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
1NATO is going to carry out its largest military drills in over 10 years, focusing on battling ISIS, according to NATO commanders. NATO forces will be deployed across the Mediterranean, while Russia is invited to observe the drills. It is unclear whether this is some kind of ruse or NATO just wants to show off in front of Russian President Vladimir Putin. The Alliance’s largest military drills named ‘Trident Juncture’ will be carried out from September 28 to November 6 in Spain, Italy and Portugal as well as in the Mediterranean Sea and the Atlantic Ocean. “We cannot choose between the eastern threat and the southern threat, we have to train for both,” said commander of the NATO military command in Brunssum, Netherlands General Hans-Lothar Domrose, who is in charge of the exercise, as quoted by Reuters.
2Major European nations have no appetite for conflict with Russia“In the final analysis the European powers closest to the Russian threat – Germany and France – have demonstrated they are not prepared to go to war over Ukraine. UN sanctions have been imposed, and that’s about it” [Independent]
3During the recent talks between Japan and Turkmenistan, Japanese partners expressed their intention to invest in the construction of a new international sea trade port in Turkmenistan’s city of Turkmenbashi.This port is designed to become not only the “sea gates” of the country, but also an important and integral part of the high-capacity regional transport infrastructure that is being created today.Earlier, it was reported that following the international tender, Turkish company Gap Insaat, which is part of the Calyk Holding, was named the general contractor for the project for construction of a new Caspian Sea port in Turkmenbashi.
4Almaty-Cholpon-Ata highway. Prime Minister of Kyrgyzstan Temir Sariev during a meeting with his Kazakh counterpart Karim Masimov raised the issue of construction of the Almaty-Cholpon-Ata highway, Kabar news agency reported on July 21. “We have established direct flight from Almaty to Tamchy, but it is not enough. We need to build high-speed road from Almaty to Cholpon-Ata. Then Kazakh people will drive to Issyk-Kul lake in 2.5 hours,” said Sariev.Prime Minister of Kazakhstan instructed relevant state agencies to expedite the construction of the highway.
5Foreign investments in Azerbaijan’s fixed capital increased by 46.3 percent in January-June 2015, according to a report by the Azerbaijani State Statistics Committee. Under the report covering a period of six months, the total volume of foreign investments made in Azerbaijan’s fixed capital amounted to 3.2 billion manats(approximately $3.05 billion). More than 2.85 million manats (over 88.5 percent) of investments made in county’s fixed capital by the foreign countries and international organizations over the first half of this year belonged to investors from the UK, Norway, Russia, Iran, Sweden, USA, Turkey, and Japan.
6Kazakhstan is ranked 50th in the Government Efficiency Index. The efficiency index considers expenditures, workload regulations and political transparency. The Government Efficiency Index is led by Qatar that is followed by Singapore and Finland. The outsiders of the list are Argentina, Italy and Venezuela that landed on the last lines of the ranking. Kazakhstan beats of a number of European countries in government efficiency, according to the list. In particular, Kazakhstan is ahead of Belgium, France, the Check Republic, Hungary, Spain, Portugal, Bulgaria, Slovenia, Serbia and Romania. South Korea, Israel and India were, too, beaten by Kazakhstan in the ranking. Russia, Armenia, Latvia, Moldova, Ukraine, Lithuania and Kyrgyzstan are also ranked below the 50th place.
7Netanyahu steered U.S. toward war with Iran – the result is a deal he hates. “Much of the criticism of the Iran nuclear deal has focused on the fact that it is entirely limited to the nuclear issue, which leaves Iran a free hand — and new resources — to continue policies that have angered regional and international players. There is no denying that if Iran plays its hands well and uses the next decade to build its economic and political potential, its regional influence is likely to expand, as is its capacity to do the sort of things that have angered Israel and Gulf Arab states” writes Shibley Telhami for Reuters.
8Turkmenistan will start producing high-quality Euro-5 gasoline at the Seidi refinery from 2016, the country’s Oil and Gas Industry and Mineral Resources Ministry reported.The U.S. Westport Trading Europe Limited company won the tender for the design and reconstruction of a production facility for the new generation gasoline.This novel motor fuel is distinct from the previous generations in that it has a lower content of sulfur and polycyclic aromatic hydrocarbons. With Euro-5, engines work quieter, they can be started much more quickly and easily, corrosion is prevented, and vibration and fuel consumption is reduced.
9Why is the Iran deal bad? “Think North Korea. Perhaps Iran will cooperate, but so far, it has not come clean with the IAEA about 12 existing “areas of concern” regarding the “possible military dimensions” of its nuclear program. That is not a good sign. It suggests that Iran, like North Korea (or, for that matter, Iraq during the 1990s), is likely to play a game of cat-and-mouse with inspectors — and that if it does cheat, as North Korea did, the world will again discover it is too late to do anything about it” writes Max Boot for the Los Angeles Times.
