bp and EnBW emerge successful in offshore wind project

bp and EnBW have been awarded a lease option off the east coast of Scotland to develop a major offshore wind project — to be known as Morven. The award was made in the highly competitive ScotWind leasing round; the results were announced by Crown Estate Scotland.

The approximately 860km2 lease is located around 60km off the coast of Aberdeen. The E1 lease is in an advantaged area, allowing the partners to develop it as a fixed-bottom offshore wind project with a total generating capacity of around 2.9 gigawatts (GW), sufficient to power more than three million homes.

“bp has a proud 100-year history in Scotland. We want to thank Crown Estate Scotland for the opportunity to now start a new chapter, helping Scotland continue as a global energy leader for the next 100 years.We have a fantastic partner in EnBW and now an even more competitive portfolio of nearly 6GW of combined offshore wind to develop together,” said Bernard Looney, chief executive officer.

The success of the bid is expected to unlock a number of investments across the country, as part of bp’s integrated energy company approach, leveraging its existing North Sea infrastructure, skills and relationships and EnBW’s experience in offshore wind. Along with the offshore wind development, these investments include significant expansion of electric vehicle charging infrastructure in Scotland and green hydrogen production. Together, these represent up to £10 billion of investment in support of offshore wind and Scotland’s energy transition. 

“Our plans go much further than just the turbines offshore. They see us investing in projects and in people — from EV charging to green hydrogen — aligned with Scotland’s energy transition plans.   “This is good business — making disciplined investments and demonstrating what an integrated energy company can do; we can’t wait to get to work.”

EnBW CEO Frank Mastiaux added, “In this close partnership we succeeded in a highly competitive field of bidders. Since the construction of the first German offshore wind farm in 2010 by EnBW, we have become a major player in offshore technology, even beyond Germany's borders. We are therefore very pleased to be able to contribute our experience of developing and operating technically demanding offshore wind projects once again with our partner bp.

“This success marks so far the largest development project in offshore wind for our company. And we are proud to contribute significantly to a climate-friendly energy future in Scotland, being one of the world’s largest markets for offshore wind power. “For EnBW this investment will be a corner stone in our strategy to become CO2 neutral by 2035. The international and European targets to reduce the CO2-footprint can only be met by implementing large scale renewable generation capacity. Offshore Wind in Scotland provides a perfect setting for achieving this goal.”

As a result of the successful ScotWind bid, the partners will establish their operational centre in Scotland, and bp will make Aberdeen its global operations and maintenance centre of excellence for offshore wind, creating up to 120 new direct jobs.  It is expected to contribute up to £40 million per year to the economy.

The offshore wind development will include investments in infrastructure, ports, harbours and shipyards, including the construction of four ships to support EnBW and bp’s offshore wind projects across the UK, subject to technical and commercial due diligence. These new-builds will involve an investment of more than £100 million and would be expected to support 500 associated jobs. It also triggers additional investment in Forth Ports, who are creating Scotland’s largest renewable hub at the Port of Leith, supporting up to 3,000 direct and indirect jobs in the Forth Estuary net zero corridor.

bp also intends to apply its integrated business model to use the clean power generated offshore to supply and significantly accelerate the expansion of its EV charging network in Scotland, to around 4,000 public chargers, by 2030.

As part of bp’s commitment to support oil and gas workers through employment and opportunities for re-training and reskilling in renewables, bp and EnBW have already committed more than £1 million to X-Academy in Scotland in a five-year deal; supporting both reskilling experienced workers and the creation of entry-level energy transition roles.

Taken together, Morven will represent a significant contribution to the development of Scotland’s energy transition infrastructure, economy, and skills, creating new opportunities and long-term, high-quality jobs.

Iran expresses willingness to reopen embassy in Saudi Arabia

Iranian Foreign Ministry spokesman Saeed Khatibzadeh has expressed Iran’s readiness to reopen Tehran’s embassy in Riyadh, underlining that reopening embassies depends on a Saudi will. 

Speaking at a weekly press conference on Monday, Khatibzadeh said Iran is now focused on resumption of its diplomatic activities in the Jeddah-based Organization of Islamic Cooperation (OIC). 

“The focus is on starting the Islamic Republic of Iran's mission to the Organization of Islamic Cooperation in Jeddah, and our diplomats obtained visas to conduct this feasibility study.”

Earlier, ISNA reported that the three Iranian diplomats had arrived in the Saudi city of Jeddah in recent days to represent Iran in the OIC.

It indicated in a report that the three Iranian diplomats left for Jeddah in recent days and are scheduled to resume their activities after 6 years of stopping Iran's representation to the 57—member organization.

The activities of the Iranian representative office in Jeddah stopped in early 2016, following the severing of relations between Iran and Saudi Arabia, after demonstrators attacked Saudi Arabia’s embassy in Tehran and its consulate in the city of Mashhad in northeastern Iran.

In December 2021, Iranian Foreign Minister Hossein Amir Abdollahian announced that Saudi Arabia has agreed to issue visas to three of Iran’s diplomats who work as diplomats residing at the headquarters of the OIC.

The Iranian Foreign Ministry said that Saudi Arabia issued visas to three Iranian diplomats, while the Kingdom confirmed the issuance of visas as part of the normal procedure for representatives of member states of the organization residing in Jeddah.

Khatibzadeh said that Iran stands ready to resume diplomatic relations with Saudi Arabia in line with the foreign policy agenda of President Ayatollah Seyed Ebrahim Raisi. 

“As Raisi noted in an early election press conference, the Islamic Republic of Iran is ready to reopen its embassy in Saudi Arabia, depending on what practical steps Saudi Arabia takes,” he said. “We have already announced this readiness, and God willing, we will consider all the preparations in this direction so that this path will be implemented.”

The spokesman also addressed a range of regional issues. Responding to a question about the visit of the foreign ministers of the Persian Gulf countries to China and some analyses about the concern of these countries about China's influence and Iran-China relations, he said, “Iran-China relations are completely normal. East-East relations are based on the natural requirements of developments in the international system and bilateral relations. The presence of different countries in the region as independent countries is neither a threat nor a cause for concern. China already has relations with various countries in the region, including the countries of the Persian Gulf, and we welcomed balanced and independent relations between the countries.”

Khatibzadeh continued, "What is worrisome is the presence of some Western trans-regional countries in the Persian Gulf region, which try to change the geopolitics of the region by selling weapons and establishing a military base in the Persian Gulf region and changing governments and regimes and manipulating the results of political developments in these countries. A system of inclusive regional arrangements can help implement these stable relationships in the region.”

