Keywords

Introduction

The collapse of the Soviet Union paved the way for many newly independent post-Soviet countries to introduce market economies and adopt laws on private ownership and market-oriented principles. In turn, these developments were accompanied by the introduction of Western values in business and economic life in many post-Soviet societies (Berkowitz & DeJong, 2003; Bova, 1991; Hendley, 1997). New economic and legal realities resulting from the Western neoliberal agenda motivated many people living in the post-Soviet region to shift from the public sector and seek income-earning opportunities in the private sector. The motives for such a mass increase in the number of people engaged in informal private enterprise resulted not only from the opportunities arising from the newly introduced reforms in the early 1990s (Berkowitz & DeJong, 2003), but also from the challenges associated with the retrenchment of the social protection system, low salaries, weak development, and the lack of managerial strategies in the public sector (Fajth, 1999; Woolfson, 2007). Another factor contributing to the proliferation of informal (or the so-called semi-formal or ‘grey’) private sector was the high rate of unemployment in the post-Soviet space, especially in Georgia, Latvia, Russia, Tajikistan, and Uzbekistan (Silagadze et al., 2020). Since the state was no longer able to preserve the Soviet-era type of ‘stability’ mechanisms, people’s trust in the state significantly eroded. As a result, people began to rely only on themselves to secure their own well-being. The most feasible way to do so was by gaining employment in a private company or starting a small-scale business—that is, the small-scale trading of clothes, gold, and other items popular amongst the public. Consequently, teachers, engineers, politicians, lawyers, and doctors began investing in the private sector, leaving their previous positions in the public sector.

These developments marked a significant shift from the Soviet-era work organisation principles towards new forms to state–society relationships, ways of thinking, the legal culture, and the labour market in the post-Soviet period. This stems from the fact that the economic distribution of capital, state–society relationships, and the economy in the Soviet Union were all different from those in Western societies. Specifically, the economy of the Soviet Union was more labour-oriented than profit-concentrated. In contrast to the Western capitalist world, the Soviet government pursued a goal of involving more people in production and keeping a large portion of the population busy with work. As a result, per capita income rapidly grew, which was an irrational approach to labour productivity in the Soviet Union (Arnot & Arnot, 1988). These strategies largely reflected the Marxist–Leninist ideology, which saw the rise of the working class as a precondition in the transitional period of moving from the socialist stage of development to full Communism, where the Soviet working class was supposed to become the Soviet Union’s ruling class (Lansford, 2008). In addition to these strategies, the Soviet government pursued all-encompassing social policies, such as free healthcare, up to three years of paid maternity leave, free childcare, and free education for all citizens (Fajth, 1999). These social policy strategies enabled the Soviet government to build a working class–oriented economy, a form of social contract that closely tied citizens to the state through social welfare arrangements. A typical Soviet worker had access to resources not only through a monetary wage, but also through the position they held within the official government hierarchy. As a member of the working class, especially in a higher position within the hierarchy, a Soviet worker could secure a ‘dlinnaya ruka’ (‘long arm’), which guaranteed access to additional resources such as foreign currency, social influence, and the black market.

In addition, the flipside of Soviet governance was the rapid proliferation of informal practices in the everyday life of society. Most informal practices arose from the shortage of goods available in markets. The scarcity of goods and obtaining access to them shaped the emergence of informal connections. Those connections existed within the frame of the business, economic, social, and political interests of participating parties. Such informal connections were not necessarily based on a patronage system, which relies on client–patron relationships, but rather on the blat system (Shalin, 1999). Blat is the Russian term explaining the distinctive system of social exchange in the Communist society of the Soviet Union, in which human needs were articulated regardless of the rigid state control (Ledeneva, 1997). If the patron–client relationship represents the unequal positioning of the parties within the social or political hierarchy, the blat system was built around transactions between equals (Shalin, 1999). Money was not the central focus of the blat system. According to blat, one could gain access to goods and services in exchange for ensuring access to some other goods and services for the other party. However, informality took many other forms, representing the centrality and importance of money, especially cash, in the Soviet Union. One of those informal practices was the pod prilavka system or the so-called torgovlya iz pod prilavka, meaning ‘trade under the table’ (Dadabaev, 2021). Pod prilavka was an alternative way of purchasing in-shortage goods for informal cash payments. This informal practice became part-and-parcel of everyday life and was widely applied not only in Soviet Russia, but across all of the Soviet states, and later in post-Soviet societies as well (Dadabaev, 2021). Thus, even though the market economy was forbidden in the Soviet era, in practice, it existed in daily life through informal practices. This was the form the business climate assumed during the Soviet era and which continues to have ramifications for the contemporary business environment in post-Soviet countries.

Therefore, historically, in Uzbekistan, people’s understandings of and attitudes toward corruption are closely interlinked with prevailing social norms, informality, and the legal culture, which reflects the amalgamation of the Soviet and post-Soviet political atmosphere (Dadabaev, 2021; Urinboyev & Svensson, 2016). These processes become especially visible when we explore the current governance trajectories in Uzbekistan, particularly when observing Uzbek authorities’ zeal to improve its ranking amongst global indicators in the field of anticorruption, on the one hand, and everyday business realities and informalities, on the other. Currently, Uzbekistan is striving to improve its international image by revising domestic legislation and institutions in order to create a favourable business environment in the country, thereby attracting more foreign direct investment. However, corruption within the higher echelons of the government remains active, especially patterns of ‘legal corruption’—that is, exclusions and provisions in legal acts benefiting only certain groups of people or businesses. Legal corruption is a recent understanding within law scholarship that describes the legal framework built by the elite to protect the financial interests of individuals by providing exclusive rights in business dealings (Domadenik et al., 2014; Kaufmann & Vicente, 2011). A high risk surrounds the loss of transparency when initiating any exclusions in legal acts vis-à-vis coordinating business, public procurement, or investment dealings. Exclusions in legal acts are mostly viewed as a negative factor benefitting a limited number of individuals by creating unfair business conditions, monopolies, and ineffective governance (Arnáiz, 2006; Gilmore et al., 2007; Warren, 2006).

