Central Eurasia 2005

CENTRAL EURASIA 2005

Analytical ANNUAL

CA&CC Press® SWEDEN 2006

1 CENTRAL EURASIAFOUNDED 2005 AND PUBLISHED AnalyticalBY Annual INSTITUTE INSTITUTE O OR CENTRAL ASIAN AND STRATEGIC STUDIES O CAUCASIAN STUDIES THE CAUCASUS Registration number: 620720-0459 Registration number: M-770 State Administration for Ministry of Justice of Patents and Registration of Sweden Azerbaijan Republic

PUBLISHING HOUSE CA&CC Press®. SWEDEN Registration number: 556699-5964

S c i e n t i f i c E d i t o r i a l B o a r d

Eldar ISMAILOV

C h a i r m a n Tel./fax: (994-12) 497 12 22 E-mail: [email protected]

Murad ESENOV

D e p u t y C h a i r m a n Tel./fax: (46) 920 62016 E-mail: [email protected]

Jannatkhan EYVAZOV

E x e c u t i v e S e c r e t a ry Tel./fax: (994-12) 499 11 73 E-mail: [email protected]

Abbas MALEKI

Doctor, Director General, International Institute for Caspian Studies (Iran)

Ainura ELEBAEVA

Doctor of Philosophy, professor, director of the Research Institute of Ethnology, International University of Kyrgyzstan (Kyrgyz Republic)

Ariel COHEN

Doctor, leading analyst, The Heritage Foundation, U.S.A. (U.S.A.)

Vitaly NAUMKIN

Doctor of History, professor, Director, Center for Strategic and International Studies of RF (Russian Federation) 2 Vladimer PAPAVA Doctor of Economics, professor, Senior Fellow, Georgian Foundation for Strategic and International Studies (Georgia), Fulbright Fellow, Central Asia-Caucasus Institute, The Nitze School-SAIS, Johns Hopkins University (U.S.)

S. Neil MACFARLANE Professor, Director, Center for International Studies, The University of Oxford (Great Britain)

Roger N. McDERMOTT Honorary Senior Research Fellow, Department of Politics and International Relations, University of Kent at Canterbury (U.K.)

Lena JONSON Doctor, Senior Fellow, Swedish Institute of International Affairs (Sweden)

Timur SHAIMERGENOV Member of the Secretariat of the Kazakhstan Parliament Majilis (Republic of Kazakhstan)

S. Frederick STARR Professor, Chairman, The Central Asia-Caucasus Institute, The Johns Hopkins University (U.S.A.)

Bülent ARAS Doctor, Chair, Department of International Relations, Fatih University (Turkey)

Xing GUANGCHENG Doctor of Political Sciences, professor, Deputy Director of the Institute for East European, Russian and Central Asian Studies, Chinese Academy of Social Sciences (China)

The views in the Analytical Annual do not necessarily reflect those of the Scientific Editorial Board

Editorial Office: CA&CC Press AB Hubertusstigen 9. 97455 Luleå SWEDEN WEB ADDRESS: http://www.ca-c.org

CENTRAL EURASIA 2005 Analytical Annual

CONTENTS

Eldar Ismailov PREFACE ...... 9

Eldar Ismailov, CENTRAL EURASIA IN THE NEW GEOPOLITICAL AND Murad Esenov GEO-ECONOMIC DIMENSIONS ...... 11 Introduction ...... 11 Central Eurasia on the Path to Political and Economic Transformation ...... 13 Central Eurasia in the World Community ...... 24 The Cultural-Civilizational Aspect of Central Eurasian Development ...... 37

AFGHANISTAN

Viktor Korgun GENERAL OVERVIEW ...... 44 Viktor Korgun POLITICS ...... 47 Evgeni Pastukhov ECONOMY ...... 53 Iakov Trofimov RELIGION ...... 59 Evgeni Pastukhov INTERNATIONAL AFFAIRS ...... 63

REPUBLIC OF ARMENIA

Agasi Enokian GENERAL OVERVIEW ...... 70 Manvel Sarkisian POLITICS ...... 72

4 Contents

Vaagn Khachatrian ECONOMY ...... 79 Vagram Melikian, Egine Mkrtchian RELIGION ...... 87 Sergey Minasian INTERNATIONAL AFFAIRS ...... 93

AZERBAIJAN REPUBLIC

Nazim Imanov GENERAL OVERVIEW ...... 102 Nazim Imanov POLITICS ...... 105 Fuad Murshudli ECONOMY ...... 113 Elmir Kuliev RELIGION ...... 121 Jannatkhan Eyvazov INTERNATIONAL AFFAIRS ...... 128

GEORGIA

Vladimer Papava GENERAL OVERVIEW ...... 137 Giya Zhorzholiani POLITICS ...... 140 Nodar Khaduri ECONOMY ...... 147 Zaza Piralishvili RELIGION ...... 152 Archil Gegeshidze INTERNATIONAL AFFAIRS ...... 158

REPUBLIC OF KAZAKHSTAN

Timur Shaimergenov GENERAL OVERVIEW ...... 167 Erbulat Seylekhanov POLITICS ...... 170 Larissa Sidorova ECONOMY ...... 176 Iakov Trofimov RELIGION ...... 189 Murat Laumulin INTERNATIONAL AFFAIRS ...... 194

5 CENTRAL EURASIA 2005 Analytical Annual

KYRGYZ REPUBLIC

Ainura Elebaeva GENERAL OVERVIEW ...... 204 Nur Omarov POLITICS ...... 207 Alymbek Biialiev ECONOMY ...... 212 Kanatbek Murzakhalilov, Kanybek Mamataliev RELIGION ...... 219 Askar Beshimov, Muratbek Baikhojoev INTERNATIONAL AFFAIRS ...... 223

REPUBLIC OF TAJIKISTAN

Jamilia Majidova, Parviz Mullojanov GENERAL OVERVIEW ...... 229 Parviz Mullojanov POLITICS ...... 231 Sobir Kurbanov ECONOMY ...... 234 Khakim Abdullo RELIGION ...... 244 Rashid Abdullo INTERNATIONAL AFFAIRS ...... 250

TURKMENISTAN

Azhdar Kurtov GENERAL OVERVIEW ...... 258 Azhdar Kurtov POLITICS ...... 261 Igor Proklov ECONOMY ...... 267 Iakov Trofimov RELIGION ...... 273 Azhdar Kurtov INTERNATIONAL AFFAIRS ...... 277

REPUBLIC OF UZBEKISTAN

Mukhabat Khamraeva GENERAL OVERVIEW ...... 285

6 Contents

Bakhodyr Ergashev POLITICS ...... 288 Jahangir Kakharov ECONOMY ...... 294 Bakhodyr Ergashev RELIGION ...... 300 Aziz Kamilov INTERNATIONAL AFFAIRS ...... 305

CHRONOLOGY OF EVENTS FOR 2005

Politics Afghanistan ...... 311 Republic of Armenia ...... 312 Azerbaijan Republic ...... 313 Georgia ...... 315 Republic of Kazakhstan ...... 315 Kyrgyz Republic ...... 319 Republic of Tajikistan ...... 320 Turkmenistan ...... 322 Republic of Uzbekistan ...... 323

Economy Afghanistan ...... 325 Republic of Armenia ...... 327 Azerbaijan Republic ...... 328 Georgia ...... 330 Republic of Kazakhstan ...... 331 Kyrgyz Republic ...... 333 Republic of Tajikistan ...... 333 Turkmenistan ...... 335 Republic of Uzbekistan ...... 336

7 CENTRAL EURASIA 2005 Analytical Annual Religion Afghanistan ...... 339 Republic of Armenia ...... 339 Azerbaijan Republic ...... 341 Georgia ...... 344 Republic of Kazakhstan ...... 345 Kyrgyz Republic ...... 345 Republic of Tajikistan ...... 346 Turkmenistan ...... 347 Republic of Uzbekistan ...... 348

International Affairs Afghanistan ...... 350 Republic of Armenia ...... 357 Azerbaijan Republic ...... 361 Georgia ...... 364 Republic of Kazakhstan ...... 368 Kyrgyz Republic ...... 373 Republic of Tajikistan ...... 375 Turkmenistan ...... 378 Republic of Uzbekistan ...... 379

LIST OF ACRONYMS ...... 382

8 Preface

PREFACE

Dear readers,

he Institute of Strategic Studies of the Caucasus and the Institute for Central Asian and Cauca- sian Studies, which publish the journal of social and political studies Central Asia and the Cau- T casus, are offering an Analytical Annual called Central Eurasia 2005 as their next project. The articles in the Annual focus on a general overview and analysis of the political, international, religious, and economic affairs of the Central Eurasian countries in 2005. This publication is unique with its comprehensive overview of the most important events and processes going on in the aforementioned areas of each country’s life, the dynamics and development trends in this region from the viewpoint of globalization and new regionalism. Our primary aim in undertaking this project is to present an objective panorama of public life, regional cooperation, and integration of the Central Eurasian countries as an important prerequisite of their sustainable and dynamic development. A comprehensive view of the social processes going on in this region will be conducive to finding the right responses to the diverse challenges of globalization. We hope in this way to make our best contribution to forming a contemporary model for developing a new regional entity—Central Eurasia—and thus help the international community to create a coordinated platform for rendering real support to sociopolitical development and integration in the region. A qualitatively better result can be achieved by attaining these goals jointly than by simply putting together a bunch of appealing and significant facts. We are living in very difficult and interesting times. The sociopolitical, economic, and international relations of the Central Eurasian countries are transforming before our very eyes. New regional relations are developing among these countries on an equal and mutually advantageous basis, which could ultimately lead to the formation of another sustainably developing region on the planet. At present, the countries of the region are at a stage where it is becoming increasingly important for each of them to popularize the priority areas of development they have chosen and the measures they are taking in political, international, religious, and economic affairs. This need is essentially what prompted the authors of the Annual to launch this project. They tried to select from an enormous amount of information precisely those items which will help readers to orient themselves in the convoluted ups and downs of the social life in all the region’s countries as they interact and have an influence on each other, and to find in the event-filled chronology of each country those facts and incidents deserving of attention. 9 CENTRAL EURASIA 2005 Analytical Annual

The initiators of the Annual hope that this publication will encourage a dialog between the countries of the region and will offer political scientists and the public enough convincing arguments in favor of regional cooperation and integration, which could, we are sure, become catalysts for ensuring sustainable and long-term economic growth, lowering the level of poverty, and maintaining social stability. This Annual, which we intend to make a tradition, seems to us to be the most attractive way to form a new perception of the place and role of Central Eurasia in the planetary scheme of things. This confidence is based on the fact that Central Asia and the Caucasus and its special issues, as well as the Annual being published in tandem are widely disseminated and available to a broad readership. The entire project is aimed at readers who are looking for ways to encourage the sustainable, dynamic development of the Central Eurasian countries and their integration into the globalizing world. We hope the Annual will be a success, and we welcome all reviews and suggestions for improving the publication, as well as for developing similar projects.

Eldar ISMAILOV, Chairman of the Scientific Editorial Board

10 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions

CENTRAL EURASIA IN THE NEW GEOPOLITICAL AND GEO-ECONOMIC DIMENSIONS

Eldar ISMAILOV Ph.D. (Econ.), Director of the Institute of Strategic Studies of the Caucasus, Chairman of the Editorial Board of Central Asia and the Caucasus (Baku, Azerbaijan)

Murad ESENOV D.Sc. (Political Science), Director of the Institute for Central Asian and Caucasian Studies, Editor-in-Chief of Central Asia and the Caucasus (Luleå, Sweden)

I n t r o d u c t i o n

n the political map of the world, Central countries which differ immensely in terms of their Eurasia (CEA), which has stood for cen- natural geographic characteristics (territorial re- O turies at the crossroads of the vital arteries lief, supplies of natural resources, area, and so on), between Western Europe and Eastern Asia, is economic potential (level of production, invest- comprised today of nine sovereign states—Af- ments, incomes, and so on), human development, ghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, attitude toward reform, social, environmental, and Turkmenistan, Uzbekistan, Azerbaijan, Armenia, administrative standing, and willingness to en- and Georgia.1 Although a historically interde- gage in cooperation. Despite these differences, the pendent, single, socioeconomic area, CEA unites countries of the region have much in common (mainly of a transitive nature), partly due to their centuries-long common political and economic 1 In keeping with the classification we use, the first six states form Central Asia, and the other three, the Central history (particularly when they formed a part of Caucasus. the Soviet Union) and Soviet heritage, and partly 11 CENTRAL EURASIA 2005 Analytical Annual to their significant interdependence in trade, wa- rupt. The consequences of political, economic, ter and energy systems, the environment, difficul- and social disintegration were similar throughout ties in gaining access to the world markets, and the post-Soviet expanse, but we believe they were vulnerability to natural disasters and man-induced most intensely manifested in CEA. This is because threats. the region has no access to the sea, depends heav- Along with this, based on geopolitical and ily on external relations and financial transfers, is geo-economic expediency, the need and impor- at the mercy of political conditions, has weak state tance of integrating the region into a single inte- institutions, and so on. gral formation are growing. The stability current- The new borders and end of the command ly achieved in the region is still rather tenuous, economy have destroyed the trade and financial, and although the problems arising primarily re- transport, and social ties established during So- late to the region’s countries themselves, they are viet times, raised barriers hindering interperson- arousing the increasing concern and involvement al relations, undermined the integrated, but vul- of other nations. The range of these problems is nerable water and energy systems, and made it rather broad and includes military conflicts, drug difficult for the new states to integrate into the trafficking, political, international, religious, world economy. The breakdown in industrial and economic, and other controversies. These and agricultural supply networks, the emigration of a other problems, which are arising to a certain large number of qualified workers, and the halt in extent as the result of outside influence on the subsidies from Moscow and traditional inter-re- Central Eurasian region, are having a detrimen- public cooperation in the key sectors of the nation- tal effect on the countries around it (Russia, Iran, al economy have led to a chronic economic crisis Turkey, China, India, and Pakistan), as well as and placed the damper on economic activity. This on the rest of the world as a whole. This is why, in turn has caused serious deterioration of the in addition to being a potential market for other population’s social protection system and an countries, the region is also viewed as a source abrupt rise in poverty. Some republics of the re- of specific threats, which is making regional sta- gion have experienced ethnic conflicts and civil bility and regional consent issues of urgent im- wars. In addition to all these difficulties, each of portance. the countries had to restore its national self-iden- Dramatic changes occurred in the CEA tity, build state institutions, as well as carry out countries after the Soviet Union ceased to exist as market reforms, in most cases using political and an entity of international law and geopolitical administrative-management personnel from reality and the world socialist system collapsed. among representatives of the party establishment These changes were manifested in increased ten- (nomenklatura). sion in interstate relations and aggravation of the But the collapse of the Soviet Union also existing historical ethnic and, in particular, terri- opened up borders and helped the region to estab- torial disputes. This in turn had an extremely neg- lish direct contacts with its Asian neighbors— ative impact on the situation in these countries and Turkey, Iran, China, Pakistan, and others. This caused abrupt downward trends in all areas of contributed to the revival of the trade routes that socioeconomic life during the transition period. once passed through CEA, via which energy re- Over time, the states of the region were able to sources can be transported from the region to the make up to one extent or another for what they had world markets, as well as for strengthening ties lost, but this did not compensate for all the losses between the region and the rest of the world. In in the region. For example, the breakdown in ties order to take full advantage of these opportuni- and appearance of new borders between the re- ties, the region’s countries must accelerate polit- gion’s states disrupted supply and demand and ical and economic reform and interstate and in- raised barriers hindering trade, transit, and pay- terregional integration processes, as well as draw ments, thus causing many industrial and agricul- up mechanisms for predicting and preventing tural enterprises in the CEA countries to go bank- present-day threats.

12 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions

The CEA nations and their governments GUAM, BSECO, and others) which can to one have made notable progress in many important degree or another promote further development areas to overcome the most serious problems of regional cooperation and integration. Where- they encountered after the collapse of the So- as at the end of the 1990s, there were reasons viet Union. They have succeeded in restoring to seriously doubt the long-term independence their national self-identity and building state in- of each state, particularly their integration into stitutions. Most countries have made immense a unified region, today there are objective pre- strides toward creating new market mechanisms requisites for the CEA countries to become and gaining access to the world markets. They prosperous and make rapid progress in all are- are also well on the way toward economic as of social development. This is shown by the growth after the severe economic slump during end results of their political, international, eco- the first years of their independence. Regional nomic, and religious affairs in 2005, which we unions have been created (the EurAsEC, SCO, will discuss below.

Central Eurasia on the Path to Political and Economic Transformation

All the CEA countries are in the process of political and economic transit, that is, in a transition period from one socioeconomic and sociocultural system to another. The transformation of their political and economic systems and modernization of society as a whole require exerted efforts from all strata of society, as well as the presence of certain prerequisites: (a) civil consent in society, and consent among the elites and various political forces; (b) a consolidating national idea; (c) re- tention of state control over the changes going on and prevention of acute social conflicts and armed clashes; (d) rapid growth of the middle class; and (e) sufficient economic and human resources.2 It is presumed that all the countries of the region have the above-mentioned prerequisites for transforming and modernizing society as a whole. But the dynamics for carrying out these processes and the results achieved on the way to transformation have their own special features in each country.

The Special Features of Political Transformation

Building national statehood and forming a democratic social system were declared as the goals of the political transit in all the republics of the region. For several reasons, this transformation has been and still is an arduous process. In the first half of the 1990s, several countries of the region were caught up in the turmoil of ethnic, territorial, and other conflicts. As of the present, some of these conflicts have been favorably resolved (Tajikistan), or are frozen (Azerbaijan, Georgia), or relative stability has been preserved exclusively due to the efforts of the world community (Afghanistan). At the moment, relative stability has nevertheless been reached in the region, or at least the hot phase of

2 For more details about these conditions, see: N.F. Naumova, Retsidiviruiushchaia modernizatsiia v Rossii: beda, vina ili resurs chelovechestva, Editorial URSS, Moscow, 1999. 13 CENTRAL EURASIA 2005 Analytical Annual some of the conflicts has been overcome, and this is opening the way to political and economic transformation. There are different ideas about the qualitative characteristics and stages of the transition period. Among Western experts, the most widespread is Samuel Huntington’s well-known two-turnover test. According to this test “a democracy may be viewed as consolidated if the party or group that takes power in the initial election at the time of transformation loses a subsequent election and turns over power to those election winners, and if those election winners then peacefully turn over power to the winners of a later election.”3 In the post-Soviet space, particularly in Russia, in addition to the government being elected at free elections, success of the transformation period is also measured by such categories as “national integrity”4 and “state sovereignty.” Whereby sovereignty is considered to be a “political synonym for competitiveness.”5 Keeping in mind the level of awareness of the Russian expert community with respect to CEA affairs, as well as the reality of the events going on in the region’s states, the opinion of these experts is difficult to refute. The following picture of the situation in the region’s countries can be drawn up using the qualitative parameters of the transition period presented, as well as based on the presence or absence of the prerequisites required for carrying out the political transit (see Table 1). As can be seen from the table, there are no precedents of a democratic transfer of power in the region which meet the requirements of Huntington’s test. But it should be noted that the negative index is objective here. Even if free and democratic elections have begun being held, a positive result (two turnovers) can only be achieved after at least three election cycles. At the same time, based on this index, presidential and parliamentary elections have begun to acquire free and democratic features in several of the region’s countries. For example, international observers generally gave a positive appraisal of the most recent elections in Afghanistan, Armenia, Azerbaijan, and Kazakhstan. As for such indices as “national integrity” and “state sovereignty,” the result depends on the presence or absence of local conflicts and territories not controlled by the central authorities. At the moment, Azerbaijan (Nagorno-Karabakh), Georgia (Abkhazia and the Tskhinvali Region), and Afghanistan (the central authorities do not fully control the entire country) have the indicated problems. Some of the data presented in Table 1 might at first glance seem controversial, for example, the absence of positive aspects during the last elections in Georgia and Kyrgyzstan. But it cannot be denied that in both Georgia and Kyrgyzstan the change in power took place as the result of the so-called color revolutions, and the revolutionaries were only legitimized later by means of an official election, which can hardly be called a positive step toward democracy. Consolidation of the elites has largely been achieved in several countries of the region, but in such countries as Afghanistan, post-revolutionary Kyrgyzstan, Turkmenistan, and Uzbekistan, there is no consolidation of the elites to speak of. The split in the elite in Afghanistan is the result of the long civil war, and in Kyrgyzstan it was caused by the so-called Tulip Revolution, which upset the balance in this country’s elites. In two other countries—Turkmenistan and Uzbekistan— the elites are held together exclusively by repressive methods, so there can be no talk of their consolidation.

3 Samuel P. Huntington, THE THIRD WAVE: Democratization in the Late Twentieth Century, University of Okla- homa Press, 1991, p. 267. 4 B. Makarenko. “‘Tsvetnye revoliutsii’ v kontekste demokraticheskogo tranzita,” Politkom.ru, 16 January, 2006. 5 V. Surkov, “Suverenitet—eto politicheskiy sinonim konkurentosposobnosti.” Available at [http://www.kreml.org/ media/111622794?user_session=e6fed6dab4ca7a01620e2365d2a23775], 25 February, 2006; M. Rogozhnikov, “Chto takoe suverennaia demokratiia,” Ekspert, No. 43 (489), 14 November, 2005. 14 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions

Table 1 Typology of the Transits in Central Eurasia

Precedents of a Consoli- Consoli- Nation- State democratic transfer dation dating Country al sover- of power (Hunting- of the national integrity eignty ton’s test) elites idea

Afghanistan +– – – +– –

Armenia +/– + + + +

Azerbaijan +/– –(+) + – +

Georgia – – + – +

Kazakhstan +/– + + + +

Kyrgyzstan – + – + –

Tajikistan – +(–) + + +

Turkmenistan – + – + –

Uzbekistan – + – + –

N o t e s: “+/–” — there are no precedents of a democratic transfer of power, but the last election is assessed as relatively democratic. “+(–)” — national integrity was restored after serious upheavals. “–(+)” — national integrity has not been achieved, but the situation is improving. “+–” — state sovereignty was technically restored, the central government does not completely control the entire country, or the central government depends on external factors when making certain decisions.

Political competition, which implies the unhindered activity of political parties and other public organizations, free mass media, and free elections to the power bodies, occupies one of the central places in the political transformation process. The dynamics for creating political competition and the achievements of the CEA countries in this sphere differ significantly from each other in their details. For example, whereas at the end of 2005, the number of registered political parties in Georgia reached 184, Turkmenistan had only one political party. At the same time, the region’s countries have more in common in terms of such indices as the participation of political parties in elections and the number of seats they obtain in the country’s parliament based on the results of these elections (see Table 2). As can be seen from Table 2, in most of the region’s countries, with the exception of Turk- menistan and Uzbekistan, the road to political competition is mainly open. Opposition parties, along with pro-government parties and movements, actively participate in different levels of elections. For example, all the political parties active in the country submitted applications independently or as part of party coalitions to the Central Election Commission in order to participate in the election to the Azerbaijan parliament in the fall of 2005. After reviewing their applications, the CEC regis-

15 CENTRAL EURASIA 2005 Analytical Annual

Table 2 Party-Building in Central Eurasian Countries

Number of Number of Number of seats in parliament registered parties which (according to party lists) political overcame the Country parties as of Pro-govern- % barrier at the Opposition the end of ment last parliamenta- parties 2005 ry election parties

Afghanistan 73 —** 119* 130*

Armenia 65 6 65 21

Azerbaijan 50 —** 60 12

Georgia 184 3 97 9

Kazakhstan 11 4 9 1

Kyrgyzstan 24 —** — —

Tajikistan 8 3 18 6

Turkmenistan 1 —** — —

Uzbekistan 5 5 108 0

* The oppositional nature of the parliamentary deputies in Afghanistan has its special features and the figures presented are unstable. ** Elections are held according to the majority system. tered eight party blocs. According to the election results, only three political forces—the progovernment party, Eni Azerbaijan, and the opposition blocs, Azadlyg and Yeni siyasiat —were able to place their representatives in the country’s parliament, whereby in far from equal numbers (see Table 2). Similar examples can also be presented for the other republics of the region, but the most indicative are the results of the presidential election in Kazakhstan held at the end of 2005. The Central Election Commission registered five presidential candidates for participation in this election: Erasyl Abylkasymov, nominated by the Communist People’s Party of Kazakhstan (CPPK) as a candidate from the opposition; Alikhan Baymenov, representative of the Ak Zhol Party, also a candidate from the opposition; environmentalist Mels Eleusizov, leader of the Tabighat (Nature) movement, a self-nominee, who positioned himself as a neutral candidate; Nursultan Nazarbaev, nominated by the Otan Party, the country’s current president; and Zharmakhan Tuiakbay, nominated by the democratic forces bloc For a Just Kazakhstan (FJK), who was registered as the united opposition candidate. That is, of the five presidents, three represented different opposition forces which, according to the results of this election, received a total of approximately 8% of the votes against the 91.01% received by the current president. The examples presented for Azerbaijan and Kazakhstan show that, despite the relatively adequate conditions for free political competition (these conditions were not refuted by the observers present at this election, including by international organizations and Western countries), the opposition struc-

16 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions tures do not have what it takes to engage in a competitive power struggle. There are several reasons for this, such as the administrative resource in the hands of the pro-government forces, the sociocultural features of the population, the underdevelopment of political institutions, the low level of mass media freedom, and so on. Of the above-listed reasons, we would like to single out one in particular—the level of mass media freedom. Without free mass media which are equally accessible to all the political forces, it is difficult to create equal conditions for the participants in the political competitive struggle. As the reports of various international organizations show, the level of mass media freedom in the CEA countries is much lower than in the countries of other regions of the world. According to the report by an international organization called Reporters without Borders (see Table 3), the CEA countries are below the 100 mark on the list of 167 countries, with the exception of Georgia, which occupies 99th place, in terms of freedom of press.

Table 3 Freedom of Press Index

No. Country Score

99 Georgia 25.17

102 Armenia 26.00

111 Kyrgyzstan 32.00

113 Tajikistan 33.00

119 Kazakhstan 36.17

125 Afghanistan 39.17

141 Azerbaijan 51.00

155 Uzbekistan 66.50

165 Turkmenistan 93.50

S o u r c e: Reporters without Borders. Worldwide Press Freedom Index 2005.

Based on the presented data, the conclusion can be drawn that, on the whole, the CEA states are at the initial stage of the political transit and have the necessary prerequisites to carry it out. At the same time, it should be noted that in different countries of the region, the transformation processes have different dynamics. In such countries as Azerbaijan, Armenia, Georgia, and Ka- zakhstan, more or less stable conditions have been created for political competition, which is shown by the presence of a multiparty system, civil society structures, a universal election system, pluralism of opinions, and so on. These conditions are absent, however, in Turkmenistan and Uz- bekistan, and the activity of the political organizations and institutions of a civil society is purely token in nature. However, the existence of a multiparty system, civil society institutions, and pluralism of opinion in the region’s countries does not mean these attributes are being efficiently implemented. It is precisely the low efficiency of the political institutions that gave rise to the color revolution phenom-

17 CENTRAL EURASIA 2005 Analytical Annual enon in the region’s states. If we analyze the revolutionary events of the fall of 2003 in Georgia and of the spring of 2005 in Kyrgyzstan, it is not difficult to see that these events indeed resulted from the weakness of the political institutions in these two countries. Potential revolutions were earmarked in other countries too last year. In particular, during the parliamentary election in Azerbaijan, the referendum to make amendments to the Constitution in Armenia, and the presidential election in Kazakhstan. But the political institutions in these countries proved more efficient. This fact in itself gives reason to talk about the positive prospects for political transformations in the Central Eurasian countries as a whole.

Economic Transformation and Prerequisites of Economic Development

Based on geopolitical expediency and in light of the globalizing economy, geo-economic prerequisites arose in the center of the Eurasian continent for establishing an independent economic regional formation—Central Eurasia (CEA). If the continent is pictured as a set of geometric figures, it is easy to see that CEA forms an ellipse or a sort of arc supporting the bunches of trapezoids, triangles, and circles of different integration formations which are stretched out along the periphery of this mega continent. But it is this ellipse which is the most vulnerable element, in terms of strength of economic and geographic ties, of the Eurasian continental model.6 It is also easy to see that several smaller, from the geographic and geopolitical viewpoint, integration formations are putting negative pressure on CEA, as the arc supporting the entire Eurasian mega continent. The largest of these unions, from which the strongest impulses are coming, are in Europe, the far western, and in the APR, the far eastern part of the continent. Both impulses also directly affect Central Eurasia. What is more, there is a local, but powerful integrating impulse on the Central Eurasian region from the ECO, which emanates from the direct proximity and obvious geographic advantages of this union. Since the end of the 1990s, CEA has become one of the most rapidly transforming regions being integrated into the world economy. The region’s advantages are its large supplies of natural riches (oil, gas, gold, and other ferrous metals), its relatively developed infrastructure (common transportation routes, energy system, joint network of oil and gas pipelines inherited from the Soviet Union), human capital, as well as its strategically important location—at the crossroads between Europe and Asia.7 It should be noted that CEA largely has the resources necessary to become a self-reproducing entity of the world economy and significant development potential. Nevertheless, full-fledged implementation by the region of its planetary function presumes economic integration both within the segments themselves, and among them. Natural questions arise. Is it expedient to create this kind of independent regional union on the Eurasian continent for carrying out its geo-economic function? If so, in keeping with which principles and of what type? Will this boost accelerated economic development both of the region’s countries and of the entire world economy? In order to provide a comprehensive answer to these and other questions, it is primarily necessary to present a general overview for 2005 of the main parameters of the CEA’s socioeconomic space as an independent geo-economic object-subject.

6 M. Laumulin expresses a similar viewpoint in his article entitled “Polititka protiv geografii. Evraziia na geo- politicheskom perelome,” Kontinent, No. 8, 17-30 April, 2002. 7 According to the conception of Samuel Huntington’s “clash of civilizations” (see: Samuel P. Huntington, The Clash of Civilizations and the Remaking of World Order, Simon & Schuster, New York, 1996, 368 pp.), after the collapse of the Soviet bloc, the main world rivals were three super civilizations (Western—Christian, Muslim, and Chinese—Confucian). The CEA states are the juncture of all three super civilizations. 18 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions

Table 4

Main Indices for CEA and the Countries Belonging to It for 20058

Indices Territories Population GDP (PPP)

Regions/ Thou. Percen- Million Percen- Billion Percen- Countries sq. km tage people tage dollars tage

CEA 4,841.7 100 104.5 100 321.8 100

Afghanistan 647.6 13.4 28.7 27.9 21.5 4.9

Armenia 29.8 0.6 3.2 3.1 15.3 4.0

Azerbaijan 86.6 1.8 8.3 8.1 36.5 10.0

Georgia 69.7 1.4 4.3 4.2 16.1 4.9

Kazakhstan 2,724.9 56.3 15.2 14.7 132.7 43.8

Kyrgyzstan 199.9 4.1 5.2 4.9 9.3 2.1

Tajikistan 143.1 3.0 6.9 6.6 8.8 1.7

Turkmenistan 491.2 10.1 6.7 6.1 29.4 18.5

Uzbekistan 448.9 9.3 26.0 24.4 52.2 10.1

Taking into account the growing cooperation in the Central Eurasian region, it is expedient to give a brief socioeconomic description of it as of 2005 (see Table 4). As we can see from Table 4, CEA, which is comprised of nine states, encompasses an extensive area of more than 4.8 million sq. km with a population topping 104 million people. The total GDP, taking into account purchasing power parity (PPP), is more than $321 billion for the region’s countries. A comparison of the main indices characterizing CEA’s socioeconomic potential, on the one hand, and that of the current integration groups, on the other, shows that in terms of territorial, human, and production resources, this region is inferior to most of them (Table 5). So although Central Eurasia is 6.1-fold larger in terms of territory and 1.7-fold larger in terms of population size than GUAM, its GDP, taking into account PPP, is 1.2-fold smaller. The difference between CEA and CAREC is also perceptible—3.0-fold, 13.7-fold, and 26.1-fold in favor of the latter, respectively. Comparative indices of the Central Eurasian region are also much lower compared with the regional integration groups (EurAsEC, CIS, BSECO, EU, NAFTA, MERCOSUR, APEC, ASEAN, SCO, and LAS). The rich human resources of the CEA states, the vast underdeveloped market and consumer potential of which will grow apace with development of its natural resources and increase in the prosperity of its population, make it possible to talk about the high capacity of the consumer market.

8 See: [www.cia.gov/cia/pudlication/factbook, www.cisstat.com], and the country reports in this Annual. 19 CENTRAL EURASIA 2005 Analytical Annual

Table 5

Main Indices for CEA and Regional Unions for 20059

Indices Territories Population GDP (PPP) Mem- Regions/ Per- Per- Per- Thou. Million Billion ber Regional cen- cen- cen- sq. km people dollars states unions tage tage tage

CEA 4,841.7 100 104.5 100 321.8 100 9

GUAM 790.3 16.3 63.0 60.3 383.2 119.1 4

CAREC 14,764.5 304.9 1,370.7 1,311.7 8,403.5 2611.4 7

EurAsEC 20,799.8 429.6 205.9 197.0 1,,815.8 564.3 6

CES 20,611.6 425.7 214.8 205.6 2,066.7 642.2 4

CIS 22,111.0 456.7 278.8 266.8 2,243.7 697.2 12

BSECO 19,184.1 396.2 323.4 309.5 2,999.4 932.1 11

ECO 7,977.7 164.8 397.1 380.0 1,778.8 552.8 10

EU 3,976.4 82.1 461.5 441.6 12,180.0 3,785.0 25

NAFTA 21,588.7 445.9 434.4 415.7 14,516.0 4,510.9 3

MERCOSUR 12,789.2 264.2 260.8 249.6 2,342.7 728.0 5

APEC 62,634.4 1,293.6 2,670.2 2,555.2 33,561.2 10,429.2 21

ASEAN 4,495.6 92.9 570.3 545.7 2,650.8 823.7 10

SCO 30,189.2 623.5 1,502.4 1,437.7 9,896.0 3,075.2 6

LAS 12,969.4 267.9 326.2 312.1 2,323.7 722.1 22

The Central Eurasian region is generously endowed with natural resources, which is an objective prerequisite for achieving positive and sustainable socioeconomic development of the CEA countries and makes it possible to efficiently carry out the region’s geo-economic function. This function consists of accelerating the integration processes throughout the Eurasian space. The region’s raw mineral base is extremely diversified in range of commodities and is une- qually distributed among the different countries. The CEA states have enormous reserves of fuel and energy resources. The Caspian Region alone accounts for 4% of the explored and confirmed world oil reserves and possibly a little more of gas.10 The region occupies fourth place in the world

9 See: [www.cia.gov/cia/pudlication/factbook, www.cisstat.com], and the country reports in this Annual. 10 See: S. Frederick Starr, “A New Age of Regional Cooperation in Central Asia?” in: Security and Regional Co- operation, Collection of documents from an international conference, KISI under the Kazakhstan President, Almaty, 2004, p. 13. 20 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions in terms of world gas reserves (after Russia, Iran, and Qatar) and its production (after Russia, the U.S., and Canada), and third in terms of uranium production (after Canada and Australia). The leader in terms of aggregate resources and raw material production volumes is Kazakhstan, which is one of the largest states in the world with respect to hydrocarbon and coal reserves. The mineral base of the economy of other CEA countries is also relatively rich—Azerbaijan (oil and gas), Uzbekistan (gas and gold), Turkmenistan (gas), Kyrgyzstan (gold and uranium), and Tajikistan (hydropower resources). The region has significant agricultural resources, particularly for producing cotton, vegetables, and gourds. The development and use of these resources form the basis for joint cooperation in the CEA region. The economic situation in the CEA countries is of course far from identical. Many Central Eurasian countries began carrying out market economic reforms with the aim of accelerating economic development and raising the competitiveness of the private sector. The World Bank divides them into groups with respect to level of liberalization of the economy. In keeping with this classification, Armenia, Georgia, Kazakhstan, and partly Kyrgyzstan are categorized as countries with an intensively reforming economy, in which the most radical changes have been carried out, and the old economic institutions have been gradually replaced; Azerbaijan, Tajikistan, and Uzbekistan belong to the group of states in which the reforms were oriented toward gradual transformation, the state played a significant role in carrying out the reforms, and many methods of the command- administration system were retained. Turkmenistan and Afghanistan did not carry out liberalization of the economy and are putting up strong resistance to new types of enterprises and financial institutions penetrating into the market system. As a result, the CEA countries significantly differ from each other both in terms of development rates, economic potential, and social status, and in terms of a favorable business environment, penetration of market mechanisms, level of business transparency, and so on. Indeed, in 2005, the economic development of each Central Eurasian state had its own specifics. For example, Azerbaijan had the highest GDP and industrial production growth rates. It was also noted for its successfully implemented oil strategy, the resource orientation of its export, and its particular attention to expanding the non-petroleum industries and to socioeconomic development of the republic’s administrative regions. Georgia was distinguished by profound institutional reforms, particularly in the tax sphere, liberalization of economic activity, and aggressive privatization. In Armenia, economic growth still depends on external sources of financing. Among Kazakhstan’s impressive advantages are its favorable investment climate, the most progressive banking system in CEA, the world market’s growing demand for Kazakhstan oil, metals, and wheat, and its developed oil-and-gas and metallurgical industry. These factors made it possible to attract foreign capital, obtain high export revenue, and partially invest it in the development of non-raw material production, infrastructure, and the service sphere. According to the reform indices of the EBRD, Kyrgyzstan was the leader among the Central Asian republics in terms of economic reform. But due to its limited natural resources and political instability, its attractiveness for foreign investors diminished to a significant extent, and here, in contrast to other countries of the region, negative GDP dynamics were observed. What is more, the enormous burden of its foreign debt, which is higher than the safety threshold, is placing growing pressure on the economy. Uzbekistan (although the IMF nevertheless noted the progress achieved in conducting structural changes) and Turkmenistan (a high level of investments was noted, largely in the energy sector) are characterized by a shortage of market reforms, their economies on the whole continue to function on the principles of the command-administrative system inherited from the Soviet Union. Tajikistan, which has been strictly following the recommendations of international financial institutions in recent years, has accelerated the modernization of its economy and is increasingly adopt-

21 CENTRAL EURASIA 2005 Analytical Annual

Table 6 Comparative Indices of International Organizations for CEA

Inward FDI Indices Human Worldwide Index of Performance Development Quality-of- Economic and Potential Index11 Life Index12 Freedom13 Index14

Ranking in Rank- Ranking in Rank- Ranking in Rank- Ranking Rank- the world: ing the world: ing the world: ing in the ing place in place in in world: in Countries place (index) CEA (index) CEA (index) CEA place CEA

1 Afghanistan — — — — — — — —

2 Armenia 83 (0.759) 2 85 (5.422) 1 27 (2.26) 1 22 5

3 Azerbaijan 101 (0.729) 5 86 (5.377) 2 123 (3.51) 5 1 1

4 Georgia 100 (0.732) 4 87 (5.365) 3 68 (2.98) 2 13 3

5 Kazakhstan 80 (0.761) 1 96 (5.082) 4 113 (3.35) 4 11 2

6 Kyrgyzstan 109 (0.702) 6 103 (4.846) 6 71 (2.99) 3 77 6

7 Tajikistan 122 (0.652) 8 107 (4.754) 8 137 (3.76) 6 19 4

8 Turkmenistan 97 (0.738) 3 102 (4.870) 5 148 (4.04) 8 — —

9 Uzbekistan 111 (0.694) 7 106 (4.767) 7 144 (3.91) 7 105 7 ing contemporary market institutions. The rather difficult economic situation continuing in Afghani- stan stems from natural conditions, the infrastructure not restored after the Soviet military intervention and the many years of ongoing civil war, the government’s inability to carry out economic projects, and the low level of foreign assistance. Agriculture is a priority vector of the Afghan economy. The different levels of economic reform in the CEA countries was expressed in the various assessment indices and ratings established by international organizations in 2005 (see Tables 6, 6a). As we can see from Tables 6 and 6a, in terms of the global indices presented—human development, quality of life, economic freedom, corruption perceptions, competitiveness, and ease of doing business—the Central Eurasian states occupy far from the leading places, and only in terms of the country’s FDI performance and potential rating (UNCTAD) are some countries in a relatively advantageous position with respect to other developing economies. What is more, among the fifty countries of the world which were included in the research conducted by Forbes magazine for compiling the Employee Happiness Index, Georgia was the only Central Eurasian country, occupying third place. Keeping in mind the transitional nature of the economy, in our opinion, it is natural for the Central Eurasian states to have low indices and rankings in terms of per capita GDP indices, taking into account PPP (based on the methodology of the Economist Intelligence Unit). In so doing, comparing the

11 Human Development Report 2005, UNDP. 12 Worldwide Quality-of-Life Index 2005, The Economist Intelligence Unit. 13 Index of Economic Freedom 2006, Heritage Foundation. 14 World Investment Report 2005, UNCTAD, Annex table A.I.13. Inward FDI Performance and Potential Index Ranking. 22 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions

Table 6a

Indices Growth Ease of Corruption Competitiveness Doing Business Perceptions Index15 Rating16 Index17 Gini Ranking in Rank- Ranking in Rank- Ranking in Rank- Coefficient18 the world: ing the world: ing the world: ing place in place in place in Countries (index) CEA (index) CEA (index) CEA

1 Afghanistan — — 122 6 117 (2.5) 3 —

2 Armenia 79 (3.44) 3 46 1 88 (2.9) 1 0.413

3 Azerbaijan 69 (3.64) 2 98 4 137 (2.2) 6 0.37

4 Georgia 86 (3.25) 4 100 5 133 (2.3) 4 0.38

5 Kazakhstan 61 (3.77) 1 86 3 110 (2.6) 2 0.32

6 Kyrgyzstan 116 (2.62) 6 84 2 134 (2.3) 5 0.28

7 Tajikistan 104 (3.01) 5 — — 150 (2.1) 8 0.33

8 Turkmenistan — — — — 157 (1.8) 9 0.408

9 Uzbekistan — — 138 7 143 (2.2) 7 0.35 average per capita GDP indices and the quality of life index, a sharp differentiation is found in the absolute value of the first index19 and a perceptible lag in the ranking of the second.20 It should also be noted that according to international standards, the Central Eurasian countries have a very unequal income distribution: for example, in the Central Asian republics, the Gini Coef- ficient21 fluctuates between 0.28 (Kyrgyzstan) and 0.35 (Uzbekistan).22 Armenia, Kyrgyzstan, Tajikistan, as well as Georgia to some extent are among the countries of the world in which the highest level of inequality is noted: in the mentioned countries, the Gini Coefficient is almost twice as high as the pre-transition level. The growing inequality in incomes measured according to this coefficient has caused an increase in the poverty level. Even after several years of economic growth, the poverty level in most of the region’s countries is still quite high in terms of the percentage of the population living on less than $2.15 a day (according to PPP).23 In this way, the CEA countries are in the process of transition from one socioeconomic and sociocultural system to another, and of modernizing all spheres of sociopolitical life. The transformation process is not going smoothly and the anticipated results are not always being achieved. Nevertheless, it is presumed that, on the whole, CEA has all the necessary prerequisites for successful transformation.

15 Growth Competitiveness Index Rankings 2005, World Economic Forum. 16 Doing Business in 2006: Creating Jobs, World Bank&International Financial Corporation. 17 Corruption Perceptions Index 2005, Transparency International. 18 CIA: The World Factbook 2006; Central Asia Human Development Report 2005, UNDP, p. 50. 19 There is a 6.6-fold difference (Kazakhstan—$8,090, Tajikistan—$1,226). 20 For Kazakhstan and Turkmenistan by 33 degrees, for Azerbaijan by 5 degrees, and for Uzbekistan by 2 degrees. 21 The Gini Coefficient is a measure of inequality, a macroeconomic index characterizing the extent to which the distribution of income (or consumption) among individuals or households within a country deviates from a perfectly equal distribution. 22 See: Central Asia Human Development Report 2005, UNDP, p. 50. 23 For example, in Tajikistan, this index amounted to 74%, in Kyrgyzstan to 70%, in Uzbekistan to 47%, and in Kazakhstan to 21% (see: ibidem). 23 CENTRAL EURASIA 2005 Analytical Annual Central Eurasia in the World Community

One of the most significant results of globalization is the pronounced regional pluralism of international affairs. Accelerated consolidation of relatively independent regions—capacious geopolitical expanses—is taking place given the interaction among various countries and centers of power in the international relations, in which multifaceted socioeconomic, military-political, sociocultural and spiritual-religious processes are unfolding. CEA occupies an important place among such consolidating and, consequently, dynamically changing regions of the present-day world. This region is a link for the largest state-political and other kinds of coalition entities of international affairs directly or indirectly interacting with it. Therefore, addressing the CEA’s regional problems as they relate to the worldwide processes is becoming extremely important, not only in the local, but also in the global respect. The problem of CEA’s development cannot be resolved without the full-fledged incorporation of this region into the world community. In so doing, keen attention should be paid to the interaction of geopolitical and geo-economic factors, to ensuring regional security, and to the cultural-civilizational aspect of development in this region.

Geopolitical and Geo-economic Potential and the Alignment of Forces in the Region

Based on the geopolitical and geo-economic potential of the states, according to N. Spykman’s criteria,24 the geopolitical potential of the region’s countries can be assessed in a score system (see Table 7). In terms of some criteria (area, population), it is impossible or difficult to achieve an increase, others (mineral resources, type of borders—mountain, river, sea, etc.) are natural gifts and do not depend on us. As for all the others, each CEA country has potential enough for improving its ranking, the main ones, in our opinion, are economic and technological development, financial strength, and level of social integration, the aggregate of which predetermines political stability. The first three places are occupied by Kazakhstan, Uzbekistan, and Azerbaijan, with Tajikistan and Armenia bringing up the rear. The areas and priorities of the CEA countries’ foreign economic policy in correlation with the level of current international relations and defined by the multi-vector principle, in addition to cooperation within the region itself, also encompass relations with the most important centers of power (the U.S., the EU, Russia, China, and Japan) and interaction with the countries of neighboring regions (Southeast and South Asia, the Near and Middle East). At present, the Central Eurasian region has still not achieved the status of an independent entity of the world economy, nor designated its own niche clearly enough in the geo-economic system of coordinates. The sociopolitical problems of most of its countries have still not been resolved, while geopolitically, the main actors are still divvying up power and the situation remains rather tense. As before, problems of cooperation with the main economic partners in the CEA—Russia, the U.S., the EU, China, Japan, Turkey, and Iran, which are primarily interested in the region for its geopolitical and geo-economic potential—are still urgent, which makes the Central Eurasian countries the main

24 See: N.J. Spykman, The Geography of the Peace, Harcourt, Brace, New York, 1944. 24 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions

Table 7 Assessment of the Geopolitical Potential of the CEA Countries, 200525

Countries Georgia Armenia Tajikistan Azerbaijan Uzbekistan Kyrgyzstan Kazakhstan Afghanistan Criteria Turkmenistan

Area 8 1 3 2 9 5 4 7 6

Population 9 1 6 2 7 3 5 4 8

Type of borders 9 1 4 8 3 2 6 7 4

Mineral resources 5 1 7 2 9 4 3 6 8 Economic and technological development 1 6 8 5 9 3 2 4 7

Financial strength 5 3 7 4 9 2 1 6 8

Ethnic homogeneity 1 9 8 6 2 3 5 7 4

Level of social integration 1 3 5 4 8 9 7 2 6

Political stability 1 6 7 4 8 5 2 9 3

National spirit 9 6 5 8 2 4 3 1 7

TOTAL, score 49 37 60 45 66 40 38 53 61

Place occupied 5 9 3 6 1 7 8 4 2 zones of influence on the part of global and regional nations. Of course, the relations between the CEA countries and these nations differ due to the differences in their size, geographic location, strategic and economic significance, as well as their development requirements, political orientation, and interest in integrating into the world economy. All of this has also given rise to significant differences in the level of financial support from entities of the world community. Russia continues to be the Central Eurasian republics’ most important economic partner. It is an active partner in bilateral relations and a participant in most of the regional unions in CEA. Relations between the region’s countries and Russia are complex and contradictory. In recent years, due to the military conflicts in Azerbaijan (Nagorno-Karabakh) and Georgia (Abkhazia and the Tskhinvali Re- gion), and the events in Kyrgyzstan, Uzbekistan, and the Caspian Region, Russia’s role in the region

25 Table 7 was compiled by experts from the Institute of Strategic Studies of the Caucasus taking into account the assessments of M. Suiunbaev for the five countries of Central Asia (see: “Central Asia or Central Eurasia?” Available at [www.centrasia.org/newsA.php4?st=1087682640]). 25 CENTRAL EURASIA 2005 Analytical Annual has not been properly defined. Nevertheless, Russia remains an economic pole of attraction for most of the CEA countries and the region’s largest trade partner. It also continues to consolidate its military and economic position in individual states by strengthening the various vectors of cooperation. This process is unfolding most dynamically in Armenia, Kazakhstan, Uzbekistan, Kyrgyzstan, and Tajikistan. With respect to Turkmenistan and Azerbaijan, the situation is more difficult, but nevertheless, here Russia has also succeeded in achieving a certain parity on the basis of checks and balances (for example, Russia retains its control over the export of Turkmen gas). Georgia, on the other hand, is demonstrating an openly pro-Western stance and trying to minimize Russia’s participation in the country’s economic development. In other words, Russia is diversifying its interests in cooperation with the CEA states. Although at this stage, Russia is mainly striving to develop relations with each of the countries on a bilateral basis or by carrying out specific projects, it is also a member of a whole range of regional unions (such as the CIS, CES, EurAsEC, SCO, BSECO), viewing them at the same time as an effective tool of influence on particular states in the region. Russia’s government and private companies are making strategic direct investments and have joint ventures in the key branches, which is promoting the region’s economic growth and bringing Russia economic and political benefits at the same time. Russian investments are mainly being made in the fuel and energy sector, and it is expected that they will play a significant role in long-term exploitation of the region’s large oil, gas, and hydropower resources. But recently, Russian companies have also been making investments in other branches (for example, in Kyrgyzstan’s manufacturing industry, Azerbaijan’s aluminum industry, Uzbekistan’s telecommunication sphere, and so on). In Uzbekistan, after signing an alliance treaty with the Russian Federation, core Russian investors were given priority in denationalization and privatization projects. Russian state and private companies are making active investments in Tajikistan and Armenia, particularly by obtaining shares of government enterprises in exchange for writing off debts. This is occurring on a scale which could ensure Russian investors control over a significant part of the economies of these CEA countries. The trade turnover of the CEA countries with Russia is also steadily rising. For example, it accounts for approximately 21.3% of Kazakhstan’s foreign trade turnover, 16% of Georgia’s, 12.9% of Ar- menia’s, more than 10% of Azerbaijan’s, and more than 12.5% and 33.0% of Turkmenistan’s and Kyrgyzstan’s import, respectively. Along with the high economic benefits which cooperation with Russia promises the CEA countries, there are also certain risks. For example, Russia’s monopoly on the transportation of gas and oil via pipelines from Turkmenistan and Uzbekistan is limiting the opportunity of these countries to take advantage of the high world prices for oil and gas since they do not have direct access to the world markets. The same can also be said of Russia’s growing domination in Tajikistan’s energy sector. The United States is another key player actively establishing economic relations with the independent CEA countries. The U.S. continues to be pragmatically interested in maintaining a balance of power which coincides with its interests in the region. For example, the U.S. is creating certain conditions for maintaining its domination in the region: primarily, conditions for exploiting mineral fields, ensuring the priority position of its companies, and attracting investments to projects (BTC, BTE, the building of a bridge across the River Panj between Afghanistan and Tajikistan, and so on). In so doing, the U.S. is consistently diversifying its risks with respect to this or the other CEA country. By means of USAID, the U.S. is financing initiatives aimed at developing trade and boosting investments, improving the environment for small and medium businesses to thrive, managing natural resources, assisting the market reforms in agriculture and power engineering, and expanding access to high-quality services in health care and education. In compliance with the Framework Agree- ment on Trade and Investment signed with the Central Asian republics, a U.S.-Central Asian Trade

26 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions

Council was created which is called upon to assist the expansion of trade and investment opportunities in relations with the United States and become a forum for helping Kazakhstan, Tajikistan, and Uzbekistan to join the WTO. The U.S.’s economic interests in Azerbaijan are mainly related to projects for developing prospective oil, gas, gold, silver, and copper deposits, using alternative sources of electric power in the country, and expanding tourism. Enlargement of the EU, the economic interests of which are traditional in CEA, has raised its international responsibility on the world arena. In this respect, the European Union is responsible for a new strategy in the CEA countries, aimed at improving the trade and investment climate, and intends to assume the position of a geo-economic power in this region. On the whole, the EU’s strategic goal is to open up the region for the European and international economic system by helping to liberalize its economy. Europe clearly understands that CEA’s natural resources should play an important role in the future energy supply of the EU countries (and at the same time reduce their resource dependence on Russia). The EU’s transport-energy strategy was more consistent: to put Central Eurasian resources at the service of European interests by developing the TRACECA, INO- GATE, and SPECA projects. The EU is supporting projects aimed at improving customs services and simplifying the conditions for carrying out legal transborder trade in the CEA countries. The European Bank for Reconstruction and Development (EBRD) and TACIS, which have been actively participating in various regional projects, should be singled out as important tools of European strategy in the region. In 2005, the priority of certain EU countries in CEA continued to be rendering assistance in accelerating the economic reforms and developing the market economy. For example, in Kyrgyzstan, Tajikistan, and Azerbaijan, Germany is supporting the market reforms, implementing national poverty reduction programs, and helping to finance small and medium business. The Swiss aid program is targeted at small businesses in Kyrgyzstan, Uzbekistan, and Tajikistan and aimed at carrying out programs for assisting export from these countries. China is a very important economic partner of the CEA countries and is clearly demonstrating its geopolitical and geo-economic ambitions in the region. Its dynamically developing economy needs energy resources and other natural resources for boosting the country’s role in the global processes. This has led to a rapid increase in large Chinese investments in the CEA’s fuel and energy complex. It is important for this country to have close relations with the Central Asian republics, which are sources of energy and bridges permitting greater influence on the Middle East and Europe. What is more, China’s desire to have a stable neighbor is encouraging its interest in Central Asia’s economic and political future. Its top priority issues are strengthening international economic cooperation with the SCO and CAREC, as well as developing bilateral relations with the region’s countries in production, trade, and investments. From the viewpoint of the Central Eurasian states, Chinese investments are producing the necessary capital and technical know-how. For example, China agreed to grant a trade credit of $900 million to the SCO member states for purchasing Chinese commodities and at the same time to make a contribution to the Development Fund of $20 million for supporting various infrastructure projects of regional economic significance. China has particularly strong economic ties with Kazakhstan: in 2005, there were more than 40 Chinese companies and over 70 joint ventures operating in the republic, and large investments were made in power engineering, the banking sector, the food industry, the manufacture of building materials, and car assembly. Now China is among the five largest foreign investors in Kazakhstan, and its percentage in the republic’s foreign trade turnover amounted to 8.2% in 2005. Chinese investors have stepped up their participation in various projects in Uzbekistan, Kyrgyzstan, and Azerbaijan. In other countries of the region, China’s presence is still limited or at the initial stage.

27 CENTRAL EURASIA 2005 Analytical Annual

On the whole, the level of cooperation between the CEA states and China is not that high, which is due to the region’s peripheral nature objectively retained in China’s global strategy until recently. This is related to CEA’s distance from the industrially developed eastern provinces of the PRC and, as a result, from the main vector of its economic development, the APR, as well as to the underdevelopment of China’s transportation infrastructure, particularly close to the Central Asian borders. In the next few years, economic relations with the CEA countries will apparently undergo rapid growth and bring the sides mutual benefits. Japan is rendering significant support to the newly independent CEA states. Its government also made a decision, along strengthening bilateral relations with the Central Asian countries, to develop a dialog and cooperation with the region in other formats. For example, several Japanese economic development projects within the framework of the new Central Asia + Japan initiative are aimed at developing and modernizing the energy and other industries relating to natural resources and includes their geological exploration, production, and transport, as well as the exploration and production of ferrous metals and the modernization of ferrous metallurgy. A successful example of investments by the Land of the Rising Sun in the regional economy is the construction of a bridge across the River Panj between Afghanistan and Tajikistan, as well as national motorways, which is opening up beneficial opportunities for commercial agents as trade is revived between the north and the south. A broad range of projects involving Japanese investments, including the development of telecommunication systems, science, education, health care, and the rehabilitation and modernization of the energy and transportation infrastructure is being implemented in Uzbekistan. A loan of $231.5 million has been granted for modernizing one of Uzbekistan’s largest power stations—the Tashkent State Regional Power Station—until 2007. Japan is actively supporting the reforms in Azerbaijan, primarily by allotting grants for humanitarian and technical purposes. For example, the funds granted by the Japanese government to support the agrarian sector and ensure Azerbaijan’s food safety are being used to purchase agricultural equipment. The Sangachal Termi- nal, which services the Baku-Tbilisi-Ceyhan oil pipeline, and the steam-gas installation at the Shi- mal State Regional Power Station were built on the financial resources of this country. A characteristic feature of Japanese policy in economic cooperation with the CEA countries is that whereas most of the states primarily invest in the raw material sector, Japan is doing this in all spheres, without placing special emphasis on one of them. Turkey and Iran should be singled out among CEA’s immediate neighbors. These countries prefer to act on a bilateral basis, but they are also engaging in regional cooperation with the CEA countries and within the region. Turkey’s and Iran’s membership in the ECO, Turkey’s in the BSECO, and Iran’s in the SCO (as an observer) is evidence of this approach. In so doing, their policy is formed primarily under the influence of pragmatic considerations, although they differ in essence. The actions of the Turkish side (with respect to Central Asia and Azerbaijan) are also guided by the ethno- genetic communality and ethno-linguistic closeness of the Turkic peoples, as well as by the idea of its rapprochement with them and their unification in order to accelerate its economic growth by means of active participation in developing the natural riches and consumer market of the region.26 Iran’s interest, on the other hand, in this cooperation is based on a striving to expand economic relations and a search for political allies, given the complicated interrelations with the U.S. and Europe.27 Turkish companies have entered numerous contracts and made investments in the private construction sector, particularly in the building of retail trade and hotel business facilities in the CEA countries. An extensive air communication and telecommunication network has also been created

26 See: Rossiia i Turtsiia na poroge XXI veka: na puti v Evropu ili v Evraziiu? Edited by I. Kobrinskaia and Sh. Gar- nett, Scientific Reports, The Moscow Carnegie Center, Iss. 14, Moscow, 1997, pp. 25-26, 46. 27 J.P. Smith, “Iran Pushes for Positive Political Engagement in Central Asia,” Central Asia-Caucasus Analyst 5, 2004, pp. 10-11. 28 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions between Turkey and the region. On the whole, Turkey is especially interested in power engineering. Turkey signed an agreement with Iran and Turkmenistan on the purchase of Turkmen gas on barter terms via the Iran-Turkmenistan gas pipeline, the only Turkmen gas pipeline which does not pass through Russian territory. On the whole, Turkey, taking into account its growing demand for energy and desire to become a transit country for energy resources, is extremely interested in gaining access to the energy resources of Central Asia and Azerbaijan, and they, in turn, in diversifying energy transportation routes without passing through Russia. This also predetermined Turkey’s direct participation in the Baku-Tbilisi-Ceyhan (BTC) and Baku-Tbilisi-Erzurum (BTE) global energy projects and in the construction of the Kars-Akhalkalaki-Tbilisi-Baku (KATB) rail corridor. What is more, Tur- key is actively cooperating with the region in education by granting stipends for study in Turkish schools and universities and opening numerous schools and universities throughout Central Asia, Azerbaijan, and Georgia. And it is offering technical assistance and training for their businessmen and diplomats. Positive dynamics of economic interaction have developed between Turkey and Azerbaijan. The volume of trade turnover between them in 2005 amounted to $795 million with an increase during the year of almost 45%. The Turkish TPAO Oil Company alone intends to invest more than $4 billion in Azerba- ijan’s oil sector.28 Mutually beneficial and rapidly growing economic relations have developed between Turkey and Georgia, the trade turnover with which in 2004 topped $320 million. Despite the absence of diplomatic ties and open borders between Turkey and Armenia, the trade turnover between them, according to official data, is higher than $60 million, whereby in Armenia, imports from Turkey exceed exports to this country by 21-fold. On the whole, cooperation between this country and the CEA countries is yielding definite, although limited, benefits for both sides. For several CEA countries, Iran is the most important access to the world markets, and relations with it are mainly in trade, energy cooperation, and the transportation of freight through this country’s territory. For example, at the beginning of 2005, three transport agreements were signed which will expand and facilitate the transportation of Uzbekistan’s industrial and agricultural commodities through Iran. These countries, along with Afghanistan, will build a north-south motorway from Uzbekistan through Afghanistan for the transit of goods from Central Asia to the countries of the Persian Gulf and the Oman Sea, whereby Iran is willing to allot $2 billion to this project. Tajikistan, partly for cultural reasons since the Tajik language belongs to the Iranian lingual group, is taking part in several joint economic projects. In particular, Iran is investing $4 billion in 2004-2009 for building a hydropower plant on the Basksh River. Turkmenistan also has significant economic relations with Iran, particularly in the energy sector, which was discussed above. Iran and Kazakhstan entered an agreement on the exchange of petroleum products with the aim of creating new markets for Caspian oil. Economic relations are developing exponentially, mainly in the same areas as with the Central Asian republics, between Iran and the Central Caucasian states, particularly with Azerbaijan and Armenia. For example, Iran is drawing up a Gazvin-Rasht-Astara railroad construction project with Azerbaijan within the framework of the North-South transportation corridor, and is also building a gas pipeline for transporting Iranian gas to Armenia. Iran’s economic relations with Georgia are very insignificant. On the whole, Iran’s weak cooperation with the CEA countries in the industrial sphere is explained by the raw material orientation of their economy.

Integration Processes in Central Eurasia

After gaining state independence, the idea of CEA regional integration was given a new boost by the desire of the young sovereign states to accelerate the reform of their economies and join the globaliz-

28 See: Bakinskiy rabochiy, No. 63, 11 April, 1005, p. 2. 29 CENTRAL EURASIA 2005 Analytical Annual ing world economy. After the collapse of the Soviet Union and the ensuing weakening of Russia’s position, Central Asia and the Central Caucasus once more became an arena of rivalry between global and regional powers—Russia, the United States, the EU, China, Turkey, and Iran, each of which has its own view of unity in this region, while its sustainable and dynamic development presumes a new type of integration based on the principles of new regionalism in the context of the global economy. We all know that during the Soviet era, the economies of the southern republics developed within a single national economic complex as independent regional formations—the Transcaucasian and Central Asian economic regions. The collapse of the Soviet Union caused a breakdown in this complex, plunging the countries which became independent into a profound crisis. Unfortunately, such a positive factor as greater economic sovereignty led to a negative result—lack of economic interdependence and isolation. Dependence on the Center was replaced by independence both from the Cent- er and from each other. Under these conditions, the chosen course toward conscious interdependence and cooperation development meant evolving from a struggle for survival to partnership, co-survival, and co-development. The region had to take an evolutionary path: dependence of its countries on the Center to being independent of the Center and of each other to a new type of interdependence on each other and integration of the region into the world economy. But even after 15 years of sovereignty, the economic basis of regional integration in the CEA countries is still weak. Despite participation in various regional formations and initiatives, as well as establishing bilateral relations, foreign economic relations between these countries are insignificant, and their economic interests, although they lie within CEA, significantly depend on the objectives of other geopolitical centers of power. So we are bound to ask how realistic is internal economic integration in CEA, and can it put the brakes on the accelerating centrifugal processes arising mainly from the “big geopolitical game” going on around it? Various factors are taking their toll on bilateral regional economic cooperation. For example, the military conflicts in the Central Caucasus (in Nagorno-Karabakh, Abkhazia, and the Tskhinvali Region) are largely defining the dimensions of cooperation of the countries in this sub-region. As a result, since the beginning of the 1990s, Azerbaijan and Armenia have curtailed all economic relations with each other, and only Georgia maintains them with both republics. For example, in 2005, reciprocal trade turnover between Azerbaijan and Georgia amounted to $131.5 million and is on the rise. Their growing cooperation within the framework of transnational projects, such as TRACECA, BTC, BTE, and KATB, is particularly encouraging. As for Armenian-Georgian economic relations, Georgia brings up the rear in the structure of Armenia’s foreign trade turnover with a share of only 2% and has a negative balance with this country. All the Central Caucasian countries, as statistics show, have close ties with Turkmenistan, mainly in the import of energy resources. In 2005, prerequisites were created for a significant expansion of foreign economic relations with Kazakhstan. Trade relations with other Central Asian republics are extremely insignificant. As in previous years, regional trade of the Central Asian counties in 2005 remained at a low level. This is explained not only by their trade and currency policy and the absence of cooperation between them in trade and transport, as well as of coordinated activity in customs and border services, but also by the similar structures of their economies. The greatest activity in reciprocal foreign trade relations is manifested by Kazakhstan, Uzbekistan, and partly Kyrgyzstan, while Afghanistan, Tajikistan, and Turkmenistan are prevalently oriented toward other countries of the world. Official trade between the post-Soviet republics of Central Asia and Afghanistan began growing rapidly immediately after the fall of the Taliban regime. An example of this is the expansion of ties between Afghanistan and Uz- bekistan, mainly due to the export of Uzbek commodities. The commodity trade pattern in the CEA countries since the collapse of the Soviet Union has not significantly changed: several raw material commodities, such as oil, natural gas, metals, and cotton fiber, still prevail in the export structure. Along with this, numerous regional and bilateral agreements overlapped each other, which led to the appearance of a contradictory and confusing set of trade rules on every CEA border and minimized the eco-

30 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions nomic impact of these agreements. The trade development prospects of these countries within the CEA will largely depend on improving regional cooperation and mutual action to reduce commercial expenses, liberalize trade conditions, and lower trade barriers arising from the underdeveloped transportation infrastructure and weak measures for activating regional trade turnover. An analysis of the development of integration processes within the framework of CEA makes it possible to identify the initiating countries both in each of its segments—Central Asia and the Central Caucasus—and throughout the CEA region as a whole. Whereas in Central Asia, Kazakhstan and Uzbekistan can be classified as initiating countries, in the Central Caucasus, these countries are Az- erbaijan and Georgia. Applying this to the Central Eurasian region as a whole, such countries could primarily be Azerbaijan, Georgia, and Uzbekistan, while withdrawal of the latter from GUUAM led to a break in this “chain.” At the same time, Kazakhstan’s active foreign economic relations with Azerbaijan and Georgia, as well as the priority placed on putting the Baku-Tbilisi-Ceyhan export oil pipeline into operation and Kazakhstan’s joining this project make it possible to look at this country, along with the aforementioned Central Caucasian states, from the geo-economic viewpoint as an initiating nucleus of integration in the CEA region. Nevertheless, it should be noted that along with several positive trends in regional cooperation of the CEA countries, the following problems have still not been resolved: n There is no mechanism for implementing the economic and legal decisions adopted: the viewpoints of the CEA states largely do not coincide and there is no coordination in their foreign economic activity. n Foreign economic differences are growing: there are differences in their foreign economic policy and international orientations, as well as different understandings of political and economic cooperation priorities with neighboring countries and large nations. n There are different levels of economic market reform and a low level of economic cooperation: the reform implementation rates and level of state regulation of the production- economic and financial spheres significantly differ, due to which mutual access of industrial, trade, financial, and insurance capital to the markets of partner countries is limited, and the efficiency of economic relations and introducing more intense forms and mechanisms of integration is declining. n Interregional trade and investment cooperation are of low priority. Reciprocal trade ties in the region in the purely economic respect are playing a secondary role, although they serve as an efficient lever of influence on neighbors. The low indices of foreign trade ties among the Central Eurasian states and the level of their investment activity in the region are clear evidence of inefficient use of the potential of mutually beneficial cooperation among these countries. The main reasons for this are lack of coordination of the economic policy conducted by them, the significant differences and even contradictoriness of the market reforms being carried out, and national egoism in raising all manner of barriers to the movement of commodities.

Assessment of the CEA States from the Viewpoint of their Involvement in the Globalizing World Economy

As of the end of 2005, the participation of the CEA states in various regional unions and programs can be singled out as the main area of their multilateral cooperation (Table 8).

31 CENTRAL EURASIA 2005 Analytical Annual

Table 8 Membership of the CEA Countries in Regional Unions and Programs

CACO29 EurAsEC CAREC GUAM SCO CIS CES BSECO ECO SPECA

Afghanistan +* + +

Armenia + +

Azerbaijan + + + + + +

Georgia +* + + +

Kazakhstan + + + + + + + +

Kyrgyzstan + + + + + + +

Tajikistan + + + + + + +

Turkmenistan + + +

Uzbekistan + + + + + + +

* As an observer.

An analysis of this activity shows that the most integrated country is Kazakhstan, and the least integrated are Armenia and Afghanistan. Kazakhstan’s leading position sufficiently reflects its state policy, its advantageous geographical location, rich natural resources, and highest economic potential and investment performance. In terms of these parameters, Armenia lags behind essentially all the CEA countries, which is explained to a certain extent by the state’s policy and its low level of participation in regional unions. The other countries of the region, with the exception of Turkmenistan, which is uphold- ing a policy of neutrality and self-isolation, and Afghanistan, torn by internal contradictions and conflicts, are also becoming more involved in regional cooperation. Here we should make particular mention of Uzbekistan’s participation in the SCO, its withdrawal in 2005 from GUUAM, and its joining the EurAsEC, which shows a change in direction of its foreign political vector toward Russia and China. The regional integration treaties existing in the world have different objectives, tasks, and geo- economic functions, and are differentiated in terms of the nature and degree of their integration, since they are entered between countries with different levels of development. For example, whereas the integration processes in North America (NAFTA) and South America (MERCOSUR) largely apply to trade and have a purely intercontinental range of activity, the main objective of a possible regional group of CEA countries in the center of the Eurasian space is to ensure multi-vector integration— Western Europe and Eastern Asia (West-East), Russia and South Asia (North-South). In this respect, it is very important to choose the right principles, forms, and methods of regional integration and cooperation suitable for CEA, the implementation of which would justify the expectations of each of the states and various nations belonging to it. An analysis of the integration processes in CEA shows that it would be expedient to intensify cooperation in the region in the near future and ensure even more intensive institutional and economic

29 In October 2005, at the CACO summit in St. Petersburg, a decision was made to integrate this union into the EurAsEC. 32 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions integration in the long term. There are several reasons for this, the most important of which are the following. First, despite their historical ties, the Central Eurasian countries are distinguished from each other today by their level of economic development, political orientation, as well as the structure of their economy and state institutions. This also explains the differences in their interests and demands, which could lead these countries in different directions. Second, against the background of the Soviet past, the CEA countries are often suspicious of integration, assuming it to mean the loss of national independence and identity. Examples of close integration between the economies of different Europe- an countries and the U.S., the U.S. and Canada, and other regions show that cooperation and integration in no way signify the disappearance of national borders or renunciation of national sovereignty. Transborder cooperation shows that these regions are striving to achieve mutual trust and minimize border problems and barriers. Agreements between neighboring countries which facilitate the movement of people and the flow of commodities, capital, and information, as well as coordinate branch and macroeconomic policy, economic structures, and civil and constitutional legislation, imply the need to share some elements of national sovereignty with their partners. The Central Eurasian countries will ultimately have to find their own approach to regional cooperation and integration. Despite the common threats to their economic and social stability, their political motivation and leadership is not strong enough at the moment to intensify regional integration, nor do they have the external sources of financing needed. Realistically, Central Eurasia should begin with the simplest integration of its structures, focusing attention on cooperation in a broad range of issues and choosing those areas in which quick and positive results can be achieved. The first achievements will help to build confidence and set the stage for more ambitious long-term goals. The CEA countries, their neighbors, and the international community could join efforts to improve and strengthen regional institutions, which could become effective tools in supporting regional cooperation. The need for CEA to integrate into a single, integral, socioeconomic region is dictated not so much from the viewpoint of its potential and market capacity, that is, trade and investment opportunities and performance, as from the viewpoint of its functional significance, that is, its unique territorial location at the crossroads between Europe and Asia, the European Union and the Asia-Pacific Region, the Chris- tian, Buddhist, and Islamic civilizations, and the Silk Road and Volga-Caspian Trade Route, along which world trade routes have passed for many centuries and still pass today, and also between their contemporary modifications—international transport-communication West-East and North-South corridors. At present, there are plans to revive the new Silk Road based on three supporting economic complexes: power engineering, the transcontinental transport system, and telecommunications. The fulcrum of this project, which simultaneously unifies global, regional, and local interests, is to be assimilation of the natural resources not only of the Caucasian region, but also of the entire Caspian zone in its broadest sense, that is, incorporating the natural wealth of the Central Asian and Central Caucasian countries into the world economy. Realization of CEA’s raw material potential, primarily, of its large oil and gas fields, will make it possible to boost the dynamism of the economy of the Caspian countries, as well as provide large importers of hydrocarbons with stable sources of raw materials. In other words, at the beginning of the 21st century, the principles, forms, and methods of CEA integration and type of regional union should be determined based on the importance of the transport- communication network and the fuel and raw material resources of the particular region for the world economy. In this respect, great interest is aroused by the experience gained during implementation of the U.N. Special Program for the Economies of Central Asia,30 within the framework of which the Program of Action for transit-transport cooperation of the SPECA member states was drawn up.

30 This program was set forth in the Tashkent Declaration signed in March 1998 by the presidents of Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. In September of the same year, Turkmenistan officially supported this Declaration 33 CENTRAL EURASIA 2005 Analytical Annual

Active participation of the Central Eurasian countries in the SPECA transport project and efficient realization of its potential can bring this region realistic results and perceptible advantages. This could be manifested in particular in assisting its countries to integrate into the world economy, in supporting integration processes at regional and sub-regional levels, as well as in helping them to join the U.N.’s Trans-European North-South Motorway and Trans-European Railway projects, and so on. In the final analysis, this cooperation could be a way to develop efficient, unified, and safe transportation systems in the region and bring regional regulating documents into harmony with European and international standards. It could also serve as an important stimulus for stepping up cooperation and beginning integration of the CEA.

Regional Security System in Central Eurasia

As already noted, the natural-geographic, economic, sociopolitical, infrastructure, and other support structures of CEA are only just beginning to form and adapt to life’s changing conditions. The difficulties of national and cultural self-identity have still not been fully overcome, many local conflicts are in a frozen state, and the complicated configuration of their various dependencies in international affairs is obvious. This situation is giving rise to indefiniteness and dangerous threats in CEA, since a solution has still not been found to the indicated problems. This is why the region’s security is of prime importance when incorporating CEA into the overall dynamics of world economic and sociopolitical relations. The unresolved ethnic and territorial conflicts, diversity of foreign political priorities, as well as open nature of geopolitical competition make it impossible to talk about creating a classical model of regional security in CEA, whereby the entire region is drawn into a unified security system to repel external threats. But in the era of globalization, when the nature of threats to national and regional security is dramatically changing, the approaches to creating a regional security system are also transforming. A complex, multi-level security system is forming in the region aimed at creating mechanisms for maintaining it at the sub-regional, regional, and global level. In so doing, the contents of the subregional security system boil down to creating mechanisms among the CEA states themselves (interstate, intergovernmental, and interdepartmental treaties and agreements for carrying out a joint struggle against particular threats). The contents of the regional level of the CEA security system are determined by various internal prerequisites and external factors of the region’s consolidation and development within the framework of such military-political and military organizations as the SCO and CSTO. A mechanism for ensuring CEA security at the global level is being formed by actively drawing the region’s countries into the activity or specific programs of different international organizations, such as the U.N., OSCE, and NATO (within the Partnership for Peace [PfP] and Individual Partnership Action Plan [IPAP] programs). At the beginning of the 1990s, there were plans to ensure regional security within the framework of the Collective Security Treaty (CST). Its main provisions largely reflected how its member states saw the nature of external threats at the time this document was signed. In particular, Article 1 prohibits its members from participating in other military alliances or from taking part in any groups of states, the actions of which are directed against any other member-state of this Treaty. Article 4 envisaged that “if one of the members is subjected to aggression from any other state or group of states, and expressed its willingness to participate in SPECA. In November 2002, Azerbaijan joined SPECA. The priority areas of cooperation are: the development of the transportation infrastructure and facilitation of border crossing procedures; rational and efficient use of energy and water resources; an international economic conference on Tajikistan in the regional context of Central Asia. In February 2004, U.N. Secretary General in his letters to the presidents of the five Central Asian countries and Azerbaijan confirmed the goals and importance of SPECA and the U.N.’s adherence to its implementation (see: [htpp:// www.unece.org/speca/transp/pro-pwg-t40400ru.htm]). 34 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions

Table 9 Participation of the CEA Countries in Regional and Global Security Structures

OSCE NATO (PfP) NATO (IPAP) SCO CSTO

Afghanistan — * — — —

Armenia + + + — +

Azerbaijan + + + — —

Georgia + + + — —

Kazakhstan + + + + +

Kyrgyzstan + + — + +

Tajikistan + + — + +

Turkmenistan + + — — —

Uzbekistan + + — + —

* Since August 2003, the International Security Assistance Force (ISAF) has been under NATO command. this will be considered aggression against all the member states of this Treaty.”31 In other words, security in the region was understood exclusively as ensuring protection from external aggression by another state or group of states. No collective measures against terrorism, religious extremism, and separatism were set forth in the text of the treaty. Another element of the regional security system being formed was the Shanghai Five created in 1996. The Agreement on Confidence-Building in the Military Sphere in the Border Areas signed in 1996 and the Agreement on Mutual Reduction of Military Forces in the Border Areas entered in 1997 were called upon to ensure stability along the former Soviet-Sino border. In its original version, the Shanghai Five had specific goals in a strictly delineated space—ensuring stability along the borders and increasing mutual trust between the border member states of this organization. 1999 was the same turning point for some CEA countries as 9/11 was for the whole world. The Tashkent explosions at the beginning and the Batken events in the middle of 1999 clearly showed that there is essentially no efficient security system in the region. The CST and Shanghai Five began taking several steps at almost the same time to respond to the new security challenges. At the Minsk summit of the heads of the CST member states in May 2000, several important documents were signed, including the Memorandum on Raising the Efficiency of the Collective Security Treaty and its Adaptation to the Current Geopolitical Situation and the Model of a Regional Collective Security System.32 In compliance with these documents, the nature of the organization’s activity is undergoing significant changes. In particular, the emphasis is being placed on fighting international terrorism and on forming collective rapid action peacekeeping forces.

31 See: Collective Security Treaty. Available at [http://dkb.gov.ru/start/index.htm], 19 April, 2006. 32 Ibidem. 35 CENTRAL EURASIA 2005 Analytical Annual

Enlargement of the sphere of activity of the Shanghai Five went hand in hand with formation of the CSTO. At the organization’s summit which was held on 5 July, 2000 in Dushanbe, the heads of the five states announced their intention to turn the Shanghai Five into a regional multilateral cooperation structure, which was officially stated in a declaration adopted at the end of the summit. It is worth noting that Uzbekistan President Islam Karimov attended this summit as a guest for the first time. A year later, on 15 June, 2001, at a meeting in Shanghai, the heads of six states—Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan—signed a Declaration on the Creation of the Shanghai Cooperation Organ- ization (SCO). In terms of its structure, objectives, and tasks, the SCO is very different from its prede- cessor, the Shanghai Five. In particular, the SCO has a permanent working body—the Council of Na- tional Coordinators (CNC), which carries out the SCO’s daily work. The organization is primarily engaged in fighting international terrorism, the drug business, and illicit arms circulation. In order to achieve these objectives, in 2003, the SCO created a Regional Antiterrorist Structure (RATS) located in Tashkent. The third element of the regional security system being formed in CEA is the North Atlantic Alliance—NATO. All the countries of the region have been drawn into some or other of its programs, and in some of them NATO is already a specific tool for ensuring security. For example, since August 2003, the International Security Assistance Force in Afghanistan has been under NATO’s command. It should be noted that elements of the global level of security (membership in the U.N., OSCE, participation in various NATO programs) are not providing direct guarantees of military security, since this level of security envisages threat prevention and the creation of favorable conditions for ensuring security in the region. From the very beginning, NATO’s activity in CEA was based on the Partnership for Peace program adopted in 1994. Its objectives were declared as “facilitation of transparency in national defense planning and budgeting processes; ensuring democratic control of defense forces; and maintenance of the capability and readiness to contribute to the development of cooperative military relations with NATO and the development, over the longer term, of forces that are better able to operate with those of the members of the North Atlantic Alliance.”33 In different years, all the states of the region, apart from Afghanistan, joined the program. The official basis of the Partnership for Peace program is the Framework Document which sets forth specific obligations for each partner state and secures the obligation of the NATO allies to consult with any of the states participating in the program which sees a direct threat to its territorial integrity, political independence, or security. In so doing, each partner state in the program assumes several important political obligations—to protect the democratic foundations of society; to maintain the principles of international law; to fulfill the obligations under the U.N. Charter, the Universal Declaration on Human Rights; to observe the existing borders; to refrain from threat or the use of force against other states, and so on. Within the framework of this program, approximately 2,000 undertakings are carried out a year—from large-scale military exercises to small seminars, about 500 of which are directly related to the CEA countries. The next stage of building the security architecture in the region’s countries with NATO’s participation was the launching in 2002 of the Individual Partnership Action Plan (IPAP).34 This Plan envisages the following activities between NATO and the country which becomes a member of the Plan: periodical consultations regarding regional security issues; drawing up a security strategy and military doctrine for the country with NATO’s participation; improving defense and budget planning with NATO’s assistance; maintaining cooperative military relations with NATO forces on an operative level; improving military education, introducing automatic control systems into the armed forces; improving mechanisms of democratic control, and so on.

33 Partnership for Peace: Framework Document. Available at [http://www.nato.int/docu/comm/49-95/c940110b.htm], 19 April, 2006. 34 See: NATO’s Cooperation with Partners. How did It Evolve? Available at [http://www.nato.int/issues/ partnership_evolution/index.html], 19 April 2006. 36 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions

At present, all the states have joined the Partnership for Peace program and four states of the region—Armenia, Azerbaijan, Georgia, and Kazakhstan—have joined the IPAP. The collective and qualitative results of these programs show that NATO has become an integral element of the CEA security architecture. These facts indicate that a security system is gradually forming in CEA which corresponds to the region’s specifics. Its elements are the CSTO, the SCO, and the West’s military-political presence in the form of various NATO programs. A distinguishing feature of the regional security system being formed is its multifaceted and multi-level nature. This special feature of the system ensued from the complex nature of the current threats, the diversity of foreign political priorities of the region’s countries, as well as the real correlation of forces between the world and regional centers of power. Of course, this does not mean that formation of the regional security system is complete, or that there are no problems in this area. The system is still evolving.

The Cultural-Civilizational Aspect of Central Eurasian Development

When viewing CEA in the geopolitical and geo-economic context as a single region, it should also be analyzed from the cultural-civilizational perspective. Most of its population is Muslim, and Islam plays an important role in the sociopolitical life of the region’s countries due to its broad social base, trans-nationalism, polycentrism, and the vast financial potential of the oil-producing states. The second key religion of the region is Christianity, the followers of which comprise the absolute majority of the population in Armenia and Georgia (see Table 10).

Table 10 Confessional Composition of the CEA States in 2005

Index Islam Christianity Other Total

Million Million Million Million % % % % Country people people people people

Afghanistan 28.4 99.0 0.006 0.02 0.294 1.0 28.7 100

Armenia — — 3.199 99.99 0.0003 0.01 3.2 100

Azerbaijan 7.9 95.6 0.35 4.2 0.05 0.2 8.3 100

Georgia 0.473 11.0 3.784 88.0 0.043 1.0 4.3 100

Kazakhstan 10.64 70.0 4.545 29.9 0.015 0.01 15.2 100

Kyrgyzstan 4.415 84.9 0.78 15.0 0.005 0.1 5.2 100

Tajikistan 6.417 93.0 0.476 6.9 0.007 0.1 6.9 100

Turkmenistan 6.03 90.0 0.663 9.9 0.007 0.1 6.7 100

Uzbekistan 24.154 92.9 1.820 7.0 0.026 0.1 26.0 100

TOTAL: 88.429 84.7 15.623 15.0 0.4473 0.4 104.5 100

37 CENTRAL EURASIA 2005 Analytical Annual

Table 11 Ethnic Composition of the CEA States in 2005

Index Population— Including:

total35 Titular ethnos36 Other ethnoses

Million Million Million Country % Ethnos % Ethnos % people people people

Afghanistan28.7 100 Pashtoons15.8 55.037 Tajiks, Uzbeks, 12.9 45.0 Hazaras, etc.

Armenia3.238 100 Armenians3.1 97.939 Yezidis, 0.1 2.1 Russians, Assyrians, etc.

Azerbaijan8.3 100 Azeris7.5 90.640 Lezghians, 0.8 9.4 Russians, Armenians, etc.

Georgia4.341 100 Georgians3.6 83.8 Azeris, 0.7 16.2 Armenians, Russians, etc.

Kazakhstan15.2 100 Kazakhs8.8 57.742 Russians, 6.4 42.3 Ukrainians, Uzbeks, etc.

Kyrgyzstan5.2 100 Kyrgyz3.4 64.9 Uzbeks, 1.8 35.1 Russians, Dungans, etc.

Tajikistan6.9 100 Tajiks5.5 79.9 Uzbeks, 1.4 20.1 Russians, Kyrgyz, etc.

Turkmenistan6.7 100 Turkmen5.7 85.0 Uzbeks, 1.0 15.0 Russians, etc.

Uzbekistan26.043 100 Uzbeks20.3 78.0 Russians, 5.7 22.0 Tajiks, Karakalpaks, etc.

TOTAL: 104.5 100 73.7 70.5 30.8 29.5

35 According to the CIS International Statistics Board as of 1 January, 2006. Available at (apart from those cases where other sources are given). 36 According to the information on the U.S. CIA website [http://www.cia.gov] (apart from those cases where other sources are given). 37 According to the information on [http://ru/wikipedia.org]. 38 As of 1 October, 2005. 39 According the data of the Armenian National Statistics Service. Available at [http://www.languages-study.com/ demography/armenia.html]. 40 According to the information of the Azerbaijan State Statistics Board. Available at [http:/www.azstat.org]. 41 As of 1 July, 2005. Available at [http://www.cia.gov/cia/publications/factbook/geos/gg.html]. 42 According to the data of the Kazakhstan Department of Social and Demographic Statistics. Available at [http:// www.languages-study.com/demography/kazakhstan.html]. 43 According to the data of the Uzbekistan State Statistics Board. Available at [http://www.regnum.ru/news/uzbek/ 600454.html]. 38 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions

Ethnic unity, particularly the affiliation of most of the Central Asian countries with the Turkic world, is an equally important consolidating factor in CEA. This makes the high level of Turkey’s geopolitical activity in the region objective (see Tables 11, 12).

Table 12 Main Ethno-Linguistic Groups of the Central Eurasian Region in 2005

Ethno-Linguistic Groups Numbers (million people) Percentage (in %)

Turkic-speaking (Uzbeks, Kazakhs, Azeris, etc.) 55.6 53.2

Iranian-speaking (Pashtoons, Tajiks, Hazaras, etc.) 33.3 31.8

Slavic-speaking (Russians, Ukrainians, etc.) 8.3 7.9

Georgians 3.8 3.7

Armenians 3.1 3.0

Others 0.4 0.4

TOTAL: 104.5 100

The sociocultural features of the region are also shaped by its relations with neighboring states. In the south, the Central Eurasian states border on relatively isolated geopolitical Muslim actors— Pakistan, Iran, and Turkey. In the east, the CEA states are contiguous to the Muslim border regions of China (the Xinjiang-Uighur Autonomous Region), which play the role of a buffer zone between the Muslim world and the Confucian civilization and Buddhism. In the north, Russia’s southern regions are also populated by numerous Muslim peoples who are under the strong influence of Orthodoxy and the Slavic culture. In the west, after acquiring their independence, the CEA countries gained access to the western civilization. The special features noted make it possible to view CEA as a special ethno-religious part of the Muslim and Turkic world, where attempts are being made to establish a secular state relying on the spiritual and ethic principles of religion. The religious processes going on here are of global significance, since it is in this region that a new form of religious cooperation is emerging which can be created primarily on geopolitical—the League of Arab States (LAS)—or on geo-economic principles—the Association of Southeast Asian Nations (ASEAN) (see Table 13). As can be seen from Table 13, the percentage of Muslims in the CEA states (84.7%), although less than the corresponding index in LAS (92.9%), is much higher than this index in ASEAN (41.7%). Today, it is difficult to predict which of these factors—geopolitical or geo-economic—or their com- bination will be pivotal in the CEA integration processes. Orthodox Georgia and Gregorian Armenia, the percentage of the population of which amounts to 3.7% and 3.0%, respectively, are islands of non-Muslim culture in the Central Eurasian space. Taking into account the geopolitical reality, it should be noted that it is they who efficiently used the religious factor to restore their statehood. They are also gaining political advantages by making use of this factor in international organizations, which is confirmed by the recent European Parliament resolution on the Armenian cemetery in Julfa (Nakhchyvan, Azerbaijan) supposedly destroyed by Azeris in 2005.

39 CENTRAL EURASIA 2005 Analytical Annual

Table 13

Confessional Composition of CEA and Regional Unions Composed of a Predominantly Muslim Population

Population Including the followers of (in %): Region/ Number of (million Regional unions Islam Christianity Other states people)

CEA 104.5 84.7 15.0 0.3 9

LAS 326.2 92.9 3.8 3.3 22

ASEAN 570.3 41.7 19.6 38.7 10

In contrast to these two countries, the Muslim states of the region are still trying to define the place, role, and degree of influence of religion on the sociopolitical processes. On the one hand, this is related to the high level of politicization of Islam over the past fifty years, and on the other, by their striving to integrate into the world socioeconomic space. Among the Muslim republics of CEA, the greatest socialization of religion has been achieved in Kazakhstan and Azerbaijan, where the authorities are trying to use Islamic values as a component of the conception of the state’s sociopolitical development. For this purpose, religious unions are becoming actively involved in implementing humanitarian and social projects. In Uzbekistan and Tajikistan, on the contrary, the political activity of extremist Muslim groups compels the government to restrict the rights not only of religious figures, but also of ordinary believers. The influence of religion on the sociopolitical processes is felt most strongly in Afghanistan and Armenia. In so doing, even in Soviet times the Armenian Church was able to have a direct influence on the public conscience of its people. Among the Muslim peoples of the Central Eurasian region, the Afghanis and Tajiks are traditionally the most religious. After experiencing a religious renaissance, the Muslim peoples of the region are very vulnerable to transformation. The CEA states located in the post-Soviet space were long under the influence of the communist ideology, which rejected religious values. During this time, a tolerant attitude, bordering at times on complete indifference, toward spiritual dissidence became rooted in the public conscience. Religiosity in this region underwent profound changes, which left its mark not only on the special features of the religious processes going on there, but also on the cultural, economic, and political development of society. The complexity of the religious factor is largely defined by the numerous ideological trends within Islam, which can provisionally be divided into Sunni and Shi‘a. Despite the unending attempts of several spiritual Muslim leaders to put an end to this division, many Muslim communities are still divided into Sunnis and Shi‘as. This also applies to certain countries of the Central Eurasian region, primarily, to Azerbaijan and Afghanistan. The only Muslim country of the region where Shi‘as predominate is Azerbaijan (approximately 70% of the population). But here the differences with respect to this characteristic are still not having a significant influence on the sociopolitical processes, which is mainly due to the relatively low level of religiosity of society. In Afghanistan, the Shi‘as, who comprise 10-15% of the population, mainly live in the areas bordering on Iran.

40 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions

However, the diversity which developed in the religious spectrum of the region’s countries at the turn of the 21st century is related not so much to the ideological trends historically existing within Islam, as to the activity of foreign missionary organizations, whereby not only Muslim, but also Christian (mainly Protestant), Krishnaites, Bahais, and others. Non-traditional religiosity is introducing new elements of self-expression into the sociocultural structure of society, which presuppose not only financial, but also political support. They are finding this in the form of Western human rights organizations and even certain countries. Iran, Turkey, Saudi Arabia, Kuwait, and Pakistan, as well as several Western countries lobbying the interests of Protestant groups, are the most active in this sphere. In contrast to them, Russia is supporting the traditional clergy, due both to the high number of Russian Orthodox believers in the region, and to the historical relations between the Russian Orthodox Church and the religious and state structures of these countries. But whereas the activity of non-Muslim propagandists is not popular among the broad masses and does not find the desired support in the ruling circles, Islamic groups usually quickly become overgrown with followers. The activity of missionaries often encourages the growth of religious radicalism. In some cases, this happens because of the spread of openly political Islam, and in others, because the moderate views brought in from the outside do not always coincide with sociopolitical reality, which at first pushes believers toward alienation. Consequently, the energy of these closed groups may spill out into radical movements with pseudo-religious motives. The main factors determining the popularity of radical views in some of the region’s countries, Tajikistan and Uzbekistan, for example, include the conservativeness of the traditional clergy and its inability to respond adequately to the challenges of the times, as well as the low level of religious enlightenment. Since the governments are not ready to participate in religious enlightenment, every attempt to find a balance between guaranteeing believers’ rights and methods for fighting religious extremism essentially boils down to restricting religious propaganda and narrowing the sphere of social activity of religious figures. In recent years, cases are being encountered with increasing frequency of compulsory removal of believers from public life and the educational and work process. This reaction only complicates the situation and promotes a rise in religious radicalism. The political struggle going on in several Muslim countries at the end of the last century (including Uzbekistan’s grievous experience) showed that it is essentially impossible to totally eradicate radical ideas. Much will depend on how much the CEA countries succeed in reaching a compromise with moderate groups of believers using mechanisms for legitimizing secular power within the framework of progressive reformatory Islam. Affiliation with Islam is having an impact not only on the interrelations between most of the CEA states and their neighbors (see Table 14), but also on the interrelations between the former and the countries of the Far Abroad. Neighboring Muslim states—Pakistan, Iran, and Turkey—are interested in religious integration, on the one hand, while they continue to use Islam (the main unifying factor) in their political and economic interests, on the other. The Islamic factor also plays just as important a role in Russia’s religious policy. Taking advantage of the fact that 14% of its population is comprised of Muslims mainly living in the southern regions, and after obtaining the status of observer in the Organization of the Islamic Conference in 2005, the Kremlin is trying to boost its influence on the religious and spiritual life of CEA by shifting the vector toward secular Islam. This development of events also suits China. The U.S., for which control over Eurasia is the basis of global supremacy, is particularly interested in religious moderation in the region. And whereas the two periphery regional unions of the continent—LAS and ASEAN, where Islamic origins are significant—are under the strong political and economic influence of the United States, in CEA, its influence has still not been defined, which

41 CENTRAL EURASIA 2005 Analytical Annual

Table 14 Confessional Composition of the Countries Bordering on the Central Eurasian Region in 2005

Population Including the followers of Total (in %):

Country44 Million people % Islam Christianity Other

Islamic Republic of Iran 68.0 100 98.0 0.2 1.8

Islamic Republic of Pakistan 162.4 100 97.0 1.8 1.2

Russian Federation 142.845 100 14.0 85.0 1.0

Turkey 69.7 100 99.7 0.2 0.1

People’s Republic of China 1,306.3 100 2.0 4.0 94.0 could provoke a shift in the distribution of power at the global level, that is, boost the role of Russia and China. This is also confirmed by the color revolution fiascos in 2005 in Central Asia, which somewhat eroded the U.S.’s regional foothold and thus increased Russia’s influence. Even the global antiterrorist campaign launched by the United States in the region was efficiently used mainly by the governments of most CEA states to stabilize the domestic political situation. So the ethno-religious structure of Central Eurasia is having a significant influence on the priorities of the main geopolitical actors with respect to the region (see Table 15). Among the neighboring Muslim nations, religion for Iran and Pakistan forms the main component of their regional priorities due to the high politicization of Islam in these countries. At the same time, although Turkey has a similar percentage of Muslim population—99.7% (Table 14), in this country economic and ethnic (Turkic) factors dominate over religious. The non-Muslim nations—Russia and the PRC—bordering on CEA continue to define their attitude toward the region through the prism of economic factors, with religious and ethnic elements being secondary. Among the Muslim actors of the Far Abroad, the religious factor is only determining for the LAS countries, while for the ASEAN countries, the economic component dominates in their Central Eurasian policy over the religious and ethnic. For the U.S. and the EU, just like for Russia, China, and the ASEAN countries, economic interests take the upper hand in their regional policy, followed by religious and ethnic. For non-Muslim nations, the importance of the religious and to a certain extent the ethnic factor is determined by the interest in restraining the development of radical Islamic and ethnocen- tric trends in the region’s states. As can be seen from the aforesaid, the cultural-civilizational factor in CEA is not only having a tangible effect on the sociopolitical situation in its countries, but is also affecting their foreign policy. Given efficient use of the religious element in CEA, active geopolitical actors will be able to help the region become an important political and economic partner. And whereas spreading the reformatory Islamic idea, which relies on a synthesis of the spiritual and the secular, could be a catalyst for these processes, they might be hindered by conservative and traditionalistic ideas, as well as unresolved armed conflicts in the region.

44 According to the information on the U.S. CIA site [http://www.cia.gov]. 45 According to the data of the Federal State Statistics Service for 1 December, 2005. Available at [http:// www.languages-study.com/demography/demorussia.html]. 42 E. ISMAILOV, M. ESENOV. CEA in the New Geopolitical and Geo-economic Dimensions

Table 15 Priority Levels of the Geopolitical Actors in CEA

Factors Priority

Geopolitical Actors Religious Ethnic Economic

Turkey 3 2 1

States Muslim Iran 1 3 2 bordering Pakistan 1 3 2 on CEA Russia 3 1 2 Non-Muslim China 3 1 2

Arab countries 1 3 2 States of Muslim Southeast Asian the Far 3 1 2 countries Abroad U.S. 3 1 2 Non-Muslim EU 3 1 2

* * *

In this way, incorporating the region into the world community and creating an efficient regional security system in the region could help to turn Central Eurasia into a single, integral, sustainably developing region with all the necessary conditions for dynamic growth of the economy and successful human development. The prospects for achieving this goal will most likely depend on the rates of corresponding changes in the national economies and the introduction of forms and methods of economic regulation generally accepted in world practice, as well as on the political will of the heads of state and government of the CEA countries. In the next decade, the region could become the reliable and stable core of a new Eurasian continent which is steadily growing in strength.

43 CENTRAL EURASIA 2005 Analytical Annual

AFGHANISTAN

GENERAL OVERVIEW

Viktor KORGUN D.Sc. (Hist.), head of the Afghanistan Sector, Institute of Oriental Studies, Russian Academy of Sciences (Moscow, Russian Federation)

amid Karzai’s government and the international community supporting it spent all of last year in an untiring attempt to deal with all the problems that have accumulated during the prolonged H transition from the civil war, which ended in 2001, to peace and revival on a new and democratic basis. And the main event of the year was the parliamentary election held on 18 September. It concluded yet another stage in Afghanistan’s political history defined by the Bonn agreements of De- cember 2001, within the framework of which the process of building a new state and creating conditions for further democratization of society’s sociopolitical life unfolded. The formation of new legislative state administrative structures (the parliament and provincial councils) gave ultimate legitimacy to the entire mechanism of the ruling regime and legislatively enforced the system of central and local power bodies that has currently developed. What is more, the appearance of the parliament and councils opens up opportunities, although still limited, for involving various political and social forces, and later the broad masses, in big politics, and for their direct participation in the development of society. Other important events of the past year were also related in part to the election. These primarily involved problems of security, the main threat to which is posed by three factors: the armed struggle waged by the Taliban and al-Qa‘eda militants against Hamid Karzai’s government and the international coalition troops; the sovereignty and tyranny of the warlords; and the production and smuggling of drugs. As a result of the combat operations by the international antiterrorist coalition and the Nation- al Afghan Army, the Taliban and foreign forces acting on their side have been significantly weakened. They can no longer have a radical effect on the situation and political processes in the country and, confined to the regions bordering on Pakistan, are unable to organize and carry out large-scale

44 AFGHANISTAN General Overview military operations. All the same, the extremists still have great military, financial, ideological- propagandistic, and psychological potential. What is more, their actions have acquired new forms and dimensions. The main goal of the opponents to Hamid Karzai’s regime last year was to undermine the parliamentary election, and the main targets were the employees of international organizations primarily involved in running the election, as well as the police and clergy cooperating with the authorities. By the fall, the extremists had developed a tactic that was new to Afghanistan— suicide bombers, most of whom were foreign mercenaries. During the second half of the year, more than 30 people died at their hands, including seven parliamentary deputy candidates and eight priests. During the year, more than a total of 1,400 people were killed by terrorists, including 46 U.S. servicemen. The opposition between the central government and the uncontrollable, semi-autonomous, different-caliber leaders, both local and regional, who govern most of the country is still arousing serious concern. Possessing full power in the areas they control, they only pay lip service to Kabul. More- over, many of them occupy gubernatorial posts in the provinces, although the zone of their actual control frequently spreads far beyond the bounds of the corresponding administrative regions. Tak- ing advantage of the government’s weakness, they abuse power scotfree, administer tyranny, violate human rights, mercilessly repress the discontented moods of the local population, and are closely tied with drug trafficking, which provides them with the funds for their armed contingents’ upkeep. Although 65,000 people laid down their arms during the campaign to disarm, demobilize, and rehabilitate private armed formations financed by Japan in 2005, the influential warlords have held onto a large part of their contingents and weapons. And even though, in the past two years, the head of state was able to neutralize or even oust the most authoritative and odious of them from big politics, such as Defense Minister Marshal Fakhim, leader of the Afghan Uzbeks General Dustom, and Herat Governor Ismail-khan, most of the warlords have retained their influence in the provinces. The drug problem presents just as great a threat to the country’s security. It is related not only to drug crimes, subversion of the national economy, corruption of the state system, and the threat posed to neighboring states, but also to the fact that the local drug barons are financing criminal groups, the Taliban and al-Qa‘eda. In 2004, Afghanistan proved to be the largest manufacturer of heroin, producing 87% of the world volume, as well as its largest supplier to the world market. The government has drawn up a set of measures in cooperation with donor countries to wipe out drug manufacture, ranging from the destruction of opium plantations to the creation of alternative farms for growing traditional crops. But these efforts have not yet yielded the desirable results. Admitted- ly, thanks to the powerful international financial support rendered by the drug control campaign, the U.S. allotting 780 million dollars for this purpose last year alone, poppy-growing fields were reduced by 21%. But due to favorable weather conditions, the harvest only decreased by 2.5% to 4,100 tons, while in 2004 it was 4,200 tons. Even with significant foreign financial assistance, 8.2 billion dollars for 2004-2009, the restoration of Afghanistan’s economy and social sphere is an extremely slow process. The greatest achievements have been reached in nation-building: after several years of obscurantism due to the Taliban rule, the country had to begin from scratch. In January 2004, a new liberal constitution was adopted which declared the country’s main task to be building a democratic society. In October of the same year, the country elected its president at a universal, secret, and equal election. This was Hamid Kar- zai, who gathered 54% of the votes in the first round. Finally, as already noted, in September 2005, a parliamentary election was held, the first in 36 years, which completed the formation of legitimate state administration structures. A new political system is forming, within the framework of which basic civilian rights and freedoms are being realized: personal immunity, inviolability of private property, freedom of speech and the press, equal rights for men and women, and so on. Today, approximately 300 independent

45 CENTRAL EURASIA 2005 Analytical Annual periodicals are published in the country, private radio and television stations operate along with the state channels, and more than 100 political and public organizations have been created and are functioning, many of them represented in the parliament. More modest results have been achieved in the economy, the main role in the restoration of which is played by donor countries. So far improvements can only be seen in infrastructure: roads, power stations, and irrigation systems are being restored and new ones built. In the future, Afghanistan could become a transit state, a junction between Europe and India with access to Southeast Asia, as well as providing a route from Central Asia to South Asia. In the next few years, there are plans to build cross- border railroads which will link the countries of the Persian Gulf and Pakistan with Central Asia through Afghanistan. And finally, a project for building a gas pipeline from Turkmenistan through Afghani- stan to Pakistan and possibly on to India is being reanimated. The transit of Turkmen gas will become a very tangible source of hard currency revenue into the Afghan budget. But for the moment all of this only exists in the form of promising plans and projects. Against the background of these extremely modest achievements, the situation in other spheres of the economy and social life remains depressing. There is still the problem of refugees who left the country during the Soviet occupation of 1979-1989, during the civil war in 1989-1996, and during the Taliban’s rule in 1996-2001. After the downfall of the Taliban regime, 3.8 million refugees returned to the country, mainly from Iran and Pakistan, but there are still about another 2 million living abroad. Most of those who have returned cannot find housing or jobs, the size of the population in large cities has burgeoned and people are living on the brink of poverty. There is still the problem of temporary migrants who fled from rural areas to the large cities during the combat action and are swelling the ranks of the unemployed there. Economic backwardness is also why other social problems cannot be resolved. The country is still one of the poorest in the world. According to the U.N. human development index, it holds 173rd place out of a total of 178. Only a few Sub-Saharan African countries are worse off. The average lon- gevity of Afghanis is 44.5 years, that is, 20 years less than in neighboring countries. The child and maternal fatality rate is the highest in the world, and 53% of the population live below the poverty line. Poverty in Afghanistan is a multifaceted problem which consists of unequal access to means of production and social services, a low level of education, health, and nutrition, weak social security systems, housing problems, and inequality between the sexes. The country is on the brink of a public health crisis, which is graphically shown by medical statistics. Only 40% of children are vaccinated against the main diseases, only 25% of the population have access to clean drinking water and to normal sanitation, there is one doctor to every 6,000 patients, one nurse to every 2,500 people, and 20% of children die before they reach the age of five. As for the country’s foreign policy, last year it noticeably strengthened. The priorities in this sphere are defined primarily by the amount of assistance rendered. The most important player on the Afghani field is still the U.S., which heads the antiterrorist coalition and also renders extensive military and economic assistance to Afghanistan’s restoration. Washington largely shapes official Ka- bul’s foreign policy. The U.S. has long-term political, economic, and geostrategic interests in this country, and bilateral relations are underpinned by the Agreement on Strategic Cooperation signed in May 2005 in the U.S. capital. Afghanistan is maintaining close ties with neighboring states too, primarily with Iran, Pakistan, and India. Located in the center of the Central and South Asian subregion, they use Afghanistan as a transit route to the Central Asian markets. In so doing, each of the countries in this region, by rendering significant economic assistance, is striving to gain a dominating position in Afghanistan, often acting on the brink of interference in its internal affairs. This primarily applies to Pakistan, which is engaged in fierce rivalry with India for influence over official Kabul. In addition, last year, Afghan- istan stepped up its foreign policy activity within the framework of regional and international organ-

46 AFGHANISTAN Politics izations. For example, in November 2005, a conference was held in Kabul of the member states of the Economic Cooperation Organization, to which Turkey, Azerbaijan, Iran, Turkmenistan, Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan, and Pakistan belong. The participants in this meeting discussed increasing economic aid to Afghanistan. In the same month, Afghanistan joined the South Asian Association for Regional Cooperation (SAARC), the members of which are India, Pakistan, Nepal, Bhutan, Bangladesh, Sri Lanka, and the Maldives. In 2006, Afghanistan has a real chance of joining the World Trade Organization (WTO), as well as the Shanghai Cooperation Organization, in which it became an observer in 2005. Last November, the SCO and official Kabul established a Con- tact Group. Relations with the European Union are dynamically developing, which is rendering immense economic aid to the country. Last November, official Kabul signed an Agreement on Partner- ship with the EU. In this way, in 2005, Afghanistan declared itself an important entity of international relations and regional geopolitics. The country’s foreign policy activity and stances will have a significant impact both on the alignment and balance of power in the region and on the overall political and economic development of its states.

POLITICS

Viktor KORGUN D.Sc. (Hist.), head of the Afghanistan Sector, Institute of Oriental Studies, Russian Academy of Sciences (Moscow, Russian Federation)

arly in 2005, the north betrayed its annoyance with the freshly formed Cabinet. On 1 January, representatives of eight northern provinces came to the Mazar-i-Sharif to declare that the number E of ministers of the ethnic minorities of the north in Hamid Karzai’s new government did not correspond to their contribution to the jihad against the Soviet troops in 1979-1989 and to the counterterrorist struggle. The final resolution emphasized that the majority of the country’s ethnic groups, especially those of the north, was disappointed with the new cabinet. It also objected to the distribution of ministerial posts, the most important of them going to Pashtoons, members of the country’s largest ethnic group, and called on the president “who represented all Afghans” to revise his government’s composition. It appears to be General Abdul Rashid Dustom, leader of the Afghan Uzbeks, who stirred up discontent in the north: at the presidential election on 9 October, 2004, he won 10 percent of the votes, which were never transformed into a government seat for himself, while his supporters obtained only two seats in the new cabinet. Late in December 2004, he voiced his displeasure about the inadequate representation of Uzbeks and other national minorities in the upper echelons of power. Mass rallies with similar slogans took place in the northern provinces of Balkh, Jauzjan, and Faryab. A power struggle was evidently gaining momentum in the ethnically split country.

47 CENTRAL EURASIA 2005 Analytical Annual

This led to an aborted assassination attempt on General Dustom which took place on 20 January in the village of Sibergan, the Jauzjan provincial center and the general’s turf. Dustom, who escaped with his life, blamed the people connected with the Taliban and al-Qa‘eda. The local authorities, however, preferred to blame Pakistan, their version being denounced by a spokesman of the Supreme Court of Afghanistan. The investigation teams have so far failed to offer a final version. Al-Qa‘eda might be involved: the general, who wields a lot of influence in the north, is a thorn in the side of the Islamic Movement of Uzbekistan (IMU) headed by Tahir Yoldosh, one of al-Qa‘eda’s allies. The IMU camping along the Pakistani border would like to move closer to Uzbekistan’s southern borders. Shortly after the attempted assassination, Reuters received information from an unknown person who represented the Taliban. He said that the failed attempt on the general’s life was intended as revenge for the mass murders of Taliban members perpetrated by Dustom’s units involved in the counterterrorist operation in October 2001. General Dustom annoyed the central government as well: for a long time the general, who headed the National Islamic Movement Party, toyed with the idea of federalism to create a wider autonomy for the Afghan Uzbeks. In recent years, General Dustom was also involved in a protracted conflict with General Ato Muhammad, comrade-in-arms of former Defense Minister Mohammed Fahim, thus undermining political stability in the country’s north. In the wake of the presidential election, though, the general gradually became a legitimate figure to the extent of disarming his private army, albeit unwillingly. Later President Karzai lured him onto his side by giving him the purely decorative post of chief of staff of Armed Forces under the Supreme Commander. The general quit his post of head of the National Islamic Movement. To be more exact, the general was not appointed chief of staff. President Karzai instituted the high-sounding new post, which had no real power, in order to detach the general from his cronies and lure him into the presidential palace in order to control him without humiliating either him or his comrades-in-arms. Under pressure, the general came to the capital to take the post—this was the first step toward gradual disarmament and integration of the warlords. Hamid Karzai, who resolved to put an end to the warlord system, had no ready means to do this, therefore he gradually narrowed down the power of the warlords by pushing them onto the road of legal political activities, where all played according to the rules. What happened next was prompted, directly or indirectly, by the coming parliamentary election. Scheduled for October 2004 to coincide with the presidential election, it was moved to a later date—first to May and then to September 2005. This was explained by the complex domestic situation, the need to train more people to organize elections across the country and to re-register the voters. On 17 January, 2005, however, the head of state appointed the Central Election Commission of nine members who represented all major ethnic groups: Pashtoons, Tajiks, Uzbeks, Hazaras, Turk- mens, and ethnic Hindus. Later it was transformed into a Joint Commission for the Elections. The race began. Meanwhile, the country’s leaders never abandoned their efforts to draw the former Taliban leaders and fighters onto their side. This was done within the 2004 amnesty of those Taliban members who had withdrawn from fighting against the government and the international counterterrorist coalition. In February, four former top bureaucrats accepted an invitation to join the national reconciliation process: Abdul Hakeem Mujahed, who was expected to represent the Taliban in the U.N., but was never accredited; Arsalan Rahmani, Deputy Minister of Higher Education, Ramatullah Wahidyar, Deputy Minister for Martyrs and Repatriation, and H. Fawzi, former charge d’affaires ad interim of Afghanistan in Saudi Arabia. This was a demonstrative rather than political step. In 2004, Hamid Karzai supported by the United States called on the Taliban members to lay down their arms and go back to peaceful activities. A group of about 100 Taliban leaders either connected with al-Qa‘eda or guilty of grave crimes against

48 AFGHANISTAN Politics the nation were excluded from the amnesty. According to official information, the four members who sided with the government were clean of suspicious ties or crimes. All of them came from the same province (Paktika); all of them, especially Arsalan Rahmani, a highly respected religious leader in his province, could be used to convince other Taliban members to lay down arms and go onto the government’s side. The campaign was slow to take off: about 300 people laid down arms by mid-2005, while the terrorists and Islamic extremists started fighting with renewed vigor. This became especially evident as the parliamentary election drew nearer. In fact, the nation was divided over reconciliation with the Taliban. As the election campaign gained momentum, new centers of power appeared in the country: early in March, a political New Afghanistan party headed by Yunos Qanuni, former minister of education, announced that it was prepared to register. Another newly formed party—the National Authority Party— was headed by former minister of commerce Mustafa Kazemi. With his 16 percent of votes at the presidential election, Yunos Qanuni, former member of the Islamic Society of Afghanistan Party headed by then president Burhanuddin Rabbani, became one of the opposition leaders. Hamid Karzai approved of his desire to set up an opposition party and compete for parliamentary seats. After the presidential election, Yunos Qanuni was busy forming his image of an independent politician who claimed a leading role in the nascent opposition. M. Kazemi, a former member of the Islamic Unity Party of Afghan- istan headed by Vice-President Abdul Karim Halili, announced that he had dropped out of this party five years earlier because the country was moving toward peace. In view of this, said he, independent parties headed by intellectual politicians willing and capable of addressing new tasks should replace the militarized parties representing hostile factions. The process of building parties headed by prominent politicians testified that political forces had been set in motion as the election date was drawing nearer. Even though the election law spoke of independent candidates rather than political parties, it was clear to all that many of the political structures would nominate their allegedly independent candidates to be able to set up parliament factions and coalitions on an ideological and party basis. Late in March, twelve political parties, which in the past belonged to the Northern Coalition, united into a National Reconciliation Front of Afghanistan headed by Yunos Qanuni: New Afghani- stan under Qanuni; two groups which formerly belonged to the Wahdat Islamic Unity Party and retained the name headed by former minister of planning Mohammed Mohaqiq and Mohammad Ak- bari; the Islamic Movement of Afghanistan headed by former minister of transport Sayyed Moham- mad Ali Jawed; the Islamic National Revolutionary Movement under Ahmad Nabi, as well as other less prominent structures which represented the three largest ethnic groups: Pashtoons, Tajiks, and Hazaras. The bloc leader identified its purpose as coordinating all the opposition parties with the aim of winning a parliamentary majority. His more specific aims were monitoring the government, strengthening democracy, amending the constitution, and guaranteeing social justice. “We are not at loggerheads with the government,” said he. “Government monitoring is part of democracy and typical of any democratic society.” Other political figures of the Front—Mohammed Mohaqiq, Ahmad Shah Ahmadzai, Sayyed Mohammad Ali Jawed, Mohammad Akbari, Qarabek, Abdul Mansoor, Nasrulla Barakzai, Ahmad Nabi, and S.D. Hussayni—were all typical warlords and heads of military-political groups, many of them accused of numerous human rights violations. On the whole, the Front seemed to be a weak, artificial, and loosely tied structure with no inner unity. There was an opinion shared by most of the experts that the Front had no chance of survival because of the leaders’ egocentrism, clan and religious preferences, and its political patchiness. The leaders, Qanuni and Mohaqiq, undertook to represent the mojahedin while trying to leave behind their jihad-associated past. In an effort to acquire a new identity, they announced democracy,

49 CENTRAL EURASIA 2005 Analytical Annual pluralism, and values of civil society their aims. People like S.M.A. Jawed, the Front’s speaker, and A.Sh. Ahmadzai, the Front’s deputy head, represented two different dimensions in the coalition. The former, with no social support, has spent much time in politics playing up to all sorts of politicians. He joined the Front for purely personal reasons. Ahmad Shah Ahmadzai rejected democracy altogether; a rich and influential figure under the Taliban, he abandoned the armed struggle and represented the Pashtoons in the new bloc. There was a group of young and ambitious Tajiks, Uzbeks, and Hazaras of the Abdul Mansoor type ready to go to all lengths to reach their own ends. While sticking to the old dogmas, they wanted changes and were not alien to experimenting. On the other hand, after abandon- ing their old ideas and embracing new realities, they had nothing to offer. They were fundamentalists and political modernists devoted to tribal values, but with no social support. On the whole, the Front stood a good chance of getting enough seats in the parliament because of the large number of parties involved and several independent political personalities. There was no guarantee, however, that they would represent the classical opposition—all the more so since Yunos Qanuni was successfully cooperating with the government on many issues. In May, the unfolding election race created a background for the events outside Afghanistan which echoed throughout the Muslim world. I have in mind the defilement of the Koran by American guards in the American base of Guantanamo (Cuba). On 10 May, the day after the newspapers carried information about the incident, a large student rally took place in Jalalabad, in the country’s east, under the slogans “Death to America!” and “Death to Bush!” accompanied by massive unrest and loss of life in clashes with the police. On 11 May, thousands of protesters came out into the streets again, with new victims ensuing. Kabul also had its share of student protest rallies, which formulated concrete demands aimed at the United States. In other cities, too, unrest was accompanied by violence and deaths. The response of the country’s leaders, forced to balance between their loyalty to the United States and the need to take public opinion into account, proved easy to predict. Hamid Karzai said in Brussels, where the news reached him, that the rallies were an obvious sign of democracy, added that Afghan society was still not ready to embrace democratic values, and suggested that the rallies were incited by religious extremists both inside and outside the country. Other Afghan officials made similar statements. The demonstrations revealed the growing dissatisfaction of part of the nation with America’s presence and activities in Afghanistan; this became even clearer when the status of the American bases in Afghanistan was widely discussed. While the Guantanamo incident did not undermine the Afghans’ trust in Washington, it increased the number of anti-Americanists in all social groups and supplied the Islamic extremists outside the country with another chance to say that the U.S. was fighting Islam, not terrorists. On 29 May, the country was shaken by a bloody event in Kandahar: Maulawi Abdullah Fayaz, prominent religious figure, staunch supporter of President Karzai, and Chairman of the Ulema Council of Afghanistan, who actively denounced the Taliban, died in a terrorist attack. Soon after that, on 1 June, a suicide bomber carried out a terrorist attack in the Abdul Rab Ahundzada Mosque in Kan- dahar where hundreds of people had gathered for the Fayaz funeral service. Head of the Kabul Se- curity Service Akram Khakrizwal was among the twenty-one killed. Kandahar Governor Gul Agha Sherzai hypothesized that the Arab terrorist was connected with al-Qa‘eda. These events were the first in the series of terrorist acts carried out by those who had learned a lot from their Iraqi “colleagues.” At the same time, Karzai’s closest circle began to doubt his policy of reconciliation with the Taliban. It had become more or less clear that the growing tension between the president and his opponents in the cabinet might increase the public’s radical sentiments and open heated debates on this issue. This, in turn, might negatively affect an advance toward national unity and provide external forces with more opportunities to destabilize the situation at home.

50 AFGHANISTAN Politics

New leftist and rightist radical forces joined the election race, together with the traditional and well-known political, religious, and public leaders. After many years of absence, General S. Tanai, defense minister in President Najibullah’s communist government, came back to Kabul on 5 August. In March 1990, after an aborted anti-presidential riot he had himself organized, the general fled to Pakistan under the wing of Gulbuddin Hekmatyar, leader of the Party of Islam which supported him. Later, Hekmatyar pooled forces with the opponents of the Karzai regime. Even before he came home, the general set up a Peace Movement. Back home, he announced that he wanted to put his people in the parliament. Warmly greeted by his tribe, he was severely criticized by the Afghan media for his repressive policies as minister and his ties with the ISI (Inter-Services Intelligence) of Pakistan. Several leftist politicians, former members of the People’s Democratic Party of Afghanistan (PDPA) which was in power in the 1980s, also claimed parliamentary seats. They were: Nur al’Haq ‘Ulumi, founder of the National Unity Party of the social-democratic type, who arrived earlier in the same year from Russia; Sayyed Muhammad Gulabzoi, former member of the CC PDPA and former minister of the interior, and K. Ranjbar, former president of the Academy of Sciences of Afghanistan. New candidates appeared on the right, too. They were those Taliban members who had moved away from their former leaders, including Abdul Wakil Muttawakil, former foreign minister. In 2001, at the very beginning of the counterterrorist operation, he abandoned the Taliban, gave himself up, and spent two years under home arrest. Today, he supports Karzai. Former deputy interior minister hajji Abdus- samad Haksar, who claimed a parliamentary seat to represent Kandahar, joined the former foreign minister. The notorious former minister for religious affairs, Maulawi Kalamuddin, also ran for parliament. In the past, his people had been known to roam the streets detaining women without hijabs and beardless men. The list of candidates contains the well-known names of former Taliban warlords, Rais Bagrani from the Hilmand Province and Abdussalam Raketi from the Zabol Province. The loyalty of the latter four to the current authorities is highly doubtful, yet their presence in the government might improve the feelings in the areas where fighting is still going on. The very fact that all sorts of political figures, including those who defend opposing ideas, were involved in the election race pointed out two important factors present in the country’s domestic policies. First, that different political forces were increasingly eager to rule the country, which meant that the nation’s political mobility had increased. Second, by admitting the obvious pluralism of candidates, President Karzai demonstrated that his position was firm, while he himself was prepared to enter into a dialog with the opponents, even the most radical of them. The election took place on 18 September. The last few days prior to that date were filled with even more bitter political rivalry: the candidates’ portraits were everywhere, while the press carried numerous autobiographies and election slogans. There were 12,400,000 registered voters across the country, who had to elect 249 deputies to the parliament’s lower chamber (Wolesi Jirga) and provincial councils. The latter, in turn, were to elect 64 senators, or two-thirds of the parliament’s upper chamber (Meshrano Jirga); 32 senators were appointed by the president. There were 5,800 registered candidates, 2,707 of them ran for parliament (there were 68 women among them); 3,025 ran for the provincial councils (247 women), and 68 for the lower chamber from the nomads, including 7 women. All of them ran as independent candidates free from party obligations. The National Army (28,000), the national police (55,000), forces of the international counterterrorist coalition (20,000), the international peacekeeping corps (the numerical strength of which had risen by election day from 9,000 to 11,000), paramilitary units of the people’s police and border police—over 100,000 in all—were engaged in ensuring security on election day. Pakistan increased the number of its troops along the border with Afghanistan from 70,000 to 79,500 to prevent Taliban members camping near its territory from crossing the border. The turn-out was fairly high, but much lower than at the presidential election on 9 October, 2004: 6,400,000 came to the polls (52 percent compared with over 80 percent on 9 October). Many of the

51 CENTRAL EURASIA 2005 Analytical Annual voters were undecided for several reasons. Those who ignored the election argued that nothing had changed after the presidential election on which they had pinned their hopes; that the deputies had already been hand-picked, therefore voting was useless; that the richest and most influential among the candidates (warlords and drug barons) would be elected; that the parliament staffed with the same people who had been plundering the nation would do nothing to improve the situation; that it would have no real power, etc. Contrary to fears, the election was relatively peaceful; the Taliban could not disrupt the process. In some places, there were attempts to frighten the voters away; several polling stations were blasted causing eight deaths. International observers confirmed, on the whole, that the election campaign was absolutely legitimate, even though they pointed to several minor violations of the laws. The complaint commission received over 5,000 statements about violations of the voting procedure. It took a lot of time to study them all, therefore the preliminary election results were not made public until late in November. The political community expects that the new parliament (the National Assembly) will complete the process of creating a new statehood, thus providing the regime with much needed legitimacy, while the people are looking forward to peace and stability. Everybody expects that the parliament will urge the cabinet to effectively reconstruct the country, ensure national security, put national policy on a firm foundation, etc. As a post-Taliban democratic institute, the parliament is expected to work together with executive power to address all the priority problems, jolt the government into action, and prevent it from taking steps not conducive to the country’s rehabilitation, economic growth, and higher social status for the country’s citizens. The executive and legislative powers are expected to work together irrespective of their ethnic, geographic, or clan interests. The parliament should ensure equality for all Afghans regardless of sex, ethnic affiliation, and political preferences; it should create a system of checks and balances in full conformity with the constitution. With powerful support from the West and from President George W. Bush in person, official Kabul spared no effort to promote the idea of parliament opening up the road to democracy and genuine power of the people. This sounded plausible since free elections of legislatures are an element of democracy, yet the term cannot be fully applied to the Afghan realities. Islam and conservative ethnic traditions dominate politics and everyday life; the country has no experience of democratic development, while the people, exhausted by never-ending wars and poverty, know nothing about the democratic ideals imposed from abroad. Against the background of general optimism aroused by the parliamentary election, Karzai’s regime betrayed a certain amount of instability. On 27 September, Minister of Internal Affairs Ali Ahmed Jalali, a technocrat educated in the West and a former journalist who came back from the United States in 2002, resigned from the cabinet. He said this step was for personal reasons and his intention to return to his academic job and research, yet he did not exclude the possibility of coming back to politics. According to people from the ministry, however, his resignation was due to disagreements with the president over appointments of provincial bureaucrats. The former minister resolutely dis- proved this by saying that the time had come to fight corrupt bureaucrats and those involved in drug dealings. Jalali carried a lot of weight with the country’s political elite, therefore his resignation might make it harder to create a cabinet of technocrats. On 19 December, the newly elected parliament met for the swearing-in ceremony and for its first sitting—events of symbolic importance for the country. The head of state described it in the following words: “This meeting is a sign of the unity of the peoples of Afghanistan and a step toward democracy… The Constitution and the National Assembly will gather us under one roof to discuss our problems.” Even though the new government is a patchwork of tribal chiefs, former Westernized émigrés, warlords, women, and members of ethnic minorities, it should be described as a milestone created by the people trying to leave a devastating civil war behind.

52 AFGHANISTAN Economy

Hamid Karzai is overly optimistic—the new legislature is unlikely to become a constructive political force. Indeed, over half of its members are influential provincial figures able to stem all efforts to reform the administrative system and bring to court those responsible for the protracted blood- shed. Many of the newly elected deputies, who have no administering experience or even basic education, will have to learn fast in order to be able to deliver the country from poverty, terrorism, and drug trafficking. Under the constitution, the president outweighs the parliament, though it can pass laws and even veto the cabinet suggested by the president. Its first sitting attended by U.S. Vice-President Dick Cheney as a guest of honor (he also attended the swearing-in ceremony) elected Yunos Qanuni as speaker (not without behind-the-scenes bargaining), who immediately announced that he relinquished his role of opposition leader to support President Karzai’s course aimed at the country’s rehabilitation. “I am convinced,” said he, “that the parliament should support the government’s positive policies. The parliament, the judiciary, and the president should work together to help the people of Afghanistan.” The sailing would not be smooth, though: the very first session was nearly disrupted by deputy of the Farah province Ms. Malalay Juya, who tried to read a statement about the need to bring to court the “criminal warlords” present at the session as deputies. Loud protests drove her from the hall. In an interview to local journalists, she said that she had been upset to find so many warlords, war criminals, and drug dealers in the country’s legislature. In future, the parliament will surely be confronted with no less debatable issues. Still, the parliamentary election formally completed the process of political transition (the so- called road map) to a new stage of independent development initiated in December 2001 in Bonn by various groups of Afghans.

