Saudi Arabia and UAE not present in US led Naval Coalition

Saudi Arabia's name was conspicuously - perhaps surprisingly - absent from a list of countries the United States announced as part of its new naval coalition protecting Red Sea shipping from Yemen's Houthi group.

Although it has a US-equipped military, has been waging war on the Houthis for nearly nine years and relies on Red Sea ports for 36% of imports, Saudi Arabia along with Gulf ally the United Arab Emirates has proclaimed no interest in the venture.

The main reason for its absence appears to be a concern that participating would detract from a long-term strategic goal ‑ extricating itself from a messy war in Yemen and a destructive feud with the Houthis' principal backer Iran.

Houthis, who control much of Yemen, have been striking at ships in the Red Sea for weeks in response to Israel's war with the Palestinian Hamas group in Gaza.

Whether their attacks are having much direct impact on Israel - shipping companies say several targeted vessels were not headed there - their campaign has hit Israel's Western allies by complicating global trade. On Wednesday their leader threatened to expand this campaign to US naval vessels.

US officials have avoided saying outright that the two countries will not take part, and spokespeople for both the Saudi and Emirati governments did not respond to Reuters requests for comment on the matter.

Both the countries want to avoid being seen as participants in a campaign that could upset their long-term regional strategy - and turn Arab anger over Gaza against them.

It appears that Saudi and Emirati absence was because they wanted to avoid escalating tensions with Iran or jeopardizing the peace push in Yemen by joining any naval action.

"Another war would mean moving from the political process into another military one that would really mess up the geopolitical map of the Middle East right now," said Eyad Alrefai of King Abdulaziz University in Jeddah.

Spurred partly by worry about long-term US commitment, Saudi Arabia and the UAE have for years tried to reorient their regional policy, seeking new partners, taking a fresh look at ties with Israel and settling the rivalry with Iran.

The biggest steps in that process so far were the Chinese-mediated detente agreement between Saudi Arabia and Iran in February and the establishment of diplomatic relations between Israel and the UAE in 2020.

But the Saudis also want to end their nearly 9-year-old war in Yemen, which has become a draining stalemate that has damaged their reputations and brought insecurity through Houthi drone attacks on airports and energy plants.

Peace in Yemen is important for the UAE too, even though it largely pulled out its forces in 2020. It still backs groups in Yemen and the Houthis targeted its capital Abu Dhabi with drone and missile attacks last year.

 

BRICS getting bigger to reshuffle world order

Major emerging market nations invited top oil exporter Saudi Arabia, along with Iran, Egypt, Argentina, Ethiopia and the United Arab Emirates, to join their bloc in an ambitious push to expand global influence. The new BRICS members bring together several of the largest energy producers with the developing world’s biggest consumers, suddenly giving the bloc outsized economic clout. With most of the world’s energy trade taking place in dollars, the expansion could also enhance its ability to push more trade to alternative currencies.

In deciding in favour of an expansion - the bloc's first in 13 years - BRICS leaders left the door open to future enlargement as dozens more countries voiced interest in joining a grouping they hope can level the global playing field.

The expansion adds economic heft to BRICS, whose current members are China, Brazil, Russia, India and South Africa. It could also amplify its declared ambition to become a champion of the Global South.

The long-standing tensions could linger between members who want to forge the grouping into a counterweight to the West - notably China, Russia and now Iran - and those that continue to nurture close ties to the United States and Europe.

"This membership expansion is historic," Chinese President Xi Jinping, the bloc's most stalwart proponent of enlargement, said. "It shows the determination of BRICS countries for unity and cooperation with the broader developing countries."

Originally an acronym coined by Goldman Sachs chief economist Jim O'Neill in 2001, the bloc was founded as an informal four-nation club in 2009 and added South Africa a year later in its only previous expansion.

The six new candidates will formally become members on January 01, 2024, South African President Cyril Ramaphosa said when he named the countries during a three-day leaders' summit he is hosting in Johannesburg.

"BRICS has embarked on a new chapter in its effort to build a world that is fair, a world that is just, a world that is also inclusive and prosperous," Ramaphosa said.

"We have consensus on the first phase of this expansion process and other phases will follow."

The countries invited to join reflect individual BRICS members' desires to bring allies into the club.

Brazilian President Luiz Inacio Lula da Silva had vocally lobbied for neighbour Argentina's inclusion while Egypt has close commercial ties with Russia and India.

The entry of oil powers Saudi Arabia and UAE highlights their drift away from the United States' orbit and ambition to become global heavyweights in their own right.

Russia and Iran have found common cause in their shared struggle against US-led sanctions and diplomatic isolation, with their economic ties deepening in the wake of Moscow's invasion of Ukraine.

"BRICS is not competing with anyone," Russia's Vladimir Putin, who is attending the summit remotely due to an international warrant for alleged war crimes, said on Thursday.

"But it's also obvious that this process of the emerging of a new world order still has fierce opponents."

Iran's President Ebrahim Raisi celebrated his country's BRICS invitation with a swipe at Washington, saying on Iranian television network Al Alam that the expansion shows that the unilateral approach is on the way to decay.

Beijing is close to Ethiopia and the country's inclusion also speaks to South Africa's desire to amplify Africa's voice in global affairs.

United Nations Secretary-General Antonio Guterres attended Thursday's expansion announcement, reflecting the bloc's growing influence. He echoed BRICS' longstanding calls for reforms of the UN Security Council, International Monetary Fund and World Bank.

"Today's global governance structures reflect yesterday's world," he said. "For multilateral institutions to remain truly universal, they must reform to reflect today's power and economic realities."

BRICS countries have economies that are vastly different in scale and governments with often divergent foreign policy goals, a complicating factor for the bloc's consensus decision-making model.

Though home to about 40% of the world's population and a quarter of global gross domestic product, internal divisions have long hobbled BRICS ambitions of becoming a major player on the world stage. It has long been criticized for failing to live up to its grand ambitions.

The regularly repeated desire of its member states to wean themselves off the dollar has never materialized. Its most concrete achievement, the New Development Bank, is now struggling in the face of sanctions against founding shareholder Russia.

Bloc heavyweight China has long called for an expansion of BRICS as it seeks to challenge Western dominance, a strategy shared by Russia.

Other BRICS members support fostering the creation of a multi-polar global order. But Brazil and India have both also been forging closer ties with the West.

