Blank on the Anti-Democratic Backlash

by Nathan Hamm on 4/3/2006 · 19 comments

Stephen Blank has a great article at EurasiaNet on the crackdown against democratic forces in Central Asia. He makes an important observation regarding an oft-overlooked reason for the crackdown, at least as far as Uzbekistan is concerned.

As the experience of the Andijan entrepreneurs indicates, the full dimension of anti-democratic repression in Central Asia cannot be properly understood unless one realizes that a major motive for it is essentially greed. The Andijan tragedy might not have occurred if greed did not play such a large role in the official decision-making process.

Subsequent Uzbek policy decision can also be linked to avarice on the part of the country’s leaders. For instance, a Rand Corporation report in 2005 suggests that one reason for Karimov’s mounting unhappiness with the former American air base at Karshi-Khanabad was his knowledge that the family of former Kyrgyz leader Askar Akayev, then in power in Bishkek, was making a fortune off of concessions at the US base at Manas, outside the Kyrgyz capital. Ultimately, Karimov opted to expel US military forces from Uzbekistan after he could not reach new base-terms with American officials, the report stated, basing its assertion on interviews with Washington-based Uzbek diplomats.

And the important thing, Blank says, is not so much that Central Asian leaders are corrupt but that there are no property rights in the region. And without property rights, he says, there will not be liberalization, rule of law, or democracy.

He closes on a pretty pessimistic note.

While such a system may seem outwardly stable, in Uzbekistan and Turkmenistan there is good reason to believe that we are seeing failing states hollow out before our eyes. Thus, the anti-democratization trend stands a good chance of culminating in upheaval. Any attempt to reverse the current, dangerous trend will stand little chance of success unless those promoting change pay attention not only to the need to promote basic civil and human rights, but also to the defense of property rights. Without the latter, the former can neither be achieved nor secured.

I entirely agree, and think that the importance of property rights, for whatever reason, do not get anywhere near the amount of attention they deserve from most advocates of liberalization in Central Asia.


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– author of 2991 posts on 17_PersonNotFound.

Nathan is the founder and Principal Analyst for Registan, which he launched in 2003. He was a Peace Corps Volunteer in Uzbekistan 2000-2001 and received his MA in Central Asian Studies from the University of Washington in 2007. Since 2007, he has worked full-time as an analyst, consulting with private and government clients on Central Asian affairs, specializing in how socio-cultural and political factors shape risks and opportunities and how organizations can adjust their strategic and operational plans to account for these variables. More information on Registan's services can be found here, and Nathan can be contacted via Twitter or email.

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{ 19 comments }

Peter April 4, 2006 at 1:04 am

It is doubtless interesting that this piece was written, though some of the premises are a bit of a stretch. There are obvious prescriptive inferences for multilateral international organisations in stating that the greatest required impulse for reform in Central Asia lies in strengthening property rights, but that doesn’t make a lot of sense in real terms. The majority of IMF efforts have, rightly if unsuccessfully, concentrated on seeking financial growth and stability. Realistically, market reforms are testable and subject to routine assessment, while something like property poses more problematic questions for the international community, as Russia has demonstrated.
The suggestion that Andijon was actually a property grab is nothing more than a theory, and a pretty far-fetched one at that. In actual fact, the incident illustrates the root cause for the Uzbek regime’s unwillingness to make way for the growth of small business. Correctly, it senses that this could engender a model of civil society that it does not recognise as the future it envisages for the country. Perhaps, in retrospect, there is some scope for regretting the international community’s failure to offer more assistance to an apolitical business climate in Uzbekistan during the brief glimpse of opportunity presented in the wake of 9/11. (Interestingly, there are some Western business concerns operating in the Ferghana Valley, but they are decidedly a rarity.)
However, if there one thing that everyone can agree on, then that is the fact that the Uzbek regime is as thieving as it is murderous. It would be intersting if anybody could demonstrably diagnose this as the cause of either arbitrary consolidation of power or of a concious grab in advance knowledge of systematic and terminal institutional breakdown. In either event, the apparently predominant criminal make-up of the Uzbek administration suggests a strong if perhaps ineffective snaction that the international community has at its disposal. Though the EU has done something in this direction, it is imperative that the United States adopts a similarly rigourous position. Frankly, if the United States were half as agressive with a nasty and evil regime like Uzbekistan as they have been with either Libya or Cuba, then it would make more ripples.
The bottom line is that it is easy and obvious to breezily assert that Central Asia authoritarianism hinges significantly on financial duplicity, but it is likewise superficial and fatuous to derive from this that this dynamic can be purely be perceived fully in terms of property rights. If, as Blank suggests, we are seeing “failing states hollow out before our eyes”, then Central Asia is becoming an imperative priority for U.S. foreign policy. Rather than adopting the current ambiguous stance, the West should adopt an active policy of making Uzbekistan into the pariah state it deserves to be. In the short term, there is no better way of doing this than targetting the business interests of the leadership wherever and whenever possible.

