Category Archives: Central Asia & South Caucasus News

Fitch downgrades Kazakh bank

DEC. 20 2016 (The Conway Bulletin) — The Fitch ratings agency downgraded the rating of Kazakhstan’s third largest bank Tsesnabank to B from B+ because of a drop in the quality of its loan portfolio. The downgrade and drop in loan quality are a reflection of the pressures that the Kazakh economy is under. The tenge has lost around half its value in the past couple of years, pressuring households with foreign currency loans and mortgages.

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(News report from Issue No. 310, published on Dec. 23 2016)

Grain exports rise in Kazakhstan

DEC. 20 2016 (The Conway Bulletin) — Kazakhstan has exported 7.9m tonnes of grain this so far this year, Kazakh deputy agriculture minister Kairat Aituganov said at a press conference, a 12% increase on 2015. Grain is an increasingly important part of the Kazakh economy. Overall, Mr Aituganov said that agricultural production in Kazakhstan had increased this year by 4.5%.

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(News report from Issue No. 310, published on Dec. 23 2016)

Kyrgyz President meets Indian PM Modi for talks

BISHKEK, DEC. 20 2016 (The Conway Bulletin) — A few days after hosting Tajik president Emomali Rakhmon, Indian PM Narendra Modi held talks with Kyrgyz president Almazbek Atambayev.

At the talks, Mr Modi praised Kyrgyzstan for a being a beacon of democracy. “Our societies share a sense of warmth. We are also bound by a common belief in democratic values and traditions,” he was quoted by media as saying.

India has been pushing to improve its links with Central Asia. It has built relations through gas projects, mainly the TAPI gas pipeline running from Turkmenistan, and has also been accepted as a member of the Russia and China led Shanghai Cooperation Organisation which focuses on Central Asia.

Mr Atambayev said that he wanted to strengthen economic links with India.

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(News report from Issue No. 310, published on Dec. 23 2016)

Kyrgyz business group criticises new tax code

BISHKEK, DEC. 21 2016 (The Conway Bulletin) — Kyrgyzstan’s Association of Markets and Businesses has criticised the government for rushing through reforms to the tax code without consultation, media reported.

Reports said that the government had published a new tax code on Dec.

6 without consulting the group. Sergey Ponomarev, the group’s leader, said that it had been working with the government for six months previously to produce a new tax code.

“The previous code has been discussed for a year and the document became balanced. It wasn’t perfect, but at least the development process and decision were complied,” he said. Mr Pomomarev said the business community would need six months to look at the new proposals. Kyrgyzstan is suffering from an economic downturn and its looking to raise revenue.

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(News report from Issue No. 310, published on Dec. 23 2016)

Georgia’s economy grows by 2.3%

DEC. 19 2016 (The Conway Bulletin) — Georgia’s economy was 2.3% larger in the third quarter of 2016 compared to the third quarter of 2015, highlighting economic growth in Georgia despite difficult conditions. Geostat also said that Georgia’s economy had grown by 2.7% in Q1 2016 and 3% in Q2 2016. Both Armenia and Azerbaijan have seen their economies fall in value.

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(News report from Issue No. 310, published on Dec. 23 2016)

Armenia’s economic activity rises

DEC. 20 2016 (The Conway Bulletin) — Armenia’s economic activity index recorded a rise of 2.3% in November compared to the same month in 2015, the state statistics agency said, suggesting some positive news after a slew of poor economic headlines. The biggest risers were the service sectors and industrial output which recorded rises of 6.8% and 7.8.%. The biggest drop was in construction, a key economic driver in Armenia. It fell more than 10%.

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(News report from Issue No. 310, published on Dec. 23 2016)

Kazakh security forces arrest suspected terrorists

DEC. 21 2016 (The Conway Bulletin) — Kazakh security forces arrested 16 people for allegedly stirring ethnic hatred and belonging to terrorist groups in four coordinated raids across the country. The Kazakh government has blamed radical Islamists for trying to recruit young men into the ranks of IS.

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(News report from Issue No. 310, published on Dec. 23 2016)

Kazakh President’s Syria peace talk offer

DEC. 23 2016 (The Conway Bulletin) — >> So Kazakhstan is hosting peace talks on the war in Syria. This sounds like a major deal.

>> It is and it isn’t. This is actually the third talks in Kazakhstan on the Syria war. The previous two rounds have proved to be more of a talking shop than a forum to find peace. They were only attended by the disparate opposition groups and so were limited. They produced a declaration that called for parliamentary elections and fighting terrorism but little else. Fairly anodyne stuff when there is a vicious civil war going on. There are also other peace talks going on, mainly the UN-backed Geneva talks, to try to sort out the war in Syria that has killed hundreds of thousands of people and forced many more to flee their homes.

>> When were the previous talks? Who was involved?

>> There were two rounds of talks last year, in May and in October. The only groups to attend were the disparate rebels. The extremist group IS was not invited. The talks generated a lot of headlines for Kazakhstan but no tangible impact to the war in Syria. These next talks also feature Russia, Turkey and Iran and could be altogether more serious if they do go ahead. These are the three powers who are exerting the main influence over Syria at the moment. The US and other Western powers have been left out in the cold. These talks though are more aimed at influencing the main talks going on in Geneva, rather than coming up with a stand-alone solution.

