Category Archives: Central Asia & South Caucasus News

Georgian wine producers tap into Chinese market

TBILISI, MARCH 7 2017 (The Conway Bulletin) — Official data from Georgia showed that its wine producers exported 8.8m bottles of wine in January and February, nearly double the volume during the same period in 2016.

Wine is one of Georgia’s most important exports and the National Wine Agency said that the value of exports in January and February hit $20.5m. This puts Georgia on course for a record year and highlights the success of its export strategy. So successful has the marketing strategy become that rival winemaker Azerbaijan has pledged to mimic it.

Georgia’s wine industry has concentrated its efforts on breaking into new markets where drinkers are acquiring a taste for wine. Top of this list is China. Georgia sold nearly 832,000 bottles of wine to China in Jan. – Feb. and expects the Chinese market to become the second biggest, after Russia, by the end of the year, overtaking Ukraine.

The head of marketing at the Wine Agency, Irakli Cholobargia, said: “China as a market is one of the keys to drive volumes and serve as one of the alternatives to the Russian market on which we would like to be less dependent as far as unstable political relations are concerned.”

The boost in wine exports to China also vindicates advocates of a free-trade deal signed with China in Sept. 2016. Since then Georgian wine companies have signed a series of deals with Chinese companies, including a deal by Badagoni in Nov. 2016 to export 5m bottles of wine.

In 2016, Georgia’s overall exports rose by 38% to 50m bottles. Russia made up 27.2m of this total, Ukraine 8.8m and China 8.3m.

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

Georgia’s rebel state closes borders

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MARCH 5 2017 (The Conway Bulletin) — The authorities in Abkhazia, one of Georgia’s rebel states, closed two of the three remaining crossing points, drawing criticism from the United States and the EU. Abkhazian officials decided last year to close the border points to improve control over border crossings. Abkhazia also closed two other border crossings in 2016.

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

First cargo crosses new bridge from Azerbaijan to Iran

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MARCH 5 2017 (The Conway Bulletin) — The first cargo train crossed a new bridge over the River Astarachy, the border between Azerbaijan and Iran, media reported. This is the only railway link between Azerbaijan and Iran and is important because it signifies just how relations between neighbours have improved. The bridge is also vital if a plan to build a north-south trade corridor from India to Russia is to be turned into reality.

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

EBRD set to re-engage with Uzbekistan

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MARCH 6 2017 (The Conway Bulletin) — In a major boost for Uzbekistan under its new president, Shavkat Mirziyoyev, the European Bank for Reconstruction and Development (EBRD) hinted that it was going to re-engage with the country after a 10 year break.

The move comes a month after EBRD delegates flew to Tashkent for talks with the Uzbek government on how best to reignite the lending process, a credit line that was cut in the late 2000s after rows over corruption, human rights and media freedom.

Reuters news agency quoted two anonymous EBRD officials in their London office as saying that they expected the bank to signal that it was re-starting lending to projects in Uzbekistan within a couple of days. They also said a visit to Tashkent later this month by EBRD president Suma Chakrabarti had also been discussed. By the end of the week no official word had been given but neither had officials refuted the Reuters story.

For Mr Mirziyoyev, a signal from the EBRD that it was preparing to resume normal service would be a major boost. He has been trying to pursue a reform-minded agenda, rolling back some of the more intransigent and isolationist policies that

his predecessor, Islam Karimov, followed. Karimov died in September 2016.

A second Reuters exclusive from Tashkent on March 7 said Mr Mirziyoyev had clashed with some of his ministers over his reform agenda.

The EBRD said that it has lent 900m euro to projects in Uzbekistan, although the flow dropped off in the first decade of the 21st century. In hasn’t approved a project in Uzbekistan since 2007 and doesn’t keep an office in Tashkent. In 2003, Uzbekistan held its AGM in Tashkent, a meeting overshadowed by rows over human rights.

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

Armenia PM wants more investment

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YEREVAN, MARCH 9 2017 (The Conway Bulletin) — In an interview with the Reuters news agency, Armenian PM Karen Karapetyan said that he would be prepared to cut state spending to attract more private investment in try to reboot the country’s stalling economy.

In particular, Mr Karapetyan, who had previously worked as the head of the national gas distributor ArmRosGazprom and is known to retain strong links with Russia, said that he was looking to attract up to $850m of private investment this year to reduce Armenia’s reliance on Kremlin handouts.

“Regular structural reforms will be implemented in Armenia, even if these reforms are unpopular,” Reuters quoted him as saying.

Investors have been looking to the Armenian government for strong leadership. Mr Karapetyan, who took over in September 2016, is the third PM since April 2014. His two predecessors quit after failing to transform expensive state pensions and losing control of an armed takeover of a police station.

In 2015, the government also backpedaled over proposed reforms to electricity tariff increases that it wanted to impose after a series of large street demonstrations.

