Is US opposition of Rampal coal plant due to love for Sundarbans or to keep India away?

During his six-hour trip to Dhaka on 9th April 201, US President Joe Biden’s special envoy for climate change, John Kerry, bluntly raised the Rampal coal based plant issue during his official talks with Foreign Minister AK Abdul Momen.

However, Kerry didn’t raise this issue in his talks with Prime Minister Sheikh Hasina. He did say in a general way that coal-fired power plants are one of the main causes of environmental damage. He drew attention to the US opposition to coal-fired power plants.

John Kerry raised the Rampal issue again towards the end of the talks. “Can I ask an outrageous question? Can you stop Rampal?”

At one point Kerry said that he was confused about Bangladesh’s stance on the Sundarbans. On the one hand it is taking steps to protect the forest, and on the other it is taking up projects like the Rampal coal-fired power plant. “How is this possible”, he asked.

John Kerry was told that Bangladesh has always given importance to environmental protection. Despite resource constraints, various steps have been taken to face the climate change challenge. The protection of the Sundarbans is being given due importance in the construction of the Rampal power plant.

Earlier in 2017, the former US Vice President, environmentalist Al Gore, had appealed to Prime Minister Hasina to halt the construction of the Rampal power plant.

Prime Minister Sheikh Hasina asked Al Gore to visit Bangladesh to see the Sundarbans and see if the project is harming the environment.

In 1997, the United Nations Educational, Scientific and Cultural Organization (UNESCO) declared the Sundarbans as a World Heritage Site.

UNESCO has been raising objections to the project since 2018. A study carried out by UNESCO and the International Union for Conservation of Nature (IUCN) on the project says that it will do irreparable harm to the Sundarbans. This may also cause the Sundarbans to lose its status as a World Heritage Site, UNESCO has repeatedly warned.

There seems also a split within Bangladesh.  The official version is, “The Bangladesh government has taken up various initiatives to protect the Sundarbans mangrove forests.” While some experts say that the power plant will put the mangrove forest at risk but the government is not paying attention to this issue.

It goes without saying that now financial and technical assistance for mega projects is driven by geopolitics rather that economic viability.  Based on this stance, I am ready to say that Bangladesh is being pressurized to give up this project, only because of Indian involvement.

The Bangladesh Power Development Board and India’s National Thermal Power Corporation are jointly constructing the 1,320 MW power plant at Rampal in Bagerhat, next to the Sundarbans.

Opponents of the plant go to the extent of saying that the technology used in the Rampal project is of low standard. They raise a question if in other countries coal-fired power plants are being closed down, why Bangladesh should go for this.

Supporters of the plant say, it is a reality that at present, work on the Rampal power plant has advanced considerably. The government would not be able to do anything about it now, even if objections are raised.

The Bangladesh Foreign Minister, Abdul Momen, highlighted the various steps taken by Bangladesh to tackle threats from climate change and to protest the Sunderbans.

US intelligence agencies playing mantra orchestrated by military complexes

I have often raised this point that the US foreign policy is driven by ‘military complexes’. The survival of these conglomerates is dependent on internal conflicts and proxy wars, often created and proliferated by the US intelligence agencies. 

If presence of weapons of mass destruction in Iraq was the biggest joke of the century, Iran getting ready to attack United States is another point to laugh. If you don’t agree with me read the highlights of ‘The Annual Threat Assessment Report’.

According to The Annual Threat Assessment Report – 2021 prepared by the office of the US Director of National Intelligence (DNI) and sent to Congress three major threats have been identified. These are: 1) China’s push for global power, followed by 2) Russia’s provocative actions and 3) threats from Iran.

DNI’s annual threat assessment reports are shared with congressional intelligence committees as well as the committees on the Armed Services of the House of Representatives and the Senate.

While assessing possible threats from South Asia, the report warned that “under the leadership of Prime Minister Modi India is more likely than in the past to respond with military force to perceived or real Pakistani provocations.”

The report noted that heightened tensions in the region raise the risk of conflict between the two nuclear-armed neighbors, with violent unrest in Kashmir or a militant attack in India being potential flashpoints.”

The report also said that a general war between India and Pakistan during 2021 was unlikely, but crises between the two are likely to become more intense, risking an escalatory cycle.”

Another US intelligence report to Congress, released last week, had warned that India and Pakistan could go to a war in the next five years over real and perceived provocations.

The report pointed out that some regional conflicts – such as the fighting in Afghanistan, Iraq and Syria – had “direct implications for US security,” while “tensions between nuclear-armed India and Pakistan remain a concern for the world.”

