India leads world in cutting internet access for 5th year in a row

India imposed by far the highest number of internet shutdowns in the world in 2022, internet advocacy watchdog Access Now said on Tuesday, as the country topped the list for the fifth successive year.

Out of 187 internet shutdowns globally recorded by Access Now, 84 took place in India, including 49 in Indian- administered Kashmir, the New York-based digital rights advocacy group said in a report published on Tuesday.

"Authorities disrupted internet access at least 49 times in Kashmir due to political instability and violence, including a string of 16 back-to-back orders for three-day-long curfew-style shutdowns in January and February 2022," the watchdog report added.

Kashmir has long been a flashpoint between India and archrival Pakistan, which claim the region in full but rule only parts.

In August 2019, the Hindu nationalist Bharatiya Janata Party government led by Prime Minister Narendra Modi scrapped the autonomy of the Muslim-majority state of Jammu and Kashmir, splitting it into two federally administered territories.

The government has since regularly imposed communications restrictions on the region on security grounds, which rights groups have condemned and described as measures to quash dissent.

Militants have battled India's rule in Kashmir for more than three decades. The South Asian country blames Pakistan for stoking the revolt. Islamabad denies the claims.

Although India once again led the world in internet shutdowns, 2022 marked the first time since 2017 that there were fewer than 100 shutdowns in the country, the watchdog said.

Ukraine was second on the list, with the Russian military cutting access to the internet at least 22 times after Russia invaded Ukraine on February 24 last year.

"During Russia's full-scale invasion of Ukraine, the Russian military cut internet access at least 22 times, engaging in cyberattacks and deliberately destroying telecommunications infrastructure," the watchdog said in its report.

Ukraine was followed on the list by Iran where authorities imposed 18 internet shutdowns in 2022 in response to demonstrations against the government.

Nationwide anti-government protests erupted in Iran last fall after the death of 22-year-old Kurdish Iranian woman Mahsa Amini in police custody on September 16, last year. Amini was arrested in Tehran by the morality police for flouting the hijab rules, which require women to entirely cover their hair and bodies. She died while in custody.

 

Pakistan: Monetary Policy or Mockery

State Bank of Pakistan (SBP) was scheduled to announce Monetary Policy on March 16, 2023. However, on February 28, the central bank announced to hold meeting of Monetary Policy Committee on March 02. The central bank is likely to hike the interest rate by 200 to 300 bps.

While this may have surprised some people, many say it was much anticipated. They say since SBP and Finance Ministry plan to hold a big auction on March 08, 2023. The Banks faced a few challenges, worst being lack of clarity on the interest rate.

It was feared that if the Monetary Policy is not announced before the auction, the banks will participate at much higher than the previous cutoff levels.

If the Banks participate at or around the previous cutoff levels and the SBP raises interest rates higher than the market expectations of 200bps, the carry on the T-bills will be negative as SBP will have to hold OMO at higher levels.

It appears that the Government of Pakistan is adamant at rising interest to curb inflation as per IMF mantra. However, it is necessary to say that after the proposed hike the paying interest rate for the GoP on its borrowing would become unsustainable, inflation would spike to new highs and businesses would witness further erosion in their competitiveness – leading to further fall in exports.

It is also necessary to reiterate that the steps being taken on the behest of IMF would take Pakistan closer to default. One wonders, why the present economic managers have not been able to come up with their homegrown plan to pull Pakistan out of the current malice.

Failure on the part of economic managers to tax the rich, as advised by the chief of IMF, suggests that the rulers wish to prolong their ‘honeymoon’ and let the Pakistanis face all the adversaries.

 

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Pakistan: What should be the facets of New Refining Policy?

There can’t be two opinions about need for boosting crude oil refining capacity in Pakistan. However, analysts are of the consensus that the issue is complicated, policy makers and players are not on the same page, presence of pressure groups and above all there is an acute shortage of foreign exchange. As a result announcement of new Refining Policy has been lingering on, eroding paltry foreign exchange reserves of the country.

Lately, the government has asked local refineries to overcome the likely shortfall of 8,000 tons of petrol in the country. This clearly indicates that the concerned departments were unaware of the factors responsible for the shortfall: 1) delay in opening of L/Cs due to the limited availability of the foreign exchange and 2) overflowing furnace oil storage tanks of the refineries.

The government has been emphasizing local refineries to further up-grade their plants for producing Euro-V specification fuels and minimizing production of furnace oil, however it requires capital investment of around US$5 billion.

Analysts also say that for up-gradation of refineries that included setting up of Diesel HydroDesulfurization (DHDs) to reduce Sulphur from diesel and isomerization plants for enhancing the production of Motor Spirit (Petrol).

This would require refineries to arrange funding from either their own resources and or borrowing from lenders at commercial terms. To obtain the required funding, refineries will have to improve their balance sheet, according to sources. 

At present 8 refineries are operating in the country which have not been able to perform well. These refineries have not been able to utilize full capacity mainly due to low margins, liquidity issues, low fuel grade, low domestic crude oil production and high cost of production.

The aggregate installed capacity of the refining sector is around 22 million tons per year. In 2021 these refineries refined around 12 million tons, which puts capacity utilization around t 55%.          

Mainly these refineries produce Motor Sprit, Kerosene, HSD and Furnace oil. They also produce HOBC, LDO, Aviation Fuels, Naphtha, Refinery Gas, LPG, Lube-Oil, Asphaly, Wax, Sulphur and various other non-energy products. 

Furnace oil is being produced in large quantities. However, due to it being a high cost source for power generation its consumption has gone down drastically which has piled up its inventories as exporting furnace oil has been a challenge for the refineries. 

Sector experts suggest that the upcoming refining policy must incentivize existing players to upgrade their facilities to allow them to produce international quality standard products in turn opening up avenues for exports. This will also reduce furnace oil production which will increase profitability of the whole sector due to high margins of MS and HSD. 

It seems that policy planers are keen in the creation of new refinery that will require approximately US$15 billion. However, sponsors demand more incentives that would put the existing refineries at a disadvantage.

Refineries are regulated by Oil & Gas Regulatory Authority (OGRA) under Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules, 2016. Setting up an oil refinery is a highly capital-intensive Project. Going for a secondhand refinery is a not advisable as a refinery comprises of extensive net of pipelines and once refinery shuts down than for long (other than a planned yearly shut down) most of the pipelines are required to be replaced.

The Country can learn from the experience of Cynergico (BYCO) in this regard. The unit even after 8 years of its implementation is the least efficient among all refineries in Pakistan.

The way forward is that the GoP should come up a short term policy that will cover debottlenecking of processes and Balancing, Modernization & Reconstruction (BMR) of existing refineries to make them more efficient in terms of capacity utilization.

The product composition of Refineries should be such that the Country will be importing cheaper products (like crude oil and furnace oil) and producing more of expensive products (like Motor spirit and high speed diesel.

Long term plan comprises of construction of at least one Refinery in next five years with a minimum refining capacity of 50,000 barrel/day extendable to 100,000 barrel/per day in 10 years.

The field of energy and petroleum is highly specialized, and its policy makers should also be properly educated, knowledgeable and experienced to judge the implications of any Policy Review.

The problem is that Ministry of Energy & Petroleum comprises of decision makers who cannot grasp the whole implications because they are more trained in management than the business.

