Category Archives: Central Asia & South Caucasus News

Editorial: Attacks in Aktobe

JUNE 10 2016 (The Conway Bulletin) – Kazakh officials have been quick to blame Islamic militants for a series of attacks in Aktobe, northwest Kazakhstan, that killed at least 25 people.

This, if proved, would be alarming as it would confirm links in west Kazakhstan with Islamic militants in both the North Caucasus and Syria/Iraq. The Islamic militant explanation, though, would also help President Nursultan Nazarbayev’s narrative. He made it clear that if the Kazakh population didn’t support him they would be faced with a dystopian future.

And this version of events, of course, could be accurate, time will tell. But no group has taken responsibility and there is an alternative explanation.

Some analysts have said that the attacks were organised by disgruntled members of the Kazakh elite. Mr Nazarbayev, 75, is looking weak. He hasn’t organised a clear succession and is presiding over a worsening economy. By destabilising the country, a rival would be piling on the pressure.

This is the alternative explanation for the Aktobe attacks that the gov- ernment doesn’t want discussed.

ENDS

(Editorial from Issue No. 284, published on June 10 2016)

Business comment: Banking mergers

JUNE 10 2016 (The Conway Bulletin) — A wave of mergers, acquisitions and privatisations has hit Central Asia and the South Caucasus.

At The Bulletin, we’ve extensively covered the Kazkommertsbank buyout over the past two years. But elsewhere, from Azerbaijan to Uzbekistan, the banking sector is in a restructuring phase.

A renovation of the financial sector had become crucial after an extended economic downturn hit the money markets, from currency exchange rates to loan sustainability. What’s more, low oil prices, besides depressing budget capacity and economic growth, have hindered investment and project financing.

From small local lenders to country-wide behemoths, banks across Central Asia and the South Caucasus have equally suffered, albeit for different reasons.

And since the beginning of 2016, small quakes have shaken the sector.

In Azerbaijan, immediately after the sharp depreciation of the manat, middle and small-sized banks were unable to maintain the newly set capital ratio requirements, triggering failures and mergers.

This week a rather obscure deal involving an Uzbek bank and a German plastics manufacturer marked the beginning of the new privatisation era in Uzbekistan.

And of course, across the border in Tajikistan, we are now three weeks into the care-taking administration of the country’s second-largest bank.

This is both a stress test and an opportunity. 25-year-old countries cannot afford to have a banking crisis every decade. Dependent as they are on commodity prices and regional trade, they need to seize this occasion to build more reliable and stable foundations for their finance sector.

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(News report from Issue No. 284, published on June 10 2016)

Tourism income rises in Georgia

JUNE 8 2016 (The Conway Bulletin) — PM Giorgi Kvirikashvili said income earned from the tourist industry reached $1.94b last year, 8.3% more than in 2014. According to Mr Kvirikashvili, the number of incoming tourists increased by 14% in the first five months of the year, compared to 2015. This is important for Georgia, where tourism is a major part of its economy.

ENDS

(News report from Issue No. 284, published on June 10 2016)

Stock market: Central Asia Metals share price prospects

JUNE 10 2016 (The Conway Bulletin) — Analysts in London are positive about copper producer Central Asia Metals, despite its shares hitting 144.5p, the lowest level in four months, on Thursday. It had traded at a high of around 170p.

Canaccord Genuity set a price target of 190p, in line with the majority of analysts who rate it a “buy”.

Central Asia Metals is a Kazakhstan-based copper producer, which had recently seen its share price rise after announcing positive results for 2015 and saying that its ambitious expansion was on schedule. Kenes Rakishev, a powerful Kazakh businessman and son-in-law of defence minister Imangali Tasmagambetov, is Central Asia Metals’ largest shareholder with 19%.

Other shareholders own 10% or less in the company. Mr Rakishev has actively diversified his investment portfolio in recent years buying Kazakhstan’s largest bank, Kazkommertsbank, and acquiring a minority stake in a discount retail chain.

ENDS

(News report from Issue No. 284, published on June 10 2016)

Germany against Georgia’s visa-free access to the EU

JUNE 7 2016 (The Conway Bulletin) — Ambassadors representing Germany, France and Italy at the European Union gave the strongest indication yet that Georgia would fail to win visa-free travel to Europe this year after they voted against the motion at a meeting in Brussels.

Perhaps reflecting wider concerns about allowing more migrants from Syria, Turkey and other countries to enter Europe, German politicians said they were against Georgia being given visa-free access because of worries over crime.

“Georgian asylum seekers are more heavily involved in organised crime than any other group of foreigners,” Armin Schuster, MP for the ruling CDU party, told the Der Spiegel magazine. This view was reflected at the ambassadors’ meeting.

Failing to win visa-free travel to Europe would be a major blow to the ruling Georgian Dream coalition only four months before what is likely to be a tight parliamentary election. Georgia wants to join the European Union and sees visa-free travel as a major step towards achieving that aim.

Georgian PM Giorgi Kvirikashvili told media that he was disappointed about the messages coming out of the European Union.

