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The Week in the Neighbourhood

Weekly
BM. GE
24.09.23 13:59
11

On Tuesday, September 19, Azerbaijan said its armed forces had launched what it called "local anti-terrorist activities" in the Nagorno-Karabakh region to restore constitutional order by disarming and forcing the withdrawal of Armenian military formations there. After 24 hours the sides declared a ceasefire. The tensions caused thousands of protesters in Armenia’s capital Yerevan gathering outside government buildings, calling for Prime Minister Nikol Pashinian to resign. According to the leadership of the breakaway region, the ethnic Armenians of Nagorno-Karabakh will leave for Armenia as they do not want to live as part of Azerbaijan and fear ethnic cleansing.

Here is a rundown of the latest political and economic developments around Georgia's neighboring Armenia, Azerbaijan and Turkey during the last week.

Armenia-Azerbaijan 

Azerbaijan said last Tuesday its armed forces had launched what it called "local anti-terrorist activities" in the Nagorno-Karabakh region to restore constitutional order by disarming and forcing the withdrawal of Armenian military formations there. Karabakh, internationally recognised as part of Azerbaijan, has an overwhelmingly ethnic Armenian population and broke from Baku's control in the early 1990s after a war. Azerbaijan recaptured swathes of land in and around it in a 2020 war. Azerbaijan's defence ministry spoke in a statement of its intention to "disarm and secure the withdrawal of formations of Armenia’s armed forces from our territories, (and) neutralise their military infrastructure."

Protesters in Armenia’s capital Yerevan called on Prime Minister Nikol Pashinyan to resign Tuesday, hours after he denounced calls for a “coup” as Azerbaijan launched a military operation in Armenian-populated Karabakh. Hundreds of people gathered in Yerevan’s Republic Square, outside Pashinyan’s offices, to denounce his handling of the Karabakh crisis, according to an AFP journalist on the scene, with demonstrators shouting “Nikol traitor!” and “Nikol resign!” Pashinyan, who has faced protests in Armenia since Yerevan lost a 2020 war with Azerbaijan, earlier warned against calls for a coup. Media saw police cordon off Pashinyan’s offices, with some protesters attempting to break through the cordon. Armenia’s opposition has accused Pashinyan of being weak on Karabakh, a breakaway region populated mainly by ethnic Armenians over which Yerevan and Baku have been locked in a dispute over for decades.

Due to the unstable situation in Nagorno-Karabakh, Air Astana said its flights to Turkey, Europe and Israel are circumventing this territory, the Kazakh air carrier said.

Hungarian low-cost airline Wizz Air has also been forced to change, cancel or reschedule flights to Yerevan and Baku due to the aggravation of the situation in Nagorno-Karabakh. "Wizz Air flight W6 4423 from Sofia to Yerevan on September 19 was diverted to Kutaisi, Georgia, due to the escalation of the conflict in the Nagorno-Karabakh region.”

The Azerbaijani president has told US Secretary of State Antony Blinken that Baku is ready to stop “anti-terrorist measures” if Armenians in Nagorno-Karabakh lay down their weapons. He told Blinken that the military incursion was triggered by Armenian armed forces laying mines in the contested region “for the purpose of terrorism” and targeting Azerbaijani soldiers with mortars and other weapons.

24 hours after Azerbaijan began an offensive to take control of the enclave that killed dozens and injured hundreds, Ethnic Armenians in Azerbaijan's breakaway region of Nagorno-Karabakh agreed to a Russian proposal for a ceasefire on Wednesday.

The ethnic Armenians of Nagorno-Karabakh will leave for Armenia as they do not want to live as part of Azerbaijan and fear ethnic cleansing, the leadership of the breakaway region said. "Our people do not want to live as part of Azerbaijan. 99.9% prefer to leave our historic lands," David Babayan, an adviser to Samvel Shahramanyan, the president of the self-styled "Republic of Artsakh". He said it was unclear when the 120,000 of Karabakh Armenians would move down the Lachin corridor. "The fate of our poor people will go down in history as a disgrace and a shame for the Armenian people and for the whole civilised world. Those responsible for our fate will one day have to answer before God for their sins."