The report assessed the prospects for a peace deal between the Afghan government and the Taliban in 2021 as low. The Taliban are likely to make gains on the battlefield, and the Afghan government will struggle to hold the Taliban at bay if the coalition withdraws support, the report predicted. It also noted that Kabul continues to face setbacks on the battlefield, and the Taliban are confident they can achieve military victory.

Commenting on Iran’s role in Afghanistan, the report said that “Iran will hedge its bets in Afghanistan,” adding that “Iran publicly backs Afghan peace talks, but it is worried about a long-term US presence in Afghanistan.”

As a result, “Iran is building ties with both the government in Kabul and the Taliban so that it can take advantage of any political outcome,” the report added.

Walking away from Afghanistan now, is a mistake

A few days back I had posted a blog ‘Joe Biden faces resistance on withdrawal of troops from Afghanistan’. Then I posted another blog ‘Chinese soldiers may enter Afghanistan after departure of US troops’. One of the comments received in response to the second blog was “United States seem to have decided to handover charge of Afghanistan to China.” 

Today, I am posting below a message of Marvin G. Weinbaum, Director for Afghanistan and Pakistan Studies at the Middle East Institute.

The Biden administration decision to disengage militarily from Afghanistan by 11th September 2021 may seem warranted; perhaps even overdue, after a commitment of two decades and spending US$2 trillion. The initial objectives of the US for intervention in Afghanistan were seemingly achieved years ago and its subsequently acquired aims in staying have proved mostly unattainable. But while a full unconditional withdrawal from Afghanistan may appear to be defensible as the US weighs its global threats, the president’s action is nevertheless shortsighted and narrow in its understanding of US long-term security interests. Foremost, it is an “America First” policy that shows callous indifference to the consequences for a current-day Afghanistan that is to a large extent of our making. We are putting in motion developments that will eliminate any remaining possibilities for a negotiated peace, lead to increased violence, undermine a sitting government, collapse the formal economy, and place at risk the hard-won rights of Afghan women and minorities. The stage is also being set for an open-ended, proxy-driven civil war that in creating millions of refugees is likely to destabilize and radicalize the region.

In many ways we have been here before. After the Soviets bailed out of Afghanistan in 1989, the US decided that it had little stake in what happened in the country and the region. Virtually all government assistance ceased. We decided to let the Afghans sort out their differences and left Pakistan, our erstwhile partner in the jihad against communism, to fend for itself in coping with the fallout of the decade-long Afghan conflict. What we got in Afghanistan was a bloody, anarchic, fratricidal civil war, the rise of the Taliban, the settling in of al-Qaeda, and 9/11. In Pakistan, there followed a decade of political instability, an undeterred decision to go nuclear, and a high-altitude shooting war with an also nuclear-armed India that it took the US to help stop. It would have to do much the same three years later to prevent a potentially more deadly, globally impacting conflict on the subcontinent.

If walking away from Afghanistan and the region was a mistake in the 1990s, it is ever so much more so now. The US was not then worried about global terrorism or nuclear proliferation emanating from the region. Geo-strategically, we were unconcerned with having an adversarial Russia, China, and Iran among others filling the vacuum of an American absence. It is misguided to believe that we can compartmentalize our global interests. If tragedy befalls Afghanistan and the region falls into turmoil, it is difficult to believe that the US can expect to realize its objectives in areas now deemed of higher priority. A continued American military presence in Afghanistan small enough to be politically palatable but large enough to contribute to the country’s stability might not seem very satisfying but given the alternatives it might have been the least bad of all possible outcomes. Unfortunately, the Biden administration decision now rules that out.

Pakistan oil and gas production declines during Jan-Mar 2021 quarter

Pakistan’s indigenous crude oil production in 3QFY21 declined to 77,139, down 6%YoY barrels per day (bpd) mainly because of sharp fall of 63%YoY in Makori Deep’s production, followed by 23%YoY decline in Mardankhel and 11%YoY in Maramzai’s productions.

These three fields belong to Tal Block (operated by MOL Pakistan) of which production in total has declined by 13%YoY to 17,840 bpd during Jan-Mar 2021 quarter as against 20,597 bpd during Jan-Mar 2020 quarter.

The decline in production from Tal Block was contained to 13% due to 3%YoY increase in oil production from Makori East (which contributes 54% to Tal Block and 12% to country’s production).

On a QoQ basis, Pakistan oil production was up by 2%.

During 9MFY21, Pakistan oil production declined by 6%YoY to 75,924 bpd due to decline in flows from Makori Deep, Mardankhel and Nashpa fields.

Pakistan domestic gas production declined to 3,550 mmcfd, down by 3%YoY during the quarter under review due to lower flows from Qadirpur, Kandhkot, KPD and Maramzai ranging from 7% to 15%YoY.

