Faltering Russian Wheat Shipments

Shipments from Russia in July and August, the first two months of the new season, fell 22% to 6.3 million tons from a year earlier, according to ship lineup data from Logistic OS. 

Last month, Ukraine restarted shipments, exporting 1.5 million tons of food through the grain corridors established under a deal brokered by the United Nations and Turkey.

While the cargoes from Ukraine’s Black Sea ports are little more than a quarter of pre-war volumes, the government hopes shipments will pick up in the coming months.

The slow pace of Russian wheat exports is adding pressure to global supplies as harvests elsewhere are hit by drought. Food was exempted from western sanctions, but bankers and insurers are cautious about doing business with Russia and shipping lines are wary of sending their vessels into a war zone.

 “We have reputational risk or informal sanctions,” Dmitry Rylko, General Director of Moscow-based institute IKAR, said in an interview. “They cause problems with finding vessels for Russia Black Sea, and we see some banks don’t want to open letters of credit for wheat of Russian origin.”

Since the start of the new season, Russian shipments are no longer constrained by an export quota that was in place for the second half of the previous season to protect domestic supplies. Now the government is complaining about restrictions on trade, even after the European Union and United States stressed that food is not targeted by sanctions.

“Despite the statements made by Washington and Brussels that anti-Russian sanctions do not apply to food and fertilizers, the blocking obstacles to bank settlements, insurance and transportation of goods that have arisen as a result of their introduction still remain,” Russia’s Foreign Ministry said last week.

Russian farmers are also reluctant to sell wheat as a strong ruble and high export tax make it less attractive, while IKAR said some European customers weighted their orders to earlier in the year.

Russia and Ukraine signed a deal in July to release millions of tons stuck in Black Sea ports. The first cargoes were carried by vessels trapped in Odesa and two other Black Sea ports, while another 1.15 million tons of grain was shipped by rail in the first 23 days of August, according to Ukragroconsult.

Still, it remains to be seen whether shipments can be accelerated further as Ukrainian forces mount a counter-offensive in the south of the country. Before the war, 5 to 6 million tons of grains were typically dispatched monthly via its Black Sea ports.

The United Nations, which brokered the deal to end the logjam at Ukrainian ports, has emphasized the importance of Russian fertilizers and agricultural commodities making it to customers.

Russian exports are starting to speed up slightly, something that’s essential to the global wheat market, according to Agritel. IKAR expects shipments to rise to 4 million tons in September, though that would still be behind the 4.7 million tons exported a year earlier.

“The wheat production of the five major exporters outside the Black Sea is barely progressing compared to last year,” Agritel analyst Nathan Cordier said at a briefing. “It will not allow them to cover a failure of Ukraine or Russia.”

Putin denies Gorbachev a state funeral

Russian President Vladimir Putin is likely to miss the funeral of the last Soviet leader, Mikhail Gorbachev, the man who failed to prevent the collapse of the Soviet empire.

Gorbachev, idolized in the West for allowing eastern Europe to escape Soviet communist control but unloved at home for the chaos that his perestroika reforms unleashed, will be buried on Saturday after a public ceremony in Moscow's Hall of Columns.

The grand hall, within sight of the Kremlin, hosted the funerals of Soviet leaders Vladimir Lenin, Josef Stalin and Leonid Brezhnev. Gorbachev will be given a military guard of honour - but his funeral will not be a state one.

State television on Thursday showed Putin solemnly placing red roses beside Gorbachev's coffin - left open as is traditional in Russia - in Moscow's Central Clinical Hospital, where he died on Tuesday aged 91.

Putin made a sign of the cross in Russian Orthodox fashion before briefly touching the edge of the coffin.

"Unfortunately, the president's work schedule will not allow him to do this on September 03, so he decided to do it today," Kremlin spokesman Dmitry Peskov told reporters.

He said Gorbachev's ceremony would have elements of a state funeral, and that the state was helping to organize it.

Nevertheless, it will be a marked contrast to the funeral of Yeltsin, who was instrumental in sidelining Gorbachev as the Soviet Union fell apart and hand-picked Putin, a career KGB intelligence officer, as the man most suited to succeed him.

When Yeltsin died in 2007, Putin declared a national day of mourning and, alongside world leaders, attended a grand state funeral in Moscow's Cathedral of Christ the Saviour.

Russia's intervention in Ukraine appears aimed at reversing at least in part the collapse of the Soviet Union that Gorbachev failed to prevent in 1991.

Gorbachev's decision to let the countries of the post-war Soviet communist bloc go their own way, and East and West Germany to reunify, helped to trigger nationalist movements within the 15 Soviet republics that he was powerless to quell.

Five years after taking power in 2000, Putin called the breakup of the Soviet Union the greatest geopolitical catastrophe of the 20th century.

