Monday, 28 November 2022

Pakistan: Banking sector posts robust performance during H1CY22

Banking sector has shown robust performance and steady resilience during H1CY22, says Mid-Year Performance Review of the sector by State Bank of Pakistan (SBP).

The review covers the performance and soundness of the banking sector for the period January-June 2022 (H1CY22). It also covers the performance of financial markets and Microfinance banks (MFBs) as well as the results of Systemic Risk Survey (SRS), which represents independent respondents’ views about key risks to financial stability.

The Review reveals that sustained economic activity during H1CY22 supported the expansion of banking sector balance sheet by 16% during H1CY22. Substantial increase in the asset base was mainly driven by the flows of private sector advances and increase in investments, particularly the Government securities.

Besides sizable mobilization of deposits, banks’ reliance on borrowings increased significantly to finance the expanded balance sheet.

The pace of private sector advances growth during H1CY22 was the highest in comparable periods of previous three years. Improved manufacturing activity, as reflected in double digit growth in Large Scale Manufacturing (LSM) index during H1CY22, higher input prices and SBP’s refinance schemes augmented the overall flow of advances. Individuals and sugar sector availed major chunk of financing followed by textile sector.

Besides noteworthy growth, banks’ asset quality indicators further improved. Gross Non-Performing Loans (NPLs) ratio moved down to 7.5% by end June 2022, from 7.9% at end December 2021. However, recent catastrophic flooding in many parts of the country may impact the repayment capacity of agri-borrowers of banks’ and Microfinance borrowers.

The Review highlights that baseline profitability indicators moderated — despite strong growth in incomes — mainly due to the impact of sharp increase in tax charges.

Capital Adequacy Ratio (CAR) of the banking sector slightly edged down to 16.1% due to faster growth in asset base and advances. Nonetheless, the ratio remains well above the minimum regulatory requirement of 11.5% and banking sector in general has adequate capital buffers and resilience to withstand the impact of severe stress of macroeconomic conditions and shocks to key risk factors.

The Review also covered the results of 10th wave of SRS (July-2022) based on perceptions of independent market participants. The respondents perceive that the key risks for the financial system are mostly exogenous in nature i.e. global and macroeconomic risks. Majority of the respondents expressed confidence in the stability of the financial system.

Recent catastrophic flooding in many parts of the country may impact the repayment capacity of agri borrowers of banks and microfinance borrowers, and that of other borrowers as a second round effect. As such, banks as well as MFBs need to make prudent assessment of the possible impact on lending portfolios and take necessary measures for maintaining the asset quality and resilience of financial strength of their institutions, the Review adds.

Iran's Joining Shanghai Cooperation Organization

Iranian Foreign Minister Hossein Amirabdollahian praised Iran’s decision to move forward with an accession bill to the Shanghai Cooperation Organization (SCO), noting that a recent vote on the bill for the accession of the Islamic Republic of Iran to the SCO shows the determination and seriousness of our country to develop regional, international, and economic cooperation and strengthen its view of Asia.

The SCO includes countries in Central Asia, including Kazakhstan, Tajikistan, Russia, Pakistan, Uzbekistan and China. These are important countries because Russia and China tend to position themselves at odds with the US. This is increasingly true with Russia after the Ukraine invasion. Russia and the West appear to have completely destroyed their relations, and Iran would like to swoop in and benefit.

Iran calls this multilateralism. Recently in an interview with the Chinese People’s Daily Online published on Saturday, Mohammad Keshavarzzadeh stated that the SCO seeks to assist in providing better answers to the problems faced by member states as well as the region.

He argued that there was great “significance of Iran joining the bloc by pointing out that the organization includes members from Central and Eastern Asia in addition to other regions, and this can give Iran a platform to make overtures with all of these countries.”

The reason Iran likes the SCO is that it views it as an organization that has no Western members. “On a question that some Western nations equate the SCO with NATO, Keshavarzzadeh said such a comparison is wrong because the SCO is an inclusive bloc and not a military alliance,” a report in Tehran Times noted. These are pro-regime publications and reflect Iran’s stance.

