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Azerbaijan boosts gas imports from Russia

JULY 3 2017 (The Bulletin) — Russia’s Gazprom said that it was in negotiations with Azerbaijan to increase the amount of gas it sells it. The statement followed a meeting between the head of Gazprom Alexey Miller and the head of SOCAR, the Azerbaijani state- owned oil and gas company, Rovnag Abdullayev and highlights improved Azerbaijan-Russia relations. Azerbaijan started gas imports in September 2015.

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(News report from Issue No. 336, published on July 16 2017)

Azerbaijan oil exports via BTC fall 11.8%

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JULY 5 2017 (The Bulletin) — Azerbaijan’s oil exports through the Baku-Tbilisi-Ceyhan pipeline (BTC) fell by 11.8% in the first half of 2017 compared to the same period last year to 13.174m tonnes, state-owned SOCAR said. This is significant as the BTC export route is Azerbaijan’s main thoroughfare for its oil, its most important commodity. No reason was given for the drop in oil exports.

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(News report from Issue No. 336, published on July 16 2017)

Lender targets Kazakhstan

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JULY 6 2017 (The Bulletin) — TWINO, the peer-to-peer loans company, said that it was going to start lending to Kazakh clients, a PR boost for Kazakhstan which has been trying to deflect from negative headlines about the rise of non- performing loans in its banking sector. TWINO, based in London, said that it was the first European peer-to-peer loans provider to lend to Kazakhstan. It already lends to Latvia. Poland, the Czech Republic, Russia, Georgia, Denmark, Mexico and Spain.

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(News report from Issue No. 336, published on July 16 2017)

Russian tourists flock to Georgian breakaway region of Abkhazia

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SUKHUMI/Georgia, JULY 16 2017 (The Bulletin) — Russian tourists are flocking to beach resorts in Abkhazia at a greater rate than ever before, giving the breakaway Georgian region an economic boost.

Russian couples walk along Sukhumi’s beachfront promenade and sip Abkhaz wine in newly renovated restaurants. Russian is the main language heard on the streets, shops are filled with Russian products and Russian newspapers are available in local newsagents. The currency used is the Russian rouble.

Abkhazia looks, feels and sounds like a piece of Russia and local residents are, mainly, grateful.

A tourist guide in Novy Afon, around 20km north of Sukhumi told the Bulletin : “Thank God there are the Russians. Not only did they save us when the Georgians wanted to exterminate us but now they make our economy run through tourism.”

It declared independence from Georgia in 1992, triggering a war that killed and displaced thousands of people and lead to a de facto independence. In 2008 after a war with Georgia focused on its two rebel states of Abkhazia and South Ossetia, Russia recognised them as independent. Only a handful of other countries looking to curry Russian favours followed.

Moscow subsidises Abkhazia’s state budget and has thousands of troops permanently deployed in the region.

Other than the military and the breakaway region’s administration, bankrolled by the Kremlin, there are few other jobs in Abkhazia, making Russian tourists so important.

And they are coming in their thousands, all via a border crossing with Russia to the north. Last year Avtandil Gartskiya, the tourism minister told the New York Times in an interview that he expected 1.5m tourists per year, up from less than 100,000 a decade ago.

By contrast, references to Georgia have been eradicated, or nearly.

The cuisine gives away Abkhazia’s Georgian connection. Georgia’s food icon, the Ajarian Khachapuri, a boat shaped crusty bread filled with melted cheese and egg, is a firm favourite with the Russian tourists. It’s been subjected to a rebrand, though, and is called ‘lodochka s yaizom’. In English, this simply means ‘boat with egg’.

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(News report from Issue No. 336, published on July 16 2017)

Comment: Kazakhstan’s two- pronged foreign policy

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JULY 16 2017 (The Bulletin) — For Kazakhstan, July 2 marked both the Day of Diplomatic Service and also the 25th anniversary of the establishment of the country’s diplomatic corps. In 1992 Kazakh President Nursultan Nazarbayev signed a decree setting up the service and another that enshrined a ‘multi-vector’ foreign policy.

Since then, Kazakhstan has built up diplomatic relations with 182 countries, including 57 embassies and 27 consulates abroad. It also hosts 69 embassies, 19 consulates and 27 international organisations representations.

Kazakhstan’s foreign policy can be roughly broken down into two.

Firstly, Astana has been quite successful in setting up multi-vector diplomacy, roughly defined as seeking to keep “friendly and mutually- beneficial relations with all states” while also pushing the country towards playing an “important role in world affairs”.

This is a pragmatic approach to international affairs, evidenced by the balancing between Russia and China, strong ties with the EU and the US, as well as with non-traditional partners such as South Korea, Singapore, Malaysia and Japan.

