Transformation of Uzbekistan: How smooth transition in elite class is reshaping the country
Within the nations of the former USSR, serious transformations are accompanied by distress – active power struggles, revolutions, and outbreaks of separatism. However, today, a country that has been squandering its potential for a quarter of a century is transforming in an uncommon way for the CIS – rapidly yet without political upheaval.
The Communist party appointed Islam Karimov to run the Uzbek Soviet Socialist Republic back in 1990. After the Soviet Union collapsed, he retained power and strengthened his authority year after year, a common case for the post-Soviet republics in Central Asia. Karimov abandoned a state-planned economy, but he was otherwise cautious about making reforms and took an isolationist approach, which unquestionably had an adverse effect on the economy in the era of globalization.
After his death in 2016, a small ruling elite privately began to organize, resulting in the emergence of a new leader – former Prime Minister Shavkat Mirziyoyev. The subsequent presidential election, which Mirziyoyev won, only formalized his legitimacy. It seemed like a bad sign for those hoping for change, which was almost all of the 32 million citizens of Uzbekistan. And yet significant change is underway.
Awakening: but for how long?
The new leadership, despite emerging from the “Karimov elite,” seems to be doing everything the former president had opposed for years. A policy of relative openness and careful balance of exposure between the key centers of power, such as Russia, the USA, and China, has replaced isolationism. Mirziyoyev, who succeeded Karimov, did away with exit visas and he became one of the most well-travelled presidents himself. In the last couple of months alone, he has met with the leaders of Kazakhstan, Turkmenistan, China, Russia, and Pakistan, and attended the Arab-Islamic-American Summit as well as the Shanghai Cooperation Organization summit.
Until recently, Uzbekistan saw about zero foreign investment in its economy (0.1 percent of GDP, to be exact), but today it is seriously engaged in attracting foreign capital. A recent landmark example is the privatization of AO Urgench Exkavator, a large previously state-owned factory now owned by the Chinese. This was unthinkable in the previous era of economic isolation. The same goes for Uzbekistan’s agreement with Turkey on a $2 billion investment in agriculture.
Perhaps the biggest economic reform has been the deregulation of the foreign currency exchange market. Though Karimov’s Uzbekistan economy departed from Soviet policy, it maintained state control in one key area – the currency exchange rate. Under Mirziyoyev, the exchange rate of the national currency – the som – was left to be determined by the market. The reform immediately weakened its currency. However, it was still a crucial and beneficial long-term move for engaging in foreign trade and attracting investors.
There have also been reforms in taxation, the judicial system, and law enforcement agencies. Transformation is apparent almost everywhere. But we’ve seen good intentions remain intentions many times in many different countries. Could this end up being the case in Uzbekistan? Of course, it could. However, there are several important signs and trends that give Uzbekistan a chance for real, rather than declarative, transformation.
Tourism as an indicator
Tourism is a telling industry that shows the processes taking place across the country. Uzbekistan is fortunate in this area – it’s an exotic and cheap country with a fascinating culture, nature, and cuisine. Many well-preserved Muslim monuments serve as a great basis for “religious tourism.” Did the country live up to its potential as a tourist destination? Not fully. You could count on one hand the number of hotels that were able to comfortably accommodate foreigners. And paying with a card or exchanging money was a no-go.
The new leadership team has prioritized the development of tourism, and the country is actively filling the gaps in infrastructure (new hotels, bank branches, and means of transportation) and personnel (the new tourism university in Samarkand). Combined with economic reforms, first and foremost the deregulation of the foreign currency market, the first half of 2018 saw the flow of tourism increase by 91.6 percent compared to the same time last year, largely supported by the countries that were granted visa-free status.
Placing a bet on this industry, Uzbekistan is hoping for a multiplying effect and acting very sensibly. Tourism is a driver for other areas of business, such as restaurants, hospitality, and sightseeing, as well as internal logistics. Demand for construction materials, machinery, and utilities will grow to accommodate new construction. And the rise of these industries will create new jobs, stimulating consumption.
The new elite
Surprisingly, a new elite is taking form in parallel to the old one in a peaceful process. The old elite was very small and included only the former president’s family and associates. Today the elite is expanding, primarily as a result of business, the layer of society vitally invested in change.
