Pakistan Stock Exchange index up 2.58%WoW

Pakistan Stock Exchange maintained its bullish momentum during the week ended on April 26, 2024. Despite some profit-takings, challenged its previous highs and closed the week at its highest ever level of 72,742 points, marking a weekly gain of 1,833 points or 2.58%.

Overall, the positive momentum was largely driven by anticipation of investments from Saudi Arabia, the successful visit of Iran’s President, and inclusion of Pakistan in the IMF’s executive board agenda.

On the macroeconomic front, trends remained encouraging. Firstly, current account balance for March 2024 clocked in at a surplus of US$619 million, taking 9MFY24 total CAD to US$508 million, down by 87%YoY.

Foreign direct investment in March witnessed an increase of 89%MoM, reaching US$258 million.

Inflation is expected to ease; with April 2024 CPI estimated at 16.9%YoY compared to increase of 36.4%YoY during the same period last year. This easing inflationary pressure signaled monetary easing to investors, which resulted decline in secondary market yields, with the yield on 12-month paper decreasing to 20.21%. The weekly inflation index, SPI has been on a downward trajectory for the past two weeks, indicating a favorable outlook for inflation for next month as well.

Consequently, the possibility of monetary easing beginning in the upcoming monetary policy meeting scheduled for Monday cannot be ruled out.

On the flip side, concerns regarding smuggling have begun to emerge, particularly in the petroleum sector, which is beginning to impact the refinery sector.

With the market enjoying positivity, participation also improved WoW with average daily traded volume increasing to 650 million shares as compared to 492 million shares in the earlier week, up 32%WoW.

Foreign exchange reserves held by State Bank of Pakistan declined by US$74 million to US$7.98 billion as at April 19, 2024. PKR depreciated by 0.03%WoW to close at 278.4/US$.

Other major news flows during the week included: 1) Pakistan's IT exports were up 37% to record US$306 million in March, 2) RDA inflows rose to US$7.66 billion, and 3) GDP expected to grow 2.6% during FY24.

Top performing sector were: Fertilizers, Synthetic & Rayon, and ETFs, while Tobacco, Miscellaneous, and Refinery were amongst the worst performers.

Flow wise, major net selling was recorded by Insurance companies with a net sell of US$13.1 million. Mutual Funds absorbed most of the selling with a net buy of US$6.0 million.

Top performing scrips of the week were: FATIMA, DGKC, AVN, EFERT, and FFBL, while laggards included: FHAM, PAKT, PSEL, BIPL, and NRL.

Looking ahead, the upcoming monetary policy meeting scheduled for April 29, would remain in the limelight, with start of monetary easing poised to further support the ongoing bullish trend of the market, that would be led by debt-heavy sectors.

Additionally, the disbursement of the third tranche of the IMF’s SBA and initiation of talks with IMF for next EFF will be closely monitored.

Given the market at its highest, analysts advise investors to focus on fundamentally strong companies.

   

 

World Economic Forum Special Meeting

Saudi Crown Prince and Prime Minister Mohammed bin Salman will patronize the World Economic Forum (WEF) Special Meeting on Global Collaboration, Growth, and Energy for Development on April 28 and 29 in Riyadh.

More than 1000 global leaders, including heads of state and government, and thought leaders from across the public and private sectors, as well as from international organizations, academic institutions, and non-government organizations will participate in the two-day event convened by Saudi Arabia.

The Special Meeting, which will focus on three central themes of Global Collaboration, Growth, and Energy for Development, will address the most pressing present day global development challenges.

The sessions will witness productive dialogues to enhance global collaboration and stimulate collective international action to devise sustainable solutions in a world marked by growing social and economic disparities, as developed nations surpass pre-pandemic levels of activity, while emerging economies continue to play catch-up, the Saudi Press Agency reported.

Under Global Collaboration, dialogues will explore how to overcome today’s geopolitical upheavals and challenges, especially with the mounting humanitarian crises in the Middle East and Eastern Europe, while looking to foster inclusive dialogues between the Global South and North.

On the topic of Growth, the deliberations at Special Meeting will examine how the trends of transformation, innovation and economic policy-making are helping to create inclusive growth models through new investment frameworks, while looking to outline solutions to the deepening inequalities between developed and developing economies.

Under Energy for Development, leaders attending the meeting will focus on the need to achieve a net-zero future through an inclusive global energy transition.

The Special Meeting marks a continuation of the long-standing technical and policy-making collaboration between Saudi Arabia and the World Economic Forum, and builds on the impact of the Kingdom’s active participation and contributions at the Forum’s annual meetings held in Davos, Switzerland each year.

The agenda of the Special Meeting, which has been designed to revive the spirit of cooperation and collaboration, includes several panel discussions, workshops, and networking opportunities, and represents a unique convergence of global leaders and experts committed to forging a path towards a more resilient, sustainable, and equitable world.

The choice of Riyadh as the host for the WEF Special Meeting is tipped to be as a testament to Saudi Arabia’s global role in fostering international cooperation and collaboration. Since the launch of Saudi Vision 2030, Riyadh has emerged as a global capital and platform for thought leadership and action, innovation, and solutions that deliver worldwide impact, it was pointed out.

