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Is Kazakhstan Open For Business?




Now that almost six months since the launch of the Expo 2017 Astana have passed, how successful was Kazakhstan’s $3 billion effort to tell the world that it’s “open for business?” Ahead of the Expo, the government of Kazakhstan certainly did its best to raise expectations and to position itself as a regional powerhouse, keen on diversifying its oil-dependent economy. Indeed, in the more than quarter century since the country gained independence from the USSR, GDP growth has come mainly off the back of Kazakhstan’s vast natural resources. But with the price of oil and gas – which account for around 60% of exports – having plummeted, and with GDP having grown by a mere 1% last year, the government has been making urgent efforts to woo foreign investors. Hence the theme of the fair – “Future Energy” – and the government’s campaign to host the Expo in the first place as part of a nation-branding scheme.

However, the investment climate is problematic.  AES, one of the first foreign companies to invest in the country is all too familiar with the problems. An AES spokesperson explained how Kazakhstan forcibly seized two hydroelectric power plants that AES had acquired in a concession deal 20 years earlier – and paid the firm only $1 in return for the assets.

 AES was among the first and only foreign investors outside the oil sector to invest in Kazakhstan, having entered the market in 1996, when the country was still making only halting progress in the transition from a planned to a market economy. At the time, the electricity sector was still state-owned and on the verge of collapse due to chronic lack of funds.

AES’ first move was to acquire the newly privatized Ekibastuz GRES 1 coal-fired power plant in the Pavlodar region. Encouraged by Kazakhstan's commitment to support foreign private investment, AES later entered into a concession agreement and acquired four coal-fired heat and power plants, together with a 20-year concession for two hydroelectric plants in East Kazakhstan. To ensure the plants were operational during the winter and to upgrade their efficiency, AES invested almost $400 million in the plants included in the concession – even though investment in the sector still posed considerable risks.

As the economy started picking up in 2001 thanks to high oil prices, the government started having second thoughts over its decisions to sell assets to foreign investors such as AES. As a result, it started efforts to re-appropriate the plants and to render the concession agreement null and void.

The only snag was that Kazakhstan had provided a number of guarantees and promises through the concession agreement as well as through existing legislation like the Foreign Investment Law – guarantees which were pivotal in AES’ decision to pursue the investment.

But that didn’t stop Kazakhstan from signaling it wouldn’t extend the concession, nor fulfill its promises – a fact that became increasingly clear as the expiry date of October 1, 2017 approached. In April 2017, AES was officially informed that Astana would require the return of its plants by October 1, without offering any explanation or chance for negotiations. As part of the return process, Kazakhstan was required to pay AES a transfer payment calculated in accordance with a contractual formula, which was designed to ensure that the firm would be compensated for any value it contributed to the plants over the concession period. In July, AES shared its calculation for the payment, which totaled approximately $87 million, along with detailed supporting documentation. The following month, Kazakhstan responded with a one-page estimate of $60 million – with no documentation included.

Following additional back-and-forth, Kazakhstan notified AES that the amount due was only $1 for each plant. Perhaps fittingly for such a bizarre figure, the government did not provide any details for its new calculation.

In its April notification, the government stated that an amount equal to AES’ calculation of the transfer payment would be deposited into escrow, in return for which the firm must transfer the plants, and that arbitration would be necessary to establish the correct payment. AES objected, but the government went ahead nonetheless and reiterated its demand for the “immediate” transfer of the plants. AES complied.

In addition to not paying AES, Kazakhstan set up a flawed escrow agreement that allowed the government to direct the release of funds to any person (including itself) at any time, which prompted AES to apply for a temporary injunction preventing them from doing so. Although AES has been reaching out to local authorities to find a mutually agreeable solution, Kazakhstan has so far refused to engage in settlement discussions, which may force AES to initiate arbitration.

As the spokesperson explained, the affair serves as a warning bell for other investors looking to enter the country. Indeed, other foreign energy firms operating in Kazakhstan have suffered similar fates. These include the US firms CCL Oil, Turkey’s Türkiye Petrolleri Anonim Ortaklığı, and the Dutch firm Liman Caspian Oil B.V.

