February 2007
COUNTRY
Formal Name: Republic of Uzbekistan (Ozbekiston Respublikasi).
Short Form: Uzbekistan.
Term for Citizen(s): Uzbekistani(s).
Capital: Tashkent.
Other Major Cities: Namangan, Samarqand (Samarkand), Andijon (Andizhan), Bukhoro (Bukhara, Buxoro), and Nukus (in order of population size).
Independence: Uzbekistan celebrates September 1, 1991, as its date of independence. That is the date on which independence from the Soviet Union was declared.
Public Holidays: Uzbekistan celebrates New Year’s (January 1), the Feast of the Sacrifice (February 1), Women’s Day (March 8), Navruz (Uzbek New Year, March 21), Victory Day (May 9), Independence Day (September 1), the end of Ramadan (date determined by the Islamic calendar), and Constitution Day (December 10).
Flag: The flag is divided into three equal horizontal stripes of blue (top),
white, and green, which are separated by thin red stripes. On the left side
of the blue stripe is a crescent moon with 12 five-pointed stars, all in white.
The blue represents water; the white, peace; the green, nature; and the red,
life. The stars represent either the 12 constellations of the zodiac or the 12
provinces of Uzbekistan.
HISTORICAL BACKGROUND
In the first millennium B.C., Iranian nomads established irrigation systems along the rivers of Central Asia and built towns at Bukhoro and Samarqand. These places became extremely wealthy points of transit on what became known as the Silk Road between China and Europe. In the seventh century A.D., the Soghdian Iranians, who profited most visibly from this trade, saw their province of Mawarannahr overwhelmed by Arabs, who spread Islam throughout the region. Under the Arab Abbasid Caliphate, the eighth and ninth centuries were a golden age of learning and culture in Mawarannahr. As Turks began entering the region from the north, they established new states. After a succession of states dominated the region, in the twelfth century Mawarannahr was united in a single state with Iran and the region of Khorazm, south of the Aral Sea. In the early thirteenth century, that state then was invaded by Mongols led by Genghis Khan, under whose successors Turkish replaced Iranian as the dominant culture of the region. Under Timur (Tamerlane), the last great Mongolian nomadic leader (ruled 1370–1405), Mawarannahr began its last cultural flowering, centered in Samarqand. After Timur the state began to split, and by 1510 Uzbek tribes had conquered all of Central Asia.
In the sixteenth century, the Uzbeks established two strong rival khanates, Bukhoro and Khorazm. In this period, the Silk Road cities began to decline as ocean trade flourished. The khanates were isolated by wars with Iran and weakened by attacks from northern nomads. In the early nineteenth century, three Uzbek khanates—Bukhoro, Khiva, and Quqon (Kokand)—had a brief period of recovery. However, in the mid-nineteenth century Russia, attracted to the region’s commercial potential and especially to its cotton, began the full military conquest of Central Asia. By 1876 Russia had incorporated all three khanates (hence all of present-day Uzbekistan) into its empire, granting the khanates limited autonomy. In the second half of the nineteenth century, the Russian population of Uzbekistan grew and some industrialization occurred.
At the beginning of the twentieth century, the Jadadist movement of educated Central Asians, centered in present-day Uzbekistan, began to advocate overthrowing Russian rule. In 1916 violent opposition broke out in Uzbekistan and elsewhere, in response to the conscription of Central Asians into the Russian army fighting World War I. When the tsar was overthrown in 1917, Jadadists established a short-lived autonomous state at Quqon. After the Bolshevik Party gained power in Moscow, the Jadadists split between supporters of Russian communism and supporters of a widespread uprising that became known as the Basmachi Rebellion. As that revolt was being crushed in the early 1920s, local communist leaders such as Faizulla Khojayev gained power in Uzbekistan. In 1924 the Soviet Union established the Uzbek Soviet Socialist Republic, which included present-day Tajikistan and Uzbekistan. Tajikistan became a separate republic in 1929. In the late 1920s and early 1930s, large-scale agricultural collectivization resulted in widespread famine in Central Asia. In the late 1930s, Khojayev and the entire leadership of the Uzbek Republic were purged and executed by Soviet leader Joseph V. Stalin (in power 1927–53) and replaced by Russian officials. The Russification of political and economic life in Uzbekistan that began in the 1930s continued through the 1970s. During World War II, Stalin exiled entire national groups from the Caucasus and the Crimea to Uzbekistan to prevent “subversive” activity against the war effort.
