Bulgaria: Newest customer of Iranian oil

The Eurostat, European Union statistics office announced the import of Iranian oil by three European Union (EU) members in 2022, and introduced Bulgaria as the newest customer of Iranian oil in this union, IRNA reported on Sunday.

The information published by Eurostat shows that the European Union imported 4,181 tons of crude oil or oil products from Iran last year.

Although the amount of EU oil imports from Iran is not a significant figure, it indicates the desire of European refineries to ignore the US sanctions against Iran, and the inclusion of these figures in the official European oil import statistics shows the desire of the European authorities to distance themselves from the sanctions, or at least showing their objection to the US sanctions policy against Iran.

Iranian President Ebrahim Raisi has said that the oil and gas sector experienced a growth of 9% in the past Iranian calendar year 1401.

Oil Minister Javad Oji has recently said that a new record high will be reached in the country’s oil export in the current Iranian calendar year.

The country’s oil export in 1401 was 83 million barrels more than that of 1400 and 190 million barrels more than the export in 1399, the minister announced.

Underlining that now oil export has reached the highest figure in the last two years, the official said, “Considering that the Oil Ministry is one of the main providers of the country's foreign currency; in the 13th government, despite the tightening of cruel sanctions, fortunately, thanks to the grace of God and the efforts of our colleagues in the country's oil and gas industries, there are good records in the field of exporting crude oil, gas condensate, and petroleum and petrochemical products.”

Despite the negative impacts of the US sanctions, Iran has been ramping up its oil production and exports over the past few months.

In his remarks in November 2022, President Raisi highlighted the failure of the enemy’s policy of maximum pressure, saying the country’s oil export has reached the pre-sanction levels.

Back in January, the US Energy Information Administration (EIA) in a report put Iran’s average oil production in 2022 at 2.54 million bpd, 140,000 bpd more than the previous year.

Iran's oil production in 2021 was about 2.4 million bpd.

 

 

Saudi Navy carries out evacuation operation from Sudan

The Royal Saudi Naval Forces (RSNF) carried out the operation that evacuated citizens, other nationals, diplomats and international officials from Sudan on Saturday, the Foreign Ministry announced. The RSNF conducted the operation with the support of various branches of the armed forces.

The Ministry said, “66 persons from Kuwait, Qatar, UAE, Egypt, Tunisia, Pakistan, India, Bulgaria, Bulgaria, Philippines, Canada, and Burkina Faso were among the evacuated.” The number of evacuated Saudi citizens was 91 persons.

All the Saudi citizens and nationals of other countries have arrived safely in Jeddah. This has come in the implementation of the directives of the Kingdom’s leadership, the Ministry said.

The batches arrived in Jeddah at King Faisal Naval Base and were received by Deputy Minister of Foreign Affairs Eng. Waleed Al-Khereiji.

Al-Khereiji said that the journey of the evacuation was long, starting from Khartoum, passing through a number of regions in Sudan until reaching Port Sudan, and with the cooperation of government agencies in the Kingdom. He affirmed that an important role of the operation was done by Ministry of Defense that implemented this plan.

“We all celebrate the return of our sons and the sons of brotherly and friendly countries to the land of Saudi Arabia, which coincided with the celebration of Eid Al-Fitr.”

Saudi Arabia has worked to provide all the main needs for the foreign nationals, in preparation for facilitating their departure to their countries.

Meanwhile, Foreign Minister Prince Faisal Bin Farhan received a phone call from his Kuwaiti counterpart Sheikh Salem Abdullah Al-Jaber Al-Sabah.

Sheikh Salem voiced sincere congratulations on successful evacuations by Saudi ships of citizens from 11 countries from Sudan to Jeddah.

Sheikh Salem expressed Kuwait's appreciation and gratitude to the Saudi foreign minister for the Kingdom's efforts to ensure the evacuation of Kuwaiti citizens from Sudan.

The Ministry of Foreign Affairs had announced earlier on Saturday the start of arranging the evacuation of Saudi citizens and a number of nationals from other countries from Sudan to Jeddah by sea on 5 Saudi ships. The second Saudi ship was carrying Saudia airline crew who was targeted in Khartoum airport.

It is noteworthy that after a week of fighting between two factions of the country’s military leadership, at least 400 people have been killed in Sudan.

Ukraine grain saga

From restrictions on Ukrainian grain going to Eastern Europe to costly English breakfasts and drought problems, here’s a snapshot of key food stories from around the world compiled by Agnieszka de Sousa in London for Bloomberg.

The latest chapter of the Ukrainian grain saga in Eastern Europe returned to Brussels. The European Union will look to prohibit the domestic sale of Ukraine’s grain in five member states, only allowing transit to other destinations. That follows unilateral bans by Poland, Hungary, Slovakia and Bulgaria on imports of Ukraine’s produce on fears the supplies are hurting their own markets.

