IMF and Pakistan conclude staff level meeting

An International Monetary Fund (IMF) mission led by Ernesto Ramirez Rigo held virtual discussions during October 4–November 18, 2021 in the context of the 2021 Article IV consultations and the sixth review of the authorities’ reform program supported by the IMF’s Extended Fund Facility (EFF).

The Pakistani authorities and IMF staff have reached a staff-level agreement on policies and reforms needed to complete the sixth review under the EFF. The agreement is subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms.

Completion of the review would make available SDR 750 million (about US$1,059 million), bringing total disbursements under the EFF to about US$3,027 million and helping unlock significant funding from bilateral and multilateral partners. An additional SDR 1,015.5 million (about US$1,386 million) was disbursed in April 2020 to help Pakistan address the economic impact of the COVID-19 shock.

Despite a difficult environment, progress continues to be made in the implementation of the EFF-supported program. All quantitative performance criteria (PCs) for end-June were met with wide margins, except for that on the primary budget deficit.

Notable achievements on the structural front include the finalization of the National Socio-Economic Registry (NSER) update, parliamentary adoption of the National Electric Power Regulatory Authority (NEPRA) Act Amendments, notification of all pending quarterly power tariff adjustments, and payment of the first tranche of outstanding arrears to independent power producers (IPPs) to unlock lower capacity payments fixed in renegotiated power purchase agreements (PPAs).

The authorities have also made progress in improving the anti-money laundering and combating the financing of terrorism (AML/CFT) framework, although some additional time is needed to strengthen its effectiveness.

On the macroeconomic front, available data suggests that a strong economic recovery has gained hold, benefiting from the authorities’ multifaceted policy response to the COVID-19 pandemic that has helped contain its human and macroeconomic ramifications.

The Federal Board of Revenue’s (FBR) tax revenue collection has been strong. At the same time, external pressures have started to emerge: a widening of the current account deficit and depreciation pressures on the exchange rate—mainly reflecting the compound effects of the stronger economic activity, an expansionary macroeconomic policy mix, and higher international commodity prices.

In response, the authorities have started to adjust policies, including by gradually unwinding COVID-related stimulus measures. The State Bank of Pakistan (SBP) has also taken the right steps by starting to reverse the accommodative monetary policy stance, strengthening some macro-prudential measures to contain consumer credit growth, and providing forward guidance.

In addition, the government plans to introduce a package of fiscal measures targeting a small reduction of the primary deficit with respect to last fiscal year based on: 1) high-quality revenue measures to make the tax system simpler and fairer (including through the adoption of reforms to the GST system) and 2) prudent spending restraint, while fully protecting social spending.

These policies will help safeguard the positive near-term outlook, with growth projected to reach, or exceed, 4% in FY22 and 4.5% the fiscal year after that. However, inflation remains high, although it should start to see a declining trend once the pass-through of rupee depreciation is absorbed, and temporary supply-side constraints and demand-side pressures dissipate.

However, the current account is expected to widen this fiscal year despite some export growth, reflecting the rising import demand and international commodity prices. This economic outlook continues to face elevated domestic and external risks, while structural economic challenges persist.

In this regard, and looking beyond the near term, discussions also focused on policies to help Pakistan achieve sustainable and resilient growth to the benefit of all Pakistanis.

On the fiscal policy front, staying on course on achieving small primary surpluses remains critical to reduce high public debt and fiscal vulnerabilities. Continued efforts to broaden the tax base by removing remaining preferential tax treatments and exemptions will help generate much-needed resources to scale up critical social and development spending.

Monetary policy needs to remain focused on curbing inflation, preserving exchange rate flexibility, and strengthening international reserves. As economic stability becomes entrenched and the independence of the State Bank of Pakistan (SBP) is strengthened with the approval of the SBP Act Amendments, the central bank should gradually advance the preparatory work to formally adopt an inflation targeting (IT) regime in the medium term, underpinned by a forward-looking and interest-rate-focused operational framework. While some key elements of IT are already in place, including a medium-term inflation objective and prohibition of monetary financing, additional efforts are needed, to modernize the SBP’s operational framework as well as to strengthen monetary transmission and communication.

Advancing the strategy for the electricity sector reforms, agreed with international partners, is important to bring the sector to financial viability, and tackle its adverse spillovers on the budget, financial sector, and real economy. In this regard, steadfast implementation of the Circular Debt Management Plan (CDMP) will help guide the planned management improvements, cost reductions, timely alignment of tariffs with cost recovery levels, and better targeting of subsidies to the most vulnerable. Substantially lowering supply costs. However, this will require a modern electricity policy that: 1) ensures that PPAs do not impose a heavy burden on end-consumers; 2) tackles the poor and expensive generation mix, including a wider use of renewables; and 3) introduces more competition over the medium term.

