Armenia and Azerbaijan to hold peace talks in Washington on Sunday

Armenia and Azerbaijan will hold a new round of talks in Washington on Sunday to try to normalize relations, Yerevan said on Saturday, after weeks of rising tensions over the disputed Nagorno-Karabakh region.

Armed forces from the two Caucasus neighbors have frequently exchanged fire amid disputes over the mountain enclave, which is internationally recognized as part of Azerbaijan but populated mainly by ethnic Armenians.

Azerbaijan set up a new checkpoint last Sunday on the Lachin corridor, a road to Karabakh that passes through Azeri territory, in a move that Armenia that called a gross violation of a 2020 ceasefire.

"From April 30 Minister of Foreign Affairs of Armenia Ararat Mirzoyan will be in Washington DC on a working visit. The next round of discussions on the agreement on normalization of relations between Armenia and Azerbaijan is scheduled," the spokesperson, Ani Badalyan, said on her official Facebook page.

Later on Saturday, the Armenian defence ministry said one of its soldiers had been injured by shot fired by Azeri forces near the village of Tegh in Armenia's southern Syunik province, Tass news agency said.

Tegh is the last village on the Lachin Corridor in Armenia before it enters Azeri territory.

Russian peacekeepers were deployed in 2020 to end a war, the second that Armenia and Azerbaijan have fought over the enclave since the 1991 collapse of the Soviet Union.

Despite years of attempted mediation between them, Armenia and Azerbaijan have yet to reach a peace agreement that would settle outstanding issues such as the demarcation of borders and return of prisoners.

Turkish plane comes under attack in Sudan

A Turkish evacuation plane coming into land at an airbase outside Sudan's capital, Khartoum, has been fired at, Turkey's defense ministry confirms.

No-one was injured and it landed safely at Wadi Seidna, where it was being checked.

Sudan's army blamed paramilitary fighters for firing at the aircraft and damaging its fuel system.

The Rapid Support Forces (RSF) denied the allegation, saying it was committed to the extended humanitarian truce.

The rival military factions agreed to an extension of their ceasefire at midnight local time (22:00 GMT on Thursday) for a further three days.

It has had only a limited effect, with army jets continuing to pound RSF positions in Khartoum during the night.

The previous truce allowed thousands of people to attempt to flee to safety, while dozens of countries organized evacuations.

Turkey's Defence Minister said efforts would continue to rescue Turkish citizen from Wadi Seidna and the city of Port Sudan on the Red Sea coast.

Since the clashes began 14 days ago, hundreds of people have been killed and tens of thousands forced from their homes.

The fighting is devastating the capital and its surrounds, which until recently had a population of around 10 million - leaving people without supplies of food, water and fuel. 

Pakistan Stock Exchange benchmark index posts 1.4%WoW gain

The week ended on April 28, 2023 was marred with political uncertainty. The United States asked Pakistan to move ahead on stalled reforms by the IMF, while promising technical help in worst economic times. The IMF awaits clarity on the cross fuel subsidy scheme. In addition to this, foreign exchange reserves inched by US$30 million to US$4.5 billion as on April 20, 2023, culminating to an import cover of less than a month.

The KSE-100 index closed the week at 41,581 points, posting 1.40%WoW gain. Participation in the market was a pleasant surprise, daily trading volumes averaging a little above 208 million shares during the week as compared to around 105 million shares in the prior week depicting 98%WoW gain.

Other major news flows during the week included: 1) Saudi Arabia expected to sign deal for US$2 billion deposits after Eid, 2) GoP cuts growth rate to 0.8 percent, 3) profit repatriation during first 9 months of the current financial year plunges by 82% to US$233 million, 4) CPPA-G seeks positive adjustment of PKR1.17/unit, 5) regulator asks DISCOS to freeze capacity payments and 6) GoP bank borrowings surge 182% to PKR3 trillion.

Top performing sectors were: Vanaspati & Allied Industries, Tobacco, and Investment Banks, while the least favorite sectors included: Close End Mutual Funds, Leasing Companies, and Glass & Ceramics.

Top performing scrips were: POML, SRVI, DAWH, UBL, and MUREB, while laggards included: PGLC, HGFA, KAPCO, BOP, and PIBTL.

Flow wise, Companies were the major buyers with net buy of US$15.9 million, followed by individuals with net buy of US$14.17 million, while Mutual Funds were major sellers during the week, with a net sell of US$1.63 million.

According to media reports, Saudi Arabia and UAE have intimated IMF on financing support giving a relief on external financing shortfall of US$6 billion will dictate the market performance in near term. Moreover, political situation will be in limelight till general elections are held. Keeping that in view, analysts continue to advise scrips that have dollar-denominated revenue streams which hedges the investor against the currency risk, that include the Technology and E&P sectors.

Implications of Saudi-Iran deal for Pakistan

Implications of the apparent rapprochement between Saudi Arabia and Iran extend even further, with significant consequences for vital neighboring regions like South Asia and other populous Muslim countries, including, notably, Pakistan.

