Turkish President Recep Tayyip Erdogan, left, and Azerbaijan President Ilham Aliyev during a Turkish technology and aviation festival in Baku in May. AP Photo
Turkish President Recep Tayyip Erdogan, left, and Azerbaijan President Ilham Aliyev during a Turkish technology and aviation festival in Baku in May. AP Photo
Turkish President Recep Tayyip Erdogan, left, and Azerbaijan President Ilham Aliyev during a Turkish technology and aviation festival in Baku in May. AP Photo
Turkish President Recep Tayyip Erdogan, left, and Azerbaijan President Ilham Aliyev during a Turkish technology and aviation festival in Baku in May. AP Photo


Turkey's expanding role in Central Asia is a boon for Nato


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July 05, 2022

As Nato leaders gathered in Madrid last week, Russian President Vladimir Putin embarked on a crucial diplomatic mission of his own. His first trip abroad since his country’s late February invasion of Ukraine was not to either of the two regional powers, India and China, that have with their increased gas imports provided Moscow an economic lifeline.

Mr Putin instead sought to reassert Russian influence in Central Asia, visiting Tajikistan, where its leader embraced him on the tarmac, then Turkmenistan for a summit of Caspian Sea leaders, including those from Azerbaijan, Kazakhstan and Iran.

“An atmosphere of friendship and co-operation reigns in the Caspian,” Mr Putin’s foreign policy adviser, Yuri Ushakov, asserted. Yet, Russian influence in the Caucasus and Central Asia was widely seen as receding even before the conflict with Ukraine. Now, with significant western sanctions disrupting trade routes, Russian ties across Eurasia – and with regional heavy hitter China – may soon be critical to its economic survival.

This is not news to Turkey, which has been expanding its regional footprint for years. Back in 2009, Ankara created the Organisation of Turkic States (formerly the Turkic Council). Today, the bloc’s five members (Azerbaijan, Kazakhstan, Kyrgyzstan, Turkey and Uzbekistan) and two observer states (Turkmenistan and Hungary) are home to some 170 million people and an aggregate GDP of $1.5 trillion.

In March, former Turkish deputy prime minister Binali Yildirim, chair of the bloc’s Council of Elders, said it hoped to establish an EU-like alliance, with full freedom in the movement of goods and people. This echoes the vision of the 10-member Economic Co-operation Organisation, which is significantly older and also counts Iran, Afghanistan and Pakistan as members, as well as Tajikistan.

The Turkish-made Bayraktar TB2 drones are in great demand. AFP
The Turkish-made Bayraktar TB2 drones are in great demand. AFP
If Nato seeks to counter this rising Russian-Chinese axis in Eurasia, it could hardly find a better partner than Ankara

But the stressing of pan-Turkic identity and Turkey’s status as the most populous member gives Ankara a degree of control over the Turkic organisation, which is why most observers view the bloc as a tool to expand Turkish influence, focused on energy and trade.

Turkey has few domestic energy reserves and thus must rely on imports, with Russia providing nearly half its natural gas. Ankara’s main goal in backing Azerbaijan in the late 2020 war for Nagorno-Karabakh was arguably its hope of gaining greater access to Azerbaijani gas and the Trans-Caspian, potentially becoming an energy transit state.

The Turkic organisation is all about developing bigger, better ports and more direct trade corridors. One recent example is the first Kazakhstan-Iran-Turkey train, which arrived in Tehran with its cargo of sulphur in late June. More specifically, Ankara aims to develop the Middle Corridor to China, poised between the southern and northern routes through Iran and Russia.

A crucial element of that vision is reviving the Zangezur corridor, which, as this column has previously detailed, is a train link across Armenian territory that would connect mainland Azerbaijan to its exclave of Nakhchivan, bordering Turkey. This would give Ankara a gateway to the Caspian basin and one of the faster routes to Central Asia and China, offering huge economic and energy potential and the opportunity for significant Belt and Road Initiative (BRI) investment.

