“It is very difficult to explain to Western diplomats why … the official press is full of materials, where the West is charged with intentions of undermining the country’s stability. It is especially strange when the National Bank of the Republic of Tajikistan is negotiating with the IMF and other Western donors to allocate multimillion-dollar loans and grants for the protection of their economic (and hence political) stability “, -. political analyst Parviz Mullodjanov discusses paradoxical tendencies in the political situation in Tajikistan in article written exclusively for cabar.asia.
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There is no doubt that the year of 2016 in Tajikistan will pass in the conditions of socio-economic crisis unfolding under the influence of a number of external factors – the fall in world oil prices, the consequent reduction in the Russian labor market, the devaluation of the Russian currency. The economic crisis cannot fail to influence the politics, because any serious economic issue sooner or later acquires a political meaning in today’s world.
Today, in the Russian Federation, it is officially recognized that the crisis will have long-term nature, which will affect the situation in Tajikistan. Hence, there are several questions: what shall Tajik society expect this year? What kind of impact will the Russian crisis have? Which trends will appear in development of the country? What will be the new challenges and threats, problems and challenges? To answer these important questions, let’s consider in detail, how the main parameters of socio-economic and political life of the country will change under the impact of the crisis.
Economy and social sphere – a blow to labor migration
A distinctive feature of the Tajik economic model is the over-reliance on labor migration in Russia. According to the World Bank, in 2014, money remittances accounted for 52% of GDP, which is quite a high rate in the world.[i] Accordingly, the reduction of the Russian labor market has an extremely negative impact on the economy of Tajikistan. In particular, in 2016, we should expect the following trends and phenomena in social and economic life of the republic.
First of all, we can predict a further reduction in the volume and quality of migrants’ remittances. According to the National Bank of the Republic of Tajikistan, in 2015, the remittances decreased by 33.3%. According to the Central Bank of Russia, the volume of money transfers from Russia to Tajikistan for the first three quarters of 2015 decreased by 65.1% compared to the same period in 2014.[ii] Due to the devaluation of the ruble, migrant earnings have declined almost three times in dollar terms; next year, due to inflation, rising cost of patent, costs of migrants in Russia will grow even more, which will affect the amount of remittances to their homeland.
As a result, in 2016, there will continue the trend of return of migrant workers to their homeland. Today, according to various estimates, from 15 to 30% of the total number of migrants will return. However, we should note that a significant part of them is still in Russia, largely due to savings, and they still hope that the crisis will end early. In addition, about 400 thousand of Tajik migrants are on the list for deportation; a significant portion of whom still remains on the territory of Russia, because if they cross the border, they will not be able to return to this country.
If the situation in the Russian economy does not improve in the next few months, we can expect a new wave of the return of Tajik citizens from labor migration. The rate of return of migrants may be slightly reduced, if Tajikistan joins the Eurasian Union, which would entail the abolition or reduction of payments. However, the coordination and entry procedure is facing with great difficulties, and in the best case, it will happen not earlier than the end of this year.
Thus, the crisis hit on the fundamental pillars of the Tajik economy, significantly reducing the sources of replenishment of the budget. This quickly resulted in a wave-like chain of consequences for the Tajik economy, the impact of which will only increase in the current year.
First of all, the crisis causes an acute shortage of money supply, increasing devaluation of the Tajik somoni against the dollar and the lack of hard currency in the country. The devaluation of the Tajik somoni, ultimately, leads to a reduction in imports and to inflation. At the same time, it should be noted that the share of imports on average is three times greater than exports – that is, two thirds of the goods consumed in the market are imported from abroad. To date, the Tajik economy is just beginning to feel the effects of this aspect of the financial crisis, the first victims of which are small traders and commercial firms involved in import and trade. On the one hand, the trade becomes unprofitable due to falling somoni and growth of the dollar. On the other hand, the population has less money, thus dealers cannot sell their goods.
During the following months, there increases the risk of loss of control over rising prices. To date, the rise in prices is constrained by two factors – the low purchasing power of citizens and availability of unsold goods in the market. However, in the spring, traders will have to deliver a new batch of goods, laying all the losses and risks in its value, including a possible increase in the dollar exchange rate. The downside of this process is the ruin of small and medium-sized businesses and small businesses. Under these conditions, usually large vendors survive who have greater resources and reserve funds.
This year we can expect that the most significant losses will be incurred by small and medium businesses. About 42% of the budget debts in Tajikistan belong to large companies, but many of them enjoy tax breaks. Therefore, the increasing tax burden falls primarily on the sector of small and medium-sized businesses. According to unofficial data, already in 2015, a significant part of Tajik entrepreneurs had to pay taxes for that year. The question is, how taxes will be collected this year, given the serious and increasing difficulties in the budget replenishment.
Domestic policy – stability tops the agenda
The economic crisis cannot fail to influence the politics, because any serious economic issue sooner or later acquires a political meaning in today’s world. Accordingly, the anti-crisis strategy of the Tajik government initially includes the activities and actions of a political nature. Apparently, in 2016, the priority will be given to problems of political stability, strengthening the vertical of power and neutralization of centers of political mobilization.
