Russia conquered the territory of present-day Uzbekistan in the late 19th century. Stiff resistance to the Red Army after the Bolshevik Revolution was eventually suppressed and a socialist republic established in 1924. During the Soviet era, intensive production of "white gold" (cotton) and grain led to overuse of agrochemicals and the depletion of water supplies, which have left the land degraded and the Aral Sea and certain rivers half dry. Independent since 1991 upon the dissolution of the USSR, the country is striving to reduce its dependence on the cotton monoculture by diversifying agricultural production while developing its mineral and petroleum export capacity and increasing its manufacturing base. Uzbekistan’s first president, Islom KARIMOV, led Uzbekistan for 25 years until his death in September 2016. The political transition to his successor, then-Prime Minister Shavkat MIRZIYOYEV was peaceful, but sidelined the constitutional process where the chairman of the Senate would have served as the acting president. MIRZIYOYEV, who won the presidential election in December 2016, has sought to improve relations with Uzbekistan’s neighbors and proposed wide-ranging economic and judicial reforms.
Uzbekistan is a doubly landlocked country in which 51% of the population lives in urban settlements; the agriculture-rich Fergana Valley, in which Uzbekistan’s eastern borders are situated, has been counted among the most densely populated parts of Central Asia. Since its independence in September 1991, the government has largely maintained its Soviet-style command economy with subsidies and tight controls on production, prices, and access to foreign currency. Despite ongoing efforts to diversify crops, Uzbek agriculture remains largely centered on cotton; Uzbekistan is the world's fifth-largest cotton exporter and seventh-largest producer. Uzbekistan's growth has been driven primarily by state-led investments, and export of natural gas, gold, and cotton provides a significant share of foreign exchange earnings. In early 2016, Russia’s Gazprom announced it planned to increase purchases of Uzbek gas.Aware of the need to improve the investment climate, the government is taking incremental steps to reform the business sector and address impediments to foreign investment in the country. Since the death of first President Islam KARIMOV, rhetorical emphasis on such initiatives and ostensible government efforts to seek input from the private sector have increased. In the past, Uzbek authorities have accused US and other foreign companies operating in Uzbekistan of violating Uzbek laws and have frozen and seized their assets. At the same time, the Uzbek Government has actively courted several major US and international corporations, offering financing and tax advantages.In 2003, the government accepted Article VIII obligations under the IMF, providing for full currency convertibility. However, strict currency controls and tightening of borders have lessened the effects of convertibility and have also led to some shortages that have further stifled economic activity, and the government has lately raised the issue of currency reform in a number of official decrees and proclamations. Recently, lower global commodity prices and economic slowdown in neighboring Russia and China have been hurting Uzbekistan's trade and investment and worsening its problem of foreign currency shortage.