That effectively means Ukrainian exporters face losing sales in those countries. For example, 7% of Ukraine’s corn and wheat exports have gone to Poland this season, according to UkrAgroConsult. Some 7% of its corn shipments have also gone to Hungary.

It’s not the only setback Ukraine’s agriculture sector has faced this week. Its Black Sea exports were again disrupted after inspections of ships under a safe-passage corridor were halted for two days — after a similar stoppage the previous week. Kyiv has blamed the disruption to the grain-export deal — which has been crucial for bringing down global food-commodity costs from records reached after Russia’s invasion — on Moscow. 

While the shipping resumption is good news for both Ukraine and developing nations that import its grain, it highlights uncertainty over the initiative that Russia has repeatedly threatened to quit.

As Muslims around the world sat down for the final days of Ramadan, soaring food prices mean things aren’t what they used to be. Take this downtown Casablanca cafe, where hungry people would flock at sunset for the iftar meal. But with Moroccan prices at the highest since 1984, most of the seats now remain empty.

The average year-on-year food inflation between March and December 2022 was 29% in the Middle East and North Africa region, the World Bank said. Muslims comprise a quarter of the world’s population and food inflation during Ramadan affects a broad swath of the Middle East, Africa and Asia.

Riccardo Fabiani, North Africa project director for the International Crisis Group think tank, said, “It’s a special time of the year, which makes people more sensitive about the issue. The legitimacy of local governments is at risk, protests could intensify and, in general, the fear is that something could break in terms of public order and stability.”

A dry spell is currently wilting crops and delaying plantings in some of Europe’s top produce growers, risking a further run-up in food inflation. Southern Europe is a heavyweight in fruit and vegetables, and the bad weather follows a drought that withered rice paddies and olive groves last year. 

Observation satellites are being deployed to help farmers, utilities and supply chains adjust to persistently hotter and drier weather.

 

 

European countries agree on mechanism to pay for Russian gas in roubles

European energy firms can open special accounts with Gazprombank to pay for Russian gas, a key demand by Moscow, without breaching sanctions if transferring euros or dollars to them fulfils their contractual obligations, the German Economy Ministry said.

Russia cut gas supplies to Bulgaria and Poland this week for failing to pay in roubles, raising fears that other countries could be next.

Moscow's decree says Gazprombank would open special "K" type accounts for gas payments from foreign buyers. An EU company would transfer foreign currency into one such account, and then a Russian bank would convert the payment to roubles and transfer the roubles to another "K" account belonging to Gazprom.

European Union countries remain divided over whether sanctions would be broken if they engage with Russia's roubles payment demand.

Russia's decree said the buyer's obligation would be considered fulfilled only when the roubles arrived in Gazprom's account.

"There are European guidelines on payment modalities, which form the framework for us and which we adhere to," a spokesperson for Germany's Economy Ministry said on Friday in an e-mailed statement.

"According to these guidelines, account K, to which payment is made in euros/dollars, is in line with the sanctions if companies declare that contracts have been fulfilled with payment in euros or dollars."

A government source said that it was irrelevant in which country the K account is opened as long as the bank in question was not on any sanctions list.

The European Commission will provide EU countries with extra guidance on whether they can keep paying for Russian gas without breaching the bloc's sanctions, a Commission official told Reuters on Friday.

Companies and countries were at odds over Moscow's rouble-for-gas payment system on Friday, while European officials promised more guidance on whether buying Russian gas can comply with sanctions and Russia said it saw no problem with its plan.

It did not specify whether companies could do this and also open a rouble account, as requested by Russia, without being in breach of EU sanctions. 

Denmark's Orsted said it has no intention of opening a rouble account in Russia, although it declined to comment on payment in other currencies. Italy's ENI also said it had not opened an account in roubles.

Under Russia's mechanism, buyers are obliged to deposit euros or dollars into an account at privately-owned Russian bank Gazprombank, which has then to convert them into roubles, place the proceeds in another account owned by the foreign buyer and transfer the payment in Russian currency to Gazprom.

EU energy ministers will on Monday hold an emergency meeting to discuss their response to Russia's demand.

The European Commission, the EU executive, has already said countries may be able to make sanctions-compliant payments provided they declare their payments are completed once it has been made in euros and before it is converted into roubles.

EU countries, however, have said they want more clarity, while Germany, the bloc's biggest economy and among the most dependent on Russian gas, says it cannot afford to stop buying Russian supplies, even though it is taking steps to find alternative sources of energy.

A European Commission official told Reuters on Friday the executive will provide EU countries with extra guidance following complaints from some countries that ambiguity would leave different countries reaching different interpretations of what they were allowed to do.

Russia on Friday said it saw no problem with its proposed system.

"If the established procedure for interaction between gas buyers and the authorized bank is observed by the buyer, and there are no problems for the authorized bank in terms of selling currency on the stock exchange due to restrictive measures on the part of foreign states, then there cannot be any obstacles to paying for and receiving natural gas," Russian Central Bank Governor Elvira Nabiullina said.

