Part of the reason that small and medium enterprise is suffering so badly is the lack of clear channels of communication between businesspeople and the government. Uzbekistan’s treatment of civil society groups makes it nearly impossible for NGOs and business associations to operate without official government support. Under the guise of a crackdown on money laundering, the Uzbek government has effectively stopped the transfer of foreign funds to all Uzbek civil society groups. In the Ferghana valley, the government has forced hundreds of civil society groups to shut down. The banking sector is so tightly controlled, that NGOs and business associations are simply not able to legally make use of foreign assistance.
The government of Uzbekistan apparently sees control of civil society as a vital issue. Instead of allowing civil society to serve as the glue between the government and the people, they are effectively breaking any such bond, which could pit the people against the government. Furthermore, in western countries, the presence of the government is not deeply felt in daily life. In Uzbekistan, however, citizens feel the presence of the government in almost every activity outside the home.
Under the guise of a crackdown on money laundering, President Karimov issued a decree to set up a committee to review all questionable bank transfers, which has effectively stopped the transfer of foreign funds to all Uzbek civil society groups.
The co-opting of an umbrella association on NGOs provides an illustration on how the government seeks to control all civil society activities. Approximately 300 civil society groups in Uzbekistan formed an umbrella organization called the National Association of NGOs of Uzbekistan (NANUZ). These organizations held a meeting in Spring of 2005, and elected the Chairperson of the Business Women’s Association, Dildor Alimbekova, to be the president of the umbrella organization. The day after the meeting, officials forced participants to attend a second day of activities in which the previous day’s vote was recalled and the director of the Timurid Museum was appointed president of NANUZ through a vote forced by intimidation and coercion. Meanwhile, Ms. Alimbekova was put in charge of the national NGO support fund. Some suspect that she was given this role as a consolation, but once the fund’s activities begin, the government will quickly remove her from this post.
Overall, the economic situation in Uzbekistan is a dire one, caused in large part by the government’s obsession with control. This obsession is seeking to crush independent civil society, especially following the events of May 2005. The result of this arrangement is a massive coordination failure in which entrepreneurs, have no independent voice with which to advocate for a better business climate, while policy-makers have no way of assessing the needs for a robust and diverse economy.