Iran's economic relations with its neighbors

In recent years, the economic relationships between Iran and its neighboring countries have grown in both complexity and significance. This economic integration is crucial for the development of Iran’s non-oil sector and its broader economic strategy, especially considering the geopolitical challenges that the country faces.

In this article, an effort has been made to explore the current state and future prospects of Iran’s trade with its neighbors, examine key sectors, trade volumes, and strategic partnerships.

As of late 2024, Iran’s non-oil trade with its neighbors has seen a notable increase. Non-oil trade volumes reached US$55.3 billion in the first 11 months of the year, with exports constituting 67 million tons of goods valued at US$25.8 billion and imports amounting to 21.4 million tons valued at US$29.4 billion.

This represents a significant increase in trade flows, driven by an increase in exports of petrochemical products, minerals, and agricultural goods.

Iran’s primary trading partners in the region include Iraq, the UAE, Turkey, Pakistan, and Afghanistan. The UAE and Iraq are Iran’s two largest trade partners, especially in terms of exports.

For example, in the first seven months of 2024, Iran’s trade with Iraq was valued at US$7.6 billion, making it one of the most crucial destinations for Iranian goods. The major exports to Iraq include petrochemicals, cement, and agricultural products, while imports primarily consist of machinery and food items.

Turkey has also maintained its position as a key trading partner, with trade between the two countries amounting to US$9.9 billion in the same period. Iranian exports to Turkey largely consist of natural gas and petroleum products, while imports from Turkey are diverse, including electrical machinery and textiles.

Iran’s geopolitical location, bordered by 15 countries, gives it a strategic advantage in the trade of goods and services. This advantageous position allows Iran to serve as a key transit hub for goods moving between Central Asia, the Caucasus, and West Asia.

In particular, the development of international transport corridors, such as the North-South Transport Corridor (INSTC), which links Iran with Russia, India, and Central Asia, is expected to enhance Iran’s role in regional trade.

Furthermore, the expansion of special economic zones, such as the Lamerd Free Trade Zone, has created new opportunities for businesses to engage in regional trade. This diversification of trade routes and infrastructure investment is expected to foster deeper economic ties with countries in the Persian Gulf and beyond.

Despite challenges, such as global sanctions and regional instability, Iran’s government has focused on expanding its non-oil exports, particularly to its neighbors. This strategy is part of a broader effort to reduce Iran’s dependency on oil revenues and diversify its economy.

The Iranian government’s push for stronger trade relations with Central Asia, Russia, and even countries like Oman and Turkmenistan, is driven by the need for economic diversification and the potential to access new markets. Iran’s trade with Russia, for example, has grown steadily, with recent figures showing a trade volume of US$1.5 billion in 2024.

The economic outlook for Iran’s trade with neighboring countries is promising. The country’s strategic location, combined with increased infrastructure investment and a strong focus on non-oil exports, positions Iran as a key player in the regional economy.

However, the ongoing challenges of sanctions and geopolitical tensions remain factors to consider as Iran continues to navigate its path toward economic diversification.

If these trade relationships continue to strengthen, Iran could significantly enhance its role as a regional economic hub, ensuring long-term stability and growth for its economy.

 

JCPOA no longer relevant, says IAEA chief

Rafael Grossi, the Director General of the International Atomic Energy Agency (IAEA), has said that the Joint Comprehensive Plan of Action (JCPOA) is no longer viable, appearing to place sole responsibility for the 2015 nuclear deal's lame-duck state on Iran.

"The philosophy of the initial JCPOA agreement can be used as a basis, but the agreement itself is no longer necessary," Grossi remarked during his visit to Italy for discussions with the Foreign Ministry. 

The UN nuclear chief pointed out that Iran is now enriching uranium to levels of 60%, a threshold that he said brings the country close to the capability to produce military-grade uranium, which requires enrichment to 90%. "Iran is rapidly approaching the status of a nuclear state," he claimed. 

Grossi omitted any mention of the West's abandonment of the deal, the factor that prompted Iran to curtail some of its JCPOA commitments in the first place. 

The JCPOA was signed in 2015 between Iran and the P5+1 group of countries (the United States, Britain, France, Germany, Russia, and China). It aimed to limit Iran’s nuclear program in exchange for the termination of sanctions.

Washington unilaterally withdrew from the pact in 2018 and re-imposed sanctions against Iran. European signatories to the deal not only failed to take the sting out of US sanctions but also came up with anti-Iran bans of their own. 

Tehran began to scale back on some of its JCPOA commitments in 2020, under a new law passed by the Iranian parliament. 
 

 

 

Turkey violated Doha agreement on Syria

The Turkish Foreign Minister has claimed that Turkey successfully persuaded Iran and Russia not to intervene militarily during the Syrian rebels' offensive which led to the downfall of President Bashar al-Assad's government in the early hours of December 08. 2024.

The information obtained by the Tehran Times suggests that this assertion contradicts the terms agreed upon in Doha on December 07 between the foreign ministers of Turkey, Iran, and Russia.

In a recent interview with Turkey’s NTV, Hakan Fidan stated, "The most important thing we had to do was to talk to the Russians and Iranians to ensure they would not enter the (Syria) equation with military force. We spoke with the Russians and Iranians, and they understood the issue."

The information obtained by the Tehran Times shows the December 07 summit under the Astana platform saw Turkey agree to a framework enabling direct negotiations between the Syrian President and rebel forces, with Assad remaining in power.

“It was agreed that the Syrian conflict would be resolved through political means, with both the Assad government and the armed opposition entering into dialogue,” a source involved in the Doha talks told the Tehran Times.

“The agreement was signed by Iran's Foreign Minister Abbas Araghchi, Turkey's Foreign Minister Hakan Fidan, and Russia's Foreign Minister Sergey Lavrov. Yet, developments on the ground in Syria on Sunday, December 09, show that Turkey did not adhere to what it had signed.”

Armed factions led by the Hayat Tahrir al-Sham (HTS) rebels launched a surprise attack against Syria’s northwestern Aleppo Province on November 27. The militants quickly advanced towards Damascus in the face of the Syrian army’s refusal to resist. 

Reports and evidence show the HTS and its allied factions have been receiving substantial financial and military support from Turkey, the United States, and Israel.

 

Shia-Sunni Conflict in Syria to Get Louder

The current situation in Syria presents three significant implications. First, the recruitment of fighters, motivated by financial incentives or sectarian affiliations, is expected to rise. Second, the majority of these recruits are likely to come from the South Asian region. Videos circulating on social media already show individuals with Pashto or Hazara accents celebrating the withdrawal of Bashar al-Assad’s forces from key cities, leaving behind military-grade weapons, ammunition, and vehicles. Third, existing foot soldiers in Afghanistan, Pakistan, and Iran may see new opportunities to leverage their combat experience, contributing to the rekindling of the Syrian conflict.

