|Map of Tajikistan View Larger.|
Editor’s Note: Ask most Americans whether they know where Tajikistan is and you are likely to get a blank stare, even though this former Soviet Republic and now independent country of seven million inhabitants occupies a geopolitically sensitive location at the core of Greater Central Asia, bordering Afghanistan, China, Iran, Kyrgyzstan and Uzbekistan. In a recent visit, Senior Fellow Johannes Linn assisted nine of Tajikistan’s main international donor agencies in the preparation of a joint country assistance strategy, a key step in improved coordination among the Tajik government and the country’s international partners. In this note he reflects on the country’s ten years of transition from civil war to peace, from deep economic recession to sustained growth, and most recently from facing good prospects to confronting serious risks. Tajikistan’s success or failure in working through its current crisis may well be a barometer of Central Asia’s long term prospects.
Dushanbe , Tajikistan , June 1, 2008 – A foreign visitor arriving now for the first time in Dushanbe, the capital of Tajikistan – a country with a per capita income in 2006 of $390, ranked 187th in the world out of 209 countries, just ahead of Tanzania, according to the World Bank–, may well marvel at the pleasant look of the city, with its stately boulevards flanked by lush tall trees and by rows of graceful buildings with inviting overhanging roofs carried by Persian-style colonnades. Little reminds the visitor of the dire past winter, when weeks of deep freeze brought the city to a near stand still as the country’s electricity supply failed. The majority of the inhabitants could not heat their homes, businesses had to close down, and schools and hospitals could barely function. Even less could one imagine the way the city greeted the visitor ten years ago, when I arrived for my first visit to Tajikistan as the World Bank’s Vice President for the Europe and Central Asia Region.
In 1998 Tajikistan was in the early stages of a very fragile peace after years of a deadly civil war. There was still fighting in the outskirts of Dushanbe and parts of the country were inaccessible to the government and to most foreigners. The future of the government of President Rakhmon (then Rakhmonov) seemed at best uncertain. The country’s economy was in a severe recession, Tajik GDP having dropped by about 60% from the level of 1990, the year before the breakup of the Soviet Union. 80-90% of the population lived in poverty. The administrative capacity of the government was in shambles, incomparably worse than today. There were virtually no active foreign aid donors, except for those who provided humanitarian assistance. To make matters worse, Russia’s financial crisis in August 1998 hit the prospects for the countries of the Former Soviet Union. So no end of Tajikistan’s economic decline seemed in sight.
As one now looks back on Tajikistan’s development since 1998, it turns out that the unexpected happened. President Rakhmon and his government established political stability. Rapid economic recovery began in 1999 and was sustained since then with average economic growth at levels between 7-9 percent per year. This helped to reduce the poverty rate significantly, even as it remains at a high level today (estimated at over 60%). There is now a significant donor presence and aid levels have increased. Economic management capacity, while still severely limited, has improved. In fact, Tajikistan has been rightly hailed as a rare success story of post-conflict reconciliation and reconstruction, especially when compared with its immediate neighbor to the south, Afghanistan.
However, over the last 12-18 months, difficulties started to emerge. These are likely to shape the immediate future of the country in three key areas: in the political arena, in the economy, and in the regional context.
In the political arena, the success of pacification contained the seeds of long-term troubles. It is now clear that two elements were critical for successful peace making in Tajikistan: first, the wide distribution of “spoils” to the main combatant leaders and the opposition – this involved the allocation of privatized assets and of government positions; and second, the gradual centralization of power and control by the President. These two steps created the essential prerequisites for post-conflict stability, by assuring the buy-in of most major players and central government’s control over the country’s geographically, ethnically and politically fragmented territory.
While helpful for peace and stability in the aftermath of conflict, this combination of factors also created troublesome political dynamics that are not unusual for countries with autocratic governments. The virtual absence of political participation and competition, the lack of transparency and accountability in the political system, and an increasing concentration of political and economic power in a limited group of individuals closely associated with or related to the President in the longer term may well lead to dissatisfaction and disenchantment at the base as people lose faith in the one-time popular leadership. These factors also create the potential for intra-elite conflict over the distribution of power. The resulting tensions present threats to long-term political stability as the examples of Indonesia under President Suharto and of neighboring Kyrgyzstan under President Akaev have demonstrated.
