Ever Given to leave Suez Canal on 7th July

A giant container ship that blocked Egypt’s Suez Canal for nearly a week in March this year will be released on 7^th July following an agreement between authorities and the vessel’s owners, said Suez Canal Authority (SCA) on Sunday.

A ceremony for the signing of the settlement ending the dispute over the 400-meter-long Ever Given will be held on Wednesday, and the ship will be allowed to depart.

Earlier, Stann of London, the attorneys for the ship’s owner and insurers, said that a formal solution had been agreed upon and that preparations for its departure were being made.

Neither the SCA nor the attorneys provided details of the settlement. But the agreement marks an end to a dispute that arose after the Ever Given was freed after getting stuck in the vital waterway in March. The incident roiled global shipping markets.

The SCA had initially sought over US$900 million in damages and compensation that included recovering expenses related to freeing the ship, lost revenue and other costs and claims. The figure was later lowered to US$550 million.

Japan’s Shoei Kisen Kaisha the owner, and the ship’s insurers initially offered US$150 million.

The SCA brought the matter to an Egyptian court, which ordered the seizure of the ship pending a resolution of the dispute. Authorities had said that they were eager to reach an out-of-court agreement and that the ship would be allowed to leave once such a deal was reached.

The ship is being held in the Great Bitter Lake -- about halfway along the canal.

Saving Lebanon from total collapse

Reportedly, Lebanon is hurtling toward total collapse. The World Bank believes that the country’s financial and economic crisis is one of the severest the world has witnessed in the past 150 years. 

A number of factors have contributed to Lebanon’s disastrous situation, but a major cause of its troubles is the dominant position that Iran has managed to acquire in the nation’s political life, by way of its proxy Hezbollah. But now that Iran is undergoing a severe economic crisis of its own, a window of opportunity may have opened for its malign influence over Lebanon to be weakened, if not entirely eliminated.

Lebanon is on the verge of a political, economic and social catastrophe. It has been without a government for eight months. Food and medicines are in short supply, electricity cuts last for much of the day, while people are queuing for hours at gas stations and, as they clash over who gets to fill their tank first, fist fights have turned into shootings. Now criminal gangs are moving in to exploit the situation. A representative of the union for fuel distributors and gas stations in Lebanon said, “Individuals claiming to be in charge of security at gas stations are using extortion… The owners of over 140 gas stations are refusing to accept deliveries of gasoline because they have been exposed to extortion and beatings.”

On 22^nd June the acting administration raised the price of bread for the fifth time in a year.  The latest increase — 18 percent from the last raise in February — was the result of the decision to end subsidies on sugar and yeast, which both go up in price in consequence.  

In June the World Bank issued a report on the rapidly deteriorating situation. It believes that more than half of Lebanon‘s population may have been pushed below the poverty line. While the official rate of exchange for one US dollar is 1,507 Lebanese pounds, the banks do not permit currency conversion or foreign fund transfers and so dollars are simply not available at the official rate. On 25^th June the rate on the black market was 16,450 Lebanese pounds. The country’s gross domestic product, close to US$55 billion in 2018, plummeted to some US$33 billion last year.  Foreign currency reserves are at an all-time low. 

The World Bank pulls no punches in its criticism of Lebanon’s political elite in which Hezbollah features so strongly. It accuses them of deliberately failing to tackle the country’s many problems, which include the economic and financial crisis, the COVID pandemic and last year’s Port of Beirut explosion.  The inaction, says the report, is due to failure to agree on policy initiatives but also a continuing political consensus that defends “a bankrupt economic system, which benefited a few for so long”.

Following the explosion in Port Beirut in August 2020, Saad Hariri was named by the Lebanese parliament as prime minister designate, and charged with forming a new government. So far, because of an ongoing dispute between him and President Michel Aoun over the composition of the new administration, he has failed to do so.  

