Key Reforms

Key Reforms

In 2016, Shavkat Mirziyoyev was elected President of Uzbekistan after 26 years of authoritarian rule. The former Soviet Republic was ready for a change. President Mirziyoyev seized that opportunity and immediately began to lay out a new vision for Uzbekistan.

His vision would ultimately open the country to greater democratic freedoms, address long-standing civil and human rights issues head on, and revitalize the economy through development of infrastructure and reform of policies, programs and systems.

The “Strategy for Action 2017 / 2021” President Mirziyoyev officially announced in February of 2017, is a five-year plan. It rapidly modernized Uzbekistan and improved the lives of 33 million people.

Two other foundational documents, the “Program to Reform the Judicial and Legal System”, and “Concept of Administrative Reform”, have fundamentally transformed the relationship of the government to its people.

Taken together, Mirziyoyev’s program of reform focuses on six key areas that are relevant to “ESG” reporting on environmental, social and governance issues.

Six areas of reform

1

Civil Society/Human Rights Reforms

Freedom is on the march in Uzbekistan. The new mindset that has been introduced by President Mirziyoyev creates a more civil society that supports human rights chiefly among other ESG issues. The government is transforming into a protector and guarantor of rights, rather than serving as source of oppression.

The President and Parliament are ushering in freedom of speech and of the press, gender equity, and religious tolerance, while banishing child labor, forced labor, coercion, torture and human trafficking, among other abuses.

Among the highest priorities in President Mirziyoyev’s plan is labor rights reform, which has achieved astounding success by eliminating systemic forced labour and child labour in the cotton harvest in less than 4 years. On Jan. 29, 2021, the International Labour Organization’s report, 2020 Third-party Monitoring of Child Labour and Forced Labour During the Cotton Harvest in Uzbekistan, showed that forced labor had been reduced by 33 percent from 2019, to less than 4 percent. The report was based on more than 9,000 unaccompanied and unannounced interviews with a representative sample of the country’s 1.8 million cotton pickers.

2

Governance and Judicial Reforms

In order to achieve these new freedoms, Uzbekistan took radical steps to change the way it operated. Greater competition was introduced in the country’s elections and representation. A redistribution of power shifted the balance toward Parliament and away from the President. Governors and Mayors began to be directly elected by the people, rather than appointed by the President. Not only were the people given a greater voice than they had ever had before, but their elected officials began listening tours to encourage participation in civic life. Representatives went out into their communities to see and meet people where they live, to hear their concerns.

From 2016 to 2020, hundreds of new NGOs were allowed into the country along with independent and international media. Restrictions on social media were ifted and a booming public conversation was taking place as citizens shared their public faces and voices. All of these major changes were institutionalized through codification and simplification of laws. They were made permanent by improving governance structures, increasing judicial transparency, and bolstering enforcement capabilities to punish violations appropriately.

3

Agricultural Reforms

While Uzbekistan is a major producer of minerals and natural gas, agriculture is one of the country’s main exports, including the #1 cash crop cotton. For years, the government controlled the means of production in the Soviet style, setting quotas, prices and wages, distributing land, water, seed, fertilizer, controlling all freight transportation and managing all exportation.

Under Mirziyoyev, a privatization plan was introduced that created “cotton clusters” run by investors and business who took over some of the government’s former responsibilities. The clusters now compete to negotiate contracts with farmers. This gives farmers more choices on what crops they want to plant and grow, what costs they want to pay, and what prices they want to charge for their harvest. Workers are no longer forced or coerced into the fields and quotas have been eliminated. Competition has begun to increase productivity along with massive investments in farm machinery, diversification of crops, and the development of modern agricultural techniques.

4

Business and Economic Reforms

Setting up these conditions for change is no small task. But, the program of reform could not be successful without a burgeoning economy that allows people to gain their own financial freedom. To emerge from stagnation of the previous decades brought on by isolation on the world stage, Uzbekistan began an outreach effort that opened new avenues for commerce and investment. This process began with loosening export controls, removing the requirement for export through the government, and increasing the share of export revenues in foreign currency to the government. A unified exchange rate and planned permission for private foreign exchange services brought more consistency and assurances to investors. Tax reform, with a simplification of the tax code and a reduction in taxes, made it easier for businesses to compete globally. Further, a greater emphasis was placed on creating jobs and training especially for young workers who would make up the future base of the economy. All of this was quickly noticed by the international investment community, and ignited an influx of interest. The marquee change, however, was privatization of state-owned enterprises to remove the government as the overarching central figure and serve a more appropriate oversight and enforcement role.

5

Environmental Reform

Environmental stewardship has also risen to the top of the reform agenda. Uzbekistan is a country that has already experienced the results of a changing climate. The Aral Sea, once the fourth largest lake on earth, has shrunk to just 10 percent of its original size, severely affecting the entire region. Soviet-era mega projects further exacerbated the problem by diverting rivers that fed the lake in order to irrigate the desert. The change has been so dramatic, the eastern basin of the lake is now effectively dry and known as the Aralkun Desert. To manage this challenge, Uzbekistan is encouraging global action while investing in funds to improve technology, develop “green” solutions, and innovate on irrigation, water use, agriculture and food production.

