Iranian exports to Afghanistan

Iran exported non-oil commodities valued at US$1.6 billion to Afghanistan during the first eight months of the current Iranian calendar year (March-November), the head of the Islamic Republic of Iran Customs Administration (IRICA) announced. Foroud Asgari said that Afghanistan was Iran’s fifth top export destination in the mentioned eight-month period.

Iran shares land or water borders with 15 countries namely UAE, Afghanistan, Armenia, Azerbaijan, Bahrain, Iraq, Kuwait, Kazakhstan, Oman, Pakistan, Qatar, Russia, Turkey, Turkmenistan, and Saudi Arabia.

In a meeting with an Iranian trade delegation in Kabul in mid-August, Afghanistan's interim Deputy Prime Minister Mullah Abdul Ghani Baradar Akhund said that his country is eager to attract Iranian investors in order to develop Afghan mining industry, generate solar electricity and expand railway connectivity.   

The Iranian delegation also proposed to launch a joint special industrial zone with Afghanistan.

Noting that Afghanistan has turned into a good place for making investment, Mullah said that the relevant ministries and organizations there, will cooperate and work closely with the investors. 

The Iranian delegation, made up of economic and trade players, also held a separate meeting with Afghanistan’s acting minister of commerce Haji Nooruddin Azizi. They called for the formation of a joint economic-mining zone between the two neighboring countries.

In early August, Iran's commercial attaché in Afghanistan said that in order to improve Iran’s presence in Afghanistan's markets, the trade between the two countries should move towards newer models of cooperation.

“Afghanistan meets more than 80 percent of its market needs through imports, and imports from Iran constitute 25 percent of this amount,” Hossein Roustaei said in a meeting on opportunities and challenges of the Afghan market, held by Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA).

Referring to Afghanistan's import priorities, including food, agriculture, fuel, basic goods such as flour, oil, eggs, day-old chickens, medicine, medical equipment, and construction equipment, he said, “Iran exported more than 724 million dollars of goods to Afghanistan in the first four months of the current Iranian calendar year which posted increased by 28 percent as compared to the same period last year.”

“The establishment of national security and the central government in Afghanistan over the past two years have improved the conditions of trade with this country,” he added.

Afghanistan has prioritized the exploitation of the country’s mines. Therefore, Iran's traditional economic relation with Afghanistan should enter into newer models of cooperation, he stressed.

According to Roustaei, investment and operation of mines, technical and engineering services, mechanization of agriculture and smart agriculture, construction of transportation infrastructure, and renewable energies are among the new fields that should be considered for cooperation between the two countries.

Increasing non-oil exports to the neighboring countries is one of the major plans the Iranian government has been pursuing in recent years.

HTS seeking close ties with Israel

Syria’s new rulers are seeking cordial relations with Israel despite domestic anger over the regime’s occupation of more lands of the Arab country. 

“We have no fear toward Israel, and our problem is not with Israel. There exists a people who want coexistence. They want peace. They don’t want disputes,” the governor of Damascus said Thursday. 

Maher Marwan made the comments in an interview with the US public broadcaster NPR, apparently on behalf of Syrian de facto leader Ahmed al-Sharaa, also known by his nom de guerre, Abu Mohammed al-Jolani.

Marwan added, “And we don’t want to meddle in anything that will threaten Israel’s security or any other country’s security. We want peace, and we cannot be an opponent to Israel or an opponent to anyone.”

This is how he tried to justify Israeli strikes on Syria after the Hayat Tahrir al-Sham (HTS) rebel group and its allies toppled the government of President Bashar Assad on December 08, 2024. 

Marwan said Israel’s initial trepidation after the fall of Assad was “natural.”

“Israel may have felt fear. So it advanced a little, bombed a little, etc,” he noted. 

The Israeli army has carried out hundreds of airstrikes in Syria destroying much of the country’s military capabilities since HTS removed Assad from power. The regime claims it wants to prevent military equipment from falling into hostile hands.

Israel also sent its ground forces into a UN-patrolled buffer zone in the occupied Golan Heights and beyond after Assad’s fall. 

Israel has extended its occupation to further regions of the Syrian territory, encompassing various towns, villages, and the strategically significant Mount Hermon. 

Israel claims the occupation of additional parts of the Syrian territory is aimed at ensuring the security of the regime’s borders.  