ECONOMY

Evgeni PASTUKHOV Researcher, Investment Profitability Research Agency (Almaty, Kazakhstan)

n 2005, as in previous years, the economic situation in Afghanistan was sufficiently complicated. This is due to the country’s adverse natural conditions, an infrastructure that has not been restored I after 25 years of civil war, the government’s inability to implement economic projects, and inadequate foreign assistance. The problem of illicit production and trafficking of narcotic drugs has not been resolved either. At the same time, let us recall that the country’s current head of state, Hamid Karzai, ran for president on a platform that clearly defined the government line in the economy: self-reliance and mobilization of all domestic reserves for rebuilding the country. Having reaffirmed his commitment to the principles of the market economy, he promised to raise per capita income by the end of his term in office from $200 to $500, especially in rural areas. It must be admitted that some positive changes have indeed been recorded in the economy: in the 2003/04 fiscal year, GDP grew by 16%, and a similar figure, according to preliminary data, was

53 CENTRAL EURASIA 2005 Analytical Annual reached in 2004/05. Estimates by the Asian Development Bank Institute (ADBI) show that average annual GDP growth in 2006-2010 will amount to at least 10%. In the 2004/05 fiscal year, GDP totaled $5,536 million ($246 per capita). According to the country’s Finance Minister Anwar-ul Haq Ahadi, the state budget in fiscal 2004/05 amounted to $678 million, including $333 million of tax revenues and $345 million of donor aid, mostly provided by the U.S. and EU states. The Afghan budget is known to consist of tranches from donor countries and domestic taxes. Since 2003, the latter have steadily increased. In view of growing economic activity and changes in legislation, the share of tax revenues has increased from 30% a few years ago to about 50% today (over $300 million). In 2005, the Central Bank’s international reserves reached $773 million. Consequently, since 2004 government revenues have obviously assumed particular importance in the Afghan economy. Given the heavy burden of expenditure (for restoring the economic structure, ensuring national security, etc.), over the past three years the government has taken a number of measures to strengthen the country’s finances, so boosting economic growth in general and government revenue in particular. In 2003, the country’s authorities carried out a currency reform. The old afghani was considerably depreciated: 1,000 old currency units were exchanged for 1 new one. This new money was issued in the amount of 16.5 billion afghanis, and the exchange rate stabilized at 46 afghanis per U.S. dollar. Since 2003, the Central Bank has pursued a policy designed to strengthen the banking system; that was also when the first five national commercial banks were licensed and began operations in the country. The incipient banking system has made it possible to accom- plish one of the main tasks of economic policy: to attract funds from members of the Afghan diaspora in the Western countries. In 2005, the Afghan government, which depends in large part on international economic aid, took a decision serving to increase government revenues: on 23 September, it introduced a progressive income tax. This tax is to be levied both on local companies and enterprises and on foreign citizens and firms operating in the country: incomes of over $200 per month are to be taxed at the rate of 10%, and over $2,000 per month, at the rate of 20%. Since the average monthly wage of government employees in the country is $25 per month, this tax is mostly oriented toward foreigners and Afghans employed by foreign companies and humanitarian organizations. According to official data, about 2,000 foreigners (excluding the military) are permanently resident in Kabul alone, and many of them work for various international organizations. Local analysts say that employees of some foreign firms earn close to $1,000 per day. Consequently, the new income tax, just as the measures taken to improve money circulation, to create a banking system and attract funds from the Af- ghan diaspora, will help to increase budget revenues. Nevertheless, in the opinion of many observers and experts, the economic situation in the country remains extremely grave: there is a shortage of jobs, and the economy is on the verge of collapse. The main factor here is that the legal sector of the economy is almost entirely dependent on foreign aid. But foreign funds flowing into the country for rehabilitation and reconstruction purposes are utilized extremely ineffectively. A significant part of them is used to pay salaries to government officials and employees of international and other organizations. A recovery has been recorded only in the activities of small traders. Overall, objective conditions in Afghanistan are not yet ripe for large-scale ambitious projects. At the same time, foreign investors and other businessmen have wide opportunities for developing small and medium business in such areas as construction, production of building materials, development of a network of auto repair shops, road repairs and irrigation. These areas of the Afghan economy attract investors from Iran, Turkey, Pakistan, China and India, while businessmen from the Cen- tral Asian states, especially Tajikistan and Uzbekistan, tap into the markets of the country’s northern provinces. Local experts believe that all conditions for a mutually beneficial inflow of investment into the country (including tax measures, liberal economic policy and other factors attractive to any busi-

54 AFGHANISTAN Economy ness person) have already been created. In actual fact, however, the government lacks real power in the country, and this has a serious effect on the situation. First of all, this applies to agriculture. The situation here, extremely grave as it is in view of the destruction of irrigation facilities and the degradation of irrigation systems, has in recent years been exacerbated by drought. Despite foreign assistance, about 40% of the population are now living below “survival” level: by U.N. standards, 6.4 million people in the country are malnourished. The main problem here is that agriculture is still largely geared to the production of drug crops. The cultivation of opium poppy and the production of opium and heroin have reached a huge scale. According to U.N. data, domestic drug trafficking in Afghanistan has exceeded $2.5 billion, while the value of locally produced drugs on the foreign market is close to $30 billion. According to information received from various sources, drugs account for about 60% of the country’s real GDP, and at least two-thirds of all Afghan farmers are involved in their production. In other words, over 1.5 million Afghans cultivate opium poppy. Interior Minister Ali Ahmad Jalali reports that drug production in 2004 was almost 20% higher than in 2003. Whereas in 2002 the output of raw opium totaled 3,400 tons, in 2003 the figure was 3,600 tons, in 2004, 4,200 tons, and in 2005, according to preliminary estimates, 4,000-5,000 tons, which can be processed into 500 tons of heroin. In 2004, the amount of heroin smuggled out of the country reached 430 tons. Considering that Europe consumes about 70 tons (over 90% of all heroin supplied to France and up to 80% of the drugs sold in Britain are of Afghan origin), this means that over 300 tons of heroin remained in the CIS countries. Contrary to expectations, the presence of coalition forces in Afghanistan has not helped to eradicate drugs or even to reduce the area under poppy cultivation. On the contrary, opium production has sharply increased. But the international forces stationed in the country are still disunited in the fight against this evil. Cautious attempts by the International Security Assistance Force (ISAF) to clamp down on the private mini-armies of the drug lords inevitably encounter resistance from U.S. army units deployed in the country, which often collaborate with the local warlords, many of whom are drug lords as well. Some foreign observers draw attention to the fact that many Afghan governors, army commanders and policemen are also involved in this criminal business. There are persistent rumors that even the Afghan president’s own brother, Qayum Karzai, who plays a significant role in Kandahar (in the south of the country), is connected with the drug trade. The reasons for Afghanistan’s possible transformation into a “narco-state” lie in the continued political instability, in the lack of effective government and of a clearly formulated action program to counter the drug trade, and in the degradation of agriculture and the economic infrastructure. Most experts are convinced that in its efforts to curb the cultivation of opium poppy Kabul has met with resistance from the farmers because, first, virtually no new jobs have appeared in the country in recent years; second, conditions that would enable the farmers to give up poppy growing have not been created; and third, both Hamid Karzai himself and Washington behind him fear that a large-scale operation to destroy poppy crops without providing the farmers with alternative sources of livelihood could lead to a sharp increase in unemployment, famine and general destabilization. Considering that many drug dealers maintain illegal armed formations resembling mini-armies, the threat to the central authorities and the international forces is very real. As regards the farmers, for them the advantages of poppy growing are quite obvious. Specialists say this does not require large tracts of land: in 2000, area under poppy cultivation constituted only 0.9% of the country’s arable land. Even in villages totally oriented toward the cultivation of this crop, it occupies no more than 8% of such land. Opium does not require as much labor or capital as wheat, rice or other grain crops. Poppy is best suited to Afghanistan’s arid climate and brings in a much larger profit than other crops: $4,600 per hectare compared to $390 for wheat. In 2003, this difference was much wider ($12,700 and $470, respectively). Whereas per kilogram of opium the farmer earns $600 to $1,000, per kilogram of rice he gets only $1.

55 CENTRAL EURASIA 2005 Analytical Annual

In October 2004, newly elected President Karzai said that the fight against drugs was to become a priority of his government’s policy, because drugs are a greater threat to the country’s political and economic security than the Taliban or al-Qa‘eda. Two months later, in December 2004, the post of a deputy minister in charge of anti-drug efforts was instituted at the Ministry of the Interior, and a Counter- Narcotics Ministry was set up in place of the former Agency. In addition, the armed forces and the police were charged with the task of destroying opium poppy crops. And at the beginning of 2005 the government approved an anti-drug plan providing for the development of alternative agriculture, the creation of special anti-drug task forces and judicial bodies, destruction of poppy crops, reduction in the demand for opium, treatment of drug addicts, and regional cooperation. This is a ten-year program, but by 2008 it is already planned to reduce drug production by 75%. However, international experts take a highly pessimistic view of the situation. In their opinion, over the next few years one should not expect any radical changes in the fight against the cultivation of opium poppy, because the government’s economic measures in this area can do nothing to improve the situation in agriculture. This is probably why in early 2005 the Karzai Administra- tion considered the possibility of declaring a general amnesty for persons involved in the drug trade, provided they cease their criminal activities and invest the capital derived from such activities in the country’s economy. It should be noted that throughout the past year the country’s authorities (together with international organizations) discussed projects for legalizing drug production. In particular, they considered the possibility of allowing Afghan farmers to produce opium on legal grounds exclusively for medical purposes. It has been estimated that profits in this case could equal those made from illicit trafficking of this narcotic substance. And world demand for codeine and morphine to be produced in Afghanistan could exceed the supply of opium illegally produced in that country by a factor of two. In September, a similar suggestion was made by French researchers from the so-called Senlis Council, whose employees jointly with Kabul University and scientific centers in Europe and North America had carried out a study resulting in a set of proposals for legalizing drug production. But at the end of the year official Kabul rejected that idea. In particular, in one of his speeches (back in Sep- tember) Counter-Narcotics Minister Habibullah Qaderi questioned the timing of the Senlis Council’s report and noted: “We don’t want to confuse the Afghan people, because while the government on the one hand wants to control and stop cultivation, we are talking about licensing.” Qaderi argued that the country’s security system was still too weak to regulate the legal production of opium. Without an effective control mechanism, he added, a significant part of this opium would be processed into heroin and supplied to illegal markets in the West and elsewhere. Incidentally, according to a U.N. study carried out in Afghanistan, in 2005 the amount of opium produced in the country fell by 2.4% from the previous year, and overall drug production and trafficking accounted for 52% of its GNP. Evidently, last year the Afghan authorities focused their efforts on the use of force in resolving the drug problem. Thus, a new law on combating illicit drug trafficking not only clearly defines the role and functions of official agencies in charge of work in this area, but also establishes criminal penalties for employees of state agencies who aid and abet drug dealers. This document also empowers the police, with court approval, to tap telephones and monitor the e-mail of persons suspected of involvement in the drug trade. Under another article of this law, citizens’ property derived from the drug trade is to be confiscated in favor of the state. The law was written by experts from Afghanistan, the United Nations, the U.S. and Britain according to Western models, but with due regard for local specifics. Clearly, its approval is an attempt to reduce the high level of crime and corruption, which is a serious obstacle to the country’s development. But one should not forget another revenue item of the criminal economy: trafficking in weapons, gold, precious stones, historical objects and other goods. This kind of business got an extra boost with the arrival of the coalition forces and international missions in Afghanistan. For example, one of the factors conducive to the theft of cultur-

56 AFGHANISTAN Economy al objects is that foreign military personnel and employees of international missions are very well- paid (by Afghan standards). In the spring of last year, reports began to appear on trafficking in human beings, especially children. For example, on 7 March, 2005, demonstrators clashed with police by the provincial gover- nor’s residence in Kandahar when a thousand-strong crowd urged the authorities to take resolute action against kidnapping. Against this background, the economic recovery, including the restoration of the industrial and agricultural infrastructure ravaged by years of civil war, remains unsatisfactory. There is a catastrophic shortage of money for the solution of numerous humanitarian problems, and the conditions of daily life of ordinary Afghans leave much to be desired. At the same time, the construction of schools, hospitals, roads and other facilities funded by donor states has got underway in the country on a sufficiently large scale. As a rule, donors fund concrete projects, and only a small part of international aid goes to the Afghan government. For example, Iran is currently implementing four projects: the creation of a water resources and environmental research center with training of personnel; organization of water supply to the city of Zaranj, the center of Nimruz Province; a master plan study on water management in the Kabul river basin; and equipment of a number of weather stations in Afghanistan. In July 2005, India pledged to allocate an additional $500 million for reconstruction projects in Afghanistan. Nevertheless, observers note that official Delhi, for all its interest in strengthening ties with Kabul, lags somewhat behind Iran, Pakistan and China in establishing political and economic contacts with Afghanistan. For example, goods from the PRC already constitute 25% of Afghan imports. According to Mohammad Azim Wardak, who is in charge of foreign trade at the Ministry of Commerce of Afghanistan, last year the share of Chinese goods on the Afghan market increased by 30% compared to 2004. It should be noted that the country’s government is gradually going over from the use of funds provided by donor countries to domestic investment. In April 2005, President Karzai accused nongovernmental organizations operating in Afghanistan of squandering aid money allocated for its reconstruction. He said, in particular, that his responsibility was to stop “corrupt, wasteful and unac- countable” nongovernmental organizations. That was how Hamid Karzai commented a law on NGOs prepared by the authorities effectively barring these organizations from participation in some of the largest projects. Under this law, the government intends to conclude contracts only with private tax- paying entities. In July, the government adopted a law on natural resources. From now on, the share of private sector investment in the exploration, prospecting and development of mineral deposits and oil and gas fields can reach 100%. According to experts, the country has around 300 deposits of gas, uranium, copper, gold, coal and other minerals. Some experts note that in the first place work will probably be resumed in the oil and gas industry, since it is the only industry that has not suffered from the civil war. It includes oil and gas exploration facilities in the town of Shibergan; oil and gas wells; gas pipelines; a gas desulfurization plant in the Jar Quduq field, and compressor stations on gas pipelines. The potential capacity of the Afghan market for oil products is estimated at over 1.2-1.4 million tons a year, and proven oil reserves in the north of the country allow the production of up to 1 million tons of oil a year. In addition, the government is conducting negotiations on the development of other natural resources. Potential foreign investors (China and South Korea) are particularly attracted by the copper deposit at Aynak (45 km from the capital), whose reserves are estimated at 360 million tons (from 0.7% to 1.5% of copper) with an approximate value $11.9 billion. Last year the government also took active steps to develop a network of industrial parks. Let us recall that back in 2004 an Industrial Parks Development Authority was established under the High

57 CENTRAL EURASIA 2005 Analytical Annual

Commission for Investment. The Authority is engaged in the construction of well-equipped technology zones with all the necessary communications for the development of small-scale production. Such parks are being created in Bagram, Herat, Mazar-i-Sharif and Kandahar, and there are plans for their construction in Kamari and Deh Sabz, in the vicinity of Kabul and in Sinjet Dara. Allocations for this project are to total $20 million. For the first three parks the government has received a $10 million grant from the U.S. International Development Agency. The first industrial park, opened in Novem- ber 2004, is located close to the capital (in Bagram). Its area is 24 hectares, and its users are provided with land parcels of 1,000 to 4,500 square meters. The park has electricity, water-supply and sewerage networks, a system of access roads, and a security perimeter. The second park, lying 20 km south of Herat, was opened in June 2005. It has attracted about $350 million of private domestic investment. Out of the 420 diverse industrial companies founded under this project, 35 have already started work, employing 4,000 people. The head of the Mines and Industries Department of the city of Herat, Ghulam Mohammad Mudabbir, said at the opening ceremony that soft drinks, biscuits, chips, vegetable oil, ice, plaster, paints and other goods produced by plants in the park were already on sale. In order to encourage domestic producers planning to trade with other countries, in September 2005 President Karzai issued a decree partially exempting exporters from customs payments for the next three years. Up to then, such payments had amounted to 2% of the value of exported goods. The country’s exports today total $300 million, or less than 10% of its imports. Incidentally, this decree does not apply to the export of natural resources, specially emphasizing that its purpose is to support domestic producers and improve the investment climate in the country. In 2005, the construction of an industrial park also continued in Mazar-i-Sharif. Its main purpose is to develop textile production (with French and Russian investments). Apart from that, the French have acquired a 60% stake in the Bakhtar vegetable oil plant, which resumed work in December. Active participation of foreign capital is due, among other things, to the fact that on 28 Novem- ber the Afghan government announced the start of a campaign to privatize state-owned companies. Most of these companies are to be privatized over the next three years. According to some estimates, by November 2005 the state had on its balance sheet close to 60 enterprises with about 25 thousand employees. The authorities are also planning to transfer natural resources to private companies at public auctions held in accordance with the above-mentioned law on natural resources, approved by the government and signed by the president. In summing up the results of the past year, one can say that it was not all that bad for the country’s economy. Just over three years since the ousting of the Taliban regime and the end of the long civil war, the country’s roads, bridges and big cities have for the most part been restored, and there is regular trade and close economic cooperation with neighboring states. The authorities have carried out a currency reform and are taking steps to develop banking, build industrial parks and create an investment system. The country’s successes are obvious. However, Kabul’s declared intention to insist on a single national budget for 2006 is justified more from a political than from an economic point of view. By setting this ambitious task, the central authorities are apparently trying to adjust the image of the Administration of Hamid Karzai who is seen as a puppet of the West both at home and abroad. After all, the country’s economy is still heavily dependent on foreign financial infusions, while agriculture is oriented toward the production of narcotic drugs. Evidently, these two factors will continue to determine Afghanistan’s economic and sociopolitical development in the near future.

58 AFGHANISTAN Religion RELIGION

Iakov TROFIMOV Ph.D. (Philos.), professor at the Karaganda “Bolashak” Institute of Actual Education (Karaganda, Kazakhstan)

pproximately 98 percent of Afghanistan’s population is Muslim; there are over 15,000 mosques in the country; about 550 of which are found in the capital. Between 80 and 85 percent of the A Muslims are Sunnis, and 15 to 20 percent are Shi‘a, the distribution being ethnically determined. Prof. Sazhin has the following to say on this score: “The dozens of ethnic groups make the situation even worse. According to the latest data, the Pashtoons form the largest group, they comprise 38 percent of the country’s total population; Tajiks comprise 25 percent; Uzbeks, 6 percent; and Hazaras, 19 percent. Each of the groups has a very complicated clan and tribal structure. The Pashtoons, for example, are divided into four large tribal unions, which in turn are divided into tribal affiliations consisting of tribes (there are over 20 of them), while the tribes are made up of numerous clans and families.”1 The larger part of the Pashtoons and Tajiks, as well as Uzbeks, Turkmens, Baluchis, Aymaks, Arabs, etc. are Sunnis. The Hazaras, Persians, some of the Pashtoon tribes, and Tajiks are Shi‘a. Each of the ethnoses has its own ideas about the Islamic dogmas and rites associated with the cults of saints and holy places. “There are about one-and-a-half thousand mazars (tombs) and holy places (ziyarats) in the country, the best known being the Rauzayii-Sharif Mosque in Mazar-i-Sharif, traditionally regarded as the burial place of Ali, one of the most revered, especially among the Shi‘a, Islamic saints, who was the first cousin and son-in-law of the Prophet Muhammad. The holy building Sakhi-Jan in Kabul, where Ali supposedly spent a night, is another such place. There is a mosque in Kandahar where the clothes believed to belong to the Prophet himself are exhibited; there is also the Ahund-zade tomb at Jalalabad.”2 For many centuries, Islam remained in the background of the country’s political life. Late in the 1960s changes began. R. Landa was quite right when he wrote: “Starting in 1973, Afghanistan, which for a long time remained on the periphery of the Islamic world, was gradually drawn into world politics; it got its share of Islamic fundamentalism as well. This became clear at the end of the 1960s when a Muslim Youth organization was set up to oppose modernization and cut down the clerics’ influence. The Islamists moved against Prince Muhammad Daud who, after seizing power, proclaimed a republic. In 1975, the Young Muslims tried, but failed to replace him.”3 Islam became radicalized and politicized after the Soviet invasion of Afghanistan in December 1979. Most of the local Muslims and their co-religionists around the world believed the invasion to be aggression against a Muslim land “dar al-islam.” I shall limit myself here to the role the war played in the process without going into details of how it became internationalized or its geopolitical importance. The war against the unfaithful (the shouravi, in this case the Soviet servicemen) forced the local

1 V.I. Sazhin, “Demokratia XIV veka.” Available at [http://i-r-p.ru/page/stream-trends/index-2550.html], 9 January, 2006. 2 Istoria Afghanistana. Available at [http://www.afghanistan.ru/print/?id=103], 10 January, 2006. 3 R.G. Landa, Politicheskiy Islam: predvaritel’nye itogi, Moscow, 2005, Ch. III, Para 4. Available at [http://i-r-p.ru/ page/stream-event/index-1295.html], 27 December, 2005. 59 CENTRAL EURASIA 2005 Analytical Annual

Muslims and the Muslims around the world to close ranks. Inside Afghanistan, however, the Muslims remained disunited; as soon as the Soviet Union withdrew its troops in 1989, a civil war broke out, which brought the Taliban to power. Its military defeat created conditions for the country’s democratic development in the social, political, and religious spheres, but it failed to lower the level of Islam’s political involvement. On 26 January, 2004, Afghanistan acquired a new constitution, under which the country was given a new name: The Islamic Republic of Afghanistan. “Islam was proclaimed the dominant religion, while the Constitution guarantees the right to profess other religions. The document, however, specifically points out that no laws contradicting Islam may be adopted. It also proclaims the ‘equality of all peoples of Afghanistan, of men and women before the law.’”4 In this way Islam acquired its legal status. The Shi‘a scored an important victory: instead of pointing out, as it was originally suggested, the leading role of “Sunni Islam,” the Constitution speaks of Islam in general. It should be said here that the Taliban was very negative about the Shi‘a. Prof. Georgy Mirskiy says the following: “The Afghan Taliban has been hostile to the Shi‘a at all times. They stated, for example, that mass murders of the Shi‘a in Mazar-i-Sharif in 1997 was ‘revenge of the truth.’”5 In 2002, the Shi‘a of Afghanistan acquired safer conditions for their religious activities and commemoration of Imam Hussein than in Pakistan. The parliamentary election on 18 September, 2005 demonstrated that the Islamic leaders were still highly respected. “According to the Central Election Commission of Afghanistan, representatives of the Mujahedin and clerics (about 50 percent) won the largest number of seats … members of the Taliban received four seats (1.6 percent)… The Afghan Shi‘a will also act as an independent and fairly strong political force: they have been building their self-identity for rather a long time.”6 It should be said that the election results did not reflect the Taliban’s real role in the country. They can be interpreted as the Taliban’s aborted attempt to sabotage the election; they refused, for example, to nominate their candidates. The election also demonstrated that in post-Taliban times, the country recognized women’s important role in social life: they won 71 seats out of the total 249. The country, however, has preserved the vice squad; in many provinces, women still have to wear yashmak; the media function under strict control, while dissidents are persecuted as criminals. Women’s Rights editor, Ali Mohaqiq Nasab, was sentenced to two years in prison for publishing anti-Islamic articles. One of them said in particular that under the Shari‘a, a Muslim who embraced a different religion should be punished by stoning. The judge argued that such articles inculcated hatred of Islam.7 What the author wrote, however, was completely true, which means that he was sent to prison for writing the truth about the Shari‘a norms. Here is another example: “In Afghanistan, a woman was stoned to death for adultery. According to Lenta.Ru, which refers to Reuters, this was the first case of this sort in post-Taliban times. A 29-year-old married woman was publicly stoned on a decision of the district court of Feyzabad, the Badakhshan Province. According to eyewitnesses, the local authorities and her husband dragged her away from her parents’ house to be stoned to death. The man involved was given100 lashes and let go.”8 No one was punished: everything was done according to the law and no one talked about “inculcating hatred of Islam.”

4 “V Kabule podpisana novaia Konstitutsia, soglasno kotoroy Afghanistan stal Islamskoy respublikoy.” Available at [http://portal-credo.ru/site/print.php?act=news&id=17588], 26 January, 2004. 5 See: Materialy SMI: “Shiity v sovremennom mire.” Available at [http://www/interfax-religion.ru/ print.php?act=news&id=7975], 7 December, 2005. 6 V.I. Sazhin, op. cit. 7 See: “V Afghanistane redaktor zhurnala poluchil srok za stat’i s kritikoy nekotorykh musul’manskikh norm,” In- terfax, 24 October, 2005. 8 “V Afghanistane po resheniu suda zhenshchinu nasmert zabili kamniami za supruzheskuiu nevernost,” Portal Credo.Ru, 25 April, 2005. 60 AFGHANISTAN Religion

The official clergy and the Taliban use the media in their own interests. “The Afghan mullahs decided to start a TV channel to, as they put it, compensate for the harm done by amoral secular TV… TV companies mushroomed in post-Taliban Afghanistan. Last month (in April.—Ia.T.), the Taliban opened its own mobile pirate radio station, holding forth on religious subjects and criticizing Presi- dent Hamid Karzai.”9 The government has not yet opened its own TV channel. Post-Taliban Afghanistan is producing much more opium poppy than before; this business pro- duces between 60 and 85 percent of the country’s GDP. In 2005, the clergy was enlisted to fight drug production. “The government of Afghanistan has devised a plan under which religious leaders will preach in the mosques against raising opium poppy used to produce heroin. Twenty-five mosques will be used for this purpose. The Minister for Hajj and Religion Nematulla Shahrani said: ‘We want to discuss the drug issue from the religious point of view. We want to explain to people that drug production is illegal.’ The minister for drug control, Habibullah Qaderi, has pointed out: ‘The mullahs will preach in the mosques to explain that poppy raising, heroin production, and trade in it are banned by Islam and the Constitution and are hazardous to the health.”10 Not all clerics, however, agree with this; many of them are convinced that Islam permits drugs. “Mufti Munir Shakir from the town of Barah (on the border with Pakistan) said while on the air at one of the local radio stations that poppy raising and trading in opium were absolutely acceptable to Islam. He is very popular in the area where opium production increased several times over in the last four years, even though not only political, but also religious leaders of Afghanistan and Pakistan announced that Islam banned this business.”11 In May, the country was shaken by stormy mass anti-American rallies which began in Jalal- abad. “Yesterday (11 May.—Ia.T.) was the second day of mass rallies in the Afghan city of Jalal- abad, 115 km east of Kabul, not far from the Pakistani border, which even force has not yet been able to suppress. They were triggered by information supplied by Newsweek about the humiliation to which Americans subjected the Muslim Guantanamo Bay prisoners. To cause them mental anguish, the Koran, the holy book for all Muslims, was placed on toilet seats or flushed down the toilet… According to different sources, the clashes claimed from four to ten civilian lives, and at least 60 were wounded.”12 Mass protests then spread to Kabul and to ten out of 34 Afghan provinces, including Paktia, Laghman, and Vardak. Pakistan, Iran, Indonesia, and other Muslim countries had their share of unrest, which originated in Afghanistan. It should be said that international human rights organizations have condemned the American methods of fighting the Taliban and al-Qa‘eda. Amnesty International’s annual report for 2005 paid much attention to persecution of the Muslims: “Hundreds of suspected supporters of the Taliban and al-Qa‘eda were detained for a long time at the American airbase in Bagram and other places controlled by the U.S. army. The arrested found themselves beyond the law and were thus deprived of the right to defend themselves.”13 In 2005, the Taliban stepped up its terrorist activities, its main target being the U.S. military and the servicemen of the international security forces, those Muslim religious leaders who supported the government, the mosques headed by pro-government clergymen, and schools. Mullah Omar is still the movement’s spiritual leader; according to unverified information he is hiding on the Pakistani border.

9 “Afghanskie mully otkryvaiut sobstvenny telekanal,” Interfax, 6 May, 2005. 10 “Vlasti Afghanistana namereny privlech k bor’be s narkotikami religioznykh deiateley.” Available at [http://i-r-p.ru/ page/stream-event/index-1295.html], 27 October, 2005. 11 “Torgovlia opiumom dozvolena islamom, shchitaet mufti iz Afghanistana,” Portal Credo.Ru, 21 January, 2005. 12 Materialy SMI: “Afghantsy vosstali za chest Korana. Amerikantsy spuskali sviashchennuiu knigu v unitaz,” Inter- fax, 12 May, 2005. 13 “V ezhegodnom doklade ‘Mezhdunarodnoy Amnistii’ za 2005 god bol’shoe vnimanie udeleno presledovaniam musul’man.” Available at [http://portal-credo.ru/site/print.php?act=news&id=34596], 23 June, 2005. 61 CENTRAL EURASIA 2005 Analytical Annual

On 30 May, President of the Maulawi Council Maulawi Abdullah Fayaz was killed outside his office. “Maulawi Fayaz, who in the past supported the Taliban, became the loyal follower of current President of Afghanistan Hamid Karzai. Mullah Latif Hakimi, the Taliban spokesman, confirmed in a telephone call to a France Press correspondent from an unidentified place that this organization was responsible. He said that ‘M. Fayaz acted against the Taliban under the guise of Islam and deserved death’.”14 In the small hours of 1 September, “the Taliban decapitated Muslim theologian Amir Moham- mad who supported one of the candidates at the upcoming parliamentary election… About 1,000, 48 of them military, have fallen victim to the Taliban in the last twelve months.”15 On 14 October, Mu- hammad Khan was killed, according to Associated Press, by a blast in a mosque; 18 other people were wounded. Muhammad Khan was an active supporter of President Hamid Karzai and condemned the Taliban. This was probably why he was killed.16 The Muslims in Afghanistan protested against the blasts in the mosques and the murders of clerics. On 20 October, about 4,000 took to the streets in the Khost Province to protest against the murder of Muslim cleric Muhammad Khan in a mosque. Many were chanting: “Death to the terrorists.” Ac- cording to a representative of the local authorities, the demonstrators demanded that the government protect the clergy.17 Regular attacks on schools arouse less indignation: the faithful believe that this is the Taliban’s way of protesting against co-education of boys and girls. The most radical of the fundamentalist groups insist that schools which, in their opinion, violate Islamic norms should be closed. In December alone, no less than four people, including a schoolmaster, died in such attacks.18 Schools for girls are not spared. In Afghanistan, Christianity is associated with the Western charities working in the country, practically all of which are missionary structures. This fact causes a lot of discontent among the Muslims. An American Open Doors missionary organization published a list of 50 countries in which Chris- tians were persecuted. Afghanistan, in which there are practically no Christians among the local people, holds 10th place on the “black list.” “According to Jerry Dykstra, who represents Open Doors, the study took into account many factors, including the possibility to follow Christianity, the degree of persecution, the freedom of worship, etc. The study was mainly based on information supplied by missionaries and members of the persecuted churches.”19 Judaism has virtually disappeared from the country. “Forty-five-year-old Zebulton Simen- tov became the only Jew in Afghanistan when his neighbor Itshak Levin died,” reported the Daily Times of Pakistan. “They were both born in Herat, a regional center of Western Afghanistan. The small Jewish community there began to fall apart when Israel was formed. His wife and children emigrated there together with other Jews. Zebulton himself refused to move away from the place where he settled over 20 years ago. Left alone, he shares his home, in the synagogue building, with his friend, 25-year-old Muslim Mohammad Amir, a guard at one of the two Jewish cemeter- ies of Kabul.”20

14 “V Afghanistane zastrelen glava Soveta sviashchennosluzhiteley strany,” Interfax, 30 May, 2005. 15 “Afghanskie taliby obezglavili musul’manskogo bogoslova za podderzhku candidata v parlament strany,” Inter- fax, 1 September, 2005. 16 See: “V Afghanistane proshla mnogotysiachnaia aktsia protesta protiv terroristov, ubivshikh v mecheti sviashchen- nosluzhitelia,” Interfax, 20 October, 2005. 17 See: Ibidem. 18 See: “Taliby zhgut shkoly, polagaia, chto sovmestnoe obuchenie mal’chikov i devochek protivorechit Koranu.” Available at [http://i-r-p.ru/page/stream-event/index-1295.html.?NTHOSTSESSID=49e1f6eab5eea8], 9 January, 2006. 19 “Opublikovan ezhegodny spisok stran, gde khristiane podvergaiutsia naibol’shim presledovaniam,” Interfax, 1 February, 2005. 20 “Posledniy evrey Afghanistana delit zhilishche s musul’maninom,” Interfax, 1 February, 2005. 62 AFGHANISTAN International Affairs

There is still a Sikh ethnic and religious community in the country, but the Taliban burned down their only temple in Kabul. Hinduism is present, yet hardly noticeable. This is a general overview of religious life in present-day Afghanistan.

INTERNATIONAL AFFAIRS

Evgeni PASTUKHOV Researcher, Investment Profitability Research Agency (Almaty, Kazakhstan)

ast year, Afghanistan’s foreign policy was largely determined by the fact that the world community continued to rivet its attention on this country. Its keen interest in the events going on in L and around it was aroused by the fact that the situation within the country is still having a significant impact on stability in the region, on the security system of its states, and on the interrelations of such players on the Central Asian field as the U.S., Russia, Iran, Pakistan, China, and India. Afghanistan’s foreign policy has also become more active since the country became a full-fledged member of the international community after the overthrow of the Taliban. Judging from the energetic activity of the country’s leadership, primarily of its president, Hamid Karzai, who made official visits to several European and neighboring countries, official Kabul is gradually trying to establish its place in the rapidly changing world. A significant role in improving the country’s image on the international area was played by the decisions of the Afghani government to support those states suffering from natural disasters. For example, in January, Afghanistan sent humanitarian aid to the South Asian countries hit by the tsunami at the end of December 2004: twenty military medics flew to Sri Lanka and five tons of medication and medical equipment were also sent there. In September, Kabul allotted 100,000 dollars to the victims of Hurricane Katrina in the south of the U.S., and on 22 November, 500,000 dollars were sent to the earthquake victims in Pakistan. What is more, Kabul is striving to reinforce relations with neighboring states and establish a dialog with other countries in order to obtain additional assistance for restoring the country’s economy and ensuring its security. For example, one of the main items on the agenda at international conferences and meetings of Afghanistan’s donor countries was usually the most important areas of joint activity to promote its restoration, including ensuring security, fighting the illicit production and spread of drugs, developing infrastructure, and so on. It is also very symptomatic that the main goal of the international economic conference held in Kabul at the beginning of April was to replenish the country’s budget for 2005/06 by attracting additional donor funds. Head of State Hamid Karzai asked the participants in the forum to increase the amount of funding and look at the possibility of sending these funds straight to the state budget and not to nongovernmental organizations, since this causes untargeted squandering of the allotted aid. Similar requests were also heard during Hamid Karzai’s visits to London, Paris, and Brussels.

63 CENTRAL EURASIA 2005 Analytical Annual

A particularly urgent problem is refugees. Despite the fact that many of them, three million people according to experts, returned to their homeland after the Taliban regime was routed, the Afghani diaspora is still one of the largest in the world, constituting between three and four million people according to different estimates. Most, approximately three million, of them found refuge in Pakistan, approximately 900,000 in Iran, while many others settled in the U.S., Holland, Germany, England, the UAE, India, the Central Asian republics, and Russia. As early as the beginning of the year, the U.N. High Commissariat for Refugees (UNHCR) expressed its concern about their fate, particularly of those who settled in Turkmenistan and Uzbekistan. According to the U.N. employees, the local regimes have been restricting the rights and freedoms of Afghani refugees and are trying to oust them from their republics. In this respect, the question was raised at the world level about further arrangements for former Afghani citizens. Canada was the most vocal among the Western states declaring their willingness to give refuge to migrants from Afghanistan. At the end of 2004-beginning of 2005, its representatives visited Tajikistan, Turkmenistan, and Kyrgyzstan, where they held talks with refugees, many were refused for security reasons, but in the end Canada agreed to accept 2,000 Afghanis, 1,000 of whom were from Tajikistan. In April, the U.N. High Commissioner for Refugees Ruud Lubbers said that the Afghani refugees living in Iran and Pakistan would be returned to their homeland before the end of the year. But as early as June, the Commissariat’s representative office in Kabul announced a cutback in the number of refugees to be returned home from Iran, from where, according to U.N. data, 15,000 people arrived in six months. Most of the Afghanis announced their desire to stay in Pakistan too, but, keeping in mind the load this large diaspora has on its economy, the refugee problem will become extremely urgent again in the near future with respect to official Islamabad’s relations with Kabul. One of the most serious questions for the world community and official Kabul is preventing Afghanistan from turning into a so-called drug state. At the beginning of last year, the International Monetary Fund published a report from which it followed that Afghanistan is gradually becoming a country where all the state institutions are powerless against the enormous amounts of drugs being produced and transported, the cost of which is estimated at 30 billion dollars on the foreign market. As some Western and Russian mass media claim, many high-ranking Afghani officials and politicians are involved in the drug business, even the president’s brother, Quayum Karzai, who essentially completely controls this business in the country’s southern provinces. According to U.N. experts, Afghan- istan accounts for 87% of the total world production of heroin, and the turnover of the opium economy is more than 60% of the country’s GDP. Approximately 10% of the country’s 24-million population are involved in this industry. At the same time as the IMF report appeared, U.N. representatives made a statement that international aid to this state should be cut back if its authorities do not establish control over drug manufacture. On 6 February, Hamid Karzai asked the World Bank to finance the efforts in the drug war aimed at reorienting farmers toward growing alternative crops. On 16 February, during his visit to Kabul, Brit- ish Foreign Minister Jack Straw said that London plans to create a trust fund for rendering Afghanistan aid in the fight against the illicit manufacture and sale of drugs, to which other countries can also make contributions. These problems were discussed at many international meetings devoted to the restoration of Afghanistan. For example, the threat of drugs spreading from the country was one of the main issues discussed at the meeting of defense ministers of the North Atlantic Alliance states and at the meeting of the Russia-NATO Council. Judging by everything, the fight against the illicit production and spread of drugs, which Hamid Karzai headed, began to yield fruit by the end of the year. For example, according to the September report of the U.N. Office on Drugs and Crime (UNODC), the opium poppy plantations in the country were reduced by 21%, from 131,000 to 104,000 hectares. Of course, the governments of neighboring states are also providing Kabul with significant help in fighting the drug threat. On 6 December, a meeting was held in the Pakistani town of Rawalpindi

64 AFGHANISTAN International Affairs of the heads of the corresponding departments of Afghanistan, Pakistan, and Iran, the participants of which came to terms about strengthening cooperation in the struggle against the spread of drugs. The fight against drug manufacture is also being stepped up due to the fact that a certain amount of the profit from its sale is used to recruit militants and buy weapons and ammunition. According to U.N. estimates, the country’s population has up to 10 million submachine guns, rifles, and machine guns, but the measures (supported by the international military contingent) its government is carrying out to demobilize and disarm illegal military formations are clearly insufficient. What is more, according to some information, terrorists are still being trained in the country, which means this state continues to be a source not only of the drug business and illegal arms trade, but also of religious extremism and terrorism. And although the Taliban movement was officially routed as early as the fall-winter of 2001, not all the extremists and terrorists were destroyed during the U.S.-led international antiterrorist operations and the corresponding activity of the Afghani special services. Throughout the year, difficulties were noted in carrying out these operations in the southeast provinces of the country, particularly in the regions bordering on Pakistan. For example, on 22 June, the Afghanistan president’s press secretary Jawed Ludin said that some high-ranking leaders of the Taliban movement are still in Pakistan. The problem of cross-border terrorism manifested itself with new force in May, when Director of the Russian Federal Security Service Nikolai Patrushev said that the events in Afghanistan are related not only to Uzbekistan’s domestic problems, but have developed under the influence of the instability in Afghanistan. During his official visit to Japan, Afghani Foreign Minister Abdullah Abdul- lah admitted that some participants in the unrest in Uzbekistan had ties with the Afghani Taliban. And speaking at the meeting of the Russia-NATO Council in Brussels, Russian Defense Minister Sergei Ivanov announced that Moscow has information about the training of terrorists in Afghanistan for their future export. But representatives of the Afghani Defense Ministry said this statement was unsubstan- tiated and demanded that Russia explain and clarify its viewpoint on this issue. On 24 June, representatives of the Collective Security Treaty Organization (CSTO) member states discussed measures to render assistance and support to Afghanistan at a meeting in Moscow. Russian President Vladimir Putin again expressed his concern about the fact that terrorist bases continue to function in this country. In response, several Kabul newspapers published an open letter by Afghan- istan Head Hamid Karzai to Russian President Vladimir Putin which said in particular: “Your Excel- lency, Mr. President of the Russian Federation! I would hereby like to reassure you and the Russian people that Afghanistan will not allow terrorists to use its territory for destabilizing the situation in neighboring countries and the countries of the region.” But in August, head of the CSTO Antiterrorist Center Colonel General Boris Mylnikov said again that “the greatest threat of terrorism for the CIS countries comes from Afghanistan.” But in so doing, the participants in the Shanghai Cooperation Organization summit held in As- tana in June called on the international antiterrorist coalition in Afghanistan to define the time periods for using the bases in Central Asia. This statement prompted Uzbekistan President Islam Karimov to demand that Washington withdraw the U.S. military base from the country, although six months prior to this, in January, he officially spoke in favor of keeping the bases of the United States and its allies in the antiterrorist coalition in Uzbekistan: “While the American contingent is in Afghanistan, the base in Khanabad will continue to exist.” This and other events clearly show that Afghanistan has turned from a country on the periphery into one of the centers where the forces of regional and global players are applied. In this respect, we would like to remind you that throughout the entire year, official Kabul continued to focus significant attention on its contacts with representatives of states interested in strengthening their foothold in Afghanistan. Among them are also those looking for the opportunity to incorporate its significant

65 CENTRAL EURASIA 2005 Analytical Annual mineral resources into the world economy, but primarily trying to use the country as a natural transportation corridor in the development of interstate economic relations. For example, on 5 January, 2005, the first meeting of the Interstate Coordinating Council to create a trans-Afghan transportation corridor was held in Tashkent. The delegation from official Kabul headed by Social Affairs Minister Suhrab Ali Safari took part in the ceremony to sign the provision on this Interstate Coor- dinating Council to create a transportation corridor linking Afghanistan, Iran and Uzbekistan. And as early as the middle of the month, despite the problems relating to determining the capacities of Turkmenistan’s gas fields, the Asian Development Bank presented the leaders of the oil and gas industry and mineral resources of Turkmenistan, Afghanistan, Pakistan, and India with the final feasibility report drawn up by the British Penspen Company for laying a gas pipeline of 1,680 km. As per the plans, it will pass from Turkmenistan through Afghanistan and Pakistan to the population settlement of Fazilika in India. On 28 March, the country’s trade minister Hedayat Amin-Arsalla held a press conference in Kabul, at which he said that the state leaders were undertaking active measures to implement a project for building a transit gas pipeline. A few months later, after a meeting of the Indo-Pakistani working group on cooperation in power engineering in Delhi, Pakistan’s Deputy Oil and Natural Gas Minister Akhmed Vakar confirmed that the Indian authorities also agreed to participate in this project. There are plans to begin building this gas pipeline in 2006. The cost of the project is estimated at 3.3 billion dollars and its implementation will be not only of economic, but also of geostrategic significance. For example, the U.S. as a guarantor of security should reinforce its position more in Central and South Asia. In this respect, the strengthening of American-Afghani contacts should be noted. During the second half of May, Afghani President Hamid Karzai made a visit to the U.S., during which an agreement was signed on long-term strategic partnership. In particular, it envisaged the possibility of the U.S. armed forces contingent’s long-term stay in Afghanistan, as well as the use of the Bagram airbase and other military infrastructure in Washington’s interests. What is more, the U.S.-led international military contingent will continue to have freedom of movement in the country while the antiterrorist campaign is being carried out. Here I should remind you that the signing of this agreement was preceded by events threatening to greatly complicate bilateral relations. In the spring, anti-American moods intensified in Afghani- stan aroused by the publications in Newsweek and then in other mass media about derision on the part of American security guards of the religious sentiments of prisoners at the base in Guantanamo. Ac- cording to the magazine, in order to break the Islamists’ spirit, they derided the Koran, placing copies of the book in the toilets. This information aroused indignation in many Muslim countries, including in Saudi Arabia and Pakistan. In the Afghan town of Jalalabad, about 300 students came out into the streets to demonstrate bearing slogans of “Death to America!” and “Death to Bush!”. Soon thereafter, similar demonstrations took place in 14 of the country’s 34 provinces, including Kabul. In Kunduz and Gazni, there were clashes between the demonstrators and the police, as a result of which 18 people were killed and 43 were wounded. As the representatives of the Western embassies in Afghanistan noted, this unrest was well planned and coordinated by people interested in escalating tension between Washington and Kabul. Hamid Karzai, who was making a European tour at the time, had a very unusual reaction to the anti-American protests. In his opinion, the multi-thousand demonstrations showed “the presence of democracy in the country,” and the unrest and pogroms were explained only by the absence of “the necessary power structures and law-keeping forces.” And this, in Karzai’s words, again confirms the need to retain NATO’s military presence in Afghanistan even after the parliamentary election. But the increase in anti-American moods ultimately forced Hamid Karzai to make several loud statements. For example, on 20 September, he said that he did not see the point in continuing a full-scale military operation in

66 AFGHANISTAN International Affairs

Afghanistan, the international contingent should concentrate on destroying the terrorist bases and not bomb or search the homes of peaceful residents. Some experts evaluated the head of state’s demarche as an attempt to change foreign policy priorities and steer away from American policy. According to their arguments, whereas Hamid Karzai used to depend on Washington and essentially could not take a single step on the international arena without its help, by the end of the summer, the situation had changed. During his years of rule, the Afghani leader has established rather stable relations with Iran, India, Pakistan, Tajikistan, and other countries, and Hamid Karzai himself is no longer perceived on the world arena as a puppet ruler. This is shown in particular by the fact that although the Hamid Karzai government still depends on injections of money from the U.S., not one major infrastructure project was implemented with its participation. The largest contribution to restoration of the Afghani economy was made by Iran and India. For example, the Iranian government allotted 500 million dollars in gratuitous aid to agriculture and power engineering, which is 46.1% of all the funds allotted in 2002-2004 to the restoration of the Afghani economy. And on the whole, Tehran is participating in 22 projects, whereby last year most of them were fully implemented: water supply and irrigation systems were restored, 180 artesian wells were built in the provinces of Herat, Kabul, and Kandahar, and so on. It is focusing particular attention on power engineering. In order to supply the western provinces of Afghanistan with electric power, a project for building two power transmission lines has been drawn up—Taebat-Herat and Torbete- Jam-Herat—costing a total of 13.6 million dollars. The first went into operation in 2003, and the second in January 2005. What is more, the Iranians have built major highways—Herat-Eslamkala and Herat-Meimene—and on 24 January, 2005, the ceremonial opening of the 122 km Dugarun-Herat highway took place, which was also built with Iran’s assistance. Along with this, last year an Iranian- Afghani intergovernmental committee on economic issues was created, which is headed by the finance ministers of both countries. The decision announced by Head of the Iranian Chamber of Commerce and Industry Mohammad Amin Kerim to grant Afghani businessmen 50 hectares in the free economic zone of Chabar was a significant economic breakthrough in bilateral relations. In this way, Hamid Karzai’s January visit to Tehran and other meetings with then Iranian president Mohammad Khatami, the visit by his wife, Zohre Sadegi Khatami, to Afghanistan in March, and the signing of several agreements, including on training Afghani policemen in Iranian higher educational establishments and on training personnel for the government administration, for which Tehran is allotting 1 million dollars, an agreement on border security, a memorandum on cooperation in communications, and several important political and economic documents signed in November indicate the high level of bilateral relations. However, last year, Tehran tried to undermine the U.S.’s plans to extend Washington’s influence in Central Asia, intercept Pakistan’s direct interference in the inter-Afghani settlement, and eliminate the threat of terrorism in order to ensure national security in the region and its interests in it, as well as intensify the fight against drug transportation from Afghanistan to Iran, and through its territory, etc. Contacts between Afghanistan and India have also strengthened. For example, on 15 Febru- ary, for the first time in the past 15 years, Indian Foreign Minister Natwar Singh visited Kabul, and on 28 August, Indian Prime Minister Manmohan Singh began an official two-day visit to Afghani- stan. The last visit at this level took place 29 years ago, in 1976, when Indian Prime Minister Indira Gandhi visited Kabul. India occupies sixth place in terms of amount of aid to Afghanistan, allotting 515 million dollars for this purpose since 2002. What is more, its specialists are participating in building a complex of parliament buildings in Kabul, restoring roads, implementing several projects in agriculture, in particular helping to establish power supply in the villages using solar energy, and introducing more efficient methods of farming. During his visit, Manmohan Singh offered 50 million dol-

67 CENTRAL EURASIA 2005 Analytical Annual lars for carrying out small projects, and also stated that both sides equally understand the danger of international terrorism and are willing to cooperate in the struggle against it. This cooperation put Pakistan on its guard. India considers Afghanistan to be a kind of gateway to Central Asia, where there are significant supplies of energy resources. Official Delhi is supporting Kabul in the fight against terrorism with the precise aim of ensuring security in the Central Asian countries and its interests in the region. It also hopes that this will help to wipe out the threat of international Islamist expansion with respect to Kashmir and other Indian regions where there is a predominant Muslim population. What is more, India does not want its traditional rival Pakistan to restore its dominating influence in Afghanistan. Despite the fact that in recent years Indian-Pakistani relations have significantly improved, there is still rivalry between Islamabad and Delhi. For example, most of India’s humanitarian aid to Afghanistan has been transited and will continue to be transited through Iran by road. This route is much longer than the one through Pakistan, but, according to the Indian authorities, it is simpler and more reliable, since when issuing permits to Indian truck drivers to pass through Pakistani territory, the local authorities insist on their own political conditions. It should be noted that in recent years, relations between Islamabad and Kabul have been developing very unevenly. After the terrorist act of 9/11, the Pakistani government and its leader Pervez Musharraf took the side of the coalition troops, but continued to support the Afghani Pashtoons, and recommended that the new Afghani authorities keep an eye on the former moderate Taliban. When the U.S. and the international antiterrorist contingent came to Afghanistan, Islamabad lost its former influence on the events going on in its neighboring state. This was because in exchange for refusing to play the “Afghan game,” the Western countries, primarily the United States, offered Pakistan significant economic aid, in particular, they adjusted its foreign debts. What is more, they essentially recognized, which is extremely important, official Islamabad’s nuclear status, and in so doing brought the country out of the international isolation it was in for many years. On the whole, Islamabad has been very interested recently in Afghanistan’s political and economic stability, from where, as already noted, up to 4 million refugees came to Pakistan and on the upkeep of whom, according to some estimates, it spends up to 1 million dollars daily. Refugees have been creating quite a number of other problems, and only after the end of the civil war in Afghanistan did the opportunity to resolve them arise for the first time. A new stage in the development of bilateral relations came in the middle of last year when Gov- ernor General of the Northwest Border Province of Pakistan, populated predominantly by Pashtoons, recognized the controversial nature of the border between these two countries, the so-called Durand Line, and the need to enter a new treaty. The one-hundred-year term of the previous treaty expired, according to official Kabul, 12 years ago, but Islamabad tried to insist on the limitless nature of this border by putting forward the idea of building a security wall along it. This plan, as was to be expected, aroused an extremely negative reaction in Afghanistan President Hamid Karzai. Nevertheless, in September, Pakistan refuted the statements that there are disputes between Islamabad and Kabul regarding their state borders. But the fact that Pakistan nevertheless decided on a demarche indicates its attempts to declare its interests in Afghanistan from a position of strength. Islamabad is still interested in retaining a friendly regime in Kabul, in maintaining its control over development of the situation in Afghanistan in the necessary vector, and in opposing the plans of certain states (for example, Iran and Russia) regarding the Afghani settlement. In turn, Iran, the U.S., and Russia, which are carrying out their own policy in Afghanistan, are trying to retain their influence both in this country and in Central and South Asia as a whole in order to use Afghanistan as a springboard for carrying out their policy in relation to the countries contiguous to it. As for China and the Central Asian republics, last year they were mainly interested in ensuring the safety of their borders, eliminating hotbeds of tension in the region, eradicating terrorist groups,

68 AFGHANISTAN International Affairs and ensuring national security. What is more, in this respect, their goal was to prevent a spread in radical Islamic fundamentalism in the CIS republics, destroy sources of drug trafficking from Afghanistan, and turn the country into a stable and friendly state with a predictable foreign policy. In this way, despite the changing features of the region’s political map, last year, Afghanistan continued to be a key country and problem for many foreign players. Like before, it will serve as a lever in the game many states are playing to advance their interests in Central Asia. But an important outcome of the year was the fact that Afghanistan is turning from a closed zone of economic and political influence into an open country in which many centers of power are beginning to function. What is more, Kabul itself is trying to carry out and uphold its own policy in its interrelations with neighboring countries. It is symptomatic that in the middle of the year, Hamid Karzai publicly announced more than once that the activity of foreign intelligence services had increased in the country. In his words, the employees of several foreign intelligence services had even penetrated into some of Afghanistan’s state administration bodies. In December, statements appeared that Kabul intends to demand compensation from Russia for the damage inflicted on Afghanistan during the years of Soviet intervention. But in the near future, Hamid Karzai is unlikely to be able to carry out a more independent foreign policy. The interests of regional and global nations are too tightly bound up with Afghanistan and the region as a whole.

69 CENTRAL EURASIA 2005 Analytical Annual

REPUBLIC OF ARMENIA

GENERAL OVERVIEW

Agasi ENOKIAN Assistant professor at the Department of International Relations and Diplomacy, Erevan State University (Erevan, Armenia)

rmenia acquired its state independence in 1991 at the same time as the country became em- broiled in the struggle for Karabakh’s self-determination. This is why the Karabakh problem A always features among all the domestic political, economic, and security-related difficulties characteristic of the transition period. And 2005 was no exception. The Karabakh problem made a significant impact on foreign policy, while it also had an immense effect on domestic policy. Another important aspect of the political processes of recent years is the government’s dubious legitimacy. The current team headed by President Robert Kocharian came to power in 1998 as the result of a coup. Since then, all elections (both presidential and parliamentary) have been held with what local and international observers have registered as grave violations. Today’s regime suffers from a constant dearth of legitimacy, which forces it to intensify the populist component in politics, on the one hand, and not shun dubious methods for fighting the opposition, on the other. The opposition maintains that it won the presidential and parliamentary elections in 2003 and contended this victory throughout 2003 and 2004 by organizing peaceful mass protest demonstrations. They culminated in the meeting held in the early hours of 13 April, 2004 and its dispersion using troops and military hardware. After 2004, which was full of post-election unrest and various demarches by the government’s political adversaries, 2005 can be described as a period of relative calm and even a year of stagnation in some political respects. This is largely explained by the fact that the opposition parties had most of the wind knocked out of their sails after their consistent attempts to render the 2003 presidential and parliamentary elections illegitimate and have their results annulled, as well as due to the unsuccessful demonstration tactics. Admittedly, in 2005, the opposition made several attempts to establish cooperation in other formats, but it was unable to make any significant headway. Of course, the politically active members of society, who played an extremely important part in the demonstration tactics chosen by the opposition, also grew weary of the failures.

70 REPUBLIC OF ARMENIA General Overview

The elections to the local power bodies held in 2005 in most of the country’s regions, as well as the Karabakh question and its discussion at the international level might have given a boost to domestic political affairs. However, the opposition either did not see the import of the opportunities opening up, or it decided not to squander its resources, but keep them for some later date. The small number of candidates it nominated did not receive political and moral support from the parties, nor did they achieve any success at these elections. Nor did the Karabakh problem rustle up any action on the part of the government’s political adversaries, since their approaches to the question were essentially the same as the those of country’s leadership, so neither side had any particular reason to come to loggerheads on this problem. What controversy there was mainly revolved around the referendum held on 27 November regarding amendments to the Constitution. At first, it was presumed that they would be adopted with the cooperation and consensus of all the political forces involved, but at the last moment the opposition again took the path of confrontation. The amendments to the Basic Law were not discussed in any purposeful way. Robert Kocharian’s political adversaries accused him of trying to change the Constitution to create conditions favorable to his running for a third term. What is more, by removing the ban on duel citizenship from the Constitution, he was seen to be preparing the ground, using simple manipulations, for falsifying the election by means of Armenians living abroad (mainly in Russia). The opposition parties called upon the people in different formats and with different justifica- tions to boycott the referendum. But after it was over, the government, in turn, announced extremely high voter activity, to which not only the opposition, but also international organizations objected. And some representatives of the country’s leadership even agreed with this opinion. But this time too, the opposition was unable to take advantage of the situation which developed—in actual fact very few voters participated in the referendum—to give itself a new lease on life, as the result of which its prestige took a severe blow. It is worth noting that literally two or three weeks after the referendum, the opposition’s “disappearance” had its reverberations in the government’s camp: contradictions between its individual leaders and parties grew, which could be symbolic for the political processes in 2006. In foreign policy, discussion of the Karabakh question took the back seat. Nevertheless, official Erevan invariably mentioned this problem at all levels. For example, at the beginning of the year, when Armenian and Azerbaijani Foreign Ministers Oskanian and Mamediarov met in Prague, the so-called Prague Process was launched (admittedly, its essence and details were not revealed). The Internation- al Crisis Group (ICG) came forward with its own proposals, but its recommendations aroused a very negative response both in Armenia and in Azerbaijan. According to some experts, the ICG report consisted of the main set of proposals put forward by the OSCE Minsk Group and was prepared only to sound out public opinion on the eve of the January 2006 meeting between Presidents Kocharian and Aliev being prepared at that time. Along with this, major achievements should be noted in cooperation with international organizations, in particular with the European structures and NATO, which was mainly determined by the region’s significance. The antiterrorist campaign in Iraq and the intensification of European Union integration placed additional, frequently token and deferred, obligations on Armenia, on the one hand, and the West’s accentuated interest in the Southern Caucasus provided all three of its countries more favorable conditions for holding talks on joining the EU, on the other. For example, such important documents as the European Neighborhood Policy (ENP) and the Individual Partnership Action Plan with NATO (IPAP) were initialed. What is more, the leadership of Armenia moved away from its unilateral pro-Russian orientation, preferring to develop multilateral ties, particularly with the U.S., which was prompted by the impasse that formed in domestic policy, the new realities in the region, and the world trends toward democratization.

71 CENTRAL EURASIA 2005 Analytical Annual

The undertakings held in Erevan dedicated to the 90th anniversary of the tragic events of 1915 in the Ottoman Empire should also be noted as events of international significance. They helped many states to recognize and condemn this historical fact. Many high-ranking guests came to Armenia for the events organized in memory of this date. Several meetings were held at the top level, which in addition to everything else helped to enhance Armenia’s ties with its diaspora and develop inter-confessional ties of the Armenian Apostolic Church. Significant achievements have also been observed in the economy. For example, incomes have risen by 14%, that is, the double-digit growth rates of the past few years have been retained. It is worth noting that the highest growth rates of 54% and 34% were recorded in such material-intensive spheres as the chemical industry and construction, respectively. This shows that Armenia has overcome the problems caused by the blockade of its borders organized as early as the beginning of the 1990s by its neighbors, Azerbaijan and Turkey, which affected 85% of the republic’s state boundaries. What is more, 2005 was also marked by a significant inflow of foreign financial resources. According to the official data, private transfers amounted to 26% of the GDP. Achievements in the economy led to a substantial reduction in the burden of social problems. Unemployment decreased, while pensions and wages increased to a certain extent. Despite the fact that the economy is of a largely consumer nature (it is fed from abroad), it is still capable of steadily reducing poverty. When analyzing the noticeable stability in 2005, domestic and foreign observers express the hope that these trends will continue in 2006. What is more, experts believe that since no elections are scheduled in Armenia or in Azerbaijan in 2006, this will bode well for settlement of the Karabakh conflict.

POLITICS

Manvel SARKISIAN Independent researcher (Erevan, Armenia)

n 2005, domestic policy remained under the pressure of two major factors: the continued confrontation between the government and the opposition which began during the 2003 elections and the I intention of the republic’s leaders to amend the Constitution. The opposition’s intention to force a change in the regime by means of a revolution and dispersal of the opposition rally on Bagramian Prospekt in Erevan on 12 April, 2004 added to the tension. Throughout 2005, the confrontation became localized in the constitutional referendum issue. The visible and invisible transformations at the top and in the opposition ranks, as well as the interrelations between the sides stemmed from their desire to win; the referendum was merely another instrument of political struggle. The boycott of the parliament launched by the opposition deputies and the organizational changes in the opposition camp proved to be two stable processes. A political struggle was waged around the Constitution and restoration of constitutional law and order through a change in the regime. For the first time in the last decade, the Karabakh issue disappeared from domestic policy. 72 REPUBLIC OF ARMENIA Politics

Early in January, the deputies who refused to attend the parliament sittings informed the progovernment factions that they were prepared to return if the parliamentary majority agreed with all their constitutional amendments. At a meeting with the secretary of the opposition faction “Justice” Viktor Dallakian, speaker of the parliament Artur Bagdasarian promised to discuss the propositions relating to the constitutional reform submitted by the opposition within the next ten days and call a meeting to discuss the results. The parliamentary majority, which was made up of three parties—the Republican, Dashnaktsu- tiun, and Orinats Erkir parties—and submitted its own amendments, rejected everything the opposition suggested. The opposition continued to boycott the parliament, while the Justice bloc became even more radical. On 10 February at a press conference in Erevan, an opposition member, leader of the New Times Party Aram Karapetian, announced that his party was prepared to launch a “national revolution” in April and to lead the popular revolt. It became obvious that there was a force prepared to head the revolutionary movement. On 16 February, another member of the united opposition, leader of the Liberal Progressive Party of Armenia (LPPA) Ovannes Ovannisian, announced that revolutions would inevitably shake the post-Soviet expanse and that Armenia would be no exception. Meanwhile, the country reached a point beyond which the amended Constitution became the pivotal point for all the political forces. On 2 February, the parliament was expected to start consultations on the amendments; however, vice speaker Tigran Torosian announced that they would begin on 11 February. Members of the Justice bloc refused to attend the consultations because the ruling coalition had rejected the amendments drafted by the Justice and National Unity (another wing of the opposition) factions. Confrontation over the Constitution became clear; it determined the logic of all the subsequent events inside the country; minor parallel issues appeared and disappeared without trace. The hearings on Nagorno-Karabakh (one of the key problems of Armenia’s domestic policy) which took place at the National Assembly on 29 March were one such issue. They were prompted by another upsurge of talks on settlement of the Nagorno-Karabakh conflict, in particular the reports submitted by Davis and Atkinson and the PACE resolution based on them. Its theses caused a wave of mutual accusations hurled by the deputies and the republic’s Foreign Ministry. Ambitious Armenian Defense Minister Serzh Sarkisian tried to play first fiddle in the settlement process. No matter how important, this remained an isolated episode, while the constitutional process continued to be the main driving force behind all the political transformations inside the country. It became clear that the referendum might have a dramatic impact on the course of the political struggle. There was information about talks between the camps and about their true intentions. On 5 April, for example, members of the opposition New Times Party met a delegation of the progovernment Orinats Erkir Party in the former’s headquarters to discuss foreign and domestic policies for about an hour. The opposition, however, remained as radical as before. On 13 April, the Justice bloc marked the anniversary of the dispersal of the rally on Bagramian Prospekt by calling a For the Sake of De- mocracy Forum to be carried out under the slogan “The Illegal Regime Should Leave—This is the Main Condition of Democracy.” Nearly all the political opponents of the regime (with the exception of the Armenian National Movement and the New Times Party) attended the forum. This was when the first signs of inner-party changes appeared, together with the threat of the opposition’s disintegration. The Republic Party met for its congress on 15 April. Its political council, which was formed at the congress, elected Aram Sarkisian (the brother of prominent politician Vazgen Sarkisian, minister of defense and premier, who died in the 1999 terrorist act in the parliament) as party chairman. Albert Bazeian and Lieutenant General Vagarshak Arutiunian, former defense minister, who nominated Aram Sarkisian to this post, remained political council members. Later it became obvious that the congress had been the first step toward the split in the party; before that it had been the most radical of the opposition parties, uniting the followers of the murdered premier. In May,

73 CENTRAL EURASIA 2005 Analytical Annual it became obvious that transformations in the opposition camp would go on. P. Ayrikian, leader of the National Self-Identification Party, speaking at the For the Sake of Democracy Forum, called on the deputies of the Justice bloc who were still boycotting the parliament to set up a National Council, a new political structure. The joint action of the opposition and the progovernment parties proved to be even more symbolic. Twenty-five political organizations from both camps signed a protest against the criminal elements which dominate in the country’s politics. The protest was prompted by the events in the town of Sevan, where firearms were used to disperse a rally. Ten more parties signed the document later. The president betrayed his uneasiness by stating that the opposition had misinformed the coalition leaders. Late in May, 16 opposition parties tried to set up an Advisory Council, an effort which displeased the leader of the Justice oppositional bloc, who said in particular: “Those who became deputies thanks to the bloc’s image” are aggravating the contradictions inside the bloc by their separatist activities. Summer brought the transformations in the opposition camp and the opposition over the Constitu- tion to a standstill. Early in August, the confrontation resumed over three important constitutional amendments. The opposition and the experts of the Venice Commission of the Council of Europe agreed in their assessments, while the government flatly refused to accept them. The Venice Commission insisted that they should be introduced into the draft. It looked as though the opposition had gained international support. On top of this, at a press conference held on 3 August in Erevan, foreign diplomats positively assessed the commission’s suggestions regarding the set of constitutional reforms, the parliament approved it in May in the first reading. Special Representative of the Secretary General of the Council of Europe to Armenia Boyana Urumova, Ambassador Extraordinary and Plenipotentiary of the U.K. to Armenia Ms. Torda Ebbot-Watt, head of the Erevan OSCE office Vladimir Priakhin, and U.S. Embassy Charge d’Affaires Anthony Godfrey expressed their hope that the opposition forces would participate in making the constitutional changes and in the referendum on the Constitution scheduled for the fall. The public sector, which had so far been keeping out of the way, began taking more active part. On 25 August, Alexander Butaev of the initiative group called “People are the Masters of Their Coun- try” announced that the public had not yet shown its interest in the amendments because the nation had not been informed of their meaning. He also pointed out that the Constitution should be amended to include provisions on the necessary democratic mechanisms. As a result, he added, people would obtain the right to carry out referendums and make important decisions. The ruling coalition was concerned about these developments. It was forced to accept the demands of the Venice Commission, which worsened the opposition’s situation: since the government accepted (probably contrary to its will) its suggestions, there was no reason to remain in opposition. On 31 August, though, at a special parliament sitting to discuss the amendments in the second reading, Artashes Gegamian, chairman of the National Unity opposition faction called on the nation to reject the constitutional amendments at the referendum. Earlier, A. Sarkisian, chairman of the Repub- lic Party, did the same thing. In this way, a new confrontation emerged between the government and the opposition over the yes/no answer. The opposition badly needed a new thesis to justify its stand and formulated it as “criminal power has no right to amend the Constitution.” On 1 September, the parliament discussed the set of amendments coordinated with the Venice Commission in the second reading: 98 deputies voted for it; 1 abstained. Nobody voted against because the opposition factions National Unity and Justice did not vote at all. The final text should have been adopted in the third reading. The opposition, however, had already launched a campaign to boycott the referendum. On 5 September, the non-parliamentary New Times Party called on all healthy forces to close ranks to initiate a change in the regime. On 9 September, Vazgen Manukian, chairman of the Nation- al-Democratic Union (NDU) and former premier, called on two out of three of the progovernment parties—the Armenian Revolutionary Federation Dashnaktsutiun and Orinats Erkir—to leave the ruling

74 REPUBLIC OF ARMENIA Politics coalition “since,” he said, “they are not involved in ruling the country and serve as a smokescreen for the third, Republican Party, which de facto rules the country.” On 20 September, the Zharangutiun (Heritage) Party headed by former foreign minister Raffi Ovannisian announced that it was against the referendum. The opposition camp showed no desire to close its ranks. Moreover, because of a scandal inside the party, the Republic Party, previously the leader of the most radical part of the opposition, split. Its most influential members, Albert Bazeian and former defense minister Vagarshak Arutiu- nian, discontinued their membership and offered scandalous revelations about their recent ally, Aram Sarkisian. They announced that they intended to start a new party with the tentative name of New Democrats and to convene its constituent congress in about two months’ time. Alarmed, the other opposition members deemed it necessary to create a new format of joint action before the referendum. Thus, on 29 September, 16 political organizations and the Forum of the Coun- try’s Intelligentsia issued a statement on their cooperation, which said in particular: “We have rejected constitutional amendments and in this way we are saying ‘no’ to the ruling regime.” Later, the Heritage Party joined them, which gave a name to the new format—the opposition headquarters 17 + 1. This meant that confrontation between the government and its political opponents acquired a definite organizational shape. On 4 October, President Robert Kocharian issued a decree which set the referendum date for 27 November. On the same day, he signed a law adopted by the parliament which amended and changed the republic’s Law on Referendum. The country’s domestic political life concentrated on the subject of the national poll. The public was puzzled by the continued confrontation. On 6 October, the press club of Erevan declared that the independent civil structures should remain neutral because supporting political forces was not their mission—they should concentrate on enlightening activities. Meanwhile, the opposition, which gained a new lease on life after becoming united, specified its tactics. On 8 October, the NDU council met to listen to its chairman Vazgen Manukian, who explained the contents of the constitutional debate and the political situation in the country. After discussing the situation, the council voted to boycott the referendum. It should be noted that at first the opposition parties could not agree on the right policy: some preferred to vote “no” at the referendum, while others insisted on boycotting. On 12 October, for example, the political council of the Justice bloc decided to call on its supporters to vote “no.” The council drafted a statement which said that “a positive result at the referendum will make the regime legitimate.” It also added that it would discuss the text with another opposition structure, the National Unity Party; and from 18 October until referendum day, the bloc resolved to meet the people and persuade them to reject the amendments. The republic’s leaders lost no time either. On 13 October, President Kocharian met the council members of the progovernment coalition. It was decided to set up a coordinating structure which would unite the progovernment structures and other political forces involved in the constitutional process. Mger Shakhgeldian, chairman of the Parliamentary Committee on Defense, National Security, and Internal Affairs, was appointed head of the coordinating group. The opposition, meanwhile, was cementing its unity. Koriun Arakelian, deputy chairman of the National Unity Party, said in the National Assembly that his party would support the Justice bloc and open the “second front” of confrontation. This spelled the danger of a revolution. The country’s leaders resorted to blackmailing: at a press conference, presidential adviser Garnik Isagulian warned some of the opposition members that if they continued to trade their Motherland for foreign support in a Color Revolution, he would inform the press about these facts. He further said that there was no threat of a Color Revolution in Armenia and that the country should move on to the next election cycle of 2007-2008. In this situation, international structures and European countries moved to the government’s side with their open propaganda in favor of the referendum. U.S. Ambassador Extraordinary and Plenipo-

75 CENTRAL EURASIA 2005 Analytical Annual tentiary to Armenia John Evans told the press: “The set of amendments is fairly satisfactory. The outcome depends on the people: we all expect them to pass their verdict on that day.” He added that the approval threshold was very high: one-third of Armenia’s electorate. The support was well timed—the “yes” camp strengthened. On 18 October, at a meeting with the leaders of the ruling coalition, 21 political parties called on the nation to vote “yes.” Head of the Coordinating Center Mger Shakhgeldian invited all the political forces to join the document. The “yes” camp was also doing its best to prevent the coalition from becoming stronger. In a certain sense, this confrontation looked comical. On 25 October, the Republic Party, having been denied premises for its congress, held it out in the open in front of the Matenadaran, the depository of ancient manuscripts. On the eve, it circulated a press release which said: “By doing this, the government interfered with the party’s activities, thus violating several constitutional provisions.” Foreign countries and international organizations were much more serious about the referendum. Some of their significant statements were designed to dampen the revolutionary ardor. On 27 Octo- ber, the U.S. ambassador announced that the United States had already started preparations for the Armenian election in 2007. According to John Evans, the Congress had already approved a set of measures and allocated about $6 million. The hint was too obvious to be missed. The “yes” and “no” camps launched wide-scale campaigns. On 29 October, the opposition 17 + 1 headquarters organized a Erevan-Shirak car race, rallies in the towns of Artik and Maralik, and a large demonstration in the city of Giumri with the aim of convincing the local people to boycott the referendum in order to turn it into a vote of “no confidence.” Only three local structures—the Your Choice public organization, the Social-Democratic Gncha- kian Party, and NDU—together with the PACE mission deemed it necessary to register at the Central Election Commission as observers. As the referendum date drew closer, the squabbles rose in pitch. It seemed that the country’s leaders realized too late that politicization of constitutional reform was dangerous. On 3 November, the president met with professors and students of Erevan University to answer their questions about the reform. He rejected all the arguments of his political opponents and assured them that he would accept any result at the referendum. Nothing bad would happen to the country if the amendments were rejected, but the country’s image would be tainted, he said. The rapidly consolidating opposition was of a different opinion: the failure of the referendum would doom the regime. On 8 November, S. Demirchian of the People’s Party attended a sitting of the 17 + 1 opposition headquarters and agreed to join the opposition’s undertakings. The headquarters received a new name—18 + 1—even though the People’s Party had not signed the constituent documents. The National Unity remained the only opposition structure that preferred independent actions. The country’s leaders were alarmed even more. As a precautionary measure they decided to limit the number of international observes, which gave rise to no objections from the international structures. Urdur Gunnarsdottir, press secretary of OSCE/ODIHR, said that since the government had not sent his organization an invitation, none of its observers would attend the referendum. It should be added that propaganda was limited to the yes/no issue without going into the details of the proposed amendments. The public, however, was concerned about the planned ban on dual citizenship. On 9 November, the Consent Center of Independent Analytical Studies, which enjoys the favor of the former ruling Armenian National Movement (ANM) Party, organized a seminar in the Congress Hotel to discuss the issue in detail. The participants unanimously agreed that Armenian citizenship should belong to those who shared the hardships of the country and its people during the early 1990s. The same issue was discussed on TV. Quite unexpectedly the constituent congress of the Dashink (Union) Party which met on 10 No- vember caused quite a stir amid the pre-referendum chaos. Its head, Samvel Babaian, hastened to dis- prove the rumors about his presidential ambitions in 2008. Vaan Ovannisian, who represented the

76 REPUBLIC OF ARMENIA Politics

Dashnaktsutiun Party, pointed out that it was not by chance that the new party had chosen a name similar to that of his own party. Obviously, Dashnaktsutiun expected to acquire a reliable partner, while many observers pointed out that the “yes” camp had reinforced its position. The new party’s head, however, stated that he had no specific opinion about the referendum. Meanwhile, those who wanted to boycott the referendum were gradually gaining a stronger foothold. On 10 November, the ANM board called on the nation to boycott the illegal referendum. The text approved by the board appeared on 15 November. It described the new version of the Constitu- tion offered for the referendum as an attempt to undermine Armenia’s basic values. On the same day, 10 November, the Vanadzor office of the Helsinki Civil Assembly announced that during the discussions of the draft amendments, human rights had been violated, therefore public opinion had not been taken into account. It was, in fact, an invitation to boycott the referendum which no one, except the government, really needed. At that time, the opposition had not yet reached an agreement on the issue. On 11 November, at a constituent congress of the National Revival Party, Albert Bazeian and Vagar- shak Arutiunian, its founding fathers, announced that they had decided to start a new party since they had left the Republic Party because of disagreements with its leaders. They stated that they would remain in opposition until legal power was restored and promised to cooperate with S. Demirchian, leader of the Justice bloc, in their propaganda against the amendments. Several days later, on 15 November, the National Unity Party, the People’s Party, and the 18 + 1 headquarters reached an agreement on a joint boycott of the referendum. As a result, the opposition finally overcame the disagreement over the issue. Its mass actions became purely political. On 21 November, at a press conference, leader of the Heritage Party Raffi Ovannisian (member of the 18 + 1 structure) announced that he planned a “Meet- ing of Citizens” in Erevan, on Freedom Square, as a show of no confidence in the government and its referendum. Two hours later, Artashes Gegamian, leader of the National Unity Party, another opposition structure, called a press conference to announce that it would carry out all its anti-referendum events independently. The statements of the two leaders, who had recently joined the 18 + 1 headquarters, demonstrated that the anti-government camp was not united and that the boycott was the only point on which they agreed. Tension was gradually mounting. On 24 November, Vazgen Manukian, former premier, head of NDU, and member of the Justice parliamentary faction, announced: “A boycott is an ideal form of protest for the opposition, since the government has obviously become resolved to falsify the results. If this happens, the people will acquire the moral right to revolt. My party is prepared to lead them.” There was obviously a problem of personal leadership in the opposition ranks. This became even clearer when on 25 November Raffi Ovannisian, leader of the Heritage Party, called the Meeting of Citizens on the square before the State Opera; several other opposition parties supported his initiative. On a suggestion by A. Sarkisian, leader of the Republic Party, the crowd of about 800 declared a sit-in strike; they were even supplied with tents. The demonstration continued the next day; this was the beginning of the post-referendum rallies. On the same day, 25 November, President Kocharian gave an interview to the central TV channels in which he said: “The opposition has failed to provide a reasonable argument in favor of the ‘no’ answer or boycott.” The referendum took place on 27 November as planned. According to preliminary information supplied by the Central Election Commission, 65.3 percent of the total number of people with the right to vote came to the polls; 93.3 percent of them supported the amendments; 5.4 percent voted against. PACE was the only international organization to observe the referendum. The next day, 28 No- vember, its mission announced that the referendum corresponded to international standards. At the same time, the observers pointed out: “The number of voters—1.5 million—quoted by the Central Election Commission is overstated, yet undoubtedly the needed number of voters—no less than 782,000—approved the amendments.”

77 CENTRAL EURASIA 2005 Analytical Annual

At the same time, the Justice bloc issued a statement calling the referendum illegal because of mass falsifications; it insisted that less that 400,000 had come to the polls, that is, 20 percent of the total number. The bloc criticized the international organizations and PACE in particular. Later the same day, the Public Information Center of the United Opposition published its figures, according to which 84.7 percent of the voters chose to boycott the referendum and only 15.3 percent approved the amendments. These figures had nothing in common with the official information, yet the opposition said it would not appeal to court since the judicial system was subordinate to an illegal government. Tension mounted once more. In an effort to create a “critical mass” to pass a decision on a change in the regime, the opposition started another series of mass rallies, while the government remained passive because of possible criticism from the international community. It turned out later that both sides had to cope with unexpected problems. On 29 November, President Kocharian congratulated the nation on its decision to amend the Constitution and said in particular that the “yes” answer testified that the people wanted deeper reforms, while the amended Constitution paves the way to prosperity in the 21st century. The same day, the coalition of the progovernment parties issued a statement pointing out that the referendum should be considered valid, since the results on the whole corresponded to the nation’s general feelings and expressed its will. At the same time, at another meeting (starting on 25 November meetings became a daily feature in the capital), the opposition sent an ultimatum to the Central Election Commission with a demand to annul the referendum results within 72 hours. According to the law enforcement bodies, the rally was attended by 1,100 people, while the opposition claimed an attendance of between 7,000 and 10,000. By that time, the Central Election Commission had already published the final results: 1,411,711 (93.2 percent) people voted for; 82,018 (5.4 percent)—against; 1,582 ballot papers were invalid; 1,513,541 people (65.3 percent of 2,317,317, the total number of voters) came to the polls. The rallies ended after 2 December when the EU ambassadors received representatives of the opposition in the U.K. embassy. The same day, the EU published a statement about the referendum and called on the authorities to investigate the violations and punish those responsible for them. It became obvious that, on the whole, the people had not supported the opposition rallies; it was obvious at the same time that the results had been falsified. Society simply steered clear of the political processes, something that neither the opposition, nor the government expected. Nor could the sides have predicted what happened next. The center of gravity shifted to the parliament. At a regular session on 5 December, the Justice faction suggested that the signatures of 44 deputies be collected to set up a parliamentary commission to investigate the mass violations registered during the referendum. Speaker Artur Bagdasarian, who had earlier spoken about serious violations, found himself under pressure from the parliamentary opposition, which insisted that his faction should join the initiative. He said that the commission was not needed and that he intended to send a letter to the General Prosecutor’s Office, since it was its responsibility to investigate such violations. On 8 December, the opposition 18 + 1 format gathered a “Meeting of Citizens” in the Cinema House to discuss further action. The organizers described the post-referendum situation, announced their intention to set up a public movement with a united coordination center, and invited all the opposition parties to join. Time showed that the opposition was no longer the driving force behind the further development of events. The ruling coalition was badly shaken by the speaker’s acknowledgement of the falsifications and his intention to appeal to the General Prosecutor’s Office. And his statement about fighting the falsifications was the last straw. On 17 December, the Republican Party, one of the members of the ruling coalition, met for its congress. Judging by the aggressive statements of its leaders

78 REPUBLIC OF ARMENIA Economy and its attacks on other members of the same coalition, the party was launching its election campaign. This means that the referendum results provoked the party to do this eighteen months before the parliamentary election scheduled for 2007. This started a party boom in the country; all parties began “preening their feathers,” there were rumors that more parties would appear. On 19 December, the non-parliamentary New Times opposition party met for its congress. It was about the same time that its leader Aram Karapetian received an Honorary Guest of Russia Order in Moscow, in the State Kremlin Palace (formerly the Palace of Congresses). The Armenian politician was the first person in the CIS to receive this order. The squabbles over the referendum continued to send tension up. On 19 December, the speaker of the National Assembly Artur Bagdasarian sent a document containing facts of the falsifications to the General Prosecutor’s Office. General Prosecutor Agvan Ovsepian responded immediately. The next day he called a press conference to say that his office had no information about serious violations. After hearing this, Artur Bagdasarian sent a copy of the same document to the press; on 23 December, he convened his own press conference at which he said that 2006 would be marked by fierce election battles. On 26 December, the president reminded the members of the ruling coalition that the pact signed by the three parties and the president would remain valid until 2007 and that it imposed certain mutual responsibilities on all the sides involved.

ECONOMY

Vaagn KHACHATRIAN Advisor to the president of the Republic of Armenia in 1996-1998 (Erevan, Armenia)

n 2005, the Armenian economy continued to The recovery of the past ten years can be develop at a rapid pace characteristic of the explained by consistent implementation of re- I past four years. According to official data, its forms aimed at creating a market economy, facil- gross domestic product (GDP) in 2005 exceeded itated by large-scale external financing in the form the previous year’s level by 14%. This economic of various grants or favorable conditions. Never- growth was accompanied by deflation (0.2%) and theless, Armenia remains a poor country with per a further rise of the national currency against the capita income of $1,400, or a quarter of the fig- leading currencies of the world. ure for the Baltic countries.

Real Sector

Over the past three years, economic growth has accelerated still further. In 2001-2004, average annual growth was twice as fast as in the previous four years. 79 CENTRAL EURASIA 2005 Analytical Annual

Table 1 GDP in 2000-2005

2000 2001 2002 2003 2004 2005

GDP, billion drams 1,031.3 1,175.9 1,302.5 1,624.6 1,896.4 2,168.2

GDP, million dollars 1,911.6 2,118.4 2,376.3 2,807.1 3,555.1 4,756.9

Real GDP growth, % 5.9 9.6 13.2 14.0 10.1 14.0 S o u r c e: National Statistical Service (NSS).

According to the U.N. Statistics Division, in 2002-2004 double-digit growth was recorded in only six countries of the world (out of a total of 212 countries), with Armenia ranking fourth in 2002 (13.2%) and third in 2003 (14.0%). An interesting point to note is that average GDP growth in the republic in recent years was roughly twice as high as in the “lower middle income countries,” among which, according to the World Bank classification, Armenia belongs. In absolute terms, GDP in 2004 totaled AMD 1,896.4 billion ($3,551.1 million), and in 2005, AMD 2,168.2 billion ($4,756.9 million). This indicator, which reflects the size of the economy, is much lower than in other countries. In terms of GDP volume, the Armenian economy in 2004 ranked 134th among 183 countries of the world. In 2005, the growth trend recorded in previous years was sustained. Thus, in the period from January to November, GDP grew by AMD 361.6 billion ($788.8 million). This was due to an increase in construction volume by 32.7% (AMD 1,233.1 billion), agricultural output by 10.9% (AMD 408.9 billion), industrial output by 6.8% (AMD 5,848.8 billion), services by 16.7% (AMD 281.4 billion), power generation by 6.2% (5,706.6 million kWh), foreign trade turnover by 31.7% (AMD 111.9 billion), retail turnover by 90% (AMD 740.3 billion), etc. Household spending increased by 11.7% to AMD 1,199.5 billion ($2.6 billion). Table 2

Real GDP Growth by Sector in 2000-2005 (%)

2000- 2000 2001 2002 2003 2004 2005 2005 (average)

Industry 106.6 103.9 113.9 115.6 102.1 106.6 108.1

Agriculture 98.9 111.7 103.8 104.2 114.1 110.9 107.3

Construction 128.9 104.8 141.5 145.5 113.4 134.1 128.0

Transport and communications 100.4 115.8 98.3 108.3 116.9 112.9 108.8

Trade 108.8 117.2 119.7 114.1 110.5 109.4 113.3

Other sectors 102.2 106.3 112.0 108.6 112.1 110.6 108.6

Net taxes 113.6 116.9 114.3 107.9 102.4 110.9 111.0

GDP 105.9 109.6 113.2 114.0 110.1 113.5 111.1

80 REPUBLIC OF ARMENIA Economy

Table 3 GDP—Composition by Sector in 2000-2005 (%)

2000 2001 2002 2003 2004 2005

Industry 21.9 20.1 18.9 19.3 19.1 19.7

Agriculture 23.2 25.5 23.4 21.5 22.6 21.3

Construction 10.3 9.7 12.6 15.7 15.5 18.8

Transport and communications 7.2 7.0 6.1 5.9 6.0 5.3

Trade 9.4 10.2 10.6 10.9 11.2 9.7

Other sectors 18.8 17.8 18.7 17.6 17.2 16.4

Net taxes 9.1 9.7 9.7 9.1 8.4 8.8

GDP 100.0 100.0 100.0 100.0 100.0 100.0

These figures show once again that in recent years serious changes have taken place in the very composition of GDP. Thus, in 2002-2005 agriculture and construction accounted for more than half of the country’s economic growth. As a result, the share of construction in GDP increased from 9.7% in 2001 to 15.5% in 2004 and 18.8% in 2005. The share of industry was virtually unchanged at about 20%, while the share of agriculture decreased from 25.6% in 2001 to 22.5% in 2004 and 21.3% in 2005 (see Tables 2 and 3).

Sectoral Composition of GDP

In view of slower growth in industry, in 2004 its share in GDP fell by 0.2 percentage points compared to 2003 (to 19.1%), whereas in 2005 its growth accelerated and its share increased by 0.6 percentage points compared to 2004 (to 19.7%). Growth rates in construction were also higher than in 2004. As noted above, in recent years construction has played a key role in GDP growth, boosting the development of the country’s entire economy. As the tables show, after a certain decline in 2004 industry developed dynamically throughout 2005. The increase in construction volume accounted for about 40% of GDP growth. It should be noted that in 2005 construction made its largest contribution to GDP growth (5.2 percentage points) since Armenia’s independence in 1991. In previous years, the greatest contribution was made by agriculture, which still has the largest share in the structure of GDP (about 22%).

Agriculture

The year 2005 was almost as successful for agriculture as 2004. Whereas in 2004 growth in agriculture reached 14.1% (a record high for the sector), in 2005 the figure was 10.9%, or AMD 559.0 billion ($120 million). Growth was recorded both in crop production (15.6%) and in livestock production (3.4%), which was largely due to favorable weather conditions. 81 CENTRAL EURASIA 2005 Analytical Annual Financial and Banking Sector

Under the Central Bank’s monetary policy program, inflation in 2005 was to have amounted to 3% compared to December 2004, given a 26% increase in the average annual money supply and a 13.6% increase in the monetary base. In actual fact, as noted above, there was deflation of 0.2%. In 2004, in contrast to previous years (2001-2003), the monetary base amounted to AMD 132.05 billion (as of 30 December), and growth of the money supply slowed down. The recorded increase in the monetary base (by 6.1%) was lower than real GDP growth, an unprecedented phenomenon for Arme- nia. The year 2005 put things right in this respect. In January-September, the monetary base increased by 3.17% (to AMD 173.8 billion), and at year-end, by another AMD 14 billion. In the first nine months of the year, cash in the banking system and cash deposits increased by 23% and 40%, respectively. Whereas in December 2004 currency in circulation totaled AMD 98,569 million, in September 2005 the figure was AMD 120,983 million (an increase of 22.7%), and in December, AMD 133,801 million (an increase of 37.5%). As regards dram deposits, in December 2004 they totaled AMD 46,919 million, in September 2005 the figure was AMD 65,905 million (an increase of 40.4%), and in Decem- ber, AMD 73,171 million (an increase of 68.6%). The latter was due to the following factors: —high rate of economic growth (about 14%); —increase in lending in the economy (in January-September, the increase for dram credits was 47.5%, and for foreign currency credits, 23%); —growing confidence in the national currency, significantly enhanced by its rise against the dollar in the second half of 2004 (in 2003, 1 dollar equaled 577 drams, in 2004, 533 drams, and in 2005, 458 drams); —implementation of the new Law on Currency Regulation and Currency Control (adopted in July), which helped to expand the sphere of dram circulation; —final implementation (in July) of a system designed to guarantee the deposits of natural persons, which stimulated an increase in deposits by the middle classes; —steady increase in gross national savings (in 2004, they grew by 29.6% to 18.6% of GDP, and in 2005, to 19.3% of GDP). However, the problem of dollarization of the economy in general was not resolved either in 2004 or in 2005. Large volumes of dollar transactions in the economy tend to reduce the effectiveness of monetary policy, because it is impossible to control the supply of foreign currency. Consequently, efforts to control the money supply may fail to produce the expected results. As some studies show, the dollarization of the Armenian economy is growing in view of the dram’s internal and external instability, regardless of whether it strengthens or weakens. High interest rates are another key problem of the financial market. Although the average interest rate on credit issued by Armenian banks over the past two years has declined, it is still very high: 18.8%. There is also a wide difference between the average lending and deposit rates: 13.7 percentage points (2005). This is a clear indication of high investment risk. Otherwise one could have expected a significant inflow of international capital into the country, which, judging from the figures of the capital and financial account of the balance of payments, has not occurred. Moreover, there is an outflow of financial capital caused by a decline in the value of the dollar in international markets. Over the past two years, external risks associated with changes in the value of the dollar and financial inflows (especially private transfers) have played a significant role in Armenia’s financial market. The rate of increase in private transfers did not slow down either in 2004 or in 2005. Accord-

82 REPUBLIC OF ARMENIA Economy ing to some experts, they exceeded $1 billion, exerting additional pressure on the foreign exchange market. As a result, the national currency continued to strengthen in 2005 as well, pushing the dollar down to 458 drams. To summarize the performance of the financial sector in 2005, let us note that: —financial intermediation still has a superficial character, while the cost of borrowing remains high; —in terms of quantitative indicators, the country’s banking system remains among the worst ones in the world. One of its key indicators—total lending as a percentage of GDP—is around 7-7.5%, whereas in the developed countries it exceeds 100% (in Switzerland, over 250%), which means that the banking system in these countries is one of the main institutions promoting economic development; —among the factors contributing to the high cost of financial intermediation is the inadequate level of the corporate governance sector, where the first stage of reforms aimed at ensuring transparency, identifying property owners and specifying accountability levels has not yet been completed.

Fiscal Sector

In 2004, budget revenues totaled AMD 302.2 billion ($567 million), exceeding the target figure by 2.4%. Of these, budget revenues proper amounted to AMD $288.5 billion, while AMD 13.7 billion came from external sources (in the form of official transfers). Tax revenues for 2004 constituted 13.1% of GDP. And in January-November 2005, state budget revenues and official transfers totaled AMD 325,339.9 million, up 23.1% from the same period of the previous year. In January-Novem- ber 2005, budget spending amounted to AMD 338,789.3 million, with a deficit of AMD 13,449.4 million. In dollar terms, the picture was as follows: revenues and transfers—$722.9 million; expenditures—$752.8 million; and deficit—$29.9 million. For 2005 as a whole, the budget deficit amounted to 2.3% of GDP. Compared to previous years, it tended to increase (1.3% in 2003, 1.7% in 2004), but remained within acceptable limits (2.5-3%). In order to avoid problems in the future, it is necessary to broaden the tax base and improve tax performance indicators. This will make it possible to finance basic social needs, allocations for which have tended to increase since 2005. Thus, spending on science and education increased from 14.1% of the budget in 2004 to 15.4% in 2005, and the target figure for 2006 is 16.7%; in health care, the figures are 7.24%, 7.9% and 8.2%, respectively. In view of the limited tax base and dependence on direct taxes, the tax structure is unbalanced and tax collection for funding basic social needs is so far unsatisfactory. In view of this, given a high rate of unemployment and a large shadow economy, it would make sense to focus on direct taxation. As we find from Table 4, state budget revenues in 2005 amounted to 16.2% of GDP; of this, tax revenues and state duties added up to 14.5%. Tax revenues increased by 18.5% compared to 2004, largely owing to a high rate of collection of direct taxes. The increase in profit tax was 46.5%, and in income tax, 29%. The former was due to changes in the methodology of profit tax computation, which resulted in a significant reduction in the number of loss-making enterprises. And the increase in the income tax indicator was due to significant wage rises in the public and private sectors of the economy (by 24%). For indirect taxes the picture was as follows: VAT collections increased by 26.6%, and excise tax amounts fell by 5.6%. The former was due to an increase in imports (by 30.4% compared to 2004).

83 CENTRAL EURASIA 2005 Analytical Annual

Table 4

Budget Revenues, Expenditures and Deficit in 2001-2005 (million drams)

2001 2002 2003 2004 2005

Revenues and official transfers, total 193,577.8 193,577.8 292,035.3 302,200.0 351,700.0

As % of GDP 16.5 16.5 18.0 15.9 16.2

Expenditures, total 244,381.5 244,381.5 312,697.8 334,000.0 401,100.0

As % of GDP 20.8 20.8 19.3 17.6 18.5

Deficit financing 50,803.7 50,803.7 20,662.5 31,800 49,400

As % of GDP –4.3 –4.3 –1.3 –1.7 –2.3

Current revenues 182,682.7 182,682.7 238,293.1 273,387.7 333,276.9

As % of GDP 15.5 15.5 14.7 14.4 15.4

Of which: tax revenues 154,892.3 154,892.3 212,232.8 248,109.9 296,835.4

As % of GDP 13.2 13.2 13.0 13.1 13.7

State duties 13,916.7 13,916.7 15,213.7 16,059.8 17,169.5

As % of GDP 1.2 1.2 0.9 0.8 0.8

Non-tax revenues 13,873.7 13,873.7 10,864.6 9,217.9 19,272.1

As % of GDP 1.2 1.2 0.7 0.5 0.9

S o u r c e s: NSS; preliminary data for 2005.

Budget expenditures in 2005 constituted 18.5% of GDP, going up by AMD 67,100 billion (20.1%) compared to 2004. Most of these funds went to finance reforms in the social sphere and in government administration, to strengthen the country’s defense and protect public order, and also to assist local government. Capital expenditures increased by as much as 220%, reaching AMD 57.1 billion, while the increase in current expenditures was more modest: by 21.8%. Such an increase in capital expenditures was due to the implementation of various programs by the country’s government and by international organizations (jointly or separately), World Bank loans, credit programs implemented with the assistance of the German government, etc. Significant progress was made in the social insurance sector. Compared to 2004, spending in this sector increased by more than AMD 27.1 billion (by 46.5%) to AMD 85.3 billion ($18.6 million), which made it possible to raise pensions to 4,250 drams (from 3,000 drams in 2004), and the value of one insurance year, to 180 drams (from 160 drams in 2004). This was mostly due to a 53.5% increase in mandatory contributions to social funds made by employers (to a total of AMD 65.4 billion). A significant amount was also obtained from the state budget in the form of an official transfer: AMD 19.9 billion (an increase of 27.6%). 84 REPUBLIC OF ARMENIA Economy External Sector

In January-September, the deficit of the current account of the balance of payments amounted to $114.01 million, decreasing by $36.4 million (by 24.2%) compared to the same period of 2004; as a percentage of GDP, the current account deficit was 3.6% (compared to 6.6% in 2004). Table 5 Major Trading Partners (January-November 2005) (%)

Trade Imports Exports

CIS countries 25.1 22.0 18.6

EU countries 34.9 33.6 46.7

Other countries 40.0 44.3 34.7

Individual countries:

Russia 12.9 13.1 12.4

Germany 10.8 8.0 15.7

Belgium 10.2 8.4 13.6

Israel 8.1 6.2 11.7

USA 6.5 6.4 6.7

Great Britain 0.4 0.6 0.0

Iran 4.0 4.7 2.7

Switzerland 3.1 2.8 3.8

Georgia 2.0 1.0 3.9

United Arab Emirates 1.0 0.9 1.1

Turkey 2.3 3.4 0.2

Ukraine 5.1 7.1 1.4

Turkmenistan 4.1 6.3 0.1

Total, thousand dollars 2,448,963.4 1,581,581.3 867,382.3

S o u r c e: NSS.

As in previous years, the current account deficit was largely the result of imports, while its reduction was caused by the following factors: —an increase in foreign direct investment (FDI). Whereas in 2004 FDI totaled $150 million, in 2005 the $150 million mark was already passed in September; —an increase in current transfers, which reached $254 million in September 2005, exceeding the same indicator for 2004 by $30 million; 85 CENTRAL EURASIA 2005 Analytical Annual

— a decrease in the capital account, on the contrary, prevented a reduction in the deficit. In Septem- ber, it reached $117.7 million compared to $147 million in 2004. This was due to lack of financing by the Lincy Foundation. As noted above, a significant effect on the size of the current account deficit is exerted by imports and the balance of trade, which has been negative in recent years. In September 2005, the trade deficit amounted to $394.8 million, or 12.5% of GDP (owing to rapid growth of GDP: in September, GDP reached $3.1 billion). In relative terms, the trend here has been positive: in 2003, the figure was 15% of GDP, and in 2004, 13.1%. However, as a factor characterizing the economy it shows that imports still have a great influence on the country’s economy, while actual growth in exports so far does little to reduce unemployment or alleviate poverty. In January-November, the country’s trade turnover totaled $2,449 million, including exports— $867.4 million, and imports—$1,581.6 million, so that the trade balance was negative: $714.2 million. Compared to the same period of 2004, exports rose by 34.2%, imports by 30.4%, and the deficit by 26.1%. In relation to GDP, exports amounted to 20.7%, and imports, to 37.7%. In absolute terms, exports (excluding diamonds) totaled $624.8 million (40% increase), and imports (excluding diamonds), $1,329.3 million (31.9% increase). In Armenia’s foreign trade turnover, the largest share—34.9%— belongs to the countries of the European Union; the CIS republics have 25.1%, and other countries, 40%. Incidentally, compared to the same period of 2004, the share of the CIS countries increased by 5%. It should be noted that Armenia’s top five partner countries, including Russia, Germany and Belgium, account for about half the total volume of Armenia’s foreign trade (see Table 5). According to NSS data, Armenia’s total external debt at the end of September 2005 stood at $1,819.87 million, having shrunk by $8.16 million in a few months (from the end of June).

C o n c l u s i o n s In 2005, the Armenian economy continued to develop at a rapid pace characteristic of previous years. GDP growth of almost 14% was coupled with deflation (by 0.2%) and a strengthening of the dram against the world’s leading currencies. Such rapid growth was due, among other things, to the small size of the republic’s economy (in terms of GDP, it ranked 134th among 183 countries). Per capita GDP was $1,480 compared $1,106 in 2004, which was due both to economic growth and to the above-mentioned rise of the dram against the U.S. currency. Government spending as a percentage of GDP has been relatively stable in recent years (10-11%), which cannot be regarded as an additional incentive to economic growth. The greatest contribution to GDP growth was made by construction, agriculture and industry (the first two sectors increased GDP by 7%). Rapid growth in industry was generated by the restarting of long-idle enterprises. After a year’s break, construction once again became the country’s economic locomotive, growing by 34% and sustaining the positive trends of the previous two years. For agriculture, 2005 was just as unprecedented as 2004, with rapid growth recorded both in crop production (by 15.6%) and in livestock production (by 3.4%). Gross output increased by 11%. The average monthly pension constituted 21-22% of the average wage. Compared to 2004, the annual consumer price index showed a tendency toward deflation (0.2%) instead of the 3% inflation projected by the Central Bank. Although the strengthening of the dram was conducive to deflation, preventing a significant rise in the prices of certain goods on the foreign market, its influence on inflation/deflation for the Armenian consumer, in my opinion, was around 1-2%. The average figure for the economically active population was 1,205.0 thousand, including 98.8 thousand (8.2%) jobless people officially registered as unemployed. According to the methodology of the International Labor Organization, the unemployment rate in Armenia was over 31%. The labor market remains fragmented, and labor mobility in the country is low. 86 REPUBLIC OF ARMENIA Religion

After a year’s break, there was a rapid increase in the monetary base and the dram money supply. Given the instability of the dram (regardless of its rise or fall), the degree of dollarization increased still further to an estimated 82%. Interest rates on credit provided by commercial banks were reduced, but still remained quite high: at 18.8%. The gap between the lending and deposit rates was significant as well: 13.7% percentage points, which indicates a high degree of investment risk. The budget deficit amounted to about 2.3% of GDP. Compared to 2004, budget expenditures as a share of GDP increased by about 1 percentage point, with better budget performance for capital than for current expenditures. Gross external debt was reduced by 3.4%, and net external debt, by 16%. The latter amounted to 19.11% of GDP. Compared to 2004, the trade deficit reached $714.2 going up by 26.1%. Owing to GDP growth, the trade deficit fell by 0.3 percentage points to 15% of GDP (from 15.3% in 2004). Overall, economic growth indicators in Armenia are most impressive and have already had a significant effect on poverty reduction. Extreme poverty was reduced by 21%, and overall poverty, by 17%, although more than a third of the country’s population is still ranked as poor. Economic growth continues to depend on external funding sources (although the level of domestic savings has continued to grow) and is based more on investments and an increase in productivity than on an increase in employment. In terms of quantitative indicators, the banking system remains among the worst ones in the world.

RELIGION

Priest Vagram MELIKIAN Director, Information Center of the Mother See of Holy Etchmiadzin (Erevan, Armenia)

Egine MKRTCHIAN Director, Press Center of the Mother See of Holy Etchmiadzin (Erevan, Armenia)

oday there are 56 officially registered reli- Church with its long history and deep roots has gious organizations in Armenia and about had a significant influence on the Armenians’ psy- T 10 unregistered ones, which is a lot for a chology, culture, and traditions. country with a population of slightly over 3 mil- In this historical context, deviations from the lion. This figure looks even more impressive in a national church are largely due to social and po- country which adopted Christianity 1,700 years litical factors. First, the atheism imposed on the ago. What is more, the Armenian Apostolic people in Soviet times has generated a post-Sovi-

87 CENTRAL EURASIA 2005 Analytical Annual et upsurge of interest in religion, which occurred registered as a religious organization, providing it at the same time as an upsurge in the republic’s meets certain conditions, i.e. it is based on a his- national life. This attracted religious organizations torically accepted canonical holy book; its religion of all hues to Armenia, while the social and eco- is part of the contemporary universal system of nomic difficulties caused by the 1988 earthquake religious-church communities, etc. Registration and the first years of independence, coupled with makes such a group a legal entity with all the rights the appalling poverty of the local people, supplied envisaged by national legislation. all sorts of religious organizations with a pretext At the same time, the state does nothing to for invading the country under the guise of char- stem illegal activities or to ensure the legal regis- ities. Humanitarian aid attracted people to the new tration of religious structures, which would make religious trends. As distinct from the Armenian them answerable to the law. The obvious social Church which, after decades of persecution, need- changes in Armenia, on the one hand, and the ed new clergymen, these religions were past mas- favorable religious legislation, on the other, cre- ters of active, aggressive or, at times, illegal pros- ated a highly variegated religious picture which elytizing. includes nearly all the religious trends found else- The 1991 Law on Freedom of Conscience where in the world: Christianity, Judaism, pagan- and Religious Organizations, which said in part: ism, and Sun worshipping. There are also new “The Republic of Armenia ensures freedom of religious trends, some of them known as totalitar- conscience and religious beliefs of its citizens. Each ian sects. Today, these developments concern only citizen can freely choose his attitude to religion, he a few social organizations. has the right to profess any religion or to profess The only state structure engaged in these none; to perform religious rites independently or problems is the Department for National Minor- together with other citizens,” contributed to the ities and Religions under the republic’s govern- present religious patchwork in the republic. The ment. As a mere intermediary between the state law gives a relative description of a religious or- and religious organizations, it has no legal tools ganization: any group of at least 200 members (un- to apply and is confined to professional expertise der the 1996 Appendix to the 1991 Law) may be and consultations.

Religious Organizations Functioning in Armenia

The Department supplies information about the registered organizations and their religious and confessional trends. The first among them is the Armenian Apostolic Holy Church. There are also four registered communities of the Russian Orthodox Church in the republic; three communities of the Armenian Catholic Church; one community of the Eastern Nestorian Church, as well as communities of the Yezidis of Armenia (Sharfadins) and Jews. These groups are living peacefully side by side in the favorable climate created by the positive attitude shown by the public, the Armenian Apostolic Church, and the state. Nothing interferes with their functioning, while the state even helps them. In 2005, the government gave the Russian Orthodox Church a plot of land (5,000 sq m) for a cathedral. On another occasion, at the request of the Catholicosate of the Assyrian Church of the East, the government returned the Assyrian religious organizations of Armenia two cathedrals with the right to free use. There are several Protestant confessions in Armenia (churches of Evangelists, Evangelical Baptists, Adventists, and Pentecostals), many of them are registered as individual religious struc-

88 REPUBLIC OF ARMENIA Religion tures at their pastors’ home addresses. Some have been registered as religious Protestant charities and present themselves as religious organizations. It should be noted that two out of six— branches of the French Hope for Armenia and the Armenian Evangelical Union of North America—are headed by one man, who is president of all the Evangelical religious organizations functioning in Armenia. New religious trends are also functioning in the republic: the Armenian community of the Church of Jesus Christ of Latter-Day Saints (the Mormons), the Jehovah’s Witnesses, the Bahais, etc. There are also registered pagan and ecumenical structures. The list of registered religious organizations can be completed with a list of public organizations of a religious nature. They are the widely known Unification Church (the Church of Moon); “Dianet- ics” (Scientology); the Armenian Roerich Society (an occult structure), Waldorf Pedagogic, etc. There are also all kinds of Protestant structures, including young men’s (women’s) Christian associations, charities, human rights organizations, foundations, etc. In the religious respect, they are less transparent, the religious side being camouflaged by charities in the social sphere, education, and culture. The Krishna Consciousness Association, the Erevan All-Evangelical Ararat Church, the Union of Inde- pendent Churches, and the occult groups (clairvoyants, UFO-logists, etc.) are outlawed as unregistered. According to unofficial information, there are even groups of Satanists in Armenia. There is no reliable information on how many people belong to all the active religious organizations and groups. According to official statistics, most belong to the Armenian Apostolic Church, yet no exact figures have been supplied so far. The latest (2001) population census established that 96 percent of the republic’s population are Armenians; the census, however, did not establish religious affiliation. The remaining four percent are made up of national minorities: Russians, Yezidis, Kurds, Assyrians, Greeks, Ukrainians, Jews, etc. They mainly belong to their traditional religions, yet some of them embrace other confessions and do not belong to the Armenian Apostolic Church. There is no reliable information (existing information is highly contradictory) about the number of Armenian followers of religions other than the Armenian Apostolic Church. At the end of 2005, only 17 out of 56 religious organizations supplied information about themselves over the last 12 months. However, the expert community believes that the supplied information cannot be trusted. For the third year running, the Mormons maintain they have 1,700 followers, even though this figure and the number of their structures are on the rise. Young men in white shirts with black bags slung over one shoulder—the Mormon uniform—can frequently been seen in the very center of Erevan. Unofficial sources insist that the share of followers of religious structures other than the Armenian Apostolic Church has reached 10 to 15 percent of the total population; 20 to 25 percent is also cited, but this figure looks less plausible. Today the religious situation in the Republic of Armenia is highly variegated; it needs to be ordered and carefully analyzed.

Religious Tolerance and National Security

Under the Law on Freedom of Conscience and Religious Organizations, freedom of conscience comes second after national security, maintenance of order, protection of health and morality, and the rights and freedoms of other citizens. This gives the Armenian Apostolic Church and some public organizations grounds to be concerned about the activities of certain religious, mainly new, structures, the totalitarian activity of which is destroying the nation’s spiritual, moral, and cultural values. To 89 CENTRAL EURASIA 2005 Analytical Annual demonstrate its concern and protest against such activities, the public holds rallies, demonstrations, and other mass events. There are many reasons for alarm: murders, suicides, divorces, degeneration of public morals, etc. Alexander Amarian, head of the Public Center for the Rehabilitation of Victims of De- structive Sects, is convinced that these sects staged the color revolutions in the post-Soviet countries. The Jehovah’s Witnesses, Mormons, and certain Protestant trends are the most pernicious. It should be said that the Armenian Apostolic Church has no problems with the traditional old Christian sister churches. Functioning all over the world, the Armenian Church cooperates at various levels—from the parishes and dioceses up to the highest level—with other Christian churches in many spheres of religious service in Armenia and beyond. It demonstrates sufficient tolerance toward several traditional Protestant confessions. Still, some religious organizations, Protestant organizations among them, are using legal loopholes to proselytize among the followers of the Armenian Church. Statistics show that the number of suicides (even among minors) in the republic is growing. This happens mostly for social reasons, yet some of the dead belonged to religious sects. In the fall of 2005, for example, a police precinct in the north of the country received information about an attempted suicide: a 43-year-old man tried to hang himself. He prepared a wooden cross with an inscription stating that he was a Jehovah’s follower and so would be accepted into heaven. Official sources offer no comment about this and similar cases. Meanwhile, families fall apart for religious reasons. A recent court case in Erevan is the best illustration of this. The father of an 8-year-old boy demanded that his ex-wife, the boy’s mother, should be deprived of her parental rights as a Jehovah’s Witness; the boy did not want to live with his mother either. Conscription into the army of Jehovah’s Witnesses, a sect which has been active in the republic for 15 years and claimed a membership of up to 20,000, continued to be a problem in 2005. However, it was registered as late as 2004 and as a Christian structure. This fact caused a wave of indignation in the Armenian Apostolic Church and the public. For several years, the Jehovah’s Witnesses were not registered because their rules contradict the law on conscription—its members refuse to carry firearms. The dilemma was resolved by the Law on Alternative Service adopted in 2004, under which 25 of its members were sent to hospitals and homes for the aged to carry out alternative service. In 2005, 23 of them left the service, claiming it to be degrading and below their human dignity. Today only two out of the original 25 continue their service, while criminal cases have been instituted against the rest. The social cards introduced in January 2005 caused another religious and social problem: a small group of Armenian citizens became convinced that the cards threatened both their spiritual safety and the country’s national security. Some of those who consider themselves followers of the Armenian Apostolic Church closed ranks in an association called Against Assigning People Numbers. They refuse to obey the Law on Social Security Cards and to receive such cards because of their spiritual convictions. Neither the Armenian Apostolic Church, nor the Supreme Spiritual Council managed to dis- suade them, even though the Council issued a statement about the absolute safety of social security cards. The state agreed on concessions, yet the people who rejected the cards refused to collect their allowances and salaries. The religious problem became a social one. Passions flew high at the rallies until the issue was moved to the courts, which are now busy investigating cases of timely payment of pensions and salaries.

The Armenian Apostolic Holy Church

The Armenian Apostolic Church is more than a religious organization: over many centuries it has been a symbol of statehood for a nation and country which lost its independence, a unifying 90 REPUBLIC OF ARMENIA Religion force, a patron of sciences and enlightenment, and even a supporter in the national-liberation movement. Today, in the sovereign state, the Church is separated from the state, yet thanks to its role in public life and its impact on the society’s spiritual and moral life, it remains one of the major public institutions. As the spiritual center of all Armenians through three hierarchical chairs—the Houses of Cilicia, Jerusalem, and Constantinople—and of about forty dioceses functioning all over the world, the Mother See of Holy Etchmiadzin is a force that unites all Armenians. For this reason, the Armenian Church and its spiritual center are more important to the Armenians than any other church. In a country which has recovered its independence, the Church is fighting the challenges of the times in an effort to restore its influence and perform the religious and moral mission it lost under Soviet power. National religious anniversaries and memorial dates are the nation’s moral stimuli. In 2005, the Church and the state marked an important date—the 1,600th anniversary of the Arme- nian script, which became a powerful tool of the Church and the people, saving the Armenians from complete assimilation. In January 2005, His Holiness Garegin II, the Supreme Patriarch and Catholi- cos of All Armenians, issued an encyclical in celebration of the anniversary of this great historic event. Another encyclical was publicized to mark the 90th anniversary of the memory of the victims of the tragic events of 1915 in the Ottoman Empire. A commission of the Armenian Apostolic Church set up to look into possible canonization of the victims of these events met in September 2005 in Etch- miadzin. The year 2005 saw other important events: the pilgrimage of His Holiness to Jerusalem and the Holy Places on 12-14 May and the Patriarchal visit to the Western Prelacy of the Armenian Apostolic Church of North America in June. The pilgrimage to Jerusalem was of historic importance. The group of about 80 people who accompanied His Holiness was made up of top officials, respected intellectuals, and public figures. In November, a large delegation headed by Chief Rabbi of Israel Jona Metsger visited Armenia. This visit demonstrated the religious tolerance lacking among the Jewish extremists in Israel toward the Christians in Jerusalem and especially toward the Armenian clergy. It was the first visit of the primate of Jerusalem to Armenia. While still in Jerusalem, His Holiness said: “This visit (pilgrimage.—Auth.) will open a dialog between the two religions and two nations.” The visit of the Chief Rabbi, in turn, caused quite a stir in Armenia: the delegation was received by the Catholicos and Premier Andranik Margarian. In August, the spiritual leaders of Canada paid a friendly visit to Holy Etchmiadzin. The relations in another sphere of inter-church life took a different turn. Recently, the problem of the legal status of the Armenian Diocese in Georgia created tension in the relations between the two churches; nor is there an agreement on several churches confiscated in Soviet times from the Armenian Church and on those which became the property of the Georgian Church. The Arme- nian Diocese in Georgia finds it hard to organize the national-religious life of its parishioners in the absence of a law on the national minorities’ religious life. In April, a delegation of the Armenian Church arrived in Tbilisi to discuss the issue. It met with His Holiness Ilia II, the Catholicos-Patri- arch of All Georgia, and the Georgian premier. The heads of state of both countries also discussed the issue. The Catholicos of All Armenians sent letters to the Patriarch and the President of Geor- gia. Nothing helped. The Church has other burning problems. The Catholicosate of All Armenians and the Armenian Catholicosate of the Great House of Cilicia (Lebanon) met to discuss a draft on Injunction to Spiritual Renewal of the Armenian Church. The delegations specified the major issues of the Armenian Church’s activities in the religious and administrative spheres, ritual life, and its relations with the state and other churches.

91 CENTRAL EURASIA 2005 Analytical Annual

The public tends to regard the Armenian Church’s mission in various spheres of social life as obligatory. That is why its everyday activities pass unnoticed; only a couple of events in the relations between churches or between the Church and the state rivet public attention. The referendum on constitutional amendments was one such significant event. The Constitu- tion, based on the results of the referendum of 27 November, opened up new prospects for the country’s religious life, particularly for the Armenian Apostolic Church. The new text of the Constitution said: “The Republic of Armenia recognizes the exclusive historical mission of the Armenian Apostol- ic Holy Church as a national Church in spiritual life, the development of the national culture, and the preservation of the national identity of the Armenian people.” The previous version made no mention of the Armenian Church and limited itself to “everyone is entitled to freedom of thought, conscience, and religion.” It was only the Law on Free- dom of Conscience and Religious Organizations that spoke of the Armenian Church’s unrivalled role in the life of the Armenians. Its preamble described the Armenian Apostolic Church as a national church, yet it is mentioned in the chapters dealing with religious organizations as one of many structures. The law did not neglect its role in all spheres of public life and recognized the following activities as its privilege: free preaching, building of churches, restoration and use of the old churches, support of the Armenian people’s spiritual education and enlightenment, etc. It is unclear, though, how these legal privileges can be implemented and how they are to be preserved. In fact, the relations between the Church and the state in Armenia hinge on a couple of agreements between them. In 2000, the Government of the Republic of Armenia and the Armenian Apostolic Church signed a Memorandum of Intentions in Holy Etchmiadzin which described the nature of the relations between the Church and the state. The document envisaged further improvement of the legal basis of their relationship, specification of the problems related to the Church’s property (land and real estate, monuments of culture and history, etc.), and tax privileges to the Church and its traditional organizations. Several protocol issues specified participation of the Armenian Apostolic clergy in state events. The Memorandum paid particular attention to the Church’s role in education, culture, social insurance, and health services. It was also planned to let the Church work in the armed forces and prisons. Contrary to general expectations, no final agreement based on the document appeared. Later the Defense Ministry and Holy Etchmiadzin signed two documents. The first was the Rules of Spiritual Service in the Armed Forces, which regulated chaplain service in the army; today there are about 30 chaplains in the Armenian army. The second document, which was related to education, was finally enacted in 2005. In compliance with this document, signed by the premier of Ar- menia and the Catholicos of All Armenians, the subject “History of the Armenian Church” was added to all curricula for 4th to 10th graders in secondary schools. The textbooks written jointly by the Ministry of Education and Science and the Center of Spiritual Education of Holy Etchmiadzin are of a purely academic nature. The Armenian Apostolic Church can do more than that. It can not only educate a new generation of clergy, restore the old and build new churches, but it can be active in the social sphere as well: charity diners, social centers, centers of Armenian youth, unions of young believers, hospitals, hospices, homes for the elderly and orphans, a TV company, etc. To make this possible the Church needs corresponding laws. Opinions about the new amendment to the Constitution which mentioned the Armenian Ap- ostolic Church differed. The Liberal-Democratic Party Ramkavar, one of the traditional parties, for example, believes that the constitutional amendment did not fully reveal the role of the Armenian Apostolic Church, since it did not mention the status of Holy Etchmiadzin as the spiritual center

92 REPUBLIC OF ARMENIA International Affairs and the Catholicos of All Armenians as the head of the Church. Still, the fact that the Church was mentioned at all in the Constitution marked huge progress in the relations between the Church and the state.

INTERNATIONAL AFFAIRS

Sergey MINASIAN Ph.D. (Hist.), director of the Scientific-Research Center of the Southern Caucasus’ Regional Security and Integration Problems, researcher at the Institute of History, Republic of Armenia National Academy of Sciences (Erevan, Armenia)

1. Armenia’s Cooperation with International Organizations

n 2005, Armenia actively built up its cooperation with the leading international organizations, the U.N., OSCE, and Council of Europe in particular. In so doing, the republic placed its prior- I ities on becoming more involved in international political and socioeconomic processes; on pro- curing assistance from international organizations in building democracy and creating democratic institutions; on improving the socioeconomic and political situation in the country; on settling the Nagorno-Karabakh conflict; on normalizing relations with Turkey and Azerbaijan; on enhancing regional political and economic cooperation; and on implementing humanitarian and cultural-educational programs. On 15-17 May, President Robert Kocharian paid a working visit to Warsaw, where he took part in the third summit of the Council of Europe member states. He spoke before the Council and also held several bilateral meetings, including with the presidents of Slovakia, Lithuania, Cyprus, and Georgia. During these meetings, the discussion focused on expanding interstate ties by means of cooperation and a livelier exchange of experience. What is more, Robert Kocharian met with European Commissioner for Foreign Relations Benita Ferrero-Waldner and discussed with him the possibility of drawing up and adopting a European Union Action Plan for Armenia. With respect to the European community’s involvement in the settlement of the Nagorno-Kara- bakh conflict, the PACE resolution prepared by David Atkinson and adopted in January should also be mentioned. An important component of Armenia’s relations with European and international organizations is their participation, this particularly applies to the Council of Europe and the OSCE, in making preparations for and holding the referendum held on 27 November to introduce amendments into the Ar- menian Constitution.

93 CENTRAL EURASIA 2005 Analytical Annual 2. The Nagorno-Karabakh Conflict

Nagorno-Karabakh continued to be a key element in the country’s foreign policy. On 11 Janu- ary, a meeting was held in Prague between Armenian and Azerbaijani Foreign Ministers Vardan Os- kanian and Elmar Mamediarov, along with the cochairmen of the OSCE Minsk Group, on the settlement of the Nagorno-Karabakh conflict. The sides also met separately with the OSCE MG cochairmen. This laid the foundation for the so-called Prague Process, which with certain modifications became the main format of the talks in 2005 on the Nagorno-Karabakh problem. On 14 May, Armenian Foreign Minister Vardan Oskanian met in Krakow with the cochairmen of the OSCE Minsk Group to discuss issues within the framework of the Prague Process. And on 15 May, Armenian and Azerbaijani Presidents Robert Kocharian and Ilham Aliev met in Warsaw for private talks and also held a meeting with the cochairmen of the OSCE Minsk Group, at which they discussed settlement of the Nagorno-Karabakh conflict. Experts noted that this meeting was an important milestone in the negotiations on Nagorno-Karabakh. What is more, on 27 August, Armenian and Azerbaijani Presidents Robert Kocharian and Ilham Aliev met in Kazan. The talks began with the foreign ministers of both countries and the cochairmen of the OSCE Minsk Group, and then continued in private, after which the foreign ministers and OSCE MG cochairmen joined them again. In the fall, the International Crisis Group (ICG) put forward a new initiative on the settlement of the Nagorno-Karabakh conflict after preparing two reports with recommendations on the problem.1 The foreign policy departments of both states reacted correspondingly to these reports, but it was obvious that 2005 would not be the year for bringing the talks to any definite conclusion. Nevertheless, the statements of the OSCE Minsk Group cochairmen and several representatives of the conflicting sides give reason to hope that if all goes well, 2006 might become a turning point in peaceful settlement of the conflict.

3. Armenia’s European Integration and Bilateral Relations with the European States

Armenia officially declared the prime importance of the European vector in its foreign policy. Whereby this supremacy is manifested regardless of whether it joins the European Union or not. This was prompted by the EU’s decision to include Armenia (along with the other two South Caucasian countries) in its European Neighborhood Policy initiative (ENP). What is more, a pivotal point in Armenia’s interrelations with the EU was the European Commission’s publication on 2 March of the South Caucasian Country Reports. During the preparations for drawing up this document, EU Special Representative for the Southern Caucasus Heikki Talvitie arrived in Erevan on 24 January on his tour of the region, where he met with President Robert Kocharian, Security Council Secretary and Defense Minister Serge Sarkisian, and Minister of Justice David Arutiunian.

1 See: Nagorno-Karabakh: Viewing the Conflict from the Ground, Europe Report, No. 166, International Crisis Group, Tbilisi/Brussels, 14 September, 2005. 94 REPUBLIC OF ARMENIA International Affairs

On 27-30 January, on an invitation from President of the Italian Republic Karlo Adzelio Cham- pi, Armenian President Robert Kocharian paid an official visit to Italy. At their meeting in Rome, the two presidents discussed bilateral relations, and regional and international problems. A special topic of discussion was Armenia’s European integration. Robert Kocharian confirmed that Arme- nia is looking forward to developing relations with the European Union on a more serious note under the European Neighborhood Policy, and the Italian president assured him that his country would help Armenia to integrate into the EU, as well as assist the progress and peaceful future of the Ar- menian people. The main topics Robert Kocharian discussed with the prime minister and the chairmen of the Italian senate and lower house of parliament were enhancing bilateral political and economic relations and Armenia’s European integration. In Vatican Robert Kocharian was hosted by Pope John Paul II and Cardinal Angelo Sodano. The President met also with the Catholicos of the Catholics of the Cilician See Patriarch T. Nerses-Poghos and observed the newly installed statue of St. Gregory the Illuminator. In Venice, Robert Kocharian met with the city mayor and representatives of the local Armenian community, and visited Murad Rafaelian College and the Mkhitarist order on the island of St. Lazarus. Within the framework of the European Neighborhood Policy, on 2 March the European Com- mission finished preparing the ENP Country Reports for the South Caucasian countries, which should become the basis for drawing up Individual Action Plans for these countries in cooperation with the EU in the ENP format. On the whole, the European Commission positively assessed both the general level of cooperation between the EU and official Erevan, and Armenia’s level of development in all the areas under consideration. The main emphasis in Armenia’s Country Report was placed on the underdevelopment of democratic institutions and on the need to continue efforts to bring the legislation of Armenia into harmony with European standards. On 20-23 April, Armenian President Robert Kocharian made a working visit to France, where he met with Chairman of the National Assembly of this country Jean-Louis Debre and Senate Chair- man Christian Ponsle and discussed a broad range of bilateral relations issues and the settlement of the Nagorno-Karabakh conflict. President Robert Kocharian also met with the French cochairman of the OSCE Minsk Group Bernard Facier. On 26-28 September, on the invitation of Robert Kocharian, President of the Republic of Fin- land Tarja Halonen made an official visit to Armenia. The heads of both countries discussed Arme- nia’s bilateral relations and cooperation with the EU and regional problems, and they also exchanged opinions on urgent international issues. Tarja Halonen welcomed Armenia’s involvement in the Eu- ropean Union’s ENP program and noted that in its foreign policy her country is placing high priority on developing relations with the South Caucasian states, particularly keeping in mind that in 2006 Finland will be chairing in the European Union. The Armenian-Finnish talks continued in an extended format, at which the priority areas of economic cooperation and the possibilities of stimulating them were discussed. On 6-8 October, on the invitation of Robert Kocharian, Latvian President Vaira Vike-Freiberga made an official visit to Armenia. The main purpose of the visit was to stimulate the development of interstate relations, enhance cooperation, and designate priority areas in economic interaction. The heads of both countries discussed aspects of cooperation in the Armenia-EU format and regional problems, exchanged opinions on urgent international issues, signed a joint communiqué and intergovernmental agreements on the stimulation and mutual protection of investments and on mutual assistance in customs issues, as well as an interdepartmental document on cooperation in culture, and also spoke at a joint press conference. In addition, during the visit, the Latvian president met with the chairman of the National Assembly and the Armenian prime minister, and an Armenian-Latvian business forum was held at this time, which the heads of both countries attended.

95 CENTRAL EURASIA 2005 Analytical Annual

A key event of the year, which was of special significance for the development of Armenia’s European integration and its relations with the European structures, was Robert Kocharian’s visit to Brussels. Within the framework of this visit, the Armenian president met on 20 October with Belgian Prime Minister Guy Verhofstadt. During their talks in a private and enlarged format, the current state and prospects for developing Armenian-Belgian trade and economic relations were discussed. The sides stressed the importance of the fact that Belgium occupies first place in terms of Armenia’s export volume to the European Union countries. And the main topics of Robert Kocharian’s meeting with President of the Belgian Senate Anne-Marie Lizin were expanding bilateral cooperation and issues relating to Belgium’s chairmanship in the OSCE. What is more, Anne-Marie Lizin welcomed the constitutional reform in Armenia and noted that this reform makes it possible to establish more so- phisticated institutional relations both within the country and beyond it, as well as improve the situation in the human rights sphere. At a meeting with European Parliament President Jozep Borell-Fon- tels, President Kocharian discussed the European integration problem relating to the drawing up of an EU Individual Action Plan for Armenia. Robert Kocharian also discussed Armenia-European Union cooperation and questions relating to the settlement of the Nagorno-Karabakh conflict in depth at his meeting with EU High Represent- ative for Common Foreign and Security Policy Javier Solana. Within the framework of this same visit, on 21 October, Robert Kocharian also met with European Commission President José Manuel Barosso. During their meeting, they discussed issues relating to the EU European Neighborhood Policy Program, the Nagorno-Karabakh problem, Armenia’s foreign relations, and constitutional reform in Armenia. Both sides assessed this reform as an important guarantee of Armenia’s future development and its further democratization. At the beginning of October, head of the representative office of the European Commission in Georgia and Armenia, Ambassador Torben Holtse, said that even before the end of the month discussion would begin of the Action Plans presented by the South Caucasian countries within the ENP program.

4. Stepping Up Euro-Atlantic Integration and Intensifying Partnership with NATO

In 2005, Armenia entered a new phase of integration into the Euro-Atlantic structures, including with respect to expanding its relations with NATO. It is worth noting that this process was intensified a few years ago and does not interfere with the republic’s military and strategic partnership with Russia. According to Armenia’s leaders, the Russian Federation is systemically moving closer to the North Atlantic Alliance, interacting with Brussels in different formats, and participating in joint exercises. What is more, official Erevan is emphasizing that it does not intend to join NATO as its full-fledged member. Nevertheless, although Armenia’s cooperation with NATO began as early as the republic’s first years of independence, its contacts with this organization, before the mid-1990s, were very limited. Only its gradual incorporation into NATO’s Partnership for Peace program (PfP) and participation in several of the Alliance’s structures made it possible to accelerate the Euro-Atlantic integration going on in Armenia. But, for all intents and purposes, 2005 marked a turning point in this cooperation, not only with respect to the more frequent contacts between Armenian officials and society and NATO structures at all levels, but also in terms of the new stage in institutionalization of the republic’s rela-

96 REPUBLIC OF ARMENIA International Affairs tions with this organization after official Erevan submitted its Individual Partnership Action Plan (IPAP). Armenian Foreign Minister Vardan Oskanian presented the Alliance leadership with a corresponding presentational document in Brussels on 16 June. The foreign minister said that this event would open a new page in Armenia’s relations with NATO and become a cornerstone in the development of their relations. According to Armenia’s military-political leadership, the main reforms planned within the framework of the IPAP and the cooperation mechanisms with NATO to implement them are as follows: regular consultations with the Alliance on regional security issues, drawing up a national security strategy, preparing a military doctrine, improving defense and budget planning, ensuring interaction with NATO forces on an operative level, improving military education, introducing automatic command systems into the Armenian armed forces, developing communication and interaction systems with NATO, developing defense science, improving the personnel control system, involving the broad public in defense issues, strengthening democratic monitoring mechanisms, interdepartmental blending of spheres relating to defense and the fight against terrorism, carrying out environmental assignments, and so on. The Armenian president’s above-mentioned visit to Brussels and his meeting with the Al- liance’s Secretary General on 21 October were extremely important in terms of intensifying cooperation between Armenia and NATO. During this meeting, Robert Kocharian and Jaap de Hoop Scheffer discussed in detail the provisions of Armenia’s Individual Partnership Action Plan with this organization and emphasized the importance of official Erevan’s participation in several programs being implemented within the Alliance, in particular the activity of Armenia’s peacekeeping forces in Kosovo. What is more, the individual approach was emphasized in Armenia- NATO relations and the significance of the complementarity principle was noted, meaning the sides’ relations with Russia. Contacts in the Armenia-NATO format became particularly active at the end of the year. For example, on 9 December the Individual Partnership Action Plan was discussed at a joint meeting of NATO’s Political Committee and Military-Political Committee held in Brussels. The Armenian side was represented by the country’s deputy defense minister, Lieutenant General Artur Agabekian, deputy foreign minister Arman Kirakosian, Armenian Ambassador to NATO Samvel Mkrtchian, and the republic’s military representative in the Alliance, Colonel Davit Tonoian. As early as 18 December, Armenia’s Individual Partnership Action Plan with NATO came into force.

