US-Saudi Arabia to sign security treaty

The Biden administration is close to finalizing a treaty with Saudi Arabia that would commit the United States to help defend the Gulf nation as part of a deal aimed at encouraging diplomatic ties between Riyadh and Israel, the Wall Street Journal reported on Sunday.

The possible deal, widely telegraphed by US and other officials for weeks, is part of a wider package that would include a US-Saudi civil nuclear pact, steps toward the establishment of a Palestinian state and an end to the war in Gaza, where months of ceasefire efforts have failed to bring peace.

Approval of the treaty, which the WSJ said would be known as the Strategic Alliance Agreement, would require a two-thirds majority vote in the US Senate, a threshold that would be difficult to achieve unless the treaty were tied to Israeli-Saudi normalization.

The draft treaty is modeled loosely on Washington's mutual security pact with Japan, the newspaper cited US and Saudi officials as saying.

In exchange for the US commitment to help defend Saudi Arabia if it were attacked, the draft treaty would grant Washington access to Saudi territory and airspace to protect US interests and regional partners, the newspaper reported.

It is also intended to bind Riyadh closer to Washington by prohibiting China from building bases in the kingdom or pursuing security cooperation with Riyadh, the WSJ quoted officials as saying.

The White House, the US State Department and the Saudi embassy in Washington did not immediately respond to requests for comment.

 

Israel: Gantz quits Netanyahu government

According to Reuters, Israeli minister Benny Gantz announced his resignation from Prime Minister Benjamin Netanyahu's emergency government on Sunday, withdrawing the only centrist power in the embattled leader's far-right coalition amid a months-long war in Gaza.

The departure of Gantz's centrist party will not pose an immediate threat to the government. But it could have a serious impact nonetheless, leaving Netanyahu reliant on hardliners, with no end in sight to the Gaza war and a possible escalation in fighting with Lebanese Hezbollah.

Last month, Gantz presented Netanyahu with a June 8 deadline to come up with a clear day-after strategy for Gaza, where Israel has been pressing a devastating military offensive against the ruling Palestinian militant group Hamas. Netanyahu brushed off the ultimatum soon after it was given.

On Sunday, Gantz said politics was clouding fateful strategic decisions in Netanyahu's cabinet. Quitting while hostages were still in Gaza and soldiers fighting there was an excruciating decision, he said.

"Netanyahu is preventing us from advancing toward true victory," Gantz said in a televised news conference. "That is why we are leaving the emergency government today, with a heavy heart but with full confidence."

Netanyahu responded in a social media post, telling Gantz it was no time to abandon the battlefront.

With Gantz gone, Netanyahu would lose the backing of a centrist bloc that has helped broaden support for the government in Israel and abroad, at a time of increasing diplomatic and domestic pressure eight months into the Gaza war.

While his coalition remains in control of 64 of parliament's 120 seats, Netanyahu will now have to rely more heavily on the political backing of ultra-nationalist parties, whose leaders angered Washington even before the war and who have since called for a complete Israeli occupation of Gaza.

This would likely increase strains already apparent in relations with the United States and intensify public pressure at home, with the months-long military campaign still not achieving its stated goals - the destruction of Hamas and the return of more than 100 remaining hostages held in Gaza.

Polls have shown Gantz, a former army commander and defence minister, to be the most formidable political rival to Netanyahu, whose image as a security hawk was shattered by the October 07, 2023 attack by Hamas on Israel.

Warning that the conflict in Gaza could take years, he urged Netanyahu to agree on an election date in the autumn, to avoid further political infighting at a time of national emergency.

Gantz joined a unity government soon after October 07 as part of Netanyahu's inner war cabinet where he, Netanyahu and Defence Minister Yoav Gallant alone had votes.

On Sunday, Gantz described Gallant, who has sparred with Netanyahu and some ultra-nationalists ministers, as a brave leader and called on him 'to do the right thing,' though he did not elaborate on what that meant.

Far-right National Security Minister Itamar Ben-Gvir demanded Gantz's now vacant seat at the war cabinet soon after the resignation was announced.

Finance Minister Bezalel Smotrich said in a statement Gantz was giving Israel's enemies what they want.

Asked whether he was worried about his departure impacting Israel's standing abroad, Gantz said Gallant and Netanyahu both know "what should be done."

"Hopefully they will stick to what should be done and then it will be okay," he said.

 

Iran: Candidates for Presidential Election

Iran’s Guardian Council has approved six candidates for the upcoming presidential election scheduled for June 28, 2024. Qualified candidates will now have two weeks to campaign before the voting.

