Israel making attempts to derail JCPOA revival process

The United States and Iran on Monday held their seventh round of indirect talks as part of efforts to return to the 2015 nuclear deal. The talks came more than five months after the countries' last discussion in Vienna.

The Biden administration is stressing that diplomacy with Iran is the last, best chance to box in their nuclear ambitions and prevent Tehran from building a weapon of mass destruction.

Officials have played down reports that they are considering an interim deal with Iran, or talks outside the parameters of the Joint Comprehensive Plan of Action (JCPOA), the formal name for the 2015 deal.

“Our objective has not changed, it remains a mutual return to full compliance with the JCPOA, this is the best available option to restrict Iran’s nuclear program and provide a platform to address Iran’s destabilizing conduct,” White House Press Secretary Jen Psaki told reporters on Monday.

“We're working with our European partners in lockstep, and of course we are going to continue to press for the diplomatic approach.” 

Enrique Mora, the European Union’s lead negotiator on the nuclear talks, said he felt “extremely positive” at the conclusion of the first round of discussions on Monday. 

“There is clearly a will on all the delegations to listen to the Iranian positions brought by the new team. And there is clearly a will for the Iranian delegation to engage in serious work and bring JCPOA back to life,” Mora said. “So I feel positive that we can be doing important things for the next weeks to come.” 

Former President Trump withdrew from the deal in 2018. President Biden, in contrast, has said he is intent on reviving the JCPOA.

A State Department spokesperson told The Hill that there were no updates following the conclusion of the discussions on Monday but said, “If Iran returns to Vienna ready to focus on the handful of unresolved issues from the sixth round, we can quickly reach and implement an understanding on mutual return. Otherwise, we are risking crisis.”

Republicans and Israel remain firmly opposed to the deal, saying it fails to stop Iran from ever achieving a nuclear weapon and does not address its other destabilizing activity in the region.

“Iran deserves no rewards, no bargain deals and no sanctions relief in return for their brutality,” Israeli Prime Minister Naftali Bennett said in a statement on Monday. “I call upon our allies around the world: Do not give in to Iran's nuclear blackmail.”

State Department deputy spokesperson Jalina Porter on Monday said the administration would not comment on the report, but said “enrichment to 90 percent, obviously, would be a provocative act.”

There’s also concern over Iran’s blocking inspectors with the United Nations’ International Atomic Energy Agency (IAEA) from key nuclear facilities, in particular in the city of Karaj where Iran has reportedly begun producing centrifuges used to enrich uranium. 

IAEA Director-General Rafael Grossi raised concerns last week with the IAEA’s 35-country board of governors that Iran’s obstruction of nuclear inspections risks its ability to return to the JCPOA. 

Elisa Ewers, adjunct senior fellow with the Center for a New American Security’s Middle East Security program, said in a statement that Iran's return to Vienna is a signal it takes the IAEA warning seriously. 

“This suggests Iranian efforts to avoid increased pressure and buy time,” she said. “...This denial of monitoring access has been one of Iran’s more concerning steps in recent months.”

Iranian officials say they will only return to the JCPOA if the US lifts all of the estimated 1,500 sanctions imposed after Trump withdrew from the deal, and ensures that successive presidents cannot tear up the agreement with a change of administrations. 

“The United States still fails to properly understand the fact that there is no way to return to the JCPOA without verifiable and effective lifting of all sanctions imposed on the Iranian nation after the US departure,” Iranian Foreign Minister Hossein Amir-Abdollahian said in a statement Monday. 

While the Biden administration has said it is prepared to lift sanctions that are “inconsistent” with the deal, many of the Trump-era sanctions targeted Iranian institutions, entities and people under other authorities related to counterterrorism and human rights. 

Iran also arrived in Vienna with a new negotiating team in place, under the leadership of Iranian President Ebrahim Raisi, the conservative, hard-liner elected in August, who is under US sanctions for human rights abuses.

Behnam Ben Taleblu, a senior fellow focused on Iran at the Foundation for Defense of Democracies, said the Islamic Republic has arrived in Vienna from a position of strength, with a new administration that has demonstrated increased willingness to greatly exceed the limits of the JCPOA.

“This situation of greater nuclear capability and less nuclear monitoring is designed to force Washington into providing upfront and direct sanctions relief,” Taleblu said. 

“The team at the helm today in Iran are ultra-hardliners who are more comfortable with escalation and their assessment that they can outlive any potential ‘Plan-B’ pressure track by the Biden administration. All of this will impact Iran's negotiating strategy making any agreement less likely and less valuable than before. After all, Iran's nuclear program in 2021 cannot be addressed by a deal that was deficient by the standards of 2015 or 2013.”

Ewers, of CNAS, said given Iran’s maximalist demands and its new team in place, expectations are low for what can be achieved in the first session. 

“A good outcome would be a quick resurrection of the work that was done between April and June, where some progress was made on hashing out what a mutual return to compliance would look like,” she continued. “But this would require the new Iranian delegation to be ready to deal. That’s increasingly doubtful.”

Supporters of the JCPOA are raising concern the deal remains the best course of action for both the US and Iran, with sanctions relief shown to be a key incentive for Iran to adhere to the strict limits and intrusive inspections outlined in the deal, while also avoiding a dangerous military confrontation, even as the Biden administration has shown greater coordination with Israel and Gulf nations. 

"Close cooperation with US allies in the region to put pressure on Iran won't produce a fundamentally different result than what the Trump administration attempted and produced the worst of all words: an Iranian nuclear program that is now closer to nuclear weapons than ever and an Iran that is more aggressive in the region and more repressive at home,” said Ali Vaez, Iran project director and senior adviser to the president for the International Crisis Group. 

“Plan B options range from unattractive to ugly. That's why both sides need more flexibility to save Plan A, which remains the least costly option for both sides.” 

Israeli military readying Plan B to counter Iran

After a five-month pause in talks between the United States and Iran is set to resume on Monday, with the other parties to the nuclear deal mediating in hope of reestablishing an agreement to curb the Islamic Republic’s nuclear ambitions.

The defense establishment does not see a war breaking out with Iran or its proxies, such as Hezbollah in Lebanon, but the IDF has been keeping an eye on the North and on the South. It held large-scale exercises in the North in October and November, and there are plans to hold 50% more drills next year than in 2020, and 30% more than in 2021.

The increased exercises set for 2022 follows years of stagnation, and will be the largest training operation in five years, especially for reserve forces. Following the signing of the Abraham Accords, the IDF has also begun conducting drills with Gulf Arab states.

In a subtle message to Iran, Israel took part in a multilateral maritime security drill in the Red Sea with the United Arab Emirates, Bahrain, and US Naval Forces Central Command’s (NAVCENT).

The drill in early November was the first of its kind, and showed what kind of naval coalition Israel might join should there be military action against Iran.

“It is exciting to see US forces training with regional partners to enhance our collective maritime security capabilities,” V-Adm. Brad Cooper, Commander of NAVCENT, US 5th Fleet and Combined Maritime Forces said. “Maritime collaboration helps safeguard freedom of navigation and the free flow of trade, which are essential to regional security and stability.”

There are also hints of an aerial coalition that could come together. Israeli jets recently escorted a B-1B strategic heavy bomber and KC-10 re-fuelers on their way to the Gulf. Jets from Egypt, Jordan, Bahrain and Saudi Arabia also escorted those planes while flying through their respective airspace.

Israel’s Blue Flag air drills, which become more popular as the years go on, also provide a clue as to what other countries could fly alongside Israel when push comes to shove.

This year’s Blue Flag saw aircraft from Germany (six Eurofighters), Italy (five F-35 jets and five G550 planes), Britain (six Eurofighters), France (four Raphale jets), India (five Mirage jets), Greece (four F-16 jets), and the US (six F-16 CJ jets) take part.

