Tattered Western Order

The great power competition between the United States and China is in full swing. Both the countries are embroiled in major issues of international affairs, and none of the international issues remains immune to their influence. 

Trade war, ideational war, and forging alliances are new forms of strategies crafted by Washington and Beijing. Arguably, the world no longer solely is dominated by the West materially and ideationally. The material and ideational decline by and large is contributing to enfeebling the Western hegemony.

The democratic crises in the West and the rise of China in terms of economy, becoming the world’s largest export market, and rapid rise in technology caused a great deal of consternation for the West. The deeply embedded crisis in the Western-led liberal order, ostensibly, leaves a vacuum for China.

The old Western-led liberal order looks more troubled today than at any time since the 1930s. 

Over a decade, Western free societies endured polarization, corruption, populism, inequality, and illiberal threats to the rule of law. The former US president Donald Trump's rhetoric of “America First” was not only symptomatic of attacks on liberal internationalism but also challenged US exceptionalism.

An exclusionary approach of Trump created a deep rift in international politics. The US exit from the Trans-Pacific Partnership Agreement (TPP), withdrawal from the Paris Climate Agreement and threat of the World Health Organization (WHO) astonished many experts. 

Joseph Nye accurately assessed Trump’s self-destructive approach and argues “I am not worried by the rise of China I am more worried by the rise of Trump” His populism, reactionary nationalism, an assault on the rule of law and openness of US society badly tarnished the American image.

Anne-Marie Slaughter states “Four years of erratic, personality-driven leadership in the United States under President Donald Trump have left the liberal order in tatters”. 

To improve the tarnished image of the US, the incumbent president Joe Biden promised to “rebuild the nation, revitalizing our democracy, and winning the future for America”.

In competition with China, the US must rebuild the social purpose of liberal democracy at home and improve the damaged image of liberal democracy abroad. The work appears to be a daunting task for the Biden administration to improve its triple crises, crisis of democracy, crisis of leadership, and crisis of multilateralism. 

The US is extremely likely to weaponize ideology in its strategic rivalry vis-à-vis China. The battle of democracy vs. autocracy will gain further momentum. Biden advises his countrymen “I predict to you your children or grandchildren are going to be doing their doctoral thesis on the issue of who succeeded, autocracy or democracy, because that is what is at stake”.

The relative rise of China in terms of economy and changing distribution of global wealth in parity between the West and East would go in favour of the East in the coming decades. The diffusion of power and transfer of global wealth will make the hegemonic decline of the West irreversible. 

The Chinese vision, a community of shared future for mankind first emerged in 2011 as a rhetorical slogan in Chinese diplomacy gained content and substance. The phrase in October 2017 after the 19th National Congress was incorporated into the Constitution of the Chinese Communist Party (CCP) and subsequently into the Chinese Constitution in March 2018.  

A community of shared future for mankind is aimed at building an inclusive, open, clean and beautiful world contributing to lasting peace, common prosperity and universal security, providing instructive answers to addressing the fragmentation and turbulence in international politics. China has actively advocated the phrase in public diplomacy. The Chinese vision was accepted in different UN resolutions as far as the peace and security of the world are concerned.

To be fair, the Chinese vision would confront innumerable challenges in a politically divided world community. Nadège Rolland terms the Chinese vision “looks more like a list of what Beijing advocates for its own needs, security, and position than an innovative contribution for the future of the world”.

Meanwhile, China initiated the Global Civilizational Initiative GCI. The initiative is believed to have been promoting diversity, plurality and dignity among nations challenging the idea's imposition and discouraging the exploitation of communities and resources that will prove instrumental for diversity, mutual understanding, and the world's economic growth.

China under GCI is trying to undermine Western democracy which is coupled with populism, polarization, racism and xenophobia. The contemporary world is going through tremendous changes, power is shifting from the West to the East. 

The Western dominance in terms of material and ideational seems to be declining. The Saudi-Iran détente brokered by China was a momentous occasion in Middle Eastern politics that caused a huge setback to the US interest. The inclusion of Saudi Arabia, UAE, Iran Egypt, Ethiopia and Argentina in BRICS would cement China’s ideational, and material strength vis-à-vis the US. 

The prevailing battle of democracy vs. autocracy will further accelerate. The United States promotes Quadrilateral Security Dialogue Quad comprised the democratic countries like the US, India, Japan and Australia in a bid to contain China.

The Ukraine crisis has brought China and Russia closer together. The US domestically and internationally faces dual challenges in the projection of democracy. Domestic crises such as populism, racism, and xenophobia pose severe threats to democracy. In the international arena, China and Russia are causing significant obstacles in the advancement of US democracy.     

 

Fallout from Canada-India clash

Canada-India relations are reeling from the announcement that Canadian security agencies had uncovered evidence linking the Indian government to the assassination of an Indian-born Canadian citizen in British Columbia earlier this year. Canada Institute Associate Xavier Delgado outlines what's at stake for both countries and their allies in the Indo-Pacific.

Prime Minister Justin Trudeau announced that Canadian security agencies have obtained credible evidence linking the Indian government to the unsolved murder of Hardeep Singh Nijjar, a Canadian citizen and notable advocate for Sikh separatism. 

Nijjar was shot by two masked assailants outside a Sikh temple in British Columbia earlier this year in an attack that Canada alleges has since been connected to agents of India.

The Indian foreign ministry decried the allegations as absurd and, in the aftermath of the announcement, exchanged tit-for-tat expulsions of senior diplomats from Ottawa and New Delhi.

The dispute has shined a sudden spotlight on the Canada-India relationship, which, prior to the Nijjar incident, had been trending in a positive direction. Geopolitical developments, economic ties, and demographic trends over the past ten years had set the stage for closer cooperation between the two former British colonies. India’s prominence in Canada’s 2022 Indo-Pacific Strategy and high-level negotiations between the two states for an early progress trade agreement (EPTA) gave supporters of the relationship plenty of reasons to be optimistic.

Now, the allegations that the Indian government orchestrated the assassination of a Canadian citizen on Canadian soil have cast a cloud of doubt over the path ahead for the bilateral relationship.

Trade will likely be the first major casualty of the fallout, with negotiations for the EPTA being put on hold. Both countries declared that they would pause trade talks with each other earlier this month and Canadian Trade Minister Mary Ng has indefinitely postponed a trade mission to New Delhi that had been planned for October. The negotiations were a notable part of Canada’s Indo-Pacific Strategy, which listed the EPTA as a critical step towards a larger comprehensive economic partnership agreement (CEPA) that would bolster trade ties between the two countries.

The stalled trade talks have put a US$17 billion bilateral trade relationship under strain. Canadian merchandise trade with India grew from approximately US$3.87 billion in 2012 to US$10.18 billion in 2022, with major increases in the export of Canadian energy products and import of Indian consumer goods. In that same year, services trade between the two countries measured US$6.96 billion. 

A reduction in the flow of Indian immigrants, which constitute almost one in five of all recent immigrants to Canada, could be even more devastating than a deterioration of trade relations.