This weakness pushes them to call for advice from consultants on every implication which may spread into various sub implications. The Opinion of each consultant may vary from each other so much that the decision makers try to just pass the time instead of taking a decision.

The same phenomena are with the cabinets and their heads who understand least of the sector and often failed to defend a decision as they can’t comprehend the implication of a policy review at decision time, nor any body give them confidence over a decision.

The multinationals, international suppliers/ traders and local operators engaged in the country in selling of energy / petroleum do also take the advantage of ignorance of decision makers at Ministry and Cabinet level and try to influence the decisions to their own respective advantage. During the process the country suffers and the custodian of country benefits has least of required knowledge.

 

 

 

 

 

 

 

 

US oil drilling on decline in response to lower prices

In United States, oil drilling activity has begun to decline in response to the downturn in prices since the middle of 2022. This will lead to lower production growth throughout the rest of 2023 and into 2024.

The number of rigs drilling for oil fell to 600 in the week ending on February 24, down from a recent peak of 627 in the week ending on December 02, 2022 oilfield services company Baker Hughes found.

The rig count has declined in five of the eight most recent weeks and is at the lowest level since the start of July 2022.

The acceleration of drilling activity that started in August 2020 after the first wave of the pandemic appears to have paused or possibly ended.

Over the last three decades, changes in the rig count have generally followed changes in front-month WTI futures prices with an average lag of about 4-5 months (roughly 19 weeks).

When prices rise, delays reflect the time needed to confirm a change in price level is persistent rather than temporary, contract extra rigs, move them to the drill site, erect the equipment, and begin boring.

When prices fall, the lag reflects time needed to confirm the trend, finish part-drilled wells, drill wells already under contract, and idle unneeded rigs.

The number of rigs drilling for oil peaked in late November 2022, roughly 25 weeks after prices peaked, slightly longer than average.

Since June 2022, prices have generally retreated, which has been reflected in a gradual turnover in drilling activity rates.

Prices are roughly 15% below year-ago levels and still trending lower, implying drilling is likely to continue falling through end of June 2023.

Once drilling is finished, there is a further delay of six months on average for casing, pressure pumping, installation of surface equipment, flow testing, linking up to the pipeline network and entering commercial production.

The current slowdown in drilling is therefore likely to reduce production growth through the end of 2023 and probably into 2024.

The Energy Information Administration (EIA) forecasts US production will be only 340,000 barrels per day (2.7%) higher in December 2023 than it was in December 2022.

If this forecast is realized, growth will have halved from 660,000 barrels per day (5.8%) in December 2022 compared with December 2021.

Growth would be just one-sixth of what it was at the height of the second shale drilling boom in 2018, marking the end of the shale revolution.

Slower growth in US production will reduce any accumulation of crude inventories, even if the global economy slows this year, and restrict the potential for non-inflationary growth in the remainder of 2023 and 2024.

 

Zelensky thanks Saudi Arabia for support

Saudi Arabia and Ukraine signed an agreement and a memorandum of understanding (MoU) for the provision of humanitarian aid, amounting to US$400 million, to the war-stricken European country.

This is in implementation of the pledge made by Crown Prince and Prime Minister Mohammed Bin Salman during his phone call with Ukrainian President Volodymyr Zelensky in October 2022 with regard to the provision of an additional humanitarian aid package to Ukraine.

The ceremony of signing the pacts was held on the occasion of the visit of Saudi Foreign Minister Prince Faisal Bin Farhan to Ukraine and his meeting with Zelenskyy.

Prince Faisal Bin Farhan and Director of the Office of the Ukrainian President Andriy Yermak attended the signing ceremony of the agreement and MoU between the Kingdom and Ukraine, with a value of up to US$400 million.

The agreement includes a joint cooperation program to provide humanitarian aid from the Kingdom to Ukraine, amounting to US$100 million.

The agreement was signed by Advisor at the Royal Court and General Supervisor of the King Salman Humanitarian Aid and Relief Center (KSRelief) Dr. Abdullah Al-Rabeeah and Deputy Prime Minister for Restoration of Ukraine – Minister for Communities, Territories and Infrastructure Development of Ukraine Oleksandr Kubrakov.

The MoU also includes financing oil derivatives worth US$300 million as a grant from the government of Saudi Arabia through the Saudi Fund for Development in favor of Ukraine.

Earlier, Zelensky received Prince Faisal and his accompanying delegation at the presidential residence in the capital city. At the outset of the meeting, Prince Faisal conveyed the greetings of Custodian of the

Two Holy Mosques King Salman and the Crown Prince to the president, the government, and the people of Ukraine.

Zelensky conveyed his greetings and appreciation to King Salman, Crown Prince Mohammed bin Salman, and the government and people of Saudi Arabia.

During the reception, they reviewed the bilateral relations between the two countries and ways to further promote them. They also discussed a number of regional and international issues of common concern.

The foreign minister reiterated the Kingdom’s keenness and support for all international efforts aimed at resolving the Ukrainian-Russian crisis politically, and the continuation of its efforts to contribute to mitigating the humanitarian effects resulting from it.

The reception was attended by Dr. Abdullah Al-Rabeeah, CEO of the Saudi Fund for Development Sultan Al-Murshed, Saudi Ambassador to Ukraine Muhammad Al-Jabreen, and Director General of the Office of the Foreign Minister Abdul Rahman Al-Daoud.

Prince Faisal also met with the Minister of Foreign Affairs of Ukraine Dmytro Kuleba. During the meeting, they discussed the latest developments in the Ukraine crisis.

The Saudi foreign minister emphasized the Kingdom’s support for everything that contributes to de-escalation, protection of civilians, serious pursuit of negotiated political solutions, and support for all international efforts aimed at resolving the political crisis.

The signing of the agreement and the MoU reflects the keenness of the Saudi government to support Ukraine and its friendly people in facing the social and economic challenges that the country is going through and to contribute to mitigating the resulting humanitarian impacts.

Iranian annual export to India rises 60%

The value of Iranian export to India increased 60% in 2022 as compared to the preceding year, according to the data released by the Indian Ministry of Commerce and Industry.

The Indian ministry put the worth of Iran’s exports to India at US$653 million in 2022, while the figure was US$409 million in 2021, IRNA reported.

As reported, petroleum products have been the major goods imported by India from Iran.

According to the mentioned data, the value of trade between Iran and India reached US$2.5 billion in 2022, up 48% from US$1.693 billion in 2021.

During January-December 2022, Indian export to Iran also increased 44% to stand at US$1.847 billion, while the figure was US$1.284 billion in 2021.

Rice was India’s major product exported to Iran during this period, the country shipped US$1.098 billion worth of rice to the Islamic Republic.

In late May 2022, the Iranian ambassador to India said that Iran and India were trying to diversify the channels of payments to expand bilateral trade.

In an exclusive interview with Financial Express Online, Ali Chegeni said, “We are trying to diversify the channels of payments and accordingly wish to extend and expand an already existing mechanism in order to cover all of the goods and services including all of the non-oil goods and to achieve this”.

During the past two years, because of Covid restrictions, we pursue the issue via virtual dialogues and currently, our officials are following the matter through the exchange of delegations, the envoy stated at the time.

“We want to develop our economic and trade relations beyond energy and petrochemical products. because, due to the complementarity of Iran and India's economies, an extensive range of non-oil trade exists between the two sides including trade on goods and services, investment, tourism, education, and … which may pave the way for multiplying our economic relations ten times more than current relations in mid and long terms”, Chegeni said.

