Publication: Eurasia Daily Monitor Volume: 4 Issue: 92

In his annual address to parliament on April 30, Tajik President Emomali Rahmon outlined prospects for Tajikistan’s economic growth through 2015 within the National Development Strategy. Rahmon enjoys majority support in Tajikistan despite widespread corruption and elements of authoritarianism in his governance, and most Tajiks take very seriously his promises to enter “a completely new stage of socio-economic development, create an advanced and progressive type of statehood, and achieve a deserving and free level of life.”

Overshadowed by the vast economic potential of Kazakhstan and Turkmenistan, and the ongoing political turmoil in Kyrgyzstan, Central Asian experts rarely notice the remarkable progress made by Tajikistan in the past decade, since the end of its five-year civil war in 1997.

The Tajik National Bank reports that since 1997 Tajikistan’s GDP average annual growth rate has been about 7%, reaching a peak of 10% in 2004. The bank predicts continued average 7% annual GDP growth until 2009. Concurrently, inflation rates have been steadily decreasing, and Tajikistan is slowly paying off its external debt. Compared to Kyrgyzstan, a country with similar demographic and geographical indicators, Tajikistan’s economy is growing at a much faster pace.

Despite widespread corruption, the Tajik government still scores better approval rating from the international donor community and, importantly, from the local public. As one World Bank employee commented to Jamestown, compared to neighboring regimes, Rahmon’s government is noteworthy for its consistency in cooperation with international donors, its ability to learn fast from previous mistakes, and its motivation to acquire new professional knowledge. Tajikistan has been cooperating with Russia, Iran, China, and the United States, as well as the World Bank, International Monetary Fund, and Asian Development Bank, to develop its energy sector, transportation system, and agriculture.

The Tajik government has been actively seeking foreign investment, particularly for the construction and modernization of hydropower plants. The government is mainly oriented for exporting generated electricity to Pakistan and India through Afghanistan. Russia invested about $500 million into Sangtuda-1 and Iran promised to invest $200 million into Sangtuda-2, the two largest hydropower plants in Tajikistan. As the Tajik Ambassador to the United States, Abdujabbor Shirinov, notes, in the future Tajikistan is planning to become a transit country for electricity, liking its northern neighbors to Afghanistan, India, and Pakistan. Furthermore, Tajikistan is aiming at exporting energy in the winter months as well.

Tajikistan is still one of the poorest countries in the post-Soviet space. As mentioned, it is plagued by systemic corruption at the highest levels, and it is a major transit country for heroin from Afghanistan. It is also the main supplier of labor migrants to Kazakhstan and Russia, having between 600,000 and one million of its citizens traveling abroad in search of work. However, as Ambassador Shirinov points out, Tajikistan’s banking system has learned to process remittances effectively. Whereas in 2003 some $75,000 was processed through the banking system, in 2006 the amount reached $1.2 billion. But like other Central Asian states, Tajikistan does not tax remittances.

According to Ambassador Shirinov, today the internal debt in the cotton sector amounts to more than $400 million and is one of the central economic problems in Tajikistan. While the international community is pressing the Tajik government to adopt market reforms in the sector, Shirinov argues that there are neither easy nor quick solutions to the problem, as roughly 70% of the population lives in rural areas. The cotton market needs to be stabilized gradually, and the reform should be focused on inputs such as credits, special equipment, and seeds. Tajik farmers must learn how to profit from other types of agricultural work and, finally, urbanize. Corruption in the cotton sector undermines any attempt to reform.

Rahmon noted that a newly launched anti-corruption committee should significantly reduce corruption among government officials. But corruption in the Tajik public sector seems to be highly centralized and linked to the shadow economy. As one Tajik representative of an international organization told Jamestown, the most profitable legal and illegal businesses are maintained by government officials or people linked to the government, meaning that the shadow economy greatly correlates with political power in Tajikistan.

Indeed, in the November 2006 presidential elections Rahmon showed that he is willing to tolerate political opposition only if it remains submissive to his regime. Today, the Tajik government and parliament feature only a handful of opposition representatives, and even they prefer to play by the president’s rules. Rahmon has also been increasingly criticized for developing a strong personality cult and espousing ethno-nationalism in the country. However, as one U.S. official noted, since the signing of the Peace Accord in 1997, Tajikistan has been able to recover from its five-year civil war with “remarkable success.” If economic growth remains the same, Rahmon’s latest promises may well materialize.

(Avesta.tj, Khovar.tj, Nbt.tj, President.tj, April 30-May 10)