Canada recently reached the 40-million-population milestone off an influx in inbound migration following the COVID-19 pandemic. In fact, Canada’s population growth, which is the fastest in the G7, is mainly driven by migration ‑ four in five new Canadians from 2016 to 2021 were immigrants. 

Indian immigration to Canada has tripled since 2013, overtaking and pulling away from the Philippines and China as the top source country for new Canadians in the 2021 census.

That census also counted 1.3 million ethnic Indians living in Canada, over 1 million of whom resided in British Columbia or Ontario. 77% of that group – 771,790 people – follow Sikhism, making Canada’s Sikh population the largest in the world outside of India. 

India also tops a notable subcategory of immigration ‑ international students, 34% of international students in Canada from 2015 to 2019 came from India, providing a critical source of revenue for Canadian academic institutions; by 2022, that share had grown to 40%. These numbers directly translate to the labor force, with Indian graduates from Canadian programs accounting for the largest share of post-graduate work permit holders in 2018 over China (20%) and the United States (1%).

Beyond the bounds of Canada-India relations, the dispute between the two countries may throw a wrench in the emerging Indo-Pacific framework of institutions and alliances.

India, with its economic might and security capabilities, has been hailed by the United States and democratic allies as a regional counterweight to China. Washington included India as a founding member of the Indo-Pacific Economic Framework (IPEF) and the freshly-anointed I2U2 bloc with Israel and the United Arab Emirates.

Both countries are also founding members of the Quadrilateral Security Dialogue (QSD or Quad), a strategic security dialogue that includes Japan and Australia.

Canada, for its part, was not invited to join the Quad or IPEF at the conception of either group, nor was it included alongside Five Eyes allies Australia and the United Kingdom in the AUKUS security pact. After inviting Canada to join the Trans-Pacific Partnership during the Obama administration, the United States opted to not join the agreement, leaving both countries without a shared major economic or security institution in the Indo-Pacific. 

A chilling of relations with India could hinder Canada’s ability to join the network of Indo-Pacific institutions, both because regional allies will be wary of angering the Modi government and because India itself could block Canadian membership in certain groups.

Ottawa is clearly aware of India’s influence and power in the region. The Canadian Indo-Pacific strategy, published in late 2022, has an entire section dedicated to India that reads, “India’s strategic importance and leadership – both across the region and globally – will only increase as India – the world’s biggest democracy – becomes the most populous country in the world and continues to grow its economy.”

Canada is not the only party that stands to lose from this dispute. The allegations can damage India’s public image as a democratic nation committed to a rules-based order or, more critically, its perception as a trustworthy ally in the competition against China. Canada’s Five Eyes partners could reevaluate intelligence sharing and law enforcement cooperation with India if Canadian officials uncover definitive proof of India’s involvement in Nijjar’s murder. 

Disputes between allies are common and, in the diverse roster of countries that constitute the emerging Indo-Pacific architecture, should be expected. Governments disagree frequently over trade policies, environmental practices, and other issues that don’t pose a threat to their diplomatic relationships.

The Canada-India dispute is unique in that the severity of the allegations, the economic and demographic ties between the two countries, and the geopolitical context in which the situation unfolded have raised the stakes for all parties, including the United States.

To prevent spillover damage to the nascent Indo-Pacific alliances, Washington will need to approach the situation carefully. Beijing benefits the most from in-fighting between major US allies, but regardless of how the coming weeks play out, both Canada and India will still have poor relations with China and good relations with the United States. One reason for this is the values that all three countries nominally share. US leaders should remember this and remind Ottawa and New Delhi that the path forward must be paved by justice and a commitment to due process to deviate from those values would be to bring relations between all three countries into uncharted and volatile territory.

 

Iran becomes 3rd top oil producer among OPEC members

Iran continued to increase its oil production in August to reach three million barrels per day (bpd) and stand at the third place among OPEC top producers, according to figures released in the organization’s latest monthly report.

OPEC data shows that Iran’s oil output increased by 143,000 bpd or 5% in August as compared to production figures reported in July, Shana reported.

The figures showed that Iran had regained its position as the third largest oil producer in OPEC in August after Saudi Arabia and Iraq.

Iran posted the largest increase in oil production in OPEC last month, as the country is exempt from output cuts introduced by the alliance to help boost international oil prices.

Iranian heavy oil prices rose to US$87.58 per barrel in August from US$81.48 reported in July, OPEC data showed.

The figures prove earlier reports suggesting Iranian oil production and exports had reached multi-year record levels in August despite US sanctions that restrict the country’s ability to engage in normal trade of oil products.

Estimates by international energy firms published earlier this month had suggested that Iran’s oil exports were nearly 3.15 million bpd in August as oil exports from the country reached over 2 million bpd.

Private refiners in China accounted for a bulk of oil purchases from Iran last month as shipments rose to an all-time record of 1.5 million bpd.

Iran’s Oil Minister Javad Oji said earlier that Iran’s oil production will reach 3.4 million bpd by late September.

 

China blacklists US defence companies

Beijing has announced sanctions on two US companies over arms sales to Taiwan, warning of forceful retaliation against any further US military deals with the island.

Without saying what action Beijing would take, the Chinese foreign ministry said on Friday that the sanctions applied to Northrop Grumman and a unit of Lockheed Martin.

Ministry spokeswoman Mao Ning said the St Louis, Missouri, branch of Lockheed Martin was the main contractor in a US arms sale to Taipei on August 24 while Northrop Grumman, based in Falls Church, Virginia, had been involved in supplying weapons to Taiwan multiple times.

Mao said Washington was going further down the wrong and dangerous path of arming Taiwan despite Beijing’s firm opposition.

“We urge the US side … to stop selling weapons to Taiwan, to stop the US-Taiwan military collusion and to stop arming Taiwan, otherwise it will be met with resolute and forceful countermeasures of China,” she said.

The State Department announced three weeks ago that the US had approved a half billion dollar sale of advanced sensor systems built by Lockheed Martin for F-16 fighter jets to Taipei.

Lockheed Martin – along with Raytheon Missiles and Defence – was already on a Chinese Commerce Ministry blacklist over Taiwan arms sales.

Beijing later said Chinese companies were banned from doing business with the US firms and senior executives of Lockheed or RMD were not allowed to travel to or work in China.

The self-governed island has become one of the greatest sources of tension between the two powers in recent years.

Beijing regards Taiwan as a breakaway province to be brought under mainland control by force if necessary and opposes any official interactions between countries it has established diplomatic relations with and the island.

Most countries, including the US, do not recognize the island as an independent state, although Washington is opposed to any attempt to take it forcibly.

In addition to the arms sale, the Biden administration notified the US Congress last month that it had approved the first-ever US military aid – amounting to US$80 million – to Taiwan under a program generally reserved for assistance to sovereign, independent states.

The US government is also reportedly planning to redirect millions of dollars of military financing for Egypt to Taiwan.

On Friday, Mao said US arms sales to Taiwan seriously violate the one-China principle and severely harm China’s sovereignty and security interests”.

“The Chinese government’s determination to defend its national sovereignty and territorial integrity is unwavering,” she said.

