Friday, 15 July 2022

Biden makes history with first direct presidential flight from Israel to Saudi Arabia

President Joe Biden on Friday became the first sitting US President to fly directly from Israel to Saudi Arabia, a historic trip that the White House cited as evidence of warming ties between the two countries. 

“Welcome aboard our historic flight,” White House press secretary Karine Jean-Pierre told reporters aboard Air Force One as the plane made its way from Tel Aviv to Jeddah. 

Israel Prime Minister Yair Lapid, Israeli President Isaac Herzog and US Ambassador to Israel Thomas Nides sent Biden off at Ben Gurion Airport.  

Biden landed about two hours later at King Abdulaziz International Airport.  

Friday’s flight was preceded by the news that Saudi Arabia would open its airspace to all airlines, including all commercial flights flying to and from Israel. Reports indicate the new policy could pave the way for direct flights from Israel to Saudi Arabia for Muslims to make pilgrimages to Mecca.  

The development, while well short of a full normalization of relations between the two countries, represented a step forward and a win for Biden. Jean-Pierre characterized it as a result of Biden’s persistent diplomacy with Saudi Arabia.  

“As we mark this important moment, Saudi Arabia’s decision can help build momentum toward Israel’s further integration into the region, including with Saudi Arabia,” Biden said in a statement earlier Friday.

“I will do all that I can, through direct diplomacy and leader-to-leader engagement, to keep advancing this groundbreaking process.” 

Biden administration officials say they are working to help Israel normalize relations with Arab nations in order to build on the Abraham Accords brokered under the Trump administration that saw Israel normalize relations with Bahrain, Morocco and the United Arab Emirates.  

 “It is on a path that we hope will eventually lead to normalization, but it is the first step, and the first step is a big step,” White House National Security Adviser Jake Sullivan told reporters on Friday, referring to the Saudi move to open up its airspace to Israeli flights.  

Lapid praised the Saudis for the move in a statement but called it “only the first step.” 

“We will continue working with necessary caution, for the sake of Israel’s economy, security and the good of our citizens,” Lapid said in a statement.  

 

Saudi Arabia reiterates preconditions for normalizing relations with Israel

In an interview with the Riyadh-based Arab News, Abdallah Al-Mouallimi, the kingdom’s permanent representative to the UN, said Riyadh is committed to the Arab Initiative for peace, which calls for the end of the Israeli occupation of all Arab territories occupied in 1967 and the establishment of an independent Palestinian state with East Jerusalem as its capital in return of normalizing ties with Israel.

"The official and latest Saudi position is that we are prepared to normalize relations with Israel as soon as Israel implements the elements of the Saudi peace initiative that was presented in 2002," Al-Mouallimi said.

He added that once implementing the initiative, Israel will have recognition "not only from Saudi Arabia but the entire Muslim world, all 57 countries of the Organization of Islamic Cooperation".

"Time does not change right or wrong. The Israeli occupation of Palestinian territories is wrong no matter how long it lasts," the diplomat said.

Israel occupied East Jerusalem during the 1967 Arab-Israeli war and annexed the entire city in 1980 in a move that has never been recognized by the international community.

It may be recalled that when United Arab Emirates (UAE) became the first Gulf state to normalize relations with Israel, in a historic US-brokered accord, it raised the prospect of similar deals with other Arab states including Saudi Arabia.

However, Saudi Arabia declared it will not follow UAE in establishing diplomatic ties with Israel until the Jewish state has signed an internationally recognized peace accord with the Palestinians.

But after days of conspicuous silence and in the face of US pressure to announce a similar deal, Saudi Arabia's Foreign Minister Prince Faisal bin Farhan ruled out the possibility until the Palestinian issue is resolved.

Peace must be achieved with the Palestinians on the basis of international agreements as a pre-condition for any normalization of relations, Saudi Arabia's Foreign Minister Prince Faisal bin Farhan told reporters during a visit to Berlin.

“Once that is achieved all things are possible,” he added, in a comment that was consistent with Saudi Arabia's previous stance on the issue.

Prince Faisal's remarks were the kingdom's first official reaction since the UAE's landmark deal with Israel, which was the third such accord the Jewish state has struck with an Arab country after Egypt and Jordan.

Until now, Saudi Arabia had maintained a notable silence over the deal even as local officials hinted that Riyadh was unlikely to immediately follow in the footsteps of the UAE, its principle regional ally.

United States kept pressure on the kingdom, President Donald Trump's son-in-law and adviser Jared Kushner had insisted that it would be in Riyadh's interest to formally establish ties with Israel.

Further putting the kingdom in the spotlight, the then Prime Minister Benjamin Netanyahu said Israel was working on opening a corridor over Saudi Arabia for flights to the UAE.

Saudi Arabia, the Arab world's biggest economy and home to Islam's holiest sites, faces more sensitive political calculations than the UAE.

Not only would a formal recognition of Israel be seen by Palestinians and their supporters as a betrayal of their cause, it would also hurt the kingdom's image as the leader of the Islamic world.

“The notion that Saudi Arabia will be next in normalizing relations with Israel was far-fetched,” said Aziz Alghashian, a lecturer at Essex University specializing in the kingdom's policy towards Israel.

The biggest constraint for Saudi-Israeli normalization is not the fear of a domestic and regional backlash. “Rather, Saudi Arabia deems it necessary not to normalize relations outside the framework of the Arab Peace Initiative that called for resolving the Palestinian issue, if it still wants to be seen as the leader of the Muslim and Arab world,” Alghashian told AFP.

