China announces sanctions against Nancy Pelosi

Chinese foreign ministry has announced it will issue sanctions against US House Speaker Nancy Pelosi and her direct family relatives after she travelled to Taiwan this week.

The ministry said Pelosi’s trip to Taiwan was a serious violation of China’s sovereignty and territorial integrity, and a serious violation of the one-China principle.

Pelosi arrived in Taiwan on Tuesday night and met officials, including Taiwanese President Tsai Ing-wen, before flying out on Wednesday afternoon. The trip was a stop on her Asian tour and drew the ire of Beijing.

Taiwanese leader says island ‘won’t provoke but will firmly defend’ amid mainland military drills

Websites in Taiwan, including those of its defence and foreign affairs ministries, have gone offline amid heightened tension with Beijing and as mainland China holds military exercises in areas surrounding the island.

Several government websites in Taiwan have been subjected to cyberattacks in the days following the arrival of Pelosi in Taiwan.

The websites of Taiwan’s National Defence Ministry and Foreign Affairs Ministry went down in the early hours of Friday but were soon back online. Both sites were also inaccessible late on Wednesday night.

Taiwan’s Chi Yang-class frigate Ning Yang is anchored at a harbour in Keelung city, Taiwan, on Friday. Beijing’s military started to a series of live-fire drills in six maritime areas around Taiwan’s main island to run until Sunday.

Lo Ping-cheng, Taiwan Cabinet spokesman, said on Thursday attack traffic during this period was about twice as high as past attacks.

“The peak was on Tuesday, and the attack traffic was 23 times the previous peak,” Lo said.

Lo said targets of recent cyberattacks on government departments include Taiwan’s presidential office and the defence and foreign affairs ministries.

Three grain ships scheduled to leave Ukraine ports on Friday

Three ships carrying a total of 58,041 tons of corn have been authorized to leave Ukrainian ports on Friday as part of a deal to unblock grain exports.

The first vessel carrying Ukrainian grain allowed to leave port since the start of the war set sail from Odesa on Monday bound for Lebanon, under a safe passage deal brokered by Turkey and the United Nations.

The Joint Coordination Centre in Istanbul, which groups Russian, Ukrainian, Turkish and UN personnel, said two ships would leave from Chornomorsk and one from Odesa on Friday.

"The three outbound vessels are estimated to depart in the morning from their respective ports," it said.

From Chornomorsk, the Polarnet would leave for Karasu in Turkey with 12,000 metric tons of corn and the Rojen would take 13,041 tons of corn to Teesport in Britain. From Odesa, the Navistar would take 33,000 tons of corn to Ringaskiddy in Ireland.

The Turkish bulk carrier Osprey S, flying the flag of Liberia, was expected to arrive in Ukraine's Chornomorsk port on Friday, the regional administration of Odesa said. It would be the first ship to arrive at a Ukrainian port during the war.

As of Thursday afternoon, Osprey S was anchored in the Sea of Marmara, around 1 kilometer (0.62 mile) off Istanbul's Asian coast, along with other ships waiting to cross the Bosphorus in to the Black Sea, according to a Reuters journalist.

According to Western media, Russian President Vladimir Putin sent troops into Ukraine on February 24, sparking the biggest conflict in Europe since World War Two and causing a global energy and food crisis. Ukraine and Russia produce about one third of global wheat and Russia is Europe's main energy supplier.

 

Quantifying OPEC Plus spare production capacity a difficult task

Reportedly, OPEC leaders Saudi Arabia and the United Arab Emirates stand ready to deliver a significant increase in oil output should the world face a severe supply crisis this winter.

When the Organization of the Petroleum Exporting Countries and its allies (OPEC Plus) decided on Wednesday to raise oil output by a mere 100,000 barrels per day (bpd), it broke a taboo with a rare reference to the group's spare production capacity.

The statement referred to the severely limited availability of spare capacity, saying that meant it needed to keep it in reserve for severe supply disruptions.

At first glance, that reads as an acknowledgement that OPEC’s leader Saudi Arabia has almost no room to raise output, as mentioned by French President Emmanuel Macron in a conversation with US President Joe Biden last month.

Three sources, speaking on condition of anonymity because of the sensitivity of the issue, said Saudi Arabia and the UAE could pump significantly more, but would only do so if the supply crisis worsened.

"With possibly no gas in Europe this winter, with a potential price cap on Russian oil sales in the New Year, we can’t be throwing every barrel on the market at the moment, one of the sources said.

The sources did not quantify any increase, but said Saudi Arabia, the UAE and some other OPEC members possessed around 2.0 million to 2.7 million barrels per day of spare production capacity.

"The only time we can prove we have more spare capacity is when it comes to a long-lasting crisis," the source said, adding that would be when OPEC members would raise output.

That could be as soon as this winter, the sources said, as the political and economic standoff between Russia, a member of OPEC+, and the West over Moscow's invasion of Ukraine show no sign of easing.

The invasion, begun on February 24, which Moscow terms a "special military operation" sent European gas prices to records and lifted international Brent crude to 14-year highs.

"With spare capacity below 2 million bpd in August, we believe OPEC Plus preferred to keep their powder dry and use their buffer to address potential future disruptions," PVM's Tamas Varga said in a note.

