European countries agree on mechanism to pay for Russian gas in roubles

European energy firms can open special accounts with Gazprombank to pay for Russian gas, a key demand by Moscow, without breaching sanctions if transferring euros or dollars to them fulfils their contractual obligations, the German Economy Ministry said.

Russia cut gas supplies to Bulgaria and Poland this week for failing to pay in roubles, raising fears that other countries could be next.

Moscow's decree says Gazprombank would open special "K" type accounts for gas payments from foreign buyers. An EU company would transfer foreign currency into one such account, and then a Russian bank would convert the payment to roubles and transfer the roubles to another "K" account belonging to Gazprom.

European Union countries remain divided over whether sanctions would be broken if they engage with Russia's roubles payment demand.

Russia's decree said the buyer's obligation would be considered fulfilled only when the roubles arrived in Gazprom's account.

"There are European guidelines on payment modalities, which form the framework for us and which we adhere to," a spokesperson for Germany's Economy Ministry said on Friday in an e-mailed statement.

"According to these guidelines, account K, to which payment is made in euros/dollars, is in line with the sanctions if companies declare that contracts have been fulfilled with payment in euros or dollars."

A government source said that it was irrelevant in which country the K account is opened as long as the bank in question was not on any sanctions list.

The European Commission will provide EU countries with extra guidance on whether they can keep paying for Russian gas without breaching the bloc's sanctions, a Commission official told Reuters on Friday.

Companies and countries were at odds over Moscow's rouble-for-gas payment system on Friday, while European officials promised more guidance on whether buying Russian gas can comply with sanctions and Russia said it saw no problem with its plan.

It did not specify whether companies could do this and also open a rouble account, as requested by Russia, without being in breach of EU sanctions. 

Denmark's Orsted said it has no intention of opening a rouble account in Russia, although it declined to comment on payment in other currencies. Italy's ENI also said it had not opened an account in roubles.

Under Russia's mechanism, buyers are obliged to deposit euros or dollars into an account at privately-owned Russian bank Gazprombank, which has then to convert them into roubles, place the proceeds in another account owned by the foreign buyer and transfer the payment in Russian currency to Gazprom.

EU energy ministers will on Monday hold an emergency meeting to discuss their response to Russia's demand.

The European Commission, the EU executive, has already said countries may be able to make sanctions-compliant payments provided they declare their payments are completed once it has been made in euros and before it is converted into roubles.

EU countries, however, have said they want more clarity, while Germany, the bloc's biggest economy and among the most dependent on Russian gas, says it cannot afford to stop buying Russian supplies, even though it is taking steps to find alternative sources of energy.

A European Commission official told Reuters on Friday the executive will provide EU countries with extra guidance following complaints from some countries that ambiguity would leave different countries reaching different interpretations of what they were allowed to do.

Russia on Friday said it saw no problem with its proposed system.

"If the established procedure for interaction between gas buyers and the authorized bank is observed by the buyer, and there are no problems for the authorized bank in terms of selling currency on the stock exchange due to restrictive measures on the part of foreign states, then there cannot be any obstacles to paying for and receiving natural gas," Russian Central Bank Governor Elvira Nabiullina said.

The rouble has to an extent benefited from Moscow's demand for roubles payment. The currency hit its highest level versus the euro in more than two years on Friday supported by capital controls as the central bank cut interest rates for the second time this month.

European gas prices have hit record levels since the invasion of Ukraine by Russia, Europe's top gas supplier, and were up slightly on Friday.

Central to the confusion on the part of the European buyers is whether Russia would only consider the payment to be complete after the gas-to-roubles conversion is done - a transaction that would involve Russia's central bank, which is subject to EU sanctions.

Speaking on condition of anonymity, an EU diplomat admitted a certain amount of ambiguity could be helpful as the bloc seeks to prevent any widening of divisions between countries, which have different levels of reliance on Russia and different deadlines to make payments.

"In the circumstances, a little bit of messiness might just be preferable," the diplomat said.

