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Time to invest in Russia despite sanctions threat?

Dimitris Giannakopoulos

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The 10 most important things you need to know on Caspian Sea Region for Thursday, June 11:

1Time to invest despite sanctions threat? “Despite this uncertainty, however, some market participants argued there were “bargains” in Russia.”There is significant opportunity here. The one thing with Russia is that it generally goes from being the worst (performing) stock market to the first stock market in a very rapid rate,” Simon Fentham-Fletcher, chief information officer of Freedom Asset Management, told CNBC Europe’s “Squawk Box” Wednesday. His company specializes in investment in emerging markets, such as Russia. Certain sectors – such as retail and real estate – were thriving, Fentham-Fletcher said, speaking from Moscow” writes Holly Ellyatt for the CNBC.

2Duqu 2.0: computer virus ‘linked to Israel’ found at Iran nuclear talks venue. “The security company Kaspersky discovered the virus, which it said was a new variant of the Duqu worm, itself a variant of the state-sponsored computer virus Stuxnet, used to attack Iran’s nuclear infrastructure in 2010. Known as Duqu 2.0, the new worm was, Kaspersky said, used to attack three European hotels where the P5+1 talks involving the US, UK, Germany, France, Russia, and China with the EU concerning Iranian nuclear capabilities were held over the last 18 months. Kaspersky did not identify the hotels or say who was behind the attack. However, Israel is thought to have deployed the original Duqu worm to carry out sensitive intelligence gathering” writes Samuel Gibbs for the guardian.

3In his opening speech at the Fifth Congress of Leaders of World and Traditional Religions Wednesday in Kazakh capital Astana, President Nazarbayev said the trust that has been built in the decades since World War II has been lost. Describing Islam as a “tolerant” religion, Nazarbayev said that it was “blasphemous” to use it as an excuse for extremism and terrorism.”The destruction of centuries-old cultural heritage sites in Iraq and Syria cannot be called anything else but anti-humane acts,” he said. Kazakhstan can be a model for religious freedom, added Nazarbayev, “The key foundation is tolerance and openness.” Attended by 80 delegations from 42 countries, the two day inter-religious meeting, which takes place once every three years, is aimed at shaping resolutions for global threats and challenges through communication among religious leaders.

4Azerbaijan blocks Amnesty visit ahead of European Games. Denis Krivosheev, Amnesty’s deputy director for Europe and Central Asia, said the crackdown by authorities “only highlighted their desperate attempts to create a criticism-free zone around the games”. He added that the legacy of the event would be to “further encourage repressive authorities around the world to view major international sporting events as a ticket to international prestige”. In its new report, the London-based group said the government’s campaign against activists had left Azerbaijan “without independent voices”.”Behind the image trumpeted by the government of a forward-looking, modern nation is a state where criticism of the authorities is routinely and increasingly met with repression,” said the report, which was released on Wednesday. [BBC]

5Kazakhstan has finished negotiating the terms of a deal to join the World Trade Organization (WTO), capping 20 years of efforts to take part in the world of mainstream commerce. The country’s WTO accession package will go for final approval before WTO members on June 22.”I congratulate WTO members and the government of the Republic of Kazakhstan on the historic step taken today,” WTO Director-General Roberto Azevedo said on June 10. “I look forward to welcoming Kazakhstan to the WTO.”Ambassador Vesa Himanen of Finland, who chaired the WTO working party that negotiated the deal with Kazakhstan, said it was “one of the most challenging negotiations in the 20-year history of the organization.” [TASS]

6Russia has no contract with Iran to import its oil, but may help resell it on the world market, according to Russian Energy Minister Alexander Novak. Already the two countries cooperate in a variety of commercial sectors. One key aspect is Russia supplying fuel for Iran’s nuclear power reactor at Bushehr in central Iran on the Persian Gulf coast. Last August’ deal could be essential for Iran, whose crude exports have plunged by more than half – from 2.5 million barrels per day to about 1 million barrels per day – since 2011, when the international community tightened sanctions. Any company trading with Iran is forbidden under the sanctions from doing business with the U.S. and Europe. Iran recently has expressed hope and even confidence that the sanctions imposed on it may be lifted soon” writes Andy Tully for the Oilprice.

7BRICS Bank Could Change the Game. “There are challenges to overcome. Researcher Wood thinks that “the bank’s short term challenges will be logistical, completing basic things like hiring staff, building internal operational procedures, and so on. Once this is completed, two larger challenges will present themselves. First, making a decision on what projects to fund, which will involve answering difficult questions on what type of projects the bank prioritizes, where it most wants to operate, and what role political priorities might play. Second, would be in building relationships with existing funders, like the World Bank and AIIB, to assure the BRICS bank doesn’t have to bear all the risk of the projects it gets involved in” writes Kester Kenn Klomegah for the Modern Diplomacy.

