Oil restrictions in Iran may hurt Tajikistan
The other day I was reporting that Iran in recent years has become the major foreign investor in Tajikistan and it has plans to make huge investments, especially in hydroenergy sector.
Tajik boy said in response:
In any case the investments are good and I am glad someone is committed to re-build Tajikistan.
Indeed, the Iranian investments are important for Tajikistan to rebuild its economy. However, oil restrictions in Iran may hamper its investment projects in Tajikistan. The main reason for oil rationing in Iran is its inability to produce enough petroleum for the internal market. Iran does not have enough money to restore its own refinery plants (!). According to the experts, ‘Iran needs £6 billion of foreign investment to achieve self-sufficiency in petrol by upgrading refineries.’
Reviving the entire oil and gas sector - allowing Iran to produce its full potential of 5.3 million barrels per day - would need another £46 billion.
Taking into consideration the fact that US will further pursue its sanctions against Iran and take strict measures against the world companies which have a desire to invest in Iranian energy sector, it is clear that Iran will not be able attract foreign investments. Therefore the government of Iran will look for money inside the country and try to refrain from investing the spare money in other countries, like Tajikistan.
on June 28th, 2007 at 12:16 pm
I do not see that Iran will stop its investment projects in Hydro Electricity field of Tajikistan and Iran wants to continue it Investment even at the cost of its people because they want to have influence in Tajikistan future. I hope and pray that it would not happen (I mean iranian [SHITIE] influence in my country) otherwise another Iraq is waiting for the wolrd.
Regards
on June 28th, 2007 at 12:34 pm
As for , “In any case the investments are good and I am glad someone is committed to re-build Tajikistan.”
Seems that many others: the World Bank, UN (UNDP, UNICEF), and, USAID, are, and have been for many years now, committed to development (in many spheres) in Tajikistan. Investments, loans and humanitarian aid add up well over a billion dollars, at the least.
on June 28th, 2007 at 12:49 pm
“Seems that many others: the World Bank, UN (UNDP, UNICEF), and, USAID, are, and have been for many years now, committed to development (in many spheres) in Tajikistan. Investments, loans and humanitarian aid add up well over a billion dollars, at the least.”
That very well may be, but the results are not tangible. Plus knowing how these organizations work, you can be sure that at least 80% of that US$ 1 billion went to pay the high salaries of consultants, etc.
The net positive effect of such investments in Tajik economy remains debatable. Investment in hydropower, on the other hand, creates an asset, which will generate income for the country hence making it’s economic development more sustainable.
on June 29th, 2007 at 1:08 am
“That very well may be, but the results are not tangible”.
I don’t want to be an apologist for foreign donors (not only the US has invested in Tajik development) in Tajikistan, for their shortcomings and weaknesses are many. But, what studies or project evaluations or indices of success did you use to come to the conclusion that they results “are not tangible”?
Of course it is healthy, I think, for Tajikistan to have productive and mutually beneficial relations with its neighbors in a very complicated and potentially volatile region. But it seems short-sited and even juvenile to think that it does not need, and has not benefitted from, the support and resources of others in the world community. Good relations with the US and EU only help to leverage its relationships with Pakistan and Iran.
on June 29th, 2007 at 5:26 am
Andrew,
It is a bit counterintuitive to try to prove something that is so evident. I personally do not see how all this humanitarian aid and loans translate into something tangible. By tangible I mean something which could make the country self-sufficient.
To me the rhetoric about the improvement of humanitarian landscape, political situation and other fluffy words carries no weight. These concepts are very fluid, hard to measure and very subjective (which makes them even more dangerous). So sorry, but I don’t see how the world community has helped Tajikistan’s economy become self-sufficient.
If you have data to prove otherwise, you’re are more than welcome to lay out your evidence, but please do not bother if it is along the lines of “benefit from the support of the world community”.
I am not arguing against humanitarian aid or international loans, etc overall. These are good temporary, patchwork solutions to here-and-now problems, but they are by no means crucial in the long-term survival of Tajikistan in that they do not lay groundwork for sustainable economic development.
