Following is a Web version of a document from USAID's 1997 Congressional Presentation. Please note that some formatting may have been lost in the automated conversion of the original file. This document is also available for download in its original WordPerfect 5.1 format.

Introduction.

Tajikistan is the poorest of the five Central Asian Republics and the only one of the five in which underlying ethnic, regional, economic and ideological strains have led to open warfare and major population displacements. A cease- fire, in effect since late 1993, continues while UN-moderated peace talks appear to be making incremental progress. The UN Mission of Observers in Tajikistan (UNMOT) monitors the cease-fire agreement, while Commonwealth of Independent States (CIS) Russian-led troops, at the request of the local government, guard the southern Tajikistan boundary against incursions from Afghanistan. Donor efforts can make meaningful changes in Tajikstan's situation: the economy has been in free fall since independence, former trade ties have been dissolved and risks collapse before economic reform. U.S. interests are based on providing humanitarian aid, promoting regional stability in Central Asia and helping to create an independent, democratic and market-oriented Tajikistan that is friendly to the U.S. and constructively engaged in international political and economic relationships.

The Development Challenge.

An average per capita GDP of approximately $400 places Tajikistan firmly in the ranks of the world's least developed countries. Even during the Soviet era it was the poorest of the Soviet republics with a per capita GDP of $1,100. Its economy was based almost entirely on aluminum exports and a cotton monoculture. Social services were maintained at an artificially high level with subsidies from Moscow. The collapse of the Soviet Union, followed by the outbreak of civil war in May 1992, thus hit Tajikistan especially hard.

The civil war left at least 50,000 dead, displaced 700,000 within the country and resulted in an outflow of at least 75,000 refugees to Afghanistan. Many refugees subsequently returned to rebuild their homes, but the harsh economic consequences of the civil war continue to take their toll. Thousands of homes and hundreds of schools and medical units were destroyed. The war also left behind 55,000 orphans, 25,000 widows and a legacy of hatred and suspicion that makes reconstruction difficult.

Political consensus has yet to be achieved, despite cease fire agreements and continuing rounds of UN-mediated peace talks involving government and opposition groups. In addition, in early 1996 two groups of government supporters outside the capital rebelled in an effort to force personnel changes. The government quickly agreed to some changes in return for disarming the rebels. Nonetheless, the political situation remains fragile. Rule of law is rarely observed and violence at times seems endemic.

The breakdown in economic links with other former Soviet republics hampers the flow of badly needed raw materials, consumer goods and food items. Gas supplies from Uzbekistan have been repeatedly cut off because of Tajikistan's inability to earn foreign exchange to pay its debts. The World Bank classifies Tajikistan as a less-indebted low- income country; total external debt at the end of 1994 was $594 million. Unemployment is a growing problem, and many workers who have jobs go for months without being paid. Productivity in the two major economic sectors, agriculture and industry, has dropped precipitously, and per capita industrial and agricultural production has been reduced at least by half. While per capita income has fallen dramatically, prices for food, non-food items and services have sharply increased with monthly inflation rates often measuring in the double digits. In May 1995, the government introduced a new currency to replace the Russian ruble, the last of the Central Asian republics to do so.

The crisis has been especially severe in the social sectors. For example, the immunization program introduced and maintained during Soviet times has largely collapsed. The departure of many thousands of Russian-speaking professionals following independence left a gap in the health sector and other sectors that has yet to be filled. Infant mortality rates are very high (115 per thousand), nearly twice that of Kazakstan and more in line with patterns observed in less developed countries in many parts of Asia and Africa rather than those observed in the former Soviet Union. School and university enrollment has declined, especially for women. Most families do not have dependable access to either heating or potable water. There is a widespread shortage of pharmaceutical and other medical supplies and many hospitals and clinics are either closed or barely functioning due to a lack of medical supplies, equipment andsalaries.

