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| >> Regional Overview >> Uzbekistan Overview | |||||||||||||||||||||
IntroductionUzbekistan is situated in the geographic heart of Central Asia, bordered by the four other Central Asian countries, as well as Afghanistan. Uzbekistan is critical to the stability of Central Asia and U.S. national interests reflect a combination of geopolitical and commercial interests. It is the only country with a growing population, a variety of natural resources, and a potential for a well-diversified economy, including energy and food self-sufficiency. A prosperous Uzbekistan would be central to economic growth in the region. Uzbekistan aspires to regional leadership, and continues to be a key player in maintaining security in Central Asia. However, its leadership has become entrenched with an increasingly closed and static political and economic system. There is concern that militarism, repression and poverty will encourage radicalism and ethnic conflict in the south. Development ChallengeOverall, the challenge in Uzbekistan is to build the capabilities of its citizens and local organizations to provide the basis for political, economic and social change. The unwillingness of the Government of Uzbekistan (GOU) to introduce market-oriented reforms in the financial sector has constrained economic recovery. Each year since independence the economy and infrastructure has declined and will continue to do so for the foreseeable future without economic reform and new investment. Its authoritarian politics and state-controlled economy have stymied any transition, contributed to human rights violations and limited foreign investment. Despite significant agricultural, manufacturing, energy and mineral resources and potential, economic growth is held back by state ownership and extraction through excessive currency trade and business controls. Trade and foreign exchange restrictions breed corruption and non-competitive industry and discourage enterprise and foreign investment. The lack of political will to undertake economic reforms led USAID to shift its assistance strategy focus from the macro-economic level to the micro-and local levels, focussing on private sector development through education and training. Through training in basic business practices, managers of small and medium enterprises will acquire skills necessary to survive the transitioning economy. A principal problem that many small businesses face, especially women-owned businesses, is lack of credit. There exists strong interest in starting a pilot micro-credit activity in the Ferghana Valley where modest seed capital and business education could help start and expand businesses, and thus alleviate social and welfare problems. Citizens are poorly informed and their participation in economic and political life is restricted, particularly at the national level. Political opposition is not tolerated. In 1999, several TV stations were closed. The crackdown on the media eased somewhat in 2000 with many local non-state TV and radio stations receiving five-year licenses. Enforcement of a progressive 1999 NGO law has been slowed due to absence of implementing regulations and associated legislation. Despite this, the NGO community, particularly those grassroots organizations addressing pressing social needs and engaging community councils, is growing stronger. Uzbekistan inherited a Soviet-style health system, focused on curative rather than preventive care. The GOU is committed to providing good health services and is working with USAID and the World Bank on pilot programs to reform the health system. The models developed under USAID's pilot program focus on new management and payment systems for improved health service delivery and financing. The initial results have been impressive and the GOU has requested a major expansion of this pilot program. Responding to a resurgence of tuberculosis (TB), USAID continues to work with the Ministry of Health to introduce the new, more effective World Health Organization (WHO) protocols for TB treatment. In 2000, the WHO protocols were introduced in five pilot sites, and USAID has been requested to expand the pilots in the Ferghana Valley. Uzbekistan is a major consumer of, and a minor contributor to, the Central Asia region's water resources. Uzbekistan's efficient use of water resources and cooperation with neighbors on water distribution are important from both a natural resources management and a regional stability standpoint. Partnerships, training and exchanges remained an important component of USAID assistance. Under its Global Training for Development Program, USAID trained over 1,500 government leaders and professionals, many in inter-regional fora, in areas directly related to democracy, health care and a free-market economy. Forty-two percent of these trainees were women. USAID's successful third country training allows participants to observe first-hand positive reform in other Central Asian Republics. The program in Uzbekistan takes advantage of a few centrally-managed programs, including the the Global Bureau's inter-agency agreement with the Center for Disease Control and the Farmer-to-Farmer program financed through P.L. 480 and managed by the Office of Private and Voluntary Cooperation in the Bureau for Humanitarian Response. Other DonorsUSAID works closely and coordinates with other donors. The World Bank is undertaking a financial sector reform project and the Asian Development Bank is working to develop credit unions. The European Union (EU) focuses on technical assistance in agriculture, private business development, and energy, and support for accounting reform. The United Nations (UN), the Soros Foundation, and the Organization for Security and Cooperation in Europe (OSCE) fund training to improve civil society. The World Bank has a large health sector reform loan, and WHO is active in providing support for TB control. The World Bank's Global Environmental Facility and the Canadian and Swiss Governments provide assistance in the area of natural resources management. The European Bank for Reconstruction and Development (EBRD) has made loans for textile plants, energy, and small enterprise development. FY 2002 ProgramThe new USAID assistance strategy gives highest priority to primary health care, infectious disease control, economics and business education, micro-credit, civic education, information dissemination, civil society, and water resources management. Assistance will primarily concentrate in two sub-regions, the Ferghana Valley and Karakalpakstan, where the local environment is more conducive to change, and financial needs and potential for conflict greatest. USAID-supported health care reform efforts will feature decentralization, quality of primary care, informed communities, allocation of health care resources and legislative policies. USAID will also provide substantial support for maternal and child health activities and the control of TB, hepatitis and HIV/AIDS. In the democracy sector, USAID will emphasize working at the local level, particularly in the southern part of the country, and continue to support the strengthening of NGOs, civic education, women's legal rights, NGO advocacy for the rule of law, and grassroots community issues. It will also work with the more mature NGOs on policy advocacy skills, coalition building, and community development. USAID assistance to non-state media, press and internet will help address equipment, technical and management deficiencies and fund local production, thus improving reporting and increasing access to information. Given the current weakness of the economic policy environment, USAID is focusing its efforts on business and economic training and education. USAID will enhance economics and business education at the university level by strengthening the curricula and providing greater access to modern economics and business information. In addition, through its Small and Medium Enterprise (SME) Training activity, USAID will offer those involved in private enterprise a range of business courses, as well as building business associations and advocacy groups. USAID also plans to implement a micro-credit activity in the Ferghana Valley to increase access to capital and provide women with greater opportunity to own businesses and increase their standard of living. In the area of water resources management, priority will be given to efficiency, rational allocation, access to accurate data and regional agreements. USAID will not provide assistance for economic and financial reform, energy restructuring, elections or any state-controlled institutions unless Uzbekistan changes its current macroeconomic policies. Activity Data Sheets
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