Karimov has shown himself to be a shrewd politician, one of the few old-line Communist Party leaders able to maintain himself in power through the post-Communist era. Under Karimov, Uzbekistan remains one of the most authoritarian of the former Soviet republics.
A new constitution was adopted by the Oliy Majlis in 1992 by unanimous vote after two months of public discussion. It provides for a strong president and a weaker, 250-member unicameral legislature, termed the Oliy Majlis or Supreme Assembly (an amendment to the constitution passed in 2002 created a second chamber to be established via elections in 2004). Although a multi-party system was proclaimed, the Oliy Majlis, just after enacting the constitution, banned Birlik as a subversive organization and removed the legislative mandate from a prominent human rights activist. As detailed in the constitution and by a law approved in September 1994, the Oliy Majlis adopts laws and amendments to the constitution, determines the direction of domestic and foreign policy, approves the budget, determines taxes, schedules legislative and presidential elections, elects the constitutional court, supreme court, and arbitration court, ratifies the president's choices for prime minister and other members of the cabinet, ratifies a presidential declaration of a state of emergency, and ratifies treaties, among other powers. In actuality, the Oliy-Majlis is closely controlled by Karimov.
On 26 March 1995, Karimov orchestrated a referendum to extend his presidential term until the year 2000, winning support by 99.6% of 11.25 million voters. Most international observers deemed these results questionable. Two candidates were registered to run in the 9 January 2000 presidential race, incumbent President Karimov and Abdulkhafiz Jalolov. Jalolov, a philosopher, was nominated by his People's Democratic Party (PDP), which Karimov formerly headed, to give the appearance of a contested race. All other registered parties and regional councils vied to support Karimov. His campaign pledges included extending privatization, promoting small business, and allowing currency convertibility for the Uzbek currency, the som , which would encourage foreign investment. He also appeared to extend an olive branch to some former opponents, such as exiled Sheikh Mohammed Sadeq, Uzbekistan's former Islamic leader, inviting him to return. Karimov won 91.9% of 12.1 million votes cast, with a reported 95.1% turnout. The U.S. State Department announced on 12 January 2000, that "this election was neither free nor fair and offered Uzbekistan's voters no true choice," mentioning the Uzbek government's refusal to register opposition parties or candidates and that Jalolov had endorsed Karimov during the campaign. Some critics argued that the election illustrated groups competing for Karimov's favor and spoils. Similar election scandal erupted after a referendum on 21 January 2002, when 91% of voters supported two constitutional amendments. One would make the parliament bicameral, while the other would extend the presidential term from five to seven years. At this time it is unclear whether this vote will affect Karimov's current term, which is slated to end in 2005. Karimov has publicly stated that his current term would be his last.
Karimov's leadership was challenged in February 1999 by explosions in the capital city of Tashkent that Karimov denounced as a coup attempt. After the explosions, which by various reports killed 16–28 and wounded 100–351, Uzbek officials detained dozens of suspects, including political dissidents. The first trial of 22 suspects in June 1999 resulted in six receiving the death sentence. Karimov in April 1999 asserted that former Uzbek presidential candidate Mohammad Solikh had masterminded the plot, and had been supported by the Taliban group in Afghanistan and Uzbek Islamic extremist Tohir Yuldash. The 22 suspects were described in court proceedings as Islamic terrorists who received training in Afghanistan (by the Taliban), Tajikistan, Pakistan, and Russia (by the terrorist Khattab in Chechnya), and were led by Solikh and Yuldash and his ally Jama Namanganiy. Testimony alleged that Solikh had joined the Islamic Movement of Uzbekistan (IMU), led by Yuldash and Namanganiy, in mid-1997, and that Solikh, Yuldash, Namanganiy, and others had agreed that Solikh would be president and Yuldash defense minister after Karimov was overthrown and a caliphate established. According to an Uzbek media report in July 1999, the coup plot included a planned attack on Uzbekistan by Namanganiy and UTO allies transiting through Tajikistan and Kyrgyzstan. Another secret trial in August 1999 of six suspects in the bombings (brothers of Solikh or members of his Erk Party) resulted in sentences ranging from 8 to 15 years. Solikh rejected accusations of involvement in the bombings, alleging that court "confessions" were coerced and scripted. At the OSCE Summit in November 1999, Karimov called for the creation of OSCE special forces to combat terrorism. The OSCE more generally resolved that the international community should play a role in anti-terrorism and anti-crime efforts and in bolstering security cooperation in Central Asia.
Karimov faced another crisis in the latter part of 1999. Several hundred Islamic extremists and others fled repression in Uzbekistan and settled in Tajikistan but were being forced out at Uzbekistan's behest. Rogue groups from Tajikistan refused to disarm as part of the Tajik peace settlement and entered Kyrgyzstan in July–August 1999. Namanganiy headed the largest guerrilla group, the Islamic Movement of Uzbekistan (IMU military leader Namanganiy apparently was killed during a US-led air strike in Afghanistan in November 2001). The guerrillas seized hostages, including four Japanese geologists, and several Kyrgyz villages, stating that they would cease hostilities if Kyrgyzstan provided a safe haven for refugees and would release hostages if Uzbekistan released jailed extremists. The guerrillas were rumored to be seeking to create an Islamic state in south Kyrgyzstan as a springboard for a jihad in Uzbekistan. Kyrgyzstan's defense minister in October 1999 announced success in forcing guerrillas out of the southwestern mountains into Tajikistan. Karimov contributed air support that targeted several alleged guerrilla hideouts in Tajikistan, eliciting protests from Tajikistan of violations of its airspace. Karimov heavily criticized Kyrgyz President Askar Akayev for supposed laxity in suppressing the guerrillas. In November 1999, Karimov also denounced Tajik President Imomali Rakhmonov for allowing the guerrillas to enter Afghanistan rather than wiping them out.