The practice of legal corruption is widely observed in post-Soviet countries, especially in Uzbekistan, and permeates decision-making and business activities. Recent investigations indicate that some high-level state officials were closely linked to corrupt schemes or owned businesses which engaged in such schemes (Lasslett, 2020). Furthermore, international corruption scandals related to Uzbekistan have had a negative impact on the country’s position in international rankings. For instance, Uzbekistan has experienced international corruption scandals involving foreign private and public enterprises. All of these corruption cases directly or indirectly affected the position of Uzbekistan on the Corruption Perceptions Index (CPI) and other international indices. Most of the infamous corruption scandals were related to Gulnara Karimova, daughter of former president Islam Karimov, who is currently serving a thirteen-year prison sentence due to her involvement in corrupt activities (OCCRP, 2020). The Sarajevo-based Organised Crime and Corruption Reporting Project (OCCRP) previously estimated that five telecommunications companies might have paid Karimova more than US$1 billion in bribes during the 2000s (Roque, 2016). In addition, recent conflict-of-interest accusations in a Tashkent City project and the Sardoba dam failure in the Syrdarya region demonstrate the prevalence of legal corruption in Uzbekistan (Markowitz, 2017; Open Democracy, 2023; The Economist, 2020), where political elites and economic actors use legal channels to gain access to resources. Therefore, the main hurdles impeding ongoing reforms in Uzbekistan remain high-level corruption and a challenging legal atmosphere.

The above considerations thus lead to the primary aim in this chapter, which is intended to investigate the interconnections between the legal culture, informality, and international anticorruption agenda. Specifically, I attempt to determine how these processes shape the business and investment climates in Uzbekistan. In undertaking this task, I explore the following three processes. First, I describe the current situation vis-à-vis the international anticorruption agenda and its actuality in policymaking processes in Uzbekistan. Whilst focusing on this, I discuss the reflection of international anticorruption indices in local anticorruption policymaking within the specific example of Transparency International’s (TI) Corruption Perceptions Index (CPI). Second, I explore the nexus between the anticorruption agenda, (mis-)trust in the government, and the changing legal culture in Uzbekistan. In this respect, analysing the reactions of both local and foreign businesses to the state anticorruption policy agenda in Uzbekistan provides intriguing insights into trust and the changing legal culture in Uzbek society. This analysis relies on examining ongoing anticorruption initiatives and their implementation in real-life situations. This chapter considers the concept of trust from both social and political perspectives. Despite current positive changes, anticorruption reforms are hampered by informal practices and recalcitrant social norms, which have a pernicious effect on the business and investment climates in Uzbekistan. Thus, in this section, I examine the business representatives’ perceptions of and experiences with corruption, their legal cultures, and the level of trust in Uzbekistan’s political and legal institutions. Third, and finally, I analyse the forms and causes of legal corruption in Uzbekistan by examining the practice of exclusion provisions in normative legal acts. Here, I describe the importance of the anticorruption review of legal acts as a practical preventive tool to remove the practice of legal corruption from modern lawmaking in Uzbekistan. Both the legal aspects and the social perception toward a lack of a solid anticorruption screening for legal normative documents are analysed in the last section of this chapter. In this analysis, I refer to the relevant literature and the personal experiences of interviewees who participated in my research.

As such, the remainder of this chapter is organised as follows. The next section, part two, presents the research methodology, where I describe my methods, fieldwork, and data collection strategies. Part three provides the theoretical framework constructed, which draws upon the multilevel governance framework and collective action approach. This framework provides a lens via which to study people’s perceptions of laws and the everyday informality shaping petty corruption within the business climate in Uzbekistan. In part four, I present the empirical material and analysis, as well as discuss the implications of this study on broader socio-legal and sociopolitical debates. Finally, part five summarises the primary findings and offers concluding remarks from my analysis.

Methodological Considerations

This research employs a qualitative approach to data collection and analysis, representing an interdisciplinary study covering elements of both legal science and the sociology of law. Moreover, I applied general and specific scientific methods of cognition to achieve the goals and objectives within this socio-legal study to understand the interconnections between the legal cultural, societal, and anticorruption legal frameworks and their implications for the business climate in Uzbekistan. I have conducted more than thirty semi-structured interviews with various actors, namely, civil servants working in the field of anticorruption, legal practitioners, experts, analysts, and academic researchers who understand the anticorruption and business environments in Uzbekistan. I also interviewed representatives of foreign companies operating or considering investing in various sectors of Uzbekistan’s markets. More specifically, I also interviewed the general manager of a company responsible for implementing the massive ‘Tashkent City’ state construction project. Interviews (face-to-face) were conducted in Tashkent, with the exception of one interview with an anticorruption scholar based in Copenhagen. Several interviews were conducted online using modern remote conferencing platforms due to the COVID-19 pandemic. I also conducted one group interview involving experts from different fields in order to understand the causes of corruption and the conflicts of interest within the public sector. In addition to interview data, I present some relevant examples from my daily observations.

