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

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