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"There are no ready-made solutions to many
a problem facing the Uzbekistan economy" -- Islam Karimov
Besides the Council meeting of the Central Asia Economic
Union held in Almaty on 5 January 2001 and attended by the
Uzbekistan President, another political event in the new year
2001, momentous for Uzbekistan, has been the meeting of the
Inter-agency Coordination Council for Reform and Investment
that took place on 11 January. The fact that the Uzbekistan
President spoke at the meeting imparted significance to this
seemingly regular event (see "Narodnoe Slovo", January 12,
2001). Speech delivered by Islam Karimov is, apparently, viewed
as conveying the program line to govern operations of all
administrative units (ministries and agencies) of the country’s
economy.
[The Inter-agency Coordination Council for Reform and
Investment was established in keeping with the
Presidential Decree of February 17, 2000. The new Council
was charged with a duty to prepare quarterly reviews of how
ministries and agencies implement presidential decrees and
government resolutions. Information is to be submitted in
the form of report titled "On executive discipline in
the bodies of government administration". Operations
of the new Council have been set up as Controlling Inspection
under Presidential Office. The Controlling Inspection
under Presidential Office with its branches at khokimiyats
was established in 1994 to replace the former Government Control
Committee. Head of the Controlling Inspection also performs
as State Advisor to the President. The key function of the
Controlling Inspection is the same as that of the Inter-agency
Coordination Council.]
Having identified priorities of economic development at the
very beginning of his speech, Islam Karimov then focused on
the shortcomings and oversights of strategic planning. According
to the President, the key strategic objectives should be as
follows:
- "In the world market, to occupy a place we deserve";
- To develop those traditional sectors of economy, which
"historically had already gained markets and their
own specific niche in the global division of labor";
- To bring in foreign capital for the development of mineral
resources of Uzbekistan;
- To develop and enhance cotton-growing sector and its related
production and processing industries (Ibid.).
Naturally, the Islam Karimov’s address, like many his other
talks, touched upon numerous economy-related problems and
tasks; however, we would like to single out some basic ideas
that constitute the framework of his speech:
1) Extremely unsatisfactory quality of strategic
planning. According to Islam Karimov, the economic perspective
of Uzbekistan is rather obscure than clear. «Who can tell
me what is happening now with demographic processes?», demanded
the President. «Even today the problem of employment for
able-bodied population, especially the youth, is very critical,
but what awaits us tomorrow?» Nobody knows neither what
is happening with consumer budget, nor how to deal with
the problems of water and gas supply for rapidly growing
population, nor are there answers to many other questions.
One of the main causes of the current problems the President
sees in the unsatisfactory operations of the Ministry of
Macroeconomy and Statistics. In his rather brief speech,
Islam Karimov referred to the Ministry in question six times,
of which four times in the context of being dissatisfied
with its work. In accordance with the President’s idea,
the Ministry is to play the key role in coordinating the
work of other government administrations involved in economic
management. Criticism of the Ministry’s operations resulted
in the proposal to set up a joint Collegium under the Ministry,
to be comprised of executives from the ministries and agencies
of macroeconomic complex, as well as of some senior experts.
[The Ministry of Macroeconomy and Statistics
was created on the basis of the State Committee for Planning
and Statistics following the Presidential Decree of May 15,
1997. The new Ministry was headed by Bakhtiyor Khamidov. Bakhtiyor
Sultanovich Khamidov had already managed Uzbek statistics
before. In August 1992 he was made Chairman of the State Committee
for Planning and Statistics. After having worked there for
18 months, in 1994 he became Minister of Finance, but in 1997
returned to the State Committee which had already been transformed
into the ministry. In July 2000 Khamidov was discharged from
his ministerial duties and made khokim of Kashkadarya Province.
A new minister of macroeconomy and statistics became Rustam
Azimov, the former Minister of Finance.]
2) The importance and indispensability of macroeconomic
regulation. Harmonious development of all components
of economy can be achieved, provided that "macroeconomic
indicators and proportions are complied with, ...essential
and indubitably important laws of monetary policy are observed".
However, Karimov says that there are serious obstacles that
obstruct this development. For instance, "totally erroneous"
are statements such as that market economy can develop without
projections and macroeconomic balances. The example of the
developed countries’ economy proves the opposite. "Which
methods to employ to implement this strategy is another
matter", said the President. Of course, in the soviet
time when state was the sole proprietor of production resources,
they tried to run the economy by means of command from the
top government. "Both GosPlan and GosSnab, and the
likes of these distributional agencies had been typical
representatives of that fallacious system", went on
Islam Karimov. (President Karimov knows of the GosPlan operations
not by hearsay. He had been working for the agency for 17
years, from 1966 till 1983, having made his career from
senior expert of the Science Department to the First Deputy
Chairman.) It has to be noted that never before did the
Uzbek President make such an emphasis on the need for macroeconomic
balance and the implementation of proper monetary policy.
This unambiguous emphasis has, apparently, been influenced
by Rustam Azimov, the new Minister of macroeconomy and statistics.
( Rustam Azimov represents a new generation of political
elite of Uzbekistan. He is about 45 years old and unlike
Islam Karimov himself or any representative of the old cast
of government officials - such as the aforementioned Bakhtiyor
Khamidov - he has not been burdened with experience of working
in the soviet government institutions. In 1994 Azimov became
Chairman of the Board of the National Bank for Foreign Economic
Activity, in 1998 was appointed Minister of Finance, and
in 2000 headed the Ministry of macroeconomy and statistics.)
3) Foreign investments must work for structural economic
reform. Having recognized that without foreign investment
the economy of Uzbekistan will not be able to utilize even
a small portion of the country’s rich mineral resources,
the President emphasized that numerous investment programs,
unfortunately, "have not yet become the key instrument
to influence the implementation of structural change in
economy". According to what he said, the problem is
that "the investment programs currently being designed
are based primarily on the list of facilities that need
to be constructed", instead of taking into consideration
strategic transformations in the economy.
Thus, the Islam Karimov’s program talk upon the key economy-related
issues has set a new epoch in the development of Uzbekistan.
While marking some new priorities and accents in the economic
policy and government, it also contains a number of contradictions.
For instance, it is universally known that one of the constraints
for bringing in foreign investments is the lack of convertibility
of the national currency. Yet, again the presidential address
reiterates an old thesis about "step-by-step currency
liberalization", meaning that the situation with currency
will be conserved for indefinite time. But on the other hand,
consistent approach towards recognizing the importance of
macroeconomic regulation speaks of a gradual change in the
former stereotypes that inhibit economic development
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