Poland and Bulgaria have contracts with Gazprom due to expire at the end of this year, which meant their search for alternative supplies was already advanced. Poland also has very healthy gas stocks around 77% full.

Austria’s OMV, which has a contract with Gazprom until 2040, said it was analyzing how a change could be implemented for it to pay in roubles without breaching sanctions when next payment is due in May.

United States has 40 military sites in Germany

This morning I was dismayed to read the news that the United States is training Ukrainian troops in Germany. I immediately clicked WIKIPEDIA to find some details. The bigger surprise was the United States has 40 military installations in Germany. Over the years more than 220 installations have been closed, mostly following the end of the Cold War in the 1990s.

The rationale behind the large number of closures is that the strategic functions of the bases, designed to serve as forward posts in any war against the USSR, are no longer relevant since the end of the Cold War era.

WIKIPEDIA has a list of United States military locations in Germany, both closed and still existing. To preserve originality, place names follow US Forces nomenclature as far as is reasonable. As the amount of data grew, it became necessary to list each garrison on two separate pages: List of American Military Sites in Southern Germany, List of American Military Sites in Northern Germany.

The associations were subordinate to the following supreme commands:

The US armed forces were initially organized as USFET (United States Forces European Theater) from August 01, 1945 to February 28, 1946 in Berlin and Frankfurt am Main, IG Farben Building. 

On March 15, 1947 they were reassigned to EUCOM (European Command) in Frankfurt, 1948 moved from Frankfurt to Heidelberg, Campbell Barracks. On January 01, 1950 reorganized as USAREUR (United States Army Europe). USAREUR was subordinate to USEUCOM (United States European Command), since 1967 in Stuttgart-Vaihingen, Patch Barracks.

The US Air Force was reorganized on August 16, 1945 from USSAF (US Strategic Air Forces) to USAFE (US Air Forces, Europe) in Wiesbaden, Lindsey Air Station, while still part of the US Army. 

Subordination to EUCOM was lifted in 1950 and1972 Transfer to Ramstein Air Base. 

USAFE was subordinate to USEUCOM (United States European Command), since 1967 in Stuttgart-Vaihingen, Patch Barracks.

The US nuclear weapons on German soil formed the backbone of the North Atlantic Alliance. They were the crucial military element of the Cold War.

The ability to use the nuclear arsenal and the will to ultimately use these weapons, conveyed to the opponent in a credible manner, formed the core element in the global bipolar conflict.

The 59th Ordnance Brigade in Pirmasens was responsible for the nuclear operational capability of the USA. Nuclear custody according to the principle of the two keys was the responsibility of the United States Army Field Artillery Detachments (USAFAD) - in the Nike associations United States Army Artillery Detachments (USAAD), which were subordinate to the United States Army Artillery Groups (USAAG) at corps level.

The detachments were with all nuclear-capable NATO allies on German soil from 1958 (Germany, Great Britain, Belgium, the Netherlands, Canada (until 1984) and also France until 1966 stationed.

The "Regency Net" system with the control center in Pirmasens was set up from 1976 to 1982 as the command and control network. 

In an emergency, Regency Net would have served to transmit "Emergency Action Messages" from CINCEUR (also SACEUR in personal union) for the release of nuclear weapons for the national partners. 

For the Air Force there was a similar organization with Munitions Support Squadrons (MUNSS) and a Munitions Maintenance Group in Ramstein.

 

United States training Ukrainian troops in Germany

Reportedly, the United States has started training Ukrainian troops on howitzer artillery systems and radars at US military installations in Germany, said a Pentagon spokesperson on Friday.   

The efforts will build on initial artillery training given to a small number of Ukrainian forces elsewhere, and will also include training on the radar systems and armored vehicles the US recently pledged to Kyiv, press secretary John Kirby told reporters. 

The Florida National Guard will provide the bulk of the training, as those forces had been training Ukrainian troops before being moved out of Ukraine ahead of Russia’s February 24, 2022 invasion, Kirby said. 

