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Update No: 259 - (25/07/02)

The Tajiks are doing well from the campaign against terrorism. It is not just that Western, especially US aid is flowing, but that the whole geopolitical context is transformed and they are now far better known in the world at large. From being a remote backwater they are now on the front line, no longer just hosting Russian and US troops but those of the US and France as well.

The benefit of Afghan pacification
The new government in Afghanistan is a triumph for the Northern Alliance, in which ethnic Tajiks are prominent. Just over one year ago they were languishing; now they are a dominant part of the new Afghan government. With the Taleban out, the domestic rapprochement within Tajikistan is stronger. Moderate Islamicist forces and the ex-communists are cooperating.
President Imomali Rakhmonov is an ex-communist whose support is in the northern province, Leninabad, the industrial centre of the country, and around the capital, Dushanbe. He is a shrewd operator, less dictatorial in style than Karimov or Niyazov, his Uzbek and Turkmen counterparts, but very much in charge.

The US ally
The great thing is that the Tajiks can now balance the Americans against the Russians. They are no longer just Central Asian stooges of Moscow. Some 20,000 Russian troops will remain, but they are no longer the symbol of a subservient posture.
The US is extending US$125m, not a small sum for a small, remote state. No strings are being attached. The economy is in poor shape basically, with acute water shortages for the last three years. But international attention is being directed Tajikistan's way. Tajikistan occupies 103rd place among the 174 countries on the Human Development Indicator.

Economy on the mend
Rakhmonov is targeting poverty reduction as a top priority. The growth rate of GDP has been highly satisfactory of late, albeit from a low base, being 8.3% in 2000, 10.2% in 2001 and a prospective 6% this year.
Also highly gratifying is that foreign direct investment shot up in 2002, to US$200m, from being negligible beforehand. Tajikistan is at last on the investment map.

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ENERGY

Foreign loans provided for Tajik power project

The World Bank will give Tajikistan three credits worth a total of US$32.5m. Agreements on these credits were signed in Almaty on 3rd July, Asia-Plus News Agency has reported. 
Alongside the World Bank, two separate lenders, namely the Swiss government and the Aga Khan Fund for economic development, are taking part in implementing a project to complete the construction of the Pomir-1 hydro-electric power station and to put it into operation. They allocated US$5m and US$7.5m respectively. 
The Pomir-1 hydro-electric power station will supply the mountainous Badakhshon Autonomous Region with electricity. The project provides for the completion of the construction of the Pomir-1 hydro-electric power station and for doubling its capacity so that it can generate up to 28 MW of electricity.

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FOREIGN LOANS

Tajikistan, World Bank sign three loan agreement

The World Bank and the Tajik Cabinet signed three loan agreements in the bank's Central Asian office in Almaty recently, Interfax News Agency has reported. 
The agreements were signed in line with three projects run by the International Development Association, a division of the World Bank. The projects include funding the second stage of the poverty alleviating project (US$13.8m), rebuilding the Dushanbe water supply system (US$17m) and completing the construction and providing start-up funds for the Pamir-1 hydraulic power station. In addition to the IDA's US$10m, the International Financial Corporation, also a division of the World Bank, will contribute US$7.5m to the latter project. 
The poverty alleviation project will be an extension of a similar pilot project and cover the entire country. Its goals include helping victims of the recent civil war, introducing a transitional economy and post-conflict reconstruction. 
Under the project, grants will be made available to 440 low-income communities in order to create jobs and rebuild the infrastructure, provide technical and training aid to local non-governmental organizations and finance the institutional development of the National Social Investment Fund of Tajikistan. 
The repairs for the Dushanbe water supply system will enhance its safety and efficiency.

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TELECOMMUNICATIONS

Japan, EBRD provide further support for Tajiks telecoms

Japan is providing a further €300,000 to complement the EBRD's ongoing support to the Government of Tajikistan in developing its telecommunications regulatory framework. The contribution from the Japan Europe Cooperation Fund will help finance the second phase of a programme that aims to create a fairer and more transparent telecoms operating environment, which will ultimately encourage further investment into the sector.
Japan has now contributed more than €2m to support change in the Tajikistan telecoms sector. Nuridin Mukhitdinov, the country's Minister of Communications, said the funds have played a critical role. "Tajikistan has commenced on the path of regulatory reform in accordance with international standards to make a level playing field in order to attract new investment into the sector," he said. "We have made a good start under phase 1 of the EBRD project, and this new funding from Japan will enable us to continue this vital work."
Kunimitsu Yoshinaga, the EBRD Board Director representing Japan, said Tajikistan is recognised as an important country for Japan, which is glad to make a modest contribution to important structural reform in Tajikistan's telecommunications sector. "Japan stands ready to support development and transition in Tajikistan," Mr Yoshinaga said.
The EBRD's Institutional Development Technical Assistance programme, amounting to €1.1m complements the US$13m (€13.3m) loan for modernisation of Tajikistan's fixed-line telecommunications network that was signed between the Bank and Tajiktelecom in October 2001.
Under Phase 1, Tajikistan set out key milestones, including further liberalisation of the market, establishment of an independent regulator and privatisation of state-owned incumbent operator, JSC Tajiktelecom. In April, the Parliament passed a new Telecommunications Law, and much work has been done to develop the regulatory function. Under Phase II, this work will be extended to encompass account licensing, interconnection and tariff policies, and clear responsibilities for the various players in the sector.
Lizzet Guney, Director of the EBRD's Telecommunications, Informatics and Media Team, said it is important that the modernisation of Tajikistan's network infrastructure is complemented by modernisation of the legal basis for the sector. He also expressed appreciation of the continued support of Japan as a major provider of donor finance in Tajikistan and in other countries.
For more information contact Jazz Singh, EBRD, tel: +44 7802 510707, e-mail: Singhja@ebrd.com.

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