An article at the Carnegie Endowment for International peace notes that Iran joining the SCO will bring some benefits to Tehran, but there are also hurdles.

“Iranian officials still maintain that officially joining the SCO – which is slated to occur by April 2023 – will bring benefits in the economic, commercial, and strategic sectors. Furthermore, from the perspective of the SCO itself, Iran’s political cooperation may be useful for the organization’s relations with the Islamic world,” the report noted.

It also notes that trade between Iran and SCO countries surpassed US$651 billion last year. But Iran will need to modernize its infrastructure to take advantage of any new opportunities. Also, the new China-Iran partnership will take a while to be realized in terms of benefits for Tehran.

 



Sunday, 27 November 2022

US Soccer scrubs emblem from Iran flag at World Cup

The United States Soccer Federation briefly displayed Iran’s national flag on social media without the emblem of the Islamic Republic, saying the move supports protesters in Iran ahead of the two nations’ World Cup match scheduled for Tuesday.

Iran’s government reacted by accusing America of removing the name of God from their national flag.

The decision by the US Soccer Federation adds yet another political firestorm to the Middle East’s first World Cup, one which organizers had hoped would be spared of off-the-field controversies.

It also comes as the US faces Iran in a decisive World Cup match, which was already freighted by the decades of enmity between the two countries and the nationwide protests now challenging Tehran’s theocratic government.

The US Soccer Federation said in a statement Sunday morning that it decided to forego the official flag on social media accounts to show support for the women in Iran fighting for basic human rights.

The Twitter account of the U.S. men’s team displayed a banner with the squad’s matches in the group stage, with the Iranian flag only bearing its green, white and red colors. The same could be seen in a post on its Facebook and Instagram accounts laying out the point totals so far in its group.

By Sunday afternoon, the normal flag with the emblem had been restored in the Twitter banner as attention to it grew.

“We wanted to show our support for the women in Iran with our graphic for 24 hours,” the federation said.

The U.S. Soccer Federation displayed the official Iranian flag in a graphic showing Group B standing on its website.

The brief absence of the emblem comes as monthslong demonstrations have challenged Iran’s government since the Sept. 16 death of 22-year-old Mahsa Amini, who had been detained by the country’s morality police.

The protests have seen at least 450 people killed since they started, as well as over 18,000 arrested, according to Human Rights Activists in Iran, an advocacy group following the demonstrations.

Iran has not released casualty or arrest figures for months and alleges without providing evidence that the protests have been fomented by its enemies abroad, including the US

Tehran also restricts press access and has detained over 63 reporters and photographers since the demonstrations began, according to the Committee to Protect Journalists, making covering the unrest that much more difficult.

Iran’s mission to the United Nations and its soccer federation did not respond to a request for comment from The Associated Press. As comments raged online, Iranian state television described the US federation as “removing the symbol of Allah” from the Iranian flag.

Iran’s semiofficial ISNA news agency quoted Safiollah Fagahanpour, an adviser to the Iranian Football Federation, saying that the measures taken regarding the Islamic Republic of Iran flag are against the law of FIFA competitions.

“They must be held responsible,” Fagahanpour said. “Obviously they want to affect Iran’s performance against the US by doing this.”

The Islamic Republic emblem, designed in 1980, is four curves with a sword between them. It represents the Islamic saying: “There is no god but God.” It also resembles a tulip or lotus.

At the top and the bottom of the flag, there are 22 inscriptions of “God is Great” as well, which honors the date on the Persian calendar when the Islamic Revolution took hold.

The flag has become a point of contention at the World Cup. Apparent pro-government supporters have waved it, shouting at those demonstrating over Amini’s death. Others at matches have waved Iran’s lion and sun flag, an emblem of its former ruler, the late Shah Mohammad Reza Pahlavi.