Brazil's Lula has rejected the idea that the bloc should seek to rival the United States and Group of Seven wealthy economies. However, as he departed South Africa on Thursday, he said he saw no contradiction in bringing in Iran - a historical arch-foe of Washington - if it advanced the cause of the developing world.

"We can't deny the geopolitical importance of Iran and other countries that will join BRICS. ... What matters is not the person who governs but the importance of the country."

 

Buying Russian crude unviable for Pakistan

In one of my blogs I had questioned the economic viability of Pakistan importing Russian crude oil on three points: 1) longer distance, 2) higher freight and handling charges, 3) Pakistani refineries not tuned to refine Russian crude and on top of all 4) why to buy Russian oil on upfront payment when Saudi Arabia is supplying crude on deferred payment. Today, a Reuters report substantiated my apprehensions.

The report says, “Pakistan is unlikely to meet a target for Russian crude to make up two-thirds of its oil imports, despite attractive prices, hampered by a shortage of foreign currency and limitations at its refineries and ports”.

It also pointed, “The benefits are being offset by increased shipping costs and lower quality of refined products compared to the fuels produced from crude from Pakistan's main suppliers, Saudi Arabia and the United Arab Emirates”.

It goes to the extent of saying, “Added to the challenges, transportation costs for Russian crude are higher than for Middle Eastern crudes not only because of the longer distance traveled, but because Pakistan's ports cannot handle the large vessels departing Russia”.

According to the report, “Urals crude had to be transferred from a supertanker on to smaller ships, known as a lightering operation, in Oman before heading to Pakistan, unlike direct shipments from the Middle East”.

Even with that extra cost, it was worth importing Russian oil, said Viktor Katona, lead crude analyst at Kpler, as Saudi Arab Light crude is US$10 to US$11 per barrel more expensive for Pakistani refiners than Urals, while lightering operations add around US$2 to US$3 per barrel.

"Pakistani buyers would still be much better off," he said.

The key issue is, “Urals quality is a deterrent, as Pakistan's refineries cannot get as much gasoline and diesel out of Urals crude as they produce from Saudi and UAE crudes”.

It will take Pakistan Refinery (PRL) at least two months to fully process its first cargo of 100,000 tons (730,000 barrels) of Urals crude as it needs to be blended with Middle East crude to offset the high output of fuel oil from the Russian oil, Zahid Mir, chief executive of the refinery.

"Our optimum processing solution is to blend Urals with Middle Eastern imported crude while not exceeding 50% Ural in the blend," Mir said.

The residual fuel produced from Urals crude has to be mixed with diesel and kerosene to meet specifications for local use while the remainder is exported, but the deal was still commercially viable for Pakistan, Mir said.

PRL has no plans to upgrade its refinery to process fuel oil into higher quality fuels, he added.

Kpler's Katona expects Pakistan's liquidity issues and technical challenges to weigh on its appetite for Russian crude.

"Russian imports into Pakistan will not grow into anything bigger than one cargo per month," he said.

 

 

Egypt seeking funds for purchase of wheat

Egypt, one of the world’s biggest wheat importers, is in talks with the UAE for a US$400 million financing to help it purchase the commodity.

The funding would come from the Abu Dhabi Fund for Development, via tranches of US$100 million, Egyptian Supply Minister Ali El-Mosilhy told Bloomberg. He didn’t say when a deal is likely to be finalized. 

It would be a boost for Egypt, facing a dire shortage of foreign exchange and a cost-of-living crisis, partly as a result of soaring food prices.

Earlier this month, Egypt announced that Abu Dhabi wealth fund ADQ would invest US$800 million in companies in its economy. Qatar has also looked bolster the nation’s economy.

El-Mosilhy criticized Russia’s exit from the Black Sea grain-export initiative and said it will continue to import Ukrainian wheat even after the collapse of the United Nations-backed agreement this week.

“We are not pleased with the Russian withdrawal from the UN grain-export deal,” El-Mosilhy said. He urged Moscow to reconsider its position.

Egypt’s economy has been negatively affected by an increase in grain prices since Russia invaded Ukraine last year. 

While global benchmark wheat futures had begun to moderate, they’ve surged this week after Russia terminated the export pact. 

The pact that had allowed Ukraine's grain to be exported safely over the Black Sea for the past year expired on Monday when Russia withdrew and warned that it could not ensure ship safety, a move that the United Nations said would strike a blow to people in need everywhere.

Moscow has said that if demands for increased exports of its own grain and fertilizer were met, the Black Sea pact might be revived.

Russia said it would not prolong the grain pact after accusing the West of failing to fulfill a parallel memorandum aimed to facilitate Russia's agricultural and fertilizer exports.

The International Monetary Fund has said Russia's withdrawal from the agreement allowing Ukrainian exports via the Black Sea weakens the global food security outlook and risks increasing food prices, particularly in low-income countries.

 

UAE and India agree to use local currencies for bilateral trade

President of United Arab Emirates (UAE), Sheikh Mohamed Bin Zayed Al Nahyan received Indian Prime Minister Narendra Modi, who is on an official visit to the Emirates.

To boost bilateral trade and investments, Modi announced that India and the United Arab Emirates have agreed to start trade settlement in local currencies.

The Local Currency Settlement System will permit payment from exporters and importers in their respective local currencies, Indian Rupee (INR) or UAE Dirham (AED). This move will also further enable the development of an INR-AED foreign exchange market.

Modi said that he hopes that bilateral trade between the two countries goes past the US$100 billion-mark soon, as it currently stands at US$85 billion.

Upon arrival at Qasr Al Watan in Abu Dhabi, the Indian prime minister’s motorcade was met by a group of Emirati children waving the flags of both countries.

Sheikh Mohamed greeted Modi and those who accompanied him during an official reception ceremony that included a guard of honor welcome, a 21-gun salute, and a performance of the national anthems of India and the UAE.

 “The India-UAE comprehensive strategic partnership has been steadily strengthening and the Prime Minister’s visit will be an opportunity to identify ways to take this forward in various domains such as energy, education, healthcare, food security FinTech, defense and culture,” the Ministry of External Affairs (MEA) said.

It will also be an opportunity to discuss cooperation on global issues, particularly in the context of the UAE’s Presidency of COP-28 and India’s G-20 Presidency in which the UAE is a special invitee, it added.

The UAE and India have agreed to implement the use of local currencies for bilateral and cross border transactions, the announcement was made on the sidelines of Modi’s visit to Abu Dhabi on Saturday.

