Who should be held responsible for unabated smuggling of Iranian oil products into Pakistan?

In my earlier blogs I had raised concerns about influx of huge quantities of Iranian oil products into Pakistan. Lately, the oil marketing companies have accused Oil & Gas Regulatory Authority (OGRA) for the unabated influx of Iranian products into Pakistan.

The overwhelming perception is that being the regulatory authority entrusted with overseeing the petroleum sector, it is the responsibility of OGRA to take a proactive stance against the smuggling of Iranian petroleum products.

It is also being said that failure of OGRA to control this menace not only undermines the integrity of the regulatory, but also jeopardizes the national economy.

OMCs working under the legal ambient are already operating on a very thin margin. The smuggling of

Iranian products add to their miseries and make it even harder for them to compete with the vendors of smuggled products.

According to some sector experts, “OGRA is a ‘toothless watchdog’ and its prime duty has been to facilitate the government by raising prices of the petroleum products. It has failed in protecting the interest of consumers.” They add neither the Authority has the mandate nor the resources to curb the smuggling.”

OMCs have the right to ask the Government of Pakistan to take immediate and stringent measures to curb the smuggling of Iranian diesel/petrol.

These include strengthening border controls, enhancing coordination among the law enforcement agencies, and implementing robust monitoring mechanisms.

According to some analysts till recently the smuggled products were sold in Baluchistan Sindh, but now Punjab and even KPK are flooded with Iranian Petroleum products.

 

Iran: New Face of National Security

After ten years, Secretary of Iran’s Supreme National Security Council (SNSC) Ali Shamkhani was replaced with Ali Akbar Ahmadian, a veteran Islamic Revolution Guards Corps commander who is set to transform the security body.

Rumors surrounding Shamkhani’s departure first came to the surface in January this year, when one of his close associates was put to death over espionage for the MI6. Nevertheless, Shamkhani remained in his post and continued to make the headlines by orchestrating a thaw in Iran-Saudi relations. Over the course of his tenure as a top security official, Shamkhani coordinated a lot of national security decisions ranging from nuclear talks to internal developments.

He is now being replaced with a hard-nosed IRGC general whose career within the IRGC is distinguished by strategizing and strategic planning. Ali Akbar Ahmadian is a quiet, cagey and taciturn general whose actions speak louder than words.

A dentist-turned-general, Ahmadian served in various positions in the IRGC and rose through the ranks to become the mastermind of many IRGC initiatives and policies. His entire career in the IRGC is characterized by leadership and strategic planning. The heady days of his youth coincided with the outbreak of the Iran-Iraq war of the 1980s, which left a formative impact on his career as a navy admiral. During the war, he participated in many operations, including at sea. In some cases, he personally played a role in some maritime retaliatory operations, an experience that he would use to develop strategies for reciprocal operations in the IRGC Navy.

After the war, he was appointed as the deputy commander of the IRGC Navy. In this position, he theorized the maritime experience of the war in countering the aggressions of the US. In a sense, he is seen as the main architect of the IRGC Navy.

Also, he is one of the masterminds who developed the asymmetric warfare doctrine, which he put into practice when he later became the chief commander of the IRGC Navy.

In addition, Ahmadian reshuffled the IRGC during this later tenure as the chief of the force’s joint staff. In this position, he put the IRGC’s house in order administratively, something that earned him the approbation of Ayatollah Seyed Ali Khamenei, the Leader of the Islamic Revolution. Five years later, the entire IRGC entered a new administrative stage under the supervision of Ahmadian.

At the same time, Ahmadian was appointed as the commander of the IRGC’s Imam Hossein University, which played a great role in providing the force with the qualified cadets.

The new security chief has obtained a PhD degree in strategic management from the National Defense University. In September last year, Ayatollah Khamenei appointed him as a member of the Expediency Council.

Ahmadian is taking up the reins of Iran’s national security at a time when the country is navigating through sensitive issues at home and abroad. These issues range from Afghanistan, Azerbaijan, and Saudi Arabia to the now defunct 2015 Iran deal, which is formally called the Joint Comprehensive Plan of Action (JCPOA).

Shamkhani handled some of these issues. He played a key role in paving the way for Tehran and Riyadh to sign a Chinese-brokered deal in Beijing on March 10 this year. The deal restored the Iran-Saudi diplomatic relations after seven years.

