Tuesday 31 May 2022

Israel signs free trade deal with UAE, first-ever with an Arab state

Israel entered its first-ever free trade agreement with an Arab state, when Economy Minister Orna Barbivai signed the deal with her counterpart in the United Arab Emirates on Tuesday.

Ambassador to the UAE Amir Hayek in a few words announced the signing of the agreement on twitter, tweeting Done! in response to a previous tweet on the topic.

Prime Minister Naftali Bennett praised the FTA as historic and the fastest to be signed in Israel's history. He thanked Crown Prince of Abu Dhabi Mohamed Bin Zayed for accelerating the process.

"We are continuing to warm the peace between the countries," Bennett tweeted.

On Monday, Barbivai said her visit to Dubai, “It is of strategic importance to the economic relations between Israel and the United Arab Emirates.”

"Together we will remove barriers and promote comprehensive trade and new technologies," she added. 

Israel and the UAE established full diplomatic relations in August 2020, in what was called the Abraham Accords. Bahrain, Sudan and Morocco followed soon after.

Israel has nineteen free agreements, including the one with the UAE. Israel also has a more limited free-trade agreement with Jordan, but the new deal with the UAE is much broader and is similar to those with the United States and with the European Union.

The free trade agreement is the UAE’s second, following one with India earlier this year.

This agreement covers 96% of the trade between Israel and the UAE, which was recorded last year at US$885 million.

That is more than double Israel's US$330 million in trade with Egypt in 2021, even though the two countries have had a peace agreement since 1979.

According to the Economy and Industry Ministry, the level of trade in 2020 was reported at US$120 million and at US$ one million in 2010. 

The FTA signing proceeded as planned, even though the UAE criticized Israel a day earlier for allowing Jews to visit the Temple Mount, Judaism's holiest site.

"The UAE today strongly condemned the storming of Al Aqsa Mosque courtyard by extremist settlers under the protection of Israeli forces," a statement by the Emirati Foreign Ministry read, calling on Israel "to take responsibility for reducing escalation and ending all attacks and practices that lead to the continuation of tensions."

There was no documentation of violence by Jews or Israelis on the Temple Mount this week, though some did pray at the site in contravention of the rules for Jewish visitors. Some Muslims threw rocks at visitors and police from the Al Aqsa Mosque.

The statement came a day after the annual Jerusalem Day flag march through the Old City, which was mostly peaceful, though some Jews and Muslims chanted calls for violence and some minor clashes, leading to about 50 arrests.

 

Monday 30 May 2022

India buys 34 million barrels Russian oil at discounted price

According to a Reuters report, India has received 34 million barrels of discounted Russian oil since Moscow invaded Ukraine on Feb 24, 2022. This has more than trebled the value of total imports from Russia, including other products, compared with the same period of 2021.

The volume of India's seaborne oil imports from Russia exclude CPC Blend oil, which is also exported via Russia's Black Sea port, but mostly supplied by Kazakhstan's subsidiaries of western countries as transit volumes.

India's oil imports from Russia have been rising since February this year, as Asia's third-largest economy and the world's third-biggest oil importer, turned to deeply discounted Russian oil, mostly Urals crude, to cut its energy imports bill.

India received more than 24 million barrels of Russian crude oil in May 2022, up from 7.2 million barrels in April and about 3 million barrels in March. The quantity is set to rise to about 28 million barrels in June.

Surging energy imports helped push India's total goods imports from Russia between February 24 and May 26 this year to US$6.4 billion, as compared to US$1.99 billion in the same period last year.

India's exports to Russia fell nearly 50% to US$377 million over that period, as its government is yet to set up a formal payment mechanism.

As the West responded to the invasion with a barrage of sanctions, India has come under fire for its continued purchases of Russian energy.

New Delhi has brushed off the criticism, saying those imports made only a fraction of the country's overall needs and has said it will keep buying cheap Russian oil, arguing a sudden stop would drive up costs for its consumers.

Russian and Indian energy companies have also been discussing term supply agreements and possible acquisitions of stakes in Russian oil and gas projects.

Former Prime Minister of Pakistan, Imran Khan has once again praised India for buying discounted oil from Russia despite being a key member of a US-led alliance called QUAD.

“Despite being part of QUAD, India sustained pressure from the US and bought discounted Russian oil to provide relief to the masses,” Khan wrote in a tweet.

