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The EU will soon make a U-turn in its approach to Russia

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

1The European Union will soon review its sanctions policy toward Russia and shift its focus to cooperation, president of the Greek-Eurasian Business Council and Greece’s former Deputy Foreign Minister Spyros Kouvelis told Sputnik.”The EU will gradually start reviewing its position towards the sanctions… I believe it is not a thing that will last for a very long time,” Kouvelis said.He stressed that cooperation with Russia had been made more complicated because of the sanctions, but expressed certainty that it is always possible to find ways of working together, even under such conditions. According to Kouvelis, the sanctions regime “hampers the economy of not only the Russian Federation, but also the European Union” as it “does not serve the building of bridges between two very important potential partners, like the European Union and the Russian Federation”.

2Iran’s economy will grow whether sanctions are lifted or not and that Tehran will not forget those countries which maintained relations during the worst of times. Deputy Foreign Minister Majid Takht Ravanchi says less reliance on oil revenues and better tax revenues will drive Iran’s economic growth.“While sanctions relief is important to make the economy better, that is not the only instrument that the government has at its disposal,” Ravanvhi was quoted by Bloomberg as saying in an interview.Since late 2013, oil exports have declined by more than one million barrels per day, taking more than $100 billion from the revenue stream. Crude price slump by about 60% over the past year has dealt an added blow. President Hassan Rouhani says his government has reduced reliance on oil revenues from an average of 45% over the past two decades to about 31.5% next year.

3President of Kazakhstan Nursultan Nazarbayev and Chinese leader Xi Jinping signed a declaration on a new stage in the bilateral strategic partnership during a meeting Monday. Issues of bilateral cooperation in trade, economic, investment, credit, finance, culture and humanitarian spheres were discussed during the meeting.In May, Xi visited the Kazakh capital Astana to discuss the Silk Road Economic Belt, Chinese government’s economic development framework, announced in 2013, with the primary aim of integrating trade and investment in Eurasia.

4Azeri borders are safe as long as Baku has the support of Turkey, there can be no problems between the two states, Turkish Prime Minister said, according to Hurriyet Daily.“We are always together,” Ahmet Davutoglu told reporters on Sunday, August 30, Turkey’s Victory Day. “Azerbaijan’s holidays are our holidays, and vice versa.”The Agreement on Strategic Partnership and Mutual Support between Azerbaijan and Turkey for strategic partnership and security co-operation was signed in 2010 in Baku by Presidents Ilham Aliyev and Abdullah Gül. Azerbaijan and Turkey often describe their relations as “one nation with two states”.

5The issues of interaction and preparation of a new strategy of partnership between Turkmenistan and the World Bank (WB) have been discussed in the ministry of foreign affairs of Turkmenistan during the meeting with the World Bank Regional Director for Central Asia Saroj Kumar Jha, who arrived with a working visit to Ashgabat. A constructive dialogue on the global agenda and the rational use of water resources in the region was held during the meeting. Saroj Kumar Jha mentioned the importance of capacity building for regional cooperation and said that the World Bank Group (WB Group) is ready to provide full support to the initiatives of Turkmenistan in this direction.

6A Perfect Cyber Storm: Russia and China Teaming Together.“China and Russia, by far, have the most sophisticated cyber capabilities in the world. The offensive cyber capabilities of each individual country was a threat already to the United States but if they now work together in earnest the United States could be facing an unprecedented cyber danger. According to senior military officials, Russia’s Ministry of Defense is establishing its own cyber command that will be responsible for conducting offensive cyber activities such as propaganda operations and inserting malware into enemy command and control systems” Laura Garrido for Modern Diplomacy.

7The Kazatomprom National Atomic Company has approved a new development strategy for 2015-2025, which provides for the preservation of the leading positions of the company and Kazakhstan on the extraction of natural uranium. Implementation of the strategy will make it possible for Kazatomprom and Kazakhstan to preserve the achieved leading positions on production of natural uranium in the world.In order to do that, the company will develop existing mines and build the new ones, as well as introduce advanced technologies in order to improve the efficiency and reduce the prime cost of uranium extraction. One of the strategic directions of Kazatomprom is the business diversification in all subsequent stages of front-end nuclear fuel cycle.