Most interviewees who wished to remain anonymous stated they felt uncomfortable discussing a sensitive topic like corruption in a digital format. However, after long negotiations and becoming acquainted with anonymisation procedures, most interviewees agreed to answer all of my questions. Representatives of foreign enterprises and local businesses requested the interview questions beforehand, including the aim and the financial sources of the research. Public sector representatives and individual experts, by contrast, asked for general information about the interview topic in order to clarify the exact area of the anticorruption reforms and business climate to be discussed. All respondents, excluding some public officials from Uzbekistan, asked to be cited as anonymous interviewees or that I use fictional pseudonyms when referring to their responses in this chapter.

Theoretical Framework

Multilevel Governance Framework

I draw upon the multilevel governance framework to analyse the different levels and components of governance in Uzbekistan and how they interact with each other to support or hinder the implementation of the anticorruption agenda. Multilevel governance is a recent concept in political science and public administration developed for the study of European integration and decision-making on different levels of governance (Bache, 2008; Piattoni, 2009). This framework vertically studies interactions between different levels of governance (international, regional, and local) and horizontally examines the synergies amongst actors with the same political authority (Cairney et al., 2019). I use this framework as a lens to study vertical and horizontal governance aimed at tackling corruption in the business sector in Uzbekistan. Firstly, from an international perspective, I analyse the external environment of the political system, including global trends, international organisations, and cooperation with foreign countries that impact the design and implementation of the anticorruption agenda in Uzbekistan. Uzbekistan has been working closely with international organisations such as the United Nations Development Programme (UNDP), the United Nations Office on Drugs and Crime (UNODC), and the World Bank to implement its anticorruption agenda (UNDP Uzbekistan, 2018). The government has also established relationships with neighbouring countries, such as Kazakhstan, to share best practices and experiences in combating corruption and dealing with transnational crimes. Secondly, this research covers the formal institutions of the political system, such as the constitution, laws, and courts, which play a critical role in implementing the anticorruption agenda. The Uzbek government has taken several steps to strengthen these institutions, such as enacting new laws and increasing the independence of the judiciary. For example, in 2019, the government established a new anticorruption agency and reformed the State Security Service to investigate corruption cases better. Thirdly, this research addresses the actors in the political system, including political parties, interest groups, and civil society organisations which also play a critical role in implementing the anticorruption agenda. The government has been working with business groups to encourage them to adopt more transparent business practices. However, the recalcitrant social norms and informal practices underpinning corruption have made it a challenging task to disperse anticorruption norms within society. Nonetheless, the government has been working to change these attitudes by launching public awareness campaigns and encouraging citizens to report corruption. Simply put, a multilevel governance network facilitates scrutinising the realities of the anticorruption agenda in Uzbekistan from global, regional, and local perspectives.

Collective Action Approach

Corruption undermines economic development, hampers social progress, and erodes public trust in government institutions. Addressing corruption requires a multifaceted approach; one useful framework for understanding the dynamics of (anti-)corruption is the collective action approach. The collective action approach emphasises the importance of understanding the incentives and behaviours of different actors within a specific context. This theory suggests that corruption can be seen as a collective action problem, whereby individual actors are inclined to engage in corrupt behaviour because they believe that ‘everybody is doing it’. Similarly, anticorruption efforts can also be viewed as a collective action problem, in which different actors must coordinate their actions to combat corruption effectively (Peiffer & Walton, 2019; Persson et al., 2013). At the same time, the theoretical underpinnings of the collective action approach also highlight the importance of collective action and coordination amongst different actors in order to effectively combat corruption (Persson et al., 2013). This requires various strategies, including legal and regulatory frameworks that discourage corruption, independent oversight institutions that can monitor and investigate corruption, and civil society organisations that can raise public awareness and advocate for change.

In Uzbekistan, there have been a number of recent initiatives aimed at combating corruption, including the establishment of the Anticorruption Agency, the adoption of a new anticorruption law, and the implementation of measures to increase transparency and accountability in government institutions. These efforts are all examples of anticorruption reforms aimed at addressing the problem of corruption. However, challenges to collective action remain in Uzbekistan, including a lack of trust between different actors, the persistence of informal networks of power and influence, and limited resources to support anticorruption efforts. Overcoming these challenges will require a sustained effort and collaboration from various actors, including government officials, civil society organisations, and the private sector. Quite simply, the collective action approach provides a useful framework for understanding the dynamics of corruption and anticorruption efforts in Uzbekistan. By identifying the actors involved in corrupt practices and the norms and beliefs driving their behaviour, we can better understand the root causes of corruption in Uzbekistan. Simultaneously, by emphasising the importance of coordination amongst different actors, it is possible to identify strategies to effectively combat corruption and promote greater transparency and accountability in government institutions. Whilst significant challenges remain, the collective action approach provides a valuable tool for analysing corruption and anticorruption efforts in Uzbekistan and for identifying strategies to address this persistent challenge.

Transparency International’s Corruption Perceptions Index and Its Implications for the Business and Investment Climates in Uzbekistan

In recent years, Uzbekistan has undergone significant legal, political, economic, and social transformations, particularly in its anticorruption agenda. The country has taken notable steps to combat systematic corruption and enhance transparency in everyday governance. Understanding the dynamics of this process requires examining changing anticorruption policies in Uzbekistan by applying the multilevel governance framework. Multilevel governance refers to a system whereby authority and decision-making powers are shared amongst various levels of government, including central, regional, and local bodies (Cairney et al., 2019). In examining the anticorruption agenda in Uzbekistan, this framework allows for the analysis of collaboration, coordination, and cooperation amongst international organisations, governmental institutions, and civil society organisations. To undertake this task, in this section, I analyse the role of international actors such as international anticorruption organisations, bilateral partners (foreign states), and donor agencies which facilitate Uzbekistan’s anticorruption agenda by providing technical assistance, capacity building, and financial support. They also facilitate knowledge exchange and best practices.