The recent announcement of a China-brokered peace deal between Saudi Arabia and Iran initially took the world by surprise. The debate persists concerning whether this deal will last, its potential implications for the United States, what it means for the Middle East region (including Israel), and what brokering this agreement indicates about China’s rising power.

Pakistan has for decades been an arena in the proxy war between Riyadh and Tehran that was sparked soon after the Iranian Revolution in 1979.

Saudi Arabia provided financial and ideological backing to many Sunni militant groups trained in Pakistan that the US Central Intelligence Agency (CIA) was arming to wage a jihad against the Soviets in Afghanistan. Some of these groups, such as Sipah-e-Sahaba, and its offshoot, Lashkar-e-Jhangvi, later turned their guns on the sizeable Shi’a minority in Pakistan.

Iran responded by offering support to Pakistani Shi’a militants to counter this Sunni militancy. Iran also began to cooperate with India in Afghanistan after the Soviets withdrew in 1989 and US attention shifted away from the region.

New Delhi and Tehran notably both supported the Northern Alliance — comprised of a mixture of ethnic minorities, including the Shi’a — in the latter’s resistance to the predominantly Sunni Pashtun Taliban, which enjoyed good relations with Riyadh and Islamabad.

The post-9/11 US-led intervention in Afghanistan caused a seismic shift in regional alliances. Motivated, in part, by its longstanding rivalry with the United States, Iran began cultivating ties with the Taliban as they waged war against the US and North Atlantic Treaty Organization (NATO).

Pakistan’s relations with Iran also improved during this time. Despite some friction along their shared border, Iran and Pakistan broached the possibility of regional energy cooperation, which ultimately led to the two countries signing a bilateral natural gas pipeline deal in 2013. Nonetheless, Pakistan continued dragging its feet on completing its portion of the pipeline, fearing both Saudi and American displeasure over cooperation with its heavily sanctioned western neighbor.

Pakistan’s relations with the US, meanwhile, have been tenuous at best, soured by their divergent strategic objectives in Afghanistan and America’s increasing reliance on India to counteract Chinese influence across South and Southeast Asia.

Pakistan has doubled down on its military and diplomatic ties with China, and the two have significantly boosted their economic ties by launching the US$62 billion China-Pakistan Economic Corridor (CPEC) in 2015, dubbed a flagship project of China’s ambitious Belt and Road Initiative (BRI).

China included many Middle Eastern countries in the BRI, and it inked a 25-year strategic trade and investment accord with Iran in 2021, estimated to be worth between US$200 billion and US$300 billion. China’s move to involve Iran in the BRI may partly have been prompted by its desire to undermine India’s investment in the Iranian Chabahar deep-sea port on the Indian Ocean, viewed as a rival to the Chinese-controlled Pakistani deep-sea port in Gwadar.

For its part, Iran is trying to balance its relations with India and China. India used the Chabahar seaport to send shipments to Afghanistan, bypassing the need to cross Pakistani territory. Despite facing constraints due to the international sanctions regime, India had secured US waivers to buy Iranian oil and to invest in Chabahar.

Whether India will be able to maintain those relations with the Islamic Republic as its ties with the US continue to grow remains to be seen, but the increasing acrimony between China and India certainly makes it unlikely that Chabahar and Gwadar can become ‘sister ports’ to help enhance broader regional trade and connectivity.

Beijing’s attempt to simultaneously loop Iran and many of its arch-rival Arab states into the BRI may have been a key factor that informed its decision to step in to mediate one of the thorniest rivalries between Muslim nations in the Middle East. Other Muslim countries in the Gulf region and beyond, such as the United Arab Emirates, Turkey, and Pakistan, have applauded this high-profile Chinese diplomatic maneuver.

For Pakistan, in particular, the tempering of the protracted Saudi-Iran rivalry could not only help lessen long-running domestic sectarian frictions but also alleviate pressure on Pakistani decision makers to involve Islamabad in contentious proxy tussles elsewhere in the Muslim world, as happened in Yemen.

Even if the still fragile Saudi-Iranian rapprochement holds, Pakistan’s ability to improve its ties with the Islamic Republic will still be kept in check by concerns over further antagonizing the United States.

Biden administration officials have cautiously welcomed Chinese efforts to try to de-escalate tensions in the troubled region while expressing reservations about Iran’s likelihood to stick to the deal.

For many Muslim-majority countries, including Pakistan, Beijing’s diplomatic endeavors are more immediately relevant and beneficial than those undertaken by Washington to bring the Gulf states and Israel together to deter Iran.

Courtesy: Middle East Institute

Iranian exports to Turkey up 23%

The value of Iran’s export to Turkey increased by 23 percent in the past Iranian calendar year 1401, an official with Iran’s Trade Promotion Organization (TPO) announced.

Farzad Piltan, Director General of TPO's Office of West Asian Countries, said based on the data released by the Islamic Republic of Iran Customs Administration (IRICA), Iran exported commodities worth US$7.45 billion to its neighbor in 1401, while the figure was US$6.079 in 1400.

Turkey was Iran’s third top export destination in the past year, the official named natural gas, aluminum, urea, polyethylene, copper cathode and cathode parts, copper wires, iron and steel ingots, and polyethylene as the major products Iran exported to Turkey in the previous year.

