U.S. treasury secretary backs Uzbek economic reforms, Uzbek president pledges currency reform


Associated Press
July 17

U.S. Treasury Secretary Paul O'Neill expressed support Wednesday for economic reforms undertaken by Uzbek President Islam Karimov, who pledged to introduce long-awaited free convertibility of the Central Asian nation's currency before the end of the year.

"I came away assured that President Karimov and his people are moving with deliberate speed, with no doubt about their policy, goals and objectives," O'Neill said after talks with Karimov in the Uzbek capital Tashkent.

Karimov said Uzbekistan would by the end of this year sign Article 8 of the International Monetary Fund's charter that requires its members guarantee free convertibility of their currencies.

"The main aim is to liberalize the economy and promote the democratic processes that are taking place in Uzbekistan," he said.

The economy of the former Soviet republic has remained largely unreformed since the 1991 collapse of the Soviet Union. The IMF withdrew its representative from Uzbekistan last year due to frustration over the lack of economic reforms.

The key issue was the government's reluctance to allow free convertibility of the national currency, the som, a practice that has encouraged a black market in currency trading and hampered foreign investment. However, earlier this year the IMF concluded a new agreement with Uzbekistan after the government promised currency reforms.

Uzbekistan's relations with the United States significantly improved since last fall when it offered a military base to U.S. troops for anti-terrorist operations in neighboring Afghanistan. But the cooperation also raised fears among human rights groups that in exchange, the United States would back off efforts to promote democratic change in Uzbekistan.

The U.S. State Department said last month that aid to Uzbekistan in 2002 would amount to dlrs 193 million, almost four times more than the previous year. Earlier this year, it was announced that the aid would reach dlrs 160 million.

O'Neill and Karimov also spoke about the need to boost U.S. private investment in Uzbekistan, the most populous country in Central Asia with 25 million people.

Earlier Wednesday, O'Neill visited a water distribution unit outside Tashkent built with funding from the U.S. Agency for International Development.

He also made a quick tour of the Oloy bazaar in central Tashkent. Mayor Rustam Shabdurahmanov escorted O'Neill past stalls piled with peaches, figs, grapes and other fruits and vegetables.

Uzbek officials helped O'Neill bargain with a dried fruit seller, bringing the price of a kilogram (2.2 pounds) of dried apricots down from 1,000 to 600 som, or half a dollar. One seller presented him a traditional Uzbek knife in a carved case.

Told that their guest surrounded by a dozen guards was the U.S. treasury secretary, sellers nodded with understanding but one asked to make sure: "So it's the boss of all dollars?"

O'Neill is on an eight-day visit to four former Soviet republics - all cooperating to varying degrees in the anti-terror campaign - to gather information on how to bolster their economic growth, private investment and living standards.