Can Black Sea grain deal survive without Russia?

According to a Reuters report, United Nations, Turkey and Ukraine pressed ahead to implement a Black Sea grain deal and agreed on a transit plan for Monday for 16 vessels to move forward, despite Russia's withdrawal from the pact that has allowed the export of Ukrainian agricultural products to the world markets.

Russia, which invaded Ukraine on February 24 this year, on Saturday halted its role in the Black Sea deal for an indefinite term, cutting shipments from one of the world's top grain exporters, because it said it could not guarantee safety of civilian ships travelling under the pact after an attack on its Black Sea fleet.

The move has sparked an outcry from Ukraine, NATO, the European Union and the United States, while the United Nations and Turkey, two main brokers of the July deal, scrambled on Sunday to save it.

UN Secretary-General Antonio Guterres was deeply concerned about Russia's move and delayed a foreign trip to try and revive the agreement that was intended to ease a global food crisis, his spokesperson said.

Following Russia's move, Chicago wheat futures jumped more than 5% on Monday as both Russia and Ukraine are among the world's largest wheat exporters, analysts said.

More than 9.5 million tons corn, wheat, sunflower products, barley, rapeseed and soy have been exported since July. Under the deal, a Joint Coordination Centre (JCC) - made up of UN, Turkish, Russian and Ukrainian officials - agrees on the movement of ships and inspects the vessels.

No ships moved through the established maritime humanitarian corridor on Sunday. But the United Nations said in a statement that it had agreed with Ukraine and Turkey on a movement plan for 16 vessels on Monday - 12 outbound and 4 inbound.

It said the Russian officials at the JCC had been told about the plan, along with the intention to inspect 40 outbound vessels on Monday, and noted that "all participants coordinate with their respective military and other relevant authorities to ensure the safe passage of commercial vessels" under the deal.

During Sunday's session among the grain deal delegations, Russian officials said Moscow will continue the dialogue with the United Nations and the Turkish delegation on pressing issues, the UN said in its statement.

Turkish Defence Minister Hulusi Akar was in contact with his Russian and Ukrainian counterparts to try and salvage the agreement and had asked the parties to avoid any provocation, the Turkish defence ministry said.

NATO and the European Union have urged Russia to reconsider its decision. US President Joe Biden on Saturday called Russia's move purely outrageous and said it would increase starvation. US Secretary of State Antony Blinken accused Moscow of weaponizing food.

On Sunday, Russia's ambassador to Washington snapped back, saying the US response was outrageous and made false assertions about Moscow's move.

QatarEnergy keen in acquiring 30% stake in Lebanon offshore gas project

State-owned QatarEnergy is in talks with the Lebanese government to take a 30% stake in an offshore exploration block and is also negotiating with TotalEnergies and ENI on this matter, CEO Saad al-Kaabi confirmed on Sunday.

According to Reuters, TotalEnergies and the Lebanese government have reached a deal handing the French oil major temporary majority control of the block and paving the way for negotiations with Qatar over a stake in the gas project.

"We are in the process of discussing that with the government of Lebanon and the partners, Total and ENI for a participation of around 30% ownership of that exploration block," Kaabi said.

"In due course when we get that basically finalized as an agreement, and we sign that agreement, we will announce it."

The initial exploration license was held by a three-part consortium of TotalEnergies, Italy's Eni and Novatek. Beirut announced in September that Novatek, which held a 20% stake, would exit.

Lebanon's cabinet issued an unpublished decision on October 21, assigning Novatek's stake to a firm called Daja 216 and transferring TotalEnergies's 40% stake to another company, Daja 215. It is believed that Daja 215 and Daja 216 were TotalEnergies vehicles.

The sources had said that the understanding between TotalEnergies and Lebanon was that the French group would enter negotiations with QatarEnergy over the former Novatek stake. Qatar was seeking a 30% stake, comprised of Novatek's former stake and a 5% stake from each of TotalEnergies and Eni.

Offshore areas in the eastern Mediterranean and Levant have yielded major gas discoveries in the past decade. Interest in them has grown since Russia's invasion of Ukraine disrupted gas supplies.

