Tankers Haul Russian Diesel to Brazil

According to Bloomberg tankers laden with millions of barrels of Russian diesel are floating off the coast of Brazil — with more on the way.

Ships holding at least 3.2 million barrels of diesel-type fuel from Russian ports are idling in waters off the world’s fifth largest country.

It’s not clear why the cargoes are getting held up. However, the glut is the latest sign of snarls in the delivery of petroleum from Russia at a time when US and UK sanctions are tightening.

Diesel cargoes are also being held in tankers in the Mediterranean and Gulf of Guinea, while crude is backing up outside Indian ports.

While the glut is notable — 3.2 million barrels would meet about two weeks of the Latin American country’s imports — there doesn’t appear to be a complete halt in the discharge of cargoes from Russia in Brazil. Of the vessels off the nation’s coast, at least two are Sovcomflot PJSC tankers.

There are also at least 3.3 million barrels of diesel currently being transported toward Brazil, much of it across the Atlantic. It seems unlikely traders would continue sending the cargoes if they weren’t able to unload.

Other vessels are signaling Brazil, but their movements suggest they may not be heading to the country anytime soon. The nation has also imported diesel-type fuel from the UAE and Kuwait this month.

 

Aid reaches Gaza shore in first sea delivery

According to Saudi Gazette, the first maritime humanitarian aid shipment to Gaza has been unloaded on to the shore. The US charity behind the mission, World Central Kitchen, is carrying out the mission in cooperation with the United Arab Emirates.

Aid agencies have repeatedly warned that no method of relief is as effective as delivery by land, but they say Israeli restrictions mean a fraction of what is needed is getting in.

The shipment contained 200 tons of food desperately needed for Gaza, which the UN says is on the brink of famine. It marks the start of a trial to see if the sea route would be more effective than air and land deliveries.

Aid agencies have accused Israel of impeding aid deliveries, a charge vehemently denied by Israeli officials. They say Israel is allowing aid through two crossings in the south and has blamed aid agencies of logistical failures.

Saturday's shipment arrived on board Spanish charity ship Open Arms.

Its cargo includes beans, carrots, canned tuna, chickpeas, canned corn, parboiled rice, flour, oil, salt and pallets of dates, which hold spiritual significance during Ramadan.

In a statement, World Central Kitchen (WCK) said, "All cargo was offloaded and is being readied for distribution in Gaza." Teams worked through the night to get the aid on to dry land.

Gaza has no functioning port, so a jetty stemming from the shoreline was built by WCK's team.
However, there are few details on how the aid distribution will work, with UN relief agencies having described huge obstacles to getting relief supplies to those in need.

Earlier, WCK's founder, celebrity chef José Andrés, wrote on X (formerly Twitter) that all the food aid from the barge had been loaded into 12 lorries.

"We did it!" he wrote, adding that this was a test to see if they could bring even more aid in the next shipment — up to "thousands of tons a week".

In a statement, the Israel Defense Forces (IDF) said troops had been deployed to secure the shoreline.

This delivery has been highly anticipated since the ship set off from the port of Larnaca on Tuesday.

If this sea mission is deemed a success, other aid ships will likely follow as part of an international effort to get more aid into Gaza. The ships would use a newly opened sea route to travel directly to the region.

The US is planning to build its own floating dock off the coast to boost sea deliveries. The White House says it could see two million meals a day enter Gaza, but while a military ship is en route with equipment on board to build the dock, questions remain about the logistics of the plan.

The World Food Program had to temporarily pause its land deliveries after convoys came under gunfire and looting. And an air drop turned deadly last week when five people were reportedly killed when a parachute failed and they were hit by the aid package.

The UN has warned that famine is "almost inevitable" in Gaza without urgent action, and the EU's foreign policy chief Josep Borrell has accused Israel of creating a "manmade" disaster and using starvation as a weapon of war.

 

Iran, Saudi Arabia, UAE, Egypt, Ethiopia join BRICS

South Africa’s representative in the BRICS group of emerging economies, Anil Sooklal, has stated that Iran, Saudi Arabia, the United Arab Emirates, Egypt, and Ethiopia join the bloc on January 01, 2024.

At the recent BRICS meeting, which took place in Durban, South Africa, early in December, Sooklal underlined —referring to the attendance of high-ranking representatives of Iran, Saudi Arabia, the United Arab Emirates, Egypt, and Ethiopia— that the number of BRICS members will double with the addition of these nations.

He went on to add that the next conference of the economic group is scheduled for January 30, 2024 in Moscow, and it is expected that representatives of the new BRICS members will be there.

In a recent interview with Sputnik, Iran's Deputy Foreign Minister for Political Affairs, Ali Bagheri Kani, emphasized Iran's commitment, alongside other BRICS members, to actively pursue de-dollarization across various economic sectors.

Bagheri Kani highlighted the focus on trade, economic collaborations, and financial exchanges within this influential coalition of major economies. 

He emphasized ongoing initiatives and expressed optimism about reinforcing these efforts to swiftly achieve their objectives.

Bagheri Kani underscored the importance of collaborative efforts, signaling a unified commitment within BRICS to reducing dependency on the dollar.

He clarified that the initiatives aim to establish a framework fostering economic autonomy and resilience among member nations.

The BRICS group, initially comprised of Brazil, Russia, India, China, and South Africa, established in 2009, has emerged as a significant force shaping global economic discussions. 

Iran, alongside Argentina, Egypt, Ethiopia, the UAE, and Saudi Arabia, has received an invitation to join this influential bloc. Their anticipated full membership, official from January 01, 2024, marks a substantial shift in the geopolitical landscape.

Russia's Deputy Foreign Minister, Sergey Ryabkov, provided insights into BRICS countries accelerating the transition to national currencies. 

This strategic shift aligns with the shared vision of establishing a more balanced and resilient global economic framework, reducing vulnerabilities associated with a singular currency.

BRICS has announced plans to introduce a gold-backed currency for settling international trade payments, challenging the global reserve status of the US dollar. This decision adds momentum to the ongoing de-dollarization trend unfolding in the global economy.

Iran's active involvement in the BRICS initiative toward de-dollarization aligns with a broader trend among influential nations reshaping the global economic landscape.

As BRICS evolves, its concerted efforts toward economic autonomy become increasingly significant in shaping the future of international trade and finance.

