Tag: Kazakhstan

Here is why the EU should deepen its relations with Central Asia

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The opinions expressed in this article are those of the author and do not represent in any way the editorial position of Euronews.

While the economic and diplomatic benefits are evident, the real win for the EU would be in shaping a narrative of partnership and shared progress, Emil Avdaliani writes.

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Last week, Germany’s Chancellor Olaf Scholz held a landmark summit in Berlin with leaders from the five Central Asian states. 

While the primary topic was how to advance regional and economic ties with Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, the underlying focus was undoubtedly on geopolitics. 

Relations between the Central Asian nations and Russia have deteriorated since Moscow’s full-scale invasion of Ukraine last year, giving the five countries bigger room for manoeuvre in foreign policy. 

This situation presents the EU with an opportunity to expand its ties with Central Asia and play a more prominent role in this dynamic region.

A solution to Europe’s energy concerns is within reach

There are numerous advantages to Europe deepening its ties with Central Asia.

Firstly, as European countries aim to address energy security challenges, especially their reliance on Russian energy, the diversification of energy sources becomes crucial.

Strengthening ties with Kazakhstan, the largest of the Central Asian states both geographically and economically, can offer a solution to Europe’s energy concerns. 

Kazakhstan, blessed with abundant oil and mineral reserves, already supplies oil to the German market through the Druzhba pipeline, which starts in Russia and stretches to multiple European destinations. 

Since the start of 2023, Kazakhstan has exported 500,000 tonnes of oil to Germany. After talks with Chancellor Scholz last week, Kazakhstan’s President Kassym-Jomart Tokayev said that Astana is ready to increase supplies and make them long-term.

Kazakhstan and several other Central Asian states are also rich in rare earth metals, important for the green energy transition. 

These metals play a pivotal role in the manufacturing of a vast array of technologies, from smartphones and wind turbines to rechargeable batteries for electric vehicles. Currently, Europe relies heavily on China and Russia for these indispensable minerals. 

The Middle Corridor, a major inroad

Considering the intricate and at times strained relationships with China and especially with Russia, Europe should proactively seek to diversify its rare earth supply chains, and a deeper partnership with Central Asian nations could be a strategic move in that direction.

However, many supply chains and primary trade routes from Asia to Europe pass through Russia, posing potential complications if relations remain strained or deteriorate further. 

Consequently, both Central Asian and European nations are keen on establishing alternative trade routes. Circumventing Russia, the Trans-Caspian Trade Route, also known as the Middle Corridor, stands out as a particularly promising conduit for enhancing trade between Asia and Europe via the South Caucasus and Kazakhstan.

Transport times along this route have been cut from 38-53 days in the previous year to just 19-23 days. The aim is to further decrease this to 14-18 days. 

During his visit to Berlin, President Tokayev proposed synergising the Trans-Caspian route with the Trans-European Transport Network and the EU’s Global Gateway initiative, a worldwide strategy to compete with other global projects by investing in infrastructure projects and establishing economic partnerships.

Knocking the Kremlin off its perch

The war in Ukraine, amplified by Russia’s aggressive actions, highlights the urgent need for Brussels to reinforce its strategic alliances, especially in a region traditionally under significant Russian sway. 

By deepening relations with Central Asian nations, Europe not only expands economic and political cooperation but also strategically counters Russia’s dominance, achieving meaningful geopolitical advantages.

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Kazakhstan, notably, has expressed a keen interest in broadening its ties with the West. 

While it maintains close economic and cultural connections with Russia, Kazakhstan has refused to support its neighbour’s invasion of Ukraine, instead calling for an end to hostilities and the commencement of peace negotiations in line with the principles of the UN Charter. 

In his discussions with Scholz, Tokayev emphasised that Kazakhstan would abide by Western sanctions imposed on Russia.

Igniting a game of dominance should be off the table

However, while Europe can capitalize on the current situation, it must remain aware of Central Asia’s complex geopolitical landscape. 

The EU should steer clear of igniting a new “Great Game” for dominance in Central Asia, as no nation wants to be perceived merely as a pawn. 

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It’s important to recognise that displacing the influence of Russia and China entirely isn’t just unfeasible but might also not be in the best strategic interest of the Central Asian countries. 

Given its geographic position and historical ties, Central Asia will invariably aim to keep balanced relations with its major neighbours. 

Tokayev, for example, recently said that Kazakhstan will continue cooperation with its major allies on all strategic issues, in line with its “multi-vector” foreign policy. 

Central Asia’s approach to fostering positive ties with all major players can eventually promote stability and collaboration across the broader Eurasian region.

And while the economic and diplomatic benefits are evident, the real win for the EU would be in shaping a narrative of partnership and shared progress. 

