European plan to shield households from soaring energy costs

The European countries have been lured by United States to supply more and more lethal arms to Ukraine and forced to stop buying oil and gas from Russia. Reportedly at present citizens of these countries are facing a sharp rise in power bills driven by sky-rocketing gas prices.

According to a Reuters report, an effort is being made to understand what Britain and other European Union member states are doing to protect the consumers.

Britain

Britain has a price cap on the most widely used household energy contracts. A new cap applicable from October will be announced on August 26. The forecasting group Cornwall Insight estimates that average British annual bills for gas and electricity will jump to 3,582 pounds in October and 4,266 pounds in January. Earlier this year, the price cap was 1,277 pounds.

The government is facing growing pressure to provide more support to households struggling with energy bills. The major fiscal decisions will be made by the new prime minister. The Conservative Party leadership contest between Foreign Secretary Liz Truss and former finance minister Rishi Sunak runs until September 05, 2022.

Truss has said she would apply a temporary moratorium on environmental and social levies added to consumers' electricity bills.

Sunak has said more support would be needed to help households through the winter, and he would act as soon as it is confirmed how much bills would be increasing by. 

In May, when Sunak was finance minister, the government set out a 15 billion pound (US$18.17 billion) support package to help households. Every household will receive a 400 pound credit to their energy bills from October.

More than 8 million low-income households in receipt of state benefits are also being given a further one-off payment of 650 pounds. Pensioners and disabled people will also received additional help.

Bulgaria

Bulgaria in May approved a 2 billion levs ($1.1 billion) package aimed at shielding companies and low-income consumers from the surge in energy and food prices caused by the Ukraine conflict.

The government decided to offer a discount of 0.25 levs per litre of petrol, diesel and liquefied petroleum gas and methane from July until the end of the year and scrap excise duties on natural gas, electricity and methane.

Denmark

In June, Danish lawmakers agreed a cash handout to the elderly and other measures totaling 3.1 billion Danish crowns ($439 million) to cushion the impact of soaring inflation and high energy prices. The measures also included a cut to a levy on power prices. Danish lawmakers have previously agreed to offer subsidies worth 2 billion Danish crowns ($288 million) to some 419,000 of the households hard hit by rising energy bills.

European Commission

European Union (EU) countries are largely responsible for their national energy policies, and EU rules allow them to take emergency measures to protect consumers from higher costs.

The EU in July asked its member states to reduce gas demand voluntarily by 15% this winter with the possible introduction of mandatory cuts.

The bloc also aims at refilling storage to 80% of capacity by November 01 to provide a buffer for peak demand winter months.

France

France has committed to capping an increase on regulated electricity costs at 4%. To achieve this government has ordered utility EDF, which is 80% state owned, to sell cheaper nuclear power to rivals.

New measures announced include helping companies with the cost of higher gas and power bills - bring the total cost of the government package to around 26 billion euros ($27 billion) Finance Minister.

French energy regulator CRE said last month it was proposing a 3.89% increase in regulated electricity sales tariffs (TRVE). The government has the ability to oppose the regulator's proposed rate hike and set new tariffs at a lower level or reject them outright.

Germany

German workers and families will receive extra cash, cheaper petrol and cut-price public transport tickets to help them shoulder soaring power and heating costs. Workers who pay income tax will receive a one-off energy price allowance of 300 euros as a supplement to their salaries. In addition, families will receive a one-time bonus of 100 euros per child, which doubles for low-income families.

Over the next few years, up to 13 billion euros per year will be allocated to subsidize renovations to old buildings and installing more energy-efficient windows, doors and heaters.

However, German households will have to pay almost 500 euros more a year for gas after a levy was set to help utilities cover the cost of replacing Russian supplies.

The levy, introduced by Germany in a bid to help Uniper and other importers cope with soaring prices, will be imposed from October 2022 will remain in place until April 2024.

Greece

Greece has spent about 7 billion euros in power subsidies and other measures since September last year to help households, businesses and farmers pay their electricity and gas bills.

Subsidies, which will be incorporated into power bills, will come in at about 1.136 billion euros in August and absorb up to 90% of the rise in monthly power bills for households and 80% of the rise for small and medium-sized firms.

Greece has imposed a cap on payments to power producers to reflect their real production costs, effectively scrapping a surcharge on electricity bills, with proceeds earmarked to help it finance power subsidies.

Hungry

Hungary has capped retail fuel prices at 480 forints ($1.23) per litre since last November, well below current market prices, to shield households from surging fuel prices. The measure led to such an increase in demand, which subsequently forced the government to curb eligibility for the scheme.

The sharp rises in European gas and electricity prices have also forced Hungary's government to curtail a years-long cap on retail utility bills, setting the limit of capped prices at national average consumption levels, with market prices applying above that.

Hungary has also imposed an export ban on fuels to ensure domestic supply needs and recently loosened logging regulations to meet increased demand for solid fuels, such as firewood.

Italy

Italy approved in early August a new aid package worth around 17 billion euros to help shield firms and families from surging energy costs and rising consumer prices.

The scheme, one of the last major acts by outgoing Prime Minister Mario Draghi before a national election next month, comes on top of some 35 billion euros budgeted since January to soften the impact of sky-high electricity, gas and petrol costs.

The government also intends to extend a 200 euro bonus paid in July to low and middle-income Italians who did not previously receive it.

A cut in excise duties on fuel at the pump scheduled to expire on August 21 is set to be extended to September 20.

