Tag Archives: Tajikistan

Central Asian leaders prepare to welcome Russian president Putin

Tajik aluminium smelter and Rusal near deal

FEB. 16/17 2017 (The Conway Bulletin) — Talco, the Tajik aluminium smelter owned through a series of offshore companies by the family of President Emomali Rakhmon, has struck a deal to end a long-running dispute with Russia’s Rusal, both Eurasianet and RFE/RL reported.

A court in 2014 ruled against Talco, in a ruling that focused on a breach of contract a decade earlier, meaning that it needed to pay Rusal up to $375m.

Now, Eurasianet and RFE/RL reported, Talco will pay Rusal the full amount it has been fined plus an extra sum for control of the Hyatt hotel and a business centre in Dushanbe, which Rusal had owned.

The deal appears to allow both sides to save face and also for Rusal to quit Tajikistan.

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(News report from Issue No. 317, published on Feb.17 2017)

More jobs needed in Tajikistan, says World Bank

FEB. 14 2017 (The Conway Bulletin) — Tajikistan desperately needs to create more and better jobs if its economy is going to grow at a sustained rate, the World Bank said in a new report. In its report, the World Bank said that only 43% of Tajiks of working age were in the job market. Remittances sent home from workers, mainly in Russia, is the biggest generator of GDP growth for Tajikistan.

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(News report from Issue No. 317, published on Feb.17 2017)

Comment: Central Banks face mess of their own making, says Kilner

FEB. 17 2017 (The Conway Bulletin) — First came the oil price collapse, then remittance flows started stagnating and (some) currencies (think of the tenge and the Azerbaijani manat) halved. Now the debt mountain, or perhaps debt tsunami is a better description, looms large, threatening to drown the countries of Central Asia and the South Caucasus.

Kazakhstan is the latest to propose a major bailout of its banking sector. Finance minister Bakhyt Sultanov said on Feb. 13 that the government would potentially use $6.3b to prop up banks listing under the weight of bad loans. The Tajik government is in talks with the IMF to borrow cash to help prop up its banking sector and in Azerbaijan the government has been, as quietly as possible, buying up chunks of the biggest bank. It now owns more than 76% of the International Bank of Azerbaijan, allowing it to smooth out its debt crisis without attracting too much attention.

Ratings agencies and analysts have been warning of this denouement.

As long ago as December 2015, Standard & Poorsratings agency said: “Medium-term prospects for Kazakhstan’s banking system have deteriorated in 2015 due to lower oil prices, the economic slowdown (especially in non-extractive sectors) and the weaker tenge.”

And that prediction has been borne out.

The frustration is that we have been here before. In the Global Financial Crisis of 2008/9 bad debt built up in banks in Kazakhstan forcing the government to step in. It bought out BTA Bank, at the time one of the country’s biggest lenders, and a handful of smaller banks. It was expensive but staved off disaster and the Kazakh government pledged not to find itself in a similar position again.

The government finally offloaded BTA bank to pro-government businessmen in 2014/15 and proposed to impose rules and regulations that would require its banks to bulk up their capital and refrain from handing out loans, mainly mortgages, to people unworthy of them.

Clearly, the Kazakh Central Bank and other regulators across the region, have failed. Certainly they have not been helped by the sharp currency devaluation that made US dollar-denominated mortgages unserviceable.

Better macro-economic policies, tighter rules on lending and a more clear-headed approach to dealing with problems would surely have put the Central Banks in better positions than they now find themselves. Governments in the region are once again having to buy themselves out of trouble.

By James Kilner, Editor, The Conway Bulletin.

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(News report from Issue No. 317, published on Feb.17 2017)

Tajikistan-Uzbekistan flight resumes

FEB. 10 2017 (The Conway Bulletin) — >> So what has happened? I’ve read that a commercial flight has flown between Dushanbe and Tashkent

>> Yes, that’s right. This was the first commercial flight between the Tajik and Uzbek capital since 1992. In 1992, Tajikistan was just tipping over into a civil war when commercial flights were scrapped but they were never re-instated after the war petered out a few years later. By this time Emomali Rakhmon had secured himself as the president of Tajikistan, a position he still holds. Uzbekistan was then ruled by Islam Karimov, who died in September last year. The two men loathed each other, Karimov was notoriously cantankerous and Rakhmon is quarrelsome.

>> So, the row was entirely personal?

>> Much of it was but there was also a macro-political and economic angle too. Tajikistan has long-planned to build a dam at Rogun in the Pamir Mountains. This was a Soviet-era plan that never moved from the drawing board into reality. Tajikistan, though, needed to generate more electricity and has been looking for backers for years. And this irritated Uzbekistan and Karimov who argued that the dam would damage water flows downstream where Uzbek cotton fields needed to be irrigated. At times the row became so heated that it threatened to spill over into war that may have dragged in neighbours.

>> What has changed?

>> Karimov’s death in September changed Uzbekistan’s foreign policy outlook. The new president Shavkat Mirziyoyev has been far more positive in promoting relations with Uzbekistan’s neighbours. This has included Kyrgyzstan and Tajikistan. The resumption of a commercial flight between the two capitals may feel a bit of a token gesture but it is actually a very significant step forward for bilateral relations. Rakhmon actually invited Mirziyoyev to Dushanbe for a bilateral meeting last month. This was something that would have been unimaginable under Karimov.

>> And now that flights have resumed, what can we expect?

>> The first flight was operated by Somon Air, a Tajik airline. It is likely that the airline will look to set up a regular service between the two cities. And just making that link, just having it there, is an important part of the heeling process for the region. It’s blighted by complex borders, thanks Stalin, and disparate pockets of ethnic groups, making travel links important. This is especially so between Tajikistan and Uzbekistan. Many of the people living in Uzbekistan are ethnic Tajiks. Previously, to travel between the two cities, people had to make tortuous road trips that would take days.

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