Can Iran influence crude oil price?

One of the conspiracy theories says that the US decision to attain the status of largest oil producing country was aimed at undermining the importance of all other oil producing countries, particularly Russia, Iran and Saudi Arabia. This theory gets some credence because all oil exporting countries have witnessed reduction in revenue and US being the largest energy consumer is benefiting due to nearly 50 percent fall in crude oil prices.

The world is also keenly awaiting talks between super powers and Iran that could lead to easing sanctions on Iran. An agreement has to be arrived at by 31^st March this year. Various attempts have been made to sabotage the negotiations, last made by Israeli prime minister. It appears that sanctions will be eased that can pave way for enhanced export of oil from Iran, which would add to the glut.

Bijan Namdar Zangeneh, Iranian oil minister has said that his country would never give up fight for its production quota set by the Organization of the Petroleum Exporting Countries (OPEC). The conviction is evident from his statement, “We keep struggling and we do not retreat even one barrel from our previous quota.” He was reacting to an OPEC directive that its 12 member states are required to produce 30 million barrels per day of oil altogether without any specific quota for each member.

Zangeneh said “OPEC is the only organization in the Third World to have managed to influence world’s economic equations and there is no other such body. We have to wait a little to see why a political will is affecting OPEC. Naturally, oil prices should move forward. Those who pushed the oil price down are more than others under pressure. They have understood their mistake, so has the market and it wants the prices to rise, but a political intention is disturbing the market. If this political intention stops oil prices will edge up.

Iran sold heavy crude oil at $53.26 per barrel in February, a $10.42 rise from $42.84 in January OPEC said in its latest report. The country’s heavy crude oil price came to $47.92 on average during the first two months of 2015, showing $57 fall compared to the same period last year. Reuters quoted Iranian Deputy Foreign Minister Hossein Amir Abdollahian as saying that falling world oil prices will hurt countries across the Middle East unless Saudi Arabia, the world’s biggest crude exporter, takes action to reverse the slump.

There are growing concerns that Iran could become a potential threat to all the oil producing countries. These apprehensions are based on a statement Iranian oil minister that his country has set an output target of 5.7 million barrels per day of crude oil by 2018. Analysts have the reasons to believe his statement because with holding 157 billion barrels of recoverable crude oil reserves, Iran possesses the world’s fourth largest crude oil reserves.

A question arises, why the US is willing to give a chance to Iran to enhance its oil exports? Some cynics say that the US priorities have changed after attaining the status of largest oil producing country. Analysts also apprehend that the US is also willing to accept Iran as a regional super power. If the guns are being moved away from Iran many wonder which country could be the next target?

Netanyahu's victory does not bode well for peace

Benjamin Netanyahu's Likud Party has once again attained a position to form government in Israel, a stunning victory after a tight race that had put his lengthy rule in jeopardy.

Netanyahu's return to power for a fourth term likely spells trouble for Mideast peace efforts and could further escalate tensions with the United States.

With nearly all votes counted, Likud appeared to have earned 30 out of parliament's 120 seats and seems in a position to form a coalition government with its nationalist, religious and ultra-Orthodox Jewish allies.

It is feared that he may try to sabotage nuclear negotiations that may put Israel at odds with the international community. He has already earned a bad name over unabated construction settlements, opposition to Palestinian statehood, and continue clashing with the White House over hardline policies.

According to an AP report, the election was widely seen as a referendum on Netanyahu, who has governed the country for the past six years. Recent opinion polls indicated he was in trouble, giving chief rival Isaac Herzog of the opposition Zionist Union a slight lead.

Exit polls Tuesday showed the two sides deadlocked but once the actual results came pouring in early Wednesday, Likud soared forward. Zionist Union wound up with 24 seats. Given the final results, it is all but assured that Israel's largely ceremonial President Reuven Rivlin will ask Netanyahu to forming the new government.

Netanyahu was prompt in saying, "Against all odds, we achieved a great victory for the Likud," even before final results were known”. "I am proud of the people of Israel, who in the moment of truth knew how to distinguish between what is important and what is peripheral, and to insist on what is important."

Netanyahu focused his campaign primarily on security issues, while his opponents instead pledged to address the country's high cost of living and accused the leader of being out of touch with everyday people..

