…the Human Rights Society of Uzbekistan ‘Ezgulik’…

O’zbekiston Inson Huquqlari “EZGULIK” Jamiyati
Human Rights Society of Uzbekistan “EZGULIK”
Toshkent shahar, Navoiy ko’chasi, 7/418.
tel. (+998 97)131-48-72; ofis: (+998 71)241-85-88;
E-mail: vasila.iva@gmail.com Website: http://www.ezgulik.org

The independent review
of the World Bank’s
Rural Enterprise Support Project – Phase 2

Background information

The current review is implemented by the Human Rights Society of Uzbekistan ‘Ezgulik’ which  has been for last several years monitoring the situation with the rights of farmers and the use of child labour in the cotton sector. Our research has shown that the use of forced child labour in this sector is widespread. According to our observations, children are sent to the cotton fields to pick cotton not by their parents, but by their school administrations at the directive of the district and provincial authorities.

In spite of international criticism for this practice and the subsequent adoption in 1998 of the Law “On Guarantees of the Rights of the Child” as well as the ratification by our government of ILO Conventions ? 138 “On Minimum Age for Admission to Employment” and ? 182 “On the Elimination of the Worst Forms of Child Labour”, the practice of mass scale mobilization of children and college students for picking cotton remains unchanged since the Soviet times. For instance, in 2009, hundreds of thousands of school and college students spent on cotton fields for more than two months and returned to their classes only at the end of November. This year’s harvest is seems to be no exception from this practice. The school kids are working in cotton fields in hazardous conditions exactly at this time, while the agro-project managers of the World Bank keep reporting success stories about the situation in the farming sector of Uzbekistan.

One of the reasons of the Uzbek government not heeding criticism is that not everyone in the world is aware of this problem. This is partly because some of the most respected international organizations not only exhibit indifference, but also support the Government’s version of this problem. It is well known that the Uzbek government denies that the use of forced child labour is widespread and that the public authorities are complicit in it.  Such a respected international agency as UNICEF had been already criticized for adopting this position when they underreported the true nature and extent of the problem of child labour in Uzbekistan. To our best knowledge, due to growing criticism, UNICEF has since changed its stance and now recognizes the problem.

Regretfully, another authoritative international organization, the World Bank, has failed so far to provide an adequate assessment of the realities in the agro-sector of Uzbekistan and to acknowledge the fact of the widespread use of child labour in this sector. We regret that the Bank’s support to projects in the agricultural sector in Uzbekistan has been unconditional and was not used as a leverage to encourage the government of Uzbekistan to stop the human rights abuses in this sector. What is shocking to read is that in document justifying the allocation of loans and grants for agro-projects, the World Bank has admitted statements that are completely at odds with reality. Thus, intentionally or not, the authors of respective appraisal documents mislead the international community and donors to these projects on the real situation in Uzbekistan’s agricultural sector. We sincerely hope that our constructive criticism will be received accordingly and can initiate a frank and open discussion directed at seeking solutions to the issues we are raising with the World Bank.

Reviewing the World Bank Appraisal Document

The current assessment is based on a review of the following World Bank document:

Project Appraisal Document on a Proposed Credit in the Amount of SDR 41.3 million (US$ 67.96 million Equivalent) to the Republic of Uzbekistan for a Rural Enterprise Support Project, Phase II, World Bank: May 8, 2008 (report No: 43479-UZ).

Rural Enterprise Support Project, Phase II  (RESP-2) is a continuation of the RESP-1 supported by the World Bank in 2001-2008 which the World Bank considers successful. In private conversations, the Bank’s representatives complain that they don’t have much leverage with regard to Uzbekistan to promote the reform agenda and raise concerns over the use of child labour and other human and labour rights violations endemic to the country’s agro- sector. However, as the authors of the Project Appraisal Document stated themselves, the Project’s phase two has been initiated by the Government of Uzbekistan, so the Bank did have an incentive in its hands to encourage the Uzbek government to meet its international obligations in terms of farmers’ rights and the rights of children.  But instead of using this chance, the Bank preferred to appease the Uzbek authorities, satisfy its hunger for hard currency, without any preconditions, thereby sanctioning further human rights abuse.

