New visa regime, $22b in frozen assets, World Bank forecasts, and a beautiful drone adventure

Date: Jan 2018

As you will no doubt be aware, protests broke out in Iran over Christmas. Demonstrators protested against rising prices, unemployment and corruption. Media outlets have reported over 20 deaths, and even the arrest of the country’s former president, Mahmoud Ahmadinejad. Whilst the protests have now seemingly ended, questions are still being raised about the deaths of some of those held in custody. The US and Saudi Arabia have expressed support for the Iranian protesters. You can read an interesting analysis from Stratfor (via Forbes) here.

Sweden’s Telia has agreed to sell its controlling stake in K-Cell, the Kazakh mobile operator. It is likely that the buyer will be Kazakhtelecom, i.e. the state. According to rumours, the conditions of the previously announced tender were not satisfactory for other potential buyers, including China Mobile. The value of the transaction is thought to be approximately $1 billion.

An unbelievable story has emerged involving The Bank of New York Mellon’s unprecedented decision to freeze $22 billion of the Kazakh national fund’s assets in connection with a dispute between a Moldovan businessman and Kazakhstan. The move is relatively strange, considering that the national fund’s assets are protected by state immunity. Whilst the Ministry of Justice is staying silent, the former prime minister of Kazakhstan, Akezhan Kazhegeldin, said in an article that he was of the opinion that the whole unfortunate story was the result of political intrigue and irresponsibility. Meanwhile, Kazakhstan says it may appeal the ruling.

President Nazarbayev delivered his annual message to the Kazakh nation. Traditionally, such addresses have included positive facts and figures, covering almost all sectors of the economy and key social issues. This time, Nazarbayev spoke more about the importance of technology and the digital economy, making no sensational statements.

After very long negotiations, Tajikistan and Uzbekistan have come to an agreement to waive visa requirements and have also finally resolved some crucial border disputes. In addition, the territory of the Farhad Hydroelectric Power Station will now belong to Tajikistan, and the hydroelectric power station itself will be the property of Uzbekistan. Diplomacy in action!

During a second attempt, Uzbekistan’s President Mirziyev has approved the state budget. According to Senator Djumagaldiev, in previous years the budget was not set out in as much detail. For the first time, forecasts have been made for a surplus of 0.02% of GDP. However, questions have also been raised. For example, why is spending on culture and sports several times higher than on science, which should clearly be a priority area?

World Bank experts have forecasted 2.9% economic growth in Central Asia due to a slight increase in oil prices and the relatively positive state of the global financial market. The EBRD's increasing activity in the region, particularly in Uzbekistan, is a highly anticipated consequence of this positive outlook, as well as of the ongoing reforms in the Central Asian country. If you want further reading, The Diplomat recently published this interesting article on expectations in 2018 in Central Asia.

In 2017, Kazakhstan produced 86.2 million tonnes of oil and, notably, overtook Iraq’s output. This is a violation of the agreements reached at the OPEC+ summit two years ago. However, the consequences of this violation for Kazakhstan are not as serious as you might think. Firstly, this overproduction will not have a big impact on the overall picture when you put the country’s production in a global context.  Secondly, the fact that Kazakhstan had exceeded the permissible rates of oil production was widely known but broadly ignored, as Kazakhstan's continuing membership in the agreement is the most important thing.

Kyrgyzstan’s “Smart City” project will be implemented by Huawei within three years. However, as yet it is not clear whether the project will be implemented in a PPP format or whether the government will simply hire Huawei as a general contractor. The project was initially announced five years ago, but progress was hampered by the number of court hearings following the tender results.

The Iranian oil tanker that erupted in flames last week following a collision with a Chinese ship off the coast of China has partially exploded. The search for 31 crew members continues, whilst investigators, insurers and banks work together closely. The situation is complicated by the fact that banks are still struggling to pay for Iranian projects. There is a risk that it will be extremely difficult to pay compensation due to sanctions, no matter which party is found to be liable.

Italian tourists visiting Kyrgyzstan and Tajikistan used a drone to film their trip, producing some incredibly stunning results. Why not enjoy this beautifully calming distraction at the end of a long week!

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