Hariri wants to assemble a technocrat cabinet dedicated to enacting the reforms long demanded by the World Bank, the International Monetary Fund and donor countries such as the United States and France. In March he stormed out of a meeting with Aoun, telling reporters that the President had sent him a proposed list of ministers and asked him to sign off on them. Hariri had rejected the request as unconstitutional.  Aoun is a strong supporter of Hezbollah, the Iran-backed group that dominates Lebanese politics and underpins his presidency. According to Hariri, Aoun was pushing for a third of all cabinet seats for his Hezbollah allies and their supporters, which would give them, veto power over government decisions.

The shoeing into power in Iran on 18^th June of a hard-liner, Ebrahim Raisi, as its new president can be seen as a desperate effort by the ruling élite to shore up the power of a regime in economic freefall.  The value of the Rial, the national currency, has halved over the past two years, inflation is running at 50% and the country is experiencing mass unemployment. Popular protests are bursting out in major towns and cities all over Iran.

Hezbollah’s popularity among the Shia population owes much to the vast sums it has spent in its social and health programs.  The collapse of the Iranian economy means that the regime is no longer able to pay its Hezbollah proxy in dollars.  Its financial support is now provided in the rapidly depreciating Lebanese currency. 

Bahaa Hariri, the brother of Lebanon’s designated Prime Minister Saad, is a billionaire businessman.  He is reported to believe that if Iran cannot continue with its payments, support for Hezbollah will quickly collapse. “Some die-hard supporters will maintain their allegiance to Hezbollah,” he is reported as saying, “but many others will no longer be prepared to support the movement if the payments stop.”  

One failing economy is attempting to support another, while simultaneously trying to maintain the political status quo.  That is scarcely a sustainable situation.  If Iran’s deteriorating economic position results in Hezbollah losing power in Lebanon, this might provide the opportunity for Hariri to assemble his technocrat cabinet and institute the economic reforms necessary to pull the country back from the brink of disaster. 

Israeli cargo ship hit in Indian Ocean

According to initial media reports, an Israeli-owned cargo ship was struck by an ‘unknown weapon’ in the northern Indian Ocean, causing a fire onboard the vessel. The reports claims that the Israeli ship was anchored in the port of Jeddah before moving towards the coast of the Emirates, adding that no one has claimed responsibility for this targeting so far.

The ship identified as Tyndall, a Liberian-flagged cargo ship. The vessel was initially reported to be partly owned by Israeli businessman Eyal Ofer, Israeli sources later confirmed that the ship’s crew is not from Israel.

Tyndall is owned by Zodiac Maritime. A source familiar with Zodiac Maritime's fleet said the company had sold the CSAV Tyndall several months ago and that no such incident had taken place involving any of its vessels.

It was reported that the ship was sold two months ago, and was no longer under the ownership of the Ofer family, or any Israeli company.

Ship-tracking data from Refinitiv Eikon showed a vessel called the CSAV Tyndall that was last docked in Jeddah was off the coast of Dubai.

Israel has been carrying out its “war-between-wars” against Iran for years, though it focused on weapons convoys from Iran to Hezbollah in Syria. But, according to foreign reports, Israel began to attack ships carrying Iranian oil and weapons through the Mediterranean starting in 2019.

Several Israeli and Iranian vessels have been damaged in the middle of the sea in the maritime war-between-wars between the two countries.

According to foreign reports Israel has hit tankers and ships transporting oil and weapons to Hezbollah. Several Israeli-owned vessels have also been struck in the Indian Ocean, and while there was damage, none sank.

China and India wooing Bangladesh

Bangladesh, which was once dismissed by former US Secretary of State, Henry Kissinger as a “basket case” after its birth in 1971, is en route to becoming one of the Asian Tigers. Friction between China and India is elevating Bangladesh’s importance. 

Located at the head of the Bay of Bengal, Bangladesh is in a key strategic position, with both Asian powers eyeing to build ports in the country to boost their presence in the Indian Ocean region.

India-Bangladesh relations have witnessed ups and downs. Since the government led by Prime Minister Sheikh Hasina came to power in 2009, ties with India have greatly improved. Bangladesh is now India’s largest trading partner in the sub-continent, with bilateral trade reported at US$9.5 billion in 2019-20.