As they put it, if the government truly wants to diversify its economy and attract business, “It should guarantee a stable regulatory framework and allow investors to repatriate profits and be treated fairly under the contracted agreements.” Indeed, such a strategy would go far towards ensuring the expo delivers on its promises.



With EU support, Iraq is slowly advancing on anti-corruption



Since the US-led invasion to oust long-time dictator Saddam Hussein in 2003, corruption has become Iraq’s unshakable scourge, with successive governments trying and failing to tackle the problem. Now, however, the publication of the country’s Anti-Corruption Strategy for 2021-24, which was prepared by the Iraq Integrity Authority (IIA) and approved by President Barham Salih, is hoped to provide a renewed push for concerted anti-corruption action in Iraq.

The document comes mere weeks after the EU, UN and Iraq launched a partnership to suppress corruption in the country. The €15 million project seeks to “revise Iraq’s anti-corruption laws, training investigators and judges, and working to boost the role of civil society”, improving the justice system being the final objective.  In light of the new project – along with a new anti-graft draft law currently being discussed that aims to recover stolen funds and hold the perpetrators accountable – Iraq’s own Anti-Corruption Strategy comes at a time when international cooperation to curb illegal activities is at a new high.

Going after businessmen and judges

These initiatives are part of a wider EU-supported push by Prime Minister Mustafa al-Kadhimi’s, whose aggressive anti-corruption drive is targeting crooked government and judiciary officials in a bid to stop the massive budgetary losses that result from criminal activities. After all, al-Kadhimi came to power after public protests against the incompetence and immorality of the prior government in October 2019. The demonstrations prompted a shake-up in the Iraqi parliament, with al-Kadhimi promising to take a hard line on corruption upon his ascension to the hotseat.

Al-Kadhimi can already claim a clutch of high-profile arrests, including several prominent politicians, a well-connected businessman and a retired judge. In August 2020, he set up a special committee tasked with targeting high-profile individuals guilty of graft, with the first arrests of two officials and one businessman following the month after. The head of the national Retirement Fund and the chief of the Investment commission were the two civil servants apprehended, but it’s the businessman – Bahaa Abdulhussein, the CEO of electronic payment firm Qi Card – who perhaps represents the biggest fish, since his ample friends in high places demonstrate that even well-connected fraudsters no longer are safe from the law.

The biggest case so far this year is that of retired judge Jafar al Khazraji, who recently was handed a sentence of “severe imprisonment” for the illegal inflation of his spouse’s wealth by some $17 million in undeclared assets. According to the IIA, Khazraji was not only ordered to repay the sum in full, but was additionally slapped with an $8 million fine. The case is a landmark one given that it represents the first time that the judiciary has prosecuted an individual under a law against illicit gain of material wealth at the expense of the Iraqi people.

The reclamation of $17 million is certainly a positive development, but represents a mere drop in the ocean when compared to the $1 trillion which al-Kadhimi estimates Iraq has lost to corruption in the last 18 years. However, the precedent-setting nature of the sentence could be more valuable in stamping out malfeasance and encouraging the FDI that Iraq so desperately needs to rebuild its crumbling infrastructure.

Iraq’s economy on the line

Indeed, the prosecution of al Khazraji is significant for another reason. The judge had ruled against international companies Orange and Agility in their case against the Iraqi telecommunications firm Korek. The two foreign interests alleged that Korek had expropriated their investments without due recourse to the law, a stance which was refuted first by al Khazraji and then confirmed by the World Bank’s International Center for the Settlement of Investment Disputes (ICSID).

The ICSID verdict has been severely criticized as “fundamentally flawed” by Agility, because the ICSID essentially handed corrupt officials in the country carte blanche to do what they like with investors’ money, thus sending out sizable red flags to the overseas investment community. This is a development of which the EU has certainly taken note, even if the arrest of a judge implicated in the case may go some way towards restoring that fading faith in Iraqi justice.

