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Georgia’s Ivanishvili criticises CBank chief

FEB. 26 2015 (The Conway Bulletin) – Bidzina Ivanishvili, Georgia’s former PM and its richest and arguably most powerful man, accused Central Bank chief Giorgi Kadagidze of not doing enough to protect the country from the economic downturn enveloping the region.

Inflation is rising in Georgia, the lari currency is falling in value and businesses are worried. This has all heaped pressure on the 34-year-old Mr Kadagidze, who has been in the top job at the Central Bank since 2009.

Mr Ivanishvili’s intervention will pile on more pressure.

“The Governor of the NBG (National Bank of Georgia), Giorgi Kadagidze, who was appointed by the previous government, led us with his inactivity and incorrect actions to the lari crisis,” he said in a statement released through an NGO he has set up.

A fall in oil prices and economic turmoil in Russia have triggered inflation across Central Asia and the South Caucasus.

Some economic experts argue that Georgia’s Central Bank could have done more to dampen the inflation; others have said the government is merely looking for a scapegoat and that Mr Ivanishvili’s intervention is destabilising.

Vakhtang Charaia, director of the Center for Analysis and Forecast at Tbilisi State University, said: “Ivanishvili’s statement could lead to political instability, which in turn would negatively affect Georgia’s investment climate.”
-ENDS-

(News report from Issue No. 221, published on March 4 2015)

Samruk-Kazyna to refinance debt

FEB. 20 2015 (The Conway Bulletin) — The growing financial crisis in Kazakhstan has now hit the country’s sovereign wealth fund, Samruk-Kazyna.

Umirzak Shukeyev, head of the fund, said the plan was to look to borrow up to $2.5b to refinance its debt.

“If conditions on external markets are attractive enough for us, we will tap foreign markets, although right now we see that the situation in the internal market is more favourable for us to borrow,” he said.

Regardless, Samruk-Kazyna’s insistence that it will need to borrow cash to restructure its debts is an important admission that the financial crisis is growing.

Like its neighbours, the slowdown in Russia’s sanction-hit economy and the drop in the price of oil has hit Kazakhstan hard.

Samruk-Kazyna holds about $100b in assets, roughly half Kazakhstan’s GDP, and manages about 500 companies.

ENDS
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(News report from Issue No. 220, published on Feb. 25 2015)

South Ossetia’s demographic decline

ZGUBIR/Georgia, FEB. 25 2015 (The Conway Bulletin) —- Vera, a 70-year old widow, lives with her jobless, unmarried son in the small mountain hamlet of Zgubir, ten miles north of Tskhinvali, the capital of the Georgian rebel region of South Ossetia.

In 2008 South Ossetia was the poster-boy of rebel regions of the former Soviet Union. With the help of Russian forces it had just defeated Georgia in a war and declared independence.

The future for South Ossetia was, back then, bright. Now, though, nearly seven years later and with the world’s gaze fixed on separatist fighting in eastern Ukraine it looks different.

“Nationalism brought us only war and destruction and this hard-won independence condemned this land to isolation,” Vera said.

South Ossetia may have won its independence but it has lost its people. According to Russian data, 52,000 people live in South Ossetia, compared to 100,000 in Soviet times and 70,000 in 2007.

Most of the people living in Tshkinvali have fled to Russia to escape the war and search for a new life. Those who stayed were unable to emigrate. Apart from bored Russian soldiers, local militiamen and a few government officials, most inhabitants appeared to be lonely elders and alcoholic single men.

Vera is one among those who stayed.

“I grew up all my life in a country where it didn’t matter whether you were Ossetian, Georgian, Russian, or Jewish. We were all Soviets and we knew only one flag, only one army,” she said.

The unemployment rate, the demographic outflow and the almost complete lack of public investments are bleak for South Ossetia, leaving Vera and others with ever more romanticised, glorious memories of the Soviet era.
By Gianluca Pardelli

ENDS
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(News report from Issue No. 220, published on Nov. 22 2010)

Support increases for early election in Kazakhstan

FEB. 21 2015 (The Conway Bulletin) — Various political organisations in Kazakhstan threw their support behind the prospect of an early presidential election, virtually ensuring the vote goes ahead in the next couple of months. Kazakh officials floated the idea earlier this month. They want President Nursultan Nazarbayev’s authority underlined.
ENDS
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(News report from Issue No. 220, published on Feb. 25 2015)

Kumtor gold production falls

FEB. 19 2015 (The Conway Bulletin) — In its annual report, the Toronto-based Centerra Gold said that its Kumtor mine in eastern Kyrgyzstan produced 10% less gold in 2014 than it did in 2013.

Kumtor is not only important to Centerra Gold, which also has other assets, but is also vital to the economic health of Kyrgyzstan. It is the country’s largest single asset and contributes around 10% of its total GDP.

Already reeling from the fallout from Russia’s sanction-hit economic slowdown, the news from Centerra Gold that, although expected, gold production at Kumtor had fallen will be a another big blow to Kyrgyzstan.