Italy is also promoting a cap on gas prices at a European level to help contain price spikes.

The Netherlands

The Netherlands has cut energy taxes for its 8 million households.

Norway

Norway has been subsidizing household electricity bills since December last year and currently covers 80% of the portion of power bills above a certain rate. This is planned to go up to 90% from September, with the scheme to remain in place until at least March 2023.

Poland

Poland has announced tax cuts on energy, petrol and basic food items, as well as cash handouts for households. It has also extended regulated gas prices for households and institutions like schools and hospitals until 2027. The government agreed in July on a one-off payment of 3,000 zlotys to households to help them cover the rising cost of coal. Prime Minister Mateusz Morawiecki has said the total cost of curbing energy prices in Poland will amount to around 50 billion zlotys.

Romania

Romania's coalition government has implemented a scheme capping gas and electricity bills for households and other users up to certain monthly consumption levels and compensating energy suppliers for the difference. The scheme is supposed to be in place until end March 2023.

Romanian Prime Minister Nicolae Ciuca has estimated in February the support scheme will cost around 14.5 billion lei ($3.27 billion), but analysts now expect it to exceed 10 billion euros.

The leftist Social Democrats, parliament's biggest party and a part of the governing coalition, supports replacing the cap-and-subsidy scheme with regulated prices.

Spain

Spain has started to temporarily subsidize fossil fuel plants' power costs in a bid to bring down high prices in the short term while keeping a longer-term focus on building renewable capacity. The system is due to be in place until May 31, 2023. Spain also cut several taxes to reduce consumer bills.

Spain announced 16 billion euros in direct aid and soft loans to help companies and households weather sky-high energy prices.

Sweden

Sweden will compensate households worst hit by the surge in electricity prices, with the government setting aside 6 billion Swedish crowns ($605 million) for the measures.

Chinese ship allowed to dock in Sri Lanka port

Reportedly, Chinese research ship, The Yuan Wang 5 has been given permission to dock on the condition it would not carry out research while in Sri Lankan waters. The ship has been allowed to remain in the Chinese-run port until August 22. 

India had previously voiced concerns that the ship would be used to spy on its activities, said media reports.

Foreign security analysts quoted by Reuters describe the Yuan Wang 5 as one of China's latest generation space-tracking ships, used to monitor satellite, rocket and intercontinental ballistic missile launches.

Several Indian media reports described it as a dual-use spy ship. Shipping analytics websites call it a research and survey vessel.

One report by Indian news site NDTV said the government in Delhi was concerned about the possibility of the ship's tracking systems attempting to snoop on Indian installations while on its way to Sri Lanka.

Earlier in July, an Indian foreign ministry spokesman said the government was monitoring the ship's planned visit, adding that Delhi would protect its security and economic interests.

According to a Reuters report, India had lodged a verbal protest with the Sri Lankan government against the ship's visit.

Earlier this month, Sri Lanka's foreign ministry had asked China to defer the ship's port call, saying it needed to take further consultations.

China responded, saying it was completely unjustified for certain countries to cite so-called 'security concerns' to pressure Sri Lanka - though it did not name any specific country. Sri Lanka later announced that the vessel would be given permission to dock.

 

Oil prices take a dip on weak demand outlook

According to early morning reports, crude oil prices fell on Tuesday as bleak economic data from top crude buyer China renewed fears of a global recession. 

While Brent crude futures fell to US$94.37 a barrel by 0313 GMT, WTI crude futures dipped to US$88.97. Oil futures fell about 3% during the previous session.

China's central bank cut lending rates to revive demand as the economy slowed unexpectedly in July, with factory and retail activity squeezed by Beijing's zero-COVID policy and a property crisis.

"Commodities prices across the board were under pressure as China's July economic data painted a more downbeat growth picture than previously expected, which prompted renewed concerns on demand outlook," wrote Yeap Jun Rong, market strategist from IG Group in a note.

China's fuel product exports are expected to rebound in August to near a year high after Beijing issued more quotas, adding pressure to already-cooling refining margins.

Investors also watched talks to revive the 2015 Iran nuclear deal. More oil could enter the market if Iran and the United States accept an offer from the European Union, which would remove sanctions on Iranian oil exports, analysts said.

Iran responded to the European Union's final draft text to save a 2015 nuclear deal on Monday, an EU official said, but provided no details on Iran's response to the text. The Iranian foreign minister called on the United States to show flexibility to resolve three remaining issues.

In the United States, total output in the major US shale oil basins will rise to 9.049 million bpd in September, the highest since March 2020, the US Energy Information Administration (EIA) said in its productivity report on Monday.

Market participants awaited industry data on US crude stockpiles due later on Tuesday. Oil and gasoline stockpiles likely fell last week, while distillate inventories rose, a preliminary Reuters poll showed on Monday.

The premium for front-month WTI futures over barrels loading in six months stood at US$3.46 a barrel on Tuesday, the lowest level in four months, suggesting easing tightness in prompt supplies.

 

Trump authorized Israeli sovereignty in West Bank

According to The Jerusalem Post, former US president Donald Trump authorized then-prime minister Benjamin Netanyahu to annex parts of the West Bank.

In a three-page letter dated January 26, 2020, two days before Trump presented his Vision for Peace in the White House, he summarized some of its details. These included that Israel would be able to extend sovereignty to parts of the West Bank, as delineated in the map included in the plan if Netanyahu agreed to a Palestinian state in the remaining territory on that map.

