Tajikistan 2011

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April 2011

CONTENTS Resources

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Tajikistan increases the use of the internet to raise its visibility internationally and to reach out to tourists, businessmen and investors.

President Rahmon

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President Emomali Rahmon speaks openly about critical issues, notably regional stability and security with neighboring Afghanistan, poverty reduction, and efforts undertaken by his country to break its energy and transportation isolation.




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Credit: Philip de Leon

Tajikistan’s recent history is connected to that of the Soviet Union, but its territory has been part of the Persian Empire, a component of the Silk Road and a strategic component of the Great Game.


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In a region where water is scarce, Tajikistan sits on a clean energy hydropower potential which, if properly developed and managed, could lead to energy independence and the supply of neighboring Afghanistan and Pakistan.


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Though in its infancy, the banking system is showing a tremendous potential to support the economic growth of the country and many banks are working with international partners.


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One step at a time Tajikistan is working on improving its business climate and foreign players are positioning themselves far from media attention.

Foreign Minister

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Minister Hamrokhon Zarifi, a dynamic promoter of Tajikistan abroad, discusses the foreign policy and priorities of his country as well as the many challenges it faces.


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As roads, airports, rail tracks, bridges and tunnels are being rehabilitated or built, Tajikistan is bound to become a major trade route as many projects are nearing completion.


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For tourists in quest of a travel experience that resembles none other, mountainous Tajikistan offers a variety of activities and destinations with no equivalent in the region.


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The Ambassadors of Tajikistan, the United States and France openly shared their views on Tajikistan, confronting perceptions with reality and elaborating on challenges.


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International finance and development institutions play a critical role in steering Tajikistan out of poverty. The heads of mission shared some of the projects they are working on with the support of the Tajik government.

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April 2011


lowly but surely, Tajikistan is learning to raise its visibility by sharing useful information on the Internet — not only in Tajik and Russian but more recently in English too.

Many programs and initiatives funded by foreign donors are now coupled with websites that list procurement opportunities, tenders and other practical information. The effort fosters greater accessibility, transparency and accountability, while encouraging Tajiks to do the same on their own. English translations, sometimes done via online translation software, are not always accurate, but they are a testimony to the Tajik determination to reach out. With a growing number of travel agencies and 150,000 tourists in the first nine months of 2010 — up from 91,000 during the same period in 2009 — tourism in Tajikistan is expanding rapidly despite harsh weather conditions in the winters. The official website of the Tourism Authority of Tajikistan, www.visittajikistan.tj, is a good starting point for practical information on the logistics of getting to and staying in Tajikistan. Before considering a trip to the country though, tourists are advised to check with the Embassy of Tajikistan in Washington regarding visa requirements: http://tjus.org/consular/visa-info. To lure more foreign tourists, Tajikistan has dropped its visa fee to $25 and processing time to only three business days. In the U.S. visa applications can be downloaded from the Tajikistan embassy’s website, and citizens from nearly 80 countries may also obtain a visa valid for 45 days directly upon arrival at the airport. Tajikistan’s private domestic airline Somon Air, www.somonair.com, offers online booking and connects through major airports including Frankfurt, Istanbul and Moscow. Future code-sharing agreements will let travelers check bags all the way to their final destination in Tajikistan. Pay attention to luggage weight limits, however, as these vary from one airline to the next. The capital city of Dushanbe is a natural stop for all visitors, but other cities and regions should not be missed. Some have websites, while others are catching up so as not to be left out. The Zerafshan Valley in northern Tajikistan offers tourism information at www.zerafshan.info, while the Zerafshan Tourism Development Association (www.ztda-tourism.tj) — an NGO promoting sustainable development — offers different community-based SPONSORED REPORT

tourism options such as accommodation in traditional homes as well as transportation and mountain guides. In eastern Tajikistan, tourists can trek the Pamir Mountains, an exciting alternative to the heavily traveled Himalayas. The Pamirs Eco-Cultural Tourism Association (www.pecta.tj/en) offers detailed information about the Pamirs, including tour operators and available activities. Tajik embassies around the world are a good initial resource. In addition, foreign investors can also benefit from multiple resources such as the website of the Chamber of Commerce and Industry of Tajikistan (CCI) at www.tpp.tj/en/. “Our CCI is like a bridge between domestic entrepreneurs and foreign investors,” said the chamber’s chairman, Said Sharif, explaining that it helps potential investors by handling the logistics of their visit and their participation in conferences and exhibitions, many of which are organized by the CCI itself. The American Chamber of Commerce (www.amcham.tj) plays an important role representing foreign companies operating in Tajikistan, notably at the Consultative Council on Improvement of the Investment Climate (www.investmentcouncil.tj/eng). These organizations as well as the State Committee on Investments and State Property Management (http:// amcu.gki.tj/eng/) and the Customs Service (www.customs.tj/ eng/) are a good place to start collecting a wide range of business-related information, notably on tax exemptions, such as for imported technology. Like his counterparts elsewhere in Central Asia, Tajik President Emomali Rahmon is a central and omnipresent figure of political life. His activities can be followed at www.president.tj, with the Russian version being more up-to-date. Some other useful governmental websites are the Ministry of Foreign Affairs (www.mfa.tj); National Bank of Tajikistan (www.nbt.tj); Ministry of Transport and Communication (www.mintranscom.tj/eng); Ministry of Energy and Industry (www.minenergoprom.tj); Ministry of Economic Development and Trade (www.medt.tj/en); and Ministry of Agriculture (http://vkishovarzi.info/en). Iteca Osiyo (www.iteca-osiyo.tj), part of ITE Exhibitions & Conferences Ltd., is planning six major exhibitions in Tajikistan later this year: Tajikistan Infrastructure, to take place Oct. 27-29, will include TajikBuild (construction); MiningWorld, Power (power and lighting); and InfoComExpo (telecom and information technologies); as well as DIHE 2011 (the Dushanbe International Healthcare Exhibition) and InterFood (food industry and agriculture). Meanwhile, the International Road Transport Union (www.iru.org), in cooperation with the Tajik government, is planning a major conference on transportation scheduled for Dushanbe next fall. Current news on Tajikistan can be obtained from the independent Tajik news agency ASIA-plus (http://news.tj/en) and from state news agency Khovar (http://khovar.tj/eng). U.S. citizens can find out more about Tajikistan by visiting the website of the U.S. Embassy in Dushanbe (http://dushanbe.usembassy.gov) as well as the State Department website for travel and security information (http://travel.state.gov/travel).

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April 2011


President Rahmon Looks to Open Tajikistan Up to Rest of the World


resident Emomali Rahmon of Tajikistan has been a pivotal figure in Tajik politics and society since becoming head of state in 1994, earning widespread recognition in 1997 for his role in ending a civil war that killed around 100,000 people. As Tajikistan prepares to celebrate its 20th year of independence — the actual anniversary will be Sept. 9, 2011 — Rahmon talked to The Washington Diplomat about his foreign and domestic agenda, which seeks to open Tajikistan up to the outside world while improving the lives of its 7.3 million inhabitants. Tajikistan’s foreign policy is shaped largely by its neighbors, notably Afghanistan, with which it shares a 1,330-kilometer border. As such, Tajikistan plays a vital role in supporting U.S. and NATO efforts to stabilize the war-torn country. “There is no doubt that the security of the entire Central Asian region greatly depends upon the stability in Afghanistan, and Tajikistan is ready to put all its efforts into this endeavor,” Rahmon said, adding that with a common history, language, traditions and religions, “our relationship with Afghanistan has a special place in our foreign policy.” For one thing, Afghanistan was among the first countries to recognize Tajik independence in 1991. “Despite its difficulties, Afghanistan accommodated thousands of our refugees who had fled Tajikistan as a result of internal strife. And its leaders have never refused its valuable assistance to the Tajik people in order to help stabilize the situation in Tajikistan and bring peace to our country,” he said. Likewise, Rahmon added, “even during its own civil war, Tajikistan always supported stability and development in Afghanistan.” This natural kinship has led to bilateral accords in science, education, health, defense, law and socioeconomic development. “The construction of roads, railways, bridges and even our greater plans for the construction of energy transmission lines will certainly develop and expand our close ties,” said Rahmon. With Afghanistan next door, terrorism and drug trafficking are also naturally major concerns for the Tajik government. In 2000, even before the U.S.-led war in Afghanistan, Tajikistan suggested that a single definition and universal concept of what terrorism is

Credit: Presidential Palace

be adopted in order to find strategies to fight it. “While presenting proposals to the United Nations and the international community, Tajikistan advocated for the creation of an international union against drug trafficking as well,” Rahmon noted. The president also believes in a comprehensive approach to tackle global terrorism. “It is indispensable to eliminate the causes and factors that create terrorism, such as poverty, limited access to real justice, poor education and the selfishness of some countries,” he said. “Our partnerships to fight terrorism, drug trafficking and other international threats are valuable for regional security and international peace, notably our border and security cooperation.” Rahmon said fundamentalism, religious extremism and drug trafficking are all global threats, and that Tajikistan understands its role in facing those threats head-on. “Tajikistan, with its long border with Afghanistan, has since our independence played an important role as a buffer zone against terrorists, extremists and drug traffickers,” he told The Diplomat. “These are global threats, but only after the events of Sept. 11, 2001, in New York did people understand to what degree the danger of these threats could be. Even back in the spring of 2000, we indicated the necessity of preparing and adopting a single, universal concept of terrorism, its features and devastating acts — and finding ways of fighting it.”