During the drill, forces practiced aerial battle as well as surface-to-air battle scenarios, advanced surface-to-air missiles combat outlines in enemy territory, and more.

The exercise focused on “broadening and enhancing the operational capabilities of the participating forces,” with a focus on air-to-air and air-to-ground attacks, as well as evading ground-based air defense systems “and various operational scenarios in enemy territory,” the army said at the time of the drill.

While Israel has never joined a regional military coalition, Marom Division commander Col. Aviran Lerer told The Jerusalem Post that there could be a time that Jerusalem might be part of such a partnership.

Lerer, who spoke to The Post after a two-week drill with 500 troops from NAVCENT’s 51/5th Marine Expeditionary Brigade, said that the IDF has to be ready to fight with other troops.

The drill, he said, was to strengthen ties with Israel’s main ally and the Marines who “are a significant force in the US military with whom we have a lot of shared interests. The United States always fights as a coalition, and it could be that will be part of a future coalition. We, as an army, have to do everything we can to be ready for a future conflict; we see the Americans as a strategic ally, and there could be a time when we will work and fight together.”

While Israel’s diplomats are working around the clock to influence the United States, the UK and France on the Iran talks, Defense Minister Benny Gantz said that the “best-case scenario” would be a deal that not only focuses on uranium enrichment but also on Tehran’s ballistic missile program and its regional hostility.

“Concerning Iran, we must influence our partners and have ongoing discussion with them,” Gantz said. “Our other obligation is to build a military force, which is an important issue by itself. I ordered the military to improve its force build-up, in parallel to our discussions with our strategic partners.”

Has the US crossed red line warning on Taiwan?

The Biden administration has announced its intention to walk over China’s red line warning on Taiwan. The move by the United States has been termed a reckless provocative step that dares an inevitable military response from Beijing.

If that happens then all bets are off for a full-scale military confrontation between the United States, its allies, and China.

Australia and Britain are explicitly committed to a military alliance with the United States in the Asia-Pacific through the recently formed AUKUS pact. Russia will be obliged to defend China.

The date in question is December 9-10 when the Biden administration plays host to a “Summit of Democracies”. The State Department announced a list of “participants” that include 110 countries. China and Russia are not invited, among other excluded nations.

Most provocatively, the separatist Chinese territory of Taiwan is invited to attend the video conference. The US is careful to refer to Taiwan as a “participant” not as a “nation”. Nevertheless, this semantically device aside, the invitation is a blatant violation of China’s sovereign claim of authority over Taiwan.

China’s claim to Taiwan as being a part of its integral territory is recognized by the United Nations and, at least in theory, by the United States with its One China Policy since 1979.

The island of Taiwan has existed as a self-governing territory since China’s civil war ended in 1949 with communist victory. The nationalist opponents fled to Taiwan. China retains the right to reunite Taiwan under governance from the mainland. Beijing has warned it will do so by military force if Taiwan ever declares independence.

Washington maintains a position of “strategic ambiguity” whereby it acknowledges a One China Policy while also simultaneously offering US commitments to help Taiwan with military defence.

Since Joe Biden took the White House in January, his administration has taken this ambiguity to dangerous levels. At one point, Biden has overstepped policy by explicitly stating the US would defend Taiwan in the event of a confrontation with China.

At a teleconference summit on November 16, China’s President Xi Jinping admonished US policy on Taiwan as “playing with fire”. Xi drew a red line that Washington must desist from inciting separatist ambitions of the Taiwanese government.

The announcement this week of the “Summit of Democracies” and specifically the invitation of Taiwan while excluding China is about as bold as it can get by the Biden administration in undermining China’s sovereignty and territorial integrity. That it comes only days after a verbal commitment from Biden to Xi that the US adheres to One China Policy and is not seeking Taiwan’s independence makes the provocation all the more contemptuous.

Biden’s ratcheting up of tensions with China is not out of the blue. For more than a decade, successive administrations under Obama, Trump and now Biden have been targeting Beijing as its top national security threat. Washington continually accuses China of aggression in the Asia-Pacific which is an inversion of reality. Taiwan has become a spearhead for Washington to antagonize China with. Under this administration, arms sales to Taiwan have increased as well as US naval and air force maneuvers in the Taiwan Strait under the cynical pretext of “freedom of navigation operations”.

President Biden has made “democracy versus authoritarianism” a theme of his White House. Calling a summit of 110 participating countries for the summit on December 9-10 is an arrogant attempt to demarcate the world into a false dichotomy whereby presumed virtuous nations are under the benign leadership of the United States.

China has slammed the summit as an artificial polarization of nations into so-called allies and enemies in what is a throwback to the Cold War decades. Chinese Foreign Minister Wang Yi said this divisive manipulation of international relations is simply a ploy by the United States to exert its hegemonic ambitions.

China says it is not up to the United States to define what democracy is and what is not. Beijing asserts that “democracy belongs to all humanity”. It’s not just about holding cycles of elections. In the case of the United States, its “democracy” is dominated by two parties bankrolled by Wall Street capitalists and plutocrats. Its record on poverty, inequality, racism and warmongering is plentiful to roundly negate pretentious claims of “democracy”.

In any case, back in August when the Biden administration first announced its plans for a “democracy summit” Beijing warned Washington not to use the forum to incite Taiwanese tensions. If the US persisted, China said it would order military planes and warships to Taiwan.

There is an unmistakable sense that China has had it with US provocations. The mainland has been making military preparations for a showdown over Taiwan. This insane move by Washington to call a “summit of democracies” – how bitterly ironic – could well be the final act of American treachery. War is on the cards and we just got a date.

Oil prices take a nose dive

Oil prices experienced one of their worst trading days in recent memory on Friday, plunging across the board by more than 10% on fears that a new COVID-19 variant discovered in Southern Africa might dampen economic growth and trigger another demand slump.

Following the spectacular failure of the SPR release, which instead of depressing prices ratcheted them up higher, renewed COVID-19 concerns have now brought about President Biden’s objective.

OPEC+ might still have a say in this, with the group's December 02 meeting, potentially resulting in a reduction in production targets for 2022. 

Despite repeated talks with the US government, China has pushed back against President Biden’s calls to “do more” and stated it would coordinate its own releases of strategic stocks according to its needs, cooling down the enthusiasm of market bears.

OPEC expects a release of oil stocks by majors consumers to significantly increase a global glut in the next few months, an OPEC source said, just over a week before a meeting to decide immediate output policy.

The outlook might complicate decision-making for the Organization of the Petroleum Exporting Countries and allies, a grouping known as OPEC+, although several sources said there has been no discussion yet on pausing planned production increases.

OPEC's Economic Commission Board (ECB), a panel of experts that advises ministers, met this week ahead of the OPEC+ ministerial meeting on December 02. The ECB expects the oil release to swell a surplus in the oil market by 1.1 million barrels per day (bpd). OPEC has warned in recent days of the expected supply excess in remaining days of 2021.

It expects a 400,000 bpd surplus in December 2021, expanding to 2.3 million bpd in January 2022 and 3.7 million bpd in February if consumer nations go ahead with the release, the source said.

On Tuesday, US President Joe Biden's administration said it would release 50 million barrels of oil from strategic reserves in coordination with smaller releases from Britain, China, India, South Korea and Japan, to try to cool prices after OPEC+ ignored calls to pump more.

Biden was frustrated after OPEC+ shrugged off his repeated requests to pump more oil. Retail US gasoline prices are up more than 60% in the last year, the fastest rate of increase since 2000.

Goldman Sachs estimated the total size of the release at 70 million or 80 million barrels, less than one day's worth of global consumption, describing it as a "a drop in the ocean".