5. Relations with Turkey

Relations between Erevan and Ankara were determined by the undertakings relating to the 90th anniversary of the tragic events of 1915 in the Ottoman Empire. Their recognition as genocide was an urgent issue on the agenda of Armenian diplomacy. On 13 April, during the hearings held on this issue in the Turkish parliament, the country’s foreign minister Abdullah Gul said that the country’s prime minister Recep Erdogan had sent Robert Kocharian a letter asking him to create a joint commission (with the participation of historians) to study this problem. In a return letter, the Armenian President rejected the initiative of the Turkish side, proposing instead to create an Armenian-Turkish intergovernmental commission, which could also discuss this question among other things. It was also suggested that President Kocharian and Prime Minister Erdogan could discuss the development of bilateral relations during their meeting planned, according to different sources, for15-16 May in Warsaw, that is, during the Council of Europe summit, but this meeting did not take place. Nevertheless, in 2005, contacts were made between representatives of Armenian and Turkish sociopolitical circles, during which bilateral relations were discussed, including with respect to the opening up of the bor- 97 CENTRAL EURASIA 2005 Analytical Annual ders. In particular, on 12 June, a meeting was held in Erevan between a delegation of the parliamentary faction of the Turkish ruling party headed by Turhan Comez and a representative of the Dashnakt- sutiun party bureau, Kiro Manoian, as well as a meeting between Turkish parliamentary deputies and deputies of the Armenian National Assembly.

6. Intensified Cooperation with the U.S.

Within the framework of Armenia’s foreign policy priorities, its relations with the United States continued to actively develop, particularly with respect to the political dialog and the trade and economic and military-political spheres. The agreements reached contributed to the humanitarian and technical aid the U.S. offered Armenia, as well as to confirmation of the amount of military aid being allotted to Erevan, to involving Armenia in the Millennium Challenge Program, and to adopting a law on establishing permanent trade ties with Armenia. Export from Armenia to the U.S. perceptibly increased. Active cooperation is also continuing within the framework of the antiterrorist coalition. In this respect, sending a limited contingent of Armenian servicemen (46 people, mainly military drivers and sappers) to Iraq as part of the international peacekeeping forces on 18 January was of great significance. An important event in the military-political sphere was the official visit of secretary of the National Security Council under the Armenian President, Armenian Defense Minister Serge Sarki- sian to the United States. During this visit, on 29 October, he met with Pentagon Head Donald Rums- feld, president of the National Defense University General Michael Dann, Chairman of the Senate Standing Committee on Foreign Relations Richard Lugar, and Undersecretary of State for Political Affairs Nicholas Burns. Experts note that this visit was an important milestone in strengthening bilateral relations in the military-political sphere, as well as with respect to Armenia’s participation in the international antiterrorist coalition. On the whole, it can be maintained that in 2005, the United States continued to render Armenia political, military, and economic aid. Special mention should be made of the efforts exerted to carry out projects relating to Armenia’s participation in the U.S. State Department’s Millennium Challenge Program, which envisages granting significant funds (235.65 million dollars) to Armenia’s socioeconomic development. As Armenian Deputy Minister of Finance and Economics Tigran Khachatrian said at a press conference held in Erevan on 20 December, 145.67 million of this sum will be used to restore and modernize the irrigation system, 67.1 million to reconstruct roads in rural areas, about five million for monitoring and evaluating the work carried out under the program, and 17.79 million dollars for command and control. According to the American side, the program will lower the level of rural poverty by developing corresponding infrastructure and management and directly affect 75% of the rural residents, as a result of which in 2010 their annual income will increase by a total of 36 million dollars, and by 2015 by more than 113 million dollars.

7. Armenian-Russian Relations and Cooperation in the Post-Soviet Space

During the year, interrelations with Russia continued to be one of the top priorities of Armenia’s foreign policy, in particular, relations developed and intensified in the military-political, trade and 98 REPUBLIC OF ARMENIA International Affairs economic, and humanitarian spheres. Close cooperation also continued within the CIS and the Col- lective Security Treaty Organization (CSTO). On 16 February, Russian Federation Foreign Minister Sergei Lavrov paid a two-day official visit to Erevan. He said that he discussed bilateral and regional problems, approaches to the settlement of the Nagorno-Karabakh conflict, as well as questions relating to Russian President Vladimir Putin’s upcoming visit to Armenia at his meetings with the Armenian leadership. On 24 March, Russian Federation President Vladimir Putin made a working visit to Erevan. During this visit, attention was focused on questions relating to bilateral relations. What is more, the Russian leader took part in the opening ceremony of the Year of Russia in Armenia celebrations. On 23 June, Robert Kocharian took part in the regular session of the Collective Security Treaty Organization Council held in Moscow, which looked at the priority areas in the CSTO’s activity, the military-political situation in the CSTO’s zone of responsibility, and the Organization’s prospective tasks. The summit ended in the heads of the member states signing 11 documents and a political communiqué. The adopted decisions envisage stepping up the fight against terrorism, the illicit circulation of drugs, and the proliferation of nuclear weapons. The presidents endorsed the CSTO’s plan of priority measures for the near future, the program for comprehensive strengthening of interstate cooperation within the Treaty framework for 2006-2010, as well as the formation and development of the collective security system. Decisions were made on creating a coordinating council of heads of the competent bodies of the CSTO member states for fighting the illicit circulation of drugs, as well as for developing and further improving the air defense system of the Or- ganization’s member states. On 26 August, Robert Kocharian took part in a regular meeting of the Council of the heads of CIS member states held in Kazan, in which the foreign ministers also participated along with the presidents of the Commonwealth countries. The main topic of discussion was reform and improvement of the CIS structures. During the meeting, more than 10 documents were signed calling for an enlargement of the regulatory and legal basis of cooperation among the Commonwealth republics in the political and military sphere. Head of the Russian Government Mikhail Fradkov and Chairman of the Federation Council Sergei Mironov paid official visits to Erevan in December. The meeting between heads of state Vladimir Putin and Robert Kocharian on 16 December in Sochi was also of immense importance. Among the other questions discussed by the Russian and Armenian presidents, the most important one was setting the price of gas delivered to Armenia by Russia’s Gazprom Company. On the whole, in 2005, both bilateral Armenian-Russian relations and Armenia’s cooperation with the CIS states (including within the framework of the CSTO) enjoyed steady development and enhancement.

8. Armenia-Georgia: Traditional Good-Neighborly Relations in Search of a New Modus Vivendi

Last year, several agreements were reached in implementing joint economic and communication projects, as well as investment plans with the participation of Armenian capital in Georgia. What 99 CENTRAL EURASIA 2005 Analytical Annual is more, the events relating to the withdrawal of Russia’s military bases from Georgia and the situation in Samtskhe-Javakhetia, where most of the population is Armenian, set the tone for the political contacts between the leaders of these countries. Along with the permanent contacts at the governmental and interdepartmental level, regular meetings between the heads of state, including in an unofficial setting, were also of great significance. For example, after the situation in Samtskhe-Javakhetia became aggravated, President Robert Kocharian went to Georgia on 1 April, and on 21-22 August, Georgian President Mikhail Saakashvili visited Armenia. During the last visit, the two presidents discussed Armenian-Georgian relations and the socioeconomic situation in Samtskhe-Javakhetia at the Armenian president’s summer residence, on the shores of Lake Sevan. On the whole, it can be noted that during the year, the sides searched for a new format of relations in order to adjust certain aspects of the two countries’ approaches, which at present do not entirely coincide, to the current geopolitical and economic conditions. According to some experts, Armenia and Georgia’s European integration processes could become an important stabilizing factor in bilateral cooperation in the future, particularly within the framework of the EU’s new ENP program.

9. Intensifying Relations with Iran

On 8 February, a meeting was held in Tehran between Iranian President Seied Mohammad Khatami and Secretary of the National Security Council, Armenian Defense Minister Serge Sarki- sian. The Iranian President said that the countries of the region can settle their differences without mediation and at the top level, whereby Iran is ready if necessary to participate in resolving the problems between neighbors. The same day, Serge Sarkisian met with Iran’s Expediency Council Chair- man Hashemi Rafsanjani. At the end of March-beginning of April 2005, building of the Iran-Armenia gas pipeline began, and on 15 May, representatives of both countries reached an agreement on building two power stations in the border area on the River Araks. A decision on this matter was adopted in Tehran at the seventh meeting of the joint Iranian and Armenian technical committee. In compliance with the agreement reached, the first power station with a capacity of 130 MWT and a tunnel of 18.3 km in length will be built in Armenia, and the second station with a capacity of 140 MWT in Iran. Artashes Tumanian, head of the Armenian presidential administration and cochairman of the intergovernmental commission on coordinating Armenian-Iranian relations discussed the prospects for bilateral cooperation in the socioeconomic, energy, and political spheres during his visit to Iran. On 15 November, he was the first high-ranking Armenian official to meet with the new president of the Islamic Republic of Iran Mahmoud Ahmadinejad. During this meeting, Mahmoud Ahmadinejad underlined the close bilateral relations and noted that friendship, mutual assistance, and stronger peace must be achieved among the countries of the Caspian basin. The possibilities of increasing contacts between the two countries were also discussed, particularly in the energy sphere, including with respect to completing the Iran-Armenia gas pipeline and further cooperation in the import of energy resources. On 6 December, an Iranian delegation arrived in Armenia headed by IRI Energy Minister Parviz Fattah. The delegation was received by head of the Arme- nian presidential administration and cochairman of the Armenian-Iranian intergovernmental com-

100 REPUBLIC OF ARMENIA International Affairs mission Artashes Tumanian. During the meeting, the sides discussed economic cooperation, in particularly aspects relating to the energy sphere. Artashes Tumanian said that at the meeting of the Armenian commission members the implementation of joint programs was discussed and proposals which will be presented in January 2006 at a joint meeting in Tehran formed. During the talks with the Iranian energy minister, the main attention was focused on three main projects: extending the Iran-Armenia gas pipeline, building a third high-voltage power transmission line between the two countries, and completing the fifth block of the Razdan Hydropower Plant with participation of the Iranian side.

101 CENTRAL EURASIA 2005 Analytical Annual

AZERBAIJAN REPUBLIC

GENERAL OVERVIEW

Nazim IMANOV D.Sc. (Econ.), professor, Editor-in-Chief of Kavkaz & Globalizatsia (Baku, Azerbaijan)

ll the sociological polls conducted during the year, including during the election campaign, showed that the country’s main problem was Nagorno-Karabakh. A significant portion of the A population—between 40 and 55% according to the poll data—believes the only possible way to resolve it is by using military force. But even these respondents did not mean that the country should immediately engage in combat action to liberate the territory occupied by Armenia. This led to a public consensus: the absolute majority agreed that military might should be built up, although some respondents viewed force as a way of putting political pressure on Armenia, while others saw it as a prerequisite for beginning combat action. In the fall, when preparations for forming the budget reached their peak, the government announced that it intended to double spending on defense. This news was welcomed, and the decision was supported by even the most radical opponents of the government. Society showed a heightened interest in the talks with Armenia mediated by the OSCE Minsk Group,1 particularly since they were perceptibly gaining in momentum. In this respect, criticism by the government, opposition, NGOs, and the mass media of the Minsk Group for its passivity in previous years was noticeably toned down. There were even hopes that a peace agreement might be entered before the end of the year. But, alas, these expectations were not justified. Nevertheless, it can be confidently maintained that the talks have paved the way for intensified diplomatic activity in the near future, which, in our opinion, will also be promoted by the fact that no important elections are anticipated in the conflicting countries. A public consensus was also reached with respect to Azerbaijan finding a way during the talks to resolve the problem step-by-step, which involves liberating the occupied territories, returning the

1 Created in 1992. Since 1997, its cochairmen are the U.S., France, and Russia. 102 AZERBAIJAN REPUBLIC General Overview forced migrants and ensuring their safety, and defining the status of Nagorno-Karabakh. Another positive aspect of the year was that the fears actively expressed by the opposition in the past about the government possibly compromising the interests of the country at the talks have practically disappeared from the political vocabulary. The main domestic political event of the year, which also aroused a broad international response, was the election to the Milli Mejlis (parliament). For the first time in the country’s history, it was held exclusively according to the majority system (prior to this, the mixed, proportional-majority system was used), and was characterized by an unprecedented number of candidates and observers, including foreign. The ruling party, New Azerbaijan, retained its majority in the parliament, which underwent a 65% overhaul. But when the government celebrated its victory, the opposition declared the election undemocratic, refused to accept the legitimacy of the voting results publicized by the Central Election Commission, and began to take measures to have them annulled. But another color revolution in the post-Soviet space, which the opposition leaders and some high-ranking civil servants (including several government members) were counting on, was avoided. International observers also evaluated the election ambiguously. For example, the missions representing the CIS, Turkey, Iran, and Russia responded positively, while several Western countries and influential international organizations were very critical, noting that the election did not meet several democratic standards. Some high-ranking officials joined the opposition, and also rendered it financial support, which was a serious ordeal for the government. On the eve and immediately following the election, the ministers of economic development and public health, as well as several other high-ranking civil servants, were fired and then arrested. They were accused of attempting to organize a coup d’état. Despite all the difficulties of the situation, the head of state coped with it. He made several rotations in government members and was able to keep the rest of the team consolidated. After losing the election and failing to fulfill its promises again, the opposition disappointed the protest electorate. Torn apart by internal contradictions, by the end of the year, it lost its momentum and fizzled out. As for the country’s geopolitical priorities, they did not undergo any major changes. In the system of West-East and North-South Eurasian relations, the first vector remained predominant, while the second clearly became more dynamic. For example, 2005 was officially declared the year of Azerbaijan in Russia; and relations with Iran were enhanced, which was expressed, among other things, in more intense diplomatic relations. One of the main things prompting Tehran’s openly favorable attitude toward Baku was the deterioration of the relations between Washington and Tehran. The leadership of Azerbaijan resolutely rejected any speculation on the possibility of Azerbaijan offering its territory as a springboard for the United States to launch a military strike on Iran. The relations with the European and Euroatlantic structures were complicated somewhat by the question of North Cyprus. Azerbaijan made very definite statements about the possibility of withdrawing it from international isolation and even undertook practical steps in this direction, which aroused irritation among its European partners. Another factor casting gloom on relations with the West was the insufficient, from the viewpoint of certain international organizations, democracy of the parliamentary election. The influence of these two factors will apparently continue to take its toll in the future. The obvious increase in Azerbaijan’s regional political clout was promoted, among other things, by the rates of its economic development. In 2005, Azerbaijan occupied first place in the world in terms of GDP growth, which was 26.4%. Per capita GDP constituted $1,518, and at purchasing power parity of 3.38, $5,129. In so doing, industrial production increased by 33.5%. The republic climbed to one of the top places in the CIS and Eastern Europe in terms of per capita investment ($1,518), and it was world leader in the UNCTAD rating in terms of investment attractiveness. But all of these im-

103 CENTRAL EURASIA 2005 Analytical Annual pressive results were achieved mainly on the basis of the petroleum sector, which accounted for approximately 70% of industrial production. The main economic event of the year was putting the Azeri section of the Baku-Tbilisi-Ceyhan (BTC) export pipeline into operation, which was undoubtedly also of political significance. Oil is already being pumped through the pipeline. Since it was put into operation, the country’s petro revenue is expected to rise even more, which, along with the positive parameters, could also have negative consequences. The gravest of the latter is the inevitable increase in pressure on the financial market, which is already experiencing certain difficulties. The National Bank (NBA) had to tackle with a contradictory task. On the one hand, the rise in world oil prices and accompanying rise in the price of imported goods, the increase in domestic demand, and the increase in the money supply all led to inflation. After reaching a maximum level in April of 15.5% and dropping in December to 2.2%, it amounted to an average of 9.6% for the year. On the other hand, the immense inflow of foreign currency (petrodollars) threatened to infect the economy with the so-called Dutch disease. Its symptoms made themselves known in mid-September, in two days, the manat (national currency) rose by 14% with respect to the dollar, and only support intervention of the national currency brought relief to situation. The economy was still experiencing the restraining effect of the Nagorno-Karabakh conflict. At present, Armenia is occupying 20% of Azerbaijan’s territory, and there are approximately 1 million refugees and forced migrants in the country, 60% of whom are living below the poverty line. In 2005, 153 million dollars were allotted from government sources alone for their social support. On the whole, however, the financial damage caused by the Armenian aggression is estimated at 26 billion dollars. Given the essentially complete absence of economic relations with Armenia, cooperation with other countries of the region and those further afield is still an important priority. Azerbaijan’s main trade partners include the following neighboring countries—Turkey, Russia, Kazakhstan, Georgia, Iran, and Turkmenistan—and more distant countries—Italy, Great Britain, Israel, Germany, France, China, and Japan. The strategic political partnership established with Georgia has also been projected onto bilateral economic relations. Symbolic in this respect is the Agreement on Restructur- ing Georgia’s Debt to Azerbaijan signed in March. Pumping Kazakhstani oil via the BTC pipeline can make a significant contribution to enhancing regional economic cooperation. Talks about this began in April. On the whole, the implementation of international projects for building new transportation corridors passing through Azerbaijan and Georgia is both of economic and political significance to the region. The idea of creating a Union of Eurasian Businessmen initiated by the business structures of Azerbaijan and Turkey is very promising. Russia is also being given an important role in this organization.2 The idea was elaborated in the Baku declaration signed in October on the creation of this structure. One of Azerbaijan’s indisputable advantages, which has already become traditional and is creating a favorable background for the country’s political and economic development, is the high level of its religious and ethnic tolerance. In this respect, many experts consider our republic a model state. There are no significant problems between the Muslims, who constitute the main mass of the population (according to estimates, 60% of them follow Shi‘ism and the rest Sunnism), and the followers of other confessions (Russian Orthodox, Protestants, Catholics, Judaists, Krishnaites, and so on), nor is religion used as a means of domestic political struggle. Admittedly, during the year, certain circles made several feeble attempts to arouse interest in Islam as a political factor, but they did not find support in society and came to naught. Against the background of the decreasing activity of the Sunni radi-

2 In 2005, trade turnover with Russia grew by over 20% and exceeded 1 billion dollars. 104 AZERBAIJAN REPUBLIC Politics cals, which was observed primarily in the regions bordering on Russia, a certain amount of concern was aroused by the activity of mobile, although small, pro-Iranian Shi‘ite groups in the country’s southern regions and the capital’s suburbs. Life in Azerbaijan was, of course, not limited to the four mentioned spheres. Special note should be made of the Heydar Aliev Foundation, which carried out a widespread program in education and made a vast contribution to the development of national culture, particularly mugam—classical Az- erbaijani folklore music which is universally recognized as a gem of world culture. In particular, a sumptuously designed collection of mugam performed by Karabakh khanende (titled mugam singers and performers) was published, and work was continuing to create a unique structure—the Interna- tional Center of Mugam.3 What is more, a world championship of artistic gymnastics was held in Baku in October, which was an important event not only in the country’s sporting, but also in its social life, since this was the first time a sporting event of this caliber was organized in Azerbaijan. 2005 was a year of many choices, that is, not only political, but also economic and humanitarian. The country chose between democracy and authoritarianism, genuine and “cardboard” independence, forceful and peaceful means of resolving the Nagorno-Karabakh conflict, balanced diplomacy and one- vector geopolitical priorities, harmonious economic progress and one-sided “petroleum development,” economic freedoms and strict state regulation, enlightened Islam and religious fanaticism. All of this will of course continue, for choice in this sense is a never-ending process, and not a series of one-time events.

3 In August, during his official visit to Baku, Director General of UNESCO Koichiro Matssura took part in the foundation-laying ceremony of the buildings of this Center.

POLITICS

Nazim IMANOV D.Sc. (Econ.), professor, Editor-in-Chief of Kavkaz & Globalizatsia (Baku, Azerbaijan)

I n t r o d u c t i o n

he country leaders and the elite were quite president in 2003, determined the year’s political satisfied with 2005; they were even elated importance. In addition, on the very eve of the elec- T about it; the opposition and the analysts close tion, some of the Western powers, particularly the to it, on the other hand, were very negative. There United States, readjusted their foreign policy pri- were practically no neutral opinions—political po- orities. This was followed by deep-cutting politi- larization in Azerbaijan has obviously reached a cal changes in some of the CIS countries, primari- high point. The parliamentary election, the first na- ly Ukraine and Georgia. This naturally left its im- tionwide campaign after Ilham Aliev was elected print on Azerbaijan’s political life.

105 CENTRAL EURASIA 2005 Analytical Annual The Government

Late in March, the State TV and Radio Company was transformed into a private limited liability company, though the state remained the only shareholder. More than that: the state will retain a controlling interest even when some of the assets are privatized. The change in the Company’s legal status, however, agrees with the planned privatization of public property. In future, this may help to withdraw the Company from the government’s monopoly control. On 30 May, the president signed a document which set up a commission designed to bring the educational system into harmony with contemporary standards. Early in June, a State Commission for Integration into Europe was formed from cabinet members and other top bureaucrats. The Foreign Ministry was instructed to coordinate its activities with the EU. The Department of Public Property and Privatization of the Ministry of Economic Development (MED) served as a basis for the State Committee of Public Property set up in September. Two new structures—the Ministry of the Military-Industrial Complex and the Emergencies Ministry—were set up in December. They are still being formed, so it is too early to assess their efficiency. However, the very fact of their existence can be described as positive: both structures may help to liberate the occupied territories. The structural reforms of 2005 were completed with the adoption of a document that created a Mortgage Fund at the National Bank. In 2005, the public was surprised to learn that in December O. Asadov, who headed the Azersu joint stock company, was elected speaker of the parliament; and V. Aleskerov, head of the Foreign Investments Administration of the State Oil Company of the Republic of Azerbaijan, was elected deputy speaker. The president was obviously behind these appointments: the New Azerbaijan Par- ty, to which President Aliev was elected chairman on 26 March, is in the majority in the Milli Mejlis (parliament). In mid-April, it amended the Law on Political Parties to allow the president to belong to any of them. The old version of the same article in this document aroused heated debates, since it was claimed to contradict the Constitution, which did not ban the president’s affiliation with political parties. Early in 2005, a new Military Prosecutor was appointed. There were changes among the upper judiciary as well. In April, the chairmen of the Supreme Court and the Court of Appeals lost their posts; in December, the chairman of the Economic Court met the same fate. The Supreme Court received a new chairman, while the two other posts remained vacant. The heads of executive structures in over 20 districts (6 of them in the capital) were changed. Dramatic personnel changes, due to an attempted coup, took place on the eve of the elections and immediately after them. This was what happened. In March, a group of top officials from the Ministry of Internal Affairs were found to have committed grave crimes; later, officers of the National Security Ministry (NSM) arrested them. Throughout the year, more people were arrested. The Minis- try of Internal Affairs, the Public Prosecutor’s Office, the NSM, and the Ministry of Justice were thor- oughly purged. The scandal convinced the opposition that there was no cohesion in the corridors of power and that a revolution was possible in principle. Toward the end of the year, the country’s leaders were convinced that the threat was real. On 19 October, the president fired the minister of economic development, who was arrested on the spot for being involved in the coup. The next day, the health minister met the same fate, and head of the Presidential Administration also lost his post. Later, head of the State Azerkimia Company was fired (his powers were equal to those of the minister of the chemical industry). All of them were accused of helping the radical opposition seize power by force. Later, all of them were accused of large-scale corruption. All the TV channels demonstrated their wealth to convince the public and create a nega-

106 AZERBAIJAN REPUBLIC Politics tive opinion about the arrested people. The effect proved unexpected: the nation saw that the opposition leaders, independent experts, and international organizations were right when they spoke about corruption among the top echelon. The president, however, kept his team; he was compelled to make most of the new appointments.

The Opposition

The government’s political opponents faced a dilemma: to mobilize the protest electorate, they needed a broad coalition in which the main opposition parties risked being dominated by smaller groups. Decision-making would become inflexible, while squabbles much more frequent. To avoid this, in the middle of March, Musavat, the Popular Front, and the Democratic Party formed a closed bloc called Azadlyg (Freedom). Left out in the cold, the smaller political groups created their own associations and began fighting both the country’s leaders and the large opposition blocs. The second large opposition bloc, Yeni siyasiat (New Politics), split the protest electorate still further. At the first stage, this bloc, which included former president Aiaz Mutalibov, claimed the role of a new political force. Little by little, however, it became a conglomerate of “has-beens.” On the whole, the two opposition blocs damaged the cause of the political enemies of power: they stirred up false hopes among their supporters. In the upcoming election campaign, the opposition counted on foreign countries as its main political resource. In February, 30 opposition parties asked the leaders of the United States, the EU countries, Turkey, Ukraine, and Georgia to give a principled assessment of the “anti-democratic regime in Azerbaijan.” The opposition leaders also traveled abroad in search of support for the “democratic changes” associated with their own coming to power. They said the same when talking to Western diplomats and politicians. The American and Norwegian ambassadors were especially active; on 13 April, the parliamentary majority publicly denounced their activities. The opposition was obviously seeking international support at any price. This convinced part of the public that the opposition was pinning its hopes only on foreigners and acting under their orders. The New Politics bloc failed to develop into an important political structure and disintegrated after the election, at the end of the year. The Azadlyg bloc was torn apart by the rivalry of its members, while its political leadership insisted on the resignation of those responsible for the bloc’s repeated failures. Some of the parties experienced a lot of problems in the post-election period. The Party of Na- tional Independence of Azerbaijan split into two, each side hurling accusations at the other. The leaders of the Democratic Party of Azerbaijan headed by R. Guliev, now in political emigration in Amer- ica,1 were also in crisis.

Main Subjects of the Political Discussion

There were four major subjects. n First, the Nagorno-Karabakh issue became even more pressing, since the Armenian side regularly violated the ceasefire regime: every week the country learned about how the Azeri

1 Until 1996 he was speaker of the parliament; the protest electorate pinned its revolutionary hopes on him. 107 CENTRAL EURASIA 2005 Analytical Annual

positions had been shelled and its citizens killed, wounded, or taken prisoner. There were no disagreements over this: all the politicians were convinced that the country should build up its military might and stick to the step-by-step settlement. n Second, the government and the opposition agreed that the country, while preserving good relations with its closest neighbors, should integrate with the West. They disagreed only over Iran: the liberal-minded public objected to wider political and economic contacts with this country; the religious circles, on the other hand, were absolutely satisfied. n Third, the country’s leaders regularly informed the public about the nation’s economic achievements, the world’s fastest GDP growth (26.4 percent), the high direct foreign per capita investments, etc. The structure of these achievements, though, was never subjected to political and economic analysis. Some of the economic novelties, such as redenomination of the manat, aroused no political emotions. Corruption was a politically hot subject, yet it was discussed in a very unprofessional way: the opposition accused the government, while the people on top pointed out that corruption was endemic in many countries. n Finally, a direct dialog between the government and the opposition was indispensable due to the lack of mutual trust. The country’s leaders were sure that the opposition would try to stage a revolution immediately after the election, while the opposition never doubted that the government would falsify the election results. A consensus was obviously impossible, yet the public and international organizations continued insisting on it. Early in May, the government and the opposition met for the first time. After several rounds, however, in June and July the dialog was dropped for lack of results. The sides failed to agree on the places where the opposition could organize rallies. The government and the press managed to agree on the Memorandum on Mutual Understanding and the Conduct Code of the Media During Election Campaigns signed in the middle of July.

Nongovernmental Organizations

Early in 2005, there were about 3,000 NGOs functioning in the country, about 1,000 of them were not registered. The sector has over 4,300 employees. No more than 20 percent of the active NGOs were engaged in the non-political sphere. Few of the rest were absolutely independent; others supported either the government or the opposition. Early in 2005, the problem of NGOs acting as observers at the upcoming election came to the fore. The government was against it on the grounds that the NGOs funded from abroad might act under foreign pressure. The pro-governmental and pro-opposition NGOs unanimously stated that foreign money did not affect their independence. Ten days before the election, the president asked the parliament to remove the ban from the election laws; this was done two days later. Traditionally, NGOs are very active in the human rights sphere.2 In June, members of the presidential staff, deputies, and members of human rights organizations set up a Joint Commission to reach a consensus on whether or not citizens of Azerbaijan had been arrested for political reasons. This was an important event. After that, the Commission asked the Council of Europe to postpone its discussions of the political prisoner issue in the hope that the talks might lead to an agreement. This was the first case when the government and human rights activists worked together. In the fall, political pas-

2 Both amnesty decrees the president signed on 20 March and 20 June, 2005 mentioned the addresses of the NGOs. 108 AZERBAIJAN REPUBLIC Politics sions pushed the Commission into the background. It was decided that its activities should be resumed next year. The NGOs themselves could not agree on how to use the popular diplomacy potential to resolve the Karabakh issue. Most of the pro-governmental structures were against any contacts with the Ar- menian side. Being in favor of the use of force, they carried out several actions to prevent Armenian delegations from coming to Azerbaijan for international events.

The Press

International organizations reported that the media were acting under financial pressure, while TV companies found it hard to acquire licenses; pressure was being put on journalists, it was hard to circulate periodicals, and the press was politically biased. The local creative structures, such as the Confederation of Journalists, the RUH Committee for the Protection of Journalists, etc. said the same. The use of police force against journalists during unsanctioned mass actions generated loud echoes, especially the beating up of F. Teymurkhanly of Aina-Zerkalo newspaper on 21 May. The journalists closed ranks to protect his rights; international organizations also interfered. The policeman who abused his power was fired. This created a precedent very illustrative of the country’s democratic development. Before that, on 2 March, Editor-in-Chief of the Monitor Elmar Guseynov, well known for his scything criticism of the government, was brutally murdered. All political and journalist organizations and NGOs resolutely condemned the murder and described it as a political assassination which crippled the country’s political image, yet they could not agree on the specific political motives behind it. On 29 August, Public Television was ceremoniously opened. The New TV Company set up by a group of mainly opposition public figures and journalists also caused quite a stir. The project did not progress too far: it failed to get state registration; by the end of the year, New TV was forgotten. On 21 May, 312 delegates of 133 publications and media companies met for their Third Con- gress of Journalists. The national press celebrated its 130th anniversary. On 21 July, shortly before that date, the president issued three decisions: On Rendering Financial Aid to the Media, On Awarding Journalists of Azerbaijan, and On Conferring Honorary Titles on Journalists.

The Main Event of the Year: The Parliamentary Election

The public expected much of this campaign, its expectations were probably inflated by the optimistic statements coming from the West, particularly from the Unites States, the EU, and the Coun- cil of Europe. They all reiterated their promises to see that the election would be transparent and fair. The republic’s leaders insisted that the campaign would be democratic, while the opposition was resolved to rule out any falsifications. Independent analysts kept saying that the president did not need falsifications, since a few dozen opposition deputies in the parliament (the opposition could not count on more) would not threaten his power.

109 CENTRAL EURASIA 2005 Analytical Annual

Throughout the election campaign the government remained under unprecedented international pressure. The U.S. administration kept repeating that Azerbaijan’s relations with the rest of the world would depend on the election’s democratic nature. Prominent American politicians3 who visited the country in July-August insistently called for a fair election. On 20 July, the House of Representatives of the U.S. Congress passed a resolution in which it demanded that Azerbaijan hold a fair election; early in October a similar draft was sent to the Senate’s Foreign Relations Committee. Late in October this was crowned with a telephone talk between Vice President of the United States Dick Cheney and President Ilham Aliev. The OSCE, European Union, and PACE kept sending their missions to Baku one after another; co-reporters of the Monitoring Committee of the Council of Europe Parliamentary Assembly regularly visited the country and offered most critical comments. On 25 April, PACE passed a resolution on Azerbaijan which expressed its concern about the election campaign and emphasized that no economic, political, or social problems could be resolved without democratic elections. In June, the European Parliament passed a similar resolution. On 11 January, the opposition published its draft amendments to the Election Code which changed the principles for forming election commissions of all levels4 ; the draft touched upon the problems of monitoring, checking the voter lists, and the nomination procedure. The government disagreed while PACE, and the Venetian Commission of the Council of Europe supported the commission-related demands and discussed them with the government, which rejected the demands outright. An equal number of members, the officials argued, would allow the opposition to disrupt the election process and provoke a crisis. In June, the president initiated a draft law on amendments to the Election Code which contained 43 points mainly of technical nature. On 28 June, it was approved, but the election commissions were formed in the old way. In July, the Venetian Commission and the ODIHR placed a compromise version on the table: one more opposition member to be included in each of the election commissions, but it was rejected both by the government and its political opponents. On 25 October, the head of state signed a decision On Urgent Measures Related to the Election Campaign and Elections,5 which resolved some of the contradictions and was positively accepted by the public. First, under this decision, the NGOs acquired the right to observe the voting procedure; second, it sanctioned finger marking (a demand put forward by the opposition and international organizations).6 Under this document, the Central Election Commission was obliged to display the voter lists with names and addresses.7 In August, the Central Election Committee restored the Khankendi constituency with the aim of letting the local Armenians take part in the elections; the Armenian community of Karabakh was invited to vote through the Internet. Exit polls were another novelty. They were organized by PA Government Services (with financial support from the U.S. International Development Agency) in 65 constituencies selected at random. Mitowski International, another American company, carried out an exit poll in all constituencies; its conclusions were called into question because, the opposition argued, the company was hired by the government.

3 See: Section “International Affairs”. 4 The opposition suggested that the election commissions should include an equal number of members representing the government and the opposition. 5 This was the third presidential election-related decision. The first, of 11 May, dealt with the improvement of the election practices; the second, of 4 July, was of a formal nature and merely fixed the election date. 6 Four days before the document was signed 500 opposition and independent candidates had addressed the Central Election Commission and the parliament with a demand that finger marking should be introduced. 7 Before that the lists contained no addresses. T. Davis, the Council of Europe Secretary General, specifically asked the country leaders about this. 110 AZERBAIJAN REPUBLIC Politics

About 18,700 observers (an unprecedented number for Azerbaijan), including 1,689 foreign observers, gathered to monitor the voting procedure. The OSCE had two missions (short- and long- term) of 640 members; Turkey sent a group of deputies, while the CIS was represented by 542 people. Officials of the diplomatic missions accredited in Baku, as well as over 200 foreign journalists accredited at the Central Election Commission were actively involved. The number of registered deputies was equally unprecedented: by mid-September the list contained 2,062 names. Some of them later removed their names (they were mainly members of the New Azerbaijan Party and its supporters; others were removed by court decisions). There were 1,439 candidates on election day. The New Azerbaijan Party ran using its own list, while other large parties preferred to form coalitions. As a result, the Central Election Commission registered eight party election blocs, not all of them influential enough to affect the situation. Some of the smaller blocs known as pro-governmental received no seats at all. The campaign was officially launched on 7 September. Much earlier, in the spring, the opposition was engaged in mass protest rallies, its main weapon. At first, the government was against them. Nevertheless, on 21 May, the opposition, resolved to build up tension, organized a large unsanctioned rally in the very center of Baku. It ended in clashes with the police and scores of arrested. The rally which took place on 4 June was sanctioned. It was followed by a series of demonstrations with an approximately identical number of participants and similar slogans. Starting on 18 June, the rallies were orange colored—the hint was obvious. After a while, the public lost interest in the regular rallies. Late in September, the opposition had to build up tension once more with an unsanctioned rally which produced more arrested and wounded. The opposition leaders remained resolved to continue in the same vein. On 1, 9, and 23 October, when the campaign was drawing to an end, it staged similar meetings. Since enthusiasm was obviously lacking, the opposition cut short the series with a promise to resume it after the election. The government, which had many more possibilities, mainly money, limited itself to concerts. In addition, on 15 June and 4 November, the New Azerbaijan Party organized two rallies with a noticeable entertainment component. On the whole, the election campaign, so far the most expensive in the country’s history, reached a high pitch: the sides hurled accusations at one another; not infrequently all boundaries of deco- rum were forgotten, while none of the sides missed an opportunity to charge the opponents with using “black PR.” The election took place on the appointed date, 6 November; it attracted 42.2 percent of the voters, less than expected.8 The party of power carried the day with 55 seats, 19 seats less than in the previous parliament. Supported by independent deputies, though, it retained its absolute majority. After winning 8 seats, the opposition declared that it would renounce them because the election was not legitimate. On the whole, 65 percent of the Milli Mejlis deputies were new, with only 55 of the former deputies retaining their seats. On 1 December, the Central Election Commission endorsed the election results. In 10 constituencies, the results were annulled and another round was scheduled. The early assessments were highly contradictory: while the government spoke about free and democratic elections, the opposition insisted that the results had been falsified. Some of the Western countries and international structures (OSCE, the Helsinki Commission of the U.S., and the Interna- tional Crisis Group) were very critical, while observer missions from neighboring countries—Tur- key, Iran, and Russia—offered positive remarks.

8 The election law does not demand a quorum. 111 CENTRAL EURASIA 2005 Analytical Annual Post-Election Processes

I have already written that the election campaign never left the agenda in 2005. Early in the year, the opposition announced that the election would escalate into a color revolution. The government retaliated with “There will be no revolution.” More statements of the same kind followed. In June, a group of respected and well-known intellectuals warned the public that the election might escalate into post-election clashes and proposed a number of preventive measures. This came too late: the mechanism of confrontation had been already set in motion. Shortly before the day of election the authorities prevented R. Guliev from returning to the country; they also identified those top officials who supported the opposition and arrested them. A revolution became even less possible. The nation remained indifferent to nearly all the arrests with the exception of that of Academician E. Salaev, who was freed on 16 November, mainly due to public pressure. On 9 November, the opposition carried out its first “orange rally.” The next day, it announced that the National Resistance Movement had been formed to organize public actions to insist that the election was illegitimate and its results should be annulled. A week later, an All-Republican Confer- ence on annulling the election results was convened; it gathered 500 deputies who were convinced that their rights had been violated. The next two rallies, on 13 and 19 November, went on as expected. It was becoming obvious that the opposition supporters were gradually getting bored and tired. On 26 November, during another rally, the opposition leaders announced that they would remain in the square indefinitely, until they attained victory. The police used force to disperse them. Arrests were resumed, against which the Western embassies, OSCE, PACE, Human Rights Watch, and other organizations expressed their indignation. The authorities were implacable: mass demonstrations in the usual place in the capital’s center were all banned; the opposition was invited to move its actions to the outskirts. After declining this offer, on 18 December, the opposition tried to stage another unsanctioned mass demonstration and was prevented by force. The opposition had no choice but to drop this practice and put away the orange tents purchased abroad until better times. On 10 November, to celebrate its victory, the party of power held a rally which ended in fire- works. The New Azerbaijan Party gathered the signatures of candidates who believed that the election had been absolutely democratic. On 21 November, it invited all of them to a republican forum. By the end of November, its list contained over 800 names. The international community, displeased with the violations registered during the elections, approved of what the president did to remedy them. Some of the local administrators paid with their posts for their “interference in the vote counting procedure,” while the Public Prosecutor’s Office instituted about 20 criminal cases related to violations of the election law.

C o n c l u s i o n

Despite the heavy domestic and foreign pressure, the government realigned its forces and preserved the parliamentary majority. The opposition failed once more to live up to its promises; it disappointed the protest voters and lost momentum by the end of the year. The NGOs remained a weak link in the democratization process. They were too biased politically to develop into an independent and influential political factor. Freedom of expression was considerably restricted. The press had obviously progressed, yet its problems (financial dependence, violation of journalists’ rights, and their insufficient professionalism) remained unresolved.

112 AZERBAIJAN REPUBLIC Economy

The parliamentary election, the third since the country regained its independence, was carried out on a majority basis. In the past, violations were more flagrant and interference of the law enforcement structures more obvious. In 2005, there were practically no such violations, at least in the capital. However, the end result proved to be much less refined than before: in the past there were structures in the country’s legislature which the public regarded as the real opposition, while the newly elected parliament looked different.

ECONOMY

Fuad MURSHUDLI Ph.D. (Econ.), advisor to chairman of the board, International Bank of Azerbaijan (Baku, Azerbaijan)

I n t r o d u c t i o n

he socially oriented market economy cho- process include measures to create a favorable sen by Azerbaijan as a development model investment environment and a proper market in- T for the country is being created through frastructure and to improve the social protection phased liberalization of economic activity com- system. The Azerbaijan economy today is one of bined with active government support for priori- the most dynamically developing economies in ty sectors. Other important constituents of this the world.

Macroeconomic Indicators

Macroeconomic indicators point to the continuation of positive trends characteristic of the republic’s economy since the turn of the century. In 2005, GDP grew by 26.4% (compared to 10.2% in 2004). In terms of GDP growth, Azerbaijan ranked first in the world. Per capita GDP was $1,518, and at purchasing power parity (3.38), $5,129. The main driving force behind this recovery was industrial production, which increased by 33.5% (compared to 5.7% in 2004). This was due in large part to high oil prices and increasing oil production. Fixed capital investment reached 28.9 trillion manats (Azerbaijan’s currency unit, AZM), with investment in production constituting about 87% of the total. In terms of per capita investment ($1,518), the republic is high on the list of CIS and East European countries. According to a report by the U.N. Conference on Trade and Development (UNCTAD), Azerbaijan is the world leader in investment attractiveness. At the same time, the rate of increase in capital investment in 2005 was down to 16.6% compared to 35.4% in 2004. The main reason here was the decline in demand in the oil and gas sector owing to the completion of the bulk of construction work and the related sharp slowdown in the

113 CENTRAL EURASIA 2005 Analytical Annual inflow of foreign investments (4.1% increase compared to 30.4% in 2004), which constitute over two- thirds of total investments. At the beginning of the year, there was a clear upturn in inflation caused by a surge in domestic demand and rising oil prices (which entailed a rise in the prices of imported goods), by an increase in the money supply and a number of other factors. In April, inflation reached a maximum of 15.5%. Then the government announced that its main macroeconomic goal for the year was to reduce inflation to a single-digit figure. And on 31 May the president issued a decree on strengthening anti-inflation measures, setting concrete tasks before all the economic agencies. Control over the execution of the state budget was enhanced, monetary policy was tightened, and a number of measures were taken to improve the competitive environment and ensure more effective financial management. In December, inflation was down to 2.2%, and for the year as a whole it amounted to 9.6%. The prices of food products rose by 10.9%, nonfood products by 5.4%, and services by 9.7%.

Sectoral Composition of the Economy

The oil sector prevails, accounting for more than two-thirds of industrial production. In Febru- ary 2005, the Central Azeri oil field came on stream, and exports from the field began in March. The Azerbaijan section of the Baku-Tbilisi-Ceyhan (BTC) export pipeline was put into operation in May, and the first million barrels of oil was already pumped into the pipeline in July, which was one of the main economic events of the year. The construction of the Baku-Tbilisi-Erzurum gas pipeline was continued (70% of the work has already been performed), and production was started at the Shah Deniz gas condensate field. In April, there was a change in the composition of foreign companies taking part in the oil consortium: Chevron Texaco (U.S.) became the holder of the second largest stake (10.3%). In June, an oil and gas conference and exhibition was held in Baku with the participation of 331 companies from 29 countries. In August, yet another (26th) oil contract worth $400 million was signed with RAFI OiL EfZeI (United Arab Emirates). The large share of oil in industry, in GDP and especially in exports is the country’s main structural problem. This entails another problem: unequal distribution of business activity across the territory of the republic, with the economy mostly concentrated in the capital. The government has been trying to remedy this situation by taking energetic measures to expand non-oil sectors in the regions. In 2004, it adopted a state program for regional economic development, under which hundreds of manufacturing enterprises and sociocultural facilities with about 200,000 new jobs were put into service in 2005. Nevertheless, GDP growth in the non-oil sector fell to about 8.2% (from 14.0% in 2004). One of the reasons here was the slowdown in construction activity (to 2.0%) after the completion of the BTC pipeline. In the transport sector, the fright turnover growth rate was 13.5%. In March, the largest air terminal in the CIS with an annual capacity of up to 100,000 tons opened in Baku. In May, agreements were signed on the construction of two trunk rail corridors: Qazvin-Rasht-Anzali-Astara and Kars-Akhalkalaki-Tbilisi-Baku, the latter being included among the U.N. top-priority projects for the construction of a trans-European railway network. Work was also started on the construction of new highways. All of this will facilitate the country’s deeper integration into the international transportation system. An important aspect of the development of non-oil industries is an effort to optimize the management of oil revenues. With this aim in view, a special program was adopted in February 2005

114 AZERBAIJAN REPUBLIC Economy designed to develop the non-oil sector, raise the level of education (including higher education institutions), help Azerbaijanis to get an education abroad, develop a single system for reducing resource dependence, and achieve other goals of sustainable economic development and poverty reduction. A forum entitled “Oil Revenues and Diversification of the Azerbaijan Economy,” held in Baku in Au- gust, resulted in the drafting of a package of proposals to that effect. In this context, great importance attaches to a joint public investment project launched in August by the country’s Ministry of Econom- ic Development and the United States Agency for International Development (USAID). An advertising campaign to promote local goods was conducive to the development of the non-oil sector and helped to enhance the competitiveness of its products. But in the fall, after the arrest of the minister of economic development,1 it was, unfortunately, scaled down.

Poverty Reduction and Social Protection

Nominal household income in the country increased by 27.0%, and real income, by 16.0%. The average monthly wage rose by 21.9% (to $137). The consumption basket of 585 goods and services was estimated at roughly AZM 260,000 (about $58), and the subsistence level, at AZM 213,000 ($47). Allowances to low-income categories of the population were raised twice during the year (in March and August). In October, the minimum wage was increased by 20%, to AZM 150,000 ($33). That same month, the president signed an order on indexing deposits with the U.S.S.R. Sberbank made by the republic’s citizens prior to 1992. In addition, an Employment Strategy for 2006-2015 was approved and a Law on Targeted State Social Assistance entered into force. Economic growth has naturally helped to reduce poverty to a significant extent (from 40.2% to 29.3%), but its level remains high. At the same time, it should be noted that official statistics do not give an adequate picture of poverty, because the informal economy, which remains one of the largest in Europe (according to the World Bank, about 62%), provides for a relatively large share of informal incomes, although it goes without saying that their distribution cannot be regarded as equitable.

Business

During the year, there was active discussion of factors holding back the development of business. A number of measures were taken to improve the business environment. One of the positive steps in this area was a reduction in the maximum statutory time for state registration of new companies. An appropriate amendment to the relevant law entered into force in September. In order to give business broader access to financial resources, numerous credit fairs were held both in the capital and in the regions. In April, over 300 business people took part in the first congress of the Confederation of Entrepreneurs. In June, the Ministry of Economic Development together with experts from the U.N. Industrial Development Organization (UNIDO) embarked on a project to create an industrial park near Sumqayit (30 km north of Baku) with about 10,000 new jobs. In August, a Fund for the Promotion of Exports and Investments was set up to help domestic business to develop and enter international markets. Note should also be taken of measures to popularize leasing and give businesses broader access to it.

1 See: Section “Politics.” 115 CENTRAL EURASIA 2005 Analytical Annual Finance and Credit

In February, the president signed a decree on the redenomination of the national currency (from 1 January, 2006). That was due to the need to improve currency circulation, simplify the accounting and settlement system, and reduce government spending. One new manat (AZN) equals 5,000 old manats (AZM), so that given the current exchange rate it should virtually equal the U.S. dollar. Dur- ing the year, the old manat will circulate alongside the new one. This redenomination was supported not only by independent experts, but also by members of the opposition. However, it could have certain negative effects as well (for example, generate a degree of technical inflation). The new national currency was officially presented on 28 December. While taking anti-inflation measures, the government was obliged now and again to keep the manat from rising against foreign currencies. The crunch came on what has come to be known as “Black Saturday” in October, when the dollar’s free fall (14-15% in two days) was only halted by means of a massive manat intervention. The explanation of the National Bank of Azerbaijan (NBA) that such a fall was the result of gambling on the financial market was clearly unconvincing, although this factor had evidently played a certain role. However, the root cause of these events was probably that the country is already receiving huge (by the standards of its economy) amounts of petrodollars, which naturally exert pressure on the financial market. In the years ahead, the government as a whole and the NBA in particular will have to display much greater flexibility in exchange regulation matters. The government’s decision to go over (starting from 2006) to predominantly non-cash payments was of great importance. In particular, measures were projected for the use of plastic cards and installation of POS terminals, and also for switching customs and tax payments to a card system. Certain steps were also taken to strengthen the banking system. In March, the president entrusted the Ministry of Economic Development with power to launch a package of measures to reduce the government share in the authorized capital of two state banks, the International Bank of Azerbaijan (IBA)2 and KapitalBank, which is to take place with the participation of these banks themselves. In December, under a newly launched mortgage loan program, the NBA set up a Mortgage Fund. This program has two purposes: to improve people’s living conditions by creating effective financing mechanisms; and to attract local and foreign investors into the mortgage sector. In January, a Central Credit Register containing the entire array of information on borrowers was established at the National Bank of Azerbaijan. In order to attract additional resources and reduce inflationary pressure, the NBA raised the discount rate on three occasions (in May, July and October), bringing it up from 7% to 9% per annum. In September, the National Bank called on the international community to prevent the opening of Armenian banks in Nagorno-Karabakh and the use of the dram (Armenia’s national currency) in that territory as a currency unit. The banks of Azerbaijan worked hard to gain international recognition. In March, the international agency Fitch IBCA confirmed the IBA’s ratings: long-term BB- (outlook stable), short-term B, individual rating D/E, and support rating 3. Such authoritative magazines as Euromoney and The Banker, in July and September respectively, ranked UniBank as the Best Bank in Azerbaijan in 2005. In Oc- tober, yet another IBA branch was opened in Ekaterinburg (Russia), in addition to its representative offices in London and Frankfurt and IBA-Moscow with a branch in St. Petersburg. In January, Azerbaijan presented its national report on action against money laundering and funding of terrorism to the Council of Europe Select Committee of Experts on the Evaluation of Anti- Money Laundering Measures (Moneyval). It is encouraging to note that Azerbaijan was ranked among states basically meeting the standards of the OECD’s Financial Action Task Force (FATF).

2 The largest banking institution in the Caucasus. 116 AZERBAIJAN REPUBLIC Economy

Progress has also been recorded in fiscal reforms. These include measures to upgrade tax legislation and the budget process, the development of a legal framework for targeted social assistance, participation in the initiative to enhance transparency in the mining industries, etc. In January, new amendments and addenda to the Tax Code, mostly concerning taxation of the transport sector and rates of tax on the production of natural resources, entered into force. In Febru- ary, a decree was signed on improving control over the use of state budget funds, and the government traditionally renewed its list of import goods exempt from VAT. An important and growing role in the financial system is played by the State Oil Fund, whose resources are already comparable with the state budget and are expected to exceed it in the next few years. That is why the approval of the Fund’s budget (in March) attracted public attention. In June, the country’s parliament approved amendments to the 2005 State Budget (with an increase in revenue and expenditure by 7.4% and 10.1%, respectively), and in November it approved the 2006 State Budget. The budget deficit is to amount to 1.3% of GDP, with due regard for the repayment of a part of the external debt. In February, the procedure for protecting Azerbaijan’s property rights abroad, including in international courts, was revised. From now on, the costs of such protection are to be covered from state budget funds transferred to the account of the Ministry of Economic Development. Twenty-five percent of income from privatization of state property is to be used for these purposes.

Foreign Economic Relations

As an independent participant in the world process, Azerbaijan has increased its role in the development of the system of international economic relations from year to year, focusing its attention on regional economic cooperation, primarily with countries of the Caucasus and Central Asia. There is active cooperation with Georgia, which accounts for 4.8% of Azerbaijan’s export operations. Trade between the two countries ($253.9 million in 2005) has been growing with a surplus in favor of Azerbaijan ($162.9 million). Cooperation under transnational projects has also been expanding. Together with delegations from Azerbaijan and Turkey, Georgia’s representatives took part in the first meeting (in February) of the working group for the construction of the Kars-Akhalkalaki- Tbilisi-Baku Rail Corridor, which discussed the establishment of a tripartite consortium to implement the project and prepare a feasibility study. In March, the government signed an agreement on resched- uling Georgia’s debt to Azerbaijan in the amount of $16.2 million. In April, the State Securities Com- mittee of the Azerbaijan Republic and the National Securities Commission of Georgia signed a memorandum of cooperation, which is seen as the first step toward the creation of a single securities market in the Caucasus. On 19 July, a forum of business people from Azerbaijan and Georgia was held at the Baku Business Center. And in December, during the Georgian foreign minister’s visit to Azerba- ijan, the parties discussed matters of further cooperation and interaction between the two countries in the transportation of energy resources from the countries of Central Asia and the Caspian basin to Europe, use of their transit potential to ensure long-term security, and the idea of developing a trans- Atlantic energy concept. In view of Armenia’s expansionist policy toward Azerbaijan, economic relations with this Cen- tral Caucasus republic are not maintained. Noticeable changes have taken place in Azerbaijan’s relations with Kazakhstan, the leading country of Central Asia. In April, representatives of the two countries meeting in Baku started talks on the transportation of Kazakhstan oil through the Baku-Tbilisi-Ceyhan pipeline. In June, a two-day

117 CENTRAL EURASIA 2005 Analytical Annual bilateral business forum was held in Baku in order to develop an arrangement for the supply of fruits and vegetables from Azerbaijan to Kazakhstan. And in July, the two countries signed a protocol on expanding economic relations. International economic cooperation is largely promoted by Azerbaijan’s activity in various regional structures (CIS, GUAM, ECO) and projects (TRACECA and North-South international transport corridors). Azerbaijan maintains traditionally close relations with neighboring countries: Russia, Turkey and Iran. The Russian Federation is high on the list of Azerbaijan’s trade and economic partners, and 2005 was declared to be a Year of Azerbaijan in Russia. Its share in Azerbaijan’s foreign trade is 11.7%. In the past year alone, bilateral trade increased by over 20% and exceeded $1 billion. One of the most active Russian business entities operating in the country is the company LUKoil, which takes part in the development of the Shah Deniz field and in the construction of the South Caucasus gas pipeline. In March, the Azerbaijani-Turkish Association of Businessmen initiated the establishment of a Union of Eurasian Businessmen (Russia, together with the aforesaid countries, is to constitute its basis), and a declaration on the establishment of this Union was signed in Baku in Octo- ber. During visits to Azerbaijan by official Turkish delegations, the parties signed a number of intergovernmental agreements in various spheres of the economy. Cross-border cooperation with Iran mostly covers projects in the electric power industry designed to enhance the technical possibilities for energy exchange between the two countries. Economic relations with other Islamic states, including Pakistan and unrecognized Northern Cy- prus, are strengthening as well. In July, a branch of the National Bank of Pakistan was set up in Baku; a direct air route was opened between Baku and Karachi; and a joint business forum was held at the Mid- dle East University in Northern Cyprus. The Azerbaijani-Turkish Association of Businessmen and a number of organizations of Northern Cyprus signed protocols on trade and economic cooperation. The question of Azerbaijan’s integration into Europe came into even sharper focus. Trade with countries of the European Union increased, just as the amount of investment in the Azerbai- jan economy. The EU share in the republic’s foreign trade exceeded 38%. A special place here belongs to technical assistance programs (TACIS). In February, a department of European integration was set up at the TACIS Coordinating Unit in Azerbaijan. Under the European Neighbor- hood Policy program, the parties began drafting an action plan to implement the necessary measures for closer relations between Azerbaijan and Europe. Among the priorities of EU cooperation with Azerbaijan let us note the following: poverty reduction, completion of oil and gas pipelines, modernization of the tax system, and food security. But this cooperation had its weak points as well: Azerbaijan’s low share in the EU countries’ foreign trade and asymmetric commodity structure of mutual trade, when Azerbaijan exported to Western Europe mainly energy resources and raw materials, while exports of manufactures were confined to a narrow range of relatively simple goods and intermediate products. Various business forums with the participation of business people from Azerbaijan and leading European countries (Germany, France, Italy, Finland, etc.) were held throughout the year. Developing economic interaction with the United States was mostly connected with projects for the use of alternative energy sources in Azerbaijan, development of promising deposits of oil, gas, gold, silver and copper, and tourism in Azerbaijan. Trade and economic relations with countries of the Asia-Pacific Region—China and Japan— developed dynamically. Trade with these two countries has been growing steadily, and their companies successfully operate and actively invest in the republic’s economy. In 2005, priority was given to the energy sector: Chinese companies are interested in larger supplies of Caspian oil and seek to increase their investments in this area, and Japanese companies are working on such major projects as the Sangachal Terminal and the Shimal State District Power Station (SDPS). Among the other areas

118 AZERBAIJAN REPUBLIC Economy of cooperation one should note the reconstruction of electric power stations, engineering, agriculture, the textile industry, tourism, and the development of the infrastructure. In March, the governments of Japan and Azerbaijan concluded a grant agreement, under which the republic has purchased 25 new combines for the amount of $1.82 million. Contacts were also on the rise with South Korea, which has expressed an interest in deepening cooperation in the energy and construction sectors, in the field of electronics and information technology. Economic relations with foreign countries should intensify still further in connection with the submission to the WTO (in May) of a package of six documents, which made it possible to start bilateral negotiations.

Cooperation with International Financial Institutions

Significant progress was achieved during the year in cooperation with global and European financial institutions. The International Monetary Fund mostly provided advisory assistance on a wide range of issues, including an improvement of statistical reporting (March), fiscal policy (April), assessment of inflation, targeted social assistance to poor strata of the population (May), implementation of the new economic reform program and development of the non-oil sector (December). The World Bank and members of its group—the International Finance Corporation (IFC) and the International Development Association (IDA)—were active in their relations with Azerbaijan. In January, the World Bank approved a soft loan ($11.3 million) to Azerbaijan for the support of refugees and displaced persons and considered the question of disbursing the first credit tranche ($20 million) for the poverty reduction program. The parties also discussed possible lines of cooperation in the area of infrastructure projects, signed credit agreements (over $20 million) for the development of the postal system and environmental protection in rural areas, and considered the question of a grant ($481,250) for preparing a project to utilize petroleum gas at the Gunashli field. The IFC began implementing corporate governance projects (in the amount of $2.1 million) and signed an agreement to provide a $5 million line of credit to UniBank. And the IDA, for its part, signed an agreement on a $19.2 million credit for poverty reduction. At the same time, when speaking of IMF and World Bank loans, one should draw attention to a number of indicative facts: in June, the government declined an IMF tranche in the amount of $19 million in view of an increase in currency reserves, and in December it took a decision to return to the World Bank $4.6 million saved under the second project of technical assistance for institution building in Azerbaijan (IBTA-2). The European Bank for Reconstruction and Development (EBRD) financed four projects to the tune of $200 million (repair of the Hajigabul-Kiurdamir road, reconstruction of the Baku-Samur highway, upgrading of the locomotive fleet of the Azerbaijan State Railways, and support for small and medium businesses). In November, the EBRD adopted a new country strategy for Azerbaijan, according to which its main operational objectives are the non-oil sector (agribusiness, tourism, telecommunications, general industries), the financial sector, infrastructure and natural resources. In addition, the EBRD became a shareholder in the Mbask insurance company and two commercial banks: Bank of Baku and Azdemiryolbank. In August, the Black Sea Trade and Development Bank (BSTDB) provided a five-year loan of 5 million euros for the purchase of equipment for a glassworks in Baku, and in November it signed an agreement with UniBank on a $3 million revolving line of credit for funding export and import operations. 119 CENTRAL EURASIA 2005 Analytical Annual

The Asian Development Bank (ADB) took a decision to provide Azerbaijan with credits ($104 million) for implementing three projects: one road project ($52 million) and two water projects ($52 million). The Islamic Development Bank (IDB) entered into four loan agreements for a total of $62.4 million. Germany’s KfW Development Bank allocated a technical assistance grant of 1 million euros and a soft loan of 5 million euros for the initial capitalization of the Azerbaijan Deposit Insurance Fund, and also a $500,000 grant for the development of projects to renovate the water supply systems of the cities of Ganja and Sheki. Together with the Sparkassen International Development Trust (SIDT), the KfW became a shareholder in the Republic Bank. In February, the State Securities Committee and Deutsche Bank discussed the latter’s proposal for the issue of Eurobonds by Azerbaijan. A forty-year loan agreement with the Japan Bank for International Cooperation ($273.6 million) for the construction of a combined cycle gas turbine at the Shimal power station, approved in July, will make it possible to ensure stable energy supply to Baku and neighboring areas. Under another agreement approved in July, the Czech Export Bank is to raise a credit ($180 million) for the reconstruction of the Baku-Samur road. In August, one of the leading banks of Kazakhstan, TuranAlem, presented its representative office in Azerbaijan. On 19 August, the IBA signed an agreement with a number of Western banks, including the American Citigroup and the German Commerzbank, on raising a syndicated loan in the amount of $56 million. In May, representatives of the country’s government, UNDP, ADB, EBRD, World Bank and IMF meeting in Baku signed a declaration on the development of a long-term poverty reduction and economic development strategy for Azerbaijan for 2006-2015. Apart from that, the EBRD, BSTDB, IFC, USAID and other foreign financial organizations are involved in microfinance projects, having attracted $100 million for their implementation from foreign sources.

Economic Consequences of Armenian Occupation

In 2005, as in the previous 18 years, the interstate conflict between Armenia and Azerbaijan (Nagorno-Karabakh conflict) exerted a negative influence on every sphere of public life. Its adverse effects will impede the socioeconomic development of Azerbaijan for a long time to come. Armenia seized the Nagorno-Karabakh Region of the Azerbaijan Republic and seven districts adjacent to it. Almost 20% of Azerbaijan’s territory is under occupation, and this has resulted in huge material damage to the republic totaling $26.2 billion. The number of refugees and displaced persons in Azerbaijan is close to one million, with about 60% of them living below the poverty line. In order to improve their material status and everyday living conditions, the government is obliged to allocate significant budget funds, which exerts constant pressure on the economy: in 2005, allocations for these purposes amounted to $153 million. Another $30 million was provided by international financial organizations. Special note should be taken of the environmental damage from Armenian occupation. In the occupied territories, the invaders engage in illegal development of mineral deposits (over 90 officially registered and evaluated mineral deposits are located in these territories), destroy forests, nature reserves, pastures, etc., and deliberately pollute rivers flowing into the Caspian Sea. Under a 1998 agreement with Canada’s First Dynasty Mines Ltd, only in 2002-2003 Armenia produced 5,000 kil- ograms of gold from the Zod deposit in the Kelbajar District (located outside Nagorno-Karabakh). In

120 AZERBAIJAN REPUBLIC Religion defiance of international legal norms, Armenia has set up a joint venture with India’s Sterlite Gold Ltd and has continued to develop this deposit, laying waste 500 hectares of adjacent territory. In view of this, and also because of the forced cessation of rail and road communications with the Nakhchyvan Autonomous Republic (blockaded over the past 18 years) and of transit traffic through its territory, Azerbaijan’s budget annually loses colossal amounts.

C o n c l u s i o n

So, 2005 was a period of active implementation of concrete plans and programs oriented toward sociopolitical and macroeconomic stability, structural reforms, improvement of the business climate, a massive inflow of investment into the oil sector, enhancement of its export potential, faster growth of production in the non-oil industries, and a significant increase in real household income. On the whole, objective conditions have been created in the country for dynamic economic and social development. In many respects, Azerbaijan remains the most attractive country for investment. Its leadership’s strategy of socially oriented market transformation has created prerequisites for accelerating economic development and integrating the republic into the world economy in cooperation with friendly countries and international financial institutions.

RELIGION

Elmir KULIEV Director, Department of Geoculture, Institute of Strategic Studies of the Caucasus (Baku, Azerbaijan)

he religious community of Azerbaijan entered op a civil society led the people to expect that reli- 2005 with the hope that all the problems region would become an element of public life. The T lating to the rights of believers would be re- state still has to create religious stability and raise solved in the near future. The economic and admin- religious tolerance in order to rule out religious rad- istrative changes carried out by the country’s new icalism and extremism, as well as any attempts to turn leaders, as well as the measures designed to devel- religion into a political instrument.

The Current Situation

About 96 percent of the country’s population are Muslims; while 4 percent are the followers of other religions. There are over 1,500 religious communities in the republic, 29 of them are non-Islam-

121 CENTRAL EURASIA 2005 Analytical Annual ic: 12 are Protestant; four are Christian Orthodox (including Albanian-Udin); six are Judaic; three are Bahai; three are Molokan; and one is Krishnaite. Only 335 of the total number are registered with the State Committee for Religious Organizations (hereinafter, the Committee). Five of the earlier registered were deprived of registration. Historically, the Administration of the Muslims of the Caucasus (AMC) is considered the Mus- lim communities’ organizational center; it controls the groups wishing to be registered with the Com- mittee. The AMC also has the following powers: it monitors adherence to the Shari‘a; trains the clergy; appoints akhunds to the mosques; and organizes annual pilgrimages to Mecca. There is an Attestation Commission functioning under the AMC which assesses the level of the clerics’ religious knowledge. Most of the local Muslims traditionally follow the Shi‘a (the Imamiyya) and Sunni (Shafi‘ite and Hanafi) madhabs. While Shi‘ites live all over the country, Sunnis mainly live in the capital and in the north. Sufism of the Naqshbandiyya and Qadiriyya Tariqahs is popular among those who follow the Shafi‘ite madhab. Late in the 1980s, followers of non-traditional Islamic trends appeared in Azerbaijan, the most active among them being the radical Shi‘ites, Wahhabis, Nursites, and the Sufi Tariqahs. Radical Shi‘ites, who are inspired by the religious and political ideas of Khomeini, live mostly in the south where their mosques are concentrated. They have supporters in Baku and its environs, and in the Guba District. The loyal Wahhabis live all over the republic, but mostly in Baku, in the north and northwest. Their ideas are preached in about two dozens of mosques. Recently the radical Wahhabis played down their activeness, mainly due to the efforts of the law enforcement bodies. Still, certain incidents in the republic show that religious radicalism is still a serious problem. The followers of Sayid Nursi live mainly in Baku, Sumqayit, and the Sheki-Shirvan zone. They are actively planting their supporters in education (today they run over 10 lyceums) and state administration. They also have a large share of Turkish business at the local markets concentrated in their hands. The followers of influential Daghestani Sheikh Avar Sayid-efendi Chirkeevsky are very active in the northwest of the country. His teaching is based on the Tariqahs Naqshbandiyya, Shaziliyya, and Jazuliyya (today, his murids control the Spiritual Administration of the Muslims of Daghestan). There are about 5,000 of his followers in Azerbaijan, mostly Avars. Christianity is represented by Orthodoxy (the Russian and Georgian churches), Catholic and Protestant trends, as well as various sects. The Armenian population of Nagorno-Karabakh follows the Armenian Gregorian Church. The Russian Orthodox churches are united into the Baku-Caspian Eparchy restored on 28 De- cember, 1998; there are 11 Molokan communities which adhere to the Old Believer traditions, yet never promote their religious ideas. There are no more than 500 of them and their numbers are gradually diminishing. Late in the 20th century, the Albanian Church, which was liquidated by the czarist government in 1836, was restored in Azerbaijan. In the 19th century, its property was transferred to Etchmiadzin: the Karabakh churches were called Armenian and the Christian population was registered as Armeni- an. Today, the Udins (there are about 6,000 of them) are the followers of the Albanian Church; 4,400 of them live in a compact group in the village of Nidj in the Gabala District. On 10 April, 2003, the Albanian-Udin Christian community was registered. In 1999, the Roman Catholic community was registered with the Ministry of Justice; later it was re-registered with the Committee. It has two Vatican-appointed priests; in 2001, the Catholics bought a prayer house for local parishioners (there are about 150 of them; up to 200 foreigners also attend the services).

122 AZERBAIJAN REPUBLIC Religion

The registered Baptist communities have about 3,000 followers in Baku, Sumqayit, and Ganja; there are also unregistered groups in 17 towns and settlements. In 2004, the Union of the Baptist Churches of Azerbaijan held its constituent congress. There are several communities of the Seventh Day Adventists, the largest of them are found in Baku, Ganja, Nakhchyvan, and Terter. The Baku and Ganja communities are registered with the Committee. The total membership is about 700. There are three registered Pentecostal communities which actively propagate their teaching and a community of the New Apostolic Church with over 400 followers. The Evangelical Lutheran community was registered in 1993 with the Ministry of Justice; later a new Lutheran community was registered with the Committee; today there are about 80 parishioners in the Baku church, while there are about 700 Germans (who are supposed to be Lutherans) living in the republic. The Jehovah’s Witnesses were registered with the Ministry of Justice in 1999, yet small groups of missionaries arrived much earlier, in 1983. According to certain sources, today the community is 1,200 strong; the largest of its meetings, however, are attended by no more than 250 people. Not infrequently foreign missionaries help the community to propagate its ideas—this creates tension in the community’s relations with the authorities. The Armenian Gregorian Church enjoys a special status in Armenia-occupied Nagorno-Kara- bakh. Throughout 2005 some of the human rights organizations followed the changing fortunes of several members of the Protestant sects (Baptists and the Jehovah’s Witnesses) who refused to serve in the separatist military forces because of their religious convictions and were sentenced to prison terms. In June 2005, one of them, Armenian citizen Armen Grigorian, was sentenced to two years in prison. From time to time, the Azeri media inform the public of the plans to build new churches on the occupied territories, which is normally interpreted as an attempt to deliberately change the region’s ethnic and religious structure. Early in August, the AMC described the intention of Bishop of the Armenian Church Pargev Martirossian to restore the mosque in Shusha as provocative and hypocritical. According to certain estimates, there are 15,000 to 20,000 Judaists in the republic; the Mountain Jews form the majority of the republic’s Jewish diaspora, 4,000 of them live in the Guba District; there are 7,000 to 8,000 Ashkenazi Jews, most of them found in Baku and Sumqayit; there are also about 700 Georgian Jews in Azerbaijan. It should be said that the Kransnaia Sloboda settlement of the Guba District is the only place in the post-Soviet expanse where Mountain Jews live in a compact group. The Bahai community was officially registered with the Ministry of Justice in 1993; in 2002, it was re-registered with the Committee simultaneously with another Bahai community in Sumqayit. The Baku Bahai center holds regular meetings and conferences devoted to historical dates and events. In 1986, the Baku branch of the International Society for Krishna Consciousness (ISKCON) began its activities; the community registered in 1990 has over 200 followers; they hold daily services in the Baku prayer house. Recently, non-traditional trends stepped up their activities for several reasons: influenced by the ideas of socialism in the past and the ideas of liberalism at present, some of the local people moved away from their spiritual and ethnic roots; there is a lot of mistrust in the mullahs and traditional clerics; the traditional values are poorly explained and promoted; there are many social problems, while some of the foreign companies prefer Christian employees. The nation’s historical memory reflects the period of domination of Christianity, Zoroastrianism, and even earlier beliefs. Given the right conditions, it would not be difficult to turn to the systemic values of other religions, the memory of which is stored in the mass consciousness. At the same time, the number of cases where people changed their faith and joined destructive sects dropped because of improved social conditions and improved religious education.

123 CENTRAL EURASIA 2005 Analytical Annual

Today there are about 1,300 mosques functioning in the country, 500 of them supported by the state; 150 mosques were built on foreign and charity money. There are 60 mosques in the capital. The oldest and the largest mosque—the Juma Mosque in Shemakha—was founded in 744. There are over 50 churches, prayer houses, and synagogues in the republic. Five registered Christian Orthodox churches belong to the Baku-Caspian Eparchy (three of them are found in Baku); Ganja and Hachmas have one each. The Cathedral of the Holy Wives in Baku is the central church, in which the bishop leads the services. The Georgian Orthodox Church has four churches; the Armenian Gregorian Church has five churches (three of them in Nagorno-Karabakh). In September 2005, the foundation of the Roman Catholic Cathedral of Immaculate Conception was laid in Baku on the plot of land transferred to the community free of charge in 2003 during the visit of Pope John Paul II. The Molokan Spiritual Christians own 11 prayer houses; the Baptists have six; the Seventh Day Adventists also have six; and the Pentecostals and the Jehovah’s Witnesses have one prayer house each. Four prayer houses belong to other Protestant sects. The Evangelical Lutheran community holds its Sunday services in the Baku Hall of Chamber and Organ Music (formerly a Protestant church). Six synagogues function in Baku, Oguz, and the Guba District. The Baku Krishna Consciousness Asso- ciation has a two-story prayer house; the Bahai community has two prayer houses—in Baku and Sumqayit. Over 70 architectural monuments of Muslim and Albanian-Christian culture can be found in five districts of Nagorno-Karabakh; some of them date back to the 4th century; and there are 60 religious monuments in the occupied districts adjacent to Nagorno-Karabakh. According to statistics, 44 Albanian-Christian churches, nine mosques, nine palaces, 927 public libraries, and 464 monuments of art and museums were destroyed in the occupied territory; about 40,000 museum exhibits were stolen. The citizens of Azerbaijan have the right to receive religious education, individually or collectively. The main Muslim religious educational institution in the republic, the Islamic University, was opened in 1991; today it has three regional branches. Since 1992, specialists in Islam have been trained at the Department of Theology of Baku State University. In August 2001, 22 madrasahs, the curricula of which did not correspond to the law, were closed. Today there are four madrasahs in the Sheki, Agdash and Zakataly districts. As of January 2005, there were 16 official courses of Koranic studies, and many more unofficial courses. The non-Islamic communities also run study courses. Over 500 people are studying abroad with the help of AMC: over 200 of them are educated in Iran and about 160 in Egypt. About 2,000 young Azerbaijani men and women (the figure is unofficial) are studying in religious educational establishments in Syria, Turkey, Pakistan, Saudi Arabia, Russia (in Tatarstan and Daghestan), and Malaysia. There is no information about the number of Azeri citizens studying in Christian, Judaic, and Buddhist educational establishments abroad. Judging by the steadily increasing number of missionaries educated abroad, the figure is large. The Committee is supposed to control the process. The fundamentals of religion are not taught in secondary schools, but this is not banned. In recent years, the issue became a source of discord between the Committee and the Ministry of Educa- tion, which objects to this discipline as part of school curricula for want of trained teachers and teaching programs. The public, on the whole, welcomes the idea, yet is doubtful about the Committee-supported idea that the fundamentals of Islam should be taught together with the fundamentals and traditions of other world religions. Schoolchildren might become disoriented, which would negatively affect their national and cultural self-identification. Late in 2005, the president of Azerbaijan endorsed the state program “The Youth of Azerbaijan: 2005-2009,” which, in particular, speaks of the need to teach schoolchildren national spiritual values during and after school hours.

124 AZERBAIJAN REPUBLIC Religion

There are several religious publications in Azeri: the Islam Press and Nabz newspapers and the Kalam journal. In 2005, a new journal Fitrat was started to promote radical Islamic ideas of various types ranging from the views and opinions of Ayatollah Khomeini to the Muslim Brothers’ ideas; there are also quarterlies Manavi Saflyg and Irfan; in the middle of May, a weekly Eni Hikmet appeared. In the past, some of the religious publications were discontinued for financial reasons. Pilgrimage to Mecca is the central annual event of the republic’s religious life. It is organized by the AMC, which has a relevant agreement with the Ministry of Hajj of Saudi Arabia. The Ad- ministration distributes quotas among tourist companies. Recently, Azerbaijan has been receiving larger quotas: in 2003, it was 2,000 persons; in 2004, 2,200; and in 2005, 2,300. In 2006, the republic received 2,800 places, but in the end, a much larger number, about 3,450 Azeri citizens, performed the hajj. Previously, the number of people wishing to perform the hajj was much lower than the quota. The local people follow the tradition of visiting the tombs of saints and other local pilgrimage places: there are about 550 of them in Azerbaijan (about 30 are in the Nakhchyvan Autonomous Re- public), most of them are AMC-controlled. By the end of 2005, only 14 of them had been registered. Many of the communities are engaged in humanitarian actions, some of them being connected with Islamic customs: during the Gurban-bayram religious festival, the meat of slaughtered animals is distributed among the needy; meat and other foodstuffs are also distributed during the Ramazan-bayram festival. Missionary organizations also carry out charity work.

Relations Between the State and Religion

The Constitution of Azerbaijan guarantees every citizen freedom of conscience and the right to independently choose a religion and profess it personally or together with other people, or not to profess any religion, as well as to express and promote his convictions related to his attitude toward religion (Art 48). Religion shall be separated from the state; all religions shall be equal before the law; the spread and promulgation of religions which humiliate human dignity and contradict the principles of humanity shall be banned. The state educational system shall be of secular character (Art 18). Under the Law on Freedom of Worship, freedom to worship may be limited for considerations of state and national security, as well as to protect the rights and freedoms of citizens (Art 1). The law was adopted in 1992; even though it was amended several times in 1996-2002, the public insists on improving the laws in this sphere. The law does not stipulate that the funding of religious communities should be transparent, which is necessary to fight religious extremism. There is a lot of discussion about the communities’ dependence on republican or foreign religious centers (Art 9). It is also expected that in 2006 this law will be amended with respect to the right of individual groups of believers to alternative military service. The Committee set up in 2001 serves as a link between the state and the religious communities, which means that it implements the ideas of the country’s leaders in the religious sphere. The Com- mittee insisted on prohibiting religious propaganda by foreign citizens (since 2005, some European states have been practicing similar policies). The Committee allows or bans the publication, import, and distribution of religious literature in the republic. In 2005, over 500,000 copies of such publications were brought into the republic, 30 percent less than in 2004. It should be said that the Law on Freedom of Worship does not restrict the right of physical persons to bring in books for personal use, yet they, too, sometimes encounter such problems.

125 CENTRAL EURASIA 2005 Analytical Annual

Early in October 2005, a Council of Religious Experts was set up under the Committee with the aim of establishing order in the religious education system; it is expected to set up a database on religious communities and to invite the communities to help resolve social problems. The Committee also initiated a Republican Center called Spiritual Health for the Rehabilitation of Victims of Religious Violence. It should be said that the religious upsurge of the late 1990s was replaced with a better understanding of the meaning of religion and its role in public life. The upper echelons of power have finally realized that religion can and should be used to strengthen national unity and political stability, yet progress in this direction is very slow and cautious. In 2005, the public continued to discuss the protection of the rights of believers, who are especially displeased with the fact that the Ministry of Internal Affairs refused to issue identity cards and passports to Muslim women who were photographed for these documents wearing hijabs. In Decem- ber 2004, a group of Muslim women complained about this to the European Human Rights Court. In some places, Muslim women who worked in schools and state offices were told not to appear at their work places with covered heads. On 30 March, a teacher at the Istedad lyceum in Sumqayit was fired for this reason. In June, the city court confirmed her right to wear hijab during work hours, and the school was obligated to pay her the salary for the entire period she was out of work. This fact demonstrates that understanding is gradually forming between the authorities and the faithful, even if slowly and not without setbacks. In 2005, another debatable issue was resolved, this time contrary to what the believers wanted. I have in mind alternative service for those who refuse to serve in the army for religious convictions. On 4 February, the Supreme Court ruled that every young man who is a member of a religious community should serve in the army like every other young male citizen of the Azerbaijan Republic, irrespective of his religious ideas. The Constitution registered the right to alternative service for religious convictions in Art 76, yet after several months of court proceedings in lower instances, the Supreme Court ruled that alternative military service was not applicable to everybody subject to conscription while Azerbaijan remained in the state of war with Armenia. As distinct from the public feelings aroused by the case of the hijabs, this time the public supported the authorities. The state does its best to stem any attempt to use religion as a political tool: recently several Islamic humanitarian organizations lost their registration, including on the charge of their ties with terrorist structures; and several foreigners who tried to promote religious extremism and destructive ideas were deported. The Islamic Party of Azerbaijan (IPA) and the Islamic Democratic Party (IDP) are still waiting to be registered with the Ministry of Justice. Back in 1992 when the Popular Front was in power, the IPA was registered; its registration was annulled on the eve of the 1995 parliamentary election. In 2005, many of the Muslim leaders were involved in political activities in connection with the parliamentary election of 6 November. Several of them intended to run for the Milli Mejlis, yet the Central Election Commission rejected most of them. The Constitutional Court only allowed IPA Chairman G. Nuri to run for parliament; E. Abramov, a member of the Krasnaia Sloboda community of the Mountain Jews, was also elected to become the first ever representative of the Jewish community in the parliament. In Azerbaijan all religions are equal: the state defends the rights of the Muslims to the same extent as the rights of the followers of all the traditional confessions present in the republic. Throughout the year, the authorities regularly met heads of religious communities at seminars and other events, which improved mutual understanding and strengthened their ties. The organizations which joined the Alli- ance of Religious Communities “For the Sake of Peace and Harmony” were extremely active. Set up late in 2004, the structure unites over 40 communities of various confessions; some of the local and foreign NGOs and international organizations contribute to the religious dialog.

126 AZERBAIJAN REPUBLIC Religion Religious Revival: Today and Tomorrow

By the early 21st century, the process of religious revival dating back to the latter half of the 1980s accelerated. More and more people embrace religious practices; in the south, closer to Iran, religious identity predominates. The secular nature of Azerbaijan, however, makes religious affiliation strictly private. The events of 2005 have confirmed that there are three large groups in the country’s Muslim community. The traditional clergy united under the AMC forms one group, which is opposed by two other groups of believers: the renovationists and the sectarians. The former are the socially and politically passive majority of the nation’s religious population, which studies and practices Islam in search of spiritual purification. The latter form an active minority supported by foreign missionaries and structures pursuing political aims. Today, the two groups have much in common: both suppress the individuality of their followers, while some of their ideas do not let people develop as individuals; they preach simplified religious ideas and seek purely formal relations. As opponents of the secular state, they both want to move Islam to the center of public life in Azerbaijan. Under these conditions, it was necessary to let everyone know that the state was not merely responsible for the country’s social and economic development, but also for the nation’s spiritual health, its ethnic and cultural traditions, humanistic principles, morals and ethics. The local intelligentsia, the academic community in particular, has pointed out that the faithful should not be isolated from the rest of society and should be involved in public, political, economic, and cultural developments. To cope with this task, the communities were invited to present social programs of their own to channel their energy into social activities and social ethics. This process might consolidate and develop the relations between the state and religious organizations and will help to counteract attempts to make religion a political tool and to proliferate extremism. Religious communities can help to strengthen national unity, and support orphans, refugees, and forced migrants; they can help the sexes to better understand their roles in order to diminish violence at home. They can help families and society as a whole to preserve and develop cultural traditions; they can also fight smoking, drug and alcohol abuse, and help to raise the level of spiritual culture and education of the faithful and non-believers. On the other hand, social tension is still preserved because civil society is undeveloped and the communities still lack the proper mechanisms to function. Most religious figures have not yet realized the need to form full-blooded communities as centers of spiritual assistance to society, rather than being mere groups of co-religionists. Their consumer psychology still keeps the communities dependent on the local authorities or foreign sponsors and does not allow them to fulfill their social mission. The laws do not allow the communities to fully tap their religious potential to fortify their social base. This is primarily true of non-alienable (wakuf) property in Islam similar to church property in Christianity. Today, a law on such property is overdue, while some clerics are still against it. The country also needs measures which will allow it to use the religious factor to attain firmer stability. Globalization has made preservation and promulgation of spiritual and ethical values a national priority; at the same time, social consciousness must be reformed to allow acceptance of the values of liberalism and an open society together with traditional culture. It has become more important to maintain a balance between secular and religious principles in society rather than setting them against each other. To achieve this, the graduates of theological departments should also obtain an obligatory secular higher education.

127 CENTRAL EURASIA 2005 Analytical Annual

Certain religious leaders interpreted the defeat of the opposition at the parliamentary election as the beginning of an ideological shift in the country, which would finally arrive, they hoped, with Is- lam as the central value. They obviously overestimated political Islam’s potential in Azerbaijan—today, supporters of political Islam in the republic are few and far between, but no one can exclude the possibility that under certain conditions they will be able to persuade not only the loyal part of the faithful, but also that part of the opposition which does not profess Islam. The low level of spiritual culture is a feature of the present stage of religious revival. In most cases, a religious lifestyle and its promulgation are divorced from the moral education and spiritual traditions handed down from one generation to another. This adds to the axiological crisis and contributes to the spread of false religious ideas. Aware of the gravity of this problem, religious intellectuals are spending much time studying the philosophy and history of religion in an effort to supply the ethical norms with artistic form to create new spiritual and moral images.

INTERNATIONAL AFFAIRS

Jannatkhan EYVAZOV Deputy director of the Institute of Strategic Studies of the Caucasus, executive secretary of Central Asia and the Caucasus (Baku, Azerbaijan)

A g e n d a o f t h e Y e a r

was not a year in which Azerbai- reinforcing the republic’s international position in jan did any serious rethinking this respect, integrating into European and Euro-At- 2005 about its relations with the outside lantic structures, and establishing relations with its world. The country’s leadership retained its main closest neighbors. What is more, in this context, the foreign political priorities, and efforts were large- parliamentary election held on 6 November should ly directed toward resolving the following issues: be singled out in particular. It had an unprecedented settling the conflict with Armenia, implementing influence both on Azerbaijan’s domestic political sit- transregional energy and transportation projects and uation and on its international contacts.

International Activity

At the end of 2004-beginning of 2005, relations with Iran underwent a perceptible upswing. In December 2004, high-ranking Iranian officials, including Defense Minister Ali Shamkhani and Secu- rity Minister Ali Yunisi, visited Azerbaijan. Many analysts assessed these visits, as well as the partici-

128 AZERBAIJAN REPUBLIC International Affairs pation of Azerbaijan’s delegation in a meeting of the bilateral Intergovernmental Commission on Economic Cooperation held in Tehran, as preparations for Azerbaijan President Ilham Aliev’s official visit to the Islamic Republic of Iran (IRI). Both sides pinned particular hopes on this visit with respect to finding a solution to the most urgent problems in bilateral relations. In January, the preparation and adoption by a PACE of a resolution on the Conflict over the Nagorno-Karabakh Region Dealt with by the OSCE Minsk Conference aroused a flurry of diplomatic activity. Azerbaijan responded unequivocally to this document, but on the whole sociopolitical circles assessed it as a diplomatic victory. The resolution included several provisions which strengthened Azerbaijan’s negotiating stance. This primarily applies to the first article of the resolution, which states: “Considerable parts of the territory of Azerbaijan are still occupied by Armenian forces, and separatist forces are still in control of the Nagorno-Karabakh region.”1 The first ten days in February were marked by active contacts with NATO, in particular by visits by Assistant Secretary General of the North Atlantic Alliance for Security Issues Patric Har- down and NATO Secretary General’s Special Representative for Central Asia and the Southern Caucasus Robert Simmons. The main issue discussed at the talks was the expansion of bilateral cooperation, in particular finishing up work on the Individual Partnership Action Plan (IPAP). In February, the country’s president made two foreign visits: a working visit to Russia and an official visit to Italy. March was a particularly busy month in this respect, during which the head of state paid official visits to Saudi Arabia, China, and Poland. An important event in March was completion of the work of a special OSCE mission and publication of its report on the Situation in Nagorno-Karabakh as a U.N. General Assembly document. But even prior to this, in the fall of 2004, on the initiative of official Baku, the General Assembly approved a resolution on the situation in the occupied territories of Azerbaijan, in which the OSCE was asked to urgently send a multinational fact-finding mission to carry out an investigation and present a report on the situation in the occupied territories. The mission revealed facts which justified Azerba- ijan’s concern about Armenians settling in the occupied territories. Commenting on the results of the investigation, Azerbaijan Deputy Minister of Foreign Affairs Araz Azimov said that the facts established by the mission correlated with those presented by official Baku. For example, according to the Azerbaijan government, 20-23,000 people have settled in the occupied territories, while the mission’s statistics were 15-16,000.2 In April, intensive contacts with the OSCE continued, during which, as throughout the whole of 2005, settlement of the Armenian-Azerbaijani conflict and carrying out of democratic reforms in Azer- baijan, as well as the holding of free and fair parliamentary elections, were discussed. This last topic was also discussed during OSCE Chairman and Foreign Minister of Slovenia Dimitrij Rupel’s visit to Az- erbaijan at talks with representatives of the government, opposition, and the nongovernmental sector. Along with this, in April, the U.S. noticeably stepped up its foreign policy activity with respect to Azerbaijan, which was shown by the following high-ranking U.S. officials’ visits to the republic: Deputy Commander of the European Command (EUCOM) Charles Wald, Defense Minister Donald Rumsfeld, and U.S. State Department’s Senior Advisor for Eurasia Steven Mann. The public showed great interest in the visits by the Pentagon representatives. The details of the talks were not disclosed, but official statements noted that their participants discussed aspects of developing bilateral cooperation in the military sphere. However, unofficial sources provided more specific information, according to which these talks focused on such issues as deploying mobile forces in order to protect the Baku-

1 Parliamentary Assembly of the Council of Europe, Resolution 1416 (2005) [http://assembly.coe.int/Documents/ AdoptedText/TA05/ERES1416.htm], 12 January, 2005. 2 See: Zerkalo, 19 March, 2005 [http://www.zerkalo.az/new/arcview.php?dayar=19&month=3&year=2005&category= 2#27507], 11 January, 2006. 129 CENTRAL EURASIA 2005 Analytical Annual

Tbilisi-Ceyhan (BTC) pipeline;3 creating a so-called Caspian Guard—a special subdivision with its headquarters in Baku for monitoring the water area of the Caspian Sea and guarding the land borders of Azerbaijan and Kazakhstan;4 and using Azerbaijan’s territory in the event of a military campaign against Iran. These issues blend extremely well into the overall picture of the geopolitical processes in Eurasia related to the development of the antiterrorist campaign, the abrupt deterioration in Amer- ican-Iranian relations, and the plans of the U.S. military command to re-deploy military bases from Western Europe to the East. In April, the country’s president, Ilham Aliev paid official visits to Pakistan and Moldova, states which view Azerbaijan as one of their closest allies. Relations with Moldova are based on similar strategic priorities, which are also being executed through different international forums functioning in the post-Soviet space, primarily GUAM. The visit to Moldova was a graphic example of this. In addition to promoting bilateral relations, one of the purposes of this visit was for Ilham Aliev to participate in the GUAM Kishinev summit, at which settlement of the conflicts in Transdniester, Abk- hazia, South Ossetia, and Nagorno-Karabakh was discussed.5 During the summit, Ilham Aliev held bilateral meetings with the leaders of Rumania, Ukraine, Georgia, and Lithuania. The summit ended in the adoption of the Kishinev Declaration “In the Name of Democracy, Stability, and Development.” In April, no noteworthy progress was made in the talks on settling the Armenian-Azerbaijani conflict. Nevertheless, the meeting of the foreign ministers of both countries held on 15 April in Lon- don with the cochairmen of the OSCE Minsk Group within the framework of the Prague Process provided more graphic evidence of the immense difference in the sides’ opinion on the issue. An agreement was reached to hold another round of talks on 27 April in Frankfurt, which, incidentally, did not take place due to Armenia’s refusal to take part in it. In May, the talks on this issue were continued (at the presidential level) in Warsaw with the participation of the cochairmen of the Minsk Group and the foreign ministers of the Russian Federa- tion and France. But these talks did not lead to any major breakthrough in the settlement process either. When they ended, Azerbaijani Foreign Minister Elmar Mamediarov noted that “the sides discussed the possibility of enforcing the Prague agreements on Karabakh.”6 According to Araz Azimov “…as many as nine issues are being discussed at the talks on settlement of the Karabakh conflict, each of which has sub-topics.” The deputy minister designated the following questions among those under discussion: returning the occupied territory; withdrawing the troops; ensuring security; creating conditions for returning the population; demining the territory; and rehabilitating the territory.7 On the whole, in May, despite the lack of obvious results, international activity continued to buzz around the Nagorno-Karabakh conflict, as evidenced by visits to the region by EU Special Representative for the Southern Caucasus Heikki Talvitie and the cochairmen of the OSCE Minsk Group. The trend toward intensifying Azerbaijani-Iranian contacts was designated once more during a visit by Azerbaijan’s defense minister in May to Tehran, where the Memorandum on Cooperation in the Military Sphere was signed. Observers directly tied this event to the April visits to Azerbai- jan by high-ranking Pentagon representatives. The question of the United States’ military presence in Azerbaijan and use of its territory in the military operation against Iran, which was widely discussed in political circles against a background of confidentiality of American-Azerbaijani contacts,

3 See: Zerkalo, 12 April, 2005 [http://www.zerkalo.az/new/arcview.php?dayar=12&month=4&year=2005&category= 3#27973], 11 Januray, 2006. 4 See: M. Chernov, “Kaspiiskoe more stanet amerikanskim” [http://www.ir.spb.ru/chernov-204.htm], 11 December, 2005. 5 See: Nezavisimaia gazeta, 25 April, 2005 [http://www.ng.ru/cis/2005-04-25/6_guaam.html], 11 December, 2005. 6 Zerkalo, 17 May, 2005 [http://www.zerkalo.az/new/arcview.php?dayar=17&month=5&year=2005&category=1], 11 January, 2006. 7 See: Zerkalo, 20 May, 2005 [http://www.zerkalo.az/new/arcview.php?dayar=20&month=5&year=2005&category= 2#28892], 11 January, 2006. 130 AZERBAIJAN REPUBLIC International Affairs could not help but attract the attention of official Tehran. This was fraught with the danger of the southern neighbor having an inadequate response to the situation. It appears that Azerbaijan was trying to ap- pease the Iranian authorities by signing the mentioned memorandum. While the latter saw this document as another step in Azerbaijan’s neutralization in the event American-Iranian relations developed along the worst possible lines. The situation relating to the withdrawal of Russian military bases from Georgia had a significant impact on Azerbaijan’s political activity in the region. For example, serious concern was aroused in Azerbaijan by the news that some of the armaments (according to some data, up to 40%)8 would be sent to the Russian army base deployed in Giumri, Armenia. Official Baku’s protest against these plans was expressed in a note sent on 23 May by the country’s Foreign Ministry to the Russian Ministry of Foreign Affairs.9 Some analysts believe that it is precisely the building up of Armenia’s military potential with the help of its CSTO ally, that is, Russia, that compelled official Baku to raise the country’s military budget by 70% in 2006.10 The end of the month was marked by perhaps the main event of the year, a ceremony was held on 25 May at the Sangachal Terminal, approximately 40 km from the capital, to launch the Baku-Tbilisi- Ceyhan (BTC) pipeline11 (its Azerbaijani section began to be filled with oil). For Azerbaijan, this meant not only that so-called “big oil” could now be exported, but it also gave the country a lever of influence on resolving political problems. This lever became more significant due to the official beginning of the implementation of another transregional transport project, that is, the signing of a Declaration on Creating the International Kars-Akhalkalaki-Tbilisi-Baku Rail Corridor.12 During the summer, the intensity of international contacts naturally slackened off. A certain amount of diplomatic activity continued around the key regional (the conflict with Armenia) and domestic (the parliamentary election) problems, but nothing more than this. This period was more reminiscent of a breather between the arduous international ups and downs of the spring—maneuver- ing in the aggravated American-Iranian relations, forming transregional corridors, the unproductive talks with Armenia—and the fall-winter months, which promised to be no less arduous, particularly with respect to the upcoming parliamentary election. Nevertheless, Azerbaijan’s president Ilham Aliev made four foreign visits in the summer—an official one to Croatia and three working ones: to St. Petersburg, to participate in the ninth International Economic Forum, to Kiev, to participate in the international investment forum, and to Kazan, to participate in the anniversary events on the occasion of the city’s 1,000th anniversary and in the CIS summit. The talks on settlement of the Armenian-Azerbaijani conflict, which showed no perceptible results, continued in June at the foreign minister level in Paris. They were made memorable by Azerbaijan’s proposal to restore the Agdam-Khankendi-Shusha-Lachin (Azerbaijan)-Goris-Sisian (Armenia)-Shakh- buz (Nakhchyvan Autonomous Republic) motorway with access to Turkey.13 What is more, in June Turkish Prime Minister Recep Erdogan paid an official visit to Baku. Several months prior to this, the number of bilateral cooperation issues was augmented by another

8 See: Kavkazski uzel/Daijest SMI. “Zakrytie rossiiskoi bazy v Gruzii meniaet strategicheskii balans,” 6 July, 2005 [http://kavkaz.memo.ru/printdigest/digest/id/826615.html], 17 December, 2005. 9 For more detail, see: Zerkalo, 24 May, 2005 [http://www.zerkalo.az/new/arcview.php?dayar=24&month=5&year= 2005&category=3#28926], 11 January, 2005. 10 See: Kavkazski uzel/Daijest SMI… 11 The total length of the Baku-Tbilisi-Ceyhan pipeline is approximately 1,760 kilometers. Its throughput capacity is 50 million tons of oil a year (see: [http://en.wikipedia.org/wiki/Baku-Tbilisi-Ceyhan_Pipeline], 18 January, 2006). 12 Within the framework of this project, there are plans to build a Kars-Akhalkalaki railroad 98 km in length (68 km through Turkey and 30 km through Georgia) and restore the Akhalkalaki-Tbilisi railroad. The approximate cost of the project is estimated at 400 million dollars (see: Podpisana deklaratsiia po sozdaniiu zh/d koridora Kars-Tbilisi-Baku // Logistic.Ru, 26 May, 2005 [http://www.logistic.ru/news/2005/5/26/15/51751.html], 18 December, 2005). 13 See: Zerkalo, 21 June, 2005 [http://www.zerkalo.az/new/arcview.php?dayar=21&month=6&year=2005&category= 2#29460], 11 January, 2006. 131 CENTRAL EURASIA 2005 Analytical Annual important aspect for official Ankara—the need to withdraw North Cyprus (TRNC) from international isolation. For example, at the end of May at a joint conference held during Recep Erdogan’s previous visit to Baku, Azerbaijan’s president, Ilham Aliev, noted: “…Azerbaijan will do everything to withdraw North Cyprus from international isolation. In particular, the offices of Azerbai- jani tourist companies will soon open in Cyprus. There will also be direct air flights from Azerbai- jan to North Cyprus.”14 As the parliamentary election drew nearer, international activity aimed at ensuring its democratic nature intensified. It can be said that throughout the entire year, this activity was almost as intense as the efforts exerted to resolve the key political and economic issues in the republic. What is more, against the background of the summer doldrums with respect to regional problems, the election became practically the most important topic. Along with the fact that it was associated with numerous visits by the representatives of several international structures and leading Western countries (by a delegation of the Council of Europe Committee of Ministers or Monitoring Group, EU Special Rep- resentative for the Southern Caucasus Heikki Talvitie, former U.S. State Secretary and Head of the National Institute of Democracy Madeleine Albright, U.S. Undersecretary of State on Global Affairs Paula Dobriansky, Head of PACE René van der Linden, and others), this topic was discussed at the Parliamentary Assembly of the Council of Europe and in other European organizations. Resolution 1456 on the Functioning of Democratic Institutions in Azerbaijan testified in particular to Europe’s increasing activity regarding the accelerated democratization of Azerbaijan.15 The July talks on settlement of the Nagorno-Karabakh conflict were made memorable by another tour of the cochairmen of the Minsk Group to the region. Although no obvious progress was made in resolving the differences in the sides’ viewpoints, during this trip, unofficial information appeared about a new “package–step-by-step” plan,16 which aroused a broad public response in both countries, although their officials immediately came forward with refutations. On the invitation of U.S. State Secretary Condoleezza Rice, in August Azerbaijan’s Foreign Minister visited the United States. Along with the current state of the talks on Nagorno-Karabakh and cooperation in the antiterrorist coalition and bilateral economic relations, the main topics of discussion were issues relating to the development of democracy, which became the leading topic of the summer.17 What is more, at the end of August, the Azerbaijan-Armenian dialog was revived—the foreign ministers of the two countries held talks in Moscow, and the presidents of Azerbaijan and Armenia met in Kazan. But despite the optimistic forecasts about the possibility of signing an agreement, which was related to some changes in viewpoints designated in July, the talks between the presidents ended in the same way as the previous round in Warsaw. At the end of August, a delegation from the unrecognized TRNC visited Azerbaijan. It should be noted that that situation relating to the political ups and downs involving North Cyprus placed official Baku in a very difficult position. On the one hand, it had to take into account the interests of Turkey, its traditional ally, which supports Azerbaijan in all questions and at all levels. After the

14 Zerkalo, 1 June, 2005 [http://www.zerkalo.az/new/arcview.php?dayar=1&month=6&year=2005&category=1], 11 January, 2006. 15 See: Council of Europe, Parliamentary Assembly # 1456 (2005) [http://assembly.coe.int/Main.asp?link=http:// assembly.coe.int/Documents/AdoptedText/TA05/ERES1456.htm#_ftn1], 18 December, 2005. 16 It mentioned in particular that “…the project stipulates opening communication channels, returning the five occupied regions around Nagorno-Karabakh to Azerbaijan, returning refugees and forced migrants to their place of permanent residence, deploying OSCE peacekeeping forces in the conflict zone, holding a referendum in Nagorno-Karabakh in 10- 15 years for defining the region’s status, etc.” (see: Zerkalo, 14 July, 2005 [http://www.zerkalo.az/new/ arcview.php?dayar=14&month=7&year=2005&category=3#29941], 11 January, 2006). 17 See: Zerkalo, 5 August, 2005 [http://www.zerkalo.az/new/arcview.php?dayar=5&month=8&year=2005&category= 3#30496], 11 January, 2006. 132 AZERBAIJAN REPUBLIC International Affairs unsuccessful referendum on reunification of the two parts of the island on 24 April, Turkey was interested in withdrawing the TRNC from international isolation. On the other hand, Azerbaijan’s relations with Greece and Greek Cyprus are just as important. These countries are supported by the European Union, with which Azerbaijan has to endorse its Action Plan under the European Neigh- borhood Policy in the near future.18 The parliamentary election remained one of the main topics discussed during the visits to Baku by high-ranking representatives from the U.S., the West European countries, and international organizations, which took place at the end of August-beginning of September. As the election approached, the intensity of these contacts increased. The visitors clearly made it understood that 6 November would be an important test for the republic with respect to its correspondence to Euro-Atlantic values, on which the Western democracies’ support of Azerbaijan in resolving its urgent political and economic problems would largely depend. In September, the President of Azerbaijan made an official visit to Bulgaria, during which a Joint Declaration of the Heads of State and several other documents were signed. The Euro-Atlantic vector held sway in October. The main, but not the only aspect sustaining it was the upcoming election and the West’s interest in ensuring it was held democratically. An important event was the official visit by a Latvian delegation headed by its president, Vaira Vike-Freiberga. On the whole, the month was quite propitious in terms of visits by high-ranking foreign guests. Azer- baijan was visited by Secretary of the CIS Executive Committee Vladimir Rushailo, Chief of the Turkish General Staff Hilmi Özkök, deputy U.S. State Secretary for Europe and Eurasia Daniel Fried, and Cochairman of the OSCE Minsk Group from the U.S. Steven Mann, as well as the European Union Troika, which consisted at that time of representatives from Great Britain (chairing in the European Union), Austria (next country to chair in the EU), and the European Commission. There were also other visits in October. But the main event of the month was the launching of the Georgian section of the BTC pipeline, the official ceremony of which took place in Gardabani. It should be noted that during the entire time the project was being implemented (decision-making, designing, building), fears were expressed about the expediency of laying the BTC through the Sam- tskhe-Javakhetia region of Georgia, which is predominantly populated by Armenians. Building of the Georgian section was also accompanied by protests from several local NGOs which claimed that laying this route would be detrimental to the region’s environment. The last two months of the year did not bring about any significant changes in Azerbaijan’s relations with the outside world. Attention shifted more to the parliamentary election as it approached. What is more, the election campaign itself, which was unequivocally evaluated by international observers,19 meant that this topic continued to be one of the top news items in the post-election period too. The European countries, the U.S., and several international organizations put perceptible pressure on the Azerbaijani authorities to correct the violations registered during the election. The authorities, in turn, tried to ensure that international goodwill toward the country was not adversely affected. Admittedly, only toward the end of November, the topic of the election began to die down slightly. Cooperation came to the fore again with the North Atlantic Alliance (talks with NATO Secretary

18 The opening of an airline in July from Baku to the capital of North Cyprus Lefkosia led to a severe reaction from the Republic of Cyprus, the position of which was also supported by the EU. In October, according to a report by Radio Liberty, EU Commissar for Foreign Relations Benita Ferrero-Valdner noted that “…the creation by Azerbaijan of relations with North Cyprus may slow down the Azerbaijan Republic joining the Neighborhood Policy of this organization. The EU only recognizes the independence of the Cyprus Republic. But this state is protesting against the establishment of ties between Baku and Lefkosia, flights to North Cyprus from Azerbaijan” (see: IA Regnum, Azerbaijan za nedeliu, 12 October, 2005 [http://www.regnum.ru/news/527070.html], 27 December, 2005). This question in the interrelations between Azerbaijan and the EU was the topic of a bilateral discussion in subsequent months of 2005 as well. 19 Several observers (the CIS, Iran) acknowledged that the election met internationally recognized standards of democracy, while the international mission of observers which in particular included representatives of PACE, the OSCE, the European Parliament, and NATO, evaluated it as not meeting several important democratic standards. 133 CENTRAL EURASIA 2005 Analytical Annual

General’s Special Representative for Central Asia and the Southern Caucasus Robert Simmons in Baku) and the European Union (meeting between the Azerbaijani foreign minister and the EU Ministerial Troika in Brussels and the beginning of technical consultations associated with drawing up the Action Plan for the republic’s participation in the European Neighborhood Policy) and, of course, settlement of the Nagorno-Karabakh conflict. After the fall break due to the parliamentary election in Azerbaijan and the referendum on constitutional changes in Armenia, talks were renewed in December on settlement of the Armenian-Azerbai- jani conflict. The cochairmen of the Minsk Group met with the foreign ministers of both countries in Ljubljana. Then the cochairmen made their next tours. And as the year drew to a close, the OSCE high-planning group came to the region in order to evaluate the situation and develop conditions for deploying peacekeeping forces in the event a political solution was reached, which aroused a serious discussion in Azerbaijani society about the imminent prospects for settling the conflict. What is more, Azerbaijan’s diplomatic activity in December was aimed at developing relations with the Islamic world. Here we should note the working visit by Azerbaijan’s president to Saudi Arabia to participate in the third special summit of the Organization of the Islamic Conference (OIC). The end of the year was marked by the further development of Azerbaijani-Iranian relations. The visit to Baku by Iranian Foreign Minister Manouchehr Mottaki, the meeting of the presidents of the two countries in Nakhchyvan at the ceremony to mark the beginning of deliveries of Iranian gas to the Nakh- chyvan Autonomous Republic, as well as the agreements on cooperation in the fight against international terrorism and drug trafficking reached during Azerbaijani Minister of National Security Eldar Makhmudov’s visit to the IRI can be considered a logical continuation of the rapprochement between the two countries in 2005.

G e n e r a l C o n c l u s i o n s

The year was memorable for Azerbaijan’s relatively intensive interaction with the outside world, which was largely promoted by the favorable international conditions for this: development of the antiterrorist campaign launched by the U.S. and its allies in the Middle East with the prospect of it spreading to Iran; completion of the building of the Baku-Tbilisi-Ceyhan oil pipeline as the main segment of a diversified system for exporting the energy resources of the Central Eurasian countries to the West and the Western democracies’ heightened interest in settlement of the “frozen” conflicts hindering the efficiency of this system; and the wave of Color Revolutions in the post-Soviet countries, which significantly raised the influence of the Euro-Atlantic vector here and, consequently, weakened Russia’s position. It goes without saying that Azerbaijan’s foreign policy activity aimed at resolving the most urgent problems presumed taking these conditions into account. And although it cannot be said that this activity helped to resolve the problems faced by the republic at the beginning of 2005, there is every reason to believe that the results achieved last year will have a significant impact on the resolution of these problems in the future.

The Armenian-Azerbaijani Conflict

A solution to Azerbaijan’s most urgent problem—the Nagorno-Karabakh conflict—was not found in 2005, although intensive talks, perceptible foreign interests, and international pressure on the sides gave rise to the hopes that a peace agreement might be signed. But this year cannot be considered entirely fruitless. 2006 promises at least to retain the favorable external conditions for settlement,

134 AZERBAIJAN REPUBLIC International Affairs to which one more extremely important circumstance will be added—no national elections are scheduled in Azerbaijan and Armenia which could lead to undesirable politicization of the problem. Nevertheless, an extremely important condition of the settlement process is the desire and ability of the conflicting sides themselves to find a solution to the problem within the general accepted reg- ulations of international law, primarily the impermissibility of changing the interstate borders with the use of military force.

Relations with Closest Neighbors

In terms of Azerbaijan’s relations with its neighbors, this period can be called the “year of Iran.” One of the main reasons for official Tehran’s open friendliness was of course the deterioration of its relations with Washington. Azerbaijan was given an extremely important role in the future of these relations, whereby from both sides. In our opinion, in the near future, the development of Azerbai- jan’s cooperation with Iran will depend to a decisive extent on two factors. First, on which specific methods and tools Washington will include in its policy in the region. Second, on the line of tactical behavior Iran chooses with respect to Armenia and settlement of the Nagorno-Karabakh conflict. It is still difficult to predict how long the trend toward mutual rapprochement will continue in Azerbaija- ni-Iranian relations. As for Russian-Azerbaijani contacts, they often reflected the perceptible difference manifested in the post-Soviet period between official rhetoric and the actual state of affairs. The past year showed again that despite the declared positive aspects of the contacts, in reality relations between the two countries are far from problem-free. In particular, Russia’s viewpoints and approaches retain significant elements of traditional diplomacy. On the one hand, this applies to the magnificent arrangements for the Year of Azerbaijan celebrations in Russia and the Russian Federation’s mediation in the settlement of the Nagorno-Karabakh conflict within the framework of the OSCE Minsk Group. While, on the other, redeployment of some of Russia’s military hardware from Georgia to Armenia made it clear once more that there is a perceptible difference between the statements on “friendship” and the tension which characterizes reality. Relations with Turkey and Georgia did not have the simulation characteristic of the previous example and continued to show signs of strategic rapprochement, the most important evidence of which in 2005 was the launching of the BTC pipeline and the signing of a declaration on creating the international Kars-Akhalkalaki-Tbilisi-Baku Rail Corridor by the presidents of the three countries. There is every reason to believe that the three countries are still interested in developing de facto cooperative relations, at least under the current geo-economic conditions and taking into account the degree of current interdependence.

Relations with the West

Relations with the West, in particular with European and Euro-Atlantic structures, were somewhat complicated by the parliamentary election and the situation around North Cyprus. Judging by everything, in the near future too, these will continue to be urgent topics in official Baku’s contacts with the Council of Europe and the European Union. However, they will also depend to a perceptible degree not only on these organizations and Azerbaijan, but also on the viewpoints of other interested actors, primarily the U.S. and Turkey.

135 CENTRAL EURASIA 2005 Analytical Annual

Intensive talks with Washington on developing military-political relations, including on the possible use of Azerbaijan’s territory by U.S. armed forces, were mainly limited to building two radar stations on the border with Iran and Russia. But there is reason to believe that in the near future, these relations will develop further.

Geopolitical Reference Points

The country’s geopolitical reference points did not undergo any major changes. In the system of Eurasian West-East and North-South relations, the first vector retained its predominance. In so doing, foreign political activity in the southern vector helped to strengthen the country’s position in the second vector as well. However, the relatively high intensity of interaction in the second vector observed throughout the year is most likely tactical in nature and in the near future will not become the dominating reference point in Azerbaijan’s relations with the outside world.

136 GEORGIA General Overview

GEORGIA

GENERAL OVERVIEW

Vladimer PAPAVA D.Sc. (Econ.), professor, Senior Fellow, Georgian Foundation for Strategic and International Studies (Georgia), Fulbright Fellow, Central Asia-Caucasus Institute, The Nitze School—SAIS, Johns Hopkins University (U.S.) (Tbilisi, Georgia)

he Rose Revolution which took place in November 2003 was the consummation of the striving of the Georgian people to accelerate democratization of society, strengthen the protection of hu- T man rights, reduce corruption, develop the national economy, and improve social conditions. It is not surprising that the revolution itself and its heroes headed by the country’s current president, Mikhail Saakashvili, were supported by the U.S. administration, the leaders of the European Union and the countries belonging to it, and the entire civilized world. United States President George Bush’s visit to Georgia on 9-10 May, 2005 was clear evidence of the U.S.’s support. In 2005, the agreement on the withdrawal of Russia’s military bases from the country signed on 30 May by the Russian and Georgian foreign ministers can be considered a particular achievement of official Tbilisi’s foreign policy activity. Other outstanding events of the year include the launching of the Baku-Tbilisi-Ceyhan oil pipeline, the Georgian president’s initiative at the Parliamentary Assem- bly of the Council of Europe on peaceful settlement of the conflict in South Ossetia, the signing by the presidents of Georgia, Azerbaijan, and Turkey of the Declaration on Creating the International Kars- Akhalkalaki-Tbilisi-Baku Rail Corridor, and the country’s participation in instituting the Community of Democratic Choice. Unfortunately, a pall was cast on the year by the tragic death of outstanding politician of present- day Georgia, Prime Minister Zurab Zhvania. With respect to domestic political affairs, it should be noted that the revolution’s victory led in turn to a natural weakening of the opposition. The fact that the most authoritative part of this camp

137 CENTRAL EURASIA 2005 Analytical Annual came to power made its political opponents (that is, the opposition of the former opposition) even more unpopular. This special feature of political life was most clearly manifested in 2004, while in 2005 it slackened off slightly due not so much to the increase in popularity of the opposition itself as to the increase in number of people displeased with the changes of the post-revolutionary period. Due to the elimination or merging of government institutions and structures of the budget sector, and also due to the rejuvenation of their staff many experienced employees of long-standing were left jobless. What is more, the most popular election campaign slogans were not fulfilled. There was no perceptible increase in the minimum wage and pensions up to the subsistence minimum, the population was not compensated for the savings they lost as early as Soviet times due to hyperinflation, tax benefits were not granted for supporting small businesses, and so on. Admittedly, many of the pre-revolutionary promises were essentially impossible to fulfill, although the population placed almost their total trust in the revolutionary forces. Consequently, the expectations that the new government would meet all their promises were so high that when they were not fulfilled, the people became extremely disappointed. The current situation is objectively creating grounds for the opposition to become stronger, although the population is so used to many of its leaders that this in itself is detrimental to their popularity. Consequently, in 2005, the demand arose for new faces in politics, particularly in the opposition. Former foreign minister Salome Zurabishvili could potentially fill this role. As a citizen of France, who also obtained Georgian citizenship after the Rose Revolution, she does not have a communist past. What is more, her ancestors enjoy deserved respect in her historical homeland. But the weak management skills and insufficient knowledge of contemporary Georgian society she manifested as head of the Foreign Ministry could prevent her from becoming leader of the opposition forces. In other words, without a strong team and reliable financial support, Mrs. Zurabishvili’s political future does not look too optimistic. The mass media are of special importance in the democratic development of society. Television channels and newspapers are not as diverse in post-revolutionary Georgia as they were before the revolution, and what is more, it is common knowledge that the mass media owners are more stringent about the kind of information offered. In just over two years, the new authorities have done a great deal to establish order in the country. Among the achievements, special mention should be made of the three-fold increase in the state budget, which made it possible to significantly reduce the state’s accumulated indebtedness to the population during the pre-revolutionary years and settle pension debts entirely. It was also possible to eliminate mass corruption at the grassroots level of the government hierarchy. On 1 January, the new Tax Code came into force, which significantly reduced the number and rates of taxes. An important anti-corruption measure was the introduction of a uniform entry examination for young people applying to the country’s higher education establishments. But university reform and reorganization of the Academy of Sciences still leave a lot to be desired. The law enforcement bodies stepped up the fight against the drug business and smuggling. Measures were adopted to establish order in penitentiary institutions. The operation to identify and arrest the terrorist who made the assassination attempt on presidents George Bush and Mikhail Saakashvili during the U.S. president’s visit to Georgia, as well as on citizens participating in his ceremonial meeting in Tbilisi, can be considered particularly successful. The state’s Achilles’ heel is still its judicial system, which requires major reform. Against the background of the West’s support of the main values declared by the Rose Revolu- tion, the country’s historical striving to become an immanent part of Europe has acquired realistic features: Western politicians are making increasingly unambiguous statements about the reality of Georgia joining NATO and about the possibility of it becoming a member of the European Union in the future.

138 GEORGIA General Overview

But as the West’s support of post-revolutionary official Tbilisi grows, so Russia’s political leadership is becoming more irritated, which in turn is causing the Georgian leaders to backlash. The Russian Federation’s attitude toward the states in the post-Soviet space was set forth in the renewed Liberal Empire doctrine (as the Kremlin’s imperial mission in the 21st century), initiated by Chairman of the Board of Russia’s RAO Unified Energy Systems Anatoli Chubais. According to him, the Russian Federation has no place either in NATO, or in the EU, its sheer size makes it physically impossible for it to fit into these structures. So Russia should create an alternative to them, that is, a so-called Liberal Empire. However, it should be formed not by means of armed occupation of the former Soviet republics, but by acquiring ownership of their main economic entities, that is, by purchasing and developing their assets. According to his logic, it is precisely economic expansion that will allow the Russian Federation to restore its economic (and not only economic) influence over the entire post-Soviet space. Russia began carrying out its plan for drawing the Caucasus into this Liberal Empire with Ar- menia, its strategic partner in the region. At the end of 2002, the Russian-Armenian agreement on Property in Exchange for Debts was implemented. According to this document, Russia obtained enterprises from Armenia, the total cost of which, $93 million, was enough to completely settle Arme- nia’s debt to Russia. But Georgia creates a purely geographical obstacle to Russia’s plans to form a single economic space with Armenia (these plans cannot be carried out through Azerbaijan due to the conflict in Nagorno- Karabakh), although the first steps toward this goal were taken even before the Rose Revolution. For example, in the summer of 2003, Russia’s RAO Unified Energy Systems acquired a share of the American AES Silk Road Company, which owned 75% of the shares of the Tbilisi City Electricity Network and the assets of other power engineering facilities in the country. Georgia’s new government has begun carrying out its ambitious plans for large-scale privatization. The country’s image, improved by the Rose Revolution, made it possible to receive revenue from the very first privatization transactions which was tens, if not hundreds, of times higher than the revenue from all privatization throughout the pre-revolutionary period as a whole. During market transition, this process can only be welcomed. But the problem is that today the main buyers of assets in Georgia are Russian companies (including their branches registered in other countries), and privatization with their participation is being carried out under far from transparent conditions. This state of affairs in this sphere entirely correlates with the plans to build a Liberal Empire. In this context, the statement by the leaders of the Industrial Investors Holding on their intention to invest up to $200 million in the Georgian economy in the next three years is extremely noteworthy. A branch of this holding company purchased the AO Madneuli gold-mining enterprise for $51.1 million and 50% of the shares of the AO Kazreti gold-bearing alloy producing company. Russia’s Gazprom is trying to purchase dozens of facilities in the Georgian gas industry, primarily the main pipeline for transporting gas from the Russian Federation to Georgia and its subsequent transit to Armenia, for which it was willing to pay $150 million. The Georgian side entered the bargaining and demanded $300 million. They probably would have reached a final agreement, but the U.S. interfered and allotted $49.5 million to rehabilitate the main gas pipeline. This issue gained momentum again at the end of the year during talks on new conditions for mutual settlements with respect to Gazprom raising the price of natural gas delivered to Georgia on 1 January, 2006 from $62.5 to $110 per 1,000 cubic meters. Gazprom rejected official Tbilisi’s vague proposal to create a joint Georgian-Russian venture for managing the main gas pipeline and again firmly confirmed its intention to purchase this facility. In all likelihood, Georgia will have to determine its stance once and for all regarding this pipeline, and not make advances now to the Russian, now to the American side, particularly since neither the first, nor the second are willing to play such prim- itive games any more.

139 CENTRAL EURASIA 2005 Analytical Annual

Along with the growing scope of privatization, the precedent of nationalization carried out by the Russian side is drawing attention to itself, which was unfortunately supported by representatives of the Georgian government. In particular, at the beginning of the year, Russia’s Vneshtorg- bank, 99.9% of the shares of which belong to the Russian government, acquired a controlling share of 51% of the United Bank of Georgia (UBG), which occupies third place in the country in terms of volume of assets. It is extremely noteworthy that a little earlier, in 2004, Vneshtorgbank purchased a controlling set of shares in Armenia’s Armsberbank. Russia’s RAO Unified Energy Systems is playing a special role in drawing Georgia into the Liberal Empire being formed: when the Georgian authorities stated their interest in privatizing the Inguri Hydropower Plant and reviving construction of the Khudoni Hydropower Plant, which was halted at the end of the 1980s, it came as no surprise that the leadership of this Russian company unequivocally expressed its desire to participate in implementing these projects. It is obvious that investments are mainly coming from one, whereby clearly unfriendly, country which is making no secret of its objective—to draw neighboring states into the net of the Liberal Empire by means of economic expansion. What is more, it should be remembered that major Rus- sian capital usually either belongs directly to the state or is completely under its control. And the very methods for accumulating initial capital among the first generation of Russian (among other) oligarchs differs radically from the way business is done in the West. Consequently, the presence of foreign private capital of dubious origin, to say the least, can in no way be in the interests of Geor- gia, or of any other country.

POLITICS

Giya ZHORZHOLIANI Ph.D. (Hist.), associated professor at Ivane Javakhishvili Tbilisi State University (Tbilisi, Georgia)

eorgia is living through the third stage of 1991-early 1992 when the president was deposed its post-Soviet political history. Its first in an undemocratic way. G democratically elected president personi- Eduard Shevardnadze, who came to power fied the very idea of national independence and as the country’s second president, announced that devoted the country’s entire policy to it. How- democracy would be the beginning and end of his ever, President Gamsakhurdia’s authoritarian domestic policies. The chosen means and meth- bias aimed at centralizing and monopolizing ods, however, did not correspond to the aim. The power produced unexpected results. Groups system he was busy creating kept society (the within the ruling elite became locked in a power nation) away from politics and from building up struggle and society split, while the opposition democratic institutions: everything was done by grew more and more radical. This and certain a narrow circle of politicians who played by their external factors led to the tragic events of late own quasi-democratic rules. Sham democracy

140 GEORGIA Politics undermined the state institutions and worsened the tion through constitutional amendments and sup- people’s social, economic, and legal situation. port of the almost one-party qualified majority of While gradually losing support at home, the re- the parliament, spent his first year fighting cor- gime fell victim to the democratic rules it had ruption and recovering the money stolen by the created itself. Several members of the ruling Un- top figures of the previous regime. ion of Georgian Citizens Party, which was head- The nation spent the first post-revolutionary ed by Mikhail Saakashvili and moved onto the year waiting for changes for the better; the author- side of the opposition during Shevardnadze’s last ities were busy looking for new ideas and new presidential term, appealed to the nation pushed people, working on the development vector, and into the background by the ruling regime and putting together a team. By 2005, the new lead- forced the president to resign. ers had already identified the trends and started For the second time, the regime change was implementing a project which can be described as disguised as democracy. Mikhail Saakashvili, the Revolutionary Democracy Project: democra- who became president on the crest of the Rose cy was the declared aim while the methods re- Revolution and who later consolidated his posi- mained revolutionary.

The President, His Cabinet, and His Parliament

On 3 February, Prime Minister Zurab Zhvania died a tragic death. His post went to Finance Minister Zurab Nogaideli, the late premier’s old friend without political ambitions. The president began increasingly concentrating all power in his hands. This is rooted in the Soviet past and the constitutional system of power. In the wake of the Rose Revolution, the Constitution was amended to give the new president even more power than before: he acquired the right to disband the parliament, which obviously undermined the latter’s role and influence. It was thought that executive power would be redistributed between the Cabinet of Ministers headed by Zurab Zhvania, one of the most influential political figures of the last decade and a leader of the Rose Revolution, and the president. As premier, Mr. Zhvania did try to bolster the Cabinet with more power by appointing the right people to the right places, but failed: by late 2004, his people filled posts of secondary importance in the government. After his death, the post he filled lost its political significance and the executive branches became accountable to the president. The parliamentary majority became another of his instruments. The present parliament was formed in a very special way: 75 seats were given to the deputies elected on 2 November, 2003 in the majority constituencies (having annulled the results of the parliamentary election by party lists, the Supreme Court and the revolutionary government spared the results in the majority constituencies); 150 seats were filled after the parliamentary election by party lists held in March 2004. The presidential majority comprises more than 80 percent and includes deputies from both groups. The opposition is represented by two small factions: the Right Opposition (the only opposition structure that overcame the 7 percent barrier in March 2004) and the Democratic Front (created in the fall of 2005 by the deputies of the Republican and the Conservative parties which left the majority in 2004). Together they are still unable to stand against the National Movement ruling party, therefore all drafts and decisions initiated by the executive structures are passed without a murmur. No wonder the parliament passed several hundreds of new laws and amendments to the old laws to support the president’s course.

141 CENTRAL EURASIA 2005 Analytical Annual Influential Personalities and Groups

By 2005, it became clear which groups around the president had more power. These are informal groups, the degree and spheres of political influence of which have nothing in common with the Constitution. Indeed, the real leader of the parliamentary majority is not Maia Nadiradze, its official head, but Giga Bokeria, who represents an influential group of the Freedom Institute. Several cabinet members (Defense Minister Okruashvili, Foreign Minister Bezhuashvili, Minister of Internal Affairs Merabishvili, and Minister of Science and Education Lomaia) wield more political power than the premier. The traditions of the Shevardnadze era have changed a lot. During his time, the Security Council was probably the most influential executive structure. To be more exact, it was Mr. Shevardnadze himself who set up the Council when he was still the parliament speaker and staffed it with his comrades-in-arms of communist times. He used it to balance and then to cut down the government’s power headed by premier Sigua and the paramilitary groups under Kitovani and Ioseliani he inherited from the Gamsakhurdia regime. Under the 1995 Constitution, the SC acquired broad powers. President Saakashvili appointed Vano Merabishvili secretary of the Security Council. At that time, the Council tried not only to influence the power structures, the Ministry of Internal Affairs headed by Zhvania’s appointee Georgy Baramidze in particular, but also to control them. Very soon Mera- bishvili was placed at the head of the united Ministry of Security and Internal Affairs; Okruashvili became Defense Minister, while Bezhuashvili, former defense minister, another loyal supporter of the president, was made the SC secretary. In other words, Zhvania’s people in all the power structures were replaced with the president’s loyal supporters. The Security Council lost its function of coordinating the power structures all headed by Pres- ident Saakashvili’s closest friends and supporters. Instead, it was entrusted with the country’s security issues: relations with Russia, including Russia’s bases in Georgia in particular, and the conflict zones. When Foreign Minister Salome Zurabishvili resigned from her post, the president gained control over the Foreign Ministry as well. Today, the president controls all the power structures and the Foreign Ministry, which means that the Security Council has already lost its functions and importance. The above-mentioned Freedom Institute group has consolidated its position in the parliament and in other spheres of state and public policy. It is mainly involved in education, the judiciary, and the media, it completely controls the ombudsman’s office and exercises general ideological supervision. This group has already removed Minister of Justice Kemularia, who until recently was regarded as a potential premier. It has no influence, however, on the power structures personally controlled by the president. Alexander Lomaia, who in the past and on the eve of the revolution actively cooperated with the Freedom Institute group, remains very close to it. The group and Lomaia, who first represented the Democracy Foundation and later was Director of the Soros Foundation, set up the Kmara revolutionary youth movement. The group established independent contacts with American political circles, which is causing tension between it and Saakashvili’s other supporters. Kakha Bendukidze, former minister of economics and currently a minister without portfolio, has preserved his influence. He is in charge of the main economic trends, intensive privatization, and narrowing down the sphere of state responsibility. There is the opinion that the United States is quite satisfied with a situation where influence in Georgia is split between it (political influence) and Rus- sia (economic influence). This explains, in particular, the presence of Mr. Bendukidze in the cabinet: he is actively attracting Russian money and promotes privatization of property in Georgia.

142 GEORGIA Politics From the Party in Power to the Opposition

The National Movement Party emerged as a revolutionary structure resolved to introduce radical changes and remove the regime. In 2002, it was the slogan “Georgia without Shevardnadze” that ensured its victory in the elections to the Tbilisi City Council. This deprived most party activists of their habitual field of action: the format of revolutionary activity is much wider than the format of power functioning. In 2005, it was reported that in some places party members were moving onto the opposition’s side. It was not a mass movement, but it was very typical of the revolutionary political structures. The Path Dependence concept very popular among those who study contemporary institutions1 can be used to explain the role and functions of the political parties in Georgia today. As a rule, traditional European organizations are identified by their social support and the interests they represent, their place and efficiency being determined by the number of members and contacts with social groups. The Soviet interpretation of the party as the “vanguard of society,” the guiding force which leads the nation to progress, is still very strong in Georgia’s political mentality. Obviously, no political party can play with any success by the Soviet party-state rules in Geor- gia today: it is not completely democratic, but nor is it totalitarian. While losing their places and role in their home parties, some active revolutionaries find an opportunity to use their accumulated revolutionary experience in other opposition groups. The ruling party seems to be indifferent to this. To a certain extent, this trickle is helping to relieve inner-party tension. It was not only the active members, but also the masses supporting them who began demonstrating opposition sentiments. Sociological polls registered diminishing confidence in the country’s leaders and the ruling party.2 While the year 2004 was a year of hope and struggle against the corrupt bureaucrats of the past, who were expected to return the plundered wealth to the state, in 2005 people expected their lives would take a turn for the better. This was particularly true of impoverished people who, in their despondency, trusted the revolution and its populist slogans. Later these people started piling the guilt for everything, even objective difficulties, on the rulers; they obviously chose the well- trodden path of protest leading to the opposition ranks.

Will the Opposition Unite?

