FEB. 23 2016 (The Conway Bulletin) — Turkish airline Pegasus said it will launch its new Istanbul-Gabala route to Azerbaijan on March 18. Pegasus will fly to the town of Gabala, in central Azerbaijan, three times a week.
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(News report from Issue No. 269, published on Feb. 26 2016)
FEB. 22 2016 (The Conway Bulletin) — Tethys shares have surged back from their historical low of 1.63p after the company announced a change in the agreement with Olisol, which will allow Tethys to raise cash via a loan in Kazakhstan.
John Bell, Tethys’ executive chairman said that “in entering into this agreement, Tethys has gained a strong in-country strategic partner which has committed to remaining a minority shareholder.”
Olisol has thus finally and concretely become Tethys’ partner. After months of sustained low oil prices and fickle exploration and production data, Tethys was looking for a cash injection to finance its operation and restore investors’ trust.
Now Olisol and, likely, Bank RBK will complete a loan transaction for $10m and the deal with Olisol will go ahead as agreed last November. The entire deal should be completed within the next two months, according to Tethys.
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(News report from Issue No. 269, published on Feb. 26 2016)
FEB. 19 2016 (The Conway Bulletin) – Ermek Narymbayev, one of two Kazakh civil rights activists imprisoned last month for inciting social unrest, has been allowed to return home and serve out his sentence under house arrest, media quoted his wife as saying. Opponents of Kazakh president Nursultan Nazarbayev have accused him of cracking down on free speech.
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(News report from Issue No. 269, published on Feb. 26 2016)
FEB. 23 2016, ALMATY/DUSHANBE (The Conway Bulletin) — Kazakhstan verged on acknowledging that its economy may actually shrink this year and a Tajik Central Bank official said it was in talks with the IMF for an emergency loan, more signals that a sharp regional economic crisis was deepening further.
Normally bullish about its own GDP growth predictions, the reconfigured Kazakh government GDP growth estimate of 0.5% is an important sign of the severity of the economic downturn linked to low oil prices. Kazakhstan had earlier predicted GDP growth in 2016 at 2.1%.
“If the cost of a barrel of oil is $40, GDP growth will be 2.1%, but we’ve taken the conservative approach and have assumed that the price of oil will costs $30 per barrel and that GDP growth will hit 0.5%,” journalists quoted Yerbolat Dosayev, the economy minister as saying. Oil is currently around $35/barrel.
Importantly, this new GDP growth estimate is far closer to that of international economist who have said that Kazakhstan’s economy could shrink in 2016. The last time that Kazakhstan’s economy dipped into a recession was in 2008.
Low oil prices and a recession in Russia which has wiped out essential remittance and business investment flows have hit Central Asia hard. The scale and speed of the downturn appears to have wrong-footed leaders, including Kazakh president Nursultan Nazarbayev and his advisers.
They have slashed government budgets and also sold off chunks of state-owned companies, but they haven’t been able to prevent the tenge from losing 50% of its value and inflation rising. Officials are now worried about anti-government protests.
On the southern fringe of Central Asia, Tajikistan, the world’s most remittance-reliant economy, has also been reeling from the impact of the downturn. It has called in the IMF to try to organise an emergency loan.
Jamoliddin Nuraliev, deputy head of Tajikistan’s Central Bank, told the FT that talks with the IMF had begun.
“It’s crisis time,” he said.
Tajikistan has depleted its currency reserves in its Central Bank trying to defend the value of it somoni currency. At the same time, data has shown that the flow of remittances from Russia have dropped by around half.
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(News report from Issue No. 269, published on Feb. 26 2016)
ALMATY, FEB. 25 2016 (The Conway Bulletin) — McDonald’s said it will open its first restaurant in Kazakhstan on March 8 in central Astana, concluding the US food giant’s lengthy process for entering the Kazakh market.
The company previously said it planned to open its first restaurant in the second half of 2015. After years of rumours as to when McDonald’s would come to Kazakhstan, its first restaurant is now ready to open its doors.
The company plans to open a total of 16 restaurants in the next five years across the country.
In Kazakhstan, McDonald’s will partner with Kairat Boranbayev, a former head of Russo-Kazakh energy joint venture KazRosGas. Mr Boranbayev is also close to Kazakh President Nursultan Nazarbayev. His daughter Alima married Mr Nazarbayev’s grandson Aisultan.
