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Uzbekistan: Little Progress Seen In Agricultural Reforms

Prague, 25 February 1997 (RFE/RL) -- With the International Monetary Fund keeping $185 million in stand-by credits from Uzbekistan until key market reforms are implemented, President Islam Karimov readily admits that changes are needed to avert disaster for Uzbek agriculture.

Karimov told RFE/RL recently that his resolve to push forward with political and economic reforms is "unshakable." But Central Asian analysts and foreign economists say they have serious doubts about Karimov's desire to end his control over the country's main cash crop -- cotton.

Years of centrally-planned cotton farming has decimated Uzbekistan's environment. The fertility of most farm soil has been depleted by continuous cotton planting to fuel Soviet-era textile mills. Irrigation for the crop is cited as a key reason behind the draining of the Aral Sea. The use of that water also has been steadily increasing the content of salt in Uzbek soil.

It appears likely that the country's over-dependency on the crop will continue, at least for the near future. The sketchy farm data provided by Tashkent shows that cotton accounted for about 75 percent of all dollar earnings on exports last year.

Attempts have been made in the past two years to increase grain production. But the program is now cited as an example of waste.

Most disturbing to foreign advisors is the fact that almost nothing has been done to dismantle Tashkent's inefficient system of centrally-planned farming. Uzbekistan's current agriculture policies resemble those of the Soviet-era "Goszakaz" system more than an emerging competitive market.

Cotton and grain production quotas are still set by the state. Students, children, industrial workers, soldiers, clerks and drivers are still required to work in the fields picking cotton for a symbolic wage.

The state owns nearly all land because, for now, private ownership of land continues to be prohibited.

There has been no restitution of land to its historic pre-communist owners. The small private gardens and subsistence plots that make up one-fifth of the country's farmland are leased from the state. The rest of the agricultural land is leased to the large state-owned farms.

Market mechanisms for agriculture in Uzbekistan are few and far between. Last year, about half of the cotton crop was sold at prices set by local bureaucrats. The other half was still purchased compulsorily under the old Communist-style "Goszakaz" system.

In fact, the major difference between the Soviet era and today's centrally-planned farms in Uzbekistan is that the state now sells its cotton procurements on the international market instead of to Soviet textile plants.

Most state farms in Uzbekistan have been transformed into cooperatives or so-called "joint-stock companies." But the state continues to own these farms. The European Bank for Reconstruction and Development (EBRD) says the restructuring has had little impact on the management and efficiency of Uzbekistan�s state farms.

Western analysts say the lack of market reforms has ensured the steady decline of the Uzbek agricultural sector since independence from the Soviet Union in 1991.

The Organization for Economic Cooperation and Development (OECD) recommends reforms that would not only allow private farmers to own land, but also create a sector-wide infrastructure so that those farmers can profit from their labor.

The OECD says development of transport, marketing, distribution, foreign trade and market price information systems all must be nurtured by policies that foster competition.

In the meantime, foreign economists say that Tashkent's efforts to suppress economic data make it difficult for them to accurately assess the extent of Uzbekistan's problems and the progress of market reforms. In an apparent effort to hide the extent of the sector's decay, Tashkent has not made important agriculture data available to the international financial institutions since 1993.

Despite these difficulties, the EBRD continues to invest money into reform projects in Uzbekistan. In its most recent project, the EBRD this month announced a $120 million credit facility to the National Bank of Uzbekistan and the Asaka Bank in Tashkent.

National Bank chairman Rustam Azimov said the money would help Uzbekistan develop its natural resources and improve its agricultural sector.

Azimov said that the most important aspect of the EBRD loan is that the banks would lend money to private businesses. He said this would contribute directly to the growth of a middle class in Uzbekistan, and thus, strengthen the country�s commitment to democracy.

This is part one of a four-part series on agricultural reform in Eastern Europe and the former Soviet republics.