Category Archives: Central Asia & South Caucasus News

Stock market: Brent

MARCH 8 2017 (The Conway Bulletin) — Governments across the Central Asia/South Caucasus region will be nervously watching the Brent spot price as it slips back down to that all-important $50/barrel level. This is the psychological breakpoint.

If Brent oil dips below $50/barrel, national budgets, which have just been adjusted upwards, will have to be rethought. It broke through this level in mid-December and had hovered around the $55/barrel mark since then, before taking a downturn.

Oil prices had been pushed up in mid-December by a plan lead by producers to cut output. Data, though, this week showed that crude oil stocks held by the US government have risen, raising concerns that the fragile coalition patched together to contain global production was cracking. Data from Saudi Arabia, Iraq and Nigeria also suggested that production was rising again.

Kazakhstan’s output estimate has also been increased. The US Energy Information Administration (EIA) said Kazakhstan would produce 1.88m barrels of oil/day in 2017, compared to an earlier estimate of 1.86m barrels/day. In 2016, it produced 1.73m barrels of oil/day.

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(News report from Issue No. 320, published on March 13 2017)

Azerbaijani president travels to Iran

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MARCH 5 2017 (The Conway Bulletin) — Azerbaijani president Ilham Aliyev flew to Tehran for talks with his Iranian counterpart President Hassan Rouhani in which both men reaffirmed their commitment to completing a freight railway link between India and Europe. The plan is to ship goods from India to an Iranian port and then load the kit on to freight trains that will run across Iran, Azerbaijan and Russia. As reported, the first freight train travelled between Azerbaijan and Iran on March 5.

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(News report from Issue No. 320, published on March 13 2017)f

Fitch says Kazakhstan’s KKB-Halyk merger will be complicated

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ALMATY, MARCH 10 2017 (The Conway Bulletin) — The Fitch ratings agency said that it doubted a proposed merger between Kazakhstan’s two largest banks, Halyk Bank and Kazkommertsbank, could be achieved as smoothly and as quickly as the authorities had suggested.

Instead Fitch said that the bad debt inherited by Kazkommertabank when it completed the purchase of BTA Bank in 2015 was likely to linger despite a promise by the Central Bank to buy it up. It said that a Central Bank fund had promised 2 trillion tenge to buy up bad debt but that this was still short of the 2.4 trillion bad debt pile that Kazkommertsbank currently holds.

“Fitch believes there is a material risk that KKB’s problem assets may not be fully removed from the bank’s balance sheet or adequately reserved prior to a transaction,” Fitch said.

“Halyk Bank’s capitalization could weaken significantly as a result of the acquisition of KKB.”

This is important as Fitch is the first major Western institution to speak out against plans revealed earlier this month to merge the two banks.

The merged bank will have a 38% market share of the Kazakh banking sector. It placed Halyk Bank on a negative watch.

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(News report from Issue No. 320, published on March 13 2017)

Azerbaijan considers smoking ban

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MARCH 10 2017 (The Conway Bulletin) — Azerbaijan’s parliament debated a bill that could ban smoking in public places, media reported, the first step towards imposing tougher rules over smoking and cigarette advertising in a country notoriously fond of the habit. Azerbaijan’s neighbours in the South Caucasus, and also in Central Asia, have already imposed some restrictions on smoking. Smoking is currently banned in Azerbaijan in sports facilities, educational area and healthcare buildings.

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(News report from Issue No. 320, published on March 13 2017)

Trump’s problematic Azerbaijan hotel deal

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MARCH 8 2017 (The Conway Bulletin) — >> So what has Donald Trump, President of the United States, been doing in Azerbaijan?

>> Trump’s deals with Azerbaijanis have been getting him in trouble. Do you remember the dossier that a former British spy compiled on him last year, during the US presidential election? So incriminating were some of his discoveries about Trump’s alleged dealings with Russia and his potential for being blackmailed that the spy handed over the dossier to the US intelligence services. At the heart of these allegations was a visit that Trump made to Moscow in 2013 during the Miss Universe contest that he owns. There were some lewd allegations from that trip, too lewd to repeat in this family newspaper, but, and this is the point, the trip was set up by an Azerbaijani businessman, Araz Agalarov, with strong links in Russia.

