VZCZCXRO1134
RR RUEHLN RUEHVK RUEHYG
DE RUEHDBU #0862/01 1620813
ZNR UUUUU ZZH
R 110813Z JUN 07
FM AMEMBASSY DUSHANBE
TO RUEHC/SECSTATE WASHDC 0423
INFO RUCNCIS/CIS COLLECTIVE
RUEHBUL/AMEMBASSY KABUL 2119
RUEHNE/AMEMBASSY NEW DELHI 2120
RUEHBJ/AMEMBASSY BEIJING 1960
RUEHIL/AMEMBASSY ISLAMABAD 2154
RUEHPW/AMCONSUL PESHAWAR 0021
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEHDBU/AMEMBASSY DUSHANBE 2144

UNCLAS SECTION 01 OF 02 DUSHANBE 000862 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PGOV ETRD EAID TI
SUBJECT: LIFESTYLES OF THE  RICH AND TAJIK 
 
 
DUSHANBE 00000862  001.2 OF 002 
 
 
¶1. (SBU) Summary: A recent meeting with recipients of European 
Bank of Reconstruction and Development (EBRD) small and medium 
sized enterprise loans shed new light on the obstacles facing 
small businesses in Dushanbe.  Interviews with the owners of 
furniture, clothing, and household linens stores revealed not 
only the parasitic and predatory relationship of government 
toward small businesses both on a national and city level, but a 
glimpse at how Tajikistan's elite live. End Summary. 
 
¶2. (SBU) The owner of a furniture store on Dushanbe's main 
artery, Rudaki, openly confided that she daily lived in fear and 
paid off officials.  When asked if she had problems with customs 
or tax inspectors, she implied that she bribed them and was, 
"simply thankful to make some money and live a stable life with 
a stable income for her family."  Tired of making $5 dollars a 
month as a teacher with a degree as candidate of sciences, she 
went into business.  Her son works as a doctor in Moscow and her 
daughter is an interpreter for Mitsubishi making $8,000 a month 
in Moscow.  A quick look at her store and merchandise makes it 
clear she does not live hand to mouth.  She says the only reason 
she asked for a $50,000 loan for her furniture store was because 
she was forced to dip into her working capital when she ran over 
budget building a $340,000 vacation cottage for her grandson in 
the mountains outside Dushanbe.  If anything, she belongs to 
Tajikistan's small middle class. Her business constraints and 
choices demonstrate just how suffocating the businesses 
environment is even for those closer to the elite. 
 
¶3. (SBU) Real estate woes: After being stymied in her attempts 
to build a three-story show room for her furniture store, she 
was given verbal permission by Dushanbe Mayor Obaidulloev in a 
quick and hushed meeting in his office to build a small show 
room behind the converted apartment she uses as a store.  In a 
mere 52 days she whipped together a bright room with 
track-lighting to store and display tens of thousands of dollars 
of furniture. (Note: As of 2002, any attempt to build or remodel 
any structure in Tajikistan has to be approved by the government 
committee on architecture and construction -- and companies are 
levied a fee ranging from two to 15 percent of the proposed 
construction budget. End Note.)  The furniture store owner 
believes that she was ultimately allowed to have her showroom 
because the President's daughter likes her furniture and may 
have influenced the mayor. 
 
¶4. (SBU) The furniture sold in her store comes entirely from 
China, purchased directly in China or via Dubai, and delivered 
by train.  Roughly 95% of it (excluding the leopard print 
high-heeled shoe-chairs with red cushions) was some sort of 
ornate hybrid of synthetic velvets, brocades, and satins with 
plastic Rococo swirls and crenellations slapped onto shiny wood 
veneer to give them an 18th century European Louis XIV effect. 
(Comment: Jean Paul Sartre considered spending all of eternity 
in a room with such furniture part of his vision of hell in "No 
Exit." End Comment.) 
 
¶5. (SBU) The furniture store owner often decorates the homes of 
Tajikistan's elite. They come to her with room measurements, 
leaf through her catalogs, and special-order whatever furniture 
fancies them.  Pointing to a white swirly settee with gold and 
rouge satin and brocade cushions purchased for $4900 from China, 
the owner bemoaned that while she could sell it for $6000 in her 
store, the president's daughter sometimes comes by and takes 
pieces like this for $2000.  Indeed, many elites take furniture 
and slowly pay back in small increments, while some stop paying 
entirely.  She does not charge interest and has no recourse if 
they default.  She would not dream of going to the courts 
because that "would be very bad for them," and thus ultimately 
bad for her.  "Only God will judge them," she sighed. 
 
¶6. (SBU) The furniture store owner does not have a credit card, 
nor does she have a savings account in a bank.  When she wants 
to buy tens of thousands of dollars of furniture from China, she 
calls in orders from Dushanbe and uses a money wiring service 
that is not a bank to send the money to China.  A trusted person 
in China delivers that money to three separate furniture 
companies to complete the transaction.  The fact that money in 
such large volumes is not sent via banks highlights the gross 
inadequacies of Tajikistan's banking sector when even successful 
legitimate businesses choose neither to save their money in them 
nor use their services. 
 
¶7. (SBU) The owner of clothing and linen stores also admitted to 
paying customs and tax inspection bribes, but equivocated that 
 
DUSHANBE 00000862  002.2 OF 002 
 
 
such unpleasant things happen in many places all over the world. 
 Like the furniture store owner, her philosophy towards 
corruption is to pay for the problem to go away.  She also has a 
higher education, and used to teach at a university, but needed 
to make more money.  She started off with a small store at the 
bazaar and through small-enterprise loans has gradually grown to 
own three stores in the center of Dushanbe and employ six 
people.  Her son is a lawyer for the National Bank and her 
family seems to be comfortably ensconced in the middle class. 
She did not name her landlord, but conveyed that he was a 
government official who managed his affairs through an 
intermediary.  Moreover, the landlord recently raised the rent 
from $1500 to $1700. 
 
¶8.  (SBU) Her clothes and linens mainly originate from Turkey. 
The clothes arrive via air cargo after she personally selects 
them abroad (and not just shuttle trade via suitcases), but the 
linens come by truck since they are not subject to changing 
fashion whims.  Her $70,000 loan and three-year line of credit 
through the European Bank for Reconstruction and Development 
lending program (partially supported by USAID) partnered with a 
local bank will help her import Italian shoes.  Shoes have to be 
ordered and paid for six months in advance and this requirement 
has forced her to change the way she uses her working capital. 
Like the furniture store owner, she does not have a continuous 
savings account, but seems to use a savings account on a short 
term basis.  When she travels abroad to make her orders, she 
briefly deposits money so that she can use a debit card to cover 
transactions. 
 
¶9. (SBU) Comment: While we have often heard of the troubles of 
micro-enterprises trying to get by in bazaars, these interviews 
highlight that even larger more successful businesses face a 
similar problem with government corruption and a weak banking 
system. Their preference to just pay for their problems to go 
away and disinclination to organize or fight against wrongs, 
however, demonstrate that the business community remains 
atomized and weak at the small and medium enterprise level. End 
Comment. 
HUSHEK