 

Russia intends to suspend grain export deal

Russia expresses intent to suspend its participation in the agreement to ensure the continuation of Ukrainian grain exports — vital for food supplies to poor countries — linking the decision to a drone attack on Russian ships in occupied Crimea on Saturday morning. The Defense Ministry announced the move, and it was also reported by the state news agency TASS.

"Taking into account the terrorist act carried out by the Kiev regime with the participation of British experts against ships of the Black Sea fleet and civilian vessels involved in the security of grain corridors, Russia suspends its participation in the implementation of the agreement on exports of agricultural products from Ukrainian ports," the Russian Defense Ministry announced on Telegram.

The move comes a day after UN Secretary-General Antonio Guterres urged Russia and Ukraine to renew the deal that has seen more than nine million tons of grain exported from Ukraine and brought down global food prices.
The Ukrainian president's chief of staff, Andriy Yermak, accused Russia of blackmail and invented terror attacks on its own territory — an apparent response to Russian accusations that Ukraine was behind the blasts.

An adviser to Ukraine's Interior Ministry, Anton Gerashchenko, claimed in his Telegram channel that "careless handling of explosives" in occupied Crimea led to explosions aboard four warships belonging to Russia's Black Sea Fleet.

Regarding the UK, the Russian Defense Ministry also blamed British specialists based in Ochakov, Mykolaiv region for preparing a terrorist act and training Ukrainian military personnel.

It also said British navy personnel blew up the Nord Stream gas pipelines last month, without providing any evidence. Britain's Defense Ministry said the Russian claims were false and designed to distract from Russian military failures in Ukraine.

Lebanon plunging into constitutional chaos

Outgoing Lebanese President Michel Aoun told Reuters on Saturday his nation could be sliding into constitutional chaos, with an unprecedented situation of having no one in line to succeed him and a cabinet that is operating in a caretaker capacity.

Aoun is set to leave the presidential palace on Sunday, a day before his six-year term ends, but four sessions in the nation's fractured parliament have failed to reach consensus on a candidate to succeed him.

Aoun said in an interview an 11th-hour political move to address the constitutional crisis might be possible, but added there is no final decision on what that could involve.

Aoun's presidency is inextricably linked in the minds of many Lebanese to their country's worst days since the 1975-1990 civil war, with the financial crisis that began in 2019 and the deadly Beirut port blast of 2020.

In the days after the blast, Aoun said he had received a report about the roughly 2,700 tons of ammonium nitrate stored at the port of Beirut weeks before they detonated and killed some 220 people.

Aoun's son-in-law Gebran Bassil, who was put on a sanctions list by the United States in 2020 for alleged corruption, has presidential ambitions, according to political sources.

Bassil has denied the allegations of corruption, and Aoun said on Saturday the sanctions would not stop Bassil from eventually being a presidential candidate.

Once he's elected president, the sanctions will go away, Aoun said, without elaborating.

In his final week as President, Aoun signed a US-brokered deal delineating Lebanon's southern maritime border with Israel - a modest diplomatic breakthrough that would allow both countries to extract natural gas from maritime deposits.

He said powerful Iran-backed armed group Hezbollah, which sent unarmed drones over Israel and threatened to attack its offshore rigs multiple times, had served as a deterrent that had helped keep the negotiations going in Lebanon's favour.

"It wasn't coordinated (with the government). It was an initiative taken by Hezbollah and it was useful," Aoun said, adding that the Lebanese army "had no role" in this regard.

He said the deal paved the way for gas discoveries that could be Lebanon's last chance at recovering from a three-year financial meltdown that has cost the currency 95% of its value and pushed 80% of the population into poverty.

Lebanon has otherwise made slow progress on a checklist of reforms required to gain access to US$3 billion in financing from the International Monetary Fund.

Aoun said he would stay involved in politics in Lebanon even after he leaves office, particularly to fight Central Bank governor Riad Salameh, one of the president's main political adversaries.

Salameh is being investigated in Lebanon and at least five countries abroad on charges of corruption and embezzlement of public funds, charges he denies.

 

 

 

 

Iran denies supplying arms to Russia

Iran has maintained its active neutrality in the Ukraine war and has never given weapons to the two sides of the war, Iran’s ambassador and permanent representative to the United Nations said on Thursday.