A union of four largely Arab-backed factions became Israel's third largest party — with 14 seats — and gave Israel's Arab minority significant leverage in parliament for the first time. Ten parties in all made it into parliament.

Herzog, who appeared poised only days ago to stage a coup, conceded defeat and signaled that he would not join forces with Netanyahu and would rather head to the opposition.

UK replacing US in war on terror

United Kingdom UK) commonly known as ‘British Raj’ in Indian subcontinent had the largest number of colonies around the world once upon a time. One should remember at one time United States (US) was also a British colony. At that time it was said at that ‘sun never sets in British Raj’. However, after Second World War the British Empire reduced to its present size. It would have been conquered had the US not dropped two atom bombs on Japan and Germans soldiers not buried live in Russia due to bad weather. Japan had reached closed to India in Burma (Myanmar), there were back out drills in India to prepare the natives of potential air strikes.

At the end of the Second World War, the US assumed the role of ‘Global Policeman’ and it has been fully supported by the permanent and as well as temporary members of UN Security. It may not be wrong to say that since attaining independence US has been constantly leading war in one or the other country; dropped tons of bombs and killed millions of people. Those killed in Japan in the aftermath of dropping two atom bombs in Japan is the most brutal example of crime against humanity.

While taking into account over 200 years history of the US needs an extensive research but post 9/11 war mania of US touched new highs. It simultaneously attacked Afghanistan and Iraq, killed thousands of innocent citizens of these countries and virtually destroyed all the important installations and infrastructure. One of the conspiracy theories says that if attack on Afghanistan was aimed at getting control over production and supply of drug, attack on Iraq was aimed at controlling oil produced in Arabian Peninsula. There was an official declaration of end of war in 2010 but thousands of US-led combat soldiers are still in these countries.

If one dispassionately reviews the massive destruction caused by the US in any and every country it invaded, the findings are most horrendous and even worse than the much talked about holocaust for which Hitler is accused. Hitler killed thousands of Jews but the side effects of atomic explosions in Japan crippled future generations, mentally and physically.

The US has caused destruction because of might but British Raj conquered one country after another following its cunning ‘divide and rule policy’.  The US created phantom like Taliban, which later turned its worst foe. It also created and funded ISIS which not only failed in toppling Syrian president but attained fame for committing the worst crime against humanity. Now the US citizens are critical of their policy makers, who are now openly termed ‘war mongers’ for keeping the indigenous arms factories over booked and wasting tax payer’s money for creating US hegemony around the world. The US foreign policy dictated by CIA has created worst hatred for the US in almost every country, including some of its best friends of yesteryears.

Under the new game plan funds and arms will be supplied by the US but war tacks and physical on ground assault will be overseen by the UK, which has ruled Asia, Africa, Middle East and North Africa by installing locals in power and getting the best deal from them. UK still has its own cult called ‘Commonwealth Countries’.  There are credible evidences that ISIS is virtually controlled by UK, which is also playing a key role in striking a deal with Iran. Israeli Prime Minister made last ditched attempt to sabotage the talks but attracted criticism from its own country fellows for fanning hatred.

                                                                       

China investing in Pakistan in infrastructure projects

In November 2014 Pakistan and China signed 19 agreements and Memorandum of Understandings (MoUs) to further boost the bilateral ties between the two countries in various fields, including energy and basic infrastructure sectors. Earlier a meeting between Prime Minister Nawaz Sharif and his Chinese counterpart was held in Beijing where both the leaders discussed bilateral relations and the regional situation.

These agreements signed between the two countries include solar power production at Quaid-e Azam Solar Park, easy loan for laying optic fibre between the two countries, mining of 65,00,000 metric tons of coal in Thar Block-2, a 870 MW SukhiKinari hydropower project, a 1320 MW Sahiwal power project and MoU for 100 MW Jhimpir wind power project.

Speaking to media representatives after the meeting, Nawaz Sharif said the Pakistan-China Economic Corridor Project will prove a game changer in the region. He also expressed the confidence that his visit to China would help resolve energy crisis in the country, adding that resolution of energy problem will bring progress and prosperity to Pakistan.

The projects include coal, solar and wind based electricity generation units. An investment of US$35 billion is anticipated in the energy sector. These projects would generate 23,000 MW whereas the total generation of electricity in the country till date is only 21,000 MW.

