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
1Congress is due to finish its review of the deal and vote on it in September. If that process gets completed, by November — when Pollard will go free — Netanyahu’s calculations might be different.”If Netanyahu wanted to climb down from the tree, if he wanted to make amends with the U.S., the Pollard … release would be a great way to do it,” Sachs, a fellow with the Brookings Institution’s Center for Middle East Policy said. [CNN]
2Why the Iran deal is huge for Obama’s legacy. “From the moment he took office, the Obama doctrine — to the extent that one exists — basically boiled down to this: Diplomacy with so-called enemy countries can be effective, said Jeremy Shapiro, a foreign policy fellow at Brookings Institute and former State Department aide. Obama has been testing that theory on Iran literally since Day One, in part because nuclear nonproliferation has also been a central focus of his presidency. He became the first U.S. president to use the word “Muslim” in his inaugural address, offering to extend a hand to world leaders “if you are willing to unclench your fist.” [Washington Post]
3If Russia breaks up. “If Mr Putin goes and the money runs out, Chechnya could be the first to break off. This would have a dramatic effect on the rest of the north Caucasus region. Neighbouring Dagestan, a far bigger and more complex republic than Chechnya, could fragment. A conflict in the Caucasus combined with the weakness of the central government in Russia could make other regions want to detach themselves from Moscow’s problems” [Economist]
4Kazakhstan trade likely to bloom. A full picture of the Kazakhstani market and its business opportunities was unveiled at a forum held in Ha Noi yesterday. Viet Nam and Kazakh-stan signed a number of framework agreements on economic, trade, diplomatic, education, investment, labour and energy co-operation in recent years, said Vice Chairman of the Viet Nam Chamber of Commerce and Industry (VCCI) Doan Duy Khuong. According to Viet Nam’s General Department of Customs, trade between the two countries was almost US$230 million in 2014, with $219 million from Viet Nam’s exports, up 42 percent year-on-year. Exports consisted primarily of cell phones and electronic spare parts, machinery and farm produce. Imports, meanwhile, doubled, including ore and minerals.
5Navies of Azerbaijan, Russia and Kazakhstan has set to hold trilateral naval drills, RIA Novosti reported on July 30 with a reference to Igor Dygalo, the representative of the press service of Russian Defense Ministry on Navy.”As part of the preparations for the “Cup of the Caspian Sea – 2015″ competition, the ships of the Navies of Russia, Kazakhstan and Azerbaijan will conduct a number of preparatory artillery shooting on small maritime targets, on air targets and on a floating mine,” Dygalo noted.Holding joint naval drills among the CIS member-states’ navies was agreed in Astrakhan on November 9, 2014. An international competition called “Cup of the Caspian Sea – 2015” is the first ever joint exercises in the Caspian Sea.
6Turkey is ready to distribute gas not only from Russia but also from Azerbaijan and Iran in Europe, general director of Russia’s National Energy Security Fund Konstantin Simonov said in an interview aired by the Rossiya-24 TV news channel on Thursday.”Turkey also plans to transit gas from Azerbaijan and Iran. It appears that it may take the same position regarding this gas,” he said when speaking about the intergovernmental agreement between Russia and Turkey on 2-4 lines of the Turkish Stream to deliver Russian gas to European states.
7President of Turkmenistan Gurbanguly Berdimuhammadov and President of Russia Vladimir Putin expressed confidence in the prospects of intensifying mutually advantageous cooperation during a telephone conversation. As part of the conversation, which was held in a businesslike, constructive manner, the highest attention was paid to the discussion of the implementation of earlier agreements, designed to serve the deepening of partnership built on principles of equality, trust and mutual respect.Among the significant vectors of cooperation, the sides mentioned the trade and economic sphere, transport and communication, urban development, agroindustrial complex and other spheres.
8Russia is modernizing its S-300 missile system to supply to Iran, an adviser to Russian President Vladimir Putin said on Thursday, RIA news agency reported. “It has partially been updated, separate elements are still being updated,” said Vladimir Kozhin, a presidential adviser on military matters, referring to the S-300 system. “It will be that very S-300 complex that Iran wanted to receive.” Russia says it canceled a contract to deliver the advanced missile system to Iran in 2010 under pressure from the West. But Putin lifted that self-imposed ban in April following an interim nuclear deal between Iran and world powers.
9The commissioning of Baku-Tbilisi-Kars (BTK) railway will further increase the importance of Azerbaijan Railways CJSC and Georgian Railway JSC in freight transportation within the region and will enhance their business profiles, said Fitch Ratings July 30.Fitch said that the freight rail transportation volumes continued to decline in most former Soviet Union (FSU) countries over the first five months of 2015 and it is expected that the rail volumes are to remain weak in the second half of this year on the back of lower GDP growth across the region.“FSU rail transport companies that are reliant on crude oil transportation are also under competitive pressure as crude oil traffic continues to switch to pipelines from rail,” said the ratings agency.
10Seven start-up projects from Kazakhstan along with two start-up projects from Kyrgyzstan and Ukraine have become winners of Technation acceleration program for start-up teams from CIS (post-soviet space), Europe and Asia. The winners will travel to Silicon Valley – a land of innovation and start-ups – in the United States in October 2015 for a one-month internship.
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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