Saudi Crown Prince announces economic corridor linking India, Middle East and Europe

According to Saudi Gazette, Saudi Crown Prince and Prime Minister Mohammed Bin Salman announced the signing of a memorandum of understanding (MoU) for an economic corridor project connecting India with the Middle East and Europe.

The project aims to enhance economic connectivity, develop and upgrade infrastructure, and boost trade between the involved parties.

Speaking at the occasion of the launch of the corridor on the sidelines of the G20 Leaders' Summit in Delhi on Saturday, the Crown Prince said, “I am pleased today that we are gathered in this friendly country to sign an MoU for an economic corridor project connecting India with the Middle East and Europe.”

“This project is the culmination of our joint efforts over the past few months.

“It is built on principles that serve the common interests of our countries by enhancing economic connectivity and positively impacting our partners in other countries and the global economy as a whole.”

He added, “This project will contribute to the development and upgrading of infrastructure, including railways, port connections, and increased flow of goods and services, thus enhancing trade between the parties involved.

“It will also extend pipelines for the export and import of electricity and hydrogen to enhance global energy supply security, in addition to high-efficiency, reliable cross-border data transmission cables.”

The Crown Prince highlighted that the MoU also supports clean energy development efforts and will create new, high-quality employment opportunities along the corridors for all parties.

"To achieve what we have agreed upon in this memorandum, it requires the continuation of our collective efforts and the immediate commencement of developing the necessary mechanisms for its implementation within the agreed-upon timeframe," he said.

He also expressed profound gratitude to all those who worked together to take these foundational steps towards establishing this significant economic corridor.

Indian Prime Minister Narendra Modi announced the launch of the India-Middle East-Europe connectivity corridor, which is the first of its kind initiative on cooperation on connectivity and infrastructure involving India, UAE, Saudi Arabia, EU, France, Italy, Germany, and the United States.

The governments of Saudi Arabia and United States announced that they had signed a memorandum of understanding (MoU) between the two countries. The bilateral MoU provides a framework for developing a protocol for establishing intercontinental green transit corridors through the Kingdom to connect the continent of Asia with the continent of Europe.

This project aims to facilitate the transit of renewable electricity and clean hydrogen via transmission cables and pipelines as well as constructing rail linkages.

It is also intended to enhance energy security, support efforts for the development of clean energy, promote digital economy through digital connectivity and transmission of data via fiber cables, and promote trade and transport of goods by rail and through ports.

Saudi Arabia welcomed the role of the United States to facilitate and support the negotiation, establishment, and implementation of the green corridors transit protocol with the relevant countries.

Bangladesh going to be used as battleground of big powers, says Fakhrul

According to The Bangladesh Chronicle, Bangladesh Nationalist Party (BNP) Secretary General Mirza Fakhrul Islam Alamgir fears that Bangladesh was going to be used as a field in the fight of the big powers to establish their supremacy only because of the government’s imprudent diplomacy.

Speaking at a rally, he also voiced concern over Russian Foreign Minister Sergei Lavrov’s comment that the United States and its allies are trying to promote their interests in the South Asia region by using the Indo-Pacific strategy with their goal of countering China and Isolate Russia.

“What the Russian foreign minister said after arriving here has clearly manifested that Bangladesh is going to be used as a field in the sphere of influence of the big powers in their struggle for hegemony. It’s very alarming,” the BNP leader said.

He alleged that the Awami League government is completely responsible for creating such a situation and inviting danger for the nation. “They, the government, are making irresponsible statements and conducting their diplomacy imprudently to push Bangladesh to such a dire situation.”

Jatiyatabadi Mohila Dal brought out a rally in front of BNP’s Nayapaltan central office, marking its 45th funding anniversary. BNP founder Ziaur Rahman formed Mahila Dal, the female wing of the party, on September 09, 1978.

Lavrov arrived in Dhaka on a two-day visit and held a bilateral meeting with Foreign Minister AK Abdul Momen.

 

PSX benchmark index gains 1.5%WoW

Pakistan Stock Exchange remained range-bound during the week ended on September 08, 2023, with the benchmark index KSE-100 marginally fluctuating in the slim range of 654 points. The fear of interest rate hike due to the increase in the T-Bills yields kept the market activity in check. However, positive developments over SIFC and the caretaker prime minister’s announcement of total expected inflows of US$50 billion from UAE and Saudi expected to materialize in the next 4-5 years added a substantial layer of positivity to this multifaceted narrative.

