Country Report Uzbekistan April 2011

Economic policy: Goal of boosting private firms is unlikely to be realised

The lower house of parliament, the Legislative Chamber, is now considering introducing new legislation to encourage economic competition. For all the talk of Uzbekistan developing a parliamentary system, the initiative for the new law came from a speech given by Mr Karimov on November 12th 2010. In February the president declared that 2011 was to be the Year of Small Business and Private Enterprise. The aim is to enhance mechanisms for regulating markets, ease entry requirements for small businesses, and stop monopolies from operating in commodities exchanges.

However, it is doubtful whether the programme will extend beyond rhetoric. State control over the economy allows well-connected figures to cultivate patronage networks that help to keep the regime in power. Allowing the private sector to flourish would threaten the benefits that authority figures accrue from their economic control. Furthermore, the development of the private sector is hampered by the prevalence of corruption. Corruption is closely intertwined with the patronage networks that sustain the regime, and addressing the problem would also risk eroding these networks.

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