Uzbekistan has been leaning hard on Tajikistan in recent weeks, making a number of harsh moves that regional analysts say are motivated by opposition to Dushanbe’s plans for the Roghun hydroelectric plant, perceived as threatening Uzbekistan's intensive downstream water demand for cotton irrigation. Uzbekistan recently closed a border crossing to Tajikistan, forcing the Zarafshan Valley into isolation from the rest of Tajikistan, as snow will close the roads. Some 121,000 people will suffer, but Tashkent has not provided a reason or an answer to a eurasianet.org inquiry.
Last week, Uzbekistan's Foreign Minister called Tajikistan's officials "liars" over the issue of the delay of Tajikistan-bound freight cars, Tajikistan’s Asia Plus news agency reported. Dushanbe had no comment, although it has been steadily complaining that Tashkent is deliberately holding up freight bound for Tajikistan. In a statement published on the Uzbek Foreign Ministry's site at mfa.uz on November 1, Tashkent said that "despite objective facts and elementary logic" the Tajiks continue to claim there are freight car delays harming its economy.
To be sure, Tashkent admits that there are logistical problems, but claims there is no malice, just more traffic. ”The increase of the freight flows is due to the fulfillment by Uzbekistan of its obligations according to international agreements to provide passage of non-military and humanitarian deliveries to Afghanistan," said the Uzbek Foreign Ministry, referring NATO’s Northern Distribution Network. For now, Dushanbe does not seem to be responding, although on October 18, it was protesting that Tashkent's deliberate delays were harming its own obligations to the NATO supply route. Meanwhile, the Tajik parliament is debating the $30 million debt Tajik Railways owes Uzbekistan, with some parliamentarians asking why Uzbekistan can't pay compensation for delaying cargo, BBC Monitoring Central Asia reported, citing Tajikistan’s Avesta news agency.
Uzbekistan is claiming that the targeted quotas for the cotton harvest have been met, but adults and children are still working in the fields. A soldier was beaten to death for not fulfilling his quota, human rights groups reported last week. According to a report from Radio Free Europe/Radio Liberty (RFE/RL), farmers will not see any benefit from international cotton prices that recently soared to more than $1.20 per pound -- the highest ever on the global market. Farmers have to fulfill state quotas and accept low fixed state payments for cotton. "The problem is that Uzbekistan still has a Soviet-style command economy," Julliet Williams, director of Environmental Justice Foundation, a British-based nongovernmental organization, told RFE/RL. The old communist tradition is combined with the new oligarchic capitalism of the region – the state-owned cotton company is 51 percent owned by the state, and 49 percent owned by unknown companies believed to be related to officials and their relatives.
The Oliy Majlis, legislature is set to increase traffic fines now, a move that drivers believe is only motivated by a cave-in to a corrupt law-enforcement lobby that wants to be able to extract more bribes, uzmetronom.com comments.
On the other hand, the legislature is now poised to reduce penalties for those caught dealing in foreign currency on the black market, uznews.net reports. Simply by reporting an illicit transaction and cooperating with police, anyone violating existing law can now be let off. While the state-run media says the motivation is to promote better citizen cooperation with law-enforcers, one prominent lawyer has pointed out that it's a law beneficial only to the black-market dealers themselves, who essentially now have a blank check and a revolving door through police precincts where bribes can take care of backdating the reports.
International financial institutions continue to generate upbeat reports about Uzbekistan's growth, but they mask deeper problems rooted in the authoritarian regime. Uzbekistan was ranked at 102 out of 169 countries by the UN's Human Development Index with a per capita income of just $3,084 per person a year.
Uzbekistan faces some severe economic challenges, although its industries can appear to be posting growth records. Recently a festival of German and Uzbek friendship boasting of $469 million in trade turnover last year reportedly turned sour when a German trade official reminded his hosts that they owe 130 million euro to German companies after a state-ordered building spree by Zeromax, a large Swiss-registered conglomerate. The company, believed to be associated with President Islam Karimov's daughter Gulnara, was seized by the government in May as it went bankrupt.
Since then, nobody has really been able to find out what is going on with the company or its obligations, as there are only indirect signs and speculation. But an obvious symbol of its failure are the frozen cranes on a construction site overgrown with weeds in Tashkent -- the location of an ambitious plan to build a new soccer stadium for the feted Bundyokor team -- which also had to shed its highly-compensated famous Brazilian soccer coach earlier this year.
Bernard Duch, advisor to Germany's Federal Ministry of Economics and Technology told ferghana.ru that four Zeromax projects had failed and now owed money to German firms: the Palace of Forums, an ostentatious building in Tashkent for international conferences; one of the president's residences, the stadium, and an oil delivery contract. The trade balance, when examined for this year, is now dipping, with $338.6 million in the first eight months of 2010, regnum.ru reported. Even so, Germany is hoping for a green light for increased trade, said Duch.
Ordinary Uzbeks are increasingly asking whether the persistent gas shortages they are facing are related somehow to the seizure of Zeromax. Before, Zeromax managed to expedite deliveries of gasoline from Kazakhstan. Uzbekistan has its own crude, but it is highly impure and needs refinement -- and has not found sufficient investors.
Kazakhstan, in fact, shut off fuel exports from May through July due to its own needs for the planting season, Novosti Kazakhstan reported. The theory of the Zeromax case is that President Karimov has somehow maneuvered to close off the Kazakh route for his own political reasons, says ferghana.ru. According to one hypothesis, when Zeromax went bankrupt, a plan was hatched to hand over its shares to two related ventures previously formed by Zeromax, Uzneftegas and Russia’s Gazprom, as payment of Zeromax's debts to Gazprom.
But President Karimov was reported to have been reluctant to give all the shares to Gazprom outright, which would give them control over the companies, so he had them transferred to Uzneftegaz as well as the two joint ventures -- then sent the tax bill to Switzerland where the company was registered. Realizing it was cut out of the deal, Russia then supposedly pressured Kazakhstan to stop exporting fuel to Uzbekistan. By that time, the fuel tariff had been raised when the customs union was formed among Russia, Belarus, Uzbekistan, and Kazakhstan.
Catherine A. Fitzpatrick compiles the Uzbekistan weekly roundup for EurasiaNet. She is also editor of EurasiaNet's Choihona blog. To subscribe to Uzbekistan News Briefs, a weekly digest of international and regional press, write [email protected]
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