Russia and Iran conspiring to weaken US dollar, alleges Israel

Russian Presidential Aide Igor Levitin, who is currently on a two-day trip in Tehran, met with the Secretary of Iran's Supreme National Council Ali Shamkani, and the two discussed ways to thwart Western sanctions.

During the meeting, Shamkhani expressed his satisfaction with the volume of economic cooperation between Russia and Iran, praising the path that started to reduce the influence of the dollar in regional and international economic exchanges.

These plans, he said, "will limit the dominance of the West over the world economy to the minimum."

The representatives also discussed the ongoing joint project, the North-South Transport Corridor (NSTC), which Shamkhani described as having a decisive role in changing the geometry of goods transit in the region.

The NSTC is a transport network for moving freights between Iran, Russia, Azerbaijan and other countries in Asia and Europe.

The transport corridor aims at creating new networks to avoid the US and the West as sanctions grow on Iran.

Levitin, for his part, expressed Moscow's readiness to invest in Iran's steel, oil and petrochemical industries.

Despite Russian efforts to weaken the US dollar, the currency has continued to gain this week, while the Russian rouble is having the worst week of the year so far.

The Russian rouble suffered its worst week against the dollar this year, tumbling on a lack of foreign currency in Moscow and on the sale of Western businesses in Russia, despite gaining slightly on Friday afternoon as traders locked in profits.

The rouble RUBUTSTN=MCX skidded more than 2% against the US dollar on Friday to an intraday low of 83.50, its weakest since April last year, and fell more than 2% against the euro to an intraday low of 91.32 against EURRUBTN=MCX.

The rouble had nosedived to 113 per US dollar after President Vladimir Putin ordered the invasion of Ukraine in February 2022, but the central bank and finance ministry helped stabilize the currency, and it strengthened to 50 per dollar in July 2022.

The West then imposed a price cap on Russian oil - the lifeblood of the Russian economy - late last year, since which the rouble has weakened from about 60 per US dollar to more than 80 US dollar this week.

Traders said the Russian currency has come under pressure recently from a cocktail of problems including the sale of Western assets to domestic investors, which stoked demand for dollars, while lower oil prices in March cut the country's export revenue.

The rouble is the third-worst performer among global currencies so far this year, behind only the Egyptian pound and the Argentine peso, Reuters calculations show.

"The Russian currency remains in fundamentally weak conditions," said Vladimir Evstifeev, head of analysis at Bank Zenik. He said exporters were reluctant to swap their export revenues for roubles in the expectation that the dollar would strengthen while importers were buying foreign currency in the expectation of a bounce back in consumer confidence.

"The rate of weakening of the Russian currency is increasing, so it is likely that the authorities will get involved in the situation on the foreign exchange market and conduct a series of verbal interventions in support of the rouble."

Energy crisis in Europe, only because of following the United States blindly

As the weather gets colder in Europe, the efforts for curbing gas and electricity consumption are reaching their limits as the short-lived relief the European Union was celebrating over the past few months is starting to fade.

Before the United States commenced proxy war in Ukraine, Russia contributed to the lion’s share of European energy imports. With the conflict, now in its ninth month, disrupted that partnership, and no more gas is flowing through Nord Stream 1.

The energy crisis in Europe can be considered from two major aspects: 1) the short-term effects and challenges, and 2) the long-term impacts and solutions.

Considering the condition of the Union’s storage facilities, which according to the International Energy Agency (IEA) are currently 95% full, Europe might be able to pass through this year’s winter but there is a heavy price that it must pay in doing so.

Businesses across Europe are not just curbing their energy use, but continuing on a business as usual basis. They are shutting down factories, downsizing, or relocating. Europe may well be on the way to deindustrialization. The Eurozone manufacturing activity has fallen to the lowest since May 2020.

In its latest analysis of the European energy crisis published on November 03, the IEA said that the union could face a shortage of as much as 30 billion cubic meters (bcm) of natural gas during the next year’s pick summer period for refilling its gas storage sites.

In the report dubbed “Never too early to prepare for next winter: Europe’s gas balance for 2023-2024” IEA cautions that the cushion provided by current storage levels, as well as recent lower gas prices and unusually mild temperatures, should not lead to overly optimistic conclusions about the future.

“With the recent mild weather and lower gas prices, there is a danger of complacency creeping into the conversation around Europe’s gas supplies, but we are by no means out of the woods yet,” said IEA Executive Director Fatih Birol.

A look at the IEA report shows that the European Union is going to face a great challenge in meeting its energy needs in the coming years and considering the heavy costs of shipping gas from long distances, Iran could have been a significant contributor to the resolution of this issue.

Having the world’s biggest gas resources, Iran could provide Europe with the energy it desperately needs if the infrastructure for a pipeline were there or if the constant sanctions have not had prevented Iran from accessing the technology required for liquefying natural gas on large scales.

Unlike oil, natural gas is hard to be shipped on large scales in the form of gas, and therefore it is exported either through pipelines or by turning it into Liquefied Natural Gas (LNG), but that is an expensive and high-investment proposition. Iran currently does not have the infrastructure to export large amounts of gas to Europe.

Despite all these limitations, Iran has constantly voiced its readiness to help Europe ease at least part of its energy demand.

In early October, Iran's Deputy Foreign Minister Ali Baqeri Kani highlighted the impact of sanctions on energy security in Europe amid the Russia-Ukraine war and voiced Tehran’s preparedness to help restore energy security to the continent.

"It was thought for many years that countries like Iran should pay the cost of being sanctioned, but now the Europeans have realized that imposing sanctions has also a price," Baqeri Kani said.

Considering the current experiences and looking into the future, European governments should see clearly the negative impacts that the sanctions have had and are going to have on global energy security and therefore more efforts should be made to help the nuclear talks reach the “ending” that would be a “win-win” scenario for both sides.

 

Joe Biden running out of money for Ukraine

The Biden administration has reached the end of its presidential drawdown authority funding, with about US$100 million left, the Pentagon’s top spokesman said Monday.   

Between President Biden’s Friday announcement of a US$150 million assistance package to Ukraine and the remaining US$100 million, the United States will be able to provide weapons and equipment to Ukraine until “about the third week of this month,” Press Secretary John Kirby told reporters. 

“We’re going to be working that in real time with the Ukrainians, that will get us to about the third week of this month, is what we’re pretty much anticipating,” Kirby said. 

Biden last week warned that the latest round of military assistance for Ukraine — a US$150 million package to include artillery munitions, radars and other equipment — would nearly exhaust the military assistance that Congress has so far approved for the administration to deliver to Ukraine.  

At the time, he pressed Congress to quickly approve the US$33 billion the White House has asked for in additional security, economic and humanitarian assistance for Kyiv — about US$5 billion of which would go to additional presidential drawdown authority funding.  

Kirby on Monday echoed that thinking and said the administration continues “to urge Congress to pass the president’s supplemental request as soon as possible so that we can continue to provide aid to Ukraine uninterrupted.” 

Kirby said the drawdown authority allows the United States to get weapons and equipment “off our shelves — we already own it, it’s already ours — and get it right to Ukraine.” 

“We think with what we got left that’ll get us through most of this month and in terms of future packages and future material, but that’s why we’re urging Congress to act quickly,” he added. 

Congress is drafting legislation to meet the administration’s request — which has bipartisan support — but the process of approving such a bill may be complicated due to a desire by some to link it to a separate administration ask for more COVID-19 pandemic assistance.