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The growing importance of the Caspian countries and their constant changes

Luísa Monteiro

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In this series of articles, we intend to present an overview on the Caspian countries, their history, their changing politics and economy in order to offer a complete analysis on the late panorama in this part of the world.

As a macro approach, political and economic relations juxtapose when it comes to the development plans of the Caspian Five and their expectations. Geographically close and sharing a basin with abundant natural resources, some of those countries have maintained relations since before they became independent, the prime example being an agreement on the region signed in the early 20’s between the then called Persia and the former Soviet Union. The current five littoral nations – Iran, Russia, Kazakhstan, Turkmenistan and Azerbaijan – still struggle to tackle a solution for a fair division, while coping with external influences from Eurasian partners, the American pressure for businesses and omnipresence of the European Union.

Who moved my sea?

Russia is intrinsically connected to all the other Caspian countries, be that for its historical role as the most important player in this side of the world map or for its actual importance for being the region’s economic life belt. It is unarguably the member with the greatest incomes that also pushes the economies in the Balkans, and it physically controls the access routes to the said sea. One is in the country itself and one in the newly accessed Crimea, a ‘conquest’ that cost Russia many sanctions from the not-so-far West, nevertheless local relations in this occasion remained untouched.

Lately, the recession in the Russian economy also hit its Caspian partners, especially the independent former provinces, whose main economical sources are, not surprisingly, fossil fuels. The crisis was also responsible for Putin’s dream of a common currency in the Eurasian Economic Union (in which the only nation from the Caspian Sea is Kazakhstan) to disappear into thin gas.

Even so, the negotiations about the rights of exploitation for the countries in the area, which have lasted for more than a decade, made a clear progress in their last configuration, but show that the theme is still very sensitive for all of the members.

On the last meeting, in 2014, it was agreed that no nations apart from those that surround the sea would be allowed to have military forces there, under the pretext of maintaining regional security – and the message between these Cyrillic and Arabic lines is clear: keeping the American forces away from the Caspian waters. And although it was also settled that there would be a balance between those regional forces that does not show the slightest level of the complicity the referred countries will still be expected to cultivate before coming to the thorniest issue on the agenda that has already resulted in gunboat diplomacy.

The Achilles’ heel in the Caspian epic politics is how to divide the basin. Whereas Iran defends it must be equally divided into five parts, thus supporting the stance Caspian water plateau is a lake, Russia and the others support that it is a sea and the division should be proportional to the extension of the margin, by defining a total of 25 miles in the surface for exploitation and keeping an area for common use, which was supposed to relief tensions between the participant countries. As a third factor, it must be taken into account the difference in the legal status of the sea and lake. Whereas Iran strongly supports the lake solution, as mentioned before, the other Caspian countries argue that the Caspian is a sea. Accordingly, under this solution, the Caspian Common Force would need to observe the strictly defined rules of conduct under the UN Law of the Sea.

While the international community anxiously awaits a solution in the next meeting, expected to take place in 2015, the rich Caspian region remains untouchable for the countries who are not part of the Caspian Five and also for some of this group, since the agreement reached so far, in 2003, is trilateral (between Russia, Kazakhstan and Azerbaijan). Those resolutions, therefore, play a primordial role in the maintenance of a cooperative environment in the region.

A Vodka-Maotai tidal bore

The ex-Soviet republics, which had a previously shy importance to geopolitics, now gain recognition for the encounter of two distinct poles of influence – Russia and China.

Because of their political objectives, both nations share influence over the countries in Eurasia and, whilst Russia’s Look East policy aims to develop a common market and deepen its power in the area, China’s Go West counts greatly on the Silk Road Fund promises of an Economic belt through the funding of infrastructure in the same region, somewhat competing with funds cost by the US.

While the dual influence is beneficial for the region, once it foments local development in the main economic activities and physical integration, it is to say that both countries are willing to raise their controlling power, which might eventually have impacts in their relation.

The Casper Sea

Composed mostly of young nations, the Caspian region still has a long way to go both in diplomatic and democratic aspects. As a rich, yet discreet region, it counts with political regimes that are indisputably organized, but still making progress.

Both Turkmenistan and Azerbaijan rely on a traditional political system, which is characterized by a great conversion of roles in a strong leadership figure. That is to say that the government itself is prone to engage in a multiplicity of duties, such as keeping the local order, informing and communicating with the civilians, revealing high centralization of the available means in the administrative sphere.

The latest news in Kazakhstan, on the other hand, is not centered in communication. The country has anticipated elections on the verge of an economic crisis, choosing President Nursultan Nazarbaiev, locally referred as a ‘father’, with over 97% of votes, for a fifth successive term, against two opponents that actually supported the current government. Even though variety could be an option, it seems to not have been taken into consideration by the citizens, either because of great leadership performed by the president or an unexpressive opposition campaign.

