Equities remain under pressure in November

Pakistan Stock Exchange, in a repeat of recent performance failed to hold onto mid-month gains, November closed with a muted gain as the benchmark index gained 2.6% increase in Rupee terns and paltry 1.2% in US$ terms.

Politics remains in flux, with PTI keeping up the pressure on the ruling coalition, while the economy - and the external account position in particular - remains vulnerable.

However, these top-down concerns are balanced against ultra-cheap valuations, with the market absorbing the surprise 100bps rate hike reasonably well and foreign investors turning net buyers in oil & gas exploration after a significant gap.

Analysts believe economic outlook takes precedence over political developments, with the former paramount in determining the near-term course of the KSE-100. The pending 9th IMF review is the key deriver.

Imran Khan had an eventful November, to say the least! He survived an assassination attempt, ended his march to Islamabad, and has threatened to dissolve the Punjab and Khyber Pakhtunkhwa provincial assemblies. The overall calculus remains the same, to force early general elections but there is some change in tack, with the US no longer blamed for his ouster, and a less combative stance adopted towards the army in the run up to the appointment of the new army chief.

General Munir faces the tough task of regaining lost face for the army (in farewell speeches, his predecessor vowed the institution will be apolitical), while also focusing on preserving hard-fought security gains given the Tehreek-e-Taliban Pakistan (TTP) has recently ended its ceasefire.

The major win in November for PML-N was the issuance of a diplomatic passport to Nawaz Sharif. His eventual return to Pakistan, subject to legal relief, cannot be ruled out.

The PML-N led ruling coalition is anticipated to complete its term in the center, but there is still a significant lack of clarity on political outlook.

Sustaining the IMF program remains critical. There is greater realization that Pakistan needs stability to put economy on track.

After no change in the preceding two monetary policies, the State Bank of Pakistan (SBP) raised the policy rate by 100bps to 16%, with high inflation and external account vulnerabilities outweighing weak GDP growth.

A return to prudent policymaking possibly signals the overarching importance of sustaining the ongoing IMF program but there are challenges – no date has been set for the 9th IMF review

 The PKR appears to have been kept in check by import controls and restrictions on the movement of foreign exchange and fear of a mini-budget to impose additional taxation may yet be in play to make up for flood-related losses.

There are positives, with the SBP Governor announcing Pakistan will repay its international Sukuk ahead of its scheduled December 05, 2022 maturity, as partial offsetting funding from the AIIB has already been secured.

However, with the import cover a shallow 1.5 months, analysts believe Pakistan not only needs to sustain the IMF program, but also fast-track the promised assistance from Saudi Arabia and China (debt rollover and additional financing). Potential measures such as a higher levy on diesel may be taken as leading indicators for the government’s will in keeping the IMF program on track.       

Analysts expect equities to respond more closely to the evolution of foreign exchange reserves in the near-term, rather than noisy politics which may already be in the price. Valuations are ultra-cheap backed by more companies announcing share buybacks, most recently BAFL, and mean reversion implies significant upside through the cycle.

MSCI changes are also generally positive, with LUCK, SYS, TRG and POL added to the FM100 Index effective end-November. For our top picks, we replace EFERT with ENGRO and PSO with APL. EFERT’s theme of a high dividend yield loses a little luster in the higher interest rate environment, while ENGRO offers a good blend of both yield and growth. With tough reforms appearing unlikely for now, including on the energy side, APL’s stronger fundamentals win out over cash-strapped PSO. 

 

Iran sentences four people to death for cooperating with Mossad

Four people were sentenced to death on Wednesday by Iran's judiciary for allegedly cooperating with Mossad, the Israeli intelligence service and committing kidnappings, the semi-official Mehr news agency reported.

The Islamic Republic has long accused arch-enemy Israel of carrying out covert operations on its soil. Tehran has lately accused Israeli and Western intelligence services of plotting a civil war in the country, now gripped by some of the biggest anti-government protests since its 1979 Islamic Revolution.

Mehr named the four accused and, referring to Israel, said they were sentenced to death for the crime of cooperating with the intelligence services of the Zionist regime and for kidnapping.

It added, "With guidance from the Zionist intelligence service, this network of thugs was stealing and destroying private and public property, kidnapping people, and obtaining fake confessions."

Mehr said the accused had been arrested by the Revolutionary Guards and the Ministry of Intelligence.

Three other people were handed prison sentences of between five and 10 years for allegedly committing crimes such as acting against national security, aiding in kidnapping, and possessing illegal weapons, it said.

Death of Jiang Zemin, end of an era

Former Chinese President Jiang Zemin, who led the country for a decade of rapid economic growth after the Tiananmen crackdown in 1989, died on Wednesday at the age of 96, Chinese state media reported.

Jiang died in his home city of Shanghai just after noon on Wednesday of leukemia and multiple organ failure, Xinhua news agency said, publishing a letter to the Chinese people by the ruling Communist Party, parliament, Cabinet and the military.

"Comrade Jiang Zemin's death is an incalculable loss to our Party and our military and our people of all ethnic groups," the letter read, saying its announcement was with profound grief.

Jiang's death comes at a tumultuous time in China, where authorities are grappling with rare widespread street protests among residents fed up with heavy-handed COVID-19 curbs nearly three years into the pandemic.

The zero-COVID policy is a hallmark of President Xi Jinping, who recently secured a third leadership term that cements his place as China's most powerful leader since Mao Zedong and has taken China in an increasingly authoritarian direction since replacing Jiang's immediate successor, Hu Jintao.

China is also in the midst of a sharp economic slowdown exacerbated by zero-COVID.

Numerous users of China's Twitter-like Weibo platform described the death of Jiang, who remained influential after finally retiring in 2004, as the end of an era.

"I'm very sad, not only for his departure, but also because I really feel that an era is over," a Henan province-based user wrote.

"As if what has happened wasn't enough, 2022 tells people in a more brutal way that an era is over," a Beijing Weibo user posted.

The online pages of state media sites including People's Daily and Xinhua turned to black and white in mourning.

Wednesday's letter described our beloved Comrade Jiang Zemin as an outstanding leader of high prestige, a great Marxist, statesman, military strategist and diplomat and a long-tested communist fighter.

Jiang was plucked from obscurity to head China's ruling Communist Party after the bloody Tiananmen crackdown on pro-democracy protesters in 1989, but broke the country out of its subsequent diplomatic isolation, mending fences with the United States and overseeing an unprecedented economic boom.

He served as president from 1993 to 2003 but held China's top job, as head of the ruling Communist Party, from 1989 and handed over that role to Hu in 2002. He only gave up the position as head of the military in 2004, which he also assumed in 1989.

When Jiang retired, it was said by sources close to the leadership at the time that everywhere Hu looked he would see the supporters of his predecessor.

Jiang had stacked China's most powerful leadership body, the Politburo Standing Committee, with his own protégées, many of them from the so-called "Shanghai Gang".

But in the years after Jiang retired from his final post, the military commission chairmanship in 2004, Hu consolidated his grip, neutralized the Shanghai Gang and successfully anointed Xi as a successor.

 

Can Yuan Replace US Dollar?

Chinese entrepreneur Wang Min is delighted about Russia's embrace of the yuan. His LED lights company can price contracts to Russian customers in yuan rather than dollars or euros, and they can pay him in yuan. It's win-win, he says.

Wang's plans have been transformed by the conflict in Ukraine and the subsequent Western sanctions on Moscow that have shut Russia's banks and many of its companies out of the dollar and euro payment systems.

