Boxcar Diplomacy Puts Tajik Businesses At Tashkent’s Mercy

http://www.eurasianet.org/node/61678

August 6, 2010, Konrad Mathesius

 

Tashkent is expanding its de facto trade embargo against Dushanbe, levying new tariffs for trucks crossing the border, and continuing to delay train freight bound for Tajikistan. Seven months into the blockade, Tajik businessmen are hurting, and the government is worried about its long-term economic impact.

All of Tajikistan’s rail imports must first pass through Uzbekistan. Since January, Tashkent has delayed thousands of rail carriages, citing “technical and logistical” issues. Dushanbe says Tashkent is trying to sabotage construction of a giant hydroelectric power plant, Rogun, which it says is needed for economic independence. Tashkent has vehemently opposed the project; worried the dam will starve its agricultural sector of water.

The situation is also delaying supplies for US and NATO operations in Afghanistan.

Currently, around 1,200 boxcars sit idle on the border, according to Tajik Rail Deputy Chief Usmon Kalandarov. When construction supplies for the smaller, Iranian-funded Sangtuda-2 hydropower dam project were delayed recently, Tehran told Tashkent to knock it off. Yet Tashkent shows no interest in easing trade. On August 1, Tashkent upped the tariff for trucks crossing from Uzbekistan into Tajikistan by 14 percent, the second increase this year, Moscow’s Regnum news agency reported.

The supplies are not all bound for the hydropower projects. Tashkent is currently holding 282 tanks of petroleum products and 260 boxcars of flour at the border, Kalandarov told EurasiaNet.org. “Some supplies are getting through but at a rate of 10-15 wagons every third or fourth day. […] Shipments that would normally take 5-10 days are arriving two to three months late,” he said, adding that since April, automobiles and heavy machinery began arriving with parts missing.

Merchants in Dushanbe’s Green Bazaar say essential grains have become more expensive in recent weeks. Whereas 50 kilograms of wheat flour cost 65 somoni (roughly $15) last year, since Uzbekistan began delaying freight the price has soared to 110 somoni ($25). Beef has also jumped over 15 percent in price, the merchants say.

Small businesses are coping in different ways. In the bazaar, a baker explained that, “We make bread in the same shape, but use less flour. Instead of 300 grams for a loaf, we’ll use about 250. We charge the same price but we don’t really have a choice.” Similarly, the owner of a fast-food stand is now using only chicken instead of beef in his shawarma wrap sandwiches.

In one store, household electronics have increased by 30 percent, the manager admitted.

Officials from the Foreign Ministry fear that the decrease in sales and economic output will affect the state’s tax base and undermine the government’s ability to provide services, the Asia-Plus news agency reported on July 28.

Tajikistan’s auto imports have dropped by 44 percent, according to Nazir Sharipov, Chairman of Dushanbe’s American Chamber of Commerce (AmCham). This may be due in part to the economic crisis, but Sharipov estimates that at least half of the slump can be attributed to the unstable import environment. Moreover, because vehicles and equipment shipped through Uzbekistan are arriving “sabotaged,” with valuable parts missing, the unpredictable import conditions are hurting foreign investment, Sharipov warned.

Tashkent’s intransigence has sparked increased donor interest in alternative transportation corridors through Tajikistan’s other neighbors: Kyrgyzstan, Afghanistan and China. Improved road conditions would lower the costs associated with transporting freight overland by truck, and more importantly, would lower the dependence on the railroad for transporting goods, said USAID country director Jeffrey Lehrer at an AmCham business roundtable on July 28. Lehrer confirmed that international financial institutions such as the Asian Development Bank (ADB) are working to improve Tajikistan’s roads. Between now and 2012, the ADB will allocate $51 million in loans to improve road conditions between Dushanbe and Kyrgyzstan.

Yet despite these efforts, the railroad remains the most cost-efficient method for moving goods to Tajikistan. And despite Dushanbe’s frequent complaints in international forums, foreign governments have a limited ability to mediate between two countries unwilling to compromise, Lehrer conceded. As long as Tajikistan and Uzbekistan disagree on energy and water issues, Tajikistan’s business sector will continue to bear the brunt of the losses.