Fallout from Canada-India clash

Canada-India relations are reeling from the announcement that Canadian security agencies had uncovered evidence linking the Indian government to the assassination of an Indian-born Canadian citizen in British Columbia earlier this year. Canada Institute Associate Xavier Delgado outlines what's at stake for both countries and their allies in the Indo-Pacific.

Prime Minister Justin Trudeau announced that Canadian security agencies have obtained credible evidence linking the Indian government to the unsolved murder of Hardeep Singh Nijjar, a Canadian citizen and notable advocate for Sikh separatism. 

Nijjar was shot by two masked assailants outside a Sikh temple in British Columbia earlier this year in an attack that Canada alleges has since been connected to agents of India.

The Indian foreign ministry decried the allegations as absurd and, in the aftermath of the announcement, exchanged tit-for-tat expulsions of senior diplomats from Ottawa and New Delhi.

The dispute has shined a sudden spotlight on the Canada-India relationship, which, prior to the Nijjar incident, had been trending in a positive direction. Geopolitical developments, economic ties, and demographic trends over the past ten years had set the stage for closer cooperation between the two former British colonies. India’s prominence in Canada’s 2022 Indo-Pacific Strategy and high-level negotiations between the two states for an early progress trade agreement (EPTA) gave supporters of the relationship plenty of reasons to be optimistic.

Now, the allegations that the Indian government orchestrated the assassination of a Canadian citizen on Canadian soil have cast a cloud of doubt over the path ahead for the bilateral relationship.

Trade will likely be the first major casualty of the fallout, with negotiations for the EPTA being put on hold. Both countries declared that they would pause trade talks with each other earlier this month and Canadian Trade Minister Mary Ng has indefinitely postponed a trade mission to New Delhi that had been planned for October. The negotiations were a notable part of Canada’s Indo-Pacific Strategy, which listed the EPTA as a critical step towards a larger comprehensive economic partnership agreement (CEPA) that would bolster trade ties between the two countries.

The stalled trade talks have put a US$17 billion bilateral trade relationship under strain. Canadian merchandise trade with India grew from approximately US$3.87 billion in 2012 to US$10.18 billion in 2022, with major increases in the export of Canadian energy products and import of Indian consumer goods. In that same year, services trade between the two countries measured US$6.96 billion. 

A reduction in the flow of Indian immigrants, which constitute almost one in five of all recent immigrants to Canada, could be even more devastating than a deterioration of trade relations.

Canada recently reached the 40-million-population milestone off an influx in inbound migration following the COVID-19 pandemic. In fact, Canada’s population growth, which is the fastest in the G7, is mainly driven by migration ‑ four in five new Canadians from 2016 to 2021 were immigrants. 

Indian immigration to Canada has tripled since 2013, overtaking and pulling away from the Philippines and China as the top source country for new Canadians in the 2021 census.

That census also counted 1.3 million ethnic Indians living in Canada, over 1 million of whom resided in British Columbia or Ontario. 77% of that group – 771,790 people – follow Sikhism, making Canada’s Sikh population the largest in the world outside of India. 

India also tops a notable subcategory of immigration ‑ international students, 34% of international students in Canada from 2015 to 2019 came from India, providing a critical source of revenue for Canadian academic institutions; by 2022, that share had grown to 40%. These numbers directly translate to the labor force, with Indian graduates from Canadian programs accounting for the largest share of post-graduate work permit holders in 2018 over China (20%) and the United States (1%).

Beyond the bounds of Canada-India relations, the dispute between the two countries may throw a wrench in the emerging Indo-Pacific framework of institutions and alliances.

India, with its economic might and security capabilities, has been hailed by the United States and democratic allies as a regional counterweight to China. Washington included India as a founding member of the Indo-Pacific Economic Framework (IPEF) and the freshly-anointed I2U2 bloc with Israel and the United Arab Emirates.

Both countries are also founding members of the Quadrilateral Security Dialogue (QSD or Quad), a strategic security dialogue that includes Japan and Australia.