Tashkent resident April 4, 2006 at 1:12 am

I’m dubious as always about this “failing state” scenario as applied to Uzbekistan.

But the novelty of Blank’s argument supposedly relates to the failure of property rights. Oddly, he starts off by pointing to the issue of the K2 base — implying what? That it’s wrong for the Uzbekistan govt to request that the US govt pay up for use of these bases? Call this particular action greed if you will, but it sounds to me like a reasonable assertion of property rights by the Uz govt.

Dolkun April 4, 2006 at 1:15 am

Property rights are absolutely vital, as de Soto points out in “The Mystery of Capital.” But I think this is a chicken-and-egg argument, with property rights getting laid and corruption doing the laying.

The inability to defend ones civil, or if you will economic, rights via a legal system with clear rules is most likely not an accident. In a country where the leadership recognizes that strengthened property rights will unlock the mystery of capital, then all that remains is for some smart and consistent reform. But in a country where the leadership sees strengthened property rights as interfering with its ability to do whatever it likes, then good luck. (BTW, I seem to recall that Nazarbayev invited de Soto to deliver lectures a couple years back.)

A good example is the GOU’s ability to stop grant payments and prevent individuals from withdrawing money from their own accounts. With property rights, you could go get your money … but the government would have to find other ways to control NGOs and manage its fixed exchange rate. It would also have to pay fair market value when it tears down a neighborhood, and before you know it, al Qaida’s running the show.

Matt W April 4, 2006 at 3:15 am

Dolkun: I’d agree that it’s more about stopping the emergence of property rights than it is about grabbing property (i.e. I think Uzbek officialdom has repeatedly proven that they’d generally rather have a proportionally-larger piece of a smaller pie than have absolutely more while letting others prosper). Subtle difference, but important nonetheless. If only these guys would relax and let others eat as well…

It reminds me of my favorite Uzbek expression about running a business: “Here in Uzbekistan, every sheep has fifty rams”– the vulgarity of the statement is not apparent at first…

And as for the Andijon events in particular– yes, perhaps a property grab (though not an exceptional one), again, part and parcel to dismantling the old Obidov order– remember, these were businesses that had flourished under Uzbekistan’s longest-standing hokim.

David April 4, 2006 at 4:17 am

It seems to me that weak property rights are absolutely fundamental to these political systems. It is a hugely powerful part of the system of repression – when you can threaten to take away somebody’s business or land it means you can often avoid mass repression. Of course, if you are incompetent or excessively greedy(Karimov et al) you need to shoot people as well. But it was always easier to get international attention in Tashkent for the arrest of a journalist than for some poor businessman who had been dispossessed. Absolutely nobody responds to violations of economic rights, although in the long term they are just as important. Incidentally, on the base there were figures of up to $10 billion going around for a long-term deal. True or not, I don’t know, but if the US had done a deal, they would still be there, regardless of Andijan, etc.

Dolkun April 4, 2006 at 4:33 am

Matt W,

I’ve also observed the overwhelming tendency to zero-sum thinking. The idea that the economy can grow, and your cut along with it, doesn’t seem to have made it south of the Shimkent border. I’ve heard of visits by developing country MPs to the U.S. Congress, and the only thing they’re impressed with is the congressional bling bling. Very disappointing to their handlers, but maybe the lesson isn’t all wrong.