With these considerations in mind, in this section, I specifically examine the role of international actors, such as Transparency International (TI), an international nongovernmental organisation (NGO) operating in the field of anticorruption, and its influence on the domestic anticorruption environment in Uzbekistan. More specifically, I analyse the impact of international indices on local anticorruption legislation and initiatives, and how international business actors and investors rely on the data provided by TI and the World Bank in assessing whether to invest in Uzbekistan. Respondents representing foreign enterprises within my research shared their step-by-step experiences in investing and starting their business operations in Uzbekistan. One of their first steps was reading and analysing reports on transparency and governance in Uzbekistan from internationally recognised sources, including TI and World Bank reports. The Corruption Perceptions Index (CPI) was the most common document upon which the majority of my respondents relied. Complex area coverage and comprehensive methodologies make the CPI one of the most important sources foreign enterprises consider before investing in Central Asian markets. Thus, the next step in my analysis is focusing on understanding the nature, philosophy, and methodological background of the CPI to provide a better understanding of its popularity amongst businesses and the critical perspectives of legal scholars upon it.

TI’s Corruption Perceptions Index (CPI) is recognised as a ‘first-generation index’ that applies diverse instrumental and statistical techniques to measure corruption through its perceptions within society (Johnston, 2000). These diverse statistical and data analysis techniques guarantee that the CPI occupies a leading position amongst the world’s corruption evaluation and analytical observation indices. The international ratings by TI, Freedom House, the World Bank, the Bertelsmann Foundation, and the World Economic Forum measure the level of perceptions of corruption, governance, democracy, and transparency in various public and private sectors by standardising the data collected. The standardisation method applied by TI recalculates the original scores from such sources as the Bertelsmann Foundation Transformation Index, Economist Intelligence Unit Country Rating, Freedom House Nations in Transit Rating, the Country Risk Rating—Global Insight, CPIA—World Bank, Rule of Law Index—World Justice Project, Annual Report on Democracy—‘Diversity of Democracy’-V-Demand Project (Mustafoev, 2020), and standardises them on a scale, ranging from 0 as the most corrupt to 100 as the least. The aforementioned sources analyse almost all of the political and social aspects, reforms, challenges, rule of law, and economic stability of a state. The methodologies used by all sources vary when compared with one another, but the assessment process remains comprehensive and ‘large scale’. According to TI experts, the standardisation method allows for the identification of the most corrupt areas of public administration and institutions.

The first data for Uzbekistan in the CPI was published in 1999, based on surveys from four sources. For some years, the country led the Central Asian region in the index by showing better performance in the CPI than its neighbouring countries. But, Uzbekistan began receiving lower scores and occupying a correspondingly lower position on the CPI due to the enlargement of the number of surveys and sources. In 2016, during the last year of Islam Karimov’s presidency, Uzbekistan scored 21 of 100 on the scaled computing system. This score ensured Uzbekistan ranked 156th amongst 175 countries, meaning it became the Central Asian country with the highest corruption perception level and corrupt public sector followed by Turkmenistan, which received 22 points and was ranked 154th in 2016 (Transparency International, 2017). The most important data TI relied upon to measure the level of corruption perception in Uzbekistan are primarily provided by the World Bank Worldwide Governance Indicators, which assessed Uzbekistan on the following trends for the 2022 report: control of corruption, government effectiveness, political stability and absence of violence or terrorism, regulatory quality, rule of law, and voice and accountability. The illustration below represents the data for all six indicators in the same order (lines from top to down) as in the previous sentence.

According to Fig. 2.1, which illustrates the World Bank Worldwide Governance Indicators (World Bank Group, 2023) data for Uzbekistan from 1996 to 2022, Uzbekistan has shown positive shifts across all six World Bank indicators. This rapid growth in all indicators is visible for the period from 2016 onwards. Correspondingly, these data influenced the positioning of Uzbekistan in the CPI. Currently, Uzbekistan, with its 31 points, represents the 126th least corrupt nation out of 180 countries, according to TI’s 2022 Corruption Perceptions Index (Transparency International, 2023). In comparison with 2016, Uzbekistan has improved its position by twenty-eight places. Since 2016, during the new government, Uzbekistan has significantly improved its position on the CPI compared with the other former Soviet states. Currently, Turkmenistan (score: 19), Azerbaijan (23), and Tajikistan (24) are ranked lowest in the region, whilst Armenia (46), Moldova (39), and Uzbekistan (31) have all significantly improved their CPI scores (Transparency International, 2023). However, internationally, the Eastern European and Central Asian region remains amongst the lowest-performing regions in the CPI for 2022. According to Altynai Myrzabekova, the Eastern European and Central Asian Regional Advisor to TI, the international community, especially Eastern Europe and Central Asia, experienced unchecked corruption and kleptocracy in 2022.

Fig. 2.1
A multi-line graph for the worldwide governance indicator from 1996 to 2022. The line values are increasing.