United States the biggest beneficiary of Russia-Ukraine war

The Ukraine war has entered its second year and the past 12 months have shown there are a variety of aspects of this conflict. In this write up an effort has been done find the movers-shakers and losers-benefiters. My conclusion - Ukrainians the biggest losers.   

In 2014, following the revolution in Ukraine, armed clashes broke out between ethnic Russians (opposed to the new government in Kyiv) and the Ukrainian military in the country’s eastern Donetsk and Luhansk regions which make up the Donbas.

Despite European attempts to ease the fighting, including the Minsk agreements which granted self-government to the Donbas, the fighting continued, leaving around 15,000 people dead. Officials in Donetsk and Luhansk claim that Kyiv aimed to wipe them out. This caused deep concern in Russia.

Meanwhile over the past decade, despite repeated warnings by Moscow, NATO has been expanding eastwards towards the Russian border.  

The US-led military alliance triggered alarm in Moscow which warned NATO to avoid dangerous steps that pose a threat to Russia’s territorial integrity and sovereignty.

Amid the massive NATO buildup of forces coupled with advanced and sophisticated weapons that can strike the heart of Russia, the Kremlin sought security guarantees from the US and NATO. These were effectively ignored by both the US and NATO.

On February 24, 2022, Russia launched attack on Ukraine, calling it a “special military operation”.  It cited several reasons for the attack, including the stance of the government in Kyiv, attacks on ethnic Russians in the Donbas region, and NATO expansion to the borders of Ukraine.

Ukraine and its Western backers argue that the conflict waged by Russia was unprovoked.

Current state of affairs

As things stand, the fighting in flashpoint regions of eastern and southern Ukraine shows no signs of ending.

Moscow has annexed four regions in Ukraine where mostly ethnic Russians reside, following a referendum by the people in Luhansk, Donetsk, Zaporizhia and Kherson.
Ukraine and its Western backers have dismissed the votes as a sham.

The war has seen suffering on both sides, but mostly in Ukraine which has witnessed a high death toll and millions displaced, although a significant proportion of those have returned home.

Sanctions

The US and its Western allies have imposed unprecedented sanctions on Russia. From the freezing of US$330 billion of Russian assets to the silencing of all Russian media outlets, the Western sanctions regime continues to this day and has targeted almost all sectors of Russian society, even to the extent of banning Russian athletes from international sports tournaments. The sanctions have failed to end the war.

On the other hand, they have backfired mostly on the people of Europe. According to IMF forecasts in 2023, the UK economy will be worse off than sanction-hit Russia.  

Inflation

If anything, Western sanctions on Russian energy and wheat have backfired on Europe and beyond.

Europe has faced an energy crisis this winter. It was dependent on cheap Russian gas for 40% of the continent’s consumption.

Europe is now filling the gap by purchasing US liquefied natural gas (LNG) at astronomical prices.

This has spearheaded record inflation levels in European households, which has in turn seen waves of protests and strikes in many European countries paralyzing the public sectors. But it’s a major income boost for US energy firms.

United States Role

1. The United States is widely believed to have instigated the war in its efforts to contain Russia.

2. Washington has by far been the largest supplier of weapons to Ukraine.

3. The Pentagon has been shipping weapons to the tune of tens of billions of dollars. The White House has repeatedly announced fresh military packages for Kyiv.

4. Yet that doesn’t mean NATO members have not chipped in.

The US and other Western arms manufacturers have made very lucrative profits from the war that is the reason many experts argue, allies want the conflict to continue as long as possible.

By the same token, Russia and other countries say pouring weapons into the warzone has not and will not end the conflict. Moscow says the arms deliveries will only increase the suffering of Ukrainians and prolong the war.

Kyiv argues it needs more advanced weapons, such as battle tanks, to repel Russian forces in the country’s east. There are major question marks as to whether these weapons will change anything on the battlefield.

Some European Parliament lawmakers have said the war serves the interests of the US and not the interests of Europeans.

Europe fails in ending violence

After the fall of Afghanistan to the Taliban in August 2021 and the embarrassing scenes of US-led forces fleeing the country, repetitious statements were made by the European Union about the need to distance itself from the military affairs of the US in different parts of the world.

EU foreign policy chief Josep Borrell said Europe needs to develop its own military capacity independent of the United States.

The 27-member bloc revived debates about Europe developing the means to act independently from the US

The EU reiterated it needed to develop diplomatic and military muscle and what France's President Emmanuel Macron termed as strategic autonomy.

Some countries are going to have to ask themselves questions about an American ally which, as Joe Biden said, doesn't want to fight other people's wars for them.

"The Europeans don't have a choice. We must organize ourselves to deal with the world as it is and not the world that we dream of," Borrel said.

"We have to analyze how the EU can further deploy capabilities and positively influence international relations to defend its interests. Our EU strategic autonomy remains at the top of our agenda."

As Europe tried to be sovereign instead of taking directions from Washington, it failed to do so, as witnessed five months later with the eruption of war in Ukraine.

The Europeans understood perfectly that they are still defenseless, both militarily and diplomatically.

They don’t have the means to significantly contribute in ending a conflict on their doorsteps.  

All the European ducks have lined up and have taken their marching orders from Washington again, with a very few exceptions.

The Europeans are unable to take themselves out of this fatal subservience to the Americans.

Accusations against Iran and China

The US and NATO have accused Tehran and Beijing of providing arms to Russia to use in the Ukraine war. Both countries have dismissed the allegations as ludicrous, saying they have been working with both parties to find a political solution to the conflict.

Russia has also rejected reports that it has received weapons from any third party.

International community

While the West claims the international community stands in solidarity against Russia, the facts on the ground suggest otherwise.

However, a considerable number of countries have taken a neutral stance toward the war.

NATO does not represent the international community, despite statements by its Secretary-General, Jens Stoltenberg. 

The international community is calling for a peaceful resolution, something the US has stood firmly against.

Countries benefiting from war

The biggest beneficiary of this war has been the United States.

It has been successful in triggering a conflict in Europe to try and contain Russia’s growing power.

It has disrupted gas supply to the continent by sabotaging Nord Stream pipelines delivering Russia’s cheap gas to European consumers.

Many experts also say the US has pitted and provoked Russia and Ukraine against each other, in a similar fashion to other conflicts instigated by the Pentagon. 

 

Bangladesh: Massive withdrawals from Islamic banks

According to The Daily Star of Bangladesh, deposit flow to Islamic banks in Bangladesh registered a fall in the fourth quarter of 2022, the first such decline in eight years, in a sign of erosion of confidence among savers owing to loan irregularities.

Data released by the Bangladesh Bank showed that total deposits in Islamic banks declined to Tk 409,949 crore at the end of December 2022, down 2.71% from Tk 421,375 crore in September 2022.

This means Islamic banks lost Tk 11,426 crore in deposits in the three months, according to the October-December 2022 quarterly report on Islamic banking of the central bank.

Full-fledged Islamic banks, now numbered 10, were the biggest sufferers as they lost Tk 11,842 crore in the fourth quarter from the third quarter. They collectively held deposits of Tk 379,951 crore in December, down 3% from Tk 391,792 crore in September.

Conventional banks with Islamic banking windows recorded a marginal decline in savings in the fourth quarter, while banks with Islamic banking windows registered a 2.94% increase in the flow of savings.

