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.

 

Hassanabad Bridge on Karakoram Highway linking Pakistan and China swept away

Hassanabad Bridge in Hunza on the Karakoram Highway linking Pakistan and China was on Saturday destroyed and swept away by a glacial lake outburst flood (GLOF) from the Shishper Glacier. 

The Gilgit-Baltistan tourist police confirmed the development, adding that traffic had been diverted to an alternate route on the Sas Valley Road.

Hunza Superintendent of Police (SP) Zahoor Ahmed said the glacier had started melting on Saturday due to heat and caused a flood that damaged the bridge and rendered it unusable for traffic.

He said tourists were facing difficulties and had been provided alternate routes through Ganish and Murtazabad. He added that tourist police were also appointed at various spots to prevent any inconvenience to tourists.

The SP said that families near the nullah were shifted to safer places and the entire administration, including the police and rescue services, were on alert due to the emergency situation.

Chief Secretary Gilgit-Baltistan Mohyuddin Ahmad Wani said that the National Highway Authority (NHA) and Frontier Works Organisation assured him that the bridge would be repaired as a matter of urgency.

The Chief Secretary also directed GB Home Secretary Iqbal Hussain, Gilgit's commissioner and Deputy Commissioners of the concerned districts to take immediate steps for the restoration of the Hassanabad bridge and resolve the inconvenience caused to the passengers.

According to information from the Chief Secretary's office, the supply of provisions and fuel to the tourists was also being ensured along with rehabilitation and rations for the affected families.

It added that two power plants of Hassanabad were also swept away by the flood.

A statement issued by the district police said that control rooms were set up in Hunza and Gilgit, which could be contacted on 05813-930721-2 and 05811-930033, respectively.

Climate Change Minister Sherry Rehman warned that there were many such vulnerable areas in GB and Khyber Pakhtunkhwa. "Pakistan has the highest number of glaciers outside the polar region and many are losing mass due to high global temperatures," she pointed out.

Rehman had earlier cautioned the provincial disaster management authorities and home departments that due to an increase in regional temperatures, there was a possibility of GLOF events and flash floods in GB and KP.

Foreign Minister Bilawal Bhutto-Zardari also said the melting of glaciers was a "matter of concern". He said collective efforts at the international level were needed to tackle climate change.

"The situation arising out of lake eruption on Shishper Glacier needs to be dealt with on an urgent basis. The government must ensure that local communities are not harmed in any way and land routes remain open.

"Hopefully, the administration will ensure that ordinary people and tourists do not face difficulties," Bilawal said.

GB Environmental Protection Agency Director Shahzad Shigri said climate change had accelerated the melting of glaciers in the region and posed a serious threat to the population.

 

 

Bilawal Bhutto Zardari invited by Antony Blinken to attend food security meeting at UN headquarters

Reportedly top-level contacts between Pakistan and the United States recommenced on Friday with Secretary of State Antony Blinken calling Foreign Minister Bilawal Bhutto Zardari and inviting him to attend a food security meeting at the UN headquarters in New York on May 18, 2022.

The two-day ministerial conference will focus on the threat to global food security, triggered by the Russian invasion of Ukraine, and will be chaired by Blinken himself.

Such encouraging statements were rare during the PTI regime and the phone call to Bilawal was the first contact between the foreign ministers of the two countries in quite a while. On September 24, 2021, then Foreign Minister Shah Mahmood Qureshi had met Secretary Blinken on the sidelines of the UN General Assembly session in New York.

Pakistan is also exploring the possibility of bringing Bilawal to Washington for a separate meeting with Secretary Blinken. “Why wait? Why not try to arrange a meeting now?” said a diplomatic source when asked if Pakistan was seeking a Bilawal-Blinken meeting later this month.

 “Received a call from Secretary Blinken. Grateful for warm felicitations on my assumption of office,” Bilawal said in a tweet he posted after the call.

“Exchanged views on strengthening mutually beneficial, broad-based relationship, promotion of peace, development and security and agreed engagement with mutual respect is the way forward between the US and Pakistan,” he wrote.

The two-day ministerial meeting that Pakistan’s young Foreign Minister has been invited to precedes a UN Security Council debate on ‘Conflict and Food Security’.

