Monday, 15 August 2022

Oil prices take a dip on weak demand outlook

According to early morning reports, crude oil prices fell on Tuesday as bleak economic data from top crude buyer China renewed fears of a global recession. 

While Brent crude futures fell to US$94.37 a barrel by 0313 GMT, WTI crude futures dipped to US$88.97. Oil futures fell about 3% during the previous session.

China's central bank cut lending rates to revive demand as the economy slowed unexpectedly in July, with factory and retail activity squeezed by Beijing's zero-COVID policy and a property crisis.

"Commodities prices across the board were under pressure as China's July economic data painted a more downbeat growth picture than previously expected, which prompted renewed concerns on demand outlook," wrote Yeap Jun Rong, market strategist from IG Group in a note.

China's fuel product exports are expected to rebound in August to near a year high after Beijing issued more quotas, adding pressure to already-cooling refining margins.

Investors also watched talks to revive the 2015 Iran nuclear deal. More oil could enter the market if Iran and the United States accept an offer from the European Union, which would remove sanctions on Iranian oil exports, analysts said.

Iran responded to the European Union's final draft text to save a 2015 nuclear deal on Monday, an EU official said, but provided no details on Iran's response to the text. The Iranian foreign minister called on the United States to show flexibility to resolve three remaining issues.

In the United States, total output in the major US shale oil basins will rise to 9.049 million bpd in September, the highest since March 2020, the US Energy Information Administration (EIA) said in its productivity report on Monday.

Market participants awaited industry data on US crude stockpiles due later on Tuesday. Oil and gasoline stockpiles likely fell last week, while distillate inventories rose, a preliminary Reuters poll showed on Monday.

The premium for front-month WTI futures over barrels loading in six months stood at US$3.46 a barrel on Tuesday, the lowest level in four months, suggesting easing tightness in prompt supplies.

 

Trump authorized Israeli sovereignty in West Bank

According to The Jerusalem Post, former US president Donald Trump authorized then-prime minister Benjamin Netanyahu to annex parts of the West Bank.

In a three-page letter dated January 26, 2020, two days before Trump presented his Vision for Peace in the White House, he summarized some of its details. These included that Israel would be able to extend sovereignty to parts of the West Bank, as delineated in the map included in the plan if Netanyahu agreed to a Palestinian state in the remaining territory on that map.

Trump asked Netanyahu to adopt “the policies outlined in... the Vision [for peace] regarding those territories of the West Bank identified as becoming part of a future Palestinian state.”

In exchange for Israel implementing these policies, the US president continued, and formally adopted detailed territorial plans not inconsistent with the Conceptual Map. The letter did not delineate a timeline for sovereignty recognition.

Netanyahu’s response said that Israel would move forward with sovereignty plans in the coming days.

The letter calls into question the narrative set out in Breaking History: A White House Memoir, a new book by Trump's son-in-law and former senior adviser Jared Kushner.

In it, Kushner asserts that former US ambassador to Israel David Friedman went behind his and the president’s back and assured Bibi that he would get the White House to support annexation more immediately.

Friedman and Netanyahu viewed the matter differently, Netanyahu’s spokesman said, “The charge that Netanyahu surprised the president and his staff with an uncoordinated announcement... is utterly baseless.”

Trump's Special Representative for International Negotiations Jason Greenblatt said that during his time in the White House, he always understood from former Prime Minister Netanyahu that US recognition of the extension of Israel’s sovereignty over those areas intended to be part of Israel contemplated by the peace plan released by President Trump was necessary for Netanyahu to agree to our proposed peace plan.

David Friedman was part of most, perhaps all, of those discussions and I believe he understood that clearly as well. I was no longer working at the White House at the time the peace plan was released. 

A Trump administration source closely involved with the president's letter said, "It was a key part of Israel's acceptance of the Vision for Peace as the framework for negotiations with the Palestinians for America to accept sovereignty up front, as per the mapping process and the plan, and for all the Jewish communities in Judea and Samaria and the Jordan Valley to be included.

Trump said in his speech – which Kushner said he read and reviewed with the president before delivery, “The United States will recognize Israeli sovereignty over the territory that my vision provides to be part of the State of Israel.

Trump said Israel and the US would work together to convert the conceptual map into a more detailed and calibrated rendering so that recognition can be immediately achieved.

“We will also work to create a contiguous territory within the future Palestinian state for when the conditions for statehood are met, including the firm rejection of terrorism,” Trump said.

