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Eurasian Business Briefing Politics & International Trade

Exxon’s Black Sea hopes dashed

Steven Mnuchin US TreasurySecretaryThe Trump administration has rejected Exxon Mobil’s application for a waiver from sanctions imposed on Russia after the annexation of Crimea and subsequent events in eastern Ukraine, dashing the oil company’s hopes that it could resume drilling in the Black Sea in partnership with Rosneft. (more…)

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Brexit draws UK companies to Iran despite shadow of sanctions

Iranian power plant at ShazandWith the prospect of Brexit limiting their ability to operated within the EU, UK firms are cautiously turning to the attention the opportunities potentially on offer from Iran’s $600bn anticipated boom in trade and infrastructure investment over the next ten years.
With the Islamic Republic about to embarking on an ambitious investment drive after years of international isolation, the authorities in Tehran are expected to be looking overseas for the finance it requires for a number of key projects, including the expansion of its 10,223km long state-owned rail network; the construction of 7 new international airports; the upgrade of 54 existing ones; and the acquisition of a new fleet of aircraft. The state carrier Iran Air has already placed orders with Airbus for 114 new aircraft and it is estimated that another 600 new airplanes will be needed over the next decade.
Iran also hopes to secure large investments into its unexplored and under-developed natural gas sector.
“Is there an opportunity here for UK business? Of course there is,” said Amanda Clack, head of Infrastructure and consultancy EY told The Telegraph this week. “Deliverability is key and contracts could be won by British companies on the basis of professionalism. These skills are underpinned by high standards and regulation which means the companies are more likely to offer a robust approach to the work.”
However, according to the The British Iranian Chamber of Commerce (BICC), the main obstacle towards a significant increase in British Iranian trade lies in the absence of banking facilities caused by the fear among European banks of American primary sanctions against Iran which were retained even after the Iran nuclear deal in late 2015.
“Until the American election there were indications that some UK banks were willing to handle direct transactions with Iran under certain conditions. Since then attitudes of the banks seem to have become more cautious and restrictive,” a spokesman said.

 

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Russia and Uzbekistan sign $3.5bn in deals as Mirziyoyev heads to Moscow

Uzbek President Shavkat MirziyoyevWith Uzbekistan’s new President Shavkat Mirziyoyev due to arrive in Moscow tomorrow, the Uzbek foreign ministry has announced that the two countries have signed off on $3.5bn of bilateral deals covering project finance, the joint manufacturing of agricultural machinery and a number of agreements relating to the supply of Uzbek fruit and vegetables to Russia with oil set to flow in the opposite direction. The announcement (more…)

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EEU doomed, predicts Bzhezinsky

Zbignev BzhezinskyThe Eurasian Economic Union (EEU) will be dead and buried within in ten years or as soon as Russia accepts that it is a a European state, Zbignev Bzhezinsky predicted this week. In an interview with the daily Gazeta, (more…)

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Australia rebuffs China over Silk Road

Li Keqiang and Turnbull Australia 230317China is expected to suffer a rare setback in its drive to develop its $4trn One Belt One Road global trading, transport and logistics network this week during Premier Li Keqian’s visit to Canberra, with an unnamed Australian officials predicting that Australia will rejected Beijing’s request for its $3.8bn Northern Australia Infrastructure Facility infrastructure fund to be formally aligned with the New Silk Road strategy . The rebuff comes amid concerns that such a move could damage relations with the US at a time when Australia is pressing Washington to bolster its presence in the region and taking a tougher line on inward investment from China.
S Kidman & Co cattle farmLast year, the Canberra government blocked two potential Chinese acquisitions – bids in excess of $7.6bn for the Ausgrid electricity company due to be submitted by the State Grid Corporation and the Hong-Kong-based Cheung Kong Infrastructure company; and attempts by a Chinese consortium to purchase the S Kidman & Co cattle farm that stretches across more than 1% of Australia’s land mass.
The debate over whether Australia should align its state infrastructure fund with One Belt One Road follows on from Canberra’s hesitation over joining the Asian Infrastructure Investment Bank (AIIB). In 2014, Australia initially decided not to join following lobbying by the US and Japan, but eventually relented after the UK and several other western nations broke ranks and signed up.

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Alibaba to open ‘e-hub’ in Malaysia

China’s e-commerce giant Alibaba Group CEO is on track to open an ‘e-hub’ close to Kuala Lumpur International Airport as part of the company’s plan to establish an electronic world trade platform, its CEO Daniel Zhang said today. The facility in the KLIA Aeropolis zone would (more…)

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New investment fund set to strengthen ties between Russia and Turkey

Putin and ErdoganThe flourishing political and economic alliance between Russia and Turkey wracked up a notch this week with the announcement that the two countries had now formally agreed to set up a joint Russia-Turkey Investment Fund.
The two signatories to the agreement (more…)

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Brexit could help EU-India FTA but report scotches hopes of UK side deal

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Putin signs up to Turkish Stream

Putin ratifies Turkish Stream 080217The new axis that has been developing between Istanbul and Moscow in recent months appeared to strengthen even further yesterday when President Vladimir Putin signed a bill ratifying the construction of the Turkish Stream pipeline that will eventually carry natural gas from Russia under the Black Sea to Thrace on Turkey’s border with Greece.
Turkish Stream (more…)