Worldwide governance indicator for Uzbekistan, 1996–2022

Full size image

The improvement to the position of Uzbekistan in TI’s CPI might result from the large-scale legal and administrative reforms carried out by the new government. More specifically, President Shavkat Mirziyoyev signed Decree № DP-6003, ‘On Improving the Position of the Republic of Uzbekistan in International Ratings and Indices’ (dated 2 June 2020). This decree covers nineteen indices, including the CPI, Worldwide Governance Indicators, and the Rule of Law Index amongst others. Motivated by international rankings, the government of Uzbekistan established its own domestic indicators programme to address corruption, which is mentioned in Resolution of the President № RP-81, ‘On Measures for the Implementation of an Effective Rating System for Fighting Corruption’ (dated 12 January 2022). This resolution outlines the necessity of ensuring transparency and accountability in the public sector of Uzbekistan. These changes and legislative initiatives clearly illustrate how international norms and actors influence domestic developments in Uzbekistan. This results from the fact that Uzbek authorities understand that the flow of foreign investment heavily depends upon the country’s ranking on global indicators concerning governance, the rule of law, and corruption.

Another area where the influence of international norms is quite visible concerns citizens’ access to information related to the public sector. According to the nineteenth recommendation of the Organization for Economic Cooperation and Development’s (OECD) country progress report, Uzbekistan needs to ensure free access to information and carry out campaigns to raise citizens’ awareness about their rights and responsibilities vis-à-vis access to information regulations (OECD, 2015). In line with these recommendations, Uzbek authorities actively encourage citizens and people living in the country to participate in discussions of state programmes and amendments to existing normative legal acts. For example, before conducting a general review of legal acts, the Ministry of Justice of Uzbekistan takes into consideration people’s comments on those acts and policy initiatives published via the regulations.go.uz portal. Even with the existence of a legal framework that guarantees people’s right to access information related to the public sector, it remains impractical in cases with low public awareness about such rights. Therefore, providing official and accountable information to the public leads to an increase in trust in the government. The accuracy, appropriateness, and au fait of the published information are rather important in grabbing people’s interest and ensuring transparent business dealings in the public sector. Furthermore, publicly available information holds officials and businesses accountable. In addition, access to information allows people to trace business transactions and ensure that illegal schemes such as money laundering do not happen. Publicly available documents concerning monetary issues assure business actors’ compliance with laws, allow for more efficient audits, and, as a result, leave people more likely to trust businesses and public officials when data can be used as proof.

For example, citizens warmly welcomed the recent reforms in the tax system of Uzbekistan because the government introduced new blockchain technology-based taxation that can ensure transparency in this sector. The database in the blockchain system duplicates in different organisations, so this system has introduced decentralised control over public funds and taxes. This case can be viewed as a positive experience for establishing transparency in the public sector. (Khusnora,Footnote 1 female, legal expert from Uzbekistan)

Article 8 of the Law of the Republic of Uzbekistan, ‘On Public Procurement’ (2018), pertaining to the ‘principles of openness and transparency’, states that openness and transparency in public procurement are ensured by providing open access data on public procurement. The current law was adopted to ensure effective management and transparency in Uzbekistan’s public procurement, and primarily focuses on defining the exact procedures for that sector. This law highlights the importance of announcements providing information related to public procurement on relevant online platforms by relying on the principles of transparency and openness. However, there are quite a few exceptions granted to conduct direct contracting in public procurement. For instance, thirty-six types of state purchases have been approved for direct contracting by the respective state departments and suppliers by decree of the President of Uzbekistan (Decree of the President of Uzbekistan, ‘On Measures to Implement the Law of the Republic of Uzbekistan “On Public Procurement”’, 2018). However, as one respondent noted, such exceptions may lead to ‘legal corruption’, as noted in the previous sections of the chapter:

Yes, I understand that the decision regarding direct contracting was made considering state security matters. But, the experience of the European Union legislation on public procurement strongly recommends avoiding direct contracting because of the risks of possible practical challenges and conflicts of interest. (Bekzod, male, investment manager in a foreign consulate based in Uzbekistan)

In fact, direct contracting in public procurement might motivate lobbying models and challenge the anticipated tax compliance of service providers (Gehlbach, 2006). However, when direct contracting is viewed through the lens of the collective action approach to corruption, in societies like Uzbekistan permeated by informality, it is highly likely that direct contracting may lead to corruption and conflicts of interest. Indeed, the possibilities of direct contracting in public procurement might motivate the emergence of collective informal social behaviour amongst businessmen interested in making a profit by engaging in corrupt network groups. Such an attractive possibility for an easy profit provides an incentive for individuals to use corrupt schemes, thereby facilitating large-scale corruption. Eventually, informal practices such as lobbying become social norms and penetrate state institutions. According to local business representatives I interviewed from the construction sector, Uzbekistan would benefit from implementing a blockchain-based e-procurement system. Thus, the expansion of electronic procurement forms is essential for the creation of a safe and transparent platform for public procurement in Uzbekistan (World Bank, 2017).

Improvements to the existing electronic procurement platforms in terms of simplifying the registration process, integrating them with verified clearing and settlement platforms, and introducing document exchange and payment options directly through the system would make Uzbekistan's procurement system more transparent and reliable so that private companies would feel more confident when procuring supplies for the public sector. In addition, the interaction and unification of the electronic databases from different state departments, ministries, and public organisations can increase interest amongst both suppliers and purchasers in applying an electronic version for procurement in most cases. (Anvar, male, businessman in the construction sector in Uzbekistan)

Indeed, South Korea, as a strategic partner of Uzbekistan in various fields, has merged the databases of the Ministry of Economy and Finance, the ‘Single Window’ state service centre, the customs and tax authorities, banks, and different insurance organisations into a single electronic portal for procurement. Such a merger helped South Korean businesses by speeding up the registration processes and creating easier and safer payment and payout systems. Such a practice attracted entities from both the public and private sectors to shift to online operations and ensure transparency in procurement processes. This has prompted the imposition of various disciplines and many jurisdictions around the world to encourage the better use of resources, promote greater efficiency, and reduce the risk of favouritism or corruption in public purchasing (European Commission Internal Market & Services, 2020).

