“You know how Tajik shoot pigeons? They scatter some food on the ground and then wait around the corner with a shotgun. When pigeons come, they just blast away from a short distance.” (South China Morning Post, 07.10.2017)


This analogy, recently relayed by a Chinese businessman in an article about the difficulties facing foreign investors in Tajikistan, highlights just how the country’s kleptocratic system makes it a difficult place to invest. Government critics commonly quip that the ruling elite would rather have 100% of a $1 million pie, rather than 10% of a $100 million pie.

The political predominance of the Rahmon ruling family extends to the country’s economy. The political elite control important industries, such as aluminium (the leading export commodity), cement, cotton; and, according to some reports, narcotics. They also dominate key sectors of the service industry, such as banking, road maintenance and insurance.

Control is exercised over the economy in a number of ways. First, many of those who wield power, do so behind the scenes, with limited public oversight. Second, control over the state allows members of the elite to use their political influence to enrich themselves, whether through embezzlement, winning state contracts, soliciting bribes, or profiting from nominally state-owned enterprises. Third, elites use the state to intimidate business rivals with fears of reprisals unless they concede to their demands. Lastly, the elite uses offshore linkages to facilitate their control over large parts of the economy.

These power plays, or mechanisms through which influence is secured, are detailed in this analysis.

Embezzlement of State Funds
Where privatisation has taken place, such as in the cotton sector, this has been to the benefit of the elite.

In one prominent case, the National Bank distributed $854 million ($241 million given to it by the IMF) in uncollateralized loans between 2004 and 2008 through private bank KreditInvest, with much of the money going to the cotton sector (Asia Plus, 13.04.2009). Kreditinvest was established in 2004 as a subsidiary of Agroinvestbank, controlled by Muradali Alimardon, who also worked as Chairman of the National Bank at that time. According to a Wikileaks cable, while using KreditInvest to generate profit from interest payments by cotton farmers, he loaned $116 million to HIMA, a cotton company he was rumoured to own, none of which was paid back.

In 2008, Jamoliddin Nuraliyev established microcredit lending organisation Spitamen Capital, which became a full commercial bank, renaming itself SpitamenBank, in 2014. Crisis hit Tajikistan’s banking sector in 2015 as a result of falling remittances sent from migrants in Russia. By December 2016, the government was forced to spend $490 million bailing out Agroinvestbank and Tojiksodirotbank, the country’s two biggest lenders, as well as two smaller banks, Tajprombank and Fononbank. Tajprombank and Fononbank were declared bankrupt in early 2017.

Meanwhile, SpitamenBank has seen its market share grow, becoming the bank that will manage the $300 million to be spent of the CASA-1000 hydropower project. According to Shadow Governance sources in Tajikistan, SpitamenBank is also involved in capital transfers relating to Italian construction company Salini Impregilo’s $3.9 billion project to construct the Rogun hydropower plant.

Use of Political Positions to Solicit Bribes
From traffic police soliciting bribes from motorists, to families paying thousands of dollars to avoid military conscription, corruption is endemic in Tajikistan. Public sector pay is low creating incentives for corruption. As academics have observed in neighbouring Kyrgyzstan, the state in Tajikistan is an “investment market.”

To gain access to lucrative positions in the Tax Committee, Customs Service and State Committee for National Security, for example, many pay large bribes with the expectation that this initial “investment” will be rewarded through returns gained through corrupt practices. In December 2015, a Chinese investor alleged that agency officials demanded a $400,000 bribe on orders from “above” (Rustam Emomali, the President’s son). He refused to pay, and recorded his conversation with the anti-corruption officials. After he appealed to the President, the police destroyed the evidence and declared him to be mentally ill; he left the country shortly after.

Intimidation of Business Rivals Through Political Ties
Members of the elite with ties to the deeply-politicised and selective judiciary use these links to forcibly seize businesses.

For example, successful businessman Abubakr Azizkhojayev lost his contract to produce license plates to the President’s son-in-law. After publically complaining, Azizkhojayev was accused of “inciting national, racial, regional, or religious hatred” in February and sentenced to two-and-a-half years in prison (Human Rights Watch, 04.08.2016).

Between 2001 and 2011 Umarali Quvvatov ran two companies, Faroz and Tojiron, partnering with President Emomali Rahmon’s son-in-law, Shamsullo Sohibov, to supply oil to NATO forces in Afghanistan. In 2012, Sohibov forcibly requisitioned Quvvatov’s share in the business and he fled to Moscow (Eurasianet, 11.08.2014).

These are not isolated examples. Many such cases go unreported due to fears of reprisals should anyone speak out against members of the Presidential family.

There is evidence that this kleptocratic practice is not limited to businesses owned by Tajik citizens. In 2014, for example, China’s Zhejiang Congcai Heavy Machinery Manufacture invested $25 million for a 60% stake in the Chinese-built Taj-China 2013 cement factory in Vahdat. But after production began in 2015, the companies’ director, Abduhalim Qodirov, demanded full control of the plant. Soon, the Chinese investors were called into a meeting with the security services, who threatened them with “reprisals” if they did not comply. They agreed to lease the factory, but are only receiving a third of the rent (South China Morning Post, 07.10.2017).

Those investors who have sought to challenge this kind of intimidation and forced takeovers in court have not been successful, primarily because the court system invariably rules in favour of the Tajik side. These stories are common among investors in Tajikistan.

Diversion of Profits Offshore
Many of the country’s most significant business enterprises are registered in offshore tax havens, helping them to avoid paying corporate taxes and preventing them from disclosing their beneficial owners.

Despite being state-owned, the operations of the Tajik Aluminium Company (Talco) are controlled by Talco Management Ltd, registered in the British Virgin Islands (BVI). Innovative Road Solutions, which extracts tolls from drivers travelling between the two main cities, is also registered in BVI. Leading cotton export companies Axial Limited and Cottonext Ansalt, are registered in the Isle of Mann and Liechtenstein respectively.

Offshore accounts allow members of the elite to syphon millions of dollars from the Tajik economy. Tajikistan experienced an estimated capital flight of over 60% of its GDP in 2011, according to the IMF.

The Inseparable Link Between Business & Politics
Business and politics are inseparable in Tajikistan. Tajikistan has become a nepotocracy, a state governed by members of the President’s family and those allied to them.

Tajikistan conforms to what political scientist Henry Hale calls “patronal politics.” According to Hale, “patronal politics refers to politics in societies where individuals organise their political and economic pursuits primarily around the personalised exchange of concrete rewards and punishments through chains of actual acquaintance.” Tajikistan is a “single pyramid” system with President Emomali Rahmon sitting atop.

Powerful businessmen wield influence over politics and political figures control large parts of the economy. Control of state agencies allows businesses under the authority of the Presidential family to avoid following regulations, or paying taxes and tariffs. At the same time, state agencies are used to drive competitors out of business with fines for breaking regulations and allegations of corruption.

Those who challenge the Presidential family face severe repercussions. These factors, thus inevitably combine to make Tajikistan a hostile climate for foreign investors committed to following their own domestic anti-corruption regulations.