Moscow’s control over Uzbekistan weakened in the 1970s as Uzbek party leader Sharaf Rashidov brought many cronies and relatives into positions of power. In the mid-1980s, Moscow attempted to regain control by again purging the entire Uzbek party leadership. However, this move increased Uzbek nationalism, which had long resented Soviet policies such as the imposition of cotton monoculture and the suppression of Islamic traditions. In the late 1980s, the liberalized atmosphere of the Soviet Union under Mikhail S. Gorbachev (in power 1985–91) fostered political opposition groups and open (albeit limited) opposition to Soviet policy in Uzbekistan. In 1989 a series of violent ethnic clashes involving Uzbeks brought the appointment of ethnic Uzbek outsider Islam Karimov as Communist Party chief. When the Supreme Soviet of Uzbekistan reluctantly approved independence from the Soviet Union in 1991, Karimov became president of the Republic of Uzbekistan.
In 1992 Uzbekistan adopted a new constitution, but the main opposition party, Birlik, was banned, and a pattern of media suppression began. In 1995 a national referendum extended Karimov’s term of office from 1997 to 2000. A series of violent incidents in eastern Uzbekistan in 1998 and 1999 intensified government activity against Islamic extremist groups, other forms of opposition, and minorities. In 2000 Karimov was reelected overwhelmingly in an election whose procedures received international criticism. Later that year, Uzbekistan began laying mines along the Tajikistan border, creating a serious new regional issue and intensifying Uzbekistan’s image as a regional hegemon. In the early 2000s, tensions also developed with neighboring states Kyrgyzstan and Turkmenistan. Following the terrorist attacks of September 11, 2001, Uzbekistan provided logistical support to the U.S. antiterrorist campaign in Afghanistan. This move continued a rapprochement that began in the late 1990s. However, in 2004 the United States cut non-humanitarian aid to Uzbekistan, citing recurrent human rights violations. In mid-2005 brutal suppression of riots in Andijon brought severe criticism from the United States and the European Union (EU). Under pressure from the Karimov regime, the United States vacated its air base at Karshi-Khanabad, and sanctions by the EU and the United States followed. In the same period, a mutual defense treaty substantially enhanced relations between Russia and Uzbekistan. Tension with Kyrgyzstan increased in 2006 when Uzbekistan demanded extradition of hundreds of refugees who had fled from Andijon into Kyrgyzstan after the riots. A series of border incidents also inflamed tensions with neighboring Tajikistan. In 2006 Karimov continued arbitrary dismissals and shifts of subordinates in the government, including one deputy prime minister.
GEOGRAPHY
Location: Uzbekistan is located in Central Asia, east of the Caspian
Sea, directly south of Kazakhstan, north of Turkmenistan, and on the
western borders of Tajikistan and Kyrgyzstan.
Size: The area of Uzbekistan is 447,400 square kilometers, of which
425,400 square kilometers is land surface.
Land Boundaries: Uzbekistan has land boundaries with the following countries: Kazakhstan, 2,203 kilometers; Turkmenistan, 1,621 kilometers; Tajikistan, 1,161 kilometers; Kyrgyzstan, 1,099 kilometers; and Afghanistan, 137 kilometers.
Length of Coastline: None. Uzbekistan is landlocked.
Topography: Uzbekistan’s topography is diverse. Almost 80 percent of the surface is desert, dominated by the Qizilqum (Kyzyl Kum) Desert of the north-central part of the country. The mountains of the far southeast and far northeast, which are foothills of the Tian Shan Range, reach 4,500 meters in elevation. In the northeast, the Fergana Valley, which is the country’s center of population, agriculture, and industry, is 200 to 500 meters above sea level, surrounded by mountain ranges, and intersected by the Syr Darya River. The far west is dominated by the Turan Lowland, the Amu Darya valley, and the southern half of the shrinking Aral Sea.
Principal Rivers: Uzbekistan is not endowed with substantial river systems; the most important rivers are the Amu Darya, the Syr Darya, and the Zarafshon, all of which flow from other countries across a small expanse of Uzbekistan. Other rivers are the Akhangaran and the Chirchik, both in the northeast.