Islamic banks, however, recorded a 4.28%YoY deposit growth in the fourth quarter. Yet, the growth was the lowest since 2014, the year when the central bank started to release the quarterly report on Islamic banking.

The data came at a time when a number of Islamic banks, including Islami Bank Bangladesh (IBBL), the largest private bank in terms of deposits and investments, suffer from liquidity dearth resulting from withdrawals by many depositors after reports on alleged loan scams surfaced.

The liquidity crunch prompted the central bank in December to pump funds at 8.75% into a number of Islamic banks, including IBBL, to enable them to meet emergency financing needs and comply with regulatory requirements.

As of December 29, IBBL took Tk 8,000 crore under BB’s special arrangement. Four other Shariah-based banks — First Security Islami Bank, Social Islami Bank, Union Bank and Global Islami Bank — took Tk 6,790 crore.

Analysts say the fall in deposits at the Islamic banks is an indication of the drop of customers’ confidence owing to the allegation of loan scams, particularly at IBBL.

The central bank is investigating allegations of gross irregularities at IBBL over the disbursement of loans amounting to Tk 7,246 crore among nine companies last year.

“It is expected. Customers have withdrawn deposits mainly as a precautionary move,” said Ahsan H Mansur, Executive Director of the Policy Research Institute of Bangladesh.

“The confidence crisis is still there.”

With the fall in deposits, the overall market share of Islamic banks dropped to 25.81% in the deposit segment in December, down from 28.43% three months ago.

As such, the overall availability of excess liquidity at the Shariah-based banks reduced to Tk 12,871 crore at the end of 2022, from Tk 17,525 crore at the end of the third quarter, a decrease of Tk 4,654 crore.

Shah Md Ahsan Habib, a Professor at the Bangladesh Institute of Bank Management, said Shariah-based banks had enjoyed an edge over conventional banks for years in terms of deposit collection. So, a number of banks have opened Islamic banking branches and windows to attract deposits.

Data on deposits showed that Islamic banks have been displaced by conventional banks, he said.

“It seems that the confidence of a section of people has eroded following reports on loan irregularities.”

In a recent report, global ratings agency Moody’s Investors Service said Islamic banks in Bangladesh are more vulnerable to the tightening of liquidity than conventional banks because they have smaller liquidity buffers.

One reason that Islamic banks have weaker liquidity cushions is that the central bank has more relaxed liquidity requirements for them to support the growth of the sector.

Another reason is that Islamic banks are prohibited from holding conventional interest-bearing government bonds, and there is a limited amount of liquid shariah-compliant instruments.

“The profitability of Islamic banks is already weaker than that of conventional banks because they are more reliant on term deposits, which results in narrower spreads between financing yields and deposit costs than the system-wide level,” said the agency.

Monzur Hossain, Research Director of the Bangladesh Institute of Development Studies, thinks the recent media reports related to irregularities might have prompted the deposit withdrawal.

“Once the deposit figures of all types of banks become available, it will be clear whether the decline is a general trend or Islamic bank-specific,” he said.

A spike in imports, declines in remittance inflows and high inflation have drained liquidity out of the Bangladeshi banking system, said Moody’s report.

Despite the decline in deposits, investments by Islamic banks grew 4.9% to Tk 405,202 crore at the end of December from Tk 386,221 crore in September. The growth stood at 14.6% from the Tk 353,448 crore witnessed at the end of December 2021, according to BB data.

Mansur, a former official of the International Monetary Fund, said governance has to be ensured and irregularities that have taken place have to be addressed to regain the confidence of depositors.

“Islamic banks have to do the repair to regain the trust of people,” said Prof Habib.

 

Incoming World Bank Chief, Ajay Banga faces myriad of challenges

Ajay Banga, US President Joe Biden's pick to run the World Bank, will face a tough slate of issues around the institution's finances and capital structure from the get-go, thorny problems he must address as he reshapes the bank into a force for combating climate change on top of its traditional role as a poverty fighter.

Biden and his team have ambitious plans for overhauling the 77-year-old World Bank, which critics have said under its outgoing Chief David Malpass was too timid in financing climate initiatives and still funds substantial fossil fuel projects across the developing world.

The key to it all, of course, is money, and as organized and funded now, the World Bank would be stretched to meet those goals.

Banga's nomination, announced on Thursday, won a round of rapid endorsements as top finance leaders met on Friday in India, a sign his ascendance by early May - or possibly sooner - is all but assured, though other member countries can also submit nominations through March 29 before the World Bank's governors choose the President.

Even before he takes office, the former Mastercard Chief is expected to start working his numerous constituencies as early as April when top officials meet in Washington at the World Bank and International Monetary Fund's spring meetings. Member countries are expected to approve initial moves to stretch the bank's balance sheet to free up more funds for climate projects, pandemic preparedness and other priorities.

If confirmed, he will jump into high-profile talks in June hosted by French President Emmanuel Macron and Barbados Prime Minister Mia Mottley focused on developing a new global financial pact to reform how rich countries finance poor countries grappling with climate-driven damages.

Under Banga's leadership, Mastercard became among the first companies to set net-zero emission targets under the Science Based Targets initiative. He also serves on the advisory board of Beyond Net Zero, a climate finance fund.

Biden administration officials touted Banga's decades of experience building global companies and public-private partnerships to fund responses to climate change and migration.

"Ajay has proven his ability as a manager of large institutions and understands investment and the mobilization of capital to power the green transition," said John Kerry, the US special envoy on climate change.

An even tougher challenge then awaits Banga in winning a capital increase from member countries. This will be especially difficult for the World Bank's top shareholder, the United States, due to political brawling between the Biden administration and the Republican-majority House of Representatives. The House has major sway over the country's purse strings and its leaders are not disposed to widen the World Bank's role in fighting climate change.

In fiscal 2022, the World Bank committed more than US$104 billion to projects around the globe, according to the bank's annual report. Experts say countries will need trillions of dollars to fight and adapt to climate change.

Before an increase can even be considered, US officials say changes in World Bank debt-to-equity ratios and other rules could free up more funds for the climate fight, given the reluctance of a politically divided US Congress to appropriate more funds in a direct capital increase.

An independent report prepared for the Group of 20 major economies said changing the way the bank and other multilateral development banks (MDBs) operate could unlock hundreds of billions of dollars in additional funds.

But some middle-income countries worry that could weaken the bank's AAA credit rating and raise borrowing costs, Mark Malloch Brown, President of the Open Society Foundations told Reuters.

"The middle-income countries worry ... that the cost of borrowing will increase because of the refusal of the West to put up more cash."

Iskander Erzini Vernoit, Director of the Morocco-based climate think tank Imal Initiative for Climate and Development, said the US - which has only contributed US$2 billion of the US$100 billion in climate finance rich countries have pledged - needed to invest more.

"Playing the blame game with management of the MDBs will only get you so far, and not far enough to finance tackling the polycrisis at scale," he said.

 

IMF flags debt restructuring hurdles

There are some disagreements over restructuring debt for distressed economies, the chief of the International Monetary Fund said on Saturday on the sidelines of a G20 meeting.

India's G20 presidency comes at a time when its South Asian neighbors Sri Lanka, Bangladesh and Pakistan are seeking urgent IMF funds due to an economic slowdown caused by the COVID-19 pandemic and the Russia-Ukraine war.