"There are growing fears of demand destruction and if the current trend continues, additional barrels would put unwanted downside pressure on prices and, at the same time, would unnecessarily deplete thinning spare capacity."

After Biden visited Saudi Arabia in July to press for extra oil to cool international markets, analysts had speculated OPEC Plus would increase supply.

The Saudi trip was scheduled only after OPEC Plus announced in early June that it would increase output in July and August. Wednesday’s meeting discussed output for September.

Most OPEC Plus members have struggled to meet production targets having already exhausted their output potential following years of under-investment in new capacity.

In that context, Wednesday's decision to increase production targets by 100,000 bpd, one of the smallest increases since OPEC quotas were introduced in 1982, was a goodwill gesture, one of the sources said.

"It is small, yes, but it shows that OPEC Plus, given the fact that it includes so many countries, like Russia, Iran, Venezuela with all their grievances, managed to garner consensus and move forward," the source said.

Following Wednesday's decision, the White House said President Biden would remain focused on keeping fuel prices down.

 

US will not abandon Taiwan, says Pelosi

US House Speaker Nancy Pelosi left Taiwan on Wednesday after a visit that heightened tensions with China. Pelosi said, she and other members of Congress in her delegation showed they will not abandon their commitment to the self-governing island.

Pelosi, the first US speaker to visit the island in more than 25 years, courted Beijing’s wrath with the visit and set off more than a week of debate over whether it was a good idea after news of it leaked. In Taipei she remained calm but defiant.

“Today the world faces a choice between democracy and autocracy,” she said in a short speech during a meeting with Taiwanese President Tsai Ing-wen. “America’s determination to preserve democracy, here in Taiwan and around the world remains ironclad.”

Pelosi arrived at a military base in South Korea on Wednesday evening ahead of meetings with political leaders in Seoul, after which she will visit Japan.

Both countries are US alliance partners, together hosting about 80,000 American personnel as a bulwark against North Korea’s nuclear ambitions and China’s increased assertiveness in the South China and East China seas.

 “Such an act equals to sealing off Taiwan by air and sea, such an act covers our country’s territory and territorial waters, and severely violates our country’s territorial sovereignty,” Capt. Jian-chang Yu said at a briefing by the National Defense Ministry.

The Chinese military exercises, including live fire, are to start Thursday and be the largest aimed at Taiwan since 1995, when China fired missiles in a large-scale exercise to show its displeasure at a visit by then-Taiwanese President Lee Teng-hui to the United States.

Taiwanese President Tsai responded firmly Wednesday to Beijing’s military intimidation.

“Facing deliberately heightened military threats, Taiwan will not back down,” Tsai said at her meeting with Pelosi. “We will firmly uphold our nation’s sovereignty and continue to hold the line of defense for democracy.”

In Washington, John Kirby, spokesperson for the National Security Council, said Wednesday that the United States was anticipating more military drills and other actions from China in coming days as the country’s armed forces “flex their muscles.”

Still, “we don’t believe we’re at the brink now, and there’s certainly no reason for anybody to be talking about being at the brink going forward,” Kirby said on ABC’s “Good Morning America.”

China’s official Xinhua News Agency announced the military actions Tuesday night, along with a map outlining six different areas around Taiwan. Arthur Zhin-Sheng Wang, a defense studies expert at Taiwan’s Central Police University, said three of the areas infringe on Taiwanese waters, meaning they are within 12 nautical miles (22 kilometers) of shore.

Pelosi’s trip has heightened US-China tensions more than visits by other members of Congress because of her high-level position as leader of the House of Representatives. She is the first speaker of the House to visit Taiwan in 25 years, since Newt Gingrich in 1997. However, other members of Congress have visited Taiwan in the past year.

Tsai, thanking Pelosi for her decades of support for Taiwan, presented the speaker with a civilian honor, the Order of the Propitious Clouds.

Shortly after Pelosi landed Tuesday night, China announced live-fire drills that reportedly started that night, as well as the four-day exercises starting Thursday.

The People’s Liberation Army Air Force also flew a contingent of 21 war planes Tuesday night, including fighter jets, toward Taiwan. Chinese Vice Foreign Minister Xie Feng also summoned the US Ambassador in Beijing, Nicholas Burns, to convey the country’s protests the same night.

Pelosi addressed Beijing’s threats Wednesday morning, saying she hopes it’s clear that while China has prevented Taiwan from attending certain international meetings, “that they understand they will not stand in the way of people coming to Taiwan as a show of friendship and of support.”

She noted that support for Taiwan is bipartisan in Congress and praised the island’s democracy. She stopped short of saying that the US would defend Taiwan militarily, emphasizing that Congress is “committed to the security of Taiwan, in order to have Taiwan be able to most effectively defend themselves.”

Her focus has always been the same, she said, going back to her 1991 visit to Beijing’s Tiananmen Square, when she and other lawmakers unfurled a small banner supporting democracy two years after a bloody military crackdown on protesters at the square. That visit was also about human rights and what she called dangerous technology transfers to “rogue countries.”

Pelosi visited a human rights museum in Taipei that details the history of the island’s martial law era and met with some of Taiwan’s most prominent rights activists, including an exiled former Hong Kong bookseller who was detained by Chinese authorities, Lam Wing-kee.

