VZCZCXRO4626
RR RUEHLN RUEHVK RUEHYG
DE RUEHDBU #0106/01 0170834
ZNR UUUUU ZZH
R 170834Z JAN 08
FM AMEMBASSY DUSHANBE
TO RUEHC/SECSTATE WASHDC 0119
INFO RUCNCIS/CIS COLLECTIVE
RUEHNE/AMEMBASSY NEW DELHI 0010
RUEHIL/AMEMBASSY ISLAMABAD 0025
RUEHBJ/AMEMBASSY BEIJING 0005
RUEHBUL/AMEMBASSY KABUL 0030
RUEAIIA/CIA WASHDC 0012

UNCLAS SECTION 01 OF 02 DUSHANBE 000106 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR SCA/CEN 
 
E.O. 12958:  N/A 
TAGS: PGOV ECON TI
SUBJECT: DUSHANBE CONSUMERS TAKE A HIT 
 
REF: 2007 DUSHANBE 1760 
 
¶1. (SBU) Summary: While food shortages and lack of power hit rural 
areas of Tajikistan hardest, the Government has tried to spare 
Dushanbe these difficulties, to avoid unrest close to the center of 
power.  This winter is the coldest in decades.  While freezing 
temperatures and snow persist, years of shortsighted economic 
mismanagement and rising world food and fuel prices have brought the 
hardships of the countryside to the capital in the form of power and 
fuel shortages and much higher food prices.  End summary. 
 
¶2. (SBU) The first 40 days of winter, the "Chillai Kalon" (or big 40 
days of cold) ended on January 10, and now Tajiks prepare for the 
second 40 days, the"Chillai Khurd" (or Small 40 days of cold).  The 
first half of winter was marked by two major holidays associated 
with doubled or tripled food prices, Id-Al Fitr and Idi Qurbon.  The 
second half of winter seems, so far, to be one of high prices 
without holidays to ease the blow.  These price increases illustrate 
Tajikistan's extreme vulnerability to trade disruptions and world 
price fluctuations.  This vulnerability in turn is the result of 
non-diversification of the economy, this due to government neglect. 
 
 
Power Rationing in the Capital 
------------------------------ 
 
¶3. (SBU) Since independence in 1991 and the ensuing collapse of the 
Soviet power grid, electricity has been in short supply every winter 
in Tajikistan from November to April, as hydropower reservoirs run 
low.  Tajikistan exchanges much of its excess electricity production 
in summer months with Uzbekistan, and in return receives Uzbekistani 
excess power in the winter.  However, this does not cover the winter 
production-demand gap.  Even newly negotiated supplies from 
Turkmenistan (via Uzbekistan) would come nowhere near to closing the 
gap.  Kyrgyzstan, a smaller supplier to the Tajik grid, has also 
reduced supplies this year.  In response, Tajikistan has reduced 
electricity to regions outside Dushanbe to 2-5 hours per day.  In 
the capital, chronic outages, scheduled and unscheduled, are the 
worst in years. 
 
¶4. (SBU) Projects to bring additional generating capacity on line 
have faced repeated delays.  Bickering over financing and ownership 
terms has delayed the huge Rogun project for years; its site sits 
idle and many years from completion.  The Sangtuda 1 hydropower 
project was supposed to begin test operations in December, but 
technical problems have delayed its startup.  As a result, no 
significant new generating capacity is in sight for this winter. 
Even when/if these mega-projects come on line, their commercial 
viability will depend mostly on exports or aluminum production. 
It's not clear how much of their output would go toward domestic 
household consumption. 
 
¶5. (SBU) The cities of Dushanbe and Khojand are the places most 
vulnerable to electricity disruption, as most of their inhabitants 
rely exclusively on electrical energy.  (Rural areas can, in some 
cases, fall back on coal or wood.)  In cold weather, this leads to 
overloading of power distribution systems, causing failures and 
blackouts at the coldest times.  Power rationing began in Dushanbe 
in November, despite previous Government assurances that the capital 
would be spared.  About forty percent of Dushanbe is now without 
power for several hours each day.  Street lights in the city have 
been switched off, leaving the roads completely dark at night, 
except for cars speeding through the fog. 
Qexcept for cars speeding through the fog. 
 
