Have Trump and Adelson cut a deal on annexation of West Bank?

As back as May 2019, I had written a blog and its title was “Sheldon Adelson: Jackpot for Israel”. Its opening paragraph was, “A bet on Donald Trump for president may have seemed risky two years ago, but for billionaire casino magnate Sheldon Adelson the payout has been spectacular. Adelson (85-year old) and his wife Miriam gave around US$82 million to Republicans and candidate Trump in 2016 and within two years his two major asks were met: moving the US embassy in Israel to Jerusalem, and withdrawing of US from Iran nuclear deal”. Today I have managed to gather some details, which are worth reading.

Sheldon Adelson, the Israel-loving, Iran-war-craving casino baron, talks to Donald Trump all the time, and for good reason, he and wife Miriam are the biggest Republican donors, poised to give as much as US$200 million this year. Now that the White House appears to be lying down for the Israeli government as it moves to annex portions of the West Bank despite a growing chorus of international condemnation, the focus should be on Adelson. He has always been a strong supporter of Israeli expansion, a man who says, “There’s no such thing as a Palestinian.”

Adelsons have gotten everything they wanted from US President: tearing up the Iran deal, moving the embassy to Jerusalem, defunding Palestinians, recognizing the Golan annexation, treating settlement expansion as legitimate, even a presidential medal of freedom for Miriam, etc. Right up to yesterday — a Trump attack on the ICC in the name of Israel. As Trump once said when a Republican rival was getting Adelson’s money, Adelson wanted a “perfect little puppet.”

Most important, the Adelsons got the Trump “peace plan,” which paves the way for annexation of the West Bank. When Trump announced his “vision,” there they were in the front row. Especially if Trump loses in November, as appears more and more likely — this is the Adelsons’ last chance to get annexation. They speak to Trump all the time.

Look at it from Trump’s point of view. He doesn’t care about peace in the Middle East or Palestinian human rights. He wants one thing, to win in November, and he needs money. Why would the Adelsons risk US$200 million on a loser? Well, because it’s not a losing cause; they get their payback now. They figure that Israeli annexation is permanent no matter what happens to Trump. “Facts on the ground” is the Israeli way of expansion. The embassy move will never be reversed by a Joe Biden. So let’s annex.

Sheldon’s Israeli newspaper Israel Hayom is promoting annexation. He believes, annexation is Israel’s right, and it poses no threat to the interests of either the United States or the Jewish state. The paper is an important rightwing voice in Israel, and the Adelsons have been big supporters of Benjamin Netanyahu. So they may also play a role in Netanyahu’s zeal to annex, when he had a lot of opportunities to dismiss that policy.

The Guardian said in February that insiders expect the Adelsons to donate between US$100 and US$200 million to Trump’s reelection hopes this year. If that seems like a big lift, look at their track record: The Adelsons gave more than US$100 million to Republican causes in 2016 and another US$123 million during the 2018 election.

McClatchy reported last year that the Adelsons were putting off their big donations in 2020 until as late as possible, so as not to excite negative publicity. Adelson is a funder and board member of the Republican Jewish Coalition that calls Trump the most pro-Israel president ever and, big coincidence, the RJC “is launching a lobbying effort on Capitol Hill to rally support for Israeli annexation.

The RJC is chaired by the ex-senator Norm Coleman. . . who is said to have strong ties to Adelson that benefit the RJC and other Super Pacs and dark money outfits where Coleman is a big player.

Coleman helps lead fundraising for a Super Pac, the Congressional Leadership Fund, and a dark money outfit, the American Action Network, that respectively back Republican House members and their policies and have received seven-figure checks from the Adelsons in recent elections.

The Adelsons have seemed to have their way on annexation so far. Annexation of large parts of the West Bank is green lighted in Trump’s deal of the century. Adelsons wanted the plan out well ahead of the election, Dan Raviv of i24 said, so that Israel would be freed to set its own border this year before November comes and possibly limits its autonomy. Adelsons may be the most important actors in this entire foreign policy discussion. Maybe the media should be telling us more about them now. . .

United States and China entangling in a new type of cold war

Over the last more than two months many countries were told by World Health Organization (WHO) to opt for lockdown to fight wide spreading coronavirus pandemic. In the mean time one of the equally fast developing narratives is that it is an ongoing biological war between United States and China.

If one can recall Saddam Hussein of Iraq was accused for the production of weapons of mass destruction. A few sites were identified and destroyed, but soon it became evident that the entire propaganda was very well concocted. However, some observers went to the extent of saying that these sites produced material which was used against Iran in a war spread over more than a decade.

Coming back to my topic, it may be suspected that United States was not happy, rather afraid of growing economic might of China. Initially to keep a close watch the US companies were allowed to make huge investment in China and Chinese were allowed to invest in United States. Growing deficit in balance of trade prompted United States to impose restrictions on the entry of Chinese good, but all in vain.

One of the conspiracy theories is that United States leaked a virus in Wuhan, to ultimately reach the industrial hub of Shanghai. The move backfired as China saved its industrial hub, but virus spread to almost all the countries on the plant, except a few.

Scanning the content printed one is inclined to arrive at a conclusion that this is not a pandemic but a biological war. After more than four decades of engagement, the two superpowers have been unable to bridge the ideological gulf that separates them. A global pandemic might have served as an occasion for more cooperation; instead it has only made the divide more obvious. The two countries now stand on the brink of a new type of cold war.

The level of trust between China and the United States is at its lowest point since diplomatic ties were established in 1979. The deterioration in US-China ties began long before the pandemic and even before the Trump presidency. A fundamental shift in the relationship has taken place. American interests now diverge more than they converge.

China’s return towards communist orthodoxies since Xi Jinping became president in 2013 has had a crucial impact. Tthe fundamental difference in ideology between the US and China can be summed as, “Between 1978 and 2012, the Communist party put aside its communist roots and focused on developing economic strength. Once China succeeded economically, the CCP went back to refocus on its original intentions of building socialism. For decades, this bargain delivered impressive commercial gains; making China the prime engine for global growth.

Tens of thousands of US companies set up business in China and bilateral trade last year amounted to US$541 billion.  China is often accused of showing less willingness to accept US global leadership and began carving out its geographical spheres of influence. One critical breach of trust was termed deployed huge military infrastructure on the islands by China.

 The insecurities of United States started mounting on rising military might of China. Images of sailors standing on the deck of a Chinese guided-missile destroyer were clear signs of defiance by China. As China’s economy grew, it showed progressively less willingness to accept US hegemony.

In US-China commercial relationship accusations of violation of intellectual property rights became a big hurdle. This prompted Washington to impose tariffs on a range of Chinese goods, triggering a 20-month trade war that was put on hold in January this year with a truce deal that remains extremely fragile.

Reportedly, total Chinese investment in the US fell to US$5 billion last year, from a recent peak of US$45 billion in 2016, when Chinese companies were much more free to acquire US businesses. On top of that Trump administration and lawmakers on Capitol Hill have been considering other moves against China, including more stringent export controls, curbs on investment flows and limits on integrated supply chains between the two countries — all in the midst of a deep global recession.

Trump also threatened to terminate the January trade deal with China, which could lead to a new flare-up in tariffs, because of skepticism over China’s willingness to honour its pledge to buy billions of dollars of American goods. 

Apparently, both sides claim that good progress is being made and fully express willingness to meet their obligations under the agreement in a timely manner, but ongoing blame game becomes the biggest dampener. Some observers predict continued tension, with nationalist sentiment and recession supporting hardliners in both countries. It appears extremely difficult to contain deteriorating relationship. Strategic competition will remain the dominant factor.

