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Uzbekistan: Merchants, Consumers Paying High Price For Presidential Decrees

Bazaars have always been one of the centers of life in Central Asia, and the spread of modern technology has done little to minimize their importance. Bazaars are where the latest news is heard and disseminated, and often the place where important meetings occur. In Uzbekistan this month, bazaars also have become a place to express dissatisfaction about the country's economic policies.

Prague, 26 July 2002 (RFE/RL) -- Merchants in Tashkent's biggest bazaar, Carsu, in the heart of the old city, were the first to strike earlier this month. They were followed shortly after by merchants in another of the Uzbek capital's famous markets, Aviasozlik. And yesterday, shopkeepers in the largest bazaar in the country, Otchopar, joined the strike, too.

The merchants went on strike to protest recent decrees by the Uzbek government that they believe will drastically affect their ability to earn a living.

A decree passed in May governing the importation of goods into Uzbekistan imposes a single 50 percent customs duty on imported foodstuffs and a 90 percent duty on nonfood items, based on the value of the goods.

After paying these fees to the customs office, importers receive a special certificate that permits the sale of these goods in Uzbekistan. Retailers must provide this certificate to tax inspectors upon request or risk having their goods confiscated.

The government says the reasons for the decree include controlling the outflow of hard currency prior to the introduction of free currency convertibility, which is promised by the end of the year, and to regulate and simplify the country's customs duties and taxes.

But in a recent speech, Uzbek President Islam Karimov said the main goal of the new decree is to protect Uzbekistan's domestic production.

"If we continue to fill our domestic market with low-quality imported goods, we put ourselves onto the list of undeveloped countries that, despite being rich with raw materials and more importantly, with a qualified labor force, can't build an appropriate economy, can't produce [its] own quality consumer goods."

The first attempts by the government to enforce the new decree resulted in shopkeepers in the Carsu bazaar and on Navoiy Street, the capital's central shopping boulevard, closing their stores. The merchants feared their goods would be confiscated because they didn't have the proper paperwork.

In an attempt to end this practice and to avoid any misinterpretation of the decree, Uzbek officials are spending time in the bazaars, explaining how the new law works. The director of Otchopar, Muhiddin Atashikov, explains that they "organized a bunch of meetings with merchants. Besides, we invited customs officers, and there were seven to eight seminars in nine pavilions of our market. I don't believe that [the new decree] is difficult to understand. One who is interested in understanding should know that the decree doesn't affect him much."

Despite this explanatory campaign and official warnings, most of the merchants in Otchopar joined the protest action yesterday and today. Some did not open their stalls at all, while others displayed their goods but did not sell them.

Otchopar features some 9,000 stalls and 7,800 merchants selling consumer goods. Atashikov says that up to 40,000 people come to the market each day, paying 50 soms to enter. He estimates the cost to the local budget of a strike by merchants is around $5,000 a day.

The introduction of the customs duty for imported goods is not the only new law that merchants have had to deal with. Another decree signed last month by President Karimov aims to regulate taxes in the retail and food service system.

Interpreting the president's decree, local authorities started to increase taxes. Tashkent's mayor raised income taxes by almost 107 percent. If a retailer who owns a stall at the bazaar had to pay a monthly income tax equivalent to five monthly minimum wages before, the same merchant -- starting 1 July -- is now obliged pay the equivalent of 10.5 monthly minimum wages.

After realizing the economic consequences of this second decree, more and more merchants in Tashkent didn't open their shops and stalls in protest. A shopkeeper in Tashkent's Aviasozlik market expressed her frustration to RFE/RL.

"Trade has already been dead. Before, if I sold daily items worth 4,000 soms ($3.33), 3,000 sums went to the state in the form of different taxes and only 1,000 soms were left for me. It was, of course, not enough even for food. Now, if taxes are increased about 105 percent, I should sell the smallest item for 20 soms that cost 10 soms before. People have no money. First, [the government] should give people money to make them able to afford to buy expensive goods. The entire burden of these decrees goes directly onto the shoulders of ordinary people."

Independent observers who asked not to be identified say they believe the real aim of the new decrees may be to eliminate individual importers and merchants and to place the country's import and retail trade in the hands of a small monopoly. But these analysts question the logic behind such motives. They say such moves could dramatically increase unemployment in Uzbekistan, considering the large number of people who depend directly or indirectly on the economy of the bazaars.

The new decrees have made individual traders across the country uncertain of their futures. Ma'rufdjan Abdurakhmanov, the director of Mavlono, a small private company in Ferghana, describes the situation in the regions.

"Already a lot of shops are closed down. Almost all merchants are closing their businesses. Due to increased taxes, all shopkeepers, including big and small, have to stop their work."

Atashikov, the director of Otchopar, says it is time that Uzbek bazaars are turned into civilized markets, with a proper cash register system, guaranteed quality, and consumer rights protection.