More security forces could be seen at Iran’s last match against Wales. In the capital Tehran, anti-riot police — the same ones cracking down on protests — waved the Iranian flag after the Wales win, angering demonstrators.

Iran and United State to clash in Qatar

The United States and Iran, diplomatic rivals for more than 40 years, clash on the soccer pitch on Tuesday, their places at the World Cup on the line in a fitting finale for the most politically charged group at this year's tournament.

The national team coaches sidestepped the icy bilateral relations, saying they were focused on the tournament and its ability to bring people together.

Washington and Tehran severed diplomatic relations in 1980 after the Islamic revolution. Ties have been strained in recent years when then-President Donald Trump pulled the United States out of an Iran nuclear deal. The United States killed a top Iranian general in 2020 and Tehran responded with missile strikes at US forces based in Iraq.

“I envision the game being hotly contested for the fact that both teams want to advance to the next round, not because of politics or because of relations between our countries," said US coach Gregg Berhalter.

"The thing about soccer is you meet so many different people from all around the world, and you're united by a common love of the sport. We're soccer players and we're going to compete and they're going to compete and that's it."

Iran's dramatic 2-0 win over Wales and the US team's tense goalless stalemate against England on Friday set up a tantalizing final round of Group B matches.

England, sitting top with four points, face bottom side Wales, meaning the Iran-United States contest will decide which team goes through to the round of 16.

The eagerly awaited meeting is a rematch of the 1998 World Cup group stage contest, dubbed the mother of all games, which Iran won 2-1. In a symbolic moment before that match at Lyon's Stade Gerland, the Iranian players gave white roses, a symbol of peace in the country, to their American opponents.

Overshadowing Iran's World Cup build-up this year has been civil unrest at home over the September death in police custody of 22-year-old Mahsa Amini, arrested for flouting the country's strict Islamic dress code.

Team Melli declined to sing Iran's national anthem in their first game against England in an apparent show of solidarity with protesters. They sang quietly on Friday at the Ahmad bin Ali Stadium, where boos and jeers were heard from Iran supporters.

Amid growing public pressure on players to take a stand over a deadly crackdown on protests, Iran rallied late against Wales to rescue a World Cup campaign that seemed to have flatlined following their 6-2 thrashing by England.

Berhalter, whose exuberant side drew 1-1 with Wales in their group opener, described the match as his team's "first knockout game" of the World Cup and was wary of the threat posed by Iran after their second-half assault against Wales.

"Now we need to be sure that we are good enough to go to the second round," Iran coach Carlos Queiroz said after his team kept alive their hopes of a first ever trip to the knockout stage.

"The US is a brilliant team as well, as we saw them against Wales.

"Our preparation starts with a good rest, refresh the minds and put all the complementary and garbage things outside of our minds and focus on our goal, because what we want to do is to give this gift to Iranian fans."

 

 

 

Saturday, 26 November 2022

China hit by COVID protests

According to Reuters report, protests against China's heavy COVID-19 curbs spread to more cities, including the financial hub Shanghai on Sunday, nearly three years into the pandemic, with a fresh wave of anger sparked by a deadly fire in the country's far west.

The fire on Thursday that killed 10 people in a high-rise building in Urumqi, capital of the Xinjiang region, has sparked widespread public anger. Many internet users surmised that residents could not escape in time because the building was partially locked down, which city officials denied. The fire has fuelled a wave of civil disobedience unprecedented in mainland China since Xi Jinping assumed power a decade ago.

In Shanghai, China's most populous city, residents gathered on Saturday night at Wulumuqi Road - which is named after Urumqi - for a candlelight vigil that turned into a protest in the early hours of Sunday.

As a large group of police looked on, the crowd held up blank sheets of paper - a protest symbol against censorship. Later on, they shouted, “lift lockdown for Urumqi, lift lockdown for Xinjiang, lift lockdown for all of China”, according to a video circulated on social media.

At another point a large group began shouting, “Down with the Chinese Communist Party, down with Xi Jinping", according to witnesses and videos, in a rare public protest against the country's leadership.