The project’s key details:

Project name:    Rural Enterprise Support Project – Phase 2
World Bank loan:      $67.8 mln
Approve year:    2008
Commencing year:     Early 2010
Ending year:      2015
No of regions covered:     7
No of districts:      7

In justifying the project, the document’s authors made several assumptions. The current assessment seeks to examine to what extent these assumptions correspond to reality and can be considered credible. Below is the juxtaposition of the Document’s key statements on such issues as the status of reforms in the agro-sector, the well-being of farmers and the use of child labour with the actual situation the information of which has been collected through civil society activists and the farmers themselves.

What the World Bank Appraisal Document says     Actual situations
1    The abolishment of the collective farms and creation in their places of ‘private farms’ was presented as a fundamental reform     This assumption was too optimistic. In reality it was imitation of reforms.  In fact, this reorganization of collective farms into ‘private’ farms can be better qualified as de-collectivization, not privatization, as the farmers had not acquired real autonomy and the respective accompanying rights in terms of free enterprise. In most cases, the ‘private’ farms were created on the basis of former brigades as constituent part of collective farms. The former brigadiers now called ‘farmers,’ were allowed to open bank accounts and receive a stamp.  But in reality, little has changed in comparison with their previous status: they remained under direct command of local administrations and their various branches and institutional associates. The government continued to speak with the farmers in the language of administrative instructions and intimidation for not meeting these instructions, rather than as providing incentives.

As for former kolkhoz bosses they have found themselves occupying management positions in such quasi-associational institutions as Water Users Associations, or Associations of Private and Dehqon Farmers. The administration of these quasi-associations often serve as the local government’s agents in supervising the farmers, and often transferring bribes from the latter to local governors. Bribes are collected in exchange for various benefits and  access to resources, such as better quality land, water, fuel, sparing farmers from difficult to meet quotas, and avoiding penalization for not meeting these quotas, etc.

The agrarian sector continues to operate as an administrative-command system. Most of the instructions are implemented with no consideration of  the business plans of the farms or their strategic goals, but based on the orders of local authorities. The financial and economic activities of farms are devoid of any autonomy, and as a result, farms cannot independently manage their funds and assets. Most of the farms have been established on the basis of former collective farms and are dependent on the technical services of machine-tractor parks, collective farms, as well as organizations that provide fertilizers. And these actors are all monopolists in provision of services and supplies of seeds, fertilizers, etc.
2    As the World bank document stated ‘The impact of the reforms has created a new class of private farmer, no longer subject
to direct government management…’    It is a completely misguided assessment of the current situation. On the contrary, farmers remain subject to direct government management. The government dictates what to plant, to whom to sell, and sets the price. If farmers do not obey government orders, they may be subject to confiscation of their lands, legal persecution, and even physical abuse. Local hokims (governors) routinely beat and insult  farmers at public meetings. Police, investigators from the procuracy, and tax inspectors are frequent visitors to the farmers. Each inspection forces the farmers to pay bribes to appease the inspectors.  Such visits are frequent and systematic. Thus, bribes have become a factor eating into the farmers’ budget.

Farms are created by decisions and orders issued by the Government, and on terms that are favorable to the government only. From year to year, the plans to boost cotton cultivation do not take into account the state of land, access to water, and weather conditions. The practice of forced labor is widely used. They do not take into account the opinions of the farmers. That the prosecutor’s office has created departments of agriculture speaks volumes about the nature of the relationship between government and farmers. The prosecutor’s office is vested with authority and total control over the activities of farmers.
3    The same document says: ‘Agricultural produce covered by state planning has been reduced to only cotton and
wheat, and the percentage to be sold to GOU also reduced (all other crops and
agricultural products now being subject to individual farmer choice).’     First of all, it should be noted that state plans for growing cotton and wheat have neither been canceled nor reduced. In comparison with the Soviet era, plans for the gross production of cotton have barely changed, remaining at 1.5 million tons of cotton fiber. At the same, the amount of land for cotton cultivation has decreased significantly, and the condition of the land has deteriorated. This demonstrates the degree of exploitation of farmers by the state. As a result, the farmers’ incomes do not cover the costs of the cotton harvests. As the main customer of the cotton, the government only stands to gain from these lands at the expense of the low prices it pays for the cotton and the exploitation of the farmers who work practically without turning a profit.

The reduction of the percentage (of cotton and grant crops) to be sold to the GOU exists only on paper. In reality, the quotas (de facto, Soviet style directive plans) assigned  to farmers are so high that practically all their land is used for cotton and grains, which are subject to confiscation by the state for artificially low prices imposed from  above and that do not cover costs for inputs.