In 2002, Saudi Arabia sponsored the Arab Peace Initiative which called for Israel's complete withdrawal from the Palestinian territories occupied after the Six-Day War of 1967, in exchange for peace and the full normalization of relations.

 

Thursday, 14 July 2022

Top of the agenda items of Saudi-US talks

According to Saudi Gazette, US President Joe Biden is scheduled to start an official visit of Saudi Arabia on Friday for the first time since taking office in early 2021. The two-day visit comes at the invitation of King Salman bin Abdulaziz Al Saud.

During the visit, Biden will meet King Salman and Crown Prince Mohammed Bin Salman to discuss aspects of cooperation between the two friendly countries, and the ways to confront the challenges facing the region and the world.

The Saudi visit aims to further strengthen the historical bilateral relations and the distinguished strategic partnership between Saudi Arabia and United States, and the common desire to develop them in all fields.

On Saturday, Biden will attend the first Arab-American Summit of its kind, convened by King Salman. The summit will also be attended by the leaders of the Gulf Cooperation Council (GCC) states, as well as the Jordanian King Abdullah II, Egyptian President Abdel Fattah Al-Sisi, and Iraqi Prime Minister Mustafa Al-Kadhimi. Biden will also hold meetings with these regional leaders before the summit.

US National Security Adviser Jake Sullivan announced on Wednesday that Biden will meet King Salman and Crown Prince Mohammed Bin Salman during his visit to Saudi Arabia. Sullivan confirmed that a “bilateral program” will be held on Friday night, when Biden arrives, and will include King Salman, the Crown Prince and “other ministers in the Saudi government.”

Sullivan revealed that Biden will hold bilateral meetings with a number of regional leaders before the upcoming summit with them, and refused to answer a question about the sequencing of these meetings.

When asked to give an overview of what Biden will say at the GCC +3 Summit, Sullivan said, “President will give broad and strong statements and strategy about his approach to the Middle East.”

He also noted that Biden will discuss security, the economy, and America’s historic role in the region, and his commitment to moving forward with strong American leadership in the Middle East.

Analysts believe that the US president has realistically realized that it is time to break the deadlock in Saudi-US relations, as relations between the two countries were not good since the first day of Biden’s arrival at the White House. Biden’s visit to Saudi Arabia and his upcoming summit in Jeddah are in the interests of the United States in the medium and strategic terms.

They added that the region has become more strategically important to America and the West, with the continuation of the Russian-Ukrainian war, which has entered its fifth month, and the failure of nuclear negotiations with Iran.

It is expected that Biden’s visit will witness signing of some military agreements between Washington and some of the Arab countries to ensure the security of the Arab region, in addition to discussing other vital issues, such as Yemen, Lebanon, Palestine, Libya and Sudan, as well as the security of the Arab region in general.

Analysts said that Biden will seek to clarify the American vision and reassure the Arab countries about the Iranian nuclear agreement, which cannot be predicted about what will happen around it, but there are Arab fears that America knows.

A few days ago, US State Department spokesman Ned Price confirmed his country’s readiness to return to the nuclear agreement, provided that Iran lived up to its commitments.

“If Iran does not respond to negotiations, the chances of reaching an agreement will decrease,” Price said, while stressing the need to return to the nuclear agreement before Tehran acquires a nuclear bomb.

Leaders of the ruling Democratic Party also confirmed that the visit of Biden implies the paramount significance that the American administration attaches to the region, especially in light of the global energy crisis, in addition to trying to fix what can be fixed, and repel the strife that has spread about an imbalance in the American-Saudi or Arab relations.

Iran is, of course, another big and fundamental question in the Middle East. Indeed, it is the question that almost all other questions relate to, from Iraq to Syria, Lebanon, Yemen and Palestine. Biden’s declared policy toward Iran centered around the idea of ​​his administration’s desire to return to the nuclear agreement signed by the Obama administration where he held the position of vice president.

The agreement stipulated that Iran would be subject to monitoring its nuclear program in exchange for the lifting of sanctions, but no significant progress has been made since Biden took office, and negotiations between the United States, major powers and Iran stopped in Vienna months ago. However, it is interesting to note that a quick round of negotiations between Washington and Tehran took place in Doha prior to Biden’s visit.

It is true that the Doha negotiations did not bring about anything, but it came as a reminder that the door for dialogue between the two parties is still open, and the possibilities of returning to the agreement are still in place.

Biden’s visit to the Middle East that kicked off in Israel on Wednesday bears hopes of reuniting the countries of the region to confront common challenges, especially Iran’s nuclear program, which poses an existential threat to more than one country.

Biden’s visit provides an opportunity for convergence of views on other files, including oil supplies, in light of the Russian war on Ukraine. Questions are raised about the extent of this visit’s contribution to ‘forcing’ Tehran to review its rigid position in negotiations over its nuclear program and return to the agreement that concluded with international powers in 2015.

What is Biden's motive to visit Saudi Arabia?

US President Joe Biden will discuss energy supply, human rights, and security cooperation in Saudi Arabia on Friday on a trip designed to reset the US relationship with a country he once pledged to make a "pariah" on the world stage.

Biden will hold meetings with Saudi Arabia's King Salman bin Abdulaziz and Crown Prince Mohammed bin Salman, known as MBS, along with other government officials, a senior Biden administration official told reporters.

The visit will be closely watched for body language and rhetoric. US intelligence had concluded that MBS directly approved the 2018 murder of Washington Post columnist Jamal Khashoggi, while the crown prince denies having a role in the killing.