Israel’s land incursion into Syria violates the 1974 agreement between the two sides. The United Nations and a number of countries have demanded Israel withdraw from the region. 

Syrians have also condemned Israel’s presence on the country’s territory.                                           

On Wednesday, residents of a village in the southwestern province of Quneitra protested against Israel’s military presence there. 

Israeli forces opened fire on the demonstrators in the village of Susa, injuring several of them. 

Earlier this month, Israeli forces also attacked protesters who had gathered in the village of Maariyah on the western edge of Syria’s southern Daraa province to demand an end to the regime’s military presence in the area. They shot and wounded a protester. 

 

PSX benchmark index up 1.68%WoW

Pakistan Stock Exchange (PSX) experienced volatility throughout the week ended on December 27, 2024 due to portfolio adjustments and realignments at year-end. However, the bullish momentum prevailed, KSE-100 index posted a weekly gain of 1,838 points to close at 111,351 points, reflecting an increase of 1.68%WoW.

Major contributing sectors to this rally were commercial banks, followed by Oil & Gas Marketing Companies and INV.Banks/ INV.Cos/ Securities.Cos. T-Bill yields in the recent auction remained largely flat.

On the macroeconomic front, current account reported a surplus of US$729 million, taking 5MFY25 balance to a surplus of US$944 million.

Foreign exchange reserves held by State Bank of Pakistan (SBP) decreased by US$228 million WoW, ending the week at US$11.9 billion as of December 20, 2024.

Average daily trading volume declined by 31.0%WoW to 796 million shares, from 1.2 billion shares traded a week ago.

PKR remained stable against the greenback, closing the week at PKR278.47/US$.

Other major news flow during the week included: 1) Exports to EU surge by 14%YoY in 5MFY25 to US$4.8 billion, 2) Senate panel endorses legislation that would lead to the closure of all bank accounts of non-filers having bank balances of over PKR one million, 3) FBR announces crackdown against tax evaders, 4) GoP eyes 13.5% tax-to-GDP ratio in three years and 5) PIA to acquire 8 planes next year.

Jute, Leasing Companies, Property, Oil & Gas Marketing Companies and Glass & Cermaics were amongst the top performers, while Exchange Traded Fund, Textile Spinning, Vanaspati & Allied Industries, Transport and Woollen were amongst the worst performers.

Major net selling was recorded by Other Organizations with a net sell of US$9.3 million. Individuals absorbed most of the selling with a net buy of US$15.0 million.

Top performing scrips of the week were: PGLC, TRG, DAWH, JVDC, and FCEPL, while laggards included: PKGP, CHCC, ATRL, BNWM, and SCBPL.

Pakistan Stock Exchange is expected to remain on its upward trajectory in CY25, despite strong performance over the last two years, given the decline in interest rates to single digits.

Pakistan’s leading brokerage house, AKD Securities anticipates the KSE-100 Index would post a robust return of 55.5% in CY25, primarily driven by the strong profitability of fertilizer companies, higher sustainable ROEs of banks and improving cash flows of E&Ps and OMCs, amid falling fixed income yields.

Currently, the KSE-100 is trading at a P/E ratio of 6.0x, which remains below its 10- year historical average despite delivering a cumulative return of 130% over the past two years.

Saudi Arabia extends US$500 million for Yemen

Saudi Arabia has announced a US$500 million economic aid package to support Yemen, aimed at stabilizing the Yemeni economy, strengthening the Central Bank of Yemen, and fostering development and growth for the Yemeni people, reports Saudi Gazette.

A testament to Saudi Arabia’s long-term vision for fostering sustainable development and stability in Yemen

This initiative highlights Saudi Arabia’s commitment to addressing Yemen’s economic challenges and improving the quality of life for its citizens.

The package includes a US$300 million deposit to the Central Bank of Yemen, designed to enhance financial and monetary stability, and an additional US$200 million to address the country’s US$1.2 billion budget deficit.

The funds will be allocated through the Saudi Development and Reconstruction Program for Yemen (SDRPY) and will prioritize food security, salary support, operational expenses, and implementing economic reforms to build a stronger financial foundation for Yemen.

Saudi Arabia's efforts aim to stabilize the Yemeni economy and bolster public financial management, while fostering governance and transparency in government institutions.