Mari field’s production increased by 3%YoY and 2%QoQ as it has replaced Kandhkot field volumes to the National Grid. As a result, Kandkot field volumes have come down by 11%YoY and 1%QoQ.

On QoQ basis, gas production increased by 5% during the quarter due to sharp improvement in flows of Uch Field, rising to 35,013 mmcfd.

On 9MFY21 basis, gas production was down 3%YoY to 3,525 mmcfd due to decline in flows from Qadirpur, Kandkot, and KPD to the tune of 4% to 17%.

Chinese soldiers may enter Afghanistan after departure of US troops

A very interesting, but equally perturbing situation is likely to emerge in Afghanistan. As the United States has announced to completely withdraw troops by 11 September, China has expressed its intentions to deploy its troops.

According to a report, Beijing may consider sending a peacekeeping force to Afghanistan if the security situation in the South Asian country poses a threat to the neighboring Chinese province of Xinjiang after American troops pull out.

US President Joe Biden said on Wednesday that he would withdraw all remaining US troops – about 2,500 – from Afghanistan by 11^th September, the 20th anniversary of the terrorist attack on the United States.

The withdrawal may pose a threat to Afghanistan’s security and stability, which could spill over into Xinjiang and disrupt China’s counterterrorism efforts.

In 2018, China trained Afghan troops and helped set up a mountain brigade. The training took place in China and the aim of the brigade was to counter possible attacks by al-Qaeda and Islamic State.

“The security forces of the Afghan government are not capable of ensuring Afghan security,” said Sun Qi, an international relations specialist at the Shanghai Academy of Social Sciences.

“The situation in Afghanistan might go further into chaos in the future. Cross-border crime, drug trafficking and smuggling of firearms may proliferate,” he said.

China may send peacekeeping troops to Afghanistan under the terms of the UN Charter, according to an international relations specialist at the Shanghai Academy of Social Sciences.

While Beijing would not station troops in Afghanistan, it might work with other countries in the region to promote political stability and reduce the security risk to China, Sun said.

 “If the security situation poses a significant threat, China may send peacekeeping troops along with humanitarian assistance to the region under the terms of the Charter of the United Nations to ensure the safety and interests of Chinese people and companies there,” he said.

Chinese foreign ministry spokesman Zhao Lijian informed that foreign troops stationed in Afghanistan should withdraw in a “responsible and orderly manner” to prevent terrorist forces from taking advantage of the chaos.

“The United States is the biggest external factor affecting the Afghan issue. The relevant decisions and actions of the United States should fully respect the sovereignty, independence and territorial integrity of Afghanistan, earnestly take responsibility for maintaining the results of peace and reconstruction in Afghanistan,” he said.

Soon after Biden’s announcement, Nato secretary general Jens Stoltenberg said the alliance planned to withdraw its troops – about 7,000 – from Afghanistan by next month. Australian Prime Minister Scott Morrison said on Thursday that Australia would also complete its military withdrawal from Afghanistan in September.

Other experts said China was unlikely to push too hard to gain influence in Afghanistan as there was already fierce competition in the region.

“A number of countries, including Pakistan, India and Russia, want to exert their influence in the region, so China really needs to be careful of getting involved in the chaos,” said Wang Jin, a research fellow at the Charhar Institute think tank in northern China.

China and the US were unlikely to engage in any significant cooperation in Afghanistan after the US troop withdrawal, given the tensions between the two countries, he said.

“We can see from the withdrawal of US troops that the willingness of the US to intervene in Afghanistan’s affairs is declining,” he said.

“Primarily the idea of solving local conflicts by establishing a Western-style democracy in Afghanistan has failed.”

Sun said the US was likely to withdraw its military deployments from Central Asia and redeploy them to the Asia-Pacific.

“The withdrawal from Afghanistan allows the US to boost its military presence in Asia-Pacific and Indian Ocean regions, with the aim of containing China,” he said.

“The US is highly likely to increase its military activity in the South China Sea and China-Indochina peninsula.”

Can secret talks between India and Pakistan yield any result?

It is believed that both India and Pakistan are busy in minimizing tension on the instructions of some external forces. This may bring a temporary calm for a while, but just can’t establish sustainable peace. The lingering on of Kashmir issue can be attributed to super powers fighting a sort of proxy wars in the region, including Afghan war going on for nearly twenty years.

Analysts say that now besides United States, China and Russia are also controlling the string. Ironically, these super powers don’t wish to engage in any direct encounter but want the proxies to hit strategic interests of each other.