Last weekend US President Joe Biden said the economic slowdown in mainland China could make it less likely to consider an invasion of Taiwan.

“I don’t think it’s going to cause China to invade Taiwan. And matter of fact, the opposite – it probably doesn’t have the – the same capacity that it had before,” he said on Sunday during a visit to Vietnam.

Beijing responded saying that resolving the Taiwan question is a matter for the Chinese ourselves.

China refinery output rises to record level

China's oil refinery throughput in August rose to a record, as processors in the world's second-largest fossil oil consumer kept run rates high to meet summer travel demand and capitalize on strengthening export margins.

Total refinery throughput was a record 64.69 million metric tons in August, data from the National Bureau of Statistics (NBS) showed, up 19.6% from a year ago.

That is the equivalent of 15.23 million barrels per day (bpd), also a record on a daily basis and up from the 12.64 million bpd processed a year earlier when extensive COVID pandemic restrictions and weak domestic fuel demand led refiners to cut runs.

August throughput was also up from July's 14.87 million bpd.

Year-to-date throughput gained 11.9% from a year earlier to 491.4 million tons, or 14.76 million bpd.

Domestic demand for gasoline and kerosene over the August vacation season was a key driver of domestic fuel consumption, with travel levels likely to be have been further boosted by revenge travel after the pandemic, analysts said ahead of the data.

Domestic airline capacity by available seats was around 77.5 million in August, up around 17% from pre-pandemic levels, according to data from aviation analytics firm OAG.

G20 decisions, what next for Pakistan?

The G20 conference has come to an end in Delhi, where a lot happened which can become a permanent topic separately.

For example, the Indian media mentioned a statement by the Prime Minister of Italy regarding BRI, the Prime Minister of Canada spoke about Khalistan while standing in the Indian capital and when the rights of Sikh in Canada holding a referendum on Khalistan.

Muhammad Mehdi, Chairman of the Institute of International Relations and Media Research has discussed the concept of the Global South that President Biden arrived in Delhi with this concept, and the leadership of the Global South will be handed over to India according to Washington’s vision. 

According to Mehdi, for Pakistan any situation that affects the region is extremely important because the country would be affected whether it likes it or not. The Global South's vision is to prepare India to compete with China's BRI project.

India does not have enough economic size to be able to do this on its own, so its economic needs will be fulfilled by the United States as much as it needs compared to China.

The next and very important question is, whether the US economy under the debt of US$7.6 trillion has enough power to meet these needs or not? In order to promote the concept of the Global South, an MoU was signed during the G20 summit in India.

This economic corridor project will connect ports and rail links to the Middle East, Israel and Europe. The project is being named as India Middle East Europe Economic Corridor (IMEEEC).

It includes United States, India, United Arab Emirates, Saudi Arabia and the European Union. The goal of this project is to connect India's ports with the United Arab Emirates, Saudi Arabia by developing a large-scale rail network and then get access to Israel and Europe from there. And apart from the Suez Canal, another route should be developed while China's BRI project should also be made a response to it.

Discussions on this project started in 2021 at a Business Forum between the United States, India, UAE and Israel, and later Saudi Arabia also joined these discussions.

When the Abraham Accords was being signed between certain Arab countries and Israel under the patronage of the United States, Mehdi had said that it should not be seen only in the context of the Arab countries and Israel, but it will have far-reaching consequences on the region where Pakistan is located and that has started happening.

Saudi Arabia does not recognize Israel, but it has recognized Israel's position in this agreement. Now, what does the US want to achieve by including the Arab countries in it? It is clear that through the BRI project, China's footprints are clearly visible on the Arab land.  

This is not only limited to economic matters, but by standing with Saudi Arabia and Iran, China has given a clear message that now its political position has also become strong in this region and the UAE and Saudi Arabia have also joined BRICS, which also includes India, but its souls are China and Russia.

According to Mehdi, United States cannot afford such a situation. When the Ottoman Empire disintegrated as a result of the First World War, the British shadow remained over the Arab region from that time until the end of the Second World War, and then later the United States replaced the United Kingdom and enjoyed its position solely.

But China's recent successes have put many question marks on the presence of the US supremacy in this region and its future, and the supwer is taking steps to maintain its supremacy by presenting the concept of the Global South. And in order to achieve this goal, India is being encouraged.

Narendra Modi will face polls and in order to win he needs to put his nation behind a truck light similar to what he has achieved by holding this conference and promoting this economic corridor.

This is called a political slogan because there is a very strong belief that the current US economy, which will have a debt of US7.6 trillion by the end of year 2024, is not strong enough to support this project. 

Regarding the same thing that happened to the New Silk route project announced by Secretary of State Hillary Clinton during the Obama era, an economic route would be made from Afghanistan, but then it could never be implemented.

The real goal of the current plan seems to be to confuse the Arab world with the fact that the United States is coming down a new path and to make them think about how far they should go with China and how much should be carried forward.

If the US succeeds in getting the Arab countries into this mess, it will be a success. Because these Arab countries are concerned about their internal and international security, and they still depend on the largest suppliers of arms and military might.

Muhammad Mehdi is the Chairman of the Institute of International Relations and Media Research

 

Saudi Crown Prince announces economic corridor linking India, Middle East and Europe

According to Saudi Gazette, Saudi Crown Prince and Prime Minister Mohammed Bin Salman announced the signing of a memorandum of understanding (MoU) for an economic corridor project connecting India with the Middle East and Europe.

The project aims to enhance economic connectivity, develop and upgrade infrastructure, and boost trade between the involved parties.

Speaking at the occasion of the launch of the corridor on the sidelines of the G20 Leaders' Summit in Delhi on Saturday, the Crown Prince said, “I am pleased today that we are gathered in this friendly country to sign an MoU for an economic corridor project connecting India with the Middle East and Europe.”

“This project is the culmination of our joint efforts over the past few months.

“It is built on principles that serve the common interests of our countries by enhancing economic connectivity and positively impacting our partners in other countries and the global economy as a whole.”

He added, “This project will contribute to the development and upgrading of infrastructure, including railways, port connections, and increased flow of goods and services, thus enhancing trade between the parties involved.

“It will also extend pipelines for the export and import of electricity and hydrogen to enhance global energy supply security, in addition to high-efficiency, reliable cross-border data transmission cables.”

The Crown Prince highlighted that the MoU also supports clean energy development efforts and will create new, high-quality employment opportunities along the corridors for all parties.

"To achieve what we have agreed upon in this memorandum, it requires the continuation of our collective efforts and the immediate commencement of developing the necessary mechanisms for its implementation within the agreed-upon timeframe," he said.

He also expressed profound gratitude to all those who worked together to take these foundational steps towards establishing this significant economic corridor.

Indian Prime Minister Narendra Modi announced the launch of the India-Middle East-Europe connectivity corridor, which is the first of its kind initiative on cooperation on connectivity and infrastructure involving India, UAE, Saudi Arabia, EU, France, Italy, Germany, and the United States.