Iran’s import from Turkey also rose 15% to about US$6 billion in 1401, from US$5.2 billion in 1400.

Turkey was the third source of import for Iran in the previous year, the official named sunflower seed oil, road tractors, corn, bananas, generators, barley, soybeans, synthetic fibers, crude soybean oil, and solid acrylic polymers as the main items Iran imported from its neighbor in 1401.

The value of Iran’s exports to neighboring Turkey increased by 19% to US$3.35 billion in 2022.

Turkey had imported over US$2.82 billion worth of commodities from the Islamic Republic in 2021.

Iran's trade balance with Turkey has been $280 million positive in favor of Iran in the past year.

In last July, Iran and Turkey discussed ways of expanding economic relations along with political ties at the Turkish-Iranian High-Level Cooperation Council in Tehran.

During the meeting, which was co-chaired by Iranian President Ebrahim Raisi and Turkish President Recep Tayyip Erdogan, the two sides negotiated the extension of the gas export contract between the two sides for the next 25 years.

In the meeting, President Raisi noted that the Islamic Republic of Iran is determined to expand economic relations with neighboring countries.

The president also evaluated Tehran-Ankara ties as positive and progressive, saying that the two countries should pursue appropriate policies to move towards increasing their annual trade exchanges to US$30 billion.

On the sidelines of the mentioned meeting, Iranian Energy Minister Ali-Akbar Mehrabian also held talks with Turkish Minister of Energy and Natural Resources Fatih Dönmez in which the two sides exchanged views on cooperation in energy fields.

Later on, Head of Turkey’s Small and Medium Enterprises Development Organization (KOSGEB) Hasan Basri Kurt met with Head of Iran Small Industries and Industrial Parks Organization (ISIPO) Ali Rasoulian to discuss ways of expanding cooperation between the small and medium-sized enterprises (SMEs) of the two countries.

In this meeting Rasoulian referred to the signing of a memorandum of understanding (MOU) between the two countries on cooperation between SMEs, saying, “President Raisi has emphasized setting up joint industrial parks in the country’s special economic zones, considering the good infrastructure for setting up such parks in the free and special economic zones and the active presence of economic enterprises in these areas.”

 

First Republic Bank may be next to collapse

The San Francisco-based bank could be the next financial institution to collapse, signaling that last month's banking crisis isn't over yet. Its shares plummet 43% on Friday and 75% on the week as investors feared it would be shuttered by regulators.

Since Silicon Valley Bank’s (SVB) failure last month, First Republic’s stock is down roughly 97%.

Federal regulators are reportedly trying to figure out ways to prevent First Republic, which is headquartered in San Francisco, from failing — including asking other banks to step in and make bids.

The regional bank may ultimately be taken over by the Federal Deposit Insurance Corporation (FDIC), like SVB and New York's Signature Bank.

The selloff was triggered by a terrible earnings report revealing that First Republic lost more than US$100 billion in deposits following the SVB collapse. The outflow came even as a group of megabanks attempted to rescue First Republic by depositing US$30 billion. 

First Republic’s depositors were concerned that the bank would get hit with a similar bank run. The bank also had large unrealized losses on its balance sheet that raised the risk of a collapse.

The extended banking crisis has ramifications for the US economy.

Regional banks such as First Republic are key lenders for area businesses. Even banks that aren’t struggling are pulling back their lending to reduce risk, hurting employers’ ability to hire and grow.

 

What ails Argentina economy?

Argentina’s crucial agriculture sector—which accounts for over half of exports and around 9% of GDP—is being hammered by unprecedented dry weather. Soybean production is expected to be 40% below the 5-year average this year, and wheat production is forecast to fall by around a quarter in the 2022/23 marketing year from 2021/22.

But the country’s economic problems run far deeper than circumstantial bad weather. Government interference in the private sector is considerable, in the form of taxes and other restrictions on imports and exports, and multiple exchange rate practices—in March this year the government announced a specific ‘Malbec dollar’ rate for wine and other agriculture products for instance. 

This interference, coupled with the lack of an overarching, comprehensive structural reform blueprint—in 2020 the president said in an interview “Frankly, I don’t believe in economic plans”—has sapped investors’ confidence.

The combination of weak confidence in government policymaking and lower inflows of foreign currency due to drought have weighed on the peso in recent months; the official exchange rate is now over ARS 200 per US dollar, compared to just over ARS 100 per US dollar this time last year. The black-market peso is priced at a much higher ARS 460 per US dollar. As a result, inflation is in triple figures and rising. And the central bank has jacked interest rates up to 91% in response, heaping more misery on the economy.

The consensus forecast forewarns the GDP to contract 2% this year, and for inflation to end the year around 110%. These figures are already bad enough, but risks are still stacked to the downside. The drought could intensify. Social unrest may bubble over as economic conditions worsen. And as the October 2023 general election approaches, the government could enact populist measures in a bid to gain public support, putting the country’s IMF deal in jeopardy. Even if the opposition Together for Change coalition wins the elections as expected, recovery will be slow. Economic instability has been a feature of the Argentinian landscape for a century or more; it is likely to remain so for some time.