OCT. 26 2016 (The Conway Bulletin) — Kazakh president Nursultan Nazarbayev visited Saudi Arabia where he signed deals with King Salman bin Abdulaziz Al Saud, including a deal to boost nuclear cooperation. Kazakhstan is one of the biggest producers of uranium in the world and has been trying to build up a market to sell to.
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(News report from Issue No. 302, published on Oct. 28 2016)
OCT. 17 2016 (The Conway Bulletin) — Azerbaijan’s GDP shrank by 3.9% in the first nine months of the year compared to the same period in 2015, highlighting the heavy impact that a fall in the price of oil has had on the economy. The fall is roughly in line with analysts’ prediction. They had said that Azerbaijan is particularly exposed to the collapse in oil prices because it has not diversified its economy.
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(News report from Issue No. 301, published on Oct. 21 2016)
ALMATY, OCT. 18 2016 (The Conway Bulletin) — Kazakhs bought just under 31,000 cars in the first nine months of the year, a drop of 59% compared to the same period last year.
The car market is a key indicator of Kazakhstan’s economic health and its collapse since an oil price crash in mid-2014 has mirrored the Kazakh economy. In Q1 2014, by comparison, Kazakhs bought 35,000 new cars, easily outstripping total sales for the first nine months of this year.
Analysts have said that consumers are not buying cars because of a 50% cut in the value of the tenge and higher inflation which have made them vastly more expensive.
Putting a positive spin on the news, Oleg Alfyorov, president of Kazavtoprom, the car industry union, said that he thought the market had bottomed-out and that sales would start to rise again soon.
“Kazakhstan’s car market has been in a state of recession since the second half of 2014. But this year, sales have reached a market plateau, from which retailers can start moving upwards,” he said.
Mr Alfyorov also pointed out the increased share of locally produced cars in total sales, which grew to 24%, almost double the share in 2014.
“Quarterly Kazakhs bought about 10,000 new cars. This figure has been stable since the beginning of the year.
At the same time, an increasing number of buyers preferred locally- assembled cars,” he said.
Still, this is a long way from where the industry was a few years ago when foreign car makers were eager to get a foothold in Kazakhstan’s growing manufacturing sector to launch into what they thought would be a lucrative Central Asian market.
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(News report from Issue No. 301, published on Oct. 21 2016)
OCT. 17 2016 (The Conway Bulletin) – ArcelorMittal, the world’s largest steelmaker, has shown signs of trouble in its operations in Kazakhstan due to the fall in commodity prices.
In early 2014, it laid off around 1,000 workers. The subsequent devaluation of the tenge currency seemed to have fixed its cost problems but as the US dollar strengthened against all commodities, effectively pushing prices down, the company felt the bite of lower revenues.
In 2015, it cut worker salaries by 25% only to later face a court order that deemed the move illegal. Later in 2015, when the tenge sank after the Central Bank ditched the peg to the US dollar in August, ArcelorMittal Temirtau’s former boss Vijay Mahadevan said that the tenge value needed to be even lower for the company to effectively cut costs.
But exchange rate fixes are only one-off solutions that cannot ensure long-term stability.
Earlier this year, the company predicted a 13% drop in net income and cancelled a promised pay raise to its employees, lowering their benefits instead. And in September, the government lodged a veiled accusation against ArcelorMittal Temirtau for allegedly slowing production to keep revenues low and avoid a higher tax bill. The company said this week it had resumed full production, to avoid further problems.
But the headaches are still there, despite the potential growth of the Iranian market, vital for ArcelorMittal, after most sanctions were lifted this year.
Besides the thousands that it currently employs, the plant in Temirtau holds symbolic value, as President Nursultan Nazarbayev worked there in his youth.
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(News report from Issue No. 301, published on Oct. 21 2016)
OCT. 17 2016 (The Conway Bulletin) – A man blew himself up outside the headquarters of the TV station in the breakaway Georgian region of Abkhazia. Reports were unclear on whether the bomb was a suicide or the man was targeting the TV station itself. Abkhazia and South Ossetia broke away in 2008 after a brief war between Georgia and Russia. Russia recognises their independence.
