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Inflation in Kazakhstan begins to accelerate

OCT. 7 2015, ALMATY (The Conway Bulletin) — The Consumer price Index (CPI) in Kazakhstan grew by 1% in September, official data showed, matching analysts’ predictions of accelerating inflation after a devaluation of the tenge in August.

Analysts had forecasted higher price inflation for September after the Central Bank cut its peg to the US dollar on Aug. 20, triggering a sharp fall in its value.

Halyk Finance, part of one of Kazakhstan’s largest banks, said that a drop in government spending, tighter economic policies and wage cuts had acted as a brake on inflation but it still measured 4.8%.

It said that there were inflationary pressures in the Kazakh economy but that the weaker tenge was not going to have as big an impact as analysts had thought at first.

“We do not expect weaker tenge to have a considerable effect on food price growth. We revised our year- end inflationary expectations downward to 7.1% y-o-y,” analysts Askar Akhmedov and Nurfatima Jandarova wrote in the Halyk Finance report.

These sentiments will come as a relief to the Kazakh Central Bank which has been under fire this year for its handling of the economy. Last week it raised its key interest rate to 16% from 12% to help strengthen the tenge and also dampen inflation.

One of the main inflationary pressures comes from a sharp rise in the price of petrol after the Kazakh government abandoned controls on it last month.

The official data showed that petrol prices rose 14% last month.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Turkmen President visits Uzbekistan

OCT. 7/8 2015 (The Conway Bulletin) – Turkmen president Kurbanguly Berdymukhamedov paid an official visit to Uzbekistan where he discussed security and water scarcity issues with Uzbek President Islam Karimov. An increase in fighting in Afghanistan has become a major concern for the two leaders.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Graphene Nanochem secures contract in Turkmenistan

OCT. 6 2015 (The Conway Bulletin) — London-listed Graphene Nanochem secured a service supply contract with Malaysia’s Scomi Oiltools, for $384,000 to help drill oil wells in Turkmenistan. Graphene Nanochem has been working in Turkmenistan for a few years.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Comment: This was a successful election for Kyrgyz democracy

OCT. 9 2015 (The Conway Bulletin) – On Oct. 4, Kyrgyzstan held parliamentary election marked by significant improvements in the country’s democratic development.

The elections have demonstrated the viability of Kyrgyzstan’s constitution adopted in 2010 that delegated more powers to the parliament and prevents the emergence of autocratic political power. Six political parties out of a total of 14 were able to pass the national and regional threshold, adding an important element of political plurality.

The elections are significant for three main reasons.

First, despite earlier skepticism, the Social Democratic Party of Kyrgyzstan (SDPK), led by President Almazbek Atambayev gained only an estimated 38 seats out of total 120. This demonstrates that the president was unable to gain wide support despite his overwhelming influence over state media and the public sector.

Along with SDPK, the new parliament includes Respublika- Ata-Jurt bloc, Kyrgyzstan, Onuguu, Bir Bol and Ata-Meken parties.

Second, competing political parties tried to arrange their party lists to ensure both popularity and professionalism of their top members. As a result, the new parliament will include a greater number of powerful individuals better able to articulate their respective parties’ agendas. Greater professionalism in parliament can in turn boost the quality of political debates.

Finally, despite multiple cases of election fraud at voting booths and controversy surrounding a rushed collection of biometric data ahead of the elections, the electoral process was a progression towards greater transparency and accountability among political parties.

The government actively tried to eliminate fraud, while parties reported their campaign spending.

Televised debates featured representatives of competing parties who sought to distinguish themselves with creative policy solutions to pressing issues.

The new parliament will inevitably have a strong minority coalition either led by Respublika- Ata-Jurt block or will be composed of smaller parties aligning against SDPK.

But regardless of who will end up in the ruling coalition, the process of coalition formation is likely to be highly contentious and fraught with difficulties.