Climate: The climate of landlocked Uzbekistan is continental, with hot summers and cool winters. Summer temperatures reach 40°C, averaging 32°C. Winter temperatures reach –38°C, averaging –23°C. Rainfall averages vary between 100 millimeters per year in the northwest and 800 millimeters per year in the Tashkent region. Precipitation falls mainly in the winter and spring.
Natural Resources: Uzbekistan is self-sufficient in natural gas and oil in the near term. Gold is the most plentiful mineral having export value. Significant amounts of copper, lead, silver, tungsten, uranium, and zinc also are present. Nearly all of Uzbekistan’s arable land requires intensive irrigation. Water, Uzbekistan’s most crucial resource, comes mainly from rivers whose sources are in other countries, requiring bilateral agreements with source countries as well as with other user countries downstream. Uzbekistan’s chronically poor water and irrigation management has resulted in severe environmental crises and regional tensions.
Land Use: Some 10.5 percent of Uzbekistan’s land, most of it in the Fergana Valley, is classified as arable, and 0.8 percent is planted to permanent crops. About 0.4 percent is forested. Most of the rest is desert.
Environmental Factors: The Aral Sea, half of which is in Uzbekistan, has been severely desiccated by overuse of its tributary rivers, a situation recognized as one of the world's worst environmental disasters. Enormous overdrafts on these rivers are caused by the extremely low efficiency of irrigation systems in Turkmenistan and Uzbekistan. Without the moderating influence of the sea, winters became significantly colder and summers hotter. Vozrozhdeniye Island in the Aral Sea, now connected to the shore by shrinkage of the sea, contains the lethal remains of a Soviet anthrax weapons testing laboratory, most of which lies in Uzbekistani territory. Drinking water quality also is a major problem, especially in the western province of Karakalpakstan, where water is not properly distributed, and sources are exposed to various types of surface and underground contamination. Inadequate sewage disposal adds to Uzbekistan's water pollution problem: only 40 percent of the population is served by sewerage systems. Some 15,000 hectares of pastureland are lost to salt and dust annually. Soil contamination is highest in agricultural areas that have been subjected to annual overdoses of fertilizers and pesticides. Uncontrolled timber cutting has endangered the few remaining stands of forest.
The main environmental protection agency, the State Committee for Nature Protection, nominally has responsibility for a wide variety of regulatory functions. However, like most of Uzbekistan’s ministries, it is outside the small decision-making circle of President Karimov.
Time Zone: Uzbekistan’s time zone is five hours ahead of Greenwich Mean Time.
SOCIETY
Population: In 2006 Uzbekistan’s population was estimated at 27.3 million, the largest of the five former Soviet republics in Central Asia. The annual growth rate was 1.67 percent, and overall population density was 64.2 people per square kilometer. Population density varies greatly, as the Fergana Valley includes most of Uzbekistan’s population centers. In the early 2000s, the greatest population growth has occurred in rural areas, and emigration has occurred mainly from urban areas. In 2006 some 63 percent of the population was classified as rural. In 2006 the net migration rate was –1.5 people per 1,000 population.
Demography: In 2006 some 32.9 percent of the population was 14 years of age or younger, and 4.8 percent of the population was 65 years of age or older. The sex ratio was 0.98 males per female. In 2006 the birthrate was estimated at 26.4 births per 1,000 population, and the death rate at 7.84 per 1,000 population. Infant mortality was 70 deaths per 1,000 live births. Overall life expectancy was 64.6 years: 61.2 years for males and 68.1 years for females. The fertility rate was 2.91 children per woman.
Ethnic Groups: Before the Soviet era, Uzbeks identified themselves by clan and by khanate rather than by nationality, which became an ethnic identifier only in 1924 with the union of the khanates in the Uzbek Soviet Socialist Republic. Despite their different languages, official differentiation of Tajiks and Uzbeks occurred only when the Republic of Tajikistan was established five years later. According to the 1998 census, 76 percent of the population was Uzbek, 6 percent Russian, 4.8 percent Tajik, 4 percent Kazakh, 1.6 percent Tatar, and 1 percent Kyrgyz. However, a substantial portion of the officially Uzbek population, estimated as high as 40 percent, is of Tajik ancestry, and Tajiks predominate in the urban centers of Bukhoro and Samarqand. Substantial numbers of Germans and Ukrainians left in a mass emigration during the 1990s. The Karakalpaks, about 475,000 of whom inhabit western Uzbekistan, are a Turkic people of unclear ethnic origin who now are included with the Uzbeks in official ethnic statistics.