As a former Soviet republic, Tajikistan is a member of the Commonwealth of Independent States, the Eurasian Economic Community, the Collective Security Treaty Organization and the Shanghai Cooperation Organization. Beyond traditional relationships rooted in Tajikistan’s geography and Soviet past, Rahmon is eager to boost ties with the United States, Great Britain, France, Germany and other Western nations. That enthusiastic approach to forging ties with the rest of the world existed long before the Soviet era, said the president. “For hundreds of years, our predecessors had laid down the foundations for friendly relationships with our neighbors, and for many centuries we have been developing and strengthening those ties,” he said. “Today, we should continue this tradition of creating fields of constructive cooperation, friendly dialogue and fruitful collaboration with our neighbors, particularly within the Central Asian region.” Calling Tajikistan’s friendship with the United States “an important political achievement of our independent foreign policy,” Rahmon says “relations with the U.S. are expanding year by year, and we are interested in further developing them.” However, he cautioned that Tajikistan’s ties with the United States “don’t match the level of relations” it has with other countries. Greater economic collaboration would bring many benefits, he added, including the reduction of terrorism and extremism in the region. “Cooperation in the economic sector has great potential and will give us more opportunities to successfully resist and fight global threats. This will improve regional cooperation, especially with Afghanistan,” the president told us, citing as an example the Dusti Bridge, constructed with U.S. assistance over the Panj River linking Afghanistan and Tajikistan. “The realization of hydro-energy projects in Tajikistan can provide Afghanistan with cheap electricity, without which its economic development is impossible,” Rahmon continued. “Therefore, our efforts are directed toward the construction of electricity transmission lines, roads and railways from our border to Afghanistan. Obviously, it will be very difficult to implement this without the support of superpowers such as the United States. I hope our American counterparts will support our proposals.” The president described Tajikistan’s foreign policy as a straightforward “open door” policy geared toward creating “favorable conditions for the rapid development of the country.” To that end, on the domestic front, Rahmon’s Continued on Page 11

Cooperation in the economic sector has great potential and will give us more opportunities to successfully resist and fight global threats. This will improve regional cooperation, especially with Afghanistan. — President Emomali Rahmon of Tajikistan

April 2011


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Tajikistan’s History Spans A Millennium of Evolution


ajikistan, a rather mysterious country that few people outside the region know much about, has a rich history deeply influenced by Persian culture.

In fact, it was the Samanid dynasty, founded by Ismoil Somoni more than 1,100 years ago, that led to the emergence of the Tajik national identity. In the 11th century, the name Tajik appeared for the first time — used to describe local Persian speakers by the Uyghur scholar Mahmud al-Kashgari. But the beginning of Tajik people’s history goes back at least to the middle of the first millennium B. C. The poet Rudaki who is regarded as the ‘father’ of classical Persian-Tajik literature was born and lived in the territory of presentday Tajikistan. The Tajiks fell under Turkic rule in the end of the 10th century and remained that way until the 1860’s, when czarist Russia began making conquests in Central Asia. Toward the end of the 19th century, Tajikistan became a strategic piece in the so-called regional “great game” whereby the Russian and British empires vied for control of Central Asia, especially the famed Pamir Mountains. Tajikistan eventually became a federated Soviet socialist republic in 1929. Although part of the USSR for nearly 60 years, Tajikistan preserved its unique national identity while benefiting from the Soviet education and health care system. It was also connected with other Central Asian republics at the time thanks to Soviet transportation and energy corridors. In September 1991, as the USSR was collapsing, Tajikistan emerged as an independent state — and almost immediately faced multiple crises: a tragic civil war that lasted from 1992 to 1997, the end of critical subsidies from Moscow, and the breakdown of well-established regional collaboration and exchange systems. The acute poverty that ensued led many Tajik men from rural areas to emigrate — mostly to Russia — to support their families. Many remain abroad and continue to send home remittances — in 2008, for instance, they

sent home a record $2.6 billion. These remittances represent a large percentage of Tajikistan’s GDP and are like an umbilical cord, making Tajikistan dependent on Russia’s overall economic health. Today, the country must shake off the centrally planned economy it inherited from the Soviet era, along with a communist mentality. With just over 7 million inhabitants, the government is undertaking aggressive measures to lift its population out of poverty. According to the World Bank, the percentage of Tajiks living below the poverty line has been slashed from 83 percent in 1999 to 47 percent in 2009. However, the health care and education sectors still lag behind, suffering from a dire lack of funding. Complicating matters is the fact that 40 percent of all Tajiks are under the age of 14. The desire to usher in stability after a debilitating civil war has spawned a paternalistic approach to governing, led by a powerful president. To that end, Tajikistan does not score very highly in rankings that compare countries’ economic and political freedoms. Transparency International’s Corruption Perceptions Index ranks Tajikistan at 154th place, the Economist Intelligence Unit’s Democracy Index puts it at 149th, and Freedom House’s Freedom of the Press Index lists Tajikistan at 169th place, with the press seen as “not free.” Meanwhile, the Organization for Security and Cooperation in Europe (OSCE), which monitors elections, said Tajikistan’s parliamentary balloting in February 2010 failed to meet OSCE standards, as did previous elections. The fear that too much democracy might jeopardize the stability needed for economic growth and even breed chaos has so far

Credit: Gennadiy Ratushenko


stymied the emergence of a real opposition and more vocal press. The Tulip Revolution in neighboring Kyrgyzstan and the ousting of its president Kurmanbek Bakiyev is on the mind of all the governments of Central Asia and a source of concern. With that in mind, the economic prosperity enjoyed by Singapore and its hybrid regime — which blends democracy with authoritarian disciple — is seen as an appealing alternative model. The debate over how far Tajikistan should go democratically, however, overlooks some of the country’s economic advances. The Wisconsin-size country has for two years in a row earned a spot among the top 10 improving economies in the World Bank’s Ease of Doing Business Report, ranking 138th in the bank’s 2011 report. On the social front, Tajikistan has been working to assert a modern new national identity while balancing tradition and Islam. Ethnically Tajikistan is composed of Tajiks (80 percent), Uzbeks (15.3 percent) and Russians (1.1 percent). Nearly all inhabitants profess Islam, with 95 percent following the Sunni tradition and 3 percent identifying themselves as Shiites.

1,500-YEAR-OLD SLEEPING BUDDHA AT THE NATIONAL MUSEUM OF ANTIQUITIES Credit: Committee of Youth, Sports, and Tourism


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Recent years have seen a spike in religious activity. Today, Tajikistan is home to nearly 3,500 mosques in Tajikistan (compared to only 32 during Soviet times) and 18 religious schools, or madrasas. To that end, the Committee for Religious Affairs was established in May 2010 to serve as a bridge between the government and religious organizations and to supervise their growth. Although freedom of religion is enshrined in Tajik law, religious organizations may not operate against the government and must be registered. Students can pursue religious education abroad, but a few have been brought back home for having traveled illegally or having been instructed by radical groups. The fear of radicalization is ever-present, which is why foreign imams are not allowed to preach in Tajikistan. Just as religion is making a comeback, Tajikistan is also witnessing a return to its traditions. Historical figures such as Rudaki and Somoni have been revived as national heroes, while some Tajik names have lost their Russian consonance. Costly buildings have been constructed, such as the imposing Palace of Nations, which will soon be flanked by the world’s tallest flagpole, towering 165 meters high. Despite its reported cost of $32 million, the project is seen as a necessary step in building pride through imagery associated with national icons and symbols. Tajikistan’s return to its pre-Soviet roots has not prevented the country from leaping forward into the 21st century, and women are an integral component of national development. Major banks such as the State Savings Bank, as well as trade organizations including the American Chamber of Commerce and the National Association of Small and Medium Businesses, are all headed by women. Internet penetration remains relatively low, but the cellular phone market is one of

April 2011

Graphics: Armando Portela


the most dynamic in Central Asia. Another important relic of Tajik history is the teahouse. In 1987, the mayor of Dushanbe announced that he would present Boulder, Colo., with a teahouse to celebrate the establishment of sister-city ties. For the next three years, more than 40 artisans carved and painted the teahouse’s decorative elements by hand. It officially opened in July 1998. “The teahouse is a manifestation of Persian and Tajik culture, customs, art and architecture,” said Joe Stepanek, president of the Boulder-Dushanbe Sister Cities Board, noting that the teahouse attracted 175,000 visitors in 2009. “It has created awareness of Central Asia in general, and


Credit: Boulder-Dushanbe Sister Cities


Tajikistan in particular. The city of Boulder is now working to landmark this unique building.” Stepanek added that Tajikistan’s gift led to his city’s offer of a reciprocal gift to Dushanbe: a pizza parlor idea ended up becoming an Internet café and more with a solar-powered library and children’s corner — “and a showcase of hospitality, of Boulder life and art.”

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Tajikistan Turns to Hydropower To Fuel Renewable Growth



ith climate change becoming a dire concern worldwide, Tajikistan — which has limited fossil fuels — is unique.

