SAMARKAND, Uzbekistan/WASHINGTON (Reuters) - The news reached Dmitry Tihonov in Uzbekistan’s rural heartland as the labor activist quietly recorded the arrival of thousands of teachers, nurses, laborers, students and other conscripts sent to the fields to pick cotton.

A cotton picker is at work during this year's harvest in Karakalpakstan, Uzbekistan in this October 2015 photo courtesy of Anti-Slavery International released to Reuters on December 18, 2015. REUTERS/Simon Buxton/Anti-Slavery International/Handout

A fire had destroyed Tihonov’s home office. When he returned to search the debris on Oct. 29, his reports for international monitors documenting the annual mobilization had vanished.

Human rights groups say Tihonov is a victim of Uzbekistan’s efforts to conceal a massive, state-orchestrated forced labor system that underpins its position as the world’s fifth-largest cotton exporter. They cite regular arrests, intimidation and harassment of activists.

The activist from Angren, a town about 62 miles (100 km) east of the capital Tashkent, says he’s under constant surveillance by local authorities to remind people “it’s better to keep away from me” – an allegation that Reuters could not independently confirm.

Persecution of activists is among many abuses cited by witnesses and human rights groups that fueled discord in the Obama administration this year over how much criticism Central Asia’s most populous nation deserved in the U.S. State Department’s annual report on modern slavery.

In a previously undisclosed memo, analysts in the State Department’s Office to Monitor and Combat Trafficking in Persons called forced labor “endemic” during the cotton harvest and said Uzbekistan had “failed to make significant and sustained efforts” to improve its record. The early 2015 memo, reviewed by Reuters, recommended keeping Uzbekistan in the lowest tier of the report’s rankings, raising the specter of economic sanctions on a country whose cotton is used in yarn and fabric that play a significant role in the global supply chain.

But senior U.S. diplomats rejected the recommendation, downplaying concerns about human rights in a strategically important country.

The landlocked nation of deserts, mountains and steppes was a transit point for U.S. troops and supplies during the war in neighboring Afghanistan. Washington now wants its help preventing the spread of Islamic militants, stabilizing Afghanistan and offsetting Russian influence in the region.

When the State Department issued its 2015 Trafficking in Persons (TIP) Report in July, Uzbekistan was elevated from the bottom tier of violators. Uzbekistan doesn’t meet “minimum standards” to end trafficking, the report said, but it is “making significant efforts” – a caveat absent from the analysts’ assessment.

Uzbekistan’s government makes an estimated $1 billion a year from cotton sales, and the harvest mobilizations of roughly a million people that date to Soviet times are characterized as a patriotic duty. Uzbek officials did not answer repeated requests for comment but generally argue that citizens pick cotton voluntarily.

A Reuters examination – based on interviews with local officials, activists and workers in the fields – found that while the country has made progress ending child labor in the harvest, it has intensified recruitment of adults and older teenagers using the same coercive approach.

The State Department’s decision to rebuff its experts’ recommendation and upgrade Uzbekistan’s rating in the trafficking report reinforces a Reuters article in August that said senior diplomats inflated assessments of 14 strategically important countries in the annual review, including the central Asian country. The yearly review is meant to independently grade countries on trafficking and forced labor.

Despite Uzbekistan’s progress barring children from the fields, “I don’t see any evidence that this very fundamental form of coercive labor has changed,” says former U.S. ambassador-at-large Mark Lagon, who headed the State Department’s anti-trafficking office from 2007-2009. Uzbekistan still has a “miserable human rights profile.”

Slideshow ( 3 images )

Asked for comment, a State Department official defended Uzbekistan’s upgrade, saying the department stands by “the integrity of the process” for determining country rankings.

“Are they still mobilizing workers? Yes,” said a senior official who accompanied Secretary of State John Kerry on a Nov. 1 visit to Uzbekistan. But “if you don’t show recognition of improved behavior (on child labor), you risk them deciding it’s not worth the effort and then doing nothing.”

STRATEGIC IMPORTANCE

U.S. policymakers have struggled for two decades to balance concern about Uzbekistan’s human rights record with the need to maintain relations with hard-line President Islam Karimov.