Centerra Gold said gold production in 2014 was around 620,000 ounces, down from 690,000 ounces.

Kumtor has been a headache over the past few years. Kyrgyzstan wants to assume more control over the gold mine, while Centerra Gold has been fighting to retain its share.

Strikes and protests caused part of the drop in production at Kumtor.

Centerra Gold CEO, Ian Atkinson said of negotiations with the Kyrgyz government over Kumtor ownership: “We are in the process of negotiating the definitive agreements to implement the restructuring as described in the Heads of Agreement signed on January 18, 2014 and are continuing discussions with the Kyrgyz Government in this regard.”

Kyrgyzstan wants to swap its 32.7% stake in Centerra Gold for a 50:50 joint venture in Kumtor directly.
ENDS
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(News report from Issue No. 220, published on Feb. 25 2015)

Azerbaijan devalues manat by a third

FEB. 21 2015 (The Conway Bulletin) — Azerbaijan’s Central Bank cut the value of its manat currency overnight by a third in response to the falling value of the Russian rouble and the collapse in oil prices.

Many analysts said that a devaluation was long overdue although none expected such a sharp correction.

And, as a Bulletin correspondent reports from Azerbaijan, the devaluation has angered and frustrated local people. Ordinary people have watched as the value of their savings has plummeted, inflation has soared and economic growth rates have been cut.

This is the major risk that the Central Asian and South Caucasus economies run when trying to deal with an increasingly nasty economic downturn that has enveloped the region. They need to adjust their monetary policies while still retaining the trust of their populations.

Part of the problem has been the speed with which the economic downturn has hit the region.

Most Central Banks in Central Asia and the South Caucasus have allowed their currencies to depreciate slowly although Turkmenistan, and now Azerbaijan, have opted for a sudden devaluation this year.

Kazakhstan is still resisting another correction — it cut the value of its tenge currency by 20% last year — but it must now only be a matter of time before it succumbs.

(News report from Issue No. 220, published on Feb. 25 2015

Nazarbayev opponent dies in jail

>>Former son-in-law alleged to have committed suicide>>

FEB. 24 2015 (The Conway Bulletin) — Rakhat Aliyev, an opponent and former son-in-law of Kazakh President Nursultan Nazarbayev, died in prison days before the end of a pre-trial hearing linked to the 2007 murders of two Kazakh bankers.

He was found hanged in the toilet, the only corner of his solitary cell without constant surveillance. The prison administration described his death as a suicide but Aliyev’s lawyer, Klaus Ainedter, cast immediate doubt on this explanation.

“I have significant doubts about this without wanting to blame anyone. I visited him yesterday. There could be no talk whatsoever of danger of suicide,” Mr Ainedter told the local press.

Aliyev had at one time been viewed as a potential successor to Mr Nazarbayev but he fell from grace in 2007 and was forced to flee Kazakhstan before the authorities could arrest him for the murder of the two bankers.

In exile, Aliyev, who had been married to Mr Nazarbayev’s eldest daughter, set himself up as a vocal opponent of his former father-in-law from his bases in Malta and Vienna. He always denied any link to the bankers’ murders.

Last year, Aliyev turned himself in to the authorities in Vienna days before police planned to arrest him. The Austrian authorities had declined to deport Aliyev back to Kazakhstan but they had agreed to try him in Vienna for the murders.

Aliyev’s death rids Mr Nazarbayev of another major opponent. In 2013, French police arrested Mukhtar Ablyazov, a former Kazakh banker and minister, who was also a high profile opponent of Mr Nazarbayev.
ENDS
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(News report from Issue No. 220, published on Feb. 25 2015)

Uzbekistan blocks rights activist

FEB. 18 2015 (The Conway Bulletin) — Two Uzbek human rights campaigners said they had been prevented from leaving Uzbekistan to pick up awards in South Korea. Shukhrat Rustamov and Elena Urlaeva said they had been denied exit visas to receive the Tji Haksoon Peace Award on March 11. Uzbek citizens need to apply for an exit visa to leave the country.
ENDS
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(News report from Issue No. 220, published on Feb. 25 2015)

Kazakhstan-US law deal

FEB. 20 2015 (The Conway Bulletin) — Kazakhstan and the US have signed an agreement that will smooth law enforcement issues between the two countries, the US State Department said. In particular the deal, which the US State Department described as an “important step forward”, will help the transfer of evidence between the two countries.
ENDS
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(News report from Issue No. 220, published on Feb. 25 2015)

Delay for Almaty metro

FEB. 18 2015 (The Conway Bulletin) — Kazakh president Nursultan Nazarbayev ordered work on the Almaty Metro system to stop because of a shortage of funds, media reported. The first phase of Almaty’s metro was unveiled in 2011 but high costs and low passenger numbers have combined with a drop in government funds to delay a planned extension.
ENDS
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(News report from Issue No. 220, published on Feb. 25 2015)