Map 45: Independent Uzbekistan
U
zbekistan officially declared its independence from
the USSR on 1 September 1991. The country began
its independence against a background of rising social
tensions and a looming ecological crisis. The country has
about 27.8 million people (2007 CIA est.), making it the
largest in the region in terms of population. The popula-
tion is very young, with about 50 percent below the age
of 25. The population could double within the next 25 to
30 years if the current birth rate remains unchanged. The
rapidly growing population puts enormous pressure on
the country's environment and natural resources, with
about half of its territory experiencing a severe shortage
of drinking water. In addition, large land areas face
salinization and desertification.
Uzbekistan's society has long been relatively homo-
geneous, with ethnic Uzbeks accounting for 80 percent of
the population, Tajiks about 5 percent, Russians about 5.5
percent, Kazakhs about 3 percent, Karakalpaks 2.5 per-
cent, Tatars 1.5 percent and others 2.5 percent (2007 est.).
Since 1991 a significant number of Russians and Russian-
speaking groups have left the country due to interethnic
tensions and uncertainty about their future.
Citing political instability, the rise of social unrest,
Islamic radicalism and interethnic tensions, Uzbekistan
has been slow to conduct political reforms. The govern-
ment developed policies emphasizing egalitarianism,
traditional community values, nationalism and the cen-
tral role of the state and state institutions in regulating
and controlling the country's political processes. The
Communist Party of Uzbekistan was renamed the
People's Democratic Party (PDP) in 1991 and continued
playing an important role in Uzbekistan's political life.
All major opposition political parties were banned and
their leaders were persecuted or went into exile. The
government also established tight control over the
media, banning all independent media outlets. In 1990
and again in 2000, Islam Karimov was elected president
(he skipped elections in 1995, as his term in office was
extended by a popular referendum).
Uzbekistan inherited from the Soviet era a well-
developed and well-diversified economy; however, its
restructuring and reforming proved very difficult. The
government initially turned to the international
expertise of the World Bank, IMF, European Bank of
Reconstruction and Development, Asian Development
Bank and others, though it outright rejected the Shock
Therapy approach. By the mid-1990s it had devised
the so-called Uzbekistan Model of Development that
emphasized gradual reforms, gradual privatization and
liberalization and the preservation of the state's central
role in controlling the national economy. Although
the government approved small-scale privatization,
allowed private entrepreneurship and conducted cur-
rency reforms, at the same time it retained a form of
centrally planned economy, large-scale subsidies and
direct control over the industrial and agricultural sec-
tors. The national currency, the sum, was introduced in
1993. A currency black market emerged due to the
state's strict control over the convertibility of the sum.
After a turbulent period from 1993 to 2001, during
which annual inflation fluctuated between 400 and
3,000 percent, in the early 2000s the country achieved
some degree of macroeconomic stability, with an
annual official inflation rate of 7.6 percent in 2006 (2007
CIA est.).
During the 1990s Uzbekistan's approach to eco-
nomic reform helped it avoid a steep economic reces-
sion, mass closure of factories and plants and the mass
unemployment seen in many neighboring Central
Asian states. Uzbekistan even attracted direct foreign
investment in its resources-extracting sectors, especially
gold extraction and processing, nonferrous metals and
textiles, and in its manufacturing sector—it became the
first country in the region to begin producing cars (at a
joint Uzbek-Korean plant). By the late 1990s, however,
foreign investors were becoming reluctant to invest in
the economy due to the continued inconvertibility of
the national currency and the state's centralized eco-
nomic controls.
Agriculture, industry and services are the three main
pillars of post-Soviet Uzbekistan's economy, contribut-
ing 31.1, 25.7 and 43.2 percent respectively to GDP in
2005 (2006, CIA est.). The country's exports to the inter-
national market include cotton (it is the region's largest
producer), gold (it is the third largest producer in the
CIS), energy products, textiles and some machinery. Due
to macroeconomic difficulties and huge spending on the
social welfare system and on various large projects,
Uzbekistan has accumulated about 4.7 billion U.S.
dollars in external debt, the largest in the region (2007
CIA
est).
Uzbekistan experienced a steady decline in living
standards among all groups of the population in the
1990s. The country remains one of the poorest countries
of the former Soviet Union, with 33 percent of the
population living below the poverty line (2007 CIA est).
In 2006 the UN Development Program's Human
Development Index (HDI) put Uzbekistan in 113th place
out of 177, on a par with Egypt and Nicaragua. As in
some other Central Asian republics, a large number of
economic migrants left Uzbekistan in the post-Soviet era.
Between 2002 and 2008 Uzbekistan experienced
annual economic growth between 4 and 7 percent, due
to favorable conditions on the domestic and interna-
tional markets. A significant rise in the prices of interna-
tional market commodities boosted the state's revenues
and Uzbekistan managed to improve its trade with
partners in the region and in the CIS. Yet, the country
failed to attract significant foreign investment in its
economy; its transportation infrastructure, energy facil-
ities and agriculture have become run-down and
require substantial investment and improvements.