“This is what our government was working to achieve with the help of an independent foreign policy,” he added.

In a second tweet, Khan claimed that for his government, “Pakistan’s interest was supreme but unfortunately the local Mir Jafars and Mir Sadiqs bowed to external pressure, forcing a regime change and are now running around like a headless chicken with the economy in a tailspin”.

Khan also tagged to his tweet a South Asia Index report, saying: “After buying discounted oil from Russia, the Indian government reduced petrol price by 9.5 Indian rupees per litre, Diesel price was also reduced by 7 rupees per litre.”

Michael Kugelman, a scholar of South Asian affairs at the Wilson Centre, Washington, also referred to this report, saying: “This is why Khan was praising India during his final days as PM.”

Khan wanted to import wheat and eventually gas from Russia.

 

Iran exploring ways to boost trade with India and Pakistan

Many analysts can recall the fanfare about Iran-Pakistan-India (IPI) gas pipeline project, which was sabotaged by the economic sanctions imposed on Iran by the United States. Anticipating that Iran nuclear negotiations may lead to easing of some of the restriction, the three countries have started exploring trade opportunities   

TPO hosts Indian trade delegation

Reportedly, a trade delegation from India’s PHD Chamber of Commerce and Industry visited Iran’s Trade Promotion Organization (TPO) to discuss ways of expanding trade ties between the private sectors of the two countries. The Indian delegation was received by the acting director of TPO’s Indian Subcontinent Office Reza Seyyed-Aghazadeh, the TPO portal reported on Monday.

Talking on the occasion, Seyyed-Aghazadeh expressed hope for the continuation of such meetings in order to develop trade relations and increase the volume of trade between Iran and India, and called for the expansion of relations between the two countries. He also expressed TPO’s full support for the private sectors of the two countries.

Iran-Pakistan trade workshop

Trade Promotion Organization (TPO) of Iran has also announced to hold a training workshop for Iranian businessmen who are interested in trading with Pakistan.

Marketing strategies and methods, cultural awareness, and the trade-related laws and regulations of Pakistan are among the subjects to be covered in the workshop which is due to be held on June 12, 2022.

It is pertinent to note that the TPO has held several business training workshops with different countries. However, the training workshop with Pakistan is the first such event that will be attended by TPO Head, Ambassadors and economic and trade advisors of the two countries, and officials of Pakistani and Iranian chambers of commerce.

  


Ukraine conflict reshaping global oil markets

According to a Reuters report, Russian invasion of Ukraine has reconfigured the global oil market, with African suppliers stepping in to meet European demand and Moscow, stung by Western sanctions, increasingly tapping risky ship-to-ship transfers to get its crude to Asia.

The reroutings mark the biggest supply-side shakeup of the global oil trade since the US shale revolution altered the shape of the market around a decade ago and suggest Russia will be able to navigate a European Union (EU) oil ban, provided Asia and China continue to buy its crude.

Sanctions imposed on Moscow after the conflict in Ukraine kicked off in February, including a US ban on its oil imports, have prompted Russia to pivot away from Europe, where its crude is shunned, to customers in India and China who are picking up cargoes at a steep discount, according to industry data and traders.

Russian exports were back to pre-invasion levels in April, according to data from the Paris-based International Energy Agency and oil prices have stabilized around US$110 after hitting a 14-year high above US$139 a barrel in March.

Even if the European Union agrees to an oil ban in its next round of Russian sanctions, analysts said the impact could be tempered by demand from Asia.

"Unless the West puts diplomatic pressure on Asian buyers, we do not see the supply gap widening and oil prices spiking," said Norbert Rücker of Julius Baer.

A complex patchwork of US, EU and British sanctions have prohibited Russian-owned or flagged ships from calling at ports meaning that some of the increased trade to Asia is being facilitated via ship-to-ship transfer at sea -- a costly process where the risk of spills is greater.

Overall, the flow of Russian oil to Asia via the sea has jumped at least 50% since the start of the year, according to tanker-tracker Petro-Logistics and other data.

Transfers between vessels, which account for a small fraction of the overall sea trade, have shifted away from the Danish coast to the Mediterranean Sea to avoid sanctions and protests.