United States needs war in Gaza

A summit by the Organization of Islamic Cooperation (OIC) resulted in a blanket condemnation of Israel, but lacked substantive solutions. The summit was sabotaged by Saudi Arabia, UAE, Bahrain, and Morocco, who recently normalized relations with Israel. These countries block significant actions due to extensive US influence and future geopolitical calculations, causing disappointment among the international Muslim community.

After all, the Arab street – even while repressed in their home nations – has pulsed with protests expressing ferocious rage against Israel’s wholesale massacre of Palestinians in the Gaza Strip.

Arab leaders were forced to take some sort of action beyond suspending a few ambassadorships with Israel, and called for a special Organization of Islamic Cooperation (OIC) summit to discuss the ongoing Israeli war against Palestinian children.

Representatives of 57 Muslim states convened in Riyadh on 11 November to deliver a serious, practical blow against genocidal practitioners and enablers. But in the end, nothing was offered, not even solace.

The OIC’s final statement will always be enshrined in the Gilded Palace of Cowardice. Highlights of the tawdry rhetorical show: we oppose Israel’s self-defense; we condemn the attack on Gaza; we ask (who?) not to sell weapons to Israel; we request the kangaroo ICC to investigate war crimes; we request a UN resolution condemning Israel.

For the record, that’s the best 57 Muslim-majority countries could drum up in response to this 21st-century genocide. History, even if written by victors, tends to be unforgiving towards cowards.

The Top Four Cowards, in this instance, are Saudi Arabia, the UAE, Bahrain, and Morocco – the latter three having normalized relations with Israel under a heavy US hand in 2020. These are the ones that consistently blocked serious measures from being adopted at the OIC summit, such as the Algerian draft proposal for an oil ban on Israel, plus banning the use of Arab airspace to deliver weapons to the occupation state.

Egypt and Jordan – longtime Arab vassals – were also non-committal, as well as Sudan, which is in the middle of a civil war. Turkiye, under Sultan Recep Tayyip Erdogan, once again showed it is all talk and no action; a neo-Ottoman parody of the Texan “all hat, no cattle.”

Israeli attempt to normalize Libya ties backfires

Libyan Prime Minister has firmly rejected the prospect of normalizing relations with Israel, days after the news broke out of an apparent secret meeting between the Libyan foreign minister and her Israeli counterpart.

On August 27, Israeli Foreign Minister Eli Cohen publicly said he and Libya’s now sacked foreign minister had held a private meeting in the Italian capital Rome the previous week, the first-ever alleged encounter between a top Libyan diplomat and an Israeli regime official in history.

The next day, Libya’s Prime Minister Abdul Hamid Dbeibah fired Foreign Minister Najla Mangoush, (who claimed it was not an official meeting but a swift coincidental interaction) and launched an investigation into the reported meeting. 

Mangoush’s whereabouts is now unknown following the uproar in Libya after news emerged of the exchange late last week.

Dbeibah also touched on the ongoing probe about the incident, saying, “Regardless of good or bad intentions, together we (the Libyan people) will learn the details of what happened in Rome through the ongoing investigation.”

Under a 1957 law in Libya, it is illegal to normalize ties with the occupation regime of Israel. Libya has long been hostile toward the Israeli regime and a staunch supporter of the Palestinians.

During a televised ministerial meeting of the Libyan Government of National Unity, Prime Minister Dbeibah said his government completely rejects any form of normalization with Israel.

"Before I assumed this mission, (I affirm) our categorical and complete rejection of any form of normalization, and our complete bias towards the Palestinian people and their just cause,” Dbeibah told his ministers.

The Premier has also accepted responsibility for the foreign minister’s illegal interaction, in spite of being unaware of the reported secret gathering, saying, “Despite everything that happened to our people, they still cling to their principles and identity. In fact, from this place, I bear full responsibility for this government, regardless of who made mistakes in it and who was responsible.”

“Long live Libya, long live its people, long live Palestine, and long live the Palestinian cause in our hearts,” he added.

On Tuesday, Libya’s parliament also condemned the meeting, while voicing opposition to any attempt toward any level of normalization with Israel, with the parliament speaker denouncing any contacts with the regime and emphasizing Libya’s support for the Palestinians. 

Aguila Saleh Issa added that no one is allowed to undermine the Palestine struggle for freedom, and everyone should work on establishing a Palestinian state with occupied al-Quds (Jerusalem) as its capital.

In a sign of how just sensitive the news was for the Libyan public, the reported meeting ignited angry street protests in several Libyan cities, including mass rallies in the capital Tripoli, with demonstrations strongly condemning Israel and protesters chanting slogans in support of the Palestinians. 

This, in turn, prompted the suspended foreign minister Mangoush to reportedly flee to Turkey for fear of her safety. Her exact whereabouts remain unknown.

Israeli news reports suggest that the regime’s Prime Minister, Benjamin Netanyahu, was furious with his foreign minister for making the news public before informing him.

Reports also suggest the United States is fuming about the Israeli announcement of the reported meeting amid the wave of angry reactions from Libya.

Both Israel and the US are reportedly said to have hoped the private meeting could have materialized into some type of PR boost for Israel and President Biden, ahead of the 2024 US presidential election with a view to some kind of normalization agenda between Israel and Libya.

The response from the Libyan people and the government officials since the news broke out suggests that no such measure will materialize in the foreseeable future.

Israel is finding itself isolated in West Asia after the so-called Abraham Accords which saw the UAE, Bahrain, and Morocco normalizing ties with Israel when Donald Trump was at the White House.

While Sudan formally joined the so-called Abraham Accords, relations between Sudan and the occupation regime have been frozen because of domestic opposition and political instability.
Three years later, Israel had widely hoped to expand on the so-called Abraham Accords by normalizing ties with many more states in West Asia and Africa, something that has yet to transpire.

Palestinians have said the Abraham Accords have emboldened Israel in its brutal crackdown in the occupied territories, describing the deal as a stab in the back for the Palestinian cause.

According to the United Nations, Israeli forces have killed more than 200 Palestinians so far this year, many of them women and children, the highest annual death toll since the UN began keeping records in 2005.

But 2023 has yet to end and Israeli aggression against the Palestinians continues to expand, particularly the almost daily pre-dawn heavy military invasions in the occupied West Bank cities, towns and villages that have been condemned by human rights groups as “merciless”.

On Friday, the regime's military raided several cities in the occupied West Bank, killing an innocent teacher in the village of Aqaba, while injuring and arresting many others, including family members of residents that Israel claims are wanted. 

