Hezbollah: Friend or Foe of Lebanon

Hezbollah occupies a complex position within Lebanon’s political and social landscape, generating both support and opposition.

Arguments portraying Hezbollah as a friend of Lebanon

Resistance role:

Hezbollah emerged in the 1980s as a resistance movement against Israeli occupation, gaining legitimacy particularly after Israel’s withdrawal in 2000 and the 2006 war.

Community services:

The organization provides health care, education, and welfare services, particularly to underserved Shia populations, filling gaps left by the Lebanese state.

Political representation:

Hezbollah holds seats in parliament and ministries, thereby integrating a marginalized sectarian constituency into Lebanon’s political process.

Arguments portraying Hezbollah as a foe of Lebanon

Parallel authority:

Hezbollah maintains a powerful military structure independent of the Lebanese Armed Forces, challenging state sovereignty.

External alignment:

Its close ties to Iran and the Islamic Revolutionary Guard Corps suggest that its priorities may extend beyond Lebanese national interests.

Regional involvement:

Hezbollah’s intervention in the Syrian conflict and confrontations with Israel risk entangling Lebanon in regional wars.

Economic consequences:

Its designation as a terrorist organization by multiple Western and Arab states contributes to sanctions and international isolation, aggravating Lebanon’s economic crisis.

Hezbollah’s dual identity — as both a provider of security and services, and as an armed actor operating outside state control — creates a paradox.

For supporters, it is an indispensable defender of Lebanon.

For critics, it undermines national sovereignty and stability.

The friend-or-foe debate remains contingent on whether one prioritizes resistance against external threats or the consolidation of a sovereign Lebanese state.

 

PSX closes at record high of 154,277 points

Pakistan Stock Exchange (PSX) remained positive throughout the week, with the benchmark index posting CYTD’s 4th highest weekly return of 3.8%, closing at a record high of 154,277 points.

Market participation also increased by 19%WoW, with average daily traded volume increasing to 1,068 million shares from 899 million shares a week ago.

The rally was supported by successful China visit of prime minister, improving industrial activity, easing inflation, and strong corporate results. Cement sector led the gains, driven by a pick-up in domestic demand as local offtakes posted double-digit growth for the second consecutive month alongside rising mortgage lending. Commercial Banks followed on the back of robust results.

During the week, prime minister concluded his China visit, signing US$8.5 billion worth of MoUs and JVs at the second Pak-China investment conference.

On the macro front, August 2025 inflation came in softer than expected at 3.0%YoY against 4.1%YoY, petroleum sales rose 7%YoY on improved demand, and local phone manufacturing surged 2.1x YoY in July 2025.

At Wednesday’s T-bill auction, 1-month paper yield declined to 10.75%.

Trade deficit widened 30%YoY in August 2025 due to weaker exports.

Other major news flow during the week included: 1) PKR2.6 trillion debt repaid ahead of schedule, 2) SBP governor sees GDP growing 3.45% to 4.25% in FY26, 3) digital currency to be legalized once regulation is in place, 4) cotton arrivals increase by 9%YoY, and 5) SBP forex reserves increase to US$14.3 billion as of August 29, 2025.

Cement, Refinery, and Power generation were amongst the top performing sectors, while Jute, Synthetic & rayon, and Vanaspati & allied industries were among the laggards.

Major selling was recorded by Banks and Foreigners amounting to US$22.4 million. Individuals and Mutual funds absorbed most of the selling with a net buy of US$19.7 million.

Top performing scrips of the week were: BOP, HGFA, NBP, JVDC, and AKBL, while laggards included: PKGP, SCBPL, JDWS, IBFL, and UPFL.

According to AKD Securities, PSX is expected to remain positive in the coming weeks, with the upcoming MPC and any developments over circular debt remaining in the limelight.

The benchmark index is anticipated to sustain its upward trajectory, primarily driven by strong earnings in Fertilizers, sustained ROEs in Banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability.

Top picks of the brokerage house include: OGDC, PPL, PSO, FFC, ENGROH, MCB, LUCK, DGKC, FCCL, INDU, and SYS.

 

Vessel reports electronic interference and unknown projectile in Red Sea

An unknown projectile struck the surface of the sea some distance from a vessel in the Red Sea, an area suffering “severe electronic interference,” according to a master’s report published by UKMTO.

The suspicious activity warning relates to an incident reported at 0310 hours on September 04, 178 nm northwest of Yemen’s Al Hudaydah.