Minister of State for Foreign Trade Dr. Thani Bin Ahmed Al Zeyoudi, said, a year after their Comprehensive Economic Partnership Agreement (CEPA) took effect, the UAE and India have further strengthened their strategic relations.

In his statement to the Emirates News Agency (WAM), he stressed that the Emirati-Indian strategic partnership has seen positive developments at all levels, including the CEPA, which makes it a global model for how to upscale collaboration and partnership ties to higher levels that achieve mutual growth, create opportunities for business communities, stimulate entrepreneurship, and support sustainable development.

He noted that this would not be achieved without the shared keenness and unlimited support of the leaderships of the two countries.

He added that the UAE and India had entered a new phase of shared prosperity due to the CEPA that took effect a year ago, which has boosted key sectors in both countries, most notably non-oil trade and mutual investment.

In the first year of the partnership, their non-oil trade reached US$50.5 billion, growing by 5.8%YoY, and compared to the previous year, from May 2020 to April 2021, non-oil trade grew by 53.5%, he added.

It increased by 36.1% as compared to the same period in 2019-2020, and by 29.6% compared to the same period in 2018-2019, Al Zeyoudi further said.

He stressed that the UAE-India partnership agreement boosted non-oil exports from the UAE, which reached US$10.3 billion in the year of its implementation, a rise of 18.6% compared to the same period during 2020-21.

Al Zeyoudi noted the UAE’s ongoing investment in India, which was driven by the impressive growth of one of the world’s fastest-growing economies.

As per the latest official data released this year, the UAE invested US$36.61 billion in various sectors, including financial services, real estate, business services, alternative and renewable energy, engine manufacturing, equipment, and more.

The UAE has chosen India as the first country to sign a comprehensive economic partnership agreement with, in light of their strong strategic ties.

India is a key ally and partner for the UAE in trade and investment, and they have a long history of friendship. This is also India’s first agreement of this kind with a country in the Middle East and North Africa region.

Iranian naval chief visits Pakistan

Rear Admiral Shahram Irani, Commander Iranian Navy, reached Islamabad on Monday for a three-day visit to discuss methods to strengthen bilateral collaboration in a number of military domains with top military commanders of Pakistan.

Irani visited Islamabad at the request of his Pakistani counterpart Admiral Muhammad Amjad Khan Niazi’s request.

Irani, who is accompanied by a senior military team, visited naval headquarters in Islamabad, where he was greeted by his Pakistani counterpart and witnessed a guard of honor, according to a Pakistan Navy press release.

The Iranian and Pakistani navy commanders met to discuss common interests such as bilateral marine, defense, and educational cooperation, as well as the exchange of naval delegations.

Additionally, Irani and Niazi discussed regional partnerships and marine security in the region.

Niazi briefed Irani and his accompanying team on the professional activities of Pakistani naval forces to maintain maritime security and bolster bilateral and multilateral cooperation.

Irani’s current trip to Islamabad, in the opinion of Pakistan’s Navy, will be a significant step in fostering closer naval cooperation between the two nations.

In the meanwhile, Irani and Pakistani Air Force Chief Marshal Zaheer Ahmed Baber Sidhu met. They emphasized the value of strengthening military, educational, and aviation cooperation.

In a statement, Pakistan’s Air Force said, “The meeting between Irani and Baber Sidhu is a testament to the deep-rooted friendship and unwavering commitment of the two nations to work towards a peaceful and stable region.”

The Pakistani marshal also underscored on the advancement in space, electronic warfare, cyber and niche technologies coupled with artificial intelligence (AI) which have profoundly affected the traditional environment of national security.

He gave the dignitary a briefing on the numerous initiatives the Pakistan Air Force is working on, paying particular attention to modernization and the growth of indigenous capabilities.

“Tehran and Islamabad enjoy longstanding religious, cultural, and historical bonds which are manifested through strong ties between both sides,” the Pakistani air chief noted.

The commander of the Iranian Navy praised the professionalism of the Pakistan Air Force troops and the extraordinary advancements made by the PAF on its path to modernization.

Irani further commended Pakistan for its ongoing efforts to maintain security in the region and emphasized the significance of strengthening military-to-military cooperation, particularly in the areas of operations, training, and the aviation sector.

Irani stated earlier this month that the Islamic Republic intends to create new intra- and extra-regional partnerships to improve security.

Along with Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, and Iraq, he also mentioned Pakistan as a nation that is in earnest for international naval cooperation.

He said that almost all of the nations in the northern parts of the Indian Ocean have decided to support Iran and work together more effectively to build security.

A number of Persian Gulf Arab nations, led by Saudi Arabia, realigned their coalition and resumed their relations with Iran, shattering the Israeli regime’s and its old partner, the United States, dreams of a “NATO-like” anti-Iran alliance in the region.

 

Pakistan pays Russian crude price in Chinese currency

According to a Reuters report, Pakistan has paid for its first government to government import of discounted Russian crude in Chinese currency. It is a significant shift in its US dollar dominated export payments policy.

Discounted crude offers respite as Pakistan faces an acute balance of payments crisis, risking a default on its debt obligations. The foreign exchange reserves held by the central bank are scarcely enough to cover four weeks of controlled imports.

The first cargo of discounted Russian crude oil arranged under a new deal struck between Islamabad and Moscow earlier this year arrived in Karachi on Sunday. It is currently being offloaded at the port in the southern city of Karachi.

Petroleum Minister Musadik Malik, talking to Reuters by phone, did not disclose the commercial details of the deal, including pricing or the discount that Pakistan received, but said the payment was made in Chinese currency.

He said the purchase, Pakistan's first government-to-government (G2G) deal with Russia, consisted of 100,000 tons, of which 45,000 tons had docked at Karachi port and the rest was on its way. Pakistan made the purchase back in April.

Pakistan's purchase gives Moscow a new outlet to add to growing sales to India and China, as it redirects oil from western markets because of the Ukraine conflict.

Despite being a long-standing Western ally and the arch-rival of neighbouring India, which historically is closer to Moscow, analysts say the crude deal also presents a new avenue for Pakistan at a time that its financing needs are great.

Pakistan's Refinery Limited (PRL) will initially refine the Russian crude, the minister said. He had earlier referred to the purchase of the shipment as a trial run to judge financial and technical feasibility.

Malik on Monday played down concerns around the financial viability and concerns about the ability of local refineries to process Russian crude given the South Asian country's historical importation of Middle Eastern petroleum products.

"We've run iterations of various product mixes, and in no scenario will the refining of this crude make a loss," Malik said, adding, "We are very sure it will be commercially viable."

