Examining Maritime Security Concerns

Judging from reports published during the second quarter, one might assume that the greatest maritime security concerns for operators of the merchant fleet in Asia are centered on the South China Sea’s Saint Thomas Shoal and the Taiwan Strait.

As is true on all the world’s waters, awareness of the potential threats amongst vessel operators and crew is the best defence in mitigating all potential consequences, whether great or small. While the threat levels in Asia are not as significant as those in the Red Sea and Indian Ocean, the significance and nature of the threats do change, and therefore require continued attention.

While the Chinese military forces do conduct significant military exercises along the Taiwanese coast while the Chinese Coast Guard continues its provocations aimed at the Philippines Navy, to date neither activity has resulted with significant consequences for merchant shipping plying these waters. Opportunistic armed robbers and thieves have maintained their focus on the profits to be gained from stealing vessels’ equipment and spare parts in areas farther to the south and west.

Risk Intelligence, as part of its daily security incident analysis and monitoring operations, tallied a total of 22 reported vessel boardings in Asian waters during the second quarter, with half of these taking place along the Singapore Strait. In a distant second place in terms of the number of vessel boardings is Chittagong, Bangladesh, where two thefts and one inconsequential boarding took place at the anchorage. Dumai with two boardings trailed Chittagong, the site of one theft and one inconsequential boarding at the anchorage, while armed robberies, thefts and inconsequential boardings were also recorded at Vung Tau, Manila, Belawan and Balikpapan.

Chittagong’s second place standing behind the Singapore Strait has drawn attention amongst stakeholders, including ReCAAP which in June issued a special report that compared the single reported vessel boarding in Bangladeshi waters during 2023 with nine reported boardings between January 01 and May 31 this year.

While the dramatic nine-fold increase is cause for concern, this year’s decline in the number of incidents from seven in Q1 to three in Q2 may be grounds for cautious optimism.

It is also worthy to note that when the theft of property from vessels is promptly reported to the Bangladeshi authorities, they have an admirable record of apprehending the perpetrators and returning the stolen items.

Like all categories of crime, whether on land or at sea, there is a significant degree of under reporting, therefore the tally of known boardings does not represent the actual crime level within any straits, anchorage areas or ports in Asia.

When assessing such statistics, it is also important to bear in mind that the generic term ‘piracy’ is now applied to a wide range of crimes, from vessel hijackings and seafarer kidnappings to armed robberies and thefts, a practice that can be misleading.

Similarly, the accuracy of the respective statistics hinges on the severity of the crimes, with statistics for hijackings and kidnappings being far more accurate than statistics for armed robberies and thefts.

A vessel operator is far more motivated to report a hijacking or kidnapping during which the fate of vessels and seafarers is at stake as compared to a theft of engine spare parts, for obvious reasons. With that in mind, there is high confidence that an absence of reports of hijackings and kidnappings in Asia reflects an actual absence of such crimes during Q2, while the number of reports of armed robberies and thefts tallied in the same period is unlikely to reflect the true scope of these less significant yet still serious crimes.

Not all vessel types are targeted by criminals in Asia. There have been no recorded incidents involving cruise ships, and no container vessels have recently been targeted while navigating the Straits of Malacca and Singapore.

Bulk carriers continue to be the most frequently targeted ships, in particular when reducing speed to transit the Singapore Strait, followed by tankers and barges. Vessels with low freeboard such as OSVs and heavy lift vessels, both offering easy access to perpetrators on sampans, also remain vulnerable.

The area with the highest frequency of vessel boardings continues to be the Singapore Strait, with 50% of the boardings in the second quarter taking place within the strait’s recognized International Hydrographic Organization (IHO) boundaries. Here nine of the 11 incidents involved vessels underway, while two involved ships situated at anchorages off Batam. Further illustrating the strait’s position as the primary area of armed robberies and thefts, June 2024 was the first month since May 2021 during which all reported maritime security incidents in Southeast Asia took place within the boundaries of the Singapore Strait.