Responding to a question about Amir Abdollahian’s visit to Oman and Qatar and Iran's readiness for regional arrangements, the spokesman said, “Good neighborliness and the issue of neighborhood as a definite policy in the past few months has been pursued in various forms and consultations have been held in the Persian Gulf. Announced and unannounced trips between the capitals and the visit of some Persian Gulf officials to Iran and the visit of the Iraqi foreign minister to Iran are all measures to establish comprehensive arrangements in the region in a multilateral manner.”

He pointed out, “Of course, these comprehensive arrangements in the Persian Gulf are the first step and targeting of eight countries in the Persian Gulf and is a serious issue.”

He added, “Friends in Iraq had suggestions, and we supported any endogenous arrangements by the countries of the region. The principles of these regional arrangements have been discussed in the meetings, including respect for the sovereignty of countries and the prevention of processes that lead to interference, non-aggression and recognition of red lines, etc. But for these to become organizational arrangements, we must create distance among them.”

Khatibzadeh also pointed to relationship between Iran and Syria, describing it as strategic and multi-layered. 

Regarding the Israeli aggression on Syria and some claims that it targets resistance bases, and the statements of US officials about their presence on Syrian soil, Khatibzadeh said, “Iran-Syria relations are multi-layered and multi-dimensional and with their own strategic depth, and it is better for countries to think about ending their wrong policies that led to the killing of innocent Syrians and the occupation of Syrian territory and the cowardly siege and inhumane acts.”

He continued, “The Islamic Republic of Iran knows its own interests well and also knows how to defend its own lives and interests. To date, no party has allowed some parties to strike in areas where Iran has acted as an advisor and where Iran has helped the national sovereignty of countries, and they know full well that the Islamic Republic of Iran will respond on the spot.”

Khatibzadeh referred to Amir Abdollahian’s visit to Oman and Qatar and said, “In Oman, he had a meeting with Mohammad Abdul Salam about the latest situation in Yemen, and in Qatar, in addition to meeting with the Emir and Foreign Minister of Qatar, he also met with Ismail Haniyeh.”

During the meeting with Qatar’s Emir Sheikh Tamim bin Hamad Al Thani, Amir Abdollahian examined the latest developments in bilateral ties in areas of politics, security, trade, and economy. Iran’s top diplomat referred to the existing capacities for expanding economic relations between Iran and Qatar, underlining the need for forging cooperation in economic areas given the existing advantages of Iran.

Amir Abdollahian further outlined the Iranian administration’s approach to relations with neighboring countries, emphasizing exchange of delegations at high levels for consultations between Iran and Qatar.

He also pointed to Iran’s views toward the region and declared Tehran’s readiness to develop interaction with regional nations bilaterally and multilaterally.

The top Iranian diplomat then spoke about the Vienna talks over removing the illegal sanctions against Iran as well as the issues related to Afghanistan and Yemen. 

The Qatari emir, for his part, outlined his views regarding these matters.

Sheikh Al Thani also stressed the importance of ties between Iran and Qatar and cooperation on regional issues. He underlined that Qatar is interested in expanding cooperation with Iran.

Amir Abdollahian also met with a high-profile delegation from Hamas, headed by its political bureau chief Ismail Haniyeh.

The Hamas delegation addressed the developments related to the Palestinian cause, particularly with regard to the situation in Occupied Jerusalem and the West Bank, Palestinian detainees in Israeli prisons, and the 15-year Israeli siege on Gaza, according to the Palestinian Information Center. 

The delegation hailed the Islamic republic's position in support of the Palestinian cause and resistance. 

The Iranian minister, meanwhile, discussed the developments concerning a number of matters, including regional alliances and the Vienna talks, reiterating his country's stance in support of the Palestinian people and resistance.      

The Hamas delegation welcomed the endeavors being made to achieve unity among Arab and Muslim nations, especially the efforts being exerted by Iran and Saudi Arabia. 

Besides the Hamas chief, the meeting was attended by members of Hamas political bureau Khalil al-Hayya and Mousa Abu Marzouq, in addition to Majdi Abu Amsheh, head of Haniyeh's office.

The Iranian Foreign Ministry said in a statement that during the meeting, Amir Abdollahian outlined the Islamic republic’s principled policy toward the issue of Palestine as a plight in the heart of the Islamic ummah created by the child-killing Zionist regime which enjoys support from the West.

He also condemned the brutal crimes of the Zionist occupiers against al-Quds, al-Aqsa Mosque, Gaza and occupied Palestinian territories as well as the regime’s aggression and atrocities against the Palestinian people.

US denies Syria-Lebanon-Israel gas deal

The official Twitter account of the US State Department’s Bureau of Near Eastern Affairs denied a claim that there was a secret deal that would see Israel supply gas to Lebanon.

This raises many questions because the media had not reported that the US had brokered a deal between Israel and Lebanon; reports had merely indicated that Israel could supply gas to Jordan and that gas would find its way onward, perhaps to Syria or Lebanon in some complex arrangement.  

The overall perception is that the deal may not take place; in fact it is not clear if the deal is real. The deal involves too many ifs and buts. The gas might have been for Jordan, a country that does not have large energy supplies, and supply to Syria and then to Lebanon may be loud thinking. Experts believe that the gas line would take years to be repaired from Syria to Lebanon; other reports said an energy swap might be involved.  

Who would come up with a complex deal involving moving gas from Israel to Egypt, Jordan and Syria by pipeline? The whole concept was only to stop Lebanon from taking Iranian energy products. 

Lebanon is in the middle of a financial and energy crisis. This is caused partly by Hezbollah’s stranglehold on the government and the fact that wealthy Lebanese keep their money abroad and don’t pay taxes. Like many countries, Lebanon has plenty of wealth but wants other countries to foot the bill so its elites can enjoy restaurants in Paris and sports cars.

Lebanon probably has more fancy villas, sports cars, servants and maids for its middle and upper class than Israel does, but the country is “poor” because too much of the money has been siphoned off and sent abroad. This is a traditional model of governance where money is taken abroad and then Lebanese demand that the US and others pay for everything. 

Meanwhile, American taxpayers who can’t afford the sports cars and servants that are common in Beirut have to pay for Lebanon’s army because the billionaires and millionaires who run Lebanon’s sectarian feudal political system are too busy partying with supermodels and owning yachts.