Trump asked Netanyahu to adopt “the policies outlined in... the Vision [for peace] regarding those territories of the West Bank identified as becoming part of a future Palestinian state.”

In exchange for Israel implementing these policies, the US president continued, and formally adopted detailed territorial plans not inconsistent with the Conceptual Map. The letter did not delineate a timeline for sovereignty recognition.

Netanyahu’s response said that Israel would move forward with sovereignty plans in the coming days.

The letter calls into question the narrative set out in Breaking History: A White House Memoir, a new book by Trump's son-in-law and former senior adviser Jared Kushner.

In it, Kushner asserts that former US ambassador to Israel David Friedman went behind his and the president’s back and assured Bibi that he would get the White House to support annexation more immediately.

Friedman and Netanyahu viewed the matter differently, Netanyahu’s spokesman said, “The charge that Netanyahu surprised the president and his staff with an uncoordinated announcement... is utterly baseless.”

Trump's Special Representative for International Negotiations Jason Greenblatt said that during his time in the White House, he always understood from former Prime Minister Netanyahu that US recognition of the extension of Israel’s sovereignty over those areas intended to be part of Israel contemplated by the peace plan released by President Trump was necessary for Netanyahu to agree to our proposed peace plan.

David Friedman was part of most, perhaps all, of those discussions and I believe he understood that clearly as well. I was no longer working at the White House at the time the peace plan was released. 

A Trump administration source closely involved with the president's letter said, "It was a key part of Israel's acceptance of the Vision for Peace as the framework for negotiations with the Palestinians for America to accept sovereignty up front, as per the mapping process and the plan, and for all the Jewish communities in Judea and Samaria and the Jordan Valley to be included.

Trump said in his speech – which Kushner said he read and reviewed with the president before delivery, “The United States will recognize Israeli sovereignty over the territory that my vision provides to be part of the State of Israel.

Trump said Israel and the US would work together to convert the conceptual map into a more detailed and calibrated rendering so that recognition can be immediately achieved.

“We will also work to create a contiguous territory within the future Palestinian state for when the conditions for statehood are met, including the firm rejection of terrorism,” Trump said.

“You are recognizing Israel’s sovereignty over all the Jewish communities in Judea and Samaria, large and small alike,” he said. “Mr. President, because of this historic recognition, and because I believe your peace plan strikes the right balance where other plans have failed, I’ve agreed to negotiate peace with the Palestinians on the basis of your peace plan.

“Israel wants the Palestinians... to have a future of national dignity, prosperity, and hope. Your peace plan offers the Palestinians such a future. Your peace plan offers the Palestinians a pathway to a future state,” Netanyahu said.

“Israel wants the Palestinians... to have a future of national dignity, prosperity, and hope. Your peace plan offers the Palestinians such a future. Your peace plan offers the Palestinians a pathway to a future state.”

The prime minister also said, “We looks forward to working with you to achieve a peace that will protect Israel’s security, provide the Palestinians with dignity and their own national life, and improve Israel’s relations with the Arab world.”

Immediately after the speeches, Netanyahu said he would bring the extension of Israeli sovereignty over parts of the West Bank to a cabinet vote the following week. Then-ambassador to Israel David Friedman told the media that Israel could start work toward annexation the moment it completed its internal process.

In Friedman’s book, Sledgehammer, released earlier this year, the ambassador wrote that the Trump administration did not know that Netanyahu already had the Jordan Valley mapped out for annexation. Netanyahu’s spokesman said, the prime minister’s letter to Trump in advance of the White House event specified that he would move forward in a matter of days.

The Trump administration source involved with the letter said that the dispute was only whether sovereignty moves could be made within a few days or weeks. Kushner himself told journalists at the UN days after the plan was presented that the mapping teams will take a couple of months before annexation moves forward.

Kushner also repeatedly claimed in the book that he struggled to convince Bibi, a master negotiator, to agree to a compromise that would give tangible life improvements to the Palestinians."

In contrast, Netanyahu conceded that a Palestinian state would be established. In addition, Friedman said Netanyahu agreed not to allow Israeli construction in the areas earmarked for the Palestinians in the plan's map. 

Ukraine termed defaulter by S&P and Fitch

"Given the announced terms and conditions of the restructuring, and in line with our criteria, we view the transaction as distressed and tantamount to default," S&P said.

Global rating agencies Fitch and S&P lowered Ukraine's foreign currency ratings to selective default and restricted default as they consider the country's debt restructuring as distressed.

Earlier last week, Ukraine's overseas creditors backed the country's request for a two-year freeze on payments on almost US$20 billion in international bonds. The move will save Ukraine some US$6 billion on payments.

Fitch cut the country's long-term foreign currency rating to "RD" from "C," as it deems the deferral of debt payments as a completion of a distressed debt-exchange.

S&P also said the macroeconomic and fiscal stress stemming from Russia's invasion of Ukraine may weaken the Ukrainian government's ability to stay current on its local currency debt and lowered the Eastern European country's local currency rating to "CCC-plus/C" from "B-minus/B".

Battered by Russia's invasion, which started on February 24, Ukraine faces a 35% to 45% economic contraction in 2022 and a monthly fiscal shortfall of US$5 billion.

It may be recalled that in July Ukraine aimed to strike a deal up to US$20 billion program with the International Monetary Fund (IMF) before year-end to help shore up its war-torn economy, the country's central bank governor Kyrylo Shevchenko had told Reuters.