In the economic sphere, parallel and related dynamics are at work. The concentration of key national economic assets (the giant aluminum company TALCO, the national airline and other state-owned enterprises, cotton production, etc.), of governmental posts and of the regulation of the economy in the hands of a limited elite has slowed Tajikistan’s progress with establishing an effectively functioning market economy and has resulted in poor economic management. It also has limited foreign investment and created great difficulties for effective management of external assistance. Rapidly growing remittances from hundreds of thousands of migrants to (mostly) Russia propped up the Tajik economy in recent years, but now the economic stresses are becoming increasingly apparent.
In the regional context, too, positive trends are undermined by negative developments. On the positive side, the defeat of the Taliban in Afghanistan after September 11, 2001 brought a dramatic reduction in security threats and permitted the establishment of a relatively open border between Tajikistan and its southern neighbor, even as Tajikistan’s access to the Pakistani ports on the Indian Ocean remains limited by continuing insecurity in Afghanistan and by problems with infrastructure and transit. Another positive regional factor has been the strong economic growth during recent years among Tajikistan’s Central Asian neighbors and of China and Russia. Central Asia is at the hub of a highly dynamic and rapidly integrating Eurasian supercontinent. This is a significant driver of growth for the region as a whole and also for Tajikistan. Finally, among the positives is the emergence of an increasingly active and effective regional economic coordination mechanism, the Central Asia Regional Economic Cooperation Forum (CAREC), which consists of eight countries in the broader Central Asia region and of six multinational institutions. CAREC supports regional economic integration by implementing regional trade, trade facilitation, transport and energy strategies.
However, two regional factors limit progress and create potential risks for Tajikistan. First, lack of agreement between Tajikistan and Uzbekistan about how to manage the highly integrated cross-border regional transport and energy infrastructure imposes many constraints on Tajikistan’s ability to trade, and specifically limits it access to gas imports and its ability to market electricity exports. This forces Tajikistan to seek costly infrastructure and trading routes by- passing Uzbekistan. Second, there is the increasing threat of a regional water shortage, which may significantly raise the risks of regional tensions over the allocation of scarce water resources between upstream and downstream countries in the Aral Sea basin. (Read Water-Energy Links in Central Asia: A Long-Term Opportunity and Challenge.)
As a result of the interplay of these political, economic and regional forces Tajikistan now faces the threat of three actual or impending crises at once: First, there is the immediate and highly visible economic crisis caused by the closely interrelated threats to energy, water and food security that were so painfully brought to light during the last winter (read The Impending Water Crisis in Central Asia: An Immediate Threat) and that recently have been compounded by the country’s macroeconomic difficulties. At the root of this crisis is a combination of poor economic management, regional factors (barriers to trade and transit) and worldwide trends (food prices and global warming).
Second, and less visible so far, there is a potential crisis of domestic political stability. Popular frustration about the economic hardships and about deterioration of public services has so far been kept in bounds by the safety valve of outmigration and by the fact that Tajikistanis remember the suffering caused by the civil war and eschew violence to solve their problems. But these factors may not hold back a sense of anger and betrayal forever, unless the economic crisis is quickly and effectively resolved. A further risk to domestic political stability may come from tensions among key power centers in the country, although the opaque political process and the absence of free and strong media in Tajikistan make it difficult to judge this risk.
Third, there is a crisis in the external perception of Tajikistan, reversing what had been an improvement in its reputation and credibility. The news from Tajikistan reported to the world in the international press and electronic media today is generally bad. And some diplomats even talk about Tajikistan as a “failed state”. This turns off foreign investors, undermines donor support and makes it difficult to attract good staff and consultants for externally funded projects.