Shia militias, including the Zainabiyoun Brigade and other groups from Iraq, are also being drawn into the conflict. As a result, Syria is poised to become the site of escalating sectarian violence, with Sunni and Shia factions, supported by various regional and international actors, facing off.

What Impact Will This Have on the Gaza War?

How will these developments affect the ongoing conflict in Gaza? Will they weaken Hezbollah in Lebanon? And what strategic advantages might Israel and its regional or international allies gain?

Currently, Hamas is on the defensive, and the Syrian situation could demoralize its forces if Bashar al-Assad and his allies lose their grip on power, potentially drawing them into direct confrontation with rebel factions.

Iran and Russia are already evacuating some of their officials, but sectarian fighters loyal to the Assad regime will likely remain in Syria, continuing their resistance. Aerial support for Assad’s forces may still come from select countries, but unless a similar conflict arises in Iraq—where Sunni militias start pushing against Shia factions—a complete collapse of the Assad regime seems unlikely.

A Possible Escalation: Assad's Last Resort?

If Bashar al-Assad feels cornered and believes he must evacuate, he could resort to an extreme measure: launching a direct attack on Israel. What might such an assault look like?

First, a safe zone could be established for Iranian, Russian, or Syrian officials in the border region of Iraq, enabling them to continue strategizing and coordinating efforts in Syria and beyond.

Second, there would be a need for a large influx of Shia fighters into Syria and Lebanon to counteract new rebel offensives or Israeli airstrikes against Assad’s regime. These fighters could also act as conduits for weapons flowing into Lebanon, strengthening Hezbollah and other allies.

Coupled with aerial support, these forces could give Assad a better chance of reclaiming lost territories.

Wider Regional Implications: Yemen and Saudi Arabia

The sectarian tensions in Syria could also spill over into other parts of the region, particularly Yemen and Saudi Arabia, exacerbating existing conflicts there.

What if Bashar government falls in Syria?

Donald Trump will formally take charge as president of United States on January 20, 2025. The strategic regions of the world are being trapped in a situation known as "tactical wars". These conflicts do not seek a definitive victory but rather aim to create a state of instability and uncertainty in key areas vital to US global interests.

The "America First" slogan, central to Trump's agenda, can only materialize if Washington succeeds in maintaining its hegemony over the major geostrategic regions. However, this dominance is only possible if one essential factor is guaranteed: an active and sustained military presence in these regions.

In these sensitive territories, the United States faces growing resistance from both local governments and popular movements demanding the withdrawal of American troops. If Washington were to yield to these demands and abandon Afghanistan, Iraq, Syria, or the Persian Gulf; renounce its intervention in Ukraine and the Caucasus under the pretext of NATO; or reduce its activities in the South China Sea, it would risk becoming just another power, unable to maintain its global hegemony.

The United States deems it necessary to maintain its presence in these strategic regions to avoid the decline of hegemony. Its military deployments, although costly and often unpopular, are seen as the only means to ensure its position as a dominant power in an increasingly competitive world.

As explained by Iranian diplomat Mohammad Rasoul Mousavi, the strategy to preserve the United States' military presence is based on fueling what are known as "tactical wars." These wars do not seek a definitive resolution but rather aim to prolong the conflict. On one hand, they weaken the countries involved, and on the other, allow the United States to justify and impose its presence in those regions.

Mousavi interprets the resurgence of the conflict in Syria as a clear manifestation of the United States' strategic approach. In the current context, it is evident how Washington is attempting to consolidate its presence in the region. Despite avoiding responsibility for the war led by extremist militants backed by Turkey, the United States insists that the solution to the conflict is inevitably tied to its military presence in Syria— a presence that would be difficult to justify without the conflict serving as a pretext.

Additionally, there is a clear contradiction in the United States' stance. In the current offensive against the government of Bashar al-Assad, the main units fighting alongside anti-Assad forces are primarily affiliated with Hay'at Tahrir al-Sham (HTS). This group, which separated from Al-Qaeda in 2016, has maintained a strong presence in Syria.

Since 2018, the US State Department has designated HTS as a Foreign Terrorist Organization. HTS remains a central player in the Syrian conflict, particularly in the regions of Aleppo and Hama. The group is led by Abu Muhammed al-Golani, who previously led the Nusra Front, Al-Qaeda's affiliate in Syria. In 2016, al-Golani announced HTS's separation from Al-Qaeda, claiming a distance from the global terror network.

However, his ties with Al-Qaeda remain a burden, continuously attracting international attention. For example, the US still offers a US$10 million reward for the capture of al-Golani, reflecting the ongoing mistrust toward the group and its ideology.

In general, Syria is a stage where various geopolitical interests converge. In the case of Turkey, the potential fall of Bashar al-Assad would have significant strategic implications. Through its allied groups in Syria, such as the self-styled Syrian National Army and HTS, Turkey could consolidate and significantly expand its power and influence in a territory that was part of the Ottoman Empire from 1516 to 1918.

A withdrawal of Russia, its historical rival in the region, would represent a key political victory for Recep Tayyip Erdogan, while constituting a defeat for Vladimir Putin and weakening Russian influence in the Middle East. Additionally, the weakening or elimination of Kurdish forces in Syria, a constant point of friction for Ankara, would be one of Turkey's primary strategic objectives.

Finally, once Syria was "pacified" by HTS and its allies, Erdogan could seize the opportunity to facilitate the return of the millions of Syrian refugees currently in Turkey, presenting Assad’s fall as the end of the war. This measure could potentially boost support for the Justice and Development Party (AKP) in future elections.

The potential fall of Bashar al-Assad would have profound consequences for Russia, as it could redefine both its influence in Syria and its projection in the Middle East.

The loss of its main ally in Damascus would signal the end of its political influence in the country, marking a strategic defeat that would alter the regional balance.

Additionally, Russia would be surpassed by Turkey, which would solidify its power and influence in Syria, leading to a geopolitical reshaping in favor of Ankara.

Russia's military presence, essential to its influence in Syria, could be significantly reduced or even eliminated, representing a substantial loss of power in the region.

Moreover, Moscow would lose control of the naval base in Tartus, a strategic facility it has controlled since 1971 during the Soviet era and it serves as its only permanent military base in the Mediterranean. The loss of Tartus would deal a major blow to Russia’s ability to project power in the Middle East.

The potential fall of Bashar al-Assad would also bring a series of strategic implications for Israel, directly impacting its security in the region.

For Iran, the fall of Bashar al-Assad would have political and strategic consequences. First, Iran would lose a key ally in the region.

However, the rise of Turkey as a regional power would be a blow to Iran’s interests, as it would witness its rival expanding its power while Iran's own political and military presence in Syria and Lebanon crumbles. This scenario would lead to the weakening of Shia interests in Syria, Lebanon, and even Iraq, disrupting the regional balance and undermining Iran's influence in these key countries.