Dan April 4, 2006 at 4:57 am

How can property rights be promoted in the absence of the rule of law? Would it be possible in Uzbekistan to improve this section of the legal system while leaving other areas untouched? A number of Asian countries had fairly effective property rights systems but no political freedoms (SKorea and Taiwan before democratisation, Singapore, Indonesia etc.) What could be done to get Uzbekistan at least on to that track? Answers anyone?

Nathan April 4, 2006 at 6:58 am

The suggestion that Andijon was actually a property grab is nothing more than a theory, and a pretty far-fetched one at that. In actual fact, the incident illustrates the root cause for the Uzbek regime’s unwillingness to make way for the growth of small business.

Isn’t that a property rights issue? The businesses can’t grow because no one has a right to his property. And Blank is saying that Andijon–the arrests of the businessmen that triggered the protests, anyway–certainly was in part a property grab. I thought that was fairly well-established.

Peter April 4, 2006 at 8:08 am

The issue is not whether it was or was not a property grab, but whether that was what lay at the heart of government actions. In the passage after the quote you have lifted out of my comment, I suggested that the government’s most pressing consideration in the Andijon scenario was the suppression of an alternative civil society. It is this reading that is, as far as I know, the most well-established.
As economic analysis goes, it is hardly a bold proposition to assert that a state that accords itself the right to arbitrarily seize private property will in all likelihood stagnate. Even the Soviet-style Uzbek nomenklatura must know this. As somebody noted in the comments above, the very stifling of enterprises (through confiscations among other means) denies well-positioned individuals the opportunity to profit from corruption and clientelism. Yet, Karimov’s regime persists in its behavior because it does not perceive these issues in economic terms. For Blank to do so seems a trifle fanciful. So, he contrives some kind of bag-snatching, killing the goose that lays the golden egg paradigm that doesn’t actually make a whole lot of sense to me. In other words, those who can will rob as much as they can until the whole edifice comes tumbling down.
I would suggest that the parallel with Russia is the most helpful here. That is a country where there is some basic semblance of property rights for those who subordinate themselves to the state’s will. I am certain that those businessmen would have had every chance of retaining control over their property had they tempered their religious-political activities. Therefore to rephrase the misunderstood quote, a property grab may have taken place in Andijon, but property was far from being the main issue of contention. Blank makes an interesting case that suggests otherwise, but I simply beg to differ.

Rustam April 4, 2006 at 9:07 am

Peter,

Your point of view that religious-political activities are at the centre, the main reason that could explain the actions of Karimov’s regime, at first sounded to be correct for me as well. However, it is not as clear cut as it seems, why?
The main reason why the preoccupation with the civil, political as well as religious beliefs of property owners is not the main factor that could explain the actions of the regime is its make up as of today. I mean in Uzbekistan’s case we do not have any viable judicial system, no lawyers defending the businessmen and very high power concentrated on the hands of “law enforcement” agencies, we don’t have Soyus Promishlennikov (Union of Industrialists) in Uzbekistan, we don’t have Chubais, i.e people from yesterdays government doing legitimate business. There are thousands of cases when businesses of ethnically Russian Uzbek citizens, foreign businessman (I remember the case of a businessmen from the Netherlands, he used to own, I think, more than 10 petrol stations in Tashkent and all of it was confiscated from him) and very secular Uzbeks was confiscated, not only confiscated they spent more than a year in jail on the bases of made up charges. What I want to say is that it would have been bearable if the situation in Uzbekistan was as good as in Russia, even taking into account the Yukos case, in Uzbekistan, the regime is sick with the greed. There are numerous cases when Gulnora Karimova (daughter) came to restaurant and other business owners and made them financially ridiculous offers, the offers that they could not refuse, God Father style. So at first there was several camps, such as, law enforcement people, street, i.e. mafia and Gulnora. Now as I see, it is Gulnora and under her back law enforcement, mainly SNB, papas bodyguards. Did you hear about the Zeromax, the company came from nowhere just few years ago and now owns pretty much everything in Uzbekistan, guess who is at the top, you are right. Therefore there are a lot of these secular businessmen who are waiting for the time to tear into peaces her and her companies, including the street.