I wonder if there is a publication which could provide the key details on all these aid/loan programs. It would be very interesting to see what the underlying conditions of loans are for example. Now if there is such a publication (and most importantly if you can analyze the figures) it might give you an insight into why countries provide aid or give loans. I think it is not in the interest of donor countries to help countries build economic capacity and become self-sustainable because donor countries would a) lose external markets for their goods and “expertise” and b) have no leverage over other countries to dictate their rules of engagement.
My experience shows that a great number of these aid programs/loans are aimed to ultimately support the economies of donor countries.
Suppose Country A has $1 billion pledged to a project in a poor country, but has set certain things (hiring consultants from country A to help with the project, spending money on goods from country A while cheaper alternatives exist, etc.) as a condition of the loan agreement. This would ensure that major part of this $1 billion project would ultimately fly back to the economy where it came from. So at the end of the day the population of a poor country gets into debt and is liable to pay the whole $1 billion while in fact receiving a small portion of it.
This is exactly what makes aid/loan programs intangible as opposed to investing real money and building real assets which generate real cash for the economy.
on June 29th, 2007 at 1:02 pm
OK. Your point that much of the loans to countries actually goes back to donor coutnries is well taken, to an extent. And perhaps not a wise choice to accept the loans in the first place.
As an aside, US foreign policy has always, in the modern era, been a dialogue between self-interest and the promotion of loftier, more humanitarian ideals (Kissinger versus Carter). If the agenda of loans abroad seems confusing, it’s because it is. Sometimes the US profits and sometimes it loses, in many different ways, from its involvement in the rest of the world.
But I don’t think that investments by Iran will come without a price either.
As for self-sufficiency, that sounds from rhetoric from North Korea. Kim Jung Il’s was famous for his appeal for “self-sufficiency”, which only led to a fatal isolation and collapse of the internal economy. No such thing as “self-sufficient” these days. It’s just a matter of dependence on others, in good and bad ways. As a young and weak nation, Tajikistan has little choice but to be dependent. Iran or the EU/UN/US? Choose your poison.
on June 29th, 2007 at 4:22 pm
“But I don’t think that investments by Iran will come without a price either. ”
Oh, trust me neither do I. If my memory serves me right, Iranian government will be entitled to share the income from its investment for the next 25 years. But the advantage of this transaction is that at the end Tajikistan will own an asset which would give it means to survive.
“As for self-sufficiency, that sounds from rhetoric from North Korea.” The fact that someone else uses the same term does not make my point (short-term solutions vs. long-term economic capacity building) any less true.
Plus there are different ways one could interpret the word “self-sufficient”. For Kim Jung Il it most probably means trying to produce everything inside one country, which (if you believe in Comparative Advantage Theory) is inefficient and does not work in free market. For such an approach to work the economy MUST be isolated or heavily susidized
Anyway, I use the word “self-sufficient” in a different sense. To me a country could be self-sufficient if it can produce something with a greater cost advantage. A country can be self-sufficient even if it’s economy is not diversified. It would be prone to cycles but still.
Saudis have oil while Asian economies can boast with cheap labor. Tajikistan has an untapped hydropower, which could lift the country out of poverty. All it needs is investments and access to free market.
“As a young and weak nation, Tajikistan has little choice but to be dependent. Iran or the EU/UN/US? Choose your poison.”
Tajikistan should be open to anyone but still choose a partner based on its own economic interests. So far, in my books, Iran in Tajikistan has beaten the rest of the world by a score of 1:0. Would others care to challenge that?
I am sure Tajikistan is open for offers.
on November 11th, 2007 at 10:32 pm
I don’t think that it is good for tajikistan to invest somthing from another countries, is they invest somthing, main profit will go to another country but we can reduce umemployment in tajikistan. But bad thing they pullating our envorement and they using our natural resourses, one day this things gonna be global warming in tajikistan. Forieng direct investment don’t care with our future generation, in my prospect we should care with our future and we should reduce forieng direct investment as much as possible.
Wiht respects Chucho