Category Archives: Central Asia & South Caucasus News

Kazakh elite are winners from bank merger

MARCH 3 2017 (The Conway Bulletin) — By merging Kazkommertsbank with Halyk Bank, the Kazakh elite have completed their drive to control the country’s banking sector.

It’s been a long campaign but, for the Kazakh elite, one worth fighting and winning. If previously, the country’s banking sector had been troublesome, creating billionaires such as Mukhtar Ablyazov and Nurlan Subkhanberdin who didn’t necessarily want to go along with President Nursultan Nazarbayev’s vision for Kazakhstan, now they have full control.

The process to subjugate the banking sector started with the government’s purchase of BTA Bank in 2008/9 when it was on the brink of collapse. Next came the not-so-subtle takeover of Kazkommertsbank in 2014/15 and then its absorption of BTA Bank, and its mountain of bad debt.

And now we have the denouement.

Kazkommertsbank has apparently agreed to merge with, or perhaps more accurately – be taken over by, Halyk Bank. The first and second biggest banks in the country will create a mega-bank that will dominate the sector.

Halyk Bank is owned by Dinara Kulibayeva, President Nursultan Nazarbayev’s daughter, and her husband, Timur Kulibayev. Since 2015, the 37-year-old Kenes Rakishev, one of the Kazakh elite’s favourite businessmen has been the majority owner of Kazkommertsbank. Last year he also became its chairman.

And, as if to underline the elite/insider nature of the deal, the Kazakh Central Bank has given the deal its blessing, saying that it will provide the necessary funds to see it through, including buying up the bad debt that Kazkommertzbank inherited when it took over BTA Bank. In other words, expect the new bank to be in excellent health and to be fully compliant to the whims of the Kazakh elite.

This cements the elite’s control of Kazakh business and banking. Opposition forces will never have as much leverage, good or bad, as when Ablyazov controlled BTA Bank and Subkhanberdin controlled Kazkommertsbank.

The business acumen of the Kazkommertsbank-Halyk merger may not be obvious, but the political reasons are crystal clear.

ENDS

(News report from Issue No. 319, published on March 3 2017)

Azerbaijan’s Socar fails to buy Turkish petrol stations

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MARCH 3 2017 (The Conway Bulletin) — Azerbaijan’s state-owned oil and gas company Socar failed in its high-pro- file bid to buy up the chain of petrol stations in Turkey owned by Austria’s OMV.

Instead, OMV said it had sold the group of 1,785 petrol stations, called Petrol Ofisi, to Vitol Investment Partnership, a subsidiary of commodities company Vitol for $1.45b. Petrol Ofisi is the biggest petrol retailer in Turkey with a 23% market share.

The failure to secure a petrol station group will be a disappointment to Socar, Last month, in an interview with a Turkish newspaper, the general director of Socar Turkey Energy, Zaur Gahramanov, said that if its bid to buy the OMV petrol stations in Turkey failed, it would pursue alternative options.

Socar owns the Star oil refinery in Turkey and has said that it wants to expand its downstream operations.

ENDS

(News report from Issue No. 319, published on March 3 2017)

New Syria talks to take place in Kazakhstan

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MARCH 1 2017 (The Conway Bulletin) — The next round of talks aimed at ending a civil war in Syria are planned for Astana on March 14, media reported. This is the continuation of a series of talks this year in Astana involving Syrian rebels, forces loyal to Syrian president Bashir al-Assad, Russia, Turkey and Iran. For Kazakh President Nursultan Nazarbayev the talks have been useful in bolstering Kazakhstan’s international profile.

ENDS

(News report from Issue No. 319, published on March 3 2017)

Clashes take place in between Armenia and Azerbaijan

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MARCH 1 2017 (The Conway Bulletin) — A series of clashes in the disputed region of Nagorno-Karabakh between Armenia-backed rebels and Azerbaijani forces were being dubbed the worst since April 2016. On Feb. 27 Azerbaijan said that five of its soldiers had been killed in a firefight with Armenia- backed rebels who control the region under a 1994 UN-negotiated ceasefire which ended a war that killed 30,000 people. Two days later, the Armenia-backed rebels said one of their soldiers had been killed.

ENDS

(News report from Issue No. 319, published on March 3 2017)

Russian diplomat flees after car crash in Kyrgyzstan

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FEB. 23 2017 (The Conway Bulletin) — The first secretary of Russia’s embassy in Bishkek fled Kyrgyzstan days after driving his car through a red light and smashing it into a lorry, killing the driver. Bishkekers reacted with anger after news that Viktor Pukhov had been allowed to leave Kyrgyzstan for Russia was reported in local media.

