Iran hosts Asian Clearing Union summit

The 51st Asian Clearing Union (ACU) summit, mainly focusing on de-dollarization, kicked off on Tuesday at the Central Bank of Iran (CBI).

On the first day of the two-day event, expert committees from the delegations attending the summit held meetings to discuss preliminary issues.

The summit is attended by the governors of the central banks of the ACU member countries in addition to Russia.

The Governor of the Central Bank of Russia Elvira Nabiullina arrived in Tehran on Monday to attend the event.

In the 51st ACU summit, the members are set to discuss various issues including the amendment of the Union's statutes in order to facilitate the acceptance of new members, and determining the new currency basket of the member countries in order to settle exchanges without the need for euro or the dollar.

Exploring the feasibility of using digital currencies of central banks for cross-border payments and the unveiling of the interbank messaging network of the member states of the Union are also among the major topics on the summit’s agendas.

Asian Clearing Union is a payment arrangement whereby the participants settle payments for intra-regional transactions among the participating central banks on a net multilateral basis.

The main objectives of the clearing union are to facilitate payments among member countries for eligible transactions, thereby economizing on the use of foreign exchange reserves and transfer costs, as well as promoting trade and banking relations among the participating countries. 

Currently, the members of ACU are the central banks of Iran, India, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka, and Myanmar.

The central banking authorities of member countries have issued detailed instructions and modalities for channeling monetary transactions through the ACU. Membership in the ACU is open to central banks located in the geographical area of ESCAP and non-ESCAP.

 

Governor State Bank of Pakistan, new Chairman of Asian Clearing Union (ACU)

Dr. Murtaza Syed, Acting Governor State Bank of Pakistan (SBP) assumed the charge of Chairman of the Board of Directors of the Asian Clearing Union (ACU) in the 50th meeting of the ACU Board held in Islamabad on May 13, 2022 in both physical and virtual modes.

Established in 1974 with permanent headquarters in Iran, the Asian Clearing Union (ACU) is a payment arrangement system whereby member countries settle payments for intra-regional transactions among their central banks on a net multilateral basis. Currently, the Central Banks of Bangladesh, Bhutan, Iran, India, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are members of the ACU. The main objectives of the clearing union are to facilitate payments among member countries for eligible transactions, thereby economizing on the use of foreign exchange reserves and transfer costs, as well as promoting trade and banking relations among the participating countries. 

The Secretary General of ACU, Mrs. Lida Borhan Azad, presented the annual report on the operations of the union for the year 2020, which the Board approved and adopted.

The Board reviewed progress on the ongoing projects being undertaken by the union. It reviewed a new web based messaging system and constituted a sub-committee to finalize the recommendations for its implementation within six months. The Board also considered the report on issues faced by traders under the ACU mechanism and decided to implement the recommendations in the next three months. 

While appreciating the report on the use of domestic currencies for settlement of trade transactions prepared by the Reserve Bank of India (RBI), the Board requested RBI to convene a virtual seminar to enable member countries to gain a fuller understanding of the proposed mechanism. The Governors and head of the delegations of the countries also gave a broad overview of the economic development in their respective economies and shared their experiences in addressing the challenges emerging in the post COVID-19 global landscape.

Governor Central Bank of Myanmar, Than Nyein, Vice Governor Central Bank of Iran, Dr.Mohsen Karimi, Chief Economist Central Bank of Bangladesh Md. Habib ur Rehman, and Executive Director Nepal Rastra Bank Ramu Paudel participated in the meeting physically. Governor Dr. P. Nandalal Weerasinghe, and Deputy Governor of Central Bank of Sri Lanka, T.M.J.Y.P Fernando, Governor Maldives Monetary Authority Ali Hashim, Ms. Yangchen Tshogel Central Bank of Bhutan and Executive Director RBI Radha Shyam Ratho, attended the meeting virtually.

At the conclusion of the Board meeting, Mrs. Lida Borhan Azad relinquished the charge of Secretary General of the ACU after distinguished service of the Union for 15 years. While appreciating the services of Mrs. Lida Borhan, the Board appointed Farhad Morsali as the new Secretary General of the ACU, as recommended by the Central Bank of Iran.

