Friday, 9 August 2024

Saudi Arabia must resist buying US arms

To create the justification for the sale of lethal arms to Israel, the United States has also decided to lift ban on sale of arms to Saudi Arabia. We are of the opinion that Saudi Arabia must resist wasting its money on buying weapons.

The new US mantra is that the Kingdom need weapons amid turmoil in the Middle East following Hamas' deadly attack on Israel and fears of war in the Middle East.

According to the United States, the decision comes as the threat level in the region has been heightened since late last month, with Iran and Lebanon's powerful Iran-backed Hezbollah group vowing to retaliate against Israel after Hamas' political chief Ismail Haniyeh was killed in Tehran.

One may recall that in the past United States had sold weapons worth billions of dollars, using its mantra, “Iran is a bigger threat for Saudi Arabia as compared to Israel”.

Our perspective is that the Middle East in general and Saudi Arabia in particular does not fear any attack on its soil from any country except United States and its proxy Israel.

Reportedly, the Biden administration has decided to lift a ban on sale of US offensive weapons to Saudi Arabia, reversing a three-year-old policy to pressure the kingdom to wind down the Yemen war. Reuters was first to report the decision earlier.

The State Department was lifting its suspension on certain transfers of air-to-ground munitions to Saudi Arabia, a senior department official confirmed.

"We will consider new transfers on a typical case-by-case basis consistent with the Conventional Arms Transfer Policy," the official said.

The administration briefed Congress this week on its decision to lift the ban, a congressional aide said. One source said sales could resume as early as next week. The US government was moving ahead on Friday afternoon with notifications about a sale, a person briefed on the matter said.

"The Saudis have met their end of the deal, and we are prepared to meet ours," a senior Biden administration official said.

Under US law, major international weapons deals must be reviewed by members of Congress before they are made final. Democratic and Republican lawmakers have questioned the provision of offensive weapons to Saudi Arabia in recent years, citing issues including the toll on civilians of its campaign in Yemen and a range of human rights concerns.

But that opposition has softened amid turmoil in the Middle East following Hamas' deadly October 07, 2023 attack on Israel and because of changes in the conduct of the campaign in Yemen.

Since March 2022 - when the Saudis and Houthis entered into an UN-led truce - there have not been any Saudi airstrikes in Yemen and cross-border fire from Yemen into the kingdom has largely stopped, the administration official said.

"We also note the positive steps that the Saudi Ministry of Defense have taken over the past three years to substantially improve their civilian harm mitigation processes, in part thanks to the work of US trainers and advisors," the State Department official said

Yemen's war is seen as one of several proxy battles between Iran and Saudi Arabia. The Houthis ousted a Saudi-backed government from Sanaa in late 2014 and have been at war against a Saudi-led military alliance since 2015, a conflict that has killed hundreds of thousands of people and left 80% of Yemen's population dependent on humanitarian aid.

Biden adopted the tougher stance on weapons sales to Saudi Arabia in 2021, citing the kingdom's campaign against the Iran-aligned Houthis in Yemen, which has inflicted heavy civilian casualties.

Ties between the kingdom and the United States have warmed since then, as Washington has worked more closely with Riyadh in the aftermath of Hamas' October 07 attack to devise a plan for post-war Gaza.

The Biden administration also has been negotiating a defense pact and an agreement for civil nuclear cooperation with Riyadh as part of a broad deal that envisions Saudi Arabia normalizing ties with Israel, although that remains an elusive goal.

The Houthis have emerged as a strong supporter of the Palestinian Islamist group Hamas in its war against Israel. Earlier this year, they attacked commercial ships that they said are linked to Israel or bound for Israeli ports.


Israel to get US$3.5 billion to kill Palestinians

According to Reuters, Washington will provide Israel US$3.5 billion for the purchase of US weapons and military equipment. The money will be released after the US Congress appropriated it during Israel's war in Gaza.

A State Department spokesperson said on Friday that the department notified Congress on Thursday that the government intended to release the billions of dollars of foreign military financing to Israel.