Languages: Some 74.3 percent of the population speaks Uzbek, 14.2 percent Russian, and 4.4 percent Tajik. Speakers of Karakalpak, a Turkic language related to Kazakh and Tatar, are included under “Uzbek” in statistics; the number of Karakalpak speakers is not known because many ethnic Karakalpaks use Uzbek dialects. Speakers of Russian, which is officially designated as the “language of interethnic communication,” live mainly in the large cities. Tajik is the most common language in Bukhoro and Samarqand. There are no language requirements for citizenship.
Religion: About 88 percent of the population is Muslim and 9 percent Russian Orthodox. Most Uzbek Muslims practice a type of mystic Sufism that is Sunni, introspective, and distinctly nonpolitical. Uzbekistan also has between 15,000 and 20,000 Jews and congregations of Baptists, Jehovah’s Witnesses, Korean Protestants, and Seventh-Day Adventists.
Education and Literacy: Eleven years of primary and secondary education are obligatory, starting at age seven. This requirement includes four years of primary school and two cycles of secondary school, lasting five and two years, respectively. The rate of attendance in those grades is high, although the figure is significantly lower in rural areas than in urban centers. Preschool registration has decreased significantly since 1991. The official literacy rate is 99 percent. However, in the post-Soviet era educational standards have fallen. Funding and training have not been sufficient to effectively educate the expanding younger cohorts of the population. Between 1992 and 2004, government spending on education dropped from 12 percent to 6.3 percent of gross domestic product. In 2006 education’s share of the budget increased to 8.1 percent. Lack of budgetary support has been more noticeable at the primary and secondary levels, as the government has continued to subsidize university students. However, bribes often are necessary to ensure success and advancement in universities. Between 1992 and 2001, university attendance dropped from 19 percent of the college-age population to 6.4 percent. The three largest of Uzbekistan’s 63 institutions of higher learning are in Nukus, Samarqand, and Tashkent. All are state-funded. Private schools have been forbidden since the establishment of Islamic fundamentalist (Wahhabi) schools in the early 1990s brought a government crackdown. However, in 1999 the government-supported Taskhent Islamic University was founded for the teaching of Islam.
Health: In the post-Soviet era, the quality of Uzbekistan’s health care has declined. Between 1992 and 2003, spending on health care and the ratio of hospital beds to population both decreased by nearly 50 percent, and Russian emigration in that decade deprived the health system of many practitioners. In 2004 Uzbekistan had 53 hospital beds per 10,000 population. Basic medical supplies such as disposable needles, anesthetics, and antibiotics are in very short supply. Although all citizens nominally are entitled to free health care, in the post-Soviet era bribery has become a common way to bypass the slow and limited service of the state system. In the early 2000s, policy has focused on improving primary health care facilities and cutting the cost of inpatient facilities. The state budget for 2006 allotted 11.1 percent to health expenditures, compared with 10.9 percent in 2005.
Among the most common diseases are those associated with polluted drinking water: typhoid, hepatitis, dysentery, cholera, and various types of cancer. The chief causes of death are, in order of frequency, disorders of the cardiovascular, respiratory, and digestive systems and infectious and parasitic diseases. The reported incidence of human immunodeficiency virus (HIV) has increased sharply beginning in 2002, partly because of a new government reporting policy and partly because of increased drug abuse. In 2005 about 5,600 cases of HIV were known, after 2,000 new cases appeared in 2004. At least two-thirds of cases have been linked with drug abuse. The geographic centers of the HIV cases are Tashkent and Surkhandarya Province on the Afghanistan border. Expanding drug trafficking through Uzbekistan has led to increased drug addiction in urban areas. Some HIV treatment and counseling centers exist.