The experience of post-Soviet Georgia has demonstrated that the government’s strength and influence is primarily determined by its access to the administrative resources, which allows it to control the money and nearly all the media. As distinct from the Shevardnadze regime, when the center had no control over part of the administrative resource (the Abashidze regime in Ajaria, the Tbilisi City Council, etc.), in 2004 and especially in 2005, the National Movement showed everyone that it would not accept this state of affairs. Today, when the ruling party has claimed the right to express the will of the nation, the opposition forces cannot do much in the structures of power. This brings to mind the Gamsakhurdia regime, when the opposition and the government could not work together, and when groups of former supporters were leaving the president’s party, while the circle in control of the ad-

1 See: B. Guy Peters, Institutional Theory in Political Science. The “New Institutionalism,” Continuum, London, 2001; D.C. North, Institutions, Institutional Change, and Economic Performance, CUP, Cambridge, 1990. 2 Available at [http://www.gorbi.com/store/en/20051222_183415.pdf]; Public Opinion Research, October/November 2005 [http://www.iri.org.ge/eng/engmain.htm]. 143 CENTRAL EURASIA 2005 Analytical Annual ministrative resources was shrinking. Monopolization and centralization of power weakens the opposition to a certain extent; it deprives it of access to the administrative resources (this happened in 2004) and makes it more radical. Barred from official politics, the opposition is forced to look for new forms and trends. In 2005, the opposition concentrated on two major trends: first, cooperation and joint efforts among its various structures and, second, searching for ways to increase their representation and establishing closer contacts with the public. A Democratic Front faction was formed in the parliament; and in some of the majority constituencies, the opposition united for the parliamentary election. The Democratic Front was made up of deputies active in the Rose Revolution and elected to parliament by the National Movement lists. Some of them, who were members of the Republican Party (chairman David Usupashvili), revealed their opposition sentiments soon after the election. There were too few of them though to form a parliamentary faction (this required 10 deputies). The faction’s other part was made of deputies of the United National Forces Party headed by Zviad Dzidziguri and Koba Davitashvili, one of the founders of the National Movement. After beginning as a small opposition group in the parliament as early as in 2004, they set up the Conservative Party of Georgia in the summer of 2005. In November of the same year, the groups united to form a faction headed by David Zurabishvili, who also left the parliamentary majority. At the same time, the Right Opposition faction, which stood alone, stepped up its oppositional activities within the parliament and outside it. The faction consisted of two parties—the New Rights (Chairman David Gamkrelidze) and the Industrial- ists (Zurab Tkemaladze). The Right Opposition was also involved in joint opposition activities during the midterm elections. Their united efforts and cooperation with some of the non-parliamentary political structures— the Labor Party headed by Shalva Natelashvili and the Freedom Party headed by Konstantin (Koko) Gamsakhurdia, son of the former president—did not help. The National Movement won in all five constituencies. In an effort to invite wider public circles to participate in political activities, a new public and political organization, the Popular Forum, was set up with the participation of the Traditionalists’ Party and several prominent public figures and public organizations. Together with nearly all the opposition parties, this new structure suggested that the question of direct election of the mayor of Tbilisi be brought up at a national referendum. In the past, the country’s president appointed the mayor of the Georgian capital; the laws adopted at the end of 2005 envisaged that the mayor of Tbilisi should be elected by the City Council. The government, as represented by the Central Election Commission, declined the initiative, but the initiators started gathering the signatures needed to place a legislative initiative in the name of the public in the parliament and present a petition from the public to the president. On the whole, the opposition is growing increasingly aware that if it wants to become a real alternative to the ruling party, it must pool its efforts to become completely involved in the political process.

The Minister Resigns to Plunge into Public Activities

Seeking even greater goodwill from the West, the post-revolutionary leaders appointed Salome Zurabishvili (a French diplomat of Georgian extraction who served as Ambassador of France to Geor- gia) as foreign minister of Georgia. Soon after that, tension and strained relationships between the newly appointed minister and the leading circles in the parliament and other structures began to show.

144 GEORGIA Politics

This can be explained by the specific and highly centralized system of power in Georgia dominated by informal, rather than formal hierarchic structures. They hinge on a blend of clientele relationships and democratic centralism of the Soviet type. In other words, appointing someone from a different context independent of the ruling party and its ideological and organizational leaders as the head of a key ministry did not fit the system. She had no political past associated with the revolutionary government and the Georgian political circles: her appointment was obviously not only a decision of the Georgian government. After resigning from the government, Salome Zurabishvili announced that she would start another opposition movement.

The Most Important Events of the Year

Farewell to (Russian) Arms!

The document signed on 30 May by the foreign ministers of Georgia and Russia which started the withdrawal of the Russian military bases from Georgia was the most important military-political event of the year. The process started on 14 August when Russian amphibious ships removed a large batch of military equipment of the group of Russian troops in the Transcaucasus from the Gonio test- ing ground in Ajaria. The Russian military units are to leave Georgian territory before 2009. Georgia started the Individual Partnership Action Plan (IPAP) with NATO. Despite certain problems, the NATO leaders have positively assessed the process. The plan of peace settlement in the Tskhinvali Region (part of the former South Ossetian Auton- omous Region) offered by Tbilisi was another important event. It was presented in the U.N. and the EU and approved by many of the international organizations and Western leaders. Very soon, however, de facto leader of the conflict territory Kokoyty offered a settlement plan of his own. In spite of certain similarities (one of which was the demilitarization priority), it was a declaration and a propaganda effort. Tension remains high—no real shifts were achieved. Defense spending is a rapidly growing part of Georgia’s post-revolutionary budget. In 2005, 390 million lari (about $200 million), or about 15 percent of the budget, were allocated to be spent on better living conditions for the military, weapons and ammunition, and military exercises. Despite the nearly ten-fold increase in military spending compared to the pre-revolutionary period, this has done little to improve the army’s fighting efficiency. The country needs a clear conception of the development of its armed forces, since the security conception offered by the parliament failed to fill the bill.

Holiday on Bush Street

On 10 May, 2005, President George W. Bush visited Georgia; the country’s leaders and most of the public interpreted this event as a landmark in Georgian history. This visit told the world that the international progressive-minded community recognized that Georgia and its leaders had scored great victories in democratic development. The country came to be seen as the vanguard of democratic movement not only across the post-Soviet expanse, but also in the Greater Middle East. Soon after the visit, one of Tbilisi’s main streets was named after the American president. Throughout 2005, President Saakashvili offered several initiatives designed to strengthen the country’s position in the international democratic movement: the Borzhomi Declaration of the presidents of Ukraine and Georgia; the (failed) efforts to revive GUUAM (Georgia, Ukraine, Uzbekistan,

145 CENTRAL EURASIA 2005 Analytical Annual

Azerbaijan, and Moldova); and intensified contacts with the Baltic and East European countries. In- ternational organizations and the West, the United States in particular, enthusiastically hailed these efforts. Two American senators (Democrat Hillary Clinton and Republican John McCain) nominated the presidents of Ukraine and Georgia for the Nobel Prize. While being extremely engrossed with its democratic image abroad, Georgia, like certain other post-communist states, paradoxically contradicted the fundamentals of democracy at home. It is no longer paying attention to the very meaning of democracy as a method (amply described in his time by J. Schumpeter, one of the most profound theoreticians of democracy).3 Today, the bald regulatory aspect has moved to the fore and assumed the form of an ideology which mobilizes all sorts of political forces and groups. The international cooperation of some of them brings to mind the tactics of the notorious revolutionary internationalists of the past.

Uniform National Exam, Reform of Education and Science

The law adopted late in 2004 triggered reform of the higher education system undertaken to bring organizational and education aspects into harmony with the Bologna Process. This was to be achieved during a transition period of two years, during which time the autonomy of universities and other higher educational establishments was to be significantly reduced and the Ministry of Education and Science was to be entrusted with decision-making. The ministry headed by Alexan- der Lomaia shouldered this responsibility without hesitation and immediately plunged into action. In several months, the presidents of the leading state universities were replaced with people proposed by the minister and endorsed by the president. The activities of academic councils were suspended and university departments were reorganized. At Ivane Javakhishvili Tbilisi State Univer- sity, for example, 22 departments were merged into six. The lecturers and professors were of two minds about the changes, although on the whole they criticized them. The ministry, meanwhile, went on with the project. The uniform national graduation exam held in July was described as the reformers’ main achievement; the country’s leaders announced that it put an end to the recent decades of corruption at entrance exams. However, both this statement and the methodology (the larger part of which was ready before the Rose Revolution) were severely criticized in the higher educational establishments and the media. There was a lot of displeasure about the dramatic drop in the number of freshmen (from 33,000 to 17,000, only 25 percent of whom were paid for from the budget). The style and methods of the revolutionary leaders betrayed themselves in this sphere and in science as a whole. Indeed, social tension increased when the number of students and university lecturers was cut down for the alleged purpose of improving the quality of education (which should be done). These steps planted doubts in people’s minds about the availability of higher education in Georgia for one and all. The Ministry of Education and Science scored another “victory” on the second front: late in December it reigned victorious in its confrontation with the Academy of Sciences of Georgia, when the parliament passed a law under which academic institutes, by acquiring the status of legal entities of public law, dropped their membership in the Academy of Sciences and became subordinated to the ministry. In this way, the ministry, by ignoring all the suggestions and arguments proposed by the academic community through the press, petitions, mass rallies, etc., destroyed the system of science

3 See: J. Schumpeter, Capitalism, Socialism and Democracy, 2nd ed., Harper, New York, 1947. 146 GEORGIA Economy which has taken decades to complete for the sake of a new and still unclear system. The academic community, probably the most precious resource of a country not rich in natural resources, has been divorced from decision-making. Revolution does not recognize evolution…

ECONOMY

Dr. Nodar KHADURI Associated Professor, Department of Economics and Business, Ivane Javakhishvili Tbilisi State University (Tbilisi, Georgia)

I n t r o d u c t i o n

n 2005, the country’s economic development Despite the fact that during these years Geor- was relatively stable, without sharp fluctua- gia was in the forefront of economic reform in the tions. Among the main factors determining CIS countries, in the second half of 1998 it plunged I 2 this development was the post-revolutionary sit- into a fiscal crisis. The state could not meet its ob- uation in the republic, and also natural disasters ligations, which resulted in huge wage and pension (floods and landslides), which caused great dam- arrears, and was often unable to discharge its debts age to the economy in the spring of 2005. Anoth- to economic agents that provided it with goods and er unfortunate circumstance was the country’s services. Unfortunately, some of the consequences failure to resolve its energy problems, which kept of this crisis have not been overcome to date. erupting throughout the year. Apart from objective factors, the country’s In the first few years of independence, the economy was adversely affected by subjective 3 decline in production reached, so to speak, factors as well: a large shadow sector, high level record figures. For example, real GDP1 in 1994 of corruption among government officials, and was almost three-quarters lower than in 1990 (which lack of political will required to resolve econom- in itself was not a very good year for the econ- ic, social and other problems. The country entered omy of Soviet Georgia). But in 1994 the coun- a period of economic and political stagnation. In try managed to halt this decline, and in 1996- the final pre-revolutionary years, there was min- 1997, to achieve fairly good results: real eco- imal economic growth against a steadily worsen- nomic growth in these two years added up to ing social background. almost 25%. 2 See: V. Papava, Necroeconomics. The Political Economy of Post-Communist Capitalism, Universe, New 1 The relevant information was obtained from the York, 2005, pp. 123-136, 159-163. Statistics Department of Georgia’s Ministry of Economic 3 See: T. Beridze, “Measuring Georgia’s Nonobser- Development and from the website [http://www.statistics.ge/ ved Economy,” Problems of Economic Transition, Vol. 48, index_eng.htm]. No. 4, 2005, pp. 43-54. 147 CENTRAL EURASIA 2005 Analytical Annual

The Rose Revolution of 2003, apart from its gressive privatization.” The serious institution- important political aspect, had a significant eco- al and personnel reform of the government, in- nomic basis as well.4 cluding its economic block, was continued. Nat- In 2005, the government took a number of urally, no one expected the structure of execu- unpopular steps, which helped to strengthen fi- tive power to remain intact after the Rose Rev- nancial discipline in the country and carry out olution, but the pace of change was impressive: vital transformations, including so-called “ag- a more or less stable Cabinet was formed within a year. Unfortunately, the unemployment level re- 4 See, for example: N. Khaduri, “Mistakes Made in Conducting Economic Reforms in Postcommunist Georgia,” mains high (according to official data, around Problems of Economic Transition, Vol. 48, No. 4, 2005, 13.5%). Moreover, since the start of large-scale pp. 18-29; V. Papava, “Georgia’s Macroeconomic Situation Before and After the Rose Revolution,” Problems of Eco- reforms in the public sector many government nomic Transition, Vol. 48, No. 4, 2005, pp. 8-17. employees have lost their jobs.

Fiscal Sector

In 2005, GDP grew by about 16% compared to 2004, and prices rose by 6.2%. Naturally, such results could not have been achieved without serious institutional changes. This includes, first and foremost, the new Tax Code, which entered into force on 1 January, 2005. Compared to the previous document that was in force from 1997, the new Tax Code has a number of obvious advantages. First of all, the range of taxes was sharply reduced: from more than twenty to seven. The rest were either abolished (such as the taxes on advertising, on the use of local symbols, on hotels, etc.) or integrated with other taxes, while some taxes of an economic nature were transformed into fees or administrative penalties. Thus, the tax on the use of natural resources was replaced with a fee, and the tax on exceeding the axle weight limits for trucks was replaced with a new fine in the Code of Administrative Offences. An almost 40% reduction in the rate of the single social security tax can be regarded as revolutionary. Before 2005 it stood at 31% for employers and 2% for employees, adding up to 33% of gross wages, whereas the new Code reduced it to 20%. Income tax was reduced as well, but what is more important (than its simple mechanical reduction) is that the old progressive tax with rates ranging from 12% to 20% and a tax-free income of 9 lari (about $5) was replaced with a proportional tax of 12%. The rate of value added tax was reduced from 20% to 18%, although this was evidently a populist move: businesses hardly felt an easing of the tax burden, while the state budget lost hundreds of millions in tax revenue. According to a study carried out by the U.S. Forbes magazine, Georgia ranked third among 50 countries in terms of what is known as the Employee Happiness Index. In other words, taxes on wages are lower only in the United Arab Emirates and Malta. Georgia is followed by Russia, which is fourth on this list. In view of the huge tax rates characteristic of previous years, employers and employees sought to reduce the gross payroll, so running a great risk of being drawn into corrupt deals with members of tax and law enforcement agencies. In the view of independent experts, one of the most attractive and interesting provisions of the new Code was the establishment of a special independent Arbitration Court as the main instrument for resolving disputes between the tax authorities and taxpayers. However, it proved to be short-lived: having lost several cases in this Arbitration Court, the state hastily amended the Tax Code and abolished this institutional innovation. A Law on Amnesty and Legalization of Undeclared Tax Liabilities and Property entered into force together with the new Tax Code. As intended by its initiators, the law was to enable enterprises 148 GEORGIA Economy to disclose their hidden tax liabilities and property without fear of punishment. But in 2005 the country’s population legalized property for the amount of only GEL 13.5 million (just over $7.5 million). According to the Finance Ministry, payments to the treasury amounting to 1% of the sum (property) being legalized were made by about 30 persons and added up to only GEL 135,000. This shows that the post-revolutionary government does not yet enjoy sufficient confidence among the population and business people. Nevertheless, tax revenues going into the state budget markedly increased. According to Fi- nance Ministry data, the amount of taxes collected into the budgets of all levels (consolidated budget) in 2005 was over GEL 2.5 billion (106% of the forecast adjusted during the year), or 25% more than in 2004. These figures were achieved despite the liberalization of the Tax Code and the tax system in general, resulting from a stepped-up fight against smuggling, corruption and other economic crimes. Unfortunately, in spite of these successes, Georgia was unable to meet all its debt obligations. Moreover, the country’s authorities postponed the implementation of a number of social programs, and at year-end most of them were scrapped altogether. The country’s budget system was changed as well. In the past, the state budget consisted of an autonomous central budget and extrabudgetary funds (pension and road), whereas today all of these have been integrated into a single state budget.

Main Areas of Economic Recovery

The Law on Free Trade and Competition adopted by parliament in the summer of 2005 can be regarded as a serious institutional innovation. This law liberalized relations between the state and economic agents, and also abolished the Antimonopoly Service and the State Price Inspec- tion. The state’s abandonment of antimonopoly regulation of the economy and consumer protection suggests that some public servants who came from business are interested in facilitating the implementation of their own business interests. At the same time, a great many licenses have been abolished, the bureaucratic apparatus has been downsized in most cases, and many agencies and departments have started operating on the “one stop shop” principle. Since September 2005, all institutional and procedural aspects of business activity are registered by tax agencies instead of judicial bodies. Economic development requires significant investments, but the virtual absence of a stock market (despite the existence of the appropriate institutional attributes) rules out the possibility of accumulating funds required for investment through the sale of bonds or shares. Few enterprises have equity capital available for reinvestment. This is coupled with high interest rates in the capital market (up to 15-20% per annum), which naturally makes credit resources inaccessible to many businesses. In addition, even though real wages have increased by almost 30% and nominal wages by 40%, average monthly household income covers only about 85% of household expenses. Consequently, foreign capital remains the only real investment opportunity. It should be noted that the events of 2005 provided fresh evidence of the importance of Geor- gia’s international economic function.5 Thus, ferry crossings to Russia and Ukraine were put into operation; a container train started running along the Poti-Baku-Aktau-Almaty route, and on Bulgar-

5 See, for example: V. Papava, “On the Special Features of Georgia’s International Economic Function,” Central Asia and the Caucasus, No. 2 (14), 2002, pp. 143-147. 149 CENTRAL EURASIA 2005 Analytical Annual ia’s initiative this project is to be extended to the Varna and Burgas ports. Another important project is the North-South route, which links Russia with Armenia, its strategic partner in the Southern Caucasus. The Baku-Tbilisi-Ceyhan oil pipeline went into service on 25 May, and the opening ceremony for its Georgian section was held on 12 October. Eventually, this pipeline is to reach the eastern coast of the Caspian Sea and is to carry oil from Kazakhstan as well. An important point here is that the U.S. and the European countries will not only obtain an oil source alternative to the Persian Gulf, but will also expand their zone of influence. Work on the construction of the Baku-Tbilisi-Erzurum gas pipeline is also proceeding apace. All of this will significantly diversify the system of oil and gas supplies from the FSU countries to the world market. At the same time, Georgia today is regarded as an attractive investment destination. Kazakhstani businessmen, among others, are planning to invest over $1 million in the country’s economy. Privatization can be seen as a continuation of the investment topic. As noted above, government officials describe the privatization process as “aggressive.” In 2005, several large enterprises of strategic importance to the country, including the state shipping company and the aircraft manufacturing complex, passed into private hands. Attempts were also made to privatize the Chiatura manganese deposits. Overall, budget revenues from privatization totaled GEL 370.6m, or over $205m (compared to GEL 12.8m in 2000, GEL 5.6m in 2001, GEL 8.7m in 2002, GEL 23.6m in 2003 and GEL 71.7m in 2004); out of 92 privatized facilities, 71 were sold at auctions, 15 on a competitive basis, and 6 through direct sale. According to government data, the most successfully privatized facilities were the Georgia Shipping Company (initially priced at $30m, it was sold for $93 million); 51% of the Elmavalmsh- enebeli locomotive building plant ($3m and $4.15m, respectively); the former fire service building in a prestigious Tbilisi neighborhood ($1.5m and $3.04m), a railway car repair plant ($1.5m and 6m); and JSC Madneuli ($32.25m and $35.10m). At the same time, many questions arise in connection with the insufficient transparency of the privatization process, when backstage talks with potential buyers were held in circumvention of the law.

Foreign Trade and Exchange Rate

Despite the efforts of the authorities and the business community, it has so far proved to be impossible to achieve the country’s energy independence: the construction of oil and gas pipelines through its territory has not yet led to the appearance of alternative energy sources. Russia remains virtually the only supplier of natural gas, which enables it to manipulate this opportunity in order to achieve its primarily political goals. Apart from energy resources (oil, oil products, natural and liquefied gas, electricity), which make up about 19% of total imports, Georgia imports large numbers of passenger cars, mostly used ones, from EU countries (about 7% of total imports in 2005). Of course, to some extent this indicates that living standards in Georgia have been rising but, unfortunately, the share of new cars in the import structure is very small. The list of the top ten import items also includes pharmaceuticals (about 4%), turbojet engines (2.5%), flour and wheat. The main export item is scrap metal (10.4%), followed by ferroalloys (9.4%), wines (9.2%), aircraft (8.8%), nuts (7.7%), copper ore (4.4%), mineral water, raw gold, fertilizers (about 3.8% for each group) and sugar (3.5%). The list of these goods shows once again that Georgia mostly exports raw materials. Special note should be taken of exports of scrap metal: contrary to the generally accept-

150 GEORGIA Economy ed rules of foreign trade, this is the only commodity group subject to excise tax (25 lari per ton), which is evidently a good source of revenue for the state budget. The list of Georgia’s major economic partners remains stable. It is headed by Russia with about 16% of the republic’s foreign trade turnover. Then come Turkey, Azerbaijan, Ukraine, Germany, Turkmenistan, the U.S., Bulgaria, Great Britain and France, whose share adds up to about 75%. Un- fortunately, Georgia has a deficit in trade with all these countries. This is fresh proof that the Georgian economy is still insufficiently competitive and that the government should first of all focus its efforts precisely in this area.6 One of the key macroeconomic instruments in foreign economic relations (and in other areas) is the exchange rate of the national currency. As noted above, the Russian Federation remains Georgia’s leading economic partner. At first glance, this means that the Russian ruble should outperform other currencies in foreign trade transactions. But since the ruble itself is not a stable, freely convertible currency, Georgian businessmen (as well as Russian ones) prefer to use the U.S. dollar even in economic relations with Russia itself. Despite the stability of the lari, the share of deposits denominated in foreign currency in the country’s commercial banks is still much higher than the share of deposits in national currency, although the latter tended to increase throughout 2005. According to the National Bank of Georgia, the share of foreign currency deposits in the total volume of deposits is 77%, while the share of lari deposits is 23%. The continued pursuit of a prudent monetary policy is of special importance in this context.7

Promising Ratings

Authoritative international organizations take an optimistic view of the economic processes recorded in Georgia in 2005. These organizations include the IMF, which has approved the reforms underway in the country and its macroeconomic performance. Special note should be taken of the tariff preferences for export products granted to Georgia by the European Union under the GSP+ program (a more favorable regime compared to the basic arrangement under the Generalized System of Preferences), which entered into force on 1 July and is to operate until the end of 2008. The new program offers duty-free access to the EU market for about 7,200 goods out of a total of 11,000 goods produced in Georgia. The Board of Directors of the U.S. Millennium Challenge Corporation (MCC) has included Georgia among 23 countries which are to receive financial assistance under its Millennium Challenge Account (MCA) in 2006. And Standard & Poor’s rating agency has assigned “B+” long-term and “B” short-term sovereign credit ratings to Georgia (outlook positive). According to a joint study of economic freedom in 161 countries carried out by the Heritage Foundation and The Wall Street Journal, Georgia ranks 68th in the world in terms of the index of economic freedom (with a score of 2.98 points), for the first time having been included in the category of “mostly free” countries. At the same time, as noted in the report, the economic situation in Georgia remains extremely grave. The study covers several areas, with scores assigned on a 5-point scale (1—best, 5—worst). Thus, Georgia’s index of economic freedom was 3.48 in 2002, 3.40 in 2003, and 3.19 in 2004. At the beginning of 2005, the country ranked 100th with a score of 3.32 points.

6 For more detail, see: N. Khaduri, “Macroeconomic Determinants of Competitiveness of the Georgian Economy,” Georgian Economic Trends, No. 3, 2005, pp. 60-68. 7 See: M. Kakulia, N. Gigineishvili, “The Primary Objectives and Priorities of Monetary Policy in Georgia,” Prob- lems of Economic Transition, Vol. 48, No. 4, 2005, pp. 30-42. 151 CENTRAL EURASIA 2005 Analytical Annual

The Heritage Foundation report notes that by the beginning of 2006 the situation in the banking sector and in foreign investment had improved, with a corresponding improvement in the scores for both these categories by one point to 3.0 and 2.0 points, respectively. The figures for monetary policy (2.0), trade policy (3.5) and fiscal burden (2.3) improved as well. Compared to 2004, there was no change in government intervention in the economy (1.5), wages and prices (3.0), property rights (4.0), state regulation (4.0) and the informal market (4.5). As a result, Georgia’s current rating improved by 0.31 points and it was ranked as a “mostly free” country. Georgia’s classification as a “mostly free” country within two years of the Rose Revolution can be regarded as an encouraging factor, although it is important that Georgia’s own citizens should see their homeland in this light.

RELIGION

Zaza PIRALISHVILI D.Sc. (Philos.), professor at Ivane Javakhishvili Tbilisi State University (Tbilisi, Georgia)

ccording to the 2003 population census, Orthodox Christians in Georgia comprise 83 percent of the total population. I doubt, however, that the census figures accounted for the high level of A labor migration, primarily Azeris and Armenians, therefore I compared these figures with expert assessments. My picture is not completely reliable either, but it does give an idea of the actual situation. My efforts revealed that 80.0 percent of the Georgian population considers themselves Orthodox Christians; 11.0 percent describe themselves as Muslims; 5 percent follow the Armenian Apostolic Church; 0.5 percent are Judaists; 2.5 percent belong to other confessions; and 1.0 percent does not profess any religion. Religious life in Georgia is obviously dominated by an overwhelming number of Orthodox Christians. We should bear in mind that most of them (between 50 and 70 percent according to different sources) consider this religion their historical-cultural, rather than religious identity: they call themselves Orthodox Christians because of the local tradition. This is still an important factor. Re- cently, the number of people who describe themselves as Orthodox Christians for purely religious reasons has been growing. In Soviet times, relations between confessions were an important factor which helped religions to survive. The process was a natural one: in 1962, the Georgian Orthodox Church joined the World Council of Churches and the Conference of European Churches; later, in 1979-1981, the Georgian Patriarchate organized theological discussions between the Georgian Baptists and the Orthodox Chris- tians. In 1983, the Patriarch administered communion to two Catholic priests in the Zion Cathedral— German Celestine Patok and Austrian Ernst Zutner; and in 1989, to a group of young Georgian Cath- olics. When visiting one of the Catholic-populated regions, the Patriarch pointed out that a schism divided Rome and Constantinople, while the Georgian Church had never quarreled with Rome.

152 GEORGIA Religion

Early in the 1990s, a “market of religions” appeared, which was full of organizations adjusting to the newly acquired freedom of worship and using the appropriate missionary technologies. The Orthodox Church at no time considered faith and salvation to be commodities to be put on the market. There is certain logic behind this and religious reasons to be reckoned with, yet, according to Mark Juergensmeyer, this could trigger religious nationalism and religious conflicts.1 Indeed, at some point, certain clerics turned to latent or open religious violence. While in the early half of the 1990s, religious nationalism was part of cultural nationalism, half a century later, religious nationalism developed into an independent ideology. This happened, first, because of the adaptation crisis when the nation, which was returning to freedom after 70 years of Soviet totalitarianism, suffered a considerable cultural shock. Social hardships are the second reason for the same thing. A large part of the nation looked at Christian Orthodoxy as a symbol of deliver- ance. Recent sociological polls consistently demonstrate that the Orthodox Church is the only institution which still enjoys the confidence of 70 to 80 percent of the nation, even though not infrequently confidence can be given as a synonym of hope. By the mid-1990s, it was clear that the conservative right wing of the Georgian Orthodox Church and the religious groups engaged in missionary activities were at daggers drawn. The religious new- comers proved to be well adjusted to the local conditions and obviously inclined, in extreme cases, to open expansion and “new evangelization.” Violence against these groups has already attracted the attention of the human rights organizations. There is an increasing number of publications in the religious and secular media which describe in apocalyptical terms democratization and liberal values as an anti-Orthodox plot. Certain Russian Orthodox ideologists contributed to the theories of alternative historical development. It should be said that starting in the mid-1990s, the Russian imperial avengers began using the ideology of Orthodox globalism as one of their tools.2 Some Georgian clerics were accused (and are still accused) of sympathizing with this project. On 20 May, 1997, under pressure from religious fundamentalists, the Georgian Orthodox Church left the World Council of Churches and the Conference of European Churches. In November 1999, the Patriarchate issued a ban on Orthodox Christians attending the Liturgy during the papal visit to Georgia. In the second half of the 1990s, certain forces enjoying fairly strong public support demanded that Christian Orthodoxy be made the state religion. According to the 1997 public opinion poll conducted jointly by the Arnold-Bergstrasser Institute of Germany and the Caucasian Institute of Peace, Democracy, and Development, 65 percent of the respondents (70 percent of the student respondents) supported the statement that “faith and religious values should dominate all spheres of public and state life.” In 2003, the Orthodox Church and the state signed a Constitutional Agreement which registered the Church’s special role in the Georgian state. The authorities turned a deaf ear to the religious minorities wanting similar agreements. In 1999, a Working Group of the Christian Churches was set up to respond to the mounting violence of the Orthodox radicals. It was transformed into a council of inter-religious cooperation in July 2003 when Muslims and Judaists joined the Working Group. The Christian minorities started a tradition of ecumenical services, but a large part of the Orthodox clergy and their parishioners rejected the practice and the Council. The Jehovah’s Witnesses, who were the main targets of the violence, did not join the movement, but kept to themselves. They still avoid any contacts with other religious groups and NGOs.

1 See: M. Juergensmeyer, The New Cold War? Religious Nationalism Confronts the Secular State, University of California Press, 1993, p. 178. 2 For more detail, see: A. Krasikov, Globalizatsia i pravoslavie. Available at [http://www.archipelag.ru/geoculture/ religions/Eurasia/orthodoxy/]. 153 CENTRAL EURASIA 2005 Analytical Annual

Arrests of several Orthodox radicals after the Rose Revolution whose extremism was largely caused by the sect’s missionary zeal lowered the level of violence and the Jehovah’s Witnesses’ missionary pressure. In 2005, liberal-minded Orthodox clerics and laymen closed ranks around a new publication— the Zgvari (The Limit) journal. By that time tension had subsided. The leader of the Orthodox radicals, former priest Basil Mkalavishvili, was arrested after the Rose Revolution; deprived of its leader the disorganized movement lost its intensity. The absolute majority of the local population looks at the non-Orthodox Christians as people who left the common historical and cultural field and treats them accordingly. This was the background of religious life in 2005. In April, the Christian Orthodox churches were shaken by a scandal involving Patriarch of Jeru- salem Irineos I, who was accused of selling church land to Jewish businessmen. On 6 May, the Synod removed him from his post by 12 Episcopal votes out of a total of 18. The Patriarch refused to obey. Patriarch of Constantinople Bartholomew, who is also the Ecumenical Patriarch, convened a World Orthodox Congress in Constantinople’s St. George Cathedral on 23 May. The Georgian Orthodox Church was represented by a delegation made up of Metropolitan of Tskhum-Abkhazia Daniil (Dat- uashvili), Bishop of Zugdidi and Tsaish Gherasim (Sharashenidze), and cleric of the Zion Cathedral in Tbilisi, Deputy Rector of the Tbilisi Spiritual Academy Archpriest Georgy Zviadadze. The majority voted for his resignation; the delegates of the Polish and East Syrian churches abstained, while the Georgian delegation voted against. Metropolitan Daniil explained this by saying that Irineos was a canonical patriarch, therefore the group that condemned him should, instead, obey him. This was a strategy of universal reconciliation which those who represented Christian Orthodoxy should take into account. The Georgian delegation pointed out that the problem should be further studied with the help of experts in church law. Haste could trigger non-canonical opposition to the head of the church.3 Still, the official decisions of the Holy Synod of the Georgian Orthodox Church of 27 June paid little attention to this fact, which is eloquent enough in itself. The document said in particular: “The Holy Synod confirms that the position of the delegation of the Georgian Church at the Constantinople meeting was correct, yet deems it necessary to point out that the decision belongs to the Jerusalem Church.”4 The response was ambiguous: the critics of the Church agreed with those who believed that the position of the Georgian Church was determined by the accusations of certain clerics accused of corruption and illegal economic activities at home. It was also pointed out that Orthodoxy, which is conservative in nature, demonstrates two approaches to globalization. One of them, a relatively liberal one, is personified by the Ecumenical Patriarchate, looks for ways to adapt itself to the new historical conditions, and recognizes the supremacy of human values. The conservative approach is associated with the Russian Orthodox Church, which interprets all attempts to integrate with contemporary trends as concessions to man’s sinful nature. It uses more archaic vocabulary and the terms “alternative history” and “alternative eschatology.” I have already written that there is a lot of talk about the clerics of the Georgian Church who supported these ideas; in fact, the position of the Georgian delegation was an expression of the latent confrontation in the Orthodox world. The relations between the Russian and Georgian Orthodox churches cannot be described as unambiguous. The former was tempted to encourage religious separatism in the regions trying to detach themselves from Georgia: Abkhazia and Samachablo (the Tskhinvali Region). The Georgian Church was forced to protest against this.

3 Based on the interview Archpriest Georgy Zviadadze gave to the 24 Saati newspaper on 11 June. 4 Vedomosti Patriarkhii, No. 21 (328), 2-8 June, 2005. 154 GEORGIA Religion

After the Orange Revolution in Ukraine, the Ukrainian Orthodox Church began a movement aimed at gaining its independence from the Russian Orthodox Church. It was started by the Kiev Patriar- chate and its head, Patriarch of Kiev and Ukraine Filaret Denisenko. On 22 December, he congratulated Catholicos-Patriarch of All Georgia Ilia II on the anniversary of his enthronement and asked for his support in the Ukrainian Church’s struggle for its independence. He pointed out that the Russian Church was working toward church separatism in Abkhazia and Samachablo, two separatist Geor- gian regions. The official response was never known, but it is unlikely that the Georgian Church would oppose the interests of the Russian Church in Ukraine in any resolute way. Other Orthodox churches have likewise tried to avoid such confrontation. The liberal wing of the Georgian Orthodox believers enthusiastically supported the idea of au- tocephality in Ukraine. In mid-December, a delegation of the Georgian NGO Center for Religious Studies, the members of which included Protodeacon Basil Kobakhidze and the Center’s head, Lado Gogiashvili, attended the Ukrainian Church and Civil Forum. Holy Patriarch of All Ukraine Filaret awarded the Georgians with a Large Church Order of Grand Prince Equal-to-the-Apostles St. Vladimir. In 2005, the contradictions over the ownership of certain churches claimed by the Armenian Apostolic Church became aggravated. The disagreement started much earlier and developed into a permanent bone of contention in the relations between the two countries. Recently, however, the issue moved to the fore. In March, the Georgian Eparchy of the Armenian Apostolic Church issued a press release saying that early in April an Armenian delegation would come to Georgia to discuss the ongoing destruction of the Armenian church and cultural heritage. Head of the Karabakh Eparchy of the Armenian Apostolic Church Pargev Martirosian was to lead the delegation. The Armenian delegation, the statement said, was resolved to discuss the status of the Georgian Eparchy of the Armenian Apostolic Church. After the talks with the Patriarch of Georgia and the Synod, it was decided to set up a commission to study all the relevant issues in depth. Late in March, Armen Rustamian, who represented the Highest Organ of the Armenian Revolu- tionary Federation Dashnaktsutiun and who also headed its parliamentary faction, met, on the Revo- lutionary Federation’s initiative, Ambassador of Georgia to Armenia Revaz Gachechiladze. The Ar- menian side, in particular, voiced its concern about the attempts to make the Armenian churches in Georgia “too Georgian.” On 24-26 November, the Patriarchate of Georgia and the International Center of Christian Stud- ies held the Second International Symposium on “Christianity in Our Life: Past, Present, and Future.” Speaking at the symposium, Levon Isakhanian, assistant for legal issues to the head of the Georgian Eparchy of the Armenian Apostolic Church, pointed out in particular that the Eparchy of the Holy Armenian Apostolic Church has existed in Georgia since the 5th century. During the fifteen centuries of its functioning, said the speaker, it has erected about 600 religious buildings. He also insisted that since the religious organizations needed a corresponding legal status, the legal vacuum in this sphere should be eliminated. This caused quite a stir in Georgian academic circles and the media: the speaker failed to indicate how he had arrived at the figure of 600. It looked more like a typical Soviet-time utopian and nationalist statement than a fact of history. Georgian academics are convinced that the facts were distorted in an attempt to pass them as the Armenians’ concern for democracy and the rights of minorities. The political origins of the figure 600 were confirmed in an interview Vice-Speaker of the Ar- menian Parliament Vagan Ovanesian gave to The Georgian Times (published in the 17-24 November issue). In an interview which predated Levon Isakhanian’s statement, Vagan Ovanesian categorically demanded autonomy for Samtskhe-Javakhetia, in the southeast of Georgia. Back in the 19th century, the Russian administration settled Armenians who fled from Turkey there; this caused the exodus of local Georgians. Today, the Armenians are in the majority in this corner of Georgia.

155 CENTRAL EURASIA 2005 Analytical Annual

On 3 December, the Armenian Eparchy distributed a statement under the eloquent title of “Anti- Armenian Sentiments in Georgia are Gaining Momentum.” The document said in particular: “For some reason, anti-Armenian sentiments are being fanned in Georgia, a country known for its tolerance and Christian traditions. Recently the process has become even more consistent. The Eparchy of the Holy Armenian Apostolic Church in Georgia is very concerned about the negative feelings toward the Armenians living in Georgia, their culture and history. We regret to say that these feelings are supported by the academic circles and some state structures of Georgia.” It seems that the assessment of the response of some Georgian academics to Levon Isakhanian’s statement as persecution of the Armenians and their Church, not to mention cultural genocide and anti- Armenian hysterics, is overstated, to say the least. Before that, in mid-September, those who fought in Karabakh joined the discussion; they sent a letter to President Saakashvili in which they assured him that they were prepared to defend the national interests of the Armenians in Georgia. The letter was inspired by the firing of several Armenians who worked at one of the customs offices on the Georgian-Armenian border. This stirred up mass unrest. The police were called in only after the local people had routed the customs office and the checkpoint. The letter to the president said in particular: “The recent news from Javakhk and other places where Armenians live in compact groups arouses concern; it shows that the Georgian government is carrying out a wide-scale program aimed at squeezing out the Armenians; on several occasions the authorities tried to use force.” The above shows that the issue is not related to the right to profess religion and own the churches—it is part of a much wider political context. It should be said here that the Karabakh conflict was also predated by similar statements about the identity of Armenian national interests, democracy, openness, and human rights. Disputes about the church buildings are still going on and should be resolved by a commission the sides set up. This process might be disrupted by the inability of certain Orthodox circles to carry on a dialog, on the one hand, and the radical political context which gave rise to and is feeding the tension, on the other. There is the fear that if at least one of the demands proves justified and the Georgian side satisfies it, the scale of such demands will inevitably increase. So far it seems that the sides have reached an impasse: the Georgian Eparchy of the Armenian Apostolic Church insists, in very resolute terms, on the return of the Norashen Church in Tbilisi and Surb Nshan Church in Akhaltsikhe. It seems that to defuse the tension and move the problem into the academic and legal context, the Georgian side must demonstrate more initiative. The demands of the Catholic Church, which wants back four cathedrals now used by the Patri- archate in Kutaisi, Gori, Ivlita, and Uda, should be satisfied. This should have been done long ago since the Catholics are open to cooperation and a dialog with the Orthodox Christians. There are similar problems in the relations between the Orthodox Church and the Muslim community, the second largest religious community in Georgia, yet they are not marred by conflicts. The relations between the two religious communities are undoubtedly affected by tradition and past practices. It should be said that relations between Georgia and Azerbaijan are good; their common political interests undoubtedly affect the relations between these confessions. Despite certain concerns aroused by Wahhabism, which has already appeared in several Muslim states, relations between the Orthodox Christians and Muslims in Georgia have not changed, even though there are political forces intent on interpreting rare personal conflicts as religious intolerance. On 5-8 June, 2005, Catholicos-Patriarch of All Georgia Ilia II paid an official visit to Azerbaijan where he met Sheikh-ul-Islam and Chairman of the Spiritual Administration of the Muslims of the Caucasus Allahshukur Pashazade at his residence. On 6 June, Ilia II met Parliament Speaker Murtuz Aleskerov; and the same day he was received by President Ilham Aliev. On 7 June, Catholicos-Patri-

156 GEORGIA Religion arch Ilia II conducted a prayer service in the Christian Orthodox Cathedral of the Caspian Area and the city of Baku. At the same time, the Muslims in Georgia are still experiencing certain difficulties, some of them dating back to Soviet times. In 1951, for example, the so-called Shi‘a Blue Mosque in Tbilisi was destroyed by the Soviet government. Today, the Shi‘a and the Sunni share one mosque. The Muslims want greater involvement in state administration and better social and economic conditions in the Azeri- populated regions. It should be added that the clashes on the Georgian-Azeri border between the local power structures and local Azeris forced to engage in smuggling to support their families have never been described in Azerbaijan as ethnic and religious persecution or genocide. On 6 April, the parliament amended Art 1509 of the Civil Code, under which religious organizations acquired the right to register as non-commercial legal entities. The Catholic, Armenian Apos- tolic, and Lutheran Evangelical churches rejected this innovation and objected to different statuses for religious organizations. They demanded that a law on religious organizations be adopted, or that these structures sign an agreement with the state similar to that between the state and the Georgian Christian Orthodox Church. Speaking in the parliament, Ombudsman Sozar Subari called on the country’s leaders to sign an agreement with religious organizations similar to the Constitutional Agreement between the state and the Georgian Christian Orthodox Church. Most of the deputies responded negatively, however, certain legal changes are obviously necessary. Such agreements cannot be signed with all the religious organizations—there are several dozen of them and some of them have a tiny following. On 22 January, the Ministry of Education and Science and the Patriarchate signed a memorandum based on the agreement between the Patriarchate and the state. The newly signed document envisaged in particular that a joint commission be set up to write textbooks on Christian Orthodoxy and draft corresponding curricula; to create a system for screening, training, and appointing teachers; to draft procedures under which representatives of the Autocephalous Apostolic Orthodox Church of Georgia would be involved in drafting curricula and discussing textbooks on Christian Orthodoxy; to create a legal basis of funding, as well as of the property rights of the Georgian Church’s educational organizations and orphanages; and to decide on the forms and conditions of cooperation between the state and the Georgian Church in educating the youth. According to the ombudsman, the memorandum violated the constitutional principle of separation of the church from the state and implied discrimination of other confessions.5 On 8 April, the parliament passed the Law on General Education, under which proselytism, indoctrination, and demonstration of religious symbols for purposes other than academic in general schools were banned. The law limited the possibility of using the educational process for religious education. The memorandum and the law were thus mutually contradictory, while their appearance within a very short period of time demonstrated that the people in power were doing their best to preserve good relations with the Christian Orthodox Church, especially with its radical wing, while still posing as liberals. The year 2005 was a very important one as far as historical accommodation of the Christian Church to the current situation was concerned. In May, a Coordinating Center of Inter-religious Relations in State Development was set up under the Patriarchate. It concentrates on improving the social situation, introducing ideas of a healthy way of life among young people, restoring the state’s territorial integrity, etc. So far, these aims have remained on paper, but this is much more appropriate than the attitude toward people of other confessions demonstrated by the radicals among the Orthodox Christians.

5 For more detail, see: [http://www.sakartvelo.info/result]. 157 CENTRAL EURASIA 2005 Analytical Annual

A similar structure called the Council of Religions with 18 religious groups represented in it was set up under the ombudsman’s office to protect the rights of religious minorities and integrate them into the life of the state. There is a certain amount of tension between the two structures, but today they are mutually complementary. The ombudsman office is making statements which are not expected from the Patriarchate: about the media, which are demonstrating intolerance, or about clerics whose activities raise serious doubts. On 21 June, the ombudsman and religious representatives of the religions in the Council of Religions signed a memorandum which said in particular: “We are convinced that we should help to build a democratic state ruled by the law; we should actively participate in civil integration, create an atmosphere of tolerance, take part in the peaceful settlement of conflicts, and shoulder social, moral, and ecological responsibility. We believe that we should work together to protect international standards of freedom, human rights, and principles of the Constitution of Georgia.”6 I have already written that on 24-26 November the Patriarchate and the International Center of Religious Studies organized the Second International Symposium on “Christianity in Our Life: Past, Present, and Future.” This multi-confessional event was attended by about 40 guests from other countries. Despite several unpleasant incidents, the symposium was interesting for all those who attended and demonstrated that the Patriarchate was willing to talk to other religious groups.

6 For more detail, see: [http://www.sakartvelo.info/result].

INTERNATIONAL AFFAIRS

Archil GEGESHIDZE Ph.D. (Geogr.), Senior Fellow at the Georgian Foundation for Strategic and International Studies (Tbilisi, Georgia)

saw the onset of a geopolitical (according to the World Bank ratings),1 while shift in Georgia’s most recent institutionally the republic should integrate into 2005 history. The country began mak- the Western structures, particularly NATO. ing efforts to reach a qualitatively new level of What is more, it is understood that joining the development, entailing continuous economic European Union, in contrast to joining the modernization and bringing the country’s polit- North Atlantic Alliance, will hinge to a lesser ical system into harmony with the Western model extent on the changes in geopolitical conditions of democracy. The mid-term strategic goal to be reached by the next presidential term (2009- 1 In an interview with Russia’s RTV on 17 Decem- 2014) is to achieve macroeconomic indices ber, 2005, Georgian Prime Minister Zurab Nogaideli said which will ensure territorially reunited Georgia that the current rates of the country’s economic development will continue and in 6-7 years, it will be on a par with Rus- the status of an upper-middle-income country sia in terms of per capita GNP. 158 GEORGIA International Affairs and achieving the level of the Copenhagen crite- This prospect may seem rather too ambitious ria will be a challenging task.2 to the minds of Western observers, but the country’s authorities are zealously raising the population’s hopes of reaching the indicated goals, and 2 See: S. Kapanadze, “The Paths to Europe,” 24 Hours, consequently many are inclined to believe that No. 26, 9 April, 2004. they can indeed be achieved.

Foreign Policy

The country’s foreign policy reference points have not changed, since in the past they were basically defined correctly and subsequently have been based on public consensus. I am talking about Georgia’s pro-Western policy, which is inspired by the striving to: (a) achieve a rational balance of resources among the participants in the Abkhazian and South Ossetian conflict-settlement process by increasing the West’s role and reducing Russia’s dominating role; (b) integrate into the European and Euro-Atlantic structures; (c) make full use of transit potential; (d) attract primarily Western investments; and (d) further intensify relations with the U.S. in political and economic spheres, as well as in security. Admittedly, in 2004, the new political elite came up with the illusionary idea of combining the pro-Western vector of development with improvement of relations with Russia. At that time, the Georgian leadership called on the Russian Federation “to start relations all over again from scratch.” It is to the new government’s credit that it rather quickly understood how pointless it was to hope that Russia would voluntarily reject its plans to prevent the West from penetrating into the Southern Cau- casus as a result of “Georgia’s surrender to NATO and the EU.” After freeing itself from this illusion, official Tbilisi was able to take sober stock of the situation and begin implementing a principled foreign policy with respect to the Russian Federation.

Relations with Russia

The content and nature of the issues on the agenda indicate unequivocally the unfriendliness, to put it mildly, of the relations between Georgia and Russia, since unresolved problems prevail over issues which have been resolved on a mutually advantageous basis. The most urgent of them is Rus- sia’s lack of desire to take a constructive approach to the settlement of the ethnopolitical conflicts in Georgia’s territory and its continuing attempts to duck out of the obligations assumed under the OSCE Istanbul Agreement on the withdrawal of its military bases from Georgia. After the Rose Revolution, the Georgian government, enjoying the West’s, and particularly the U.S.’s,3 unprecedented blessing, placed its stakes on a policy of diplomatic coercion, including with respect to Russia’s fulfillment of its obligations under the Istanbul Agreement. As a result of this, the Russian Federation adopted a decision to start withdrawing its bases (the first batch of weapons has already been sent to Russia, and

3 As early as the 1990s, the Georgian authorities tried to convince their Western partners to actively cooperate with Russia in order to incline it in favor of a constructive peacekeeping process. The insufficient support rendered to Georgia by its Western partners during conflict settlement allowed the Russian Federation to shy away from carrying out its obligations as an unbiased mediator and conduct a policy aimed at freezing the settlement process. What is more, elements of so-called creeping annexation of the conflict zone were clearly seen in its actions. Only after the Rose Revolution were issues regarding overall security in Georgia, and problems of conflict settlement in particular regularly placed on the agenda of relations with official Moscow. This is being done most frequently within the U.S.-Russia dialog. 159 CENTRAL EURASIA 2005 Analytical Annual the entire process is to be completed by 2008).4 If official Moscow indeed fulfills all of its obligations in this sphere, it will be gratifying to say that one of the main thorns in bilateral relations has been removed. However, the decision on the military bases was not enough to improve these relations in general. The main problem—Russia’s lack of desire to assist in real settlement of the conflicts in Abkhaz- ia and South Ossetia—continued to make its presence known and required even greater efforts from the Georgian government. A decision was adopted to ensure Russia’s constructive participation in unfreezing the conflict settlement process, particularly in South Ossetia.5 With the corresponding support of the international community, which approved the Peace Plan put forward by the Georgian leaders on settlement of the conflict in South Ossetia,6 Georgia managed once again to incline Moscow toward supporting this initiative. However, the Russian Federation tried to make adjustments to the overall process in order not to lose control over the situation, in response to which official Tbilisi tried to reduce Russia’s influence by raising the question of the expediency of continuing the peacekeeping operations in Abkhazia and South Ossetia in the current format. In particular, the Georgian parliament adopted a resolution which said that if the Russian side did not take measures to increase the efficiency of the peacekeeping operations in South Ossetia and Abkhazia, the question of curtailing them should be raised.7 Incidentally, Russia is always trying to do Georgia a bad turn. Along with the Russian Fed- eration’s well-known policy in the conflict zones and the visa system it recently introduced, in November it placed an embargo on Georgian agricultural products, primarily on citrus fruits. Its intentions are clear, but not entirely understandable with respect to the political significance of this step—while the processing industry responds to what is going on and readjusts, the Georgian farmer will suffer. The consequences of Gazprom’s (read Russia’s) decision in mid-December to hike up the price of natural gas could be much more serious.8 Taking into account the well-known gas conflict with Ukraine at the end of 2005-beginning of 2006, this decision casts aspersions on Russia’s reliability as a supplier of energy resources. In all likelihood, the Russian Federation is planning to make ever frequent use of levers of economic pressure in its relations with Georgia. Along with possibly repeating its economic sabotage by halting the supply of gas at the drop of a hat, it could also further hike up the price for fuel, which it will justify as being caused by the “laws of the market.”

Cooperation with the U.S.

In 2005, relations with the United States acquired all the features of strategic partnership. Based on the growing compatibility of democratic values and the coincidence of strategic interests in the region, they have reached a qualitatively new level, which was shown in particular by the U.S. pres-

4 On 10 March, the Georgian parliament adopted a resolution On Military Bases of the Russian Federation Located on the Territory of Georgia, according to which the Georgian government held talks on and coordinated the deadlines for withdrawal of the bases with Russia. Available at [http://www.parliament.ge/index.php?lang_id=ENG&sec_id=98&info_id=944]. 5 To unfreeze the conflict settlement process conflict in South Ossetia, it was suggested a settlement plan be drawn up and the existing conditions of the peacekeeping operation changed. 6 The Peace Plan was drawn up on an initiative put forward by the Georgian president on 26 January at the Parlia- mentary Assembly of the Council of Europe and supported by the OSCE, EU, U.S. (see, for example, Senate Resolution 344), and others. Available at [www.president.gov.ge/others/initru.htm]. 7 Resolution of the Georgian parliament of 11 October On Current Situation in the Conflict Regions on the Ter- ritory of Georgia and Ongoing Peace Operations. Available at [http://www.parliament.ge/index. php?lang_id= ENG&sec_id=98&info_id=7268]. 8 Beginning on 1 January, 2006, the price for the gas delivered to Georgia was raised from $62.5 to $110. Despite the fact that the decision to raise the price of Russian gas was also made for other countries, this is no comfort to Georgia. 160 GEORGIA International Affairs ident’s visit to Georgia on 9-10 May. The main feature of these relations is the fact that they are no longer strictly humanitarian, but have acquired the nature of systemic support of the development course chosen by official Tbilisi. In the 2005 fiscal year, Georgia continued to be one of the top per capita recipients of U.S. government aid (a total of $138.9 million). These funds were used not only to develop democratic institutions and implement economic and social programs, but also to continue cooperation in military-building.9 In particular, a new program called Sustainment and Stability Operations has begun, one of the important aspects of which is to bring the Georgian armed forces into harmony with NATO standards. Talks ended on determining investment programs under the Millennium Challenge Account initiative. Based on the priorities proposed by Georgia, four major projects were identified for a total of $297 million. These projects, which are to begin in 2006, mainly relate to assisting economic growth and the construction and/or rehabilitation of infrastructure. An important element of political support by the U.S. is intensification of the American-Russian dialog on Georgia’s security problems. This is largely what prompted the withdrawal of the Russian military bases from Georgia to begin. Tbilisi, in turn, helped the United States by dramatically increasing the size of its peacekeeping contingent in Iraq. In terms of per capita involvement, Georgia, with 850 soldiers and officers, has become the second largest sponsor in the coalition.

Relations with NATO and the European Union

The European and Euro-Atlantic vectors remained dominating in Georgia’s foreign policy. The main efforts were aimed at implementing the Individual Partnership Action Plan (IPAP), that is, a program for modernizing the country, particularly its armed forces, coordinated with NATO. In keeping with the integration strategy in the Alliance and on the basis of a positive assessment of the implementation of the IPAP, Georgia will most likely be asked to join the Membership Action Plan (MAP) before the end of 2006. In this respect, attention was focused on creating an efficient management mechanism for implementing the IPAP. For this purpose, a mechanism for coordinating and monitoring implementation of the IPAP was created, the main elements of which are a corresponding state commission headed by the prime minister and an interdepartmental coordinating state commission for realizing Georgia’s priorities during integration into NATO and the European Neighborhood Policy (ENP).10 Incidentally, a special NATO commission gave a positive assessment of the reforms carried out within the IPAP. Further rapprochement and eventual integration into the EU are of equal importance. But since possible membership in the European Union is still somewhere beyond the horizon, the intensity and dimensions of activity in this area fell short of the efforts made to fulfill the obligations under the IPAP. Nevertheless, the government carried out the necessary preparatory work for beginning talks on the action plan within the framework of the ENP. On 2 March, the European Commission published its Country Report on Georgia,11 after which preparations began for the talks. In particular, proposals were drawn up on the priority areas in the corresponding vectors. The main priorities for the near future

9 Within the framework of the Train and Equip program completed in 2004, four infantry battalions, one mechanized battalion, as well as an armored company were trained. 10 The commission is headed by the state minister for European and Euro-Atlantic Integration. 11 Available at [http://europa.eu.int/comm/world/enp/pdf/country/georgia_cr_0503.pdf]. 161 CENTRAL EURASIA 2005 Analytical Annual are to ensure active involvement of the EU in political settlement of the conflicts. Important mid-term areas are rehabilitating the energy and transport infrastructure, as well as activating the Four Freedoms principle.12 The sides agreed that the first round of the talks held on 29-30 November was on the whole successful.

Relations with the Regional Countries

In the regional dimension, Georgia’s foreign policy activity was dynamic as usual, although the focus and intensity of contacts were largely determined every time by the changes in the political environment. Over the past ten years, due to the energy corridor being built through the Southern Caucasus, in particular the Baku-Tbilisi-Ceyhan oil pipeline, Georgia’s cooperation with Azerbaijan has developed into a strategic partnership, which was promoted by their historical closeness, the friendship between their political leaders, and other factors. And since the energy corridor will retain its region-forming significance, these relations will continue to be strategic in the future. What is more, after the Baku-Tbilisi-Erzurum gas pipeline and Kars-Akhalkalaki-Tbilisi-Baku Rail Corridor are launched, bilateral relations will strengthen even more. In addition, after the Orange Revolution in Ukraine, this country acquired a special strategic significance for Georgia. Ukraine is an ideal partner for Georgia as they head toward NATO and the EU. This explains the perceptible intensification of bilateral relations aimed at coordinating efforts to implement the strategy for integrating into these structures. The jointly initiated Community of Dem- ocratic Choice is a vibrant example. On the whole, in 2005, Ukrainian-Georgian relations were the most dynamic in Georgia’s bilateral contacts with the post-Soviet states. The agenda of bilateral relations with Turkey did not undergo any significant changes. The main issues were still building oil and gas pipelines, as well as preparations for building the Kars-Akhalka- laki railroad. An important indication of the growing trust and closeness between the neighboring nations was the agreement reached on eliminating the visa regime beginning in January 2006. Relations with Armenia have always been civil and imbued with a feeling of mutual respect. The main questions of bilateral cooperation are traditionally related to transport and power engineering. What is more, the year was designated by a significant increase in tourists from Armenia to Georgia, whereby in the near future, this trend is expected to increase even more. It should also be noted that Armenia’s investors are showing an interest in Ajaria’s recreation and transport infrastructure. Further activation was noted in relations with Rumania. After Rumania and Bulgaria join the EU in 2007, the Black Sea will become a European sea, and Georgia will directly border on the Eu- ropean Union. In this context, expanding comprehensive cooperation with these countries is acquiring increasing significance for Georgia. It is worth noting that in 2005, the Rumanian president came to Georgia twice. In April, a GUAM summit was held in Kishinev, at which a Declaration “In the Name of De- mocracy, Stability, and Development” was adopted in the presence of the Lithuanian and Rumani- an presidents, who were invited to attend. This declaration stated the Organization members’ willingness for the first time in history to cooperate in the military-political sphere, including in peacekeeping operations. It is believed that as a new vision forms of the strategic significance of the Black Sea Region with respect to security in the Euro-Atlantic space, interest in GUAM will significantly increase.

12 The Four Freedoms principle means free movement of goods, services, capital, and labor. 162 GEORGIA International Affairs International Activity

There can be no doubt that main event in the state’s international life was U.S. President George Bush’s visit to Georgia. First of all, this visit showed that the U.S. recognizes the importance of the democratic changes which have begun in the country. Second, Russia was shown that the democratic community was taking Georgia under its wing. Third, the visit prompted donor countries and international organizations to reconsider, in terms of increasing, the amounts of technical and other aid they are granting Georgia. The beginning of withdrawal of Russian military bases from Georgian territory was also of historical significance. This process is mainly important for the fact that its completion will also signify the end of the “Russian boot” era in Georgia. Along with reinforcing the country’s sovereignty and security, it will also have a moral and psychological effect on the nation. The launching of the Baku-Tbilisi-Ceyhan oil pipeline is definitely one of the most important events of the year. It is not only significant because of its pioneering nature (it will be followed by a gas pipeline of no less political and economic significance), but also because its launching symbolizes the strong solidarity among three friendly states and nations in the name of victory in a complicated geopolitical game. The Georgian president’s initiative in January at the Council of Europe Parliamentary Assem- bly on peaceful settlement of the conflict in South Ossetia helped to get things moving again. Soon thereafter a three-stage plan was drawn up, which needed international support to be successfully implemented. To the credit of Georgian diplomacy, this support has now essentially been forthcoming. The next task is to put it into action. In August, in the town of Borzhomi, the Georgian and Ukrainian presidents came forward with a proposal to create a Community of Democratic Choice, which aroused an immediate international response. This structure was created at a founding session organized in December in Kiev, and at that time comprised of Georgia, Ukraine, Lithuania, Latvia, Estonia, Rumania, Moldova, Slovenia, and Macedonia. The beginning of the talks on the ENP Action Plan was also a significant event of the year, as well as the meetings between representatives of the Georgian government and the European Union. Despite the fact that the noted events were only the start of a larger process, they mark the beginning of an important stage in Georgian-EU relations. Along with this, the year was marked by an unprecedented number of visits by high-ranking delegations of many countries and international organizations, in particular by the U.N. Secretary General, and the presidents of Armenia, Latvia, Ukraine, Kazakhstan, Finland, Lithuania, Rumania, and Estonia. The country’s dynamic international life also consisted of conferences and seminars, the number of which was much higher than in the previous period. Among the most important, we will note the international conference called “The Southern Caucasus in the 21st Century,” which was held by the Georgian Foundation for Strategic and International Studies with the support of the Japanese Sasa- kawa Peace Foundation. This was the first large conference on the Southern Caucasus held in the region, which gathered around 150 participants from 34 countries. The “New Wave of European Liberation: Democracy and Transformation” forum held in Tbi- lisi with the participation of the Georgian, Ukrainian, Estonian, and Rumanian presidents coincided with the second anniversary of the Rose Revolution.

International Image

The country’s international image generally remained positive largely due to the revolutionary events of 2003. What is more, the reforms in certain sectors of the economy and political life, as well

163 CENTRAL EURASIA 2005 Analytical Annual as the events mentioned above made a significant contribution to preserving Georgia’s growing reputation. What is more, international organizations provide interesting information for synthesis and corresponding evaluations which do not always please the patriotic fanatic or self-satisfied bureau- crat. We will present a brief review. n The Council of Europe.13 In general, large-scale and long-term reforms have been set on the right track. Georgia deserves praise for the first tangible results in the fight against corruption. The Assembly welcomes the adoption, in cooperation with the Council of Europe, of a Strategy and an Action Plan for the fight against corruption. However, most reforms are still at the very beginning, and much still remains to be done to bring legislation in line with European standards. Not all the European charters and conventions have been signed or ratified, nor have several recommendations from the former resolution (1415) been executed. n International Religious Freedom Report.14 After the Rose Revolution, the status of religious freedom improved. Attacks on religious minorities, including violence, verbal harassment, and disruption of services and meetings, decreased, but instances still occur. The U.S. leaders repeatedly raised their concern about the mentioned incidents with the country’s leaders, in particular with President Mikhail Saakashvili, senior government officials, and members of parliament. n Freedom House.15 As a result of the Rose Revolution, the political rights rating improved by one point and is equal to 3; the civil liberties rating amounts to a “4.” The country’s status remains the same: “partly free.” Freedom of confession is largely respected, but there are still certain problems with holding assemblies of representatives of non-traditional religions; under the former political regime, the press enjoyed more freedom. Now signs of inhibition and self-censorship are seen; jurisdiction is not entirely free, courts regularly feel pressure from executive power. n Human Rights Watch.16 Since the Rose Revolution at the end of 2003, the government has had an uneven record on human rights. In 2005, it continued to prioritize its campaign against corruption and for territorial integrity. Its ambitious reform agenda is supported by the international community. However, at times it carries out reforms hastily, without broad and open consultation and without the thoroughness or detail necessary to eradicate entrenched human rights problems. n Transparency International.17 The corruption perceptions index (CPI) improved slightly compared with the previous year. On a 10-point scale, the new index amounts to 2.3 (compared to 2 in 2004), which made it possible for Georgia to raise its position from 136th to 133rd (out of 138 countries). The CPI is a “survey of surveys” which reflects the perceptions of the degree of corruption as seen by business people and country analysts (both foreign and those who represent the countries themselves). n World Competitiveness Report.18 This is an annual report of the World Economic Forum reflecting indices of competitiveness of 117 national economies. In 2004 Georgia was in-

13 From Resolution 1477 (2006) of the Council of Europe Parliamentary Assembly. 14 International Religious Freedom Report 2005. Report prepared by the Bureau of Democracy, Human Rights, and Labor (U.S.). 15 Freedom House is a prestigious nongovernmental organization called upon to assist the advance of democracy and economic freedom by means of different programs and publications, in particular, reports on the level of democratic freedoms in 192 countries. Available at [www.freedomhouse.org]. 16 Human Rights Watch World Report 2006. 17 Available at [http://www.transparency.org/policy_and_research/surveys_indices/cpi/2005]. 164 GEORGIA International Affairs

cluded in this report for the first time, so it is now possible to make the first comparison. In the table presented below, a certain amount of progress can clearly be seen:

Ranking in 2005 Points in 2005 Ranking in 2004 Change in Ranking

86 3.25 94 +8

n Standard&Poor’s International Rating Agency.19 Georgia obtained an improved long- term credit rating compared with the last period of “B+”, which enhances the country’s reputation in the eyes of its potential investors. n Economic Freedom Index.20 This index, which is drawn up every year by the U.S. Herit- age Foundation, is an important indicator for businessmen and investors. For the first time in the 11 years of observations, Georgia obtained 2.98 points, which made it possible for it to occupy 68th place and gain the status of a “mostly free” country. If we keep in mind that certain parameters, for example, the level of economic regulation, were taken from 2004 when the reforms in this sphere had only just begun, Georgia objectively deserves a higher position.

* * *

In spite of all the possible shortcomings in the methodology used by the above organizations to evaluate the situation, other international structures, for example, NATO and the European Union, as well as individual countries and business communities take heed of their opinion. Consequently, these and other resolutions, reports, and indices are of primary importance for forming the country’s international image. A quick analysis of the information presented makes it possible to conclude that on the whole Georgia’s international reputation is on the rise, but certain “defects” remain. Consequent- ly, corresponding conclusions should be drawn.

B y W a y o f S u m m a r y

So it can be stated that from the viewpoint of international affairs, 2005 was the most productive year of the recent past. The main tasks posed and carried out were mainly related to Russia, the conflict in South Osse- tia, and integration into NATO and the EU. These areas were all characterized by a dynamic, targeted, and principled approach. Observers noted the country’s continued inclination toward the West, whereby it retained the geopolitical reference points it chose in the past. The country is moving toward NATO and the EU at a much more intensive and faster rate. At the same time, Georgia’s striving to move closer to Ukraine, as well as to other countries of the Black Sea and Baltic regions, than to the South Caucasian coun-

18 Available at [http://www.weforum.org/site/homepublic.nsf/Content/Growth+Competitiveness+Index+rankings+ 2005+ and+2004+comparisons]. 19 Available at [http://www2.standardandpoors.com/servlet/Satellite?pagename=sp/Page/IndicesMainPg&r= 1&l=EN&b=4]. 20 Available at [http://www.heritage.org/research/features/index/]. 165 CENTRALGEORGIA EURASIA 2005 InternationalAnalytical Annual Affairs tries, is becoming more obvious. In this respect, the Baltic countries have been particularly active in rendering moral and political support to Georgia and, just as important, in sharing their experience regarding nation-building and integration into Western institutions. Against this background, certain changes are noted in Russian-Georgian relations. Georgia’s fidelity to its principles and at times lack of compromise in issues to which Russia is sensitive is making the expert community worry about Russia’s likely undesirable response. This applies in particular to the possible escalation in tension in the event of withdrawal of the peacekeeping forces from the conflict zones. All the same, if the main trends of the year continue, the noted geopolitical shift will become irreversible, which in the near future will give Georgia the reputation of a democratic and stable state.

166 REPUBLIC OF KAZAKHSTAN General Overview

REPUBLIC OF KAZAKHSTAN

GENERAL OVERVIEW

Timur SHAIMERGENOV Member of the Secretariat of the Kazakhstan Parliament Majilis (Astana, Kazakhstan)

he main event of the year was the presidential election, which had an effect on most of the other processes going on in the country in one way or another. The year was essentially a turning point T in the republic’s transition to a qualitatively new stage in its socioeconomic and political development. In this respect, several characteristic features can be singled out. First, there was a further upswing in the economy and social stability, which formed a springboard from which other processes could take off. Second, thanks to some real democratic changes that have taken place in the country, the election of the head of state retained the status quo in the republic’s leadership. Third, Kazakhstan gained a stronger international foothold, which also enhanced its image as a pioneer of economic reform and democratization among the Central Asian countries. It should also be mentioned that the world community focused special attention on the republic throughout the year. And this stands to reason. After the wave of so-called color revolutions in several post-Soviet countries, the world community was keenly interested in the outcome of the upcoming presidential election in Kazakhstan too. Kazakhstan was the first country to offset the destructive wave of these revolutions in a flexible and innovative way, that is, by means of the evolutionary path of its development, which came as a surprise both to the revolutionaries and to many of their political adversaries. Practice showed that the economic reforms carried out in the country were quite efficacious. On the whole though, the logic of all the processes going on in the republic was based on the strategy “first the economy, then politics.” For example, thanks to the high economic growth rates in 2003-2005, the volume of the per capita GDP rose 1.7-fold, amounting to $3,620. In 2005, the republic reached a state budget spending level of approximately 28% of the GDP, while growth in GDP at the end of the year amounted to 9.4%. Experts maintain that this index could soon exceed (if it has not already exceeded) the total GDP volume of the seven Central Asian and Caucasian states.1

1 According to the information of Vneshneekonomicheskie sviazi. Available at [www.eer-magazine.com/ru/1044.html]. 167 CENTRAL EURASIA 2005 Analytical Annual

Nevertheless, a two-fold drop in production growth rates was observed, which was caused by the reduction in activity in all sectors of industry forming approximately 30% of the GDP. But in so doing, 84% of all direct investments went to the metallurgy and oil and gas industries, which inspires hope that the growth rates will pick up again. Thanks to the achievements in the economy and the stable sociopolitical situation, Kazakhstan is the most investment-attractive country in the region with an annual volume of foreign investments of $30 billion. This is allowing the country’s leadership to continue its course toward diversification of the economy on the basis of the Strategy of Industrial-Innovative Development, which was drawn up and approved, and toward the attraction of science-intensive technology. This is extremely pertinent for the republic, since according to many experts, it might otherwise become “addicted to the oil habit.” In 2005, Kazakhstan made itself known as a future space nation, at least as a country capable of independently launching spaceships in the near future. In order to reach this goal, a National Space Program was prepared, which is gradually turning into a systemic program of action by creating such specialized enterprises as Kazkosmos, Baiterek, and KazSat. In spite of the objective problems, there are plans to implement these programs in the very near future. What is more, economic growth became the catalyst for deep-seated social transformations, which in turn had a positive effect on the population’s social well-being and participation in the country’s sociopolitical life. Nevertheless, worrying trends are being manifested in the social sphere. For example, the creation of jobs and job opportunities are mainly concentrated around large cities, while there is still disproportion between regions on the job market due to the low mobility and migration of the republic’s residents. What is more, illegal labor migration from Uzbekistan and Kyrgyzstan is taking its toll on the domestic labor market. As for politics, the year can be divided into three periods. The first, which continued until the beginning of July, was full of debate about the possible date of the presidential election and whether the current head of state would run for office again. When it was officially announced that this election would definitely be held in 2005, all of the country’s political forces threw their time and energy into preparing for the election campaign, which ended in the nation going to the polls. The third period began after the election, which, due to the voting results and particularly Nursultan Nazarbaev’s re-election, was characterized by defused political tension and stable sociopolitical development. Despite criticism from certain political forces, the country’s leadership did not deny the need for political reforms, but did not hurry to carry them out either. According to the republic’s president, Nursultan Nazarbaev, this issue should not be rushed, because democracy is an evolutionary process and the country must go through all of its stages. Abrupt changes are fraught with unpredictable consequences. In particular, the decree signed by the head of state on 4 May On Measures on Further Use of the Potential of the Kazakhstan Constitution demonstrated that the country’s leadership has armed itself with a strategy of gradual political modernization of society. The next strong move initiated by the authorities within the framework of the National Com- mission on Democratization and Civil Society (NCDCS) was a discussion about the future political reforms, which all the political forces, regardless of their ideological views, were asked to participate in. In this way, through the activity of the NCDCS, the world community was sent a clear message that Kazakhstan seriously intends to build democracy by conducting political reforms, and the presidential election reinforced the republic’s democratic image once and for all. The election campaign itself became a catalyst for citizen-generated political activity. This was shown in particular by the numerous acts of support, as well as by the 77% of the electorate who came to the polls. Here it should be noted that based on Kazakhstan’s current achievements, Nursultan Nazarbaev’s victory was to be expected. And one of the main tasks was to ensure that the election was recog-

168 REPUBLIC OF KAZAKHSTAN General Overview nized as legitimate, which indeed happened. Most international observers noted its open, alternative, and democratic nature. However, no one expected Nursultan Nazarbaev to receive 91% of the votes. But given the current sociopolitical reality, it is as clear as day that the planned political reforms can only be carried out by a person who not only enjoys the unconditional trust of society, but is also well aware of all the costs of the power system he built. So, in this case, Nursultan Nazarbaev was the logical choice. The year was also a turning point for the opposition. Unjustifiably ambitious and unable to overcome its internal bickering, it split into several groups, which were polar in their ideological approaches. It can be noted with certainty that as things stand at the moment, the opposition flank demonstrated utter political and technical incapacity while organizing the election campaign, but the main thing was that it lost in the game of public politics. In this way, due to the destructive internal trends, a systemic opposition did not develop either, and the country’s leadership managed to better organize and prepare for the election race, whereby it also clearly understood the path of the country’s further development. In so doing, while putting a damper on the provocative calls of the opposition to take radical action, the government worked very cautiously, thinking out its every step, and making correct use of the latest political techniques. The arguments that the opposition was placed at a disadvantage were only its unsuccessful attempt to justify its defeat. But one of the main questions regarding the upcoming political reforms was what the Kazakhstan opposition would look like in the near future and around which political figures it would form? The year was also characterized by the high level of Kazakhstan’s foreign political activity. While retaining its main priorities in this sphere, Astana is carrying out a multi-vector foreign policy, which is justified in practice and places the emphasis on strengthening relations with the European Union on the whole and its countries in particular, as well as with China, Russia, and the U.S., without undermining the importance of cooperation with other states. Kazakhstan’s Eurasian strategy initiated by President Nursultan Nazarbaev is being carried out on the basis of integration, by means of participation in various international organizations. In this respect, several major events can be singled out which took place in Kazakhstan in 2005. On 4 July, a SCO summit was held in Astana, which became an important stage in this organization’s development; on 1 October, the 15th session of the Council of Foreign Ministers of the ECO member states took place; at the beginning of November, the republic made voluntary contributions to the fund of several U.N. institutions; and on 16-18 November a meeting was held of a Special Working Group of the Conference on Interaction and Confidence-Building Measures in Asia (CICBMA). According to the results of the presidential election, Kazakhstan recommended itself as a democratically developing country, and in so doing made a serious bid for chairmanship in the OSCE in 2009. What is more, during the year, the republic was a site of diplomatic pilgrimage and focus of attention for the most prominent world and regional politicians. In 2005, Kazakhstan was visited by Vladimir Putin, Condoleezza Rice, Henry Kissinger, OSCE Representative for Central Asia Alojz Peterle, Director of the ODIHR/OSCE Christian Strohal, EU Special Representative for Central Asia and the Caucasus Jan Kubish, NATO Secretary General’s Special Representative for Central Asia and the Southern Caucasus Robert Simmons, color democrats Mikhail Saakashvili, Viktor Iushchenko, Kurmanbek Bakiev, and others. Such high interest in Kazakhstan indicates that the republic’s role in international affairs today is undergoing qualitative changes. According to many politicians, the republic is staunchly assuming a key position in the region and becoming its political and economic center. Military-political cooperation was actively developed in two main areas. On the one hand, with Russia, India, and such organizations as the CSTO and SCO, and on the other, with the U.S., Turkey, and NATO. In practice, this was expressed in talks and the signing of several documents, as well as in holding joint exercises. They included “Rubezh-2005” (within the framework of the CTSO), Kazakh-

169 CENTRAL EURASIA 2005 Analytical Annual

American “Balance-Zhardem-2005,” and Kazakh-British “Steppe Eagle 2005” with the participation of U.S. and Turkish observers. What is more, in the format of an international coalition, Kazakhstan’s armed forces continued to participate in the postwar regulation in Iraq. But in so doing, it should be noted that although multilateral cooperation in the military-political sphere is helping to raise the level of security, the country is in danger of finding itself in the epicenter of controversies among rivaling international structures. In this way, according to the conception of the so-called Triple Transit, which includes economic reforms, political liberalization, and high-quality transformation of public consciousness, Kazakhstan is confidently continuing its modernization. Of course, the country has its problems, which is very natural for a young state. But thanks to the timely response of the republic’s leadership, extremely destructive and dangerous trends have been avoided, making it possible for official Astana to set itself new ambitious tasks which will come to fruition in the next few years.

POLITICS

Erbulat SEYLEKHANOV Ph.D. (Political Science), leading analyst at the Investment Profitability Research Agency (Almaty, Kazakhstan)

he year 2005 marked a turning point in the country’s social and political life: the systemic disproportions between the levels of economic and political changes brought Kazakhstan to a cros- T sroads. For some time the liberalization rates in the economy outstripped the changes in the social and political spheres, which, in turn, created deeply rooted structural contradictions, having a considerable impact on the stability of the state and society. A visible manifestation of these disproportions was the split inside the elite in power, the appearance of a relatively strong (compared with the 1990s) and well-organized opposition, and the more insistent demands for political liberalization and socialization of the state. Due to certain specifics of the country, which is often described as a “super-presidential republic,” the president was the only political entity able to change the situation. For this reason, in anticipation of the upcoming presidential election, government/opposition relations came to the fore in domestic politics in 2005, while sociopolitical organizations were busy drawing up the country’s future strategies. By early 2005, the political balance was the following: the parliamentary election in the fall of 2004 brought victory to the pro-presidential parties—the Republican Political Party Otan (Fatherland), the Republican Party Asar (All Together), the election bloc AIST (made up of the Civic and Agrarian parties), and the Democratic Party of Kazakhstan. They took nearly all the seats in the parliament. The moderate opposition represented by the Democratic Ak Zhol Party of Kazakhstan (the Road of Light) received one seat, which it declined as a matter of principle (it refused to accept the election results). The radical opposition represented by the Communist Party of Kazakhstan and the Democratic Choice

170 REPUBLIC OF KAZAKHSTAN Politics of Kazakhstan, as well as political organizations of the intermediary type, such as the Patriots’ Party, the Peasant Social-Democratic Auyl Party, the Rukhaniat (Spirituality) Party, and the Communist People’s Party of Kazakhstan (CPPK), failed to overcome the 7 percent barrier and were left outside the Majilis. Having analyzed the results of the parliamentary election and in view of the upcoming presidential election, nearly all the parties had to think about election blocs. By the beginning of 2005, three camps had already formed. In the absence of a common organizational structure, the pro-presidential parties closed ranks around President Nazarbaev who, in 2004, made public his intention to run for a third term. For obvious reasons these parties had the administrative resource at their disposal, money and the media included, and their own organizational potential. The traditionally Oriental respect for state power was on their side as well. It can be said that the pro-presidential camp demonstrated relative unity of its ranks and its ideologies. Irritated with the results of the 2004 parliamentary elections, the moderate political opponents of the government joined forces with the radical opponents by setting up a Coordinating Council of the Democratic Forces of Kazakhstan (CCDFK) to nominate a single presidential candidate. In this way, the CCDFK concentrated considerable financial and information resources, yet the amorphous nature of the new structure and its inability to work together considerably undermined the bloc. Two intermediary structures (the Patriots’ Party and the Peasant Social-Democratic Auyl Party) preferred to wait and see, while the other two (the Rukhaniat and the CPPK) moved in opposite directions. The Rukhaniat supported the president, while the CPPK was in opposition to all: they obviously could not join the presidential campaign on their own. By the beginning of 2005, the not entirely aboveboard parliamentary election of 2004 somewhat lowered the rating of the pro-presidential forces. According to certain sociological polls, at the turn of 2005, President Nazarbaev’s rating dropped to 50-55 percent; according to E. Ertysbaev, the president’s advisor for political issues, by early 2005, Nazarbaev had no more than 4 million staunch supporters (slightly more than 40 percent of the total number of 8,949,199 voters). In this way, early in 2005 President Nazarbaev’s victory at the upcoming presidential election was far from assured, which presupposed uncompromising rivalry. Under these conditions, the authorities had to work out their election strategy to score an obvious, on the one side, and legitimate, on the other, victory over the opposition. Finally, it was decided to attract the electorate through wide-scale social programs (housing, higher wages, pensions, scholarships, state allowances, broader privileges in medical services and education, etc.) coupled with fairly severe confrontation with the radical opposition, the People’s Party Democratic Choice of Kazakhstan (PP DCK) in the first place. The lessons of the Color Revolutions in Georgia and Ukraine were obviously taken into account. The authorities decided to snatch the initiative from their opponents, weaken them organizationally, put up legal barriers to keep “revolutionary” sentiments and actions in check, and create a comfortable information agenda and conditions to carry out the election campaign. The people on top counted on international support. On 6 January, 2005, the people in power made the first move: the Bostandyk Inter-District Specialized Economic Court of Almaty resorted to compulsory liquidation of the PP DCK; on 9 Feb- ruary, the decision was supported by the Almaty City Court. The case initiated by the city public prosecutor’s office was based on the statement issued by the Democratic Choice of Kazakhstan of 12 December, 2004 which mentioned the possibility of calling to civil disobedience as a form of mass protest. The court decision elicited a sharply negative response from the majority of political entities at home and a negative reaction abroad. The analysts easily saw through the case: the authorities were resolved to remove all the radical forces from the political scene as a preventive measure to avoid the “Ukrainian scenario.” The court decision was also intended to warn the opposition that the authorities would not allow it to destabilize the situation: civil disobedience and political crit-

171 CENTRAL EURASIA 2005 Analytical Annual icism of the regime were described as destabilization steps. This also explains the court actions brought late in 2004 and in January 2005 against Z. Nurkadilov, one of the most vehement enemies of the ruling top, as well as two opposition papers—Soz and Kazakhstan. At the same time, the authorities brought pressure on the Soros-Kazakhstan Fund, the founder of which was closely associated with the Color Revolutions in Georgia and Ukraine. In this way, from the very beginning of the year, the regime outlined the space for “manageable democracy,” within which all the political forces were allowed to act. Compulsory liquidation of the PP DCK yielded several political results. First, it was no longer possible to hold a dialog between the authorities and the opposition: with one of the key opposition parties removed from the scene, the other opposition parties found such contacts impossible. Second, in the absence of the possibility of entering into a dialog with the country’s leaders, the republic’s political forces polarized, thus sending social tension up. Third, the too harsh court decision in relation to one opposition party radicalized the moderate opposition. Later events, however, demonstrated that by liquidating the PP DCK the authorities acquired certain advantages. On the one hand, the demonstration of force drove some of the less confirmed supporters from the opposition; on the other, radicalization of several leaders of the Ak Zhol Party caused a split in its ranks in February. The split created two political organizations (the Democratic Ak Zhol Party and the still unregistered Genuine Ak Zhol Party) which began a squabble over the party brand, its property, and ideology. The formerly strong political organization with a very good future was as good as dead. Against the background of the crisis in the opposition’s ranks, President Nazarbaev made another move. On 18 February, he made public his Address to the Nation for 2005, in which he offered a medium-term strategy and attractive promises in the social sphere, some of them earmarked for realization in the same year. These included: in the economic sphere—clusters, support of small and medium businesses, and development of a competitive environment; in the political sphere—adoption of a National Program of corresponding changes, wider functions of judicial structures based on the Con- stitution’s potential, decentralization of executive power, court reform, and broader democratic rights and freedoms; in the social sphere—higher wages for those earning wages and salaries from the budget (by 32 percent on average), higher pensions (by 3,000 tenges), higher scholarships (2-fold), and higher state allowances (from 1,000 to 4,000 tenges), free medicine and privileges for children, teenagers, and pregnant women (some medical services), as well as realization of the first stage of a state housing program ($350 per sq m of housing). The propaganda campaign that followed and involved all the state structures and the media, the exact time-span for implementing the program, and the scale of its social component suggested that the presidential election would take place as early as 2005. (The year 2006 was also discussed as an option.) The energetic efforts under the national security banner to push away undesirable opposition organizations and create a legal framework beyond which political activities were prohibited clearly indicated that the next election campaign was around the corner. Not satisfied with the already mentioned liquidation of the PP DCK, the authorities initiated court cases against several opposition newspapers (Soz, Zhuma-Times, DATa nedeli, Ak Zhol Kazakhstan, Dauys DVK): some of them were closed, others barely escaped. Later, this became a norm. Z. Nurkadilov, a prominent opposition member, and several PP DCK regional leaders attracted more than the usual attention. In addition, on 9 February the parliament adopted two laws directly related to national security issues on Opposing Extremist Activities and on Amending and Changing Certain Legal Acts Related to Opposing Extremist Activ- ities. Some of the local and international human rights organizations supported by ODIHR/OSCE and the Permanent Council of the European Union criticized the newly adopted laws and pointed out, in particular, that their vague wording might cause “arbitrariness in decision-making and ambiguity when ensuring national security” and “violation of fundamental human rights and freedoms.”

172 REPUBLIC OF KAZAKHSTAN Politics

In view of the above and taking into account expert opinions, the opposition, in turn, launched hasty preparations for the presidential race. It started in February, long before the official beginning, the country’s political actors concentrating on the election campaign. It should be added that this affected different forces in different ways: while the pro-presidential forces closed ranks, the opposition, as became evident in March, began with settling scores and part- ing ways. The republic’s leaders concentrated on purely pragmatic tasks: the people obviously preferred practical results to ideological statements. The government, and all the other power branches, set about creating a mechanism designed to realize the February Address to the Nation. After calculating that the country needed another 100 billion tenges to live up to what the social bloc of the Address promised, the cabinet started looking for additional funding sources and specified other propositions of the presidential Address. The parliament correlated its agenda accordingly. The authorities took measures to prevent the opposition from exploiting the most painful social sores (corruption, human rights, and political reforms) in its interests. As a first step in this direction, the Agency for Fighting Economic Crimes and Corruption was reassigned to the president by a presidential decree of 2 March to upgrade its status and make it independent. The president also met ombudsman B. Bay- kadamov. Pressure on the opposition press and members of the radical opposition continued—in other words, the authorities emerged as a closely knit organization firmly resolved to support their leader. The opposition camp was in disarray: by the end of February the squabbles in the Ak Zhol Party reached their peak, making a split imminent. It was extremely important for the opposition to close ranks around a single presidential candidate, a task which was set in the fall of 2004 in the wake of the parliamentary election. This was not done for several reasons, the most important of them being that the 5th Congress of the Ak Zhol Party, which took place in Astana on 13 March, changed leaders. There were no longer cochairmen, while A. Baymenov was elected the only chairman. This not only meant a split, but also spoke of the new party leaders’ fundamentally different approach to a single opposition bloc. While not rejecting outright the idea of cooperation with other opposition structures, primarily with the CCDFK, Baymenov’s supporters wanted the party to run the race on its own with A. Bay- menov as a presidential candidate. The authorities undoubtedly profited from the lack of unity in the opposition ranks on the eve of the decisive battle for the highest post in the country. The split in Ak Zhol and the year-long information war between the former cochairmen cost the party some of its members, both moderate and radical, and some of the potential votes. It was precisely the split in Ak Zhol and the following events that forced the CCDFK to speed up the process of nominating a single opposition candidate. The process ended on 20 March when Zharmakhan Tuiakbay, the CCDFK chairman, was chosen as this candidate, the decision being the result of the first congress of the new public election bloc For a Fair Kazakhstan made up of the Commu- nist Party, the radical wing of Ak Zhol, and supporters of the banned Democratic Choice of Kazakhstan Party. The events in Kyrgyzstan which brought down President Akaev sent tension up; duly impressed, the united opposition in Kazakhstan finally opted for a non-conformist approach to the regime change. Together with the calls for fair and honest elections within the laws, an opinion was voiced that the “Ukrainian scenario” would be acceptable if the opposition did not agree with the election results. The opposition’s radical part hastened to create an adequate organizational basis in the form of their parties’ structures under new names: PP DCK-PP Alga, DCK!, Ak Zhol-Genuine Ak Zhol. Having analyzed the events in Ukraine and neighboring Kyrgyzstan, the leaders of Kazakhstan found an adequate response to their own opposition: early in April, the parliament passed a draft Law

173 CENTRAL EURASIA 2005 Analytical Annual on Amending and Changing the Constitutional Law on Elections in the Republic of Kazakhstan, some time later endorsed by the president to prevent political destabilization during the election campaign. The Law banned mass rallies, processions, demonstrations, and all other forms of public actions organized by the candidates or the parties which nominated their presidential candidates for the period between the end of the election campaign and the day the official results were made public. Another amendment, which made it possible to shift the date parliament announced as election day from the second Sunday of August to the first Sunday of September, meant that the time for the election campaign was reduced to six weeks and was also beneficial to the authorities. The Law on Amending and Changing Certain Legal Acts of the RK Related to National Se- curity Issues, also hastily passed in May, limited unsanctioned election propaganda; it also established stricter regulation of activities of international and religious organizations, as well as of local political parties and the media. In June, the parliament passed two other draft laws in the national security sphere to improve the regulation of activities of republican and international NGOs and their branches on the territory of Kazakhstan. These documents were severely criticized by the Kazakhstani and international public, while the authorities explained their appearance by the potential destabilizing effect of the Andizhan events of 13-14 May in neighboring Uzbekistan. If endorsed by the president, these draft laws would have allowed the state to establish practically complete control over the religious organizations and NGOs operating in Kazakhstan; the laws would oblige them, in particular, to register and supply financial reports. However, public protests, including those of the Asar Party, as well as the threat that many of the NGOs would join the opposition, forced President Nazarbaev to veto the draft laws and, late in August, to reject them. This decision was based on the opinion of the RK Constitutional Coun- cil, which ruled that the laws contradicted the Constitution. A discussion in the parliament and the media to decide the date for the presidential election was another milestone of June 2005. In view of the disagreements among lawyers and the state structures (the Central Election Commission and the Ministry of Justice), it was decided to send an inquiry to the RK Constitutional Council. It was submitted on 7 July; a week before that, on 1 July, wages, pensions, and scholarships were raised according to the promises made in the 2005 Address to the Nation. This meant that the date had been settled at the political level and only required formal confirmation. On 19 August, the Constitutional Council discussed the inquiry and concluded that the election should be held in 2005. On 7 September, the Majilis set the date—4 December; and the nomination process began accordingly on 7 September. There were 18 candidates; the president enjoyed the greatest support among them. In September, six pro-presidential parties (Otan, the Civil and Agrarian parties, Asar, the Dem- ocratic Party of Kazakhstan, and Rukhaniat) nominated Nursultan Nazarbaev for president at their congresses and later formed an election bloc called the People’s Coalition of Kazakhstan. Trade unions and many public organizations supported the president at their congresses. On 16 September, the Republican Public Headquarters in support of this candidate was set up to coordinate the election campaign. Starting on 25 October, all registered candidates (five out of the original eighteen: E. Abylkasy- mov, A. Baymenov, M. Eleusizov, N. Nazarbaev, and Zh. Tuiakbay) were allowed to launch their election campaigns. The RK Central Election Commission weeded out 13 candidates at the registration stage: 4 of them failed the state language exam, 6 candidates failed to gather all the necessary documents, while 2 candidates quit the race for their own reasons. The race, which started late in October, went relatively peacefully due to the fact that the radical opposition operated within the law (the Ministry of Justice registered its election bloc For a Fair Kazakhstan on time, while the CEC registered Zh. Tuiakbay as presidential candidate); the presidential decree of 9 September On the Measures to Realize the Rights of RK Citizens to Free, Fair, and Competitive Elections also played its positive role. The candidates largely kept within the law, while

174 REPUBLIC OF KAZAKHSTAN Politics the official structures responsible for the election did their best to ensure equal rights for all candidates. They were given time on radio and TV, space in the republican newspapers, as well as advertising room in special places. On 17 November, the candidates (with the exception of Nazarbaev, who was in Ukraine on an official visit) met for televised debates. The lull was broken once: on 13 Novem- ber Z. Nurkadilov, one of the president’s fiercest opponents, was found dead in his home. Late in December, the investigation concluded that he had committed suicide. Wide-scale, but not always justified, use of administrative resources added some tension. The election of 4 December concluded the political season of 2005. According to the RK CEC, the votes were distributed in the following way: N. Nazarbaev, 91.15 percent of the votes; Zh. Tuiak- bay, 6.61 percent; A. Baymenov, 1.61 percent; E. Abylkasymov, 0.35 percent; and M. Eleusizov, 0.28 percent. There was obviously no need for a second round. According to experts, Nursultan Nazarbaev’s success was predetermined by a number of objective and subjective reasons: the relative social and economic well-being of the local population (especially when compared with the other Central Asian countries), responsible for the conservative choice; the economic upsurge and related optimistic expectations; and the established idea about the president as a guarantor of political stability. The February Address to the Nation and its realization played an important role; the candidate of power was also supported by administrative, organizational, financial, and media resources, which made it possible to consolidate efforts. Nazarbaev’s program was more specific and more impressive than those of his opponents. On top of this, the political technologies his team used allowed him to steadily increase his rating. The opposition, on the other hand, failed to realize its potential, partly because the large-scale brainwashing of the nation in favor of the president discouraged those who planned to vote for the opposition—some of them even refused to come to the polling stations. The fact that there were two opposition candidates also played its negative role; the opposition made a major strategic mistake by relying on the protest electorate, which was obviously in minority. All the attempts of the president’s opponents to contest the election results (they brought over 1,000 claims to courts of various instances about violations of the election laws) could not deprive the president of his victory. Numerous foreign and Kazakhstani observers confirmed the legitimacy of the election campaign. They pointed out that the violations were mainly limited to the election process and only partly to the election results. It should be said that in 2005 the presidential race was not the only election event; on 12 August, experimental elections of the district akims took place, followed on 19 August by elections to the Senate. With the help of the administrative resource, all unwanted candidates were skillfully removed from the race—in this way, the pro-government candidates scored easy victories. What remained of the opposition was removed from the Senate; the results of the local elections were also predictable. It was the deputies of the district maslikhats who voted at the elections, while the people not supposed to be involved showed little interest in the process. By way of summary, it should be said that 2005 was rich in political events; its main result was the choice of the evolutionary advance toward democracy the nation made at the presidential election. The configuration of the republic’s political forces changed during the year. The Asar Party headed by the president’s daughter Dariga Nazarbaeva came to the fore in the country’s party and political system. Her party became the main strategic partner of the president’s party Otan by moving aside two previous strategic partners, the Civil and the Agrarian parties. The very fact that the People’s Coalition of Kazakhstan (PCK) was preserved after the election—on 6 December, the leaders of the involved parties set up a Democratic Union as the PCK coordinating structure—means that the ruling elite plans to act together during the reforms. The opposition parties—the Genuine Ak Zhol and Alga!— failed to obtain registration with the Ministry of Justice, which means that a government/opposition dialog will not take place in the near future. We can expect, however, that a new party, the Republican Ecological Party Menin Kazakhstanym (My Kazakhstan) headed by M. Duambekov and K. Satypal-

175 CENTRAL EURASIA 2005 Analytical Annual dy, Nazarbaev’s nephew, will emerge on the scene. It held its constituent congress on 16 December. Youth and national-patriotic movements which have already set up public and political structures became much more active. The National Commission for Democratization and Civil Society has done a good job. It serves as the main structure within which the parties (with the exception of the opposition parties) can work on a program of political reforms. The State Commission for Drafting a Nation- al Program of Economic Reforms, working under the president, will specify their content. On the whole, the trend toward change in 2005 was obvious, which means that the country is moving toward a new and challenging stage of political transformation.

ECONOMY

Larissa SIDOROVA Academic secretary, Kazakhstan Institute for Strategic Studies under the President of the Republic of Kazakhstan (Almaty, Kazakhstan)

Macroeconomic Trends

n 2005, the republic pursued a policy of deepening the economic reforms launched in the early 1990s. In 2003-2005, the average GDP growth rate was over 9%, with a steady increase in indus- I trial production, investment and other key indicators. Living standards in the country rose accordingly. Per capita GDP—an aggregate indicator characterizing the country’s economic development level—increased 1.7 times in 2003-2005, reaching $3,620 at the end of 2005 (compared to $1,052.1 in 1995 and $2,713.8 in 2004). The main efforts in 2005 were focused on a reform of the tax and tariff spheres and further development of the banking system, the insurance sector, the accumulative (financial defined contribution) pension system and the stock market. Steps were also taken to enhance the efficiency of the fuel-and-energy and extractive sectors, find new ways of ensuring economic growth, develop government support for business activity, promote regional economic policy, etc. In recent years, virtually all international ratings assigned to Kazakhstan have been upgraded. For example, in terms of the Growth Competitiveness Index of the World Economic Forum (WEF), in 2005 the republic ranked 61st among 104 countries. This rank results from Kazakhstan’s 41st place in terms of the macroeconomic environment index and its 76th and 77th places, respectively, in terms of the public institutions index and the technology index. On 20 December, 2005, Fitch Ratings agency upgraded the country’s long-term foreign currency rating to “BBB” and its long- term local currency rating to “BBB+” and reaffirmed its F3 short-term foreign currency rating, with a stable outlook for all these ratings. According to the agency’s latest report, Kazakhstan has good economic prospects. The present stage of qualitative transformations in the republic is primarily associated with the development of the industrial innovation component. In the drive to improve the economy and en- 176 REPUBLIC OF KAZAKHSTAN Economy hance its efficiency, the government and President Nursultan Nazarbaev have set a number of new tasks: to diversify production; to increase the share of high value added industries in the gross domestic product; and to carry out structural transformations aimed at bringing Kazakhstan’s economy closer to the standards of the developed industrial countries.

Real Sector

According to the Statistics Agency of the Republic of Kazakhstan, GDP in 2005 grew by 9.4% compared to the previous year, which was due to an increase in production in virtually all sectors of the economy: by 4.6% in industry, 6.7% in agriculture, 34.1% in construction, 4.8% in transport, 27.7% in communications, and 12.4% in trade. The increase in fixed capital investment compared to the previous year was 22.1% (see Fig. 1). In assessing the results of the republic’s development, one should note the changes in the structure of economic growth. Whereas in 2004 industry accounted for 32.3% of total GDP growth, in 2005, according to the RK Ministry of Economy and Budget Planning (MEBP), its share fell by more than half, to 14%. The main reason here was slower growth in the export-oriented sectors, which mostly include mining and metallurgy (in 2005, crude oil production increased by only 1.1% compared to 2004, while production in metallurgy fell by 6.2%). As a result, the contribution of these industries to overall GDP growth shrank from 21.4% in 2004 to 2.7% in 2005. In these conditions, according to the MEBP, a significant contribution to GDP growth was made by construction: its share in overall GDP growth increased from 9.3% in 2004 to 27.1% in 2005. One

Figure 1 Main Macroeconomic Indicators for 2004-2005 (as % of previous year)

125 122.1 120

115 112.4 110.5 110.6 110.9 109.6109.5 109.4 110 106.7 104.6 104.8 105 99.9 100

95 2004 2005

Gross domestic product Industry

Agriculture ixed capital investment

Retail turnover Transport

S o u r c e: RK Ministry of Economy and Budget Planning.

177 CENTRAL EURASIA 2005 Analytical Annual should also note the successful development of agriculture, whose 2005 contribution to GDP growth was 4.6%. The share of trade in GDP growth fell from 13.5% to 11.9%, and that of transport, from 10.4% to 7.6%, while the share of the communications sector increased from 5.2% to 6.2%.

Industry

In January-December 2005, industrial production in the country totaled 5,124.1 billion tenge (KZT), or 104.6% of the amount for the same period of 2004 (see Fig. 2). Due to higher demand in the domestic and foreign markets, production in the mining industry increased by 3.2%, and in manufacturing, by 6%. The production and distribution of electricity, gas and water rose by 2.2%. As noted above, 2005 brought a decline in the rate of industrial development. Whereas in 2001- 2004 the average annual growth rate in industry was 10.4%, in 2005 the figure was 4.6% (2.3 times lower), largely due to a decline in output in a number of mining and manufacturing industries. In the chemical industry, the volume index for January-December 2005 compared to the same period of the previous year was 95.3%, and in metallurgy and the manufacture of finished metal products, 93.7%. The production of oil, coal and ore declined as well. The sectoral composition of industry has not undergone any significant changes in recent years. Natural resource industries still prevail. In 2005, the mining industry accounted for 58.6% of industrial production (compared to 44.5% in 2000), the manufacturing industry, for 35.7% (46.5% in 2000), and the production and distribution of electricity, gas and water, for 5.6% (9% in 2000). The persisting natural resource character of the economy remains a big problem for the republic. The high level of world prices for its export products (oil, ferrous and nonferrous metals) is the key

Figure 2 Industrial Growth in 2000-2005 (as % of previous year)

125

120 115.5 113.8 115 110.4 110.5 109.1 110 121 104.6 105 115 117.4 115.9 110.2 110.3 113.4 114 100 106 108.6 108.1 109.2 105.8 107.9 95 101.9 102 103.2 102.2 90 2000 2001 2002 2003 2004 2005

Mining industry Manufacturing industry Production and distribution of electricity, gas and water Industry as a whole

S o u r c e s: RK Statistics Agency; RK Ministry of Economy and Budget Planning.

178 REPUBLIC OF KAZAKHSTAN Economy factor of economic growth and of the increase in the country’s nominal gross national income. As a result, the contribution of the oil and gas sector to the economy and to overall GDP growth has tended to increase, just as the share of oil and gas condensate in the country’s total exports. According to MEBP estimates, the contribution of the oil and gas sector to GDP growth has reached 49.5% (compared to 25.4% in 2001), while the share of oil and gas condensate in total exports increased from 36.5% in 1999 to 62.5% in 2005, which makes the country’s economy more dependent on the state of world natural resource markets. The level of investment activity in the processing industries remains low. For example, over 50% of total fixed capital investment goes into the mining sector and metallurgy. The share of the mining industry in the total amount of foreign direct investment (FDI) inflows has ranged from 27% to 75% in different years. In 2005, according to the National Bank of the Republic of Kazakhstan, FDI inflows into this sector amounted to $1,766.4 million out of a total of $6,416.4 million. In the event, about 94% of FDI flowing into the mining industry went into the production of crude oil and natural gas. Low investment activity in the processing industries on the part of both foreign and domestic investors leads to inadequate capital renewal and an increase in the proportion of worn out and obsolete equipment. Experts also note a decline in labor productivity in many branches of the economy, especially in agriculture. Overall, the products of the country’s processing sector are still insufficiently competitive in foreign markets. In the foreseeable future, the country’s economy will undoubtedly retain a certain degree of dependence on the operation of the fuel-and-energy and extractive sectors. At the same time, as the head of state pointed out, it is necessary to make efficient use of these sectors for priority development of high value added industries directly connected with the mining industries. In this context, priority is currently given to the above-mentioned tasks of modernizing and diversifying the economy, enhancing its competitiveness, developing the processing sector and high value added industries, and ensuring conditions for accelerated economic growth and for the implementation of new technologies.

Agriculture

In 2005, total agricultural production increased by 6.7% compared to 2004, including by 8.4% in crop production and by 4.5% in livestock production (see Fig. 3). The years 2003-2005 were declared a period of regeneration of the aul (village). Government programs of great importance for the development of rural communities (an agro-food program and a program for the development of rural areas) were approved in that period. In these three years, budget allocations for the Aul Support Program exceeded KZT 100 billion. During that time, the situation in the agricultural sector was to some extent stabilized: the number of profitable farms multiplied 2.3 times, while that of loss-making ones was reduced by a third; there was a recovery in the production of all kinds of produce; and a part of the machinery and equipment used in agriculture was renewed through loans and leasing. At the same time, according to experts, national agriculture is still based on uncompetitive petty commodity production. About 80% of its output is realized in the form of raw materials, while the sector itself is in need of further capital renewal. In view of this, the country’s leadership has formulated the task of raising the agroindustrial complex to a fundamentally new level. In order to enhance the competitiveness of this complex as Kazakhstan seeks to join the WTO, the country’s authorities aim to develop an effective agribusiness sector, to rationalize government support for agricultural production, and to optimize the management of the agro-food complex. 179 CENTRAL EURASIA 2005 Analytical Annual

Figure 3 Agricultural Growth in 2000-2005 (as % of previous year)

140 120 117.3 99.5 106.7 95.8 103.4 102.1 100 80 128.5

% 104.2 105 105.6 104.5 60 100 103.2 102.9 108.4 40 92 99.9 95.1 20 0 2000 2001 2002 2003 2004 2005

Crop production Livestock production Agriculture

S o u r c e: RK Ministry of Economy and Budget Planning.

An important task for the immediate future is to attract investment into the agro-food sector for the purpose of technological innovation at its processing enterprises.

Transport and Communications

Since 2000, a number of programs for the development of transport of both national and regional importance have been adopted in the country, with the result that this sector has entered a period of growth. In 2005, freight transportation increased by 4.8% due to an increase in rail traffic by 5%, road traffic by 4.6%, and air traffic by 14.7%. River transport carried 825.0 thousand tons of cargo, and main pipelines, 191.0 million tons, including 65.6 million tons of oil and oil products and 125.3 million tons of gas. A state program for the development of roads for 2001-2005 was completed on schedule. In that period, out of a total of 16.5 thousand km of roads provided by this program, the country’s road workers reconstructed and repaired over 11.4 thousand km (69%), and also 45 bridges out of a total 65 (69.2%). In 2005, they built, reconstructed and rehabilitated 915 km of roads, and also carried out capital and intermediate repairs on 2,188 km of roads of national importance. The reconstruction of the Ural-Caspian Canal was also completed in 2005, making it possible to provide reliable transportation services to companies engaged in the development of offshore oil fields and to ensure safe passage for ships to the estuary port of Atyrau. Work was also underway to develop the country’s Caspian ports aimed at expanding the existing Aktau seaport, completing the Kuryk and Bautino ports, and creating a national marine fleet. 180 REPUBLIC OF KAZAKHSTAN Economy

The volume of communication services reached 127.7% compared to 2004, with a 65.3% increase in the volume of cellular communication services. A number of large infrastructure projects were implemented in this sector, and work was in progress to digitize networks, introduce new technologies and install telephones in rural areas. The past year was the initial stage in the establishment of a new-generation data transmission network using IP MPLS technology and of new access networks based on Metro Ethernet technology. Broadband Internet access networks were deployed in all the big cities of the republic. New kinds of services such as mobile and satellite communications made rapid progress. The satellite communications system was expanded under a program for the development of the space industry in the republic and an intergovernmental agreement on the construction of a communications and broadcasting satellite for Kazakhstan (KazSat) signed in 2005 between Kazakhstan and Russia. In December, a ground mission control and communications monitoring center was put into operation in the city of Akkol, Akmolinsk Region.

Construction

The country’s construction complex is among the rapidly developing sectors of the national economy. In 2005, the volume of construction works (services) exceeded the 2004 level by 34.1%. Out of the 24,770 buildings with a total floor area of 6,430,700 square meters constructed in 2005, residential housing accounted for 20,204 buildings and 5,041,100 square meters (see Fig. 4). Total investment in housing construction amounted to KZT 241 billion (1.6 times more than in 2004). The state housing construction program for 2005-2007 provides for the construction in the republic’s regions of public housing for socially protected categories of citizens, and also of debt-

Figure 4 Housing Construction in 2000-2005

300 6000 5041 250 5000 195.7 200 4000 158.9 145.7 155.7 150 2587 3000 114.4 124.4 2111 241 100 1506 1552 2000

billion tenge 1218 59.5 36.2 124.4 50 22.4 27.3 1000

0 0 thousand square meters 2000 2001 2002 2003 2004 2005

Investment in housing construction Growth rate, % Total floor area of new housing

S o u r c e: RK Ministry of Economy and Budget Planning.

181 CENTRAL EURASIA 2005 Analytical Annual financed housing (at a cost of not more than $350 per square meter). In 2005, 183,700 square meters of public housing (2,302 apartments) was commissioned in the country, which comes to 140% of the target figure for the year. However, the pace of housing construction does not fully meet the needs of the population, since the demand for housing far exceeds supply. In order to promote the development of the housing and public utilities sector by improving the quality of utility services and upgrading the legal framework in this area, the government has drawn up a program for the development of the housing and public utilities sector for 2006-2008. It is designed to help broad strata of the population gain access to af- fordable housing.

Business Sector

The development of business is seen as a key factor in the efforts to diversify the country’s economy. In particular, the government has adopted a program to accelerate the development of small and medium enterprises for 2005-2007. According to statistical data, in 2005 the number of small enterprises increased by 18% to 740 thousand, and the number of people employed in small business reached 1.5 million. The year was marked by the establishment of a Small Enterprise Assistance Fund, whose development concept for 2005-2007 and activity memorandum provide for the introduction of the principles of a “financial supermarket,” as defined in the Presidential Ad- dress to the Nation in February 2005. During the year, the Fund used its resources to finance 318 projects for the total amount of KZT 3,688 million. There is also a program for the development of microcredit, under which 19 microcredit organizations were set up in 2005 (in Astana, Almaty, Zhezkazgan, Semipalatinsk and Arkalyk). At the same time, the business sector is in need of further improvement, primarily as regards juridical and tax registration and removal of barriers to the development of small business.

Investment Policy

One of the priority lines of economic policy is to attract more foreign and domestic financial resources for the country’s development. In this context, amendments and addenda to the law “On Investment” designed to simplify the procedure for granting preferences to private investors implementing investment projects entered into force in May 2005. This was coupled with the adoption of a Law on Amendments and Addenda to Some RK Legislative Acts Concerning Investment, which provides for an easing of the conditions for granting customs privileges in the import of equipment and component parts for the implementation of investment projects. A meeting held in 2005 within the framework of the Foreign Investors Council under the President of Kazakhstan was devoted to ways of enhancing the country’s investment image.

Fixed Capital Investment

Fixed capital investment in 2005 amounted to KZT 2,205.2 billion (a record figure for the republic), going up by 22.1% compared to 2004 (see Fig. 5). The main sources of fixed capital investment were the own funds of economic entities (56.8%) and foreign investment (25.2%). Budget funds amounted to 12.6%, and borrowings, to 5.4%. These

182 REPUBLIC OF KAZAKHSTAN Economy

Figure 5 Fixed Capital Investment in 2000-2005

2500 200 148 .5 144 .7 2000 122.1 150 110 .6 116.6 110.6 1500

100 % 2205 .2 1000

billion tenge 1530 .6 1327 .9 50 500 943 .4 1100 595 .7 0 0 2000 2001 2002 2003 2004 2005

&ixed capital investment Growth rate, %

S o u r c e: RK Ministry of Economy and Budget Planning. investments mostly went into the oil and gas production sector (33.9% of total fixed capital investment), real estate operations (21.1%), transport and communications (14.8%) and the manufacturing industry (10.4%).

Foreign Direct Investment

In 1993-2005, the gross inflow of foreign direct investment amounted to $40.5 billion, including $6,416.4 million in 2005. During the year, 115 contracts were signed with foreign investors, or 31 contracts more than in 2004. These funds are to be applied, on average, over a period of 1.5-2 years. In 2005, the republic carried on work with more than 20 states under bilateral agreements for the promotion and reciprocal protection of investments.

Public Investment Projects

Budget allocations for the implementation of priority projects (programs) totaled KZT 320.5 million. Overall, a number of major projects with foreign and national capital are now underway in the republic. At the same time, it should be noted that the current investment situation has brought some problems into sharp focus. This is primarily connected with the geographical disproportions of investment activity, uneven inflow of investment into various sectors of the economy, insufficient fixed capital investment and, in some cases, inadequate efficiency of foreign investment for the country’s economic development. These weaknesses should be eliminated in order to implement the government policy aimed at developing the manufacturing sector and creating high technology industries.

183 CENTRAL EURASIA 2005 Analytical Annual Trade Policy

Domestic Trade

According to the RK Statistics Agency, the retail turnover in January-December totaled KZT 1,312.9 billion, going up by 12.4% (in constant prices) from the same period of 2004 (see Fig. 6).

Figure 6 Retail Turnover in 2000-2005

118 115 .7 116 114 112 .4 112 110 .9 109 .8 110 % 108 .2 107 .1 108 106 104 102 2000 2001 2002 2003 2004 2005

S o u r c e: RK Ministry of Economy and Budget Planning.

Sales of goods by private enterprises and individual entrepreneurs amounted to KZT 1,301.5 billion (99.1%), and by other states, their legal entities and citizens, KZT 11.2 billion (0.9%). The share of state trade in the republic is insignificant.

Foreign Trade

The republic’s annual foreign trade turnover, according to customs statistics (excluding informal trade), totaled $45.2 billion, with an increase of 37.8% compared to 2004 ($32.8 billion); exports reached $27.8 billion (up 38.6%), and imports, $17.4 billion (up 35.8%) (see Fig. 7). At the present stage, the country’s foreign trade is characterized by exports of fuel and energy resources and imports of investment goods (see Fig. 8). That is, the republic for the most part imports machinery, industrial equipment and transport vehicles while exporting products of the natural resource sector. All of this shows that trade exchanges between Kazakhstan and other countries remain unbalanced. Organizationally speaking, the country’s foreign trade policy was marked by more intensive efforts in the WTO accession process. As part of these efforts, Kazakhstan held bilateral negotiations with member countries of the Working Party on Kazakhstan’s accession to the WTO (European Un- ion countries, Turkey, Japan, the U.S., Canada and the Republic of Korea), and also negotiations with a number of countries on market access for goods and services. The republic has virtually brought its national legislation in the area of protection of intellectual property rights into conformity with the standards of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights. In ac-

184 REPUBLIC OF KAZAKHSTAN Economy

Figure 7 Foreign Trade in 2000-2005

180 30000 154.1 160 145.4 137.8 25000 140 131.2 120 108.9 107.8 20000 100 15000 % 80 27849

60 20096.2 10000 US$ million 17352.5 40 12926.6 12781.2 8812.2 8639.1 9670.3 5000 20 8408.7 5040 6446 6584 0 0 2000 2001 2002 2003 2004 2005

Exports Imports &oreign trade turnover, %

S o u r c e: RK Ministry of Economy and Budget Planning.

Figure 8 Export Structure Import Structure in January-November 2005, % in January-November 2005, %

73.8% 9.2% 7.2% 43.3% 11.6%

3.3% 14.7% 15.9% 1.2% 14.0% 3.4% 2.4% Machinery, equipment and mechanisms, Mineral products electrical products Non-precious metals and articles Mineral products thereof Non-precious metals and articles ood products thereof Products of chemical and related Products of chemical and related industries industries Machinery and equipment ood products Other Other

S o u r c e: RK Ministry of Economy and Budget Planning.

185 CENTRAL EURASIA 2005 Analytical Annual cordance with one of the key WTO principles—transparency in the development and implementation of trade and economic policy—the government has adopted a new methodology for calculating fees for state registration of legal entities, import licensing and customs clearance of goods. Under this methodology, fees are based on actual expenses incurred in rendering the respective services.

Inflation

In recent years, the government and the RK National Bank have perfected their methods of fighting inflation. At the time of the adoption of the Government Program for 2003-2005, the main goal of the National Bank’s monetary policy was to contain average annual inflation in 2003-2004 within the limits of 4-6%, and then to reduce it to 3-5% by 2005 and to 4.5% in 2006. However, 2003-2005 brought a rise in inflation. According to the RK Statistics Agency, its average annual rate rose from 5.9% in 2002 to 7.6% in 2005 (see Fig. 9). Figure 9 Inflation in 2000-2005

118 116 114 113.2 112 110 108.4 107.6 108 116 106.4 106.9 105.9 106 111.5 111.5 106.8 107 107.7 108.1 104 107.8 as % of previous year 108.5 105.6 105 106.8 106.5 102 106.3 104.8 104.8 105.1 105.6 100 2000 2001 2002 2003 2004 2005

ood products Nonfood products

Paid services Consumer price index

S o u r c e: RK Ministry of Economy and Budget Planning.

Faster inflation was due to a number of micro and macroeconomic factors, including a significant inflow of foreign exchange, growing budget expenditures and rising household income.

Social Sphere

High rates of economic growth serve to raise living standards in the republic. Real household income in January-November, according to the RK Statistics Agency, rose by 11.4% from the same

186 REPUBLIC OF KAZAKHSTAN Economy period of 2004. The average monthly wage was 32,957 tenge, going up by 19.2% (in real terms, by 10.8%) from the same period of 2004. The minimum wage was increased from 7,000 tenge on 1 Jan- uary, 2005, to 9,200 tenge from 1 July 2005. From that date, wages in the public sector were increased on average by 32%. Pensions and state benefits paid out to disabled persons, to families that have lost their breadwinner (survivor benefits), and to veterans and disabled veterans of the Great Patriotic War. The implementation of the Poverty Reduction Program for 2003-2005 was completed (all its main targets were met). The country’s high rates of economic growth and the measures taken to create new jobs help to reduce unemployment. Thus, the number of unemployed persons fell from 906 thousand in 2000 to 641.3 thousand in 2005, and the unemployment rate was down from 12.8% in 2000 to 8.2% in 2005 (see Fig. 10). However, unemployment among young people remains quite high.

Figure 10 Unemployment in 2000-2005

14 12.8

12 10.4 9.3 10 8.8 8.4 8.2 8 % 6

0 2000 2001 2002 2003 2004 2005*

* December

S o u r c e: RK Statistics Agency.

In order to create a multitier social security system, in 2005 the government launched a program for deepening social reforms in Kazakhstan for 2005-2007.

Growth Prospects

As noted above, the successes of Kazakhstan’s socioeconomic development are recognized by international financial and rating agencies. At the same time, a qualitative analysis of the country’s economic performance in recent years shows that quite a few problems still remain to be solved, adding urgency to the task of further structural change. For Kazakhstan, this implies the need for qualitative development. As the head of state noted in his Address to the Nation, accelerated modernization calls for a qualitative breakthrough in all development areas, a breakthrough based on innovations,

187 CENTRAL EURASIA 2005 Analytical Annual creation of new lines of economic growth, and better use of the country’s traditional competitive advantages. This will make it possible to improve the people’s quality of life and to build a competitive economy. A great deal of work has already been done to promote industrial innovation processes. Thus, an appropriate legal framework has been created for implementing the state’s policy in this sphere, and the necessary infrastructure is taking shape. The past year was the final year of the first preparatory stage for the implementation of the In- dustrial Innovation Development Strategy, adopted by presidential decree in 2003. Nine sectoral and intersectoral programs were approved at that stage. These include programs for the creation and development of a national innovation system for 2005-2015, for the development of the construction industry, energy saving, and others. Over 20 new laws were adopted in this area, including laws On Technical Regulation, On Investment Funds, On the Regulation of Trading Activities and On the Kazakhstan Investment Fund, and amendments were made to the Tax Code, to the laws On Invest- ment, On Education, On Special Economic Zones, etc. This went hand in hand with the establishment of appropriate development institutions: JSC Kazakhstan Development Bank, JSC Kazakhstan Invest- ment Fund, JSC National Innovation Fund, JSC Small Enterprise Assistance Fund, JSC State Insur- ance Corporation for Export Credit and Investment Insurance, and JSC Engineering and Technology Transfer Center. Their main purpose is to finance (together with private investors) promising high technology projects and to take part in creating the key elements of the innovation infrastructure (technology parks, business incubators, research parks). According to the RK Ministry of Economy and Budget Planning, as of 1 January, 2006, the institutional investment portfolio consisted of 130 investment projects approved for funding worth a total of $3,263.5 million, including with the participation of development institutions for the amount of $873.8 million, which is more than double the figures for 2004. In 2005, funds were disbursed for 90 projects worth a total of $2,222 million, including with the participation of development institutions for the amount of $725.1 million. Work was also in progress to develop the infrastructure of technoparks, and a Model for the Development of Regional Technology Parks in the Republic of Kazakhstan was prepared and approved. Great hopes for a diversification of the economy are associated with Kazakhstan’s cluster initiative, designed to enhance the competitiveness of domestic products both at home and abroad. In 2005, plans were approved for the creation and development of seven pilot clusters: Tourism, Food Industry, Oil and Gas Engineering, Textile Industry, Transport Logistics, Metallurgy, and Building Materials. These sectors can help Kazakhstan enter world markets and will become new growth points in the republic’s economy. In the context of cluster ideas, a promising instrument that could be used by the state to promote real production is the creation of industrial zones. Another important task facing the government is to develop the petrochemical industry, likewise in the form of a regional cluster. On the whole, accelerated modernization of the economy is becoming a key priority for the republic. Here is how President Nazarbaev has formulated Kazakhstan’s strategic goal: to join the ranks of the top 50 most competitive countries of the world. In view of this, the next stage of structural reforms will require changes in sectoral and regional policy, greater support for domestic producers, including small and medium enterprises, a breakthrough in creating an innovation infrastructure, and a more active stance in foreign markets.

188 REPUBLIC OF KAZAKHSTAN Religion RELIGION

Iakov TROFIMOV Ph.D. (Philos.), professor at the Karaganda “Bolashak” Institute of Actual Education (Karaganda, Kazakhstan)

azakhstan is a multi-confessional state with over 3,500 religious communities of 62 various confessions. According to my calculations, nearly 70 percent of the believers are Muslims; 28 per- K cent, Orthodox Christians; 1 percent, Catholics; about 0.5 percent, Protestants, and followers of other faiths constitute less than 0.01 percent. Islam is the main confession in the republic—there are about 2,000 communities, 1,779 of them registered. It is interesting to note that in recent years, three Shi‘a and one Sufi community appeared, besides the traditional Sunni communities of Hanafi madhab. The figure of 70 percent Muslims is fairly conventional because many members of the traditionally Islamic ethnoses (Kazakhs, Uzbeks, Kyr- gyz, Dungans, Chechens, Azeris, Uighurs, etc.) do not always follow the Islamic rules. Kayrat Saty- baldy, leader of the Ak Orda (The White Horde) movement, has pointed out: “The number of Mus- lims who strictly adhere to the main Shari‘a rules is no more than 1.5 million (out of ten million.— Ia.T.) if we include in this number those who do not perform Friday rights yet regularly attend the mosques to ask the imams to pray for themselves or their relatives, etc.”1 The multi-ethnic nature of the Muslim communities is responsible for the strictly ethnic features of the mosques (Kazakh, Uzbek, Dungan, Chechen, Azeri, and Uighur), while the Spiritual Adminis- tration of the Muslims of Kazakhstan (SAMK) cannot cope with the situation. First, it emerged because the Kazakh language used in most mosques is unknown to members of other ethnoses who obviously want to use their own tongues. No wonder K. Satybaldy has said: “I have always been of the opinion that in the regional centers where non-Kazakh people and Kazaks who, regrettably, do not know their mother tongue predominate, all forms of daavat (Muslim call to faith.—Ia.T.) should be conducted in two tongues—Russian and Kazakh.”2 Second, there are few officially registered mosques in the republic. For example, in Karaganda, a city with over 300,000, there are only three mosques, which can hold no more than 1,000 believers for namaz. At the same time, several scores of mosques are functioning independently of the SAMK; this is partly done for financial considerations: the SAMK insists on receiving 30 percent of the mosques’ incomes. On 22 March of last year, President Nazarbaev took part in the opening ceremony of a new Islamic Cultural Center (the main mosque) in Astana. It was built in fulfillment of an agreement between the heads of Kazakhstan and Qatar, which invested $6.8 million in the project. On 20 April, the president met members of the SAMK, Chief Mufti of Kazakhstan Absattar kazhy Derbesali, and the chief imams of all the regions, Astana, and Almaty in his residence in Almaty to discuss three main tasks: the struggle against religious extremism, education of the clergy, and keeping the Muslim society together. In June, the Fourth Kurultai (Congress) of the Muslims of Kazakhstan re-elected Absattar kazhy Derbesali as Chief Mufti. It should be said that part of the clergy representing some of the Muslim communities actively opposed the re-election of a “layman.” The discussion was not resolved at the kurultai: in October, Auzovskiy District Court No. 2 examined the case against the leader of an independent Is-

1 Available at [http://www.islam.ru/pressclub/gost/nazarbaev/?print_page], 4 June, 2005. 2 Ibidem. 189 CENTRAL EURASIA 2005 Analytical Annual lamic association, the Union of Muslims in Kazakhstan (UMK), accused of slandering the SAMK. In this connection, Megapolis wrote: “The court found information that the SAMK deliberately cultivat- ed religious intolerance; demanded that all imams should unquestionably obey all the instructions of the Spiritual Administration; banned polemics with the SAMK’s leaders; that it was guilty of corruption, formalism, and bureaucracy; and its personnel had a low cultural level and were ignorant of the elementary rules of behavior not to correspond to reality and obligated the Megapolis newspaper to publish refutation of this information.” In its “refutation” the newspaper emphasized: “Chief Mufti Absattar kazhy Derbesali took the post of the mufti (in 2000.—Ia.T.) contrary to the then valid Char- ter of the Spiritual Administration of the Muslims of Kazakhstan (SAMK). This fact was made public by Murat Telibekov, head of the MAK-UMK [Associated Muslims of Kazakhstan-Union of Muslims in Kazakhstan], during the court hearings of the case. The claimant did not refute this information, while the judge ignored it altogether.”3 I would like to add that last year several attempts were made to deprive the Union of Muslims in Kazakhstan of state registration as a religious organization. It seems that so far there is no reason to say that the Muslim community in the republic has become stronger. In April, a new public association, Ak Orda, headed by Kayrat Satybaldy mentioned above was set up to counterbalance the UMK. The head is a major general, head of the personnel department of the National Security Committee, and the president’s nephew. Since some of the media described Ak Orda as a political party of sorts, K. Satybaldy answered the question of the Islam.ru portal as follows: “On the whole, I see no other way of curing all the numerous ailments of our time: be it moral degradation or economic problems, apart from developing and strengthening Islam… I believe that political organizations based on confessions are a time-delay bomb. This should not be taken to mean that we should reject the applied nature of the principles of our religion. This is what moves me into the sociopolitical field where, I believe, I can be useful to Islam and the nation by moving slowly and making balanced decisions… Today, we are busy organizing our ranks; later, by the end of next year, we will probably develop into a political movement.”4 It should be added that the Constitution bans political parties based on confessions. So far, training of the clergy remains a problem. Inside the republic, higher education is offered by the Egyptian University of Islamic Culture “Nur Mubarak” functioning in Almaty; the first 50 students enrolled in 2001. About 100-200 Kazakhstani citizens are studying in the Muslim theological institutes and universities of Turkey and Egypt. In 2003, an Institute of Advanced Studies for Imams was opened in Almaty under the SAMK; numerous newly opened madrasahs are designed to remedy the situation, yet many of them cannot offer adequate education for want of trained teachers. It seems that in the near future it will be next to impossible to staff all the 2,000 mosques with highly educated clergy. There is another important aspect in the confessional sphere: opposition of the state and the Mus- lim communities to religious Islamist extremism. The country’s geographic location has made it a target country for all sorts of Islamist emissaries and a transit country both for the Islamic Movement of Uz- bekistan (IMU), which is resolved to “defend” Islam in Kazakhstan, and for Uighur fighters “defending” Islam in China’s Xinjiang Uighur Autonomous Region, Kyrgyzstan, and Chechnia. In the last few years, the republic has become a focus of attention for extremists of all hues and international drug dealers. The republic’s law enforcement bodies are naturally concerned with Hizb ut-Tahrir al-Islami which penetrated southern Kazakhstan back in 2000, probably from Uzbekistan, and which betrayed itself in the country’s central and northern regions. In 2000-2005, more than 170 members of this secret religious-political organization were arrested for spreading leaflets. Its supporters are more and more actively coming to the fore: while in 2003, 1,000 leaflets were confiscated from them, in 2004, the number rose to over 11,000; and 111 criminal cases were instigated on instances of illegal distribution

3 Megapolis, No. 43 (256), 31 October, 2005. 4 Available at [http://www.islam.ru/pressclub/gost/nazarbaev/?print_page], 4 June, 2005. 190 REPUBLIC OF KAZAKHSTAN Religion of leaflets. By the time this article was completed, there were still no statistics for 2005. Judging by scattered reports about arrests and criminal cases instigated against the leaflet distributors and those who tried to organize mass rallies in front of mosques in Shymkent, Pavlodar, and other cities, the organization is stepping up its activities. On 31 January, 2005, a clandestine print shop of Hizb ut- Tahrir was found in Almaty with a pile (13,000) of leaflets waiting to be distributed. The arrested members are normally sentenced to 2 to 5 years in prison, much less than in Tajikistan where similar crimes are punished with 10 to 18 years imprisonment. The legal base of the antiterrorist and anti-extremist struggle is constantly being improved. In 1999, the republic acquired the Law on Anti-Terrorist Struggle; in 2002, the Law of the Republic of Kazakhstan on Amendments and Addenda to Certain Legal Acts of the Republic of Kazakhstan Re- lating to the Antiterrorist Struggle; two relevant laws were passed in 2005: on Opposing Extremism and on Amendments and Addenda to Certain Legal Acts of the Republic of Kazakhstan Relating to National Security Issues. In 2004-2005, acting according to these documents, the RK Supreme Court described al-Qa‘eda, the Islamic Party of Eastern Turkestan, the Kurdish Popular Congress, the Is- lamic Movement of Uzbekistan, Asbat al-Ansar, the Muslim Brothers, the Taliban, Boz Gurd, the Jamaat of Central Asian Mojaheddin, Lashkar-i-Tayba, and the Society of Social Reforms as terrorist organizations banned on the territory of Kazakhstan. Hizb ut-Tahrir was outlawed by a court in Astana as an extremist organization. The Law on Opposing Extremism describes religious extremism as follows: “Fanning religious enmity or strife, including related to violence or calls to violence, as well as any religious practice threatening safety, life, health, morals or rights and freedoms of citizens.” It should be said that certain changes introduced into the Law on Freedom of Religion and Reli- gious Associations on the grounds of the Law on Amendments and Addenda to Certain Legal Acts of the Republic of Kazakhstan Relating to National Security Issues stirred up mixed emotions among the religious organizations. Under the amended law, all religious organizations should be registered, with higher fines (stipulated by the Administrative Offensives Code) imposed on violators. The leaders of such organizations are fined an amount equivalent to100 minimum wages (compared with the present sum of about $680), while the members of an organization guilty of such a violation will have to pay 50 minimum wages. The fact that only 87 percent of the organizations are registered, while most of the faithful will be unable to pay high fines, drew numerous complaints from the Protestant communities. According to Credo.ru, ombudsman Bolat Baykadamov said at a press conference that “the amendments introduced into the legislation relating to national security issues encroach on the rights of the faithful.” A press release distributed at the same press conference said: “Between 19 April and 10 June, the ombudsman received 100 written applications from the followers of the International Union of the Evangelical Christian Baptist Churches of Kazakhstan and of nine foreign countries related to this draft law.”5 The law obliges the missionaries to register—this too brought numerous complaints; the law, however, says: “Missionary activity is preaching and disseminating through religious education a faith absent from the charter of a religious association acting on the territory of the Republic of Kazakhstan,” which means that, according to law, a missionary is a person disseminating a religion unregistered in the republic. The preachers of the registered confessions or missionaries arriving in the country by invitation are not missionaries under this law and should not be registered. For this reason the Protes- tant associations working in Kazakhstan stepped up their missionary activities. Christian Orthodoxy is the second largest confession in Kazakhstan: today, the Russian Ortho- dox Church (ROC) has 248 religious associations in the republic (including 8 monasteries). In May 2003, the ROC Holy Synod created a Metropolitan Okrug with its center in Almaty, which included

5 Available at [http://portal-credo.ru/site/print.php?act=news&id=35253], 20 April, 2005. 191 CENTRAL EURASIA 2005 Analytical Annual the Astana, Almaty, Uralsk, Guriev, Shymkent, and Akmolinsk eparchies. Metropolitan Methodius (Nikolai Nemtsov) heads the okrug. The church pays particular attention to church building and religious education. In 1991, a two-year eparchy spiritual school was opened under the Almaty-Semipal- atinsk Eparchial Administration which, on a decision of the ROC Holy Synod of 17 June, 2001, was transformed into a four-year school. It trains clergymen and precentors (50 people at the day department), there is an evening theological missionary department (with about 200 students) which offers knowledge in Christian Orthodoxy to laymen and people working in the Christian Orthodox churches of Almaty; it also trains Orthodox missionaries and schoolteachers of the Lord’s law. In 1997, an Eparchial branch of St. Tikhon Theological Institute (with a 5-year course) was set up in Karaganda with two departments: a theological-pastoral and a Catechistic-pedagogical. Every year, 4-5 persons are sent to Russia to study; a large number of clergymen study at the Moscow Spiritual Academy by correspondence. On 18 October, 2005, the Orthodox Christians of the republic marked for the first time the Ka- zakhstani Orthodox festival established by the ROC Synod called “The Synaxis of the Kazakhstani New Martyrs and Confessors” to commemorate the memory of the clergymen and Christian Orthodox believers who fell victim to political repressions in Kazakhstan. For several years, the Russian Orthodox Church Abroad (ROC Abroad) set up in 1921 by Rus- sian émigré clergy who condemned the ROC for cooperation with Soviet power has been working in Kazakhstan. In August 2002, Archbishop Lazarus ordained Archimandrite Irenaeus (Klipenstein) Bishop Burnenskiy and gave him a seat in Kazakhstan. Today, the ROC Abroad has three communities (two of them registered) in Kazakhstan and one church in Kostanay. The Roman Catholic Church is fortifying its position as well. In May 2003, the Pope elevated the Apostolic Administration in Astana to the level of Archdiocese (called the Archdiocese of Our Lady in Astana), the Apostolic Administration in Almaty was raised to the level of Diocese (called the Diocese of St. Trinity in Almaty). At the same time, the Pope added the following structures as suffragan—the Diocese of St. Trinity in Almaty, the Karaganda Diocese, and the Apostolic Administration in Atyrau—to the Archdiocese of Our Lady in Astana, thus creating a metropolitanate. The title of Honorary Prelate was conferred on Apostolic Administrator of Atyrau Janosz Kaleta. Today, there are 90 Catholic communities in the republic and 160 visiting groups with two archbishops (one of them fills the post of metropolitan), one bishop, and over 60 clergymen. (There are Poles, Italians, Germans, Americans, one Korean and one Swiss among them.) Many of them have no Kazakhstani citizenship; they came because the old and new parishes need clergymen. The number is still not enough—practically one-third of the communities have no permanent clergymen. Almaty, Karaganda, Kokshetau, Astana, Kostanay, Atyrau, and other cities acquired new Cath- olic buildings; more facilities are being built with continued financial support from the German and Polish churches. The ROC regards these activities as Catholic proselytism on its canonical territory. The republic has already acquired four communities of the Ukrainian Greco-Catholic Church (UGCC): they appeared in Astana, Pavlodar, Satpaev, and Karaganda. There are several small communities in villages around these cities and in Dzhezkazgan. On 8 November, 2002, in view of the spiritual requirements of the Greco-Catholics in Kazakhstan and in response to the request of the UGCC head, Cardinal Lubomir Huzar, the Apostolic See appointed clergyman Vassily Govera as apostolic delegate for the Greco-Catholics of Kazakhstan and Central Asia. On 18 September, 2005, official representative of the Pope, Cardinal Ignatius Musa I Daud, and Bishop Vassily Semeniuk, prefect of the Congregation of the Eastern Churches and delegate of the UGCC head, consecrated the Cathedral of the Intercession of the Mother of Our God in Karaganda. This was a significant event in the life of the country’s Greco-Catholic community. The first stone was consecrated by Pope John Paul II during his visit to Kazakhstan in 2001.