Israel is being governed by one of the most fascist regimes in the entity’s short history.  And while former Israeli rulers committed similar war crimes against the Palestinians, observers say the new ministers in Netanyahu’s cabinet are not even trying to hide their brutal and illegal practices, unlike previous ones who tried to cover them up. Netanyahu’s cabinet openly boasts about killing Palestinian civilians.

This has added extra pressure on any regional state's official pondering the idea of some kind of diplomatic normalization and being seen warming up to the new fanatical criminal gang in charge of the occupied Palestinian territories.

 

Expansion of BRICS: What are the economic implications?

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

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

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

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

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

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

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

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

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

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

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

Courtesy: Focus Economics

Iran's BRICS membership a nail in the coffin of United States sanctions

Vahid Jalalzadeh, Chairman of the Parliament’s National Security and Foreign Policy Committee, said, “Iran’s membership in BRICS is a nail in the coffin of the unilateral sanctions of the United States.”

“One of the main features of the new world order is the strengthening and expansion of the front of resistance against the domination system, the decline of America and the transfer of knowledge and wealth from the West to the East,” he told state news agency IRNA. 

Jalalzadeh added, “BRICS and the Shanghai Cooperation Organization (SCO) are definitely a front against the excesses of the domination system, particularly America.”

Jalalzadeh emphasized that BRICS, Shanghai, and Eurasia are the code names for the failure of Western sanctions.

“The neutralization of sanctions in the era of the formation of the new global geometry means the era of entering regional and international agreements, coalitions and unions. And this means the end of unilateralism,” he continued.

Hossein Qaribi, Iranian Ambassador to Brazil, has also said that Iran’s BRICS membership was the result of months of intense diplomatic efforts by the Ebrahim Raisi administration.

“Iran's membership in the BRICS group is a happy event that is the result of months of efforts and intensive diplomatic measures by the 13th government, the Ministry of Foreign Affairs and the Iranian embassies in five member countries of that group,” Qaribi said in remarks to IRNA. 

He added, “Practically, the policy of strengthening multilateralism in the international system is better realized by advancing the goals of BRICS. In addition, it should be noted that the capacities that exist in the Islamic Republic of Iran will also be available to this group, and with development-oriented planning, it will lead to an increase in business interactions among its members.”

Foreign Minister Hossein Amir Abdollahian has lauded the bloc for deciding to move towards expansion. “In addition to strengthening multilateralism, the great success of accepting Iran’s membership in BRICS can provide the basis for the pursuit of goals and the development of other macro strategies of the government in the implementation of dynamic diplomacy,” the top diplomat wrote on X.

During a BRICS summit held in Johannesburg, South African President Cyril Ramaphosa announced the BRICS member states have agreed to admit Iran, Argentina, Egypt, Ethiopia, the UAE and Saudi Arabia as full members. That means the bloc currently consisting of Brazil, Russia, India, China and South Africa, will double in the number of members as of the beginning of next year.

Iranian President Ebrahim Raisi who had traveled to South Africa to attend the summit called the advantages of Iran's membership in the bloc “history-making”. 

“Strategic cooperation between Iran and BRICS members in the fields of transit, energy, and trade, will support the BRICS global agenda. The Islamic Republic of Iran strongly supports the successful efforts of BRICS in the path of de-dollarization of economic relations between members, the use of national currencies, as well as the strengthening of BRICS mechanisms for payment and financial settlement,” Raisi told the BRICS summit.

 

Pakistan stock market closes almost flat

The week ended on August 11, 2023 started on a positive note, but faced volatilities as the week prolonged with the benchmark index closing the week at 48,424 points, reflecting a decrease of 0.33%WoW.

The average daily turnover clocked in at 287 million, down 26.9%WoW. The market capitalization dropped to PKR7,232 billion, from PkR7,290 billion.

Major drivers during the week remained multimillion investment commitments by GCC countries, UAE and Saudi Arabia and the triumphant oversubscription of MTBs much higher than the anticipated pre-auction target.

Furthermore, the total foreign exchange reserves witnessed a 0.9%WoWdecline, additionally workers’ remittances declined by 7.3%MoM and 19.3%YoY to US$2.03 billion in July 2023. Cumulatively remittances for 7MCY23 were reported at US$14.9 billion, down 16.9%YoY.

Other notable news from the week were: 1) CCoE approval for up-gradation for local refineries , 2) transfer of 15 companies to MSCI FM index from the small cap index, and 41 other companies were added to the small cap MSCI Index, 3) emergence of NBP, BoP and U bank as the top agri-microfinance creditors, 4) penetration of local rice traders into the global rice trade nexus as a result of restriction imposed by India on rice export, and 5) dissolution of the national assembly and anticipation of the caretaker govt.

Sector-wise, REFINERY declined by 11%, while INV. BANKS/ INV. COS/ SECURITIES COS. gained 8.3%.

Top performing scrips were: DAWH, AICL, FABL, UBL, and NATF, while laggards included PSMC, HCAR, CNERGY, SML, SEARL, and NRL.

BANKS/DFIs recorded a net sell of US$6.9 million. Insurance Companies absorbed all of the selling with a net buy of US$6.4mn.

The market is expected to portray positivity, while the installation of the caretaker government and the relation it fosters with IMF are likely to usher in market stability.

Despite a significant upside, market still remains attractive. Additionally, the influx of investments from UAE and Saudi can bolster and affirm stability.

Market participants are advised to implement a cautious approach when investing while focusing on dollar denominated revenue stream companies like E&Ps and Technology to hedge against currency risk or in companies with healthy dividend yields.

UAE and India agree to use local currencies for bilateral trade

President of United Arab Emirates (UAE), Sheikh Mohamed Bin Zayed Al Nahyan received Indian Prime Minister Narendra Modi, who is on an official visit to the Emirates.

To boost bilateral trade and investments, Modi announced that India and the United Arab Emirates have agreed to start trade settlement in local currencies.

The Local Currency Settlement System will permit payment from exporters and importers in their respective local currencies, Indian Rupee (INR) or UAE Dirham (AED). This move will also further enable the development of an INR-AED foreign exchange market.

Modi said that he hopes that bilateral trade between the two countries goes past the US$100 billion-mark soon, as it currently stands at US$85 billion.

Upon arrival at Qasr Al Watan in Abu Dhabi, the Indian prime minister’s motorcade was met by a group of Emirati children waving the flags of both countries.

