Pakistan needs US$16.8 billion for rehabilitation and reconstruction

Pakistan is eying generating around US$8 billion from the international community and donor agencies for the rehabilitation and reconstruction of the flood-affected people at the “International Conference on Climate Resilient Pakistan” scheduled for January 09 in Geneva.

Diplomatic sources said Pakistan needs a total of US$16.8 billion for the reconstruction and rehabilitation of more than 33 million flood-affected people.

“We are trying our level best to arrange half or US$8.1 billion of the total US$16.8 billion from our own resources and for the remaining US$8.1 billion we are hopeful that the international community will extend its support generously so that the vast affected population of the country is rehabilitated,” a diplomatic source said.

When asked how the huge amount of around US$8 billion could be arranged in such a grave economic situation, he explained that the amount would not be spent in one go, rather it is a process and the amount would be generated from Public Sector Development Program (PSDP), as well as, from the public-private partnership.

To another question, he said that to the UN flash appeal of US$816 million, more than US$200 million have been received so far from the international community.

In an informal interaction, a senior Foreign Office official said that Pakistan, in coordination with the donor agencies, will present “Resilient, Recovery, Rehabilitation and Reconstruction Framework” before the International Conference on Climate Resilient Pakistan being held in Geneva on January 09.

He said that Prime Minister Shehbaz Sharif and UN Secretary-General António Guterres will co-host the conference while various world leaders including French President Emmanuel Macron and others will also participate.

To a question, he said that France has been very supportive in providing the required assistance for the flood-affected people of Pakistan, adding that Pakistan is also in touch at the highest level with various countries to ensure their participation at heads of state and heads of government level.

The official expressed confidence that the international community will express solidarity with Pakistan for the reconstruction and rehabilitation of flood-affected areas.

“Pakistan is in touch with all the important capitals and a high-level participation from them is expected in the conference,” the official said, adding that the event should also be seen in the context of a diplomatic achievement of Pakistan.

He said that the prime minister has instructed that a small delegation from Pakistan will be accompanying him to the conference while all the provinces have also been asked to ensure their participation either at the level of chief ministers or ministers.

About the transparency in spending international assistance, he said that a procedure has been devised with regard to spending the money in a transparent manner and it will be announced in the proposed “Resilient, Recovery, Rehabilitation and Reconstruction Framework”.

Meanwhile, Foreign Office said in a statement that the Conference will serve as a platform to marshal international support for the people and Government of Pakistan to build back better in a resilient manner after the recent devastating floods, as the country transitions from the rescue-and-relief phase towards the monumental task of recovery, rehabilitation, and reconstruction.

It added that Pakistan will present the Resilient Recovery, Rehabilitation and Reconstruction Framework (4RF) at the Conference, and seek international support and long-term partnerships for its implementation.

The 4RF document outlines a prioritized and sequential Plan, defined at the Federal and Provincial levels, and includes the financial mechanism and institutional arrangements for its execution in an open, transparent and collaborative manner.

The Conference will feature a high-level opening segment, to be co-chaired by the Prime Minister and the UN Secretary General, followed by the official launch of the 4RF document and partner support announcements.

The Prime Minister and the UN Secretary General will also hold a joint press stakeout.

At the Conference, according to the statement the Prime Minister will outline Pakistan’s vision for rehabilitating the affected population and reconstructing the damaged infrastructure in a resilient manner, with the support of development partners, and the country’s transition towards a more dynamic and sustainable economic development model.

Federal Ministers from Pakistan will elaborate on the 4RF document and also present Pakistan’s long-term plan for building climate resilience and adaptation, it added.

It added that the perspectives of the four provinces will be articulated by their representatives.

Heads of State and Government, Ministers and high-level representatives from several countries and International Financial Institutions, Foundations and Funds, as well as from international development organizations, private sector, civil society and INGOs will participate in the Conference, it added.

“The Conference will help Pakistan in forging a long-term partnership with its friends and development partners on the basis of the 4RF document, and serve as a demonstration of international solidarity with the people of Pakistan as they commence the journey towards rebuilding their lives and livelihoods,” it added.

Saudia to further cut Arab Light crude prices

Top oil exporter Saudi Arabia may further cut the prices for its flagship Arab Light crude grade to Asia in February 2023 after they were set at a 10-month low this month, as concerns of oversupply continued to cloud the market.

State oil giant Saudi Aramco may cut the official selling price (OSP) for the medium sour grade by about US$1.50/barrel in February, according to four respondents surveyed by Reuters, in line with the move in the Dubai benchmark.