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United States “an uninvited guest” in Persian Gulf

An International affairs expert, Sabah Zanganeh has termed the United States “an uninvited guest” in the Persian Gulf region. “The United States’ security and military forces have understood that Iran is serious about defending its interests. Iran is the owner, but the United States is an uninvited guest. If any incident occurs, it is this guest who will be harmed,” he told IRNA in an interview published on Tuesday.

Zanganeh added that the United States knows that it should not make a mistake and endanger regional security. “It was a time when Portugal and Britain were in the Persian Gulf region, but they left. The United States must learn a lesson and leave the region,” he noted.

President Hassan Rouhani said on 29^th April 29 that the US must know that the waterway in the West Asia region is the Persian Gulf and not the New York or Washington Gulf.

“They must understand the situation by the name of the place and the people who have protected it for thousands of years and stop hatching plots against the Iranian people,” Rouhani said in a cabinet meeting.

He said, “The United States has witnessed the Iranian people’s success in all areas and also in protecting the Persian Gulf waterway. Our soldiers in armed forces, the Guards [the Islamic Revolutionary Guard Corps], Basij, Army and police forces have always protected and will protect the Persian Gulf.”

Rouhani also described the Persian Gulf as very “important” and “sensitive” region.

“The Persian Gulf belongs to the Iranian nation and has always been and will be the Persian Gulf,” the president noted.

IRGC Navy chief Alireza Tangsiri also said on 27^th April that the United States is an “uninvited guest” in the Persian Gulf region.

The chief of the Iranian Army Command and General Staff College (DAFOOS) has said that the United States is an “uninvited guest” in the Persian Gulf region.

“The Persian Gulf is like a big old house which has eight doors and independent rooms and also a yard which is shared by these eight neighbors. If a guest comes, he has to leave after a while, because a guest should not stay permanently,” General Hossein Valivand told reporters on the sidelines of a ceremony held to mark the national day of the Persian Gulf.

Valivand noted that Iran wants the US and all other foreign forces to leave the Persian Gulf region.

“We guarantee security of the Persian Gulf by the Army’s Navy and the Guards [the IRGC] and also by cooperation with other neighbors and the countries we have formed a military coalition with,” he said.

Foreign Ministry spokesman Abbas Mousavi said on 20^th April that foreign forces’ presence in the region is the source of insecurity, instability, and tension.

“We consider presence of the foreign forces, especially forces of the United States, in the region a source of tension, instability, and insecurity. Their presence is illegal and illegitimate. This is our region and our armed forces must be able to patrol without hurdle,” Mousavi said in a press conference held through video conference.

He said, “This issue led to our forces’ response. It has been for thousands of years that Iran is in this region and the regional security must be provided by the regional countries, especially Oman which is in the Strait of Hormuz region.”

The spokesman urged foreign forces to leave the region and not make Iran give them warning.

Foreign Minister Mohammad Javad Zarif wrote on his Twitter page on April 23 that “US forces have no business 7,000 miles away from home, provoking our sailors off our OWN Persian Gulf shores.” 

It came after US President Donald Trump said he had ordered the US Navy to destroy Iranian boats “if they harass” US ships in the Persian Gulf.

“I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea,” Trump said in a tweet on 22^nd April 22.

The IRGC has rejected US description of the Iranian boats’ behavior in the Persian Gulf, saying such a depiction is like “Hollywood scenarios”.

Chevron books larger profit but opts for fresh capex cuts

Oil major Chevron booked a larger profit in the first quarter of 2020 compared to the same period last year on the back of asset sales, favorable tax items, and forex gains, but decided to further cut its apex guidance for the year. Chevron also set a new quarterly production record.

Chevron has reported earnings of US$3.6 billion for the first quarter of 2020 as compared to earnings of US$2.6 billion for the first quarter of 2019.

Included in the current quarter was a gain of US$240 million associated with the sale of upstream assets in the Philippines and favorable tax items aggregating to US$440 million.

Foreign currency effects increased earnings in the first quarter of 2020 by US$514 million.

Sales and other operating revenues in the first quarter of 2020 were reported at US$30 billion, as compared to US$34 billion for the same period a year ago.

“First-quarter earnings were up from a year ago,” said Michael K. Wirth, Chevron’s chairman of the board and chief executive officer, “driven by downstream margins and increased Permian production. However, commodity prices fell significantly in March and the weakness continued into the second quarter, primarily due to reduced demand resulting from the COVID-19 pandemic.”

Wirth also added that the company’s financial results in future periods are expected to be depressed as long as current market conditions persist.

Chevron decided to further reduce its 2020 capital expenditure by up to US$14 billion.

The company has already reduced its 2020 capital spending plan by $4 billion.

In addition, the Company estimates that 2020 operating costs will decrease by US$1 billion. This follows the previously announced suspension of share repurchases and the completion of additional asset sales.

“Together these actions are consistent with our longstanding financial priorities: to protect the dividend; to prioritize capital that drives long-term value, and to maintain a strong balance sheet,“, said Wirth.

Chevron’s worldwide net oil-equivalent production was 3.24 million barrels per day in the first quarter of 2020, an increase of over 6 per cent from a year ago, and a new quarterly record.

An agreement signed with United States in 1945 will continue to haunt House of Saud for ever

I wrote a blog titled “And finally Saudi Arabia bows down before US mantra” on April 10, 2020, where the bottom-line was that Saudi Arabia has bent to knees before United States. Since then I wanted to explore what turned Saudi Arabia too feeble. 

Now I share with you the crux of my finding very briefly.

In my opinion, Saudi Arabia was put to its knees after United States put showed it the details of an agreement in 1945 between Franklin D. Roosevelt, President of United States and the Saudi King at the time, Abdulaziz, which defined the relationship between the two countries for the years to come. 

The deal that was struck between the two men at that time was that the US would receive all of the oil supplies it needed for as long as Saudi Arabia had oil in place, in return for which the U.S. would guarantee the security of the ruling House of Saud.

The deal was altered slightly since the rise of the US shale oil industry. The US also expects the House of Saud to not only supply the US with whatever oil it needs for as long as it can but also that it will also facilitate the US shale industry to continue to function and to grow.

President Donald Trump has used this agreement to the US benefit. He has sensed a lack of understanding on the part of Saudi Arabia for the huge benefit that the US is doing the ruling family. He went to the extent of saying that [Saudi King Salman] would not last in power for two weeks without the backing of the US military. He also made it clear that without the US protection, either Israel or Iran and its proxy operatives and supporters could very soon end the rule of the House of Saud.

Trump has also said, “I will do whatever I have to do... to protect... tens of thousands of energy workers and our great companies,” and added that plans to impose tariffs on Saudi Arabia’s oil exports into the US were “certainly a tool in the toolbox.”

 Putting tariffs on Saudi oil rather than Russian oil made a lot of sense from two key perspectives. First, the US imports around 95% more oil from Saudi than it does from Russia, so sanctioning Russian oil would have little effect on supply glut prevailing in the US. Second, it was also a understanding in the US that Russia was in much better economic shape than Saudi to handle any shocks to its oil-related streams of revenue.

It is also the fact that Saudi currently provides one of the few large-scale sources of sour crude to the US, which is essential to its production of diesel, and to which purpose WTI is less suited. Gulf Coast refinery system of the US has invested heavily in coking systems and other infrastructure to better handle heavier crudes from the Middle East in recent decades.

The other major historical sources are not in a position to fill the gap, with US sanctions still imposed on oil imports from Venezuela, Mexican flows unreliable, and Canada’s pipeline capacity to the US not able to handle anymore exports south until the long-delayed Keystone pipeline is up and running till 2023.