China intends to invest US$50 billion in energy and infrastructure projects in Pakistan till 2017 of which $15 billion investment is anticipated in infrastructure projects only. These included Lahore-Karachi Motorway, Karakorum Highway and expanding the capacity of Gawadar Port. In the transportation sector, the railway line from Karachi to Peshawar would be modernized and upgraded.

In a briefing minister for planning and development informed the cabinet that during the visit of the prime minister of Pakistan to China in July last year, an agreement was reached on the establishment of an "Economic Corridor". He added that because of hard work during the last six months and confidence of the Chinese government on Pakistani leadership, the number of projects has increased.

Pakistan-China economic corridor project is likely to get funding from the Asian Infrastructure Investment Bank (AIIB).The bank is being set up on the proposal of Chinese President to support the developing countries for construction of their basic infrastructure. In this connection, twenty-one countries including Pakistan are willing to join AIIB and have signed a memorandum of understanding (MoU). The countries signing the MoU includes Bangladesh, India, Kazakhstan, Kuwait, Malaysia, Oman, Pakistan, Qatar, Singapore, Sri Lanka, Thailand and Uzbekistan, besides Pakistan and China.

The name ‘Corridor’ suggests a gateway or a passage that connects the two countries, continents or regions. This ‘economic corridor’ will not be the first in history. The use of sea and land routes has assisted in the globalization process of opening Asia, as early as the 19th century. Suez Canal, opened in 1869, acted to aid the empires of great powers during the time. The canal through the Sinai Peninsula made trade and empire faster but also economical. The world’s superpower of the time, Great Britain, made great strategic use of it, by transport of goods, officials and soldiers to Bombay and other key colonial hubs in an easier and affordable manner. Similarly, Pakistan and China’s economic corridor sets out to achieve the same goals in a cooperative and democratic manner.

The project received a major boost when control of Gawadar was transferred to China’s state-owned China Overseas Ports Holding in February 2013. Built by Chinese workers and opened in 2007, Gwadar is undergoing a major expansion to turn it into a full-fledged deep-water commercial port. Pakistan and China have signed agreements for constructing an international airport at Gwadar, upgrading a section of the 1,300-Kilometre Karakorum Highway connecting to Islamabad and laying a fibre-optic cable from the Chinese border to the Pakistani city of Rawalpindi. With the development of the corridor Central Asia, traditionally an economically closed region owing to its geography and lack of infrastructure, will have greater access to the sea and to the global trade network. The Pak-China Economic Corridor Secretariat was inaugurated in Islamabad on August 27, 2013.

Physically, the corridor is a 2,700-Kilometre highway that stretches from Kashghar to Gwadar through Khunjrab. But in essence, these road and rail links will further strengthen the bond of brotherhood, as highlighted by the two governments. China Pakistan Economic Corridor from Kashgar to Gwadar will integrate the economies of the two friendly countries. The project envisages establishing several economic zones and physical links connecting Pakistan and China. Both the countries believe that this economic corridor will benefit new emerging regional cooperation in South Asia. This project is set out to transform the future of the region, driven by economy and energy, and the building of pipelines and ports with roads rail infrastructure.

Pakistan serves as an important ally for China in the South Asian Region. Pakistan’s geographical location puts it on the main route connecting China and the Middle East and China and Central Asia. For economic and strategic connectivity with these regions, China requires safe passage through Pakistan especially after China’s growing share in world trade.

Chairman of the Pakistan-China Institute, Senator Mushahid Hussain Sayed believes that the economic corridor will play a crucial role in regional integration of the ‘Greater South Asia’, which includes China, Iran, Afghanistan, and stretches all the way to Myanmar. A strong Pakistan is valuable as it warrants that Indian claim of regional hegemony will not go unchallenged. He opined that the Pakistan-China Economic Corridor is of immense importance for the revival of Pakistan’s economy, resolution of energy crisis and strengthening the Federation through development and infrastructure.

Pakistan-China Economic Corridor is strategically important for both China and Pakistan keeping in view the growing regional trade and investment collaboration. It is a win-win opportunity for Pakistan and China and the agreements of early harvest projects during Prime Minister Nawaz Sharif visit to China have great significance. These projects would be completed within a span of two to three years time and these include rail, road network besides several long and short term energy projects.

