US hegemony being challenged by Yemen

Yemen’s Ansarullah movement has seriously challenged the US hegemony in West Asia, particularly in light of Washington’s unwavering support for the Israeli regime’s warmongering and military adventurism in the region.

Nearly two weeks after Israel launched its US-backed genocidal war on Gaza on October 7, 2023, the Yemeni army began firing missiles and drones at Israel in support of Palestinians in the besieged enclave. 

Yemen’s armed forces have also been targeting Israeli-linked ships in the Red Sea and Gulf of Aden since November last year.

The Yemeni army later broadened the scope of its attacks targeting American and British warships. These attacks have been in response to airstrikes carried out by these countries against Yemen with the aim of compelling it to cease anti-Israel operations. 

On Tuesday, the Yemeni army struck a significant blow to the US Navy through the execution of two “specific military operations” off the country’s coast.

“The first operation targeted the American aircraft carrier (Abraham) located in the Arabian Sea with a number of cruise missiles and drones,” the spokesman for the Yemeni Armed Forces said. 

Yahya Sarea added, “The other operation targeted two American destroyers in the Red Sea with a number of ballistic missiles and drones.” 

He noted that the operation had “successfully achieved its objectives”.

The US Defense Department admitted that US warships were targeted but did not acknowledge the attack against the Abraham Lincoln vessel.

Pentagon spokesperson Air Force Major General Patrick Ryder told reporters following the attacks that two US-guided missile destroyers – the USS Stockdale and USS Spruance – were hit by at least eight one-way attack drones, five anti-ship ballistic missiles and three anti-ship cruise missiles.

He claimed that the United States military’s Central Command (CENTCOM) forces “successfully repelled” the Yemeni army’s attacks during a transit of the Bab al-Mandeb strait”, which connects the Red Sea to the Gulf of Aden.

Since January this year, the US and the UK have conducted multiple airstrikes in Yemen, claiming to target Ansarullah’s positions, with the most recent operations taking place over the weekend.

The US has so far failed to force the Yemeni army to stop its attacks against Israel and the regime’s ships. 

The Ansarullah movement has stressed that it will halt the strikes only if Israel ends its war of genocide on Gaza, which has so far claimed the lives of more than 43,700 Palestinians. 

Defense Secretary Lloyd Austin has said that US strikes against Yemen aim to “further degrade” Ansarullah’s military capability to “protect and defend US forces and personnel in one of the world's most critical waterways”.

For now, the targeting of US warships, including the Abraham Lincoln vessel, clearly indicates that American strikes against Yemen have backfired. 

The Yemeni army has also shot down nearly a dozen US drones over the country’s airspace in the wake of the Gaza war. 

The Yemeni army has significantly upgraded its capabilities, enabling it to effectively target sophisticated US naval vessels and aircraft.

 

Yuan attains record share in global payments

According to the South China Morning Post, share of Chinese yuan in global payments hit a record high in July 2024, a milestone in Beijing’s efforts to fend off the hegemony of the US dollar and increase its say in the global monetary system.

The yuan kept its fourth-place spot in the ranking of payment currencies last month, with its share of global transactions rising to 4.74% from 4.61% in June. The increase was observed in data from the Society for Worldwide Interbank Financial Telecommunication (Swift), the world’s largest interbank messaging service.

It was the ninth consecutive month the Chinese currency has stayed above 4%.

Swift payment data is a major indicator for the relative status of international currencies. Other metrics include frequency of use in foreign exchange markets, commodity trading and governments’ foreign reserves.

The data shows the value of payments settled in yuan increased by 13.4% as compared to June, outpacing the 10.3% growth recorded across all currencies.

The world’s second-largest economy first encouraged the use of its currency in international trade settlements in 2009, part of its response to the global financial crisis.

Yuan usage has been on the rise since Russia was ejected from the US dollar system after its invasion of Ukraine in February 2022. A vast majority of China and Russia’s US$240 billion trade last year was settled in either yuan or roubles.

Beijing’s policymakers have continued to promote the yuan as an alternative currency in international trade, as the perceived weaponisation of the US dollar against Russia has sent chills through emerging markets. In response, countries such as Brazil have expressed a greater openness to accepting Chinese currency.

“Despite depreciation pressures, the yuan’s internationalization has advanced this year, with its overseas use on the rise,” said Ding Shuang, chief Greater China economist at Standard Chartered Bank.

Standard Chartered’s renminbi globalization index, which also tracks the yuan’s international use, continued to grow this year after a strong 33 per cent% increase in 2023 in alignment with Swift data.

The yuan surpassed the Japanese yen as the world’s fourth most active currency in global payments in November 2023, following the US dollar, euro and pound sterling.

In July 2024, the US dollar accounted for 47.8% of global payments, followed by the euro at 22.5% and the pound sterling at 7.0%, Swift data showed.

The yuan also secured the No. 2 position in the trade finance market with a 6% stake, higher than the euro’s 5.8% and second to the US dollar’s considerable share of 83.2%.

As the Global South looks to avoid overreliance on the US dollar amid rising geopolitical tensions, Ding said, the yuan is well-positioned to expand its global role.

But he also pointed out the inherent difficulty of further breakthroughs after the yuan’s internationalization reaches a certain level, considering the state of the country’s capital controls.

“To strengthen confidence in the yuan, the currency’s exchange rate but also the openness of cross-border capital flow must play a role,” he said, stressing the latter was not being prioritized sufficiently by Beijing.

“Currently, China is more focused on stability amid growing external uncertainties. But in the long term, Beijing will need to further relax its controls over capital accounts.”

