ENGRUS

Uzbekistan: Karimov’s Economic Model Comes Under Attack

Criticizing the policies of the late president of Uzbekistan is very much in vogue these days.

Late last month, a recently created state-run TV news channel featured analytical content criticizing the “mistakes” of the previous leadership — a description that could only be understood as a reference to Islam Karimov.

With that taboo broken, business news website Kommersant.uz has gone into even further detail about the shortcomings of what is commonly referred to as the “Uzbek model.”

Economist Yulily Yusupov has become the most vocal proponent for an overhaul to Uzbekistan’s economic model.

“We live in a time of change. Reforms have already begun, including long-awaited reforms of the currency exchange market. This implies an inevitable change to the model of economic development. And what about the old model?” Yusupov writes in his detailed piece for Kommersant.uz.

This is powerful stuff. Nobody would have dared write anything quite so bold as little as a year ago.

Yusupov describes the Uzbek model as far from unique and characterized by what he terms “mercantilism.” This model argues for the intervention of the state in economic activity to maximize national wealth, beginning from control over distribution of financial and material assets to the setting of prices for goods and services.

The application of this idea in Uzbekistan is believed to have been implemented in earnest in 1996, when measures were adopted to limit currency convertibility so as to enable the accumulation of funds for large state projects. The government protected the internal market by slapping high tariffs and taxes.

“Let destroy a myth — there is in fact no ‘Uzbek model.’ Similar economic approaches have been implemented at various times in various places. This model was especially popular among developing countries leaning toward friendship with the Soviet Union in the 1950-70 period,” Yusupov wrote.

Yusupov argues that the only real results of the would-be Uzbek model is that gross domestic product per capita in Uzbekistan in 2015 stood at $2,160, as compared to $11,390 in Kazakhstan. Current average salaries are around $177, better among the former Soviet republics only than Tajikistan ($120).

Figures on direct investments per capita do not make for more reassuring reading. Between 1997 and 2017, it was $341 in Uzbekistan, compared to $18,400 in Estonia, or even $392 in Tajikistan.

The only way out of this situation, Yusupov argued, is the fully reject the model of state regulation of the economy in favor of a completely market-based model. The main areas needing attention are farming, banking and finance, the tax system and the management of state affairs, not to speak of currency convertibility.

It barely needs saying that Yusupov’s ideas are probably not as explosive and novel as the very fact he is able to express them. President Shavkat Mirziyoyev may not have landed on any especially bold and innovative economic ideas to date, but the permissiveness toward a certain level of open discussion among his fellow citizens is encouraging.