Get your act straight Uzbekistan. You need more Foreign Direct Investment.

 Full of rich natural resources such as gold, cotton, oil and natural gas with the largest population in Central Asia and fairly developed human capital with low wages, Uzbekistan is potentially the best country in the region for foreign investments. The inability to stabilize macroeconomic and structural refinement has aggravated bureaucratic incompetency and promoted vast corruption. After the collapse of the Soviet Union, which led to huge losses in technological development and economic growth, Foreign Direct Investment (FDI) is the best way to diversify and improve the economy of Uzbekistan. For Uzbekistan to attract more FDI it has to standardize and increase currency-converting process, as well as unify and organize licensing and investment entry procedures, restrain corruption for more efficient investing environment as well as increase tax-cutting incentives.

     Uzbekistan has to revise the foreign currency exchange processes and allow FDIs to convert greater amounts of currency in more efficient ways as the first step to bring in foreign businesses into the economy. Currency conversion is one of the greatest difficulties for foreign businesses wishing to invest in Uzbek markets (Lautier and Francois). National Bank of Uzbekistan (NBU), which is the Central Bank, is the only bank authorized for any transactions by FDIs. Thus, the government has full control over how much profit money the FDI can withdraw or transfer for its operations and at which speed this process is initiated. As the centralized economy, Uzbekistan is trying to prevent easy outflow of money from the country; thus, slows down the exchange processes. However, these policies hurt FDIs ability to smoothly make transactions, pay wages and do basic business like buying equipment, so fewer investments are made.

       The initial process of licensing and investment for foreign businesses has to become more systematic and centralized. Licensing and initial registration of investment are ambiguously separated between different agencies and ministries, which are poorly coordinated and often contradict with each other’s policies (Loungani). Moreover, some of these agencies are in charge of State Owned Enterprises (SOEs), so they present competing interests to investments that make the licensing process counteractive (Abdurakhmonov, p.200). Instead of having multiple malfunctioning agencies that slow down the preliminary registration and legalization of FDI, there should be one concentrated ministry. It can consist of one or two representatives from each ministry in the same locale, who are in control to oversee the entire procedure and expedite it accordingly. Also, these ministries can’t acquire shares in FDI competing SOE industries.

        Uzbekistan Ministry for International Trade and Investment (MITI) has to create universal laws, instead of case-by-case based regulations, which are passed in top down manner in order to eliminate lower levels of corruption and provide safe and stable environment for the FDI. Uzbekistan is ranked “177th out of 183 in Transparency International’s 2011 Corruption Perceptions Index”(US Department of State). Executive branch of Uzbekistan highly advocates in favor of FDI, but poorly organized local and regional ministries “Hokimiyat” are able to tweak regulations on individual case that promotes corruption (Allan, Jorg p.43). Expropriation rules and regulations change so often that it’s almost impossible to abide with them that result in arbitrary and illegal fines. MITI has to provide standardized and universal regulations, which will protect FDIs and represent interest of the executive government instead of corrupt small bureaucrats.

      While Uzbekistan is very attractive state for FDI in Central Asian region, it has to compete with other states that don’t have as much potential, but provide enough tax incentives and safety regulations to become more desirable place for investment. After July 2006 cancelation of tax holidays and protection from expropriations to 10 years, many FDIs closed their businesses (Abdurakhmonov, p.183). Uzbekistan won’t sustain and loose FDI if it will not introduce more vigorous pro-investment tax reforms immediately. First, the MITI should reconsider property tax, the environment tax and the road user tax and eliminate it. These taxes are not rational for the government and represent strain for the investors. Secondly, it should remove all the inconsequential and extraneous limitations on removal of advertising, entertaining and labor costs.

      The productivity potential, low labor costs and substantial market are very inviting conditions for the FDI. Unfortunate inability to follow through with its promises and punishing regulations serve as very discouraging attributes for FDI in Uzbekistan. If Uzbek government wishes to enjoy more FDI, great technological advancement and human capital growth, besides rapidly growing economy it has to revise its policies and stabilize its operations. Otherwise, it will remain stagnant and lose its last remaining FDIs.