OPEC+ has been increasing output targets by 400,000 bpd every month since August, saying those volumes were sufficient because of the expected oil market surplus next year.

Some market analysts, including JP Morgan, have suggested OPEC could slow down output increases after the release of stocks by major consumers.

OPEC+ has not yet started any discussions on a planned output hike in January 2022 and Iraq's oil minister said on Thursday OPEC+ should stick to its existing plan.

Israel does not approve JCPOA negotiations

With nuclear negotiations in Vienna set to start on Monday of next week, the conflict between Israel and the United States over Iran policy almost seemed to overtake the conflict between Jerusalem and Tehran.

Prime Minister Naftali Bennett is extremely concerned that Washington is rushing toward a nuclear deal weaker than the 2015 JCPOA Iran deal, and made his most direct military-sounding threats yet this week.

Israeli-US exchanges on the issue could get a lot worse before they get better, at a time when predictions for the nuclear talks in Israel tend to range from Iran will not agree to anything to US will cave in for a bad deal.

The latest fireworks come after four evolving stages of ups and downs of how Israelis have viewed the Biden administration’s Iran policy over the last 10 months. The current stage seems to have returned to the original deeply worried stance of November 2020, and with Iran itself at a more dangerous point.

When US President Joe Biden was elected and in his early months, top Israeli officials in the administration of Benjamin Netanyahu ranged between resignation and dread that the US would rejoin the JCPOA 2015 Iran nuclear deal with no conditions.

For Israeli officials at that time, this would have erased all of the sanctions and psychological leverage they had built up over Iran over two-and-a-half years. This without receiving anything, will pave the way for the Islamic Republic to a nuclear weapon when the JCPOA would expire, if not before.  

Despite demands and threats from Iran that Biden must return to the JCPOA on its terms by January or February 2022, the Biden team took its time and said it would cut a deal only along with an add-on deal afterward that would strengthen and lengthen the JCPOA.

Among some other issues, this goal of Washington is one of the reasons that the April-June negotiations fell short of an agreement, even if they got close. One could call this period the first Israeli win in that the US stuck to its positions.

However, then there was a third stage of confusion in which there were no negotiations from June until now, where Israel was increasingly disturbed by the Islamic Republic’s escalating nuclear violations.

But on the positive side for Israel, US started to talk about a plan B with Iran. The US seemed to judge that diplomacy was failing and that the new administration of Iranian President Ebrahim Raisi simply was unwilling to reach anything resembling a reasonable deal.

Although there was uncertainty surrounding how close the Islamic Republic was progressing toward a nuclear weapon, this period was possibly the best for Israeli-US relations because both administrations were equally frustrated with Raisi’s stonewalling.

However, once the IAEA Board of Governors seemed ready to publicly condemn Tehran in September, which could have even led to a UN Security Council referral, Raisi finally signaled a readiness to return to talks.

Even a whiff of a return to talks shut down the expected September IAEA condemnation and brought Washington into engaging in rapid diplomacy.

Despite IAEA Director-General Rafael Grossi’s framing of negotiations with Iran as intractable so far (and the IAEA tried to bend over backward to be diplomatic), all signs were that the board of governors would put the issue again during its meetings this week. Off the record, US officials also started floating new flexibility toward the Iranians.

It is unclear whether the new flexibility means allowing Tehran to maintain all of its new army of advanced centrifuges for enriching uranium, or whether it means a “less for less” deal in which the US would partially lift sanctions for even a partial reduction in Iranian nuclear violations.

Raisi had already achieved more than his predecessor, Hassan Rouhani, simply by refusing to talk for a few months. This is clear from the fact that the old “less for less” deal floated in 2019 required the Islamic Republic to start returning to the nuclear deal – not just to freeze new violations.

If the 2019 “less for less” deal meant partial sanctions relief would come for Iran shipping out some of its new large uranium stock and freezing all new enrichment, the updated, worse “less for less” deal sounds like mere freezing or slowing of new enrichment – without shipping out any of the uranium stock.

If, in 2019-20, advanced centrifuges would need to be destroyed (and there were fewer of them anyway), now they could just be placed in storage. Placing them in storage would mean they could easily be returned to operation in a matter of days or weeks.

If the Biden administration is ready for a weaker JCPOA or a weaker “less for less” deal or any negotiations that seem to reduce the sense of crisis, even without a deal – then its original idea of improving the JCPOA would seem to be out the window.

Some top Israeli defense figures, including Defense Minister Benny Gantz, have been promoting Israel working quietly behind the scenes to get a better JCPOA, even if it does not get everything it wants – for example, greater limits either on Iran’s ballistic missiles (there are currently none with any teeth) or on its aggression in the region.

But if Washington is not equipped or committed sufficiently to achieve these improvements, then what exactly can Israel hope to get from the US?

Could it be as narrow as what circumstances Biden would green-light an Israeli preemptive strike on Iranian nuclear facilities, even if he will not order a strike on his own?

US Secretary of Defense Lloyd Austin and US CENTCOM head General Kenneth McKenzie Jr. this week both emphasized that the US military option is on the table.

Yet, because of Biden’s passivity in using military force to date and his botched pullout from Afghanistan (Trump also intended to pull out, but his assassination of IRGC Quds Force chief Qasem Soleimani intimidated the Ayatollahs more than Biden has to date), many view this as empty talk with no details.

For example, during the Obama administration, US military officials gave public interviews about the readiness to use specific aircraft and weapons – and none have done that yet this round.

Possible reluctance on Biden’s part to use force raises the old question, dating back around a decade, of whether Israel has the capability to take out Iran’s deep underground Fordow facility.

There are additional, more recent questions about whether Israel could take out enough of Iran’s multiple nuclear facilities (unlike the cases of Iraq and Syria, where each had only one major facility) on its own to sufficiently set back the program.

Interestingly enough, there was a wide disparity of answers on this question by former top Israeli officials. Former IDF intelligence chief Amos Yadlin said Israel definitely could.

Former Mossad chief Tamir Pardo and former Mossad Iran desk chief Sima Shine both said they doubted that Israel could on its own.

Pardo’s successor at the Mossad, who just retired in June, Yossi Cohen, told the Jerusalem Post Conference last month and a Haaretz conference this month that Israel should make sure to have or develop such a capability – leaving his position unclear.

Similarly, former National Security Council chief Yaakov Amidror emphasized that Israel needs to have such a capability, but was vague about whether Israel could do so now.

Former IDF chief (2015-19) Gadi Eisenkot previously confidently told The Jerusalem Post that Israel could take out Iran’s nuclear program, without specifying how.

Whether the “yes” officials are bluffing to deter Iran or the “no” officials are misinformed or are downplaying Israeli capabilities to deter Jerusalem from rushing to pull the trigger, Bennett, even after this week’s speech, has not made it clear at what point he would strike.

With all of Netanyahu’s tough rhetoric, even he was intimidated from striking Iran for several years when the JCPOA was being negotiated or was operating.

Would Bennett really strike the Islamic Republic if there was a new version of the JCPOA operating, holes and all, but with the US back in the deal?

Would he aggressively use the Mossad to sabotage nuclear facilities and slow down the Islamic Republic as Netanyahu did, even if the delays from such hits might be measured only in months and not in years?

There is one factor that is much worse now than in the 2012-15 period, a factor that led Iran to make at least some big short-term nuclear concessions for the JCPOA.

Then, China and Russia wanted the Ayatollahs to make concessions and make the crisis go away.

But now China and Russia are both at new low points with the US, and short of Biden offering some game changer on Taiwan or Ukraine, he may have little to offer them to get them to press Tehran to cut a more reasonable deal.

In short, Israel is entering a period where the overall trends for changing Iranian behavior are worse. It may need to live with an extended period of uncertainty, as the US and Iran start a new game of chicken, which some think could run deep into 2022.