This isn’t conjecture, a Lebanese political leader, who doesn’t seem to pay any taxes in Lebanon, gave US$16 million to a model, according to The New York Times. But Americans, Israelis, Jordanians and other people who work for a living and see their earnings evaporate due to inflation are being asked to “save” Lebanon from Iran so that its upper class can continue the good life. Is this really a realistic plan? 

At the end of the day, the idea of bailing out Lebanon’s elites to keep Iranian gas off the streets of Beirut may not come to pass because of its complexity, not because people in the US or Israel or other countries might think the idea boorish and crass. Washington has slapped sanctions on Damascus, but media reports asserted that the Syrian regime might benefit from the gas deal by positioning itself to supply Lebanon’s energy needs.

The Assad regime, which floods the region with narcotics, hosts Hezbollah and is an ally of Iran, was supposed to be a conduit for the energy needs of Lebanon, to supposedly counter the Islamic Republic. This is like the proverbial “robbing Peter to pay Paul” where you work with one Iranian ally to supposedly counter another. If the Syrian regime and Hezbollah benefit, why was the United States, Israel and Jordan or Egypt supposed to be involved in the deal?

The US denial of the reports indicates these were leaked to scuttle the deal in the first place. Lebanon’s ruling elite officially dislike Israel and they are held hostage by Hezbollah, which threatens anyone who has any contact with the Jewish state. Lebanese law even makes it illegal to send an email to or converse with Israelis.

If Beirut hasn’t been able to sort out a maritime dispute with Jerusalem, how can media reports indicate that Israeli gas might somehow benefit its northern neighbor? Such a concept seems far-fetched. And even if it was floated as some kind of energy swap – where gas flows to one country and that country swaps it for other gas from a third country and this goes to Lebanon – the whole idea would require more regional stability than currently exists.

Smugglers from Syria gunned down a Jordanian soldier and wounded other Jordanians over the weekend. The idea that Amman will agree to work with a Syrian regime that is empowering drug smugglers may not be a reality.

While it is true that Egypt, Jordan, the Gulf States and Russia want a more stable Syrian regime – and it’s also true that Israel has interests in not having Lebanon become more poor and chaotic – the ability to get all these interests aligned seems difficult. If the US could pull it off, it would be an accomplishment of the Biden administration.

The question is whether the deal would actually reduce Iran’s role in Lebanon, or simply give Tehran breathing space to spend resources on Hezbollah’s arsenal, rather than see Iran trying to sort out Lebanon’s gas and electric mess. Perhaps Iran will benefit either way.  

bp and Oman enter strategic partnership

bp and the Ministry of Energy and Minerals in Oman have signed a Strategic Framework Agreement (SFA) and a Renewables Data Collection Agreement which will support the potential development of a multiple gigawatt, world-class renewable energy and green hydrogen development in Oman, by 2030. 

As part of the agreement, bp will capture and evaluate solar and wind data from 8,000km2 of land – an area more than five times the size of Greater London. The evaluation will then support the Government of Oman in approving the future developments of renewable energy hubs at suitable locations within this area to take advantage of these resources. The renewable energy resources could also supply renewable power for the development of green hydrogen, targeting both domestic and global export markets.

This partnership represents a significant evolution of bp’s business in Oman and is aligned with bp’s strategy, which includes rapidly growing our developed renewable generating capacity and to take early positions in hydrogen. 

bp Chief Executive Bernard Looney said, “Today’s agreement represents what bp is able to offer as an integrated energy company. These projects will build on our gas business, and bring wind, solar and green hydrogen together in a distinctive and integrated way supporting Oman’s low carbon energy goals. 

“And we’re not just investing in energy. We are investing in Oman to create and develop infrastructure, support local supply chains and cultivate the skills and talent needed to usher in this next generation of energy leaders.  We look forward to working closely with the Omani government to take this forward.”

His Excellency Dr Mohammed Al Rumhy, Minister of Energy & Minerals of the Sultanate of Oman, said, “This is a proud moment for Oman and a significant step towards delivering our 2040 Vision. In partnership with bp, we will progress the development of new, world-class solar and wind resources – generating renewable power for the grid and powering the manufacture of green hydrogen to supply domestic demand and to export to global customers. Over the past 50 years, we’ve advanced our hydrocarbon production. Today’s agreement signals the next step in our energy journey – unlocking the potential for Oman as a low-carbon energy hub”.

The UK’s Minister for Investment Lord Gerry Grimstone added, “Following the signing last week of the UK-Oman Sovereign Investment Partnership, this investment by bp into Oman’s renewable energy sector is a shining example of our countries’ joint ambition to facilitate strategic and commercial bilateral investment. The project demonstrates our shared vision for future prosperity through clean growth, further strengthening the partnership between the United Kingdom and the Sultanate of Oman”.

Under the SFA, bp and Oman will also consider ways to collaborate in a number of areas, including a renewables strategy, regulation, the establishment of a renewable energy hub and the development and reskilling of the local workforce.

Oman has a strong track record in the oil and gas industry, which it has grown over recent years. Today’s announcement, which is subject to final agreement of commercial terms, is an important step towards the country’s 2040 Vision and an opportunity to become a leading low-carbon energy hub. And it would further support the Oman government’s goals of diversifying the economy and bolstering investment. 

bp is committed to growing its business and building on its 15-year history in Oman, where it operates Block 61, which produces a third of the country’s gas demand. In 2020, bp’s Oman business spent US$610 million with Omani-registered companies – 90% of its total spending. And in 2021, bp joined Oman’s national hydrogen alliance, Hy-Fly, to promote the hydrogen industry in Oman, and established a net zero taskforce to help develop a ‘roadmap’ for bp in Oman.

Kazakhstan from stability to turmoil

Dozens of people have died and thousands have been detained in Kazakhstan over the past week during the worst violence seen in the Central Asian nation since it became independent in the early 1990s. 

Security forces appeared to have reclaimed the streets of the country's main city a day after Russian paratroopers arrived to help quash the uprising.

Kazakhstan, located between Russia and China and also sharing borders with three other ex-Soviet republics, is the largest economy in Central Asia, with rich hydrocarbon and metal deposits. It has attracted hundreds of billions of dollars in foreign investment since becoming independent in 1991.

Strategically, it links the large and fast-growing markets of China and South Asia with those of Russia and Europe by road, rail, and a port on the Caspian Sea. It has described itself as the buckle in China's huge 'Belt and Road' trade project.