The US says that since the February 24 invasion, Russia has blocked Ukraine’s ports, causing the suspension of food supplies to the Middle East and Africa.

Pakistan’s participation in a UN meeting that highlights the problems caused by the Russian invasion would be a major departure from the policies of the previous PTI government.

Former Prime Minister Imran Khan clearly annoyed the US and other Western powers by visiting Moscow on the day Russia invaded Ukraine. Later, he claimed that the US “conspired” with Pakistani opposition parties to oust him and displays a diplomatic cable to support his claim.

Washington has rejected his claim, saying that although it backs the democratic process in Pakistan, it does not support any party or individual. Such terse exchanges between Islamabad and Washington further strained an already tense relationship.

But since Khan’s departure, the Biden administration has issued almost a dozen statements underlining its desire to re-engaging with Pakistan.

The ministerial conference in New York would be Bilawal’s first participation in a multilateral meeting since becoming foreign minister late last month.

A source, privy to the conversation, while confirming the invitation, hoped that it works out. Secretary Blinken had called to greet the new Foreign Minister, but the conversation continued for nearly fifty minutes, in which both sides discussed various aspects of the bilateral cooperation and expressed keen interest in re-engaging.

“The conversation went very well,” the source maintained.

The source also said that neither side spoke about the former PTI government’s allegation that the US conspired to topple it.

A US State Department readout of Friday’s call highlighted several key points of the conversation that focused on strengthening the bilateral relationship and working together to stabilize Afghanistan.

Spokesperson Ned Price said that Secretary Blinken reiterated the desire to strengthen our broad-based bilateral relationship. The secretary underscored the resolute US-Pakistan commitment to Afghan stability and combating terrorism. The Secretary and Foreign Minister also highlighted ongoing engagement on trade and investment, climate, energy, health, and education, Price added.

He noted that this year marks the 75th anniversary of US-Pakistani relations and “we look forward to strengthening our cooperation.”

In Islamabad, the Ministry of Foreign Affairs also issued a statement, saying that in the phone call, Secretary Blinken expressed the desire to continue strengthening mutually beneficial US-Pakistan bilateral relationship.

Exchanging views on various aspects of US-Pakistan relations, the Foreign Minister underscored that Pakistan and the United States had a longstanding broad-based relationship, the statement added.

Bilawal said that a constructive and sustained engagement between the two countries on the basis of mutual respect and mutual interest was vital to promote peace, development and security in the region and beyond.

The Foreign Minister emphasized that Pakistan’s vision was focused on human development, regional connectivity, and a peaceful neighborhood.

Secretary Blinken also invited Pakistan to the Second Global Covid Summit, which is to be held virtually later this month.

 

US Senate adopts measures to stop revival of Iran nuclear deal

President, Joe Biden’s bid to revive the Iran nuclear deal flunked its first test in the US Senate, Politico reported. 16 Democrats voted with almost all Republicans to approve Sen. James Lankford’s motion.

Former US President Donald Trump had blacklisted the IRGC to make a return to the nuclear deal difficult, which he abandoned in May 2018.

Senators voted to endorse a Republican-led measure stating that any nuclear agreement with Tehran should also address what they claimed Iran’s support for terrorism in the region, and that the US should not lift sanctions on a branch of the Iranian military, the Islamic Revolution Guard Corps (IRGC).

While the measure itself was non-binding, the vote was hailed as a modest victory for Republicans who have pushed the Biden administration to walk away from the talks in Vienna.

 “We want a longer and stronger deal,” Sen. Cory Booker said when asked why he supported the measure. “I want the best deal possible that secures the region and prevents Iran from having a nuclear weapon.”

Contrary to claims by certain US Congresspersons, Iran has said it will not seek nuclear weapons with or without a nuclear deal.  The Leader of the Islamic Revolution Ayatollah Ali Khamenei has also banned production, stockpiling and use of weapons of mass destruction (WMDs) including nuclear arms. 

Sen. Chris Murphy, who spoke on the Senate floor against the measure, suggested it could undermine the Biden administration’s efforts and said it would be an endorsement of the Donald Trump-era approach to Iran.

“To deny this administration the ability to enter into a nuclear agreement isn’t just folly, it’s downright dangerous…. We should not endorse four more years of this failed Iran policy,” Murphy said.

