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Uzbekistan: Did Tashkent Get Economic Quid Pro Quo?

By Zamira Echanova

There's been no official word on what type of compensation, if any, Uzbekistan received from the United States in return for offering the use of an airbase in the war against terrorism. President Islam Karimov himself denies there was any quid pro quo, but others say the U.S. likely offered security guarantees and possibly promises of economic assistance. RFE/RL correspondent Zamira Echanova reports from Tashkent that any offer to help the country's economy would be most welcome. The IMF and World Bank, she reports, no longer maintain active programs in the country and businessmen say the investment climate has been poor. Ironically, the war could change all that.

Tashkent, 18 October 2001 (RFE/RL) -- Since the Uzbek government agreed earlier this month to participate in the U.S.-led coalition against terror, observers have wondered what price Uzbek President Islam Karimov may have exacted.

There's been no official talk of a quid pro quo between Uzbekistan and the U.S. following the announcement that Tashkent would allow U.S. planes to use an airbase in its operations against Tashkent. But speculation has run to U.S. offers of security and defense guarantees as well as possible financial aid.

In a press conference earlier this month, Karimov rejected the notion that any trade-off with the U.S. was involved: "Our relations are not based on a trade-off that says if you promise this we'll do that in return. There is no trade-off -- no bargaining. The issue that terrorism should be fought and we should unite our efforts has to be clearly understood by everybody."

Observers say any possible offer of U.S. economic assistance would most likely be channeled through one of the international lenders, the International Monetary Fund or the World Bank. The IMF is less likely to be involved since it has not had an official representation in Uzbekistan since April 2000. The fund hasn't launched any new projects in the country since 1996. The World Bank is more likely but in recent years it has reduced its work in Uzbekistan mainly to environmental projects because of its disappointment in the speed of economic reforms in the country.

The bank's chief country officer in Uzbekistan, David Pearce, says right now the World Bank has no plans to expand its relations with the Uzbek government beyond existing projects. He says there has been no specific requests from either Washington or Tashkent on new loans or credits: "I can tell you the contrary. There is no such request, and we are not at this point considering any additional assistance to Uzbekistan as a result of recent developments [in Afghanistan]. That's just not on the agenda at this point. It hasn't been proposed to us by any of the principal shareholders. This has not yet been requested by the Uzbek government. As I indicated earlier, we are focusing on our existing agenda."

Pearce says he believes the U.S. will provide some form of financial or economic support to Uzbekistan. But he says this will likely come through the U.S.'s own local institutions, such as the U.S. aid organization USAID. Economic assistance could be crucial if the war lasts for a long time or goes badly, frightening off already-timid investors from putting their money in Uzbekistan.

Western and local experts say in the short term, the effect of the war will be mostly negative. On the domestic front, the government will divert more resources from social needs to defense and security.

But experts say if the war leads to stability and peace in Afghanistan, all neighboring countries, including Uzbekistan, will benefit.

Charles Rudd, the president and managing director of the Uzbek-based InterConcepts Incorporated, a trade and consulting company, says a peaceful solution to the Afghan problem will open up new economic and socio-political perspectives: "Let's assume that everything goes positive: they remove the terrorist bases, they remove the government in Afghanistan and, more important, that all of factions can unite under a single leadership and don't fight each other after this process. Then the rebuilding of Afghanistan will benefit Uzbekistan directly."

He says, first of all, it will open up long-closed trade routes. Rudd says Uzbekistan has enough of its own resources of food and could feed a great part of Afghanistan.

At the same time, he stresses that the development and economic growth of Uzbekistan does not depend solely on the political situation in Afghanistan. The major barriers, he and other Western experts believe, lie in the economic policy of the Uzbek government, the slow path of reforms, rampant corruption, and bureaucracy.

"Everyone waits and sees. Before the 11 September [terrorist attacks in the United States] occurred, most foreign business people looked at Uzbekistan as a declining opportunity. There were too many obstacles. It was easier to set up business in Kyrgyzstan or Kazakhstan or whatever and not have to fight bureaucracy, not have to sit there and plead for an opportunity to make their investment. Business always seeks, like water, the easiest path to move. So that path has to be understood."

Any country seeking economic development, Rudd says, has to make sure "its opportunities are better than its neighbors; it has to compete." But for the moment, he says, there has been little change in the investment climate and foreign investment is on hold.