Sheikh Mohamed greeted Modi and those who accompanied him during an official reception ceremony that included a guard of honor welcome, a 21-gun salute, and a performance of the national anthems of India and the UAE.

 “The India-UAE comprehensive strategic partnership has been steadily strengthening and the Prime Minister’s visit will be an opportunity to identify ways to take this forward in various domains such as energy, education, healthcare, food security FinTech, defense and culture,” the Ministry of External Affairs (MEA) said.

It will also be an opportunity to discuss cooperation on global issues, particularly in the context of the UAE’s Presidency of COP-28 and India’s G-20 Presidency in which the UAE is a special invitee, it added.

The UAE and India have agreed to implement the use of local currencies for bilateral and cross border transactions, the announcement was made on the sidelines of Modi’s visit to Abu Dhabi on Saturday.

Minister of State for Foreign Trade Dr. Thani Bin Ahmed Al Zeyoudi, said, a year after their Comprehensive Economic Partnership Agreement (CEPA) took effect, the UAE and India have further strengthened their strategic relations.

In his statement to the Emirates News Agency (WAM), he stressed that the Emirati-Indian strategic partnership has seen positive developments at all levels, including the CEPA, which makes it a global model for how to upscale collaboration and partnership ties to higher levels that achieve mutual growth, create opportunities for business communities, stimulate entrepreneurship, and support sustainable development.

He noted that this would not be achieved without the shared keenness and unlimited support of the leaderships of the two countries.

He added that the UAE and India had entered a new phase of shared prosperity due to the CEPA that took effect a year ago, which has boosted key sectors in both countries, most notably non-oil trade and mutual investment.

In the first year of the partnership, their non-oil trade reached US$50.5 billion, growing by 5.8%YoY, and compared to the previous year, from May 2020 to April 2021, non-oil trade grew by 53.5%, he added.

It increased by 36.1% as compared to the same period in 2019-2020, and by 29.6% compared to the same period in 2018-2019, Al Zeyoudi further said.

He stressed that the UAE-India partnership agreement boosted non-oil exports from the UAE, which reached US$10.3 billion in the year of its implementation, a rise of 18.6% compared to the same period during 2020-21.

Al Zeyoudi noted the UAE’s ongoing investment in India, which was driven by the impressive growth of one of the world’s fastest-growing economies.

As per the latest official data released this year, the UAE invested US$36.61 billion in various sectors, including financial services, real estate, business services, alternative and renewable energy, engine manufacturing, equipment, and more.

The UAE has chosen India as the first country to sign a comprehensive economic partnership agreement with, in light of their strong strategic ties.

India is a key ally and partner for the UAE in trade and investment, and they have a long history of friendship. This is also India’s first agreement of this kind with a country in the Middle East and North Africa region.

China supports regional naval alliance plan

China pledges to strive for peace and stability in West Asia, including Persian Gulf, by promoting plans for a regional maritime alliance.

A question regarding Iran’s intention to create a naval alliance with Saudi Arabia, the United Arab Emirates, and other Persian Gulf nations that will also include India and Pakistan to protect regional stability was addressed by Wang Wenbin, the spokesperson for the Chinese Foreign Ministry.

Speaking at regular press briefing, Wang also noted that “upholding the peace and stability of the Persian Gulf region in the Middle East (West Asia) bears on the wellbeing of countries and people in the region.”

Rear Admiral Shahram Irani, the commander of the Iranian navy, had announced earlier that Iran will create new intra- and extra-regional partnerships to improve security.

“Today, regional countries have realized that the establishment of security in the region requires synergy and cooperation,” Irani stressed.

The Chinese spokesperson stressed the vital importance of peace and stability in the region at the news conference in order to preserve world peace, accelerate global economic growth, and maintain a steady supply of energy.

“China supports regional countries in resolving disputes and cultivating good-neighborliness and friendship through dialogue and consultation,” Wenbin added.

Beijing, he declared, will continue to contribute positively and constructively to the cause of regional peace and stability.

US authorities were not pleased with Admiral Irani’s announcement of the formation of a joint naval alliance.

Tim Hawkins, the spokesman for the 5th Fleet and Combined Maritime Forces, purportedly said that Iran’s participation in a regional naval alliance defies reason and that the Islamic Republic is the primary cause of maritime instability in the Persian Gulf region.

The parameters of the regional alliance are taking shape a year after the Israeli regime claimed that it, along with the United States and regional Arab allies, would form a Middle East NATO to fight Iran's dominance in the region.

American and Israeli military leaders touted the notion ahead of President Joe Biden’s July visit to West Asia.

The goal was to improve cooperation among allies in order to defend each other against envisioned Iranian threats.

Israel’s hopes for a coalition against Iran, however, have been dashed as a number of Persian Gulf Arab nations, led by Saudi Arabia, have started to change their allegiances and normalize ties with Iran.

Iran has recently made maritime breakthrough that can shake the US position in the world including the 86th Naval Fleet, which included the home-built Dena Destroyer, and came home last month after the first round of the world in a mission dubbed 360-Degree.

The flotilla sailed across the Indian, Pacific, and Atlantic oceans without needing assistance from land for the first time in Iran’s naval history.

It departed from Bandar Abbas, a port city on the Persian Gulf, on September 20, 2022. It finally anchored at Oman’s Salalah harbor on the 236th day of its journey. The flotilla traveled 63,000 kilometers and four times crossed the equator.

Last month, Admiral Farhad Fattahi, the commander of Iran’s 86th Naval Fleet, outlined achievements of the flotilla after a round-the-world voyage.

Admiral Fattahi emphasized that the first achievement of the voyage can be mentioned as the design, production and operationalization of the all-Iranian meteorological software, which was developed by Iranian youths in the army and yielded fruitful results.

“Secondly, we have proven that the Iranian products are totally trustworthy and reliable. It means that the Dena destroyer is an Iranian product that is 100% reliable,” he added.

The admiral continued, “Given the maritime diplomacy, one of the achievements is that the flotilla docked in the port of Rio de Janeiro to mark the 120th anniversary of the establishment of diplomatic relations between Iran and Brazil.”

“Another remarkable achievement is that Iran’s flag was waved in the world’s four major oceans, seven seas and seven strategic straits,” he noted.

The admiral also said that a unique phenomenon emerged in the cultural sphere as the flotilla’s commanders and staff were representatives of Iranian-Islamic cultural values.