Senate Majority Whip Dick Durbin downplayed the vote and said he expects at least half of the Democrats who supported the Lankford motion would ultimately side with the Biden administration on a nuclear deal.

“It was a non-binding vote. It’s a political year,” Durbin said.

A State Department spokesperson reiterated that Biden is seeking a full return to the 2015 agreement and said “nothing in a nuclear deal would diminish our resolve to continue combating” Iran’s ballistic missile program and its policy in the region.

“If and when we conclude a deal on mutual return to full implementation of the 2015 deal, we will look forward to defending it in detail, and we are confident that it will have support in Congress and with the American people,” the spokesperson added.

Most Democrats, even those who opposed the initial deal, criticized Trump for pulling out of the agreement in 2018 and implementing a so-called maximum pressure campaign of sanctions and other punitive measures against Iran. Democrats say Trump’s policy failed, pushing Iran much closer to achieving full nuclear capabilities.

Iran has demanded that the US scrap the IRGC’s designation as a foreign terrorist organization as part of an eventual nuclear agreement. Allies of the Biden team have argued that the designation itself is largely symbolic. But dozens of Democrats, particularly in the House, have urged the Biden administration to resist delisting the IRGC.

Never ending tragedy of ready-made garment workers in Bangladesh

According to a Dhaka Tribune report, like every year, just before the Eid holidays, ready-made garment (RMG) workers had to resort to street processions demanding their full salary and bonus. 

Reports indicated that RMG workers demonstrated in Mirpur, Uttara, and Savar, causing traffic disruptions across Dhaka. Police dispersed them by shooting tear gas, injuring many workers.

Though people have become accustomed to seeing protests by RMG workers, these events are paradoxical if considered that the RMG industry is one of the pillars of the country’s growing economy. Yet, these workers face neglect and misery, and just before the Eid holidays, their tragedies become more apparent.

The recent protests started after the government on April 11, 2022 instructed factory owners to pay 15 days’ wages before the holiday. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) claimed that factories were prepared to follow the directive, but “if any factory owners want to pay their workers for the full month, they can.”

This is unfortunate that the government advised not to disburse full salary — observers do not think any service holder would have liked it if they did not get their full monthly salary and bonus before the Eid holidays.

Since the government announced the directive to pay trunked salaries before Eid, workers’ leaders predicted unrest, but the factory owners repeatedly said there was no fear of turmoil. Since the decision was publicized, observers heard the news about road blockades demanding full salary. Skeptics claimed that worker leaders uttered the demands for their interests or served a vested quarter.

One could argue that in capitalism, workers’ well-being is hardly a concern for the industry owners. In addition, they are motivated by profit-making possibilities. However, this tendency to hold back some money before the workers go on holiday is a labour management strategy for ensuring their timely return. But from the workers’ perspective, not receiving salary on time is a significant breach of promise, as most workers would claim, “if we do not get our salary on time, there is no point in going to our family.”

Bangladesh will soon become a middle-income country, but when will RMG workers’ tragedies end?

The difficulties RMG workers usually face in getting their full salary and bonus seem incongruent with the export income earned by the garment sector. Following the Covid-19 setback, businesses have gained pace; in the last fiscal year, Bangladesh earned export proceeds of US$38.75 billion. Besides, during the previous nine months (July-March) of this fiscal year, Bangladesh exported RMG products worth US$31.42 billion gaining a YoY growth of 33.81%.

While the sector is thriving in business volume, the workers had to take to the streets with demands to receive their salary on time.

To recap some events that shocked many during the two years of the Covid-19 pandemic. Even though a stimulus package of Tk 5000 crore was announced for the RMG sector, from April to May 2020 alone, 18,000 workers were dismissed as per estimates of the Department of Inspection of Factories and Establishments. Moreover, Transparency International Bangladesh (TIB) has found that as much as 42% of the RMG workers primarily employed in micro, small, and medium-sized factories, did not receive help from the stimulus package.

If one looks a little further back, during the first wave of Covid in the country, on the morning of April 4, 2020, many were shocked to see a rush toward Dhaka. This rang an alarm as the country was supposed to remain under lockdown to minimize the risks of spreading the virus. Late in the evening of that day, the BGMEA President requested the closure of all the factories during the lockdown period.