His contract manufacturing business with Russia has been small in the past, but now he's preparing to invest in warehousing there.

"We hope that next year sales in Russia can account for 10-15% of our total sales," said the businessman from China's southern coastal province of Guangdong, whose annual revenue of about US$20 million mainly comes from Africa and South America.

Wang is seeking to capitalize on a rapid "yuanization" of Russia's economy this year as the isolated country seeks financial security from Asian powerhouse China. He sees a win-win situation in Chinese exporters reducing their currency risks and payment becoming more convenient for Russian buyers.

While the yuan, or renminbi, has been making gradual inroads into Russia for years, the crawl has turned into a sprint in the past nine months as the currency has swept into the country's markets and trade flows, according to a Reuters review of data and interviews with 10 business and finance players.

Russia's financial shift eastwards could boost cross-border commerce, present a growing economic counterweight to the dollar and limit Western efforts to pressure Moscow by economic means.

Total transactions in the yuan-rouble pair on the Moscow Exchange ballooned to an average of almost 9 billion yuan (US$1.25 billion) a day last month, exchange data analyzed by Reuters showed. Previously, they rarely exceeded 1 billion yuan in an entire week.

"What happened was that it became suddenly very risky and expensive to keep traditional currencies - dollar, euro, British pounds," said Andrei Akopian, Managing Director of Moscow-based investment firm Caderus Capital, citing the potential danger of a bank that keeps foreign currency deposits being sanctioned.

"Everybody was motivated and even pushed towards the rouble or other currencies including, and first of all, the renminbi."

Indeed, yuan-rouble trading totalled 185 billion yuan in October, more than 80 times the level seen in February when Russia launched what it refers to as a special military operation in Ukraine near the end of the month, according to exchange data.

The surge of interest has seen the yuan's share of the currency market jump to 40-45% from less than 1% at the start of the year, said Dmitry Piskulov, international projects head at the Moscow Exchange's foreign-exchange market department.

By comparison, the dollar/rouble pair, which commanded more than 80% of trading volumes on the Russian market in January, has seen its share drop to about 40% as of October, according to exchange data and the central bank.

Until April, Russia didn't even make the top 15 list of countries using the yuan outside mainland China, in terms of the value of inbound and outbound flows, according to data from global financial networking system SWIFT.

It has since jumped to No. 4, lagging only Hong Kong, the city's former colonial ruler Britain and Singapore.

To put this in a global context, though, the dollar and euro are still by far the dominant currencies, representing more than 42% and 35% of flows respectively as of September this year. The yuan has risen to almost 2.5% from below 2% two years earlier.

Wang's business optimism is echoed by Shen Muhui, who heads a trade group for small exporters to Russia in neighbouring Fujian province. He said more and more Russian buyers were opening yuan accounts and settling transactions directly in the Chinese currency, which he said was a big advantage.

"The Russia-Ukraine conflict has brought opportunities for Chinese businessman," said Shen, adding that his association had received many inquiries from Chinese companies interested in doing business in Russia.

It's not only Chinese companies, or small companies, joining the yuan train. Seven Russian corporate giants, including Rusal, Rosneft and Polyus, have raised a total of 42 billion yuan in bonds on the Russian market, according to Reuters calculations, and the list could grow with No.1 lender Sberbank and oil firm Gazpromneft saying they're also considering renminbi debt.

Aluminium producer Rusal, which buys raw materials from China and then sells a large chunk of its finished goods there, told Reuters it had stepped up the share of yuan used in those purchases and sales this year, and that the share would continue to rise, though it declined to provide a detailed breakdown.

While President Vladimir Putin has long sought to reduce Russia's reliance on the dollar, geopolitics has turbo-charged this trend in 2022.

China, the world's No. 2 economy, is the biggest global power not to join economic sanctions against Russia. Indeed, Putin and Chinese President Xi Jinping sealed a no limits partnership in February, weeks before Moscow launched what it describes as a "special military operation" in Ukraine.

The yuan comprised about 19% of Russia's trade settlements with China in 2021 versus the dollar's 49% share, Andrey Melnikov, deputy director at international cooperation department at the Russian central bank, said in September.

While 2022 figures haven't been published yet, the Chinese currency is gaining ground, according to Melnikov, who told a conference that demand for yuan liquidity had risen sharply due to reduced access to traditional payment methods and the freezing of its overseas gold and foreign exchange reserves.

The central bank declined to comment for this article.

Bank governor Elvira Nabiullina is tracking the growth, telling lawmakers this month that the influx of yuan illustrated a transformation of the currency composition of our economy.

Regulators are also aware of potential perils, such as a disparity between a growing number of yuan-held current accounts and deposits of the currency, with yuan-denominated lending only starting to develop.

The central bank has said lenders should seek to reduce the growing risks of yuanization of their balance sheets - or gaps between yuan assets and liabilities - by increasing payments in yuan for imports, investing in yuan-denominated securities or using yuan in trade transactions with other countries.

Regulators do not plan to limit yuan usage now and may encourage banks to use more by relaxing provisioning requirements for the currency while tightening them for dollars and euros, Elizaveta Danilova, director at the central bank's financial stability department, told a conference this month.

Tehreek-e-Taliban ends ceasefire with Government of Pakistan

Reportedly, the armed group Tehreek-e-Taliban Pakistan (TTP) has announced the end of an indefinite ceasefire agreed with the Government of Pakistan in June 2022 and issued orders to its fighters to carry out attacks across the country.

“As military operations are ongoing against mujahideen in different areas, … so it is imperative for you to carry out attacks wherever you can in the entire country,” the group said in a statement on Monday.

The group said it is facing a rising number of attacks by the Pakistani military, particularly in the Lakki Marwat district of Pakistan’s northwestern province of Khyber Pakhtunkhwa.

“We submit to the people of Pakistan that we have repeatedly warned you and continued to be patient so that the negotiation process is not sabotaged at least by us, but the army and intelligence agencies do not stop and continue the attacks, so now our retaliatory attacks will also start across the country,” the statement said.

The TTP has been waging a rebellion against the state of Pakistan for more than a decade. The group demands the imposition of hardline Islamic law, release of key members arrested by the government and a reversal of the merger of Pakistan’s tribal areas with Khyber Pakhtunkhwa province.

On November 16, the TTP claimed responsibility for an attack on a police patrol in Lakki Marwat, about 200km (125 miles) southwest of the provincial capital, Peshawar. Six policemen were killed.

The TTP made its declaration hours after the government said the state minister for foreign affairs, Hina Rabbani Khar, will visit Afghanistan on Tuesday.

According to the foreign ministry, Khar will hold talks on regional security with the Taliban government in Kabul.

Security specialist Asfandyar Mir of the United States Institute of Peace told Al Jazeera that while the TTP has been escalating its violence recently, it has also exercised restraint by not carrying out attacks outside tribal areas.

“I have inferred the targeting as a function of Afghan Taliban pressure on the TTP to calibrate their escalation,” he saId. “Now if the TTP follows through in its declaration of countrywide attacks, the key question is how will the Taliban respond.”

The government and the TTP have held multiple rounds of talks facilitated by the Afghan Taliban, the last of which took place in June. The talks began weeks after the Taliban took control of Kabul last year.

Despite the ceasefire, the TTP continued its attacks this year, saying they were defensive in nature and only in retaliation for operations carried out by Pakistan’s military.