Finally, for the United States, the fall of Bashar al-Assad would have significant strategic implications. First, it would mean Russia's withdrawal from Syria, which would considerably weaken Moscow's influence in the region, reducing its projection of power in the Middle East.

Additionally, the United States would achieve a key victory by seeing the fall of Assad's government, considered one of Iran's main allies, with whom Washington maintains an openly adversarial relationship. This would mark the end of a long struggle to displace a government that has been an obstacle to US policy in the region, consolidating the influence of Washington and its allies in Syria and the Levant.

 

OPEC Plus extend production cuts

Saudi Arabia and seven other OPEC Plus countries have decided on Thursday to extend their oil production cuts for another three months, until the end of March 2025.

Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman, which previously announced additional voluntary adjustments in April 2023 and November 2023, held a virtual meeting on Thursday on the sideline of the 38th OPEC and non-OPEC Ministerial Meeting (ONOMM).

These countries will extend their additional voluntary adjustments of 2.2 million barrels per day, that were announced in November 2023, until the end of March 2025 and then the 2.2 million barrels per day adjustments will be gradually phased out on a monthly basis until the end of September 2026 to support market stability. This monthly increase can be paused or reversed subject to market conditions," OPEC Plus said in a statement carried by Saudi Press Agency.

The virtual meeting was held to reinforce the precautionary efforts of OPEC Plus countries, aiming to support the stability and balance of oil markets. These countries decided, in addition to the latest decisions from the 38th ONOMM, to extend the additional voluntary adjustments of 1.65 million barrels per day that were announced in April 2023, until the end of December 2026.

"In the spirit of transparency and collaboration, the meeting welcomed the pledges made by the overproducing countries to achieve full conformity and resubmit their updated compensation schedule to the OPEC Secretariat for the overproduced volumes since Jan 2024 before the end of December 2024 as agreed in the 52nd Meeting of the Joint Ministerial Monitoring Committee. The compensation period will be extended until the end of June 2026," the statement said.

  

Trump Victory: Impact on Iran-Russia relations

Iranian political experts have quickly projected that a Trump victory in the presidential elections could lead to renewed US-Russia relations due to Trump and Putin's reportedly friendly ties. Some in Iran worry that this shift might undermine the strategic partnership between Iran and Russia, which has been strengthened over the past three years.

However, a closer look at Russian experts' views presents a more balanced and realistic perspective. These analysts believe that the US-Russia relationship is unlikely to return to pre-conflict levels, given the profound trust issues that have persisted since the Ukraine crisis.

Russian-Iranian partnership, which has gained unprecedented momentum, is unlikely to be sacrificed for potential rapprochement with the United States.

Examining the opinions of notable Russian experts can shed light on Moscow's likely short-term approach to US relations, especially regarding the Ukraine conflict.

In initial responses, some speculate that Trump's return might lead Russia to slightly slow its Eurasian integration efforts, potentially making space for renewed discussions with the US, especially on the Ukraine crisis.

Yet, Alexander Dugin, a prominent proponent of Eurasianism in Russia, expresses a different view. He argues that while Trump’s administration may deprioritize the Ukraine crisis, it will likely focus on domestic US issues and its trade war with China.

Dugin, who frames Russia's actions in Ukraine as part of a destiny-driven mission to “de-Nazify Kyiv,” is adamant that this campaign should continue westward in Ukraine. In his view, even if Trump were to ask Putin to halt military operations in Ukraine, such a request would be improbable to affect Russia's plans.

Similarly, Andrey Bezrukov, an international relations expert and professor at Russia's Ministry of Foreign Affairs University, believes that resolving the Ukraine issue depends more on Russia's military progress than the US elections.

He emphasizes Trump’s unpredictability, citing Iran's experience with US policy shifts, and warns of the risks if future Democratic administrations disregard any agreements.

Bezrukov adds that Trump's administration would likely focus primarily on countering China's global influence, rather than confronting Russia directly in Ukraine.

However, this does not necessarily mean the end of US support for Ukraine; the US might shift more of this responsibility to Europe, despite Trump's potential disagreements with European leaders.

Andrey Sushentsov, director of the Valdai Discussion Club’s programs and an expert on international relations, says US institutions constrained Trump’s policy intentions on Ukraine during his presidency from 2017-2021.

During his campaign, Trump asserted he could resolve the Ukraine crisis swiftly, but Sushentsov views such claims skeptically.

He argues that Ukraine is a tool for the US to manage Russia’s influence, rally European allies, and compel them to bear the economic and social costs of the crisis unless the US decides that Ukraine is no longer an effective lever.

In reviewing these insights from prominent Russian analysts and commentaries in Russian media, it is apparent that most Russian experts are skeptical about any rapid impact of a Trump-Putin rapport on resolving the Ukraine conflict.

Given the unprecedented level of Russian-Iranian relations over the past three years, it is unlikely that this alliance would be sacrificed for hypothetical negotiations between a Republican-led US and Russia.

 

United States fails in keeping oil prices high

No sooner had OPEC Plus depressed market sentiment by admitting a potential rollover of its cuts into 2025, Iran reemerged as the main talking point of the markets.

Having downplayed the Israeli retaliatory strike, the oil markets are now anticipating an Iranian attack on Israel, using a large number of drones from Iraqi territory.

A semblance of geopolitical risk premium has lifted ICE Brent futures ahead of a particularly jittery week when the United States votes for its president.

OPEC Plus postponed its planned increase of oil production, bringing back the 2.2 million barrel per day output under eight countries’ voluntary cuts, citing concerns about soft oil demand, particularly on the heels of China’s slowing down, as well as rising non-OPEC supply.

In an attempt to retain its share in gas market, the US Treasury announced new sanctions imposed on Novatek’s Arctic LNG 2 liquefaction terminal, Russia’s latest LNG project in the Arctic, targeting construction service provider Smart Solutions and four LNG tankers run by newly created UAE firms.

European majors flock into US gas, Norway’s state oil firm Equinor boosted its portfolio of non-operated US shale assets after it bought EQT’s gas interests in the northern Marcellus basin for US$1.25 billion, taking its stake to 40.7% as most of the assets are still operated by Expand Energy.

In an attempt to diversify its energy supplying countries, China’s top driller locked in Key Iraqi Deal. China’s top upstream firm CNOOC signed an exploration and production contract with Iraq to develop the onshore Block 7, with the state-owned firm holding 100% interest over a massive territory covering more than 6,000 km2 in Diwaniyah province.

Bangladesh: Performance of interim government

Nearly three months have passed that the interim government (IG) has been in charge of a country devastated beyond comprehension. We the mere mortals, struggling to forget the nightmarish 15 years, can be forgiven for nurturing very high expectations from the new dispensation.

