Israeli arms shipments to Ukraine will destroy relationship with Russia

Former President of Russia, Dmitry Medvedev said on Monday afternoon, Israel seems to be going to supply weapons to the Kyiv regime, calling it a reckless move that will ruin relations with Russia.

"It will destroy all interstate relations between our countries," Medvedev, who is now Deputy Chairman of the Security Council of the Russian Federation, said. "I'm not talking about the fact that the Bandera supporters were Nazis, and remained so. Just look at the symbolism of their modern henchmen. If they are supplied with weapons, then it is time for Israel to declare Bandera and Shukhevych their heroes."

Medvedev was referring to Stepan Bandera, a Ukrainian far-right leader of the radical, terrorist wing of the Organization of Ukrainian Nationalists. He pledged to work with Germany during World War II, but as this was seen as an attempted coup, he was arrested. 

He was awarded the Hero of Ukraine award posthumously in 2010 by then-Ukrainian president Viktor Yushchenko, an action which was subsequently condemned by foreign nations and Jewish groups worldwide.

Roman-Taras Yosypovych Shukhevych, worked for Bandera in the OUN-B, murdering and expelling the Polish population of Volhynia and Eastern Galicia.

Russia's top leaders have spent a large portion of their international campaigning during the Russia-Ukraine war comparing between Ukraine and the Nazis. Russia's Foreign Ministry said just this past May that Israel supports neo-Nazis in Ukraine.

This occurred just one day after Russian Foreign Minister Sergey Lavrov claimed that Adolf Hitler had Jewish origins.

Russia-Ukraine conflict, Nazi, weapons,

Coal price in Europe jumps on strikes at South African port

The price of importing coal to Europe’s largest ports rose the most since May as a strike in South Africa curtails shipments of the fuel during the middle of an energy crisis.

“The action by Transnet SOC employees is lasting longer than anticipated and has started to take a serious toll on exports,” said Alex Claude, Chief Executive Officer of DBX Commodities in London.

Coal flows out of South Africa last week were 600,000 tons, the lowest in more than a year, he said.

South Africa’s troubles dovetail with those of European power producers, who are trying to stock up on coal ahead of winter to make up for dwindling supplies of natural gas from Russia.

Traders are relying increasingly on South Africa because European Union sanctions ban purchases from Russia, long the continent’s largest source.

Month-ahead European coal futures rose as much as 11%. They’re now trading at about US$290 per ton, rebounding from an almost seven-month low on October 10, 2022. The jump also may be driven by traders covering shorts or profit-taking after a long decline, Claude said.

The Transnet strike also is hobbling iron ore exports as staff refuse to work unless the company raises their pay. Negotiations are set to continue Wednesday.

Coal exports to Europe from a consortium that owns the Richards Bay Coal Terminal in South Africa increased to 4.1 million tons in the first half of 2022, as compared to 500,000 tons a year earlier, Thungela Resources Chief Financial Officer Deon Smith said in August.

 

How Countries Should Respond to Strong Dollar?

The US dollar is at its highest level since 2000, having appreciated 22% against yen, 13% against the euro and 6% against emerging market currencies since the start of this year. Such a sharp strengthening of the dollar in a matter of months has sizable macroeconomic implications for almost all countries, given the dominance of the greenback in international trade and finance.

While the US share in world merchandise exports has declined to 8% from 12% since 2000, the dollar’s share in world exports has held around 40%. For many countries fighting to bring down inflation, the weakening of their currencies relative to the dollar has made the fight harder. On average, the estimated pass through of a 10% dollar appreciation into inflation is one percent. Such pressures are especially acute in emerging markets, reflecting their higher import dependency and greater share of dollar-invoiced imports compared with advanced economies.

The dollar’s appreciation also is reverberating through balance sheets around the world. Approximately half of all cross-border loan and international debt securities are denominated in US dollars. While emerging market governments have made progress in issuing debt in their own currency, their private corporate sectors have high levels of dollar-denominated debt. As world interest rates rise, financial conditions have tightened considerably for many countries. A stronger dollar only compounds these pressures, especially for some emerging market and many low-income countries that are already at a high risk of debt distress.

In these circumstances, should countries actively support their currencies? Several countries are resorting to foreign exchange interventions. Total foreign reserves held by emerging market and developing economies fell by more than 6% in the first seven months of this year.

The appropriate policy response to depreciation pressures requires a focus on the drivers of the exchange rate change and on signs of market disruptions. Specifically, foreign exchange intervention should not substitute for warranted adjustment to macroeconomic policies. There is a role for intervening on a temporary basis when currency movements substantially raise financial stability risks and/or significantly disrupt the central bank’s ability to maintain price stability.

As of now, economic fundamentals are a major factor in the appreciation of the dollar, rapidly rising US interest rates and a more favorable terms of trade a measure of prices for a country’s exports relative to its imports for the US caused by the energy crisis.

Fighting a historic increase in inflation, the Federal Reserve has embarked on a rapid tightening path for policy interest rates.

The European Central Bank, while also facing broad-based inflation, has signaled a shallower path for their policy rates, out of concern that the energy crisis will cause an economic downturn.

Meanwhile, low inflation in Japan and China has allowed their central banks to buck the global tightening trend.

The massive terms of trade shock triggered by Russia’s invasion of Ukraine is the second major driver behind the dollar’s strength. The euro area is highly reliant on energy imports, in particular natural gas from Russia. The surge in gas prices has brought its terms of trade to the lowest level in the history of the shared currency.