The government has attempted to deal with the crisis, most notably with the release of its "Five Year Economic Plan" in August 1995 that commits the country to "radical changes in economic policy" and states that the goal is to create a "socially oriented market economy." Subsidies have been curtailed and a relatively tight monetary policy has been maintained. Privatization efforts remain erratic in both industry and agriculture, but prices have been freed up in a number of areas. Official figures indicate low levels of state-controlled imports, but private traders are increasingly active in filling the gaps left by a diminishing government presence. Indeed, a relatively weak central government sometimes provides opportunities for innovation and new approaches at a local level.

Given the lack of political consensus and the ongoing economic and humanitarian crisis, Tajikistan is likely to need foreign assistance for some time to come. The devastation caused by civil war provides a strong disincentive for resuming violence, and there is some hope that development programs are now finally moving away from short-term humanitarian relief and laying the foundations for more long-term sustainable development. USAID supports this transition and, despite limited resources, intends to play a positive role in helping shape the reconstruction of Tajikistan. Programs thus far have entailed large-scale support for both international organizations and U.S. PVOs in carrying out relief and development programs. Also, more than 200 Tajiks have participated in short-term study visits in the United States. Modest technical assistance and in-country training related to economic restructuring, democratization, and health and family planning have also been provided, to expose Tajiks to alternative approaches and to mechanisms for introducing democratic processes and market-based economic reform.

USAID expects that Tajikistan may not have the institutional and other resources to continue its own transition. Current plans are to phaseout Freedom Support Act (FSA) assistance within the next few years and pursue other means of continuing cooperative assistance in the future.

Other Donors.

The United States is a lead donor in dealing with the immediate aftermath of civil war and responding to the humanitarian crisis which followed. Other countries, including Russia, Iran, Turkey and various EU countries have also been involved. The United Nations has had a significant presence, though with the end of the immediate crisis, UNHCR has reduced its presence and transferred responsibility for more long-term development programs to the United Nations Development Programme (UNDP). Other groups, including WFP, WHO and UNICEF, are also involved. The IMF and the World Bank have both engaged in dialogue with the government in order to shape the economic restructuring program and make multilateral resources available to support the economic recovery. Overseas Development Assistance in 1994 was $66.5 million, with the United States contributing 27 percent of that sum. A number of PVOs from both the US and elsewhere are active in Tajikistan, and on-ground coordination among the various donors and PVOs is regarded as excellent.

FY 1997 Program.

USAID's strategy in Tajikistan will continue to concentrate on humanitarian assistance and social sector restructuring. However, the focus will increasingly shift from meeting the immediate humanitarian needs to addressing longer-term development concerns. Funds will be channeled in large part through U.S. PVOs, with a view toward building local organizational capacity and strengthening the ability of Tajiks to build and sustain their own economic recovery. Efforts will also be made to use scarce USAID resources to leverage other donor funding and help shape the broader donor effort. For example, both the World Bank and the UNDP are contemplating new initiatives which could increase funding for various PVOs working in the country. A continued training effort and modest involvement in economic restructuring and democratization might also be considered. U.S. interests in the country are determined mainly by a concern about regional stability and a desire to see the country returned to normalcy. A return to civil war would be disastrous, with potential spill-over effects involving Afghanistan, Iran, Russia and Uzbekistan, among other countries. USAID's assistance program will, hopefully, help avert this possibility and prevent the country from slipping into costly social, political and economic chaos.

Strategic Goal: Social Stabilization

Programming efforts will continue to focus on the ongoing economic and social crisis, with a view toward building localcapacity and offering new approaches to development which can eventually be extended on a national level. USAID- funded American PVOs will remain as a significant programming vehicle for at least the next two years, and an increased emphasis will be placed on developing Tajik partner groups and ensuring sustainable approaches to development.

Building on current PVO activities underway in Tajikistan, funding will be provided for further activities and expansion into other areas of the country. Much of the early PVO emphasis was on rebuilding houses, providing food to vulnerable groups, and making medical services available to needy returning populations. Future programs will directly address more long-term, sustainable development concerns, in part by strengthening partnerships with local communities and putting programs in place which can continue once donor assistance ends.