According to data compiled by the Pakistan Institute for Peace Studies, an Islamabad-based research organization, at least 65 such attacks took place in Khyber Pakhtunkhwa through the end of October. These killed at least 98 people and wounded 75, it said.

 

Iran publishes list of sensitive sites in Israel

Under the guise of reporting on reports by Beirut-based Al Mayadeen, a pan-Arabist satellite news channel, media outlets close to the Islamic Revolutionary Guard Corps (IRGC) have published a list of “sensitive” sites that could be targeted in a future war. The reports listed a number of buildings and sites in Israel in what was clearly intended as a threat, reported The Jerusalem Post.

Iran’s Tasnim News Agency on Monday reported, “In this regard, Al Mayadeen network has published a report on the analysis of Israel’s target bank and the sensitive positions of this regime that can be targeted in any war. At the beginning of this report, the general situation of the Zionist regime at the military level and its equipment has been examined.”

The article included a list of sites in Israel, such as the Knesset, the Prime Minister’s Office and the Defense Ministry. It included what Tasnim characterized as nuclear sites and facilities. In the list of warehouses and facilities, the report included a Rafael Advanced Defense Systems site in Haifa, the Weizmann Institute of Science in Rehovot and the Technion-Israel Institute of Technology in Haifa.

The report also examined airports and military and intelligence bases. It mentioned civilian airports, such as Ben-Gurion Airport and Ramon Airport near Eilat. A list of military bases followed.

This appears to be one of the few times that Iranian media close to the regime have so openly published what it claims is a list of Israeli sites that could be targeted in a future war. This appears to point to Iran and its proxies’ estimates of their targeting ability.

In the last conflict with Hamas, the terrorist group claimed to have targeted Ramon Airport. Operations at the airport were briefly suspended during that conflict. Hamas also appeared to target other sites that have infrastructure, using large-scale salvos of rockets to try to overwhelm the Iron Dome air-defense system.

Hezbollah has also made threats regarding targeting Israel’s infrastructure, including threatening gas rigs off the coast and industrial sites near Haifa.

The overall context of Iran can be seen as merely bragging and threatening. But it also illustrates the shift in thinking in Tehran and among Iran’s proxy groups. The proxies include Hezbollah, Islamic Jihad, the Houthis in Yemen and members of Hashd al-Shaabi in Iraq.

Recent reports that an Iranian IRGC member linked to Iran’s drone program was killed in Syria, and that Iran wants to move air-defense systems to Syria, show Iran’s possible concerns regarding these latest tensions and threats.

Publishing the kind of list that Iran’s pro-regime media published on Monday, listing sites that Iran thinks are sensitive, can be seen as a message to Israel.

It can also be seen as illustrating that Tehran believes the conflict with Israel is entering a strategic stage in which Iran would like to supply proxy groups in Lebanon and Syria with more advanced weapons, including drones and precision-guided munitions that can target the sites Al Mayadeen listed.

Iran has increased its drone threats against Israel in recent years, and Tehran works closely with Hamas and Hezbollah to try to learn from past conflicts and tensions with Israel.

 

 

 

Israelis being shunned at Qatar World Cup

According to a report by The Jerusalem Post, multiple Israelis have claimed to have been met by an atmosphere of hostility and hatred at the World Cup in Qatar, with fans refusing to speak to Israeli journalists, waving Palestinian flags in the background of their videos and yelling at them.

Moav Vardy, KAN’s foreign affairs reporter was yelled at by a Saudi fan who told him, “You are not welcome here. This is Qatar. This is our country. There is only Palestine; no Israel.”

Other videos from Qatar show people immediately walking away when they find out the person interviewing them is Israeli.

In one particular video, N12’s Ohad Hemo begins to interview a group of Lebanese men who then walk away when Hemo tells them he’s Israeli. One of them then turns back and asks Hemo what he’s doing there and then tells him that Israel doesn’t exist.

In other videos, people stand behind various Israeli reporters and raise Palestinian flags.

Israeli soccer legend and KAN World Cup panel member Eli Ohana also faced anti-Israel sentiments when he was on a golf cart being driven by a Qatari policeman. When Ohana said he is Israeli, the officer asked him if he was joking, and Ohana then said he was really Portuguese in order to avoid trouble.

The officer told him that if he had been Israeli, he would have turned the car around and refused to drive him.

Raz Shechnick, Yediot Ahronoth’s reporter for the World Cup, wrote on Twitter about his experiences in Qatar, describing an atmosphere of rejection and hostility from both locals and foreigners attending the games.

“We didn’t want to write these words, we are not the story here. But after 10 days in Doha, we cannot hide what we are going through. We are feeling hated, surrounded by hostility, not welcomed,” the journalist wrote.

He also described an incident in which he and his colleague had lied about their country of origin, saying they were Ecuadorian in order to prevent them from being harassed by fans.

Israeli journalist Dor Hoffman reported that a Qatari taxi driver kicked him out of his cab when he discovered he was Israeli, refusing to take his money.

He later continued to a restaurant on a beach, where he was escorted out of the restaurant by security, with the owner demanding that he delete every photo taken in his restaurant. Hoffman said the owner took his phone and that he felt threatened.

On Saturday, Tunisian fans waved a banner saying “Free Palestine,” despite Qatar and FIFA’s policy of not allowing political protests at matches, a policy that led to the confiscation of rainbow-colored items in support of the LGBTQ community and Iranian anti-regime signs.

Jerusalem resident Michael Janekowitz, a former spokesman for the Jewish Agency who is attending the World Cup, refuted the claims that Israelis were being targeted, and said his experience has been without incident.

“Qatar is very welcoming to the Israeli visitors,” he said.

These Israeli journalists are going with magnifying glasses to find haters of Israel. Most of these Israel-bashers have come to the World Cup from outside of Qatar. They are being provoked by headline-seeking Israeli journalists.

“Qatar has a population of about 3.3 million of whom only 300,000 are Qataris. The other 3 million are mostly workers from mainly India, Bangladesh, Kenya, Uganda, Philippines and Sudan,” he added, saying that was where the antagonism against Israelis was emanating from.

 

Pakistan: Banking sector posts robust performance during H1CY22

Banking sector has shown robust performance and steady resilience during H1CY22, says Mid-Year Performance Review of the sector by State Bank of Pakistan (SBP).

The review covers the performance and soundness of the banking sector for the period January-June 2022 (H1CY22). It also covers the performance of financial markets and Microfinance banks (MFBs) as well as the results of Systemic Risk Survey (SRS), which represents independent respondents’ views about key risks to financial stability.

The Review reveals that sustained economic activity during H1CY22 supported the expansion of banking sector balance sheet by 16% during H1CY22. Substantial increase in the asset base was mainly driven by the flows of private sector advances and increase in investments, particularly the Government securities.

Besides sizable mobilization of deposits, banks’ reliance on borrowings increased significantly to finance the expanded balance sheet.

The pace of private sector advances growth during H1CY22 was the highest in comparable periods of previous three years. Improved manufacturing activity, as reflected in double digit growth in Large Scale Manufacturing (LSM) index during H1CY22, higher input prices and SBP’s refinance schemes augmented the overall flow of advances. Individuals and sugar sector availed major chunk of financing followed by textile sector.

Besides noteworthy growth, banks’ asset quality indicators further improved. Gross Non-Performing Loans (NPLs) ratio moved down to 7.5% by end June 2022, from 7.9% at end December 2021. However, recent catastrophic flooding in many parts of the country may impact the repayment capacity of agri-borrowers of banks’ and Microfinance borrowers.