Pakistan: What exactly are we celebrating?

Pakistan’s Finance Minister, Miftah Ismail, has been extremely jubilant on the release of US$1.1 billion by the International Monetary Fund (IMF), but PDM government led by Shehbaz Sharif, has insulted the overseas Pakistanis the most, who remit around US$2.5 billion every month, by refusing to give them voting rights.

Dr. Akbar Zaidi* in his article published in Dawn has said rightly, “Such agreements might temporarily rescue governments and their economies, but these are always anti-people with deep and deleterious long-term consequences”.

He has also identified, “Perhaps the government of Pakistan chose not to read carefully beyond the headline as it highlighted numerous uncomfortable truths”.

He continues with, “On top of this, the IMF insists that the governments need to increase electricity prices and taxes on petroleum products even further, as well as keeping interest rates high.

Countries generally facing balance of payment crisis go to the IMF, known as ‘lender of last resort’. The revival of Pakistan’s agreement with the IMF was ‘sure’, after the story of Army Chief General Bajwa contacting the US Administration hit the newspapers headlines.

One tends to disagree with Dr. Zaidi’s when he says, “It was quite irrelevant since the agreement between the Government of Pakistan and the IMF was already well in place and even the request from the COAS had little value to add at this late stage”.

I am delighted with the admission of Dr, Zaidi, “The agreement which has been reached is not a new one, and is the revival, with additional, stricter, conditionalities”.

Dr. Zaidi’s statement should be an eye opener for the ruling elite, “Celebrating receipt of a mere US$1.1 billion is  a sign of how low our expectations and standards have fallen”.

While there was a possibility of a default, mostly on account of our own collective doing, the revival of the program allows only very short-lived breathing space. The deep-rooted, chronic, structural problems which affect the economy, have barely been articulated, let alone addressed.

Dr. Zaidi deserve a salute for saying, “All adjustments and actions taken in the last four months by the incumbent government were to ensure that they secure the loan. Now that they have, they have the opportunity to sit on their false laurels and easily avoid taking measures which are even more unpopular than the ones they have already taken”.

The preconditions end up raising taxes (usually regressive ones, such as indirect taxes), cutting expenditure (always development), increasing electricity and gas tariffs and other essentials, are meant to slow down aggregate demand and the economy.

With the damage caused by the floods to the economy estimated to be 10 times the amount received from the IMF, this latest rescue package is not going to rescue the people of Pakistan.

*Dr. Akbar Zaidi is a political economist and heads the IBA, Karachi.

Felixstowe: Eight day strike comes to end

An eight-day strike at the Britain’s main container port has come to an end, but the impact will continue to be felt in the coming months and further action could be on its way.

Supply chain risk company Everstream Analytics said carriers have avoided Felixstowe during the strike, with ship calls dropping by 82% from 29 in the week of August 15 to just five in the following strike week.

“The large-scale vessel diversions have led to higher congestion levels, especially at German ports that have battled labor actions on their own in the last few weeks,” said Everstream.

Waiting times at Hamburg hit a peak for the year of 42 hours last week and at Bremerhaven, 18 vessels per day waited at anchor to berth, another 2022 high and around 63% above the annual average.

The strike at Felixstowe has ended, but the underlying issue of pay is yet to be resolved. “The ball is now firmly back in Felixstowe’s court. The employer has the opportunity to make a greatly improved offer which will end this dispute. If the employer declines this opportunity, then further strike action is expected to be announced in the coming weeks,” said a spokesperson for Unite the union.

Unions have proposed September 19 as a potential date for more strike action, potentially with fellow dockworkers at the Port of Liverpool striking alongside workers at Felixstowe.

“Knock-on congestion and delays on other European ports are therefore likely to occur in the coming weeks as well as we head into the beginning of Q4 and the holiday season,” said Everstream.

Port owner Hutchison said it offered a “very fair” 7% pay rise to workers along with a one-off £500 bonus.

The threat of further industrial action comes at a time of widespread strikes in the Britain, including by rail workers, barristers, council workers, and postal workers. The most prominent reason for strikes is insufficient pay increases in the face of high inflation.

Unite, the union behind the Felixstowe strike, has had recent success in the Britain maritime sector. Workers at ferry operator Red Funnel voted to accept a two-year pay deal of between 13.4% and 18.3% covering members including ratings, shunters and customer service staff.

The strikes are the latest in a series of disruptions to the Britain’s supply chain, adding to complications from Brexit regulatory changes, pandemic impacts, and the loss of ferry capacity during the P&O Ferries debacle.

 

Afghanistan: One year of Taliban rule, but no recognition by international community

Taliban marked the first anniversary of their rule in Afghanistan on Wednesday. This reminds humiliating defeat of US-led forces who invaded Afghanistan following September 11, 2001, attacks on the United States. 

