Loan freeze draws Uzbekistan's ire
ALMATY - Uzbekistan condemned today a decision by the European Bank for Reconstruction and Development (EBRD) to freeze much of its lending to the country, a move welcomed by rights campaigners, but which sparked concern about further economic hardship. "It's an unreasonable decision because we accepted a lot of the EBRD's proposals and we're still ready to realise those proposals," foreign ministry spokesman Ilkhom Zakirov said.
"For us it's important to create a democratic society and market economy," Zakirov said by telephone from the capital Tashkent.
The Western government-dominated EBRD, the country's largest foreign investor, announced on Tuesday that it was halting most public sector lending to Uzbekistan because the former Soviet republic had failed to meet a one-year deadline to fulfil demands for human rights, democratic and economic reforms.
The announcement followed four days of violence in Uzbekistan last week including Central Asia's first suicide bombings that analysts said sprang partly from worsening economic and political conditions.
Uzbekistan's hardline secular leadership headed by President Islam Karimov has been widely criticised for its methods of combatting Islamic militancy including the alleged use of secret executions and systematic torture.
Uzbekistan is a key Central Asian ally in the United States' anti-terrorism efforts in the region and hosts a major US airbase near the Afghan border.
The EBRD's decision was welcomed by the New York-based Human Rights Watch, which in a written statement said that it was "crucial that the international community speak with one voice on these issues and send a strong and coordinated message to the Uzbek government."
But some analysts predicted that the decision would intensify tension among Uzbekistan's nearly 26 million population - already evident in last week's blasts and shoot-outs, which officially left 47 people dead, many of them officers of the widely resented police force.
"This is the second serious blow to Karimov, the first being the terror acts by his impoverished people," said Eduard Poletayev, director of the Almaty office of the Institute for War and Peace Reporting.
"Karimov will probably tighten the screws on poor farmers and increase taxes on factories that make any profit - the United States allowed Karimov's regime to clamp down and this will increase tension," Poletayev said.
A Western diplomat in Tashkent agreed, saying that the EBRD decision "could increase pressure on society and might affect levels of corruption."
The EBRD had come under increasing pressure to scale back lending to Uzbekistan after being criticised for hosting its showcase annual meeting in the country last year and for issuing loans to questionable projects.
In the public sector the EBRD will continue to finance a certain number of projects, notably those which have cross-border impact, the bank told journalists in London on Tuesday.
The EBRD, which was set up to boost ex-Soviet economies in 1991, has so far invested 527 million euros in Uzbekistan.
The International Monetary Fund (IMF) has estimated that Uzbekistan's economy grew by just 0.3% last year while other experts have said that the economy may even have shrunk. Salaries in this country that relies heavily on cotton and gold exports average around 40 dollars per month, the IMF has estimated.
AFP