USD going up, up and away

Exchange rates most often impinge on the economic world when there’s big drama — China’s surprise devaluation in 2015, the crisis of confidence with EUR in 2000, the Asian currency collapses of 1997. There’s a sleeper hit developing right now with the dollar.

The Bloomberg Dollar Index, which measures the greenback against a basket of other major currencies, is heading for its biggest monthly gain since March 2020 — when global markets were in turmoil over the eruption of the pandemic and there was massive emergency demand for dollars.

On the flipside, the currencies of countries including Chile, Poland, South Africa and Turkey have tumbled in double-digit percent terms over the past six months.

USD is appreciating as investors start building in a more aggressive withdrawal of Federal Reserve monetary stimulus. San Francisco Fed President Mary Daly said on Wednesday that she’d support a faster taper if data stay strong. Some Wall Street banks raised forecasts for economic growth in the fourth quarter after a wave of robust data was released.

A rising USD would have significant consequences in particular for emerging markets, which still rely to a large extent on it for their borrowing needs. The stronger the currency is, the more expensive it is for companies and governments in developing nations to make payments on debt denominated in greenbacks.

Even as the American share of the global economy has declined over the years, the role of the dollar has in many ways strengthened — increasing the consequences of its appreciation. A Bank for International Settlements report in September showed that outstanding dollar credit to companies and other non-bank borrowers outside the US more than doubled since the financial crisis in 2008 to US$13 trillion by the end of March.

A host of emerging and developing central banks — from Chile to Russia to Pakistan — have already started increasing interest rates well ahead of counterparts in the developed world, and the prospect of their currencies weakening against the USD will only add to the pressure to extend or even strengthen those campaigns.

As the Fed moves to curtail the supply of USD, by winding down its quantitative easing program and turning at some point toward raising interest rates, conditions will only get tougher for emerging-nation borrowers. That will add further headwinds for economies struggling to match the rich nations in combating the pandemic.

“The peak in terms of the flow of liquidity’’ in USD “is behind us,” Shweta Sing, a managing director at research firm TS Lombard, wrote in a report. The big build-up in the Fed’s balance sheet since early 2020 has “meaningfully mitigated the ripple effects from a strong USD to global financing conditions,” she said. “But the risks are building up.”

Will Joe Biden succeed in reining in oil prices?

The United States is pulling out various stops in an effort to get gas prices under control at the start of a busy holiday travel season. The administration is tapping into the strategic petroleum reserve and President Biden has called on the Federal Trade Commission to investigate whether oil companies are responsible for increased prices.

But the focus on gas prices has provided fuel for Republican attacks on Biden’s handling of the economy, and his energy policies in particular, at a time when the White House is hoping to rally support for ambitious climate goals in its roughly US$2 trillion spending plan.

There was a prediction that 53.4 million people will travel for the Thanksgiving holiday, a 13% increase from 2020 when many Americans opted not to travel with coronavirus cases and deaths surging around the country.

The busy travel season to come has put a spotlight on gas prices in particular amid broader concerns about inflation, something the White House has attempted to show it has under control.

“Obviously, the president does not control the price of gasoline -- no president does,” Energy Secretary Jennifer Granholm told reporters. “But what we’re seeing right now is this global mismatch between supply and demand. Oil production is lagging behind as the rest of the economy roars back to life after the shutdown.”

“So, we, in this administration, are leaving no stone unturned as we examine the market to figure out what's behind the high prices,” she said.

The White House has shown more urgency in recent weeks in publicly messaging how it is trying to provide relief for Americans grappling with inflation, particularly after the Labor Department released statistics showing consumer prices grew far faster than expected in October and that annual inflation had hit a 30-year high. That rise was in part a result of rising energy costs, and increased costs at the gas pump.

Biden last week wrote to the Federal Trade Commission requesting the agency look into whether oil companies were unfairly spiking prices at the pump.

And on Tuesday, the administration announced it would release 50 million barrels of oil from the nation’s Strategic Petroleum Reserve in coordination with several other countries in an effort to match supply with demand.

Experts have questioned whether either move will do much to meaningfully bring down prices immediately, and they cautioned other factors, like the course of the pandemic, are more likely to affect the trajectory in the months to come.

That has led some conservatives to question whether the White House’s actions on gas prices were more of a political maneuver as poll after poll has shown voters souring on Biden, particularly over his handling of the economy, with his approval ratings dropping into the low 40s.

“This is being done in order to use every tool at the president's disposal to lower the price of gas for the American people,” White House press secretary Jen Psaki said when asked if tapping into the strategic reserve was being done for political purposes.

Republicans have gone on offense over inflation for the last few weeks, and the Biden administration’s decision to release oil from the strategic reserve provided more fodder for attacks on its energy policies.

Former President Donald Trump and GOP lawmakers argued the Biden administration’s desire to shift away from fossil fuels and toward clean energy industries has led to problems at the pump.

“Today’s announcement is nothing more than a gesture. If the president and his administration wanted to make a real, long-term impact, they would work to maximize domestic production and expedite energy infrastructure like pipelines—not close federal lands to drilling and add a federal tax to methane,” Sen. Shelley Moore Capito, ranking member on the Senate Environment and Public Works Committee, said in a statement.

Sen. John Barrasso, the top Republican on the Senate Energy and Natural Resources Committee, accused Democrats of “waging a war on American energy.

Even Sen. Joe Manchin, who has opposed some climate initiatives in Biden’s Build Back Better agenda, called the release of oil from the reserves an “important policy Band-Aid for rising gas prices” while criticizing the administration's energy policy as “shortsighted.”

Biden in remarks Tuesday sought to assure the public that the US economy was on the upswing and a rise in prices would not be a long-term concern.

“I also want to briefly address one myth about inflated gas prices: They are not due to environmental measures. My effort to combat climate change is not raising the price of gas or increasing its availability,” Biden said in prepared remarks, arguing investments in electric vehicles, solar panels and other sectors would spur job creation and innovation.

“Let’s beat climate change with more extensive innovation and opportunities,” he added. “We can make our economy and consumers less vulnerable to these sorts of price spikes when we do that.”

Israel airstrikes Syria, once again

At least four people were killed and seven injured in an alleged Israeli airstrike that reportedly targeted sites belonging to Hezbollah in Homs in western Syria, according to Syrian media and reports.

According to SANA, the airstrikes were carried out from northeastern Beirut. The report claimed that most of the missiles were shot down by Syrian air defenses. Two civilians were killed and another was injured in the strikes.

A Syrian anti-aircraft missile launched at what was allegedly an Israeli aircraft crashed into the Mediterranean Sea, but preliminary estimates say it went over Lebanon and did not cross into Israeli airspace, according to reports.

According to the opposition-affiliated Halab Today TV, about 10 members of Hezbollah were injured after a site the movement uses as a military headquarters and to store logistical equipment was targeted in the airstrikes.

According to Al-Araby Al-Jadeed, at least 10 missiles hit positions belonging to Syrian regime forces west of the city of Homs, causing casualties among civilians, Syrian soldiers and Iran-backed militants. One of the sites targeted was located in the Syrian Gas Company, according to the report.

The two civilians were reportedly killed by a missile that hit a civilian area near a gas station west of Homs.

The airstrikes come exactly a week after the IDF fired two missiles from the Golan Heights toward an empty building south of Damascus.

One of the missiles was shot down and no losses were caused, according to the report. It is unclear whether the missiles were fired from an aircraft or were surface-to-surface ones.

A week before that strike, two Syrian soldiers were injured and material damage was caused in an alleged Israeli airstrike targeting sites in the Homs area.