ENDS

(News report from Issue No. 318, published on Feb.24 2017)

Uzbek authorities release reporter after 18 years

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FEB. 22 2017 (The Conway Bulletin) — Uzbekistan released opposition activist and journalist Muhammad Bekjanov from prison after 18 years. Mr Bekjanov, considered one of the longest serving political prisoners in the world, was sent to prison in 1999 after a trial linked to a car bomb in the capital, Tashkent. His supporters have always said that he is innocent.

ENDS

(News report from Issue No. 318, published on Feb.24 2017)

Comment: The Aliyev dynasty just got stronger, says Kilner

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FEB. 24 2017 (The Conway Bulletin) — Azerbaijan, under Ilham Aliyev, has lead the way in creating a regional royal family, a dynasty that rules the country unimpeded. By appointing his wife, Mehriban Aliyeva, as his First Vice-President, Aliyev reinforces this impression.

He must, though, have been prepared for the cries of nepotism hurled at him after he made the announcement. Prepared and not particularly bothered, was probably his attitude.

Aliyev has always done things his own way, waving a proverbial two fingers at critics, including large parts of the European Parliament. He virtually inherited the presidency himself from his ailing father in 2003. Of course, there was an election to garnish his rise to the top but in essence it was a coronation job.

Since then Aliyev has crushed dissent, imprisoning most of the country’s opposition activists and independent journalists. Those who haven’t been imprisoned or fled into exile, keep their heads down or are pliant. And that’s why reaction to Aliyeva’s promotion to First Vice-President has been muted in Azerbaijan.

As for the international community, there have been the predictable accusations of foul play from human rights groups and others but, in general, this has been glossed over. Azerbaijan is now an important partner for Europe. It

wants to source its gas from the Azerbaijani sector of the Caspian Sea and has built a pipeline across the South Caucasus and Turkey to pump gas to its people. It needs a stable Azerbaijan. Aliyev appointing his wife as his deputy is not a big enough issue for EU countries to complain about.

What exactly Aliyeva’s roles are likely to be, remains to be seen. Perhaps, though, they are less important than the impression her promotion has created of the omni-powerful Aliyev clan, ably supported by the Pashayevs, Aliyeva’s family. The Pashayevs have business interests stretching across the spectrum, from banking to insurance, mining to luxury car dealerships.

The Aliyevs also have a string of business interests. Protecting these interests and the interests of his wife’s family, will have been a major concern of Aliyev before he handed his wife the of First Vice-President. These interests are now a little more secure and Azerbaijan’s reputation
as a partner to do business with is a little more tarnished.

By James Kilner, Editor, The Conway Bulletin.

ENDS

(News report from Issue No. 318, published on Feb.24 2017)

Armenia to produce Solar panel

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FEB. 24 2017 (The Conway Bulletin) — Armenia will start producing solar panels later this year under a government-sponsored scheme designed to give solar-power a boost in the country, media reported quoting Hayk Harutyunyan, the deputy energy infrastructure and natural resources minister. He said that 50 jobs will be created at the plant which will begin production in Q3 2017.

ENDS

(News report from Issue No. 318, published on Feb.24 2017)

Kazakh authorities clamping down on rights groups

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FEB. 21 2017 (The Conway Bulletin) — The New York-based Human rights Watch said that the authorities in Kazakhstan have been harassing two local human rights groups by falsely alleging that their tax receipts were wrong. HRW said that International Legal Initiative Foundation and Liberty had both faced tax audits. The Kazakh authorities have not commented. Rights groups have previously accused Kazakhstan of using official channels to close down groups that it finds a nuisance.

ENDS

(News report from Issue No. 318, published on Feb.24 2017)

BP cuts costs in Azerbaijan

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FEB. 21 2017 (The Conway Bulletin) — BP cut its costs in Azerbaijan by 17.8% in 2016, Azerbaijani media reported by quoting the British company. The cut in expenditure is probably a reflection of the drop in the price of oil and the need for energy companies to cut costs. Azerbaijan has been hard hit by the drop in oil prices, forcing it to reduce its budget and various social development programmes. BP is the biggest foreign investor in Azerbaijan and has helped to build up its energy sector since the 1991 collapse of the Soviet Union.

ENDS

(News report from Issue No. 318, published on Feb.24 2017)