WELCOME TO IWPR'S REPORTING CENTRAL ASIA, No. 573 Part 2, April 22, 2009
NEW INVESTMENT DRIVE, SAME OLD CHALLENGES IN UZBEKISTAN Despite government
campaign to attract funds, the business environment remains less than
attractive. IWPR staff in Central Asia
FINANCIAL CRISIS TALK HITS KAZAK MOSQUES Some mosque-goers dismayed at
political messages preached from pulpit. By Daulet Kanagat-Uly and Marik
Koshabaev in Almaty
VILLAGERS ABDUCTED IN TAJIK-AFGHAN DRUG TRADE When Tajik drug traffickers
default on payment, their Afghan business partners wreak vengeance by
kidnapping locals in cross-border raids. By Turko Dikaev in Shuroabad and
Mukammal Odinaeva in Dushanbe
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NEW INVESTMENT DRIVE, SAME OLD CHALLENGES IN UZBEKISTAN
Despite government campaign to attract funds, the business environment remains
less than attractive.
IWPR staff in Central Asia
Lack of interest has forced the Uzbek government to extend the deadline for
bids to acquire state-owned assets.
Analysts interviewed by IWPR say it is unsurprising that few potential buyers
have come forward. Uzbekistans economy is subject to a high degree of state
control, businesses are vulnerable to interference from government, and the
current privatisation process is far from transparent.
In March, a round of tenders for 26 state-owned enterprises originally
planned for last year was delayed again. The assets on offer include the
Kokand alcohol plant, a large fertiliser factory in Samarkand, the UzbekUgol
coal company and the Markazi hotel complex.
These state-owned firms fall within a major privatisation programme which is
due to be completed next year.
This includes most of the government-run enterprises involved in extracting and
processing Uzbekistans rich mineral resources, and in chemicals, food,
construction and tourism.
The authorities are also looking for new owners for the Tashkent aircraft
plant, the communications agency Uzbektelecom and two luxury hotels in the
capital, the Grand Mir and the Dedeman Silk Road.
Analysts believe the privatisation drive has been spurred by the global
economic crisis, one of whose consequences is a fall in export prices for
commodities like cotton.
In this harsher environment, the Uzbek state is finding it increasingly
untenable to underwrite businesses that are, at least in the case of industry,
crumbling and obsolete.
An anti-crisis programme for 2009 approved late last year focuses on attracting
investment funds to upgrade industrial plants to modern technologies.
What has not changed, however, is the intrusive role of government in the
private sector, and analysts say that unless this changes, privatisation
efforts will have limited success.
Among the main obstacles they cite is the banking system, where businesses
report that their accounts are open to scrutiny by the authorities. In practice
the central bank, which is subservient to government, may freeze cashflows or
prevent them converting earnings into foreign currencies, despite legislation
allowing foreign investors for move funds freely in and out of the country.
The central bank decides arbitrarily which investors are going to be allowed
to convert their currency and which ones arent, said a local economist.
When the wind changes, even investors who have secured high-level political
backing and pledges of unhindered currency conversion can suddenly run into
difficulties. As a result, a succession of major foreign investors have come
and gone over the years.
In some cases, the foreign partner sets up a joint venture, only to be nudged
out when the business starts doing well. In 2006, for example, the American
gold-mining firm Newmont, for example, had to retreat when the joint venture it
was involved in, Zaravshan-Newmont, was taken over by the state-run Navoi
concern. In what many saw as an example of judicial compliance with the
governments agenda, courts in Uzbekistan ruled against Newmont.
According to Dosym Satpaev, director of the Risk Assessment Group in Kazakstan,
business and politics are closely linked in Uzbekistan.
The elite has an interest in maintaining total state control over key sectors
of the economy, he said.
Taken together with a flawed banking system and restrictions on access to
currency conversion, he said, this suggests that investors will be afraid to
take risks, and the privatisation of key state enterprises will drag on for
Uzbekistans problematic international reputation is also a constraint on
foreign-owned businesses. Many of those working in the country closed after
sanctions were imposed on Uzbekistan following the events of May 13, 2005, when
government troops shot hundreds of demonstrators in Andijan. In response to
political pressure to allow an independent investigation into the violence, the
authorities hit out at foreign companies, squeezing them out of the country and
nationalising their assets.