Over the past year, while Israeli strikes have intensified in Syria, the response time by Syrian air defense batteries has become quicker, leading the Israel Air Force to change how it acts during such operations – including by having larger formations so that more targets can be struck at once during an operation instead of having jets return to the same target.

Iran has begun deploying advanced anti-aircraft missile batteries to the region in an attempt to challenge Israeli jets.

US getting ready to confront with Russia

The Biden administration is considering sending military advisers and new weapons to Ukraine in the face of a Russian military buildup near the border between the two countries, CNN reported Tuesday.

The proposed lethal aid package could include mortars, air defense systems such as stinger missiles and new Javelin anti-tank and anti-armor missiles, multiple sources familiar with the deliberations told the outlet.

Sources also said the Pentagon has pressed for some equipment that would have gone to Afghanistan to instead be sent to Ukraine, like Russian-made Mi-17 helicopters. The US military has halted sending such equipment to Afghanistan with the end of its mission there in August.

US officials have also talked with European allies about forming a new sanctions package that could go into effect should Russia invade Ukraine, the sources said. 

The discussions are taking place as Ukraine has begun to warn the US and allies that a Russian invasion could happen as soon as January. 

Kyiv earlier this month noted the unusual Russian troop movements, but after discussions between US and Ukrainian officials — and an estimated 92,000 Russian troops now placed close to the border — the warnings have grown. 

US and NATO intelligence now fear Moscow’s troop buildup is preparation for a military operation over Ukraine’s eastern border from multiple locations, much like when Russia invaded Crimea in 2014. 

“Our concern is that Russia may make the serious mistake of attempting to rehash what it undertook back in 2014, when it amassed forces along the border, crossed into sovereign Ukrainian territory and did so claiming — falsely — that it was provoked,” Secretary of State Antony Blinken said last week.

Asked about the possible military package, a State Department spokesperson told The Hill that they had nothing to preview or confirm. 

They did note, however, that the administration has “demonstrated that the United States is willing to use a number of tools to address harmful Russian actions and we will not hesitate from making use of those and other tools in the future.”

"We continue to have serious concerns about Russian military activities and harsh rhetoric towards Ukraine, and call on Moscow to de-escalate tensions," they added.

Russian officials, meanwhile, have maintained that the troops and military units are in the area as part of exercises and a response to threats from NATO. They also have called reports that they may soon invade Ukraine “false.”

Asked on Tuesday about the possibility that the US will send additional assistance to Ukraine, Russia spokesman Dmitry Peskov on Tuesday suggested that should it happen, it could lead “to a further aggravation of the situation on the border line.”

 

50 million barrels crude oil to be released from Strategic Petroleum Reserve

The Department of Energy will release 50 million barrels of oil from the nation's Strategic Petroleum Reserve, the White House announced Tuesday, as the Biden administration seeks ways to control rising costs at the pump.

Of the 50 million barrels, 32 million will eventually be returned to the strategic reserve over the years ahead once fuel prices come down in a bid to ensure the reserve remains stocked, officials said. 

Another 18 million barrels will be released as an acceleration of an oil sale Congress had already authorized.

Tuesday's announcement was made in concert with China, India, Japan, South Korea and the United Kingdom, which will also tap into their own strategic reserves.

The Biden administration had reportedly discussed the strategic reserve option in recent weeks to increase supply as consumers faced higher gas prices amid broader concerns about inflation as the economy rebounds from the coronavirus pandemic.

The Labor Department earlier this month released statistics showing consumer prices grew far faster than expected in October and that annual inflation had hit a 30-year high.

The consumer price index, which tracks inflation for a range of staple goods and services, rose 0.9 percent last month and 6.2 percent in the 12-month period ending in October. The rise in prices was driven largely by a 4.8 percent increase in energy costs for the month, including a 1.6 percent increase in gasoline prices.

In a bid to rein in gas prices as inflation contributed to sinking poll numbers, Biden last week asked the head of the Federal Trade Commission to investigate whether oil companies are illegally increasing prices.

Sen. John Barrasso (R-Wyo.), the ranking member of the Senate Energy and Natural Resources Committee, said on Tuesday that Biden's own policies were to blame for needing to tap into the strategic reserve.

“We are experiencing higher prices because the administration and Democrats in Congress are waging a war on American energy," Barrasso said in a statement, arguing Tuesday's announcement would not fix the problem alone.

"Begging OPEC and Russia to increase production and now using the Strategic Petroleum Reserve are desperate attempts to address a Biden-caused disaster," Barrasso added. "They’re not substitutes for American energy production."

Congress is negotiating a roughly $2 trillion reconciliation package that is the cornerstone of Biden's agenda and features billions of dollars in investments in programs to combat climate change, with investments in renewable energy, electric cars and more.

The White House insisted Tuesday's announcement was not at odds with Biden's goals to shift away from fossil fuels in the years to come.

"Today’s announcement reflects the President’s commitment to do everything in his power to bring down costs for the American people and continue our strong economic recovery," the White House said in a statement.

"At the same time, the Administration remains committed to the President’s ambitious clean energy goals, as reflected in the historic Bipartisan Infrastructure Law signed last week and the House-passed Build Back Better Act that together represent the largest investment in combating climate change in American history and is a critical step towards reaching a net-zero emissions economy by 2050 and reducing our dependence on foreign fossil fuels."

Israel about to separate West Bank from Jerusalem

Israel has reached the final stage of separating the West Bank from Jerusalem, European Union Representative to the Palestinian Authority Sven Kuhn von Burgsdorff warned on Sunday. He was talking to The Jerusalem Post along with the representatives from more than 20 European and like-minded countries at the site of the former Kalandia airport.

He voiced concern over two Israeli projects which they fear would destroy any prospects for a future Palestinian state. The first is the construction of close to 3,500 settlement homes in an unbuilt area of the Ma’aleh Adumim settlement, known as E1.

The project has been largely frozen for decades, but former Prime Minister Benjamin Netanyahu advanced the project during the last elections and allowed for the deposit of its building plans with the Higher Planning Council for Judea and Samaria.

The council is now in the process of hearing objections to the projects, with the next hearing date set for December 13, 2021, the last obstacle to the E1 project’s final approval.

The second project of concern to the EU is the pending construction of 9,000 homes in the Atarot area of east Jerusalem on the site of what was once the Kalandiya airport, which opened in 1924 and closed in 2000. It is presumed to be designated mostly for Jewish Israelis.

The Jerusalem District Planning Committee is scheduled to hold a December 6, 2021 hearing on the matter.

Burgsdorff and his delegation visited both sites, where they were briefed by the left-wing NGO Ir Amim. They paused to speak to reporters in Atarot. Behind the delegation was the construction site for a new bypass road with a tunnel that will go underneath the projected homes.

To the delegation’s left stood the security barrier that separated Atarot from apartment buildings in the east Jerusalem Palestinian neighborhood of Kafr Akab.

“We are here at the very last stage of completely cutting off Jerusalem from the West Bank, which makes it impossible to discuss between the parties a future, independent, contiguous, viable Palestinian state with Jerusalem as the capital of both, based on negotiations on that matter,” he said.

He told reporters that the plans run contrary to statements the Israeli government has made about shrinking the conflict and maintaining the status quo.

“The current Israeli government clearly said we do not want to jeopardize the status quo, but the things we are seeing on the ground seem to suggest something else,” Burgsdorff said.

“Israeli settlements are in clear violation of international law and constitute a major obstacle to a just, last[ing] and comprehensive peace between Israelis and Palestinians,” he explained. The EU can’t “close its eyes” to such actions, he added.

The EU and much of the international community believe in a two-state resolution to the Israeli-Palestinian conflict based on the pre-1967 lines with Jerusalem as the divided capital of the states.

Israel has been blunt about its belief that Jerusalem must remain the united capital of the Jewish state and that projects like those in Atarot and the E1 area play an important role in protecting a united Jerusalem under Israeli sovereignty.