Let everyone keep in mind that Russia and other Central Asian countries want access to warm waters, though Afghanistan and Pakistan. Similarly, China wants full control and security of projects being constructed under the auspicious of CEPC.

According to a Reuters news, top intelligence officers from India and Pakistan held secret talks in Dubai in January this year in a new effort to calm military tension over the disputed Himalayan region of Kashmir.

While the super powers are pursuing their agenda, hawks present in India, Pakistan and Afghanistan continue to play the role of ‘spoilers’. Ironically the status of these hawks keeps on changing from friend to foe to friend.

Having read the preamble, now let us talk about secret talks going on between India and Pakistan on the behest of United Arab Emirates or to be little rude China and United States.

Keeping a few points in mind that over the last 74 years Kashmir issue has not been resolved, both the countries have fought numerous wars and attained the status of atomic powers to stain supremacy on each other, while millions of people on both sides of the border live below the poverty line, maintaining peace and tranquility in the regions seems only diabolic thinking

Both the Pakistan and Indian governments have re-opened a backdoor diplomacy aimed at a modest roadmap to normalizing ties. Such meetings have taken place in the past too, especially during times of crises but never been publicly acknowledged.

 It is not loner a secret that Indian and Pakistan intelligence officials have been meeting for several months in third countries. It is believed that these meeting have been held in Thailand, Dubai and London between the highest level people.

There is a lot that can still go wrong, it is fraught that is why nobody is talking it up in public, we don't even have a name for this, it's not a peace process, one can call it a re-engagement.

"It’s better for India and Pakistan to talk than not talk, and even better that it should be done quietly than in a glare of publicity," said Myra MacDonald, a former Reuters journalist who has just published a book on India, Pakistan and war on the frontiers of Kashmir.

Analysts don't see these meeting going beyond a basic management of tensions, possibly to tide both countries over a difficult period - Pakistan needs to address the fallout of the US withdrawal from Afghanistan, while India has to confront a far more volatile situation on its disputed frontier with China.

Joe Biden faces resistance on withdrawal of troops from Afghanistan

President Joe Biden announced on Wednesday of a complete withdrawal of United States from Afghanistan by 11^th September this year. The announcement aims at closing the longest war of the United States.

However, many analysts, even within the US, remain skeptical of sustainable peace in Afghanistan, which has reduced to rudiments in two decades of fighting.

As officials disclosed Biden’s pullout plans, the US intelligence community renewed deep concerns about the outlook for the US-backed government in Kabul, which is clinging to an eroding stalemate.

“The Afghan government will struggle to hold the Taliban at bay if the coalition withdraws support,” said the US assessment, which was sent to Congress.

Kabul continues to face setbacks on the battlefield, and the Taliban are confident that they can achieve military victory.

The Democratic President had faced the 1st May withdrawal deadline, set by his Republican predecessor, Donald Trump, who tried but failed to pull the troops out before he left office.

Biden’s decision to keep 2,500 troops in Afghanistan past that 1^st May 1 deadline, but officials suggested troops could fully depart before 11^th September, the US troop numbers in Afghanistan peaked at more than 100,000 in 2011.

“There is no military solution to the problems plaguing Afghanistan, and we will focus our efforts on supporting the ongoing peace process,” a senior administration official said.

It remains unclear how Biden’s move would affect a planned 10-day summit about Afghanistan starting on 24^th April in Istanbul that is due to include the United Nations and Qatar.

Taliban, which were ousted from power in 2001 by the US-led troops, said they would not take part in any summits that would make decisions about Afghanistan until all foreign forces had left the country.

Critics said the departure plan appeared to surrender Afghanistan to an uncertain fate, something that experts say was perhaps inevitable.

 “There is no good way that the US can withdraw from Afghanistan. It cannot claim victory, and it cannot wait indefinitely for some cosmetic form of peace,” said Anthony Cordesman at the Center for Strategic and International Studies think tank in Washington.

Democratic Senator Jack Reed, chairman of the Senate Armed Services Committee, called it a very difficult decision for Biden.

“There is no easy answer,” Reed said.

US officials can claim to have, years ago, decimated al Qaeda’s core leadership in the region. But ties between the Taliban and al Qaeda elements persist.

By withdrawing without a clear victory, the United States opens itself to criticism that a withdrawal is a de facto admission of failure.

The war began as a search for al Qaeda leader Osama bin Laden following the Islamist militant group’s 9/11 attacks, when hijackers slammed airplanes into the World Trade Center in New York City and the Pentagon outside Washington, killing almost 3,000 people.

Successive US presidents sought to extricate themselves from Afghanistan, but those hopes were confounded by concerns about Afghan security forces, endemic corruption in Afghanistan and the resiliency of a Taliban insurgency that enjoyed safe haven across Afghanistan.