Pelosi, who is leading the trip with five other members of Congress, also met with representatives from Taiwan’s legislature.

“Madam Speaker’s visit to Taiwan with the delegation, without fear, is the strongest defense of upholding human rights and consolidation of the values of democracy and freedom,” Tsai Chi-chang, vice president of Taiwan’s legislature, said in welcome.

The administration of US President Joe Biden has sought to tone down the volume on the visit, insisting there’s no change in America’s longstanding “one-China policy,” which recognizes Beijing but allows informal relations and defense ties with Taipei.

Pelosi said her delegation has “heft,” including Gregory Meeks, chair of the House Foreign Affairs Committee, and Raja Krishnamoorthi from the House Intelligence Committee. Reps. Andy Kim and Mark Takano are also in the delegation.

She also mentioned Rep. Suzan DelBene, whom Pelosi said was instrumental in the passage of a US$280 billion bill aimed at boosting American manufacturing and research in semiconductor chips — an industry that Taiwan dominates and is vital for modern electronic

 

 

OPEC Plus agrees to increase oil production by paltry 100,000 bpd

OPEC Plus in its meeting today (Wednesday) agreed to raise oil output by 100,000 barrels per day (bpd), a quantity analysts say is an insult to US President Joe Biden. In his recent trip to Saudi Arabia, the producer group's leader, Biden had asked to pump more to help the United States and the global economy.

The increase, equivalent to 86 seconds of daily global oil demand, follows weeks of speculation that Biden's trip to the Middle East and Washington's clearance of missile defence system sales to Riyadh and the United Arab Emirates will bring more oil to the world market.

"That is so little as to be meaningless, from a physical standpoint, it is a marginal blip. As a political gesture, it is almost insulting," said Raad Alkadiri, Managing Director for energy, climate, and sustainability at Eurasia Group.

The increase of 100,000 bpd will be one of the smallest since OPEC quotas were introduced in 1982, OPEC data shows.

The Organization of the Petroleum Exporting Countries and its allies, led by Russia, a group known as OPEC Plus that was formed in 2017, had been increasing production by about 430,000 to 650,000 bpd a month.

They had struggled to meet full targets as most members have exhausted their output potential following years of under-investment in new capacity. Combined with disruption linked to Russia's invasion of Ukraine in February, the lack of spare supply has driven up energy markets and spurred inflation.

With US inflation around 40-year highs and Biden's approval ratings under threat unless gasoline prices fall, the president travelled to Riyadh last month to mend ties with Saudi Arabia, which collapsed after the murder of journalist Jamal Khashoggi four years ago.

Saudi de-facto ruler, Crown Prince Mohammed bin Salman, whom Western intelligence accused of being behind the Kashoggi murder - which he denies - also travelled to France last month as part of efforts to rebuild ties with the West.

On Tuesday, Washington approved US$5.3 billion worth of defensive missile system sales to the UAE and Saudi Arabia but it has yet to roll back its ban on offensive weapon sales to Riyadh.

OPEC Plus, which will next meet on September 05, 2022, said in a statement that limited spare capacity requires it to be used with great caution in response to severe supply disruptions. It also said a chronic lack of investment in the oil sector will impact adequate supply to meet growing demand beyond 2023.

Sources within OPEC Plus, speaking on condition of anonymity, also cited a need for cooperation with Russia as part of the wider OPEC Plus group.

Benchmark Brent oil futures jumped by around US$2 per barrel after OPEC's decision to trade close to US$101 per barrel.

Shortly after Russia's invasion of Ukraine, which Moscow terms a "special military operation", oil prices rose to their highest in 14 years.

By September, OPEC+ was meant to have wound down all of the record production cuts it implemented in 2020 in response to the impact of the pandemic.

By June this year, OPEC Plus production was almost 3 million barrels per day below its quotas as sanctions on some members and low investment by others crippled its ability to boost output. Only Saudi Arabia and the UAE are believed to have some spare capacity.

French President Emmanuel Macron has said he had been told that Saudi Arabia and the UAE had very limited ability to increase oil production.

 

Pelosi visits Taiwan in utter disregard to Chinese warnings

More than 30 years ago, Nancy Pelosi angered China's government by showing up in Tiananmen Square and unfurling a banner honoring dissidents killed in the 1989 protests.

On Tuesday, August 02, 2022, as speaker of the House of Representatives, Pelosi disregarded China's fiery warnings and landed in Taiwan to support its government and meet with human rights activists.

Pelosi's trip to Taiwan capped her decades as a leading US critic of the Beijing government, especially on rights issues, and underscores the long history of the US Congress taking a harder line than the White House in dealings with Beijing.

Second in line for the presidency after Vice President Kamala Harris, Pelosi became the most senior US politician to travel to Taiwan since then-Speaker Newt Gingrich in 1997. She led a delegation of six other House members.

In 1991, two years after China's bloody crackdown on pro-democracy demonstrations, Pelosi and two other US lawmakers unfurled a banner in Tiananmen reading, "To those who died for democracy in China."

In 2015, she took a group of House Democrats to Tibet, the first such visit since widespread unrest in 2008. Pelosi has regularly spoken out about human rights issues in Tibet and has met the Dalai Lama, whom Beijing reviles as a violent separatist.

