Friday, September 08, 2006

Will Uzbekistan reinitiate privatization efforts on a large scale?

A comment to an earlier piece on Alisher Usmanov and his purchase of the Russian newspaper “Kommersant” mentioned an interesting tidbit about the appointment of a new head of the state privatization committee (GosKomImushestva) in Uzbekistan. While the person leaving the comment had suggested that this new appointee is only 35 years old, another contact has told me that he is only 29 and that he was chosen by Gulnara Karimova, the daughter of President Karimov and, more recently, a pop music star. Regardless of whoever backed this appointment and whether the new head of the committee is 29 or 35, does the appointment of somebody from the post-Soviet generation to this position suggest that Uzbekistan will reinitiate the privatization process, which had never been completed to the same extent as in Kazakhstan and Kyrgyzstan?

There are reasons to believe that Uzbekistan may be thinking again about privatization. Afterall, there eventually will be a presidential succession in Uzbekistan. If various people control certain sectors of state property now, it is likely they might lose that control once a succession takes place. If the property is at least privatized, it makes the redistribution of assets more difficult in such a succession scenario. The Kazakhs, of course, are far beyond this logic. They are now trying to put various large assets that had been privatized in the 1990s on international stock markets so as to make re-privatization difficult during a succession. If that were to ever happen in Uzbekistan, a lot still needs to be privatized and a lot needs to be done to ensure that privatized assets can meet the international standards demanded of stock markets in the U.S., Canada, Europe, and Japan.

It would be quite ironic if that, after 15 years of the United States’ urging to privatize, the Uzbeks started their big drive now, when U.S. engagement and the presence of USAID and other international donors are at an all time low.

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