It will do us well to remember that the IG is not the caretaker government (CTG) of the past. It is very unique, given the circumstances in which it came to power—a popular youth-led uprising has validated not only the IG’s assumption of power but has also, ipso facto, granted approval for any and all legal actions it undertakes to rectify the damage to the nation’s institutions and agencies. The mutilation done to the nation would require more than run of the mill actions or traditional approach.

In passing it should be stressed that raising the issue of Hasina’s resignation at this point in time is out of place, some may see this as being ulteriorly motivated, and reeking of conspiracy.

It is of no consequence whether a person who assumed power in a dubious manner, was deposed through a popular uprising—there can be no greater mandate than this—and sought exile of their own volition, has tendered an official letter of resignation. We must admit that the president’s recent remarks regarding this have mystified us.

The various reform committee gives us a good idea of the sectoral reforms the IG wants to undertake. Unique situation requires unique response that may not necessarily conform to the normal methods and means of administering a country.

But while the IG goes about fixing things, it should keep the people informed about its policies and plan of action for rectification. The IG should keep in mind that although it is not bound by any timeframe and its framework of reference is very wide, its time limit is also not open-ended. And a “reasonable” timeframe is open to various interpretations. What the IG is doing should also be visible.

The first thing that still needs to be fully addressed is the administration, which seems to be influenced by the lingering presence of the Awami League. Reportedly, many beneficiaries of the past regime continue in important appointments. The longer they stay in the administration the more are the risks they pose to the successful implementation of the IG’s reform plans. The significance of the manufactured unrest in the RMG sector, sabotage of oil tankers, and various demands from different professional groups are well-orchestrated actions to nip the plans of the IG in the bud.

Apparently, it would seem that the administration is not moving fast enough for some quarter’s liking, and a feature post-revolution is the regime of intimidation and coercion imposed on certain quarters. While that is understandable under the circumstances, making haste while sorting out the muck of the last 15 years may be counterproductive.

The public has certain expectations as well as grievances, and some of these are manifested in the student outburst, demonstrated in their siege of the High Court for removal of judges appointed during the Hasina regime where personal fealty triumphed over qualification and merit. The latest outburst is against the person in Bangabhaban for reasons mentioned.

One of the gripes the students have, and justifiably so, is the continuation of some senior bureaucrats who thrived under the Hasina regime, and who were complicit in the destruction of the state institutions and misuse of the state agencies for partisan gains. This goes for all sectors.

The education sector was a target of the students too. But witch-hunting is not the answer. Admittedly, the public universities were caderised from the vice chancellor down to the junior most lecturer. Most of them did not meet the minimum requirements of the post. One might say that it was a long-term plan to destroy the backbone of the nation by destroying the education sector.

It would also seem that the process of accountability is not moving fast enough. One hears the question “Where have all the crooks gone, and how?” Indeed, one may ask, once again, where have all the crooks gone? And by crooks, I mean all those that sought sanctuary inside the safety of the cantonments across the country after the student-led revolution that has been anointed with the very appropriate appellation of Monsoon Revolution, and many others who made good their escape quite a few days after the assumption of office of the IG. In fact, there is a general suspicion that the beneficiaries of the previous government may still be calling the shots.

A passing reference was made to this subject in one of my previous columns, but time has come to accord the issue more than a cursory glance. It is my distinct impression that the matter has been deliberately swept under the carpet hoping that, Bangalee memory being short, the matter would be forgotten. Well, not so soon.

A few questions need to be answered by the relevant individuals in positions of responsibility. Feigning ignorance will not sit well with the common man, who feels that allowing those responsible for bringing so much misery to the people—through wanton loot and plunder, siphoning billions out of the country, and particularly those directly responsible for the deaths of a thousand and the maiming of several times more—soils the blood of the martyrs. They must be held accountable.

Of the 170 million Bangladeshis, only 600 or so sought refuge inside the military establishments. Among them were politicians and senior members of the law enforcing agencies. The question is why. They must have done something wrong that they feared would incur public wrath. In fact, these were the people who would have left the country sooner but somehow couldn’t. Some of their cleverer and smarter colleagues had abandoned the Awami League boat no sooner than they realized that it had started taking in water.

In fact, abandoning the followers and leaving the country furtively for safer places during hard times has been the hallmark of the party leadership. History will bear out my comments. Therefore, to see the leader living up to the party tradition after August 05 was not a surprise.

My question is, in the future, will highly secured places within the country be used as sanctuaries for those responsible for killing democracy, looting public wealth, and committing the kinds of misdeeds that those seeking protection in the cantonments are alleged to have committed? Additionally, we are still at a loss to explain how many of these individuals managed to leave the country and who guaranteed them a safe exit.

The ultimate goal is to hold a participatory all-inclusive and acceptable election. Having said that, holding elections without fixing the systemic aberrations would take us back to square one. That would denigrate the sacrifice of the martyrs of the Monsoon Revolution. And it shall not be allowed to happen.

 Courtesy: Daily Star

Russia-Iran use national currencies in trade

Iran and Russia have been using national currencies in more than 96% of their mutual payments, the Kremlin’s press service said on the verge of the meeting between presidents of the two countries to be held on the sidelines of the BRICS Summit in Kazan.

"The leadership of both countries pay priority attention to the development of trade and economic ties. Growth of mutual trade in 2023, despite a certain decline, totaled over US$4.0 billion.

We recorded growth of 12.4% as of the end of January - August. The share of national currencies in mutual payments ws over 96%," the press service informed.

Russia and Iran are implementing several large-scale mutual projects in the sphere of transport and energy, the Kremlin said. The North-South international transport corridor project is being developed. Russian-Iranian relations are on the rise, the press service noted.

According to the Islamic Republic of Iran Customs Administration (IRICA), the value of Iran’s non-oil exports to Russia rose 12% in the first six months of the current Iranian calendar year as compared to last year’s first half.

According to the IRICA data, Iran exported 1.3 million tons of commodities worth over US$494 million to Russia in the first half of the current Iranian year.

Non-oil exports to the Russian Federation also increased by 20% in terms of weight.

In the first half of the current Iranian year, foreign transit through Iran from Russia reached 526,000 tons with a growth of 17%, and foreign transit to Russia was 56,000 tons, which decreased by 18%.

The Islamic Republic had exported 2.2 million tons of commodities worth US$965 million to Russia in the previous Iranian calendar year, which also registered a 54% increase in weight and a 28% rise in value.

The main Iranian products exported to Russia in the previous year were fresh or dried pistachios, ordinary non-expandable polystyrene, fresh kiwi and synthetic fibers, and other types of polyester.

Iran and Russia have been taking serious steps to boost their mutual trade over the past few years.

In late January, Iran’s late President Ebrahim Raisi said that the Islamic Republic and Russia have reached an agreement to boost the trade between the two countries up to US$10 billion.

“We agreed to remove trade barriers and boost the economic exchanges between the two countries. Currently, the level of mutual trade is not acceptable, so the two countries agreed to increase trade to US$10 billion a year,” Raisi said on January 21, upon arrival to Tehran after a two-day visit to Moscow.