Hydroelectric power accounts for 98 percent of the electricity generated in this Wisconsin-size country, with a further potential of 527 billion kWh (kilowatt-hours) — only 5 percent of which is currently used. Developing this clean and renewable energy source is a key priority for Tajikistan in its efforts to eradicate poverty and achieve energy self-sufficiency. “The people of Tajikistan have been suffering for more than 15 years due to electricity shortages in the winter,” President Emomali Rahmon told The Washington Diplomat. “Our neighbors should clearly understand the situation, and the only way to solve this issue is to construct hydroelectric plants.” The winter shortages in the region can be crippling, especially because most of Tajikistan comes to a standstill in colder weather. Schools and hospitals frequently close, industrial output slows down, and agricultural yields plummet as electric pumps that irrigate fields run out of power. Nearby Afghanistan, Pakistan and even northern India — which all suffer similar energy problems — could indirectly benefit from hydroelectric projects implemented in Tajikistan, where water is plentiful. In fact, with 93 percent of its territory covered by mountains, 8,476 square kilometers of glaciers, 947 rivers stretching over 28,500 kilometers and 1,300 freshwater lakes, landlocked Tajikistan is blessed with abundant

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water resources. The former USSR used to link its republics through a Central Asian power grid, an elaborate system that allowed Tajikistan and Kyrgyzstan — the source of more than 80 percent of the region’s water — to supply hydroelectric power in the summer to downstream republics like Kazakhstan, Turkmenistan and Uzbekistan. In turn, they would supply gas and electricity in the winter, when water was accumulated and kept in the reservoirs with the purpose of future disposals by mentioned countries during irrigation season. The collapse of the Soviet Union brought an end to this profitable relationship — and in subsequent years, water rights have become a source of enormous regional tension. “Under Tajikistan’s initiative and with the support of more than 140 countries, 2003 was declared by the United Nations as the International Water for Life Decade,” said Rahmon. “This is a bright example of our active engagement in the resolution of important issues for mankind.” According to the country’s water resources minister, Rahmat Bobokalonov, water and energy issues are inextricably linked. “Solving water and energy problems requires us to develop regional collaboration. Unfortunately, it is not a reality in Central Asia,” he said. “In 2006, experts estimated that the inefficient management of water resources resulted in losses of $1.75 billion.” In fact, fears and suspicions that Tajikistan and Kyrgyzstan would suddenly be able to control the water flow to downstream countries — mainly Uzbekistan — has led to regional animosity. In late 2009, Uzbekistan withdrew from the Central Asian power grid — forcing some regions in Tajikistan to SPONSORED REPORT

burn coal with all its negative environmental consequences. Concerned that equipment transiting its territory might end up being used to build hydropower plants in Tajikistan, Uzbekistan is also disrupting rail traffic to its neighbor, which in turn hurts traffic to Afghanistan via the Northern Distribution Network. Last year, for instance, up to 2150 freight cars traveling daily through Uzbekistan were delayed for many weeks. Many of them stopped for a period of up to two months, unable to get to Tajikistan. With the help of international development agencies though, Tajikistan hopes to improve its ability to manage its own water resources. The country is taking steps to finish construction of the Rogun hydroelectric dam. Located on the 350-kilometer-long Vachsh River, Rogun could generate up to 3,600 megawatts of power and guarantee Tajikistan’s energy independence. Abdullo Yorov, chairman of the state-owned power company Barki Tojik, says the Vachsh is “the most economical and technologically beneficial river to use for hydropower plants.” But construction of the dam came to a screeching halt when the Soviet Union collapsed. Then came Tajikistan’s civil war and in 1993 a devastating flood that washed out much of what had been built up to that point. In 1999, Tajikistan decided to revive the project, and five years later, Russian oligarch Oleg Deripaska — owner of aluminum conglomerate RUSAL — vowed to invest $2 billion to complete Rogun, modernize the Tajik aluminum company TadAZ (now Talco), and build another aluminum smelter. Unfortunately nothing happened, and in 2009 the Tajik government finally cancelled the deal, citing RUSAL’s “failure to honor its commitments.” Eager to move the project forward, in January 2010 the government issued $1.4 billion in stock, as part of a controversial plan in which it invited every citizen to buy shares. The scheme brought in about $200 million. “It’s true that, with the goal of attracting domestic investment, we have started to sell shares of the Rogun joint stock company,” said the president. “However, in my address to the people of Tajikistan, I reminded them that during the sales process nobody should use force or pressure people to buy shares, because the financial support for constructing Rogun is a patriotic act and a long-term investment for the people of Tajikistan, their children and their grandchildren.” The World Bank is keeping close tabs on the project.

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Chiara Bronchi, the bank’s resident manager in Dushanbe, says Tajikistan has agreed to comply with a technical-economic assessment as well as an environmental and social assessment “to see if it is a viable project, and if it makes sense economically.” Following publicly advertised tenders, several companies were selected to conduct these assessments, whose completion will take even more time if additional studies are needed, noted Bronchi. Once all the assessments are finished and come back positive, she said, “We will need a consortium to finance this project,” pointing out that in a similar case in Africa, 21 companies joined forces because of that project’s technical and financial complexity. The president has his own take on the matter. “It seems that some biased parties have declared that the implementation of hydroelectric projects in Tajikistan would negatively affect neighboring countries. This is totally groundless,” Rahmon told The Diplomat. “Tajikistan has a transparent policy and respects the interests of its neighbors. We have never ignored any of their concerns and reservations with regard to this issue.” Rahmon said he hopes ongoing feasibility studies will eventually “remove all these groundless accusations and attract international investors.” Some countries, afraid of infuriating key allies that have more to offer than Tajikistan, have stayed away from Rogun. The two biggest potential

investors are Russia and China — yet Russia enjoys privileged relations with Kazakhstan and is deeply involved in the oil and gas sectors of both Turkmenistan and Uzbekistan. China, meanwhile, is keeping a low profile as it secures infrastructure contracts and diversifies its supply of energy and mineral resources for its booming economy. Besides generating more electricity, Tajikistan is also rushing to boost transmission lines to its grid. “As a result of being isolated,” said Yorov,” we lost 5.5 billion kWh in 2009 because we had no opportunity to sell.” Gul Sherali, Tajikistan’s minister of energy and industry, says his country has a surplus of 4 to 5 billion kWh in the summer, and a deficit of 3 to 3.5 billion kWh in the winter. “Because of Uzbekistan’s 2009 decision to withdraw from the Central Asian power grid, Tajikistan was no longer able to export or import energy to and from its neighbors.” In November of that year, Tajikistan inaugurated the South-North Power Grid, ending the Sughd region’s isolation. A massive transmission line stretching 350 kilometers from Tursunzoda to Khujand now carries up to 8.6 billion kWh, thanks to a soft loan from China in the amount of $281 million. And in 2007, the Central Asia South Asia Electricity Trade and Transmission Project came into being. Known as CASA 1000, this $680 million regional project aims to supply 300 megawatts of electricity of summer surplus power from Tajikistan and Kyrgyzstan to the Afghan capital of Kabul, and 1,000 megawatts to northwestern Pakistan. The transmission lines have already been built on the Tajik side and should be completed on the Afghan side sometime in 2011. Besides optimizing electricity usage, Tajikistan has also launched a massive campaign to conserve energy. “As we work toward energy independence, we have taken other measures as well,” said Rahmon. “For example, with the aim of saving energy and fuel resources, I signed a special decree to transition to energysaving bulbs. Within a year of implementation of this decree, we’ve managed to save 2 billion kilowatthours.” Tajikistan is also working towards adjusting tariffs to recover costs, while improving debt collection, installing meters, etc.


The people of Tajikistan have been suffering for more than 15 years due to electricity shortages in the winter … and the only way to solve this issue is to construct hydroelectric plants. — President Emomali Rahmon of Tajikistan

April 2011


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Growing Tajik Banking Sector Looks to Overcome Initial Hurdles



ith just 14 banks and 2.5 billion somoni (about $568 million) in deposits, Tajikistan’s banking sector is still clearly in its infancy.

Nevertheless, there’s tremendous room for growth — and rising interest from foreign banks, including entities from Qatar, Afghanistan, Pakistan, Ukraine and the United Arab Emirates. Tajik banks are heavily involved in processing remittances coming from laborers working in Russia. In 2010, these workers sent their families in Tajikistan just over $2 billion, accounting for some 40 percent of Tajikistan’s GDP. Of the 14 banks in operation, one is the state-owned savings bank Amonatbonk; nine are local-foreign joint ventures; and four (AccessBank, FirstMicroBank, Kazkommertsbank. and Bank Tijarat) are 100 percent foreign-owned. Some 35 percent of the capital of Tajikistan’s private banks belongs to foreign shareholders. Amonatbonk, which is the State Savings Bank, is the only one offering a 100 percent guarantee on deposits without limitations. “This was done so that the people would trust the banking system when they had lost confidence,” says Amonatbonk’s chairman, Gulnora Hasanova. According to the International Monetary Fund, “Tajikistan is emerging from the global crisis. Economic activity is on the upswing, bolstered by higher hydroelectric power production and a rebound in inward remittances. The outlook for the remainder of 2010 and 2011 is relatively positive.” The IMF does recognize though that some risks remain related to regional recovery, food and fuel prices, and weaknesses in the state enterprise and financial sectors. Tajikistan’s business and investment environment is also relatively healthy — boasting an inflation target of about 7 percent, GDP growth estimated at around 5 percent for 2011, a stable currency (the somoni averaged 4.38 to the dollar in 2010), and an exchange system the IMF describes as “free of restrictions on payments and transfers for current international transactions.” Nevertheless, some banks have found themselves overexposed after having financed state-subsidized industries such as cotton and aluminum. And most suffer from the disruption of rail traffic with Uzbekistan, which has hurt the bottom line of their clients — aside from the global economic crisis in general. “Before the crisis, we could attract financing from foreign banks, but with the crisis they started using their resources to support their own economies,” said Sharif Rahimzoda, chairman of the National Bank of Tajikistan, estimating that 65 percent of deposits held in Tajik banks are in foreign currencies, mostly U.S. dollars. “We need time, maybe one or two more years, to get back to the levels of 2008.” The global financial crunch also means less money