In an unfavourable global climate, with the business in Uzbekistan particularly
unfriendly, the investment outlook does not look good.
According to Tashpulat Yuldashev, a political analyst in exile, some
enterprises have been on the market for three years or more without a buyer in
Another deterrent for potential investors is that it is unclear how the
state-run concerns on offer have been valued.
Some argue that in purely monetary terms, the firms actually represent a
bargain. Analysts say UzbekUgol, for example, which would give access to large
coal reserves, is grossly underpriced at just over 30 million dollars.
Practically all the assets put out to tender are undervalued, said
Tashkent-based economist Komron Aliev.
Another commentator, who asked to remain anonymous, said the sell-offs would
have been easier if the price-tags had been assessed by international
One of the main problems with the privatisation is that the assets on sale
havent been priced correctly, he said. If an investor was interested [in one
of them] theyd need to visit the site and take a look at what state it was in.
That would cost time and money.
(The names of some interviewees have been withheld out of concern for their
FINANCIAL CRISIS TALK HITS KAZAK MOSQUES
Some mosque-goers dismayed at political messages preached from pulpit.
By Daulet Kanagat-Uly and Marik Koshabaev in Almaty
Regular visitors to mosques in Kazakstan have been taken aback to hear the
normal Friday sermons on religious themes prefaced with admonitions to remain
calm and avoid panic during the current economic crisis.
There is some resentment at the new tone, as many believe the countrys Muslim
clerical hierarchy is delivering a political message on behalf of the
The Muslim leadership has instructed preachers to back the governments
anti-crisis efforts and call for national unity at a difficult time, as the
economy slows and businesses shed workers.
At a March 27 press conference, Kulmuhamet Mahambet, prayer-leader at the
central mosque in Almaty, Kazakstans biggest city, said that from now on,
Friday prayers would be preceded by a half-hour talk on the right way to
approach the current economic slowdown with patience and forbearance.
A spokesman for the Spiritual Administration of Muslims in Kazakstan, or
Muftiate for short, told IWPR on condition of anonymity that the decision came
from the Mufti himself, Absattar Haji Derbisali.
Asked whether this amounted to religion interfering in the affairs of the
secular Kazak state, Mahambet replied, The Holy Koran says that people should
obey their ruler. The address by the president calls on people in Kazakstan to
unite, so it is our duty to support his appeal.
He was referring to the state-of-the-nation speech on March 6, in which
President Nursultan Nazarbaev outlined the steps his government was taking to
alleviate the crisis, such as encouraging domestic businesses and helping
vulnerable groups such as people made unemployed by the economic contraction.
Nazarbaev also called on Kazakstans people to display the calm and cohesion
needed to get them through the economic crisis.
His party, Nur Otan, has already responded to the call by getting a number of
political parties and pressure groups to agree not to arrange demonstrations or
engage in other anti-government activities until the crisis is over. (For a
report on this, see Kazak Opposition Baulks at No Protest Pact, RCA No. 571,
Now the authorities have received backing from the Muftiate, a formal structure
which leads the countrys Sunni Muslim majority and is seen as close to
We want to help people in difficult times, the deputy head of the Muftiate,
Muhammed Hussein Alsabekov, told IWPR. Now we must pray to Allah, be patient
and not be afraid. At times like these, we should be united and help each
Alsabekov said clerics at all of the countrys mosques had understood and
accepted the Muftiates call.
Among the mosque-goers interviewed for this report, there was concern that the
Muftiate was positioning itself too close to government, even among those who
back Nazarbaevs plea for unity.
Frankly speaking, I am disappointed that my faith is being used to propagate
someone elses ideas, said Rinat, a 33-year-old businessman who said he
recently discovered Islam. Now, he said, I am even thinking of stopping
going to the mosque.
Like many interviewees, one regular visitor to the central mosque in Almaty was
against mixing private belief and public politics.
Of course it isnt desirable for such an initiative to come from the religious
leadership, he said, speaking on condition of anonymity.
Both he and other people at this mosque felt it was pointless trying to hammer
home messages about an economic situation with which they were all too
I dont think we need to be told about the financial crisis, said 65-year old
pensioner Abdumalik, That isnt what I come here for.
