Less than a month after Tajikistan’s top government-sanctioned Islamic cleric condemned Iran as a haven for terrorists, Dushanbe has turned to Tehran with its desperate pleas for money.
Tajik media reported on February 18 that the head of the National Bank of Tajikistan met with the Iranian ambassador this week to discuss cooperation in banking and prospects for a renewed wave of inward investment.
Dushanbe appears to believe the lifting of sanctions on Iran have presented it with a timely opportunity. Iran’s banking system is yet to come out fully from under the rubble of the sanctions regime, and setting up shop in Tajikistan could be a way to get things moving again in their financial system.
Reality is a tough master, however, and there will be a lot of bad air to clear before anything materializes.
Relations between the two countries have historically veered erratically between warmth and antipathy. They are brought closer by linguistic and historic kinship. But Tajikistan also holds fast to resentments over what they say was Iran’s support of the armed opposition in the civil war of the 1990s.
And yet, Iran was the first country to establish diplomatic ties with Tajikistan’s after the collapse of the Soviet Union. And Tehran was one of the guarantors of the now-shredded postwar 1997 peace agreement, which assured a portion of government jobs to the opposition.
The Sangtuda-2 hydropower plant, which began operating in 2011, was constructed in part with $180 million of Iranian money. Iran also built, if that’s the word, the comically appalling Istiqlol tunnel, which links the center and north of Tajikistan.
A wrench was thrown in to the works in late December, when Iran welcomed Tajik opposition leader Muhiddin Kabiri, who is wanted back home on trumped-up charges of fomenting a plot to topple the government, to an Islamic-themed conference in Tehran.
On December 29, Kabiri met with Iran’s Supreme Leader Ali Khamenei for talks and was pictured as they exchanged warm greetings.
This felt to Dushanbe like Tehran reprising its treachery of the 1990s.
Unable to contain its indignation, the Foreign Ministry of Tajikistan fired off a diplomatic note to Iran noting its irritation that their hosting what they called the “head of a terrorist party.”
The head of Tajikistan’s Council of Ulema, Saidmukarram Abdulkodirzoda, who had to tolerate the indignity of being seated near Kabiri at the Tehran conference, went further.
At a Friday sermon following the conference, Abdulkodirzoda described Iran as an “abettor of traitors” and accused it of “openly supporting the enemies of the Tajik nation.”
Compounding the diplomatic awkwardness, Tajikistan’s President Emomali Rahmon decided in early January to visit Saudi Arabia, just as the Middle Eastern kingdom’s bitter exchange of rhetoric with Iran had reached its apex.
Rahmon’s plan for that visit appears to have been twofold — to convince his own population of his piousness and to pump the Saudis for some desperately needed cash.
With indecent haste, Tajikistan has now swallowed humble pie and decided to forget about its hurt feelings and reach out to Iran again.
Still, the experience of Iranian investment in Tajikistan is a far from happy one.
Consider the case of Iranian billionaire Babak Zanjani, whose international business empire once included assets in Tajikistan ranging from a bank and an airline to a taxi service and a bus terminal.
In addition to that, Western officials strongly suspect that Zanjani exploited his close links to Rahmon to use Tajikistan as a money-laundering hub for the proceeds of illegally traded Iranian oil, thereby circumventing international banking sanctions.
Zanjani was arrested in Iran in 2013 for allegedly salting away billions of dollars owed to his country’s Oil Ministry. After his arrest, Zanjani produced a document purporting to show that he had stashed the money with the National Bank of Tajikistan, a claim that Dushanbe heatedly denies. Even Iranian officials appeared disinclined to give that story much credence.
At the start of 2015, Tajikistan denied that Zanjani had ever invested in the country at all — a mind-boggling lie even by Tajik officialdom’s standards.
As the head of the government’s investment committee, Qodir Qosim, explained, Zanjani only attended the March 2013 opening of the refurbished Dushanbe bus terminal as an “honored guest.” (An honored guest indeed — here he is at the terminal-opening ceremony, smiling on the right-hand side of the shot and standing next to Rahmon).
Tehran is not best impressed with how things have gone down and would like to have Zanjani’s multimillion dollar Tajikistan investments handed over. It is difficult to see large volumes of Iranian money arriving in Dushanbe before that issue is settled.
Tajikistan’s appeals for financial support have gone into overdrive in recent months.
Aside from its overtures to Iran and Saudi Arabia, Tajikistan has recently hosted an International Monetary Fund delegation, which was reportedly on the receiving end of a plea for support.
And this week, Tajik Foreign Minister Sirojiddin Aslov traveled to Brussels for talks with European Union officials and managed to walk away with a pledge of 251 million euros ($279 million) in fresh development funding.
Every little helps.
The Finance Ministry plaintively admitted this week that government revenues for January fell short of requirements by 130 million somoni ($17 million at the current rate). Officials could not account for the shortfall.
Revenues in 2015 fell 3-4 percent of what was expected, although a slight surplus was registered in December, courtesy of a $60 million cash injection from the Asian Development Bank. (If Tajikistan has pocketed those funds for running costs, it appears to go against ADB assertions that they are earmarked for developing the private sector and promoting investment).
The planned 2016 budget has been estimated at 18.3 billion somoni (now $2.3 billion), which the government likes to point out is 20 percent higher than the amount earmarked for last year. Of course, the somoni has lost one-third of its value against the dollar since this time last year, so that in fact equates to a drop in foreign currency terms.
The Foreign Ministry concedes that around 1.5 billion somoni ($190 million) — half of the purported 3.3 billion somoni year-on-year boost in the budget — is expected to come from international grants and loans.