The governments of Saudi Arabia and United States announced that they had signed a memorandum of understanding (MoU) between the two countries. The bilateral MoU provides a framework for developing a protocol for establishing intercontinental green transit corridors through the Kingdom to connect the continent of Asia with the continent of Europe.

This project aims to facilitate the transit of renewable electricity and clean hydrogen via transmission cables and pipelines as well as constructing rail linkages.

It is also intended to enhance energy security, support efforts for the development of clean energy, promote digital economy through digital connectivity and transmission of data via fiber cables, and promote trade and transport of goods by rail and through ports.

Saudi Arabia welcomed the role of the United States to facilitate and support the negotiation, establishment, and implementation of the green corridors transit protocol with the relevant countries.

Bangladesh going to be used as battleground of big powers, says Fakhrul

According to The Bangladesh Chronicle, Bangladesh Nationalist Party (BNP) Secretary General Mirza Fakhrul Islam Alamgir fears that Bangladesh was going to be used as a field in the fight of the big powers to establish their supremacy only because of the government’s imprudent diplomacy.

Speaking at a rally, he also voiced concern over Russian Foreign Minister Sergei Lavrov’s comment that the United States and its allies are trying to promote their interests in the South Asia region by using the Indo-Pacific strategy with their goal of countering China and Isolate Russia.

“What the Russian foreign minister said after arriving here has clearly manifested that Bangladesh is going to be used as a field in the sphere of influence of the big powers in their struggle for hegemony. It’s very alarming,” the BNP leader said.

He alleged that the Awami League government is completely responsible for creating such a situation and inviting danger for the nation. “They, the government, are making irresponsible statements and conducting their diplomacy imprudently to push Bangladesh to such a dire situation.”

Jatiyatabadi Mohila Dal brought out a rally in front of BNP’s Nayapaltan central office, marking its 45th funding anniversary. BNP founder Ziaur Rahman formed Mahila Dal, the female wing of the party, on September 09, 1978.

Lavrov arrived in Dhaka on a two-day visit and held a bilateral meeting with Foreign Minister AK Abdul Momen.

 

Bank of China opens branch in Saudi Arabia

China’s most internationalized state bank on Tuesday opened its first branch in Saudi Arabia in a move to expand the use of yuan amid a growing number of economic deals between the two countries.

Bank of China (BOC), one of China’s four biggest state-owned banks, opened its branch in Riyadh, the capital city of the oil-rich Middle Eastern country, more than two years after being given approval by the Saudi Arabian government.

The branch has more than 20 staff, with a majority hired locally – a condition requested by local authorities.

It is the second Chinese bank to open a branch in Saudi Arabia after the Industrial and Commercial Bank of China (ICBC) opened its first branch in Riyadh in 2015. ICBC also opened a branch in Jeddah in May.

China’s ambassador to Saudi Arabia, Chen Weiqing, said the opening of the branch was a result of positive developments in the bilateral relations between the two countries, and new stage of financial cooperation.

“It also shows that China highly recognizes the financial regulations, investment environment, and geographical advantages of Saudi Arabia,” Chen said, as he attended the opening ceremony with Bank of China president Liu Jin.

Saudi Central Bank governor Ayman al-Sayari and Saudi Arabia’s deputy investment minister, Saleh Ali Khabti, also attended the opening ceremony along with 250 guests.

The Saudi-listed ACWA Power, Saudi Arabia’s Ministry of Investment, Ajlan & Bros Holding Group and Zhejiang Rongsheng Holding Group signed memorandums of understanding involving internationalizing the yuan and green financing with BOC during the opening ceremony, the statement added.

The move came as part of a growing series of economic activities between China and Saudi Arabia, with their bilateral relations described as being at the best stage ever following President Xi Jinping’s state visit in December 2022, with both countries facing souring relations with the West.

During the trip at the end of last year, Xi pledged to work towards widening the use of yuan in oil and gas trade in the region, amid a push to establish the currency internationally and weaken the US dollar’s grip on world trade.

Saudi Arabia is China’s largest source of crude oil imports, with 87.5 million metric tons (641 million barrels) shipped in 2022.

Amid efforts by state banks to tap potential in the Middle East, BOC’s new branch has been licensed to provide basic commercial banking services to individual consumers and small- to medium-sized businesses, ranging from deposit accounts and loans to mortgages and yuan transactions.

At the weekend, BOC president Liu also met Khaled Mohamed Salem Balama Al Tameemi, the governor of the central bank of the United Arab Emirates, to court more support for its yuan clearing in the region and potential cooperation with the nation’s sovereign wealth funds.

In an interview with local media in June, BOC said the new branch aimed to offer the yuan to the wider Middle East region to assist commercial and financial trade between China, Saudi Arabia and beyond.

As there are many Chinese companies entering the market in the region, being able to trade and make financial transactions using the yuan would encourage Chinese companies to invest in the area.

The Saudi Arabian government first agreed to allow BOC to open its branch in January 2020. At the time, Saudi Arabia had only 14 foreign banks, including ICBC.

BOC also has existing branches in Abu Dhabi and Dubai in the UAE, as well as Bahrain, Turkey and Qatar.

Li Tong, president of the bank’s investment banking unit, Bank of China International, said in June during the Arab-China Business Conference in Riyadh that the new branch in Riyadh would push for financial cooperation, and further boost economic cooperation between the two countries.

The bank has also been in discussion with local counterparts to offer panda bonds – yuan-denominated bonds sold by overseas entities in China’s onshore bond market to raise investments in China.

A number of other banking sector collaborations have also been announced this year.

In March, the Export-Import Bank of China announced a first loan cooperation with Saudi National Bank, Saudi Arabia’s largest bank, in yuan.

Hong Kong has also been named as a major hub for financial cooperation between China and Saudi Arabia.

In July, the Hong Kong Monetary Authority, the city’s de facto central bank, signed a memorandum of understanding with the Saudi Central Bank, pledging initiatives in financial infrastructure development, open market operations, market connectivity and sustainable development.

 

 

Crude oil prices take a dip despite supply cut by Saudi Arabia and Russia

Oil prices reversed course on Wednesday after rising over 1one percent in the previous session, on a firmer dollar and as investors shrugged off jitters arising from supply cuts from Saudi Arabia and Russia.

"The reason the market gave back half of the gains and is listless this morning, is because within the language of the joint announcement there is a caveat that these cuts will be reviewed on a monthly basis," said John Evans of oil broker PVM.

"This flexibility add-in allows for wiggle room, but the market smells a taper," he said, citing conditions like anti-inflation battles in the United States and other countries, whether crude prices near US$100 a barrel, or the effect on Saudi oil revenues.

Saudi Arabia and Russia on Tuesday extended their voluntary oil cuts to the end of the year 2023. While Saudi Arabia relinquished one million barrels per day (bpd), Russia agreed to cut 300,000 bpd. These are on top of the April cut agreed by several OPEC Plus members till end 2024.

Both countries will review their decisions monthly to consider deepening cuts or raising output depending on market conditions.

The rising oil prices could be restrained when crude demand dips as US refineries enter their September-October maintenance period, said Sugandha Sachdeva of Acme Investment Advisors.

