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NATO: Azerbaijan’s importance is growing

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

1Azerbaijan is going to be an important component of global energy security market place, according to NATO Liaison Officer in the South Caucasus William Lahue. It is important that countries have multiple sources of supply in order to protect themselves from fluctuations in available sources of supply,” he said. “In this process Azerbaijan is going to be important, and its importance is growing.”

2A report on the results of the recent talks with Turkmenistan’s official delegation led by Deputy Prime Minister Baimurad Hodzhamuhammedov in Tokyo was heard at the recent meeting of the country’s Cabinet of Ministers. During the working visit, there were held meetings with Japanese Prime Minister Shinzo Abe and business representatives. The meetings focused on the prospects for attracting Japanese investments in the implementation of the projects for developing fields in Turkmenistan, modernization of the oil and gas industry and diversification of the supply routes of Turkmen gas, as well as cooperation within other bilateral agreements and contracts.

3Russia has become the most attractive market among BRICS countries for investors in 2015, replacing China as the top earner, this according to the Bloomberg news agency. Concerns over falling oil prices and the collapse of the ruble at the end of 2014 have largely dissipated, with investors betting on fewer political risks for Moscow.According to Bloomberg, “the tables have turned in these seven months.” Crude has rebound, and investors have calmed down over the country’s troubles. Oil has stabilised above US$ 55 a barrel and a cease-fire is holding in eastern Ukraine, whose crisis the West has blamed on Russia.“Most Russian stocks are fundamentally undervalued,” said Mattias Westman, the London-based founder of Prosperity Capital Management, a major asset investment firm heavily involved in former Soviet republics. “There is potential for further recovery,” he explained. Russia’s economy, set to contract this year for the first time since 2009, may rebound 0.5 per cent in 2016. At the same time, European economic sanctions over the Ukraine are likely to be relaxed, as it will not be “easy to convince everyone to prolong them” next year, Westman said.

4Iran set for significant investment. A few investors are racing to establish funds for Iran following last week’s nuclear deal with world powers, and many others are tapping into multinationals already present in the $400bn economy. The agreement has made some seek a foothold in Tehran’s $100bn stock market even before sanctions are lifted, although others are taking a more cautious approach. Classified as an upper-middle income country, with a population of 78m and annual output higher than that of Thailand or the United Arab Emirates, Iran is set to be the biggest economy to rejoin the global trading and financial system since the break-up of the Soviet Union over 20 years ago.

5“Hybrid war” – a Scholarly Term or a Propaganda Cliché? “In June 2015 the Finnish Institute of International Affairs (FIIA) published a report entitled “Russia’s Hybrid War in Ukraine: Breaking the enemy’s ability to resist”, by András Rácz, a senior research fellow at the institute [1]. As the title indicates, the subject of the paper is the phenomenon of “hybrid war”. Following Russia’s annexation of Crimea and the start of military actions between Ukrainian security forces and units of the non-recognised Donetsk and Luhansk People’s Republics in 2014, this phenomenon has attracted the close attention of political, military, academic and journalistic circles in western countries and in Russia” writes Pyotr Topychkanov for RIAC.

6Russia’s Coming Regime Change. Regime change in Russia is inevitable, maybe imminent. But the West should not bet on that eventuality or make it a policy goal. The Russian people will rise up again, but the path to a sustainable democracy and stable economy will be challenging. The West should be ready to help then” writes Andrei V. Kozyrev for the New York Times.

7Your Time Is Over Mr. Netanyahu. “Three years ago, when the Israeli Prime Minister Benjamin Netanyahu displayed an imaginary map of Iran’s effort to build nuclear bomb at the annual meeting of the United Nations General Assembly to the attendees, he was not taken seriously by anybody, even his own American friends. At that time, some politicians told Netanyahu that “your time is over,” though he did not believe them” writes Haroun Yashayaei, Leader of Iran’s Jewish Community for Iran Review.

8Market study: Home Care in Kazakhstan. Home care saw a good sales growth during the review period benefiting from economic growth in Kazakhstan and rising income levels. There was strong expansion in the country’s mid-income group while many low-income consumers also benefited from increased household budgets. Consequently low-income consumers became able to buy a wider range of home care while mid- to high-income consumers continued to trade up to more specialised and value-added products. Urbanisation also contributed to sales. [Euromonitor]

9Turkmenistan, India to hold talks on TAPI project. Talks on Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project will be held in India’s New Delhi city July 21. For this purpose, a Turkmen delegation has been sent on an official visit to India in accordance with the order of Turkmenistan’s President Gurbanguly Berdimuhammadov. TAPI project was one of the key issues during the negotiations between Turkmenistan’s president and India’s prime minister in Ashgabat July 11.