Canada, for its part, was not invited to join the Quad or IPEF at the conception of either group, nor was it included alongside Five Eyes allies Australia and the United Kingdom in the AUKUS security pact. After inviting Canada to join the Trans-Pacific Partnership during the Obama administration, the United States opted to not join the agreement, leaving both countries without a shared major economic or security institution in the Indo-Pacific. 

A chilling of relations with India could hinder Canada’s ability to join the network of Indo-Pacific institutions, both because regional allies will be wary of angering the Modi government and because India itself could block Canadian membership in certain groups.

Ottawa is clearly aware of India’s influence and power in the region. The Canadian Indo-Pacific strategy, published in late 2022, has an entire section dedicated to India that reads, “India’s strategic importance and leadership – both across the region and globally – will only increase as India – the world’s biggest democracy – becomes the most populous country in the world and continues to grow its economy.”

Canada is not the only party that stands to lose from this dispute. The allegations can damage India’s public image as a democratic nation committed to a rules-based order or, more critically, its perception as a trustworthy ally in the competition against China. Canada’s Five Eyes partners could reevaluate intelligence sharing and law enforcement cooperation with India if Canadian officials uncover definitive proof of India’s involvement in Nijjar’s murder. 

Disputes between allies are common and, in the diverse roster of countries that constitute the emerging Indo-Pacific architecture, should be expected. Governments disagree frequently over trade policies, environmental practices, and other issues that don’t pose a threat to their diplomatic relationships.

The Canada-India dispute is unique in that the severity of the allegations, the economic and demographic ties between the two countries, and the geopolitical context in which the situation unfolded have raised the stakes for all parties, including the United States.

To prevent spillover damage to the nascent Indo-Pacific alliances, Washington will need to approach the situation carefully. Beijing benefits the most from in-fighting between major US allies, but regardless of how the coming weeks play out, both Canada and India will still have poor relations with China and good relations with the United States. One reason for this is the values that all three countries nominally share. US leaders should remember this and remind Ottawa and New Delhi that the path forward must be paved by justice and a commitment to due process to deviate from those values would be to bring relations between all three countries into uncharted and volatile territory.

 

Pakistan Stock Exchange benchmark index posts 1.46%WoW increase

Pakistan Stock Exchange (PSX) posted somewhat lackluster movement during the week ended on September 22, 2023. It could be attributed to Monetary Policy announcement scheduled in the middle of the week, amidst dual fuel price hikes during the month. However, the decision of the central bank to keep the rates unchanged was a pleasant surprise.

On the external front, country’s foreign exchange reserves remained relatively flat, ending at US$7.69 billion as compared to US$7.64 billion a week ago. Additionally, the domestic currency continued to strengthen against the greenback.

Globally crude oil prices remained on upward trajectory, with Brent ending the week at US$94.03/bbl. This was largely driven by persistent supply cuts by major producers, namely Russia and Saudi Arabia. China’s economic recovery, provided further impetus.

Average daily trading volumes declined by 13.4%WoW, to 139 million shares, from 160 million shares traded during the earlier week.

The benchmark Index gained 6674 points posting a 1.46% increase in the index.

Other major news flows during the week included: 1) Caretaker setup increased prices of petroleum products, 2) foreign office termed report on Pakistani arms sale to Ukraine to secure IMF bailout ‘Baseless and fabricated’, 3) IMF expressed concerns over diesel smuggling from Iran and advised finance ministry to submit detailed report, 4) T-Bill yields tumbled despite the central bank mopping PKR2.4 trillion in the latest auction, and 5) GST evasion through flying invoices estimated around PKR6 trillion.

Transport, Leasing Companies and Close ended Mutual Funds were amongst the top performers, while Vanaspati and allied industries, Insurance and Automobiles were amongst the worst performers.

Major selling was recorded by Insurance (net sell US$1.3 million) and Brokers (net sell US$1.1 million).

Individuals and Other organizations absorbed most of the selling with a net buy of US$2.3 million and US$1.1 million respectively.