Two of the most regrettable points are: 1) United States has not allowed the world to recognize Taliban government and 2) to continue its tyranny United States has not released foreign reserves of Afghan central bank as yet.

"The experience of the past 20 years can be a good guide... Any kind of pressure and threats on Afghans in the last 20 years has failed and just increased the crisis," Taliban said in a statement.

The Islamic Emirate of Afghanistan - the name the Taliban give their government - is the "legitimate government of the country and the representative of the brave Afghan nation", the statement said.

No country has recognized Taliban, who took over Afghanistan with a speed and ease that took the world by surprise, following which President Ashraf Ghani fled the country and his government collapsed. The US led forces left two weeks later in chaos.

Taliban statement called on the international community to allow Afghans to have an independent Islamic government that has a positive interaction with the world.

The international community has pressed Taliban on human rights, particularly those of girls and women whose access to school and work has been limited. It has also urged Taliban to stopping harassing critics, activists and journalists.

The Taliban say they are discussing the matter of girls' education and deny cracking down on dissent.

Fireworks lit up Kabul sky on Tuesday night on the first anniversary of the withdrawal of foreign troops which Taliban are marking as "Freedom Day". 

Wednesday was also a public holiday, with small celebrations across Kabul including parades by Taliban forces.

Gorbachev winning Nobel Prize for ending Cold War dies

Mikhail Gorbachev, who ended the Cold War without bloodshed and also earned Nobel Prize but failed in preventing the collapse of the Soviet Union, died at the age of 91 in Moscow.

Gorbachev, the last Soviet president, forged arms reduction deals with the United States and partnerships with Western powers to remove the Iron Curtain that had divided Europe since World War II and bring about the reunification of Germany.

His internal reforms helped weaken the Soviet Union to the point where it fell apart, a moment that President Vladimir Putin has called the ‘greatest geopolitical catastrophe’ of the twentieth century.

Putin expressed his deepest condolences, Kremlin spokesman Dmitry Peskov told Interfax. "Tomorrow he will send a telegram of condolences to his family and friends," he said.

Putin said in 2018 he would reverse the Soviet Union's disintegration if he could, news agencies reported.

World leaders were quick to pay tribute. European Commission Chief Ursula von der Leyen said Gorbachev, who was awarded the Nobel Peace Prize in 1990, had opened the way for a free Europe.

British Prime Minister Boris Johnson, citing Putin's invasion of Ukraine, said Gorbachev's "tireless commitment to opening up Soviet society remains an example to us all".

There was no immediate reaction from the White House or the US State Department. Former US Secretary of State James Baker described Gorbachev as "a giant who steered his great nation towards democracy".

After decades of Cold War tension and confrontation, Gorbachev brought the Soviet Union closer to the West than at any point since World War Two.

"He gave freedom to hundreds of millions of people in Russia and around it, and also half of Europe," said former Russian liberal opposition leader Grigory Yavlinsky. "Few leaders in history have had such a decisive influence on their time."

But Gorbachev saw his legacy wrecked late in life, as the invasion of Ukraine brought Western sanctions crashing down on Moscow, and politicians in both Russia and the West began to speak of a new Cold War.

"Gorbachev died in a symbolic way when his life's work, freedom, was effectively destroyed by Putin," said Andrei Kolesnikov, senior fellow at the Carnegie Endowment for International Peace.

He will be buried in Moscow's Novodevichy Cemetery next to his wife Raisa, who died in 1999, said Tass, citing the foundation that the ex-Soviet leader set up once he left office.

"We are all orphans now. But not everyone realizes it," said Alexei Venediktov, head of a liberal media radio outlet that closed down after coming under pressure over its coverage of the Ukraine war.

When pro-democracy protests rocked Soviet bloc nations in communist Eastern Europe in 1989, Gorbachev refrained from using force - unlike previous Kremlin leaders who had sent tanks to crush uprisings in Hungary in 1956 and Czechoslovakia in 1968.

But the protests fuelled aspirations for autonomy in the 15 republics of the Soviet Union, which disintegrated over the next two years in chaotic fashion.

Gorbachev - who was briefly deposed in an August 1991 coup by party hardliners - struggled vainly to prevent that collapse.

"The era of Gorbachev is the era of perestroika, the era of hope, the era of our entry into a missile-free world ... but there was one miscalculation: we did not know our country well," said Vladimir Shevchenko, who headed Gorbachev's protocol office when he was Soviet leader.

"Our union fell apart, that was a tragedy and his tragedy," RIA news agency cited him as saying.

On becoming general secretary of the Soviet Communist Party in 1985, aged just 54, he had set out to revitalize the system by introducing limited political and economic freedoms, but his reforms spun out of control.