Moreover, those countries are a pool of ethnicities, gathering many distinct peoples that have historically offered the governors extra difficulties in keeping a political unit. The main question is whether or not those governors will be able to deal with them all in an era where information flows faster and wilder than the waters in their sea.

Have we seen it oil?

To sum up, the promising Caspian region is full of opportunities for development in different aspects – economical, by the convergence of plenty of investment, political, because of the advances in international negotiations and, finally, humanitarian, with the exposition of the internal politics as a chance of putting the governmental system on the spot and making it better.

We will scrutinize all of them in the next weeks.

Luísa Monteiro is a bachelor in Social Communication and is currently taking a Master's degree in Communication and Politics at PUC São Paulo. Her researches are closely linked to the studies of internet as a democratic agora and her latest academic production correlates the (offline) social movements and their exposure on the net.

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Eastern Europe

The phenomenon of the Islamic world- Ilham Aliyev

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At the end of the twentieth century – at the beginning of the 21st century, world politics differ by its complexity and diversity. It is too important that Azerbaijan, which proclaimed independence twice during the twentieth century, maintained its this independence during the period full of globalization, international integration and social contradictions. Under such complicated historical circumstances, the prominent politician and statesman, the well-known and respected person in the world – Ilham Aliyev’s commitment and successful realization of this responsibility can be characterized as the golden age of modern Azerbaijan history. Conduction of successful foreign policy during his term as head of state has had a significant impact on the future life of Azerbaijan.

The Republic of Azerbaijan, established normal international relations with all the countries of the world after gaining independence, and in the frame of good relations with the Muslim countries, it also protects the interests and interests of the Islamic world within the Organization of Islamic Cooperation and continues to cooperate with these countries in accordance with the requirements of international law. In this regard, strengthening of Islamic solidarity in the world is one of the priority issues in the foreign policy of Azerbaijan. Namely from this point of view, declaration of 2017 year as “Islamic Solidarity Year” by decree of the  President Ilham Aliyev dated January 10, 2017, is an indicator of  humanistness of our state leader and at the same time it is a positive example of our country’s sensitive attitude to the Islamic Countries Union. Islamic solidarity does not only mean the solidarity of Islamic countries. This is a kind of challenge, regardless of religion, to the world’s people to live in friendship, brotherhood and multiculturalism conditions.

It is well known that sectarian wars, civil wars in the Middle East and as a result, emerged certain socio-political tensions indicate that Muslim countries are in great need of moral solidarity. The controversial political processes happening in the world, the emergence and increasingly widespread of warlike states in different countries, the strengthening of religious confrontation, and the deepening of the prejudiced attitude towards Muslims emphasize the necessity level for solidarity among people, nations and states. It can be said that one of the main reasons for exacerbating the myth of Islamic terrorism, the threat of Islamophobia, and strengthening the oppression of Islamic countries should be sought in the absence of unity and solidarity among these countries. Faith differences, contradictions in interests and positions and etc. leads to serious disagreements, and sometimes severe confrontations. Islamic religion, its sacred values, are insulted by the Islamophobia and those who are exposed to the poisonous propaganda against Islam. The bloody events that took place in the Islamic countries during last years, especially in Iraq, Bahrain, Yemen, and Syria are confirmation of our opinions. Cradles of ancient Eastern culture such as Baghdad, Damascus, Aleppo, Kirkuk, Basra and other cities are subject to serious destruction as a result of wars in Iraq and Syria and constant clashes, monuments of Islamic culture in these cities are destroyed. Caricatures of the Prophet Muhammad are given in the Western media, mosques, the holy book-Koran is burnt. The Western world’s official structures do not just condemn the acts of vandalism, but on the contrary, they protect, honor, and appreciate the performers of those acts.