It was strongly believed that Trump would use the threat of such tariffs to convince the Saudis that he is unpredictable enough to impose such taxes, regardless of the short-term economic consequences. As president, he was required to do something as around 44 million barrels of Saudi crude was expected to reach the US over the next four weeks. This was around four times the most recent four-week average, according to EIA records, and it was mostly due to be delivered to the already overwhelmed Cushing delivery point.

Reportedly, Republican Senator Kevin Cramer of North Dakota, who advises Trump on energy issues, has been calling on the White House to take action to stop the very large crude carriers from unloading and several senators and congressmen have threatened to vote to withhold military aid to Saudi Arabia.

Keeping in view the burgeoning ill-feeling towards the Saudis, sources in theUS Administration were desperate to exploit ‘No Oil Producing and Exporting Cartels Act’ (NOPEC). Pressure was building on Trump to finally sign off the NOPEC Bill ever since the Saudis announced to increase output.

The NOPEC Bill would make it illegal to artificially cap oil (and gas) production or to set prices, as OPEC, OPEC+, and Saudi Arabia do. The Bill would also immediately remove the sovereign immunity that presently exists in US courts for OPEC as a group and for each and every one of its individual member states. This would leave Saudi Arabia open to being sued under existing US anti-trust legislation, with its total liability being its estimated US$ one trillion of investments in the US alone.

The would have also entitled the US administration to freeze all Saudi bank accounts in United States, seize its assets in the country, and halt all use of US currency by the Saudis anywhere in the world. It would have also allowed the US to go after Saudi Aramco and its assets and funds, as it is still a majority state-owned production and trading vehicle, and ment that Aramco could be ordered to break itself up into smaller, constituent companies that are not deemed to break competition rules in the oil, gas, and petrochemicals sectors or to influence the oil price.

The Bill came very close indeed to being passed into a law in February of last year, when the House Judiciary Committee passed the NOPEC Act, which cleared the way for a vote on the Bill before the full House of Representatives. On the same day, Democrats Patrick Leahy and Amy Klobuchar and – most remarkably – two Republicans, Chuck Grassley and Mike Lee, introduced the NOPEC Bill to the Senate. Its progress was only halted after President Trump stepped in and vetoed it when the Saudis did what he told them to do, but the option is still available for a relatively quick turning it into law.

And finally Saudi Arabia bows down before US mantra

The decision by OPEC plus to cut production can be termed a time-out to avert a tripartite war. Lately, there has been significant deterioration in relations between the United States and Saudi Arabia.

Reportedly, nearly 50 US Republican lawmakers warned Saudi Crown Prince Mohammed bin Salman on the eve of this week’s OPEC oil ministers’ video-conference that economic and military cooperation between the United States and Saudi Arabia was at risk. The congressmen demanded that the kingdom must convince Russia to save oil marker from a collapsed.

The United Arab Emirates (UAE) had joined Saudi Arabia in raising production in a move that was sparked by Russia’s initial refusal to extend production cuts agreed early this year but more fundamentally was designed to knock out competition from US shale producers that had turned the United States into the world’s largest oil producer.

It is being portrayed that Saudi Arabia, Russia and the UAE share a desire to render the US shale industry uncompetitive. The prime objective of Russia is to end the US hegemony by stripping it off its status of largest oil producing country.

The threats for Arabian Peninsula monarchs and the US have been raised by the collapse of the oil price as well as demand in the midst of a global economic meltdown.

For Saudi Arabia and the UAE, the stakes were their relationship with the US and significant reputational damage with a move that put at risk tens of millions of American jobs at a time more than 17 million people have been rendered jobless in the United States in the past four weeks.

Oil is but the tip of an iceberg in efforts, particularly in the case of the UAE, to manage a divergence in interests with the United States without tarnishing the country’s carefully groomed image as one of Washington’s closest allies in the Middle East.

Emirati gestures were designed to ensure that it would not be a target in any military confrontation between the United States and Iran.

However, when UAE began reaching out to Iran last year by sending a coast guard delegation to Tehran to discuss maritime security in the wake of alleged Iranian attacks on oil tankers off the coast of the Emirate, the relationship got bitter.

The Trump administration remained silent when the UAE last October released US$700 million in frozen Iranian assets that ran counter to US efforts to strangle Iran economically with harsh sanctions.

While the United States reportedly blocked an Iranian request for US$5 billion from the International Monetary Fund (IMF) to fight the virus, the UAE was among the first nations to facilitate aid shipments to the Islamic republic.

The shipments led to a rare March 15 telephonic conversation between UAE foreign minister Abdullah bin Zayed bin Sultan Al Nahyan and his Iranian counterpart, Mohammad Javid Zarif.

UAE officials stressed that there would be no real breakthrough in Emirati-Iranian relations as long as Iran supported proxies like Hezbollah in Lebanon, pro-Iranian militias in Iraq and Houth rebels in Yemen. The UAE gesture contrasted starkly with a Saudi refusal to capitalize on the pandemic.

A against this, Saudi Arabia appeared to reinforce battle lines by accusing Iran of “direct responsibility” for the spread of the virus. Government-controlled media charged that Iran’s allies, Qatar and Turkey, had deliberately mismanaged the crisis.

Moreover, the kingdom, backing a US refusal to ease sanctioning of Iran, prevented the Non-Aligned Movement from condemning the Trump administration’s hard line.

In a further indication of a divergence of interests, the UAE was alleged for trying to sabotage US support for Turkey’s military intervention in northern Syria as well as a Turkish-Russian engineered ceasefire in the region.

It was also reported that UAE Crown Prince Mohammed bin Zayed had promised Syrian President Bashar al-Assad US$3 billion, out of this US$250 million were paid upfront to break the ceasefire in Idlib, one of the last rebel strongholds in Syria.

Prince Mohammed had hoped to tie Turkey up in fighting in Syria, which would complicate Turkish military support for the internationally recognized Libyan government in Tripoli. The UAE aids Libyan rebel forces led by Field Marshal Khalifa Haftar.

A tweet by Prince Mohammed on 28th March declaring support for Syria in the fight against the coronavirus was designed to keep secret the real reason for the UAE payment.

“I discussed with Syrian President Bashar al-Assad by phone the repercussions of the spread of the coronavirus and assured him of the UAE’s support of and assistance for the brotherly Syrian people in these exceptional circumstances. Human solidarity in times of adversity supersedes all else, Sisterly Syria will not be alone in these difficult circumstances,” Prince Mohammed said. It is unlikely that Prince Mohammed’s explanations will convince policymakers in Washington.

Nevertheless, the United States, Saudi Arabia and the UAE are likely to hide cracks in their relations, but it is only a matter of time the cracks will re-appear.

Pakistan Stock Exchange outperforms other global equity benchmarks WoW basis

Continuing the momentum gained in the latter part of last week, the benchmark index of Pakistan Stock Exchange (PSX) closed the week ended on 3rd April 2020 at 31,622 points, posting 12.5%WoW gain. It was the highest ever in points gain, (up 3,512 points WoW) and highest weekly gain in percentage terms since February 2000, outperforming other global equity benchmarks on weekly basis. Across the board attractive valuations, cabinet approval of the stimulus package announced last week and kick-start of essential industries in the coming week (another incentive package for Construction sector announced on Friday) aided investor sentiment in tandem with encouraging news flow regarding number of recoveries from coronavirus. For the week top gainers included: ASTL, CHCC, MLCF, PIOC and KAPCO.