Senate Republican leader Mitch McConnell accused Biden of planning to “turn tail and abandon the fight in Afghanistan.”

“Precipitously withdrawing US forces from Afghanistan is a grave mistake,” McConnell said, adding that effective counterterrorism operations require presence and partners on the ground.

Even Biden’s allies in Congress fretted about the impact a withdrawal would have on human rights, given the gains - particularly for women and girls - in Afghanistan in the past two decades.

The senior administration official said US troops were not the best solution for preserving human rights gains, saying that aggressive diplomatic, humanitarian and economic measures are needed instead.

Ship stuck in Suez Canal still held by Egyptian authorities to recover US$ one billion

The world cheered when Evergreen cargo vessel was freed from the sides of the Suez Canal on March 29, 2021, but it is still held as ‘hostage’ to recover a king's ransom. The ship is still inside the Suez Canal, in a wider area called the Great Bitter Lake.

Egyptian authorities say they will let the mega ship go only after the ship's owners pay US$ one billion to compensate for the week that the canal was shut down. 

It seems that there are other reasons for detaining the ship. First there was little concern when ship grounded. Then work to afloat the ship moved at snail’s speed. And now the ship is being held as hostage to recover the booty.

The investigation can be completed in a few hours simply by listing to the captain of the ship, its key crew members and Egyptian pilots.

On the face value the Suez Canal authority (SCA) seems at fault and should be held liable to pay all others including the ship owners. It was their responsibility to use efficient pilot boats to escort this mega ship. If the weather was bad and visibility was poor they should have not pushed the ship into the Canal. And if they were confident of their skills, they should have also kept the control with them; they just can’t put the blame on the ship crew.

The SCA can still fight the case in a competent court of law, but holding the ship indefinitely tantamount to ‘Marine Terrorism’.

Osama Rabie, Chairman, SCA said on Egyptian state television that the country will hold onto the ship while it investigates what happened and until the ship's owner pay US$ one billion.

The losses for the period ending March 29, that the ship was stuck and blocked traffic flow through the canal comes to less than US$100 million in lost transit fees and there are also the costs to free the ship and other expenses to reimburse.

"The vessel will remain here until investigations are complete and compensation is paid," he said, according to The Wall Street Journal. 

"The minute they agree to pay the compensation, the vessel will be allowed to move."

It's not just Egyptian authorities who are asking for money. The Wall Street Journal said insurance claims for the boat's week in the spotlight could include losses for perishable goods as well as supply-chain disruptions.

Interestingly, Japanese company, Shoei Kisen Kaisha that owns the ship told the Journal it is in discussions with Egyptian authorities and cooperating in the investigation but has not officially, heard about the billion-dollar ransom.

The Company has started liability-limiting court proceedings in London. A representative of the International Transport Workers Federation, also based in London, told the Wall Street Journal that the crew appears to be well treated while they remain on board the ship.

Drying US oil pipelines

According to a Reuters report, pipeline companies in the United States went on a construction spree throughout 2018 and 2019 to handle blistering growth in crude production that touched a record 13 million barrels per day (bpd). 

However, the coronavirus pandemic crushed both fuel demand and oil production, and neither has recovered fully, leaving many pipelines unused.

Major pipeline companies are exploring ways to ship other products in those lines and considering selling stakes in operations to raise cash.

The coronavirus pandemic upended the global energy supply system and worldwide fuel demand. Gasoline consumption in the US is now estimated to be past its peak and as refiners process less crude, producers are not filling pipelines used to transport it.

By the fourth quarter, total utilization of the largest oil pipelines from the Permian is expected to drop to 57%, consultancy Wood Mackenzie said. The nadir during the last market bust in 2016 was roughly 70%.

The US crude output is currently about 11 million bpd, and is not expected to grow much until 2022. But more pipelines were already set to come online, growing the gap between production and capacity covered by long-term contracts to a record over one million bpd in February, according to energy research firm East Daley Capital.

"We do not expect to be at pre-COVID production levels by end-2022," said Saad Rahim, chief economist at Commodities Merchant Trafigura.

The top three Permian pipeline companies are offering discounts to entice shippers and stem the fall in volumes. Companies rely on long-term contracts that require customers to ship a certain volume of oil or pay a penalty. Now companies are renegotiating those agreements at lower rates when they are close to expiring, to keep their customers.

Magellan Midstream Partners LP’s transportation and terminals revenue slid 9% to about US$1.8 billion in 2020, the lowest since 2017. The Company has only enough long-term contracts to fill its 275,000-bpd Longhorn pipeline to 70% capacity over the next six years, Magellan said.