"No adjustments (were) needed at the refinery to refine the Russian crude," the minister told Reuters.

Energy imports make up the majority of the Pakistan's external payments. Islamabad imported 154,000 bpd of oil in 2022, around steady with the previous year, data from analytics firm Kpler showed.

The crude was predominantly supplied by the world's top exporter Saudi Arabia followed by the United Arab Emirates. The 100,000 bpd from Russia in theory greatly reduces Pakistan's need for Middle Eastern fuel.

 

Saudi Arabia and UAE getting out of US hegemony

I am delighted to share with my readers an article written by David Ottaway of Wilson Center. This should be an eye opener for the Arab monarchies. Their growing tilt towards China and Russia challenges the US hegemony.

Much to the anxiety of policymakers in Washington, the two most important Arab partners in the Persian Gulf to the United States are asserting studied neutrality in the emerging Cold War with Russia and China.

Both Saudi Arabia and the United Arab Emirates (UAE) are fast expanding their relations with China while declaring their non-alignment in the new feuds over Ukraine and Taiwan.

This past December, Saudi Arabia signed a Comprehensive Strategic Partnership Agreement with China. The UAE and China signed a similar partnership accord in 2018.

Saudi Crown Prince Mohammed bin Salman (MBS) warmly welcomed President Xi Jinping to Riyadh for the signing of what the Chinese called an “epoch-making milestone in the history of China-Arab relations.”

The UAE became the first Gulf Arab nation to purchase Chinese military aircraft, including trainer jets in likely preparation for flying China’s most advanced warplanes, the FC-31 stealth fighter.

The two Gulf Arab monarchies have paid scant attention to US calls for economic sanctions on Russia following its invasion of Ukraine. Nor have they abided President Biden’s pleas to make up for the loss of Russian oil in order to lower gasoline prices for American consumers.

To the contrary, the Organization of Petroleum Exporting Countries (OPEC) has cut production by 3.6 million barrels a day over the past six months, led by Saudi Arabia in close collaboration with Russia.

The question arises whether these Arab monarchies can afford a policy of non-alignment with a tilt toward China in face of pressure from Washington to stay in its corner. Their security still depends heavily on the US and the vast bulk of their arms remain “Made in America.” China has scant military presence in the Gulf and has so far offered no security assurances of any kind.

On the other hand, neither has the United States ever committed itself in writing to the “ironclad” guarantee of “a swift, overwhelming and decisive response” that President Biden pledged to South Korea in April in case of a nuclear attack from North Korea.

The current administration, like those before it, has limited itself to myriad verbal reassurances of US aid to help the Gulf Arab monarchies help themselves.

The only commitment Biden has made to Gulf Arab states’ security is to never allow Iran to acquire a nuclear bomb. Still, decades of efforts to convince the Gulf Cooperation Council (GCC) to form a US-backed common air defense system against Iran have failed.

There is a long history to end Saudi Arabia’s lopsided dependence on the US and to cultivate its relationship with China in particular as a counterbalance.

In 2004, the former Saudi foreign minister, Prince Saud al-Faisal, explained to me, only half-jokingly, the Saudi vision of nonalignment in these terms, Saudi Arabia was not tied to the US in an unbreakable Catholic marriage. It was, he reminded me, a Muslim country with the right to have up to four wives at once, so long as it treated them all equally.

At the time, Saudi Arabia had long since reached out to China to court a second wife. In 1985, then Saudi ambassador to Washington, Prince Bandar bin Sultan, outraged the Reagan administration by traveling incognito to Beijing to open negotiations on the purchase of Chinese medium-range ballistic missiles, the East Wind CSS-2, capable of carrying nuclear warheads.

Saudi Arabia did not yet have diplomatic relations with the Communist country at the time. The Saudis even managed to smuggle the missiles into the kingdom without the knowledge of the US government. The CIA only discovered the Saudi deceit in early 1988, touching off a full-scale crisis in US-Saudi relations and nearly triggering Israeli military retaliation.

Ironically, Saudi Arabia finally established diplomatic relations with China just before the outbreak of the 1990-91 Gulf War when the US dispatched 500,000 soldiers to defend the Kingdom against Iraq and liberate Kuwait from its occupying troops.

Although, it waited until 1992, after the collapse of the Soviet Union—and demise of communism—to reactivate its long-frozen ties with Moscow.

Today, China is Saudi Arabia’s number one trading partner and customer of its oil exports. Russia, the world’s biggest non-OPEC exporter, cooperates closely with the Kingdom to maintain high oil prices at US expense.

Neither China nor Russia looms as a security threat to the Gulf Arab states who are instead concerned with Iran, particularly Saudi Arabia, which views Tehran as its main rival for Gulf primacy. In the face of Iranian expansion and aggression in the Gulf and beyond, the US security umbrella has proven increasingly leaky.

There was no US response when an Iranian drone and missile barrage on Saudi oil facilities knocked out half of the kingdom’s oil production in September 2019.

Then US president Donald Trump, declared he was in no rush to go to war with Iran and observed, to the consternation of the Saudis that was an attack on Saudi Arabia. That wasn’t an attack on us.

Nor did the Biden administration react when Iranian-backed rebels in Yemen carried out several drone and missile attacks on the UAE in January 2022. In both cases, the US response was limited to sending Patriot missiles to bolster their defenses against future incidents.

The six Gulf Arab monarchies, though grouped together in the GCC, have no common defense strategy or military relationship with the US. Only three of them—Kuwait, Bahrain, and Qatar—rank as a Major Non-NATO Ally.

Only four—Kuwait, Oman, Bahrain, and the UAE—have defense cooperation agreements with Washington mainly to facilitate US arms sales and military training. Although, Qatar does hosts US Central Command’s regional headquarters and Bahrain the US Fifth Fleet.

The outlier is Saudi Arabia, the GCC’s military keystone and America’s oldest Middle East partner dating back to 1945. It has never wanted a permanent American military presence in the Kingdom, or to become a Major Non-NATO ally, and has not even asked for a formal defense cooperation agreement.

It has also always looked askance at US efforts to form a collective compact with its Gulf Arab partners, such as when former President Trump unsuccessfully sought to launch a Middle East Strategic Alliance.

Nonetheless, the Saudi military is armed to the teeth with tens of billions of dollars of US arms and hopes to buy the most sophisticated US warplane, the F-35.

