Ugly truth behind banknotes

Even though Uzbekistan has reduced the amount of child labor used during its annual cotton harvest, activists say it continues to force adults and older children into the fields. The Korean government uses Uzbek cotton to make banknotes. / Courtesy of Cotton Campaign

KOMSCO Daewoo imports cotton produced by Uzbek forced labor

By Kim Young-jin

On Sept. 10, the start of the cotton-picking season in Uzbekistan, the temperature in Tashkent soared to a scorching 38 degrees Celsius. As they do each year, citizens took to the fields to pick "white gold."

In the Central Asian country, this is called "hashar" ― one's national duty. But it's far from voluntary.

Activists estimate that one million Uzbeks are compelled each year to fill cotton quotas in what the U.S. State Department refers to as "government-organized forced labor."

Koreans may be surprised to find that some of that cotton literally ends up in their pockets.

Under a deal with the government of President Islam Karimov, the Korea Minting Security Printing and ID Card Corporation (KOMSCO) operates a factory outside Tashkent to manufacture cotton linter pulp, the material used in Korea's banknotes.

Uzbekistan, the world's fifth-largest cotton exporter, has reduced the use of child labor during the harvest. But rights groups say it continues to force adults and older children into the fields, a claim conceded by officials of Daewoo International, Korea's largest trading company, which owns two cotton processing factories there.

Critics want Korea to scrutinize its links to Uzbek cotton, as well as the financially-struggling Global KOMSCO Daewoo (GKD).

''The government has desperately sought to secure natural resources from Uzbekistan,'' Rep. Park Won-suk of the minor opposition Justice Party said. ''But by using cotton that comes from forced labor, it is collaborating with a dictatorship.

Jointly operated by KOMSCO and Daewoo International, GKD manufactured some 4,529 tons of cotton linter pulp this year, as of October, according to documents obtained by The Korea Times.

KOMSCO used 209 tons of that to produce Korean banknotes; and 2,311 tons to make banknotes for other, undisclosed countries. GKD also exported pulp to be made into money and security paper abroad.

During the harvest, the laborers ― including doctors, nurses, teachers and university students ― must meet daily quotas of some 60 kilograms. They often face expulsion or dismissal if they refuse.

''Coercion is the essence of this problem,'' said Matt Fischer-Daly, coordinator of Cotton Campaign, a coalition of labor groups.

Uzbekistan is a member of the International Labor Organization (ILO), which prohibits the use of forced labor for economic purposes. "You can't coercively organize people to produce something for the government,'' Fischer-Daly said.

The system dates back to the Soviet era, when millions were mobilized to support the state.

When Karimov took power, land was theoretically ''privatized.'' Strapped for cash, however, the government established tight controls on production and prices, procuring cotton at a fraction of market value.

The brunt of the burden falls on farmers, who must dedicate a percentage of their land to cotton. If they miss their quota, they can lose their farms.

The farmers are often in debt. While they have to pay for equipment and upkeep of the fields, they receive only one-third of the market value for the cotton they produce, said Fischer-Daly.

The mobilization is an impediment to Uzbekistan's development, says Umida Niyazova, an Uzbek emigre and head of the Uzbek–German Forum for Human Rights.

"The country turns into a big labor camp," she said. "Every organization ― kindergartens, schools, hospitals, privately-owned companies ― are required to send a specific number, 20 to 30 percent, of their employees to pick cotton."

According to rights monitors, the laborers are paid some eight cents per kilogram, and a large portion is deducted for meals and other expenses.

Advocates for Public Interest Law, a Seoul-based law firm which conducted a field investigation during this year's harvest, said citizens slept in schools, barns and government buildings. The facilities often lacked showers and potable water.

In September, a school boy who fell asleep on a trailer suffocated when cotton was loaded on top of him, according to Cotton Campaign.

In October, Safarboy Karimov, a 38-year-old farmer, hanged himself in his cotton field, three days after he was publically humiliated for missing his quota.

There have, however, been signs of change.

Faced with international pressure, Uzbekistan last year enforced a sweeping reduction of the number of children under 15 in the cotton harvest.

This year, it allowed a delegation from the International Labor Organization (ILO) to monitor the harvest for child labor.

According to one Daewoo International official, the government has plans to introduce 2,000 mechanical cotton pickers by 2015, which he argued would reduce the need for mobilized labor.

"Though we're limited in what we can demand, we've spoken (to the Uzbekistan government) as much as possible," the official said, asking not to be named. "We think we've contributed to a trend toward change."

Niyazova was skeptical, arguing that the decree on child labor hasn't solved the problem.

"They're forcing more adults, people from different professions to pick instead of children," she said.

South Korea ramped up investment in Uzbekistan in 2009, signing 16 agreements on the rights of Korean firms to develop oil and mineral resources and industrial infrastructure. In February the next year, KOMSCO, Daewoo International and the Uzbek government inked a deal for GKD to take over a dilapidated cotton cellulose factory in Yangiyul.

Aside from Korean banknotes, KOMSCO uses material from GKD to make banknotes for other, undisclosed countries. GKD also exports the material to foreign countries, where it is made into money and security paper.

Daewoo International, a subsidiary of POSCO, began producing cotton yarn in the country in 1996 and exports to countries such as China, Turkey and former Soviet republics.

GKD's output has been lower than expected, reaching only 22.1 percent of its targets in 2012. Following a target adjustment this year, it's managed to reach 51 percent of its goal. For KOMSCO, this translates to losses of some 12.8 billion won (about $12.7 million) over three years.

According to Rep. Park, apparel giant Nike recently cut ties with Daewoo International after joining a boycott of Uzbek cotton that also included retailers such as GAP, Target and Tesco.

The firm could be under further scrutiny as well: The International Labor Rights Forum recently filed a complaint to U.S. Customs and Border Protection against the importation of cotton from Uzbekistan by Daewoo International, which the group says occurred in 2008. Under U.S. law, it is illegal to import goods made with forced labor.

Fischer-Daly urged Daewoo International to produce a public report assessing its supply chain in Uzbekistan. For Seoul, the situation provides a "significant opportunity" to promote human rights.

"It's not really about the bottom line, but also the contribution of companies to social stability in that country on a basic level," he said.