He also noted that the two sides also discussed monetary and banking issues during his talks with Russian officials.

The two countries also agreed to identify mutual agricultural capacities as well as suitable areas for the exchange of agricultural products in order to increase the level of trade in the agricultural sector, according to the official.

He went on to say that the Islamic Republic of Iran has very good capacities in the field of transit and transportation, saying: “During this visit, it was agreed to activate the north-south corridor. This transit route will make the time and distance of transiting goods from Russia and different northern countries to the southern regions much shorter.”

 

 

How far can crude oil prices plunge?

We are of the view that crude oil price may fall below US$60 per barrel, if production in countries like Libya, Iraq, Iran and Venezuela rise to normal. Sanctions on Russia and Iran are also there to avoid glut. We have the convictions that unrest in some of the African countries is there to avoid fall of crude oil price below US$50 per barrel  

Brent crude futures fell below US$70 a barrel on Tuesday for the first time since December 2021, after OPEC Plus revised down its demand forecast for this year and 2025.

Brent crude futures were traded at US$69.51 a barrel and US West Texas Intermediate (WTI) crude slipped to US$66.21. On Monday, both benchmarks had risen about 1%.

On Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) in a monthly report said world oil demand will rise by 2.03 million barrels per day (bpd) in 2024, down from last month's forecast for growth of 2.11 million bpd. Until last month, OPEC had kept the forecast unchanged since it was first made in July 2023.

OPEC also cut its 2025 global demand growth estimate to 1.74 million bpd from 1.78 million bpd. Prices slid on the weakening global demand prospects and expectations of oil oversupply.

On Monday, Chinese data showed consumer inflation accelerated in August to its fastest in half a year, though domestic demand remained fragile, and producer price deflation worsened.

Data released on Tuesday showed China's exports grew in August at their fastest in nearly 1-1/2 years, yet imports disappointed with domestic demand depressed.

“If we lose China this market is going to have a problem because OPEC just cannot cut enough to offset the US and Brazilian position, and some of the other reservoirs at work,” said John Kilduff, partner at Again Capital.

 

Zangezur Corridor red line for Iran

The head of National Security and Foreign Policy Committee of the Iranian parliament has reiterated that the Zangezur Corridor is a critical red line for Iran, warning that any attempts to alter its status or make unilateral moves in the region will be met with a firm response.

In an interview with ISNA News Agency on Saturday, Ebrahim Azizi emphasized that Iran has conveyed its position to regional countries through various diplomatic channels, stressing that the corridor's status is non-negotiable for Tehran.

In response to recent statements from Russian officials advocating for the opening of the Zangezur Corridor and their cooperation with Azerbaijan and Turkey in this matter, Azizi expressed Iran’s strong opposition.

"The geopolitical developments surrounding the Zangezur Corridor are not in the best interest of the region, and Iran is vehemently opposed to such moves," Azizi stated.

While underscoring Iran's commitment to regional stability, he made it clear that any threat to Iran’s territorial integrity would be met with resolute action.

"The Islamic Republic of Iran has always pursued peace and avoided escalating tensions in the region. However, if our territorial sovereignty is compromised, we will stand firm and will not allow any country to infringe upon us."

The strategic importance of the South Caucasus region was also highlighted by Azizi, who described it as a key axis in Eurasian geopolitics.

"Historically, this region has been part of Iran's civilizational sphere and has witnessed numerous geopolitical shifts over the centuries. Its role in energy transfer, peace, stability, and regional balance is undeniable, and we are closely monitoring all developments," he said.

Azizi also referred to the Leader of Islamic Revolution's position on the issue, recalling a meeting between Ayatollah Seyyed Ali Khamenei, Russian President Vladimir Putin, and Turkish President Recep Tayyip Erdogan, during which Iran’s firm stance against any geopolitical changes in the Caucasus was reiterated.

"We have repeatedly communicated to regional nations that the Zangezur Corridor is a red line for Iran, and any alterations will provoke a strong and serious response."

Concluding his remarks, Azizi underscored the active role of Iran's parliament in monitoring the situation. "The National Security and Foreign Policy Committee of the Iranian parliament is closely following the geopolitical developments related to the Zangezur Corridor. We expect the president and the foreign minister to address these critical issues with urgency and sensitivity, using diplomatic channels to resolve the matter in a way that protects Iran's national interests." 

Additionally, the Deputy Speaker of Parliament issued a tweet advising Russia and Azerbaijan to respect international borders.

"Iran's strategic policies regarding borders, neighboring countries, and corridors are stable and rooted in our national interests. As I emphasized during the recent Parliamentary Assembly in Baku, we do not accept any changes to borders. My advice to Russia and Azerbaijan is to respect these boundaries,” Ali Nikzad, the Deputy Speaker, posted on the social media platform X.
 

 

Iran can become an LNG superpower

Liquefied natural gas (LNG) has become the world’s most sought-after emergency energy source following Russia’s invasion of Ukraine on February 24, 2022. This is because it is readily available in the spot markets and can be moved quickly to anywhere, unlike gas or oil sent through pipelines.

Unlike pipelined energy as well, the movement of LNG does not require the build-out of a vast acreage of pipelines across varying terrains and the associated heavy infrastructure that supports it.

Iran is the largest gas producer in West Asia, having tripled production over the past decade to around one billion cubic meters per day (bcmd). It also holds the second-largest gas reserves on the planet after Russia, at about 34 trillion cubic meters (tcm).

The Islamic Republic has long planned to become a global LNG superpower through a variety of methods, including one that involves longstanding ally Oman.

Iran’s plan to use Oman in its LNG plans was part of the broader cooperation deal made between Oman and Iran in 2013, extended in scope in 2014, and fully ratified in August 2015. It was centered on the Sultanate’s importing at least 10 billion cubic meters of natural gas per year (bcmy) from Iran for 25 years. The deal was to have begun in 2017, valued at roughly US$60 billion at that time. The target was then changed to 43 bcmy to be imported for 15 years, and then finally altered to at least 28 bcmy for a minimum period of 15 years.

According to a statement at the signing of the 2014 deal from the then-managing director of the National Iranian Gas Export Company (NIGEC), Mehran Amir-Moeini, the Iranian company was already working on the different contract mechanisms for the key phases of the project.

Specifically, the land section of the project would comprise around 200 kilometers of 56-inch pipeline (to be constructed in Iran), to run from Rudan to Mobarak Mount in the southern Hormozgan province.

The sea section would include a 192-kilometre section of 36-inch pipeline along the bed of the Oman Sea at depths of up to 1,340 meters, from Iran to Sohar Port in Oman.

In broad terms, this deal was intended to allow for the completely free movement of Iranian gas (and later oil) via Oman through the Gulf of Oman and out into the world oil and gas markets.