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(News report from Issue No. 301, published on Oct. 21 2016)
OCT. 15 2016 (The Conway Bulletin) – Neil McKain, regional director of the EBRD, said that the Bank is ready to put $100m into the ailing Tojiksodirotbank (TSB), which has been under temporary administration since May. Rumours about the EBRD buying a stake in TSB have lingered for months. Should the investment be confirmed, it would be lower than the $165m previously rumoured. TSB is Tajikistan’s second-largest lender.
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(News report from Issue No. 301, published on Oct. 21 2016)
OCT. 18 2016 (The Conway Bulletin) – The EBRD and the EU will partner to implement a 42m euro ($46.5m) programme to support farming in Tajikistan. A first tranche of 15m euros was provided to Arvand, a microfinance organisation, to make available to small agri- business borrowers. The EBRD, which is contributing 20m euros to the project, said that another development bank will soon join the project. Despite being the largest employer, the agricultural sector in Tajikistan is lacking investment and planning.
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(News report from Issue No. 301, published on Oct. 21 2016)
OCT. 21 2016 (The Conway Bulletin) — It appears as if Pakistan is losing confidence in the West’s headline power transmission project in Central Asia — CASA-1000. It’s been talking to Russia and Turkmenistan about covering an anticipated shortfall in electricity from Tajikistan and Kyrgyzstan, undermining a core pillar of the project.
CASA-1000 is the World Bank funded project that will, when it is built in 2018, send electricity generated by hydropower stations in Kyrgyzstan and Tajikistan to consumers in Pakistan via Afghanistan.
The $1.2b project was supposed to spearhead what Hillary Clinton, when she was US Secretary of State, had described as a new north-south Silk Road. The West has disengaged from Central Asia to a large extent since the drawdown of it militaries from Afghanistan in 2013 and 2014, making new projects like CASA-1000 so important. The aim was to empower Tajikistan and Kyrgyzstan, tie both Pakistan and Afghanistan into a wider Central Asian economic sphere and restore confidence in the West’s commitment to the region.
But it may not be going to plan.
Leaders from Tajikistan, Kyrgyzstan, Afghanistan and Pakistan gathered earlier this year to mark the start of CASA-1000’s construction. They shook hands and smiled. Now it seems that Russian and Turkmen leaders should also have been there.
Pakistan has, openly, been courting both Russia and Turkmenistan as back up energy suppliers. Its leaders appear to doubt the ability of both Kyrgyzstan and Tajikistan to produce enough power during the freezing winters when their domestic demand spikes and water levels in their reservoirs, which feed the hydropower plants, fall.
There are also question marks over whether the Soviet-era infrastructure that both Kyrgyzstan and Tajikistan are relying upon can cope with the demands of CASA-1000. The World Bank has promised funds to both Tajikistan and Kyrgyzstan to boost power production but it may not be enough and it may come too late, in any case.
Russia has already told Pakistan that it will happily feed its power into CASA-1000 to make up the shortfall but, and this is the point, this would undermine the ethos of the project.
With Russia riding to the rescue, CASA-1000 risks making the West’s strategy in Central Asia look muddled.
By James Kilner, Editor, The Conway Bulletin
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(News report from Issue No. 301, published on Oct. 21 2016)
OCT. 14 2016 (The Conway Bulletin) — Uzbekistan acting president Shavkat Mirziyoyev approved an amnesty for hundreds of inmates to mark the 25th anniversary of the country’s constitution in December, media reported. Reports said that women, inmates under 18 and over 60 and those who don’t pose any risk to society would be freed. Mr Mirziyoyev is on a charm offensive ahead of an election in December that is expected to give him the presidency on a permanent basis. Islam Karimov, who ruled from 1991, died in September.
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(News report from Issue No. 301, published on Oct. 21 2016)
OCT. 14 2016 (The Conway Bulletin) – Armenia’s parliament approved a missile defence deal with Russia that will mean it relies increasingly heavily on the Kremlin for its defences, media reported. Russia already maintains a large military base in Armenia, seen as essential for keeping its various enemies (mainly Azerbaijan and Turkey) at arms length. Importantly, officials also said that the missile defence deal with Russia did not cover the region of Nagorno-Karabakh which Armenia disputes with Azerbaijan.
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(News report from Issue No. 301, published on Oct. 21 2016)