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Russia renews bid for Arctic regions

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

1Russia has renewed its efforts to get the United Nations to recognise 1.2 million sq km (463,000 sq miles) of the Arctic shelf that it lays claim to. It made a similar move for the resource-rich territory in 2001, but that was rejected by a UN commission because of insufficient evidence. Russia’s foreign ministry said the fresh bid is backed by scientific data.But all other countries bordering the Arctic – Norway, Denmark, Canada and the US – reject Moscow’s claim. All five nations have been trying to assert jurisdiction over parts of the Arctic, which is believed to hold up to a quarter of the world’s undiscovered oil and gas.The competition for Arctic resources has intensified in recent years as the shrinking polar ice opens new opportunities for exploration.

2Tehran and Baku have recently intensified bilateral relations with an expectation to further deepen the all-out cooperation between the two close neighbors. As part of the measures to broaden the longstanding ties in various fields, an Azerbaijani delegation that included several representatives from oil, telecommunication, banking, and energy companies, led by Azerbaijan’s Economic Development Minister Shahin Mustafayev, visited Tehran. Referring to the role that the North-South corridor can play in consolidating the bilateral ties between the two countries, Rouhani stressed that Azerbaijan can act as Iran’s gateway to the Caucasus region while Tehran can ease Baku’s access to the Gulf and Oman Sea.

3Over 200 fields to be developed in Turkmenistan. Besides the hydrocarbon resources of global importance, Turkmenistan has rich and diverse solid minerals and hydro-mineral reserves of commercial scale. There are more than 200 deposits of various solid minerals and hydro-mineral raw materials prepared for industrial development at the state balance of Turkmenistan. Among them are a variety of mineral salts, iodine-bromine industrial waters, celestine, sulfur, bentonite and kaolin clays, ozocerite, barite, gypsum, ornamental and facing stones, carbonate raw materials for the chemical industry, a variety of mineral raw materials for the production of building materials.

4Ukraine is Intensifying the Transnistria Conflict.”The deteriorating relationship between Moscow and Kiev may be having profound regional consequences, with the Transnistrian Moldovan Republic (TMR) becoming a clear victim due to the abruptly worsening international environment. The Russian public has focused on the military aspects, although the problem is multidimensional and armed confrontation breaking out in Transnistria is unlikely” Igor Istomin [RIAC]

5Syrian Minister In Tehran For Talks On Ending Civil War. Syrian Foreign Minister Walid al-Moualem arrived in Tehran on August 4 for talks with Iranian and Russian officials aimed at ending the four-year-old war in his country. Moallem will meet Mikhail Bogdanov, President Vladimir Putin’s special envoy to the Middle East, before holding talks with Iranian Foreign Minister Mohammad Javad Zarif on August 5, Iranian media reported.”Fortunately, we see a change in the strategy of regional players in the Syrian crisis. If four years ago they believed war is the only solution, now they prefer to focus on diplomacy,” Amir-Abdollahian was quoted as saying by the Fars News Agency.

6Obama to make his case on Iran, drawing on lessons from the Cold War. “President Obama will ask Americans on Wednesday to give his tentative nuclear agreement with Iran a chance when he delivers a history lesson on the most prominent U.S. adversary of his lifetime — the Soviet Union.In an address heavy with homage to President Kennedy’s 1963 nuclear talks with Soviet Premier Nikita Khrushchev, Obama will talk about the importance of engaging with a hostile and seemingly intransigent opponent in the hopes of achieving peace.The Cold War allusion has been a common theme in public conversations with White House officials all week, and always with a sharp point: “We clearly know who won,” Press Secretary Josh Earnest said Tuesday” Christi Parsons and Michael A. Memoli [Los Angeles Times]

7Kazakhstan Temir Zholy national railways company plans to transit 42,000 containers on the China-Europe-China route, and this figure is almost 40 times more than in 2011. The additional volume of container transportation from China to Europe and vise-versa in 2014 allowed for an increase of revenues from transit traffic by 13.7 percent compared to 2013, Kazakhstan’s Samruk-Kazyna National Welfare Fund reported. China emerged as a major economic player in Central Asia, driving billions into promoting Chinese-Central Asian trade. According to International Monetary Fund estimates, these investments reached $50 billion last year.

