Government regrets EBRD decision to curb loans

Uzbekistan has regretted a move by the European Bank for Reconstruction and Development (EBRD) to reduce the level of public-sector loans to the Central Asian country. "It wasn't a justified decision and we regret that it was made despite efforts made both by the Bank [EBRD] and our government to reach a mutual understanding on those problems that the EBRD raised with us," Ilkhom Zakirov, Uzbek foreign ministry spokesman, told IRIN from the Uzbek capital, Tashkent, on Wednesday. His comments came one day after the EBRD announced its new strategy for Uzbekistan. One year after calling for political and economic reform in the ex-Soviet republic the Bank said that there had been very limited progress and it was no longer able to conduct business as usual. "The key point we made was that we found progress to be very limited," Jeff Hiday, head of media relations for the EBRD, told IRIN from the bank's headquarters in London. "In some cases we think perhaps things went a bit backwards, in some cases things clearly went forwards in a good way, and in some cases things changed little. So, it's not black and white," he added. Earlier last year, the London-based financial body was criticised for holding its annual meeting in Tashkent, a step seen by the Bank as an effort to contribute to pushing forward reforms in the country. The 2003 EBRD strategy for Uzbekistan expressed serious concerns about the state of genuine multi-party democracy, respect for the rule of law and human rights in Uzbekistan. The strategy set seven benchmarks for reform and scheduled a review of progress for the spring of 2004. Following a review, the Bank concluded progress towards the benchmarks had been limited and decided to narrow its activities in the country. "We are going to focus on certain types of public sector [activities], so we are narrowing the type of public sector [work] that we will do," Hiday said. According to the EBRD, the government had not registered any opposition political parties, a concern prior to the upcoming parliamentary election in December; government control over media remained and harassment of journalists expressing independent views continued and local non-government organisations (NGOs) working on the rule of law and human rights were denied registration. "A definition of "torture" has been incorporated into Uzbek legislation; however, torture has persisted in prisons and places of detention. An action plan on torture has been adopted, although it has not yet been published and contains no clear monitoring mechanism," the Bank said in a statement. But Zakirov had a different view on the issue. "We think that those changes that took place over the past years both in terms of democratisation and economic reforms were on a pretty substantial scale and they give and will give positive results. The EBRD thinks that the impact of these reforms was not sufficient but we think the opposite." As for benchmarks, Zakirov defended his government's position, noting: "It is more important that those processes taking place in the [Uzbek] society and state would mature and would be perceived internally as conscientious needs and not simply a result of some outer pressure." "We have stated many times that our government is aiming at democratic and market reforms based on an open economy. But how fast that will happen and when it will have tangible results is a matter of time," he said. Meanwhile, the EBRD is keen on maintaining contact with Central Asia’s most populous country. "The other key point we made was that we do intend to stay engaged," Hiday said. The Bank is expected to focus its activities only on the private sector and those public sector projects that finance cross-border activities or clearly benefit the Uzbek people, coupled with continuing to monitor developments in relation to the strategy benchmarks. "We very much want to continue working with the country and we are hoping that they can continue to make progress at a faster rate and we can do more work there," Hiday highlighted. "We are ready to talk, we are ready to work and we are just waiting for more progress so we can increase our engagement." A new strategy for Uzbekistan is scheduled for the spring of 2005. The EBRD, which has invested almost US $640 million in Uzbekistan, has had a lower level of commitments in recent years as a result of the country's unfavourable investment climate.