Amir Saeed Iravani said Iran has been insisting on an immediate end to the war in Ukraine, and despite bilateral defense cooperation with Russia, Tehran has never given weapons to the warring parties for use in the war in Ukraine before or after the conflict.

Speaking at the UN Security Council meeting, he refuted claims by Western countries on alleged use of Iranian drones in the war in Ukraine and attempts to link it with UN Security Council Resolution 2231 on the nuclear agreement.

“A number of members of the United Nations Security Council, including the United States, have accused other countries of violating UNSCR 2231, while they themselves continue to violate all legal obligations under the same resolution.

A clear example of this breach of commitment is the illegal withdrawal of the United States from the 2015 nuclear deal and the continuation of this breach of obligations now as leverage for bargaining.

An action that is considered a clear and flagrant violation of the mandatory rules of international law, the United Nations Charter and Security Council Resolution 2231,” the diplomat stated.

In another move, Iravani pointed out, Western countries have tried to present false, misleading, arbitrary and incomplete interpretations of Resolution 2231.

“They made a false connection between this resolution and the use of drones in the conflict in Ukraine in order to justify their baseless claims against the Islamic Republic of Iran,” the ambassador stated.

He added that the claim of violation of Paragraph 4 of Appendix B of Resolution 2231 is a mistake and a misleading and arbitrary interpretation, which is considered to be in contradiction with the provisions, spirit and text of this paragraph.

“This paragraph clearly refers to the limitations of items, materials, equipment, goods and technology that could contribute to the development related to nuclear weapons, in which Iran has never produced or supplied these items and has no intention to produce them,” Iravani underlined.

Regarding the request submitted to the UN Secretariat to conduct an investigation within the framework of Resolution 2231 to evaluate the type of drones used in the conflict in Ukraine, the ambassador stressed the resolution has not provided any legal basis for conducting such investigations.

“In addition, and more importantly, the memorandum dated January 16, 2016 by the head of the Security Council has specified the duties related to the implementation of the resolution, especially in relation to the principles mentioned in paragraph 2 and 7 of Appendix B of this resolution. The Secretariat has duties regarding this resolution including managing all incoming and outgoing communications related to the implementation of the resolution, drafting correspondence, speeches and justifying the facilitator related to the implementation of the resolution, maintaining all information and documents related to the work of the Security Council,” he added.

Ambassador Iravani further warned any misuse of the duties mentioned in Resolution 2231, saying the requested investigation is illegal and is considered a clear violation of the Secretariat's agenda.

“Mr. President, I want to emphasize once again Iran's clear and consistent position regarding the situation in Ukraine. Since the beginning of the war in Ukraine, Iran has adopted and maintained a position of active neutrality. Our country emphasizes that all members of the United Nations must fully respect the goals and principles contained in the United Nations Charter and international law, including sovereignty, independence, unity and territorial integrity,” the diplomat said.

He concluded his remarks by saying, “Beyond the legal and political position, Iran believes from a moral point of view that the supply of military weapons cannot help end the war and will escalate the war and increase the injuries and destructions and cause the suffering and pain of the civilians. This is the reason why Iran has asked the parties to fulfill their obligations under international humanitarian law and conduct consultations to protect citizens and vital infrastructures against military attacks.”

 

Iran Pakistan private sectors ink MoUs

Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) and Federation of Pakistan Chambers of Commerce and Industries (FPCCI) have signed three memorandum of understanding (MoU) with the aim of expanding economic cooperation between the private sectors of the two countries.

The MOUs were signed during a visit of an Iranian private sector delegation headed by ICCIMA Head Gholam-Hossein Shafeie to the Pakistani cities of Karachi and Lahore.

Based on the signed memorandums, the two sides agreed to strengthen comprehensive cooperation between the private sectors of the two countries, to establish a joint trade council of Iran and Pakistan, and to determine a mechanism to resolve trade disputes.

Accordingly, the Iran-Pakistan Joint Trade Council will work together with the Iran-Pakistan Joint Chamber of Commerce to strengthen economic relations between the two neighbors.

ICCIMA and FPCCI will also resolve the trade disputes between businessmen and traders through a channel separated from the two countries’ legal systems.

