The European Bank for Reconstruction and Development decided to restrict its already minimal lending to Uzbekistan in April, after the bank decided that the country had failed to meet economic and humanitarian benchmarks it set one year ago.
In April 2003, EBRD president Jean Lemierre laid down seven political and economic benchmarks for the country including combating the systematic use of torture, decreasing state control of the media, and freeing up the country?s FX market.
The targets were set in response to widespread press and non-governmental organizations? criticism of the bank?s decision to hold its annual meeting in Tashkent last year. Sources at the bank privately complain that the decision was taken by the bank’s president at the time, Horst Kohler, who then abruptly left to head the IMF.
In early April 2004, the bank announced: ?A year after calling for improvement of the political and economic situation in Uzbekistan, the EBRD has concluded that there has been very limited progress and the bank is no longer able to conduct business as usual.?
The bank will therefore only focus on private sector investments in the country, rather than working with the government.
The decision was welcomed by some NGOs. Rachel Denber, director of Human Rights Watch?s Europe and central Asia division, says: ?Given the Uzbek government?s continued appalling human rights record, the bank did the right thing in following through on its demands and demonstrating it was serious about its requirements for reform.?
The Uzbek government, run by president Islam Karimov, was less impressed. One source said the ruling was ?an insult to central Asia?. Uzbekistan failed to send a delegation to the EBRD meeting in protest. Uzbek government officials say there has been real progress in the past 12 months, including the liberalization of the country?s foreign exchange regime.
However, some regional bankers thought the ruling might help make the Karimov regime ?sit up and take notice?. One said: ?Something needs to change there. We can?t go on like we are now.? Recent terrorist attacks in Uzbekistan were, he believes, further evidence of the failure of Karimov?s repressive and impoverishing regime.
But the cooling of relations between Uzbekistan and the EBRD points to a wider problem for the bank too ? how to deal with central Asian non-democratic regimes. The bank, which has a mandate to promote democracy, is gradually shifting its resources east from central Europe to central Asia.
It is not just Uzbekistan that has a bad human rights record. Azerbaijan, for one, experienced brutal police crackdowns during the election there in October last year. But while Uzbekistan is publicly reprimanded, Azerbaijan is looking forward to the beginning of one of the EBRD?s biggest-ever projects ? the Baku-Tblisi-Ceylon pipeline.
Is Azerbaijan so much better than Uzbekistan?
An EBRD source says: ?I think there are differences. We were watchful over the election in Azerbaijan but things have improved a lot there. Some political prisoners have been released since then.?
