Uzbekistan Is Making Healthy Strides Toward Good Governance

COMMENTARY International Economies

Uzbekistan Is Making Healthy Strides Toward Good Governance

Jul 8th, 2019 2 min read

Commentary By

Anthony B. Kim @akfreedom

Research Manager and Editor of the Index of Economic Freedom

Jordan Parrish

Summer 2019 member of the Young Leaders Program at The Heritage Foundation

Early indicators are encouraging. Ozbalci/Getty Images

While some countries like Venezuela remain stuck with socialism, others are quietly transitioning from repression to openness. 

Uzbekistan is one of those countries. Though it still has a very long way to go, it is now transitioning from a command-and-control economy to a market-based economy, propelled by a wide range of reforms.

To be clear, Uzbekistan still suffers from poverty, corruption, and oppression, and the state-run cotton trade still uses forced child labor, despite a recent presidential decree banning the practice.

With an area and population roughly the same as California, Uzbekistan is still classified as a “mostly unfree” economy by The Heritage Foundation’s annual Index of Economic Freedom, which tracks economic policy developments around the globe. 

The country’s young, growing workforce desperately needs jobs, and Uzbekistan’s sluggish state-owned enterprises have not kept up with the country’s needs. Investors are afraid to invest. Businesses are expropriated. 

Lots of ambitious Uzbeks have moved to neighboring countries in the Caspian region, draining the country of its best and brightest. There’s also a lingering threat of Islamic extremism among the disaffected youth who are searching for meaning. 

But Uzbekistan is inching toward improvement. According to the Financial Times:

Under former dictator Islam Karimov, Uzbekistan used to rank alongside North Korea for its political rights and civil liberties. With strict currency controls and widespread corruption, it was off limits for most investors. But following Mr Karimov’s death in 2016, new president Shavkat Mirziyoyev, who had served under Mr Karimov as prime minister, shocked the international community by embarking on major reforms. Political prisoners have been released, exchange restrictions lifted and political debate encouraged.

Indeed, President Shavkat Mirziyoyev and his reform-minded team have mapped out a far-reaching roadmap to “promote good governance, judicial reform and rule of law, economic liberalization, social development, and an open and constructive foreign policy.” 

They have also taken practical steps to attract greater foreign investment, such as loosening currency controls and transforming the Uzbek som into a fully convertible currency. 

Early indicators are encouraging. Some forms of private property ownership were made legal for the first time in decades. A few months ago, Uzbekistan received its first-ever credit rating by two of the three main credit agencies and succeeded in issuing its first $1 billion Eurobond.

Tashkent’s relationship with Washington has entered into “a new era of strategic partnership” as well. During Mirziyoyev’s historic first visit to the White House in 2018, President Donald Trump pledged U.S. technical assistance to Uzbekistan, as the country has sought admission to the World Trade Organization and undertaken a reform agenda to liberalize its trade regime in line with its World Trade Organization obligations. 

Also notable is that the U.S. has removed Uzbekistan from a list of countries with the worst religious tolerance. Secretary of State Mike Pompeo recently commented, “In Uzbekistan, much work still remains to be done, but for the first time in 13 years, it is no longer designated as a country of particular concern.”

It is still too early to say if these ongoing positive changes will have a lasting impact on Uzbekistan, but these early indicators are encouraging signs for the future of the country.

This piece originally appeared in The Daily Signal