10Almaty 2022 Accommodation Plan A Key Asset. After a nearly two year bidding race, Almaty 2022 is ready and excited to welcome the international community to its beautiful city. Almaty, Kazakhstan’s largest city has seen a rapid rise in its tourism sector. With annual growth rates of almost 11% in hotel rooms, Almaty is one of the fastest growing tourism destinations in all of Central Asia.
UN Security Council discusses Kashmir- China urges India and Pakistan to ease tensions
The Security Council considered the volatile situation surrounding Kashmir on Friday, addressing the issue in a meeting focused solely on the dispute, within the UN body dedicated to resolving matters of international peace and security, for the first time since 1965.
Although the meeting took place behind closed doors in New York, the Chinese Ambassador, Zhang Jun, spoke to reporters outside the chamber following deliberations, urging both India and Pakistan to “refrain from taking any unilateral action which might further aggravate” what was an already “tense and very dangerous” situation.
The Indian-administered part of the majority-Muslim region, known as Jammu and Kashmir had its special status within the constitution revoked by the Indian Government on 5 August, placing it under tighter central control. Pakistan has argued that the move violates international law.
The UN has long maintained an institutional presence in the contested area, which both countries claim in its entirety, with the areas under separate administration, divided by a so-called Line of Control. The UN Military Observer Group in Indian and Pakistan (UNMOGIP) observes and reports on any ceasefire violations.
“The position of the United Nations on this region is governed by the Charter…and applicable Security Council resolutions”, said the statement. “The Secretary-General also recalls the 1972 Agreement on bilateral relations between India and Pakistan also known as the Simla Agreement, which states that the final status of Jammu and Kashmir is to be settled by peaceful means”, in accordance with the UN Charter.
Ambassador Zhang said Council members had “expressed their serious concern” concerning the current situation in Jammu and Kashmir…The Kashmir issue should be resolved properly through peaceful means, in accordance with the UN Charter, the relevant Security Council resolutions and bilateral agreements.”
Pakistan requested the Security Council meeting on 13 August, and it was subsequently called for by Permament Member, China.
Speaking to reporters outside the chamber, Pakistan’s Ambassador, Maleeha Lodhi said the meeting had allowed “the voice of the people of the occupied Kashmir” to be heard “in the highest diplomatic forum of the world.” She argued that “the fact that this meeting took place, is testimony to the fact that this is an international dispute.”
She said that “as far as my country is concerned, we stand ready for a peaceful settlement of the state of Jammu and Kashmir. I think today’s meeting nullifies India’s claim that Jammu and Kashmir is an internal matter for India. Today the whole world is discussing the occupied state and the situation there.”
Speaking a few minutes later, India’s Ambassador, Syed Akbaruddin, said that “our national position was, and remains, that matters related to Article 370 of the Indian Constitution, are entirely an internal matter of India…The recent decisions taken by the Government of India and our legislative bodies are intended to ensure that good governance is promoted, socio-economic development is enhanced for our people in Jammu and Kashmir and Ladakh.”
He said that the Chief Secretary of Jammu and Kashmir had announced measures which would return the region towards a state of “normalcy”
“India remains committed to ensure that the situation there remains calm and peaceful. We are committed to all the agreements that we have signed on this issue.”
But without naming names, he stated that “of particular concern is that one state is using terminology of jihad against and promoting violence in India, including by their leaders”, adding that India was committed to the principle “that all issues between India and Pakistan, as well as India and any other country, will be resolved bilaterally, peacefully, and in a manner that behooves normal inter-state relations between countries.”
ADB to Help Drive Modernization in First Loan for Sri Lanka’s Railway Sector
The Asian Development Bank (ADB) has approved a $160 million loan to modernize the operations and improve the efficiency of Sri Lanka Railways, the country’s railway operator, by upgrading its infrastructure and technical capacity. This is ADB’s first loan in Sri Lanka’s railway sector.
“There is a need to improve public transportation in Sri Lanka to serve a growing population, expected to reach 25 million by 2050,” said ADB Transport Specialist Mr. Johan Georget. “An improved railway system will help promote the development of services and industries across Sri Lanka, as well as put the railway as a viable transportation mode of choice for the people. This is particularly the case in suburban Colombo, where the impacts of traffic congestion are strongly felt by all road commuters as vehicle numbers have doubled between 2008 and 2018, while rail commuters often face overcrowded trains.”
Sri Lanka Railways moves 136.7 million passengers and 2 million tons of goods annually. However, the market share of the railway sector has progressively declined over the years, while the country’s railway infrastructure is overdue for significant upgrades and modernization. The network’s signaling and telecommunication systems are outdated, and the paper tickets are manually printed for all ticket classes and station pairs. Sri Lanka Railways owns 250 diesel locomotives and multiple units, but only about three-quarters of them are operational and half of the fleet is more than 30 years old.