As for emerging markets and developing economies beyond China, many were ahead in the global monetary tightening cycle—perhaps in part out of concern about their dollar exchange rate—while commodity exporting EMDEs experienced a positive terms-of-trade shock. Consequently, exchange-rate pressures for the average emerging market economy have been less severe than for advanced economies, and some, such as Brazil and Mexico, have even appreciated.

Given the significant role of fundamental drivers, the appropriate response is to allow the exchange rate to adjust, while using monetary policy to keep inflation close to its target.

The higher price of imported goods will help bring about the necessary adjustment to the fundamental shocks as it reduces imports, which in turn helps with reducing the buildup of external debt.

Fiscal policy should be used to support the most vulnerable without jeopardizing inflation goals.

Additional steps are also needed to address several downside risks on the horizon. Importantly, we could see far greater turmoil in financial markets, including a sudden loss of appetite for emerging market assets that prompts large capital outflows, as investors retreat to safe assets.

In this fragile environment, it is prudent to enhance resilience. Although emerging market central banks have stockpiled dollar reserves in recent years, reflecting lessons learned from earlier crises, these buffers are limited and should be used prudently.

Countries must preserve vital foreign reserves to deal with potentially worse outflows and turmoil in the future. Those that are able should reinstate swap lines with advanced-economy central banks.

Countries with sound economic policies in need of addressing moderate vulnerabilities should proactively avail themselves of the IMF’s precautionary lines to meet future liquidity needs.

Those with large foreign-currency debts should reduce foreign-exchange mismatches by using capital-flow management or macro-prudential policies, in addition to debt management operations to smooth repayment profiles.

In addition to fundamentals, with financial markets tightening, some countries are seeing signs of market disruptions such as rising currency hedging premia and local currency financing premia.

Severe disruptions in shallow currency markets would trigger large changes in these premia, potentially causing macroeconomic and financial instability.

In such cases, temporary foreign exchange intervention may be appropriate. This can also help prevent adverse financial amplification if a large depreciation increases financial stability risks, such as corporate defaults, due to mismatches.

Finally, temporary intervention can also support monetary policy in the rare circumstances where a large exchange rate depreciation could de-anchor inflation expectations, and monetary policy alone cannot restore price stability.

 

 

Saudi Arabia to support supply chain growth

Minister of Transport and Logistics Eng. Saleh Bin Nasser Al-Jasser has confirmed that they are working to inaugurate 59 logistic areas in Saudi Arabia in order to support the prosperity and the growth of the supply chains and logistic services.

Eng. Al-Jasser made these remarks during his speech at the Supply Chain Conference, where he stated that the 59 logistic areas would also enable Saudi Arabia to play a regional and global role.

He added that 18 industrial areas have been chosen in order to expand the scope of its work, to become a logistic industrial region that serves the arrival of the products into Saudi Arabia's regions and the export portals with high efficiency.

Crown Prince Mohammed Bin Salman's launch of the National Transport and Logistics Strategy (NTLS) has contributed in unifying the destination and charting the paths towards a brighter future of the Kingdom, Eng. Al-Jasser said.

He added that the NTLS has also empowered Saudi Arabia to be a global logistics center linking the three continents, in addition to the fact that it has enabled the Kingdom to be a model for a sustainable transport.

The presence of integrated logistic services is an important factor so as to achieve the national targets of the industrial and mining sectors, he noted.

Additionally, it also would decrease the cost of transporting and storing goods of Saudi origin, which will encourage local industries and support the goals of the national industry.

Eng. Al-Jasser pointed out that the transport and logistics services' system is working in developing the legislative system, and also improving the business environment in order to attract investments and modern technologies to meet the needs of several sectors.

At the conference, Deputy Minister of Industry and Mineral Resources Eng. Osama Al-Zamil announced the launch of the Developing the Local Supply Chain Development initiative.

The initiative aims in achieving clarity in the industrial supply chains, and also developing the industrial value chains for products, to be possible in increasing the investment for the integration of local supply chains, and their connection with the global and regional supply chains. 

Asia losing growth momentum

Asia’s strong economic rebound early this year is losing momentum, with a weaker-than-expected second quarter. International Monetary Fund (IMF) has cut growth forecasts for Asia and the Pacific to 4.0% this year and 4.3% next year, which are well below the 5.5% average over the last two decades. Despite this, Asia remains a relatively bright spot in an increasingly dimming global economy.

Waning momentum reflects three formidable headwinds, which may prove to be persistent:

1-      A sharp tightening of financial conditions, which is raising government borrowing costs and is likely to become even more constricting, as central banks in major advanced economies continue to raise interest rates to tame the fastest inflation in decades. Rapidly depreciating currencies could further complicate policy challenges.

2-      Russia’s invasion of Ukraine, which is still raging and continues to trigger a sharp slowdown of economic activity in Europe that will further reduce external demand for Asian exports.

3-      China’s strict zero-COVID policy and the related lockdowns, which, coupled with a deepening turmoil in the real estate sector, has led to an uncharacteristic and sharp slowdown in growth, that in turn is weakening momentum in connected economies.

After near-zero growth in the second quarter, China will recover modestly in the second half to reach full-year growth of 3.2% and accelerate to 4.4% next year, assuming pandemic restrictions are gradually loosened.

In Japan, IMF expects growth to remain unchanged at 1.7% this year before slowing to 1.6% next year, weighed down by weak external demand. Korea’s growth in 2022 was revised up to 2.6% due to a strong second-quarter growth but revised down to 2% in 2023 reflecting external headwinds.

