He also signed a decree on the structure and administrative staff of the new government. This decree was the beginning of a new administrative reform. Earlier reform had mainly touched the system of local administration, but this was the first reform of the highest echelon central power.

On February 3, Rustam Azimov was appointed first deputy prime minister and minister of economy. Previously, he held the position of Minister of Macrostatistics, an old name for the Ministry of Economy. Azimov’s responsibility now include the important task of controlling internal trade, light industry and food industry, sectors previously headed by deputy Prime Minister Mirabror Usmanov. Usmanov’s competence had been the subject of criticism for a considerable time. A decree signed by President Karimov’s in October 2004 reformed the governmental and joint-stock companies under Usmanov’s control (special organs of managerial administration corresponding to the former Soviet branches of Ministries) into simple joint-stock companies. The decree also reformed the managerial duties and addressed issues of administrative interference. With the new government, the decree can be said to have been fully realized.

Usmanov was not included in the new Cabinet of Ministers, and the structure of his former administration was reformed and transferred to the Ministry of Economy. At the same time, Tursunkhon Khudayberganov, Advisor to the President tasked with the implementation of administrative reforms, was removed from his position but received a position in the Senate. The authority of the curator of administrative reforms is likely to be transferred to the Prime Minister’s office.

These reforms can be explained by the President’s apparent intention to give the new Prime Minister the opportunity to form a single team and reduce the parallel power structures between the Cabinet and the Presidential Office. This streamlining of government is very important on the threshold of difficult market reforms in the social sphere. The next important event was President Karimov’s announcement on new priorities in economic policy. These priorities are:

1) Liberalization of the entire system of sanctions slammed at business violations. This is in order to lower their size of penalties for unintentional and minor violations, and introducing the possibility of not applying penalties in cases where a businessman voluntarily compensates the damage.

2) Taking measures in market liberalization to make a wider variety and volume of goods available; improving stock exchanges and auctions, and preventing a return to the system of centralized distribution.

3) Supporting entrepreneurial activities. This support was suggested to be carried out through a modern and developed banking system, allotting loans at low interests for enterprises, widening the system of micro-credits, including the assistance of international financial institutions, such as the International Financial Corporation, the World Bank, and the Asian Development Bank.

The third item is necessary to accomplish the aim of widening the role of small business and farming. The aim is for the share of small business to increase by no less than 45% until 2007. Several privileges are suggested for small business: First, additional privileges and preferences in the system of taxation, implementing clear and simple ways of paying taxes. Secondly, cutting down and facilitating the number of procedures for registration of small businesses. Third, stimulating the creation of new small enterprises and private home workshops. Fourth, creating supply structures, rendering services and logistic support for the sale of the products of small enterprises or citizens working from their homes, especially in rural areas.

As far as agriculture is concerned, the government also plans to implement the recently adopted program of re-organization of unprofitable farms, which are to be reorganized by 2005-2010, including 406 farms scheduled for 2005.