Kazakhstan is the top global producer of uranium and the recent unrest prompted an 8% jump in the price of the metal that fuels nuclear power plants. It is the world's ninth biggest oil exporter, producing some 85.7 million tons in 2021, and its 10th largest producer of coal.

It is also the world's second largest miner of bitcoin after the United States.

The uprising began as protests in oil-rich western regions against the removal of state price caps on New Year's Day for butane and propane, which are often referred to as 'road fuels for the poor' due to their low cost.

The reform, aimed at easing oil shortages, quickly backfired as prices more than doubled. The protests spread, tapping into a wider sense of discontent over endemic state corruption, income inequality and economic hardships that have all been compounded by the coronavirus pandemic.

Although the richest of the Central Asian republics in per capita income, half of the population in Kazakhstan - the world's ninth largest country by territory - live in rural, often isolated communities with poor access to public services.

While the country's vast natural resources have made a small percentage of elites incredibly wealthy, many ordinary Kazakhs feel left behind. About a million people out of a total population of 19 million are estimated to live below the poverty line.

Annual inflation is running at close to 9%, the highest in more than five years, prompting the central bank to hike interest rates to 9.75%.

Career diplomat Kassym-Jomart Tokayev, 68, was elected president in 2019 on promises to continue the broadly pro-business policies of his long-serving predecessor, Nursultan Nazarbayev. But Nazarbayev, a former Soviet Politburo member who led Kazakhstan for nearly three decades, was widely seen as the real power behind the throne.

Tokayev has used the protests - which have sometimes targeted symbols of the Nazarbayev era including statues - to fire the 81-year-old former president from his post as chief of the powerful Security Council.

Nazarbayev has made no public comments or appearances since the protests erupted and it remains unclear to what extent the uprising will weaken the considerable influence he and his family have continued to wield in politics and business.

Tokayev also sacked Nazarbayev's nephew, Samat Abish, as second-in-command of the security police. Nazarbayev's eldest daughter Dariga, a former speaker of the Senate and still a lawmaker, has been spoken of in the past as a possible future president.

Kazakhstan’s per capita gross domestic product in 2020 was US$9,122, World Bank data show, slightly above that of Turkey and Mexico but below its annual peak of nearly US$14,000 in 2013.

Tokayev's government introduced a stimulus package worth 6% of national output to help smaller and medium-sized businesses weather the COVID-19 pandemic.

The World Bank has forecast economic growth of 3.5% in 2021, rising to 3.7% this year and 4.8% in 2023. It has urged Kazakhstan to boost competition and limit the role of large state-owned enterprises in the economy, tackle social inequality and create a more level economic playing field.

Western countries and rights groups have long criticized Kazakhstan for its authoritarian political system, its intolerance of dissent, curbs on media freedoms and lack of free and fair elections, though it has also been viewed as less repressive and volatile than its ex-Soviet neighbours.

Amnesty International said this week's protests were a result of the authorities' "widespread repression of basic human rights" and it called for the release of all those arbitrarily detained and for investigations of past state abuses.

"For years, the government has relentlessly persecuted peaceful dissent, leaving the Kazakhstani people in a state of agitation and despair," said Marie Struthers, Amnesty's Director for Eastern Europe and Central Asia.

India faces sanctions under CAATSA

Moscow has started supplying New Delhi with S-400 air defense missile systems said Dmitry Shugayev, the head of the Russian military cooperation agency. The deal between Russia and India, worth around US$5.5 billion was signed in 2018 for five long-range surface-to-air missile systems. New Delhi believes it is crucial for countering China.

The deal attracts attention of the experts to the US legislation called Countering America's Adversaries through Sanctions Act (CAATSA). It is the US Federal Law signed on August 02, 2017 that requires the US President to sanction Russian, North Korean and Iranian, punishing direct or indirect support of them. The three sections of CAASTA are aimed at curbing Iran’s nuclear program, reducing Russian growing influence in Europe and Eurasia and curbing North Korean weapons of mass destruction.

The US applied CAASTA on Turkey in January 2021 after it bought S-400 systems from Moscow. But sanctioning India under CAATSA appears to be a herculean task for Washington. New Delhi is not bothered about CAATSA, being considered a US law, and not one by the United Nations. In March 2021 Lloyd Austin, US Secretary of Defense raised concerns over India’s planned procurement of the S-400 air defense missile. He had accentuated that the US allies and partners ought to shun “any kind of acquisitions that will trigger sanctions”.

Austin soon after clarified that the question of sanctioning India was not under consideration as New Delhi had not taken delivery of the system; sanctions would be applied only when deliveries took place, Austin added.

Interestingly, India has purchased S-400 air defense missile systems from Russia. A few queries remain unanswered. Will the US impose sanctions against India under CAATSA? If sanctioned are applied what would be the Indian reaction?

India, arguably, is a robust bulwark of the US against the containment of China sanctioning would loss a strategic ally in the Indo-Pacific region. Meanwhile, India and Russia have a long history of military relations since the era of the Soviet Union.

Currently in the military services of India nearly 86% of the weapons, equipment, and platforms are of Russian origin. The US started selling weapons and equipment to India in 2001 after easing its relations with New Delhi.

Russian air defense system is extensively used in the Indian military; the latter is unlikely to compromise on the former’s sophisticated weapons. Sanctioning India will reduce Indian military buttress vis-à-vis China and will swing New Delhi to Moscow that the US never wants to happen. The US is fully cognizant of the fact that if sanctions are imposed will alienate India resulting in losing Indian arms market damaging the US military-industrial complex.

The fact of matter is that instead of sanctioning and alienating India, the US presumably will occupy the Indian arms market by competing with Russian weapons and equipment in terms of performance and price. 

On the other hand, there is a great deal of likelihood that CAATSA will bypass India, under the Act’s “modified waiver authority” for “certain sanctionable transactions’ granted by the US president Joe Biden. India has already been lobbying in Washington for CAATSA waiver over the S-400 air defense missile systems.

Indian diplomats and security officials reassured the US that both India and the US had a comprehensive global strategic partnership and both were having a threat from China and S-400 air defense missile systems were attributed to countering China. New Delhi had also guaranteed the protection of the US materiel and the US “technical and operational secrecy”.

India predominantly reassured Washington that the former was willing to reduce its dependency on the Russian defense equipment in the foreseeable future. India, as a result, was backed by three Republican senators presented an amendment in Congress to the National Authorization Act for Fiscal Year 2023 with the aim of making obstacles for the U.S. in the imposition of CAATSA on India.

