Pakistan: Will general elections be held in October 2023?

Besides facing dire economic challenges, Pakistan has been passing through a political crisis as well. The political quagmire has exacerbated. Investors’ confidence already shattered amid fears of default on foreign loans, has been battered further by uncertainties hovering over the elections schedule. This raises the million dollar question will the Elections be held in 2023.

The Elections for the National Assembly have become due by October 2023 as per the constitution. The dissolution of two Provincial Assemblies ahead of the October schedule and the judicial orders to hold early elections makes the situation untenable.

According to Polls conducted by Pakistan’s leading brokerage house, Topline Securities, 60-70% respondents feel elections will be held before October or in October 2023, while 20-30% think it will be delayed.

If National Elections are held around October 2023, there is high probability that Khan led PTI may get highest seats in National Assembly, surveys and polls forecast, unless Khan meets with disqualification, party breakup, etc. due to under trial cases against him.

With risk that present prime minister, Shehbaz Sharif may be disqualified by Supreme Court on contempt, another much talked about scenario has been that the present coalition government (PDM) might get its office term extended beyond October 2023. The government might invoke the Article 232 of the constitution under the garb of ‘emergency’ in the country on the pretext of security concerns or/and financial crisis.

Hypothetically, if the government undertakes such measures, matter might be challenged by the opposition in the court of law and the court may give its ruling over the government decision. It could linger the matter further and crisis may persist persist.

Another option could be the military rule. The country has witnessed direct military rule for 33 out of 75 years in Pakistan. Chances of direct military rule are slim, 10% as per our Poll.

To cool down the situation efforts of dialogue between political parties to sort out this elections related matter has started. This out of the court settlement, through dialogues can be a catalyst to cooling political heat and lead to any decision regarding the Elections for the national and provincial assemblies.

The brokerage house believes, this uncertain political theatre would keep on reflecting on the stock market, economy and currency. However, once the truce is carved the current political battles, the focus will be imminently back on economy.

The brokerage house in one of its earlier reports “Pakistan’s Debt Restructuring” dated December 03, 2022 and report “Pakistan Debt Restructuring – Part 2” dated January 24, 2023 the crucial factor or the Achilles heel of the current debt is the short term rollovers that have increased by 9 times to over US$12 billion since 2015.

The brokerage house is of the view that external debt restructuring is the litmus test, the mode of restructuring, and how orderly or disorderly are done, will determine Pakistan’s economic vulnerabilities.

Pakistan new government should ideally try to convert its short-term external loans with long term with the help of friendly countries like China, Saudi Arabia and UAE etc. If that is not doable, then Pakistan should try G-20 common framework of debt restructuring. These are less painful and will help in economic recovery.

 

 

China to send special envoy to Ukraine

Chinese President Xi Jinping spoke to Ukrainian counterpart Volodymyr Zelensky over the phone on Wednesday. The call was the first time the two leaders had talked since the Russian invasion of Ukraine in February 2022.

China has faced mounting criticism over its stance on the war, with Beijing’s assertion of neutrality failing to convince Western governments because of its disproportionate interaction with Moscow.

During the call, Xi pledged long-term cooperation with Ukraine, and said China will send its special envoy on Eurasian affairs to Ukraine and other countries.

The envoy, former vice-minister of foreign affairs Li Hui, would be the most senior Chinese official to set foot on Ukrainian soil since the war began. He was China’s ambassador to Russia for 10 years, from 2009 to 2019.

Xi also said mutual respect for sovereignty and territorial integrity was the political foundation of bilateral relations.

He did not mention Russia by name at all, according to the CCTV report, though he reiterated China’s stance on the war and called for more dialogue.

Xi had held multiple calls with Russian President Vladimir Putin since the invasion, and even led a delegation to Moscow in March – his first overseas trip since beginning a historic third term.

The call also came just two weeks after French President Emmanuel Macron and European Commission President Ursula von der Leyen visited China and said they had urged Xi to call Zelensky.

Xi had replied that the conversation could happen when the conditions and time are right, according to von der Leyen.

 

United States allows J P Morgan payment route for Russian grain export

The United States gave J P Morgan permission to process payments for agricultural exports via the Russian Agricultural Bank, but the arrangement was no substitute for reconnecting the bank to the SWIFT system, two Russian sources told Reuters.