White House advisers have declined to say whether Biden will shake hands with the prince, the kingdom's de facto ruler.

"The president's going to meet about a dozen leaders and he'll greet them as he usually does," the administration official said.

At the start of Biden's trip to the Middle East, officials said he would avoid close contacts, such as shaking hands, as a precaution against COVID-19. But the president ended up engaging in hand-shaking in Israel.

Biden said on Thursday his position on Khashoggi's murder was "absolutely" clear. Biden made his "pariah" comment less than two years ago after the journalist's killing and while campaigning for president.

Biden said that he would raise human rights in Saudi Arabia, but he did not say specifically if he would broach the Khashoggi killing with its leaders.

Energy and security interests prompted the president and his aides to decide not to isolate the country. The United States is eager to see Saudi Arabia and its OPEC partners pump more oil to help bring down the high cost of gasoline and ease the highest US inflation in four decades.

"The Saudis definitely are intending to boost capacity and with oil prices so high they have the wherewithal to do that, particularly as they see production constraints elsewhere in a market that is still growing," said Daniel Yergin, S&P Global vice chairman and an expert in world energy markets.

Biden will encourage peace and press for a more integrated Middle East during his trip, the official said.

"We will be covering a host of bilateral and regional issues, really capping many months of diplomacy and positioning the United States and our partners for the future in a manner that advances our interests and theirs," he said.

Topics include strengthening a truce in the war in Yemen, "balance" in energy markets and technological cooperation in 5G and 6G, he said.

 

US-Israel joint declaration against Iran

Israeli Prime Minister Yair Lapid and US President Joe Biden signed a joint declaration on Thursday reaffirming the two nations' partnership and cooperation when it comes to Iran, among other topics that they have joint interests in.

The declaration reiterated the US commitment to ensuring that Iran never gets a nuclear weapon and that it is "prepared to use all elements of its national power to ensure that outcome."

The US also pledged to continue to work with partner nations to stop Iran's attempts to destabilize the region both directly and through proxies like Hezbollah, Hamas and the Palestinian Islamic Jihad.

Memorandum of Understanding

The declaration also referred to the US$38 billion MoU on security assistance supplied to Israel by the US that has been signed over the last few decades by consecutive American administrations.

The declaration expressed America's conviction to add a follow-up MoU to "address emerging threats and new realities."

Jerusalem expressed its appreciation of Washington's assistance, and the two countries expressed enthusiasm for moving forward with a close defense partnership.

Abraham Accords

Israel thanked the US for its support regarding the Abraham Accords, and the two allies reiterated the importance of the Negev Forum that met last month in Bahrain. 

The declaration expressed the commitment of the US to the effort of expanding the accords with Saudi Arabia in Biden's upcoming visit over the weekend as well as including further Arab and Muslim countries.

Anti-Israel and antisemitic attacks

The two nations reaffirmed their dedication to fighting against efforts to boycott and delegitimize Israel as well as efforts to unfairly single it out in organizations such as the United Nations and the International Criminal Court.

The declaration also committed to fighting against antisemitism, with the US reiterating its pride of standing "with the Jewish and democratic State of Israel."

Israeli-Palestinian Relations

Regarding the tensions between Israel and the Palestinians, both nations condemned the series of terror attacks in recent months and affirmed "the need to confront radical forces... seeking to inflame tension and instigate violence and terrorism."

Biden reaffirmed his support for a two-state solution and expressed America's readiness to work with Israel and the Palestinian Authority to make a peaceful solution to the tensions possible. 



 

Wednesday, 13 July 2022

Pakistan: Staff level agreement reached with the IMF

Pakistan has finally reached staff level agreement with International Monetary Fund (IMF) on policies to complete the 7th and 8th reviews of Pakistan’s Extended Fund Facility (EFF). 

The agreement is subject to IMF board approval, likely in August, which will pave way for the release of US$1.17 billion bringing total disbursement to US$4.2 billion under EFF.

Additionally, in order to support program implementation and meet the higher financing needs in FY23, the IMF Board will consider an extension of the EFF till June 2023 instead of September 2022. The Board will also consider increasing the size of the EFF program to US$7 billion, up from initially proposed US$6 billion.

This support will provide some help as delays in IMF program and policy actions had led to increased economic uncertainty and a continuous decline in foreign exchange reserves.

To recall, 7th and 8th reviews of Pakistan EFF program was initially scheduled in March 2022 and June 2022 but Pakistan was not able to reach Staff level agreement with IMF due to delay in proposed policy actions like removal of petroleum subsidies, imposition of Petroleum Levy (PDL), energy tariff rationalization and increased tax measures.

It is believed that the implementation of key policy actions like increase in energy tariffs (gas and power rates) and other structural benchmarks like gradual increase in taxes on oil and implementation of anti-corruption law will remain key and will lead to IMF’s executive board approval and release of funds. 

IMF in its press release highlighted 5 key policy priorities to stabilize economy and bring policy actions in line with IMF-supported program which includes 1) Steadfast implementation of FY23 budget, 2) catch-up in power sector reforms, 3) proactive monetary policy to guide inflation to more moderate levels, 4) reducing poverty and strengthen social safety, and 5) strengthen governance.

The recently passed budget aims to reduce government’s large borrowing needs by targeting an underlying primary surplus of 0.4% of GDP by restricting expenditures and broad revenue mobilization measures.

Relating to power sector reforms, IMF noted that due to weak implementation of the previously agreed plan, the power sector circular debt flow is expected to grow significantly to about Rs850 billion in FY22.