The latest US legislation, called the Circumspectly Reducing Unintended Consequences Impairing Alliances and Leadership (CRUCIAL) Act, 2021 maintains that CAATSA will only weaken the US security in the Indo-Pacific region.

Ted Cruza a Republican senator argues that “Now would be exactly the wrong time for President Biden to undo all of that progress (in partnering India) through the imposition of these sanctions”.

S-400 obviously ushers a path to a diplomatic crisis for the Biden administration. Applying CAATSA on India will dilute the strategic coherence of Quadrilateral Security Dialogue QUAD in the Indo-Pacific undermining US diplomatic ties with India in the containment of China.

Moscow also looks forward to taking advantage of the sanctions reclaiming its role as an Indian bona fide military partner. Applying of sanctions would remain a geostrategic victory of Russia damaging the US Indo-Pacific strategy overwhelmingly.

Beijing remains a prime adversary of the US and India that forces both countries to be strategic allies in the region. However, the S-400 air defense missile somewhat caused a rift in the diplomatic ties of the US and India.

It can be argued that the irresponsible US withdrawal from Afghanistan and the non-inclusion of India in the AUKUS compelled India to move towards Moscow in a bid to pressurize the United States.

The US certainly hangs in the balance as far as CAATSA is concerned. On one hand, sanctioning India will bring New Delhi and Moscow further closer, weakening the US containment policy of China and the credibility of the Quad. On the other, non-imposition of CAATSA would tarnish the US image globally, showcasing its selective approach in punishment of the countries. 

Devaluation of Taka should be gradual, says Mostafa Kamal

Over the years I have been saying that Pakistan suffers from cost pushed inflation. The depreciation or devaluation of currency does not provide a sustainable solution to boost export or accelerate GDP growth rate. Today I am presenting the interview of Mostafa Kamal, a leading businessman of Bangladesh in support of my narrative.

The central bank should depreciate the taka against the US dollar gradually, if necessary, in order to avoid hurting the economic recovery and stocking inflationary pressures as Bangladesh is an import-dependent country, said Mostafa Kamal, chairman and managing director of Meghna Group of Industries.

“If the depreciation is not gradual, it will have a huge impact on every sphere of the economy and life,” he told The Daily Star in an interview.

Lately, the Bangladesh central bank brought about a major depreciation of the local currency to tackle pressure stemming from surging import payments and encourage remitters.

The interbank exchange rate hit Tk 86 per US$ for the first time in history, up from US$85.80 on Thursday, showed data from the central bank.

Kamal says the current interbank exchange rate is much lower than in the rate in the kerb market, where it stands at around Tk 90 per US$.

Importers used to buy US dollars for Tk 85 two months ago but it has gone past Tk 87 per US$.

Currency devaluation is preferred by exporters, but Kamal says depreciation is not a continuous solution.

“As Bangladesh is an import-based country, we have to strike a balance between the interests of importers and exporters.”

According to the noted businessman, any major devaluation of the taka will raise the prices of all goods. “It has a bigger effect on food and diesel prices and transport fare.”

“Policy-makers would have to find out whether the depreciation would be fast or gradual.”

Kamal says that most businessmen are importers. This is also true in the garment industry.

“We have been able to manufacture some accessories, but a majority of them are still imported.”

Speaking about the increased of commodity prices, he says the price of crude degummed soybean oil, or palm oil, has risen.

It used to cost US$500 to US$800 per ton in the past. Now it costs US$1,400. The duty has also increased.

“If the price increases by Tk 0.5 because of the currency devaluation, the price of the final goods will go up as well because import duties and other costs are added,” said Kamal.

He thinks it will not be a good idea to recommend curbing imports for the sake of keeping the foreign currency reserves stable as the move will rein in the growth of the economy.

Remittance flow to Bangladesh has slowed to some extent in recent months. But exports are performing well compared to the previous year.

A higher growth in the import of machinery means the economic stagnation has been over. It will generate jobs and accelerate economic activity.

“Imports have surged. Machinery imports have gone up after a lull for two years. There is no need to panic about rising machinery imports. Rather, it should be encouraged. People are returning to activities strongly.

“It is a good sign for the economy,” said Kamal.

He calls for looking at Turkey’s situation. The country’s currency, lira, has lost at least 35% of its value against US$. Inflation has touched a two-decade high. As a result, there is a crisis in the country.

“As we are import-dependent country, any major hike in the interbank rate will stoke inflationary pressure. The effects will be felt across the country,” Kamal said.

According to the entrepreneur, the economy has just started to return to normalcy from the coronavirus pandemic. “We, the businessmen, are optimistic.”

“Businessmen could not do well in 2020 and 2021. Now, they are more serious. Their business volume is growing. Businessmen hope that there will be a boom in the economy.”

Although the prices of imported goods and materials have gone up, the prices can’t be passed onto customers automatically, he said.

“Sometimes, we are compelled to raise prices. Sometimes, we keep the cost in the off-balance sheet. We will adjust the balance sheet when we make profit,” Kamal added.

 

US drillers add most oil and gas rigs in a week since April 2020

The US energy firms added the most oil and natural gas rigs in a week since April 2020 as rising oil prices prompt more drillers to return to the wellpad. The oil and gas rig count, an early indicator of future output, rose by 13 to 601 in the week ended on January 14, 2022, the highest since April 2020, energy services firm Baker Hughes Co. said in its closely followed report on Friday.

U.S. oil rigs rose 11 to 492 this week, their highest since April 2020, while gas rigs rose two to 109, their highest since March 2020.

The Eagle Ford in South Texas gained six rigs this week, the most of any basin, bringing its total to 50; it is highest since April 2020. The Haynesville shale in Texas, Louisiana and Arkansas gained three to 52; it is highest since November 2019.

The US crude futures were trading around US$84 per barrel on Friday, putting the contract on track to rise for a fourth week in a row for the first time since October.

With oil prices up about 12% so far this year after soaring 55% in 2021, a growing number of exploration and production (E&P) firms plan to enhance spending for a second consecutive year in 2022.

The rig count has climbed gradually for a record 17 months in a row, but US oil production slipped in 2021 as many energy firms focused more on returning money to investors rather than boosting output.