CNN reported earlier on the release of this amount which comes from a US$14 billion supplemental funding bill for Israel passed by the Congress in April.

Tensions in the Middle East have been mounting and many fear a widening of Israel's war in Gaza that has already killed tens of thousands and caused a humanitarian crisis.

There has been an increased risk of escalation into a broader Middle East war after recent killings of Palestinian Islamist group Hamas' leader Ismail Haniyeh in Iran and of Hezbollah military commander Fuad Shukr in Beirut allegedly by Israel.

The latest bloodshed in the decades-old Israeli-Palestinian conflict was triggered on October 07, 2023 when Hamas attacked Israel, killing 1,200 and taking about 250 hostages, according to Israeli tallies.

The Gaza health ministry says that since then Israel's military assault on the Hamas-governed enclave has killed nearly 40,000 Palestinians (genocide) and also displacing nearly the entire population of 2.3 million, causing humanitarian crisis.

 

 

 

Pakistan Stock Exchange posts nominal gains

Pakistan Stock Exchange witnessed mixed momentum throughout the week ended on August 09, 2024 to close at 78,570 level with a nominal 0.4%WoW gain.

According to a report by AKD Securities, the week began on a turbulent note, primarily due to concerns about global markets following Japan's interest rate hike. However, a rebound in the E&P sector, spurred by a surprising payout from MARI, revitalizing market sentiment in the last two sessions.

Investors’ confidence was further strengthened by debt rollover commitments during the week, aligning with IMF prerequisites ahead of the Executive Board meeting expected later this month.

Additionally, T-Bill yields dropped in the latest auction on Wednesday, signaling investor anticipation of rapid rate cuts in upcoming Monetary Policy Committee (MPC) meetings. This decline in T-Bill yields consequently led to KIBOR rates hitting 18-month low.

On the macroeconomic front, remittances for July 2024 were reported at US$3.0 billion, up 45%YoY, cementing a positive outlook for the current account balance for the ongoing year.

The energy sector remained a focal point of public discourse amid rising power prices, prompting the government to establish a task force on energy and announce plans to retire/ gradually phase out 15 IPPs.

The ECC directed the relevant ministry to formulate a fertilizer policy to address concerns over production, pricing, and the provision of gas, which might result in unify gas prices across the industry.

Despite initial volatility in market, participation surged by 38%WoW, with the average daily traded volume rising to 493 million shares, from 358 million shares a week ago.

On the currency front, PKR largely remained stable against the greenback, closing the week at PKR278.55 to a US$.

Other major news flows during the week included: 1) Cement sales declined by 7% due to slow down of economic activity, 2) SBP forex reserves rose by US$51 million to US$9.15 billion, 3) SIFC was hopeful of foreign investments once IMF deal was done, and 4) GoP hiked GST on tractors to 14%.

Woollen, Textile weaving, and Textile spinning were amongst the top performing sectors, while, Vanaspati & allied industries, Property, and Fertilizer were amongst the worst performers.

Major net selling was recorded by Mutual Funds with a net sell of US$6.0 million. Individuals absorbed most of the selling with a net buy of US$5.5 million.

Top performing scrips of the week were: YOUW, BNWM, MARI, SNGP and APL, while top laggards included: PIBTL, AKBL, BAHL, FFC and ATRL

Looking ahead, market is expected to continue positive momentum as global market concerns settle and macroeconomic indicators remain favorable. The anticipated IMF Executive Board approval during the month is likely to support the momentum.

Sectors benefiting from monetary easing and structural reforms would remain in the limelight. However, modest economic recovery would keep the upside in check for the cyclicals.

 

 

Pakistan not involved in ouster of Hasina

The Foreign Office (FO) on Friday rejected all statements emanating from India accusing Pakistan of being involved in the ouster of Bangladesh’s then-prime minister Sheikh Hasina, terming it New Delhi’s “disturbing obsession” with Islamabad.

