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BAKU-TBILISI-KARS RAILWAY: POLITICAL AND ECONOMIC IMPLICATIONS

The Azeri Times

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On October 30, a decade after construction began, one of the most debated transportation projects of the South Caucasus – the Baku-Tbilisi-Kars (BTK) railway line, was officially put into operation. Connecting Azerbaijan, Georgia, and Turkey, the 826-kilometer railroad is expected to function as a new Eurasian bridge between East Asia and Western Europe in the near future. BTK’s capacity of five million tons of freight a year at the earlier stages is planned to gradually increase to 17 million tons. It will also transport up to one million passengers annually.

Azerbaijani President Ilham Aliyev noted at the inauguration ceremony that BTK is the most reliable and shortest route between Europe and Asia: “This road will serve the development of tourism, stability and security, increase the amount of mutual investment, and strengthen the geopolitical significance of our countries.” As such, the project claims to be an alternative to Russia’s Trans-Siberian and Iran’s Razi-Sarakhs railways. Thus, besides being an alternative railway between China and Europe, BTK is to provide an alternative for the Central Asian countries to reach the European market without using the Russian or Iranian routes. This is probably why Georgia’s former president Mikheil Saakashvili enthusiastically called it “a great geopolitical revolution” in 2007 when its construction started.

BTK’s Economic Implications

BTK is of serious economic importance for the conflict-riven South Caucasus. It is expected to boost regional trade which has stagnated in recent years due to the decline in energy prices and a slowdown in the regional economies. The overall trade turnover between Azerbaijan and Georgia has declined around 50% from its peak level in 2013 ($1.36 billion) to $645 million in 2016. Azerbaijan’s trade turnover with Turkey has also undergone a similar fall in this period, declining from $2.9 billion (2013) to around $1.56 billion (2016). There is high optimism that the newly launched railroad will contribute to the expansion of the trade in the region and attract more investment.

During his visit to Azerbaijan on the occasion of the inauguration of BTK, the Turkish President Recep Tayyip Erdogan, stated that he believed that the trade turnover between the two countries would rise up to $5 billion. He also declared his expectation for a similar rise in mutual investments, which accounted for $23 billion as of late 2016: “We have the potential to bring the volume of our investments to $30 billion over five years.”

BTK’s Political Implications

It is the political implications for the construction of the BTK railway line, however, which are believed by some experts in the region to be the major motivation behind this project. The railway, which was initiated and largely financed by the Azerbaijani side, is believed to serve the purpose of boosting the geopolitical importance of Baku in the region and further isolating its enemy, Armenia.

The establishment of BTK sidelines the already existing, though no longer functioning, railway connecting Tbilisi and Kars through the Armenian city of Gyumri. The Tbilisi-Gyumri-Kars (TGK) railway line stopped operating after the Nagorno-Karabakh war as Turkey ceased its diplomatic relations with Armenia in protest to the latter’s occupation of Azerbaijani territories. Therefore, BTK came up as another regional geo-economic project, after the Baku-Tbilisi-Ceyhan (BTC) and Baku-Tbilisi-Erzurum (BTE) pipelines, that bypassed Armenia and severed its isolation.

This was why the EU and United States refused to financially support the construction of the railway regardless of the fact that it was to provide an alternative to the Russian route. A December 2006 act of the US Congress banned the US “Export-Import Bank” from funding the project. The initiators of the act argued that it would “drop out Armenia and continue the illegal economic blockade of this Caucasian nation.”

Consequently, the railway line, whose construction costs amounted to over $1 billion, has become the first international transportation project of the South Caucasus to be built without any external funding and largely financed by Azerbaijan. While Turkey covered all the construction costs in its territory, Azerbaijan provided a long-term loan worth $775 million to Georgia for the construction of the Georgian section of the rail link. Using its status of being the main funder of the project, the Azerbaijani side has unequivocally ruled out the possibility of Armenia’s use of the railway for the transportation of its cargo.

The Armenian political and expert community responded furiously to the opening of the railway. On the one hand, it isolates Armenia from regional transportation routes, on the other hand strengthens Georgia’s “monopoly” on Armenia’s exchanges with Russia and Europe and allows Tbilisi to sustain high custom tariffs with Armenia.

Some Armenians consider the BTK railway “another attempt by Turkey, Azerbaijan and Georgia to isolate Armenia”. Arman Vaneskegyan, a commentator at Sputnik Armenia, disputes the economic feasibility of the project and argues that:

In order to understand the importance and meaning of the launched Baku-Tbilisi-Kars railway project, one should look at the geographic map of the South Caucasus. It can be understood that the railway project, which is launched with Azerbaijan’s backing, is unequivocally a political project, and does not pursue any economic, logistical or any other goals.