Pakistan Stock Exchange closes at highest level

At Pakistan Stock Exchange trading session during the week ended on April 19, 2024 remained erratic. However, concluded on a stronger note on the Friday with the benchmark index posted highest-ever closing at 70,909 points posting 0.85%WoW gain.

Overall, average trading volume was reported at 492.37 million shares, up 43.51%WoW, clocking in at 2.46 billion shares, as compared to 1.72 billion shares traded in the earlier week.

The volatility may be attributed to the general uncertainty surrounding over international crude prices, primarily due to the ongoing rifts in the Middle East, with the tensions largely emanating due to the scuffle between Iran and Israel. The key highlight of the week was the successful visit of the Saudi delegation to Pakistan, promising major investments in various sectors. Additionally, KSA’s acquisition of a 25% minority stake in the Reqo Diq Mining project for US$1.0 billion appears to be progressing well, with the deal anticipated to finalize soon.

With regards to FIPI flows, net foreign investments remained consistent throughout the outgoing week, culminating to US$33.86 million by Friday close.

Finally, authorities repaid the maturing US$1.0 billion Eurobond on April 12th, resulting in the SBP’s FX reserves to end the week at US$8.0 billion.

With regards to fuel price, Motor Gasoline and Diesel prices were raised, attributed to rising crude oil prices.

Other major news flows during the week included; 1) PIB sale falls short, yields dip on shorter maturities, 2) Pakistan claimed to complete gas pipeline project with Iran, 3) Wheat production target of 32.2 million tons set for the current season is at high risk due to rainfall, 4) Government does not anticipate any significant currency devaluation.

Sugar & Allied industries, Refinery, Synthetic & Rayon, Vanaspati & Allied Industries, Textile Weaving were amongst the top performing sectors, while laggards included Miscellaneous, Woolen, and Paper & Board.

Major net selling was recorded by Individuals (US$14.43 million) & Banks (US$10.97 million). Brokers absorbed most of the local selling with a net buy of US$1.23 million.

Top performing scrips of the week were: PSX, FABL, FATIMA, AKBL, NRL, while top laggards included: PTC, ISL, KTML, SEARL, and MUGHAL.

Going forward, market is expected to return its focus to negotiations with the IMF regarding The EFF program, upcoming monetary policy announcement, and the corporate results which are expected to be announced throughout the coming two weeks.

Despite the market reaching its new highest, the forward P/E continues to remain below 5.0x, which instills positivity regarding the market's fundamentals.

Middle East can't afford more conflicts

Saudi Foreign Minister Prince Faisal bin Farhan reaffirmed on Tuesday that the Middle East cannot afford further conflict, amid heightened tensions between Iran and Israel.

Addressing a joint press conference with his Pakistani counterpart Ishaq Dar in Islamabad on Tuesday during his official visit to Pakistan, leading a high-level delegation, Prince Faisal urged all parties to prioritize de-escalation.

Prince Faisal and Dar called for immediate ceasefire in the Gaza Strip. While regretting the failure of the international community to ensure ceasefire in Gaza, both leaders demanded its immediate enforcement, opening of a humanitarian corridor and averting of famine that was leading to a catastrophe.

Prince Faisal said that a ceasefire in the Gaza Strip, which has been besieged for months due to the Israeli war, has become a necessity.

He said international efforts aimed at achieving a ceasefire in Gaza have been wholly insufficient. He emphasized the need for intensified efforts to alleviate the suffering of Palestinians in Gaza and stressed the urgency of implementing an immediate ceasefire.

Prince Faisal called for an immediate end to the killings and sufferings of the people of Gaza. Palestinians were already living in an unstable region leading to a catastrophe in Gaza and ‘there is no need for further confrontation’, he said adding that ‘de-escalation should be everybody’s priority.

Prince Faisal said that so far more than 33,000 people had been killed in Gaza. “They are now facing a famine like situation and starving to death as the international humanitarian aid is not getting in. It is a complete failure of the international community,” he observed.

Terming the situation unacceptable, the Saudi minister said there was no justification to it. In reality, he said, the two United Nations resolutions regarding immediate ceasefire in Gaza had not seen implementation. Efforts were seen after six Western aid workers were killed but not when 33,000 Palestinians died which showed the double standards, he regretted.

On his part, Dar said Pakistan and Saudi Arabia shared the same feelings on Gaza, while calling upon the international community to help end the genocide.

“The world conscience must wake up and enforce an immediate and unconditional ceasefire to ensure unimpeded humanitarian aid. More Palestinians should not be killed due to starvation,” he said, and demanded for a global probe into the crimes committed against humanity in Gaza.

Prince Faisal and Dar reiterated the need to build up and convert the bilateral strong partnership into a strategic partnership and further promote economic cooperation for the mutual benefit of the two countries.

Prince Faisal termed his meetings with the Pakistani leadership very productive. He emphasized the importance of strategic partnership between the two countries and expressed commitment for strengthening of investment.

“The Saudi delegation was impressed with the proactive and business focused approach of the Pakistani side. There were significant investment opportunities in Pakistan, and termed their visit ‘very positive on their perspective’, which would lay the groundwork for future ventures.”

The Saudi minister also emphasized the need to tap the untapped potential in Pakistan. “We should continue to work closely for the economic progress and regional security with historic bilateral cooperation,” he added.

