President of Uzbekistan Islam Karimov delivered a speech on internal and external policies and priorities in socioeconomic development of Uzbekistan for 2005 and long-term perspective at the first joint session of the Legislative Chamber and the Senate of Oliy Majlis on 28 January.

The main long-term and strategic task is to steadily and gradually promote the country on the chosen way to democratic construction and formation of civil society, deepening market reforms and strengthening democratic values, he said.

Speaking the about strategy of development of the country, Karimov said that so called ?regulated economy? or ?managed democracy? models were not acceptable in Uzbekistan. He added that the country would adhere to the principles of the Uzbek model of reforms and state and social modernization.

?Strengthening independence, democratization and modernization of society remains a primary task for us?. Based on this, issues on poverty and backwardness of the country should be solved.

REFORS AND MODERNISATION

The country should pay attention to strengthening the role of the legislative power and achieving a balance among, legislative, executive and judicial powers to reform and modernize the life of the country, Karimov said.

Part of the presidential powers should be transferred to the upper house of the parliament, Senate, and to the government. Besides, professional lower house of the parliament should be formed and its powers and rights should be expanded.

The role and responsibilities of the prime minister and the government should be strengthened. He also added that the concrete measures on achieving independence and freedom of judicial power must be taken.

President said the long-term target of the country was to implement the principle of ?moving from strong government to strong civil society?. In this regard, additional measures should be implemented to decentralize the government and transfer part of authorities from the centre to local self-governing bodies, he said.

The country must cardinally strengthen the role of political parties and civil institutes in adoption of important state decision. Political parties should increase their authority among the population and ensure their financial independence. MPs, political parties and NGOs should serve as the main tool of public control over the activity of state structures, Karimov said.

At the same time, the President said that some NGOs, founded with use of sponsors? funds, are operating outside their charter and programs and pursue ?ordered aims?. Such projects, violating the country?s legislation, ?have no future in Uzbekistan?, he said.

?I want to underline once more that we are against any revolutions and fundamentalism in any appearance when it comes to reforming and modernization of the country,? Karimov underlined.

?We are confident that democracy and various so called ?open society models? cannot be exported and imported.?

?We are for evolutional, gradual reforms and modernization, which is necessary closely tied with transformation in social relations and lifestyle, and strengthening democratic values in the people?s minds,? he noted.

JUDICIAL REFORMS

President Karimov said the country pays important attention to reforming and liberalization of the judicial-legal system.

Thus, classification of crimes was reviewed and changed, and the list of less gross and publicly dangerous crimes was expanded. As a result, over 5,000 people, who broke the law and whose crimes were not representing large threat to public, were not jailed and paid compensation for 11 billion soums.

?Today the number of prisoners in Uzbekistan comprises 158 per 100,000 people, while this figure is 715 in the USA, 584 in Russia, 416 in Ukraine, 386 in Kazakhstan, 390 in Kyrgyzstan and 339 in Estonia,? the head of the state said.

It is time to review separate clauses of criminal and judicial legislation in part of strengthening control over processes of preliminary investigation and pre-court work.

?It is necessary to transfer the rights to issue sanctions for arrest to the courts,? Karimov said.

Another issue requiring solution is elimination of death penalty, the President said, adding that he did not mean introduction of the moratorium, but full abolishment.

During independence years, the number of crimes leading to death penalty was reduced from 33 to 2 ? terrorism and aggravated murder. At the same time, Uzbek legislation prohibits use of death penalty against women, minority and people above age of 60.

At least two-three years may be required to solve the issue of abolition of death penalty, he said.

To do that, it is necessary to carry out wide explanation work among the population, most of whom are against abolition of death penalty and build necessary premises for those sentenced for life imprisonment instead of death penalty, he explained.

The President also said law-enforcement bodies should reconsider their attitude towards entrepreneurs and the private sector, adding that the legislation should give more preferences and guarantees to businesses.