With more pipelines adding to competition, Magellan expects daily volumes on Longhorn to drop to an average 230,000 bpd this year versus 270,000 bpd in 2020. A Magellan spokesman said the company could use its marketing arm to buy space on the Longhorn line and sell it to ad-hoc buyers.

Plains All American Pipeline LP’s transportation revenues fell about 13% to $2 billion in 2020, and warned that earnings could suffer further if production declines. Plains did not comment for this story.

Pipeline companies can make some money even when oil is not flowing through pipelines. Producers pay what are known as deficiency payments - penalties for not shipping oil. Still, those payments are small. Plains reported $71 million in deficiency payments in 2020, less than 4% of its overall transportation segment revenue.

Some companies are considering retrofitting pipelines to ship liquids besides crude, such as renewable fuels.

Enterprise Products Partners LP’s co-Chief Executive Jim Teague recently told analysts that he was fielding queries from a petrochemical company that needs pipeline transport and storage for potential hydrogen projects.

Enterprise’s crude pipelines and services revenues plunged 35% in 2020. In February, it said it has long-term contracts to ship about 1 million bpd through 2028 and beyond, compared with average volumes of 2 to 2.2 million bpd over the past two years.

The company did not comment for this story.

As pipeline companies have struggled, investor returns have suffered. The Alerian MLP index, which tracks the performance of midstream companies, is down 24% since the beginning of 2020, compared with a 27% return for the S&P 500.

“A lot of companies had to cut their dividends,” said Rob Thummel, senior portfolio manager at TortoiseEcofin. “It has created some skepticism on the investor base about the sustainability of the sector.”

Rising remittances prove issuing Eurobonds was a bad decision for Pakistan

In one of my recent blogs I had opposed the idea of flotation of Eurobonds. It was based on two premises: 1) the issue will add to debt servicing and 2) the rate of return being offered is fabulous. I had also suggested that whatever amount Eurobond will provide would be mobilized in less than a month.

A review of remittance received indicates that receipts extended their unprecedented streak for the 10th consecutive month in March 2021 and rose to US$2.7 billion for the month, 20% higher than earlier month and 43% higher than March 2020. 

Cumulatively during first 9 months of current financial year (FY 21) remittances rose to US$21.5 billion, up 26% over the same period of FY20.

Remittance inflows during the period under review were mainly originated from Saudi Arabia (US$5.7 billion), United Arab Emirates (US$4.5 billion), United Kingdom (US$2.9 billion) and the United States (US$1.9 billion).

Proactive policy measures taken by the Government of Pakistan (GoP) and State Bank of Pakistan (SBP) to encourage inflows through official channels, limited cross border travel due to the COVID-19 and orderly foreign exchange market conditions contributed to this sustained rise in workers’ remittances.

I am still concerned about deteriorating balance of trade situation of Pakistan. The deficit during first nine months of FY21 swelled to US$21.241 billion from US$17.352 billion over the corresponding months of last year, reflecting an increase of 22.4%. The surge in trade deficit has been mainly led by higher growth in imports and lower growth in exports.

During the period under review, import bill increased by 14.68% to US$39.91 billion, from US$34.799 billion. This hike was contributed by import of raw material as well as import of wheat, sugar and cotton. As against this, export proceeds rose by 7% to US$18.669 billion, from US$17.447 billion.

I am also inclined to draw a conclusion that Pakistan would have faced serious balance of payment crisis, had there been not so huge influx of remittances. Even IMF tranches and borrowing from friendly countries would have proved too paltry.

Therefore, it is suggested that GoP must look into the problems faced by overseas Pakistani, particularly those living in UAE and Saudi Arabia. Similarly, efforts should also be made to convince these countries to resolve problems faced by Pakistanis.

 

Israel attacks Iranian nuclear facility at Natanz

Mossad was reportedly behind the cyberattack at the Natanz nuclear plant on Sunday that caused extensive damage to Iran’s main uranium enrichment facility.

Western sources quoted in Israeli media said the attack, which was initially referred to as an accident by Iran, was carried out by the Mossad.

Iran admitted on Sunday evening that the accident was the result of a terrorist act.

The country’s nuclear chief, Ali Akbar Salehi, said the international community and the International Atomic Energy Agency needed to deal with what he called nuclear terrorism. Iran reserves the right to take action against the perpetrators, he was quoted as saying.

The incident at Natanz was not an accident, and the damage was worse than what Iran had initially presented to the public, a source confirmed to The Jerusalem Post. Western sources said the facility was hit by a cyberattack.

IDF Chief of Staff Lt.-Gen. Aviv Kohavi gave a rare strong hint pointing to Israeli involvement on Sunday.