The comments came after reports emerged from India blaming the Pakistan intelligence agencies for their involvement in the collapse of Bangladesh’s government.

The Bangladeshi military initially took over the country after a student-led protest forced the country’s Hasina to flee. Later, an interim government was formed with Bangladesh’s Nobel Peace Prize-winning economist Muhammad Yunus sworn in as its head.

Reacting to the Indian media reports, FO spokesperson Mumtaz Zahra Baloch, during a weekly press briefing in Islamabad today, rejected all such statements, stressing that Pakistan had no involvement in the events that took place in Bangladesh.

“These statements depict India’s disturbing obsession with Pakistan,” Baloch said in response to a question.

She said that Indian political ledgers and their media habitually blamed Pakistan for their failures in domestic and foreign policy.

The spokesperson added that Pakistan and Bangladesh had positive relations which had only continued to grow.

“The government and people of Pakistan have expressed their support and solidarity with the people of Bangladesh and we sincerely hope for a peaceful and swift return to normalcy,” said Baloch.

She went on to say that Pakistan was confident that the resilient spirit and unity of the Bangladeshi people would lead them towards a harmonious future.

The student-led movement that ousted Hasina grew out of protests against quotas in government jobs that spiraled in July, provoking a violent crackdown that drew global criticism, although the government denied using excessive force.

Hasina, 76, who had been in power since 2009, quit on Monday as hundreds of thousands of people flooded the streets of Dhaka. Jubilant crowds later stormed and looted her palace.

Monday’s events were the culmination of more than a month of unrest, which began as protests against a plan for quotas in government jobs but morphed into an anti-Hasina movement.

Hasina, who was accused of rigging the January elections and widespread human rights abuses, deployed security forces to quash the protests.

At least 455 people were killed in the unrest, according to an AFP tally based on police, government officials, and hospital doctors.

 

 

IPPs: Much Ado About Nothing

According to a research report by AKD Securities, authorities in Pakistan have decided to retire/ gradually phaseout 15 IPP contracts with immediate effect.

Planned terminations for the IPPs include the following: KAPCO, Kohinoor Energy, Gul Ahmed Energy, Liberty Power, Tapal Energy and Attock Gen Limited. 

Phased-out retirement for the IPPs includes the following: HUBCO Base, Lalpir Power, PakGen Power, Rousch Power, Fauji Kabirwala, Habibulla Coastal, Japan Power, Saba Power and Southern Electric.

The brokerage house is of the view that with many of these capacities already expired/ non-operational due to their fuel/ generational inefficiencies, authorities have focused on the low-hanging fruit by gradually terminating/ phasing these IPPs out.

It's important to note that these IPPs were part of the master-agreement amendments in 2020 as well, which led to a downward negotiation of their ROE components.

Four of the six IPPs planned for immediate retirement have their PPAs already expired, meaning they do not bill capacity payments to the power purchaser.  

Therefore, it is believed that this move will have minimal impact on the power purchase costs currently billed towards the CPPA-G.

However, early retirement of IPPs with remaining tenures may be settled with a payout of present value of capacity payments due for the remaining tenures.

 

 

Thursday, 8 August 2024

US sending aircraft carrier to protect Israel

The US decision to redirect the USS Abraham Lincoln to the Middle East away from Asia leaves the West Pacific dangerously open until a newly refurbished aircraft carrier arrives in Japan later this year, according to Nikkei Asia. Defense Secretary Lloyd Austin recently ordered the USS Abraham Lincoln Carrier Strike Group, operating near Guam, to head to the Middle East to replace the USS Theodore Roosevelt.

This move came less than two months after Austin directed the Roosevelt, which also had been on a Pacific deployment, to replace the USS Dwight D. Eisenhower Carrier Strike Group in the Red Sea. The Roosevelt will return to the US, and the Eisenhower already has done so.

The Lincoln and the Roosevelt had been stationed in the Asia-Pacific to cover for the short-term absence of a Japan-based carrier.