“Georgia has completed its own part and now it’s up to the European countries to take decision,” he was quoted as saying. “It’s not easy and we understand that, but all these issues, the migration crisis, internal challenges have nothing to do with Georgia’s technical readiness. We are ready institutionally, legislatively.”

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(News report from Issue No. 284, published on June 10 2016)

Power production sinks in Azerbaijan

JUNE 6 2016 (The Conway Bulletin) — Electricity production in Azerbaijan shrank by 6.1% to 9.2b kWh last year, state-owned Azerenergy said in a statement. Power generation had decreased marginally in 2015 compared to the previous year. Electricity generation, especially from sources other than coal or gas, is one of the main priorities for Azerbaijan.

ENDS

(News report from Issue No. 284, published on June 10 2016)

Russia defence min visits Turkmenistan

JUNE 9 2016 (The Conway Bulletin) — Sergei Shiogu, the Russian defence minister, travelled to Turkmenistan for talks with Turkmen president Kurbanguly Berdymukhamedov, opening the door to improved military cooperation. Turkmenistan has long professed a policy of neutrality and has kept a distance from Russia-led military blocks in the region. Now Turkmenistan could be looking to import military kit from Russia, according to Russian media.

ENDS

(News report from Issue No. 284, published on June 10 2016)

Saudi Arabia builds influence in Tajikistan

DUSHANBE, JUNE 5 2016 (The Conway Bulletin) — Saudi Arabia has agreed to build a new parliament building in the centre of Dushanbe, seen as an effort to curry influence.

Plans for the new parliament involve tearing down several Soviet- era buildings such as the current parliament building, the city administration, the ministry of agriculture and apartment blocks. The Iranian embassy will also be demolished to create space for the Saudi-financed parliament. Iran and Saudi Arabia are major regional rivals.

Saudi Arabia agreed in principle to fund the new parliament building when Tajik President Emomali

Rakhmon visited Riyadh in January. Media has now reported that this was confirmed in May when Abdullah Ibn- Muhammad al Ash-Sheikh, the speaker of Saudi Parliament, visited Dushanbe.

Mr Rakhmon is keen on constructing extravagant buildings in Dushanbe including a flagpole that had at one time been the world’s tallest and Central Asia’s largest library. The largest theatre and biggest mosque in Central Asia are also planned. But with the economy stalling, remittances from Russia drying up and the financial system creaking, ordinary Tajiks are angry.

Romiz, a 34-year-old construction worker, told the Conway Bulletin that the authorities should be building something more useful.

“For instance, hospitals, schools, children’s centres, sport complexes, elderly houses. Is it necessary to build a palace for these idlers?” he said.

A Dushanbe-based analyst, who asked to remain anonymous, said that constructing a new building is part of Saudi Arabia’s attempt to play a more important role in the region.

“Tajikistan itself is not interesting for Saudi. They do all this only as part of their regional game against Iran,” he said.

ENDS

(News report from Issue No. 284, published on June 10 2016)

Azerbaijan’s President travels to Germany

JUNE 6,7 2016 (The Conway Bulletin) — Azerbaijani President Ilham Aliyev travelled to Berlin on his first trip to Europe since releasing from prison a number of journalists and opposition activists often described by European Union leaders as political prisoners.

Mr Aliyev’s objective appeared to be to encourage German investment in Azerbaijan. He met with several business leaders and policymakers, including Chancellor Angela Merkel.

But Emin Milli, director of Meydan TV, an Azerbaijani opposition Berlin- based media outlet, said Azerbaijan needs loans to fill budget gaps created by a collapse in oil prices.

“With the fall of the oil price and the looming economic crisis which causes some socio-economic unrest in the country, the government needs more legitimacy among the public,” Mr Milli told the Conway Bulletin.

“They can’t get it through falsified elections, so they try to extend their influence abroad, through handshakes and photo opportunities with Western leaders, such as Angela Merkel or Barack Obama.”

He also said this may have been the motivation behind the release of investigative journalist Khadija Ismayilova last month.

The visit came four days after the German parliament recognised the 1915 mass killings of Armenians by Ottoman Turks as genocide. The move angered Turkey, but also prompted a harsh reaction in Baku, Ankara’s closest ally.

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(News report from Issue No. 284, published on June 10 2016)

Donald Trump in hot water over Azerbaijani deal

JUNE 4 2016 (The Conway Bulletin) — Donald Trump, the presumptive Republican party candidate for a presidential election later this year, has quietly ditched a real estate project in Azerbaijan that had been linked to an father-son combination allegedly connected to the Iranian military, the AP news agency reported.

Mr Trump had made the initial deal in Baku in 2013 with Anar Mammadov. His father Ziya Mammadov is a government minister and is also alleged to be linked to various money laundering schemes as well as to the Iranian military. Although some sanctions were lifted on Iran earlier in the year, it is still an offence to do business with the Iranian Republican Guard.

Mr Trump has not commented on the case although his staff have said that the project had been delayed because of economic conditions.

ENDS

(News report from Issue No. 284, published on June 10 2016)