MEDIA DEVELOPMENT

President of Uzbekistan said concrete and gradual measures should be implemented in introduction of democratic standards in the country?s mass media. ?This is further liberalization of the activity of the press, television and radio, as one of the main components of deepening reforms in the country, and guaranteeing their freedom and independence,? he said.

To improve the situation and avoid self-censorship, economic freedom of mass media should be ensured. One of the ways to this, in the President?s opinion, is creation of an independent public fund to support mass media.

?This project will assist the process of formation of the system of state-owned and nongovernmental mass media,? he said.

Creation of the fund does not mean that mass media would operate only using its resources ? they should have their own financing from their activity, he continued. The fund, if created, will be supported by sponsors, internal and external, as well as state and nongovernmental commercial structures.

The fund should deal not only with development of nongovernmental mass media, but also with strengthening their material-technical base, and training and re-training personnel.

Islam Karimov also proposed creation of a public TV channel on the basis of the state-owned channel, and touched upon development of the TV and radio market.

FOREIGN POLICY

Speaking about priorities of foreign policy of Uzbekistan for 2005 and further years, the President said the country should take into account its national interests and security while determining its foreign policy.

?We are ready to actively cooperate with all countries with which our national interests coincide. At the same time, we want to have open relations for dialogue with countries we have different views on various issues of international life,? he added.

?Preserving peace and stability in Central Asia and turning this region in a sustainable secure zone is an important priority of our foreign policy.?

The country pays important attention to integration processes and market reforms, as well as formation of the single Central Asian market, which can attract more investments in the region and ensure its sustainable development, he said.

At the same time, in Karimov?s opinion, international terrorism, extremism, drug aggression and other transnational threats to regional security still remain.

?An important condition to ensure security, peace, stability and sustainable development in the region is our collaboration within structures like the SCO [Shanghai Cooperation Organization, CAC [Central Asian Cooperation Organization], CIS [Commonwealth of Independence States] and other organizations,? Karimov said.

?In solving foreign political tasks, Uzbekistan attaches great importance to development of collaborations within the UN. Uzbekistan is interested in expansion of involvement of the UN in solving regional and global security issues.?

The UN should be modernized and the tasks of its structures, first of all Security Council, should be reconsidered. However, at present there is no alternative to this organization, he noted.

Uzbekistan is interested in interacting with the Organization for Security and Cooperation in Europe, European Union and the North Atlantic Treaty Organizations in deepening democratic and market reforms, maintenance of security and stability in the country and in the region, he said.

Collaboration with large international financial structures and organizations like the International Monetary Fund, the World Bank, the Asian Development Bank, Islamic Development Bank and others will remain a priority of foreign policy.

Uzbekistan firmly supports international community in fight against terrorism, Karimov said.

Central Asia must become a zone free from nuclear and other weapons of mass destruction, while countries of the region should take obligation about non-spread of such weapons and ensuring security of objects where such materials are stored, he added.

ECONOMIC PRIORITIES

President Karimov said 2004 was a difficult year, but achievements were good. Gross domestic product of Uzbekistan increased by 7.7% for the first time during the years of reforms. Industrial output rose by 9.4%, production of consumer goods by 13.4% and of non-food goods by 18.6%.

Inflation rate dropped to 3.7%, while real incomes of population increased by 15% last year.

Agricultural production grew by 10.1% and the country collected 4.8 million tonnes of wheat and 3.5 million tonnes of cotton last year. Today 85,500 farms are operating in the country.

Exports of Uzbekistan increased more than 30%, while the share of ready products in export rose by 52%. Current account of Uzbekistan made up over US$1 billion.

The number of small business entities increased by 14% and some 425,000 new jobs (14% up year-on-year) were created in the private sector. The share of small business in GDP comprised 35.6%.

The volume of investments in real sector of Uzbekistan increased by 5.2% and comprised 20% of GDP last year. At the same time, the share of centralized sources of financing decreased and that of non-centralizes sources increased. Enterprises are using their own funds for investment and its share made up 43% from total investments. Foreign direct investments grew 1.5 times and were directed in oil and gas, as well as textile industries.

