SEPT. 10 2017 (The Conway Bulletin) — In line with a general liberalisation policy, the Uzbek authorities said that they were scrapping excise duties on several imported products. These included natural resin, wire of non-alloy steel, non-woven fabric, drops and solutions for contact lenses, video recording equipment and other products, Azerbaijan’s Trend news agency reported.
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017
SEPT. 12 2017 (The Conway Bulletin) — Kazakhstan signed a contract with Russia to buy 12 Sukhoi Su-30SM fighter jets, giving its air force a major boost and underlining its close military cooperation with Russia. Kazakh Pres. Nursultan Nazarbayev has said that he wants to strengthen Kazakhstan’s military. A Russian official said the order would be met within three years.
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017
SEPT. 15 2017 (The Conway Bulletin) — Turkish military and fighter jets arrived in Azerbaijan ahead of a 12-day military exercise with their Azerbaijani counterparts set to run from Sept. 18. Azerbaijan and Turkey are close allies and regularly hold military exercises although this series, dubbed TuAz Eagle 2017 is one of the biggest held.
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017
>Kazakh Central Bank remedies are unlikely to tackle fundamental supervision problems in Kazakhstan’s banking sector. Political influence will still trump formal oversight, writes Camilla Hagelund.
SEPT. 15 2017 (The Conway Bulletin) — After bailing out Kazakhstan’s biggest lender, Kazkommertsbank (KKB), the National Bank of Kazakhstan (NBK) is now attempting to “reset” the country’s financial sector through a new financial support package and by boosting its own regulatory powers.
The measures introduced by the NBK are designed to improve reporting on and auditing of banks. They will also strengthen the NBK’s ability to act on its own accord. Political interference and past tendencies to bury bad news mean dramatic changes are unlikely to materialise though.
Kazakhstan’s banking troubles began with a build-up of toxic debt during the 2007-2009 crisis. These remain a burden for many Kazakh banks.
The NBK now readily admits that official statistics do not reflect the full scale of the problem. The NBK estimates that the share of non-performing loans could be as high as 25%, contrasting dramatically with the official figure of 12.8%. One of the limitations the regulator seeks to address with further regulatory powers is its current reliance on bank-reported data.
But because of the political connections of major bank shareholders, further regulatory powers are unlikely to improve the effectiveness of supervision. The biggest, KKB and Halyk Bank, are now controlled by President Nursultan Nazarbayev’s immediate family, while Tsesna Bank, the country’s third largest, is owned by the head of the Presidential Administration, Adilbek Zhaksybekov.
KKB provides an apt illustration of the restrictions on the regulator and auditors alike. According to our sources, the NBK unofficially acknowledged that KKB was bankrupt at the end of 2015 but, despite knowledge of this, the auditor approved the bank’s accounts.
Auditors likely fear that too much honesty will hurt their lucrative contracts with the government, and though the NBK may not have felt empowered to initiate a restructuring of KKB, its total lack of action indicates that political influence was exerted over the regulator.
As control over important banks remains in the hands of elite insiders, it is implausible that additional regulatory powers will overcome the ineffective oversight and moral hazards characterising the banking sector. It appears the country’s institutions unfortunately remain subject to the informal rules of the game in Kazakhstan.
Camilla Hagelund, Principal Central Asia Analyst at risk consultancy Verisk Maplecroft
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017
SEPT. 13 2017 (The Conway Bulletin) — The IMF said Azerbaijan’s GDP will fall by another 1% this year but rise by 2% in 2018, more analysis that an economic downturn that has smashed into the region is being hard felt in Azerbaijan (Sept. 7). The root cause of the downturn was a fall in oil prices that triggered a recession in Russia. Azerbaijan’s economy is dependent on oil. Last year its economy shrank by 3.8%. The IMF also said that inflation in Azerbaijan would remain above 10%.
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017
SEPT. 12 2017 (The Conway Bulletin) — Farmers in Uzbekistan are being given subsidies to diversify their crops away from cotton, Eurasianet reported by quoting local officials and farmers. Uzbek President Shavkat Mirziyoyev wants to stabilise fruit and vegetable price and this means encouraging farmers to ditch cotton. This year, Eurasianet reported, 400sqkm of cotton fields are being taken out harvest and another 1,000sqkm next year. Uzbekistan currently has 13,000sqkm of cotton fields and is one of the world’s biggest producers.
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017
SEPT. 11 2017 (The Conway Bulletin) — Azerbaijani President Ilham Aliyev pardoned Israeli/Russian travel blogger Alexander Lapshin who was imprisoned in July for three years for illegally entering the disputed region of Nagorno-Karabakh. After he was released, Mr Lapshin was immediately flown to Israel for hospital treatment. Azerbaijan sees Russia and Israel as two of its closest allies. It fought Armenia in a war for control of Nagorno-Karabakh in the 1990s.
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017
SEPT. 8 2017 (The Conway Bulletin) — A group of pro-Western MPs in Armenia submitted a proposal in parliament to leave the Russia-led Eurasian Economic Union (EEU). Armenia’s government is staunchly pro-Russia and has no intention of leaving the EEU but the proposal is a reminder that a more pro-Western strand exists in the Armenian political spectrum. Yelk, which holds nine seats in the 105 member chamber, said that Armenia’s economy has suffered in the three years it has been part of the EEU.
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017
SEPT. 9 2017 (The Conway Bulletin) — Central Asia Metals (CAM), the Kazakhstan and Chile focused copper producer, suspended its share trading on London’s AIM after it said that it was in advanced talks over a potential “reverse takeover”. CAM didn’t specify which company it may be talking with over a deal. Its main asset is the Kounrad copper dump in Kazakhstan.
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017
SEPT. 11 2017 (The Conway Bulletin) — UN investigators have flown to Armenia to help local teams look into the causes of a fire that engulfed part of the Nairit chemical plant in August, Armenian media reported. The fire was one of the biggest at an Armenian industrial site in recent years and burnt for two days. The UN, under its OCHA unit, is particularly concerned about chemical leaks and spills.
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— This story was first published in issue 343 of The Conway Bulletin on Sept. 15