Admiral Fattahi remarked that during the mission, we used the home-built Dena destroyer, whose capabilities grabbed the attention of other countries’ naval commanders and forces. This came as no surprise that all naval commanders expressed congratulations over building such a military feat.

 

Iran, Saudi Arabia to form naval coalition in northern Indian Ocean

Iranian Navy Commander Shahram Irani announced on Saturday that a naval coalition will be formed in the northern Indian Ocean with the involvement of Iran, Saudi Arabia, the UAE, Bahrain, Iraq, Pakistan, India, and other countries in the region.

“In line with this purpose new coalitions are being formed in the region and beyond,” the admiral added.

“Today regional countries have reached the conclusion that if there is going to be security in the region, definitely it can be done through convergence and cooperation with each other,” Shahram Irani said in a televised interview.

Earlier, the website of the Emirati foreign ministry said Abu Dhabi had withdrawn from the Joint Maritime Forces that operate in the Red Sea and the Persian Gulf.

Analysts say Abu Dhabi has made the decision in line with its ambition to diversify its security relationships.

A Qatari news website reported on Friday that Iran, Saudi Arabia, the United Arab Emirates (UAE), and Oman are to form a joint naval force under China's support in line with increasing maritime security in the Persian Gulf.

Al-Jadid said China had already begun mediating negotiations among Tehran, Riyadh, and Abu Dhabi aimed at reinforcing navigation's safety in the strategic body of water.

Back in March, China successfully helped broker a deal between Tehran and Riyadh according to which Iran and Saudi Arabia agreed to reestablish diplomatic ties after seven years of estrangement.

According to analysts, the consent of the Persian Gulf states to Beijing's mediation in such sensitive matters shows China's growing influence in the region as opposed to Washington's declining influence.

 

 

Iran-UAE to facilitate joint investment

Iran and the United Arab Emirates (UAE) have agreed to sign new memorandums of understanding (MOUs) on the avoidance of double taxation and facilitation of mutual investment, Fars News Agency reported on Friday.

The decision was made during a meeting between Iranian Minister of Finance and Economic Affairs Ehsan Khandouzi and UAE Minister of State for Financial Affairs Mohamed bin Hadi Al Hussaini on the sidelines of the annual meeting of the Islamic Development Bank (IsDB) Board of Executive Directors in Jeddah.

During the meeting, the officials emphasized increasing cooperation in the fields of trade and foreign investment. It was also decided that appropriate measures should be implemented soon in order to sign agreements on facilitating foreign investment and avoidance of double taxation between the countries.

Pointing to the positive impact of the resumption of relations between the Islamic Republic of Iran and Saudi Arabia in the region, Al-Husseini said that the volume of trade between the two countries has increased about 40 times.

“This volume of trade in various fields indicates a natural and positive growth of relations and interactions between Iran and the UAE, and the role of the governments of the two sides is to encourage trade and facilitate it through agreements to avoid double taxation, and it is necessary to revise the existing agreements between the two countries,” he said.

Khandouzi for his part referred to the previous unfinished negotiations related to the drafting of a foreign investment agreement between the two sides, saying: “The Islamic Republic of Iran is ready to cooperate in joint profitable projects, as well as cooperation for investing in other countries.”

At the end of this meeting, Khandouzi invited his Emirati counterpart to travel to Tehran as soon as possible.

 

Pakistan Stock Exchange benchmark index posts 1.4%WoW gain

The week ended on April 28, 2023 was marred with political uncertainty. The United States asked Pakistan to move ahead on stalled reforms by the IMF, while promising technical help in worst economic times. The IMF awaits clarity on the cross fuel subsidy scheme. In addition to this, foreign exchange reserves inched by US$30 million to US$4.5 billion as on April 20, 2023, culminating to an import cover of less than a month.

The KSE-100 index closed the week at 41,581 points, posting 1.40%WoW gain. Participation in the market was a pleasant surprise, daily trading volumes averaging a little above 208 million shares during the week as compared to around 105 million shares in the prior week depicting 98%WoW gain.

Other major news flows during the week included: 1) Saudi Arabia expected to sign deal for US$2 billion deposits after Eid, 2) GoP cuts growth rate to 0.8 percent, 3) profit repatriation during first 9 months of the current financial year plunges by 82% to US$233 million, 4) CPPA-G seeks positive adjustment of PKR1.17/unit, 5) regulator asks DISCOS to freeze capacity payments and 6) GoP bank borrowings surge 182% to PKR3 trillion.

Top performing sectors were: Vanaspati & Allied Industries, Tobacco, and Investment Banks, while the least favorite sectors included: Close End Mutual Funds, Leasing Companies, and Glass & Ceramics.

Top performing scrips were: POML, SRVI, DAWH, UBL, and MUREB, while laggards included: PGLC, HGFA, KAPCO, BOP, and PIBTL.

Flow wise, Companies were the major buyers with net buy of US$15.9 million, followed by individuals with net buy of US$14.17 million, while Mutual Funds were major sellers during the week, with a net sell of US$1.63 million.

According to media reports, Saudi Arabia and UAE have intimated IMF on financing support giving a relief on external financing shortfall of US$6 billion will dictate the market performance in near term. Moreover, political situation will be in limelight till general elections are held. Keeping that in view, analysts continue to advise scrips that have dollar-denominated revenue streams which hedges the investor against the currency risk, that include the Technology and E&P sectors.

Saudi Navy carries out evacuation operation from Sudan

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

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

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

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

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

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

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

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

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

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

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

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

OPEC Plus gaining control of oil market

According to M.K. Bhadrakumar, a former Indian diplomat, the recent shocking oil production cuts from May outlined by the OPEC Plus essentially means that eight key OPEC countries decided to join hands with Russia to reduce oil production, signaling that OPEC and OPEC Plus are now back in control of the oil market.

No single oil producing country is acting as the Pied Piper here. The great beauty about it is that Saudi Arabia and seven other major OPEC countries have unexpectedly decided to support Russia’s efforts and unilaterally reduce production.

While the eight OPEC countries are talking about a reduction of one million barrels per day (bpd) from May to the end of 2023, Russia will extend for the same period its voluntary adjustment that already started in March, by 500,000 barrels.

Now, add to this the production adjustments already decided by the OPEC Plus previously, and the total additional voluntary production adjustments touch a whopping 1.6 million bpd.