Instead of struggling for the redistribution of resources, the new elite has taken the long route, searching out new opportunities and creating new niches to occupy without competing with the old elite – the Karimov era politicians and those closely connected to big state business.
The new business elite is gradually finding its way into the administration. In April this year, Dzhakhongir Artykhodzhaev, 42, the founder of the AKFA Group, was appointed as the hokim (mayor) of Tashkent – a business representative, rather than a government official. A German national, Karsten Heinz, was previously employed by the German Ministry of Education and Researchand assumed the role of Deputy Minister of Innovative Development in July. Such appointments, unthinkable in the past, speak volumes about the change in Uzbekistan.
So far the only area that hasn’t shifted significantly is democracy. For the first time ever Freedom House recorded a slight improvement in this area in 2017. But Uzbekistan is a country that needs to develop democratic procedures and independent media. Otherwise, the lack of these characteristics combined with inherited corruption and a lack of skilled professionals will delay its transformation process. Even so, for the first time in 25 years, Uzbekistan stands a good chance of changing. According to HSBC’s forecast (World in 2050 report) within the next 30 years, the country will rank among the 26 fastest growing economies in the world (meaning GDP growth will remain above 5% per year). If this scenario comes to pass, we will witness one of the most impressive transformations of a state and, perhaps, the most inspiring one among former Soviet Union countries.
The CSTO and the U.S. in Central Asia
The Collective Security Treaty Organisation (CSTO) is becoming more active amid growing instability in the wider Eurasian region. Imangali Tasmagambetov, who became CSTO secretary general at the beginning of this year, has met with the secretaries of the Security Councils of Russia, Belarus, Kyrgyzstan and Tajikistan, as well as with the heads of member states (except Russian President Vladimir Putin).
Tasmagambetov might have come to Yerevan as well, but they have recently tried to distance themselves from the CSTO. This year, Armenia refused to host the “Unbreakable Brotherhood” exercise and also decided not to take up the quota of deputy secretary general of the organisation.
Tasmagambetov is tasked with examining the difficult operational environment. On the western flank of the CSTO, there is a growing external threat from Ukraine and Poland, which could draw Belarus into a conflict between “the West” and Russia; in the southeast, there is the possibility of renewed conflict on the Kyrgyz-Tajik border and a growing Afghan factor. All this could have a negative impact on collective security.
On the European track, the urgent tasks of preventing and defending against aggression will first and foremost be handled by the regional grouping of troops from Belarus and Russia, which has been deployed since 2022.
As to the border problem between Kyrgyzstan and Tajikistan, the Russian expert Alexander Knyazev believes that the CSTO should focus on demilitarization of the “conflict” areas and take them under the control of the Organization’s monitoring group and peacekeeping contingent. It is likely that Tasmagambetov visited both republics with these proposals.
The Afghan problem is multifaceted and requires a unified approach among the CSTO member states to curb it.
In addition to exploring challenges and threats in CSTO areas of responsibility, Tasmagambetov began promoting the topic of military-economic cooperation among CSTO member states.
At a meeting with Russian Minister of Industry and Trade Denis Manturov, he suggested forming multilateral cooperation among military-industrial complex enterprises of CSTO countries to jointly develop and produce weapons and military equipment and establish service centres for their maintenance and repair.
Military and economic cooperation within the CSTO is an important component of integration, since it implies not only equipping the armed forces with the latest weapons, but also developing military engineering in all CSTO states and, importantly, maintaining common arms standards.
Tasmagambetov’s initiative will update the Concept for Standardisation of Armaments and Military Equipment within the CSTO, i.e. it will launch the work of defence enterprises under unified technical standards, ensuring compatibility of armaments on various parameters.
In addition, the CSTO itself is gradually being modernised. Ratification of the documents is underway, which will allow the military alliance to interact more effectively with the UN. Once ratification is complete, the CSTO will be able to form peacekeeping contingents and conduct operations under the auspices of the “coordinating state” with a UN mandate.
In February 2023, Russian Foreign Minister Sergey Lavrov announced that the CSTO was developing peacekeeping capabilities. He noted that “on Kazakhstan’s proposal we are making an addition” to the Agreement on CSTO Peacekeeping Activities, “because it says that CSTO peacekeeping forces are deployed by agreement and with the sanction of the UN Security Council. In Sergey Lavrov’s opinion, this norm is redundant and he believes that only an appeal by one of the member states to the Collective Security Council is sufficient.