10Azerbaijan specifies requirements on state secrets protection. The activities of state authorities of Azerbaijan in the territory of the Republic of Azerbaijan and beyond, regardless of legal form of the organization and types of property, all enterprises, institutions and organizations performing activities related to state secret, formations, military units and institutions of the Azerbaijani Armed Forces and other military agencies established in accordance with the legislation shall be based upon the provisions of the Requirements.

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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World Bank Financing to Help Kazakhstan Unleash Full Potential of its Livestock Industry

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The World Bank Board of Executive Directors approved today a $500 million loan for the Sustainable Livestock Development Program to support the development of environmentally sustainable, inclusive, and competitive beef production in Kazakhstan.

The program financing will support Kazakhstan’s state Agro-Industrial Complex Development program in improving veterinary services and animal recording systems, scaling-up a farmer-centric service delivery model, and improving agro-environmental policies for the sector.

Over a period of five years, the program aims to achieve a 10 percent increase in the share of public expenditure for sustainable beef production and processing, and a three-fold increase in the value of beef exports. In addition, around 20,000 small and medium farmers will be connected to export value chains.

“We are very happy to support Kazakhstan in developing its high-value export-oriented beef sector,” said Jean-Francois Marteau, World Bank’s Country Manager for Kazakhstan. “The country has a huge natural potential and favorable geographic position, which are conducive to export-oriented beef sector development. These can be utilized to benefit Kazakhstan’s long-term economic development goals, namely, diversification of exports and improving rural livelihoods. The Program is particularly important in a COVID-19 environment which is affecting employment countrywide.”

An export-oriented, high-value beef sector provides an opportunity for Kazakhstan to achieve its national development objectives, by mobilizing significant investments from domestic and foreign agribusiness firms and expansion of production by small and medium farmers.

A potentially competitive expanded resource base and geographical proximity to important consumer markets will also help attract private investment in meat processing, packaging, and logistics companies to Kazakhstan.

The program will promote green growth and sustainability policies aimed at promoting climate-smart practices for beef cattle production, reducing greenhouse gas emissions and improving the overall agri-environmental outcomes of the government’s beef sector support programs.

The five-year (2021-2025) implementation of the Sustainable Livestock Development Program for Results will be financed through a $500 million IBRD loan, which will be disbursed on the basis of Program-for-Results (PforR) – a financing instrument that links the disbursement of funds directly to the achievement of specific program results.

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Turkey’s Rail Connectivity and Logistics will Improve with World Bank Financing

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The World Bank’s Board of Executive Directors today approved a loan in the amount of EUR 314.5 million ($350 million equivalent) for the Turkey Rail Logistics Improvement Project. The project aims to reduce transport costs in selected rail freight corridors and to strengthen institutional capacity at the Turkish Ministry of Transport and Infrastructure (MoTI) to deliver rail freight connectivity and manage rail-enabled logistics centers.

The project will support delivery of last-mile rail and multimodal connectivity infrastructure at well-prioritized nodes of Turkey’s national railway network. These interventions will help revitalize the transport and logistics sector, and by extension, contribute to the sustainability of the cargo owners operating supply-chains in the project’s target corridors in the aftermath of the COVID-19 pandemic.

“Despite having economic geography and commodity specialization characteristics that are in-principle favorable to the use of rail freight, rail accounts for only 4% of Turkey’s transported tonnage, leaving a large share of freight to be moved by road. This leaves significant economic value on the table in terms of avoidable logistics costs and environmental externalities,” says Auguste Kouame, World Bank Country Director for Turkey. “The project’s investments will contribute towards more fully realizing rail freight’s potential in Turkey.”

The project will be implemented by the Ministry of Transport and Infrastructure’s (MoTI), and has three components:

Component 1 includes construction of railway branch lines and multimodal connections at priority network nodes, including Filyos Port, Çukurova Region Industrial Zones, Iskenderun Bay Maritime Ports, and at additional priority sites to be selected during implementation;

Component 2 includes feasibility studies, detailed engineering designs, environmental and social documentation, and construction supervision for rail last-mile connectivity infrastructure at additional freight nodes;

Component 3 focuses on Phase 2 COVID-19 response support, institutional strengthening, capacity building, and project implementation support, including technical assistance on uniformization of rail technical standards across the national rail network, support in preparation of a strategy document for rail freight sector performance improvement, and support to Turkish State Railways through development of an operational and management model for rail-enabled logistics centers.