“You are recognizing Israel’s sovereignty over all the Jewish communities in Judea and Samaria, large and small alike,” he said. “Mr. President, because of this historic recognition, and because I believe your peace plan strikes the right balance where other plans have failed, I’ve agreed to negotiate peace with the Palestinians on the basis of your peace plan.

“Israel wants the Palestinians... to have a future of national dignity, prosperity, and hope. Your peace plan offers the Palestinians such a future. Your peace plan offers the Palestinians a pathway to a future state,” Netanyahu said.

“Israel wants the Palestinians... to have a future of national dignity, prosperity, and hope. Your peace plan offers the Palestinians such a future. Your peace plan offers the Palestinians a pathway to a future state.”

The prime minister also said, “We looks forward to working with you to achieve a peace that will protect Israel’s security, provide the Palestinians with dignity and their own national life, and improve Israel’s relations with the Arab world.”

Immediately after the speeches, Netanyahu said he would bring the extension of Israeli sovereignty over parts of the West Bank to a cabinet vote the following week. Then-ambassador to Israel David Friedman told the media that Israel could start work toward annexation the moment it completed its internal process.

In Friedman’s book, Sledgehammer, released earlier this year, the ambassador wrote that the Trump administration did not know that Netanyahu already had the Jordan Valley mapped out for annexation. Netanyahu’s spokesman said, the prime minister’s letter to Trump in advance of the White House event specified that he would move forward in a matter of days.

The Trump administration source involved with the letter said that the dispute was only whether sovereignty moves could be made within a few days or weeks. Kushner himself told journalists at the UN days after the plan was presented that the mapping teams will take a couple of months before annexation moves forward.

Kushner also repeatedly claimed in the book that he struggled to convince Bibi, a master negotiator, to agree to a compromise that would give tangible life improvements to the Palestinians."

In contrast, Netanyahu conceded that a Palestinian state would be established. In addition, Friedman said Netanyahu agreed not to allow Israeli construction in the areas earmarked for the Palestinians in the plan's map. 

Sunday, 14 August 2022

Ukraine termed defaulter by S&P and Fitch

"Given the announced terms and conditions of the restructuring, and in line with our criteria, we view the transaction as distressed and tantamount to default," S&P said.

Global rating agencies Fitch and S&P lowered Ukraine's foreign currency ratings to selective default and restricted default as they consider the country's debt restructuring as distressed.

Earlier last week, Ukraine's overseas creditors backed the country's request for a two-year freeze on payments on almost US$20 billion in international bonds. The move will save Ukraine some US$6 billion on payments.

Fitch cut the country's long-term foreign currency rating to "RD" from "C," as it deems the deferral of debt payments as a completion of a distressed debt-exchange.

S&P also said the macroeconomic and fiscal stress stemming from Russia's invasion of Ukraine may weaken the Ukrainian government's ability to stay current on its local currency debt and lowered the Eastern European country's local currency rating to "CCC-plus/C" from "B-minus/B".

Battered by Russia's invasion, which started on February 24, Ukraine faces a 35% to 45% economic contraction in 2022 and a monthly fiscal shortfall of US$5 billion.

It may be recalled that in July Ukraine aimed to strike a deal up to US$20 billion program with the International Monetary Fund (IMF) before year-end to help shore up its war-torn economy, the country's central bank governor Kyrylo Shevchenko had told Reuters.

Shevchenko, speaking during his visit to London, also said he hoped to agree on a swap line with the Bank of England.

It was the first time Ukraine has put a number on the fresh financing it needs from the Washington-based lender. A US$20 billion program would be the second largest currently active loan from the IMF after Argentina.

The central bank chief said a new program should provide measures that will help stabilize the economy. That could ensure a return to pre-war conditions, such as a flexible exchange rate, no limits on the currency market, decreasing non-performing loans in the banking sector and a balanced fiscal policy.

The IMF's latest loan to Ukraine was a US$1.4 billion emergency financing support agreed in March - the equivalent of 50% of the country's quota in the fund.

Separately, Kyiv is now in talks with its international creditors over a freeze in debt payments to ease its liquidity crunch. Lately, Ukrainian energy firm Naftogaz became the country's first government entity to default since the start of the Russian invasion.

"I hope that Naftogaz, together with the ministry of finance of Ukraine, that they will find a solution," said Shevchenko.

Some relief on foreign exchange revenue and liquidity would also come from the deal agreed between Moscow and Kyiv to allow safe passage for grain shipments in and out of Ukrainian ports.

However, those revenues and shipments would only pick up in earnest next year, when under the central bank's "conservative" estimates exports could hit 5 million tons per month and generate approximately US$5 billion in 2023, Shevchenko said.