 

Bangladesh succumbs to US pressure and bars Russian ships entering its maritime territory

The Bangladesh government has imposed restrictions barring the entry of 69 Russian ships into its maritime waters in line with US and EU sanctions.

This means that Russian vessels will not be able to bring in shipments of imports, stop for fueling, anchor in the area, or even use sea routes.

The government has sent notices to the relevant ministries, agencies, ports, shipping services, and international organizations regarding the new restrictions.

As a result of these new sanctions, Bangladesh will find it difficult to conduct any trade with Russia.

Bangladesh’s most expensive mega project, the Rooppur nuclear power plant, is being built with the support of Russia. A significant portion of the equipment and materials for that project is imported from Russia. Recently, a shipment from Russia carrying materials for the project was barred from entering Bangladesh’s maritime boundary amid diplomatic pressure from the US.

The ship attempted to dock at India’s Haldia Port to deliver its shipment but was turned away there too. It eventually returned to Russia with its cargo.

“At the request of the Ministry of Foreign Affairs, the 69 vessels from Russia which were embargoed by the United States have been banned from entering ports in Bangladesh,” said Captain Sabbir Mahmood, registrar of Bangladesh ships at the Mercantile Marine Office, citing the content of the notice.

The ban covers a wide range of ships, including oil tankers and cargo vessels, operated by seven companies. The restrictions mean that no import or shipping agents can import goods from any country using these Russian ships.

“The ban on ships bearing the Russian flag was jointly imposed by the United States and the European Union,” said Azam J Chowdhury, chairman of the Bangladesh Ocean Going Shipowners Association, or BOGSA. “If any product comes to Bangladesh on these ships, then Bangladesh will also be added to the ban. The bulk of our international trade is with the EU and the US.”

The sanctions were imposed due to Russia’s ongoing invasion of Ukraine.

“As such, we believe that in the overall assessment of the interests of Bangladeshi businesses, the Russia situation will not significantly impact the transportation of goods for global trade.”

Bangladesh has 197 ships that travel in the deep sea, accounting for less than 10 percent of the country’s total trade in international goods.

If Bangladesh businesses stay abreast of the situation, the ban should not have a significant impact on shipping or costs, the BOGSA chief said.

However, some import agents who have had long working relationships with these Russian vessels may be impacted, Azam noted.

Russia is not on the list of the top 20 countries that Bangladesh trades with, according to data from Bangladesh Bank. Nearly 87 percent of all imports come from those countries.

Bangladesh mainly imports wheat and petroleum products from Russia and exports garments to the country.

 

Saudi Arabia and China sign strategic deals

Saudi Arabia and China showcased deepening ties with a series of strategic deals on Thursday during a visit by President Xi Jinping, including one with tech giant Huawei, whose growing foray into the Gulf region has raised US security concerns.

King Salman signed a comprehensive strategic partnership agreement with Xi, who received a lavish welcome in a country forging new global partnerships beyond the West.

Xi's car was escorted to the king's palace by members of the Saudi Royal Guard riding Arabian horses and carrying Chinese and Saudi flags.

The Chinese leader held talks with Crown Prince Mohammed bin Salman, de facto ruler of the oil giant, who greeted him with a warm smile. The two stepped into a pavilion as a military band played the countries' national anthems. Xi heralded a new era in Arab ties.

The display stood in stark contrast to the low-key welcome extended in July to US President Joe Biden, with whom ties have been strained by Saudi energy policy and the 2018 murder of Jamal Khashoggi that had overshadowed the awkward visit.

The United States, warily watching China's growing sway and with its ties to Riyadh at a nadir, said on Wednesday Xi's trip was an example of Chinese attempts to exert influence around the world and would not change US policy towards the Middle East.

A memorandum with China's Huawei Technologies, on cloud computing and building high-tech complexes in Saudi cities, was agreed despite US concerns with Gulf allies over a possible security risk in using the Chinese firm's technology. Huawei has participated in building 5G networks in most Gulf states despite US concerns.

Prince Mohammed, with whom Biden bumped fists instead of shaking hands in July, has made a comeback on the world stage following the Khashoggi killing, which cast a pall over Saudi-US ties, and has been defiant in the face of US ire over oil supplies and pressure from Washington to help isolate Russia.

 

In further burnishing of his international credentials, Saudi Arabia and the United Arab Emirates said on Thursday that the prince and the UAE president jointly led mediation efforts that secured the release of US basketball star Brittney Griner in a prisoner swap with Russia.

In an op-ed published in Saudi media, Xi said he was on a pioneering trip to open a new era of China's relations with the Arab world, the Arab countries of the Gulf, and Saudi Arabia.

China and Arab countries would continue to hold high the banner of non-interference in internal affairs, and firmly support each other in safeguarding sovereignty and territorial integrity", he wrote.

Xi, due to meet with other Gulf oil producers and attend a wider gathering of Arab leaders on Friday, said these states were a "treasure trove of energy for the world economy ... and are fertile ground for the development of high-tech industries".

Several regional rulers including Egypt's president, Kuwait's crown prince and Sudan's leader, arrived in Riyadh on Thursday.

Saudi Arabia and other Gulf states like the United Arab Emirates have said that they would not choose sides between global powers and were diversifying partners to serve national economic and security interests.

China, the world's biggest energy consumer, is a major trade partner of Gulf states and bilateral ties have expanded as the region pushes economic diversification, raising US hackles about Chinese involvement in sensitive Gulf infrastructure.

The Saudi energy minister on Wednesday said Riyadh would stay a "trusted and reliable" energy partner for Beijing and the two would boost cooperation in energy supply chains by setting up a regional centre in the kingdom for Chinese factories.