192 REPUBLIC OF KAZAKHSTAN Religion

There are over 1,000 Protestant structures of various hues in the republic. There is a smoothly functioning association of the Evangelical Christian Baptists, which unites about 300 communities and groups. Even though there is a constant outflow of Baptists to Germany and Russia, their total number in Kazakhstan remains stable at about 12,000. The Council of the ECB Churches is regaining its position under the new name of International Union of the Evangelical Christian Baptist Churches: last year it united 22 communities, some of them fairly large. In Pavlodar, for example, the local community numbers about 300, with four presbyters, an evangelist, and a deacon. The number of Pentecostal communities increased to reach 50, mainly at the expense of new structures, such as Sun Bok Ym. Jehovah’s Witnesses are attracting more and more people. Today, 105 communities have 24 prayer houses—in 1989 there were none. Significantly their western co- religionists do not fund them—they merely offer soft loans. Some of the religious associations are losing members and communities. The number of Luther- an communities dropped to 29 (in 1989 there were 171 of them). The Mennonites are left with one church and three visiting groups; the Seventh-Day Adventists have only 61 communities, and the New Apostolic Church was left with 48. This is successfully compensated for by other confessions coming into the republic: the Meth- odists, 9 communities; Presbyterians of various types, 183 communities: the Grace Church, Grace Mission, Cosin Mission, Immanuel Mission, etc. In the past ten years, over 240 Protestant charismatic associations have appeared (over 30 have different names), of which the New Life Church has 50 associations and the Agape Mission, 45 communities. On 16 July, 1999, an Association of Religious Communities of Kazakhstan (ARCK) with A. Kliushev as its director-general was set up. Its Charter described its main task as protection of the rights and interests of religious communities. All the charismatic Protestant structures (240 in all) which belong to the newly established association joined forces in charities, moral and spiritual education, conferences and legal seminars carried out in churches, in publishing activities, and other projects. The Almaty department of justice registered the ARCK as a public rather than spiritual structure. Buddhism is another world religion represented in the republic: there is one Von-Buddhism community; three others belong to the center of Tibetan Buddhism. Judaism is fortifying its position in the republic: there is the Chabad Lubavitch Center and 25 Jew- ish communities. In the past seven years, synagogues have appeared in Almaty, Pavlodar, and Astana; more temples will probably appear in other cities. The Church of Jesus Christ of Latter-Day Saints (the Mormons) is developing steadily: today there are six Mormon communities, even though the first of them appeared in Almaty relatively recently—in 2000. The following non-traditional religions are present in Kazakhstan: Bahai (23 communities); Krishnaites (12 communities); Vaishnava (6); Transcendental Meditation (2); Scientological Church (5); the White Brotherhood, the Unification Church (Reverend Moon), Church of the Last Testament, the Christian Science Church, and the Church of Satan have one community each. The republic has accumulated rich experience in peaceful coexistence between the ethnoses and confessions. Today, however, a more complicated religious situation typical of the last decade has already worsened relations among the confessions even though in the past the country did not know (and had never known) serious conflicts in this sphere. Upon their arrival in Kazakhstan, missionaries of numerous religions convinced that they had come to a pagan country believed they should teach the Truth indiscriminately to the all republic’s nations and peoples. This creates a conflict with Islam, Christian Orthodoxy, and Catholicism. The Presbyterian, Methodist, and Mormon missionaries, as well as those who represent the New Apostolic Church, New Life, Bahai, the Unification Church are especially zealous: they publicly announce that they are prepared to covert the majority of the local people. The Grace Church in Karaganda does not conceal its intention (absolutely utopian, to my mind)

193 CENTRAL EURASIA 2005 Analytical Annual to save 300,000 sinners and set up 10,000 missionary churches. The same can be heard in other prayer houses too. This explains why representatives of the traditional religions consistently criticize proselytism and the “totalitarian” cults in their preaching and in the media. As a rule, the number of people newly converted to “new” faiths is overstated. There is information, for example, that between 300,000 and 500,000 Kazakhs have already become Protestants. My calculations say that no more than 150,00 people follow all types of Protestantism. Several factors are responsible for the ongoing religious peace in the republic: first, the Kazakhs are traditionally tolerant; second, the two main confessions—Islam and Orthodoxy—are cooperating in a constructive way. This is best illustrated by the following information from Interfax: “Roman Catholic Archbishop of Karaganda Jan Pawel Lenga said at the Synod of Bishops in the Vatican that the Catholics might learn much more from the Orthodox Christians and Muslims about how to vener- ate God.”6 Third, religious peace is maintained by the successfully developing social and economic spheres and the developing market economy. Fourth, the country’s leaders and the NGOs are working toward ethnic peace and religious tolerance. Since each of the confessions always insists on the true nature of its faith, religious tension is inevitable, therefore religious tolerance and peace should receive close attention, while all manifestations of religious extremism should be stemmed. President Nazarbaev repeatedly points out that religious stability is the most precious of the nation’s achievements. “All the world religions are present in Kazakhstan, therefore intolerance or religious fanaticism are alien to us. This spiritual tradition, this openness to the Word of God in all of its manifestations is one of the cornerstones of religious harmony in Kazakhstan. We are known in the world as a tolerant nation which preserves ethnic and religious peace and dialog. The ever growing peace potential of our country should be carefully preserved and developed.”7

6 Interfax, 8 October, 2005. 7 Kazakhstanskaia pravda, 19 February, 2005.

INTERNATIONAL AFFAIRS

Murat LAUMULIN D.Sc. (Political Science), chief researcher at the Institute for Strategic Studies under the President of the Republic of Kazakhstan (Almaty, Kazakhstan)

uring 2005, Kazakhstan’s foreign policy national, including regional, organizations, such as and its participation in international affairs the U.N., OSCE, CIS, EurAsEC, and SCO, and its D developed dynamically in all the main tradi- cooperation with such structures as NATO, the OIC, tional areas. This included its participation in inter- and ECO. What is more, the republic strengthened

194 REPUBLIC OF KAZAKHSTAN International Affairs its bilateral relations with Russia, the CIS states as a had a strong impact on Kazakhstan’s interna- whole and Central Asian countries in particular, the tional status. I am referring to the presidential U.S., the PRC, the countries of the European Union election in the country, which attracted the and the Muslim East, the APR, and Southeast Asia. keen attention of several international organ- But this past year was distinguished by izations and individual states to its domestic specific features: the domestic political factor policy.

Kazakhstani-Russian Relations

The first half of the year was characterized by unprecedented activity in this area. For example, in January, Russian President Vladimir Putin made a working visit to Almaty. During his informal meeting with Kazakhstan President Nursultan Nazarbaev, a broad range of questions were discussed relating to the development of bilateral relations and preparations for the forthcoming visit of Kazakhstan’s head of state to Moscow. The informal format of the meeting was conducive to discussing the upcoming presidential election in Kazakhstan and the Russian Federation’s support of it. At the same time, this visit was also prompted by the events in Ukraine; in particular, Vladimir Putin and Nursultan Nazarbaev needed to develop a joint stance on the future of the Common Economic Space (CES). Soon thereafter, Kazakhstan President Nazarbaev made an official visit to Moscow, during which several intergovernmental agreements were signed with President Putin on the results of the talks, including the Treaty on Delimitation of the Kazakhstani-Russian State Border. What is more, an agreement was reached on regulating issues relating to developing mineral deposits and operating engineering structures, supply lines, and other infrastructure facilities which cross the state border or pass along it, as well as resolving problems of storing and using biological resources, water use, and environmental protection by means of separate agreements. An intergovernmental agreement was also signed on creating a Kazakhstan communication and broadcasting satellite called KazSat. Both sides emphasized in particular that Russia was Kazakhstan’s “eternal strategic partner and eternal neighbor, whereby God-given.” The next meeting between Vladimir Putin and Nursultan Nazarbaev took place in May in Che- liabinsk, where they discussed in particular questions of cooperation within the framework of the SCO and EurAsEC. At the beginning of June, extensive and painstaking work was completed on delimitation of the longest land border in the world of more than 7,500 km in length. Then the heads of the two states held a meeting at the beginning of July after the SCO summit, which ended in the signing of four agreements on power engineering. Cooperation in the military-strategic sphere also continued. At the end of October, Russian Defense Minister Sergei Ivanov said that the Russian government intended to sign new memorandums to the Russian-Kazakhstan intergovernmental agreement on use by the Russian Federation Armed Forces of four test grounds in Kazakhstan. So Kazakhstani-Russian relations were extremely active in 2005: there were eleven summit meetings, and Moscow rendered full political support to Nursultan Nazarbaev with respect to the presidential election in Kazakhstan. Admittedly, there were also some sensational events and provocations in bilateral relations. For example, at the beginning of October, a Russian magazine published an article which said that Mos- cow supposedly had secret plans to create a single state between Russia and Kazakhstan. But both the Kazakhstan and Russian foreign ministries denied this. 195 CENTRAL EURASIA 2005 Analytical Annual Cooperation with Other CIS States

As in the past, the Republic of Kazakhstan took up an active position in the post-Soviet expanse. But the emphasis of the republic’s interests began to shift from the CIS to more compact integration structures, such as the EurAsEC and the CES. Paradoxically enough, the past year was marked by intensive development of relations with the CIS countries which experienced so-called Color Revo- lutions, Georgia, Ukraine, and Kyrgyzstan, although Kazakhstan has always been strictly pro-Rus- sian and prone to criticize the color coups. The interest of these and other CIS countries in cooperating with Kazakhstan was aroused primarily by their energy problems. Whereby this was a concern not only of the Orange, but also of the integrationist republics. In May, Belarus President Alexander Lukashenko visited Kazakhstan. His talks with the leaders of Kazakhstan led to the signing of a series of intergovernmental agreements, including on cooperation in developing the fuel and energy complexes of both countries. But most important, the leaders of Kazakhstan and Belarus made a policy statement to the effect that in the event Ukraine refused to take part in creating the CES, this process would go on without Kiev’s participation. Reporters assessed this statement as a warning signal to Ukrainian President Viktor Iushchenko. At the end of May, Ukrainian President Viktor Iushchenko made an official visit to Kazakhstan, within the framework of which a series of bilateral documents was signed. Nursultan Nazarbaev gave his Ukrainian colleague the clear understanding that the questions interesting Kiev—oil and gas deliveries—could not be resolved without Moscow. In mid-November, Nursultan Nazarbaev made an official return visit to Ukraine. The joint statement and Road Map signed by the heads of these states were aimed at strengthening cooperation in the transportation and fuel and energy sectors, the agroindustrial complex, and the aerospace industry. The development of Kazakhstani-Georgian relations was strongly influenced by completion of the Baku-Tbilisi-Ceyhan (BTC) pipeline. At the end of March, Georgian President Mikhail Saakash- vili made an official state visit to Astana. Within the framework of this visit, several mutual agreements were signed. At the beginning of October, the Kazakhstan president made an official return visit to Georgia, during which several bilateral documents were signed. Its main outcome was the adoption of a Joint Communiqué expressing a mutual desire to further develop cooperation within the framework of the main export pipeline project, Baku-Tbilisi-Ceyhan, as well as regarding deliveries of Kazakhstan gas to Georgia and efficient use of the potential of the Caspian port of Aktau (Kazakhstan) and the Black Sea ports of Poti and Batumi (Georgia). In addition to the summit meetings, relations between the heads of various departments were also developed, particularly in power engineering. A key issue was the price to be paid for Kazakhstan gas, which required additional agreements between the two sides. Kazakhstan maintained traditional ties with Azerbaijan. In May, the Kazakhstan president made a state visit to Baku, during which an agreement was signed on strategic partnership and alliance relations, and agreements were amended on the main principles of cooperation in petroleum machine- building and in free trade. Official Astana’s concern about the situation in neighboring Kyrgyzstan dramatically rose after the March events in this republic. Kazakhstan played an important role in stabilizing its political situation, rendered it urgent economic assistance, and established good relations with the new political leadership of this state. Nursultan Nazarbaev participated in the inauguration of its new president, Kurmanbek Bakiev, who made several visits to Kazakhstan, as did Kyrgyz Prime Minister Felix Kulov. For example, in October, he participated in discussing the bloc of economic issues and, in particular, agreements on cooperation in the fuel and energy sphere and on joint use of water resources were reached. What is more, questions relating to Kyrgyz labor migrants residing in Kazakhstan were resolved. 196 REPUBLIC OF KAZAKHSTAN International Affairs

Official Astana actively participated in multilateral meetings of the leaders of the post-Soviet republics, including in the meeting of heads of EurAsEC member states held in Moscow, at which questions of forming a common customs fee for the community and coordinating viewpoints at the talks on joining the WTO were discussed. In August, Kazakhstan took part in the work of a CIS summit held in Kazan. A controversial issue was election of the new CIS chairman. It was presumed that Kazakhstan President Nazarbaev would replace Vladimir Putin in this post. Perhaps the Tajikistan and Uzbekistan delegations did not support his candidacy. Whatever the case, due to the upcoming presidential election in Kazakhstan, Nursultan Nazarbaev turned down the offered post. At the beginning of October, Kazakhstan took part in the meeting held in St. Petersburg of the heads of member states of the Central Asian Cooperation Organization, during which a decision was made regarding its joining ranks with the Eurasian Economic Community. What is more, at this same meeting, the Republic of Kazakhstan supported Uzbekistan’s appeal to join the EurAsEC.

Relations with Western Countries

Official contacts between Kazakhstan and the U.S. became more active during the second half of the year. But as early as May, the situation was potentially fraught with deterioration. At that time, talking at an International Republican Institute congress, the U.S. president said that Washington would actively assist the Color Revolutions, whereby two well-known Kazakhstani opposition figures were in the audience, including the future Kazakhstan presidential candidate. On 22 August, Kazakhstan Foreign Minister Kasymzhomart Tokaev visited the United States, where he held talks with U.S. State Secretary Condoleezza Rice. After expressing satisfaction with the level of cooperation and constructive dialog reached, Ms. Rice declared the White House’s unconditional support of the program announced by the Kazakhstan president of full-scale sociopolitical reforms, which is an optimal development model for other Central Asian countries. In addition, Con- doleezza Rice emphasized that Kazakhstan has all that it takes to play a key role in the region. In turn, Mr. Tokaev confirmed official Astana’s fundamental interest in expanding mutually advantageous cooperation with Washington and its adherence to the democratic course of reform. What is more, during this visit, on 25 August, Mr. Tokaev met with U.S. Defense Minister Donald Rumsfeld and they discussed the development prospects for bilateral relations in the military-political sphere and questions relating to cooperation in settling regional conflicts and strengthening security and stability in Central Asia and the Caspian Region. In October, U.S. State Secretary Condoleezza Rice arrived in Kazakhstan. During her meeting with Nursultan Nazarbaev, problems of regional policy and economic questions were discussed, and the upcoming presidential election in the Republic of Kazakhstan prompted a discussion of the democratization of Kazakhstan society. As Condoleezza Rice noted, Kazakhstan is in a difficult region, but the U.S. believes that the republic could become a fulcrum for the development of other Central Asian states and expressed the hope that the presidential election in Kazakhstan would be fair and open. At the beginning of November, a meeting between General John Abizaid, Commander of the U.S. Central Command, and Kazakhstan Defense Minister Mukhtar Altynbaev was held in Astana, during which questions were discussed of international, including regional, security, and the present state and future prospects for bilateral cooperation in the military sphere. The Pentagon representative said that Washington does not intend to deploy a military base in Kazakhstan unless a tense situation arises in one of the Central Asian states and the government of that republic invites the U.S. Armed Forces to come in. And finally, on 20 December, U.S. CIA Director Porter Goss visited Kazakhstan and held a series of meetings with officials.

197 CENTRAL EURASIA 2005 Analytical Annual

Unofficial contacts also have great political significance in bilateral relations with the United States. For example, in September, former U.S. president Bill Clinton visited Kazakhstan. During his meeting with Kazakhstan President Nursultan Nazarbaev, the former head of the White House expressed the opinion that Kazakhstan has every reason to accept the post of OSCE chairman in 2009. Analysts evaluated this unexpected visit by Bill Clinton as a signal that Washington supported Nazarbaev’s candidacy at the upcoming presidential election in Kazakhstan. Some time later, in Oc- tober, former U.S. secretary of state Henry Kissinger made a private visit to the republic. He said that his meeting with Kazakhstan President Nursultan Nazarbaev gave the United States reason to positively evaluate the efforts being made by official Astana to further democratize society, and he emphasized the significant economic and political progress of Kazakhstan’s development. During the year, several conferences were organized in the U.S. devoted to Kazakhstan, at which extremely well-known U.S. representatives answered journalists’ questions. Among them were former presidential candidate and ex-commander of NATO troops in Europe Wesley Clark, former FBI and CIA director William Webster, former advisor to the U.S. defense minister Richard Perle, first vice president of the National Committee on Foreign Policy Donald Rice, Assistant Secretary of State for European and Eurasian Affairs Ariel Cohen, and others. As for the other Western states, active relations with Great Britain should be noted. For example, in March, the British Ministry of Trade and Industry assumed responsibility for rendering support to build a nuclear technopark in the town of Kurchatov. In September, a delegation of Kazakhstan parliamentary deputies headed by Majilis Chairman Mukhamejanov went to London, and in October, the British-Kazakhstani Parliamentary Group made a return visit to Kazakhstan. Contacts were also developed with other EU countries, including Central and Eastern European states. A representative Polish delegation came to Kazakhstan in April. During its visit to Almaty, Kokchetav, and Astana, Kazakhstan-Polish economic forums were held which showed that Kazakhstan is becoming one of this country’s important economic partners in Central Asia. The number of Polish companies interested in cooperating with Kazakhstan is increasing. But at the same time, Polish businessmen have noted several barriers barring their access to the Kazakhstan market. It should also be noted that Kazakhstan is continuing to develop ties with the European Union as an organization. At the beginning of February, the third meeting of the European Union-Kazakhstan Subcommittee on Justice and Law and Order was held in Astana. At the beginning of April, participants in the 6th meeting of the Republic of Kazakhstan-European Union Cooperation Committee in Brussels discussed the prospects for interaction between the sides in the energy and transportation sphere, as well as regarding TACIS programs. At the end of October, EU special representative for Central Asia Jan Kubish made a working visit to Kazakhstan. During his meeting with the Kazakhstan president, the possibilities were discussed of further developing trade and economic cooperation, Kazakhstan’s membership in the WTO, and issues relating to the upcoming presidential election in Kazakhstan. On the initiative of several deputies of the faction of the European People’s Party-European Democrats (EPP-ED), on 10 November there were hearings in the European Parliament, which a delegation from Kazakhstan attended, on the upcoming presidential election in Kazakhstan. The ensuing discussion focused on the political situation, freedom of the press, and development of the institutions of a civil society in Kazakhstan. A EU statement was adopted on the outcome of the hearings, which noted in particular that the European Union appreciates the responsibility Kazakhstan has assumed to hold a free and fair election. Other international organizations were also interested in the course of the 2005 election in Ka- zakhstan. For example, on 10 November, the Caspian Information Center (CIC) presented a report in London on the election campaign in the republic. Its main conclusion was that Kazakhstan, after achieving success in its economic reforms, has reached an important stage in democratic development.

198 REPUBLIC OF KAZAKHSTAN International Affairs Contacts with Asian Countries

In May, the foreign ministry representatives of Kazakhstan and China held bilateral consultations and a meeting of the Secretariat of the Committee on Cooperation between the Republic of Kazakhstan and the PRC. At the beginning of July, on the eve of the SCO summit, PRC Chairman Hu Jintao made an official two-day visit to Kazakhstan. Key issues of bilateral cooperation, as well as urgent international, including regional, problems, were discussed within a small group and at an enlarged session. Hu Jintao and Nursultan Nazarbaev signed a Declaration on Strategic Partnership and several other documents on expanding interstate relations, and came to terms on creating favorable conditions for further intensifying ties in such spheres as trade, the economy, power engineering, transportation, and finances. On 1 September, bilateral talks on Kazakhstan joining the WTO were successfully concluded in Beijing, and a statement was signed on completion of the talks on access to the Kazakhstan market of goods and services from the PRC under mutually acceptable conditions for both sides. Cooperation was also continuing with Japan. In November, a statement was signed on completion of the talks between Astana and Tokyo on access to the Kazakhstan market of goods and services, which in itself designated completion of the talks between the two countries on Kazakhstan’s membership in the World Trade Organization. At the end of May, within the framework of an official visit to Kazakhstan by Turkish Prime Minister Recep Tayyip Erdogan, several documents were signed in Astana, including an interparlia- mentary agreement on cooperation in the struggle against international terrorism. At the end of the official bilateral meetings held in June in Geneva, Astana and Ankara reached agreements on completion of the talks on Kazakhstan’s entry into the WTO. In November, King of Jordan Abdallah II bin al-Hussein made an official visit to Kazakhstan, during which a decision was made to create a joint economic commission, and bilateral documents were signed, mainly on cooperation in culture. But due to the terrorist acts which took place in the Jordan capital on 10 November, Abdalla II bin al-Hussein cut this visit short.

Development of Relations with International Organizations

An important place in Kazakhstan’s foreign policy is occupied by the Shanghai Cooperation Organization. As its chairman, Kazakhstan organized a meeting of the Council of Foreign Ministers of the member states (CFM SCO) at the end of February to discuss questions of maintaining stability in the SCO expanse, the Organization’s international activity and urgent current problems, and stepping up efforts to advance Tashkent’s initiative to create a partner network of multilateral associations in the Asia Pacific Region. At the beginning of June, the second meeting of the secretaries of the Security Councils of the Organization’s member states on security and stability in the SCO expanse and in neighboring regions, as well as on strengthening cooperation in the fight against terrorism, separatism, and extremism, was held in Astana. A major international event was the tenth (anniversary) meeting of the heads of SCO member states held on 5 July in Astana. At this summit, Iran, India, and Pakistan joined the Organization as observers. The participants in the anniversary meeting in Astana signed a total of seven documents, including a conception of cooperation in the fight against terrorism, separatism, and extremism, and came to terms on interaction in preparing and holding joint antiterrorist exercises, training, and qual-

199 CENTRAL EURASIA 2005 Analytical Annual ification-raising seminars and on exchanging work experience. The main outcome of this geopolitically significant summit was the SCO Declaration, in which the question was raised of how long the U.S. bases should remain in the Organization’s Central Asian member states. At the end of October, a regular meeting of the Council of Heads of Government of the SCO Member States was held in Moscow with Kazakhstan’s participation. Several documents were signed on its outcome. Within the framework of this meeting, talks were also held between the delegation heads and Russian President Vladimir Putin. What is more, PRC State Council Premier Wen Jiabao made a statement in which he offered 900 million dollars for carrying out joint development projects. Official Beijing essentially stated its willingness to provide a line of credit for the entire economy of the SCO countries and turn this structure from a military-political into an economic organization. But Moscow and Astana had a cool response to this suggestion. Kazakhstan has been actively supporting the work of the United Nations. In particular, at the end of January, a meeting was organized in the republic of the Antiterrorist Committee of the U.N. Security Council (ATC U.N. SC). Its participants discussed urgent questions relating to the fight against terrorism: improving the international tools for its suppression, including the interception of illegal financing; putting regional antiterrorist centers to work; combating the illicit circulation of arms and drugs; intensifying cooperation between corresponding national and international structures; and ensuring security of air and sea ports. What is more, within the framework of the ATC U.N. SC meeting, the Kazakhstan government and U.N. Drug and Crime Control Department (UNDCD) signed five documents on technical and advisory assistance in the fight against drug abuse and the illicit circulation of drugs. At the end of February, the Kazakhstan government, in the form of the country’s Foreign Min- istry, and the U.N. departments signed joint action plans for 2005-2009. During this period, the U.N. departments will orient their efforts in three mutually related directions: reducing poverty, improving basic social services, and carrying out democratic state administration. At the end of March, a U.N. International Assembly was held in Almaty, which reviewed the question of the role of international, including regional and subregional, organizations in carrying out the Almaty Action Program (AAP) for the developing countries without access to the sea. On 1 November, the U.N. General Assembly unanimously adopted a resolution initiated by Kazakhstan called International Cooperation and Co- ordination of Activity Aimed at Rehabilitation of the Population and Environment, and Economic Development of the Semipalatinsk Region in Kazakhstan, which called on the international community to render the republic assistance in ensuring economic growth in this area. As for cooperation with the OSCE, in mid-February, its current chairman, Foreign Minister of the Republic of Slovenia Dimitrij Rupel, visited Kazakhstan and held consultations with representatives of the Senate and Majilis of the parliament, the Security Council, Foreign Ministry, business circles, political parties, and NGOs. In September, high-level consultations were held in Vien- na of the OSCE member states, during which questions were reviewed of reforming the Organiza- tion and improving its activity. Foreign diplomats supported the initiatives of Kazakhstan Presi- dent Nursultan Nazarbaev aimed at further socioeconomic and political modernization of Kazakhstan society. Our republic also participated in drawing up recommendations for the Group of Prominent Po- litical Officials of the seven OSCE countries on a conception of reform for the Organization. Kazakh- stani delegation head Rakhat Aliev said at this meeting that the Republic of Kazakhstan is adhering to democratic values and upholds a gradual (evolutionary) liberalization of the political system, closely tying this process with continuing the socioeconomic reforms. Among other important prerequisites, the delegation head named the need to ensure a broad public dialog, including the constructive role of nongovernmental organizations and the mass media during democratic development, and called on the participants of the forum to support Kazakhstan’s initiative to hold an International Conference on

200 REPUBLIC OF KAZAKHSTAN International Affairs an Inter-Confessional and Ethnic Dialog in Kazakhstan in 2006. What is more, Rakhat Aliev directed attention to the need to ensure humanitarian security in the OSCE expanse and observe a rational balance in fighting the terrorist threat, on the one hand, and protecting the fundamental human rights and freedoms, on the other. In this context, he mentioned official Astana’s practical actions which have unilaterally liberalized the visa conditions for several OSCE countries. Kazakhstan has also been maintaining close contacts with the North Atlantic Alliance. In particular, in February, a conference was held in the republic on planning a Working Program of NATO Partnership organized by the Allied Command Transformation. At the end of June, at a meeting held in Brussels of the North Atlantic Council in the NATO-Kazakhstan format, Kazakhstan’s Deputy Foreign Minister Askar Shakirov presented the Presentational Document of an Individual Action Plan of Partnership between the Alliance and the Republic of Kazakhstan. This document set forth official Astana’s conceptual approaches to the development of relations with NATO, including in the sphere of international, including regional, security, and touched on questions of practical cooperation in strengthening Kazakhstan’s defensibility. Representatives of the NATO leadership and member states highly praised the current level of partnership with Kazakhstan, noted its leading role in strengthening regional stability, and expressed interest in closer interaction on urgent problems of international and regional security. At the beginning of October, NATO Secretary General’s Special Representative for Central Asia and the Southern Caucasus Robert Simmons visited Kazakhstan. He met with representatives of government bodies: parliamentary deputies, the secretary of the Security Council, the minister of defense, the minister for emergencies, and the deputy foreign minister. According to Robert Simmons, successful use by Kazakhstan of the Alliance’s experience in training servicemen, as well as in the sphere of improving interoperability is serving a positive example for other NATO partner states. Sending Kazakhstan specialists to work in the Euro-Atlantic Disaster Response Coordination Center could be of immense value in this process. What is more, the sides discussed urgent problems of regional security. On behalf of NATO, Simmons expressed gratitude for Kazakhstan’s active support of the efforts of the antiterrorist coalition. On 26 October, President Nazarbaev signed a Law on Ratification of the Security Agreement between the Republic of Kazakhstan and the North Atlantic Treaty Organization. The agreement is aimed at reinforcing the sides’ mutual obligations to protect sensitive information exchanged when interacting within the NATO Partnership for Peace program. And in mid-December, Robert Simmons made a statement that at the beginning of 2006, the Alliance intends to sign an individual action plan with Kazakhstan on this program. In relation to Kazakhstan, special emphasis was made on military reform and raising the country’s combat-readiness. Kazakhstan also participated in the work of the Asian Cooperation Dialog (ACD) by joining such documents as the Islamabad Declaration and the Islamabad Initiative on Economic Cooperation in Asia in April. What is more, within the framework of his visit to Islamabad, Kazakhstan Minister of Foreign Affairs Tokaev held bilateral meetings with Thai Vice Premier Surakiart Sathirathai and the heads of the foreign policy departments of Pakistan, China, Japan, Vietnam, Oman, Mongolia, and Sri Lanka. At the beginning of June, a regular meeting was held of the Secretariat of the Congress of World and Traditional Religions, in which 23 members of different religious associations from Iran, Egypt, Saudi Arabia, Indonesia, Pakistan, Great Britain, France, Russia, China, Mongolia, Israel, and other countries took part. Kazakhstan and foreign theologians also took part in the meeting. At the end of September, the Third World Kazakh Kurultai (Congress), in the work of which President Nazarbaev took part, was held in Astana. More than 300 delegates from 32 countries of the Near and Far Abroad came to the congress, including from China, Austria, Norway, the Czech Re- public, Italy, Singapore, and Egypt.

201 CENTRAL EURASIA 2005 Analytical Annual

On 8 October, an international symposium called Kazakhstan—Strengthening International Cooperation for Peace and Security was held in Ust-Kamenogorsk with the participation of Kazakhstan President Nazarbaev. Under Secretary of State for Arms Control and International Security Robert Joseph, President of the NATO Parliamentary Assembly Pierre Lellouche, Extraordinary and Pleni- potentiary U.S. Ambassador to Kazakhstan John Ordway, Senator Sam Nann, well-known media magnate and founder of the Nuclear Threat Initiative (NTI) Ted Turner, and member of this foundation Susan Eisenhower (granddaughter of U.S. president Dwight Eisenhower) also participated in this symposium. During the year, Kazakhstan continued to act as the center for preparing the Conference for Cooperation and Confidence-Building Measures in Asia (CCCMA). In mid-December, a meeting of the Special Working Group (SWG) for developing CCCMA confidence-building measures was held in Almaty on economic, humanitarian, and environmental dimensions, as well as regarding the new challenges and threats. Representatives of the member states of this organization also took part in its work. The proposals prepared at the meeting on applying confidence- building measures were consolidated and formed the basis of the report for the Committee of Senior Officials of the CCCMA.

The Election Factor and Kazakhstan’s International Status

At the beginning of the year, a discussion was launched in the country on making changes to the election legislation. This problem immediately acquired a clear international context, in particular, the Permanent Council of the Organization of Security and Cooperation in Europe asked the republic’s leadership to bring the new version of the law into harmony with OSCE standards. As for the U.S., it did not have a monolithic position. A split was designated between the State Department, which in the person of Deputy Assistant to the Secretary of State for European and Eurasian Affairs Laura Kennedy talked about the succession of Washington’s policy toward Kazakhstan, and Congress, which insists on toughening it up. However, when comparing the thematic data presented by various nongovernmental organizations, on the one hand, and by Kazakhstan officials, on the other, the European Parliament deputies gave preference to the NGO data, which were clearly oppositional. As a result, the European delegates called for closer cooperation with the U.S. in drawing up a joint policy in the Central Asian Region. In April, a law was adopted in the republic on national security. The West retained its critical attitude toward the measures undertaken by the Kazakhstan leadership in this area. According to the OSCE and the European Commission, corresponding amendments to the country’s legislation might violate human rights, that is, not correspond to the international standards of democracy. Kazakhstan’s intention to chair the OSCE in 2009 was also a reason for pressure. Permanent U.S. representative of this organization made it understood that in return for the privilege of occupying this “chair,” Kaza- khstan would have to accelerate political liberalization. In May, foreign representatives participated in a discussion of the draft law on the activity of international NGOs in the republic and the reports of these organizations on corruption and freedom of speech in Kazakhstan. At the beginning of the summer, the policy of the United States and the West as a whole toward Kazakhstan began to gradually, but very perceptibly, evolve toward a softening of assessments and criticism of the existing regime, in particular, Washington confirmed its course toward retaining good relations with Astana. Condoleezza Rice suggested continuing military aid to Kazakhstan, substantiating her initiative with the interests of U.S. national security.

202 REPUBLIC OF KAZAKHSTAN International Affairs

Nor has China remained a neutral observer of the current events. PRC Chairman Hu Jintao expressed his country’s concern by talking about the right “of nations to choose their own development path.” But a turning point in election history was the visit by Kazakhstan Foreign Minister Tokaev to the United States in August. By that time, it was known when the presidential election would be held. On 19 August, the Kazakhstan Constitutional Council announced its verdict that it should be held in 2005. In this respect, Condoleezza Rice, as was mentioned above, told head of the Kazakhstan For- eign Ministry that the program of full-scale sociopolitical reforms announced by the Kazakhstan president is an optimal development model for other Central Asian states. The OSCE also changed its view. Its leaders stated that Kazakhstan is striving to establish itself as a democratic state. Representatives of the European Parliament and deputies of the British Parliament and U.S. Congress made similar statements. On 4 December, the presidential election was held in Kazakhstan, at which the country’s current president, Nursultan Nazarbaev, sustained victory. This election campaign aroused a great international response, more than 1,600 international observers and 400 journalists from 27 countries of the world were present at the election. Numerous representatives from the CIS and SCO noted small technical flaws, but admitted that the presidential election took place at a high organizational level. At the same time, observers from the OSCE pointed out that the election did not meet several obligations within the framework of the OSCE and other international standards of democratic voting.

203 CENTRAL EURASIA 2005 Analytical Annual

KYRGYZ REPUBLIC

GENERAL OVERVIEW

Ainura ELEBAEVA D.Sc. (Philos.), professor, director of the Research Institute of Ethnology, International University of Kyrgyzstan (Bishkek, Kyrgyzstan)

he stormy events of 24 March, 2005 were caused by a gradually mounting political crisis, rather than a sporadic outburst of popular discontent. It all started in 2000 when President Askar Akaev T was elected to his third term, which the republic’s Constitutional Court preferred to count as his second term. The illegal nature of his presidency led to an ongoing political confrontation, the ebbs and flows of which were determined by what was going on in politics. International developments added tension to the already tense domestic situation. In the fall of 2000, at the very beginning of the third term, an invasion of international terrorists from the Batken Region (in the country’s south) triggered a political crisis. The clashes showed that the armed forces of the Kyrgyz Republic were badly trained and unable to maintain their combat proficiency. The parliamentary discussions which followed caused a political confrontation between the head of state and the deputies who accused the president of violating the Constitution and abusing his powers regarding use of the army. The agreement permitting the United States to deploy its air force base at the Manas Airport following the 9/11 events in New York caused another storm in the Zhogorku Kenesh (parliament). The Kyrgyz-Chinese protocol on transferring the disputed Uzengu Kush territory to China ended in another large-scale political demarche: accused of betraying the country’s interests, the head of state barely escaped impeachment. The administration retaliated by arresting parliamentary deputy A. Beknazarov. This started another political crisis complete with gunfire at a peaceful demonstration in support of the arrested deputy in the Aksy District in the south, which cost the demonstrators five lives. Kurmanbek Bakiev and his cabinet had to resign.

204 KYRGYZ REPUBLIC General Overview

In 2002, political confrontation caused by the demands to liberate the arrested deputy and carry parliamentary by-elections reached its peak and caused another bout of popular unrest. People were obviously prepared to march on Bishkek to restore justice; demands for the president’s resignation were voiced for the first time. The presidential administration worked hard to pacify the nation by convening the Constitutional Assembly, which eventually achieved a precarious political compromise. It was overturned when President Akaev published his own draft constitution to be put forward at the 3 February, 2003 referendum; it was designed to cement his personal grip on power. Political passions were rekindled. The March 2005 events were triggered by numerous violations of the voting and vote counting procedures at the parliamentary election of 27 February: voters’ signatures were faked; vote counting abounded in falsifications; unwelcome candidates were subjected to financial and administrative pressure; and the state tapped all its resources to ensure the victory of its loyal supporters and top people’s relatives. This caused popular discontent and violent protests. Spontaneous rallies shook the country’s south (Dzhalal-Abad and Osh); then the wave reached the north and pounded the capital. To stay ahead of the mounting popular restlessness, the president sped up legitimization of the newly elected parliament: on 22 March, the election results were officially confirmed. The next day, the first session of the parliament opened while special forces from the Ministry of Internal Affairs mercilessly dispersed a rally of youth, including student, and other public organizations outside. Two days later, on 24 March, the mob took the Government House by storm, a fact the opposition hastened to exploit in its interests. Despite two diametrically opposite opinions about the events of 24 March—either a popular revolution or a coup—one thing was clear: the country had entered a new development stage. The people showed that they would no longer put up with being treated like slaves. At the same time, the popular revolution was nothing more than an outer manifestation of an already accomplished regime change. All that actually happened was one political elite squeezed out another. The political forces and their leaders removed from the commanding posts by the old regime rode the wave of popular discontent to take their revenge. The state institutions proved too weak, therefore those who for different reasons found themselves outside Akaev’s ruling elite regained their former positions. In the post-March period, the scale of corruption (which, under Akaev, had been the country’s scourge and one of the causes of the March events) increased despite the new rulers’ intention to create an anti-corruption system. The market laws were no longer effective in the country. Kyrgyzstan is one of the world’s most corrupt countries: in 2005, it occupied 130th place on a list of 159 countries; in 2003 and 2004, it was in 118th and 125th place, respectively. The new president, Kurmanbek Bakiev, assumed control over the most profitable economic branches to achieve, according to him, more efficient use of the country’s strategic resources. This was taken as a signal to redistribute property on a nationwide scale. On 31 December, 2005, in his New Year address to the nation, the head of state assured the people that the old order of things would never return. In the absence of law and order in the sociopolitical and socioeconomic spheres, the people find it hard to share his optimism. In fact, the hasty and ill-advised steps of the new leaders started another round of popular unrest. The nation discovered that President Bakiev was not qualified enough to rule the country and was not up to the tasks it faced. It turned out that instead of bringing fresh blood into the government, he merely rotated the members of the Akaev political elite. Popular disen- chantment was imminent. In 2005, the crime level rose even higher than before: there were 24 criminal groups and four criminal communities plundering the country. On top of this, 2005 was a year of political assassina-

205 CENTRAL EURASIA 2005 Analytical Annual tions: after the March events, three parliamentary deputies—Zh. Surabaldiev, E. Baiamanov, and T. Akmatbaev (all of them indirectly involved in criminal activities)—were killed one after another. Economy and business suffered immensely from the widespread crime: disillusioned local and foreign investors are fleeing abroad with their money. The government, however, tried to raise the wages of those employed in the budget sector: the salaries of teachers and doctors were increased by 15 percent; of the law enforcement bodies by 50 percent; pensions were increased by 10-15 percent; and other social benefits were also raised. In- flation reduced these efforts to naught: the price of some foodstuffs grew by 50 to 100 percent. No wonder larger numbers of people began leaving the country: according to the National Committee for Statistics, 25,500 people migrated to Russia alone (9,449 more than in 2004). In the nine post-revolutionary months, the republic found itself twice on the brink of another political crisis. At first, R. Akmatbaev, a criminal leader and brother of murdered deputy T. Akmatbaev, picketed the central square and parliament building for several days and openly threatened the premier. By staging an alternative picket in defense of the premier, democratic NGOs and political parties forced the president to interfere. He met the picketers and persuaded them to leave the square until the end of the investigation procedure. Complete rehabilitation of the above- mentioned criminal leader and his renewed public threats at press conferences targeted at Pre- mier Felix Kulov caused another crisis. On top of this, he ran for parliament to win his dead brother’s seat. After the hasty presidential election of 10 July, the newly elected head of state Bakiev all of a sudden blocked the planned constitutional and political reform and suggested that the referendum on the future form of government in the Kyrgyz Republic should be postponed until the end of 2006. In November he published his own draft of constitutional reform, which had nothing in common with the draft discussed at and approved by the Constitutional Assembly. The president insisted on minor changes: the majority-proportional system for parliamentary elections, unification of the Constitutional and Supreme courts, and annulment of death penalty. Permanent political instability in the country threatens its territorial integrity and unity, yet the new leaders have not come out with a clear political strategy for leaving the systemic political crisis behind. Instead, they have already betrayed their antidemocratic intentions; it was with their help that certain criminals came to the political scene. The nation is disappointed; it no longer believes that the new government can (and wants to) bring law and order to the country. Anarchy is mounting; the world is becoming more and more disillusioned with the Tulip Revolution. Experts’ forecasts of the country’s future breed no optimism either: it is sliding toward complete instability, the process being aggravated by the squabbles between the president and the parliament and between the president and the prime minister. The country is dangerously close to permanent instability, conflicts, and coups; it might even split into the south and the north. This will spell the end of the integrity and sovereignty of the Kyrgyz Republic. The 2005 events demonstrated that a regime change is not an end in itself: to remedy social evils the country needs new leaders resolved to stick to policies which will radically improve the political, economic, and social situation. Such people will prove worthy of the nation’s confidence. Regretta- bly, the credit of confidence in Kurmanbek Bakiev and his Cabinet has all but run out.

206 KYRGYZ REPUBLIC Politics POLITICS

Nur OMAROV Ph.D. (Political Science), doctoral student at the Kyrgyz-Russian Slavic University (Bishkek, Kyrgyzstan)

oday the developments in Kyrgyzstan are giving rise to frightening premonitions, while comments about the present state of affairs are highly varied. Society is becoming more and more T convinced that the fruits of the so-called popular revolution were reaped by a very narrow circle of the new ruling bureaucracy. The huge credit of confidence Akaev’s opponents received from the nation on the eve of the March events is rapidly evaporating: the former allies are too busy trying to divvy up power to engage in any coordinated action. In fact, this could have been predicted as early as late 2004 and early 2005. The opposition was too diverse, too ambitious, and too scandal-prone to permit optimistic forecasts about the country’s future. It closed ranks only to bring down Akaev’s regime. Today, various groups inside the political establishment are fighting among themselves for their own different interests, while the people have become hostages of these manipulations. The unsatisfactory results of the “year of change” are the best proof of the above.

* * *

By early 2005, there were three opposition blocs1 in the country which united the most prominent of Akaev’s opponents. Early in the spring of 2004, the first efforts to unite the opposition failed due to the personal ambitions of those who wanted to remain in the limelight, rather than because of different reform strategies. The absence of a clear reform strategy gave rise to the highly unsatisfactory situation in the post-Akaev period. Much earlier, in the fall of 2004, some of the top bureaucrats left the presidential camp to join the opposition. Those who lost their top posts under Akaev were invigorated by the president’s intention not to run for another term, and liked to think of his “political heritage” being torn apart by power-greedy politicians. The genuinely democratic, and very small, segment of the opposition was resolutely pushed aside and eclipsed by better-organized regional clan groups. This determined the political dynamics of 2005. Unprecedented manipulation of the election results (the two rounds took place on 27 February and 13 March) triggered the March events. Under these circumstances, the leaders who badly needed a parliamentary majority to fortify their shaky position did more harm than good. There is a widely shared opinion that by nominating its loyal supporters or even the relatives of the top people as parliamentary candidates (Akaev’s older children and his wife’s relatives), the ruling regime revealed its utter moral degradation. Time has shown that the country’s rulers sealed their fate by being indifferent to or even dis- dainful of the interests of the most influential among the regional and clan groups. In the context of the increasing stagnation of the political and state institutions, this factor proved to be pivotal. In Jan-

1 The Popular Movement of Kyrgyzstan headed by K. Bakiev; the Zhany-Bagyt headed by M. Imanaliev and I. Abdrazakov and Ata-Zhurt headed by R. Otunbaeva and O. Tekebaev. There was also a youth group called Kel-Kel patterned on the Georgian Kmara and Ukrainian Pora. 207 CENTRAL EURASIA 2005 Analytical Annual uary and February, the ruling circles, already hysterical about the rumors of the imminent Tulip Rev- olution and the victory the opposition had scored in Ukraine, stuck to the seemingly winning tactics of removing opponents by abusing the election laws, using mass bribes, and putting administrative pressure on the voters.2 The so-called Western democratic community with interests of its own in Kyrgyzstan took certain steps to relieve the pressure on the opposition. American money paid for the law on finger-marking; funds designed to raise the voters’ legal awareness were set up, while the election itself was attended by about 2,000 observers, an unprecedentedly large number. Later events showed that these efforts ensured but short-lived success of the democratically minded public. The first round of the election (27 February) produced 31 deputies out of the required 75.3 In some of the constituencies, where the local candidates were replaced with candidates loyal to power, the people preferred to ignore the election. An analysis of the voters’ high social activity in the protest constituencies revealed that they were guided by regional and clan loyalties, rather than by political considerations. The people, who at all times treated central power with a great deal of suspicion, were absolutely convinced that this time the leaders had decided to ultimately deprive them of their rights.4 Unreasonably, Akaev and his cronies neither relieved the pressure, nor sought compromises. The presidential team went even further: it insisted that the election was the epitome of democracy and power of the people. It was no wonder that on 28 February mass demonstrations swept several regions. People even blocked highways to support those who either lost the election or had been removed from the race. On 4 March, the crowd occupied the building of the regional Dzhalal-Abad administration. This drew no response from the authorities and ignited similar processes elsewhere; alternative power structures were set up. By 13 March, the date of the second round of the parliamentary election, some regions were no longer controlled by the center. Violations of the voting and vote counting procedure were even more obvious: the government failed to learn its lesson. On 15 March, the People’s Kurultai convened on the initiative of the regional elite leaders set up the Coordinating Council of People’s Unity with K. Bakiev and B. Erkinbaev as its informal leaders. Taking several incidents (in some places criminals were set free, while 23 million soms were stolen from the Dzhalal-Abad Branch of the National Bank) as a pretext, official Bishkek described the development of events as criminal. On 19 March, the riot police tried unsuccessfully to recapture the administration building in Dzhalal-Abad. Events spiraled out of control. The opposition was as shocked as those who still headed the country. On 24 March, a crowd took the Government House in Bishkek by storm; the opposition had to admit that this was something it never expected. President Akaev left the country of his own free will, while the opposition, carried away by the opportunity to divide the spoils, failed to prevent massive plundering of the capital. The events of 24 March can be described as a coup which assumed the form of a popular revolution for two reasons. First, the regional leaders provoked popular discontent by means of the election results. Second, Western sponsors actively interfered, allegedly to change the regime in a democratic way. This was why the opposition won on 24 March. The average Kyrgyz “revolutionary” of March 2005 was very different from the average revolutionary in Serbia, Georgia, and Ukraine, where the youth played first fiddle. In Kyrgyzstan, it was much older people of the titular nation who were involved. The Bishkek population showed no enthusiasm: there were too many nationalities living in the capital who had nothing in common with the

2 It should be said that in some cases the candidates who stood opposed to Akaev used similar methods—money and the voters’ clan affiliation. 3 Under the 2003 Constitution these were the elections to the one-chamber parliament by 75 majority constituencies. 4 The events of February-March 2005 brought to mind the local elections of the late 19th century also accompanied by massive fights between clans. 208 KYRGYZ REPUBLIC Politics regional and clan groups of the titular nation. This explains why the “revolution” began in the regions and was advanced by rural people, strange as this may seem. The outburst in the south was undoubtedly prepared, among other factors, by foreign (mainly American) interference. For some time, foreign funds and the NGOs which operated on their money had been manipulating public opinion in the crisis regions to bring the people’s indignation to boiling point. The violations of the election procedure were the last straw for the leaders of the south already irritated about the “power usurpers” from the north of the country. The resulting unrest which swept across the republic brought the nearly 15 years of Akaev’s rule to an end. After several days of chaos, a semblance of law and order was restored. Kurmanbek Bakiev, who obviously stood out among the variegated opposition crowd, was appointed premier and acting president. Felix Kulov, who was released from prison on 24 March, spent several days in power and returned to his vague status. By early April, the country found itself in a strange situation in which the government was represented by a “pro-Akaev” parliament, the product of the latest election, and a provisional government staffed with opposition members. The former allies would not agree to disband the newly elected legislature as some people suggested. The parliament, in turn, gained a new lease on life by recognizing the new government. The situation remained even more complicated until 4 April when the fugitive president finally abdicated. After receiving his resignation, the parliament passed a decision on an off-year presidential election and set the date for 10 July. For want of a real program of reform, the new leaders had to resort to populist statements. It was suggested that the wealth of the Akaev family should be returned to the people, which meant that power authorization and the business spheres related to it were to be redistributed. The opportunity was too good to be missed: the criminal ochlocracy lost no time—property5 and plots of land in the capital for private housing were grabbed. Several prominent businessmen and deputies, the first victims of the uncivilized divvying up of the spoils, were murdered one after another. Economic stability remained beyond reach, while the country slipped into stagnation.6 Immediately after 24 March, some of the prominent public and political figures started talking about constitutional reform to bring the Constitution into harmony with democratic norms. The initiative hailed by all the major political forces produced the Constitutional Assembly, which met for its first sitting on 29 April. Its 105 members represented the executive and judicial powers and the civil sector. It was generally expected that by mid-June a draft would be ready for nationwide discussion. From the very beginning, the Assembly concentrated on two versions: under one of them the nation was expected to endorse the new Constitution before electing a new president. Under the second, discussion of the Constitution and the presidential campaign were two parallel processes. The second version won out, but not without pressure from Kurmanbek Bak- iev’s closest associates. The Assembly members did not agree on too many issues, therefore by mid-November they were still deliberating. In October, the composition of the Assembly changed significantly. Bakiev, who in the meantime had been elected president, brought the number of members of the Constitu- tional Assembly up to 275, its chairman being appointed by the head of state. It came as an unpleasant surprise to Bakiev’s closest supporters to discover they had been thrown out, while the newly appointed members were mainly selected at random. Civil society justly interpreted this as an attempt to restore the totalitarian past by drafting a constitution which would suit the new leaders. Under public pressure, the president had to invite the “new old opposition” to join the Assembly,

5 The most graphic example of this was supplied by N. Motuev from the Naryn Region who on 10 June appropriated the largest coal stripping Kara-Keche. He is rumored to say to the new leaders: “You seized power, I grabbed wealth.” 6 The small and medium businesses destroyed by the riots and plundering of 24 March did not receive promised compensations. 209 CENTRAL EURASIA 2005 Analytical Annual thus enlarging its membership to 287. After long, yet fruitless, discussions until mid-November, the new Assembly finally agreed on a draft Constitution; the process was to be completed by 25 Decem- ber. The final version looked suspiciously like the Constitution adopted in February 2003 when Askar Akaev was still president.7 Under the new constitution, Kyrgyzstan was to become a presidential- parliamentary republic in which the president and the executive structures would retain their broad powers. It was for this reason that in the latter half of November and early December, the “new opposition” (prominent politicians and businessmen displeased with the “power of the people”) made an attempt to achieve closer unity.8 It insisted on the parliamentary form of government as an anti-authoritarian measure. The civil sector quite correctly strove to limit the executive power’s monopoly, yet the country was not ready for the parliamentary form of government. Its weak civil society and undeveloped national political parties and other democratic institutions made a shift to the parliamentary form during the transition period a hazard fraught with protracted political crises and the possible triumph of regional ochlocratic groups. The country, which had slipped back into the mid-19th century as far as its political development level was concerned, must first return to the path of democratic reforms and real power of the people. World experience has taught us that if reform is imposed, no country will be able to avoid serious upheavals fatal to its multinational population. The off-year presidential election held on 10 July played an important role in shaping the current political situation. It was during the election campaign that the K. Bakiev-F. Kulov bloc was formed: the Andijan events forced all influential politicians to close ranks in the face of a common threat. Under the agreement, presidential nominee Kurmanbek Bakiev promised Felix Kulov the post of prime minister. This defused the tension which had been mounting between them and their camps since early May. The result, however, posed several questions. First, did the agreement justify the nation’s expectations and what could people expect from the alliance? Most of those who approved of the Bak- iev-Kulov tandem later voiced their doubts about its future, and with good reason. In the absence of a national leader able to unify the different interests of the local people by force of his moral authority, the political clans offered their own tactics, according to which the titular nation in the south and the north split its sympathies between Bakiev and Kulov. Weaker, but no less ambitious candidates (A. Atambaev, A. Madumarov, etc.) were squeezed out of the race by being included in the central figures’ teams. Some of the other most serious contesters (Tursunbay Bakir uulu, Urmatbek Baryktabasov, and Zhypar Zheksheev) preferred different tactics. The events of 17 June, which the new rulers called an aborted “counterrevolutionary coup” allegedly initiated by Askar Akaev, should be paid special attention. Early on 17 June, supporters of U. Baryktabasov, who the Central Election Commission refused to register, gathered a large rally in the center of Bishkek and seized the Government House once more. After a short while, they were driven from the building, while their leader was put on the wanted list. So far, details and causes remain unknown. Independent observers believe, however, that the new government planted its agents in the ranks of the candidate’s supporters. It was they who staged the coup to fortify the position of the new leaders in society. The “strange” election of 10 July brought the Bakiev-Kulov tandem its expected victory. How- ever, those who crowded around the new leaders could not abandon their old habits and relied heavily on the notorious administrative resource, which invited numerous negative comments from independent observers; foreign observers, meanwhile, described the election as “the purest and fairest.”

7 The statement that K. Bakiev made at a press conference of 8 December was sensational yet completely expected. He said that he did not rule out a possibility of postponing the constitutional reform till 2009. He argued, very much in line with the tradition, that society needed political and social stability. 8 On 25 November, for example, the constituent congress of the Union of Democratic Forces was held in Bishkek on an initiative of K. Baybolov. 210 KYRGYZ REPUBLIC Politics

Immediately after the election, the potential premier was consistently deprived of much of his power by removing his supporters from important posts.9 The agreement between the president and the premier stipulated that the power structures would be controlled by the new president, therefore the replacements raised no questions. What puzzled the public was the desire of the new president to control all more or less profitable economic branches with the alleged aim of achieving more rational use of the country’s strategic resources. This did not satisfy the majority: the new administration was suspected of building up a regime of personal power. Suspicions intensified when the nation learned that Prosecutor General A. Beknazarov had been removed from his post on 19 September; and tension increased even more when deputy B. Erkinbaev was murdered the next day. This was not all: on 20 October deputy T. Akmatbaev and his retinue were murdered in Correc- tional Labor Colony No. 31. The tension reached its peak when relatives accused Premier Felix Kulov of plotting against the deputy. The sides barely avoided direct clashes. For several days, two mass rallies were held in the capital at a distance of 100 meters from each other. The echo resounded louder and louder across the country. Certain experts were convinced that a clash could have triggered events similar to the Tajik scenario of 1992. The silent president was reproached from all sides; he was even accused of close ties with the dead deputy’s brother, R. Akmatbaev, who is well known in criminal circles. President Bakiev’s meeting with the relatives of the dead, as well as his obviously delayed address to the nation stabilized the situation, yet those who suspected the president of wanting to get rid of Kulov became even more convinced. Foreign investors and foreign missions were extremely concerned about everything going on, including the mounting crime wave. The country was growing more and more unstable, mainly because certain politicians sought to upturn the political balance. People were very much troubled by T. Turgunaliev and his supporters who, in order to dissolve the parliament, had already collected the 300,000 signatures required for a national referendum. This would undoubtedly cause large-scale destabilization and push the country toward civil war. T. Turgunaliev himself insisted that he wanted to restore justice and to complete the fair cause of the “popular revolution.” He is suspected, however, of getting rid of the deputies bold enough to oppose Bakiev and to weaken Kulov’s position.10 Whatever the case, this is building up tension in a country living through a very difficult period; the civil conflict born in 2004 will inevitably come out into the open, leaving devastation and loss of life in its wake.

* * *

The regime change carried out by illegitimate means and which should partly be blamed on the former president and his closest circle revealed the problems and contradictions of the country’s domestic development. Today, society is suffering most from the new leaders’ failure to establish civilized relations with the new opposition and from their attempt to assume total control over all the social spheres.11 The new government, which in the recent past suffered from the real and imagined persecutions of the Akaev regime now actively vilified, is making the same mistakes and alienating its real and potential allies in promoting democracy not only in Kyrgyzstan, but also in other countries of Central Asia.

9 The way Head of the Administration of the Interior of Bishkek O. Suvanaliev was replaced with M. Kongantiev from Dzhalal-Abad is one of the most graphic examples. 10 This is indirectly confirmed by T. Turgunaliev’s frequent statements that the country did not need a premier whose functions could be entrusted to the president. His own reputation as a “tribune of the people” was greatly damaged by his zealous speeches in defense of criminal leader R. Akmatbaev. 11 This is confirmed by the seizure in October-December of the leading media, the central TV channels in the first place, by the groups close to the new leaders. In some cases force was used. 211 CENTRAL EURASIA 2005 Analytical Annual

Politics in the Kyrgyz Republic is growing increasingly unpredictable. It failed to accommodate itself to the rationally organized field of civilized relationships and may provoke a clash between the rivaling groups. There are external threats as well; coupled with the weakly developed democratic institutions, they are breeding numerous threats for the country’s development. Domestic factors, which have already divided society and given a boost to the traditionalist trends, cannot but cause alarm. Typically enough, the populace vacillates between passivity and expectations of the worst and criminal ochlocratic pressure on the authorities. Combined with the egotistic, rapacious, and power-hun- gry clans, this may prove fatal for the country. For this reason the new leadership, one of the most influential sides of the political process which needs stability and higher authority among law-abiding citizens and foreign partners, should work toward civil peace and harmony to be able to address the most urgent strategic tasks. They are: harmo- nization of the domestic situation; social consolidation as a tool of struggle against corruption and bureaucratic arbitrariness; and prevention of shady cartel agreements which contradict the nation’s interests. Mistakes should be prevented, not corrected after the fact. This alone will give the new government a chance to earn the nation’s respect and acceptance.

ECONOMY

Alymbek BIIALIEV Ph.D. (Econ.), columnist of the newspaper Respublika, economic advisor to the governor of the Issyk Kul Regional Administration (Issyk Kul, Kyrgyz Republic)

he country’s economy in 2005 was expected to develop in line with the trend characteristic of the previous five years, when the government had traditionally focused on macroeconomic T policy, paying less attention to the real sector. Thus, in accordance with Government Deci- sion No. 756 of 13 October, 2004, monetary policy was designed to maintain low inflation (not exceeding 4.6%). It was assumed that such a rate of inflation would take shape under the combined impact of internal and external factors: an increase in the money supply controlled by the National Bank of the Kyrgyz Republic, the impact of the government’s fiscal measures, adjustment of the rates charged for the services of natural monopolies, seasonal fluctuations in the prices of agricultural products, and also changes in the economic situation in Kyrgyzstan’s trading partners and fluctuations in world prices. The Nation- al Bank continued its floating exchange rate policy, which it planned to pursue by means of currency interventions designed to smooth out any sharp exchange rate fluctuations associated with seasonal changes in demand for foreign currency or short-term speculative operations. In annual terms, the exchange rate of the national currency (som, KGS) against the US dollar was projected at 42 soms per dollar. The government planned that macroeconomic stability would help to achieve GDP growth of 5% (as in previous years). However, a weak point of the government’s plans was that the increase in

212 KYRGYZ REPUBLIC Economy this basic economic indicator was to have been achieved largely through growth in agriculture and the service sector. Total GDP was projected at KGS 100.1 billion (about $2.5 billion), with these two sectors of the economy accounting for over 72% of the total. Industrial production was expected to fall by 3.6% compared to 2004, mostly as the result of a decline in the production and processing of gold from the Kumtor mine. In agriculture, it was planned to achieve real production growth of 5.3%, mostly owing to crop production. This growth was to have been achieved by introducing progressive techniques in seed farming and livestock breeding; by developing private veterinary services, technical service centers and markets of mineral fertilizers, pest control chemicals and agricultural machinery; by expanding access to credit resources and establishing new credit unions; by developing microcredit and promoting agricultural exports. In order to develop the service sector, the government planned to continue upgrading the legal framework for business activity, and also to promote an expansion of this sector through the development of modern services, including telecommunications and tourism. The demand for services was to have been sustained by a rise in household income. Real growth of total output in this sector was projected at 8.2%, mostly due to the development of market services: trade, repair of cars, household appliances and articles of personal use, and also transport and communication services, hotels and restaurants. State policy in the field of tourism was traditionally designed to create favorable conditions for foreign investment, promote national tourism in world markets, form an optimal tourism management structure by combining the interests of the state and private producers of these services, and develop domestic tourism. Investment policy in 2005 was expected to reduce the amount of government-guaranteed foreign loans under the Public Investment Program (PIP) while increasing the amount of private investment, including foreign direct investment. The plan was to reduce PIP to 3.3% of GDP. Overall, investments in the economy and the social sphere from all funding sources were projected at about KGS 12 billion (approximately 12% of GDP). Poverty reduction remained a strategic goal. Economic growth was expected to reduce the poverty rate to 42-43% (based on a rate of 45.9% for 2004, calculated by the country’s National Statistics Committee using a new technique of integrated household budget and labor force surveys). As the result of a reform of the public sector remuneration system, an optimization of the public administration structure and development of the economy, the average monthly wage in nominal terms was expected to reach 2,434 soms (with a real increase of 6.2%), exceeding the minimum consumer budget (1,860 soms) by 31.2%. In assessing government economic policy for 2005, one should note that it was well-justified within the framework of the conditions in which the economy had developed in previous years, and there was reason to expect that the plan targets would be met. However, the revolutionary events of 24 March, 2005, led to serious changes both in government activities and in the economic situation. President Askar Akaev fled the country, and the government resigned. The new revolutionary authorities hastily appointed a provisional government, which was naturally unable to gain control of the situation in the country right away. The criminal redistribution of property that got underway in the republic and political contract killings scared away many investors, resulted in a scaling down of production and caused a flight of capital from the country. All of this naturally had an effect on the state of the economy, and statistical data point to a sharp drop in many indicators. On the other hand, targeted attacks on business, which particularly intensified during the campaign to track down the property of the Akaev family, made many investors question the advisability of investing in Kyrgyzstan. In 2005, real GDP fell by 0.6%. This was due to a decline in industry by 12.1% as the result of a drop in production at enterprises specializing in the development of the Kumtor gold deposit (by 23.7%) and to a 4.2% decline in agriculture caused by a setback in crop production (by 7.5%). The

213 CENTRAL EURASIA 2005 Analytical Annual share of these sectors in the structure of GDP was 46.6%. Inflation rose to 4.9%, exceeding the level of January-December 2004 by 2.1 percentage points. Prices rose by 9.8% for food products, 2.0% for nonfood products, and 3.2% for paid services. Fuel and lubricant prices rose by an average of 23.1%, which was due to an increase in world oil prices and disruptions in the supply of petroleum products to the domestic market. The situation in the foreign exchange market was characterized by greater stability in the exchange rate of the dollar compared to the same period of the previous year. Its official effective exchange rate in relation to the som was down by 3.9% to 41.0 soms per dollar. In the first 11 months of 2005, state budget revenues totaled KGS 18,036 million (102.2% of the target figure), going up by 11.8% from the same period of 2004 due to an increase in tax revenues. These amounted to KGS 14,619.7 million (101.9% of the target figure), with a 16.6% increase from the same period of the previous year. The State Customs Inspection contributed KGS 6,315.1 million to the state budget (an increase of 19.5%), or 102.8% of the plan target. This was due to a sharp increase in receipts of single tax collected from natural persons in view of changes in customs legislation. The main reason for the increase in tax revenues from foreign economic activity was the growing volume of imports. The State Tax Inspection collected a total of KGS 7,063.0 million (101.5% of the target figure), up 12% from the same period of 2004. This overall increase was due to the collection of larger amounts of income tax as the result of a rise in the average wage, and also significant amounts of profit tax levied on large enterprises. The current expenditures of the state budget in the first 11 months of the year (excluding expenditures for public debt service) totaled KGS 17,751.8 million (94.7% of the target figure), with an increase of 11.6% from the same period of the previous year. At the same time, the country’s external debt continues to exert significant pressure on the economic situation. That is why the new government made active efforts to reduce the debt burden. In particular, it signed bilateral debt restructuring agreements with Russia, Germany, France and Den- mark, and also exchanged notes to that effect with Japan. An additional condition of debt restructuring was a partial capitalization of interest for 2005-2008. The government also carried on negotiations on this subject with Turkey and Korea, and Pakistan converted its $10 million credit into a grant for the Kyrgyz Republic. In the banking system there was a continued trend towards an increase in deposits. From the beginning of the year, deposits increased by 34.9%, and the amount of issued credits, by 17.1%. At the same time, interest rates on credit still remain high (24-25%). In the first 11 months of 2005, the foreign trade turnover reached $1,597.7 million, going up by 6.1% compared to the same period of 2004. However, exports fell by 6.4% to $618.3 million, which was due to a reduction in the exports of gold by 17.4%, sugar by 34.1%, fruits and vegetables by 18.6%, and electricity by 12%. The main factor behind the decline in gold exports was a drop in the physical volume of gold production by 23%. Imports in that period totaled $979.4 million and were up 15.9%, mostly as the result of an increase in imports of oil products (1.3 times), specialized machinery for various industries (1.8 times), medical and pharmaceutical products (by 38.9%), electrical machines, devices and instruments (by 51.3%), and coal, coke and bricks (by 17%). The republic’s major trading partners for imports from the CIA countries were Russia (33% of total imports), Kazakhstan (16.2%) and Uzbekistan (5.7%), and from non-CIS countries, China (7.7%), the U.S. (6.7%) and Germany (3.9%). The rise in imports and the fall in exports led to an increase in the trade deficit from $184.7 million in January-November 2004 to $361.1 million, which was due to the republic’s high demand for imports of oil products, raw materials and other goods not produced in the republic or produced in insufficient quantities.

214 KYRGYZ REPUBLIC Economy

During the year, much attention was paid to intensifying bilateral and regional trade and economic cooperation. Thus, the republic took part in meetings of the EurAsEC heads of state; in the work of an SCO summit, the EU-Kyrgyzstan subcommittee and the intergovernmental working group on the creation of a Central Asian common market; and in a number of meetings of high-level experts from the ECO member countries. The republic continued its work along the lines of the World Trade Organization. Within the framework of the Doha Round, Kyrgyzstan set forth its position regarding an improvement of transit provisions, the joint statement of the WTO countries on a liberalization of logistics services, and participation in a joint statement of CIS states members of the WTO in negotiations on agricultural and industrial goods. There was also an active effort to develop trade and economic relations with Paki- stan, Iran and the EU countries for the purpose of attracting investment into the republic’s economy. In order to protect the domestic market and support national producers, the government began drafting a new law on customs tariffs, which provides for duty-free imports of industrial equipment and components required for production in the republic. Work was underway to attract and coordinate technical assistance, program loans and grants provided by international organizations and foreign donors. As noted above, the downturn in industrial production was due to a decline in production at the Kumtor enterprises, whose share in total industrial output was 38.1%, and in the structure of GDP, 5.5%. In order to compensate for the retired capacity of JV Kumtor Gold Company, it is necessary to bring on stream as soon as possible the developed commercial reserves of the Jerooy and Taldy Bulak Levoberejny gold deposits, and also to stabilize gold production at the enterprises of the Kyrgyzaltyn Open Joint Stock Company by switching the Makmalzoloto plant to the exploitation of underground reserves at the Makmal deposit, by developing open-pit reserves at the Altyn Tir site (Solton Sary deposit), and by renovating the concentration plant at the Tereksai mine. In the sector for the production and distribution of electricity, gas and water, real growth amounted to 1.6% due to an increase in thermal power generation by 2% and services in the distribution of electricity by 0.7%, fuel gas by about 50%, and thermal power by 2.3%. At the same time, electricity generation fell by 1.7% from the same period of the previous year due to a reduction in electricity supplies to Russia (58.9%) and Tajikistan (73%). According to operational data, total exports of electricity were down to 2,270.7 million kWh (84.5%), while its exports to Kazakhstan and China increased (117.6% and 106.6%, respectively). Based on the results for the first nine months of 2005,1 the quasi- fiscal deficit (QFD) in the electricity sector amounted to KGS 5,367 million ($130.8 million). System losses increased (43% compared to 41% in the first nine months of 2004). In October, 170 industrial enterprises (27.7% of their total number) were at a complete standstill. The decline in agricultural output by 4.2% compared to the previous year was caused by a 7.5% reduction in crop output, whose share in total agricultural output was 60.4%. In the service sector, real growth in 2005 amounted to 12.6%, which was 3.8 percentage points below the figure for 2004 in view of a slowdown in services as a result of the March events. At the same time, the number of cellular subscribers increased 2.1 times from the beginning of the year, and the number of Internet users, 2.6 times. Under a project known as E-Government, work was underway with Korea’s Global Code corporation in order to attract investment. As of 1 July, 2005, the number of tourist companies registered in the republic was 4.7 thousand, or 0.2 thousand more than in 2004. Gross value added in the tourist sector was KGS 1,431.5 million (3.8% of GDP). However, in the first half of the year there was a decline in the number of foreign tourists visiting the country by 60.3 thousand, which was another direct consequence of the March events.2

1 Some data will be available only by mid-2006. 2 No data for the whole of 2005. 215 CENTRAL EURASIA 2005 Analytical Annual

In the first six months of the year, the republic had 163.3 thousand small and medium enterprises (excluding peasant and private commercial farms), or 12.9 thousand more than in the same period of 2004. The annual increase in the number of small and medium enterprises leads to an actual increase in the number of audits and inspections in this sector. The share of gross value added by small and medium enterprises in that period was 37.2% of GDP. Fixed capital investment in the construction, renovation, expansion and retooling of facilities amounted to KGS 10,631.8 million (97.0% of the figure for 2004). The rate of fixed investment fell compared to 2004: by 74.8% for foreign grants and humanitarian aid, by 22.7% for state budget funds, by 50.7% for local budget funds, by 28.2% for foreign credits, and by 12.5% for household and other funds. Total expenditures on investment projects under the Public Investment Program for the first 10 months of the year amounted to KGS 203.1 million, including external financing of investment projects (excluding grants)—KGS 2,443.4 million (73.5% of the annual plan target), and in the part of internal co-financing of investment projects—KGS 208.4 million (47.0% of the target figure).3 In order to raise the living standards of low-income households, the basic part of the statutory pension was established at 258 soms ($6.2), with a differentiated increase in its insurance part. Public sector wages were increased as well: by 50% for employees of the Ministry of Internal Affairs, by 30% for workers in culture, and by 15% for workers in education (except higher education institutions) and health care. As a result, the average monthly wage in January-November was 2,481.8 soms ($60.5), with a real increase of 11.9% from the same period of 2004. At the same time, there was an increase in unemployment: in the first 10 months of the year, the number of jobless people reached 199.4 thousand (up 10%), and the number of people officially registered as unemployed, 68.0 thousand. Unless the government takes resolute measures to promote economic activity (in Kyrgyzstan, such activity should manifest itself in the narrow segment of export-oriented industries), even a marginal increase in the production of goods and services, given the country’s average wage of $60, will be stunted by limited domestic demand. In market conditions, this will nip business initiative in the bud. In this context, it is not surprising that there is a steady downturn in investment in the construction, renovation, expansion and retooling of facilities. Moreover, most capital investments, insignificant as they are, now go into the development of small enterprises, which can do little to enhance the country’s economic potential, and are mostly oriented towards the domestic market. That is why the increase in employment by 80 thousand recorded in 2000-2004 was mostly due to an increase in the number of non-wage workers: people engaged in peasant (private) farming and in individual labor activity. Evidently, the economy is dominated by petty commodity production. The latter cannot provide a basis for resolving the problem of export expansion, which alone can ensure long-term economic growth in the republic. As a result of the petty commodity character of the economy, in 1999- 2003 the share of wage workers in the economically active population fell from 40.5% to 33.6%. Over the past two years, the situation has worsened still further. Unless the new government is able to reverse the investment trend within a short time and redi- rect investments towards large-scale export-oriented production, the country will hardly ever recover from the current crisis. It cannot be ruled out that the indecision of the republic’s authorities in carrying out radical political and socioeconomic transformations could very soon, even within the next two or three years, plunge the country into upheavals similar to the Tulip Revolution. One should also bear in mind the various negative factors serving to worsen the situation in the republic. First, there is the huge external debt burden, which exceeds the safety threshold in relation to GDP (over 84% with a threshold value of 80%). Of course, one can say that the Kyrgyz Republic is close to the threshold value, that many countries have been in such a situation and that there is nothing to fear.

3 No data for the whole of 2005. 216 KYRGYZ REPUBLIC Economy

However, this would be true for Kyrgyzstan if the republic (in the absence of current revenue caused by the decline in GDP) had appropriate assets abroad. Given such assets, we could finance our development and ensure high rates of economic growth. Unfortunately, the republic has no such assets. No wonder the International Bank for Reconstruction and Development has included Kyrgyzstan among countries with an excessive debt burden. That is why it is under constant threat of default with all that this implies. On the other hand, debt service payments (in some years, up to 40% of budget expenditures) are a large drain on the state’s scant resources. With a budget of only $400-450 million, this makes it impossible to allocate funds for development or for the solution of social problems. According to the Kyrgyz finance minister, if the government manages to reach an agreement with its major creditors, in 2006 the country will have to pay only KGS 1.2 billion (instead of KGS 3.2 billion), but this is only a question of debt restructuring and not a complete write-off. The republic’s present leadership has set itself an ambitious goal: to resolve the external debt problem in the immediate future once and for all so as not to leave this burden to future generations. The slowdown in GDP growth in 2005 to the point of negative values makes it necessary to finance a certain part of budget expenditures out of external borrowings. But in the conditions of the country’s inability to pay and a reduction in assistance from international financial organizations and donor states, Kyrgyzstan will have to rely on its own efforts. The whole point is whether it can ensure the necessary economic growth solely with the use of domestic resources. From 2000 on, this growth hinged on the development of the Kumtor gold deposit. As soon as the gold miners reduced their output, there was a drop in GDP (in 2005). This points to the instability of economic growth based on the mining industries, agriculture and the service sector, which are strongly influenced by natural climatic factors and the degree of social stability. As evident from the record of the developed countries, sustainable economic growth can be achieved mostly through the development of industry, especially its manufacturing sectors. In Kyrgyzstan, on the contrary, industry has been losing ground from year to year: in the past four years alone, its share in GDP has shrunk from 23% to 14%. That is why the reasons for the optimism of the country’s present leaders, who promise economic growth of 8% for 2006, are hard to understand. After all, these has been no lessening of the impact of negative factors, either subjective (poor governance, corruption, shadow economy) or objective (huge external debt, low propensity to save). The second negative factor conducive to a further worsening of the situation in the republic is the low saving capacity of the population. For many years this capacity did not exceed 18%, and in the recent period it has tended to decline. The experience of rapidly developing countries (Malaysia, Taiwan, Singapore, South Korea) shows that significant economic growth requires a savings rate of at least 30%. In view of the population’s low propensity to save, investment activity tends to decline as well, as we find from the data of the National Statistics Committee (see Table). In order to achieve a savings rate of 30%, at the initial stage is it necessary to ensure fixed capital investment of KGS 25-30 billion ($625-750 million) per year. If we create the most favorable condi-

Table Dependence of Investment Activity on the Propensity to Save

1999 2000 2001 2002 2003

Gross capital formation (as % of GDP) 18.0 20.0 18.0 17.6 11.8

Gross savings (as % of GDP) 1.2 14.4 16.8 17.4 7.6

Fixed capital investment (as % of previous year) 121.5 137.3 85.5 90.4 93.4

217 CENTRAL EURASIA 2005 Analytical Annual tions for investment, then we can attract for these purposes, at best, KGS 8-10 billion of domestic savings (totaling about KGS 2 billion in bank deposits plus KGS 6-8 billion “under the mattress”). But in actual fact it is only possible to attract about 50% of this amount, because the rest are savings “for a rainy day,” which households will never invest in the economy. Consequently, domestic savings can provide $100-125 million for investment purposes. The remaining $500-625 million worth of annual investment will have to come from external sources. In order to attract foreign investors into the country’s export-oriented sectors, it is necessary to take unprecedented measures without delay in order to create the best possible conditions for their operation (as well as for the operation of domestic investors), because otherwise the current stagnation of production could rapidly develop into a large-scale systemic crisis of the whole economy, a crisis with unpredictable consequences. Finally, the third factor is poor governance, which is currently the greatest threat capable of causing chaos not only in the economy, but also in society as a whole. The entire system of state administration is disorganized. The country’s new leadership has no clear-cut strategic goals or programs for the further development of Kyrgyz society, which has resulted in chaotic and spontaneous managerial decisions and a delayed response to arising problems. That is why the authorities have not yet put in place a new government structure oriented towards the development and pursuit of our own active policy instead of a strategy of survival and strict obedience to the prescriptions of international financial institutions. Kyrgyzstan should not fall victim to the ongoing globalization of the modern world, but should make active use of its advantages (including the advantages of WTO membership) for its own development while protecting itself against the negative aspects of this process by the thousand- year traditions and world view of the Kyrgyz people. Given the above-mentioned specific features of the current systemic crisis in the republic, it would make sense to take the following steps in the short-term perspective. n First, we must restore the tax holiday (five years) for investors putting their money in export-oriented lines of production. Tax rates should not be reduced on any account, because this could lead to a sharp drop in budget revenue and prevent the government from meeting its social obligations. And this, in turn, could trigger a social explosion and thwart the efforts to modernize the economy. Those who did not pay taxes in the past will not pay them at reduced rates either, so that the priority task now is to fight the shadow economy. In this process, one should not try to reduce some taxes and compensate the losses by introducing other taxes, as the government is doing today. This will not ease the tax burden, so that there can be no question of tax policy playing an incentive role. n Second, we must declare a general economic and a tax amnesty. This will help to reduce the shadow sector and to increase the collection of taxes and duties, so compensating for the losses from the tax holiday. Steps should simultaneously be taken to stiffen the penalties for shadow activities. An amnesty should be prepared and carried out in the shortest possible time, because the disintegration of society’s economic basis is becoming increasingly irreversible. According to experts, the shadow sector has already reached 60-70% of the entire economy. n Third, we must drastically reduce the bureaucratic apparatus, upgrade the structure of executive agencies and improve the methods of their activity. This can only be achieved through a reform of the republic’s entire state structure based on the development and adoption of a new Constitution. There is no doubt that the present system of government, defined as a presidential-parliamentary republic, is objectively conducive to an unprecedented spread of corruption, which is a characteristic feature of almost all CIS countries. For Kyrgyzstan, which has no abundant natural resources such as oil, gas or timber to cushion the blow struck by corruption at the living standards of the bulk

218 KYRGYZ REPUBLIC Religion of the population, the key condition for a recovery from the permanent crisis is to overcome corruption (or at least to keep it within reasonable limits). Such are the economic realities in the Kyrgyz Republic. And unless resolute steps are taken without delay, the situation is bound to worsen.

RELIGION

Kanatbek MURZAKHALILOV Leading specialist, State Agency for Religious Affairs under the Government of the Kyrgyz Republic (Bishkek, Kyrgyzstan)

Kanybek MAMATALIEV Leading specialist, State Agency for Religious Affairs under the Government of the Kyrgyz Republic (Bishkek, Kyrgyzstan)

n 2005, the main trends in the religious sphere, born when the republic took its first steps as an independent state, were preserved and strengthened. The central and local structures of state pow- I er, civil society, as well as confessions and their leaders demonstrated a constructive approach, mutual respect, and mutual understanding. Under the laws of the Kyrgyz Republic (KR), which fully conform to international norms, the country’s leaders have been treating all legal religious associations and groups on an equal basis and cooperating with them in the cultural, humanitarian, and social spheres for the sake of the nation’s spiritual and moral improvement. There were several fairly specific phenomena caused by the revolutionary events in March that removed the old leaders from power. In the first post-revolutionary days, many of the believers were concerned about the future of the social-political situation in the country, they asked themselves which of the political forces would win and which course they would prefer, how their rights and freedoms would be realized, and how the process would affect every citizen’s world outlook. Being aware of these concerns, acting head of state Kurmanbek Bakiev issued a statement in which he confirmed the country’s dedication to the principles of democracy, he assured the nation that human rights and freedoms would be invariably observed, while the country would fulfill its international obligations, including securing the freedom of religion. The new rulers have been faithful- ly following these promises. It should be said that the legal relations between the state and religious organizations are regulated not only by the Law on the Freedom of Religion and Religious Organizations (adopted in 1991) but also by several legal acts and norms related to realization of believers’ rights and freedoms, which

219 CENTRAL EURASIA 2005 Analytical Annual allowed the number of religious communities of various confessions to greatly increase. Today, there are 2,085 registered religious facilities in the country, 1,762 of them belonging to the Spiritual Ad- ministration of the Muslims of Kyrgyzstan (SAMK): 1,639 mosques, 45 madrasahs, 7 higher educational establishments, as well as several centers, foundations, etc. Over 300 Kyrgyz citizens are studying in Islamic educational establishments abroad. There are 318 registered Christian facilities in the republic, belonging to Christian Orthodoxy, Catholicism, Protestantism, and its 15 branches. There is also a Bud- dhist and a Jewish community, 21 facilities belonging to new religious trends, and 21 missions of foreign religious organizations. Over 1,200 foreigners who came to the republic from 54 countries have registered and re-registered. Today, along with the rest of the world, Kyrgyzstan is experiencing the pressure of religious extremism; there is a very painful response to proselytism, which has already caused minor conflicts in local communities; there are illegal destructive groups banned elsewhere in the world. Some of the missionaries are resolved to convert all the local people to Christianity, while others hope to build an Islamic state. The confessional and ethnic relations in Kyrgyzstan might be seriously affected if extremist religious organizations step up their activities and if the number of destructive and sham religious organizations increases—the negative trends are confirmed by the recent course and trends in development. In 2005, Hizb ut-Tahrir came to the fore; it became especially active during the parliamentary (February-March) and presidential (June-July) elections, even though the party rejected all democratic norms, of which elections were one. Before the parliamentary election in 2005, the party was functioning across the country in full conformity with its Charter, yet in the course of the campaign, the local leaders became engaged in talks with some of the candidates. Party members even took part in the presidential election.1 At the same time, the party is more and more actively involving women and sets up women sections, through which they hope to influence other family members, primarily children. It is skillfully exploiting the moral ban on the persecution of women by the male part of society. In February 2005, the party’s supporters organized several pickets in Osh (in the south of the country) which involved women and children to destabilize the situation and liberate their comrades detained for storing explosives and huge numbers of extremist religious publications. Some of the candidates sought the support of clergymen—this was a novel feature of the parliamentary election. According to the Kyrgyzinfo Information Agency, this took the form of material support to churches and mosques to be used for renovation and other purposes.2 It should be said that such cases were rare. On the whole, the Islamic clergy kept within Fetwah No. 19 “On Avoidance of Politization of Islam” issued by the Council of the Muslim Ulema of Kyrgyzstan. According to certain sources, Hizb ut-Tahrir has 3,000 followers in the republic; there is the opinion that the number is ten times larger. They operate mainly in the south, in the Osh and Dzhalal- Abad regions, where Islam has always had a much greater role to play than elsewhere. Clandestine cells operate in the country’s less religious parts: during the presidential election campaign, religious leaflets in Kyrgyz and Russian urging to boycott the election were distributed across the country. Life has demonstrated once more that Hizb ut-Tahrir, as well as other radical groups will not succeed. The election results confirmed this. Hizb ut-Tahrir hopes to remove the secular governments and create a world-wide Islamic Caliphate through militant religious propaganda combined with intolerance to all other faiths, active enlistment of supporters, and a purposeful drive toward a split in society.3 This explains why the Hizb

1 See: E. Zhusupaliev, “Partia Hizb ut-Tahrir aktivno uchastvovala v vyborakh v Kirghizii.” Available at [Ferghana.ru. http://news.ferghana.ru/detail.php?id=31647337182.33,1290,5314356], 19 July, 2005. 2 See: U. Babakulov, E. Kabulov, N. Sharshembieva, G. Imankulova, “‘Golos svobody’ oboznachil rol religii i religioznykh liderov vo vremia vyborov v Kyrgyzstane,” Kyrgyzinfo, 10 November, 2004. 3 See: O.Sh. Mamaiusupov, K.S. Murzakhalilov, K.K. Mamataliev, Islam v Kyrgyzstane: tendentsii razvitia, Bishkek, 2004. 220 KYRGYZ REPUBLIC Religion ut-Tahrir emissaries are trying to enlist civil servants, people employed by the law enforcement bodies, businessmen, deputies of all levels, members of the intelligentsia, and students. The party is seeking closer contacts with the media, local and foreign NGOs, as well as other international organizations; in short, it is trying to penetrate all social groups and spheres of public life. In December 2005, it took part in the local elections: in the Bazarkorgonskiy District, it nominated one of its members (with a previous record as a participant in anti-constitutional activity4 ) as a candidate. A resident of Osh registered a TV studio called Ong (Awareness), which offered its viewers religious information based on Hizb ut-Tahrir’s ideas (it was discovered later that the founder belonged to this party). This registration was suspended. Some of the experts5 predicted a religious extremist riot in the Ferghana Valley in May-July. This forecast was confirmed by the May events in Andijan (Uzbekistan), in which the followers of Akromiya played the main role. Earlier, two groups—Hizb an-Nusra and Akromiya—detached themselves from Hizb ut-Tahrir because of tactical disagreements between its regional leaders.6 Accord- ing to the media, there is a small number of Akromiya supporters in the south of Kyrgyzstan. Experts believe that it was not by chance that some of them, along with local Hizb ut-Tahrir members in the regions bordering on Uzbekistan, found themselves in Andijan on 12-13 May. There is the commonly accepted opinion that the conflict in the Ferghana Valley has been developing for many decades, while certain international religious organizations added tension. There is also the opinion that the Andijan events are nothing but an episode in the global war international terror is waging against the world community.7 The Daavatists have also stepped up their activity. An analysis of their efforts revealed their contacts with radical centers abroad. According to the International Crisis Group, all sorts of Islamic groups appeared in Kyrgyzstan under the influence of Kyrgyz students who studied in other countries. Tabligh is one of the most active among them. It consists of young men who studied in madrasahs in Pakistan. Tabligh carries out a policy which these people describe as Daavat.8 According to N. Alniazov,9 Pakistani religious organizations are involved in missionary activities in all the Central Asian countries. Tabligh is the main such structure in the region; its main spiritual centers are found in Pakistan and India.10 The local people treat Daavatists in different ways: the absolute majority insists that the authorities should stem their activities because of their appearance, which is unacceptable for most of the local people for canonical reasons; their calls to live strictly within the Shari‘a and their low educational level are another two reasons for their rejection by society. On the whole, the group is not dangerous, yet certain less educated groups (women and the youth) might be tempted by fanaticism or religious zeal, which later may lead to religious extremism. The religious situation in Kyrgyzstan is not as dangerous as in other countries and is not conducive to religious extremism. Some of the local Muslims, however, and spiritual leaders (mainly because of their age, or for social reasons) refuse to take SAMK opinions and recommendations into account. This explains why a group of Muslims informed state and public structures of their dissat-

4 See: “Bazarkorgonskiy kandidat zhaluetsia na prokuraturu, obviniaiushchuiu ego v chlenstve v partii Hizb ut-Tahrir,” Akipress Information Agency, 2 December, 2005. 5 See: V. Panfilova, Z. Todua, “Amiry rvutsia k vlasti. Islamskie fundamentalisty gotoviat proryv v Tsentral’noy Azii,” NG-Religii, 20 April, 2005. 6 See: “IDU i Hizb ut-Tahrir: posledstvia afganskoy kampanii,” ICG Report, Osh-Brussels, 30 January, 2002. 7 See: V. Panfilova, Z. Todua, “‘Khalifat idet!’ Islamisty nastupaiut na Tsentral’nuiu Aziu,” NG-Religii, 19 October, 2005. 8 See: “Tsentral’naia Azia: Islam i gosudarstvo,” ICG, Report on Asia, No. 59, Osh-Brussels, 10 July, 2003. 9 See: N. Alniazov, “Faktory, vliiaiushchie na razvitie islama v Kazakhstane.” Available at [http://www.kazanfed.ru/ actions/konfer7/18/], 4 January, 2006. 10 See: E. Novikov, “Baza Gansi v Kyrgyzstane Shtatam ne nuzhna,” Vecherniy Bishkek, 10 November, 2005. 221 CENTRAL EURASIA 2005 Analytical Annual isfaction with the chief mufti and his activities. Certain publications carried information that the chief religious leader and his cronies were guilty of financial misdemeanor and wanted to know where the $1m allegedly collected during Ramazan disappeared to.11 Similar questions appeared in connection with the hajj to Mecca organized by the SAMK. On the strength of these suspicions, the Committee for International Affairs, Inter-Parliamenta- ry Contacts, Public Associations, and Religious Organizations of Zhogorku Kenesh (parliament) suggested that these functions be transferred to the Foreign Ministry.12 The Cabinet decision on Organ- izing a Pilgrimage to Mecca from the Kyrgyz Republic of 13 December, 2005 closed the discussion. The zeal demonstrated by certain religious groups and missionaries unaware of the local conditions, centuries-old customs, and traditions have already created a problem accompanied by growing tension. Proselytism, for example, endangers family life, the problem being created by the wish of the relatives of the deceased who embraced another faith during their lives to bury them next to their ancestors. Neighbors energetically object; conflicts become imminent. In 2005, this happened in the Almaluu village (Yssykatinskiy District, Chu Region) where the local people threatened the inade- quately zealous missionaries of one of the foreign churches with physical violence. The case echoed across the country. The missionaries, in turn, explained their importunity using the example of Jesus Christ, persecuted yet persevering. The state structures defused this situation, as well as many previous ones which flared up all over the place. Earlier there were clashes between Muslims and Protestants in the Issyk Kul Region (Zhetioguzskiy District), and in the Naryn, Batken (the village of Bazar Bashi), Dzhalal-Abad, and Osh (the village of Myrzak) regions. In the Chu Region, the clashes were especially violent: they took place in Spartak, Sokuluk, Chon-Tash, Ak-Tiuz, Orlovka, Tash-Dobo, and in the Archa-Beshik Dis- trict of Bishkek. Members of the traditional confessions were concerned about the arrival of Sun Myung Moon, head of the Holy Spirit Association for the Unification of World Christianity (Unification Church) in the republic. In many countries, his teaching has already caused public protests, while some states from time to time refuse to let him in. Followers of Hizb ut-Tahrir and some of the less reasonable Daavatists add tension to the problem of proselytism and the spread of destructive faiths. Their leaflets and sermons reject the existing confessional diversity, they teach intolerance toward those who left Islam to embrace a different faith; they want to evict other religions from the predominantly Muslim places. The growing number of newly converted young men and the accelerating proselytism make serious ethnic and religious conflicts possible. Because of this and in view of certain social and economic aspects, the public initiated opposition to the growing number of grandiose and sumptuous burial rites, the number of which was spon- taneously increasing. It should be said that the local clergy have been always opposed to the burial rites, while the Muslim leaders issued a fetwah that banned those which contradicted the Shari‘a.13 About 40,000 people die in Kyrgyzstan every year, 30,000 of them are Kyrgyz. The burial rites and funeral repast for each of the deceased (the 3rd, 7th and 40th day and one year are marked) cost an average of 100,000 soms; in 12 months, 30m soms ($732,000) across the country are spent on these purposes. M. Urumbaev has written that in one district alone the burial rites, most of them invented, cost people no less than 70m soms in one year.14

11 See: F. Karimova, “Sezon nedoveria,” Vecherniy Bishkek, 22 November, 2005. 12 See: A. Sultangaziev, “Deputaty parlamenta predlagaiut peredat organizatsiu Khadja musul’man Kyrgyzstana v MID,” Kabar Information Agency, 20 November, 2005. 13 See: A. Sadybakasova, “Pyshnye pokhorony razoriaiut kyrgyzstantsev: dorogostoiashchie pogrebal’nye i pominal’nye meropriatia zastavliaiut kyrgyzskie sem’i zalezat v krupnye dolgi,” Argumenty i fakty (Kyrgyzstan), 18 Novem- ber, 2005. 14 See: M. Urumbaev, “Kto voruet nashi dushi?” Vecherniy Bishkek, 2 June, 2005. 222 KYRGYZ REPUBLIC International Affairs

The SAMK heads, as well as the leading theologians made certain steps and suggested that the faithful should follow rules identical for all; it is hard, however, to interfere in this delicate and highly specific sphere, unify the process, and ban or limit some of its parts. On the whole, confessional relations in the republic do not arouse serious concern. The country’s political leaders pay great attention to the religious sphere, confessional equality, and harmony and create conditions for the development of religious institutions. It is necessary to further improve the laws related to the religious sphere in view of possible destabilization. This may be caused by the growing contradictions between the destructive trends and groups of both Muslims and Christians. It seems that the state should pay more attention to the situation and tighten its control in the religious sphere.

INTERNATIONAL AFFAIRS

Askar BESHIMOV Kyrgyz Deputy Minister of Foreign Affairs (Bishkek, Kyrgyzstan)

Muratbek BAIKHOJOEV Director of the Department of International Organizations and Security, Kyrgyzstan Ministry of Foreign Affairs (Bishkek, Kyrgyzstan)

he country’s foreign policy clearly manifested trends which indicate the beginning of a new stage in its international affairs. The change in regime is over, and although it is impossible to predict T what will happen next, the main factors defining the state’s further development are already obvious. The republic’s current leadership has set itself three main tasks: augmenting diplomatic efforts to ensure Kyrgyzstan’s security; orienting foreign political activity toward creating favorable conditions for stimulating the economy; and forming Kyrgyzstan’s new image on the international arena. Implementation of this course is being assisted by the integration processes taking place in the Commonwealth of Independent States, which have significantly intensified recently. In particular, an important event in the CIS was the regular session of the Council of Heads of Member States (Kazan) and Governments (Moscow). The main documents adopted at the Council, including those on cooperation in fighting terrorism for 2005-2007, counteracting illegal migration for 2006-2008, concepts of interaction in the military sphere until 2010, drawing up border policy for the Commonwealth states, and fighting violent forms of extremism, show that cooperation among the member states is intensifying. To these, we should also add the agreements on a unified budget for the CIS structures for 2006; on a set of mid-term measures for advancing competitive commodities manufactured by national producers onto the CIS domestic market and the markets of third countries until 2010; on the conception for forming a common electric power market, and much more.

223 CENTRAL EURASIA 2005 Analytical Annual

Along with this, we will note the heightened intensity of Kyrgyzstan’s dialog with its strategic partner, Russia. Graphic evidence of this was Kyrgyzstan President Kurmanbek Bakiev’s meeting with Russian President Vladimir Putin, working visits to Moscow by the republic’s Prime Minister Felix Kulov, foreign minister, and heads of other departments, the signing of several bilateral agreements, and the celebration of the Kyrgyzstan Days festival in Moscow, among others. Our countries intend to cooperate on a deeper level, consistently reinforce alliance and strategic partnership relations, maintain a regular political dialog, encourage direct contacts between the heads of the two countries’ executive and legislative power bodies, and expand ties in the trade and economic, military, military- technical, scientific and technical, and humanitarian spheres, as well as in investing Russian capital in building hydropower plants, producing gas and other natural minerals, and developing transport and tourism in the republic. In order to achieve these goals, delegations of different levels from Moscow visited Kyrgyzstan with specific business projects, as a result of which the implementation of several economic and humanitarian initiatives, the creation of joint ventures for attracting capital into the republic’s oil and gas industry, and the revival and reconstruction of existing facilities have already begun. There are plans to carry out these tasks using, in particular, the potential of the EurAsEC and the Shanghai Cooperation Organization. One of the most important areas in Kyrgyzstan’s foreign policy was strengthening relations with its closest neighbors. President Kurmanbek Bakiev and Prime Minister Felix Kulov paid working visits to Kazakhstan, and their meetings with the leaders of this country made it possible to open up vast opportunities for intensifying economic integration. The problems created by the shortage of fuel and lubricants, labor migration, and much more, which have become a headache for many, are beginning to be resolved. The dialog between Presidents Kurmanbek Bakiev and Islam Karimov in St. Petersburg ended in them stating their intention to replenish Kyrgyz-Uzbek relations with new content. In particular, the heads of government plan to pay reciprocal visits in the near future, contacts are to be established at the foreign ministry and other government structure levels, and joint measures are to be adopted to stabilize the situation on the Kyrgyz-Uzbek state border. The heads of state agreed to focus priority attention on expanding trade and economic relations and noted the importance of activating and elab- orating urgent issues regarding economic interaction within the framework of an intergovernmental commission on bilateral cooperation. Evidence of the deepening bilateral relations between Kyrgyzstan and Tajikistan was the talks between Kurmanbek Bakiev (who was acting president and prime minister of the country at that time) and the Tajik leadership held on 18 May, confirming the desire of both countries to develop traditional good neighborly and mutually advantageous contacts in all spheres. The sides showed mutual interest in efficiently using the potential of both republics not only at the political, but also at the economic level. Two events confirmed these strivings. The first was the signing of an intergovernmental agreement on the mutual transfer of land for building high-voltage power transmission lines and roads. The second was the opening of the Batken-Kanibadam energy bridge, which will make it possible to improve power supply to these densely populated areas. What is more, in power engineering, the sides intend to carry out a mutually advantageous policy which involves investments by international financial institutions, donor countries, as well as the joint export of electric power to third countries. At the Dushanbe meeting of ministers responsible for foreign economic activity, a mechanism was approved for implementing a plan of action aimed at the further economic development of our states. As for cooperation with Western countries, Kyrgyzstan is paying keen attention to security issues. Unfortunately, the situation in Afghanistan cannot be described as calm, and it is difficult to predict the further development of affairs in this country, since even after the presidential and parliamentary elections, Islamic extremists continue to carry out raids initiated by al-Qa‘eda and the Taliban. Kyr- gyzstan is supporting the U.S.-led operation of the antiterrorist coalition by offering it the use of an

224 KYRGYZ REPUBLIC International Affairs airbase close to Bishkek. Keeping in mind national interests, Kyrgyzstan’s leadership intends to review the agreement with Washington regarding the technical and financial conditions for staying on at this airbase. This question was discussed in particular during the visits to Kyrgyzstan by U.S. State Secretary Condoleezza Rice and other high-ranking White House officials. The U.S. and the European Union are interested in strengthening bilateral partnership with Kyrgyzstan, which U.S. State Secretary Condoleezza Rice and European Union Commission Deputy General Director for Foreign Relations Michael Lee repeatedly stated. During the summit meetings, a decision was made to include Kyrgyzstan as a threshold state in the list of member states of the Millennium Challenge Account program for the 2006 fiscal year. The EUC also adopted a decision on allotting Kyrgyzstan one million Euros in additional aid, as well as 18 million Euros for the Food Safety program being prepared for 2005-2006. Bilateral talks with the French government made it possible to begin restructuring the foreign debt, with the German government—to begin implementing projects in public health, the economy, and with respect to writing off the debt, and with the Danish government—to develop cooperation under the Kyoto Protocol to the U.N. Framework Convention on Climate Change. Along with this, the Kyrgyzstan leadership and Swedish government ratified a Special Agreement on the Support of Training/Development of Social Work with Risk Group Children in Kyrgyzstan. Kyrgyzstan’s historical, spiritual, and cultural affiliation with the Islamic world makes it necessary to activate bilateral and multilateral cooperation with the Arab states, including within the Or- ganization of the Islamic Conference (OIC). (The long stagnation in contacts between Kyrgyzstan and the Arab world requires major reconsideration of their former approaches and mechanisms.) For example, a policy aimed at strengthening Kyrgyz-Saudi and Kyrgyz-Arab relations as a whole was designated during the meeting held in September in New York between Kyrgyzstan President Kurman- bek Bakiev and crown prince of Saudi Arabia. The participation of State Secretary of the Kyrgyz Republic Dastan Sarygulov in the special OIC summit in Mecca gave a significant boost to the republic’s cooperation with the Arab countries. For the first time in the history of Kyrgyz-Saudi relations, a ceremony was held where the Ambassador Extraordinary and Plenipotentiary of the Kingdom of Saudi Arabia Ali Al-Hamdan awarded letters of credit. The visit to Bishkek by Chairman of the Foreign Affairs Committee of the Japanese House of Representatives Yoshiaki Harada was of important political significance. During the meetings with the Kyrgyz leadership, the Japanese side gave a positive assessment of the policy of the country’s new leadership and expressed its willingness to support the reforms aimed at developing democracy and market reforms in the republic. The visit by a Kyrgyz parliamentary delegation headed by Parliament Speaker Omurbek Teke- baev to Thailand for the 6th assembly of the Association of Asian Parliaments for peace, as well as meetings between this delegation and several high-ranking representatives of East Asian states indicated Kyrgyzstan’s interest in participating in the resolution of urgent political and socioeconomic problems of regional development in Asia both in the multilateral and bilateral format. As for the PRC, it can be said that bilateral relations have increased in the trade and economic, political, and cultural-humanitarian spheres. Kyrgyzstan President Kurmanbek Bakiev’s meeting with Chairman of the People’s Republic of China Hu Jintao, official and working visits by ministers, and the exchange of delegations in different areas of activity are graphic evidence of this increase. Kyrgyzstan is paying great attention to participation in the work of international organizations, particularly in the U.N. structures. A significant event of the year was the U.N. summit on the 60th anniversary of its creation, which was attended by a Kyrgyz delegation headed by the country’s president. In his speeches at this summit, Kurmanbek Bakiev highlighted the events of the year in the republic, went into detail about the main aspects of its cooperation with the U.N., and presented official Bishkek’s proposals with respect to the main international problems concerning the world com-

225 CENTRAL EURASIA 2005 Analytical Annual munity. They included fighting terrorism, reinforcing conditions for ensuring the non-proliferation of nuclear weapons, eliminating poverty, reforming the United Nations, and so on. This visit laid a new foundation for developing cooperation between Kyrgyzstan and the U.N., which was noted during the meetings with the Organization’s Secretary General Kofi Annan and UNDP Administrator Kemal Dervish. What is more, Kurmanbek Bakiev took part in the opening ceremony of the U.N. Foundation of Democracy organized by U.S. President George Bush and Indian Prime Minister Manmohan Singh, and also held several other bilateral meetings. The most important practical result of the work aimed at carrying out the proposals voiced by the Kyrgyzstan president was the presentation by the Kyrgyz Republic, Switzerland, and 42 other co- sponsor countries of a coordinated draft of the resolution on “Sustainable Mountain Development,” which was adopted unanimously on 13 December by the Second Committee of the U.N. General Assembly and approved by the U.N. General Assembly on 22 December. The coordinated draft of the resolution on the sustainable development of the mountain republics within the framework of “Moun- tain Partnership” was supported by other international organizations and leading countries: the EU, Group-77, the African Union, the PRC, RF, U.S., Japan, the CIS republics, the Latin American states, and many others. Such impressive support by the world community of Kyrgyzstan’s foreign policy efforts to press through the Kyrgyz-Swiss draft of the resolution is undoubtedly definite guarantee of its further progress. Kyrgyzstan is taking the most direct part in the activity of the Organization of Security and Cooperation in Europe (OSCE), including in the sphere relating to important aspects of Kyrgyzstan’s security. And the national revolution of 24 March gave a new boost to these relations. For example, as a result of OSCE visits, which were regular and quite intensive in nature, an OSCE Working Plan for the Kyrgyz Republic was signed, which is aimed at implementing short- and long-term programs to assist in holding transparent, free, and fair elections; at ensuring safe borders and resolving the transborder problems of the Central Asian countries; at reforming the interior affairs bodies; at fighting corruption; and at ensuring freedom of speech and the development of the mass media. Among the measures already implemented, which have had a direct influence on the sociopolitical situation in the republic, we will note the following: a media center has been opened for improving access to information in remote regions of Kyrgyzstan; a series of meetings was held on interaction among business circles, NGOs, and the government in order to ensure sustainable development of Kyrgyzstan’s economy; visits of groups of European and American journalists were organized to promote the development of tourism in Kyrgyzstan; a conference was held to stimulate investments and create new jobs in the southern regions of the republic; a seminar was organized for the unemployed with the aim of teaching them how to find a job, raise their qualifications, acquire new skills, and so on. The Europe-Kyrgyzstan dialog which took place in Austria helped the international community to respond with understanding to the events in the republic, and Kurmanbek Bakiev’s (at that time he was acting president and prime minister) working visit to Vienna confirmed that the OSCE’s interest in Kyrgyzstan is not declining, but, on the contrary, is growing. This was eloquently stated by the participants in a special session of the OSCE Permanent Council, which positively evaluated the Kyrgyz delegation head’s speech, thus giving the republic and its new leadership its due. We will note that at this meeting Kurmanbek Bakiev described in detail the republic’s tasks and priorities aimed at reforming the Constitution and judicial power, as well as matters concerning the freedom of mass media, fighting corruption, economic reforms, and several other issues. The constructive and democratic dialog, on the basis of which the situation in the country after 24 March was regulated, was positively evaluated by the representatives of the European democratic wing, who again designated the republic as an active link in a strategically important region. Inciden- tally, special attention at the Vienna debates was focused on the threats in Central Asia: terrorism, organized crime, and drug trafficking. In this respect, the participants in the discussion welcomed the

226 KYRGYZ REPUBLIC International Affairs measures and efforts of the new Kyrgyzstan leadership to guarantee the succession of foreign policy and observe all the bilateral and multilateral international agreements to which Kyrgyzstan is party. It has become a tradition for the current chairmen of the Organization to visit the countries of the region. In so doing, the recommendations and consultative-expert assistance of the OSCE are being applied in practice in all areas, including in the carrying out of political, legal, and democratic reforms. As a participant in many international political structures, Kyrgyzstan is making its contribution to integration in the post-Soviet space, where the CSTO, EurAsEC, and SCO are of course priority organizations for the republic. Within the framework of the CSTO, we should mention the meeting of the Summit Group consisting of the deputy ministers of foreign affairs and defense and the deputy secretaries of the Security Councils of the member states, at which the main attention was focused on preparing for the sessions of the Council of Foreign Ministers, Council of Defense Ministers, and Committee of Secretaries of the Security Councils of the Organization’s countries. During the meeting of the Council of Foreign Ministers, a provision on the Working Group for Afghanistan was endorsed, the CSTO budget draft for 2006 were approved, as well as other documents prepared for en- dorsement at a regular meeting of the members of the Collective Security Council. According to the country’s prime minister, Felix Kulov, CSTO summits are acquiring special significance in light of the new threats which must be faced today. The recent events in Andijan com- pel us to look for efficient ways to collectively oppose these threats. The current level of cooperation within the framework of the CSTO makes it possible to say that the Organization is capable of carrying out collective security tasks not only on paper. Within the framework of regional cooperation, an important event, which Kyrgyzstan participated in, was the decision to unite the Central Asian Cooperation Organization (CACO) with the EurAsEC, which was adopted at a session of the Council of Heads of CACO States in St. Petersburg. Within this structure, all tasks must be carried out to create an integrated market, implement programs for sharing water resources, as well as programs in the energy, transport, and food spheres, in fighting terrorism and drug trafficking, in fighting AIDS, and so on. Kyrgyzstan should urgently develop regional cooperation, with the aid of which the republic could overcome several problems. They include ensuring fair and rational water use, supplying gas and hard fuel, creating transportation corridors and free transit, and protecting the state border. In today’s world, one country cannot resolve these questions on its own. Recognizing its responsibility, Kyr- gyzstan is trying to resolve them together with its neighbors on the basis of integration. As for the Shanghai Cooperation Organization, it has vast potential for further mutually advantageous development and for carrying out tasks to ensure security in the region, to step up economic trade ties, and to strengthen cooperation in the humanitarian sphere. Pakistan, India, Iran, and Mon- golia joined the SCO as observers and this is assessed as an important stage in the development of international contacts and evidence of this Organization’s openness. The declaration of the heads of its member states signed at the summit in July in Astana, confirmation of the conception of cooperation in the fight against terrorism, separatism, and extremism, the provisions on permanent representatives of the member states in the Regional Antiterrorist Structure, and other documents are evidence of the high level of mutual understanding among the leaders of the states belonging to this structure— Kazakhstan, China, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. The summit held in Astana set tasks aimed at the rapid practical implementation of the goals set forth in the Organization’s Charter on building efficient regional cooperation in the economic trade sphere. In order to reach these goals, several documents have been drawn up and adopted, the necessary legal base has been created, and there are plans to launch a mechanism for the joint financing of corresponding projects. The member countries reached mutual understanding on the main questions of the format and functioning of the SCO Development Foundation. It is important that its creation

227 CENTRAL EURASIA 2005 Analytical Annual

(by opening special accounts for specific projects) will make it possible to keep in mind as much as possible the economic interests of each of the Organization’s states, as well as its interests as a whole. An important aspect of the multilateral interaction of the SCO states is intensifying cultural and humanitarian cooperation. For example, Kyrgyzstan has obtained the Organization’s support of its proposal to hold annual Isyk Kul sporting events under the SCO’s auspices, which will promote extensive coverage of its activity, particularly taking into account the SCO’s fifth anniversary coming up in 2006. The state is exerting significant efforts to draw up and put socioeconomic measures into practice to overcome a whole set of reasons for the instability in the region. Therefore, during the regular meeting held in October in Moscow, the Council of Heads of State reached an agreement to step up work aimed at developing trade and economic cooperation and improving the investment climate. The prime ministers felt it necessary to begin practical implementation of a Program of Multilateral Trade and Economic Cooperation until 2020, which includes more than 120 specific projects. During this meeting, the first session of the SCO Business Council was held, and an Interbank Union was created. What is more, an intergovernmental agreement on interaction in dealing with emergencies was signed. With respect to Kyrgyzstan’s participation in the work of economic international structures, the Sixth Conference of the World Trade Organization held in Hong Kong should be noted. It defined the further priorities of the WTO’s Doha Round of multilateral talks, a regular four-year round of talks on the liberalization of international trade which began in Doha, Qatar. What is more, during the International Conference on Strengthening Subregional Economic Cooperation in Central Asia and the future role on a U.N. Special Program for the Economies of Central Asia (SPECA), ways and means were determined for strengthening cooperation within this program, as well as ways to achieve greater complementarity between SPECA and other international programs in Central Asia. According to the European Economic Commission, the progress noted in subregional and regional trade and economic cooperation, increasing the size of the market, and finding joint so- lutions to environmental problems will help to strengthen sustainable and dynamic development of all the SPECA member states, including Kyrgyzstan. In conclusion, it should be noted that all the sides participating in Kyrgyzstan’s international affairs are interested in its economic stability and sustainable development. In so doing, sustainable development is understood as an integral approach to establish the best balance among the main elements of development: economic, social, and environmental. This means that structural and social problems must be resolved equally and taken into account along with macroeconomic and financial questions.

228 REPUBLIC OF TAJIKISTAN General Overview

REPUBLIC OF TAJIKISTAN

GENERAL OVERVIEW

Jamilia MAJIDOVA Representative of Central Asia and the Caucasus in Tajikistan (Dushanbe, Tajikistan)

Parviz MULLOJANOV Director of the Public Committee for Assisting the Democratic Processes in Tajikistan (Dushanbe, Tajikistan)

he main political event of the year was the election to the republic’s Majlisi namoiandagon (the lower house of parliament) held on 27 February. Its results secured the dominance of the ruling T People’s Democratic Party, which received 52 mandates out of 63. What is more, only two opposition parities, the Communist Party and the Islamic Revival Party, obtained seats (according to party lists) in the new parliament, while they have rather token representation in the country’s highest legislative body with four and two seats, respectively. Other important events of the year included transfer of protection of the Tajik-Afghan border to the jurisdiction of the State Border Protection Com- mittee under the Tajikistan government. On 14 June, the last, 13th, frontier post of the Panj border contingent was transferred under Tajik control. The main events in the republic’s international affairs developed in two areas: the Russian vector, which recently became a priority, and relations with Western countries. With respect to Russia, we will note that the year was a time of active implementation of the bilateral agreements of 2004, which marked an increase in Russia’s influence in Tajikistan. In this respect, Tajikistan’s specific steps should be singled out aimed at reinforcing cooperation and integration within geopolitical unions and blocs in which Russia plays a leading role: the SCO (Shanghai Cooperation Organization), the CSTO (Collective Security Treaty Organization), and the EurAsEC (Eurasian Economic Community).

229 CENTRAL EURASIA 2005 Analytical Annual

These steps included the Tajik President’s visits to Russia and several other CIS countries, as well as Head of Russia’s RAO Unified Energy Systems Anatoli Chubais’ visit to Tajikistan in April to participate in the ceremony dedicated to revival of the construction of Sangtuda-1 Hydropower Plant, where he announced that the last (fourth) of its units would go into operation in 2009. Some time later, several mass media reported that a separate item has been introduced into the Russian Fed- eration budget for 2006 for financing this facility. And in September, an official ceremony was held in the country with the participation of Tajik President Emomali Rakhmonov and Russian Minister of Industry and Power Engineering Viktor Khristenko to mark the revival of construction of the Rogun Hydropower Plant. It should also be noted in particular that a meeting of the EurAsEC Interstate Council was held in Dushanbe on 27 September. At that time, an important agreement for Tajikistan was signed with Russia, according to which Tajik labor migrants may reside in the Russian Federation by virtue of their domestic passports. As for the Western vector, the country’s leadership continued rather active consultations and contacts with the U.S. and European Union countries. For example, on 25 July, U.S. Defense Minister Donald Rumsfeld visited Tajikistan; and in August, General John Abizaid, Commander of the U.S. Central Command, paid a visit. And at the beginning of October, an official Tajik delegation visited France, where a meeting was held between the presidents of these two countries. But the greatest response was aroused by U.S. State Secretary Condoleezza Rice’s visit to Tajikistan on 13 October as part of her tour of the Central Asian countries. It stood to reason that the domestic mass media called her visit to Tajikistan the “visit of the year.” The official reports gave rather brief and general descriptions of the purpose of Condoleezza Rice’s visit to the region, as well as of the nature and content of her meetings with the leaders of the Central Asian countries (Kazakhstan, Kyrgyzstan, and Tajikistan). But according to the information of independent mass media, she discussed the possibilities of creating a new regional organization or a “new economic bloc” with the presidents of these countries, which would be oriented toward the West and could be a counterbalance to the CSTO and SCO in particular.1 It is precisely within the framework of the Shanghai Cooperation Organization that not only Russia’s, but also Beijing’s influence in the region has significantly grown during the past year, which cannot help but concern Wash- ington, since the Central Asian countries have vast potential. They have their own history, cultural and, most important in the current context, trade ties with Europe and Asia. As Condoleezza Rice stated during her tour, the United States will render economic assistance in order to lower trade barriers and promote trade and economic relations between the region’s countries. In religious life, one of the main events of the year was a pilgrimage (hajj), within the framework of which 4,000 Tajik Muslims went to Mecca. “Hajj-2005” was distinguished by the fact that after many years of chaotically organized pilgrimages, the Committee for Religious Affairs under the Tajik government was responsible for its organization for the first time since the republic gained its independence. After the hajj, debates flared up in society between the supporters and opponents of state control over the organization of pilgrimages. The trials on the cases of Islamic radicals associated with the Islamic Movement of Uzbekistan (IMU), most of whom were arrested in the Sogd Region in the north of Tajikistan, aroused a wide response in society. For example, during the first half of the year, a scandalous trial was held on seven members of an underground group called Baiat. But the biggest news was the exposure of a network of activists of the Islamic Movement of Turkestan (IMT) in the north of the republic, which had at least 200 activists.

1 P. Bykov, “Tsentral’naia Azia: konets avtoritarnoi ‘stabil’nosti,’” Part 1, APN-Kazakhstan. Available at [http:// centrasia.org/newsA.php4?st=1131089220]. 230 REPUBLIC OF TAJIKISTAN Politics

Another important event in the religious sphere was the discussion between the religious and secular parts of society aroused by the significant spiritual and ideological differences which still exist between them. These included the following: establishing equal rights for women to attend mosques, streamlining several national-religious rituals, correlating national and religious self-consciousness, defining the place and role of Islam in the historical and present-day life of the Tajiks, and so on. A particularly serious dispute unfolded around the government’s decisions on prohibiting women from wearing hijabs in learning establishments and on introducing restrictions on pupils of general education schools wishing to visit mosques. In the economy, two main rather contradictory trends were observed. On the one hand, the macroeconomic indices noted during the past few years continued to improve. For example, the budget revenue was endorsed at 430 million dollars, which is almost twice as high as the budget for 2004, and the foreign debt significantly shrank. What is more, on 21 December, the International Monetary Fund adopted a decision to write off part of Tajikistan’s debt (around 99 million dollars). On the other hand, economic growth rates slowed down compared with 2004 from 10% to 6%. But most important, stagnation continued in agriculture, the country’s main economic sector, where most of the able-bod- ied population is employed. Whereas in 2004-2005, the world price of cotton (one of the largest sources of hard currency revenue into the country) dropped by 40-45%, its export in 2005 amounted to 59% of the 2004 level, and the debts of local farmers to futures companies topped $220 million. As a result, essentially all of the main economic events occurred in the industrial sector, mostly in power engineering and aluminum production (on the basis of bilateral agreements on large investments by Russian business—the RusAl Company and Russia’s RAO Unified Energy Systems). These events also include, in particular, Anatoli Chubais’ visit mentioned above and the opening of the RusAl Company’s representative office in the republic. In conclusion, we can already predict that the presidential election scheduled for November will be the most prominent event of 2006. Its results will determine the specifics of the country’s further development.

POLITICS

Parviz MULLOJANOV Director of the Public Committee for Assisting the Democratic Processes in Tajikistan (Dushanbe, Tajikistan)

ertain political events of 2005 will echo for at least ten more years; they will affect the country’s social, economic, and political development. C I have in mind, first and foremost, the Majlisi Oli (parliamentary) election of 27 Febru- ary, 2005. Six political organizations officially registered with the Ministry of Justice contended for seats: the National-Democratic Party (NDPT), the party in power with the absolute majority in the previous convocation, the Communist Party (CPT), the Islamic Revival Party of Tajikistan (IRPT),

231 CENTRAL EURASIA 2005 Analytical Annual the Democratic Party (DPT), the Social-Democratic Party (SDPT), and the Socialist Party (SPT). It was expected that the NDPT, which wielded considerable administrative resources, the CPT, as the most weathered party with a large following, and the IRPT, which had scored considerable organizational victories, would be the main contenders. Without a leader, the Democratic Party was considerably weakened. The Socialist Party split into two, only one of the new factions being allowed to run. For want of money and time, the SDPT had little chance of obtaining more than a couple of seats. As a result, the NDPT received 74.9 percent; the CPT, 13.64 percent; the IRPT, 8.94 percent; the DPT, 1.17 percent; the SDPT, 0.5 percent; and the SPT, 0.3 percent.1 It turned out that 0.34 percent of the ballot papers were invalid; and 0.2 percent voted against all the parties. At first glance, reality looked very similar to the forecasts: the NDPT received about 84 percent of the seats, the CPT, 4 seats; and the IRPT, 2 seats.2 The NDPT scored a convincing victory since it not only preserved its domination in the parliament, but also obtained more seats. The deputies of the other two parties could not even unite into a faction—there were too few of them. Thus, their presence in the legislature was purely nominal. In view of the upcoming presidential election, the NDPT’s victory was especially important. The other parties were disappointed: neither the SDPT, nor the Democrats and Socialists succeeded in overcoming the 5 percent barrier and obtaining at least one seat each. The parties which did overcome this barrier, however, were also displeased with the election results. As soon as the election results were officially announced, Communist leader Shodi Shabdolov resolutely objected to them by accusing the executive power of putting pressure on the voters and the election commissions, which resulted in mass falsifications. The Democratic, Social-Democratic, and Islamic Revival parties sided with the communists. Each of them engaged in independent vote counting, the results of which differed greatly from the official data. IRPT analysts insisted that their party had come in second and that only interference by the official structures had made it possible for the Communists to capture second place. Some of the candidates in the majority constituencies agreed with the critics. Four out of the six parties insisted on another election round under threat of withdrawing from the Presidential Public Council. The statements issued by CIS observers and members of diplomatic missions and embassies were more positive. The Russian diplomats were especially positive. “The minor shortcomings identified during the election campaign and the voting process did not affect the voters’ free choice,” stated the Russian Embassy in the Republic of Tajikistan.3 International organizations, however, were more critical—the OSCE announced that both the laws and the rights of the voters had been violated. Head of the UNTOP mission in Tajikistan Vladimir Sotirov said in particular: “The elections proved to be a political test for Tajik society, still at the early stage of its democratic development.”4 He voiced his concern over the threat of several parties to leave the Public Council: “A discontinued dialog at the Public Council level would endanger national and inter-party efforts to move the country forward after the conflict.”5 Criticism notwithstanding, the election results were accepted. Nevertheless, the parties whose demands to revise the results were neglected (IRPT, CPT, SDPT, and DPT) announced that they would leave the Public Council. On the whole, the election campaign demonstrated that most of the opposition parties had overestimated their potential. The so-called right, or democratic opposition was left outside the parliament, while the Communist Party, a favorite, was bumped off at the election. On the other hand, it turned out that the IRPT’s potential was much higher than previously believed.

1 Asia Plus Information Agency. Available at [[email protected]]. 2 See: “Parlamentskie vybory,” Varorud, No. 10 (148), 9 March, 2005 (in Tajik). 3 Ibidem. 4 Ibidem. 5 Ibidem. 232 REPUBLIC OF TAJIKISTAN Politics

Now the rapidly increasing number of those who supported the opposition is convinced that in future elections will become even less transparent, while the government will devise new falsification methods. There is a widely accepted opinion, popular even among the fairly moderate opponents of the country’s leadership, that it will be much harder for them to come to power in the legal way. Thus, the parliamentary election of 2005 radicalized part of the opposition. As for the government, it should obviously ponder on the new alignment of forces: in the near future, the IRPT will remain the only influential opposition party. The election was the only important domestic event; foreign political issues dominated the political sphere. On the domestic scene, several court cases with political overtones resounded across the country. I have in mind the arrest and trial of DPT leader Makhmadruzi Iskandarov, a former warlord who later headed the country’s gas industry. After being removed from this post in 2004, he put up stiff opposition, then he moved to Moscow, from where he was abducted under still unclear circumstances and brought back to Dushanbe. He was accused of several crimes ranging from financial abuses to an attempted coup. Early in October he was sentenced to 23 years in prison.6 Before that, in April, Iakub Salim, another former warlord and one of the pro-government Pop- ular Front leaders, was sentenced to 15 years in prison. Appointed head of the RT Customs Service in 1998, he staged an aborted riot. He fled to Russia, which handed him over to the Tajik law enforcement bodies.7 Today Gaffor Mirzoev (Gray-Haired), a former Popular Front warlord who for many years commanded the National Guard, is still on trial. Although removed from his post, he refused to vacate it; after long talks he was appointed chairman of the Agency for Fighting Drug Trafficking. Soon after that he was arrested and accused of violating several articles of the Criminal Code. R. Fayziev, deputy chairman of the Tarakkiet (Development) Party was sentenced to five years in prison. In the past, his party competed with the NDPT for influence in the Kulob Region, one of the main bases of the party in power. These court cases are a direct result of the general trend toward more centralized power. Former warlords and potential political opponents are deliberately pushed to the side: they leave politics, allegedly of their own free will, to start their own businesses or work in other spheres unrelated to politics. Those who find it hard to abandon their political ambitions sooner or later find themselves in the dock. In most cases, the political undercurrent is not obvious: the law enforcement bodies can always find ways to accuse the former warlords of criminal offences. This year saw a very specific response by the country’s leaders to the Color Revolutions. Nearly all aspects of domestic and foreign policy were affected by the Rose Revolution in Georgia and the Orange Revolution in Ukraine. The Tulip Revolution in Kyrgyzstan and the events in Uzbekistan resounded across the country. Convinced that the events in Kyrgyzstan were possible because the leaders demonstrated their weakness, the Tajik leaders decided that a strong civil society, Third Sector, and a developed multiparty system threatened Tajikistan’s stability. The above considerations forced the Tajik leaders to take measures to avoid similar developments in their republic. The parliament initiated amendments to a number of laws to give more power to the law enforcement bodies. It discussed amendments to the laws On the Press and On TV and Radio Broadcasting. Under the amendments introduced into both laws, late in November all publishers were to submit fresh issues of their periodicals (before circulation) for examination by the state structures under the threat of punishment. The obviously oppositional and independent publications were the first to experience strict control. On the other hand, the government gradually increased its control over international organizations, local NGOs, and foreign offices. The Foreign Ministry, for example, asked international organ-

6 Tsentrazia, Personalii. Available at [http://www.centrasia.ru/person.php4]. 7 Ibidem. 233 CENTRAL EURASIA 2005 Analytical Annual izations to inform the government about all their planned events; and the local NGOs find it much harder to obtain permission for their events. The Russian and Central Asian press accused Western countries of staging the Color Revolutions, which gave the government structures reason for treating the U.S. Embassy in the Republic of Tajikistan, related agencies (USAID, USAED, NDI), and the Soros Foundation with suspicion. Government structures carried out an inspection of the local office of the Soros Foundation, but failed to find anything incriminating. Tension was relieved on 15 Sep- tember when George Soros and the Tajik President met in New York during a Tajik delegation’s visit to America. It seems that, influenced by the events in the neighboring republics, the Tajik government will postpone its reforms and laws designed to create a developed civil society in the republic. The law on decentralization of the system of local self-government drafted with the help of international organizations was put on the back burner. In 2005, the law enforcement structures carried out several actions designed to neutralize illegal extremist organizations, the Hizb ut-Tahrir Party in particular. In May, seven of its members were con- victed in the north of the country; on 17 September, more members were detained; and in October, the head of the party’s regional branch was arrested. In May, several people from the Sogd Region accused of belonging to the underground Islamist organization Baiat were sentenced to many years in prison.

* * *

The parliamentary election intensified the country’s drift toward centralization in evidence over the past ten years. Several years ago there were several centers of influence on the republic’s political scene opposing the central government. Today, some of them have disappeared, while others lost much of their potential. On the whole, at a certain stage of its post-conflict development the country needs centralization as part of the stabilization process. The last election demonstrated, however, that the country has no strong opposition, which is indispensable for democratic development. Today, the government controls the parliament since the opposition parties (if the Communist Party can be considered an opposition at all) have few seats and cannot influence its work.