The location falls well within the operational range of Yemen’s Houthis, a group whose attacks on merchant vessels has led many vessels to avoid transiting the Red Sea entirely.

After a period of relative calm in the area since the end of 2024, the Houthis began attacking ships in the area again in early July 2025, striking and sinking two vessels in the space of two days.

In the past week, the Houthis have claimed two more successful attacks on merchant ships, but both vessels have continued on their way; one ship reported the attack as having missed.

Electronic interference is not commonly reported in the Red Sea, but has regularly been reported on the other side of the Arabian Peninsula around the Strait of Hormuz.

Disruption to navigation systems such as GPS and AIS including spoofing and jamming lasted for multiple days in June as tensions boiled over between Iran and Israel.

Courtesy: Seatrade Maritime News

 

Significance of Pezeshkian’s visit to China

Iranian President Masoud Pezeshkian wrapped up a four-day visit to China on Wednesday, heading back to Tehran after attending a military parade in Beijing that marked 80 years since the end of World War II.

Pezeshkian's first stop in China was the northern port city of Tianjin, where he attended the 25th Meeting of the SCO Council of Heads of State, the largest gathering of the bloc to date. The Iranian president delivered a speech there, addressing the "unfair" global order led by the West and highlighting the need to create a new one through collaboration among the Global South.

A much-anticipated meeting between the presidents of Iran and China took place the next day. Pezeshkian told Xi Jinping that Iran was ready to work with China "under any circumstances" to elevate relations to their highest level, stressing that Beijing could count on Tehran as a "strong and determined friend and ally." Xi reciprocated, stating he sees Tehran as a "strategic partner" with a "forward-looking approach." Both sides agreed that more needed to be done to implement the 25-year cooperation plan signed in 2020.

Analysts in Iran hope that the president’s visit, during which he was accompanied by his foreign minister, economy minister, and defense minister, would lead to new military and financial deals.

This appears to be the case, as upon arriving in Tehran, Pezeshkian stated that "important," "strategic," and "vital" decisions had been made following his discussions with Xi.

"Additionally, discussions on security and defense equipment were held with the support of the defense minister, who was present during this trip, and necessary follow-ups will be carried out in this regard," Pezeshkian declared. It is believed that Iran is looking to buy air defense systems and fighter jets from China, although there is no official confirmation on what it seeks to purchase.

While Iranians have mostly focused on what the trip could bring about for Iran, the rest of the world has mainly been discussing how the SCO summit and the close interaction between India's Modi and Xi demonstrate that the split President Trump opened up between Washington and New Delhi is much larger than expected.

Trump’s former security advisor told American media that Trump has “shredded decades of effort” to pull India away from the Russian and Chinese orbit with his tariff policies. 

Furthermore, Modi's presence at the recent SCO meeting, along with other developments, is viewed as a sign that the new global order Pezeshkian has called for is approaching, or may already be in place.

"The new international order everyone has been talking about for years has almost arrived," said economic and trade analyst Majid Shakeri.

The expert said several factors point to this consolidation include: 1) the exclusion of Arab states from the Wednesday parade after their embrace of Trump during his West Asia tour earlier this year, 2) the Siberian Power Pipeline agreement signed between Russia and China this week, 3) and Beijing's announcement of its intention to establish an artificial intelligence cooperation center with the rest of the SCO.

"A crucial piece of the puzzle that is still incomplete and unclear is India's balancing act between China and America," Shakeri explained.

Pezeshkian's visit to China also included significant interactions with other world leaders. While there appeared to be no interaction with the Indian Prime Minister, Pezeshkian spent four hours in discussion with Russia's Vladimir Putin and a shorter amount of time speaking with Pakistan's Shehbaz Sharif, whose country's relationship with Iran is growing closer by the day.

Recep Tayyip Erdogan of Turkey was filmed holding onto Pezeshkian's hand while walking alongside him in a hall. The Iranian president expressed anticipation for Erdogan's visit to Tehran.

Despite recent tensions between Iran and Turkey regarding South Caucasus transportation plans and the situation in Syria, both nations appear in favor of maintaining their friendly relations.

Tajikistan’s Emomali Rahmon was also affectionate with Pezeshkian. The two countries share a significant part of their history and culture and view each other fondly.