>> Right. So negotiations with the US are happening elsewhere?

>> Yes. They are not officially going to be at the peace talks in January in Astana.

>> So, what is Kazakhstan’s role?

>> It hosts the talks and will also mediate, if needed. It’s a great headline generator for Kazakhstan. President Nursultan Nazarbayev craves more attention. He wants to be taken more seriously and has tried to position Kazakhstan as a neutral venue to solve the world’s problems. He organised a summit of the OSCE member states, something that hadn’t been done since 1999, in Astana in 2010. He has also hosted a meeting of the Iran talks. This involves the US, Russia, Britain, France and China. Next year, Kazakhstan starts a two year posting as a non permanent member of the UN Security Council. And, perhaps most brazenly, Nazarbayev has also created his own peace prize.

>> What do you mean? Nazarbayev has a peace prize?

>> Yes, that’s right. We reported on it when it was announced in October. It comes with a $1m cheque. The first prize went to King Abdullah of Jordan for taking in 1.5m Syrians refugees and for making the Middle East a nuclear free zone. Nazarbayev plans to hand it out every year so it’ll be interesting to see who he gives the prize to in 2017. A Syria connection would be a good bet.

>> Back to these Syria talks. What will come out of them?

>> It’s all very fluid at the moment. Russia and Turkey appear to have given their consent to Kazakhsta-based peace talks but nothing has been heard from the Assad regime and Iran or the rebels. It’s highly unlikely that the rebels and the Assad regime will convene in one place so, even if they do go ahead, you’re likely to get an unbalanced view of things. The government forces may turn up this time but not the rebels.

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(News report from Issue No. 310, published on Dec. 23 2016)

Israeli PM visits Azerbaijan and Kazakhstan for first time

DEC. 13/14 2016 (The Conway Bulletin) –Israeli PM Benjamin Netanyahu travelled to Baku and Astana in a high- profile trip aimed at shoring up bilateral support in the South Caucasus and Central Asia region.

This was the first trip to the region by a serving Israeli PM.

Mr Netanyahu’s visit to Baku was particularly important. Azerbaijan borders Iran, Israel’s arch foe, and the two countries have built up an alliance. Azerbaijan buys Israeli weapons and has previously given its air force permission to use its airbases if conflict did break out with Iran. In return, Israel buys Azerbaijani oil.

In comments which gushed with positivity, Mr Netanyahu was quoted by the Times of Israel as saying: “The world sees so much intolerance and darkness, this (Azerbaijan-Israel cooperation) is an example of how the Muslim-Jewish relationship can and should be everywhere.”

Mr Aliyev was equally enthusiastic about bilateral relations, calling Israel an important partner and describing how his government had spent nearly $5b on buying Israeli-made weapons. The visit triggered a series of anti- Azerbaijan demonstrations in Iran. The Iranian government also officially complained and accused the Azerbaijani government of anti-Islamic tendencies.

From Baku, Mr Netanyahu flew to Astana for a meeting with Kazakh president Nursultan Nazarbayev. He openly said that he wanted to enlist Kazakhstan’s help in supporting Israel for a non-permanent seat on the UN’s Security Council.

“We helped you get accepted as a member of the Security Council and now we are asking you to help us be a member of the council, as well,” he was quoted by media as saying to Mr Nazarbayev.

Kazakhstan starts a two-year position on the UN Security Council in January. It is one of 10 non-permanent members. The five permanent members are the United States, Britain, France, Russia and China.

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(News report from Issue No. 309, published on Dec. 16 2016)

Kyrgyzstan-focused Centerra Gold scraps quarterly dividend for first time since 2010

BISHKEK, DEC. 9 2016 (The Conway Bulletin) — Canadian gold miner Centerra Gold said it suspended its regular quarterly dividend issue because the bank accounts of its subsidiary in Kyrgyzstan that operates the Kumtor mine has been frozen.

Scrapping the quarterly $0.04 dividend payout to shareholders breaks with a six-year tradition and highlights tension between the Kyrgyz government and the Toronto- listed mining company. The Kyrgyz government, owns a 27% stake in the company but wants, instead, to own a direct stake in Kumtor.

“In light of the current restrictions relating to funds held at Centerra’s wholly-owned Kyrgyz Republic subsidiary, Kumtor Gold Company, Centerra’s Board at its regularly scheduled board meeting yesterday decided against declaring a third quarter dividend,” the company said in a statement.

“In addition, the Board has decided to suspend future dividends for the time being.”

Kumtor’s bank accounts have been frozen since June because of an unpaid environmental fine. Centerra has said the fine is politically motivated to force it to relinquish more equity in the gold mine. For the past couple of years, Kyrgyzstan has argued that it wants to give up its share in Centerra in exchange for a direct 50% stake in Kumtor.

Kumtor is Centerra’s biggest asset. In 2015 it accounted for 97% of its total revenues. And the gold mine is also vital for the Kyrgyz economy. It is its single biggest industrial asset, making up an estimated 10% of total GDP.

Reuters quoted RBC Capital Markets analyst Stephen Walker who said that for every quarter Centerra fails to pay a dividend, Kyrgyz state- owned Kyrgyzaltyn will lose around $9.5m in revenue – a vital source of funding.

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(News report from Issue No. 309, published on Dec. 16 2016)