But by then, many had travelled to Dhaka, and many were stuck in between. As an institution, BGMEA restated that they could not force any factories to remain closed. Unfortunately, the government did not ask the factories to shut down; instead, it only discussed measures to ensure the workers’ salaries were on time to justify their questionable actions. The workers went through this toil as many did not receive their pending salary before the lockdown started on March 26 and were likely to lose their jobs if they would not report to the factory as and when instructed. The testimonies of the returnee garment workers revealed such concerns.

Bangladesh went into another lockdown phase in 2021, starting from July 23 until August 5. However, upon repeated requests from the industry owners, the authorities suddenly decided on the afternoon of July 30 to reopen export-oriented industries on August 1, including the RMG sector — while the entire country would follow the lockdown till 5 August. Therefore, people rushed to get back to the industrial cities to save jobs, but there was hardly enough public transport. Hence, these workers had to pay five to 10 times higher fares to reach their factories on time.

During the negotiations with the government, factory owners claimed they would start operations with the workers living near factory areas, and workers who travelled to the villages would join later. However, many workers said factory supervisors contacted them over the phone and asked them to join work on August 1. Ignoring health and social distancing directives, hundreds of thousands of workers travelled in crammed goods transports, auto-rickshaws, rickshaw vans, and even walked to their workplaces in Dhaka, Narayanganj, and Gazipur to save their jobs.

RMG workers toil throughout the year towards meeting production targets and eventually contribute to earning foreign currencies, but it is tragic to see them protesting for unpaid salaries. For demanding their rightful wage, workers face police brutality, and many workers lose their jobs having allegations of “creating disruption” in production.

Even if these protests do not turn into outright conflict, these events reflect the power imbalance between workers and owners — that culminated in the Rana Plaza calamity back in 2013.

 

United States portrayal of Islamic Revolutionary Guard Corps

As negotiations between the world powers and the Islamic Republic of Iran continues over the revival of the 2015 nuclear agreement, the last barrier to a deal is, Tehran’s demand for the United States to remove its Islamic Revolutionary Guard Corps (IRGC) from the foreign terrorist organization (FTO) list.

Naturally, this demand has triggered a heated debate in Washington between proponents and opponents. Proponents of such a move — including Khamal Kharrazi, former Iranian foreign minister — claim the IRGC does not belong on the FTO list as it is a national army that is no different from Saudi Arabia’s National Guard.

By contrast, opponents argue that removing the IRGC from the FTO list would legitimize an entity that has the characteristics of a terrorist organization and engages in widespread acts of terrorism.

A research prepared by a US Think-tank reveals that the nature of IRGC is not a conventional state armed force and should not be treated as such. The IRGC is an ideological organization that shares key characteristics with other designated Islamist organizations, including its quest for an expansionist Islamic state, a global Islamic order, forceful imposition of sharia law (Shi’a interpretation), militaristic concept of jihad, and anti-American and anti-Semitic ideology.

The finding of a US research paper reveals three visible trends in the IRGC. The first relates to indoctrination becoming an increasing focal point in the Guard. Sayyid Ali Hosseini Khamenei and his hardline circle have sought to nurture a more radical IRGC generation by dedicating more time to ideological indoctrination of its members. The promotion system within the ranks of the IRGC also favors ideological conviction over technical expertise, ensuring the most zealous members rise up within the chain of command.

The second trend relates to the increasing priority given to Mahdism within the IRGC’s ideology. From the post-2009 period onwards, the doctrine of Mahdism has become one of the main prisms through which the IRGC and affiliated hardline clerics would understand the world around them and the IRGC’s actions, as well as communicate that understanding. In turn, there has been greater emphasis on viewing the IRGC as the military vehicle to prepare the foundations for the reappearance of the 12th Imam, with policy objectives such as hostility toward the US and the eradication of Israel being understood through this prism. This is consistent with the goal of Khamenei and his hardline allies, such as Ayatollah Alamalhouda, the supreme leader’s representative to Khorasan and President Ebrahim Raisi’s father-in-law, to transform the concept of Mahdism from a set of feelings into an “ideological belief.”

The third and final trend relates to the IRGC’s younger generations becoming more radical and extreme. In this regard, efforts by Khamenei and the Guard’s Ideological-Political Organization to nurture a more radical generation among the IRGC has paid, and is paying, dividends.