As a result, average traded volume jumped to 227.7 million shares, from 150.0 million shares traded a week ago. Within main board items, Cements led the show, gaining 26.0%WoW on expectation of the construction sector incentive package and news flow suggesting initiation of construction activities at Diamer Bhasha dam. It was followed by E&Ps/OMCs gaining 15.7/23.2%WoW, on Brent price rising more than 30% in anticipation of deal between Saudi Arabia and Russia. Flow wise, net buyers were Individuals (US$13.0 million), Mutual Funds (US$10.3 million), and Insurance (US$9.0 million), mostly absorbing sale by foreigners (US$36.1 million).

On the international front, global institutional investors continue to sell despite undemanding valuations driven by redemption pressures across both active and passive investment strategies. At the same sovereign allocators of global capital are also calling in redemptions due to calls for support from respective governments to fund relief measures as economies face various levels of impacts due to the virus outbreak. A fresh round of allocations may only be likely over the medium to longer term as economies only gradually reopen within the backdrop of large scale stimulus programs launched by central banks. Stimulus programs will eventually translate into higher risk tolerance improving allocations towards frontier and emerging markets.

Analysts advocate buy-and-hold investment strategy with a long term investment horizon since the impact of coronavirus outbreak is yet to be completely gauged. They also suggest continuing to monitor data regarding the virus, testing capacity augmentation, provincial measures to mandate social distancing (including length and severity of lockdowns.

A bruising day for US Dollar

Thursday could be a bruising day for US Dollar. One of the reasons investors are liquidating their positions is depressing news. It is also anticipated that social distancing rules may be extended to April 30th, which delays the return to normal business activity. With the focus on US data this week, a disappointing jobless claims or non-farm payrolls report could also send USD reeling against other currencies.

If the first day of April 2020 was an indication of what’s to come, it will be a very rocky second quarter. After falling more than 24% during the first quarter, the Dow Jones Industrial Average plunged. Currencies have been taking their lead from equities, so it was no surprise to see some of the currencies falling against the greenback. The strongest currencies continue to be the USD and JPY – which absorbed all of the gains in the first quarter.

However the supremacy of the USD is likely to come into question in the weeks ahead. Investors have been buying it on the premise that the rest of the world will be stuck in recessionary conditions longer than the United States because there can’t be a global recovery without a US recovery. While that may be true, the data coming from many countries is weak. The spread of coronavirus in United States is alarming and lockdown is becoming a serious concern.

Looking ahead to Friday’s non-farm payrolls report, it could it be even worse. In many ways tomorrow’s jobless claims report will be more telling and more market moving. The current forecast is 3.5 million, which sounds about right but the underlying numbers are probably much worse. 

According to New York State Labor Department, between March 23rd and March 28th, the agency received more than 8.2 million calls compared to just 50,000 in a typical week. Of course many of those calls are redundant but with just one state receiving that many requests, we can only imagine how many claims are being requested and filed nationally. 

With the exception of JPY, all of the major currencies are lower against USD. Despite an unexpectedly strong increase in German retail sales, Eurozone PMIs were revised lower. UK PMI was also revised lower.  Although manufacturing activity increased in March according to Australia’s PMI report, the RBA minutes were very dovish. According to the central bank a very material contraction is expected in Australia with significant job losses over the months ahead.

Is rebound in oil prices sustainable?

Some hopes were created on Tuesday after U.S. President Donald Trump and Russian President Vladimir Putin agreed to talks to stabilize energy markets, with benchmarks climbing off 18-year lows hit as the coronavirus outbreak cut fuel demand worldwide.

Trump and Putin agreed during a phone call to have their top energy officials discuss stabilizing oil markets, the Kremlin said on Monday. On this flimsiest pretext, oil prices are showing signs of clawing back from a near 18-year low.

Expectations were partly marred when crude oil benchmarks opened April mixed on Wednesday, following their biggest-ever quarterly and monthly losses, overshadowed by fears of global oversupply as data showed a bigger-than-expected rise in inventories in the United States. Brent futures were traded at US$26.14/barrel by 0032 GMT, while WTI futures were traded at US$20.75.

Opening session of today left oil prices marooned near their lowest levels since 2002 amid the global coronavirus pandemic that has brought worldwide economic slowdown and slashed oil demand. Crude futures ended the quarter down nearly 70% after record losses in March.

Added to the trauma was rise in US crude inventories, up by 10.5 million barrels last week, far exceeding forecasts for a 4 million barrel build-up, indicated by data from industry group the American Petroleum Institute.

Oil slumped to a 17-year low as coronavirus lockdowns cascaded through the world’s largest economies, leaving the market overwhelmed by plummeting demand and piling up crude inventories.

Physical oil markets are struggling to store fuel, hit by a double whammy of lockouts and shrinking demand. Western media is portraying it a war for market share between Saudi Arabia and Russia.

The world normally uses 100 million barrels of oil day, but forecasters predict as much as a quarter of that has disappeared in just a few weeks. The plunge in consumption is unprecedented. The great crash of 1929, the twin oil shocks of the 1970s and the global financial crisis don’t come close.

Global oil demand is in freefall and consumption may decline by as much as 20 million barrels a day, according to the International Energy Administration.

The bearish mood in the market hasn’t improved by a rift within the Organization of the Petroleum Exporting Countries (OPEC). Saudi Arabia and other members of OPEC were unable to come to an agreement on Tuesday to meet in April to discuss sliding prices.

It is very unlikely that OPEC, with or without Russia or the United States, will agree to production cut to contain global crude oil glut, mainly due to record production by the United States.

Unhinged Foreign Policy of United States

UN Secretary General Antonio Guterres has called for an "immediate global ceasefire" to focus on fighting Covid-19. He has appealed for the "waiving of sanctions that can undermine countries' capacity to respond to the pandemic." But Washington is not listening. Requests from Venezuela and Iran for emergency IMF loans to buy medical supplies were blocked by U.S. interventions.

The Trump administration is reacting to the pandemic stress by lashing out at perceived internal and external enemies. Secretary of State Mike Pompeo is leading the external onslaught.

Just a month ago Pompeo announced an increase of sanctions against Iran. The sanctions block money transfers. They make it impossible for Iran to import the medical equipment it urgently needs to counter the epidemic.

While the US renewed the sanction waiver which allows Iraq to import electricity and gas from Iran, the waiver is now limited to only 30 days. One third of Iraq's electricity depends on those imports from Iran and, if the waiver is not renewed, its hospitals will go dark just when the epidemic will reach its zenith.

Parts of the Trump administration are even pressing for a wider war against alleged Iranian proxy forces in Iraq.

The Pentagon has ordered military commanders to plan for an escalation of American combat in Iraq, issuing a directive last week to prepare a campaign to destroy an Iranian-backed militia group that has threatened more attacks against American troops.

But the United States’ top commander in Iraq has warned that such a campaign could be bloody and counterproductive and risks war with Iran.

Some top officials, including Secretary of State Mike Pompeo and Robert C. O’Brien, the national security adviser, have been pushing for aggressive new action against Iran and its proxy forces — and see an opportunity to try to destroy Iranian-backed militia groups in Iraq as leaders in Iran are distracted by the pandemic crisis in their country.

Military leaders, including Defense Secretary Mark T. Esper and Gen. Mark A. Milley, the chairman of the Joint Chiefs of Staff, have been wary of a sharp military escalation, warning it could further destabilize the Middle East at a time when President Trump has said he hopes to reduce the number of American troops in the region.

The plan is lunatic. One can’t "destroy" Kataib Hezbollah and other Iraqi Shia groups which Iran helped to build during the war against ISIS. These groups are part of political parties with deep roots in the Iraqi society.

France, Italy and the Czech Republic have started to withdraw from Iraq. Denmark is also leaving and the UK is removing 50% of its force.

There are less then 5,000 US soldiers in Iraq and a war on Kataib Hezbollah could mobilized hundreds of thousands Iraqis to fight against the US occupation. Such a war would also involve Iran and the US would certainly lose it.

