JULY 23 2015 (The Conway Bulletin) – In a report entitled “‘That’s When I Realized I Was Nobody’: A Climate of Fear for LGBT People in Kazakhstan”, Human Rights Watch said that homophobia in Kazakhstan was rife. Almaty is bidding to host the Winter Olympics in 2022. The HRW report was released on the eve of the IOC decision on who to award the Games to.
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(News report from Issue No. 241, published on July 23 2015)
JULY 17 2015 (The Conway Bulletin) – Net profit at KCell, Kazakhstan’s largest mobile operator, dropped by 23.6% in Jan-June compared to the same period in 2014 because of aggressive price competition, the company said.
A few days later, on July 21, Kazakhstan’s state monopolies committee also ordered KCell, owned by Sweden and Finland based Telia-Sonera, to return around 1.5b tenge ($800m) to its customers for overcharging, more evidence that mobile charges in Kazakhstan are falling sharply.
KCell CEO Arti Ots said: “Further intensification of competition, with notably aggressive pricing, has impacted our results for the second quarter of 2015.”
KCell’s competitors Tele2, also based in Sweden, also blamed a price war in Kazakhstan for lower-than-hoped for profits. Mats Granryd, the company’s CEO, said that prices in Kazakhstan are falling sharply.
“Kazakhstan is turning into a real bloodbath when it comes to pricing,” he told Reuters in an interview.
Mobile companies operating in Kazakhstan are competing to lower prices, in an effort to grab market share.
And the conse- quences of these pricing policies are filtering through. In earnings reports, both KCell and Tele2 said they have not been profitable in Kazakhstan in 2015.
Specifically, Kcell said that its sales in H1 2015 were down by 6.6% on the same period in 2014. It also said that service revenue dropped by 12.3%.
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(News report from Issue No. 241, published on July 23 2015)
JULY 20 2015 (The Conway Bulletin) – Lifting of international sanctions against Iran will give Kazakhstan’s steelmaking industry, and the ArcelorMittal plant at Temirtau in particular, a boost, Asset Isekeshev, Kazakh minister for industrial development, said.
ArcelorMittal Temirtau, near Karaganda, is one of the most important factories in Kazakhstan outside the oil and gas sector but it has struggled recently because of a drop in demand for steel from Iran.
“The lifting of sanctions against Iran could be a big plus for ArcelorMittal. This is a big market for us and this would allow us to stabilise operations,” Mr Isekeshev said at a press conference.
According to officials from ArcelorMittal Temirtau, Iran makes up around a third of its export market. Over the past few years, ArcelorMittal has tried to cut costs at the plant. It has laid-off thousands of workers and imposed salary cuts.
A new railway transport route from Kazakhstan, across Turkmenistan into Iran should also help ArcelorMittal exports.
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(News report from Issue No. 241, published on July 23 2015)
JULY 23 2015 (The Conway Bulletin) – Many Central Asian countries have pledged their support for a deal between Iran and Western countries over its nuclear programme that will allow sanctions to be lifted. The positive feeling is mutual. In April 2015, Iran’s Foreign Minister noted that there is “no ceiling for the expansion of relations with regional countries, whether in the Caucasus or in Central Asia”.
Central Asia and Iran have already been cooperating for some time.
December 2014 saw Europe via Iran the inauguration of the new Iran-Turkmenistan-Kazakhstan railroad, linking Central Asia to Iran’s southern ports. Iran has oil swap deals with both countries.
Turkmenistan also has gas pipelines running to Iran and in 2010 Iran sent equipment to Tajikistan for the construction of the Sangtuda-2 hydro- power plant.
Increased formal, and more flexible, cooperation will certainly benefit Central Asia. Iran will give Central Asia greater access to Middle Eastern and European markets. The energy export potential is attractive, particularly given that last year Russia said it would stop buying Central Asian gas, and Turkmenistan recently accused Gazprom of failing to pay debts. Supplying Europe with gas via Iran may be more feasible for Turkmenistan. The opening up of Iran also provides another legitimate partner in the region to counterbalance Russian and Chinese dominance, as is a key aim of the region’s “multi-vector foreign policy”.
However, it will also produce new competition in the region. In August 2014, before any nuclear deal was signed, Iran announced it would no longer import gas from Turkmenistan, instead building up domestic production. Having been excluded from markets for so long, Iran will want to build up its own trade partners rather than act as a transit country for Central Asia. Moreover, more Iranian oil on the market may cause a drop in oil prices, impacting Kazakhstan at already difficult times.
One thing is certain — new transport and energy infrastructure will need to be built for any Iranian reintegration to take place. China will no doubt be looking with interest at the opportunities this presents.
By Sarah Lain, Research Fellow at the Royal United Services Institute in London
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(News report from Issue No. 241, published on July 23 2015)
JULY 22 2015 (The Conway Bulletin) – Iran could export refined oil products to Kazakhstan, Vahid Ahmadi, the Iranian deputy science minister, told media. This is important because Kazakhstan is looking for ways to boost its supply of oil-based products.
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(News report from Issue No. 241, published on July 23 2015)
JULY 17 2015 (The Conway Bulletin) – US fast food giant McDonalds will open its first store in Kazakhstan this year in Astana, media reported quoting city officials. Last year McDonalds said it had agreed a franchise deal with businessman Kairat Bornabayev.
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(News report from Issue No. 241, published on July 23 2015)
JULY 23 2015 (The Conway Bulletin) – Air Astana, the Kazakh airline part-owned by Kazakhstan’s sovereign wealth fund Samruk Kazyna and BAE Systems, said that profit was $8.3m in the first half of the year compared to a $36.5m loss in the same period in 2014. The main driver of the increased profit was the cheaper price of jet fuel.
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(News report from Issue No. 241, published on July 23 2015)
JULY 21 2015 (The Conway Bulletin) – The number of Chinese migrants working in Kazakhstan doubled this year, according to the Kazakh ministry of labour. More than 12,000 Chinese labourers work in Kazakhstan, a third of the total foreign workforce. The increase shows how important Kazakhstan has become for China.
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(News report from Issue No. 241, published on July 23 2015)
Kazakhstan’s Central Bank chief Kairat Kelimbetov extended the bandwidth that the tenge could trade against the US dollar to 182-198 from 182-188, effectively giving it room to devalue by over 5%.
Hours after Mr Kelimbetov’s statement, exchange bureaus in Kazakhstan had already upped the price of $1 to over 188 tenge, breaking the psychological 187 value it had been pegged around for so long.
A drop in the value of the Russian rouble and the price of oil has pressured the tenge. The Kazakh Central Bank has stood firm, though, and defended the value of its currency while neighbours have devalued.
Still, Mr Kelimbetov said external pressures had triggered the bandwidth extension and that the move was designed to shift the tenge towards a full free-float over the next 12 months.
“This corridor allows the currency to fluctuate independently of the negative scenarios that may take shape outside Kazakhstan,” he said.
Mr Kelimbetov, though, said he didn’t see the tenge dropping below 192 against the dollar in the next 6 months.
The government has said that it wants its monetary policy to target inflation rather than a tenge-US dollar rate.
This bandwidth extension follows on from a gentle recalibration of the tenge. The Central Bank has allowed it to lose a couple of percentage points in value against the US dollar this year. In February 2014, the Kazakh Central Bank devalued overnight by 20%.
JULY 10 2015 (The Conway Bulletin) – Kazakhstan’s GDP grew 1.7% in the first half of this year, the statistics agency said. This is within estimates but is less than half the growth during the same period in 2014. Low oil prices and a drop in the value of the rouble have hit Kazakhstan.
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(News report from Issue No. 240, published on July 16 2015)