Chinese and Saudi firms also signed 34 deals for investment in green energy, information technology, cloud services, transport, construction and other sectors, state news agency SPA reported. It gave no figures, but had earlier said the two countries would seal initial agreements worth US$30 billion.

Tang Tianbo, Middle East specialist at the China Institutes of Contemporary International Relations (CICIR) - a Chinese government-affiliated think tank - said the visit would result in further expansion of energy cooperation.

 

How will Russian gas shutoff affect the EU?

In early September, Russia announced that it would keep the Nord Stream 1 gas pipeline to the EU closed until sanctions are lifted.

As the lifting of sanctions appears off the table, this implies that the EU will be without a large chunk of Russian gas supply this winter.

The impact on the EU economy will be twofold. First, Russia’s decision will keep gas prices high in the coming months—prices are currently around four times higher than a year ago—and likely weigh on the euro, dampening households’ purchasing power and consumption.

Second, the move raises the risk of energy rationing this winter, which could have a significant impact on industrial output.

Even before this latest development, analysts had expressed their apprehensions that the bloc may witness sharp slowdown of the economy. These projections are now set to be revised down in their next forecast.

That said, the effect on the European economy is still highly uncertain. For one, it will vary from country to country.

Those with large industrial sectors and with heavier reliance on Russian gas, such as Germany and Italy, are the most exposed.

Moreover, while Nord Stream 1 is the main route supplying Russian gas to Europe, it is not the only one, as gas is still flowing westward from Russia via Ukraine and Turkey.

The fate of these routes, together with the EU’s efforts to source alternative supply from the North Sea, the United States and Algeria, will be crucial in determining the extent of the upcoming supply crunch.

The weather will also play an important role; a mild winter would reduce gas demand for heating.

Finally, the EU has not sat on its hands in response to the Nord Stream shutdown. Member states are mulling a range of EU-wide options, from gas price caps to a windfall tax on energy companies, and measures to reduce energy demand.

Moreover, further fiscal support is to be expected at the national level. If approved, these measures will offset the fallout from constrained gas supplies to some degree.

As such, while Russian move is certainly a blow to the EU economy, it is not yet a death knell.

“The countries most likely to face gas shortages are Germany, Austria, Italy, the Czech Republic and Slovakia. Those countries' governments are already working to reduce demand and diversify their sources of gas, on the assumption that Russia is no longer a reliable supplier.

The spillover effects will be substantial for the rest of Europe too, with external demand and confidence suffering, and inflation remaining elevated.

On the potential economic fallout, analysts at Goldman Sachs said, a full shutdown could drive European household energy costs up by about 65% to around €500 (US$512) per month.

Industries like chemicals and cement in Germany and Italy might have to cut their gas usage by as much as 80%.

The euro-area economy would likely shrink by more than 2% through March 2023, with GDP in Italy and Germany declining as much as 4% and 3% respectively.

 

Is the end of US dollar dominance approaching faster than anticipated?

With the outbreak of the war in Ukraine, Western countries have imposed all-rounded sanctions on Russia. This, in turn, has had an impact on the global economic, trade and financial systems, raising concerns in the market and academic circles about the adjustment of the global financial system. 

One of the main issues being debated is the future of the US dollar.

Gita Gopinath, First Deputy Managing Director of the International Monetary Fund (IMF) warned that financial sanctions against Russia by the West could gradually weaken the US dollar’s role in the world, leading to further fragmentation of the international monetary system.

Analysts such as Goldman Sachs Economist Cristina Tessari said the actions of the United States and its allies to freeze Russia’s central bank’s foreign exchange reserves have sparked fears that countries may begin to ditch the dollar due to concerns about the power that the United States could muster thanks to the dominance of the currency.

Kenneth Rogoff, a Harvard University Economics Professor, said in an interview with Bloomberg that the dominance of the dollar could end within 20 years. The reason is that the US and its allies have launched sanctions due to the Russia-Ukraine war, restricting Russia’s access to the dollar-dominated global financial system.

This ‘weaponization of the dollar’ will instead stimulate the acceleration of alternative solutions. Rogoff believes that the US blockade or freezing of the foreign exchange reserves of the Russian central bank is undoubtedly a historic development.

The preeminence of financial sanctions on Russia by the US-led Western world could accelerate changes in the international financial system to compete with the US dollar. While this certainly would not happen overnight, what could have taken 50 years may now only take 20 years to realize, said Rogoff.

This narrative appears to be supported by data changes in the dollar’s position in global markets. According to the IMF’s most recent Currency Composition of Official Foreign Exchange Reserves (COFER) data, the American currency’s global dollar-denominated foreign exchange reserves were US$7,087 billion in the fourth quarter of 2021, with a market share of 59.15% in the third quarter, which had dropped to 58.81%.

The dollar’s share of the global reserve currency was as high as 72% around the turn of the century. According to SWIFT’s worldwide payment data, the payment share of the US dollar has declined to 38.85% in 2022.

Is the outlook for the dollar’s prospect as pessimistic as these academics and institutions predict?

Anbound’s founder Chan Kung holds the exact opposite view. He believes that if the global situation continues with the current development trend, the US dollar will stand out in the world. If there are no exchange rate swings caused by inflation or emergency, the US dollar will be in a unique position when compared to the world’s major currencies.

This begs the question, why would the future of the US currency be diametrically opposed to what many feels is happening while a significant game-changing geopolitical event, especially the conflict in Ukraine, is ongoing?

The difference lies mainly in the variety of opinions on the impact of the geopolitical event of the war in Ukraine. Professor Rogoff believes that the dollar has been reduced in terms of market scale, and new currency substitutes will emerge, thereby weakening the dollar’s status.