As has been the case for several years regarding the Singapore Strait, bulk carriers are most often targeted, followed by tankers and barges. In Q2, seven of the 11 incidents involved bulk carriers, with the remainder involving one heavy lift vessel, an OSV and two barges, from which thieves seek scrap metal cargo.

Despite the frequency of Singapore Strait boardings, in most cases the crew is unharmed, while the perpetrators focus on taking spare parts and equipment that they can sell onshore. In a marked improvement from previous years, at this time merchant shipping in Asia is not facing more significant consequences stemming from hijackings or kidnappings.

Maritime security concerns in Asia are not limited to the aforementioned geopolitical activities in the South China Sea and piracy in the broader sense. While merchant ships navigate these waters they are surrounded by a significant level of migrant smuggling with a dark fleet seeking to operate under the radar, and drug and contraband smuggling.

Currently these activities have not had significant impact on merchant ships, although monitoring this activity remains necessary in light of potential future consequences.

In Asia large tankers transporting sanctioned oil cargoes have sought to disguise their activities by using the names and particulars of innocent traders in AIS broadcasts, with implications for the operators of the vessels subject to such identity theft. Smaller vessels illegally buying, selling and storing fuel comprise another dark fleet.

Conventional cargo vessels are rarely impacted by their operations, except when duped into purchasing fuel from such rogue traders.

The widespread smuggling at sea in Asia has not had significant impact on the merchant fleet as the crime syndicates involved primarily move their contraband on small boats, thereby circumventing conventional ports, although there are occasional concealments discovered in containerized cargo. Illegal movements of migrants and refugees is also done on small boats, so far without the consequences similar to what has been seen in the Mediterranean.

Courtesy:  Seatrade Maritime News

 

Pakistan-Iran to strength ties for regional peace and stability

Pakistan’s Prime Minister Shehbaz Sharif and President Asif Ali Zardari on Saturday felicitated Masoud Pezeshkian for his election as the president of Iran.

Pezeshkian won Iran’s runoff presidential election on Saturday, besting Saeed Jalili by promising to reach out to the West and ease enforcement on the country’s mandatory headscarf law.

A vote count offered by authorities put Pezeshkian, as the winner with 16.3 million votes to Jalili’s 13.5 million in Friday’s election.

Sharif congratulated Pezeshkian on X and said he looked forward to working closely with the president-elect to further strengthen Pakistan-Iran bilateral ties and promote regional peace and stability.

“As neighboring countries, Pakistan and Iran enjoy a close and historic relationship. We must ensure a bright future for our two peoples through mutually beneficial cooperation,” the Pakistan premier said.

In a separate statement, President Zardari extended his felicitations to Pezeshkian and expressed confidence that Pakistan-Iran relations would grow further stronger under his leadership.

“Pakistan looks forward to working together with Iran for the peace and prosperity of the region,” Zardari said.

Pezeshkian’s win still sees Iran at a delicate moment, with tensions high in the Middle East over the Israel war on Gaza, Iran’s advancing nuclear program, and a looming US election that could put any chance of a detente between Tehran and Washington at risk.

 

Saudi Arabia keen in developing ties with Iran following Pezeshkian election

Saudi Arabia's king and crown prince congratulated Masoud Pezeshkian on his election as Iran's president, state news agency SPA reported on Saturday.

"I affirm my keenness on developing and deepening the relations between our countries and people and serve our mutual interests," SPA quoted Saudi Crown Prince Mohammed bin Salman as saying.

In March 2023, Iran and Saudi Arabia signed a landmark China-brokered deal to reestablish relations after years of regional rivalry.

Iran election: Doesn’t matter who win

Masoud Pezeshkian has won the country's run-off presidential vote, the interior ministry said on Saturday. "By gaining majority of the votes cast on Friday, Pezeshkian has become Iran's next president," it said.