The meeting ended with all member countries emphasizing their commitment to further enhancing their trade and banking relationships. It was decided that central bank digital currencies (CBDCs) would be the special topic on which research would be conducted during Pakistan’s chairmanship of the ACU over the next twelve months.

India trying to win over hearts of its neighbors

According to The Bangladesh Chronicle, India has announced substantial assistance for all the SAARC member countries, except Pakistan. The announcement was made by Indian Finance Minister Nirmala Sitharaman while presenting the 2022-23 budget in the parliament.

South Asian Association for Regional Cooperation

The South Asian Association for Regional Cooperation (SAARC) is an economic and political organization of eight countries in South Asia. It was established in 1985 when the Heads of State of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka formally adopted the charter. Afghanistan joined as the 8th member of SAARC in 2007. To date, 18th Summits have been held and Nepal’s former Foreign Secretary is the current Secretary General of SAARC. The 19th Summit was to be hosted by Pakistan in 2016, which never happened.

India announced Rs 300 crore annual budgetary financial assistance for Bangladesh, up from Rs 200 crore in the outgoing fiscal 2021-22. The allocation of the financial assistance has been provided for the Ministry of External Affairs.

Myanmar will get Rs 600 crore, Rs 200 crore more than last financial year, and Nepal will get Rs 750 crore from India in the coming fiscal.

India has allocated Rs 200 crore as aid to Taliban-ruled Afghanistan in for 2022-23 even though New Delhi does not have diplomatic presence in Kabul where its embassy has remained closed since the Taliban took over Afghanistan in August last.

The government of Ashraf Ghani in Afghanistan had in the last fiscal received around Rs 348 crore from India.

The Maldives at Rs 360 crore (as against Rs 250 crore in 2021-22) also saw an increase in India’s annual aid provision in today’s budget document.

At Rs 2,266.24 crore in 2022-23, Bhutan is once again be the highest recipient of India’s annual financial aid. But this is lower than Rs 3,004.95 crore in 2021-22 fiscal.

The second highest recipient in the coming financial year of the allocation will be the Indian Ocean island of Mauritius — Rs 900 crore.

 

Chinese claim over Indian territories

According to The Eurasian Times, Chinese Ministry of Civil Affairs announced that it has granted “standardized” names for 15 locations in the Indian state of Arunachal Pradesh, which will be featured on official Chinese maps.

India calls this Beijing’s motives of expanding its territory beyond the Line of Actual Control (LAC), the de facto border. It also says that the ongoing border standoff is unlikely to be over anytime soon.

India says, this is not the first time China has coined names for places in India’s Arunachal Pradesh state. A similar attempt was made in April 2017, in the backdrop of the Doklam crisis that erupted at the tri-junction between China, India and Bhutan.

“We have seen similar reports,” said Arindam Bagchi, the spokesperson for India’s External Affairs Ministry, referring to China’s move to rename places in Arunachal Pradesh. “Arunachal Pradesh has always been and will always be a vital part of India,” Bagchi asserted, calling the Chinese names as ‘invented’.

Among the 15 locations renamed by China are eight residential areas, four mountains, two rivers and a mountain pass. On Chinese maps, Arunachal Pradesh is labeled ‘Zangnan’ or ‘South Tibet’, and in 2017, Beijing gave six official names for locations in the state, which was considered as a retaliatory measure when the Dalai Lama, Tibet’s spiritual leader, visited the state.

China has traditionally asserted its claim over the whole of Arunachal, a state that it considers the extension of its Tibetan region. This is essentially the reason behind China raising a hue and cry every time India asserts its sovereignty over Arunachal or when dignitaries from New Delhi visit this northeastern state.

India had strongly reacted, when reports about China’s new land border law appeared in October 2021. New Delhi said, “China’s unilateral move to bring out a legislation that can have ramifications on our existing bilateral arrangements on border control… is of concern to us.”

The law was presented in March 2021; almost a year after the LAC crisis began and was considered as an attempt to legitimize the Chinese military’s actions in eastern Ladakh. It calls on various Chinese civilian and military institutions to ‘safeguard’ Chinese territory.

Indian media reports had earlier revealed how China has been trying to build human settlements, enclaves and villages inside Arunachal Pradesh. It has also constructed settlements inside the Bhutanese territory, considered strategic to India’s own security.