By Erica Marat, Assistant Professor at the College of International Security Affairs of the National Defense University, Washington DC

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Starbucks opens in Kazakh city

OCT. 2 2015 (The Conway Bulletin) — Starbucks said it would open two stores in Almaty, Kazakhstan’s business capital, its first stories in Central Asia. The two stores will be located in shopping malls owned by the brand Mega. With the new opening, scheduled for 2016, Starbucks will have stores in 67 countries globally.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Comment: Worry over intensifying fighting in northern Afghanistan

OCT. 9 2015 (The Conway Bulletin) – Russia and the US are right to be increasingly concerned about intensifying fighting in northern Afghanistan.

The question is what can they do about it, if anything?

This week, Russia said it was sending a batch of attack helicopters to its base in Tajikistan. Russia is clearly in a belligerent mood, as its air strikes in Syria have also shown.

For most ordinary Tajiks, as the Bulletin reports, the attack helicopters are welcome in the country, although it is not entirely clear when Russia would actually use them.

For the US, the priority is to protect its own. It has said it is going to spend $200m strengthening its embassy in Turkmenistan.

No doubt the current embassy needed an upgrade but don’t be fooled by the cleverly spun press releases.

The US is not spending $200m rebuilding its embassy to re-affirm its commitment to Turkmenistan. It is spending $200m rebuilding its embassy on the outskirts of Ashgabat because it is nervous and the strategy now is to prioritise protection over everything else. This will be an embassy with big walls and prison-style security cut off from the rest of Turkmenistan.

Both the Russian and the US moves are a response to the Taliban threat over the border and the radical Islamic threat internally.

These threats appear to be growing, although there is debate over just how strong IS recruitment really is in the region. Both Russia and the US and the rest of Central Asia will have to get used to them.

By James Kilner, Editor, The Conway Bulletin

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(News report from Issue No. 251, published on Oct. 9 2015)

Kazakh CBank delays move

OCT. 7 2015 (The Conway Bulletin) – The Kazakh Central Bank will probably delay its high-profile move to Astana from Almaty because of the worsening financial crisis, Central Bank chief Kariat Kelimbetov said. The Central Bank is the last remaining major government institution based in Almaty. It was slated to move to Astana by 2017.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Hyatt to open in Uzbekistan

OCT. 5 2015 (The Conway Bulletin) — Hyatt Hotels will build a new luxury hotel in Tashkent funded partly by the Uzbek government, local media reported. Uzbekistan’s state- owned Xalq Banki has said it will provide a 100b sum (officially $38m, but quoted at $20.5m in the black market) loan for the deal, around 10% of the total cost of the project. This will be the first Hyatt hotel in Uzbekistan.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Kazakhstan-oriented miner borrows $352m from Russian bank

ALMATY, OCT. 7 2015 (The Conway Bulletin) — VTB Bank, majority owned by the Russian government, agreed to loan $352m to Eurasian Resources Group (ERG), highlighting the Kazakhstan-orientated miner’s need to borrow cash during a period of low commodities prices.

The company, which also operates in Africa, will use the funds to finance the upgrade of two aluminium plants in Kazakhstan.

ERG, owner of ENRC which was previously listed on the London Stock Exchange and has close connections with the Kazakh elite, has an outstanding debt with VTB of around $3b, according to Reuters.

ERG now owes Sberbank, another Russian bank, and VTB a total of $.4.4b, said Reuters. Last September, the company secured around $2.5b in financing from Chinese banks.

Earlier in June, VTB said it would postpone ERG repayment to 2021.

Alexander Mashkevich, ERG chairman, said at the time: “VTB Bank is a longtime strategic partner of Eurasian Resources Group, and the new agreement reaffirms our mutually beneficial and effective cooperation.”

The loan is confirmation of VTB’s willingness back ERG during the slump in commodities’ prices.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

BP stops maintenance in Azerbaijan

OCT. 8 2015 (The Conway Bulletin) — BP said it had temporarily stopped planned maintenance work at one of its platforms operating in Azerbaijan’s Azeri-Chirag-Guneshli (ACG) offshore oil field. BP, which operates ACG and holds a 35.8% share in the consortium, had said that its planned maintenance work at the Chirag platform which would shut the platform for 20 days from Sept. 17. It is unclear if the maintenance work has been completed.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)