Top performing scrips of the week were: PGLC, LOTCHEM, UNITY, SCBPL, and GADT, while top laggards included: MUREB, UPFL, ATHL, PIOC, and MUGHAL.

 

Market is expected to be post gains in the coming week, driven by CPI readings alongside further clarity on IMF's upcoming review.

However, in the near term, appreciating PKR alongside expectations of higher remittances during September 2023 are expected to keep investors optimistic.

Overall, analysts continue to advise a cautious approach while building positions, with investments only focused on dollar-driven and high dividend-yielding companies.

 

 

Colors promoting UN goals or LGBTQ rights

Turkish President Tayyip Erdogan said that he was uncomfortable with the use of LGBT colors at the United Nations, decorated with bright colors promoting the Sustainable Development Goals.

Erdogan said he would have liked to discuss it with UN Secretary General Antonio Guterres, Turkish media reported on Thursday. Turkish government - led by Erdogan and his Islamist-rooted AK Party - has toughened its stance on LGBTQ freedoms.

"One of the issues that bothers me the most ... is that when entering the United Nations General Assembly, you see the LGBT colors on steps and other places," Erdogan was quoted as saying by broadcaster Haberturk and others.

"How many LGBT are there in the world right now? However much right they have on these steps, those against LGBT have as much right as well," said Erdogan, who has frequently labeled members of the LGBTQ community as "deviants" and particularly toughened his rhetoric during his election campaign this year.

However, some UN diplomats suggested Erdogan might have confused the 17 different colors associated with the Sustainable Development Goals - and decorating parts of UN headquarters, including steps, for a summit that was held earlier this week - with the rainbow Pride colors associated with LGBTQ rights.

While Guterres has been a vocal supporter of LGBTQ rights and spoken out about discrimination, there are no rainbow Pride colors at UN headquarters promoting LGBTQ rights.

The 17 Sustainable Development Goals, adopted by world leaders in 2015 with a deadline of 2030, are a global "to do" list that includes wiping out hunger, extreme poverty, battling climate change and inequality, and promoting gender equality.

 

Profile of prisoners swapped by Iran and United States

I am sure many of the readers of my blogs would be keen in reading the profiles of prisoners exchanged between Iran and United Stations. The real point to ponder is that the United States has used funds which it never owned.

On September 18, Iran released five US citizens as part of a prisoner swap. The four men and one woman had been imprisoned. One had been held since 2015. In return, the Biden administration released five Iranian men imprisoned in the United States, including two who had been held since 2019.

The United States also issued a waiver so South Korea could transfer US$6 billion of frozen Iranian oil revenues to Qatar, which will oversee limited Iranian purchases of humanitarian goods, including medical, education and agricultural goods. 

Four of the Iranians had allegedly violated US sanctions, and another had acted as an unregistered foreign agent of the Islamic Republic. Only two of the Iranians were going to return to Iran. “One of them, as he has family in another country, will be moved to join them in that third country, and apparently two of our citizens imprisoned in the US have said they wish to remain there due to their history of staying there,” foreign ministry spokesperson Nasser Kanani said.

The following are profiles of the prisoners.

US citizens released by Iran

Three of the five US citizens released by Iran are Siamak Namazi, Morad Tahbaz and Emad Shargi, no details are available for the two prisoners.

Siamak Namazi, a Dubai-based businessman was arrested during a trip to Iran in October 2015. In October 2016, he was sentenced to 10 years imprisonment for collaborating with an enemy state. Namazi had primarily worked for consultancies focused on energy before his detention. In 2005, he was a public policy scholar at the Woodrow Wilson International Center for Scholars. He also did a stint at the National Endowment for Democracy in 2006. Baquer Namazi, Siamak’s father, traveled to Iran to secure his son’s release but was also sentenced to 10 years for espionage in 2016. In October 2022, Iran released the elder Namazi so that he could seek medical treatment abroad.