Iranian crude supply rises could also hobble price gains. "Iran is producing close to 3.1 million bpd and plans to pump around 3.4 million bpd," ING Economics analysts noted.

 

Chinese President to skip G-20 meeting

Who shows up where can be very revealing 

According to Bloomberg, for the first time since he took power, Chinese President Xi Jinping will skip a Group of 20 summit. Instead, China is sending Premier Li Qiang to the event hosted by India’s Prime Minister Narendra Modi. That’s a clear signal of the relative value he places on the G-20 — set up with US backing in the late 1990s — versus the newly expanding BRICS grouping. 

Xi just made one of his rare 2023 overseas visits last month, to attend the BRICS summit in South Africa, where he successfully pressed for its expansion to include commodity powerhouses including Saudi Arabia, Argentina and the United Arab Emirates.

The new BRICS-11 will account for a major share of key global inputs, according to calculations by Center for Strategic and International Studies researchers Gracelin Baskaran and Ben Cahill: a) 42% of the world’s oil supply, b072% percent of rare earth minerals- with three of the five nations with the largest reserves, c) 75% of the world’s manganese, d) 50% of global graphite and e) 28% of nickel

“It is quite possible that a more coordinated approach” toward export restrictions to the rest of the world could now develop among the BRICS-11, the CSIS analysts wrote.

In the energy field, the group features both major oil and gas producers as well as two of the largest importers, in China and India.

Therefore, there is an incentive for members to set up mechanisms to trade commodities outside the reach of the G-7 financial sector, Baskaran and Cahill wrote.

Ex-Treasury Secretary Lawrence Summers — who was in government when the G-20 began — says the enlarged BRICS is a symptom of the US abdicating global leadership in the cause of economic nationalism. Whereas Washington once championed free-trade deals, now its focus is on import restrictions and a buy American bias, he says.

Whenever anybody says they care about producers, not low prices for consumers, they are adopting a negative sum, ‘all-against-all’ vision of international economic policy that invites challenges to the post-WWII vision the US once championed, says Summers, a paid contributor to Bloomberg Television.

The BRICS-11 has its own challenges. Bloomberg’s geo-economics team, led by Jennifer Welch, cautions that the dollar is unlikely to be dethroned by any push by the group to use alternatives.

India-China border tensions, part of the backdrop to Xi’s skipping the G-20, are a bar to BRICS-11 coordination. President Joe Biden, who will be showing up in New Delhi this week, has every incentive to keep Modi aloof from China. Treasury Secretary Janet Yellen’s attendance marks her fourth visit to India in 10 months, highlighting the US focus on that relationship.

Biden and Xi will both be no-shows at the Asean summit of Southeast Asian nations and key trading partners in Jakarta, Indonesia, this week, a missed chance for both.

Japan’s Prime Minister Fumio Kishida will be — a great opportunity for this key US ally to show support for the region in the wake of a provocative Chinese map that sowed acrimony there.

And to share a stage with regional counterparts as China tries to isolate Japan over its discharge of treated wastewater from wrecked Fukushima reactors into the Pacific.

 

ASEAN losing its composure

Southeast Asia is at a dangerous crossroads. Once regarded as a haven of relative stability and economic progress, today the region is buffeted by escalating geopolitical struggle between the United States and China, state fragmentation in Myanmar and internal political conflicts that are exposing the limits of democratic reform and the dangers of populism.

These issues will be on full display at the annual leaders' summit of the Association of Southeast Asian Nations next week in Jakarta and may well intensify as the group's rotating chairmanship passes afterward from Indonesia to Laos, the bloc's smallest and poorest member.

Civil society and the international community have long looked to ASEAN, which has reliably preserved regional peace for decades, to deal with major challenges.

But the bloc is now deeply divided. On Myanmar, for example, mainland states have put a premium on state integrity and security over political change and reform while more democratic maritime states, led by Indonesia, regard military rule as intolerable.

In an alarming public display of regional dissonance, Thailand recently directly engaged with Myanmar's military junta without informing Indonesia. By playing on such divisions, the junta has avoided complete ostracization.

The region is also divided over the extent to which China poses a threat and whether it should be contained by the United States and its allies.

Laos, Thailand and Cambodia have close ties with Beijing, reflecting proximity or long-standing political alignment. Vietnam views China with deep historical enmity but maintains a dual-track relationship sustained by ties between the two nations' ruling communist parties. Even so, Hanoi has drawn closer to the US.

The Philippines has effectively checked out of ASEAN because officials in Manila believe the group has done nothing to defend the country's maritime claims against Chinese intrusions, noting its failure to support the 2016 arbitral ruling by a court in The Hague affirming Philippine sovereignty over contested areas.

"We might as well be allied with Taiwan, Japan and South Korea," said a former official after the recent confrontation between a Chinese coast guard ship and Philippine vessels attempting to resupply troops on Second Thomas Shoal in the disputed Spratly Islands. Manila has indeed moved closer to the US since Ferdinand Marcos Jr. became president last year.

Compounding such rifts over external issues is a distinct political divide. The rise of democratic reform movements in Indonesia, Malaysia and even Thailand over the last 30 years has led to more frequent changes in national leadership.

As a result, the personal relationships that held ASEAN nations together under more authoritarian regimes have frayed. Some democratic leaders have begun to wonder why they need to spend so much time with tedious ASEAN meetings when their domestic constituents are more interested in social equality and food security than strengthening regional identity.

All this has made Southeast Asia more fragile and isolated than it appears. Great power leaders who once routinely attended regional summits now often skip them. The US and China prefer bilateral engagements during which they can press for alignment. While he will skip this month's ASEAN summit, US President Joe Biden will visit Vietnam right afterward, reportedly to sign a bilateral strategic partnership agreement.

ASEAN has lost its much-touted centrality and is frankly on life support as an autonomous multilateral platform, reflecting to some degree the decline of multilateralism globally.

What can be done to revive effective multilateral cooperation and rescue the region from fracture by competing great powers and division by political dispute?

Civil society has traditionally helped in quiet ways to build and sustain the sinews of connectivity in the region. Networks of academics and think tanks helped promote connections and address sensitivities among governments and offered regional policy ideas.

Many of those veteran scholars are now retired or deceased. The younger generation has not filled the void, in part because the rivalry of the great powers has polarized much of their ranks.

A possible new approach would be to launch a recovery process to help reconnect the 10 ASEAN states. This would involve identifying common challenges rather than relying on outdated institutionalized processes or weak mechanisms to manage conflicts and protect human rights.

There is clearly a need for cross-bloc dialogue about what can be done. A bottom-up approach could offer innovative ideas and help ease the acrimony that has built up over the past few years. Post-pandemic, there is an urgent need for more contact and understanding in a region vastly more challenged than it was even five years ago.

The US and China are locked in an epic, dangerous rivalry that treats Southeast Asia as a battleground, so they will not be of help. But midsized powers and traditional partners such as Australia, the EU and UK could support regional cohesion if they spent less time pushing Western values and seeding animosity toward China, which even if justified, generates further division.