European support on Iraq’s long road ahead

Such restoration is sorely needed, not least to rekindle the economy, which shrank by 10.4% in 2020, the largest contraction since the days of Saddam Hussein. Iraq’s GDP-to-debt ratio is expected to remain high, while inflation could reach 8.5% this year. Al-Kadhimi is certainly up against quite the challenge, with even his own party members stating that 17 years of entrenched corruption will need to be swept away in order to give the country a fresh start.

These are just the first steps on a long road to bring Iraq back from the brink, and the fact that every successive government since Hussein’s deposition has launched its own anti-corruption initiatives – and then failed to follow through on them – may make Iraqis wary of getting their hopes up. However, the initial arrests of prominent individuals, alongside the publication of an official Strategy aimed at unpicking the knotty tangle of corruption in the country’s higher echelons, are, at least on a technical level, encouraging indicators that the government’s efforts are standing on solid ground.

The EU’s role is now in helping the government maintain the positive momentum. Brussels has done well to remain in intimate contact with key figures in order to ensure the implementation of the IIA’s Anti-Corruption Strategy. Although it’s evident that a steep hill remains to be climbed, if even a few suggested reforms are realised – including a transition to e-governance, or an increase in the participation and collaboration of civil society groups – the government may edge forward in doing what none of its predecessors have managed.

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113 US and EU organizations urge EU and US to Lift retaliatory tariffs on products unrelated to transatlantic trade disputes



In advance of the upcoming EU-US summit in Brussels, the undersigned 113 organizations reiterate our call for the permanent removal of tariffs on sectors unrelated to the ongoing transatlantic trade disputes. The transatlantic relationship is of enormous economic importance to our sectors, and spiritsEUROPE is eager to see it protected and nurtured. spiritsEUROPE welcomes the positive steps to de-escalate the disputes over the past few months and hope that both sides can build on this positive momentum to secure the permanent removal of retaliatory tariffs on our products.

"We are encouraged by the decision to temporarily suspend tariffs imposed in connection to the World Trade Organization Airbus-Boeing disputes and by the ongoing US and EU efforts to settle the dispute before the suspension ends. Our strong desire is to see an agreement before 11 July to permanently remove these tariffs. However, predictability is essential for businesses on both sides of the Atlantic. Our sectors, therefore, request advance notice that the tariffs will not return, even if there is a need for additional time to negotiate, to account for shipping times between the EU and the US.

"We are also encouraged by the recent US-EU joint statement on addressing global steel and aluminium excess capacity, and commend the EU’s decision to postpone the second tranche of rebalancing tariffs until 1 December. While this six-month respite provides reassurance to affected sectors, we call on both parties to secure an agreement before the December deadline to permanently remove existing tariffs and not to introduce new tariffs. Indeed, products across a range of sectors continue to face destructive tariffs that are harming competitiveness and negatively impacting manufacturers, producers, farmers and logistics providers and many others on both sides of the Atlantic.

"We are hopeful the recent positive momentum in both disputes will lead to the permanent removal of tariffs on unrelated sectors and an agreement not to introduce new tariffs in these transatlantic disputes. We call on our leaders to intensify negotiations to ensure that this happens without delay. Removing tariffs on unrelated sectors is essential to create the necessary certainty and stability to grow the transatlantic economy as it recovers from the COVID-19 pandemic. Securing the permanent removal of tariffs on unrelated sectors will also allow both sides to establish a positive transatlantic trade agenda and focus on common areas of interest."

List of signatories

ACEM - European Association of Motorcycle Manufacturers

Agriculture Transportation Association

AIJN - European Fruit Juices Association

American Apparel & Footwear Association

American Bakers Association

American Beverage Licensees

American Chemistry Council

American Craft Spirits Association

American Cranberry Growers Association

American Distilled Spirits Alliance

American Distilling Institute

American Farm Bureau Federation

American Peanut Council

American Single Malt Whiskey Commission

American Soybean Association

American Sweet Potato Marketing Institute

APPLiA - Home Appliance Europe

Arizona Craft Distillers Guild

Associated Equipment Distributors

Atlantic Seaboard Wine Association

BNIC - Bureau National Interprofessionnel du Cognac

California Artisanal Distillers Guild

CAOBISCO - Chocolate, Biscuits and Confectionery of Europe

Cape Cod Cranberry Growers' Association

CECE - Committee for European Construction Equipment

CECIMO - European Association of the Machine Tool Industries

CEEV - Comité Européen des Entreprises Vin

CEFIC - The European Chemical Industry Council

CEMA  - European Agricultural Machinery Industry Association

CEO - Comité Européen de l'Outillage

Cheese Importers Association of America

CLITRAVI - Liaison Centre for the Meat Processing Industry in the European Union

COCERAL - European association of trade in cereals, oilseeds, pulses, olive oil, oils and fats, animal feed and agrosupply