The main purpose of the “Islamic Solidarity Year” is to strengthen the unity of the Muslim world and to show that Islam is a religion of peace and culture, and to achieve this goal, as President of the Republic of Azerbaijan Ilham Aliyev said, first of all, reconciliation between different sects that have historically damaged Islam should be established. The announcement of the year 2017 as the “Year of Islamic Solidarity” in Azerbaijan is a challenge to the West, which is strengthening its attacks on the Islamic world annually and promoting a new “crusades” in the 21st century. This is also a call for Islamic countries to be vigilant against the crafty intentions of the West, to demonstrate unity and solidarity. Ilham Aliyev made this important step and expressed the his own position and the position of the state of Azerbaijan. As Azerbaijan has distinguished from other states with its multicultural and tolerant values throughout its history. Islamic solidarity is also a part of this context, and this shows that President Ilham Aliyev gives great importance to the solidarity of the Islamic world. As political scientists point out, some initiatives have been made to call Muslim countries to get unified around religion. For the first time in history, the head of our state has sent a political message to the Islamic world, pointing to the importance of acting from unified position, to achieve unity and at the same time integrate into the world. It should be noted that the Order of the President of the Republic of Azerbaijan on the declaration of 2017 year as“Year of Islamic Solidarity” states: “The Republic of Azerbaijan has established mutually beneficial relations with the Islamic world by being selected as a member of the Organization of Islamic Cooperation, ISESCO and other respected organizations joining muslim countries and has been an organizer of a number of important cultural forums of global importance. Azerbaijan has made a great contribution to the founding of tolerance environment, multiculturalism, intercultural and intercivilizational dialogue, and the promotion of Islamic values in the world. The prestige gained by Azerbaijan in the Islamic world got its expression in this results that Baku and Nakhchivan cities declared as a capital of Islamic culture in 2009 and 2018 respectively. And the decision to hold the IV Islam Solidarity Games in Baku in 2017  create favorable conditions for our country to take the next practical steps in strengthening the Islamic solidarity. ”

Only state leader of the country like Azerbaijan,  where multiculturalism and solidarity are established, and citizens of different nationalities, religions and sects live in peace, has a moral right to give such a decree. The promotion of the Islamic Solidarity initiative is related to the challenges of the present and controversial processes that take place because of various reasons in the Islamic world. As it is seen here, the importance of Azerbaijan’s reputation in the Islamic world, as well as the need to strengthen the solidarity of Islamic countries, as well as the actuality of holding the Islamic Solidarity Games in Baku, the capital of the Republic of Azerbaijan in 2017, have been extensively and logically expressed in this decree. With Islamic solidarity policy, Azerbaijan, as unifying facility of the Islamic world, confirms that these religious values are indeed, humanistic, moral values and reinforces belief to being of these ideas are an effective means of creating a shared living and stability environment not only in the Islamic geography but also in the entire world. Azerbaijan, which has created a partnership of cultures and ideas between East and West, fulfills the function of a of solidarity bridge, thus demonstrates its commitment to universal values, as well as its commitment to the highest values of the Islamic religion, which had a special place in the past and continuing to keep its value today. Thus, Azerbaijan uses all the means to establish steady stability in a globalizing world and propagates the peacekeeping, reconciliatory position in a unique way that is essential for today.

We suppose that this humanist initiative of the President of Azerbaijan, Mr. Ilham Aliyev, will promote the expansion of cooperation relationship between Muslim countries in the world and further strengthening of the Islamic solidarity. The strengthening of Islamic solidarity, in its turn, will play an important role in ensuring tranquility and peace in the Middle East and other regions.

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Eastern Europe

Economic Growth of Ukraine Depends on Completing Pending Reforms Quickly

MD Staff

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Ukraine’s economy grew by 2.5 percent in 2017, the second year of modest growth, according to the World Bank’s latest Ukraine Economic Update.  Growth in manufacturing, services, and construction was robust, but weaknesses in the agriculture and mining sectors, together with delays in key reforms to further strengthen investor confidence contributed to the modest overall growth performance.

“Faster growth is needed to improve living standards for the people of Ukraine who continue to hurt from the economic crisis of 2014-2015,” said Satu Kahkonen, World Bank Country Director for Belarus, Moldova and Ukraine. “This will require decisive measures in the next few months to complete pending reforms to bolster investor confidence and safeguard macroeconomic stability.”

Economic growth is projected at 3.5 percent in 2018 if pending reforms in anticorruption, land markets, state-owned banks, and privatization can be advanced in the next few months. This would provide an important signal to investors. If reforms are delayed, growth could drop below current levels in an uncertain macroeconomic environment as financing risks rapidly increase.

Ukraine faces major financing needs to repay public debt and fiscal pressures from higher public sector wages and social benefits in 2018 and 2019. Mobilizing adequate international financing by completing pending reforms in the months ahead will be important to maintain macroeconomic stability.

Meeting the fiscal deficit target of 2.5 percent of GDP in 2018 will require improving targeting of housing utility subsidies, making further wage increases contingent on measures to optimize the school and hospital network and public-sector staffing, and identifying affordable options to update public sector pensions.

Fiscal Pressures and Reform Options …

According to the World Bank’s Special Focus Note on fiscal pressures and reform options, Ukraine has made progress in reducing its large public spending since 2014. However, sustaining these gains while also improving the effectiveness of public services will require implementation of reforms in education, health, public administration, pensions, and social assistance in a fiscally affordable manner.