However, Chan Kung believes that the alternatives to the US dollar cannot succeed, because the market of these alternatives is weak, while their social economy is turbulent, and some are even still in war zones.

For these reasons, the US dollar will remain strong, even becoming the sole stable international currency in circulation. All in all, geopolitical factors play an important role in global currencies, and the dollar will be supported by it.

Chan Kung noted in his article ‘Bracing the Era of Economic Shortage’ that during a period of economic uncertainty, the Anglo-American axis countries might be safer havens in the face of geopolitical turbulence. He believes that once the geopolitical war in Europe is resolved, the maritime countries and economy of the American continent would re-emerge.

From the perspective of the world’s spatial pattern, conflicts and competitions are most intense in the continental region of the world, that is, the continental region where Europe, Russia, the Middle East, Central Asia, China and India are located. It would be difficult to establish buffer zones between them, hence there are direct collisions with each other.

Conflicts and competitions are unavoidable and often have existed since time immemorial. The deep mutual hostility has long been recorded in the chapters of history, and the only thing lacking is often a reason for the actual friction to take place in reality.

In contrast, the geographical location of the Anglo-American axis is in the middle of the ocean. The Atlantic and Pacific routes connect the American continent and a large number of island countries and regions of different sizes, and there are often oceanic divisions between them.

Historically and relatively speaking lesser enmities exist between these parts of the world, and they are mutually dependent in trade relations. Therefore, while the continental regions are experiencing violent upheaval, the Anglo-American axis, the maritime states, and the Americas have more prominent opportunities for development and enjoy greater prosperity than before.

Anbound

Anbound Consulting (Anbound) is an independent Think Tank with the headquarter based in Beijing. Established in 1993, Anbound specializes in public policy research, and enjoys a professional reputation in the areas of strategic forecasting, policy solutions and risk analysis. Anbound's research findings are widely recognized and create a deep interest within public media, academics and experts who are also providing consulting service to the State Council of China.

 

United States responsible for bringing Vienna talks to a halt

The United States is solely responsible for the current state of the Vienna talks, said Iranian Foreign Ministry spokesman on Monday. “Let us all not forget that the government which is in front of us today is not a government that adheres to its obligations,” Saeed Khatibzadeh told reporters in his weekly presser. 

The spokesman said the United States is trying to hold the remaining issues pertaining to the Vienna talk hostage to its internal affairs.

“Iran and Iranians cannot be patient forever. If the United States wants to reach an agreement, it must make a political decision as soon as possible,” he asserted.

When asked about European Union coordinator Enrique Mora's trip to Tehran, Khatibzadeh said, “During this trip, he carried some points of views and wanted to exchange opinions with us. We told Mora about our point of view. Our messages and demands were clear from the beginning. Mora's trip was to get us all out of this situation. Iran tried to use another way to resolve the remaining issues. So far, Iran has had the most initiatives.”

The spokesman continued by saying that Iran is waiting for the other side's response, but it has not received it yet.

On the pause in the talks, the diplomat said it was clear to Iran in the last two weeks that Joe Biden and the White House have not made their decision and have taken the whole agreement hostage to US partisan and internal affairs. 

“The Biden administration takes the same approach that has led to the failure of many international agreements, which is to make an international agreement subject to their own internal conflicts.

The JCPOA agreement and United Nations Security Council Resolution 2231 are the perfect examples, and it is in this context that the Biden government must make its political decision,” Khatibzadeh noted.

The spokesman said that the United States is responsible for bringing the talks to a halt. 

“The solution is in the White House,” he reiterated. 

The US must respond logically to Iran's reasonable demands, which are approved by the P4+1 members, so that we are ready to return to Vienna, Khatibzadeh noted. 

“An agreement is very much available if the United States understands that we will not cross our red lines or fall short of our demands,” the diplomat asserted.

Responding to a question about the remaining issues in the negotiations, the spokesman said, “It was not at all like we connected the West Asia region to the JCPOA." 

Iran's benefits from the JCPOA are in accordance with the text of the agreement, and UNSCR 2231 is the main mission of the Ministry of Foreign Affairs, the spokesman said. 

“Now, in the final steps, the United States is trying to prevent Iran from benefitting from the various aspects of the JCPOA. We are at a point where the Biden administration wants to follow the failed legacy of the Trump administration or act as a semi-responsible government. International actors see that the Biden government is following the same path of the previous government,” Khatibzadeh pointed out.

Responding to a question, the diplomat said that illegal and unilateral sanctions have become a common practice in the United States.

“The US believes that it is the police of the world and the domestic laws of this country are international laws. Bullying will not work,” the spokesman remarked. 

Khatibzadeh once again reiterated that Iran’s red lines are the interests of the people and the benefit of what was once discussed.

“The whole deal depends on Washington's political decision. This has been the situation for weeks now. It is a matter of individuals and entities that should be removed from the sanctions list according to the JCPOA, in addition to Iran's economic benefits from the deal. These are issues that are delaying Washington's political decision,” he stressed. 

The diplomat stated that the Biden government must show that it is the true representative of the American people.

“We have not yet received the final answer from Washington, and if Washington's answer is appropriate, we can go to Vienna as soon as possible with the points raised, not for new negotiations, but to finalize the agreement. The response and signal must come from Washington,” the spokesman concluded. 

Talks in Vienna over reviving the 2015 Iran nuclear deal have come to a standstill due to the Biden administration’s inability to make tough political decisions.