These include former Parliament Speaker Mohammad Bagher Ghalibaf and former nuclear negotiator Saeed Jalili, two high-profile conservative political figures.

Other candidates in the race include former lawmaker Masoud Pezeshkian, former minister Mostafa Pourmohamadi, Tehran Mayor Alireza Zakani, and former lawmaker Amir Hossein Ghazizadeh Hashemi.

The candidacy of former Vice President Eshaq Jahangiri, who was expected to be the top reformist contender, was rejected by the election supervisory body. Ali Larijani, a former Parliament Speaker believed to have the backing of the reformist camp, also failed to make the cut.

Both Jahangiri and Larijani were disqualified by the 12-member council in the 2021 presidential election when Abdolnasser Hemmati was the lone reformist challenger to Ebrahim Raisi.

Hemmati, who was again in the running this year, also had his candidacy rejected.

The candidacy of former President Mahmoud Ahmadinejad was also rejected by the Guardian Council.

Speculation is rife that Ghalibaf, who was re-elected as a parliament speaker late last month, will be the main conservative figure after the presidential debates, as he enjoys strong support from lawmakers.

Among reformists, Pezeshkian is likely to be the main contender.

The snap presidential vote is scheduled for June 28 following the death of President Raisi in a helicopter crash on May 19 in northwestern Iran.

Bangladesh apparel export to US takes a dip

Bangladesh suffered the highest negative growth among competitor countries in exporting readymade garments to the United States in the January-April period of 2024.

According to the US Department of Commerce’s Office of Textiles and Apparel data released on Thursday, the country’s apparel exports to the United States, the largest export destination for Bangladesh, in the first four months of 2024 declined by 14.44% to US$2.31 billion compared with those of US$2.70 billion in the same period of 2023.

At the same time, apparel imports by the US from Vietnam grew by 0.31%, while those from China declined by 4.42%, according to the OTEXA data.

The data showed that Vietnam overtook China to become the largest readymade garments exporter to the US in the January-April period of 2024.

Exporters observed that despite a recent increase in US demand for apparel, Bangladesh failed to capture a larger market share due to factors such as longer shipment times and higher production costs.

They said that buyers had been placing more orders with Vietnam and China recently, due primarily to shorter delivery times.

The data showed that the US apparel imports from China decreased to US$4.32 billion in January-April 2024, down from US$4.52 billion in the same period the previous year.

Garments imports from Vietnam increased to US$4.38 billion in the four months of 2024, up from US$4.37 billion in the corresponding period of the previous year.

The data also showed that the total US imports of readymade garments from the world in January-April of 2024 decreased by 6% to US$23.69 billion compared with those of US$25.20 billion in the same period of 2023.

Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, said that despite an uptick in apparel demand in the US market, Bangladesh struggled to capitalize on this increased demand.

He identified prolonged shipment times a key factor hindering Bangladesh’s ability to seize a larger share of the growing demand.

According to Hatem, Bangladesh’s shipment times have been steadily lengthening due to issues such as customs-related delays at ports and production slowdowns caused by gas and electricity shortages.

He said that while major apparel manufacturing countries like China and Vietnam had experienced negative export growth globally in recent times, most other countries, except Bangladesh, had begun to narrow this gap.

Hatem pointed out that Vietnam had already shifted to a positive trajectory in exporting RMG to the US market.

“In Bangladesh, our factories are operating up to 70% capacity utilization due to energy shortages, prompting buyers to redirect orders to China and Vietnam for quicker deliveries,” he said.

Hatem also claimed that many factories struggled to accept orders at the prices offered by buyers due to rising utility costs and increased workers’ wages.

The OTEXA data showed that India’s readymade garments exports to the US market in the four months of 2024 declined by 5.02% to US$1.66 billion compared with those of US$1.75 billion in the same period of the previous year.

Readymade garments imports by the US from Indonesia in the four months of 2024 decreased by 8.46% to US$1.38 billion compared with those of US$1.51 billion in the same period of 2023.

The US apparel imports from Cambodia in January-April of 2024 increased by 7.92% to US$1.03 billion compared with those of US$951.93 million in the same period of 2023, the data showed.

 

India: Modi sworn in PM for third term

Narendra Modi sworned in as India's prime minister on Sunday for a third term, after a shock poll setback that will test his ability to ensure policy certainty in a coalition government in the world's most populous nation.