Saudi foreign minister leads high-level delegation to Pakistan

Saudi Arabia’s Foreign Minister Prince Faisal Bin Farhan arrived in Pakistan on Monday for a two-day official visit, aimed at bolstering economic ties and advancing mutual interests.

Leading a distinguished delegation, the foreign minister is joined by several key figures, including the Minister of Environment, Water and Agriculture, Eng. Abdulrahman Al-Fadhli; Minister of Industry and Mineral Resources, Bandar Al Khorayef; Advisor at the Royal Court Mohammed Al-Tuwaijri; and Assistant Minister of Investment, Eng. Ibrahim Al-Mubarak, among other senior officials from the Ministry of Energy, the Public Investment Fund, and the Saudi Fund for Development.

The delegation's visit follows a recent meeting between Crown Prince and Prime Minister Mohammed Bin Salman and Pakistani Prime Minister Shehbaz Sharif in Makkah, underscoring a commitment to expedite a previously discussed US$5 billion investment package.

Discussions during this visit will focus on enhancing bilateral cooperation across diverse sectors, including significant investments in Pakistan’s Reko Diq mining project, which involves one of the largest undeveloped reserves of copper and gold in the world.

The Saudi delegation is set to engage in comprehensive talks with Pakistani leaders, including the president, the prime minister, the foreign minister, and other key stakeholders.

These discussions are expected to cover a wide range of topics such as agriculture, trade, energy, minerals, IT, and transport.

Pakistan’s antagonized relations with its neighbors

Pakistan's relationships with its neighboring countries have been strained for several decades, with current tensions particularly evident with Iran, Afghanistan, and India. These strained relations stem from a complex history and various geopolitical factors.

Historically, Pakistan enjoyed close ties with Iran, notably during the RCD era. However, following the revolution in Iran, relations soured, partly due to pressure from the United States. US-imposed sanctions on Iran and efforts to isolate it, including influencing Saudi Arabia to sever ties, further exacerbated tensions. Allegations suggest that countries like Saudi Arabia and Kuwait supported Iraq during its decade-long war with Iran.

The Iran-Pakistan-India (IPI) gas pipeline project, once of significant importance, faced setbacks due to US influence. India, under US pressure, withdrew from the project, citing the threat of economic sanctions. In an attempt to mitigate these challenges, Pakistan turned to Saudi Arabia for crude oil supplies on deferred payment terms.

Despite hopes for improved relations following diplomatic efforts brokered by China between Saudi Arabia and Iran, ongoing cross-border terrorism activities between Pakistan and Iran have hindered progress on projects like the Iran-Pakistan gas pipeline.

The relationship between Pakistan and Afghanistan has been marked by fluctuating dynamics, oscillating between cooperation and hostility. India's involvement, including support for anti-Pakistan elements in Afghanistan and participation in infrastructure projects like the Chabahar Port, has further complicated matters, seeking to undermine Pakistan's regional influence.

US foreign policy interests heavily influence the dynamics between India and Pakistan, with the former receiving substantial military support to counterbalance China, often at Pakistan's expense. Some analysts believe that entrenched hard-line positions in both countries will continue to hinder any prospects for improved relations.

Critics argue that Pakistan's foreign policy, historically aligned with US interests, prevents the country from overcoming its most pressing challenges independently. This dependence on external support, particularly from the United States, perpetuates Pakistan's vulnerability in international affairs.

Saudi Arabia: Remittances fall to five year low

The remittance by expatriates living in Saudi Arabia fell 10.41 percent to SR9.33 billion during February 2024 from SR10.41 billion in the previous month. This shows a the decline of SR1.08 billion month-on-month basis, marking the lowest average monthly level in five years, according to a monitoring by Okaz/Saudi Gazette based on the statistical figures released by the competent authorities.

The average monthly remittance level recorded a fall in January and February to the lowest level in at least five years, as the average remittances for the two months reached about SR9.87 billion. The average value of monthly remittances of expatriates in 2019 was reported at SR10.46 billion, and then it maintained a steady increase in the two successive years.

During the year 2020, the monthly average of foreign remittance rose to SR12.47 billion and it further rose to SR12.82 billion in 2021. Then, it began to decline in 2022, bringing the average monthly remittance value to SR11.94 billion. During the year 2023, the average value of foreign remittance declined further reaching SR10.41 billion while the average value of transfers for the months of January and February was reported at SR9.87 billion.

Meanwhile, the Saudi Central Bank (SAMA) revealed that the bank’s net foreign assets recorded a decline of US$7.20 billion in February as compared to the previous month. Net foreign assets fell to SR1.545 trillion (US$411.96 billion) from SR1.572 trillion (US$419.1 billion) in January, and net foreign assets fell 4.9%YoY in February.

 

Qatar: Al Udeid US Air Base

According to a CNN report the United States has quietly reached an agreement that extends its military presence at a sprawling base in Qatar for another 10 years.

The deal, which has not been announced publicly, highlights Washington’s reliance on the tiny Gulf country that has recently played a central role in mediating the release of Americans from captivity in Gaza and Venezuela.

The Al Udeid Air Base, located in the desert southwest of Doha, is the biggest US military installation in the Middle East and can house more than 10,000 American troops.