Against this backdrop, the rise of devout followers of the militaristic doctrine of Mahdism among the senior ranks of the IRGC is not inconceivable and should not be ruled out. While there is hope that the IRGC’s senior leadership will act pragmatically, internal structures within the Guard — including its indoctrination and promotion system — certainly open up the possibility that devoted Mahdists could occupy senior leadership positions.

Such a scenario could have far-reaching consequences as it would bring the three pillars of the IRGC’s foreign policy — militias, ballistic missiles, and the nuclear program — under their control. Even if a small number of devout Mahdists occupy senior positions in the Guard, it is possible that they may seek to facilitate and speed up the return of Mahdi. This would have major implications for some of the policies that are being understood through the prism of Mahdism, such as Israel’s existence being the “greatest barrier” to the reappearance of the 12th Imam.

At present the doctrine of Mahdism in the IRGC remains a complete blind spot for Western policymakers, yet it could have major implications for the Islamic Republic’s militia network, ballistic missile program, and even its nuclear program. Of course, no one knows for sure if devout adherents of the ideology will attain senior command positions in the IRGC. The objective of this paper, however, is simply to point out that it would be unwise not to prepare for this scenario given the huge implications it would have for US and global security.

Russia-Ukraine conflict paves way for free trade agreements among EU members

Russia’s war with Ukraine is giving member countries of the European Union fresh incentives to speed up work on free-trade agreements. At least nine nations including Germany and Spain are planning to send a letter to the EU seeking to speed the delayed talks, according to a Bloomberg report.

The signatories want faster negotiations with New Zealand, Australia, India and Indonesia, while speeding the implementation of accords agreed with Chile, Mexico and the Mercosur bloc of countries, which include Argentina, Brazil, Uruguay and Paraguay.  

The letter also says that the process to negotiate, sign and implement trade deals is too long, and points out that the massive Regional Comprehensive Economic Partnership was signed in late 2020 and will enter into force this year for most members.

In Brussels, a slow-moving trade bureaucracy has often been displaced and made irrelevant by quicker political developments.

For example, in 2016 a transatlantic trade deal negotiated during the Obama administration tanked after Donald Trump’s election reversed the trajectory of US-EU trade liberalization efforts.

Then in late 2020 the EU announced the conclusion of its seven-year investment negotiations with China, only to see it promptly belly flop after Brussels clashed with Beijing over its alleged human-rights abuses in Xinjiang.

Trade agreements take time to complete and sometimes span the length of entire careers, which makes it understandably frustrating to see years of hard work go down the drain.

Now Russia’s invasion is hastening a fundamental rewiring of the global economy that is reinforcing existing trade ties among geopolitical allies and incentivizing new ones. It’ll play out in the months ahead through business decisions about supply chains and government deal-making.

“In a post-invasion world, it has become increasingly untenable to isolate trade from universal values such as respect for international law and human rights,” European Central Bank President Christine Lagarde said in a speech last month.

Shifts are occurring from dependence to diversification, from efficiency to security, and from globalization to regionalization, she said.

In Russia, businesses and the government may already be substituting imports from Europe with imports from Asia, according to Vincent Stamer, head of the Kiel Trade Indicator.

The Russian port of Novorossiysk in the Black Sea has recently seen a significant increase in the number of container ships arriving, whereas the port of St. Petersburg, which is involved in European trade, continues to record declines, Stamer said in a post Thursday.

“This could be a first indication of trade diversion” and “makes it all the more important to create economic incentives for countries such as India to move closer to Europe rather than Russia,” he added.

 

Iranian port Chabahar handles nearly 2 million tons goods in a year

As announced by a provincial official, nearly 2 million tons of basic commodities were transported from Chabahar port, in the southeast of Iran, to the designated destinations throughout the country in the past Iranian calendar year 1400 ended in March 2022.

Mehrollah Damough, the head of goods transportation office of Road Maintenance and Transportation Department of Sistan-Baluchestan province, where the strategic port lies, said that the mentioned commodities were transported by almost 80,000 trucks.

Chabahar is an important port and a low-cost route for Central Asian countries, which with its strategic unloading and loading equipment has the potential to become a key transit corridor for international transit and transportation, the official further underlined.

