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
1Many states — including Britain, France and North Korea — have used nuclear weapons to permit greater independence from their senior allies. Indeed, fear of that independence has frequently driven the United States’ surprisingly vigorous efforts to prevent even its allies from acquiring nuclear weapons, as several scholars have documented. To the extent that Iran’s senior allies — Russia and China — now constrain Iranian behavior, we might expect Iran to behave more independently upon acquiring nuclear weapons. But Russia and China are (at best) loose allies of Iran, so this effect is likely to be limited. Mark S. Bell for The Washington Post
2Former US secretary of state Henry Kissinger has urged the United States to treat Russia as a “great power” and stop making efforts to break it.“Breaking Russia has become an objective [for US officials] the long-range purpose should be to integrate it,” the 92-year-old said during an interview with The National Interest published on Wednesday.“If we treat Russia seriously as a great power, we need at an early stage to determine whether their concerns can be reconciled with our necessities,” he told the policy magazine.In his interview, Kissinger accused the American and European governments for failing to recognize the historical context in which the confrontation between Russia and Ukraine started.”The relationship between Ukraine and Russia will always have a special character in the Russian mind,” he said.“It can never be limited to a relationship of two traditional sovereign states, not from the Russian point of view, maybe not even from Ukraine’s. So, what happens in Ukraine cannot be put into a simple formula of applying principles that worked in Western Europe,” the veteran diplomat added.
3The Asian Development Bank (ADB) has approved a $1 billion loan to help Kazakhstan continue government programs to strengthen the economy in the face of recent challenges.”This loan from ADB’s Countercyclical Support Facility will give the country the fiscal leeway it needs to mitigate the unanticipated and significant negative impacts of the steep decline in world oil prices and the economic slowdown of the neighboring countries,” said Lotte Schou-Zibell, Principal Economist in the Central and West Asia Department.
4Iran will cooperate with Azerbaijan on gas transportation to Europe through the Southern Gas Corridor, Mahmoud Vaezi told Trend on August 20.The Iranian Information and Communications Technology Minister, said that his country plans to export gas not only to Asian markets, but to Europe as well.“Transportation through Azerbaijan is one of the routes of bringing Iranian gas to Europe,” Vaezi noted. The Southern Gas Corridor is a priority energy project for the EU. It envisages the transit of gas from the Caspian Sea region to European countries through Georgia and Turkey.
5Azerbaijan: Back in the USSR? The conviction of two prominent dissidents conjures up the Soviet past. Political prisoners are nothing new in today’s Azerbaijan, run by Ilham Aliev, its authoritarian president. But the Yunuses’ case is especially egregious. They are veterans of the Soviet dissident movement and still the country’s most prominent civil-rights activists. In the early 1980s they worked for a samizdat newspaper, Express Chronicle. In the late 1980s Mrs Yunus was at the forefront of Mikhail Gorbachev’s perestroika reforms, which held out the promise of a free and dignified life. When Soviet tanks rolled into Baku in 1990 in a desperate attempt to stop the crumbling of the empire, she led a national independence movement. [The Economist]
6The Delegation of Azerbaijan to the OSCE rejects the allegations made by the US, EU, Canada and Norway with respect to the situation with human rights in Azerbaijan and find such statement as undermining bilateral relations with these countries, said the statement of the Delegation of Azerbaijan at the 1064th Special meeting of the OSCE Permanent Council on August 19. “Azerbaijan condemns the attempts to deliberately politicize and misinterpret ongoing legal cases against some individuals in our country,” said the statement. “Azerbaijan calls on US, EU, its member states, EU officials and institutions concerned, Canada and Norway to respect the decisions of justice system in Azerbaijan and to refrain from interfering into ongoing legal cases. We consider the references made in the statements to some anonymous international monitor’s observations in courts as seriously flawed and designed with a view to exert pressure on administration of justice.”Every person in Azerbaijan is equal before the law and bears equal responsibility for his or her deeds, according to the statement.
7U.N. human rights experts have criticized a court in Azerbaijan for what they say were “politically motivated” convictions of a prominent rights defender and her husband.A court in Baku on Aug. 13 sentenced Leyla Yunus to 8½ years in prison on charges of fraud, tax evasion and illegal business activities. Her husband Arif Yunus was given a 7-year sentence for fraud.Six experts linked to the U.N.’s Human Rights Council in Geneva said in a statement Thursday that the convictions were a sign of “the continuing repression of independent civil society in Azerbaijan.”The Yunuses both pleaded not guilty during the trial. They have suffered serious health problems in custody since their arrest a year ago, and the experts urged Azerbaijan authorities to provide proper medical care. [The Associated Press]
8China Petroleum & Chemical Corp. completed the purchase of a 50 percent stake in a Kazakh oil producer from Lukoil PJSC for $1.09 billion, gaining full control of a venture with stakes in five oil and gas fields.The sale of Caspian Investments Resources Ltd. received the required permits from the state authorities of the Kazakhstan in late July, Lukoil said in a statement Thursday. The deal concluded after more than a year of talks and the price is less than the $1.2 billion agreed on in April 2014.
9Is A Slow Putsch Against Putin Under Way? A quarter century after the fall of the USSR, Kremlinologists sense a putsch in the air, despite Vladimir Putin’s overwhelming approval ratings. The tea leaves say that the Kremlin elite, dubbed by some as Politburo 2.0, is currently deciding whether Putin should go before he makes a bad situation worse. The founder of the respected daily Kommersant predicts that a dramatic change is about to take place and advises Russians who have the means to leave the country for a month or so and take their children with them. Paul Roderick Gregory for Forbes.
10Is Turkmenistan Opening Up?Turkmenistan remains the only Central Asian country that requires citizens of all neighboring countries to obtain a visa before visiting–with tiny exceptions (visits lasting five days or less) for people living in select bordering communities in Kazakhstan and Uzbekistan. Though many statements have been made in the past, both by Berdimuhamedov and other regional leaders, about the need to ease travel over borders, there is little overall progress on that front. [The Diplomat]
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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