Furthermore, adjustment in monetary policy and linkages of EFF and LTFF rates with policy rate remain the key given rising inflationary pressures. Government is also establishing a robust electronic asset declaration system and plan to undertake a comprehensive review of the anticorruption institutions (including the National Accountability Bureau).

IMF stressed that “Steadfast implementation of the outlined policies, underpinning the SLA for the combined seventh and eighth reviews, will help create the conditions for sustainable and more inclusive growth”.

It is believed that Pakistan economic situation will remain challenging due to uncertain global economic and financial market conditions along with local political situation.

Pakistan need to arrange funding up to US$35 billion during FY23 which is big task considering rising interest rates and risk averse attitude around the world.

There are expectations that few friendly countries like China, Saudi Arabia will continue financial support to Pakistan after IMF deal.

Furthermore, Pakistan is also expected to receive financing from other Bi-lateral and Multi-lateral donor agencies that could provide some support to reserves of the country.    

Moreover, after ousting of the previous Khan government through a no confidence motion, the PML-N led coalition government will be going into elections next year whereby it will be difficult to take all much needed reforms.

Though, the recently announced measured by the new government in Pakistan will help stabilize the economy and reduce fiscal and current account deficit, the overall investor confidence will remain below average.

Pakistan Eurobond yields are now at 20%-32%, local lending rate is at 20 year high of 15.87% while Pakistan stocks are down 6% (US$ down 21%) in 2022 to date.

This new IMF deal may help in some recovery of Pakistan dollar bond prices but considering the overall global interest rate environment and Pakistan rising debt a strong recovery may not come.

Similarly, Pakistan stocks may react slightly positively to this news but given Pakistan’s high lending and policy rates & other challenges like high inflation could continue to impact stock market sentiments.

Recently in its monetary policy statement SBP also highlighted key risks like high global commodity prices, rising inflation and increasing external account concerns that remain critical for Pakistan economic outlook.   

Analysts expect FY23 GDP growth of maximum 4% against government target of 5% and estimate CPI inflation around of 19% in FY23.

Global energy prices also remain the key for Pakistan. In FY22, oil and LNG imports are estimated at US$22 billion which was 27% of total import bill. A sustainable fall in oil, coal and LNG prices can provide some support to Pakistan external account.

 

Bangladesh: IMF team arriving on Thursday

A delegation from the International Monetary Fund (IMF) is scheduled to reach Dhaka on Thursday on a nine-day trip to discuss the government’s request for a US$4.5 billion support program.

Rahul Anand, Division Chief in the IMF’s Asia and Pacific Department, will lead the team during talks with the senior officials of the Finance Ministry, the central bank, the National Board of Revenue and the Economic Relations Division.

If everything proceeds smoothly, the loan deal could be finalized by October this year, said an official of the Finance Ministry yesterday.

The request for IMF support comes to shore up the precarious foreign currency reserves, which slipped to US$39.8 billion — the lowest since October 14, 2020. This is enough to cover about five months’ import bills.

Typically, the World Bank and the IMF prescribe an import cover of three months, but in times of economic uncertainty, they advise keeping sufficient reserves to meet 8-9 months’ imports.

Going forward, even though imports are slowly contracting, the elevated inflation levels around the world mean the odds of a slowdown in both remittance inflows and export orders, two sources of foreign currency for Bangladesh.

The IMF officials will look into the impacts of the Russia-Ukraine war and escalated global commodity prices on the Bangladesh economy, the status of recovery from the global coronavirus pandemic and the government’s large subsidy program.

They will see whether the subsidy spending is justified and compare it with the other countries. If it is deemed excessive, the IMF mission may suggest ways to trim it.

Subsidy spending in the just-concluded fiscal year is Tk 66,825 crore, 24.1% more than the original allocation thanks to the spiral in fuel and fertilizer prices in the global market.

In this fiscal year’s budget, Tk 82,745 crore has been earmarked for subsidy.

But considering the price trend of oil, gas, and fertilizer in the international market, the estimated spending can be 15-20% higher than the initial estimates, said Finance Minister AHM Mustafa Kamal in his budget speech in June.

The conditions could include measures to increase revenue, lower subsidy expenditure, market-based exchange rate and lending rate, and reforms in the banking sector and tax administration, the Finance Ministry official said.

Bangladesh has unveiled a relatively smaller budget for the current fiscal year, put on hold low-priority projects, suspended foreign tours of government officials, adjusted the prices of gas and diesel to some extent, and loosened the exchange rate policy.

The government has also signalled that it may raise the price of fuel oil and has proposed to the Bangladesh Energy Regulatory Commission to increase the electricity tariff to cut the subsidy burden.

Surjit Bhalla, Executive Director of the IMF for India, Bangladesh, Bhutan and Sri Lanka, who represented Bangladesh on the board of the Washington-based lender, is also set to visit Bangladesh separately.

 

Israel to push Biden on trade corridor connecting Israel and Gulf

“Corridors for Economic Integration”

A new highway and railway system throughout Israel, Jordan and Saudi Arabia could facilitate tens of billions of dollars in trade, according to a special paper prepared by the Finance Ministry ahead of US President Joe Biden’s visit to Israel.

The paper was drafted by Shira Greenberg, the ministry’s chief economist, under the direction of Finance Minister Avigdor Liberman. Government officials said that Liberman met in recent days with Prime Minister Yair Lapid to ensure that its main points would be brought up in talks with Biden during his visit to Israel, which begins on Wednesday and will end on Friday.