The US oil output was hit by the coronavirus pandemic which crushed demand and prices, and is only forecast to surpass 2019's record levels of 12.3 million barrels per day (bpd) next year. The government projects production will rise from 11.2 million bpd in 2021 to 11.8 million bpd in 2022 and 12.4 million bpd in 2023.

Rig activity across the five largest US oil plays would need to increase by about 13 weekly over next eight weeks to reach a sustainable plateau to hold current oil volumes in 2022, versus average rig gains of about two over the last four weeks, Mizuho said this week.

"We continue to believe drilling activity will be a put a ceiling on US supply growth, which is positive for the commodity and large cap E&Ps," the bank said.

 

 

Microsoft to invest in alcohol to jet fuel refinery

Microsoft is investing US$50 million in a LanzaJet facility in Georgia that will produce jet fuel from ethanol next year. Microsoft created the Climate Innovation Fund in 2020 to invest US$ one billion over the next four years to speed up the development of carbon removal technology.

The airline industry is considered one of the hardest to decarbonize. Renewable aviation fuel accounted for less than 0.1% of current global jet fuel demand of about 330 million tons in 2019, investment bank Jefferies said last year. Governments and investors are trying to boost incentives to produce lower-carbon emitting jet fuel.

LanzaJet, based in Chicago, said it has nearly completed on site engineering at its Freedom Pines Fuels Biorefinery, with plans to start producing 10 million gallons of sustainable aviation fuel (SAF) and renewable diesel per year from sustainable ethanol, including from waste-based feedstocks, in 2023.

Oil majors, airlines and other petroleum trading companies including Suncor Energy Inc., British Airways and Shell are also funding the company.

The White House said last year that it wants to lower aviation emissions by 20% by 2030, as airlines face pressure from environmental groups to lower their carbon footprint.

The Biden Administration has touted tax credits for production of sustainable jet fuel as part of its Build Back Better legislation, which is currently stalled in Congress.

The European Union is aiming to increase the amount of SAF blended in petroleum jet fuel to 63% by 2050.

 

Global shipping costs are moderating

Lockdowns, labor shortages, and strains on logistics networks led to shipping-cost increases and significantly lengthened delivery times, though those pressures are easing. The Chart of the Week shows global container rates began to pull back from their record in September 2021.

Since then the rates have declined by 16 percent, mostly due to falling rates for trans-Pacific eastbound routes, the main sea link from China to the United States.

According to IMFBlog, shipping costs soared over the past year as the consumers unleashed pent-up savings to buy new merchandise, while the pandemic continued to snarl the world’s supply chains. Container rates have more than quadrupled since the start of the pandemic, with some of the biggest gains concentrated in the first three quarters of last year.

The drop indicates that strong goods demand is diminishing after the traditional peak shipping season, which is typically from August to October. In addition, the US recently ordered some ports to expand operating hours and boost efficiency to reduce congestion and ease supply bottlenecks.

Although rates have subsided, they may remain elevated through the end of the year. Some underlying supply constraints do not have immediate fixes. Backlogs and port delays, labor shortages in related occupations, supply chain disruptions moving inland, and shipping industry challenges such as the slow capacity growth and consolidation that concentrated the market power of a few carriers. If the pandemic is controlled in the future, the demand for tradable goods might gradually decline as some service-providing sectors, such as travel and hospitality, recover.

Higher shipping costs and goods shortages are expected to boost merchandise prices. The United Nations Conference on Trade and Development (UNCTAD) projects that if freight rates remain elevated through 2023, global import price levels and consumer price levels could rise by 10.6% and 1.5%, respectively. This impact would be disproportionately larger for small, developing islands which heavily rely on imports that arrive by sea.

Higher freight rates will also result in larger increases in the final price of low-value-added products. Smaller developing economies that export many of these goods could become less competitive and face difficulties with their economic recoveries. Moreover, the final prices of products that are highly integrated into global value chains such as electronics and computers will also be more affected by higher freight rates.

Returning to pre-pandemic shipping rates will require greater investment in infrastructure, digitalization in the freight industry, and implementation of trade facilitation measures.

 

Hamas hails Iranian support for Palestinians

Palestinian resistance group Hamas has hailed the position of the Islamic Republic of Iran in support of Palestine. In a recent meeting with Iranian Foreign Minister Hossein Amir Abdollahian in Doha, a delegation of Hamas, headed by its Political Bureau Chief Ismail Haniyeh, appreciated the Iranian backing. 

The Hamas delegation addressed the developments related to the Palestinian cause, particularly with regard to the situation in occupied Jerusalem and the West Bank, Palestinian detainees in Israeli prisons, and the 15-year Israeli siege on Gaza. 

The Iranian minister discussed the developments concerning a number of matters, including regional alliances and the Vienna talks, reiterating his country's stance in support of the Palestinian people and resistance.      

Hamas delegation welcomed the endeavors being made to achieve unity among Arab and Muslim nations, especially the efforts being exerted by Iran and Saudi Arabia. 

Besides the Hamas chief, the meeting was attended by members of Hamas Political Bureau Khalil al-Hayya and Mousa Abu Marzouq, in addition to Majdi Abu Amsheh, Head of Haniyeh's office.

The Iranian Foreign ministry said in a statement that during the meeting, Amir Abdollahian outlined the Islamic republic’s principled policy toward the issue of Palestine as a plight in the heart of the Islamic Ummah created by the child-killing Zionist regime which enjoys support from the West.

He also condemned the brutal crimes of the Zionist occupiers against al-Quds, al-Aqsa Mosque, Gaza and occupied Palestinian territories as well as the regime’s aggression and atrocities against the Palestinian people and sanctities.

Amir Abdollahian reaffirmed Iran’s support for the legitimate defense of the Palestinian people and resistance against the occupation of the Zionist regime. 

Haniyeh, for his part, appreciated Iran’s support for the Palestinian people in their struggle against the Zionist regime’s continued aggression.

He also called on the Muslim and Arab world as well as the international community to adopt a decisive stance against the Israeli regime’s violations.

The meeting was part of Amir Abdollahian’s high-level meetings in Qatar, where he met with the emir and the foreign minister of the tiny Persian Gulf nation. 

In his meeting with Qatar’s Emir Sheikh Tamim bin Hamad Al Thani, Amir Abdollahian extended the Iranian President’s greetings to the Qatari leader. He examined the latest developments in bilateral ties in political, security, trade and economic areas. Amir Abdollahian referred to the existing capacities for expanding economic relations between Iran and Qatar, underlining the need for forging cooperation in economic areas given the existing advantages of Iran in this regard. 

