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How Energy Concerns Drive the Nuclear Deal

Dimitris Giannakopoulos

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Welcome to the Caspian Daily, where you will find the 10 most important things you need to know on Caspian Sea Region. We appreciate ideas, reports, news and interesting articles. Send along to Caspian[at]moderndiplomacy.eu or on Twitter: @DGiannakopoulos

1Tehran’s Power Lobby. “Iran has a track record of lobbying energy firms to put pressure on the West. In 1991, Tehran reached a pre-agreement with Conoco, granting the U.S.-based oil company the right to develop gas and oil fields in Iran. Through these efforts, Iran sought to entice U.S. oil companies to pressure U.S. authorities into altering their approach toward Tehran’s leadership. These efforts resulted in a discreet campaign by oil giants to improve Iran’s public image in the United States and led to lobbying efforts to get Washington to promote business with Iran. When Mohammad Khatami began his term as Iranian president in 1997, he sought to soften Western attitudes toward Iran. His policies prompted the creation of a number of lobby groups across the United States. At the same time, the National Foreign Trade Council, a representative group for major U.S. corporations, started its own lobbying initiative called USA*Engage. Other major U.S. business lobbies followed suit, establishing the American Iranian Council (AIC) with a governing board comprised of former U.S. diplomats and executives from Chevron, Exxon Mobil, and Halliburton” By Tara Shirvani and Siniša Vuković for the Foreign Affairs.

2Russia’s Hybrid War in Ukraine: Breaking the Enemy’s Ability to Resist. “The form of warfare Russia employed in Ukraine in 2014, often called hybrid war, has been aimed at defeating the target country by breaking its ability to resist without actually launching a full-scale military attack. In line with contemporary Russian military thinking on ‘new generation warfare’, hybrid war is built on the combined use of military and non-military means, employing basically the whole spectrum of a state’s policy inventory, including diplomatic, economic, political, social, information and also military means” new report by András Rácz and The Finnish Institute of International Affairs.

3China, Kazakhstan agree to integrate growth strategies. Chinese vice Premier Zhang Gaoli and Kazakh Prime Minister Karim Masimov met Thursday and agreed to align their countries’ growth strategies and boost bilateral cooperation on production capacity. China and Kazakhstan are indeed comprehensive strategic partners, said Zhang, who arrived in Astana on Wednesday for a three-day visit to Kazakhstan.The Silk Road Economic Belt initiative brought up by Xi and the “Path of Light” economic strategy proposed by Kazakh President Nursultan Nazarbayev enjoy a high degree of compatibility, Zhang pointed out. [China Daily]

4Standard & Poor’s Ratings Services had lowered its long-term insurer financial strength and counterparty credit ratings on Kazakhstan-based JSC Oil Insurance Co. (NSK) to ‘B’ from ‘B+’. The outlook is stable. At the same time, we lowered the Kazakhstan national scale rating to ‘kzBB+’ from ‘kzBBB’. The downgrade reflects our view that the company’s capital adequacy, liquidity, and financial flexibility have significantly weakened following a large claim recognized in May 2015. We note that the company currently plans to restore its financial standing by generating sufficient net income. We don’t factor in any capital support provided by shareholders, because we have no clear view on their willingness to provide it or of the possible timing, the statement said.

5Islamic State may threaten Russia’s Caucasus. “The head of Russia’s Security Council has identified Islamic State (IS) as the greatest threat to world peace and security, and it seems the danger could be getting closer to home. The militant Islamist group has proclaimed the establishment of a wilayaat, or province, in Russia’s mainly-Muslim North Caucasus, suggesting it may be gaining the upper hand in a battle for control over radical forces there. The statement follows an anonymous audio message posted online pledging allegiance to IS on behalf of militants in four regions. But it remains unclear how far – and high – that support may reach among militants previously loyal to the banned, al-Qaeda-affiliated group Caucasus Emirate, which has long sought to carve out an Islamist state in the region” writes Sarah Rainsford for the BBC.

6Brzezinski’s full recipe for solving the yearlong Ukrainian crisis:”Ukraine must have a right to freely choose its political identity and forge closer ties with Europe. At the same time, Russia must be reassured that Ukraine will never become a NATO member,” Brzezinski said, as quoted by Spiegel Online. In other words, Ukraine needs to become Finland of sorts. Brzezinski’s ideas echo those of Henry Kissinger. In an opinion piece for the Washington Post published in March 2014, the former secretary of state urged the West to understand Russia’s concerns and its attachment to Ukraine. “Ukraine should have the right to choose freely its economic and political associations, including with Europe,” Kissinger stated, adding that Kiev should not join NATO and “should pursue a posture comparable to that of Finland.” [SputnikNews]

7During the scientific and practical conference “National press of Azerbaijan – 140: “Ekinchi” traditions and modern journalism,” Ali Hasanov, Azerbaijani president’s aide for public and political affairs said that some great powers want to control certain countries and naturally, Azerbaijan is among such countries.“Today, Azerbaijan has its resources, policy and own interests,” he said, adding that in order to fulfill these interests, Azerbaijan should say “no” to someone’s wishes. “When it is not to their advantage, they come down on Azerbaijan. Big states want to control Azerbaijan. However, President Ilham Aliyev’s independent policy which is literally based on Azerbaijani people’s will, is not to their advantage and they stand against it,” said Ali Hasanov.

8Kazakhstan Infrastructure Report. The Kazakh infrastructure sector is facing severe challenges stemming from falling oil revenues cuts to government expenditure and weak credit conditions. However preparations for the 2017 World Expo the country’s rich natural resource endowment a desire for economic diversification and sovereign wealth-backed infrastructure development will provide for distinct investment opportunities some growth relief and continued investments. Following a generally weakening domestic economy including falling loan and private consumption levels we nonetheless expect infrastructure and construction growth to remain far below previously expected levels. [Fast Market Research]

9Azerbaijan signs agreement for Asian Infrastructure Investment Bank. Representatives from 57 Prospective Founding Members (PFMs) of the Asian Infrastructure Investment Bank (AIIB), including Azerbaijan, gathered on June 29 in Beijing for a Signing Ceremony of the Bank’s Articles of Agreement at the Great Hall of the People. From Azerbaijan, the Minister of Finance of Azerbaijan Samir Sharifov, who is currently on a visit to China, signed the financial agreement. The AIIB, which will be headquartered in Beijing, will initially have an authorized capital stock of $100 billion, said the message published on the website of the bank. Reflecting the regional character of the bank, its regional members will be the majority shareholders, holding approximately 75 percent of shares.

10Mehriban Aliyeva: “Azerbaijan once again demonstrated its power to the world through successful organization of the Baku 2015 first European Games. Each victory of the independent Azerbaijan is based on President Ilham Aliyev’s will and knowledge”

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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