Governor SBP, we beg to differ with you

On Saturday, Acting Governor, State Bank of Pakistan (SBP), Dr. Murtaza Syed talked about unwarranted market concerns about Pakistan’s financial position and assured the crisis will be over in a few weeks.

This is to remind him that analysts are not concerned about Pakistan’s capacity to overcome the temporary hiccups, but have objections on the way the problems are being handled by the incumbent government. The overwhelming concern is that the decision makers are pushing the country towards default, rather than acting upon the advice of International monetary Fund (IMF) to avoid the eminent default.

To be honest, even a man on street knows that the top priority of the government should be to get the tranche released from the IMF, but the economic managers have been playing their own mantra. They not only failed in submitting a plan for increase in electrify and tariffs and petroleum prices, on top priority. On the contrary, they kept on refusing to comply with the IMF requirements, till it became unavoidable. On top of that they also kept on maligning the IMF for the miseries being faced by Pakistanis.

Now talking about the numbers upsetting Pakistanis, they are fully cognizant that the country faces adverse balance of payment crisis and the need to bridge the gap by containing imports, particularly by stopping import of the luxury goods and enhancing exports. Let me put it on record that the incumbent government has failed on both the fronts, miserably.

To establish my point allow me to refer to the decision to increase electricity and gas tariffs and also curtailing supplies to textiles and clothing industry. The industry highlighted that as a result of following this absurd policy they fear losing export orders worth millions of US dollars and even closure of production facilities, as they are losing competitiveness in the global markets.

This is also to remind Syed Sahib that the incumbent government is on borrowing spree at whatever rate the dollars are offered. However, it is not following the priority, which is causing the crunch. They have been told bluntly that unless IMF issues ‘fitness’ certificate, multi-lateral and even bilateral lending will not be possible. However, their focus remains on foreign visits for ‘borrowing’.

Go two steps forward; the incumbent government has not been able to put together: 1) moratorium request and/or 2) impose quantitative restrictions on imports under Article-6 of World Trade Organization (WTO).

This compels the experts to draw the conclusion: either the economic team is incompetent and just can’t make prudent decisions or it is adamant at pushing the country towards eminent default.  

Saga of Turkish Flotilla Continues to Haunt

Twelve years after the Mavi Marmara incident caused an unprecedented diplomatic crisis between former allies Israel and Turkey, the ties between the two countries are warming up again.

Ankara broke off relations with Jerusalem following a raid by Israeli commandos on a Gaza-bound ship trying to break the naval blockade of the Hamas-run enclave. Ten pro-Palestinian Turks who were part of Turkey’s Humanitarian Relief Foundation (IHH) were killed after they attacked the commandos.

The Mavi Marmara was part of a flotilla heading to the blocked Gaza Strip to deliver humanitarian aid.

 It was the largest in a six-vessel convoy that tried to break the siege imposed by both Israel and Egypt that was designed to prevent Hamas and other groups from importing weapons and other goods that could help their military build-up.

The blockade was imposed in 2007 after Hamas took over the coastal enclave, making all goods that enter Gaza be imported under Israeli supervision through land crossings. Several ships had, over the years, attempted to break the blockade, but were stopped by the Israeli Navy and deported from Israel.

 “We can’t let anyone in. If we let one in, we will lose control and if we did that, within three months, we would see Iranian ships in Gaza,” said Eliezer Marom, commander of the Israeli Navy from 2007–2011.

Marom was commander at the time of the Mavi Marmara and, now part of Habithonistim, a movement of Israeli defense officials who advocate for the country’s future security needs, he sat with the Magazine to tell his story.

“I spoke with the Turkish, Greek, and Italian navy chiefs and warned that there could be blood,” he said. “A military operation was our last resort. Violating our maritime borders violates our sovereignty.”

“Whoever wants to bring aid to Gaza, that’s OK. But it must be by land,” he said. “We won’t let anyone into Gaza by sea. A land and sea border is the same, even though there is no physical barrier.”

But those aboard the Mavi Marmara were different. “All of them were terrorists who belonged to IHH, and wanted to kill Israeli soldiers.”

 “It was a different story and needed to be treated seriously,” noted Marom. “It was a civilian ship that decided that it wanted to provoke and challenge Israel.”

He explained that following diplomatic and legal measures taken by Israel to stop the flotilla, the IDF and other security bodies prepared a military operation.