8Iranian President Hassan Rouhani said Iran and Azerbaijan have worked a lot toward attaining mutual interests. “We can have a lot of relations with Azerbaijan. We have established very friendly relations for common good,” he told the Trend news correspondent during a press conference in Tehran August 29. Effort has been made to have economic relations and joint cooperation around the Caspian Sea, he noted. Now the two governments are sure that they can cooperate, and it is hoped that the efforts can help regional security, including the Nagorno-Karabakh issue, he said.

9Turkmenistan is developing a draft investment program of the country for 2016. This was noted at a meeting of the Cabinet of Ministers of the country chaired by President Gurbanguly Berdymukhamedov, the government reported last week.According to the preliminary calculations, the volume of domestic investments in Turkmenistan’s economy will amount to 51.5 billion manats ($14.72 billion) for 2015. The government plans to allocate 56.2 billion manats ($16.06 billion) to the development of the sectors of the national economy at the expense of all sources of financing in 2016. Some 65.5 percent of these investments will be allocated to the construction of production facilities, and 34.5 percent in social and cultural facilities.

10Iran’s grand ayatollah Hossein Nouri Hamedani visits Azerbaijan to meet with country’s Shia clerics and visit historic Azerbaijani cities. Nouri Hamedani arrived in Baku on August 31 for a 6-day visit at an invitation of the Caucasian Muslims Office. Nouri Hamedani is scheduled to meet Shia clerics at Teze Pir mosque in Baku and visit the historic cities of Ganja and Shamakhi. He will meet with local religious leaders in these cities.Previously, the grand ayatollah had traveled to Russia, Kenya, and Tanzania.

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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To Fulfill its Mission, ADB Must Prioritize Sustainability

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Asia is rapidly evolving as are its development needs. To keep pace with these changing needs and to ensure that solutions multilateral development banks like the Asian Development Bank (ADB) bring are effective, thorough assessment of their operations is crucial. In its 2018 Annual Evaluation Review (AER), Independent Evaluation at ADB draws out an overall picture of ADB’s performance.

“Delivering results is critical to ADB’s existence. Evaluation is a central piece for ensuring that the solutions ADB brings to development problems are fit for purpose, and as effective as possible,” said Director General of Independent Evaluation at ADB Mr. Marvin Taylor-Dormond.

The AER identifies areas in which ADB has been successful, where it hasn’t, and what were the reasons behind this. A review of its overall performance reveals that over the past 3 years, there has been a marginal decline in the success rate of public sector projects. In 2015 to 2017, 74% of public sector projects were successful, down from 76% in 2014 to 2016. A sector-wise look shows that four sectors—education, health, public sector management, and transport—dropped in performance. These four sectors account for 58% of the portfolio that was evaluated.

If one looks at private sector-supported ADB projects, the decline is more apparent. About 58% of projects were categorized successful in 2015 to 2017, compared to 67% in 2014 to 2016. This fall can be attributed to the disappointing performance in financial intermediary and private equity funds, which account for half of the projects evaluated.

Performance at the country-level was steady at 75%, although it was still below ADB’s 80% target. AER notes that ADB achieved good results in its operations with middle-income countries. Also, when it came to promoting inclusive growth, middle-income countries were highly appreciative of ADB’s work. Other areas where ADB is doing well include environmentally sustainable growth, regional cooperation, and gender mainstreaming.

However, there are some areas where results can be improved. The Independent Evaluation Department (IED) assesses the relevance, effectiveness, efficiency, and sustainability of ADB projects and programs. One third of completed projects and programs were evaluated as less likely to be sustainable, well below the desired rate of four out of five.

“The sustainability problem is well illustrated by the inadequate financing for operations and maintenance of ADB-supported transport projects,” said IED Thematic and Country Division Director Mr. Walter Kolkma. “Other factors affecting the sustainability of ADB operations are often limited capacity of government agencies to run these projects and governance issues.”

For private sector operations, the AER recommends that to achieve better outcomes, ADB expand operations beyond infrastructure and help middle-income countries better adapt to new challenges. With specific reference to the use and leverage of guarantees, loans, and other credit enhancement tools, the AER calls for the mobilization of much-needed private sector finance for development, particularly to help close Asia’s huge infrastructure gap, estimated at $1.7 trillion a year.