Bryan McGrath, a retired surface warship officer and founding managing director of consultancy The FerryBridge Group, said the U.S. Navy's absence in the region reinforces to Chinese President Xi Jinping "the fact that the United States of America does not have enough naval power to cover its requirements."

Collin Koh, a senior fellow at the Institute of Defence and Strategic Studies in Singapore, said the Pentagon has concluded that "the situation in the Western Pacific is at least stabilizing for now."

Koh said this is based on South China Sea tensions winding down since China and the Philippines agreed to a provisional arrangement, and with Taiwan and the Korean Peninsula "while still tense, at least under control."

But if a full-scale armed conflict does break out in Asia, "US military power projection capabilities in the Western Pacific are expected to suffer from the absence of a carrier strike group," he said. "Land-based assets are useful, but they do lack the versatility offered by naval forces, and US Navy carrier strike groups constitute the linchpin of such assets."

The shift in military posture is intended to "increase support for the defense of Israel," deputy Pentagon press secretary Sabrina Singh said in a statement on Monday. Iran has vowed to retaliate after Hamas political chief Ismail Haniyeh was killed last week in Tehran.

Plans shared by the US Navy to Nikkei Asia confirmed that a "carrier gap" in the West Pacific was emerging. The USS Carl Vinson, which was assumed by security observers to move westward after being in Hawaii for the biennial Rim of the Pacific exercise, instead will head directly back to San Diego, a spokesperson said on Monday.

The next carrier to be deployed to the West Pacific will be the USS George Washington, when it arrives in Yokosuka, Japan, to be the forward-deployed carrier replacing the USS Ronald Reagan, the spokesperson said. The navy has previously said the George Washington is expected to arrive in the autumn. 

Wednesday, 7 August 2024

Haniyeh's assassination flagrant violation of Iranian sovereignty

Saudi Deputy Minister of Foreign Affairs Eng. Waleed Al-Khereiji said that the assassination of former Palestinian Prime Minister Ismail Haniyeh is a flagrant violation of the sovereignty, territorial integrity, and national security of Iran, as well as international law and the Charter of the United Nations.

“The assassination of Haniyeh during his visit to Tehran last week constitutes a threat to regional peace and security,” he said while attending, on behalf of Minister of Foreign Affairs Prince Faisal bin Farhan, the extraordinary meeting of the Executive Committee of the Organization of Islamic Cooperation (OIC) in Jeddah on Wednesday.

Al-Khereiji emphasized that the government of Custodian of the Two Holy Mosques King Salman is aware of the seriousness of the escalating situation in the Palestinian territories due to the blatant attacks and illegal practices of the Israeli occupation against the Palestinian people inside and outside the Palestinian territories, ignoring international charters and resolutions.

The deputy minister said that the government of Saudi Arabia, based on its firm positions towards the Palestinian cause, condemns the attacks carried out by the Israeli occupation forces on civilians and rejects any attack on the sovereignty of states or interference in the internal affairs of any state in accordance with international conventions and the OIC Charter.

Al-Khereiji expressed the Kingdom’s deep concern over the escalation of violations by the Israeli occupation army, which resulted in large numbers of martyrs and wounded among civilians in the Gaza Strip and the West Bank. He also voiced concern over the shortage of food, medicine, and fuel to the complete depletion of the health sectors under the pressure of the increasing numbers of patients as well as displaced civilians seeking shelter.

Al-Khereiji renewed the Kingdom’s call on the international community to take effective action to play its role in holding the Israeli occupation forces fully accountable for these crimes and violations and their negative consequences on the chances of reviving the peace process and in stopping the attacks and violations against the Palestinian people.

He also emphasized that the Kingdom supports all efforts aimed at ending the occupation of the Palestinian territories and reaching a comprehensive solution that enables the Palestinian people to establish their independent Palestinian state in accordance with international legitimacy resolutions and the Arab Peace Initiative.

 Courtesy:  Saudi Gazette