India’s economy will expand, albeit more slowly than previously expected, by 6.8% this year and 6.1% in 2023, owing to a weakening of external demand and a tightening of monetary and financial conditions that are expected to weigh on growth.

Southeast Asia is likely to enjoy a strong recovery. In Vietnam which is benefitting from its growing importance in global supply chains, IMF expects 7% growth and a slight moderation next year. The Philippines is forecast to see a 6.5% expansion this year, while growth will top 5% in Indonesia and Malaysia.

Cambodia and Thailand will expand faster in 2023 on a likely pickup in foreign tourism. In Myanmar, which has endured a deep recession due to the coup and pandemic, growth this year is expected to stabilize at a low level amid continued unrest and suffering.

The outlook is more challenging for other Asian frontier markets. Sri Lanka is still experiencing a severe economic crisis, though the authorities have reached an agreement with IMF staff on a program that will help to stabilize the economy.

In Bangladesh, the war in Ukraine and high commodity prices has dampened a robust recovery from the pandemic. The authorities have preemptively requested an IMF-supported program that will bolster the external position, and access to the IMF’s new Resilience and Sustainability Trust to meet their large climate financing need, both of which will strengthen their ability to deal with future shocks.

High debt economies such as Maldives, Lao PDR, and Papua New Guinea, and those facing refinancing risks, like Mongolia, are also facing challenges as the tide changes.

IMF expects growth across Pacific Island Countries to rebound strongly next year to 4.2% from 0.8% this year as tourism-based economies benefit from eased travel restrictions.

Inflation now exceeds central bank targets in most Asian economies, driven by a mix of global food and energy prices, currencies falling against the US dollar, and shrinking output gaps. Core inflation, which excludes volatile food and energy prices, has also risen and its persistence—driven by inflation expectations and wages—must be closely monitored.

Meanwhile, the US dollar has strengthened against most major currencies as the Federal Reserve raises interest rates and signals further hikes to come. Most Asian emerging market currencies have lost between 5% and 10% of their value against the dollar this year, while the yen has depreciated by more than 20%. These recent depreciations have started passing through to core inflation across the region, and this may keep inflation high for longer than previously expected.

Finally, spikes in global food and energy prices early this year threatened to abruptly raise the cost of living across the region, with particularly strong implications for the real incomes of lower-income households that spend more of their disposable income on these commodities.

Amid lower growth, policymakers face complex challenges that will require strong responses.

Central banks will need to persevere with their policy tightening until inflation durably falls back to target. Exchange rates should be allowed to adjust to reflect fundamentals, including the terms of trade—a measure of prices for a country’s exports relative to its imports—and foreign monetary policy decisions. But if global shocks lead to a spike in borrowing rates unrelated to domestic policy changes and/or threaten financial stability or undermine the central bank’s ability to stabilize inflation expectations, foreign-exchange interventions may become a useful part of the policy mix for countries with adequate reserves, alongside macro-prudential policies. Countries should urgently consider improving their liquidity buffers, including by requesting access to precautionary instruments from the Fund for those eligible.

Public debt has risen substantially in Asia over the past 15 years—particularly in the advanced economies and China—and rose further during the pandemic. Fiscal policy should continue its gradual consolidation to moderate demand alongside monetary policy, focused on the medium-term goal of stabilizing public debt.

Accordingly, measures to shield vulnerable populations from the rising cost of living will need to be well-targeted and temporary. In countries with high debt levels, support will need to be budget-neutral to maintain the path of fiscal consolidation. Credible medium-term fiscal frameworks remain an imperative.

Beyond the short term, policies must focus on healing the damage inflicted by the pandemic and war. Scarring from the pandemic and current headwinds are likely to be sizable in Asia, in part because of elevated leverage among companies that will weigh on private investment and education losses from school closures that could erode human capital if remedial measures aren’t taken today.

Strong international cooperation is needed to prevent greater geo-economic fragmentation and to ensure that trade aids growth. There is an urgent need for ambitious structural changes to boost the region’s productive potential and address the climate crisis.

 

 

Biden National Security Strategy

The White House has released its national security strategy, outlining President Biden’s priorities at the start of what officials are calling a decisive decade for global challenges like climate change and competition among major powers.

The strategy focuses broadly on investing domestically so the US has a modern military and is not dependent on foreign supply chains. It also puts an emphasis on building alliances abroad to counter the influence of adversaries like China.

“The world is at an inflection point, and the choices we make today will set the terms on how we are set up to deal with the significant challenges and the significant opportunities faced in the years ahead,” National Security Adviser Jake Sullivan told reporters.

Sullivan said the administration highlighted two major challenges that the national security strategy needed to address. The first is competition between major powers, pointing to both economic competition and Biden’s long-running warnings about democracies versus autocracies.

The second key challenge is dealing with transnational challenges like climate change, food insecurity and infectious diseases, Sullivan added.

Underlying it all is the growing competition between the US and China, as well as the ongoing war in Ukraine sparked by Russia’s invasion in February.

“We will effectively compete with the People’s Republic of China, which is the only competitor with both the intent and, increasingly, the capability to reshape the international order, while constraining a dangerous Russia,” the national security strategy states.

The administration said that the US is willing to work with any country, including our competitors, willing to constructively address shared challenges, but officials will simultaneously pursue deeper ties with other democracies to prove that they can deliver results.

The strategy calls for investments in emerging technologies and modernizing the US military. It also calls for a focus on trade and shared technology among allies in the Indo-Pacific and Europe.