Looking at the text of the Agreement on the Peacekeeping Activities, Article 3 notes that CSTO peacekeeping operations are authorised by the Collective Security Council (the CSTO body) if they take place on the territory of member states, as for example in Kazakhstan in January 2022, or by the UN Security Council if they take place on the territory of a non-member state of the CSTO.
The point of the forthcoming amendments to the CSTO documents, to which Lavrov referred, is that the CSTO could independently decide to conduct a peacekeeping operation on the territory of non-member states without consulting the UN.
It is not simply a question of stepping up CSTO activities. Increased instability in wider Eurasia points to the ineffectiveness of the universal global institutions for conflict prevention and resolution, which is the UN Security Council. At least in the form in which it currently exists. Therefore, the CSTO is now probably seen by the political elites of the member states as the basis for an autonomous regional security system.
It is not a question of a permanent break with international institutions such as the UN. The format of interaction with them will remain, and this is what the provision of a “coordinating state”, which will act under a UN mandate, is introduced for.
There is a risk that a peacekeeping operation will be vital, but the UN mandate will be blocked in the Security Council by some other countries. This is why the CSTO is planning to expand its mandate to carry out politico-military activities beyond the borders of its member states.
It is clear that it is not about distant “peacekeeping marches”. The CSTO is interested in the situation in neighbouring states where collective security may be threatened. If we talk about Central Asia, it is Afghanistan, from the territory of which militant groups can begin to carry out military and terrorist acts against CSTO member states.
The revival of the former Soviet-era cooperation between the defence establishments of the CSTO countries, which the Secretary General recently updated, may be aimed at creating a resource base for this autonomous security system in the region.
To prevent the development of military-economic and military-technical cooperation within the CSTO, the United States has initiated a discussion that Russia will at some point be unable to supply Central Asian countries with ammunition and weapons for border protection because of the ASW. In particular, US Assistant Secretary of State for South and Central Asian Affairs Donald Lu stated this. The former U.S. ambassador to Kyrgyzstan noted that there is a debate on where the countries of the region could obtain defence equipment if needed, citing the United States, Japan and South Korea as possible arms suppliers.
Washington clearly understands that the revival of the military industry within the CSTO increases the level of independence of the member states. To prevent this, the U.S. is planning to get some CSTO member states put on the “arms needle”, possibly initially free of charge.
Armenia’s ‘special position’ in the CSTO is probably a phenomenon of the same order, which, according to some experts, is evidence of the desire of the country’s political elite to leave the Organisation. It is clear that this desire is motivated by the West, which seeks to prevent the emergence of an autonomous security system in our region. But according to Yerevan expert Grigor Balasanyan, a country’s withdrawal from the CSTO would not be in the interests of the Armenian people.
So far, with the exception of Armenia, the other CSTO members have demonstrated their readiness for further evolution of the organization, which may be joined by other states. For example, Serbia and Afghanistan are currently observer countries at the CSTO Parliamentary Assembly. In addition, the SCO has a strong interest in developing cooperation with the CSTO, as these organisations have many overlapping lines and areas of responsibility.
Competition of U.S.-China in Central Asia & its Implications for Pakistan
US-China rivalry will affect various states, which have good relations with both (China and U.S). After the disintegration of the Soviet Union, China and the U.S. have been ambitious in strategically influencing the Central Asia region. Belt and Road Initiative (BRI) is a part of China’s grand strategy in Central Asia, which has intensified the importance of this region. Further, China’s influence in this region has increased through regional organizations such as Shanghai Cooperation Organization (SCO). Pakistan is an important pivot of China’s regional strategy. China-Pakistan Economic Corridor (CPEC) is the flagship project of China’s BRI. However, US’s grand strategies are phase 1.0 policy to 2.0 policy and C5+1 (Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Turkmenistan with the United States of America) is also part of the US’s grand strategy in Central Asia.
China’s connection with Central Asia can be traced to an ancient times, but established during the Soviet. In 1992, the Ashkhabad summit intensified China’s role in this region.
China joins this region through Xinjiang, an autonomous region with a majority Muslim population. It also falls into the Central Asian region. Xinjiang shares its border with three Central Asian states (Tajikistan, Kyrgyzstan, and Kazakhstan).