Brian April 4, 2006 at 9:23 am

The Center for International Private Enterprises has a really intersting short report (2004) about the business climate in Uzbekistan (with some nice examples) and states that infringement of property rights is one of the key bad thing:

http://www.cipe.org/pdf/publications/fs/suhir.pdf#search='property%20rights%20uzbekistan

Nathan April 4, 2006 at 11:00 am

Peter, Rustam essentially makes the response I planned to make. If Andijon was the only case, I’d say you’re right. And Blank isn’t saying that alternative civil society wasn’t a reason for the crackdown, nor is he even saying that it wasn’t an enormous reason for it. There are many more examples to show that one of the quickest ways to abject poverty and a prison camp in Uzbekistan is to be a successful businessman.

I think that’s what important about what Blank is saying is that far too many advocates of liberalization (the ones who do it for a living, most importantly) in not just Uzbekistan, but all of Central Asia, do not treat property rights as being as important as civil or political rights. There is some degree of obviousness to the point, of course, because I think that most of the more academically-oriented followers of the region fully understand the importance of property rights to economic prosperity and democratization. But I’m not sure that’s who he was addressing. (I wouldn’t necessarily expect to see him write this article for any of the other places I find his essays.)

Peter April 4, 2006 at 2:59 pm

To be exact, the professional advocates of liberalisation, namely the IMF, have consistently prioritised the need for economic liberalisation, regardless of what international governments may have made the most noise about. Blank hardly needs to convince anyone in the donor or multilateral organisation community of what he is writing about in that respect. However, the fact that such a vast proportion of the Uzbek economy is clandestine makes debate about the issue of property rights look pretty academic. I would imagine that most small and medium business enterprises have a pretty liberal relationship with their country’s arcance bureaucracy, which highlights the futility of speaking about something as ambitious as legal rights in financial affairs. It seems to me that what it boils down to is that the Uzbek government and some of its citizens have entered into a social contract based on the tacit acceptance of a black economy and the corruption that allows it to exist. The matter that the West needs to concern itself with is what happens when the economic decline that this engenders turns into an economic catastrophe. As insanely optimistic as it may seem, guidance on avoiding meltdown is the one thing that the Uzbek government could one day come to seek the help of Western governments for. Meanwhile, the thing that will actually spread well-being across the largest sector of the population is the currency reform that the IMF sought for so long, not the reversible and largely insignificant insistence on property rights that would, even in the unlikely best case scenario, offer solace to fairly restricted segments of the population. And even if stronger property rights were guaranteed, is there anything to suggest that they would have any tangible benefit on the actual economic welfare of the population at large?

Matt W April 4, 2006 at 8:33 pm

On comment #7: regarding the applicability of SE Asian economic-before-political reform models and their applicability to FSU states, here is an excerpt from an “Argumenty i Fakty” interview with Egor Gaidar regarding Russia’s chances to perform such an economic miracle, which I think may be about right for most of Central Asia as well:

“… [we want to live] like the French or the Germans, and for that we need two generations– 40 or 50 years. You could hope for a burst of growth; there are examples of countries displaying bursts of fast growth: Japan, South Korea. But they have different traditions, [particularly] a high level of responsibility among memebers of the elite and the state.”

(Print version: “Argumenty i fakty” #11 (1324), March 2006 page 4– sorry, I looked for an electronic version, but could not find it)

Anyway, I’m not sure if I totally agree with him, but I do think he has a point. Anyone have any strong opinion as to whether or not Kazakhstan is on the SE Asian path? Do officials there ruin small business ot just “dip their beak”?

Nathan April 4, 2006 at 10:33 pm

Matt, I get the impression that the situation in Kazakhstan is far better than elsewhere in the region, but that the elites are nowhere near as “responsible” (to use Gaidar’s term) as those in the East Asian success stories.