Lastly, the strategy calls for affirmative engagement across the world. It highlights the US interest in the Indo-Pacific to counter Chinese influence; notes the importance of engagement in Africa to address global problems; and it calls greater integration in the Middle East critical to advancing peace efforts.

The release of the national security strategy was delayed from earlier this year in light of Russia’s invasion of Ukraine, with officials unsure how that development might shift the administration’s priorities and planning.

The strategy is largely used for budgeting purposes and for national security agencies to get their priorities in line with the current administration. The White House last year released interim guidance that pivoted away from the Trump administration’s “America First” strategy and focused instead on global cooperation to take on China and fight the COVID-19 pandemic.

The Russian invasion of Ukraine has taken center stage in much of the administration’s national security efforts, particularly in recent weeks as Russian President Vladimir Putin escalates his rhetoric and actions with missile strikes in Ukrainian cities and thinly veiled references to nuclear weapons — and some overt ones.

The administration is also in the middle of a potential upheaval in its relationship with Saudi Arabia after OPEC Plus — a coalition of oil producing nations that the kingdom is part of — announced it would slash supply by 2 million barrels per day.

Biden said in an interview on Tuesday with CNN that Saudi Arabia would face consequences for the decision, but he declined to offer a timeline for a decision or what the repercussions might be.

 

Biden re-evaluating US relationship with Saudis

Reportedly, President Joe Biden is launching a review of the US relationship with Saudi Arabia after OPEC Plus announced last week that it would cut oil production over US objections.

The announcement came a day after powerful Democratic Senator Bob Menendez, chairman of the Senate Foreign Relations Committee, said the United States must immediately freeze all aspects of US cooperation with Saudi Arabia, including arms sales.

White House Press Secretary Karine Jean-Pierre said a review will be forthcoming but gave no timeline for action or information on who would lead the re-evaluation. The United States will be watching the situation closely over the coming weeks and months, she said.

OPEC Plus announced plans for an oil production cut last week after weeks of lobbying against one by US officials. The United States accused Saudi Arabia of kowtowing to Russia, which objects to a Western cap on the price of Russian oil spurred by the Ukraine invasion.

US officials had been quietly trying to persuade its biggest Arab partner to nix the idea of a production cut, but Saudi Arabia's de factor ruler, Crown Prince Mohammed bin Salman, was not swayed.

Bin Salman and Biden had clashed during Biden's visit to Jeddah in July over the death in 2018 of Washington Post journalist Jamal Khashoggi.

US intelligence says the crown prince approved an operation to capture or kill Khashoggi, a Saudi insider-turned-critic, who was murdered and dismembered by Saudi agents inside the kingdom's consulate in Istanbul.

The prince, son of King Salman, 86, has denied ordering the killing but acknowledged it took place under my watch. Biden said in July he told the prince he thought he was responsible.

John Kirby, the White House National Security Spokesperson, said Biden would work with Congress to think through what that relationship ought to look like going forward.

"And I think he's going to be willing to start to have those conversations right away. I don't think this is anything that's going to have to wait or should wait, quite frankly, for much longer," Kirby added.

State Department Spokesperson Ned Price also said on Tuesday the Biden administration would not overlook Iran, a US adversary and a bitter regional rival of Saudi Arabia, in the review. Much of US arms sales to Saudi Arabia have been made with Iran's threat in the region in mind.

"There are security challenges, some of which emanate from Iran. Certainly, we won't take our eye off the threat that Iran poses not only to the region, but in some ways beyond," Price said.

 

Trump pushes for Russia-Ukraine talks

Former President, Donald Trump has emerged as the most prominent advocate in the United States of negotiations between Ukraine and Russia to broker a cease-fire as hostilities between the two sides ratcheted up over the weekend.

The former president’s public pushes for some kind of truce cuts against the public views of many Republicans, who have backed support for Ukraine in the war, and reflect some of the schisms within the party between Trump and his staunchest defenders and other prominent conservatives.

Trump has used his social media platform, Truth Social, and recent public appearances to broadly criticize the Biden administration’s handling of the war. Trump has not offered many specifics on how he would approach the situation differently, other than to declare Russian President Vladimir Putin would not have invaded if Trump were still in office.

While Biden administration has been adamant that it will not push for negotiations that Ukraine does not support, Trump has been vocal that the two sides should broker a cease-fire, even suggesting at one point that he could be involved in the talks.

“With potentially hundreds of thousands of people dying, we must demand the immediate negotiation of the peaceful end to the war in Ukraine, or we will end up in World War III and there will be nothing left of our planet all because stupid people didn’t have a clue,” Trump told supporters Saturday at a rally in Arizona. “They really don’t understand … what they’re dealing with.

Those comments came days after Trump claimed during a speech in Miami that his relationship with Putin would have prevented the Russian invasion of Ukraine in February.

“You would never in a million years — they wouldn’t be there. So sad,” Trump said at an event organized by the America First Policy Institute. “When I see all these people being killed, it’s got to stop. They’ve got to negotiate a deal. It’s got to stop.”

 “Be strategic, be smart (brilliant!), get a negotiated deal done NOW,” Trump wrote. “Both sides need and want it. The entire World is at stake. I will head up group???”

While it is easy to dismiss Trump’s remarks, he remains a favorite for the GOP presidential nomination, a contest expected to intensify after the midterms. If he doubles down on some of his positions, it could have unpredictable consequences on the politics of arming and aiding Ukraine next year.