As announced by the Deputy Head of Islamic Republic of Iran Customs Administration (IRICA), 30.9 million tons of basic goods worth US$19.6 billion were cleared from the customs in the past Iranian calendar year.

Foroud Asgari, Deputy Head of IRICA for customs affairs, said that the imported goods comprises of 25 commodity groups.

Putting the value of the imported basic commodities at US$19.6 billion in the past year, the official said that the imports showed a 60% increase in terms of value and 32% growth in terms of weight, as compared to the Iranian calendar year 1399.

As Iran's only oceanic port on the Gulf of Oman, Chabahar port holds great significance for the country both politically and economically. The country has taken serious measures for developing this port in order to improve the country’s maritime trade.

In this regard, the Islamic Republic has been welcoming investors from all over the world to take part in the development of this port and benefit from its distinguished position as a trade hub in the region.

Chabahar port consists of Shahid Kalantari and Shahid Beheshti terminals, each of which has five berth facilities. The port is located in Iran’s Sistan-Balouchestan Province and is about 120 kilometers southwest of Pakistan’s Baluchistan province, where the China-funded Gwadar port is situated.

In May 2016, India, Iran, and Afghanistan had signed a trilateral agreement for the strategically-located Chabahar to give New Delhi access to Kabul and Central Asia.

Based on an agreement with Iran, India is going to install and operate modern loading and unloading equipment including mobile harbor cranes in Shahid Beheshti Port in Chabahar.

Miftah the lesser you talk the better it will be for you and the incumbent government

The consensus is growing among the analysts that Miftah Ismail, Finance Minister of Pakistan talks a lot and often inconsistent and incoherent, which could make his life miserable with the passage of time. 

The other suggestion is that he should bid farewell to Imran Khan animosity and focus on putting the economy of the country back on track.

Allow me to refer to his statement regarding Dr. Reza Baqir, the outgoing Governor of State Bank of Pakistan. Ismail had indicated in a tweet that the government would not be providing an extension to Dr. Baqir. It may be called that he was often termed an appointee of the International Monetary Fund and follower of the IMF dictate.

However, on his departure he admitted, "I want to thank Reza for his service to Pakistan. He is an exceptionally qualified man and we worked well during our brief time together. I wish him the very best."

He misses no chance of maligning Imran Khan for agreeing with the IMF on conditions which had opened floodgate of inflation in Pakistan, the most notorious being the hike in the tariffs of electricity and gas and withdrawal of different types of subsidies.

It is a welcome sign that the IMF has extended the timeline of the current program and also promised to increase the amount by US$2 billion. However, the honourable minister hasn’t disclosed the conditions attached to this ‘favour’. The cat will soon come out of the bag when the IMF starts its review soon after Eid Holidays.

Even a person of ordinary wit knows very well that IMF bailout package will be attached with: hike in revenue, hike in electricity and gas tariffs and withdrawal of subsidies. It is also no wonder that Miftah hasn’t developed ‘homegrown’ plan and would be obliged to follow the IMF recipe.

I am not sure if the Minister is fully aware of massive smuggling of food items to the three neighboring countries, enjoying long and most porous borders with Pakistan. Food items are being fled to Afghanistan, Iran and India only because of the faulty Trade Policy being followed by Pakistan.

Ismail faces a daunting challenge of controlling mounting ‘circular debt’, which is nothing but rampant pilferage going on with the connivance of employees of the utility companies. Analysts say, with every hike in tariffs the incentive grows for pilfering electrify and gas.

Minister has to convince IMF that Pakistan suffers from cost pushed inflation and the hike in interest rate renders the exporters uncompetitive in the global markets. Exports just can’t be increased without exploiting Pakistan’s comparative advantage and making exports competitive in the global markets.

Last but not the least, Pakistan has to contain import of luxury and/or unnecessary goods to contain trade deficit. WTO Article 6 provides an option to Pakistan to impose quantitative restrictions on imports; the option must be exercised without further waste of time.

Welcome Dr. Murtaza Syed as Governor State Bank of Pakistan

With three-year term of Dr. Reza Baqir as Governor, State Bank of Pakistan (SBP) coming to an end on May 04, 2022, Dr. Murtaza Syed, the senior most Deputy Governor takes over as Governor of the central bank.