Speaking about the central bank's intervention in currency markets as well as its bond buying program, Shevchenko said both would continue for now, though the latter would cease as soon as the war ended.

He added that operating in times of war had seen a whole new host of vocabulary spring up, with expressions such as maturity of war - a term to describe the time frame of a debt instrument used in the context of the conflict.

 

  


US wages almost 400 military interventions

Since I have started writing blogs, one of my assertions has been that United States is the biggest warmonger as well initiator of regime change programs around the world. This agenda is aimed at serving producers of lethal arsenal in the United States as well foreign policy objectives.

The United States has waged nearly 400 military interventions since its founding in 1776, according to a new research published lately. According to the study by the Military Intervention Project, A New Dataset on US Military Interventions, 1776–2019, half of those conflicts and other uses of force occurred between 1950 and 2019. 

More than a quarter of them have taken place since the end of the Cold War. Out of the nearly 400 military interventions, 34% have been in Latin America and the Caribbean; 23% in East Asia and the Pacific region; 14% in West Asia and North Africa; and 13% in Europe and Central Asia.

The authors find that US interventions have increased and intensified in recent years. While the Cold War era (1946 – 1989) and the period between 1868 – 1917 were the most militaristically active for the United States, the post-9/11 era has already taken the third spot in all of US history and most of that military adventurism has been in West Asia. 

It says, “These interventions have only increased and intensified in recent years, with the US militarily intervening over 200 times after World War II and over 25% of all US military interventions occurring during the post-Cold War era.”

Until the end of the Cold War, US military hostility was generally proportional to that of its rivals. Since then, the US began to escalate its hostilities as its rivals deescalate it, marking the beginning of America’s more kinetic foreign policy.  

The study reads, “Some scholars have explained such increasing interventionist trends as part of the new norm of contingent sovereignty, which explicitly challenges the traditional principle of non-intervention in the internal affairs of other states. Particularly regarding the US, one perspective is that the country is evolving past its Cold War doctrine.”

The study notes, “US military interventions to promote geopolitical interests cannot explain the dynamics of the post-Cold War era. If the US primarily intervenes when its security interests are threatened, we expect the US to intervene less in an era void of peer competitors where fewer vital interests are arguably at stake.”

The authors point out that other researchers have asserted the US uses force abroad without a clear organizing principle and thus its military missions have had disastrous long-term and unintended consequences.

In 2018, a co-author said, “Current patterns of US military engagement as kinetic diplomacy, diplomacy solely through armed force,” the research says, in the past years.

While US Ambassadors are operating in one-third of the world’s countries, US special operators are active in three-fourths. 

A challenging aspect of measuring military interventions is how to define an intervention, the research notes. The study highlights that the definition of US military intervention may fall under any of the following categories.

The movement of regular troops or forces of one country inside another one in the context of some political issue or dispute. To separate higher intensity interventions from minor skirmishes, this definition excludes paramilitaries, government-backed militias, and other security forces that are not part of the regular uniformed military of a state. 

Similarly, “Events must be purposeful, not accidental.” Inadvertent border crossings are not included in this definition and neither are unintentional confrontations between planes or naval ships. The definition excludes soldiers engaging in exercises in a foreign land, transporting forces across borders, or on foreign bases. Furthermore, the definition categorizes international military interventions by temporal guidelines so that interventions are continuous if repeated acts occur within 6 months of one another.

Instances in which the United States has used its Armed Forces abroad in situations of military conflict or potential conflict or for other than normal peacetime purposes...Covert operations, disaster relief, and routine alliance stationing and training exercises are not included here, nor are the Civil and Revolutionary Wars and the continual use of US military units in the exploration, settlement, and pacification of the western part of the United States.

The political use of military force involving ground troops of either the US Army or Marine Corps in an active attempt to influence the behavior of other nations

Use of armed force that involves the official deployment of at least 500 regular military personnel (ground, air, or naval) to attain immediate term political objectives through action against a foreign adversary

Routine military movements and operations without a defined target like military training exercises, the routine forward deployment of military troops, non-combatant evacuation operations, and disaster relief should be excluded

Militarized interstate disputes are united historical cases of conflict in which the threat, display, or use of military force short of war by one member state is explicitly directed towards the government, official representatives, official forces, property, or territory of another state

 This recent pattern of international relations conducted largely through armed force, it noted, has increasingly targeted West Asia and Africa. These regions have seen both large-scale U.S. wars, as in Afghanistan and Iraq, and low-profile combat in nations such as Burkina Faso, Cameroon, the Central African Republic, Chad, and Tunisia.