Six weeks ago, Kazakh President Kassym-Jomart Tokayev visited Ankara and signed 15 bilateral deals as part of an enhanced strategic partnership. Mr Tokayev pointed out that, since Kazakhstan began using Turkish shipping corridors, the cargo transport time from Khorgos to Istanbul has gone from 60 days to just 13. Surely Beijing took note.

Kazakhstan also agreed to begin domestic production of Turkey’s unmanned Anka drones. This seemed fitting, as the Turkic organisation sometimes seems like a showcase for Turkey’s domestic defence. Turkey’s military backing, mainly via advisers and Bayraktar TB2 drones, played a crucial role in Azerbaijan’s victory in Nagorno-Karabakh. Late last year, Kyrgyzstan confirmed it had purchased Turkish drones.

Turkmenistan has also purchased at least one TB2, which it showcased last September. Home to the world’s fourth-largest natural gas reserves, Turkmenistan is the alliance’s most recent addition, becoming an observer in November 2021. It may soon request member status, despite its predilection for avoiding regional alliances. Its main energy customer has been China, but those proceeds mainly go to debt repayment.

Turkmenistan may now view Turkey as the best alternative buyer and the most direct trade route – across the Caspian to Baku, through Zangezur to Turkey and on to Europe. In February, Ankara agreed with Azerbaijan and Turkmenistan to transit gas from their joint Dostluk field to Europe.

Building its trade superhighway to the West, China probably hopes to keep Russia and Turkey from gaining a stronger foothold. One key node of that effort is Uzbekistan, where China emerged as the country’s leading export market last year ($1.74 billion compared to Russia’s $1.7bn). China is also Uzbekistan’s largest source of foreign investment, more than doubling that of Russia.

Mr Erdogan visited Tashkent in March to seal the Turkey-Uzbek partnership just weeks after Beijing and Tashkent signed their own deals. Turkey’s commitments included a $150 million thermal power plant and a $140m gas piston power plant, making Ankara the third-largest export market to Uzbekistan.

“It’s a race between Turkey and China in Central Asia,” Kamran Bokhari, former head of Central Asian studies at the US’s Foreign Services Institute, recently told me, “as to who gets more influence as Russia recedes.”

While Mr Putin was making nice in Central Asia, Sweden and Finland agreed to address Turkey’s concerns about terrorism – though they still need to follow through – as Russia’s Ukraine invasion spurred prompt Nato expansion. Receiving much less media coverage was Nato’s decision to shift its strategic focus eastward.

The bloc’s new strategic concept, released in Madrid, asserted that China’s “stated ambitions and coercive policies challenge our interests, security and values” and warned of “the deepening strategic partnership between the People’s Republic of China and the Russian Federation”.

Russian President Vladimir Putin speaks to the media after the summit of Caspian Sea littoral states in Ashgabat, Turkmenistan, on Thursday. AP Photo
Russian President Vladimir Putin speaks to the media after the summit of Caspian Sea littoral states in Ashgabat, Turkmenistan, on Thursday. AP Photo

Nato member state officials have for years expressed concerns about China spreading its economic influence through the BRI, with large investments in Central Asia, Afghanistan, Pakistan, Turkey, and into the Balkans. Now, one of the most pressing results of the war in Ukraine is Moscow aligning more closely with Beijing.

Ankara may be pursuing its own interests in Central Asia and the Caucasus, but as I detailed last year, those interests are largely aligned with its Nato allies. Both aim to ensure stability and access to energy resources while curbing the influence of Beijing and Moscow.

Paul Goble, a longtime specialist on Eurasia and once adviser to former US secretary of state James Baker, said in a recent interview that Turkey is likely to continue to emerge in the region as Russia declines. “Russia is terrified of the rise of [Turkey],” he said. “Russia is concerned that it represents a threat to the southern part of the Russian Federation, which it does.”

The US already supports the development of Turkey’s Middle Corridor as a way to help Europe move away from Russian energy, and may provide significant funding and diplomatic support for Ankara’s completion of the Trans-Caspian route. If Nato seeks to counter this rising Russian-Chinese axis in Eurasia, it could hardly find a better partner than Ankara.

