The Cotton Sector in Central Asia Economic Policy and Development Challenges Proceedings of a Conference held at SOAS University of London 3–4 November 2005 Edited by Deniz Kandiyoti Published in 2007 by The School of Oriental and African Studies University of London Thornhaugh Street Russell Square London WC1H 0XG United Kingdom Copyright © 2007 All rights reserved. Except for brief quotations in a review, this book, or any part there- of, may not be reproduced, stored in or introduced into a retrieval system, or transmit- ted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. ISBN 10: 0 7286 0378 0 ISBN 13: 978 0 7286 0378 3 Printed and bound in Great Britain by the School of Oriental and African Studies Print Room Cover illustration: Photograph by Thomas Grabka (www.grabka-fotografie.de) Contents Acknowledgements v Contributors vi Introduction 1 Deniz Kandiyoti 1 A Caste of Helot Labourers: Special Settlers and the Cultivation 12 of Cotton in Soviet Central Asia: 1944–1956 J. Otto Pohl 2 Cotton-Dependent Countries in the Global Context 29 John Baffes 3 Cotton in Central Asia “Curse” or “Foundation for Development” 54 Max Spoor 4 Legal Regulation of Cotton Exports in Uzbekistan 75 Mavlyuda Kulikova 5 Indirect Taxation of the Uzbek Cotton Sector: 90 Estimation and Policy Consequences Sandjar Djalalov 6 Cotton in Uzbekistan: Water and Welfare 102 Iskandar Abdullaev, Mark Giordano and Aziz Rasulov 7 Abandoned by the State: Cotton Production in South Kyrgyzstan 119 Alexander Kim 8 Kazakhstan’s Cotton Market 129 Olga Dosybieva iv 9 The Dark Side of White Gold in South Kazakhstan 133 Daur Dosybiev 10 The Emerging Actor of Decollectivization in Uzbekistan: 138 Private Farming between Newly Defined Political Constraints and Opportunities Tommaso Trevisani 11 The “Uzbek Agrarian Model” in Transition: 163 Inertia, Dynamics and Unsustainability Raphaël Jozan, Romain Florent, Samuel Martin, Olivier Munos and Marie Panarin 12 Demonstration and Advisory Services Activities 190 for Cotton Growing: A Case Study in Ak Altin, Uzbekistan Ian Houseman 13 The Cotton Sector in Tajikistan: From Macro-Economic 208 Impact to Social and Environmental Consequences Nargis Halimova 14 The Role of Children in Uzbekistan’s Cotton Harvest 217 Elliott Cannell Appendix: Summary of Papers Presented at the Conference 223 v Acknowledgements The conference on “The Cotton Sector in Central Asia: Economic Policy and De- velopment Challenges” was the result of a cross-disciplinary and multi-lingual dialogue. We owe special thanks to Alisher Ilkhamov who acted as conference co-ordinator. Jane Savory and Sara Hamza of the Centres and Conference Office at SOAS took faultless care of the logistics. Feruza Abdullaeva, Stefan Kirmse, Katerina Kist gave valuable assistance with translation and John Heathershaw with post-conference editing. We also thank Raphaël Jacquet, Editorial Manager of Central Asian Survey, who was responsible for producing this volume in its final form and preparing it for publication. vi Contributors ISKANDAR ABDULLAEV (Uzbekistan): Regional Researcher, International Water Management Institute JOHN BAFFES (USA): Senior Economist, Development Research Group, World Bank ELLIOTT CANNELL (UK): Project Manager, Environmental Justice Foundation SANDJAR DJALALOV (Uzbekistan): Regional Water Program Manager, Swiss Cooperation Office Uzbekistan Embassy of Switzerland DAUR DOSYBIEV (Kazakhstan): IWPR Correspondent in South Kazakhstan OLGA DOSYBIEVA (Kazakhstan): IWPR Correspondent in South Kazakhstan ROMAIN FLORENT (France): PhD Student MARK GIORDANO (USA): International Water Management Institute, Sri Lanka NARGIS HALIMOVA (Tajikistan): MS Student, Royal Institute of Technology, Stockholm, Sweden IAN HOUSEMAN (UK): Freelance Consultant; Team Leader for ADB ISSAD Project, Uzbekistan RAPHAËL JOZAN (France): PhD Student DENIZ KANDIYOTI (UK): SOAS, University of London ALEXANDER KIM (Kyrgyzstan): Auditor specialist for cotton gins MAVLYUDA KULILOVA (UZBEKISTAN): Center of Legal Problems Studies SAMUEL MARTIN (France): PhD Student OLIVIER MUNOS (France): PhD Student MARIE PANARIN (France): PhD Student J. OTTO POHL (USA): Independent Scholar AZIZ RASULOV (UZBEKISTAN): Tashkent Institute of Irrigation and Amelioration MAX SPOOR (The Netherlands): Associate Professor of Transition Economics, Centre for the Study of Transition and Development, Institute of Social Studies TOMMASO TREVISANI (Italy): Researcher, ZEF/UNESCO programme on Agro- sector case study in Khorezm; PhD student in Social Anthropology at the Free University of Berlin Introduction Deniz Kandiyoti After the break-up of the Soviet Union, the newly independent states of Central Asia embarked on markedly different paths of market and