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 the most stable country in the South Caucasus in terms of stability in domestic and foreign policy, economic power and the ability to resist extremism, says a report published by Minchenko Consulting. The report mentions that the collapse of the USSR gave birth to six armed conflicts, the majority of which still remain unsettled. “The South Caucasus is the only region in the post-Soviet area where some of the states do not have diplomatic relations. There are no diplomatic relations between Azerbaijan and Armenia, Georgia and Russia, Armenia and Turkey,” says the report.Azerbaijan is mentioned as the most stable country among the three South Caucasian countries in terms of stability in domestic and foreign policy, economic power and the ability to resist extremism. Azerbaijan comes first thanks to its monolithic political system and strong economy.
2Russia’s Defense Ministry broadcasting channel, Zvezda-TV, reports that Moscow has plans to start building new early warning radar stations in Azerbijan and near the Arctic Circle. The radar stations are meant to provide long-distance monitoring of airspace. Construction of the Voronezh-DM radar will start at Azerbaijan’s Soviet-era Qabala military complex in 2017 and is scheduled to be completed during 2019. The new radar will replace old Soviet radar system Daryal, which Russia stopped using in December 2012 due to differences with Baku over the Qabala lease fee.
3Some 234 trains have been launched via the China-Europe-China railway route through Kazakhstan for the first seven months of 2015, which is almost three times more than in the same period of last year, Kazakhstan Temir Zholy (Railway of Kazakhstan) said.”As of 2015, the number of organized container trains is expected to increase up to 510 or more than 40,000 containers, which is almost 40 times more than in 2011,” a statement said.”Kazakhstan Temir Zholy is actively working to implement the transit-transport potential of the country in three main vectors: East-West (China-Europe-China), TRACECA (China, Turkey, the Caucasus); North-South (China, Russia, India, Gulf countries),” a statement said. “Great success in this area was observed in transcontinental transportation via the China-Europe-China route.” The container transportation via this route increased, mainly due to redirecting the cargo flow from marine transport to railway transport.
4Kazakhstan Power Market Outlook To 2025. This report elaborates Kazakhstans power market structure and provides historical and forecast numbers for generation, capacity and consumption up to 2025. Detailed analysis of the Kazakhstan power markets regulatory structure, import and export trends, competitive landscape and power projects at various stages of the supply chain is provided. The report also gives a snapshot of the power sector in Kazakhstan on broad parameters of macroeconomics, supply security, generation infrastructure, transmission infrastructure, degree of competition, regulatory scenario and future potential. Financial performance of the leading power companies is also analyzed in the report. [Market Research Reports]
5Turkmenistan has seen a 7.8-percent GDP growth in oil and gas condensate production in the January-July 2015 period. This data was announced at a meeting of the Turkmen Cabinet of Ministers, which summarized the results from various sectors of the national economy for the first seven months of the current year. It was also noted that the country’s GDP growth was at the level of 8.7 percent, including an industrial sector growth rate of about 4.4 percent, 12.6 percent in the construction sector, 13 percent in trade, and 12.2 percent in agricultural production. The volume of investments from all financing resources amounted to 27.7 billion manat, representing a 7.9 percent growth from that of the same period in 2014.
6How Much Pressure Will Iran Put On Oil Prices? “According to Robin Mills, Head of Consulting at Manaar Energy, the anticipation of the Iranian deal has already caused prices to fall and further falls will depend on the pace of the increase in Iranian exports.“Iranian exports will increase somewhat ahead of the formal confirmation of lifting sanctions, about 6 months after the approval of the deal by the U.S. and Iran (which itself takes 3 months from signing), but the return of ~1 million bpd of Iranian exports will depress prices by $5-10 per barrel. In the long term, growing production from Iran will help keep prices moderate,” stated Mills to Oilprice” source: investing.com
7Central Asian Cities: Between Demography and Politics. “We live in a rapidly urbanizing world, where city populations are growing in across the globe at an impressive rate. In 1950, 28.8 percent of the world’s population lived in cities, in 1975 – this figure was 37.2 percent and in 2000 – 45.0 percent, while more recently, in 2009, it exceeded 50 percent. This trend is also apparent in the post-Soviet space, chiefly in Central Asia. In 1959, city-dwellers accounted for 38.5 percent of the population, whereas in 2014 this figure had risen to 47.6 percent, with the population increasing from 8.9 to 32.1 million. According to UN forecasts, by 2050 the region is to become home to 82 million people, with 45 million or 55 percent residing in cities. The fastest increase takes place in major cities, which are gradually becoming into megalopolises, and this gives rise to a range of political challenges for Central Asian states” Artem Dankov for RIAC.
8Kazakhstan’s Mining Fiscal Regime. Kazakhstan has significant fossil fuel reserves, and mineral and metal deposits. It produces a variety of mineral resources such as coal, uranium, lead, zinc, tungsten, molybdenum, borates, phosphorite, copper, potassium and cadmium. The fiscal regime report covers mining industry of Kazakhstan which is governed by the Ministry of Industry and New Technology and Ministry of Environmental Protection. The Law of Subsoil and Subsoil Use is the main regulating law for mining activities in the country. The report outlines governing bodies, governing laws, licenses, rights, obligations and key fiscal terms which includes upfront payments and taxes on subsurface usage, land tax, vehicle tax, deductions, depreciation, loss carry forward, withholding taxes and value added tax (VAT) [Research and Markets]
9Three-day consultations of heads of customs services of the participating countries of international transport project North-South, including Azerbaijan, will start in Delhi tomorrow. Indian ambassador to Russia Pundi Srinivasan Raghavan has informed today that the parties are actively working on launching this project as it will halve the costs on the delivery of goods. Transport corridor from Nava Sheva (Mumbai, India) through Bandar Abbas (Iran) to Astrakhan (Russia) and Baku (Azerbaijan) is expected to reduce much the time of transporting cargo from India to the regions of Central Asia and Russia. Currently, an important issue in the running of transport corridor North-South is the completion of railway line Qazvin-Rasht-Astara with length of 375 km.
10Kazakhstan, Azerbaijan, Kyrgyzstan and Turkey agreed to create a common Turkic-speaking channel.Memo was signed during the first meeting of the ministers in the sphere of information and media council of cooperation in Astana. The channel will broadcast in the language of the member-states which signed a memo on its creation.
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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