Emad Shargi also a businessman was detained in April 2018, while working for a venture capital fund involved in technology. After being interrogated and held in solitary confinement, he was released on bail in December 2018. A year later, he was cleared of all spying and national security charges. But his passport was withheld, and he was not permitted to leave Iran. In November 2020, Shargi was summoned to court and convicted of espionage without a trial. He was sentenced to 10 years in prison.

Morad Tahbaz and eight other environmental activists were detained In January 2018. In November 2019, Tahbaz was sentenced to 10 years in prison for espionage. Tahbaz and his colleagues had been using cameras to track endangered Asiatic cheetahs and were accused of using that work as a cover for collecting “classified information.”

Iranian citizens released by the United States

Mehrdad Moein Ansari, an Iranian citizen and resident of the United Arab Emirates and Germany was arrested in 2019, for plotting to secure dual-use materials with potential military and nuclear applications for the Islamic Republic. In September 2021, he was sentenced to more than five years in prison. 

Kambiz Attar Kashani, a US-Iranian citizen was arrested in January 2022, for conspiring to export goods and technology to the Central Bank of Iran. He had used two front companies based in the United Arab Emirates to procure equipment and software for Iran. In February 2023, he was sentenced to 30 months in prison. 

Reza Sarhangpour Kafrani, an Iranian and resident of Canada was arrested for sending laboratory materials to the Islamic Republic. He had shipped the equipment—controlled for nuclear nonproliferation purposes—to Iran through Canada and the United Arab Emirates. He was indicted in July 2021 with 10 crimes, some of which carried maximum prison sentences of 20 years. 

Amin Hasanzadeh, an Iranian and permanent US resident was arrested in November 2019 on charges of fraud and interstate transportation of stolen property. Federal prosecutors accused Hasanzadeh of stealing sensitive technical data from his employer and sending it to his brother, who is connected to the Iranian military. He was indicted in December 2020. 

Kaveh Afrasiabi, the US-based Iranian was arrested in January 2021, for failing to report his status as a foreign agent in the United States. He had lobbied the State Department and a congressman for policies favorable to Iran while on the payroll of Iran’s UN mission since around 2007. His alleged crimes carried a maximum of 10 years in prison. 

 

Iranian trade center starts activity in Jeddah

The Director of Commercial Attachés Office of Iranian Trade Promotion Organization (TPO) announced that license was issued to establish a trade center in Saudi Arabia, and the center started its activity in Jeddah.

Mohammad Rajab-Nejad announced, “We currently have 46 active trade centers in other countries, and licenses have been issued for the establishment of trade centers in Kirgizstan, Malaysia, and Indonesia.”

During a meeting between Iranian Finance and Economic Affairs Minister Ehsan Khandouzi and Saudi Finance Minister Mohammed Al-Jadaan, in mid-May, the two sides discussed the ways to expand economic cooperation and remove the barriers in the way of trade between the two countries.

In the meeting, which was held on the sidelines of the annual meeting of the Board of Executive Directors of the Islamic Development Bank (IsDB) in Jeddah, the Saudi Arabian minister expressed satisfaction with the re-establishment of relations between Iran and Saudi Arabia and said, “We hope that quick steps will be taken in relations with Iran.”

“In this regard, it is necessary to remove the economic and trade barriers against the two countries”, he stressed.

The Iranian minister welcomed the progress of economic relations between the two countries and stated that the development of relations is important not only for Iran and Saudi Arabia but also for all countries in the region.

Stating that it is the duty of governments to facilitate economic ties, Khandouzi said these bilateral relations are very important not only from an economic point of view but also in the political and security fields.

Explaining Iran's program in the field of economic relations with Saudi Arabia, Khandouzi said, “At the government level, Iran and Saudi Arabia have not finalized any basic agreement in the field of investment, customs, and trade. In this regard, it is necessary to draw up and sign MoUs between the parties.”

The Saudi Arabian side, while agreeing to cooperate in the three fields of customs, trade, and investment, expressed hope that with the assistance of his country’s ministries, cooperation in the mentioned fields will be followed up.