>> Okay, but now I hear that there has been hotel project in Baku which is linked to Trump.

>> Yes, this is a different issue. Trump agreed to lend his brand to a hotel in a Baku suburb in 2012. This was before the US election and during a boom time for the Azerbaijani economy. It was a good place to invest. His daughter Ivanka visited the Tower in 2014 to make sure that the work was going to plan. While she was there, she also met with Trump’s Azerbaijani business partners, and this is where the trouble now lies for Trump. He either picked his business partners carelessly or, worse, was in some way complicit in various dodgy deals.

>> What do you mean? Who were his business partners for this Baku project?

>> Trump’s main business partner was Elton Mammadov, brother of Azerbaijan’s former powerful transport minister Ziya Mammadov who has various businesses, including in the hotel sector. The problem for Trump is that these businesses are alleged to be linked to corruption and also to dealings with Iran’s Republican Guard. This is illegal for Americans under US sanctions. Trump has vigorously denied any links to corruption or doing business with Iran.

>> What has Trump and his team done about this?

>> Before Christmas, Trump quietly cut his links to the unopened Baku hotel and last month, Azerbaijani president Ilham Aliyev sacked Ziya Mammadov as transport minister, although it is unclear if this was connected to the Baku hotel deal.

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(News report from Issue No. 320, published on March 13 2017)

ADB agrees $573m loan to Uzbekistan

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MARCH 6 2017 (The Conway Bulletin) — The Asian Development Bank agreed to give Uzbekistan a series of loans worth $573m in a deal that signifies that institutional lenders consider Uzbek president Shavkat Mirziyoyev worth doing business with. A $100m loan has been earmarked for small businesses in rural communities and another $121m loan has been put against developing Tashkent’s water supply.

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(News report from Issue No. 320, published on March 13 2017)

Kazakh police arrests another official

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MARCH 6 2017 (The Conway Bulletin) — Police in Kazakhstan arrested Bazarbai Nurabaev, chairman of the Committee for Geology and subsoil use within the ministry of investment and development, the latest high profile government official to be detained for corruption. The anti- corruption agency said that Mr Nurabaev and his deputies had been extorting bribes from several companies in return for licences.

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(News report from Issue No. 320, published on March 13 2017)

HRW criticises Azerbaijan over blogger

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MARCH 7 2017 (The Conway Bulletin) — The influential New York-based Human Rights Watch described the imprisonment of Azerbaijani blogger Mehman Huseynov for slander in February as a “new low even for Azerbaijan”. Rights groups have been complaining that the Azerbaijani authorities have been crushing dissenting voices for years using slander and libel laws. Azerbaijani officials have refuted this and said instead that the West was intent on fomenting a revolution in Azerbaijan. Huseynov was well- known for reporting on official corruption.

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(News report from Issue No. 320, published on March 13 2017)

Row hurts mobile users in Tajikistan

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MARCH 6 2017 (The Conway Bulletin) — Telecoms companies in Tajikistan have, according to local media, stopped taking payments via terminals because of a dispute over the commission that the terminal operators were charging. The row has meant that long queues of people waiting to top up their mobiles are snaking out of telecoms shops in Dushanbe and other cities.

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(News report from Issue No. 320, published on March 13 2017)

Kazakh energy site pays fine

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MARCH 4 2017 (The Conway Bulletin) — The consortium developing the Karachaganak oil and gas site in northwest Kazakhstan paid a fine of 10.4m tenge ($32,800) because of an inventory error, media reported quoting the court in west Kazakhstan. It wasn’t specific about the inventory error. In a far bigger arbitration dispute playing out from last year, the Kazakh government has accused the Karachaganak consortium of withholding oil worth billions.

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(News report from Issue No. 320, published on March 13 2017)