Both governments have undertaken initiatives for boosting connectivity. Cooperation in the power sector has resulted in private Indian companies investing US$9 billion in Bangladesh. However, unresolved water-sharing issues, India’s border killings of Bangladeshi nationals, controversial laws on Muslims in India and expulsion of alleged illegal Bangladeshi migrants remain sources of friction.

China is considered an ‘all-weather friend’ by many in Bangladesh. A Chinese move to exempt tariffs for 97% of Bangladeshi products is a welcome boost in Covid-stricken times for bilateral trade, which was reported at US$18 billion in 2019. Bangladesh now accounts for 20% of China’s arms sales. Bangladesh is also the recipient of billions in loans and other assistance under China’s Belt and Road Initiative (BRI).

Bangladesh is building its third largest Payra deep-sea port with Chinese assistance while opening up Mongla and Chattogram ports to the Chinese, after access was granted to India. A US$250 million contract to build an airport terminal in Sylhet city was awarded to China over Indian competitors.

As India drags its feet on water-sharing negotiations for the Teesta River, the lifeline to north-western Bangladesh, “Teesta River Comprehensive Management and Restoration Project” was inked last year with support from China for a US$ one billion engineering scheme. That said, moves by Bangladesh to assert cost control on some Chinese-backed rail projects have led to friction.

Earlier last month, India’s External Affairs Minister S. Jaishankar spoke to his Sri Lankan counterpart Dinesh Gunawardena amid Delhi’s growing concerns over the proposed Chinese-funded Colombo Port City project.

Despite India’s support for Bhutan against China over a still-unresolved border dispute, it has not stilled rumblings about reducing Bhutan’s dependence on India in the Himalayan kingdom. In the Maldives, although there has been a renewal of an ‘India First’ policy, China’s expanding footprint there, such as the US$200 million China-Maldives Friendship Bridge, has ensured its position in the country.

With the withdrawal of US troops from Afghanistan, the stakes for both India and China’s regional security concerns have increased. Though, India enjoys cordial relations with the current Afghan regime, China has the advantage of deeper pockets and good ties with Pakistan, a key player in Afghan geopolitics. While Beijing has diplomatic ties with Kabul, it has also been hedging its bets by building up contacts with the Afghan Taliban.

The wooing of Bangladesh by China and India is part of a bigger tussle over regional and maritime security. China, whose economy is heavily dependent on energy exports shipped from the Middle East, is driven by its need to ensure it has friendly relations with littoral states around the Indian Ocean.

From India’s perspective, the building of Chinese relationships—and the ports and other facilities that come with it—with key countries along the maritime route is a threat, with the likes of Pakistan, Sri Lanka, Bangladesh and the Maldives being part of a strategic ‘string of pearls’ to encircle India and choke its power projection.

Seen in this light, China’s BRI is a tool to augment its foothold in South Asia by creating economic dependence, as it did in Sri Lanka. Chinese support for Bangladesh under the BRI framework, it is argued, is part of the same game to undermine India’s security and strategic interests.

India too has been wooing Bangladesh in line with its ‘Act East’ policy. Among other things, Delhi is trying to get Dhaka to join the Indo-Pacific ‘QUAD’, an informal strategic alliance involving the United States, India, Japan, and Australia.

This has elicited a strong reaction from Beijing, with the Chinese Defence Minister Wei Fenghe on a recent visit to Dhaka calling for joint efforts to resist ‘powers from outside the region setting up a military alliance in South Asia’.

Bangladesh has been deftly balancing its relations with the two Asian giants, making it clear that it would not be choosing between the two. While trying to address India’s geopolitical concerns, Bangladesh has steadfastly maintained its right to maintain economic cooperation as well as close defence ties with China.

While China has strengthened its economic ties with Bangladesh by bankrolling development projects, India has the benefit of a shared history, values, culture and connectivity with Bangladesh.

The onus is now on the two giants to prove whose strategic objectives are more aligned with the long-term interests of Bangladesh. For now, the country can enjoy the attention it gets from the two rivals. By playing its cards wisely, South Asia’s stellar performer can safeguard its economic and strategic interests.