The rouble has to an extent benefited from Moscow's demand for roubles payment. The currency hit its highest level versus the euro in more than two years on Friday supported by capital controls as the central bank cut interest rates for the second time this month.

European gas prices have hit record levels since the invasion of Ukraine by Russia, Europe's top gas supplier, and were up slightly on Friday.

Central to the confusion on the part of the European buyers is whether Russia would only consider the payment to be complete after the gas-to-roubles conversion is done - a transaction that would involve Russia's central bank, which is subject to EU sanctions.

Speaking on condition of anonymity, an EU diplomat admitted a certain amount of ambiguity could be helpful as the bloc seeks to prevent any widening of divisions between countries, which have different levels of reliance on Russia and different deadlines to make payments.

"In the circumstances, a little bit of messiness might just be preferable," the diplomat said.

Poland and Bulgaria have contracts with Gazprom due to expire at the end of this year, which meant their search for alternative supplies was already advanced. Poland also has very healthy gas stocks around 77% full.

Austria’s OMV, which has a contract with Gazprom until 2040, said it was analyzing how a change could be implemented for it to pay in roubles without breaching sanctions when next payment is due in May.

Back Sea Brewing Conflict

Many experts from United States find the whole swath of territory in Eastern Europe, near Russia, very far away and hard to conceptualize. This part of the world involves a number of countries, small and large that is generally neither the most frequently discussed in the US news nor frequented by the US tourists.

To make sense of much of this remote region, it can be helpful to take a perspective that centers on the Black Sea and views that body of water as the key point of reference for much of the region. Doing so not only helps clarify what Russia is up to in its neighborhood, but also shines a spotlight on Chinese activity.

The Black Sea region is best viewed as having three big anchors—Ukraine to the north, Turkey to the south, Russia to the northeast. Then there are three countries on either side of the region—Romania, Bulgaria and Moldova on the left or west, Georgia and Armenia and Azerbaijan to the east.

Turkey, Romania and Bulgaria are NATO allies; the US and NATO’s other twenty-six members (making for a grand total of thirty) are sworn to their defense through a mutual-defense treaty. And even though Ukraine is not a NATO ally, the United States did promise (along with Russia) back in 1994 to help protect its security—which is why the Russian aggression against Ukraine since 2014 has been so concerning.

None of this is to say that the US needs to prepare for war against China, or Russia for that matter, in the Black Sea region. The Black Sea is far from the Chinese coasts; the main military concerns are with China in the western Pacific region.

Moreover, as Chairman of the Joint Chiefs of Staff, Gen. Mark Milley, told a group of people at the Brookings Institution on 2nd December 2020, the US is in a period of great-power competition but it is not in a period of conflict, and the goal should be to keep things that way while competing effectively against Russian and Chinese influence.

Indeed, as with many parts of the world, China does not pose a direct military threat, rather it challenges the US interests in the realms of economics, technology, and espionage. To be specific:

- China is offering loans, through its Belt and Road Initiative, to many countries along a vast periphery and perimeter. This includes the Black Sea. But buyer must be cognizant that China’s money comes with strings. The US needs to help regional countries understand this and so that they can accept any loans with their eyes wide open.

- China’s software and hardware are optimized for intrusive monitoring of the population, Black Sea inhabitants will be monitored if and when they accept Chinese technology, even from private firms, in realms like 5G. China’s civil-commercial-military-intelligence “fusion law” formalizes this; Beijing isn’t even pretending to do otherwise.

- China is actively trying to buy into sectors that have huge security implications. A prime example is the manufacturer Motorsich in Ukraine, which builds high-quality engines for helicopters and aircraft. A struggling Ukrainian economy may make such assets relatively easy pickings for a purportedly friendly but also devious foreign investor

- In general, Chinese infrastructure comes with long-term controlling interests

- Default on Chinese loans results in Chinese ownership of assets—and the default is a distinct possibility when big projects are foisted upon unsuspecting countries with weak economies and a lack of transparency in their investment decisions.

The US can do a lot to help in ways that are already showing promise in other regions around the world. Malaysia and Pakistan, for example, have figured out that they can say no to massive Chinese projects that would bring them little in the way of jobs (since China brings along most of its own workers for Belt and Road projects) and much in the way of debt. A central database that tracks such Chinese efforts, and helps countries do the calculus of pros and cons for each proposed investment before signing any contracts, can go a long way towards defeating such practices.

The US needs to be a part of the leadership in this region. The EU and NATO are important, to complement our diplomacy with both those organizations, the incoming Biden administration should recognize the Black Sea as a region of importance, requiring a focus on diplomacy and economic engagement.

The good news is that war does not have to be the future for the Black Sea. Military support is important, but it is just one of our tools for engagement in this vital region. To avoid bad news, the US must engage effectively, be patient, and sustain its efforts, when it chooses to do. It is time to choose.