Secretary of Defense Lloyd Austin personally visited Al Udeid and thanked Qatar for their increased spending on the base.

Austin made no mention of the renewal and the Biden administration has not publicized it – at a time when Qatar has come under growing scrutiny for hosting senior Hamas leaders.

Qatari officials have countered that it was only after a US request during the Obama administration that Hamas was allowed to open a political office in Doha.

The base has been a pivotal hub for the US Central Command’s air operations in or around Afghanistan, Iran and across the Middle East. The Qatari and British Air Forces also operate from the base.

The extension comes as the US has bolstered its presence in the region amid escalating threats from Iran-backed militant groups in Iraq, Syria and Yemen.

After Hamas kidnapped some 240 hostages from Israel on October 07, 2023 Qatar has been the primary go-between with Hamas to broker the initial release of scores of the Israeli and international hostages. It continues to be central in the talks to try to revive hostage negotiations, coordinating with the CIA and Israel’s Mossad, as well as Egypt.

Their part in the months of negotiations over Americans detained by Venezuela was less public but came to light after President Nicolas Maduro released 10 Americans last month in exchange for a close ally accused by the US of laundering hundreds of millions of dollars.

Qatar’s involvement in both sets of negotiations has been seen as an extension of the mediating role the country has taken on with other US enemies, including Iran and the Taliban. 

Its vast oil and natural gas wealth, coupled with ability to act as a facilitator, allow Qatar to punch above its weight.

While their hosting of Hamas leadership was no secret, the brutality of the October 7 massacre in Israel has ignited criticism of Qatar and calls for them to expel Hamas.

President Joe Biden has spoken about his conversations with Qatar’s emir but at times hasn’t given them the credit they feel they deserve.

Biden did not mention Qatar in a November op-ed in The Washington Post, while Egypt and other Middle East allies were referenced. Nor did Biden highlight Qatar’s part in the release of the detainees in Venezuela in his official statement.

Thousands of Afghans were flown from Kabul to Al Udeid during the chaotic American withdrawal from Afghanistan in 2021. US military personnel struggled to provide for the massive influx of refugees from what Biden called “one of the largest, most difficult airlifts in history.”

Qatar has committed billions of its own funds upgrade the facilities for US Airmen at the base. Al Udeid became CENTCOM’s main air base in 2003, shifting forces and assets from the Prince Sultan Air Base in Saudi Arabia, where the presence of a large number of American military personnel was more sensitive and controversial.

“We’ll do this through Qatar’s commitment to contribute significant resources to increase capabilities here at Al Udeid Air Base, and that will support both of our forces for years to come,” Austin added.

 

 

Saudis commit US$101 million for Pakistan

The Saudi Fund for Development (SFD), Chief Executive Officer, Sultan Abdulrahman Al-Marshad and Secretary of the Ministry of Economic Affairs of Pakistan Dr. Kazim Niaz signed two strategic development loan agreements totaling US$101 million to bolster Pakistan's clean energy sector.

These agreements, valued at US$66 million for the Shounter Hydropower Project and US$35 million for the Jagran-IV Hydropower Project, aim to significantly enhance Pakistan's renewable energy infrastructure by adding a combined total of 70MW hydropower capacity to the national grid.

The funding will facilitate the construction of essential infrastructure, including dams, water diversion systems, powerhouses, and transmission lines, marking a significant step forward in Pakistan's transition towards sustainable energy sources.

These projects not only aim to address the environmental and financial challenges associated with conventional energy sources but also underscore the critical role of clean energy in promoting sustainable development, economic growth, and social welfare across Pakistan.

This move reinforces the SFD's long-standing commitment to supporting Pakistan's development goals, having financed 41 development projects and programs since 1976 with soft loans and grants exceeding US$1.4 billion, aimed at fostering growth in various critical sectors throughout the country.

Stopping military operations in Gaza

Saudi Crown Prince and Prime Minister Mohammed bin Salman and US Secretary of State Antony Blinken held a meeting in Jeddah on Wednesday.

During the meeting, they discussed the latest regional and international developments, foremost of which were the developments in the Gaza Strip. The efforts to stop military operations in Gaza, and dealing with its security and humanitarian repercussions were figured high in their talks.

The entire population in Gaza is experiencing high levels of acute food shortage, with around 1.1 million people or half the population living through catastrophic food insecurity.

Famine is now projected and imminent in the North Gaza and Gaza Governorates and is expected to become manifest during the projection period from mid-March 2024 to May 2024.

The famine is projected to occur in Gaza’s northern governorates if conflict escalates, including the impending ground offensive in the southern city of Rafah, and if the hostilities continue to obstruct the flow of humanitarian aid to parts of Gaza where people in need reside.

Some households face massive food shortages, being in the phase four and five categories and the latest data shows that people are resorting to eating animal fodder, scavenging or begging.

“There is an imminent risk of famine in North of Gaza and a risk of famine across the [Gaza] Strip,” Nour Shawaf, the MENA policy adviser at Oxfam, told Al Jazeera.

The Crown Prince and Blinken also reviewed bilateral relations and areas of cooperation between the two countries and issues of mutual concern.