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Obama hits Trump with new Russian sanctions and Arctic drilling ban

Navy Day Parade SevastopolOutgoing US President Barack Obama this week did his best to thwart his successor Donald Trump’s plans to improve relations with Moscow and to increase US oil and gas production by extending the sanctions imposed on Russia over its 2014 annexation of Crimea while almost simultaneously withdrawing (more…)

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Erdogan rubber-stamps Turkish Stream

Turkish President Tayyip ErdoganTurkish President Recip Erdogan has paved the way for construction of the Turkish Stream pipeline to begin after officially ratifying the Russian-Turkish accord concerning a new natural gas pipeline running from Krasnodar in southern Russia, along the bed of the Black Sea to Turkish Thrace. The announcement (more…)

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Rouhani threatens to revive nuclear programme after Senate votes for 10-year extension to Iran Sanctions Act

Isfahan nuclear plantIran’s President Hassan Rouhani yesterday called on outgoing US President Barack Obama not to sign a 10-year extension to Washington’s Iran Sanctions Act, amid reports that the Iranian parliament is preparing to table a motion that would give the government a mandate to resume its nuclear programme in retaliation. (more…)

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Tusk expects Russian sanctions to be extended – but for how long?

EU Council Chairman Donald TuskRussian sanctions: The odds are stacked in favour of Brussels extending its programme of sanctions against Russia when it reviews the situation in January, EU President Donald Tusk said yesterday, but it will be harder to hold the line (more…)

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Russian Economy Minister Ulyukaev arrested over Bashneft ‘bribe’

Putin and UlyukaevRussia’s Economy Minister Alexei Ulyukaev is under arrest after being accused of accepting a $2m bribe in exchange for signing off on Rosneft’s purchase of a stake in mid-sized oil producer Bashneft. “The minister is detained,” the Investigation Committee said in a statement released overnight. “In the near future (more…)

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World Bank upgrades forecast for Russian economy as Moscow looks in hope to Trump to trigger detente

REUTERS/Sergei KarpukhinThe Russian economy could return to growth as early as next year, the World Bank predicted yesterday, with a rise in oil prices expected to help it bottom out in the second half of the year. While the bank is forecasting that Russia’s GDP will contract by 0.6% this year, it now sees it growing by 1.5% in 2017 and 1.7% in 2018. Back in April, the bank was forecasting a 1.1% growth rate for next year.
While it is now expects higher oil prices to have a positive impact on domestic demand and to trigger investment activity as some of the country’s major companies replenish their stocks, it warned that the Russian economy remained dangerously dependent on its oil and gas sectors. “This growth upsurge, however, is unlikely to turn the tide in terms of building a more diversified economy,” it said.
US President elect Donald TrumpThe Kremlin will also be hoping that Trump’s victory in the US Presidential elections may put paid to one of the World Bank’s other concerns, namely that economic sanctions imposed after the annexation of Crimea might complicate Russia’s economic recovery. On receiving news of yesterday’s shock result. Russian President Vladimir Putin sent Donald Trump a congratulatory telegram in which he expressed his hope that relations between the two world powers would improve “from their crisis state.” Ties between Moscow and Washington must be “based on principles of equality, mutual respect and a real accounting of each other’s positions,” he added.

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Putin wins Russian parliamentary elections but turnout down

Russian Parliamentary elections 2016Russian parliamentary elections: Russia’s ruling political party has comfortably won this weekend’s parliamentary elections, early results suggest, but a drop in turnout from 60% five years’ ago (more…)

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Nazarbayeva moves up succession line as Dad moves to quell rural unrest

Dariga NazarbayevaFollowing last week’s removal of Prime Minister Karim Massimov, Kazakhstan’s President Nursultan Nazarbayev yesterday announced that his daughter Dariga Nazarbayeva had moved from the post of Deputy Prime Minister to take up a role as deputy in the Senate. Although (more…)

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Pressure mounts with Russian Reserve Fund running on empty

Russian Deputy Finance Minister Sergei LavrovThe Russian Reserve Fund will run out of money by the end of next year, Deputy Finance Minister Alexei Lavrov told journalists on Friday, confirming speculation that the country has been burning through its national reserves at an unprecedented rate. Hit by western sanctions (more…)

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Sakhalin 2 on agenda as Japan and Russia seal $1.3bn investment package

LNG tanker Sakhalin 2A number Japanese companies and banks are considering participating in the financing and construction of the third stage of the Sakhalin 2 LNG project in Russia’s Far East, it has emerged, as Japan managed to steal the show at last weekend’s Eastern Economic Forum in Vladivostok by signing some 20 agreements (more…)

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Uzbek succession speculation begins with Islam Karimov in intensive care

Uzbek President Islam KarimovUzbekistan’s President Islam Karimov is in intensive care after suffering a brain haemorrhage, according to his daughter Lola Karimova-Tillyaeva. “His condition is considered stable, ” she wrote on her Instagram account yesterday, apparently seeking to counter claims that her father had in fact died. (more…)

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