JAN. 22 2016 (The Conway Bulletin) – The reserves of Azerbaijan’s Central Bank fell by 60% in 2015 to $5b, it said, highlighting just how much cash it had burned through trying to prop up its ailing manat currency. The Central Bank was forced to devalue the manat twice last year as oil prices stayed stubbornly low. The manat is now worth around 50% of its value of a year ago.
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(News report from Issue No. 265, published on Jan. 29 2016)
JAN. 22 2016 (The Conway Bulletin) – There is much excitement in our region over the emergence of Iran after over a decade of US-imposed sanctions.
New flight connections, new pipelines, new transmission lines and more is what a sanctions-free Iran could bring to the South Caucasus and Central Asia.
Iran has struck a deal with Air Astana to open the Almaty-Tehran air route. It has also revived talks with Turkmenistan about gas fields and pipelines around the Caspian.
Potentially, a new network to the east of the Caspian Sea could facilitate the European Union’s plans to import gas from the region. Azerbaijan may well be interested in such deals as well. In addition, Iran could become an important supplier of gas to both Armenia and Georgia.
On the flip side, Iran’s accession to the global oil market will undoubtedly drive the price of oil further down, it has huge oil reserves and production capacity, increasing the pressure on the budgets of oil-exporting economies in the region.
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Editorial from Issue No. 264, published on Jan. 22 2016)
JAN. 18 2016 (The Conway Bulletin) – Police and protesters angry about worsening economic conditions in Azerbaijan clashed briefly in the town of Quba, north of Baku, three days after demonstrations sprung up in several regional towns.
Media reports from Quba said that police fired tear gas and rubber bullets to control the demonstration. Protesters are angry at a sharp rise in prices after a devaluation of the manat at the end of last month.
Similarly to the earlier protests, police moved in after the end of the stand-off and detained dozens of demonstrators.
There have been no other demonstrations since.
These were the most serious civil disturbances this year in Central Asia and the South Caucasus linked to the economic slowdown and have worried the Azerbaijani government.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 21 2016 (The Conway Bulletin) — US PR firm Ketchum signed a so- called exclusive affiliation deal with Azerbaijan-based Red Communications, which will expand the company’s operations into its 17th country. Red Communications was previously affiliated with Ketchum’s Moscow office. Ketchum said it will work with Red Communications on international PR campaigns.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 19 2016 (The Conway Bulletin) – Azerbaijan imposed some of the most stringent currency controls in the region to try and halt the slide in its manat currency and to stop a feared wave of capital outflows as the economic storm that has hit the region strengthens.
The most draconian measure was an immediate 20% tax on purchases of property, securities and other investments in foreign currencies.
“People should know that the central bank, other government agencies are in a position to prevent the manat from falling sharply,” Azerbaijan’s Central Bank chief, Elman Rustamov, said in televised comments clearly aimed at shoring up public support. Last week sporadic clashes broke out in regional towns between angry protesters and police.
The Azerbaijani manat has lost 50% of its value in six months and people have lost confidence in the country’s financial system.
Mr Rustamov also said that the Central Bank held enough currency reserves to support the manat, despite a series of reports which suggested that it was running out of money after trying to defend its value unsuccessfully throughout 2015, and that several smaller banks would soon have to merge.
Other measures unveiled by Mr Rustamov to try to boost public support in the manat included allowing people to pay back loans of up to $5,000 at the manat/$ exchange rate prior to the last devaluation on Dec. 21 and cancelling tax on manat bank deposits and dividends.
Azerbaijan has been one of the hardest hit by the economic slowdown that has hit the region. Its economy is dependent on oil which has sunk in price to around $28/barrel from around $115/barrel in July 2014.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 16/17 2016, ALMATY/Kazakhstan (The Conway Bulletin) – Countries in the South Caucasus and Central Asia applauded the end of western sanctions against Iran, a move they hope will turn their southern neighbour into a strong trade and diplomatic partner.
But, as well as adding a hopefully vibrant economy on their southern fringe, the reemergence of Iran also presents a major potential downside.
Low commodity and oil prices have been a major contributor to an economic downturn that has shaken the region. Adding Iran’s large oil reserve to the market will further pressure prices which are already hovering around 12-year-lows of $28/barrel, down from $115/barrel in the summer of 2014.
Most countries in the region issued a statement applauding Iran’s return to the international fold.
The Kazakh foreign ministry said: “It is a critically important step in creating a safer world.”
It also said that Iran had signed its first post-sanctions international agreement with Kazakhstan’s Air Astana to open an Almaty-Tehran flight in 2016.
In the South Caucasus, Armenia and Georgia are trying to negotiate gas supply deals with Iran, and Azerbaijan may be able to persuade Tehran to fill part of its TANAP gas pipeline running via Turkey to Europe.
Elham Hassanzadeh, Research Fellow at the Oxford Institute for Energy Studies, said Iran could become an important trade and diplomatic partner for Central Asia and the South Caucasus.
“It will certainly be an easier partner to trade with [than previously],” she told The Conway Bulletin in an interview.
“The cost of doing business with Iran will be significantly lower than that of during the sanctions era while less economic and political restrictions on a given country in the region could be translated into less antagonism and conflict and more collaboration and constructive dialogue.”
She said, though, that energy would be at the forefront of relations. “A good number of Azeri and Turkmen companies are planning to invest in Iran’s oil and gas sector,” Ms Hassanzadeh said.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 21 2016 (The Conway Bulletin) – The organisers of Azerbaijan’s first Formula 1 race, scheduled for June, denied that the current economic downturn has hit their plans to stage the event. They were responding to media reports that they were going to have to downgrade their plans after a 50% fall in the value of their manat currency over the past year.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 21 2016 (The Conway Bulletin) – Khadija Ismayilova, a high-profile imprisoned Azerbaijani journalist, said that she had appointed Amal Clooney, the wife of Hollywood star George Clooney, as her lawyer ahead of a hearing in the European Court of Human Rights linked to her conviction this year on economic-related charges. Ismayilova is looking to challenge her conviction through the European Court. Europe and the West have accused Azerbaijan of cracking down on free speech.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 21 2016 (The Conway Bulletin) — Azercell, one of the largest telecoms companies in Azerbaijan, said it will lay off 60 workers, around 8% of its employees in the country. Azercell is TeliaSonera’s subsidiary company in Azerbaijan. It said in a statement that the worsening economic conditions in the country are directly affecting the company’s financial health.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 13 2016 (The Conway Bulletin) – The authorities in Azerbaijan detained at least 50 people during a police operation in the district of Nardaran, 30km outside Baku, a follow-up to police raids on so-called Islamic terrorists last year that killed at least eight people. Nardaran is considered one of the most religiously conservative areas of Azerbaijan with many people living there looking to Iran for support and guidance. Azerbaijan is, officially, a secular country.
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(News report from Issue No. 263, published on Jan. 15 2016)