It has reportedly, for the first time, sought a written US security guarantee against future Iranian attacks. This comes amid complex negotiations over a deal with the Biden administration to establish diplomatic relations with Israel.

The obstacles to adopting a nonaligned posture with a tilt toward China have become painfully apparent in the Biden administration’s two-year-long negotiations with the UAE over its purchase of the F-35 fighter jet. The UAE is arguably America’s closest GCC military partner; it was the only one to send soldiers and warplanes to fight alongside American forces in Afghanistan. Still, the F-35 talks remain inconclusive because of US security concerns over the UAE’s expanding military ties with China. These include, according to US officials, an indication the UAE is allowing China to build a naval base there.

At some point soon, Saudi Arabia and the UAE will have to decide whether to live with a leaky security arrangement led by the US or take their chances with China or Russia. Buying Chinese or Russian arms is certain to incite Washington’s wrath and make purchase of advanced American weaponry ever more problematic. But it remains very unlikely Chinese or Russian arms will resolve Saudi’s security dilemma.

China also has extensive economic interests and a comprehensive strategic agreement with Iran and, so far, has stuck its own strict nonalignment policy in the Iran-Saudi rivalry. Russia, on the other hand, has become closer to Iran militarily, selling its advanced SU-35 fighter jet to Tehran and buying Iranian drones for its war in Ukraine in return. The US security umbrella may be leaky but neither China nor Russia seems likely to offer even that.

 

 

History of Israel-Arab Normalization

Israel currently has official diplomatic ties with five Arab countries namely Egypt, Jordan, UAE, Bahrain, and Morocco.

Egypt was the first Arab state to sign a peace treaty with Israel, in 1979, in return for an Israeli withdrawal from the Sinai Peninsula it occupied in 1967.

Jordan followed in 1994, a year after Israel and the PLO recognized each other via the Oslo Accords. Progress toward Israeli-Palestinian peace enabled Israel to establish ties with other Arab states, but these were cut after the outbreak of the second intifada in 2000.

In 2020, following a gradual process, the Abraham Accords were signed, leading the UAE and Bahrain to normalize ties with Israel, with Sudan indicating it would follow suit when domestic conditions allow.

Also in 2020, Morocco re-established the official ties it had with Israel in the 1990s.

In 2022, Israel, the UAE, Bahrain, Morocco, Egypt, and the United States established the Negev Forum to advance multilateral cooperation.

Israel for decades had unofficial and secret relations with most Arab states. Israel-Arab relations traditionally have a strong security dimension, but also increasingly include civilian, economic, and political cooperation.

In 2002, the Arab League adopted the API, which promised Israel normal relations with the entire Arab world in return for peace with the Palestinians.

The API did not generate progress toward Israeli-Palestinian peace.

Currently, Saudi Arabia is seeking to update the API and possibly have it become a key part of a package of incentives for peace.

Netanyahu has repeatedly rejected the need to move forward with the Palestinians as a condition for progress with Arab countries. While he seeks to advance ties with Arab states to bypass the Palestinian issue, others in Israel and the international community seek to leverage normalization to advance Israeli-Palestinian peace.

UAE new hub of Russian gold

The United Arab Emirates has become a key trade hub for Russian gold since Western sanctions over Ukraine cut Russia's more traditional export routes.

The records, which contain details of nearly a thousand gold shipments in the year since the Ukraine war started, show the Gulf state imported 75.7 tons of Russian gold worth US$4.3 billion - up from just 1.3 tons during 2021.

China and Turkey were the next key destinations, importing about 20 tons each between February 24, 2022 and March 03, 2023. With the UAE, the three countries accounted for 99.8% of the Russian gold exports.

Ever since the Ukraine conflict started, many multinational banks, logistics providers and precious metal refiners stopped handling Russian gold, which had typically been shipped to London, a gold trading and storage hub.

The London Bullion Market Association banned Russian bars made from March 07, 2022, and by the end of August 2022, Britain, the European Union, Switzerland, the United States, Canada and Japan had all banned imports of Russian bullion.

The data shows Russian gold producers quickly found new markets in countries that had not imposed sanctions on Moscow, such as the UAE, Turkey and China.

Louis Marechal, a gold sourcing expert at the Organization for Economic Co-operation and Development said there was a risk Russian gold could be melted down and recast and then find its way back into US and European markets with its origin masked.

"If the Russian gold comes in, is recast by a local refiner, sourced by a local bank or trader and then sold on into the market, there you have a risk," he said. "This is why carrying out due diligence is instrumental to end buyers wishing to ensure they respect sanctions regimes."

The UAE government's Gold Bullion Committee said the state operated with clear and robust processes against illicit goods, money laundering and sanctioned entities.

"The UAE will continue to trade openly and honestly, with its international partners, in compliance with all current international norms as set down by the United Nations," it said.

In a bid to further isolate Russia, Washington has warned countries, including the UAE and Turkey, they could lose access to G7 markets if they do business with entities subject to US sanctions.

US lawmakers to introduce bill to combat normalization with Syria

A bipartisan group of US Lawmakers plans to introduce a bill on Thursday intended to bar the US government from recognizing Bashar al-Assad as Syria's president and enhance Washington's ability to impose sanctions in a warning to other countries normalizing relations with Assad.

The bill would prohibit the US federal government from recognizing or normalizing relations with any government in Syria led by Assad, who is under US sanctions, and expands on the Caesar Act, a US law that imposed a tough round of sanctions on Syria in 2020.

The bill comes after Arab states turned the page on years of confrontation with Assad on Sunday by letting Syria back into the Arab League, a milestone in his regional rehabilitation even as the West continues to shun him after years of civil war.

Regional countries including Saudi Arabia, Qatar and others - had for years supported anti-Assad rebels, but Syria's army - backed by Iran, Russia and allied paramilitary groups - regained most of the country. The icy ties with Assad began to thaw more quickly after devastating earthquakes in Syria and Turkey in February 2023.

The United States has said it will not normalize ties with Assad and its sanctions remain in full effect.

The bill will be introduced by House of Representatives Foreign Affairs Committee Chairman Michael McCaul, Congressman Joe Wilson, the chair of the Subcommittee on the Middle East, North Africa, and Central Asia; and Democrats Steve Cohen and Vicente Gonzalez, among others, a senior congressional staffer who worked on the bill told Reuters.

The legislation is a warning to Turkey and Arab countries that if they engage with Assad's government, they could face severe consequences, the staffer, said speaking on condition of anonymity.