Strengthening the medium-term outlook, including by unlocking sustainable and resilient growth, creating jobs, and improving social outcomes, hinges on ambitious efforts to remove structural impediments and facilitate the structural transformation of the economy. To this end, increased focus is needed on measures to strengthen economic productivity, investment, and private sector development, as well as to address the challenges posed by climate change:

Improving the governance, transparency and efficiency of the state-owned enterprise (SOE) sector 

Putting Pakistan’s public finances on a sustainable path—while leveling the playing field of firms across the economy and improving the provision of services—requires following through with the current reform agenda, especially with the: 1) creation of a modern legal framework; 2) better sectoral oversight by the state, supported by regular audits, especially of the largest SOEs; and 3) reduction of the footprint of the state in the economy, based on the recently completed comprehensive stocktaking.

Fostering the business environment, governance, and the control of corruption

The business climate would benefit from simplifying procedures for starting a business, approving FDI, preparing trade documentation, and paying taxes; and the empowerment of people and production of more complex goods from investing more in education and human capital. Ensuring a level playing field and the rule of law also remains essential, mainly by bolstering the effectiveness of existing anti-corruption institutions and accountability of high-level public officials and by completing the much-advanced action plan on AML/CFT.

Boosting competitiveness and exports

To this end, key objectives include: 1) implementing the approved national tariff policy, based on time-bound strategic protection; 2) negotiating new free trade agreements; and 3) facilitating the integration in global supply chains by improving firms’ reliability and product quality, and registering firms with all necessary entities for tax and business purposes.

Promoting financial deepening and inclusion

To better channel savings toward productive investment, improve the allocation of resources, and diversify risks, key policies remain: 1) entrenching macroeconomic stability; 2) strengthening institutional and regulatory frameworks; 3) creating conditions that allow for a greater role of private credit; and 4) boosting financial coverage of underserved segments of the population and SMEs.

Stepping up to climate change

Worldwide, Pakistan ranks both among the top 10 countries with the largest damages from climate-related disasters and top 20 countries with the largest greenhouse gas (GHG) emissions. Critical next climate policy steps are: 1) accelerating the finalization of the authorities’ National Adaptation Plan (NAP); and 2) implementing an adequate set of measures to meet the COP26 Nationally Determined Contribution (NDC) targets and securing sufficient financing, including from international partners.

Kamala Harris made President of United States for 85 minutes

Kamala Harris, Vice President became the first acting female President of United States on Friday for 85 minutes. President Joe Biden before going for a routine colonoscopy chose to temporarily transfer powers to the Vice President, making her acting president for the time of the examination.

In that time, she served as president, the first woman to do so in the nation's history. Acting presidents, according to The Wall Street Journal, have all the powers of the president except for naming a vice president. 

A section of the 25th Amendment states that Presidents may temporarily transfer their powers to their vice president, should they be unable to do their job. It is not mandatory under circumstances such as a routine colonoscopy, but Biden chose to do so.

Joe Biden notified leaders of the Senate and the House of Representatives of the decision. After his medical procedure, he submitted a letter reclaiming presidential powers. 

The colon has historically been a source of presidential power transfers in the US. Former President Ronald Reagan transferred power to George W. Bush while undergoing colon cancer surgery, and George W. Bush transferred powers to then-vice president Dick Cheney twice while also undergoing colonoscopies. 

White House Press Secretary Jen Psaki said that the Biden administration knew that they "make history every time they’re working together, every time she’s out there speaking on behalf of the government as the Vice President of the United States.  But certainly, today was another chapter in that history that I think will be noted for many women [and] young girls across the country."

An attempt to block US$650 million US arms sale to Saudi Arabia

According to the reports, a group of senators in the United States is opposing the Biden administration’s first major arms sale to the Kingdom of Saudi Arabia over Riyadh’s involvement in the conflict in Yemen.

A joint resolution of disapproval to block a proposed US$650 million in US arms sales to the Kingdom of Saudi Arabia was introduced by Republicans Rand Paul and Mike Lee, as well as Bernie Sanders who caucuses with Democrats.

While many US lawmakers consider Saudi Arabia an important partner in the Middle East, they have criticized the country for its involvement in the war in Yemen, a conflict considered one of the world’s worst humanitarian disasters. They have refused to approve many military sales for the kingdom without assurances US equipment would not be used to kill civilians.

Activists have said Saudi Arabia has lobbied heavily against extending a mandate of United Nation investigators who have documented possible war crimes in Yemen by both the Riyadh-led coalition and the Houthi movement.

The package which was approved by the State Department would include 280 AIM-120C-7/C-8 Advanced Medium Range Air-to-Air Missiles (AMRAAM), 596 LAU-128 Missile Rail Launchers (MRL) along with containers and support equipment, spare parts, US government and contractor engineering and technical support.

In a statement Paul said, “This sale that could accelerate an arms race in the Middle East and jeopardize the security of our military technologies.”

 “As the Saudi government continues to wage its devastating war in Yemen and repress its own people, we should not be rewarding them with more arms sales,” said Sanders in the joint statement.

The Biden administration has said it adopted a policy of selling only defensive weapons to the Gulf ally.

When the State Department approved the sale a spokesman said the sale “is fully consistent with the administration’s pledge to lead with diplomacy to end the conflict in Yemen.” The air-to-air missiles ensure “Saudi Arabia has the means to defend itself from Iranian-backed Houthi air attacks,” he said.

