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New hydro power plant opens in Georgia

JULY 3 2017 (The Bulletin) — Adjaristsqali Georgia, a subsidiary of India’s Tata Power, said that it had completed the construction of the 186MW Shuakhevi Hydro Power Station in Georgia, one of the largest to be built in the last 50 years. Its finance partners for the project were the IFC (part of the World Bank) and Norway’s Clean Energy Invest. The project cost $420m to build and has been under construction since 2013. Speaking at the opening of the plant, Georgian PM Giorgi Kvirikashvili said that power produced by the plant would be sold during winter, when there is traditionally a deficit. Georgia has been heavily investing in its hydropower capacity.

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(News report from Issue No. 336, published on July 16 2017)

Uranium bank to open in August, says Kazakh President

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JULY 3 2017 (The Bulletin) — Kazakh president Nursultan Nazarbayev said that a low-enriched Uranium bank will open in eastern Kazakhstan on Aug. 29. The project is being administered by the International Atomic Energy Agency (IAEA) and is being promoted by Kazakh officials and Mr Nazarbayev as yet another contribution by Kazakhstan to world peace. On the day the uranium bank opens, Mr Nazarbayev intends to give out his first international award for nuclear disarmament. He already has his own peace award.

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(News report from Issue No. 336, published on July 16 2017)

State salaries and pensions to rise by 10% in Turkmenistan

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JULY 8 2017 (The Bulletin) — Apparently looking to bolster his support from ordinary Turkmen during a sustained economic downturn, President Kurbanguly Berdymukhamedov ordered state pensions and salaries to be increased from Jan. 1 2018. Analysts have said that the Turkmen economy is under increasing pressure and that inflation is rising fast.

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(News report from Issue No. 336, published on July 16 2017)

Azerbaijan makes diversification plans

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JULY 11 2017 (The Bulletin) — Azerbaijan plans to set up a new textile champion that will generate 550 jobs and place the country at the heart of regional, if not global, garment production, the ministry of economy said in a statement. The ministry said that the textile park centre was planned for Mingachevir Industrial Park in the north-central area of the country, although it didn’t release any other details. Azerbaijan has been under pressure to diversify its economy away from oil and gas.

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(News report from Issue No. 336, published on July 16 2017)

Turkmen President wants faster import substitution programme

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JULY 12 2017 (The Bulletin) — At a government meeting focused on the economy, Turkmen president Kurbanguly Berdymukhamedov told his ministers to speed up the diversification of the economy and especially an import substitution programme that it has been working on. The media report of the meeting betrays, perhaps, Mr Berdymukhamedov’s nervousness at the state of the Turkmen economy. It has been hit by a regional economic decline.

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(News report from Issue No. 336, published on July 16 2017)

Ex-ILO official accuses WB of wilful ignorance on Uzbek forced labour

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TASHKENT, JULY 11 2017 (The Bulletin) — In a letter to the FT, Elaine Fultz, a former director for the Central Asia office of the International Labour Organisation (ILO), accused the World Bank of turning a blind eye to forced labour at its projects in Uzbekistan.

She was writing after the World Bank refuted a report last month from Human Rights Watch that forced labour was being used on its projects. The World Bank rejected the accusations and said that the ILO had investigated forced labour accusations in 2016 and concluded that the practice had been stopped.

But Ms Fultz, head of the ILO’s Central Asia office from May 2007 until January 2009 and now a consultant at US-based JMF Research Associates, said that the ILO team that toured Uzbekistan had been too small, too inexperienced and also been accompanied by a group of trade union officials who acted as government minders.

“Under these conditions, the ILO’s failure to detect forced labour in World Bank project areas is hardly surprising,” she wrote. “So why did the World Bank commission the ILO to report on the state of forced labour in Uzbekistan? We must conclude that it did so because it knew precisely what sort of report it would get.”

The issue of forced labour has haunted the Uzbek cotton sector. Over the past seven years Western companies have boycotted garments made from Uzbek cotton because of its association with forced labour.

In its report of June 27, HRW said that the World Bank invested over $500m into Uzbek agriculture in 2015/16 and that it would be impossible for its projects not to be tainted by forced labour.