It has also been argued that such projects, which provide access roads that would improve traffic flow, do not cut off Palestinians from the West Bank.

Jerusalem Deputy Mayor Fleur Hassan-Nahoum said that “Jerusalem is a living, breathing, growing capital city of the State of Israel.”

Due to work already done in the area of Atarot, the municipality had turned Atarot into a thriving industrial zone with it’s first-ever [shopping] mall for aast Jerusalemites, with factories and workplaces providing hundreds of jobs.

“The housing project will provide thousands of much-needed housing units,” Hassan-Naboum said. “The European Union should stop talking in the language of the past and join the development of the future catering for Jews and Arabs alike and providing opportunity and not empty rhetoric and false hopes.”

IMF and Pakistan conclude staff level meeting

An International Monetary Fund (IMF) mission led by Ernesto Ramirez Rigo held virtual discussions during October 4–November 18, 2021 in the context of the 2021 Article IV consultations and the sixth review of the authorities’ reform program supported by the IMF’s Extended Fund Facility (EFF).

The Pakistani authorities and IMF staff have reached a staff-level agreement on policies and reforms needed to complete the sixth review under the EFF. The agreement is subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms.

Completion of the review would make available SDR 750 million (about US$1,059 million), bringing total disbursements under the EFF to about US$3,027 million and helping unlock significant funding from bilateral and multilateral partners. An additional SDR 1,015.5 million (about US$1,386 million) was disbursed in April 2020 to help Pakistan address the economic impact of the COVID-19 shock.

Despite a difficult environment, progress continues to be made in the implementation of the EFF-supported program. All quantitative performance criteria (PCs) for end-June were met with wide margins, except for that on the primary budget deficit.

Notable achievements on the structural front include the finalization of the National Socio-Economic Registry (NSER) update, parliamentary adoption of the National Electric Power Regulatory Authority (NEPRA) Act Amendments, notification of all pending quarterly power tariff adjustments, and payment of the first tranche of outstanding arrears to independent power producers (IPPs) to unlock lower capacity payments fixed in renegotiated power purchase agreements (PPAs).

The authorities have also made progress in improving the anti-money laundering and combating the financing of terrorism (AML/CFT) framework, although some additional time is needed to strengthen its effectiveness.

On the macroeconomic front, available data suggests that a strong economic recovery has gained hold, benefiting from the authorities’ multifaceted policy response to the COVID-19 pandemic that has helped contain its human and macroeconomic ramifications.

The Federal Board of Revenue’s (FBR) tax revenue collection has been strong. At the same time, external pressures have started to emerge: a widening of the current account deficit and depreciation pressures on the exchange rate—mainly reflecting the compound effects of the stronger economic activity, an expansionary macroeconomic policy mix, and higher international commodity prices.

In response, the authorities have started to adjust policies, including by gradually unwinding COVID-related stimulus measures. The State Bank of Pakistan (SBP) has also taken the right steps by starting to reverse the accommodative monetary policy stance, strengthening some macro-prudential measures to contain consumer credit growth, and providing forward guidance.

In addition, the government plans to introduce a package of fiscal measures targeting a small reduction of the primary deficit with respect to last fiscal year based on: 1) high-quality revenue measures to make the tax system simpler and fairer (including through the adoption of reforms to the GST system) and 2) prudent spending restraint, while fully protecting social spending.

These policies will help safeguard the positive near-term outlook, with growth projected to reach, or exceed, 4% in FY22 and 4.5% the fiscal year after that. However, inflation remains high, although it should start to see a declining trend once the pass-through of rupee depreciation is absorbed, and temporary supply-side constraints and demand-side pressures dissipate.

However, the current account is expected to widen this fiscal year despite some export growth, reflecting the rising import demand and international commodity prices. This economic outlook continues to face elevated domestic and external risks, while structural economic challenges persist.

In this regard, and looking beyond the near term, discussions also focused on policies to help Pakistan achieve sustainable and resilient growth to the benefit of all Pakistanis.

On the fiscal policy front, staying on course on achieving small primary surpluses remains critical to reduce high public debt and fiscal vulnerabilities. Continued efforts to broaden the tax base by removing remaining preferential tax treatments and exemptions will help generate much-needed resources to scale up critical social and development spending.

Monetary policy needs to remain focused on curbing inflation, preserving exchange rate flexibility, and strengthening international reserves. As economic stability becomes entrenched and the independence of the State Bank of Pakistan (SBP) is strengthened with the approval of the SBP Act Amendments, the central bank should gradually advance the preparatory work to formally adopt an inflation targeting (IT) regime in the medium term, underpinned by a forward-looking and interest-rate-focused operational framework. While some key elements of IT are already in place, including a medium-term inflation objective and prohibition of monetary financing, additional efforts are needed, to modernize the SBP’s operational framework as well as to strengthen monetary transmission and communication.

Advancing the strategy for the electricity sector reforms, agreed with international partners, is important to bring the sector to financial viability, and tackle its adverse spillovers on the budget, financial sector, and real economy. In this regard, steadfast implementation of the Circular Debt Management Plan (CDMP) will help guide the planned management improvements, cost reductions, timely alignment of tariffs with cost recovery levels, and better targeting of subsidies to the most vulnerable. Substantially lowering supply costs. However, this will require a modern electricity policy that: 1) ensures that PPAs do not impose a heavy burden on end-consumers; 2) tackles the poor and expensive generation mix, including a wider use of renewables; and 3) introduces more competition over the medium term.

Strengthening the medium-term outlook, including by unlocking sustainable and resilient growth, creating jobs, and improving social outcomes, hinges on ambitious efforts to remove structural impediments and facilitate the structural transformation of the economy. To this end, increased focus is needed on measures to strengthen economic productivity, investment, and private sector development, as well as to address the challenges posed by climate change:

Improving the governance, transparency and efficiency of the state-owned enterprise (SOE) sector 

Putting Pakistan’s public finances on a sustainable path—while leveling the playing field of firms across the economy and improving the provision of services—requires following through with the current reform agenda, especially with the: 1) creation of a modern legal framework; 2) better sectoral oversight by the state, supported by regular audits, especially of the largest SOEs; and 3) reduction of the footprint of the state in the economy, based on the recently completed comprehensive stocktaking.

Fostering the business environment, governance, and the control of corruption

The business climate would benefit from simplifying procedures for starting a business, approving FDI, preparing trade documentation, and paying taxes; and the empowerment of people and production of more complex goods from investing more in education and human capital. Ensuring a level playing field and the rule of law also remains essential, mainly by bolstering the effectiveness of existing anti-corruption institutions and accountability of high-level public officials and by completing the much-advanced action plan on AML/CFT.

Boosting competitiveness and exports

To this end, key objectives include: 1) implementing the approved national tariff policy, based on time-bound strategic protection; 2) negotiating new free trade agreements; and 3) facilitating the integration in global supply chains by improving firms’ reliability and product quality, and registering firms with all necessary entities for tax and business purposes.

Promoting financial deepening and inclusion

To better channel savings toward productive investment, improve the allocation of resources, and diversify risks, key policies remain: 1) entrenching macroeconomic stability; 2) strengthening institutional and regulatory frameworks; 3) creating conditions that allow for a greater role of private credit; and 4) boosting financial coverage of underserved segments of the population and SMEs.

Stepping up to climate change

Worldwide, Pakistan ranks both among the top 10 countries with the largest damages from climate-related disasters and top 20 countries with the largest greenhouse gas (GHG) emissions. Critical next climate policy steps are: 1) accelerating the finalization of the authorities’ National Adaptation Plan (NAP); and 2) implementing an adequate set of measures to meet the COP26 Nationally Determined Contribution (NDC) targets and securing sufficient financing, including from international partners.