The route was designed to allow Iran the same sanctions-free flows that it was operating via Iraq at that time, and to this day.

From Oman’s side, all the preliminary work related to seabed surveys, design of the pipeline and its accessories and the compressor stations was completed some time ago.

The depth of the subsea pipeline had been increased in August 2016 due to the heightened political tensions between Saudi Arabia and Iran resulting in a plan modified to avoid the territorial waters of the then US ally, the United Arab Emirates (UAE).

Once the gas had made its way to Oman, the technicalities of Iran becoming an LNG producer were extremely straightforward. The original plan, according to Alireza Kameli, managing director of the National Iranian Gas Export Company (NIGEC), would have entailed Tehran utilizing about 25 percent of Oman’s then-total 1.5 million tons per year LNG production capacity to produce Iranian LNG.

This would then have been loaded on to the specialized LNG transport vessels for export to European and Asian markets, in return for commission payments to Oman.

Overall, the Islamic Republic’s plan was to become the largest exporter of gas – including that in LNG and liquefied petroleum gas (LPG) forms – to Europe and Western Asia, with a focus on China, South Korea and Pakistan.

Prior to the withdrawal of the US from the Joint Comprehensive Plan of Action (JCPOA) or colloquially ‘the nuclear deal’) in May 2018, there had been no shortage of international oil and gas firms companies looking to take part in the Iran-Oman pipeline.

France’s Total, Germany’s Uniper and EON, South Korea’s KOGAS, Japan’s Mitsui, and Shell had all expressed serious interest in being involved, among others.

Given the potentially sanctions-busting nature of the project, though, the US included the Iran-Oman LNG project in its efforts to prevent Iran from meaningfully expanding its hydrocarbons export routes into the booming market of Asia.

Before the dispute between Saudi and Qatar erupted again, Washington’s main alternative for Oman was that it increased its uptake of gas from Qatar, via the existing Dolphin Pipeline that runs from Qatar to Oman through the UAE, or in LNG form, but it refused.

Oman’s desire to re-energize the plans for the Iran-Oman gas pipeline was fanned by the UAE’s demands for an increasingly large fee for allowing the transit of gas from Iran through its waters, again part of the US strategy to persuade Oman to take its gas from Qatar.

With U.S. sanctions firmly back in place in 2018, though, Oman backed away from the plan, to be replaced by Russia’s Gazprom in Iran’s LNG program, which duly signed two memoranda of understanding with the NIOC concerning the rollout of a two-fold joint strategy regarding gas.

The first part concerned a gas cooperation roadmap between the two companies, and the second part detailed the construction of Iranian LNG facilities in partnership with Iran’s Oil Industry Pension Fund. Initially, this would allow Gazprom to effectively take over from Germany’s Linde on its own then-60 percent complete Iran LNG complex, and later to be integral in the construction of mini-LNG complexes.

Gazprom would take payment for its work from the sale of gas both from this complex and from part of the output from fields feeding gas into it.

These plans, though, were again put on hold due to increased US sanctions against both Iran and Russia, and a relatively poor global LNG price outlook at the time. Additionally, China was again interested in taking part in the LNG project as part of its wider 25-year deal with Iran.

That said, the middle of April last year saw Oman Energy Minister, Salim al-Aufi, state that the long-stalled Iran-Oman pipeline was finally progressing once again, with expectations that it will commence operations late this year or early 2025.

Less than a month ago Oman announced the construction of a new LNG plant in Qalhat, with an annual production capacity estimated at 3.8 million metric tons, raising the Sultanate’s LNG production to 15.2 million metric tons per year. It is expected to be fully operational by 2029.

Beneficially for Iran, and China, is that the Iran-Oman gas route and adjunct infrastructure will complement Iran’s sanctions-busting Goreh-Jask pipeline, which has the capacity to transport at least one million bpd of oil from Iran’s major oil fields and runs from Goreh in the Shoaybiyeh-ye Gharbi Rural District of Khuzestan Province 1100 kilometres to the port of Jask in Hormozgan province on the Gulf of Oman.

Muscat is happy to be a conduit for the gas pipeline that would begin in Iran’s supergiant South Pars gas field and run to Sohar in the north of Oman. This pipeline would then link up to the existing pipeline that runs from there to Salalah near the Yemeni border.

 

Bangladesh: Yunus faces a rough terrain

Nobel Peace Prize-winning economist Muhammad Yunus has become the leader of Bangladesh's caretaker government on August 08, 2024 following weeks of turmoil that began when student-led protests rose up against the government and climaxed with the dramatic resignation of Prime Minister Sheikh Hasina.

As Yunus and the interim government have tough work ahead to quell social unrest, they also have to deal with mounting expectations for structural reforms and prepare for free and fair elections to be held sometime soon.

Who is this Nobel Prize winner, what sparked the rage that chased away Hasina and how are neighboring countries reacting?

Yunus is best known for his work with Grameen Bank, which traces its origins to small unsecured loans he began making to poor families in 1974. Hasina saw this champion of the underclass as a political threat, indicting him on what many saw as a long history of trumped-up charges.

Bangladesh was under the firm grip of Hasina until a few weeks ago. With her now out of the country, many citizens are waking up to a hopeful future for "a new Bangladesh" under the nonpartisan interim government headed by an 84-year-old economist, despite a series of economic challenges and the lingering effects of unrest.

Hasina enjoyed a good relationship with Indian Prime Minister Narendra Modi. But in the wake of her resignation and fleeing the country, uncertainty hangs over the two nations. As India's biggest South Asian trading partner, Bangladesh has received much investment from its neighbor, politically and financially

Hasina had recently signed a slew of economic, trade and public health agreements with China. With the countries also having elevated their relationship to a "comprehensive strategic cooperative partnership," how will Beijing find working with the next government?

For Yunus, who will lead the caretaker administration, the first and most urgent task will be to reestablish the rule of law.

However, the bigger and more difficult tasks will be to prevent interference of United States and continue to receive aid/ financial support from China and Russia.

Yunus has to quickly come up with a “home grown plan” to break the IMF shekels. The largest source of foreign exchange for Bangladesh is “textiles and clothing” and the major buyers are United States and members of European Union, who may opt for pressure tactics to keep Bangladesh away from China and Russia.

Trans-Caspian International Transport Route

Reflecting new geopolitical and economic realities

The ongoing Russian-Ukrainian conflict and security issues in the Red Sea due to Houthi attacks have pushed European countries to seek alternative trade routes to China, avoiding Russia, the Red Sea, and the Suez Canal.

The focus has shifted to the Middle Corridor, or Trans-Caspian International Transport Route (TITR), a key land-sea-rail trade route linking China with Europe.

In 2023, China was the EU's third-largest export partner and a major source of imports. Germany, France, and the Netherlands lead in EU exports to China.