State Department approval of a sale is not necessarily the indication of a signed contract.

Is the US hegemony around the world ending?

The horrifying images of desperate Afghans trying to get out of Kabul after the US-backed government collapsed in August signify a major twist in world history, the end of the US hegemony had come earlier than anticipated.

The growing weakness of United States can be attributed more to the domestic issues rather than its overseas proxy wars. The country is gradually losing status of largest ‘economic power’ as well as its ability to fix internal problems.

The peak period of the US hegemony lasted less than 20 years, from the fall of the Berlin Wall in 1989 to the financial crisis of 2007-09. The country was dominant in many domains of power—military, economic, political and cultural.

The height of American hubris was the invasion of Iraq in 2003, when it hoped to remake not just Iraq and Afghanistan, but the whole Middle East. The United States not only overestimated the effectiveness of its military power to bring about deep political change, but also underestimated the impact of its free-market economic model on global finance.

The decade ended with its troops bogged down in two counterinsurgency wars and a financial crisis that accentuated the inequalities of US-led globalization had brought about.

The degree of uni-polarity in this period has been rare in history, and the world has been reverting to a more normal state of multi-polarity ever since, with China, Russia, India, Europe and others gaining power relative to counter the US.

Afghanistan’s ultimate effect on geopolitics is not likely to be small. The US may have survived an earlier, humiliating defeat when it withdrew from Vietnam in 1975, but regained its dominance within little more than a decade. The much bigger challenge to the US global standing is domestic.

American society has become deeply polarized and has found it difficult to find consensus on virtually anything. This polarization started over conventional policy issues like taxes and abortion, but has since metastasized into a bitter fight over cultural identity.

Normally a big external threat such as a global pandemic should be the occasion for citizens to rally around a common response. But the covid-19 crisis served rather to deepen divide in the United States, with social distancing, mask-wearing and vaccinations being seen not as public-health measures but as political markers. These conflicts have spread to all aspects of life, from sport to the brands of consumer products that red and blue Americans buy.

Many analysts believe that the US influence abroad depends on its ability to fix its internal problems. Polarization has affected foreign policy directly.

During Barack Obama’s presidency, Republicans took a hawkish stance and scolded Democrats for the Russian “reset” and alleged naivety regarding Vladimir Putin.

Donald Trump turned the tables by embracing Putin, and today roughly half of Republicans believe that the Democrats constitute a bigger threat to the American way of life than Russia does.

There is more apparent consensus regarding China as both Republicans and Democrats agree it is a threat to democratic values. A far greater test of the US foreign policy than Afghanistan will be Taiwan, if it comes under direct Chinese attack. Will the United States be willing to sacrifice its sons and daughters on behalf of that island’s independence?

Would the US risk military conflict with Russia should it invade Ukraine? These are serious questions with no easy answers. A reasoned debate about the US national interest has to be conducted primarily through the lens of how it affects the partisan struggle.

The biggest policy debacle of President Joe Biden’s administration in its first year has been its failure to plan adequately for the rapid collapse of Afghanistan.

Biden has suggested that withdrawal was necessary in order to focus on meeting the bigger challenges from Russia and China. Obama was never successful in making a “pivot” to Asia because the US remained focused on counterinsurgency in the Middle East.

In 2022, the administration needs to redeploy both resources and the attention of policymakers to deter geopolitical rivals and engage with allies.

The United States is not likely to regain its earlier hegemonic status, nor should it aspire to. What it can hope for is to sustain, with like-minded countries, a world order friendly to democratic values. The ability do this depend on recovering a sense of national identity and purpose at home.

United States may send some evacuees back to Afghanistan

According to a CNN report, Biden administration is mulling plans to send some Afghan evacuees at a US military base in Kosovo back to Afghanistan, in case they fail to pass a vigorous vetting process. 

The option is one of several being considered by US officials who have not yet developed a wider plan for where to resettle Afghans who do not pass the security clearance process.

About 70,000 Afghan evacuees have come to the United States following the chaotic scramble to evacuate US forces and vulnerable populations from Afghanistan in August.

Tens of thousands of other evacuees were sent to sites across Europe and the Middle East to be processed before moving on to the US or a partner third country.

Administration officials have made clear that all Afghans looking to come to the United States must pass a security screening and vetting process and receive necessary vaccinations before they are permitted to enter.

But those whose cases required more intense vetting are being transferred to Camp Bondsteel in Kosovo, with roughly 200 individuals, including family members, now at the base. The administration and Kosovo’s government have an agreement to house evacuees there for up to a year.

Should an individual at Bondsteel not pass vetting, he/she could then choose to go back to Afghanistan and would not be sent back to the country against their will.

Before such a move, there would be a conversation to examine whether there was a third country where they could travel instead.

Sending evacuees back to Afghanistan without their permission would be a departure from the administration’s previous promise to transfer such individuals to a third country and raise human rights concerns and legal questions.

US officials have also been very vague about which countries would then take those individuals.

While nobody sent to Kosovo has yet been deemed unable to enter the United States, some US officials and lawmakers worry that should individuals not pass clearances there are limited options for them. They could, for example, be stuck on a base long-term.

