EBRD issues new strategy for Uzbekistan

“I welcome this decision by the EBRD, which is taking a strong lead among international institutions in taking seriously questions of democracy and human rights.

This decision represents a considerable tightening of the EBRD postition; previously soem government projects were still being considered. Now not only are Uzbek government projects ruled out, so are private projects with any participation by government officials and their families. This is a strong recognition of regime corruption, and a major slap in the face for Karimov.

The EBRD are to be applauded for their stance on Uzbekistan. We are always ready to criticise IFIs. We should be equally ready to praise when they get it so right.”

Craig Murray 30/07/05

EBRD Press Release (29/07/05)

The EBRD’s new two-year strategy for Uzbekistan concludes that while some economic progress has been made since its last strategy for the Central Asian country was published in 2003, there has been no comparable political liberalisation.

The previous strategy described Uzbekistan’s political and economic progress as slow and characterised by setbacks, and emphasised the importance of the Uzbek authorities taking a number of critical steps to put the country on a path of sustained progress towards multi-party democracy and a market economy. In 2004, the Bank restricted its activity to private-sector projects as well as public-sector operations that either linked Uzbekistan economically to other countries in the region or clearly benefited ordinary citizens, such as by improving a town’s water supply.

The Bank’s new strategy notes that economic progress has been achieved in two areas since 2003 – current-account convertibility and adjustment of tariffs in public utilities – but says there has been no progress in Uzbekistan’s political environment.

As a result, the Bank has decided not to initiate any new projects in the public sector during the new country strategy period. It will focus on supporting private-sector development and entrepreneurship, particularly SMEs and micro-business, provided that there is no direct or indirect link to the government or government officials. For example, the Bank is considering the possibility of establishing a microfinance bank and expanding its leasing operation. The Bank will also continue to support trade through its Trade Facilitation Programme.

Equally, the EBRD will continue its efforts to engage in policy dialogue with the authorities, working for improvement in the investment climate and supporting reform efforts. Only reforms can unlock Uzbekistan’s significant economic potential and allow the Bank to operate on a full-fledged basis. The events in Andijan in May, resulting in the indiscriminate use of force against civilians, as documented in various reports, including this month’s report by the UN High Commissioner for Human Rights, were a cause of serious concern for the Bank.

The EBRD, which has invested ?509.5 million in Uzbekistan, has had a lower level of commitments in recent years as a result of the country’s unfavourable investment climate. In 2004 the Bank signed three projects for a combined ?34 million.