Public expenditures increased significantly in 2017, by 11.7 percent in real terms, reaching 41.5 percent of GDP, due to the doubling of the minimum wage and over 40 percent increase in wages of teachers and doctors. Spending on social programs also increased.

The recently adopted reforms in education, health, and public administration seek to improve compensation for teachers, doctors, and public servants to strengthen incentives and attract quality personnel. Achieving this in a fiscally affordable manner will require coordinating further increases in salaries with time-bound measures to optimize staffing and the school and hospital network.

The social assistance package in Ukraine is not only fiscally costly—costing 5 percent of GDP in 2017, but is also poorly targeted—with only 30 percent of assistance going to the bottom 20 percent of the population. Fixing this will require improved targeting of the large HUS program.

The recently adopted pension reform helped improve adequacy of benefits and stabilize fiscal costs. Additional initiatives going forward should avoid undermining these core objectives of the pension system. The timeline to create a funded pillar system by January 2019 needs to be reconsidered since this will undermine contributions to the pay-as-you-go system, create contingent fiscal liabilities, and face inadequate availability financial instruments.

Background

Since May 2014, the World Bank Group has provided a total of more than US$5 billion to Ukraine (including 4 development policy loans, 7 investment operations and 1 guarantee) from the International Bank for Reconstruction and Development (IBRD).

The World Bank’s current investment project portfolio in Ukraine amounts to US$2.5 billion.  Investments support improving basic public services that directly benefit ordinary people in areas such as water supply, sanitation, heating, power, roads, social protection and healthcare, as well as private sector development. Since Ukraine joined the World Bank in 1992, the Bank’s commitments to the country have totaled over US$12 billion in about 70 projects and programs.

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Eastern Europe

Baltic States: Missed opportunities in global politics

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We are living in the world where the facts “who makes” and “where it is made” are much more important than “what for” issue. Nowadays the world political scene is divided between superpowers supported by their allies. In order to punish each other for having opposite views the sides criticize any step made by the opponent.

Unfortunately, this happens even in case of evident necessity. It is not the secret that the modern system of international security is unable to perform all demanded functions any more. It needs to be reformed. Another question is who and where will decide.

The most likely political platforms for this are the United Nation Organization and OSCE. But the preparatory stage for any new decision should become different forums and conferences, such as the Munich Security Conference and the Moscow International Conference on Security.

This year the Munich Security Conference took place on February 16-18. More than 30 heads of state and government and over 100 cabinet ministers from across the globe came together at the forum for discussions on major international security challenges. As far as the Baltic States concerns, President of Estonia, as well as Lithuanian and Latvian ministers of defence did not miss the event because it was of great importance for the future of their countries and all Europe.

Just another situation developed in March. In Moscow an annual International Conference on Security was held on April 4-5. The fight against terrorism and other pressing security challenges were one the agenda. There is not a single person who is not affected by the discussed topics.

Many European countries considered it unnecessary to visit the event. It makes no sense to blame them for this choice. They have a strong and common view on what is happening in the world. But if abstract from the current geopolitical situation and confrontation between Russia and the West, politicians should see such kind of forums as a chance to find even weak possibilities to make the world safer. Probably the main reason for not attending the event is in the fact that politicians forgot how to listen to each other. They forgot that only discussing controversial issues makes possible to reach a consensus.
Another issue that deserves attention is the list of participants, which is of great interest to the analysts. According to the Russia’s Defense Ministry, representatives from at least 95 countries, three deputy prime ministers, 30 defense ministers, 15 chiefs of staff, 10 international organizations and military delegations have come to participate in the International Conference on Security. They include defense ministers of India, South Africa, Iran, Iraq, Pakistan, Vietnam, Azerbaijan, Belarus, China, Armenia, Mozambique, Serbia, and Israel. Thus, almost half of the UN member-states (total number is 193) sent representatives to the Conference.

It becomes evident that Russia really has powerful partners and allies that are ready to discuss even difficult questions and find mutually beneficial solutions. Those who came do not necessarily agree with Moscow and support its foreign policy but they clearly understand that unfortunately without Russia it is impossible to improve the International Security system.

This fact admitted Thomas Greminger, secretary-general for the Organization for Security and Co-operation in Europe. He stressed that Russia is a key partner in issues of the European security. But the Baltic States blinded by hatred to Russia ignore ignored the event thus putting political ambitions higher than common sense.

It is obvious that Russia is not satisfied with NATO’s actions near its borders. NATO in its turn disputes the lawfulness of Russia’s behavior. Every day confrontation becomes harder and leads to the arms race. The only way out is to discuss things and find the way out. The Baltic States as usual lost the possibility to express their position on key international security issues and be the active actors in global politics.

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