Maksat, a 19-year old student in Almaty, said it was wrong to issue
instructions to congregations, since the basis for attending a mosque was
At the same time, he was less than surprised that clerics were following the
lead of Kazakstans political masters.
In our country, its customary to look to the top and do what they say, he
By contrast, Nazar, a teacher in Almaty, argued that the Muftiate was doing the
right thing. It is proper that we should support our government and not
express discontent, he said.
The director of the Kazakstan Bureau for Human Rights and Rule of Law, Yevgeny
Zhovtis, said religious leaders could and should work towards tolerance and
peace, but argued that it arouses suspicion if its done sporadically.
Zhovtis sees the Muftiates plan as a one-off gesture, similar to the campaign
to rally political parties and other groups behind the government.
Theres a sense that this plan has been coordinated from a single centre
other words it is like Soviet times, where workers, peasants, religious
figures, NGOs and the rest all have to sign up to appeals for peace and
There is a political element which shouldnt be there, because religion is
about moral values, said Zhovtis.
Amirjan Kosanov, deputy chairman of the opposition National Social Democratic
Party, argues that the Muftiate is used by government to ensure the Muslim
community remains quiescent.
I think that what the constitution states about the separation of state and
religion is not working, he said.
Political analyst Oleg Sidorov said the Muftiates support for Nazarbaev placed
other faith groups such as the Russian Orthodox Church and the Jewish community
in a somewhat awkward position.
Those who havent made an official statement look as though they havent
demonstrated their loyalty, he said.
Daulet Kanagat-Uly is a freelance reporter and Marik Koshabaev an IWPR-trained
journalist in Almaty.
VILLAGERS ABDUCTED IN TAJIK-AFGHAN DRUG TRADE
When Tajik drug traffickers default on payment, their Afghan business partners
wreak vengeance by kidnapping locals in cross-border raids.
By Turko Dikaev in Shuroabad and Mukammal Odinaeva in Dushanbe
While out grazing his livestock near the ruins of the Bardara fortress,
Sherzamon Manonov was abducted by two armed men. Eyewitnesses were sure the
raiders who spirited Manonov away across the border were members of an Afghan
Manonovs parents were close to desperation when they heard the news, and his
wife was out of her mind with worry.
The herder, who comes from the village of Odinaboi in the Shuroabad district of
south-western Tajikistan, was only the latest in a series of Tajik nationals
abducted by raiders from over the border.
These are not random attacks, but deliberate tactics employed when a business
debt remains unpaid. The business involved is the high-return and high-risk
trade in heroin produced from opium poppies in Afghanistan and shipped north
through Central Asia on its way to destinations in Europe.
That does not mean Manonov or his relatives were enmeshed in trafficking, as
there are frequent reports that the Afghan suppliers will target anyone in
order to pressure a whole community into repaying a debt left by a defaulting
Manonov was fortunate Tajik security forces secured his release after just
one week. The head of Shuroabads district government, Ibrahim Azizov, told
IWPR that all security agencies in the areas, border guards as well as police,
sprang into action and negotiated with the kidnappers. He did not say whether a
deal had been struck with them.
His mother still bursts into tears every time she remembers the day he was
taken. I am happy everything turned out well. But if he hadnt been released,
who would have raised his five children? she said.
ROUGH JUSTICE ON LAWLESS FRONTIER
The border strip in Shiroabad district lies in a particularly remote
mountainous part of the country, where Tajikistans frontier guards have
limited ability to patrol the tortuous landscape. The porous nature of this
section of the frontier have made it a magnet for drug smugglers shifting
consignments of heroin over the river Panj, which is easily crossed here, to
sell to Tajik gangs who will move it on and out of the country.
After the Soviet Union collapsed in 1991, economic decline and a five-year
civil war, coupled with chaos as rival mujahedin warlords battled each other in
Afghanistan, created all the preconditions for a thriving drug trade.
Afghan traffickers were soon on the lookout for locals poor enough to consider
doing the legwork of getting drugs from the border to the interior of the
At first, they were polite and didnt insult anyone, but they were persistent
in looking for middlemen to dispose of the drugs, recalled one local resident
who gave his first name as Alikhon. Many people agreed to it since there were
no other jobs to be had in those days.
