Presentation “The role of state in conducting reforms in Uzbekistan:

1. “Uzbekistan: a model of reforms and democratization” Presentation “The role of state in conducting reforms in Uzbekistan: liberalization of political and judicial systems as a main direction of formation legal democratic state” May 30, 2006

2. UZBEKISTAN Geographical location and borders - Territory – 447,400 sq. km (53rd place in the world) - Length of borders – 6,221 km - Plain area – 78 % - Mountain area – 22 % - Double landlocked country

3. Main priorities outlined by the Constitution • of the Republic of Uzbekistan adopted in December 1992 • promoting values of democracy and secular civil society, • protection of human rights, • creation of a socially oriented free market economy.

4. The tasks of paramount importance • Creation of the political, legal and constitutional foundations of a new state system; • Consolidation of a new system of economic and social relations; • Reform of state bodies, both central and local; • Change people’s mentality, strengthen the values of democracy in their mind, statute obedience, to achieve the reign of laws

5. Difficult starting conditions of Uzbekistan for implementation of reforms: • Industries were primarily oriented to provide raw materials and intermediate products which were concentrated in cities, while rural areas accounted for more than 60% of Uzbekistan’s population; • The share of small businesses in GDP in 1991 was only 1%; • Growing of the only one agricultural crop - cotton, which accounted for 75% of arable land;

6. Arable land in Uzbekistan accounts for only 10% of the total territory of the republic (447,400 square kilometers). • Arable land per capita: in Uzbekistan - 0.17 hectares; in Kazakhstan - 1.54; in Kyrgyzstan - 0.26; in the Ukraine - 0.59 in Russia - 0.67

7. One of the largest ecological problems in the world – the Aral Sea drying

8. The excessive use of pesticides and chemical fertilizers leaded to pollution of surface and underground water. • Infantile death becomes one of the highest in the world. • In former USSR Uzbekistan occupied one of the last places in terms of living standards. • In 1990 aggregated income of about 70% of population of the republic was lower than minimum of subsistence.

9. Human Development Index in 1990

10. Demographic Trends (population in mln.)

11. China Double-landlocked position of Uzbekistan

12. Principles of State Development and Economic Reforms in Uzbekistan • Priority of economy over policy • Government is the major reformer during transition period to market economy • Superiority of law • Strong social policy is a constituent element of market economy • Stage-by-stage reformation

13. Key tasks of economic reforms during the first years of Independence • creation of multi-leveled economy through consecutive implementation of denationalization and privatization; • stimulation of development of small and private business, creating a real class of owners in the republic; • reorganization of state owned farms into individual private farms, rationalising rent relations and providing land plots for lifelong use with the right to inheritance; • strengthening monetary circulation and, hence, of the national currency, developing financial market; • structural changes in the economy directed to deeper processing of agricultural raw materials and mineral resources, creating modern, technologically equipped base both for export oriented production and for providing internal market with domestically produced goods.

14. Privatisation • realized to private owners in 2000-2005 - 4,660 enterprises. • realized at Zero Redemption Value during last 3 years - 396 enterpriseson total amount of 43.2 bln. soums.

15. Share of State and Non-State Sectors in GDP

16. Small and Private Businesses in 2005 • Number of enterprises - 310,000 • Sum of allocated credits – 419.9 bln. soum • Number of minibanks – 1,450 • Over 65% of total labour force of economy SHARE OF SMALL ENTERPRISES IN GDP

17. Agriculture • Total number of private farms exceeds now 190,000 (in 1997 – 19,500). • Private farmers produce more than 66%of cotton and55%of grains. • In order to develop market infrastructure for farms 268minibanks, 250 outlets of fertilizer and 320 outlets of lubricants distribution, 624 motor tractor fleets, 278 outlets for storing and distributing agricultural products were established.