One GOP strategist said Trump’s views won’t be a major factor in the midterms for Republicans with domestic issues dominating the campaign. But if Republicans retake majorities in both chambers of Congress, Trump could turn up pressure on lawmakers to adopt some of his rhetoric.

For now, experts believe the former president’s views are not widely shared given public support for Ukraine remains high, and the US and its allies have been unwilling to budge on ceding Ukrainian territory to Russia as part of any negotiation.

“What I can tell you is that Mr. Putin started this war and Mr. Putin could end it today — simply by moving his troops out of the country,” John Kirby, a spokesperson with the National Security Council, said Sunday, adding that Putin has shown “no indications” that he’s willing to sit down and negotiate an end to the war.

Other prominent Republicans have also shied away from direct calls for negotiating an end to the war in the way Trump has, instead focusing on recent missteps by President Biden and reinforcing the need to support Ukraine.

“The destruction today in Kyiv is horrific — allies and partners must get Ukraine the missile defenses and long-range weapons it has asked for,” GOP members of the House Armed Services Committee tweeted Monday. “Arbitrary red lines by the Biden admin that hinder lethal aid shipments will only prolong this conflict.”

Mike Pompeo, who served as Secretary of State under Trump and is viewed as a potential 2024 presidential candidate, focused on “Fox News Sunday” on Biden’s warnings of nuclear “Armageddon,” saying the focus should be on quiet diplomacy and public pressure on Putin.

“America has always pushed back against our adversaries by showing enormous resolve, executing quiet diplomacy in the same way that we did during our time in office,” Pompeo said.

“Making very clear to Vladimir Putin that the costs of him using a nuclear weapon will bring the force of not only the United States and Europe, but the whole world against Vladimir Putin. We ought to be doing that. I hope that they’re doing this quietly.”

Dozens of House Republicans voted against a $39 billion aid package in May. Rep. Madison Cawthorn drew blowback for calling Ukrainian President Volodymyr Zelensky a “thug.”

Eight months after Russia first invaded Ukraine, the war has ratcheted up considerably in recent weeks. Following a series of successful Ukrainian counteroffensives to push back the Russian military, Putin sought to illegally annex four Ukrainian regions and mobilize hundreds of thousands of Russian men into the military.

An explosion over the weekend damaged a critical bridge linking Russia to the occupied Crimean Peninsula that was a key supply chain route and a personal point of pride for Putin. The Russian leader personally drove a truck over the bridge when it opened in 2018.

 

French call for NATO exit

Thousands of angry French protesters have gathered in the French capital to call for the country’s withdrawal from the US-led NATO military alliance. The protesters have also called for the resignation of the country’s President Emmanuel Macron.

The demonstration reflects similar rallies being held across Europe in opposition to their respective government’s support for the war in Ukraine. The constant supply of arms by mainly NATO members has prolonged the conflict in Eastern Europe, leading to the suffering of civilians caught up in the cross fire.

When Russia expressed legitimate concerns about the NATO military’s eastward expansion toward its border, it opened the door to discussion, negotiation and proposals on security guarantees. However, these were ignored which many critics said, at the time, will lead to a military confrontation that will hurt ordinary Europeans. In this case, Ukrainian civilians are suffering from the human cost and ordinary civilians are falling into poverty.

Russia’s sense of insecurity in the face of the North Atlantic Treaty Organization seemed quite genuine, but critics say the media coverage has dismissed Moscow's initial concerns.

Opposition to NATO has been strong in Europe. The military alliance’s summits are always met with anti-war demonstrations. In June this year, protesters marched during an anti-NATO rally ahead of the summit that was held in Madrid. The organizers said the American-led military alliance is not the solution to the war in Ukraine. US arms manufacturers have made lucrative profits from the war.

Last month, an estimated 70,000 people protested in Prague against the Czech government, calling on the ruling coalition to do more to control soaring energy prices and voicing opposition to the European Union and NATO.

For many years, the Kremlin has made it clear that if NATO continued to mass troops and weapons on the Russian border, the expansion would likely be met with serious resistance by the Russians, even with military action. That view was not just limited to Russian officials. Even some prominent American foreign policy experts backing the same possible scenario. The current director of the CIA, William Burns, has been warning about the provocation and consequences of NATO’s expansion on Russia for more than 20 years now.  

On the other hand, Europe’s decision to cave into American pressure and impose unprecedented sanctions on Moscow has heavily restricted the gas supplies to the continent which have instead pushed energy prices up, leaving many in poverty. Europe relied on 40% of Russian gas before the conflict erupted.

The shortage of energy on the continent and rising prices for the fuel has been met with angry voters bringing down governments at the polling stations.

A recent poll by Elabe reveals that support for anti-Russian sanctions is on the decline across France. The survey shows only 40% of the French population are in favor of the anti-Russian sanctions. The poll also reveals that 32% of French people think the anti-Russia sanctions must be restricted to diminish their effect on the livelihoods of the French people.

The opposition French Patriots party again called for the demonstrations after the initial protests that took place on September 3rd. The protesters want Macron to leave office and withdraw from both NATO and the European Union.

The French government, like others in Europe, is adopting or considering various emergency measures ahead of the winter, such as the possibility of three-hour power outages in the United Kingdom.

As inflation levels are biting, a group of French intellectuals, including Nobel literature prize winner Annie Ernaux, have urged people to join the protests being organized by the left for next week. They accuse President Macron of not doing enough to help the poor cope with high prices while the profits of some companies are spiking.