 

Super powers should stop interfering in oil market dynamics, says UAE Energy Minister

Global oil supply and the market will not work if oil producers are maligned for years, only to be looked on a ‘superheroes’ when oil supply is lower than demand, according to Suhail al-Mazrouei, Energy Minister of OPEC’s heavy-weight the United Arab Emirates (UAE).  

“I think in COP 26 all the producers felt they were uninvited and unwanted but now we are again superheroes, it’s not going to work like that,” Reuters quoted al-Mazrouei as saying on Monday at the Global Energy Forum by the Atlantic Council in Dubai.

The oil and gas industry needs long-term planning and investments every year despite the global push for accelerating the use of renewable energy sources, the UAE minister added.

The country, currently OPEC’s third-largest producer after Saudi Arabia and Iraq, is sticking to its plan to raise its production capacity to 5 million barrels per day (bpd), but it is also committed to continue working with OPEC and OPEC+ Plus in the management of supply to the market, al-Mazrouei said.

“The UAE’s plan to raise production capacity does not mean that we will leave OPEC Plus or do something unilateral. We will work with this group to ensure that the market is stable,” he added.

During the Atlantic Council forum, al-Mazrouei reiterated the importance of OPEC in stabilizing global energy markets and argued that politics around sanctioned countries (such as Russia) must not interfere with the organization’s broader mission.

According to the UAE’s minister, producers cannot immediately boost supply significantly, also due to the production declines in recent years. At least 5-8 million barrels need to be replaced each year through investment, he added.

Al-Mazrouei also called on the financial and analytical institutions, such as the International Energy Agency, to adopt realistic perspectives on long-term investment in oil and gas and recognize the needs of global consumers who need affordable energy and commodities.

 

Biden threats Xi Jinping of serious consequences

US President, Joe Biden has warned Chinese President Xi Jinping that Beijing would face consequences if it provides material support to Russia amid its invasion of Ukraine, the White House said Friday. 

“President Biden detailed our efforts to prevent and then respond to the invasion, including by imposing costs on Russia,” said a White House readout of the call published hours after it concluded. “He described the implications and consequences if China provides material support to Russia as it conducts brutal attacks against Ukrainian cities and civilians.”

Reportedly, the two leaders spoke for nearly two hours on Friday morning on a secure video call, which a senior administration official described as direct, substantive and detailed and largely focused on Russia’s war in Ukraine.

“We’re concerned that they’re considering directly assisting Russia with military equipment to use in Ukraine,” Secretary of State Antony Blinken told reporters on Thursday, the day the White House announced plans for the phone call.

The senior administration official told reporters that Biden did not make specific requests of Xi when questioned if Biden asked China to intervene to stop the Russian assault. 

“The president really wasn’t making specific requests of China,” the official said. “He was laying out his assessment of the situation, what he thinks makes sense and the implications of certain actions.”

Asked why that was the case later Friday, White House Press Secretary Jen Psaki told reporters, “Because China has to make a decision for themselves about where they want to stand.”

Psaki said, the administration was still concerned about the possibility of China aiding Russia militarily.

“That is something we will be watching and the world will be watching,” she said.

A Chinese readout of the call said that Xi told Biden that China does not want to see the situation in Ukraine to come to this. Xi also affirmed support for peace negotiations between Russia and Ukraine, according to the readout, which also indicated he did not condemn Russia’s actions in Ukraine.

“All sides need to jointly support Russia and Ukraine in having dialogue and negotiation that will produce results and lead to peace,” the readout posted by China’s Ministry of Foreign Affairs said.

“The US and NATO should also have dialogue with Russia to address the crux of the Ukraine crisis and ease the security concerns of both Russia and Ukraine.”

Both readouts indicated the two leaders tasked their teams to follow up on the conversation in the days ahead. 

China, which has deepened relations with Russia in recent years, has tried to portray itself as a neutral party in the Ukraine conflict. The US officials have urged China to condemn Russia’s behavior while raising concerns about China’s ties to Russia.

Reports surfaced earlier this week that Russia was seeking military assistance from China as it continues its invasion.

During a lengthy meeting with China’s top diplomat earlier this week in Rome, Biden’s National Security Adviser Jake Sullivan said that Beijing would face consequences if it helped Russia with the invasion financially or militarily.

White House officials have also raised concerns about China amplifying Russian claims that the US is developing biological weapons in Ukraine, which the US has called disinformation meant to lay the foundation for a possible Russian chemical attack. 

The senior administration official told reporters Friday that Biden directly expressed concerns to Xi about China echoing Russian disinformation about bio-weapons labs in Ukraine during the call. 

Russia has escalated its attacks on Ukraine since it first launched its invasion three weeks ago, despite officials and experts saying the Russian advance has not moved as quickly or as effectively as the Kremlin had hoped.

Russia has launched missiles targeting hospitals and civilian areas, prompting Biden and Blinken to call Russian President Vladimir Putin a “war criminal.”

The US has provided Ukraine with billions of dollars in humanitarian and security assistance. Biden this week announced a total of US$1 trillion in aid that will be used to supply anti-aircraft defense systems, anti-tank weapons and other arms to Ukraine.

Separate from talks on Ukraine, Biden reiterated that the US has not changed its policy on Taiwan and “emphasized that the United States continues to oppose any unilateral changes to the status quo,” according to the White House readout.

The senior administration official said Xi was the one who raised the issue of Taiwan.

Taiwan has been a source of some tension between the US and China, and Russia’s aggression in Ukraine has prompted concerns among some international watchdogs that China may try to invade or lay claim to the island.

Biden has previously told Xi the US is committed to the “One China” policy, under which the US does not recognize Taiwan as a separate state from China, but had also mistakenly said the US had an obligation to send troops to Taiwan if it were attacked by China.