18. Banking and Financial sector in 2005 • Number of commercial banks - 29, incl. 9private banks, 5banks with foreign investment. • Assets of commercial banks - 5.6 trln. soum (12.5% increase). • Number of issued plastic cards – 2 mln. (5-fold increase). • 10 leasing companies. • 23 investment companies. Commercial banks' capital growth (bln. soum)

19. Investments and credits in 2002-2004 ($ 2406 mln.) • Cooperation with Russia in sphere of energy (2005-2006): $ 2.5 bln. • May 2005, China: agreements signed on a total amount of $ 1.5 bln. • March 2006, Korea: agreements signed on a total amount of $ 1.8 bln.

20. Industry of Uzbekistan nowadays consists of more than 100 branches, both extracting and processing ones During the years of independence, manufacture of more than 900new kinds of products has been mastered

21. High Technology Industry Automotive industry • Number of enterprises – more than 100. • Share in automotive production of Central Asia – 67%. • The largest producer of machinery for all phases of cotton cultivation and processing and irrigation in CIS. Car industry • UzDaewoo Auto – Uzbek-Korean JV: - set up in 1996 in Andijan produced more than 500,000 cars since its creation; - car production in 2005 – 101,010 cars (44% increase); - the 4th largest foreign car supplier on Russian market after Hyundai, Chevrolet and Ford. - planned production for 2006 – 140,000 cars • SamKocAuto – Uzbek-Turkish JV, established in 1999 to produce midibusses and trucks.

22. High Technology Industry Aircraft industry • Technical Services Centre of Western-made aircraft of Uzbekistan Airways Technics is the unique institution in Central Asian region and CIS. • 30 IL-114 airplanes produced by TAPOiCh will be supplied to Russia by 2008. Agricultural machinery • Tashkent tractor plant “TTZ” production in 2005 – 3,500 tractors, which are delivered for domestic, Russian, Afghan and Turkish consumers. • UzCaseMash JV – producer of modern agricultural machinery, incl. tractors and cotton harvesters

24. Index A Cotlook ($/tn)

25. GDP GROWTH (%) In 2005 GDP: • was 30.1% higher than in 2000 • was 28.2% higher than in 1991 * - forecast

26. GDP and Cotton Price Tendencies

27. Improvement of foreign trade structure and growth of trade balancein 2005 Foreign Trade Balance (mln. USD) • export growth - 11.5% • import growth - 7.2% • the share of finished goods and services in export exceeded 50% • the share of machinery and equipment in import - 44%

28. Mineral Resources Base of Uzbekistan • Estimated volume of the total mineral resources -$11 trln, only 17% reserves of which are discovered • Estimated uranium reserves - 55,000 tn • Total deposits of natural gas – 7.8 trln. cub. m • Annual volume of natural gas exports – $ 477.15 mln. • Gas-main pipelines length – 13,000 km • Total revenue for natural gas transit – $ 118 mln.

29. Fund of Reconstruction & Development • May 11, 2006date of the President’s Decree • Fund’s budget: $ 1 bln. (to be set in 2006-2009) • Main tasks: - accumulate financial resources for developing crucial economic branches and structural reforms in economy; - financing implementation of national socially important state programmes and projects, primarily in perspective but not sufficiently developed regions; - financing modernization of transport and telecommunication infrustructure

30. Due to privatization, strengthening of private property, stimulation of the establishment of small enterprises and micro firms, farmers and entrepreneurship the middle class is getting shape in the country as a foundation of democratic society. Basically private entrepreneurs initiated the creation of new Liberal Democratic party, which was very active during elections in December 2004 of new (two-chamber) Parliament. These people indeed are the main support of our society, its social basis, because they are most interested in maintaining and deepening of the reforms, stable and sustainable development of the country.

31. Evolution of Uzbek Parliament One Chamber Parliament was created during first years of Independence while multiparty system was not developed yet and there was a lack of professional politicians. During the first years of Independence of Uzbekistan there was a need of mobile Parliament ensuring legal basis for large-scale reforms in all spheres of life in the country. Oliy Majlis (first convocation elected in 1994 and 1999) adopted 232 laws, 12 Codes, 2 National Programs, 1445 legislative amendments. Besides, 135 International Conventions were ratified.