"He was a good man - he was a decent man. I think his tragedy is in a sense that he was too decent for the country he was leading," said Gorbachev biographer William Taubman, a professor emeritus at Amherst College in Massachusetts.

Gorbachev's policy of glasnost - free speech - allowed previously unthinkable criticism of the party and the state, but also emboldened nationalists who began to press for independence in the Baltic republics of Latvia, Lithuania, Estonia and elsewhere.

Many Russians never forgave Gorbachev for the turbulence that his reforms unleashed, considering the subsequent plunge in their living standards too high a price to pay for democracy.

Vladimir Rogov, a Russian-appointed official in a part of Ukraine now occupied by pro-Moscow forces, said Gorbachev had "deliberately led the (Soviet) Union to its demise" and called him a traitor.

"He gave us all freedom - but we don't know what to do with it," liberal economist Ruslan Grinberg told the armed forces news outlet Zvezda after visiting Gorbachev in hospital in June.

 

Canada invokes pipeline treaty with United States

Canada has invoked a 1977 pipeline treaty with the United States for the second time in less than a year. This is to prevent a shutdown of Enbridge-Line 5 pipeline in Wisconsin, said Canadian Foreign Minister Melanie Joly on Monday.

The Bad River Band, a Native American tribe in northern Wisconsin, wants the 1953 pipeline shut down and removed from its reservation because of the risk of a leak and expired easements, which are land use agreements between Enbridge and the tribe.

In May, Enbridge filed a motion in a US district court saying federal law prohibits attempts to stop the pipeline's operations. The motion sought to dismiss some of Bad River Band's claims.

The company said in a statement on Monday that it remains open to resolving this matter amicably and was pursuing permits to re-route Line 5 around the Bad River Reservation.

Joly said Canada has raised serious concerns that a possible shut down of the Line 5 pipeline will cause a widespread and significant economic and energy disruption.

"This would impact energy prices, such as propane for heating homes and the price of gas at the pump. At a time when global inflation is making it hard on families to make ends meet, these are unacceptable outcomes," Joly said in a statement.

The pipeline is a critical part of Enbridge's Mainline network, which delivers the bulk of Canadian oil exports to the United States. Line 5 carries 540,000 barrels per day from Superior, Wisconsin, to Sarnia, Ontario.

Joly said Canada was worried about the domino effects the shutdown would have on jobs.

"The shutdown could have a major impact on a number of communities on both sides of the border that depend on the wellbeing of businesses along the supply chain," she said.

The 1977 pipeline treaty governs the free flow of oil between Canada and the United States, and last year Canada invoked it for the first time ever to start negotiations with the United States to resolve a dispute with Michigan State, which wants to shut down Line 5 on environmental grounds.

This month, a US judge sided with Enbridge in ruling that a federal court should hear a suit by the State of Michigan seeking to force shutdown of the pipeline underneath the Straits of Mackinac in the Great Lakes. 

 

Japan pledges US$30 billion for Africa to counter Chinese influence

Japan plans to infuse US$30 billion in aid and investment from its public and private sectors into Africa over the next three years as it seeks to counter China’s growing influence.

Speaking via video link at the eighth Tokyo International Conference on African Development (TICAD), Prime Minister Fumio Kishida stressed Japan will grow together with Africa.

This is an increase from the US$20 billion that Japan promised African countries in 2019 and we essentially achieved it over the last three years, Kishida said.

The pledge is seen as an effort by Tokyo to differentiate itself from China, which has been criticized by the US and some Western nations for burdening African countries with loans.

Japan launched the TICAD in 1993, to revive interest in the continent and find raw materials for its industries and markets for its products. About a decade later, China began holding a rival event, the Forum on China-Africa Cooperation, at a time when Japan was turning inward as it sought to rebuild its struggling economy.

Japan has over time shifted the focus of its engagement with Africa from aid to private-sector-led investment.

Japan’s total trade with the continent is just a small fraction of Africa’s trade with China, according to the Japan External Trade Organization. In 2020, Africa’s exports to Japan were US$8.6 billion, while African imports from Japan were about US$7.9 billion.

As against this, China’s total two-way trade with the continent reached US$254 billion last year.

President Xi Jinping last year pledged US$40 billion in loans and investment for Africa and promised to grow imports from the continent to US$300 billion in three years.

Except during the triennial TICAD meetings, Japan is almost invisible in Africa, Seifudein Adem, a global affairs professor at Doshisha University in Kyoto, Japan, said while Africa, too, is invisible in Japan.

Adem added, “China is also ahead in disseminating its ideas and values in Africa. While the global pandemic has widened the gap between Africa and Japan, the trend started earlier.”