“Impartial evaluation is crucial for accountability and learning. ADB must capitalize its learning and use these lessons to design better, smarter, and stronger future projects to stay relevant because in today’s world, developing member countries are not short of options of development financing,” noted Mr. Taylor-Dormond.

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China to Improve Inland Waterway Transport with World Bank Support

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The World Bank’s Board of Executive Directors approved a US$150 million loan today to improve the capacity and reliability of inland waterway transport along the Han River in China’s Hubei Province. The project will increase connectivity between the less developed central and western regions and the more prosperous eastern provinces, and yield local and global environmental benefits by promoting a green mode of transport and producing renewable energy.

As part of the Yangtze River Economic Belt, China is relocating industries in the less developed inland regions of the middle and upper reaches of the Yangtze River. This requires an efficient multimodal transport that can move freight over long distances in a sustainable manner.

“Inland waterway transport is a cost effective and environmentally friendly mode of transport that is underexploited in China. The new project will increase inland waterway transport along the Han River and promote a shift from roads to waterways, which reduces carbon emissions from transport,” said Zhai Xiaoke, World Bank’s Senior Transport Specialist and leader of the project.

The Hubei Inland Waterway Improvement Project will construct the Yakou Navigation-Hydropower Complex in the middle reaches of the Han River. It will upgrade about 53 kilometers of waterway between the Yakou and the Cuijiaying Complex to Class III navigation standards and help enable the completed investments at other cascades to realize their full navigation capacity and economic benefits. The hydropower station will supply renewable energy to Yicheng City, which is located 16 kilometers from Yakou.

The project will also provide gravity flow irrigation to over 5,300 hectares of existing farmland. Other anticipated benefits of the project include the significant reduction of lifting costs, the improvement of flood resilience, and the creation of a better landscape for recreational tourism.

The total investment of the project is US$515.13 million; the IBRD loan will finance US$150 million and the Hubei Provincial Government will invest US$365.13 million. About 5.61 million residents along the Han River are expected to benefit from the economic development and ecological improvement brought about by the greener transport mode.

Starting with the First Inland Waterways Project in 1995, the World Bank has supported seven inland waterway projects in China, with each successive phase introducing important additionality, ranging from technical innovation to integrated development and management of multi-purpose inland waterway transport, as well as improved institutional capacity and environmental aspects.

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EU investment in gas interconnection between Bulgaria and Serbia to enhance energy security in the region

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To boost the diversification of energy sources in the Western Balkan region, reduce dependency on one dominant supplier and increase energy security, a joint commitment to implement the gas interconnector between Bulgaria and Serbia has been signed today 17 May by the Energy Minister of Bulgaria, Ms. Temenuzhka Petkova, and the Energy Minister of Serbia, Mr. Aleksandar Antić, on the occasion of the Western Balkans summit of Leaders in Sofia, Bulgaria. This interconnection will for the first time link the gas systems of Bulgaria and Serbia.

This new political impetus to the project showcases the political will of all parties. Once completed, the interconnector will constitute a major contribution to the solidarity in the Energy Union. The interconnector will allow for the transfer of between 1 and 1.8 billion cubic metres of natural gas annually from Bulgaria to Serbia and 0.15 billion cubic metres from Serbia to Bulgaria. The project forms part of the EU’s Projects of Common Interest and is a priority in the context of the Central and South Eastern Europe Energy Connectivity High Level Group (CESEC).

The European Commission is contributing notably to the Serbian side of the Bulgaria-Serbia Interconnector with a Pre-Accession grant of EUR 49.6 million. The Commission is actively facilitating progress on this priority project in close contact with both the Bulgarian and the Serbian authorities.

The new gas pipeline will provide a new supply route from Bulgaria not only to Serbia, but also to other parts of the South-East European region. This will enable access to liquefied natural gas from Greece, Azeri gas from the Southern Gas Corridor, as well as gas from Black Sea offshore production, and ensure improved integration of these sources into the EU’s internal energy market.

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