The low-profile moderate Masoud Pezeshkian, who has pledged to open Iran to the world and deliver freedoms its people have yearned for, is expected to win the run-off presidential vote on Friday.

Reportedly, the vote counting has ended and the rival candidates have been informed about the result. Pezeshkian is around three million votes ahead of his hardline rival Saeed Jalili.

Earlier, the interior ministry said that Pezeshkian was leading the race in early results, adding that the initial reports showed turnout was around 50%, higher than the first round.

The run-off follows a June 28 ballot with historically low turnout, when over 60% of Iranian voters abstained from the snap election for a successor to Ebrahim Raisi, following his death in a helicopter crash.

The vote is a tight race between low-key lawmaker Pezeshkian, the sole moderate in the original field of four candidates, and hardline former nuclear negotiator Jalili, a staunch advocate of deepening ties with Russia and China.

Videos on social media showed supporters of Pezeshkian dancing in streets in several cities and motorists honking car horns to cheer his victory.

People in the northwestern city of Urmia, Pezeshkian's hometown, were handing sweets out on the streets.

While the election is expected to have little impact on the Islamic Republic's policies, the president will be closely involved in selecting the successor to Ayatollah Ali Khamenei, Iran's 85-year-old Supreme Leader who calls all the shots on top matters of state.

Western media says, voter turnout has plunged over the past four years, which underlines that support for clerical rule has eroded at a time of growing public discontent over economic hardship and curbs on political and social freedoms.

Only 48% of voters participated in the 2021 election that brought Raisi to power, and turnout was 41% in a parliamentary election in March.

The election coincides with escalating Middle East tensions due to the war between Israel and Iranian allies Hamas in Gaza and Hezbollah in Lebanon, as well as increased Western pressure on Iran over its fast-advancing uranium enrichment program.

"Voting gives power ... even if there are criticisms, people should vote as each vote is like a missile launch (against enemies)," said Iran's Revolutionary Guards Aerospace Commander Amirali Hajizadeh.

The next president is not expected to produce any major policy shift on the nuclear program or change in support for militia groups across the Middle East, but he runs the government day-to-day and can influence the tone of Iran's foreign and domestic policy.

Election rivals Jalili and Pezeshkian are establishment men loyal to Iran's theocracy. But analysts said a win by the anti-Western Jalili would signal a potentially an even more authoritarian domestic policy and antagonistic foreign policy.

A triumph by Pezeshkian might promote a pragmatic foreign policy, ease tensions over now-stalled negotiations with major powers to revive a 2015 nuclear deal, and improve prospects for social liberalization and political pluralism.

However, many voters are skeptical about Pezeshkian's ability to fulfil his campaign promises as the former health minister has publicly stated that he had no intention of confronting Iran's power elite of clerics and security hawks.

 

 

NATO summit under Biden’s uncertain future

When dozens of world leaders convene in Washington, DC, for the NATO 75th anniversary summit next week, they won’t only be looking to underscore the unity of the alliance — they will also be carefully watching US President Joe Biden after his poor debate performance last week.

Biden’s showing at the CNN presidential debate was met with shock and concern by diplomats around the world. Now, the president will be under immense pressure to perform well at the high-stakes gathering and show that he is still a viable competitor to former President Donald Trump, multiple diplomats told CNN.

The concern is compounded because many believe Trump poses a threat to the future of NATO. He publicly railed against the alliance during his first term in office and did so again recently on the campaign trail, even going as far as suggesting Russia “do whatever the hell they want” to members who don’t meet defense spending targets.

Questions about Biden and his political future inject further uncertainty into a summit where key allies are also dealing with major political changes.

The Labour Party took power in the United Kingdom overnight for the first time in more than a decade, putting a new prime minister — Keir Starmer — in place just days before the start of the summit on Tuesday.

On Sunday, the second round of French parliamentary elections is taking place, which could potentially lead to a far-right prime minister taking office in a massive defeat to President Emmanuel Macron’s coalition.

However, as one former senior US diplomat said, there will “certainly be a spotlight” on Biden at the NATO summit.