Also, in an interview with the French newspaper Le Figaro published in late May, the Iranian foreign minister said the reconciliation between Iran and Saudi Arabia is more than just a tactical agreement, and both nations have decided to advance their economic and commercial ties.

Hossein Amir Abdollahian also mentioned that the Saudi government has prioritized investment in Iran.

“I talked about economic issues during my recent meeting with my Saudi counterpart,” the top diplomat said, adding, “We both agreed to develop our economic and commercial relations in the months and years to come.”

He continued by saying that the Saudi government now prioritizes the completion of economic initiatives.

In early July, the Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIMA) held a seminar titled "Economic cooperation between Iran and Saudi Arabia; Private sector perspective".

With the strong presence of the TCCIMA members and representatives of the private sector, the seminar was held at the place of TCCIMA, where the speakers pointed to the capacities, challenges and future of Iran-Saudi Arabia relations and emphasized that the private sector can help advance political relations between the two countries and further cooperation in international forums by developing economic relations.

At the beginning of this seminar, Ferial Mostofi, the head of the Investment Services Center of TCCIMA, referred to the agreement between the political authorities of Iran and Saudi Arabia to restore relations and said, “In its economic diplomacy, Saudi Arabia smartly focuses on connecting to global value chains, paying attention to domestic and foreign investment; and developing trade, and economic cooperation with Saudi Arabia can be viewed from these three perspectives.”

Saudi Arabia is also taking steps to strengthen international trade by simplifying customs procedures, low import tariffs, and introducing new instruments to promote exports to open new markets for the products and services of Saudi companies, she added.

In Iran, especially in the private sector, there are many capabilities and experiences in the field of downstream oil and gas industries, mining and mineral industries, health, construction, technical and engineering services, chemical industries, construction and light industries, food and agriculture industries, etc. Many of these capabilities have been the result of the private sector’s efforts. In this regard, the Chamber of Commerce can be a window of effective communication between the private sectors of the two countries and thus help to expand the relations between the two countries, Mostofi stated.

Addressing the same seminar, Bahman Eshqi, the secretary-general of TCCIMA, referred to the high capacities of Iran and Saudi Arabia as two large and influential countries in West Asia, and said that the private sectors should play a role instead of governments in the development of economic relations between the two countries.

 

Global landscape undergoing paradigm shift, says Raisi

Speaking at the annual debate of the UN General Assembly in New York, Iran’s President Seyyed Ebrahim Raisi discussed the emergence of non-Western powers, encouraged regional economic and security partnerships, and lamented the ongoing Israeli occupation of Palestinian territories.

The world is reaching a critical junction point as an emerging order of non-Western states looks to pursue closer economic and political ties with one another, according to Raisi.

“The global landscape is undergoing a paradigm shift towards an emerging international order, a trajectory that is not reversible,” he said.

“As non-Western powers have emerged, there is a collective hope for a novel and equitable world order. The Islamic Republic of Iran advocates maximum economic and political convergence and is interested in interacting with the global community under the principle of justice.”

Through mutual political trust, economic cooperation, and indigenous security measures the goals of regional partners can be achieved more easily, said Raisi.

Holding up the Qur’an, he said “The holy book beckons humanity towards rationality, spirituality, the truth and justice. It expounds upon the unity of mankind proclaiming all earthly inhabitants it seeks to guide all towards human dignity... and speaks of equality among humans.”

Raisi emphasized the need for regional stability, noting the security of neighboring countries directly implicated the security of Iran.

He also criticized Western powers for what he claimed was an overt attempt to undermine stability in the region, claiming that Western intelligence agencies were moving terrorists across the region in a much targeted fashion.

“The surgical use of terrorists by certain Western governments as a political tool will be overcome by the collective will of the people of the region,” he said.

“Iran, who herself has been the biggest target of terrorists, has been at the forefront of combating terrorism in the region,” he added.

Iran additionally accused the United States of meddling in neighboring states, and drew attention to the situation in Afghanistan to highlight the humanitarian impact of Western military intervention on regional affairs.