During their visit to Pakistan, the Iranian delegates attended a meeting with officials from the State Bank of Pakistan in which the two sides discussed details of a barter trade mechanism between the two countries.

The Zahedan Chamber of Commerce from Iran and the Quetta Chamber of Commerce and Industries (QCCI) from Pakistan have been put in charge as coordinators for implementing and pursuing the barter trade mechanism between the two sides.

As reported, at the end of the meeting the two sides agreed to form a 10-member committee to work on the details of the mechanism and follow up on the related issues in the future.

Solving currency and customs issues for the easy passage of transit trucks and accelerating the implementation of the free trade agreement between Iran and Pakistan, along with using Iran's membership status in the Eurasian Economic Union (EAEU) and the Shanghai Cooperation Organization (SCO), were also among the issues that were discussed in this meeting.

Details of the barter trade mechanism were also discussed in another meeting with the members of the Karachi Chamber of Commerce and Industries (KCCI) on Thursday.

Speaking in this meeting, KCCI Head Mohammad Tariq Yousuf mentioned the unsatisfactory level of trade between the two countries and noted that the barter trade agreement would open new windows for the expansion of trade ties between the two sides.

Shafeie for his part mentioned Karachi as the economic capital of Pakistan, saying that despite the significant capacities on both sides, the level of commercial relations between the two countries is still very limited.

During their stay in Pakistan, the 26-member Iranian delegation, comprised of the head of the Iran-Pakistan Joint Chamber of commerce, the heads of the three provincial chambers of Isfahan, Zanjan, and Zahedan, the secretary general of the ECO chamber of commerce, and four MPs, visited the cities of Karachi and Lahore.

Promoting bilateral trade to five billion dollars is said to be among the main objectives of this visit.

 

Putin criticizes West over Ukraine war

Russian President Vladimir Putin is showing no regrets for the war against neighbour Ukraine, insisting it is going according to plan and playing down any nuclear standoff with the West.

Putin, in remarks at a conference in Moscow on Thursday, had a familiar litany of grievances against our Western opponents and said the West's dominance over world affairs was coming to an end.

Putin accused the West of inciting the war in Ukraine and of playing a dangerous, bloody and dirty game that was sowing chaos across the world. Putin said, the West would have to talk to Russia and other major powers about the future of the world.

"We are standing at a historical frontier, ahead is probably the most dangerous, unpredictable and, at the same time, important decade since the end of World War Two," Putin said at an annual foreign policy conference.

The conflict, which began eight months ago with an invasion by Russian forces of neighbouring Ukraine, has killed thousands, displaced millions, shaken the global economy and reopened Cold War-era divisions.

Asked at the conference whether there had been any disappointments in the past year, Putin answered simply: "No", though he also said he always thinks about the Russian lives lost in Ukraine.

In response to questions, Putin made no mention of Russia's battlefield setbacks in recent months and said Russian aims had not changed.

Russia was fighting to protect the people of the Donbas, he said, referring to an eastern industrial region that comprises two of the four Ukrainian provinces he proclaimed annexed last month.

Fighting on the ground appears to have slowed in recent days, with Ukrainian officials saying tough terrain and bad weather had held up their main advance in Kherson.

On Thursday a close ally of Putin, Chechen leader Ramzan Kadyrov, said 23 of his soldiers had been killed and 58 others wounded in a Ukrainian artillery attack this week in Kherson. After the attack, Chechen forces killed about 70 Ukrainians, he said.

Russian forces shelled Ukrainian positions along the entire line of contact and built fortifications, particularly on the east bank of the Dnipro River, the General Staff of the Ukrainian Armed Forces said in a Facebook post on Thursday evening.

Indian oil imports from Middle East fell to 19 month low

Indian oil imports from the Middle East fell to a 19-month low in September, while Russian imports rebounded although refining outages hit overall crude imports.

Iraq remained the top supplier while Russia overtook Saudi Arabia as the second biggest after a gap of a month.

Indian total oil imports in September fell to a 14-month low of 3.91 million barrels per day (bpd), down 5.6% from a year earlier, due to maintenance at refiners such as Reliance Industries and Indian Oil Corp.

