Hot on the heels of a corruption scandal in Uzbekistan’s financial sector comes news that a commercial bank that has foreign shareholders has been barred from conducting hard currency operations.
The development is the latest sign of troubles hitting Uzbekistan’s banking industry, as Central Asia reels from an economic crisis that is slowing growth and pressuring currencies across the region.
Uzbekistan’s central bank has imposed a six-month ban on Hamkorbank conducting foreign currency operations with businesses on the grounds that it has been breaking currency laws, the Anhor.uz news website reports.
No further specifics were offered for the ban, which is unusual and will present a significant barrier to a bank with foreign capital conducting commercial operations.
The International Finance Corporation (a financing arm of the World Bank) and the Netherlands Development Finance Company (a development bank controlled by the Dutch government) between them own 30 percent of shares in Hamkorbank, according to documents filed with Uzbekistan’s stock exchange.
The time for showers of gold is over, President Nursultan Nazarbayev warned his countrymen on February 16 in his latest attempt to inculcate a popular spirit of parsimony.
Instead, the people of Kazakhstan should exploit the opportunity of a crisis caused in part by low oil prices to transform the country into a more innovative and dynamic economic performer.
“We should not expect to be showered with gold,” he said in remarks quoted by the Nur news agency.
Those remarks appear much in the same mold as recent exhortations by Nazarbayev for the people of Kazakhstan not to indulge in luxuries such as lemons.
“Every crisis is a stage ahead of new development,” which, he said, means weaning the economy off its current dependence on oil and gas.
One way the government intends to that is by raiding the state pension pot, which Nazarbayev ordered last week as part of measures to stimulate growth.
The economy is in desperate need of help. Some economists are forecasting that the economy will shrink this year for the first time in almost two decades.
In line with Nazarbayev’s order, issued on February 10, 1.5 trillion tenge ($4 billion) worth of assets will be withdrawn from the state pension fund — a quarter of its total holdings of nearly 6 trillion tenge — to help plug holes in the budget deficit and support small businesses and infrastructure projects.
A top banker has been arrested in Uzbekistan on suspicion of making a fortune out of Uzbekistan’s black currency market and laundering the proceeds.
The arrest comes as the rate of the currency, the sum, soars against the dollar on the black market, creating even larger than usual profit margins for those in control of the illegal trade.
Asaka Bank chairman Kahramon Oripov is in detention on suspicion of “currency crimes and legalization of criminal revenues,” an unnamed spokesperson for the General Prosecutor’s Office told Russia’s RIA Novosti news agency on February 12.
The confirmation of Oripov’s arrest, which had been rumored, came days after he was dismissed by the government as chairman of the state-owned Asaka Bank, which handles payments for the automobile industry in Uzbekistan.
Oripov is suspected of exploiting the bank’s position as the financial institution responsible for taking payments for car purchases to carry out his scheme, the Tashkent-based Uzmetronom.com website reported earlier this month.
This was allegedly made possible by the unorthodox system through which payments are made to purchase cars in Uzbekistan, whereby only dollars, rather than sum, are accepted to buy some models of vehicles assembled in-country by the GM Uzbekistan, a US-Uzbekistani joint venture which accounts for the bulk of the country’s car sales.
The money to buy a car must be deposited in dollars at an account in Asaka Bank, which is supposed to transfer it in hard currency to Uzavtosanoat, the state company that holds Tashkent’s share in GM Uzbekistan.
Mortgage protests in Kazakhstan are becoming a familiar sight. In attention-grabbing demonstrations over the past couple of days, crowds have swarmed around banks in the commercial capital, Almaty, loudly banging pots and pans and blowing whistles.
“Down with banks!” chanted the two dozen people who took to the streets of Almaty on February 2.
A political activist recently jailed on charges of inciting ethnic strife has been released pending appeal after issuing a grovelling public recantation for his purported offense.
Serikzhan Mambetalin was freed on January 31 after serving just over a week of his two-year sentence.
“I am at home… How happy I am!” he wrote on his Facebook page on February 1.
Mambetalin’s Facebook page was regularly updated, presumably by his supporters, throughout his trial and incarceration, which began in October.
A court ordered Mambetalin’s release until the appeal is heard, but the activist has been made to sign a written undertaking not to leave his hometown, Almaty.
Mambetalin’s release came after he posted a contrite statement of repentance on his Facebook page on January 29 — a week after he was jailed along with another political activist, Yermek Narymbayev, who remains behind bars.