He said Japan’s relative power has declined over the last three decades, as has its diplomatic and economic interest in Africa. However, the re-emergence of China as a global hegemon seems to be marginally stimulating Japan’s engagement with Africa and will continue to do so”, Adem noted.

At TICAD-8 in Tunis, which was attended by hundreds of heads of state and diplomats, Kishida, who spoke via video link, announced that Tokyo will help African countries with debt restructuring and extend loans worth around US$5 billion in coordination with the African Development Bank to promote sustainable African development.

This includes a special, newly created loan of up to US$1 billion for the purpose of advancing reforms that result in sound debt management and helping a resilient and sustainable Africa, the prime minister said.

Kishida also announced a further US$4 billion to promote Japan’s Green Growth Initiative. He also promised to contribute over US$1 billion to the Global Fund to help fight the spread of Covid-19 and other infectious diseases in Africa.

Kishida said Tokyo would work to ensure grain shipments to Africa amid a global shortage at a time when the international order is under threat after Russia invaded Ukraine.

Japan has aligned itself with the other Group of Seven countries in sanctioning Russia. However, the continent is divided over Moscow’s war in Ukraine, with many countries taking a neutral stance while others oppose sanctions, which Russia has blamed for food shortages in Africa.

Adem of Doshisha University said Japan’s approach to African development is distinct with its emphasis on transparency and the high quality of its projects.

 “But, from Japan’s point of view, the growing influence of China in Africa in the last two decades has made them all the more important to try to offset China’s unassailable competitive advantage,” Adem, the author of a forthcoming book on lessons for Africa from Japan and China, said.

However, he said Kishida has been more cautious in his diplomacy so far compared with previous leaders. Perhaps gone are the days of bold initiatives of the late Shinzo Abe, a friend of Africa, he said.

But Jonathan Berkshire Miller, a senior fellow at the Japan Institute of International Affairs, said: “Tokyo’s advantage will be to provide high-quality infrastructure, in line with the G20 priorities, and also enable African SMEs (small and medium-sized enterprises) through public-private partnerships.”

He said Japan has been making strides for decades on this through its TICAD process and evolving its assistance to the continent.

Miller said Japan views Africa in dynamic terms. However, Africa is changing and Japan is also realizing that its relations with the continent also need to balance the growing economic and geopolitical dimensions. Eventually, Japan would be advised to look more closely at building pre-existing partnerships with India and others in the region.

He said TICAD this year is of even more critical importance for African states to take ownership of partnerships and infrastructure cooperation. As the inflationary pressures and economic headwinds continue in recent months, the focus should be on partnership-based ventures that don’t saddle African states with unwieldy debt, Miller said.

Iran gas revenues increase 64% in a year

The Managing Director of National Iranian Gas Company (NIGC) has said the country’s gas revenues have increased by 64% since the current government took office last August, IRNA reported.

“An 11% increase in gas exports to Turkey and the continuation of negotiations to increase exports, the collection of about US$1.6 billion of Iran's gas dues from Iraq, and a 138% increase in gas swaps are among other measures taken to promote energy diplomacy in the 13th government,” Majid Chegeni said on Sunday.

Speaking at a ceremony for inaugurating several gas projects on the occasion of Government Week, Chegeni noted that over the past year Iran has reached a new record in gas condensate exports and the country has been established as a major player in the region’s gas market.

According to the official, the Islamic Republic’s natural gas refining capacity has also reached 1.030 billion cubic meters in the past 12 months and 530 kilometers of new gas pipelines have also been constructed to transfer fuel to seven power plants.

Operating the largest natural gas network in West Asia, NIGC continues to expand this network into the country’s most remote areas so that currently over 95 percent of the Iranian population enjoys natural gas through this huge network.

With a total length of over 36,000 kilometers, Iran’s gas network is also among the world’s most modern networks and it enjoys the most modern and updated measuring, transmission, and pressure boosting instruments and equipment.

This vast network of pipelines is growing bigger and bigger every year as NIGC tries to increase the coverage of the national network to nearly 100 percent.

According to NIGC data, Iran is currently producing over 810 mcm of natural gas daily which is mostly used within the country by the domestic sectors as well as fuel for the power plants. A small portion is also exported to neighboring countries like Iraq and Turkey.

Pakistan: Crucial IMF Board Meeting Today

Reportedly, Executive Board of the International Monetary Fund (IMF) is scheduled to meet Today (Monday) to consider a bailout package for Pakistan.

If the Board approves the deal, the IMF will immediately disburse about US$1.2 billion to Pakistan and may provide up to $4 billion over the remainder of the current fiscal year, which began on July 01, 2022.

“The board is likely to approve the disbursement of the 8th and 9th tranche (over US$1.2 billion) on Monday.” “Not doing so will send a negative signal, particularly during the floods.”