The reduction of the production quotas for cotton is a fiction. One reason is that quotas tend to be so high, not taking into account the actual condition of the land, its salinity, or availability of water, so that the entire crop ends up being submitted to the state to fulfil state orders. Should a farmer manage to produce cotton above the quota, from a financial point of view the surplus wouldn’t bring any additional benefit. The best prices are paid during the first period of the cotton harvest when the farmers are still meeting the quota. By the end of the harvest, the cotton is bought by the cotton gins at the lowest rates. That is why the so-called negotiated prices for the surplus product turns out to be a fiction. Because of this, farmers don’t distinguish between quota prices and so called negotiated prices. What is important to the farmer is how much cotton he or she manages to submit in the first 2-3 weeks of the harvest season when the cotton is accepted by the cotton gins at the highest rates and better prices
4                                                                                                                  The same document says: ‘State procurement prices for cotton and wheat have increased significantly, with wheat almost at international parity. While cotton procurement prices are still lower than parity prices (largely due to processing inefficiency and undervaluing of by-products), they increased in US Dollar terms over 70 percent in the 2000 to 2007 period, whilst the international price increased by only 17 percent’.    This assessment does not take into account the fact that under the collective farms system, the state had provided the farms with subsidies and subventions, and periodically written off their debts. Now, with the creation of the ‘private’ farms, subsidies are gone, while the obligatory quota system remains untouched, and the prices for inputs increased dramatically.  Another striking fact is that upon the creation of  ‘private farmers,’ the former collective farms’ debts were transferred to the them.  So one cannot say that ‘reform’ has improved the economic condition of the farmers or their well-being. The truth is that only a small percentage of farmers associated with the local administration have become better-off. The farmers, in comparison with the times when they were brigadiers, became worse off because they are now subject to numerous inspections and accompanying extortions. In the past, as brigadiers they maintained control over their land plots and were protected from the inspectors. They paid tribute only to one person, the collective farm boss who dealt with the inspectors himself and protected the brigadiers from inspectors.

As stated earlier, the “reforms” carried out by the government benefit only those farmers who, with the assistance of acquaintances, corruption, and bribes, can sell A grade cotton, through non-legal means. Using their own contacts in the local government bodies, they falsify data on cotton production. And the burden for covering the shortage falls on ordinary farmers.
5.    The World Bank document says:
‘The main rationale for Bank involvement is the results on the ground of the first Rural
Enterprise Support Project. This project was rated as satisfactory by the World Bank, the Government of Uzbekistan, and by FAO, a neutral external partner which carried out a
comprehensive final evaluation including beneficiaries’ survey’.    The RESP-1 was implemented during 2001-2008 with the World Bank loan of $36.14 mln in five districts (Akhangaran (Tashkent region), Ellikalin (Karakalpakstan), Marharnat (Andijan), Nishan (Kashkadarya) and Sherabad (Surkhandarya). The institutional outcomes of this project can hardly be qualified as successful. The creation of ‘private’ farmers turned out not to achieve more than de-collectivisation, and farmers have not acquired real autonomy or freedom from the state’s direct,micro-managing, and administrative dictate. As for the FAO’s survey the Word Bank refers to, it is available to readers only in the form of a one page summary while the full-text report is not posted online.  In claiming the project’s success, the report refers to the growth in productivity in the five districts selected for the project. But the productivity figures were most probably provided by the Uzbekistan state department of statistics, which are unreliable as local governments providing such statistics are known for systematic manipulation for propagandistic use.
One possibly real impact was achieved by improving the districts’ irrigation and drainage systems and in the supplying the farmers with access to finances. In terms of institutional development, the project’s effect is minimal.
6.     The World Bank says that RESP-2 responds directly, among others, to the following objective: ‘Supporting the further development of private sector farming’.     In the light of the aforementioned arguments, it is unclear how the project in reality supported private sector farming.