Shamkhani has held the position since September 2013. Since then, he has been overseeing major cases ranging from the nuclear talks to regional negotiations with Iran’s Arab neighbors.

In his recent weeks at the SNSC, Shamkhani highlighted the shift in the world order from unipolar to multipolar.

“We are now at a critically historical juncture, and a change in the world order is accordingly of paramount importance. The new world order and mechanisms to approach it would prompt us to review our macro policies,” he underlined.

The comments were delivered by Shamkhani in Tehran at the “New World Order Geometry” conference’s closing ceremony, which was held earlier in May 2023.

He stated that the opportunities and challenges of the new world order rely on how nations behave and prepare for such changes.

Shamkhani also remarked that the new world order may either present big and bright chances or pose threats and dangers.

“We must prepare ourselves and increase our resilience for global transformations,” he noted.

Shamkhani also emphasized the need of preparing for the conditions brought about by the new world order and the changes that follow, adding that being prepared for such developments will allow one to make the most of the new world order.

 

China bans chip giant Micron from key infrastructure projects

China says products made by US memory chip giant Micron Technology are a national security risk. The country’s cyberspace regulator announced on Sunday that America’s biggest maker of memory chips poses “serious network security risks”.

It is China’s first major move against a US chip maker, as tensions increase between Beijing and Washington. The firm’s products will be banned from key infrastructure projects in the world’s second largest economy.

The announcement is the latest development in a deepening row between the US and China over the technology crucial to economies around the world.

The long-running dispute has seen Washington impose a series of measures against Beijing’s chip making industry and invest billions of dollars to boost America’s semiconductor sector.

In a statement, the Cyberspace Administration of China (CAC) said, “The review found that Micron’s products have serious network security risks, which pose significant security risks to China’s critical information infrastructure supply chain, affecting China’s national security.”

The CAC did not give details of the risks it said it had found or in which Micron products it had found them.

A Micron spokesperson confirmed to the BBC that the company had “received the CAC’s notice following its review of Micron products sold in China”.

“We are evaluating the conclusion and assessing our next steps. We look forward to continuing to engage in discussions with Chinese authorities,” they added.

In response, the US government said it would work with allies to address what it called “distortions of the memory chip market caused by China’s actions”.

“We firmly oppose restrictions that have no basis in fact,” a US Commerce Department spokesperson said.

“This action, along with recent raids and targeting of other American firms, is inconsistent with [China’s] assertions that it is opening its markets and committed to a transparent regulatory framework.”

Micron’s share price tumbled by 5.3% in pre-market trading in the US.

Analysts at investment banking group Jefferies said “the ultimate impact [of the ban] on Micron will be quite limited” because it does not rely on the Chinese government or telecommunication for most of the sales it generates in the country.

Micron’s chip customers in China are mostly concentrated in smartphones and personal computers.

But CJ Muse, an analyst at Evercore ISI, said there was a risk that Micron customers in China might move away from the firm to its rivals Samsung and SK Hynix, both of which are based in South Korea.

“The US, meantime, has urged South Korea not to fill any China shortfalls,” he said.

China is a key market for Micron and generated around 10% of its full-year sales. In 2022, Micron reported total revenue of US$30.7 billion, of which US$3.3 billion came from mainland China.

It also has manufacturing facilities in the country.

The CAC’s announcement came a day after a G7 leaders meeting in Japan issued a joint statement which criticized China, including its use of “economic coercion”.

On Sunday, US President Joe Biden said G7 nations were looking to “de-risk and diversify our relationship with China”.

“That means taking steps to diversify our supply chains,” he added.

Micron chief executive Sanjay Mehrotra attended the summit in Hiroshima as part of a group of business leaders.

Last week, the company said it would invest around US$3.6 billion to develop technology in Japan.

Iran-China trade exceeds US$5 billion in four months

The value of trade between Iran and China reached US$5.23 billion in the first four months of 2023, according to the data released by China’s customs administration.

The four-month trade between the two countries increased by 4% as the figure was US$5.02 billion in the first four months of 2022.

