Mar 13, 2012

Ruling Uzbekistan like in a James Bond movie

Acemoglu and Robinson just started a blog to accompany the launch of their new book, Why Nations Fail (reviewed by The Economist here). A recent post focuses on extractive institutions in Uzbekistan and stars none other than the repressive president's daughter, Gulnara (pictured below and more pics here) (Karimov has been President since 1991). Here's an anecdote:

Part of Uzbekistan is also ideal for growing tea. Interspan, a US company, invested heavily. But by 2006, Karimov’s daughter, Harvard graduate and international jet setter, Gulnara Karimova, had taken an interest in this market. Gulnara is a woman of many talents as you can see from her web page. For example she hangs out with rock stars like Sting and even duets with Julio Iglesias. Gulnara’s interest meant taking over Interspan’s assets and business. And this was not going to be by making an attractive offer. The company reports that men with machine guns, allegedly working for the Uzbek intelligence services, entered its offices and warehouses, and seized its assets and inventory. Its personnel were arrested and tortured. By August 2006, the company pulled out of Uzbekistan, and tea was now a Karimov family monopoly. The tea market is not the only one which Gulnara Karimova is said to have used coercion and expropriation to have taken control of. She has allegedly acquired shares in the Coca-Cola bottling franchise and in the oil sector through similar means, and controls the largest mobile phone operator, and has major interests in several other sectors, including cement and nightclubs. (Ironically, one of Karimov’s other daughters, Lola, is a “campaigner for the rights of children”!).
Two questions. Do people actually still wonder why Uzbekistan is poor? And second, who would've thought the line between perfection and insanity was so thin indeed?

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