Sanctions-Hit Iran to Build an Industrial Town in Tajikistan?

It has become something of a custom for authorities in Tajikistan to announce major investment deals which are unlikely to materialize. Apparently, the latest agreement with Iran announced this week by Tajikistan’s Ministry of Economic Development and Trade (MEDT) belongs to this category of deals.

On February 23, the Ministry told journalists that Iranian entrepreneurs have agreed to build the first specialized industrial town in Tajikistan. The industrial town will reportedly host about 50 industrial enterprises, including plants processing aluminium, cotton, and fruit. These enterprises will employ an estimated 20,000 people. The industrial town will occupy an area of 100 hectares (250 acres) in the Rudaki district, adjacent to Tajikistan’s capital city Dushanbe. According to the authorities, construction of the facilities will take about three years and will begin as soon as Iranian specialists complete all technical plans and feasibility assessments.

It is clear that a project involving the construction and equipment of so many enterprises, training thousands of people, and marketing of goods will require massive investment. It is equally clear that Iran whose economy is increasingly damaged by tougher international sanctions would not be able to provide this investment. What remains unclear, however, is what would happen to previous investment pledges made by Iran.

So far, Iran’s largest investment project in Tajikistan has been the construction of the Sangtuda-2 hydropower plant (HPP) on the Vakhsh River in central Tajikistan. The 220-megawatt power plant which was commissioned in late 2011 had cost about US$200 million to complete. The Iranian authorities have announced that they would also build a 170-megawatt Ayni HPP on the Zarafshon River in northern Tajikistan. In February 2011, a private Iranian company signed an agreement with the Tajik Ministry of Energy and Industry (MEI), pledging to build a large cement plant in Tajikistan’s southern Khatlon province. It was announced that the plant would produce two million metric tons of cement annually, costing some US$500 million to complete. Besides, Iranian private companies have announced plans to build three specialized health clinics in addition to an existing Iranian hospital in Dushanbe. The authorities have not indicated whether the investments that Iranian companies plan to channel into the industrial town project are expected to complement or replace the previous investment pledges.

Iran has steadily expanded its economic and cultural cooperation with Tajikistan. Trade between the two countries stood at US$215 million in 2011. Last week, the Tajik envoy to Iran, Davlatali Hatamov, announced that Tajikistan was ready to export crude oil from Iran. He also suggested that a pipeline needs to be built to enable uninterrupted deliveries of Iranian crude to the country. It is hard to say whether Hatamov himself believes that an Iranian pipeline which will have to go through Afghanistan might be a feasible project any time soon. Deliveries of Iranian oil by rail through Turkmenistan and Uzbekistan are unlikely, because the Uzbek authorities have effectively been blocking the transit of all rail cargo bound for Tajikistan through their territory since late 2010.

So, why do the Tajik and Iranian authorities speak publicly about economic and investment projects which most probably will not be implemented? Is it wishful thinking or something more than that?

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4 Comments

Filed under Economy, Industry, Tajik-Iranian relations, Tajikistan

4 responses to “Sanctions-Hit Iran to Build an Industrial Town in Tajikistan?

  1. Ak Barak

    Interesting. I am sure Iran genuinely wants to support Tajikistan by helping develop its economy. This is why Iran has built the Sangtuda-2 hydroelectric plant (it would have built the Sangtuda-1 plant had Russia not objected). The Iranian leadership does not think that international sanctions would work. These sanctions simply cannot be effective without China, India and Russia supporting them. So, Iran thinks it can continue investing in the brotherly nation.

    • Thanks for the comment!

      I personally do not think that Iran’s support to Tajikistan is motivated by its “brotherly” sentiment alone. By investing in Tajikistan, Iran pursues a number of political, strategic and economic goals.

      I do not know whether the sanctions can or cannot be effective. According to the recent reports (NYT, Economist, Financial Times), the sanctions are already damaging Iran’s economy. Of course, without China, Russia and India, these sanctions will not have the full effect they could possibly have – but they will still hurt Iran.

  2. Iran self-sufficient in developing traditional power plants

    Tehran Times, 27 February 2012

    Iran can develop thermal and combined cycle (CCGT) power plants using entirely indigenous materials and labor, the director of Iran Power Plant Projects Management Company (MAPNA) announced on Monday.

    Abbas Aliabadi told Mehr news agency that the country currently exports its technical and engineering expertise in building power projects.

    Aliabadi said on February 17 that Iran is currently building seven large power plants in Syria, Oman, Iraq, and Tajikistan, as well as several in Africa.

    By the end of the fifth five-year Economic Development Plan (2015), Iran will boost its electricity generation capacity by 25 gigawatts (GW) to 73GW, Energy Minister Majid Namjou said on February 7.

    Deputy energy minister Mohammad Behzad has said that the country’s electricity exports will amount to $1 billion by the end of the current calendar year (March 19, 2012).

    Iran currently trades electricity with Turkey, Armenia, Turkmenistan, Azerbaijan, Pakistan, Afghanistan and Iraq.

