Category Archives: Central Asia & South Caucasus News

Armenia’s CB cuts interest rates

JUNE 28 2016 (The Conway Bulletin) — Armenia’s Central Bank cut its key interest rate to 7.5% from 7.75% because of continued deflationary pressure on its economy. Armenia’s interest rate is now at its lowest level for 18 months. It had aggressively increased its interest rate to prop up its currency. Now prices are falling and the economy is slowing, forcing the Central Bank to try to stimulate business and economy activity.

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(News report from Issue No. 287, published on July 1 2016)

Editorial: Military conscription

JULY 1 2016 (The Conway Bulletin) — Georgia’s decision to scrap conscription for its army comes as no surprise. It has been moving in this direction for some time. The Georgian army is a modern Western army that has fought battles in Iraq and Afghanistan alongside members of NATO, a club it longs to join.

What is more critical is the timing of the announcement and the way it was delivered. Tina Khidasheli, Georgia’s defence minister, took it upon herself to cancel conscription from 2017. She sidestepped a debate in parliament and also presidential permission. It was a unilateral decision.

Ms Khidasheli is a member of the Republican Party, part of the Georgian Dream coalition government. The Republican Party, though, has said that it will fight a parliamentary election in October outside the government coalition. The problem with this approach, though, is that while it sets the Republican party apart it has to improve its polling, hovering around 1%.

The decision to scrap conscription in the Georgian army is a historic first for Central Asia and the South Caucasus. The timing, though, should perhaps be seen against the backdrop of an unpredictable election.

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(Editorial from Issue No. 287, published on July 1 2016)

Azerbaijan downgrades plans for processing plant

JUNE 29 2016 (The Conway Bulletin) – In an effort to revive its aspirations to build a mega petrochemical plant, SOCAR, Azerbaijan’s state-owned energy company, said it would cut the capacity of its gas processing section, lowering the cost by a third to $4b.

SOCAR now plans to build a plant with a processing capacity of 10b cubic metres/year, down from 12b cubic metres/year. Downsizing the project would save around $2b, according to the company.

The original plan was much more grandiose. The OGPC petrochemical complex at Sangachal, 55km south of Baku, had at one point included an oil refinery and was quoted for a total of $16.5b. Azerbaijan wanted the project to become the region’s hub for refined products.

Last year, first Japan’s Mitsui, then the Britain-based unit of US’ Fluor Group came forward to participate in the project, but later dropped out.

SOCAR then scrapped plans for the refinery, bringing down costs to around $6b. In February, company representatives said that construction work had been frozen, due to the sustained economic malaise, triggered by low oil prices.

Now, Suleyman Gasimov, SOCAR’s VP for financing, said the company is considering two offers, one from China’s CNPC and one from a Russo-Italian consortium of Gazprombank, Russia’s export credit agency EXIAR and Italy’s credit agency SACE.

“Currently, we think the proposals from CNPC and Russian-Italian partners are the most suitable for us,” Mr Gasimov said.

If Azerbaijan manages to resurrect OGPC, even in a downsized fashion, the project will give a much-needed boost to the country’s economy.

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(News report from Issue No. 287, published on July 1 2016)

Kyrgyzstan’s Megacom bid fails

JUNE 17 2016 (The Conway Bulletin) – An auction for Kyrgyzstan’s state- owned Alfa Telecom was declared invalid after failing to receive any bids, a sign that investors find the company unattractive. In May, the government had postponed an earlier auction. Alfa Telecom, which owns the Megacom brand, was nationalised in 2014. The government said that it wants to raise $19b som ($280m) from its sale.

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(News report from Issue No. 286, published on June 24 2016)

Pope Francis prepares to visit Armenia

JUNE 23 2016 (The Conway Bulletin) – Pope Francis is set to visit Armenia on June 24, a trip that will further strain relations with Azerbaijan and Turkey.

The Vatican has already had to modify the trip, originally planned to include both Armenia and Azerbaijan, after the most serious violence in the disputed of Nagorno-Karabakh region for 20 years broke out in April. The Pope will now only visit Armenia, where he will deliver a liturgy on June 25.

Last year, Pope Francis labelled the mass killings of Armenians in 1915 by Ottoman Turks as a genocide, a diplomatic victory for Armenian lobby groups. The declaration damaged Turkish-Vatican relations. Turkey has denied the genocide.

In the past few years, the Roman Catholic Church has tried to boost ties with Armenian Apostolic Christians.

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(News report from Issue No. 286, published on June 24 2016)

Iran’s ATA Airlines flies to Azerbaijan

JUNE 17 2016 (The Conway Bulletin) – Iran’s ATA Airlines flew to Azerbaijan for the first time, officially opening the new Tehran-Baku Tabriz route. The new route, which will operate twice weekly, is a sign of the growing importance of transport links between Azerbaijan and Iran. AZAL, Azerbaijan’s national carrier, also operates a direct flight to Tehran.

