Uzbekistan at crossroads after Karimov

TASHKENT: The sudden death of former President Islam Karimov, who led Uzbekistan for almost 27 years, has raised the prospect of a more uncertain future for the country.

Karimov’s much-criticised regime, characterised by dictatorial regime and widespread allegations of human rights abuses, may have kept a lid on internal dissent but did little to address widespread poverty that could provide a breeding ground for extremism.

Uzbekistan, which is an important regional gas producer and stands at the centre of the ancient Silk Road trade route between East and West, has a population of 32 million — many of whom are young and few of whom access to decent jobs. There are concerns they could be vulnerable to the pull of terrorist groups such as Islamic State.

Who Karimov’s successor will be is not yet clear, but whoever is chosen needs to find enough stable jobs in the next several years to counterbalance the alternatives offered to disillusioned young people by the likes of IS.

China, Russia, the US and European countries could provide investment into Uzbekistan’s industrial sector to create new jobs and limit emigration that has seen as many as 2 million young Uzbeks move to Russia for work, mostly in unqualified positions.

Uzbekistan’s natural gas reserves, estimated at more than 3 trillion cubic metres, coupled with its vast gold and uranium mines as well as traditional cotton industry, offer potential to boost the economy.

Some sectors of the economy, such as manufacturing and chemicals, grew steadily during Karimov’s tenure, but the expansion of minerals production was limited because of strong state control.

In the future, the flow of foreign investments will depend upon the willingness of Karimov’s successor to open up these key sectors of the economy for privatisation by domestic and outside players.

Additionally, Karimov’s successor will have to reform Uzbekistan’s discredited court system to ensure fair treatment of all participants and investors if they want to improve the country’s image overseas as well as its investment prospects.

So far, foreign involvement in the gas industry has been limited to development projects, operated by Russia’s Lukoil and Gazprom.

Karimov also sanctioned the construction of transit pipelines that carry gas from the Galkynysh group of fields in Turkmenistan across Uzbekistan for onward delivery to China, which reportedly became the country’s largest trade partner last year, overtaking Russia.

However, Uzbekneftegaz has kept its monopoly over the hydrocarbons sector, and is an obligatory partner in all ventures with foreign investors in Uzbekistan.

Three potential successors to Karimov — Prime Minister Shavkat Mirziyayev, Deputy Prime Minister Rustam Azimov and the head of the National Security Service, Rustam Inoyatov — are being considered in the Uzbek capital Tashkent, according to press reports.

Privatisation and opening of the energy sector to outsiders would be a challenge for Mirziyayev and Inoyatov because of their background and lack of free market experience, while Azimov may lean towards greater economic openness due to his finance and banking experience.

Karimov’s successor will likely be able to count on political and some economic support from China and Russia, given its role operating transit gas pipelines between its giant neighbours.

The US is also keen on maintaining ties with Tashkent because of Uzbekistan’s joint border with Afghanistan that needs to be kept sealed to prevent IS members infiltrating into Central Asia.

Whether such support extends to improvement of the lot of ordinary Uzbeks remains to be seen.