Peter, I’m sorry, I’ve been horribly imprecise the last couple days. For whatever reason, I was hedging around saying what I actually meant, which was not the IMF or the like. I meant the human rights NGO community, which too is why I mentioned the importance of the article being on EurasiaNet and not one of the more academic websites Blank occasionally appears on.

You’re right that currency reform would have a bigger impact, but to then poo-poo property rights as only being of benefit to a restricted chunk of society strikes me as incredibly short-sighted. Do what you will with the exchange rates, but deny people the rights to their property and a reasonable expectation of being able to enjoy the fruits of one labor and the economy will go nowhere. In fact, one only need look back at one of the big Korean complaints when Karimov went to Seoul to see how much harm the lack of property rights is to the country. Foreign investors can’t expect a return on investment (without a government to add some political angle to the deal, anyway) and Uzbeks can’t expect much success either. Of course, it’d also help a ton if agricultural land and the right to choose what crops to grow were given out to those who worked the land.

Peter April 4, 2006 at 11:53 pm

Matt,

That was a well-remembered snippet from the AiF article:

“- СКОЛЬКО нужно крутить рыночные педали, чтобы преодолеть отставание и бедность?

– Бедность в Африке, в России, в Китае или, скажем, в Америке и Швейцарии – это разные понятия. Китай в последнее десятилетие демонстрирует поразительные темпы роста, но бедность там в два раза глубже, чем у нас. Но ведь мы хотим жить не как в Китае, а как во Франции или Германии. А для этого потребуется два поколения, 40-50 лет. Можно, конечно, надеяться и на рывок. Есть примеры стран с резким ускорением – Япония, Южная Корея. Но там другие традиции, высокая ответственность элиты и властей.”

Do you have access to EastView – http://dlib.eastview.com/newsearch/basic.jsp

It has all Russian newspapers on an electronic archive. I’m not sure if its subscription only.

Peter April 5, 2006 at 12:00 am

Incidentally, on the question on whether anyone strongly holds the opinion that Kazakhstan is pursuing the SE Asian model, you only need to dig up statement after statement by the President and his ambassadors all over the world to hear that view. Whether it is it true or not is another matter. The macro indicators are pretty unequivocal on that front, so it depends if you can stomach the mantras about economic development before democratic development.

Matt W April 5, 2006 at 12:50 am

Thanks, Peter, great resource. That would have saved me some time this morning when I was trying to dig up the reference on the Internet.

Yes, Nazarbaev claims to be taking the SE Asian route, but most politically non-liberalizing leaders in the region are. What I should have asked was: is there anyone here commenting on Registan that believes that Kazakhstan is actually on this path and cares to make this argument?

Peter April 5, 2006 at 7:25 am

Matt,

I think the question you are asking is quite germane to the debate over the primacy of property rights in the emergent and (non)-democracies. We in the West can talk about this sort of thing till the cow comes home, but when even an imperialist neocon like Nathan Hamm [;)] can state that Kazakh “elites are nowhere near as ‘responsible'” as they should be, we should be considering the notion of introducing some elasticity into the concepts in play. Now, one can either choose to disbelieve the goodwill of prevailing elites when they argue for the need to defer full democratic values pending satisfactory economic development (and I think we are all in agreement that it is wise to be intensely vigilant in this respect), or we reject that position out of hand. My view is that, morally ambiguous as it might seem, we are obliged to adopt a pragmatic position of accomodation. By which, of course, I mean Kazakhstan not Uzbekistan.
Of course, where Kazakhstan is naughty, Uzbekistan is downright delinquent. Yet, that doesn’t preclude it from deploying the same rhetoric as a fig-leaf for its immoral practices. My dissatisfaction with the property rights spiel is that Uzbekistan has been developing and expounding the notion of collective interests over private and sectoral ones since its independence. But while the West more or less turns a blind eye to that reasoning in Kazakhstan, it has not been so forgiving in Uzbekistan. My argument is that getting into debates over rights and whatnot in Central Asia leads us into a blind alley of inconsistencies and contradictions. Which means that for all the repulsiveness of the current Uzbek regime, we are compelled to attack those limited sectors of the economy that are not percieved as threatening to the institutional base of the current political order.

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