8Why Almaty should get the 2022 Winter Olympics. “In contrast with the grassroots opposition that scuttled Norway’s bid, Kazakhstan’s bid has overwhelming public support. Two polls were conducted to gauge national opinion on the Games. A poll that the International Olympic Committee commissioned showed 87 percent support. A poll that the Almaty 2022 organization conducted showed 79 percent support. One reason Almaty’s cost proposal is so reasonable is because it’s already built or renovated most of the facilities needed for the Olympics. A lot of the work was done for the 2011 Asian Winter Games – the building of a ski jump and the renovation of the Medeu skating rink, for example. Almaty will build additional facilities for the 2017 Winter Universiade, an Olympic-caliber event for student athletes 17 to 28” writes Hal Foster for the Tegri News.

9Iran and Azerbaijan are two neighbor countries and friends with lots of cooperation in various sectors which has grown in recent years and can go further, Jalil Eslami, deputy director of ports and special zones affairs of Iran’s Ports and Sailing Organization told Trend June 10. The official stressed that maritime cooperation can help Iran-Azerbaijan relations. There are agreements on cooperation in the maritime sector and there are sisterhood pacts between Iranian and Azerbaijani ports, he said. Eslami in particular pointed to maritime transit and tourism as one of the sectors with great development opportunities. Having in mind the growing tourism attractions, it is necessary to provide the infrastructure for transporting over 25 million passengers by 2025, and improving the quality and quantity of maritime transportation services, he noted.

10Russia’s Unending Balkan Intrigues. “Russia’s Leninst-style foreign policy egoism as well as its historical efforts to oust the West from the Balkans and create a sphere of influence there go hand in hand; together, they represent Moscow’s unending efforts to control the Balkan region. One of the most practical regional issues for Moscow is the transmission of Russian energy through the Balkans to Central Europe. Russia aims to cement a monopoly on providing this energy; yet, it neglects to do the practical things necessary to build pipelines or win local governments’ willing assent to its plans. In seeking to eliminate rivals to its regional energy strategies, Russia is obstructing Azerbaijan’s efforts to buy a 66-percent stake in the Greek gas grid operator DESFA. Moscow has long coveted not only the Greek grid but also other distribution networks throughout Europe” writes Stephen Blank for the Jamestown.

Journalist, specialized in Middle East, Russia & FSU, Terrorism and Security issues. Founder and Editor-in-chief of the Modern Diplomacy magazine. follow @DGiannakopoulos

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ADB Invests $25 Million in Private Equity Fund to Help Small Businesses in Southeast Asia

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The Asian Development Bank (ADB) signed an agreement to provide a $25 million equity investment to Exacta Asia Investment II, L. P. (Exacta II), a private equity fund, to provide much-needed investments for small and medium-sized enterprises (SMEs) in Southeast Asia.

“ADB’s investment will help well-managed and middle-market SMEs in Southeast Asia to realize their growth plans, thereby driving employment, tax generation, skills transfer, and regional trade,” said ADB Director for Private Sector Investment Funds and Special Initiatives Division Ms. Janette Hall. “Investing in Exacta II allows ADB to participate in Southeast Asia’s continued economic growth while providing development benefits for people in the subregion.”

ADB’s support will allow Exacta II to invest growth equity into smaller firms—particularly those from Indonesia, Malaysia, Philippines, Singapore, Thailand, and Viet Nam—whose growth is driven by domestic consumption and export. This will help address the issue of low private equity penetration in Southeast Asia, which is crucial to create new jobs, drive economic growth, and encourage further investments in related sectors.

Exacta II, a private equity fund with a target capitalization of $250 million, intends to invest about $10 million to $40 million per transaction in some of Southeast Asia’s SMEs and lower middle-market companies, particularly in the manufacturing, technology, and service sectors.

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Suzhou Forum Calls for Faster Energy Transformation for Better Lives and Prosperity

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Senior government officials, business leaders and key players in the global energy sector met today at the Third International Forum on Energy Transitions (IFET) in Suzhou, China. The international gathering, co-organized by the National Energy Administration of China, the International Renewable Energy Agency (IRENA), and the Jiangsu Provincial People’s Government of China, is an important platform for dialogue and collaborative action on how to transform energy systems towards a sustainable, low-carbon and resilient energy future.

Over the last decade, renewables have brought disruptive change to the global energy landscape. Driven by rapid technological advances, enabling policy frameworks and plummeting costs, renewables have created unprecedented opportunities to rethink the way our energy systems operate. IFET aims to identify solutions to scale up the latest renewable energy innovations, particularly in end-use sectors, accelerate power sector transformation, increase renewable energy financing, and transform urban energy systems.