One senior administration official told CNN that the security flags that have led to people being transferred to Bondsteel are usually not those “that can be resolved within hours or even within days.”

The US has not sent anyone back to Afghanistan, but the official said they “would leave all such possibilities on the table, which includes the fact that you might have evacuees for whom that is their preferred destination if the United States is not an option.”

Europe decoupling from China would not be right, says Merkel

German Chancellor Angela Merkel has said that decoupling from China is not the right option for Europe, despite tense relationship. The outgoing leader told Reuters in an interview that Germany may have been naive in some areas of cooperation with China.

“Maybe initially we were rather too naive in our approach to some cooperation partnerships,” she said. “These days we look more closely, and rightly so.”

But, she said it was important for Germany and the European Union to continue to cooperate with China and to learn from one another.

“Total decoupling wouldn’t be right in my view, it would be damaging for us,” she said.

Merkel also said, Germany was continuously in discussions with Beijing on intellectual property and patent protection, “both with regard to Chinese students in Germany and German enterprises operating in China”.

Merkel has sought to engage with China during her 16 years at the helm and helped to nurture EU-China ties. She did not seek re-election in the September election and will step down once a new coalition government is formed.

China became Germany’s biggest trade partner in 2016 and its rapid economic expansion has fuelled German growth throughout Merkel’s tenure. Some critics say Germany is now too reliant on China, and becoming too soft on Beijing on awkward issues such as human rights violations.

Merkel’s government has said she always addressed human rights issues on her official visits to China – she has visited the country 12 times as chancellor – and has sought to diversify trade in Asia.

Her remarks come as relations between China and the EU are at a low point over a growing list of issues, including Hong Kong and Xinjiang. In May, the European Parliament halted ratification of an investment treaty with China after the two sides imposed tit-for-tat sanctions over Beijing’s alleged human rights abuses against Uygurs in the far western Xinjiang region.

Beijing hits back at Western sanctions against China’s alleged treatment of Uygur Muslims.

Beijing has also been angered by some European nations seeking closer ties with self-ruled Taiwan, which it claims as its own territory. Brussels was preparing to announce a new strategic format for liaising with Taiwan on trade and economic issues this week, but it was postponed at the eleventh hour, sources told the South China Morning Post. It is expected to be revisited at a later date, according to a European Parliament source.

As Brussels tries to balance ties between Beijing and Taipei, China is trying to re-engage with Europe. Zhang Ming, China’s ambassador to the European Union, has said there are plans to hold an EU-China summit by the end of this year.

On climate issues, Merkel told Reuters that she had urged Chinese Premier Li Keqiang in a phone call to use cleaner technology if new coal-fired plants were being built in China.

“I have just spoken to the Chinese premier and discussed whether it would not be better, if his country is going to build coal-fired power plants, to at least build the latest generation,” she said.

Merkel’s party, the Christian Democratic Union, is headed for the opposition and likely to take a “hawkish turn on China” after she steps down, according to Noah Barkin, a Europe-China expert at Rhodium Group.

“The government that replaces her will also strike a different tone because it will include two parties, the Greens and Free Democrats, who support a harder line,” Barkin said.

“In her final months in office, Merkel has been doing all she can to ensure that her dialogue-first approach to China remains in place after her departure. But the political mood in Germany, as well as China’s own trajectory, suggest otherwise.”

 

Iran keen in developing links with neighbors

Deputy Foreign Minister of Iran for Economic Diplomacy Mehdi Safari has said it is a priority to expand economic and trade cooperation with neighbors, saying the Economic Cooperation Organization (ECO) can help achieve this goal.

Safari made the remarks at a meeting with ECO Secretary-General Khosrow Nazeri on the eve of the ECO summit in Turkmenistan, Mehr reported on Wednesday.

ECO includes Iran, Turkey, Afghanistan, the Republic of Azerbaijan, Kyrgyzstan, Kazakhstan, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan.

At the meeting, the ECO chief presented a report on the process to prepare for the summit in Ashgabat and hailed Iran for its assistance in this regard.

Safari said expansion of economic and trade cooperation with neighbors is a priority of the new Iranian administration and stressed the role of ECO in achieving the goals of member countries.

The top diplomat said a plan by Iran to send a high-level team to the forthcoming summit signifies the prominent position of ECO.

Safari said Iran is ready help ECO members to implement important decisions at the ECO summit in Ashgabat.

Iranian Transport and Urban Development Minister Rostam Qasemi said that positive agreements have been reached with neighboring countries, for expansion of transportation cooperation, especially in the aviation sector, IRNA reported.

Speaking at the ceremony on introducing the new head of Civil Aviation Organization (CAO), Qasemi said, “We recently reached agreements with Turkmenistan and Kyrgyzstan, part of which is related to the development of aviation.”

According to the official, the expansion of transportation cooperation with other countries will lead to the expansion of trade ties and eventually will increase the country’s revenues.

“We have made plans for upgrading our transportation fleet. However, we need effective measures to be taken for the development of the aviation industry,” he stressed.