The operation to stop the flotilla, he said, “was the largest Navy operation” with thousands of soldiers at sea, a thousand more in Ashdod and 30 maritime vessels.

“The operation was to take over all the ships simultaneously,” he said. “I wanted to do it at night, when it’s more comfortable to act. And we wanted it to be fast” he added, explaining that Israel knew that the ships had antennas to broadcast what was happening aboard.

The navy initially made contact with the ships in the flotilla late on Sunday evening, going ship to ship and ordering them to follow them to Ashdod Port or be boarded at dawn.

The boarding of the ships started at 2 a.m. the next morning and at 4 a.m. Israeli commandos descended on ropes from helicopters onto the Mavi Marmara and were immediately attacked with clubs, knives, and metal rods. Three soldiers were taken captive.

Troops opened fire after a protester, later identified as Ken O’Keefe, a former US marine aboard the Mavi Marmara, seized a gun from one of them. When it was all over, nine of the flotilla activists were killed and dozens more were wounded, including Israeli troops. Another activist died in hospital, four years later.

“All of them were terrorists who belonged to IHH, and wanted to kill Israeli soldiers,” said Marom, adding that “they planned to do it.”

According to the former navy chief, “we didn’t have enough intelligence. If we knew that they were IHH, we would have acted differently.”

And just like Israel wasn’t expecting such violence, neither was Turkey, said Dr. Hay Eytan Cohen Yanarocak, an expert on Turkey and Turkish history at the Jerusalem Institute for Strategy and Security, and Tel Aviv University’s Moshe Dayan Center for Middle Eastern and African Studies, “In hindsight, Turkey did not expect casualties, physical damage like during a street fight maybe, but in my opinion, they didn’t expect casualties and the incident forced them to downgrade relations.”

“None of the organizers want to take responsibility. After seeing 10 people killed, none of the organizers can do such an initiative because they can be accused of leading people to their death. These flotillas were departing from European countries; it’s not easy to take such an initiative because they have to face the consequences of the act.” 

US hegemony in Middle East is a thing of past

The Jeddah Summit, requested by the United States, should have been Joe Biden’s show, “America is back”. Instead, it was a spectacle that showed America as a spent force desperately trying to stay relevant. Biden’s arrival to the region was probably comparable to Biden’s departure from Afghanistan. 

No one has managed to expose the US superpower fallacy than Russia’s Putin. And no one described that fallacy better than China’s Mao, describing the US as a, “paper tiger”, decades ago.   

Up to this week, no one managed to demonstrate that fallacy, more evidently, that Mohammed Bin Salman, the seemingly unremovable heir to the Saudi throne, who sat rejoicing his incarceration as a statesman, leading a real nation, and negotiating with his defeated US nemesis across the table. That wasn’t enough.

Then came an American reporter, shouting at Joe Biden, who sat in stone silence, whether the Saudi is still a pariah. There’s no way of knowing whether that loud dagger was plunged and twisted into Biden by MBS’ himself. It might as well have been. 

Worst still, the Superpower leader and his delegation were made to listen, in obvious shock, to the young prince across the table loudly refusing to increase oil output beyond 13 million barrel per day, which was the only reason that brought Biden to the Saudi capital.

Why MBS had to wait until Biden sat across the table to deal that humiliating blow, is open to speculation. The body language among the American delegation was interesting, to say the least. Even before MBS dealt this blow, his father, king Salman, decided to disappear after a quick handshake with Biden, giving a clear message. You deal with my son, or you don’t deal.  

America’s previous hegemony in the region is a thing of the past. Earlier, MBS received the US leader at the palace, unlike all other leaders attending, whom he met warmly at the airport. Whether that was another intended message or part of the protocol shouldn’t matter anymore.

Biden would have been better served staying at home. Trump must be relishing the spectacle and comparing it to his own welcome, complete with Saudi folk dances and a US$110 billion arms deal.  

Clearly, Biden’s declaration that America is back found no welcoming party. 

It can never be more personally humiliating than this for a sitting US president being forced to eat his words by a political operator more than 50 years his junior. Neither can the superpower fallacy be more humiliatingly exposed than this. 

No superpower worth the name can be brought to its knees in such fashion by a dependent power. If Putin or MBS have no other benefits from Ukraine’s disaster, this victory is enough for them. A previous oil searching visit to Riyadh, by Joe Biden’s ally, British Prime Minister Boris Johnson, who was recently disgracefully removed, was followed almost immediately by MBS’ trip to China. What will happen to Biden come 2024, assuming the Democrats are foolish enough to nominate him, is anybody’s guess. 