The group of 69 signatories, including writers, film directors and university teachers, said in a text published in the Journal Du Dimanche that "Emmanuel Macron is using inflation to widen the wealth gap, to boost capital income at the expense of the rest." 

"It is all a matter of political will," said the text, co-signed by Ernaux, who on Thursday became the first French woman to win the Nobel Prize for Literature.

The statement also said the government has not done enough to fight the skyrocketing energy prices and declined to raise taxes on companies making enormous profits as a result of high inflation.

The signatories have also urged the public to join the protest march planned for October 16, which is being organized by the political movement of the France Unbowed party, which this year struck an alliance with more moderate leftwing parties to form France's largest opposition bloc.

Next week’s protest is being promoted as "against the high cost of living and climate inaction". It comes as Macron faces stiff resistance from unions over a planned pensions reform and as strikes by workers demanding a pay rise from retail to refineries have disrupted parts of the economy.

There is more misery for the French government as a number of fuel service stations are grappling with supply problems amid strike action at refineries run by major oil companies TotalEnergies and ExxonMobil. The walkout by members of the national trade union center CGT mainly over pay has disrupted operations at refineries and storage facilities. The industrial action has forced the government to tap into the country’s strategic reserves.

Environment Minister Christophe Bechu earlier told French media the government will, for the time being, not be rationing petrol for drivers or restrict the use of service stations in response to supply problems. "We haven't reached this point yet," Bechu said when asked if the government would impose any national measures beyond the bans already in place in some regions on filling large flat-sided metal containers for storing or transporting petrol.

The strikes at the refineries of ExxonMobil and TotalEnergies will continue, union officials at both companies have said. “It is continuing everywhere,” a CGT representative said, adding that there had been no contact from TotalEnergies since Saturday’s call by the union for the company’s managers to begin talks on pay.

In some areas, the share of affected petrol stations is much higher than the national average. An interactive map compiled by the website mon-essence.fr, where more than 100,000 users have reported outages in recent days, shows a large majority of petrol stations in and around Paris were marked out of service.

Across France, long queues have been seen outside fuel stations. "The waiting line will take you at least one-and-a-half hours or two", motorist Jean Galibert said as he entered the last stretch of a 700-metre tailback in front of a Paris service station. Another motorist, Franck Chang, said, "This situation right behind me reflects the state of France. We're struggling."

Reports say the strikes have reduced France's total refinery output by more than 60% which will be seen as another blow to the French government. On Sunday, TotalEnergies claimed to have offered to bring forward wage talks, in response to union demands, as it strongly seeks to end the industrial action that has disrupted supplies to almost a third of French petrol stations.

Amid warnings that energy shortages and rising inflation are set to extend in coming winter, further protests and anger at governments’ economic policies across Europe are expected to expand.

 

Young Americans turning against Israel

A new extensive research has revealed American public views toward Washington’s foreign policy with the majority of younger American opposing Washington's arms sales to the Israeli regime. The study also reveals massive support among the Americans toward a return to the Iran nuclear deal.

The survey conducted by the Eurasia Group Foundation suggests that the younger American generation is becoming politically more aware of Israeli atrocities and the insecurity it brings to West Asia. The majority of those surveyed (18-29 years old) disapprove the ongoing arms assistance to Israel. Albeit Americans of older age groups (above 60 years of age) are more supportive of the US military assistance to the occupying regime.

The United States provides Israel with some US$4 billion in annual military aid. That makes the regime the largest recipient of American military aid. However, the money comes from the pockets of American taxpayers, many of whom are not aware that their money is funding genocide and ethnic cleansing of the indigenous people of Palestine. 

Nearly 80% support the Biden administration negotiating a return to the Iran nuclear deal. There has been strong regional and international debate over how much ordinary Americans support their government's military assistance to authoritarian, occupying, apartheid regimes and dictatorships. Washington regularly claims security reasons for the assistance it provides but very few buy this argument. 

Mark Hannah, a senior fellow at Eurasia Group Foundation said, "We began this survey five years ago because we believed lawmakers and foreign policy leaders conducting foreign policy on behalf of the American people would benefit from a window into their opinions and priorities." 

Hannah expressed hope, "Those inside the Beltway use this survey to make the activities they pursue more sensitive to — and informed by — the opinions of their constituents, and to bridge the gap between the concerns of policymakers and those of ordinary Americans."

Just last month, the US aviation giant Boeing revealed that it will be providing the Israeli regime with four Boeing refueling military aircrafts in the coming years as part of the free military aid it receives from Washington.

The contract between Boeing and the US Defense Department is to the tune US$927 million for the four KC-46A aircraft. In essence, that means the US taxpayer will pay the price by footing the bill of US$927 million. Boeing will make a considerable profit and the regime will find more opportunities to create regional instability.

The Israeli war minister, Benny Gantz said, "This is yet another testament to the powerful alliance and strategic ties between the defense establishments and governments of Israel and the United States."

As per the norm the war minister and other regime’s officials alongside their counterparts in Washington cite Iran as the pretext for the massive military aid budget. 

US military aid to Israel has mostly bipartisan backing in Congress and continues to be approved by a majority of lawmakers each year.

The University of Maryland found less than one percent of respondents viewed Israel as one of Washington's top two allies. Over the years there have been other polls that reflect the findings by the Eurasia Group Foundation. Earlier this year, a Pew Research poll also showed critical views toward Israel among younger Americans - respondents (under 30 years of age) 61% of this age group had favorable views of the Palestinian people.

Also this year, the University of Maryland found less than one percent of respondents viewed Israel as one of Washington's top two allies.