Under the Taiwan Relations Act of 1979, the US is committed to providing Taiwan with arms for its defense. The law does not commit the US to sending troops to Taiwan to defend it. 

United States warns China on supporting Russia in Ukraine conflict

According to an AP news, face to face, President Joe Biden’s national security adviser warned a top Chinese official on Monday about Chinese support for Russia in the Ukrainian conflict, even as the Kremlin denied reports it had requested Chinese military equipment to use in the war.

The US Adviser Jake Sullivan and senior Chinese foreign policy adviser Yang Jiechi met in Rome, with the Biden administration increasingly concerned that China is using the Ukraine war to advance Beijing’s long-term interest in its competition with the United States.

Sullivan was seeking clarity on Beijing’s posture and was warning the Chinese anew that assistance for Russia — including helping it avert sanctions imposed by the US and Western allies — would be costly for them.

 “The national security adviser and our delegation raised directly and very clearly our concerns about the PRC’s support to Russia in the wake of the invasion, and the implications that any such support would have for the PRC’s relationship not only with us, but for its relationships around the world,” said State Department spokesman Ned Price, using the initials for the People’s Republic of China.

Meanwhile, two administration officials said the US had determined that China had signaled to Russia that it would be willing to provide both military support for the campaign in Ukraine and financial backing to help stave off the impact of severe sanctions imposed by the West. The officials said that assessment had been relayed to Western and Asian allies and partners earlier Monday.

“Moscow has received a positive response from Beijing,” said one official, describing a diplomatic cable sent to US embassies asking for them to inform their host governments of the information. The officials spoke on the condition of anonymity to discuss the sensitive information.

Sullivan made clear during an intense seven-hour meeting that the Biden administration has deep concerns about China’s alignment with Russia at this time, White House press secretary Jen Psaki said.

Psaki declined to comment on whether the US believes China has already provided the Russians with military, economic or other assistance.

In advance of the talks, Sullivan bluntly warned China to avoid helping Russia evade punishment from global sanctions that have hammered the Russian economy. “We will not allow that to go forward,” he said. Russia, however, on Monday denied it needed China’s help.

“No, Russia has its own potential to continue the operation, which, as we have said, is unfolding in accordance with the plan and will be completed on time and in full,” said Dmitry Peskov, President Vladimir Putin’s spokesman. Meanwhile, White House officials are discussing the possibility of Biden traveling to Europe to meet with allies for in-person talks about the crisis in Ukraine, according to three US officials. The officials, who were not authorized to comment publicly and spoke on the condition of anonymity, said the trip hasn’t been finalized. One possibility is a visit to NATO headquarters in Brussels on March 24 with other potential stops in Europe, according to one of the officials.

The prospect of China offering Russia financial help is one of several concerns for Biden. A US official said that in recent days, Russia has requested support from China, including military equipment, to press forward in its ongoing war with Ukraine. The official, who spoke on condition of anonymity to discuss sensitive matters, did not provide details on the scope of the request.

The Russians have seen significant losses of tanks, helicopters and other materiel since the start of the war more than two weeks ago. Ukraine, while overmatched by Russian forces, is well-equipped with anti-tank and anti-aircraft missiles. Russia’s and China’s weapons systems have limited interoperability, and it’s not clear what weapons China has that Russia would be in short supply of.

The Biden administration is also accusing China of spreading Russian disinformation that could be a pretext for Putin’s forces to attack Ukraine with chemical or biological weapons.

Russia’s invasion of Ukraine has put China in a delicate spot with two of its biggest trading partners, the US and European Union. China needs access to those markets, yet it also has shown support for Moscow, joining with Russia in declaring a friendship with no limits.

Asked at a daily briefing about the reported Russian request for assistance, Chinese Foreign Ministry spokesperson Zhao Lijian said, “The US has been spreading disinformation targeting China recently over the Ukraine issue. It is malicious.”

“What is pressing now is that all parties should exercise restraint and strive to cool down the situation, rather than fueling the tension,” Zhao told reporters. “We should promote diplomatic settlements instead of further escalating the situation.”

Biden administration officials say Beijing is spreading false Russian claims that Ukraine was running chemical and biological weapons labs with US support. They say China is effectively providing cover if Russia moves ahead with a biological or chemical weapons attack on Ukrainians.

When Russia starts accusing other countries of preparing to launch biological or chemical attacks, Sullivan said Sunday, “it’s a good tell that they may be on the cusp of doing it themselves.”

Pentagon spokesman John Kirby, on ABC’s “This Week,” said “we haven’t seen anything that indicates some sort of imminent chemical or biological attack right now, but we’re watching this very, very closely.”

The striking US accusations about Russian disinformation and Chinese complicity came after Russian Foreign Ministry spokeswoman Maria Zakharova alleged with no evidence that the US was financing Ukrainian chemical and biological weapons labs.

The Russian claim was echoed by Chinese foreign ministry spokesman Zhao, who claimed there were 26 bio-labs and related facilities in “which the US Department of Defense has absolute control.” The United Nations has said it has received no information backing up such accusations.

There is growing concern inside the White House that China is aligning itself with Russia on the Ukraine war in hopes it will advance Beijing’s “vision of the world order” in the long term, according to a person familiar with the administration view who spoke on condition of anonymity because the official wasn’t authorized to comment publicly.

China has been one of few countries to avoid criticizing the Russians for its invasion of Ukraine. China’s leader Xi Jinping hosted Putin for the opening of the Winter Olympics in Beijing, just three weeks before Russia invaded on February 24. During Putin’s visit, the two leaders issued a 5,000-word statement declaring limitless “friendship.”