Alikhon explained how there was an air of unreality to the trade at that time,
Drugs were handed out freely to anyone who wanted to get involved in selling
them, without any payment up front. The idea was that accounts were settled
after the sale went through.
Another local man, Nurkhon, added, It was as if people went mad when they saw
how easy it was to make money from drugs. Youd see elderly couples leading a
donkey or horse loaded with saddlebags full of hashish.
In the years since the United States-led Coalition ousted the Taleban
government in Kabul in late 2001, opium production has boomed, despite various
eradication campaigns led by the international community. With Iran still the
main exit for processed heroin, with two-fifths, the Central Asian states and
Tajikistan in particular are the second most important transit route,
accounting for perhaps another fifth.
Russia maintained troops along the Afghan border until 2005, when the Tajiks
took over, but neither force proved capable of intercepting the massive
quantities of heroin coming into the country, although Tajikistan intercepts
more than any other Central Asian country.
A retired Tajik border guard who requested anonymity said adjoining parts of
the Afghan province of Badakhshan were not under the control of Kabul or of the
international troops stationed in the country.
He said the drug trade in this part of Afghanistan was under the control of
ex-members of the mujahedin faction Jamiat-e Islami, part of the Northern
Alliance that battled the Taleban regime prior to 2001.
The remnants of these troops make up the majority of the local drug
traffickers, he said.
With more money at stake than ever, the rules of this illicit game are tough,
especially for those who take the goods and renege on payment.
Afghans used to hand out narcotics to almost anyone. The people here were
neither sophisticated nor familiar with the drugs business, so they didnt
imagine that debts would be collected in this way, said Nurkhon.
Lieutenant-Colonel Abdurahim Buzmakov, former head of Shuroabads criminal
investigation department, knows a thing or two about the crime network that
spread in the area. He says that although police have broken up 14 trafficking
gangs in the district, a similar number are still operating there, well-armed
and consisting of up to 60 members each.
The more successful Tajik traffickers often relocated permanently to urban
areas such as the capital Dushanbe, or even abroad, to enjoy their newfound
wealth. If they left any outstanding debts behind, their relatives or others in
the village pay the consequences.
Many fled their homes, but the Afghan traffickers found a way to squeeze them
for money, said Nurkhon.
When our villagers grew so poor and did not have anything to pay the debts,
the Afghans started taking hostages, says another villager Faizullo Ismoilov.
According to Asliddin Dostiev, a journalist in Shuroabad district who
specialises in covering the drugs trade, the Afghan drug smugglers conduct a
raid over the border, grab hostages and bring them back to Afghanistan.
The attackers are well aware that family ties are strong in Tajikistan, so
taking relatives is an effective way of pressuring defaulters. The captives
seem to be used as serfs, performing manual work for their captors until they
The border guards service says five Tajik nationals were kidnapped last year
and 12 in 2007. These figures are lower than in previous years; in 2004, for
example, there were 44 Tajiks recorded as being held captive in Afghanistan.
However, members of the security services accept that the official figures may
underestimate the scale of the problem.
Lt-Col Buzmakov recalled how two of the five people abducted last year were
young men from the village of Sebandi.
The Afghans seized these two young men because they allegedly took drugs from
them and tried to pay them in counterfeit dollars, said Buzmakov.
The two men were released, only to be arrested back in Tajikistan on charges of
drug trafficking and counterfeiting.
Because the negotiations and sometimes transactions involved in securing a
release are confidential, former captives are reluctant to talk to the press
about their experiences.
Zoir Niezov, 63, from the village of Mulev in the Shuroabad district, spent
several months in captivity in Afghanistan in 2005, held by a gang who claimed
his nephew owed them money for drugs. They threatened to seize other family
members if he died in captivity.
Like others, Niezov will not discuss how much money changed hands to free him,
although he says the Afghans were demanding 170,000 US dollars in payment for
Residents of Shuroabad told IWPR that traffickers sometimes engaged in plain
extortion these days, beating up villagers and robbing them of livestock and
Another worrying trend is that the wives and sisters of defaulting drug
customers are carried off and forced to become concubines of the minor warlords
who run the drug gangs in the Afghan province of Badakhshan. The kidnappers
often send the women home when they feel they have become a burden, for example
when they bear children.