Zuri Linetsky, a research fellow at EGF, told Middle East Eye, "We asked the question about ranking why you would stop selling [arms] and specifically respondents who were against selling arms to Israel said that it violates human rights through its enduring occupation of Palestine. So that resonates with people."

The latest poll also shows American opposition to the ongoing US arms sales to Saudi Arabia, with nearly 70% of respondents disapproving the massive sale of US weapons to Riyadh. Saudi Arabia has used Western-supplied weapons, especially Americans, to level Yemeni infrastructure to the ground.

This is despite growing concern among rights groups that more arms sales to countries, such as Saudi Arabia bombing Yemen or Israel attacking other nations, continue to be approved by the Biden administration. In August, President Biden approved a massive US$5 billion weapons sale to Saudi Arabia and the UAE for missile technology.

The study also shows how respondents are in favor of curbing US military adventurism overseas and the increasing support of more efforts by the US administration towards diplomacy, even with American adversaries.

Among the top takeaways of the Eurasia Group Foundation findings in the West Asia region are:

On the Iran Nuclear Deal:

Regardless of the partisan leanings, Democrat or Republican, most Americans are in favor of negotiations with Iran. Nearly 80% support the Biden administration negotiating a return to the Iran nuclear deal. That support is notably bipartisan; more than 70% of Republicans believed the US should continue to pursue these negotiations.

"We found that there are vocal critics on both sides of the political aisle in Congress, against pursuing an agreement with Iran, but those views don't necessarily reflect what we're finding amongst the survey respondents," Lucas Robinson, an external relations associate at the foundation, told MEE.

The Biden administration has continued with his predecessor's policies on Iran; the so-called maximum pressure campaign that have led to the death of children with rare diseases and cancer patients alongside a whole range of other humanitarian issues that have hurt ordinary Iranian people.

On War Powers:

Roughly 80% believe the president's war-making abilities should be more restricted by Congress, representing a consecutive two-year increase. The US has waged numerous invasions of countries, most notably Afghanistan and Iraq. It continues to occupy parts of West Asia illegally and is invoked in secret military programs without the consent of Congress. 

On Afghanistan:

Nearly two-thirds of respondents think the most important lesson from the war in Afghanistan was that the United States should not be in the business of nation-building or that it should only send troops into harm's way if vital national interests are threatened.

With regards to the issue of nuclear weapons, nearly 75% are concerned with nuclear weapons. Respondents who have served or are currently serving in the military are significantly less concerned than those without military experience.

"For the vast majority of the 21st century, the United States has been involved in conflicts and in far-flung parts of the world. So the question is, is this what the American people want? Does this represent their interests?" Linetsky asks.

"This is very much a test to see where people who take surveys fall down on what American policy is towards the world and what they think their leaders' priorities should be, be they international or domestic."

The White House is at odds with most respondents - a diverse group of Americans across the country from different religions, political affiliations, age groups and income levels.

The foundation surveyed more than 2,000 voting-age Americans online with detailed questions about US foreign policy and America's global role.

 

 

Gold losing glitter

Gold is losing its shine. The precious metal, whose price neared a record high at the onset of the war in Ukraine, has come back to earth in the second half of the year after a string of US interest rate increases and a surge in the value of the dollar.

Benchmark gold futures prices in New York are at US$1,729 per ounce as of early October, down 15% from early March. At one point in late September the benchmark fell to US$1,626, the lowest since April 2020.

Gold's strength early in the year was a reflection of its reputation as a haven in times of insecurity. But its subsequent fall is exposing the close inverse relationship between demand for gold and dollar strength.

The fall in gold prices came on the back of accelerating US interest rate hikes. In September, the Federal Reserve raised the benchmark rate by 75 basis points (0.75%) for the third consecutive time. Since March, Fed has raised rates five times to tame inflation. 

The dollar index -- which measures the US dollar's strength against a basket of six influential currencies such as the euro -- soared to 114 in late September, hitting the highest in two decades. A strong dollar weighs on gold, as the yellow metal is often described as a "stateless currency" that investors buy when there is little trust in traditional currencies.

Furthermore, since gold earns no return for its owner, higher interest rates increase the incentive to switch from holding gold to holding dollars.

The Fed is expected to maintain its hawkish approach this year amid continued inflation. In August, the US Consumer Price Index registered an 8.3% increase compared to the same month last year, up from a market consensus of an 8% increase. In the September meeting, the Fed increased its year-end rate forecast to 4.4%, from the 3.4% it had previously expected in the June meeting.

Despite the headwinds for gold in the short term, analysts say the current price level is at the lower end and forecast a rebound next year. 

Itsuo Toshima, a Japan-based financial market analyst for Toshima & Associates, expects gold to range between US$1,800 and US$2,200 per ounce next year. "Amid persistent inflation, investors will soon start fretting over stagflation," said Toshima. He argued that even though inflation can somewhat be tamed, there is a limitation because some costs, such as rent, are unlikely to fall immediately.

Toshima expects the currently strong dollar to peak this year, as it lacks additional bullish factors for next year. "When there are no more bullish factors to strengthen the dollar further, the dollar index will reverse course to fall sharply," he added. 

Internationally, Citi is broadly bullish on gold, expecting prices to rebound above US$1,900 by mid-2023. Goldman Sachs in August forecast gold prices 12 months later at US$1,950. 