The US has currently two aircraft carrier groups in the Arab sea to threaten Iran. But those ships are of no use right now. They are 'cruise ships with guns'. Nuclear powered five billion dollar Petri Dishes for novel coronavirus outbreaks.

Two US carrier groups in the Pacific are already out of action because they have larger outbreaks on board. It is only a question of time until the other carriers follow.

It is not only Iraq and Iran the US is aiming at. The US State Department cut its contributions to health care in Yemen just in time of the highest need:

Officials with the United States Agency for International Development said the decision to halt funding, reported earlier by The Washington Post, included exceptions for “critical, lifesaving activities, including treatment of malnutrition as well as water, sanitation and hygiene programs aimed at keeping people healthy and staving off disease.”

But humanitarian officials said the agency’s exceptions did not provide for continued funding of basic health care programs, which are heavily reliant on foreign aid, and did not seem to take into account what might occur when the coronavirus begins to spread.

Coronavirus: Pandemic, Biological war or Azab (torment)

Ever since coronavirus has attacked Pakistan all sorts of explanations are being given, but mostly end at ‘it is a virus and no vaccine or treatment is available’. First it was said people should restrict socializing and now government is being asked to impose complete lockdown.

The point being propagated is that the victim will face death; therefore, lockdown is the most appropriate.

Since the lockdown can bring even the most robust economies to stand still, various bailout packages are being prepared by the multilateral donors.

To save the less developed economies, economic powers have developed consensus to offer US$2 trillion package.

This reminds formation of International Bank for Reconstruction and Development, now known as World Bank

While many still don’t believe, a small group has been saying from day one that it’s a biological war. The virus has a stipulated life and after a while all the cities and countries will be declared ‘clean’.

It is estimated that around 25,000 people have died in three months, but a point to be remembers is that the largest number of deaths are in the countries which have one of the best Medicare systems in the world.

This number may look colossal but it is only a miniscule keeping in view the loss of millions of lives in WWII.

During this virus spread, faith of Muslims, Christians and Jews was also jolted as their places of worship were closed. Followers of these religions were terming this pandemic an Azab and they were made to believe the contrary.

It becomes easy to believe that it is a biological war when one looks as the ‘disinformation’ spread by three global news agencies. The ‘embedded’ journalist reported global outbreak so extensively that achieve ultimate goal ‘lockdown’ became too easy.  

Let me conclude that this virus may also have become out of control, keep in mind many of the science fictions, and you will tend to agree with my briefest narrative.

Pakistan Stock Exchange down 8.34%WoW on coronavirus hype

The benchmark index of Pakistan Stock Exchange (PSX) continued its slide during the week ended on 27th March 2020, closing at 28,110 points, down 8.34%WoW on coronavirus hype. State Bank of Pakistan (SBP) announced a policy rate cut of 150bps taking the cumulative rate cut to 225bps. There was also an announcement of Rs1.2 trillion stimulus packages, but market sentiment remained bearish. To a large extent PSX also remained insulated to the announcement of massive economic stimulus by the US, as opposed to visible cheering by the other stock markets around the globe. Stocks generating the highest volumes during the week included:  KEL, UNITY, BOP, HASCOL and MLCF, while laggards were: HASCOL, PSMC, PSO, ASTL and DGKC.

Major news flow during the week included: 1) announcement of Rs100 billion refunds to export sectors along with deferred payment of principal and interests on bank loans, 2) Rs100 billion for deferred payment of loans for small and medium enterprises (SMEs), agriculture and concessional loans, 3) reduction in the prices of petrol, diesel and kerosene with immediate effect, 4) divestment from government debt instruments by foreign investors reaching some US$1.8 billion, 5) Pak rupee depreciating 4.3% against greenback over the week, 6) ministry requesting OMCs to halt petroleum imports and increase their offtake from local refineries, and 6) GoP considering to approach multilateral lending agencies for additional financial assistance for fighting adverse economic impact of pandemic. Resulting from reduced market timings, average daily trading volumes declined 37.3%WoW to 150 million shares. While the market sentiments in the upcoming week are likely to be dictated by how GoP grapples with rising coronavirus cases in Pakistan, sectors relatively insulated from direct economic impacts may manage to remain afloat. The benchmark index has already shed 33.5% CYTD.

Russia strongly opposes US sanctions against Iran amid coronavirus pandemic

The Aide to the Russian President Yuri Ushakov in a phone conversation with Iran's Ambassador to Russia Kazem Jalali emphasized Moscow's strong opposition to US sanctions against Iran, especially amid coronavirus outbreak.

The two sides discussed medical terrorism against Iran, the latest spread of the coronavirus worldwide, and the measures taken by Iran to combat the virus in the country.

In this conversation, the Iranian ambassador talked about medical terrorism and the extensive US sanctions against the Iranian nation, in particular preventing many countries from sending medical aid to Iran to combat coronavirus.

Jalali also appreciated Russia's humanitarian aid to Iran and sending test kits as well as Russian political support to Iran.

Ushakov, for his part, emphasized Russia's strong opposition to US sanctions on Iran, especially when Iran is fighting against coronavirus outbreak.

The two sides discussed launching a Russia-China-based campaign to lift sanctions on Iran.

While the countries are trying to boost cooperation in the fight against COVID-19 pandemic, the US still continues its unilateral sanctions against Iran which have affected the country’s power to contain the outbreak.

The new sanctions come as China and Russia, in particular, have urged the US to remove its sanctions on Tehran since the restrictions could interfere with Iran’s efforts to contain the coronavirus outbreak in the country.

As of Saturday, the death toll from the coronavirus outbreak in Iran has risen to 1,433 with 19,644 confirmed cases.

It may be recalled that Iranian Foreign Minister Mohammad Javad Zarif highlighted that what the United States is carrying out against the Iranian nation is a crime against humanity.

“The banking and financial restrictions imposed do not identify whether you are purchasing humanitarian items or not. When a bank deems it risky to do business with Iran, it simply closes the door,” said Zarif.

In addition, European manufacturers of medical equipment do not sell their products to Iran because the US is threatening them with penalties, added Zarif. “There are several ways through which the United States is practicing economic and medical terrorism against Iran. Looking at it from a legal perspective, it is a crime against humanity.”

Asked about official offer of United States to help Iran, Zarif said that the offer was ‘hypocritical’. “A few days ago, US Secretary of State, Pompeo asked other countries to set conditions to help Iran with the fight against coronavirus. All the United States needs to do is to stop interfering.”

“We will take care of ourselves and have enough friends in the world to help us. Stop economic terrorism. If you are not ready to do this, then we ask the world to stop just watching this bullying. This is inhumane.”

“Iranians are dying and people are accepting American bullying just in the hope that they will not be hit. This will not work.”

Calls for lifting unilateral sanctions imposed by the United States against Iran has increased during the recent weeks as the country is facing problems with buying its required medicine and equipment to contain the coronavirus outbreak. Meanwhile, Washington has announced that it will not abandon the maximum pressure policy. 

Iran has emerged as one of the hard-hit countries by the virus. As of Saturday, the death toll from the coronavirus outbreak in Iran rose to 1,556 with 20,610 confirmed cases.

Pakistan Prime Minister calls for lifting sanctions on Iran to combat coronavirus

Prime Minister Imran Khan, in an interview with Associated Press has called for lifting of sanctions on Iran to enable it to combat coronavirus.

In a call for action from the international community, Imran Khan said it was time to end US sanctions on Iran, where one of the worst coronavirus outbreaks in the world has unfolded. 

Iran has struggled to respond in part because of crippling sanctions imposed by the Trump administration.