“The recent reunion now of these Florida National Guard members with their Ukrainian colleagues, we are told, was an emotional meeting given the strong bonds that were formed as they were living and working together before temporarily parting ways in February,” Kirby said. 

The US is training 100 more Ukrainians on howitzer artillery systems in Europe in a five-day course, according to the Pentagon.

Washington has said it will send 90 howitzers total to the embattled country as part of two security assistance packages worth US$800 million each, announced earlier this month.  

Another 15 Ukrainians are being trained on radars for about a week.

The troops will then return to Ukraine to train their fellow soldiers on how to use the systems. 

Kirby also noted that Germany is one of roughly three sites being used by the US to train Ukrainians outside of their country, but he would not say where the other sites were. 

In addition, the US is considering the option of doing virtual training with Ukrainians on some defense equipment, Kirby said.  

 

World Quds Day Celebrations

The World Quds Day is celebrated every year on the last Friday of the holy month of Ramadan. It was designated Quds Day on August 07, 1979 on the initiative of Imam Khomeini to support the Palestinian cause and nation and mark a new stage of solidarity with the people of Palestine.

Qods Day is a unique manifestation of unity among Muslims and all the world’s freedom seekers in expressing support for Palestine and disgust for the Zionists usurper. It illustrates an unparalleled portrayal of unity among the people of the world to condemn the atrocities and occupation of the Zionist regime and abhor the racist and inhuman nature of the Zionists.

Quds Day also symbolizes resistance. Undoubtedly, the establishment of the illegitimate and forged Zionist entity has become the prime element of instability and insecurity in West Asia since 1948. 

The tyrannized and resilient people of Palestine have risen up with the support of the Muslims and free peoples of the world, with a chain of Palestinian intifadas, against this massive oppression by the Zionist regime and have frustrated and depressed this forged entity.

Over the years, the issue of Palestine has transformed into the main issue of the Muslim world at least for three reasons: Firstly, the complexion of the Palestinian land, its sanctity and status among the followers of Islam. Secondly, the nature of the hostility of Zionists, their religious and historical claims and their expansionist and occupationist spirit. Third, the nature of Western-Zionist coalition which pursues to weaken the Muslim Ummah and generate dissension and split between the Muslims with the hope that the Muslim states remain dependent and reliant on the big powers.   

The Zionist regime is considered as the violator of fundamental rights including the right to self-determination of Palestinians and the main element of permanent insecurity in the region.

There are many reasons for this belief. Zionist regime breaches the international law and regulations as well as human rights and takes actions such as imposing collective punishment, blockading Gaza, completing the West Bank separation wall and evicting and displacing more than 5.7 million Palestinians; the Zionist regime assassinates Palestinian and other Arab and Muslim commanders and soldiers, destroys Palestinian houses and farmlands, Judaizes the al-Quds, and promotes and continues settlement constructions in occupied territories; Zionists enforce curfew on the Palestinian citizens of al-Quds and revoke the identification and permanent residence cards of Palestinians (in violation of international rules and agreements especially Article 43 of the Hague Convention and the Fourth Geneva Convention); moreover, the Zionist regime adopted the “nation-state of the Jewish people” bill in Knesset in 2018 and is separating the Palestinians living in the West Bank and Gaza. 

While the criminal and occupation-oriented logic of the kid-killer Zionist regime in the past seven decades has produced nothing but the continuation of occupation, murder, racism and dissension in the region, we regretfully are witnessing that a number of Muslim states have closed their eyes on the persistent crimes of the Zionist regime and have fallen into the trap of the Western-Zionist axis and have committed a historical but reversible and amendable mistake. Unfortunately, normalization of relations of some Arab and Muslim states with the Quds-occupying regime has emboldened the Zionists to expand their hostility. The recent desecration and atrocities of the Zionists in al-Aqsa Mosque testify to such emboldening. The satanic Western-Zionist conspiracy aims to hatch differences among the Muslims and has undoubtedly targeted the unity and solidarity of the Muslim world in supporting Palestine. 