The aid package is expected to empower Yemen’s private sector to drive sustainable economic growth, create job opportunities, and steer the national economy toward a more sustainable trajectory.

Previous Saudi assistance has yielded significant improvements in Yemen’s economic landscape. Deposits in the Central Bank of Yemen have bolstered foreign reserves, stabilized the local currency, and lowered exchange rate volatility.

This stability has reduced the prices of essential goods, including wheat, rice, milk, cooking oil, and sugar, while easing the costs of fuel and diesel. These measures have not only addressed immediate economic concerns but have also enhanced Yemen's food security and overall quality of life.

Saudi aid has also contributed to key sectors such as healthcare, by covering medication for chronic illnesses and cancer treatments, and education, among others.

Support for electricity generation has been another vital component, with Saudi Arabia supplying oil derivatives to 80 power plants across Yemen.

These initiatives have improved essential services and revitalized Yemen’s critical infrastructure.

Additionally, the Saudi Development and Reconstruction Program for Yemen has implemented 263 development projects and initiatives across Yemen, focusing on sectors including education, health, water, energy, transportation, agriculture, fisheries, and government capacity building.

 

Yemen fires supersonic missile at Tel Aviv

According to media reports, Yemen’s Ansarallah on Friday attacked the airport in Israel’s commercial hub of Tel Aviv, after Israeli air strikes hit Sanaa’s international airport and other targets in Yemen.

The Israeli strikes on Thursday landed as the head of the UN’s World Health Organization said he and his team were preparing to fly out from Yemen’s capital.

Hours later on Friday, the Ansarallah said they fired a missile at Ben Gurion airport and launched drones at Tel Aviv as well as a ship in the Arabian Sea.

No other details were immediately available.

Yemen’s civil aviation authority said the airport planned to reopen on Friday after the strikes that it said occurred while the UN aircraft “was getting ready for its scheduled flight.”

The Israeli military did not immediately respond to a request for comment on whether they knew at the time that WHO chief Tedros Adhanom Ghebreyesus was there.

Israel’s attack came a day after the Ansarallah rebels claimed the firing of a missile and two drones at Israel.

Ansarullah leader Abdul-Malik al-Houthi has termed Yemen’s launch of hypersonic missiles at Israeli targets “a very important achievement”, saying they have surprised the enemies.

“Yemen's supersonic missile operation, which penetrated the enemy's systems, is a great and very important achievement, and the enemy and the Americans are aware of it,” Houthi said in a televised speech on Thursday evening.

The firing of hypersonic missiles, he said, has caused immense disappointment among the political and security apparatus of Israel and the United States.

Finland seizes ship carrying oil for Russia

Finland on Thursday seized a ship carrying oil for Russia in relation to the recent cutting of an undersea cable connecting electricity to Estonia as concern mounts over ships disrupting power and gas lines in European waters.

Finland’s national law enforcement body, the Police of Finland, said in a statement it had seized a Cook Islands-registered ship called the Eagle S.

The ship is suspected in the rupturing of the Estlink 2 power transmission cable connecting electricity between Estonia and Finland, but police said at this time the investigation is looking at the incident as “aggravated criminal mischief.”

The power cable was disconnected on Wednesday, according to Finnish Prime Minister Petteri Orpo, who said at the time that authorities were “on standby over Christmas and are investigating the matter.”

European officials said the ship is suspected of carrying Russian oil, part of a vast shadow fleet Moscow is using to circumvent Western sanctions imposed over the war in Ukraine.

The European Commission said the disruption “is the latest in a series of suspected attacks on critical infrastructure.”

“We strongly condemn any deliberate destruction of Europe’s critical infrastructure,” officials said in a statement.

“The suspected vessel is part of Russia’s shadow fleet, which threatens security and the environment, while funding Russia’s war budget. We will propose further measures, including sanctions, to target this fleet.”

The European Commission said it would move to strengthen undersea cable protection through increasing related detection methods, information sharing and repair work.

Finnish leaders have also expressed concern about Russia’s alleged connection to the cutting of the cable.

“It is necessary to be able to prevent the risks posed by ships belonging to the Russian shadow fleet,” wrote Finnish President Alexander Stubb on the social platform X.

Estonian Prime Minister Kristen Michal urged the European Union and the Western security alliance NATO to increase cooperation on efforts to protect undersea cables.