Khan further added that Iran is a “classic example” of a place where the humanitarian imperative to contain the outbreak outweighs political rivalries or economic dogmas.   

The prime minister said he fears the new coronavirus will devastate the economies of developing nations and warned richer economies to prepare to write off the debts of the world’s poorer countries. 

“It’s not just Pakistan. I would imagine the same in India, in the subcontinent, in African countries,” the prime minister said, referring to the virus, “If it spreads, we will all have problems with our health facilities. We just don’t have that capability. We just don’t have the resources.”

Falling oil prices, biggest threat to US shale producers

The week ended on 13th March 2020 can be termed one of horrific weeks for crude oil producers and traders as prices went down about 50 percent since the start of the year. 

Oil rebounded a bit on Friday following movement in the U.S. Congress to pass a coronavirus economic relief bill. Nevertheless, the near-term looks dire for oil markets, with supply rising quickly as demand continues to collapse. The added threat is likely hike in output by OPEC and Russia.  

Analysts anticipate oil prices to remain at current depressed levels for months amid a price war and the fight for market share. They fear WTI Crude prices to hover around US$30/barrel in the near term. On Friday, WTI traded at US$33, but down by a massive 25 percent on the week for what is shaping up to be the worst week for oil prices since the financial crisis in 2008. Brent prices are also likely to remain range bond in the near term.

After the collapse of the OPEC+ production cut deal, major banks slashed their oil price forecasts, expecting an enormous oversupply in the market as Saudi Arabia, the United Arab Emirates (UAE), and Russia are turning on the taps and looking out for their own interests instead of trying to fix the prices.

Goldman Sachs has warned oil price may plunge to US$20, Standard Chartered says WTI Crude will average just US$32 a barrel in 2020, and ING slashed its Q2 Brent Crude forecast to $33, from US$56, to name a few.

Saudi Arabia has promised to flood the oil market with an extra 2.6 million bpd of oil from April, while its fellow OPEC producer and ally, the United Arab Emirates (UAE), pledged an additional one million bpd in supply. This will result in a total increase of 3.6 million bpd in global oil supply from OPEC’s heavyweights at a time of depressed oil demand due to the coronavirus outbreak. Russia indicates to raise production up to 500,000 bpd.   

According to the Wall Street Journal, Russia believes that low oil prices can damage U.S. shale producers. Outwardly, Moscow does not link its motivations to an intention to harm U.S. oil companies, but Russia had grown wary of the OPEC+ cuts, which contributed to a 4 million bpd increase in U.S. shale over the past three years. Western analysts believe that U.S. sanctions on Nord Stream 2 and Rosneft stoked ire in Moscow. 

 A study of 30 shale drillers accounting for 38 percent of total U.S. oil production finds that roughly 50 percent of their output is hedged at an average price of US$56. If WTI averages US$40 this year, the hedges would save the companies a combined US$10.5 billion or US$17 billion if WTI averages US$25. “There is definitely a significant amount of default risk,” said Michael Anderson, a strategist at Citi.

Western media annoyed with Russia for not joining Saudi Arab in production cut

As usual the western media is putting pressure on Organization of Petroleum Exporting Countries and Russia, commonly known as OPEC plus to opt for deeper production cut. After the inconclusive meeting of the group on 6th March 2020, the media is projecting a rift between OPEC, led by Saudi Arabia and Russia, but has not said a word to demand United States to cut production. It is on record that now United States has attained the status of largest oil producing country, followed by Russia and Saudi Arabia.  

On Friday, Brent price witnessed its biggest daily loss in more than 11 years, after Russia didn’t support a production cut by OPEC to stabilize prices hit in the aftermath of coronavirus outbreak. Prices plunged because the OPEC conference remained inconclusive. The split between OPEC and Russia revives fears of a 2014 oil price crash, when Saudi Arabia and Russia fought for market share with US shale oil producers of United States; it is on record that United State has never participated in any output limiting pact.

Now there is uncertainty about whether the OPEC plus alliance will survive. A day earlier, OPEC issued a call to cut production and also indicated that there would be no deal without Russia. It is believed that Moscow didn’t agree at production cuts not only because it has a stronger stomach for lower prices than Riyadh, but also because the oil market is suffering from a demand trap.

There is talk that if OPEC plus has failed to agree on additional production cuts, would the current agreement – the one  agreed in December 2019 and set to expire in March in 2020 be adhered to or producers will be at liberty to raise output. The fate of the alliance is now on the rocks, although the group pledged to continue to talk going forward. 

There was pressure on Russia to agree, but Moscow has been skeptical of additional cuts for quite some time. A few days ago, Russian President Vladimir Putin said that his country was more or less contented with where oil prices were, noting that the Russian budget had taken into accounts the possibility of low oil prices.

Western analysts find it hard that Russia didn’t agree to further production cut. They believe it required only a modest reduction on Moscow’s part that would have boosted crude prices. They also believe that no-deal would almost surely lead to further decline in prices.

Another twist appeared when Iranian Oil Minister, Bijan Namdar Zanganeh told reporters that if Russia does not sign there will be no deal. Western experts term this a hollow threat. They insist, OPEC has shown signs of a determination to cut output even without Russia. The pressure on government budgets from low oil prices is already pinching.

“OPEC is making the cuts conditional on Russia joining. What Moscow perhaps is underestimating is that Saudi Arabia may be ready to walk away if it doesn’t get a positive answer,” said Amrita Sen, chief oil analyst at consultant Energy Aspects, reported Bloomberg.

Russia, for its part, sees US shale on the ropes, with financial stress deepening for small and medium-sized drillers. US oil production growth has slowed dramatically in recent weeks and months, and if WTI lingers below US$50/barrel for a long period, first output will flatten and then decline.

Keeping crude oil prices has facilitated the US in boosting production. Time has come for Saudi Arabia and Russia to snatch the title of largest oil producing country from United States. This target can’t be achieved without plunging crude oil prices below US$40/barrel that will force many US Shale companies to shutdown their operations.

Is Coronavirus reporting merely a media driven plot to topple President Trump?

Reportedly, Acting White House chief of staff Mick Mulvaney has refused to take responsibility for the Trump administration's response to Coronavirus spread and crafted a new conspiracy theory that the news coverage on the novel virus is merely a media-driven plot to take down Donald Trump.

"They think this will bring down the president," Mulvaney said at the Conservative Political Action Conference, regarding news reporting on the spread. The virus and its spread have caused panic among investors, who fear the disease could have lasting impacts on the economy.

On Thursday (27th February 2020), the Dow Jones Industrial Average fell nearly 1,200 points, the worst one-day drop in history. On Friday, the index fell by another 1,190 points, dropping 4.4%. As a consequence, equities are likely to witness their worst week since the 2008 financial crisis, according to the Wall Street Journal.

When asked how the administration could calm the markets, Mulvaney again blamed the media — the go-to strategy Trump and his aides employ when faced with criticism over their policies. "What I might do to calm the markets is turn the television off for 24 hours," Mulvaney said. "This is not Ebola. It's not SARS."

While Trump and his appointed officials are trying to calm fears, experts within the Centers for Disease Control and Prevention are warning of community spread of virus, saying cities should plan to implement "social distancing measures," including closing schools and asking businesses to have employees work from home.

Because Trump fears the impact the virus may have on his reelection hopes, he's trying to control the amount of information that gets to the public on the disease, putting Mike Pence solely in charge of the communications response. Pence, has a checkered record on public health crises, overseeing the worst outbreak of HIV in Indiana when he served as state governor.

And in even worse news for the administration, a whistle blower came forward to say that public health workers in the federal government are not well trained or properly equipped to deal with the disease, saying workers were "improperly deployed" to military bases where people infected with the disease are being quarantined.