As in Afghanistan with the Taliban, in Russia-Ukraine peace talks and grain release efforts, and with the Syrian refugee crisis, Turkey, despite regularly taking anti-western positions, once again finds itself perfectly poised to help out its western allies.

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West Ham 2-3 Tottenham
Arsenal 2-2 Southampton
Bournemouth 1-2 Wolves
Brighton 0-2 Leicester City
Crystal Palace 1-2 Liverpool
Everton 0-2 Norwich City
Watford 0-3 Burnley

Manchester City v Chelsea, 9.30pm 

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, established Edge in 2019.

It brought together 25 state-owned and independent companies specialising in weapons systems, cyber protection and electronic warfare.

Edge has an annual revenue of $5 billion and employs more than 12,000 people.

Some of the companies include Nimr, a maker of armoured vehicles, Caracal, which manufactures guns and ammunitions company, Lahab

 

PAKISTAN v SRI LANKA

Twenty20 International series
Thu Oct 26, 1st T20I, Abu Dhabi
Fri Oct 27, 2nd T20I, Abu Dhabi
Sun Oct 29, 3rd T20I, Lahore

Tickets are available at www.q-tickets.com

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Wins: 28
Wins by KO: 26
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This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.

Specs

Price, base: Dhs850,000
Engine: 3.9-litre twin-turbo V8
Transmission: Seven-speed automatic
Power: 591bhp @ 7,500rpm
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if you go

The flights 

Etihad and Emirates fly direct to Kolkata from Dh1,504 and Dh1,450 return including taxes, respectively. The flight takes four hours 30 minutes outbound and 5 hours 30 minute returning. 

The trains

Numerous trains link Kolkata and Murshidabad but the daily early morning Hazarduari Express (3’ 52”) is the fastest and most convenient; this service also stops in Plassey. The return train departs Murshidabad late afternoon. Though just about feasible as a day trip, staying overnight is recommended.

The hotels

Mursidabad’s hotels are less than modest but Berhampore, 11km south, offers more accommodation and facilities (and the Hazarduari Express also pauses here). Try Hotel The Fame, with an array of rooms from doubles at Rs1,596/Dh90 to a ‘grand presidential suite’ at Rs7,854/Dh443.

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Distance covered: 160km

Temperature: -40°C

Weight of equipment: 45kg

Altitude (metres above sea level): 0

Terrain: Ice rock

South Pole stats

Distance covered: 130km

Temperature: -50°C

Weight of equipment: 50kg

Altitude (metres above sea level): 3,300

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Day 5, Dubai Test: At a glance

Moment of the day Given the problems Sri Lanka have had in recent times, it was apt the winning catch was taken by Dinesh Chandimal. He is one of seven different captains Sri Lanka have had in just the past two years. He leads in understated fashion, but by example. His century in the first innings of this series set the shock win in motion.

Stat of the day This was the ninth Test Pakistan have lost in their past 11 matches, a run that started when they lost the final match of their three-Test series against West Indies in Sharjah last year. They have not drawn a match in almost two years and 19 matches, since they were held by England at the Zayed Cricket Stadium in Abu Dhabi in 2015.

The verdict Mickey Arthur basically acknowledged he had erred by basing Pakistan’s gameplan around three seam bowlers and asking for pitches with plenty of grass in Abu Dhabi and Sharjah. Why would Pakistan want to change the method that has treated them so well on these grounds in the past 10 years? It is unlikely Misbah-ul-Haq would have made the same mistake.

What is Genes in Space?

Genes in Space is an annual competition first launched by the UAE Space Agency, The National and Boeing in 2015.

It challenges school pupils to design experiments to be conducted in space and it aims to encourage future talent for the UAE’s fledgling space industry. It is the first of its kind in the UAE and, as well as encouraging talent, it also aims to raise interest and awareness among the general population about space exploration. 

Updated: July 05, 2022, 11:26 AM