  3. Kremlin Seeks to Alarm Southern Neighbors About Cooperating with the Pentagon

    Eurasia Daily Monitor (Volume: 9 Issue: 44), March 2, 2012

    It is well-known that the aggressive foreign policy of Iran’s clerical regime makes Central Asian governments uneasy. Most obviously, Iran and its Caspian neighbors have a longstanding dispute over Tehran’s expansive claims to offshore energy resources. In addition, the Central Asian states have repeatedly rejected Tehran’s application to elevate its observer status within the Shanghai Cooperation Organization to that of a full member. Furthermore, they have limited educational and cultural exchanges with Iranians that could give Tehran opportunities to proselytize radical versions of Islam in Central Asia.

    At the same time, no Central Asian government appears enthusiastic about a major US military operation against nearby Iran or about additional UN sanctions on Tehran given their economic ties with Iran. For example, Turkmenistan has such important bilateral projects as the Dostluk Water reservoir, the Tejen-Serahs-Mashhad railway, and the Korpeje-Gurtguyi and Dovletabat-Serahs-Khangeran gas pipelines. Iranians also purchase large quantities of electricity from Turkmenistan (trend.az, February 21).

    Kyrgyzstan has minimal economic ties with Iran, but it does host the most prominent US military base in Central Asia at Manas International Airport, which the Pentagon has used for the last decade to support Operation Enduring Freedom in Afghanistan. In December 2011, President Almazbek Atambayev cited the need to end this US presence at Manas because “Iran poses a big threat, whose missiles can easily reach Kyrgyzstan. Just imagine what could happen if Iranians, firing missiles against the US base, were to hit peaceful the population?” (24.kg news agency, December 29, 2011).

    Russian officials have sought to play up fears of a confrontation involving Iran by warning Central Asians that the United States could exploit any basing and other military privileges (such as overflight rights) to entangle them in a war with Iran.

    In a February 22 media briefing, Foreign Ministry spokesman Alexander Lukashevich warned that “[i]t cannot be excluded that this site [Manas] could be used in a potential conflict with Iran,” which he said would violate the Pentagon’s lease agreement with Bishkek. Lukashevich further claimed that, “[t]he worries are shared not just by Kyrgyzstan – where a debate has erupted about the risk of a retaliatory strike from Iran – but other Central Asian countries.”

    The Russian Foreign Ministry has also claimed that the Western powers were exploiting the Iranian nuclear issue to “re-carve the geopolitical map of the large hydrocarbon-rich region that includes Central Asia” (The Hindu, http://www.thehindu.com/news/international/article2932313.ece, February 25).

    In his subsequent meeting with Atambayev, President Dmitry Medvedev extended Russia’s warning to other former Soviet republics to encompass Western pressure on Syria since developments related to “the Middle East (around Iran and Syria, and certain other countries) have direct influence on the situation in our region” (www.kremlin.ru/news, February 24). Medvedev called on these governments to cooperate closely with Russia to address this threat: “And Russia considers it extremely important to coordinate with our closest partners and allies our efforts to ensure greater stability [in Central Asia], and especially in this case when negative developments could occur” (www.kremlin.ru/news, February 24).

    The US ambassador to Russia, Michael McFaul, responded that the “Manas Transit Center contributes to the international effort to stabilize and secure Afghanistan and will only be used for that purpose” (https://twitter.com/#!/McFaul/status/172405940342104064). Indeed, it is most unlikely that the US would attack Iran from Central Asia given the superior and better-situated US military facilities and platforms in the Persian Gulf. For example, carrier-based aircraft could bomb Iranian nuclear targets without needing to fly through any other countries’ airspace.

    Iranians would invariably seek to retaliate for a US or Israeli military strike against Iran, but the most likely targets would be against US interests and allies in Afghanistan, Iraq, Israel and other Middle Eastern countries, but also the South Caucasus, which has already emerged as a battleground between US and Iranian proxies.

    It is important to recall that these Russian remarks came in the context of Atambayev’s February 24 visit to Moscow, his first since becoming Kyrgyzstan’s new president in December. Before the trip, Atambayev had focused his remarks on Russia’s failure to provide sufficient compensation to Kyrgyzstan for hosting its military bases (Kyrgyz Kabar news agency, February 24).

    According to Kyrgyzstan’s Defense Ministry, Russia owes $15 million for leasing its military facilities, which includes four military bases, a torpedo testing facility, military communication center and a radio seismic laboratory (Rian, February 24). Furthermore, Atambayev told Radio Ekho Moskvy that Russia has failed to train Kyrgyz pilots, as required by their bilateral defense agreements (Rian, February 24, 2012). The media coverage on Kyrgyzstan’s military bases since Atambayev’s return has focused on Atambayev’s repeated insistence that the Pentagon stop using the base after the US lease expires in summer 2014.

    Moscow’s war rhetoric is likely to continue even after Putin’s almost inevitable return to the Russian presidency because it helps keep Iran alienated from the United States (preserving the Russians’ dominant economic position there), deepen Central Asian fears about supporting an enduring US military presence in their region (Russia would like the capacity to kill any Western military presence at will as a means of influencing Western actions on Georgia, missile defense, NATO expansion, etc.), and remind Washington and other governments (including Beijing) that the Kremlin still considers the post-Soviet space as a zone where Moscow exercises strategic primacy.

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