Access to the SWIFT payment system is one of Russia's main demands in negotiations over the future of the Black Sea grain export deal, which the United Nations says helps to tackle a global food crisis that has been aggravated by the Ukraine war.

The Kremlin has repeatedly warned the deal will not be renewed beyond May 18 unless the West removes obstacles to Russian grain and fertilizer exports, including the financing and insurance of exports.

A Russian source, who spoke on condition of anonymity, said the US Office of Foreign Assets Control (OFAC) had allowed JPMorgan to process the transaction.

"JPMorgan received permission from OFAC to carry out payment for agricultural procure - but the process is difficult," said the first Russian source.

A second Russian source said that JPMorgan and Russian Agricultural Bank, which is under US and European Union sanctions, were both specifically given exemptions to execute a single transaction.

It involved grain and was denominated in US dollars, according to the second Russian source. A third source also said the transaction was for grain.

Reuters could not ascertain who the exporter was or the destination of the supply.

The JPMorgan route was proposed as an alternative to reconnecting Russian Agricultural Bank (known as Rosselkhozbank) to SWIFT, but could be terminated at any time, the first Russian source said. "This cannot replace SWIFT," the source said.

Another source familiar with the transaction said the US State Department and US Treasury had asked JPMorgan to carry out the very limited and highly monitored transaction in relation to the export of agricultural materials, which occurred this month.

Russian Foreign Minister Sergei Lavrov on Tuesday told a briefing at the United Nations that one bank kindly consented to finance one operation, but that was not an acceptable long-term solution, Lavrov did not name the bank.

 

Putin signs decree to take over Russian assets of two foreign firms

President Vladimir Putin on Tuesday signed a decree establishing temporary control of the Russian assets of two foreign energy firms, signaling Moscow could take similar action against other companies, if need be.

The decree - outlining possible retaliation if Russian assets abroad are seized - showed Moscow had already taken action against Uniper Russian division and the assets of Finland's Fortum Oyj.

The decree said Russia needed to take urgent measures to respond to unspecified actions from the United States and others it said were unfriendly and contrary to international law.

The shares in the two entities have been placed in the temporary control of Rosimushchestvo, the federal government property agency, the decree said.

In February, US Treasury Secretary Janet Yellen said Russia should bear the costs of damage caused by its war on Ukraine, adding though there were significant legal obstacles to confiscating major frozen Russian assets.

The CEO of state-owned bank Bank VTB PAO had on Monday said Russia should consider taking over and managing the assets of foreign companies such as Fortum, only returning them when sanctions are lifted.

Rosimushchestvo said more foreign firms could find their assets under temporary Russian control, TASS reported. The agency would ensure the assets were run in accordance with their importance for the economy.

"The decree does not concern ownership issues and does not deprive owners of their assets. External management is temporary in nature and means the original owner no longer has the right to make management decisions," TASS cited the agency as saying.

Last October European Council President Charles Michel said the EU was looking at using Russian assets frozen nunder sanctions against Moscow towards rebuilding Ukraine.

Asset sales by investors from unfriendly countries - as Moscow terms those that imposed sanctions against Russia following its invasion of Ukraine - require approval from a government commission and, in some cases, the president.

In February, Uniper valued its majority stake in Russian division Unipro at a symbolic one euro to reflect the likely chance a planned sale to a Russian buyer would fall through. Fortum had already warned shareholders there was a risk its Russian assets could be expropriated.

 

Over 1500 companies participating in Iran Oil Show 2023

More than 1,500 Iranian and foreign companies are participating in the 27th Iran International Oil, Gas, Refining and Petrochemical Exhibition (Iran Oil Show 2023), being held at the Tehran Permanent International Fairgrounds during May 17-20.

The event is being participated by the companies active in various sectors including upstream oil and gas sectors, exploration and production, as well as domestic manufacturers, knowledge-based companies, startups and other companies related to the oil industry, in addition to technology parks and universities.

“Oil Industry, Technological Production, Optimal Consumption” is the motto of this year’s event.

Iranian President Ebrahim Raisi has said that the oil and gas sector experienced a growth of 9% in the past Iranian calendar year 1401.

