Miftah the lesser you talk the better it will be for you and the incumbent government

The consensus is growing among the analysts that Miftah Ismail, Finance Minister of Pakistan talks a lot and often inconsistent and incoherent, which could make his life miserable with the passage of time. 

The other suggestion is that he should bid farewell to Imran Khan animosity and focus on putting the economy of the country back on track.

Allow me to refer to his statement regarding Dr. Reza Baqir, the outgoing Governor of State Bank of Pakistan. Ismail had indicated in a tweet that the government would not be providing an extension to Dr. Baqir. It may be called that he was often termed an appointee of the International Monetary Fund and follower of the IMF dictate.

However, on his departure he admitted, "I want to thank Reza for his service to Pakistan. He is an exceptionally qualified man and we worked well during our brief time together. I wish him the very best."

He misses no chance of maligning Imran Khan for agreeing with the IMF on conditions which had opened floodgate of inflation in Pakistan, the most notorious being the hike in the tariffs of electricity and gas and withdrawal of different types of subsidies.

It is a welcome sign that the IMF has extended the timeline of the current program and also promised to increase the amount by US$2 billion. However, the honourable minister hasn’t disclosed the conditions attached to this ‘favour’. The cat will soon come out of the bag when the IMF starts its review soon after Eid Holidays.

Even a person of ordinary wit knows very well that IMF bailout package will be attached with: hike in revenue, hike in electricity and gas tariffs and withdrawal of subsidies. It is also no wonder that Miftah hasn’t developed ‘homegrown’ plan and would be obliged to follow the IMF recipe.

I am not sure if the Minister is fully aware of massive smuggling of food items to the three neighboring countries, enjoying long and most porous borders with Pakistan. Food items are being fled to Afghanistan, Iran and India only because of the faulty Trade Policy being followed by Pakistan.

Ismail faces a daunting challenge of controlling mounting ‘circular debt’, which is nothing but rampant pilferage going on with the connivance of employees of the utility companies. Analysts say, with every hike in tariffs the incentive grows for pilfering electrify and gas.

Minister has to convince IMF that Pakistan suffers from cost pushed inflation and the hike in interest rate renders the exporters uncompetitive in the global markets. Exports just can’t be increased without exploiting Pakistan’s comparative advantage and making exports competitive in the global markets.

Last but not the least, Pakistan has to contain import of luxury and/or unnecessary goods to contain trade deficit. WTO Article 6 provides an option to Pakistan to impose quantitative restrictions on imports; the option must be exercised without further waste of time.

Welcome Dr. Murtaza Syed as Governor State Bank of Pakistan

With three-year term of Dr. Reza Baqir as Governor, State Bank of Pakistan (SBP) coming to an end on May 04, 2022, Dr. Murtaza Syed, the senior most Deputy Governor takes over as Governor of the central bank.

Dr.  Syed an eminently qualified economist with rich experience of dealing with International Monetary Fund (IMF) will oversee the affairs of SBP and will be part of Pakistani team negotiating with the IMF, until the Government of Pakistan formally appoints new Governor of SBP.

According to the SBP, Dr. Syed has more than 20 years of experience in macroeconomic research and policy making and worked with the IMF for 16 years before resigning to join the State Bank of Pakistan. Dr. Syed has a PhD in economics from Nuffield College at the University of Oxford and has delivered lectures on public policy at Cambridge and Oxford Universities.

Earlier Finance Minister, Miftah Ismail had indicated in a tweet that the government would not be providing an extension to Dr, Reza Baqir.

"I want to thank Reza for his service to Pakistan. He is an exceptionally qualified man and we worked well during our brief time together. I wish him the very best," the minister had added.

Following Ismail's announcement, Dr. Baqir, in a series of tweets, thanked Allah and his fellow team members for giving him a chance to serve in the public office. "To other fellow Pakistanis, especially overseas, I encourage you to consider public service," he said.

The former governor also recalled the initiatives the SBP took during his tenure, such as Covid relief packages which included Rozgar payroll loans and hospital financing, Roshan Digital Account, Raast, a framework to licence digital banks in Pakistan, financial inclusion for women, affordable mortgages for lower-income groups and others.