Beijing passed a similar rule to protect its maritime borders earlier this year. Both pieces of legislation provide law enforcement officials the authority to shoot ‘intruders’ anywhere in the country, including the Himalayas and the South China Sea, Jayanta Kalita, Editor, The EurAsian Times wrote in an article.

The Chinese claim over Arunachal dates back to the Shimla Convention of 1914 which led to an agreement regarding the border between British India and Tibet.

Even though the McMahon line agreed as the boundary by both sides was not recognized by China, it led to significant loss of territory for Tibet including Tawang, according to another article written by Jayanta Kalita for EurAsian Times.

China has long claimed the strategically significant town, which is only 30 kilometers from the Line of Actual Control (LAC), as its own. Beijing claims the entire state of Arunachal and refers to it as ‘southern Tibet’.

Dai Bingguo, a former Chinese border negotiator with India, said in 2017 that the border conflict between the two nations can be resolved if New Delhi recognizes Beijing’s claim to Tawang. India, of course, wasted no time in refuting such assertions. However, this indicated the strategic importance that China places on Tawang. It also explains the reason behind the Chinese construction of settlements in Arunachal.

Tawang has a long history with Tibet. The Gaden Namgyal Lhatse (Tawang Monastery) is a three-century-old monastery on the Bhutan-China border. According to legend, the 5th Dalai Lama, Ngawang Lobsang Gyatso, wanted a monastery erected in Tawang, and it was built.

The Chinese have used the argument that “The 5th Dalai Lama belonged to Tawang and that means Tawang was historically a part of Tibet, which in turn means that it belongs to China,” said Kondapalli.

While these new Chinese assertions do not cause a major change on the ground, they hint at a permanent militarization of the LAC. As of now, all eyes would be on China to see if takes any unilateral action citing its new border law, and creates further troubles for India.

 

Corona virus likely to move from India to neighboring countries

The world is watching India’s coronavirus crisis but Asia’s developing nations are all at risk. From Laos, Vietnam and Thailand in Southeast Asia to Bhutan and Nepal bordering India, countries have been reporting significant surges.

The reported spikes in these handfuls of nations have been steep enough to raise the alert against potential dangers of an uncontrolled spread. The increase is mainly because of more contagious virus variants, though complacency and lack of resources to contain the spread have also been cited as reasons.

In Laos last week, the health minister sought medical equipment, supplies and treatment, as cases jumped more than 200-fold in a month.

In Nepal hospitals have been quickly filling up and running out of oxygen supplies. With infections surging, will Nepal be the next Covid-19 hotspot?

In Vietnam, authorities on Tuesday closed schools in Hanoi as Vietnam battles its first wave of Covid-19 cases via community transmission in more than a month.

In Thailand health facilities are under pressure, as 98% of new cases are from a more infectious strain of the pathogen, while some island nations in the Pacific Ocean are facing their first Covid waves.

Although nowhere close to India’s population or flare-up in scope, the reported spikes in these countries have been far steeper, signaling the potential dangers of an uncontrolled spread. The resurgence – and first-time outbreaks in some places that largely avoided the scourge last year – heightens the urgency of delivering vaccine supplies to poorer, less influential countries and averting a protracted pandemic.

Also on top of the list are Bhutan, Trinidad and Tobago, Suriname, Cambodia and Fiji, as they reported the epidemic erupting at a high triple-digit pace.

All countries are at risk as disease appears to be becoming endemic and will likely remain a risk to all countries for the foreseeable future.

The situation is very serious as new variants require a new vaccine and a booster for those already vaccinated. The economic hardship of poorer countries makes the battle even tougher.

The new cases emerged shortly before a three-day public holiday in Vietnam when many families travel across the country, raising the risk of a wider outbreak.

In Sri Lanka, authorities have isolated areas, banned weddings and meetings and closed cinemas and pubs to cap a record spike following last month’s local New Year festivities. The government says the situation is under control.

The Covax program to distribute vaccines around the world had planned to ship 1.9 million doses in the first half of this year. However, India’s surge in cases has resulted in global shortages.

The situations in many countries prove that vaccines are far from a panacea. Some vaccines, which had been considered highly effective, caused severe side effects, including even death, leading many countries to stop their use.