"The readmission of Syria to the Arab League really infuriated members and made clear the need to quickly act to send a signal," they said.

The bill's provisions include a requirement for an annual strategy from the secretary of state for five years on countering normalization with Assad's government, including a list of diplomatic meetings held between Syria's government and Turkey, the United Arab Emirates, Egypt and others.

The bill would also clarify the applicability of US sanctions on Syrian Arab Airlines and another carrier, Cham Wings. Under the proposed bill, countries that allow the airlines to land would face sanctions against that airport, the staffer said.

If passed, the bill would also require a review of transactions, including donations over US$50,000 in areas of Syria held by Assad's government by anyone in Turkey, the UAE, Egypt and several other countries.

 

Saudi Crown Prince discusses regional stability with US, UAE and Indian officials

Saudi Crown Prince Mohammed bin Salman met with senior officials from the United States, United Arab Emirates and India on Sunday. In Jeddah, he received Ruler of Abu Dhabi and National Security Advisor of the United Arab Emirates (UAE) Sheikh Tahnoun bin Zayed Al Nahyan; the US National Security Advisor Jake Sullivan; and the National Security Advisor of India Ajit Doval.

During the meeting, they discussed ways to strengthen relations and ties between the three countries in a way that enhances growth and stability in the region.

Crown Prince and Prime Minister received on Sunday the US National Security Advisor Jake Sullivan in Jeddah

During the meeting, they reviewed the strategic relations between the two countries and ways to enhance them in various fields. They also discussed the latest regional and international developments.

Attending the meeting from the American side were US Ambassador to Saudi Arabia Michael Ratney; the US National Security Council Coordinator for the Middle East and North Africa Brett McGurk; Special Presidential Coordinator at the Department of State Amos Hochstein; and Senior National Security Advisor Ariana Berengaut. 

Saudi Arabia joins US-UAE-Egyptian mediation bid to end conflict in Sudan

Saudi Arabia has joined the mediation efforts of the United States, the United Arab Emirates and Egypt to end the conflict in Sudan. This was revealed by Sky News Arabia, quoting well-informed US sources.

The sources stated that the mediation efforts seek to bring together Commander of the Sudanese Armed Forces Lt. Gen. Abdel Fattah Al-Burhan and Commander of the Rapid Support Forces Mohamed Hamdan Dagalo in the Saudi capital Riyadh in the coming weeks.

US Secretary of State Antony Blinken said on Monday that the United States is in close contact with Sudanese military leaders to extend the ceasefire, and to explore options for restoring the diplomatic and consular presence of Sudan as soon as possible.

“Following intense negotiation over the past 48 hours, the Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF) have agreed to implement a nationwide ceasefire starting at midnight on April 24, to last for 72 hours,” Blinken said in a statement issued two hours before the ceasefire started.

In an interview with MSNBC, Blinken said, “We are still looking at options. We have military installations that are still in the immediate area if they are needed, but this is not the time to conduct some kind of massive operations.”

He pointed out that dozens of Americans are participating in a convoy led by the United Nations heading to Port Sudan, and that the US military is helping to monitor it through unmanned aircraft systems (UAS).

The agreement between the Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF) came following intense negotiation over the past 48 hours, Blinken said.

“The United States urges the SAF and RSF to immediately and fully uphold the ceasefire,” Blinken said.

“To support a durable end to the fighting, the United States will coordinate with regional and international partners, and Sudanese civilian stakeholders, to assist in the creation of a committee to oversee the negotiation, conclusion, and implementation of a permanent cessation of hostilities and humanitarian arrangements in Sudan,” he added.

The White House Spokesman John Kirby announced that the United States is preparing to send part of the American fleet to help its nationals who wish to leave Sudan.

Meanwhile, the Arab and Western countries continued evacuation of their nationals and diplomatic missions from the capital, Khartoum, after the security and humanitarian conditions have deteriorated and reached on the brink of an impending catastrophe.

In a related development, a US military plane evacuated 45 Japanese citizens and their family members from Sudan.

UAE and Jordan considering reducing diplomacy with Israel

The Jordanian parliament voted on Wednesday to demand that the government expel Israel's ambassador, according to Jordanian newspaper Al-Dustur.

The vote came after Finance Minister Bezalel Smotrich said, "There is no such thing as a Palestinian people" in Paris at a podium that showed a map of Israel whose borders extended into Jordan.

Saudi reports on Monday also claimed that The United Arab Emirates is considering reducing its level of diplomatic representation in Israel.

According to the report, the Emirati Foreign Ministry ordered Emirati Ambassador to Israel Mohammed Al Khaja not to meet with any Israeli government officials.

Khaldoon al-Mubarak, the senior advisor to the President of the UAE, is currently visiting Israel, according to Walla News.

Miri Regev, Israel's transportation minister Miri Regev wrote an update on Twitter on Wednesday afternoon, saying that she spoke with her friend, the Ambassador of the United Arab Emirates, Mohammed Al-Khaja. He also understood what the media was trying to do - take things out of context. The attempt [to create] conflict between countries became an invitation for another visit."

The office of Prime Minister Benjamin Netanyahu denied allegations by Channel 12 that Israel is experiencing a crisis in its relations with the UAE after the country announced that it plans to stop a purchase of Israeli-made defense systems in protest of Netanyahu's government, The Jerusalem Post reported earlier this month.

“Until we can be sure that Prime Minister Netanyahu has a government he can control, we will not be able to jointly operate,” Emirati President Sheikh Mohamed bin Zayed had reportedly told Israeli officials.

Last month, the UAE was among numerous countries that condemned a comment by Smotrich that the West Bank Palestinian town of Huwara needs to be wiped out, calling the comment racist.

Smotrich had later claimed that his comment had not been sincere and had apologized for it.

Arab reluctance to react to Iranian protests

Wilson Center has tried to find an explanation for the lack of Arab support in highlighting the actions of Iranian ruling regime. Its efforts could be termed ‘Killing two birds with one stone’. Not only has it maligned Iran, but also Arab States for not opposing Iran because they also don’t like opposition.   

When protests in Iran broke out in September 2022 following the killing of 22-year-old Mahsa Amini by the morality police, the world showed immediate support for the outraged Iranian women who took to the streets. Unlike before, these protests gained momentum as popular demands shifted from greater freedoms and economic reforms to the overthrow of the oppressive regime. The Iranian government’s harsh repression sparked international condemnation and sanctions against officials and entities, including the morality police itself.