 

The Fading Edge of Western Sanctions

Western sanctions were once the sharpest weapon in Washington and Brussels’ arsenal — a way to cripple adversaries without firing a shot. But today, their overuse and poor calibration are blunting their impact, most visibly in the case of Russia’s energy industry.

Take the recent arrival of the Arctic Mulan in southern China. On August 28, the sanctioned tanker unloaded liquefied natural gas from Russia’s Arctic LNG-2 plant — a facility buried under Western restrictions. That shipment, China’s first from the Siberian project, came just days before Vladimir Putin’s state visit to Beijing. The symbolism is unmistakable: Beijing is choosing energy security and strategic ties with Moscow over Washington’s disapproval.

Washington’s own missteps reinforce the sense that sanctions are losing their sting. In late August, President Donald Trump slapped a 25% “secondary tariff” on Indian imports of Russian crude, doubling existing duties. The gamble backfired. India not only kept buying Russian oil but also found common cause with China — a troubling development for US strategists who once counted on Delhi as a counterweight to Beijing.

The core problem is not intent but longevity. Sanctions work best when they are broad, swift, and temporary — delivering a shock that compels change before targets can adapt. But when restrictions drag on, industries build workarounds.

Russia has done so with astonishing speed, channeling crude through China and India, which now absorb 80% of its exports, and relying on “dark fleets” of tankers to bypass Western oversight. Iran and Venezuela, veterans of economic siege, have perfected similar tactics.

Meanwhile, the sheer scale of sanctions is undermining their effectiveness. Since 2017, the number of international sanctions has surged by 450%, according to LSEG Risk Intelligence. After Moscow’s 2022 invasion of Ukraine, EU sanctions on Russia jumped from zero in 2013 to more than 2,500 by 2025. Washington blacklisted over 3,100 new entities last year alone, most of them Russian. The result, enforcement has become a bureaucratic quagmire, draining multinational firms with compliance costs while Russia and its partners adapt.

In short, the West is flooding the world with sanctions — but the more it leans on this tool, the less powerful it becomes. Economic warfare cannot be waged indefinitely without diminishing returns. If sanctions are to remain credible, they must be recalibrated: fewer, smarter, and more time-bound, backed by genuine multilateral coordination.

Otherwise, the very weapon once seen as a substitute for war may become just another dull instrument in an increasingly multipolar world.

Yemen carries out precision operations

Yemeni Armed Forces carried out five precision military operations targeting the Israeli military’s General Staff building in Tel Aviv, the Hadera power station, Ben Gurion Airport in Tel Aviv, Ashdod Port, and the ship MSC ABY in the northern Red Sea. These attacks were conducted using a number of drones and a cruise missile.

Brigadier General Yahya Saree, spokesperson for the Yemeni Armed Forces, stated that the Air Force conducted four drone operations using Samad-4 drones. 

The first targeted the General Staff building in Tel Aviv, while the remaining three struck the Hadera power station, Ben Gurion Airport, and Ashdod Port. He confirmed that all targets were successfully hit.

In addition, the Air Force and Missile Unit carried out a joint operation against the ship “MSC ABY” vessel for violating the ban on entering ports in occupied Palestine and for its ties to the Israeli regime. The ship was struck directly using two drones and a cruise missile.

The Yemeni Armed Forces affirmed that these operations are part of their continued support for the Palestinian people in the Gaza Strip, aimed at ending the aggression and lifting the blockade. Officials emphasized that the attacks are a response to the “Zionist enemy’s acts of genocide and starvation against civilians”. 

Following the announcement from Sanaa, air raid sirens sounded again in Tel Aviv and its surrounding areas. The Israeli military said it has detected another missile launch from Yemen. Israeli media reported that the airspace over Ben Gurion Airport has been closed following the launch.

According to military experts, the Yemeni response to the assassination of the Prime Minister and ministers in Sanaa has not occurred yet. The calculations for the response to this operation are different and will most likely be carried out at a deterrent level.

On Monday, Yemeni forces announced they struck the Israeli oil tanker Scarlet Ray in the northern Red Sea with a ballistic missile.

Below is the latest statement in full issued by the Yemeni Armed Forces:

“In victory for the oppressed Palestinian people and their noble fighters, and in response to the crimes of genocide and starvation committed by the Zionist enemy against our brothers in the Gaza Strip.

