In 2002, the bazaar in Andijan, Uzbekistan, witnessed an unusual scene. The police approached a trader selling coats and demanded to see his papers. When it became clear that they intended to confiscate his stock, the trader set every single coat alight and watched his capital go up in flames. He chose the path to bankruptcy over the humiliation of extortion.

Also on the Uzbekistan crisis in openDemocracy:

Nathan Hamm, “Andijan and after: what future for Uzbekistan?”

Matt Black, “Uzbekistan’s gift to radical Islam”

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The road from this extraordinary individual act to the events in Andijan on 13 May 2005, after days of protest over the incarceration of twenty-three popular local entrepreneurs, is not so long as it may seem. The trader who committed it may have done something exceptional, but the everyday experience that lay behind it was shared with millions of his fellow-citizens. This experience, which I encountered during fieldwork in the region from the late 1990s, reveals one of the crucial factors behind Andijan: how the finely honed skills of accommodation and survival preserved by the people of Uzbekistan through the difficult post-Soviet years started to break down under extreme economic and political pressures.

The road from burning coats to blood in the Andijan streets is not a story of the lures of Islamic extremism, nor even of growing absolute poverty: it is, rather, one of a fundamental breach of the social contract between state and citizen in Uzbekistan. The key element is a process of botched market reforms that bred mistrust and cynicism in an otherwise risk-averse population who have increasingly found all their avenues to livelihoods and dignity blocked – with no recourse left except desperate protest.

Between state and market

After independence in 1991 following the collapse of the Soviet Union, the government of Uzbekistan – dominated by its Soviet-era leader Islam Karimov – faced a serious dilemma: how to retain control of hard currency earnings from the leading export crop (cotton) when the international donor community [especially the International Monetary Fund (IMF) and World Bank] were pressing it to liberalise markets and privatise the economy?

The government in Tashkent was averse to a “shock therapy” approach to privatisation, especially of land. There were good reasons for this: land privatisation threatened the incomes of a rent-seeking state elite, and risked provoking popular discontent if the large collectivised farm sector started to shed jobs rapidly in a society with a collapsing social safety-net and no other means of employment.

The government seemed to be proved right: Uzbekistan was able to avert the precipitous decline in GDP and living standards of neighbouring central Asian states in the early 1990s, a fact documented in the United Nations Human Development Reports. But this short-term stability, amid partial, halting reforms that consolidated the economic and political privileges of a narrow social elite, had perverse long-term effects.

The important cotton production sector continued to rely on a command economy system requiring producers to fulfil delivery quotas, where they found themselves squeezed between high prices for inputs and sales to state buyers at well below world prices. Members of restructured former collective agricultural enterprises came increasingly to rely on their smallholdings (an entitlement inherited from the Soviet period) and on informal trade in local or regional bazaars. In rural Andijan’s increasingly tight economic environment, being able to sell at Karasu (Korasuv) bazaar and cross the border to Osh in Kyrgyzstan to trade more profitably became important “safety-valves”.

Although land was not privatised, legislation was passed between 1992 and 1998 that gradually expanded private access to land through leaseholds and the possibility of establishing private farms. The shortage of land in the populous Fergana valley, and the presence of different categories of claimants within the same territory, created a “zero-sum” game: land leased to aspiring private farmers on a long-term basis meant reduced allocations to households from collective enterprises. The weakest members of the community stood to lose most. Informal land sales and increasing levels of corruption in the distribution of resources started to generate popular outrage.

In summer 1998, villagers in the Dardak district of Andijan were angry. A group of men had been detained, amid rumours of jail sentences, after protesting the temporary confiscation of their household plots. They had worked in the cotton fields all year without receiving any cash payments (except for harvesting wages) and were now threatened with losing their main source of livelihood – growing rice on their smallholdings for self-subsistence and for sale. Dardak villagers were staring a winter of penury and hardship in the face.