Colorado Distillers Guild

Connecticut Spirits Trail

Corn Refiners Association

Cranberry Institute

CRN - Council for Responsible Nutrition

Distilled Spirits Council of the United States

Distillers Association of North Carolina

Drinks Ireland

ECCIA - Europan Cultural and Creative Industries Alliance

ECF - European Coffee Federation

EDA - European Dairy Association

EFFA - European Flavour Association

EPTA - European Power Tools Association

Espirituosos España - Federación Española de Espirituosos

EUCOLAIT - European Association of Dairy Trade

EURATEX - The European Apparel and Textile Confederation

EUROMAT - European Gaming and Amusement Federation

European Boating Industry

Farmers for Free Trade

FEC - Federation of European manufacturers of Cookware and cutlery

FEMA - Flavor & Extract Manufacturers Association of the United States

FEVS - Fédération des Exportateurs de Vins & Spiritueux de France

Florida Citrus Mutual

Florida Citrus Packers

Florida Craft Spirits Association

Food Export-Northeast

Freshfel Europe - The European Fresh Produce Association

FRUCOM - European Federation of the Trade in Dried Fruit, Edible Nuts, Processed Fruit & Vegetables and Processed Fishery Products

Idaho Distillers Association

Illinois Craft Distillers Association

Independent Restaurant Coalition

Intergraf - European federation for print and digital communication

Iowa Distillers Alliance

Kentucky Distillers’ Association

Louisiana Distillers Guild

Maryland Distillers Guild

Michigan Craft Distillers Association

Montana Distillers Guild

Napa Valley Vintners

National Association of Beverage Importers

National Association of State Departments of Agriculture

National Association of Wine Retailers

National Council of Chain Restaurants

National Fisheries Institute

National Grain and Feed Association

National Restaurant Association

National Retail Federation

NCA - National Confectioners Association

New Hampshire Distillers Guild

New Jersey Craft Distillers Guild

New York State Distillers Guild

NMMA - National Marine Manufacturers Association

North American Shippers Association

NY Wine Industry Association

Ohio Distiller’s Guild

Oregon Distillers Guild

Oregon Wine Council

Pennsylvania Distillers Guild

Personal Care Products Council

PROFEL - European Association of Fruit and Vegetable Processing Industries

South Carolina Craft Distillers Guild


Tennessee Distillers Guild

Texas Distilled Spirits Association

The Maryland Wineries Association


U.S. Wine Trade Alliance

United States Bartenders’ Guild

United States Sweet Potato Council

USA Rice

USMMA - United States Motorcycle Manufacturers Association

Virginia Distillers Association

Washington Wine Institute

West Coast Seafood Processors Association

Willamette Valley Wineries Association

Wine & Spirits Wholesalers of America

Wine and Spirits Shippers Association

Wine Institute


Wisconsin State Cranberry Association

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The money-making business of ministerial life after politics



Life after politics can be a daunting prospect. But, for some, after many years in government, possibly as career politicians, entering the private sector also opens-up a host of opportunities, and financial reward that were once, technically, off-limits.

No-one goes into politics in the UK to make money, just ask Boris Johnson. However, the status that comes with having held a position in high-office often attracts significant and lucrative opportunities for those once they leave the corridors of Westminster behind. George Osborne is a notable example, who, among the 10 private sector jobs he undertook after leaving office, secured a £650,000 a year advisory role with BlackRock. Tony Blair in early 2008 joined US investment bank JP Morgan as a ‘senior advisor’, reportedly earning him six-figures for three 90-minute appearances a year.