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flowing into the system, leadBut debit cards are sure to become a way of ing to higher interest rates that life in a country with a burgeoning youth populaprevent companies from bortion. Given the demographics, it’s no surprise that rowing and, ultimately, pro67 percent of Tojik Sodirot Bonk’s employees are ducing goods. under 40 years old, said chairman of the board Shuhrat Ismatulloev, first Natalya Nazarshoeva as she took The Diplomat deputy chairman of on a tour of her bank. “We want to attract young Orienbank, gave the example and energetic people, not only in our headquarof state aluminum giant Talco, ters but also in our branches,” she noted. which saw its revenues drop Her colleague Pirov, commenting that “we significantly in 2009 when need well-trained staff, notably in our branches,” commodity prices collapsed. added that “women are a big factor of the develOn the other hand, the opment of our bank. They are more responsible past five years have seen a and always try to do their best. We have a policy SHARIF RAHIMZODA, CHAIRMAN OF boom in retail banking and the THE NATIONAL BANK OF TAJIKISTAN in the region that if the senior manager is a man, use of debit cards. Each bank his deputy must be a woman.” official that The Diplomat spoke to bragged about the Tajikistan initiated a private Credit Information number of new ATMs and branches opened since 2006 — Bureau in 2010. Once up and running, financial institueven in the most remote areas. tions along with mobile operators and utility companies Yet the growth of debit cards comes up against old will gain access to reliable data on customers — allowing habits. them to slash loan processing time, boost lending to “The people are not always ready. In rural areas, they small- and medium-size enterprises, and reduce credit prefer to withdraw all their money out of fear of losing defaults. Bringing banks and state-owned companies up it, but they will get used to it,” said Tojidin Pirov, chairto Western auditing standards is a prerequisite for workman of the supervisory board oj Tojik Sodirot Bonk. ing with international players. Orienbank’s Ismatulloev gave the example of ATMs Separately, various development organizations such being filled with 100,000 somoni, and emptied after just as the European Bank for Reconstruction and two hours. “We only have 50 ATMs throughout the Development (EBRD) and Germany’s Kreditanstalt für country, so it’s a challenge to supply them with money,” Wiederaufbau (KfW) have invested in existing banks or he said. The recent introduction of new 200- and entities started from scratch, such as AccessBank, which 500-sonomi banknotes may alleviate the problem. began operations in April 2010. Another issue, according to Ismatulloev, is that Christoph Ziegler, general manager of AccessBank, because the debit card business is so new, there’s no pro- says the foreign involvement is definitely appreciated. cessing center in Tajikistan, forcing banks to use process“Local banks welcome us for the sake of the developing centers in other countries. However, Agroinvestbank Continued on Page 11 has a processing center certified by Visa. SPONSORED REPORT

April 2011


President Rahmon Continued from Page 5 government is launching a series of programs to tackle one of Tajikistan’s biggest impediments to economic development: blackouts. On May 29, 2010, the government approved an action plan to improve the energy sector between now and 2015. The goal is to lure domestic and foreign investment to expand Tajikistan’s hydro potential. Specifically, it will bring the Sangtuda-2, Zeravshan, Nurobod-1, Obburdon, Fondaryo, Shurob and Dupula power plants online, while building new electricity transmission lines and rehabilitating aging power plants. By the end of December 2010, according to the president, 30 small hydropower plants with a total capacity of more than 4 megawatts will be constructed and put online. Rahmon conceded that many of the region’s disputes center on water and energy issues — in particular the accusations that the acceleration of hydroelectric projects in Tajikistan will harm its neighbors. “I reiterate that this kind of opinion is totally groundless,” he said. “All our hydropower plants are being constructed along our internal rivers, and they will never cause any water shortages or worsen the ecological situation in the region. Even during Soviet times, while planning the construction of big hydro plants in upstream countries, two main goals were taken into account: generating cheap electricity for the whole region, and secondly, providing water to irrigate arable lands in the downstream countries.” For more than 15 years, he noted, the people of Tajikistan have been suffering electricity shortages, especially in winter. “Our neighbors should clearly understand our situation,” said the president. “The only way to solve this issue is to construct hydropower plants. Despite being the main source of water in Central Asia, Tajikistan uses only 5 to 7 percent of its water resources. As a mountainous country, it has no opportunity to expand its arable lands and will never pose a threat to the region. On the contrary, our previous suggestion to provide the people of the region with pure water from Sarez Lake is still on the table.” Meanwhile, aluminum and cotton are two of Tajikistan’s main exports, but the cotton industry needs investment to modernize its outdated equipment. The government also hopes to relieve the debt burden

Banking Continued from Page10 ment of the financial market, and for our best practices,” he said. “We don’t take Tajik jobs away. On the contrary, we create jobs. We hire university graduates and teach them, in-house, everything they need to know. We spare no efforts to train our staff, including branch managers, about our corporate culture and career ladder.” Farrukh Tagaimurodov, chairman of Agroinvestbank, which is 25 percent owned by EBRD, also credits the organization for its indispensable assistance: “We work closely with the EBRD, notably with a three-year technical assistance program where international consultants

April 2011

Credit: Gennadiy Ratushenko

stifling many of the country’s cotton farms. “With the development of the cotton industry in mind, the government intends to tackle the severe indebtedness issue by annulling or decreasing farms debts incurred through Jan. 1, 2008,” Rahmon explained, noting that the government earmarked $41 million out of the national budget in 2009 and $39 million in 2010 to alleviate farm debt and bolster the cotton industry. In addition to increasing its exports, the Tajik government also wants to increase the country’s access to the outside world. “For landlocked Tajikistan, having transport corridors is very important,” said Rahmon. “One of our main and strategic goals is getting out from our communication deadlock.” Indeed, building the infrastructure to connect with the outside world is a top priority of the Rahmon administration. As a direct result, the volume of freight between Tajikistan and other countries has skyrocketed over the past five years. “Four bridges on the Panj River and the DushanbeKhorog-Kulma road were built with the assistance of countries such as the United States, China, Iran, Turkey and Italy, and of international organizations such as the Asian Development Bank, the Islamic Development Bank, the European Bank for Reconstruction and Development, OPEC and the Economic Development Fund of Kuwait,” the president noted. These bridges shorten the travel time between Tajikistan and Afghanistan, also giving other nations in the region easier access to Afghanistan while boosting

help us with institutional capacity-building, risk management and information technologies.” Other banks look at creative ways to develop their business while supporting Tajikistan’s efforts to eradicate poverty. For instance, Hasanova explained how her bank is hoping to get a grant of up to $2 million from the Bill & Melinda Gates Foundation so that it can “work with savings banks to double the number of savings accounts for the poor.” A local pioneer, Somon Capital was the first investment bank to open in Tajikistan in 2007, establishing relationships with regional investors and focusing on the most promising sectors for its portfolio: energy and mining, construction and agribusiness/food processing. SPONSORED REPORT

trade throughout Central Asia. Other projects focus on rehabilitating and building highways that will better link Tajikistan to nations such as Uzbekistan and Kyrgyzstan, as well as opening up transportation corridors throughout Southeast Asia and to harbors as far as the Indian Ocean. In addition, a railway that would link China, Kyrgyzstan, Tajikistan, Afghanistan and Iran is currently being planned, with transportation ministers from all these nations meeting in Dushanbe late last year to discuss the project. With Afghanistan said to have the world’s largest copper deposits and China the world’s leader in production of rare earths, Tajikistan has some stiff economic competition in its backyard. But fortunately the country boasts its own mineral wealth. In 2010, the government offered international bidders the Koni Mansuri Kalon silver deposit, home to an estimated 50,000 metric tons of silver. The oil and gas sector also has enormous potential, with 25 oil and gas deposits discovered over the past 80 years. “The largest extraction volumes occurred in 1973 and 1979 where 520 million cubic meters of gas and 418,000 tons of oil were produced. Today, 98 percent of Tajikistan’s oil and gas is imported, and that’s why the development of this sector is very important,” said Rahmon. “A number of foreign companies such as Gazprom, Tethys, Kulob Petroleum Ltd., Marvis Ltd. and one closed joint venture, Somon Oil, are now engaged in discovering and extracting oil and gas in Tajikistan. We definitely need the assistance of foreign companies in this process.”

“Tajik companies lack an understanding of corporate finance and financial management on one hand, and lack of experience working with international investors on the other hand,” said Somon Capital’s CEO, Jamshed Rahmonberdiev, when asked about the challenges he faces. “Tajikistan is sometimes hard to sell because international investors simply do not have information to assess their risks and rewards.” That’s why Rahmonberdiev tells Tajik companies about best practices needed to create value for business. And for the Tajik government, the development of securities and financial markets is a top priority. That’s why Rahmonberdiev is busy looking to establish partnerships with private equity and venture-capital firms that have an interest in Tajikistan and Central Asia.