In the face if this triple crisis there are some positive signs: First, the government has begun to address its macroeconomic and structural issues in connection with a new IMF program. Second, traditional aid donors are pulling together in the face of the emerging crises, as witnessed by the immediate joint response to the food and energy problems since last winter, and by the preparation of a joint donor assistance strategy, an important coordination process that is now starting. The willingness shown by President Rakhmon and his economic team to engage in this process is encouraging. Third, new aid donors (including China, Iran and Russia) appear to be developing a realistic assessment of government capacities to administer inflows of aid and appear ready to engage with the traditional donors in seeking common approaches for an effective support of Tajikistan.
What can be done if Tajikistan is to work its way out of the triple crises that it faces. Foremost, the government will have to grasp the seriousness of the situation and work on all fronts – political, economic and regional – to address the challenges it faces. It will have to contain the immediate macro-economic, food and energy risks, while also signaling a clear commitment to reform its economic structure and management. It will have to introduce greater transparency and accountability, achieve greater market-driven efficiency, and create more favorable conditions for private investors from outside the traditional elite. This means a major reversal of political and economic directions of President Rakhmon and his cabinet and will not be easy. But for someone who has created peace out of the ashes of war, who has forged progress out of disaster, and who has conveyed a sense of smart realism when confronted with great challenges in the past, this should not be an insurmountable task. It does require the recognition that the long term prosperity and stability of the country, and hence also of its elite, is possible only with fundamental change.
Tajikistan’s external partners can help bring about this change in direction. First, they should not write-off Tajikistan as a “failed state”. The country is a “fragile state” in the sense that it’s public and private capacities, institutions and policies are weak and under pressure. However, there is no inevitability to the country’s failure or its government’s inability of managing a transition to a better future. Tajikistan is a regionally and geopolitically important country where principled, clear-sighted and constructive engagement is necessary and appropriate.
Second, the donor community, including China, Iran and Russia, needs to pull together in engaging the President and his government and in supporting the country at this critical stage. It appears that the government is open to a serious engagement and indeed most of the internal critics of the current political establishment look to the outside partners for strong engagement.
Third, the external partners should focus on a limited number of key steps that will signal the government’s commitment to serious change: (a) effective implementation of the agreed IMF program (with its welcome emphasis on state-owned enterprise reforms in addition to the traditional macro economic stabilization measures); (b) reform of agricultural policies and institutions, especially in the critical cotton sector; (c) improvements in the investment climate, guided by a newly set-up Investment Council supported by the European Bank for Reconstruction and Development; and (d) effective engagement in the management of the immediate food and energy crisis.
Fourth, the international community should engage in helping improve the regional context which Tajikistan faces. This relates to the preparedness of the short term water and energy crisis , to cooperation on the long-term development of the region’s water and energy resources, and to improvements in its transport and trade links with the rest of the world.
In sum, Tajikistan faces three mutually reinforcing crises, each presenting severe challenges to the government and to the donor community on the ground. However, every crisis contains the seeds of opportunity. In the case of Tajikistan, the biggest opportunity now is that the current challenges will energize the government to move forward with urgently needed actions and reforms and will call attention to the need for effective and well coordinated support of the international community. Tajikistan’s success in overcoming its current challenges will be critical for the long-term prosperity and stability of Central Asia.
 Shahrbanou Tadjbakhsh, “International Peacemaking in Tajikistan and Afghanistan Compared: Lessons Learned and Unlearbed.” Les Etudes du CERI , No. 143, April 2008. Centre d’etudes et d recherches internationals, Sciences Po, Paris.
 Stina Torjesen and S. Neil MacFarlane, “R before D: the case of post conflict reintegration in Tajikistan”, Conflict, Security & Development, Vol. 7 (2), June 2007
 See UNDP, Central Asia Human Development Report, New York, 2005 http://europeandcis.undp.org/archive/?wspc=CAHDR2005
I think blended finance, development finance, is what’s needed, is the future. The U.S. is using a model that was created 40 years ago and I think it’s way past time for modernizing our capabilities.