Indian imports from the Middle East fell to about 2.2 million bpd, down 16.2% from August, while imports from Russia increased 4.6% to about 896,000 bpd after dipping in the previous two months.

Russia's share of India's oil imports surged to an all-time high of 23% from 19% the previous month while that of the Middle East declined to 56.4% from 59%, the data showed.

The share of Caspian Sea oil, mainly from Kazakhstan, Russia and Azerbaijan, rose to 28% from 24.6%.

India has emerged as Russia's second biggest oil buyer after China, taking advantage of discounted prices as some Western entities shun purchases over Moscow's invasion of Ukraine.

"The discount on Russian oil has narrowed now but when you compare its landed cost with other grades such as those from the Middle East, Russian oil turned out to be cheaper," said a source at one of India's state refiners.

Imports for Saudi Arabia fell to a three-month low of about 758,000 bpd, down 12.3% from August, while imports from Iraq plunged to 948,400 bpd, their lowest level in a year, the data showed.

Imports from the United Arab Emirates declined to a 16-month low of about 262,000 bpd.

Higher intake of Caspian Sea oil has hit the share of other regions in India's imports in April-September, the first half of the fiscal year, and also cut OPEC's market share in the world's third biggest oil importer and consumer to its lowest ever.

In the first half of this fiscal year, Indian refiners also reduced purchases of African oil, mostly bought from the spot market. However, supply from the Middle East rose from a low base last year when the second wave of the coronavirus cut fuel demand.

 

 

Islamic State claims Iran shrine attack

The Islamic State claims carrying out attack on a Shi'ite Muslim shrine in Iran on Wednesday which killed 15 people, escalating tensions in a country reeling from a wave of protests, reports Reuters.

Iranian officials said they had arrested a gunman who carried out the attack at the Shah Cheragh shrine in the city of Shiraz. State media blamed takfiri terrorists - a label Tehran uses for hardline Sunni Muslim militants like Islamic State.

The group has claimed previous attacks in Iran, including deadly twin bombings in 2017 which targeted Iran's parliament and the tomb of the Islamic Republic's founder Ayatollah Ruhollah Khomeini.

Wednesday's killing of Shi'ite pilgrims came on the same day that Iranian security forces clashed with increasingly strident protesters marking the 40-day anniversary since the death in police custody of Mahsa Amini, a 22-year-old Kurdish woman.

Interior Minister Ahmad Vahidi blamed the protests sweeping Iran for paving the ground for the Shiraz attack, and President Ebrahim Raisi said Iran would respond, according.

"Experience shows that Iran's enemies, after failing to create a split in the nation's united ranks, take revenge through violence and terror," said Raisi, speaking before Islamic State released its claim of responsibility.

"This crime will definitely not go unanswered, and the security and law enforcement forces will teach a lesson to those who designed and carried out the attack."

The semi-official Tasnim news agency said the attacker shot an employee at the shrine entrance before his rifle jammed and he was chased by bystanders.

He managed to fix his gun and opened fire on his pursuers, before entering a courtyard and shooting worshippers. Several women and children were among the dead, it said.

 

Oil isn’t the reason for US-Saudi rift

Saudi Arabia decided to be the mature guys in a spat with the United States over oil supplies, the Kingdom's energy minister Prince Abdulaziz bin Salman said on Tuesday.

The decision by the OPEC Plus oil producer group led by Saudi Arabia this month to cut oil output targets unleashed a war of words between the White House and Riyadh ahead of the kingdom's Future Investment Initiative (FII) forum, which drew top US business executives.

The two traditional allies' relationship had already been strained by the Joe Biden administration's stance on the 2018 murder of Saudi journalist Jamal Khashoggi and the Yemen war, as well as Riyadh's growing ties with China and Russia.

When asked at the FII forum how the energy relationship with the United States could be put back on track after the cuts and with the December 05, 2022 deadline for the expected price-cap on Russian oil, the Saudi energy minister said: "I think we as Saudi Arabia decided to be the mature guys and let the dice fall".

"We keep hearing you 'are with us or against us', is there any room for 'we are with the people of Saudi Arabia'?"