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Tajikistan Improves Business Climate To Attract More Foreign Investors


oing business in an obscure country bordering Afghanistan may sound like a risky proposition to most potential investors — which is why Tajikistan instead prefers to highlight its proximity to a more far more successful neighbor: China. Even though it was ranked 112th in the latest United Nations Human Development Index, and 154th on Transparency International’s Corruption Perceptions Index — on par with Russia — Tajikistan is making visible strides to improve its business and investment climate. In fact, the country has been recognized two years in a row by the World Bank as among the 10 economies that improved the most from 2008 to 2009, and again from 2009 to 2010. It scored highest in the areas of starting and closing a business, protecting investors and dealing with construction permits. And compared to its neighbors, Tajikistan is doing far better in the bank’s ranking of places to do business (139th out of 183 this year, up from 164th place in 2009). In fact, it scores better than either Uzbekistan (150th) or Afghanistan (167th). At the same time, in 2008 Tajikistan adopted an anti-corruption strategy that Fatoh Saidov — director of the State Agency for Financial Control and the Fight Against Corruption — says is the “bible” by which his agency bases its entire activity. Added Ari Aisen, resident representative of the International Monetary Fund in Tajikistan: “The fact that Tajikistan managed to deflect the effects of the [global] crisis and have 3.4 to 3.5 percent GDP growth in 2009 shows that something intrinsically good is happening here, despite the drop in remittances.” Foreigners living in Tajikistan often told The Washington Diplomat that “government officials listen” to their concerns — a rarity in a region where bureaucratic conceit is common and self-criticism not seen as a way to further one’s career. “The government is taking step-by-step actions to improve the investment climate and carry out reforms,” said Davlatali Saidov, chairman of the State Committee on Investments and State Property Management. In 2007, Saidov’s agency and the business community established a consultative council that meets four times a year to further improve Tajikistan’s investment climate. And in 2009, the government carried out a program called “200 days of reforms,” which entailed, among other measures, the removal of administrative barriers and the establishment of a “one-stop shop” that slashes the registration of new business entities down to a three- to four-day process. Unfortunately, Tajikistan suffers from a chronic liquidity shortage. Yet that hasn’t stopped the private sector from flourishing. A case in point: Tajikistan’s wireless telecom market, one of the most dynamic in Central Asia. Despite its difficult landscape, Tajikistan was

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Credit: Gennadiy Ratushenko


among the first of the former Soviet republics to embrace mobile telephones and adopt the 3G wireless standard. During a recent meeting of the American Chamber of Commerce in Tajikistan, several members reflected on where future opportunities might lie for new investors. “There is no more room for GSM. All frequencies have been allocated,” said Bahriddin Najmudinov, chief executive officer of Tcell, referring to the global system for mobile (GSM) communications. “However, there may still be some room for CDMA [code division multiple access] operators.” Tcell, with more than 2 million subscribers, is owned by the Swedish-Finnish conglomerate TeliaSonera. One area of growth is the opening of the fiber-optic market beyond Tajiktelecom, the national communications operator though investors remain concerned about an excise tax imposed on mobile operators in January 2011. Najmudinov added that the most opportunities for foreign investors are in “sectors that are in bad shape, such as health care, education and tourism.” Another priority is hydroelectric power — crucial for the manufacturing industry, and a potential moneymaker for Tajikistan in its own right. The general rule of thumb is that it takes $1,000 to build one kilowatt of capacity, or $1 million per megawatt. But for smaller hydropower plants, this is not an insurmountable obstacle, thanks to the help of various international organizations. The success of Pamir Energy is an example of one fruitful public-private partnership. Under the accord, signed in 2002, Pamir has a 25-year concession to operate all power generation, transmission and distribution facilities in Tajikistan’s sparsely SPONSORED REPORT

populated Viloyati Mukhtori Kuhistoni Badakhshon (Mountaineous Badakhshan Autonomous Province). The province, which comprises 45 percent of the country’s land area but has only 3 percent of its population, was devastated after Tajikistan’s civil war. Pamir Energy has proved to be financially viable while providing cheap electricity to the province’s local inhabitants. According to Tajik President Emomali Rahmon, the government will construct and put online 60 small hydroelectric plants over the next two years in remote, mountainous areas of Tajikistan. This is in addition to Sangtuda 1, a 670-megawatt hydro plant built jointly by Russia and Tajikistan and Sangtuda 2 (Iran, Tajik investment) which will be put online at the end of 2011. Another strong area of potential investment is the mining sector — which can become even more lucrative given recent Chinese restrictions on the export of rare-earth minerals. “Tajikistan has rich mineral resources, which include almost all the elements of the periodic table,” said Rahmon, noting that 93 percent of Tajikistan is mountainous. “Most probably, in the mineral deposits

April 2011

The government is taking step-by-step actions to improve the investment climate and carry out reforms. — Davlatali Saidov, chairman of the State Committee on Investments and State Property Management

of our territory, these exist as integrated metals.” In fact, some new opportunities are already up for grabs — such as the Koni Mansuri Kalon deposit, containing an estimated 50,000 metric tons of silver. “We started doing business in Tajikistan in 1993, and we are in the midst of doubling production and setting up a state-of-the-art smelter so that we can produce antimony metal in Tajikistan,” said Michael Bollag, president of New Jersey-based Comsup Commodities Inc., which specializes in the mining, processing, and distribution of metals and minerals. The proximity of China and its insatiable appetite for natural resources makes it a prime customer and partner for such projects. According to Bollag, “most of our product goes to China, which we truck to Khujand and then by rail across Uzbekistan and Kazakhstan.” Meanwhile, domestically the appetite for quality consumer goods is certainly present in Tajikistan, although official distribution networks to bring foreign commodities to local Tajiks remain spotty. While visiting stores, The Washington Diplomat did find Coca-Cola sodas produced in Afghanistan, Procter & Gamble shampoos from Pakistan, and various other brands from Russia, the United Arab Emirates and elsewhere. The completion of roads and rail networks will allow the country to import an even greater variety of goods while lowering prices. Similarly, more hydroelectric plants will guarantee uninterrupted manufacturing capacity. With more than 70 percent of its population living in rural areas, Tajikistan depends heavily on agriculture and on its main export: cotton. Agriculture Minister Kosim Kosimov, noting that only 650,000 hectares of Tajik territory is irrigated, said the country must boost yields and acquire more farm equipment urgently. “We need 14,000 tractors but we have only 5,000,” he said, adding that his nation also needs fertilizers as well as seeds that produce higher yields. Despite its landlocked status, Tajikistan has many lakes, and assistance in developing fisheries and livestock breeding could be extremely beneficial for the country. Among the top consumers of Tajikistan’s cotton is Nassoji Tojik, the nation’s leading producer of garments, linens and medical supplies. “We provide premises, cheap labor, cotton and electricity, so it is very profitable to establish a joint venture in Tajikistan,” said Anvar Kurbanov, the company’s chairman. Nassoji Tojik already exports to more than 20 countries, but Kurbanov said he’d like to increase the quality of Nassoji Tojik’s fabrics and threads by installing new technology and equipment in now-idle factories. Finally, some words of investment advice from Bollag, the U.S. mining executive: “One needs to be patient, as things do not always move as quickly as one would like. If you’re not short-sighted and treat people fairly, Tajikistan can be a great place to do business, with plenty of opportunities and a very friendly business environment. It is also very useful to have a local office and management team.”


Many opportunities can be developed within the framework of international initiatives to reduce poverty and to develop energy and transportation infrastructures. LIST OF NEEDS: Agriculture: tractors; water pumps possibly activated through solar panels and related spare parts, drop irrigation & water saving technology; raw cotton processing equipment; fertilizers, seeds and technology to increase yields Construction: construction materials (cement, etc) Consulting Services: business, management and capacity building development Education: online courses Energy: small and medium HPPs;

April 2011

transmission lines; low consumption electricity bulbs; electricity generators and meters Food Processing: food packaging processing lines and equipment Healthcare: drinking water filtration & purification equipment


Mining: mining equipment Security: border guards & customs control equipment Transportation: road maintenance equipment and airport rehabilitation Financing Services: financing for all of the above SPONSORED REPORT

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Foreign Minister Zarifi Aims to Cement Tajikistan’s Ties with U.S. and Region


n January, Tajikistan’s foreign minister, Hamrokhon Zarifi, spoke to The Washington Diplomat about bilateral relations. Zarifi, who served as his country’s first ambassador to the United States from 2002 to 2006, also discussed key issues such as Afghanistan, the rise of religious fundamentalism, the government’s 2010 clashes with Islamist groups and Tajikistan’s priorities for 2011.