Amid continued uncertainty over geopolitical risks and the Ukraine war, gold market analyst Koichiro Kamei at Tokyo's Market Strategy Institute argues that there will be stable gold demand. The sharp fall in cryptocurrencies such as bitcoin on the back of US monetary tightening was alarming for investors, whereas gold prices remained relatively firm, Kamei added. 

The direction of gold prices is being closely watched in India and China, where demand for purchases of physical gold is traditionally strong. The two countries jointly account for around 60% of global demand for gold jewelry, bars and coins.

Ahead of Diwali, one of Hinduism's most popular festival seasons, which falls in October, demand for gold jewelry, bars and coins is expected to increase. The wedding season also comes between November and February, during which gold jewelry sells well. Analysts say despite the headwinds of a weak rupee, traditional demand for gold will still be strong. Gold prices are around 139,000 rupees per ounce as of early October, up 1.2% from three months ago, while gold prices in dollars fell 3% over the same period.

In China, the depreciation of the yuan is acting as a headwind for retail investors. In late September, the yuan plunged to the lowest level against the dollar since 2008. According to the World Gold Council, gold prices in yuan are 4% higher compared with three month ago.

Still, consumer demand for physical gold has little impact on international bullion prices, analysts say. The bigger determinant is how investors manage funds in the gold futures market while taking interest rates and the global economic outlook into account. 

Tatsufumi Okoshi, senior economist at Nomura Securities, expects the Fed to start cutting rates in September next year, a tailwind for the yellow metal, which yields no interest. "As fears over recession loom over and demand for safe-haven assets continues, we will see gold bounce back," said Okoshi.

 

OPEC Plus production cut decision attracts opposite reactions

US Treasury Secretary Janet Yellen said a decision by the OPEC Plus to cut oil production was unhelpful and unwise for the global economy, especially emerging markets, the Financial Times quoted on Sunday.

"We're very worried about developing countries and the problems they face," Yellen told the newspaper in an interview.

As against this, Kremlin praised OPEC Plus for agreeing production cuts that had successfully countered the ‘mayhem’ sown by the United States in global energy markets.

The OPEC Plus decision to cut oil production despite stiff US opposition has further strained already tense relations between President Joe Biden and Saudi royal family, Reuters reported on Saturday.

The White House pushed hard to prevent the output cut. Biden hopes to keep US gasoline prices from spiking again ahead of midterm elections in which his Democratic party is struggling to maintain control of the US Congress.

Kremlin spokesman Dmitry Peskov said it was very good that such balanced, thoughtful and planned work of the countries, which take a responsible position within OPEC, is opposed to the actions of the United States.

"This at least balances the mayhem that the Americans are causing," Peskov said, according to Russian news agencies.

Peskov said that the United States had begun to lose its composure over the OPEC decision and was even trying to push additional volumes of its reserves into the market.

"They are trying to manipulate with their oil reserves by throwing additional volumes into the market. Such a game will not lead to anything good," Peskov said.

The worry for those tracking Europe's energy transition commitments is that these accumulated costs of LNG imports, alongside other expenses already incurred, drain both the funds available for de-carbonization projects and the level of ambition of the governments responsible for them.

There's an irony in that this potential diminished firepower comes when the appetite in society and government for weaning Europe off fossil fuels has likely never been greater.

But funding has always been a critical component of every energy transition plan, and the reality is that if government and commercial budgets have already been drained by imports of fossil fuels to keep the economy going, there may be little left in the kitty to finance the transition to a greener energy system.

 

Iran State run live TV hacked by protesters

According to a BBC report, Iran’s state-run broadcaster was apparently hacked on air Saturday, with a news bulletin interrupted by a protest against the country’s leader. A mask appeared on the screen, followed by an image of Supreme Leader Ali Khamenei with flames around him. The group called itself “Adalat Ali”, or Ali’s Justice.

It comes after at least three people were shot dead when protesters clashed with security forces in new unrest over the death of Mahsa Amini. She was detained in Tehran by morality police for allegedly not covering her hair properly.

The 22-year-old Iranian Kurd died in custody on September 16, 2022, three days after her arrest. Her death has sparked an unprecedented wave of protest across the country.

Saturday’s TV news bulletin at 21:00 (17:30 GMT) was interrupted with images, which included Iran’s supreme leader with a target on his head, photos of Amini and three other women killed in recent protests.

One of the captions read “join us and rise up”, whilst another said “our youths’ blood is dripping off your paws”.

The interruption lasted only a few seconds before being cut off.

Such displays of rebellion against Ayatollah Ali Khamenei are historically rare, and he wields almost complete power within Iran.

But following Amini’s death, there has been widespread open dissent.

Also on Saturday, social media videos emerged which seemed to show female students at a university in Tehran chanting “get lost” during a visit by President Ebrahim Raisi.

Earlier in the day, two people were killed in Sanandaj, including a man shot in his car after he sounded his horn in support of protesters.

A video shared online also showed a woman shot in the neck lying unconscious on the ground in Mashhad.

In Sanandaj, a police official said a man had been killed by “counter-revolutionaries”, the state-run news agency IRNA reported.

On Friday, Iran’s Forensic Medicine Organization said Amini had died from multiple organ failure caused by cerebral hypoxia — and not from blows to the head, as her family and protesters contend.

Rights groups say more than 150 people have been killed since the protests in the Islamic Republic began on September 17.

Shops in several cities have shut in support of the protesters, including in Tehran’s bazaar where some set fire to a police kiosk and chased the security forces away.

The protests reaching the bazaar in Tehran will ring alarm bells with Iranian leaders who have counted the merchants as among their supporters.