He further stated that the most important factor in the development of the aviation industry is the use of specialists to promote it, adding: “In order to empower the aviation industry to meet the needs of the country, we need more work to be done, and this capability exists inside the country.”

Elsewhere in his remarks, Qasemi mentioned the needs of other transportation sectors including road, maritime, and rail, and said, “The transport sector needs to modernize its fleet, and we have not yet achieved the goals of the program in the rail, sea, and land sectors.”

Ghasemi pointed to the existing problems in the railway fleet and also the incompleteness of the country’s railway corridors and said, "Conditions in the railway sector are not favorable, the average life of the road transportation fleet is high and in the sea sector, despite high capacities, the capacity of the country’s ports has not been used well."

 

Christmas without fanfare

Christmas is set to be spoilt for many Americans by rising prices. While retailers are forecasting a record holiday spending season, inequalities in the economic recovery will again be laid bare.

Inflation is especially taking a toll on lower-income families, who spend roughly a third of their earnings on essentials like food and energy, according to this report by Amelia Pollard and Olivia Rockeman.

It’s eating into recent wage increases, and the timing couldn’t be worse after federal pandemic relief expired for about 7.5 million people.

“Anything that in the very short run puts a lot of pressure on family budgets across the board will cause more stress and damage to low-income households because they just have less scope to absorb it,” said Josh Bivens, director of research for the Economic Policy Institute.

A majority of Americans flush with over US$2 trillion in excess savings accumulated during the pandemic are ready to splurge on gifts and holiday trips.

At the same time, more than 11% of Americans don’t plan to spend at all, the greatest share in at least 10 years and more than double that in 2020, according to a Deloitte survey.

And the Salvation Army is bracing for a holiday season similar to that after the 2008 financial crisis, according to National Commander Kenneth Hodder.

Nery Peña, a first-grade teacher and single mom of two in Washington, DC, says the child tax credit and stimulus checks were a lifeline this past year.

While she’s received around US$500 a month since July, the next tax-credit payment due around December 15, this year will be the last one unless Congress passes the social-spending package, and she’s already started to curb her spending.

“Food prices are going up, gas prices are going up — prices are going up everywhere,” said Peña. “Thank God my daughters understand, but as a mom, it just sucks to tell your kids Christmas won’t be that Christmassy this year.”

CNN reports Biden-Kamala rift

On Monday, White House made a concerted effort to defend Vice President Harris from media criticism, saying she is an important part of the team and signaling she’ll play a role in promoting the bipartisan infrastructure bill.

The pushback came after a CNN report that cast doubt on the vice president’s standing in the Biden administration and said there were rifts within the Biden-Harris operation.

It’s one of a few pieces that have appeared in recent weeks that have taken a critical eye of Harris or that have raised questions about her prospects as a potential successor to Biden as soon as 2024 if he changes his public position and declines to run for reelection. Last week, a Los Angeles Times column’s headline read: “Kamala Harris, the incredible disappearing vice president.” 

The officials dismissed talk of a rift as “gossip,” and a number of faces in Biden World offered on-the-record statements or tweets defending the vice president and pouring cold water on any suggestion that she feels constrained.   

The White House announced that Harris will visit Columbus, Ohio — the capital of a swing state — on Friday to promote the US$1.2 trillion infrastructure bill. White House press secretary Jen Psaki called Harris “a valuable member of our team.” 

“The president relies on the vice president for her advice, for her counsel,” Psaki said after she was pressed on the news reports suggesting Harris is unhappy in her position. “She is somebody who is not only taking on issues that are challenging; she is not looking for a cushy role here. No vice president, no president is.” 

“The president selected the vice president to serve as his running mate because he felt she was exactly the person he wanted to have by his side to govern the country,” she added.

Outside advisers also pushed back against the onslaught of negative coverage and said Harris’s main objective is to advance the Biden agenda.

“While it’s difficult to stop the endless swipes, past gripes or the inside the beltway second-guessing squad, it’s vital that Vice President Harris continue to take meaningful action in helping President Biden deliver for the American people,” said former Democratic National Committee Chairwoman Donna Brazile. 

“It’s untenable for modern vice presidents to succeed in their role as being No. 2. Thus, her number one goal must remain to support the president of the United States,” Brazile said.

On Monday, at least publicly, Harris and Biden seemed as close as ever.

They walked out with one another to the White House signing ceremony for the infrastructure bill. Harris delivered remarks alongside Biden, commending his leadership. Biden thanked the vice president and others for their work and noted that Harris would be among those promoting the bill.

Harris has seen her own approval ratings slide as Biden’s have been in the dumps.

A USA Today-Suffolk University poll out last week showed Harris with an approval rating of 28%, lower than Biden’s 38%. 

Supporters say media stories about strife between the vice president and Biden or their camps are not doing anyone favors.

“These stories don’t help anybody. And they don’t matter. All they do is embarrass the vice president, embarrass the president and hurt the party,” said one former Harris staffer who requested anonymity to speak candidly.

The former staffer said it didn’t matter who was doing the sniping but suggested it could have been former staffers or donors who are upset about not having the same level of access to Harris.