There is a talk also that Congress and the White House need to rise above their usual partisan sniping and name-calling and show a little unified leadership as the United States readies itself for the spread of the new virus.

It seems hard, given the level of bitter polarization in Washington, but Democrats and Republicans owe it to the American people to shun their differences. That’s what rational, responsible governments do in cases of war, natural disaster and, yes, a mass outbreak of infectious disease.

It is being said that the outbreak in the United States seems all but inevitable. Transmission without a known connection to someone who is sick or traveled to a place where people are sick marks a concerning turning point in any disease outbreak.

One thing that needs to happen now is the accelerated production of millions of masks needed to protect healthcare providers; another is to get working testing kits out to the states to confirm suspected cases.

President Trump made the same point about working together in a news conference Wednesday night. He tried to assure the country that he and his team had things completely under control. To make that point he waved a printout that he said was a list from the Johns Hopkins Hospital in Baltimore ranking the U.S. as the most prepared country to handle an epidemic.

“We should be working together,” he said when asked about criticism by House Speaker Nancy Pelosi and the partisan debate about the right amount of federal funds needed to properly prepare. “Pelosi shouldn’t be making statements like that because it’s so bad for the country,” he said.

The president then undercut his own point by trash-talking Pelosi, Sen. Chuck Schumer (D-New York) and all of the Democratic candidates on whom he inexplicably placed blame for the recent stock market drops.

Boosting Pakistan Iran Trade

A Trade delegation from Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIMA) recently visited Pakistan to discuss strengthening trade ties between the two countries.

In a meeting with their Pakistani counterparts, the Iranian delegation expressed concerns over the low level of trade between the two countries and suggested taking measures like holding exhibitions, exchanging business delegations and the use of non-bank channels for money transfers, for boosting trade between the two nations.

The delegation, Led by TCCIMA Head Masoud Khansari also visited Federation of Pakistan Chambers of Commerce & Industry (FPCCI). Mian Anjum Nisar, President, FPCCI said the level of economic relations between the two countries was insufficient keeping in view the existing capacities and cultural closeness between the two sides.

“Although the two countries have signed a preferential trade agreement a few years ago, none of them has used this opportunity properly,” Nisar regretted.

There are growing realization that the US sanctions against Iran are a major part of the obstacles to the development of economic cooperation between the two countries, and both sides need to take serious measures to resolve this issue. 

During the visit to Pakistan, the Iranian delegation also met with Arif Ahmed Khan, Chief Executive, Trade Development Authority of Pakistan (TDAP) in Karachi.

In the meeting, the two sides emphasized the need to use solutions such as the preferential trade agreement, free trade agreement, and removing customs barriers for boosting trade relations between the two countries. 

Speaking on this occasion, the head of the Tehran chamber pointed out some of the obstacles in the development of economic cooperation between the two countries. Annual trade between Iran and Pakistan is as paltry as US$1.5 billion. 

Ahmad Khan noted that both Iranian and Pakistani authorities should realize that the development of trans-regional trade is subject to a boom in regional trade. Therefore, the two countries must take operational steps to improve trade relations.

Why is war in Iraq still going on, despite the massive economic costs?

The war in Iraq from the outset was very controversial in the United States and other Western countries.The opponents considered the cost of the war in Iraq as a heavy burden on the US taxpayers and wanted to prevent the invasion of Iraq in 2003, and have called for a halt to the war in Iraq repeatedly since its beginning.

Lately, various US groups and institutions have rallied to highlight this issue once again. “The Costs of War Project” is one of the research projects on the costs of the war in Iraq that begun its evaluation of the costs since 2011. The project is being observed and managed by Dr. Neta C. Crawford, Professor and Chair of Political Science at Boston University, examining the key features and effects of the Iraq War on the federal budget. 

According to the latest report says that even if the US administration decides to pull out all of its troops in Iraq immediately, the war has already cost US$1,922 billion to the US tax payers voters from 2003 to the end of 2019. This amount not only includes funding appropriated by the US Department of Defense (DoD) for the war, but also the costs of the care of Iraq War veterans and interests on debt incurred for the 16 years of the US military's involvement in the country. 

The DoD had allotted approximately US$838 billion for military operations in Iraq from the fiscal year 2003 to 2019, including operations fighting ISIS in Iraq and Syria. Aside from the Defense Department costs, the State Department added approximately US$59 billion to the total costs of the Iraq War for The United States Agency for International Development (USAID) on Iraq and Syria. Since 9/11 attacks, about US$4.1 billion has been spent on medical and disability care of war veterans and compensation. 

These costs came at the time when the Pentagon has been trying to cut its expenditures for the past decade after its annual US$140 billion funds for the Iraq War heightened in 2008. In some cases, Congress has appropriated funding required for the war in Iraq apart from previous approved plans.

It is worth mentioning that the EU budget with 27 member countries and a population of 446 million people was set at US$175 billion in 2018. Therefore, a question is being asked, why is the war in Iraq still going on, despite the massive economic costs?

Some experts consider the ideological orientation of US foreign policy to be one of the main reasons for the continued war in Iraq. From this point of view, Washington is trying to confront its ideological opponents rather than adopting short-term approach toward issues and the costs and benefits of the implementation of its policies.

On top of all Washington considers Islamic Republic of Iran as its most important ideological opponent, which has been openly defying the US policies. Therefore, White House leaders find it necessary to continue the war in Iraq to confront Iran.

Therefore, withdrawal of US troops from Iraq is being considered as a major defeat for the United States. That is the reason the US continues to insist on maintaining its presence and even expanding its military bases in Iraq, despite the massive financial costs and the Iraqi parliament’s resolution for expulsion of foreign troops. 

Washington knows it very well that the withdrawal of its troops from Iraq will be taken as a sign of its defeat. It also knows that this defeat will be the opposite of the "America First" populist slogan.

Need to end Saudi-Iran animosity

One completely fails to understand why even a thought of ending Saudi-Iranian animosity make the supporters of monarch jittery. If one could recollect lately Iraq made an attempt to ease tension between the two arc enemies, but turmoil was created in Iraq. Soon after two top military strategist, one each from Iran and Iraq were killed, the probability of war in the region increased manifold.

Recently, Iranian Foreign Minister Mohammad Javad Zarif, who traveled to Germany to attend the 2020 Munich Security Conference, said that after the martyrdom of commander Soleimani, we received a message from Saudi Arabia calling on talks with Iran. Zarif also reiterated that although he replied to the Saudis' response, he received no further messages.

Following the remarks by the Iranian foreign minister, Saudi Foreign Minister, Prince Faisal bin Farhan Al Saud claimed that Riyadh had not sent any private messages to Tehran. On the issue of talks between Iran and Saudi Arabia, there seem divergent thoughts, which must be explored to end the enomsity.

First, it is being said that Saudi Arabia is trying to compare the dialogue between Riyadh and Tehran with the US-Iran negotiation and is constantly changing its stance on Iran. The nature of the negotiations between Iran and the US differs from that between Iran and Saudi Arabia. Iran has repeatedly stated that it is willing to hold talks with the Saudis without any preconditions, as the proximity of the two countries is in favor of stabilizing the region and reducing tensions.

Second, the Saudis have always set mostly general and vague preconditions for starting talks with Iran, such as the need for Iran to change its behavior in the region. The foreign policies of the countries are defined by their foreign interests, so Saudi Arabia expects to change all of Iran's behavior and policies in the region, which is totally inappropriate.

Third, Saudi officials have been at odds over developments in the region; on the one hand, they know that the US and the West cannot provide the country’s security forever, which led Riyadh to the dialogue with Tehran, and on the other hand, they are still looking forward U. support. The recent regional developments have led Saudi Arabia to face new developments in the region.