Turkey

Turkey’s central bank hiked its key interest rate to 30% on Thursday, a 500-basis point jump from 25%, as Ankara continues to battle double-digit inflation.  The central bank decision followed a series of rate hikes that have been painful for Turks, as the country aims to turn around several years of skyrocketing inflation and dramatically weakened currency — in large part the result of stubbornly loose monetary policy by the Ankara government. The lira is down 30% against the dollar year to date and has lost 78% of its value against the greenback in the last five years.

Turkey's central bank has sent instructions to banks under which it has raised to 2.5% from 2% the targeted monthly rise in the share of Turkish lira deposits in total deposits. The Central Bank of the Republic of Turkey (CBRT) took additional steps to support lira deposits in line with data showing that the transition to lira was accelerating.

Turkey has signed an 859.7 million euro ($966 million) financing deal with the World Bank for green transformation. The financing is part of the World Bank's pledge to provide $35 billion in funding to Turkey over a three-year period. This financing can be used in new investments in the real sector, especially for reconstruction in the wake of earthquakes this February as well as green transformation.

Turkey’s economy overall is expected to grow more than expected this year, but the outlook for 2024 will mostly be weak as "painful" interest rate hikes aimed at curbing inflation take their toll, the Organisation for Economic Co-operation and Development (OECD) said. Turkey's GDP is expected to expand 4.3% this year and 2.6% in 2024. In June, the organization saw the Turkish economy growing 3.6% in 2023 and 3.7% next year. It sees Turkey's stubborn inflation, which shot back to nearly 60% in August, dropping to 52.1% by year-end, up from its earlier forecast of 44.8%. The country's annual inflation is expected to fall further to 39.2% in 2024, the OECD said.

Turkey welcomed 6.7 million foreign visitors in August, jumping 5.65% annually, the Culture and Tourism Ministry said. The famed resort city of Antalya on the Turkish Riviera was the top draw for foreign visitors with 37%, attracting 3.5 million foreign visitors last month. Istanbul, Turkey's largest city by population and a top tourist spot, ranked second, attracting 1.7 million foreign visitors in August. The Aegean province of Mugla, and the northwestern province of Edirne, which borders both Bulgaria and Greece, followed them with 628,654 and 525,270 foreign visitors, respectively. At 871,270, Germans made up 13.1% of all foreign visitors, followed by Russians at 852,640, Britons at 588,448, Iranians at 280,951, and Poles at 279,040.

The trade volume between Turkey and African countries has increased eightfold in the last two decades and reached $40.7 billion (TL 1.1 trillion), Deputy Foreign Minister Yasin Ekrem Serim said. Speaking at the closing of the 9th World Cooperation Industries Forum (Wci Forum) held in Istanbul between Sept. 18-19, Serim emphasized that the African continent stands out as the rising value of the 21st century with its cultural accumulation and enormous potential. "Our trade volume with Africa has increased eight times. The figure, which stood at $5.4 billion in 2003, amounted to $40.7 billion in 2022. The value of direct investments exceeded was by $6 billion," Serim said. He said that Turkish companies provide employment to some 100,000 people in Africa and announced that the 4th Türkiye-Africa Business and Economic Forum will be held in October.

President Recep Tayyip Erdogan held a meeting with Elon Musk, the head of electric carmaker Tesla, and invited him to establish a factory in Turkey. Erdogan and Musk have held a string of meetings both in Turkey and on the sidelines of international forums, developing a seeming friendship that they extended last Sunday in New York.

Starlink, the satellite internet venture of space exploration company SpaceX, has officially applied to obtain a license in Turkey, just days after its founder Elon Musk met President Recep Tayyip Erdogan in the U.S. The company's application to the Information and Communication Technologies Authority (BTK) for its satellite internet service was confirmed by Ömer Fatih Sayan, Turkey's deputy transport and infrastructure minister. "Starlink, which offers low Earth orbit satellite services, expressed their desire to operate in our country," Sayan wrote on the social media platform X, formerly known as Twitter. "In response to their request, we conducted a productive meeting today with SpaceX representatives at the Information and Communication Technologies Authority," he said.

Turkey  has obtained billions of dollars in external financing since the May elections, a top economy official said, as the country embraced more conventional policies to fight stubborn inflation after a long-running easing trend. A combined $10.4 billion (TL 281 billion) in financing from abroad has flown into Türkiye since June, Treasury and Finance Minister Mehmet Şimşek said. Out of this, the banking sector secured over $6.7 billion, the real sector attracted $3.26 billion and the non-banking financial sector accounted for $367 million.

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