The source also pointed out that much of Harris’s staff are Biden people or were picked by Biden aides, which could also contribute to some of the feelings of dysfunction.

“People can be frustrated all they want, but it’s not helpful,” the former staffer said. “It’s not helpful to anybody, and it’s certainly not advancing the vice president’s political position. It makes her look weak.”

Harris just completed what was generally seen as a successful trip abroad to France to help bolster ties between Washington and Paris after a fallout earlier this year over a submarine deal with Australia. And her aides sought to minimize the CNN report as Beltway chatter. 

“It is unfortunate that after a productive trip to France in which we reaffirmed our relationship with America’s oldest ally and demonstrated US leadership on the world stage, and following passage of a historic, bipartisan infrastructure bill that will create jobs and strengthen our communities, some in the media are focused on gossip — not the results that the ‘resident and the Vice President have delivered,” Harris chief spokesperson and senior advisor Symone Sanders tweeted.

Harris is presiding over a difficult and expansive policy portfolio that includes immigration and voting rights.

She’s also leading the National Space Council and taking meetings with foreign leaders. While she’s been less visible in Biden’s effort to get the infrastructure bill passed, officials insist she is still playing a meaningful role. Harris was among a group that made calls alongside Biden earlier this month when the White House was trying to get the legislation across the finish line in the House. 

As vice president, she would be considered among the front-runners to carry the party mantle should Biden opt not to run again in 2024. But others are also seen as positioning themselves for that race, including Transportation Secretary Pete Buttigieg.

“There is skepticism among the Democratic establishment that Kamala can be the standard-bearer of the party, and I’m not sure she’s done a lot to dispel that in the last year,” the former Harris staffer said.

At the same time, some Harris allies complained that the White House needs to continue to do more to help position her, especially if she is the heir apparent to Biden should he choose not to run for reelection in 2024. 

 “Simply put, I think people expected her to have a higher profile,” one ally said. “What happens if she runs in 2024? They’re not helping matters."

At the briefing on Monday, Psaki put it this way: “I don’t have any predictions of whether she will run, when she will run. I will leave that to her and they do not reflect his view of our experience with the vice president.”

Iran accuses US supporting ISIS in Afghanistan

Iran's special envoy for Afghanistan said on Monday that after the defeat in Afghanistan, the United States is trying to support the ISIS terrorist group.

"The aggressor country, which intended to rule Afghanistan for the past 20 years, is now trying to strengthen the takfiri groups in Afghanistan after its defeat," Hassan Kazemi Qomi said.

Arriving in Kabul, the Iranian diplomat told reporters that the purpose of his visit was to discuss political, economic, security and Afghan refugee issues with the officials of interim government.

"We respect the will of the Afghan people and our position is in line with the wishes of the Afghan people," Kazemi Qomi told a reporter when asked about recognizing the Taliban government.

Iran's special envoy for Afghanistan expressed hope that with formation of a strong government in Afghanistan, stability would prevail in the region.

The diplomat went on to say that "Afghanistan, like the Islamic Republic of Iran, is facing oppressive Western sanctions and the two countries will try to cooperate more by ensuring security in the borders."

The Iranian envoy in his remarks underlined that Iran had always stood by the people of Afghanistan and today stands by the people of Afghanistan in all aspects of security, economy and politics.

Referring to the US defeat in Afghanistan, the envoy said some countries are exploiting terrorism to launch a proxy war in Afghanistan.

Earlier, the embassy of the Islamic Republic of Iran in Kabul announced the trip. It said, "Kazemi is scheduled to talk with senior Taliban officials on various issues such as regional issues, refugees, humanitarian aid, formation of an inclusive government and especially economic issues. Helping the Afghan people is a priority before the cold season."

Speaking at his weekly press briefing on Monday, Saeed Khatibzadeh, the Iranian Foreign Ministry spokesman, said that Qomi’s trip to Kabul will address the current and future status of the people of Afghanistan.

He then said that Iran has tried to make the Afghan people bear the least impact from the developments in Afghanistan and the catastrophic departure of the United States from the country.

The diplomat noted that the responsibilities of this governing body will be discussed.

“We are concerned about extremism and terrorism, and we have witnessed the disgusting act of terrorism in attacking worshippers, and it is the direct responsibility of the governing body to protect the security of worshippers and the people of Afghanistan,” he insisted.

He then said that Iran has news of the presence of ISIS in Afghanistan, which is worrying and is one of the topics that will be discussed during the trip by the special envoy to Afghanistan.

ISIS has been targeting worshippers since the Taliban took power in August. Its suicidal attacks on worshippers in Kunduz (northern Afghanistan) on October 8 and Kandahar (southern Afghanistan) on October 15 were horrific.

It also attacked a military hospital in Kabul on November 2. At least 25 people were killed and more than a dozen were wounded during the attack.

The attack, which included armed gunmen and at least one suicide bomber, targeted the 400-bed Sardar Mohammad Daud Khan military hospital.