32. Parliamentary reform started in 2002 and important changes it has brought: Firstly, a bicameral Parliament has been formed.Lower Legislative professionalChamber of the parliament consists of 120 deputies. Secondly, take over by upper house – Senate of some authorities from the President (100 senators). Thirdly,the main actors of election process became political parties and independent groups of electorate, citizens’ self-governing bodies. Fourthly, introduction of 30% women quota for candidates from political parties. As a result 18% of elected deputies are women. It is 2.5 times more than in previous Parliament elected in 1999.

33. Main objectives of two chambers` Parliament First,Legislative Chamber is carrying out its activities on permanent professional basis should provide the overall improvement of quality of the laws being adopted to further reform all spheres of the country. Second, achievement of balance of state and regional interests, because – Senate is elected from the deputies of local, regional, city and district elective bodies. Third, intensification of activities of political parties in legislative work, defending interests of electorate while initiating legislative amendments aimed at improvement of legal environment.

34. Composition of the new Parliament • 489 candidates participated in elections, including from 5 political parties – 435 candidates; • from independent voter initiative groups - 54 • (4-5 candidates for every seat in Legislative chamber). • The seats in Lower Chamber of Oliy Majlis were divided between the following parties and groups: • Liberal Democratic Party - 34,2% (41); • People’s Democratic Party - 23,3% (28); • "Fidokorlar“ National Democratic Party - 15% (18); • "Milliy Tiklanish" Democratic Party - 9,2% (11); • "Adolat" Social Democratic Party - 8,3% (10);  • Initiative Groups - 10% (12).

35. The priority tasks and directions of reforms In his speech at the first joint meeting of Legislative Chamber and Senate of Oliy Majlis (Parliament) of Uzbekistan after the election in December 2004 of two chamber parliament the President of the Republic of Uzbekistan Islam Karimov declared: “Our main long-term and strategic aim remains the same – firmly, consequently and steadily lead the country towards chosen path of democratic development and creation of civil society, deepening of market oriented reforms and strengthening of democratic values in the minds of our people”.

36. “From strong state to strong civil society” • The administrative reform is aimed at changing the functions of administrative structures; • elimination and fundamental decrease of their authoritative, • regulative and controlling functions; • prohibition of direct interference and regulation of activities of economic enterprises. • From 2001 to 2005 the total number of administrative personnel reduced by 75 000 people or by 35.5% including: • in the republican bodies – by 21%, • in local administrative bodies – by 63.5%, • economic organization administrations – by 30,5%.

37. Share of administrative staff in total employed population

38. Slogan “Less State in Economy” is becoming more and more popular in the country. As of 1 July 2005 the financial sanctions and suspension of operations on current bank accounts against entrepreneurs could be applied only through court procedures. In first quarter of 2006 Ministry of Justice of Uzbekistan considered 3987 complaints from entrepreneurs on abuse of their rights and interests. Accordingly, on the basis of 2880 cases (72.2%) the representatives of governmental and administrative bodies have been called to account.

39. Liberalization of the judicial and legal system • Specialization of courts on criminal, civil and economic matters has been carried out. • Institutes for appellate and cassation jurisdiction have been introduced by the Law. • The term of investigation and detaining people in custody has been substantially shortened. • Fixed terms of case proceedings have been set up. • On January 1, 2008 the Law on transfer to courts authority of issuing the warrant, taking into custody as well as applying other measures of judicial compulsion will enter into force.

40. Cardinal measures to liberalize the country’s • criminal law: • The classification of crimes have been altered with significant extension of corpus delicti falling under the category of less grave crimes that do not represent a danger to the public. • As a result persons who committed offences of not great danger to the public did not loose their freedom but forced to pay off material damage caused by their crimes. • Sentence serving conditions are essentially improved at penitentiaries, articles extended providing for early release and significantly mitigate terms and conditions of keeping in prisons.