Dr.  Syed an eminently qualified economist with rich experience of dealing with International Monetary Fund (IMF) will oversee the affairs of SBP and will be part of Pakistani team negotiating with the IMF, until the Government of Pakistan formally appoints new Governor of SBP.

According to the SBP, Dr. Syed has more than 20 years of experience in macroeconomic research and policy making and worked with the IMF for 16 years before resigning to join the State Bank of Pakistan. Dr. Syed has a PhD in economics from Nuffield College at the University of Oxford and has delivered lectures on public policy at Cambridge and Oxford Universities.

Earlier Finance Minister, Miftah Ismail had indicated in a tweet that the government would not be providing an extension to Dr, Reza Baqir.

"I want to thank Reza for his service to Pakistan. He is an exceptionally qualified man and we worked well during our brief time together. I wish him the very best," the minister had added.

Following Ismail's announcement, Dr. Baqir, in a series of tweets, thanked Allah and his fellow team members for giving him a chance to serve in the public office. "To other fellow Pakistanis, especially overseas, I encourage you to consider public service," he said.

The former governor also recalled the initiatives the SBP took during his tenure, such as Covid relief packages which included Rozgar payroll loans and hospital financing, Roshan Digital Account, Raast, a framework to licence digital banks in Pakistan, financial inclusion for women, affordable mortgages for lower-income groups and others.

"I want to especially thank Deputy Governors and SBP Corporate Management Team for your teamwork and support. I also want to thank the 4 Finance Ministers and 5 Finance Secretaries I worked with over my 3 years," he continued.

Dr. Baqir said that Pakistan faced several challenges but also possessed "great strengths" to counter them. "I am confident and hopeful that we as a country will make the right choices to overcome the challenges ahead of us," he added.

Meanwhile, the news of Dr. Baqir's term has termed as "loss for Pakistan" by politicians and analysts on Twitter.

Pakistan foreign policy always subservient to US mantra

In today’s blog I am daring to negate an impression created by an article written by Ms Maleeha Lodi (Pakistan’s former ambassador to the United States, United Kingdom and United Nations) and published in Pakistan’s leading English newspaper. I am taking an extreme position by saying, “Pakistan’s foreign policy has always remained subservient to the US mantra”.

Please allow me to begin with the U2 incident, when the US pilot-less planes used to takeoff from a Pakistani airbase near Peshawar for spying USSR. At one point the situation got so nasty that USSR threatened to attack Pakistan.

Badaber: A secret US intelligence facility in Pakistan

In July 1958, US President Dwight D. Eisenhower requested permission from the Pakistani Prime Minister Feroze Khan Noon for the United States to establish a secret intelligence facility in Pakistan and for the U-2 spyplane to fly from Pakistan. The U-2 flew at altitudes that could not be reached by Soviet fighter jets of the era; it was believed to be beyond the reach of Soviet missiles as well. A facility established in Badaber (Peshawar Air Station), 10 miles (16 km) from Peshawar, was a cover for a major communications intercept operation run by the United States National Security Agency (NSA). Badaber was an excellent location because of its proximity to Soviet central Asia. This enabled the monitoring of missile test sites, key infrastructure and communications. The U-2 "spy-in-the-sky" was allowed to use the Pakistan Air Force section of Peshawar Airport to gain vital photo intelligence in an era before satellite observation.

I would also invite the readers to recall last-minute cancellation of the visit of Prime Minister Liaquat Ali Khan to USSR and going to the United States around the same dates.

This also reminds me the US ditching Pakistan at the time of creation of Bangladesh. State-owned Pakistani media kept on telling the US feet could arrive any minute, which never arrived. This creates an impression that the US supported creation of Bangladesh.

Now coming to Afghan proxy war, Pakistan played two opposite roles: first it supported Taliban in averting USSR attack in a quest to reach warm water and then supporting US/Nato troops in crushing the same Taliban.

Please also allow me to share conspiracy theory, “Pakistan and United States have enjoyed cordial relationships due military rule”. The readers are invited to read details of Ayub, Zia and Musharraf eras.

I am also inclined to share another public opinion, The US-Pakistan relationship is a saga of ‘Marriage of Convenience’.