China views visits by US officials to Taiwan as sending an encouraging signal to the island's pro-independence camp. Washington does not have official diplomatic ties with Taiwan but is legally bound to provide it with the means to defend itself.

Kharis Templeman, a Taiwan expert at Stanford University's Hoover Institution, said Pelosi, who is 82, would be looking to cement her legacy, while signaling support for Taiwan against pressure from Beijing.

"And what better person to send that signal than the speaker of the House herself? So she's in a very powerful symbolic position to take a stand against the CCP," Templeman said, referring to the Chinese Communist Party.

Beijing considers Taiwan part of its territory and has never renounced using force to bring the island under its control. Taiwan rejects China's sovereignty claims and says only its people can decide its future.

Chinese foreign ministry spokesman Zhao Lijian said a trip would lead to "very serious developments and consequences."

Analysts said Beijing's response was likely to be symbolic. "I think China has tried to signal that their reaction would make the US and Taiwan uncomfortable, but would not cause a war," said Scott Kennedy, a China analyst at Washington's Center for Strategic and International Studies.

Congress has long taken a harder line on Taiwan than the White House, no matter whether Democrats, such as President Joe Biden and Pelosi, or Republicans are in charge.

Republicans supported Pelosi's trip. "Any member that wants to go, should. It shows political deterrence to President Xi," Representative Michael McCaul, the top Republican on the House Foreign Affairs Committee, told NBC News. McCaul said he was invited to join Pelosi's Asia trip but was unable to do so.

The executive branch takes ultimate responsibility for foreign policy but relations with Taiwan are one area where Congress wants influence. The Taiwan Relations Act, which has guided relations since 1979, passed Congress with an overwhelming majority after lawmakers rejected a proposal from then-President Jimmy Carter as too weak.

Democrats and Republicans in the US Senate are working on a bill that would overhaul that policy, including by increasing military support for Taiwan and expanding Taipei's role in international organizations.

Pelosi's trip and Beijing’s reaction have pushed the White House to once again express - including in a call between Biden and Chinese President Xi Jinping last week - that it has no desire to change the status quo.

Biden cast doubt publicly on the wisdom of the trip last month in a rare break with Pelosi, a close ally.

"I think that the military thinks it's not a good idea right now, but I don't know what the status of it is," Biden told reporters.

Pelosi's office refused ahead of the visit to rule out or confirm a possible stop by the speaker, citing security concerns typical for top US officials.

Pelosi announced on Sunday that she was leading a congressional delegation to Singapore, Malaysia, South Korea and Japan "to reaffirm America's strong and unshakeable commitment to our allies and friends in the region."

US defense officials played down the risk of China's military interfering with Pelosi's visit, but they were worried that an accident could spiral into a larger conflict.

 

Finding reasons behind the US support for war in Ukraine

Biden Administration could have avoided pushing Ukraine into war in the first place by not inviting Russian immediate neighbor to join NATO, but it chose the war. Many are of the view that it was not for any love for the people of Ukraine.

Is it because it is a country populated by white people? In 1994, President Clinton did nothing while genocide of Tutsi ethnic Rwandans was going on in Rwanda resulting in the deaths of some 500,000 to 662,000. Was that utter neglect because those were black people?

Or is it because there is a considerable number of Ukrainians living in the United States who would vote for Biden’s reelection in 2024?

Or is it because usually a war president gets reelected?

Or was it that Biden wanted to look “macho”, a president who cowed down Russia?

Or are Biden administration and the Pentagon pursuing the policy suggested by recent Rand Corporation thesis to break up Russia by weakening it by this brutal war?

Or are he and the democrats paying back the ‘defense’ contractors—for their donations to the Democrats during elections-- with billions of dollars in profit by this war?

The Rand Corporation’s April 2019 article on Russia recommends that we should overextend and weaken Russia by directly addressing its vulnerabilities, anxieties, and strengths, exploiting areas of its weakness while undermining Russia’s current advantages.

Further it states that “Russia’s greatest vulnerability, in any competition with the United States is its economy.” It seems the reason; United States has embarked upon provoking Russia to invade Ukraine.

United States is using double edged sword: 1) weakening Russia militarily by this proxy war and 2) weakening Russia economically by brutal sanctions ever imposed on a country.

The US administration government has doled out more than US$54 billion in arms and other categories. It is anticipated that more will come as the war drags on.

These billions in donation to Ukraine, a country that is 9,181 kilometers away from the United States and has no strategic value to the United States.

These billions are not coming from president or politicians; this is taxpayers’ money. The taxpayers must ask the government, why to donate such huge amounts to a country which has done nothing for America?

President Biden’s son, Hunter Biden supposedly made US$11 million from 2013 to 2018, being made member of Board of Directors of Ukraine gas company, Burisma, though he had no knowledge of gas production, refining or transportation.

Biden, Nancy Pelosi, Michell McConnel, Jill Biden and others went and paid visit to Zelensky and his wife. Why so much love and respect for Ukraine and its president?

The US provocation of Russia resulting in this brutal but avoidable war will go down in history as one the most irresponsible and reckless act committed by the United States, a foreign policy blunder that could trigger a nuclear war between Russia and the United States.