Bennett must usher paradigm shift in foreign policy of Israel

Naftali Bennett government has been endowed a unique opportunity to bring positive changes in the foreign policy of Israel. A perception is being created that this government will be ineffective due to the ideological differences among its member parties. 

It is also believed that Israel’s foreign policy was distorted under Benjamin Netanyahu regime and his departure from office will create positive diplomatic momentum. This offers fertile ground for action on which the government could agree despite its diversity.

Despite Netanyahu achievements, Abraham Accords on top, his acts created deep antagonism, especially on the part of leaders of liberal democracies. He was regarded as challenging the fundamental principles of governance and democracy, supporting racist parties in Israel and abroad, and undermining prospects of a two-state solution.

Netanyahu’s credibility was questioned in Washington, Paris, Amman and perhaps in other capitals. His aggressive approach prompted loud clashes with critics of Israel, even with those inherently enjoying friendly relations. It also became evident that during the recent political crisis Netanyahu’s actions were driven, first and foremost, by his desire to remain in power.

This criticism was generally voiced behind the closed doors, but it surfaced occasionally and created much-publicized crises. Netanyahu’s oust enable the new government to improve diplomatic relations with the many countries, particularly the Muslim world.

However, the foreign policy potential of the new coalition does not stem only from Netanyahu’s absence. Yair Lapid serving as foreign minister has long been preparing himself for the job. He has entered the office with experience, contacts and plans to revamp Israeli diplomacy.

Most notably, he clearly has a strong desire to strengthen the Ministry of Foreign Affairs (MFA) and its public standing. The approval of appointment of 35 ambassadors could be the biggest achievements, which Netanyahu has been holding up for over six months.

The participation of the Labor and Meretz parties in the new government will also contribute to restoring diplomacy to its rightful place in Israeli decision-making. Members of Knesset from both parties have challenged Netanyahu’s foreign policy approach repeatedly and sought to advance new paradigms and guiding principles shaping a pro-peace, multi-regional, internationalist, modern and inclusive Israeli foreign policy.

Labor and Meretz will be in charge of the Ministry of Regional Cooperation and the Ministry of Diaspora Affairs in the new government, both with distinct diplomacy components, as well as the Ministries of Health and Environmental Protection, both of which deal with issues high on the global diplomatic agenda to which Israel has much to contribute.

Their voices are also expected to be heard and exert influence regarding the Palestinian issue. In addition, the election of Israel’s new President Isaac Herzog – a pro-peace, liberal democratic leader with extensive diplomatic experience and who enjoys international respect – will bolster the assets of the new Israeli leadership and its capabilities in the international arena.

There are reasons to believe that the coalition parties can reach agreement on a series of urgent foreign policy goals that include: 1) rebuilding trust with the Jordanian monarch and restoring Israel’s strategically important ties with the kingdom; 2) deepening ties with the US Democratic Party to restore bipartisan support for Israel; 3) leveraging the normalization agreements with Arab states to forge bilateral and regional cooperation; 4) improving relations with European Union and renewing the high-level dialogue (Association Council) which has not convened since 2012; 5) leveraging opportunities in the Eastern Mediterranean, including restoring relations with Turkey and advancing maritime border negotiations with Lebanon and 6) strengthening the moderate Palestinian leadership, along with restoring Israeli-Palestinian dialogue channels to advance mutual interests.

Although, the new government is not likely to achieve a final-status peace agreement with the Palestinians, which should be a top foreign policy and national security for Israel, it could be instrumental in mending and healing Israeli foreign policy and leaving a significant diplomatic legacy that will better position Israel in the region and internationally.

Russian apprehensions about QUAD

With the spotlight recently on Russia’s relations with the United States and Europe, following the meeting between US President Joe Biden and Russian President Vladimir Putin and the G7 and NATO summits, less attention has been paid to the complex challenges facing Russia in Asia.

After the inaugural QUAD summit between the leaders of Japan, Australia, India and the US in mid-March this year, Russian Foreign Minister Sergey Lavrov visited China, South Korea, India and Pakistan to underscore Russia’s continuing relevance.