Pakistan is the first South Asian country to sign a free trade agreement and currency swap agreement with China and is also the largest destination of Chinese investment in South Asia. China is Pakistan’s second largest trading partner and fourth largest export market. China-Pakistan Economic Corridor has the potential to turn Pakistan into a hub of regional cooperation. If Pakistan uses this opportunity wisely and is able to reap the economic benefits this corridor has to offer, it can greatly enhance its regional power and prestige and prove a more valuable long-term ally for Beijing.

Beijing would be investing between $30 billion and $40 billion in Pakistan to develop the much-awaited Pak-China Economic Corridor (PCEC) which the logistics experts believe would enable China to significantly reduce the cost of its 70-million-TEUs containerized trade with Europe.

According to All Pakistan Shipping Association (APSA) Chairman Aasim Siddiqui once developed the proposed corridor would cut the conventional 19,000-mile Sino-Europe shipping route by thousands of miles.

Rendering PCEC to be of “immense importance” for the economy of Pakistan, Siddiqui told an intermodal Europe exhibition held recently in Rotterdam, Netherlands, that if transported through PCEC, the shipment of containerized cargo from Europe to western China would take about 9,000 miles only.

“Sino-Europe bilateral trade involves around 225 million TEUs. If only 10 percent of this huge containerized trade goes through Pakistan we would see our transport industry grow by three fold,” said Aasim.

The APSA chief says this 10 percent, which would add at least 7 million TEUs to Pakistan’s containerized trade, was a conservative figure and the potential figure might be up to 20 plus percent.

Work on the significant project, however, had been lingering for quite some time because the Chinese government had been planning to link Gwadar Port with western parts of China through constructing a new road network.

Pakistan has suggested to Chinese that instead of building new one they should tape Pakistan’s existing communication network and build an expressway to link Gwadar-Ratodhero Road to the national highway.

The two sides have decided the formula to make a matching investment on the expressway project. Under the formula a third lane would be added to the two-lane national highway road network to save money to be spent on the development of a new trade route. Matching funds would be made as the economic interest of two countries is common.

To reap the “trickled down” dividends of the Sino-Europe future trade, Pakistan would have to build local infrastructure through developing cargo villages, dry ports, attracting fresh investment in trucking field and so on.

It is believed that even Kazakistan is pro-actively working to benefit its geo-strategic location by developing a rail network to link Shanghai with Eastern Europe. They have run the train which would take 16 days to commute between the two destinations.

The corridor would have a “slow trickle-down effect” on Pakistan’s economy. The APSA chairman during the Rotterdam’s event claims to have received “encouraging” response from international intermodal transport service providers to establish business alliance with Pakistan for the development of PCEC.

Prof GaoJianlong, president of the Xinjiang Academy of Social Sciences, told reporters at a seminar held in Urumqi, (Xinjiang Autonmous Region) that AIIB was supposed to finance the mega projects like Pak-China economic corridor, which is a development project that would connect Gawadar Port to China’s northwestern region of Xinjiang via highways, railways and pipelines to transport oil and gas.

Chinese Prime Minister was among the first advocates of the project. As per policy of the Chinese government wants to offer equal development to all the regional countries. After completion, the Pak-China economic corridor will serve as a primary gateway to trade among China, Middle East and Africa through Pakistan. Particularly, the oil from the Middle East could be offloaded at Gawadar, which is located just outside the mouth of the Persian Gulf.

The oil would be transported to China through Pakistan. Such a link would vastly cut the 12,000-kilometres route that Mideast oil supplies must now take to reach Chinese ports. According to a deal signed in July, the project includes construction of 200 kilometers long tunnel, which will link both the countries and facilitate trade and commuters.

As per the plan, special economic zones would be established along the economic corridor, and Chinese companies have shown willingness to set up industries in the zones.

The MOU specifies that the authorized capital of AIIB is 100 billion US dollars and the initial subscribed capital is expected to be around 50 billion dollars. AIIB will be an inter-governmental regional development institution in Asia. It is expected that the Prospective Founding Members will complete the signing and ratification of the Articles of Agreement (AOA) in 2015 and AIIB will be formally established by the end of 2015. The proposed Asian Infrastructure Investment Bank will bring benefits to all parties involved.

China could contribute 50 per cent of the bank's capital. This shows China's determination to establish the bank but the final investment is open to adjustment, depending on how many countries participate. By economic weight, China is still expected to hold the biggest share.