The Review highlights that baseline profitability indicators moderated — despite strong growth in incomes — mainly due to the impact of sharp increase in tax charges.

Capital Adequacy Ratio (CAR) of the banking sector slightly edged down to 16.1% due to faster growth in asset base and advances. Nonetheless, the ratio remains well above the minimum regulatory requirement of 11.5% and banking sector in general has adequate capital buffers and resilience to withstand the impact of severe stress of macroeconomic conditions and shocks to key risk factors.

The Review also covered the results of 10th wave of SRS (July-2022) based on perceptions of independent market participants. The respondents perceive that the key risks for the financial system are mostly exogenous in nature i.e. global and macroeconomic risks. Majority of the respondents expressed confidence in the stability of the financial system.

Recent catastrophic flooding in many parts of the country may impact the repayment capacity of agri borrowers of banks and microfinance borrowers, and that of other borrowers as a second round effect. As such, banks as well as MFBs need to make prudent assessment of the possible impact on lending portfolios and take necessary measures for maintaining the asset quality and resilience of financial strength of their institutions, the Review adds.

Iran's Joining Shanghai Cooperation Organization

Iranian Foreign Minister Hossein Amirabdollahian praised Iran’s decision to move forward with an accession bill to the Shanghai Cooperation Organization (SCO), noting that a recent vote on the bill for the accession of the Islamic Republic of Iran to the SCO shows the determination and seriousness of our country to develop regional, international, and economic cooperation and strengthen its view of Asia.

The SCO includes countries in Central Asia, including Kazakhstan, Tajikistan, Russia, Pakistan, Uzbekistan and China. These are important countries because Russia and China tend to position themselves at odds with the US. This is increasingly true with Russia after the Ukraine invasion. Russia and the West appear to have completely destroyed their relations, and Iran would like to swoop in and benefit.

Iran calls this multilateralism. Recently in an interview with the Chinese People’s Daily Online published on Saturday, Mohammad Keshavarzzadeh stated that the SCO seeks to assist in providing better answers to the problems faced by member states as well as the region.

He argued that there was great “significance of Iran joining the bloc by pointing out that the organization includes members from Central and Eastern Asia in addition to other regions, and this can give Iran a platform to make overtures with all of these countries.”

The reason Iran likes the SCO is that it views it as an organization that has no Western members. “On a question that some Western nations equate the SCO with NATO, Keshavarzzadeh said such a comparison is wrong because the SCO is an inclusive bloc and not a military alliance,” a report in Tehran Times noted. These are pro-regime publications and reflect Iran’s stance.

An article at the Carnegie Endowment for International peace notes that Iran joining the SCO will bring some benefits to Tehran, but there are also hurdles.

“Iranian officials still maintain that officially joining the SCO – which is slated to occur by April 2023 – will bring benefits in the economic, commercial, and strategic sectors. Furthermore, from the perspective of the SCO itself, Iran’s political cooperation may be useful for the organization’s relations with the Islamic world,” the report noted.

It also notes that trade between Iran and SCO countries surpassed US$651 billion last year. But Iran will need to modernize its infrastructure to take advantage of any new opportunities. Also, the new China-Iran partnership will take a while to be realized in terms of benefits for Tehran.

 

US Soccer scrubs emblem from Iran flag at World Cup

The United States Soccer Federation briefly displayed Iran’s national flag on social media without the emblem of the Islamic Republic, saying the move supports protesters in Iran ahead of the two nations’ World Cup match scheduled for Tuesday.

Iran’s government reacted by accusing America of removing the name of God from their national flag.

The decision by the US Soccer Federation adds yet another political firestorm to the Middle East’s first World Cup, one which organizers had hoped would be spared of off-the-field controversies.

It also comes as the US faces Iran in a decisive World Cup match, which was already freighted by the decades of enmity between the two countries and the nationwide protests now challenging Tehran’s theocratic government.

The US Soccer Federation said in a statement Sunday morning that it decided to forego the official flag on social media accounts to show support for the women in Iran fighting for basic human rights.

The Twitter account of the U.S. men’s team displayed a banner with the squad’s matches in the group stage, with the Iranian flag only bearing its green, white and red colors. The same could be seen in a post on its Facebook and Instagram accounts laying out the point totals so far in its group.

By Sunday afternoon, the normal flag with the emblem had been restored in the Twitter banner as attention to it grew.

“We wanted to show our support for the women in Iran with our graphic for 24 hours,” the federation said.

The U.S. Soccer Federation displayed the official Iranian flag in a graphic showing Group B standing on its website.

The brief absence of the emblem comes as monthslong demonstrations have challenged Iran’s government since the Sept. 16 death of 22-year-old Mahsa Amini, who had been detained by the country’s morality police.

The protests have seen at least 450 people killed since they started, as well as over 18,000 arrested, according to Human Rights Activists in Iran, an advocacy group following the demonstrations.

Iran has not released casualty or arrest figures for months and alleges without providing evidence that the protests have been fomented by its enemies abroad, including the US

Tehran also restricts press access and has detained over 63 reporters and photographers since the demonstrations began, according to the Committee to Protect Journalists, making covering the unrest that much more difficult.

Iran’s mission to the United Nations and its soccer federation did not respond to a request for comment from The Associated Press. As comments raged online, Iranian state television described the US federation as “removing the symbol of Allah” from the Iranian flag.

Iran’s semiofficial ISNA news agency quoted Safiollah Fagahanpour, an adviser to the Iranian Football Federation, saying that the measures taken regarding the Islamic Republic of Iran flag are against the law of FIFA competitions.

“They must be held responsible,” Fagahanpour said. “Obviously they want to affect Iran’s performance against the US by doing this.”

The Islamic Republic emblem, designed in 1980, is four curves with a sword between them. It represents the Islamic saying: “There is no god but God.” It also resembles a tulip or lotus.

At the top and the bottom of the flag, there are 22 inscriptions of “God is Great” as well, which honors the date on the Persian calendar when the Islamic Revolution took hold.

The flag has become a point of contention at the World Cup. Apparent pro-government supporters have waved it, shouting at those demonstrating over Amini’s death. Others at matches have waved Iran’s lion and sun flag, an emblem of its former ruler, the late Shah Mohammad Reza Pahlavi.

More security forces could be seen at Iran’s last match against Wales. In the capital Tehran, anti-riot police — the same ones cracking down on protests — waved the Iranian flag after the Wales win, angering demonstrators.

Iran and United State to clash in Qatar

The United States and Iran, diplomatic rivals for more than 40 years, clash on the soccer pitch on Tuesday, their places at the World Cup on the line in a fitting finale for the most politically charged group at this year's tournament.

The national team coaches sidestepped the icy bilateral relations, saying they were focused on the tournament and its ability to bring people together.

Washington and Tehran severed diplomatic relations in 1980 after the Islamic revolution. Ties have been strained in recent years when then-President Donald Trump pulled the United States out of an Iran nuclear deal. The United States killed a top Iranian general in 2020 and Tehran responded with missile strikes at US forces based in Iraq.

“I envision the game being hotly contested for the fact that both teams want to advance to the next round, not because of politics or because of relations between our countries," said US coach Gregg Berhalter.

"The thing about soccer is you meet so many different people from all around the world, and you're united by a common love of the sport. We're soccer players and we're going to compete and they're going to compete and that's it."

Iran's dramatic 2-0 win over Wales and the US team's tense goalless stalemate against England on Friday set up a tantalizing final round of Group B matches.

