Category Archives: Central Asia & South Caucasus News

Kyrgyz President says Russia should leave Kant

DEC. 1 2016 (The Conway Bulletin) — At a press conference, Kyrgyz president Almazbek Atambayev said that Russia would have to quit its air base at Kant near Bishkek. He didn’t elaborate or give any details but he did say that he wanted all foreign military to quit Kyrgyzstan. Russia has signed a deal with Kyrgyzstan to operate from Kant until 2032. It started operations at Kant in 2003. The US quit its airbase outside Bishkek in 2014.

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(News report from Issue No. 307, published on Dec. 2 2016)

Georgia to protect mortgage holders as lari tumbles

TBILISI, NOV. 29 2016 (The Conway Bulletin) — Georgia’s government said it would protect home-owners who took out mortgages in US dollars and also that it would ban online consumer lending, reforms aimed at shoring up confidence in the government and its economic policies after the lari dropped to all time lows.

PM Giorgi Margvelashvili made the announcements after fresh economic data showed a drop in exports and lower-than-expected remittance flows from Russia had pushed the lari down to 2.56 against the US dollar by close-Dec. 1. This is 20% lower than it was valued at in June.

“According to our plan, loans which had been disbursed to individuals before Jan. 1 2015, and supported by real estate, would be recalculated in lari at a rate which is lower than the current by 20 points,” media reported him as saying.

“For example, if the rate today is 2.5 lari per dollar, the credit will be calculated at a rate of 2.3 lari per dollar.”

And Mr Margvelashvili also said that the government would ban credit agencies which lend money via the internet and also look to increase excise duty on cigarettes.

The changes are among the most radical presented by a government in the South Caucasus/Central Asia region since an economic downturn linked to a collapse in oil prices and a recession in Russia. Earlier this year, Kazakhstan announced similar measures to protect mortgage holders who had borrowed in US dollars.

Following Mr Margvelashvili’s intervention, the Georgian Central Bank also called for calm. It said that the sudden fall in the value of the lari was a short term adjustment that would steady.

“We expect that devaluation will stop shortly,” it said in a statement. “We would recommend society and economic agents not to make harsh decisions, which will negatively affect themselves.”

The Central Bank blamed the drop on the strengthening US dollar, the weak rouble and poor Georgian economic data.

Georgia’s GDP grew in the 12- months to the end of October by 1.3%, less than half the rate for the same period in 2015. Remittances from Russia, so vital to the economy, have been low.

And people are worried. David, a Tbilisi resident in his late 20s, said that he had a mortgage for $15,000 which he had taken out when the lari was valued at 2.19 against the US dollar. He said that the fall in the value of the currency had meant it was now virtually unpayable.

“I got this credit for my home, so if the dollar continues to rise, I will have to sell my home and give the credit back,” he said. “I don’t know what else I can do.”

Tamta, a Tbilisi resident, was also worried. “I am trying not to think about this otherwise I’ll go crazy,” she said. “Thank God nobody in my family has a mortgage in dollars.”

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(News report from Issue No. 307, published on Dec. 2 2016)

Azerbaijani Central Bank defends economy policy

DEC. 1 2016 (The Conway Bulletin) — Azerbaijan’s manat currency dropped to its lowest ever level against the US dollar, continuing a decline that has wiped 18% off its value since June.

The collapse in the value of the manat, linked to still-subdued oil prices and weaknesses in the Russian economy, is stoking inflation. The lack of confidence in the manat has also triggered a run on US dollars, with many high street banks and exchange offices running out of the greenback.

On Nov. 30, the Azerbaijani Central Bank was forced to defend its policies.

Elman Rustamov, the Central Bank chief, told parliament that he was pursuing a tight monetary policy but he also admitted that the banking system was under strain.

“There are similarities between stabilisation and development,” he said. “If we don’t achieve macroeconomic stability, no investor will have confidence in us.”

International economists expect Azerbaijan’s economy to shrink by around 3% this year, underscoring the problems it is facing. In September, in an effort to prop up its manat currency, the Central Bank raised interest rates to 15% from 9.5%.

But on the streets of Baku, the mood is glum. A Bloomberg reporter said that only one of the nine banks he visited on Nov. 28 sold US dollars. Importantly too, he reported that the Black Market exchange rate for buying US dollars with manat was 5% higher than the official rate, an indication of the lack of confidence in the currency.

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(News report from Issue No. 307, published on Dec. 2 2016)

Uzbeks prepare to back Mirziyoyev as their second post-Soviet president

TASHKENT, DEC. 2 2016 (The Conway Bulletin) — Even last month, it was clear to Uzbeks who was going to win a presidential election on Dec. 4.

“It is already known who is going to be our new president,” laughed Farkhod, 55, a resident of Samarkand. “But still I am fine with him.”

The “him” is Shavkat Mirziyoyev, Uzbekistan’s PM and acting president since Islam Karimov died on Sept. 2.

And on a tour of Uzbekistan’s two main cities — Tashkent and Samarkand — Mr Mirziyoyev appeared to be a genuinely popular choice to replace Karimov. He’s also had the advantage of looking presidential by leading Karimov’s funeral and hosting various world leaders, such as Russian president Vladimir Putin and Turkish president Recep Erdogan.

