BACKGROUND: Tashkent's attempts to attract foreign investment in the early 1990s were mostly unsuccessful. Western economic interest rose only in the middle of the decade. However, privatization was still largely limited to sell-offs of large state firms to foreign buyers, and to contract-signings with the largest Western companies for investment in the metallurgical and machine-building sectors. Exceptions to this included the tobacco and automotive industries. In October 1995, President Karimov announced a major privatization plan for implementation in 1998-2000. Nevertheless, as the year 2000 comes to a close, privatization still lags. The first and "flagship" tender of the three-year program (for the Almalyk Copper Plant) evoked little interest. Over a dozen of the largest enterprises targeted by the government remain without bids, despite successful privatizations of some smaller firms. The national currency is still not fully convertible, despite repeated declarations of the intention to achieve this.

Indicative of Uzbekistan’s "all directions" policy is a series of zigzags in Uzbekistan's recent international conduct. For example, on July 5 of this year, President Karimov attended the Dushanbe summit of the Shanghai Forum. Renamed from the Shanghai G-5, this grouping includes Russia, China, Kazakhstan, Kyrgyzstan, and Tajikistan. There, Karimov expressed the desire either to cooperate with the Forum or indeed to join it. His interest was well received. In August he cooperated with Kyrgyzstan and Tajikistan in formulating a common response to new flare-ups with Islamic insurgents in the region. Uzbekistan also signed recently a bilateral security cooperation accord with Kyrgyzstan, after extremely strained relations with the country in 1999. Early this autumn, after the Taliban's military successes in northern Afghanistan, Karimov split from such an approach to regional security. In particular, he has hinted at recognizing the Taliban government in exchange for its withdrawing support from the Islamic Movement of Uzbekistan (IMU), which has bases in Afghanistan and receives support from Kabul.

Karimov's recent moves bring Uzbekistan closer to Turkmenistan, which has always wished to deal with the Kabul government, so that a pipeline could be built to carry Ashgabat's gas across Afghanistan into South Asian markets. At the same time, Karimov's recent moves increase the diplomatic distance between Uzbekistan and Tajikistan, the latter of which is seriously menaced by the most recent developments on the ground in northern Afghanistan and turns to Russia for continued support. Uzbekistan has recently mended fences with Turkey, after years of objecting to the political asylum that Ankara offers to non-Islamic opposition figures. It has tried to improve relations with Pakistan and Iran. Uzbekistan has also toned down its reaction to European and U.S. criticisms of human rights violations, and spoken with China about possibilities for economic cooperation. Uzbekistan’s diplomatic initiatives truly are in "all directions" or perhaps "all over the map."

IMPLICATIONS: A crevasse in Central Asian regional security threatens to open, separating Uzbekistan and Turkmenistan on the one side from Kazakhstan, Kyrgyzstan, and Tajikistan on the other, not to mention Russia, India and Iran, which likewise oppose Afghanistan. Such a division manifests also in the agreement just signed in Astana, to transform the CIS Customs Union (including Russia, Kazakhstan, Belarus, Kyrgyzstan, and Tajikistan) into a Eurasian Economic Union (EEU). Confirming the trend towards a schism in Central Asian regional security is the fact that the very same countries dedicated to promoting the EEU (plus Armenia that seeks to join it) are those that constitute the full membership of the CIS Collective Security Treaty, as the latter was renovated in 1999, when Uzbekistan withdrew along with other founding members Georgia and Azerbaijan.

Still more striking, Uzbekistan has wholly ignored the GUUAM formation in public statements about recent developments. It even went so far as to issue a joint statement together with Ukraine, objecting to the EEU initiative as an attempt to split the CIS. Now there is speculation that Uzbekistan might rejoin the CIS Collective Security Treaty, which, in Bishkek at its October 11 summit, introduced significant changes regarding both organizational doctrine and military strategy. These changes establish specific and programmatic logistical cooperation and the treaty now forms the operational basis for the elaboration of its members' practical response to the threat from Islamic insurgents.

Uzbekistan, like Ukraine and also Kazakhstan, inherited from the Soviet period a significant economic interdependence with Russia, indeed overwhelming in certain important economic sectors such as energy transmission, including power-grids as well as pipelines. The EEU initiative of Kazakhstan's President Nazarbaev follows on his more ambitious and unrealized 1994 proposal for a "Euro-Asiatic" Union (EAU). Nazarbaev's purpose has been to find institutional ways in increase the number of actors whose leverage can be brought directly to bear on his bilateral relations with Russia. This is a typical and well-known strategy deployed by weaker partners in unequal partnerships. Such a policy direction should also be anticipated to become one of the several directions of Uzbekistan's "all directions" international conduct.

CONCLUSION: Strict political measures introduced in Uzbekistan to counter Islamic insurgents combine with the difficult economic situation there to deepen the disenchantment of what middle class there is in the country. Economic stagnation bodes ill for Uzbekistan, the most populous in country in Central Asia with 26 million people, a figure that by the year 2010 will rise to between 30 and 35 million. Uzbekistan contains five of the eight most densely populated regions in Central Eurasia. Tashkent, where one-tenth of the national population lives, is one of these, but the other four (Andijan, Ferghana, Namangan, and Khorezm) are all parts of the country unlikely to experience job-creation in the event of a national economic upturn.

The impoverishment of young rural Uzbek males is a stimulus to the formation of armed bands marauding under whatever banner is available and trafficking in narcotics and other illicit commodities. President Karimov’s "all directions" strategy is a foreign-policy response to the social conditions that increasingly enforce an "every man for himself" strategy upon the citizens of Uzbekistan who see their lives becoming increasingly difficult and desperate. A short-term alternative is not evident on either the international-political or the domestic-social level, and prospects in the medium-term are complicated by the legacy of the past ten years. It would seem that Karimov’s "all directions" international strategy will be unable to avoid exacerbating the very domestic conditions that have led him to elaborate it.

AUTHOR BIO: Dr. Robert M. Cutler is a Research Fellow at the Institute of European and Russian Studies, Carleton University, Canada. He writes on international politics, energy development, ethnic conflict, and economic and security cooperation in Eurasia.

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