¶6. (SBU) People are blaming the government, and the usually stoic 
press is even publishing complaints and articles critical of the 
government.  There has been public discussion of the need to close 
schools, as they are too cold to use; the education ministry has so 
far rejected this measure.  The connection between the public's 
suffering and the government's desire for more revenues is also 
evident in rumors surrounding the cutoff of power for several days 
in December at Dushanbe's main train station.  Although considered a 
strategic object, the station and surrounding area were without 
power, giving rise to the rumor that the electricity was 
disconnected to export more power to Afghanistan. 
 
¶7. (SBU) An opposition political party has called for the government 
and the parliament to take measures to resolve the energy crisis, 
saying that authorities are not able to provide power to hospitals 
and maternity houses and alleging that this has caused the death of 
newborn babies.  Opposition politicians argue that the best short 
term measure would be to reduce electricity supQes to the massive 
Tajik aluminum plant, which consumes about forty percent of 
Tajikistan's peak electricity production and is the country's 
 
DUSHANBE 00000106  002 OF 002 
 
 
largest earner of foreign exchange.  On January 16 President Rahmon 
called for diverting some power from Talco to public use. 
 
Food Price Increases 
-------------------- 
 
¶8. (SBU) Reftel described increasing food shortages in rural areas 
of Tajikistan.  Food in Dushanbe, while not in short supply, has 
increased dramatically in price since last fall, from 20 to 100 
percent.  Most food is imported -- overall Tajikistan imports close 
to ninety percent of its food items, making it one of the world's 
least food-secure countries and very vulnerable to current increases 
in world food prices.  This is at the same time that the government 
has diverted funds from the central bank to shore up the failing 
cotton sector, and had local officials force farmers to grow cotton. 
 Now with the Central Bank pleading for an international bailout to 
repay its cotton debts, the Government is pressuring private banks 
to step in and continue non-market based financing of cotton 
growing.  This will benefit cotton investors close to the President, 
but will help keep the majority of Tajik farmers in cotton-based 
servitude, and will help ensure that Tajik consumers continue to 
face higher food prices and narrower choice of products. 
 
¶9. (SBU) Combined with onerous customs regulations in central Asia, 
bad transport infrastructure, winter supply disruptions, and the 
unpredictable political mood of neighQing Uzbekistan, Tajik 
consumers are in a tight spot this winter.  The main source of 
finance for imported food is the remittances from labor migrants in 
Russia and Kazakhstan. 
 
¶10. (SBU) According to the resident IMF representative, in 2007 
price inflation reached twenty percent.  It is rumored to be even 
higher.  The IMF Director recently told local media that inflation 
in Tajikistan increased sharply since July 2007.  This was mainly 
due to the increase in prices of food stuffs including wheat flour. 
Wheat flour is the largest contributor to the consumer price index 
in Tajikistan -- about fifteen percent -- and is all imported.  The 
IMF representative called for diversification of agricultural 
production to keep prices stable, saying that prices could be lower 
in Tajikistan if farmers had freedom of choice on what to grow. 
Instead, he noted, the Government trumpeted results of the cotton 
harvest, perpetuating Soviet-style cotton quotas. 
 
Gasoline Prices Spike 
--------------------- 
 
¶11. (SBU) Tajik drivers depend on imports of refined petroleum 
products, mostly originating in Russia, and all coming via 
Uzbekistan.  In December the price of gasoline increased almost 
overnight from 2.3 Somonis per liter to 4 Somonis per liter.  Taxis 
and the microbuses doubled their fares and became hard to find, and 
traffic overall was down noticeably.  Up to half of Dushanbe's 
filling stations ran out of gas because drivers made a run on 
gasoline in fear of further increases.  Now the price of gasoline is 
down to 3.5 Somoni liter, still well above its earlier level. 
 
¶12. (SBU) Comment: The Government of Tajikistan's failed and 
negligent economic policies have begun to have a strong impact in 
the capital city, Dushanbe.  Many young Tajiks experiencing this 
neglect and corruption firsthand are paying less attention to the 
warnings of their parents' generation to avoid protest at all cost 
to preserve stability.  The memories of Tajikistan's bloody civil 
war - the fighting ended by 1993 in Dushanbe -- seem much less 
Qimmediate than the freezing temperatures and high fuel and food 
costs.  In addition, many thousands of migrant workers home from 
Russia for the slow winter non-working season can see the sharp 
contrast between Tajikistan's political economy and the relatively 
efficient and open Russian system.  While the current difficulties 
are unlikely to lead directly to unrest, they will add significantly 
to the accumulation of discontent with the administration of 
President Rahmon.  End Comment. 
 
 
HUSHEK