Shevchenko, speaking during his visit to London, also said he hoped to agree on a swap line with the Bank of England.

It was the first time Ukraine has put a number on the fresh financing it needs from the Washington-based lender. A US$20 billion program would be the second largest currently active loan from the IMF after Argentina.

The central bank chief said a new program should provide measures that will help stabilize the economy. That could ensure a return to pre-war conditions, such as a flexible exchange rate, no limits on the currency market, decreasing non-performing loans in the banking sector and a balanced fiscal policy.

The IMF's latest loan to Ukraine was a US$1.4 billion emergency financing support agreed in March - the equivalent of 50% of the country's quota in the fund.

Separately, Kyiv is now in talks with its international creditors over a freeze in debt payments to ease its liquidity crunch. Lately, Ukrainian energy firm Naftogaz became the country's first government entity to default since the start of the Russian invasion.

"I hope that Naftogaz, together with the ministry of finance of Ukraine, that they will find a solution," said Shevchenko.

Some relief on foreign exchange revenue and liquidity would also come from the deal agreed between Moscow and Kyiv to allow safe passage for grain shipments in and out of Ukrainian ports.

However, those revenues and shipments would only pick up in earnest next year, when under the central bank's "conservative" estimates exports could hit 5 million tons per month and generate approximately US$5 billion in 2023, Shevchenko said.

Speaking about the central bank's intervention in currency markets as well as its bond buying program, Shevchenko said both would continue for now, though the latter would cease as soon as the war ended.

He added that operating in times of war had seen a whole new host of vocabulary spring up, with expressions such as maturity of war - a term to describe the time frame of a debt instrument used in the context of the conflict.

 

  

US wages almost 400 military interventions

Since I have started writing blogs, one of my assertions has been that United States is the biggest warmonger as well initiator of regime change programs around the world. This agenda is aimed at serving producers of lethal arsenal in the United States as well foreign policy objectives.

The United States has waged nearly 400 military interventions since its founding in 1776, according to a new research published lately. According to the study by the Military Intervention Project, A New Dataset on US Military Interventions, 1776–2019, half of those conflicts and other uses of force occurred between 1950 and 2019. 

More than a quarter of them have taken place since the end of the Cold War. Out of the nearly 400 military interventions, 34% have been in Latin America and the Caribbean; 23% in East Asia and the Pacific region; 14% in West Asia and North Africa; and 13% in Europe and Central Asia.

The authors find that US interventions have increased and intensified in recent years. While the Cold War era (1946 – 1989) and the period between 1868 – 1917 were the most militaristically active for the United States, the post-9/11 era has already taken the third spot in all of US history and most of that military adventurism has been in West Asia. 

It says, “These interventions have only increased and intensified in recent years, with the US militarily intervening over 200 times after World War II and over 25% of all US military interventions occurring during the post-Cold War era.”

Until the end of the Cold War, US military hostility was generally proportional to that of its rivals. Since then, the US began to escalate its hostilities as its rivals deescalate it, marking the beginning of America’s more kinetic foreign policy.  

The study reads, “Some scholars have explained such increasing interventionist trends as part of the new norm of contingent sovereignty, which explicitly challenges the traditional principle of non-intervention in the internal affairs of other states. Particularly regarding the US, one perspective is that the country is evolving past its Cold War doctrine.”

The study notes, “US military interventions to promote geopolitical interests cannot explain the dynamics of the post-Cold War era. If the US primarily intervenes when its security interests are threatened, we expect the US to intervene less in an era void of peer competitors where fewer vital interests are arguably at stake.”

The authors point out that other researchers have asserted the US uses force abroad without a clear organizing principle and thus its military missions have had disastrous long-term and unintended consequences.

In 2018, a co-author said, “Current patterns of US military engagement as kinetic diplomacy, diplomacy solely through armed force,” the research says, in the past years.

While US Ambassadors are operating in one-third of the world’s countries, US special operators are active in three-fourths. 

A challenging aspect of measuring military interventions is how to define an intervention, the research notes. The study highlights that the definition of US military intervention may fall under any of the following categories.

The movement of regular troops or forces of one country inside another one in the context of some political issue or dispute. To separate higher intensity interventions from minor skirmishes, this definition excludes paramilitaries, government-backed militias, and other security forces that are not part of the regular uniformed military of a state. 

Similarly, “Events must be purposeful, not accidental.” Inadvertent border crossings are not included in this definition and neither are unintentional confrontations between planes or naval ships. The definition excludes soldiers engaging in exercises in a foreign land, transporting forces across borders, or on foreign bases. Furthermore, the definition categorizes international military interventions by temporal guidelines so that interventions are continuous if repeated acts occur within 6 months of one another.

Instances in which the United States has used its Armed Forces abroad in situations of military conflict or potential conflict or for other than normal peacetime purposes...Covert operations, disaster relief, and routine alliance stationing and training exercises are not included here, nor are the Civil and Revolutionary Wars and the continual use of US military units in the exploration, settlement, and pacification of the western part of the United States.