The meeting was attended by Minister of Defense Prince Khalid bin Salman, Saudi Ambassador to the United States Princess Reema bint Bandar, Minister of Foreign Affairs Prince Faisal bin Farhan, and Minister of State, Cabinet Member and National Security Advisor Dr. Musaed Al-Aiban, as well as the US Secretary of State’s accompanying delegation.

Palestinian state must for Mideast stability

Saudi Foreign Minister Prince Faisal bin Farhan said on Saturday that the only pathway towards security and stability in the Middle East, including Israel, was through the establishment of a Palestinian state, reports the Saudi Gazette.

Addressing a panel discussion at the Munich Security Conference about normalization of ties with Israel, Prince Faisal underscored the need to ensure a safe path to a two-state solution, saying, the greater the consensus in the international community on the two-state solution, the closer we will get to it.

Egyptian Foreign Minister Sameh Shoukry and Belgian Foreign Minister Hadja Lahbib also attended the discussion.

The foreign minister said that Saudi Arabia has no relations with Israel. “Normalization of relations with Israel depends on the implementation of the Arab Peace Treaty. We do not talk to them directly,” he said.

Prince Faisal stressed that Saudi Arabia was now concentrating on a truce in the Gaza war. “We are focused on a ceasefire and on an Israeli withdrawal from Gaza and we are focused on humanitarian access for the people of Gaza”.

“What Israel is doing in Gaza will not make it safer, but rather will push a new generation towards extremism,” he said while calling for all those, who obstruct the two-state solution, to be held accountable.

For his part, Sameh Shoukry said that Cairo confirmed to Tel Aviv that removing the displaced Palestinians from Rafah poses a threat to Egypt’s national security, saying that there are catastrophic consequences of displacing the people of Gaza.

He considered that the lack of will of the international community is what has been obstructing the two-state solution for years.

On her part, Hadja Lahbib called for bringing out a comprehensive plan to end the Israeli-Palestinian conflict, stressing that the current crisis in Gaza cannot be resolved militarily.

The Belgian minister said that Israel must offer an alternative solution as long as it rejects the two-state solution, stressing that the two-state solution is capable of defusing the conflict in the Middle East.

Meanwhile, Josep Borrell, high representative of the European Union for Foreign Affairs and Security Policy, said on Saturday that he discussed with Saudi Foreign Minister Prince Faisal bin Farhan the catastrophic situation in the Gaza Strip.

In a statement on his X account, Borrell stated that he also discussed with the Saudi minister the need for regional security and the practical steps that can be taken within the framework of our joint work on the two-state solution.

On Friday, Prince Faisal discussed with his British counterpart David Cameron the developments on the Gaza situation and the international efforts being made in this regard. Their meeting was held on the sidelines of the Munich Security Conference.

Iranian Revolution Celebrations in Jeddah

A ceremony marking the 45th anniversary of the Islamic Revolution of Iran was held at the Iranian consulate in Jeddah, Saudi Arabia. 

The gathering was attended by Mazen bin Hamli, Director General of the Office of the Ministry of Foreign Affairs of the Kingdom of Saudi Arabia in Jeddah, a large group of consuls stationed in Jeddah, representatives of various countries at the Organization of Islamic Cooperation, as well as traders, economic activists, and media personnel.

Hassan Zarnegar Abarghouei, Consul General of the Islamic Republic of Iran in Jeddah, delivered a speech, thanking the guests for joining Iranians in celebrating a big day in their country’s history.  

In his speech, he referred to the scientific and technological achievements and economic, tourism, and scientific capacities of Iran, emphasizing the necessity of developing relations between Tehran and Riyadh and the readiness of traders and merchants from both countries to expand cooperation.

He further emphasized the need for unity among Islamic countries to end the crimes of the Zionist regime against the besieged Palestinian people in Gaza. 

The Iranian Consulate in Saudi Arabia’s port city of Jeddah was officially reopened in June of last year. The two countries had severed their ties in January 2016 after the execution of Sheikh Nimr al-Nimr, a prominent Shia cleric in Saudi Arabia, prompted angry protests in front of the Saudi Embassy in Tehran and the kingdom's Consulate in the holy city of Mashhad.

China successfully mediated high-stakes talks between Tehran and Riyadh in March of last year, which led to the conclusion of a deal between the two sides that foresaw the resumption of their ties.

 

Achieving Gulf Unity and Prosperity

Saudi Crown Prince and Prime Minister Mohammed bin Salman expressed his aspiration to make more efforts to achieve the vision of Custodian of the Two Holy Mosques King Salman to achieve the unity of the Gulf Cooperation Council (GCC) countries as well as the stability and prosperity of their people.

The Crown Prince said this while co-chairing the 3rd meeting of the Saudi-Bahraini Coordination Council along with Bahrain’s Crown Prince and Prime Minister Prince Salman bin Hamad Al-Khalifa in Riyadh on Wednesday. The two leaders witnessed the announcements about key joint projects and signing of a number of agreements and memoranda of understanding (MoUs) between the two countries.

In his speech, the Crown Prince highlighted the significance of the activities and initiatives being carried out by the Saudi-Bahraini Coordination Council and its affiliated committees in all areas of cooperation, saying that this would benefit the citizens of both countries and meet the aspirations of their leadership. He also lauded the strong and deep-rooted historical relations that bind the two kingdoms and their peoples.