A World Bank spokesperson told media that it condoned any use of forced labour in Uzbekistan.

“We continue to voice our strong concerns on labour issues to the government of Uzbekistan and we have been working with the International Labour Organisation to put in place a robust monitoring programme,” she said.

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(News report from Issue No. 336, published on July 16 2017)

Turkmen President sacks finance minister

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JULY 11 2017 (The Bulletin) — Turkmen president Kurbanguly Berdymukhamedov sacked Mukhametguly Muhammadov as finance minister in yet another public dressing down for a senior government official. Mr Berdymukhamedov has sacked almost his entire government over the past year in what analysts have said is an attempt to deflect blame for Turkmenistan’s stuttering economy.

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(News report from Issue No. 336, published on July 16 2017)

Uzbekistan has no plans to rejoin the CSTO

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TASHKENT, JULY 3/5 2017 (The Bulletin) — Uzbekistan will not rejoin the Russia-led CSTO military group despite improved relations with its neighbours, Uzbek foreign minister Abdulaziz Kamilov said.

He was speaking after growing speculation that Uzbekistan was looking for a more prominent military role. Earlier, Uzbekistan had said that it was due to hold military exercises with Russia for the first time since 2005.

The CSTO, short for the Collective Security Treaty Organisation, was formed in 1992 after the break up of the Soviet Union and is mainly used as a mechanism for sharing military exercises. Although a rapid reaction force was set up in 2009, it has been criticised for not deploying forces, most notably during ethnic riots in Osh, south Kyrgyzstan, in 2010 that killed hundreds of people.

During a TV interview, Mr Kamilov said: “The question of renewing our CSTO membership is not on the agenda. There are no plans to discuss or review this matter in the future.”

Analysts had speculated that President Shavkat Mirziyoyev, in power since September 2016, may look to reengage with the CSTO. He has generally opened up Uzbekistan since taking power.

Uzbekistan suspended its membership of the CSTO between 1999 and 2006 and quit altogether in 2012. In August 2012, the Uzbek parliament voted to ban Uzbekistan from joining military alliances, including the CSTO. At the time, Uzbekistan was earning billions of dollars as an exit corridor for NATO equipment leaving Afghanistan.

Along with Russia, Belarus, Armenia, Kazakhstan, Kyrgyzstan and Tajikistan are also members.

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(News report from Issue No. 336, published on July 16 2017)

Foreign investment climate in Georgia is worsening says business group

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TBILISI, JULY 3 2017 (The Bulletin) — The foreign investment climate in Georgia is deteriorating at a rapid rate because of the unscrupulous use of the courts, the influential Georgia International Chamber of Commerce (GICC) said in a statement after its AGM.

The GICC was careful to say that it thought that Georgia’s government was a positive influence on the business climate but that there were other forces and influences that were dragging it down.

“On the other hand (there is) a negative and destructive power represented by ‘uncontrolled elements’ from both in and out of state structures who do not report to the Head of Government and on whom government has no control,” it said in a statement.

Specifically, the IGCC said that unscrupulous officials, police and other officials “scam foreign businesses, expropriate them, steal their lands and their businesses.”

The criticism is a rare blow to Georgia’s reputation as a place to do business. It is more usually associated with positive criticism, relative to the rest of the region. The Georgian government has not responded.

Direct foreign investment is a vital inflow of cash for the Georgian economy. FDI measured $1.65b in 2016, double the inflow of 2010 but down on 2007 when inflows measured over $2b. A war with Russia in 2008 dented Georgia’s FDI pull.

The IGCC referenced fines handed out by a Tbilisi city court against Philip Morris, the US cigarette maker, and British American Tobacco this year as bias against foreign companies.

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(News report from Issue No. 336, published on July 16 2017)

Kazakhstan props up banks

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JULY 11 2017 (The Bulletin) — Kazakhstan is prepared to give up to 500b tenge ($1.52b) to its banks to help them weather an economic downturn that has piled their loan portfolios with bad debt, deputy central bank chief Oleg Smolyakov was quoted as saying. Kazakhstan’s bank have been listing worryingly after a collapse in oil prices in mid-2014 forced a sharp economic decline and the tenge to lose half its value.

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(News report from Issue No. 336, published on July 16 2017)