The political use of military force involving ground troops of either the US Army or Marine Corps in an active attempt to influence the behavior of other nations

Use of armed force that involves the official deployment of at least 500 regular military personnel (ground, air, or naval) to attain immediate term political objectives through action against a foreign adversary

Routine military movements and operations without a defined target like military training exercises, the routine forward deployment of military troops, non-combatant evacuation operations, and disaster relief should be excluded

Militarized interstate disputes are united historical cases of conflict in which the threat, display, or use of military force short of war by one member state is explicitly directed towards the government, official representatives, official forces, property, or territory of another state

 This recent pattern of international relations conducted largely through armed force, it noted, has increasingly targeted West Asia and Africa. These regions have seen both large-scale U.S. wars, as in Afghanistan and Iraq, and low-profile combat in nations such as Burkina Faso, Cameroon, the Central African Republic, Chad, and Tunisia.

The authors say “the U.S. has increased its military usage of force abroad since the end of the Cold War. Over this period the U.S. has preferred the direct usage of force over threats or displays of force, increasing its hostility levels while its target states have decreased theirs. Along the way, the regions of interest have changed as well. Up until World War II, the U.S. frequently intervened in Latin America and Europe,” but beginning in the 1950s, the U.S. shifted its focus to West Asia and the North Africa region.

The data comprises confirmed covert operations and low-profile interventions by Special Operations forces, however, it points out that US government secrecy and scrupulous sourcing standards of the public database it studied guarantees that the post-9/11 tally is an undercount.

The post-9/11 era appear to be the third most active for US interventions of relatively higher hostility levels. In this era, threats of force are absent, while the use of force has been overwhelmingly commonplace. Since 2000 alone, the US has engaged in at least 30 military interventions. 

Experts say that the Pentagon has likely used secretive authority to carry out combat beyond the scope of any authorization for the use of military force or permissible self-defense.

They point out that while secretive “127e” programs in Somalia and Yemen for instance overlap with well-known US military interventions, other uses of the authority, such as in Egypt and Lebanon, may not. The same goes for even lesser-known programs like “Section 1202”.  

US military conflicts have provided American arms manufacturers with ample opportunity to make a profit and prolong the country’s history of violence based on its founding. 

According to the Stockholm International Peace Research Institute (SIPRI), Global military expenditure is estimated to have been US$1,917 billion in 2019, the highest level since 1988. 

With a military expenditure of US$732 billion, the US remained by far the largest spender in the world in 2019, accounting for 38% of global military spending. The US spent almost as much on its military in 2019 as the next 10 highest spenders combined.

Today, SIPRI puts the cost of the US military at more than US$800 billion annually, accounting for almost 40% of global military spending.

 

India selling US dollar for UAE dirham

Reportedly Indian companies are switching from the US dollar to Asian currencies to pay for Russian coal imports. Steelmakers and cement manufacturers in India have been using the UAE dirham, Hong Kong dollar, Chinese yuan, and euro to pay for Russian coal in recent weeks.

Last month, Russia became India’s third-largest coal supplier after the South Asian giant dumped the greenback to secure deals, with imports surging to a record 2.06 million tons.

In June, Indian buyers paid for at least 742,000 tons of Russian coal using currencies other than the US dollar, equaling 44 percent of the 1.7 million tons of Russian imports that month.

Meanwhile, the Reserve Bank of India also recently approved payments for commodities in the Indian rupee, a move that could further boost bilateral trade with Russia.

Recent reports revealed that Moscow was calculating the value of oil exports to India in US dollars while requesting payment in dirhams, asking that payments be made to Russia’s Gazprombank via Mashreq Bank, its correspondent bank in Dubai.

India has increased purchases of Russian oil and coal since the start of the war in Ukraine, helping Moscow cushion the effect of western sanctions and allowing New Delhi to secure raw materials at a discount.

In early July, the Russian logistics company, RZD Logistics, announced the completion of the first transportation of goods via container trains from Russia to India through the eastern branch of the International North-South Transport Corridor (INSTC).

The INSTC, which links the Indian Ocean and Persian Gulf to the Caspian Sea via Iran, is a 7,200 kilometer-long, major international shipping route for Indo-Russian trade.

In the face of aggressive western sanctions, Russia has bolstered economic cooperation with several friendly nations. Iran and Turkey are currently working on implementing Russia’s Mir payment system into their economies.

Turkey also recently agreed to make partial payments for Russian gas in rubles, while European companies have reportedly been inquiring with Ankara about acting as a middle man to supply Russia with metals, as a way to overcome sanctions.

 

Pakistan a victim of tug of war among super powers

This year Pakistan is celebrating Independence Day, when the clouds of imminent default are getting thicker. While the people have complete faith in the economic resilience of the country, a lot needs to be done on war footings. 

To carve out its future strategy, a dispassionate review of nearly three-quarters of a century has to be done, find out the mistakes and develop a conviction that Pakistan is a sovereign state and not a colony of any global or regional super power.

It is an undeniable fact that since independence Pakistan has remained the focus of global and regional super powers. The country is termed a natural corridor for trade, gateway to Central Asia and landlocked Afghanistan.

The perception is getting credence often regimes are installed and toppled in Pakistan by the super powers to achieve their vested interest. This is evident from Pakistan fighting US-proxy war is Afghanistan for more than four decades and love and hate relationship with India.

At present Pakistan faces extremely volatile situation, which has become a threat for its own existence. Fighting a US proxy in Afghanistan has completely destroyed the economic and social fabric of the country. Pakistan is suffering from the influx of foreign militant groups getting funds and arms from different global operators.

Analysts say over the years Pakistan has been towing US foreign policy and military agenda, which has often offended Russia, China, India and Iran. To improve internal security Pakistan must revisit its foreign policy, particularly relationship with Afghanistan, India and Iran, enjoying common borders with the country. It may not be wrong to say that at present Pakistan doesn’t enjoy cordial relation with none of these countries.

