DEC. 25 (The Conway Bulletin) — Kazakh President Nursultan Nazarbayev and Kyrgyz President Sooronbay Jeenbekov promised to improve ties at a meeting in Bishkek. Relations between Kazakhstan and Kyrgyzstan strained in October during a Kyrgyz presidential election when outgoing Kyrgyz president Almazbek Atambayev accused Mr Nazarbayev of trying to meddle.
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— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin
DEC. 23 (The Conway Bulletin) — The Trans Adriatic Pipeline (TAP) is on target to deliver the first gas from Azerbaijan by 2020 despite protests from locals in Italy who have said that the $5.3b project will destroy ancient landscapes, Walter Peeraer, the TAP chairman, told Reuters. TAP is the final leg of a pipeline system dubbed the Southern Gas Corridor that central Europe is banking on to deliver gas from the Caspian Sea, reducing its reliance on Russia. The main gas supplier for the $40b Southern Gas Corridor is Azerbaijan’s BP-run Shah Deniz II.
— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin
JAN 4 (The Conway Bulletin) — Brandy production in Armenia, something of a bellwether for the state of the wider FSU economy, increased by 41% between January and end-November to 27.9m litres, official statistics showed. This comes on top of a 27% increase for the same period in 2016 compared to 2015. Powered by Russia and oil prices, the FSU economies are recovering from a slump in 2014-16.
— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin
JAN 2 (The Conway Bulletin) — Turkmenistan cut power supplies to northern Afghanistan for two days after, media has reported, the Afghan authorities refused to pay an increased fee for electricity. Power supplies were renewed after Turkmenistan agreed to delay price increases by a month. Turkmenistan’s economy has been hit hard by a drop in energy prices since 2014.
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— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin
JAN 5 (The Conway Bulletin) — Uzbek officials said that they were going to introduce a new label, Uztexile, that will only be given to clothes that meet the highest ethical, environmental and manufacturing techniques, the chairman of the industry association Uztekstilprom, Ilkhom Khaidarov, told media. The new label appears to be another attempt to improve Uzbekistan’s image for cotton. It is a major cotton producer and wants to start processing and exporting an increasing amount of its crop.
— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin
DEC. 29 (The Conway Bulletin) — Inflation in Azerbaijan should measure between 6% and 8% in 2018, the Central Bank said. In the past couple of years, inflation in Azerbaijan has been measured in the double digits as the economy fights a sharp economic downturn and a currency devaluation that wiped 50% off the value of the manat in 2015/16.
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— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin
JAN. 5 (The Conway Bulletin) — The Georgian lari yo-yoing showed no sign of stopping as it came off recent highs to fall 1.2% in the period from Dec. 22. On Dec. 22, the Georgian lari had been valued at 2.534/$1 compared to its current value of 2.589/1. It finished the year at 6.6% higher than its 2017 starting value.
The other big mover over the Christmas period was the Kyrgyz som. It rose 1.2% to 68.93/$1 and finished the year nearly 0.5% stronger against the US dollar.
Indeed only two currencies out of the eight in the Central Asia and the South Caucasus region were weaker on New Years eve 2017 then they were on the first trading day of the year.
The Uzbek authorities effectively devalued their soum currency in September when they released it from its various US dollar pegs. It immediately lost half its value to trade at around 8,100/$1 and has stayed there ever since.
The other losing currency of 2017 was the Tajik somoni. Pushed down by bad fundamentals and a failing banking system it finished the year 12% lower at 8.8277/$1.
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— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin
DEC. 23 (The Conway Bulletin) — Azerbaijan’s financial watchdog declared DemirBank, a mid-sized lender part-owned by the EBRD and the Dutch development fund FMO, unfit to trade after bad debt swamped it and its capitalisation ratio level dropped.
Azerbaijan’s banking sector has been flooded with bad debt since a 2014 fall in the price of oil triggered a currency devaluation and a recession. In 2017 its biggest bank, International Bank of Azerbaijan, defaulted on its debt.
The failure of Demirbank shows that part-ownership of a bank by major financial institutions doesn’t guarantee survival. The EBRD owned a 25% stake in Demirbank, and had been considering an increase, and FMO owned a 10% stake.
In March, Fitch, the rating agency, had warned that smaller Azerbaijani banks were vulnerable because of a surge in non-performing loans. It said that the proportion of non-performing loans on banks’ debt books had reached 21% up from 12% in 2015.
Demirbank’s licence to trade was withdrawn on Dec. 23 by Azerbaijan’s Financial Markets Supervision Chamber, a decision upheld by an appeal court four days later.
People who had deposits at the bank will be eligible for compensation from a state fund.
Demirbank had deposits of just over 100m manat ($59m) from 55,000 depositors.
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— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin
>> The region’s economies and Uzbekistan’s regeneration under Mirziyoyev are the standout features of 2017, writes James Kilner
JAN 5 (The Conway Bulletin) — For Central Asia and the South Caucasus, 2017 was a year of recovery. There have been the usual rounds of elections, generally predictable and cementing the incumbent powers in Georgia, Armenia and Kyrgyzstan, but economics, and not politics, caught the eye and the bigger headlines in 2017.
The economic stupor that had hung over the region since oil prices collapsed in 2014 and Russia’s economy fell into a recession, was finally thrown off. If, at the start of the year, the green shoots of recovery looked tentative, by October they were coming out into full bloom.
Most countries were posting decent economic growth figures and double-digit inflation, a real worry, has been neatly sidestepped.
Special mention here must go to Georgia which has posted exceptionally strong economic results, pushed on by a spurt in tourism and investment.
There have been some serious economic exceptions, though. Azerbaijan’s economy still shrunk and its banking sector looked as shaky as ever. International Bank of Azerbaijan defaulted on its debt repayments and several smaller banks have had their licenses revoked. Tajikistan also looks increasingly fragile and Turkmenistan, while the information stream coming out of the country is as beguiling as ever, looks like it may have been holed below the waterline. Watch out, in 2018, for a serious fracture in Turkmenistan.
As well as a recovery period for the region’s economies, 2017 was also a year of recovery for Uzbekistan’s political structures and their relationships with society. This will go down as the year that Uzbek President Shavkat Mirziyoyev made it clear that he was determined to pursue a reformist agenda after taking over from the authoritarian and brutal Islam Karimov in September 2016.
He devalued the official exchange rate of the Uzbek soum, took thousands of people off blacklists linked to Islamic extremists, reigned in the power of the secret service, encouraged traders to export to neighbouring countries and signed deals with the rest of the region over borders and commerce that his predecessor had spurned.
There is still much to do in Uzbekistan, and some people grumble about the lack of genuine democratic values and the slow pace of human rights progress, but Pres. Mirziyoyev is laying the foundation for a better future for Uzbeks.
If the Conway Bulletin had a ‘Person of the Year’ prize, Mirziyoyev would be a worthy winner.
>> Next week – the first in a 2-part series on what to look out for in 2018
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— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin
DEC. 26 (The Conway Bulletin) — Armenia’s Central Bank said that it was going to keep its interest rates steady at 6% although year-on-year inflation rose to 2.2% in November, up from 1.2% in October. The decision will be cheered by business which had warned that a rise in interest rates would dampen growth. Interest rates in Armenia had been at 10.5% in 2015 and have been steadily cut to stimulate economic growth.
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— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin