Armenians in post-war Nagorno-Karabakh pin their hopes on Russia


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The latest war between Armenia and Azerbaijan over Nagorno-Karabakh may be over, but "normality" has not returned to the region.

In many ways, it never will.

This is clearly visible along the road to the capital, Stepanakert, as it passes by the entrance to Shushi, a city a few kilometres away. After half a dozen sandbagged Russian peacekeeping positions, a large new sign emblazoned with the city's Azerbaijani name, Shusha, and flanked by the flags of Azerbaijan and Turkey. Russian troops guide vehicles past two fortified Azerbaijani checkpoints, with heavily armed Azerbaijani soldiers a few hundred metres away. Stepanakert, and indeed Karabakh, still feels like it is under siege.

A sign bearing the flags of Azerbaijan and Turkey outside the city of Shushi in Nagorno-Karabakh displays its Azerbaijani name, Susha. Neil Hauer for The National
A sign bearing the flags of Azerbaijan and Turkey outside the city of Shushi in Nagorno-Karabakh displays its Azerbaijani name, Susha. Neil Hauer for The National

In Stepanakert, life has returned with startling speed. Barely three weeks since the entire capital was emptied of civilians as Azerbaijani forces closed in during the waning days of the war, the streets are once again packed with people. Stores are stocked and operating, streets have been cleared of debris, and although Armenian Karabakh soldiers in uniform are still omnipresent, so too are civilians going about their lives.

The veneer of normality is misleading. The first conversations with locals reveal that life now is nothing like it was before.

There are two main centres of life in Stepanakert these days. One is the social affairs office, where people gather to receive a one-time relief payment of 83,000 dram, roughly $170, from the Armenian Karabakh administration.

Mikael, 71, is a retiree from the village of Vazgenashen, which has since reassumed it Azerbaijani name, Gyulably. It was handed over to Azerbaijani control as part of Agdam region on November 20, as one of the conditions of the ceasefire deal.

“The clothes you see me in are all I have,” Mikael says, rubbing his hands to keep warm in the cold morning air. “We don’t have a home, we hardly have any of our possessions. We barely have our lives, and who knows for how much longer,” he adds grimly.

Damage from the latest war with Azerbaijan is still visible in the market in Stepanakert, the main city in the Nagorno-Karabakh region. Neil Hauer for The National
Damage from the latest war with Azerbaijan is still visible in the market in Stepanakert, the main city in the Nagorno-Karabakh region. Neil Hauer for The National

Asya Arushudyan, a 26-year-old teacher of Russian and mother of three, has similar problems despite being two generations younger.

“I am happy we were able to return to our country,” she says with a cautious smile. “But we are still afraid. The Azerbaijanis are right there,” she says, pointing in the direction of Shushi, visible on a high hillside just a few kilometres away.

Ella Mirzoyan, a 53-year-old schoolteacher, captures the mood. “We’re still afraid,” she says, having just returned to Stepanakert after leaving on the first day of the war, September 27. “I hope the Russians will be able to protect us.”

"The Russians" are the topic of the moment in Karabakh these days.

If the Russians weren't here now, then we wouldn't have come back

Russia has officially deployed just under 2,000 peacekeepers to Karabakh, along with 90 combat vehicles and 360 other vehicles. Inside Stepanakert, they are more of an occasional sight: a Russian humvee might pass by an intersection, its tricolour waving conspicuously from the hood.

Outside the capital, it is a different story. Russian armoured vehicles and emplacements are everywhere, with small – and sometimes large – convoys constantly traversing the landscape.

“I think the Russians have brought 2,000 BTRs alone,” jokes Vazgen, a taxi driver, referring to the Russian infantry fighting vehicle that is now a ubiquitous feature of Karabakh’s roads.

The Russians are all many people feel they have left to place their hope in.

Karine Aghajanyan, a 46-year-old salon worker in Stepanakert, hopes Russia will offer recognition to the Nagorno-Karabakh region. Neil Hauer for The National
Karine Aghajanyan, a 46-year-old salon worker in Stepanakert, hopes Russia will offer recognition to the Nagorno-Karabakh region. Neil Hauer for The National

Conversations at Stepanakert’s marketplace, the other main congregation point, revolve around two topics: betrayal by Armenian authorities, and the salvation to be found in Moscow.

Silva, 53, is a fixture at the market, where she is one of a number of women selling "zhingyalov hats", the herb-stuffed flatbread considered Karabakh’s national dish.

She does not mince words when discussing the outcome of the war, and her opinion of Nikol Pashinyan, Armenia’s prime minister.

“Pashinyan did this,” she says. “He sold us. He brought everyone to Yerevan so he could sell us to the Turks,” she said, referring to the November 8 evacuation of civilians from Stepanakert.

The loss of swathes of Armenian-populated land in Karabakh as a result of the military defeat and truce deal is a particular source of anger.

Mr Pashinyan "should have made some diplomatic deal at the start, if that’s what was necessary”, Silva says.

“He could have given back the seven regions,” she adds, referring to Azerbaijani territory surrounding Karabakh that Armenian forces occupied in the first war from 1988-94 and held until October.

“Instead, he has now also given regions where Armenians have lived for thousands of years. You can walk on the street and see people from Hadrut, from Martuni and Martakert. They have nothing,” she says, referring to areas Armenian-majority areas fully or partially handed over to Azerbaijan.

Like others, she sees Karabakh’s only hope in Russia.

“If the Russians weren’t here now, then we wouldn’t have come back,” she says. “Russia is our saviour.”

Others go yet further in their hopes for Russia, among them Karine Aghajanyan, a 46-year-old salon worker who says her house was hit by Azerbaijanis bombardment on November 8.

“I came here from Baku in 1989. Now the Azerbaijanis have come here for me, too,” Ms Aghajanyan says.

“Honestly, I hope that Russia will just make us like Abkhazia,” she says, referring to another breakaway enclave in the Caucasus whose self-declared independence Russia has recognised and whose citizens have been granted Russian passports.

“We can just become a province of Russia. I have no problem with that.”

For Ms Aghajanyan, and others, the lost war showed that Armenia cannot guarantee Karabakh’s security – and that Russia is the only protector left.

“Our army fought so hard. I am so proud of our soldiers,” she says.

“But obviously Nikol [Pashinyan] could not defend us. So, let Russia do it. We are better off with them anyway.”

Company Fact Box

Company name/date started: Abwaab Technologies / September 2019

Founders: Hamdi Tabbaa, co-founder and CEO. Hussein Alsarabi, co-founder and CTO

Based: Amman, Jordan

Sector: Education Technology

Size (employees/revenue): Total team size: 65. Full-time employees: 25. Revenue undisclosed

Stage: early-stage startup 

Investors: Adam Tech Ventures, Endure Capital, Equitrust, the World Bank-backed Innovative Startups SMEs Fund, a London investment fund, a number of former and current executives from Uber and Netflix, among others.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Will the pound fall to parity with the dollar?

The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.

Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.

New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.

“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.

The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.

The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.

Bloomberg

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