China, the world's largest bilateral creditor, urged G20 nations on Friday to conduct a fair, objective and in-depth analysis of the causes of global debt issues as clamor grows for lenders to take a large haircut, or accept losses, on loans.

"On debt restructuring, while there are still some disagreements, we now have the global sovereign debt roundtable with consideration of all public and private creditors," IMF Managing Director Kristalina Georgieva told reporters after the roundtable she co-chaired with Indian Finance Minister Nirmala Sitharaman.

"We just finished a session in which it was clear that there is a commitment to bridge differences for the benefit of countries."

Apart from restructuring debt, regulating cryptocurrencies is another priority area for India, which Georgieva agreed with.

"We have to differentiate between central bank digital currencies that are backed by the state and stable coins and crypto assets that are privately issued," Georgieva said.

"There has to be very strong push for regulation... if regulation fails, if you're slow to do it, then we should not take off the table banning those assets, because they may create financial stability risk."

 

 

 

Pakistan Stock Exchange witnesses 10.4%WoW decline in average daily trading volume

During the week ended on February 24, 2023, Pakistan Stock Exchange remained volatile due to news flows regarding the IMF deal and approval of Financial Supplementary Bill for raising additional taxes of PKR170 billion.

Unease amongst the participants increased as T-Bills cut-offs in the latest auction by State Bank of Pakistan (SBP) went up to 19.95%, contributing to the fears of further hike in the interest rate.

Reserves held by the SBP witnessed an increase for second consecutive week, rising to US$$3.26 billion, still standing at a critical level. The noticeable improvement can be expected after IMF agreement and expected inflows from bi-lateral partners.

The KSE-100 index closed the week at 40,708 points, lower by 411 points, depicting 1.0%WoW decline.

Participation in the market declined by 10.4%WoW, with daily volumes averaging 138 million shares as against 154 million shares a week ago.

PKR continued to strengthen against the US$, gaining 2.82% over the course of the period to close in at PKR259.99/US$ on Friday.

Other major news flows during the week included: 1) foreign exchange reserves got much-needed boost on support from amid IMF procrastination, 2) GoP announced steps to correct fiscal imbalances, 3) Current Account for the first seven month of the current financial year dipped on import curbs to US$3.8 billion deficit, 4) Islamabad got positive signals for help from Riyadh, and Beijing, and 5) ECP failed in taking decision on election date.

Sector-wise, Miscellaneous, Cement and Vanaspati & Allied Industries were amongst the top performers. On the other hand, Leasing Companies, Close-End Mutual Fund and Oil & Gas Exploration Companies were amongst the worst performers.

Flow wise, major net selling was recorded by Individuals with a net sell of US$4.56 million. Companies absorbed most of the selling with a net buy of US$5.91 million.

Top performing scrips during the week were: PSEL, KTML, KOHC, and MUGHAL, while top laggards were: PGLC, HGFA, PPL, SHFA, and SHEL.

The market is expected to remain range-bound in the near future, clouded by concerns regarding the interest rate hike. Expected increase in the interest rate may be a huge downside for the aggregate demand and subsequently the equity markets.

Any news regarding a successful Staff Level Agreement with the IMF and inflows from bi-lateral partners would boost investor’s confidence. Investors are advised to stay cautious while building new positions in the market.

Pakistan: Auction of wheat not fit for human consumption

Pakistan Agricultural Storage & Services Corporation Ltd (PASSCO) has published a tender in newspapers for the sale of 44,000 tons of wheat lying in its warehouses. This wheat is not fit for human consumption. The last date for submission of the tender is March 03, 2023.

Experts fear that ‘not fit for human consumption’ wheat will ultimate be bought by the erring flour mills and sold to the consumers. Even if it is bought by chicken feed mills, the birds eating contaminated feed will not be suitable for human consumption.

Technically the government should burn this wheat to save chickens and human beings.

Going such a large quantity stale raises various questions: 1) why appropriate steps were not taken to save this quantity from going stale? 2) Why there was delay in release of the quantity to flour mills when market was experience shortfall? Will any action be taken against those who are responsible for this crime?

It is estimated that going stale of such a big quantity would cause over PKR20 million to the nation. The Government is already spending foreign exchange on the import of wheat, leading to waste of precious foreign exchange. On top of all the incapacity of the government has raised flour price in the local market and added to the miseries of the poor people.

This highlights the inadequate storage capacity available with PASSCO and provincial departments. The successive governments have failed miserably in the construction of grain storage silos.

Reportedly, the aggregate wheat storage capacity of PSSACO and provincial food departments is less than 2.5 million tons as against an average crop size of nearly 30 million tons. It must be remembered that these are flatbed warehouses where wheat is kept in bags.

Another question can be raised, if PASSCO and provincial food departments do not have adequate storage, why the government has given these the mandate to be the sole buyers of wheat? 

UN resolution approves withdrawal of Russian forces from Ukraine

The United Nations General Assembly resolution calling for Russia to withdraw from all territory in Ukraine was approved by member nations on a 141-7 vote. Although, the resolution holds no power but relays a powerful message to Moscow.

General Assembly votes also serve as a key barometer for the success of each side of the war to sway international opinion.

The resolution is purely symbolic, but it allows Ukraine and its allies to build a consensus against Russia.

Thirty-two countries also abstained from the vote, including China, South Africa and India.

The countries opposing the resolution included Belarus, Mali, Nicaragua, Russia, Syria, North Korea and Eritrea.

Russia picked up two additional votes from a previous UN vote on the war in October.

US Ambassador to the United Nations Linda Thomas-Greenfield said the vote will go down in history.

“On the one-year anniversary of this conflict, we will see where the nations of the world stand on the matter of peace in Ukraine," Thomas-Greenfield said in remarks the day before the vote.

Indian Ambassador to the U.N. Ruchira Kamboj said the resolution had inherent limitations and questions that needed to be answered.

South Africa, China and Russia are holding joint drills in the Indian Ocean this weekend.

The United States also accused China of supplying nonlethal aid to Russia, and several officials warned Beijing is considering sending lethal aid.

 

 

 

Pakistan: Power Generation decreases by 3.2%YoY in January 2023

Power generation has been reported at 8,515GWh for January, 2023, remaining flat MoM while decreasing by 3.2%YoY as compared to 8,797GWh generated last year.

This takes cumulative energy generated for the first 7 months of FY23 to 77,085GWh, a decrease of 7.3%YoY.

The demand supply shortfall remains a persistent issue in the country, where peak demand for the month was estimated between 16,000-17,000MW.

Circular debt for the power sector has been reported at PKR2.5 trillion as compared to PKR2.25 trillion in June 2022.

According to the revised Circular Debt Management Plan presented to the IMF, FY23 is targeted to close with a Circular Debt stock of PKR2.4 trillion after a PKR335 billion payout will be given in June to reduce the accumulation for the year.

Hydel generation for the month under review was reported at 800GWh, decreasing substantially on a monthly basis as January is the month of least hydrology in the country historically.

Hydel generation was up 56% on a yearly basis, partly due to dependable capacity on Hydel increasing to 10,592MW.

The significant increase in power generation have been seen from Coal fired power plants, with generation up 61%MoM aided by the new Thar Coal Block-1 and ThalNova plants which were added to the grid, along with increased generation from the plants running on imported coal to cover for the lack of hydel generation in the month.