Oil Minister Javad Oji has recently said that a new record high will be reached in the country’s oil export in the current Iranian calendar year.

The country’s oil export in 1401 was 83 million barrels more than that of 1400, and 190 million barrels more than the export in 1399, the minister announced.

Underlining that now oil export has reached the highest figure in the last two years, the official said, “Considering that the Oil Ministry is one of the main providers of the country's foreign currency; in the 13th government, despite the tightening of cruel sanctions, fortunately, thanks to the grace of God and the efforts of our colleagues in the country's oil and gas industries, there are good records in the field of exporting crude oil, gas condensate, and petroleum and petrochemical products.”

Despite the negative impacts of the US sanctions, Iran has been ramping up its oil production and exports over the past few months.

In his remarks in November 2022, President Raisi highlighted the failure of the enemy’s policy of maximum pressure, saying the country’s oil export has reached the pre-sanction levels.

Back in January, the US Energy Information Administration (EIA) in a report put Iran’s average oil production in 2022 at 2.54 million bpd, 140,000 bpd more than the previous year.

Iran's oil production in 2021 was about 2.4 million bpd.

Saudi Arabia joins US-UAE-Egyptian mediation bid to end conflict in Sudan

Saudi Arabia has joined the mediation efforts of the United States, the United Arab Emirates and Egypt to end the conflict in Sudan. This was revealed by Sky News Arabia, quoting well-informed US sources.

The sources stated that the mediation efforts seek to bring together Commander of the Sudanese Armed Forces Lt. Gen. Abdel Fattah Al-Burhan and Commander of the Rapid Support Forces Mohamed Hamdan Dagalo in the Saudi capital Riyadh in the coming weeks.

US Secretary of State Antony Blinken said on Monday that the United States is in close contact with Sudanese military leaders to extend the ceasefire, and to explore options for restoring the diplomatic and consular presence of Sudan as soon as possible.

“Following intense negotiation over the past 48 hours, the Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF) have agreed to implement a nationwide ceasefire starting at midnight on April 24, to last for 72 hours,” Blinken said in a statement issued two hours before the ceasefire started.

In an interview with MSNBC, Blinken said, “We are still looking at options. We have military installations that are still in the immediate area if they are needed, but this is not the time to conduct some kind of massive operations.”

He pointed out that dozens of Americans are participating in a convoy led by the United Nations heading to Port Sudan, and that the US military is helping to monitor it through unmanned aircraft systems (UAS).

The agreement between the Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF) came following intense negotiation over the past 48 hours, Blinken said.

“The United States urges the SAF and RSF to immediately and fully uphold the ceasefire,” Blinken said.

“To support a durable end to the fighting, the United States will coordinate with regional and international partners, and Sudanese civilian stakeholders, to assist in the creation of a committee to oversee the negotiation, conclusion, and implementation of a permanent cessation of hostilities and humanitarian arrangements in Sudan,” he added.

The White House Spokesman John Kirby announced that the United States is preparing to send part of the American fleet to help its nationals who wish to leave Sudan.

Meanwhile, the Arab and Western countries continued evacuation of their nationals and diplomatic missions from the capital, Khartoum, after the security and humanitarian conditions have deteriorated and reached on the brink of an impending catastrophe.

In a related development, a US military plane evacuated 45 Japanese citizens and their family members from Sudan.

Yemen Key Test in China Middle East Diplomacy

China scored a diplomatic coup by restoration of ties between Saudi Arabia and Iran, announced on Friday, March 10. But the two rivals for primacy in the Persian Gulf are still a long way off from sharing the neighborhood.

The first litmus test will be whether they can even share Yemen, where their proxies have been at war for eight years.

Given the intense rivalry and extreme volatility in their past relations, using terms like rapprochement and détente to describe the renewal of ties seem premature.

Even “reconciliation” remains to be seen. Since the I979 Islamic revolution in Iran, the two countries have gone through repeated cycles of intense hostility with only short-lived thaws.

The low points include the Saudi shooting down of four Iranian F-4 fighter jets in 1984, the Saudi killing of 275 Iranian pilgrims in Mecca in 1987, and the severance of diplomatic relations first from 1988 to 1991 and then again from 2016 to 2023.

Both breaks in relations were initiated by Saudi Arabia after Iranians ransacked the Saudi embassy in Tehran.

