Trump Victory: Impact on Iran-Russia relations

Iranian political experts have quickly projected that a Trump victory in the presidential elections could lead to renewed US-Russia relations due to Trump and Putin's reportedly friendly ties. Some in Iran worry that this shift might undermine the strategic partnership between Iran and Russia, which has been strengthened over the past three years.

However, a closer look at Russian experts' views presents a more balanced and realistic perspective. These analysts believe that the US-Russia relationship is unlikely to return to pre-conflict levels, given the profound trust issues that have persisted since the Ukraine crisis.

Russian-Iranian partnership, which has gained unprecedented momentum, is unlikely to be sacrificed for potential rapprochement with the United States.

Examining the opinions of notable Russian experts can shed light on Moscow's likely short-term approach to US relations, especially regarding the Ukraine conflict.

In initial responses, some speculate that Trump's return might lead Russia to slightly slow its Eurasian integration efforts, potentially making space for renewed discussions with the US, especially on the Ukraine crisis.

Yet, Alexander Dugin, a prominent proponent of Eurasianism in Russia, expresses a different view. He argues that while Trump’s administration may deprioritize the Ukraine crisis, it will likely focus on domestic US issues and its trade war with China.

Dugin, who frames Russia's actions in Ukraine as part of a destiny-driven mission to “de-Nazify Kyiv,” is adamant that this campaign should continue westward in Ukraine. In his view, even if Trump were to ask Putin to halt military operations in Ukraine, such a request would be improbable to affect Russia's plans.

Similarly, Andrey Bezrukov, an international relations expert and professor at Russia's Ministry of Foreign Affairs University, believes that resolving the Ukraine issue depends more on Russia's military progress than the US elections.

He emphasizes Trump’s unpredictability, citing Iran's experience with US policy shifts, and warns of the risks if future Democratic administrations disregard any agreements.

Bezrukov adds that Trump's administration would likely focus primarily on countering China's global influence, rather than confronting Russia directly in Ukraine.

However, this does not necessarily mean the end of US support for Ukraine; the US might shift more of this responsibility to Europe, despite Trump's potential disagreements with European leaders.

Andrey Sushentsov, director of the Valdai Discussion Club’s programs and an expert on international relations, says US institutions constrained Trump’s policy intentions on Ukraine during his presidency from 2017-2021.

During his campaign, Trump asserted he could resolve the Ukraine crisis swiftly, but Sushentsov views such claims skeptically.

He argues that Ukraine is a tool for the US to manage Russia’s influence, rally European allies, and compel them to bear the economic and social costs of the crisis unless the US decides that Ukraine is no longer an effective lever.

In reviewing these insights from prominent Russian analysts and commentaries in Russian media, it is apparent that most Russian experts are skeptical about any rapid impact of a Trump-Putin rapport on resolving the Ukraine conflict.

Given the unprecedented level of Russian-Iranian relations over the past three years, it is unlikely that this alliance would be sacrificed for hypothetical negotiations between a Republican-led US and Russia.

 

Trump’s pick for key positions

President-elect Donald Trump has started filling key posts in his second administration, putting an emphasis so far on aides and allies who were his strongest backers during the 2024 campaign.

Here’s a look at some of the persons he has selected so far:

Susie Wiles, chief of staff

Wiles, 67, was a senior adviser to Trump’s 2024 presidential campaign and its de facto manager.

Wiles has a background in Florida politics. She helped Ron DeSantis win his first race for Florida governor. Six years later, she was key to Trump’s defeat of him in the 2024 Republican primary.

Wiles’ hire was Trump’s first major decision as president-elect and one that could be a defining test of his incoming administration considering her close relationship with the president-elect. Wiles is said to have earned Trump’s trust in part by guiding what was the most disciplined of Trump’s three presidential campaigns.

Wiles was able to help keep Trump on track as few others have, not by criticizing his impulses, but by winning his respect by demonstrating his success after taking her advice.

Mike Waltz, national security adviser

Trump asked Waltz, a retired Army National Guard officer and war veteran, to be his national security adviser, a person familiar with the matter.