It is often said, ‘Pakistan is a frontline allay of United States in war against terrorism’. Some analysts interpret it ‘Pakistan is partner in proxy wars but when it comes to Investment and trade India is the US darling’.

I tend to subscribe to this theory based on my follow up of the construction of Chabahar Port in Iran. Despite economic sanctions on Iran, India invested millions of dollars in the construction of this port and allied road and rail links to connect with Afghanistan and Central Asian states. Please also note that Pakistan was not allowed to import oil from Iran during this period.

The United States was more than smart in facilitating India in the construction of Chabahar Port and allied infrastructure. The prime US motive was to create an alternative access to land-locked Afghanistan, extended to Central Asian states.

But the real objective was to undermine Pakistan’s importance in Afghan transit trade. There is no denying to the fact that Pakistan still offers cost effective and shortest route to Afghanistan.

Before I conclude let me say, “Pakistan under the influence of the United States has not recognized Taliban Government in Afghanistan”. While Afghans are facing shortage of food and medicines, the two countries are not allowed to trade in local currencies; the United States has not released foreign exchange reserves of Afghanistan.

Prime Minister Shehbaz what have you done?

Looking at this advertisement published in a leading English newspaper of Pakistan has prompted me to communicate with my readers and or anyone who is worried about the fast deteriorating economic conditions of Pakistan.

I am ready to say without mincing my words that historically Saudi Arabia and United Arab Emirates (UAE) have been more than gracious in extending support to Pakistan, the first Muslim country to attain the status of ‘Atomic Power’.  

At this juncture when the negotiations with the lender of last resort, International Monetary Fund (IMF) have been marred there was an urgent need for Pakistan to have enough foreign exchange reserves, be it earned or borrowed, to meet the targets agreed with the Fund.

Since commercial borrowing could prove fatal, the only option was to approach the ‘time tested friends’, who have reciprocated as usual. Therefore, it is not a ’well-done’ by the incumbent prime minister, but graciousness of the Monarchs.

It is true that Mian Sahib, has been put in a very difficult position by the coalition partners, they don’t want to take responsibility of ‘bad’ decisions but to attain political mileage in the upcoming elections.

It appears that some of Mian Sahib’s advisors, fearful of the repercussions of ‘bad’ decisions are suggesting to sweep the issues under the carpet, which can make the things even more complicated for him as well as Pakistan.

Mian Sahib has already committed ‘double fault’ by not increasing prices of energy products, despite recommendations by the Oil & Gas Regulatory Authority (OGRA).

The harsh reality is that with each passing day, price of crude oil hovering at higher level and Rupee witnessing erosion in value the quantum of subsidy has already become unmanageable.

The sooner the incumbent government increases the tariffs of energy products, the better it will be for Pakistan. It may be a blessing that Pakistan’s friends are willing to supply oil/POL products at deferred payment, but the outstanding amount has to be settled in due course of time.

The other decisions which has offended overseas Pakistanis, remitting around US$2.5 billion per month, is ‘unwillingness’ of the incumbent government to allow them to cast their votes in the general elections of Pakistan.

According to informed sources, overseas Pakistanis have threatened to withdraw amounts kept in Roshan Digital Accounts, if they are not allowed to cast their vote in forthcoming general election.

To conclude, there is a friendly advice to the incumbent government that it must address the grievances of overseas Pakistanis without any further delay. While the IMF has indicated to give Pakistan US$2 billion over the next two years, overseas Pakistanis are sending more than this amount every month.

Iran Oil Show 2022 to kick off on May 13

The 26th International Oil, Gas, Refining and Petrochemical Exhibition of Iran (Iran Oil Show 2022) is scheduled to kick off on May 13 at Tehran Permanent International Fairgrounds, Shana reported.

As reported, all Covid-19 related permits have been obtained from the National Headquarters to Combat Coronavirus Pandemic and the four-day exhibit will be held in full compliance with health protocols and standards.

Iran Oil Show is among the most significant oil and gas events in the world in terms of the number of participants and its diversity.

The event covers a variety of oil industry areas, including upstream industries, universities and science centers, start-ups, and science and technology parks, petrochemicals and related industries, gas and related industries, pipes and tubes, valves, refining and distribution and related industries, rotary machines, as well as products exporters, and etc.