DUSHANBE (TCA) — As increasingly authoritarian President Emomali Rahmon has consolidated his grip on power in Tajikistan, his large family (including numerous in-laws) are taking control of the most lucrative business sectors in the country, squeezing out competitors with the help of servile government officials. We are republishing this article on the issue, originally published by Eurasianet:

When the chief executive of one of Tajikistan’s few banking success stories stepped down in February, something seemed odd. Surprise turned to amazement when the head of another flourishing lender resigned a couple of days later.

The recent shakeup at Eskhata Bank and Imon International, which are both privately owned, has little to do with finance, however. This is a story about politics and how the sprawling ruling family is deepening its control over a moribund economy, now increasingly at the expense of the country’s northern business elites.

Imon International, a microcredit organization, is relatively unusual for Tajikistan in that it turns a profit. And it is extremely unusual in that it was founded and, until recently, run by a woman.

The lender opened in 2005 and was an offshoot of the National Association of Businesswomen of Tajikistan, a support organization for aspiring female entrepreneurs. It was backed by multiple international financial institutions and has focused on helping small and medium businesses.

Nine years ago, 45-year-old Nazokat Hafizoda, decided to open a beauty salon and turned to Imon International for a loan. She needed $10,000 to land the premises and purchase equipment.

“My spouse and I drew up a business plan, the bank economist gave an assessment and we got the loan,” she said.

The salon, which goes under the name Noz, provides work for four other women. Once Hafizoda paid off her debts, she looked to expand further and took out another loan from Imon International, which agreed this time to offer a lower interest rate.

“Imon is a stable bank, that’s why I always turn to them. On the whole, they always help out women entrepreneurs,” she said.

Many recipients of credit from Imon International in rural areas of the north, where the lender’s business is predominantly focused, confirm this scenario.
Disbursements are often literally seed funds – money to buy the raw materials with which to sow fields. Other times, the cash is needed to buy some basic but essential equipment.

From 2015 through 2017, as the rest of the banking sector was falling to pieces, Imon International accumulated client deposits totaling 661 million somoni ($70 million).

The figures may not be huge, but to be in the black is an achievement in itself. Tajikistan’s finance sector is a wasteland of banks crippled by often-senseless lending policies. The government has had to step in with barely affordable rescue packages to save the most important victims of maladministration.

Despite Imon International’s outlier status, general director and founder Gulbahor Mahkamova suddenly announced on February 8 that she was stepping down to pursue further studies. Since leaving the bank, Mahkamova, who declined to speak to Eurasianet for this article, has moved to the United States.

Her replacement in this fundamentally woman-focused lender is Zakir Abdrashitov, who previously occupied a lower function in the company.

The tone of Mahkamova’s resignation statement at Imon was similar to a press release issued two days earlier by Eskhata Bank, which declared that in the interests of “improving the effectiveness of its operations,” it was letting go of its general director, Khurshed Nosirov.

Eskhata Bank is synonymous with northern Tajikistan. Its branches are a ubiquitous sight in Khujand, the capital of the Sughd region. ATMs are regularly stocked with cash – a far-from-certain guarantee at other banks in the country.

According to National Bank figures, the volume of deposits at Eskhata on January 1 stood at almost 930 million somoni ($105 million). That was a spike of 22.5 percent year-on-year – an especially notable point given the plunging trust in banks that has accompanied the financial crisis of the past few years.

There are widely circulating rumors that Mahkamova and Nazarov were summoned to the National Bank headquarters sometime in January and strongly advised to tender their resignations, but none of the stakeholders have been prepared to go on record to confirm that account.

“The general directors at Imon and Eskhata were forced out of their positions so that their banks would become less competitive. Compared with other problem banks, Imon and Eskhata seemed very trustworthy. This was a blow at their reputation. The trust people used to have in them will no longer be the same,” a banking sector expert told Eurasianet on condition of anonymity.

Public commentary in any remote way involving the ruling family can incite severe reprisals.

Tajikistan’s dozen or so banking institutions fall broadly into three camps. The near-dead, whose continued existence has been assured only by bailouts and whose activities revolve largely around struggling to pay out their disgruntled depositors. Then there are relatively flourishing institutions like Imon International and Eskhata Bank. And finally there are newer players who have appeared suddenly on the market with a flurry of slick advertising – namely Kommertsbank Tajikistan and International Bank of Tajikistan.

The background of this group indicates they enjoy a considerable advantage in the form of political patronage.

