Tajikistan: Clock Ticking on Corruption

Recent moves to address endemic corruption in Tajikistan show the country’s leaders have recognised that potential investors are deterred by the scale of the problem. But the culture of bribery and favour runs so deep that the government will be hard-pressed to change it.

At the end of May, President Imomali Rahmonov approved a raft of legislation that - while not explicitly concerned with corruption - are designed to curb corruption and attract much-needed foreign investment, economic analysts say. The laws included new tax and customs regulations, the creation of new free trade zones, the introduction of licensing for some commercial activity and the facilitation of small-scale loans.

The international watchdog on corruption, Transparency International, places Tajikistan among the five most corrupt countries in the world in its latest ranking.

Corruption is stunting the development of a functioning market economy in Tajikistan, and is also a major deterrent to foreign investment which the government recognises as critical to rescuing the economy and servicing the country’s foreign debt, which at an estimated one billion US dollars is a heavy burden for this impoverished country.

Khojamahmad Umarov, a well-known economist, says foreign businessmen too often learn about corruption in Tajikistan from first-hand experience.

“I don’t understand why high ranking officials try to deny that there is corruption in Tajikistan when talking to the press, as one advisor to the deputy prime minister recently did,” said Umarov. “They may be doing this to comfort themselves, but the rest of the world is well aware what is going on.”

Stories of prospective investors being scared off by blatant corruption are commonplace. A Polish businessman, who asked not to be named, told IWPR how officials dropped heavy hints about the need for back-hand payments when he visited Tajikistan as part of a commercial delegation last year. The result was that his firm shelved plans to open a new pharmaceuticals factory in the country.

In March this year, US ambassador Richard Hoagland told journalists how two foreign firms had abandoned plans to build a world-class hotel in Dushanbe after local officials demanded bribes. Hoagland noted that the lack of an independent and fair judiciary means investors have little assurance that their assets are safe in Tajikistan.

Local businesses have it tougher since they have no option but to play along with the system.

In April, the International Finance Corporation, part of the World Bank, published findings of a survey which showed that 98 per cent of the businessmen who responded admitted to making “unofficial payments” to government officials, while almost half had contributed funds euphemistically earmarked for “improving the infrastructure of the neighbourhood” at the request of local authorities.

A shop owner in the centre of Dushanbe told IWPR that he was continually required to pay bribes so that his business could survive. “What else can I do?” asked the shopkeeper, who requested anonymity. “If I don’t they’ll make life difficult for me. It’s not only tax officials but also inspectors from the state standards agency, so that they issue certificates for imported goods more quickly. I import food products that would simply spoil if I waited the normal time for them to clear customs and be granted a certificate.”

The deputy minister for revenue and tax collection, Bakhtior Sultonov, was unwilling to accept that corruption was a block to business development, “There is corruption in every country to some extent, so I can’t be sure that it’s the reason why foreign investors are not coming to Tajikistan.”

Sultonov was upbeat about the changes to the tax and customs regulations, saying, “The clarity and transparency of the new laws should reduce opportunities for corrupt practices.”

Saifullo Safarov, deputy director of strategic research in President Rahmonov’s office, took a more robust view of the problem, saying, “corruption in other countries cannot serve as a justification for its existence in Tajikistan”.

Corruption thrives because of the slow and obstructive bureaucracy typical of former Soviet states, self-serving elite groups which restrict the access of “outsiders” to business opportunities, a significant heroin trafficking problem, and a civil administration that is at once interfering and chaotic. Elite insiders are careful to keep benefits and key jobs within their circle. Those on the outside can only survive by paying bribes.

A related problem is the large grey economy, estimated to be equivalent to a quarter of officially gross domestic product. This is partly a legacy of the Tajik civil war that ended in 1997 which left centralised administration weak in some places, but it is also a result of the mountain of red tape facing any prospective businessmen, a judiciary susceptible to financial and political leverage, and a taxation system that sometimes looks more like officially-sponsored extortion.

Tax evasion means that government revenues are low, curtailing the administration’s ability to fund basic services and infrastructure. Analysts estimate that a significant reduction in corruption could double income to the budget.

As an example of how a corrupt system blocks reform, presidential aide Safarov said he had seen dozens of innovative economic ideas emanating from Rahmonov’s office, only to be disregarded by lower-level officials. “The ministries are not interested in how beneficial these projects are for developing the Tajik economy,” he said. “They are mainly interested how they can line their own pockets.”

Safarov believes the president has adopted a twin-track approach to tackling corruption – both passing new legislation and mobilising public opinion to call officials to account. “The repressive measures adopted by some other countries fighting corruption are not very effective. It is the same as combating alcoholism,” said Safarov. “Freedom of speech and independent media can also help make the government accountable to its people.”

However, others see corruption as more than an unpleasant side-effect of transition, but as a problem that goes to the heart of the way Tajikistan is governed.

The administration is still dominated by officials from Rahmonov’s home region in the south of Tajikistan, who came into power in the early phases of the civil war.

As the government seeks to defend its political position ahead of a general election next year, it will be difficult for the administration to reform itself from the inside and weed out offenders. In a report published in May, the International Crisis Group, a Brussels-based think tank, said, “the increasing strength of a small clique around the president makes any battle against corruption and criminality increasingly difficult”.

At a meeting in Dushanbe a year ago, donors pledged a total of 900 million US dollars, a fact the Tajik government has been keen to promote. But as Matthew Kahane, then head of the United Nations Development Programme in Tajikistan, said at the time, disbursement of the money will depend on whether the government can deliver results in the war on corruption.

Nargis Zokirova is a correspondent for Vecherny Dushanbe newspaper.