England, sitting top with four points, face bottom side Wales, meaning the Iran-United States contest will decide which team goes through to the round of 16.

The eagerly awaited meeting is a rematch of the 1998 World Cup group stage contest, dubbed the mother of all games, which Iran won 2-1. In a symbolic moment before that match at Lyon's Stade Gerland, the Iranian players gave white roses, a symbol of peace in the country, to their American opponents.

Overshadowing Iran's World Cup build-up this year has been civil unrest at home over the September death in police custody of 22-year-old Mahsa Amini, arrested for flouting the country's strict Islamic dress code.

Team Melli declined to sing Iran's national anthem in their first game against England in an apparent show of solidarity with protesters. They sang quietly on Friday at the Ahmad bin Ali Stadium, where boos and jeers were heard from Iran supporters.

Amid growing public pressure on players to take a stand over a deadly crackdown on protests, Iran rallied late against Wales to rescue a World Cup campaign that seemed to have flatlined following their 6-2 thrashing by England.

Berhalter, whose exuberant side drew 1-1 with Wales in their group opener, described the match as his team's "first knockout game" of the World Cup and was wary of the threat posed by Iran after their second-half assault against Wales.

"Now we need to be sure that we are good enough to go to the second round," Iran coach Carlos Queiroz said after his team kept alive their hopes of a first ever trip to the knockout stage.

"The US is a brilliant team as well, as we saw them against Wales.

"Our preparation starts with a good rest, refresh the minds and put all the complementary and garbage things outside of our minds and focus on our goal, because what we want to do is to give this gift to Iranian fans."

 

 

 

China hit by COVID protests

According to Reuters report, protests against China's heavy COVID-19 curbs spread to more cities, including the financial hub Shanghai on Sunday, nearly three years into the pandemic, with a fresh wave of anger sparked by a deadly fire in the country's far west.

The fire on Thursday that killed 10 people in a high-rise building in Urumqi, capital of the Xinjiang region, has sparked widespread public anger. Many internet users surmised that residents could not escape in time because the building was partially locked down, which city officials denied. The fire has fuelled a wave of civil disobedience unprecedented in mainland China since Xi Jinping assumed power a decade ago.

In Shanghai, China's most populous city, residents gathered on Saturday night at Wulumuqi Road - which is named after Urumqi - for a candlelight vigil that turned into a protest in the early hours of Sunday.

As a large group of police looked on, the crowd held up blank sheets of paper - a protest symbol against censorship. Later on, they shouted, “lift lockdown for Urumqi, lift lockdown for Xinjiang, lift lockdown for all of China”, according to a video circulated on social media.

At another point a large group began shouting, “Down with the Chinese Communist Party, down with Xi Jinping", according to witnesses and videos, in a rare public protest against the country's leadership.

The police tried at times to break up the crowd.

Beijing is adhering to a zero-COVID policy even while much of the world tries to coexist with the coronavirus. While low by global standards, China's cases have hit record highs for days, with nearly 40,000 new infections reported on Sunday for the previous day.

China defends Xi's signature zero-COVID policy as life-saving and necessary to prevent overwhelming the healthcare system. Officials have vowed to continue with it despite the growing public pushback and its mounting toll on the world's second-biggest economy.

Widespread public protest is extremely rare in China, where room for dissent has been all-but eliminated under Xi, forcing citizens mostly to vent on social media, where they play cat-and-mouse with censors.

Frustration is boiling just over a month after Xi secured a third term at the helm of China's Communist Party.

"This will put serious pressure on the party to respond. There is a good chance that one response will be repression, and they will arrest and prosecute some protesters," said Dan Mattingly, assistant Professor of political science at Yale University.

Still, he said, the unrest is far from approaching that seen in 1989, when protests across the country culminated in the bloody crackdown in Tiananmen Square.

"Popular sentiment matters," he said. "But as long as there is no split in the elite and as long the PLA (People's Liberation Army) and security services remain on his side he does not face any meaningful risk to his hold on power."

The next few weeks could be China's worst since the early weeks of the pandemic for the economy and the healthcare system, Mark Williams of Capital Economics said in note last week, as containing the outbreak will require additional lockdowns.

In the northwestern city of Lanzhou, residents on Saturday upturned COVID staff tents and smashed testing booths, posts widely shared on social media showed. Protesters said they were put under lockdown even though no one had tested positive.

Videos from Shanghai showed crowds facing police and chanting “Serve the people”, “We want freedom", and “We don’t want health codes”, a reference to the mobile phone apps that must be scanned for entry into public places across China.

The city's 25 million people were put under lockdown for two months earlier this year, an ordeal that provoked anger and protests.

Chinese authorities have since then sought to be more targeted in their COVID curbs, an effort that has been challenged by the surge in infections as the country faces its first winter with the highly transmissible Omicron variant.

On Friday night, crowds took to the streets of Urumqi, chanting "End the lockdown" and pumping their fists in the air after the fire, according to videos on social media.

Many of Urumqi's 4 million residents have been under some of the country's longest lockdowns, barred from leaving their homes for as long as 100 days.

In Beijing, 2,700 km (1,700 miles) away, some residents under lockdown staged small protests or confronted local officials on Saturday over movement restrictions, with some successfully pressuring them into lifting the curbs ahead of a schedule.

A video shared with Reuters showed Beijing residents marching in an unidentifiable part of the capital on Saturday, shouting "End the lockdown"

 

 

 

US creating make or break situation for Iran

United States and its allies across the globe are struggling to support protesters in Iran in what observers say is a make-or-break moment that could tip the scales for regime change in Tehran.  

US President, Joe Biden said in early November that “we’re gonna free Iran. They’re gonna free themselves pretty soon.”  

But outside experts say US policy focused on diplomacy with Tehran over its nuclear program, and the disunity within and outside Iran, puts the favor in the hands of the nation’s current government.  

“The problem is not only the foreign policy decisions of the US. There’s no united front on the end of the protest movement, there is no leadership,” said Ceng Sagnic, Chief Analyst of TAM-C Solutions, a multinational private intelligence company. 

Iran’s leaders have attempted to brutally suppress demonstrators that originally took to the streets protesting the death of Mahsa Amini, after she died in custody of the country’s morality police. Amini was detained for allegedly wearing her headscarf incorrectly.

Since then, protests have grown to include calls for the downfall of the country’s Islamic rulers. 

At least 14,000 people are reported to have been arrested and hundreds are believed to have died in the demonstrations, including dozens of children. The youngest victim is believed to be nine years old.  

“The Iranian government and the regime as a whole have the potential power to suppress the protest movement,” Sagnic said.  

US Special Envoy for Iran, Rob Malley reacted to a recent CNN investigation saying that it documented unspeakable acts of sexual violence by Iranian officials in detention centers. 

“It’s a reminder of what is at stake for the Iranian people – and of the lengths to which the regime will go in its futile attempt to silence dissent,” he tweeted. 

The US, European Union and United Kingdom have imposed sanctions on individuals and entities they have identified as responsible for the violent crackdown on protesters. They’ve sought to ease restrictions on internet access to aid protesters who have had their service cut off. 

Member-states of the United Nations are looking for ways to condemn and isolate the Islamic Republic, the ruling government of which came to power in 1979 following a revolution. Outside Iran, individuals are working to maintain support for the protesters globally.  

The Iranian national soccer team stayed silent when their national anthem played at the World Cup in Qatar, widely viewed as a sign of support for the protesters. Solidarity protests in Berlin, Los Angeles and Washington, DC, last month brought together tens of thousands of the Iranian diaspora and their supporters. 

