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Books on Tajikistan
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Update No: 320 - (31/08/07)
Troubled country
Tajikistan is a basket case, to use a mordant phrase. It is the poorest country
in Central Asia, and the poorest of the countries that became independent of the
Soviet Union in 1991. It then plunged into six years of civil war, which further
eroded employment in both agriculture and industry, that had been left to fend
for themselves after Moscow cut off traditional Soviet-era subsidies. Its trade
was sorely disrupted.
According to the latest statistical estimates, Tajikistan's gross domestic
product (GDP) in 2006 was $2.8 billion, ranking 145th in the world. The value of
gross national product, measured in real terms, has not recovered to the level
of 1992; but because of population growth, per capita GDP has been lagging even
further behind its pre-independence level.
There are just over 7 million Tajiks. Poverty and malnutrition are pervasive;
and so is corruption. In the latest country ranking available from Transparency
International, in 2006 Tajikistan ranked 142nd on the global Corruption
Perception Index; that is one of the world's worst.
Cotton and aluminium are the two industries on which Tajikistan's economy
depends. But the cotton crop has suffered from periodic drought, poor yields and
volatility of global prices, which have been falling for the past decade and
which are expected to continue falling.
The single largest income-earning enterprise is the Talco - the Tajikistan
Aluminium Plant. Its export earnings in 2006 were recorded by the International
Monetary Fund as amounting to $184 million out of a total export revenue for the
year of $383 million. That is one dollar in every two. Without remittances from
its workers in Russia, Chinese project finance and aluminium exports, Tajikistan
would die.
The EBRD is in town
The European Bank for Reconstruction and Development (EBRD) issues the seal of
creditworthiness without which commercial lenders would be reluctant to lend at
all in Central Asia. It is with the World Bank, an incredibly important player
there.
Its brief history started with the collapse of three entities; the Soviet
Union's economic bloc, Comecon; the Soviet military alliance known as the Warsaw
Pact; and then the Soviet Union itself in 1991. The EBRD wasn't a postwar aid
plan so much as a scheme for making sure the ignoramuses who were the communists
in Russia, and its neighbours, ceased their more doltish policies; and for
converting the black markets that had been underground and illegal into
legalized, privatised enterprises supportive of Western investment and imports.
At the time, the medicine the EBRD said it was trading was called reform.
In fact, the EBRD was capitalized by North Atlantic Treaty Organization
treasuries to finance replacements for the state-owned assets of their Soviet
enemies, and buy equity in selected local entrepreneurs and syndicates. The EBRD
has done well at its trade. The EBRD also reports a substantial profit each
year. But for all its preaching transparency to its clients, the EBRD has not
acquired total frankness. Once in a while there is a slip.
The aluminium cock-up
Tajikistan is where, between June of 2006 and June of this year, the EBRD
decided that the creation of a private aluminium fortune, controlled by the
president of the country - the largest concentration of wealth in Tajikistan -
was a policy goal of such sensitivity, that the evidence that it was corruptly
acquired, and is corruptly maintained, should be suppressed.
Unique in the case of Tajikistan is that detailed evidence of corruption comes
from testimony given in hearings of the High Court in London, and also in
rulings issued by several English judges, in the first instance and in appellate
proceedings.
Also unique is the fact that the cases that have produced these English
judgments on corruption in Tajikistan were initiated on the orders of Tajik
President Imomali Rahmon and his chief prosecutor. Their litigation - which is
currently pending also in an affiliated British jurisdiction, the British Virgin
Islands - is the costliest boomerang ever to strike back at its thrower.
Legal fees running into several millions of pounds, compounded by a court award
and appeal judgment of US$150 million in indemnification, have already been
recorded against Tajikistan's most important state enterprise, the Tajikistan
Aluminium Plant (Talco). Several judges of the High Court in London, and the
International Court of Arbitration in London, have concluded alike that Talco is
a corrupt organization, a forger, a fraud and a dishonest wrongdoer. These terms
are taken from the judgments, which are public records and readily accessible.
The World Bank steps in too
The EBRD has been joined in the Tajikistan corruption programme by the World
Bank. First created in 1944, in the first flush of the military victories over
Germany and Japan, it has a global mandate similar to the EBRD's. To make sure
it doesn't go astray, the US government insists that the World Bank's chief
executive should always be an American national. That had embarrassing
consequences when the White House first foisted Paul Wolfowitz on the bank, and
then had to let him go, after embarrassing evidence was disclosed and confirmed
against him.
A US citizen supervises the EBRD's programmes in Tajikistan; she is Enery
Quinones, the chief compliance officer of the EBRD in London. According to the
biography posted on the EBRD's website, Quinones is a career specialist in
dealing with official bribery and corruption. Her mandate at the EBRD "as
head of the compliance office is [to be] responsible for ensuring that the
highest standards of integrity are applied throughout all activities of the EBRD.
The compliance office, which is also the anti-money-laundering office of the
bank, provides a range of advice and assistance to all bank departments in
assessing and evaluating integrity and reputational risks relating to proposed,
as well as ongoing, bank transactions."
Nationality is important, because the US Foreign Corrupt Practices Act applies
to US citizens, wherever they are, and for whomever they work, making them
individually liable to the US prohibition on knowing involvement in, or covering
up for, the corruption of foreign government officials.
To date, over the past decade the EBRD has committed a relatively small amount
of money to Tajikistan - 56.2 million euros ($76 million). It hasn't made a loan
to Talco, not yet; however, over the past year EBRD bankers have visited the
plant, discussed its future with government officials, and supported a series of
transactions between the plant and its partners, worth more than $1 billion a
year. The story of these dealings is one the EBRD is doing its best to keep
under wraps.
The World Bank has committed much more to Tajikistan than the EBRD has. In the
decade since 1996, the bank says, it has obligated $440 million, of which $337
million has been paid out; $86 million of that in the form of non-repayable
grants, and the rest in loans. The commercial lending affiliate of the World
Bank, the International Finance Corp (IFC), has invested another $36 million in
Tajikistan in the same period. Supervising whose pockets this money goes into
are a Japanese and a New Zealander - Shigeo Katsu is the vice president of the
World Bank for Europe and Central Asia; Annette Dixon, the regional director for
Central Asia.
Until English judges started issuing their findings on corruption in Tajikistan,
it was possible for the two banks, and these three individuals, to claim to know
nothing material about governmental corruption in Tajikistan. The court rulings
have changed that. And so each of the banks, and these individuals, were
recently sent a detailed questionnaire to determine what impact the UK court
rulings have had. That is when the cover-up began. Why the EBRD and the World
Bank should be turning a calculated blind eye to English court documents of
corruption in Tajikistan is at first difficult to appreciate. But the strategic
justification - that is to say, the campaign against Russia - doesn't take long
to uncover.
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