As compared to strong responses from Western nations, Arab governments have stayed noticeably silent. This pattern of silence from Arab governments on internal Iranian issues, in contrast to Iranian involvement in Arab protests and revolutions, has been evident since the 2009 ‘green scarf movement’ in Iran and raises questions about the relationship between Arab states and Iran during times of popular upheaval.

While certain Arab nations, including Saudi Arabia, harbor a desire for the downfall of the Iranian regime, their reluctance to engage with Iran’s protests and internal politics is due to a multitude of challenges and constraints.

Many Arab governments, particularly those in the Gulf region, have a complex relationship with Iran. They may disapprove of the suppression of protests, but they also see Iran as a regional rival and may not want to give the impression of supporting domestic dissent, in effect allowing Iran to justify its interventionist policies elsewhere in the region.

The GCC nations, particularly Saudi Arabia, are grappling with the uncertainty surrounding the potential consequences of taking a unilateral adversarial approach towards Iran amid concerns about US security commitments and a decline in bilateral relations. Nevertheless, since the early days of the protests, Iranian authorities have repeatedly blamed foreign nations, including Saudi Arabia, for instigating the demonstrations.

IRGC Commander-in-Chief Hossein Salami warned the Saudi leadership, saying, “You are involved in this matter and know that you are vulnerable; it is better to be careful.” This warning was in reference to media supported by Saudi Arabia, such as funding for Iran International TV, which broadcasts in both Persian and English from London. It also refers to other Saudi-funded media outlets like Al-Arabiya and newspapers like Al-Sharq Al-Awsat, Okaz, Al-Riyadh, and Al-Madina, as well as Qatari and Jordanian newspapers. Arab News, a Saudi English-language newspaper, even dedicated special coverage to the protests.

To such accusations, Prince Faisal bin Farhan, the Saudi Foreign Minister stated, “A country that strengthens itself with good governance and a clear vision does not need to turn to the outside, and the Kingdom firmly adheres to the principle of non-interference in other countries’ internal affairs.”

Meanwhile, the Wall Street Journal reported that Iran was planning to attack Saudi Arabia, either directly or through its allies, such as the Houthis in Yemen, allegedly to distract from the protests.

Indeed, there is a state of uncertainty regarding the trajectory of events within Iran that raises four concerns:

First, it is unclear whether the current wave of protests will be more impactful than previous ones in affecting the regime. Given the past failures of protest movements to achieve their demands, it is understandable for Arabs to expect the current protests to fail or remain focused solely on reforms without aiming for regime change.

Second is the possibility of a desperate retaliation from the regime on neighboring states and interests should the protests escalate to the point of overthrowing the government—the ‘Samson option.’

Third is whether the support for the demonstrations will pressure the regime to respond positively to the JCPOA negotiations or vice versa.

Fourth is what the new regime will look like if the mullahs’ regime falls (to avoid repeating the deception of the 1979 revolution) and the role of opposition groups already plagued by sharp internal division.

Comparably, the silence and reticence of Arab capitals towards the Iranian protests are rooted in their varying relationships with Iran and their perceptions of the threat posed by the Islamic Republic.

Countries like Saudi Arabia, the United Arab Emirates, and Bahrain hold a hostile attitude toward Iran, while Iraq, Syria, and Algeria maintain close ties and similar ideologies. Oman tries to maintain a balancing act between Iran and Saudi Arabia, while Qatar has strong economic connections with Iran that have only grown stronger in recent years after the GCC blockade in 2017.

 In some ways, this explains Al Jazeera’s limited media coverage of the protests in Iran compared to that of the Arab Spring uprisings. But at least the Qatari Foreign Minister, in his interview with Bloomberg, indicated that “We are opposing using violence by security forces against civilians whether a woman or a man. This is a domestic issue, and we don’t normally interfere in domestic issues with countries.”

Arab governments may be hesitant to speak out against the Iranian government’s repression of protests due to their fear of a domino effect. This fear stems from the potential for revolutionary contagion, as seen in the Iran Islamic Revolution and Arab Spring Uprisings, and the potential undermining of ideological ties with Iran.

It is clear that since the Arab Spring uprisings, the change in the power dynamic in the region has worked in Iran’s favor, allowing it to expand the axis of resistance it leads, particularly to the detriment of Saudi Arabia.

On the other hand, these Arab governments may avoid taking a stance on the issue to avoid drawing attention to their own history of suppressing protests and to prove their goodwill and non-interference in Iran’s internal politics on the principle of good neighborliness—moral grandstanding. They believe this would strengthen their negotiating positions with Iran on outstanding and complex issues and strengthen their legitimacy in the international community.

Arabs and Iranians share the same region and religion. However, they have proud and distinct heritage, speak different languages and follow different branches of Islam, with Arabs predominantly Sunni while Iranians are Shiite. These cultural and linguistic differences create communication barriers and binary stereotypes, making it difficult to understand each other’s current common interests and demands.

Arab and Gulf media focus primarily on Iran’s regional influence and power struggles but pay little attention to local issues such as popular protests and human rights violations against minorities.

The lack of meaningful Arab media dedicated to in-depth coverage of Iranian society has heightened the divide between the Arab and Iranian peoples. The deliberate media stereotyping that portrays Iran merely through its regime and regional behavior, viewed from a narrow religious perspective, obscures the overall picture of Iranian society and erodes the trust and sympathy of the Arab public.

As against this, Iran has a vast media apparatus aimed at both the Arab and Iranian publics that reflects the views of the Iranian regime and presents political events through ideological and sectarian lenses.

Arab elites, especially after the Arab Spring, continue to face restrictions on freedom of demonstration and expression. Indeed, this impedes their ability to back advocacy campaigns for the protests in Iran organized by civil society.

Authorities are balancing a political equation that prevents them from officially supporting the protests in Iran. Nevertheless, some interaction with the protests, such as solidarity statements, condemnations, and vigils, can be observed in a few Arab capitals and elsewhere in the diaspora.

In Arab countries such as Lebanon and Iraq, which have close ties to Iran, any upheaval in Iranian politics could be viewed as a window of hope for those who grapple with their own internal struggles to challenge Iranian political influence.

In Lebanon, for example, Fe-male, a feminist organization, held a vigil to show support for the Iranian women protesting against mandatory veiling under the title “From us to you, [sending] all our love and support.” The vigil featured slogans in Arabic and Persian, including mantra of the protesters, “Woman, Life, Freedom.”