Furthermore, Furnace oil (FO) based plants have finally seen an uptick in utilization, with 463MW generated in the month as compared to merely 39MW last month.

Despite this, owing to better availability of lower-cost alternatives, FO generation was down 63%YoY and remains at highly diminished levels.

Average cost of generation for the month under review rose by 59% to PK11.2/kWh owing to the decrease in generation from Hydel plants and the consequent increase in reliance on thermal sources.

In terms of the generation mix for January, the largest contributors are Coal (29%), followed by Nuclear (22%), RLNG (15%), Gas (13%) and Hydel (9%).

Coal based generation in generation mix has risen to 29% from the 18% recorded last month.

Generation from thermal based power plants was recorded at 63% of total generation in the month, considerably lower than the 3 year average of monthly generation in the month of January of 74%, mainly due to the emergence of new Nuclear based capacities.

HUBC has seen significant increases in power generation, with 58GWh more power generated in this month, while down by 72%YoY despite the new TEL plant coming online this year.

Utilization for the CPHGC remains meager at 6% for January, while the base plant generated 0.9GWh after three months of no utilization.

On the flipside, the more efficient Narowal plant witnessed significant utilization of 37% in the month with 56.5GWh generated, while the TEL plant remains well-utilized at 69% due to its high placement in the Merit Order.

KAPCO remains non-operational owing to the expiry of its PPA and is still out of the Merit Order, although it has sold 2.7GWh from its RLNG plant in the month.

NPL and NCPL have also seen a surge in utilization for the month as the plants are relatively less expensive compared to their peers in the FO group, with the plants recording 40% and 29% in utilization respectively.

As the hydrology in the country improves post January, the cost of generation should decrease going forward as reliance on thermal sources decreases in tandem.

 

 

UN to mark one year of Ukraine war with vote

Marking one year of war, Ukraine and Russia lobbied countries at the United Nations on Wednesday for backing ahead of a vote by the 193-member General Assembly that the United States declared will "go down in history."

"We will see where the nations of the world stand on the matter of peace in Ukraine," US Ambassador to the United Nations Linda Thomas-Greenfield told the General Assembly.

The General Assembly appeared set to adopt a resolution on Thursday, put forward by Ukraine and supporters, stressing the need to reach, as soon as possible, a comprehensive, just and lasting peace in line with the founding UN Charter.

UN Secretary-General Antonio Guterres denounced Russia's invasion and said the Charter was unambiguous, citing from it, "All members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any state."

Ukraine and its supporters hope to deepen Russia's diplomatic isolation by seeking yes votes from nearly three-quarters of the General Assembly to match - if not better - the support received for several resolutions last year.

They argue the war is a simple case of one unprovoked country illegally invading another, while Russia portrays itself as battling a proxy war with West, which has been arming Ukraine and imposing sanctions on Moscow since the invasion.

"The West has ... brazenly ignored our concerns and continue bringing the military infrastructure of NATO closer and closer to our borders," Russia's UN Ambassador Vassily Nebenzia told the General Assembly.

Nebenzia said, “Moscow had no other option but to launch what it has called a special military operation on February 24 last year to defend Russian speakers in eastern Ukraine and ensure the safety and security of our country, using military means.

The draft UN resolution, which is non-binding, but carries political weight, mirrors a demand the General Assembly made last year for Moscow to withdraw troops and halt the hostilities. Russia has described the text as unbalanced and anti-Russian and urged countries to vote no.

Ukrainian Foreign Minister Dmytro Kuleba told reporters Ukraine was exercising its right to self-defense as enshrined in the UN Charter and that when you are sending weapons to Ukraine, you are helping Ukraine to defend UN Charter.

"Russia violated the UN Charter by becoming an aggressor," he said at the United Nations. "When you are sending weapons to them, you are helping to destroy the UN Charter and everything that the United Nations stands for. It's very simple."

The General Assembly has been the focus for UN action on Ukraine, with the 15-member Security Council paralyzed due to veto power by Russia and the United States along with China, France and Britain.

The Security Council has held dozens of meetings on Ukraine in the past year and will again discuss the war on Friday at a ministerial gathering, due to be attended by US Secretary of State Antony Blinken. Diplomats say Russian Foreign Minister Sergei Lavrov is not scheduled to attend.

 

 

 

 

 

 

 

 

 

 

 

 

 

Iraq to allow trade with China in yuan

The central bank of Iraq said on Wednesday it planned to allow trade from China to be settled directly in yuan for the first time, in an attempt to improve access to foreign currency.

The central bank has been taking urgent steps to compensate for a dollar shortage in local markets, which prompted the cabinet to approve a currency revaluation earlier this month.

"It is the first time imports would be financed from China in yuan, as Iraqi imports from China have been financed in US dollars only," the government's economic adviser, Mudhir Salih, told Reuters on Wednesday.

The move is the latest sign of the yuan's growing role on the international stage as China gradually opens up its financial markets and some countries look to diversify their currency exposures.

The central bank could, as part of its plan, boost the balances of Iraqi banks that have accounts with Chinese banks in yuan, it said in a statement.

Another option would be to boost local banks' balances via the central bank's accounts with JP Morgan and Development Bank of Singapore (DBS), it added.

The first option would depend on the central bank's yuan reserves, while the other would use the bank's US dollar reserves at JP Morgan and DBS. The two banks would convert the dollars to yuan and pay the final beneficiary in China, Salih explained.

Pakistan: OGDC profit down 22%QoQ

Pakistan’s largest exploration and production company, Oil & Gas Development Company (OGDC) has reported its 2QFY23 financial results, posting profit after tax of PKR 41.7 billion (EPS: PKR9.70), lower by 22%QoQ, higher by 18%YoY.

Net sales were PKR97.2 billion for the period, down 8.3%QoQ but up 22%YoY basis, mainly on the back of declining oil prices (down 15%QoQ) during the period. Overall, total hydrocarbon production declined by 1.7% during the quarter.

Exploration expenses were reported at PKR5.1 billion on account of two dry wells: Shahpurabad-1 (OGDCL stake: 50%) and Sundha Thal-1 (OGDCL stake: 50%).

Furthermore, operating expenses increased to PKR21.4 billion (up 15%QoQ) from PKR18.63 billion in the previous quarter.

Finance & other income for the quarter were reported at PKR9.2 billion, likely due to higher income on lease holdings and bank deposits.

Along with the result, company also announced an interim cash dividend of PKR2.25/share, taking total 1HFY23 dividend payout to PKR4.0/share.

 

Pakistan: Government likely to approve new oil refining policy shortly

The upcoming Cabinet Committee on Energy (CCoE) meeting is likely to approve the Pakistan Oil Refining Policy 2023 as Prime Minister Shehbaz Sharif being In-charge of the Petroleum Division has authorized submission of a summary in this regard to the CCoE.

The petroleum division has prepared the summary for the new oil refining policy 2023 involving upgradation of the existing refineries. 

The summary was circulated to the Finance Fivision, Ministry of Planning, Development and Special Initiative, Federal Board of Revenue (FBR) and Oil and Gas Regulatory Authority (OGRA) for seeking their input. 

This is a positive development for establishing a proposed refinery in the country worth around US$10 billion dollars with the cooperation of Saudi Arabia.

Petroleum products contribute 31% to the energy mix of Pakistan with an overall contribution of  around 11 million tons Per Annum (inclusive of 30% local crude processing) while the remaining 69% of the country’s demand has to be met with imports.