Many Pakistanis believe that when Britain decided to take an exit from the subcontinent in 1947 it left a thorn, Kashmir. Since independence India and Pakistan have been living in constant state of war, spending billions of dollars annually on the purchase of conventional as well as non-conventional arms and have also attained the status of atomic powers. However, both the countries suffer from extreme poverty.

There seems no probability of reconciliation between the two countries because of presence of hawks on both the sides. Even the trade relations could not be normalized due to the lingering Kashmir dispute as Hindus are not ready for another division of Hindustan on the basis of religion.

Iran has been persistently enduring economic sanctions for more than four decades. Pakistan suffers from severe energy crisis but it is not allowed to construct Iran-Pakistan gas pipeline or even buy Iranian crude oil under food for oil program. Iran has often complaint that certain outfits, most notorious being Jundullah, having its base in Baluchistan province of Pakistan, are involved in cross border terrorism.

Pakistan offers the shortest and most cost effective route to landlocked Afghanistan, leading to Central Asian countries. Gwadar deep seaport has been constructed in Baluchistan province with the financial and technical assistance of China. India often raises its concerns on Chinese presence along Pakistan’s coastal belt. However, it is on record that India played a key role in the construction of Chabahar port in Iran as well as road and rail links up to Central Asia via Afghanistan.

Pakistanis completely fail to understand the duality of US policy. India was asked to withdraw itself from Iran-Pakistan-India gas pipeline project and also rewarded nuclear technology in return. However, it was not stopped from building port and supporting infrastructure in Iran.

 

 

 

Astarachay Bridge to enhance Iran Azerbaijan economic cooperation

Readers of this blog site may recall that the signing ceremony of memorandum of understanding (MOU) for cooperation in the construction of this bridge was covered on January 28 this year. Today an update is being presented, an evidence of the commitment and hard work of the people of both the countries.

Iranian Ambassador to Baku, Abbas Mousavi has said that completing the bridge over the Astarachay border river is going to diversify the modes of transportation between Iran and Azerbaijan and improve economic cooperation between the two countries.

“The completion of the bridge between Iran and Azerbaijan will boost business in both countries and result in diverse transportation (both railway and automobile) between the two sides,” Mousavi said on Wednesday on the sidelines of a visit to the bridge construction site.

Having a length of 89 meters and a width of 30 meters, this bridge aims to connect the international transit highways of the two countries (Baku-Rasht-Qazvin highways), the official explained.

According to the official, the transport ministers of the two countries are going to meet soon to discuss such joint projects and ways of expending transportation and transit cooperation.

“Also, a tripartite meeting between Iran, Azerbaijan and Russia will be held in the near future to review issues related to transit, customs, and the development of the North-South corridor,” Mousavi added.

Iran and Azerbaijan signed a memorandum of understanding (MOU) in late January for cooperation in constructing the bridge over the Astarachay border river.

The MOU was signed by Iranian Deputy Transport and Urban Development Minister Kheirollah Khademi and Azerbaijan’s Deputy Minister of Digital Development and Transport Rahman Hummatov in Baku on January 26.

The two neighbors had earlier announced the total investment made in the project to be 4.7 million euros.

Speaking in the signing ceremony of the mentioned MOU, Azeri Deputy Prime Minister Shahin Mustafayev said the construction of the bridge is scheduled to be completed by the end of 2022.

"The president and the government of the Republic of Azerbaijan attach special importance to the development of relations with the Islamic Republic of Iran, and the presidents of Iran and Azerbaijan expressed interest in further developing relations between the two countries in a cordial meeting in Ashgabat," the official said.

Noting that Azerbaijan and Iran have established deep relations in various areas including trade, economy, energy, customs, and investment, he said: "There are good opportunities between the two countries to implement joint projects in these fields."

Iranian Transport Minister Rostam Qasemi for his part called Azerbaijan the closest neighbor to Iran and said: "We hope that after the meeting of the presidents of the two countries, relations between the two nations will develop as much as possible."

 

 

Five Chinese state-owned companies opt to delist from New York Stock Exchange

According to a Reuters report, five Chinese state-owned companies, oil giant Sinopec and China Life Insurance said on Friday they would delist from the New York Stock Exchange, amid economic and diplomatic tensions with the United States.

Three other companies to follow are Aluminium Corporation of China, PetroChina and Sinopec Shanghai Petrochemical Co seeking delisting of their American Depository Shares this month.

These five, in May were flagged by the US securities regulator as failing to meet its auditing standards, will keep their listings in Hong Kong and mainland Chinese markets.

Beijing and Washington are in talks to resolve a long-running audit dispute that could see Chinese companies banned from US exchanges if they do not comply with US rules. Washington has long demanded complete access to the books of US-listed Chinese companies, but Beijing bars foreign inspection of audit documents from local accounting firms, citing national security concerns.

There was no mention of the auditing dispute in separate statements by the Chinese companies outlining their moves, which come amid heightened tensions after last week's visit to Taiwan by US House of Representatives Speaker Nancy Pelosi.

"These companies have strictly complied with the rules and regulatory requirements of the US capital market since their listing and made the delisting choice for their own business considerations," the China Securities Regulatory Commission (CSRC) said in a statement. The agency added that it would keep "communication open with relevant overseas regulatory agencies."

