Uzbeks Visit The U.S. To Say They Are Open For Business After Years Of
Isolation
This last week a numerous delegation of top-level officials and business
folk from Uzbekistan paid a first-ever such visit to the US, initially to
Washington DC for policy consultations then to New York for days-long
conferences. The one I attended in Manhattan, geared to capital markets, was a
real eye-opener, genuinely even surprisingly impressive. One watched in
something like awe as frank, detailed, convincingly documented presentations
(in English) about capital investment opportunities followed one another. By
youthful Uzbek CEO's of industrial and banking concerns essentially to an
audience of Wall Street finance companies. I canvassed the Americans and found
the mood to be uniformly enthusiastic. They were going to do some serious
business. I also spoke with the American-educated Atabek Nazirov, Director of
Capital Markets Development Agency (CMDA), a ministry level post. Conclusion:
Uzbekistan is thawing out and opening up.
If the above sounds hyperbolically
positive, you have to understand how bad things were in that country until
recently. The former SSR had become a grim, impoverished, virtual police-state
for the entire post-Soviet era under former leader Islam Karimov. He ran a
corrupt, isolationist regime with an iron fist in a slightly risible
cult-of-personality style. Not far off the North Korean model. Fear was the
staple commodity. If you had to hunt around and find one good thing about his
era, you could say he, at least, stamped hard on the incipient radical Islamism
seeping in from Afghanistan, and bubbling up indigenously in the Ferghana
Valley region. He nipped it brutally in the bud but at a huge cost in human
rights. Uzbekistan, with a population of thirty million people, became a kind
of black hole of news. Foreign journalists were kept out. Nobody inside or
outside the country knew what was going on.
Karimov died in 2016, somewhat mercifully for his country, a land
otherwise abundant in historical wonders and natural riches (gold, cotton, gas,
uranium etc..). Miraculously, his successor Shavkat Mirziyoyev has turned out
to be something of a blessing, a reformer and modernizer and a man on a
distinct mission to improve his country's lot economically. One says
miraculously, because he served in the top echelons of Karimov's administration
for years. He was, in effect, the appointed successor. He could have kept the
same course. And yet, within a short few years, he has changed the country's
direction and future, releasing political prisoners, allowing in foreign media,
opening up the country to foreign trade and investment. Appointing new young
talent to top positions often with training abroad. He has cracked down on the
rampant corruption and nepotism of the Karimov era, some say too harshly.
A word about that. In past years I reported for various outlets from
former Iron Curtain countries as they transitioned to liberal democracies. I
noticed again and again that a too tentative approach to previous corruption,
whatever its human rights virtues, allows elites to remain in place for years
with all their webs of inside dealing intact. The populace tries repeatedly to
throw off the yoke through people power but little changes. The economy stays
hobbled. We have seen the phenomenon in numerous countries like Ukraine,
Rumania, Bulgaria and the like. Only in Georgia did hope kindle for several
years under Saakashvili for an end to endemic corruption and oligarchic power
because he took an early and severe approach. He too opened the economy,
appointed young talent and foreign-educated administrators, pushed a
generational change in personnel. The problem, as he discovered, is that former
elites and their vast networks of patronage, when disenfranchised, can
destabilize you and end your project abruptly often with help from abroad.
Some have argued that, in authoritarian polities, the purging of former
elites by a successor indicates not change but more of the same only with new
incumbent's retinue in place. It rather depends what the new guy does. In
Mirziyoyev's case the signs already bode well-ish. Central Asia remains a tough
neighborhood so any reformist approach must of necessity be a gradualist one.
There isn't much room for maneuver or risk-taking. One shouldn't expect any
rushed Westernization, not with Moscow watching, Islamists waiting, neighbor
countries ready to make trouble and the like. It's a matter of priorities.
Think about Uzbekistan's geography, far from the West and closer to East Asia
where the Singapore model looms larger than ours. Education, stability,
affluence first – but only if corruption doesn't block or derail the process.
To deliver those goals, you cannot avoid a high degree of transparency because
investors won't engage in sufficient volume otherwise. So you inexorably launch
a momentum towards liberalization that, badly managed, can go in any direction.
I was rather surprised, pleasantly so, by the candor of Atabek Nazirov,
the director of CMDA. Did I mention how transparency was ubiquitous throughout
the event – a real turn-around for Uzbek affairs. Even the US-based sponsor
talked openly, Frank Muradov, adviser to CMDA and C.O.O of New York -based
investment firm Park Rock Capital. He too noted the “blunt
openness” of the speakers, “not sugar-coating anything, not arrogant or
Soviet-style at all”. But back to Nazirov. We had a good long face-to-face
interview during which he spoke quite directly about the past regime's
awfulness, his hopes and worries for the future. I asked him why now? What made
this the right time for Uzbekistan to open up despite all the challenges? He
told me that it was a matter of responding to the people's needs because of
pressure from the bottom up. The new President realized change had to come so
it was a matter of steering, expanding, liberating dynamism, managing the
risks. Mizriyoyev kicked off his rule with early visits to neighbor countries
to settle border disputes and make commercial agreements. Uzbekistan is a
landlocked country so trade begins with neighbors, namely Kazakhstan,
Tajikistan, Kyrgyzstan, Turkmenistan and Afghanistan – a market of 300 million
people in total. He plans to visit 36 countries this year.
Uzbekistan has robust amounts of raw materials. Gold for instance. It's
treasury has $25 billion in gold reserves as against less than $20 billion in
external debt, says Nazirov, so the balance is solid. But the country wants to
diversify the economy, move towards manufacturing and exporting the products
rather than just selling natural resources. So the capital markets investments
will go towards, say, infrastructure for converting gas into petrochemical
products or building cotton textile plants rather than selling it raw abroad.
According to Nazirov, the economy is growing %5 a year and accelerating.
The priority is on development but with stability: how to change the
institutions, politically, economically, culturally, while avoiding turbulence.
To that end the President and his colleagues have opened public reception
offices throughout the country for consulting the populace, listening to their
complaints and advice. English is now taught in schools along with Uzbek and
Russian. The idea is to find a path that's organic to Uzbekistan, Nazirov told
me. Not just through sustained interaction with the populace, but with neighbor
countries, and beyond also. “You look at countries that do well, and you see
what they have in common – those are proven models. But you can't just implant
them suddenly from top down. You have to consult the people, see what they
want, what the situation will tolerate. The dynamism is visible already, with
cafes and restaurants opening but true economic liberalization has risks:
removing subsidies and tariffs and the like. It will take years. But we're
finally on the right track.”
Listening to Nazirov, I realized that he was actually talking about
returning Uzbekistan to its roots, restoring its traditional role down the
centuries as a trading hub. The central hub of the Silk Road in fact with famed
oasis cities. Always far away, forever landlocked, yet always doing business
with the world, it was never a country that flourished in isolation. The key
was always to balance outside influences from East and West with its own
internal identity. After domination by outsiders for almost two centuries,
after nearly thirty years of grim isolation, at last, Uzbekistan is
rediscovering its rightful place in history.