The Middle Corridor spans 4,256 kilometers and includes both land and sea routes. It starts in Kashgar, China, travels through Kyrgyzstan and Uzbekistan to Türkmenbaşy on the Caspian Sea, and then moves through Azerbaijan, Georgia, and Turkey before reaching Europe.

This route is faster compared to the Northern Corridor through Russia, which covers about 10,000 kilometers and takes 15 days, whereas the Southern maritime route via the Red Sea and the Suez Canal is around 20,000 kilometers and takes 45-60 days.

The World Bank reported an 88% increase in cargo volume on the TITR in early 2023, highlighting its growing importance.

Central Asia, a geostrategic hub, has been bolstering infrastructure and aligning with China and the West for investment and development.

The region's significance has grown, especially after the United States withdrawal from Afghanistan and increased competition among Russia, China, the United States, and the European Union. President Biden's meeting with Central Asian leaders in September 2023 underscored this shift.

The US is promoting the C5+1 Dialogue to exploit the region’s mineral wealth, while Japan is also increasing its engagement, with plans for a summit in August 2024 and potential projects in renewable energy.

The EU, a major donor and investor in Central Asia, has intensified its involvement as the region seeks to diversify from Russia and China.

In June 2023, EU President Charles Michel visited Kyrgyzstan for the Second EU-Central Asia Summit, and in June 2024, Kyrgyzstan signed the Enhanced Partnership and Cooperation Agreement (EPCA) with the EU.

This agreement, replacing the old Partnership and Cooperation Agreement, aims to deepen ties in trade, investment, and various sectors, reflecting new geopolitical and economic realities.

Outlook for BRICS Common Currency

The prime objective of formation of BRICS, in my opinion, is to “end the US hegemony by getting rid of involvement of US currency in trade and above all US dominated settlement system”. It is not an easy task because creation of an alternative currency and dependable settlement system is a mammoth job, especially because United States would not like to see end to its hegemony.

De-dollarization of the global financial system is the long-term goal of the bloc amid Western economic sanctions on several members. For example, Saudi Arabia and the UAE might face rising pressures to sell oil to China and India in a currency acceptable and dependable. Trade in general is set to be increasingly carried out in the bloc’s currencies. Nonetheless, a common BRICS currency is not an easy task given the Gulf countries’ heavy links with the West and the Petrodollar, large economic disparities among members, and the strength of the Western financial system. 

BRICS economies will remain heterogeneous, with marked differences in their stage and pace of development, and in economic size and structure. For example India, Egypt and Ethiopia will grow at the fastest rates, boosted by great catch-up potential. China will benefit from its high-tech manufacturing sector. Non-oil diversification strategies will buttress activity in Saudi Arabia and the UAE. In contrast, Brazil, Iran, Russia and South Africa are set to grow at underwhelming clips due to lackluster progress on structural reforms. 

The western analysts believe, “Expansion will bolster the BRICS geopolitical significance—provided the group can reconcile its internal tensions—and its combined economic muscle, but the direct economic impact will be small. The BRICS group is unlikely to become a solid geopolitical and economic construction, regardless of how many bricks are added to the wall.” 

 The biggest agreement is, “Despite some pressure, the Petrodollar will remain the preferential currency for trade. A greater role of BRICS and other emerging markets in global trade may create more natural demand for alternatives to Petrodollars, but this has not happened so far. The higher share of CNY in trade invoicing doesn’t seem to be dethroning Petrodollar, but rather pushing out second tier developed market FX, such as GBP. One direction in which Petrodollar could be challenged given the geopolitical confrontation is the higher focus of BRICS trade on other emerging market economies.” 

OPEC Plus unlikely to change oil output policy

According to Reuters, a mini OPEC Plus ministerial meeting scheduled next month is unlikely to recommend changing the group's output policy, including a plan to start unwinding one layer of oil output cuts from October.

The Organization of the Petroleum Exporting Countries and allies led by Russia, commonly known as OPEC Plus, will hold an online joint ministerial monitoring committee meeting (JMMC) on August o1, 2024 to review the market.

Reuters says the meeting would serve as a "pulse check" for the health of the market.

Oil has risen in 2024 and was trading around US$85 a barrel on Thursday, finding support from Middle East conflict and falling inventories. Concern about higher for longer interest rates and demand has limited gains this year.

Reuters says, neither the Saudi government communications office returned a request for comment nor OPEC's headquarters in Vienna responded to a request for comment.

OPEC Plus has cut output by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand, in a series of steps agreed since late 2022.

At its last meeting in June, OPEC Plus agreed to extend cuts of 3.66 million bpd by a year until the end of 2025 and to prolong the most recent layer of cuts, a 2.2 million bpd cut by eight members for three months until the end of September 2024.

OPEC Plus is anticipated to gradually phase out the cuts of 2.2 million bpd over the course of a year from October 2024 to September 2025.

Russian Deputy Prime Minister Alexander Novak, asked this week if the market was strong enough to take the extra volume from October, did not rule out tweaks to the agreement if needed.

"Now we have such an option (of output increase), as we said earlier, we will always evaluate the current situation," Novak said.

In June, Saudi Energy Minister Prince Abdulaziz bin Salman had said OPEC Plus could pause or reverse the production hikes if it decided the market is not strong enough.

The JMMC usually meets every two months and can make recommendations to change policy which could then be discussed and ratified in a full OPEC Plus ministerial meeting of all members.

 

10th anniversary of downing of MH17 airline

According to Reuters, the Netherlands commemorated on Wednesday the 298 victims of flight MH17 that was shot down over Ukraine 10 years ago with a ceremony attended by the bereaved and representatives from Malaysia, Australia, Britain, Belgium and Ukraine.

Malaysian Airlines Flight MH17 from Amsterdam to Kuala Lumpur was shot down over eastern Ukraine on July 17, 2014, as fighting raged between pro-Russian separatists and Ukrainian forces, the precursor of Russia's invasion of Ukraine.

All passengers and crew on board, including 196 Dutch citizens, were killed, leaving the plane's wreckage and the remains of the victims scattered across fields of corn and sunflowers.

Based on an international investigation, a Dutch court in 2022 said there was no doubt the plane was shot down by a Russian missile system and that Moscow had "overall control" of the forces of the separatist 'Donetsk People's Republic' in eastern Ukraine from May 2014. Russia denies any involvement.

During Wednesday's ceremony, which took place at the MH17 monument in the village of Vijfhuizen near Amsterdam, loved ones read out loud the names of all the victims.

Mark Rutte, who was prime minister when the disaster happened and a strong critic of Russian President Vladimir Putin ever since, drew applause for his efforts during his time in office to keep the international spotlight on the incident.

The Dutch court convicted two former Russian intelligence agents and a Ukrainian separatist leader in absentia of murder for their role in the transport into eastern Ukraine of the Russian military BUK missile system that was used to shoot down the plane.

"Justice requires a long, long breath," said Prime Minister Dick Schoof, who took office earlier this month, adding that "a conviction is not the same as having someone behind bars".