That would drag the February Arab Light price to a level last seen in November 2021, and about US$1.75 a barrel over the Oman/Dubai average.

"The near-term market outlook is dim. More Russian barrels are expected to flow to Asia, but demand is not picking up," said one respondent.

The price cut comes as Russia diverts its oil from Europe to Asia, after the European Union banned seaborne crude oil imports from December 05, 2022 alongside a price cap introduced by the Group of Seven (G7) nations that restricts Russian oil trade using Western financial, shipping and insurance services.

Though, Moscow last week banned crude sales to countries that observe the price ceiling on Russian crude oil, its key oil clients in Asia would be unaffected as they did not join the price cap coalition.

Russia became the top crude supplier to both China and India in November, as the Asian countries took advantage of the steep discounts, while the western countries eschewed business with Moscow.

Oil demand is also unlikely to return imminently even though China has removed its stringent COVID-19 restrictions. The sharp spike of infections in the country has dampened people's willingness to travel, the respondents said.

China has raised export quotas for refined oil products in 2023's first batch, a further effort to spur refinery production and capture healthy export margins amid slow domestic demand.

Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting about 9 million barrels per day (bpd) of crude bound for Asia.

Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices.

 

Ben-Gvir's Temple Mount visit and Netanyahu's political gamble

National Security Minister Itamar Ben-Gvir's early Tuesday morning visit to the Temple Mount was a political gamble that could pay off big-time for both him and Prime Minister Benjamin Netanyahu – or backfire.

Only one terror attack will prove fodder for the opposition to make a convincing case that Ben-Gvir was indeed dragging Netanyahu into chaos.

Netanyahu and Ben-Gvir met on Monday evening, after which the Likud put out a statement saying, "After consulting with security officials, Netanyahu did not request that Ben-Gvir not visit the site."

Ben-Gvir put Netanyahu in a pickle. The National Security Minister would have likely visited the site even if Netanyahu would have requested him not to.

Netanyahu therefore risked appearing weak, but on the other did not want to encourage Ben-Gvir to visit so as not to be blamed for the consequences.

First, the duo reportedly actually agreed in the meeting that Ben-Gvir would visit on Tuesday, and second, they agreed to keep this secret and intentionally led many to believe that the visit would happen in the next week or even few weeks, rather than the first thing the next day.

After the opposition launched an attack on Monday, including Lapid warning that people will die, both Ben-Gvir and Netanyahu realized that if the visit ends up not provoking a response from Palestinians in the West Bank or Hamas in Gaza, it proves the doomsayers wrong, strengthens the idea of showing who is boss and indicates a new, tougher policy vis-à-vis the Palestinians.

The question is what happens if there is a response?

One siren in the Gaza border area, or one terror attack directly linked to the visit, will prove fodder for the opposition to make a convincing case that Ben-Gvir was indeed dragging Netanyahu into chaos.

This sort of political gamble is typical of Ben-Gvir, but not of Netanyahu, who is notoriously cautious on security issues.

But as Netanyahu showed throughout the coalition negotiations over the past two months, he does not have much of a choice but to go along with his controversial partner, as he has no other realistic government and he was and likely will continue to be willing to sacrifice quite a lot in order to maintain power.

The question is whether such a sacrifice includes a security deterioration, and, god forbid, loss of life of an Israeli soldier or civilian.

 

Pakistan exports 50,000 tons furnace oil to Singapore

Refineries in Pakistan were facing glut of furnace oil, which was also hampering their operations. Pak Arab Refinery Limited (PARCO) takes the lead by exporting the first cargo of 55,000 metric tons on Sunday night. This opens the door for other refineries to follow the footsteps of PARCO.

According to a report, the tender for this cargo was floated by PARCO at the beginning of December 2022, and Dubai-based E3 Energy DMCC won the tender for the export.

According to the sources in the refining sector, PARCO had to export furnace oil to keep the refinery running. PARCO Managing Director Shahid Mahmood Khan took the decision to export the fuel oil.

If the decision was not taken, the refinery would have shut down due to the accumulation of huge furnace oil stocks. Before the export of fuel oil, PARCO had almost fifty percent of total stockpile with the local refineries following slump in demand.

The demand dropped because thermal power plants stopped stockpiling furnace oil which was on the bottom of the electricity generation merit list. Also, electricity demand had declined due to winter.

As PARCO started accumulating excess furnace oil, which was not being taken by the power plants, it started storing the fuel at Port Qasim for exports.