Zarifi called the United States a crucial ally ever since the very first days of Tajikistan’s independence. Initial technical and humanitarian assistance during the 1992-97 Tajik civil war matured into a wider scope of bilateral interaction ranging from economic cooperation and education to security and democracy building. “The Republic of Tajikistan considers the United States an important and reliable partner in the international arena, and relations with the U.S. have a priority in the foreign policy of our country,” he said, adding that “in recent years, we have witnessed an increasing exchange of students and teachers from both sides” through Fulbright scholarships and other programs. “However, in our opinion, the two countries have not used the existing potential for cooperation, particularly in the commercial, energy and communications sectors.” Zarifi said that last year’s launch of annual political consultations in Washington between the United States and Tajikistan “will help further deepen and expand our relationship, taking into account untapped opportunities and opening up new horizons.” The ongoing war in neighboring Afghanistan — 27 percent of whose people are ethnic Tajiks — hurts the stability and security of the entire region, Zarifi said, stressing the need for security arrangements, together with effective steps for reviving the Afghan economy. “Obviously, the Tajiks are concerned about the situation in Afghanistan and sincerely wish for peace and order to be quickly established there,” he said. “It’s no secret that as a result of continuous wars and instability for over 30 years, the Afghan economy is in ruins and other areas of human activity like health care and education are paralyzed.” Zarifi argues that Afghan living standards can only be raised by creating jobs, producing goods and developing trade relations with other countries. But this will require adequate infrastructure, communication networks and power capacity. That’s why he believes projects linking Afghanistan to the rest of Central Asia can play a critical role in “turning Afghanistan into an important communication link in this vast region.” Zarifi added that the building of highways would “allow us to move to a new level of economic and trade relations between our countries.” In this regard, Zarifi pointed out that traffic is expected to increase once the transit corridor of

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must be accompanied by fighting narcotics production and active implementation of economic and social programs.” In addition to assisting its neighbor, the Tajik government must also pay close attention to possible turmoil within its own borders. Religious fervor is on the rise in Tajikistan — 98 percent of whose people profess Islam. Mosques are full, madrasas (Islamic houses of study) are spreading rapidly, and women in hijabs (traditional veils) are becoming more commonplace throughout Tajikistan. “Attendance at mosques and religious educational institutions has increased,” Zarifi confirmed. “Currently, we have more than 3,500 mosques, and this year, about 5,000 Muslims from Tajikistan have made the hajj [pilgrimage] to Mecca. All this is in accordance with existing laws and is considered to be normal.” However, he warns that extremism in any form will not be tolerated in Tajikistan. “We are concerned about the penetration of negative elements with a religious bent and extremist ideas from other countries,” Zarifi told The Diplomat. “In this regard, we have decided to bring back from certain Muslim countries our citizens who, bypassing official channels, had left Credit: Presidential Palace the country and were being trained illegally in a Kunduz-Panji Poyon-Dushanbe-Khujand — which variety of informal and unregistered religious passes through Afghanistan, Tajikistan and schools.” Uzbekistan — is completed. Tajikistan is a proponent Last September, 28 Tajik soldiers were killed after of the contruction of railway Shir Khan Bandarwhat Zarifi called “dangerous criminals” had Mazari Sharif-Herat in Afghanistan. escaped from a detention facility and joined the Cooperation on the energy front is also an Mullah Abdullah and Ali Bedaki anti-government important tool for regional social and economic terrorist groups. He said the ambush against a development. By spring 2011, a 220-kilowatt military convoy in the Kamarob area had been transmission line from the Sangtuda-1 power plant organized with help from the Islamic Movement of in Tajikistan to Kunduz, Afghanistan, will be Uzbekistan. finished. Later, that line will be extended to Kabul. Zarifi believes that “reliable channels of Likewise, construction of hydroelectric plants diplomatic cover and military cooperation” between will be crucial to fostering regional integration. For Tajikistan and Afghanistan will “lead to the complete instance, Zarifi said construction of the Dashtijum eradication” of such terrorist groups — especially hydropower plant on the Panj River separating “now the criminals know that they will be caught in Tajikistan and Afghanistan — in addition to Afghanistan and returned to Tajikistan.” generating cheap electricity — will allow With regards to its other neighbors, Zarifi said Afghanistan to irrigate 1.5 million hectares of new Tajikistan’s cooperation with two much bigger cropland. countries — Russia and China — is based on solid “Tajikistan is also collaborating with other historical foundations and mutually beneficial countries in solving Afghanistan’s problems. We are economic ties. working closely with the United States, in particular “The appearance on the world political map of helping in the transit of non-military cargo from new sovereign states of Central Asia opened up new ISAF [International Security Assistance Force] to opportunities and prospects for international Afghanistan, which is not only beneficial from an cooperation,” he said. “Russia and China are major economic point of view, but also helps to restore trade and economic partners of Tajikistan. We stability in Afghanistan and create a north-south consider further expansion and deepening of market.” cooperation with these countries an important factor NATO, which leads the security mission known in our economic development, notably in the areas of as ISAF, is of course a key partner in the peaceenergy, transport infrastructure, light industry and building process in Afghanistan. As such, in 2004, joint exploitation of natural resources.” Tajikistan signed an agreement to allow non-military Incidentally, as Tajikistan approaches its 20th cargo and NATO personnel to cross through Tajik anniversary of independence later this year, the territory into Afghanistan, building five border country will organize a conference marking another bridges to facilitate NATO movement. crucial anniversary: 100 years since the formation of “We think these projects will play an important Sarez Lake. role in the economic and social rehabilitation of Created in 1911 by a powerful earthquake, this Afghanistan’s post-conflict period,” said Zarifi. But he added that “measures stabilizing Afghanistan Continued on Page 18 SPONSORED REPORT

April 2011


Landlocked Tajikistan Stays Land-Connected Through Transport


nding landlocked Tajikistan’s physical isolation is one of the government’s top strategic goals, driving the current push to build up transportation infrastructure.

That push is being complemented by an effort to modernize customs facilities and to make existing laws compatible with international customs standards. Most of Tajikistan’s roads, railways and airports date to Soviet times, and over the years, inadequate maintenance, natural disasters and the country’s civil war have left them in tatters, warns the Asian Development Bank — the largest multilateral development partner in Tajikistan’s transport sector. “When the Soviet Union collapsed, we inherited only one customs checkpoint located in Panji Poyon [at the Afghan border], so there was no customs infrastructure in Tajikistan,” said Negmat Rahmatov, first deputy chief of the nation’s Customs Service. Decrepit road, rail and air infrastructure hamper the development of trade as well as investment. As Rastislav Vrbensky, country director of the U.N. Development Program, pointed out: “Infrastructure is a precondition to attract investment.” Mountainous Tajikistan is already challenged by its harsh topography and winter conditions. Roads carry 90 percent of passenger traffic and over 65 percent of cargo, but most roads are substandard — especially when it comes to trucking during the winter. “Our mine is located in the middle of the mountains, and the mountain pass on the way to Khujand is not in good condition,” explained Michael Bollag, president of New Jersey-based Comsup Commodities Inc. In this context, the Manila-based Asian Development Bank is financing several transportation projects, including the CAREC Regional Road Corridor Improvement Project, which envisions a 550-kilometer-long trade corridor linking China with Kyrgyzstan and Tajikistan, as well as projects that would outsource road maintenance to the private sector. “Every year our budget allocation increases to develop infrastructure, notably for highways,” said Olimjon Boboev, former minister of transport and communication. He also pointed out that railways are critical to accessing Asia and Europe, but the problem, he explained, is that “in Tajikistan there are three railways — Southern, Northern and Central — but they are not connected to each other. They are only connected through the Uzbek railway network. One of our goals is to join the Central and Southern railways.” Likewise, Tajikistan’s main airports in Dushanbe — Khujand, Kulob and Qurghonteppa — all need to be rehabilitated, even more so now that new air routes are being finalized to London, Delhi, Islamabad and the United Arab Emirates. Boboev noted that airlines want to use Tajik airspace to shorten flying time between Europe to China, which will also save them money.

April 2011


Infrastructure is a precondition to attract investment.

— Rastislav Vrbensky, Tajikistan country director for the U.N. Development Program

In addition to upgrading airport facilities, state-run Tajik Air is also being restructured after years of stagnation and the emergence of Somon Air, a dynamic private-sector competitor. Other recently completed projects include a bridge over the Panj River linking Afghanistan and Tajikistan, while cutting the distance between Dushanbe and the closest seaports nearly in half. At $37.1 million, it’s the country’s largest single U.S. governmentfunded infrastructure project in Tajikistan. Beyond the physical barriers, less tangible border barriers exist. “They are sometimes difficult to identify and harder to get rid of,” said Igor Runov, undersecretary-general of the International Road Transport Union. “These have to do with border crossings, red tape, corruption and so on.” That’s why the Asian Development Bank has been involved in streamlining and simplifying border and customs procedures, notably by funding the implementation of a Unified Automated Information System and by pushing the single-window concept. Runov also advocates a “backhaul” system proposed at a recent U.S. Central Command meeting, whereby the same containers and trucks used to deliver goods to U.S. SPONSORED REPORT

troops in Afghanistan can also be utilized for the export of Afghan goods. “With this, you hit two birds with one stone,” he said. “You get rid of empty containers by helping Afghan exports and you fight drug trafficking by enabling people to grow food and not poppies.” Another way to overcome administrative barriers is to be a signatory to United Nations conventions. “You don’t need to go through complicated bilateral negotiation processes — you just comply with existing rules,” Runov said. “Tajikistan is a signatory to four conventions but said it ASPHALT LAYING ON TAJIKISTAN’S would join five more, MANY DIRT ROADS such as on dangerous and perishable goods.” Yet another tool is the International Road Transport Convention, which allows goods to transit from a country of origin to a country of destination in sealed compartments, with customs control recognition along the supply chain. Neighboring Afghanistan signed onto the convention in October 2010. With China set to join in 2011 and Pakistan indicating that it would also apply, Runov sees a new favorable environment in which goods could travel from Pakistan to Turkey without inspections, duties or reloading issues.