“The investigation gathered exhaustive evidence of my guilt,” the statement said. “Therefore I fully admit my guilt over the proof presented to me and actively repent.”
Mambetalin has changed his tune since his trial, when he strenuously denied any guilt and denounced the trial — which was condemned by international human rights watchdogs — as a “political order” motivated by his activism and his opposition to President Nursultan Nazarbayev.
Kazakhstan’s president could hardly be expected to run for parliament, so the ruling Nur Otan party has gone for the next best thing: The actor who played him as a young man in the biopic.
Nurlan Alimzhanov is just one of several celebrities that Nur Otan included in its populist list of candidates for the March 20 parliamentary election, which authorities are hoping will serve as a tonic for their flagging legitimacy.
Other recognizable faces selected by a unanimous vote at a party congress in Astana on January 29 included Gennady Golovkin, a world champion boxer renowned as the best pound-for pound fighter in the world, Olympic gold medal-winning weightlifter Ilya Ilyin and Kairat Nurtas, a wildly popular 26-year-old pop singer.
One actual Nazarbayev is also standing — Dariga Nazarbayeva, the president’s daughter and current first deputy prime minister.
Alimzhanov may be the actor, but it was President Nursultan Nazarbayev that gave the real performance in Astana as a man pretending his party is readying for a proper election. Speaking to the congress, he urged a “competitive fight” in the upcoming vote.
Since there is no real opposition (not behind bars) anywhere to be seen, however, it can be taken for granted that the new legislature will be similarly compliant as the outgoing lot.
In its eagerness to counteract Islamic extremism, Uzbekistan has embraced a Cultural Revolution-style naming and shaming exercise.
Parents are being hauled before public meetings to be admonished for the sins of their militant sons and daughters in scenes reminiscent of the public castigations common during the Cultural Revolution in 1960s China.
“This sacred land, where model family relations are rooted, never forgives those who do not care about their children's future,” a doom-laden TV program intoned on January 26, according to a translation by BBC Monitoring.
“Unfortunately, some people, who have forgotten their parental obligations and are bringing up their children as traitors, do not seem to realize it,” the program – broadcast on the main state channel – said.
TV screens were filled with a sobbing elderly couple whose son is allegedly fighting with militants in Syria, filmed at a public meeting held in the Andijan Region in eastern Uzbekistan.
Although other areas of the country were featured in the program, the choice of Andijan as a venue was telling. The city was the scene of fatal unrest in 2005 which the government blamed on Islamic extremists, a version disputed by many survivors and by international human rights groups.
“What are the goals of these traitors? Who are they fighting for and dying for as dogs?” state TV asked rhetorically in its latest broadside against extremists, over footage of burials in foreign war zones.
President Islam Karimov frequently embraces alarmist talk about the threat to Uzbekistan and the wider region of Islamic extremism emanating out of Afghanistan.
Hot on the heels of a graft scandal that has blighted a flagship exhibition to be staged in Kazakhstan’s capital comes news that its budget is being slashed – again.
With Kazakhstan in the throes of economic crisis, President Nursultan Nazarbayev has approved cuts of 53 billion tenge ($140 million) to the budget for hosting EXPO-2017 in Astana next year.
“We have to look at budget spending, taking account of hard times,” Akhmetzhan Yesimov, the official in charge of organizing the project, said in remarks quoted by Tengri News on January 26.
The latest cuts bring the total reduction in public spending on the exhibition to 131 billion tenge ($345 million), a dramatic slump forced by the fall in global oil prices.
That is around one-tenth of the originally expected total expenditure of $3 billion, most of which was to come from private investors but with a significant chunk provided by the state.
The project’s financial well-being was not helped by officials previously in charge of organizing it pilfering some $27 million dollars from the construction funds.
Kazakhstan is scrambling for ideas on where to cut as it enters its worst economic crisis since the 1990s. Some economists are forecasting negative growth this year for the first time in nearly two decades.
Critics of the EXPO see it as a vanity project that is wasting money at a time of crisis, though when Kazakhstan won the hosting rights in 2012 oil prices were riding high and growth was buoyant.
Armor-clad warriors surge out from behind a rocky outcrop and gallop across the steppe amid a thunder of hooves, banners flapping in the breeze and swords aloft. Emitting furious war cries, they descend on an encampment and – with a clash of swords – a pitched battle ensues.