Troubled and largest Tajik lender Tojiksodirotbank (TSB) said on May 14 that it has agreed a deal in principle in which Saudi Investment Group will acquire 51% of the bank. No terms or timetable for the planned acquisition of the Dushanbe-based bank were revealed.

The announcement followed meetings with Saudi Investment Group chairman Al Waleed Al Dahash Al Tuwaijri on May 11. Tajikistan has to date been unsuccessful in its attempts at prompting foreign investors to bail out TSB and other lenders in its ailing banking sector. Talks, for instance, took place with the European Bank for Reconstruction and Development (EBRD), which it was proposed might pick up a controlling stake in TSB controlling stake for $80mn, but the discussions proved to no avail. Efforts made by Tajik authorities to acquire stabilisation funds from the International Monetary Fund (IMF), meanwhile, have not borne much fruit.

The Tajik banking sector was hit hard by economic troubles in 2015-2016, much of them linked to declining exports to, and remittances from, Russia. The situation left many Tajik businesses and individuals unable to repay their loans to banks and microfinance institutions, although the Tajik economy has been recovering thanks to the moderate economic stabilisation in Russia. However, irresponsible lending practices, including the handing out of loans to well-connected individuals and business associates, are believed to be a major reason behind the banking woes.

In 2017, authorities attempted to rescue distressed banks with capital injections to avert a potential liquidity crisis. But the move appears to have been insufficient. Agroinvestbank, along with TSB, have been given injections of Tajikistani Somoni (TJS) 1.7bn (€162mn) and TJS2.25bn, respectively, but they are still experiencing difficulties. TSB still owed customers $102mn as of end-2017.

The Dushanbe Economic Court launched liquidation processes for Tajprombank and Fononbank in March last year, following the Tajik central bank’s announcement that it was pulling the two banks’ licences. The banks were originally supposed to receive TJS530mn for recapitalisation.

In January 2018, the ex-Soviet nation’s Finance Ministry bought a 85.9% stake in the bank by issuing bonds and selling them to the Tajik central bank.

Saudi plan to isolate Iran?
Some believe the arrival of Saudi investment in the rescue is driven by Saudi Arabia’s aim to alienate Dushanbe from its regional arch-rival Iran. Riyadh's ambassador to Tajikistan, Abdulaziz bin Mohammed Al-Badi, bragged in an interview in September of successfully pursuing diplomatic overtures that led to the “expulsion of Iran and its agents from the country,” Eurasianet reported.

Tajikistan’s common Persian history with Iran has proved insufficient in keeping Dushanbe from complaining about Tehran's alleged intrusions in Tajik politics throughout recent decades. Such accusations reached new heights last August when Dushanbe condemned Iran for alleged involvement in Tajikistan’s 1992-97 civil war. It marked the first time that the Tajiks had publicly blamed Iran for meddling in the conflict.

According to allegations aired by Tajik state television in a documentary, Iran supposedly sent assassins and saboteurs into the former Soviet nation to support an Islamist-led rebel force. Three Tajiks shown in the documentary confessed to the killing of politicians and other prominent Tajik figures as well as attacks on a Tajikistan-based Russian military base. The trio, the documentary claimed, received financial support and training from Iran.

More negative comments on Iran
At a public event coinciding with an investment forum of Arab nations taking place in Dushanbe on May 12, Tajik President Emomali Rahmon made more comments about opposition militants of the Civil War having Iran ties.

“His [a militant’s] pockets were filled with dollars from that country, which called itself our so-called friend,” Rahmon reportedly remarked, most likely referring to Iran without naming it. “He himself admitted that he accepted the Shiite faith and carried out the orders of the security services of that country against the Tajik nation.”

Moreover, Rahmon claimed that the banned Islamic Renaissance Party of Tajikistan (IRPT), which was the only source of opposition in the country prior to the president cracking down on it, had also converted to Shia Islam. The claim contradicts his previous attempts at painting IRPT as an Islamic State-aligned entity.

The TV documentary also claimed that the opposition militants were supporters of Abdukhalim Nazarzoda, an ex-deputy defence minister and rebel general, who was supposedly planning a coup and was killed in 2015 by Tajik authorities in a shootout. By linking the trio to Nazarzoda, Tajik authorities were implying that Iran has links to the IRPT. While Nazarzoda was not explicitly a supporter of the IRPT, the authorities claim he operated on behalf of the banned party in attemting a coup.

The IRPT has been labelled as a terrorist organisation and has even been “recognised” by the China-led Shanghai Cooperation Organisation (SCO) as an extremist group. As such, Tajikistan's growing anti-Iran and anti-Shia rhetoric does not bode well for the geopolitics of the Central Asian region, which has been, aside from the war in Afghanistan, largely unscathed by regional rivalries in the Middle East.