Shayda Gangi, an Iranian American living in DC, helped launch an exhibit in Georgetown displaying protest art created over the past two months in an effort to keep attention on the struggle of the people of Iran.  

“All these articles being written, all the people who come to these exhibits, and showcase this work, is so important and it’s doing what it’s supposed to do, which is to raise awareness and keep the spotlight on Iran,” she told The Hill.  

The exhibit, which ran for three days, featured more than 100 pieces from artists all over the world, including Iranians living abroad, Italian and Israeli artists, and at least one artist from inside Iran, who sent her work with great secrecy, quickly deleting communication and even blocking the organizers at one point as a security precaution, Gangi said.  

“I tried to put myself in her shoes and think, ‘would I do the same thing?’” Gangi said. “And I don’t know. She was scared and is in Iran, and it’s dangerous, but even with all of that, she was so happy to contribute to this event, and to do what she could do and to send her artwork to be shown.” 

Sherry Hakimi, an Iranian American activist and founder and executive director of a nonprofit focused on gender equality, was one of five Iranian women invited to meet with Secretary of State Antony Blinken and other top State Department officials in October to offer their advice on how the US could best support protesters.  

“I appreciate that senior US leaders have been listening to the calls made by Iranians and Iranian Americans alike,” she told The Hill, but said governments need to be more innovative in how they think about aiding the protesters.  

“These are unprecedented times – this is the first female-led revolution – so meeting the moment requires unprecedented measures.” 

Hakimi said that on top of sanctions and efforts to hold the Islamic Republic accountable at the United Nations, countries should focus on providing health care assistance because injured protesters risk arrest if they seek care at a hospital.  

“I want to see more health care-focused aid being sent to Iran, whether that’s through the Red Cross, Doctors Without Borders, or some other organization or mechanism.

There are parts of Iran where people are no longer able to seek treatment, because the regime has made it impossible — either hospitals won’t treat them or if they do go to a hospital they can risk arrest, which makes things worse,” she said.  

“To me, that seems like one of the most basic things.” 

Human rights groups and news reports have documented accounts from protesters that they are avoiding hospitals for fear of arrest from security forces, and that the Iranian government is using ambulances to infiltrate protests and detain demonstrators.  

The danger for protesters seeking medical help was echoed by Cameron Khansarinia, Policy Director for the nonprofit and nonpartisan National Union for Democracy in Iran (NUFDI), which also helped sponsor the art exhibit in Georgetown.  

“Protesting in Iran is not like protesting in any other country,” he said, referencing the extreme tactics of targeting protesters, the use of live ammunition, detentions, allegations of torture and killings.  

NUFDI is advocating for the US and other governments to explore setting up a “strike fund” to distribute the Islamic Republic’s frozen assets abroad among protesters who have their livelihoods threatened by the government.  

“So providing, at least, a small modicum of financial support to allow these workers to go on strike and allow their families to have bread at the end of the day … are very tangible means by which a foreign government could empower the Iranian people,” he said, calling for governments to devise a “mechanism” to deliver such cash.   

Khansarinia, like others interviewed for this article, described the protests as unprecedented for their massive scale in the face of extreme violence by security authorities.   

The Norway-based Iran Human Rights organization has documented at least 416 people killed, and that includes 51 children. The rights group is also pointing to the government systematically and disproportionately targeting minorities in Iran, in particular in the Baluch and Kurdish ethnic regions. 

The tactic is aimed at seeking to delegitimize the protests as an ethnic, separatist movement, private intelligence analyst Sagnic said. 

“By increasing the oppression in the Kurdish areas, violent tactics, striking Kurdish Peshmerga bases in Iraq, trying to make it more an ethnic issue, something that separates Kurdish groups from the rest of Iran, which is a successful tactic, to be honest,” he said.  

Gangi, who helped organize the Georgetown art exhibit, said that she feels this moment is different because of the scale of support from the international community. 

“This is by far, in my personal experience following these things throughout the years, this is the first time I’ve seen this much support from not just the Iranian community and not just within Iran, but the global community,” she said.   

“With what they’re doing within Iran, with the internet shutdowns, and all the violence — what we’re seeing outside is a small percentage of what’s happening there. I would really just ask everyone to continue to do what they’re doing, and keep the light on, on Iran.” 

 

EU Countries Lambast Gas Price Cap Proposal

European Union Energy Ministers locked horns on Thursday over a proposed gas price cap at 275 euros per megawatt hour (MWh), grappling over its effectiveness at that level and the impact on supplies and incentives to cut consumption.

The long-standing disagreements were holding up other policies to alleviate the acute energy crisis, such as the launch of joint EU gas purchases and a quicker permit process for renewables.

Diplomats said the 27 EU countries agreed on these two in principle but delayed formal approval until another meeting called for December 13, 2022 with proponents of a cap demanding a green light for all three proposals or none at all.

Polish Climate Minister Anna Moskwa called the 275 euro blueprint put forward by the European Commission a joke.

Belgium's Energy Minister Tinne Van der Straeten also chimed in, telling reporters, "The text that is on the table is unsatisfactory ... it doesn't clearly say if it will have an effect on prices."

Their Greek counterpart, Konstantinos Skrekas said a cap of 150-200 euros/MWh would be realistic.

"It could help us reduce gas prices and therefore reduce electricity prices, which is a major challenge in Europe this winter," he said.

Malta was also unhappy with the proposed ceiling. Energy minister Miriam Dalli said the strict conditions needed for the mechanism to kick in made it "next to impossible".

As many as 15 EU states want a set limit to contain energy costs after gas prices soared to record highs in August 2022, driven up by Russia cutting supplies to Europe in the wake of Western sanctions over Moscow's war against Ukraine.

But stiff opposition comes from a smaller but powerful camp led by Germany, the EU's biggest economy. Together with the Netherlands, Sweden, Austria and Finland, they say a cap could shift supply elsewhere and cut incentives to lower consumption.

The Commission proposed to limit the front-month price on the Netherlands' Title Transfer Facility (TTF) gas exchange if it exceeds 275 euros/MWh for two weeks and if the price is more than 58 euros higher from a liquefied natural gas (LNG) global reference for 10 consecutive trading days.

Dutch minister Rob Jetten was highly critical of the plan.

"The proposal is flawed," he said. "There is a lot of risk for damaging the energy security of supply, and also for stability of the financial markets."

German state secretary for climate, Sven Giegold, added, "We still have a lot of work to do."

The Estonian minister was the only one to say the plan was OK, pretty much as a temporary measure and only to address extreme price increases rather than a permanent solution.

The EU has approved a series of measures to mitigate the crisis in recent months, ranging from consumption savings to windfall taxes to claw back profits from energy producers. But the issue of whether and how to cap gas prices has split the bloc.

Ukraine's energy minister was also due to dial in, according to an EU diplomat, to discuss support for his country where the Russian war destroyed civilian infrastructure and incapacitated power and heating systems as winter cold sets in.

 

 

Ghana to buy oil with gold instead of US dollar

Ghana's government is working on a new policy to buy oil products with gold rather than US dollars, Vice-President Mahamudu Bawumia said on Facebook on Thursday.

The move is meant to tackle dwindling foreign currency reserves coupled with demand for dollars by oil importers, which is weakening the local cedi and increasing living costs.