The KSE-100 index closed at 46,013 points with a gain of 1.55%WoW. Meanwhile, market participation declined by 26%WoW, averaging at 138 million shares. On the currency front, rupee strengthened against the greenback. Moreover, administrative measures yielded positive results, taking the gap between interbank and open market below 1% which was around 5% a week ago.

August trade deficit widened by 29.8%MoM to US$2.126 billion as compared to US$1.637 billion in July.

The foreign exchange reserves held by the State Bank of Pakistan (SBP) by US$70 million to US$7.8 billion as of September 01, 2023.

Other major news impacting the market include: 1) August 2023 petroleum sales declined 8%YoY to 1.41 million tons, 2) August cement dispatches rose by 37%YoY to 4.518 million tons, 3) Pakistan’s public debt surged 22% to PKR61.75 trillion in July and 4) IMF allowed leeway on electric bills, raises gas prices by 50%.

Sector-wise, Close-End Mutual Fund was the worst performer, while Transport, Automobile Parts & Accessories & Inv. banks/ Securities cos. were amongst the top performers.

Flow-wise, major net selling was recorded by Mutual Funds with a net sell of US$2.4 million. Individuals absorbed the selling with a net buy of US$3.6 million.

Top performing scrips were: GADT, DAWH, ILP, THALL, KAPCO, while the Laggards included: JWDS, ARPL, BAHL, EFUG and INDU.

Going forward, market is expected to remain range-bound due to the upcoming Monetary Policy Committee meeting on September 14, 2023.

Furthermore, government’s steps over energy reforms, and next review with the IMF may improve the market sentiments.

Analysts continue to advise investors to remain cautious while taking positions and invest in companies with strong fundamentals or high dividend-yielding scrips.

 

Pakistan Gasport seeks spot LNG cargo

Pakistan Gasport is looking to buy a spot liquefied natural gas (LNG) cargo for November delivery, its chairman Iqbal Ahmed told Reuters on Thursday. This would be the country's first spot LNG deal since June 2022.

The south Asian country, facing a severe economic and foreign exchange crisis, has struggled to purchase the super-chilled fueled following a surge in prices after Russia's invasion of Ukraine last year.

LNG is crucial for Pakistan, where natural gas accounts for over a third of power generation and local gas reserves are insufficient to address growing electricity demand in a country of over 230 million, leading to frequent power cuts.

Pakistan Gasport is evaluating interest for a cargo from sellers in Oman, the United States and the United Arab Emirates, Ahmed said.

"We've got different countries which have offered us different options. We are extremely encouraged by what we've heard today," Ahmed told Reuters.

Pakistan Gasport owns the country's largest LNG import and regasification terminal at Port Qasim, but LNG imports have historically been facilitated by Pakistan LNG, a state-run firm that last bought a spot cargo in June 2022 from PetroChina.

A cargo would be the first shipped in by a private sector company in Pakistan, said Ahmed, who expects LNG prices to fall in coming years, making spot purchases more attractive.

Ahmed said 12% to the Brent slope was the "price to beat" for a cargo to Pakistan. That works out to nearly US$11 per mmbtu, a discount of a sixth to current average Asian LNG prices of US$13.

"If the government or anybody else can bring LNG at a price of 12% of Brent or lower, there is a market. The minute you cross that barrier, there is resentment," he said.

Ahmed said he expects Pakistan's LNG demand to grow to 30 million metric tons in 5 years, from about 10-12 million tons now.

Importers of all commodities to Pakistan have faced increased financing costs and higher processing times due to the ongoing economic and foreign exchange crisis. LNG traders have said sellers to Pakistan could demand a premium because of the country's low credit rating.

Pakistan Gasport plans to avert such challenges by not seeking a letter of credit from banks, financing the deal with internal funds, Ahmed said.

"I plan to use a currency other than the dollar to facilitate the payment and also use a semi-barter system to settle," he said.

 

Urea shortage in Pakistan a hoax call

Certain quarters have started saying that Pakistan is likely to face shortage of urea that could affect wheat production and food security in the country. Their voice gets credibility because natural gas supply to fertilizer plants will be suspended from middle of October.