“How does he look? And how does he sound? And how does he move? Does he look fit? And I suppose he and his team (will) be trying to focus on making him look spry and more with it,” said the former diplomat, who is a veteran of several of NATO summits.

Biden will undoubtedly be feeling the pressure to perform well, the former diplomat said.

The three-day summit is highly choreographed, and typically little is left to chance. It is preceded by months and months of prep work, discussion and negotiations among the 32 member countries.

During the summit, there will be numerous opportunities for counterparts to interact with Biden — the North Atlantic Council meeting, formal bilateral meetings, a leader’s dinner.

The president will be supported and accompanied to key meetings by Blinken, Defense Secretary Lloyd Austin and other key national security officials. Officials such as Blinken and Austin may have one-on-one meetings with their counterparts as well.

Diplomats say the chances of Biden making a major blunder at the NATO summit are limited, but one European diplomat said, that even if Biden does well, “This will still leave doubt,” given how poorly he performed at the debate.

“If there is another clear failure, this will feed into the ‘crisis mood,’” this diplomat said.

The allies are not expected to raise Biden’s debate performance with him directly, but it is expected that they will discuss the debate and their observations next week among themselves.

Another European diplomat said they believe the debate will be used, “even subconsciously, as a benchmark in all kinds of contexts” between now and Election Day.

CNN has reached out to the White House for comment. One US official said they were not aware of concerns that Biden’s debate performance would overshadow the NATO summit, saying that the leaders have spent a good deal of time with the US president, including last month at the G7 summit in Italy.

However, some diplomats were already concerned about Biden’s endurance that summit.

Another source told CNN that British officials who spoke with Biden during the G7 in June assessed he was fine and with it when it came to topics discussed during meetings, but that there was a lot of concern after the debate performance that he did not perform like the same person they interacted with in the meetings.

Adding to the pressure is the increased significance of this year’s NATO summit. The alliance will mark its 75th anniversary and seek to shore up consensus on issues such as support to Ukraine, particularly ahead of a potential change in leadership in the United States.

Trump’s stance on the campaign trail that his adherence to the alliance would be conditional has stirred concerns in the international community. Some question whether Trump will seize the opportunity to again denounce NATO next week. The former US diplomat remarked that “it’s hard to imagine him staying out of it.”

One NATO diplomat told CNN that the attention on Biden next week is a double-edged sword — while they appreciate the immense attention on the summit, there is concern that the actual substance will be lost as all eyes are on the US president.

Meanwhile, the Biden administration has sought to focus attention on the content of the summit and away from Biden’s debate performance.

“Next week, in Washington, DC, as you know, the historic summit is to mark the 75th anniversary of NATO’s founding,” White House press secretary Karine Jean-Pierre said Tuesday.

“For 75 years, NATO has kept us and the world safer. And under the president’s leadership, this president’s leadership, our Alliance is stronger, it’s larger, it’s more united than ever.”

 

PSX average daily volume up 23.8%WoW

Bullish momentum persisted through the first four days of the week, as the KSE-100 index reached its highest-ever closing of 80,283 points on Thursday. Overall, the benchmark index closed at 80,213 on last trading day on the week ended on July 07, 2024, with a gain of 1,767 points, up 2.25%WoW.

With an overall positive market landscape, participation also increased with the average daily traded volume rising to 440 million shares as compared to 355 million shares a week ago, up 23.8%WoW.

The finance minister confirmed positive progress in talks with the IMF, the lending authority appraising of the announced changes in electricity and gas tariffs effective July 01, 2024, with the likelihood of a staff level agreement (SLA) within this month.

On the inflation front, CPI for June 2024 was reported at 12.57%YoY, in-line with the consensus. Meanwhile, trade deficit for June was reported at US$2.39bn, taking FY24 deficit to US$24.09 billion, down by 12%YoY.

On the external front, foreign exchange reserves held by State Bank of Pakistan (SBP) rose by US$494 million on a weekly basis to US$9.39 billion.