Indigenous and imported crude is refined by five local refineries which have been periodically upgraded to meet local fuel specifications.

The upgradation of refineries included setting up of Diesel HydroDesulfurization (DHDs) to reduce Sulphur from diesel and isomerization plants for enhancing the production of Motor Spirit (Petrol) at a combined cost of around PKR75 billion.

The government has been emphasizing local refineries to further up-grade their plants by producing Euro-V specification fuels and minimizing production of furnace oil, however it requires capital investment of around US$4.5 billion. 

This would require refineries to arrange funding from either their own resources and or borrowing from lenders at commercial terms. To obtain the required funding, refineries will have to improve their balance sheet, according to sources.

The five year profit/loss position of refineries indicates that the sector needs fiscal support from the government to improve the financial position for upgradation purposes.

In case of no intervention by the government, the local refining industry might be at risk of collapsing according to some speculators. 

In such a case the domestic crude oil production of approximately 70,000 barrels per day by the country’s Exploration and Production (E&P) companies would have to be exported and more expensive refined petroleum products would have to be imported. 

Such a scenario might discourage investment in exploration of the oil and gas sector, apart from creating vulnerability in the supply chain of strategic fuels and placing additional burden on the country’s balance of payments.

In October 1997, the government introduced the Petroleum Policy 1997 (amended in 2002), which replaced the minimum 10% guaranteed rate of return for refineries with tariff protection formula/deemed duty (10% on high speed diesel, 6% on Kerosene oil, light diesel oil & JP-4). In 2008 tariff protection was reduced to 7.5% on HSD only. 

Given the tariff protection could not attract investment in the sector, it is therefore required to be improved. Accordingly, an Energy Sub-Group of the Advisory Committee of the Planning Commission was constituted which made recommendations in April of 2021, with regard to investment in the refinery sector through government support including product pricing policies, tax structure etc.

In view of the above, the Petroleum Division prepared a draft Pakistan Oil Refining Policy for new and existing refineries which was discussed in CCoE meetings. The committee through its decision dated 13th September, 2021, provided guidelines to improve the policy document, therefore, the policy has been revised, said the sources.

The establishment of a new refinery requires considerable lead time and huge investment for which a policy along with attractive incentives needs to be in place.

In case of existing refineries, necessary changes have been incorporated in the policy after deliberation with the refineries and government bodies.

The draft Pakistan Oil Refining Policy 2023 for upgradation of existing refineries is submitted for the consideration and approval of the ECC whereby certain tax exemption and tariff protection incentives have been proposed as provided at section-6 of the proposed policy.

 

Shipping industry grapples with ways to cut cargo fires at sea

Global shipping companies are exploring ways to boost safety in transporting cargoes as risks grow from fires erupting inside containers or in cars at sea, officials said on Wednesday.

Shipping transports around 90% of world trade onboard different vessels including container and Ro-Ro ships with trade routes getting busier.

In a new initiative, leading carriers Evergreen Line of Taiwan, South Korea's HMM, Denmark's Maersk, Germany's Offen Group, Singapore's ONE (Ocean Network Express), Hong Kong's Seaspan as well as British ship certifier Lloyd's Register said they are looking into feasibility studies to understand how cargo is loaded and also monitored at sea, as well as finding solutions to detect fire onboard ships and speed up ways to stop it spreading.

"The priority for the first challenge area is to provide earliest indication of a fire incident, thus allowing the appropriate onboard responses to prevent the occurrence of large fires and loss," Rich McLoughlin, Program Director for the cargo fire and loss innovation initiative, told Reuters.

"The initiative seeks to provide proof-points that emerging tech may be used to improve response times over the existing regulatory requirements, leading to enhanced vessel safety."

In its 2022 safety and shipping review, analysis by major insurer Allianz Global Corporate & Specialty showed there had been over 70 reported fires on board container ships alone in the past five years, with growing risks faced by car carriers transporting electric vehicles using batteries.

"The main root cause for cargo fires on container ships is the integrity of dangerous goods throughout the supply chain. Therefore, it is a problem that can only be improved through industry wide solutions," Maersk's Aslak Ross said separately in a statement.

 

Russia suspends only remaining major nuclear treaty with United States

Russian President Vladimir Putin declared Tuesday that Moscow was suspending its participation in the New START treaty — the last remaining nuclear arms control pact with the United States — sharply upping the ante amid tensions with Washington over the fighting in Ukraine.

Speaking in his state-of-the-nation address, Putin also said that Russia should stand ready to resume nuclear weapons tests if the US does so, a move that would end a global ban on nuclear weapons tests in place since Cold War times.

Explaining his decision to suspend Russia’s obligations under New START, Putin accused the US and its NATO allies of openly declaring the goal of Russia’s defeat in Ukraine.

“They want to inflict a strategic defeat on us and try to get to our nuclear facilities at the same time,” he said, declaring his decision to suspend Russia’s participation in the treaty. “In this context, I have to declare today that Russia is suspending its participation in the Treaty on Strategic Offensive Arms.”

New START’s official name is The Treaty between the United States of America and the Russian Federation on Measures for the Further Reduction and Limitation of Strategic Offensive Arms.

US Secretary of State Antony Blinken deplored Putin’s move as deeply unfortunate and irresponsible, noting that we’ll be watching carefully to see what Russia actually does.

He said, “We’ll, of course, make sure that in any event we are postured appropriately for the security of our own country and that of our allies,” but emphasized “We remain ready to talk about strategic arms limitations at any time with Russia irrespective of anything else going on in the world or in our relationship.”

“I think it matters that we continue to act responsibly in this area,” Blinken told reporters on a visit to Greece. “It’s also something the rest of the world expects of us.”

NATO Secretary-General Jens Stoltenberg also voiced regret about Putin’s move, saying that “with today’s decision on New START, full arms control architecture has been dismantled.”

“I strongly encourage Russia to reconsider its decision and respect existing agreements,” he told reporters.

Putin argued that while the US has pushed for the resumption of inspections of Russian nuclear facilities under the treaty, NATO allies had helped Ukraine mount drone attacks on Russian air bases hosting nuclear-capable strategic bombers.

The Russian military said that it shot down the Soviet-built drones that struck two bomber bases deep inside Russia in December last year, but acknowledged that several servicemen were killed by debris that also damaged some aircraft.

Putin on Tuesday mocked NATO’s statement urging Russia to allow the resumption of the US inspections of Russian nuclear weapons sites as some kind of theater of the absurd.

“The drones used for it were equipped and modernized with NATO’s expert assistance,” Putin said. “And now they want to inspect our defense facilities? In the conditions of today’s confrontation, it sounds like sheer nonsense.”

He said that a week ago he signed an order to deploy new land-based strategic missiles and asked: “Are they also going to poke their noses there?”

The Russian leader also noted that NATO’s statement on New START raises the issue of the nuclear weapons of Britain and France that are part of the alliance’s nuclear capability but aren’t included in the US-Russian pact.

“They are also aimed against us. They are aimed against Russia,” he said. “Before we return to discussing the treaty, we need to understand what are the aspirations of NATO members, Britain and France and how we take it into account their strategic arsenals that are part of the alliance’s combined strike potential.”

Putin emphasized that Russia is suspending its involvement in New START and not entirely withdrawing from the pact yet.