The Zionist regime is regarded as the main source of insecurity and threat to regional and international peace and stability and represents the biggest violator of human rights in the world. The Quds-occupying regime is the only regime in the region which owns tens of nuclear warheads and avoids joining the International Atomic Energy Agency and related safeguards. Against this reality, the West and self-proclaimed Western defenders of human rights, in the past years, have continued military-political supports to the Zionist regime without any restriction. For example, we see how Americans, with double standards, veto resolutions against this regime in the United Nations, Human Rights Council, UNESCO and other international organizations. 

Washington has used its veto power at least 40 times to secure the interests of the Zionist regime. This per se suggests the sort of bias and partisan orientation of the Western policies in support of the Zionist regime and ignoring the fundamental rights of the Palestinians. The international community shoulders a heavy responsibility in this connection and must end its long-term silence and inaction and guarantee the termination of occupation and realization of the right to self-determination and human rights for the people of Palestine. 

The “Saif al-Quds (Sword of al-Quds) Operation” in support of the al-Aqsa Mosque dealt a massive blow to the forged Israeli regime. In particular, this stage is a new beginning for the unity of Palestinians in Gaza, the West Bank, Occupied Territories of 1948, Palestinian camps and all the Palestinians across the globe. 

Zionist occupiers and their global advocates must know that the determination of resistance will never be tremulous and Islamic and national resistance will continue to exist in various types and forms to support the suppressed people of Palestine. Without doubt, Islamic resistance against the Zionist occupation and diversion in occupied territories, Lebanon, Syria and other Muslim states would pave the grounds for terminating this diversion and purulent gland. As the “Saif al-Quds Operation” indicated, the capacity and capabilities of the Palestinian resistance are strengthening on a daily basis.  

I would like to commemorate the memory of the dignified martyred leaders of resistance such as the great general of resistance and liberation of the holy Quds, Haj Qassem Soleimani, who made continued efforts and wise decisions to fertilize the plant of resistance in so eloquent manner that the resistance movement now constitutes the main pillar of and is pioneer in all effective actions against Zionism and in support of the oppressed.   

The Islamic Republic of Iran would spare no efforts, like the past, in supporting the legitimate and usurped rights of the Palestinian nation. On the basis of the political and democratic plan registered by the Islamic Republic of Iran in the Secretariat of the United Nations, the settlement of the issue of Palestine would be possible only through ending occupation and holding a referendum with the presence of the main inhabitants of the land of Palestine and all refugees to determine their own destiny.

The return of Palestinian refugees to their motherland and holding a national referendum among the original people of this land to shape their destiny and the type of political system is the most effective solution to resolve this crisis. Based on this proposal, Muslims, Jews and Christians of Palestinian descent should be bale to choose the type of legal system that is going to govern their destiny and benefit from its rights freely and equally. This plan, which has been presented based on the principles of democracy and international law as recognized by all governments and nations, could definitely replace the previous failed schemes. 

In conclusion, I would like to ask all the people of Iran and other Muslims in the world as well as freedom seekers and awakened consciences to participate gloriously in the ceremonies and rallies across the globe to mark the World Quds Day to commemorate this great day and express solidarity with the suppressed people of Palestine.   

Hudong Zhonghua inks largest ever LNG carrier order with Nippon Yusen Kabushiki Kaisha

According Seatrade Maritime News, CSSC Hudong-Zhonghua Shipbuilding of China has signed contracts for six 174,000 cu m LNG carriers with Japan’s Nippon Yusen Kabushiki Kaisha (NYK). The contracts are valued valued at US$1.26 billion, the largest single LNG carriers order that the Chinese shipyard has ever received. 

With the addition of these six vessels, Hudong-Zhonggua Shipbuilding has booked in 17 LNG carriers in the first four months of year 2022. 

Independently developed by Hudong-Zhonghua Shipbuilding, the LNG carriers will be 299 meters in length and 46.4 meters in width, equipped with X-DF dual-fuel engine and could reduce over 10 tons carbon emission daily. 

