Swiss-Uzbek Agreement a Step Toward Returning Many Millions to Uzbekistan

On September 9, the Swiss government announced that it had signed an agreement with Uzbekistan paving the way for the restitution of assets worth millions confiscated from Gulnara Karimova.

“The agreement has some welcomed features. It incorporates, broadly speaking, established international principles for responsible asset return. Though the devil will be in the detail of the forthcoming asset sharing and restitution agreements,” Kristian Lasslett, an expert in responsible asset return who is researching asset repatriation procedures in Central Asia, told The Diplomat.

Switzerland is just one of several global jurisdictions to have frozen and seized assets belonging to Karimova, the eldest daughter of late Uzbek President Islam Karimov. Karimova is current serving jail time in Uzbekistan related to the breathtaking corruption that she engaged in during her father’s reign. Human rights advocates have questioned the legal process by which Karimova has been convicted and jailed, though they also do not hesitate to criticize the astounding scale of her corruption. In March 2020, Karimova was sentenced to 13 more years.

In 2010, leaked U.S. diplomatic cables characterized Karimova as a “robber baron.” She was, one cable stated, “the single most hated person in the country.” It wasn’t until 2012, however, that the scale of Karimova’s corruption exceeded her father’s tolerance. Her machinations spilled into the international consciousness when allegations surfaced on Swedish public television that a shell company tied to Karimova had solicited and received bribes from a Swedish telecom aiming to enter the Uzbek market — of which Karimova was queen.

In the ensuing years, she was eventually shuffled out of public view (after having been a wanna-be pop star, the Uzbek permanent representative to the United Nations in Geneva, and its ambassador to Spain) and placed under house arrest by her father’s administration. That extended beyond the Karimov era, as the change of leadership following Karimov’s death in 2016 also presented an opportunity for the Uzbek government to lobby for the return of assets worth millions she’d squirreled out of the country.

The announcement of a deal between Swiss and Uzbek authorities is the next big step in the Uzbek government’s quest to repatriate the gains of Karimova’s corruption. It contrasts sharply with France’s decision in 2019 to return $10 million to Tashkent without preconditions.

“The agreement sets out the principles and stages for the restitution,” notes a Swiss government press release, which also stipulates that the agreement relates to $131 million “already definitively confiscated in one of the criminal proceedings in connection with Gulnara Karimova” and also considers “any further assets that may be definitively confiscated in the future under the still ongoing criminal proceedings.” Assets worth more than $715 million are frozen by the Swiss government and subject to ongoing criminal proceedings.

According to the Swiss government, the framework is based on a handful of principles: Transparency and accountability in the restitution process; use of the assets to improve the living conditions of the people of Uzbekistan; investment of the funds in projects which support sustainable development (in accordance with the U.N.’s 2030 Agenda and Uzbekistan’s development strategy); establishment of a monitoring mechanism; and the potential involvement of non-state actors.

While the framework agreement is not yet legally binding, some activists see it as a promising step. A group of Uzbek activists gathered signatures on an open letter regarding the agreement and what needs to happen next. The Diplomat reviewed a draft of the letter, which called the agreement a “step forward.”

But there remain many questions about the actual process of returning the assets and how that process will be overseen. Umida Niyazova, executive director of the Uzbek Forum for Human Rights, a Berlin-based NGO, told The Diplomat that “It is unclear how the transparency and accountability requirement will be interpreted and enforced.”

Niyazova noted with concern that the participation of nongovernmental organizations is paired with the term “potential.” It, she said, “leaves a loophole for the Uzbek government to ignore the role of civil society in this matter.” There is a risk, she said, that if “independent” civil society organizations are not specifically included, the Uzbek government could instead involve government-controlled NGOs (known as GONGOs) in their place — circumventing the purpose of involving nongovernmental organizations in the first place.

The Uzbek government, now headed by Shavkat Mirziyoyev (who served 13 years as prime minister under Karimov) pushed ahead with a reform agenda that has seen both progress and setbacks — all within the context of consistently stated high ambitions from the top. Nevertheless, Uzbek activists have cautioned states that hold frozen Karimova assets to not rush the return of funds to Uzbekistan and to not repatriate any amount of money without safeguards and oversight, lest the influx of funds just be fodder for further corruption.

“The big challenge right now is that a kleptocratic elite continue to control large swathes of the Uzbek economy, and this elite manipulates public finances and government decisions, to benefit their private interests. Meanwhile Uzbek civil society, including journalists, face continued persecution particularly when exposing corruption. Protecting the funds from predation in this environment is going to require judicious transparency, accountability, and oversight mechanisms,” Lasslett said.

“The requirement of accountability simply cannot be fulfilled until the rule of law is established in the country,” Niyazova said, noting that “the legal profession is still under the direct control of the Uzbek Ministry of Justice, there are no open and transparent systems of public procurement, nor a conflict of interest clause [in the relevant Uzbek laws].”

The Swiss agreement is admittedly a first step, and carries with it big promises and big demands. Can the Uzbek government ensure that those who participated in Karimova’s corruption do not benefit from it once more?