"I want to especially thank Deputy Governors and SBP Corporate Management Team for your teamwork and support. I also want to thank the 4 Finance Ministers and 5 Finance Secretaries I worked with over my 3 years," he continued.

Dr. Baqir said that Pakistan faced several challenges but also possessed "great strengths" to counter them. "I am confident and hopeful that we as a country will make the right choices to overcome the challenges ahead of us," he added.

Meanwhile, the news of Dr. Baqir's term has termed as "loss for Pakistan" by politicians and analysts on Twitter.

Pakistan foreign policy always subservient to US mantra

In today’s blog I am daring to negate an impression created by an article written by Ms Maleeha Lodi (Pakistan’s former ambassador to the United States, United Kingdom and United Nations) and published in Pakistan’s leading English newspaper. I am taking an extreme position by saying, “Pakistan’s foreign policy has always remained subservient to the US mantra”.

Please allow me to begin with the U2 incident, when the US pilot-less planes used to takeoff from a Pakistani airbase near Peshawar for spying USSR. At one point the situation got so nasty that USSR threatened to attack Pakistan.

Badaber: A secret US intelligence facility in Pakistan

In July 1958, US President Dwight D. Eisenhower requested permission from the Pakistani Prime Minister Feroze Khan Noon for the United States to establish a secret intelligence facility in Pakistan and for the U-2 spyplane to fly from Pakistan. The U-2 flew at altitudes that could not be reached by Soviet fighter jets of the era; it was believed to be beyond the reach of Soviet missiles as well. A facility established in Badaber (Peshawar Air Station), 10 miles (16 km) from Peshawar, was a cover for a major communications intercept operation run by the United States National Security Agency (NSA). Badaber was an excellent location because of its proximity to Soviet central Asia. This enabled the monitoring of missile test sites, key infrastructure and communications. The U-2 "spy-in-the-sky" was allowed to use the Pakistan Air Force section of Peshawar Airport to gain vital photo intelligence in an era before satellite observation.

I would also invite the readers to recall last-minute cancellation of the visit of Prime Minister Liaquat Ali Khan to USSR and going to the United States around the same dates.

This also reminds me the US ditching Pakistan at the time of creation of Bangladesh. State-owned Pakistani media kept on telling the US feet could arrive any minute, which never arrived. This creates an impression that the US supported creation of Bangladesh.

Now coming to Afghan proxy war, Pakistan played two opposite roles: first it supported Taliban in averting USSR attack in a quest to reach warm water and then supporting US/Nato troops in crushing the same Taliban.

Please also allow me to share conspiracy theory, “Pakistan and United States have enjoyed cordial relationships due military rule”. The readers are invited to read details of Ayub, Zia and Musharraf eras.

I am also inclined to share another public opinion, The US-Pakistan relationship is a saga of ‘Marriage of Convenience’.

It is often said, ‘Pakistan is a frontline allay of United States in war against terrorism’. Some analysts interpret it ‘Pakistan is partner in proxy wars but when it comes to Investment and trade India is the US darling’.

I tend to subscribe to this theory based on my follow up of the construction of Chabahar Port in Iran. Despite economic sanctions on Iran, India invested millions of dollars in the construction of this port and allied road and rail links to connect with Afghanistan and Central Asian states. Please also note that Pakistan was not allowed to import oil from Iran during this period.

The United States was more than smart in facilitating India in the construction of Chabahar Port and allied infrastructure. The prime US motive was to create an alternative access to land-locked Afghanistan, extended to Central Asian states.

But the real objective was to undermine Pakistan’s importance in Afghan transit trade. There is no denying to the fact that Pakistan still offers cost effective and shortest route to Afghanistan.

Before I conclude let me say, “Pakistan under the influence of the United States has not recognized Taliban Government in Afghanistan”. While Afghans are facing shortage of food and medicines, the two countries are not allowed to trade in local currencies; the United States has not released foreign exchange reserves of Afghanistan.