Saudi Investment Minister Khalid al-Falih said earlier that Riyadh and Washington will get over their unwarranted spat, highlighting long-standing corporate and institutional ties.

"If you look at the relationship with the people side, the corporate side, the education system, you look at our institutions working together we are very close and we will get over this recent spat that I think was unwarranted," he said.

While noting that Saudi Arabia and the United States were solid allies in the long term, he highlighted the kingdom was very strong with Asian partners including China, which is the biggest importer of Saudi hydrocarbons.

The OPEC Plus cut has raised concerns in Washington about the possibility of higher gasoline prices ahead of the November US midterm elections, with the Democrats trying to retain their control of the House of Representatives and the Senate.

Biden pledged that there will be consequences for US relations with Saudi Arabia after the OPEC Plus move.

Princess Reema bint Bandar Al Saud, the kingdom's ambassador to Washington, said in a CNN interview that Saudi Arabia was not siding with Russia and engages with everybody across the board.

"And by the way, it's okay to disagree. We've disagreed in the past, and we've agreed in the past, but the important thing is recognizing the value of this relationship," she said.

She added, "A lot of people talk about reforming or reviewing the relationship" and said it was a positive thing as Saudi Arabia is not the kingdom it was five years ago.

Like previous years, the FII three-day forum that opened on Tuesday saw a big turnout from Wall Street, as well as other industries with strategic interests in Saudi Arabia, the world's top oil exporter.

JPMorgan Chase & Co Chief Executive Jamie Dimon, speaking at the gathering, voiced confidence that Saudi Arabia and the United States would safeguard their 75-year-old alliance.

"I can't imagine any allies agreeing on everything and not having problems – they’ll work it through," Dimon said. "I'm comfortable that folks on both sides are working through and that these countries will remain allies going forward, and hopefully help the world develop and grow properly."

The FII is a showcase for the Saudi crown prince's Vision 2030 development plan to wean the economy off oil by creating new industries that also generate jobs for millions of Saudis, and to lure foreign capital and talent.

No Biden administration officials were visible at the forum on Tuesday. Jared Kushner, a former senior aide to then-President Donald Trump who enjoyed good ties with Prince Mohammed, was featured as a front-row speaker.

The Saudi government invested US$2 billion with a firm incorporated by Kushner after Trump left office.

FII organizers said this year's edition attracted 7,000 delegates compared with 4,000 last year.

 

Energy market should be depoliticized, says Iranian Oil Minister

Energy market should be depoliticized, says Iranian Oil MinisterIranian Oil Minister Javad Oji said sanctioning the owners of the world’s biggest gas reserves will have devastating consequences for the environment, stressing that the global energy market should be depoliticized.

GECF Members account for 43% of the world's gas production and own 72% of the world's gas reserves; 55% of the gas transmission by pipeline and 50% of the liquefied natural gas (LNG) trade is also carried out by GECF member states.

 “Using energy as a political tool and sanctioning the most important owners of natural gas reserves will have irreparable consequences on the world’s environment and will make it impossible to achieve the United Nations’ sustainable development goals,” said Oji, addressing the 24th Ministerial Meeting of the Gas Exporting Countries Forum (GECF) in Cairo, Egypt.

“I believe that the realization of a global ecosystem with zero carbon emission will remain only a slogan without political will, financial resources, investment in infrastructure, and serious scientific and technological cooperation of all nations,” he said.

Underlining the important role of natural gas in the world’s energy transition, the official stated that the members of the GECF assembly should put new policies on the agenda to promote and facilitate natural gas consumption.

Oji further emphasized the need to pay more attention to environmental issues, saying, “As a person who has worked in engineering and management activities in Iran's gas sector for many years, I believe reducing carbon emissions and protecting the environment is possible considering the existing technical and engineering capabilities.”

Emphasizing that it is necessary for developing and developed countries to pay serious attention to new technologies in various fields such as carbon absorption, utilization, and storage of natural gas, and reducing the leakage of methane or blue hydrogen, he added, “Fortunately, new technologies for reducing the carbon emission in the natural gas production process are widely available if there is the political will to do so.”

The official finally stressed the need for improving the GECF status in the global gas market for ensuring the world's energy security, saying, “I suggest that joint thinking and construction cooperation among the members of the assembly should be promoted at strategic, managerial and technical levels.”