Reportedly, PARCO sold the stock to a foreign group at free on board (FOB) plus five dollars. Although the export price was low, it would help the refinery keep the operations.

Before the export of 55,000 tons, the country’s total furnace oil stock stood at 592,000 tons. Refineries have 233,000 tons or 39% of the total stock.

Oil marketing companies hold 186,000 tons or 31% of the total stock, whereas power plants carry 172,000 tons or 29% of the total stocks available in the country.

Out of the total stocks with refineries, PARCO held 108,000 tons furnace oil or 46%. That has now reduced to 53,000 tons, following Sunday’s export to Singapore.

Cnergyico has 45,000 tons furnace oil or 19% of total stock carried by refineries.

Attock Refinery Limited (ARL) holds 37,000 tons or 16%.

Pakistan Refinery Limited (PRL) stockpile stands at 25,000 tons or 11%.

National Refinery Limited (NRL) is carrying 17,000 tons or 7%.

It may be recalled that Furnace oil stockpiles started increasing after power plants refused to lift it despite government instructions. Their reason of refusal was the low demand of electricity, which made power generation from expensive furnace oil economically unfeasible.

 

Oil slides after IMF warns of tougher 2023

Oil prices slid on Tuesday from their highest levels in a month on a stronger US$ and after the head of the International Monetary Fund warned of a tougher 2023 as major economies experience weakening activity.

Brent crude futures dropped to US$84.93/barrel by 0148 GMT while US West Texas Intermediate crude (WTI) traded at US$79.49/barrel, after the US$ strengthened. A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies.

IMF Managing Director Kristalina Georgieva said on Sunday that the United States, Europe and China - the main engines of global growth - are all slowing down simultaneously, making 2023 tougher than 2022 for the global economy.

Still, oil prices settled more than 2% higher on Friday with Brent and WTI closing 2022 up 10.5% and 6.7%, respectively.

Commodities saw a substantial US$12.3 billion bullish flow in the week that ended on December 27, 2022 the single largest weekly bullish flow in 2022, Societe Generale analysts said in a January 03. 2023 note.

“The commodity with the largest flow was Brent, which saw a US$3.4 billion bullish flow as Russia outlined its response to the EU and G7 imposed price cap on the country's crude exports to third parties," the analysts said.

President Vladimir Putin banned the supply of crude and oil products from February 01, 2023 for five months to nations that abide by the cap in a decree, which also included a clause that allows for Putin to overrule the ban in special cases.

Russian crude has been diverted to India and China from Europe while Moscow planned to increase diesel exports from the Baltic Sea port of Primorsk to 1.81 million tons in January 2023. However, January oil products exports from Tuapse are expected to fall to 1.333 million tons, traders said.

A Reuters oil price poll showed that Brent prices are expected to average at US$89.37/barrel in 2023 while the average for WTI is at US$84.84 a barrel as global economic growth slows.

In China, the world's largest crude importer and second-largest oil consumer, some people in key cities braved the cold and a rise in COVID-19 infections to return to regular activity on Monday, raising the prospect of a boost to the economy and oil demand as more recover from infection.

 

Pakistan in the midst of a perfect storm

At present Pakistan is plagued by policy paralysis and the situation is likely to get worse before getting better. The continuation of the IMF program remains critical.

Unfortunately, analysts do not see much of an improvement. Pakistan seems to be caught in the midst of a perfect storm of adversities with spiraling inflation, falling reserves and external vulnerabilities.

Politics appears to be a nightmare because the current set up seems incapable of making the right decisions. The logjam in politics continues to persist, which is prolonging policy inaction, delaying the 9th IMF review and taking the situation from bad to worse.

Given the urgent need for action to revive the IMF program and procure fresh bilateral funding, the possibility of a technocrat-led government has made its way into the discourse. Such a setup would need very strong backing and slack by political parties, which appears to be missing.

Balance of Payments crisis is getting worse. Pakistan barely managed to meet the US$ one billion Sukuk maturity in early December 2022, but confidence on meeting external debt obligations in 2023 is being shattered with foreign exchange reserves slipping below US$ 6 billion.

There is little conviction also that the donors conference scheduled for January 09, 2023 in Geneva will generate meaningful funds for post-flood reconstruction.

Pakistan urgently needs the promised US$3 billion from Saudi Arabia, together with the continuation of the IMF program.

The situation has already become unsustainable and analysts expect the PKR to slip further down.

They also expect the policy rate to rise by another 100bps to 17% in the next Monetary Policy Committee meeting scheduled for January 23, 2023.     