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(News report from Issue No. 286, published on June 24 2016)

SCO leaders gather in Uzbekistan for summit

JUNE 23 2016 (The Conway Bulletin) – The presidents of Kazakhstan, Kyrgyzstan and Tajikistan gathered in Tashkent to kick-start the summit of the Shanghai Cooperation Organisation (SCO), together with their colleagues from Russia and China and Uzbek host, President Islam Karimov. The members are set to vote on June 24 to begin the membership process for India and Pakistan, currently observer countries.

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(News report from Issue No. 286, published on June 24 2016)

Kazakh oil producer restarts output

ALMATY, JUNE 21 2016 (The Conway Bulletin) — Aral Petroleum Capital, a small oil company owned by Canada’s Caspian Energy, said it had restarted oil production at the East Zhagabulak field in Kazakhstan after cutting output to zero because of the sharp fall in oil prices.

This is good news for the Kazakh oil sector, which has seen production fall from some of its least economical fields and may also indicate that other oil companies who have cut production would follow with price rises.

Aral said it welcomed the Kazakh government’s decision to cut customs duty on oil to $30/tonne from $40/tonne in February.

Michael Nobbs, chairman of Caspian Energy, said its subsidiary will now generate cash flow to boost investment as well as pay back creditors. Mr Nobbs, however, warned that creditors could hinder progress. “If a creditor were to take action to seize or block access to Aral’s bank accounts, Aral’s ability to continue producing would be seriously jeopardized,” Mr Nobbs said in a statement.

Aral operates the Zhagabulak oil field, located in the north-western Aktobe region, near Kenkiyak.

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(News report from Issue No. 286, published on June 24 2016)

Kyrgyzstan’s Supreme Court changes Askarov sentence

JUNE 22 2016 (The Conway Bulletin) – Kyrgyzstan’s Supreme Court said it would reconsider a life sentence levied against Azimzhan Askarov, a prominent human rights defender, on July 11. Police arrested Askarov in the aftermath of clashes in 2010 that toppled President Kurmanbek Bakiyev’s government for inciting ethnic hatred. Pressured by US lobby groups, who have held up Askarov as a human rights champion, the Court had announced in April that it would revise the sentence.

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(News report from Issue No. 286, published on June 24 2016)

Person in the news: Asset Issekeshev, the new mayor of Astana

JUNE 20 2016 (The Conway Bulletin) – An urbane, English-speaking former civil servant who has quickly climbed up through the ranks, Asset Issekeshev, 44, is the prototype of Kazakhstan’s new generation. One of his most high-profile colleagues is Baurzhan Baibek, 42, mayor of Almaty since August 2015, forming a duopoly of power in the country’s most important civic positions.

But while Mr Baibek received a government grant to study in Germany, Mr Issekeshev’s education was completed in Kazakhstan, at the Al-Farabi University in Almaty, with a Law degree.

A Karaganda native, Mr Issekeshev then graduated from the Higher School of Public Administration, an aspiring model school for politicians.

Since the late 1990s, Mr Issekeshev has worked his way through government bodies, reaching the post of minister of industry and trade in 2009. Under him, the ministry underwent two successive reorganisations, first it changed name to the ministry of industry and new technologies and in 2014 to the ministry for investment and development.

Now the ever loyal Mr Issekeshev has claimed a top job as the mayor of Astana. Adilbek Dzhaksybekov, named chief of the presidential administration this week, was the incumbent before Mr Issekeshev took over on June 21.

Other notable mayors include Umirzak Shukeyev, currently chief of Kazakhstan’s sovereign wealth fund Samruk-Kazyna, and Imangali Tasmagambetov, currently minister of defence and formerly Kazakh PM.

Throughout the history of independent Kazakhstan, the post of Astana mayor has proved to be a powerful springboard. When President Nursultan Nazarbayev wants to

raise the profile of a career-bureaucrat, the mayoral position in Astana is a perfect position.

Next year, the much awaited and heralded EXPO will take place in Astana, and Mr Issekeshev will be the young face of the shiny Kazakh capital.

The public likes him and local political observers highly regard him. He ranked as the most popular minister in the country last year, in a poll organised by KIPR, a local think-tank. In June 2013, he was named among the top ten of Kazakhstan’s most powerful elite people, according to the Strategiya think-tank.

This, perhaps, puts him in a strong position to play a role inMr Nazarbayev’s succession plans.

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(News report from Issue No. 286, published on June 24 2016)