"Ship-to-ship (STS) transfers were common in Danish waters, at the entry point of the Baltic Sea," Petro-Logistics President Mark Gerber told Reuters. "Those are not happening anymore; hence the STS trend of sanctioned tanker to non-sanctioned tanker increasing in the warmer and friendlier Mediterranean waters."

Gerber put the volumes of Russian crude and products being transferred between tankers in the Mediterranean at about 400,000 barrels per day (bpd), of which the majority is going to Asia, adding to the 2.3 million bpd going directly.

In January, before the invasion, around 1.5 million bpd were being sent directly to Asia.

Russian oil is loaded on Aframax or Suezmax tankers that carry less than one million barrels and it is transferred at sea to larger vessels that can take 2 million barrels, making shipping more cost effective, traders said.

The seaborne volumes are only part of the total exports from Russia. Including pipeline supplies, total Russian crude and products exports increased to just above 8 million bpd in April, back to the pre-invasion rate.

To compensate for the loss of Russian oil, European refiners have been turning to imports of West African crude, which are up 17% in April compared to the 2018-2021 average according to Petro-Logistics.

Eikon data also shows an increase and indicates 660,000 bpd mostly from Nigeria, Angola and Cameroon is arriving in northwest Europe in May, with three cargoes of Nigerian Amenam coming compared to one in February.

Volumes of West African crude to India, meanwhile, have nearly halved, according to Gerber, with 280,000 bpd delivered in April from 510,000 bpd in March as Delhi switches to Russian supply.

With European demand red-hot, the prices of Nigerian light, sweet crude grades in particular are hitting record highs, according to traders, with Forcados crude for example offered at a premium of at least US$7 to Brent.

Supply from North Africa to Europe is up by 30% since March, Petro-Logistics said. Of this, Eikon data indicates arrivals into northwest Europe from Egypt's Sidi Kerir port, which analysts say is likely Saudi crude, will almost double versus March to above 400,000 bpd in May.

The United States has also boosted supply to Europe. European crude imports in May from the US on a delivered basis are up over 15% versus March, according to tracking company Kpler, the highest monthly pace in its records. Europe has discharged about 1.45 million bpd of crude from the United States.

 

Sunday 29 May 2022

Iranian immunity over, Israeli Prime Minister

In a hint to possible Israeli involvement in the recent assassination of an Iranian military officer, Prime Minister Naftali Bennett said on Sunday that Iran would not go unpunished for instigating attacks through its proxies. 

IRGC Colonel Hassan Sayad Khodai was shot dead last week while sitting in his car and by two people on a motorcycle. The tactic echoed previous killings in Iran that focused on nuclear scientists and were widely pinned on Mossad.

"For many years, the Iranian regime has carried out terrorism against Israel and the region via proxies but for some reason the head of the octopus – Iran itself – has enjoyed immunity," Bennett said at the start of the weekly cabinet meeting in Jerusalem.  "As we have said more than once, the era of immunity for the Iranian regime is over." 

"Those who finance terrorists, those who arm terrorists, and those who send terrorists – will pay the full price," he added.

In another attack on Thursday, an Iranian engineer was killed in an explosion said to have been caused by drones carrying explosives at the Parchin military base, where Iran has allegedly conducted nuclear weapons tests in the past. 

Israel has been on high alert over the last week amid concern that Iran will try to retaliate for Khodai's death. On Saturday, Iran revealed images from an underground secret drone base that it operates, amid simmering tensions in the Gulf.  State TV said 100 drones were being kept in the heart of the Zagros Mountains, including Ababil-5, which it said were fitted with Qaem-9 missiles, an Iranian-made version of air-to-surface US Hellfire.

At the government meeting Bennett recalled a story published last week in the Wall Street Journal claiming that a cache of 100,000 documents Israel spirited out of Tehran in 2018 included evidence that the Islamic Republic had used reports from the International Atomic Energy Agency to hide its former nuclear program.

"Iran has also been investing in lies such as its deliberate misleading of the IAEA in order to evade visits by the agency, as was revealed last week. The Iranian regime is based on tyranny, terror and lies," Bennett stated.

Bennett spoke in advance of a visit to Washington this week by an Israeli delegation led by National Security Adviser Eyal Hulata to discuss options should talks to revive the 2015 Iran nuclear deal fail. 