Pakistan, could also request emergency help from the IMF’s Rapid Financing Instrument (RFI), which may bring additional funds of up to US$500 million.

In April 2020, the Board approved the disbursement of US$1.386 billion to Pakistan under the RFI to address the economic impact of the Covid-19 shock.

Also, The Wall Street Journal (WSJ) reported on Sunday that in recent weeks Pakistan has tied up at least US$37 billion in international loans and investments, pulling the country away from the kind of financial collapse seen in Sri Lanka”.

Both WSJ and Voice of America (VOA), a semi-official broadcasting service, confirmed that the Board is meeting on Monday to consider Pakistan’s request.

The VOA reported that in the last six weeks Pakistan has secured loans, financing, deferred oil payments and investment commitments close to US$12 billion from China, Saudi Arabia, Qatar and UAE to avoid a default. But such commitments will become available only after the IMF Board approves the package.

The VOA quoted experts as telling, “Pakistan’s economy is broad and deep and its geostrategic position strong enough for it to avoid default.”

Tamanna Salikuddin, Director of South Asia programs at the United States Institute of Peace, told VOA that despite differences Washington still supports the loans through the IMF because a crisis on Afghanistan’s border is not something that the US wants to see.

She identified “Counterterrorism, nuclear security and stability” as being the main factors for continued US interest in Pakistan.

Salikuddin noted that “Geostrategic importance (often) leads Pakistan to make irresponsible economic policies as the leadership perhaps believes the country is too big to fail.”

The WSJ noted that the IMF had asked the country to first arrange additional funds to cover the rest of its external funding shortfall for the fiscal year, pointing out that Islamabad appears to have met that target.

Among allies, “China led the way, providing more than $10 billion, mostly by rolling over existing loans,” the report added.

In an interview to WSJ, Finance Minister Miftah Ismail said Saudi Arabia was rolling over a US$3 billion loan and was providing at least US$1.2 billion worth of oil on a deferred payment basis. Riyadh would also invest US$1 billion in Pakistan.

The UAE will invest a similar amount in Pakistan’s commercial sector, and it is rolling over a $2.5 billion loan. Last week, Qatar announced it would invest US$3 billion in the country.

But the WSJ report warned that the scale of the flooding from heavier-than-usual monsoon rains means that the country will need more financing than it had planned for.

It goes without saying that the opposition and government forces in Pakistan also need to end fighting each other over everything if they want to stabilize the economy.

 

Iran, Russia and China targets of US disinformation campaign

Recent studies have uncovered material that appears to be the part of the ongoing disinformation campaigns of the United States. These are aimed at maligning Iran, Russia, and China by using bogus accounts to spread pro-Western narratives.

In a study conducted by researchers from the Stanford Internet Observatory and research company Graphika, it was found that pro-US covert influence operations utilized deceptive techniques to sway public opinion in West Asia and Central Asia for over five years.

The accounts running the activities posted articles in at least seven languages, including Farsi, Russian, Arabic, and Urdu, and frequently pretended to be news organizations or to be persons who weren't real.

Some of the accounts posted links to websites maintained by the US military as well as news pieces from media organizations financed by Washington, such as Voice of America and Radio Free Europe.

The country of origin of the accounts, according to Meta, which owns Facebook, Instagram, and WhatsApp, was the United States, while according to Twitter; the presumptive countries of origin for the accounts were the United States and Britain.

The study also stated that in July and August, when the fraudulent pro-US influence campaign was being promoted, Twitter and Meta erased hundreds of phony accounts.

The Russian social media networks VKontakte and Odnoklassniki, Google's YouTube, and Telegram were all utilized in the activities.

According to YouTube, multiple channels that were promoting US foreign policy in Arabic, Farsi, and Russian, as well as channels connected to a US consulting business, were removed. Based on the researchers, the accounts used regionally specific language and message.

Between November 2020 and June 2022, a total of 21 Twitter accounts, six Instagram accounts, five Facebook profiles, and two Facebook pages allegedly targeted Iranian audiences.

It was revealed that several of the aliases had possibly artificial intelligence-generated profile images.

Many made an effort to appear authentic by sprinkling poems and images of Persian cuisine with political messaging.

Numerous posts on Facebook and Instagram also unfairly contrasted chances for Iranian women with those available to women abroad.

In addition, 12 Twitter accounts, 10 Facebook pages, 15 Facebook profiles, and 10 Instagram accounts were made with a Central Asian concentration between June 2020 and March 2022.

These accounts subsequently posted articles that sharply denounced Russia's military campaign in Ukraine and supported anti-Russian demonstrations taking place in Central Asian nations.