They say the gap between urea production and consumption has widened, raising fears of nitrogenous fertilizer shortage up to 500,000 tons during Rabi season, especially between the critical period of October 2023 and March 2024, when wheat and other crops are sown.

The market has also begun to see price distortions, the industry is providing urea as usual but the middlemen are selling it at higher rate.

Farmers are being fleeced by middlemen, who are charging a premium up to PKR1,000 per bag above the retail price.

According to the National Fertilizer Development Center (NFDC) projections, total urea availability as of October 01, 2023, is expected to be only 69,000 tons, compared to 294,000 tons during the same period last year. During the last Rabi season, around 300,000 tons of urea was imported, but no plan has been set by the government to meet the critical requirement of farm nutrients for this season.

Some groups are asking the government to immediately import at least 500,000 tons urea and ensure its arrival in November 2023 to avoid a shortage and also ensure uninterrupted supply at full capacity keep the plants operating simultaneously.

Every year around this time Pakistan is forced to import urea. However, this year the government should continue gas supply to the fertilizer plants as the gas prices are attractive level in the international market.

For those, who may not be aware, Pakistan has an installed capacity to produce 7 million tons urea, but the manufacturers produce 6 million tons.  

There is also the responsibility of the ruling junta to also take concrete steps to stop the smuggling of fertilizer through the Western borders.

Why Modi is keen in calling India Bharat?

Dinner invites referring Bharat rather than India have fueled a political row and public debate over what the country should be called as the country prepares to welcome world leaders for the G20 summit.

Invites issued by the “President of Bharat,” instead of the customary “President of India,” were sent to delegates from the world’s 20 top economies for a dinner to be hosted by Indian President Droupadi Murmu on Saturday.

Both India and Bharat are used officially in the nation of 1.4 billion people, which has more than 20 official languages.

“India, that is Bharat, shall be a Union of States,” the country’s constitution states.

Bharat is also the Hindi word for India and is used interchangeably – both feature on Indian passports for example.

But its use on the invites marks a notable change in the naming convention used by the country on the international stage under Prime Minister Narendra Modi and his Hindu-nationalist Bharatiya Janata Party (BJP).

The G20 summit is a first for India as Modi aims to raise New Delhi’s global clout following nearly a decade-long tenure in power in which he has positioned himself as a leader intent on shedding the country’s colonial past – emphasizing the need to liberate ourselves from the slavery mindset.

Britain ruled India for about 200 years until it gained independence in 1947 and those who prefer Bharat say the name the country is best known by globally is a remnant of the colonial era.

The name India has been derived by ancient Western civilizations from the Sanskrit word for the Indus River – Sindhu – and was later adapted by the British Empire.

“The word ‘India’ is an abuse given to us by the British, whereas the word ‘Bharat’ is a symbol of our culture,” Harnath Singh Yadav, a BJP politician, told Indian broadcaster ANI.

Meanwhile, former India cricket star Virender Sehwag urged the sport’s officials to use Bharat on players’ shirts during the Men’s Cricket World Cup, which will be held in India this year.

“We are Bhartiyas, India is a name given by the British and it has been long overdue to get our original name ‘Bharat’ back officially,” he said on social media.

During its time in power, Modi’s government has made steps to steer the country away from what it has called “vestiges of British rule” and to free itself from its “colonial baggage.”

These efforts also include renaming roads and buildings related to both India’s Mughal as well as its colonial past.

For example, in 2022, the government renamed Rajpath, a 3-kilometer (1.8-mile) boulevard formerly known as Kingsway that runs through the heart of New Delhi. The new official name, Kartavya Path, would “remove any trace of colonial mindset,” the government said.

And in 2018, three Indian islands named after British rulers were renamed in the Andaman and Nicobar Islands, to erase “these signs of slavery.”

But the use of “Bharat” on the G20 invites has raised eyebrows among opposition leaders.

“While there is no constitutional objection to calling India ‘Bharat’, which is one of the country’s two official names, I hope the government will not be so foolish as to completely dispense with ‘India’, which has incalculable brand value built up over centuries,” Shashi Tharoor, a former diplomat and prominent lawmaker from the main opposition Congress party, said on social media.