Kommertsbank Tajikistan’s website offers up some broad-stroke details about its history. Before rebranding in October, the bank went under the name Faroz and was a microcredit group. And one year before that, the lender was called Muzaffariyat. The original founder of the institution, Muzaffar Jumayev, told Eurasianet in a brief phone call that he set up the lender in 2006 and sold it on three years ago.

As to who owns Kommertsbank Tajikistan now, nobody quite knew until reporters quizzed National Bank chairman Jamshed Nurmuhammadzoda on the matter in February. Nurmuhammadzoda revealed that it is owned by a company called Faroz.

The revelation of that final piece of the puzzle was interesting but shocked nobody.

Faroz has since 2012 belonged to President Emomali Rahmon’s son-in-law, Shamsullo Sohibov. Prior to that, the company was controlled by Umarali Kuvvatov, an entrepreneur who was forced to flee Tajikistan and later set up a foreign-based opposition movement after getting embroiled in a business dispute with Sohibov.

“He squeezed me out of my business, and I was forced to flee Tajikistan urgently. The president’s family does not tolerate outsiders of any kind doing business in Tajikistan,” Kuvvatov told Moscow-based news agency Regnum in the summer of 2012, talking about his freshly created Group-24 opposition movement.

Kuvvatov was shot dead in Istanbul in 2015. Subsequent investigations into the killing largely fizzled out.

Sohibov, husband of President Rahmon’s third-eldest daughter, Ruhshona, has been uncannily fortunate in his dealings with rivals. Until recently, for example, his chain of Faroz gas-filling stations had two serious competitors – Russian-owned Gazpromneft Tajikistan and a company called Umed-88. But then in mid-October, Rahmon addressed a gathering of businessman to complain about Umed-88 owner Radjabali Odinayev, who the president accused of unscrupulously bilking bank loans. With Odinayev now facing prosecution, the fuel market has become suddenly roomier.

And then there is International Bank of Tajikistan. This company appeared in 2016 with a flashy advertising blitz offering loans to college students, teachers and doctors. The bank dangled money to be used for the cost of studying, holidays, home repairs and medical treatment. The promise of individualized repayment schedules was something new for Tajikistan.

Untangling ownership here too requires some patience. The company websites show that International Bank of Tajikistan is also a reformed microcredit group, previously called Standart Finansy. Tax Committee data show that Standart Finansy was in turn owned by companies registered to Jamshed Gulov, who currently also serves as deputy chairman of Gazprom’s Tajikistan affiliate.

Perhaps just as significantly, Gulov is the brother of Ashraf Gulov, who is married to Rahmon’s fifth-eldest daughter, Parvina.

BISHKEK (TCA) — The evolvement of China’s Silk Road Economic Belt initiative has boosted shipments from China to Europe and vice versa using the railway network of the Eurasian Economic Union (EEU) member countries, primarily Kazakhstan and Russia, according to the report titled Silk Road Transport Corridors: An Estimate of Potential Increases in Freight Traffic through the EEU, prepared by the Centre for Integration Studies of the Eurasian Development Bank (EDB).

Continue reading

ASHGABAT (TCA) — The customs of Turkmenistan has prohibited the import of blond hair colors as well as highlighting and hair bleaching chemicals, the independent foreign-based news website Chronicles of Turkmenistan reports.

Continue reading

KABUL (TCA) — About 40 percent of the population in Afghanistan has no food security, David Beasley, Executive Director of World Food Program (WFP) has said, TOLOnews reported.

Continue reading

ALMATY (TCA) — Authorities in Kazakhstan have raided the editorial offices of Forbes Magazine’s local edition, briefly detaining a senior reporter and seizing his notes and computer files, RFE/RL’s Kazakh Service reported.

Continue reading

BISHKEK (TCA) — Although Kazakhstan has big plans to develop its own aerospace industry, such plans are heavily dependent on Russia, which is leasing the country’s Baikonur Cosmodrome until 2050. We are republishing this article on the issue by Anna Gussarova, originally published by The Jamestown Foundation’s Eurasia Daily Monitor:

Russia has pledged to transfer 44.8 square miles of Baikonur Cosmodrome territory and two Zenit-M rocket launch platforms to Kazakhstan by the end of May 2018 (Iz.ru, March 1). This became possible thanks to the recent amendments to the lease agreement between the two countries, which was concluded this March, following years of negotiations. Several important conclusions can be drawn from this development.