In his speech, Prince Salman bin Hamad praised the level of distinguished relations and historical ties between the two kingdoms. He stressed the importance of these meetings and their effective role in strengthening the strategic partnerships between Bahrain and Saudi Arabia to achieve the desired integration and its contribution to pushing joint cooperation towards new horizons that achieve prosperity and development for the two countries and their peoples.

Prince Salman praised the good efforts made by Crown Prince Mohammed bin Salman in supporting various initiatives and projects that would contribute to achieving integration and development for the two countries, including the initiatives that the committees of the Saudi-Bahraini Coordination Council are working on, which aim to put shared aspirations and visions into practice.

In the presence of Prince Mohammed bin Salman and Prince Salman bin Hamad the opening of the first office of the Saudi-Bahraini Company and the completion of the construction of King Abdullah Medical City Hospital in Bahrain were announced.

The company was established in November 2022 between the Saudi Public Investment Fund and the Bahrain Mumtalakat Holding Company, with an investment amounting to US$5 billion. The King Abdullah Medical City Hospital is scheduled to begin operation during the second quarter of 2024.

Announcements were also made with regard to a number of projects related to launching training opportunities and incubating private sector institutions concerned with artificial intelligence, networking and electronic data sharing, and partnerships between private sector institutions in the fields of health and handling of products between the two countries.

During the meeting, a number of agreements and MoUs were signed in the fields of energy, economy, finance and financial markets, legal, culture, education, administrative development, health, television, radio and news.

Several ministers and high ranking officials from the two countries attended the meeting. It was agreed to hold the 4th meeting of the Saudi-Bahraini Coordination Council in Bahrain.

Saudi Arabia: No Israel ties without recognition of independent Palestinian state

Saudi Arabia has clearly communicated to the United States that it will not establish diplomatic relations with Israel without substantial progress on the Palestinian issue.

The Kingdom is demanding the recognition of an independent Palestinian state within the 1967 borders, with East Jerusalem as its capital.

Additionally, it has called for an end to Israeli aggression in the Gaza Strip and insists on the withdrawal of all Israeli occupation forces from the area as prerequisites for any future diplomatic engagement with Israel.

A statement issued by the Ministry of Foreign Affairs highlights that Saudi Arabia's position on the Palestinian issue is steadfast, emphasizing the necessity for the Palestinian people to obtain their legitimate rights.

This stance is particularly relevant in light of ongoing discussions between Saudi Arabia and the US concerning the Arab-Israeli peace process, further underscored by recent comments from the spokesperson for the US National Security Council.

This declaration is a pivotal moment in Middle Eastern politics, signifying Saudi Arabia's firm commitment to the Palestinian cause and setting clear conditions for any normalization of relations with Israel.

The Kingdom underscored that resolving the Palestinian issue is central to achieving lasting peace and stability in the region.

Saudi Arabia has also reaffirmed its appeal to the international community, especially urging the permanent member states of the Security Council that have not yet recognized the Palestinian state, to promptly do so.

The Kingdom advocates for the swift recognition of the Palestinian state within the 1967 borders and with East Jerusalem as its capital, aiming to empower the Palestinian people to attain their legitimate rights and to ensure a comprehensive and just peace for all.

Saudi Arabia and Kuwait assert ownership of Durra field

Saudi Arabia and Kuwait underscored their unequivocal stance regarding the Durra field, asserting its location entirely within Kuwait's exclusive maritime areas. They emphasized that the natural resources in the divided submerged area, including the Durra field, are shared exclusively between Saudi Arabia and Kuwait. This unequivocal stance rejects any claims of rights by any other party in this area.

The assertion of this stand came in a joint statement issued following the visit of Kuwait's Emir, Sheikh Mishal Al-Ahmad Al-Jaber Al-Sabah, to Saudi Arabia on Tuesday. During the visit, the Kuwaiti Emir held talks with Saudi Arabia's King Salman, as well as Crown Prince and Prime Minister Mohammad bin Salman.

The two nations renewed their call on Iran to engage in negotiations over the eastern border of the divided submerged area, involving Kuwait and Saudi Arabia as one party, in accordance with international law.

Saudi Arabia and Kuwait have reaffirmed their call to neighboring Iraq to honor the 2012 agreement concerning the regulation of navigation in the Khor Abdullah waterway.

The joint statement emphasized the importance of the Khor Abdullah agreement, which came into force on December 5, 2013, after ratification by both countries and subsequent submission to the United Nations on December 18, 2013.

The two nations expressed their disapproval of Iraq's unilateral cancellation of the security exchange protocol established between Kuwait and Iraq in 2008, as well as the endorsed map signed between the two countries on December 28, 2014. The map included a clear mechanism for amendment and cancellation.

Moreover, Saudi Arabia and Kuwait reiterated their support for the UN Security Council Resolution No. 2107 (2013). This resolution seeks the Special Representative of the Secretary-General to facilitate efforts in determining the fate of missing Kuwaitis, and third-country nationals, and the return of the seized Kuwaiti property, including national archives.

The joint statement covered various aspects of cooperation, including economic, commercial, and investment collaboration. Both sides hailed the growth of trade relations and mutual investments, emphasizing the importance of expanding economic cooperation and partnership, aligning with their respective visions – Saudi Arabia's Vision 2030 and Kuwait's Vision 2035.

