Decision to Cut Investment Over Rights Abuses Welcomed
April 7, 2004
We commend the EBRD for its principled decision. Given the Uzbek government's continued appalling human rights record, the bank did the right thing in following through on its demands and in demonstrating it was serious about its requirements for reform.
Rachel Denber, acting director of Human Rights Watch's Europe and Central Asia Division

The European Bank for Reconstruction and Development has correctly decided to limit its investment in Uzbekistan over the lack of progress in human rights, Human Rights Watch said today.

The EBRD's Board of Directors took its unprecedented decision yesterday, following the expiration of the one-year deadline it had set for the Uzbek government to meet specific human rights benchmarks as a condition for further engagement. The bank concluded that "[a] year after calling for improvements of the political and economic situation in Uzbekistan […] there has been very limited progress and the Bank is no longer able to conduct business as usual." It decided to limit investment to the private sector and stay involved in public sector projects only to the extent that they directly affect the well-being of the general population, or involve neighboring countries.

"We commend the EBRD for its principled decision," said Rachel Denber, acting director of Human Rights Watch's Europe and Central Asia Division. "Given the Uzbek government's continued appalling human rights record, the bank did the right thing in following through on its demands and in demonstrating it was serious about its requirements for reform."

In a briefing paper published in advance of the EBRD's one-year assessment of Uzbekistan, Human Rights Watch documented the Uzbek government's persistent failure to take the necessary reform steps required by the EBRD, and called on the bank to suspend all public-sector lending to Uzbekistan until the Uzbek government makes real progress toward meeting the human rights benchmarks. Adding that exceptions could be made for projects that directly affect the health, education and well-being of the general population, Human Rights Watch stressed that projects falling into these categories would need to be closely monitored to make sure they served their intended purpose.

Significantly, the EBRD decision on Uzbekistan also makes clear that the bank will continue to monitor developments in Uzbekistan and press the government to make progress on the benchmarks, three of which pertained to human rights: greater political openness and freedom of the media, the free functioning and registration of independent civil society groups, and the implementation of recommendations by the United Nations Special Rapporteur on Torture following his 2002 visit to Uzbekistan. The bank is scheduled to adopt a new country strategy for Uzbekistan in spring 2005.

Human Rights Watch had encouraged the bank to continue to use the benchmarks as policy tools for reform, and to set up a coherent system of sustained monitoring of Uzbekistan's progress in meeting them.

"The benchmarks carry a real potential to trigger reforms in Uzbekistan," said Denber. "We are glad to see that the bank is committed to keeping them alive and hope to see it actively push the Uzbek government to fulfil them."

Human Rights Watch also called on the international community as a whole, in particular key shareholder governments of the EBRD and other international financial institutions, to do their share to promote the EBRD's demands for human rights reform.

"The EBRD has created an important momentum for reform in Uzbekistan that other actors engaged with the country should take advantage of," said Denber. "It is crucial that the international community speak with one voice on these issues and send a strong and coordinated message to the Uzbek government about the need to see tangible progress in human rights."

Human Rights Watch also encouraged the EBRD to build on the lessons learned from its experience with Uzbekistan, and further explore ways to maximize its potential to use its political mandate to trigger reforms as part of its engagement.

"The EBRD put its mandate to good use in adopting the benchmarks on Uzbekistan last year and in staying firm on its course with the decision it took just now, in the face of the Uzbek government's non-compliance," said Denber. "But it could do more to fully recognize and promote the direct relationship between political and economic reform."

Human Rights Watch said that as a first step, the bank should develop benchmarks relevant to its political mandate also with regard to other countries of operation.

"There are several other countries out there, particularly in Central Asia and the Caucasus, where a similar approach to that taken with respect to Uzbekistan would be warranted," said Denber. "We are convinced the bank's engagement could be significantly enhanced by using benchmarking as a standard method for measuring progress and linking the level of involvement directly to progress in meeting them."

Human Rights Watch said the bank's annual meeting, to be held in London on April 18 and 19, would be a good occasion for the EBRD and its shareholders to further reflect on the bank's potential to promote democracy and human rights as part of its engagement.