Finally, the domestic currency slightly weakened against the greenback, ending the week at PKR278.38/US$ (down 0.01%WoW).

Pakistan’s Oil Marketing Companies (OMCs) recorded their highest sales in 19 months, reaching 1.45 million tons in June 2024. Domestic cement sales fell 4.6% to 38.18 million tons in FY24.

Other major news flows during the week included: 1) GoP decided to shut down Pakistan Steel Mills, 2) Cabinet approved PKR5.72/unit hike in Nepra base tariff, 3) Pak-Afghan rulers reestablish contact for talks and 4) Power minister promised tariff relief.

Top performing sectors were INV. Banks / INV. COS./ Securities Cos, Leasing Companies, Exchange Traded Fund, Jute and Commercial Banks, while Synthetic & Rayon, Woollen, Close-end Mutual fund, Tobacco, and Textile Composite were amongst the worst performers.

Major net selling was recorded by Mutual Funds with a net sell of US$13.65 million. Foreigners absorbed most of the selling with a net buy of US$7.69 million.

Top performing scrips of the week were: AKBL, NBP, PSX, BOP and PGLC, while laggards included: IBFL, THALL, PAKT, HGFA and FCEPL.

According to AKD Securities, market is expected to return its focus to negotiations with the IMF, to be a key market trigger in the near term.

The rally is expected to continue amidst the market's attractive valuations, with the forward P/E continuing to remain below 4.0x. At these levels, the brokerage house anticipate that sectors benefiting from monetary easing and structural reforms will remain prominent.

Its top picks include OGDC, PPL, MARI, MCB, UBL, MEBL, HUBC, FFC, LUCK, MLCF, FCCL and INDU.

Israel's largest West Bank land seizure

Israeli government has approved a large land seizure in the occupied West Bank – the biggest since the 1993 Oslo Accords set out a path for peace between Israel and the Palestinians, according to the Israeli rights group Peace Now.

The Israeli military’s Civil Administration department, which manages civilian matters in the West Bank, issued the declaration on June 25 converting the area into state land, according to a document from the body, but the official notice wasn’t posted until Wednesday, Peace Now said.

The declaration covers a 1,270-hectare (3,138 acre) section of the Jordan Valley in the eastern West Bank near Jericho, the document from the Civil Administration shows.

Peace Now, an Israeli rights group that monitors illegal Israeli settlement expansion, criticized the move in a statement on Wednesday, saying that the seizure makes it even more difficult to establish “a Palestinian state alongside Israel.”

The group also noted that the latest declaration followed several previous announcements that have made this year the biggest, by far, for Israeli land seizures in the Palestinian territory, according to data it has collected that dates back to 1993.

According to the report, declaring land as state property is one of Israel’s primary methods for asserting control over the occupied territories. Once land is designated as state land, Israel no longer recognizes it as privately owned by Palestinians. CNN has reached out to the spokesperson for Israel’s Civil Administration for comment about this specific claim by Peace Now, but has yet to hear back.

Separately, on Monday Israel’s Higher Planning Council, the government body responsible for greenlighting new housing construction in parts of the West Bank, said it would move to approve thousands of new housing units in dozens of Israeli settlements, according to Peace Now.

Israeli Finance Minister Bezalel Smotrich, who also holds a position in the Defense Ministry with significant control over civilian matters in the occupied West Bank, celebrated the move in a Wednesday post on X.

“Building the good country and thwarting the establishment of a Palestinian state. MTA is meeting this morning to approve over 5,000 housing units,” he wrote, using an acronym for The Higher Planning Council.

Smotrich spoke about preventing the occupied West Bank from becoming a part of an independent Palestinian state, according to leaked audio of a speech he gave in June.

On Sunday, Israel sparked condemnation after the finance minister announced plans to legally recognize five unauthorized Jewish settlements in the occupied West Bank.

Courtesy: Saudi Gazette