The move would put Waltz at the forefront of a litany of national security crises, ranging from the ongoing effort to provide weapons to Ukraine and escalating worries about the growing alliance between Russia and North Korea to the persistent attacks in the Middle East by Iran proxies and the push for a cease-fire between Israel and Hamas and Hezbollah.

Waltz is a three-term GOP congressman from east-central Florida. He served multiple tours in Afghanistan and also worked in the Pentagon as a policy adviser when Donald Rumsfeld and Robert Gates were defense chiefs.

He is considered hawkish on China, and called for a US boycott of the 2022 Winter Olympics in Beijing due to its involvement in the origin of COVID-19 and its ongoing mistreatment of the minority Muslim Uighur population.

Tom Homan, ‘border czar’

Homan, 62, has been tasked with Trump’s top priority of carrying out the largest deportation operation in the nation’s history.

Homan, who served under Trump in his first administration leading US Immigration and Customs Enforcement, was widely expected to be offered a position related to the border, an issue Trump made central to his campaign.

Though Homan has insisted such a massive undertaking would be humane, he has long been a loyal supporter of Trump’s policy proposals, suggesting at a July conference in Washington that he would be willing to “run the biggest deportation operation this country’s ever seen.”

Democrats have criticized Homan for his defending Trump’s “zero tolerance” policy on border crossings during his first administration, which led to the separation of thousands of parents and children seeking asylum at the border.

Elise Stefanik, UN ambassador

Stefanik is a representative from New York and one of Trump’s staunchest defenders going back to his first impeachment.

Elected to the House in 2014, Stefanik was selected by her GOP House colleagues as House Republican Conference chair in 2021, when former Wyoming Rep. Liz Cheney was removed from the post after publicly criticizing Trump for falsely claiming he won the 2020 election. Stefanik, 40, has served in that role ever since as the third-ranking member of House leadership.

Stefanik’s questioning of university presidents over antisemitism on their campuses helped lead to two of those presidents resigning, further raising her national profile.

If confirmed, she would represent American interests at the UN as Trump vows to end the war waged by Russia against Ukraine begun in 2022. He has also called for peace as Israel continues its offensive against Hamas in Gaza and its invasion of Lebanon to target Hezbollah.

Stephen Miller, deputy chief of staff for policy

Miller, an immigration hardliner, was a vocal spokesperson during the presidential campaign for Trump’s priority of mass deportations. The 39-year-old was a senior adviser during Trump’s first administration.

Miller has been a central figure in some of Trump’s policy decisions, notably his move to separate thousands of immigrant families.

Trump argued throughout the campaign that the nation’s economic, national security and social priorities could be met by deporting people who are in the United States illegally. Since Trump left office in 2021, Miller has served as the president of America First Legal, an organization made up of former Trump advisers aimed at challenging the Biden administration, media companies, universities and others over issues such as free speech and national security.

 

PSX creates new highs every week

Pakistan Stock Exchange (PSX) continued its bullish momentum throughout the week ended November 08, 2024 with the benchmark index closing at 93,291 points, up by 2.7%WoW, achieving it’s highest ever closing.

The momentum was fuelled by State Bank of Pakistan (SBP) accelerating the pace of monetary easing with 250bps cut resulting in policy rate to end at 15% as inflation continues to fall towards the central bank medium term target range, providing impetus to cyclical sectors.

MSCI added eight Pakistani scrips while removing one from its MSCI FM Small Cap Index as part of its November review.

Furthermore, an IMF mission is scheduled to arrive Pakistan for the first review of the US$7 billion Extended Fund Facility (EFF), which was originally due in March 2025 but will take place four months ahead of schedule.

Cement offtakes for October 2024 was reported at 4.36 million tons, up 9%YoY. 

Workers’ remittance remained robust and reported at US$3.0 billion for October 2024, taking 4MFY25 remittances to US$11.8 billion (up 35%YoY).

Foreign exchange reserves held by SBP increased by US$18 million WoW to US$11.2 billion as of November 01, 2024.

Average daily trading volume rose to 896.1 million shares from 682.8 million shares traded a week ago, up 31.2%WoW.

On the currency front, PKIR largely remained stable against the greenback throughout the week.