Southeast Asian governments and their leaders could help by speaking with one voice on critical issues and maintaining traditional balancing approaches to great power competition. As things stand today, there is a real chance that the Philippines and China will come to blows over the Second Thomas Shoal.

That would bring the United States and China dangerously close to war. Will ASEAN leaders be able to combine and collaborate to prevent any crisis from escalating? Right now, that looks doubtful.

 

Expansion of BRICS: What are the economic implications?

In late August it was announced that from 2024, the BRICS—a political grouping that currently comprises Brazil, Russia, India, China and South Africa—will admit six new members: Iran, Saudi Arabia, Egypt, Argentina, the UAE and Ethiopia.

The eleven countries combined represent around 45% of the planet’s population, over 40% of world oil production and roughly a third of global GDP. The BRICS average economic growth rate is likely to be notably above the global average. That said, the G7’s GDP is still substantially larger at market prices, and should remain so over the medium term.

The group’s key economic institution, the New Development Bank (NDB), is still tiny in comparison to other multilateral lenders. The Bank has financed projects worth around US$33 billion since 2015; in contrast, the World Bank alone committed around US$50 billion each year over the same period.

Other overarching economic structures are lacking, and a BRICS trade deal seems difficult to fathom given members’ vastly different stages of development and policy priorities.

Internal geopolitical disputes could further complicate economic rapprochement between members: Egypt and Ethiopia are at loggerheads over a dam on the Nile River, relations between Iran and its Gulf neighbors are still strained, and there are tensions between India and China over their shared Himalayan border and Indian restrictions on Chinese imports and technology.

The expansion of the BRICS could encourage greater political overtures and financial generosity from the G7 towards emerging markets going forward; the G20 summit later this year will be key to watch, with the UN calling on US$500 billion of annual financing from wealthy nations.

More countries are likely to join the BRICS in the coming years, as current members—particularly China and Russia—look to bolster an alternative to the G7-led world order.

BRICS members will increasingly conduct intra-member trade in local currencies to reduce dependence on the dollar, with the yuan and rupee set to be major beneficiaries.

That said, the US dollar will remain the global reserve currency for the foreseeable future - incumbency, dollar liquidity, the strength of the US economy, and the reliability of the US government as a debt issuer are key advantages. As for the BRICS grouping as a whole, it is likely to remain more of a political than an economic force.

On the BRICS’ prospects, EIU analysts said, “The BRICS group will not become a solid construction, regardless of how many bricks are added to the wall, and it will continue to face internal tensions and divisions. However, the expansion will bolster its geopolitical significance and its combined economic power, and the organization will continue to evolve. The relatively trouble-free and productive BRICS summit will enhance South Africa’s standing without damaging its relations with key Western partners.”

On the future of the dollar, ING analysts said, “Until international issuers and investors are happy to issue and hold international debt in non-dollar currencies – and the take-up of CNY Panda bonds has been very slow indeed – we suspect this will be a decade-long progression to a multi-polar world, a world in which perhaps the dollar, the euro and the renminbi become the dominant currencies in the Americas, Europe and Asia respectively.”

Courtesy: Focus Economics

China tells India to stay calm in map row

According to the Saudi Gazette, China has told India to stay calm over a new Chinese map that Delhi says lays claim to its territory. India protested after Beijing released the map showing the north-eastern Arunachal Pradesh state and the disputed Aksai Chin plateau as China's territory.

Beijing responded by saying its neighbours should refrain from over-interpreting the issue.

Meanwhile, media reports say Chinese President Xi Jinping is likely to skip next week's G20 leaders’ talks in Delhi.

Unconfirmed reports suggest Premier Li Quang will attend instead. Xi had earlier confirmed he would travel to Delhi for the meeting from 9-10 September, but China's foreign ministry did not confirm his attendance when asked to do so at a regular press briefing on Thursday.

India is not the only country to object to the map — on Thursday, the Philippines and Malaysia issued protests against China's claim of ownership over most of the South China Sea in the map. Taiwan — which China says is a breakaway province that will eventually be under Beijing's control — also objected to its inclusion in the map.

A politician from Nepal also cancelled a visit to China, saying the new map did not take into account the country's revised map, which has already sparked tensions with India.

The escalation over the 2023 edition of China's standard national map comes just days after Indian Prime Minister Narendra Modi and President Xi spoke on the sidelines of the BRICS summit in South Africa.

Indian foreign minister, Foreign Minister Jaishankar called China's claim absurd. An Indian official said afterwards that the two countries had agreed to intensify efforts at expeditious disengagement and de-escalation along the disputed border.

On Thursday China indicated it wasn't budging on the map — the disputed border is an issue which has bedevilled relations for years.

"It is a routine practice in China's exercise of sovereignty in accordance with the law," foreign ministry spokesperson Wang Wenbin said.

"We hope relevant sides can stay objective and calm, and refrain from over-interpreting the issue."

India has often reacted angrily to China's attempts to stake claim to its territory.

The source of the tension between the neighbours is a disputed 3,440km (2,100 mile)-long de facto border along the Himalayas - called the Line of Actual Control, or LAC — which is poorly demarcated and soldiers on either side come face to face at many points.

China says it considers the whole of Arunachal Pradesh its territory, calling it South Tibet — a claim India firmly rejects. India claims the Aksai Chin plateau in the Himalayas, which is controlled by China.

Relations between India and China have worsened since 2020, when their troops were involved in a deadly clash at the Galwan valley in Ladakh - it was the first fatal confrontation between the two sides since 1975. 

PetroChina posts record profit

State-owned energy giant PetroChina, reported a record-high net profit for the first half of the year 2023, driven by increased oil and gas output and resurgent refined fuel sales.

Net profit attributable to shareholders was 85.3 billion yuan or US$11.70 billion, up 4.5% for the same period last year, according to a filing with the Hong Kong Stock Exchange on Wednesday.

Total revenue was down 8.3% to 1.48 trillion yuan, due to a sustained fall in global oil prices after an initial spike in the immediate aftermath of Russia's invasion of Ukraine in February 2022.

The company reported realized crude oil prices of US$74.15 per barrel, having slid 21.7% on the average for the same period last year.

However, PetroChina's total crude oil and natural gas equivalent output was 893.8 million barrels, representing a 5.8% increase on last year, supporting a 3.7% increase in operating profit for the group's upstream segment.

Domestic crude output rose 1.2%, whilst the development of key projects in Central Asia and the Middle East saw overseas crude production leap 27.8% over the period.

Total domestic refinery throughput for the first half was 673 million barrels, a 12.6% increase as compared to last year when extensive COVID-19 lockdowns hammered demand for refined fuel products in the country.

The group previously announced to raise crude throughput to 1.29 billion barrels this year, up 6.6% from 2022.

Operating profit from the group's sales segment jumped 28.4% as compared to last year. Total sales volume of gasoline, kerosene and diesel increased 12.9% to 80.7 million metric tons, with domestic sales accounting for around 74% of this.