Tharoor is also the author of “Inglorious Empire”, a work of non-fiction that excoriates colonial Britain’s rule of India.

India's opposition is uniting to unseat Modi in next year's election. Should he be worried?

In July, the leaders from 26 Indian opposition parties formed an alliance – known as INDIA (or the Indian National Developmental Inclusive Alliance) – in a bid to unseat Modi in the next general election.

Coined to evoke a sense of nationalism ahead of the 2024 polls, the INDIA alliance said its goal was upholding the country’s democratic institutions.

Modi’s government has come under scrutiny from rights groups and opposition lawmakers for its increasingly strident brand of Hindu nationalist politics, an ongoing crackdown on dissent, and a tightening grip on the country’s democratic institutions.

Modi has denied a crackdown, saying in a rare June press conference at the White House that when “there are no human rights, then it’s not a democracy,” and “there’s absolutely no space for discrimination” in the country.

Some opposition politicians said the government’s use of Bharat was a response to the formation of the INDIA alliance.

“How can the BJP strike down ‘INDIA’? The country doesn’t belong to a political party; it belongs to [all] Indians,” Aam Aadmi Party lawmaker Raghav Chadha, an alliance member, said on social media. “Our national identity is not the BJP’s personal property that it can modify on whims and fancies.”

But in an interview with ANI, India’s Minister of External Affairs S. Jaishankar said India “is Bharat.”

“It is there in the constitution. I would invite everybody to read it,” he said.

“When you say Bharat,” it evokes a “sense, a meaning and a connotation,” he said.

“I think that is reflected in our constitution as well

 

G7 likely to remove cap on Russian oil

According to Reuters, the Group of Seven (G7) and allies have shelved regular reviews of the Russian oil price cap scheme, people familiar with the matter told Reuters, even though most Russian crude is trading above the limit because of a rally in global crude prices.

Russian producers have found ways to sell oil using fewer Western ships and insurance services, making it difficult for the West to enforce the existing price cap because the companies facilitating the trade are outside of their remit.

The G7 countries along with the European Union and Australia imposed the price cap mechanism on Russian oil last December, followed by a cap on fuel from February this year. Initially, EU countries agreed to review the price cap every two months and to adjust it if necessary while the G7 would review as appropriate including implementation and adherence.

The G7 has not reviewed the cap since March 2023 and people familiar with G7 policies said the group had no immediate plans to look into adjusting the scheme.

There were some talks in June or July to do a review, or at least talk about it, but it never formally happened.

While some EU countries were keen for a review they said that there was little appetite from the United States and G7 members to make changes.

The sidelines of the upcoming UN General Assembly later this month could serve as an informal platform for talks on the cap

The mechanism allows third countries to buy Russian fuel using Western ship insurance if there is proof the purchase does not exceed price limits of US$60 per barrel for crude, US$45 per barrel of heavy fuel and US$100 per barrel of light fuel such as gasoline and diesel.

The idea was spearheaded by Washington to cut Moscow's revenues amid its war on Ukraine while avoiding market disruptions as a result of an EU ban on Russian oil.

Benchmark Brent oil futures are trading at their highest this year at above US$90 a barrel, raising the value of global crude, including Russian Urals.

Russia's finance ministry said the average price on its flagship crude grade Urals has recovered to US$74 a barrel on average in August - well above the US$60 a barrel cap - and up from an average US$56 in the first six months of the year.

Russia was forced to cut exports of oil and products immediately after the price cap imposition as it struggled to find enough ships to transport all of its output.

However, the country has managed to move most of its exports into the hands of domestic or non-Western foreign shippers, which do not require Western insurance coverage.

According to Reuters, at least 40 middlemen, including companies with no prior record of involvement in the business, handled at least half of Russia's overall crude and refined products exports between March and June.

While mostly dark fleet of tankers with murky ownership was being now used to transport Russian crude, Western ships were still involved in moving products since those were harder to police, an industry source said.

According to LSEG data, Russian crude has been trading above the cap since mid-July and is currently being traded at around US$67 a barrel at Russian crude terminals. Russian refined products such as fuel oil and diesel have also surpassed their caps.

A US Treasury official said this week the cap was still effective as it had helped cut Russian revenues. He said the group would stay nimble but added there was no plan for an immediate revision.