Influenced by these international best practices and tendencies, Uzbekistan has also digitalised state services with financial support from the South Korean government. More specifically, the State Customs Committee of Uzbekistan launched the unified customs Single Window system for US$5.5 million in cooperation with the Korea International Cooperation Agency (KOICA) in 2017. Based on the Presidential Decree ‘On Measures to Further Improve the Business Environment and Improve the System of Supporting Entrepreneurship in the Country’ supporting the abovementioned reform, since 1 February 2020, procedures such as processing permits and certificates for export–import operations have been conducted online through the Single-Window customs information system in Uzbekistan. Uzbekistan’s ‘Single Window’ system was developed by adhering to the criteria and guidelines developed by the United Nations Centre for Trade Facilitation and Electronic Business Operations (State Customs Committee of the Republic of Uzbekistan, 2020).

Therefore, the current economic and business development strategies of Uzbekistan focus on establishing a more open and transparent public sector, less corruption, and higher public accountability. However, the country continues to face the challenges of systematic corruption, especially in public procurement. Regardless of the high level of informality in society, the government of Uzbekistan is actively working on improving its international image to attract new investments in the local economy. Thus, Uzbekistan is attempting to improve its position on the CPI by developing and modernising its domestic anticorruption legislation and policies.

Trust and the Changing Legal Culture

Following the collapse of the Soviet Union, many newly independent countries emerging from the fall of Communism struggled to fulfil the basic functions of the state in terms of providing jobs and social protections to their citizens (Woolfson, 2007). These post-Soviet transformations led to a high level of unemployment, which caused high levels of suicide, depression, and alcoholism in society. The political tendencies of the early 1990s diminished people’s trust in the government and forced them to rely on their own skills for survival. Correspondingly, many citizens of the newly sovereign states preferred to work for themselves, but not for the state. Thus, these rapid sociopolitical changes lead to questions such as: What were the social, legal, and economic consequences of moving from a state-centric economy to a market-oriented one? How did these changes affect people’s trust in the state and its laws and policies? How did people secure their wellbeing living under politically and economically unstable systems? More importantly, how have these changes affected the local legal cultures and the legal landscape in general? And, finally, what are the roles of ethics and morality in everyday business transactions in the post-Soviet region?

Trust in the political and economic stability of the host country is a quite important factor for any business when determining that a country is a viable investment destination. Trust in the market starts with analysing the relevant reports to ensure the further security of investments and business efforts. In my interviews, most respondents representing foreign enterprises operating in Uzbekistan highlighted the importance of international indices and rankings as major factors for any pre-investment consideration in the region. According to the interview data, representatives of Finnish companies operating in oil and gas production in Uzbekistan also mentioned the importance of TI’s CPI as one of the essential documents they relied on before investing in new destinations. The CPI primarily reflects the opinions of regular citizens and national and international experts’ reports on the level of tolerance of corruption. The results of my observations and group discussions demonstrate that trust is the first step in stemming the flow of corrupt practices. Trust is essential, but it requires a departure from the ‘normative’ culture and attitudes surrounding corruption in Uzbek society towards international moral values and ethical standards. Interview data show that ordinary citizens, business workers, and even government officials in Uzbekistan view corruption as a normal means to an end, or ‘standard operating procedure’, when viewed from the collective action approach to corruption. Corruption allows tasks to be completed more efficiently in the short term; in the long term, however, it is more damaging to efficiency, especially for those members of society who do not have the means to engage in such practices. This becomes a vicious cycle (Gleave et al., 2011; Urinboyev, 2019; Urinboyev & Svensson, 2016).

Uzbekistan has recently established a new anticorruption agency indicating its intention to prevent and combat corruption. However, this remains unsystematised and lacks the trust of citizens since the Anticorruption Agency of Uzbekistan is considered a preventive legal body rather than an independent law enforcement agency. One of the primary reasons for the inefficient anticorruption legal framework is a lack of trust amongst people, businesses, and state institutions. If people do not have access to correct and clear information, they cannot make adequate decisions at critical moments. Manipulating or essentially fabricating data without reliable sources creates uncertainty for people and businesses by allowing corruption to persist. The current situation regarding transparency and efficiency in governance in Uzbekistan was discussed during an online group discussion involving representatives from the Ministry of Justice of Uzbekistan, independent lawyers, and researchers in February 2020. All research participants asked to remain anonymous because of the sensitivity of the topics discussed, topics which touched upon corruption, governance, and state policies. During these discussions, one participant noted the connections between transparency and trust:

Transparency leads people to have more trust in the government, which can help to overcome corruption-related problems in the public sector. (Khusnora, female, legal expert from Uzbekistan)

However, a second participant in the same group discussion responded to Khusnora’s thoughts by stating a need to keep certain public areas less than transparent for the sake of the political and economic stability of Uzbekistan.