The collapse of the Soviet Union curtailed security threats to China’s national security from Central Asia. However, in 1991, the victory of the US in the Gulf War and the emergence of the New World Order was an alarming situation for China. This situation pressed China to discover a role, particularly in regional affairs in newly born states of Central Asia.
In the New Great Game, China has comprehensively increased its national strength politically and economically and has influenced this region culturally. China has utilized classical geopolitical concepts, reviving the Old Silk Road, and divide and rule strategy. Silk Road is China’s identity, which connects Asia and the West by the terminus in Xinjiang.
In 2002, Former Secretary of the State Colin Powel once remarked in House Foreign Affairs Committee that we would enhance our presence and interest in Central Asia that we had not dreamed of before.
US grand strategy falls into two phases towards Central Asia. 1.0 Phase means to protect Soviet Weapons of Mass Destruction (WMD), protect the sovereignty of newly born states from Russian aggression, to break Russian monopoly over transit routes and gas pipelines. In this phase, the US should have paid more attention to its geopolitical approach towards Central Asia and had fewer priorities in this region.
11 September 2001 brought huge changes in US strategy towards Central Asia, and it introduced the 2.0 phase, which means that the agenda of the US towards Central Asia is political and economical. However, the military prevailed over this policy due to US’s military presence in Afghanistan, conducting an operation against terrorism. The US has utilized this policy for military cooperation in this region.
Strategic competition between U.S. and China will directly impact Pakistan’s national security at the broader level, such as economy, military and politics.
At the political level, it impacts Pakistan’s relations with China, Iran, Russia, and the Gulf States. At the military level, Pakistan’s geostrategic location enhances Pakistan’s importance. Pakistan has been an important ally of the US against the war on terror and played its role as a frontline state against this war. At the economic level, China-Pakistan Economic Corridor (CPEC) is a game changer for Pakistan’s economy. It will create opportunities for the economy of Pakistan.
The bigger challenge for Pakistan is how it can maintain its relations with China and the US. Pakistan needs help to maintain good relations with both (US and China). If we see a historical perspective, in the 1970s, Pakistan built a bridge between US and China. Strategic affairs experts strongly believe that Pakistan can defuse the tension between the US and China.
Pakistan has few policy options through which Pakistan can maintain its good relations with both countries.
China is Pakistan’s strategic partner, which addresses Pakistan’s regional strategic concerns in all fields, such as defense, economy, politics and security sectors. CPEC has formed strategic interdependence. Pakistan cannot afford to be the part of the US’s grand strategy to contain China.
Good Pak-US relations are required for regional security. These are guarantors to bring peace in Afghanistan and can counter terrorism and extremism in this region. It is difficult for Pakistan to uncouple from the US. However, the US has a great influence on IMF and World Bank. Pakistan is in negotiation with IMF to get a loan. The US can assist Pakistan with IMF. However, Pakistan has serious concerns over Indo-US growing strategic relations, creating an imbalance in the South Asian region. India is utilizing Indo-US strategic relations as a tool against Pakistan, which concerns Pakistan’s national security. However, good Pak-US relations depend on the US that how it wants to conduct its relations with India and China.
The last option for Pakistan is that it should only place some eggs in one’s basket. Pakistan needs diversifying approach towards all major powers. Although it would be difficult for Pakistan, Pakistan can maintain its relation through an issue-based relationship. It will not affect Pakistan’s relations with anyone rather than choosing one side. This option would protect Pakistan’s regional strategic interests and address Pakistan’s security concerns.
The Strategic Importance of Central Asia and India’s influence in the Region
Long-standing historical, cultural, political, and economic ties between India and Central Asia have evolved into a solid, experienced, and transformative connection over time. In light of the COVID-19 epidemic and the shifting global order, India’s proximity to and growing convergence on concerns with the five Central Asian nations of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan has led to increased collaboration on these issues. The two sides have simultaneously intensified their discussions and cooperation on issues like trade and connectivity, economic development, energy security, regional concerns of shared interest, and the shared geopolitical worries of both sides regarding new challenges in Afghanistan.