In order to free the private sector from the state monopoly and the administrative-command system, the Uzbek government must implement a series of successive reforms.
7    Only in one section titled ‘Social’ the World Bank refers to the issue of child labour: ‘Although the SA [Social Assessment] did not reveal extensive use of child labour in the areas where consultations were conducted, it raised general concerns about farmers’ seasonal hiring of
children, starting from the fifth grade, to pick cotton in some districts. Although the SA
indicated that children work to contribute needed income to support their families, preventing their access to an education through full time work, and through work where there are unhealthy working conditions, is detrimental to their well-being and perpetuates the cycle of
poverty. Recognizing that the Government is already taking steps to eliminate this practice, the project’s Financing Agreement includes requirements that all farmers seeking credit for farm investments must comply with all national child labour laws and regulations (see annex
12). The project also includes financing of third party social monitoring that will monitor the use of child labour, among other social development issues. In addition, the project finances
public awareness raising to inform farmers and the public about child labour issues and relevant legislation’.    The fact that the Social Assessment ‘didn’t reveal extensive use of child labour in the areas where consultations were conducted’ demonstrates the extent of the SA’s credibility.  The SA’s statement that seasonal hiring of children is taking place only in some areas and is driven only by the need by children to help their families indicates that the SA authors, and the bank as well, is out of touch with the reality in Uzbekistan.

At the same time, the fact that ‘the project’s Financing Agreement includes requirements that all farmers seeking credit for farm investments must comply with all national child labour laws and regulations can be considered positive provided that it will be possible for civil society groups to monitor how this requirement is fulfilled in practice. Therefore, the project’s management should disclose the list of farmers who are going to receive the bank’s credits.

The selection of the ‘third party monitoring,’ its work, and the results of its work should be transparent and accountable to all stakeholders.

The public awareness raising activity planned by the bank also should be implemented in cooperation with civil society groups.
8    The SA the project document refers to contains a deeply flawed assessment of the status of child labour in agriculture: ‘Respondents stated that school children are not exploited for cotton production.
Indeed, the recent work of UNICEF and the SA showed the lack of worst forms of child labour in rural Uzbekistan*. There is little difference in the nature of child labour on the cotton plantations and on DF [dehqon, or household, plots of land where cotton is not planted]. Usually, 12 to 18 year old children are not used in FEs [farmer enterprises] during weeding, cotton and guzapaia   (cotton stems) picking. Their labour is used during the period of cotton picking when districts/provinces can not fulfil their plan of cotton picking. Children do not participate in cleaning of the irrigation and drainage systems. In some provinces where there was a shortage of farm labour school children were picking cotton (grades 5 and above), and in other provinces there worked only high school children (pupils of 8-11 grades and
college students). In some provinces, where there is excess farm labour (women), children were not involved at all. Women and schoolchildren believe that they can earn the most only
when they pick cotton when each can earn more than $7 per day and more than $300 per month, which many families badly need’.    It is amazing that the Social Assessment refers to the widely criticised UNICEF sponsored MICS [Multiple Indicator Cluster Survey] 2000 and 2005 Uzbekistan survey reports, which UNICEF itself have renounced.

It is not true that school children are not being used in weeding works. Rural children are widely mobilised for weeding works well before the end of academic year, in May. The statement that school children are not exploited for cotton production is utterly untrue. A number of surveys implemented by human rights groups have already demonstrated the opposite. Contradicting itself, the Social Assessment admits that in some provinces where there was a shortage of farm labour, school children were picking cotton. The reality is that there are no provinces in Uzbekistan with a labour shortage. All provinces are overpopulated. But what is true is that many adults leave their homeland to find work in other countries, mainly in Russia and Kazakhstan. The SA report claims that the cotton picker can make $300 per month during the harvest season. Were this true, no adults would leave to work in other countries where they earn exactly the same amount ($300 per month). Cotton pickers at best can eke out $100, a part of which is deducted for meals and confiscated by school administrations for renovations. In any case, money that schoolchildren earn cannot  compensate for the two months of lost educational opportunity.
9    The document says that a ‘wide range of stakeholders have been consulted
in the preparation of the project. All participating government agencies and implementing partners have contributed to the design of the relevant components of the project. RRA [rural restructuring agency] on behalf of the Government and with the assistance of a local social science research firm carried out an extensive qualitative social assessment (SA) to better understand stakeholder expectations; determine the optimal means by which the project can benefit poor farmers, the newly established private farmers, and those relying on their home gardens for income…. A stakeholder consultation … was organized by RRA in Tashkent on 18 March 2008 with broad participation from government agencies and a number of NGOs’.     First of all, the preparation of the Social Assessment report was done under the supervision of the government. It’s nit surprising then that it failed to mention the main problem that farmers face, which is the systematic violation of their human, entrepreneurial, and ownership rights by the state, by local administrations, and by all associated agencies. On the same reason, such acute problem as forced child labour was left almost unnoticed by the Social Assessment report and its importance downplayed.