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Destination Tajikistan: Terrifically Off the Beaten Track


uietly nestled between high-profile neighbors such as Afghanistan and China lies a nation unknown to much of the world, which tends to lump the “stans” of Central Asia into one homogenous pot. But present-day Tajikistan — once part of the Persian Empire and the Silk Road before becoming a republic of the Soviet Union — is working toward building a national identity that will raise its visibility abroad and recapture some of its past glory. “The nation is ancient, but the country is young,” says Maliksho Nematov, chairman of the Tajik government’s Committee of Youth, Sports and Tourism. And the 20th anniversary of its independence to be celebrated in 2011 is seen “as an important event for the entire country.” As one of the poorest and least-known countries in the world, Tajikistan’s untapped tourism market could become a significant driver of the economy, according to Nematov. To that end, a recent contest adopted a new tourism logo and slogan for the country: “Tajikistan – Feel the Friendship.” That’s exactly what government officials are hoping visitors will experience in this unique destination. More than 90 percent of Tajikistan is mountainous and half of the country rises above 3,000 meters. “Tajikistan is a ‘stan’ with high altitude,” noted Lochin Faizulloev, vicechairman of the Committee of Youth, Sports and Tourism. Tajikistan’s landlocked borders, the civil war that followed its independence in the early 1990s, and a lack of proper transportation and hospitality infrastructures have kept Tajikistan off mainstream travel routes for years. But with the increased number of airlines flying into the capital city of Dushanbe, a wave of hotels offering Western amenities and diverse accommodations opening up, and travel agencies offering tailored excursions, Tajikistan is poised to see tourism flourish. Impressed by his visit to Tajikistan, Dr. Taleb Rifai, secretary-general of the United Nations World Tourism Organization, declared: “Tajikistan is a hidden treasure in the heart of Central Asia” and “an important stop along the Silk Road,” stressing that “regional cooperation is key to harnessing the tourism potential of Central Asia.”

TOURISM: PRIORITY AND POTENTIAL With a per-capita GDP of $766 in 2009, poverty reduction is one of the government’s top priorities, with the support of international financial institutions. In this context, tourism is a natural sector to nurture — a market filled with promise that won’t require huge start-up funds. To that end, legislation is being passed to create a favorable investment climate for domestic and foreign investors, while administrative barriers are being broken down. It now takes only three days to get a tourist visa to Tajikistan, and citizens of 80 countries can simply get a visa upon arrival at the airport. The previously required

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OVIR registration (registration with the Ministry of Internal Affairs) is no longer needed for tourists staying less than 30 days, and a similar rule for all business visas is under consideration as well. Since 2010, the cost of a tourist visa is $25 per person, with a 50 percent discount for groups of more than five people. The greater ease of traveling to Tajikistan, financially and logistically, is having a tangible impact. By September 2010, 150,000 tourists had visited Tajikistan, compared with 91,000 in 2009, although of that amount, only 3,000 were Americans. To bring in more Westerners, Tajikistan has embarked on a campaign to boost its hotel capacity while capitalizing on its natural advantages, such as its bounty of mountain- and water-based activities as well as a rich history connected to the Silk Road. The government is also aware of its shortfalls and is working to remedy them. As Nematov of the Committee of Youth, Sports and Tourism pointed out: “The problem is that not too many people are able to assist our tourists, so tourism schools are established to prepare tourism personnel.” The year 2009 was a critical turning point for the Tajik tourist industry with the opening of the Hyatt Regency in Dushanbe, the first major international hotel chain to enter the market. “Hyatt brought very high standards,” said Hokimbek Ziyoev, chairman of the board of directors of the Hotel Tajikistan. “We want such competition, because without it we stay where we are.” SPONSORED REPORT


So as new five-star hotels prepare to open, Ziyoev welcomes the increased room capacity, which will be necessary for large international gatherings, such as the upcoming Dushanbe International Healthcare Exhibition scheduled for Oct. 27-29, 2011, when 2,000 attendees are expected to converge on the capital. “We are building a swimming pool and a sauna to

April 2011

The nation is ancient but the country is young.


— Maliksho Nematov, chairman of the Tajikistan Committee of Youth, Sports and Tourism

provide all services our clients would like,” noted Ziyoev. Jean-François Durand, general manager of the Hyatt Regency, says, “We are an oasis in Dushanbe. We are self-sufficient as we have our own water, our own generator and our own boiler.” That’s not a slight point in a country that continues to experience electricity shortages and water quality issues. Until recently, getting to and from this isolated nation was also not without its difficulties. That all started to change when international airlines such as Turkish Airlines and Somon Air — a Tajik private airline flying Boeing 737-800s — opened direct routes, instantly putting Tajikistan on the map via one easy connecting flight from major airports in cities such as Moscow, Istanbul and Frankfurt. The growth in airline access coupled with the rise in accommodations is rapidly making Tajikistan an attractive, off-the-beaten-track destination that’s ripe for discovery.

CAPITAL CHARMS Dushanbe is a natural first stop on any travel itinerary. Trees and neoclassical buildings form the backdrop to striking market displays that feature a wide array of naturally grown foods, from melons, persimmons and lemons, to oranges, pistachios and pyramids of vibrantly colored spices. With no Westernstyle chain stores or fast food Credit: Gennadiy Ratushenko restaurants in sight, Dushanbe has retained an authenticity that will be a breath of fresh air to Westerners. Within walking distance from the Maydoni Dusti (Friendship Square), visitors can experience Tajikistan’s multi-millenary history juxtaposed with its state-of-the art buildings. The National Museum of Antiquities (www.afc.ryukoku.ac.jp/tj) hosts what is now the largest Buddha sculpture in Central Asia (14 meters long) after the destruction by the Taliban of the famed statues at Bamyan, Afghanistan. In 2001, the museum also received $30,000 to restore the “Buddha in Nirvana” from the U.S. Ambassador’s Fund for Cultural Preservation. In addition, the venerated museum is also home to a 3,000-year-old statue of Alexander the Great as well as an array of regional artifacts that shed light on Central Asia’s vast culture and history. Tajikistan is a largely Muslim country, and one of the most stunning examples of religious architecture can be found at the Haji Yakoub mosque, which is more than 200 years old and punctuated by intricate, dazzling ceramic tiles. Teahouses are a tradition dating back to the Silk Road age. Lavishly designed, these teahouses capture the essence of Tajik hospitality today. One famous teahouse, located on the main Rudaki Avenue, offers traditional Tajik dishes such as plov (rice dish made with meat and carrots and cooked in oil or mutton fat), non (flatbread), vegetable or meat soups such as laghmon and mantu, as well as sambusa (pastry stuffed

April 2011

with meat and onion). Meals are often accompanied with dried nuts, fresh vegetables such as tomatoes, cucumbers and radishes, along with fruits such as pomegranates, lemons, oranges, persimmons and melons. Perhaps a bit of a surprise to outsiders, Dushanbe is a very green city, boasting several lovely parks such as Victory Park or the Botanical Gardens, where families and couples can be seen strolling along the flower-filled lanes. Other areas of interest include the statue of Ismoili Somoni, inaugurated in 1999 to commemorate the founder of the Samanid dynasty on its 1,100th anniversary. Nearby stands the impressive Palace of Nations built by the Italian construction firm Codest International to host presidential events and visiting delegations. Construction of the tallest flagpole in the world (165 meters) has also begun and will stand next to the palace. The high cost of these projects has been criticized, although the importance of building a unifying national identity around state symbols in a region prone to internal divisions is seen by the government as a critical endeavor. Another magnificent building is the new Ismaili Center located across the street from the Hyatt Regency Hotel. Inaugurated in 2009, this center is the first in Central Asia, even though the region has been home to Ismaili Muslims for more than 1,000 years.

Credit: Gennadiy Ratushenko


BEYOND DUSHANBE Tajikistan is blessed with spectacular natural beauty: The mountainous landscapes of the Pamir Mountains are often referred to as the “roof of the world,” with the Ismoili Somoni Peak standing at 7,495 meters and lakes found as high as 3,500 meters. Hiking, mountaineering, rock climbing, cycling, rafting and jeep tours are popular activities for those seeking unchartered adventures. Although accommodations, transportation routes and the healthcare system remain rudimentary, efforts are under way to develop this potentially lucrative industry. In fact, last year the site of Sarazm located on the border with Uzbekistan was added to the UNESCO World Heritage List. Meaning “where the land begins,” this 6,000-year-old site is home to one of the most ancient settlements in Central Asia, where tools, ceramics, and ornate jewelry have been unearthed. Beyond Dushanbe, however, hotel accommodations remain scarce. Guesthouses, such as the well-established Marian’s Guesthouse, have helped to fill the void. The Serena Inn in Khorog, a city bordering Afghanistan, is a notable exception. Owned and managed by the Aga Khan Fund for Economic Development, this hotel strives to minimize the impact on the local environment while seeking to maximize socio-economic benefits to the local economy. To that end, Tajikistan is working to implement a community-based approach to tourism so that the local people benefit in places such as the picturesque Zerafshan Valley (www.ztda-tourism.tj/en). In March 2008, the Zerafshan Tourism Development Association (ZTDA) was established to pair foreign tourists with traditional home stays, offering them a memorable personal traveling experience. This strategy also introduces foreigners to local handicrafts, folklore, culture and customs while at the same time diversifying the source of income for the valley’s inhabitants, who serve as hosts, drivers and tour guides. For more information, visit the Tourism Authority of Tajikistan at www.visittajikistan.tj/en/.




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Diplomats Assess Tajikistan’s Political, Economic Challenges


bdujabbor Shirinov, Tajikistan’s ambassador to the United States, says the world needs to be a little patient with his country, which is still transitioning from a Soviet state model to one based on modern democratic priorities.

