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Oil Price Drops Raise Fears of Unrest

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

1Oil, the lifeblood of many countries that produce and sell it, appears to be rapidly turning into an ever-cheaper economic curse.While the price has been declining for months, forecasts have always been hedged with the assumption that oil would eventually stabilize or at least not stay low for long. But new anxieties about frailties in China, the world’s most voracious consumer of energy, have raised fears that the price of oil, now 30 percent lower than it was just a few months ago, could remain depressed far longer than even the most pessimistic projections, and do even deeper damage to oil exporters. [New York Times]

2Russian President Vladimir Putin will meet with his Egyptian counterpart Abdel Fatah Al-Sisi along with King Abdullah II of Jordan and the crown prince of Abu Dhabi, Sheikh Mohammed Al-Nahyan, in a series of talks starting on Tuesday in Moscow. Putin’s meeting with King Abdullah will pay special attention to the implementation of joint projects, including the construction of the first Jordanian nuclear power plant, according to a statement released by the Kremlin on Monday. Talks with Crown Prince Al-Nahyan, also the deputy supreme commander of the armed forces of the United Arab Emirates, will focus on enhancing security and stability in the Middle East and North Africa, in addition to bilateral cooperation in energy and investment.

3New gas field discovered in Turkmenistan. A powerful commercial natural gas inflow was obtained at the ‘Bagly-1’ area in the Karakum Desert in Turkmenistan’s Mary Province, the Turkmen newspaper ‘Neutral Turkmenistan’ said. According to the newspaper this happened after the first exploration well at the area reached a depth of 4,690 meters. The daily hydrocarbon output at the new field exceeds one and a half million cubic meters. The newspaper said the new field’s prospect can also be judged from its being located a few dozen kilometers away from the gigantic Galkynysh field, which is famous worldwide for its explored and proven natural gas reserves.

4Azerbaijan`s investment potential will be discussed as part of “Milan Expo-2015″ international exhibition on Tuesday.”Invest in Azerbaijan: Business environment and opportunities” event will be co-organized by the Azerbaijan Export and Investment Promotion Foundation (AZPROMO) and Azerbaijan-Italy Trade Institute (ITAZERCOM).The agenda includes discussions on prospects for cooperation between the two countries in the fields of information and communication technologies, agriculture, chemistry, mechanics, environment, industry and construction.The event will bring together representatives of AZPROMO, Azerbaijan Investment Company, Sumgait Chemical Industrial Park, and Clean City company.

5Kazakhstan’s Air Defence Forces have received five air defence missile systems from Russia according to the press-office of Kazakhstan’s Ministry of Defense.“These S300PS air defence missile systems will be tested during live fire exercise and transferred to military bases of Kazakhstan’s Air Defence Forces to be in operation readiness covering the airspace of the Republic of Kazakhstan,” the Commander of Kazakhstan’s AA Troops Nurzhan Mukanov said. The S300PS AA missile systems were given to Kazakhstan free of charge.

6Preparation for the official visit of Turkmen President Gurbanguly Berdimuhammadov to Afghanistan, scheduled for August 27 was discussed at the last meeting of the Cabinet of Ministers in Ashgabat, the Turkmen government reported. The president of Turkmenistan said that the country’s stance is exclusively peaceful settlement of the situation in Afghanistan by taking concrete steps to restore the Afghan economy and social infrastructure, according to the message.All this is proved by large-scale projects initiated by the Turkmen side, such as the construction of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline and the construction of Turkmenistan-Afghanistan-Tajikistan railway, which started in 2013.

7Azerbaijan has expanded the investment in the social and economic spheres of the country in January to July, 2015.The investments in the mentioned spheres increased by 3.5 percent as compared with the same period of the past year, according to the report of the Azerbaijan State Statistical Committee.The total amount of investments amounted to 9.37 billion manats (over $8.94 billion), including 58.6 percent of internal investments.The government allocated the largest investments in the field of the construction and installation works for this period, amounting to 74.7 percent of the total volume of investments.

8Ahead of a high-level technical delegation from Iran, the Ministry of Commerce on Monday explored various avenues to enhance bilateral trade to $5 billion in the next five years after lifting of international sanctions against Iran. A delegation from Iran will visit Islamabad on August 25-26 to revive the trade links. Pakistan has a narrow export basket to Iran because 63 per cent of exports comprised of rice alone. Pakistan’s exports to Iran fell to a low level of $43 million in 2014 from $182m in 2010. While Iranian imports fell to $186m in 2014 from $884m in 2010.

9Duda on Top of Russian Threat. Poland sees Russia as a pre-eminent threat. This has been the essence of speeches made by Andrzej Duda, the newly appointed President who has called for additional security guarantees from NATO and has plans to create an anti-Russian bloc within the organization alongside other Eastern European countries. Given Duda’s attitude, it would seem that Russian–Polish relations could deteriorate even further, while tensions in the Baltic–Black Sea Region as a whole will increase sharply. Vadim Trukhachev for RIAC.

10The first lady of Azerbaijan, ISESCO Goodwill Ambassador Mehriban Aliyeva is a very dynamic person with great talents and open-mindedness, Director General of the Islamic Educational, Scientific and Cultural Organization (ISESCO) Dr. Abdulaziz Othman Altwaijri said in an interview with Trend news agency.“She has always been an advocate of dialogue and positive interaction between cultures,” he said.The ISESCO director general went on to add that Mehriban Aliyeva’s support to the World Forum on Intercultural Dialogue is a strong factor of its success in achieving its noble objectives.

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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UN Security Council discusses Kashmir- China urges India and Pakistan to ease tensions

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Women walking past Indian security forces in Srinagar, summer capital of the Indian state of Jammu and Kashmir. Nimisha Jaiswal/IRIN

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.  

In a statement issued on 8 August, UN Secretary-General António Guterres said he had been following the situation in Jammu and Kashmir “with concern”, making an appeal for “maximum restraint”.  

“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.” 

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ADB to Help Drive Modernization in First Loan for Sri Lanka’s Railway Sector

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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.

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World Bank Issues Second Tranche of Blockchain Bond Via Bond-i

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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.

Important information

·          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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