For Saidaziz, 21, a student in Tashkent, stability was the key issue. “I am going to vote for Mirziyoyev, as it seems that he is going to continue the line of Islam Karimov,” she said.

Not everybody is as enthusiastic, though. An Uzbek academic who preferred not to be named said that Mr Mirziyoyev had a reputation for being excessively strict.

“As far as I know, Karimov did not choose Mirziyoyev as his successor, as he was aware of the methods the latter prefers to use,” he said in hushed tones between sips of tea in a Tashkent cafe.

Still, for most Uzbeks, Mr Mirziyoyev’s moves to open up the country and to create jobs through major infrastructure projects are welcome.

The economy has been in the doldrums for two years and needs stimulating. Alexander, a 54-year-old plumber in Tashkent said that a change of president would have little impact on ordinary people.

“The elite will decide who becomes president, without our participation, but there won’t be any revolution from ordinary Uzbeks,” he said. “Creating a stable political system, like the one in America is more important task.”

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(News report from Issue No. 307, published on Dec. 2 2016)

Uzbekistan’s acting-president signals changes to currency controls

NOV. 29 2016 (The Conway Bulletin) — Uzbekistan’s acting-president Shavkat Mirziyoyev published a draft decree on the presidential website laying out what appeared to be a manifesto to liberalise some of the tightest currency controls in the world.

In the draft decree, Mr Mirziyoyev wrote that restrictions would be lifted on foreign companies working in Uzbekistan and on Uzbeks taking money out of the country.

The document said that the main aims of the reforms were to “stimulate growth of the country’s export potential, improve the competitive- ness of domestic producers in foreign and domestic markets” and to “create equal conditions for all participants of foreign economic activity during their foreign exchange operations and the prohibition of the practice of privileges and preferences to individual companies or sectors”.

Specifically, the document said Uzbeks would be allowed to take up to $10,000 out of the country. Currently, Uzbeks are banned from taking cash out of the country. Foreign companies working in Uzbekistan have also complained about restrictions on repatriating profits. Under the draft regulations this should be easier.

Uzbekistan also operates a dual exchange rate with the official and the Black Market rate varying widely.

The draft legislation on the presidential website didn’t specifically tackle the issue of the dual exchange rates but loosening currency controls should bring them together.

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(News report from Issue No. 307, published on Dec. 2 2016)

Turkmenistan and Afghanistan open railway

NOV. 29 2016 (The Conway Bulletin) — Turkmenistan and Afghanistan opened a long awaited rail link which should ease trade, especially shipments of refined fuel. Turkmenistan’s economy relies of gas sales, mainly to China, but it has been looking to diversity into refined fuel and electricity exports and it sees Afghanistan as a potentially important market. It has built a 540,000 tonne oil product terminal at the Ymemnazar customs point on the border with Afghanistan.

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(News report from Issue No. 307, published on Dec. 2 2016)

BTC flows to drop, according to Azerbaijan’s state budget

NOV. 25 2016 (The Conway Bulletin) — The Baku-Tbilisi-Ceyhan (BTC) pipeline will drop oil transport next year, according to a forecast in Azerbaijan’s state budget. In 2017, BTC will transport 31m tonnes, down from 32.5m tonnes that the government forecast for this year. In 2016, exports via BTC increased, but the share of Azerbaijan’s SOCAR in pipeline sales decreased in favour of its foreign partners.

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(News report from Issue No. 307, published on Dec. 2 2016)

Tajik and Kyrgyz military fire shots

NOV. 28 2016 (The Conway Bulletin) — Shots have been fired by Tajik and Kyrgyz border guards on their shared border, Radio Free Europe/Radio Liberty reported. The border is one of the most tense in Central Asia. RFE/RL said that nobody had been injured in the fighting and that it wasn’t clear if the shots had been fired into the air as warnings or had been aimed at security personnel.

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(News report from Issue No. 307, published on Dec. 2 2016)

Domestic violence rises in Azerbaijan

NOV. 29 2016 (The Conway Bulletin) — Giving a rare insiders’ view of domestic life in Azerbaijan, MP Elmira Akhundova said that violence against women by their husbands was rising. Media quoted her as saying that punishments must be increased for men who kill or injure their wives. Official government statistics have said that domestic violence in Azerbaijan has halved over the past couple of years because, the authorities have said, of harsh new punishments. Activists, though, have refuted this and said that the government simply makes up the numbers for its own benefit.

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(News report from Issue No. 307, published on Dec. 2 2016)

Azerbaijan’s GDP shrinks in Jan-Oct

NOV. 30 2016 (The Conway Bulletin) — Azerbaijan’s finance minister Samir Sharifov admitted in a parliamentary session that the country’s overall GDP had dropped by 3.7% between Jan. and Oct. this year. He also said, and this is important as Azerbaijan has said it wants to diversify away from oil and gas production, that the non-oil part of the economy had shrunk by over 6%. Azerbaijan has been badly hit by the fall in oil prices and a recession in Russia.

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(News report from Issue No. 307, published on Dec. 2 2016)