Fundamentally, many analysts had forewarned, the Western sanctions against Russian oil creating distortions and anomalies in the oil market and upsetting the delicate ecosystem of supply and demand, which were compounded by the incredibly risky decision by the G7, at the behest of the US Treasury, to impose a price cap on Russia’s oil sales abroad.

On top of it, the Biden administration’s provocative moves to release oil regularly from the US Strategic Petroleum Reserve in attempts to micromanage the oil prices and keep them abnormally low in the interests of the American consumer as well as to keep the inflationary pressures under check turned out to be an affront to the oil-producing countries whose economies critically depend on income from oil exports.

The OPEC Plus calls the production cuts a precautionary measure aimed at supporting the stability of the oil market. In the downstream of the OPEC Plus decision, analysts expect the oil prices to rise in the short term and pressure on Western central banks to increase due to the possible spike in inflation.

What stands out in the OPEC Plus decision is that Russia’s decision to reduce oil production by the end of the year has been unanimously supported by the main Arab producers.

Independent but time-coordinated statements were made by Saudi Arabia, the UAE, Kuwait, Iraq, Algeria, Oman and Kazakhstan, while Russia confirmed its intention to extend until the end of the year its own production reduction by 500,000 barrels per day, which began in March.

Significantly, these statements have been made precisely by those largest oil producers in OPEC, who have a record of fully utilizing their existing quota. Put differently, the reduction in production is going to be real, not just on paper.

Partly at least, the banking crisis in the US and Europe prompted the OPEC Plus to intervene. Although Washington will downplay it, in March, Brent oil prices fell to US$70 per barrel for the first time since 2021 amid the bankruptcy of several banks in the US and the near-death experience of Credit Suisse, one of the largest banks in Switzerland. The events sparked concern about the stability of the Western banking system and fear of a recession that would affect oil demand.

There is every likelihood that tensions may increase between the US and Saudi Arabia as higher oil prices will push inflation and make it even more difficult for the US Federal Reserve to find a balance between raising the key rate and maintaining financial and economic stability.

Equally, the Biden administration must be furious that practical cooperation is still continuing between Russia and the OPEC countries, especially Saudi Arabia, notwithstanding the West’s price cap on Russian oil and Moscow’s decision to unilaterally cut production in March.

However, the Biden administration has only a limited range of options to respond to the OPEC Plus surprise move, one, go for another release of oil from the Strategic Petroleum Reserve; two, pressure US producers to increase domestic oil output; three, back legislation that would allow the United States to take the dramatic step of suing OPEC nations; and, four, curb the US export of gasoline and diesel.

To be sure, the OPEC Plus production cut goes against the Western demand to increase oil output even as sanctions were imposed against Russian oil and gas exports. On the other hand, the disruption in oil supplies from Russia contributed to the rising inflation in the EU countries.

The US wanted the Gulf Arab states to step in and step-up oil production. But the latter did not oblige because they felt that there wasn’t enough economic activity in the West and there were clear signs of recession contrary to expectation.

Thus, as a result of the sanctions against Russia, Europe is facing the complex situation of inflation and near-recession known as stagflation.  In reality, the adaptive and agile OPEC Plus read the situation correctly and has shown that it is willing to act ahead of the curve.

At a time when the world economy is struggling to grow at a healthy rate, the demand for oil would be relatively less, and it makes sense to cut oil production to maintain the price balance.

All that the Western leaders can complain about is that the OPEC Plus cut in oil output has come at an inappropriate time. But the woes of Western economies cannot be laid at the door of OPEC Plus as there are inherent problems which are now coming to the surface.

For instance, the large-scale protests in France against pension reform or the widespread strikes in Britain for higher wages show that there are deep structural problems in these economies, and the governments seem helpless in tackling them.

In geopolitical terms, the OPEC Plus move came after a meeting between Russian Deputy Prime Minister Alexander Novak and Saudi Energy Minister Prince Abdulaziz bin Salman in Riyadh on March 16 that focused on oil market cooperation. Therefore, it is widely seen as the tightening of the bond between Russia and Saudi Arabia.

In fact, in May, as the largest members of OPEC join Russia in its unilateral reduction, the balance of quotas and the ratio of market shares between and amongst the participants in the OPEC Plus deal will return to the level set when it was concluded in April 2020.

The rise in crude oil prices particularly benefits Russia. Simply put, the production cuts will tighten up the oil market and thus help Russia to secure better prices for the crude oil it sells. Second, the new cuts also confirm that Russia is still an integral and important part of the group of oil producing countries, despite the Western attempts to isolate it. Third, the consequences of the decision are all the greater because, unlike the previous cuts by the OPEC+ group at the height of the pandemic or last October, today, the momentum for global oil demand is up, not down—what with a strong recovery by China expected.

That is to say, the surprise OPEC Plus reduction further consolidates the Saudi-Russian energy alliance, by aligning their production levels, thus placing them on equal footing. It is a slap in the face for Washington.

Make no mistake, this is another signal regarding a new era where the Saudis are not afraid of the US anymore, as the OPEC leverage is on Riyadh’s side.

The Saudis are only doing what they need to do, and the White House has no say in the matter. Clearly, a recasting of the regional and global dynamics that has been set in motion lately is gathering momentum. The future of the petrodollar seems increasingly uncertain.

 

Saudi Arabia, Russia announce oil output cuts

Saudi Arabia and other OPEC Plus oil producers on Sunday announced voluntary cuts to their production, with Riyadh saying it would cut output by 500,000 barrels per day (bpd) from May until the end of 2023.

Russia's Deputy Prime Minister also said Moscow would extend a voluntary cut of 500,000 bpd until the end of 2023.

The United Arab Emirates, Kuwait, Iraq, Oman and Algeria said they would voluntarily cut output over the same time period.

The UAE said it would cut production by 144,000 bpd, Kuwait announced a cut of 128,000 bpd while Iraq said it would cut output by 211,000 bpd and Oman announced a cut of 40,000 bpd. Algeria said it would cut its output by 48,000 bpd.

The Saudi Energy Ministry said in a statement that the kingdom's voluntary cut was a precautionary measure aimed at supporting the stability of the oil market.

Russia will extend 500,000 barrels per day (bpd) oil production cut until the end of the year, Deputy Prime Minister Alexander Novak said on Sunday.

Russia announced the move within minutes of statements by Saudi Arabia, Kuwait, Oman, Iraq and the United Arab Emirates that they were also reducing output until the end of the year. Russia is part of OPEC Plus, which groups the Organization of the Petroleum Exporting Countries and allies.