“It’s a natural geopolitical alliance but it’s complicated because of his human rights record,” says John Herbst, U.S. ambassador to Uzbekistan from 2000-2003. “His authoritarian regime is not very consistent with our principles.”

Speaking to reporters before his November meeting with Karimov in the ancient Silk Road city of Samarkand, Kerry spoke of “shared interests,” especially combating Islamic extremism, but his references to human rights were oblique. He noted a need to address “the human dimension” of Uzbek governance. Reuters was unable to determine whether they discussed forced labor in their private meeting.

Uzbekistan took initial steps to bar children from picking cotton in 2012 and the effort expanded in 2013, when the State Department downgraded the country in the trafficking report to the “Tier 3” – the lowest rank shared by North Korea and a few other countries. In last year’s report, Uzbekistan remained at Tier 3, and its prohibitions on child labor grew more stringent.

But the dearth of child workers led to increased conscription of adults and older teens, according to a dozen witnesses of the harvest interviewed by Reuters.

Still facing the same government-imposed harvesting quotas, local authorities expanded mobilizations of public employees, such as teachers, nurses and bureaucrats, as well as private sector workers, the witnesses said. While young, school-age children were not forcibly mobilized on a mass scale, many 17-year olds were coerced along with some younger children in the later weeks of the harvest to meet quotas, they added. “NO WAY OF REFUSING”

A dozen workers interviewed by Reuters in September all requested anonymity, saying they feared retribution.

Among them, a plumber, 46, said he was bused 250 km (155 miles) to pick cotton for 15 days. When he returned, another group of employees went out. Food and lodging were provided in dilapidated barracks. “There was no way of refusing,” he said.

A pensioner, 64, said each household in her town was directed to send a volunteer to pick cotton. She feared those that didn’t would be “on the black list” and lose public benefits. Because her son runs a small shop that supports the family, she went to the fields herself.

A history teacher, 49, said staff at her school were told to pick cotton for 20 days or pay the equivalent of about $400 each to support the harvest. She refused and, facing termination, resigned.

Reuters was unable to independently confirm these accounts. BACK IN WASHINGTON, DC.

The State Department’s human rights analysts lacked support this year as they pushed to keep Uzbekistan at the bottom of the rankings, according to congressional sources, and current and former U.S. officials.

The trafficking office’s director had left, and the department brought in a retired diplomat as acting director for a few months while rankings were decided. Patricia Butenis, former ambassador to Sri Lanka and Bangladesh, opposed the analysts on Uzbekistan, according to officials involved, leaving them without high-level advocacy.

At a meeting that included the U.S. ambassador to Uzbekistan, Butenis pushed for the country to be upgraded against the recommendation of the analysts she represented, the sources said. She urged the analysts to consider what she described as the “big picture” implications of keeping Uzbekistan at Tier 3, they added.

The State Department declined to discuss “internal deliberations.” An official noted that country rankings ultimately are decided by the secretary of state, based “solely” on staff input. Butenis, now retired, declined comment.

Uzbekistan’s Tier 3 ranking in the 2013 and 2014 reports helped a coalition of human rights groups, the Cotton Campaign, organize a boycott of Uzbek cotton by more than 200 apparel manufacturers and retailers, including Gap Inc, American Eagle Outfitters Inc and Wal-Mart Stores Inc..

American Eagle said it had no plans to change a ban on using Uzbek cotton it has had in place since 2008. Gap and Wal-Mart did not immediately respond to requests for comment.

The U.S. upgrade of Uzbekistan has not changed the boycott, said Patricia Jurewicz, director of Responsible Sourcing Network, an advocacy group in California that maintains a list of companies that have pledged “to not knowingly” source Uzbek cotton until the country “ends the practice of forced child and adult labor in its cotton sector.”

But big cotton processors such as Singapore’s Olam International Ltd and South Korea’s Daewoo International Corp, still buy Uzbek cotton, the companies said.

Olam said it could not answer specific queries on Uzbek cotton, but added it was working with the government and other bodies to address labor issues.

Because of weakness in the global economy, demand for Daewoo’s Uzbek cotton has weakened, a Daewoo company spokesman told Reuters. He declined to comment on the country’s forced labor conditions but welcomed Uzbekistan’s upgrade in the trafficking report as “definitely good”.