                                                            Works Cited:

Abdurakhmonov, Mukhsinkhuja. "FDI Scenario in Uzbekistan-Glancing at the First Decade after Independence." Economic journal of Hokkaido University 32 (2003): 183-200. Web. 23 Oct. 2014. <http://www.worldcat.org.libproxy.usc.edu/title/fdi-scenario-in-uzbekistan-glancing-at-the-first-decade-after-independence/oclc/678242350&referer=brief_results>.

Allan, Rorry, and Jorg Weber. "Investment Policy Review in Uzbekistan." UNCTAD. New York and Geneva. 1999. Web. 23 Oct. 2014. <http://unctad.org/en/docs/poiteiipm13.en.pdf>.

Lautier, Marc, and François Moreaub. "DOMESTIC INVESTMENT AND FDI IN DEVELOPING COUNTRIES: THE MISSING LINK."Journal of Economic Development 37.3 (2012): 1-23. ProQuest. Web. 16 Oct. 2014.

Loungani, Prakash, and Assaf Razin. "How Beneficial Is Foreign Direct Investment for Developing Countries?" Finance and Development. A quarterly magazine of the IMF. June 2001. Web. 16 Oct. 2014.

United States. Department of State. Burreau of Economic and Business Affairs. “2012 Investment Climate Statement – Uzbekistan.” N.p., n.d. Web. 22 Oct. 2014. <http://www.state.gov/e/eb/rls/othr/ics/2012/191261.htm>.

Energy Poverty and "Akon Lighting Africa"

Do you know how much of your daily routine is dependent on having simple electricity? Can you imagine your education, working environment or home chores with out reliable supply of energy? Simple use of ATM machines, iPhones, Macs, Laundromats, Printers and even as simple as use of a toaster in morning are all dependent on electricity. People in developed countries simply don’t realize what a blessing it is to be provided with constant energy. Having electricity and being able to use it is so normal to us that we forget its true value.

An ugly reality is that not the entire world is gifted with reliable sources of energy. Even further, lives of so many people around the world are at stake because hospitals can’t keep vaccines refrigerated. People can’t store their food under required temperature. Very often huts get caught on fire because people use other unsafe sources of energy like ceresin lamps instead of electricity.  Many children can’t acquire basic education and drop out of schools and poverty of these countries just grows bigger and bigger. Just to see the severity of this problem, try to imagine that 7 out of 10 people in Sub-Saharan Africa lack basic electricity. That is a heart-breaking and horrifying fact.

Growing up in Uzbekistan, that is a former USSR country and is located in Central Asia south of Kazakhstan and north of Afghanistan and Iran, I was unlucky enough to experience lack of stable energy flow first hand. Ironically “Uzbekistan was the third largest natural gas producer in Eurasia, behind Russia and Turkmenistan in 2011.” On the contrary about 3 to 4 out of 7 days a week my family would spend with out any sign of electricity. I remember how my grandmother would get so devastated and upset when just as she’d buy groceries and put them in the fridge, the power would go off for days and the entire fridge of food would get thrown away because we can’t eat it all before it went bad.

During one of the coldest winters in Uzbekistan when temperature dropped below zero degrees Fahrenheit we were out of electricity as well as hot water for a week. In order to sleep and not get sick my mom made me wear all my warm clothes, including boots, gloves, puff jacket, hat, and scarf before I got under several layers of blankets. Now living in LA and enjoying this blessed beautiful weather sometimes I still get horrified by memories of those days and nights that all you do is just hope that electricity will come back on and I’d be able to have a cup of warm tea or water.