Prime Minister Shehbaz Sharif has indicated there is no option but to comply with IMF conditions (market-based exchange rate, energy reforms, higher revenue generation), but the government needs to take immediate action.

Exploring affiliation of Israeli cabinet members

Benjamin Netanyahu's newly formed cabinet has been officially sworn in despite receiving no favorable headlines from around the world, reports Tehran Times

Even some Israeli media outlets have referred to the new cabinet as the most rightwing during the entity’s decades-long history.

Israel, as a colonialist regime, has always been viewed as an extremist right-wing occupation committing atrocities and Palestinian do not see much difference between any Israeli cabinets over the past seven decades.

All the regime's cabinets have committed crimes against humanity that included war crimes, genocide, the mass slaughter of children, the ongoing ethnic cleansing campaign along with so many other violations of international law.

However, the newly formed Netanyahu cabinet is perhaps the most extreme and right-wing and that's according to Israel’s leftist parties who are afraid that it will result in an increased number of retaliatory operations by the Palestinians.

A member of Israel’s own Knesset admitted that the occupation, under the rule of Netanyahu and his extremist cabinet, is moving toward a full-fledged fascist state.

The remarks were made during an Israeli settler protest outside the Knesset in strong opposition to the return of Netanyahu who has been Israel's longest-ever serving Prime Minister.

The truth is Israel has always held a fascist ideology but it is now under the rule of a more extreme and fascist ideology. The regime has given the powers of governance to war criminals and extremists because Israel has never been so weak and vulnerable as it is at the moment.

It has been exposed because of the unprecedented armed resistance that has been emerging from the occupied West Bank this year. 

Such is the extent of the resistance; Israel has turned to Netanyahu, the war criminal and a person that is facing multiple corruption charges along with a coalition that is so extreme that it has called for the expulsion of all Palestinians from their native land and the execution of Palestinian prisoners.

Netanyahu was forced to bring in these fascist figures because he wanted to secure a majority that can bring him back to power and save him from corruption charges.

In other words, the war criminal does not care for the safety of Israeli settlers which is something that is very concerning for Israelis who are planning on leaving the occupied Palestinian territories in their droves, according to surveys.

There are now Israelis protesting against the new cabinet, for the first time in history, because of new ministers in an office such as Itamar Ben-Gvir who has made so many disturbing and racist statements that even Israel’s allies are concerned.

The most extreme and right-wing fascist cabinet in history will put Israel at odds with large parts of the Israeli public, and concern Israel's closest allies while escalating tensions with the Palestinians.

Reports indicate that some elements of the new Israeli cabinet are so extreme that the administration of US President Joe Biden will not deal with them as they feel uncomfortable with such elements. 

Netanyahu's incoming hardline government will place illegal West Bank settlement expansion at the top of its agenda and had already pledged to legalize dozens of illegally built outposts and annex the occupied territory as part of its coalition deal with ultranationalist allies.

Some members of the new cabinet squat on illegal settlements themselves, in a sign that there will be a major push in the future toward expanding settler units, despite the fact they are considered illegal under international law. 

But experts say the newly formed West Bank resistance groups will expand their armed operations in the face of further settlement expansion, which comes alongside Israeli demolitions of Palestinian homes.

The new cabinet members also support the Israeli settlers storming of the al-Aqsa Mosque compound, something Palestinians have said is a red line. 

There is no doubt this will represent a new escalation in occupied al-Quds (Jerusalem) next year and the wider occupied West Bank as well as inside the occupied Palestinian territories.

Some Palestinian analysts say they are glad the new Israeli government is in power because it represents the real face of the regime in front of the international community. 

Meanwhile, Palestinians have welcomed a vote by the United Nations General Assembly to ask the International Court of Justice (ICJ) to deliver a widespread opinion on the legal consequences of Israel's occupation of the Palestinian territories.

"The time has come for Israel to be a state subject to law, and to be held accountable for its ongoing crimes against our people," said Nabil Abu Rudeineh, a senior Palestinian official based in the occupied West Bank.

In a social media post, another senior official Hussein al-Sheikh said that the vote "reflects the victory of Palestinian diplomacy."

The United Nations General Assembly has passed a resolution calling on the ICJ to give an opinion on Israel’s illegal occupation of Palestine.

The General Assembly voted 87 to 26 with 53 abstentions on the resolution, with Western nations split but with virtually unanimous support in the Islamic world – including among Arab states that have normalized relations with Israel.

Russia and China also voted in favor of the resolution.