The paper – obtained by The Jerusalem Post and prepared in English so it could be shared with the Biden administration – pushes for a new plan called “Corridors for Economic Integration” that would create a regional transportation network including railways and highways linking Israel with Jordan, Saudi Arabia and the Gulf.

“By creating a direct connection between the Gulf and the Mediterranean, the network will allow for dramatically shorter shipment times between East and West,” the paper claims. “The project thus has the potential to facilitate trade on both a regional and global level, in addition to enhancing regional economic cooperation.”

Some sections of the network are already in stages of development, according to the paper. In Israel, a railway runs from the port of Haifa to Beit She’an, which is only 10 km. from the border with Jordan.

In Saudi Arabia, the North-South Railway links the east and center of the country with the north, all the way up to the border with Jordan.

In the Gulf, a railway under development there is being planned to connect those of all Gulf countries, in particular railways in Saudi Arabia, the United Arab Emirates and Bahrain.

“By creating a direct connection between the Gulf and the Mediterranean, the network will allow for dramatically shorter shipment times between East and West.”

The distance, the paper said, of the “missing link” – between the Saudi-Jordanian border and the crossing between Israel and Jordan where the railway almost reaches – is just 200 kilometers.

The network, the paper claims, could facilitate trade between the Gulf, Europe, North Africa and the east coast of the Americas. “The existence of numerous relevant and significant trade flows is expected to provide the project with robust demand – as traders in all relevant countries will seek to take advantage of reduced shipment times and direct access to regional markets,” it says.

In the paper, the Finance Ministry calls on the Biden administration to take the reins of the initiative and to bring all of the relevant stakeholders together to facilitate its success.

“While preliminary analyses have shown the project’s potential, a full cost-benefit analysis carried out on behalf of all involved parties by an experienced international partner could also help the sides decide on the next steps,” it says. “We believe that the current positive atmosphere of regional cooperation will allow us the opportunity to move forward in these regards.”

 

 

 

Saturday, 9 July 2022

Biden visit to Middle East: What is more important Israel or Saudi Arabia?

Forty-nine years since making his first trip to Israel, US President Joe Biden is scheduled to arrive in the country on Wednesday on the first leg of his first presidential visit to the Middle East.

For years he has regaled Jewish and Israeli audiences with an account of a meeting he had during that trip with then-prime minister Golda Meir, who told him that Israel’s secret weapon in dealing with Arab hostility was, “We have no place else to go.”

He later termed the meeting one of the most “consequential” of his life.

At that meeting, however, he complained to Meir about the Labor Party’s platform which he said was leading to “creeping annexation” of the territories. He also relayed to Meir that in Egypt he heard how the Egyptian officials believed in “Israel military superiority.” He concluded, as a result, that Israel should initiate the first step toward peace by unilateral withdrawals from nonstrategic areas.

A half-century breeds enormous changes. The US has changed dramatically, as has its position in the Mideast. Israel, too, has changed dramatically, as has its position in the world. But two things from that meeting remain constant, Biden is still opposed to Israel’s policies in the territories, and Israel’s sense that it has no place else to go infuses much of its strategic thinking – including Iran.

On Biden’s upcoming visit, both in Israel and in Saudi Arabia, Iran issue is going to take up much more room than the occupied territories.

Another issue, which came to the fore only a few months after Biden’s initial visit, will also feature prominently, oil. His visit in the late summer of 1973 came just before the Arab countries discovered oil as a strategic weapon, and began to use it.

Biden is the seventh sitting US president to visit Israel. It took 26 years before the first presidential visit to Israel, with Richard Nixon taking that leap in 1974. Since then, there have been 10 other presidential visits, including a one-day visit by Barack Obama in 2016 to attend Shimon Peres’s funeral. Nixon, Jimmy Carter and Donald Trump all visited once, George W. Bush and Obama visited twice, and Bill Clinton came here four times.

This will not be the first time a US president comes during an election campaign. Clinton came here in March 1996 – after organizing a “Summit of Peacemakers’’ in Sharm e-Sheikh – and made clear his preference for Peres, rather than the Likud leader running against him at the time, Benjamin Netanyahu.

Clinton’s support didn’t help, as Netanyahu eked out a razor-thin victory over Peres in elections held two months later. This should be a cautionary tale for Prime Minister Yair Lapid, who is hoping that Biden’s visit will give him a boost.

Historically, nods from US Presidents – though the optics are often powerful – have not necessarily translated into huge bonuses at the polls. Ask Netanyahu how much he was helped by the hug then-president Donald Trump gave him before the two elections in 2019, and the one in 2020. Trump was all-in for Netanyahu, yet Netanyahu didn’t get the votes he needed to form a coalition.

What Biden’s visit will do for Lapid is make him look prime ministerial. Photos of Lapid meeting and greeting Biden, and even audio of Biden praising the new acting prime minister, may help remove lingering doubt among those who believe that the onetime television journalist is not yet ready for the political prime time.

It is not, however, going to move voters from the pro-Netanyahu camp to the anti-Netanyahu camp headed by Lapid.

What is the goal? Beyond Lapid, what does Israel want from the Biden visit?

First of all, it just wants the visit itself. Presidential visits are still important for Israel because they reinforce the impression – an important one for Jerusalem in projecting power throughout the region and beyond – that its alliance with the US is steadfast and solid, and that it continues to enjoy a close and special relationship with Washington.

This not only deters those who might want to harm Israel, realizing that the US stands firmly behind it, but also encourages those who might want to get closer to Israel, because of Israel’s closeness to America. Presidential visits demonstrate that closeness.