Lavrov’s talks in New Delhi aimed at bolstering Russia–India ties. He underlined Moscow’s concerns about the QUAD, repeating Russia’s opposition to the creation of security blocs in the Asian region.

In December last year, Lavrov had sharply criticized the QUAD as part of a US-led ‘persistent, aggressive and devious’ policy intended to ensnare India in its ‘anti-China games’ and designed to undermine the close partnership between Moscow and New Delhi. Russia also claims the QUAD is divisive and undercuts ASEAN centrality.

First and foremost among Russia’s priorities in Asia is China. The close and growing strategic partnership between Moscow and Beijing reflects political affinities, economic complementarities and foreign policy convergences. But it remains a pragmatic, transactional relationship, and Moscow is conscious that growing asymmetries make it the junior partner.

Russia has sought to balance its close ties with China by expanding relations with other Asian states, especially India but also Japan and ASEAN states. Little headway has been made with Japan, with the intractable Kuril Islands dispute impeding progress. Efforts to intensify economic links, especially energy and arms sales, with partners like Vietnam and Indonesia have made more headway.

Underpinning its Asian swivel, Russia has promoted its Greater Eurasian Partnership idea as a platform for engagement with the wider Asian region, based on institutions such as the Eurasian Economic Union and the Shanghai Cooperation Organization—in which Russia plays a leading role. Moscow has advocated greater cooperation between the EEU and ASEAN, and supports observer status for the EEU at APEC. Russia has sought to leverage its geographical location to promote its relevance to greater connectivity between Asia and Europe.

Moscow fears that the emerging Indo-Pacific strategic concept, especially closer security cooperation within QUAD, jeopardizes its position in Asia.

Conceptually, the Indo-Pacific construct is a maritime-based cooperative framework, as opposed to the continental Eurasian-centered vision for regional integration promoted by Russia. Whereas the Eurasian cooperative model would confer a leading role on Russia, it’s not clear to Moscow how it might fit into the Indo-Pacific framework.

Moscow’s concern is that QUAD, perceived as a US-orchestrated security coalition against China, will complicate Russia’s efforts to strike some balance in its relationships with China and other key Asian regional countries, especially India.

If the QUAD gains momentum, drawing in Asia–Pacific players such as South Korea and ASEAN, Russia fears that it will become more isolated and be compelled into greater dependence on China than it would like.

India is a particular concern. Moscow knows that New Delhi’s growing anxieties about Beijing, including military rivalry, underpin India’s involvement in the QUAD. Moscow believes this will encourage New Delhi’s tilt towards closer cooperation with the US, weakening Russia’s own ‘special and privileged partnership’ with India.

India has tried to mollify Russia, talking up the Indo-Pacific as a principles-based, inclusive and unifying construct and encouraging Moscow to view it positively as an opportunity—but to no avail.

Moscow remains suspicious of where India is heading. While Russia is an important partner for India, especially in energy and defence, the overall relationship remains thin, compared to India’s growing and diverse connections with the US and others.

In this context, Lavrov’s subsequent visit to Pakistan—his first in a decade—was a clear warning to New Delhi. During talks in Islamabad, Lavrov discussed expanding Russian security assistance to the Pakistan military.

Alive to potential marginalization, Moscow will strive to bolster its relevance and importance as a credible major actor in the wider Asian region. Expect further intense Russian bilateral and regional diplomacy over coming months, as well as efforts to diversify ties with other Asian partners, such as Bangladesh, Pakistan and Myanmar. Moscow will try to lift its modest military presence and influence in the Indian Ocean, building on the recent naval basing agreement with Sudan and military exercises with India, Iran and Pakistan.

China Communist Party Marks Centenary

China will not allow itself to be bullied and anyone who tries will face “broken heads and bloodshed in front of the iron Great Wall of the 1.4 billion Chinese people,” President Xi Jinping said at a mass gathering Thursday to mark the centenary of the ruling Communist Party.

Wearing a grey buttoned-up suit of the type worn by Mao Zedong, Xi spoke from the balcony of Tiananmen Gate, emphasizing the party’s role in bringing China to global prominence and saying it would never be divided from the people.