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Such an inclusive and collaborative approach might just be what Central Asia is looking for.

Emil Avdaliani is a Professor at the European University in Tbilisi and Director of the Geocase think tank.

At Euronews, we believe all views matter. Contact us at [email protected] to send pitches or submissions and be part of the conversation.

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Why should Kazakhstan’s nuclear energy plans matter to the West?

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Currently, Kazakhstan is heavily reliant on fossil fuels, making its energy sector vulnerable to market fluctuations and geopolitical shifts, Emil Avdaliani writes.

Kazakhstan’s President Kassym-Jomart Tokayev recently announced that the country will hold a referendum to decide whether to build its first nuclear power plant. 

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As discussions about sustainable energy solutions gain momentum globally, Kazakhstan’s deliberations on nuclear energy could not come at a more pivotal time. 

The proposed project is nestled at the intersection of a host of considerations that resonate far beyond this Central Asian nation’s borders. 

From energy security and economic growth to environmental stewardship and geopolitical sway, the implications are expansive.

Addressing domestic shortage and reshaping energy portfolio

Kazakhstan’s desire to move toward nuclear energy is primarily driven by its need for energy security. 

As the world’s top uranium producer, the country is sitting on an energy goldmine. The development of a nuclear power plant would not merely represent an economic venture but could serve as an insurance policy against future energy uncertainties. 

In particular, Kazakhstan faces a projected electricity shortage in the southern part of the country, and a nuclear facility could contribute 2,800 MW to its grid. 

This is not just about meeting domestic energy demands; it’s about reshaping the country’s entire energy portfolio.

Currently, Kazakhstan is heavily reliant on fossil fuels, making its energy sector vulnerable to market fluctuations and geopolitical shifts. 

By adding nuclear power to the mix, the country would not just be diversifying its energy sources, it would be fortifying its national sovereignty and position on the global stage.

Carbon-neutral ambitions

The economic advantages of a nuclear plant are another compelling part of the story.

Beyond the obvious benefits of job creation in a specialized sector — Kazakhstan already employs nearly 18,000 people in the peaceful use of nuclear energy — the plant would produce a high energy output with relatively low input.

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Furthermore, in a world increasingly worried about climate change, Kazakhstan has already signalled the importance of shifting towards a greener economy. 

Tokayev emphasised this need in his recent address. Nuclear energy, with its minimal greenhouse gas emissions, aligns perfectly with this vision. 

The project would not only be a significant leap toward meeting Kazakhstan’s ambitious goal to become a carbon-neutral country by 2060 but also be a concrete contribution to global sustainability goals.

But the reverberations do not stop at economic or environmental factors; they spill over into the arena of geopolitics as well. 

A successful nuclear program affects geopolitics, too

A successful nuclear program has the potential to help Kazakhstan evolve from a consumer to a Eurasian energy supplier, amplifying its geopolitical influence. 

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This is particularly relevant in view of Moscow’s full-scale invasion of Ukraine and the European Union’s aim to reduce the bloc’s reliance on Russian energy sources. 

Therefore, the issue of Kazakhstan’s nuclear energy is more than a question of energy exports, but rather a matter of regional stability and strategic partnerships.

In that sense, Europe and the US could view Kazakhstan’s deliberations on nuclear energy as an alignment with broader goals of energy security, climate change mitigation, and regional stability. 

With the EU recognising nuclear energy as a pivotal industry to achieve carbon neutrality by 2050, Kazakhstan’s endeavours could find supportive partners in the West. 

Partnerships could be particularly beneficial for companies specialising in nuclear technology, security protocols, and related services, tightening economic ties between Kazakhstan and Western countries.

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However, not all countries in the EU support nuclear energy. For instance, while France backs it completely, Germany remains opposed.

A history of being someone else’s nuclear test site

Naturally, questions arise about whether Kazakhstan can ensure safety and security if its population votes in favour of building a nuclear power plant. 

This concern holds particular significance for ordinary Kazakhs, given that the country’s land was used for nuclear weapons testing during the Soviet era. 

These tests caused health and environmental damage around the Semipalatinsk nuclear test site, which closed in 1991 when the country gained independence. 

Understandably, some segments of Kazakhstan’s population remain worried about the idea of developing nuclear facilities. 

However, Kazakhstan has demonstrated it could provide safety. The country is already hosting the International Atomic Energy Agency’s (IAEA) Low-Enriched Uranium Bank, indicating an existing reservoir of international trust. 

The nation is pushing this even further by seeking a seat on the IAEA board, a move that will deepen its involvement in shaping and adhering to global nuclear safety protocols.

A referendum to let people decide?

Kazakhstan’s decision to hold a national referendum on the nuclear power plant issue adds an intriguing layer, especially since referendums are relatively rare in Central Asia — although Kazakhstan did hold one last year on constitutional amendments following mass unrest in January. 