The Chinese abstained on UN votes censuring Russia and has criticized economic sanctions against Moscow. But questions remain over how far Beijing will go to alienate the West and put its own economy at risk.

Spanish Foreign Minister José Manuel Albares said Monday that he had asked his Chinese counterpart Wang Yi to use Beijing’s influence over Moscow to end the war.

“We are at a historical moment that requires responsibility and vision of all world leaders,” Albares told Wang during a telephone conversation on Monday, according to a statement from the Spanish ministry.

 

Chinese President says US pressure on Iran worrying

A rise in tensions in the Middle East owing to the US pressure on Iran is worrying and all parties need to exercise restraint, Chinese President Xi Jinping told Russian media ahead of a visit to the country.

Tension between Iran and the US has escalated over the past months, after the United States pulled out of a deal between Iran and global powers to curb Tehran’s nuclear program in return for lifting sanctions.

Washington re-imposed sanctions last year and tightened them sharply at the start of last month, ordering all countries to halt imports of Iranian oil. It has also hinted at military confrontation, sending extra forces to the region to counter what it describes as Iranian threats.

Chinese President told TASS news agency and Rossiyskaya Gazeta newspaper that because of the “extreme pressure” Washington has put on Tehran and the unilateral sanctions, tensions have continued to rise in the Middle East.

He reiterated, “The development of the situation is worrying.”

The Iran nuclear deal should be fully implemented and respected, as it is of crucial importance for peace and stability in the Middle East and non-proliferation, Xi added.

 “China and Russia’s views and positions on the Iran nuclear issue are highly aligned, and both hope that all relevant parties remain rational and exercise restraint, step up dialogue and consultations and lower the temperature on the present tense situation,” he said.

China has been angered by U.S. threats against countries and companies that violate U.S. sanctions by importing Iranian oil. China and Iran have close energy ties.

Xi did not directly address the oil sanctions issue, but appeared to allude to them by saying: “China will continue to firmly safeguard its own legitimate and lawful rights and interests”.

Finally United States kneels down before Iran

The United States announced to re-impose sanctions on Iran. President Donald Trump unilaterally pulled his country out from an agreement signed by big powers with Iran. The US government threatened countries to bring down their oil imports from Iran to zero or face similar sanctions. Many critics fail to understand the logic of President Trump as they strongly believe that he will not be able to achieve much by re-imposing sanctions.

Some analysts say that the US administration wishes to maintain a delicate balancing act with the waivers by ensuring the oil market has sufficient supply and avoid a politically damaging spike in fuel prices. The US also wants to ensure that Iran doesn’t collect enough revenue that the US sanctions become irrelevant. Countries that get waivers will be required to pay trough an escrow accounts in their local currency. That means the money won’t directly go to Iran, but will be allowed to use it for buying food, medicine or other non-sanctioned goods from its crude customers.

Let us first of all find the rationale behind re-imposition of sanctions on Iran by the US. I will prefer to use a quote. It says the re-imposition of sanctions on Iran by the US are aimed at achieving two targets: 1) quashing its nuclear ambitions and its ballistic missile program, but also 2) weakening its financial strength to support groups fighting proxy war in Syria, Yemen, Lebanon and other parts of the Middle East”.

Some analysts say that the US has imposed proxy war on the above stated countries for establishing its hegemony in Middle East and North Africa (MENA). The US efforts are aimed at weakening these countries so that they don’t become a potential threat for Israel, which has faced humiliating defeat in Lebanon. Hezbollah, a Lebanon-based resistance group smashing Israel’s military supremacy is often termed a terrorist outfit and alleged for receiving funds and military hardware from Iran.

No sooner did these sanctions became effective, the US confirmed granting waivers to eight countries, allowing them to continue to import oil from Iran for the next six months. The countries include South Korea, Japan, India, China, Turkey, Taiwan, Italy and Greece. The waivers will facilitate these to continue to import oil, although there is a great deal of disagreement among analysts over how much Iran’s exports will fall.

This waiver means that the supply situation will ease further. Reportedly Iran’s oil exports will stabilize at around 1 million barrels per day, and could even increase again in the coming months because Japan and South Korea have hardly been buying any Iranian oil lately. Receiving the waivers will allow them to continue buying. To be sure, not everyone agrees on this point, some believe the hawkish government in Washington will make other efforts to curb Iranian oil export.

Announcement of waivers, are a defeat of the US, seemingly backtracking a policy to cut Iran’s oil exports to zero. However, the Secretary of State Mike Pompeo continues to play the famous US mantra, “maximum pressure” campaign will continue and that the administration hopes to get to zero. The waivers were granted to countries that “need a little bit more time,” he said. 

I am also obliged to refer to what has been said by Professor Frank N. von Hippel, former assistant director for national security in the White House Office of Science and Technology. He said that it was a terrible mistake for the Trump Administration to pull the US out of the agreement between the P5+1+EU and Iran, commonly referred as Joint Comprehensive Plan of Action (JCPOA).

“The US has lost credibility with the other permanent members of the UN Security Council, Germany and the EU”. He also warned, “If Iran reacts by ending its own compliance with the JCPOA, we might be on a path to war. The US does not need another unnecessary and costly war”.

CPEC Myths and Realities

In Pakistan a lot is being said and talked about China Pakistan Economic Corridor (CPEC). While some analysts term it a mega initiative by Pakistan’s ‘time tested friend’, cynics label it ‘another East India Company in Making”. Another group says, “British Raj undertook many mega developmental project in Indian subcontinent but most of these were aimed at taking the raw materials from one of its bountiful colony to the home town and sell its finished products to one of the huge markets enjoying substantial purchasing power, as against this CPEC is aimed at ushering prosperity in the rural areas of Pakistan”.