“I believe that the exchange of successful experiences among member countries at the mentioned levels is very important,” he added.

The ministerial meeting is the highest governing body of the forum, and according to the GECF statute, it is held once a year.

Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago, and Venezuela are 11 main members of GECF, and Malaysia, Norway, Iraq, Peru, Azerbaijan, UAE, and Mozambique are observer members in the forum.

 

Rishi Sunak faces huge task as Prime Minister

Rishi Sunak became Britain's third prime minister in two months on Tuesday, tasked with tackling a mounting economic crisis, a warring political party and a deeply divided country in one of the greatest challenges to confront any new leader.

The 42-year-old former hedge fund boss was asked to form a government by King Charles, and will seek to bring an end to the infighting and feuding at Westminster that has horrified investors and alarmed international allies.

Sunak, one of the richest men in parliament, will have to find deep spending cuts to plug an estimated 40 billion pound ($45 billion) hole in the public finances due to an economic slowdown, higher borrowing costs and a six-month program of support for people's energy bills.

With his party's popularity in freefall, Sunak will also face growing calls for an election if he moves too far from the policy manifesto that elected the Conservative Party in 2019, when then leader Boris Johnson pledged to invest heavily in the country.

Economists and investors have said Sunak's appointment will calm markets, but they warn that he has few easy options when millions are battling a cost of living crunch.

"With a recession in 2023 now increasingly likely, and the next general election in only two years' time, Rishi Sunak can expect a challenging premiership," Eiko Sievert at the Scope ratings agency told Reuters.

Sunak has warned his colleagues they face an "existential crisis" if they do not help to steer the country through the surging inflation and record energy bills that are forcing many households and businesses to cut back spending.

"We now need stability and unity, and I will make it my utmost priority to bring our party and our country together," he said as he was elected by his lawmakers on Monday.

Sunak, Britain's youngest prime minister for more than 200 years and its first leader of colour, replaced Liz Truss who resigned after 44 days following a "mini budget" that sparked turmoil in financial markets.

With debt interest costs rising and the outlook for the economy deteriorating, he will now need to review all spending, including on politically sensitive areas such as health, education, defence, welfare and pensions.

Reflecting the near constant state of turmoil in British politics this year, politicians, journalists and photographers once again crammed into Downing Street on Tuesday to hear a departing speech from Truss.

Speaking seven weeks to the day after she arrived as prime minister, Truss did not apologize for her short tenure and said she knew Britain was set for brighter days.

During her time in office the pound hit a record low against the dollar, borrowing costs and mortgage rates surged, and the Bank of England was forced to intervene to protect pension funds from collapsing.

Sunak will now start forming his cabinet, with some Conservative lawmakers hoping he will include politicians from all wings of the party.

He is expected to retain Jeremy Hunt as finance minister after the former foreign and health secretary helped calm volatile bond markets by ripping up most of Truss's economic program.

Investors will also want to know if Sunak still plans to publish a new budget alongside borrowing and growth forecasts on October 31, 2022 which would help inform the Bank of England's interest rate decision on November 03, 2022.

Sunak, a Goldman Sachs analyst who only entered parliament in 2015, must unite his party, aware that voters are increasingly angry over the antics at Westminster as the economy heads for recession.

He was blamed by many in the party when he quit as finance minister in the summer, triggering a wider rebellion that brought down Johnson.

While many expressed relief that the party settled on a new leader quickly, a sense of distrust remains among some while others questioned whether struggling families would relate, or ever vote, for a multimillionaire.

"I think this decision sinks us as a party for the next election," one Conservative lawmaker told Reuters on condition of anonymity.

Historian and political biographer Anthony Seldon told Reuters that Sunak would also be constrained by the mistakes of his predecessor.

"There is no leeway on him being anything other than extraordinarily conservative and cautious," he said.

Many politicians and officials abroad, having watched as a country once seen as a pillar of economic and political stability descended into brutal infighting, welcomed Sunak's appointment.

Sunak becomes Britain's first prime minister of Indian origin.