Other major news flow during the week included: 1) Qatar to invest US$3 billion in diverse sectors 2) exports up 13.45%YoY to U$10.88 billion during first four months of the current financial year, 3) Eurobond sale planned for the next financial year, 4) Tax exemptions in FY24 amounted to PKR3.8 trillion, and 5) GoP to raise PKR8.7 trillion debt to pay maturing loans.

Refinery, Exchange traded fund, Jute, Mutual Funds and Paper & Board were amongst the top performers, Synthetic & Rayon, Tobacco, Real Estate Investment Trust, Banks & Leather & Tanneries.

Major net selling was recorded by Individuals with a net sell of US$13.6 million. Mutual Funds emerged major buyers with net a net buy of US$22.0 million.

Top performing scrips of the week were: PIBTL, HCAR, BOP, PKGS. and FCEPL, while top laggards included: SCBPL, IBFL, FABL, SRVI, and HBL.

Continuation of monetary easing due to disinflationary environment and improving macroeconomic environment is likely to make investment in equities more appealing.

Aforementioned factors, along with declining external financing requirement under the IMF program, would keep foreigners’ interest alive.

AKD Securities recommend sectors that benefit from monetary easing and structural reforms. However, modest economic recovery may limit the upside for cyclicals.

Top picks of the brokerage house include: OGDC, PPL, MCB, MEBL, FFC, PSO, LUCK, MLCF, FCCL and INDU.

 

Yemen downs another US Reaper drone

Yemeni air defense units have shot down another US MQ-9 Reaper drone over the northern province of al-Jawf, the 12th aircraft of its kind destroyed by the country's forces so far.

The drone designed for intelligence, surveillance, target acquisition and reconnaissance was downed while flying over the region early Friday, Yemeni media outlets reported. 

The US military acknowledged the videos circulating online showing what appeared to be a flaming aircraft dropping out of the sky and a field of burning debris in what those off-camera described as an area of al-Jawf province. The military said it was investigating the incident, declining to elaborate further.

Yemeni forces have surface-to-air missiles capable of downing aircraft. The country's Ansarullah movement has been a key component of the “Axis of Resistance” that includes Lebanon’s Hezbollah, Hamas and the Islamic Resistance in Iraq.

Reapers, which cost around US$30 million apiece, can fly at altitudes up to 50,000 feet (15,240 meters) and have an endurance of up to 24 hours before needing to land. The aircraft have been flown by both the US military and the CIA over Yemen for years.

Yemenis have declared their open support for Palestine’s struggle against the Israeli occupation since the regime launched a devastating war on Gaza on October 07 last year, killing at least 43,469 Palestinians to date. 

Yemen's armed forces have said that they won’t stop their attacks until Israeli ground and aerial attacks in Gaza end. They have targeted more than 90 Israeli-linked vessels with missiles and drones since the Israeli war on the Gaza Strip started in October 2023.  

Ansarullah maintains that it targets ships linked to Israel, the United States or the Britain to force an end to Israel’s war on Gaza.  

In October, the US military unleashed B-2 stealth bombers to bomb Yemen in support of Israel.

 

Israel: Prolonged war becomes unsustainable

Israel’s economy, already straining under the costs of an ongoing war, now faces new turbulence as Defense Minister Yoav Gallant was fired earlier this week.

Prime Minister Netanyahu’s decision sends a troubling message to investors as Israel grapples with mounting debt, credit downgrades, and slowing growth.

This unexpected shift is causing concerns about Israel’s economic stability. Credit rating agencies have downgraded Israel’s rating, warning of the potential risks to those considering investment.

At a time when stability is key to sustaining investor confidence, signals like these make it even harder for Israel to project resilience and security on the global stage.

These economic realities impact everyday Israelis the most. The costs of war are immense—not only for soldiers and security but for essential services, the cost of living, and the ability for struggling families to stay afloat.

 

 

 

No difference who wins election in the US

President Masoud Pezeshkian said on Thursday that it "does make a difference" for Iran who has won the presidential elections in the United States, noting Iran and its political system is reliant on its own power and its great and noble nation.   

It was the first reaction by the Iranian president since Donald Trump won the White House in the presidential elections on November 05.

Pezeshkian added, "In developing our relations with other countries we will never have a 'closed or limited' view."