They are also likely to discuss the upcoming IAEA Board of Governors' Meeting in Vienna next week and the possibility of a resolution condemning Iran.


Regime Change: Best Pastime of United States

It may be recalled that when Imran Khan’s government was removed through ‘non-confidence vote’ he openly alleged that the United States was behind this. Although, the US administration categorically denies having played any role, many in Pakistan don’t accept the denials.

This morning I was lucky enough to find an article an article by by Lindsey A. O'Rourke published in The Washington Post as back as December 23, 2016 which stated that the United States tried to change governments of other countries 72 times during the Cold War era.

The CIA has concluded with “high confidence” that Russia intervened covertly during the presidential election to promote Donald Trump’s candidacy. They based this assessment on the discovery that Russian security agencies had hacked the Republican National Committee, the Democratic National Committee and the Hillary Clinton campaign — and had released selected Democratic documents to WikiLeaks to undermine Clinton’s candidacy.

However, it must be remembered that The US has a long history of hacking other democracies. If true, Russia’s actions are reminiscent of Cold War covert political warfare, with an Internet-era twist. Following are six key things the research uncovered about those efforts.

Obviously, studying covert interventions is tough. By definition, the operations are designed so that the intervening state can plausibly deny it was involved, deflecting blame onto other actors. It’s impossible to get reliable cross-national data, given how widely countries vary in their rules about government transparency and freedom of the press. Add in flourishing conspiracy theories, and it can be hard to separate historical fact from fiction.

To tackle these problems, the writer has spent the past several years investigating allegations of US-backed covert regime changes during the Cold War. She has done so by going through relevant documents from the National Archives, National Security Archive and presidential libraries. Fortunately, the combination of the US government’s declassification rules, congressional inquiries and journalistic coverage has revealed a great deal about these operations.

1. From 1947 to 1989, the United States tried to change other governments in other countries 72 times

That’s a remarkable number. It includes 66 covert operations and six overt ones. These 72 US operations were during the Cold War — meaning that, in most cases, the Soviet Union was covertly supporting anti-US forces on the other side. However, a look at these US actions allows us to survey the covert activities of a major power, so we can glean insight into such interventions’ causes and consequences.

2. Most covert efforts to replace another country’s government failed

During the Cold War, for instance, 26 of the United States’ covert operations successfully brought a US-backed government to power; the remaining 40 failed.

Success depended in large part on the choice of covert tactics. Not a single US-backed assassination plot during this time actually killed their intended target, although two foreign leaders — South Vietnam’s Ngo Dinh Diem and the Dominican Republic’s Rafael Trujillo — were killed by foreign intermediaries without Washington’s blessing during US-backed coups.

Similarly, covert actions to support militant groups trying to topple a foreign regime nearly always failed. Of 36 attempts, only five overthrew their targets. Sponsoring coups was more successful; nine out of 14 attempted coups put the US-backed leaders in power.

3. Meddling in foreign elections is the most successful covert tactic 

The author found 16 cases in which Washington sought to influence foreign elections by covertly funding, advising and spreading propaganda for its preferred candidates, often doing so beyond a single election cycle. Of these, the US-backed parties won their elections 75% of the time.

Of course, it is impossible to say whether the US-supported candidates would have won their elections without the covert assistance; many were leading in the polls before the US intervention. However, as the CIA’s head of the Directorate of Intelligence, Ray S. Cline once put it, the key to a successful covert regime change is “supplying just the right bit of marginal assistance in the right way at the right time.”

In an election where Clinton won the popular vote by 2.86 million but lost the electoral college, thanks to 77,744 voters in Wisconsin, Michigan and Pennsylvania.

It’s impossible to say for sure, but the numbers were certainly close. If Clinton had replicated Obama’s 2012 turnout in those three swing states, she would have won them by more than half a million votes. Even if she had been able to convert just one percent of these states’ Trump voters, she would have won by a combined 55,000 votes.

The Clinton campaign undoubtedly had many strikes against it: high unfavorability ratings, inaccurate polling, FBI Director James B. Comey’s letter and strategic mishaps. Still, Russia’s covert campaign probably compounded these problems. Thanks to WikiLeaks’s slow trickle of hacked emails, the news cycle throughout October was flooded with embarrassing anti-Clinton stories, preventing her from building momentum after the debates.