Xi, who is head of the party and leader of the world’s largest armed forces also, said China had restored order in Hong Kong following anti-government protests in the semi-autonomous city in 2019 and reiterated Beijing’s determination to bring self-governing Taiwan under its control.

He received the biggest applause when he described the party as the force that had restored China’s dignity and turned it into the world’s second largest economy since taking power amid civil war in 1949.

“The Chinese people are a people with a strong sense of pride and self-confidence,” Xi said. “We have never bullied, oppressed or enslaved the people of another nation, not in the past, during the present or in the future.”

“At the same time, the Chinese people will absolutely not allow any foreign force to bully, oppress or enslave us and anyone who attempts to do so will face broken heads and bloodshed in front of the iron Great Wall of the 1.4 billion Chinese people,” Xi said.

Xi’s comments come as China is enmeshed in a deepening rivalry with the United States for global power status and has clashed with India along their disputed border. China also claims unpopulated islands held by Japan and almost the entire South China Sea, and it threatens to invade Taiwan, with which the US has boosted relations and military sales.

Beijing faces criticism that it is guilty of abusing its power at home, including detaining more than 1 million Uyghurs and other Muslim minorities for political reeducation in the northwestern region of Xinjiang, and for imprisoning or intimidating into silence those it sees as potential opponents from Tibet to Hong Kong.

Thursday’s events are the climax of weeks of ceremonies and displays praising the role of the Communist Party in bringing vast improvements in quality of life at home and restoring China’s economic, political and military influence abroad. Those improvements coupled with harshly repressing opponents have helped the party hold power despite its 92 million members accounting for just over 6% of China’s population.

While the progress dates mainly from economic reforms enacted by Deng Xiaoping four decades ago, the celebrations spotlight the role of Xi, who has established himself as China’s most powerful leader since Mao. Xi mentioned the contributions of past leaders in his address, but his claims to have attained breakthroughs in poverty alleviation and economic progress while raising China’s global profile and standing up to the West were front and center.

Xi, 68, has eliminated limits on his time in office and is expected to begin a third five-year term as party leader next year. In seeking to capture more gains for the party on the world stage, Xi is setting up China for a protracted struggle with the US, said Robert Sutter of George Washington University’s Elliot School of International Affairs.

 “In foreign affairs it involves growth of wealth and power, with China unencumbered as it pursues its very self-centered policy goals at the expense of others and of the prevailing world order,” Sutter said.

While the party faces no serious challenges to its rule, the legitimacy of its rule has been undercut by past disasters such as the mass famine of the Great Leap Forward in the late 1950s and early 1960s, the Cultural Revolution’s violent class warfare and xenophobia, and the 1989 bloodshed at Tiananmen Square.

The party’s official narrative glosses over past mistakes or current controversies, emphasizing development, stability and efficiency — including its success in controlling COVID-19 at home — in contrast to what it portrays as political bickering, bungling of pandemic control measures and social strife in multiparty democracies.

Xi’s comments Thursday on bullying, oppression and enslavement will elicit historical memories among Chinese of the 19th century Opium Wars that led to foreign nations gaining special legal and economic privileges in China, as well as Japan’s brutal invasion and occupation of much of the country during the 1930s and 1940s.

Xi said those experiences had made the party’s rise to power inevitable as the only force truly able to rid China of foreign meddling and restore its global stature.

Xi said the party would retain absolute control over its military wing, the People’s Liberation Army, which now has the world’s second-largest annual budget after the US armed forces and has been adding aircraft carriers and sophisticated new aircraft, showcased in a flyover at the start of the ceremony featuring a squadron of China’s J-20 stealth fighters.

“We will turn the people’s military into a world-class military, with even stronger capabilities and even more reliable means to safeguard the nation’s sovereignty, security and development interests,” Xi said.

Thursday’s rally recalled the mass events at which Mao would greet hundreds of thousands of Red Guards in Tiananmen Square during the chaotic 1966-76 Cultural Revolution, a time many older Chinese would prefer to forget.