ECONOMY

Sobir KURBANOV National Program Officer for Economic Affairs, Swiss Cooperation Office in Tajikistan (Dushanbe, Tajikistan)

y the beginning of 2005, the republic had achieved significant positive results. These were due to the course taken by the government and society as a whole several years ago in order to sta- B bilize the sociopolitical situation in the country, enhance business activity and improve the in- 234 REPUBLIC OF TAJIKISTAN Economy vestment climate. As a result of these efforts, the average annual rate of economic growth in 2000- 2004 was around 10%, and per capita GDP rose from $170 to $310. Another point to note is that from 1999 to 2004, according to the World Bank, the poverty rate fell from 80% to 64%. In the economic sphere, the country has strictly followed the recommendations of international financial institutions, so that growth has been accompanied by macroeconomic stabilization achieved through measures to tighten monetary policy, reduce inflation (from 38.6% in 2001 to 5.7% in 2005), stabilize exchange rate policy (while maintaining a freely floating exchange rate without any sharp fluctuations in recent years), and improve fiscal performance (from 2001 to 2005, budget revenues increased from 15.2% to 17.9% of GDP). In the process, the government has managed to maintain a fiscal balance, with the absolute figure for budget revenues nearly doubling from $220 million to $400 million. This increase was achieved by broadening the tax base in the real sector, mostly in private business (including the service sector), and by improving tax compliance for sales tax. But in 2005 (in contrast to earlier years), real GDP grew by only 6.7%, including 8.5% in industry and 3.1% in agriculture, whereas the target for the year, as agreed with the IMF, was 8%. The slowdown in agriculture is largely explained by a 20% decline in the production of raw cotton and a 42% drop in cotton fiber exports. The World Bank and the International Monetary Fund regard recent economic growth in Tajikistan as recovery growth: output in 2004 was only about 68% of the 1990 level.1 Let us recall that in 1990- 1994 the country experienced a drastic decline in output averaging 20% a year (from the 1990 level), whereas the average figure for the CIS countries at that time was 7%. Consequently, the growth rates achieved in the republic to date do not as yet reflect such things as a real solution of structural problems in the economy, a significant increase in the contribution of the private sector, higher labor productivity at privatized enterprises in the real sector, an improvement of the employment situation or an increase in domestic or foreign investment. Current economic growth is a reflection of better utilization of traditional branches of the economy (cotton growing, aluminum production), and also of faster growth in the service sector owing to a surge in imports and household consumption. As regards household incomes, these have been rising largely due to money transfers and parcels from labor migrants. Estimates of migrant remittances range from $400 million (official data) to $1 billion a year, or from 30% to 50% of GDP (100% to 250% of annual budget revenue). These remittances from migrant workers, including imports of food, considerably stimulate domestic economic activity, especially in the service sector and in retail trade, and also affect the real estate market. So, economic growth in the short term can be sustained by means of significant investments in the production of aluminum, the hydropower industry and large projects under the foreign-funded Public Investment Program (PIP), and also by means of the above-mentioned remittances from labor migrants. In the long term, however, growth can only be sustained through further economic restructuring, a real improvement in the investment climate, creation of a more supportive environment for private business activities, diversification of financial markets, an improvement in the quality of financial services, etc. According to the RT State Statistical Committee, the consumer price index (CPI) in 2005 was 107.8%, and average monthly inflation, 0.60% (compared to 0.40% in 2004). The largest increase was in the prices of foodstuffs (8.3%) and paid services to the population (9.3%), while nonfood products rose by 2.7%. The price of a minimum consumption basket (based on rational nutrition standards) was 86.84 somoni (about $27) per person per month. As noted in the IMF Country Report for 2005, the republic’s authorities seek to maintain low inflation (with a projected annual figure of 8%). The increase in the money supply, including bank and reserve money, should not exceed 18%. The gross international reserves of the National Bank of

1 See: IMF Country Report No. 05/131, April 2005. 235 CENTRAL EURASIA 2005 Analytical Annual

Figure 1 GDP—Composition by Sector (%)

40 35 30 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005

Agriculture Trade Industry Other Construction

S o u r c e: IMF Country Report No. 05/131, April 2005.

Tajikistan (NBT) are to increase by $45 million, reaching 2.3 months of imports (compared to 1.9 months today). Nevertheless, the range of liquidity instruments available within the banking system remains fairly limited. In view of this, the National Bank and the Ministry of Finance should take urgent measures to stimulate the secondary market of government securities, notably for trading 3 million somoni of government treasury bills so as to enable the Ministry of Finance to repay its debt to the National Bank. In its exchange rate policy, the republic seeks to maintain the free convertibility of its national currency, the somoni (SM), put into circulation in 2000. In 2005, on the IMF’s recommendations, the National Bank switched from weekly adjustments of the exchange rate based on actual supply and demand in the official interbank market to daily currency trading with daily quotation of the official exchange rate. Despite these changes, the foreign exchange spot market has remained stable, without any swings in supply and demand or problems with cash. In its efforts to regulate banking policy and consolidate the banking system, the NBT has also taken steps (in 2005 and 2006) to raise the minimum capital requirements for commercial banks from $3 million to $5-6 million. In the area of fiscal policy, the total amount of revenues and grants going into the state budget in 2005 was SM 1,295.2 million (18% of GDP). As of 1 December, 2005, the execution of the state budget showed a deficit of SM 33.7 million (0.5% of GDP). Budget expenditures for the first 11 months of the year totaled SM 1,195.01 million, or 85.1% of the target figure (18.7% of GDP). The overall increase in budget revenues is due to a significant reduction in the list of tax exemptions and to a number of other measures: the introduction of a minimum corporate income tax (tax on enterprise profits) and of a unified agricultural tax in place of 17 different taxes collected in the past; implementation of the provisions of the new tax and customs codes, which entered into force on 1 January, 2005, etc. In addition, a significant increase in budget revenues is expected from a tightening of control over the

236 REPUBLIC OF TAJIKISTAN Economy

Tajik Aluminum Plant (TadAZ) to ensure payment of its accumulated tax and electricity arrears. The country’s authorities believe that the new Tax Code will help to simplify procedures, improve tax administration and reduce the cost of collecting taxes, in particular by increasing transparency and reducing opportunities for corruption. Nevertheless, there are still many complaints from both fiscal agencies and taxpayers, including agricultural and other enterprises, about the absence of detailed procedures, the document’s vaguely worded provisions, etc. In formulating the budget for 2005, the authorities focused their attention on avoiding a deficit and ensuring fiscal discipline. Transparency was increased through more active participation in this process of a parliamentary budget commission (to select the main priorities). Thus, some unproductive investments in construction were redirected into the social sphere, in order to ensure, among other things, a significant increase (by 40%) in the salaries of government employees, which are still among the lowest in the CIS countries. Incidentally, such a pay rise is envisaged by a program for reforming public administration agreed with the IMF and the World Bank. But this raises the question of whether such pay rises will be accompanied by measures to maintain a fiscal balance, to cut staffs and upgrade the system as a whole. Under the 2006 State Budget Law, approved by the country’s parliament on 6 December, 2005, budget revenues were established at SM 1.51 billion (SM 243 million more than in 2005), and budget expenditures at SM 1.542 billion (30% more than in 2005). This budget can be called a social one, because SM 1.033 billion (67% compared to 46% in 2005) is to be used for social purposes, including social protection of the population. As before, the increase in budget revenues is connected with measures to improve tax administration and fiscal administration in general, to broaden the tax base, especially in the service sector and trade, and to raise import duties. According to the monthly bulletin of the State Statistical Committee, the republic’s foreign trade turnover in 2005 amounted to $2,238.5 million. The trade balance was negative: $421.1 million. Com- pared to 2004, exports fell to 99.3% ($908.7 million), mostly owing to the decline in cotton exports, and imports rose to 111.6% ($1,329.8 million), mostly due to growing imports of consumer goods, foodstuffs, building materials and engineering products. The CIS countries account for 46.6% of the republic’s foreign trade, and non-CIS countries, for 53.4%. A point to note is that the Commonwealth countries are the main source of Tajikistan’s imports (63.6%), providing the republic with food, pe- Figure 2 Exports by Product (US$ million)

1000

800 Other 600 Electricity

400 Cotton Aluminum 200

0 2001 2002 2003 2004 2005

S o u r c e s: IMF Country Reports No. 05/131 and No. 05/368; RT State Statistical Committee (September 2005).

237 CENTRAL EURASIA 2005 Analytical Annual troleum products, etc., so that the trade balance with these countries is highly negative: $686.2 million. Most of the republic’s exports (83%)— cotton fiber and primary aluminum—go to non-CIS countries (Switzerland, Netherlands), with a surplus of $265.1 million. Against the background of Tajikistan’s poorly developed production base and the absence of competitive lines of production, the country is heavily dependent on imports of a wide range of goods, including staples falling into the food security category. Figure 3 Imports by Product (US$ million)

1400

1200

Other 1000 Grain and flour 800 Electricity

600 Petroleum products Natural gas 400 Alumina 200

0 2001 2002 2003 2004 2005

S o u r c e s: IMF Country Reports No. 05/131 and No. 05/368; RT State Statistical Committee (September 2005). Final data on imports of petroleum products are not available.

Table 1 shows a growing deficit of the republic’s current account balance. According to IMF estimates, this deficit is around 4-5%, whereas the Ministry of Economics and independent experts estimate it at 16-22%, which means that the country’s foreign trade position is highly unstable. This is largely due to the decline in world prices for its key export goods, with a resultant reduction, as noted above, in cotton exports in 2005. At the same time, the prices of such key import items as petroleum products, foodstuffs and natural gas have been growing rapidly. Another factor behind the sharp increase in imports is the surge in consumer demand caused by a significant increase in remittances from migrant workers as a result of growing labor migration to neighboring countries, and also by other factors stimulating domestic business activity and, most importantly, the informal economy. As noted in the latest IMF Country Report (No. 05/368, October 2005), the Tajik authorities are concerned that the growing trade deficit makes the economy vulnerable to external shocks and possible disruptions in the supply of key import goods, reflecting the low competitiveness of domestic production. Given the high share of foreign trade in the structure of Tajikistan’s economy and its difficult geographical position, the republic is an advocate of regional trade and of an open and liberal foreign trade regime. On this basis, it is actively working to develop regional cooperation in such organizations as the Eurasian Economic Community (EurAsEC or EAEC), the Shanghai Cooperation Organ-

238 REPUBLIC OF TAJIKISTAN Economy

Table 1 Balance of Payments (US$ million)

2000 2002 2004

Current account –62 –33 –81

Current account balance (% of GDP) –6.5 –2.8 –3.9

Balance of trade (exports minus imports) –24 –125 –332

Balance of services 4 –36 –67

Balance of income –36 –57 –80

Balance of transfers, of which: 37 184 399

Remittances from labor migrants n/a — 65 313

Capital account 63 54 84

Capital transfers 5 5 9

Government loans 17 9 –211

World Bank 13 0 25

Asian Development Bank 9 5 0

Foreign direct investment 24 36 272

Commercial bank assets 24 8 63

Other –28 –8 –74

Overall balance 1 21 3

[Use of international reserves –29 –1 –54

S o u r c e s: RT Ministry of Economics; IMF Country Report No. 05/131, April 2005. ization (SCO), the Central Asian Cooperation Organization (CACO) and the Economic Cooperation Organization (ECO). A special problem facing Tajikistan is that of tight non-trade and transport restrictions on the part of Uzbekistan (considering that Tajikistan’s border with this country constitutes 70% of its total border length). All commercially viable transportation routes (road and rail) for Tajik exports and imports run through the territory of Uzbekistan. Examples of existing serious barriers include a 100% prepayment requirement in the transit of Tajik exports and imports through Uzbekistan, delays at the border, a ban on the passage of Tajik road and rail transport, massive mining of the border in the north, bribes and harassment of private traders. Naturally, all of this significantly increases Tajikistan’s export- import costs. The World Bank estimates2 that non-transport costs in the transit of Tajik freight traffic through Uzbekistan, mostly consisting of unofficial payments at border crossing points and customs

2 See: The World Bank, Tajikistan, Trade Diagnostic Study, June 2005. 239 CENTRAL EURASIA 2005 Analytical Annual posts, amount to an average of $200 per ton. In addition, Tashkent has introduced at least eight kinds of official fees for transit of freight traffic from Tajikistan, which may amount to $500 per truck. When goods are exported to Russia, for example, transit through Uzbek territory accounts for about 30% of total transportation costs. The Dushanbe authorities are aware of these problems and trade restrictions, both objective and subjective, and hope that they will eventually be overcome with the help of the World Trade Organization. Of course, WTO accession will not result in any immediate economic benefits for Tajikistan, especially given the existence of regional trade barriers, the country’s isolation, and inconsistencies between the goals and purposes of regional political and trade associations and those of the WTO. In the long run, however, entry into the WTO will be an important political step towards recognition of the openness of the Tajik economy, helping to reform its trade policy, attract foreign investment and diversify national exports. Let us recall that the republic declared its political commitment to WTO accession back in 2001, when it took a basic decision to initiate this process. The past year, just as 2004, brought a considerable reduction in the republic’s external debt, which has enabled it to move from the category (according to the accepted international classi-

Table 2 Selected Macroeconomic Indicators

2001 2002 2003 2004 2005

Nominal GDP (SM million) 2,512 3,345 4,758 6,158 7,201.1

Nominal GDP (US$ million) 1,051 1,197 1,556 2,073 2,336.5

Real GDP (% change) 10.2 9.1 10.2 10,6 6.7

CPI inflation (end-of-period, % change) 12.5 14.5 13.7 5,6 7.8

Average monthly wage (SM) — 32.55 44.61 60,79 93.63

Total budget revenue (% of GDP) 15.2 16.7 17.3 17,9 18.0

Total budget expenditure (% of GDP) 18.4 19.2 19.1 20,3 18.5

Balance (excluding PIP, % of GDP) –0.1 –0.1 0.9 0,7 –0.5

Balance (including PIP, % of GDP) –3.2 –2.4 –1.8 –2,4 –4.1 (projection)

Domestic financing (% of GDP) –0.8 –0.1 –1.1 –1,7 0.9 (projection)

External financing (% of GDP) 3.0 2.6 2.8 4,0 3.2 (projection)

Change in net domestic assets (% of broad money) 86.0 45.9 –21.4 78,8 15 (projection)

240 REPUBLIC OF TAJIKISTAN Economy

Table 2 (continued)

2001 2002 2003 2004 2005

Change in net foreign assets (% of broad money) –38.2 –7.5 48.8 –22.3 2.1 (projection)

Change in M3 money supply (broad money, %) 40 39.7 29.2 14.3 18.4 (projection)

Exports of goods and services (US$ million) 735 799 985 915 908.7

Change in exports (%) –13.5 8.8 23.2 –7 –0.7

Imports of goods and services (US$ million) 847 929 1,142 1,191 1 329.8

Change in imports (%) –2.5 9.7 22.9 4.3 11.6

Current account balance –10 (IMF projection), (% of GDP) –5.1 –3.6 –1.3 –4.0 –18 (government projection)

External debt (US$ million) 1,017 1,009 1,031 853 890

External debt (% of GDP) 96.7 84.3 66.2 41.1 38.4

Gross international reserves (US$ million) 96 96 135 189 225

Average exchange rate (SM/US$) 2.4 2,8 3.1 2.97 3.22

S o u r c e s: IMF Country Report No. 05/368, October 2005; RT State Statistical Committee (October 2005). fication) of heavily indebted poor countries (HIPCs) to the category of moderately indebted countries. After the signing of a number of bilateral debt restructuring agreements, the republic’s external debt was reduced from $1.3 billion to $895 million in 2004, and then to $840 million by the end of August 2005. Accordingly, the ratio of external debt to GDP (against the background of GDP growth) has fallen by half, from 82% to 40%, with a sharp drop in the other indicators of external debt vulnerability: debt-to-exports, debt-to-revenue and other ratios. Agreements in this area have been signed, in the first place, with Russia, Pakistan, India, Uzbekistan, Kazakhstan and Iran. The agreement with Russia, reached during President Vladimir Putin’s official visit to Tajikistan in October 2004, is regarded as particularly successful in various respects, including investment promotion. In the event, Tajikistan’s debt obligations in the amount of $306 million were cancelled in return for the deployment in the republic of Russia’s military base and its Okno (Window) space tracking station ($250 million), and also Russia’s contribution to the construction of the Rogun Hydropower Plant, which already had a positive effect on the Tajik economy in 2005.

241 CENTRAL EURASIA 2005 Analytical Annual

Under the Multilateral Debt Relief Initiative, on 19 December, 2005, the IMF Executive Board included Tajikistan among 19 countries eligible for a write-off of their entire debt to the IMF, which has reduced the republic’s debt burden by another $99 million. One of the main priority lines of the country’s economic policy is to create a favorable investment and business climate. According to World Bank data, foreign investors today own a total of just over 20 enterprises in the country. Naturally, a favorable investment regime helps to attract domestic and foreign investment, create new jobs and improve company performance through the introduction of new corporate governance practices, new skills, advanced technologies, etc. However, Tajikistan’s policy in this area cannot be regarded as very successful, because the average annual inflow of investment ($30 million) is the lowest among all the 26 transition economy countries.3 The reasons here, according to The Economist, include inadequate domestic legislation and its implementation, governance problems and permanent political stability risks, as well as tariff and nontariff barriers on the part of Uzbekistan impeding the free transit of potential investor capital, products and technologies to Tajikistan. Aluminum production and the energy sector are the main focus of foreign investor interest. Back in October 2004, the republic signed a seven-year package of “political” investment projects with the Russian Federation worth a total of $1.6 billion (76% of 2004 GDP), at that time seen as an expression of interest. This package provides for investments by RusAl, the largest Russian aluminum holding

Figure 4 Administrative Barriers to Business

very complicated very easy

Access to external financing oreign trade operations Taxation

Inspections

Licensing Certification and standardization

Permits and approvals Registration

Bank account operations

90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 10% 20% 30% 40% 50% % of respondents

S o u r c e: Business Environment in Tajikistan as Seen by Small and Medium Businesses, SECO-IFC, 2003.

3 See: Country Report. December 2003. The Economist Intelligence Unit. 242 REPUBLIC OF TAJIKISTAN Economy company, in the completion of the Rogun Hydropower Plant ($560 million) in 2005-2009, the reconstruction of the Tajik Aluminum Plant ($160 million), and the construction of two new aluminum plants ($600 million) in southern Tajikistan in 2010-2013. The completion of the Rogun and Sangtuda hydropower plants will help the republic to solve the problem of power shortages, increase its aluminum production potential (based on low-cost electric power) and start commercial exports of electricity to Russia, Pakistan and other countries. In 2005, the parties continued to discuss the details of these projects, and RusAl opened a permanent office in Dushanbe. In addition, RAO UES of Russia has pledged to invest around $200 million in the completion of the Sangtuda Hydropower Plant in 2005-2009 (which will complement the $50 million to be invested as part of a swap of Tajik debt owed to Russia for assets in Tajikistan). Tehran, too, is planning to invest in the construction of the second stage of this hydropower plant, which is to export electricity to Iran and Pakistan. As regards the business environment in Tajikistan, it lags far behind other transition economies. Thus, the private sector contributes only about 50% of GDP. A survey conducted by the International Finance Corporation (IFC), Business Environment in Tajikistan as Seen by Small and Medium Busi- nesses, shows that local small and medium enterprises face significant administrative barriers in their business activities. These include lack of access to financing, foreign trade restrictions, complicated licensing and certification procedures, and pressure from inspection agencies, which impedes the development of the private sector and fuels corruption. According to the findings of this survey, small businesses in Tajikistan are subjected to an average of 16 inspections a year at a cost of about $110 per inspection in the form of fines and unofficial payments, with each inspection lasting about 17 days. The registration of a firm takes 25 working days at a cost of $176 (both official and unofficial). About 65% of all businessmen find it difficult to get reliable information about registration procedures; 98% make unofficial payments for various administrative procedures; and 82% do not use bank accounts in their business activities. True, the IFC has recently launched another survey of businesses on this topic, and its results could show an improvement in the situation. But they will be published in a year. The country’s banking system, according to NBT data, includes 11 independent banks, 6 credit unions, 7 nonbank financial institutions and 1 representative office of a foreign bank. Last year, the banking system’s assets increased by SM 21.2 million (to SM 825.4 million or 13.4% of GDP), although this is still a very low indicator pointing to the system’s weakness. Household deposits in 2005 increased by 58.9%, from SM 299 million to SM 467.1 million, which points to rising household income, to the population’s growing trust in the banking system and a stable national currency. Last year the authorities abolished the legislative limit on the share of capital that may be owned by foreign banks and, as mentioned above, raised the minimum capital requirements for commercial banks from $3 million to $5-6 million. On the whole, however, this system is still poorly developed: four major banks control 70% of all assets, 81% of household deposits and 71% of private loans, while the ratio of domestic credit to GDP is 16%, with credits to the cotton sector constituting half of the total. The activities of commercial banks are mostly focused on short-term loans to commercial entities and on foreign exchange transactions. Such sectors as consumer and residential mortgage lending, credit cards, operations with securities and other debt instruments of the securities market are in an embryonic state. In general, a proper stock market has yet to be created, especially a secondary market of government and corporate securities.

243 CENTRAL EURASIA 2005 Analytical Annual RELIGION

Khakim ABDULLO Lecturer at the Department of Political Science, Tajik State National University (Dushanbe, Tajikistan)

t the beginning of 2005, the preparations for the next hajj to Mecca for nearly 4,000 pilgrims were completed. In the past, thousands of those wishing to go to Mecca had to overcome nu- A merous hardships: in 2004, hundreds of Tajik pilgrims had to queue standing for a week at Dubai airport before they could board an aircraft, which caused quite a stir in Tajikistan. This happened because of lack of adequate experience in the past; for several reasons there was no Central Spiritual Admin- istration of the Muslims in the country. On 3 December, 2004, the Cabinet of Ministers, in an effort to bring order to the process, adopted decision No. 457, in compliance with which organizing duties were entrusted to the Committee for Religious Affairs under the RT government. As soon as Hajj-2005 was over, some of the local media pointed out that higher voucher prices (which rose from $1,250 to $1,750) did nothing to improve the organizational side—everything was done much worse than before. The press got hold of some of the preliminary conclusions of the auditing structures, which found out that $7m of the hajj money had been misused. Some of them went as far as accusing the Committee of monopolizing the highly profitable “hajj-business,” of financial frauds, and of laundering a large part of the money collected.1 The Committee responded by describing the reports as the insinuations of private hajj guides who had lost their businesses as a result.2 The protracted conflict around the “holy millions,” however, evoked a wide public response and damaged the Committee’s reputation. The next month was dominated by the parliamentary election, in which an influential political religious organization—the Islamic Revival Party of Tajikistan (IRPT)—took part. This was symbolic for the religious part of the nation and affected the republic’s entire sociopolitical context. Indeed, the fact that an Islamic party could take part in the election and maintain peace with the government was very important for continued stability at the post-conflict stage. This explains why the parliamentary election which took place on 27 February was taken as a durability test of the peace agreement and confirmed that political Islam and a secular state can live side by side. After the voting, the IRPT and some of the other parties started talking about the gross violations which had taken place during the election campaign and falsification of the voting results in the capital. They insisted on a repeat election in Dushanbe.3 The Central Election Commission, in turn, insisted that the IRPT had won 9 percent of the votes and would have two seats in the newly elected parliament. Later it became obvious that the IRPT members were disappointed: the party suspended its involvement in the Public Council of the RT, while its relations with the government became much cooler. The party leaders, however, demonstrated political maturity and refused to aggravate the already tense situation. The Central Election Commission committed a political error when trying to convince the nation that the IRPT was not popular enough; to a certain extent this caused the radicalization of political Islam in Tajikistan.

1 See: Tochikiston weekly, 11 August, 2005. 2 See: Tochikiston weekly, 19 August, 2005. 3 See: Joint Statement of the Political Parties of Tajikistan on the Parliamentary Election Results, Dushanbe, 28 Feb- ruary, 2005. 244 REPUBLIC OF TAJIKISTAN Religion

In March, when the parliament’s upper chamber was formed, the president appointed very respected religious leader Khoji Akbar Turajonzoda as a member of the Majlisi Mili. He did not represent the IRPT, yet this defused the relations between the government and political Islam. The official ceremony on 15 April in Dushanbe which ushered in another stage of the Secular- Islamic Dialog project became a landmark in the country’s religious life. The project supported by the German and Swiss governments is the main tribune of a civilized discussion between the secular and religious elites. It has already accumulated a vast body of concrete suggestions on how to improve the legal base of the relations between the state and religion, how to separate religion from the state, how to reform religious education, how to formulate a strategy in relation to radicalism, etc. The document called “Confidence Measures” is one of the key results. It speaks of developed cooperation between the secular and Islamic elements in the country busy building up a nation-state.4 This dialog is important because it makes it possible to prevent problems and conflicts from accumulating in the relations between the state and religion. The visit by the Islamic leaders of Tajikistan to the United States within the U.S. State Depart- ment’s international exchange program was another important event in the republic’s religious life. For two weeks, people from madrasahs, imams of regional mosques, and IRPT members studied religious life in the United States, visited Muslim centers, and mosques, churches, and synagogues, as well as religious educational and research institutes, and met members of other confessions. The delegation members admitted that the trip helped them to understand what a secular state meant; how the principle of the relations between the state and religion should be interpreted; and how to realize religious freedoms and tolerance. Indeed, these issues—especially the radical interpretation of the meaning of the secular state and the absolutization of the principle of separation of religion from the state—can be described as the highest psychological and political barriers on the road toward normal relations between the state and religion in Tajikistan. In July, some of the Swiss and German foundations helped organize camps and seminars of civil education for madrasah students. On 10-20 July, in the town of Kayrakkum (Sogd Region), 50 young girl students from Muslim seminaries were given their first chance to learn the fundamentals of social sciences and familiarize themselves with the republic’s laws relating to religion and women’s rights. These projects remedied the situation in which Islamic students were pushed aside and helped them to join the civil processes. So far their inadequate legal and civil culture is still interfering with the “civil rehabilitation” of this part of the Tajik youth. About 100 students of higher secular and religious establishments attended the second July seminar in the Sogd Region. This was the first time that young members of the secular intelligentsia and Islamic clergy were able to meet each other. It helped to bring these two important social segments closer together. Indeed, mutual intolerance might create new fissures in Tajik society. During the first ten days of August, imam-hatybs of the main mosques came to Dushanbe to attend a seminar where they improved their knowledge of the civil sphere and tried to unify their positions on certain religious issues which have been stirring up dissent among the clergymen: the presence of women in the mosques; introduction of zakat (yield deductions) according to the Shari‘a; unification of certain ethnic religious rites; and organizing family life in situations where men have left home in search of employment, etc. Religious education received a lot of attention; in the latter half of 2005, certain progress in setting up mechanisms to deal with the problem was made within the framework of the Secular-Islamic Di- alog and the Religious Education Workgroup. Some other issues (official acceptance of diplomas issued by religious educational establishments, introducing a standard set of social sciences into the curric-

4 Documents concerning the dialog can be found in Postroenie doveria mezhdu islamistami i sekuliaristami: tajik- skiy eksperiment, Dushanbe, 2004. 245 CENTRAL EURASIA 2005 Analytical Annual ulum of madrasahs, as well as a course on the fundamentals of religion into the curriculum of secular schools) remained pending. Certain problems relating to primary and private religious education are still awaiting settlement. While the Law of the RT on Religion and Religious Organizations permits primary education in mosque groups, its vague legal wording creates numerous loopholes which breed conflicts and abuse. From time to time, official bans of study groups stir up discontent among the faithful. In July 2005, on the strength of O. Aliev’s letter (the author being an official at the Committee for Religious Affairs), study groups in mosques of the Sogd Region were closed down. The faithful were naturally highly displeased. Similar information came from other parts. In July-August, the republic’s religious community lost several of its most respected members. On 27 July, prominent religious and public figure Abdullo Kalonzoda died at the age of 82 in Khu- jand. For 30 years (1960-1988), he served as the Kazi of the Muslims of Tajikistan. On 6 August, one of the most influential representatives of traditional clergy Eshoni Turajon died in Vakhdat at the age of 72. The funeral of the Qadiriyya sheikh gathered unprecedentedly huge crowds. He was believed to be the last representative of the Central Asian elite school of Sufism known for its highly specific features.5 The radical Islamist organizations present a problem not only for the religious, but also for the sociopolitical life of the country. Throughout 2005, there was a steady flow of information about arrests of members of the Islamic Hizb ut-Tahrir Party. It was announced to be the main radical organization of the republic and a target of fierce struggle waged by the power structures. The party meanwhile was extending its influence: while earlier its members were mainly detained in the north and along the Uzbek border, recently its cells were discovered in the capital and in the south.6 Obviously, active and uncompromising efforts on the part of the authorities failed to produce desirable results.7 The expert community is convinced that force is no answer to the influence of Hizb ut-Tahrir, which is a very complex phenomenon.8 The Baiat Group was announced to be the second most important radical religious organization in the republic. The first half of 2005 was taken up with a sensational trial of seven of its members. Upon its completion, the group’s lawyer S. Valizoda published an open letter to President Rakhmonov, in which he wrote that the law had been violated during the investigation and court hearings, and that his clients had been subjected to threats and physical violence to force them to admit that they were members “of the group, which the investigators invented for their own purposes, and to provide information about its activities.”9 Even though in the course of the investigation and court proceedings, the group was presented as a political religious extremist organization which called for “deposing the constitutional order,”10 in the final sentence it was described as “an organized criminal group with neither religious nor political hues.”11 Since the Andijan events in Uzbekistan predated the final sentence by several days, it can be concluded that the unexpected decision to present the religious and

5 Special program of the Tajik service of Radio Liberty of 13 August, 2005. 6 According to the press, on 11 August, 2004 the trial against 20 members of Hizb ut-Tahrir arrested in Kulob (in the south) began. 7 According to the Asia Plus information agency (information of 13-15 October), in August-September alone 36 active members of Hizb ut-Tahrir were arrested; in nine months, over 200 criminal cases were instigated against its members. 8 For the most detailed analysis of the situation around Hizb ut-Tahrir in Tajikistan, see: Kh.A. Turajonzoda, “‘Is- lam,’ protivorechashchiy Koranu,” Nezavisimaia gazeta, 4 August, 2004. 9 Nachot, 8 August, 2005. 10 On 20 April at a press conference of the heads of the Administration for the Struggle Against Organized Crime of the republic’s Ministry of Internal Affairs, the Baiat was presented as a religious extremist group which called for deposing the constitutional order in Tajikistan and setting up an Islamic Caliphate in Central Asia (Ozodi, Tajik Service of Ra- dio Liberty, 20 April, 2005). 11 Upon the completion of the court process, on 24 May, 2005 the public prosecutor of the Sogd Region A. Kalan- darov declared that the Baiat “was merely an organized criminal group with neither religious nor political hues.” He further said: “The crimes investigated during the trial were not aimed against national security and stability in Tajikistan” (Radio Ozodi, 24 May, 2005). 246 REPUBLIC OF TAJIKISTAN Religion political organization as a banal criminal group was caused by the desire to avoid “a second Andijan.” Let me remind you that in Uzbekistan the events were triggered by court proceedings against the Aqromiya religious group. The relatives and friends of the Baiat members demonstrated restraint and limited themselves to a “silent rally” in front of the court building in the Isfara District (Sogd Region) on 1 June.12 Arrests of members and groups connected with the Islamic Movement of Uzbekistan (IMU) became much more frequent, which is arousing serious concern in Tajikistan. In mid-September 2005, its activity in the capital was stemmed, yet the public was shocked to learn that a wide flung network of the Islamic Movement of Turkestan (IMT) was functioning in the country’s north. According to the law enforcement bodies of the Sogd Region, which carried out a series of arrests in September and October, the IMT regional cell consisted of about 200 people.13 The radical secularism demonstrated by certain officials coupled with social, economic, political, and cultural factors make the religious sentiments of certain of the nation’s segments more radical. Indeed, religious education is not widely available; children and women are banned from the mosques, while the hijabs are banned from educational establishments. The media reported dozens of cases where girls in hijabs were kept out of schools.14 Tension increased in late October when Minister of Education A. Rakhmonov officially banned the hijab from all educational institutions. While the law does not ban the hijab and Art 41 of the country’s Constitution guarantees secondary education to all and makes it obligatory for everyone to attend school, the ministry qualified the hijab as an “ideological instrument” inadmissible at schools and other educational establishments. This formula, as well as the limitations on mosque attendance for schoolchildren, caused wide-scale rejection and sharp negative comments from the republic’s clergy, including the IRPT leaders.15 In 2005, this was one of the most explosive issues in the relations between the state and religion. Religious minorities merit special attention: the largest of them is the Russian Christian Ortho- dox Church; there are fairly large communities of Jews, Baptists, Union of Evangelists, Seventh Day Adventists, Jehovah’s Witnesses, the Christian Grace Sunmin Church, Hare Krishna, etc. The number of new and previously absolutely unknown religious trends has sharply increased in the last ten years: there are over 80 sects in Tajikistan according to official sources. The Muslims demonstrate tolerance for “new religions,” yet the attempts of their followers to abuse the nation’s social and economic hardships (in the form of the Faith in Exchange for Financial Aid project) arouses indignation among more active Muslims. The Russian Orthodox Church (one of the traditional religions in the country) and many of the media also condemned these practices. Some- times irritation goes beyond the accepted limits: in 2004, students of the Islamic University blasted the building of the Grace Sunmin Church; and in February 2005 Baptist priest Sergey Bessarab was murdered in Isfara.16 In 2005, the republic’s authorities suspended the activity of the Union of Baptists, the Jehovah’s Witnesses, and the Grace Sunmin Church in Tajikistan. By way of explanation M. Davlatov, who headed the Committee for Religious Affairs under the RT Government, said: “In violation of their own charters, these organizations were engaged in missionary activities outside their churches, among the people. Last year we received numerous complaints about this.”17 Later the Committee itself altered this

12 Radio Ozodi, 1 June, 2005. 13 See: Millat, No. 7, 13 October, 2005 (see also Statement of the Public Prosecutor’s Office of the Sogd Region of 3 October, 2005 on the detention of IMT members). 14 See: Najot, No. 40 (340), 6 October, 2005. 15 See: “Statement of the IRPT Political Council,” Najot, 3 November, 2005. 16 See: Najot, No. 37 (338), 15 September, 2005; No. 39 (340), 29 September, 2005, etc. 17 Radio Ozodi, 26 July, 2005. 247 CENTRAL EURASIA 2005 Analytical Annual statement; two of the involved churches refuted this information. It was confirmed, however, that temporary problems with one of the local churches of the Grace Sunmin sect appeared in the Sogd Region.18 Information about three suspended religious sects was discussed by the highly respected British Institute for War and Peace Reporting (IWPR), as well as by other international organizations. In its annual report on religious freedom across the post-Soviet space, the United States Mission at the OSCE, on the strength of this information, called on the government of Tajikistan to revise its policies in this sphere.19 On top of this, the problem of giving the Dushanbe synagogue a plot of land instead of the one it stood on in the capital’s center scheduled for reconstruction was not resolved. This too acquired political and international hues. The larger part of the expert community, however, agrees that the religious minorities in the republic are living according to relatively easier rules than the religious majority, the Muslims. For example, under Art 14 of the Law of RT on Religion and Religious Organizations, a non-Muslim organization needs 10 followers to be registered, while to set up a main mosque, the Muslims need no less than 15,000. Today, this article stirs up the most heated discussions: many prominent Muslims interpret this as inequality before the law and encouragement of “new religions.”20 In 2005, the Islamic clergy and secular intellectuals continued their discussion of the Tajik nation’s ethnic identity and the role and place of Islam in the nation’s past and present. The article “Chuzhie klany” (Alien Clans), which appeared in the Jumhuriyat newspaper on 12 July, stirred up heated discussions. Its author Ziyo Abdullo wrote that it was the Arabian conquest of Central Asia and an unhappy synthesis of the local Persian tongue with Arabic that led to the Tajiks’ fairly conservative mentality. When assessing the consequences of the region’s Islamization, he went as far as likening the Prophet Muhammad to Genghis Khan, as far as the catastrophic results for national cultures were concerned. This was immediately denounced by the Muslim clergy, while the discussion went on and on in the press for the rest of the year. The very fact that the leading Islamic figures, Kh.A. Turajonzoda, M. Khimmatzoda, and others, resolutely condemned the author speaks volumes about the issue’s burning nature. In the last few years, this confrontation unfolding in the cultural-political field assumed different forms, while the gradually intensifying debates testify that it has reached a new phase. This means that there are two different ideas about the nation’s ethnic identity. Part of the Islamic clergy regards Islam as the cornerstone of the Tajiks’ values and ethnic identities. The secular nationalist-minded intelligentsia looks at the pre-Islamic values of the Tajiks (the values of Arian culture and Zoroastri- anism) as the pillars of the nation’s values. It seems that a rational approach should describe the contemporary Tajik ethnic identity as a harmonious synthesis of pre-Islamic, Islamic, and contemporary axiological elements. A radical approach, however, creates a picture of “paradoxical identity” and incompatibility of the above-mentioned segments with each other. Each of the sides has brainwashing instruments of its own in the form of the media and the mosques. It seems that further radicalization of confrontation and mutual intolerance might split the nation. Mutual accusations and disagreements reached their peak when unification of ethnic and religious rites appeared on the agenda. Some of the secular authors are convinced that the clergy was responsible for the trend toward complicating the rites, while the ordinary people could not shoulder their burden under the present social and economic conditions. There were authors who deemed it necessary to openly criticize the Islamic clergy’s position and even insulted religious leaders, described their lifestyle in ironic terms under the eloquent titles of “Kamni na puti progressa” (Blocks on the Road of Progress),21 “Tanets borody” (Dance of the Beard),22 “Satana v maske sviashchennika-mul-

18 Journalist investigation by Igor Rotar, correspondent of Forum-18 Agency, Radio Ozodi, 19 September, 2005. 19 United States Mission to the OSCE. Statement on Freedom of Thought, Conscience, Religion or Belief-2005. 20 Report on the Results of 23 “Law and Religion” Seminars the OSCE organized in the Sogd Region. 21 See: Tochikiston, No. 33, 18 August, 2005. 22 See: Tochikiston, No. 37, 15 September, 2005. 248 REPUBLIC OF TAJIKISTAN Religion ly” (Satan Disguised as a Mullah),23 etc. These and similar publications, which ignore the ethical and moral norms, may provoke the Islamic clergy and the faithful to take radical actions. Usmon Sharifzo- da, who wrote “Blocks on the Road of Progress,” says that his underage daughter was abducted because of the article.24 The reformist wing of the Islamic clergy found itself in a quandary. One of the wing’s leaders and a leading theologian, Deputy Chairman of the IRPT M. Khimmatzoda, has pointed out that since the mid-1980s the reformists have been trying to annul some of the ethnic-religious rites as not corresponding to the pure Shari‘a. Early in the 1990s, the government and intellectuals supported the conservative clergy and accused the “young reformers” of “Wahhabism.” This split the clergy, the members of which found themselves on two sides of the barricades during the civil war; the young Islamic reformers fell victim to their own progressive ideas. Today, the government has resolved to bring order to the rites with the help of the Islamic clergy. M. Khimmatzoda asks: “Are we guaranteed against another wave of accusations if we join this course?”25 For the second year in a row, an OSCE-sponsored wide-scale project called “Law and Reli- gion” is being implemented in the republic to raise the level of tolerance and create conditions for constructive cooperation. A series of seminars, which will bring together local administrators, religious organizations, political parties, and experts, will be held within the project. In October 2005, with the completion of a series of 26 seminars in the Sogd Region, a new stage of the project began in the country’s center and south. According to the report which concluded the first stage, one of the reasons for the lack of mutual understanding between the local administrations and the religious organizations is their low level of legal knowledge. At the seminars, the participants admitted that they had no clear idea about their legal rights and obligations. The seminars helped normalize the relations between the local powers and religious organizations, while some of the old problems were resolved at the seminars.26 The planned reform of the university course of religious studies still taught within the Soviet ideology-dominated tradition will probably soften the radical ideas of the laymen about religion. In fact, those who compiled the courses knew next to nothing about the subject they were expected to teach and attracted a barrage of criticism from the religious figures. Highly educated members of the Islamic clergy should be invited to draw up such programs. This was done in the form of a trip to the United States of Tajik academics and theologians within a project sponsored by the U.S. State Depart- ment. Eshoni Makhmujon Turajonzoda, Khoji Khusein Musozoda, and Mukhiddin Kabiry, all of them prominent theologians, spent two weeks (between 29 November and 14 December, 2005) in the U.S. learning how to draw up study courses. The team decided to create about ten study courses of Islamic studies for the republic’s higher educational establishments. In 2005, subscribers to the scholarly religious newspaper Tamaddun (Civilization) did not receive it. Its publication was stopped when the newspaper founder M. Davlatov was appointed head of the Committee for Religious Affairs. Its subject range is now covered by Najot, a sociopolitical newspaper of the IRPT, which touches upon religious subjects from time to time, and a popular privately published magazine Safinai umed, the only religious periodical in Tajikistan. Those interested in religious and theological books have to satisfy their interest with books brought in from Islamic countries and translations from foreign tongues. A theological treatise Ibodati zan dar maschid az nazari shariati islomi va konunguzorii Chumkhurii27 (How the Islamic Shari‘a and the Laws

23 See: Ibidem. 24 See: Tochikiston, No. 40, 6 October, 2005. 25 M. Khimmatzoda, “Islam protiv nevezhestva i eresi,” Tochikiston, No. 29 (405), 29 September, 2005. 26 See: Report on the “Law and Religion” seminars in the Sogd Region. 27 See: Kh.A. Turajonzoda, Ibodati zan dar maschid az nazari shariati islomi va konunguzorii Chumkhurii, Nodir Publishers, Dushanbe, 2005. 249 CENTRAL EURASIA 2005 Analytical Annual of the Republic of Tajikistan Treat the Female Mosque Attendance Issue) by Kh.A. Turajonzoda created quite a stir among the reading public; the same can be said about another local book Gosudarstvo i religiia: poisk putey prodolzhenia dialoga28 (The State and Religion: How to Continue Their Dia- log) based on documents from a seminar of the same name the Ebert Foundation held in Dushanbe. The year 2005 marked another step toward a qualitatively new system of relations between the state and religion; the old Soviet ideas were gradually replaced with new opinions and approaches. Since the process was slow because the general process of democratization is proceeding at a slow pace, problems in the state/religion relationships were inevitable. While in 2004 certain factors, such as extreme politicization of the female mosque attendance issue, created tension in the relations between the state and religion, in 2005, the country’s leaders demonstrated more restraint in their dealings with religion, religious organizations, and religious leaders. The religious circles were especially satisfied with the statements President Rakhmonov made at the September U.N. Summit in New York and at the Day of Tajikistan ceremony at UNESCO’s headquarters in Paris about Islam’s civilizational role. He said that Islam and its humane principles should be respected, while such terms as “Islamic extremism” and “Islamic terrorism” should be dropped from political parlance. Several projects designed to improve the religious community’s civil culture and to lower its conflict-prone level were completed in 2005. Continued work on the draft Law of the RT on Religion and Religious Organizations was an important factor. It is expected to be approved in the near future as the Law on the Freedom of Conscience and Religious Organizations. It will alter our conceptual approach to religion, provide more details regarding the contacts between the state and religion, and rationalize the norms regulating such contacts. The year 2005 will go down in the history of religious life in Tajikistan not as a chain of 365 outstanding events, but as a year of deep-cutting and highly complicated processes, on the results of which the future of religious life and sociopolitical stability in the country depend.

28 See: Gosudarstvo i religia: poisk putey prodolzhenia dialoga. Materialy seminara, Irfon Publishers, Dushanbe, 2005.

INTERNATIONAL AFFAIRS

Rashid ABDULLO Independent political scientist (Dushanbe, Tajikistan)

he content and orientation of the country’s foreign policy and its economic relations with other countries of the world were defined by the need to successfully build Tajikistan’s post-Soviet T statehood and create prerequisites ensuring an upswing in the economy. These tasks had to be 250 REPUBLIC OF TAJIKISTAN International Affairs carried out in an atmosphere of intensified rivalry between Russia and the U.S. in Central Asia, and against the background of China’s and Iran’s growing interest in the region, which are striving to realize their goals in Central Asia as a whole and in Tajikistan in particular. The Tulip Revolution in Kyr- gyzstan and the events in Andijan had a significant impact on the development of the political situation in the region and consequently on official Dushanbe’s foreign policy moves. Of course, the elections to the Majlisi Oli (the parliament), as well as the transfer of the entire state border with Afghanistan to the republic’s jurisdiction had an impact on how these tasks were carried out. The main feature of the 2005 elections was that for the first time in Tajikistan’s post-Soviet history, deputies were being elected to a parliament already established in form and composition. What is more, for the first time they were to be a routine procedure organized under conditions not aggravated by an emergency. It was very important for the republic that the international community positively assessed the election campaign, the elections themselves, and their results. In order to reach the set goal, cooperation was established with CIS, U.N., and OSCE structures. For example, on 24 January, CIS Executive Secretary Vladimir Rushailo arrived in Dushanbe. The next day, he and the first 13 of the 70 Commonwealth observers who arrived with him opened their mission’s office in the republic’s capital. And on 28 January, the OSCE also opened its mission of observers engaged in monitoring the preparations for and course of the elections. The U.N. allotted approximately $250,000 through its structures in Tajikistan to prepare for the upcoming voting. As expected, the presidential People’s Democratic Party sustained a victory at the election to the lower house of parliament. The Communist Party and Islamic Revival Party of Tajikistan succeeded in obtaining seats for their representatives in parliament. The CIS observers found that the preparations and holding of the elections complied with the necessary standards. The OSCE mission of observers was of a diametrically opposite opinion. But the U.S.’s assessment had a greater influence on the ultimate legitimacy of the elections. On 28 February, the embassy of this country put out a press release which said that the elections should be evaluated as part of the positive process of creating prerequisites for the further development of democracy in Tajikistan. And on 3 March, in an interview with the newspaper Azia plius, United States Ambassador to the republic Richard Hoagland said that the elections were a very important step forward, designating success at the very first level. Rome was not built in one day, he said, that is, building democracy is a long process, and one or two elections are not enough to create democracy… Both the embassy’s press release and the ambassador’s statement showed the White House’s unequivocal support of the elections results. In this way, the rational policy of the country’s leadership, which also took into account the realities of Tajikistan and the interests of its Russian and Western partners, including ideological, allowed it to achieve the result both it and the republic needed in this issue. As for Tajikistan gaining jurisdiction over the state border with Afghanistan, it was important for official Dushanbe to complete the procedure as soon as possible, without complicating relations with Russia in the process. The set task was carried out, first, by transferring the border to the control of the Tajik border guards, and second, by ensuring participation of the Russian side in the protection of the state boundaries by creating an institution of RF advisors in the Tajik border troops, training the republic’s citizens in specialized Russian learning establishments, and developing cooperation of the corresponding structures within the framework of the CIS. Transfer of control over the Tajik-Afghan borders began as early as December 2004 in the eastern-most part of the border—its Khorog section. On 16 February, transfer of the Moscow section to the control of the Tajik border guards began, and on 22 May of the Panj section of the border with Afghanistan. On 14 June, actual transfer of the border to the jurisdiction of Tajikistan was successfully completed. And on 13 July, a ceremony was held to raise the Tajikistan flag in the western-most, Panj, section of the border with Afghanistan. On 19 October, with the participation of Head of the

251 CENTRAL EURASIA 2005 Analytical Annual

Russian Federation Border Service Vladimir Pronichev, an official ceremony was held to transfer the entire Tajik border with Afghanistan to the jurisdiction of Tajikistan’s border guards. The same day, the 54th session of the Council of CIS States Border Service Commanders was held in Dushanbe. With respect to the changes that occurred on the Tajik-Afghan border, Vladimir Pronichev noted that cooperation of the CIS countries must be intensified in ensuring both the safety of this border, and the safety of all the Commonwealth’s southern borders. When the Russian border guards began to leave, official Dushanbe asked the international community for financial and material-technical support of its efforts aimed at preventing a drop in the level and quality of defense of these borders. On 19 January, the first meeting of the Paris Pact was held in the republic’s capital. This is an international structure founded in 2003 at the G-8 summit in Paris with the aim of closing the channels for smuggling Afghani drugs. The members of the Pact are 55 countries, prestigious international organizations (the U.N., IMO, etc.), and financial institutions (the World Bank, Asian Development Bank, etc.). The participants in the meeting discussed the possibility of assisting Tajikistan to protect its borders with Afghanistan. In particular, emphasis was placed on the need for increasing technical assistance to the republic’s border troops immediately and for rendering assistance in training their qualified personnel in the near future. It was also noted that both of these tasks should be carried out within the framework of the bilateral and multilateral relations of the Pact’s member countries. On 16 February, a European Commission delegation, which arrived in Tajikistan, stated that within the framework of the EU program on border management and the struggle against drug trafficking, work will begin to determine efficient measures aimed at strengthening the border. In addition, the delegation reported that cooperation is already being established to create learning centers, train border guards, ensure corresponding control at airports, carry out legal and institutional reforms necessary for modernizing the border protection system, and so on. These and several other questions were discussed at the First International Conference of Do- nors held on 16 February. The Tajik side stated that the republic’s border service needed time and resources in order to develop a corresponding infrastructure, ensure technical equipping of the border, carry out reforms, train personnel, and so on. (The latter was assessed at $110 million.) On 7 September, the country’s president, Emomali Rakhmonov, received E.U. Special Repre- sentative for Central Asia Jan Kubish, who said that the European Union was willing to assist Tajikistan in reinforcing the border with Afghanistan. And on 27 September, the Second International Confer- ence of Donors opened in Dushanbe. Its participants discussed questions relating to the drawing up of a Partnership Agreement between the donor countries and the republic’s government and to determining the amount of aid needed to protect the border until 2007. A sum of approximately $30 million was decided on. This money is to be used to modernize existing and create new frontier posts along the entire boundary with Afghanistan.

When carrying out tasks to create prerequisites for promoting an upswing in the economy, the leadership’s efforts were aimed primarily at implementing large projects in power engineering (the country occupies second place in the CIS in terms of hydropower resources). With the help of Moscow and Tehran, Bishkek resolved the problems relating to completion of the Sangtuda and Rogun hydropower plants, which began being built in Soviet times. The republic’s leadership was initially interested in cooperating with the Russian Federation. But the conditions proposed by Russia, particularly regarding the Sangtuda Hydropower Plant, did not satisfy Tajikistan. In

252 REPUBLIC OF TAJIKISTAN International Affairs

September 2004, Iranian President Mohammad Khatami offered the republic $250 million (2.5-fold more than Russia) for building this hydropower plant. During his official visit to Dushanbe in Octo- ber 2005, Russian President Vladimir Putin offered Tajikistan almost 2 billion dollars to complete construction of both hydropower plants, as well as to modernize an active Tajik aluminum plant and build a new similar production unit. The republic’s leadership accepted Russia’s offer, but did not want to reject the Iranian alternative. First, Tehran was offering cash, and what is particularly important, its offer was dictated by Iran’s national interests. Second, Tajikistan’s experience with Russia in building relations indicated that Russia would only undertake something practical and positive with respect to Tajikistan when real competition to its interests appeared. And in this case, Dushanbe views Tehran as a competent financial partner able to compete with Moscow and in so doing prompt it to actually carry out its own proposals. As a result of corresponding foreign political moves by Tajikistan’s leadership, the idea came about to build two separate Sangtuda hydropower plants. This idea was discussed at the meeting held in Dushanbe on 12 January between Tajik Energy Minister Jurabek Nurmukhammadov, Iranian En- ergy Minister Habibollah Bitaraf, and Head of Russia’s RAO Unified Energy Systems Anatoli Chu- bais. The sides signed three documents, in compliance with which the Russian side was obliged to invest funds in the construction of Sangtuda-1 Hydropower Plant, costing $400-500 million, and Iran in the construction of Sangtuda-2 Hydropower Plant, costing $220 million. On the Russian side, things stood as follows. On 15 April, Anatoli Chubais participated in the official ceremony to restart construction of Sangtuda-1 Hydropower Plant. After the meeting with Tajik President Emomali Rakhmonov, he told journalists that the last (fourth) block of the hydropower plant would go into operation on 19 April, 2009. On 28 June, a regular meeting of the Tajik-Russian Intergovernmental Commission on Trade and Economic Cooperation was held in Dushanbe. The sides, headed by Tajik Prime Minister Akil Akilov and Head of Russia’s Emergencies Ministry Sergei Shoigu, discussed (among other things) the participation of Russian companies in building Sangtuda-1 Hydropower Plant and the Rogun Hydropower Plant. In this respect, Sergei Shoigu expressed the concerns of Russia’s potential investors about investing funds in Tajikistan’s economic projects, although they still have a desire to work on this market. On 8 September, Tajik President Emomali Rakhmonov and head of the RusAl Company Oleg Deripaska discussed plans for joint work to restart construction of the Rogun Hydropower Plant. On 26 September, with the participation of the head of Tajikistan, Emomali Rakhmonov, and Russian Vice Premier Viktor Khristenko, an official ceremony for reviving construction of the plant was held in Rogun. On 6 October, talks were held in the Kremlin between Tajik President Emomali Rakhmonov and Russian President Vladimir Putin. They discussed a broad range of questions relating to the development of bilateral relations. Emomali Rakhmonov placed special emphasis on problems relating to the implementation of strategic economic projects, under which agreements were reached during meetings of the heads of these states one year earlier in Dushanbe. On 14 December, Chairman of the RF State Duma Boris Gryzlov paid a two-day visit to the republic. After his meeting with Emomali Rakhmonov, he told journalists that Tajikistan was a country in which funds could be invested. These words were in response to the opposite statement made by Sergei Shoigu on 28 June. The Tajik side was just as active in the Iranian vector. For example, on 31 May, Emomali Ra- khmonov and Iranian Deputy Energy Minister Reza Ardakanian discussed the further development of cooperation in power engineering. Then on 8-11 June, Tajik Energy Minister Jurabek Nurmukham- madov discussed questions with his Iranian colleague Habibollah Bitaraf in Tehran relating to implementation of the Sangtuda-2 project. The sides signed a Memorandum on Mutual Understanding. In

253 CENTRAL EURASIA 2005 Analytical Annual particular, Iran confirmed that it would allot $220 million dollars in credit ($180 million) for ten years at a 5% interest rate for implementing the project. On 15 June, Emomali Rakhmonov held talks with manager of Iran’s Central Bank Ebrahim Sheibani, who confirmed his willingness to invest in the Sangtuda-2 project. And on 13 July, a session of the Tajik-Iranian Intergovernmental Commission on Trade and Economic Cooperation was held in Dushanbe. During its work, questions were also discussed regarding implementation of the Sangtuda-2 project. In particular, cochairman of the commission, Iranian representative M. Shariat- madari, confirmed that his country would grant a loan of $180 million for building Sangtuda-2 Hy- dropower Plant. During his visit to Iran on 24-30 December, Chairman of the Tajik Lower House of Parliament Saidullo Khairulloev met with his Iranian colleague Guliam Ali Khaddad-Adel, new Iranian Presi- dent Mahmoud Ahmadinejad, and the country’s foreign minister, Manuchehr Muttaki. During these meetings, official Tehran’s desire to further develop economic cooperation, particularly in power engineering, was confirmed. In 2005, President Emomali Rakhmonov participated in several international forums, during which he deliberately lobbied important economic projects for Tajikistan. For example, on 22-23 April, the head of Tajikistan participated in the Asian-African summit held in Jakarta, where he met with Iranian Vice President Mohammad Reza Aref and discussed with him Iran’s participation in building Sangtuda-2 Hydropower Plant and the Anzob Tunnel. Emomali Rakhmonov discussed trade development and the prospects for exporting electric power from Tajikistan to Pakistan with his Pakistani colleague Pervez Musharraf. On 22-25 March, President Emomali Rakhmonov paid an official visit to South Korea, where he discussed the development of bilateral trade and economic cooperation, particularly in power engineering, with its president, and also participated in an international economic forum. On 26 May, Tajikistan’s energy minister participated in a session of the CIS Energy Council, at which the prospects and strategy for developing cooperation in this sphere until 2020 were discussed. On 16-17 June, an international banking conference was held in Dushanbe. In his introduction, the Tajik president emphasized that the republic needs foreign investments in the national economy. Along with this, he announced that the country’s government is removing all restrictions on the activity of foreign banks in Tajikistan. The head of EBRD, who participated in the forum, held separate talks with the head of state and Prime Minister Akil Akilov. On 21 June, Emomali Rakhmonov visited Moscow, where he participated in the EurAsEC summit. What is more, during his meeting with Vladimir Putin, he discussed the implementation of earlier agreements, including in energy projects. When speaking at the summit, Emomali Rakhmonov called the construction of the Sangtuda hydropower plants with Russian and Iranian investments a good example of cooperation. When speaking at the U.N. summit in New York on 14 September, Emomali Rakhmonov called on international donors to double aid to his republic and create a mechanism which would help to alleviate the debt burden of such countries as Tajikistan. He suggested using a so-called “writing off debts in exchange for sustainable development” mechanism for his republic. On 27 September, the CIS prime ministers gathered in Dushanbe. When he met with them, Tajik President Emomali Rakhmonov called for intensification of economic relations among the Common- wealth countries in the bilateral and multilateral formats. At the same time, on 27 September, a session of the EurAsEC Intergovernmental Council was held in Dushanbe. Its participants signed agreements on a procedure for creating a common oil and gas market, protecting investments, and more, and approved the Commonwealth’s budget for 2006. On 10 October, experts of the SCO countries met in Dushanbe to discuss cooperation in the economy, trade, and banking. And on 11-12 October, the ministers of economics of these countries

254 REPUBLIC OF TAJIKISTAN International Affairs discussed a range of questions relating to the development of trade and economic ties. This discussion was largely motivated by the fact that China allotted $900 million to the Central Asian countries for resolving their economic problems. In particular, Tajikistan presented a list of facilities in need of rehabilitation. On 7-8 December, Emomali Rakhmonov participated in the Third (Special) Summit of the Organ- ization of the Islamic Conference (OIC) held in Mecca. In his speech, he called on the OIC countries to invest in the republic’s energy projects. He held unofficial bilateral talks, mainly on economic topics with Pakistan President Pervez Musharraf, Iranian President Mahmoud Ahmadinejad, Afghanistan Pres- ident Hamid Karzai, King of Bahrain Sheikh Hamad bin Isa, and President of the Islamic Bank of Devel- opment Ahmed Muhammad Ali. The new Iranian president emphasized the succession of his country’s policy in rendering assistance to implementing the planned economic projects in Tajikistan. On 10 December, Emomali Rakhmonov met with the representatives of international financial institutions—the World Bank (WB), Asian Development Bank (ADB), European Bank of Reconstruc- tion and Development (EBRD), Islamic Development Bank (IDB), as well as with the heads of the largest companies of Russia, the U.S., and other countries—Oleg Deripaska (RusAl), Anatoli Koles- nichenko (deputy head of Russia’s RAO UES), John Woodham (Nur Energoservis), and others, which are directly involved in implementing Tajikistan’s strategy of socioeconomic development. The meeting was devoted to the building of hydropower plants and power transmission lines in Tajikistan.

Of course, official Dushanbe also paid special attention to problems of the country’s security. The events in Kyrgyzstan and Andijan, as well as their consequences, have given Tajikistan strong motivation for developing cooperation with other countries on security issues, both in the general political, and in more specialized aspects. Two vectors of this development were designated: with CIS countries and China, on the one hand, and with Western states, on the other. On 2-6 April, command-post exercises “Rubezh-2005” were held in Tajikistan with the participation of subunits of the Collective Security Treaty Organization’s (CSTO) member states. They took place almost immediately following the Tulip Revolution in Kyrgyzstan, which made the problem of maintaining stability in the region more urgent. Against the background of these events and the exercises carried out, Tajik President Emomali Rakhmonov and Tajik Defense Minister Sherali Khairul- loev met with Russian Defense Minister Sergei Ivanov. The head of state also met with CSTO Secre- tary General Nikolai Bordiuzha. The main topic of these meetings were issues relating to maintaining regional security in light of the tempestuously developing political events in Central Asia as a whole, and in Kyrgyzstan in particular. The sides agreed on the need to create conditions for the efficient functioning of Russia’s military base (No. 4) in Tajikistan. And at the meeting held on 6 April in Sochi, Tajik President Emomali Rakhmonov and Russian President Vladimir Putin discussed the problem of ensuring security in Central Asia in light of the Kyrgyz events. Between 19 and 23 April, the republic’s Defense Minister Sherali Khairulloev paid a visit to Iran, where he held talks with his colleague Admiral Ali Shamkhani and Iranian President Said Mo- hammad Khatami. The sides signed a Memorandum on the Development of Bilateral Relations in the Military Sphere. On 24 June, a session of the Council of Defense Ministers of the CIS countries was held in Dushanbe. It took place after the events in Andijan and against the background of an abrupt deterioration in relations between Uzbekistan and the United States and West European countries, which naturally could not help but have a detrimental effect on the discussions held. In his speech, Tajik

255 CENTRAL EURASIA 2005 Analytical Annual

President Emomali Rakhmonov expressed a desire to double the quota of Tajik cadets and students at Russian military academies. On 5 July, Emomali Rakhmonov took part in the SCO summit in Astana. The events in Kyr- gyzstan and Andijan made a very significant imprint on the stance of its participants, in particular regarding the further presence of American military bases in Central Asia. On 21 July, Emomali Rakhmonov held talks in Dushanbe with Chinese Vice Premier Wu Yi, during which they discussed the rehabilitation and construction of roads in the republic, as well as the modernization and development of its telecommunication network. It is obvious that these projects have not only an economic aspect. It should be noted that due to the U.S. military presence in the region, particularly after the events in Kyrgyzstan and Uzbekistan, the Chinese leadership began intensifying its military-political and economic contacts with the Central Asian countries, justifiably believing that an active policy in this vector is a very important condition for ensuring China’s own security. What is more, Tajik Defense Minister Sherali Khairulloev, who came to the PRC as an observer of the joint Chinese-Russian exercises, met on 23 August with his Chinese colleague Cao Gangchuan and discussed the further development of bilateral cooperation with him. And on 13 September, General Cao Gangchuan made a return visit to Tajikistan, where he stated that the purpose of his visit was to discuss ways to promote further development of bilateral military cooperation. He also said that China intended to increase its military-technical aid to Tajikistan. The PRC defense minister also met with Chairman of the Tajik Upper House of Parliament Makhmadsaid Ubaidulloev and Prime Minister Akil Akilov. The security of any Central Asian state largely depends on the nature of its relations with the U.S. So the republics of the region have always tried to maintain good relations with Washington. But the events in Kyrgyzstan and in Uzbek Andijan, as well as the attempts by the United States and West European countries to put severe pressure on official Tashkent have worsened these relations. But it turned out that the U.S. and other Western countries were more interested than the Central Asian countries themselves in improving bi- and multilateral relations. For example, officials from the U.S. and other Western countries have been making frequent visits to the republics of the regions, including to Tajikistan. Their main purpose was to change the situation, which was not developing in their favor. In particular, on 15 April, Commander of Combined Forces Command in Afghanistan Lieuten- ant General David Barno visited Tajikistan. Theoretically his talks with Emomali Rakhmonov were on the security problems in the region, but in fact the general was most likely trying to sound out official Dushanbe’s attitude toward Washington. After the U.S.’s position in the region was given a severe jolt, the Americans were asked at the SCO summit to set deadlines for the presence of their bases in Central Asia, with respect to which the Uzbekistan leadership raised the question of curtailing the activity of the U.S. base in Khanabad. On 26 July, U.S. Defense Minister Donald Rumsfeld paid a one-day visit to Tajikistan. He expressed his gratitude to the republic’s leadership for cooperating with the U.S. in the military sphere and promised to increase assistance in fighting terrorism, drug trafficking, and so one. Then, on 24 August, General John Abizaid, Commander of the U.S. Central Command, visited Dushanbe to discuss bilateral cooperation in the economy, politics, and defense with Tajik President Emomali Rakhmonov. Finally, on 13 October, U.S. State Secretary Condoleezza Rice visited the republic. In his conversation with her, Tajik President Emomali Rakhmonov emphasized that Tajikistan was and still is the U.S.’s partner in the fight against international terrorism, extremism, and drug trafficking. In turn, Condoleezza Rice said that Tajikistan had made great strides toward democracy. This statement clearly showed the White House’s support of Emomali Rakhmonov and, consequently, of political stability in the country. What is more, with respect to Western countries, close political and military relations are maintained between Tajikistan and France. French Defense Minister Michele Alliot-Marie was a frequent

256 REPUBLIC OF TAJIKISTAN International Affairs visitor to Tajikistan. At a meeting on 21 July with President Emomali Rakhmonov, she, in addition to other topics, discussed with him the question of deploying several Mirage bombers in the country on a temporary basis (in order to support the preparations for and holding of the general election in Af- ghanistan), as well as an additional contingent of 400 servicemen. And on 11 October, talks were held in Paris between Emomali Rakhmonov and French President Jacques Chirac, who stated his country’s intention to continue and expand its military cooperation with Tajikistan in the military sphere. Emomali Rakhmonov and the French defense minister also discussed problems of ensuring regional security. Tajikistan’s relations with the North Atlantic Alliance also underwent a certain amount of development. On 16 December, Emomali Rakhmonov held talks with NATO Secretary General’s Spe- cial Representative for Central Asia and the Southern Caucasus Robert Simmons. The sides discussed questions relating to the Alliance’s activity in Central Asia, including in Tajikistan, with respect to strengthening ties under the Partnership for Peace program. Summing up Tajikistan’s foreign policy activity in 2005, it should be stressed again that it was successful, that is, it fully correlated to enhancing Tajik statehood, creating conditions for the republic’s economic development, and improving its international image, which all in all promoted strengthening of the country’s security.

257 CENTRAL EURASIA 2005 Analytical Annual

TURKMENISTAN

GENERAL OVERVIEW

Azhdar KURTOV President, Moscow Public Law Research Center (Moscow, Russia)

urkmenistan is a unique state not only in Central Asia, but also in the whole post-Soviet space. At the present stage of development, its uniqueness depends on two main factors. First, on its T huge hydrocarbon reserves. In per capita terms, they are comparable to those of the Arab states of the Persian Gulf. And second, on the political regime of personal power that has taken shape in the republic under President Saparmurat Niyazov and whose essential characteristics enable us to rank it among the regimes of the totalitarian type. None of the other post-Soviet regimes, which are various combinations of authoritarian government, have reached such a degree of absolute power and self- sufficient will of the head of state as one finds in Turkmenistan. In our opinion, the main feature that aligns this regime with totalitarianism is not the poor development of private enterprise, the government’s constant interference in the business process, the one- party system with a single political organization (the Democratic Party of Turkmenistan) or the use of repression against any manifestations of disagreement with the president’s line. What is totalitarian here is, first and foremost, the ideological practice of imposing on society a single system of views formulated in Niyazov’s works, including his book Rukhnama (Book of the Soul). The Turkmen state system thereby seeks to establish total control over the life of society in general and of each individual in particular.1 This is a special kind of ideology, a set of ideas substantiating and legitimizing the incumbent president’s right to pursue his own policy. The ideology proposed by S. Niyazov lays claim to coverage of all spheres of life, and also to being the absolute embodiment of ultimate truth, which is why it is thrust upon the population as compulsory for all. Niyazov’s works take pride of place in school textbooks and higher education curricula, and even enrollment at colleges and universities largely depends on personal interviews with candidates for admission on the subject of Rukhnama. The monop-

1 It is no accident that the adjective “totalitario” means “comprising the whole.” 258 TURKMENISTAN General Overview oly on political and economic power is supplemented with a monopoly on information circulating in the country. Characteristically, S. Niyazov interprets democracy not as implementation of the people’s will, but as concern for the public good in the understanding of “Turkmenbashi,” the sole leader of the nation (“serdar”). In recent years, the United Nations has adopted a number of resolutions condemning the human rights situation in Turkmenistan. In November 2005, yet another such resolution was approved by the Third Committee of the U.N. General Assembly, which deals with social affairs. Seventy U.N. members voted in favor of that document, 38 against, and 58 abstained.2 Nevertheless, Niyazov’s rule cannot be characterized as sheer willfulness, a description often given to it by the Turkmen opposition outside the republic. The president is able to make skilful use of the country’s natural resources, just as to frame his foreign policy so that it would not jeopardize his personal power but would, on the contrary, serve as an additional resource for strengthening this power. Turkmenistan entered the year 2005 without any significant economic or political difficulties. According to the country’s official statistics, GDP in 2004 grew by 21%, with production totaling $19 billion. The sharp increase in world prices for hydrocarbons was a great boon to the national economy. This was coupled with an increase in oil and gas production in the republic: in 2004, it produced 10.1 million tons of oil (an all-time high) and 58 billion cubic meters of natural gas. One should note, however, that both these figures are significantly lower than provided by the Strategy of Socioeconomic Transformations in Turkmenistan for the Period Until 2010. This strategy stipulates, among other things, a transition to market relations for enterprises in the oil and gas industry, with annual rates of growth in this industry averaging at least 18%. By 2005, oil production was to have reached 28 million tons, and natural gas production, 85 billion cubic meters. Despite this shortfall, the republic gained new opportunities to increase its exports. The volume of foreign trade exceeded $7 billion. Most of the export earnings came from supplies of natural gas; there was also a steady increase in exports of electric power to Iran, Turkey and Afghanistan. This was accompanied by the continued construction of numerous facilities, including the transportation infrastructure (roads and railroads within the republic), irrigation facilities (dams, canals, water reser- voirs), industrial enterprises, housing and administrative-cultural buildings. There was a buildup of capacity for the production of oil and gas, and also for their processing, including at two refineries. Of essential importance was the phased change in pricing policy for natural gas, the country’s main export product. Over the past year, natural gas prices rose from $44 to $65 per 1,000 cubic meters.3 This was achieved through the efforts of the country’s president and diplomats at numerous meetings with representatives of foreign states and companies. In our opinion, with this aim in view the republic’s leadership successfully used, among other things, the factor of projects for the construction of new pipelines from Turkmenistan to Afghanistan and China. A point to note is that S. Niyazov himself left the republic only on one occasion: to attend the Moscow celebrations of the 60th anniversary of the Victory in the Great Patriotic War of 1941-1945. All other negotiations he preferred to conduct in Ashghabad in an attempt to demonstrate his dominant and independent position in international relations. Another important indicator of this kind was Turkmenistan’s application for a change of its status in the CIS (from full to associated membership). The difficulties caused by the country’s inland location and the lack of real alternative options for the delivery of hydrocarbon materials to potential buyers are being gradually overcome, notably

2 Out of 12 CIS member states, the Niyazov regime was condemned only by Moldova. Russia abstained and Ukraine avoided the voting. 3 The latter price was only announced at the end of the year as taking effect for gas supplies to Russia from 1 Janu- ary, 2006. 259 CENTRAL EURASIA 2005 Analytical Annual owing to the development of the petrochemical industry. Gasoline and lubricating oils produced from a ton of Turkmen crude oil can be sold at a much higher price than the crude oil itself (which sells for about $400 per ton). The same is true of natural gas: a ton of polypropylene costs $1,200, and even a ton of liquefied gas, in contrast to natural gas, costs around $500. Turkmenistan has 52 trading partners for exports and 82 for imports. Natural gas constitutes over 45% of Turkmen exports. In 2005, three-quarters of it went to Ukraine, 10% to Iran and over 7% to Russia. Among Ashghabad’s international contacts in the past year, special note should be taken of its strengthening economic ties with China. The growing export earnings from hydrocarbon materials and their derivatives (the trade surplus for 2005 exceeded $1.1 billion) enable the republic’s government to continue subsidizing the social sphere. The state annually supplies the population free of charge with 4 billion cubic meters of gas and 2 billion kWh of electricity. Utility payments and public transport fares are very low. New apartments are purchased by city dwellers on credit (repayable over 15 years). Last year the country harvested a bumper crop of grain: 3.212 million tons. Although this figure is less than the projected 3.5 million tons, it can fully meet domestic demand. The cotton crop also fell short of the target figure of 2 million tons. The sheep population is 19.9 million, and the cow population, 2.2 million. S. Niyazov claims that investments in the republic’s economy in the years of independence have totaled $65 billion, and that $39 billion of these have already been utilized. Today the country has 2.4 million hectares of irrigated cropland, and by 2009 the government is planning to increase this figure to 4 million hectares (upon the completion of the Turkmen Lake, whose construction costs, according to official data, are to amount to $15 billion). It is also planned to introduce drip irrigation in agriculture. In analyzing all these achievements, we should make allowance for the above-mentioned government monopoly on information. There are big doubts about official statistical data. The republic’s authorities deliberately understate the corresponding indicators for the Soviet period and overstate current results. Thus, at the 16th Session of Khalk Maslakhaty (People’s Council) in October 2005, Niyazov assured the gathering that annual per capita income in the republic in the days of the U.S.S.R. was only $7, whereas today it has risen to $7,500. However, both these figures are inconsistent with the facts, and this is confirmed, in particular, by authoritative international organizations. Moreover, Niyazov pays no attention to the obvious inconsistencies in the data he himself cites. In the same speech, the head of state noted that in 1991 (the last year of the USSR’s existence) the republic produced 2.5 million tons of oil (he preferred not to mention the roughly 80 billion cubic meters of natural gas produced at that time, because this figure has not been achieved to date). Elementary calculations show that annual income at that time could not have amounted to $7 per capita. The depth of market transformations is insignificant as well. Thus, only 11,140 persons are employed in the private sector. Of these, only 4,158 persons have their own enterprises. Positive changes in the political sphere are even less pronounced. Legislative reforms, including the adoption of a new wording of the country’s Constitution, have not led to any fundamental changes either in the structure or in the content of the existing model of government. However, S. Niyazov once again assured the public that the presidential election in the country would eventually take place on a competitive basis. But the central event of the past year—the 16th Session of Khalk Maslakhaty, the republic’s supreme representative body—showed that practical policy is still in the hands of a single person, whereas all other bodies are necessary for its “warm approval by the whole people.” Regular personnel reshuffles remain standard practice. Nevertheless, it is obvious that Niyazov (regardless of his repressive methods) has been unable to curb corruption among officials to any serious degree. In 2005, for example, a number of major abuses were exposed within the system of administration of the fuel and energy complex.

260 TURKMENISTAN Politics

As regards religion, the authorities’ attitude to it is well illustrated by a decree adopted at the 16th Session of Khalk Maslakhaty On Perpetuating the Turkmenbashi Mosque of Spirituality as the Basis of the National Spirit and on Providing It with Permanent Government Support. This mosque—the largest one in Central Asia—was built not in the capital or some other relatively large city or in a place famed for some noteworthy event in the history of Islam. It appeared in Niyazov’s home village of Kipchak. The very name of the mosque and some elements of its interior decoration (quotations from Niyazov’s book Rukhnama displayed on its walls4 ) are clearly at variance with traditional Islamic doctrine: instead of embodying the religious cult essence of this edifice, they eulogize the personality of the head of state. In the above-mentioned decree, government interference in the sphere of religion may be found, in particular, in the provisions of Clause 4, under which the government is to approve the structure and number of staff for this mosque, and also the monthly salary of its chief imam. To sum up, one can predict that Turkmenistan’s leadership will continue on its present course without aiming at any fundamental reforms in the economic or political, let alone the ideological sphere.

4 It is believed in Turkmenistan that criticism of these innovations by the former chief mufti of the republic was the reason for his removal from office and criminal prosecution.

POLITICS

Azhdar KURTOV President, Moscow Public Law Research Center (Moscow, Russia)

n his New Year Address to the Nation, Turkmenistan President Niyazov named a 20 percent increase in the country’s GDP and an increase in its population by 300,000 as the republic’s main I goals for the year 2005. The year was ushered in by a presidential decree which increased wages and salaries paid from the budget by 50 percent. The president criticized the state of affairs in agriculture and, according to the recently established tradition, found and punished the culprits. Two deputy premiers—Atamyra- dov responsible for agriculture and Redzhepdurdy Ataev accused of financial irregularities connected with housing construction carried out by foreign contractors—lost their jobs. The latter had allegedly overpriced the job to be done and overpaid $4.5m of budget money. This time again though, the president’s authoritarian methods of frequently replacing bureaucrats did nothing to uproot the negative phenomena in governance. On 9 January, seven constituencies came to the polls once more to elect Mejlis (parliament) deputies: earlier, on 19 December, 2004, national election day, the authorities, for the first time during the years of independence, departed from the well-oiled voting mechanism. While in the 1990s, election campaigns were mostly organized according to the Soviet pattern with one (carefully select-

261 CENTRAL EURASIA 2005 Analytical Annual ed) candidate running for one seat, on 19 December, 2004, competitive elections in seven constituencies failed to reveal the winners, which made new elections necessary. According to the Central Elec- tion Commission, 72.24 percent of the total population came to the polls nationwide; the results were announced the next day. There were 131 candidates competing for 50 parliamentary seats, 23 of them were women. Since political pluralism and a multi-party system are practically unknown in the republic, while the parliament has no significant role to play, all election campaigns are mostly rituals borrowed from the So- viet past. Seventeen deputies of the previous Mejlis retained their seats in the newly elected Mejlis; and 8 women deputies comprised 16 percent of the total number of deputies. The Mejlis of the third convocation opened its first session on 1 February and formed all five committees: on human rights and freedoms; on science, education, and culture; on economics and social policies; on international and inter-parliamentary ties; and on working with the gengeshes.1 Ovezgeldy Ataev was elected speaker and a committee head. Speaking at the opening session, Pres- ident Niyazov touched upon several sensitive issues. He rejected the idea of imparting controlling functions to the parliament because, said he: “There is no need to do so,” as well as the idea of electing the parliament on a party basis (at least until 2020) and creating party factions in it. Saparmurat Niyazov admitted that in the future (approximately in 2008-2010), the number of seats might be increased to 120. At its first session, the Mejlis passed a decision On Declaring 2005 the Year of the Holy Book Rukhnama2 by the First and Eternal President of Turkmenistan Saparmurat Turkmen- bashi.3 By another decision, the Museum of Fine Arts in Ashghabad received the name of Sapar- murat Turkmenbashi. Having fulfilled these purely symbolic duties, the session closed the next day, 2 February. Later, the capital witnessed a wide-scale and pompous ceremony to present a new collection of the president’s poetry, during which the audience joined forces in lauding the author’s varied and profound talents. Late in February, the president underwent an operation on his left eye performed by a group of German doctors “to restore eyesight that degenerated because of a disease of the left eye.” On 7 April, speaking at a Cabinet sitting, the president outlined his political plans for the next four years, while his variant of “society’s improvement” was introduced into the agenda of the 16th Session of Khalk Maslakhaty (the decree on its next convocation was signed on the same day). Niyazov pointed out that the nation “was prepared to make another step toward the spirit of the times accepted by the world as a fair world order that suits the interests, mentality, and tradition of the Turkmen nation.” This promising introduction boiled down, however, to mere relatively new rules for electing representatives of the power bodies. The head of state once more touched upon the continuity of presidential power. He suggested, in particular, that the elections to khalk maslakhaty of the etraps (districts) should be carried out in late 2006-early 2007. A year later, khalk maslakhaty of the velaiats (regions) would be elected, while khiakims (heads) of the etraps and velaiats would be chosen from among the corresponding deputies. In 2008, elections to the Mejlis are planned; in 2009, the republican Khalk Maslakhaty is expected to nominate 3 or 4 presidential candidates; the election will take place in the same year. This will complete the process of creating a new vertical of power resting, according to the president, “on a democratic basis.” In fact, the plan mainly changed the outward

1 Gengeshes are the grass-roots representative self-administration structures in Turkmenistan. 2 Rukhnama—a book allegedly written by S. Niyazov that contains his ideas about the history of Turkmens, the republic’s sociopolitical order and the ideology of Turkmen society. Today it consists of two independent volumes. The book was officially proclaimed holy to be studied at all educational establishments of Turkmenistan. The authorities actively encourage its translation and publication all over the world. The book has become a cultic object to a much greater extent than works by Marx and Lenin under Soviet power. 3 In December 1999 Khalk Maslakhaty (the highest representative structure of Turkmenistan) passed a resolution On Powers of the First President of Turkmenistan Saparmurat Turkmenbashi under which, according to Point 1 of the enact- ing part, S. Niyazov acquired “exclusive right to perform the duties of the head of state without limiting their term.” 262 TURKMENISTAN Politics appearance of the system of power, and only in certain particulars, with nothing specific. It was a response to the criticism of the Turkmen regime heard from all sides and an attempt to convince the nation, completely in line with the Soviet tradition, that it is reaching “for new heights of progress and prosperity.” On 18 April, the Law on Amending and Changing the Family Code was published. It tightened the rules for entering into matrimony with foreigners and stateless persons. Under the old law, non- citizens who wanted to marry a citizen of Turkmenistan had to pay a large sum of money—under the new law, they also have to spend at least 12 months in the country. These new laws directly contradict the international norms of human rights. On the eve of the 60th Anniversary of the Victory in the Great Patriotic War, President Niyazov, as the Supreme Commander and General of the Army, attended the “Kuvvatly Vatan” tactical exercises and field firing, in which MiG-29 fighters, Su-25 assault bombers, Mi-24 and Mi-8 helicopters, tanks and armored personnel carriers, Shilka antiaircraft self-propelled guns, and S-60 surface-to-air missile systems were used. At the Cabinet sitting held on 20 May, the president returned once more to flagrant violations by the highest officials. He fired deputy premier Kurbanmuradov, who was his own deputy, and accused him of several crimes perpetrated when he supervised the Turkmengaz Concern and headed the Vneshe- konombank of Turkmenistan (in particular, he was accused of grand larceny, embezzlement of public property, and other financial frauds). On the whole, he was sued for $60.5m and 7.1 billion manats.4 Simultaneously, Chairman of the Republican Bread Association Atdaev was fired, accused of stealing state property and of bribes, and sued for 2 billion manats and $100,000. On 31 May, Chairman of the Board of Central Bank Mukhammedov was removed from his post for malfeasance; early in June, another high official khiakim (mayor) of Ashghabad, Redzhep- ov, lost his post; in August came the turn of the ministers responsible for the fuel and energy sector: Charyev, Chairman of the State Turkmenneftegaz Trade Corporation (accused of corruption in June) and Valiev, Chairman of the State Turkmenneft Concern. Auditing of the concern revealed gross violations: illegal profits, inflated figures of oil extraction, deficient oil deliveries to the Turkmenbashi Oil Refinery, etc. It turned out that Valiev (earlier awarded the title of Hero of Turkmenistan) openly practiced nepotism and bribe-taking (a foreign partner paid him $1,500 every month). The public prosecutor’s office confiscated over $9.5m and over 1 billion manats; 21 houses, 20 cars, and vast collections of gold coins and firearms. The overall damage to the state was estimated at $80m. The above was probably related to the changes in the Law on Hydrocarbon Reserves enacted on 22 August. Its new version clearly indicated which structure has the right to participate in legal relations in the oil and gas sphere. This was the Ministry of the Oil and Gas Industry and Mineral Re- sources. Part 2 of Art 23 of the document envisaged that production sharing agreements on the Turk- men side should be signed by the ministry “on a decision of the Chairman of the Cabinet of Ministers (Government) of Turkmenistan.” In other words, having lost confidence in his ministers, Saparmurat Niyazov decided to establish his personal control over this sphere and also instructed his subordinates to draft a program for restructuring the fuel and energy complex. In August, the president issued a decree on Banning the Use of Phonograms at Song and Music Events and on TV in Turkmenistan, because the phonograms “negatively affect the development of song and musical culture of the independence era.” In September, an exhibition center, the largest in Central Asia, was opened in Ashghabad. Built by Bouig, a French firm, it cost the country $55m in budget money. During the years of independence,

4 The Deutsche Welle radio reported that houses of Kurbanmuradov’s relatives in Ashghabad were razed to the ground in December. 263 CENTRAL EURASIA 2005 Analytical Annual

Turkmenistan has built thousands of facilities, which is undoubtedly a positive feature of the country’s development. On the other hand, it is also a negative phenomenon, because Ashghabad concentrates on prestigious buildings and other structures designed to impress with their size and sumptu- ousness. An open discussion would have revealed that the public preferred to abandon most of the projects in favor of more urgent tasks requiring large investments. On the day of commemoration of the victims of the 1948 earthquake, Niyazov signed several decrees which removed some executives from their posts, including the khiakims of two velaiats— Lepad and Mary—as well as the khiakims of the town of Mary and eleven etraps. In mid-October, another book by President Niyazov was presented to the public; it contained his poetry and prose. The event started another wide-scale campaign of lauding the head of state. On 24 October, the 16th session of Khalk Maslakhaty was opened in Ashghabad. This structure—a sort of a supra-parliament—is the country’s specific feature. There are no analogies in the world, probably because democratic states ruled by law do not need them. The Khalk Maslakhaty (People’s Council) is the highest representative legislature. Its legal status keeps it outside the division of power system. The body includes both elected and appointed members, including those from other branches of power. For that reason, the structure cannot be part of the checks-and-balances system. According to the constitutional law adopted in August 2003, its membership is 2,507, which is too large to make constructive discussion of laws possible. This is a purely decorative structure very much like the Supreme Soviet of the U.S.S.R., which passed all laws pre-prepared by the party and state mechanism unanimously and without much talk. The members of the Khalk Maslakhaty include the president, all 50 Mejlis deputies, Chairman of the Supreme Court, Public Prosecutor-General, all the ministers, the administration heads of all the velaiats, the khiakim of Ashghabad, the khiakims of all the administrative regional and district centers, and the heads of the district administrations. Most of the members were appointed by the president; the public is represented by the leaders of the Democratic Party, youth organizations, trade unions, the women’s union, leaders of other public organizations, and the elders of Turkmenistan. The elected deputies, one from each district, represent the people. This body normally meets once or twice every year for several days. Naturally enough, it cannot pass laws and govern the state, yet its powers are much broader than those of the Mejlis. For example, the Khalk Maslakhaty (by two-thirds of the total number), not the Mejlis, has the right to impeach the president. It had the right to disband the Mejlis and all the local representative bodies of power. A quorum requires two-thirds of the total; the decisions are passed by a show of hands. The structure is headed by a chairman who is elected for five years from among the citizens, “born in Turkmenistan, not younger than 55, who knows the state tongue, and who has been permanently living in the country, working in the highest bodies of state power and administration, who has already earned prestige, and who is a Khalk Maslakhaty member elected by two-thirds of the number of its members by a show of hands.” Saparmurat Niyazov was the obvious choice. Until the summer of 2003, when the Constitution was amended and the constitutional law on Khalk Maslakhaty was adopted, the importance of the Mejlis was determined by a very specific feature: if the head of state could no longer perform his duties, his powers were temporarily transferred, until the presidential election, to the Mejlis speaker. The constitutional amendments and the constitutional law changed this. The new structure became a permanent supra-parliament controlled by nobody but itself. If Niyazov decides to abandon the post of president, he will remain chairman of the Khalk Maslakhaty and thus will remain in control. The 16th session of Khalk Maslakhaty discussed the following: several draft laws related to the country’s governing structures; discussion of the draft decisions on Perpetuating the Pillar of Nation- al Spirit—the Mosque of Spirituality of Turkmenbashi and Ensuring It Constant State Support, and discussion of a decree on pardon. The public discussion between the Chairman of the Central Election

264 TURKMENISTAN Politics

Commission and the president was obviously staged. The president’s opponent suggested that the draft law on Election of the President of Turkmenistan should be removed from the agenda. He argued that the role of the president as the eternal leader of the nation is too outstanding. Niyazov tried to object, but the members unanimously refused to discuss the very idea of an election. In fact, the Khalk Maslakhaty did not discuss the new laws in any detail: during the two days of its session, the members demonstrated their unanimous support of Turkmenbashi’s initiatives. With mock modesty, the president merely pointed out that his new initiatives were designed to improve governance. He formulated the task of creating local khalk maslakhaty at the velaiat and etrap level. The number of the Mejlis deputies increased from 50 to 65, less than promised. Amendments to the Taxation Code were also on the agenda. The president’s suggestions were reasonable: five different taxes, some of them as high as 15 percent, were substituted by a single tax of 2 percent for individual commodity producers; the rate of medical insurance and pension contribution was also lowered to 2 percent. The Taxation Code, a large legal act of 222 articles, was adopted in the originally suggested version. The delegates also approved the president’s suggestion that 8,145 prisoners should be pardoned. Another decision was related to the mosque in the president’s native village of Kipchak. It received the status of a national object to be funded exclusively by the state. A decision was adopted designed to support those international organizations that opposed the spread of the weapons of mass destruction. The session also adopted an address to the nation. The final decision on Approving the Domestic and Foreign Policy of the President of the Neu- tral Turkmenian State, Chairman of the Khalk Maslakhaty of Turkmenistan Saparmurat Turkmenbashi was hailed enthusiastically; the president’s line was approved and supported. The Khalk Maslakhaty unanimously approved the impressive list of newly adopted laws: on Gengeshes, on Elections to the Gengeshes, on the Etrap and City Khalk Maslakhaty, on Elections of Members of Etrap and City Khalk Maslakhaty, on the Velaiat Khalk Maslakhaty, on Elections to Velaiat Khalk Maslakhaty, a constitutional law on changing and amending the Constitutional Law on the Khalk Maslakhaty of Turkmen- istan, laws on the Mejlis of Turkmenistan, on Elections to the Mejlis of Turkmenistan, the Constitu- tional Law on Changing and Amending the Constitution of Turkmenistan, the Taxation Code, and the Law on Protecting Health of the Citizens. President Niyazov then informed the session that $120m of budget money would be allocated for a new Khalk Maslakhaty building in Ashghabad. In conclusion, all the delegates received $500 each on behalf of the president. The scope of this article does not allow me to give a detailed analysis of these documents, yet I can say that from the formal point of view they are a certain step forward in the country’s legal system. Norms which contradicted world practice were removed from some of the laws; for example, the ethnic qualification obligatory for presidential candidates was removed from the Constitution. From the formal point of view, the introduction of representative bodies at the local level is also a positive feature, yet assessed from the political-legal viewpoint, it can be said that the new laws have not changed the nature of power in Turkmenistan: it has not become more democratic and has remained oriented toward the personal omnipotence of President Niyazov. In other words, the new acts did nothing but varnish the façade, leaving the skeleton of the political regime intact.5 The regime has no place for the division of power and a competitive democratic model of administration; it rejects freethinking, since the president is always supposed to be right. Several days after the session, on 31 October, President Niyazov fired several more top officials. While Minister of Education Saparlyev and Minister of Construction and Construction

5 Significantly, the Constitution received references to the acts of Saparmurat Turkmenbashi and more details related to the country’s neutrality. 265 CENTRAL EURASIA 2005 Analytical Annual

Materials Berdiev were merely removed from their posts, Minister of the Oil and Gas Industry and Mineral Resources, Deputy Premier Tachnazarov, not only lost his post, he was brought to court for criminal offences. On 2 November, another minister, head of the Turkmengaz Concern Ovezov, was also fired. At a special meeting of the heads of the oil and gas concerns, the Mejlis, and Central Bank, the president said: “By secretly selling gas they inflicted damage on the country in the amount of $300m… None of the heads employed in the oil and gas industry left their posts of their own free will. All of them were either imprisoned or fled the country. All of them profited from the loopholes in governance to commit grand larceny.” He went on to say that former chairman of the State Turkmenneft Concern Valiev “had embezzled $27m,” that “each contract had brought the company 10 percent in bribes. For example, Tachnazarov received $5m, and Ovezov $1m.” After stating that the country needs a new structure of the oil and gas complex, the head of state pointed out: “We should organize the industry so as to avoid stealing.” In May, President Niyazov began an anti-corruption war in the oil-and-gas sphere when Vice Premier Elly Kurbanmuradov, with eight years in the oil and gas industry behind him, was arrested at a Cabinet meeting. Accused of embezzling nearly $100m of budget money, he shared the fate of Charyev and Valiev: the maximum penalty, 25 years in prison. The meeting which gathered at the president’s office on 30 November was the first practical step toward reforms in the oil and gas complex. It was decided to improve some of the structures: the Competent Structure for Developing Hydrocarbon Resources made up of all heads of the substruc- tures belonging to the fuel and energy complex was removed from the government’s responsibility and transferred directly to the head of state. The Fund for the Development of the Oil-and-Gas Sector was to function according to the principles “of strict conformity and accountability,” while geological prospecting was also centralized. Two related facilities—the Turkmenbashi and Seydi oil refineries— received a common management structure. At its meeting on 6-7 December, the Mejlis unanimously (as always) passed the Law on the State Budget of Turkmenistan for 2006, which expected the budget to become non-deficit. Its incomes and spending will be balanced out at 81.3 trillion manats ($15.63 billion according to the official exchange rate). It is expected that the higher economic growth rates, higher prices for some types of export products, and investment activity will increase the country’s income. The oil-and-gas and energy and chemical sectors are expected to demonstrate the highest growth rates. For the first time, the budget envisages a reserve fund of 800 billion manats to be used for carrying out the decisions of the president and the government. The Mejlis also adopted a new version of the Law on Hydrocarbon Resources, and several other acts. In December, new people were appointed to administer the fuel and energy complex. The president removed Berdyev from his post of deputy chairman of the Cabinet of Ministers and minister of the oil and gas industry and mineral resources to appoint him as minister of economics and finance. Gurbanmurat Ataev, first deputy minister of oil and gas industry and temporary head of the State Turkmengaz Concern, was promoted to minister to replace Berdyev. Abilov, first deputy chairman of Central Bank, was made executive director of the State Fund for the Development of the Oil and Gas Industry and Mineral Resources and member of the Competent Structure. Later Niyazov abolished the State Turkmenneftegaz Corporation engaged in selling and buying oil, natural gas and gas products. The State Turkmengaz Concern inherited its gas export functions, while the Turkmenbashi complex of oil refineries obtained the right to export oil products and liquefied gas. Domestic consumption of oil products and control over their use inside the country was entrusted to the Main Turkmennefteprodukty Administration attached to the Ministry of the Oil and Gas Industry and Mineral Resources as its structural part.

266 TURKMENISTAN Economy

In mid-December, the country celebrated the 10th anniversary of the country’s neutrality, while on 21 December the nation marked with great pomp the 20th anniversary of Saparmurat Niyazov’s rule (twenty years ago he replaced Gapurov as First Secretary of the Communist Party of Turkmenistan).

ECONOMY

Igor PROKLOV Researcher, Near and Middle East Department, Institute of Oriental Studies, Russian Academy of Sciences (Moscow, Russian Federation)

n 2005, the country’s authorities continued to and income per capita, $7,500. Gross output in implement their economic development plans 2005 increased by almost 21% compared to 2004, I under a national program known as the Strat- amounting to 120.509 trillion manats (TMM).1 egy of Economic, Political and Cultural Devel- Production growth was recorded in virtually all opment of Turkmenistan for the Period Until sectors of the economy, with the highest growth 2020, adopted in 2003. The Strategy formulates rate in agriculture (20%), industry (about 20%), three priority tasks in the development of the transport and communications (19.4%), construc- national economy: achievement of the level of tion (17.5%), trade (26%) and the service sector the developed countries while maintaining the (23%). republic’s economic independence and security As of 1 January, 2006, according to official through rapid economic growth, implementation data, the country’s population was 6,746.5 thou- of new technologies and lines of production, and sand (an annual increase of 3%). Population an increase in labor productivity; steady growth growth was recorded both in the cities and in ru- of the gross domestic product per capita; and ral areas. The year was marked by a significant high investment activity with emphasis on pro- event in the life of Ashghabat, the country’s cap- duction facilities. ital: the birth of its 900 thousandth inhabitant. In assessing the results of the year at an annual meeting of Khalk Maslakhaty, President 1 The official exchange rate is 5,200 manats per U.S. Saparmurat Niyazov said, in particular, that the dollar. At the “black market” exchange rate, 1 dollar equals rate of economic growth had reached at least 20%, 22,000 manats. This will be discussed in greater detail below.

Industry

Total industrial production exceeded TMM 44.6 trillion, up almost 20% from 2004. In heavy industry, the growth rate was 22%. Rapid growth was achieved in oil refining (25%), gas production (29%), wool processing (45%), the confectionery industry (47%), production of nonalcoholic drinks 267 CENTRAL EURASIA 2005 Analytical Annual

(80%), and other industries. The highest growth rate was recorded in the cement industry (3.3 times), which was due to the commissioning of new production facilities in the settlement of Kelyata at the beginning of 2005. The growing scale of construction calls for a sharp increase in the manufacture of building materials. Apart from cement, industry in 2005 increased the production of nonmetallic building materials (by 22%), kaolin (by 10%), flat glass (by 5%), etc. High rates of development were observed in light industry, including textiles: the production of washed wool increased by 8%, cotton yarn by 14%, cotton fabrics by 7%, knitwear by 3%, sewn garments by 4%, leather goods by 34%, and footwear by 5%. This was largely due to the startup of such new enterprises as the textile mill in the Vekilbazar Etrap (District) and a cotton spinning mill in the Khalach Etrap. The construction of a plant for producing medical cotton and cosmetic cotton products was started in the city of Turkmenabat. Its projected annual capacity is 4,200 tons of high-quality medical cotton, 7.6 million boxes of cotton buds, 1.9 million sets of cotton pads, and 2.1 million pack- ages of cosmetic cotton. In the food industry, there was rapid growth in the production of such foodstuffs as canned meat (by 11%), flour (by 7%), etc.

Oil and Gas Complex

In 2005, Turkmenistan produced 63 billion cubic meters (Bcm) of gas and exported 45.2 Bcm. The annual rate of increase in gas production and exports was 8%. The country also produced 9.52 million tons of oil (somewhat less than in 2004), of which almost 6.9 million tons (2% more than in 2004) was refined, with an increase in the production of motor gasoline by 0.3%, diesel fuel by 2%, lubricating oils by 1%, and liquefied hydrocarbon gases by 10%. In view of the rise in world oil and oil product prices, the rate of increase in marketable output in the oil refining complex was high (25%). Power generation totaled 12,819.1 million kWh, or 7% more than in 2004. Owing to its sizeable energy resources, Turkmenistan together with Russia remains a key player in the regional energy market. Given the rapid rise in world energy prices, the Ashghabat authorities sought to make the most of the situation, and its main counterparties, primarily Kiev and Moscow, were obliged to resign themselves to this. Thus, the beginning of the year was marked by renewed tensions between the major consumers of Turkmen gas and the republic’s authorities over gas prices. At the end of 2004, Turkmenistan decided to raise the price of gas for Russia and Ukraine from $44 to $60. And when the parties failed to reach a compromise, Ashghabat shut off the gas valve (on 31 December) on the plea of repair work. Ukraine, which risked being left with a huge deficit in its gas balance in winter, capitulated on 3 Jan- uary, 2005. During a visit to Ashghabat, the head of Ukraine’s Naftogaz company, Yuri Boiko, signed a contract for the purchase of 31.5 Bcm of gas at $58 per 1,000 cubic meters. As for Russia’s Gazprom, whose contract with Turkmenneftegaz does not provide for an annual price review, insisted on compliance with this contract. From January to April, gas relations between Moscow and Ashghabat were stalemated: Gazprom tried to prove that the contract price of $44 per 1,000 cubic meters was not subject to review, while S. Niyazov refused to supply gas. The compromise finally achieved in the course of intensive talks was that the old price would be in effect until 31 December, 2006, but all payments for gas supplies would be made in “hard cash” (in the past, 50% of the gas was bartered for goods). Given that the price written into the contract of April 2003 was $44, with half of the total amount payable in cash and the other half in the products of Russian enterprises, it is evident that Russia has made certain concessions.

268 TURKMENISTAN Economy

Although Ukraine was able to negotiate a return to the old price ($44) from 1 July, 2005, it was obliged to repay its $500 million debt to Turkmenistan and, like Russia, to switch to full payment in cash (prior to 1 July, 50% was paid in goods). At the same time, the Turkmen authorities continue to look for alternative gas transportation routes (for the time being, the country pipes gas through virtually the only existing main pipeline, which runs north). In 2006, the government has authorized two consulting firms, DeGolyer & MacNaughton (USA) and Gaffney, Cline & Associates Ltd (Britain), to audit the country’s oil and gas reserves, with the exception of its southeastern regions, where such an audit has already been carried out. The findings of these independent companies will decide the future of the $3.3 billion project for a trans-Afghan pipeline from Turkmenistan to Pakistan. Turkmenistan maintains that its Dauletabad field holds 1.7 trillion cubic meters of natural gas, which makes it the fourth largest deposit in the world, whereas Pakistan and other potential project participants (Afghanistan and India) question these data. In 2005, the Asian Development Bank issued a final feasibility report on the construction of the Turkmenistan-Afghanistan-Pakistan pipeline. The feasibility study, prepared by the British company Penspen, was presented to the ministers of the oil and gas industry and mineral resources of Turkmen- istan, Afghanistan, Pakistan and India under an intergovernmental agreement signed in 2002 by the countries involved in this large-scale project. As noted in the press release issued by the Turkmen government, “this document is proof of the project’s economic feasibility, determining the basic technical parameters and markets for gas supply.” The government believes that the completion of this report will speed up the start of the project for the construction of a 1,680 km gas pipeline from the gas field to the village of Fazilika (India) on the border between Pakistan and India, with possible subsequent supplies to the Indian market. Under this project, the pipeline (pipe diameter—1,420 millime- ters, operating pressure—100 atmospheres) is to carry up to 33 Bcm of gas per year. The project also provides for the construction of six compressor stations. Its total cost is estimated at $3.3 billion.

Transport and Communications

In the opinion of the authorities, the development and quality of transport ensured stable operation of enterprises in all sectors of the economy. Overall growth in the transport sector was largely due to an increase in domestic road and rail traffic. Total freight transportation by all kinds of transport increased by 4% to 558.1 million tons, and passenger transportation, by 5% to 937.1 million people. About 86% of cargoes and 99% of passengers were carried by road transport. The recorded increase in rail transportation was due to an increase in local traffic. Overall, the country’s railways in 2005 carried 19,800 thousand tons of cargo and 4,940 thousand passengers (an increase of 9% and 11%, respectively). Air freight increased by 5% to 11.5 thousand tons owing to the development of international traffic. The country’s airlines carried a total of 1,828 thousand passengers (an increase of 13%); international passenger traffic increased by 1.5%, and local traffic (75% of the total number of passengers), by 17%. The leading place in oil and gas supplies belongs to pipeline transport. In 2005, the amount of oil and gas supplied to consumers through main pipelines increased by 5%. Special note here should be taken of the fact that S. Niyazov has long nurtured the idea of diversifying gas supplies by building new pipelines so as not to be dependent solely on the Central Asia-Center (CAC) pipeline running to Russia. We have already mentioned the projected trans-Afghan gas pipeline to be routed through the territory of Afghanistan to Pakistan and then on to India. In 2005, Ashghabat finally managed to reach an agreement with Islamabad and Delhi on cooperation in building this pipeline. However, despite the readiness of the Asian Development Bank to consider the question of project funding from a practical angle, the unstable political situation in Afghanistan, especially the military activities of the local warlords, remains a seri-

269 CENTRAL EURASIA 2005 Analytical Annual ous obstacle to its construction. The so-called trans-Asian gas pipeline (to China and Japan) with an estimated cost of about $10 million can hardly be regarded as a realistic prospect even for the distant future. In this context, there is every reason to believe that exports through the CAC pipeline will continue to be virtually the only source of foreign exchange earnings from gas. Another gas pipeline in operation runs from Korpezhe to Kurt Kui (Iran), with a maximum capacity of 13 Bcm of gas per year. As regards communication enterprises, they provided services for the amount of almost TMM 688 billion (up 34% from 2004). Sales of communication services to households increased by 48% to TMM 260.4 billion. The increase in revenue was mostly due to the wide use of electrical communications, whose contribution to total revenue in this sector amounted to 81.1% (an increase of 39.1%). Postal services also remained in demand, with a 13% increase in revenue. In addition, there was continued upgrading of telecommunications networks based on modern fiber-optic technologies and cellular communications.

Agriculture

The year was also marked by growth in agriculture. In particular, total agricultural production amounted to TMM 21.95 trillion (up 19.8% from 2004), and the development of the private sector led to an increase in its share of total production from 83% in 2004 to almost 86%. According to the National Institute of State Statistics and Information (Turkmenmillihasabat), there was a record crop of grain: over 3,100 thousand tons of winter wheat (9% more than in 2004). However, official statistics regarding these and a number of other indicators should be taken with a grain of salt. Independent analysts note the critical situation with the 2005 wheat crop. In an interview with Rossiiskaia gazeta (26 October), S. Niyazov said that “with a crop of 3,200 thousand tons of grain, we have virtually ensured our food self-sufficiency.” In actual fact, analysts put the crop at just over 800 thousand tons, or only a quarter of the official figure. In the end, disagreements with the main suppliers of grain (Iran, Ukraine and Kazakhstan) led to a disruption in deliveries, with resultant bread shortages in the republic. Renewed supplies from Kazakhstan could not remedy the situation within a short time, which caused social tensions in some parts of the country. The situation with the cotton crop was not much better. In summing up the results of the cotton harvest campaign, S. Niyazov admitted that the crop was smaller than in 2004: 500,000 tons, or only 25% of the target figure. As he put it, this would be enough to meet domestic demand, but not to ensure exports. One should note that the cotton harvest plan was not fulfilled for the third year running, largely because the farmers have no incentive to cultivate cotton in view of low procurement prices. Overall, according to official data, the production of raw cotton by all farms in the republic amounted to 737 thousand tons. Returning to the question of the validity of government statistics, let us emphasize that many indicators, especially at macro level, are actually dictated by S. Niyazov himself. This applies to information on cotton and wheat production and on GDP growth rates, which have for several years now been sustained at a fantastic level (about 20%), and also on income per capita. Apart from elementary attempts to embellish the actual state of affairs in the economy, it should be pointed out that macroeconomic parameters are computed not with the use of traditional methods, but at purchasing power parity (a rarely mentioned fact). Given the relatively low cost of living in the country, this a priori has a positive effect on the statistics of the gross national income and its components. Inciden- tally, the World Bank applies this approach (i.e., computations at purchasing power parity) in combi- nation with traditional computations in the system of national accounts, which make it possible to draw objective international comparisons based on a common denominator.

270 TURKMENISTAN Economy

At the same time, agricultural producers, especially in the private sector, managed to increase the production of fruits and vegetables. According to Turkmenmillihasabat, in January-November they gathered over 558 thou tons of vegetables (up 13% from the same period of 2004), 127.5 thou tons of fruits and berries (up 21%), 315.2 thou tons of grapes (up 16%), 225.5 thou tons of potatoes (up 8%), almost 90 thou tons of rice, and 67 thou tons of sugar beet (an increase of 1.6 times). Livestock farming was among the most dynamically developing sectors of the agroindustrial complex. An increase was recorded in livestock and poultry numbers and productivity, and also in livestock output. On 1 January, 2006, the country had 2,064.5 thou head of cattle (an increase of 2%), 16,598 thou sheep and goats (10%), 29.8 thou horses (2%), and 14,939 thou poultry (8%). The production of meat (live weight) by all the country’s farms reached 480.7 thou tons (an increase of 11%), milk—1,868.5 thou tons (11%), eggs—805.4 million (12%), wool—39.2 thou tons (9%), and hon- ey—842.2 tons (2%). A point to note is that output has been growing faster than livestock and poultry numbers, which is due to rising productivity.

Investment

Based on the results of the first 11 months of the year, investment in the development of production and the sociocultural sector totaled TMM 17,289.7 billion (11% more than in the same period of 2004). The volume of construction, installation and other capital works and services performed in that period amounted to TMM 8,097 billion (an increase of 17.4%), including TMM 7,125.4 billion worth of contract works and services (88% of the total). An important role in implementing the state’s investment program is played by foreign companies. On 1 December, 2005, 86 foreign companies from 25 countries were involved in implementing investment projects. Under contracts concluded with the republic’s ministries and agencies, they continued the construction of 254 facilities (compared to 223 facilities on 1 December, 2004) with a total value of over $5,224.5 million (almost 12% above the level of a year ago). Of these, 39 projects with a total contract value of $963 million were completed. The most active contractors were those of Turkey, Ukraine, France, the British Virgin Islands, Germany, Ireland, Austria and other countries. In the sphere of currency regulation, there were no changes in 2005. The ban on free conversion of foreign currency remained in place, and tight foreign exchange controls inevitably resulted in a shadow foreign exchange market. In particular, the value of the dollar in the black market is four times higher than the official exchange rate (5,200 manats per dollar) and ranges from 22,000 to 25,000 manats. At the official exchange rate, it is only possible to sell foreign currency to the state, but not to purchase it. Table Basic Statistical Data for 2005

GDP TMM 120.509 trillion

GDP growth compared to 2004 About 20%

Per capita income $7,500

Population 6,746.5 thousand

Budget TMM 76,249.1 billion

Total investment in production and the sociocultural sector TMM 17,289.7 billion

271 CENTRAL EURASIA 2005 Analytical Annual

Table (continued)

Total industrial production TMM 44.6 trillion

Gas production 63 billion cubic meters

Oil production 9,522.1 thousand tons

Gas exports 45.2 billion cubic meters

Power generation 12,819.1 million kWh

Total agricultural production TMM 21.95 trillion

Cotton production 737 thousand tons

Wheat official data 3,200. thousand tons unofficial data 800 thousand tons

Potatoes 225.5 thousand tons

Rice 90 thousand tons

Cattle population 2,064.5 thousand head

Passenger traffic 937.1 million people

Freight traffic 558.1 million tons

Retail trade turnover TMM 43.3 trillion

Foreign trade turnover (January-November) $7,569.7 million

Exports (January-November) $4,416.4 million

Imports (January-November) $3,153.3 million

Domestic Trade

The retail turnover amounted to TMM 43.3 trillion, up 26.1% from 2004. The consumer market developed against the background of a rise in effective demand, as indicated by retail sales per capita: TMM 6.5 million (up 22% from 2004). At the same time, these data are naturally open to question, because even official statistics show an inflation rate of 8%, whereas in the view of experts from the EBRD office in Ashghabat the figure is over 15%. That is why it is probably too early to speak of an increase in effective demand.

Foreign Trade

In January-November, the foreign trade turnover amounted to $7,569.7 million, up almost 19% from the same period of 2004. The trade surplus increased from $545.6 million for the first 11 months 272 TURKMENISTAN Religion of 2004 to $1,263.1 million. Trade with non-CIS countries grew by 17.6%, and with CIS countries, by 20.3%. Exports for that period totaled $4,416.4 million (an increase of almost 28%). In terms of commodity composition, exports were dominated by products of the fuel and energy complex: natural gas (45.4%), oil products (27.1%) and crude oil (10.5%). The republic supplied its products to 53 countries, with an increase in exports to Ukraine (1.3 times), Iran (by 10.4%), Italy (1.4 times) and Russia (by 9%). Imports in the first 11 months of 2005 totaled $3,153.3 million, exceeding the level of the same period of 2004 by 8.1%. The largest share of Turkmenistan’s imports came from Russia (over 12.5%, $280.4 million), followed by the United States (about 12%, $265.5 million) and Ukraine (over 10.5%, $235 million). Overall, the republic imports goods from 83 countries. In 2005, Russia dislodged Germany and Ukraine from their positions in the supply of technological equipment (about 33% of total imports). The range of products supplied by Russia includes pumps, electrical installations, transformers and pipes for the oil and gas sector, for electric power stations and for the development of land resources.

RELIGION

Iakov TROFIMOV Ph.D. (Philos.), professor at the Karaganda “Bolashak” Institute of Actual Education (Karaganda, Kazakhstan)

n the 20th century, religious studies acquired another term—“secular religion,” meaning venera- tion of leaders (Stalin, Lenin, Mao Zedong, Kim Il Sung, etc.) as gods. The leader is omniscient I and omnipotent. His monuments pepper entire countries; his portraits (“icons”) are seen in offices, classrooms, and elsewhere. His works are treated as a holy script of sorts to be carefully studied and strictly followed in everyday life. People are expected to worship him the way traditional religions worship their gods. The living “god” meanwhile rules all individual lives on earth. The cult of Eternal President of Turkmenistan Saparmurat Niyazov (Turkmenbashi, or Father of all Turkmens) is a graphic example of a contemporary secular religion present in all spheres of life. The huge gold monument that follows the Sun symbolizes the cult, while the two volumes of Rukhna- ma the president wrote in 2001-2004, as well as his other works and speeches provide the spiritual foundation of this new religion. “Rukhnama-zation” of the whole country is the core of Turkmeni- stan’s secular religion. Rukhnama should be studied everywhere—in kindergartens, secondary schools, higher educational establishments, offices, factories, and plants. “Secondary schools have acquired a new curriculum which takes fifteen minutes out of every lesson to read Rukhnama, irrespective of whether the lesson that follows deals with exact, natural, or social sciences. All employees are expected to regularly confirm their professional skills, of which knowledge of Rukhnama is a part. They have to pass a Rukhnama exam. Each organization has a “Rukhnama room” with the Turkmenian flag, the presi-

273 CENTRAL EURASIA 2005 Analytical Annual dent’s portrait, and several copies of Rukhnama displayed in it. Each office should have the leader’s portrait opposite the door; each employee should keep a copy of Rukhnama on his desk. Saturday turnouts for Rukhnama readings are obligatory: people come to listen to their colleagues’ papers dedicated to the ‘great’ work.”1 Rukhnama has been officially announced a holy book on a par with the Koran or the Bible, yet much more spiritual. Since 2002, all citizens spend their Saturdays, Rukhnama Day, studying the book. Rukhnama-zation is the beginning and the end of the state’s religious policy, which ideally should eliminate all other locally professed religions. The leaders of the country squeezed between Iran, Afghanistan, Uzbekistan, and Kazakhstan are forced to vigilantly guard their territory against emissaries of politicized Islam, religious extremism, and terrorism. They have, at the same time, to take into account what the international community (the states and human rights organizations) and the Islamic world in the first place think about the rights of the faithful and religious groups in Turkmen- istan. These three fairly contradictory factors affect the country’s policies in the religious sphere. The government tries to use religious communities to promote the secular Rukhnama religion, to fight politicized Islam, and to oppose the Western culture. Each mosque and prayer house is expected to possess at least two copies of Rukhnama, while the clerics should take guidance from it. This is controlled by undercover agents present at every service. “A huge mosque built on the taxpayers’ money in Kipchak, the president’s native village, is dec- orated with quotations from this book. Up to a quarter of the space on the bookshelves designed for copies of the Koran is taken up by Rukhnama and the president’s other publications. …The main gates carry an inscription in Turkmen: ‘Rukhnama is the Holy Book; the Koran is the Book of Allah.’ On one side of the gates there is the text of an oath of allegiance to the president carved in stone, on the other, the text of the national anthem. …According to Forum 18 News Agency, the Ministry of State Security closed down a mosque which did not have Rukhnama on its bookshelves. A local Muslim said that four mosques razed to the ground in Ashghabad in the fall of 2004 during the mosque destruction campaign met this fate because the imams refused to read Rukhnama at the services.”2 Under the 1997 amendments to the Law on Freedom of Conscience and Religious Organi- zations, registration was limited to religious structures with no less than 500 adult members living in compact groups, that is, to Sunni Muslims and Orthodox Christians. All others (Shi’a Muslims, followers of the Armenian Apostolic Church, Jews, Molokans, Bahais, Krishnaites, Evangelical Christian Baptists, Lutherans, Pentecostals, Seventh Day Adventists, and Jehovah’s Witnesses) were deprived of this right. They had to go underground and function under the pain of repression. Most of them are still functioning secretly; some of their prayer houses were destroyed, others confiscated. In November 2003-March 2004, the regulation envisaging no fewer than 500 members was lift- ed, which somewhat improved the situation. New rules for registering religious organizations, however, were adopted. N. Mitrokhin, an expert on the problem, has the following to say on this account: “They were much harsher than the Soviet rules. For example, all clergymen must be citizens of Turk- menistan with local diplomas. The Orthodox Christians were hard hit: while most of the clergy of the ROC MP are citizens of Russia, Ukraine, Uzbekistan, and Moldova with Turkmenian citizenship, all of them received their diplomas abroad, mainly from Tashkent Religious College, since Turkmeni- stan offers no Christian Orthodox education.”3 The new amendments deprived the faithful of the possibility of obtaining religious books from abroad.

1 “Monitoring SMI: Turkmenistan: ‘rukhnamizatsia’ shagaet po strane,” Portal-Credo.Ru, 12 May, 2005. 2 “Religioznye obshchiny Turkmenistana ispytyvaiut usilenie kul’ta lichnosti Niyazova,” Portal-Credo.Ru, 2 March, 2005. 3 N. Mitrokhin, “Religioznaia situatsia v sovremennom Turkmenistane,” Portal-Credo.Ru, 15 June, 2004. 274 TURKMENISTAN Religion

Several religious organizations had the opportunity to register themselves after the amendments were adopted. In June 2004, the community of Evangelical Christian Baptists, with Vassiliy Korobov as their pastor, was registered in Ashghabad. The International Society for Krishna Consciousness (ISKCON) also received official registration. Portal-Credo.Ru offered the following comment: “State registration notwithstanding, secret service agents are still on the lookout for Baptists in Turkmeni- stan, who are regularly threatened. In the afternoon of 4 August, six agents of the National Security Ministry secret police forced their way into a private flat in the town of Abadan (former Bezmeyn), not far from the capital, where a small group of Baptists met to pray and read the Bible, says Forum 18 News Agency. After spending three hours in the flat and confiscating copies of the Bible and the Psalter, they said that any further attempt to congregate in Abadan would create a ‘big problem’ for Pastor Vassiliy Korobov and other local Baptists. …Contrary to the official public statements, agents Saparov and Ishanov (their first names remained unknown) declared that even registered religious communities still had to have at least 500 members to be able to meet for prayers. Other religious communities had similar troubles. Officials publicly announced that they have not yet decided whether the ISKCON should be allowed to carry out its religious activities, even though the community had been registered.”4 Amnesty International published a report entitled Turkmenistan: The Clampdown on Dissent and Religious Freedom Continues which said: “Religious minorities are under tight state control. Civil society activists, political dissidents, members of religious minority groups, as well as their families have been subjected to human rights violations including harassment, arbitrary detention, torture, ill-treatment, and imprisonment after unfair trials. At least one man has been forcibly confined to a psychiatric hospital solely to punish him for peacefully exercising his right to freedom of expression. Many dissidents, members of religious minorities and their families have been forced into exile in recent years…”5 It should be said that the religious “majority” also experiences its share of human rights violations. Islam is the country’s main traditional religion. Today there are about 140 registered Sunni mosques (there is no exact information about their number since mosques are destroyed and built at Turkmenbashi’s whim). The state exercises strict control over Islam, the mosques, their destruction or construction, religious education, and the appointment of clerics. The “Religia i SMI” (“Religion and the Media”) Portal says: “‘We have signed the law on freedom of conscience—from that time on religion in our country is free,’ said S. Niyazov to the members of the Council for Religious Affairs. ‘I am giving you three more mosques. We shall build no more mosques—we have enough of them.’ The president insisted that each of the mullahs be appointed by the Council, which is staffed with locally educated people who have passed the ‘loyalty to the Moth- erland’ test. ‘Otherwise,’ said he, referring to the traditional procedure for electing mullahs from among the faithful adopted by the Muslim world, ‘they will elect people at random,’ wrote the Gundogar newspaper.”6 There is the opinion among the faithful that the locally educated and Council-approved imams “know next to nothing about Islam.” In 1991-2003, Nasrullah ibn Ibadullah was the Mufti of Turkmenistan and the Chairman of the Council for Religious Affairs under the President, that is, a state official. I am convinced, however, that his chairmanship was nominal, with the president being wholly in charge. Early in 2004, the mufti was arrested for taking part in the aborted coup of 2002 and sentenced to 22 years in prison. Presum- ably, he was not active enough when it came to promoting the Rukhnama ideas. Today, Rovshan Allaberdyev fills the post.

4 “Veruiushchie Turkmenistana nedoumevaiut, zachem nuzhna registratsia, esli gonenia na nikh ne prekrashchaiut- sia,” Portal-Credo.Ru, 10 August, 2004. 5 The Amnesty International Report Turkmenistan: The Clampdown on Dissent and Religious Freedom Continues, Portal-Credo.Ru, 5 May, 2005. 6 “Niyazov zapretil stroit’ mecheti v Turkmenistane,” religare.ru, 2 April, 2004. 275 CENTRAL EURASIA 2005 Analytical Annual

The president announced that he had no intention of building an Islamic state: “‘The Turkmen respect Islam as their religion, yet with us religion has always been separated from the state. Today we live in a secular society in which religion plays its natural role.’ …The president also said that all clerics should be locally educated at the Department of Theology of Makhtumkuli State Turk- men University.”7 In 1999, however, the secular state, on the president’s initiative, passed a Law on Annual Am- nesty and Granting Pardon in Honor of Gadyr Gijesi (Omnipotence Night) Holy Day. According to Interfax, “in 2005, President of Turkmenistan Saparmurat Niyazov signed a decree on an amnesty for 7,916 citizens of Turkmenistan and 229 foreigners on the eve of Omnipotence Night, 26/27 October in the Holy Month of Ramadan. Before that, in 2004, 9,000 were amnestied in the republic, 150 of them foreigners.”8 According to the same information agency, in July 2005, the president ordered a cutback in the number of students at the Department of Theology and unification of Islam in Turkmenistan: “A list of religious rites, the same for all Turkmen, must be published in the shortest time possible.”9 As far as I know, this order has not yet been fulfilled: none of the countries has managed to unify religious rites so far. It seems that Islamic unification is the final aim of the repression against the Shi‘a Muslims. N. Mit- rokhin, quoted above, writes: “The fate of the Turkmenian Shi‘as is even worse. They are ethnic Ira- nians who live in compact groups in the country’s south and Azeris living in Krasnovodsk and Ash- ghabad. With no educated clerics of their own, they relied on the Iranian teachers evicted in 1997. All Shi‘a mosques were closed.”10 The second largest number of believers belongs to the Russian Orthodox Church of Turkmeni- stan with 12 registered structures. It is part of the Tashkent and Central Asian eparchies of the ROC MP and is headed by Archpriest Andrey Sapunov, secretary of the metropolitan of Tashkent and Central Asia. He is also Deputy Chairman of the Council for Religious Affairs of Turkmenistan. The republic is divided into three deaneries. There are five clergymen who serve in all Orthodox churches (over one third of the parishes have no money to pay for their services). The considerable outflow of Ortho- dox Christians (Russians, Ukrainians, Belorussians, etc.) from the republic and the absence of Ortho- dox Christians among the local people have created many problems for the ROC. In May 2005, President Niyazov, irritated by the fact that the Orthodox churches in the republic are ruled from Tashkent, asked the Patriarch of Moscow and All Russia Alexy II to take the churches under his personal control. The Patriarch thanked “Father of all Turkmens” for the letter, which spoke of “a high level of state and church relations,” and informed the president: “According to the Charter of the Russian Orthodox Church, such decisions belong to the National Council or the Assembly of Hierarchs. We highly respect your request and will consider it as soon as the date of the next Council meeting is fixed.”11 The Patriarch avoided any references to the discrimination provisions of the Law on Freedom of Conscience; he never mentioned the problems the ROC had to deal with in Turkmen- istan because of state politics. Portal-Credo.Ru proceeded from information supplied by the IWPR (Institute for War and Peace Reporting) when it wrote: “Turkmenbashi’s ingratiation toward the Russian Patriarch is nothing but

7 “Saparmurat Niyazov zaiavil, chto rukovodstvo Turkmenii ne namereno stroit’ islamskoe gosudarstvo,” Portal- Credo.Ru, 26 October, 2004. 8 “V Turkmenii po sluchaiu Ramadana budut amnestirovany bolee vos’mi tysiach chelovek,” Interfax, 24 October, 2005. 9 “Prezident Turkmenii rasporiadilsia sokratit’ chislo studentov-teologov,” Interfax, 3 July, 2005. 10 N. Mitrokhin, op. cit. 11 “Monitoring SMI: Molitva Turkmenbashi. Pravoslavnymi grazhdanami Turkmenii dolzhen upravliat’ lichno Pa- triarkh?” Portal-Credo.Ru, 14 July, 2005. 276 TURKMENISTAN International Affairs hypocrisy. Niyazov has already denied visas to several clerics from Russia wishing to serve in Turk- menistan. He also forced several delegations of the Moscow Patriarchate to Turkmenistan to cut down the number of members. Alexy II himself, who has visited parishes in Central Asia and the Transcau- casus several times, has not yet been invited to visit Turkmenistan.”12 It should be said in conclusion that despite the Rukhanama-zation of the country’s spiritual sphere and the persecutions, traditional religious life has survived. In one of the texts published in Kazakhstan, the Christians of Turkmenistan thank God “for the fact that notwithstanding the very hard circumstances, brothers and sisters regularly meet for services… God is building up the Church in Turkme- nia and is preparing it for rapture.” It is hardly advisable, for obvious reasons, to supply any information about the catacomb church in Turkmenistan with a large following among the local people. According to Interfax, the American Open Doors missionary organization published its annual list of 50 countries in which Christians are persecuted. Turkmenistan is 12th on this “black list.”13

12 “Monitoring SMI: Turkmenistan: pravoslavie v osade. Turkmenbashi i ego spetssluzhby usilivaiut kontrol’ za deiatel’nostiu Russkoy Pravoslavnoy Tserkvi v Turkmenistane,” Portal-Credo.Ru, 23 November, 2005. 13 “Opublikovan ezhegodniy spisok stran, gde khristiane podvergaiutsia naibol’shim goneniiam,” Interfax, 7 March, 2005.

INTERNATIONAL AFFAIRS

Azhdar KURTOV President, Moscow Public Law Research Center (Moscow, Russia)

n 3 January, President Saparmurat Niyazov and head of Ukraine’s Naftogaz company Boiko signed another contract on the delivery of Turkmen natural gas to Ukraine for 2005. But two O days prior to this, Turkmenistan interrupted its gas export to this country. Official Ashghabad motivated its action by the need to reconsider the price parameters of the previous contract due to the abrupt rise in the cost of fuel production. This, in turn, was caused by an increase in the cost of the equipment supplied to the republic as part of the commodity clearing payment for the gas delivered. Saparmurat Niyazov insisted on the price of 60 dollars for 1,000 cubic meters, but ultimately lowered it to 58 dollars. A total of 36 billion cubic meters of blue fuel was to be sent to Ukraine. In so doing, the former payment conditions were retained: 50% in hard currency and 50% in commodities, consisting in particular of pipes, equipment, and metal products. Part of the volume (4.5 billion cubic meters) was to be paid for through the investment projects being carried out in Turkmenistan by Ukrainian companies: the construction of several compressor stations, a railroad bridge over the River Amudaria, a communication tunnel in the republic’s capital, and several other projects. Incidentally, these projects were set forth in the Treaty on Long-Term Trade and Economic Cooperation between Turkmenistan and Ukraine for 2001-2010 and in the Agreement on the Delivery of Natural Gas for 2001-2006 signed in Kiev in 2001 by Saparmurat Niyazov and then Ukrainian President Leonid Kuchma.

