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Tajikistan, Economy

Syr Darya, Amu Darya, Western company, peace accord, aluminum plant

Tajikistanís economy is built on agriculture. But even with extensive fertile lands and abundant water, the country is the poorest of the former Soviet republics. When part of the USSR, Soviet planners shifted much of its farmland to the intensive cultivation of cotton. This emphasis created an economy heavily dependent on cotton export.

Civil war wracked Tajikistanís economy from the time of independence until a peace accord was signed in 1997. Turmoil in the south destroyed much of the regionís infrastructure, created thousands of refugees, and sorely disrupted cotton cultivation. A large number of Russian-speaking people, many of them technically skilled workers or professionals, fled the country to seek safety and more favorable economic conditions. The combination of these factors caused the gross domestic product (GDP), which measures the value of goods and services produced, to drop an average of 16 percent a year between 1990 and 1996. GDP was $991 million in 2000.

Economic reforms planned at the time of independence were suspended because of the war. But in 1995 the Tajik government turned to rapid privatization in an effort to repair the countryís war-torn economy. While most small enterprises were already in private hands, large operations and most farmland were still under state control. Since then the privatization program has proceeded sporadically, slowed by occasionally renewed violence, unstable financial institutions, and the lack of laws protecting business operations.

Agriculture, the largest economic sector in Tajikistan, is the countryís best hope for economic recovery. It accounted for 55 percent of employment in 1994. The principal crop is cotton, which is grown on irrigated lands along the tributaries of the Amu Darya and Syr Darya. Grain, primarily wheat, is grown extensively on nonirrigated lands. Other major crops include vegetables, particularly potatoes, onions, and tomatoes; and fruit, such as grapes and apples. Silkworms, who feed on the leaves of mulberry trees, are also cultivated. Raising cattle and sheep is also important. Much of the farming is still done on collective or state farms, a legacy of the Soviet era. Agriculture in Tajikistan is more mechanized than that in neighboring countries, although operations suffer from a shortage of machine parts and fuels.

Mineral resources in the republic are extensive. Tajikistan has metals such as gold, silver, copper, antimony, molybdenum, and zinc; mineral fuels including coal, gas, oil, and uranium; and industrial materials such as phosphates and semiprecious stones. Much of countryís mineral resources have yet to be developed. Many are in remote mountainous areas where the lack of transportation and severe weather make mining difficult. In the late 1990s the Tajik government and a Western company began mining gold as a joint venture.

Considerable industrialization has taken place since the 1930s, but manufacturing still accounts for a relatively small part of Tajikistanís economy. Heavy manufacturing is limited to a few concerns, principally an aluminum plant at Tursunzoda, west of Dushanbe . While Tajikistan produces substantial amounts of cotton, only about one-tenth of it is processed into textiles inside the country.

Mountain rivers provide ample hydroelectric potential. Massive dams produced 98 percent of the countryís electricity in 1999, with the rest coming from thermal plants fueled by natural gas. Large quantities of electricity are needed to refine aluminum; the abundant supply is why Soviet planners built the massive Tursunzoda aluminum smelter in Tajikistan despite the country having no native aluminum ore.

Tajikistanís chief trading partners are other former Soviet republics, principally Russia, Uzbekistan, and Kazakhstan. The country is also slowly developing trading relationships with western industrial nations. The chief export purchasers in 1994 were The Netherlands, Switzerland, the United Kingdom, Belgium, and the United States.

Russiaís Central Bank had supported the ruble in Tajikistan during 1994. However, due to its own economic problems Russia ended its support, causing a severe shortage of currency in Tajikistan. In May 1995 Tajikistan introduced its own currency, the Tajik ruble (750 Tajik rubles equal U.S.$1; February 1998).

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