What could happen to the military if the US defaults on its debt?

As the United States stares down the barrel of a deadline to raise the national debt ceiling, past and current Pentagon leaders are sounding the alarm on how such an event could be deeply damaging to the country and those who keep it safe.  

Disrupted pay for service members, late benefits checks for veterans and a hit to US national security are only a glimpse into what could come.  

Defense Secretary Lloyd Austin made that much clear this week, telling lawmakers that the Pentagon won’t, in some cases, be able to pay our troops with any degree of predictability,” should a default come to pass. 

Joint Chiefs of Staff Chair Gen. Mark Milley said such an event could also embolden China and increase risk to the United States.  

The debt limit is the dollar figure up to which the Treasury Department can borrow to pay for congressionally approved spending decided through the annual appropriations process. 

The Biden administration and the GOP are at a standstill on the matter, with congressional Republicans demanding cuts in exchange for lifting the ceiling. The White House, however, has stood firm that the limit should be raised now, and spending cut negotiations will be handled separately. 

With the deadline approaching in a manner of week, the brinkmanship between the White House and congressional leaders to avoid a default so far has not made progress. 

The Treasury Department has warned the country could default, an unprecedented event in modern times, as soon as June 01, 2023.

And the Congressional Budget Office (CBO) issued a report Friday that estimated the federal government’s deadline could now be the first two weeks of June. 

The Treasury has never been incapable of paying US debt obligations – the one exception being in the War of 1812 when parts of Washington were burned, including the Treasury building – it’s not exactly clear what the effect would be on government payments.  

As the matter depends on how the Treasury Department decides to prioritize US bills, it’s to be seen what takes precedence. Ongoing obligations that deal with national security, however, require a big chunk of that change. 

The Defense Department expends multiple billions of dollars every day for military, civilian and contractor pay; fuel to run bases and keep ships at sea; maintaining US nuclear deterrents; keeping production lines running; and Social Security, Medicare and retirement payments for veterans. 

It would not just be a huge stain on US credibility in a very dangerous and unstable world; it would be the equivalent of a government shutdown of our national security.

The government could use whatever revenues it takes in if the debt ceiling is not raised, but those amounts would be woefully insufficient to support normal operations. 

On military salaries alone, the US is due to pay out about US$4 billion on June 15, according to an analysis released earlier this week by the Bipartisan Policy Center. 

On June 01, another US$12 billion is supposed to go to military and civilian retirement payments and US$12 billion towards veterans’ benefits.  

This isn’t the first time past and current Pentagon officials have raised alarms on how a default would affect the military. 

In a letter released in October 2021, the last time Washington neared the ceiling, Austin warned that a default would undermine the economic strength on which our national security rests and that it would also seriously harm our service members and their families. 

“I would have no authority or ability to ensure that our service members, civilians, or contractors would be paid in full or on time,” he wrote at the time. 

Austin noted that benefits for 2.4 million military retirees and 400,000 survivors would be at risk, federal contractors could have their payments delayed, and America’s international reputation and the stature of the US dollar would be at risk. 

Seven of Austin’s predecessors, in a separate letter to Congress, said that should a default halt payments to members of the military, it is unclear whether they would ever be repaid.  

Congress eventually raised the debt limit to roughly US$31.4 trillion in late 2021, but not without months of drama. 

Lawmakers are back in a similar situation this spring, as the GOP-led House has held firm on not raising the debt ceiling without significant spending cuts.  

President Biden and Speaker Kevin McCarthy earlier this week sat down with other congressional leaders to find a way forward, but no major movements have happened.  

For now, Pentagon leaders are making sure Congress understands the consequences should a debt default come to pass. 

“There’s just a number of things that we’re working with allies and partners on that would come into question as to whether or not we’ll be able to execute programs, but most important, this will affect the livelihood of our of our troops and our civilians,” Austin told lawmakers on Thursday. 

 

Iran-Saudi Arabia to boost economic co-op

During a meeting between Iran’s Finance and Economic Affairs Minister Ehsan Khandouzi and Saudi Arabia’s Finance Minister Mohammed Al-Jadaan, the two sides discussed the ways to expand economic cooperation and remove the barriers in the way of trade between the two countries.

In the meeting, which was held on the sidelines of the annual meeting of the board of executive directors of the Islamic Development Bank (IsDB) in Jeddah, the Saudi Arabian minister expressed satisfaction with the re-establishment of relations between Iran and Saudi Arabia and said, “We hope that quick steps will be taken in relations with Iran.”

“In this regard, it is necessary to remove the economic and trade barriers against the two countries”, he stressed.

Referring to the great opportunities for interaction and cooperation between the two countries, Al-Jadaan expressed hope that he will soon meet the Iranian finance and economic affairs minister in Riyadh.