The oversight row, which has been simmering for more than a decade, came to a head in December when the Securities and Exchange Commission (SEC) finalized rules to potentially prohibit trading in Chinese companies under the Holding Foreign Companies Accountable Act. It said 273 companies were at risk.

Some of China's largest companies including Alibaba Group Holdings, JD Com and Baidu are among them. Alibaba said last week it would convert its Hong Kong secondary listing into a dual primary listing which analysts said could ease the way for the Chinese ecommerce giant to switch primary listing venues in the future.

In premarket trading Friday, US-listed shares of China Life Insurance and oil giant Sinopec fell 5.7% and 4.3% respectively. Aluminium Corporation of China dropped 1.7%, while PetroChina shed 4.3%. Sinopec Shanghai Petrochemical Co shed 4.1%.

A spokesperson for NYSE declined to comment. A spokesperson for the Public Company Accounting Oversight Board, the audit watchdog overseen by the SEC, did not immediately provide comment.

Market-watchers were split over what the delistings might mean for the audit deal, with some saying it was a bad sign.

"China is sending a message that its patience is wearing thin in the audit talks," said Kai Zhan, senior counsel at Chinese law firm Yuanda, who specializes in US capital markets.

The companies said their US traded share volume was small compared with those on their other major listing venues.

PetroChina said it had never raised follow-on capital from its US listing and its Hong Kong and Shanghai bases "can satisfy the company’s fundraising requirements" as well as providing "better protection of the interests of the investors."

Global fund managers holding US-listed Chinese stocks are steadily shifting towards their Hong Kong-traded peers, even as they remain hopeful the audit dispute will eventually be resolved, Reuters reported this week.

"These companies are very thinly traded with very small US market cap so it is not a loss for US capital markets," Brendan Ahern, CIO of Krane Funds Advisors, which has a New York-listed fund focused on Chinese tech plays, wrote in an email.

He and analysts said the delistings could pave the way for China to comply with the US requirements, since the five companies concerned likely have sensitive information China would not want exposed in an audit review.

"We see this as a positive sign. This is consistent with our view China will decide what companies would be allowed to be US-listed and thus subject to SEC's audit investigations," Jefferies analysts wrote in a note.

China Life and Chalco said they would file for delisting on August 22, with it taking effect 10 days later. Sinopec, whose full name is China Petroleum & Chemical Corporation and PetroChina said their applications would be made on August 29.

China Telecom, China Mobile and China Unicom were delisted from the United States in 2021 after a Trump-era decision to restrict investment in Chinese technology firms. That ruling has been left unchanged by the Biden administration amid continuing tensions.

 

US exports over 100 million gallons of ethanol

The United States exported 101.48 million gallons of ethanol and 1.01 million metric tons of distillers’ grains in June, according to data released by the USDA Foreign Agricultural Service on August 04. Exports of both products were up as compared to June 2021.

Ethanol is an organic chemical compound. It is a simple alcohol with the chemical formula C₂H₆O. Its formula can be also written as CH ₃−CH ₂−OH or C ₂H ₅OH, and is often abbreviated as EtOH. Ethanol is a volatile, flammable, colorless liquid with a characteristic wine-like odor and pungent taste.

Ethanol is naturally produced by the fermentation of sugars by yeasts or via petrochemical processes such as ethylene hydration. It has medical applications as an antiseptic and disinfectant. It is used as a chemical solvent and in the synthesis of organic compounds, and as a fuel source. Ethanol also can be dehydrated to make ethylene, an important chemical feedstock.

The 101.48 million gallons of ethanol exported in June was down when compared to the 147.06 million gallons exported in May, which was a four-year high, but up from the 82.09 million gallons exported during the same month of last year.

The US exported ethanol to more than 30 countries in June. Canada was the top destination for US ethanol at 41.2 million gallons, followed by South Korea at 13.64 million gallons and the UK at 12.02 million gallons.

The value of US ethanol exports was at US$324.77 million in May, down from US$410.39 million a month ago, but up from US$187 million in June 2021.

Total US ethanol exports for the first half of 2022 reached 827.39 million gallons at a value of US$2.25 billion, compared to 662.62 million gallons exported during the same period of 2021 at a value of US$1.27 billion.

The 1.01 million metric tons of distillers’ grains exported in June was up from both 966,108 metric tons in May and 938,280 metric tons in June 2021.

The US exported distillers’ grains to approximately three dozen countries in June. Vietnam was the top destination at 197,192 metric tons, followed by Mexico at 158,501 metric tons and Turkey at 109,819 metric tons.

The value of US distillers’ grains exports was at US$311.08 million in June, down slightly from US$311.85 million the previous month but up from US$248.47 million in June of last year.

Total US distillers’ grains exports for the first six months of the year reached 5.67 million metric tons at a value of US$1.67 billion, compared to 5.4 million metric tons exported during the same period of last year at a value of US$1.42 billion.

Lots of gas but no ships to carry

As the world’s energy crunch worsens, a shortage of shipping capacity will limit the role of Liquefied natural gas (LNG) to plug the gap.

This was the warning from Lloyd’s Register (LR) gas guru, Panos Mitrou, who said that LNG shipbuilders are full until well into the second half of the decade, this was reported by Seatrade Maritime News.

Recent contracts have closed at prices around US$250 million, up by about US$60 million on last deals done at the start of the year. Clarkson figures reveal that more LNG carriers were ordered over the first half of the year than in any full year to date.