 

Nord Stream owners in insurance limbo

With the mystery of the blasts that destroyed undersea gas pipelines between Russia and Germany unsolved, insurers and reinsurers of Nord Stream 1 are grappling with how to respond to hundreds of millions of dollars in potential claims.

Munich Re and syndicates within the Lloyd's of London market are among the major underwriters for Nord Stream 1. Industry sources with knowledge of the situation said, it was unclear whether they would renew its cover.

If the insurance is not renewed, the prospect of the pipeline bringing gas to Europe under the Baltic Sea ever being repaired and restarted becomes more remote.

Even before leaks were found, supplies via Nord Stream 1 had been halted as a result of a dispute over Western sanctions on Russia, while the newly-built Nord Stream 2 pipeline had not started commercial deliveries.

While a claim has not yet been made for the damage and disruption to the pipeline, two of the sources told Reuters, Nord Stream 1 underwriters may dispute any submitted on the grounds that the damage was an act of self-sabotage, or of war, neither of which are generally covered by insurance.

Amid speculation as to who was behind alleged sabotage that severed the pipelines at the centre of an energy crisis prompted by Russia's invasion of Ukraine, Danish police said on October 18, 2022 that the damage to Nord Stream 1 was caused by powerful blasts.

While damage itself would not necessarily affect the renewal of a property policy, insurers might ask for more premium, said Tim Shepherd, a litigation partner at Mayer Brown.

For the underwriters of the pipeline system, which Nord Stream's website says was built with 7.8 billion euros (US$7.6 billion) of investment, the stakes are high.

"Even if you are taking a small size (of cover), it is a big risk," one of the four industry sources said.

"The issue is going to be what happens if you can't prove it is a state sponsor (responsible for the blasts), you end up with a massive claim for damage," the source added.

Nord Stream 1 majority shareholder with a 51% stake is a subsidiary of Russian energy group Gazprom, which is subject to sanctions by the United States, Britain and Canada as well as some European Union restrictions.

Two of the sources said renewal of Nord Stream 1 cover by the Lloyd's syndicates would be challenging given the risk of tighter sanctions on Gazprom, which would prevent paying claims.

German energy groups Wintershall and E.ON, meanwhile, hold 15.5% each. Wintershall did not immediately respond to a request for comment.

An E.ON spokesperson said Nord Stream 1 operating company was responsible for operational issues, including insurance.

"Nord Stream AG remains in close contact with relevant authorities on the recent incident. Due to prevailing uncertainties, we as a shareholder continuously monitor developments and are in close contact with the other relevant stakeholders," the spokesperson said.

Gazprom and Swiss-based Nord Stream AG, did not respond to requests for comment, while French energy provider ENGIE, which has a 9% stake, declined to comment.

Dutch natural gas infrastructure company N.V. Nederlandse Gasunie, which also has a 9% stake, said it would assess the situation as soon as there was more clarity.

"The exact extent of the damage and possible follow-up actions can only be determined after inspection of the pipelines and that is not yet possible at this moment," Gasunie said.

"We are in close contact with our European partners and the relevant government authorities," it added.

Nord Stream's insurers will have to prove that its policy does not cover the damage caused by the blasts in order to avoid paying out on any claim, lawyers said.

Although property policies typically exclude malicious damage, policy holders often buy extra cover, which is likely in Nord Stream's case, legal and insurance sources said.

Russian President Vladimir Putin has said the United States and its allies blew up the pipelines, an allegation that has been dismissed by the White House. US President Joe Biden has said damage to Nord Stream was a deliberate act of sabotage.

The West has not directly pointed the finger at Moscow, which has denied any involvement.

French President Emmanuel Macron said earlier that Nordic leaders had told their European partners it was still impossible to say at this stage who was behind the damage.

If a Western state actor was found to be responsible, the damage might be designated as an act of terror, which one broking source said might be covered by insurance.

However, if investigations found Russia to have been involved, insurers could argue it was an act of "self-sabotage", given Gazprom is owned by the state.

"If there was a deliberate act by the policyholder, you are not going to have a covered claim," said David Pryce, managing partner at Fenchurch Law, which is not involved with the policy.

If there was any Russian involvement it could also mean the Nord Stream 1 damage being designated as an act of war, something that is typically excluded by insurance policies.