Ensuring full transparency in the public sector may lead to other political and social challenges within the state. It is impossible and not profitable, either economically or socially, to ensure full transparency in the public sector by disclosing every single operation to the public because the state has a responsibility not just to ensure a good life, but also to protect borders, security, and citizens’ interests in the world where all resources are limited. Everyone has their own interests. (Alisher, male, public servant from Uzbekistan)

According to the interviewees, some people are less likely to engage in transparent practices when doing business and will instead rely on corrupt practices because of a simple lack of resources in Uzbekistan. When people receive low salaries, they must still meet their daily needs. Therefore, people must find informal and illegal ways of meeting these daily needs. The means to do so is through daily ‘good’ or ‘bad’ bribery. In addition, the state’s inadequate provision of social services and high unemployment rate have led to the creation of an unwritten set of rules and ways of engaging in social behaviour, which clash with the principles of the rule of law (Urinboyev & Svensson, 2013). The reasons why corruption became a social norm or a survival strategy were explained by one of my respondents:

If people have the means to meet their daily needs, then they are less likely to be inclined to participate in informal and illegal practices because they do not need to do so. As countries become more developed and people achieve better living standards, the situation regarding the social perception of informal practices and corruption may become better on their own. However, it still requires a system built upon transparency. To build this sort of transparent system, it is necessary to build trust and change the cultural mindset of the people of Uzbekistan. (Nariman, male, businessman from Uzbekistan)

To gain the trust of the international business community, the government of Uzbekistan strives to identify its ‘vulnerable’ public sectors and implement enhanced international practices towards anticorruption policies by initiating reforms and international collaboration. For instance, since 2018, the Prosecutor General’s Office and the Ministry of Justice of the Republic of Uzbekistan, together with the Republican Interdepartmental Commission on Combating Corruption, have been implementing the UNDP project ‘Countering Corruption through Effective, Accountable, and Transparent Governance Institutions in Uzbekistan’ (UNDP Uzbekistan, 2023) and the programme to support anticorruption policies and activities in the Republic of Uzbekistan within the framework of the UNDP Global Project on Anticorruption for Peaceful and Inclusive Societies (ACPIS) for 2017–2020. These joint projects reflect attempts by the Uzbek government to improve its image and fulfil national obligations under the UN Convention Against Corruption (UNCAC) and the Istanbul Action Plan to combat corruption in the public sector. As such, implementing international norms and standards in local policymaking practices has led to better state profile reports, meaning that the likelihood of international businesses considering the Uzbek market a viable investment destination could significantly increase. According to my fieldwork results, international companies interested in Uzbekistan’s market primarily consider expert opinions and reports documenting recent updates in policymaking and changes in the social and political sectors.

The changing legal culture of citizens is extremely important because it represents the establishment of solid policy, which guarantees and secures transparency, human rights, and the social welfare of the people. An upgrade in the people’s welfare and the political stability of the country mostly reverberates in country reports, which we constantly read and take into consideration before considering future investments. (Anna, female, deputy manager of a Finnish company operating in Uzbekistan)

Accordingly, new laws introduced to shape the legal culture of society should be properly monitored by state authorities and civil society, respectively. For instance, the new, systematised anticorruption reforms of Uzbekistan began with the adoption of the law ‘On Combating Corruption’, dated 3 January 2017. This law initiated the establishment of the Republican Interdepartmental Commission for Combating Corruption, which coordinates work prioritising international rankings and indices, indicative of the government’s interest in improving its position within these spheres. In addition, the Interdepartmental Commission was empowered to monitor the activities of state bodies and organisations implementing and participating in anticorruption activities. The Prosecutor General chairs the Interdepartmental Commission, and the commission consists of the heads of various ministries and state agencies. The basic tasks of the commission are to ensure interaction across different organisations within Uzbekistan that participate in anticorruption activities as well as to initiate proposals for enhancing current legislation on combating corruption and its eradication (‘On Combating Corruption’ 2017). The Interdepartmental Commission represented a first step in Uzbekistan’s attempts to reform its anticorruption legal framework and related policies within the country. According to President Mirziyoyev’s address to the Uzbek Parliament in January 2020 and to pursue the legal framework further, the president created a new independent anticorruption body accountable only to the Senate and the president (Permanent Mission of the Republic of Uzbekistan to the United Nations, 2020). This government decision could have served as a positive backdrop for adhering to the requirements in Article 6 of the UNCAC.Footnote 2 Still, upon establishment, the Anticorruption Agency was not provided with the necessary independence and flexibility: it was not granted law enforcement powers and remains a research and observation-based public body within the government of Uzbekistan. However, according to my interviewees, both local and foreign enterprises warmly welcomed the new anticorruption body and hope for further progress on corruption eradication in the public–private partnership sector.

Anticorruption Reviews of Legal Acts as a Preventive Measure against Legal Corruption

In theory and practice, it is generally agreed that all measures aimed at fighting corruption are primarily divided into two main categories. The first direction focuses on taking measures to counteract external manifestations of corruption. This direction aims to fight existing corruption through punitive measures. These can include, for example, instituting disciplinary responsibility and initiating criminal cases amongst others. The second direction includes measures to prevent corruption by eliminating the legislative and institutional prerequisites for corruption. One of these measures includes conducting accurate anticorruption reviews. Many corruption threats arise when developing or drafting legal acts. These threats contribute to the emergence of corrupt practices. Minimising corruption risks serves as an effective measure to combat corruption. Eliminating possible corruption risks in legal acts can be achieved through clear and strict compliance with the principles and mechanisms of an anticorruption expert review, as stated by one of my respondents:

A proper level of anticorruption review at the national level has not found wide application, and there are still problems with this issue on the ground. Thus, analyses of the current state of anticorruption reviews practised in Uzbekistan clarify that the main reasons and prerequisites for the appearance of corruption-related factors in legal documents result from violations of the methodological foundations, principles, and traditions of lawmaking techniques. (Ozodbek, male, leading research analyst of the ‘Oliy Majlis’ Senate in the Parliament of Uzbekistan)

The Ministry of Justice and its territorial divisions are responsible for conducting anticorruption reviews in accordance with the law ‘On Normative Legal Acts’ (2012) and by Order of the Minister of Justice ‘On the Approval of the Methodology of the Anticorruption Review of Normative Legal Acts’ (No. 2745, 25 December 2015). Civil society institutions have the right to conduct independent anticorruption expert reviews in Uzbekistan. However, results from the examination of civil society representatives serve as recommendations, which means that state bodies primarily carry out anticorruption reviews with no legal obligation to include the opinion of civil society.