Tokayev was re-elected last year and will be in power for seven years until 2029, which suggests that the country’s policy on nuclear energy is likely to remain consistent for the foreseeable future.

The government’s rationale is that the vote will enable citizens to express their views on nuclear energy, thereby bolstering transparency. 

The perspective is that projects that enjoy public backing are usually more successful in their implementation, lending social and political capital to the initiative.

In the long run, the act of holding a referendum could also set a regional precedent when it comes to major decisions of national significance.

Kazakhstan will be hoping that this not only elevates the country’s regional standing but also facilitates partnerships with countries that prioritize similar governance models.

Altering power dynamics could make Astana a more significant global player

In the end, the debate and the impending referendum on constructing a nuclear power plant in Kazakhstan are not merely local or national issues. 

They are global talking points embedded in a complex tapestry of economic, environmental, technological, and geopolitical considerations. 

As Kazakhstan contemplates its energy future, the world would do well to pay attention. It is not just Kazakhstan’s energy landscape that is at stake — it is a piece of the global sustainability puzzle. 

A successful nuclear program would certainly enhance Kazakhstan’s geopolitical standing. By becoming a regional or potentially even global energy supplier, Kazakhstan could wield more influence across Central Asia and beyond. 

This could alter power dynamics, particularly with neighbouring Russia and China, and could make Kazakhstan a more significant player in energy geopolitics.

Emil Avdaliani is a Professor at the European University in Tbilisi and Director of the Geocase think tank.

At Euronews, we believe all views matter. Contact us at [email protected] to send pitches or submissions and be part of the conversation.

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Here’s The Story Of The Billionaire Founder Behind Hindenburg Research’s Latest Short Selling Target

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The short seller Hindenburg has accused Kazakhstan-based brokerage Freedom Holding of fraudulent practices. Former employees who spoke with Forbes have their own beef with the company.

The short seller Hindenburg Research published its latest report on Tuesday, accusing Freedom Holding Corp., a Nasdaq-listed financial services company headquartered in Kazakhstan, of a litany of fraudulent and illegal activity.

One thing Hindenburg didn’t mention: the founder of Freedom Holding, Timur Turlov, 35, has been on Forbes’ billionaires list since 2021, worth an estimated $3.2 billion as of Tuesday’s market close, down more than $100 million in a day. In 2021, Forbes highlighted the seemingly inexplicable runup in Freedom Holdings share price and some concerning issues about the way part of the brokerage was set up.

According to Hindenburg Research, Freedom Finance, the company’s stock brokerage, has allegedly been evading U.S. and European sanctions since Russia’s invasion of Ukraine by continuing to offer its services to Russia-based customers, including clients of firms targeted specifically for sanctions enforcement measures. (The company admitted to providing “brokerage services to certain individuals and entities who are subject to sanctions” in its annual report earlier this month.)

Hindenburg Research also accuses Freedom Holding Corp. of “fabricating revenue,” of manipulating its own stock price, and of commingling customer funds. “All told, Freedom Holding has exhibited a startling array of red flags relating to virtually every category of financial malfeasance worthy of investigation,” writes Hindenburg Research, which has entered a short position on the company’s stock.

The company’s shares closed Tuesday’s market down 3.2%, leaving it with a market capitalization of nearly $4.4 billion. Turlov owns over 70% of the stock, which means the company’s shares prices are less susceptible to general investor sentiment.

“The allegations in the Hindenburg report are without merit,” a company spokesperson told Forbes in an emailed statement. “Freedom Holding and its subsidiaries continue to provide all required disclosures to regulators and investors, who can review our recently filed form 10-K and and [sic] audited financial statements on our website.”

Freedom Holding Corp., as those who’ve followed it well know, has had its share of challenges in the past year. The company’s previous auditors, a small Utah-based firm called WSRP LLC, was sanctioned last December by the Public Company Accounting Oversight Board for failing to “inquire about the business purpose of…related party transactions.” Freedom also had to restate its 2022 earnings and three different quarterly reports (the fourth quarter of 2021, as well as Q2 and Q3 of last year). Nasdaq has been threatening to delist the company since June 15 this year.

When Forbes first reported on Freedom over two years ago, the company’s meteoric stock market gains had vaulted its founder and CEO Turlov, a Russian-born millennial fond of wearing black turtlenecks and speaking with the U.S. press, into the billionaire ranks. The company, which had previously traded over-the-counter in the U.S., listed on the Nasdaq in October 2019. As Turlov told Forbes in a two-hour interview from his home in Almaty, Kazakhstan: “I had become determined to become a public company that would be good enough to be traded on [U.S. exchanges.] Because that’s the top of this business.”