 “The IDF’s actions throughout the Middle East are not hidden from our enemies’ vision, who are observing us, seeing our capabilities and carefully considering their next steps,” he said in a speech honoring Israel’s fallen soldiers.

“By virtue of clever operational activities, the past year was one of the most secure years that the citizens of the State of Israel have known,” Kohavi said.

“We will continue to act, combining power and discretion, determination and responsibility – all of this to guarantee the security of the State of Israel.”

Prime Minister Benjamin Netanyahu, at an Independence Day event on Sunday with the heads of the security branches, said, “The struggle against Iran and its proxies and the Iranian armament efforts is a huge mission.”

In a possible reference to the reported Mossad operation taking the uranium enrichment machines off-line within hours of their launch, he said: “The situation that exists today will not necessarily be the situation that will exist tomorrow.”

Natanz has in the past been targeted by Israeli cyber operations, according to foreign reports. In 2010, the Stuxnet virus attacked the facility in a joint operation with the US, destroying more than 1,000 centrifuges.

Iran said there no injuries or pollution were caused by the incident on Sunday. Malek Shariati-Niasar, an Iranian MP and spokesman for a parliamentary energy commission, wrote that the incident was highly suspected as being “sabotage,” being that it occurred on Iran’s National Nuclear Technology Day and amid the renewal of talks between the Islamic Republic and Western nations on the Joint Comprehensive Plan of Action nuclear deal of 2015.

The Iranian parliament was following the details of the incident and would announce an opinion on the matter after receiving and summarizing the information, he said.

Earlier on Sunday, Iran said a problem with the electrical distribution grid of the Natanz site had caused an incident.

Iranian MP Ali Haddad placed the blame for the incident on Israel.

“Yesterday the assassination of a nuclear scientist and today the attack on the Iranian ship Saviz and the sabotage of the Natanz nuclear facility,” he tweeted.

Haddad called for deterrence and not restraint. “When commitment is translated as restraint, the Zionist enemy dares to strike more blows,” he said.

The attack against Natanz took place a day after Iran began injecting uranium hexafluoride gas into advanced IR-6 and IR-5 centrifuges at Natanz and was revealed as US Secretary of Defense Lloyd Austin was visiting Israel.

It also came less than a month after the IAEA reported that Iran had restarted enrichment at the Natanz facility and less than a year after Israel was blamed by foreign reports for an alleged attack on the facility, which reportedly had significantly impacted Iran’s nuclear program.

Iran is still nowhere near having recovered to the point where it had been before that July 2020 explosion in terms of its capacity for assembling new advanced centrifuges, the Post recently reported.

In the alleged attack last year, Iranian reports originally referred to the explosion as an incident without providing further details.

“The centrifuge assembly hall was blown up by the enemy a few months ago, but we did not stop and temporarily set up the hall that made up for the lost hall,” Iranian nuclear chief Salehi said Saturday, according to Iran’s semi-official Fars News Agency. He did not specify which “enemy” was behind the attack last year.

Iran is working to move sensitive facilities at Natanz further underground and hopes the new underground halls will be ready next year, Salehi said.

Tensions are rising between Israel and Iran amid a number of attacks on Iranian and Israeli maritime vessels, with recent reports claiming that Israel has hit dozens of Iranian ships in recent years.

On Tuesday, a spokesman for the Iranian military blamed Israel and the US for causing an explosion on the Islamic Revolutionary Guards Corps’ Saviz vessel in the Red Sea, Sputnik news reported last Thursday.

“The United States undoubtedly has a hand in all attempts to undermine and harm Iran,” the spokesman said in a statement, adding that Tehran was not accusing any of the Gulf states of being involved in the incident.

Iran is meeting with European and American officials to discuss a possible return to the JCPOA.

Netanyahu has warned multiple times in the past week that Israel would defend itself against Iranian threats, stressing that Jerusalem would work to combat Tehran’s nuclear ambitions.

Can Iran become a new hub of copper?

In this blog, I am talking about an important base metal, copper. Many of the readers may be aware that copper mines around the world are facing closure due to one or the other reason. As a result prices of this important industrial metal are going up in the global markets.

Industries using copper are desperately looking for alternative sources of supply. My today’s blog has been inspired after reading a report about discovery of huge copper reserves in Iran, Pakistan’s next door neighbor.

Managing Director of National Iranian Copper Industries Company (NICIC) has announced the discovery of one billion tons of new copper reserves in Iran.

NICIC carried out deep drilling to identify new copper reserves across the country, which resulted in the discovery of one billion tons of new reserves, Ardeshir Sa'd-Mohammadi said in a press conference. He put the value of the discovered reserves at about US$8.3 billion.