The incident follows a concerning trend in the West of undersea cable disruptions in Europe.

A Chinese ship called the Yi Peng 3 is suspected of rupturing undersea cables last month linking Sweden and Lithuania and another connecting Germany and Finland.

The Chinese ship recently left European waters despite ongoing investigations into the matter, as officials have accused the vessel of dragging an anchor to cut the line, although they are still investigating whether it was on accident or on purpose.

A Hong Kong-registered ship was also responsible for cutting a critical gas pipeline between Estonia and Finland last year.

 

 

 

Norway Main Beneficiary of Ukraine War

When Russian President Vladimir Putin gave the order to invade Ukraine in February 2022, he surely did not expect that one of Russia’s neighbors would be the main beneficiary of his war. Yet as Russian hydrocarbon exports to Europe cratered in the wake of the invasion, Norway emerged as the continent’s largest supplier.

Owing to the steep increase in gas and oil prices that followed the outbreak of the war, Norway ultimately enjoyed a massive financial windfall. In 2022 and 2023, it reaped nearly US$111 billion in additional revenue from gas exports, according to recent estimates from the finance ministry.

A question arises, why Norway was allocated a little more than US$3.1 billion for support to Ukraine in its 2025 budget?

Combined with what it contributed in 2024, Norway’s support for Ukraine amounts to less than 5 percent of its two-year war windfall. For comparison, Germany, Europe’s largest single contributor, provided US$16.3 billion in military, financial, and humanitarian support for Ukraine from January 2022 until the end of October 2024, and the United States has contributed US$92 billion. But while Norway’s two-year windfall is larger than the US and German contributions combined, Norway’s support for Ukraine as a share of GDP, at 0.7 percent, ranks only ninth in Europe, far behind Denmark (2 percent) and Estonia (2.2 percent).

Not only does Norway have the capacity to be making far more of a difference to the outcome of the war and the subsequent civilian reconstruction; it has an obvious moral obligation to do so. Given that its excess revenues are a direct consequence of Russia’s war, surely a greater share of them should go to those fighting and dying on the front lines to keep their country free.

Instead, Norway’s government has effectively decided to be a war profiteer, clinging greedily to its lucky gains. To their credit, opposition parties have proposed higher levels of support for Ukraine, ultimately pushing up the sum that the government initially proposed. No party, however, has come anywhere close to suggesting a transfer of the total war windfall to Ukraine.

The Norwegian government’s position is puzzling, given that Norway shares a border with Russia and has long relied on its allies’ support for its defense. Its own national security would be jeopardized if Russia wins the war or is militarily emboldened by a peace agreement skewed in its favor.

Moreover, it is not as though Norway would be immiserated by transferring its war windfall to Ukraine. This windfall represents about 6 percent of its sovereign wealth fund, the world’s largest, with assets valued at US$1.7 trillion—or US$308,000 for every Norwegian.

True, Norway channels all government revenue from oil and gas production to its sovereign wealth fund, and no more than 3 percent of the value of the fund can be drawn down and transferred to the government budget each year. This rule helps limit the effects on inflation and the exchange rate, and ensures that the fund exists in perpetuity.

But as a macroeconomic and national savings instrument, the drawdown rule was not designed with wartime demands in mind. It therefore should not be seen as an obstacle for a larger transfer to Ukraine. Since such a transfer would not enter the Norwegian economy, it would have no domestic inflationary or other macroeconomic implications. (With the 2025 budget largely set, it would need to be an extrabudgetary measure justified by the wartime circumstances.)

This is not the first time that Norway’s hoarding of its war windfall has been an issue. But it is the first time that we have been given an official estimate of the windfall’s value.

The finance ministry has assigned a number to natural-gas export revenues in excess of what they would have been had gas prices remained around their five-year pre-invasion average. Although such counterfactuals will always be subject to uncertainty and debate, the official estimate is the closest we will get to a value for Norway’s war windfall.

In fact, the actual number is probably much higher, as the estimate does not include excess revenues resulting from higher oil prices following the invasion.

With Europeans wringing their hands about the implications of Donald Trump’s return to power, Norway’s government and parliament should transfer the windfall to Ukraine in the form of military and financial support. Norway has a powerful national-security interest in doing the right thing.