As reported, Iran’s exports to China during the period under review faced a 39% decrease as compared to the same period last year and reached US$1.52 billion. In the same period last year, China imported US$2.49 billion of goods from Iran.

During this period, China's exports to Iran increased by 46% to US$3.71 billion. China exported US$2.53 billion worth of commodities to Iran during January-April last year.

According to the data previously released by China’s customs administration, the value of trade between Iran and China increased by 7% in 2022 as compared to the previous year.

Based on China’s customs data, the Islamic Republic and China traded US$15.795 billion worth of commodities in 2022 that was US$1.035 billion more than the figure for 2021.

As reported, China's exports to Iran grew by 14% in the period under review as compared to the preceding year to reach US$9.44 billion. The Asian country exported US$8.258 billion worth of goods to Iran in 2021.

The value of Iran’s non-oil exports to China registered 2%decrease in 2022, reaching US$6.355 billion. Iran exported US$6.502 billion worth of goods to China in 2021.

Iran's share of China's total global trade last year was only 0.25%. China’s trade with the world reached $6.308 trillion in 2022, of which US$3.593 trillion was the share of the country's exports and US$2.715 trillion was related to imports. China's global trade grew by 4.4% last year.

China is one of Iran’s main trade partners that has maintained strong trade ties with the Islamic Republic despite the strict U.S. sanctions.

Iran and China officially signed the document for 25-year comprehensive cooperation in March 2021.

The document was signed between Iran’s former Foreign Minister Mohammad Javad Zarif and Chinese Foreign Minister Wang Yi at the Iranian Foreign Ministry.

Back in December 2022, Iran and China finalized 16 memorandums of understanding (MOU) under the framework of the two countries’ strategic 25-year agreement.

The MOUs were signed in an Iran-China comprehensive cooperation program summit which was held in Tehran on December 13 in the presence of Iran’s First Vice President Mohammad Mokhber and China’s Vice Premier Hu Chunhua.

The summit was focused on four areas explored by four committees between the two countries with the aim of paving the way for the implementation of the 25-year agreement.

 

 

What is the fate of US dollar?

The share of US dollar reserves held in central banks fell to 59% –its lowest level in 25 years – during the fourth quarter of 2020, according to the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) survey. Some analysts say this partly reflects the declining role of the US dollar in the global economy.

Economic analysts expect that the US dollar’s share of global reserves will continue to fall as emerging market and developing economy central banks seek further diversification of the currency composition of their reserves. A few countries, such as Russia, have already announced their intention to do so.

On July 01, 1944, as the Second World War raged in Europe and the Pacific, delegates from 44 countries met at the secluded Mount Washington Hotel in Bretton Woods, New Hampshire.

This gave birth to ‘Bretton Woods Agreement’ to create a new world order in the post-World War II era. The agreement instilled the dollar as the de facto global currency.

Under the agreement gold was the basis for the US dollar and other currencies were pegged to the US dollar value. By 1971, former US President Richard Nixon ended the dollar’s convertibility to gold as US balance of payments deficits led to foreign-held dollars exceeding the US gold stock, implying that the US could not fulfill its obligation to redeem dollars for gold any longer.

Although the Bretton Woods was short-lived, the dollar standard remained as the currency for international trade and the price of the commodity that made the global wheels run, price of crude oil was fixed in dollars.

Today the dollar reigns supreme. The world’s biggest economy can print greenbacks at will to save itself from budget deficits, can lower or hike federal reserve interest rates to control the price of global crude and other commodities, can manipulate interest rates to pressure emerging and poor economies that hold their foreign reserves in the Greenback.

Recent US Federal Reserve’s historic interest rate rises raised indebtedness of emerging economies. The Association of Southeast Asian Nations (ASEAN) members are exploring how to promote the use of local currencies in their bilateral trade.

According to the IMF the greenback’s share of global foreign-exchange reserves has extended a two-decade decline, but it’s still used more than all other currencies combined.

The dollar continues to play the role of number one global currency as the American economy has been producing a shrinking share of global output over the last two decades.

Chinese trade and lending have been expanding in recent years as the renminbi (also known as yuan) use has risen.

With China’s share of global goods trade now around 15 percent, the renminbi’s reach will expand. The world’s second largest economy and the largest consumer of crude is bound to challenge the dollar’s hegemony with renminbi.