Welfare: In 2000 Uzbekistan reformed its state-funded pension system, which had suffered from ineffective funds collection and an uneven funding burden that motivated enterprises to avoid support payments. The new system reallocated payment responsibility and collection authority, but it failed to stipulate funding amounts or to stimulate public participation. The system covers all employed persons; the government subsidizes shortfalls and pays substantial amounts in pensions to special categories. Pension eligibility begins at age 60 for men and age 55 for women, provided they have worked 25 and 20 years, respectively. The pension program also funds payments for work injury, maternity, and disability. In 2005 the standard pension amount was raised to US$15.50 per month. Unemployment benefits are payable for 26 weeks at 50 percent of the recipient’s average earnings. Social support payments often are late, and high inflation decreases their value. In 2004 an estimated 28 percent of the population was living below the poverty line.
ECONOMY
Overview: Uzbekistan suffered less economic shock from the dissolution of the Soviet Union than did most other former Soviet republics because it produces large amounts of cotton and gold, commodities of value on world markets, and because the government stressed development of import-replacement industries in the post-Soviet era. In the 1990s, oil and gas production increased significantly, providing limited exports of natural gas and eliminating the Soviet-era need to import oil. In the same period, the expansion of grain cultivation reduced food imports. Although cotton remains the most valuable agricultural product, cotton output has declined since the mid-1990s. Uzbekistan’s economy has retained many elements of Soviet economic planning. Economic policy remains under state control; the government has strictly limited foreign direct investment, and little privatization has occurred aside from small enterprises. Several economic models have been tried and rejected in the post-Soviet era, and experts generally conclude that the overall economy is in decline. In the early 2000s, agriculture remained the most important economic sector, but the contribution of industry was rising. Informal economic activity accounts for between one-third and one-half of output.
Gross Domestic Product (GDP): In 2004 Uzbekistan’s GDP was estimated at US$10.3 billion, an increase of 3.7 percent over the 2003 figure. In 2005 the GDP increased by 3.9 percent to US$10.7 billion, a rate of US$399 per capita. In the first half of 2006, the rate of increase was 6.6 percent, based on a six-month GDP of US$6.1 billion. In 2003 agriculture’s contribution to GDP was 38.7 percent, the share of the services sector was 35 percent, and manufacturing and construction contributed 26.3 percent. (Contributions by sector after 2003 are not available.)
Government Budget: In 2006 the Uzbekistan government planned revenues of US$3.3 billion and expenditures of US$3.6 billion, incurring a budget deficit of about US$300 million. In the first half of 2006, the government reported revenues of US$1.64 billion and expenditures of US$1.57 billion, yielding a surplus of US$70 million. The deficit for 2005 was US$100 million, based on expenditures of US$2.9 billion and revenues of US$2.8 billion. The approved 2007 budget called for a deficit of US$189 million. A series of tax rate reductions decreased direct tax revenues somewhat beginning in 2004.
Inflation: Inflation statistics for Uzbekistan are unreliable because of inconsistent reporting techniques. Throughout the post-Soviet era, inflation control has been a low priority of government planners. After reaching 26.6 percent in 2001, the estimated inflation rate for 2003 was 13.1 percent. In 2004 the official inflation rate was 3.7 percent, but international agencies estimated a rate of approximately 15 percent. The official rate for 2005 was 7.8 percent.
Agriculture: Agriculture and industries processing agricultural products (primarily those related to cotton and foods) have consistently contributed about 35 percent of Uzbekistan's gross domestic product. However, expansion of the sector has been hindered by state control of agricultural markets, equipment shortages, and the ban on private land ownership. Privately worked plots contribute an estimated 75 percent of non-wheat food output. Uzbekistan is the world's fourth-largest producer and second-largest exporter of cotton, which in 2005 accounted for approximately 20 percent of the country's exports after reaching 39 percent in the late 1990s. In recent years, Uzbekistan has switched some farmland from cotton to grains (mainly rice and wheat) in an effort to reduce food imports. Officially reported wheat harvests have increased every year since 1998, while the rice harvest decreased substantially in 2005. Other significant agricultural products are silk, fruits and vegetables, cow’s milk, and beef. Virtually all agriculture requires intensive irrigation. Cattle, goats, and sheep are the most frequently raised livestock.
Forestry: Uzbekistan has no significant forested areas.