Another set of reports honed down on West Asia, praising US efforts in Iraq and using encounters between US troops and Syrian children to support Washington's occupation of Syrian territory and theft of the natural riches of the Arab nation.

The research shows that none of the propaganda tactics were successful in reaching a sizable audience.

Only 19% of the discovered covert accounts had more than 1,000 followers, and the majority of posts and tweets only garnered a handful of likes or retweets.

The study is one of the most thorough evaluations to date of a covert, pro-US influence campaign, according to Shelby Grossman, a member of the research team that published the report.

Is China following debt trap policy?

A recent announcement by China that it is forgiving 23 loans for 17 African countries may be motivated by accusations of debt-trap diplomacy, say some analysts.

Critics have long accused Beijing of practicing debt-trap diplomacy, suggesting it deliberately lends to countries that it knows cannot repay the money, thereby increasing its political leverage. 

China vehemently rejects this, alleging it’s a way for the United States to discredit Beijing, Washington’s main challenger in the quest for influence in Africa.

China’s decision to forgive the zero-interest loans is, in part, aimed at countering the debt-trap narrative, said Harry Verhoeven, senior research scholar at Columbia University in New York.

“It is not uncommon for China to do something like this, forgive interest-free loans, now obviously it is connected to the overall debt-trap diplomacy narrative in the sense that clearly there’s a felt need on the part of China to push back,” Verhoeven said.

China’s announcement did not specify the countries or the amount of loan forgiveness, but analysts say that since 2000, China has regularly forgiven loans that are nearing their end but have a small balance.

“This is not a loan cancellation, but the cancellation of the remaining unpaid portion of interest-free loans that have reached maturity, that is if a loan was supposed to be fully paid off over 20 years, but it still has an outstanding balance, they cancel that outstanding balance,” Deborah Brautigam, Director of the China Africa Research Initiative at Johns Hopkins University’s School of Advanced International Studies. Brautigam’s research shows that between 2000 and 2019, China canceled at least US$3.4 billion of such debt in Africa.

While this applies to the Chinese government’s interest-free loans, it is not the case with the country’s interest-bearing commercial loans, which can be restructured but are never considered for cancellation, analysts explained.

Verhoeven said the sums of money involved in the 23 loans forgiven would likely be modest, but the politics of such gestures are noteworthy because for many years the Chinese would kind of shrug at various aspects, various lines of criticism, pertaining to their engagement in different African countries. But with the debt-trap allegations, China has belatedly woken up to the fact that this is a bit of public relations nightmare, said Verhoeven.

China has also been playing a role in restructuring the external debt of some African countries such as Zambia, which became the first African country to default on its debt during the pandemic. China, along with France, is chairing a committee to deal with debt relief efforts. The move, welcomed by the International Monetary Fund, is ongoing.

China is Zambia’s biggest creditor. Lusaka owes some US$6 billion to Chinese entities. In July, Zambia’s Finance Ministry announced it was canceling US$2 billion of undisbursed loans from its external creditors, US$1.6 billion of which are from Chinese banks. The move stopped construction of infrastructure projects largely funded by a Chinese bank, the South China Morning Post reported.

Shahar Hameiri, a political economist from the University of Queensland in Australia, agreed that the latest move by Beijing in forgiving African nations’ interest-free loans was probably just a goodwill gesture.

“The bigger loans are likelier to be restructured, if repayment problems loom, as we saw in Zambia,” said Hameiri

Senior officials in the United States have regularly warned developing countries, particularly in Africa, about the dangers of Chinese loans, and a 2020 State Department document, titled “The Elements of the China Challenge,” referred to China’s “predatory development program and debt-trap diplomacy.”

On a visit to the continent this month, the US Ambassador to the United Nations, Linda Thomas-Greenfield, touched on the idea that the wealthy and powerful have extracted Africa’s natural resources for their own gain. And it continues today through bad deals and debt traps. She did not mention China by name.

African politicians themselves have had mixed reactions to the debt-trap theory, with some, such as Ethiopia’s Ambassador to China, Teshome Toga Chanaka, refuting the idea, saying, “A partnership that does not benefit both will not sustain long.”

Others, including Kenya’s new President-elect, William Ruto, and Angolan opposition presidential candidate Adalberto Costa Jr., have expressed concern over taking Chinese loans.

The debt trap allegations have infuriated Beijing, which says Western private lenders are responsible for the bulk of poor countries’ debt and charge much higher interest rates.

The US allegation against China is simply untenable, Chinese Foreign Minister Wang Yi said this month.
Chinese state media constantly run articles aiming to debunk the narrative.

A number of economists and researchers are also saying the debt-trap narrative against China is unfounded.

“The debt-trap idea is that Chinese banks had ulterior motives, deliberately lending to countries when they knew those countries couldn’t repay,” Brautigam said.