The Iranian foreign minister further outlined the current Iranian administration’s approach to relations with neighboring countries and emphasized the exchange of delegations at high levels between the two countries for consultations.

Amir Abdollahian also underscored the regional views of Iran and declared Tehran’s readiness to develop interaction with regional nations in bilateral and multilateral ways.

The top Iranian diplomat then spoke about the Vienna talks over removing the oppressive sanctions against Iran as well as the issues related to Afghanistan and Yemen. The Qatari emir also outlined his views regarding these matters.

Need for resolving Kashmir conflict

Aizaz Ahmad Chaudhary has described the life of a Kashmiri in a unique manner. He asks the reader to imagine he/she is a Kashmiri born in Srinagar on January 05, 1949. By this time the reader is 73 years old and has completed nearly every phase of life. 

Decisions were taken on what to study, where to work, how to contribute, and preparing to retire, a full circle of life. But at every stage, the reminder was that he/she was not free and under Indian occupation, a kind of colonial rule. It is the story of every man and woman who lives in the Valley of Kashmir or the Jammu region, who feels helpless as well as angry.

For all Kashmiris, January 05 is a reminder that the promise was made to them on this date in 1949, which remains unfulfilled. It is the day, the United Nations Commission on India and Pakistan adopted a resolution calling for a free and fair plebiscite in Jammu and Kashmir. Ever since, like a ritual, the Kashmiris mark self-determination day, hoping that the world would listen. But year after year, the frustration has mounted. It is understandably getting hard for the Kashmiris to keep faith in international justice, or even stay optimistic. Yet the Kashmiris struggle goes on, the torch of freedom remains aloft.

The right of a nation or community to self-determination is an important principle of the UN Charter. When the UN was born in 1945, it had only 73 members. Over the years, scores of nations attained their independence thanks to the principle of self-determination, swelling the UN membership to 193. The two peoples that could not access their right to self-determination are the Palestinians and Kashmiris.

Most of the Kashmiris have close relations with the people living in central and northern Punjab. The rivers flow down from Kashmir to present day Pakistan for centuries. All roads from the Kashmir Valley head towards northern Punjab. Kashmir’s mandi (market) had traditionally been Rawalpindi. How can all these links be cut off simply because India does not want to let Kashmiris decide how they wish to live? One is completely surprised that even after seven decades of Kashmiri resistance against Indian rule, the Indian leadership is unable to deduce that the Kashmiris simply do not wish to live with India.

In the past two and a half years, the situation has taken an ugly turn. The Indian government abrogated Article 370 of the Indian constitution, robbed the Kashmiris of their statehood, and started inflicting further excesses on these freedom-loving people. Kashmiris often wonder what end goal India has in mind for Kashmir. Can it realistically maintain its colonial-like rule over eight million people? Perhaps not! India is already experiencing centrifugal tendencies in several parts of the country; how would India keep its internal stability by continuing its occupation of another 8m agitated souls?

Some analysts have argued that India does not wish to let Kashmiris exercise self-determination because if that happens, other regions in the country would also demand freedom. This argument contradicts the historical process. No nation can forever rule an unwilling population. Some strategists assert that Kashmir’s location is strategically important for India. Again, how can an unwilling population be a strategic asset for India? Some ambitious BJP enthusiasts are excited that after the actions of August 2019, and the introduction of a new domicile law, Kashmiris would no longer be a Muslim-majority community. This approach too would not work as all Kashmiris, including pro-India factions, have united in their opposition to the assault on Kashmiri statehood and identity.

It is important for the Indian leadership and its thought leaders to think this through. Ruling a population by force, undermining their identity, and suspecting each Kashmiri who aspires self-determination for his people, will never consolidate the Indian occupation of Kashmir.

A better alternative is to find ways to resolve the Kashmir dispute with Pakistan in accordance with the wishes of the Kashmiri people. The UN Security Council resolutions provide a reasonably good framework to resolve this conflict.

Can we all imagine how life would have been for every South Asian, if India had chosen the path of leading the region, not by coercion, but by mutual respect and nurturing interdependence? Today, South Asia is the least integrated and most conflict-ridden region. Can all this change? Perhaps a resolution of the Kashmir dispute could be a good beginning to defuse tensions, and let South Asia emerge as a region of peace and tranquility. Will India listen to the voice of Kashmiris? Not sure, but one does hope that one day it will.

Heavy rains in Brazil disrupts iron ore production

According to a Reuters report, heavy rainfall in southeastern Brazil has prompted miners including Vale SA to suspend some operations after downpours caused deadly floods in the northeast. 

Rainfall is expected to remain heavy this week in most of top mining state Minas Gerais, after runoff closed roads and railways.

The rains may also have contributed to the dramatic collapse of a canyon rock face in the state on Saturday, killing 10 people visiting a waterfall on boats.

In the northeastern state of Bahia, flooding displaced about 50,000 families and killed some two dozen over the holidays.

Vale said on Monday it has partially suspended operations at its Southeastern and Southern iron ore systems due to the bad weather, but reaffirmed its 2022 production target as the Northern system was not affected.

Samarco, a joint venture between Vale and BHP also cut back operations in its Germano complex, producing at an estimated 50% of capacity until weather allows it to ramp up.

Brazilian steelmakers Usiminas and Companhia Siderurgica Nacional (CSN) also halted operations of their mining units.

Anglo American said its Minas-Rio system continued to operate as planned during the rainy season.

Over the weekend, France's Vallourec suspended production from its Pau Branco mine after heavy rainfall caused a dike to overflow.

"We see the news as potentially negative for the entire mining sector, as it could result in new regulations to suspend existing operations or delay new projects," analysts at XP Investimentos said in a research note.

BTG Pactual analysts said economic impacts could be muted if normal operations are restored quickly, but noted it all depends on how long the heavy rainfall will last.

"We estimate there could be more than 100 million tons of annualized iron ore supply at risk at this stage in Brazil, which is a relevant number ‑ roughly 7% of seaborne supply and about 30% of Brazilian supply ‑learly the stakes are high and we could see impacts on short-term iron ore movements," they said.

INTERRUPTED RAILWAYS, CLOSED HIGHWAYS

Vale said in a securities filing that train circulation at its Vitoria-Minas railway was partially interrupted by the rains, halting output at the Brucutu mine and the Mariana complex due to a lack of transportation.

Both mines are part of Vale's Southeastern system, along with the Itabira complex, where production was not affected.