A person that also was unlucky enough as myself and had to experience hardships of life without electricity is Akon. Akon is an international Philanthropist, business mogul, hip-hop and R&B recording artist, songwriter and record producer. He was born in Saint Luis, Missouri and ended up growing up in Senegal. He is known for his chart-dominating singles “Smack That” and “I Wanna Love You.” In February 2014, Akon began and initiative that would bring electricity to more than one million homes in Africa by the end of 2014. “Akon Lighting Africa” is an effort that will address immediate needs of people in Africa. “This initiative will address the concern that more than two-thirds of the population of sub-Saharan Africa is without electricity, and that more than 85 percent of those living in rural areas lack access.”

Akon is being assisted by One a “campaigning and advocacy organization of more than 3.5 million people taking action to end extreme poverty and preventable disease, particularly in Africa. Cofounded by Bono and nonpartisan, they raise public awareness and work with political leaders to combat AIDS and preventable diseases, increase investments in agriculture and nutrition, and demand greater transparency in poverty-fighting programs. ONE also works closely with African activists and policymakers as they fight corruption, promote poverty-fighting priorities, monitor the use of aid, and help build civil society and economic development.”

This past Monday Akon and One with help of Michael Drachkovitch, who is USC Dornsife alumnus, manager of marketing and external relations at ONE brought the entire campaign to USC. As a former International Relations student Michael saw an opportunity to seek help of young, innovative and passionate International Relations student. Students were presented with a challenge of how to efficiently use social media and draw attention to the Energy Poverty problem and stimulate young people to send online letters to Congress. “These letters will urge Senators to support legislation that will bring modern energy to more than 50 million people living in sub-Saharan Africa for the very first time - all at zero cost to the US taxpayer. Letters are one of the most effective ways to influence the way Congress votes. The goal of the #PowerProject is to generate 50,000 letters to Congress.”

This campaign made me very proud and happy that there are people in this world that don’t forget their roots and where they came from, like Akon. Others like Michael Drachkovitch and One Campaign team are able to see beyond their own community and country and reach out to people in need in other parts of the world with the attempt to positively change their lives.

Putin's Defense Plan

     As a response to questions and concerns of Sabina Bhatia and Misunderstoodmetropolis I’m writing this post. I tried to keep my last post very distant from the Crimean annexation, but I guess it’s hard to talk about parts of conflict when there are a lot of different aspects and issues involved at the same time. It’s actually very surprising that in the US media there are less articles and news reports about issues of Ukrainian nationalism and new neo-Nazi government leaders and more articles about Putin being a crazy communist former KGB agent. I’m sorry for anybody’s hopes and/or aspirations that could be shattered by this post. After careful research I may guarantee that Putin is neither crazy, nor is he trying to rebuild Soviet Union, nor will he try to invade other parts of Ukraine or any other countries of ex-USSR territory. Putin is nothing but a rational actor that is concerned about his country’s security and tries to protect his boarders, as well as takes advantage of a situation.

    Hear me out; I’m not anybody’s supporter. I have a cold mind and heart when I'm evaluating this situation; even though, my heart is bleeding when I watch poor civilians dying because of simple bureaucratic games.
   

       Crimea has a long troublesome history of being concurred, occupied, given away and rented out. Crimea locates just South of Ukraine and South West of Russia by the Black Sea. Before Crimea got its modern name the Greeks and Romans knew it as “Taurica” which means “fortress” or “stronghold” because of its strategically important location. The Greeks, Romans, Gothic tribes, the Kievan Rus’ state, the Byzantium Empire, and Mongols all occupied Crimea at different times. During mid-1400s under protection of the Ottoman Empire, it was also known as the Crimean Khanate. 

"The modern name 'Crimea' seems to have come from the language of the Crimean Tatars, a Turkic ethnic group that emerged during the Crimean Khanate. The Tatars called the peninsula 'Qirim'." 

Russian queen Catherine the Great annexed Crimea in 1783. It remained a Russian territory until 1917, when Russian Empire collapsed after October revolution. For a short period of time Crimea was a sovereign state, but in 1921 it once again became a part of a newly born Soviet Union as the Crimean Autonomous Soviet Socialist Republic. In 1954 for very unusual and uncertain reasons Premier Nikita Khrushchev gave Crimea away to Ukraine and it remained as such until couple months ago.