All this humiliation could have been avoided. The “emperor” could have kept his clothes.  The fallacy could have continued. Instead, the US and its NATO allies were intoxicated by past impunity when they bullied weak nations: Afghanistan, Iraq, Yemen, Vietnam, Somalia, Libya and Syria.

Perhaps that’s how far they should have limited their colonial offensive. Against weak nations that couldn’t retaliate, offensives they got away with successfully. Perhaps they should have listened to Russia’s leaders, from Mikhail Gorbachev to Vladimir Putin, and even listened to many of their own political scientists, all of whom have been repeatedly warning for 30 years, not to cross the red lines with an eastward NATO expansion to Russia’s borders.

Many of those warning about the probable consequences reminded the US how President John Kennedy dangerously reacted with DEFCON 2 to Nikita Kruchev’s decision to put Soviet missiles on America’s southern borders in Cuba. That potential holocaust was only averted after the Soviet agreed to climb down, but only when the US itself agreed to withdraw its own missiles from Soviet borders in Turkey. 

Now the US decided to take on real world powers, Russia, with a plan for China on the drawing boards. The result is not just the disastrous predicament faced by Ukrainians, but also the political debacles we have been witnessing in the past months, leading to the mother of all humiliations, when cap in hand, the US came begging MBS, that murderous outlaw leading a “pariah”, for his charity, and he, you can be certain, extorting a pound of flesh in return, before also refusing to go higher than 13 million barrel per day.  

Noteworthy, Biden’s regional tour didn’t include the UAE, a key regional player, where Biden’s Russian and Chinese counterparts were given welcomes fit for reigning emperors, not so long ago.

The UAE is progressively showing a cunning survival ability to balance not just world powers, but regional ones as well, to its own advantage. Reconciliation with Turkey, while retaining strong economic relations with Iran, the two competing major regional powers, are key to the UAE balancing act. Something that Saudi’s MBS has started to emulate. 

Biden’s single seeming success was in Israel, where he managed to hold a virtual quartet summit that included UAE’s Bin Zayed, who earlier walked away from the F35 deal after discovering the plane’s technological compromise aimed at retaining Israel’s superiority, and India’s Narendra Modi, whose government recently warned the US not to interfere with India’s sovereign decisions and its relationship with Putin’s Russia. 

There were expectations that Saudis will welcome America’s re-entry into the region and seek an offensive against Iran. No one hear that language from MBS and his spokespersons. Instead, they heard language that indicated America’s weakness and unreliability as an ally and a regional desire to find solutions with Iran.

Saudi political commentators, who never speak without their government’s approval, portrayed United States as a spent force whose time is up. The region has changed, evolved and moved on. And it can do without America. Whether that vacuum will be filled by Arabs themselves, by Iran or by America’s heirs in Tel Aviv is the question that will keep them busy in the months ahead. But America’s previous hegemony in the region is a thing of the past. 

Back home, there is a lot of soul searching required from Americans to discover how they can adjust and peacefully coexist with a changing world in which America’s word is no longer divine. More importantly, try to learn how not to be extravagant in estimating America’s position, and to instead understand the new limits of its global power. 

 Courtesy: The Tehran Times

Russia and Ukraine agree to allow food shipments out of the Black Sea

Russia and Ukraine agreed to a deal Friday to open Ukrainian ports on the Black Sea, releasing stalled grain shipments into world markets to help alleviate an ongoing food crisis and bring down global prices.

The deal between the two countries was mediated through Turkey, which helped to broker the agreement under the auspices of the United Nations. The ongoing war between Russia and Ukraine has led to a de facto blockade of Black Sea ports that have been unable to export agricultural goods like fertilizer and grain.

United Nations Secretary-General Antonio Guterres, speaking at the signing ceremony in Istanbul, hailed the deal as a “beacon of relief in a world that needs it more than ever.”

“To the representations of the Russian Federation and Ukraine, you have overcome obstacles and put aside differences to pave the way for an initiative that will serve the common interests of all. Promoting the welfare of humanity has been the driving force of these talks,” he said.

The deal will open a passage for significant volumes of commercial food export from the ports of Odessa, Chernomorsk and Yuzhne, Guterres said. Russian Foreign Minister Sergei Lavrov has said that naval mines in Ukrainian ports had been an issue for exports in the past.

