PRICE OF FLOUR IN TAJIKISTAN DOUBLES

UNCLAS DUSHANBE 001456

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: PGOV ECON TI
SUBJECT: PRICE OF FLOUR IN TAJIKISTAN DOUBLES



1. (U) Summary: The price of flour has risen 100 percent in
Tajikistan in the last few weeks. Flour is a staple of the
Tajik diet, and the price rise follows a regional trend of sharp
inflation in foodstuffs. The government has sought to deflect
responsibility for the price increases, but discontent is likely
to simmer over the coming months. End summary.


2. (U) In recent weeks, the price of flour has risen by
approximately 100 percent. A 50 kg sack of flour that cost
50-60 somoni ($14-17) last month now costs 100-120 somoni
($30-35). The average monthly wage in the country is
approximately 30 somoni ($8.50) in rural areas and 120 somoni
($34) in urban areas. The price rise follows a regional trend
of increasing food prices. Flour is a food staple throughout
Central Asia, but it is particularly important in Tajikistan.
Most Tajiks cannot afford alternatives, and rely on bread as the
basis of their diets. Tajikistan imports most of its flour from
Kazakhstan.


3. (U) Officials have assigned blame for the sudden price rises
to a broad spectrum of sources, attempting to deflect direct
criticism of the government. The government media has reported
the price increases as being a function of world markets, over
which the government has little control. During a recent forum
televised on state television, government economists blamed
corrupt customs officials for increasing the price of imported
grain. The same economists cited the mafia for pushing business
people and entrepreneurs out of the market.


4. (U) The government media has also attempted to assuage
concerns about flour and grain shortages by reporting that
Kazakhstan and Russia will ensure a ready supply. After a state
visit by Kazakh President Nazarbaev in mid-September, state
television broadcasted a press conference in which Nazarbaev
said, "We will not let Tajikistan go hungry." The chairman of
the state-controlled grain company recently announced the
purchase of 5000 tons of Russian flour, which he thought would
lead to price reductions.


5. (U) Public reaction has been muted. The average Tajik
citizen bemoans the dramatic increase in food prices, but there
have been no significant demonstrations. Independent newspapers
have sharply criticized the authorities for not reacting
quickly, and one paper published a survey in which half of the
respondents believed that the price rises could be politically
destabilizing. Opposition parties have called for the
government to reduce tariffs on grain imports.


6. (U) Comment: While there are a number of reasons for the
price rises, the government's failures to address corruption and
reform the economy magnify the economic hardships that Tajiks
are encountering. The government is approaching this issue as a
short term phenomenon, but the soaring price of basic foodstuffs
adds to simmering discontent with the government. Opposition
parties may exploit this discontent. The price rises are also a
reminder that Tajikistan, the poorest country in the former
Soviet Union, remains dependent on imports for approximately 80%
of it food. Our best tool for dealing with the humanitarian
consequences of food shortages and contributing to rural
development in Tajikistan is the successful USAID Food For Peace
program, which unfortunately will be discontinued after this
year. End comment.
JACOBSON