The Saudi side extended an invitation to Kuwaiti investors and companies to expand their presence in the Kingdom and take advantage of available investment opportunities. Additionally, the two nations expressed their desire to sign an agreement to prevent double taxation.

On the defense and security front, both countries highlighted their commitment to strengthening defense cooperation and strategic relations to ensure regional security and stability. They emphasized the importance of combating crimes such as drug trafficking, border security, extremism, and terrorism, and promoting a culture of moderation and tolerance.

Regarding the Palestinian territories, Saudi Arabia and Kuwait voiced deep concern about the humanitarian crisis in the Gaza Strip due to the Israeli occupation's military operations. They called for international action to halt the Israeli aggression, protect civilians, and enable humanitarian organizations to provide aid to Palestinians. They stressed the need for a comprehensive and just settlement of the Palestinian issue based on a two-state solution, the Arab Peace Initiative, and relevant UN resolutions.

The joint statement also addressed the Yemeni crisis, expressing support for international and regional efforts to reach a comprehensive political solution. Kuwait praised Saudi Arabia's initiatives aimed at encouraging dialogue and reconciliation among Yemeni parties, as well as the Kingdom's humanitarian aid efforts.

Regarding navigation in the Red Sea, Saudi Arabia and Kuwait emphasized the importance of maintaining security and stability in the region and respecting the right to safe maritime navigation in accordance with international law and the United Nations Convention on the Law of the Sea of 1982. They called for restraint and de-escalation amid the region's heightened tensions.

Why United States has bases in Middle East?

United States has been operating bases around the Middle East for decades. Often questions are asked: what are US troops doing in the Middle East and where are these bases located? These questions have got louder after three US soldiers were killed and dozens wounded as a drone hit a military outpost in Jordan, known as Tower 22, on Sunday. The location is just one of many bases the US has in the Middle East.

Tower 22 holds a strategically important location in Jordan, at the most northeastern point where the country's borders meet Syria and Iraq.

Specifically, Tower 22 is near Al Tanf garrison, which is located across the border in Syria, and which houses a small number of US troops. Tanf had been the key in the fight against Islamic State and has assumed a role as part of a US strategy to contain Iran's military build-up in eastern Syria.

US bases are highly guarded facilities, including with air defense systems to protect against missiles or drones.

Facilities in countries like Qatar, Bahrain, Saudi Arabia and Kuwait are not usually attacked, but US troops in Iraq and Syria have come under frequent attacks in recent years.

Reportedly, since October 07, 2023 US troops have been attacked more than 160 times, injuring about 80 troops, even prior to Sunday's attack on Tower 22, which has injured around 40 more

The US has been operating bases around the Middle East for decades. At its peak, there were more than 100,000 US troops in Afghanistan in 2011 and over 160,000 personnel in Iraq in 2007.

The number has declined substantially after withdrawal from Afghanistan in 2021, but still about 30,000 US troops scattered across the region.

Since the Israel-Gaza war began in October 2023, the US has temporarily sent thousands of additional troops in the region, including on warships.

The largest US base in the Middle East is located in Qatar, known as Al Udeid Air Base and built in 1996. Other countries where the US has a presence include Bahrain, Kuwait, Saudi Arabia and the United Arab Emirates (UAE).

The US has roughly 900 troops in Syria, in small bases like al Omar Oil field and al-Shaddadi mostly in the northeast of the country. There is a small outpost near the county's border with Iraq and Jordan, known as the Al Tanf garrison.

There are 2,500 personnel in Iraq, spread around facilities like Union III and Ain al-Asad air base, though talks are ongoing about the future of those troops.

 US troops are stationed in the Middle East for different reasons and with the exception of Syria, they are there with the permission of each country's government.

In some countries like Iraq and Syria, US troops are there to fight against Islamic State militants and are helping local forces. But they have come under attack over the past several years and have taken action against the attackers.

Jordan, a key US ally in the region, has hundreds of US trainers and they hold extensive exercises throughout the year.

In Qatar and the UAE, US troops have a presence to reassure allies, carry out training and are used as needed in operations in the region.

While Washington's allies sometimes send their troops to train or work with US troops, there are no foreign military bases inside the United States.

 

 

 

 

 

Aramco to maintain oil production at 12 million bpd

Saudi Aramco, the world's largest oil-producing company, announced on Tuesday that it has received directives from the Ministry of Energy to maintain its maximum sustainable capacity (MSC) at 12 million barrels per day. This directive puts a hold on previous plans to increase production to 13 million barrels.

The determination of MSC, as outlined in the press release, is a responsibility of the state under the Hydrocarbons Law, which was enacted by Royal Decree M/37 on December 20, 2017. This law provides the framework for Saudi Arabia's oil production strategies and capacity decisions.

Aramco also indicated that it would provide an update on its capital spending guidance when it announces its full-year 2023 results in March. This update is eagerly anticipated by investors and market analysts, as it will provide insights into the company's strategic planning and investment priorities in light of the current market conditions and the ongoing energy transition.

USIP highlights Implications of Iranian attack on US Policy

While the US policymakers and the broader policy community are accustomed to Iranian aggression — mostly through proxies — across the Middle East, direct Iranian military strikes in Pakistan are a novel development for them.