"Acting as a responsible market participant and as a precautionary measure against further market volatility, the Russian Federation will implement a voluntary cut of 500 thousand barrels per day till the end of 2023, from the average production level as assessed by the secondary sources for the month of February," Novak said in a statement.

The announcement means Russia has now twice extended the output cut that Novak first announced in February this year.

Novak said on Feb. 10 that Russia would reduce production by 500,000 bpd in March. On March 21, he said the cut would continue until the end of June.

On March 24, Novak said Russia was very close to reaching the targeted level of output, which he said would be 9.5 million bpd.

 

UAE-India hold talks to finalize rupee dirham trade deal

The United Arab Emirates (UAE) and India are in technical discussions to finalize rupee-dirham exchange rate for trade arrangement. This was told by UAE ambassador to India, Abdulnasser Jamal Alshaali to Hindustan Times newspaper. 

“The technical conversation is ongoing. There has been an agreement to settle a certain [amount] of trade between the two countries, just not having to go through a third currency,” he said, adding the two sides are working on a remittance facility to make it "more direct and easier".

Alshaali noted that energy security is important for both countries with the UAE seeking to be part of India’s energy security.

“The fact that the strategic oil reserve has been agreed on and it’s been established and has been ongoing for quite some time, it is quite helpful and constructive, especially given the current state of affairs,” he added.

The ambassador said that India is a reliable partner for the UAE’s food security.

“Food security is important for us. We don’t produce that much food and we import a lot of it. And it’s quite vital for us that we have a partner that we can rely on, and India is a reliable partner when it comes to that,” Alshaali noted.

 

Russia: Lost oil revenue bonanza for shippers and refiners

Western sanctions on Russia have significantly reduced state oil revenues and diverted tens of billions of dollars towards shipping and refining firms, some with Russian connections.

Most of the winners from the sanctions are based in China, India, Greece and the United Arab Emirates, a handful are partly owned by Russian companies.

None of the firms is breaching sanctions, but they have benefited from measures designed by the European Union and the United States to reduce the revenues of what they call Russian President Vladimir Putin's war machine.

As the Ukraine conflict heads into a second year, the calculations show that Russia's income has dropped but the volume of exports has remained relatively stable despite sanctions.

Putin told the West that sanctions would trigger an energy price rally. Instead, international benchmark Brent oil prices have fallen to US$80 per barrel from a near-all-time high of US$139 in March 2022, weeks after the start of the war. Before Moscow's invasion of Ukraine began on February 24 last year, Brent traded at around US$65 to US$85 per barrel.

After the Group of Seven (G7) industrialized nations imposed a price cap on Russian oil in December 2022, Moscow's oil export revenues fell by 40%YoY in January this year, Russia's finance ministry said.

"Low official oil price meant that the Russian state budget has suffered in recent weeks," Sergey Vakulenko, non-resident fellow at the Carnegie Endowment for International Peace, said.

Vakulenko was a former head of strategy at Russian energy major Gazprom Neft. He left the firm and Russia days after the start of the war.

"Judging by the customs statistics, some of the benefit was captured by refiners in India and China, but the main beneficiaries must be oil shippers, intermediaries and the Russian oil companies," he added.

Sanctions on Russia - probably the harshest imposed on an individual state - include outright bans on purchases of Russian energy by the United States and the EU, as well as bans on the shipping of Russian crude anywhere in the world unless it is sold at or below US$60 per barrel.

Russia has diverted most crude and refined products to Asia by offering steep discounts to buyers in China and India versus competing grades from the Middle East, for instance.

The ban on shipping and the price cap have made buyers wary and forced Russia to pay for transportation of crude as it does not have enough tankers to carry all of its exports.

As of late January, Russian oil firms were offering discounts of up to US$20 per barrel for crude to buyers in India and China.

In addition, Russian sellers have also paid up to US$20 per barrel to shipping companies to take crude from Russia to China or India.

As a result, Russian companies received only less than US50 per barrel of Urals at Russian ports in January, down 42%YoY and just 60% of the European Brent benchmark price, according to the Russian Finance Ministry.

By comparison, a US exporter of Mars crude - a grade similar to Urals - would pay about US$5 to US$7 per barrel for shipping a cargo to India. Given a discount of US$1.6 per barrel versus the US benchmark WTI, a US exporter would collect some US$66 per barrel at a US port, or 90% of the benchmark price.

With output of 10.7 million barrels per day (bpd) in 2022 and exports of crude and refined products of 7.0 million bpd, the discount and additional costs would see Russian producers' revenues falling by tens of billions of dollars in 2023.

The head of the International Energy Agency (IEA), Fatih Birol, said on Sunday the price cap reduced Moscow's revenue by $8 billion in January alone.

However, because some lost revenues are captured by Russian firms, the exact hit to earnings of producers and the state is difficult to quantify.

As a further complication, some Russian oil grades, including Pacific grade ESPO, are also worth more than Urals.

 

Pakistan’s Meltdown

I am delighted to share an article by Dr. Kamran Bokhari. While many Pakistanis, particularly the establishment may not agree with many points, Pakistanis must read and try to understand the narrative.

Dr. Bokhari is the Director of Analytical Development at the New Lines Institute for Strategy & Policy in Washington, DC. He is also a national security and foreign policy specialist at the University of Ottawa’s Professional Development Institute. He has served as the Coordinator for Central Asia Studies at the US Department of State’s Foreign Service Institute.

Decades-old political economic problems in Pakistan are coming to a head. The South Asian nation needs billions of dollars in financial assistance to avoid a default at a time when its usual patrons are disinclined to bail it out.

 The International Monetary Fund is insisting on tough reforms that the fragile coalition government cannot institute without taking a major political hit in an election year.

Even if Islamabad dodges this particular bullet, it will have to massively overhaul the way it has managed the world’s fifth-most populous country.

If it cannot, then it will further push Pakistan toward a systemic breakdown, which has major consequences for security in the world’s most densely populated region.

An IMF team is visiting Pakistan from January 31 to February 09 to continue discussions on the release of US$1.18 billion in assistance, part of a $6 billion aid program that was agreed on in 2019 (and increased to US$7 billion in 2022) but that has since stalled.

Pakistan’s foreign exchange reserves have slumped to about US$3.68 billion, barely enough to cover three weeks of imports. Inflation was already at 25% when the government announced on January 29 a 16% hike in gasoline and diesel prices that will likely rise much further.