41. The Institute of Conciliation is introduced into legislation as a form of administering justice. Employing this institute made it possible to relieve from criminal punishment over 26 thousand people. • As a result of the liberalization, the ratio of persons serving sentences decreased by more than 2 times. • Today the number of inmates per 100 thousand people in Uzbekistan is 158, whereas • in the US – 715, • in Russia – 584, • in Ukraine – 416, in Kazakhstan – 386, in Kyrgyzstan – 390, (International Center • in Estonia - 389. of prison studies)

42. Exclusion of death penalty from the category of punishments from January 1, 2008 The number of crimes, for which death penalty would be passed, was curtailed : from 33to13 in 1994; from 13to4 in 2001; from 4to2 in 2003 including terrorism and premeditated murder under an aggravating circumstances. Legislation bans to administer a capital punishment with regard to women, under aged persons and persons aged over 60.

43. Development and support of NGOs • The rights and guarantees of NGOs activity are secured by Constitution and Laws “On Public Organizations”, “On Public Funds”, “On Non-Governmental Non-Commercial Organizations” and others. • More than 5.000 NGOs are registered. • The main areas of activity – protection of Human Rights, Healthcare, Education, Physical and Spiritual Training, assistance to socially vulnerable groups of population, Protection of Environment, Social Infrastructure Development etc. • 50% of NGOs are involved in the spheres dealing with women’s interests and rights.

44. Literacy level

45. Female economic activity rate (% age 15 and above)

46. Non-governmental, non-profit organisations (NNOs) • Two new structures were created in 2005: • National Association of nongovernmental, nonprofit organizations of Uzbekistan (NANNOUz) and • Fund for support of nongovernmental, nonprofit organizations of Uzbekistan (NNO Support Fund). • The main objectives of them are: • thorough support of NNOs; • participation in further liberalization processes and strengthening democratic values; • increasing activities in political, economic, social and cultural life; • reinforcement of basis for legal state and protection of human rights; • stimulation of institutes of civil society and promotion of inter-national, inter-religion, inter-cultural tolerance. • In March 2005 during the first contest of NANNOUz within NNO Support Fund over 80 projects of the national NNOs were considered, 19 of which with the total budget of 73 mln. soums have been approved.

47. Increasing the role of bodies of self-governance (Makhalla) • Makhallahas big historical experience of development as association uniting people by the place of residence and carries out following activities: • distributing state and other assistance to families in need; • organizes accomplishment of streets, sport tournaments; • secures prevention of crimes and protecting the rights and interests of family, women and followers of different religions. • The governing authorities of Makhalla are elected from the most prominent and respected people. • The number of Makhalla in Uzbekistan reaches about 10 thousand. • Makhalla as a self-governing body should become a basis of civil society thus providing path to strong democratic state.

48. Freedom of religion and belief • number of representatives of religious confessions - 16; • number of registered religious organizations - 2,202, incl. 1,918 Islamic and 186 other non Islamic organizations; • over 45,000people have been granted assistance to make Hajj pilgrimages to Saudi Arabia; • over 150 have been granted assistance to make pilgrimages to Christian and Jewish holy sites in Russia, Greece and Israel; • system of religious education includes the Tashkent Islamic Institute, Tashkent Islamic University,10 madrassas, as well as Orthodox and Protestant seminaries.

49. The secular state attitude towards religious beliefs and convictions is guided by the following principles: • recognition that religious convictions are the private practice of citizens or their communities; • recognition of the inadmissibility of using religion for destructive purposes. • This final principle corresponds to Article 18 of the International Convention on Civil and Political Rights, which upholds the right of every human being to freedom of thought and of faith, and adds that: • “Freedom to profess a faith or believe may be limited pursuant to the provisions of the Law to provide social security and safety, public order, health, and to protect the moral and major rights and freedoms of other people”.

50. Uzbekistan support the idea that religion should accomplish its role in introducing the highest spiritual, moral and ethical values, and in forming a part of the historical and cultural heritage among the population. But it is not admissible to put religious slogans on the banner in the struggle for power - a pretext for intervention in politics, economy and legislation - because it is considered as serious potential threat to the stability and security of the state.