Baikonur is of particular importance both to Russia and Kazakhstan. The latter has set ambitious goals to become a space power by the end of May 2018 (Abctv.kz, March 2). Although Kazakhstan is host to the world’s largest cosmodrome, until now the country has never possessed its own space launch infrastructure as Baikonur has been leased entirely by Russia since the collapse of the Soviet Union. Russia will continue to lease Baikonur—minus the aforementioned transferred portions—for $115 million annually until 2050.

Even though the Kazakhstani government has high expectations regarding the country’s space capabilities, the specific impact and benefits are more difficult to gauge at this point. Nonetheless, Kazakhstan’s recently established Ministry of Defense and Aerospace Industry is working to outline Kazakhstan’s strategic interests and goals in the space domain.

Kazakhstani-Russian cooperation on Baikonur has long been problematic. For instance, in early 2004, Presidents Vladimir Putin and Nursultan Nazarbayev agreed to start the Baiterek project that would result in the construction of a joint space launch complex for the Angara rocket (365info.kz, December 14, 2016). But financial disagreements and multiple delays eventually made this joint project impossible to implement. Other bilateral disputes related to Russia’s space program activities on Kazakhstani soil include environmental, health and tax issues (see EDM, June 10, 2015; June 21, 2017).

Currently, the division of labor between Kazakhstan and Russia at Baikonur looks quite peculiar. On the one hand, the Kazakhstani government will now possess its own launch platforms. But in reality, the only opportunity for the country to use this Zenit-M ground infrastructure will be to participate in joint projects with Russia, which owns and operates the actual rockets for these launch complexes (Tengrinews.kz, March 2). Specifically, these facilities will be used to launch the new Russian Soyuz-5 rockets. Thus, two countries agreed that Russia plans to develop the Soyuz-5 and Kazakhstan will be in charge of modernizing the older Zenit rockets. The feasibility study of upgrading the infrastructure at Baikonur is still ongoing. But according to estimates, the modernization of the Zenit launch pads will cost the Kazakhstani budget approximately $245 million (24.kz, September 14, 2017).

The idea for the new Soyuz-5 was born out of Russia’s need to pursue an import-substitution strategy as a result of Western sanctions and Russian counter-sanctions following the Kremlin’s aggression against Ukraine in 2014. The newly developed rocket will reportedly be built using entirely domestically produced Russian components—in comparison with 80 percent Russian-made elements in earlier rocket models. The first test launch of the Soyuz-5 from Baikonur is scheduled for 2022. The rocket will carry Russia’s new manned Federation spacecraft (Abctv.kz, March 2).

Meanwhile, Kazakhstan plans to establish a spacecraft installation and test complex in National Space Center by the end of 2018 (Kazinform.kz, February 25). More interestingly, the lessons of the failed Angara rocket cooperation will not prevent Kazakhstan from seeking to participate in future joint projects with Russia, including the super-heavy Phoenix carrier rocket, which will reportedly be flight tested starting in 2035 (TASS, March 31, 2017).

Progressively, Russia seeks to relocate its main space fleets to domestically located cosmodromes. The Russians currently working at the Zenit launch facilities that are being transferred to Kazakhstan, will be able to continue to work at the joint Baiterek facilities once they are complete, move to other Baikonur facilities still under lease by Moscow, or to Vostochny, in the Russian Far East. By 2020, the Russian space agency Roscosmos plans to decrease Baikonur’s share of Russia’s space launches from 65 percent to 11 percent, while increasing the capacity at Vostochny and the Plesetsk cosmodrome, in Arkhangelsk oblast.

To date, over a three-year period, there have only been three rocket launches from Vostochny, including one that failed to reach orbit (Lenta.ru, November 28, 2017; Roscosmos.ru, February 1, 2018) With such a weak record, Vostochny is unlikely to substitute for Baikonur’s existing infrastructure for years to come. Therefore, the Russian space program will need to continue to rely on its space launch infrastructure on Kazakhstani territory for the foreseeable future.

Russia’s upcoming transfer of certain Baikonur launch facilities to Kazakhstan will make the two countries’ space programs even more dependent on each other. It is obvious that Russia will not leave Baikonur until 2050. Whereas, the Kazakhstani government hopes to complete Baiterek and establish its own space industry. But Astana’s current strategy means that even if rockets are soon launched from Kazakhstani-owned launch pads, those rockets will be Russian.