Fishing: Most of Uzbekistan’s natural fish catch comes from reservoirs and lakes. The management of rivers primarily for irrigation reduces the natural fish yield. Beginning in the 1960s, the disappearance of the primary fishing grounds in the Aral Sea, which had produced 25,000 tons of fish per year, stimulated an aquaculture industry that has produced more than half of Uzbekistan’s fish output in the early 2000s. In 2003 the total fish output was 7,100 metric tons, of which 5,100 metric tons came from aquaculture.
Mining and Minerals: In both the Soviet and the post-Soviet eras, minerals and mining have been a foundation of the economy. In 2005 Uzbekistan had the world’s sixth largest reserves of gold and ranked ninth in world production. Annual production, estimated at 80 to 85 tons, accounts for 10 to 20 percent of export earnings. Uzbekistan’s natural gas reserves satisfy all domestic needs and are an important export product, and oil reserves are nearly sufficient for domestic needs. Significant reserves of copper, lead, tungsten, uranium, and zinc also are present.
Industry and Manufacturing: In the early 2000s, all of Uzbekistan’s large industrial enterprises remained state-owned, and many unproductive Soviet-era plants remained in operation. Beginning in the late 1990s, planners have given priority to import-substitution industrialization with investment and trade protection for industries such as steel production and sugar processing, but in general such industries have not prospered and have incurred substantial debt. The UzDaewoo automobile assembly plant, which the state took over when its joint venture partner, the South Korean Daewoo Group, folded in 2006, is Uzbekistan’s first domestic automotive industry. In 2005 the plant’s output was 100,000 vehicles per year, but the small domestic consumer base has prevented utilization of full capacity. Another important industry, cigarette manufacturing, has been affected by large-scale cigarette smuggling into Uzbekistan. Other industries are food processing, cotton textiles, machine building, metallurgy, and chemicals. Uzbekistan’s construction industry receives relatively little investment. Aside from the upgrading of airports, there are few large-scale construction projects. However, the introduction of a mortgage program in 2005 could increase the housing construction sector.
Energy: In the 1990s, Uzbekistan became self-sufficient in fuels, although the fuel industries have remained inefficient and wasteful. The smuggling of oil into neighboring countries has led to periodic domestic oil shortages. In 1999 oil production reached a peak of 8.1 million metric tons before declining to 5.4 million metric tons in 2005. In the post-Soviet era, Uzbekistan has increased its production of natural gas by an estimated 40 to 50 percent, reaching 60 billion cubic meters in 2005. Gas exports go primarily to neighboring countries, minimizing concerns about long-distance pipelines. In 2002 a production-sharing agreement with a British company, Trinity Gas, began developing gas fields in central Uzbekistan, and subsequent Russian investments have substantially increased gas output. For 2007 Uzbekistan significantly raised its price for natural gas sold to Kyrgyzstan and Russia. Uzbekistan also is self-sufficient in electric power. However, because infrastructure is in poor condition in the 37 operating power stations and their distribution networks, experts estimate that sometime after 2006 Uzbekistan no longer will produce a net surplus of electric power. Uzbekistan is scheduled to be a member of the Shanghai Cooperation Organization’s Asian Energy Club, which Russia proposed in 2006 to unify oil, gas, and electricity producers, consumers, and transit countries in the Central Asian region in a bloc that is self-sufficient in energy. Other members would be China, Kazakhstan, Kyrgyzstan, and Tajikistan.
Services: The services sector grew substantially in the early 2000s, mainly because of increased contributions from small private enterprises such as retail stores, restaurants, and computer technology. Government restrictions on consumer goods imports and licensing restrictions on retail commerce have forced many of Uzbekistan’s numerous small-scale traders (both legitimate and black-market) into neighboring countries and reduced the availability of consumer goods.
The development of financial services has been restricted by government controls on the banking industry, which serves only as a distributor of government credit and loans. The National Bank of Uzbekistan is the dominant provider of both domestic and foreign loans. The five largest banks control more than 80 percent of capital. A few small private banks are in operation. The new mortgage program of 2005 has the potential to increase personal loans. The Tashkent Stock Exchange has very limited operations.
Uzbekistan has desirable tourist destinations in the ancient Silk Road cities of Bukhoro, Khiva, and Samarqand, and the travel infrastructure is adequate. However, visa and customs restrictions, corruption in the local tourism industry, and low investment have inhibited development of the tourism industry.
