Eurasia In The Global Economy | Alan Greenhalgh

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RSM International Talking Points

RSM International Talking Points

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  • 1. Talking Points Eurasia in the Global Economy By David Bartlett, Economic Advisor, RSM International Alan Greenhalgh, Kapital Karden, Turkey Eurasia, the landmass bridging the reserves, and launch of new refineries are The $7.3 billion Turkmenistan-China pipeline traditional continents of Europe and Asia, heightening the country’s demand for energy. was inaugurated in December 2009, permitting has become a bulwark of the global economy. According to the International Energy Agency, the eastward transportation of Caspian gas. By The ancient network of trade routes that for China’s oil demand will rise to 11.3 million 2011, 30 billion cubic meters of natural gas will thousands of years brought goods from the barrels a day by 2015. be delivered to China from Turkmenistan (along Far East to Western Europe is now a rapidly with 10 billion cubic meters from Kazakhstan), The hydrocarbon supplies coming from the helping China stabilise its energy supplies and modernising network of pipelines, rails, super Eurasian region remain modest compared highways, and Information Technology links. reducing carbon dioxide emissions. to those originating in the Persian Gulf. The Eurasia of the Third Millennium is home Kazakhstan (the second largest oil producer in Parallel with these energy initiatives in Central to some of the world’s largest oil producers, the Former Soviet Union following the Russia Asia, China is expanding its commercial wealthiest investors, and fastest growing Federation) produces 1.4 million barrels per day footprint on the South Asian Subcontinent economies along with more than half the (bpd) compared with Saudi Arabia’s 10.9 million (illustrating the gradual warming of bilateral world’s population. bpd, the United Arab Emirates’ 3.0 million relations with longtime antagonist India) and China and Eurasia bpd, and Kuwait’s 2.7 million bpd. Iraq, whose the Middle East (including manufacturing- long-dormant oil industry is poised for major related trade and investment in the Middle East China is the foremost economic power in production increases, is projected to reach 4 and North Africa). the Eurasian theater, where it is investing million bpd by 2015. more heavily than the EU or the United China is also a potential participant in the States. China’s Eurasian portfolio includes China’s energy investments in the Eurasian IPI (Iran-Pakistan-India) project, which as road construction projects in Tajikistan and area serve to lower the country’s reliance on originally conceived would deliver natural gas Kyrgyzstan, gas pipelines in Turkmenistan imports from remote Middle Eastern suppliers, from Iran to Pakistan and India. But India is and Kazakhstan, and hydropower plants in most of which have lengthy and potentially hedging on the project due to sanctions on Iran Tajikistan and Kyrgyzstan. With $2.0 trillion perilous journeys through the choke points of by the United States, whose ties with the New in reserves representing nearly 30% of the Hormuz and Malacca Straits. Delhi government have also deepened in recent foreign exchange reserves worldwide, China years. The Obama Administration is reportedly enjoys huge financial resources to support its Noteworthy among these Eurasian projects is pressuring the Pakistani government also to Eurasian ventures. the 2,228 kilometer Kazakhstan-China pipeline abandon the natural gas venture with Iran. (jointly owned by KazMunayGas and the China China is prepared to fill the void left by India Energy and energy security are the drivers National Petroleum Corporation), which will and Pakistan’s withdrawal, constructing a of China’s Eurasian strategy. China is now transport 20 million tonnes of oil per year deepwater port in Gwadar near the Hormuz the world’s second largest oil consumer due from the Aktobe, Kumkol, and the increasingly Straits in preparation of and to promote an to the country’s rapid industrialisation and important Kashagan fields on Kazakhstan’s energy partnership with Iran. urbanisation. China’s massive economic Caspian shore to Alashankou in the western stimulus package, strategic stockpiling of oil Chinese province of Xinjiang.
  • 2. Eurasia in the Global Economy June 2010 Eurasia and Energy Politics • Italy’s Eni and Russia’s Gazprom have The importance of this East-West transport Russian-based energy companies (GazProm, formed a joint venture called the South corridor was recognised by the EU’s TRACECA Lukoil, et al) and mining/metallurgical Stream pipeline, which will transport (Transport Corridor Europe-Caucasus- companies (e.g., MMC Norilsk Nickel Group) Russian gas under the Black Sea to Asia) programme in the mid-1990s. The are heavily invested in the “Near Abroad” of Southeastern Europe. transportation network will make it possible to the Former Soviet Union, and are therefore ship goods quickly and inexpensively across • Turkey’s TPAO (Türkiye Petrolleri Anonim the Eurasian landmass reducing the transit important commercial players in Eurasia. Ortakligi) has joined a Gazprom-led time for cargo between the Chinese Pacific But geopolitical factors (notably the consortium to develop the Badra oil field coast and the European market to about one reassertion of Russian domination in Central in eastern Iraq. week. Asia and persistent ethno-national and • Germany’s BASF and E. ON and Holland’s territorial disputes in the North Caucasus) Information Technology in Eurasia N.V. Nederlandse Gasunie have signed as powerfully influence Russian activities in the minority partners with majority owner Along with investments in transportation, the Eurasian area. Moscow’s heavy-handed use Gazprom in the Nord Stream project, Eurasian region is undergoing a modernisation of the energy weapon against Belarus and an offshore Baltic gas pipeline that has of Information Technology. Ukraine and its armed intervention in Georgia incurred the ire of bypassed Poland. demonstrate the close interconnections The Black Sea Interconnection (BSI) project between politics and economics in Russia’s Transportation Projects implemented under 7th Framework Programme approach to Eurasia. of European Commission and the Istanbul- A range of international transportation based Black Sea Economic Council (BSEC) has To counter the Moscow government’s growing projects are underway to create