277 CENTRAL EURASIA 2005 Analytical Annual

On 17 January, talks were held in Ashghabad between Saparmurat Niyazov and an official Jap- anese delegation headed by Ichiro Aisawa, Senior Vice-Minister for Foreign Affairs. Japanese business plays a very active role in Turkmenistan, in particular, such large companies as Itochu, Mitsubi- shi, and Nichimen. For example, the Itochu Corporation invests large amounts of money in building gas liquefaction plants, since it acts as investor, builder, and buyer of the finished product. Incidental- ly, this company is allowed to take 70,000 tons of polypropylene for its own use every year until the end of the payback period as a perk for participating in this production project. Ways to continue cooperation were discussed at the talks, whereby official Tokyo tried to sound out Ashghabad’s opinion on granting Japan the status of permanent member in the U.N. Security Council. On the same day, a Japanese Embassy was opened in Ashghabad. At the end of January, a meeting of experts was held in Ashghabad on environmental safety in the Caspian Sea, the Convention on the Legal Status of which the Caspian states have already been discussing for many years now without any tangible success. This is largely due to the stances assumed by Turkmenistan and Iran, which object to dividing the sea into national sectors according to the method proposed by Russia, Kazakhstan, and Azerbaijan. Today, the negative aspects caused by this state of affairs are obvious to the naked eye. The environmental situation in the sea is dramatically deteriorating, and there have already been cases of extremely serious accidents involving oil tankers, salvo emissions of oil from wells, and the mass destruction of seals and other sea inhabitants. The number of sturgeon and size of its catch have dropped by several hundred-fold, particularly the production of black caviar from this species of fish. In 2003, a Framework Convention for the Protection of the Marine Environment of the Caspian Sea was adopted in Tehran, which envisages in particular the drawing up of corresponding protocols in several priority areas. One of them is the Protocol on Pollution from Land-based Activities, to the preparation of which this meeting of experts was devoted. The document they drew up envisages the creation and approval of national and regional programs in this sphere based on measures to monitor and eliminate sources of pollution, as well as to introduce contemporary environmentally-friendly technologies. The Protocol contains general standards called upon to help the national environmental monitoring services, and there are also plans to reconsider the standards for forest regeneration in the coastal zone and for preventing its desertification. A few days later, another similar undertaking was carried out in Ashghabad: the 16th meeting of the Special Working Group on preparing the Convention on the Legal Status of the Caspian Sea, in which delegations took part headed by the deputy foreign ministers of all the countries contiguous to the sea. Let us take a small historical excursion at this point. From the viewpoint of international law, Russia, Azerbaijan, Kazakhstan, and Turkmenistan, as CIS member states, signed the Alma-Ata Dec- laration of 21 December, 1991 and, in so doing, obligated themselves to recognize and execute all the international treaties and agreements entered at one time by the U.S.S.R. Termination of the 1922 Treaty on the Union of S.S.R. and the appearance in the post-Soviet space of newly independent states, including the same Russia, Azerbaijan, Kazakhstan, and Turkmenistan, in itself will not lead to a change in the legal status of the Caspian Sea. In this case, the common law principle of Pacta sunt servanda is in effect—treaties already entered must be observed. But it was Russia which retreated from a le- gally advantageous position on the Caspian: on 23 January, 1998, official Moscow made a statement on its intention to agree with the viewpoints of several Caspian CIS member states regarding division of the seabed into national sectors down the median line. We will remind you that the basic legal document on contemporary maritime international law is the U.N. Convention on the Law of the Sea of 1982, which, in particular, sets forth definitions of open, semi-enclosed, and enclosed seas. The Caspian does not fit any of these definitions and is classified as a lake, an enclosed reservoir without access to the world ocean either directly or via other

278 TURKMENISTAN International Affairs seas and straits, although from time immemorial it has been called a “sea.” But in this case it is not so much the reference to the mentioned Convention and the Geneva Convention on the Continental Shelf adopted in 1958 that are important as the appeal to treaties between Russia (the U.S.S.R.) and Iran which at one time defined the status of the Caspian. From the viewpoint of international law, it is these documents which are sources of the Caspian’s international status, and so it is these acts which should be replaced by a new convention on its legal status. However, the Ashghabad round of talks, like the subsequent ones (last year there were three others—in Baku, Tehran, and Astana), did not lead to any significance progress in this direction either. In particular, Azerbaijan and Turkmenistan could not overcome their differences of opinion regarding drawing of the delimiting line between their national sectors. On 9 February, a meeting was held between Turkmenistan President Saparmurat Niyazov and Deputy Assistant to U.S. Secretary of State for European and Eurasian Affairs Laura Kennedy, who declared the U.S.’ willingness to render technical assistance to the talks on the Caspian’s status. What is more, she mentioned her country’s interest in building a Trans-Afghan gas pipeline. The next day, the Turkmenistan president met with Director of Russia’s Gazprom Company Alexei Miller. The talks were about the new price for Turkmen gas to be delivered to Russia in 2005 (7 billion cubic meters). Ashghabad proposed the same alternative to which Ukraine previously agreed, while Gazprom insisted on a price of 44 dollars for 1,000 cubic meters. As a result, the ban on the export of gas to Russia introduced by Turkmenistan on 1 January remained in effect. At the end of February, talks were held in Ashghabad with a government delegation from the PRC devoted to the prospects for developing bilateral trade and economic cooperation. According to their results, an agreement was signed on giving China a nonrefundable grant of 10 million yuans for training Turkmenistan personnel in the PRC. Moreover, the Chinese company Huawei Technologies entered a contract with the Turkmenistan Ministry of Communication on modernizing the republic’s telecommunication networks with the aid of digital exchange deliveries for 100 million yuans. A project for building a factory to manufacture panne and silk fabric was also discussed. On 22 March, Ukrainian President Viktor Iushchenko visited Ashghabad. Ukraine is one of Turkmenistan’s important trade partners, and not only in the gas sphere; in 2004, it occupied first place in the republic’s foreign trade turnover with 1,643 billion dollars. Ukrainian companies are participating in 55 investment projects in Turkmenistan amounting to a total of 1,433 billion dollars. As we have already noted, at one time, these countries signed a Treaty and Program on Long-Term Trade and Economic Cooperation for 2001-2010 and an Agreement on the Delivery of Natural Gas for 2001- 2006. These gas delivery problems were a priority item on the agenda at the regular talks. The Ukrainian side made a concerted effort to obtain authorization to extend the agreement terms, including after termination of the current contract in 2006. In this respect, Viktor Iushchenko expressed his willingness to participate in implementing the Trans-Afghan Pipeline project, as well as in building a Cas- pian pipeline with a capacity of up to 60 billion cubic meters of gas a year through Kazakhstan and Russia to the Ukrainian border. What is more, the matter concerned bringing the reciprocal trade turnover up to 2 billion dollars this year. However, in the end, Ashghabad did not assume specific obligations, but once more mentioned its vast supplies of gas which would “be enough for everyone.” In the next 100 years, the republic will supposedly be able to produce up to 200 billion cubic meters annually. Understanding this and taking into account Saparmurat Niyazov’s penchant for outer shows of respect, the Ukrainian president issued a decree at the beginning of May on awarding Atamurat Niya- zov, the Turkmenistan president’s father who died during World War II, an Ukrainian order of Prince Yaroslav the Wise, 5th class. On 29 March, Turkmenistan joined several U.N. documents: two Optional Protocols to the Convention on the Rights of the Child concerning the participation of children in armed conflicts, child trafficking, child prostitution, and child pornography; the Convention against Transnational Organ-

279 CENTRAL EURASIA 2005 Analytical Annual ized Crime; three Protocols to this Convention—to Prevent Trafficking in Persons; against the Smug- gling of Migrants by Land, Sea and Air; and against the Illicit Manufacturing of and Trafficking in Firearms, Their Parts and Components and Ammunition; and the Convention against Corruption. At the same time, in the format of the U.N. Development Assistance Framework for 2005-2009 (UNDAF), an action plan was signed defining official Ashghabad’s cooperation with the corresponding U.N. structures. On 12 April, Turkmenistan President Saparmurat Niyazov and Iranian President Khatami were present at the opening of the Dostluk (Friendship) dam built by these countries, the project of which was conceived as early as 1996, but practical work on which did not begin until 2001. On the border river Tejen (Gerirud), the Turkmenistan Ministry of Water Economy and three Iranian companies, Kulham, Aban Sanat Kara, and Pars Energy, built a reservoir costing 167.5 million dollars with a capacity of 1,250 billion cubic meters and a dam height of 79 meters, which makes it possible to irri- gate 25,000 hectares of farmland in each of these countries. The facility was financed in equal por- tions.1 What is more, the presidents came to terms on joint construction of a reservoir on the border river Etrek and on increasing the export of Turkmen electric power to Iran, including by building new power transmission lines. Cooperation is also expanding in the oil and gas sphere. The 200-km pipeline from the Turkmen Korpezhe field to the north Iranian city of Kurt-Kui was originally intended for pumping 8 billion cubic meters of gas a year. But in September 2005, a new compressor station was put into operation on this route, which makes it possible to raise the amount pumped by another 4 billion cubic meters a year. Moreover, there are plans to hook up the Turkmen fields contiguous to Korpezhe to the pipeline. But so far the volumes of exported gas have not reached the stipulated amounts. On the whole, however, in 2004, bilateral trade turnover amounted to 750 million dollars, and there were plans to increase it to 1 billion dollars in 2005. On 15 April, more talks were held in Ashghabad between Saparmurat Niyazov and Head of Gazprom Alexei Miller, at which the price of Turkmen gas delivered to Russia was discussed again. The thing is that on 10 April, 2003, the Russian and Turkmen presidents signed an interstate agreement in the Kremlin on cooperation in the gas industry, and the authorized organizations—Gazprom and Turkmenneftegaz—signed a contract on the purchase of Turkmen gas. In correspondence with these documents, official Ashghabad was to deliver blue fuel to Russia for 25 years. Such long-term arrangements are certainly beneficial for the capital-intensive and to a certain extent inert gas industry of both countries. The minimum and maximum delivery volumes, as well as their transportation and payment conditions were determined for specific years (see Table).

Table

Contract Deliveries of Turkmen Natural Gas to Gazprom under the Agreement of 10 April, 2003

Volume Years (Bcm) 2004 2005 2006 2007 2008 2009 2010 2011 2012-2027 2028

Minimum 5 6 10 60 63 70 70 70 70 70

Maximum 6 7 10 70 73 80 80 80 80 80

1 It is interesting to note that Iran suggested building a dam here on several occasions as early as Soviet times: in 1926, 1958, 1971, and 1982. 280 TURKMENISTAN International Affairs

But it should be noted that here, too, the Turkmenistan leadership stuck to its traditional stance, that is, to its desire not to lose and not assume overly stringent obligations. For Russia, on the other hand, it was important that a long-term agreement made it possible to invest funds in the construction of new and the modernization of existing gas pipelines, as well as form an energy balance for the future, since it had long years of guaranteed deliveries. But Ashghabad insisted on including standards in this document which significantly reduce the significance of the above-mentioned obligations. For example, each party to the agreement had the right to terminate its action upon expiry of each five-year period, and after 2007 they are obligated to redefine the future key parameters of the contract. What is more, the price parameters of the gas to be delivered over an extended period were not precisely established. In other words, in 2003, Turkmenistan had every reason to perceive this agreement as a declaration of intention as well, and the more delicate question regarding the price of the gas being delivered in the agreement was resolved essentially in its favor. Frankly, it was this that probably became the deciding factor prompting Ashghabad to sign the agreement. After holding talks for several years on this question, Gazprom refused to pay more than 38 dollars per 1,000 cubic meters, whereas the agreement stipulated 44 dollars. Russia was essentially the first of all the Turkmen gas importing countries to accept this price. All the same, Gazprom managed to get Ashghabad to consent to pay 50% of the deliveries in hard currency, while the other half was to be paid as before by means of oil and gas equipment, that is, through barter. Due to the fact that the agreement itself was not published, its specific details can only be judged from the mass media reports which noted that these conditions were to be in effect for three years. As we have already said, such conditions are extremely beneficial to Turkmenistan. For beginning in 2007, when gas deliveries are to dramatically rise, the conditions for setting the price are to change (toward an increase). After this, the contract price is to be determined on the basis of European gas prices, but with the use of reduction factors. However, the method for calculating these prices was not determined at that time. What is more, as could be presumed, such conditions make it possible for Ashghabad to leave the barter system behind for good. As a result, at the talks held in April of last year, Gazprom was forced to yield to Turkmenbashi’s pressure. In so doing, it appeared outwardly that the Russian gas monopolist managed to reach a compromise decision, whereby with minimum losses to itself. The sides decided that Gazprom would pay 44 dollars for each 1,000 cubic meters, but in cash. In other words, Gazprom theoretically seemed to stick to its guns by not allowing the price to be raised to 58 dollars per 1,000 cubic meters, while Ukraine was forced to agree with it. But in fact, it was Saparmurat Niyazov who benefited the most. First, he once again violated a signed agreement, and probably not for the last time. Second, the previous conditions of the agreement harbored a price component advantageous to the Russians: by paying 50% of the deliveries in commodities, Gazprom, as experts believe, saved 7-8 dollars per 1,000 cubic meters of gas. Cancel- lation of the barter payments, however, will cost this company approximately 100 million dollars in additional expenses in two years alone; that is, for the Russians, the price of Turkmen gas has nevertheless risen. Third, transfer to 100% payment in currency is not advantageous to Russia, since its enterprises, mainly those of the machine-building industry, can no longer send their products to Turk- menistan by way of barter; that is, they are losing a sales market for their commodities. Fourth, the Russian machinery and equipment delivered naturally required servicing, spare parts, and so on. Now there is no guarantee that Ashghabad will continue to purchase these things from Russia. Finally, the appearance in Ashghabad of significant resources in freely convertible currency is promoting acceleration of the construction of new gas routes from Turkmenistan alternative to the Central Asia-Center pipeline. After all, with respect to the changed contract conditions, in just two years Ashghabad could receive an additional 100 million dollars from Russia, and about 1 billion dollars from Ukraine.

281 CENTRAL EURASIA 2005 Analytical Annual

On 20 April, Saparmurat Niyazov met in Ashghabad with OSCE Chairman Dimitrij Rupel. They discussed many aspects of cooperation, but the official mass media reports lead us to believe that Ashghabad did not sign any specific new agreements or other obligations, but only proposed preparing a corresponding bilateral document. It is obvious that the country’s leadership does not wish to take full responsibility for the obligations ensuing from ordinary membership in the OSCE. In turn, Mr. Rupel did not criticize the situation which has developed in the republic. In the first decade of May, Saparmurat Niyazov came to Moscow to celebrate the 60th Anniver- sary of Victory in the Great Patriotic War and for the CIS summit. This was a rare case of the Turk- menistan president’s participation in Commonwealth activities. In Moscow, he held talks with the Russian and Ukrainian presidents, the PRC chairman, and head of Russia’s LUKoil Company. As for the PRC, the China Petroleum Technology & Development Corporation (CPTDC) is becoming more active in Turkmenistan. It has been delivering boring equipment, drill bits and pipes, hoisting installations, backfill systems, fountain fixings, and other oil and gas equipment made in China to the republic since 1994. In addition, the Chinese opened two service centers in Turkmenistan for repairs, technical servicing, supplying spare parts, and so on to ensure the normal operation of the equipment and other technology delivered from the PRC. A very important and promising sphere of bilateral relations is construction of the Turkmenistan-China-Japan gas pipeline, the length of which, according to the project, amounts to 6,366 km. At the Turkmen-German economic forum held in May, it was stressed that relations between these two countries are developing successfully, trade turnover during the years of independence has risen nine-fold, in particular, it was more than 0.5 billion dollars in 2004. Approximately 50 enterprises with German capital are registered in Turkmenistan, and German companies are carrying out more than 100 investment projects in the republic amounting to a total cost of 1.5 billion dollars. At a meeting with a delegation of Ukraine’s Naftogaz National Joint-Stock Company held in Ashghabad in June, Saparmurat Niyazov was very critical about how the Ukrainians were fulfilling their obligations. “There is a bilateral document which envisages the specific cost of natural gas—58 dollars for 1,000 cubic meters, whereby the contract envisages that 50% of the payments be made in commodities. What do we actually have? Unprecedented embezzlement, involving this very commodity part. A totally unjustified coefficient has been tagged on to what is delivered unilaterally. As a result, in 2004, Turkmenistan was 61.7 million dollars short with respect to the payments it should have received for the gas delivered to Ukraine, and approximately 500 million dollars out of pocket for the first five months of 2005. Is this what is called honest partnership?” asked Saparmurat Niyazov and demanded that Kiev fulfill the obligations it has assumed. Three days after this meeting, Minister Charyev, chairman of the Turkmenneftegaz state trade corporation, was fired. Investigation by the prosecutor’s office of the activity of the directors of the concerns relating to the fuel and energy complex showed, among other things, that the Ukrainian representatives were also using openly corrupted cooperation conditions. For example, in 2003, 1.5 billion cubic meters of fuel were exported to this country above the amount that was stipulated by the contract and passed under official documents. With respect to this, on 24 June, a different Ukraine’s Naftogaz delegation arrived urgently in Ashghabad. Saparmurat Niyazov set new gas payment conditions, exclusively in hard currency. The representatives of official Kiev agreed not only to these conditions, but also to settling debts on the deliveries of goods from Ukraine, whereby at average world prices, without coefficients. On 19 July, another delegation from China arrived in Turkmenistan, this time made up of government members headed by PRC State Council Vice Premier Wu Yi. It consisted of fifty members, some of whom were also business representatives. It is obvious that the PRC has been making thor- ough preparations for Saparmurat Niyazov’s visit to China scheduled for the beginning of 2006, since Beijing is making targeted advances into the economy of the Central Asian states, primarily into their

282 TURKMENISTAN International Affairs fuel and energy complexes. Most likely, after Kazakhstan, Turkmenistan could precisely be the second country in the region in which the Chinese will try and implement a large-scale pipeline project. Incidentally, during these talks, Saparmurat Niyazov offered the Chinese to also participate in recon- structing a refinery in Seidi. On 23 August, the Turkmenistan head met with Commander of the Central U.S. Command, Gen- eral John Abizaid. They talked about the evaluation of the situation in the region, whereby John Abizaid said he was interested in developing economic cooperation between Ashghabad and Kabul, particularly on the threshold of the parliamentary election in Afghanistan. Independent sources reported that the question of possible redeployment of the American military base from Uzbekistan to Turkmenistan was also discussed, since after the May events in Andijan, relations between official Tashkent and Washing- ton greatly deteriorated. But there was no official confirmation of this information. At the end of August, another CIS summit meeting was held in Kazan, which Saparmurat Niya- zov did not participate in, but to which he sent an official delegation. It read Saparmurat Niyazov’s message with his statement about the change in format for Turkmenistan’s participation in the CIS to associated membership. Referring to the republic’s constitutional status of permanent neutrality, supported by a resolution of the U.N. General Assembly of 12 December, 1995, Saparmurat Niyazov noted in this statement that “in keeping with its international obligations, Turkmenistan does not enter military blocs or alliances, interstate organizations with regulated functions or which presume the collective responsibility of the participants, and does not take part in them, nor does it deploy the military bases of foreign states on its territory. Therefore, under present conditions, Turkmenistan’s participation in the CIS may be of an associated nature.” The other CIS members did not object, although, without going into details, we will note that the arguments presented by Saparmurat Niyazov are far from indisputable. His standpoint was taken into account, and the Commonwealth executive committee was asked to draw up the draft of a corresponding agreement together with Turkmenistan. In mid-October, another delegation of the Ukrainian fuel and energy complex arrived in Ash- ghabad. This time, too, the talks were tense. Saparmurat Niyazov again directed the guests’ attention to the violation of previously agreed-upon terms: “Every time you give your word to settle your debts in six months, but you do not do anything about it, all you do is make promises.” What is more, the Turkmenistan president noted that of the 484 million dollars commodity payment only 8.7 million has been paid, and the implementation of investment projects with Ukraine’s participation is being unjustifiably delayed, for example the building of a railroad bridge across the Amudaria. Touching on the problems of long-term cooperation in the gas sphere, Saparmurat Niyazov stressed in particular that it should take into account the interests of the third partner—Russia. Soon after this, Russian Foreign Minister Sergei Lavrov made a working visit to Turkmenistan. His talks with Saparmurat Niyazov touched upon various aspects of bilateral cooperation, the situation in the region, and problems relating to the Caspian Sea. The Turkmenistan president was in favor of increasing the participation of Russian companies in business in his republic, in particular, he again proposed that they make their contribution to building a Caspian gas pipeline,2 possibly with the participation of Ukraine. At the beginning of November, Iranian Foreign Minister Mottaki visited Ashghabad. He discussed with Saparmurat Niyazov the prospects for successfully developing bilateral cooperation. For example, reciprocal trade turnover has reached 1 billion dollars, Iranian companies participated in reconstruction the republic’s highways, and they were also asked to participate in modernizing the Seidi refinery.

2 As early as April 2003, an agreement was reached between Turkmenistan and Russia on building a new gas pipeline route from western Turkmenistan to Russia through Kazakhstan, provisionally called the Caspian gas pipeline in the literature. 283 CENTRAL EURASIA 2005 Analytical Annual

At a meeting of the Cabinet of Ministers on 18 November, Saparmurat Niyazov announced another of his initiatives to set the price for all importers of Turkmen gas beginning in 2006 at 60 dollars per 1,000 cubic meters. What is more, he noted that the agreement signed with Russia in 2003 “is not final and has not fully come into force, since it contains only the main principles of cooperation, without precise setting of the price for Turkmen natural gas.” In December, the leadership of Russia’s Gazprom and Ukrainian representatives were notified of this position. In order to draw up documents planned for signing during Saparmurat Niyazov’s upcoming visit to China in 2006, a Turkmenistan government delegation headed by Deputy Chairman of the Cabinet of Ministers Berdyev visited the PRC. The most important results of this visit were the statement made at the meeting on 7 December on intentions to deliver Turkmen natural gas to China and Beijing’s offer to grant Ashghabad a privileged credit of 650 million yuans. The conflict which became aggravated in December between Russia and Ukraine regarding the price for gas deliveries in 2006 was advantageous to Ashghabad. At that time, in December, representatives of Russia’s Gazprom and Ukraine’s Naftogaz met several times with Saparmurat Niyazov, of course separately. In the end, on 29 December, an agreement was reached with the Russians on their purchase in 2006 of 30 billion cubic meters of Turkmen gas at 65 dollars per 1,000 cubic meters. In so doing, Gazprom acquired all the additional non-contract amounts of gas, but at a higher price than Ashghabad previously designated. The cost of this amount is equal to 630 million dollars. Fifteen billion cubic meters are to be delivered in the first six months and then the sides are to adjust the price.

284 REPUBLIC OF UZBEKISTAN General Overview

REPUBLIC OF UZBEKISTAN

GENERAL OVERVIEW

Mukhabat KHAMRAEVA Representative of Central Asia and the Caucasus in Uzbekistan (Tashkent, Uzbekistan)

n his New Year’s Address, Uzbek President Islam Karimov noted that 2004 had been a difficult year: “We had to live through the anxious days of 29-30 March and 31 July, when international I terrorism and the bandits who violated our border showed their bestial faces once more and took the lives of innocent people.” But one of the most difficult periods in the most recent history of Uzbekistan was probably 2005, although its outcome was quite optimistic in essentially all areas of the republic’s life, primarily in the economic and political spheres. As the official documents note, real personal incomes rose by almost 22%, and monthly salaries, pensions, stipends, and benefits rose by an average of 40%. On 1 January, a law on the accumulative pension system came into force. Great hopes were placed on it, but they were far from fully justified. Another special feature of the socioeconomic sphere was the decrease in the profit tax rate for enterprises from 18% to 15%, in the single social payment from the wages fund from 33% to 31%, and in the marginal income tax rate for citizens from 30% to 29%. Serious changes occurred in the country’s political life. At the end of 2004-beginning of 2005, elections were held to the new, bi-chamber parliament. One hundred and twenty deputies were elected to its lower, legislative, chamber. According to the Central Election Commission, these deputies constituted lawyers, 18.3%, economists, 21.7%, industrial, construction, and communication workers, 10%, agricultural workers, 7.5%, businessmen, 12.5%, representatives of education, science, culture, and public health, 20%, and nongovernmental and non-commercial organizations, around 16%. The Liberal Democratic Party, which participated in the elections for the first time, obtained an advantage in this chamber with 34.2% of the mandates. It was followed by the People’s Democratic Party with 23.3% of the seats. The Fidokorlar Party, the most popular at the 1999 elections, was only able to win 18 seats this time. Eleven deputies from the Milliy Tiklanish Party espousing the interests

285 CENTRAL EURASIA 2005 Analytical Annual of the national intelligentsia received 11 seats, and ten from the Social-Democratic Party Adolat. In- dependent candidates received 14% of the seats. In terms of national composition, most of the parliamentary deputies are Uzbeks (91%), while the rest are represented by Kara-Kalpaks, Tajiks, Russians, Tatars, and Ukrainians. Introduction of the 30% quota for women when nominating candidates from political parties was reflected in the gender composition of the Legislative Chamber—18% of its deputies are now women, which is 2.5-fold more than in the parliament elected in 1999. A Senate was created for the first time in the country’s history, in which representatives of the regional, district, and city legislative councils (kengashs) of each of the 12 regions of the country, the city of Tashkent, and the Autonomous Republic of Karakalpakstan received 84 seats, and 16 members of the Senate (out of 100) were appointed by Head of State Islam Karimov. At the first joint meeting of both chambers of the Oliy Majlis, the country’s president made a program speech. He set forth the social development strategy for the next few years in essentially all spheres of life and severely criticized Western nongovernmental and non-commercial organizations working in the republic. Their activity, as the speaker noted, went beyond the framework of their declared programs and pursued specific tailor-made aims. This theme of the president’s speech is what comes most vividly to mind, keeping in mind the events which happened in May in Andijan. They had a significant effect on all the other important processes which unfolded subsequently. But before this several other important events occurred which also had some bearing on the situation in Andijan. For example, on 20 April, a press conference was held in the office of the opposition party, Ozod dehkonlar, at which the formation of a new coalition of democratic forces in the country was announced. The participants in the undertaking said that the party’s political platform was to enhance democracy and social progress in the republic. Several human rights activists and representatives of the republic’s economic circles also signed a corresponding statement. What is more, a memorandum on the creation of a democratic coalition called Serkuesh Uzbekistonim was read, which noted in particular that the goal of this structure was to build an open civil society, in which supremacy of the law would be observed, personal rights and freedoms guaranteed, and everything would be underpinned by high socioeconomic indices. It was also announced again that Uzbekistan was withdrawing its membership from GUUAM. The country’s president noted that the political orientation currently being manifested in Ukraine, Georgia, and Moldova, was compelling Uzbekistan to reconsider its attitude toward GUUAM. We will remind you that in June 2002, a statement by the Foreign Ministry on the same account said that this step had been taken due to the excessive politicization of the union and the fact it had no economic component. Possibly the statement by the Georgian president played a certain role in this decision, which said: “We defeated our enemies in Ukraine and in Kyrgyzstan. Now the turn has come for another country, which I will not name just now, we will announce this on 22 April at the GUUAM summit in Kishinev, where we will also step up our activity to support democracy.”1 During the small hours of 13 May, events occurred in Andijan which had a serious effect on the foreign and domestic policy not only of Uzbekistan, but also of the region as a whole. After making a surprise attack on the officers on duty of an interior patrol battalion and defense ministry military unit, criminals killed several people and seized a large number of weapons. After ramming the prison gates with a truck and entering its grounds, they released 526 prisoners, took the regional administration building by storm and put the captured hostages in it. Then the criminals made their main demand—release of all their ideological leaders from places of imprisonment, that is, members of the

1 Available at [http://news.runet.ru/news/14/2005/04/14/425336], 15 January, 2006. 286 REPUBLIC OF UZBEKISTAN General Overview

Akromiylar radical extremist group, one of the branches of the Hizb ut-Tahrir extremist terrorist organization. In order to prevent spilt blood, primarily among the peaceful population, the authorities decided to immediately begin talks with the band leaders. These talks, which went on for nine hours, with the participation of the criminals’ relatives and close friends, as well as representatives of the public, did not yield the desired results, although the bandits were asked to leave the building and given free passage to go wherever they wished in the buses provided. As a result of the measures taken, some of the bandits were killed during their pursuit, and others along with their relatives went into Kyrgyzstan. During this bandit act, 94 terrorists, 20 law enforcement officers, 11 servicemen, and 57 peaceful residents were killed, and 76 terrorists, 49 law enforcement officers, 59 servicemen, and 91 peaceful residents were wounded. In order to investigate these tragic events, the Oliy Majlis immediately created an independent commission comprised of representatives of both chambers of parliament, and two weeks later a working group was formed for monitoring the investigation and the government’s measures to stabilize the situation in Andijan and the Andijan Region. It included employees of the Indian, Iranian, Kazakhsta- ni, Chinese, Kyrgyz, Pakistani, Russian, and Tajik embassies accredited in Tashkent. Based on an analysis of the investigation documents and other data, the following conclusion was drawn: the Andijan events were a carefully planned and organized campaign prepared with the direct participation of external forces to seize power in a specific region of Uzbekistan and destabilize the situation throughout Central Asia. These events themselves had a great impact on the development of the situation in the country and in the world, primarily related to the so-called Uzbek refugees in Kyrgyzstan. For two months, a very serious ideological war was waged, as a result of which the U.N. Higher Commission for Refugees (UNHCR) in Kyrgyzstan violated international law by sending 439 people to Rumania, some of whom were suspected of committing extremely grave crimes. The actions of the UNHCR did not correspond to the principles of non-interference in the internal affairs of sovereign states and clearly exceeded the Commission’s powers. After all, in compliance with resolutions No. 1269 of 19 October, 1999, and No. 1371 of 28 September, 2001 of the U.N. Security Council, it was obligated to intercept instances where terrorists abused the refugee status. What is more, the UNHCR received official notification that Uzbekistan was asking only for the return of the people who escaped from prison or committed other crimes: premeditated murder, terrorism, illegal possession of weapons and ammunition, infringement of constitutional order, seizure of hostages, and participation in banned organizations. But the attitude of the UNHCR and several donor states toward the situation could be evaluated as indirectly helping terrorists to avoid being brought to account and encouraging terrorism as a whole. As a result of the ideological war launched against Uzbekistan, the draft of a resolution on “The Situation with Human Rights in Uzbekistan” (so-called Country Resolutions), submitted mainly by EU countries, was reviewed by the U.N.’s Third Committee. The content of this document was based on the events in Andijan and on the subsequent measures taken by official Tashkent to settle the question. It gave references to restrictions on the freedom of speech and confession, on interception of the activity and registration of NGOs and opposition political parties, and also mentioned the use of torture and persecution of civil society activists. Along with the call to carry out an international investigation of the events in Andijan, the draft also made several other demands on Uz- bekistan. At the same time, the republic’s leadership adopted a decision about the withdrawal of the U.S. armed forces contingent from the Khanabad aerodrome within three months, which incidentally, the American side did carry out. But all the same, the tension which subsequently arose in the relations

287 CENTRAL EURASIA 2005 Analytical Annual between the West and Uzbekistan has not been defused, and trends toward their improvement are extremely weak. In the second half of the year, official Tashkent began unwaveringly directing its foreign policy toward Moscow. During President Islam Karimov’s official visit to the Russian Federation, a treaty was signed on alliance relations between Russia and Uzbekistan which the head of Uzbekistan called “unprecedented.” But even prior to this, in order to develop economic integration and assist progress in the Eurasian space, on the initiative of the Uzbek president, the Central Asian Cooperation Organ- ization united with the Eurasian Economic Community (EurAsEC), thus making Uzbekistan a member of the EurAsEC. On the whole, 2005 was a year of change in geopolitical priorities in Uzbekistan’s most recent history, and appears to be the beginning of serious transformations in all spheres of the republic’s life.

POLITICS

Bakhodyr ERGASHEV D.Sc. (Philos.), professor, head of the Social Sciences and Humanities Department, University of World Economy and Diplomacy (Tashkent, Uzbekistan)

y early 2005, the parliamentary election in Uzbekistan—a very important event of the beginning of the year—was over. By 17-20 January, the election, which was carried out in two stag- B es, added 84 members of the Senate (the upper chamber of the Oliy Majlis) to the already elected 120 deputies of the lower, legislative chamber of the parliament, which became professional. Un- der the Constitution, 16 senators were appointed by a presidential decree of 24 January (among them were two poets, one scholar, two teachers, two directors of industrial enterprises, three heads of public associations, two members of the judiciary, and only four bureaucrats). By appointing these people, the government let society know its attitude toward individual groups of the ruling elite and the latter’s composition in general. Local observers noticed how many teachers of secondary educational establishments (academic lyceums and professional colleges) and farm heads there were among the senators. The government obviously intended to tap the reformist potential of the intelligentsia and the middle class. As distinct from the upper chamber of the first and second convocations, the khokims (governors, mayors, prefects) of this convocation were given more opportunity to become involved in the functioning of the representative power structures (region, district, and city Kengashes of People’s Deputies), which they headed according to the specific laws of Uzbekistan. The election campaign of 2004-2005 demonstrated a highly interesting transformation of the administrative resource: for the first time, the khokims and their structures were almost indifferent to the future parliamentary candidates (including those nominated by the two main rivals—the Liberal-Dem- ocratic Party of Uzbekistan (LDPU) and the People’s Democratic Party of Uzbekistan (PDPU), because under the new laws the heads of regions, districts, and cities could no longer be elected to the lower

288 REPUBLIC OF UZBEKISTAN Politics chamber. Significantly, only one khokim, who had to leave his post as prefect of the Shakhrisab District, was elected to the lower chamber. This illustrated positive differentiation between the executive and legislative powers not applied at the regional, district, and city levels. I have already said above that in the regions the elected khokims automatically became members of the executive power branch. On the whole, the election campaign was conducted smoothly under the scrutiny of numerous international observers, while its results reflected a complex picture of the dominant social interests ranging from the budding class of employers to the socially vulnerable class of hired workers. The number of qualified lawyers in the parliament, in the lower chamber in particular, increased 4.5-fold, which was a special feature of this election. Under the constitutional reform then in progress, the legislative chamber was expected to provide professional juridical skills. The Liberal-Democratic Party of Uzbekistan won a relative majority in the lower chamber. The LDPU, which for some time claimed the role of the party in power, was founded in Novem- ber 2003 according to the best Western political technological patterns. It united charismatic local businessmen and farmers. In 2005, the new party ran against the country’s oldest party—the People’s Democratic Party of Uzbekistan. Their programs reflected the on-going stratification between the middle class and the hired hands. The LDPU won 41 seats in the lower chamber, or 13 seats more than the PDPU, its closest rival; and it acquired 33 seats in the Senate, and 39 percent of the seats in the regional, district, and city Kengashes of People’ Deputies. The Social-Democratic Adolat Party (SDP), already ten years on the political scene, turned out to be an outsider, which inevitably caused reshuffling among its leaders. It offered a program of radical reforms, up to and including public control over the special services, which, nevertheless, did not help it to avoid failure. It seems that its rather loose organizational structure and personnel policies contributed to the defeat. On 24 January, the Second Plenary Session of the SDP Political Council elected Dilorom Tashmukhammedova, a new PC, as first secretary. The SDP became the only party in Uzbekistan headed by a woman and a young person. On 14 January, as the election campaign drew to an end, Nezavisimaia gazeta published an interview with the president of Uzbekistan entitled “Pri imperii nas schitali liud’mi vtorogo sorta” (Un- der the Empire We were Dismissed as Inferior People). The head of state offered his opinion on the recent events in Georgia and Ukraine and his new theoretical ideas about the sociopolitical changes in Uzbekistan. He took the trouble to develop his earlier thesis about the correlation between democratic developments and the nation’s mentality; the important role the new two-chamber parliament was to play in reforming the country, etc. A widely shared opinion had it that the government was warning the world community about its strength and its attitude toward the Color Revolutions unfolding elsewhere in the CIS. Speaking at the first joint session of both chambers on 28 January, the president outlined the country’s priorities to the nation and the deputies of Oliy Majlis of third convocation. In his Address to the Nation of sorts, the Uzbekistan leader identified five major immediate goals of the country’s domestic policy: development of the legislature, continued judicial reforms, democratization of the media, flexible foreign policy, and economic liberalization. Economic liberalization was at the end of the list for the obvious reason that it is very hard to push through social and political changes. The professional parliament was trusted with the task of drafting and passing effective laws within the shortest time possible and monitoring their execution. Evolution of the representative structures was another problem: in 2005, the newly created Sen- ate was expected to acquire influence over regional policy to thus revive the entire system of regional, district, and city Kengashes of People’s Deputies, which had failed to become driving power of change. While the former task seemed doable for the simple reason that the senators elected from among the regional, district and city deputies do not get together as often and so remain closely connected to the system of local administration, the second task demanded much more time. To cope with the problem,

289 CENTRAL EURASIA 2005 Analytical Annual the ruling establishment strengthened the party verticals to turn the weak parties of Uzbekistan into mass parties with strong leaders and to add vigor to the local factions (party groups) in the regions. Under the new Law on Funding Political Parties, beginning on 1 January, 2005, the five parties with seats in the parliament could expect money from the state to pay for their everyday activities (not only election campaigns): the funds were distributed according to the number of seats the parties had won. Under this scheme the LDPU, the winner, received the largest amount of money, while the los- ers—the Milliy Tiklanish Democratic Party and the Social Democratic Adolat Party—received the smallest sums. This meant that for the first time in their history, three parties—Milliy Tiklanish, Adolat, and the National Democratic Fidokorlar Party—were given the chance to set up small networks of regional, city, and district structures (before that the LDPU and PDPU used their membership dues for this purpose). This invigorated the party groups in the Kengashes. In his 7 February address to the new cabinet, which appeared in the press, the president stressed that “bureaucratic barriers, procrastination, and irresponsibility of the bureaucratic machine” should be liquidated. In fact, the electorate heard what it wanted to hear from the head of state: “The country should use all the advantages gained so far—stable currency and low inflation—to raise wages, pensions, and social allowances.” He also criticized the “regulated economy” and “guided democracy” models. This was obviously done because much had been said about them across the post-Soviet expanse. He also wanted to say once more that Uzbekistan rejected all types of foreign interference in its domestic affairs. At the same meeting, the president offered his opinion on certain transformations of the presidential form of government started on his own initiative. He was convinced, for example, that the transfer of a large number of his responsibilities to the parliament and government did not mean that he himself was shirking responsibility. On the other hand, he admitted that the presidential vertical had been created to tide the country over the political and economic difficulties of the early 1990s. (Experts agreed among themselves that by saying this Uzbekistan president was forestalling accusations of appointing his own people and encouraging younger people to fill responsible posts in all branches of power.) The year 2005 saw only two important personnel shifts at the regional level—the khokims of the country’s capital and the Tashkent Region were replaced. Analysts explained these moves by the desire of the head of state to strengthen both the vertical of executive power and the positions of the smaller, yet much more dynamic cabinet. (It was absolutely necessary to stimulate housing construction and reform of municipal services in the capital and encourage industry and the farmers in the Tashkent Region.) Many members of the expert community were convinced that behind the relative personnel stability in the regions was national consolidation in the face of the Color Revolutions and successful fulfillment of the state order on raw cotton in many regions. The local elites, in turn, demonstrated sufficient cohesion and initiative. The khokim of the Ji- zak Region, for example, beat off the Internet attacks and accusations of anti-Americanism spearheaded at him. (Nearly all political technologists agreed that the mass rally organized in Jizak in the wake of the Andijan events and attended by the khokim was one of the best examples of effective propaganda.) The same can be said of the meetings between the khokim of the Ferghana Region and the local youth. On the whole, throughout the year the local administrations effectively supported the people and their social well-being. Inter-party cooperation and rivalry cut short the expected period of post-election lull or even political stagnation. As early as 14 February, the LDPU, Fidokorlar, and Adolat created a Democratic Bloc of Three Factions in the legislative chamber. The initiators argued: “By taking advantage of the resulting majority, we will be able to draft and pass laws.” Indeed, the bloc acquired a relative majority in the lower chamber. It should be said that the “young twins”—the LDPU and Fidokorlar—shared the same ideas about protecting business, while the presence of the Social Democratic Party was probably aimed against the still strong PDPU. This forced the latter to move into the opposition.

290 REPUBLIC OF UZBEKISTAN Politics

The very fact of creating a democratic bloc was absolutely in line with the repeated statements about the desirability of political pluralism within the parliament, which, as was said more than once, needed plurality of opinions, constructive opposition, and majority/minority rivalry. The new bloc made it possible to lobby progressive laws; it created a checks-and-balances system to weed out anti- reformist drafts. (The parties which signed the agreement declared that they remained loyal to their election programs and stated aims.) Together, the three parties acquired the very much needed 68 votes, that is, a parliamentary majority. Two days later, at the 16 February press conference, the PDPU, the main opponent of the Dem- ocratic Bloc, responded by announcing itself the “opposition party of the minority,” the “left wing of the reformist forces,” “participant in a healthy faction struggle,” and “supporter of political pluralism and parliamentary competitiveness.” The still strong party with 560,000 members, a working vertical arrangement, and strict party discipline inherited from the CPSU was out to prove that it could stand against any other political force. In the past, the PDPU defeated Fidokorlar, a party using the latest political technologies and which claimed the role of the ruling party at the 1999 election. The young LDPU sent the passions of political activity higher still. On 19 March, at the Fifth Plenary Session of its Political Council, the LDPU registered the main shortcomings of its organizations: inadequate personnel policy, as well as inadequate performance of territorial branches; inadequate work with female and young voters; a narrow subject-range, and too superficial treatment of many topics in the party’s XXI asr newspaper, which attracted few subscribers. The plenary session elected Mukhammadiusuf Teshabaev, who spent much time working in the foreign economic sphere, the new leader. (Some foreign experts explained this by the party’s closer international ties, the increase in the country’s export and import, and much closer attention to the foreign investments issue.) The course toward further liberalization of social and political life required greater theoretical efforts, so in March, the president set up several republican expert groups to give the parliament analytical support in drafting the necessary normative and legal acts. By inviting local unorthodox, as well as foreign experts, the head of state demonstrated that his political intentions were serious and that he was resolved to profit from the progressive experience of developed countries. The Group for Democratization of the Media, for example, drafted about twenty laws (On State Secrets, etc.) to give the media more independence. The country’s leaders took into account not only positive, but also negative foreign experience. The March events in Kyrgyzstan, as well as the earlier Ukrainian developments confronted Uzbekistan with the problem of relations between the government and civil society institutions, especially NGOs. The country’s leaders’ earlier admission that international and foreign structures had filled a certain vacuum called for resolute, yet cautious steps. The Uzbek president’s famous interview to Nezavisi- maia gazeta on 14 January and his later statements on the events in Kyrgyzstan suggested the main conclusion related to the country’s domestic policy issues: Uzbekistan’s 5,200 public associations should become non-commercial and non-political. The Civil Forum of Uzbekistan attended by over 200 delegates, which took place on 20 May in the Kumushkan resort, helped to change the attitude toward nongovernmental organizations. The practice of civil forums monopolized in the past by foreign structures was appropriated by the Uzbek authorities. The National Association of Nongovernmental Non-Commercial Organizations of Uz- bekistan (NANNOUz) was set up in the wake of the Kumushkan forum. Later an NNO Support Fund was created and backed by the government. Uzbekistan’s political regime finally restored its right to fund local civil society institutions to prevent the latter from becoming a Trojan horse of foreign influence. This was what the expert community thought about the planned NNO re-registration. The announcement that the U.S. Peace Corps was suspending its activities in Uzbekistan, which came on 6 June, confirmed the on-going evolution of the local civil society institutions: the “strategic partner” had obviously altered its priorities under pressure of the changed attitude toward the NGOs

291 CENTRAL EURASIA 2005 Analytical Annual in Uzbekistan. (Since 1992, about 700 Peace Corps volunteers were working in the republic; on 6 June, there were 52 of them. It is common knowledge that one of the oldest and largest international organizations was not always welcome in the host countries. This probably happened in Uzbekistan, where local efforts were preferred rather than relying on foreign aid, which is hazardous from the national security viewpoint.) The political establishment avoided using command and administrative methods to bring law and order to the Third Sector—the task was left to the civil institutions themselves. This explains the visit of a delegation of a group of the best Russian political technologists headed by Viacheslav Nikonov of the Politika Foundation. On 10 June, they were received by the head of state. The local elite and intelligentsia were interested in Russia’s rich experience of beating off information attacks accumulated during the Chechen war. The Andijan riot revealed the faults of counter- propaganda efforts, therefore it was absolutely necessary to explain to the world community the sources, essence, and negative repercussions of the May events, and their connection with international terrorism and religious extremism. The Special Third LDPU Congress held on 25 June concentrated on agitation, propaganda, and educational efforts among the people in the context of the antiterrorist struggle. The congress outlined the party’s strategy in light of the information hostility against Uzbekistan unleashed after the events in Andijan. It actively discussed functioning of the political education system, organizational work among the masses, cooperation with NGOs, and the need to keep the so-called black opposition (Ozod dehkonlar partiiasi, and others) in check. The Fifth PDPU Congress held on 2 July was even stormier. The very location— the best hotel in the capital—demonstrated that the people’s democrats were ambitious and determined. The deputies were greeted with huge slogans displayed over the hotel’s entrance: “The Best Social Protection for Our Children!” “The PDPU Fights Unemployment, Social Injustice, and Poverty!” “The NDPU is Resolved to Win the Coming Elections, and Form the Government and Local Administrations!” Ex- perts agreed that the party’s new ideology—“the ideology of social justice, social solidarity, democracy, and freedom”—was the congress’ main achievement. The party described “people who need social support; people with the lowest incomes” as its social base. Numerous observers found the rivalry between the PDPU and the LDPU demonstrated at the congress fascinating. The congress offered a sober assessment of the LDPU’s ideology and practice. Then PDPU leader A. Rustamov said in particular that his party objected to the way the Liberal Dem- ocrats treated “entrepreneurship for all” and their abetting in the spontaneous market processes. He added that his party was against the “ideology of individualism” the LDPU promoted as going against the principles of social harmony and the unique makhalia institution. The PDPU offered its alternative: employment and prosperity for all; fighting unemployment, social injustice, and poverty. The party also offered its own and fairly daring interpretation of the Andijan events. The main report said that the May riot was caused by “international terrorism” and, to an even greater extent, by gross miscalculations of the local authorities and law enforcement bodies, as well as the administrative methods in which former khokim K. Obidov had indulged. This was why the extremists chose Andijan for their “color” experiments. The reporter severely criticized many of the regional, district, and city PDPU cells for their “double-dealing and lack of vigor, for taking orders from the khokims and waiting at their doors for fear of quarreling with powers that be.” He further said: “We are in opposition to the parliament majority and not only to it; we are against all those who promote destructive ideas, who pretend to be human rights activists, we are against the NGOs bought for petty grants and against corrupt officials of all ranks.” The party expressed its opinion about the media’s role in the new historical conditions. It described the party periodicals as “too passive” and “unable to rebuff the rude commands coming from foreign embassies” and stated that they “confirmed their cowardice in the information war foreign centers were waging against Uzbekistan.” The party made negative comments on the state TV chan-

292 REPUBLIC OF UZBEKISTAN Politics nels: UzTV did not cover the activity of the newly elected parliament with sufficient professionalism and “left large chunks of the inter-party discussions out of the picture.” The congress spoke disparag- ingly of the Ozod dehkonlar partiiaisi, which “lived on foreign handouts,” “sold the Motherland short,” and was “very far from its own nation.” The congress started an ambitious political project: the PDPU engaged in moderate criticism and, guided by the new political slogans, had to launch organizational and personnel reform. On 9 July, the Third Plenary Session of the PDPU Central Council concluded that “the posts of chairman of the Central Council and chairman of the parliamentary faction in the legislative chamber should be filled by different people” to “improve the faction’s performance in the lower chamber and add weight to the grass-roots cells.” Uzbekistan’s largest party set up two organizational levels, viz. the party and the faction, to move closer to the common people. Latif Guliamov, who headed the Tashkent party organization, was elected as the party’s new leader. The presidential decrees On Abolition of the Death Penalty of 1 August and On Transferring to Courts the Right to Sanction Arrests of 8 August played an important role in the country’s social and political life. These were extraordinary measures not only within the post-Soviet space—the United States, for example, still uses 6 types of death penalty—and were designed to do more than merely improve the country’s international image. (As early as two months before the Andijan events, the president’s expert group proved that such measures were indispensable.) Uzbekistan’s two neighbors, Kazakhstan and Kyrgyzstan, declare a moratorium on the death penalty every year, on the eve of the anniversary of the Universal Declaration of Human Rights. The decrees passed in Uzbekistan did not coincide with any of the relevant anniversaries, were more radical, and were best adjusted to the judicial reform in the country and humanization of the penalty system. On 19 August, the head of state met the leaders of the parliamentary factions—evidence of the new relations between the government and civil society. The faction leaders were eager to discuss important issues and become involved in the political decision-making process. Technically, the meeting was a precursor of the Senate plenary session of 26 August, which was expected to discuss withdrawal of the American troops from Uzbekistan. These two meetings defused Washington’s possible move by tapping the legal power of the parliamentary factions and the legislature to resolve this difficult international legal issue. The annual International “Shark Taronalari” Music Festival which took place in Samarkand on 27 August was intended to improve Uzbekistan’s international image damaged by the information war against it. It attracted much more attention than its predecessors: the president came in person to greet the audience and participants, among whom there were several stars such as famous French singer Charles Aznavour. This was intended to demonstrate that Uzbekistan was part of the international community; that it was a secular state, the official government of which was open to the world. The president’s visit to Malaysia, one of the leaders of the Islamic world, on 2-4 October pursued the same aim and was exceptionally successful from the economic viewpoint. The Day of the Law on the State Language celebrated on 21 October was ample proof that the reforms would go on despite the changed foreign policy landmarks. It became clear that the ideological values of the independence period had survived intact. On that day, RF Foreign Minister Sergei Lavrov arrived in Tashkent and addressed the students of the University of World Economy and Diplomacy. This visit confirmed that Uzbekistan’s closest ally respected its political choice and intended to follow this course. (A month later the American military airbase in Khanabad was ceremoniously closed.) Celebration of Constitution Day on 8 December was used not only to upgrade the nation’s legal awareness, but also to explain to the people what the country’s leaders thought about the key social and political issues. The speech delivered by the head of state at a meeting of members of the Tashkent public was based, according to experts, on six theses: loyalty to democratic principles; gradual transfer to democracy; rejection of the universal democratic model; attention to the country’s historical,

293 CENTRAL EURASIA 2005 Analytical Annual national, and religious specifics; and the head of state pointed out that democracy could not be imposed by force and that “export of democracy” was akin to “the worldwide communist revolution.” The president suggested that sponsorship and charity should be developed inside the country to rule out the highly biased “charitable assistance” foreign sociopolitical centers extended to the civil society structures in Uzbekistan. It should be said in this connection that 2006 was announced the Year of Charity and the Medical Profession. On 17 December, the SDP Adolat conference (congress) confirmed the trend toward more rational activities of the much younger membership of the Uzbek Social Democrats. Party leader Dilorom Tashmukhammedova, who also headed the party faction in the legislative chamber, presented the main report. Her contribution and related discussions confirmed that the party intended to close ranks around the slogans of justice (“adolat” means “justice” in Uzbek). It turned out that the youth wing was no longer satisfied with the party’s traditional image as the “party of medics.” The calls to protect the poor, old age pensioners, and the disabled, as well as to help small businessmen widened the gap between the SDP and PDPU. (Even fiercer rivalry can be expected between them in the second largest Samar- kand Region where both parties are very strong.) It can be said that in 2005, obsolete approaches and the political “golden mean” were competing with new approaches to national security and taking fuller account of the country’s vitally important national interests—this is the philosophical explanation of the sociopolitical changes in Uzbekistan. The country was gradually moving away from its acceptance of Western values as standard and universal, was concep- tualizing its own road to democracy, and was looking for new partners abroad. The country’s leaders bold- ly rejected the strategy and tactics of the Color Revolutions, and initiated a healthy and constructive opposition at home by letting the civil society institutions move closer to the power structures.

ECONOMY

Jahangir KAKHAROV Senior lecturer, Department of International Economic Relations and World Economy, Mirzo Ulugbek National University of Uzbekistan (Tashkent, Uzbekistan)

Government Economic Plans for 2005

he priorities for the year were formulated in a report made by President Islam Karimov at a joint session of the Legislative Chamber and the Senate of the Oliy Majlis in late January 2005.1 These T include:

1 See: I.A. Karimov, “Nasha glavnaia tsel—demokratizatsia i obnovlenie obshchestva, reformirovanie i moderniza- tia strany,” Narodnoye Slovo, 29 January, 2005. 294 REPUBLIC OF UZBEKISTAN Economy

n deepening of market reforms and further liberalization of the economy in order to ensure a decent living standard for the population by limiting government intervention in economic activity, providing effective guarantees for free enterprise, and creating the necessary market infrastructure; n priority development of the private sector, an increase in its share in the economy, and creation of effective mechanisms and instruments for its legal protection, promotion and support; n deepening and expansion of the efforts to develop private business and private farming through the provision of additional guarantees, benefits and preferences in taxation, authorization procedures and establishment of small enterprises performing contracts awarded by large enterprises and of supply and sales agencies providing services to small businesses; n deepening of reforms in the banking and financial systems by measures to promote the capitalization of banks, increase their authorized and working capital, and encourage them to use their funds for investment primarily in the real economy, and also by enhancing confidence in banks among economic agents and the population at large; n reform of the housing and public utilities sector, including the development and implementation of a special government program for its reform; n further improvement of tax policy, including the development of a new wording of the Tax Code in order to simplify legislation, unify taxes, reduce the tax burden, and upgrade and liberalize tax administration. These plans were based on the achievements of previous years, such as high rates of economic growth, positive changes in the development of foreign trade, and structural and institutional transformations. Thus, according to the official data of the State Statistics Committee, the gross domestic product (GDP) in 2004 grew by 7.7%, which was one of the highest figures for the past few years. The government continued to pursue a course aimed at ensuring macroeconomic and financial stability through tight monetary policy. The implementation of a set of measures and mechanisms in this area was designed to maintain relatively low inflation (5.6%) and stability of the national currency. As noted in a publication entitled Ekonomika Uzbekistana (The Economy of Uzbekistan), GDP was expected to grow at a high rate: 7.0-8.0%. The government planned to improve the macroeconomic environment in order to create favorable conditions for the development of the real sector and for institutional and structural changes in the economy. Its privatization program for 2005-2006 was designed to give a new impetus to the appearance of new property owners and the development of the private sector. By 2007, the government proposed to increase the share of small business to 45% of GDP. In the agricultural sector, a key task was to reorganize 1,100 loss-making shirkats (agricultural cooperatives), including 406 shirkats in 2005, and to set up private farms on their basis. For 2005, experts projected an increase in industrial production by 9-10% compared to 2004, agricultural production by 6-7%, and investment by 7-8%. Favorable conditions in the foreign market enabled them to predict an increase in the exports of raw materials, manufactures and consumer goods. Given the outlook for world trade, there was reason to expect an increase in exports by 12-15% and in imports by 10-12%, with a continued trade surplus. An active social policy remained an overarching priority of the country’s economic reforms. The year 2005 was declared a Health Year, and a special program was adopted in this area. A whole package of special social programs to be implemented during the year was aimed at ensuring social stability and improving the people’s well-being. This includes a reform of the housing and public utilities

295 CENTRAL EURASIA 2005 Analytical Annual sector, targeted assistance to vulnerable strata of the population, personnel training, development of the school education system and children’s sport, employment, supply of drinking water and natural gas to rural households, etc.2 During the year, the country’s president issued a number of important decrees and decisions aimed at strengthening the legal protection of business entities, reducing the tax burden, simplifying the tax payment and reporting system, liberalizing financial responsibility, and drastically downsizing and improving the business audit and inspection system. Overall economic growth in 2005 amounted to 7.2%, including 7.7% in industry, 7.3% in agriculture, 6.6% in construction, 8.6% in retail trade, and 14.5% in paid services. Investment increased by 6.9%, and exports, by 9.7%. As the result of a moderately tight monetary policy, inflation was 3.1% (i.e., within the predicted limits). Favorable weather conditions were conducive to record crops of grain and cotton. Thus, for the first time in the history of cotton growing, the country’s dehkan (peasants) and private farmers met their contractual obligations (3.6 million tons of raw cotton) by mid-Octo- ber.3 On the whole, the cotton crop totaled 3.766 million tons (about 4.6% more than in 2004), and the cotton crop, 6.238 million tons (10.3% more). The most rapid growth was recorded in exports of passenger cars (265%), knitwear (122%), mineral fertilizers (152%), plastic goods (104%), ferrous and nonferrous metals (152.6%) and services (109.3%). Among the negative trends of the year one should note a significant increase in accounts receiv- able for utility services and incomplete coverage of consumers by contracts for the supply of these services in some parts of the republic. In late November and in the first decade of December, Uzbekistan was visited by a mission of the International Monetary Fund, which discussed a number of issues with the country’s government. The mission also studied the latest changes in the economy and assessed the immediate prospects of its development. And although the IMF and the republic’s government decided not to make public their joint statement on the results of the mission’s work, it became known that the IMF representatives had basically agreed with the government in their assessment of the results achieved in the first nine months of the year, the figures expected for the year as a whole and the forecasts for 2006. The mission acknowledged that economic growth had averaged 7% for the third year running and that the country’s international reserves had for the first time reached 10.4% of GDP. The IMF also approved the government’s steps to ease the tax burden for businesses and noted the progress in structural reforms, including reforms designed to simplify licensing and registration procedures for certain types of business activity, to streamline reporting for business entities and reduce the number of audits and inspections. It also noted the government’s successes in the sale of equity stakes in state-owned enterprises, liquidation of unprofitable shirkats and their conversion into private farms.4 However, according to Ferghana.ru (with reference to the press service of the Cabinet of Ministers), certain differences remained in the assessment of the course of economic reforms in the country. In particular, the IMF expressed dissatisfaction with the high excise taxes on imports, the time schedule for the convertibility of the national currency, high bank interest rates slowing down the development of business, and other problems. The IMF recommended that the government tighten its monetary policy in order to curb inflation, improve the business climate and enhance depositor confidence in commercial banks.

2 See: Ekonomika Uzbekistana. Analiticheski obzor Tsentra effektivnoi ekonomicheskoi politiki (TsEEP) Respubliki Uzbekistan za 2004 god, No. 8, March 2005. 3 See: “Dannye zasedania Kabineta Ministrov Respubliki Uzbekistan of 20 oktiabria 2005 goda,” Narodnoye Slovo, 21 October, 2005. 4 See: Biznes Vestnik Vostoka, No. 50 (724), 15 December, 2005. 296 REPUBLIC OF UZBEKISTAN Economy The Budget

The parameters of budget policy were approved by the Oliy Majlis: budget revenues (excluding specialized funds)—2.1 trillion soms (UZS), expenditures—UZS 3.3 trillion, and budget deficit—about 1% of GDP.5 As in previous years, the largest share of budget funds (48.7% of total expenditures) was allocated for social purposes, including social protection of the population.

Table Main Socioeconomic Development Indicators for 2003-2005 (as % of previous year)

2003 2004 2005

Gross domestic product 104.4 107.7 107.2

Total industrial production 106.2 109.4 107.7

Production of consumer goods 108.4 113.4 —

Total agricultural production 105.9 110.1 107.3

Construction 103.5 103.6 106.6

Retail turnover 105.1 104.7 108.6

Paid services 107.9 113.8 114.5

Inflation 103.8 103.7 103.1

S o u r c e s: “Ob osnovnykh itogakh sotsialno-ekonomicheskogo razvitia Respubliki Uzbekistan v 2004 godu,” Narodnoye Slovo, 25 March, 2005; Interfax.

The expected results of state budget execution in 2005 with a deficit of 0.4% of GDP (well below the initially projected figure) were on the whole approved by the IMF.6

Investment Projects

The key tasks of the capital investment program for the year were as follows: to ensure stable GDP growth; to deepen structural economic reforms; to implement social programs; to create new jobs; and to attract foreign direct investment on a larger scale. An analysis of annual investment forecasts since 1996 shows that the share of centralized investments in their total amount increased from 46% to 58% in 2002. In absolute terms, the projected amounts of centralized investments steadily increased from UZS 65,764 million in 1996 to UZS 1,017,817 million in 2003, and then fell to UZS 862,437 million in 2005. The main sources here were budget funds and government-guaranteed foreign investments. The projected amounts of non-central-

5 See: Ekonomika Uzbekistana. Analiticheski obzor… 6 See: Biznes Vestnik Vostoka, No. 50 (724), 15 December, 2005. 297 CENTRAL EURASIA 2005 Analytical Annual ized capital investments increased from year to year, totaling UZS 2,011,190 million in 2005. The main sources here were enterprise assets, foreign direct investment and credit, and also household savings (11% of total investments in 2005).7 Among the projects commissioned in the first half of the year were the Baysun-Kumkurgan railway section, the Kagan-Gazli and Mubarek-Gallyaral gas pipeline sections, new installations at the Mubarek Gas Processing Plant, and other facilities.8 A new switching station designed to supply electricity to rural areas was put into operation in the Samarkand Region. A plant for processing farm produce at JV Shark Nematlari went into service. The implementation of a project for the development of specialized secondary and professional education with a $58.8 million loan from the Japan Bank for International Cooperation was completed. Using their own funds, the country’s enterprises put into operation the first power unit at the Talimardjan Thermal Plant and facilities for the production of knitwear, sewn products, knitted and other fabrics, yarn and other textile products.

Cooperation with TNCs

In late 2004, the Cabinet of Ministers approved a program of investment projects for 2005 to be implemented with government guarantees. It was planned to finance 115 projects with the use of foreign capital investment and credit totaling $865.78 million. At least $209.54 million (10 projects) was to be utilized through the national holding company Uzbekneftegaz. The largest of these projects provided for the investment by Russia’s LUKoil of the first $45 million in the production of hydrocarbons on PSA terms, with total Russian investments in this project due to amount to $995 million. The program included other projects as well: the construction of a compressor station and field facilities at gas condensate fields (Zevardy, Kiltak and Pamuk) by the French company Sofregaz at a total cost of $107.3 million; the development of the Khandiza polymetallic ore deposit in the Surkhandaria Region, with Britain’s Oxus Gold acting as investor (project cost at least $16 million); and the establishment of an aircraft maintenance center with the participation of the Uzbekis- ton havo Yollari company (Uzbekistan Airways) ($2.83 million). Under the investment program, government-guaranteed loans were projected at 13.3% ($350.15 million) of the total amount of investment. The share of foreign direct investment and credit was due to increase by 19.6% (to $515.63 million).9 In the first quarter of 2005, the government launched a new privatization program for 2005-2006. A total of 2,246 state-owned facilities and equity stakes were offered for sale to foreign and local investors, including 1,385 facilities and state-owned assets for acquisition entirely into private ownership.10 Of these, 249 enterprises, facilities and equity stakes were sold by the end of the first quarter. Thus, stakes in 29 joint stock companies for the amount of UZS 1.4 billion and 56 facilities for the amount of UZS 0.3 billion and $87.5 thousand were sold with a step-by-step reduction in the initial price. Foreign investors acquired state-owned enterprises and shares worth a total of $6.4 million (with investment commitments of $9.2 million and UZS 67.2 million), including the Samarkand Tea Pack- ing Factory, 73.1% of the shares of Uychi Ip-yigiruv, and 25% stakes in the Karbonat and Toj Metall

7 See: M. Abdulatipov, “Investitsionnaia programma respubliki: tseli i formirovanie,” Biznes Vestnik Vostoka, No. 38 (712), 22 September, 2005. 8 See: “Informatsionnoie soobshchenie o zasedanii Kabineta Ministrov Respubliki Uzbekistan,” Narodnoye Slovo, 20 July, 2005. 9 See: Biznes Vestnik Vostoka, No. 1 (675), 6 January, 2005. 10 See: Ob osnovnykh itogakh sotsialno-ekonomicheskogo razvitia Respubliki Uzbekistan v I kvartale 2005 goda. 298 REPUBLIC OF UZBEKISTAN Economy joint stock companies. In the first quarter, the republic’s foreign partners fulfilled their investment commitments in the amount of $6.3 million.11 The overall amount of foreign investment and credit was $423 million (2% more than projected), including $296.4 million of direct investment (24% more than projected). On the eve of Independence Day (1 September), a new enterprise, Baytex Tijaret, was opened in Tashkent. This enterprise for dyeing, bleaching and manufacturing knitted fabrics was founded by two Turkish firms, Ultash Entegre Textile and Baha Textile. The cost of the first stage of this project is $25 million, and its daily capacity is 15 tons of knitted fabric; bleaching and dyeing—50-60 tons of fabric; drying—100 tons; cutting and sewing—45 thousand pieces. Its clients include companies from the EU countries and the USA, and also such transnationals as Marks and Spencer, Wal-Mart and Chibo. Another new enterprise, JV Turkulteks, was set up on the basis of JSC Turtkul, a spinning and weav- ing mill located in the Republic of Karakalpakstan. The total cost of the project is $15.2 million, and its export potential is estimated at $10 million. With the participation of Turkey’s Demir Group, yet another joint venture, Demir Tekstil, was established in the Akhangaran District of Tashkent Region. The total cost of this project, designed to produce cotton and blended yarn, is $11.3 million, and its export potential is estimated at $9 million. JV Tashtekstil, set up with the participation of the German company Schultz, is to produce 3,000 tons of dyed knitted fabric and 6 million pieces of knitwear. The cost of the project is $10.2 million, and its export potential, around $10 million.12 Other newly commissioned facilities include three silk factories with foreign capital worth a total of over $3 million, including a $1 million silk spinning mill with 100% Chinese capital.13 Projects for the production of yarn and textile goods at JV Bursel-Tashkent Textiles, utilization of petroleum gases at the Kokdumalak field, and the manufacture of facing slabs at JV Euro Stone were also completed in 2005. In the first nine months of the year, 729 state enterprises changed their form of ownership, including 323 enterprises under the privatization program. These were converted into 2 joint stock companies, 68 limited liability companies, and 659 privately owned enterprises. In addition, 26 contracts were signed for the purchase and sale of state-owned assets for the amount of $20.95 billion and UZS 339.8 million, including 11 contracts with investment commitments for the amount of $45.9 million and UZS 6.03 million. In particular, exploratory wells in the Shege area owned by the national holding company Uzbekneftegaz were sold to Russia’s LUKoil (for $4.278 million), and large state-owned stakes in leading Uzbek joint-stock companies were sold to other foreign investors: Bukhara Gypsum (30%) to Knauff (Germany), the Samarkand Elevator Plant (75%) to Condor (Iran), AkhangaranCe- ment (25%) to JV Bentonit, and Karbonat (25%) to Shadella Inc (Switzerland). The implementation of investment programs continued at the Samarkand Tea Packing Factory, bought out by All Ameri- cas International Inc (USA). In the first nine months of the year, its new owner attracted $2.759 million worth of investment and restarted the plant, which had stood idle for over five years. JV Coca Cola Bottlers Uzbekistan Ltd (CCBU) attracted $4 million worth of investment and restarted production after a break of over two years.14 Under the Vysokovoltnoye project ($9.1 million) for heap leaching of gold and silver, the Oxus Gold company produced its first silver bar.

11 See: Ibidem. 12 See: Biznes Vestnik Vostoka, No. 35 (709), 31 August, 2005. 13 See: Ibidem. 14 See: “Kratkie itogi deiatelnosti Goskomimushchestva za 9 mesiatsev 2005 goda,” Biznes Vestnik Vostoka, No. 44 (718), 2 November, 2005. 299 CENTRAL EURASIA 2005 Analytical Annual RELIGION

Bakhodyr ERGASHEV D.Sc. (Philos.), professor, head of the Social Sciences and Humanities Department, University of World Economy and Diplomacy (Tashkent, Uzbekistan)

he New Year celebrations were the most important event of the beginning of 2005, demonstrating that the republic’s confessional life had reached maturity. In his New Year Address to the T nation, the president pointed out that 2005, declared as the Year of Health, should be used “to mobilize all the resources of the state, society, non-commercial, and commercial structures and pool them together for the sake of the nation’s health.” This meant that the religious structures, together with the state structures, were invited to contribute to the major social programs and political decision-making. In this way Uzbekistan, a multinational and poly-confessional state, acquired additional and very effective potential. In 2005, there were 2,202 religious organizations in Uzbekistan belonging to 16 confessions; 2,016, or 91.5 percent belonged to Islam. There were 170 Christian organizations, eight Jewish and six Bahai communities, one Krishna society, and one Buddhist temple in the republic. About 20 religious organizations were registered in 2005. In 2005, there were 46 teachers and lecturers teaching religious and secular subjects at the Tashkent Islamic Institute; 231 worked in the madrasahs, 20 at the Orthodox seminary, and 15 at the Protestant seminary. In 2005, the Koranic readers from Uzbekistan took the leading places at the International Con- test of Koranic Readers in Kazan (Russia). Between 7 and 17 January, the Cathedral of the Dormition in Tashkent and other churches organized their annual Christmas celebrations for children. There was information that over 50,000 children from Christian families and from families belonging to different confessions attended the celebrations and received traditional Christmas gifts. The Tashkent and Central Asian Eparchy organized the festive events with the help of Sunday school pupils and their parents. The children performed verses and songs for the Christ Child, watched performances, etc. President Karimov’s interview, which appeared on 14 January in Nezavisimaia gazeta (Rus- sia), offered a theoretical interpretation of the official conception of enlightened Islam. The head of state said in the interview: “There is traditional, enlightened Islam, and there is also militant Islam, which is coming to the fore.” He went on to say: “Militant Islam wants to dominate the billion and a half Muslims devoted to traditional Islam. …They want to turn Islam into a weapon to fight Christianity and other confessions. This has added terrorist tinges to Islam,” said the president, “which repels the Islamic world and creates even more tension in its relations with the rest of the world.” On 21 January, Uzbekistan celebrated the holy Muslim feast of Kurban Hayit together with the Islamic world. (Back in June 1991, the president made this religious festival a day off.) On that day, people prayed in all the mosques, which caused practically no trouble. In his message to the president of Uzbekistan, which appeared in all the national newspapers, U.S. President George W. Bush emphasized “Uzbekistan’s firm support of the United States’ counterterrorist struggle” and pointed out that his country “was prepared to work together with Uzbekistan in building up political and econom-

300 REPUBLIC OF UZBEKISTAN Religion ic institutions.”1 This and other facts demonstrated that the world community partly supported Tashkent’s policy regarding freedom of conscience. Nearly all the confessions took part in a series of charitable acts in support of the victims of the tsunami (which happened on 26 December, 2004 in Southeast Asia). On 23 January, the Roman Catholic Cathedral of Tashkent organized a charity concert attended by diplomats; it was a response to Pope John Paul II’s appeal to pool forces to help the natural disaster victims. Muslim, Jewish, and other communities organized similar events. The largest Uzbek NGOs (the Women’s Commit- tee, the Kamolot Public Movement, etc.) and foreign organizations (the Red Cross) organized the widest campaigns. The Kuwait International Islamic Charitable Organization set up in 1989 by Emir Jabr al-Ah- mad Jabr as-Sabah came to Uzbekistan in December 1995. Together with other foreign organizations, it actively contributed to the religious and educational activities among the Muslims. It helped orphans; extended material support to poor families; dug new and restored old wells, and distributed scholarships among the best students, etc. (In Uzbekistan, it dug new and restored 34 artesian wells with pure drinking water; and 250 students of male and female madrasahs received scholarships.) Under the Continuity of Cultural Heritage project, the charity awarded the annual Abdulaziz al-Babtin Prize to authors of the best books, archeological and historical studies, and publications of ancient manuscripts. In the Year of Health, the Foundation sent free medicine to the Andijan, Namangan, and Ferghana regions. In 2005, the year 1426 of Hegira began on 10 February. This date, as well as the birthday of the Prophet Muhammad (which fell on 21 April in 2005), is not as widely celebrated as Christmas among the Christians, but symbolizes unity of all the confessions present in Uzbekistan. The country celebrates Navruz, which, though not a purely Muslim feast, is widely celebrated across the East. On that day, the national cultural centers organize concerts in all the settlements across the country. The leaders of practically all the religious communities present in Uzbekistan offered their condolences to the Catholics of Uzbekistan and the world regarding the death of Pope John Paul II. (He was highly respected in Uzbekistan; in the past he received the president of Uzbekistan during the latter’s Italian visit. The nation was aware of the Pope’s support of the Uzbek nation in connection with the terrorist acts. On 22 March, 2005, the Pope elevated the status of the Mission in Uz- bekistan to the level of the Apostolic Administration.) On 6 April, 2005, a memorial liturgy was performed in the Roman Catholic Church attended by about 250, A. Iunusov, deputy mufti, among them. Premier of Uzbekistan Sh. Mirzieev offered condolences to the Vatican in the name of the country’s leaders. In small hours of 1 May, the Orthodox Christians of Uzbekistan, together with the rest of the Christian Orthodox world, celebrated the great religious holiday—the Resurrection of Christ. All the churches of the Tashkent and Central Asian Eparchy held holiday Easter services. Orthodox Chris- tians celebrated the great holiday in all the large cities of Uzbekistan. At night, several thousand Or- thodox Christians attended the Easter service in the Cathedral of Dormition in Tashkent. On 2 May, the second day of Easter, the Holy Fire delivered from Jerusalem was distributed at the Easter Evening Service; clerics of the eparchy were awarded on the occasion of Easter 2005, and greetings from Metropolitan of Tashkent and Central Asia Vladimir were read. On 6 May festive events—readings, a concert, and an exhibition of Easter eggs, Easter cakes, and artistic objects—were held in the new building of the Spiritual Administrative Center of Tashkent. Before that, similar undertakings were carried out by professional performers in the capital’s largest concert halls. In 2005, the events organized by Sunday school pupils in the Christian Orthodox churches and cathedrals were more of a family nature and attracted more people. The Easter Mes-

1 Khalk suzi, 13 May, 2005. 301 CENTRAL EURASIA 2005 Analytical Annual sage of Metropolitan of Tashkent and Central Asia Vladimir said in particular: “The Most High gave us life in a peaceful spiritually free land. We celebrate Resurrection in beautiful churches, the image of Heaven on earth.”2 Members of the Committee for Religious Affairs under the Cabinet of Ministers, the Tashkent Seminary, the Russian Cultural Center, and Institute of Design attended all the Easter events. The Andijan events subjected the religious and political situation in the country to a serious test. The riot was predated by public actions caused, according to experts, by mass unemployment in the area, which made it easier for the Islamists to carry out their destructive actions. It was the Akramists, a Muslim movement which tried to capture power with the help of a relatively novel method, “religious entrepreneurship,” who triggered the riots. The sect was out to prove its unique right to carry the “economic reforms,” to be the only defender of the interests of the “destitute,” and to restore the “historic right of the Caliphate.” Between 1995 and 1999, the founder, Akram Iuldashev, incarcerated for his crimes in the local prison, and his cronies “amended” the holy religion of Islam, which means that they sinned against their religion. The destructive sect was out to extend the circle of their supporters in Ferghana and even beyond it; they tried to disseminate their “novel” ideas to set up something like the Caliphate. The failed actions the Akramists designed to destabilize the situation first in Andijan and then in the capital revealed to the world community their true nature and true intentions. The clergy contributed to the general efforts to improve the country’s positive image damaged by the Andijan events. One of the most popular clerics, former Mufti Sheikh Muhammad Sodik Muhammad Iusuf, described human rights as one of the central international issues and “powerful politics.” He wrote: “All advanced countries are proud of their full observance of human rights at home and call on other states to follow their example. The leading countries make good relations with other states conditional on respect for human rights. If this approach proves ineffective, they apply certain punitive measures to the most obstinate of the regimes. …They never hesitate to pretend that they respect these rights. In fact, the so-called human rights issue is but part of the theory of rights that the Shari‘a has studied and applied from time immemorial.”3 On 14 May, Papal State Secretary of the Vatican Cardinal Angelo Sadano consecrated Father Yerzy Maculewicz, head of the Apostolic Administration in Uzbekistan, as bishop. Later the inauguration of this first Catholic bishop in Uzbekistan was held in the Tashkent cathedral. Uzbekistan regarded this as a “great honor,” not only for the local Catholic community, but also for the entire country, and as recognition of domestic stability. There are about 4,000 Catholics in Uzbekistan divided into six parishes served by ten Franciscans; there are three monks and ten nuns working in the country.4 On 25 May, the U.S. State Department classified the Islamic Jihad group as a terrorist organization, which means that its property and shares in properties of others in the United States, under U.S. jurisdiction, or controlled by American citizens should be blocked. On 30 July, 2004, this group organized a series of blasts in Tashkent at the American and Israeli embassies and the Public Prosecu- tor’s Office of Uzbekistan. The blasts killed at least two and wounded nine. The Islamic Jihad assumed responsibility for these acts and threatened more attacks. The attitude of the local and world Jewish communities toward the Andijan events deserves special mention: they demonstrated their profound understanding of the global nature of the events in Andijan and elsewhere in the world. Many active members of the Jewish and other diasporas objected to using the protest potential of religious-extremist and terrorist movements for the pur-

2 Available at [www.pravoslavie.uz]. 3 Available at [www.islam.uz]. 4 Available at [newsru.com]. 302 REPUBLIC OF UZBEKISTAN Religion pose of the Color Revolutions. On 14 May, spokesmen of the local synagogues announced that they had nothing to do with the Andijan events, that the Jewish communities were still functioning under normal conditions. Uzbekistan took part in the work of the Council of the Jewish Sephardic Communities of the CIS set up in Moscow on 28 July with the aim of preserving the Sephardic Jews’ ethnic, cultural, and religious identity in the CIS countries, giving them a religious educational infrastructure, and encouraging research into the history, philology, and literature of the Sephardim. The Sephardic Jews (Jews of Bukhara and Georgia, and Mountain Jews), who boast a highly original ancient culture, are facing assimilation, which is a major problem. According to Chief Rabbi of Central Asia David Gurevich, there are 35,000 to 40,000 Jews living in Tashkent. There is a school for 200 pupils, a kindergarten for 27, where the children get free kosher food four times a day, there is a women’s club called Geula, and a mikvah (a pool for ritual ablutions). There are 500 Jews living in Andijan, where there is a small synagogue. Approximately the same number lives in Ferghana, where a synagogue with a small Sunday school was recently opened and registered. The best Jewish school and the oldest Central Asian synagogue are still functioning in Bukhara. On 12 July, a large volume called Islom ziyosi uzbegim siymosida (The Light of Islam on Uzbek Faces) was presented at the Tashkent Islamic University under the Cabinet of Ministers. The ceremony was attended by heads of state and public organizations, scholars, prominent theologians, diplomats, and members of international organizations accredited in Uzbekistan. The book published in Uzbek, Arabic, and English contains 16 chronologically arranged presidential decrees, 48 cabinet decisions issued in 1990-2005, and extracts from presidential works and speeches at international forums and other events. The book is illustrated by 225 photographs. In 2005, 128 bachelors and 20 masters graduated from the Tashkent Islamic University, the largest in Central Asia, where young men study theology and secular subjects. In 2005, the university enrolled students into the departments of fiqh, economic and natural sciences (Islamic law, world economy and international economic relations, informatics and information technology), the history of Islam, and philosophy (religious studies). Candidates for master’s degrees were enrolled to study religious and Islamic disciplines, Islamic law, legal systems of foreign countries, computers, mathematical modeling, and the use of mathematical methods in research. The fact that the cultural-national centers and members of all the religious confessions took part in the countrywide celebrations (9 May—Day of Memory and Honors; 21 March—Navruz; 1 Octo- ber—Day of Teachers and Tutors, etc.) helped the world community understand the religious and political situation in Uzbekistan. The greetings the Uzbekistan leader received on Independence Day, the annual holiday celebrated on 1 September, gave food for thought. This is true, in particular, of the telegram the president of Uzbekistan received from Pope Benedict XVI: the new Vatican leaders were obviously prepared to cooperate with Tashkent. (The Uzbek delegation attended the burial ceremony of Pope John Paul II.) The congratulations which arrived from Saudi Arabia, Kuwait, UAE, Israel, and other countries were just as eloquent. Early in September, famous French singer Charles Aznavour, who had arrived for the Shark Taronalari Music Festival, visited the Church of Our Lady in Samarkand, the only church of the Ar- menian Apostolic Church in Central Asia. The Armenian diaspora in Uzbekistan is fairly large—over 50,000 members, for whom moral support of their compatriots is much more than a cultural gesture. (The Armenians played and continue playing a great role in the region’s social and economic life and have an immense impact on the decision-making process at the international level.) Uzbekistan took part in the First International Festival of Muslim Cinema “Golden Minbar” which opened on 5 September in Kazan to celebrate the 1,000th anniversary of the Tartar capital. Over 70 films from 18 countries competed in three categories—feature films, documentaries, and cartoons. In the

303 CENTRAL EURASIA 2005 Analytical Annual last three years, cinema in Uzbekistan has been on the upsurge; spiritual issues and enlightenment, which dominate national cinema, prevail over the mass culture. In 2005, the state-owned TV channels showed Korean, Indian, and Japanese films for the simple reason that Uzbekistan has a great deal in common in the spiritual sphere with these Eastern nations. The visit of the Apostolic Nuncio for Kazakhstan, Uzbekistan, Tajikistan, and Kyrgyzstan Arch- bishop Jozef Wesolowski, which took place on 13-15 September, allowed the sides to discuss issues related to the life of the Catholic community in Uzbekistan, as well as social and political problems. He interceded for High Mass of the Triumph of the Holy Cross in the Cathedral of the Sacred Heart in Tashkent. The Archbishop emphasized that the charitable activity of the Catholic organizations in Uzbekistan was of a cultural rather than religious nature and pursued educational aims. He also touched upon poverty in Uzbekistan, which, in his opinion, is widespread: he believed that mental patients and prisoners were among the poorest groups. On 4 October, the Muslims of Uzbekistan started the “uraza” fasting, one of the central Islamic commandments. The same day, Koranic readings were launched in all mosques across the country with the help of guest readers—the kori. According to the mufti, 1,500 Uzbek Muslims visited the holy land of Saudi Arabia to see the Prophet-related places. The first pilgrims left on 20 September. On the whole, according to the information Mufti of Uzbekistan A. Bakhromov supplied to foreign media, since the first year of independence about 50,000 Uzbek Muslims have performed hajj to Mecca and Medina. Scholarly studies of the history and proliferation of the Holy Koran have been going on at their usual pace; much was done in cooperation with European academics. Efim Rezvan, a prominent Ori- entalist from St. Petersburg, studied Koranic manuscripts. On 19 October, an ethnographic expedition of the Museum of Anthropology and Ethnography (known as the Kunstkammer) of the Russian Acad- emy of Sciences arrived in Uzbekistan. Later, in the fall, Efim Rezvan’s definitive work Koran Osma- na (St. Petersburg—Bukhara—-Samarkand—Tashkent) (The Osman Koran [St. Petersburg-Bukhara- Samarkand-Tashkent]) was awarded a diploma at the International Koranic Exhibition held in Tehran. The world Islamic community highly appreciated the Koran in the Brail system, 1,000 copies of which were published in Uzbekistan with the help of the Kuwait International Islamic Charitable Organization. It was the first attempt of this sort in the CIS and the third successful effort in the world. Presented at the International Exhibition “The Art of Book Printing,” it was awarded a diploma in the “Book of Fascinating Fate” nomination. It should be said that the RF embassy was also engaged in religious educational activities. It distributed the Koran free of charge among its Muslim expatriates in Uzbekistan. In mid-October, a book by Premier of Malaysia Abdullah Badawi Islam Khadari (Islamic Civ- ilization) appeared in Uzbek in Tashkent, in which he offered his original conception, which had much in common with the conception of enlightened Islam mentioned above. The book contained the speech the prime minister presented at the 55th Congress of the United National Organization, of which he was the head. His conception rests on ten major principles: loyalty to Allah; fair government which enjoys people’s confidence; free nation; economic growth; high living standards; protection of the rights of women and national minorities; unity of the cultural and moral environment; environmental protection; and the country’s efficient defensibility. For obvious reasons Tashkent needs the experience of an economically prosperous Muslim country to promote its own ideas about the social role of Islam. On 27 October, the Roman Catholic cathedral in Tashkent hosted an inter-religious function to commemorate the 40th anniversary of the “Nostra Aetate” Declaration on the Attitude of the Catholic Church to Non-Christian Religions. The Jewish community initiated the events attended by the leaders of the Muslim, Christian Orthodox, Evangelical Lutheran, and other communities. It is common knowledge that Israel regards the Declaration “as a historic step of the Catholic Church toward its

304 REPUBLIC OF UZBEKISTAN International Affairs own people.” Those who attended the event agreed that all the confessions present in Uzbekistan could freely communicate with the Muslims and among themselves to promote moral values, peace and freedom—in fact, everything that the Declaration called on to preserve. The holy month of Ramazan ended on Thursday, 3 November. The Muslims marked the end of the month-long fasting with Ruza Hayit, the First Meal after Fast feast. According to Mufti of the Muslims of Uzbekistan Abdurashid Kori Bakhromov, “the faithful attended the morning festive prayers held in all 1,947 mosques of the republic.” Normally urban mosques are more crowded on holidays than village mosques; prayers there are led by people with higher Islamic education well versed in the psychology of communication with the faithful, in politics, and in the most complicated religious issues. In mid-December, a Saudi delegation led by Chairman of the Consultative Council (Shura) Saleh bin Homaed paid an official visit to Uzbekistan. The guests had the opportunity to see that the state and the umma were moving to meet each other halfway; to be convinced that religious activities were going on unhampered, and to establish contacts with the local Muslim community. This was not the first visit of Saudis to Uzbekistan: earlier they came to study the position of Islam in the country, as well as the charitable activities of the local business community. On 25 December, the heterodox and some Christian communities celebrated Christmas to thank God “for His love and salvation through His Beloved Son.” This holiday has been freely celebrated in Uzbekistan for 14 years now—a sure sign of the tolerance the political regime demonstrates toward all Christian trends. The country’s leaders proclaimed religious tolerance part of the state’s policy and national idea. This is always mentioned when it comes to inter-national and inter-religious cooperation, which, in turn, helps to stem extremism. About 5,000 will perform the hajj from Uzbekistan to Saudi Arabia (1,200 more than in 2004). The mufti explained the higher figure by “improved living standards.” He also added: “The peasants produced more cotton and grain than expected; many farmers earned enough to pay for the hajj.” Those Uzbek Muslims who stay at home for various reasons (the most obvious of them being lack of space in the holy places for over 1 billion faithful) will celebrate the holiday at home in keeping with the long-established traditions.

INTERNATIONAL AFFAIRS

Aziz KAMILOV Ph.D. (Hist.), assistant professor, independent expert (Tashkent, Uzbekistan)

n international affairs, the republic followed its traditional course aimed at constructive and consistent expansion of political, economic, and other relations in a broad range of foreign policy I issues, focusing particular attention on regional and sub-regional ties. For example, on 4-6 Janu- ary, First Iranian Prime Minister Mohammad Reza Aref visited Tashkent. During his meeting with Uzbekistan’s government representatives, he talked about bilateral cooperation, primarily in trans-

305 CENTRAL EURASIA 2005 Analytical Annual port and communications. Afghani Public Works Minister Suhrab Ali Safari also participated in the ceremony to sign the Provisions on an Interstate Coordinating Council for setting up a transportation corridor between Afghanistan, Iran, and Uzbekistan. In the future, the so-called Trans-Afghan Corri- dor could bring not only immense financial, but also political dividends. Along with this, friendly relations were reinforced between the republic and Russia. The Rus- sian Federation has invested more than $1 billion in Uzbekistan’s oil and gas industry alone, which the republic’s Foreign Minister Sodik Safaev mentioned in an interview with Russia’s Nezavisimaia gazeta on 24 January, 2005. But the interview mainly focused on preparing public opinion for the need to withdraw the armed forces of third countries from the region. “We believe that Central Asia should not become militarized. This is too dangerous. It would be better for the big players to keep their competitive games to the economic sphere,” emphasized the minister. Uzbekistan went on to carry out this thesis. Uzbek President Islam Karimov’s speech on 28 February at the parliamentary session of the new convocation should also be viewed from the same angle. The head of state noted: “Checks into the activity of certain Western nongovernmental and non-commercial organizations (NGOs) showed that some of them have gone beyond the framework of their declared programs and pursued specific tailor-made aims.” Uzbekistan undertook preventive measures which made it possible to avoid a repetition of the events which took place in Georgia and Ukraine, and could take place in Kyrgyzstan in light of the upcoming election there. Islam Karimov expressed the hope that his Kyrgyz colleague would be able to avoid “rose, orange, and yellow revolutions.” “It will be a sad reflection of following the latest fashion if Kyrgyzstan tries to go for the yellow. Perhaps Kirghizia can avoid this. After all, if every republic decides to follow suit, there will soon be no colors in the rainbow left.” At the end of January-beginning of February, Uzbek-Kazakhstani relations became aggravated again. This was because President Islam Karimov accused official Astana of aiding and abetting terrorism. This accusation was voiced at a meeting of the country’s parliament. At that time, an assembly of the U.N. Counter-Terrorist Committee was going on in Almaty, with respect to which the Uzbek side made it clearly understood that the Kazakhstani authorities and special services do not wish “to fight extremism.” It was they, according to Islam Karimov, who were to blame for the terrorist acts organized in Tashkent in the spring of last (2004) year. In response, several high-ranking Kazakhstani officials severely criticized Uzbekistan’s policy. Fortunately, this is where the bandying of words ended. An important event in February was the visit by a delegation of Russia’s Gazprom Company headed by deputy chairmen Yuri Komarov and Alexander Riazanov, during which they signed contracts with Uztransgaz on the transportation of Central Asian gas through Uzbekistan and the purchase in 2005 of 5 billion cubic meters of Uzbek blue fuel. What is more, the sides agreed to expand ties in the gas industry in areas set forth in the Agreement on Strategic Cooperation. In particular, a decision was adopted to create joint working groups, within the framework of which implementation of the project for developing the Central Asia-Center pipeline will be activated, as well as draw up a long- term contract on the transportation of gas through Uzbekistan and a production sharing agreement (PSA) under the project for assimilating the fields of the republic’s Ustiurt Region. It should be noted that this visit was a logical continuation of the Strategic Cooperation Agreement in the gas industry between the Uzbekneftegaz National Holding Company and Gazprom signed on 17 December, 2002. It envisages long-term purchases of Uzbek gas for 2003-2012, Gazprom’s participation in natural gas production projects in Uzbekistan under PSA conditions, as well as cooperation aimed at developing Uzbekistan’s gas transport infrastructure and the transportation of Central Asian gas through its territory. A pilot project in this sphere is cooperation under PSA conditions in restoring gas production at the Shakhpakhty field. The PSA came into force on 14 April, 2004, and the project itself (annual

306 REPUBLIC OF UZBEKISTAN International Affairs production of 0.5 billion cubic meters) opens up possibilities for implementing a larger project under PSA conditions for the exploration and production of gas in the above-mentioned Ustiurt Region. Forming an efficient regional security system is an extremely complicated and lengthy process, particularly taking the current reality into account. In respect to this, mention should be made of the final meeting of the Regional Expert Group for drawing up a draft of the Treaty on a Nuclear-Weap- on-Free Zone in Central Asia on the initiative of its states’ leaders held on 7-9 February in Tashkent. The sides finished work which had been going on for more than seven years, and the coordinated document is essentially ready for signing. The foreign ministry representatives of Uzbekistan, Turkmenistan, Tajikistan, Kyrgyzstan, and Kazakhstan participating in this process endorsed the text of a corresponding document. It was based on the draft prepared at a meeting of experts in Samarkand in 2002, recommendations of the IAEA and U.N. Department for Legal Issues, as well as proposals put forward by the U.S., Great Britain, Russia, France, and China. What is more, at the February meeting in Tashkent, the draft of Regula- tions for the Procedure to Execute Article 10 of the Treaty Draft (advisory meetings) drawn up by the U.N. Regional Center for Peace and Security in Asia and the Pacific was agreed upon. The Regula- tions were adopted to create a mechanism for carrying out annual and special advisory meetings for discussing issues relating to execution of the treaty. The Uzbekistan delegation expressed the hope that after the document on a nuclear-weapon-free zone in Central Asia is signed, the five nuclear states will join the protocol on guaranteeing security of the treaty signatories. But in the middle of the year, the British embassy in Almaty sent out a so-called memorandum from three nuclear powers—the U.S., Great Britain, and France—which expressed “concern about the inadequacy of the consultations on drawing up the treaty draft.” This concern was largely related to their own interests, and in no way reflected the gist of the problem, that is, it was an obvious attempt to put pressure on the region’s republics and indirectly affect the interests of other nuclear powers. Here we will remind you that many complicated aspects of coordinating certain items and provisions of the Treaty on a Nuclear-Weapon-Free Zone were discussed at the advisory meeting held as early as 9 July, 1998 in Bishkek of experts of the Central Asian countries and nuclear states, based on the results of which a corresponding communiqué was adopted. But as work on the Treaty drew to a close, the positions of several nuclear powers began to change. In this respect, certain centrifugal processes were generated, and behind-the-scenes intrigues and violations of previous agreements were even observed in the region. Among the February events, mention should also be made of completing work to liquidate mine- fields in the Shakhimardan enclave. A note from the Kyrgyzstan foreign ministry said that the ministry welcomed the measures undertaken by the Uzbek side to de-mine sections of the Kyrgyz-Uzbek state border and believes that they are helping to strengthen good-neighborly relations between the Kyrgyz Republic and the Republic of Uzbekistan. On an invitation from the Uzbek President, Pakistani President Pervez Musharraf paid an official visit to Tashkent on 5-7 March, during which the heads of the two states discussed the development of bilateral relations, including the intensification of trade and economic cooperation, as well as international problems of mutual interest. According to the results of the talks, Pervez Musharraf made a public statement in which he noted in particular: “Pakistan will not permit terrorists from Uzbekistan to use its territory against your national interests.” On 15-17 March, Uzbek President Islam Karimov paid an official visit to Slovenia, during which several documents were signed aimed at reinforcing the legal basis for developing bilateral cooperation in the economic, political, and social spheres. On 4-6 April, the head of Uzbekistan visited India. His itinerary had to be changed due to the death of the Pope, still the visit can be considered successful. Islam Karimov commented on its out-

307 CENTRAL EURASIA 2005 Analytical Annual come, saying that the goal of expanding friendly ties and triggering untapped potential had been reached. The Uzbek leader met with the president, vice president, and prime minister of India, and his conver- sations with them led to a comprehensive exchange of opinions on the development of bilateral relations. It was noted that the countries have similar views on many international and regional issues and that this will serve as an important political factor in establishing practical ties. A positive aspect of the development of Uzbek-Kazakhstani cooperation is that a Free Trade Agreement has come into force between the countries. Prior to this, a simplified registration procedure was in effect for the import of fruits and vegetables weighing up to 200 kg, now this threshold has been raised to one ton. And since most greens from Uzbekistan are brought in Gazel trucks, now essentially all produce manufacturers are granted privileges. Among the April events, the fact that Uzbekistan was the first Central Asian country to render humanitarian aid to Kyrgyzstan can be singled out. On 12 April, it delivered 60 carriages of corresponding freight to this country. The main political event of May was initiation of Uzbekistan’s withdrawal from GUUAM. Official Tashkent first announced that it was withdrawing its membership from this structure in June 2002, which was motivated at that time by “the union’s excessive politicization” and by the fact that it had “no economic component.” However, the head of the republic, Islam Karimov, announced the main reason for the withdrawal by saying that the political orientation of Ukraine, Georgia, and Moldova today is compelling Uzbekistan to reconsider its attitude toward GUUAM. In this respect, on 5 May, Uzbekistan sent the Moldovan authorities (GUUAM’s depositaries) official notification of its withdrawal from the regional cooperation organization. This step became the beginning of a certain geopolitical turn in the country away from the United States and toward Russia, which was logically continued in the second half of the year. On 7-8 May, Islam Karimov visited the Russian Federation and took part in the unofficial summit of the heads of the CIS member states and undertakings dedicated to the 60th anniversary of Vic- tory over Fascism in World War II. On the whole, May was one of the most difficult months in Uzbekistan’s most recent history due to the events in Andijan. Immediately after these tragic events, official Tashkent declared it was in favor of carrying out a transparent and objective investigation, for which an independent parliamentary commission and international working group were created consisting of representatives of the diplomatic corps accredited in the republic’s capital. Running a little ahead, we will note that the results of the investigations carried out in Septem- ber-November and the trial of several participants in the May events show that these terrorist acts were a carefully planned act organized by outside destructive forces and aimed at bringing about a change in the constitutional system in Uzbekistan. And the initiation of “peaceful” demonstrations by the population were only part of it, since the inspirers of these demonstrations planned to carry out a scenario similar to the Color Revolutions and draw international human rights organizations into it by further escalating the information war against Uzbekistan. Nevertheless, on 23 May, the leadership of the European Union came forward with a statement calling for an independent investigation of the events in Andijan, in which it criticized the “extreme use of force.” But even prior to this, in a telephone conversation with U.N. Secretary General Kofi Annan, Uzbek President Islam Karimov said that he objected to an international investigation of these events being carried out. On 25-27 May, the head of Uzbekistan paid a state visit to China. On the eve of the visit, Islam Karimov gave an interview, in which he emphasized again that “the organizers of the tragic events in Andijan did not achieve their sordid goals. The people did not support them and did not follow their false appeals. Corresponding measures were opportunely adopted.” (Incidentally, as for the purpose of the visit, during talks with PRC Chairman Hu Jintao, President Karimov discussed bilateral rela-

308 REPUBLIC OF UZBEKISTAN International Affairs tions, particularly the intensification of trade and economic cooperation, regional security issues, and other international problems of mutual interest.) On 29 May, a press conference was held by U.S. senators John MacCain, Lindsey Graham, and John Sununu, at which concern was expressed about the authorities’ actions during the Andijan events and the need for carrying out an international investigation. On 8 June, a working group for monitoring the investigation of the May events and the government’s measures to stabilize the situation in Andijan and the Andijan Region began its work. As already noted, this group was comprised of the employees of embassies accredited in Tashkent. They included diplomats from Russia, China, Iran, India, Pakistan, Kazakhstan, Kyrgyzstan, and Tajikistan. On 18 June, the republic’s foreign ministry put out a press release which stated that the restrictions introduced by Uzbekistan on flights of U.S. air force carriers from the Karshi-Khanabad aerodrome were supposedly the Uzbek side’s response to the White House’s stance on the events in And- ijan… But the decision to restrict these flights was made three months before the events in Andijan for reasons the American side was well informed about. On 28-29 June, the country’s president, Islam Karimov, paid a working visit to Russia, during which the heads of the two states discussed the further development of bilateral cooperation in different spheres and the strengthening of regional security, as well as other international problems of mutual interest. This visit was viewed as a new stage in the development of relations between these countries. On 4-5 July, President Islam Karimov visited Astana, where he participated in the summit of Shanghai Cooperation Organization member states. At this meeting, the leaders of the SCO countries discussed questions of strengthening security, fighting terrorism and extremism, creating a common Central Asian market, comprehensive support and stimulation of trade and economic ties, the rational use of water and energy resources, the development of contacts in the sociocultural, scientific-technical, and transport-communication spheres, as well as other regional and international problems. What is more, the leaders of the Organization’s member states exchanged opinions about the creation of a SCO Regional Cooperation Development Fund and Business Forum, and discussed ways to cooperate in the restoration of Afghanistan. According to the results of the summit, a Declaration of the SCO heads of state and a Concep- tion of Cooperation of its member states in the fight against terrorism, separatism, extremism were adopted, Provisions on Permanent Representatives of the Organization’s Countries in the Regional Antiterrorist Structure was endorsed, and decisions on granting Iran, Pakistan, and India the status of observers in the SCO were signed. Mongolia was the only state in the past to have this status. On 1 August, the republic’s foreign ministry came forward with a statement on so-called humanitarian evacuation. It noted in particular that “on 28-29 July, 2005, structures of the UNHCR for Kyrgyzstan, in violation of all the procedures and norms of international law and U.N. decisions, carried out so-called humanitarian evacuation from Kyrgyzstan of approximately 440 Uzbek citizens, who crossed the border during the tragic events in Andijan on 12-13 May and were located in this country.” On 26 August, the Senate, the upper chamber of the Uzbekistan parliament, spoke out in favor of withdrawing the U.S. armed forces contingent from the Khanabad aerodrome, and adopted a corresponding statement. On 26-27 August, Uzbek President Islam Karimov took part in a regular session of the Council of CIS Heads of State held in Kazan and in the official undertakings dedicated to the 1,000th anniversary of the capital of Tatarstan. On 2-4 October, the Uzbekistan president paid a state visit to Malaysia, during which the heads of the two countries discussed the further development of bilateral relations, the strengthening of trade and economic cooperation, and urgent international, including regional, problems of mutual interest. The talks ended in the sides signing several agreements.

309 CENTRAL EURASIA 2005 Analytical Annual

On 4 October, the European Union placed an embargo on trade in arms and several other commodities with Uzbekistan. What is more, the EU froze a current agreement on partnership and cooperation by refusing to permit high-ranking officials of the republic into its countries. On 21 October, Russian Foreign Minister Sergei Lavrov made a working visit to Tashkent and was received by Islam Karimov. The working visit of the head of the Russian foreign ministry took place against the background of a significant boost in bilateral relations. On 14-15 November, Uzbek President Islam Karimov made an official visit to the Russian Fed- eration. During the talks, the heads of the two countries discussed the further development of cooperation in different spheres and the strengthening of regional security, and, most important, a Treaty on Alliance Relations between Russia and Uzbekistan was signed. According to the Russian President, “the most trusting level of relations” is being established between Russia and Uzbekistan. Vladimir Putin emphasized that the Treaty on Alliance Relations «is ensuring our countries an essentially new quality and extremely close degree of interaction». On 16 December, Uzbekistan became a permanent member of the Eurasian Group for combating money laundering and terrorism financing (EAG). This structure was created on Russia’s initiative more than a year ago, and official Tashkent had the status of observer in it.

310 CHRONOLOGY OF EVENTS FOR 2005 Politics

CHRONOLOGY OF EVENTS FOR 2005

POLITICS

Afghanistan

1 January —Representatives of the northern provinces gather in Mazar-i-Sharif to protest unjust, in their opinion, distribution of portfolios in Karzai’s new cabinet. 17 January —The head of state appoints the Central Election Commission to prepare and carry out parliamentary elections. 20 January —Leader of the Afghan Uzbeks General Dustom escapes with his life in a terrorist act in Sibergan. February —Four prominent Taliban leaders side with the government. March —Two new opposition parties—New Afghanistan and the National Authority Party—appear, later to be united into the National Reconciliation Front of Afghanistan under opposition leader Yunos Qanuni. 10-12 May —Mass rallies protesting against the defilement of the Koran perpetrated by Americans employed at the Guantanamo base (Cuba). 29 May —Abdullah Fayaz, prominent Muslim theologian and chairman of the Ulema Council of Afghanistan, dies in a terrorist act in Kandahar. 1 June —Terrorist act is carried out in the Abdul Rab Ahundzada Mosque in Kandahar during the funeral service of Abdullah Fayaz. 5 August —Former defense minister in the communist government of Najibullah’s General S. Tanai, who fled to Pakistan in March 1990 after an aborted anti- presidential riot, arrives in Kabul. August —Former communists and those Taliban leaders who have sided with the government join the election race. 18 September —Elections to the parliament and provincial councils take place. 27 September —Minister of Internal Affairs Ali Ahmed Jalali resigns from his post. 19 December —Swearing-in ceremony and first sitting of the parliament (National Assembly).

311 CENTRAL EURASIA 2005 Analytical Annual

Republic of Armenia

10 February —Aram Karapetian, leader of the New Times Party, announces that his party is prepared to launch a national revolution. 16 February —Ovannes Ovannisian, head of the Liberal Progressive Party of Armenia (LPPA), holds a press conference. 29 March —Hearings on Nagorno-Karabakh begin at the National Assembly. 13 April —The opposition Justice bloc marks the first anniversary of the dispersal of a rally with a For the Sake of Democracy Forum. 15 April —The opposition Republic Party meets for its congress. 31 August —Artashes Gegamian, chairman of the National Unity opposition faction, calls on the nation to vote “no” at the referendum on the Constitution. 1 September —The parliament passes the constitutional amendments in the second reading. 5 September —The New Times Party issues a statement on the set of amendments. 9 September —Vazgen Manukian, NDU chairman, suggests that two of the three parties in the ruling coalition should leave it. 20 September —The Zharangutiun (Heritage) Party issues its “no” statement. 20 September —16 political organizations and the Forum of the Country’s Intelligentsia issue a statement about their cooperation. 4 October —President Kocharian issues a decree setting the referendum date for 27 November. 13 October —The president meets the council members of the progovernment political coalition. 18 October —21 political parties call on the nation to vote “yes” to the constitutional amendments draft. 25 October —The Republic Party organizes its extraordinary congress in the open in front of the Matenadaran, the depository of ancient manuscripts. 27 October —The U.S. ambassador to Armenia announces that his country has begun preparations for the 2007 election in Armenia. 29 October —Seventeen opposition parties organize a car race between Erevan and Shirak with rallies and other events in Artik, Maralik, and Giumri. 3 November —President Kocharian meets with professors and students of Erevan State University. 8 November —Representatives of the People’s Party (S. Demirchian among them) take part in a sitting of the 17 + 1 opposition headquarters. 9 November —A seminar on dual citizenship in Armenia is held in the Congress Hotel. 10 November —The Dashink (Union) Party of Samvel Babaian meets for its constituent congress. 10 November —The Vanadzor office of the Helsinki Civil Assembly issues a statement. 10 November —The Armenian National Movement board meets for its sitting.

312 CHRONOLOGY OF EVENTS FOR 2005 Politics

11 November —The National Revival Party holds its constituent congress. 15 November —The National Unity Party, the People’s Party, and the 18 + 1 headquarters agree on a joint boycott of the referendum. 21 November —Raffi Ovannisian, leader of the Heritage Party, makes a statement about his non-confidence in the government. 21 November —Artashes Gegamian, leader of the opposition National Unity Party, holds a press conference. 21 November —18 + 1 opposition headquarters meets for its sitting. 24 November —Vazgen Manukian, leader of the National Democratic Union, holds a press conference. 25 November —Raffi Ovannisian, head of the Heritage Party calls a Meeting of Citizens on the square before the State Opera. 25 November —The president gives an interview to all central TV channels. 27 November —The referendum on constitutional amendments is held. 28 November —PACE observers publish their conclusions on the referendum results. 29 November —The united opposition holds a meeting in Erevan. 2 December —The EU ambassadors receive members of the Armenian opposition in the U.K. embassy. 5 December —At the National Assembly sitting, the Justice faction organizes the collection of signatures to set up a parliamentary commission to investigate numerous violations during the referendum. 17 December —The Republican Party meets for its congress. 19 December —The New Times non-parliamentary opposition party meets for its congress. 19 December —Speaker of the National Assembly Artur Bagdasarian sends a letter to the General Prosecutor’s Office.

Azerbaijan Republic

20 January —Mourning events are organized across the country on the occasion of the 15th anniversary of the January 1990 tragedy when punitive detachments of the Soviet army were sent into the capital, producing hundreds of victims and wounded. 23 February —The President addresses the nation on the 13th anniversary of the Khojaly genocide: in 1992, the town was razed to the ground by Armenian armed detachments. 2 March —Editor-in-Chief of the Monitor E. Guseynov is murdered. 18 March and —Two opposition blocs—Azadlyg and Yeni siyasiat—are formed. 12 April 20 March and —The president issues decrees On the Amnesty of Some of Those Sentenced 20 June to Imprisonment.

313 CENTRAL EURASIA 2005 Analytical Annual

25 April, —PACE, the European Parliament, and the House of Representatives of the 10 June, U.S. Congress pass resolutions insisting on fair elections in Azerbaijan. 20 July 4 May —The government and the opposition enter into a direct dialog on the election law. 7 May —The Milli Mejlis adopts a Declaration on the Anniversary of the Occupation of Shusha. 11 May —The president signs a decision On Improving Election Practices. 21 May —The journalists of Azerbaijan meet for their Third Congress. 12 June —A Joint Commission is set up made of members of the president’s administration, parliamentary deputies, and members of human rights organizations to find out whether there had been arrests for political reasons. 23 June —A group of well-known and respected intellectuals addresses the public to warn against possible post-election clashes. 28 June —The Milli Mejlis endorses the president-initiated amendments to the Election Code. 13 July —The government and the press sign the Memorandum on Mutual Understanding. 22 July —Jubilee events are held to celebrate the 130th anniversary of the national press. 12 August —The Central Election Commission restores the Khankenda constituency. 29 August —Public TV is ceremoniously set up. 19 October —A series of arrests of ministers and other top bureaucrats accused of cooperating with the opposition in planning a coup begins. 25 October —The president signs a decision On Urgent Measures Related to the Election Campaign and Elections. 26 October —The Central Election Commission passes a decision on marking fingers of the voters to avoid double voting. 28 October —The Milli Mejlis lifts a ban on observation of the voting procedure for NGOs by introducing corresponding measures into the Law on NGOs. 6 November —Election to the Milli Mejlis. 10 November —The New Azerbaijan Party organizes a rally to celebrate its victory in the election. 10 November —The opposition announces the setting up of the National Resistance Movement to recognize the election as illegitimate and annul its results. 21 November —A Republican Forum of Candidates recognizes that the election was democratic. 1 December —The Constitutional Court approves of the election results. 16 December —The government sets up two new ministries—the Ministry of the Military- Industrial Complex and the Emergencies Ministry.

314 CHRONOLOGY OF EVENTS FOR 2005 Politics

Georgia

3 February —Premier Zurab Zhvania dies. 10 May —U.S. President George W. Bush visits Georgia. 30 May —Foreign ministers of the RF and Georgia sign an agreement on the withdrawal of Russian military bases from Georgia. July —A uniform national exam is introduced. 1 October —Parliamentary elections are held in several majority constituencies. 19 October —Foreign Minister Salome Zurabishvili resigns. 22-23 November —Celebrations of the anniversary of the Rose Revolution sweep the country.

Republic of Kazakhstan

6 January —The Bostandyk Inter-District Specialized Economic Court of Almaty issues a decision on liquidating the People’s Party Democratic Choice of Kazakhstan (PP DCK). 20 January —About 40 members of the religious extremist organization Hizb ut-Tahrir are arrested in Almaty. 26 January —Presentation of a draft of the new Constitution by the Coordinating Council of the Democratic Forces of Kazakhstan (CCDFK). 29 January —Regular congresses of the Communist Party and the Democratic Ak Zhol Party of Kazakhstan pass resolutions condemning the authorities’ move against the opposition. 9 February —The Almaty City Court confirms the decision of the court of lower instance on liquidation of the PP DCK. 9 February —The RK parliament passes draft laws On Opposing Extremist Activities and On Amending and Changing Certain Legal Acts Related to Opposing Extremist Activities. 14 February —An opposition youth movement Kakhar is set up patterned on the Ukrainian Pora. 18 February —Address to the Nation by the President of the RK for 2005. 2 March —Presidential decree on reorganization of the RK Agency for Fighting Economic Crimes and Corruption into a state body subordinated directly to the president. 11 March —The National Commission for Democratization and Civil Society meets in Uralsk. 13 March —The 5th Congress of the Democratic Ak Zhol Party of Kazakhstan annuls the institution of cochairmen and elects A. Baymenov as the only chairman. The opposition camp splits. 20 March —The For a Fair Kazakhstan bloc elects Zh. Tuiakbay, the single opposition candidate, as chairman of the CCDFK.

315 CENTRAL EURASIA 2005 Analytical Annual

25 March —Nursultan Nazarbaev addresses the Congress of Businessmen of Kazakhstan. 25 March —Joint press conference of the Civil Party and the Agrarian Party of Kazakhstan in the wake of the events in Kyrgyzstan, at which they announce their resolution “to take to arms to defend sovereignty and the freedom of choice of the Kazakhstani people.” 29 March —The National Commission for Democratization and Civil Society meets in Astana. 29 March —Members of the initiative group announce the creation of the party Alga, DCK! as a successor of the PP DCK. 6 April —President of the RK signs a decree On Organizing Report-Back Meetings of Heads of Local Executive Structures with the People. 6 April —The People’s Front of Kazakhstan Kazak Memleketi (the Kazakh State), a national-patriotic movement, meets for its constituent congress and elects Karishal Asan-ata its president. 12 April —The 5th Congress of the Patriots’ Party of Kazakhstan. 15 April —Presidential decree On Measures to Intensify Corruption Fighting and Strengthen Discipline and Order in the State Structures and Among Civil Servants is published. 17 April —President of the RK signs the Law on Amending and Changing the Constitutional Law on Elections in the Republic of Kazakhstan. 18 April —B. Zhumagulov and A. Zholshybekov are appointed deputy chairmen of the Otan Party with B. Zhumagulov made acting chairman. 28 April —The presidential decree On Forming a Council of Businessmen under the RK President is published. 29 April —The first (constituent) congress of the Genuine Ak Zhol Party is held. 29 April —Former cochairmen A. Sarsenbaev, B. Abilov, and O. Zhandosov are excluded from the Ak Zhol Party. 1 May —An incident in Shymkent where the opponents of the opposition organized a pogrom in the Tourist Hotel where the movement For a Fair Kazakhstan held its constituent conference. 3 May —The President of the RK signs the Code of Honor of Civil Servants. 4 May —The presidential decree On Measures for More Extensive Use of the Potential of the Constitution of the Republic of Kazakhstan is published, extending the rights and functions of the parliament. 12 May —The Majilis passes a Law on Amending and Changing Certain Legal Acts of the RK Related to National Security Issues. 26 May —A meeting of the National Commission for Democratization and Civil Society supports President Nazarbaev’s initiative about stage-by-stage elections of the akims. 7 June —The Republican Asar Party and the Democratic Party of Kazakhstan form a coalition called the People’s Union of Kazakhstan for Democracy and adopt new Programs and new Rules.

316 CHRONOLOGY OF EVENTS FOR 2005 Politics

7 June —A new public and political movement Bolashak is set up. 8 June —The Medeu District Court of Almaty rules that Z. Nurkadilov is guilty of public encroachment on the honor and dignity of the RK president and imposed a fine of 485,500 tenges on him. 9 June —A meeting is held by the RK president and attended by members of his administration, the government, parliament, and the akims of the regions and the cities of Almaty and Astana to discuss carrying out the tasks formulated in the 2005 Address to the Nation. 13 June —The Medeu District Court of Almaty partly accepts the claim of the Joint- Stock Company Khabar Agency against A. Sarsenbaev and imposes a fine of 1m tenges on him. 15 June —The Majilis passes laws On the Activity of the Branches and Representative Offices (independent structures) of International and Foreign Non-Commercial Organizations on the Territory of the RK and On Amending and Changing Certain Legal Acts of the RK Related to Non-Commercial Organizations. 17 June —Decision of the RK Central Election Commission on carrying out experimental elections of district akims on 12 August. 21 June —Decision of the RK Central Election Commission to hold elections to the Senate on 19 August. 30 June —The parliament closes its session. 1 July —Raising of pensions, wages, and scholarships according to the 2005 Address to the Nation. 7 July —The RK Constitutional Council accepts for discussion an inquiry by a group of deputies about the date for the presidential election. 8 July —President of the RK signs the Law on Amending and Changing Certain Legal Acts of the RK Related to National Security Issues. 9 July —Draft Conception of the Development of Civil Society in the Republic of Kazakhstan (2006-2011) prepared by the National Commission for Democratization and Civil Society is published. 23 July —Constituent Congress of the Alga! Party (earlier People’s Party Alga, DCK!). 27 July —An organizing committee for setting up a national-patriotic movement Ult Tagdyry (the Fate of Nation) is held. 2 August —The RK Ministry of Justice registers the public association For a Fair Kazakhstan. 12 August —Experimental elections of district akims. 19 August —Elections to the Senate. 19 August —The RK Constitutional Council makes public its decision on the date of the presidential election. 24 August —RK President Nazarbaev addresses the nation on TV. 1 September —The RK parliament opens its session. 7 September —The Majilis sets 4 December, 2005 as the date for the presidential election.

317 CENTRAL EURASIA 2005 Analytical Annual

9 September —The 8th Congress of the Otan Party nominates Nazarbaev its presidential candidate. 9 September —The presidential decree On Measures to Realize the Rights of RK Citizens to Free, Fair, and Competitive Elections is made public. 12-13 September —The Second Civil Forum. 13 September —The Congress of the Democratic Party of Kazakhstan supports the nomination of Nazarbaev as presidential candidate. 14 September —The People’s Coalition of Kazakhstan is set up to support Nazarbaev; the extraordinary congress of the Asar Party nominates Nazarbaev presidential candidate. 16 September —The Republican Public Headquarters set up to support Nazarbaev. 23 September —The 6th Congress of the Civil Party of Kazakhstan nominates Nazarbaev presidential candidate. 23 September —The 6th Congress of Peasant Social-Democratic Auyl Party (PSDP) decides to join the People’s Coalition of Kazakhstan. 25 September —The 6th Congress of the Democratic Ak Zhol Party of Kazakhstan nominates A. Baymenov presidential candidate. 26 September —The 7th Congress of the Patriots’ Party of Kazakhstan decides to support Nazarbaev. 27 September —The 6th Congress of the Agrarian Party of Kazakhstan nominates Nazarbaev presidential candidate. 29 September —The leading media adopts a Charter “For Fair Elections.” 7 October —The Central Election Commission registers N. Nazarbaev as presidential candidate. 8 October —An unsanctioned meeting of the opposition in Almaty is dispersed. 11 October —The Central Election Commission calls all participants in the election process to carry out fair and open elections. 24 October —The Central Election Commission closes the procedure for registering presidential candidates. 25 October —Official election campaign begins. 28 October —The 2nd Congress of the Businessmen of Kazakhstan. 31 October —The 31st Congress of the Federation of the Trade Unions of Kazakhstan. 13 November —Z. Nurkadilov is found dead. 17 November —TV debates of the presidential candidates. 21 November —The Central Headquarters of presidential candidate Zh. Tuiakbay announces that it rejects non-constitutional methods. 4 December —Election of the President of the Republic of Kazakhstan. 6 December —The Central Election Commission officially announces the election results. 6 December —The Democratic Union of the People’s Coalition of Kazakhstan is set up. 14 December —The Ekibastuz City Court rules that G. Zhakianov, one of the opposition ideologists, be freed on parole.

318 CHRONOLOGY OF EVENTS FOR 2005 Politics

16 December —The Republican Ecological Party Menin Kazakhstanym (My Kazakhstan) holds its constituent congress.

Kyrgyz Republic

January —The “yellow opposition” organizes its first demonstrations in Bishkek. 27 February —The first round of the parliamentary election is held. 4 March —Supporters of the defeated candidates seize the regional administration building in Dzhalal-Abad. Confrontation between the government and the opposition begins. 13 March —Second round of the parliamentary election is held. 15 March —The people’s Kurultai meets in Dzhalal-Abad; synchronized civil disobedience actions sweep the republic. 24 March —The opposition seizes the Government House in Bishkek. Askar Akaev is deposed by force. Small hours of —Mass plundering of shops in the capital. 25 March 25 March —The parliament appoints Kurmanbek Bakiev premier and acting president of the Kyrgyz Republic. 4 April —Akaev signs his resignation in Moscow. The new parliament sets the date for an off-year presidential election (10 July). 29 April —The first convocation of the Constitutional Assembly begins working on changes and amendments to the Constitution. 13 May —K. Bakiev and F. Kulov sign an agreement on an election tandem. 10 June —Parliamentary deputy Zh. Surabaldiev is assassinated. N. Motuev and his supporters take the country’s largest coal strip mine, Kara-Keche, by force. 17 June —Supporters of U. Baryktabasov, who failed to register as a presidential candidate, gather for a rally and take the Government House by storm. Law enforcement bodies suppress them and drive them out of the building. 10 July —Bakiev wins the off-year presidential election. 19 September —Prosecutor General A. Beknazarov is removed from his post. 20 September —Parliamentary deputy B. Erkinbaev is assassinated. 13 October —The Constitutional Assembly of the second convocation, enlarged to 275 people on President Bakiev’s initiative, begins its work. Some of the NGOs and public organizations criticize it, suspecting that the enlargement was designed to create a pocket Constitutional Assembly. 20 October —Parliamentary deputy T. Akmatbaev and his retinue are murdered in Correctional Labor Colony No. 31. 20 October —Another round of political crisis begins. Brother of murdered deputy R. Akmatbaev, who is well known in the criminal world, puts pressure on the government. He demands that Felix Kulov, allegedly guilty of his brother’s

319 CENTRAL EURASIA 2005 Analytical Annual

death, should be punished. Kulov’s supporters interpret this as an attempt by the criminal community to seize power in the country. 11 November —The Constitutional Assembly finishes its work on the draft Constitution and offers it for nationwide discussion. 25 December —Discussion of the new constitution ends.

Republic of Tajikistan

14 January —The Central Election Commission refuses to register DPT leader M. Iskandarov and leader of Tarakkiet Party S. Kuvvatov as candidates. 31 January —A terrorist act at the Emergencies Ministry kills one person and damages a neighboring building. 27 February —The parliamentary election is held. 28 February —President E. Rakhmonov chairs a regular cabinet sitting (Dushanbe). 1 March —The Central Election Commission announces the election results to the parliament’s lower chamber. 25 March —President E. Rakhmonov appoints eight members of the parliament’s upper chamber of the third convocation. 11 April —RT Public Prosecutor General B. Bobokhonov holds a press conference at which he accuses DPT leader M. Iskandarov of several crimes (Dushanbe). 14 April —The Foreign Ministry asks all diplomatic missions and offices of international organizations in Tajikistan to inform it about their public meetings with parties, public organizations, and the media. 25 April —The Supreme Court of the Republic of Tajikistan sentences former Minister of the Interior Ia. Salimov to 15 years in a strict regime colony. 26 April —The Public Prosecutor General announces at a press conference that DPT leader M. Iskandarov was detained and placed in the Ministry of Security detention center. 3 May — The Democratic Party suspends its participation in the republic’s Public Council. 4 May —The IRPT discontinues its activity in the Public Council. 8 May —President E. Rakhmonov participates in a CIS summit (Moscow). 10 May —The Communist Party suspends its work in the Dushanbe Branch of the Public Council to protest against falsifications of the election results. 13 May —Former commander of the Presidential Guard G. Mirzoev is accused under more than 170 articles of the Criminal Code. 19 May —Russian border guards transfer the valley stretch of the Moscow Border Guard Detachment to their Tajik colleagues. 14 June —The RT Supreme Court begins a closed court trial on R. Fayziev, deputy chairman of the unregistered Tarakkiet Party. 18 June —The presidents of Tajikistan and Afghanistan take part in the ceremony for laying the first stone at the base of the bridge across the border River Panj. 320 CHRONOLOGY OF EVENTS FOR 2005 Politics

24 June —The CIS defense ministers meet for their regular meeting (Dushanbe). 28 June —The RT Supreme Court sentences R. Fayziev, deputy chairman of the unregistered Tarakkiet Party, to 5 years and 10 months in a strict regime colony. 11 August —The Center for Defending Media Rights opens in Dushanbe. 24 August —The court of the Firdavsi District of Dushanbe sentences M. Bokizoda, director of the Kaykhon printshop and Editor-in-Chief of the Nerui sukhan newspaper, to 2 years of correctional labor and to pay a fine of 20 percent of his earnings to the budget (Dushanbe). 13 September —Defense Minister of China Cao Gangchuan arrives in Dushanbe on his first official visit. 19 September —The Party of Economic Reforms holds its constituent congress (Dushanbe). 20 September —U.S. Ambassador to the Tajikistan Richard Hoagland informs journalists that the United States does not plan to set up a military base or deploy its military contingent in Tajikistan. 21 September —A delegation of the U.S. Defense Department arrives in the republic to discuss nuclear non-proliferation issues and measures designed to prevent transit of WMD and its components through Tajik territory. 28 September —The public prosecutor demands that DPT Chairman M. Iskandarov be sentenced to 25 years in prison, deprived of his rank of major general and the “Spitamen” state order. 29 September —Heads of the law enforcement bodies of Tajikistan and Afghanistan sign the Memorandum of Mutual Understanding on Issues of Joint Border Patrol. 1 October —The Agrarian Party of Tajikistan holds its constituent congress (Dushanbe). 5 October —Robert Joseph, Undersecretary of State for Arms Control and International Security, arrives in Dushanbe to discuss security issues with President Rakhmonov. 5 October —DPT Chairman M. Iskandarov is sentenced to 23 years in prison. 9 October —A 25-year-old woman is killed in a blast at the Emergencies Ministry (Dushanbe). 14 October —The foreign ministries of Russia and Tajikistan exchange notes under which citizens of Tajikistan acquire the right to travel to Russia on their internal passports starting on 1 November. 17 October —The authorities discuss the original draft amendments to the laws On the Press and On TV and Radio Broadcasting. 20 October —The Council of CIS Border Guard Commanders holds its meeting in Dushanbe. 26 October —The Social-Democratic Party announces that it will begin consultations with other political organizations of the republic on their participation in the upcoming presidential election. 27 October —Following a corresponding meeting, Premier of Tajikistan Akil Akilov is appointed Chairman of the Council of SCO Heads of State (Moscow). 16 November —The Ministry of Justice registers the Agrarian Party.

321 CENTRAL EURASIA 2005 Analytical Annual

23 November —The laws On the Press and On TV and Radio Broadcasting are amended. The publishers are bound by an obligation to submit all fresh issues of their periodicals (before distribution, including those distributed free of charge) to the government for examination under the threat of punishment. 22 December —A republican conference on education is held and declares education an issue of strategic importance.

Turkmenistan

9 January —Second round of the parliamentary election in seven constituencies takes place. 12 January —Memorial Day of the Defenders of the Geoktepe Fortress. 1-2 February —First session of the new (third) convocation of the Mejlis meets. 22 February —President Niyazov’s eye surgery. 7 April —The decree on convocation of Khalk Maslakhaty is published; its agenda includes the question of ways and trends in improving society at the present stage of the country’s development. 18 April —The Law on Amending and Changing the Family Code is published. 28 April —The president’s decision On Improving the Procedure for Selling Apartments in High Comfort and Improved Planning Residential Buildings at the Expense of Ministries and Departments is published. 5 May —“Kuvvatly Vatan” military exercises. 20, 31 May and —New rounds of purges in the top echelons of power. 12 August 22 August —The president decides to reorganize the fuel and energy complex. 22 August —The decree banning the use of phonograms at song and music events is published. 12 September —New exhibition complex is opened in Ashghabad. 6 October —Decrees on personnel purges among the khiakims of velaiats and etraps are adopted. 15 October —New book by the country’s president is presented in Ashghabad. 24 October —New foreign passport for the citizens of Turkmenistan is approved. 24-25 October —The 16th session of Khalk Maslakhaty. 25 October —New banknotes of 5,000 and 10,000 manats are issued. 31 October —Another official supervisor in the oil-and-gas complex is fired. 18 November —The 900th resident of Ashghabad, the republic’s capital, is born. 30 November —The president holds a meeting to discuss reforms in the oil-and-gas complex. 6-7 December —The Mejlis adopts the 2006 budget and new versions of the laws On Hydrocarbon Resources, On Licensing Some Types of Activity, On State Awards of Turkmenistan, On Normative Legal Acts, and On Migration. 15 December —Personnel reshuffling in the fuel and energy complex.

322 CHRONOLOGY OF EVENTS FOR 2005 Politics

16 December —The country marks the 14th anniversary of the Democratic Party, the only one in the country. 20 December —The Turkmenneftegaz Corporation is abolished.

Republic of Uzbekistan

9 January —The second round of the parliamentary election is held; 58 more deputies are elected to the legislative (lower) chamber of the Oliy Majlis (parliament). 14 January —The Day of the Motherland Defender is celebrated. 14 January —Nezavisimaia gazeta (Russia) carries an interview with President of the Republic of Uzbekistan Islam Karimov entitled “Under the Empire We were Dismissed as Inferior People.” 17-20 January —84 senators are elected to the upper chamber of the Oliy Majlis. 24 January —The President of the Republic of Uzbekistan appoints, by his decree, 16 more senators from among the most prominent state and public figures. 24 January —The Second Plenary Session of the SDP Political Council elects D. Tashmukhammedova as leader of the party. 28 January —The first joint session of both chambers of the Oliy Majlis of the third convocation meets to listen to President Karimov. 7 February —The head of state meets the new cabinet appointed by the Oliy Majlis. 14 February —Three parliamentary factions—the LDPU, National Democratic Fidokorlar Party, and SDP Adolat—form the Democratic Bloc in the legislative chamber. 16 February —The PDPU leaders hold a press conference to announce the party an opposition party of the minority, the left wing of all reformist forces, participant in a healthy faction struggle, and supporter of political pluralism and parliamentary competitiveness. 19 March —The Fifth Plenary Session of the LDPU Political Council elects M. Teshabaev as the party’s new leader. 21 March —Nationwide celebration of Navruz. 22 April —A special session of the Tashkent city Kengash of People’s Deputies elects A. Tukhtaev as khokim of Tashkent. 3 May —A press conference is held in the National Press Center on the occasion of the World Day of Free Press. 9 May —The Day of Memory and Honors is celebrated. 13 May —A riot takes place in Andijan. 18 May —A press conference about the Andijan events for Uzbek and foreign journalists and diplomats attended by the head of state is held at the Public Prosecutor’s Office. 20 May —The first national Civil Forum sets up the National Association of the Nongovernmental Non-Commercial Organizations of Uzbekistan (NANNOUz).

323 CENTRAL EURASIA 2005 Analytical Annual

6 June —The U.S. Peace Corps suspends its activities in Uzbekistan. 10 June —The president receives a delegation of the best Russian political technologists headed by V. Nikonov, leader of the Politika Foundation. 16-17 June —The head of state goes to the Surkhandaria and Kashkadaria regions on a working visit. 25 June —The Special Third LDPU Congress is held. 2 July —The Fifth PDPU Congress is held. 9 July —The Third Plenary Session of the PDPU Central Council elects L. Guliamov, head of the Tashkent party organization, as the party’s leader. 1 August —A presidential decree On Abolition of the Death Penalty is issued. 8 August —A presidential decree On Transferring to Courts the Right to Sanction Arrests is issued. 19 August —The head of state meets the leaders of the parliamentary factions. 26 August —The Senate meets for its plenary session to discuss withdrawal of American troops from the airbase in Khanabad. 27 August —The annual International “Shark Taronalari” Music Festival is held in Samarkand. 27 August —The Senate issues its statement on use by the U.S. of the Khanabad airbase. 1 September —Independence Day is celebrated. 5 September —A parliamentary commission for investigating the Andijan events meets for the first time. 20 September —The court meets for an open sitting to discuss the criminal case of the terrorist acts and other crimes committed on 12-13 May, 2005. 21-22 September —The head of state goes to the Republic of Karakalpakstan and Khorezm Region on a working visit. 1 October —Teacher and Tutor Day is celebrated. 21 October —Day of the Law on the State Language is celebrated; RF Foreign Minister S. Lavrov addresses the students of the Tashkent University of World Economy and Diplomacy. 7 November —A special session of the Tashkent Regional Kengash of People’s Deputies elects M. Kuchchiev as khokim of the region. 8 November —The Board of Guardians of the Development of Children’s Sport Foundation meets under the chairmanship of the head of state. 8 December —Members of the Tashkent public meet to celebrate Constitution Day. The head of state declares 2006 the Year of Charity and the Medical Profession. 17 December —A party conference (congress) of the SDP Adolat is held.

324 CHRONOLOGY OF EVENTS FOR 2005 Economy

ECONOMY

Afghanistan

10 January —The Afghan presidential administration considers the possibility of an amnesty for those involved in the drug trade. 28 January —Iran’s Deputy Energy Minister Reza Ardakanian says that the Islamic Republic of Iran is implementing four water resources projects in Afghanistan, to be completed within three years. 29 January —U.N. representatives declare that unless the Afghan authorities establish control over drug production in the country, international assistance to Afghanistan will have to be reduced. 2 February —The World Bank publishes a report saying that in the past two years the Afghan economy has grown by 50 percent. 20 February —Afghanistan’s Water and Energy Minister Mohammad Ismael Khan says that the situation with electricity supply to Kabul has improved. 22 March —President Pervez Musharraf of Pakistan reaffirms his pledge to allocate $100 million for Afghan reconstruction. Out of this amount, a sum of $43.36 has already been utilized in the country. 27 March —The United Nations issues a special report saying that the Afghan government’s ban on the cultivation of opium poppy has led to a decline in opium production in the country. 29 March —It is reported that 660 thousand Afghans own mobile phones, that the state has acquired its own Internet domain (af), and that Microsoft Corporation has issued software supporting the Pashto and Dari languages. 1 April —Iran’s Ministry of Agriculture announces that Tehran has implemented 22 projects to develop farming areas in Afghanistan. 4 April —An international donor conference opens in Kabul. 5 April —President Karzai says that food and other humanitarian aid does not reach the addressee. 7 April —The Asian Development Bank allocates $80 million for key works in rebuilding the Afghan infrastructure.