“Strengthened management and decision-making capacity at MoTI to promote multimodality, expand the use of rail freight, and improve the quality of rail freight services nationally will be the other benefits,” remarked Murad Gürmeriç and Luis Blancas, Task Team Leaders of the Project. “The project is expected to reduce transport costs, reduce emissions of greenhouse gases (GHGs) and local pollutants, and increased share of rail in the freight transport task of the corridors targeted by the project.”

The project is aligned with Turkey’s Country Partnership Framework (CPF) for FY18-FY21, which focuses on the three strategic objectives of growth, inclusion, and sustainability.The project will contribute to the growth focus area which has the objective of enhancing the competitiveness of selected industries. The project is also aligned with the WBG approach to supporting client countries in mitigating the impact of COVID-19 on their economies, firms and workers.

The impact assessment envisioned in Component 3 of this project will help mitigate the impacts of COVID-19 by supporting MoTI in diagnosing the medium- and long-term impacts of COVID-19 on multi-modal logistics of both the demand and supply sides, and helping design public, public-private, and/or private interventions – including interventions aimed at tackling behavioral and occupational aspects of risk prevention.

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Second phase of the Nurek Hydropower Rehabilitation Project in Tajikistan

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The World Bank’s Board of Executive Directors approved additional grant financing of $50 million from the International Development Association (IDA) for the second phase of the Nurek Hydropower Rehabilitation Project in Tajikistan. The Nurek Hydropower Plant (HPP) is the most important asset of Tajikistan’s energy system.

“The restoration of the generation capacity of the Nurek HPP is essential for ensuring energy security for the people of Tajikistan,” said Jan-Peter Olters, World Bank Country Manager in Tajikistan. “Especially in these difficult times, the combination of inherent climate benefits from this renewable source of energy and the ability to support job creation and incomes for the local population, including by their engagement in this large-scale rehabilitation process, makes this a critical investment for a fast and sustainable post-crisis recovery.”

The Nurek HPP, with an installed capacity of over 3,000 megawatts, generates about 50 percent of total annual energy demanded in Tajikistan. Operational at currently about three-quarter of its installed generation capacity, the HPP is undergoing its first major rehabilitation since its commissioning in 1972. Once completed, the rehabilitation will allow the Nurek HPP to increase electricity generation by about 300 million kWh, supporting the Government’s efforts to ensure that energy demand can be met even during the cold winter months.

At the same time, during summer, Tajikistan would be in a position to expand electricity exports from its hydro resources, including through the CASA-1000 transmission line and upon synchronization of the country’s electricity network with Central Asian Power System (CAPS). This would generate much-needed additional revenues for the sustainability of the power sector, thereby reducing pressures on the pace of tariff adjustments.

The first phase of the Nurek Hydropower Rehabilitation Project, financed by the World Bank ($225.7 million), the Asian Infrastructure Investment Bank ($60 million) and the Eurasian Development Bank ($40 million), was launched in March 2019. It has focused on rehabilitating three of the nine generating units, replacing and refurbishing hydromechanical equipment and the key infrastructural components of the power plant, replacing six auto-transformers that are used to evacuate the generated electricity, and enhancing dam safety with a special focus on protection against seismic hazards and floods.

Through a separate project, the World Bank is supporting Government’s efforts in strengthening the institutional capacity and financial viability of the open joint stock holding company Barqi Tojik (BT).

The project’s second phase will finance the rehabilitation of the remaining six generating units, the Nurek bridge, the powerhouse, and other key buildings, while strengthening the HPP’s capacity to operate and maintain the power plant.

Capacity building will be provided to Nurek HPP and BT to enhance dam safety monitoring and the operation and management of hydro facilities. With a total cost of $192 million for the project’s second phase, the Government of Tajikistan is currently finalizing its discussions with other development partners to secure the required additional resources.

Given Tajikistan’s long history of power outages, particularly during the cold winter months, the climate co-benefits, and the socio-economic development impact of using available hydro resources effectively, Tajikistan’s energy sector has been a priority area of engagement for the World Bank. Its current energy-related investments exceed $530 million.

These investments aim at supporting the sector’s sustainability, eliminating seasonal energy rationing, ensuring an affordable and stable electricity supply to families and businesses and much needed revenues from increased export of clean, non-fossil energy resources.

The World Bank Group’s active portfolio in Tajikistan includes 21 projects, totaling US$938 million that aim at helping Tajikistan to take advantage of emerging regional opportunities, transform its economy and improve the livelihoods of its citizens. Since 1996, the World Bank has provided US$1.9 billion in grants, highly concessional IDA credits, and trust fund resources.

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