Ghana's Gross International Reserves stood at around US$6.6 billion at the end of September 2022, equating to less than three months of imports cover. That is down from around US$9.7 billion at the end of last year, according to the government.

“If implemented as planned for the first quarter of 2023, the new policy will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency," Bawumia said.

Using gold would prevent the exchange rate from directly impacting fuel or utility prices as domestic sellers would no longer need foreign exchange to import oil products, he explained.

"The barter of gold for oil represents a major structural change," he added.

The proposed policy is uncommon. While countries sometimes trade oil for other goods or commodities, such deals typically involve an oil-producing nation receiving non-oil goods rather than the opposite.

Ghana produces crude oil but it has relied on imports for refined oil products since its only refinery shut down after an explosion in 2017.

Bawumia's announcement was posted as Finance Minister Ken Ofori-Atta announced measures to cut spending and boost revenues in a bid to tackle a spiraling debt crisis.

In a 2023 budget presentation to parliament on Thursday, Ofori-Atta warned the West African nation was at high risk of debt distress and that the cedi's depreciation was seriously affecting Ghana's ability to manage its public debt.

The government is negotiating a relief package with the International Monetary Fund as the cocoa, gold and oil-producing nation faces its worst economic crisis in a generation.

 

Pakistan Stock Exchange benchmark index closes flat

The uncertainty stemming from the appointment of the next Chief of Army Staff kept Pakistan Stock Exchange under pressure during the week ended on November 25, 2022. The benchmark index ended the week at 42,937, posting 0.48%WoW gain.

Participation in the market remained lackluster, with daily average trading volume at 159.58 million shares, as compared to 186.3 million shares traded in the earlier week.

All eyes had been on the Monetary Policy announcement scheduled for Friday; the State Bank of Pakistan (SBP) decided to increase the policy rate 100bps to 16%.

Other major news flows during the week were: 1) Pakistan’s foreign exchange reserves declined by
US$134 million to US$7.8 billion, 2) fertilizer offtakes plunged by 50.3%YoY in October, 2022, 3) revenue collection target for December 2022 set at PKR 965 billion, 4) FDI dropped 52% to US$348 million during first four months of current financial year, 5) World Bank approved soft loan of US$200 million for Pakistan for green project, 6) Credit default swap shoots up to 92.53% on political unrest and 7) SBP failed in setting up US$400 million oil fund.

The top performing sectors were: Jute, Technology & Communication and Transport, while the least favorite sectors were: Power generation & distribution, Vanaspati & Allied Industries and Cable & Electrical.

Stock-wise, top performers were: INDU, SYS, ENGRO, DAWH and PSEL, while laggards included: HUBC, MUREB, FCEPL, FATIMA and KEL.

Flow wise, Individuals were major buyers with net buy of US$4.8 million, followed by Foreign Investors (US$1.1 million), while Mutual Funds were major sellers during the week, with a net sell of US$2.8 million. Insurance continued to be a seller, with a net sell of US$1.4 million during the week.

The market is expected to remain range-bound in the near future. The 100bps increase in policy rate announced on Friday does not bode well and likely to dampen the outlook for equity markets.

Furthermore, the upcoming maturity of the International
Sukuk of US$1 billion will be in focus, with a positive outcome possibly restoring sentiment regarding Pakistan's external position that would follow the same.

Any development regarding the 9th review by the IMF would remain in the limelight. The market could come under further pressure due to political uncertainty from the continuing long march slated to reach Rawalpindi by November 26, 2022.

Analysts advise clients to stay cautious while building new positions in the market.

US bans Huawei, ZTE equipment sales

According to Reuters, the Biden administration has banned approvals of new telecommunications equipment from China's Huawei Technologies and ZTE because they pose an unacceptable risk to US national security.

The US Federal Communications Commission said on Friday it had adopted the final rules, which also bar the sale or import of equipment made by Chinese surveillance equipment maker Dahua Technology Co, video surveillance firm Hangzhou Hikvision Digital Technology Co and telecoms firm Hytera Communications Corp.

The move represents Washington's latest crackdown on the Chinese tech giants amid fears that Beijing could use them to spy on Americans.

"These new rules are an important part of our ongoing actions to protect the American people from national security threats involving telecommunications," FCC Chairwoman Jessica Rosenworcel said in a statement.

Huawei declined to comment. ZTE, Dahua, Hytera and the Chinese embassy in Washington did not immediately respond to requests for comment.

Hikvision said in a statement that its products don't threaten US security.

"This decision by the FCC will do nothing to protect US national security, but will do a great deal to make it more harmful and more expensive for US small businesses, local authorities, school districts, and individual consumers to protect themselves, their homes, businesses and property," Hikvision said, adding that it will continue to serve US customers in full compliance with US regulations.

Rosenworcel circulated the proposed measure, which effectively bars the firms from selling new equipment in the United States, to the other three commissioners for final approval last month.

The FCC said in June 2021 it was considering banning all equipment authorizations for all companies on the covered list.

That came after a March 2021 designation of five Chinese companies on the so-called covered list as posing a threat to national security under a 2019 law aimed at protecting US communications networks: Huawei, ZTE, Hytera Communications Corp Hikvision and Dahua.

All four commissioners at the agency, including two Republicans and two Democrats, supported Friday's move. The agency said it has authority to revoke prior authorizations, but declined to do so.

 

 

 

Poland seeking German support to sanction Russian Druzhba oil pipeline

According to a Reuters Report, Poland is seeking German support to slap EU sanctions on the Polish-German section of the Druzhba crude pipeline so Warsaw can abandon a deal to buy Russian oil next year without paying penalties.

The sources also said the pair was nearing an agreement for Poland to coordinate seaborne oil supplies to Germany via Gdansk and part of Druzhba to facilitate Poland's purchase of the Russian-owned Schwedt refinery in Germany.

The EU has pledged to stop buying Russian oil via maritime routes from December 05, 2022, but Druzhba is currently exempt from sanctions. That presents a problem for Polish refiner PKN Orlen, which has a long-term deal to purchase Russian oil via the pipeline and would need to pay penalties to break the contract.

If the EU were to impose sanctions on Druzhba - or at least its northern section supplying Poland and Germany - both countries would be able to get out of their Russian oil importing commitments penalty-free.

The southern section of the pipeline supplies Hungary, Slovakia and the Czech Republic which, unlike Poland and Germany, would struggle to diversify their oil imports.

According to the sources, the Polish climate ministry and German economy ministry are in the final stage of talks on a memorandum of understanding on oil logistics, which could unlock non-Russian flows and help Poland's top refiner pursue its interest in Schwedt.

Germany remains committed to not using Russian oil from 2023 and is working on a solution with Poland to secure the supply of Schwedt, a spokeswoman for the economy ministry in Berlin said on Friday.

Meeting pledges by Poland and Germany to stop buying Russian oil requires regulation at the EU level and both countries are cooperating to achieve this, the Polish climate ministry said on Friday.

Germany has put Schwedt under a six month trusteeship, stopping short of nationalising the refinery, and is seeking ways to supply it with oil.

Poland and Germany promised in spring to try to end Russian oil imports via Druzhba's northern leg by the end of year but Orlen remains tied to its contract with Russian oil and gas company Tatneft.

The Polish refiner has nominated supplies for Druzhba for 2023 as stipulated by the contract but these would stop if the pipeline was hit by sanctions, one of the sources said.

Orlen declined to comment on Friday.

The company has already cut its reliance on Russian oil to 30% of its requirement, replacing it with deliveries from Saudi Arabia and Norway among others.