Labor: In 2005 the labor force was estimated at 14.3 million people, of whom 44 percent were working in agriculture, 36 percent in services, and 20 percent in industry and manufacturing. The official unemployment rate was 0.7 percent, but actual unemployment was believed to be about 6 percent. Approximately another 20 percent were estimated to be underemployed. In 2005 the monthly minimum wage increased from US$6.40 to US$7.80. Agricultural workers receive especially low wages. Unemployment and low wages have caused a significant number of Uzbekistani workers to seek employment illegally in Kazakhstan.
Foreign Economic Relations: An important factor in post-Soviet economic relations has been Uzbekistan’s policy of import substitution, which has focused on increased production of wheat, natural gas, and oil. Despite that policy, however, the purchase of capital equipment for investment projects has remained a significant component of import growth. Throughout the post-Soviet period, the most important export commodities have been cotton and gold. The export share of cotton decreased in the early 2000s; the state does not release statistics on the export of gold, but extraction operations appear to remain steady. State controls on imports, one measure to improve the trade balance, have increased the smuggling of consumer products into Uzbekistan. Throughout the post-Soviet period, Russia has remained the top partner for both exports and imports. Other former Soviet republics maintaining substantial trade relations with Uzbekistan are Tajikistan and Ukraine. In 2005 Uzbekistan joined the Eurasian Economic Community, which also includes Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. That step was an exception to Uzbekistan’s usual preference for bilateral trade agreements. In the early 2000s, natural gas was the main commodity export to those republics. A significant trade event of 2005 was the signing of a gas pipeline agreement with China, worth an estimated US$600 million. Uzbekistan’s restrictive trade regulations have prevented membership in the World Trade Organization.
Imports: In 2005 the main imports, in order of value, were machinery, chemicals and plastics, foods, and metals. In 2005 the value of imports increased by 30 percent; the most important import source countries, in order of trade volume, were Russia, South Korea, Germany, China, Kazakhstan, Turkey, and Ukraine.
Exports: In 2005 Uzbekistan’s main exports, in order of value, were cotton fiber, gold, fuels, metals, food products, and machinery. In 2005 the value of exports increased by about one-third. The main customers in order of trade volume were Russia, China, Turkey, Ukraine, Bangladesh, Poland, and Tajikistan, as the volume of sales to customers outside the former Soviet Union increased significantly.
Trade Balance: Because of heavy dependence on two export commodities, world cotton and gold prices have been major factors in determining Uzbekistan’s annual trade balance, and variations in those prices have caused sharp swings in that balance. In 2005 exports totaled US$5 billion and imports US$3.8 billion, creating a trade surplus of US$1.2 billion. In 2004 the value of exports was about US$3.7 billion and the value of imports was about US$2.8 billion, resulting in a trade surplus of US$900 million.
Balance of Payments: Complete statistics on Uzbekistan’s balance of payments have not been available since 1998, when the balance was approximately zero. Although exports and imports both grew in the post-Soviet era, in most years before 2000 the more rapid growth of imports left Uzbekistan with a large current account deficit. However, beginning in 2000 that balance has been increasingly positive, reaching US$773 million in 2004. In 2005, the fourth consecutive year of surplus, it grew to an estimated US$1.1 billion.
External Debt: In 2005 the external debt was estimated at US$3.9 billion.
Foreign Investment: Although the official policy of Uzbekistan has been to attract diverse foreign investment, in the early 2000s activity has stagnated because the government maintains majority shares in all joint ventures, government monitoring is pervasive, and the legal system is unreliable. The introduction of a convertible currency in late 2003 improved the climate somewhat. In 2005 the net flow of foreign direct investment was estimated at US$1.5 billion, less than most other countries of the former Soviet Union. The Newmont Mining Company of the United States and Britain’s Oxus Gold participate in joint ventures in Uzbekistan’s gold-mining industry, but in 2006 the government took over Newmont’s operations, declaring it bankrupt, and revoked Oxus’s operating license. In 2005 China agreed to a joint venture in oil worth US$600 million. The same year, the French Alcatel company agreed to supply mobile telephone equipment to Uzbekistan through 2006. In 2006 the planned sale of a majority of shares in the state telecommunications firm, Uzbektelecom, to foreign companies remained on hold. China Mobile was one likely buyer. Also in 2006, the Russian natural gas monopoly Gazprom announced that it would invest US$1.5 billion in Uzbekistan’s fuels industries within the next few years.