Kicking off his first visit since taking office in January 2023 to China, Brazilian President Luiz Inacio Lula de Silva attacked the US dollar hegemony in international trade, asking “why can’t we do trade based on our own currencies?”

Lula called on developing nations to work towards replacing US dollar with their own currencies in international trade. He called on BRICS (acronym for five regional economies: Brazil, Russia, India, China and South Africa) to come up with their own alternative currency for use of trade.

Prior to Lula’s visit, China and Brazil agreed to settle trades in each other’s currencies. France also recently conducted its first liquefied natural gas sale in renminbi.

The rise of the Chinese currency will take some time as only three percent of central bank reserves are in renminbi. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) puts global transactions in renminbi at 2.5%, compared to 39.4% for the dollar and 35.89% for the euro.

The US economic sanctions on many nations have prompted them to use alternative currencies and even barter trade for exchange of goods.

After sanctions were applied to Russia following the Ukrainian conflict and simultaneously many Chinese companies were sanctioned by US and EU, transactions between the two neighbors shifted to renminbi.

Official data shows yuan became the most widely used currency for cross-border transactions in China overtaking the dollar for the first time.

Imports of Russian oil, piped-gas, coal and some metals from its neighbor were settled in renminbi. According to Reuters, the bilateral trade stands roughly at US$88 billion. This accelerates China’s efforts to internationalize its currency.

Iran and India established a rupee payment mechanism to eliminate dollar transactions. The state-owned United Commercial Bank (UCO) has been the primary payment settlement bank for India-Iran trade ties due to US sanctions on Iran.

The payment mechanism to import crude from Iran had provided the state-owned lender good chunk of interest-free floating fund, which helped it reduce its cost of funds.

Last year in a meeting between Iranian Foreign Minister Hossein Amir Abdollahian and his Indian counterpart Dr. Subrahmanyam Jaishankar, Abdollahian pointed out that there are existing mechanisms within the framework of international law which can help in reviving the banking and financial interaction, pointing out that Tehran has implemented such a mechanism with a dozen countries already.

A landmark agreement was signed by Jaishankar and visiting Russian deputy prime minister Denis Manturov on April 18, 2023 in New Delhi, where India agreed to adopt the Russian SPFS financial messaging system for making banking payments to Russia.

The deal also allows acceptance of Indian Ru-Pay cards and India’s Unified Payment Interface (UPI) in Russia, and the Russian MIR cards and Fast Payments Systems (FPS) in India.

In 2022 UCO Bank received the necessary approval from the regulator – the Reserve Bank of India – to open a special rupee account with Russia’s Gazprombank to facilitate trade between the two countries.

The British pound sterling, the oldest global currency still used today, anchored the global economy, until its fall in the early, mid and late 20th century.

The imminent sudden decline of the Greeenback is one of those things that can take every analyst by surprise.

The dollar’s share of global foreign exchange reserves fell from 70% in 1999 to below 59% in the last quarter of 2021, extending a two-decade decline according to IMF’s Currency Composition of Official Foreign Exchange Reserves data.

The greatest threat to dollar comes from central bank digital currencies, which can provide more efficient ways to settle transactions. The US is waking up to this danger, but should accelerate efforts on digitizing the dollar.

 

World must condemn Ben-Gvir

Israel's National Security Minister Itamar Ben-Gvir visited the Temple Mount on Sunday morning, two days after Jerusalem Day. He said, "I am happy to go up to the Temple Mount, the most important place for the people of Israel."

"It should be said that the police are doing a wonderful job here and once again proving who the master in Jerusalem is. All the threats of Hamas will not change anything; we are the masters of Jerusalem and the entire Land of Israel."

Ben-Gvir also referenced ongoing tensions surrounding the upcoming votes on the national budget, saying "We need to remember our brothers in the Negev and the Galilee. In the upcoming budget, we must invest in the Negev and the Galilee. Jerusalem is our soul, the Negev and the Galilee is our soul, we must invest, we must act there, we must be the owners of both the Negev and the Galilee, and the foundation of this is the budget."

The head of the Temple Mount Administration, Rabbi Shimshon Elbaum, welcomed the visit stating, "I congratulate National Security Minister Itamar Ben-Gvir for his ascent to the Temple Mount, which gives meaning to the slogan 'The Temple Mount is in our hands' which recently turned 56 years old."