325 CENTRAL EURASIA 2005 Analytical Annual

12 April —Copper coins of 1, 2 and 5 afghanis are put into circulation. 29 May —The Ministry of Finance announces the introduction of a new income tax from September 2005. 30 May —Afghanistan is included in the U.N. Special Program for the Economies of Central Asia (SPECA). 9 June —A trade exhibition with the participation of companies from over 30 countries opens in Kabul. 15 June —Kazakhstan’s Foreign Minister K. Tokaev declares Astana’s readiness to invest in the Afghan economy. 21 June —A donor conference for Afghanistan is held in Britain. 28 June —The Ministry of Transport launches a project to restore the country’s second largest international airport (in Mazar-i-Sharif). 28 June —The Asian Development Bank allocates $30 million for the construction of regional airports in the cities of Bamiyan, Chaghcharan, Feyzabad, Farah, Maymana, Qal’eh-ye Now and Zaranj. 30 June —The authorities in Bagram and Kalakan begin to allocate land plots to returned Afghan refugees. 30 June —Deputy Commerce Minister Gulyam Nabi Farah reports an increase in the export of Afghan carpets. 5 July —Mohammad Azim Wardak, in charge of foreign trade at the Ministry of Commerce, reports a 30% increase in the share of Chinese imports (to 25% of Afghanistan’s total imports). 7 July —The government adopts a law on natural resources, under which private sector investment in the exploration, prospecting and development of mineral deposits and oil and gas fields can reach 100%. 9 August —Spain allocates 10 million euros to Afghanistan for the construction of water supply systems and roads, and also medical institutions in Badghis Province. 13 August —About 300 Siemens-made public telephone booths installed by a private Afghan company are put into service in Kabul. 20 September —The U.N. Office on Drugs and Crime (UNODC) publishes a report saying that in 2005 area under poppy cultivation in Afghanistan decreased by 21%, from 131 thousand to 104 thousand hectares. 21 September —President Karzai issues a decree partially exempting exporters (primarily exporters of carpets and other goods produced in the country) from customs payments for the next three years. 20 October —Commerce Minister Hedayat Amin-Arsalla calls on the ECO countries to invest in Afghanistan. 9 November —A new five-star hotel, Serena, opens in Kabul. It is the first hotel built in the capital since the fall of the Taliban regime. 9-10 November —A seminar of ECO countries on Afghan reconstruction is held in Kabul. 28 November —The government launches a campaign to privatize state-owned companies.

326 CHRONOLOGY OF EVENTS FOR 2005 Economy

28 November —It is announced that specialists from Germany’s Lufthansa are to act as consultants in the reform of Afghanistan’s Ariana Airlines. 29 November —The authorities declare their intention to transfer the country’s natural resources to private companies through public auctions. 30 November —Water and Energy Minister Mohammad Ismael Khan says that no more than 6% of the country’s population have access to electricity. 5 December —Foreign Minister Abdullah Abdullah speaks of China’s great contribution to the reconstruction of Afghanistan. 7 December —Representatives of Afghanistan’s Habib Gulzar Non-Alcoholic Beverages Firm report the opening of a new bottling plant in Kabul (jointly with Coca- Cola Company). 8 December —An exhibition of Iranian producers is inaugurated in Herat, followed by a meeting between Afghan and Iranian businessmen. 9 December —The first meeting of the Afghan-American business support fund is held in Kabul. 11 December —Under the national telephone program, another 11 provinces are linked to the integrated digital communications system with the installation of 35 thousand new telephone lines. 18 December —The Bakhtar vegetable oil plant resumes work in Mazar-i-Sharif. The plant is restarted by a French company which has acquired 60% of its shares.

Republic of Armenia

11 January —The Republic of Armenia and the World Bank sign a Dutch grant agreement (4,760 million euros) connected with the poverty reduction assistance credit. 15 January —The government of Great Britain and the government of Armenia discuss a proposal for repayment of 10% of the debt (about $20 million) owed to the International Development Partnership. 23 March —The Armenian-American Commission for Economic Cooperation signs an action program designed to improve fiscal administration, strengthen the banking system, fight corruption, enhance business activity and strengthen cooperation in a number of other areas. April —The Islamic Republic of Iran and the Republic of Armenia sign an agreement on the construction of a 141 km gas pipeline from Iran to Armenia. The cost of the project is about $150 million, and its construction is to be completed in January 2007. 7 April —Within the framework of bilateral cooperation, the governments of Armenia and Germany sign two agreements: on a nature protection program and a program to promote renewable energy. Under the first program, Armenia is to receive 2.2 million euros (at the initial stage), and under the second, a soft loan (6 million euros) and a grant (1.5 million euros).

327 CENTRAL EURASIA 2005 Analytical Annual

2 May —Erevan hosts the 10th meeting of the Armenian-American working group on economic cooperation. 5-6 June —The 7th meeting of the Black Sea Trade and Development Bank (BSTDB) Board of Governors and a Black Sea Business Day are held in Erevan. July —Viva Cell starts working in the country as a second mobile operator, ending the monopoly in this area that has existed since 1998. 1 July —The National Assembly adopts a Law on Currency Regulation and Currency Control. 1 July —The Central Bank starts implementing a system designed to guarantee personal deposits. 1 July —The European Bank for Reconstruction and Development becomes the holder of 25% + 1 share of ArmEconomBank. 20 July —Armenian Finance Minister Vardan Khachatrian and Roger Robinson, World Bank country manager for Armenia, sign a new $20 million credit program for the development of rural enterprise and small-scale commercial agriculture (RESCAD) in Armenia, approved by the World Bank Board of Directors on 7 July. 20 July —Armenia and the World Bank sign a $15 million Urban Heating Project (UHP) for Armenia, approved by the World Bank Board of Directors on 12 July. 20 July —The head of Armenia’s State Tax Service and the head of the Armenian Office of the U.S. Agency for International Development (USAID) sign a memorandum of understanding on the tax administration reform being implemented in the republic. September —With the consent of the Armenian government, RAO UES of Russia acquires the Armenian Electric Network closed joint-stock company. 11 November —The National Assembly adopts a package of laws on mandatory payments. December —Based on the results of an international tender, the Erevan Vodokanal closed joint-stock company passes from EL. Utilite (Italy) to General Deso (France), which has pledged to invest $22.2 million in the Erevan water-supply and sewerage system over the next 10 years. 13 December —For the first time in the 10-year history of the government bond market in Armenia, the Ministry of Finance and Economy issues government coupon bonds with a maturity period of 15 years (distribution volume— AMD 1,160 billion, average yield—8.82%). 16 December —The Millennium Challenge Account informs the Armenian authorities that the Board of Directors of the Millennium Challenge Corporation (MCC) has approved a five-year compact with Armenia worth $235.65 million.

Azerbaijan Republic

3 January —A Central Credit Register is created at the National Bank of Azerbaijan. 7 February —The country’s president signs a decree on the redenomination of the national currency (manat) from 1 January, 2006.

328 CHRONOLOGY OF EVENTS FOR 2005 Economy

8-9 February —The working group on the project for the construction of the Kars- Akhalkalaki-Tbilisi-Baku Rail Corridor holds its first meeting, and the coordinating commission for the North-South international transportation corridor, its second meeting. 25 February —An Azerbaijani-Italian business forum takes place in Rome. 1 March —Allowances to low-income categories of the population are raised. 4 March —Azerbaijan starts exporting crude oil from the Central Azeri field. 12 March —The government reschedules Georgia’s debt to Azerbaijan a second time. 31 March —The Azerbaijani-Turkish Association of Businessmen initiates the establishment of a Union of Eurasian Businessmen. 27 April —Azerbaijan and Georgia sign a memorandum of cooperation on securities. 4 May —Azerbaijan, Russia and Iran sign an agreement (under the North-South project) on the construction of the Qazvin-Rasht-Anzali-Astara railway. 25 May —Azerbaijan, Turkey and Georgia sign an agreement on the construction of the Kars-Akhalkalaki-Tbilisi-Baku Rail Corridor. 23 June —The EU-Azerbaijan Cooperation Committee meets in Baku. 23-24 June and —Business forums with representatives of France and Kazakhstan, respectively, 30 June-1 July are held in Baku. 5 July —The National Bank takes a decision to double (from 1 January, 2006) the requirements on the minimum authorized capital of new banks. 6 July —Azerbaijan and Kazakhstan sign a protocol on expanding economic cooperation. 14 July —Baku hosts a regular meeting of the GUAM steering committee for the trade and transport facilitation project. 29 July —The first million barrels of Azerbaijani oil is pumped into the Baku-Tbilisi- Ceyhan pipeline. 16 August —The State Oil Company signs another contract with RAFI OIL EfZeI(United Arab Emirates). 19 August —The International Bank of Azerbaijan signs an agreement with a number of Western banks on raising a $56 million syndicated loan. 1 September —The country’s government increases the allowances paid out in place of the abolished benefits for public utility, transport and other services. 6 September —Legislative amendments reducing the time for state registration of enterprises from 40 to 5 days enter into force. 17 September —A State Committee on Management of State Property is set up in the country. 1 October —The government raises the minimum wage by 20%; the NBA discount rate is increased once again (to 9% per annum). 8 October —A declaration on the establishment of a Union of Eurasian Businessmen is signed in Baku. 26 October —The Employment Strategy for 2006-2015 is approved.

329 CENTRAL EURASIA 2005 Analytical Annual

27 October —A state commission is established for indexing deposits with the U.S.S.R. Sberbank made by the republic’s citizens prior to 1992. 18 November —The 2006 State Budget is approved. 22 November —A World Bank mission on agricultural development credit begins its work. 1 December —An IMF mission on accelerating the development of the non-oil sector begins its work. 22 December —A Mortgage Fund is set up at the National Bank of Azerbaijan.

Georgia

1 January —The new Tax Code and the Law on Amnesty and Legalization of Undeclared Tax Liabilities and Property enter into force. 1 January —Pensions are doubled to 28 lari (about $15.5). 18 January —One of the largest Russian banks acquires a controlling interest in the United Bank of Georgia. 24 January —Freight carriers from Azerbaijan, Georgia and Kazakhstan sign a protocol on increasing freight transportation through the Aktau port. 24 January —Georgian Prime Minister Zurab Zhvania and Evraz Group SA President Alexander Abramov sign a memorandum on the terms of sale of JSC Chiatura Manganese and JSC Vartsikhe Hydropower Complex. 27 January —Armstrong Holding ASP is declared the winner of a privatization tender for the Georgia Shipping Company. 1 February —An arbitration board for resolving tax disputes is set up at the Ministry of Finance. 8 February —By decision of the Supreme Court, the controlling stake in the Rustavi Steel Factory is returned to the state. 1 March —Tobacco products are banned for sale in merchandise markets. 23 March —A ferry crossing is opened between the Georgian port of Poti and the Russian post of Kavkaz. 23 March —Armstrong Holding ASP refuses to take part in the privatization of the Georgia Shipping Company; the company is acquired (for $93 million) by Britain’s Marine Capital. 25 March —Parliament adopts a Law on the Property of Local Self-Government Units. 26 April —Parliament makes amendments to the Tax Code regarding the resolution of tax disputes in private arbitration. 16 May —Georgia signs a contract with a consortium of companies (A&J, GTS and Celebi) for the construction of a new air terminal in Tbilisi. 25 May —At a meeting in Baku, representatives of Azerbaijan, Georgia and Turkey sign a declaration on the project for the construction of the Kars-Akhalkalaki- Tbilisi-Baku railroad.

330 CHRONOLOGY OF EVENTS FOR 2005 Economy

3 June —Georgia is ranked third in Forbes magazine’s Employee Happiness Index. 3 June —Parliament adopts a Law on Free Trade and Competition. 21 June —Evraz Group SA, one of the largest integrated mining and metallurgical groups operating in Russia, announces its withdrawal from the deal to acquire Georgia’s JSC Chiatura Manganese and JSC Vartsikhe Hydropower Complex. 24 June —Parliament adopts a Law on Licenses and Permits, which abolishes most licenses and permits. 1 July —Under the Tax Code, VAT is reduced from 20% to 18%. 10 August —Azerbaijan oil carried by the Baku-Tbilisi-Ceyhan pipeline crosses the Georgian border. 1 September —Amendments to the Enterprise Law under which all business registration procedures are to be performed by a single agency—the Tax Inspectorate— enter into force. 12 October —The presidents of Georgia, Azerbaijan and Turkey take part in a ceremony to open the Georgian section of the Baku-Tbilisi-Ceyhan oil pipeline. 2 November —The Ministry of Economic Development declares Britain’s Stanton Equities Corporation (a subsidiary of Russia’s Industrial Investors group) the winner of an international privatization tender for a 97.25% stake in the JSC Madneuli mining and processing company and a 50% stake in the Trans Georgian Resource Ltd mineral prospecting and exploration company. 6 December —Georgia is assigned “B+” long-term and “B” short-term sovereign credit ratings by Standard & Poor’s rating agency. 23 December —Parliament approves the 2006 state budget.

Republic of Kazakhstan

1 January —In accordance with the Law on Mandatory Social Insurance, a mandatory social insurance system whose main purpose is partial compensation of income lost as a result of exposure to social risks (disability, loss of job or breadwinner) is introduced in the republic. 31 January —President Nazarbaev takes part in the work of a national conference on the agroindustrial complex (Astana). 8 April —A conference entitled “Industrial Innovation Development Strategy: Peopleware for the IT Industry” is held for the first time on the initiative of private business with the participation of representatives of the state, educational institutions and NGOs. 25 April —The government approves a program for the creation and development of a national innovation system in the Republic of Kazakhstan for 2005-2015, which provides for two main vectors: first, the creation and development of an appropriate infrastructure and, second, the development of an effective system of relations between the agents of innovative activity.

331 CENTRAL EURASIA 2005 Analytical Annual

12 May —A Model for the Development of Regional Technology Parks is approved in the republic. 16 May —Parliament passes a Law on Amendments and Addenda to the Law of the Republic of Kazakhstan on the State Budget for 2005. May —Amendments and addenda to the Law on Investment designed to simplify the procedure for granting preferences to private investors implementing investment projects enter into force. Parliament passes a Law on Amendments and Addenda to Some RK Legislative Acts Concerning Investment, which provides for an easing of the conditions for granting customs privileges in the import of equipment and components for the implementation of investment projects. 6-10 June —A delegation from the republic takes part in a meeting of the Working Party on Kazakhstan’s WTO accession, in plurilateral negotiations on agriculture, and in a regular round of bilateral negotiations with member countries of the Working Party on market access for goods and services (Geneva). 28 June —Parliament passes a Law on State Allowances to Families with Dependent Children. June —Parliament passes a Law on Amendments and Addenda to the RK Law on Measures to Protect the Domestic Market in the Import of Goods. 29 August —Kazakhstan representatives hold a working meeting with experts of the Ministry of Foreign Affairs and Trade of the Republic of Korea, at which the parties discuss the renewed proposals for access to the Kazakhstan services market (Seoul). 17 September —The government adopts a decision on amendments and addenda to Government Decision No. 436 of 8 May, 2003, On Some Matters Relating to the Implementation of the RK Law on Investment. 29 September —The head of state signs a Law on Amendments and Addenda to the RK Law on Transport (to enter into force on 1 January, 2006). 30 September —A Protocol on Amendments and Addenda to the Free Trade Agreement between the Governments of Kazakhstan and Georgia is ratified. 3 October —During President Nazarbaev’s official visit to Georgia, the parties sign a number of bilateral documents, including an agreement between the governments of the two states on mutual visits by citizens, a program of trade and economic cooperation for 2006-2010, and a program of trade, economic, scientific, technical and humanitarian cooperation between Kazakhstan’s Mangistau Region and Georgia’s Ajarian Autonomous Republic. 11 October —President Nazarbaev takes part in the work of an international conference entitled “Kazakhstan-2030 Strategy in Action.” 11 October —A limited partnership called Information Technology Park Management Company is set up in the republic. 28 October —President Nazarbaev takes part in the work of a congress of Kazakhstan businessmen. 13-18 December —A Kazakhstan delegation takes part in the 6th Ministerial Conference of the WTO in Hong Kong. 15 December —The Atasu-Alashankou pipeline is opened at an official ceremony.

332 CHRONOLOGY OF EVENTS FOR 2005 Economy

Kyrgyz Republic

15 February —President Askar Akaev signs a Law On the Budget of the Kyrgyz Republic for 2005. 1 April —The government adopts a decision On Reviewing Excise Tax Rates for Some Kinds of Excisable Goods, which raises excise taxes on hard drinks, beer and other commodity groups. 2 April —The president signs a decree On Raising the Insurance Part of Pensions in 2005, which provides for a differentiated increase it the insurance part of pensions from 1 May, 2005 (by an average of 30%). 28 April —The president signs a decree On Wage Rises for Employees of the Ministry of Internal Affairs, which provides for a 50% increase from 1 May, 2005. 1 June —The president signs a decree On Wage Rises for Workers in Education and Health Care of the Kyrgyz Republic, under which their wages (excluding higher education institutions) are to go up by 50% from 1 May, 2005. 22 June —The Cabinet of Ministers adopts a decision On Amendments to KR Government Decision No. 430 of 23 June, 1997, On Measures to Step Up the Fight Against Illegal Exports and Sales of Tobacco Products. 4-5 September —President Kurmanbek Bakiev pays a working visit to the Russian Federation, during which the parties reach an agreement on matters of economic and military cooperation. 27 September —A Kyrgyz delegation takes part in a meeting of the EurAsEC Interstate Council at the level of heads of state (Dushanbe). 29 September —Prime Minister Felix Kulov pays a working visit to Kazakhstan, during which agreements are reached with Kazakhstan’s Prime Minister Danial Akhmetov on matters of labor migration and customs policy. 13-18 December —A Kyrgyz delegation takes part in the 6th WTO Ministerial Conference, which deals with matters of abolishing farm subsidies and reducing tariffs on producer goods (Hong Kong).

Republic of Tajikistan

1 January —Two new codes—the Tax Code and the Customs Code—enter into force. 1 January —Minimum capital requirements for commercial banks, credit unions and microfinance institutions are raised. 12 January —At a meeting in Dushanbe, Iran, Tajikistan and Russia sign a protocol of intentions on completing the construction of two hydropower plants, Sangtuda-1 and Sangtuda-2. March —The IMF Executive Board completes the fourth review of Tajikistan’s economic reform program under the IMF Poverty Reduction and Growth Facility (PRGF).

333 CENTRAL EURASIA 2005 Analytical Annual

4 March —President Emomali Rakhmonov signs a decree approving a strategy for settling farmers’ debts developed by the government and the National Bank. 29 March —A Tajik-Turkish business forum is held in Dushanbe. 31 March —A World Bank report on Tajikistan’s public expenditure and institutional framework is presented in Dushanbe. 12 April —The Asian Development Bank (ADB) office in Dushanbe holds a press conference to announce the approval of a new three-year strategy backed by loans in the amount of $120 million. 18-29 April —A Tajik government delegation takes part in the second meeting of the working party on Tajikistan’s WTO accession in Geneva. May —The National Bank lowers the required reserve ratio for commercial banks from 18% to 15%. May —The Ministry of Finance issues short-term treasury bills (with a maturity of 28 days). 20 May —The 4th business forum of the Central Asian Cooperation Organization (CACO) is held in Dushanbe. 11 June —The energy ministers of Tajikistan and Iran meeting in Tehran sign a memorandum of understanding on the construction of the Sangtuda-2 Hydropower Plant. 16-17 June —An international banking conference organized by the government and the National Bank under the auspices of the European Bank for Reconstruction and Development (EBRD) is held in Dushanbe. 26 June —U.N. Millennium Project Director Jeffrey Sachs and Queen Noor of Jordan on behalf of the United Nations and President Rakhmonov of Tajikistan sign a memorandum of cooperation in drafting a National Development Strategy for 2006-2015. 28 June —The 8th session of the Intergovernmental Russian-Tajik Commission on International Cooperation is held in Dushanbe. 29-30 June —The participants in a workshop organized in Dushanbe by the World Bank Institute and the Multilateral Investment Guarantee Agency (MIGA) discuss problems of improving the investment climate. July —The World Bank approves a new strategy of assistance to Tajikistan for 2006- 2009 and allocates $120 million for this purpose. 9 July —President Rakhmonov signs a decree establishing a coordinating council to elaborate the National Development Strategy for 2006-2008. 7-14 September —An IMF mission approves the fifth review under the Poverty Reduction and Growth Facility and makes the next disbursement to Tajikistan in the amount of $14.3 million. 27 September —Dushanbe hosts a meeting of CACO and EurAsEC heads of state. 12 December —The country’s parliament passes the 2006 State Budget Law. 12 December —Under the Millennium Project initiated by the United Nations, the government of Tajikistan presents a draft of its National Development Strategy at the U.N. headquarters in New York.

334 CHRONOLOGY OF EVENTS FOR 2005 Economy

19 December —Within the framework of the Multilateral Debt Relief Initiative, the IMF Executive Board includes Tajikistan among 19 countries eligible for cancellation of debt owed to the IMF, enabling the republic to reduce its external debt burden by another $99 million. 20 December —The 5th session of the Tajik-Turkish Commission on Economic Cooperation meets in Dushanbe to discuss the issue of opening regular flights by Turkish airlines via the Dushanbe airport, the construction of new Turkish hotels in Tajikistan, and other matters.

Turkmenistan

1 January —Public sector wages, pensions and student grants are raised by 50%. According to President Niyazov, the average wage in the republic at the beginning of the year is 2.25 million manats ($90 at the market exchange rate). 14 February —A new cement plant with a total cost of $160 million and a capacity of 1 million tons of cement per year is opened in the vicinity of Kelyata (70 km from Ashghabad). The plant was built by Turkey’s Gap Inshaat company. 15 April —President Niyazov meets Alexey Miller, the head of Gazprom. The parties reach an agreement to resume gas supplies to Russia. 21 May —The president dismisses Elly Kurbanmuradov, deputy prime minister in charge of the fuel and energy sector, “for serious dereliction of duty and abuse of public authority for personal gain.” 23 May —Agricultural producers start harvesting wheat. The plan is to gather 3.1 million tons, or 300,000 tons more than a year ago (as shown above, this target was not achieved). 26 May —The president opens two textile mills: in Vekilbazar (in the south of the republic) and Khalach (in the east). 30 May —The government authorizes two consulting firms, DeGolyer & MacNaughton (U.S.) and Gaffney, Cline & Associates Ltd (Britain), to audit the country’s oil and gas reserves. 24 June —Ashghabad and Kiev conclude an agreement on payment for Turkmen gas supplies in the second half of 2005 and in 2006 for the amount of about $2 billion. Ukraine is to pay $44 per 1,000 cubic meters of gas at the Turkmen-Uzbek border only in foreign currency (without barter). 28 June —Mobile TeleSystems OJSC (MTS), a telecoms operator in Russia and the CIS, announces the acquisition of a 51% stake in Barash Communications Technologies Inc. (BCTI), an American company with a branch operating in Turkmenistan. The transaction amount is $28.05 million. In addition, MTS pledges to buy out the remaining 49% of the company’s shares within eight months (given compliance with certain conditions). 1 July —Turkmenobahyzmat, an association providing technical services for agriculture, signs a contract with the Minsk Tractor Plant for the acquisition of 500 tractors and 500 plows for a total of about $19 million.

335 CENTRAL EURASIA 2005 Analytical Annual

11 July —The National Institute of State Statistics and Information reports that wheat in the amount of 3 million tons has been delivered to procurement stations (a record figure for the republic). 30 August —A new medium-range Boeing 717, the second airplane purchased by Turkmenistan Airlines during the year, arrives in Ashghabad. 14 September —A gas compressor station is put into service in the Korpezhe field in western Turkmenistan, which will make it possible to increase gas supplies to Iran. 11 October —Around 30 construction projects worth a total of $250 million are commissioned on the eve of Turkmenistan’s Independence Day (27 October). 12 October —President Niyazov demands that Ukraine pay its gas debts by the end of the year. 1 November —Russia’s Mobile TeleSystems announces that it has acquired the remaining 49% stake in the U.S. Barash Communications Technologies Inc., the leading mobile phone operator in Turkmenistan. 18 November —President Niyazov announces that the export price for Turkmen gas is to be raised to $60 per 1,000 cubic meters. 7 December —The Law on Hydrocarbon Resources is adopted in a new wording, which limits the powers of the country’s oil and gas concerns. From now on, the use of hydrocarbon resources and performance of oil operations are subject to the direct control of President Niyazov. 15 December —The president abolishes Turkmenneftegaz, the state corporation engaged in purchase and sale of oil, natural gas and their products. Turkmengaz, the state-run gas concern, is appointed as its successor in the implementation of contracts and agreements for the export of natural gas, and the Turkmenbashi Oil Refinery Complex, in the export of oil products and liquefied gas. 19 December —President Niyazov approves the Law on the 2006 State Budget, with revenues and expenditures projected at TMM 81.3 trillion.

Republic of Uzbekistan

28 January —At a joint session of the Oliy Majlis Senate and Legislative Chamber, President Karimov outlines the priorities of economic reforms for the year. 3 February —An expert group meets to discuss the recommendations set forth in a report of the International Finance Corporation (IFC) entitled “The Business Environment in Uzbekistan as Seen by Small and Medium Enterprises” (based on the results for 2003) and draws up an action plan for their implementation. 7 February —At a meeting with government members, President Karimov formulates the basic requirements and principles of the Cabinet’s work to implement the declared priorities. 18 February —The Cabinet discusses the results of the country’s socioeconomic development in 2004.

336 CHRONOLOGY OF EVENTS FOR 2005 Economy

12 March —The government, the Central Bank and a mission of the International Monetary Fund issue a press release, in which the IMF mission notes, in particular, that the country’s overall economic indicators for 2004 were very good and makes a number of recommendations for a further deepening of the reform process. 24 March —President Karimov issues a decree On Deepening the Economic Reforms and Accelerating the Development of the Building Materials Industry. 4-6 April —President Karimov pays a state visit to India. 4-6 April —The Asian Development Bank (ADB) releases a report entitled Asian Development Outlook, which says that the government’s firm economic policy has led to further macroeconomic adjustment in the republic, but notes that progress in the field of structural reforms has been uneven. 10 May —At President Karimov’s invitation, President Roh Moo Hyun of the Republic of Korea visits Uzbekistan. An Uzbek-Korean business forum is held within the framework of the visit. 14 June —President Karimov issues two decrees, On Measures to Improve the System of Legal Protection for Business Entities and On Measures to Accelerate the Implementation of Priorities in the Deepening of Market Reforms and Further Liberalization of the Economy. 18 July —Madam Wu Yi, Vice Premier of the PRC State Council, pays a working visit to Uzbekistan. As a result of her talks with President Islam Karimov, Prime Minister Shavkat Mirzieev and First Deputy Prime Minister Rustam Azimov, the parties sign 12 documents for the amount of $150 million. 26 August —President Karimov takes part in the Kazan summit of CIS countries. 21 September —President Karimov signs a decision On a Reduction in the Number and Simplification of Authorization Procedures for Business Activity. 26 September —President Karimov receives the chairman of the board of the Russian company Gazprom. During the meeting, there is an exchange of views on matters of developing and implementing new projects. 2-4 October —President Karimov pays a state visit to Malaysia, which results in the issue of a joint statement and the signing of a number of intergovernmental agreements on bilateral economic cooperation. An Uzbek-Malaysian business forum takes place within the framework of the visit. 10-11 October —The 8th session of the Russian-Uzbek Intergovernmental Commission on Economic Cooperation sums up the results of interaction between the ministries, agencies, regions and business entities of Russia and Uzbekistan over the past year and discusses plans of joint work for 2006. 9-10 November —ADB President Haruhiko Kuroda visits Uzbekistan as part of his official mission to the countries of Central Asia. During meetings with government representatives, he discusses ADB assistance programs and the importance of regional cooperation for the further development of the Central Asian countries and for poverty reduction. 14-15 November —President Karimov pays an official visit to Russia. Based on the results of his talks with Vladimir Putin, the two presidents sign a treaty of alliance between 337 CENTRAL EURASIA 2005 Analytical Annual

the Republic of Uzbekistan and the Russian Federation. An agreement is also signed between the chambers of commerce and industry of the two states. 12-14 December —During a visit to Moscow, a delegation of Uzbekistan’s State Property Committee headed by its Chairman Mahmudjon Askarov meets with senior executives of major Russian companies. At this meeting, Mr Askarov sets forth Uzbekistan’s strategy of interaction with Russian investors, according to which, based on the treaty of alliance between the two states, priority in privatization projects in Uzbekistan is to be given to Russian investors operating in the respective areas.

338 CHRONOLOGY OF EVENTS FOR 2005 Religion

RELIGION

Afghanistan

25 April —On a decision of a district court of Feyzabad, the Badakhshan Province, a 29- year-old married woman is stoned to death. 11-14 May —Mass protests against the Americans’ barbaric treatment of the Holy Koran take place in Kabul and in ten out of 34 provinces. 30 May —President of the Maulawi Council Maulawi Abdullah Fayaz is killed in his office. 31 May —A suicide bomber blows himself up in a mosque in Kandahar during the memorial service for Maulawi Fayaz, killing 19 and wounding more than 50 people. 19 August —The country endorses a new national anthem with the following words “This is our sacred call: ‘Allah Aqbar! ‘Allah Aqbar!’” (God is great.—Ia.T.). 20 October —Women’s Rights editor Ali Mohaqiq Nasab is sentenced to two years in prison for publishing anti-Islamic articles. 20 October —About 4,000 Muslims take to the streets in the Khost Province, Eastern Afghanistan, to protest the murder of cleric Muhammad Khan in a mosque. 27 October —The government launches a campaign to enlist religious leaders to fight drug production.

Republic of Armenia

6 January —The Patriarchal Christmas and Theophany Liturgy and festive events dedicated to Christmas are held. 30 January —The encyclical of His Holiness Garegin II, Supreme Patriarch and Catholicos of All Armenians, dedicated to the 1,600th anniversary of the Armenian script is issued. 1 February —150 clerics from the dioceses of Armenia and Nagorno-Karabakh come to Holy Etchmiadzin for a meeting. 339 CENTRAL EURASIA 2005 Analytical Annual

6 February —The encyclical of His Holiness Garegin II, Supreme Patriarch and Catholicos of All Armenians, dedicated to the 90th anniversary of the tragic events of 1915 in the Ottoman Empire is publicized. 12 March —His Holiness Garegin II meets Premier of Georgia Zurab Nogaideli in Holy Etchmiadzin to discuss the problems of the Armenian Diocese in Georgia. 25 March —His Holiness Garegin II meets President of Russia Vladimir Putin in Holy Etchmiadzin. 27 March —Patriarchal Resurrection of Christ Liturgy and related events are held. 7 April —A delegation headed by the Catholicos of All Armenians and the Armenian Premier visits the Vatican to take part in the burial of Pope John Paul II. 13 April —The executive structure of the Committee for the Participation of the Orthodox Believers in the World Council of Churches meets in Etchmiadzin. 23-26 April —The delegation of the Armenian Apostolic Church takes part in the enthronement ceremony of newly elected Pope Benedict XVI. 24 April —An ecumenical service with the participation of the Catholicos of All Armenians, the president, representatives of the Local Orthodox Churches, heads of diplomatic missions, and other dignitaries is held in the Cathedral of St. Gregory the Illuminator in Erevan to commemorate those who died in the events of 1915. 2 May —The Armenian Church opens a free dental care center for the people in the city of Etchmiadzin. 12-14 May —His Holiness Garegin II, Catholicos of All Armenians, performs a pilgrimage to Jerusalem and the Holy Places together with 80 other pilgrims. 31 May —Catholicos of All Armenians meets Alexy II, Patriarch of Moscow and All Russia, in Moscow. 1-31 June —The Catholicos of All Armenians visits the Western Prelacy of the Armenian Apostolic Church of North America. 4 July —A delegation of the Episcopal Church of the United States headed by Bishop Frank Grizwald visits Holy Etchmiadzin. August —Courses for upgrading the skills of teachers of the Armenian diaspora are given in Holy Etchmiadzin. 25-30 August —A delegation of spiritual heads of the churches of Canada visits Holy Etchmiadzin on the occasion of the 1,600th anniversary of the Armenian script. 3-6 September —Commission of the Armenian Apostolic Church discusses the possibility of canonizing the victims of the tragic events of 1915. 6 September —A Christian Education Center opens in Holy Etchmiadzin (previously the structure belonged to the Center of Christian Preaching). 11-13 September —On an invitation of the Saint Edigio community, the Catholicos of All Armenians takes part in an inter-church symposium dedicated to peace. 22 September —Discussion of the subject “The Present State of Public Education in Armenia and the Role of the Church in the Sphere of Education” takes place in Holy Etchmiadzin.

340 CHRONOLOGY OF EVENTS FOR 2005 Religion

23-28 September —Members of Syndesmos, the World Fellowship of Orthodox Youth, visit Armenia. 1 October —44 teachers of Armenia are awarded Patriarchate certificates. 6 October —An international conference called “Translation of the Bible into Armenian and the Armenian Spiritual Written Heritage” takes place in Holy Etchmiadzin. 22 October —The Catholicos of All Armenians consecrates the Church of St. Lazarus, the only one in the city of Metsamor (the city built in Soviet times). 23 October —The Catholicos of All Armenians consecrates the Cathedral of St. Grigor Narekatsi (Gregory of Narek) in the city of Vanadzor. 1 November — 21 priests were ordained by a Patriarchal decree to the ministry in various dioceses. 16 November —A presentation is held of school textbooks for 4th to 10th graders in secondary schools of Armenia and Nagorno-Karabakh on “History of the Armenian Church,” published with the support of the Armenian Apostolic Church. 20 November —The Catholicos of All Armenians consecrates the St. Trinity Church in Erevan built for the care of souls in an area with a population of 250,000. 21-22 November —Delegation headed by Chief Rabbi of Israel Jona Metsger visits Armenia.

Azerbaijan Republic

8 February —A closed trial of six people accused of terrorist activities and ties with al- Qa‘eda ends. 21 February —Book by A. Iunusov Islam v Azerbaijane (Islam in Azerbaijan) is presented. 23 February —A Union of Theologians of Azerbaijan is set up. 26 February —Pope John Paul II sends a message to the president of Azerbaijan. 1-3 March —A delegation of the Azerbaijan parliament headed by R. Aslanova, deputy chairman of the Permanent Human Rights Commission of the Milli Mejlis, takes part in the international conference “The Prospects for a Christian- Islamic Dialog in the Contemporary World” (Amman, Jordan). 7 March —Dr. Habib Fathi, associate of the Institute of Central Asian Studies (France), delivers a report on the situation of the Muslims in France at a forum organized by the Dar-ul-Hikmat center. 9 March —During his visit to Saudi Arabia, President of Azerbaijan Ilham Aliev performs Umrah, the lesser pilgrimage. 18 March —The AMC organizes a conference called “The Sheikh-ul-Islam-ism in the Caucasus: Past and Present.” 18 March —The State Committee of Azerbaijan for Religious Organizations carries out a national conference on “Religious Communities Against AIDS” together with the UNDP. 23 March —The concluding conference within the framework of the “Religion and Freedom of Worship in Azerbaijan after 9/11” project, organized by the

341 CENTRAL EURASIA 2005 Analytical Annual

Center for Economic and Political Research with the financial support of the American National Endowment for Democracy, is held. 30 March —The State Committee for Religious Organizations, together with the public alliance “For a Pure World,” holds a seminar called “The Role of Religious Structures in Fighting Trade in People.” 6 April —A presentation of the National-Public Advisory Council under the Center of Religious Studies is held. 6-9 April —Hierarch of the Georgian Orthodox Church Metropolitan Sergiy of Nekresski and Ereti visits Baku. 30 April-1 May —The XIV National Congress of the Bahai of Azerbaijan meets in Baku. 8 May —A mosque financed by a charity in Saudi Arabia is closed in Sumqayit. 26 May —The Center for Religion and Democracy holds a seminar called “The Rights of Women in Islam” with the financial support of the Open Society Institute— Assistance Foundation. 30-31 May —The Institute of Oriental Studies of the National Academy of Sciences of Azerbaijan holds an international scientific conference called “Islam in the Globalizing World.” 5-8 June —Primate of the Georgian Orthodox Church Catholicos-Patriarch of All Georgia Ilia II visits Baku. The president of Azerbaijan awards the Catholicos-Patriarch of All Georgia the Order of Glory for developing relations between the two countries. 10 June —The Baku eparchial administration of the Russian Orthodox Church publishes a book by hieromonk Alexy Nikonorov Istoria khristianstva v Kavkazskoy Albanii (History of Christianity in Caucasian Albania). 18 June —Seyid Javad Shahristani, personal representative of the spiritual leader of the Iraqi Shi‘as Ayatollah Sistani, begins his visit to Azerbaijan. 1 July —Chairman of the Committee meets students who obtained a religious education abroad. 3 July —The Center of Religion and Democracy organizes, with the financial support of the Institute of Open Society—Assistance Foundation, a meeting with refugees from Nagorno-Karabakh called “Unity in Islam.” 7 July —The Center of Religion and Democracy organizes, with the financial support of the Open Society Institute—Assistance Foundation, a meeting with the faithful of the Nasiminsky District of Baku called “Islam and Democracy.” 13 July —The national security structures carry out an operation in the settlement of Novkhany and detain about 30 young men suspected of religious extremism. 27 July —A scientific conference is held on “The Image of a Perfect Woman in Islam,” devoted to the birthday of Fatima, the daughter of the Prophet Muhammad. 3 August —The Committee holds a seminar on “Religion and National Security.” 9-13 August —Committee Chairman R. Aliev visits Turkey. 23 August —Heads of the religious communities meet PACE Chairman René van der Linden.

342 CHRONOLOGY OF EVENTS FOR 2005 Religion

24 August —The Center of Islamic Studies Irshad organizes a seminar on “The Politization of Religion: Evolution of Conscience or a Crisis of Spirituality?” 5-11 September —The film “The Sorcerer” by Azeri film director O. Mirkasimov receives the highest award for feature films at the First International Festival of Muslim Films “Golden Minbar” in Kazan. 7 September —The Center of Religion and Democracy organizes, with the financial support of the Open Society Institute—Assistance Foundation, a conference on “Religious Education.” 10 September —Crescenzio Cardinal Sepe, representative of the Pope, comes to Baku. 12 September —The Center of Islamic Studies Irshad organizes a seminar on “The Role of Religion in Building Up Civil Society.” 13 September —The Center of Religion and Democracy organizes, with financial support of the Open Society Institute—Assistance Foundation, a seminar “Religious Education.” 14 September —President Ilham Aliev receives Patriarch of Moscow and All Russia Alexy II and awards him with the Order of Glory. The Patriarch awards the President with the Order of St. Sergius of Radonezh, 1st Degree. 14-15 September —Patriarch of Moscow and All Russia Alexy II visits Azerbaijan. 15 September —Sheikh-ul-Islam Allahshukur Pashazade receives Patriarch of Moscow and All Russia Alexy II. The Patriarch awards him with the Order of St. Sergius of Radonezh, 1st Degree. 19-20 September —The Administration of the Muslims of the Caucasus and the Cultural Center of the Embassy of the Islamic Republic of Iran in Azerbaijan organize an international conference on “Solidarity of the Islamic Umma.” 21 September —The Highest Religious Council of the Peoples of the Caucasus set up in 1992 and headed by Sheikh-ul-Islam Allahshukur Pashazade meets for a closed session. 22 September —The Committee, along with the UNDP, organizes another seminar called “Religion against AIDS.” 23 September —The Regnum Information Agency informs that an Albanian temple of the 4th century was discovered in the village of Chaparly in the Shamkir District. 3 October —President Ilham Aliev receives representatives of the Jewish communities on the occasion of the Jewish New Year. 22 October —A book by Doctor of History Sara Kasumova Khristianstvo v Azerbaidzhane v rannem srednevekov’e (Christianity in Azerbaijan in the Early Middle Ages) is published. 26 October —The Council of the Ghazi and the AMC Scientific-Religious Council award Heydar Aliev posthumously with the Sheikh-ul-Islam Order. 7-9 November —The AMC chairman takes part in the international conference on “Peace and Tolerance in Southeast Europe, the Caucasus, and Central Asia.” 11 November —The Jehovah’s Witnesses hold their international congress in Baku.

343 CENTRAL EURASIA 2005 Analytical Annual

15 November —A presentation is held of a book by Doctor of History F. Mamedova Kavkazskaia Albania i Albany (Caucasian Albania and the Albanians). 20 November —A book by T. Gumbatova Zhizn nemtsev-kolonistov za Kavkazom (Life of German Colonists beyond the Caucasian Mountain Range) is published. 29 November —A book by A. Mansurzade Put Sheikhulislama (The Way of Sheikh-ul-Islam) is published. 1 December —A Union of Religious Organizations Daiarlar is organized. 5 December —The Jewish training complex Habad Or-avner opens a kindergarten in the Krasnaia Sloboda settlement. 6 December —The Second Congress of the Alliance of the Churches of the Seventh Day Adventists of Azerbaijan is held. 20 December —Celebrations on the occasion of the 25th anniversary of the election of Sheikh- ul-Islam Allahshukur Pashazade to the post of AMC chairman. The celebrations are attended by Catholicos-Patriarch of All Georgia Ilia II and Chairman of the Council of Muftis of Russia Mufti Ravil Gaynutdin. 22 December —President Ilham Aliev receives a group of religious leaders headed by the AMC chairman. The Council of the Ghazi and the AMC Scientific-Religious Council award Aliev with the Sheikh-ul-Islam Order. 30 December —Rector of the Baku Islamic University and Deputy Chairman of AMC S. Gasanly is awarded with the Order of Glory for his service in developing religious education.

Georgia

22 January —The Ministry of Education and Science and the Patriarchate sign a memorandum based on the agreement between the Georgian Patriarchate and the state. March —The Georgian Eparchy of the Armenian Apostolic Church circulates a press release about the visit of an Armenian delegation to Georgia in April to discuss the problems of the Armenian church and cultural heritage and the status of the Armenian Eparchy in Georgia. The delegation meets the Patriarch of Georgia and members of the Synod. 6 April —The Georgian parliament amends Art 1509 of the Civil Code to allow religious organizations to register as non-commercial legal entities. May —A coordinating center of religious relations in support of state development is set up at the Patriarchate. At approximately the same time, a similar structure appears at the ombudsman office with the aim of protecting the rights of religious minorities and helping them integrate into the life of the state. 23 May —The World Orthodox Congress meets in the St. George Cathedral in Constantinople. The Georgian delegation votes against the dismissal of Patriarch Irineos I.

344 CHRONOLOGY OF EVENTS FOR 2005 Religion

5-8 June —Patriarch of Georgia Ilia II arrives in Azerbaijan on an official visit, during which he meets head of the Spiritual Administration of the Muslims of the Caucasus Sheikh-ul-Islam Allahshukur Pashazade, Parliament Speaker Murtuz Aleskerov, and President Ilham Aliev. 24-26 November —The Patriarchate and the nongovernmental organization, International Center of Christian Studies, hold the Second International Symposium on “Christianity in Our Life: Past, Present, and Future.” 22 December —Patriarch of Kiev and Ukraine Filaret congratulates Catholicos-Patriarch of All Georgia, Holy and Most Blessed Ilia II on the anniversary of his enthronement and asks him to support the Ukrainian Church seeking independence.

Republic of Kazakhstan

26 February —The Law on Opposing Extremism is adopted. 22 March —A new Islamic Cultural Center (the main mosque) opens in Astana. 20 April —The president meets SAMK representatives in his Almaty residence, the meeting being also attended by Chief Mufti of Kazakhstan Absattar kazhy Derbesali and the chief imams of the country’s regions, as well as of Astana and Almaty. 4 June —The Fourth Kurultai (Congress) of the Muslims of Kazakhstan re-elects Absattar kazhy Derbesali as Chief Mufti. 14 July —Amendments and addenda are made to the Law on the Freedom of Religion and Religious Associations. 18 September —The Greco-Catholic Cathedral of the Intercession of the Mother of Our God in Karaganda is consecrated.

Kyrgyz Republic

21 January —National Kurban Ayt holyday. February —Pilgrims to Mecca and Medina return home. February-March, — Activation of Hizb ut-Tahrir during the parliamentary and presidential June-July election campaign. 24 June —Inter-confessional round table discusses the spread of drug addiction in the country. July-August —A series of suicides among the teenagers instigated, according to the media, by Satanist rituals. 17 August —The head of state signs the Law on Opposing Extremist Activities adopted by the Zhogorku Kenesh on 30 May. 25 August —Inter-Departmental Council for Religious Affairs meets in the House of Government; it sets up a working group to draft a conception of State Politics

345 CENTRAL EURASIA 2005 Analytical Annual

in the Sphere of Relations with the Religious Confessions in the Kyrgyz Republic, in the preparation of which the relevant ministries, departments, NGOs, religious organizations, and academics took part. September —A series of seminars for the leaders of Islamic communities of the country’s north about their involvement in dealing with socially important issues is held. September- —The draft conception of State Politics in the Sphere of Relations with the October Religious Confessions in the Kyrgyz Republic is ready. 18 October —Sun Myung Moon, head of the Holy Spirit Association for the Unification of World Christianity (Unification Church), arrives in the KR. 21 October —The republic’s president meets the Islamic spiritual leaders and theologians. 4 November —Over 60,000 attend the Orozo Ayt festival on the central square of Bishkek. For the first time, the festive namaz is shown live on TV. 11 November —By presidential decree No. 533, the State Commission for Religious Affairs under the republic’s government is transformed into the State Agency for Religious Affairs under the republic’s government. 17 November —A seminar on reproductive health is organized for the Islamic leaders. 1 December —The National Inter-Confessional Conference “HIV/AIDS in Public Morality. Interaction between State Structures, Confessions and Public Organizations to Prevent the Spread of HIV/AIDS in the Kyrgyz Republic,” the first in Central Asia, is held. 13 December —Government decision No. 581 on Organizing a Pilgrimage to Mecca from the Kyrgyz Republic is adopted. December —Beginning of pilgrimage to Mecca and Medina. The number of those willing to join increased.

Republic of Tajikistan

15 January —Religious legal treatise by Kh.A. Turajonzoda Ibodati zan dar maschid az nazari shariati islomi va konunguzorii Chumkhurii (How the Islamic Shari‘a and the Laws of the Republic of Tajikistan Treat the Female Mosque Attendance Issue) is published. 21 January —The Muslims celebrate the Kurban Bairam holiday. 27 February —The day of the parliamentary election which gives the IRPT two seats in the chamber of representatives (Majlisi namoiandagon). 15 April —Another stage of the international project “Secular-Islamic Dialog in Tajikistan” is launched in Dushanbe. 18-30 May —A delegation of Islamic leaders visits the United States within the international exchange program sponsored by the U.S. State Department. 20 June-10 July —Imams of the largest main mosques of Khujand in the country’s north are replaced.

346 CHRONOLOGY OF EVENTS FOR 2005 Religion

6 July —Teaching at mosque educational groups in the Sogd Region is suspended on the strength of an official letter of the representative of the Committee for Religious Affairs under the RT Government in the Sogd Region. 10-20 July —Female madrasah students attend a camp seminar called “Secular Education” in the town of Kayrakkum. 12 July —The Jumhuriyat newspaper publishes an article by Z. Abdullo “Chuzhie klany” (Alien Clans) which ignites a months-long scandal between secular intellectuals and the Islamic clergy in the press. 20-31 July —Students of madrasahs and secular universities gather at the “Secular Education” seminar in the town of Kayrakkum. 27 July —Mirzo Abdullo Kalonzoda, prominent public and religious figure of Tajikistan, who served as the Kazi of the Muslims of Tajikistan between 1960 and 1988, dies at the age of 82. 1-10 August —A training seminar for the imams of the country’s main mosques is held in Dushanbe. 6 August —Eshoni Turajon, one of the republic’s prominent leaders and leader of the Sufi Qadiriyya Tariqah, dies in Vakhdat at the age of 72. 5 October —According to information supplied by the Public Prosecutor’s Office of the Sogd Region, activities of a large radical religious group which belonged to the Islamic Movement of Turkestan are stemmed. 10 October —At the UNESCO Forum in Paris, President of Tajikistan Rakhmonov objects “on principle to the use of the terms ‘Islamic extremism’ and ‘Islamic terrorism.’” 13 October —U.S. State Secretary Condoleezza Rice visits the central mosque of Dushanbe and the women’s seminary of the Imam Termizi Tajik Islamic University during her visit to Tajikistan. 20 October —President Rakhmonov meets Chairman of the Islamic Center and the Council of the Ulema of Tajikistan Khoji Amonullo Ne’matzoda. 25 October —Heads of the Ministry of Education ban hijabs in the country’s educational establishments. 28 October —The joint sitting of the heads of the Committee for Religious Affairs under the RT Government and the imams of the main mosques prohibits all citizens of the republic younger than 16 from attending mosques without written permission from their parents. 29 October —The IRPT Political Council makes a statement in which it qualifies the ban on hijabs as a violation of constitutional rights and freedoms and of the country’s laws. 3 November —The country celebrates the Muslim holiday of Ramazan.

Turkmenistan

12 January —Memorial services are held in mosques and Christian Orthodox churches in memory of those killed in the Geoktepe battle of 12 January, 1881.

347 CENTRAL EURASIA 2005 Analytical Annual

11 February —The republic’s Muslim clergy attends a meeting organized by the Council for Religious Affairs together with the Mufti Administration under the slogan “Our Venerated Leader Saparmurat Niyazov is the True Patron of Spirituality” (Ashghabad). 5 May —Amnesty International publishes its report entitled Turkmenistan: The Clampdown on Dissent and Religious Freedom Continues. 3 July —President of Turkmenistan S. Niyazov orders a cutback in the number of students at the Department of Theology and for a list of unified religious rites to be published. 14 July —Patriarch of Moscow and All Russia Alexy II informs S. Niyazov, with much diplomatic skill, that the question of transferring the parishes of the Tashkent and Central Asian eparchies in Turkmenistan to the Patriarch’s personal supervision will be discussed by the ROC MP heads. 24 October —On the occasion of the Muslim feast of Ramadan, the country’s leaders grant amnesty to 7,916 citizens of Turkmenistan and 229 foreigners.

Republic of Uzbekistan

1 January —Followers of all confessions celebrate the New Year proclaimed the Year of Health. 7-17 January —Christmas tree festivals for children are organized in the Cathedral of the Dormition in Tashkent. 21 January —The Holy Muslim Feast Kurban Hayit is celebrated. 23 January —A charity concert is organized in the Roman Catholic Church in support of the victims of the tsunami which hit Southeast Asia on 26 December, 2004. 10 February —The new 1426 year of Hegira begins. 21 March —Navruz is celebrated. 22 March —Pope John Paul II elevates the status of the Mission in Uzbekistan to the level of the Apostolic Administration. 3 April —All confessions express their condolences on the occasion of death of Pope John Paul II. 6 April —A liturgy is served in the Roman Catholic Church in memory of John Paul II. 21 April —Birthday of the Prophet Muhammad. 1 May —Easter is celebrated in all the churches of the Tashkent and Central Asian Eparchy. 2 May —A festive Easter evening service is held, at which the Holy Fire delivered from Jerusalem is distributed; clerics receive awards on the occasion of Easter; greetings of Metropolitan of Tashkent and Central Asia are read. 6 May —Easter events are held in the new building of the Spiritual Administrative Center of Tashkent.

348 CHRONOLOGY OF EVENTS FOR 2005 Religion

14 May —Father Maculewicz, head of the Apostolic Administration in Uzbekistan, is consecrated as a bishop in Rome. 25 May —The U.S. State Department adds Islamic Jihad to the list of international terrorist organizations. 19 June —The Trinity is celebrated in the parishes of the Tashkent and Central Asian Eparchy of the Russian Orthodox Church. 26 June —A graduation ceremony is held at the Tashkent seminary. 12 July —A fundamental work—Islom ziyosi uzbegim siymosida—is presented at the Tashkent Islamic University under the Cabinet of Ministers. 28 July — Uzbekistan takes part in the work of the Council of the Jewish Sephardic Communities of the CIS (Moscow). 20 August —The publishers of the Holy Koran in the Brail system are awarded in the “Book of Fascinating Fate” nomination at the International Exhibition “The Art of Book Printing.” 2 September —Famous French singer Charles Aznavour visits the Church of Holy Virgin, the only church of the Armenian Apostolic Church in Central Asia. 5 September —Uzbekistan takes part in the First International Festival of Muslim Cinema “Golden Minbar” held to celebrate the 1,000th anniversary of Kazan. 13-15 September —Apostolic Nuncio Archbishop Josef Wesolowski visits Uzbekistan. 4 October —“Uraza” fasting and Koranic readings begin in all the mosques. 19 October —An ethnographic expedition of the Museum of Anthropology and Ethnography (known as the Kunstkammer) of the Russian Academy of Sciences begins its work in Uzbekistan. 20 October —A book by Premier of Malaysia Abdullah Badawi Islam Khadari (Islamic Civilization) is presented. 27 October —An inter-religious function devoted to the 40th anniversary of the “Nostra Aetate” Declaration on the Attitude of the Catholic Church to Non-Christian Religions is held in the Roman Catholic Cathedral of Tashkent. 3 November —Month-long fasting ends with Ruza Hayit, the First Meal after Fast feast. Festival morning prayers are held in all 1,947 mosques of Uzbekistan. 22 November —The Kuwait International Islamic Charitable Organization organizes charitable events among the Muslims. 13 December —A delegation of Saudi Arabia headed by Chairman of the Consultative Council (Shura) Saleh bin Homaed pays an official visit to Uzbekistan. 25 December —Christmas is celebrated.

349 CENTRAL EURASIA 2005 Analytical Annual

INTERNATIONAL AFFAIRS

Afghanistan

5 January —The Interstate Coordinating Council to create a trans-Afghan transportation corridor begins its work in Tashkent. 10 January —Afghanistan sends humanitarian aid to the South Asian countries afflicted by the tsunami. 12 January —Four American senators make a visit to Kabul. 13 January —The Mission of the U.N. High Commissioner for Refugees reports on its plans to resettle 360 Afghani refugees from Uzbekistan to Canada. 13 January —Tajikistan opens its second representative office of the Drug Control Agency in Afghanistan. 26 January —Afghani President Hamid Karzai makes a two-day visit to Iran. 26 January —A meeting is held in Kabul between high-ranking employees of the Afghani power-related structures and representatives of the U.S. Defense Ministry. 28 January —The U.S. promises Afghanistan military aid of 88.5 million dollars. 6 February —Head of State Hamid Karzai calls on the World Bank to finance efforts in the drug war aimed at reorienting farmers toward growing alternative crops. 12 February —After the end of the summit of heads of the military departments of NATO member states in Nice, Secretary General of the Alliance Jaap de Hoop Scheffer officially announces enlargement of the action zone of international peacekeeping forces in Afghanistan to its western regions. 15 February —Indian Foreign Minister Natwar Singh makes an official visit to Afghanistan. 16 February —During his visit to Kabul, British Foreign Minister Jack Straw says that London plans to create a trust fund for rendering Afghanistan aid in the fight against the illicit manufacture and sale of drugs, to which other countries can also make contributions. 18-19 February —The Pentagon doubles the number of advisors (288 U.S. servicemen) in the Afghani army.

350 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

20 February —Afghanistan President Hamid Karzai participates in the work of a three-day economic forum in Jidda (Saudi Arabia). 21 February —Well-known Afghani politicians criticize the report on violations of rights by warlords prepared by an independent commission on human rights in Afghanistan. They call all the accusations by this commission unjustified and say its report is a political job. 22 February —While in Kabul, Senator David McCain calls for creating permanent U.S. military bases in Afghanistan. 23-25 February —Afghani President Hamid Karzai makes an official visit to India. 28 February —Head of State Hamid Karzai talks on the telephone with Turkmenistan President Saparmurat Niyazov. 2 March —The wife of Iranian President, Zohre Sadegi Khatami, visits Afghanistan on the invitation of the head of state’s wife, Zinat Karzai. 5 March —The German government allots 2.76 million Euros for de-mining Afghanistan. 16 March —Head of the Iranian Ministry of Internal Affairs Abdolvahed Mousavi Lari makes an official visit to Kabul. 17 March —U.S. Secretary of State Condoleezza Rice makes her first visit to Afghanistan. 22 March —Afghani President Hamid Karzai makes a two-day visit to Pakistan. 23 March —Russian Minister of Justice Yuri Chaika and Chargé d’Affaires ad interim of Afghanistan in the Russian Federation Ghulam Sakhi Ghairat sign a treaty in Moscow on the transfer of persons sentenced to imprisonment for serving their punishment. 25 March —The U.N. Security Council extends the time of this organization’s stay in Afghanistan for another year. 27 March —Rumanian President Traian Besescu visits Iraq and Afghanistan. 29 March —Afghanistan temporarily bans flights over its territory by airplanes of the Azerbaijan Airline Company. 30 March —First U.S. Lady Laura Bush visits Kabul. 3 April —The U.N. High Commissioner for Refugees Ruud Lubbers says that Afghani refugees living in Iran and Pakistan will soon be returned home. 3 April —President Hamid Karzai meets with Chinese Foreign Minister Li Zhaoxing in Kabul. 4 April —The regular International Conference of Donors for Afghanistan opens in Kabul. 7 April —Head of the Japanese Foreign Ministry Nobutaka Matimura arrives in Kabul. 13 April —U.S. Defense Minister Donald Rumsfeld visits the city of Kandahar in south Afghanistan. 14 April —At a meeting with Pentagon Head Donald Rumsfeld, Hamid Karzai calls on the U.S. to establish long-term relations.

351 CENTRAL EURASIA 2005 Analytical Annual

18 April —The Afghanistan leadership makes a decision to send troops to Iraq. 21 April —Estonia states it intention to establish diplomatic relations with Afghanistan in the near future. 26 April —The Iranian Homa Airline Company opens its representative office in Afghanistan. 27-29 April —Tajikistan President Emomali Rakhmonov makes an official visit to Afghanistan. 6 May —The U.S. Congress votes for allotting 82 billion dollars to the military operation in Iraq and Afghanistan. 10 May —Speaking before deputies of the European Parliament, Afghani Head Hamid Karzai asks the European Union for long-term assistance (Strasbourg). 15 May —Iran and Afghanistan sign a Memorandum on Cooperation in Telecommunications. 15 May —The Afghanistan Ministry of Defense calls on the U.S. government and defense ministry to carry out investigations of the instances of derision by American servicemen of the Koran in Guantanamo prison and to punish those found guilty. 20 May —Russian Federal Security Service Director Nikolai Patrushev states that the events in Andijan are related not only to Uzbekistan’s domestic problems, but also developed due to the instability in Afghanistan. 20 May —During his official visit to Japan, Head of the Afghanistan Foreign Ministry Abdullah says that he does not deny the link between several participants in the unrest in Uzbekistan and the Afghani Taliban. 23 May —At a meeting in Moscow, Head of the Russian Foreign Ministry Sergei Lavrov and Deputy Foreign Minister of Afghanistan Zalmay Aziz discuss the situation in this country. 24 May —Head of State Hamid Karzai makes a four-day visit to the U.S. 27 May —U.S. President George Bush appoints Ronald Neumann as U.S. ambassador to Afghanistan, who replaces Zalmay Khalizad in this post. 3 June —Russian President Vladimir Putin speaks in favor of reinforcing the Tajik- Afghan border. 7 June —The Iranian road-building company begins work on restoring the roads in Herat. 9 June —At a meeting of the Russia-NATO Council in Brussels, Russian Defense Minister Sergei Ivanov announces that Moscow has information about the training of terrorists in Afghanistan for their future export. 10 June —The U.S. State Department warns American citizens against making trips to Afghanistan. 12 June —Representatives of the Afghanistan Defense Ministry describe Russian Defense Minister Sergei Ivanov’s statement as unjustified and demand that Moscow clarify its viewpoint regarding official Kabul.

352 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

14 June —The European Union allots Afghanistan 11.5 million Euros for holding a parliamentary election in the country. 14 June —Head of the press service of the Russian Federal Security Service border group in Tajikistan Colonel Kondratiev says that from this day on the Tajik- Afghan border, 1,344 km in length, will be under the full control of the Tajik border guards. 15 June —During an international business conference of the Asian Society, Head of the Kazakhstan Foreign Ministry Tokaev announces Kazakhstan’s willingness to invest in Afghanistan’s economy. 15 June —The U.S. administration redeploys HC-130 airplanes from the Karshi- Khanabad base in Uzbekistan to the Bagram base in Afghanistan. 18 June —Afghanistan President Hamid Karzai makes a working visit to Tajikistan. 21 June —A conference of Afghanistan’s donor countries opens in Great Britain. 22 June —The Afghanistan president’s press secretary Jawed Ludin says that some high-ranking leaders of the Taliban movement are still in neighboring Pakistan. 23 June —Pakistan President Pervez Musharraf talks on the telephone to U.S. President George Bush and Afghanistan Head Hamid Karzai. 24 June —Heads of the foreign ministers of the G-8 countries make a statement in Great Britain about helping Afghanistan in the struggle against criminal groups. 24 June —In Moscow, representatives of the CSTO member states discuss measures to render assistance and support to Afghanistan. 24 June —Russian President Vladimir Putin once more expresses his concern about the fact that terrorist bases are still functioning in Afghanistan. 24 June —A development program of partnership relations is signed in Kazan, the Russian Federation, by Kazan, Kabul, Braunsweig (Germany), and Yurmala (Latvia). 29 June —Some Kabul newspapers publish an open letter by Afghanistan President Hamid Karzai to Russian President Vladimir Putin. 5 July —At the summit in Astana, leaders of the member states of the Shanghai Cooperation Organization call on the international antiterrorist coalition in Afghanistan to set time-limits for use of the bases in Central Asia. 5 July —At a meeting in New Delhi with his Afghani colleague Abdullah Abdullah, Indian Foreign Minister Natwar Singh says that official Delhi will allot Kabul an additional 500 million dollars for the country’s restoration. 11 July —The Iranian Ministry of Civilian Aviation provides navigation equipment for the restored Afghani airport in the city of Bamian. 14 July —Pakistan Deputy Minister of Oil and Natural Gas Akhmed Vakar says that official Delhi agrees to participate in building a gas pipeline from Turkmenistan through Afghanistan and Pakistan to India. 18-20 July —Afghanistan President Hamid Karzai makes an official visit to Great Britain.

353 CENTRAL EURASIA 2005 Analytical Annual

21 July —Head of State Hamid Karzai makes an official visit to Italy. 24 July —Pakistani Prime Minister Shaukat Aziz makes a one-day visit to Kabul, where he announces official Islamabad’s decision to allot Afghanistan a lump sum of 100 million dollars in aid. 25 July —Afghanistan President Hamid Karzai does not exclude the possibility of establishing diplomatic relations with Israel. 25 July —Head of State Hamid Karzai meets in Kabul with Iranian Deputy Foreign Minister Mohsen Aminzade. 1 August —Spanish Defense Minister Jose Bono arrives in Afghanistan. 3 August —Afghanistan leader Hamid Karzai congratulates Mahmoud Ahmadinejad on his inauguration as Iranian president. 3 August —Hamid Karzai arrives in the capital of Saudi Arabia for the funeral ceremony of deceased King Fahd. 5 August —General of the North Atlantic Alliance Jerry G. Beck states that by the end of 2006 the U.S. will give NATO troops control over all of Afghanistan’s territory. 17 August —Afghanistan Minister of Finance Anwahr-ul-Haq Ahadi makes a working visit to Moscow. 17 August —In a report to the Security Council and General Assembly on the situation in Afghanistan, U.N. Secretary General Kofi Annan calls on the international community to urgently intercept foreign sources of financing and other support of the Taliban movement and Islamic Party of Gulbuddin Hekmatyar which is active in the country. 17 August —Spanish Defense Minister Jose Bono arrives in Afghanistan to participate in investigating the circumstances surrounding the crash of a Spanish military helicopter. 22 August —Russian Minister of Finance agrees to take another look at the possibility of writing off 70% of Afghanistan’s debt, as well as significantly reducing its debt on economic loans by restructuring the remainder of the debt on preferential terms. 28 August —Indian Prime Minister Manmohan Singh begins an official two-day visit to Afghanistan. 28 August —German Defense Minister Peter Struck arrives in Afghanistan and stops in Termez, a town bordering on Uzbekistan. 4 September —The government allots 100,000 dollars to the victims of Hurricane Katrina. President Hamid Karzai sends a written request to the U.S. embassy to accept this sum. 8 September —The European Union announces that it will allot an additional 9 million Euros to the parliamentary election in Afghanistan. 12 September —Afghanistan President Hamid Karzai calls on the U.S. and its allies to reconsider ways to fight terrorism.

354 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

13-14 September —Participants in an informal meeting of defense ministers of the NATO countries in Berlin and a meeting of the Russia-NATO Council discuss the problem of the growing drug trafficking from Afghanistan. 14 September —Head of the Afghanistan Foreign Minister Doctor Abdullah Abdullah arrives in New York to participate in the 60th session of the U.N. General Assembly. 14 September —Dustmohammad Argestani, director of the Labor and Social Security Department of the Province of Kandahar, says that Iran’s assistance is required to restore Afghanistan, particularly with respect to training specialists and the intelligentsia. 14 September —The U.N. Security Council extends the time of the international antiterrorist contingent’s stay in Afghanistan for another year. 14 September —Head of the Russian Foreign Ministry Sergei Lavrov says that Russia will continue rendering Afghanistan assistance in military-building. 15 September —Tehran and Kabul sign an agreement on training personnel. 20 September —Afghanistan President Hamid Karzai expresses doubts about the need to continue a full-scale military operation in the country. 20 September —Talking in Rome, Deputy NATO Secretary General Alessandro Minuto Rizzo, an Italian diplomat, says that the International Security Assistance Force (ISAF) under NATO’s command will stay in Afghanistan for another 5-6 years to assist security in this country. 21 September —Head of State Hamid Karzai announces his disagreement with Islamabad’s proposal to build a security wall along the Afghan-Pakistani border. 26 September —Official Islamabad denies the statement that there are disputes between it and Kabul regarding the Afghan-Pakistani border. 27 September —Hamid Karzai’s press service publicizes a statement by the head of state that the decision about the Durand Line being imposed on the country will be made by the Afghani people. In this respect, the Afghanistan Foreign Ministry emphasizes that the treaty signed in 1893 expired 12 years ago. 29 September —Representatives of the border departments of Tajikistan and Afghanistan meet in Dushanbe. 30 September —British Defense Minister John Reid visits Afghanistan. 5 October —NATO Secretary General Jaap de Hoop Scheffer, who arrived in Kabul for talks with the Afghanistan president, says that the NATO peacekeeping contingent in the country will be increased to 15,000 people. 7 October —Head of State Hamid Karzai demands that the Pakistani authorities hand over Taliban press secretary Latifullah Hakimi. 9 October —Russia says it will render Afghanistan military and technical aid. 15 October —The international tribunal in The Hague sentences two former members of the Afghanistan State Intelligence Service leadership (KHAD) Habibullah Jalalzoy and Hesamuddin Hesam to 9 and 12 years imprisonment, respectively.

355 CENTRAL EURASIA 2005 Analytical Annual

16 October —Afghanistan President Hamid Karzai says he will recognize Israel when a independent Palestinian state is created. 31 October —The Pakistan government announces the completion of preparatory work on the railroad construction project which will join the border town of Chaman to the Afghan province of Kandahar. 7 November —At the Fourth Ministerial Conference on Central Asia Regional Economic Cooperation (CAREC) program held in Bishkek, President of the Asian Development Bank Haruhiko Kuroda says that Afghanistan has become a full member of CAREC. 16 November —The participants in a conference in Ashghabad discuss problems relating to the trans-Afghan gas pipeline project. 16 November —Afghanistan President Hamid Karzai arrives in Strasbourg to sign a Declaration on Cooperation with the EU. 22 November —Kabul allots 500,000 dollars to the victims of the Pakistan earthquake. 24 November —IRI President Mahmoud Ahmadinejad meets in Tehran with Afghanistan Foreign Minister Abdullah Abdullah. 25 November —Iran and Afghanistan sign political and economic memorandums on mutual understanding. 30 November —The participants in a regular meeting of the CSTO Council of Foreign Ministers adopt a decision to create a Working Group on Afghanistan. 1 December —An American-Afghani memorandum is signed in Kabul, according to which over the span of five years the U.S. will allot 5.5 billion dollars to the Afghanistan development program. 2 December —The EU approves granting 250 million Euros to Afghanistan for drug control. 6 December —The heads of the Afghanistan, Pakistan, and Iran drug control departments meet in the Pakistani city of Rawalpindi. 7 December —Afghanistan Energy Minister Ismail Han makes a working visit to Dushanbe. 7 December —Pakistan Economics Minister Hina Rabbani Khar makes a working visit to Kabul. 8 December —Head of State Hamid Karzai arrives in the capital of Saudi Arabia Riyadh to participate in an extraordinary meeting of the conference of Islamic states, where he meets with Azerbaijan President Ilham Aliev and Tajikistan President Emomali Rakhmonov. 9 December —The Afghanistan and Tajikistan power engineering ministers sign an agreement on drawing up and implementing a project for delivering electric power from the Rogun and Sangtuda hydropower plants of Tajikistan to Herat (Afghanistan) and Mashhad (Iran). 14 December —Kazakhstan ratifies the Treaty on the Fundamentals of Cooperation with Afghanistan. 14 December —Moscow and Kabul adopt a decision whereby employees of the Afghan Ministry for Control over the Illicit Circulation of Narcotic Substances will

356 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

undergo training at the Russian Institute for Advanced Studies under the Russian Federation Interior Ministry. 15 December —Afghanistan President Hamid Karzai congratulates Kazakhstan’s leader Nursultan Nazarbaev on his victory at the presidential election. 17 December —The authorities of the Serbian Republic of Bosnia and Herzegovina adopt a decision on the gratuitous transfer of extra army weapons to the Afghanistan security services. 18 December —U.S. Vice President Dick Cheney arrives in Kabul. 19 December —Spanish Prime Minister José Luis Rodriguez Zapatero flies to Afghanistan. 26 December —Iranian Foreign Minister Manouchehr Mottaki arrives in Kabul. 28 December —U.N. Secretary General Kofi Annan appoints German diplomat Tom Koenigs his new mission chief to Afghanistan.

Republic of Armenia

11 January —Armenian and Azerbaijani Foreign Ministers Vardan Oskanian and Elmar Mamediarov meet in Prague with cochairmen of the OSCE Minsk Group for talks on settling the Nagorno-Karabakh conflict. 13 January —A deputy group of Armenia-U.S. Friendship Society meets in the Armenian National Assembly with a delegation of American congressmen and representatives of the U.S. administration who made an acquaintance-making visit to Armenia within the framework of the Marshall Foundation program. 15 January —Armenian Minister of Science and Education Sergo Eritsian leaves on a visit to Iran. Representatives of the ministry and presidents of the country’s universities are members of the delegation. 18 January —Meeting of the Armenian and Egyptian Foreign Ministers Vardan Oskanian and Ahmed Aboul Gheit is held in Cairo. 18 January —Armenian peacekeepers (46 servicemen) leave for Iraq for six months. 19 January —Armenian Minister of Foreign Affairs Vardan Oskanian meets with Secretary General of the League of Arab States Amre Moussa. 25 January —Armenian President Robert Kocharian meets with EU Special Representatives for the Southern Caucasus Heikki Talvitie. 25 January —Armenian President Robert Kocharian receives French cochairman of the OSCE Minsk Group Bernard Facier. 25 January —Following up David Atkinson’s report, the Parliamentary Assembly of the Council of Europe adopts a resolution on the Nagorno-Karabakh conflict. 26 January —Armenian President Robert Kocharian receives a delegation headed by authorized presidential representative of the Russian Northwest Federal District, former cochairman of the Armenian-Russian intergovernmental commission Ilia Klebanov.

357 CENTRAL EURASIA 2005 Analytical Annual

26 January —An Armenian governmental delegation headed by Prime Minister Andranik Margarian arrives in Krakow to participate in the ceremony dedicated to the 60th anniversary of the liberation of prisoners from the concentration camp in Oswiecim. 27 January —Armenian President Robert Kocharian pays an official visit to Italy on the invitation of Italian President Karlo Adzelio Champi. 28 January —While in Rome on an official visit, Armenian President Robert Kocharian meets with Italian Prime Minister Silvio Berlusconi. 28 January —Robert Kocharian visits the Vatican where he meets with Pope John Paul II. 8 February —A meeting is held in Tehran between President of the Islamic Republic of Iran Seied Mohammad Khatami and Secretary of the National Security Council, Armenian Defense Minister Serge Sarkisian. 9 February —A delegation headed by chairman of the Armenian National Assembly Artur Bagdasarian holds several meetings in the Bahrain Parliament. 9 February —During a visit to Iran, Armenian Defense Minister and Secretary of the National Security Council Serge Sarkisian meets his Iranian colleague Hasan Rouhani. 10 February —Armenian Foreign Minister Vardan Oskanian goes to Munich to participate in a forum on international security. 12 February —At the international conference on security in Munich, Armenian Foreign Minister Vardan Oskanian meets with U.N. Secretary General Kofi Annan, NATO Secretary General Jaap de Hoop Scheffer, Lithuanian Foreign Minister Antanas Valionis, German Chancellor on Foreign Policy and Security Issues Bernd Muezelburg, and Political Director of the German Foreign Ministry Michael Scheffer. 16 February —Russian Foreign Minister Sergei Lavrov makes a two-day official visit to Erevan. 16 February —A working meeting is held within the framework of a regional assembly of the International Labor Organization (ILO) in Budapest between the Armenian Minister of Labor and Social Affairs Agvan Vartanian and ILO General Director Juan Somavia. 17 February —President Robert Kocharian receives Russian Foreign Minister Sergei Lavrov during his official visit to Armenia. 17 February —Prime Minister Andranik Margarian receives Russian Foreign Minister Sergei Lavrov during his official visit to Armenia. 24 February —Armenian President Robert Kocharian meets with NATO Secretary General’s Special Representative for Central Asia and the Southern Caucasus Robert Simmons. 2 March —Chairman of the Executive Committee of the Commonwealth of Independent States Vladimir Rushailo makes a working visit to Erevan. 3 March —Chairman of the Armenian National Assembly Artur Bagdasarian receives experts of the Venetian Commission of the Council of Europe and the OSCE

358 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

Office of Democratic Institutions and Human Rights (ODIHR) visiting Erevan to discuss the experts’ conclusion on the Armenian Election Code. 7 March —Cochairmen of the Group on Armenian Issues of the U.S. Congress Frank Pallone and Joe Knollenberg send U.S. President George Bush a letter asking him to officially recognize the 1915 Armenian genocide. 11 March —Armenian President Robert Kocharian receives Georgian Prime Minister Zurab Nogaideli, who arrived in Armenia on a two-day working visit. 14 March —Armenian Foreign Minister Vardan Oskanian goes on a two-day working visit to Geneva to participate in the 61st session of the U.N. Human Rights Commission. 16 March —Armenian President Robert Kocharian receives Deputy Head of Russia’s Gazprom Company Alexander Riazanov and Deputy Director of Russia’s RAO Unified Energy Systems Andrei Rappoport. During this meeting, they discuss questions relating to the activity of Armrosgazprom and the building of the Iran-Armenia gas pipeline. 21 March —Russian President Vladimir Putin and Armenian President Robert Kocharian exchange messages on the occasion of the opening of the Year of Russia in Armenia. 24 March —Russian President Vladimir Putin arrives in Erevan on a working visit. 28 March —Armenian President Robert Kocharian holds a meeting with government members with regards to drawing up an Armenia-EU Individual Action Plan within the framework of the EU European Neighborhood Policy Program. 30 March —Armenian President Robert Kocharian and acting OSCE Chairman Slovenian Foreign Minister Dimitrij Ruppel discuss settlement of the Nagorno-Karabakh conflict and cooperation in the Armenia-EU format. 1 April —Armenian President Robert Kocharian goes to Georgia on a two-day working visit on the invitation of Georgian President Mikhail Saakashvili. 5 April —Armenian President Robert Kocharian meets with Chairman of the House of Representatives of the Kingdom of Belgium Herman De Croo. 8 April —Armenian President Robert Kocharian holds a meeting with members of the Commission to coordinate the obligations assumed by the republic when it joined the Council of Europe. 15 April —Armenian Foreign Minister Vardan Oskanian meets with cochairmen of the OSCE Minsk Group Steven Mann (U.S.), Bernard Facier (France), and Iuri Merzliakov (Russia). The meeting organized on the initiative of the cochairmen was held in the U.S. embassy in Great Britain. 20 April —Armenian President Robert Kocharian goes to Paris on a three-day working visit. 2 May —Armenian President Robert Kocharian chairs the 14th session of the council of trustees of the Aiastan Armenian Foundation at the House of Receptions of the Armenian Government. 3 May —Armenian Prime Minister Andranik Margarian meets with Belarussian President Alexander Lukashenko in Minsk.

359 CENTRAL EURASIA 2005 Analytical Annual

9 May —Armenian President Robert Kocharian meets in Moscow with Moldovan President Vladimir Voronin and Greek President Karolos Papoulias. 11 May —Armenian National Assembly Speaker Artur Bagdarasian receives Rapporteurs of the PACE Monitoring Committee Jerzy Jaskernia and Georges Colombier. At the meeting, they discuss how Armenia will fulfill its obligations to PACE. 13 May —Armenian President Robert Kocharian meets with Rapporteurs of the PACE Monitoring Committee Jerzy Jaskernia and Georges Colombier and Committee Secretary Boni Teofilova. 15 May —Armenian and Azerbaijani Presidents Robert Kocharian and Ilham Aliev meet in Warsaw. 15 May —Representatives of Iran and Armenia reach agreements on building two power stations in the border area on the River Araks. 20 May —Armenian President Robert Kocharian receives Russian Federation Regional Development Minister Vladimir Iakovlev. 26 May —A delegation of the Armenian National Assembly left for Ljubljana in Slovenia to participate in the spring session of NATO’s Parliamentary Assembly. 30 May —Head of the Russian Presidential Administration Dmitri Medvedev arrives in Erevan. 2 June —Armenian President Robert Kocharian receives a delegation of the Venetian Commission of the Council of Europe Parliamentary Assembly. During the meeting, they discuss the constitutional reforms in Armenia. 9 June —A Lithuanian parliamentary delegation headed by parliament chairman Arturas Paulauskas arrives in Erevan on the invitation of Armenian National Assembly Speaker Artur Bagdasarian. 10 June —Armenian President Robert Kocharian receives Lithuanian Parliamentary Speaker Arturas Paulauskas and the delegation he heads. 13 June —Armenia is elected as the vice chairman of the 60th session of the U.N. General Assembly, which begins on 14 September. 15 June —Armenian President Robert Kocharian meets with General Secretary of the Collective Security Treaty Organization Nikolai Bordiuzha during his working visit to Erevan. 20 June —The regular session of the European Union-Armenia Cooperation Committee begins its work in Erevan. 23 June —President Robert Kocharian takes part in the regular session of the Collective Security Treaty Organization Council in Moscow. 6 July —Armenian President Robert Kocharian receives a delegation from the Iranian Province of Hormozgan headed by Governor Ebrahim Derazmisu. 12 July —A joint session of the Political-Military Steering Committee and Political Committee and Armenia takes place in the NATO headquarters convened on the initiative of the Alliance for additional discussion of Armenia’s Individual Partnership Action Plan (IPAP).

360 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

15 July —Armenian President Robert Kocharian receives the cochairmen of the OSCE Minsk Group during their regional visit to Armenia. 25 July —Georgian President Mikhail Saakashvili and Armenian Prime Minister Andranik Margarian discuss questions of developing cooperation between the two countries and the situation in Samtskhe-Javakhetia (Tbilisi). 21 August —Georgian President Mikhail Saakashvili arrives in Armenia on a two-day unofficial visit. 26 August —Armenian President Robert Kocharian takes part in a regular session of the Council of heads of member states of the Commonwealth of Independent States (Kazan). 26-28 September —President of the Republic of Finland Tarja Halonen makes an official visit to Armenia. 19-22 October —Armenian President Robert Kocharian makes a working visit to Brussels, during which he meets with European Parliament President Jozep Borell- Fontels, EU High Representative for Common Foreign and Security Policy Javier Solana, European Commission President José Manuel Barosso and NATO Secretary General Jaap de Hoop Scheffer. 23 October —A delegation of the European Union Troika—representatives of the country chairing in the EU and the country which will chair next, as well as of the European Commission—arrive in Armenia. 29 October —Within the framework of an official visit to the U.S., Secretary of the National Security Council under the Armenian President, Armenian Defense Minister Serge Sarkisian meets with Pentagon Head Donald Rumsfeld. 9-11 November —Armenian President Robert Kocharian makes a state visit to Greece. 25 November —Armenia becomes the chairing country in the Parliamentary Assembly of the Black Sea Economic Cooperation. 30 November —Armenian Foreign Minister Vardan Oskanian takes part in a regular session of the Council of Foreign Ministers of the member states of the Collective Security Treaty Organization in Moscow. 2 December —Russian Prime Minister Mikhail Fradkov arrives in Armenia on an official visit. 16 December —Russian and Armenian Presidents Vladimir Putin and Robert Kocharian meet in Sochi. 18 December —Armenia’s Individual Partnership Action Plan with NATO comes into force.

Azerbaijan Republic

24-26 January —Azerbaijan President Ilham Aliev pays an official visit to Iran. 25 January —PACE adopts Resolution 1416 on the Conflict over the Nagorno-Karabakh Region Dealt with by the OSCE Minsk Conference. 31 January- —A special OSCE mission visits Azerbaijan to investigate instances of illegal 5 February settlement of occupied Azerbaijan territory.

361 CENTRAL EURASIA 2005 Analytical Annual

1-3 February —Russian Federation Minister of Foreign Affairs Sergei Lavrov visits Azerbaijan. 2-3 February —NATO Assistant Secretary General for Security Issues Patric Hardown visits Azerbaijan. 6-9 February —NATO Secretary General’s Special Representative for Central Asia and the Southern Caucasus Robert Simmons visits Azerbaijan. 15-17 February —Azerbaijan President Ilham Aliev pays a working visit to the Russian Federation. 16 February —Azerbaijani President Ilham Aliev meets with Russian President Vladimir Putin in Moscow at the opening ceremony of the Year of Azerbaijan in Russia. 24-26 February —Azerbaijan President Ilham Aliev pays an official visit to Italy. 8-10 March —Azerbaijan President Ilham Aliev pays an official visit to Saudi Arabia. 17-19 March —Azerbaijan President Ilham Aliev pays a state visit to China. 30-31 March —Azerbaijan President Ilham Aliev pays an official visit to Poland. 31 March —The special OSCE mission publicizes a report on the Situation in Nagorno- Karabakh. 1-2 April —OSCE Chairman and Foreign Minister of Slovenia Dimitrij Rupel visits Azerbaijan. 12-13 April —U.S. Defense Minister Donald Rumsfeld visits Azerbaijan. 12-13 April —Azerbaijan President Ilham Aliev makes an official visit to Pakistan. 15 April —Azerbaijani and Armenian Foreign Ministers Elmar Mamediarov and Vardan Oskanian meet in London with the cochairmen of the OSCE Minsk Group. 21-22 April —Azerbaijan President Ilham Aliev makes official visit to Moldova. 22 April —GUAM Kishinev summit. 22 April —Participants in the GUAM summit adopt the Kishinev Declaration “In the Name of Democracy, Stability, and Development.” 11-12 May —EU Special Representative for the Southern Caucasus Heikki Talvitie visits Azerbaijan. 15 May —Azerbaijani and Armenian Presidents Ilham Aliev and Robert Kocharian meet in Warsaw (with participation of the cochairmen of the OSCE Minsk Group). 16 May —Azerbaijan and Iran sign the Memorandum on Cooperation in the Military Sphere. 23 May —The Azerbaijani Ministry of Foreign Affairs sends the Russian Federation Ministry of Foreign Affairs a note regarding the redeployment of Russian military hardware from Georgia to Armenia. 25 May —A ceremony is held to launch the Baku-Tbilisi-Ceyhan pipeline (its Azerbaijani section began to be filled with oil).

362 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

25 May —The presidents of Azerbaijan, Georgia, and Turkey sign the Declaration on Creating the International Kars-Akhalkalaki-Tbilisi-Baku Rail Corridor. 26-27 May —Talks are held in Baku with the cochairmen of the OSCE Minsk Group. 10-12 June —Azerbaijan President Ilham Aliev makes an official visit to Croatia. 13-14 June —Azerbaijan President Ilham Aliev makes a working visit to St. Petersburg. 16 June —Azerbaijan President Ilham Aliev makes a working visit to Kiev. 17 June —Talks are held between the Azerbaijani and Armenian foreign ministers in Paris. 23 June —The Parliamentary Assembly of the Council of Europe adopts Resolution 1456 on the Functioning of Democratic Institutions in Azerbaijan. 29-30 June —Turkish Prime Minister Recep Erdogan visits Baku. 30 June-2 July —A delegation of the Monitoring Group of the Council of Europe Committee of Ministers visits Azerbaijan. 6-7 July —Talks are held with EU Special Representative for the Southern Caucasus Heikki Talvitie in Baku. 11-15 July —The cochairmen of the OSCE Minsk Group make a tour of the region. 12-14 July —Former U.S. State Secretary, Head of the National Institute of Democracy Madeleine Albright visits Azerbaijan. 27-28 July —U.S. Undersecretary of State for Global Affairs Paula Dobriansky visits Azer- baijan. 1-6 August —Azerbaijan Foreign Minister Elmar Mamediarov visits the U.S. 21-23 August —PACE Director René van der Linden visits Azerbaijan. 26-27 August —Azerbaijan President Ilham Aliev makes a working visit to Kazan. 27 August —The Azerbaijani and Armenian presidents meet in Kazan. 31 August —Chairman of the U.S. Senate Foreign Relations Committee Richard Lugar and Senator for Illinois Barack Obama visit Azerbaijan. 31 August- —State Secretary of the Norwegian Ministry of Foreign Affairs Kim Traavik 1 September visits Azerbaijan. 4-5 September —Secretary General of the Council of Europe Terry Davis visits Azerbaijan. 4-5 September —OSCE Chairman and Foreign Minister of Slovenia Dimitrij Rupel visits Azer- baijan. 14-15 September —EU Special Representative for the Southern Caucasus Heikki Talvitie visits Azerbaijan. 23-24 September —Azerbaijan President Ilham Aliev makes an official visit to Bulgaria. 2-4 October —A Latvian delegation headed by its president, Vaira Vike-Freiberga, makes an official visit to Azerbaijan. 6-8 October —Chief of the Turkish General staff Hilmi Özkök visits Azerbaijan. 12 October —Official ceremony is held to launch the Georgian section of the Baku-Tbilisi- Ceyhan (Gardabani) oil pipeline. 363 CENTRAL EURASIA 2005 Analytical Annual

20 October —Talks are held in Baku between Deputy U.S. State Secretary for Europe and Eurasia Daniel Fried and Azerbaijan President Ilham Aliev. 27-29 October —The EU Troika (representatives of Great Britain chairing in the European Union, of Austria—future chair of the EU, and of the European Commission) visit Azerbaijan. 18 November —Talks are held in Baku between NATO Secretary General’s Special Representative for Central Asia and the Southern Caucasus Robert Simmons and Azerbaijan President Ilham Aliev. 22 November —Talks are held in Baku between EU Special Representative for the Southern Caucasus Heikki Talvitie and Azerbaijan President Ilham Aliev. 6-8 December —Azerbaijan President Ilham Aliev makes a working visit to Saudi Arabia. 13 December —Talks are held in Brussels between Azerbaijani foreign minister and representatives of the European Union. 4 December —The cochairmen of the OSCE Minsk Group meet with the foreign ministers of Azerbaijan and Armenia (Ljubljana). 14-17 December —The cochairmen of the OSCE Minsk Group make a tour of the region. 20 December —The presidents of Azerbaijan and Iran meet in Nakhchyvan for the ceremony marking the beginning of deliveries of Iranian gas to the Nakhchyvan Autonomous Republic.

Georgia

14-16 January —A U.S. Congress delegation pays a working visit to Georgia. 24-30 January —The country’s president participates in the World Economic Forum in Davos. 26 January —The country’s president presents an initiative to the Council of Europe Parliamentary Assembly on peaceful settlement of the conflict in South Ossetia. 26-29 January —A delegation of the Council of Europe Venetian Commission visits Georgia. 28 January —Lamberto Zannier, director of the Conflict Prevention Center of the Organization for Security and Cooperation in Europe, visits Georgia. 2-6 February —NATO Secretary General’s Special Representative for Central Asia and the Southern Caucasus Robert Simmons visits Georgia. 3-5 February —Estonian Foreign Minister Kristina Ojuland visits Georgia. 3-5 February —An international conference called “The Southern Caucasus in the 21st Century” is held. 13-16 February —An international conference called “International Mission of the Community of Democracies” is held. 17-18 February —Russian Foreign Minister Sergei Lavrov visits Georgia. 19-21 February —Secretary General of the Italian Foreign Ministry Umderto Vattani visits Georgia.

364 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

3-6 March —The Georgian president visits Italy. 4 March —The Georgian prime minister visits Azerbaijan. 4 March —Georgia’s naval fleet participates in the Blackseafor exercises. 4-8 March —Klaus Schumann, the Director General of Political Affairs Directorate of the Council of Europe, visits Georgia. 5-6 March —Belgian Chamber of Representatives Speaker Herman De Croo visits Georgia. 8-10 March —Chairman of the Georgian Parliament visits Belgium. 10 March —The country’s parliament adopts a resolution On Military Bases of the Russian Federation in Georgia’s Territory. 10-12 March —Russian Deputy Foreign Minister Sergei Razov visits Georgia. 24-26 March —The Georgian president visits Ukraine. 28-30 March —Turkish Deputy Prime Minister Mehmet Ali Shahin visits Georgia. 31 March-1 April —OSCE Chairman-in-Office and Slovenian Foreign Minister Dimitrij Rupel visits Georgia. 2 April —Armenian President Robert Kocharian visits Georgia. 4-9 April —EU Special Representative for the Southern Caucasus Heikki Talvitie visits Georgia. 9-10 April —Lithuanian Foreign Minister Antanas Valionis visits Georgia. 14-16 April —Council of Europe Secretary General Terry Davis visits Georgia. 18 April —The country’s president participates in the GUAM summit in Kishinev. 18 April —The leaders of the GUAM countries adopt the Kishinev Declaration “In the Name of Democracy, Stability, and Development.” 21-26 April —Meeting of the Georgian-Iranian Commission on Economic, Trade, Scientific, and Technical Cooperation is held. 24-26 April —NATO Secretary General’s Special Representative for Central Asia and the Southern Caucasus Robert Simmons visits Georgia. 25-26 April —Iran’s First Vice President Mohammed Reza visits Georgia. 28-30 April —Chairman of the Armenian National Assembly Artur Bagdasarian visits Georgia. 4-5 May —The country’s president visits the Netherlands. 9-10 May —U.S. President George Bush visits Georgia. 12-14 May —The country’s parliament chairman visits Latvia. 15-17 May —The country’s president participates in the Council of Europe summit in Warsaw. 16-17 May —Minister for Regional Development of Italy Enriko La Logia visits Georgia. 25 May —The country’s president participates in the ceremony for launching the Azerbaijan section of the Baku-Tbilisi-Ceyhan oil pipeline. 25 May —The presidents of Georgia, Azerbaijan, and Turkey sign the Declaration on Creating the International Kars-Akhalkalaki-Tbilisi-Baku Rail Corridor. 365 CENTRAL EURASIA 2005 Analytical Annual

25-26 May —Latvian President Vaira Vike-Freiberga visits Georgia. 26-30 May —Latvian Prime Minister Aigars Kalvitis visits Georgia. 28-29 May —The country’s parliament chairman participates in a meeting of the GUAM Parliamentary Assembly. 31 May —Lithuanian Defense Minister Gediminas Kirkilas visits Georgia. 1-2 June —Rumanian MOD State Secretary for Defense Policy Ion Mircea Plangu visits Georgia. 1-3 June —Armenian Prime Minister Andranik Margarian visits Georgia. 2-3 June —Meeting of the heads of government of the CIS countries in Tbilisi. 2-3 June —Kyrgyzstan acting prime minister Adakhan Madumarov visits Georgia. 2-3 June —Moldovan Prime Minister Vasile Tarlev visits Georgia. 2-3 June —Kazakhstan Prime Minister Danial Akhmetov visits Georgia. 7 June —Speaker of the Lithuanian Seim Arturas Paulauskas visits Georgia. 15-18 June —The country’s president participates in the Economic Forum in Kiev. 20 June —The country’s parliament chairman visits China. 22-24 June —Norwegian Foreign Minister Kim Traavik visits Georgia. 24-27 June —The country’s president visits Monaco. 30 June-1 July —Ukrainian Foreign Minister Boris Tarasiuk visits Georgia. 8-11 July —International conference on conflict settlement is held in Batumi. 11 July —Personal representative of the OSCE chairman Mircha Joan visits Georgia. 18-19 July —The country’s prime minister visits Azerbaijan. 30 July —The country’s parliament chairman visits Finland. 31 July —The country’s president visits Sweden. 1-2 August —The country’s president participates in the Tallberg Forum in Stockholm. 5-7 August —Chinese Deputy Foreign Minister Qiao Zonghuai visits Georgia. 10-13 August —Ukrainian President Viktor Iushchenko visits Georgia. 13 August —The Georgian and Ukrainian presidents participate in the ceremony on the adoption of the Declaration on Creating a Community of Democratic Choice. 18 August —The country’s president and parliament chairman participate in celebrating the anniversary of the Artek international youth center. 20 August —Council of Europe Parliamentary Assembly President René van der Linden visits Georgia. 23 August —The country’s president visits Armenia. 24-26 August —The country’s president participates in the CIS summit in Kazan. 27-28 August —Japanese Foreign Minister Nobutaka Machimura visits Georgia. 30 August- —The country’s president visits Poland where he participates in the celebrations 2 September on the anniversary of the Solidarity movement.

366 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

2 September —A NATO information center opens in Batumi. 3 September —The country’s president meets with the heads of the diplomatic missions accredited in Georgia. 6-9 September —The country’s parliament chairman visits the U.S. 10-16 September —The country’s president participates in the 60th session of the U.N. General Assembly. 10-22 September —Multinational military exercises are held in Georgia within the framework of the Partnership for Peace program. 12-15 September —Turkish minister of state Kursad Tuzmen visits Georgia. 26-28 September —Greek Deputy Foreign Minister Panagiotis Skandalakis visits Georgia. 26-29 September —A NATO delegation visits Georgia to evaluate the Individual Partnership Action Plan. 28-29 September —Finnish President Tarja Halonen visits Georgia. 29 September —The country’s prime minister visits Armenia. 2-4 October —Kazakhstan Foreign Minister Kassymzhomart Tokaev visits Georgia. 2-8 October —A delegation of Latvian businessmen visits Georgia. 4-6 October —Latvian President Vaira Vike-Freiberga visits Georgia. 5-8 October —The country’s prime minister visits Turkey. 6-8 October —The country’s parliament chairman participates in the Parliamentary Assembly of the Council of Europe. 6-8 October —Personal representative of the OSCE chairman Mircha Joan visits Georgia. 11 October —The country’s parliament adopts a resolution On the Situation Being Created in the Conflict Regions and the Peacekeeping Operations in the Country’s Territory. 12 October —Ceremony is held to launch the Georgian section of the Baku-Tbilisi-Ceyhan oil pipeline. 19-21 October —The country’s parliament chairman visits Ukraine. 21-23 October —The country’s prime minister visits the U.S. 24-26 October —NATO Secretary General’s Special Representative for Central Asia and the Southern Caucasus Robert Simmons visits Georgia. 25-27 October —The European Union Troika visits Georgia. 26-29 October —The country’s prime minister visits Austria. 27-29 October —Kazakhstan President Nursultan Nazarbaev visits Georgia. 28 October —A business forum is held of the Asia-Pacific Region states’ chambers of commerce and industry. 1-4 November —Director of the OSCE Office for Democratic Institutions and Human Rights (ODIHR) Christian Strohal visits Georgia. 9-11 November —Lithuanian President Valdas Adamkus visits Georgia. 367 CENTRAL EURASIA 2005 Analytical Annual

11 November —The country’s prime minister visits Ukraine. 14-18 November —OSCE High Commissioner on National Minorities Rolf Ekeus visits Georgia. 15-16 November —A meeting of the TRACECA Coordinating Group is held in Georgia. 16 November —The country’s parliament chairman participates in a meeting of heads of parliament of the CIS states. 18-19 November —The country’s prime minister visits Kazakhstan. 19 November —U.N. Secretary General Kofi Annan visits Georgia. 22-23 November —The presidents of Georgia, Ukraine, Rumania, and Estonia participate in the “New Wave of European Liberation: Democracy and Transformation” Forum in Tbilisi. 29-30 November —The first round of talks is held on coordinating the Action Plan within the framework of the European Neighborhood Policy. 30 November —The country’s president visits Ukraine. 1-2 December —The country’s president participates in the forum for founding the Community of Democratic Choice in Kiev. 4 December —The country’s prime minister and foreign minister participate in the work of the OSCE ministerial in Slovenia. 7-10 December —The country’s foreign minister participates in the work of the NATO ministerial. 11-15 December —The country’s foreign minister participates in the work of the Cooperation Council under the Agreement on Partnership and Cooperation with the EU. 17 December —A Georgian-Russian business forum is held.

Republic of Kazakhstan

11-12 January —Russian President Vladimir Putin makes a working visit to Almaty. 17-19 January —Kazakhstan President Nursultan Nazarbaev makes an official visit to Moscow. 26-27 January —Fourth (special) meeting of the Antiterrorist Committee of the U.N. Security Council (Almaty). 28-29 January —Kazakhstan participates in the 16th meeting of the Special Working Group (SWG) to draw up a Convention on the Legal Status of the Caspian Sea (Ashghabad). 2 February —Third meeting of the European Union-Kazakhstan Subcommittee on Justice and Law and Order (Astana). 2 February —Majilis approves the draft law On International Agreements of the Republic of Kazakhstan. 8 February —The Organization for Economic Cooperation and Development (OECD) makes a decision to raise Kazakhstan’s rating and transfer the republic from the 5th to the 4th risk group.

368 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

14-15 February —Current chairman of the OSCE, Foreign Minister of the Republic of Slovenia Dimitrij Rupel, visits Kazakhstan. 21-22 February —23rd meeting of the Standing Committee on Scientific and Technological Cooperation of the Organization of the Islamic Conference (COMSTECH) (Almaty). 22 February —Annual conference on planning a Working Program of NATO Partnership opens (Almaty). 25 February —Meeting of the Council of Foreign Ministers of the SCO member states. 28 February —Kazakhstan Foreign Ministry, U.N. resident-coordinator, permanent representative of the UNDP and UNFPA, and representative of UNICEF in Kazakhstan sign action plans between the Kazakhstan Government and U.N. Departments for 2005-2009. 9 March —A round table on Kazakhstan opens in London at the British Political Science Center of the Institute of Economic Relations. 14 March —AO KazMunaiGaz Oil Company and OAO LUKoil founds OOO Caspian Oil and Gas Company joint venture in the Russian Federation. 14-18 March —Parliament Senate Chairman N. Abykaev makes an official visit to Belgium. 15 March —Kazakhstan Supreme Court recognizes the Asbat al-Ansar, Muslim Brothers, Taliban, Boz gurd, Zhamaat of Central Asian mojahedin, Lashkar-i-Tayba, and the Society of Social Reforms international organizations as terrorist and bans their activity in Kazakhstan. 15 March —Annual conference on the Closed Nuclear Centers Partnership Program (CNCP) organized by the British Ministry of Trade and Industry (settlement of Alatau, near Almaty). 19 March —Decision of the British Ministry of Trade and Industry to render support in building a nuclear technopark in the town of Kurchatov under the Closed Nuclear Centers Partnership Program. 29-31 March —U.N. international assembly on the role of international, including regional and subregional, organizations in carrying out the Almaty Action Program (AAP) for developing countries without access to the sea (Almaty). 30 March —The founding documents of AO Joint Kazakhstan-Russian Baiterek Venture for creating a space missile complex are signed (Astana). 31 March —Georgian President Mikhail Saakashvili makes an official visit to Kazakhstan. 4 April —First meeting of the Kazakhstan-Chinese subcommittee on cooperation in power engineering (Astana). 6 April —Sixth meeting of the Republic of Kazakhstan-European Union Cooperation Committee is held in Brussels. 6 April —Fourth meeting of the foreign ministers of the member states of the Asian Cooperation Dialog (ACD), attended by Kazakhstan Foreign Minister Kasymzhomart Tokaev (Islamabad). 14 April —A scientific-practical conference on the Investment Climate of Kazakhstan is held at the London School of Business.

369 CENTRAL EURASIA 2005 Analytical Annual

20 April —First working meeting on the Kalkan project created on the initiative of the Interpol (International Criminal Police Organization) General Secretariat is held in Almaty. 21-23 April —Fourth Eurasian Media Forum (Almaty). 3-4 May —International conference on Openness of Information: Kazakhstani and International Experience, organized by the Kazakhstan Transparency Foundation in partnership with the F. Ebert Foundation (Almaty). 11 May —Consultations of the Kazakhstan and Chinese foreign ministry representatives; meeting of the Secretariat of the Committee on Cooperation between the Republic of Kazakhstan and the PRC (Beijing). 16-17 May —Meeting between Russian President Vladimir Putin and Kazakhstan President Nursultan Nazarbaev in Cheliabinsk. 18-19 May —Belarus President Alexander Lukashenko makes an official visit to Kazakhstan. 23-24 May —First round of the talks between Kazakhstan and Chinese representatives on Kazakhstan’s entry into the WTO (Beijing). 24 May —The Kazakhstan president signs the Law on Ratification of the Treaty on the Status of the Fundamental Legislative Principles of the Eurasian Economic Community, and the Procedure for Developing, Adopting, and Implementing Them. 24-25 May —Kazakhstan President Nursultan Nazarbaev makes a state visit to Azerbaijan. 25 May —Nursultan Nazarbaev participates in the ceremony to open the Azerbaijani section of the Baku-Tbilisi-Ceyhan (BTC) pipeline. 26 May —Turkish Prime Minister Recep Tayyip Erdogan makes an official visit to Kazakhstan. 30-31 May —Ukrainian President Viktor Iushchenko makes an official visit to Kazakhstan. 1-2 June —Third meeting of the Secretariat of the Congress of World and Traditional Religions (Almaty). 2 June —Second meeting of the secretaries of the SCO member states’ Security Councils (Astana). 3 June —Kazakhstan Foreign Minister K. Tokaev and Russian Federation Foreign Minister Sergei Lavrov sign the Description of the Passage of the State Border and Map Sheets of the State Border (Astana). 15 June —Meeting between Kazakhstan President Nursultan Nazarbaev and Chairman of the Open Society Institute and Head of the Soros Foundation George Soros. 15 June —The Majilis of the parliament approves draft laws aimed at intensifying state control over the activity of foreign and international non-commercial organizations. 16 June —Meeting of the Kazakhstan-Russia Business Club (Moscow). 21 June —The third annual international conference on security is held in Almaty.

370 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

21 June —Kazakhstan’s Channel 31 television and radio company acquires the Independent Bishkek Television Company (IBT). 23 June —Meeting of the North Atlantic Council at the level of permanent representatives in the NATO-Kazakhstan format (Brussels). 23 June —A Kazakhstan delegation participates in the work of the 105th and 106th sessions of the Customs Cooperation Council at the headquarters of the World Customs Organization (Brussels). 3-4 July —PRC Chairman Hu Jintao makes an official visit to Kazakhstan. 5 July —The tenth (anniversary) meeting of the heads of SCO member states is held in Astana. 6 July —A meeting between Kazakhstan President Nursultan Nazarbaev and Russian President Vladimir Putin is held in Astana. 18-20 July —Bilateral consultations on Kazakhstan’s entry into the World Trade Organization at the Directorate-General of the Commission of European Trade Communities. 29 July —Kazakhstan President Nursultan Nazarbaev receives Head of the Russian Federation Presidential Administration Dmitri Medvedev. 1 August —Almaty is nominated as the capital for the winter Olympic Games of 2014. 9 August —Opening of the SAR embassy in Kazakhstan. 15 August —Kazakhstan and Turkey sign a statement on completing bilateral talks on access to the Kazakhstani market of goods and services on mutually acceptable conditions for both sides (Ankara). 22 August —Kazakhstan Foreign Minister Tokaev visits the United States, meets with U.S. State Secretary Condoleezza Rice. 25 August —Meeting between Kazakhstan Foreign Minister Tokaev and U.S. Defense Minister Donald Rumsfeld. 26 August —Nursultan Nazarbaev participates in the regular summit of CIS states (Kazan). 30 August —International conference devoted to the 10th anniversary of the Kazakhstan Constitution (Astana). 1 September —Completion of the Kazakhstan-Chinese talks on Kazakhstan’s entry into the WTO (Beijing). 6-7 September —Former U.S. president Bill Clinton makes a private visit to Kazakhstan. 7 September —A regional expert Council for Central Asia is created in Kazakhstan. 8 September —A Kazakhstan parliamentary delegation takes part in the work of the Second World Conference of Speakers of Parliaments (New York). 12 September —A Kazakhstan parliamentary delegation meets with members of the British Group–Inter-Parliamentary Union (London). 12-13 September —A Kazakhstan delegation participates in high-level consultations of the OSCE member states (Vienna). 19 September —A Kazakhstan delegation participates in the annual assembly of the OSCE Office for Democratic Institutions and Human Rights (Warsaw).

371 CENTRAL EURASIA 2005 Analytical Annual

21 September —Memorandum on the transfer to the Kazakhstan People’s Bank of the powers of the EBRD for implementing the Small Business Program. 27-30 September —Third World Kazakh Kurultai (Astana). 1 October —15th meeting of the Council of Foreign Ministers of the Economic Cooperation Organization (Astana). 2-4 October —Kazakhstan President Nursultan Nazarbaev makes an official visit to Georgia. 6 October —Robert Simmons, special representative of NATO Secretary General for Central Asia and the Caucasus, visits Kazakhstan. 6 October —Meeting of the Council of Heads of Member States of the Central Asian Cooperation Organization (St. Petersburg). 8 October —International symposium called Kazakhstan—Strengthening International Cooperation for Peace and Security (Ust-Kamenogorsk). 9 October —A delegation of U.S. Congress deputies visits Kazakhstan. 10 October —A delegation of the British-Kazakhstani Parliamentary Group visits Kazakhstan. 13 October —U.S. State Secretary Condoleezza Rice visits Kazakhstan. 13 October —Kyrgyz Prime Minister Felix Kulov makes a working visit to Astana. 13 October —7th Central Asian Mass Media Conference called Pluralism in the Mass Media and on the Internet organized under the auspices of the OSCE (Almaty). 15 October —Former U.S. secretary of state Henry Kissinger makes a private visit to Kazakhstan. 26 October —The Kazakhstan president signs the Law on Ratification of the Security Agreement between the Republic of Kazakhstan and the North Atlantic Treaty Organization. 26 October —Kazakhstan participates in the meeting of the Council of Heads of Government of the SCO member states (Moscow). 26 October —The Kazakhstan president signs the Law on Ratification of the Agreement between the Government of the Republic of Kazakhstan and the Government of the Russian Federation on KazSat. 26-28 October —Jan Kubish, EU special representative for Central Asia, makes a working visit to Kazakhstan. 27 October —Kazakhstan Prime Minister Danial Akhmetov makes official visit to the Russian Federation. 1 November —The U.N. General Assembly adopts resolution on International Cooperation and Coordination of Activity Aimed at Rehabilitation of the Population and Environment, and Economic Development of the Semipalatinsk Region in Kazakhstan. 1 November —Appeal of OSCE representative on freedom of the press to the Kazakhstan Government to cancel the rules for registering domain names for websites. 3 November —General John Abizaid, Commander of the U.S. Central Command, visits Kazakhstan.

372 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

3 November —Tenth meeting of the Kazakhstan-British Trade and Industrial Council (Astana). 8 November —Abdallah II bin al-Hussein, King of the Hashemite Kingdom of Jordan, makes an official visit to Kazakhstan. 14 November —Talks between the Kazakhstan leadership and head of Russia’s Gazprom Alexei Miller. 14 November —Joining up of the Kazakhstan and Chinese sections of the oil pipeline from Kazakhstan to China at the border Dostyk-Alashankou pass. 17 November —Nursultan Nazarbaev makes an official visit to Ukraine. 19 November —Georgian Prime Minister Zurab Nogaideli makes an official visit to Kazakhstan. 23 November —Ratification of the Treaty on Kazakhstan-Russian State Border by the Senate of the Kazakhstan Parliament and Federation Council of the Russian Federation. 23 November —Statement is signed on completing the talks between Kazakhstan and Japan on access to the Kazakhstan market of goods and services. 23 November —Second international conference on the Development of Petrochemistry in Kazakhstan: Current State and Future Prospects (Astana). 3 December —Kazakhstan President Nursultan Nazarbaev signs the Law on Ratification of the International Pact on Civilian and Political Rights. 12-14 December —Meeting of the Special Working Group (SWG) of the Conference for Cooperation and Confidence-Building Measures in Asia (Almaty). 14 December —Statement of the special authorized representative of the North Atlantic Alliance Organization Robert Simmons on signing an individual action plan with Kazakhstan under NATO’s Partnership for Peace program. 14 December —Kazakhstan President Nursultan Nazarbaev signs the Law on Ratification of the Framework Convention on the Protection of the Maritime Environment in the Caspian Sea. 20 December —U.S. CIA Director Porter Goss visits Kazakhstan. 22 December —Fifth meeting of the Inter-House Parliamentary Commission (IPC) on cooperation between the Majilis of the Kazakhstan parliament and the Russia Federation State Duma.

Kyrgyz Republic

31 March —OSCE Chairman-in-Office and Slovenian Foreign Minister Dimitrij Rupel pays a working visit to Kyrgyzstan. 8-9 April —European Union Commission Deputy General Director for Foreign Relations Michael Lee pays a working visit to Kyrgyzstan. 15 April —The republic’s foreign minister pays a working visit to Moscow.

373 CENTRAL EURASIA 2005 Analytical Annual

22 April —Acting president and prime minister of the republic, Kurmanbek Bakiev, pays a working visit to Kazakhstan. 22-25 April —The republic’s foreign minister makes a working visit to Uzbekistan. 7-9 May —Acting president and prime minister of the republic, Kurmanbek Bakiev, pays a working visit to the Russian Federation. 10-13 May —The republic’s foreign minister makes a working visit to China. 18 May —Acting president and prime minister of the republic, Kurmanbek Bakiev, pays a working visit to Tajikistan. 25-27 May —A Kyrgyzstan delegation participates in an international conference on strengthening subregional economic cooperation in Central Asia and the future role of the U.N. Special Program for the Economies of Central Asia (SPECA) organized in Astana, Kazakhstan. 29-30 May —Acting president and prime minister of the republic, Kurmanbek Bakiev, pays a working visit to Austria. 3 June —A meeting of the Council of CIS Heads of State is held. 13-16 June —The republic’s foreign minister makes a working visit to the U.S. 22 June —A meeting of the Interstate Council of the Eurasian Economic Community is held with the participation of acting president and prime minister of the republic, Kurmanbek Bakiev, in Moscow. 23 June —A session of the Collective Security Council with the participation of acting president and prime minister of the republic, Kurmanbek Bakiev, is held in Moscow. 5 July —A SCO summit is held in Astana. 25-26 July —U.S. Defense Minister Donald Rumsfeld pays a working visit to Kyrgyzstan. 2 August —Acting Vice Prime Minister of the republic Adahan Madumarov visits Almaty. 9-10 August —OSCE Secretary General Marc Perrin de Brichambaut pays a working visit to Kyrgyzstan. 23 August —A meeting of the Council of Foreign Ministers of the CIS Republics is held in Moscow. 26 August —A regular session of the Council of CIS Heads of State is held in Kazan. 4-5 September —Kyrgyz President Kurmanbek Bakiev pays a working visit to the Russian Federation. 7-10 September —The Kyrgyzstan Days festival is celebrated in Moscow. 7-10 September —Kyrgyz President Kurmanbek Bakiev participates in a U.N. summit and the 60th session of the U.N. General Assembly in New York. 27 September —A meeting of the Interstate Council of EurAsEC is held at the head of state level in Dushanbe. 29 September —Kyrgyz Prime Minister Felix Kulov pays a working visit to Moscow.

374 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

11 October —An assembly of ministers of foreign economic and foreign trade departments of the SCO member states is held in Dushanbe. 11 October —U.S. State Secretary Condoleezza Rice pays a working visit to Kyrgyzstan. 13 October —Kyrgyz Prime Minister Felix Kulov pays a working visit to Kazakhstan. 26 October —A meeting of the Council of Heads of Government of the SCO Member States is held in Moscow. 31 October —A meeting of the High Level Group of the CSTO Member States is held in Moscow. 18-24 November —The republic’s parliamentary delegation headed by Parliament Speaker Omurbek Tekebaev visits Thailand for the Sixth Assembly of the Association of Asian Parliaments for Peace. 25 November —A meeting of the heads of government of the CIS republics is held in Moscow. 30 November —A meeting of the Council of Foreign and Defense Ministers and Secretaries of the Councils of Security of the CSTO Member States is held in Moscow. 5-7 December —A Kyrgyzstan delegation participates in a special OIC summit in Mecca. 5-6 December —A regular meeting of the Council of Foreign Ministers of OSCE Member States is held in Ljubljana. 6 December —The republic’s defense minister, Ismail Isakov, visits India. 13-18 December —A WTO ministerial conference is held in Hong Kong. 21-24 December —Kyrgyz Foreign Minister Alikbek Jekshenkulov pays a working visit to China. 26 December —Kyrgyz Prime Minister Felix Kulov pays a working visit to Moscow.

Republic of Tajikistan

19 January —Members of the Paris Group discuss problems of protecting the border with Afghanistan after the Russian border guards transfer control of it to their Tajik colleagues (Dushanbe). 26 January —The Majlisi namoiandagon, the country’s lower house of parliament, ratifies the Tajik-Russian agreements, including on creating a Russian military base in Tajikistan, entered during Vladimir Putin’s visit to Dushanbe. 1 February —The RusAl company (RF) and Lehmeyer International (Germany) sign an agreement on a feasibility report for building the Rogun Hydropower Plant (Dushanbe). 16 February —The participants of an international conference discuss assistance to Tajikistan in protecting the border with Afghanistan after control is transferred from the Russian to the Tajik border guards. The U.S. announces it will allot $9.5 million for this purpose (Dushanbe).

375 CENTRAL EURASIA 2005 Analytical Annual

16 February —The Tajik Ministry of Power Engineering and Russia’s RAO Unified Energy Systems sign a document on founding the Sangtuda-1 Open Joint-Stock Company. 15 March —Tajik-Egyptian talks are held in Dushanbe at the foreign minister level. 23-24 March —Tajik Prime Minister Akil Akilov participates in the work of the EurAsEC Council of Heads of State (Astana). 2-6 April —CSTO command staff exercises “Rubezh-2005” are held in Tajikistan, during which Tajik President Emomali Rakhmonov meets CSTO Secretary General Nikolai Bordiuzha and Russian Defense Minister Sergei Ivanov. 19 April —OSCE Chairman-in-Office and Slovenian Foreign Minister Dimitrij Rupel visits Tajikistan. 19-23 April —Tajikistan Defense Minister Sherali Khairulloev pays an official visit to Iran. 22-23 April —During the Asian-African summit, Tajik President Emomali Rakhmonov meets with U.N. Secretary General Kofi Annan, Chinese President Hu Jintao, Pakistan President Pervez Musharraf, and First Iranian Vice President Mohammad Reza Aref in Jakarta. 27 April —Tajik President Emomali Rakhmonov pays his first official visit to Afghanistan. 16-17 May —Transfer begins of sections of the country’s state border with Afghanistan previously protected by Russian border guards to the control of the Tajik border guards. 18 May —Tajik President Emomali Rakhmonov meets with acting president of Kyrgyzstan Kurmanbek Bakiev. The sides emphasize that the events in Andijan are internal in nature and not one Central Asian country is interested in destabilization of the situation in Uzbekistan (Dushanbe). 22-23 May —Tajik President Emomali Rakhmonov visits South Korea. 15 June —Head of State Emomali Rakhmonov discusses questions with Director of the Central Bank of Iran Ebrahim Sheibani relating to Iran’s investments in the building of Sangtuda-2 Hydropower Plant, as well as the development prospects for bilateral cooperation in banking and financing (Dushanbe). 16-17 June —An international banking conference is held in Dushanbe, during which Tajik President Emomali Rakhmonov announces that the Tajik government is removing all restrictions on the activity of foreign banks in the republic. 18 June —Tajikistan President Emomali Rakhmonov and Afghanistan President Hamid Karzai adopt a decision on building a stationary bridge over the border river Panj. 5 July —Tajik President Emomali Rakhmonov participates in a SCO summit (Astana). 21 July —Tajik President Emomali Rakhmonov and PRC Vice Premier Wu Yi discuss questions relating to China’s participation in the rehabilitation and 376 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

development of Tajikistan’s transportation corridors and telecommunication networks. 26 July —Head of State Emomali Rakhmonov and Tajik Defense Minister Sherali Khairulloev hold talks with U.S. Defense Minister Donald Rumsfeld, who arrived in Tajikistan on an official visit (Dushanbe). 3 August —On the eve of the parliamentary election in Afghanistan, France deploys five Mirage bombers in Tajikistan and replenishes its military contingent in the republic with another 400 servicemen. 9-12 August —Tajik President Emomali Rakhmonov pays an official visit to Thailand. 24 August —Tajik President Emomali Rakhmonov receives General John Abizaid, Commander of the U.S. Central Command (Dushanbe). 7 September —Tajik President Emomali Rakhmonov holds talks with EU Special Representative for Central Asia Jan Kubish in Dushanbe. 14-15 September —Head of State Emomali Rakhmonov participates in a U.N. summit in New York. 26 September —Tajik President Emomali Rakhmonov and Russian Vice Premier Viktor Khristenko participate in an official ceremony to restart construction of the Rogun Hydropower Plant. 6 October —Head of State Emomali Rakhmonov and Russian President Vladimir Putin discuss the development of bilateral cooperation in Moscow. 11 October —Tajik President Emomali Rakhmonov and French President Jacques Chirac discuss the development of bilateral cooperation in Paris. 13 October —Tajik President Emomali Rakhmonov and Foreign Minister Talbak Nazarov hold talks with U.S. State Secretary Condoleezza Rice in Dushanbe. 13 November —Head of State Emomali Rakhmonov and Armenian President Robert Kocharian discuss the development prospects of bilateral relations in Erevan. 30 November —Tajik-Russian economic forum is held in Dushanbe. 7-8 December —Tajik President Emomali Rakhmonov participates in the Third (Special) Summit of the Organization of the Islamic Conference (OIC). During the summit, he holds talks with President of the Islamic Development Bank Ahmad Mohammad Ali, Pakistani President Pervez Musharraf, Iranian President Mahmoud Ahmadinejad, and Afghanistan President Hamid Karzai, and also meets with King of Bahrain Sheik Hamad bin Isa in Mecca. 14-15 December —Russian State Duma Speaker Boris Gryzlov pays an official visit to Tajikistan. “Tajikistan is a country in which financial resources can be invested,” he stated after his meeting with the republic’s president, Emomali Rakhmonov. 24-30 December —Chairman of the Majlisi namoiandagon, the Tajik lower chamber of parliament, Saidullo Khairulloev pays an official visit to Iran. 377 CENTRAL EURASIA 2005 Analytical Annual

Turkmenistan

3 January —A contract is signed on delivering gas to Ukraine for 2005. 17 January —Talks are held with an official delegation from Japan; opening of the Japanese Embassy in Turkmenistan (Ashghabad). 25 January —Experts meet to discuss environmental safety in the Caspian Sea. 28-29 January —16th meeting of the Special Working Group to prepare the Convention on the Legal Status of the Caspian Sea. 9 February —Meeting between Turkmenistan President Saparmurat Niyazov and Deputy Assistant to U.S. Secretary of State for European and Eurasian Affairs Laura Kennedy. 28 February —Intergovernmental talks with a PRC delegation (Ashghabad). 22-23 March —Ukrainian president visits Ashghabad. 29-30 March —53rd meeting of the Council of Commanders of Border Troops of the CIS Member States (Ashghabad). 29 March —Turkmenistan joins several international U.N. documents. 12 April —Meeting between the Turkmen and Iranian presidents. 15-19 April —Talks and entering an agreement with Gazprom on prices for Turkmen gas delivered to Russia. 20 April —Talks between Saparmurat Niyazov and OSCE Chairman Dimitrij Rupel (Ashghabad). 8-11 May —Saparmurat Niyazov visits Moscow, talks with Russian, Ukrainian, and Chinese leaders. 12 May —Meeting of the European Union-Turkmenistan committee (Ashghabad). 17 May —Talks between Saparmurat Niyazov and a Turkish governmental delegation (Ashghabad). 17 May —Turkmenistan signs an Agreement with the IAEA on applying guarantees with respect to the Nuclear Non-Proliferation Treaty and Additional Protocol to it (Vienna). 20 May —Forum of the Humanitarian Association of Turkmen of the World (Ashghabad). 23 May —Turkmen-German Economic Forum (Ashghabad). 31 May —OSCE High Commissioner on National Minorities Rolf Ekeus visits Turkmenistan. 6 June —A delegation of the CPC Central Committee visits Ashghabad. 20, 24 June —Saparmurat Niyazov criticizes Ukraine’s unconscientious execution of contracts on the delivery of gas and puts forward new payment conditions. 28 June —Vice-President of the International Committee of the Red Cross Jacques Forster visits Ashghabad.

378 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

19-20 July —A PRC governmental delegation visits Ashghabad. 23 August —Saparmurat Niyazov meets with the Chief of U.S. Central Command, General John Abizaid (Ashghabad). 26 August —Saparmurat Niyazov’s message is read at the CIS summit in Kazan about a change in format for Turkmenistan’s participation in the CIS to associated membership. 21-22 September —Turkmen-Afghan talks on setting up the border (Ashghabad). 29 September —Saparmurat Niyazov meets with EU special representative for Central Asia Jan Kubish (Ashghabad). 5 October —Saparmurat Niyazov meets with U.S. Under Secretary of State for Arms Control and International Security Robert Joseph (Ashghabad). 12 October —Saparmurat Niyazov sharply criticizes official Kiev’s violation of obligations at the talks with representatives of the Ukrainian fuel and energy complex. 17 October —Turkmen-Indian intergovernmental talks (Ashghabad). 20-21 October —Russian Foreign Minister Sergei Lavrov makes a working visit to Turkmenistan. 26-27 October —Saparmurat Niyazov meets Ukrainian Prime Minister Ekhanurov. 9 November —Iranian Foreign Minister Mottaki visits Ashghabad. 18 November —Saparmurat Niyazov announces the new prices for exported natural gas. 1 December —Turkmen-Kazakhstan talks on settling debts. 1-4 December —Turkmenistan governmental delegation visits China. 11-12 December —Head of Russia’s Gazprom Alexei Miller visits Ashghabad. 22 December —Talks with Ukrainian Minister of Fuel and Energy Plachkov and Chairman of Ukraine’s Naftogaz National Joint-Stock Company Ivchenko (Ashghabad). 26 December —Meeting of the Turkmen-Japanese committee on business cooperation. 29 December —Agreement is reached with Gazprom on delivering gas for 2006.

Republic of Uzbekistan

3 January —Uzbek Foreign Minister Sodik Safaev receives an Afghani delegation headed by Public Works Minister Suhrab Ali Safari. 4 January —Uzbekistan President receives First Iranian Vice President Mohammad Reza Aref during his official visit to the republic. During the talks, questions of bilateral relations, regional security, the situation in Afghanistan, and other problems are discussed. The same day, Reza Aref meets with the republic’s

379 CENTRAL EURASIA 2005 Analytical Annual

Prime Minister Shavkat Mirzieev and his deputy, Chairman of the Agency for Foreign Economic Relations Elyor Ganiev. 19 January —Uzbek Ambassador to the European Communities Vladimir Norov awards letters of merit to President of the European Union Commission (EUC) Jose Manuel Barroso in Brussels. 3 February —The Sixth Session of the Uzbekistan-EU Cooperation Council is held in Brussels. 7-9 February —A meeting of the Regional Expert Group for drawing up a draft of the Treaty on a Nuclear-Weapon-Free Zone in Central Asia is held in Tashkent. 10 February —Tajik Prime Minister Akil Akilov arrives in Uzbekistan and holds talks with Uzbek Prime Minister Shavkat Mirzieev on a broad range of bilateral cooperation aspects. 15-16 February —OSCE Chairman-in-Office, Slovenian Foreign Minister Dimitrij Ruppel visits Uzbekistan and is received by the republic’s president. The sides exchange opinions on reforming the OSCE, strengthening regional security, implementing joint projects in the economy and environment, as well as bilateral cooperation between Uzbekistan and Slovenia. 2 March —Leaders of the Uzbekistan Chamber of Industry and Commerce and the Afghanistan Chamber of Industry and Commerce and International Chamber of Industry and Commerce sign agreements on cooperation. 4 March —The foreign ministers of all the region’s republics and Japan participate in the representative assembly organized in the Central Asia plus Japan format. 5 March —The head of state receives representative of the nongovernmental organization Freedom House (U.S.) Maria Sever. 5-7 March —Pakistani President Pervez Musharraf visits Uzbekistan. 15-17 March —Islam Karimov pays an official visit to Slovenia. 22 March —The republic’s foreign ministry publishes a statement on the events in Kyrgyzstan. 28 March —Islam Karimov and acting president and prime minister of Kyrgyzstan Kurmanbek Bakiev hold a telephone conversation. 4-6 April —Uzbek President Islam Karimov pays a state visit to India. 7-8 May —Islam Karimov pays a working visit to Russia. 25-27 May —Uzbek President Islam Karimov pays a state visit to China. 28-29 June —The republic’s president pays a regular working visit to Russia. 4-5 July —A regular summit of the heads of the Shanghai Cooperation Organization member states is held in Astana.

380 CHRONOLOGY OF EVENTS FOR 2005 International Affairs

26-27 August —Islam Karimov visits Kazan to participate in a session of the Council of CIS Heads of State and the celebrations of the 1,000th anniversary of the capital of Tatarstan. 2-4 October —Uzbek President Islam Karimov pays a state visit to Malaysia. 6-7 October —A regular meeting of the Council of Heads of the Central Asian Cooperation Organization Member States is held in St. Petersburg. 14-15 November —Uzbek President Islam Karimov pays an official visit to Moscow.

381 CENTRAL EURASIA 2005 Analytical Annual

LIST OF ACRONYMS

ACD Asian Cooperation Dialog ADB Asian Development Bank APEC Asia-Pacific Economic Cooperation APR Asia-Pacific Region ASEAN Association of South East Asian Nations BSECO Black Sea Economic Cooperation Organization BSTDB Black See Trade and Development Bank BTC Baku-Tbilisi-Ceyhan Oil Pipeline BTE Baku-Tbilisi-Erzerum Gas Pipeline CACO Central Asian Cooperation Organization CAEC Central Asian Economic Community CAREC Central Asia Regional Economic Cooperation CE Council of Europe CEA Central Eurasia CEC Central Election Commission CEE Central and East Europe CES Common Economic Space CIA Central Intelligence Agency CICBMA Conference on Interaction and Confidence-Building Measures in Asia CIS Commonwealth of Independent States CMCE Committee of Ministers of Council of Europe CST Collective Security Treaty CSTO Collective Security Treaty Organization EAG Eurasian Group EBRD European Bank for Reconstruction and Development ECO Economic Cooperation Organization 382 List of Acronyms

ENP European Neighborhood Policy EU European Union EurAsEC Eurasian Economic Community FDI Foreign Direct Investment GDP Gross Domestic Product GRFT Group of Russian Forces in the Transcaucasus GUAM Georgia-Ukraine-Azerbaijan-Moldova GUUAM Georgia-Ukraine-Uzbekistan-Azerbaijan-Moldova IAEA International Atomic Energy Agency ICG International Crisis Group IDB Islamic Development Bank IFC International Finance Corporation IFI International Financial Institutions ILO International Labor Organization IMF International Monetary Fund INOGATE Interstate Oil and Gas Transport to Europe IOM International Organization for Migration IPAP Individual Partnership Action Plan IRI Islamic Republic of Iran ISAF International Security Assistance Force KATB Kars-Akhalkalaki-Tbilisi-Baku LAS League of Arab States MERCOSUR South American Common Market NAFTA North American Free Trade Agreement ODIHR OSCE Office for Democratic Institutions and Human Rights of OSCE OIC Organization of the Islamic Conference OSCE Organization for Security and Cooperation in Europe OSCEMG OSCE Minsk Group PACE Parliamentary Assembly of Council of Europe PfP Partnership for Peace PRC People’s Republic of China RATS Regional Antiterrorist Structure RF Russian Federation SCO Shanghai Cooperation Organization SEA South East Asia SFDRF Southern Federal District of the Russian Federation

383 CENTRAL EURASIA 2005 Analytical Annual

SOCAR State Oil Company of Azerbaijan Republic SPECA U.N. Special Program for the Economies of Central Asia TRACECA Transport Corridor Europe-Caucasus-Asia TRNC Turkish Republic of Northern Cyprus U.N. United Nations U.S. United States of America U.S.S.R. Union of Soviet Socialist Republics UAE United Arab Emirates UNCTAD United Nations Conference on Trade and Development UNDAF United Nations Development Assistance Framework UNDP United Nations Development Program UNESCO United Nations Educational, Scientific and Cultural Organization UNFPA United Nations Fund for Population Activities UNHCR Office of the United Nations High Commissioner for Refugees UNICEF United Nations International Children’s Emergency Fund UNIDO United Nations Industrial Development Organization UNTOP United Nations Tajikistan Office of Peace-Building USAID United States Agency for International Development WB World Bank WTO World Trade Organization

384