In his keynote remarks, IRENA Director-General Adnan Z. Amin stressed the need to take the global energy transformation to the next level by strengthening innovation, mobilizing investments and modernizing gird infrastructure. Accelerating renewables deployment is essential to tackle challenges such as climate change, sustainable development and meeting growing energy demand. The Director-General underlined that the energy transformation offers us vast socio-economic benefits in terms of powering sustainable growth, creating jobs and creating local value-added.

Leading the way on the energy transformation are those frontrunner countries, like China who, early on, recognised the potential opportunities in and are developing the policies, market mechanisms, and systems necessary to reorient their economies towards the high-tech industry and workforce of the future. As highlighted in IRENA’s Corporate Sourcing Report, it is not only countries that are leading the way: companies in 75 countries actively sourced 465 terawatt hours of renewable energy in 2017, enough to power a country the size of France.

In his speech at the Sub-Forum on International Cooperation on Renewable Energy Industry Development, the Director-General also highlighted that international cooperation is needed to share lessons and experiences to overcoming challenges in transforming existing energy structures to low-carbon sustainable systems based on renewables and energy.

During his remarks at the Energy Future session, the Director-General identified five priority action areas to advance the energy transformation. These include: fostering a power sector that integrates higher shares of variable renewables and decarbonising end-use sectors, strengthening system-wide innovation, scaling up investment, ensuring equitable costs and benefits of the transition, and furthering international cooperation.

The previous conferences in 2015 and 2016 adopted the Suzhou Declaration and Consensus, respectively, which called for higher levels of ambition and decisive action to accelerate the energy transition.

IRENA also participated in the Belt and Road Energy Ministerial Conference taking place in Suzhou at the same time. Renewable energy has been identified as central to one of the initiative’s key pillars as a means to build a sustainable energy future.

IRENA

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Scaling up climate finance in Asia-Pacific through Financial Centres for Sustainability

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Financial Centres for Sustainability (FC4S) today launched its Asia-Pacific Centre, one of several important steps taken to scale up the financing required for climate action and sustainable development, at the 2nd meeting of the global network.

The new centre will be located in Shanghai Lujiazui Financial City, which will work with other cities in the Asia-Pacific region to promote the innovation and development of sustainable and green finance. Lujiazui is an international financial center with a high concentration of financial institutions, dynamic capital markets and a vast financial talent pool.

The most recent report of the Intergovernmental Panel on Climate Change (IPCC) concluded that an additional 1.5 per cent in global investment would be needed to hold global warming to 1.5 degrees Celsius. Mobilizing the world’s financial centres will be crucial to achieving the system transition that the IPCC has recommended.

Lujiazui Financial City and Casablanca Financial City also signed an agreement to strengthen cooperation in sustainable finance, green finance and exchange of resources, while Lujiazui Financial City unveiled the Green Finance Integrated Development Platform, the first regional online green finance platform.

This platform provides a practical place to exchange information on green projects, capital and finance from home and abroad, enabling companies and institutions to match supply and demand, and integrate resources.

Meeting in Shanghai, the global network also appointed two co-chairs to provide strategic leadership: Pierre Ducret, board member of the Paris-based Finance for Tomorrow initiative and Kong Wei, chair of the Shanghai Green Finance Committee.

In addition, a new Wall Street Working Group on Sustainable Finance is being formed, and is considering joining the network to represent New York.

Quotes

“The IPCC report has shown more clearly than ever the need to mobilize the trillions for climate, and accelerating action is a priority for France,”  said Ducret. “I’m honoured to be appointed as a co-chair of the Financial Centres for Sustainability network – and view this as a great opportunity to strengthen international cooperation at a time of great uncertainty.”

“Green finance is a national priority in China to develop a cleaner and more prosperous economy,” said Kong Wei. “ I feel privileged to take up the role of co-chair of the Network and will use this opportunity to promote practical measures that enable all financial centres to play their role in the transition that lies ahead.”

Curtis Ravenel, Global Head of Sustainable Business & Finance, Bloomberg said: “To solve the climate challenge, we need more sustainable finance product innovation and scale across the U.S. and international capital markets. Along with the growing roster of global hubs that are part of the FC4S Network, Bloomberg is working with a number of financial institutions and others to explore the formation of a Wall Street Sustainable Finance working group to scale capital deployment aligned with the goals of the Paris Agreement.”

Satya Tripathi, Assistant Secretary General, UN Environment said: “UN Environment works across the sustainability and finance agenda – and I see that the FC4S Network is having a significant impact on the international policy sphere. These moves will further consolidate the Network’s leadership role.”

Nick Robins, the founder of the FC4S network and Special Advisor on Sustainable Finance, UN Environment said: “We need financial centres to be fit for purpose in the rapid transition that lies ahead. With Pierre Ducret and Kong Wei as co-chairs, the network has the strategic leadership it needs for the next phase.”

UN Environment

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