While domestic demand for transport fuels such as kerosene and gasoline has rebounded with the removal of travel restrictions, the group saw weaker earnings from petrochemical products such as polypropylene, amid a glut of domestic supply.

Capex for the first half was 85.1 billion yuan, down 7.8% as compared to last year. PetroChina had previously set a capex target of 243.5 billion yuan for 2023, which would represent an 11% drop as compared to last year.

Looking forward to the second half of the year, the group stated it will further deepen cooperation in overseas oil and gas markets, actively acquire large-scale and high-quality projects and continuously optimize asset structure.

 

 

What does BRICS entry mean for Iran?

On August 24, 2023 BRICS adopted Iran together with five other countries as new members defying Western rhetoric and discourse. The historic enlargement of BRICS will create new opportunities and will enhance global efforts against hegemony and unilateralism.

The year 2023 marks the 17th anniversary of BRICS inception. Albeit different in geopolitical locations, political systems and cultural backgrounds, members of BRICS do share development-oriented agendas. Members are either newly emerging economies featuring high economic growth or developing countries aspiring for development.

This is sharply different from the approach of the United States and the West to shape the world with a democratic model defined by their own. In addition, they all enshrine the principle of independence in their foreign policy.

BRICS member states have been very clear that the mechanism will be inclusive adhering to the principle of multilateralism and cultural diversity. The practices of BRICS had particularly demonstrated respect for all member states. That should be one of the reasons why BRICS had proved to be attractive, particularly for countries that had long been oppressed and humiliated by Western hegemonic powers.

The development of BRICS reflected a very strong global trend of anti-hegemony and anti-unilateralism. Most BRICS members, like China, Russia and Brazil, had been vociferous about their dissatisfaction against US financial hegemony and the weaponization of dollar as a payment channel. None of the BRICS members had shared with the US and the West their discourse on the Russia-Ukraine conflicts, and none of them had sided with the US on its efforts to provoke the fire.

The Johannesburg Summit had sufficiently demonstrated the attraction of BRICS. Six countries had been admitted into the mechanisms, more than 20 countries had formally applied to enter the mechanism, more than 40 countries had expressed their wish to be part of the mechanism, and more than 60 countries across the world had participated in various activities of the Summit, which was about 30 percent of the member states of the UN.

The enlargement will predictably make BRICS more important in international affairs as the share of member states in world economy will increase significantly and the political representation of the mechanism will grow. Therefore, BRICS will not only serve to maintain the right direction of global governance in a variety of areas including trade and financial cooperation, which had become dysfunctional as a result of confrontational mentalities of some Western countries. BRICS will also boost business opportunities for both old and new industries of all their members, and will create opportunities for its member states to reshape and even reverse the unreasonable narratives of some western powers on various issues including Russia-Ukraine conflicts and other issues.

Iran’s membership will especially enhance Iran’s international status in the international community. Over the last decades, Iran has made friends across the world in defiance of the efforts of certain hegemonic powers to isolate Iran. Entering BRICS will mean new opportunities for Iran to improve its standing.

Presence of Iranian President Ebrahim Raisi at the Johannesburg summit with delegates from more than sixty countries across the world had signified another breakthrough in its diplomacy against Western efforts to isolate the Islamic Republic.

With the dual memberships in SCO and BRICS, Iran as a nation of great civilizations and economic potentials will see more opportunities to increase its international status. The leaders of BRICS countries have a valuable opportunity to leverage the space that has been created and enhance their mutual and multilateral interactions. If Iran holds SCO and BRICS summits, it will mean that dozens of heads of state and governments will travel to Tehran, which will naturally make Tehran a center of global politics and focus of international media, which will extremely nullify the efforts of the West to isolate Iran.

Multilateral diplomacy will mean natural economic opportunities. By presence at the summits, members have the opportunity to promote their business relations. Iran will also benefit from the joint efforts of de-dollarization judging by the consensus reached on this issue in Johannesburg. It should be considered that economic benefits would not come as soon as political achievements. However, it assumes that the policies adopted by Iran will contribute to the future strengthening of the country's economy.

Iran’s accession into BRICS is also a milestone in China-Iran relations. Iran’s application for BRICS membership, as well as SCO membership, not only demonstrated Iran’s identification with the principles and spirits of the BRICS, which could be generally categorized as inclusiveness, diversity and respect, but also trust for China as a major leading actor of BRICS.

China’s support for Iran’s accession very well indicated that China had been very serious in helping Iran to get further integrated with international community. Mutual trust between the two will be further enhanced after Iran’s dual memberships.

Iran’s accession will secondly enhance China-Iran cooperation on the reconstruction of international order. It had long been China’s policy to oppose sanctions against Iran and to help improve Iran’s status in the international community as the two shared a long history of peaceful exchange of civilizations and shared the same experience struggling for justice and fairness of international order.

With Iran’s membership in both SCO and BRICS, China and Iran with other countries in the two institutions, can work better together on issues relating to the great changes and reconstruction of international order.

On top of all, it will serve to materialize cooperation projects between the two countries. China and Iran both had been working hard to materialize the Comprehensive Strategic Partnership announced in 2016, the Comprehensive Cooperation Agreement in 2022 and various agreements in 2023 when President Raisi visited China.

Iran’s accession into SCO and BRICS will make these cooperations more feasible. In addition to bilateral mechanisms, leaders of the two sides will predictably meet with each other twice annually respectively within SCO and BRICS frameworks, and they can talk directly about the concrete issues, which will greatly facilitate cooperation between the two.

All in all, the enlargement of BRICS will create new momentums for global governance and the evolution of international order for the benefits of emerging economies and developing countries and the whole world as well.

Iran’s accession into BRICS, in addition to SCO, will greatly enhance Iran’s international status and will benefit Iran economically. The world will see how Iran can translate these new political momentums into economic benefits.

 

US growth a puzzle for policymakers

US economic growth, still racing at a potentially inflationary pace as other key parts of the world slow, could pose global risks if it forces Federal Reserve officials to raise interest rates higher than currently expected. The longer the US economy outperforms, the more Fed officials wonder if they understand what's happening.

The Fed's aggressive rate increases last year had the potential to stress the global financial system as the US dollar soared, but the impact was muted by largely synchronized central bank rate hikes and other actions taken by monetary authorities to prevent widespread dollar funding problems for companies and offset the impact of weakening currencies.

Now Brazil, Chile and China have begun cutting interest rates, with others expected to follow, actions that international officials and central bankers at last week's Jackson Hole conference said are largely tuned to an expectation the Fed won't raise its rate more than an additional quarter percentage point.

While US inflation has fallen and policymakers largely agree they are nearing the end of rate hikes, economic growth has remained unexpectedly strong, something Fed Chair Jerome Powell noted in remarks on Friday could potentially lead progress on inflation to stall and trigger a central bank response.

That sort of policy shock, at a moment of US economic divergence with the rest of the world, could have significant ripple effects.