6

Infrastructure Reform

Along those same lines, the country’s infrastructure can not only be a catalyst for change, but a physical representation of that change. In recent years, the government has encouraged private investment in renewable energies that can decrease dependency on fossil fuels. Solar and wind farms are growing in number and magnitude. As a double land-locked country, Uzbekistan is particularly dependent on its transportation system to bring goods to market. As international trade increases, the need for new roads, bridges, tunnels, and railways has burgeoned. Massive construction and development projects facilitate transit, while creating jobs. Investments such as these in physical infrastructures benefit all society. Re-building the country for the 21st century will lay a literal and figurative foundation for long-term economic revitalization.

Timeline of Reform

December 2016
1
February 2017
2
May 2017
3
October 2017
4
May 2018
5
September 2018
6
April 2019
7
October 2019
8
December 2019
9
February 2020
10
March 2020
11
October 2020
12
October 2020
13
April 2021
14

President Mirziyoyev Wins National Election

Shavkat Mirziyoyev defeats three opposing candidates to win the popular vote for President of the Republic of Uzbekistan on a campaign focused largely on reform.

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President Announces Landmark “Strategy For Action 2017-2021”

The aim of the Action Strategy focuses on key environmental, social and governance issues for the modernization and liberalization of all spheres of life.

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UN High Commissioner for Human Rights Visits Tashkent

This marks the first ever visit to Uzbekistan by any of the six UN High Commissioners for Human Rights since the Office of the High Commissioner was established in 1993.

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Presidential Decree Protects Rights of Farmers

One of the first significant reform regulations introduced measures for converting individual farms into multiprofile farms, an important step in the privatization effort.

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Uzbekistan Applies for Membership in the World Trade Organization

After a 15-year hiatus, Uzbekistan took steps to renew its membership in the WTO.

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EBRD Adopts New Country Strategy for Uzbekistan

Uzbek re-engages with the European Bank for Reconstruction and Development to increase competitiveness, strengthen the private sector, promote green energy, and support international cooperation.

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ILO Reports ‘Historic Progress’ on Forced Labour in 2018 Uzbek Cotton Fields

Independent, 3rd party monitoring during the 2018 Uzbek cotton harvest included more than 11,000 unaccompanied and unannounced interviews with a representative sample of ~2.5M cotton pickers.

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World Bank Ranks Uzbekistan in Top 20 Most Improved Economies

The 17th annual report by the World Bank Group, “Doing Business: 2020,” showed that Uzbekistan was among the 20 most improved economies globally largely due to its reform efforts.

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Country of the Year: Which nation improved the most in 2019?

One of the world’s leading publications recognized the superlative success of Uzbekistan’s reform program.
 

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ILO Reports Systemic Forced Labor ‘Did Not Occur’ in 2019 Uzbek Cotton Harvest

The International Labour Organization reported that systemic forced labor was eradicated in the Uzbek 2019 cotton harvest, showing a 40% reduction from 2018, with isolated cases standing at just 5.9%.

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US Removes Uzbek Cotton From Banned List

The U.S. Department of Labor determined that the use of forced child labor in the cotton harvest in Uzbekistan was limited to isolated incidents and removed the product from its banned list.

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Uzbekistan is voted into the United Nations Human Rights Council

The HRC is an inter-governmental body within the UN made up of 47 States responsible for the promotion and protection of human rights around the globe. Members of the Council are elected for a three-year term by a majority vote of delegates to the General Assembly. Uzbekistan received the largest number of votes from member States and was elected to the HRC for a three-year period, which began on January 1, 2021.

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USTR closes the GSP worker rights eligibility review of Uzbekistan opened in 2008

The ILO monitoring program found no systematic use of child labor in the cotton harvest and a continued decline in forced adult labor for the fifth year in a row. The government has criminalized the use of forced adult labor, abolished cotton production quotas, and significantly raised the wage rate for cotton pickers. The US will continue to engage with the Government of Uzbekistan to promote further progress in the elimination of forced labor in Uzbekistan’s cotton harvest.

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Uzbekistan joins EU’s GSP+ arrangement - Trade - European Commission

The EU has accepted Uzbekistan as the 9th beneficiary country of the special incentive arrangement for sustainable development and good governance (GSP+) under the unilateral Generalised Scheme of Preferences (GSP). The EU will start applying preferential tariffs for products imported from Uzbekistan under this arrangement starting on April 10, 2021. The decision reflects the recognition of reforms undertaken by the government, in particular to improve the business climate, the judicial system, security services, labor conditions, and administrative accountability and efficiency. It also testifies to consistent positive development in the socio-economic and labor sphere.

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Journey of Change

This material is distributed by Xenophon Strategies, Inc., on behalf of the Export Promotion Agency for the Republic of Uzbekistan. Additional information is available at the Department of Justice, Washington, DC. © 2020 Xenophon Strategies, Inc. No part of this web content may be used without express, written permission.

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