McDonald’s said Mr Boranbayev’s involvement is purely related to business.
“Kairat [Boranbayev] has a diverse business background and a proven track record of running successful business ventures in his home country as well as our restaurants in Belarus,” Khamzat Khasbulatov, McDonald’s director in Russia, said in a statement.
In Kazakhstan, McDonald’s will face competition from KFC, Burger King and Hardee’s.
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(News report from Issue No. 269, published on Feb. 26 2016)
FEB. 23 2016 (The Conway Bulletin) – A new subsoil law in Kazakhstan, which Western investors hope will reduce costs and improve access to geological information, will be presented to parliament within the next few months, Aset Magauov, the deputy energy minister said. Kazakhstan has been developing a new subsoil law for the past 18 months.
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(News report from Issue No. 269, published on Feb. 26 2016)
FEB. 20 2016 (The Conway Bulletin) – The president of the breakaway Georgian region of South Ossetia, Leonid Tibilov, said that he wanted to hold a referendum on joining Russia, a vote that would raise tension in the region. Russia and Georgia fought a war over South Ossetia in 2008. Since then, Russia has recognised its independence, although only a handful of other countries have followed Moscow’s lead.
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(News report from Issue No. 269, published on Feb. 26 2016)
FEB. 23 2016 (The Conway Bulletin) – Russia’s agricultural watchdog accused Azerbaijan of re-exporting potatoes from Turkey to Russia to help their Turkish allies beat Russian sanctions.
This is the first time that Russia has accused a country from Central Asia and the South Caucasus, which have loyalties to both the Kremlin and Ankara, of helping Turkey dodge sanctions imposed last year after a Turkish fighter-jet shot down a Russian fighter-jet over Syria.
“After inspecting the food shipments coming from Azerbaijan and Iran to ensure their commitment to Russia’s decision to prevent the import of agricultural products from Turkey, we have noted that Azerbaijan has doubled its potato shipments to our country by five times since last January,” Sergei Dankvet, head of the agricultural watchdog, told media.
He also said Russia had complained to Azerbaijan and warned it of potential consequences. Companies in the Baltics have previously used Central Asia to skip EU sanctions to send their dairy goods to Russia.
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(News report from Issue No. 269, published on Jan. 26 2016)
FEB. 26 2016 (The Conway Bulletin) – Azerbaijan,it could be said, is caught between a rock and a hard place.
Two of its allies are at loggerheads and now Russia has accused it of trying to help shift potatoes around sanctions it imposed on Turkey after a Turkish warplane shot down a Russian warplane over Syria.
Azerbaijani businesses are having a tough time. The economic downturn has been tough on them and the prospect of earning a percentage may have been too much for them to ignore. Of course, they may also have just wanted to help out their regional Big Brother, Turkey.
Whatever the reason, the accusation from Moscow has thrown a spotlight on Central Asia and the South Caucasus over their sanction-beating roles.
Last year, Baltic suppliers sent dairy products to Uzbekistan for re-export to Kazakhstan and then to Russia, circumventing Western sanctions against Russia. This year Aktau port said shipments from Turkey had increased by 10-times, although they didn’t say goods were being sent on to Russia.
The region, it appears, has become a transit hub for Russia-bound goods.
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(Editorial from Issue No. 269, published on Feb. 26 2016)
FEB. 25 2016 (The Conway Bulletin) – Uzbek officials said that work on a $1.63b railway section in the Fergana Valley had been completed, meaning that trains can now travel from Tashkent without having to pass through Tajikistan.
Although the cost of the 123km track is high, driven up by kilometres of tunnels and bridges that were needed to breach the mountainous terrain, for Uzbekistan cutting out the irritation of having to deal with Tajikistan makes it worth it.
Uzbekistan and Tajikistan have been at loggerheads since the breakup of the Soviet Union in 1991.
At its core, Uzbekistan worried about Tajik plans to build hydropower dams across rivers that feed Uzbekistan’s cotton crops. Tajikistan doesn’t like Uzbekistan’s unilateral stance.
This impacted rail traffic, which steadily dropped off.
The World Bank estimated the route will transport 600,000 people and 5 tonnes of freight every year. The project also underlines the financial might of China in the region. It paid $350m of the cost of the project, the World Bank paid $190m and the Uzbek government covered the rest.
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(News report from Issue No. 269, published on Feb. 26 2016)