4. Regime changes rarely work out as the intervening states expect

A Trump presidency might not be as much of a boon for Russia as hoped or feared. Clinton warned in the third presidential debate that Putin “would rather have a puppet as president of the United States.”

However, as the writer showed in a recent International Security article with Alexander Downes, leaders installed via regime change generally don’t act as puppets for long. Once in power, the new leaders find that acting at their foreign backers’ behest brings significant domestic opposition. They therefore tend to moderate their policies or turn against the foreign backer completely. In fact, there are already reports that the Kremlin is feeling “buyer’s remorse” over Trump’s victory, given his unpredictability.

5. Covert regime change can devastate the target countries

Author’s research found that after a nation’s government was toppled, it was less democratic and more likely to suffer civil war, domestic instability and mass killing, at the very least, citizens lost faith in their governments.

Even if Russia didn’t make the difference in electing Trump, it successfully undermined confidence in US political institutions and news media.

As historian Timothy Snyder pointed out, “If democratic procedures start to seem shambolic, then democratic ideas will seem questionable as well. And so America would become more like Russia, which is the general idea. If Trump wins, Russia wins. But if Trump loses and people doubt the outcome, Russia also wins.”

6. The best antidote to subterfuge is transparency

States intervene covertly so that they don’t have to be held accountable for their actions. Amid reports that Russian hackers have been emboldened by the success of the DNC hack, exposing Moscow’s hand is the first step toward deterring future attacks against the United States and upcoming elections in Germany, France and the Netherlands. It may also be the best way to dispel disinformation and restore faith in US democratic institutions at a time when 55% of Americans say they are troubled by Russian interference into the election,

The United States is beginning this effort. Congress has announced bipartisan investigations and Obama ordered a comprehensive report on covert foreign interference into US presidential elections going back to the 2008 election.

Given how serious these allegations are, and especially considering that President-elect Trump rejects the intelligence community’s consensus conclusion, releasing these reports publicly before the inauguration could help set US democracy right.

Saturday 28 May 2022

Getting Federal Budget approved should be the top priority of Shehbaz Sharif

In all probability, the incumbent government, headed by Shehbaz Sharif, is scheduled to present Federal Budget 2022-23 in the lower house on June 10, 2022. There is an overwhelming perception that the economic team hasn’t been able to put its much talked about plans and finalized the nitty-gritty.

This impression is based on the fact that Pakistan and International Monetary Fund are still polls apart, mainly because the Pakistani economic team is not paying heed to the instructions of the Fund.

Over the last six weeks the Shehbaz team has not met even the first target of raising prices of petroleum products and electricity and gas tariffs. Most of the time is being wasted on maligning the previous government headed by Imran Khan, rather than taking into account the harsh domestic and international realities.

The team faces the most tedious task of projecting income and expenses targets and meeting the deficit. It is too obvious that the coalition government has fewer options available to boost income and it will not be able to follow any austerity drive because of the mindset of the ruling elite. There is a consensus that the elected representatives will not be ready to accept any substantial cut in their salaries and perks.

It is feared that the axe will fall on federal and provincial public sector development programs. The top priority areas are: 1) improving irrigation system, 2) strengthening electricity and gas transmission and distribution infrastructures. The mounting circular debt can’t be contained without containing rampant pilferages.

For boosting country’s exports, cost of doing business has to be reduced. The top two expenses to be rationalized are interest rate and energy tariffs. The GoP expects to receive US$2 billion from IMF over the next two years. Experts believe that this much amount can be raised by exporting just one item, one million tons urea. The country has the surplus capacity to produce one million ton exportable surplus urea by ensuring uninterrupted supply of natural to the fertilizer plants.

There is no denying to that fact that huge quantities of wheat, edible oil, POL products and even urea fertilizer are being smuggled to the neighboring countries. The key problems are 1) highly porous borders and 2) restriction on the export of these commodities. These problems can be overcome by plugging boarders and bringing necessary changes in the Trade Policy.

Last but the foremost, the economic team has to come out of the illusion that hike in interest rate can help in containing inflation in the country. Let this be known to all and sundry that Pakistan suffers from cost pushed inflation. The biggest loser of hike in interest rate is the GoP. Let me reiterate that GoP is the biggest borrower and with each hike in interest rate, its debt servicing ability is marred.