Some political experts of the country also criticize the foreign policy making of the Armenian leadership for its unrealistic calculation of the regional geopolitical and economic balance. “The policy of Armenia in this issue was built not on pragmatism, but on the hopes that the disruptive circumstances would not allow the Baku-Tbilisi-Kars railroad to become a reality,” writes Armenian columnist Sargis Artsruni. “In Yerevan, they were obviously mistaken…”

Some Azerbaijani opposition members dispute the economic significance of the project, stressing its political motivations. For example, Natig Jafarli, executive secretary of the Republican Alternative (REAL) opposition movement believes that:

Azerbaijan, the primary donor for this project, spent about one billion dollars for its realization. In the early years, profits from this railway are unlikely to exceed 20-30 million dollars. In addition, there are significant natural obstacles to overcome on the road “from Beijing to London”; the ferry across the Caspian Sea, and changing the wheelbase before crossing through turkey to Europe, as it’s well known that the standards of Russian railways differ from those of Europe. All of this wastes time. It will be a miracle if the project starts to pay off in 20-30 years.

BY Kenan Abbasov

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Fintech start-up TransferWise reports second year of profit, revenue almost doubles

The Azeri Times

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Fintech start-up TransferWise reports second year of profit, revenue almost doubles
Kristo Kaarmann, Co-Founder & CEO, TransferWise, on Centre Stage during day one of MoneyConf 2018 at the RDS Arena in Dublin. (Photo By Eóin Noonan/Sportsfile via Getty Images)

TransferWise, one of Europe’s largest financial technology (fintech) start-ups, said Monday it was profitable for the second year in a row.

 

The London-headquartered money transfer firm reported an annual post-tax net profit of £6.2 million ($8 million) for the fiscal year ending March 2018.

Annual revenue nearly doubled to £117 million during the period, from £66 million the previous year, TransferWise said. Operating profit came in at £9.5 million following a loss of £519,000 last year.

The company’s accounts entered into the black for the first time in March 2017, six years after the firm was founded by Estonian entrepreneurs Taavet Hinrikus and Kristo Kaarman.

“We’ve proven that fintech can offer consumers an unbelievable experience at a low price, all whilst creating a solid business that can be trusted long-term,” Kaarman, TransferWise’s chief executive, said in a statement Monday.

“Looking forward, sustained growth and our healthy financial position means we can continue to drive down costs whilst investing in developing our product.”

TransferWise is counted among Europe’s “unicorn” start-ups — firms valued at $1 billion or more — with a reported valuation of $1.6 billion.

It has raised a total of $397 million since it was founded in 2011. Backers include asset management giant Old Mutual, Silicon Valley venture capital firms Institutional Venture Partners and Andreessen Horowitz, and British billionaire Richard Branson.

The firm says that £3 billion worth of transactions are moved around each month on the TransferWise app by its more than 4 million users.

The company makes money through fees charged on international transfers, which it boasts are up to eight times lower than those charged by banks.

Last year, it introduced its traveler-friendly borderless account to European customers, which lets users hold over 40 currencies and switch between currencies instantly. TransferWise plans to roll out the product to U.S. users later this year.

And in July, TransferWise tied up with French bank Groupe BPCE, in its first major bank partnership, to provide the lender’s customers access to its money transfer service. It has also struck deals with rival fintech firms Monzo and N26.

Monday’s earnings news could signal a changing landscape for fintech firms like TransferWise when it comes to profitability. Many start-ups in the sector have struggled to break even due to the cost of investing in their products and scaling their business while offering cheaper services than large banks.

Rival currency exchange and banking app Revolut for instance said earlier this year that it had broken even for the first time in December 2017. Meanwhile, another competitor, WorldRemit, expects to turn a profit by 2019.

The money transfer industry is a competitive one, with established giants like Western Union and MoneyGram, both of which have been investing heavily in the digital segments of their businesses.

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Moonves speaks after CBS shakeup, says he’s ‘deeply saddened’

The Azeri Times

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Moonves speaks after CBS shakeup, says he’s ‘deeply saddened’

The two words that keep coming to mind are “stunning downfall.” Sunday night’s announcement by CBS is five stories in one.,

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Watch Elon Musk’s boring machine being operated by an Xbox controller

The Azeri Times

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Watch Elon Musk’s boring machine being operated by an Xbox controller
boring-company-flamethrower-ashley-esqueda-cnet-4

Captura de pantalla: Laura Martínez/CNET

Elon Musk founded The Boring Company in order to drill holes beneath the earth and build tunnels that could possibly reinvent public transport. Most recently the company pitched a “loop” system that would connect Los Angeles suburbs to the Dodgers stadium in four minutes.

It was a company famously founded after Elon Musk got annoyed with LA traffic.

Traffic is driving me nuts. Am going to build a tunnel boring machine and just start digging…

— Elon Musk (@elonmusk) December 17, 2016

Currently The Boring Company has three machines capable of digging the tunnels required to make the “loop” systems work.

Here is the second machine, being controlled with an Xbox One controller, which The Boring Company tweeted about on the weekend:

Best video game ever indeed. This is literally the machine being used to burrow into the ground, most likely at Hawthorne, where Elon Musk’s test tunnel is currently being worked on.

Elon Musk recently appeared on the Joe Rogan podcast where he smoked weed and discussed the impending threat of AI.

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