“The shipment of grain and food stocks into all markets will help bridge the global food supply gap and reduce pressure for high prices,” Guterres added.

Turkish President Recep Erdogan said at the ceremony the agreement would help to ease pressure on global food prices.

“We are also helping with controlling food inflation, which has become a global problem,” Erdogan said.

Speaking to reporters later Friday, White House national security spokesman John Kirby said that the United States welcomes the development but said officials would be watching it closely, noting that Russia will need to actually comply with the agreement in order for it to be effective.  

Kirby described the Biden administration as both hopeful and “clear-eyed” about the deal.  

“If it’s fully implemented and complied with it will have an impact, but it’s just too soon to know,” Kirby said.

Other international leaders hailed the agreement.

“Putin’s barbaric invasion of Ukraine has meant some of the poorest and most vulnerable people in the world are at risk of having nothing to eat. It is vital that Ukrainian grain reaches international food markets, and we applaud Turkey and the UN Secretary General for their efforts to broker this agreement,” United Kingdom Foreign Secretary Liz Truss said in a statement from the UK foreign ministry.

Global food prices are up more than 23% since last year, according to the United Nations Food and Agriculture Organization (FAO), though they have been ticking down since May. In the US, food prices are up more than 10% annually.

Global prices for grains have fallen more than 4% since a recent high in May but are still more than 27% higher than they were a year ago, according to the FAO. Wheat prices are nearly 50% higher than they were last year.

A logistical coordination center will also be set up as part of the agreement to monitor its implementation, Guterres said.

Sheer hypocrisy of United States

Imposes sanction on sale of Russian energy products but no restrictions on buying fertilizer 

A tanker carrying a liquid fertilizer product from Russia is about to arrive in the United States, sources and vessel tracking data shows.

It is worth noting that President Joe Biden administration has not blacklisted Russian agricultural commodities, including fertilizers, in the aftermath of the Ukraine invasion.

Still, many Western banks and traders have steered clear of Russian supplies for fear of running afoul of rapidly changing rules.

Russia and Ukraine are major exporters of fertilizer, key to keeping corn, soy, rice and wheat yields high. Farmers have scaled back fertilizer use due to high prices, and cut the amount of land they plan to cultivate.

Washington sanctioned Russian crude, refined products, coal and liquefied natural gas (LNG).

The Liberia-flagged tanker Johnny Ranger was scheduled to arrive in New Orleans on Monday carrying about 39,000 tons of urea ammonium nitrate solution, a fertilizer produced by combining urea, nitric acid and ammonia, the sources and Refinitiv Eikon data showed. The vessel loaded last month at St. Petersburg, according to Eikon data.

Details on the seller and buyer were not immediately available. The US Treasury Department and the US Customs and Border Protection agency declined to comment.

A State Department spokesperson said the United States has never sanctioned food or agricultural goods from Russia. "Unlike the Russian government, we have no interest in weaponizing food to create humanitarian crises at the expense of vulnerable populations."

US non-food sanctions will remain in place until Russian President Vladimir Putin stops the war in Ukraine.

In 2021, the United States imported US$262.6 million worth of urea ammonium nitrate fertilizers from Russia, according to the Commerce Department.

This week, the US International Trade Commission revoked hefty anti-dumping and anti-subsidy duties on urea ammonium nitrate fertilizers from Russia in an effort to ease fertilizer shortages and price increases.

Fertilizer cargo from Russia heads to US as many worry about food shortages

In recent days, there are widespread worries that sky-high global fertilizer prices could lead to food shortages.

 

Arab public opinion turning against normalization with Israel

A recent poll by an American think tank has confirmed what every independent expert knows: Arab public opinion does not support the controversial policy of normalization between Israel and Arab states.

Almost two years into the signing of the controversial Abraham Accords between Israel and some Arab states, the already shaky support for normalization among Arab public opinion has dropped further, a poll by The Washington Institute showed. 

“The wave of Arab countries officially normalizing relations with Israel over the past several years stands in contrast with a growing lack of public support for the Abraham Accords in the Persian Gulf,” the Institute said, noting that those who favorably view normalization with Israel are now a “minority” in Saudi Arabia, Bahrain, and the United Arab Emirates (UAE).

It added, “TWI polling from March 2022 demonstrates that more than two thirds of citizens in Bahrain, Saudi Arabia, and UAE view the Abraham Accords unfavorably less than two years out.”