Zabihullah Mujahid, a spokesman for the Taliban, said the attack was carried out by several members of ISIS, including a suicide bomber who detonated his explosives at the gate to the hospital. A car full of explosives outside the hospital also exploded, wounding dozens, and several Taliban fighters were killed and wounded in the ensuing gun battle, Mujahid said.

Iran hosted the meeting of the foreign ministers of countries neighboring Afghanistan on October 27. The participants at the conference insisted on the need for security in Afghanistan and formation of an inclusive government among other issues.

Analysts forecast proving wrong

Mass vaccinations were supposed to spur a major shift in spending away from goods, toward services. The thinking was that as more people traveled, dined out and attended entertainment venues, the less they would spend on merchandise. That would, in turn, help remove some of the strains on the supply chain., but that didn’t happen.

In part because the delta wave of the virus kept massive pent-up demand skewed toward merchandise and added further strain to supply chains.

Jobs

Another basic assumption was that as the pandemic receded and schools returned to in-person learning — freeing up home-bound parents — millions more Americans than have done would return to the job market. More workers would mean fewer bottlenecks and more supply, validating the “transitory” predictions for high inflation. The bitter reality is as of October, the participation rate, which measures those employed or looking for work, has recovered less than half of its pandemic-related collapse. 

Energy

With the fossil fuel industry having cut back investment over the years, in part amid pressure from tilt toward ESG investing and in part thanks to having over-invested in the previous cycle, energy companies haven’t been able to meet rising global demand. Labor shortages have only made things worse. This led to energy prices rising 30% from a year earlier, the largest annual advance since 2005. Gasoline is up nearly 50%. The price of electricity in October increased 6.5% from the same month a year ago, the most since March 2009.

Pricing-Power

Global competition and consumer expectations for stable prices had long eroded companies’ ability to pass along higher costs. There was no US inflation surge during the escalating tariff hikes with China, for example. But that’s all changed. Large companies have pushed through price increases after having to boost wages to lure workers, along with pay for higher input costs.

Forecasting inflation “has been incredibly challenging,” says Matthew Luzzetti, Chief US economist at Deutsche Bank AG. “And risks remain skewed to the upside for the inflation outlook.”

The Federal Reserve has been off in its forecasts just like everyone else, and will need to reassess next month, when policy makers update their projections.

Credit, though, to Lawrence Summers and Mohamed El-Erian, both contributors to Bloomberg, who have been warning of a prices problem for a while. 

Pakistan likely to face food shortage and spike in prices

In the aftermath of COVID-19 lockdowns, port congestions and supply chain disruptions food prices around the world are on the rise. Whatever is happening around the world is having trickle down effect on Pakistan. The situation is not different in three of its immediate neighboring countries, India, Afghanistan and Iran.

The biggest fear is that food products are being smuggled to these countries in large quantities and sooner than later Pakistan will also face acute shortage of these products. Therefore, it is necessary that the governments of these countries sit together to evolve a sustainable strategy to overcome the looming shortage of staple food items.

According to the available information three of Pakistan’s immediate neighbors suffer from acute problems, due to internal and external reasons. Let me begin with Afghanistan, the war torn country faces the worst problem, United Stated has frozen its foreign exchange reserve and the country is not able to import staple food items. It is feared that due to highly porous borders and use of Pakistani currency for the procurement of these items from Pakistan, Afghans has no option but to take these from products Pakistan to save people from starvation.

Iran also suffers due to ‘economic sanctions’. There are enormous opportunities for barter trade the goods are exchanging hands at borders. Since United States is not ready to lift these sanctions Iran is forced to buy food and other items from its immediate neighbors, be it Pakistan and Afghanistan or Central Asian countries.

India has ample food supplies, but bad governance, particularly ‘hording’ is pushing prices higher. Without going in too many details Indian are in a position to offer certain most sought after goods to Pakistan in exchange for food items. Since both the countries, due to the presence of ‘hawks’ don’t enjoy cordial diplomatic and economic relations the field is open for smugglers.

In the abnormal conditions people and countries have to make ‘exceptional’ decisions. Under the prevailing conditions the representatives of all the three countries must sit together to find sustainable solutions.

In case of Afghanistan trade must be allowed in Pak Rupee, export of wheat, edible oil and rice may be allowed in exchange for fruits and vegetables.

In case of Iran, ‘gas for food’ option should be exercised. At present prices of natural gas are hovering at record high level and Iran is in a position to supply gas to Pakistan at very attractive prices. Due to geographical proximity lower freight cost and shorter sailing time are the two biggest incentives.

Let me warn the policy makers that if they fail in coming up with conducive policy, it will only proliferate smuggling. On one hand the governments of respective countries will not be able to monitor the quantum of goods being smuggled and on the other hand floodgate will be opened for the influx of ‘highly undesirable products’ into Pakistan. Act now to avoid regret later.

Qatar to represent US interests in Afghanistan

Qatar will formally represent the US interests in Afghanistan, according to a new agreement signed by the two countries on Friday. This creates a new pathway for the United States to assist American citizens and allies left behind in America’s chaotic exit.

Secretary of State Antony Blinken and Qatari Deputy Prime Minister and Minister of Foreign Affairs Mohammed bin Abdulrahman Al-Thani signed an agreement, effective next month, to make Qatar's embassy in Kabul a protecting power for the US, essentially hosting many of its consular functions. 