 In line with our affirmation of the ongoing ban on the Zionist enemy’s maritime navigation in the Red Sea and the Arabian Sea, the Yemeni Air Force and the Missile Force executed a joint military operation targeting the ship (MSC ABY), which had violated the decision to ban entry into the ports of occupied Palestine and was linked to the Zionist enemy. The operation, carried out in the northern Red Sea with two drones and a cruise missile, directly struck the ship successfully, by the grace and support of God.”

Addressing the Palestinian people facing US-backed genocidal war in Gaza, the statement went on to say:

“We march upon your path, we follow your way, and we stand united in your cause. We do not retreat when others retreat, we do not abandon when others abandon, and we do not hesitate when others hesitate, deny, or turn back—thus becoming the losers.

“Our oppressed brothers in Gaza—upon whom the aggression has continued, the siege has tightened, their enemy has slaughtered and starved them, while the weak abandoned them and the traitors conspired against them. May the eyes of the cowards never sleep! We continue our support for them until the genocide is stopped and the siege lifted from them.”

 

China-Russia pipeline diplomacy a threat to Trump’s energy grip

The high stakes energy diplomacy in Beijing this week signals China’s willingness to defy US President Donald Trump’s efforts to isolate Russia and assert US energy dominance.

Chinese President Xi Jinpin, sitting alongside Russian President Vladimir Putin, used a military parade this week marking 80 years since Japan's defeat in World War Two to project Beijing's military and diplomatic clout amid heightened trade tensions with Washington.

China backed the pageantry with action on Tuesday, when Russia’s gas giant Gazprom announced the sides had signed a legally binding memorandum with Moscow for the construction of Power of Siberia 2, a 2,600-km (1,615 mile) gas pipeline that will run between the two countries. The project has struggled to take off after more than a decade of fruitless talks.

China will also boost the already large gas volumes it imports through the existing ‘Power of Siberia’ pipeline. Gazprom CEO Alexei Miller said on Tuesday that the two countries had agreed to increase supplies via the pipeline to 44 billion cubic metres a year from 38 bcm.

Additionally, both sides agreed to raise the volume of Russian gas deliveries to China via a pipeline from Sakhalin Island in Russia's Far East by 20% to 12 bcm annually.

Taken together, this is yet another indication of the growing ties between Beijing and Moscow, but more importantly, it is a signal that China is not planning to back down in the face of US pressure.

Of course, several major hurdles remain for the new Siberian project.

First and foremost, the sides have yet to agree on the price of the gas that will be transported through the pipeline. The Gazprom CEO indicated that the price would be lower than what European buyers paid in the past.

It also remains unclear whether China will require the additional volume. Chinese companies in recent years have signed many long-term liquefied natural gas supply deals, including with US producers, amounting to around 50 bcm per year of additional supplies through 2030, according to the Institute for Energy Economics and Financial Analysis.

On top of that, China ramped up its domestic gas production by 28% between 2020 and 2024 to 246.4 bcm, according to IEEFA.

The bigger problem could be strategic. Completing the new project would cement Russia's position as the biggest natural gas supplier to China – and that could be a concern for Beijing.

Russia supplied around 22% of China's gas imports in 2024, or about 38 bcm, when including pipeline gas and deliveries of LNG, according to data from the Energy Institute's Statistical Review of World Energy.

The new volumes from the existing pipeline would raise Russia's share in China’s imports to over a quarter next year, assuming an increase in the country’s gas demand.

Adding another 50 bcm capacity from the new pipeline, which likely would not come on stream before 2030, would therefore double Russia's share of China’s gas imports.

But in today’s new global environment, what might matter more is that Putin and Xi appear politically invested in making the project work.

For Russia, the agreement offers a long-term market for its vast natural gas reserves – something that has become particularly important since Europe, Russia's biggest gas market for decades, began to wean itself off Russian gas following Moscow's invasion of Ukraine in 2022.

For China, this appears to be another shot across the bow in the economic stand-off with Washington.

On a practical level, importing larger volumes of gas from Russia would reduce Beijing's need to increase U.S. LNG imports, one of the major promises many other countries have made in trade talks with the Trump administration.

And then there is the desire to signal defiance – a negotiating tactic in itself.

It is notable that last week China imported its first LNG cargo from Russia’s Arctic LNG 2 plant, despite heavy US sanctions, undermining Trump’s attempts to isolate Moscow and pressure Putin over Ukraine. Other cargoes from the plant could be heading to China.

The Trump administration has yet to respond to the cargo’s arrival in Beihai, but the timing just days before Putin’s visit is unlikely to be a coincidence.