It would be interesting to know which NGOs were invited to participate in the stakeholder consultation that took place on 18 March 2008.  It is likely that only “GONGOs” or government-organized NGOs, which are not independent and which are called upon to serve the government’s interests, were the only invited participants.

Since 2004, the government has cracked down on independent NGOs in the country, closing down most of them. Only GONGOs and a handful of still existing grass-root NGOs have been left untouched. Under such circumstances, only a few human rights groups can be considered as representing Uzbekistan’s civil society sector. However, they most probably were not invited to participate in the consultations.

By the way, exactly at that time, at the beginning of 2008, our organization distributed a report on the results of monitoring forced child labour in the Uzbekistan’s cotton industry. A copy of that report was sent to the World bank too.

The Bank should disclose the list of NGOs which were invited to the  stakeholder consultation on 18 March 2008.

Conclusion

After a careful reading of the aforementioned Appraisal Document and comparison between its assumptions and the reality on the ground, we would like to respectfully express our disagreement with some of these assumptions, namely on the following two issues:

1) The state of reforms in agriculture of Uzbekistan;

2) The extent of child labour in the cotton sector of Uzbekistan.

On the first of these issues, we believe that it would be incorrect to say, as the authors of the Appraisal Document did, that there have been fundamental reforms in the agricultural sector. Despite the transformation of collective farms into private farms, the centralized management in two major sectors of agriculture, grain and cotton sectors that occupy up to 70% of arable lands, has remained almost entirely unchanged. The command economy continues to prevail in these two sectors. The Appraisal Document has failed to recognize that farmers remain to be under a direct administrative control of the executive government. As kolkhozes in the past, the farmers are still denied the right to decide what crops to sow in their fields, as well as the right to dispensation of their products.

The phase One of the World Bank Rural Enterprise Support Project which the authors of the appraisal document regard as successful may has indeed brought some benefit to farmers, but mainly in terms of technical and financial benefits such as the revitalization of irrigation and drainage systems, as well as the allocation of loans to the farmers in five selected districts where the project was implemented. But at the institutional level, it failed to promote genuine reforms, in contrary to what the authors of the Appraisal Document claim. As we said, the farmers still lack the freedom of enterprise, and the de-collectivization has changed a little since the times before the RESP-1. There is no guarantee that the second phase of this project, which began this year, will demonstrate any progress in this regard, as there are no signs of the government’s intentions to liberalize the cotton and grain sectors and give farmers the right to decide how to dispose of their land and production.

The assessment in the document on the issue of child labour is even more dismaying to us. The authors of the Appraisal Document state that the use of child labour in the cotton industry in Uzbekistan is not a big issue. It would be naive to suggest that the staff of the World Bank office in Uzbekistan, which has been present in the country for quite a number of years, would be unable to notice the magnitude and scope of this problem. In any case, we think this ignorance is unacceptable and undermines the credibility of the Bank, at least, in the eyes of the civil society of Uzbekistan.

We also believe that these two issues, namely (1) the still persistent command economy in the agriculture and (2) the issue of forced child labour in the cotton industry, are closely related to each other. The second is caused by the first. The farmers themselves, if they were freed from the administrative dictate of the executive authorities, would possibly still bring children to pick their cotton, but would do this on a much smaller scale and, what is most important, on a contractual basis and not under duress and administrative coercion, as it currently takes place practically in all regions of the country.

Here is what we kindly urge to the World Bank:

1) Submit Bank’s documents and projects related to agriculture in Uzbekistan, for re-assessment, particularly in terms of evaluating the state of reform in the farming sector and the use of forced child labour;

2) Establish partnerships with civil society organizations on local and international levels. Particularly, the Bank should engage with those organizations which are already fighting for the abolition of forced child labour in Uzbekistan;

3) Strengthen support of reforms in Uzbekistan’s farming sector, to free the farmers from administrative directives of the local and central authorities; and to make loans to the agricultural sector contingent on Uzbekistan’s progress in executing real reforms in the sector and abolishment of forced child labour in the country’s cotton industry.

Our analysis and proposals are aimed at promoting reform in the country, improving the welfare of our people, and assisting the World Bank, the Government of Uzbekistan and other interested parties to conduct honest assessments of the situation in Uzbekistan, notably in its agriculture.  We believe that the agro-reforms and the abolishment of forced child labour are in best interests of our country.