8Azerbaijan will be hosting the first International Eurasian Conference on energy economics on August 31–September 3, 2016 in Baku. The event that will be organized by the International Association for Energy Economics is of crucial importance both for energy and tourism spheres. Nearly 200 state, private and academic circles will attend the event.

9Europe must wake up before Iran falls into the arms of Russia and China. “European leaders seem to have been caught somewhat off-guard as regards Iran’s opening up. The Greek saga alone could explain this. The problem is that other competitors have already stolen a march and this is not the US, as it could appear as first sight by looking at the newspaper headlines. Europe’s key competitors to make business with Iran are Russia and China.Although Iran’s historical relationship with Russia has not always been cordial, President Vladimir Putin has become more of a partner as both countries fight against Sunni insurgent groups, such as the Islamic State. Furthermore, Russia was one of the key players pressing for a positive outcome from the nuclear negotiations and there seems to be no doubt that Iran will be grateful” writes Alicia García-Herrero for Bruegel.

10Azerbaijan may join the international GMO-analysis networking. The Genetic Resources Institute (GEI) of the National Academy of Sciences of Azerbaijan informs that GEI senior researcher and member of the Expert Council on GMOs Ayaz Mammadov participated in the 2nd international seminar of the network, held in the Italian town of Varese. Mammadov voiced a hope for Azerbaijan’s accession to the network and European Commission’s courses and seminars in the country for research on GMOs.

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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New ADB Platform to Help Boost Financing for Climate Action

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The Asian Development Bank (ADB) has launched a new platform aimed at helping its developing member countries in Asia and the Pacific mobilize funding to meet their goals under the Paris Agreement.

The NDC Advance platform will help countries mobilize finance to implement Nationally Determined Contributions (NDCs) regarding greenhouse gas emissions that each country has voluntarily committed to under the Paris Agreement. NDCs also describe priority actions for countries to adapt to climate change.

The announcement was made at the 24th Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP24) in Katowice, Poland, which is aiming to finalize a rulebook for the Paris Agreement when it goes into effect on 1 January 2020.

The agreement aims to limit the increase in the global average temperature to below 2°C, while aiming for 1.5°C.

“Through their NDCs, our developing member countries have made ambitious commitments to respond to climate change,” said ADB Vice-President for Knowledge Management and Sustainable Development Mr. Bambang Susantono. “We need to ensure that countries are able to mobilize the needed financing to deliver on their commitments. NDC Advance will help countries devise investment plans to tap financing from a variety of sources and to implement priority projects effectively.”

NDC Advance is funded through a $4.55 million grant from ADB and will have three aims: providing technical assistance that helps countries better engage with potential sources of climate finance and to make use of innovative finance mechanisms; identifying and prioritizing climate projects; and supporting countries in tracking how projects deliver against their NDC goals.

The new initiative will help propel the climate actions ADB has committed to under its Strategy 2030 program.

ADB earlier this year committed to ensuring that 75% of its operations will support climate change mitigation and adaptation by 2030, while providing cumulative climate financing of $80 billion from its own sources between 2019 and 2030.

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Egypt: Shifting Public Funds from Infrastructure to Investing in People

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Egypt has an opportunity to capitalize on current reforms by enabling more private investment in infrastructure and freeing up public funds for investments in people’s education, health and social protection. This is according to a new World Bank report launched today in Cairo,‘’Egypt: Enabling Private Investment and Commercial Financing in Infrastructure’’, which calls for increasing the public funds available for building human capital by expanding successful energy reforms to other key sectors, such as transport, logistics, water and agriculture.

Egypt can learn from global experience and gain by increasing the use of private sector finance, management expertise and innovation in commercial infrastructure and agriculture, conserving public sector resources for where they are needed most”, said Clive Harris, Head for Maximizing Finance for Development for the World Bank.

Egypt is now beginning to reap the benefits of its transformative economic reform program. Macroeconomic stability and market confidence have been largely restored, growth has resumed, fiscal accounts are improving, and the public debt ratio is projected to fall for the first time in a decade.

Egypt has demonstrated that by having a package aimed at reducing economic risks, pursuing sector level reforms and well-prepared bankable projects, large scale foreign and domestic investment can be achieved, This is visible through the  US$ 2 billion invested in the largest solar park in the world, Benban, as well as US$ 13 billion in the Zohr field and other natural gas projects” said Ashish Khanna, Program Leader for Sustainable Development at the World Bank.