The police tried at times to break up the crowd.

Beijing is adhering to a zero-COVID policy even while much of the world tries to coexist with the coronavirus. While low by global standards, China's cases have hit record highs for days, with nearly 40,000 new infections reported on Sunday for the previous day.

China defends Xi's signature zero-COVID policy as life-saving and necessary to prevent overwhelming the healthcare system. Officials have vowed to continue with it despite the growing public pushback and its mounting toll on the world's second-biggest economy.

Widespread public protest is extremely rare in China, where room for dissent has been all-but eliminated under Xi, forcing citizens mostly to vent on social media, where they play cat-and-mouse with censors.

Frustration is boiling just over a month after Xi secured a third term at the helm of China's Communist Party.

"This will put serious pressure on the party to respond. There is a good chance that one response will be repression, and they will arrest and prosecute some protesters," said Dan Mattingly, assistant Professor of political science at Yale University.

Still, he said, the unrest is far from approaching that seen in 1989, when protests across the country culminated in the bloody crackdown in Tiananmen Square.

"Popular sentiment matters," he said. "But as long as there is no split in the elite and as long the PLA (People's Liberation Army) and security services remain on his side he does not face any meaningful risk to his hold on power."

The next few weeks could be China's worst since the early weeks of the pandemic for the economy and the healthcare system, Mark Williams of Capital Economics said in note last week, as containing the outbreak will require additional lockdowns.

In the northwestern city of Lanzhou, residents on Saturday upturned COVID staff tents and smashed testing booths, posts widely shared on social media showed. Protesters said they were put under lockdown even though no one had tested positive.

Videos from Shanghai showed crowds facing police and chanting “Serve the people”, “We want freedom", and “We don’t want health codes”, a reference to the mobile phone apps that must be scanned for entry into public places across China.

The city's 25 million people were put under lockdown for two months earlier this year, an ordeal that provoked anger and protests.

Chinese authorities have since then sought to be more targeted in their COVID curbs, an effort that has been challenged by the surge in infections as the country faces its first winter with the highly transmissible Omicron variant.

On Friday night, crowds took to the streets of Urumqi, chanting "End the lockdown" and pumping their fists in the air after the fire, according to videos on social media.

Many of Urumqi's 4 million residents have been under some of the country's longest lockdowns, barred from leaving their homes for as long as 100 days.

In Beijing, 2,700 km (1,700 miles) away, some residents under lockdown staged small protests or confronted local officials on Saturday over movement restrictions, with some successfully pressuring them into lifting the curbs ahead of a schedule.

A video shared with Reuters showed Beijing residents marching in an unidentifiable part of the capital on Saturday, shouting "End the lockdown"

 

 

 

US creating make or break situation for Iran

United States and its allies across the globe are struggling to support protesters in Iran in what observers say is a make-or-break moment that could tip the scales for regime change in Tehran.  

US President, Joe Biden said in early November that “we’re gonna free Iran. They’re gonna free themselves pretty soon.”  

But outside experts say US policy focused on diplomacy with Tehran over its nuclear program, and the disunity within and outside Iran, puts the favor in the hands of the nation’s current government.  

“The problem is not only the foreign policy decisions of the US. There’s no united front on the end of the protest movement, there is no leadership,” said Ceng Sagnic, Chief Analyst of TAM-C Solutions, a multinational private intelligence company. 

Iran’s leaders have attempted to brutally suppress demonstrators that originally took to the streets protesting the death of Mahsa Amini, after she died in custody of the country’s morality police. Amini was detained for allegedly wearing her headscarf incorrectly.

Since then, protests have grown to include calls for the downfall of the country’s Islamic rulers. 

At least 14,000 people are reported to have been arrested and hundreds are believed to have died in the demonstrations, including dozens of children. The youngest victim is believed to be nine years old.  

“The Iranian government and the regime as a whole have the potential power to suppress the protest movement,” Sagnic said.  