The New START treaty, signed in 2010 by US President Barack Obama and Russian President Dmitry Medvedev, limits each country to no more than 1,550 deployed nuclear warheads and 700 deployed missiles and bombers. The agreement envisages sweeping on-site inspections to verify compliance.

Just days before the treaty was due to expire in February 2021, Russia and the United States agreed to extend it for another five years.

Russia and the US have suspended mutual inspections under New START since the start of the COVID-19 pandemic, but Moscow last fall refused to allow their resumption, raising uncertainty about the pact’s future. Russia also indefinitely postponed a planned round of consultations under the treaty.

The US State Department has said that Russia’s refusal to allow the inspections “prevents the United States from exercising important rights under the treaty and threatens the viability of US-Russian nuclear arms control.” It noted that nothing prevents Russian inspectors from conducting inspections of US facilities.

Putin on Tuesday challenged the US assertion, alleging that Washington has rejected some Russian requests for visits to specific US facilities.

“We aren’t allowed to conduct full-fledged inspections under the treaty,” he said. “We can’t really check anything on their side.”

He alleged that the US was working on nuclear weapons and some in the US were pondering plans to resume nuclear tests banned under the global test ban that took effect after the end of the Cold War.

“In this situation, Rosatom (Russia’s state nuclear corporation) and the Defense Ministry must ensure readiness for Russian nuclear weapons tests,” Putin said. “We naturally won’t be the first to do it, but if the U.S. conducts tests we will also do it. No one should have dangerous illusions that the global strategic parity could be destroyed.”

 

Rising number of Americans say media misinform

A new survey reveals half of Americans say their national news organizations “mislead and misinform them”. The joint study published by the Knight Foundation and Gallup has revealed that half of Americans believe that major US news organizations are trying to persuade the public to adopt a particular point of view with the bias coverage of their reporting.

As little as 26% of Americans have a favorable opinion of their news media.

The survey goes beyond other research that showed a low level of trust in the US media, but this poll stretches to a new level where half of the American population believes there is a deliberate intention to deceive public opinion.

This is the lowest confidence level ever. Five years ago, surveys also showed a low level of trust in the media.

But these are strikingly worrying statistics in which Americans believe US news outlets are acting to purposely misguide them.

In other words, US citizens are essentially saying that American national media outlets are attempting to deceive them into trusting fake news.

If Americans believe mainstream US news organizations are spreading a campaign of disinformation (and not misinformation), this raises question marks over how the US media is having an impact on misguiding global views with its disinformation campaign.

Officials from different governments have previously slammed US news coverage as a factor that instigates unrest in different regions of the world and the American people’s growing suspicions of US news narratives add further weight to the argument.

Critics have also criticized US mainstream media for using pundits with links to arms manufacturers in a bid to persuade and encourage the American public into supporting Washington’s foreign military adventurism at the expense of their tax money.

This is while pundits who oppose US foreign policy or express a different narrative are being taken off the air or prevented from writing columns for newspapers.

In this modern age of information, reliable news sources are difficult to find in the US and its allies.  

This is while sources of news outlets from countries in West Asia, East Asia, Eastern Europe, and beyond which offer an audience with different narratives have been taken off the airwaves or heavily censored on social media platforms. 

If an audience has only one narrative, is that not a form of brainwashing? 

The Knight Foundation says it joined hands with Gallup as part of an academic initiative launched in 2017 to address the decline in trust for journalism and other democratic institutions.

In its latest joint publication, the survey has documented that only 26% of Americans have a favorable opinion of the news media, the lowest level Gallup and Knight have recorded in the past five years.

This is while 53% of the American population (more than half of the nation) do not hold a favorable view of their news outlets.

With the new survey highlighting how the nation's cynicism of US media is growing, the Knight Foundation pointed out that “democracy in America relies on an independent press to inform citizens with accurate information.

Yet today, two forces pose significant challenges to this function: the growing struggle of news organizations to maintain financial independence and the growing distrust of news among the public.”

For example, the research reports that “81 percent of Americans in 2020 said the news media was ‘critical’ or ‘very important’ to democracy. 

In August 2022, a Quinnipiac University poll reported that 67% of Americans believe the nation’s democracy is in danger of collapse, up from 58% in January.”

Across all political affiliations, more Americans say they hold an unfavorable opinion of the news media compared to a survey conducted in late 2019-early 2020. 

This rise is especially significant among independent voters who have no political affiliation to either the Republican Party or the Democrats.

Perceptions of political bias in news coverage have also increased, with independents again driving the trend, followed by Republicans, then Democrats.

Furthermore, the younger generation continues to hold more negative perceptions of the news media than older generations, which is in line with previous studies.

Gallup’s long-term trend on this measure hit a record low in 2020 when the share of Americans with no confidence in the news media surpassed that of people with at least some confidence for the first time in 40 years. 

Research from the American Views 2020 report by Gallup and Knight showed that Americans were “very concerned” about increasing political bias in news coverage and the perception that news organizations “push an agenda.”

Asked whether they agreed with the statement that national news organizations do not intend to mislead, 50% said they disagreed while only 25% agreed, the latest study found.

Similarly, 52% disagreed with a statement that those spreading national news “care about the best interests of their readers, viewers, and listeners,” the study found. It said 23% of respondents believed the journalists were acting in the public's best interests.

“That was pretty striking for us,” said Sarah Fioroni, a consultant for Gallup. The findings showed a depth of distrust and bad feelings that go beyond the foundations and processes of journalism, she said.

Journalists need to go beyond emphasizing transparency and accuracy to show the impact of their reporting on the public, the study said.

“Americans don’t seem to think that the national news organizations care about the overall impact of their reporting on the society,” said John Sands, Knight’s senior director for media and democracy.

Whereas Americans are increasingly losing faith and distancing themselves from national news coverage, the study found they have more trust in local news.

65 percent said that local news organizations report the news accurately and fairly to the public, and more than half of Americans say most local news organizations can be relied on to deliver the information they need.

53% believe most local news organizations care about how their reporting affects their community broadly, and 47% believe most local news organizations care about the best interests of their readers, viewers, and listeners.

44% of Americans say local news organizations do not intend to mislead, misinform or persuade the public.

But the study indicates more Americans are on top of the news than ever before with (1) the ability of many people to instantly get their news from a device they hold in their hand, (2) the rapid pace of the news cycle and (3) an increased number of news sources.

According to the survey, these factors also appear to bring problems as they overload Americans with news information. The study said 61% of Americans believe these factors make it harder to stay informed, while 37% said it's easier.

In an indication of how people are distancing themselves from national media for their news, 58% said they relied on the internet while, 31% said television, 7% said radio and only 3% mentioned printed newspapers or magazines.

As for the younger generation aged 18 to 25 years old, a massive 88% said they got their news online, the survey found.

While 72% say national news organizations have the resources and opportunity to report the news accurately and fairly to the public, only 35% say they can rely on most national news organizations to deliver the accurate information they need.

The study also found that half or more Americans report difficulty in sorting out facts and being well-informed,  61% say the increase in information today makes it harder to be well-informed.

50% say there is so much bias in the US news media that it is often difficult to sort out the facts.

The other results from this study as well as others indicate that most Americans think news organizations prioritize business needs above their public duty. 

Overall, it's a disturbing example of how the US establishment uses the media to exploit the American public, especially considering when only 23% of respondents believe the media is covering news with an attempt to deceive them.