Rentierism, Dependency and Sovereignty in Central Asia

Recommendations

Info

accounting for about 40 percent (Gleason 2003: 119). In the second decade of independence the Uzbek government attempted at cushioning the fall in cotton prices with a partial liberalization of its economy. Yet, the cotton industry remained subject to state orders and state control. The winners in the new Uzbekistan have been those at the apex of power and their clients (Collins 2009: 270; Ilkhamov 2007). According to a report by the International Crisis Group, money obtained from the sale of cotton circulates within a small elite, and rarely if ever enters the agricultural financing system: ‘[o]ne estimate is that as little as 10 to 15 per cent of the income generated by the sale of cotton goes back into agriculture thus to the farmers (2005: 4-5). The development of the oligarchy that governs today’s Uzbek cotton industry goes back to the 1970s when a ‘clear-cut cotton nomenklatura had developed, with ‘cotton-barons’ dominating the [cotton] complex, making use of falsified output and yield data, illicit trade practices and forced labour’ (Spoor 1993: 11; see also: Rumer 1989; Vaksberg 1991; Khalid 2007). The effects of the so-called ‘cotton curse’ are best visible in the large numbers of labour migrants to Kazakhstan and Russian. In 2004-2008 as many as 2.5 millions Uzbeks left the country - a fact that the Uzbek government has officially denied – and by 2008 remittances consisted 13 per cent of the Uzbek economy (ICG 2010a: 3). The workers who until the recent introduction of Western Union carried their earnings back home in cash were subject to indirect taxation by the state agencies at various steps of their journey (Collins 2009: 268). Other important sectors of the post-Soviet Uzbek rentier economy have been gold and energy sales – mainly gas – which account for 14% of export value. Gas is transported through the Russian-owned Gazprom pipeline network via Kazakhstan (Spechler and Spechler 2009: 358- 359). Finally, towards the end of the 1990s and in the first half of 2000s, the Uzbek government established strategic alliances with the US which further deep the rentier character of the Uzbek state and economy (Hiro 2009: 173-176). In 2000 Uzbekistan received considerable amounts of equipment under the Foreign Military Financing programme. Military alliances deepened on the eve of the ‘war on terror’ which led to the establishment of a small military base in Uzbekistan in which around one thousand personnel were stationed. During the first year the base earned the Uzbek government around $450 millions in grants and credits (Spechler and Spechler 2009: 366). However, the military alliance was abruptly terminated by the Uzbek regime in 2005 (Rumer 2006), prompting a turn towards Russia and China and search for new grants, credits and deals (Hiro 2009: 190). Today’s Uzbekistan is a well diversified rentier state whose roots can be directly traced back to the Tsarist and Soviet period. The regime survives primarily due to rent obtained from the sale of cotton, gold and gas which allowed it to fuel patrimonial networks and to pay for fairly large military and security apparatus. In this respect the Uzbek regime is very similar to neopatrimonial regimes which have ruled various parts of the Middle East (Hinnebusch 2006) as well as sub-Saharan Africa (Le Vine 1980; Bratton and van de Walle 1994; Bratton and van de Walle 1997). The remittances indirectly allow the government to maintain social peace and subsidise wages of the local bureaucracies even though the regime does not want to acknowledge this. Turkmenistan is another Central Asian state with a rentier character, which even more than Uzbekistan, took its shape during the Soviet period and blossomed in the post-independent period. The critical juncture in the development of the Turkmen rentier state was the period towards the end of the 1970s and the beginning of the 1980s when natural gas came to dominate the republic’s economy. According to one author as early as 1970 the SSR Turkmenistan supplied 24 percent of natural gas in the Soviet Union whose share rapidly rose to just under 33 percent by 1975 (Ebel 2000: 4). Today Turkmenistan ranks as the word’s fourth largest potential gas producer, after Russia, the United States, and Iran. Outside the natural gas sector, the industrial base of the Soviet Turkmenistan was grossly underdeveloped and traces of the modern industry (particularly textile enterprises) that existed survived solely thanks to the Soviet central subsidies. The Soviet planners left the republic underdeveloped largely due to its remote geographical position. Another important element of the Turkmen economy – similarly to Uzbekistan – was cotton production. In the 1980s, more than 50 percent of the republics population was employed 6 Copyright PSA 2011