The political aspects of the anti-crisis program are openly discussed in the official media; the following logic or interpretation of events lies in most of them:
1) during a crisis, the struggle for control over Central Asia between the world powers is exacerbated; for the sake of their interests, they may provoke and organize “color revolutions” and coups;
2) external forces rely on the “fifth column” inside the country, in the face of the opposition parties and NGOs, media, etc. sponsored by “external forces”
3) Under these conditions, the most important thing is to maintain stability, “when projects aiming at protecting and building stability gain an advantage over projects of (implementing) reform, and the need to protect national interests, stability and security become more vital than the unlimited right of “access to information”[iii]
Thus, the current internal political strategy of the government of Tajikistan is based on quite a solid ideological basis, broadly reminiscent of the ideology and approaches of the Russian leadership. This means that today’s hard line against “internal threats” (as they are perceived by the Tajik government) will generally continue in 2016. Moreover, in the case of aggravation of the situation, it is possible to predict an even tougher response from the government and further tightening of state policy against even non-political criticism, independent media, etc. In this regard, we can expect a number of active, preventive actions by the authorities in 2016, possibly with the active involvment of a number of pro-government youth organizations, such as the recently created “Vanguard”, “Sozandagoni Watan” and others.
Main threats and challenges
In general, despite the deepening crisis, the political situation in Tajikistan is quite stable. Most experts agree today that the Tajik government has a good chance to keep control over the situation throughout 2016. There is no more organized opposition in the country. The security system is quite effective, and some possible spontaneous actions of social protest will be relatively easily suppressed. According to international experts, the government holds the key macroeconomic indicators, pursues a strict fiscal policy aimed at keeping inflation under control, controlled devaluation of the somoni, etc. With the help of grants and loans allocated by international institutions to support the budget and anti-crisis measures, the authorities are able to keep the financial stability.
However, it should be noted also that there are serious threats and challenges that could adversely affect the socio-economic and political situation in the country:
Firstly, there is a series of external threats, primarily related to the further development of the financial and economic situation in Russia. In the case of a new round of crisis in the Russian economy, the negative impact on Tajikistan may take such a nature that it will be too difficult to neutralize it. Moreover, in contrast to Russia, Tajikistan does not have sufficient internal savings and reserve funds.
Secondly, a significant challenge is the growth of social tension – an absolutely inevitable phenomenon of the economic crisis. Here, much will depend on the actions of the government, on its ability to “hear” its people and to take measures (not force but political) to reduce the level of social discontent in a timely manner. The more people are affected by the crisis, lose their social niches and the former standard of living, the more opportunities are there for their politicization and radicalization. In this regard, the ability of the authorities to avoid “sudden movements”, unpopular and poorly thought-out steps is extremely important.
Such actions can also trigger a sharp surge in social protests, which in such cases often take a political coloring and act as a “trigger”, initial momentum to swing the situation. In a situation of today’s Tajikistan, such triggers may be an attempt to revise GBAR status, unpopular decisions in the social sphere – for example, the reconstruction of the city without paying adequate compensation to residents of resettled districts, demolition of markets, businesses, pressure against ordinary traders, taxis, corruption scandals and so on. In times of economic crisis – as international experience shows – the authorities have to be twice and three times careful to avoid “sudden movements”, thinking through every move in terms of its impact on public opinion.
Third, a significant challenge in 2016-2017 is a very real prospect of reducing a number of international country ratings. According to unofficial information, such prospect was seriously discussed in the international community and at the level of major donor countries at the end of 2015 – mainly, according to supporters of such measures, “with regard to the failure to meet the country’s international obligations in the field of human rights”. From the point of view of donors, some of the actions of the Tajik government look really contradictory.
In particular, it is very difficult to explain to Western diplomats why the pro-governmental youth organizations are allowed to regularly hold protest rallies, often aggressively looking, at the gates of their embassies, and the official press is full of materials, where the West is actually charged with intentions of undermining the country’s stability. It is especially strange, when the National Bank of RT is negotiating with the IMF and other Western donors to allocate multimillion-dollar loans and grants to the protection of their economic (and hence political) stability. Lower ratings will automatically affect the size and prospects of financial aid and loan portfolios for Tajikistan in the major international financial institutions – which can significantly complicate the government’s efforts to stabilize the economy.
However, the main threat and challenge to the stability in the country lie in the imperfections of the current economic model, which is too dependent on the income from labor migration. In this context, the only way to ensure long-term and sustainable development of the country is to get rid of this dependence, that can only be achieved through large-scale, structural and comprehensive reform.
[i] THE WORLD BANK Migration and Development Brief Migration and Remittances Team, Development Prospects Group, N2 Migration and Remittances: Recent Developments and Outlook, April 11 2014
[ii] Pairav Chorshanbiev. Money remittances from RF to Tajikistan for 9 months decreased by 65.1% 17.12.2015, http://news.tj/ru/news/denezhnye-perevody-iz-rf-v-tadzhikistan-za-9-mesyatsev-sokratilis-na-651
[iii] Abdulohi Rakhnamo, Amniyat: masialai rakami yak! (18 November, 2015)
http://khovar.tj/2015/11/amniyat-masalai-ra-ami-yak/