Dec 06

Political rights, financial liberties and Rahmon’s In-tray: Tajikistan after the 2013 presidential election

The re-election of President Rahmon, who has now been at the helm of government in Tajikistan for 21 years, to serve another seven-year term was nothing if not expected.  Such non-competitive elections are one of the biggest indicators of the purported failure of liberalization across Central Asia, with the partial exception of Kyrgyzstan, since the end of the Soviet Union.  Indeed, in Tajikistan, the only competitive presidential election in its history was the highly contentious victory of the Soviet apparatchik Rahmon Nabiev over the filmmaker Davlat Khudonazarov in 1991 which preceded Tajikistan’s bloody civil war.

Such sorry tales of the failure of transition are, however, misleading if they lead us to ignore the liberalization that has taken place.  Freedoms in some areas have increased markedly in the post-Soviet period and more so again since the end of the civil war.  These freedoms are negative (in the sense of freedom from regulation) and economic.  In that sense, they are completely in keeping with the systemic changes that have also taken place in Western states since the advent of the New Right, Reaganomics and Thatcherism which coincided with the unravelling of state socialism in the 1980s.

Amnesty International’s memo

When we think about liberalization in the post-Soviet context we think first about politics.  Even Amnesty International sought to bring political freedoms on to the agenda in a memo to the newly re-elected president released on 8 November.  Along with the usual key concerns regarding impunity for torturers, barriers to lawyers investigating such cases, and the failure to pursue such cases (particularly those emanating from the violence in Khorog in 2012), Amnesty added ‘dwindling space for political activism’ to its list.

The memo cites the attempted extraditions of Abdumalik Abdullojonov and Umarali Kuvvatov, the arrest of Zayd Saidov and the persecution of the Islamic Revival Party of Tajikistan as principal examples of this lack of political freedoms.  It flags the lack of freedoms in advanced of the February 2015 elections.

This is an important move for Amnesty, which often neglects political rights, for fear of being seen as partisan to a given system of government.  Those that feel that basic human rights to life and civil rights to a fair trial cannot be achieved in Tajikistan without progress in political rights will be heartened by this move.  I include myself in that number.

Rahmon’s in-tray

Unfortunately, however, we are likely to be disappointed.  It is unlikely that Amnesty’s memo will feature prominently in Rahmon’s in-tray.  This is not just because he considers it dangerous for his regime to afford opportunities to political rivals.  It is also because there are other more pressing opportunities and dangers which have arisen due to other freedoms which have come to Tajikistan since 1991.  These have come in the form of partial economic liberalization, where the state has (often) cooperated with international financial institutions and major donors.

These new freedoms are primarily financial.  They include openness to international aid to fund social welfare and, more importantly, freedoms of inward and outward capital movements which were unthinkable during the Soviet period.  The former includes the removal of formal barriers to foreign direct investment to fund industrialization and infrastructural improvement.  The latter includes the freedom to move capital off-shore via global tax avoidance and tolling arrangements which enable capital flight.

Tajikistan’s principal industrial strategy is for the generation and export of electricity through hydro-electric dams.  It hopes to be a key supplier to India and Pakistan as well as other near neighbours.  The world’s highest dam Nurek, of Soviet construction, needs renovation.  An even higher dam, Rogun, has been mooted for construction for some time.

Despite coercive and effective attempts to generate cash internally for the building of Rogun, and two IMF studies which establish its basic feasibility, Rogun is no nearer to being constructed.  It requires FDI in huge volumes.  Since Russia withdrew its direct support for the project in 2008 none has been forthcoming.  It is hard to imagine that China, India, Iran or any other potential investor would want to alienate Uzbekistan (who vehemently opposes the project due to its effect on their downstream supply and irrigation) by investing.

The TALCO mess

But the problem of outward capital flow is more immediate than that of investment in Rogun.  That relates to the state owned aluminium company, TALCO, whose production is declining and whose offshore arrangements are under threat.  John Helmer has recently provided a fascinating update of the most recent TALCO developments which are worth revisiting here.

The London Court of International Arbitration’s jurisdiction over Tajikistan’s state-owned aluminium company TALCO (2004-2008) are increasingly commonplace examples of partial liberalization after a Soviet era in which they were explicitly cut off from the global market.  TALCO’s smelter in Tursunzade produces 40% of Tajikistan’s exports but TALCO itself contributes very little to state revenues.  Its tolling arrangements have channeled the bulk of profits to off-shore vehicles, such as the BVI-registered CDH since the late-1990s. In turn these are controlled by beneficiaries that, as a British judge ruled, were likely to include the president and his family members.

‘Each year’, as the Economist stated in July 2013, ‘TALCO produces hundreds of millions of dollars in profits that are routed to a shell company in the British Virgin Islands’.

In October 2013, a Swiss court found in favour of a subsidiary of the United Company Rusal and handed down a total of $275 Million in fines, interest and costs to be paid by TALCO’s.  This ruling effectively refutes the Government of Tajikistan’s claims that alumina supply and tolling arrangements established before 2004 were illegal.  In turn, this claim was the justification for the government’s seizure of TALCO from its previous owners in 2004 which led to the inconclusive London arbitration from 2004-2008.

Rusal has subsequently threatened to force open CDH’s books and is apparently working through the Kremlin to ensure payment by TALCO or concessions from the Rahmon government.  The Rusal press release concludes, that the company is ‘determined to be paid on the award, whether voluntarily or involuntarily, from what appear to be significant resources behind CDH and its affiliates’.

Not for the first time, a foreign body has effectively determined that the Government of Tajikistan acted illegally in its business relations.  It is these transnational links, brought about by partial liberalization, that expose the corruption of the regime and compromise its position with its most important international ally.

Not just Tajikistan’s problem

As I have written about elsewhere, whilst international courts seek (unsuccessfully) to hold the regime to account, it is also international organizations that applied these international laws and norms to enable the business relationships, the audits and legal struggles in the first place.  This is a global story of economic freedoms selectively applied and claimed by the very few who are patrons and clients of the regime.  Meanwhile ordinary Tajikistanis take up opportunities to work in Russia in record numbers due to partial liberalization of labour.

Liberals may protest that this is very partial liberalization indeed, but when is liberalization anything other than partial?  Hybrid political authoritarianism-economic liberalization, facilitated by the IFIs, is in fact increasingly common.

In Tajikistan this is something proximate to what Roberto Roccu has called Neoliberal Authoritarianism in Egypt, varieties of which infect many post-colonial states.  In the global economic context, Ian Bruff has labelled this behavior Authoritarian Neoliberalism as an unaccountable system of fiscal austerity.  This widespread response to the global financial crisis continues the shift of wealth and power from labour to capital that has been ongoing since the 1980s, as the Economist has also observed. In Western states, it manifests itself in quite different ways but the fundamental dynamics are not dissimilar.

It’s typical for the international organizations which have facilitated financial liberalization in the last two decades to deny all responsibility both for the corruption associated with capital movements and the detrimental effects on labour.  But just as they would expect national government to take responsibility for the planks of liberalization which they have stymied – particularly those regarding the criminal justice system and political rights identified by Amnesty – they ought to accept responsibility for the tolling arrangements they presided over.

Neoliberal authoritarianism in Tajikistan dovetails with authoritarian neoliberalism in the global economy in the form of the ‘technocratic’ budget cutting, secretive tax avoidance schemes and hidden offshore spaces.   When we talk about the problems of authoritarianism in Tajikistan lets also think about the problems of financial liberalization, which is a matter of global responsibility.