In an opinion piece on the LR website, Mitrou cites estimates by the classification society that the half dozen specialist builders in South Korea and China have an annual production capacity of 70-80 ships. But liquefaction and transport demand over the second half of the decade could require twice this number of new vessels.

Mitrou notes that the four long-established LNG construction yards – Daewoo, Hyundai and Samsung in South Korea, and Hudong in China – have recently been joined by newcomers, Dalian and Jiangnan, also in China. A seventh yard, Yangzijiang, is also set to join the group.

But some LNG producers, who are ramping up exports, have been caught out by constraints on ship supply. Mitrou believes that the world will lack the LNG shipping capacity to meet transport demand by 2025, possibly before.

Meanwhile, floating gas plants can provide a relatively quick way of boosting energy imports in some power-hungry countries. But conversions of existing ships would take more tonnage out of the transport system, Mitrou noted.

To make matters worse, he cited estimates by the classification society that about 400 existing LNG carriers in the 640-ship fleet are likely to fall into categories ‘D’ or ‘E’ of the IMO’s carbon intensity indicator, therefore requiring remedial action. This is partly because of relatively fuel-inefficient steam turbine and early diesel propulsion, but also a lack of effective boil-off management systems.

Mitrou concludes by warning that a perfect storm is brewing. LNG is the cleanest hydrocarbon energy by far, he declares, and offers significant potential as a transitional source of energy. But we cannot have an energy transition without energy security and there is very little of that in many import-reliant countries right now. 

Get ready for another interest rate hike

Today Reuters has released the news saying that slowing US inflation may have opened the door for the Federal Reserve to temper the pace of interest rate hikes, but policymakers have no doubt that the central banks will continue to tighten monetary policy until price pressures are fully broken. 

If rates are raised around the world, Pakistan can’t remain an exception.

A US Labor Department report on Wednesday indicated that consumer prices didn't rise at all in July as compared to June. The policymakers believe it would be a long process, with a red-hot job market and suddenly buoyant equity prices suggesting the economy needs more of the cooling that would come from higher borrowing costs.

The Fed is far, far away from declaring victory on inflation, Minneapolis Federal Reserve Bank President Neel Kashkari said at the Aspen Ideas Conference, despite the "welcome" news in the CPI report.

Kashkari said he hasn't "seen anything that changes the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. The rate is currently hovering between 2.25% to 2.5% range.

To be sure, Kashkari is the Fed's most hawkish member; most of his 18 colleagues believe a little less policy tightening may be enough to do the trick to bring prices under better control.

San Francisco Fed President Mary Daly, in an interview with the Financial Times, also warned it is far too early for the US central bank to declare victory in its fight against inflation.

However, Daly said that a half-percentage point rate rise was her baseline but did not rule out a third consecutive 0.75% point rate rise at the central bank's next policy meeting in September, according to the report.

Calling inflation unacceptably high, Chicago Fed President Charles Evans said he believes the Fed will likely need to lift its policy rate to 3.25% to 3.5% this year and to 3.75% to 4% by the end of next year, in line with what Fed Chair Jerome Powell signaled after the Fed's latest meeting in July.

Still, he said, the CPI report marks the first positive reading on inflation since the Fed began raising interest rates in March in increasing increments ‑ a quarter of a percentage point to start, then a half a point, and then three quarters of a percentage point in both June and July.

After Wednesday's CPI report, traders of futures tied to the Fed's benchmark interest rate pared bets on a third straight 75-basis-point hike at its September 20-21 policy meeting, and now see a half-point increase as the more likely option.

Equity markets took a similar cue on hopes for a less aggressive central bank, with the S&P 500 rising 2.1%.

Financial markets are currently pricing a top fed funds rate of 3.75% by year-end, with rate cuts to follow next year, presumably as policymakers move to counter economic weakness.

Kashkari called that scenario unrealistic, and said Fed policymakers are united in their determination to bring inflation down to the Fed's 2% target. The risk of recession will not deter me from advocating for what's needed to do so, he said.

The consumer price index rose 8.5% in July from a year earlier, the report showed. While that marked a drop from June's 9.1% rate, prices are still rising at levels not seen since the 1970s and early 1980s. Food prices in July were up 11% from the year before, devastating for lower income families in particular.

For the moment, analysts focus on the fact that after months in which accelerating price pressures pushed Fed policymakers to tighten credit conditions faster than at any time since the 1980s, inflation data finally surprised in the other direction.

"The Fed needs a lot more evidence (of slowing inflation)... but this is a good start," said Karim Basta, Chief Economist with III Capital Management.

Data on August consumer inflation will be released on September 13, the week before the Fed meets, and given recent trends in energy and some other prices the report "should also be friendly to the disinflation path and should make a 50 basis point hike the preferred option."

Still, the Fed's battle with high inflation is far from over.

The core consumer price index - which strips out volatile gas and food prices and is seen as a better predictor of future inflation - rose 0.3% from June and 5.9% from a year earlier. The Fed targets 2% inflation based on a different index that is rising at a lower, but still high, rate of more than 6%.

An alternative measure of consumer prices compiled by the Cleveland Fed, known as the Median Consumer Price Index and considered a good view of the breadth of prices pressures in the economy, rose 6.3% on an annual basis in July, compared to 6% in June.

"Overall, prices remain uncomfortably high," wrote High Frequency Economics' Rubeela Farooqi, who stuck with her call for a 75-basis point rate hike next month. "Coupled with strength in job growth and wages, the data support the case for another aggressive rate hike in September."