The president said Iran prioritizes developing ties with Muslim and neighboring countries and deeply believes in fostering unity among Islamic nations.

Iranian Foreign Ministry spokesman Esmaeili Baghaei also said on Thursday that Iran will judge the new US government on the basis of its policies and approaches.

Baghaei said Trump's victory has provided an opportunity for the United States to reassess its "wrong policies".

 

Trump's Victory: Implications for Pakistan

Donald Trump’s second term as the US President is expected to have profound impact on geopolitics and global asset/ commodity prices, which would ultimately have implications for the ongoing macro recovery in Pakistan.

There is a high probability of a “clean sweep” by the Republican Party (it is likely to take control of both the US Senate and House), which will give Trump greater ability to execute his campaign pledges.

Trump’s policies – cracking down on immigration and large import tariffs on China – are expected to be inflationary for the US economy and negative for global growth. If he is able to bring a quick end to both the wars, in Ukraine and Gaza, oil prices are likely to continue falling under the weight of weakening global demand.

There are various caveats to these expectations:

Global experts point to the strength of US institutions in checking/ taming some of the draconian policies Trump has pledged. Second, China has begun rolling out huge stimulus measures, both fiscal and monetary, to revive its ailing economy (particularly its large property sector). This could serve as a boost to global commodity prices.

For Pakistan, the prospect of lower or stable oil/ commodity prices is positive. US-China trade war improves the opportunity to attract Chinese industries into Pakistan. Certain exports out of Pakistan, including steel and textiles, may become more competitive in the US. But, it could be a challenge for Pakistan to execute CPEC Phase 2 in the face of deteriorating US-China relations.

At this stage, the event does not materially affect outlook of continued macro stability in Pakistan – continued disinflation and foreign exchange reserves buildup – and equity market re-rating,

According to Pakistan’s leading brokerage house, Inter Market Securities:

Oil prices are more likely to fall or stabilize around US$70/bbl over the medium term. Trump is likely to encourage greater shale oil production in the US, while at the same time, he would work to bring an end to the conflicts in Ukraine and the Middle East.

Global inflation could make a comeback as Trump promises to slap up to 60% import tariffs on China and up to 20% from elsewhere. He has also committed to deport illegal immigrants from the country – which could stoke another round of labor shortage in the United States.

US interest rates may remain elevated as the resurgent inflation could lead to a slowdown of rate cuts in the US, leading to a stronger greenback against other major currencies. This could mean that global equity flows into the emerging and frontier markets would remain weak.

Raising debt through Eurobonds could therefore become difficult for Pakistan. The USD index has appreciated 5% since September, while the US 10-year bond yield has risen to 4.5% from 3.6% by end September – both have risen in anticipation of Trump’s re-election.

Global growth could be slower and commodity prices, depressed if Trump administration impose higher import tariffs on China, then growth in China could be undermined (notwithstanding the stimulus measures the Chinese government has recently begun rolling out. This would spell an extended period of down-trending commodity prices and a global oversupply in some key commodities (steel, petrochemicals) and products (EVs).

Weak US participation in achieving global climate goals could reverse or slow down the recent trend of multilateral lenders (IMF, WB and ADB) ramping up loans to developing economies for building defense against climate change.

Possible implications for Pakistan

A decline in global commodity prices would maintain the dis-inflationary trend in Pakistan. However, a fresh wave of global inflation will be felt in Pakistan through a stronger greenback and imported inflation. At this stage, the brokerage house maintains it outlook for average inflation in Pakistan over the next 12 months to be around 9% and expect the State Bank of Pakistan (SBP) to cut the policy rate up to 11% by June 2025.

US-China trade war could make some exports out of Pakistan more competitive in the US, compared to imports from China. These would include HVA textiles, flat steel, tires and cement. However, if PKR-US$ remains stable while other regional currencies depreciate against the greenback, it could undermine the competitiveness of Pakistani exports.

Pakistan could see greater Chinese FDI. As Chinese industries would continue to set up facilities outside China to avoid import tariffs, some could potentially be set up in Pakistan. However, for this to happen, Pakistan would have to offer a more stable policy environment to Chinese investors, and the government may have to drop plans to renegotiate the power tariffs of CPEC power plants, in our view.