Prime Minister Shehbaz what have you done?

Looking at this advertisement published in a leading English newspaper of Pakistan has prompted me to communicate with my readers and or anyone who is worried about the fast deteriorating economic conditions of Pakistan.

I am ready to say without mincing my words that historically Saudi Arabia and United Arab Emirates (UAE) have been more than gracious in extending support to Pakistan, the first Muslim country to attain the status of ‘Atomic Power’.  

At this juncture when the negotiations with the lender of last resort, International Monetary Fund (IMF) have been marred there was an urgent need for Pakistan to have enough foreign exchange reserves, be it earned or borrowed, to meet the targets agreed with the Fund.

Since commercial borrowing could prove fatal, the only option was to approach the ‘time tested friends’, who have reciprocated as usual. Therefore, it is not a ’well-done’ by the incumbent prime minister, but graciousness of the Monarchs.

It is true that Mian Sahib, has been put in a very difficult position by the coalition partners, they don’t want to take responsibility of ‘bad’ decisions but to attain political mileage in the upcoming elections.

It appears that some of Mian Sahib’s advisors, fearful of the repercussions of ‘bad’ decisions are suggesting to sweep the issues under the carpet, which can make the things even more complicated for him as well as Pakistan.

Mian Sahib has already committed ‘double fault’ by not increasing prices of energy products, despite recommendations by the Oil & Gas Regulatory Authority (OGRA).

The harsh reality is that with each passing day, price of crude oil hovering at higher level and Rupee witnessing erosion in value the quantum of subsidy has already become unmanageable.

The sooner the incumbent government increases the tariffs of energy products, the better it will be for Pakistan. It may be a blessing that Pakistan’s friends are willing to supply oil/POL products at deferred payment, but the outstanding amount has to be settled in due course of time.

The other decisions which has offended overseas Pakistanis, remitting around US$2.5 billion per month, is ‘unwillingness’ of the incumbent government to allow them to cast their votes in the general elections of Pakistan.

According to informed sources, overseas Pakistanis have threatened to withdraw amounts kept in Roshan Digital Accounts, if they are not allowed to cast their vote in forthcoming general election.

To conclude, there is a friendly advice to the incumbent government that it must address the grievances of overseas Pakistanis without any further delay. While the IMF has indicated to give Pakistan US$2 billion over the next two years, overseas Pakistanis are sending more than this amount every month.

Iran Oil Show 2022 to kick off on May 13

The 26th International Oil, Gas, Refining and Petrochemical Exhibition of Iran (Iran Oil Show 2022) is scheduled to kick off on May 13 at Tehran Permanent International Fairgrounds, Shana reported.

As reported, all Covid-19 related permits have been obtained from the National Headquarters to Combat Coronavirus Pandemic and the four-day exhibit will be held in full compliance with health protocols and standards.

Iran Oil Show is among the most significant oil and gas events in the world in terms of the number of participants and its diversity.

The event covers a variety of oil industry areas, including upstream industries, universities and science centers, start-ups, and science and technology parks, petrochemicals and related industries, gas and related industries, pipes and tubes, valves, refining and distribution and related industries, rotary machines, as well as products exporters, and etc.

 

 

China increases oil import from Iran

According to the Wall Street Journal major oil buyers including China are cutting back imports from Russia due to the war with Ukraine, this is effectively increasing Iranian export of oil.

Reportedly, Iranian oil exports increased by 30% during  the first quarter of 2022 as compared to the same period in the previous year, to 870,000 barrels per day (bpd).

The jump in Iran’s oil exports in Q1 was the fastest among all producers in West Asia, while the volume of exports is estimated to be the highest since former US President Donald Trump withdrew from the Iranian nuclear deal in 2018, the report said.

China is a major buyer of Iranian crude oil which has never stopped buying Iranian oil even during the sanctions. Now, the Asian country is emboldened to import more oil from Iran, not expecting to be hit by US sanctions “because Washington has its plate full with Russia,” an analyst told the Journal.

