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WEEKLY NEWSLETTER
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Tajikistan
Index
As the economic reforms of the Gorbachev regime relaxed restrictions on
foreign business activity in the Soviet Union in the last years of the
1980s, Tajikistan began to make economic arrangements with foreign
businesses. Despite some interest on the part of the Nabiyev regime in
arranging joint ventures with foreign firms, only four such agreements
were reached in 1991, and just six more were concluded by 1992. One of the
joint-venture agreements of that period brought United States investment
in the manufacture of fur and leather products in Tajikistan. Israeli
businesses began irrigation projects in Tajikistan in 1992. A deal with
two Austrian companies called for construction of a factory to produce
prefabricated housing and other buildings to be financed by US$3.5 million
raised from cotton export funds. A similar construction agreement was
signed in 1992 with Czechoslovakia. In 1995 an Italian company began
construction of a textile factory in Tajikistan. One of the most important
foreign undertakings in the country was a joint venture with a Canadian
firm, the Zarafshon Mining Project, to mine and process gold at three
known sites in the Panjakent area of northwestern Tajikistan and to
prospect in an area of 3,000 square kilometers for additional deposits.
The agreement was concluded in 1994; production began in January 1996.
The post-civil war government has emphasized cultivation of economic
relations with a variety of Western and Middle Eastern countries, China,
and the other former Soviet republics (see table 17, Appendix). In 1991 an
Afghan company opened shops in Dushanbe and the northern city of Uroteppa
to sell clothing, textiles, fruits, and nuts that the company shipped into
Tajikistan from Afghanistan and other countries. The company also planned
to export textiles woven in Tajikistan. In 1992 fourteen people were sent
from Tajikistan to Turkey to study banking procedures.
Iran and Pakistan
In the early 1990s, Iran pursued economic cooperation as a means of
expanding its regional influence by assuming part of the Soviet Union's
role as the major customer for Tajikistani exports. The first foreign firm
registered in Tajikistan was Iranian. In 1992 pacts were signed for
cooperation in the spheres of banking and commerce, transportation, and
tourism; a joint company, Tajiran, was established to handle bilateral
trade. In October 1992, Iran declared its intention to buy 1 million tons
of cotton and 400,000 tons of aluminum (a figure that exceeded
Tajikistan's entire aluminum production for 1992).
The two countries continued to make economic cooperation agreements
into the mid-1990s. Iran loaned Tajikistan US$10 million to be used to
stimulate exports and imports while offering assistance in dealing with
the costs of imported energy. In 1994, the two countries established a
commission to promote bilateral economic and technical relations. In 1995
Iran agreed to pay for Tajikistan's importation of natural gas from
Turkmenistan; Tajikistan then was to reimburse Iran in cotton rather than
currency.
Pakistan extended US$20 million in credits to Tajikistan in 1994 for
the purchase of Pakistani goods. However, the most ambitious parts of the
cooperation plans between the two countries, the completion of the Roghun
hydroelectric dam and the highway between the two countries, fell through;
the reasons included Pakistan's own economic problems, political
opposition in Tajikistan to allocating state funds on such a large scale
to a foreign country, and the continued turmoil in Afghanistan and
Tajikistan.
The United States
In 1992 newly independent Tajikistan and the United States expressed an
interest in developing trade relations. President Nabiyev made an urgent
plea to a delegation from the United States Congress for development
assistance, especially in the area of natural resource use. At about the
same time, Tajikistan made a barter trade agreement with a United States
company to exchange dried fruits from Tajikistan for bricks, greenhouse
equipment, and consumer goods from the United States. In 1992 the United
States offered Tajikistan credits to use for the purchase of food, and the
United States Overseas Private Investment Corporation made an agreement to
provide Tajikistan loans and other assistance to promote United States
investment. In 1994 the United States established the Central
Asian-American Enterprise Fund to provide loans and technical expertise
that would promote the growth of the private sector in all the Central
Asian states. Generally, however, the level of United States involvement
in Tajikistan has remained very low. The first significant undertaking in
Tajikistan by a United States firm was a US$40 million textile mill
established in 1995.