Kamala Harris made President of United States for 85 minutes

Kamala Harris, Vice President became the first acting female President of United States on Friday for 85 minutes. President Joe Biden before going for a routine colonoscopy chose to temporarily transfer powers to the Vice President, making her acting president for the time of the examination.

In that time, she served as president, the first woman to do so in the nation's history. Acting presidents, according to The Wall Street Journal, have all the powers of the president except for naming a vice president. 

A section of the 25th Amendment states that Presidents may temporarily transfer their powers to their vice president, should they be unable to do their job. It is not mandatory under circumstances such as a routine colonoscopy, but Biden chose to do so.

Joe Biden notified leaders of the Senate and the House of Representatives of the decision. After his medical procedure, he submitted a letter reclaiming presidential powers. 

The colon has historically been a source of presidential power transfers in the US. Former President Ronald Reagan transferred power to George W. Bush while undergoing colon cancer surgery, and George W. Bush transferred powers to then-vice president Dick Cheney twice while also undergoing colonoscopies. 

White House Press Secretary Jen Psaki said that the Biden administration knew that they "make history every time they’re working together, every time she’s out there speaking on behalf of the government as the Vice President of the United States.  But certainly, today was another chapter in that history that I think will be noted for many women [and] young girls across the country."

An attempt to block US$650 million US arms sale to Saudi Arabia

According to the reports, a group of senators in the United States is opposing the Biden administration’s first major arms sale to the Kingdom of Saudi Arabia over Riyadh’s involvement in the conflict in Yemen.

A joint resolution of disapproval to block a proposed US$650 million in US arms sales to the Kingdom of Saudi Arabia was introduced by Republicans Rand Paul and Mike Lee, as well as Bernie Sanders who caucuses with Democrats.

While many US lawmakers consider Saudi Arabia an important partner in the Middle East, they have criticized the country for its involvement in the war in Yemen, a conflict considered one of the world’s worst humanitarian disasters. They have refused to approve many military sales for the kingdom without assurances US equipment would not be used to kill civilians.

Activists have said Saudi Arabia has lobbied heavily against extending a mandate of United Nation investigators who have documented possible war crimes in Yemen by both the Riyadh-led coalition and the Houthi movement.

The package which was approved by the State Department would include 280 AIM-120C-7/C-8 Advanced Medium Range Air-to-Air Missiles (AMRAAM), 596 LAU-128 Missile Rail Launchers (MRL) along with containers and support equipment, spare parts, US government and contractor engineering and technical support.

In a statement Paul said, “This sale that could accelerate an arms race in the Middle East and jeopardize the security of our military technologies.”

 “As the Saudi government continues to wage its devastating war in Yemen and repress its own people, we should not be rewarding them with more arms sales,” said Sanders in the joint statement.

The Biden administration has said it adopted a policy of selling only defensive weapons to the Gulf ally.

When the State Department approved the sale a spokesman said the sale “is fully consistent with the administration’s pledge to lead with diplomacy to end the conflict in Yemen.” The air-to-air missiles ensure “Saudi Arabia has the means to defend itself from Iranian-backed Houthi air attacks,” he said.

State Department approval of a sale is not necessarily the indication of a signed contract.

Is the US hegemony around the world ending?

The horrifying images of desperate Afghans trying to get out of Kabul after the US-backed government collapsed in August signify a major twist in world history, the end of the US hegemony had come earlier than anticipated.

The growing weakness of United States can be attributed more to the domestic issues rather than its overseas proxy wars. The country is gradually losing status of largest ‘economic power’ as well as its ability to fix internal problems.

The peak period of the US hegemony lasted less than 20 years, from the fall of the Berlin Wall in 1989 to the financial crisis of 2007-09. The country was dominant in many domains of power—military, economic, political and cultural.

The height of American hubris was the invasion of Iraq in 2003, when it hoped to remake not just Iraq and Afghanistan, but the whole Middle East. The United States not only overestimated the effectiveness of its military power to bring about deep political change, but also underestimated the impact of its free-market economic model on global finance.

The decade ended with its troops bogged down in two counterinsurgency wars and a financial crisis that accentuated the inequalities of US-led globalization had brought about.

The degree of uni-polarity in this period has been rare in history, and the world has been reverting to a more normal state of multi-polarity ever since, with China, Russia, India, Europe and others gaining power relative to counter the US.

Afghanistan’s ultimate effect on geopolitics is not likely to be small. The US may have survived an earlier, humiliating defeat when it withdrew from Vietnam in 1975, but regained its dominance within little more than a decade. The much bigger challenge to the US global standing is domestic.

American society has become deeply polarized and has found it difficult to find consensus on virtually anything. This polarization started over conventional policy issues like taxes and abortion, but has since metastasized into a bitter fight over cultural identity.

Normally a big external threat such as a global pandemic should be the occasion for citizens to rally around a common response. But the covid-19 crisis served rather to deepen divide in the United States, with social distancing, mask-wearing and vaccinations being seen not as public-health measures but as political markers. These conflicts have spread to all aspects of life, from sport to the brands of consumer products that red and blue Americans buy.

Many analysts believe that the US influence abroad depends on its ability to fix its internal problems. Polarization has affected foreign policy directly.

During Barack Obama’s presidency, Republicans took a hawkish stance and scolded Democrats for the Russian “reset” and alleged naivety regarding Vladimir Putin.

Donald Trump turned the tables by embracing Putin, and today roughly half of Republicans believe that the Democrats constitute a bigger threat to the American way of life than Russia does.

There is more apparent consensus regarding China as both Republicans and Democrats agree it is a threat to democratic values. A far greater test of the US foreign policy than Afghanistan will be Taiwan, if it comes under direct Chinese attack. Will the United States be willing to sacrifice its sons and daughters on behalf of that island’s independence?

Would the US risk military conflict with Russia should it invade Ukraine? These are serious questions with no easy answers. A reasoned debate about the US national interest has to be conducted primarily through the lens of how it affects the partisan struggle.

The biggest policy debacle of President Joe Biden’s administration in its first year has been its failure to plan adequately for the rapid collapse of Afghanistan.

Biden has suggested that withdrawal was necessary in order to focus on meeting the bigger challenges from Russia and China. Obama was never successful in making a “pivot” to Asia because the US remained focused on counterinsurgency in the Middle East.

In 2022, the administration needs to redeploy both resources and the attention of policymakers to deter geopolitical rivals and engage with allies.

The United States is not likely to regain its earlier hegemonic status, nor should it aspire to. What it can hope for is to sustain, with like-minded countries, a world order friendly to democratic values. The ability do this depend on recovering a sense of national identity and purpose at home.

United States may send some evacuees back to Afghanistan

According to a CNN report, Biden administration is mulling plans to send some Afghan evacuees at a US military base in Kosovo back to Afghanistan, in case they fail to pass a vigorous vetting process. 

The option is one of several being considered by US officials who have not yet developed a wider plan for where to resettle Afghans who do not pass the security clearance process.

About 70,000 Afghan evacuees have come to the United States following the chaotic scramble to evacuate US forces and vulnerable populations from Afghanistan in August.

Tens of thousands of other evacuees were sent to sites across Europe and the Middle East to be processed before moving on to the US or a partner third country.

Administration officials have made clear that all Afghans looking to come to the United States must pass a security screening and vetting process and receive necessary vaccinations before they are permitted to enter.

But those whose cases required more intense vetting are being transferred to Camp Bondsteel in Kosovo, with roughly 200 individuals, including family members, now at the base. The administration and Kosovo’s government have an agreement to house evacuees there for up to a year.

Should an individual at Bondsteel not pass vetting, he/she could then choose to go back to Afghanistan and would not be sent back to the country against their will.