Earlier this month, Washington Free Beacon, an American conservative political journalism website, said in a report that Iran's fleet of ghost ships has been successfully sidestepping US sanctions, delivering millions of barrels of crude oil and petroleum products to foreign destinations.

The report claimed that Iranian oil tankers have shipped at least US$22 billion worth of oil only to China since 2021.

According to Iranian President Ebrahim Raisi, the country's oil exports have increased by 40% in recent months.

Iran’s crude oil production in March reached 2.546 million bpd to register a 7,000-barrel increase as compared to the figure for February, according to OPEC’s latest monthly report.

The country produced 2.539 million bpd of crude oil in February, the report said citing secondary sources.

The Islamic Republic’s average crude output for the first quarter of 2022 stood at 2.528 million bpd indicating a 56,000-bpd increase compared to the figure for the fourth quarter of the previous year, the report indicated.

The country’s heavy crude oil price also increased by US$19.36 in March, a 20.8% rise as compared to the previous month, according to the OPEC report.

 

United States urged to restore Iran nuclear deal

More than 40 former government officials and leading nuclear non-proliferation experts have expressed strong support for an agreement that returns Iran and the United States to comply with the 2015 nuclear deal.

The accord between Iran and the major world powers, known as the Joint Comprehensive Plan of Action (JCPOA), was unanimously endorsed by the UN Security Council through Resolution 2231.

The major world powers are P5+1 (the five permanent members of the United Nations Security Council—China, France, Russia, United Kingdom, United States—plus Germany) together with the European Union.

The joint statement points out that if President of United States, Joe Biden fails to bring negotiations with Iran to a prompt and successful conclusion it would perpetuate the failed strategy pursued by the Trump administration and allow Iran to further improve its capacity to produce weapons-grade nuclear material. The result, the nuclear nonproliferation experts write, “would increase the danger that Iran would become a threshold nuclear-weapon state”.

Signatories of the letter include a former special representative to the president of the United States on non-proliferation, former US State Department officials, the United States’ former Ambassador to Israel, Russia, and the United Nations, and leading nuclear non-proliferation experts based in the United States, Europe, and Asia.

“A prompt return to mutual compliance with the JCPOA is the best available way to deny Iran the ability to quickly produce bomb-grade nuclear material,” the experts’ letters notes.

“It would reinstate full IAEA international monitoring and verification of Iran’s nuclear facilities, thus ensuring early warning if Iran were to try to acquire nuclear weapons—and possibly become the second state in the Middle East (in addition to Israel) with such an arsenal.”

Despite Iran’s compliance with the accord, former US President Donald Trump withdrew the United States from the JCPOA in May 2018, reimposed sanctions that had been waived as part of the agreement and embarked on a pressure campaign designed to deny Tehran any benefit of remaining in compliance with the nuclear deal.

Iran continued to meet its JCPOA obligations until May 2019, when Tehran began a series of calibrated violations of the agreement designed to pressure the remaining JCPOA parties to meet their commitments and push the United States to return to the agreement. These violations, while largely reversible, have increased the threat posed by Iran’s nuclear program.

“As a result of Trump administration policies,” the experts’ statement says, “it is now estimated that the time it would take Iran to produce a significant quantity (25 kg) of bomb-grade uranium (enriched to 90 percent U-235) is down from more than a year under the JCPOA, to approximately one or two weeks today.”

“Restoring the limits on Iran’s nuclear program will significantly increase (by many months) the time it would take Iran to produce a significant quantity of bomb grade material, which provides the margin necessary for the international community to take effective action if Iran were to try to do so,” the experts say.

“Just as importantly,” the experts write, “the JCPOA mandates unprecedented International Atomic Energy Agency (IAEA) monitoring, verification, and transparency measures that make it very likely that any possible future effort by Iran to pursue nuclear weapons, even a clandestine program, would be detected promptly.”

Failure to bring Iran back under the limits established by the JCPOA would produce long-term adverse effects on the global non-proliferation regime, put US allies at greater risk, and create a new nuclear crisis, experts say.

Courtesy: International Press Syndicate