President Droupadi Murmu administered the oath of office to Modi at a ceremony at the Rashtrapati Bhavan, the president's palace in New Delhi, attended by thousands of dignitaries, including the leaders of seven regional countries, Bollywood stars and industrialists.

"Honoured to serve Bharat," Modi posted on X, minutes before he was sworn in, referring to India's name in Indian languages.

Supporters cheered, clapped and chanted "Modi, Modi" as the name of the 73-year old leader, dressed in a white kurta tunic and blue half jacket, was called to take his oath.

Modi was followed by senior ministers in the previous government: Rajnath Singh, Amit Shah, Nitin Gadkari, Nirmala Sitharaman, Subrahmanyam Jaishankar, and Piyush Goyal, among others. Their portfolios are expected to be announced after the swearing-in.

Modi, who started as a publicist of the Hindu nationalist Rashtriya Swayamsevak Sangh (RSS), the ideological parent of his Bharatiya Janata Party (BJP), is only the second person after independence leader Jawaharlal Nehru to serve a third straight term as prime minister.

Modi secured the third term in elections that concluded on June 01, 2024 with the support of 14 regional parties in his BJP-led National Democratic Alliance (NDA), unlike in the previous two terms when his party won an outright majority.

The outcome is seen as a big setback to the popular leader as surveys and exit polls had predicted BJP would secure even more seats than in 2019.

Modi delivered world beating growth and lifted India's global standing but appeared to have missed a step at home as a lack of enough jobs, high prices, low incomes and religious faultlines pushed voters to rein him in.

When Modi was the chief minister of the western state of Gujarat from 2001 to 2014, BJP enjoyed strong majorities, allowing him to govern decisively.

Modi's new term as prime minister, therefore, is likely to be fraught with challenges on building consensus on contentious political and policy issues in the face of different interests of regional parties and a stronger opposition, analysts say.

Some analysts worry that the fiscal balance in the world's fastest growing economy could also come under pressure due to demands for higher development funds for states ruled by the NDA's regional partners and a possible push by BJP to spend more on welfare to woo back voters it lost in this year's election.

While the broad focus on building infrastructure, manufacturing and technology could continue, "contentious reforms could be delayed", said Samiran Chakraborty, Chief Economist, India at Citi Research.

"The BJP’s major coalition partners are politically unpredictable, sometimes working with the BJP and sometimes working against them," added Rick Rossow, the Chair in US-India Policy Studies at the Center for Strategic and International Studies in Washington.

"The larger parties that will be a part of his coalition are mostly agnostic on national-level issues and should not be applying a brake on economic reforms or security ties with the United States, Japan, and other key partners," he said.

Modi, whose election campaign was marked by religious rhetoric and criticism of the opposition for allegedly favouring India's 200 million minority Muslims has adopted a more conciliatory tone since the shock result.

"We have won the majority ... but to run the country it is unanimity that is crucial ... we will strive for unanimity," he said on Friday after the NDA formally named him coalition head.

Courtesy: Reuters

 

India: Rahul Gandhi likely leader of opposition

Congress leader Rahul Gandhi is likely to be the Lok Sabha’s leader of the Opposition (LoP) after the Congress Working Committee (CWC), the highest executive forum of the party, passed a resolution on Saturday urging him to do so.

Gandhi, who has won from Wayanad in Kerala as well as Rae Bareli in Uttar Pradesh and remained the biggest draw for the party in the 2024 Lok Sabha elections, told the committee that he will consider the proposal and decide in the next few days.

For the past 10 years, the Congress, which is the largest Opposition party in Parliament, did not meet the criteria to get the LoP status in the Lower House. This time, with 99 seats, the party is entitled to get the LoP post, which has the status of a cabinet minister.

“In a resolution, the CWC unanimously requested Rahul Gandhi to take the LoP post in the Lok Sabha. All participants, in their view, were unanimous that Rahul Gandhi should become the LoP,” Congress general secretary KC Venugopal said after the CWC meeting.

“In this election, we raised burning issues such as unemployment, price rise, women’s issues, Agniveer and social justice. These issues have to be continued in a greater manner inside Parliament as well. Rahul Gandhi is the best person to lead this campaign in the Lok Sabha. In the current scenario, for a better, stronger and vigilant Opposition and those who want to protect the Constitution, it should be safe under Rahul Gandhi as LoP,” Venugopal added.

According to three CWC members, party veteran Digvijaya Singh was the first to suggest Gandhi’s name as the LoP. Both Singh and Gaurav Gogoi, the party’s deputy leader in the Lok Sabha, argued that as the LoP, Gandhi would be best suited to amplify the Congress’s ideology and key issues raised during the elections.