The Railway Efficiency Improvement Project will finance the modernization of the country’s railway system in several aspects to improve the operations, maintenance, safety, skills development, and technical capacity of Sri Lanka Railways. The project will provide a modern multichannel—paper, mobile, and smart card—ticketing system, and will also install a state-of-the-art telecommunications system, which will replace the original system installed in 1985, and allow for two-way communications with train drivers and reduce train delays. The project will also finance a new operations headquarters and train control center, provide infrastructure and equipment for the maintenance of track and rolling stock, and improve railway safety. The technical training center of Sri Lanka Railways will be upgraded and new courses will be developed to provide future graduates with knowledge of modern railway technologies.
The project will also strengthen the capacity and readiness for future railway projects. This will include a detailed study for the Kandy suburban railway network; a study on transit-oriented development and land value capture; the preparation of a railway asset inventory and a land management strategy; and the modernization of the information technology and maintenance capacity of Sri Lanka Railways.
The total cost of the project is $192 million, with the Government of Sri Lanka providing $32 million. The expected project completion date is the end of 2024.
World Bank Issues Second Tranche of Blockchain Bond Via Bond-i
The World Bank (International Bank for Reconstruction and Development, IBRD rated Aaa/AAA) has raised an additional AUD 50 million for its Kangaroo bond due August 2020 – the first bond created, allocated, transferred and managed through its life-cycle using distributed ledger (blockchain) technology.
The successful tap expands market participation with the Bond-i platform combining three joint lead managers, Commonwealth Bank of Australia (CBA), RBC Capital Markets (RBC) and TD Securities (TD), and brings together new market participants, including an offshore investor, and the exisiting investor community including ongoing support and input from TCorp (NSW Treasury Coporation).
In August 2018, CBA was mandated by the World Bank as arranger for the bond and following a two-week consultation period with the market, the two-year bond raised A$110 million. In May 2019, CBA and the World Bank, with TD acting as market maker, added additional capability to the platform by enabling Secondary Bond Trading recorded on Blockchain making this the first bond whose issuance and trading are recorded using distributed ledger technologies.
The subsequent issuance builds on the success of the platform and further enables capital markets to leverage distributed ledger technologies for faster, more efficient, and more secure transactions.
Bond-i is part of a broader strategic focus of the World Bank to harness the potential of disruptive technologies for development to benefit the World Bank’s clients. The World Bank’s blockchain innovation lab was established in 2017 as an innovation hub for poverty reduction projects across the world and includes developing opportunities to use blockchain and other disruptive technologies in areas such as land administration, supply chain management, health, education, cross-border payments, and carbon market trading.
“We are happy to see the continued, strong support and collaboration from investors and partners. The World Bank’s innovation and experience in the capital markets is key to working with our member countries to increase digitization to boost productivity in their economies and accelerate progress towards the Sustainable Development Goals,” said Andrea Dore, World Bank Head of Funding.
“The tap is an important milestone in demonstrating the full lifecycle management of an issuer’s capital markets needs. It is also a significant step for the platform bringing on additional participants and demonstrating the broader potential of Bond-i as a capital markets platform,” said James Wall, Executive General Manager International at Commonwealth Bank.
Debt capital markets today comprise numerous interconnected intermediaries and agents undertaking intersecting roles for markets to function. Blockchain has the potential to streamline processes for raising capital and trading securities, improve operational efficiencies, as well as enhance regulatory oversight.
“CBA now has tangible evidence from our first bond offering using blockchain technology and subsequent bond management, secondary trading and tap issue via the same platform, that blockchain technology can deliver a new level of efficiency, transparency and risk management capability versus the existing market infrastructure. Next we intend to deliver additional functionality to deliver greater efficiencies in settlement, custody and regulatory compliance,” said Sophie Gilder, Head of Blockchain & AI, Commonwealth Bank of Australia.
CBA, RBC, and TD have been lead managers for a number of IBRD bond issuances in the Australian and New Zealand capital markets. This issuance built on the longstanding partnership between four organisations, bringing together World Bank’s 70-year track record of innovation in the capital markets, CBA’s globally recognised Blockchain Centre of Excellence, and TD and RBC’s significant global franchises in debt capital markets.
“An increase to the line is a natural evolution for the trade providing a great opportunity for both new and existing investors to get involved. As a market maker on the platform, TD is very excited to have partnered up with World Bank and CBA again and be part of the next step in the platform’s development,” said Yuriy Popovych, Director TD Securities.
“RBC is very pleased to be involved in the next stage of evolution of World Bank’s bond-i issue, the most advanced practical application of blockchain technology to the debt capital markets to-date,” says Jigme Shingsar, Managing Director, Debt Capital Markets at RBC. “Though the technology is still in its early stages, we believe blockchain networks have the potential to transform financial services, offering a leap forward in the transparency and efficiency of our market.”
The blockchain platform was designed and developed by the CBA Innovation Lab’s Blockchain Centre of Excellence.
· An independent review of the CBA blockchain platform’s architecture, security and resilience was conducted by Microsoft.
· The law firm of King & Wood Mallesons acted as deal counsel on the bond issue and advised on the legal architecture for its implementation.
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