Trade significantly impacts India’s relationships and influence in the Central Asian Region. India’s trade with Central Asian countries helps to foster economic ties and strengthens political and cultural relations. India’s imports from the area, such as oil, gas, and minerals, provide the country with access to critical resources. In contrast, its exports, such as textiles and agricultural products, give the region market access.
Geostrategic Importance of the Central Asian Region
Central Asia is strategically important due to the location at the crossroads of Asia and Europe, making it a critical link between the two continents. The Region also has significant energy reserves, including oil, natural gas, and coal, making it a substantial energy supplier to Europe and Asia. Central Asia is also home to several major transportation and communication networks, including the historic Silk Road, connecting the Region to the rest of the world and making it a hub for trade and commerce. The Region’s proximity to several regional and global powers, such as Russia, China, and India, further highlights its strategic importance.
Central Asia is strategically located in the middle of both Asia and Eurasia. It connects Asia and Europe as a bridge between Eastern and Western nations. Central Asia’s importance is acknowledged due to its geopolitical, geoeconomic, and geostrategic position. The Central Asian states have historically been a centre of trade, rivalry, and warfare due to geography. It now serves as a bridge connecting North and South and East and West. In addition to its strategic location, the Central Asian Region is also seen by outsiders as the new global geopolitical and economic battleground. Over 2000 years of conflict have been etched into its history as the past great empires struggled to control the Silk Route, the vital trade route between Europe and Asia.
India’s Policy for growing its potential in the Central Asian Region
India’s trade with Central Asia also has the potential to help balance China’s growing economic influence in the Region. India has been actively pursuing a policy of economic engagement with Central Asian countries and working to increase investment, trade and energy ties with these countries. Several factors, including energy security, access to raw materials, and regional economic integration, have driven India’s engagement with the Region. India has made efforts to increase trade and investment flows with the Central Asian countries, which includes establishing trade agreements and participating in regional economic forums. Regional politics, competition with other major powers such as China, and regional security have also influenced the trade relationship. By engaging in trade with Central Asia, India can tap into the Region’s resources, enhance its economic footprint, and contribute to regional stability and prosperity. Drug trafficking, fundamentalism, and religious extremism threaten the strength of these communities and the wider area. Water, security, environmental, and immigration issues have all become urgent. The Region is threatened by more recent acts of narcoterrorism coming from Afghanistan. Russia, China, the U.S., Turkey, Iran, Europe, the E.U., Japan, Pakistan, India, and Afghanistan are all claimed to have significant economic and security interests in the Region, making the area a “theatre of the great game” where this and other conflicts are being played out. A significant obstacle to fostering and growing ties is that India still needs to have a shared land border with any of these states. Direct travel from Pakistan to either Afghanistan or Central Asia is prohibited. Thus, China is the transit country for time- and money-consuming land trade. India has made significant headway towards enhancing connectivity by signing a security cooperation agreement for the refurbishment of Chabahar port, the creation of the International North-South Transport Corridor (INSTC), and accession to the Ashgabat Agreement. This gap is expected to be closed by India’s involvement in both the Eurasian Economic Union (EEU) and the Shanghai Cooperation Organization (SCO).
The India-Central Asia Summit was presided over by Indian Prime Minister Narendra Modi in January 2022 in the presence of all five Central Asian heads of state. The online meeting showed India’s dedication to its “Extended Neighborhood Policy”, which mandates that New Delhi diversify its geopolitical allies and diplomatic objectives, as well as its readiness to cooperate with its Central Asian partners on several fronts.
Overall, trade helps to position India as an essential player in the Central Asian Region and contributes to its regional and global significance. More interaction is anticipated to enhance regional economic growth and mutual security. Economically, Central Asia offers India’s industry a “near abroad” market, overland links to the Middle East’s and Russia’s rich resources, and considerable energy supplies at comparatively close ranges. Suez and the Mediterranean Sea are both shorter than the INSTC corridor route. This Region is projected to become more significant as competition with China for resources increases.
The increased trade can also help India to reduce its dependence on other areas for energy supplies and increase its bargaining power in the global market. It aimed at improving the flow of goods, services and investment between the two regions and also to tapping into the vast energy resources of Central Asia. Additionally, more significant business can lead to infrastructure development and job creation, thereby improving the economic conditions in both regions. However, it also faces challenges such as competition from other countries and the need for a well-developed transport and communication network in the area.
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