Punjab leader Partap Singh Bajwa is said to have told Gandhi, “I know you don’t like positions, but this is a responsibility.”

He also pointed out that some of the NDA allies are not comfortable with certain schemes such as Agniveer and MSP issues and Gandhi could build more pressure on the government. “You would be working on your election guarantees even when sitting in the Opposition,” he said.

After other speakers also urged Gandhi, Congress president Mallikarjun Kharge reminded him that after the CWC has passed a resolution, Gandhi has to accept the post. “Rahul Gandhi smiled and told the CWC that he will consider and take his decision in a few days,” said a senior member of the panel.

Even as Congress parliamentary party Chief Sonia Gandhi remained silent, general secretary Priyanka Gandhi Vadra lauded her brother’s role in the election. Priyanka mentioned that at times, she had doubts if the party would be able to revive but Rahul “was the only one who had unflinching faith in the Congress’s ability to bounce back”.

In his speech, Rahul Gandhi took a dig at those who have left the Congress and said, “Whoever had to leave, have left. Those who are here are warriors.”

Gandhi also heaped praise on Kharge, 81, for undertaking such extensive campaign across the country at his age. He also praised the party’s communication on its 25 guarantees and said, “This time we didn’t allow anyone to derail our narrative.”

He argued that the party’s communication on the Constitution, social justice and the guarantees had been strong and “the BJP couldn’t match us on these issues. In this election, our party and people of India fought together. Earlier people said many things about us. But now it is clear that nobody can destroy the Congress party.”

The main resolution of the CWC also praised Gandhi for his role in the 2024 Lok Sabha campaign.

“Former Congress President Shri Rahul Gandhi has to be singled out largely because of the Bharat Jodo Yatra and the Bharat Jodo Nyay Yatra that he designed and led. Both these Yatras that reflected his own thinking and personality were historic turning points in our nation’s politics and instilled hope and confidence in lakhs of our workers and crores of our voters,” the resolution said.

“Shri Rahul Gandhi’s election campaign was single-minded, sharp and pointed and more than any other individual it was he who made the protection of our republic’s Constitution the central issue in the 2024 elections. The Paanch Nyay-Pachees Guarantee programme which resonated so very powerfully in the election campaign was the outcome of Rahulji’s yatras in which he listened to the fears, concerns and aspirations of all people, especially the youth, women, farmers, workers, Dalits, Adivasis, OBCs and minorities,” it added.

In the 16th Lok Sabha (2014-19), Kharge was the Congress floor leader before he shifted to the Rajya Sabha. Adhir Ranjan Chowdhury was the party’s floor leader in the Lok Sabha during 2019-2024.

Courtesy: Hindustan Times

Pakistan: Central bank must cut interest rate

Pakistan, already suffering from cost pushed inflation faces two challenges. The Monetary Policy Committee (MPC) has to make a difficult decision of cutting interest rate for making debt servicing sustainable.

The business community is already jittery due to likely introduction of new taxes, no reduction in interest rate, but more distressing hike in electricity and gas tariffs.

Analysts believe, Pakistan’s current account just can’t be improved without restoring competitiveness of the local manufacturers.

During this past week, Moody’s statement suggesting a status quo in the upcoming MPC meeting exerted some pressure on the stock market.

Looking ahead, the upcoming MPC meeting on June 10 will be in the spotlight, with any rate cut expected to shift the market’s focus towards cyclical sectors.

More than two years into the steepest interest-rate tightening cycle in decades, central banks around the world are grappling with how fast to unwind the policy. Policymakers from South Korea to Canada are weighing progress on slowing inflation, and some have started cutting rates.

Policymakers in Latin America have been trimming since earlier this year. While that all marks a major milestone, price pressures have proven stubborn, a strong dollar has roiled developing nations and geopolitical tensions have added a layer of uncertainty to the post-pandemic economic recovery.

US Federal Reserve officials will meet next week and are widely expected to hold interest rates steady as the US economy hums along and the labor market keeps firing on all thrusters. 

The Labor Department data this week suggesting last year’s payroll gains might not have been as robust as first counted, there’s now the risk that Fed Chair Jerome Powell and his colleagues could keep monetary policy too tight for too long.

Even as the Fed’s central bank peers diverge (the en-vogue term for the current unwinding cycle), rate cuts by the European Central Bank and the Bank of Canada “are less bold departures and more like components of a mosaic,” Daniel Moss writes in Bloomberg Opinion. “Harmony has been breaking down for a while.”