The sense of injustice was unambiguous. In a neighbouring village, Mahbuba, the head of a cotton production unit, was bitter: “I broke my back on these cotton fields. And now they think they can fob me off with a tiny parcel of bad land to grow a few carrots and sunflowers. The farm manager sells all the good, irrigated land to the rich. Some of them even come from outside. Are we to starve?”

Rural producers felt they had a “deal” with the authorities that was now being reneged upon. Even farm managers, occupying the lower rungs of a pyramid of extortion leading all the way to Tashkent, felt like victims. The retreat of the state from the provision of employment and social welfare had left citizens to their own devices; they relied on social networks, self-help groups and, above all, informal economic activities.

A tightening noose

As if this were not enough, even the marginal spaces where sustainable livelihood in the Andijan region was still possible were being assailed. It would be a misnomer to describe the bazaar in Uzbekistan as “informal” since it is subject to strict regulations, both official and unofficial. Traders must formally register, but often have to pay multiple bribes: to the transport police, to bazaar officials and to border guards when they sought to enter Kyrgyzstan.

In the early 2000s traders were managing to survive these pressures, even as they ate into their profits. But on 11 July 2002 bazaar traders were badly hit when the government imposed a punitive tax on imports and strict regulations on trade (such as having to show documents of provenance, having a cash register and a shop). The legislation effectively closed down the bazaars, forcing the government to supersede it in another decree on 28 July that lowered the tax rate. Meanwhile, border closures on grounds of security threats also impeded the movement of people and goods, aggravating the situation.

The official decrees were partly a response to the proliferation of unregistered economic activities, which eroded the tax base and the government’s ability to finance public service. Many workers in the informal economy, who had lost their once-safe public sector jobs, now saw a predatory state eyeing their last remaining enclaves of survival.

The July 2002 decisions were also a reaction to demands from international financial institutions. The IMF had been urging the government to achieve the convertibility of the Uzbek sum by eliminating differences between official and black-market foreign exchange rates. The government pushed ahead with convertibility at an artificially high rate by effectively closing its borders to private trade and introducing high tariffs for goods to restrict demand for foreign currency.

A further significant development followed. As the government grew increasingly suspicious of the activities of donor-assisted non-governmental organisations (NGOs), their modest infusions of cash into the economy began to be choked. Stringent political and fiscal controls, ostensibly to combat money-laundering by local NGOs, made the work of foreign donors increasingly difficult. The fledgling Uzbek NGO sector was decimated.

In April 2004, foreign NGOs were required to re-register with the ministry of justice; some (most notably the Open Society Institute) were denied the right to operate in Uzbekistan. These measures exacerbated the climate of fear among the urban intelligentsia and professional classes.

The government strategy was essentially a rearguard action aimed at securing a grip over the economy and civil society. It soon backfired. As the economy deteriorated, the pot from which “sweeteners” could be offered to local elites and the wider population shrunk. The only option the state could see was even cruder administrative measures and outright repression – which continued with implacable logic and tragic consequences.

The Islamist conundrum

What of Islam? Central Asia has indeed been targeted by transnational Islamist movements and the Fergana valley has itself long been a bastion of Islamist revival and militancy. There were episodes of Islamic dissent in Fergana, most notably in Namangan, during the early years of independence.

Several factors increased the appeal of Islamist platforms: the post-Soviet scramble for resources; the progressive loss of legitimacy of the regime; indiscriminate repression acting to stimulate recruitment into oppositional movements; and the fact that Islam provides a locally familiar idiom for the articulation of notions of morality, social justice and community. This is, indeed, fertile ground for political players with an Islamist agenda.

It does not follow, however, that the disturbances in Andijan may simply be swept under the carpet with reference to the nefarious activities of Islamist terrorist groups or “armed felons”. At the heart of the Andijan events lies the need for a new social contract that addresses the crisis of provision, legitimacy and security that has plagued post-Soviet Uzbekistan. It remains to be seen whether any democratic forces will emerge to give voice to the longings and aspirations of the people of Uzbekistan or whether the country will remain in the grip of rival authoritarianisms.