 

United States targets Chinese and UAE firms

According to a Reuters report, the United States on Monday imposed sanctions on Chinese and other firms it said helped to sell tens of millions of dollars' in Iranian oil and petrochemical products to East Asia as it seeks to raise pressure on Tehran to curb its nuclear program.

The US Treasury and the US State Departments have imposed sanctions on a total of six companies, four based in Hong Kong, one in Singapore, and one in the United Arab Emirates (UAE) in actions that were announced in separate statements.

The Treasury accused Persian Gulf Petrochemical Industry Commercial Co. (PGPICC), one of Iran's largest petrochemical brokers, of using the firms to facilitate the sale of Iranian petroleum and petrochemical products to East Asia.

The Treasury targeted UAE-based Blue Cactus Heavy Equipment and Machinery Spare Parts Trading, which it said helped sell millions of dollars of Iranian-origin petroleum products to Hong Kong-based Triliance Petrochemical Company, which has previously been sanctioned by the United States.

It also targeted Hong Kong-based Farwell Canyon HK and Shekufei International Trading Company for facilitating such sales for onward shipment to buyers in East Asia.

The Treasury accused PGPICC of using the firms' bank accounts, along with those of Hong Kong and Malaysia-based PZNFR Trading, to collect millions of dollars in proceeds.

Separately, the State Department sanctioned Singapore-based Pioneer Ship Management for allegedly managing a vessel that carried Iranian petroleum products and Hong Kong-based Golden Warrior Shipping Company, for alleged transactions related to Iranian oil and petroleum products.

The actions freeze US-based assets and generally bar Americans from dealing with them. Others that engage in certain transactions with the targeted firms also risk being sanctioned.

The steps represent the third round of US-Iran related sanctions against Chinese firms in the last two months.

Since taking office in 2021, US President Joe Biden has been loath to sanction Chinese entities engaged in oil trade with Iran due to hopes of securing an agreement to revive the 2015 Iran nuclear deal.

Efforts to resurrect the deal - under which Iran had curbed its nuclear program in exchange for relief from US and other sanctions - have so far failed, leading Washington to look for other ways to increase pressure on Tehran.

"The United States continues to pursue the path of diplomacy to achieve a mutual return to full implementation of the Joint Comprehensive Plan of Action," the Treasury's Under Secretary for Terrorism and Financial Intelligence, Brian Nelson, said in the statement, referring to the 2015 deal by its formal name.

"Until such time as Iran is ready to return to full implementation of its commitments, we will continue to enforce sanctions on the illicit sale of Iranian petroleum and petrochemicals."

Reacting to the new sanctions, Iran's Foreign Ministry spokesperson Nasser Kanaani said in a statement that Iran will respond decisively and firmly to the White House's continuation of sanctions.

Ship carrying 26,000 tons corn leaves Ukraine

According to The Joint Co-ordination Centre (JCC) of the Black Sea Grain Initiative, Razoni sailed from the port of Odesa today in the early hours, carrying 26,000 tons of corn destined for Lebanon.

Ukraine Minister for Infrastructure, Alexander Kubrakov, said 16 ships have been blockaded in Odesa since the start of the war and are awaiting their turn to sail.

 “In parallel, we will receive applications for the arrival of new vessels to load agricultural products,” said Kubrakov.

JCC was set up to co-ordinate the agreement between Russia, Ukraine and the UN to facilitate the safe export of Ukraine’s large grain stocks to the world market—the Black Sea Grain Initiative. JCC comprises representatives from Ukraine, Russia, Turkey and the UN.

The shipment aboard Razoni is expected to arrive in Turkish waters for inspection on August 02, 2022, before sailing to its final destination, Tripoli.

Under the terms of Black Sea Grain Initiative, co-ordinates have been established to create a Humanitarian Maritime Corridor. The details of the corridor have been distributed and the JCC requested participants to ensure their militaries are aware of the vessel’s passage and its right to safety.

“Today Ukraine, together with partners, takes another step to prevent world hunger,” said Ukraine Minister for Infrastructure Alexander Kubrakov.

“Unlocking ports will provide at least US$1 billion in foreign exchange revenue to the economy and an opportunity for the agricultural sector to plan for next year.”

Signed on July 22, 2022, the 120-day deal allows for the export of grain from western Ukraine ports Yuzhne, Chornomorsk, and Odesa, ports which accounted for 65% of Ukraine’s total grain exports over the past five years, according to Bimco.

While the ports historically account for almost two-thirds of grain exports, volume will undoubtedly be limited by various impacts of Russia's invasion of Ukraine.

 “With this deal, the UN hopes to increase monthly grain exports from Ukraine by five million tons. However, since over the past five years, these three ports have not ever handled such a high amount of grain, meeting this target could prove to be a challenge,” said Niels Rasmussen, Chief Shipping Analyst at Bimco.

“Even if port logistics accelerate to expedite exports, the need to escort ships in and out of the ports is likely to cause some congestion.” 

There are also questions over whether seafarers, operators, ship owners, and insurers will be willing and able to work in the region.

Ukraine is a significant producer of grains and oilseeds, with arable land accounting for around 55% of its land area according to the US Department for Agriculture (USDA) and agriculture accounting for 41% of Ukraine’s total exports by value in 2021.