Administrative reform in the country is giving its results, leading to decreased participation of the state in economy. More than 20 state bodies were reorganized and the number of their personnel decreased by 22% or 40,000 people, Islam Karimov said.

Centralized system on distribution of material resources on quotas and limits were eliminated and activity of commodity exchanges changed cardinally.

Such products as cotton-fibre, lint, fuel and diesel fuel, mineral fertilizers, oil and others are traded through the exchanges.

One of the tasks, Karimov said, is to increase incomes of the population and to undertake measures to stop the growth of prices.

Commercial banks should seriously work to attract money of the population to deposits, in particular to long-term deposits.

Another priority in the economy is to ensure fast development of private sector and increase its share in the economy.

Although measures undertaken by the government allowed improving the business environment, it is early to say that all problems have been solved, he said.

In this regard, interference of state bodies in activity of private businesses should be limited. Besides, the government should review the system of sanctions against entrepreneurs, the President said, entrusting the justice, economy and finance ministries and other structures to prepare necessary suggestions for consideration.

Further, expansion of access for private businesses to resources and sales markets, as well as assortment and volume of products realized through exchanges should be ensured, Karimov said.

Finally, private entrepreneurs should be provided with more financial support and tax privileges. This support should be provided through the country?s banking system. Micro financing system should be broadened, including assistance of International Finance Corporation, the World Bank and the Asian Development Bank, he noted.

Speaking about expansion of small businesses and farms, Karimov said the share of the small businesses in GDP should be increased to at least 45% by 2007.

He entrusted Economy Ministry, State Property Committee, Finance Ministry, Justice Ministry in cooperation with Chamber of Industry and Commerce and other interested organizations to submit a package of state decisions on guarantees and preferences for small businesses, including:

1. Granting additional privileges in tax system, creating stable tax legislation, providing transparent and simply method of tax payment.

2. Decreasing and simplification of permission procedures for separate types of activity and gradual introduction of the system of registration of small businesses on an application basis.

3. Stimulation of creation of small enterprises and workshops, which would produce spare parts and components for large enterprises.

4. Creation of structures to render material-technical supply services and sale of production of small enterprises and citizens working at home, in particular, in rural areas.

Touching upon the issue of farms, Islam Karimov said they were more efficient than collective farms. This year, 406 collective farms will be reorganized into farms in accordance with the reorganization program for 2005-2007.

?It is important that procedures on allocation of lands and selection of farmers is transparent and fair and is held only on a competitive, tender basis,? he underlined.

Speaking about reforms in the banking and financial system, the head of the state said responsibility of financial and banking structures should be increased in implementation of tight monetary-credit policy, keeping stable inflation rate and increasing stability of national currency.

President said concrete measures should be taken to capitalize banks, increase their authorized capital and turnover funds and attract their free funds for investments, first of all, in real sector.

?It is necessary to undertake concrete measures to attract to banking turnover of significant financial funds and flows, which remain out of it.?

The President set reforms in housing and communal sphere as next priority.

Lack of heating, gas and water meters is creating problems and results in waste of these resources, as well as growth of tariffs and debts of the population, he said.

He criticised the management of housing and communal sphere and warned that if no measures were taken, corresponding officials would be called to account.

Further improvement of tax policy was named by Karimov as another important priority. Tax Code was developed and adopted in 1997 and does not meet present requirements.

In the last two years only, over 100 changes and amendments were introduced in the Tax Code and tax legislation, he said, adding that tax bodies should also be reorganized.

?In this regard, Finance Ministry, Economy Ministry, State Tax Committee, Justice Ministry with Chamber of Industry and Commerce should critically analyze current tax legislation and based on that prepare and submit the new edition of the Tax Code, which will envisage further simplification of legislation, unification of tax, decreasing tax burden, and improvement and liberalization of tax administration.?