EurasiaNet Business & Economics - Tajikistan: Government Shakes Down Population Amid Deepening Economic Dysfunction

BUSINESS & ECONOMICS

TAJIKISTAN: GOVERNMENT SHAKES DOWN POPULATION AMID DEEPENING ECONOMIC DYSFUNCTION
5/07/08

Channeling the spirit of Joseph Stalin, officials in Tajikistan, Central Asia’s poorest state, have asked residents in the capital Dushanbe to give up part of their salaries "voluntarily" to help finance construction of a hydropower plant. The fear of government reprisals is compelling many Tajiks to comply.

Makhmadsaid Ubaidullayev, the speaker of the upper chamber of Tajikistan’s parliament, as well as mayor of Dushanbe, first broached the idea of public contributions on April 29. He indicated that if every working individual in Dushanbe donated half of his/her salary for May and June, the state could raise roughly $10 million. Confident of a positive response, Ubaidullayev immediately instructed government agencies and state enterprises to withhold 50 percent of the salaries normally due employees.

For many working outside the public sector, Ubaidullayev’s request seemed absurd, given that government mismanagement is a major factor in the country’s current socio-economic crisis. Still, few people are willing to risk non-compliance. Government institutions are believed to be keeping track of who contributes and who doesn’t. Thus, many believe that those not obeying Ubaidullayev’s informal directive, especially if they operate small- or medium-sized businesses, will pay a far higher price in the very near future, via audits by the tax inspectorate or other legal difficulties.

Local observers say the move is certain to fuel anger and a sense of hopelessness among a large portion of Tajikistan’s population, which endured the misery associated with a severe lack of heating and power during last winter’s deep freeze. [For background see the Eurasia Insight archive].

Officials suggest that the money, raised by what amounts to an arbitrary and confiscatory tax, will be used to help finance the Rogun hydroelectric power plant, a long-stalled project that could shore up Tajikistan energy security. [For background see the Eurasia Insight archive]. Experts, however, say that the $10 million projected to be raised from the coerced assessment is monetarily insignificant given that, according to some estimates, it will take $1.5 billion to finish the Rogun project. Government officials, meanwhile, put the cost of completion at $550 million. Regardless of the construction costs, the government’s action is unjustifiable when considering that it stands to cause severe hardships for tens, if not hundreds of thousands of Tajiks.

A recent admission made by Shukurjon Zukhurov, the minister of labor and social protection, helps to illustrate the pain inflicted on the population. Zukhurov admitted that more than a half of Tajikistani live below the poverty line. The minimal monthly salary in Tajikistan is 20 somoni (less than $6), and the average salary at the beginning of 2008 was 213 somoni (about $60). Even in normal times, many Dushanbe residents would be hard-pressed to cover gaps created by what is effectively the theft of a month’s salary. But these are not normal times for Tajikistan. [For background see the Eurasia Insight archive].

The country is still reeling from the hardships created by the winter weather. On top of that, government malfeasance seems to have created a debt time-bomb. Over the past three years, the country’s external debt has almost doubled, climbing to $1.2 billion from about $683 million in 2005. How President Imomali Rahmon’s administration will be able to meet its debt obligations remains a mystery, as the government’s annual budget amounts to an estimated $700 million.

From the popular perspective, the situation is already dire. The country is suffering from runaway inflation, driven mainly by the rapid rise in prices for basic foodstuffs. According to data compiled by the State Statistics Committee, the cost of basic food products rose by about 20 percent in 2007. Unofficial data suggests that rising prices made a much steeper ascent, with the cost of some items rising by as much as 500 percent. Tajikistan’s overall inflation rate in 2007 was pegged at 19.7 percent.

The combination of poverty and inflation are threatening to create a social catastrophe. According to a recent statement issued by the UN World Food Program, 550,000 Tajiks are suffering from malnutrition, and roughly 260,000 are in need of "emergency assistance." The UN agency said about two-thirds of Tajiks were living in poverty.

Rather than take action that could alleviate the food crisis, the government literally seems preoccupied with cosmetic issues. On April 29, the same day Ubaidullayev was announcing the dam tax, President Rahmon issued a ban on tinting car windows.

Public anger might not be so great over making "voluntary" contributions to state coffers, if citizens believed the money would be devoted to the intended purpose. But many believe their hard-earned somonis will simply disappear into the country’s vast sinkhole of official corruption.

Several important pieces of evidence of corrupt practices have come to light in recent months. Perhaps the most notorious instance concerns the International Monetary Fund’s demand, made in March, that the Tajik government repay $47 million in loans. [For background see the Eurasia Insight archive]. On April 30, Tajik officials were compelled to agree to a joint monitoring program to monitor the future activities of the National Bank of Tajikistan, which had been accused by the IMF of fraudulent practices in connection with the loans.

Many Tajiks have also been shocked to learn that Rahmon’s administration has paid over $120 million in legal fees over the past three years to a British law firm in connection with an embezzlement case involving the Tajik Aluminum Plant. According to papers filed with a London court, the British firm continues to bill the Tajik government $11 million every month.

Given the depths of government venality, some observers note with irony that southern Tajikistan in recent weeks has been best by a plague of locusts. Over 76,000 hectares of arable land has been consumed by the pests so far. In all, about 200,000 hectares of cotton and wheat fields are under threat, according to the Asia-Plus news agency.

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