Armenia has been suffering from deflation and low growth rates, an economic downturn shared by the region which is dependent on Russia as an economic engine. Russia has been suffering from a recession triggered by a drop in oil prices and Western-led sanctions.

Mr Karapetyan said that he want to cut the government’s deficit to 2.7% of GDP from 5.9% in 2016.

“It will have a negative impact,” he said in the interview. “But we want to compensate it through private investment.”

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

Currencies: Georgian lari, Kazakh tenge, Uzbek som

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MARCH 8 2017 (The Conway Bulletin) — Pushed up by decent economic data and a rise in interest rates to battle inflation which threatens to pick up this year, the Georgian lari hit a four-month high against the US dollar on March 7 of 2.45/$1, according to data from Bloomberg.

It slipped back slightly towards the end of the week to 2.5/$1 but it is still 9.1% stronger than on Jan. 1.

The Kazakh tenge fell slightly over the past fortnight but it is, too, performing well in 2017, racking up gains of around 5% this year.

As for the Uzbek som, as shown in our graph, the authorities appear to have speeded up their managed devaluation of the currency. The official exchange rate is now at 3,452/$1 an all-time low. The graph clearly shows how the steps taken to devalue the som have increased in size since mid-February. The Uzbek som is now 4.3% weaker against the US dollaxr than it was on Feb. 16. This managed downward trajectory for the som is expected to continue.

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

Comment: ISIS recruitment in Tajikistan is overstated, says Lemon

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MARCH 13 2017 (The Conway Bulletin) — Since 2013, as many as 4,000 Central Asians have travelled to fight in Syria and Iraq. Some of these militants play a crucial role in the organisation.

In September 2016, news agencies in Iraq reported that the former head of Tajikistan’s paramilitary police, Gulmurod Halimov, had been appointed ISIS’s supreme military commander. A recent report from the International Centre for Counter-terrorism revealed that Tajiks topped the list of foreign fighters used in suicide attacks.

For some observers, this development indicates that Central Asia is becoming a hotbed of radical Islam.

Long-suppressed during the Soviet Union, interest in religion has revived in Central Asia in the 25 years since independence and this revival has created concerns that the region’s population will embrace militant Islam.

Governments in the region, and some outside observers, argue that a cocktail of poverty, lack of education and rising religious piety drive radicalisation.

But the available evidence indicates a different story.

Almost half of the fighters from Tajikistan, for example, are well- educated graduates with degrees from secular universities and numerous fighters are from relatively wealthy families.

Only a handful of recruits have received any formal religious education. Far from being young and naïve as the government claims, the average age of fighters from Tajikistan is 28 years old, with over half of the fighters between the ages of 24 and 29. Numerous fighters experienced some form of trauma or personal crisis before joining Islamic State.

In other words, non-religious factors seem to be more important than religious ones in driving radicalisation in Central Asia.

Misdiagnosing radicalisation leads to counterproductive policies. Simply explaining recruitment through naivety and ignorance underestimates the conscious decision made by many to join an extremist group. Harsh measures that restrict the religious freedoms fail to address the underlying issues as well.

Instead, more needs to be done to counter ISIS’s propaganda, addressing social injustices and creating jobs and other opportunities so there is less incentive in the recruitment of extremist groups.

By Edward Lemon, a postdoctoral research scholar at Columbia University. His research examines extremism in Central Asia.

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

Uzbek ministers argue over reforms

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MARCH 7 2017 (The Conway Bulletin) — Uzbek president Shavkat Mirziyoyev is facing internal opposition from powerful members of the elite to liberal reforms he wants to push through, various sources told Reuters. They said that his plans to move the Uzbek som to a free float, cancel visas for tourists from some countries and restart a passenger flight with Dushanbe have all been delayed because of resistance from the powerful security services.

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

Protests weaken in Kyrgyzstan

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MARCH 10 2017 (The Conway Bulletin) — Protests continued in the southern town of Bazar-Korgon against the imprisonment of Omur Tekebayev, head of the Ata-Meken party, for corruption. Media reported that around 50 people holding placards marched through the town. Protests that broke out immediately after Tekebayev’s arrest on Feb. 28 in Bishkek, though, have dissipated. Bazar-Korgon is Mr Tekebayev’s hometown.

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

Nuclear fuel bank in Kazakhstan nears completion

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MARCH 6 2017 (The Conway Bulletin) — A low enriched uranium bank being built in Kazakhstan should be operational by September, the director-general of the International Atomic Energy Agency (IAEA) Yukiya Amano said in a press release. The uranium fuel bank will be the first of its kind in the world and will allow countries to buy uranium for nuclear fuel. It will be administered by the IAEA. For Kazakh president Nursultan Nazarbayev, the fuel bank will be a personal success as he wants to build Kazakhstan’s reputation as a global centre for nuclear energy. Kazakhstan is the world’s biggest uranium miner.

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