Some 22 million tons of grain are stranded in Ukraine ready for export, and a further export surplus of 25 million tons is expected from the 2022 harvest. There is an urgent need to move grain; with the wheat harvest underway and corn harvest to follow in September, stored grain needs to be exported swiftly to make room for the new crop.

“A significant obstacle to Ukrainian grain exports will be the voyage risk and corresponding insurance premiums. For the shipping of Ukrainian grain to be attractive, high rates will be necessary to mitigate risk-related expenses,” said Rasmussen. “Russia’s recent missile strikes in ports such as Odesa will add to the insecurity and uncertainty of operating in the Black Sea.” 

The impact of the war in Ukraine has hit production for key agricultural exports. Usually the world’s largest producer and exporter of sunflower meal and oil, Ukraine’s sunflower meal exports are forecast to fall from almost 66% of global exports to 40%, and sunflower oil exports are forecast down from almost half of global exports to 35%.

 “Due to limited global supply of wheat and maize, a return of Ukrainian grain to the global market would positively impact the Panamax, Supramax and Handysize segments. Additionally, the boost in Ukrainian exports would help combat inflation and food insecurity, particularly in emerging economies, and help bring needed stability to the global economy,” said Bimco.

 

Pakistan: Strategy for Navigating FY23

Through a joint statement issued by Ministry of Finance and State Bank of Pakistan, all the stakeholders and public in general has been assured that the present trauma will ease. While one may not agree with some of the points, this is an official strategy and only wait and see stance could be adopted.

Pakistan’s problems are temporary and are being forcefully addressed

Pakistan’s foreign exchange reserves have fallen since February as foreign exchange inflows have been outpaced by outflows. The inflows mainly comprise of multilateral loans from the IMF, World Bank and ADB; bilateral assistance in the form of deposits and loans from friendly countries like China, Saudi Arabia, and the UAE; and commercial borrowing from foreign banks and through the issuance of Eurobonds and Sukuks. The paucity of inflows has happened in large part due to the delay in completing the next review of the IMF program, which has lingered since February due to policy slippages. Meanwhile, on the outflows side, debt servicing on foreign borrowing has continued as repayments on these debts have been coming due over this period.

At the same time, the exchange rate has come under significant pressure, especially since mid-June. It has been driven by general US dollar tightening, a rise in the current account deficit (exacerbated by a heavy energy import bill in June), the decline in foreign exchange reserves, and worsening sentiment due to uncertainty about the IMF program and domestic politics.

However, important developments have happened recently that will address both of these temporary issues. On July 13, the critical milestone of a staff-level agreement on completing the next IMF review was reached. As of today, all prior actions for completing the review have been met and the formal Board meeting to disburse the next tranche of US$1.2 billion is expected in a couple of weeks. At the same time, macroeconomic policies—both fiscal policy and monetary policy—have been appropriately tightened to reduce demand-led pressures and rein in the current account deficit. Finally, the government has clearly announced that it intends to serve out the rest of its term until October 2023 and is ready to implement all the conditions agreed with the Fund over the remaining 12 months of the IMF program.

In FY23, Pakistan’s gross financing needs will be more than fully met under the ongoing IMF program

The financing needs stem from a current account deficit of around US$10 billion and principal repayments on external debt of around US$24 billion.

In order to bolster Pakistan’s foreign exchange reserves position, it is important for Pakistan to be slightly over-financed relative to these needs.

As a result, an extra cushion of US$4 billion is planned over the next 12 months. This funding commitment is being arranged through a number of different channels, including from friendly countries that helped Pakistan in a similar way at the beginning of the IMF program in June 2019.

Important measures have been taken to contain the current account deficit

In addition to high global commodity prices, the large current account deficit in FY22 was driven by rapid domestic demand (growth reached almost 6 percent for two consecutive years leading to overheating of the economy), artificially low domestic energy prices due to the February subsidy package, an unbudgeted and procyclical fiscal expansion, and heavy energy imports in June to minimize load-shedding and build inventories.

To contain this deficit going forward, the policy rate was raised by 800 basis points, the energy subsidy package has been reversed, and the FY23 budget targets a consolidation of nearly 2.5 percent of GDP, centered on tax increases while protecting the most vulnerable. This will help cool domestic demand, including for fuel and electricity.

In addition, temporary administrative measures have been taken to contain the import bill, including requiring prior approval before importing automobiles, mobile phones and machinery. These measures will be eased as the current account deficit shrinks in the coming months.

These measures are working, the import bill fell significantly in July, as energy imports have declined and non-energy imports continue to moderate

Foreign exchange payments in July were significantly lower than in June. This is true for both oil and non-oil payments. Altogether, payments were a sustainable US$6.1 billion in July compared to US$7.9 billion in June.

The latest trade data indicate that non-oil imports continue to fall. Specifically, non-oil imports fell by 5.7%QoQ during Q4 FY22. They are expected to reduce further going forward.

Looking ahead, a considerable slowdown has been witnessed in LC opening in recent weeks, again for both oil as well as non-oil commodities. Based on market reports, there was an 11%MoM decline in Oil Marketing Companies sales volume in June.