China National Offshore Oil Corporation (CNOOC) will be the charterer of the vessels upon delivery. 

Together with another six 174,000 cu m LNG carriers ordered from Hudong-Zhonghua in January this year, CNOOC will have twelve 174,000 cu m LNG carriers build by the yard. It is the biggest LNG carrier construction project in China, which will greatly improve the transportation capacity for China’s LNG industry chain, commented CNOOC.

The 12 LNG carriers are expected to be delivered gradually between 2024 and 2027. 

CNOOC is the largest LNG carrier owner working with Hudong-Zhonghua, and has ordered 22 LNG carriers in total at the yard since 2004. Ten of the vessels had been delivered. 

 

Africa faces new shocks with food and fuel price hikes

Sub-Saharan African countries find themselves facing another severe and exogenous shock. Russia’s invasion of Ukraine has prompted a surge in food and fuel prices that threatens the region’s economic outlook.

This latest setback could not have come at a worse time—as growth was starting to recover and policymakers were beginning to address the social and economic legacy of COVID-19 pandemic and other development challenges. The effects of the war will be deeply consequential, eroding standards of living and aggravating macroeconomic imbalances.

It is expected that growth will decelerate to 3.8% this year from last year’s better-than-expected 4.5%, according to the latest Regional Economic Outlook by the IMF.

Though the Fund projects annual growth to average 4% over the medium term, it will be too slow to make up for ground lost to the pandemic. Inflation in the region is expected to remain elevated in 2022 and 2023 at 12.2% and 9.6% respectively—the first time since 2008 that regional average inflation will reach such high levels.

There are three main channels through which Russia-Ukraine war is impacting countries—with notable differentiation both across and within countries:

Prices for food, which accounts for about 40% of consumer spending in the region, are rising rapidly. Around 85% of the region’s wheat supplies are imported. Higher fuel and fertilizer prices also affect domestic food production. Together, these factors will disproportionately hurt the poor, especially in urban areas, and will increase food insecurity.

Higher oil prices will boost the import bill for the region’s oil importers by about US$19 billion, worsening trade imbalances and raising transport and other consumer costs. Oil-importing fragile states will be hit hardest, with fiscal balances expected to deteriorate by around 0.8% of gross domestic product compared to the October 2021 forecast—twice that of other oil-importing countries. The region’s eight petroleum exporters, however, benefit from higher crude prices.

The shock is set to make an already delicate fiscal balancing act more difficult, increasing development spending, mobilizing more tax revenues, and containing debt pressures. Fiscal authorities generally aren’t well-positioned for additional shocks after the pandemic. Half of the region’s low-income countries are already in or at high risk of distress. Rising oil prices also represent a direct fiscal cost for countries through fuel subsidies, while inflation will make reducing these subsidies unpopular. Spending pressures will only increase as growth slows, while rising interest rates in advanced economies may make financing more costly and harder to obtain for some governments.

Countries need a careful policy response to address these daunting challenges. Fiscal policy will need to be targeted to avoid adding to debt vulnerabilities. Policymakers should as much as possible use direct transfers to protect the most vulnerable households. Improving access to finance for farmers and small businesses would also help.

Countries that can’t provide targeted transfers can use temporary subsidies or targeted tax reductions, with clear end dates. If well-designed, they can protect households by providing time to adjust to international prices more gradually. To enhance resilience to future crises, it remains important for these countries to develop effective social safety nets. Digital technology, such as mobile money or smart cards, could be used to better target social transfers, as Togo did during the pandemic.

Net commodity-importers, such as Benin, Ethiopia and Malawi, will need to find resources to protect the vulnerable by reprioritizing spending. Net exporters, like Nigeria, are likely to benefit from rising oil prices, but a fiscal gain is only possible if the fuel subsidies they provide are contained. It is important that windfalls are largely directed to strengthen policy buffers, supported by strong fiscal institutions such as a credible medium-term fiscal framework and a strong public financial management system.