The strikes will only reinforce US leaders’ perception of Iran as a reckless actor.

In line with that, the State Department issued a statement condemning Iran’s actions against Pakistan — and disputed the Iranian charge against Pakistan by calling Iran the “leading funder” of terrorism and instability in the region.

As for a Pakistan policy perspective, it is in United States’ interest that there is no further regional flare-up involving Pakistan which destabilizes the country at a time of economic and political stress.

Policymakers will also hope for a de-escalation to not jeopardize, or at least not disrupt, ongoing counterterrorism cooperation with Pakistan on Afghanistan.

Beyond the immediate standoff, some policymakers and US Central Command, which maintains strong ties with Pakistan, may see synergies with a Pakistan feeling threatened by Iran to balance Iranian military and proxy power in the region.

Iran-Pakistan tensions are not endemic, with incentives on both sides to maintain a functional relationship.

This basic diagnosis of Iran-Pakistan relations, combined with the United States’ Indo-Pacific priorities and uncertainty in Pakistan about working with the United States on Middle East issues, will put a ceiling on any cooperative agenda around nefarious Iranian activities in the region.

USIP rationale Iran attacked Pakistan

In a surprising turn on January 16, Iran launched missile strikes into Pakistan’s Baluchistan province, claiming it had hit two strongholds of anti-Iran insurgent group Jaish al-Adl (Army of Justice). Many Pakistanis are perplexed and just could not find the reasons for Iranian assault. Following is the logic offered by United States Institute of Peace (USIP) behind Iranian attack on Pakistan.

Iran’s calculus remains difficult to know — and Pakistan and other countries are left wondering what prompted Iran to take such a radical step against a more militarily powerful neighbor.

Iran’s logic of striking Pakistan remains opaque. On the face of it, Iran claims it struck terrorist cells of the Jaish al-Adl, which Iran says has a haven in Pakistan and implying also that the group has links to Israel.

Jaish al-Adl is a US-designated terrorist group fighting the Iranian regime with the goal of securing political and economic rights for the ethnic Baluch and Sunni in Iran.

On December 15th of last year, the group carried out an attack on a police station in the town of Rask, in Iran’s Sistan-Baluchistan province, killing several police officers.

Iranian logic that a preemptive strike against Jaish al-Adl is in response to the Rask attack doesn’t fully explain the attack.

Jaish al-Adl enjoying a haven in Pakistan with purported help from the external actors has been a long-standing Iranian complaint, but Iran has not struck Pakistan in cross-border raids before and hasn’t indicated an intent to undertake cross-border strikes of late.

There are two other possibilities for why Iran may have targeted Pakistan.

First, Iran may well be seeking to broaden the ongoing regional conflict and decided to draw Pakistan into the mix. If this is driving Iran, we may see more Iranian action in Pakistan.

Second, Iran may be attempting to force regional countries, including Pakistan, to rethink their preexisting alignment with the United States and to not offer further help that might allow the United States to counter Iran or its proxies in the region.

USIP view of Pak Iran relations

In a surprising turn on January 16, Iran launched missile strikes into Pakistan’s Baluchistan province, claiming it had hit two strongholds of anti-Iran insurgent group Jaish al-Adl (Army of Justice). Many Pakistanis are perplexed and just could not find the reasons for Iranian assault. Following is the narrative offered by United States Institute of Peace (USIP) on Iran-Pakistan relations.

Iran announced the attack in Pakistan concurrent to its strikes in Iraq and Syria. Less than two days later, Pakistan hit back with not only missiles but also fighter jets in Iran’s Sistan-Baluchistan province — claiming to target hideouts of anti-Pakistan ethno-nationalist insurgents operating from Iranian soil.

This sudden escalation and military hostilities between the two neighboring countries come at a time of heightened regional tensions, with Iranian-backed militias in Iraq carrying out near-daily attacks on bases with US forces in Iraq and Syria and escalation in the Red Sea due to another Iranian-backed entity, the Houthis, targeting global shipping.

Still the attack in Pakistan is unique. Relations between Iran and Pakistan have been generally peaceful and border skirmishes between the two sides have been minimal, or at least contained very close to the border and downplayed by both sides. This time, by announcing the attack, Iran broke from that trend.

Since the revolution in Iran in 1979, ties between Iran and Pakistan have been functional, and in periods warm, but ultimately not particularly strong. While Iran-Pakistan people-to-people exchanges are the strength of the relationship, there have been political grievances toward the other on both sides.

Iran’s Shia theocratic regime, for example, has felt ideologically discordant with Sunni-majority Pakistan. Pakistani leadership has also at times viewed the relationship through a sectarian lens, though the salience of the sectarian rift is much less acute compared to Iran’s ties with countries in the Persian Gulf region, as Pakistan has a sizable Shia minority.

Iran has also had a negative perception of Pakistan due to its strong relations with geopolitical forces opposed to Iran: the United States and Gulf powers, especially the United Arab Emirates and Saudi Arabia.

For Pakistan’s part, it has seen Iran as a difficult and not very useful neighbor due to its pariah status in the West.

Iran has also had a closer relationship with Pakistan’s archrival India, and Pakistani leaders have long suspected Iran of supporting and providing haven to anti-Pakistan ethno-nationalist groups.