Russia and the CIS
After Tajikistan achieved independence, it maintained extensive
economic relations with other former Soviet republics individually and
with the CIS. Relations with the CIS and the Russian Federation preserved
some characteristics of Tajikistan's relationship with the Soviet central
authorities. Until 1995 Tajikistan remained in the ruble zone rather than
establishing its own national currency, as the other four Central Asian
republics had done.
In the meantime, Russia retained the dominant position in the CIS and,
hence, in commerce with Tajikistan that the Moscow government had enjoyed
in the Soviet period. Russia and Tajikistan undertook to maintain their
bilateral exchange of goods at existing levels as the republics made the
transition to a market economy. In 1992 some 36 percent of Tajikistan's
imports came from Russia, and 21 percent of its exports went to Russia;
about 60 percent of total external trade was with CIS countries, and 45
percent of exports went to those countries. In 1992 a bilateral agreement
called for Tajikistan to send Russia fruits and vegetables, vegetable oil,
silk fabrics, and paint in return for automobiles, televisions, and other
consumer and industrial goods.
Post-civil war Tajikistan was heavily dependent on Russia for fuel and
other necessities. In 1993 Russia made another barter agreement, by which
Tajikistan would send Russia agricultural products, machinery, and other
goods in return for Russian oil. Despite the agreements, trade between the
two countries encountered serious difficulties. In the 1990s, a sharp drop
in independent Tajikistan's cotton production caused it to fall far short
of the deliveries promised to Russia. This development impeded
Tajikistan's ability to pay for vital fuel imports and disrupted Russia's
textile industry. Nevertheless, private bilateral commercial activity
expanded to some extent. By 1995 more than twenty Tajikistani businesses
had made joint-venture agreements with Russian enterprises.
Membership in the ruble zone required Tajikistan to cede control over
its money supply and interest rates to Russia and to comply with the
regulations of Russia's central bank. After the civil war, Russia provided
a majority of the funds for Tajikistan's budget and had considerable
influence over budgetary policy. Russia also sent periodic infusions of
cash to the Dushanbe government.
As the old interrepublic delivery system decayed at the end of the
Soviet era, Tajikistan, like other republics, reduced sales of some
commodities and consumer goods to other republics. At the same time,
direct agreements were made with several republics to place commercial
relations on a new footing. These pacts included statements of principle
on economic cooperation and general promises to deliver products from one
republic to the other and to set up joint ventures. In 1992 such
agreements were made with Georgia, Armenia, and Belarus, and a separate
trade agreement called for Turkmenistan to send Tajikistan natural gas and
various other goods in exchange for aluminum, farm machinery, and consumer
goods.
One of Tajikistan's most important trading partners among the Soviet
successor states is Uzbekistan, the source of most of its natural gas
since independence. In 1994 the two countries concluded a barter
agreement, which the International Monetary Fund (IMF--see Glossary)
subsequently criticized as disadvantageous to Tajikistan. According to the
agreement, Uzbekistan was to send Tajikistan natural gas, fuel oil, and
electricity. In return, Uzbekistan was to have mining rights to various
metals in Tajikistan, which also would supply electricity to locations in
southern Uzbekistan lacking generating capacity, as well as cotton,
construction materials, various metals, and other goods. In 1995
Uzbekistan halted its natural gas deliveries several times, citing
nonpayment by Tajikistan.
In the mid-1990s, the uncertain condition of Tajikistan's economy left
the country in a weak position to conduct foreign trade. The balance of
trade was consistently unfavorable; in 1994 imports exceeded exports by
nearly US$116 million, and by 1995 Tajikistan's foreign debt exceeded
US$731 million. Imports consisted mostly of food, energy, and medicines.
The main exports were aluminum and cotton, with a large share of the
production of both commodities earmarked for export. The income derived
from cotton and aluminum sales went largely to pay for Tajikistan's energy
imports, to repay foreign debts in general, and to cover government
expenses.
Data as of March 1996
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