In recent weeks, former Freedom Finance employees and analysts have spoken to Forbes about their impressions of and experiences working at Freedom Finance. Some corroborated claims recently made by Hindenburg Research, while others have brought fresh revelations on the firm’s working culture and toxic environment.

“They came in like cowboys, wild cowboys,” a former Freedom executive working in Dubai told Forbes a few weeks ago. “They were primarily looking for black funds, dark funds, unreported funds, to siphon them off into stock markets like they’d previously done very successfully in Russia” added the individual, who asked to remain anonymous in order to speak openly. “Once you go into unreported funds, that could be anything, especially in a market like Dubai. It could be terrorist money, it could be criminal syndicate money. It’s all kind of mixed up.”

This same employee also says that Freedom stiffed him out of money he was owed. “They would say, ‘As soon as the license is in place, we’ll be able to open our bank accounts in Dubai and you’ll get what is owed by us,’” the employee recalls. “They paid me a total of about $5,000 in six months whereas they were supposed to give me about [that much] a month,” added the employee, whose employment contract Forbes reviewed. “They still owe me salary for like eight months.”

A second former Freedom Finance employee who worked in the company’s Cyprus office, which employs about 300 people, did not have any insight or knowledge of the company’s allegedly dubious financials or Know Your Customer (KYC) requirements, but had plenty to say about a toxic work environment.

“I was abused many times by my management and gasli[t] and it was very, very difficult for me to go on,” says the former employee, who worked in finance and says he received double the amount of work that his colleagues did, yet was belittled by his managers. “They wanted to prove to me that I’m the worst one; that I’m not worth working there,” recalls the employee, who left after six months. “It was a terrible experience.”

Other employees had a better time at the company. “I will tell you, it was one of the nicest places that I’ve worked,” says a former senior executive who worked in the Cyprus office. “The nicest people.” Did they sense that anything was off about the company? Absolutely not: “It was straightforward. I didn’t see anything strange,” the person added. “I’m quite a skeptical person, but no, everything was good. Everything was good.”

Perhaps, however, a grain of salt or two are warranted. Since leaving Freedom Finance, this individual (who asked that Forbes not use his name) has worked for the equity market investment arm of Alfa Bank, Russia’s largest private bank, which has been sanctioned by the EU and the US. Alfa Bank is cited extensively in Hindenburg’s report; Freedom “continues to publicly offer clients ways to circumvent sanctions through Alfa Bank,” Hindenburg says.

A spokesperson for Freedom Holding has not yet replied regarding comments from former employees.

Turlov got his start in finance nearly two decades ago. In 2003, at age 16, he applied to a Moscow trading firm as a part-time junior trader, before moving to another bank two years later with the goal of investing in U.S. markets, he told Forbes in 2021. When the great recession hit and Turlov lost his job, he and about a half dozen of his fellow traders started a new company that would become Freedom, Turlov told Forbes.

The group set up shop in Almaty, Kazakhstan, and from there, expanded the business to other Eastern European countries. Turlov’s entree to U.S. markets came in 2015, when the company completed a reverse merger with Bmb Munai, a Nevada-incorporated company that formerly owned Kazakh oil and gas assets. Bmb President Askar Tashtitov stayed on as Freedom’s president.

For Turlov, Freedom’s 2019 IPO was a dream come true. “Never in my first days of my career would [I have been] able to expect that we will become a stock trading a million shares in a day,” he told Forbes.

But being a public company has exposed Freedom Finance’s curious design to investors. One of its most head-scratching features: the Belize-based brokerage firm, FFIN Belize, a third-party entity that routes all U.S. stock trades by Freedom customers, and which is wholly owned by Timur Turlov himself. In 2021, Turlov explained away the offshore connection as stemming from a regulatory hangup in Kazakhstan. In reality, Hindenburg claims, citing former company executives, FFIN Belize has been used to “funnel money out of Russia, often in cash, with no regard for KYC and AML [anti-money laundering] protocols.”

Another curiosity of Freedom involves one of its chief selling points to international customers—the firm’s supposed access to hot U.S. IPO stocks. The secret, Freedom told Bloomberg and others, was an unidentified hedge fund that bought shares directly from stock IPO underwriters, and then passed along the stock to Freedom via its Belize affiliate to the firm’s customers.

But that hedge fund may not exist at all, Hindenburg reports, citing individuals from the company. Jay Ritter, a professor at the University of Washington, is also skeptical about the existence of this investment vehicle. “Allocations to hedge funds aren’t being hidden. There aren’t pre-IPO investments. It’s all done transparently, it’s above the table,” Ritter, who researches IPOs, told Forbes a few weeks ago. “I find it very fishy.”

With additional reporting by Lisette Voytko.

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