Such a demonstration is especially important now, amid a constant drumbeat of stories about how Israel’s support in the US is on the decline, especially among Biden’s own Democratic Party, and especially among young voters in that party.

Secondly, Israel wants coordination on the Iranian dossier to come from this visit. It wants to coordinate with Biden regarding policy toward the Islamic Republic if there is no new nuclear agreement, and it wants to know what type of security architecture the US plans for the Mideast in that eventuality. Israel doesn’t only want to listen; it wants to give its input. Furthermore, Israel also wants to hear from Biden what the US plans to do if an agreement is signed, and Iran violates it.

Biden is scheduled to arrive Wednesday afternoon and will be leaving for Saudi Arabia on Friday. He will also be spending a few hours in the Palestinian Authority with PA President Mahmoud Abbas.

There, too, there will be meetings with interlocutors who want something. The Palestinians will want to hear Biden talk about a two-state solution, and provide concrete steps toward working toward a “diplomatic horizon.” They will want commitments regarding opening a consulate in east Jerusalem, reopening the Palestinian Liberation Organization’s office in Washington, and pledges of more financial support for the PA.

They are likely to be disappointed, as – unlike other presidents on trips to Israel and the Mideast – the Palestinian issue, resolving this issue, is nowhere near the top of the president’s agenda for this trip.

When discussions about a possible presidential visit became public a few months ago, Naftali Bennett was prime minister – the government was shaky, but still held. Even though the government has since fallen, a new prime minister is in office, and elections are four months away, the Americans proved very determined to go ahead with the visit.

Why visit Jerusalem at a time when the prime minister is not going to be able to make any significant promises, since in four months he may not be able to act on them. Why risk being seen as meddling in internal Israeli politics?

Israel is only a sidelight on this visit. Had Biden been coming only to Israel, he probably would have canceled and come next year, after the US midterm elections and when a new government would be in place in Jerusalem. But Israel is just the appetizer on this presidential voyage. Saudi Arabia is the main course.

Ironically, Biden is actually using the appetizer to explain to critics why he is moving on to the main course. He is using Israel to deflect criticism at home about visiting Saudi Arabia, despite that country’s human rights violations, despite its involvement in the killing of Saudi journalist Jamal Khashoggi, and despite Biden’s having said in the 2020 presidential campaign that it is a country that should be treated like a “pariah.”

One of the main purposes of this visit to the region, Biden said at a press conference in Spain last month, is to “deepen Israel’s integration in the region.”

“I think we’re going to be able to do that, which is good – good for peace and good for Israeli security,” he said. “That’s why Israeli leaders have come out so strongly for my going to Saudi Arabia.”

Biden is going to Saudi Arabia, where he will join a meeting of the Gulf Cooperation Council plus Iraq, Egypt and Jordan, and is expected to see Saudi Crown Prince Mohammed bin Salman, whom he has pointedly snubbed since becoming president. In Saudi Arabia, both Biden and the Saudis have their wants.

Biden wants, in fact he desperately needs, the Saudis to increase oil production to make up for shortfalls in supply caused by Russia’s invasion of Ukraine. This has led to skyrocketing prices in the US, with the average cost per gallon now standing at $4.79 a gallon (still well below the $8.96 Israelis pay per gallon at the pump).

The president is making his Mideast trip as the US economy is in the doldrums, sending his popularity numbers to new lows. Biden’s approval rating (39% on June 30) was almost 3 points lower than Trump’s at the same stage of his presidency. Low popularity isn’t because he has not put enough energy into the Mideast peace process, but, rather, primarily because of the economy – inflation and gas prices.

He hopes that in Saudi Arabia he can find a cure, at least, for gas prices, but this may be too high of an ask.

The Saudis, smarting from what they feel is the shabby way they were treated by Biden and this administration, are in no great rush to come to the president’s aid.

Lowering gas prices will help the Democrats – poised to get clobbered in five months in the US midterm election. But the Saudis aren’t interested in the Democrats doing well at the polls. If anything, they would prefer a Republican Congress and – in another two years – a Republican president.

Saudis also have their wants. They want the US to acknowledge that Riyadh has been a loyal strategic partner for 80 years; they want the US to acknowledge that the country has suffered from Houthi attacks; they want the Houthis reinstated on the American list of terrorist organizations; they want respect from Washington, and not to be viewed merely as America’s gas station.

In addition, they want assurances from Biden that they can count on the US in the future. The Saudis are looking for assurances that the US is not withdrawing from the region and is still willing to use its vast military power, and they want to hear how the US plans to protect them from Iran.

Biden will be flying into a region this week where a lot of different parties have a lot of different asks and expectations. Inevitably, some people are going to be disappointed, Biden himself may be among them. 

Iranian non-oil trade with neighbors up 18% during March-June 2022 quarter

The value of Iran’s non-oil trade with its neighboring countries increased 18% during the first three months of the current Iranian calendar year (March-June), as compared to the same period last year, the spokesman of Islamic Republic of Iran Customs Administration (IRICA) announced.

Ruhollah Latifi put Iran’s non-oil trade with its neighbors at 20.973 million tons worth US$12.363 billion in the three-month period.

He said trade with the neighbors accounted for 49% of the value and 59% of the weight of Iran’s non-oil trade during the period under review.

The country exported 16.05 million tons of non-oil goods worth US$6.736 billion to the neighboring countries in the three-month period of this year, indicating 20% rise in value, while 10% drop in weight, as compared to the same period last year, the official stated.