Anticorruption reviews of legal acts are conducted within the framework of legal reviews in Uzbekistan. Based on current legislation, anticorruption reviews are carried out by state bodies with the appropriate authority to adopt legal acts. In the case of Uzbekistan, this rests upon the Ministry of Justice. (Ozodbek, male, leading research analyst of the ‘Oliy Majlis’ Senate in the Parliament of Uzbekistan)

According to my respondents who are independent lawyers, eliminating these problems could minimise the risks of corruption and significantly improve the quality of legal acts in Uzbekistan. The institutional and legal framework for anticorruption reviews was established in Uzbekistan in 2012, but the existing potential is not applied as effectively as it could be. However, the 2015 Istanbul Action Plan monitoring meeting recognised Uzbekistan’s progress in establishing new visions and policies in the anticorruption screening of legal and administrative acts at all levels by stating that the measures taken by the government on this matter constitute progress towards the implementation of recommendations from the Istanbul Action Plan (OECD, 2015).

Moreover, the existing high risk of conflicts of interest in the area of screening legal documents at the regional and local levels creates obstacles to full transparency in the lawmaking processes. Furthermore, the lack of qualified anticorruption screening specialists and de facto anticorruption reviews that are not independent of general legal reviews hinder Uzbekistan’s progress in gaining recognition for fully satisfying the legal framework according to the criteria laid out in Article 5 of UNCAC (2003). The impact of the lack of solid anticorruption reviews within legal acts is notable given the everyday challenges faced by local businesses. One of the respondents working in the private sector in Uzbekistan expressed his concerns about the high level of corruption and conflicts of interest in land distribution processes:

Until 2020, in order to secure land for construction or other purposes people had to approach the khokimiyat (local government) for a specific document granting rights to the land. Khokim (head of the local government) usually involves nepotism during land distribution on some level. Negligent and criminal behaviours amongst regional governments are motivated by the absence of anticorruption or any other type of legal screening of their orders and signing documents. (Anvar, male, businessman in the construction sector in Uzbekistan)

Anticorruption reviews of draft legal acts and official documents with land registers at the regional and district levels could reveal a number of problematic points in the legislation at the local level. Problems with land distribution have been on the agenda for a long time, and, currently, according to the newly adopted state policy, citizens or other businesspeople can secure a title for land use by participating in online tenders within a few hours or days. Whilst the power to independently distribute land has been taken away from the khokimlar (heads of local government) by a decree from the central government, the question of anticorruption screening of the khokimiyat's decisions and orders remains unresolved. General legal screening and specific anticorruption reviews of normative legal acts and city- or district-level official documents issued by a khokimiyat in Uzbekistan are rather important factors for preventing widespread corruption schemes. Moreover, granting anticorruption review power to the newly established Anticorruption Agency can produce better outcomes in the fight against corruption. Thus, a separate and thorough anticorruption review could eliminate or minimise corruption risks and significantly improve the quality of adopted legal acts by ensuring equal treatment and transparency for proper business operations in Uzbekistan.

Conclusions

In this chapter, I argued that the attractiveness of Uzbekistan’s business climate to both local business actors and foreign investors heavily depends upon the level of trust, transparency, and a comprehensive legal framework. Transparency International’s CPI seems extremely popular amongst foreign enterprises when they consider investment destinations. Here, I employed two theories to analyse the nature of anticorruption policies and how they are perceived and experienced by local and foreign businesses in Uzbekistan. More specifically, the multilevel governance framework is applied to understand the vertical and horizontal influences of different norms and actors on each other in making decisions concerning anticorruption; the collective action approach was applied to the discussion of the social dimensions of corruption and informal practices in Uzbek society.

Firstly, this chapter provided a detailed analysis of the CPI as one of the leading indices shaping the business and investment attractiveness of Uzbekistan. More importantly for Uzbekistan, transparency allows the economy to function more efficiently. If people, particularly international enterprises, can easily access direct and accurate information, the business climate within the country may greatly improve. With access to information, businesses can better assess markets and make better decisions about their business. Additionally, being more transparency would improve Uzbekistan’s international image and ranking, something President Mirziyoyev perceives as important. Adding transparency within legal sectors, such as limiting ‘closed’ trials, would allow Uzbekistan to garner an improved and more ‘democratic’ image in the international arena.

Secondly, according to fieldwork conducted within this research, the current situation regarding public awareness in Uzbekistan demonstrates how websites and other sources of information are unavailable or inaccurate. If businesses and public agencies do not provide the necessary or accurate data to the general public, people are less likely to trust formal institutions. In turn, the perception of corruption amongst these individuals and businesses is higher. The lack of access to reliable and official information makes it difficult to contact public officials and question them about certain topics. Thus, trust in political and economic sustainability increases following the introduction of modern and comprehensive policies that prioritise transparency, openness, and equality in all matters.

Thirdly, as local and foreign business representatives mentioned, the cases of khokims (regional governors) who continue participating in corrupt schemes demonstrate how anticorruption policies from the capital, Tashkent, take a significant amount of time to be effectively implemented in the regions. However, from the perspective of many different international anticorruption actors, Uzbekistan’s domestic policies have significantly improved since 2017. This is particularly true for the business sector, which has witnessed massive growth in international investment. Corruption reforms take longer than most other reforms to succeed because they require behavioural and societal changes and not just changes to the formal system.