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Uzbekistan
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Situation and Cooperation
Even now, some 20 years after gaining independence, Uzbekistan is still going through a transition from the former Soviet-style planned economy to a market system. Economic liberalisation, privatisation and structural reforms are progressing only slowly.
Problems facing the country that are a brake on development include the half-hearted pursuit of reforms, the considerable influence of the state on the private sector, the lack of legal certainty, the weak banking system, and the enormous amount of red tape involved in procuring permits and certification. Corruption is endemic. In 2010, Transparency International's Corruption Perceptions Index rated the country 172nd out of 178 states. The private sector is developing slowly, as is to be expected under these circumstances.
Nevertheless the economy as a whole is expanding. According to official figures, the gross domestic product has risen by a minimum of seven per cent per annum in recent years. Foreign observers, and Uzbek economists, however, put the rate of growth at two to three percentage points lower, if calculated using standard international methods. The Uzbek economy's growth is due primarily to stable demand for the country's main export goods, i.e. gold, natural gas, cotton, electricity, petroleum products and mineral fertilisers). The remittances of Uzbek migrant workers living abroad also contribute to the country's economic upswing. In response to the difficult economic situation globally, the Uzbek government introduced a programme to counter the crisis for the period from 2009 to 2012. This programme is being implemented successfully and is stabilising the country's economy.
However, only a small part of the population is benefiting from these positive economic developments. The growth rates in real earnings and retail turnover reported by official sources do not reflect the actual social situation in Uzbekistan. Approximately half the working population work in the informal sector at least some of the time, and therefore do not appear in official income and labour market statistics. In particular in rural areas, where some 64 per cent of the country's population live, poverty and unemployment are on the rise, leading to social tensions. Youth unemployment and the concomitant lack of prospects also bear other risks. And basic social services are woefully inadequate, in particular in the health sector and as regards provisions for old age.
After industrial production, agriculture is the second most important sector of the Uzbek economy. It is, however, barely diversified and focuses on cotton, which is produced as a monoculture. Because a large percentage of Uzbekistan's land is desert, farming is only possible with the help of intensive artificial irrigation. Huge volumes of water are diverted from the country's two main rivers, the Amur Darya and Syr Darya, both of which flow into the Aral Sea. As less water reaches the sea it is rapidly drying up, leaving vast salt flats. The Aral Sea – formerly the fourth largest in the world and covering an area nearly as big as Bavaria in Germany – has now almost completely disappeared. Other environmental problems are caused by the intensive use of pesticides, insecticide and fertilisers, which have contaminated the soil and drinking water in many regions.
Neither the presidential elections in December 2007 nor the parliamentary elections in December 2009 complied with democratic standards. Although Islam Karimov had already held two terms of office, which is the maximum allowed under the Uzbek constitution, in 2007 he again stood for election unobstructed, and was re-elected with 88 per cent of the popular vote according to the official figures. Judicial independence is not guaranteed in Uzbekistan, and the separation of powers is frequently violated in daily political life. The human rights situation and the position of civil society organisations in the country are precarious.
Human rights
Uzbekistan was the first Central Asian country with which, in May 2007, the European Union instituted a human rights dialogue. This dialogue continues to date.
Although Uzbekistan has ratified important United Nations human rights conventions, including the International Covenant on Civil and Political Rights and the Anti-Torture Convention, human rights violations continue. Whilst a number of legislative and judicial reforms have been launched, and the human rights dialogue between the Uzbek government and the international community has been extended, the non-governmental organisation Amnesty International has reported that these efforts have not led to any fundamental or profound changes to the system. People's freedom of religion, freedom of opinion and freedom of assembly are severely curtailed, and there are reports of arbitrary arrests, unfair court proceedings and the use of torture.
Development potential
Thanks to its central geographical position and its mineral deposits (gold, copper, uranium, coal and natural gas), Uzbekistan has good development prospects. There are oil and gas reserves under as much as 60 per cent of the country's surface area. Today, Uzbekistan is the world's eighth largest gas producer. The country's textile, mobile phone and tourism industries also show development potential.
The country's young population can be regarded as another asset. These young people represent a plentiful supply of relatively well-trained labour.
In spite of the difficult environment, more and more foreign companies are investing in Uzbekistan, attracted partly by tax and customs exemptions. But strategic market considerations also play a part. Uzbekistan has entered into free trade agreements with all other CIS states. The government attaches great importance to joining the World Trade Organization (WTO), which is to be one of the main steps on the way to becoming fully integrated in the global economic community.
Priority areas of German development cooperation
At government negotiations in 2011, the German government pledged Uzbekistan a total of 15 million euros for the period 2011 and 2012. The following areas of cooperation were agreed:
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sustainable economic development
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health
In addition, Germany agreed to provide funding for regional programmes that serve to link up the development activities within the Central Asian countries, facilitate exchanges of experience, and boost cooperation. One of the more important programmes is providing support for legal and judicial reform in the states of Central Asia. Regional programmes that promote sustainable economic development, health, education and the sustainable use of natural resources are also receiving support.
Sustainable economic development
In order to contribute to sustainable economic development in Uzbekistan, Germany has become particularly active in the financial sector. For instance, Germany has been providing support for micro and small enterprises, which are especially in need of loans. At the same time, Germany is also making support available for private households wishing to buy, extend or refurbish residential property.
A further area in which Germany is involved is regional economic development. We are helping to promote a dialogue between the public and private sectors in three rural regions which are focal areas of our development cooperation, and are providing advisory services for chambers of industry and commerce, provincial administrations, farmers' associations and research institutes to help them plan and implement projects.
The measures also include support for the establishment of a labour-market-driven vocational training system in the agro-industrial sector.
Health
The quality of health care in Uzbekistan dropped dramatically after it gained its independence from the Soviet Union. Low-income sections of the population are particularly badly affected, and the incidence of poverty-related diseases is rising significantly.
Support for the health sector has therefore been made a priority of German development cooperation. Important goals include combating tuberculosis and improving maternal and child health.
A scheme to provide the population with modern family planning methods and the introduction of a personal ante-natal screening pass are intended to improve the health status of women and reduce the birth rate. Efforts are also underway to improve the medical equipment available in hospitals and to train and upgrade staff.
Information
Publications
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Promoting Resilient States and Constructive State-Society Relations – Legitimacy, Transparency and Accountability
Special 168
(PDF 495 KB, accessible) -
Preventing corruption – promoting transparency: What is German development policy doing?
(PDF 177 KB, accessible) -
Social and Ecological Market Economy Principles in German Development Policy
Strategies 158
(PDF 234 KB, accessible)