     In 1997 Ukraine and Russia signed a bilateral Treaty of Friendship, Cooperation and Partnership, which legally allowed Russia to keep it Black Sea Fleet in Sevastopol, Crimea. While renting out Crimean ports Russia was partially subsidizing Ukrainian purchases of Russian natural gas. This seemed like a beneficial for both countries agreement. Here Ukraine gets to purchase cheaper natural gas and have a great military protection of a bigger brother Russia. Meanwhile, Russia gets to protect its Southwestern boarders, which as we can observe from historic evidences is extremely important military strategic location.

     Its 2014 now and Ukraine experiences a revolution where some people are eager to join the European Union, while others are not so eager and support keeping long-standing relationship with Russia. We also have people in Crimea that speak predominantly Russian and if not all the people but a majority of them see Ukrainian turmoil as an opportunity to gain Crimean independence and join Russian Federation.

    Lets try to become psychics and foresee future of Ukraine and Crimea specifically if Ukraine joins the European Union. However, you don’t need to be a psychic to realize that if Ukraine joins the EU it will eventually join NATO, as all of the other new members of European Union did. Now what’s going to happen to Russian Black Sea Fleet if Ukraine joins NATO? Hmmmm… No need to think too long or be some outstanding political analyst to understand that Russian Black Sea Fleet would be removed and United States Fleet would be placed instead. In this case we would’ve had a Cuban missile crisis but in reverse and it would’ve been called “Crimean missile crisis.” The US could have been as close as it gets to Russian boarder eye-eye staring at each other through riflescopes.

     Putin as a rational actor that understand how the world works could not allow this to happen and did everything to prevent a possible conflict and/or threat on his own boarders. But didn’t we do the same during the Cuban missile crisis, protected our boarders and prevented threat. If so, how can we blame Putin for what he did? Is he crazy? Not at all. Is he strategic? Very much so. Did he violate international laws? Yes he did, but who didn’t? It is quite hypocritical of United States to judge and sanction Russia

 “[a]fter invadingIraq illegally in 2003, with no sanction from the UN, and no imminent threat being posed by that country to either the US or to any of Iraq’s neighbors, after years of launching bombing raids, special forces assaults and drone-fired missile launches into countries like Yemen, Pakistan and Somalia, and killing hundreds of innocent men, women and children, after illegally capturing and holding, without charge or trial, hundreds of people it accuses of being terrorists and illegal combatants, after torturing thousands of captives […]

How many times has the US sent troops into neighboring countries based upon the claim that it had to protect American citizens during a time of turmoil. We have Grenada in 1983, Panama in 1989, the Dominican Republic in 1965, and Haiti in 2003, for starters. Would the US hesitate for even a moment to send troops into Mexico if the Mexican government were overthrown in an anti-American coup, and if demonstrators who had led to that overthrow were attacking Americans? Of course not.

The Panama invasion, and the overthrow and arrest and removal to the US of Panama’s elected President Manuel Noriega, is particularly instructive, as it involved protecting a strategic US overseas base — the US Canal Zone — much as Russia is protecting its naval bases in Crimea, operated under a long-term lease from Ukraine but threatened by the recent Ukrainian coup. The US, headed at the time by President George H.W. Bush, invaded Panama under the pretext of protecting Americans in that country, but the attack (which had been planned well in advance of any threats to Americans) quickly morphed into an overthrow of the Panamanian government, the arrest of its leader, and the installation of a US puppet leader."  

    Further on, Russia has no interest in occupying any other parts of Ukraine or any other countries of former SovietUnion. Most of these countries are extremely underdeveloped and will be more costly than beneficial for Russian economy that is still in developing process itself. Even now, after annexing Crimea Russia already suffers quite a lot offinancial and economic discomfort. That’s why there is no even need of any discussions of possibility of Russia annexing anybody