US Special Envoy for Iran, Rob Malley reacted to a recent CNN investigation saying that it documented unspeakable acts of sexual violence by Iranian officials in detention centers. 

“It’s a reminder of what is at stake for the Iranian people – and of the lengths to which the regime will go in its futile attempt to silence dissent,” he tweeted. 

The US, European Union and United Kingdom have imposed sanctions on individuals and entities they have identified as responsible for the violent crackdown on protesters. They’ve sought to ease restrictions on internet access to aid protesters who have had their service cut off. 

Member-states of the United Nations are looking for ways to condemn and isolate the Islamic Republic, the ruling government of which came to power in 1979 following a revolution. Outside Iran, individuals are working to maintain support for the protesters globally.  

The Iranian national soccer team stayed silent when their national anthem played at the World Cup in Qatar, widely viewed as a sign of support for the protesters. Solidarity protests in Berlin, Los Angeles and Washington, DC, last month brought together tens of thousands of the Iranian diaspora and their supporters. 

Shayda Gangi, an Iranian American living in DC, helped launch an exhibit in Georgetown displaying protest art created over the past two months in an effort to keep attention on the struggle of the people of Iran.  

“All these articles being written, all the people who come to these exhibits, and showcase this work, is so important and it’s doing what it’s supposed to do, which is to raise awareness and keep the spotlight on Iran,” she told The Hill.  

The exhibit, which ran for three days, featured more than 100 pieces from artists all over the world, including Iranians living abroad, Italian and Israeli artists, and at least one artist from inside Iran, who sent her work with great secrecy, quickly deleting communication and even blocking the organizers at one point as a security precaution, Gangi said.  

“I tried to put myself in her shoes and think, ‘would I do the same thing?’” Gangi said. “And I don’t know. She was scared and is in Iran, and it’s dangerous, but even with all of that, she was so happy to contribute to this event, and to do what she could do and to send her artwork to be shown.” 

Sherry Hakimi, an Iranian American activist and founder and executive director of a nonprofit focused on gender equality, was one of five Iranian women invited to meet with Secretary of State Antony Blinken and other top State Department officials in October to offer their advice on how the US could best support protesters.  

“I appreciate that senior US leaders have been listening to the calls made by Iranians and Iranian Americans alike,” she told The Hill, but said governments need to be more innovative in how they think about aiding the protesters.  

“These are unprecedented times – this is the first female-led revolution – so meeting the moment requires unprecedented measures.” 

Hakimi said that on top of sanctions and efforts to hold the Islamic Republic accountable at the United Nations, countries should focus on providing health care assistance because injured protesters risk arrest if they seek care at a hospital.  

“I want to see more health care-focused aid being sent to Iran, whether that’s through the Red Cross, Doctors Without Borders, or some other organization or mechanism.

There are parts of Iran where people are no longer able to seek treatment, because the regime has made it impossible — either hospitals won’t treat them or if they do go to a hospital they can risk arrest, which makes things worse,” she said.  

“To me, that seems like one of the most basic things.” 

Human rights groups and news reports have documented accounts from protesters that they are avoiding hospitals for fear of arrest from security forces, and that the Iranian government is using ambulances to infiltrate protests and detain demonstrators.  

The danger for protesters seeking medical help was echoed by Cameron Khansarinia, Policy Director for the nonprofit and nonpartisan National Union for Democracy in Iran (NUFDI), which also helped sponsor the art exhibit in Georgetown.  

“Protesting in Iran is not like protesting in any other country,” he said, referencing the extreme tactics of targeting protesters, the use of live ammunition, detentions, allegations of torture and killings.  

NUFDI is advocating for the US and other governments to explore setting up a “strike fund” to distribute the Islamic Republic’s frozen assets abroad among protesters who have their livelihoods threatened by the government.  

“So providing, at least, a small modicum of financial support to allow these workers to go on strike and allow their families to have bread at the end of the day … are very tangible means by which a foreign government could empower the Iranian people,” he said, calling for governments to devise a “mechanism” to deliver such cash.   