“The reality is that like bondholders, which hold the majority of Africa’s debt, Chinese banks lent to countries that looked quite promising. All of these creditors have belatedly realized that risk profiles can shift dramatically in a short period of time.”

China restructured or refinanced about US$15 billion in African debt between 2000 and 2019, Brautigam’s research has found. She did not find that China had been involved in any asset seizures.

Echoing Brautigam, Hameiri said, “There is scant evidence that China has pursued ‘debt-trap diplomacy’ the idea that it would on purpose issue loans to ensnare recipients in unsustainable debt, in order to seize strategic assets or exercise control over their governments.”

Chinese lending has at times been problematic, Hameiri wrote, because in a frenzy to issue loans, Chinese lenders often spent little time considering debt sustainability. Chinese lending has contributed to debt problems in a number of countries, although it is not necessarily the only or even the primary cause as in Sri Lanka.”Some critics blamed China for the crisis in Sri Lanka earlier this year, when the cash-strapped government – which had defaulted on its debt – was deposed by mass protests. Beijing also is Colombo’s biggest bilateral creditor; however, Sri Lanka’s largest foreign lending source is in sovereign bonds.

Verhoeven said the growth in sovereign bonds has been an important factor in African nations’ debt too and rejected the Chinese debt-trap narrative.

“When it comes to China, the debt-trap narrative suggests … this is being done on purpose,” to get countries to vote with China in the UN General Assembly and to reduce Western influence, he said.

There “is little actual evidence that China’s been doing this for political gain,” Verhoeven said, “which is not to in any way say that Chinese lending is all fine, or that it’s always responsible or the best thing for countries to do, far from it.”

Since China has now been burned several times regarding its lending, with several countries defaulting on the loans, plus its own economic difficulties at home, there is certainly a sense that the good old days of 10 or 15 years ago where it could sort of give out loans left and right … are over,” said Verhoeven.

Where does Germany stand?

In the emerging new Cold War between the United States and China, it’s easy enough to slot some key global players onto one of the two sides. Russia stands with China and Japan stands with the United States.

Where does Europe stand is a key question mark. Long on the sidelines — much where President Xi Jinping has wanted — there are signs emerging that Germany, Europe’s economic engine, is undergoing a rethink about its trade and investment ties with China. German industry is fully cognizant of the danger of any fundamental shift, given its enormous reliance on China.

Outgoing Volkswagen AG China boss Stephan Wollenstein underscored last month that Asia’s biggest economy remains key to the fortunes of the German auto giant, which counted on China for 40% of its sales in the first quarter.

But the political tilt in Berlin is conspicuous. German Foreign Minister Annalena Baerbock said last month she is very serious about reducing the German economy’s reliance on China. 

Back in April, when Chancellor Olaf Scholz made his debut trip to Asia, he decided to stop first in Japan — a contrast with predecessor Angela Merkel, who put China first. Scholz highlighted that political symbolism was a priority in setting up the trip, saying in Tokyo that it was no coincidence his first trip as leader led him to that city.

Meantime, German lawmakers have pressed for greater scrutiny over their nation’s business ties with China. Despite industry lobbying, in 2021 they pushed through a supply-chain law that now requires companies to do due diligence on their suppliers, ensuring they don’t use slave labor — a move clearly targeted at China, amid concerns over practices in Xinjiang.

The Economy Ministry, led by Berbock’s Green Party colleague Robert Habeck, in May declined to renew investment guarantees for Volkswagen in China, over human-rights concerns, Der Spiegel and other media reported.

The increasing importance of geopolitics in Germany’s economic ties with China also hit home with the diplomatic spat between China and Lithuania. German firms that sourced products from Lithuania, including Continental AG, found their items held up in Chinese customs.

If a Baltic nation allowing Taiwan set up a representative office can end up disrupting German business operations in China, then it opens up a whole set of risks previously given little thought. One solution is to localize operations in China — effectively cordoning them off from overseas supply chains.

Germany Inc. is also facing a sea-change in terms of popular sentiment on the home front. Even before the Russian invasion of Ukraine — which did China little favor in terms of public opinion in most democratic nations, given Beijing’s support for Moscow — a majority of Germany’s population had turned negative on the country. A survey by Forsa, a research institute, last year showed 58% wanted Berlin to take a tougher stance against China even if it affected economic relations with the nation.

Germany is expected to release a fresh strategic game plan with regard to China later this year, and it will likely see the formal ditching Merkel’s approach of “wandel durch handel, or “change through trade,” says Yanmei Xie, a China policy analyst at Gavekal.

“How quickly the relationship changes will depend on how the argument resolves between Germans who favor values and strategic autonomy versus those who emphasize growth and profits,” she wrote in a note this month.

 Courtesy: Bloomberg