"Ben-Gvir has been active since his youth in favor of Jewish pilgrimages to the Temple Mount, and since taking office has already caused significant improvements, removing hundreds of harassers and strengthening Israel's rule on the Temple Mount."

The Tag Meir organization condemned the visit, stating "Ben-Gvir and a friend of his want to forcefully change the status quo on the Temple Mount and set Jerusalem and the Middle East on fire. Until when will we continue to pay the price of the irresponsible appointment of Ben-Gvir to the position of national security minister of the State of Israel?"

The spokesman for the Palestinian Authority presidency, Nabil Abu Rudeineh, called Ben-Gvir's visit to the site a "flagrant attack on al-Aqsa" warning that it would have "serious repercussions," according to the Palestinian WAFA news agency.

"The entry of the extremist Ben-Gvir at an early hour, like thieves, into the al-Aqsa Mosque square will not change reality and will not impose Israeli sovereignty over it," added Abu Rudeineh.

The Jordanian Foreign Ministry condemned the visit in the strongest terms, calling it a dangerous and unacceptable escalation and a flagrant and unacceptable violation of international law, and of the historical and legal status quo in Jerusalem and its sanctities.

The ministry added that the continuous violations and attacks on the Islamic and Christian sanctities in Jerusalem, in conjunction with the continuation of unilateral measures of settlement expansion and continuous incursions into the occupied Palestinian territories, warns of further escalation, and represents a dangerous trend that the international community must work to stop immediately."

The Turkish Foreign Ministry also condemned Ben-Gvir's visit to the Temple Mount on Sunday, calling it a clear breach of the international law.

"It is in no way acceptable that Israeli government members challenge the historical status of Al-Haram Al-Sharif (the name commonly used in Arabic for the Temple Mount) in this manner and commit inflammatory and fascistic actions," added the ministry.

"We call on the Israeli government once again to act responsibly, and to put an end to all kinds of provocative actions violating the historical status of Al-Haram Al-Sharif that is based on the international law."

The Saudi Foreign Ministry condemned the visit as well, stating, "The ministry affirms that these systematic practices are considered a flagrant violation of all international norms and covenants, and a provocation of the feelings of Muslims around the world. The ministry holds the Israeli occupation forces fully responsible for the repercussions of the continuation of these violations.”

Hamas's spokesman for the city of Jerusalem, Mohammed Hamada, stressed that the movement would not leave al-Aqsa alone and warned that Israel will bear responsibility for the barbaric incursions of its ministers and herds of settlers.

Hamada called on Palestinians and Arabs in Jerusalem, the West Bank and Israeli territory to intensify their presence in al-Aqsa in order confront all attempts to desecrate and Judaize it.

Palestinian media outlets affiliated with Hamas, including the Shehab news agency, published a graphic showing Ben-Gvir with a red target over him and the words "Ben-Gvir is a target for our heroes and the wrath of our revolutionaries."

On Thursday, Jewish visitors to the Temple Mount raised the Israeli flag while singing "Hatikva," as over a thousand Jews visited the complex to mark Jerusalem Day. Despite Jerusalem Day officially being on Friday, most of the festivities for the day were moved to Thursday to avoid a desecration of the Shabbat.

Video from the scene showed a man carrying a small flag while the group walking with him sang the Israeli national anthem. The man carrying the flag was detained. At least three additional individuals raised Israeli flags on the Mount on Thursday as well.

A number of ministers and MKs visited the Temple Mount on Thursday as well, including Negev and Galilee and National Resilience Minister Yitzhak Wasserlauf (Otzma Yehudit) and Likud MKs Dan Illouz, Ariel Kallner and Amit Halevi.

Since the Jerusalem Day flag march on Thursday, a series of violent incidents have been reported in the Old City of Jerusalem. Before and during the march, scuffles broke out between Jews, Arabs and police officers throughout the Old City.

Journalists covering the flag march were also attacked by right-wing participants of the march near the Damascus Gate on Thursday afternoon, with participants jeering at them and hitting them with various objects. The police stated that they arrested two of the participants who attacked the journalists. One of the suspects, a minor, was also carrying a knife in their bag.

