PRESIDENT KARIMOV'S CONSTITUTION DAY SPEECH - "DON'T DESTROY THE

UNCLAS TASHKENT 001474 E.O. 12958: N/A TAGS: PREL UZ SUBJECT: PRESIDENT KARIMOV'S CONSTITUTION DAY SPEECH - "DON'T DESTROY THE OLD HOUSE BEFORE YOU BUILD THE NEW ONE" ¶1. (SBU) SUMMARY: On December 5th 2008, Uzbek President Islom Karimov delivered a speech commemorating the 16th anniversary of the adoption of Uzbekistan's constitution and ushering in 2009 as the "Year of Rural Development and Improvement of the Countryside". Of note in a generally unremarkable speech, Karimov emphasized Uzbekistan's "transition" to a democratic system of governance, the need to stem corruption, curb the role of the state and expand the functions and powers of the citizens' self-governing bodies. Karimov's only mention of the U.S. was to name it as the source of the ongoing global financial crisis; he did not mention Russia at all. END SUMMARY. ¶2. (U) During his opening address, Karimov highlighted the building of "a democratic state, free market economy and developing civil society" which highly valued "humans, their interests, rights and freedoms". He further commented that Uzbekistan has "rejected the old, obsolete totalitarian idealized administrative-command system, (and) has chosen the new strategy of a law-governed democratic development of the country that meets the true interests of our people". Also of note, a bold-face section of the speech's English-language translation read that enhancing the GOU's work to implement a program "from a strong state to a strong civil society" serves as a "model of evolutionary development of the country". The speech contained multiple references to the rising social activeness of the population, and the need to enhance civil society institutions. ¶3. (U) A significant portion of the speech dealt with the ongoing global financial crisis. Karimov blamed the U.S.'s "failure and insolvency of mortgage lending" for the crisis, which led to a "disastrous fall of indices and market value of the biggest companies at the world's top stock exchanges". While he admitted that Uzbekistan has been affected by the crisis, he stated that his country had been able to mitigate its consequences. The President claimed that Uzbekistan has "denied the methods of shock therapy, which were persistently imposed upon us, as well as naive and deceptive conceptions about the self-regulating nature of market economy". Further, he added, the transition from an administrative-command economy to a market system of regulation will be gradual, as it is wise "not to destroy the old house until you build a new one". In short, Uzbekistan has mitigated the internal 
effects of the crisis, by balancing its policies of reforming, modernizing and diversifying the economy. Uzbekistan has also increased its capital basis and levels of liquidity in its banks, which further helps protect the country from the damaging consequences of the global crisis, according to Karimov. ¶4. (U) Economic figures of interest: Karimov spoke proudly of several economic statistics during the speech. He specifically highlighted the fact that the total capital for Uzbekistan's eight leading commercial banks increased 42 percent, and was expected to double by 2010. He highlighted the Microcredit Bank, which provides credits to small businesses, and which now has 78 branches and 270 "mini-banks" throughout the country. The bank's total capital is expected to reach 150 billion soms (approximately $115 million) in the unspecified future. Regarding external debt, he stated that the total external debt of Uzbekistan made up 13.3 percent of GDP, and did not exceed 31 percent of export volume. In 2008, Uzbekistan will implement foreign investments worth over $1.5 billion, 70 percent of which were direct investments. Inflation thus far in 2008 was 6.6 percent. (COMMENT: Unofficial estimates put inflation at 20 percent and higher. End Comment). Average salaries from 2007 to 2008 increased more than twofold. ¶5. (U) 2008 - "Year of the Youth": Karimov highlighted his country's 2008 accomplishments, including improving children's health care and schools, and raising employment levels for young graduates by 660,000. He cited 2009 as the "Year of Development and Improvement of the Countryside", which will focus on improving drinking water, electricity, roads and transport services in Uzbekistan's rural areas. He also mentioned the need to implement agricultural reforms to improve soil fertility. ¶6. (U) Thanks to the Outside World: Karimov thanked Uzbekistan's foreign partners and international organizations which "render significant and indispensable assistance". He specifically named the World Fund for Improving Nutrition, the Japanese government, the Saudi Development Fund, the Kuwait Arab Fund for Economic Development, the Islamic Development Bank, the United Arab Emirates, Asian Development Bank, and KFW Bank of Germany for their in-country donations and contributions to infrastructure projects. ¶7. (SBU) Comment: Karimov did not specifically mention the United States or Russia by name, and instead thanked Uzbekistan's "representatives of foreign and international institutions". Such speeches send important signals to the bureaucracy, but are generally not known to blaze new paths in real policy and this one was no exception. Uzbekistan's printers, however, have been given ample notice to start the presses for the soon to be ubiquitous billboards of happy farmers and their smiling president lauding the "Year of Development and Improvement in the Countryside." Under the rubric of this upcoming year of rural development, there will be opportunities for USG programs, including USAID; rural water and agricultural activities, to make inroads in Uzbek acceptance and recognition of U.S. contributions. The impact of such programming will be felt not just in terms of economic development, but also in terms of empowering rural populations and U.S. public diplomacy. End Comment. NORLAND To view the entire SMART message, go to URL http://repository.state.sgov.gov/_layouts/OSS SearchResults.aspx?k=messageid:a78bde8c-0e7c- 4733-8c2d-0363d424c705