The Advisory Committee on Business Appointments (Acoba) is the government watchdog that sets the rules for out-going MPs, Ministers and other senior civil servants on what they can and cannot do within the first two years of leaving office. Current guidelines suggest Ministers wait a minimum of three months after leaving government before undertaking a paid private sector role and are required to seek advice by the committee who will assess the merits of the role, and whether, it will be seen as a reward for previous work carried out in office, or whether the former post will give rise to an unfair advantage, at which time, a prospect may be deemed ‘unsuitable’. However, Acoba has no official powers to enforce, and there are several examples where Ministers have chosen to ignore recommendations, including the incumbent Prime minister Boris Johnson, who re-joined the Telegraph immediately after his brief tenure at the helm of the Foreign Office.

Former Prime Minister, David Cameron, has also recently made headlines after his ties to Greensill Capital were exposed. He faces allegations that he exploited his position and his network in order to seek preferential access to state funding for the bank, claims he strongly denies. The now collapsed bank, led by disgraced financier Lex Greensill has left the UK taxpayer with a bill of more than £1 billion.

As an advisor to the bank, he lobbied government heavily and in return, was handsomely rewarded. While no figures have been made public, he admits to having a large economic interest in the bank’s success, telling MPs: “By anyone’s terms, it was a generous salary”.  

Appearing in front of the Treasury Select Committee and the Public Accounts Committee last week, Cameron was grilled for four hours over a series of now public messages he sent to Ministers, MP’s and other government officials lobbying on behalf of the bank. Such was his voracity and insistence that Labour MP Angela Eagle accused him of effectively stalking, rather than lobbying, while another MP criticised him for bringing the office of the Prime Minister into disrepute.

Malcolm Rifkind, former Foreign Secretary and Chairman of the Intelligence and Security Committee, is another politician who found himself in hot water, following a ‘cash for access’ scandal in 2015 while still in office. Since choosing to stand down, he has taken on several board positions at various advisory outfits, including 17 Arm, a firm involved in the questionable business of unregulated litigation funding and asset recovery.

Founded by the controversial businessman Paddy Meade, the 8th Earl of Clanwilliam, the Dubai based company is not a member of the Association of Litigation Funders (ALF) and therefore, unlike others in the field, does not operate under any established codes of conduct, nor does it raise capital for cases on the open market through institutional investors like others, leaving a large question mark over the source of its funds.

17 Arm made recent headlines when The Guardian reported they were funding the case bought by Alexander Tugushev against his former associate, Vitaly Orlov, which has been playing out in the British courts since 2018.

Tugushev, himself a former government official in his role as Deputy Chairman of the (then) State Fisheries Committee of the Russian Federation, is a convicted fraudster, who, in 2007, was sentenced to six years in prison in Russia for abusing his position in public office and taking illicit payments and bribes. He is also the subject of several other open criminal investigations in Russia, including an indictment for fraud committed against Mr Orlov that is now procedurally attached to a separate case in which Tugushev is subject to an international arrest warrant on charges related to fraud committed against Mr Alexander Sychev.

It is not clear who is financing 17 Arm regarding this case, with Tugushev going so far as to pay £7.8 million in securities to cover legal costs to avoid identifying his backers, who are alleged to be possible rivals of Orlov’s fishing company Norebo and individuals from the Russian criminal under-world looking to cash in.

The practice of former government officials using their networks and experience to cash-in on lucrative business deals is not new.  In fact, why would a firm add a costly former government official to their payroll if not because of the doors they can open? Across every industry almost every outgoing official in recent years, from both sides of the chamber have moved into the private sector.  

In most cases, as questionable as these relationships and deals may look from the outside, no rules have apparently been broken, instead the system is simply manipulated to the benefit of individuals like Lex Greensill, and even wanted criminals like Tugushev, who try to gain credibility by riding the tailcoats of these connected and influential individuals.

For the likes of respected figures such as Rifkind and former public prosecutor, Ken Macdonald to be tied to such individuals demonstrates the need for reform and strengthening of Acoba, which has so far proven ineffective in ensuring former officials do not bring into question the integrity of the British political institutions.

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