On Friday afternoon, clashes erupted between Palestinians, Jews and Israel Police near the Lions' Gate of the Old City of Jerusalem, shortly before Friday prayers were set to begin at al-Aqsa Mosque. Two Israeli civilians and a police officer were injured amid the violence.

Footage reportedly from the scene showed Jews dancing and singing in the area before fights erupted and police intervened, throwing stun grenades into the crowd. Palestinians were seen throwing stones at the Jewish individuals during the clashes. The windshields of vehicles belonging to Palestinians were smashed as well, according to Palestinian reports. A number of Palestinians were reportedly injured amid the violence.

 

China urges 'Brethren in Central Asia' to unite

Chinese President Xi Jinping has urged the “Brethren in Central Asia” to unite against attempts to divide them in the face of unprecedented turmoil and build themselves as the bridge connecting Asia and Europe.

“The world needs a harmonious Central Asia. Brotherhood is better than all wealth,” Xi said in a keynote speech delivered on the second day of the inaugural China-Central Asia Summit in Xian, attended by the leaders of five countries in the region.

“Ethnic conflicts, religious strife and cultural divisions are not the main theme of Central Asia. Unity, tolerance and harmony are what the people of Central Asia seek,” he said, adding, “No one has the right to create discord and confrontation in Central Asia, let alone seek political self-interest from it”.

“The sovereignty, security, independence and territorial integrity of Central Asian countries must be safeguarded, the development path chosen independently by the Central Asian people must be respected, and the efforts of the Central Asian region to work for peace, harmony and tranquility must be supported,” Xi said.

With its “unique geographical advantage”, Central Asia could “become an important interconnection hub in Asia and Europe”.

Xi pledged to expand trade and economic cooperation with Central Asia and said Beijing would deepen connectivity in the region and expand energy cooperation, among other things, according to state news agency Xinhua.

He said China hoped to speed up construction of the Line D natural gas pipeline and expand the scale of oil and gas trade with the region.

Xi also announced that China would provide US$3.7 billion in financial support for the development of Central Asian nations.

Xi said the summit – the first in-person meeting of its kind since Beijing established diplomatic relations with the five newly independent countries in 1992 – opened up new prospects for cooperation with Central Asia.

“The relations between China and Central Asian countries have profound historical origins, extensive practical needs, and a solid foundation of public opinion, and they are full of vigor and vitality in the new era,” he said.

Xi said China was willing to help Central Asian countries bolster their law enforcement security and defence capabilities to independently maintain regional security, adding that China would promote the peaceful reconstruction of Afghanistan.

Xi also called for joint efforts to boost strategic trust and strengthen security ties between China and Central Asia.

“We will resolutely oppose external forces interfering in the internal affairs of regional countries and staging ‘colour revolutions’, maintain zero tolerance for the three forces, and work to resolve the regional security dilemma,” he said, referring to terrorism, separatism and religious extremism.

The summit, in the northwestern province of Shaanxi, coincided with the Group of Seven meeting in Japan, where leaders from the advanced economies – including the US, Canada, Germany and France – are expected to discuss ways to counter China’s economic coercion.

The leaders agreed on Friday to set up a formal mechanism to hold a China-Central Asia meeting every two years, with Kazakhstan to host the next one in 2025.

Beijing views Central Asia as a critical frontier for expanding trade and energy security. The region is also regarded as crucial to maintaining stability in Xinjiang, where the treatment of Uygur Muslims has been among the most contentious issues between China and the West.

In recent months, efforts to strengthen ties with the region included Xi’s first trip abroad since the early days of the Covid-19 pandemic, with visits to Kazakhstan and Uzbekistan in September.

On Thursday, Xi held a series of one-on-one meetings with the leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. All expressed support for greater Chinese engagement in the region, including under the flagship Belt and Road Initiative.

Yu Jun, deputy director general of the Chinese foreign ministry’s department of European-Central Asian affairs, flagged on Tuesday that the leaders of the six nations were expected to sign a slew of important political documents on areas including economy, trade and connectivity.

Trade between China and the five Central Asian countries has increased significantly since Beijing launched its belt and road plan in 2013. The combined volume reached US$70.2 billion last year, up 40%YoY, according to Chinese customs data.