Kommersant newspaper reported earlier this month that Orlen had submitted an application to the Russian oil pipeline operator Transneft for the supply of 3 million tonnes of oil to Poland through Druzhba in 2023.

Control over Schwedt, which also supplies western Poland, would boost Orlen's refining capacity and control over the flows of oil and its products in the region with assets in Poland, Czech Republic, Lithuania and Germany.

 

 

 

OGDC: Takeaways from FY22 Analyst Briefing

Pakistan’s largest exploration and production company; Oil & Gas Development Company Limited (OGDCL), held its analyst briefing earlier, wherein the following was discussed:

The Company has posted the highest quarterly profit after tax of PKR53.3 billion (EPS: PKR12.4) for 1QFY23, higher by 145%QoQ and 58.5%YoY basis.

Major projects during the year were: Discovery in Wali block with cumulative potential of 219bcf gas and 13 million bbl oil and exploration and appraisal activities at Abu-Dhabi offshore block 5.

Other developments during the year included: company entering into a framework agreement with the Government of Pakistan, provincial government of Baluchistan, GHPL, PPL and Barrick Gold Corporation for extraction of gold and copper reserves from Reko Diq.

As per company presentation, OGDCL holds 87,300 square km of exploration coverage with total of 57/111 exploration/development licenses, respectively.

Province wise concession shares are: KPK 19%, Sindh 21%, Punjab 21% and 39% Baluchistan.

Seismic survey acquisition during the last six fiscal years was 15,380 Line km of 2D and 3,766 sq. km of 3D portraying.

OGDCL’s share in total industry stood at 80% 2D and 31%3D surveys. Finally, OGDCL’s share in gross production works out at 23%, with industry’s total production at 73,400 bpd as on June 2022.

According to management, average natural decline rate of major oil fields stands at 16% (5-year average). Although, the said decline rate has been arrested to 6-8% more recently with the help of workovers and development wells etc.

Industry’s net gas production stood at 3,390mmcfd (OGDCL share 29%) during FY22. Natural depletion rate stands at 8% for major fields (Mela, Nashpa, Kunnar Pasakhi Deep etc.), but has been arrested at 5% by the company through workovers and development wells etc.

Management stated that Reko Diq project is a stepping stone for the diversification strategy company is trying to achieve. Company is also trying to move into power and other energy projects as well.

LNG trade faces unprecedented times

According to Seatrade Maritime News, LNG shipping is seeing exceptional strength, already fueled by geopolitical vagaries, and with the impact of winter weather patterns yet to be determined.

The sector received considerable emphasis at Marine Money’s mid-November Ship Finance Forum, held in midtown New York.

Mike Tusiani, Poten & Partner’s Chairman Emeritus, in introducing the day’s kick-off panel, described the present situation as an unprecedented time in the LNG trades.

His colleague at Poten, Jefferson Clarke, talked about “ton time” having supplanted ton miles as the operative metric in explaining LNG shipping’s rise.

He said that commodity prices are driving the flows of LNG; in short, it gives the incentive for charterers to hold on to tonnage…and not get access to tonnage.

He explained that vessel charterers have been moving vigorously into the term market, and explicitly linked high LNG prices with demand for term charters.

Though media headlines within the mainstream and trade press have pointed to charter hires for high end LNG carriers at US$400,000 per day or more, spot fixtures are actually few and far between.

Oystein Kalleklev, CEO of Flex LNG said, after reviewing fixture lists, that he could only find two spot fixtures done in November.

On a shipowner panel later in the day, Kalleklev opined that LNG shipping is like a liner trade in contrast to more spot-oriented commodity sectors, including VLGC/ LPG transporter Avance Gas, where he is Executive Chairman.

On that same panel, he described the FLNG strategy, if he were taking delivery of a hypothetical new vessel, as “fix it out, finance it, and pay a hell of a lot of dividends.”

He described one year time charters as being in the US$200,000 per day range with three-year deals drawing around US$170,000 per day but added that there will be volatility.

In the earlier panel, he indicated a preference for a strategy of fixing FLNG’s vessels on term business when they come off existing charters, rather than expanding the fleet with expensive newbuilds.

Kalleklev attributed strength in the markets to waiting and delays, which effectively reduce available supply, in explaining the market’s dynamics. In LNG trades, he explained that “ton time has mitigated the downturn in ton miles.

People are waiting more, people are deploying floating storage. One component of the potential volatility awaiting market participants this time around might be unwinding of such storage if the present contango structure LNG pricing was to flatten out.

He noted that a precipitous market fall in late 2018 had been brought about by a previous instance of floating storage being unwound.

 

 

 

US may save itself, but destroy others

The United States hopes to save itself by destroying others, rather than solving its own problems by managing and controlling crises. The US has created many crises in its relations with China. If they're not properly dealt with, not only China, but also the US itself will suffer, and the latter will suffer more.

Some elites in Washington make no attempt to improve themselves when facing competition with China and dealing with domestic woes, instead, they dedicate themselves to taking China down through committing sabotage.

Former US Treasury Secretary Lawrence Summers warned US policymakers to focus on building the country's own economic strengths in its contest with China, rather than attacking its adversary.

"If we change our focus from building ourselves up to tearing China down, I think we will be making a very risky and very unfortunate choice," he was quoted as saying, according to Bloomberg's report.

The primary reason why Washington focuses on "tearing China down," rather than concentrate on its own innovation, infrastructure, education and challenges lies in the US political system's structural contradictions.

The US is now trapped in conundrums such as the loss of manufacturing capability, the hollowing out of local industries, and the asymmetric distribution of benefits from global trade among different groups in the country. For the US, the top capitalist country, the excessive expansion of financial capital will inevitably lead to the emergence of the above mentioned problems.

If the US wants to improve itself as Summers suggested, it must overcome the constraints of its system and carry out domestic reforms to curb the excessive expansion of financial capital, implement a fairer tax policy, and manage the wide income distribution gap between different groups. It also needs to plan and guide national innovation through policies so as to enhance the creativity and competitiveness of the country. However, unless the US becomes a socialist country, these are difficult to accomplish under its existing capitalist framework, Shen Yi, a professor at the School of International Relations and Public Affairs of Fudan University, told the Global Times.

In addition, reforms require short-term costs, but under the current US system with political parties facing pressure of winning more votes in the elections, any reforms demanding short-term costs cannot be implemented in the US unless the two parties reach a consensus," said Shen.

The simpler solution, for both parties, is to "hoax" the American public that the US has been running smoothly and that the main obstacle for US' development is because of a "bad" country. Both Republicans and their Democratic counterparts claim that they can help deal with the "bad" country if elected, so as to solve their current predicament. To win the election, the two parties have been intensifying their steps to contain China.

As a matter of fact, there is nothing complicated about what is the proper solution for the US, and many elites, including Summers, are fully aware of it. Shen noted that the US seems to stay in a paralysis state, under which the brain is actually sober, but the body cannot operate according to people's thoughts.

This is how Washington's strategic anxiety in terms of China policy has been formulated. In this context, decision-makers have been given some absurd advice, with strong gambling and speculative mentality.

Furthermore, US term of office and election determine that the government has very limited time to carry out practical policies, as much time is spent on election and buck-passing. Such a nature of US political games also determines that Washington has little time to make remarkable changes.

Only when the entire US reaches a new consensus, realizing that US problems do not lie in China, but the US itself, can the US make fundamental changes on its China policy. Until that day comes, what Summers proposed will not take place.