After the surge in energy imports in June, a stock of diesel and furnace oil sufficient for 5 and 8 weeks, respectively, is now available in the country, much higher than the normal range of 2 to 4 weeks in the past. This implies a lower need for petroleum imports going forward.

With the recent rains and storage of water in the dams, hydroelectricity is also likely to increase and need to generate electricity on imported fuel is expected to decline going forward.

As a result of these trends, the import bill is likely to shrink going forward and should begin to manifest itself more forcefully in lower FX payments over the next 1-2 months.

Overall, imports are expected to decline in coming months due to a decline in global commodity prices, the higher oil stock, the unfolding impact of higher domestic prices of petroleum products, adjustments in electricity and gas tariffs, the removal of tax exemptions under the FY23 budget, administrative measures taken to curtail imports, and the lagged impact of the monetary and fiscal tightening that has been undertaken.

The Rupee has overshot temporarily but it is expected to appreciate in line with fundamentals over the next few months

Around half of the Rupee depreciation since December 2021 can be attributed to the global surge in the US dollar, following historic tightening by the Federal Reserve and heightened risk aversion.

Of the remaining half, some is driven by domestic fundamentals, in particular, the widening of the current account deficit, especially in the last few months. As noted above, the deficit is expected to narrow going forward as the temporary surge in the import bill is brought under control. As this happens, the Rupee is expected to gradually strengthen.

The remaining depreciation has been overdone and driven by sentiment. The Rupee has overshot due to concerns about domestic politics and the IMF program. This uncertainty is being resolved, such that the sentiment-driven part of the Rupee depreciation will also unwind over the coming period.

Where the market has become disorderly, the State Bank has continued to step in through sales of US dollars to calm the markets and will continue to do so, as needed in the future. Strong steps to counter any speculation have also been taken, including close monitoring and inspections of banks and exchange companies. Further additional measures will be taken as situation warrants.

Rumors that a particular level of the exchange rate has been agreed with the IMF are completely unfounded. The exchange rate is flexible and market-determined, and will remain so, but any disorderly movements are being countered.

Going forward, as the current account deficit is curtailed and sentiment improves, we fully expect the Rupee to appreciate. Indeed, this was the experience during the beginning of the IMF program in 2019, when the Rupee strengthened considerably after a period of weakness in the lead-up to the program.

Clearly, the Rupee can overshoot temporarily as it has done recently. However, it moves both ways over time. We expect this pattern to re-assert itself in the coming period. As a result, the Rupee should strengthen in line with improved fundamentals in the form of a smaller current account deficit as well as stronger sentiment.

Beirut silo collapses ahead of blast anniversary

Part of the grain silos at Beirut Port collapsed on Sunday just days before the second anniversary of the massive explosion that damaged them, sending a cloud of dust over the capital and reviving traumatic memories of the blast that killed more than 215 people. There were no immediate reports of injuries.

Lebanese officials warned last week that part of the silos - a towering reminder of the catastrophic August 04, 2020 explosion - could collapse after the northern portion began tilting at an accelerated rate.

"It was the same feeling as when the blast happened, we remembered the explosion," said Tarek Hussein, a resident of nearby Karantina area, who was out buying groceries with his son when the collapse happened. "A few big pieces fell and my son got scared when he saw it," he said.

A fire had been smoldering in the silos for several weeks which officials said was the result of summer heat igniting fermenting grains that have been left rotting inside since the explosion.

The 2020 blast was caused by ammonium nitrate unsafely stored at the port since 2013. It is widely seen by Lebanese as a symbol of corruption and bad governance by a ruling elite that has also steered the country into a devastating financial collapse.

One of the most powerful non-nuclear blasts on record, the explosion wounded some 6,000 people and shattered swathes of Beirut, leaving tens of thousands of people homeless.

Ali Hamie, the minister of transport and public works in the caretaker government, told Reuters he feared more parts of the silos could collapse imminently.

Environment Minister Nasser Yassin said that while the authorities did not know if other parts of the silos would fall, the southern part was more stable.

The fire at the silos, glowing orange at night inside a port that still resembles a disaster zone, had put many Beirut residents on edge for weeks.

The government took a decision in April to destroy silos, angering victims' families who wanted them left to preserve the memory of the blast. Parliament last week failed to adopt a law that would have protected them from demolition.

Citizens' hopes that there will be accountability for the 2020 blast have dimmed as the investigating judge has faced high-level political resistance, including legal complaints lodged by senior officials he has sought to interrogate.

Prime Minister-designate Najib Mikati has said he rejects any interference in the probe and wants it to run its course.

However, reflecting mistrust of authorities, many people have said they believed the fire was started intentionally or deliberately not been contained.

Divina Abojaoude, an engineer and member of a committee representing the families of victims, residents and experts, said the silos did not have to fall.

"They were tilting gradually and needed support, and our whole goal was to get them supported," she told Reuters.

"The fire was natural and sped things up. If the government wanted to, they could have contained the fire and reduced it, but we have suspicions they wanted the silos to collapse."

Earlier this month, the economy minister cited difficulties in extinguishing the fire, including the risk of the silos being knocked over or the blaze spreading as a result of air pressure generated by army helicopters.

Fadi Hussein, a Karantina resident, said he believed the collapse was intentional to remove "any trace of August 04, 2020".