Khansarinia, like others interviewed for this article, described the protests as unprecedented for their massive scale in the face of extreme violence by security authorities.   

The Norway-based Iran Human Rights organization has documented at least 416 people killed, and that includes 51 children. The rights group is also pointing to the government systematically and disproportionately targeting minorities in Iran, in particular in the Baluch and Kurdish ethnic regions. 

The tactic is aimed at seeking to delegitimize the protests as an ethnic, separatist movement, private intelligence analyst Sagnic said. 

“By increasing the oppression in the Kurdish areas, violent tactics, striking Kurdish Peshmerga bases in Iraq, trying to make it more an ethnic issue, something that separates Kurdish groups from the rest of Iran, which is a successful tactic, to be honest,” he said.  

Gangi, who helped organize the Georgetown art exhibit, said that she feels this moment is different because of the scale of support from the international community. 

“This is by far, in my personal experience following these things throughout the years, this is the first time I’ve seen this much support from not just the Iranian community and not just within Iran, but the global community,” she said.   

“With what they’re doing within Iran, with the internet shutdowns, and all the violence — what we’re seeing outside is a small percentage of what’s happening there. I would really just ask everyone to continue to do what they’re doing, and keep the light on, on Iran.” 

 

EU Countries Lambast Gas Price Cap Proposal

European Union Energy Ministers locked horns on Thursday over a proposed gas price cap at 275 euros per megawatt hour (MWh), grappling over its effectiveness at that level and the impact on supplies and incentives to cut consumption.

The long-standing disagreements were holding up other policies to alleviate the acute energy crisis, such as the launch of joint EU gas purchases and a quicker permit process for renewables.

Diplomats said the 27 EU countries agreed on these two in principle but delayed formal approval until another meeting called for December 13, 2022 with proponents of a cap demanding a green light for all three proposals or none at all.

Polish Climate Minister Anna Moskwa called the 275 euro blueprint put forward by the European Commission a joke.

Belgium's Energy Minister Tinne Van der Straeten also chimed in, telling reporters, "The text that is on the table is unsatisfactory ... it doesn't clearly say if it will have an effect on prices."

Their Greek counterpart, Konstantinos Skrekas said a cap of 150-200 euros/MWh would be realistic.

"It could help us reduce gas prices and therefore reduce electricity prices, which is a major challenge in Europe this winter," he said.

Malta was also unhappy with the proposed ceiling. Energy minister Miriam Dalli said the strict conditions needed for the mechanism to kick in made it "next to impossible".

As many as 15 EU states want a set limit to contain energy costs after gas prices soared to record highs in August 2022, driven up by Russia cutting supplies to Europe in the wake of Western sanctions over Moscow's war against Ukraine.

But stiff opposition comes from a smaller but powerful camp led by Germany, the EU's biggest economy. Together with the Netherlands, Sweden, Austria and Finland, they say a cap could shift supply elsewhere and cut incentives to lower consumption.

The Commission proposed to limit the front-month price on the Netherlands' Title Transfer Facility (TTF) gas exchange if it exceeds 275 euros/MWh for two weeks and if the price is more than 58 euros higher from a liquefied natural gas (LNG) global reference for 10 consecutive trading days.

Dutch minister Rob Jetten was highly critical of the plan.

"The proposal is flawed," he said. "There is a lot of risk for damaging the energy security of supply, and also for stability of the financial markets."

German state secretary for climate, Sven Giegold, added, "We still have a lot of work to do."

The Estonian minister was the only one to say the plan was OK, pretty much as a temporary measure and only to address extreme price increases rather than a permanent solution.

The EU has approved a series of measures to mitigate the crisis in recent months, ranging from consumption savings to windfall taxes to claw back profits from energy producers. But the issue of whether and how to cap gas prices has split the bloc.

Ukraine's energy minister was also due to dial in, according to an EU diplomat, to discuss support for his country where the Russian war destroyed civilian infrastructure and incapacitated power and heating systems as winter cold sets in.