The authors say “the U.S. has increased its military usage of force abroad since the end of the Cold War. Over this period the U.S. has preferred the direct usage of force over threats or displays of force, increasing its hostility levels while its target states have decreased theirs. Along the way, the regions of interest have changed as well. Up until World War II, the U.S. frequently intervened in Latin America and Europe,” but beginning in the 1950s, the U.S. shifted its focus to West Asia and the North Africa region.

The data comprises confirmed covert operations and low-profile interventions by Special Operations forces, however, it points out that US government secrecy and scrupulous sourcing standards of the public database it studied guarantees that the post-9/11 tally is an undercount.

The post-9/11 era appear to be the third most active for US interventions of relatively higher hostility levels. In this era, threats of force are absent, while the use of force has been overwhelmingly commonplace. Since 2000 alone, the US has engaged in at least 30 military interventions. 

Experts say that the Pentagon has likely used secretive authority to carry out combat beyond the scope of any authorization for the use of military force or permissible self-defense.

They point out that while secretive “127e” programs in Somalia and Yemen for instance overlap with well-known US military interventions, other uses of the authority, such as in Egypt and Lebanon, may not. The same goes for even lesser-known programs like “Section 1202”.  

US military conflicts have provided American arms manufacturers with ample opportunity to make a profit and prolong the country’s history of violence based on its founding. 

According to the Stockholm International Peace Research Institute (SIPRI), Global military expenditure is estimated to have been US$1,917 billion in 2019, the highest level since 1988. 

With a military expenditure of US$732 billion, the US remained by far the largest spender in the world in 2019, accounting for 38% of global military spending. The US spent almost as much on its military in 2019 as the next 10 highest spenders combined.

Today, SIPRI puts the cost of the US military at more than US$800 billion annually, accounting for almost 40% of global military spending.

 


Saturday, 13 August 2022

India selling US dollar for UAE dirham

Reportedly Indian companies are switching from the US dollar to Asian currencies to pay for Russian coal imports. Steelmakers and cement manufacturers in India have been using the UAE dirham, Hong Kong dollar, Chinese yuan, and euro to pay for Russian coal in recent weeks.

Last month, Russia became India’s third-largest coal supplier after the South Asian giant dumped the greenback to secure deals, with imports surging to a record 2.06 million tons.

In June, Indian buyers paid for at least 742,000 tons of Russian coal using currencies other than the US dollar, equaling 44 percent of the 1.7 million tons of Russian imports that month.

Meanwhile, the Reserve Bank of India also recently approved payments for commodities in the Indian rupee, a move that could further boost bilateral trade with Russia.

Recent reports revealed that Moscow was calculating the value of oil exports to India in US dollars while requesting payment in dirhams, asking that payments be made to Russia’s Gazprombank via Mashreq Bank, its correspondent bank in Dubai.

India has increased purchases of Russian oil and coal since the start of the war in Ukraine, helping Moscow cushion the effect of western sanctions and allowing New Delhi to secure raw materials at a discount.

In early July, the Russian logistics company, RZD Logistics, announced the completion of the first transportation of goods via container trains from Russia to India through the eastern branch of the International North-South Transport Corridor (INSTC).

The INSTC, which links the Indian Ocean and Persian Gulf to the Caspian Sea via Iran, is a 7,200 kilometer-long, major international shipping route for Indo-Russian trade.

In the face of aggressive western sanctions, Russia has bolstered economic cooperation with several friendly nations. Iran and Turkey are currently working on implementing Russia’s Mir payment system into their economies.

Turkey also recently agreed to make partial payments for Russian gas in rubles, while European companies have reportedly been inquiring with Ankara about acting as a middle man to supply Russia with metals, as a way to overcome sanctions.

 

Pakistan a victim of tug of war among super powers

This year Pakistan is celebrating Independence Day, when the clouds of imminent default are getting thicker. While the people have complete faith in the economic resilience of the country, a lot needs to be done on war footings. 

To carve out its future strategy, a dispassionate review of nearly three-quarters of a century has to be done, find out the mistakes and develop a conviction that Pakistan is a sovereign state and not a colony of any global or regional super power.

It is an undeniable fact that since independence Pakistan has remained the focus of global and regional super powers. The country is termed a natural corridor for trade, gateway to Central Asia and landlocked Afghanistan.

The perception is getting credence often regimes are installed and toppled in Pakistan by the super powers to achieve their vested interest. This is evident from Pakistan fighting US-proxy war is Afghanistan for more than four decades and love and hate relationship with India.