Fourth, remarks by Zarif indicate that the Saudis are deeply afraid of escalating tensions in the region. Whenever military tensions are heightened in the region the Saudis reduce their provocative actions against Iran, but once the situation is settled down they resume their actions. The most notable sample of this behavior is Saudi Arabia’s reaction to the assassination of General Qassem Soleimani, as it was trying to not take a provocative stance against Iran.

Fifth, Saudi Arabia needs to restore its ties with Iran to deal with the regional cases. The first issue is the attrition warfare in Yemen that began in March 2015 with the invasion of the Saudi-led coalition and has continued until now. There are clear thoughts a war that had nothing but destruction for the Yemeni people and defeats and lots of military costs for the Saudis.

In its recent actions toward Damascus, Saudi Arabia has shown that it is seeking to improve its relations with Syria, a country that has strong ties with Iran and is a part of the axis of resistance. In this regard, Syria’s permanent representative to the United Nations, Bashar Al-Jaafari, recently attended a special ceremony held in honor of the Saudi Minister of State in New York, Fahad Bin Abdullah Al Mubarak, which drew lots of controversy.

Diplomatic sources in New York said the Saudi delegate to the UN, Abdullah bin Yahya al-Muallami had intentionally met with Bashar al-Jaafari during the visit, which was unexpected for the attendees. During their celebration Saudi officials expressed their love for Syria and said that it remained in their hearts, adding that what had occurred between the two countries was nothing but a summer cloud that will inevitably pass.

Ankara has become a relentless rival to Riyadh in all aspects these days. This issue has been worsened following the Persian Gulf crisis, Saudi Arabia's cut of relations with Qatar and the assassination of Jamal Khashoggi inside the Saudi consulate in Istanbul. Saudi Arabia needs to improve its relations with Iran to be able to prevent Turkish influence, especially in African countries and Libya.

Improving relations between Iran and Saudi Arabia can undoubtedly be helpful in settling the crisis between Saudi Arabia and Qatar, as Doha has gotten closer to Tehran and Ankara since the crisis.

 The point is that some parties will certainly be dissatisfied with the close relations between Iran and Saudi Arabia and will make every effort to obstruct it.

United States not likely to ever pull its troops from Afghanistan

I wrote a blog as back as in August 2012 exploring the probability of United States pulling its troops from Afghanistan. Despite being a novice at that time, my conclusion was that troops may never be pulled out. The history confirms my prediction was right.

My biggest argument was that the objective of sending troops to Afghanistan was not to liberate the Afghan from the control of USSR or Taliban, but to occupy it for economical and political gains. It must also be kept in mind that there was no justification for attacking Afghanistan as no Afghan was involved in 9/11, directly or indirectly.

One could find only two reasons for the continued occupation of Afghanistan by the US troops: 1) presence of valuable metals and other bounties and 2) use of the country as a military base against adjoining countries, i.e. Pakistan, Iran, China and India. The persistent state of war in Afghanistan will neither allow rest of the world to sell its goods to Central Asian countries nor buy crude oil and gas from the countries that were previously part of USSR.

Being the sole surviving super power, United States seems adamant at maintaining its military dominance by brining countries all around the world under its hegemony. Afghanistan has an important place in the US foreign policy due to common borders with Pakistan, Iran, China and many oil and gas rich Central Asian countries.

Since Islamic Revolution in Iran, United States has been projecting the country as the biggest threat to the world. Over the years, despite remaining under economic sanctions, Iran has emerged as one of the major challenger for the US hegemony in the region. It seems certain that United States is waiting for the right opportunity to attack Iran to destroy its nuclear assets. United States needs a military base near Iran and Afghanistan is the ideal option.  The two countries share long mountainous border, which is virtually impossible to monitor and defend.

Lately, China has also emerged as the second superpower and started challenging US hegemony. While United States has been controlling countries through its military might, China is using the other alternative, its economic supremacy. To contain China, United States has already created its outposts in Taiwan and South Korea, but Afghanistan offers the best option, a land route.

Afghanistan has remained a hostage of super powers since Cold War era. It is no secret that if USSR had used Afghanistan, US have been occupying patronized the country for the last two decades. Having failed in bringing regime change in Iran in last four decades, the super power is consolidating its position in Afghanistan.

The USSR believed that getting control over Afghanistan could give it a perfect foot hold in South Asia and the Middle East. There are no warm water ports in Afghanistan, but getting control over the Khyber Pass (located in Pakistan) an ancient trade route would bring it closer to Iran and Turkey on the West and Pakistan on the South, all with warm water ports.

The recent history proves that the United States has got too desperate in establishing its hegemony in South Asia and MENA. Afghanistan appears to be the most ideal outpost. Therefore, hoping that the United States will pull its troops from Afghanistan is hoping against the hopes. 

Iran and India negotiating more on Preferential Trade Agreement

Lately, Iran and India held a new round of negotiations on signing a preferential trade agreement (PTA) between the two sides. Initiated in 2016, the negotiation on this agreement is said to be in the final stages, and the two sides hope that the list of the commodity items entitled to preferential tariffs will be finalized in the next round of the talks.

During the fourth round of the negotiations, which was also held in Tehran, the two countries discussed draft text of the agreement which is to reduce tariff rates by 25% to 45%. In the fifth round of the talks held at Iran’s Trade Promotion Organization (TPO), some clauses of the pact remaining from the previous talks were reviewed and discussed, said Hossein Bamiri, the secretary of TPO’s Iran-India Desk.

As reported by TPO, Iranian delegation participating in this round included Reza Seyed Aqazadeh, director general of TPO’s Asia-Pacific Office, Hossein Bamiri, the secretary of TPO’s Iran-India Desk, Mir-Hadi Seyedi, TPO’s advisor in international affairs, Zahed Talaban, international expert at TPO, and representatives from the ministries of agriculture and health, Veterinary Organization, National Standard Organization, and some other organizations.

Signing the preferential trade agreement lays a competition ground for Iranian companies to enter the Indian market, Bamiri said, adding, “In this round of the talks we tried to reduce tariffs for those commodity items that we have high potential in their production and export.”

“If tariffs are reduced and other extant barriers are removed, we can strengthen our entrance to the Indian market through the PTA”, the official emphasized.

Iran’s major exports to India are oil, fertilizers and chemicals while imports include cereals, tea, coffee, spices and organic chemicals.

The value of India’s exports to Iran stood at US$2.65 billion in 2018, while imports were valued at US$11.11 billion. The trade imbalance is mainly because of India's import of oil from Iran.

Signing this PTA is of great significance for India, as the country will be able to diversify its export basket which is now limited to agricultural products, Trade Promotion Council of India (TPCI) Chairman Mohit Singla has declared.

"With a carefully designed PTA, strategic products such as leather, textiles and readymade garments, which attract very high duties in Iran can become naturally competitive and India will be able to leverage its export strengths," The Economic Times reported quoting Singla.

Preferential trade between the two countries is a priority in India’s future plans for trade with Iran, according to Indian Ambassador to Tehran Gaddam Dharmendra.

The two countries were supposed to finalize the preferential trade agreement by the end of 2019, a target that has not come true in due time.

Addressing an Interactive Session on Business Opportunities in Iran held in New Delhi in last August, Iranian Ambassador to India Ali Chegeni had said, “Very few formalities remaining to be completed on this front will be accomplished shortly with 5th round of talks between the authorities of the two countries here in New Delhi before it becomes a reality by end of 2019.”

While the agreement has not been reached at the projected time, the two sides resolve to finalize it as soon as possible to further promote bilateral trade.