Before such a move, there would be a conversation to examine whether there was a third country where they could travel instead.

Sending evacuees back to Afghanistan without their permission would be a departure from the administration’s previous promise to transfer such individuals to a third country and raise human rights concerns and legal questions.

US officials have also been very vague about which countries would then take those individuals.

While nobody sent to Kosovo has yet been deemed unable to enter the United States, some US officials and lawmakers worry that should individuals not pass clearances there are limited options for them. They could, for example, be stuck on a base long-term.

One senior administration official told CNN that the security flags that have led to people being transferred to Bondsteel are usually not those “that can be resolved within hours or even within days.”

The US has not sent anyone back to Afghanistan, but the official said they “would leave all such possibilities on the table, which includes the fact that you might have evacuees for whom that is their preferred destination if the United States is not an option.”

Europe decoupling from China would not be right, says Merkel

German Chancellor Angela Merkel has said that decoupling from China is not the right option for Europe, despite tense relationship. The outgoing leader told Reuters in an interview that Germany may have been naive in some areas of cooperation with China.

“Maybe initially we were rather too naive in our approach to some cooperation partnerships,” she said. “These days we look more closely, and rightly so.”

But, she said it was important for Germany and the European Union to continue to cooperate with China and to learn from one another.

“Total decoupling wouldn’t be right in my view, it would be damaging for us,” she said.

Merkel also said, Germany was continuously in discussions with Beijing on intellectual property and patent protection, “both with regard to Chinese students in Germany and German enterprises operating in China”.

Merkel has sought to engage with China during her 16 years at the helm and helped to nurture EU-China ties. She did not seek re-election in the September election and will step down once a new coalition government is formed.

China became Germany’s biggest trade partner in 2016 and its rapid economic expansion has fuelled German growth throughout Merkel’s tenure. Some critics say Germany is now too reliant on China, and becoming too soft on Beijing on awkward issues such as human rights violations.

Merkel’s government has said she always addressed human rights issues on her official visits to China – she has visited the country 12 times as chancellor – and has sought to diversify trade in Asia.

Her remarks come as relations between China and the EU are at a low point over a growing list of issues, including Hong Kong and Xinjiang. In May, the European Parliament halted ratification of an investment treaty with China after the two sides imposed tit-for-tat sanctions over Beijing’s alleged human rights abuses against Uygurs in the far western Xinjiang region.

Beijing hits back at Western sanctions against China’s alleged treatment of Uygur Muslims.

Beijing has also been angered by some European nations seeking closer ties with self-ruled Taiwan, which it claims as its own territory. Brussels was preparing to announce a new strategic format for liaising with Taiwan on trade and economic issues this week, but it was postponed at the eleventh hour, sources told the South China Morning Post. It is expected to be revisited at a later date, according to a European Parliament source.

As Brussels tries to balance ties between Beijing and Taipei, China is trying to re-engage with Europe. Zhang Ming, China’s ambassador to the European Union, has said there are plans to hold an EU-China summit by the end of this year.

On climate issues, Merkel told Reuters that she had urged Chinese Premier Li Keqiang in a phone call to use cleaner technology if new coal-fired plants were being built in China.

“I have just spoken to the Chinese premier and discussed whether it would not be better, if his country is going to build coal-fired power plants, to at least build the latest generation,” she said.

Merkel’s party, the Christian Democratic Union, is headed for the opposition and likely to take a “hawkish turn on China” after she steps down, according to Noah Barkin, a Europe-China expert at Rhodium Group.

“The government that replaces her will also strike a different tone because it will include two parties, the Greens and Free Democrats, who support a harder line,” Barkin said.

“In her final months in office, Merkel has been doing all she can to ensure that her dialogue-first approach to China remains in place after her departure. But the political mood in Germany, as well as China’s own trajectory, suggest otherwise.”

 

Iran keen in developing links with neighbors

Deputy Foreign Minister of Iran for Economic Diplomacy Mehdi Safari has said it is a priority to expand economic and trade cooperation with neighbors, saying the Economic Cooperation Organization (ECO) can help achieve this goal.

Safari made the remarks at a meeting with ECO Secretary-General Khosrow Nazeri on the eve of the ECO summit in Turkmenistan, Mehr reported on Wednesday.

ECO includes Iran, Turkey, Afghanistan, the Republic of Azerbaijan, Kyrgyzstan, Kazakhstan, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan.

At the meeting, the ECO chief presented a report on the process to prepare for the summit in Ashgabat and hailed Iran for its assistance in this regard.

Safari said expansion of economic and trade cooperation with neighbors is a priority of the new Iranian administration and stressed the role of ECO in achieving the goals of member countries.

The top diplomat said a plan by Iran to send a high-level team to the forthcoming summit signifies the prominent position of ECO.

Safari said Iran is ready help ECO members to implement important decisions at the ECO summit in Ashgabat.

Iranian Transport and Urban Development Minister Rostam Qasemi said that positive agreements have been reached with neighboring countries, for expansion of transportation cooperation, especially in the aviation sector, IRNA reported.

Speaking at the ceremony on introducing the new head of Civil Aviation Organization (CAO), Qasemi said, “We recently reached agreements with Turkmenistan and Kyrgyzstan, part of which is related to the development of aviation.”

According to the official, the expansion of transportation cooperation with other countries will lead to the expansion of trade ties and eventually will increase the country’s revenues.

“We have made plans for upgrading our transportation fleet. However, we need effective measures to be taken for the development of the aviation industry,” he stressed.

He further stated that the most important factor in the development of the aviation industry is the use of specialists to promote it, adding: “In order to empower the aviation industry to meet the needs of the country, we need more work to be done, and this capability exists inside the country.”

Elsewhere in his remarks, Qasemi mentioned the needs of other transportation sectors including road, maritime, and rail, and said, “The transport sector needs to modernize its fleet, and we have not yet achieved the goals of the program in the rail, sea, and land sectors.”

Ghasemi pointed to the existing problems in the railway fleet and also the incompleteness of the country’s railway corridors and said, "Conditions in the railway sector are not favorable, the average life of the road transportation fleet is high and in the sea sector, despite high capacities, the capacity of the country’s ports has not been used well."

 

Christmas without fanfare

Christmas is set to be spoilt for many Americans by rising prices. While retailers are forecasting a record holiday spending season, inequalities in the economic recovery will again be laid bare.

Inflation is especially taking a toll on lower-income families, who spend roughly a third of their earnings on essentials like food and energy, according to this report by Amelia Pollard and Olivia Rockeman.

It’s eating into recent wage increases, and the timing couldn’t be worse after federal pandemic relief expired for about 7.5 million people.

“Anything that in the very short run puts a lot of pressure on family budgets across the board will cause more stress and damage to low-income households because they just have less scope to absorb it,” said Josh Bivens, director of research for the Economic Policy Institute.

A majority of Americans flush with over US$2 trillion in excess savings accumulated during the pandemic are ready to splurge on gifts and holiday trips.

At the same time, more than 11% of Americans don’t plan to spend at all, the greatest share in at least 10 years and more than double that in 2020, according to a Deloitte survey.

And the Salvation Army is bracing for a holiday season similar to that after the 2008 financial crisis, according to National Commander Kenneth Hodder.

Nery Peña, a first-grade teacher and single mom of two in Washington, DC, says the child tax credit and stimulus checks were a lifeline this past year.

While she’s received around US$500 a month since July, the next tax-credit payment due around December 15, this year will be the last one unless Congress passes the social-spending package, and she’s already started to curb her spending.

“Food prices are going up, gas prices are going up — prices are going up everywhere,” said Peña. “Thank God my daughters understand, but as a mom, it just sucks to tell your kids Christmas won’t be that Christmassy this year.”