on the cotton fields (Gleason 1991: 342), its sole major agriculture product. A major boost to cotton production was provided by the completion of the Karakum Canal (over more than 1,200 kilometers) which diverts water from the Amu Darya into the southern desert regions of Uzbekistan and Turkmenistan. On the eve of independence cotton, oil and gas made up 80 per cent of Turkmenistan’s industrial economy (Gleason 2003: 107). Furthermore, the cotton industry was still the largest employer in the country whereas gas guaranteed the most significant revenues to the national government (Anceschi 2009: 66). Leading on, similarly to Uzbekistan the bulk of the cotton produced in Turkmenistan during the Soviet times was preceded and manufactured outside the republic in the northern industrial centers in Russia and Ukraine. Similarly gas was sent through an inter-Union pipeline system, ‘to the European zone of the Soviet Union, whose high demand for fuel could only be satisfied by massive imports of oil and gas from other regions of the USSR’ (Anceschi 2009: 66). The collapse of the Soviet Union strengthened the regime’s dependency on gas and cotton as well as on the pre-existing relationships with its economic partners. As in the case of Uzbekistan the key in Turkmenistan’s quick transition towards a rentier economy was price liberalization which followed the disintegration of the Soviet Union ‘[t]his enabled Turkmenistan to charge world market prices for the gas it supplied to its former Soviet era customers in Ukraine, Georgia, Russia, and other countries’ (Gleason 2003: 109). In the first two years of the post-Soviet Union period, Turkmenistan was second only to Russia in benefiting for adjusting prices to world levels (Ancseschi 2009: 72). On the negative side Turkmenistan like Uzbekistan very quickly became over-exposed to volatile – or cyclical - energy prices on the international markets (Stevens 2008) and firmly linked their post-Soviet fate with the Russian controlled pipeline system, a dependency which was only recently broken. It appears that the new Turkmen regime was acutely aware of the situation in which it found itself. For instance, in the beginning of the 1990s the Turkmen government actively participated in efforts to build a pipeline which would run under the Caspian Sea and connect Turkmenistan to non-Russian markets. Those efforts largely failed by 2000. In the next phase, Turkmenistan in classic rentier-state-style, embarked on an economic program of ISI. Since the mid-1990s the government financed the development of a modern textile industry processing domestic cotton and silk, which became the centrepiece of ISI (Pomfret 2006: 93). However, the much hyped modernization resulted in the production of low-quality manufactured goods that could not compete on the international markets (Ancseschi 2009: 75). The main reason for this failure was a lack of technical capacity. At the same time, the Turkmen regime did not attempt at far reaching economic liberalization. Rather two key sectors of gas and cotton stayed in government hands, which acted to maintain strict administration and financial control over them. State controls over the economy allowed the ruling regime to fuel and uphold a vast patronage system (Collins 2006: 303). Kiren Chaudhry has argued that historically rulers of the rentier states in the Middle East were also extremely hostile to the free market which they viewed as being politically dangerous because ‘a functioning market provides opportunities for mobility that undercut lineages and traditional rights of privileges, thus threatening the status quo. Market creates inequalities in wealth that may not match existing patterns of income distribution, status, power, and entitlements; they dislocate groups in both the political and economic realms’ (1994: 4). Following the same logic of non liberalisation and upholding existing structures strategy the Turkmen regime also successfully attempted at sustaining parts of the Soviet welfare system throughout the 1990s, as argued by Richard Pomfret: ‘[t]he universal benefits from the Soviet era, such as pensions at 57 for woman and 62 for men, were supplemented by free provision of gas, electricity, water, and slat for residential use’ (2006: 90). Again the behaviour of the Turkmen regime mirrors that of the Middle Eastern and North African regimes. John Entelis argued that in the Middle Eastern and North African states ‘a sort of “ruling bargaining” was struck by the leadership with its people at independence under which the populace gave up its rights to independent political activity in return for the state’s provision of social welfare’ (1996: 45). This does not mean, however, that an ordinary person or every region in the country is a winner. 7 Copyright PSA 2011
Page 1 and 2: 61 st Political Studies Association
Page 3 and 4: states can be characterized by the
Page 5: which besides being a cotton produc
Page 9 and 10: Leading on, in the Soviet Union the
Page 11 and 12: Kyrgyzstan’s ever more authoritar
Page 13 and 14: political calculations of the Centr
Page 15 and 16: Collins, Kathleen. 2006. Clan Polit
Page 17 and 18: Kamp, Marianne. 2004. ‘Between Wo
Page 19 and 20: Ostrowski, Wojciech. 2009. ‘The l
Page 21: Copyright PSA 2011 21

Rentierism, Dependency and Sovereignty in Central Asia

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?