"We are not worried for ourselves, but for our children, from the pollution," resulting from the silos' collapse, he said, noting that power cuts in the country meant he was unable to even turn on a fan at home to reduce the impact of the dust.

Nancy Pelosi sets off on Asia tour

According to South China Morning Post, US House Speaker Nancy Pelosi has begun her anticipated trip to Asia, with her office naming four destinations but making no mention of Taiwan. 

This comes amid more stormy warnings from Beijing amid heightened tensions over her planned visit to the island.

Pelosi, No 3 in the line of US presidential succession, is leading a six-member congressional delegation to Singapore, Malaysia, South Korea and Japan, according to a statement released by her office on Sunday.

The statement skipped any mention of Taiwan, after days of intense speculation about a likely stop there fuelled tensions, with Beijing calling it a provocation and warning Washington against playing with fire.

“In Singapore, Malaysia, South Korea and Japan, our delegation will hold high-level meetings to discuss how we can further advance our shared interests and values, including peace and security, economic growth and trade, the Covid-19 pandemic, the climate crisis, human rights and democratic governance,” the statement quoted Pelosi as saying.

“America is firmly committed to smart, strategic engagement in the region, understanding that a free and flourishing Indo-Pacific is crucial to prosperity in our nation and around the globe,” the 82-year-old Democratic lawmaker said.

Beijing regards Taiwan to be a breakaway province, to be reunited by force if necessary, and warns against any official exchange with the self-governed island.

It earlier said Pelosi’s planned trip to Taiwan was a move to support Taiwan independence, in violation of one-China policy, followed by the United States.

On Thursday, Biden and China’s Xi Jinping spoke on the phone for over two hours. During the call, Biden tried to reassure Xi that US policy towards Taiwan has not changed.

“On Taiwan, President Biden emphasized that US policy has not changed and that the US strongly opposes unilateral efforts to change the status quo or undermine peace and stability across the Taiwan Strait,” an official readout on the White House website said.

After the leaders’ phone call, China’s Foreign Ministry quoted Xi as telling Biden that those who play with fire will perish by it and that they hoped the United States will be clear-eyed about this.

However, Pelosi indicated on Friday that she will be on a trip to Asia, but did not mention Taiwan. “I am very excited if we were to go to the countries that you will hear about along the way,” she said, Reuters reported.

White House spokesman John Kirby said, “Where she (Pelosi) is going to go and what she is going to do is up to the speaker to speak to.”

However, he added that the United States has not observed any signs of a specific military threat from China. “(We have) seen no physical, tangible indications of anything untoward with regard to Taiwan,” Kirby said.

  

United States remains adamant at not releasing frozen Afghan assets

Please allow me to begin my today’s blog with the Iranian indictment, “United States is the biggest terrorist in this world”. The United States is often accused of killing of hundreds and thousands of people every year in proxy wars or through direct assaults. 

It played ‘the game of death’ in Afghanistan for four decades. After facing the defeat in August last year, it may have pulled its troops from Afghanistan but it is still making lives of Afghans miserable on one or the other pretext.

It is a fact that the United States has neither recognized the Taliban government nor allows other countries to recognize their government is Afghanistan. On top of all it has frozen Afghan foreign exchange reserves. The acts of United States tantamount to worst kind of aggression against Afghans, as the country find it almost impossible to import even basic necessities due to non-availability of foreign exchange.

To maintain the US hegemony in Afghanistan, Secretary of State Antony Blinken has launched the US-Afghan Consultative Mechanism (USACM), which would enable Afghan citizens to communicate directly with American policymakers.

Addressing the launching ceremony, the top US diplomat said that besides Pakistan, the Organization of Islamic Cooperation, Qatar and Turkey, and others were also backing US efforts to convince the Taliban to reverse their decision to keep Afghan girls out of school.

The new platform — USACM — is aimed at bringing together Afghan women, journalists, and at-risk ethnic and religious communities with the representatives of the US State Department. It will facilitate regular engagement with the US government on issues ranging from human rights documentation to women in Islam.

With USACM’s launch, “We are taking these relationships to the next level. That’s why I’m so pleased about today,” Secretary Blinken said. He identified the group’s priorities as supporting income-generating activities for Afghan women; strategizing ways to help Afghan human rights monitors safely document abuses, and devising new methods to promote religious freedom.

The United States has discussed with Taliban officials the possible release of Afghan central bank’s assets frozen after the fall of Kabul in August last year. The two sides discussed ongoing efforts to enable the US$3.5 billion Afghan central bank reserves to be used for the benefit of the Afghan people.

However, in nearly one year, the US administration has failed in addressing the urgent humanitarian situation in Afghanistan.

To further complicate the situation a meeting, involving Special Representative for Afghanistan Thomas West and Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson, took place on Wednesday in Tashkent. The meetings took place after the conclusion of the Tashkent Conference on Afghanistan that Uzbekistan hosted on July 26.

Media reports on the meeting claimed that the talks had made some progress and the US and Taliban officials had exchanged proposals for unfreezing the assets. But some differences remained unresolved.

One of the key differences was over the Taliban’s refusal to replace the bank’s top political appointees, “one of whom is under US sanctions as are several of the movement’s leaders,” one of the reports added.