THE TWO-DAY annual meeting of the European Bank for Reconstruction & Development is taking place in Tashkent, Uzbekistan, in May - the first time the bank has met in central Asia. From May 4-5, some 2000 delegates will travel to the Hotel-Intercontinental in downtown Tashkent, bringing the eyes and - so the EBRD hopes - the wallets of the global financial community to focus on this central country of the CIS region.
Uzbekistan could certainly do with a lift. Foreign direct investment flows are at the moment the lowest of all the transition economies on a per capita basis. In the past four years, GDP per capita dropped from $400 to $300. Wages, in the same period, have fallen 50%, and inflation has obstinately failed to decline from its 30% level.
Although there are some signs of positive growth in the private sector, generally, the economy is still state-controlled, corrupt and inefficient. Although many banks, including Russian, Kazakh and UK financial institutions, have expressed interest in participating in the long-promised privatization process, the government led by president Islam Karimov continues to delay the programme, pleading fears of ensuing Argentina-style social unrest.
Even if privatization does go ahead, the artificially inflated som/dollar exchange rate, set by the government in 1996, makes foreign direct investment practically impossible.