"If we get to a point where there is a need for ... doing more than what's already priced in, at some point markets might start getting nervous ... Then you see a big increase in the risk premia in different asset classes including emerging markets, including the rest of the world," said International Monetary Fund chief economist Pierre-Olivier Gourinchas. "The risk of a financial tightening, a very sharp financial tightening, I think we cannot rule that out."

After the pandemic shock and the inflationary rebound that had most countries raising rates together, it's normal now for policies to diverge, Cleveland Fed President Loretta Mester told Reuters on the sidelines of the Jackson Hole conference on Saturday.

"The economy is a global economy, right? It's an interconnected economy," Mester said. "What we do with our policy - if we can get back to 2% in a timely way, in a sustainable way, if we have a strong labor market - that's good for the global economy."

Fed policymakers will deliver a crucial update to their economic outlook at the 19-20 September meeting, when they are expected to leave their policy rate unchanged at 5.25% to 5.5%.

Yet Fed officials remain puzzled, and somewhat concerned, over conflicting signals in the incoming data.

US gross domestic product is still expanding at a pace well above what Fed officials regard as the non-inflationary growth rate of around 1.8%. US GDP expanded at a 2.4% annualized rate in the second quarter, and some estimates put the current quarter's pace at more than twice that.

The contrast with other key global economies is sharp. The euro area grew at an annualized 0.3% in the second quarter, essentially stall speed. Difficulties in China, meanwhile, may drag down global growth the longer they fester.

European Central Bank President Christine Lagarde noted after the Russian invasion of Ukraine last year, the outlook was for a euro-area recession, and a potentially deep one in parts of it.

"We expected all that to be a lot worse. It has turned out to be much more robust, much more resilient," Lagarde said.

U.S. fiscal policy is driving some of the difference with $6 trillion in pandemic-era aid still bolstering consumer spending. A recent investment push from the Biden administration is supporting manufacturing and construction.

China may also play a role, economists say. Its slowdown after a short-lived growth burst earlier this year could pinch Germany's exports and slow Europe's growth, for instance.

But, Citigroup Chief Economist Nathan Sheets said, "When you hear economists give you three or four reasons for something, that's usually because we really don't know."

United States seeking military cooperation with Bangladesh

A two-day bilateral dialogue between Bangladesh and the United States began in Dhaka today with an aim to discuss cooperation on a myriad of defence topics. The aim of this dialogue is to create an opportunity for wide-ranging discussions on military cooperation between the two countries, said ISPR.

The dialogue will officially end on August 24.

Director General at the Bangladesh Armed Forces Division Brig Gen Husain Muhammad Masihur Rahman is leading the Bangladesh side while Director of Strategic Planning and Policy of the US Indo-Pacific Command Brig Gen Thomas J James is leading the US delegation.

Senior officials of the Ministry of Foreign Affairs, Armed Forces Division, Border Guard Bangladesh, and Bangladesh Coast Guard were present on behalf of Bangladesh.

 “The United States and Bangladesh share a vision to ensure the Indo-Pacific region is free, open, peaceful, and secure. In pursuit of these mutual objectives, the Bangladesh Armed Forces Division and Indo-Pacific Command will conduct the bilateral defence dialogue in Dhaka,” US Embassy Spokesperson Bryan Schiller said.

This dialogue, he said, will feature senior officers and civilians from the US and Bangladeshi militaries.

“They will discuss military education, defence articles, and upcoming military exercises, including next year’s disaster response exercise and exchange,” said the spokesperson.

This dialogue, he said, is part of a comprehensive relationship between two countries’ defence establishments, which features cooperation on a myriad of defence topics.

The US said they are encouraged that Bangladesh’s Indo-Pacific Outlook declares Bangladesh’s vision for a “free, open, peaceful, secure, and inclusive Indo-Pacific for the shared prosperity for all.

The bilateral defence dialogue between Bangladesh and the US started with a joint declaration in 2012. Since then, every year, the dialogue has taken place alternately in Bangladesh and the USA. The 9th defence dialogue was held on 17-18 May 2022 at Honolulu, Hawaii.

The purpose of this dialogue was to facilitate a broad discussion on bilateral defence and military cooperation as a complement to the strategic dialogue.

Over the years, the two countries have enjoyed cordial diplomatic relations and partnered on a wide range of security issues, including border security, maritime security, counterterrorism, peacekeeping, defence trade, and defence institution building.

The two governments continue to work together to advance a shared vision of a free, open, inclusive, peaceful, and secure Indo-Pacific region.

Earlier, the US delegation had a courtesy meeting with Principal Staff Officer (PSO) of the Armed Forces Division Lieutenant General Waker-Uz-Zaman.

 

 

Can BRICS currency be adopted?

Brazilian President called on Wednesday for the BRICS nations to create a common currency for trade and investment between each other, as a means of reducing their vulnerability to dollar exchange rate fluctuations. Luiz Inacio Lula da Silva made the proposal at a BRICS summit in Johannesburg.

Officials and economists have pointed out the difficulties involved in such a project, given the economic, political and geographic disparities between Brazil, Russia, India, China and South Africa.

Brazilian president doesn't believe nations that don't use the dollar should be forced to trade in the currency, and he has also advocated for a common currency in the Mercosur bloc of South American countries.

A BRICS currency increases our payment options and reduces our vulnerabilities, he told the summit's opening plenary session.

South African officials had said a BRICS currency was not on the agenda for the summit.

I n July, India's foreign minister said, "There is no idea of a BRICS currency". Its foreign secretary said before departing for the summit that boosting trade in national currencies would be discussed.

Russian President Vladimir Putin said the gathering, which he attended via video link, would discuss switching trade between member countries away from the dollar to national currencies.

China has not commented on the idea. President Xi Jinping spoke at the summit of promoting the reform of the international financial and monetary system.

Building a BRICS currency would be a political project, South African central bank governor Lesetja Kganyago told a radio station in July.

"If you want it, you'll have to get a banking union, you'll have to get a fiscal union, you've got to get macroeconomic convergence," Kganyago said.

"Importantly, you need a disciplining mechanism for the countries that fall out of line with it... Plus they will need a common central bank... where does it get located?"

Trade imbalances are also a problem, Herbert Poenisch, a senior fellow at Zhejiang University, wrote in a blog for think-tank OMFIF.

All BRICS member countries have China as their main trading partner and little trade with each other.

BRICS leaders have said they want to use their national currencies more instead of the dollar, which strengthened sharply last year as the Federal Reserve raised interest rates and Russia invaded Ukraine, making dollar debt and many imports more expensive.

Russia's sanctions-imposed exile from global financial systems last year also fuelled speculation that non-western allies would shift away from the dollar.

"The objective, irreversible process of de-dollarisation of our economic ties is gaining momentum," Putin told the summit on Tuesday.

The greenback's share of official foreign exchange reserves fell to a 20-year low of 58% in the final quarter of 2022, and 47% when adjusted for exchange rate changes, according to International Monetary Fund data.

The dollar still dominates global trade. It is on one side of almost 90% of global foreign exchange transactions, according to Bank of International Settlements Data.

De-dollarizing would need countless exporters and importers, as well as borrowers, lenders and currency traders across the world, to independently decide to use other currencies.