In the Southern system, Vale said all of its complexes had to halt production because key highways BR-040 and MG-030 were closed.

Vale said its Northern System is still operating as planned, and maintained its 2022 iron ore production forecast at 320-335 million tons. It noted its production plan takes into account the seasonal rainfall impact.

The miner also said the rains had not changed the alert level for any of its tailing dams which are under constant, "real-time" monitoring.

"While Vale did not change its production guidance for 2022, we believe that the market could start to project volumes closer to the low end of the range," Itau BBA analysts said, noting that iron ore prices could be supported at their current high levels.

Vale's two halted operations accounted for about 31% of its output in the first nine months of 2021, the Itau BBA analysts said. A two-week halt in these operations could represent an impact of about 3 million tons for the company, according to their preliminary calculations.

Steelmaker Usiminas announced a stoppage at its mining subsidiary Mineracao Usiminas (MUSA) due to weather, but said it had enough inventory of raw material to avoid disruption.

The company also said its Barragem Central tailings dam, which has been inactive since 2014, reached alert level 1 - an initial warning that does not mean a safety breach was noted.

CSN and its steel mining subsidiary CSN Mineracao SA announced a halt to operations of the Casa de Pedra mine, but said they are expected to resume in coming days.

They said port operations at the Itaguai coal terminal, located in the neighboring state of Rio de Janeiro, were also suspended due to excessive rains.

Brazil's regulatory National Mining Agency (ANM) suspended operations at French steel pipe maker Vallourec's Pau Branco iron ore mine in the state after a dike overflowed, cutting off a federal highway. There were no reported injuries.

"After the dam incidents of the past, we welcome the zero tolerance approach that miners are taking in the country to minimize operational risks, which we consider the prudent approach," BTG Pactual said.

Can emerging markets cope with the shift in US Fed policy?

For most of last year, investors priced in a temporary rise in inflation in the United States given the unsteady economic recovery and a slow unraveling of supply bottlenecks. Now sentiment has shifted. Prices are rising at the fastest pace in almost four decades and the tight labor market has started to feed into wage increases.

According to a report by International Monetary Fund (IMF), the new Omicron variant has raised additional concerns of supply-side pressures on inflation. The US Fed referred to inflation developments as a key factor in its decision last month to accelerate the tapering of asset purchases.

Inflation is likely to moderate later in year 2022 as supply disruptions ease and fiscal contraction weighs on demand. The Fed’s policy guidance that it would raise borrowing costs more quickly did not cause a substantial market reassessment of the economic outlook.

The history shows that the effects on emerging markets benign if tightening is gradual, well telegraphed, and in response to a strengthening recovery. Emerging-market currencies may still depreciate, but foreign demand would offset the impact from rising financing costs.

Spillovers to emerging markets could also be less benign. Broad-based US wage inflation or sustained supply bottlenecks could boost prices more than anticipated and fuel expectations for more rapid inflation. Faster Fed rate increases in response could rattle financial markets and tighten financial conditions globally.

These developments could come with a slowing of US demand and trade, which may lead to capital outflows and currency depreciation in emerging markets.

The impact of Fed tightening in a scenario like that could be more severe for vulnerable countries. In recent months, emerging markets with high public and private debt, foreign exchange exposures, and lower current-account balances saw already larger movements of their currencies relative to the USD.

The combination of slower growth and elevated vulnerabilities could create adverse feedback loops for such economies, as the IMF highlighted in its October 2021 releases of the World Economic Outlook and Global Financial Stability Report.

Some emerging markets have already started to adjust monetary policy and are preparing to scale back fiscal support to address rising debt and inflation. In response to tighter funding conditions, emerging markets should tailor their response based on their circumstances and vulnerabilities.

Those with policy credibility on containing inflation can tighten monetary policy more gradually, while others with stronger inflation pressures or weaker institutions must act swiftly and comprehensively.

In either case, responses should include letting currencies depreciate and raising benchmark interest rates. If faced with disorderly conditions in foreign exchange markets, central banks with sufficient reserves can intervene provided this intervention does not substitute for warranted macroeconomic adjustment.

Nevertheless, such actions can pose difficult choices for emerging markets as they trade off supporting a weak domestic economy with safeguarding price and external stability. Similarly, extending support to businesses beyond existing measures may increase credit risks and weaken the longer-term health of financial institutions by delaying the recognition of losses. And rolling back those measures could further tighten financial conditions, weakening the recovery.

To manage these tradeoffs, emerging markets can take steps to strengthen policy frameworks and reduce vulnerabilities. For central banks tightening to contain inflation pressures, clear and consistent communication of policy plans can enhance the public’s understanding of the need to pursue price stability.

Countries with high levels of debt denominated in foreign currencies should look to reduce those mismatches and hedge their exposures where feasible. And to reduce rollover risks, the maturity of obligations should be extended even if it increases costs. Heavily indebted countries may also need to start fiscal adjustment sooner and faster.

Continued financial policy support for businesses should be reviewed, and plans to normalize such support should be calibrated carefully to the outlook and to preserve financial stability. For countries where corporate debt and bad loans were high even before the pandemic, some weaker banks and nonbank lenders may face solvency concerns if financing becomes difficult. Resolution regimes should be readied.

Beyond these immediate measures, fiscal policy can help build resilience to shocks. Setting a credible commitment to a medium-term fiscal strategy would help boost investor confidence and regain room for fiscal support in a downturn. Such a strategy could include announcing a comprehensive plan to gradually increase tax revenues, improve spending efficiency, or implement structural fiscal reforms such as pension and subsidy overhauls (as described in the IMF’s October Fiscal Monitor.

Finally, despite the expected economic recovery, some countries may need to rely on the global financial safety net. That may include using swap lines, regional financing arrangements, and multilateral resources. The IMF has contributed with last year’s US$650 billion allocation of Special Drawing Rights, the most ever.

While such resources boost buffers against potential economic downturns, past episodes have shown that some countries may need additional financial breathing room. That’s why the IMF has adapted its financial lending toolkit for member nations.

Countries with strong policies can tap precautionary credit lines to help prevent crises. Others can access lending tailored to their income level, though programs must be anchored by sustainable policies that restore economic stability and foster sustainable growth.

While the global recovery is projected to continue this year and next, risks to growth remain elevated by the stubbornly resurgent pandemic. Given the risk that this could coincide with faster Fed tightening, emerging economies should prepare for potential bouts of economic turbulence.