The polling stands in contrast to another one from November 2020, in which some percentage of Emiratis, Bahrainis, and Saudis showed relative optimism about normalization.

While in November 2020, nearly 40 percent of Saudis and Qataris supported the Accords, support for these agreements is now hovering between 19% to 25% in Saudi Arabia, Bahrain, and the UAE, according to the new polling. 

The number of those in Lebanon viewing the Abraham Accords “very negative” has increased from 41% in November 2020 to 66% this March, while support in Egypt has dropped from about a quarter to 13%.

Attitudes toward sub-state business and sports relations with Israel have also been remarkable in the Persian Gulf Arab countries. A further 50% of Saudis and 47% of Emiratis strongly disagreed with allowing such ties. With the exception of Kuwait, disapproval rates of allowing business or sports ties with Israelis now edge closer to half (Bahrain – 58%, KSA – 60%, UAE – 55%), the Institute said. 94% of Kuwaitis and 93% of Lebanese surveyed disagreed with the notion—and a further 77% of Lebanese and 88% of Kuwaitis strongly rejected it.

The figures from the poll bear witness to a widely held belief that ordinary Arabs do not support their leaders in establishing ties with Israel. The Abraham Accords might have succeeded in generating a limited base of support in countries that normalized ties with Israel, but they absolutely failed to bring about a drastic change in Arab public opinion. And even that limited base is now evaporating.

The polling also gives substance to the remarks by Ayatollah Seyed Ali Khamenei, the Leader of the Islamic Revolution, in his meeting with Turkish President Recep Tayyip Erdogan. 

In the meeting, Ayatollah Khamenei described the Palestinian cause as being the number one issue in the world of Islam. “Despite certain governments’ interest in the Zionist regime, nations totally oppose this usurper,” he noted. 

Independent polls confirmed that Arabs do not support normalization with Israel. And even in 2020, most polls evinced that the majority of Arabs view normalization unfavorably. A poll conducted in October 2020 by the Arab Center of Research and Policy Studies showed an unequivocal Arab opposition to normalization. It was conducted in 13 Arab countries with 28,000 respondents. The polling showed that 88% of Arabs refused the idea of recognizing Israel.

Russian pipeline resumes supplying gas to Europe

Russia has resumed pumping gas to Europe through its biggest pipeline after warnings it could curb or halt supplies altogether.

The Nord Stream 1 pipeline restarted following after a 10-day maintenance break but at a reduced level.

It may be recalled that on Wednesday, the European Commission had urged countries to cut gas use by 15% over the next seven months in case Russia switched off Europe's supply.

Russia supplies Europe 40% of its natural gas requirement last year.

Germany was the continent's largest importer in 2020, but has reduced its dependence on Russian gas from 55% to 35%. Eventually, it wants to stop using gas from Russia altogether.

Russia's President Vladimir Putin has sought to play down fears, promising that state gas firm Gazprom would fulfill all its contractual obligations. His spokesman, Dmitry Peskov, denied that Russia was using gas for political blackmail.

The pipeline is only delivering 40% of its capacity, and the head of Germany's network regulator warned that the resumption of gas flows was not a sign that tensions were easing.

"The political uncertainty and the 60% cut from mid-June unfortunately remain," Klaus Müller said.

Gazprom cut the flow of gas through Nord Stream 1 last month, blaming the delayed return - due to sanctions - of a key piece of equipment which had been serviced in Canada.

The turbine is now believed to be on its way back to Russia, but President Putin recently said that if it is not returned, supply would have to be reduced further.

He has also pointed out that another machine is due to be sent for service soon, according to Russia's Tass news agency.

The continued reduction in gas supply through Nord Stream 1 is likely to make it more difficult for countries to replenish their stores before winter, when gas usage is much higher.

European countries have been looking for alternative suppliers of gas, for example LNG from the US, which can be transported by ship.

But building the infrastructure needed to import gas from new suppliers can be expensive and time consuming, which makes it unlikely that Russian gas can be replaced completely before the coming winter.

Instead, it may be necessary to cut gas consumption, and on Wednesday the EU Commission President, Ursula von der Leyen, announced a voluntary target for all EU countries to reduce their gas use by 15%.

In late February, in response to Russia's invasion of Ukraine, Germany abruptly halted plans to open a new pipeline - Nord Stream 2 - which would double the supply of Russian gas to Germany.

Critics of the Nord Stream 2 project had long argued that it would give Russia too much control over Europe's energy supply.