A State Department spokesperson confirmed that at the US-Qatar Strategic Dialogue, the secretary and Qatari foreign minister signed an agreement related to Afghanistan.

Under the agreement, first reported by Reuters, the Qatari Embassy will dedicate a certain portion of its staff to lead a US special interests section.

"Qatar has long been a great friend and strong partner of the United States and our cooperation on Afghanistan reflects the depth and strength of our bilateral relationship," a spokesperson said. "We are deeply thankful for Qatar’s close coordination on Afghanistan and its extraordinary support in facilitating the transit of US citizens and their families, Embassy Kabul personnel, at-risk Afghans, and other individuals from Afghanistan through Qatar."

Under the agreement, the US would address diplomatic relations in Afghanistan in a manner similar to how it does in Iran, where the US has no embassy but instead works through Switzerland’s embassy in Tehran.

Qatar has been a key player in the US evacuation, including by hosting a site for Afghan evacuees to be vetted before arriving in the US. 

"As the first and largest transit point in the world, Qatar has been at the forefront of our efforts to relocate people from Afghanistan to safety," the spokesperson added.

Qatar has committed to continue to allow individuals who are at risk in Afghanistan because of their affiliation with the US to transit its territory on their way to resettlement elsewhere. 

The State Department spokesperson also confirmed that according to the memorandum of understanding signed between the two countries on November 12, 2021 Qatar will continue to temporarily host Special Immigrant Visa applicants and eligible family members while their applications are processed.

"In addition, Qatar signed an arrangement today signaling its intention, effective December 31, 2021 to assume the role of protecting power for US interests in Afghanistan. Thanks to our strong partnership with Qatar, we are better positioned to serve US citizens in Afghanistan, whose safety and security is our top priority," the spokesperson added.

The move comes as the US has struggled to help its citizens leave Afghanistan. 

The arrangement could also help the US issue visas or other documents to those who assisted the US during its 20-year war in the country. 

Independent analysts estimate that more than 100,000 people deemed a priority for evacuation were left behind, including activists, those who assisted the military and individuals who worked with US aid and development organizations.

The State Department has been struggling with how to address consular issues without an on-site presence in Afghanistan, as visa applications have to be signed in front of US staff. 

In lieu of directly issuing visas on the ground, some refugee groups have pressed State to get some sort of document to those who are able to travel to nearby countries, signaling that they are likely to be able to secure passage to the US

Other requirements, like biometric screening, could then take place in Qatar.

A senior US official told Reuters it was "an important signal of potential direct engagement between Washington and Kabul in the future after two decades of war." 

The US Embassy in Kabul was evacuated on August 15, this year hours after the Taliban's takeover of the Afghan capital.

Is Iran the only supporter of Palestinians?

Reportedly, in a recent interview, Abu Jamal, a spokesperson for the Popular Front for the Liberation of Palestine’s Abu Ali Mustafa Brigades, stated the group and the ‘Palestinian Resistance’ benefited from Iranian support in its war against Israel.

“We and the Islamic Republic fought the Zionist enemy in Lebanon and we also fought them in Gaza and the West Bank with the support of the Islamic Republic of Iran,” Jamal stated.

Furthermore, Jamal lauded the relationship the group had with Iran and the Islamic Revolutionary Guard Corps (IRGC) by referring to them as ‘blood brothers’ and ‘comrades’ that shared a ‘common destiny’ in defeating Israel.

It’s unclear when Iran began supporting the group. However, in 2013, Iran reportedly resumed military and financial support to the group after leaders from both sides held several meetings in Tehran, Beirut and Damascus under the auspices of Hezbollah.

Hamas, Palestinian Islamic Jihad, PFLP, and Popular Resistance Committees have boasted about their relationship with Iran including military support they have received. After the May conflict in Gaza, the aforementioned groups praised Iran and Hezbollah for their military support during the eleven days of fighting. Additionally, smaller Palestinian factions have benefited from some Iranian aid including the now defunct Harakat al-Sabireen.

The close relationship between Iran and the PFLP was also on display when a PFLP delegation met with President Ibrahim Raisi after his swearing in ceremony in August. As expected, Raisi affirmed the Islamic Republic’s continued support for the ‘Palestinian Resistance’ and the ‘liberation of Palestine.’

It is difficult to say to what extent Iran has supported the PFLP militarily and financially. The group has purposely been ambiguous about what it exactly receives in terms of funding and arms from Iran.

However, it’s likely larger groups such as Hamas and Palestinian Islamic Jihad receive the lion share of military guidance, weapons and funding from the assistance Iran has allocated for the ‘Palestinian Resistance.’

Despite what it may or may not receive in military and financial support, the PFLP has made no qualms about showing its support and allegiance to the Islamic Republic and other members of the ‘Resistance Axis.’

After the May 2021 Gaza-Israel conflict, the PFLP held a military parade where its fighters showed their support for Iran and the IRGC by displaying pictures of former Quds Force Lieutenant-General Qasem Soleimani.