The Iranian minister welcomed the progress of economic relations between the two countries and stated that the development of relations is important not only for Iran and Saudi Arabia but also for all countries in the region.

Khandouzi said these bilateral relations are very important not only from an economic point of view but also in the political and security fields.

Explaining Iran's program in the field of economic relations with Saudi Arabia, Khandouzi said, “At the government level, Iran and Saudi Arabia have not finalized any basic agreement in the field of investment, customs, and trade. In this regard, it is necessary to draw up and sign MoUs between the parties.”

The Saudi Arabian side, while agreeing to cooperate in the three fields of customs, trade, and investment, expressed hope that with the assistance of his country’s ministries, cooperation in the mentioned fields will be followed up.

 

Iran to participate in increasing capital of Islamic Development Bank

Iranian Finance and Economic Affairs Minister Ehsan Khandouzi said, Iran as one of the major shareholders of the Islamic Development Bank (IsDB), is implementing new measures to participate in increasing the bank’s capital.

Khandouzi made the remarks in a meeting with IsDB Chairman Muhammad Sulaiman Al Jasser on the sidelines of the annual meeting of the bank’s Board of Executive Directors in Jeddah, IRNA reported.

In this meeting, while pointing to the milestones of joint cooperation, the parties emphasized on removing the related obstacles and problems in the path of this cooperation.

Referring to the efforts made by the Iranian government to remove existing cooperation obstacles, Khandouzi pointed out the emphasis of the president of the Islamic Republic of Iran on strengthening joint cooperation with IsDB and solving the problems and challenges in the path of these interactions.

Al Jasser pointed out that the challenges facing the bank during the years of the Coronavirus pandemic and requested that the Islamic Republic of Iran, like other senior shareholders of the bank, supports the increase of the bank’s capital and fulfills its obligations to the bank.

The Islamic Development Bank is a multilateral development finance institution that is focused on Islamic finance for infrastructure development and is located in Jeddah, Saudi Arabia. There are 57 shareholding member states with the largest single shareholder being Saudi Arabia.

 

Singapore: Countdown for Presidential Election

Amid global uncertainty and domestic anxiety over the cost of living, the next president of Singapore must be a unifying figure in whom Singaporeans have confidence. The job of the head of state has not changed much over the years, but people have come to expect more.

Observers say the election, which is called on a regular six-year cycle, will likely be held close to the deadline in September 2023, after the National Day celebrations – and after the National Day Rally speech by Prime Minister Lee Hsien Loong, usually in the second half of August.

This would be a time when issues and challenges confronting Singapore, as well as a sense of national identity and unity, would be at the forefront of people’s minds.

Dr Gillian Koh, deputy director of research at the Institute of Policy Studies, said that the conditions today are similar to those in 2011. 

Then, people felt that the world had seen an end to the “long boom” post-World War II and markets were anticipating another crisis in the United States and Europe which could affect Asia.

She noted that at the time, the candidate who eventually became president – former deputy prime minister Tony Tan Keng Yam – said he envisaged that the Government would make contingency plans, and gave the assurance that he would protect the national reserves with great care.

Similarly today, Singapore and the world face a tangled web of challenges – from US-China rivalry and the Russia-Ukraine war to disruptions to the global trade order – that PM Lee laid out in his speech during the debate on the President’s Address in April.

Hence, the upcoming election will involve choosing a candidate with experience, and who has a calming and steady temperament in crises, said Dr Koh.

National University of Singapore (NUS) sociologist Tan Ern Ser said it is not the president’s responsibility to directly address problems such as the economy and inflation, or geopolitical challenges, as these are the responsibilities of the prime minister and his Cabinet.

Instead, he said, the president should rally Singaporeans to stay socially cohesive and resilient amid external or internal threats, while keeping an eye on how the reserves are being used.

He added that the president could also use the prestige and symbolic power of the presidency to champion worthy causes that would enhance the well-being and unity of Singaporeans.

Dr Leong Chan-Hoong, head of policy development, evaluation and data analytics at research consultancy Kantar Public, said that in a politically divided world, the next president should also ideally have good working knowledge of foreign policy and international relations.

By design, the president has no executive, policymaking role. This remains the prerogative of the elected government that commands the majority in Parliament. 

Does it mean, therefore, that the president’s role is simply rubber-stamping? 

President Halimah Yacob’s tenure has shown otherwise, said political analyst and Nanyang Technological University (NTU) associate lecturer Felix Tan.

He said there has been some evolution in the “soft power aspect” of the role, with the President showing that she can still be involved in engaging with Singaporeans and championing certain social causes.

For example, she has spoken up on violence against women and the need to ensure a broader and more open meritocracy for all Singaporeans.