China has one of the largest population and industrial base. The country is deficient in indigenous production of energy products. To keep the factories running it has to import huge quantities of crude oil and finished products. Bulk of these products comes from Middle East and North Africa (MENA). Carrying these through ships takes long time and the cost is also high. Presence of navies of various super powers, particularly the US Navy, poses serious security risks for the ship carrying oil to China. Therefore, another route has to be constructed that is short, efficient and cost effective. Taking goods from Gwadar to Kashgar though Pakistan does not pose serious problems because most of the road and rail network is already in place, which can be further improvised at a faster pace and with lesser expenditures.

China, the fast growing economic power has embarked upon ‘One Road, One Belt’ program, which consists of economic belt and maritime road. A closer look at the illustration hardly shows any road or railway track passing through Pakistan. This implies that Pakistan is not the sole beneficiary of this grand plan but will reap the benefits to the extent it is able to use the corridor. At the best it will collect transit fee and the roads may make any contribution in boosting Pakistan’s GDP. The experts having futuristic vision say that adding to power generation and developing robust infrastructure can help in containing electricity outages and post-harvest losses, which means additional contribution to country’s GDP. However, reaping benefits will totally depend on conceiving right policies and their implementation in letter and spirit. The overwhelming perception is that the Government of Pakistan has not come up with any ‘home grown plan’ to fully exploit the true potential of CPEC.  

It is being said that CPEC envisages investment ranging from US$46 billion to US$72 billion. However, only scanty details are available about the projects and component of equity and debt. The overwhelming perception is that bulk of the money will come as debt and Pakistan may face serious debt serving constraints. Drawing substantial and sustainable income from infrastructure projects is a long drawn process. Sri Lanka already faces such a problem. Therefore, local policy planners have to take swift remedial steps to avoid a similar situation. It may be true that CPEC may yield enormous benefits for Pakistan, but it is more important to take into account any potential fallout and come up with ‘Disaster Recovery Plan’.

One of the basic lessons taught in management sciences is having a recovery plan in case the original plan fails. This is unavoidable because Pakistan faces internal and external treats. Even after seventy years of independence Pakistan is surviving on aid, grants, and loans and on the crutches of multilateral donors, particularly International Monetary Fund (IMF).

The primary obstacle to the CPEC’s full implementation is security. To address Chinese concerns and ensure the safety of these projects, Pakistan has created a dedicated CPEC force, but even a force of that size may not prove substantial. Many of the constituent projects are being constructed in the areas having sanctuaries of terrorist and anti-state groups. Attacks on the work force or Chinese engineers could delay or derail the CPEC.

A decades-long insurgency simmers in Baluchistan, where a number of important CPEC projects are underway. The CPEC also faces domestic political opposition in Pakistan, with infighting between provinces and the central government over the allocation of investments. The lack of transparency surrounding the negotiated deals has heightened concerns and skepticism that only a select few, if any in Pakistan, will benefit from the investments. In case Pakistan is unable to provide sufficient security or address the concerns of domestic opponents, projects will have trouble getting off the ground and will fail to prompt follow-on investments or deliver commercial success.

On the external front, CPEC face threats from the United States, India and Afghanistan. Indian Prime Minister has already lodged protest with China. Washington is likely to join hands with India, having concerns about the CPEC, as it represents the leading edge of China’s expanding access to, and likely influence within Eurasia. Any direct intervention by the US or India could be costly, unwinnable and almost certainly counterproductive to other US goals in Pakistan and the region.

This article was originally published in Pakistan & Gulf Economist

Pakistan in the grip of terrorists

On the last Friday of Ramadan in Pakistan killers were on the rampage, especially in Karachi capital of Sindh and Quetta capital of Balochistan. Earlier Kamra Air Base was attacked and nearly two dozen Shias were killed point blank in KP province. Though, on the face value these appear separate incidents but establish a common point ‘security forces in Pakistan are incapable of protecting Pakistanis as well as strategic installations of the country.

Many local and foreign analysts term these ‘security lapse’ but the reality is Pakistan in a state of war for more than a decade. Despite doing the best it has to hear ‘do more manta’ from the United States and face the pressure of ‘domestic constituency’ to pull the country out of proxy US war. There is growing perception that Afghan occupation by Nato forces may have other motives but bringing any change in the quality of life of Afghans, bearing the brunt of war for more than three decades. Some even go to the extent of terming it war of drug barons.

In the recent past Shia Hazaras have been the worst victim in Balochistan but now killers are on the rampage in KP and GB. For a considerably long time efforts are being made to show that that Shias and Sunnis are killing each other. However, with the Shia-Suni conflict becoming too visible in Bahrain and Saudi Arabia, efforts are being made to instigate armed conflict between the two Muslim sects in Pakistan also.

Attack on the bus carrying participants of Youm-e-Qudus Rally in Karachi was to convey a message that any group following Iranian plan can face death in Pakistan. However, the cynics fail to understand that it is not the attempt of Iran to create its hegemony in the region but to remind the Muslims that Israel is occupying Palestinian territory for decades and Arabs have failed in getting the holy city of Jerusalem free from Zionist occupation.

Many Western critics say that Iran has expansionist designs and attaining uranium enrichment technology is the first step for producing atomic warheads. Though, Iran has been refuting this allegation, United States under the pressure of Zionists want to teach it a lesson. More than 32 years of economic sanctions have failed to deter Iranians from their path. In fact Iran has emerged as a symbol of resistance against the US hegemony.