The report indicates that the action plan to further enabling private investment requires clear policy actions to resolve four cross cutting barriers to private investment – namely better management of land, transparency in Government procurement, efficiency in state owned enterprise and encouraging long term domestic financing. This needs to be complemented with developing projects for private investments with maximum economic impact, like the regional energy hub, logistics corridors, freight transport and agricultural transformation hubs.

The gains from reforms would also free up scarce public resources and allow for them to be re-allocated to investments in the education and health of Egyptians, the country’s human capital. Reforms in the energy sector provide an example of what is possible. The reform of energy subsidies freed up US$14 billon, reduced the pressure on the national budget and allowed the quadrupling of the investments in social safety net programs.

According to the report, for Egypt to maintain its reform momentum and focus on investing in its citizens, it will need to broaden and deepen its reform agenda to other sectors. This would be part of a fundamental shift away from the state as a provider of employment and output to an enabler of private investment; with the economy driven by a dynamic private sector generating jobs for the youth.

The report identifies four sectors which have huge potential for private investments and illustrates how successfully attracting those investments would generate growth, create jobs and ultimately contribute to developing Egypt’s human capital. The four sectors analyzed in the report are: transport, energy, water and sanitation, and agriculture.

The World Bank provides technical, analytical and financial support to help Egypt reduce poverty and boost shared prosperity. The focus of Bank support includes social safety nets, energy, transport, rural water and sanitation, irrigation, social housing, health care, job creation, and financing for micro and small enterprises. The World Bank currently has a portfolio of 16 projects with a total commitment of US$6.69 billion.

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New Initiative to Mitigate Risk for Global Solar Scale-up

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The World Bank and Agence Française de Développement (AFD) are developing a joint Global Solar Risk Mitigation Initiative (SRMI), an integrated approach to tackle policy, technical and financial issues associated with scaling up solar energy deployment, especially in some of the world’s poorest countries.

Initiated in Delhi at the first International Solar Alliance (ISA) summit in March 2018, the initiative will support the ISA’s goal to reduce costs and mobilize $1,000 billion in public and private investments to finance 1,000 GW of global solar capacity by 2030.

“The World Bank, in partnership with AFD, remains committed to the International Solar Alliance’s goals and to global efforts to fight climate change. Through this new, integrated approach, we hope to further scale up solar energy use by reducing the cost of financing for solar projects and de-risking them, especially in low-income countries,” said Riccardo Puliti, Senior Director of Energy and Extractives at the World Bank.

As the costs for solar power have fallen steadily, solar power is increasingly viewed as a key component in the fight against climate change. However, solar deployment has been slow in some emerging markets, particularly Africa, due to layers of risks perceived by the private sector in financing solar projects. The SRMI aims to change that.

“This partnership with ISA and the World Bank is another step towards achieving the objective of the Paris Agreement of redirecting financial flows in favor of low carbon and resilient development pathways.  AFD is glad to join forces with these partners to deliver on the commitments made at COP21, to bring solutions to de-risk potential solar investments and mobilize the private sector to invest in sustainable development” said Rémy RIOUX, CEO of AFD.

The SRMI’s integrated approach will include:

  • Support for the development of an enabling policy environment in targeted countries
  • A new digital procurement (e-tendering) platform to facilitate and streamline solar auctions
  • Targeting relatively small (under 20 MW) solar projects, offering a more comprehensive risk mitigation package of support to a wider range of investors and financiers to promote scale up at later stages. The financial risk mitigation package offered by SRMI will be supported by technical assistance and concerted engagement on planning, resource mapping and power sector reforms to ensure the creditworthiness of utilities in these countries
  • Mitigating the residual project’s risks through adequate risk mitigation financial instruments for both on and off-grid projects

The governments of India and France launched the ISA, an international organization as part of the Paris Climate Agreement in 2015 to scale up solar energy resources, reduce the cost of financing for solar projects around the world and ultimately help reach the Sustainable Development Goal on energy (SDG7) of providing access to affordable, reliable, sustainable and modern energy to all. To date, 71 countries have signed the constituting treaty of the ISA, and 48 have ratified it.

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