Commemorating the victims, Ukrainian President Volodymyr Zelenskiy said on X that Russia's accountability "is inevitable".

"In fact, Russia murdered the MH17 victims twice. First with a missile. Second, with lies that abused their memory and hurt their relatives," Ukraine's Foreign Minister Dmytro Kuleba added.

Moscow denies any responsibility for MH17's downing and in 2014 it also denied any presence in Ukraine. However, the EU's outgoing foreign policy chief Josep Borrell on Tuesday called on Russia to finally accept its responsibility.

"The evidence presented makes it abundantly clear that the BUK surface-to-air missile system used to bring down Flight MH17 belonged beyond doubt to the armed forces of the Russian Federation," Borrell said.

"No Russian disinformation operation can distract from these basic facts, established by a court of law."

 

 

 

 

Vance opposition to Ukraine aid irks Europeans

In February this year, European political and foreign policy elite heard directly from Senator JD Vance on his opposition to military aid for Ukraine and his blunt warning that Europe will have to rely less on the United States to defend the continent.

If those comments at the annual Munich Security Conference were a first wake-up call, alarm bells are now ringing loudly across the continent after Republican Donald Trump picked Vance as his vice presidential candidate for November's US election.

"His selection as the running mate is worrying for Europe," said Ricarda Lang, co-leader of the German Green party that is part of Chancellor Olaf Scholz's government, who took part in a panel discussion with Vance in Munich.

Vance stoked fears in Europe that if Trump returns to the White House, he will drop, or curb, US support for Kyiv and push Ukraine into peace negotiations to end the war that would give Moscow a substantial slice of Ukraine and embolden Russian President Vladimir Putin to pursue further military adventures.

That view was bolstered by a letter to EU leaders from Hungarian Prime Minister Viktor Orban, who visited Trump last week. Orban, a Trump ally, said the ex-president will be "ready to act as a peace broker immediately" if he wins in November.

Lang said on X that Vance had made very clear in Munich how quickly he and Trump would "deliver Ukraine to Putin".

At the Munich conference, Vance said Putin did not pose an existential threat to Europe, and Americans and Europeans could not provide enough munitions to defeat Russia in Ukraine.

He suggested the United States' strategic priorities lay more in Asia and the Middle East.

"There are a lot of bad guys all over the world. And I'm much more interested in some of the problems in East Asia right now than I am in Europe," he told the conference.

Speaking on a podcast with Trump ally Steve Bannon in 2022, Vance said, "I don't really care what happens in Ukraine one way or the other."

In Munich, he advocated for a "negotiated peace" and said he thought Russia had an incentive to come to the table

That stance is in stark contrast with the view of most European leaders, who argue the West should continue to support Ukraine massively with military aid and say they see no sign of Putin being willing to engage in serious negotiations.

Vance also voted against a US funding bill for Ukraine that eventually passed in April. In a New York Times op-ed justifying his vote, he argued Kyiv and Washington must abandon Ukraine's goal of returning to its 1991 borders with Russia.

Nils Schmid, the foreign policy spokesperson of Scholz's Social Democrat party - said he had observed Vance in Munich and concluded the senator saw himself as Trump's mouthpiece.

"He takes an even more radical stance on Ukraine than Trump and wants to end military support. In terms of foreign policy, he is more isolationist than Trump," Schmid told Reuters.

But some cautioned against jumping to conclusions about Vance, who was born into an impoverished home in southern Ohio.

"JD Vance is a devout Christian and the circumstances of his childhood give me great hope that he, like Speaker Mike Johnson, will conclude that US support for Ukraine is the only option," said Melinda Haring, a senior adviser for Razom for Ukraine, a US-based charitable organization that advocates for Ukraine.

"While Vance has come out strongly against Ukraine, he hasn’t been in a top job and as vice president I expect to see his views evolve."

Some diplomats also cautioned that the US election was far from over.

"We need to stop creating a self-fulfilling prophecy. Trump hasn’t won and Biden hasn’t lost," said a French diplomat.

In Ukraine, politicians were wary of criticizing Vance openly, as they may have to deal with him as US vice president. But some acknowledged harboring concerns.

Oleksiy Honcharenko, a lawmaker from the opposition European Solidarity party, said he had met Vance at the Munich conference and found him to be "a very intelligent and cool-headed man".

"Is there any concern about Vance's statements? Of course. The US is our biggest and most important ally," he told Reuters.

"We must remain allies and show the US that Ukraine not only needs help, but can help itself."

Maryan Zablotskyy, a lawmaker for President Volodymyr Zelenskiy's Servant of the People party, argued Russia was harming US interests on many fronts. He said any US politician pursuing an America First agenda "will never be positive towards Russia".

 

 

Changing Indian foreign policy under Modi

The United States has recently issued a bold call for India to realign its foreign policy, urging it to move away from its current stance of peacemaker and instead align more closely with American interests, particularly in countering China.

This shift was prompted by Prime Minister Narendra Modi's recent visits to Austria and Russia, where his embrace of President Vladimir Putin drew criticism from US Ambassador Eric Garcetti.

Garcetti emphasized the need for concrete actions, suggesting India should stand with the US and NATO, possibly even supporting Ukraine against Russia.

Under Modi, India has engaged in military exercises in the South China Sea as part of the QUAD alliance, signaling a departure from its traditionally non-aligned stance.

However, Modi's approach to the Ukraine-Russia conflict, characterized by neutrality, has drawn scrutiny and criticism in Western circles, which view India's stance as opportunistic rather than principled.

Historically, India under leaders like Nehru and later Indira Gandhi maintained a policy of non-alignment and emphasized principles like sovereignty, non-aggression, and peaceful coexistence. Despite occasional conflicts with Pakistan and defiance of Western pressures on nuclear issues, India generally upheld a neutral stance in global affairs.

Modi's tenure has seen a significant increase in foreign engagements, including numerous trips abroad and strategic dialogues with major powers like China and the US.

However, his handling of relations, particularly with China, has been marked by fluctuating dynamics, highlighted by border disputes and military confrontations like the Galwan Valley clash.

Critics, including opposition leader Rahul Gandhi, accuse Modi of erratic diplomacy lacking a coherent strategy, particularly concerning China, Russia, and the United States.

Despite political divisions, past Indian governments maintained a relatively consistent foreign policy, which Modi's administration has diverged from, potentially complicating India's regional and global relationships.

Looking ahead, Modi faces challenges in reconciling India's foreign policy shifts with regional and global expectations, particularly in responding to calls from allies like the US to take a more definitive stance in global conflicts.

The balancing act between asserting India's sovereignty and navigating international partnerships remains a delicate task for his administration.

While Modi has reshaped India's global engagements, criticisms over inconsistency and strategic clarity persist, posing ongoing challenges for India's foreign policy direction under his leadership.