At present Pakistan faces extremely volatile situation, which has become a threat for its own existence. Fighting a US proxy in Afghanistan has completely destroyed the economic and social fabric of the country. Pakistan is suffering from the influx of foreign militant groups getting funds and arms from different global operators.

Analysts say over the years Pakistan has been towing US foreign policy and military agenda, which has often offended Russia, China, India and Iran. To improve internal security Pakistan must revisit its foreign policy, particularly relationship with Afghanistan, India and Iran, enjoying common borders with the country. It may not be wrong to say that at present Pakistan doesn’t enjoy cordial relation with none of these countries.

Many Pakistanis believe that when Britain decided to take an exit from the subcontinent in 1947 it left a thorn, Kashmir. Since independence India and Pakistan have been living in constant state of war, spending billions of dollars annually on the purchase of conventional as well as non-conventional arms and have also attained the status of atomic powers. However, both the countries suffer from extreme poverty.

There seems no probability of reconciliation between the two countries because of presence of hawks on both the sides. Even the trade relations could not be normalized due to the lingering Kashmir dispute as Hindus are not ready for another division of Hindustan on the basis of religion.

Iran has been persistently enduring economic sanctions for more than four decades. Pakistan suffers from severe energy crisis but it is not allowed to construct Iran-Pakistan gas pipeline or even buy Iranian crude oil under food for oil program. Iran has often complaint that certain outfits, most notorious being Jundullah, having its base in Baluchistan province of Pakistan, are involved in cross border terrorism.

Pakistan offers the shortest and most cost effective route to landlocked Afghanistan, leading to Central Asian countries. Gwadar deep seaport has been constructed in Baluchistan province with the financial and technical assistance of China. India often raises its concerns on Chinese presence along Pakistan’s coastal belt. However, it is on record that India played a key role in the construction of Chabahar port in Iran as well as road and rail links up to Central Asia via Afghanistan.

Pakistanis completely fail to understand the duality of US policy. India was asked to withdraw itself from Iran-Pakistan-India gas pipeline project and also rewarded nuclear technology in return. However, it was not stopped from building port and supporting infrastructure in Iran.

 

 

 

Astarachay Bridge to enhance Iran Azerbaijan economic cooperation

Readers of this blog site may recall that the signing ceremony of memorandum of understanding (MOU) for cooperation in the construction of this bridge was covered on January 28 this year. Today an update is being presented, an evidence of the commitment and hard work of the people of both the countries.

Iranian Ambassador to Baku, Abbas Mousavi has said that completing the bridge over the Astarachay border river is going to diversify the modes of transportation between Iran and Azerbaijan and improve economic cooperation between the two countries.

“The completion of the bridge between Iran and Azerbaijan will boost business in both countries and result in diverse transportation (both railway and automobile) between the two sides,” Mousavi said on Wednesday on the sidelines of a visit to the bridge construction site.

Having a length of 89 meters and a width of 30 meters, this bridge aims to connect the international transit highways of the two countries (Baku-Rasht-Qazvin highways), the official explained.

According to the official, the transport ministers of the two countries are going to meet soon to discuss such joint projects and ways of expending transportation and transit cooperation.

“Also, a tripartite meeting between Iran, Azerbaijan and Russia will be held in the near future to review issues related to transit, customs, and the development of the North-South corridor,” Mousavi added.

Iran and Azerbaijan signed a memorandum of understanding (MOU) in late January for cooperation in constructing the bridge over the Astarachay border river.

The MOU was signed by Iranian Deputy Transport and Urban Development Minister Kheirollah Khademi and Azerbaijan’s Deputy Minister of Digital Development and Transport Rahman Hummatov in Baku on January 26.

The two neighbors had earlier announced the total investment made in the project to be 4.7 million euros.

Speaking in the signing ceremony of the mentioned MOU, Azeri Deputy Prime Minister Shahin Mustafayev said the construction of the bridge is scheduled to be completed by the end of 2022.

"The president and the government of the Republic of Azerbaijan attach special importance to the development of relations with the Islamic Republic of Iran, and the presidents of Iran and Azerbaijan expressed interest in further developing relations between the two countries in a cordial meeting in Ashgabat," the official said.

Noting that Azerbaijan and Iran have established deep relations in various areas including trade, economy, energy, customs, and investment, he said: "There are good opportunities between the two countries to implement joint projects in these fields."

Iranian Transport Minister Rostam Qasemi for his part called Azerbaijan the closest neighbor to Iran and said: "We hope that after the meeting of the presidents of the two countries, relations between the two nations will develop as much as possible."