It is not known how many cases of this kind there are, but residents say there
are many women living alone in border areas with children born from Afghan
EKING OUT A LIVING
Apart from the few Tajik drug runners who make a lot of money, the illegal
trade has not brought wealth to the local population.
Most people in these border areas are living close to or below the national
minimum, set at 60 somoni or 16 dollars a month. With few sources of paid
employment, villagers in Odinaboi survive on what they can grow peas, beans,
lentils and wheat. They also keep livestock, but have to sell most of the meat,
keeping only enough for special occasions.
Odinaboi has no mains water supply so villagers have to use nearby springs.
When the Soviet Union collapsed, the local hospital closed for lack of staff
and funding. There is a midwife in the village, but anyone who falls ill has to
travel to the town of Shuroabad.
Many villages in the mountains along the border are all but inaccessible by car
because Soviet-era roads have fallen into a state of disrepair, and are nearly
impassible due to thick snow and mud from autumn to spring.
LARGE GAPS IN BORDER PROTECTION
Life under these harsh conditions is made worse by the ever-present threat of
The 169-kilometre stretch of border in Shuroabad is the most vulnerable section
of the 1,300 km frontier with Afghanistan, because it runs around numerous
gorges and ravines. The Panj river which marks the border is very easy to ford
at this point, unlike lower downstream, where it grows to become the Amu Darya,
one of Central Asias two great waterways.
Former border guards say this area was poorly protected even in the Soviet
period, when the USSR was generally a well-defended fortress.
Lt-Col Buzmakov says the frontier post nearest the border is actually seven km
away from it, and the furthest is 25 km from Afghan territory. The intervening
strips of land are impossible to patrol properly.
Since Soviet times, over 32,000 hectares of territory in Shuroabad district
have never had frontier posts, he said. Something needs to be done about it.
Afghan drug smugglers take advantage of this situation.
Tajikistan only began guarding its southern border in 2006, taking over from
Russian troops who had stayed on after 1991. Although at the time some doubted
that the Tajik force would cope as well as the Russians, three years on
observers say the level of border control has not deteriorated, although it has
not shown much of an improvement either.
Officials say one thing that has got better is that the number of Tajik
nationals kidnapped and taken to Afghanistan has declined steadily since 1996.
We need to lay 154 km of new roads
to connect villages and the frontier
posts. We need to have well-equipped posts, and to shift them closer to the
border, said Buzmakov. None of this is currently in place, which is to the
advantage of the drug smugglers.
Officers with the Tajik border guards in the Shuroabad sector readily admit
that the force is under-funded and under-resourced.
On patrol, the services armed units lack adequate communications to stay in
touch with base or call for back-up when they need it. Often, a local command
centre will discover there is a problem only from the sound of shots as a
patrol unit engages a band of armed smugglers.
A serving major with the border guards, who spoke on condition of anonymity,
said most of his mens kit dated from the Soviet era, and they lacked night
Another problem, he said, was that units were short of local men who knew the
lay of the land.
Afghan drug smugglers know this area better than border guards who were
drafted in from various regions of the country. We are prohibited [by law] from
conscripting only locals, he said.
Tajikistan has received assistance from the international community, mainly the
United States and the European Union, to strengthen border protection and
narcotics interdiction, but this does not seem to have reached units stationed
in remoter locations.
The Tajik authorities have recognised that Shuroabad is a special case, and set
up a commission to make recommendations for improved border protection
arrangements there. One of the recommendations was that two battalions of the
regular army should be deployed to offer a rapid response when necessary.
Last year, the government also ordered local authorities to help with the
running costs of the border forces stationed in their area, both in cash and by
providing land where they could grow fruit and vegetables.
The head of Shuroabad district, Ibrahim Azizov, told IWPR that his
administration was doing everything it could, although since nearly 80 per cent
of its budget was subsidised by central government, it was hardly in a position
to make a substantial contribution.
He insisted that life was slowly getting better in the district, adding that
Securing the border
is paramount importance if people are to live and work in
Turko Dikaev and Mukammal Odinaeva are journalists based in Tajikistan.
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