He named Iraq, Turkey, United Arab Emirates (UAE), Afghanistan, and Oman as the five top export destinations.

Latifi further announced that Iran imported 4.433 million tons of goods worth US$5.627 billion from its neighbors during this period, with 15% growth in value and one percent rise in weight YoY.

He named UAE, Turkey, Russia, Pakistan, and Oman as the five top sources of imports.

As previously announced by the IRICA head, the value of Iran’s non-oil trade with its neighbors during the previous Iranian calendar year 1400 was reported at US$51.875 billion, an increase of 43% YoY.

Alireza Moghadasi put the weight of non-oil trade with the neighboring countries at 100.131 million tons in the said year, stating that trade with the neighbors also increased by 23% in terms of weight.

The official put the annual non-oil exports to the mentioned countries at 75.445 million tons valued at US$26.29 billion, with a 29% rise in value and a 12% growth in weight.

Major export destinations of the Iranian non-oil goods were Iraq with US$8.9 billion, followed by Turkey (US$6.1 billion), United Arab Emirates (US$4.9 billion), Afghanistan US$1.8 billion) and Pakistan with (US$1.3 billion) in imports from the Islamic Republic, others countries included Oman, Russia, Azerbaijan, Turkmenistan, Armenia, Kazakhstan, Kuwait, Qatar, Bahrain, and Saudi Arabia, according to the official.

Moghadasi further stated that Iran imported 24.686 million tons of non-oil commodities worth over US$25.846 billion in the previous year, with a 60% growth in value and a 68%YoY increase in weight.

The United Arab Emirates was the top exporter to Iran during the period exporting US$16.5 billion worth of goods to the country, followed by Turkey, Russia, Iraq, and Oman, he stated.

Pakistan, Kazakhstan, Azerbaijan, Turkmenistan, Afghanistan, Armenia, Kuwait, Qatar, and Bahrain were other top neighboring countries that supplied goods to Iran in 1400, respectively.

Increasing non-oil exports to the neighboring countries is one of the major plans that the Iranian government has been pursuing in recent years.

Iran shares land or water borders with 15 countries namely UAE, Afghanistan, Armenia, Azerbaijan, Bahrain, Iraq, Kuwait, Kazakhstan, Oman, Pakistan, Qatar, Russia, Turkey, Turkmenistan, and Saudi Arabia.


Lift sanctions against Russia, urges Bangladesh Prime Minister

Sheikh Hasina, Prime Minister of Bangladesh has urged the Western countries to lift the sanctions on Russia, saying that millions of people across the world were suffering as the sanctions impacted global supply chains and increased prices food and other commodities.

Because of the US-led sanctions, food prices are skyrocketing and people are suffering everywhere.

“Punishing the people of the world, while trying to punish one country tantamount to human rights violation. This is why I think it is imperative that the US step away from this. I think everybody will want this,” she said while inaugurating a new building of the Ministry of Foreign Affairs in Dhaka.

The comments came at a time when people in Bangladesh are bearing the brunt of rising food, fuel and fertilizer prices and the government is being forced to take austerity measures that include limiting fuel use and electricity generation.

In late February, the Russia-Ukraine war started, bringing more miseries to the world still reeling from the pandemic.

The Western nations led by the United States have frozen about US$400 billion of Russian central bank’s assets and at least US$240 billion belonging to oligarchs. However, Moscow has roughly US$300 billion in foreign currency and gold reserves, and the ruble has now hit a seven-year high against the US dollar.

The UN has warned that Russia’s war in Ukraine could push up to 49 million people into famine or famine-like conditions because of its devastating impact on global food supply and prices.

According Europmonitor.com, global inflation may reach 7.9% in 2022. The average annual global inflation between 2001 and 2019 was 3.8%.

Hasina said the US-imposed sanctions have reduced the availability of goods, including those imported by Bangladesh, while the shipping costs have gone up. Not only in Bangladesh, but people in the US, Europe, UK and the rest of the world are also affected by the sanctions.

People in developing and developed countries are affected by the restrictions, and the US should understand this, she said, questioning if sanctions were effective at all in hurting a particular country.

“The developed countries should think about it.”

She said the Ukraine war and sanctions came just when Bangladesh was recovering from the shock of the pandemic. “This has become a great challenge for Bangladesh to overcome.”

The war should not affect shipping of goods from one country to another and international trade must be uninterrupted, she said.

Bangladesh is trying to increase food production. “But to boost food production, we need fertilizer, diesel and other related materials. We are not getting those.”

 

Friday, 8 July 2022

United States slaps new oil sanctions on Iran

 

The United States Department of Treasury this week imposed more oil and petrochemical industry sanctions on Iran amid stalled nuclear negotiations.

"While the United States is committed to achieving an agreement with Iran that seeks a mutual return to compliance with the Joint Comprehensive Plan of Action, we will continue to use all our authorities to enforce sanctions on the sale of Iranian petroleum and petrochemicals," said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson.

In a news release, the Treasury said it would sanction an international network of companies and individuals involved in the marketing of Iranian crude oil and petroleum products in East Asia.

Secretary of State Anthony Blinken said in a tweet that the US is imposing the sanctions "absent a commitment from Iran to return to the JCPOA."

The latest round of talks between Iran and the US facilitated by the European Union ended inconclusively last week, with participants saying they would resume soon.

Meanwhile, Iran has stepped up its demands on the US side, according to the US Special Envoy for Iran—demands that have nothing to do with the nuclear deal.