A few days earlier, the Pakistani rupee fell 9.6% against the US dollar, the biggest one-day drop in over two decades, after the government removed unofficial caps and allowed the currency to move toward a market-based exchange rate.

Earlier in the month, the country’s civil and military leadership traveled to Saudi Arabia and the United Arab Emirates to secure the funds needed to avert a financial meltdown. Reports surfaced that Riyadh and Abu Dhabi would provide several billion dollars. In sharp contrast with their past behavior, they aren’t willing to write a blank check; the Saudi finance minister said January 18 that the kingdom was no longer providing direct grants and deposits to debtor nations without seeing reforms.

The Saudis, the Emiratis and others who could provide the cash want to first see the Pakistanis accept an IMF program. Besides, the beleaguered South Asian nation’s financial needs far outstrip the global appetite to assist.

Islamabad, has been struggling to finalize what would be the country’s 23rd IMF arrangement since it first knocked on the lender’s doors in 1958.

The Pakistan Muslim League-Nawaz (PML-N) party, which heads the fragile and increasingly unpopular coalition government, has a lot to lose by agreeing to IMF terms that are bound to exacerbate harsh economic conditions. As it is, the PML-N and its allies are facing an uphill electoral battle against the populist opposition Pakistan Tehreek-i-Insaf (PTI) party of former Prime Minister Imran Khan.

Still, Pakistan’s political instability is the result of a much deeper malaise. Since the end of Pakistan’s fourth military dictatorship in 2008, the country nominally has experienced its longest stretch of civilian governance. 2013 marked the first time one democratically elected government transferred power to another. But the army continued to encumber both governments, and in 2018 it engineered the rise to power of Khan’s PTI in hopes that it would finally have a pliant civilian actor. That experiment was a colossal failure. It has weakened the military politically and has thus plunged the country into uncharted territory.

A similar situation has emerged on the economic front. Pakistan has always had financial problems, which over the decades continued to worsen. The country got by only because of a periodic influx of US assistance, made possible by the broader global geopolitics of the time. There have been three such long periods – 1958-69, 1977-88 and 1999-2008 – each under a different military regime and coming at the height of the Cold War, the Soviet military intervention in Afghanistan, and the post-9/11 war on terror, respectively.

In today’s changed circumstances, Pakistan is facing an unprecedented financial crisis because it never developed a viable economy and is without external bailout options.

Without a major reform process – which is unlikely given the acute state of social and political divisions – Pakistan’s situation is likely to worsen. Its annual population growth rate is 1.9%, which is 237 times that of the global rate, and its fertility rate exceeds the global rate by 157%. At this pace, in another 10 years the country will have added 50 million people, increasing its population to 275 million. There is already a massive youth population.

Sixty percent of Pakistanis are under the age of 23. As many as 44% of all Pakistani children between the ages of 5 and 16 do not attend school. Females make up almost half the population, and literacy among them is at 48 percent.

Dealing with the multiplicity of crises plaguing the country requires a political consensus. This is extremely difficult in the current highly polarized political climate, which is unlikely to abate anytime soon. Pakistan’s powerful military establishment, which has intervened in politics for much of the country’s history, is in an unprecedented dilemma.

After the failure of its latest attempt to shape the country’s political economy, which ended with the April 2022 ouster of Khan, the top brass publicly committed to keeping the army out of politics. Rationalizing the economy, however, will take a long time – assuming the country’s tumultuous politics can be brought under control.

In moments like these, when normal politics produces only more chaos, the pressure (or temptation) for the army to hit pause or reset on the constitutional process is high. However, the general staff has been down that road many times, only to end up exacerbating the problems it aimed to solve. When problems are such that degradation is happening much more quickly than is the realistic efforts to fix them, stalling the political process could be akin to an out of the frying pan and into the fire type situation.

The only other option is to continue the slow path toward recovery, which is fraught with perils. As large swathes of the population suffer under the weight of debilitating economic conditions, intra-elite political struggles intensify. These are precisely the conditions that Islamist militants – both Taliban rebels and Islamic State militants ensconced in the neighboring emirate in Afghanistan – hope to exploit. A resurgent jihadist insurgency will likely force an already weakened Pakistani state into a new major military campaign – one that has serious potential to spill over across the border.

It is this nightmare scenario – a cash-strapped Pakistani state whose security is compromised on its western flank – that will eventually result in Arab Gulf states, China and the United States gaining greater influence in the country. Washington cannot allow Pakistan to descend into chaos, especially with Afghanistan under a Taliban regime. Likewise, China, which has pumped tens of billions of dollars’ worth of Belt and Road funds into the China-Pakistan Economic Corridor, is not going to sit by and watch its investment sink.

Pakistan is thus going to become an even bigger arena for the US-Chinese competition.

Meanwhile, the Saudis and the Emiratis, who have long played a major role in periodically mediating intra-elite power struggles in Pakistan, will likely have greater influence over Pakistan’s internal workings.

In India, which only months ago surpassed the UK to become the world’s fifth largest economy, there is immense concern over how a financially collapsing Pakistan could affect New Delhi’s upward trajectory.

While it is too early to speak with any specificity on how external powers will behave, Pakistan can’t continue to chug along as it has. It may not always appear this way, especially in chronically fragile states, but long-term dysfunction adds up. Major fissures have emerged that outstrip Pakistan’s available resources, disrupting the status quo in which it was able to get by for so long.

 

Mohammed Bin Salman chosen most influential Arab leader of 2022

Saudi Crown Prince and Prime Minister Mohammed Bin Salman (MBS) has been chosen the most influential Arab leader of 2022, according to an opinion poll conducted by the RT Arabic channel.

The Crown Prince has secured around 7.4 million (62.3%) votes out of the total votes of those who participated in the poll.

MBS obtained 7,399,451 votes out of the total 11,877,546 votes of those polled. The poll began on December 15, 2022 and ended on January 09, 2023.

The percentage of votes obtained by the Crown Prince broke the record in the history of opinion polls that RT Arabic conducts by the end of every year.

In the opinion poll, the second place went to the United Arab Emirates President Sheikh Mohammed Bin Zayed, securing 2,950,543 votes that represent 24.8% of the total votes.

Egyptian President Abdel Fattah El-Sisi won the third place with 1,387,497 votes; making up 11.7% of the total votes of those participated in the poll, carried out by RT Arabic, a global multilingual television news network based in Russia.