Courtesy: The Straits Times

Jeddah Declaration: Sudanese rivals agree to protect civilians

Sudan's warring factions have committed to protect civilians and allow the movement of humanitarian aid. The Sudanese Armed Forces (SAF) and its rival Rapid Support Forces (RSF) signed a document titled "Jeddah Declaration of Commitment to Protect the Civilians of Sudan" early Friday.

They reaffirmed their core obligations under International Humanitarian Law to facilitate humanitarian action to meet the needs of civilians.

“We affirm our unwavering commitment to the sovereignty of Sudan and to maintaining its unity and territorial integrity,” according to the joint declaration.

They welcomed the efforts exerted by Sudan’s friends who can use their relationships and good offices to ensure respect for International Humanitarian Law and for international human rights law, including by committing to this Declaration and immediately implementing it.

“We agree that the interests and well-being of the Sudanese people are our top priority and affirm our commitment to ensure that civilians are protected at all times. This includes allowing safe passage for civilians to leave areas of active hostilities on a voluntary basis, in the direction they choose,” the declaration read.

They committed to exert all efforts to ensure that these commitments—and all obligations of International Humanitarian Law—are fully disseminated within their ranks and appoint focal points to engage with humanitarian actors to facilitate their activities.

“We will enable responsible humanitarian actors, such as the Sudanese Red Crescent and/or the International Committee of the Red Cross to collect, register, and bury the deceased in coordination with competent authorities,” the declaration read.

“We will take all necessary measures to ensure that all persons acting on our instructions, direction or control abide by International Humanitarian Law, and in particular the commitments provided for in this Declaration of Commitment.”

They agreed to prioritize discussions to achieve a short-term ceasefire to facilitate the delivery of emergency humanitarian assistance and restoration of essential services, and announced their commitment to scheduling subsequent expanded discussions to achieve a permanent cessation of hostilities.

Turkey: Erdogan rival accuses Russia of deep fake campaign

Kemal Kilicdaroglu, the main election rival of Turkish President Tayyip Erdogan, issued a warning to Russia, accusing it of responsibility for the release of fake material on social media ahead of Sunday's ballot.

Kilicdaroglu, who has a slight lead over long-time leader Erdogan according to opinion polls, did not specify to which material he referred.

A third presidential candidate, Muharrem Ince, withdrew from the race on Thursday citing a faked character assassination carried out online. He gave few details.

Kilicdaroglu accused Turkey's Russian friends of responsibility for the release in this country yesterday of montages, plots, deep fake content...

"If you want to continue our friendship after May 15, withdraw your hand from the Turkish state. We are still in favour of cooperation and friendship," he said on Twitter on Thursday evening in both Turkish and Russian.

There was no immediate comment from Russian officials.

Moscow and Ankara have close ties and Russia is Turkey's largest supplier of energy. President Vladimir Putin and Erdogan hold frequent talks on issues ranging from energy to the wars in Ukraine and Syria.

In the tense campaign ahead of the May 14 presidential and parliamentary votes, political figures from both the Erdogan and Kilicdaroglu camps have complained about online accusations, including the posting of videos and photographs.

 

Iran-UAE to facilitate joint investment

Iran and the United Arab Emirates (UAE) have agreed to sign new memorandums of understanding (MOUs) on the avoidance of double taxation and facilitation of mutual investment, Fars News Agency reported on Friday.

The decision was made during a meeting between Iranian Minister of Finance and Economic Affairs Ehsan Khandouzi and UAE Minister of State for Financial Affairs Mohamed bin Hadi Al Hussaini on the sidelines of the annual meeting of the Islamic Development Bank (IsDB) Board of Executive Directors in Jeddah.

During the meeting, the officials emphasized increasing cooperation in the fields of trade and foreign investment. It was also decided that appropriate measures should be implemented soon in order to sign agreements on facilitating foreign investment and avoidance of double taxation between the countries.

Pointing to the positive impact of the resumption of relations between the Islamic Republic of Iran and Saudi Arabia in the region, Al-Husseini said that the volume of trade between the two countries has increased about 40 times.

“This volume of trade in various fields indicates a natural and positive growth of relations and interactions between Iran and the UAE, and the role of the governments of the two sides is to encourage trade and facilitate it through agreements to avoid double taxation, and it is necessary to revise the existing agreements between the two countries,” he said.

Khandouzi for his part referred to the previous unfinished negotiations related to the drafting of a foreign investment agreement between the two sides, saying: “The Islamic Republic of Iran is ready to cooperate in joint profitable projects, as well as cooperation for investing in other countries.”

At the end of this meeting, Khandouzi invited his Emirati counterpart to travel to Tehran as soon as possible.