"They have, including in Doha, added demands that I think anyone looking at this would be viewed as having nothing to do with the nuclear deal, things that they've wanted in the past," Robert Malley told NPR this week.

"The discussion that really needs to take place right now is not so much between us and Iran, although we're prepared to have that it's between Iran and itself, that they need to come to a conclusion about whether they are now prepared to come back into compliance with the deal, if we're prepared to do the same, and we've said we are," the Special Envoy for Iran also said.

Iran's Foreign Minister, who led the latest talks with the EU, said, as quoted by Reuters, "We are prepared to resume talks in the coming days. What is important for Iran is to fully receive the economic benefits of the 2015 accord."

 

Pakistan: Business leaders term hike in interest rate ‘disastrous for fragile economy’

According to a Dawn newspaper report, the business community of Pakistan has strongly condemned the decision of the State Bank of Pakistan (SBP) to increase the interest rate to 15%.

Trade and industry representatives said the move would prove highly disastrous for industries and the SME sector. They demanded that the government intervene and get the central bank’s decision withdrawn with immediate effect.

Irfan Iqbal Shaikh, President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said he did not understand SBP’s logic in raising the interest rate to 15% at a time when power, gas and petroleum prices, along with looming uncertainty, have already reached new highs.

“The interest rate in Pakistan is three to four times higher than in the region, and in such circumstances, no stakeholder would dare to set up any new industries or go for any vertical expansion of their units,” he said.

“It seems that the government is more focused on dealing with political issues rather than showing any seriousness in tackling the issues of the business community. No planning is being done while the economic situation is getting out of control,” said Shaikh.

FPCCI President urged the government to listen to stakeholders and implement policies that will help the country recover from its economic crisis.

Abdul Rasheed, President, Site Association of Industry (SAI) said while the industry was already perturbed over the interest rate, the SBP has continued to crawl up the policy rate, bringing more trouble in the functioning of the industries.

He said many industries, including the textile sector, have invested billions of dollars in importing machinery in the last three years at a 4 to 4.5% markup rate after obtaining loans from the banks. At the 15% policy rate, industrialists and exporters would stop importing machinery, leading to a suspension in industrial activities besides creating unemployment and a law and order situation.

Muhammad Idrees, President, Karachi Chamber of Commerce and Industry (KCCI) said the SBP has increased the policy rate under some pressure, which would plunge many industries into a default situation. “The government can make borrowing, but the industries will be unable to take loans,” he added.

“What is the government doing? Will it put the economy on track by taking such decisions? “deplored Ijaz Khokhar, Chief Coordinator, Pakistan Readymade Garments Manufacturers and Exporters questioned the rationale.

“In Sialkot alone, a huge cottage industry (SMEs) comprising around 7,000 small units has been in operation for a long time. So they all would be no more gradually due to the increase in the interest rate at 15% which is already too much higher than our neighbouring countries,” he explained.

In a statement, Haris Ateeq Vice President, Lahore Chamber of Commerce & Industry (LCCI) also condemned the decision, expressing concern that further increases in discount rates would raise the cost of doing business.

 

 

Thursday, 7 July 2022

Pakistan: Textile industry first casualty of absurd policies of incumbent government

Abdul Rahim Nasir, Chairman, All Pakistan Textile Mills Association (APTMA) claims that over 300 textile units have been closed due to the cut in gas supply. 

He urged the Government of Pakistan (GoP) to immediately restore gas supply to the textile industry. Explaining  gravity of the situation he said Pakistan has already lost almost US$1 billion of textiles and clothing exports.

Accompanied by APTMA, North Zone Chief, Hamid Zaman and Senior Vice-Chairman Kamran Arshad at a press conference, he said the 26% upsurge in the export of textiles during fiscal year 2021-22 was made possible only due to the supply of energy at a regionally competitive tariff.

He stated that the textile industry performed admirably, increasing textile exports from US$12.5 billion in 2020 to nearly US$20 billion in 2022, a 60% increase.

He claimed that the exponential growth in the textile sector has promoted investment of over US$5 billion and the establishment of 100 new textile units, which, after becoming operational, would result in fetching additional exports of US$6.0 billion per annum.

Nasir pointed out that gas supply to the industry was suspended for a week, almost halting production in the whole value-added industry and causing colossal losses to the economy.

He added that the large-scale closure of mills has resulted in massive layoffs and unemployment, spreading economic chaos.

He believes it is inexplicable that the exporting sector, which has pledged to increase textile exports to US$25 billion in 2022-23, is being denied energy and gas. He said that an uninterrupted supply of gas is a must for the industry to maintain momentum in exports.

Zaman said that the textile sector has repeatedly delivered on its commitment to enhance exports and proven that they are a viable and long-term solution provider for the economic stability of the country.

He warned that more than 50% of output would be lost this month, with a very high risk of permanent order loss and buyer diversion from Pakistan to its competitors.

He stated that the textile industry is currently producing goods for the upcoming Christmas, and any delay in the delivery schedule risks losing export markets for an indefinite period with little chance of recovery.

“If this momentum is lost due to energy supply and cost constraints, Pakistan will be forced to seek an additional US$6 billion in loans from abroad, which under the circumstances may not even be possible,” he said, stressing the immediate restoration of gas supply to the export-oriented industry.

Highlighting the importance of the textile sector in the mainstay of the country’s economy, Arshad said that textiles have a 61% share in the country’s exports and 40% of manufacturing sector employment. The fragile economy of the country cannot sustain the consequences of the closure of mills in the wake of non-supply of gas.