The official put the country’s total copper reserves at 40 billion tons, saying that Iran currently has the world’s seventh-largest copper reserves, and hopefully the country will climb to sixth place shortly.

Sa’d-Mohammadi further mentioned the new record achieved in the country’s copper cathode production and noted that over 280,000 tons of the commodity were produced in the country during the previous year which was 12 percent more than the preceding year.

Pointing to the NICIC’s new projects for the current year, the official noted that three major copper-related projects will go operational in the current year which is going to add more than 400,000 tons to the country’s copper concentrate output, boosting the company’s annual incomes by US$800 million.

He further noted that the country’s copper exports increased in the previous year despite the negative impacts of the coronavirus pandemic and the US sanctions.

Pakistan Refinery should not be allowed to import second hand refinery

It is worth noting that Pakistan Refinery Limited (PRL) intends to buy a second-hand refinery to upgrade its operations and increase output to meet rising demand of POL in the country. 

PRL has placed an advertisement to purchase a second-hand refinery complex for relocation to Pakistan. Offers from interested bidders have been invited with a closing date of April 23, 2021.

Please allow me to say that this entire episode seems a dubious attempt, simply looking at the closing date and the rational provided. It is right that PRL may succeed in doubling its capacity to 100,000 bpd, but the unit/units being imported will be outdated and/or obsolete. Another limiting factor is that PRL will be able execute plan for upgrading and expanding Euro V specification and high speed diesel oil production.

The report highlights two important points: 1) Pakistan’s total refining capacity is 19.37 million tons per year, while the country consumes 19.68 million tons of petroleum products annually and 2) the Government of Pakistan (GoP) says refining capacity is not being fully utilized on account of financial as well as technical problems, and is supplying only 11.59 million tons per year, while the remaining demand is met through imports.

The Finance Ministry, in a report released in March 2021 said that import volume of crude increased by 13.8% during the first eight months of FY21. Import volumes of petroleum products increased by 27.7% in the same period.

Reportedly, the GoP has finalized a new policy for petroleum refining, aimed at offering incentives for setting up of deep conversion refineries. Therefore, PRL project may not qualify for the incentives stipulated in the Policy.

It seems an attempt is being made to reward the favorites by stating that the incentives would also be available to the existing refineries for upgrading and modernizing their facilities. There would be no restriction on technology, equipment or process to qualify for such upgrade provided that it results in motor gasoline and diesel production to meet specifications notified by the government.

To conclude, it may be sufficient to advise the GoP not to allow Pakistan Refinery to import secondhand machinery and obsolete technology. I also invite the experts and potential investors in refineries to explore the reasons behind half a dozen foreign investors bidding farewell to Pakistan in last one decade.

Why to blame Saudi Arabia for coup in Jordan?

Reportedly, Shaker Zalloum, a Palestinian author believes that Saudi Arabia and the UAE had a key role in the coup attempt in Jordan. He has been quoted saying, “In the official statement of the Jordanian government, there is a reference to the intervention of foreign intelligence without specifying them.”

He went to the extent of saying, “I think it is most likely a coup attempt behind which Saudi Arabia and the UAE played a key role.”

Zalloum talked about two persons Bassem Awadallah, one of the advisers of Mohammed bin Salman and Sharif Hassan bin Zaid a Jordanian citizen who also holds Saudi citizenship. In the same breath he termed Bassem Awadallah, as one of the leaders of corruption in Jordan and the region.

Talking about attitude of Saudi Arabia and Bahrain towards the Palestinian cause, he said, “The following of subordination policy of the American-Zionist camp has become obvious even to the simple Arab citizen in Jordan and in most Arab countries. What happened under normalization of ties with Israel, reveals the malicious nature of the plan.”

He also gave a strange narrative, “These independent regimes were established according to specific job tasks to serve the colonial West and the Zionist ambitions in Palestine. When Britain declared its Hebrew Kingdom of Saudi Arabia in 1932, Churchill wired to Chaim Weizmann congratulating him on the accomplishment of half of the promised state of Israel. As for the delusive independence for the rest of the Persian Gulf states, it came in the same context.”

As regards Bahrain and UAE he said, “Indeed, their cooperation with the Zionists is old, and what has appeared to the public in terms of recent normalization of ties does not go beyond the precedent illegitimate relationships. These regimes claim advocating Arabs and Islam, while they are neither Muslim nor Arab.”

After going through interview of Shaker Zalloum, my only concern is that it aims at maligning Saudi Arabia and other Gulf States. He has not made any reference to reports that alleged involvement of one of Mossad agents in the coup.