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
1Kazakhstan switched to a floating exchange rate, creating fears that the world is about to witness a new round of “currency wars.” After currency devaluations in neighboring Russia and China, oil and mineral-rich Kazakhstan’s currency fell 36 percent overnight after its government introduced a floating exchange rate for its currency, the tenge. While Kazakhstan’s economy is more dependent on oil prices than Russia’s, it has been able to avoid currency devaluations until now. After the country’s currency collapsed, many stores closed, apparently to change price tags. The Alser electronics store in the central department store of Almaty, Kazakhstan’s largest city hung up a sign saying it is “closed for technical reasons.” [Sputnik]
2Iran, Kazakhstan discuss launching energy trade zone. Iran, Kazakhstan’s provincial officials discussed mutual ties, including establishment of a free trade zone of energy, oil and gas in the Caspian Sea. Rabi’ Fallah Jolodar the governor-general of Iran’s Mazandaran Province and Rakimbek Amirjanov a deputy governor-general of Kazakhstan’s Mangystau Province have conferred over ways to further develop bilateral ties, Fars News Agency reported August 19. During the meeting, the two sides focused on the establishment of a free trade zone of energy, oil and gas in the Caspian Sea. Amirjanov noted that launching the Aktau-Sari flight would further facilitate economic cooperation between the two provinces.Data released by Iran’s Customs Administration shows last year Iran exported $205.11 million of non-oil goods to Kazakhstan while importing $175.95 million worth non-oil goods.
3Russian lawmakers are calling the largest allied airborne drills in Europe since the Cold War a threat and provocation rather than a defensive exercise. The war games, dubbed Swift Reponse 15, involve nearly 5,000 soldiers from 11 NATO countries flying across Germany, Italy, Bulgaria, and Romania, and will continue from August 15 to September 13.In announcing the games August 18, the U.S. Army said they were aimed at demonstrating “high-readiness” and the capacity to maintain “a strong and secure Europe.”But Vladimir Komoyedov, head of the State Duma Defense Committee, said August 19 that Russia in response is keeping its forces “on alert.”Konstantin Kosachyov, head of the Federation Council International Affairs Committee, said the exercises are egging on a recent escalation of fighting in eastern Ukraine.”Conducting large-scale NATO drills is tantamount to conducting an operation to cover or support another adventure of Kyiv.” He said the “hyper exercise” is actually undermining security in Europe rather than increasing it. “Europe is secure and strong precisely when sabers are rattled less,” he said.
4IS Releases Russian Propaganda App. Islamic State (IS) militants from the extremist group’s Russian-speaking faction have released a propaganda app for Google’s popular Android platform. The app, called Caucas, is not available through the Google Play Store, where Android users obtain mainstream apps. Instead, it was made available for download on August 18 via links posted on sites such as archive.org, a U.S.-based digital archive that IS often uses to post videos. The app provides several types of IS propaganda in Russian. [RFERL]
5Almaty among Top 100 liveable cities. Economist Intelligence Unit (EIU) rated 140 cities by livability. The cities were ranked based on “stability, healthcare, culture and environment, education and infrastructure”. Almaty landed on the 100th place of the rating earning 65.3 points out of 100. The City of Apples earned 77 points for stability, 66.7 for healthcare, 57.6 for culture and environment, 66.7 for education and 60.7 for infrastructure. [Tengrinews]
6Azerbaijan has developed six projects under the Harmonizing Digital Markets Initiative and submitted them to the European Commission for financing, according to remarks made by Tofig Babayev on August 17. The director of the Regional Information Technologies Academy told Trend that the main projects to be financed in 2016-2017 will be determined by the end of 2015.”The projects developed in six areas of HDM Initiative, including e-customs, e-commerce, e-business, and e-security, will be further implemented in Azerbaijan,” he noted. The HDM Initiative includes countries of the Eastern Partnership (Belarus, Moldova, Ukraine, Azerbaijan, Georgia and Armenia).
7What makes Kazakhstan right for the bank deal? “Kazakhstan is home to some of the world’s most abundant uranium deposits, making it a key contributor to nuclear fuel supplies around the globe. In 2011, Kazakhstan increased uranium production to almost 20,000 tonnes, making it the largest uranium-producing country. Russia, China and Japan all export significant percentages of their uranium supplies from Kazakhstan. Although Kazakhstan currently does not generate nuclear power, the country is exploring assistance from Russia and Japan to construct nuclear power plants” [Gulf News]
8Russia’s top diplomat has said his country doesn’t care about the United States’ unilateral sanctions against Iran over the delivery of the Russian-made S-300 anti-aircraft missile defense system to the Islamic Republic. “The U.S. sanctions are no concern of ours,” Sergei Lavrov said on August 19, emphasizing that Moscow stands only by its own international commitments, Press TV reported. This came as Washington voiced concern a day earlier over delivery of the S-300 missiles to the Islamic Republic. John Kirby, U.S. State Department spokesman, said that Washington is concerned about the delivery of the defense system to Tehran despite the fact the move does not violate any UN Security Council resolutions.
9The oil sector, which determined direct investments in Azerbaijan for two months running, failed to restore this status for March-July. In July direct investments in the Azerbaijan’s oil sector increased by 2.1% against June providing only 47.9% of all investments in the economy against 64.1% in January, abc.az reports. The State Statistics Committee (SSC) informs that over Jan-Jul 2015 it was invested AZN 4.125 bn in the oil sector ($3.9 bn on the exchange rate by the end of reported period of AZN 1.0495 to the US dollar) that is by 19.57% higher against the 2014 same term. The non-oil sector was invested AZN 5.2 bn (-6.7%). Oil investments for the reported period made up 44% and non-oil investments -56% of all investments in the economy.
10Iran is going to inaugurate eight new petrochemical projects during the current Iranian fiscal year, Ali Mohammad Bosaqzadeh, an official with the Iranian National Petrochemical Industries Company, said. He added that Iran’s petrochemical production increased by 4 percent in the current Iranian calendar year (since March 21). According to Bosaqzadeh, 18 million metric tons of petrochemical products were produced from March 21 to July 22. He said eight petrochemical firms across the country had productions above 90 of their nominal capacities in the meantime.During the period, Iran sold about 4.4 million metric tons of petrochemical products worth 860 trillion rials ($28.8 billion) in the domestic market.
World Bank Financing to Help Kazakhstan Unleash Full Potential of its Livestock Industry
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.
Turkey’s Rail Connectivity and Logistics will Improve with World Bank Financing
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.
Second phase of the Nurek Hydropower Rehabilitation Project in Tajikistan
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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