Currency and Exchange Rate: Uzbekistan’s currency is the som. In February 2007, US$1 was worth 1,242 Uzbekistani som. Uzbekistan ended a multiple exchange rate system in 2003.
Fiscal Year: Uzbekistan’s fiscal year is the calendar year.
TRANSPORTATION AND TELECOMMUNICATIONS
Overview: Because of low investment and poor maintenance, Uzbekistan’s overland transportation infrastructure has declined significantly in the post-Soviet era. Air transport is the only branch that has received substantial government investment in the early 2000s, as airport modernization projects have been undertaken.
Roads: In 2005 Uzbekistan had 84,400 kilometers of roads, about 72,000 kilometers of which were paved. The road infrastructure is deteriorating, particularly outside of Tashkent. No significant highway projects were underway in 2006. In the early 2000s, U.S. engineers improved some roads around the port of Termez to facilitate movement of humanitarian supplies to Afghanistan. Uzbekistan is a member country of the United Nations’ Asian Highway Network, and several national roads are designated as part of the network.
Railroads: In 2005 Uzbekistan had 3,950 kilometers of rail lines, about 620 kilometers of which were electrified. A large percentage of the system’s track requires major repair. The main line is the portion of the Transcaspian Railroad that connects Tashkent with the Amu Darya. No significant rail projects were underway in 2006. The city rail line of Tashkent, the only such line in Central Asia, is 47 kilometers long.
Ports: Landlocked Uzbekistan has no seaports. Its main river port is Termez on the Amu Darya. Although Termez lacks modern facilities and has a shortage of spare parts, activity there has increased as conditions in neighboring Afghanistan have stabilized. Termez has been an important transfer point for humanitarian supplies entering Afghanistan.
Inland Waterways: Uzbekistan has 1,100 kilometers of inland waterways. Since the mid-1990s, commercial travel on Uzbekistan’s portion of the Amu Darya has been reduced because of low water levels.
Civil Aviation and Airports: In 2006 Uzbekistan had 34 airports with paved runways, six of which had runways longer than 3,000 meters. The largest of them, at Tashkent, is linked with European and Middle Eastern cities by direct flights of Aeroflot, Lufthansa, Transaero, and Turkish Airlines, and with New York and Los Angeles via connecting flights through Moscow. The national airline, Uzbek Havo Yollari (Uzbekistan Airlines), flies mainly within the former Soviet Union. Fuel shortages often disrupt flight schedules from Uzbekistani airports.
Pipelines: In 2006 Uzbekistan had 9,594 kilometers of natural gas pipelines, 868 kilometers of oil pipelines, and 33 kilometers of pipelines for refined products.
Telecommunications: In the early 2000s, Uzbekistan’s telephone system was in poor condition, and in 2005 there were only 7.4 main lines per 100 population. A government program, begun in 1994 and scheduled for completion in 2010, would modernize the system by adding digital exchanges and expanding to provide 13 main lines per 100 population. Technical support for that program is provided by the Japanese International Cooperation Agency. Substantial progress has been made in Samarqand and Tashkent, where there were 24 lines per 100 population in 2001, but as the rural population rose, the overall line-to-user ratio remained the same between 1994 and 2001. Plans call for the privatization of the state-owned telecommunications company, Uzbektelecom, but no date has been set. Digital telecommunications, which totaled 935,000 lines in 2005, are located almost exclusively in urban areas. In 2006 an estimated 2 million mobile telephones, using seven cellular networks, were in use. The June 2006 launch of the KazSat communications satellite from Kazakhstan was expected to reduce the dependence of all the Central Asian countries on European and U.S. telecommunications satellites. Launch of a second KazSat is planned for 2009. In 2005 an estimated 811,000 people were using the Internet, compared with 7,500 in 2000. The number of Internet service providers also increased very rapidly between 2001 and 2005. In 2005 Uzbekistan adopted a new telecommunications and information transfer program to accelerate development through 2010.