“An independent and robust neighborhood presents an opportunity for the entire region. We will welcome any extended hand quite warmly.

Raisi lamented Israel’s occupation of the West Bank and the Gaza Strip, labeling it a negation of the inherent rights of Palestinians.

He also emphasized the need to recognize Palestinian statehood and withdraw Israeli troops and settlements from the region.

“The people of the region see Iran as a secure partner for their own security and the occupying regime in Jerusalem is seen as the perpetrator of much of the violence in the region,” he said.

“Has the time not come to bring an end to seven and a half decades to the occupation of Palestinian lands, of the demolition of their homes, of the blood of their women and children, and for the people of Palestine to be recognized officially as a country?”

Iranian statement on the release of assets

Following the release of Iran’s funds that had been held in South Korea due to the US sanctions, the Iranian Foreign Ministry released a statement about the money and the prisoner swap with the United States.

“In order to achieve the rights of Iranian nationals all over the world as well as Iranians residing in the US and within the framework of an independent process, five Iranian citizens who were illegally prosecuted by the US judicial system due to their normal business activities were released and returned to their families,” the ministry said in the statement. 

“Prior to that, the Iranian assets in South Korea - which had been frozen due to the US pressures, making it impossible to use them for years - were unlocked thanks to diligent pursuit of the issue by the Foreign Ministry and Central Bank of the Islamic Republic of Iran. Through a financial and banking process that lasted several weeks, the assets were transferred to the accounts of Iranian banks in Qatar,” the statement added.

It further continued, “These assets are under the control of the Central Bank of the Islamic Republic of Iran and will be used at the discretion of relevant Iranian authorities and based on the country’s needs and priorities.”

“Undoubtedly, the policies and actions of different administrations in the US in preventing Iran’s free and legitimate access to its financial resources in other countries are illegal and inhumane,” read the statement.

“Nevertheless, the illegal move of the US to abuse the international banking system and put pressure on other countries to limit Iran’s access to its assets does not in any way mean that the governments where these assets are kept have no responsibility in this regard, and those governments must be held to account for their unjustified move to comply with the illegal demands of the US government, the financial losses inflicted on Iran as a result of the long-term freezing of Iranian assets and its humanitarian consequences, especially during the Covid-19 pandemic,” it noted.

The ministry also stressed, “The Iranian people will never forget that. Even during the peak of the Covid-19 pandemic the US regime, while ignoring the health emergency and humanitarian issues as well as repeated requests by the UN secretary general and human rights officials, denied Iran access to its financial resources in South Korea.”

“The Islamic Republic of Iran hereby thanks the government of Qatar for playing an effective role in transferring the assets of Iran and exchanging the prisoners. We also appreciate the valuable efforts of the Sultanate of Oman to advance this process and also the Swiss government’s cooperation and assistance in facilitating all this,” the Foreign Ministry concluded.

Five Iranians who had spent years in US jails were released on Monday in a prisoner swap between Tehran and Washington mediated by Qatar.

“After a successful team effort, five innocent Iranian compatriots in American prisons will be free today and two of them will enter Tehran via Doha,” Kazem Gharibabadi, Secretary General of Iran’s High Council for Human Rights, wrote on his X account on Monday.

“The High Council for Human Rights, alongside the government and the judiciary, will remain determined to uphold the rights of Iranians abroad,” he added.

Earlier Monday, Iranian Foreign Ministry spokesperson Nasser Kanaani stated that two of the inmates will be returned to Iran, one will join his family in a third country, and two will remain in the United States.

The process of implementing an agreement with the US on the release of Iran’s assets as well as a prisoner swap has progressed at a favorable pace, said the spokesman.

Back in August, the United States and Iran agreed to liberate five American prisoners in exchange for the release of a number of Iranians held in the US and access to around $6 billion in Iranian oil revenues in South Korea.

It is worth noting that the US is to blame for all moratoriums made in such talks because it had illogically and futilely resisted all legitimate demands by Iran. The American officials thought they had the upper hand in the talks and gave the cold shoulder to any proposals.