On the other hand, and somewhat less successfully, Kazakhstan has been actively engaging the international community for the past few years in order to boost its image as a modern and mature diplomatic player in world affairs. In January, Kazakhstan took a non-permanent seat at the UN Security Council for two years. Nuclear non-proliferation, the fight against terrorism, and Sino- Russian relations were erected as key priorities.

Kazakhstan also confirmed its intention to play an active role in the peace talks in Syria after hosting five rounds of negotiations since early 2017, although no breakthroughs have been reached yet. Furthermore, Astana is increasingly seeking international prestige and acknowledgment, as evidenced by Astana’s 2017 Expo and its bid to host the 2022 Winter Olympic Games.

Kazakhstan is actively seeking to boost its regional leadership and increasingly move away from its image of a post-Soviet country and that of a “Stan”. In 2014 it was even proposed to change the name of the country to “Kazakh Eli”, which means country of the Kazakhs in Kazakh. This idea has been abandoned, for now.

By Mathieu Boulegue, analyst specialising in the former Soviet Union for AESMA Group

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(News report from Issue No. 336, published on July 16 2017)

Comment: Turkey’s coup and its impact

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ISTANBUL, JULY 16 2017 (The Bulletin) — Finally we’ve made it to this finest of cities. It’s taken us a week since leaving Edinburgh to get here – via Yorkshire, Hampshire, Lord’s cricket ground, Warsaw, Prague (the airport only) and lovely, louche Odessa.

But at turns brooding and majestic; playful and frustrating, Istanbul is a place that commands love and loyalty. My wife and I are heading east on book research duty, hers not mine, and there was no reason to linger. Still, I insisted. It’s good for the temper, if not the waistline, to spend days here eating, drinking and strolling.

Coincidentally we are in Istanbul for the first anniversary of a failed coup attempt against Turkish President Recep Erdogan. A rebel army unit captured the bridge over the Bosphorus and tried to arrest Erdogan. They failed and the ramifications have been great.

Erdogan blamed the exiled cleric Fethullah Gulen for organising the coup and police have arrested at least 50,000 people for being ‘Gulenists’. This purge hasn’t been confined to Turkey. Pressure has been applied to Turkey’s allies in Central Asia and the South Caucasus too. Azerbaijan and Turkmenistan have been happy to comply, others less so, although Georgia has started to acquiesce.

With a resurgent Russia and a powerful China, Turkey’s influence in the region has waned since the 1990s but the coup anniversary is a reminder that events in Istanbul reverberate across the Anatolian plateau, over the Caspian Sea and on to the Tien Shan mountains.

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(News report from Issue No. 336, published on July 16 2017)

Uzbekistan banns foreign songs

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JULY 4 2017 (The Bulletin) — The authorities in Uzbekistan have banned local singers from covering foreign songs, the US-funded RFE/RL report by quoting government officials, possibly an attempt to exert more control over Uzbek culture. Last month, the Uzbek authorities also ruled that musicians needed to ask for permission before posting their music videos online. The apparent need to exert more control and authority over Uzbek culture contrasts with a more relaxed stance towards business under President Shavkat Mirziyoyev.

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(News report from Issue No. 336, published on July 16 2017)

Armenian Lydian secures more support

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JULY 4 2017 (The Bulletin) — Armenian gold miner Lydian said that it had secured another $25m loan from the Orion and Resource Capital funds, specialist mining creditors, to help pay for the construction of its operations at its Amsular site in the south of the country. Earlier this year it also secured a $50m loan for funding on the same project from ING Bank. Armenia has been looking to boost mining projects.

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(News report from Issue No. 336, published on July 16 2017)

Currencies: Kazakhstan’s tenge

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JULY 16 2017 (The Bulletin) — The Kazakh tenge has now fallen to its lowest level since January, giving up most gains it had made this year.

By July 14 it was trading at $327.91/$1, down 2.3% since July 3. At its year peak on May 25, the tenge had traded at 310.65/$1. This means that it has fallen by 5.5% in around seven weeks.

A fluctuating oil price is likely to have had little impact on the value of the tenge. It has been hovering between $50 and $45 per barrel for some time. Instead, commentators have pointed to weak Kazakh fundamentals which suggest that the economy is still in poor shape.

Most worryingly amongst this economic data is the bad debt ratio that banks have built up. It just seems to be getting bigger and the government is preparing a bailout.

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(News report from Issue No. 336, published on July 16 2017)

Uranium bank to open in August, says Kazakh President

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JULY 3 2017 (The Bulletin) — Kazakh president Nursultan Nazarbayev said that a low-enriched Uranium bank will open in eastern Kazakhstan on Aug. 29. The project is being administered by the International Atomic Energy Agency (IAEA) and is being promoted by Kazakh officials and Mr Nazarbayev as yet another contribution by Kazakhstan to world peace. On the day the uranium bank opens, Mr Nazarbayev intends to give out his first international award for nuclear disarmament. He already has his own peace award.

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(News report from Issue No. 336, published on July 16 2017)