EBRD OFFICIAL WANTS TO SEE POLICY SHIFT TOWARD

C O N F I D E N T I A L TASHKENT 000729

SIPDIS

ASTANA FOR ALMATY/USAID

E.O. 12958: DECL: 06/24/2018
TAGS: PGOV PREL ECON EFIN UZ
SUBJECT: EBRD OFFICIAL WANTS TO SEE POLICY SHIFT TOWARD
UZBEKISTAN

Classified By: Political Officer Tim Buckley for reasons 1.4 (B,D)


1. (C) On May 27 emboffs met with Turan Oz, Alternate
Director at the European Bank for Reconstruction and
Development (EBRD),who is responsible for nine countries,
including Uzbekistan. Oz, a Turkish citizen, expressed his
"disappointment" with his organization's harsh stance toward
Uzbekistan, which he sees as unproductive in promoting
Western democratic values in the country. He said that the
EBRD should find ways of reengaging Uzbekistan, particularly
in order to counter what he sees as the growing influence of
Russia and China. He was sure to mention Turkey as part of
the West "since it is trying to achieve the same thing here."
Oz lamented that "we never gave Uzbekistan a real chance,"
suggesting that it was unreasonable to expect major changes
in a short period of time. He conceded that only a small
minority within the EBRD share his views on outreach to
Uzbekistan, and he noted the U.S. delegate in London is
particularly harsh.


2. (C) Oz then shifted gears, noting that investors have good
reason to be pessimistic about Uzbekistan. He recalled
well-known horror stories in which the Government of
Uzbekistan changed economic policies mid-stream and assessed
punishing retroactive taxes on unsuspecting companies. Oz
also cast doubt on the "rosy economic data" that is
consistently published about Uzbekistan and elicited emboffs'
opinions of how much genuine economic progress there has
actually been. (Comment: Uzbekistan's economy has grown
across all sectors, but it is a case of impressive
percentages on a small base. The comprehensive reforms
necessary for job growth have not occurred. End comment.)


3. (C) Oz stated that the EBRD in Uzbekistan has never
recovered from the "disastrous" 2003 meeting in which
President Karimov was publicly humiliated on his home turf.
However, he said a fairly large local staff of 11 continues
to administer a few long-standing projects, using Early
Transition Country (ETC) funds to focus on developing the
private sector. The local office has not experienced any
operational problems, but on the other hand Oz was not
granted any meetings with the Government of Uzbekistan during
his visit -- standard treatment for EBRD visitors.

Comment:


4. (C) While we agree with Oz's inclination to find ways to
reengage Uzbekistan, Oz struck us as being somewhat
rudderless and unsure of how to proceed within his
organization. His criticism of EBRD's stance was also
unusual, and he seemed to speak more confidently about
Turkey's role than about the EBRD. Perhaps his main purpose
in meeting us was to pass the message that the U.S.
representative on the EBRD is too critical of Uzbekistan in
the hope we will exert influence to soften the stance. We
are confident the modest rapprochement with the West can
continue, but it is clear the EBRD remains in Karimov's
doghouse and will be last in line to benefit from any warming
trend.

NORLAND