To navigate the trade-off between curbing inflation and supporting growth, central banks will need to monitor price developments carefully and raise interest rates if inflation expectations drift up. They must also guard against the financial stability risks posed by higher rates and maintain a credible policy framework underpinned by strong independence and clear communication.

The international community must step up to ease the food security crisis. The IMF’s recent joint statement with the World Bank, the United Nations World Food Program and the World Trade Organization called for emergency food supplies, financial support, including grants, increased agricultural production and unhindered trade, among other measures.

Following through on the commitment by Group of Twenty countries to re-channel US$100 billion of their IMF Special Drawing Rights allocation to vulnerable countries would be a major contribution to the region’s short-term liquidity needs and longer-term development. There are options for re-channeling SDRs, for example through the IMF’s Poverty Reduction and Growth Trust or the newly created Resilience and Sustainability Trust, which has received almost US$40 billion in pledges.

Finally, for some countries, restoring debt sustainability will require debt re-profiling or an outright restructuring of their public debt. To make this a reality, the G20 Common Framework needs to better define its debt restructuring process and timeline, and the enforcement of the comparability of treatment among creditors. Importantly, debt service payments should be suspended until an agreement is reached.

 

Indonesian palm oil export ban sparks concerns in many countries

Reportedly, the prices of all types of edible oils such are expected to rise after Indonesia announced a surprise ban on export of palm oil. Major edible oils are already in short supply due to adverse weather and Russian invasion of Ukraine.

The move by Indonesia to pause exports has placed an extra strain on cost-sensitive consumers in Asia and Africa hit by higher fuel and food prices.

“Indonesia’s decision affects not only palm oil availability, but vegetable oils worldwide,” James Fry, Chairman of Commodities Consultancy LMC International, told Reuters.

Palm oil – used in everything from cakes and frying fats to cosmetics and cleaning products – accounts for nearly 60% of global vegetable oil shipments.

Top producer Indonesia accounts for around a third of all vegetable oil exports. It announced the export ban on April 22, 2022, until further notice, in a move to tackle rising domestic prices.

“This is happening when the export tonnages of all other major oils are under pressure: soya bean oil due to droughts in South America; rapeseed oil due to disastrous canola crops in Canada; and sunflower oil because of Russia’s war on Ukraine,” Fry said.

Rasheed JanMohd, chairman of Pakistan Edible Oil Refiners Association (PEORA) said, “Nobody can compensate for the loss of Indonesian palm oil. Every country is going to suffer.”

Vegetable oil prices have already risen more than 50% in the past six months as factors from labour shortages in Malaysia to droughts in Argentina and Canada – the biggest exporters of soyoil and canola oil respectively – curtailed supplies.

Buyers were hoping a bumper sunflower crop from top exporter Ukraine would ease the tightness, but supplies from Kyiv have stopped as a result of Russia’s invasion.

This had prompted importers to bank on palm oil being able to plug the supply gap until Indonesia’s shock ban delivered a “double whammy” to buyers, said Atul Chaturvedi, president of trade body the Solvent Extractors Association of India (SEA).

Importers such as India, Bangladesh and Pakistan will try to increase palm oil purchases from Malaysia, but the world’s second-biggest palm oil producer cannot fill the gap created by Indonesia, Chaturvedi said. Malaysia accounts for 31% of global palm oil supply, second after Indonesia’s 56%.

Indonesia typically supplies nearly half of India’s total palm oil imports, while Pakistan and Bangladesh import nearly 80% of their palm oil from Indonesia.

In February this year, prices of vegetable oils jumped to a record high as sunflower oil supplies were disrupted from the Black Sea region.

A state-backed Malaysian palm oil group said countries should pause or slow use of edible oil as biofuel to ensure adequate supply for use in food, warning of a supply crisis following Indonesia’s ban on palm oil exports.

Palm oil is also used as biodiesel feedstock. Indonesia and Malaysia make it mandatory for biodiesel to be mixed with a certain amount of palm oil – 30% and 20% respectively – and just last month said they remain committed to those mandates, despite higher palm prices.