a modern developed a high-speed backbone linking the assertiveness in the Eurasian region, the EU infrastructure for the Eurasian region. national research and education networks (strongly supported by the United States) of the South Caucasus countries, allowing The building of a railroad linking Kars, Turkey constructed the 1,768 kilometer Baku-Tbilisi- connectivity to the pan-European research and and Akhalkalaki, Georgia and the rehabilitation Ceyhan (BTC) pipeline transporting oil from the education GEANT2/3 network. The Scientific of the Akhalkalaki-Tbilisi rail line will connect Azeri-Chirag-Guneshli field to Turkey’s South and Technological Research Council of Turkey Istanbul to the Caspian Sea. The Kars- Mediterranean port. Since the first tanker with (TUBITAK) acts as coordinator and links 45 Akhalkalaki-Tbilisi-Baku railway is expected to Azeri oil left a Turkish port bound for an Italian universities and over 150 000 scholars from be completed in 2010 with onward connections refinery in 2006, BTC has become the most Azerbaijan, Georgia and Armenia with partner from Azerbaijan to Kazakhstan. Together with important energy corridor linking the Caspian institutions in Europe. The BSEC is also leading rail lines linking Kazakhstan and China, these Sea and Europe. the Trans-Eurasian Information Super Highway projects will create a rail connection from (TASIM) venture to bridge the region’s “digital The EU and U.S. also sponsored the parallel Istanbul to Urumqi in China’s interior. divide” by enlarging international connectivity Baku-Tbilisi-Erzurum (BTE) pipeline, which and expanding broadband access. China is constructing 12 highways to configure transports natural gas from Azerbaijan’s Central Asia as a land bridge linking Beijing offshore Shah Deniz field to Turkey. From Conclusion with the Black Sea. These highways will there, Caspian natural gas will be distributed The resurgence of international interest in connect the Xinjiang Autonomous Region to Western Europe via a Turkish-Austrian the Eurasian commercial area has important with neighboring countries, including Russia, pipeline (Nabucco) and other links. A proposed implications for the countries of the region: Kazakhstan, Kyrgyzstan, and Pakistan. Customs Trans-Caspian pipeline will convey natural gas procedures for en route goods will also be underwater from Turkmenistan to Azerbaijan, • Deepening commercial ties between streamlined. China’s Eurasian highway ventures connecting to BTE for delivery to Western China and the EU, whose trade turnover are part of the 141,000 kilometer Asian Highway Europe. Meanwhile, the European Commission already surpasses the volume of Sino- project sponsored by the United Nations. has signaled its interest in ITGI (Interconnector American and Sino-Japanese trade Turkey-Greece-Italy, which would convey The China Railway Construction Corporation natural gas from the Caspian to Italy) and the (CRCC), which is the world’s 6th largest • Rising standing of the Republic of White Stream project (which would transport contracting company and whose declared Turkey as a cultural/economic/political/ Caspian gas to Romania and Ukraine). mission is ‘‘to cut paths through mountains technological bridge between Asia, and builds bridges across rivers’’, has Europe, and the Middle East Notwithstanding Western efforts to create launched a number of Eurasian projects. The • Expanding links between the EU and the  alternatives to Russian hydrocarbons, the China–Kazakhstan railway will connect China Soviet successor states and the Caucasus, Russian Federation remains the dominant and Kazakhstan via the Alataw Pass, providing many of which endured stagnation, energy power in the Eurasian area. Current passenger service from Urumqi to Almaty and instability and isolation during the 1990s energy projects underscore the readiness of Astana. CRCC is also constructing a rail link and 2000s but are now showing strong European players to accommodate Russian between China, Kyrgyzstan, and Uzbekistan. economic potential (eg Azerbaijan). prerogatives:
  • 3. About RSM International About Kapital Karden About Alan Greenhalgh RSM International is a worldwide member Kapital Karden is a financially-focused, Alan has over 15 years experience in business organisation of independent accounting professional business services provider that development, marketing, training, PR and and consulting firms. RSM International serves growing organisations with independent communications having worked extensively is represented in 76 countries and brings audit, accounting and payroll, tax, consulting, with blue chip and entrepreneurial companies together the talents of over 32,000 individuals VAT refunds, corporate finance, restructuring, in London, Dubai, Moscow, Mexico City and worldwide. The organisation’s total fee energy audit, forensic accounting and Istanbul. A graduate of Business and Finance income of US$3.8bn places it amongst the top wealth management throughout Turkey, and Post Graduate of Marketing Management six international accounting organisations Azerbaijan and The Caucasus. Kapital Karden and Statistics (Liverpool John Moores worldwide. Member firms are driven by a was established in 1994 and became the University) he has found a welcoming home in common vision of providing high quality correspondent firm of RSM International in RSM International for the past three years. He professional services, both in their domestic 1996 and member firm in 2008. It is ranked is currently working on software and online markets and in serving the international number 5 in Turkey and No 5 in Azerbaijan. The development projects. professional service needs of their client base. International Accounting Bulletin, June 2009, E: alan@kapitalsmm.com www.rsmi.com named Kapital Karden ‘the fastest growing T: +90 212 213 9393 accountancy firm in Turkey’. www.kapitalsmm.com RSM International is the name given to a network of independently owned and managed accounting and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity. The network is administered by RSM International Limited, a company registered in England and Wales (company number 4040598) whose registered office is at 11 Old Jewry, London EC2R 8DU. Intellectual property rights used by members of the network including the trademark RSM International are owned by RSM International Association, an association governed by articles 60 et seq of the Civil Code of Switzerland whose seat is in Zug. © RSM International Association, 2010