governance reforms.1 As independent countries, they fell back on their natural resource endowments and entered into diverse relations with global markets. As primary commodities, oil and gas have received disproportionate attention in studies of the political economy of Central Asia and the Caucasus, reflecting geopolitical and corporate interest in this sector. However, Central Asian economies continue to rely on large agricultural sectors – undergoing difficult processes of restructuring and reform – that are central to the livelihoods and welfare of their populations. The lead agricultural commodity that has shaped the fortunes of the region is, un- doubtedly, cotton. Since the Tsarist conquest, cotton cultivation has played a pivotal role in the political economy of Central Asia in the irrigated valleys, which in contrast to the steppes dominated by nomadism, had a long history of sedentary settlement. By the time collectivization took place under the Soviet regime, the Ferghana Valley had already been producing cotton for Russian textile mills. Under Stalin, the twin goals of collectivization and “cotton independence” were pursued. The rural economy was geared to the extraction of maximum amounts of cotton for domestic processing by Moscow and for export on the world market as an im- portant source of hard currency. Uzbek cotton alone accounted for two-thirds of all cotton produced in the Soviet Union. Cotton monoculture involved important elements of coercion. “Cotton cam- paigns” enlisted large sections of the population (including schoolchildren) to work at harvests, setting up “socialist competition” among production units to force up labour norms. Commenting on this historical context, Pohl (Chapter 1) also reminds us that cotton cultivation utilized forced labour drawn from groups of special settlers (Karachais, Crimean Tatars, Meskhetian Turks and Russian- Germans) who had been deported to Central Asia under Stalin and whose free- dom was granted as late as 1956. The historical legacy of coerced labour still looms large in this sector. Nonetheless, Khan argued that during the Soviet period the shift in cropping patterns and the retention of a large labour force in agriculture was, in fact, the result of the systematic use of price incentives rather than just administrative coercion.2 The terms of trade were, for a long time, favourable to cotton cultiva- tion. The extent of ������������������������������������������������������������surplus transfer to the centre from Central Asia also became 2 The Cotton Sector in Central Asia a matter of debate since these transfers were offset by substantial subsidies to the Soviet periphery from the All-Union Budget. What is uncontested is that the acreage devoted to cotton was expanded continually until it reached a peak in the 1980s. Yields were forced up through the massive use of chemical fertiliz- ers and pesticides, although they had levelled off by the 1970s and had started declining in the 1980s. By the late 1980s, the water resources of the Amu-Darya and Syr-Darya rivers basins were over-utilized, leading to the much-publicized desiccation of the Aral Sea. The command economy in Central Asia’s cotton sector left an enduring legacy both in terms of its economic, social and ecologi- cal consequences and the types of vested interests it created among elites who control the distribution of resources and revenues.3 Cotton production in Central Asia currently accounts for about seven per cent of global cotton output. Uzbekistan continues to be the dominant producer, with just under five per cent of global output, followed by Turkmenistan, Tajikistan, Kazakhstan and Kyrgyzstan. The policies adopted by these countries after independence have differed significantly with Uzbekistan and Turkmenistan retaining government control throughout the entire cotton supply chain, Tajikistan imposing fluctuating degrees of control and Kazakhstan and Kyrgyzstan removing government control. The aim of the conference on “The Cotton Sector in Central Asia: Economic Policy and Development Challenges” held at the School of Oriental and African Studies on 3–4 November 2005, was to explore the post-independence trajecto- ries and policy choices of Central Asian states with a view to stimulating policy dialogue and greater public awareness, as well as contributing to capacity build- ing for policy evaluation and formulation. The topics explored by local and inter- national experts, representing diverse disciplines from economics and agronomy to investigative journalism and history, covered the multiplicity of factors that act upon the cotton commodity chain and its developmental potential, from do- mestic procurement systems and labour regimes