“We may adopt measures that from the point of view of Western experts seem confusing, unpopular and worse yet, infringing upon democratic principles,” Shirinov told us. “We in Tajikistan pay extreme attention to critical assessments about our country and its activities, but there are circumstances when criticism is unjust and ignores local realities.” For example, his country has a restrictive new law under which weddings may have no more than 150 guests and can’t last more than three hours. The 2008 law is part of efforts to stop poor Tajiks from bankrupting themselves by throwing lavish parties. “Despite criticism by Western human rights experts and politicians, it has received widespread approval among the population,” Shirinov pointed out. “I compare the importance of this law, which protects the health of the family budget, to that of the law banning smoking in the United FRENCH AMBASSADOR States to protect public TO TAJIKISTAN health. After all, nobody HENRY ZIPPER DE FABIANI would ever think of speaking out against the latter.” The Washington Diplomat also met with Shirinov’s counterpart in Dushanbe, U.S. Ambassador Kenneth Gross, as well as the French ambassador to Tajikistan, Henry Zipper de Fabiani, who said “this country needs to be looked at in a positive way and needs intelligent support.” Zipper de Fabiani noted that Tajikistan is politically stable, with no attempts to destabilize the country. It is also the only country in Central Asia

Zarifi Continued from Page 14 56-kilometer-long natural lake could provide downstream countries with clean drinking water as well as water for irrigation — thereby saving the Aral Sea from pending environmental tragedy. Tajikistan will also continue building an energy system connecting transmission lines with

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with an Islamic party. arguments against Rogun.” Added Gross: “The Tajik Zipper de Fabiani also government is one of our best stressed the need for the partners” — especially when it region to collectively manage comes to the U.S. military campaign its natural resources. “The in Afghanistan, where many ethnic Tajiks have made progress in Tajiks are helping to develop and understanding the global stabilize the war-torn nation. nature of the problem,” he An important example of said. “If you want to manage collaboration is the Northern water, you need to do it all Distribution Network (a U.S.-NATO the way, from glaciers to the supply line running through Central Aral Sea.” Asia), one of whose routes crosses Socially, one of through Tajikistan. The Tajiks have Tajikistan’s biggest trends is U.S. AMBASSADOR TO TAJIKISTAN also permitted unlimited flights over a return to Islam — KENNETH E. GROSS, JR. their territory, and in 2001, allowed particularly in rural areas, NATO to establish a small contingent of troops at the where women are dressing more conservatively and country’s main airport. traditional Sufi Muslim brotherhoods have grown in Gross further cited Tajik assistance with programs importance. to refurbish border posts and provide equipment, In Soviet times, Zipper de Fabiani said, Tajiks supplies, uniforms and training to give the Tajiks practiced “stealth Islam.” better control over their borders. “The Islamic system managed collective farms In our interview, Gross lamented that without the Soviets knowing. Today, there is a strong lingering mistrust remains along coming back to tradition. They the region’s borders, even though mix everything from local to all Central Asian countries realize Muslim traditions,” explained the that cross-border trade is French diplomat. “There is a necessary for their prosperity. search for what is good Islam. “These countries need to However, this does not mean overcome some of their distrust radical Islam is developing. Talk of of their neighbors and see how ‘talibanization’ is an exaggeration. successful they can be when they It could lead to radicalization, but cooperate,” he said. that does not mean terrorism, as As an example, Shirinov there are many steps to terrorism.” pointed out that in 2010, a daily For Zipper de Fabiani, average of 1,200 freight cars Tajikistan’s biggest challenge is bound for Tajikistan were delayed TAJIKISTAN AMBASSADOR what he calls the demographic in Uzbekistan. Those delays in bomb. TO THE UNITED STATES revenues and investments cost his “People under 18 represent ABDUJABBOR SHIRINOV government about $250 million, not to more than 50 percent of the mention another $35 million in uncollected customs population, and there are no prospects for duties and taxes. employment. If they don’t go to Russia, what will Antagonism also exists over water issues, with they do?” he asked, referring to the large number of Uzbekistan accusing Tajikistan of endangering its Tajik migrant workers already in Russia. “They are agriculture with the Rogun hydropower project. This idle. Only at the mosque can one get a sense of has led to occasional rail blockades of construction commonality.” materials destined for Rogun. According to French Shirinov agrees, warning: “The threat of certain Ambassador Zipper de Fabiani, “Rogun should be forces pushing the country into the abyss of religious looked at rationally. I am not convinced by the fanaticism should be prevented.”

neighboring Kyrgyzstan and Kazakhstan. And it will push the World Bank and the Asian Development Bank to accelerate implementation of the CASAREM regional electricity market linking Kyrgyzstan, Tajikistan, Afghanistan and Pakistan. Progress is also expected on a regional rail network. “Construction of the transnational railway for Tajikistan and Afghanistan will be carried out on a route from Kolkhozabad to Panji Poyon on the Tajik


side, and then Shir Khan-Bandar to Kunduz on the Tajik side, and then Sherhon-Bandar to Kunduz on the Afghan side,” he explained. “Western investment could be also very important in the realization of this project. China, Iran, Afghanistan, Tajikistan and Kyrgyzstan want to participate, and last December Turkey expressed its willingness to join. Realization of this project is a good example of Asian regional cooperation, and will also help Tajikistan end its isolation and gain access to the sea.”

April 2011


Development Agencies Play Crucial Role in Tajikistan


important to put this country on the map,” said Chiara Bronchi, World Bank resident manager in Dushanbe. For instance, Bronchi noted that the lack of media coverage has left Tajikistan off the radar screens of traditional donors. This is especially These groups also play a critical role in funding acute during natural projects and technical assistance that are developing disasters like the deadly this poverty-stricken country. May 2010 flash floods in “The government is very open to listening to Kulob that caused more opinions and advice coming from international donors than $600 million in and the IFI property damage. [international “When the financial institutions] mudslides community,” said Ulf happened in Hindström, local southern Tajikistan, office director for the I immediately European Bank for released emergency Reconstruction and funds, and Central Development Credit: Philip de Leon Command sent two (EBRD). planes to Kulob,” Rastislav JOJI TOKESHI, COUNTRY DIRECTOR FLOOD VICTIMS BAKING BREAD NEXT TO A RECENTLY COMPLETED REPLACEMENT HOUSE said Kenneth Gross, Vrbensky, Tajikistan FOR THE ASIAN DEVELOPMENT BANK U.S. ambassador to country director of the Finance Framework (www.taff.tj). United Nations Development Program (UNDP) agrees. Tajikistan. The program has helped to change how cotton and Humanitarian relief, however, is just one facet of “The government is accessible, and there is a political agriculture in general is financed. Tajikistan’s cotton the development work taking place in Tajikistan. will to cooperate, change things and improve.” industry is long known for having generated a cycle of International financial institutions focus on certain This political will is accompanied by efforts to debts for farmers who had to contend with a few activities according to their mandate, sometimes implement structural reforms. “investors” that had a monopoly on fuel, fertilizer, joining forces or pooling resources. They “The government understands that funds and seeds and equipment. TAFF helps break cover a wide spectrum of development resources will be hard to come by without reforms,” that cycle of dependency and debt. initiatives, with priorities as diverse as said Joji Tokeshi, country director for the Asian A similar agency, the Aga Khan poverty reduction, education, health Development Bank, who is also Development Network (AKDN), creates a care, environmentally sustainable chairman of the Donor Coordination sustainable business development model, growth and regional integration. Council, which works to improve the as evidenced by a concession deal the UNDP, for example, procures flow of information among donors, group obtained for the rehabilitation and medicine to tackle diseases such as government agencies and civil society management of the Pamir Energy HIV/AIDS and tuberculosis. It also institutions to help avoid overlap. hydropower plant. buys specialized equipment for The strengthened collaboration “We want others to replicate that model border guards and customs control. CHIARA BRONCHI, between international financial because it shows how to successfully run a Other agencies like EBRD provide institutions and the state is the result of WORLD BANK small hydropower plant,” said Munir financial and technical assistance. three strategic goals set by the Tajik RESIDENT MANAGER Merali, AKDN’s resident representative. He “In Tajikistan, our biggest government: ending the country’s ULF HINDSTRÖM, explained that electricity losses have been involvement has been in the banking system, communications isolation, ensuring its HEAD OF cut in half and that “Tajiks export electricity to about either as credit lines or equity stakes in a few energy security and ensuring its food OFFICE FOR THE 600 households in Afghanistan and they pay for it. This banks,” said Hindström. EBRD currently has security. EUROPEAN BANK has been a wonderful story for us.” interests in three Tajik banks: Agroinvestbank, It also dovetails the U.N. Millennium FOR RECONWorking in Tajikistan remains a learning curve, Bank Eskhata and Accessbank. Such credit lines Development Goals to eradicate poverty STRUCTION AND Tokeshi of the Asian Development Bank said — and equity stakes are crucial, Hindström noted, and promote health and education DEVELOPMENT explaining that it takes two to tango, and collaboration because bank assets comprise to only 20 percent worldwide. To implement these goals, between development and government officials of Tajikistan’s GDP. Tajikistan has adopted a National Development remains the key to success. “We are learning to be EBRD also supports the diversification of Strategy until 2015 and a Strategy for Poverty more flexible and less dogmatic, and to see how the Tajikistan’s farming sector — including the cotton Reduction. Tajiks think.” subsector — through TAFF, the Tajik Agricultural “Tajikistan is a donor orphan, and it is extremely

he presence of international organizations in Tajikistan and the steady stream of procurement bids they regularly announce are creating major opportunities for foreign investors.

“ April 2011

The government understands that funds and resources will be hard to come by without reforms. — Joji Tokeshi, country director for the Asian Development Bank


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