The high points saw visits to the Saudi kingdom by two former Iranian presidents.  Mohammed Khatami made the trip in 1999 - the first by any president since the Islamic revolution - and returned again for a four-day stay in 2002. Mahmoud Ahmadinejad went three times, twice in 2007. Saudi Crown Prince Abdallah, in turn, traveled to Tehran in 1997 for an Islamic summit and received red carpet treatment.

The two sides have tried in vain, again and again, to formalize a working relationship. Since 1991, the Iranians have repeatedly put forth a proposal for an alliance with the Saudi-led Gulf Cooperation Council (GCC) to establish security architecture for the Gulf. The Saudis have always viewed the proposition as a ruse to eliminate the US military presence there and therefore shown no interest.

Still the Saudis have at times signed pacts with the Iranians.  In May 1998, the two rivals signed a Comprehensive Cooperation Agreement and in 2001 a security agreement to fight together against terrorism, drug smuggling, and money laundering. The latter agreement was hailed in the Saudi press as historic and in the words of Iran’s ambassador to Saudi Arabia at that time, “the most important development in the history of relations between the two countries.” Neither agreement took hold.

Given this very checkered history in their relationship, the question is,  what chance does the latest restoration of ties have to, find an effective way to share the neighborhood and institute some sort of cold peace, as Obama put it in his 2016 interview with The Atlantic?

Saudi leaders have long insisted it is up to Iran to take the first step by showing some sign of retreat in its relentless drive to establish a key political role in Arab nations of the Middle East.

The main indicator for them is Yemen, Saudi Arabia’s southern neighbor where it has long been the dominant foreign power. Houthi rebels seized control of the capital Sanaa in September 2014, and Iran quickly came to their military and political support.

The Saudis responded with an invasion the following March and armed Yemeni tribes opposed to the Houthis. They also established a rival Yemeni government based in the south that gained international recognition, even though its rule has been increasingly disputed by secessionists there.

For Saudi Crown Prince Mohammed bin Salman (MBS), the Yemen venture has proven an albatross. He was personally responsible for leading it when the Saudi invasion began, as he had just been named defense minister by his father, King Salman. In fact, it was his first major foreign policy decision. It has led to the souring of his relations with the US Congress that has repeatedly demanded an end to all US military aid and sales to Saudi Arabia because of the disastrous outcomes of the war.

Right now, fighting between pro-Saudi and pro-Iranian Yemeni factions has reached a standstill, UN mediators last year negotiated a ceasefire, while periodically broken, still remains largely in place. Yemen itself is in ruins, however, and is one of the world’s worst humanitarian disasters, with 227,000 dead from famine alone, according to UN estimates.

The question now is whether Saudi Arabia and Iran can find a modus vivendi in Yemen upon which to build a real détente, or at least a cold peace.

This would probably require Saudi Arabia to recognize the Houthi government in Sanaa and its control over northern Yemen, where most of Yemen’s 33 million people live.

Iran would have to terminate arms supplies to the Houthis. These have included missiles and drones that the Houthis have rained down by the hundreds on strategic targets inside the Saudi kingdom, including its oil and gas facilities.

Saudi negotiators have held periodic talks for months now, with both emissaries from Iran in Baghdad and those of the Houthis in Muscat, Oman, but no agreement has been announced.

In any case, it remains far from clear if Iran is ready to stop arming the Houthis. On the contrary, a statement in early February from the US Central Command said, “US, British, and French warships had seized 5,000 rifles, 1.5 million rounds of ammunition, scores of anti-tank missiles, and parts for ballistic missiles from dhows plying the Gulf of Oman on their way from Iran to the Houthis.

They had carried out four seizures over the past two months. In addition, the British Navy declared it had captured more Iranian antitank missiles and fins for ballistic missiles from dhows on February 23.

These arms shipments could be the last before Iran stops as part of a deal with Saudi Arabia. Or, it could be a sign Iran is backing a new Houthi offensive in the making. The Houthis have been trying to extend their hold over Yemen to include its oil fields and pipelines in the center and south of the country.

A new campaign would almost certainly sink any hopes for an eventual Iranian-Saudi détente as well as China’s diplomatic bid to become a power player in the Gulf.