Other activist groups also sought to organize a protest in front of the Iranian embassy in Beirut, calling it “From Tehran to Beirut, the killer regime is one,” but failed amid threats from Hezbollah’s militias.

In Iraq, some women on social media launched the “No to Compulsory Hijab” campaign to support Iranian women facing regime repression and the mandatory dress code.

Also, in Tunisia, human rights and feminist organizations held a rally outside the Iranian Cultural Center to express their support for women in Iran. The demonstrators denounced the discrimination and mistreatment of women in Iran and chanted slogans such as “Tunisian women support Iranian women,” “Here to voice our solidarity with Iranian women,” and “Revolution and freedom.”

The International Federation for Human Rights (FIDH), including a coalition of Arab feminist and human rights groups, issued a statement on October 7, 2022, to express solidarity. The statement, ‘We stand in solidarity with women and demonstrators in Iran,’ condemned the suppression of peaceful protests.

We likely won’t see decisive Arab reactions to the protests in Iran any time soon. Despite Arab grievances to Iran’s regional behavior, states will maintain political neutrality given the uncertain trajectory of the protests.

Furthermore, they may fear exposing themselves ideologically if they endorse foreign protests. Lastly, in a cultural dimension, there is already a wide gulf between how Arabs and Iranians perceive each other. Despite what limited civic action we have seen, these factors inhibit any broad social expression of solidarity as seen in the west.

With the challenging and fading prospects of altering Iran’s behavior or the entire regime from within, Arabs still have other choices. These include waiting for a full-fledged revolution in Iran, capitalizing on international stances and sanctions, and luring its allies to abandon it, as were tried recently with China, Russia, and Iraq.

 

UAE-India hold talks to finalize rupee dirham trade deal

The United Arab Emirates (UAE) and India are in technical discussions to finalize rupee-dirham exchange rate for trade arrangement. This was told by UAE ambassador to India, Abdulnasser Jamal Alshaali to Hindustan Times newspaper. 

“The technical conversation is ongoing. There has been an agreement to settle a certain [amount] of trade between the two countries, just not having to go through a third currency,” he said, adding the two sides are working on a remittance facility to make it "more direct and easier".

Alshaali noted that energy security is important for both countries with the UAE seeking to be part of India’s energy security.

“The fact that the strategic oil reserve has been agreed on and it’s been established and has been ongoing for quite some time, it is quite helpful and constructive, especially given the current state of affairs,” he added.

The ambassador said that India is a reliable partner for the UAE’s food security.

“Food security is important for us. We don’t produce that much food and we import a lot of it. And it’s quite vital for us that we have a partner that we can rely on, and India is a reliable partner when it comes to that,” Alshaali noted.

 

All set for Davos party

There’s a hangover happening in Davos even though the party hasn’t yet started. The World Economic Forum’s annual winter shindig in the Swiss mountain resort, which kicks off on Monday, marks a return for glitzy parties and high-minded debates following a three-year hiatus.

A record number of business leaders are set to make the trip, and the passage of commercial, private and government aircraft through Zurich’s airport suggests overall attendees are at pre-Covid-19 levels. Yet the direction for the future – and those who will lead it – is more clouded than ever.

Corporate and financial chieftains who skipped last May’s low-key Davos gathering are back. JPMorgan boss Jamie Dimon, a regular at the conference, will be joined by Wall Street leaders including David Solomon of Goldman Sachs and Morgan Stanley’s James Gorman. Chevron Chief Executive Mike Wirth and BP’s Bernard Looney will represent resurgent oil majors. All in all, the WEF expects to welcome some 2,700 leaders from 130 countries, including 370 public figures.

Yet the apparent return to business as usual only serves to highlight the changes that have taken place since the last full gathering of the Davos elite. The global pandemic and Russia’s invasion of Ukraine have added more friction to the already creaking globalised world that Davos epitomized.

Meanwhile, the political leaders responsible for shaping the new order are mostly staying at home. US President Joe Biden is not making the trip – unlike his predecessor. Though, a smattering of US Congress members are expected to come they are hardly well-known international figures. China’s most senior representative is Vice-Premier Liu He. British Prime Minister Rishi Sunak, grappling with a slowing economy and striking public sector workers, is also staying home.

A stroll down the Davos Promenade, the town’s main drag where countries and corporations temporarily take over storefronts, underscores the shift. Poland and Indonesia have a prominent presence, but other national delegations have quieter messages on display. Saudi Arabia has a few conspicuous banners touting NEOM, its futuristic economic zone. The United Arab Emirates is touting tolerance.

The cryptocurrency firms that were at previous gatherings are mostly muted, replaced by companies promoting technologies like the blockchain. The Medical Psychedelics House has been replaced by the India Inclusivity Lounge. Established technology companies like Workday, Salesforce, Cisco, Qualcomm and Meta Platforms dominate the street scene. Perhaps the most striking new tenant is Manchester United, the English Premier League club which is seeking a buyer.

The shift is reflective of a world that has become introspective and less joined-up. As big companies diversify supply chains, governments and regions are competing hard for business. Biden’s Inflation Reduction Act is dangling subsidies for American manufacturing, encouraging governors like J.B. Pritzker of Illinois to lure investment to their state. The WEF and its founder Klaus Schwab acknowledged some of this by renaming the conference “Cooperation in a Fragmented World”.

Still, those returning to Davos for the first time in three years may feel like the cocktail is a little less potent.

Courtesy: Reuters

United States targets Chinese and UAE firms

According to a Reuters report, the United States on Monday imposed sanctions on Chinese and other firms it said helped to sell tens of millions of dollars' in Iranian oil and petrochemical products to East Asia as it seeks to raise pressure on Tehran to curb its nuclear program.

The US Treasury and the US State Departments have imposed sanctions on a total of six companies, four based in Hong Kong, one in Singapore, and one in the United Arab Emirates (UAE) in actions that were announced in separate statements.

The Treasury accused Persian Gulf Petrochemical Industry Commercial Co. (PGPICC), one of Iran's largest petrochemical brokers, of using the firms to facilitate the sale of Iranian petroleum and petrochemical products to East Asia.

The Treasury targeted UAE-based Blue Cactus Heavy Equipment and Machinery Spare Parts Trading, which it said helped sell millions of dollars of Iranian-origin petroleum products to Hong Kong-based Triliance Petrochemical Company, which has previously been sanctioned by the United States.

It also targeted Hong Kong-based Farwell Canyon HK and Shekufei International Trading Company for facilitating such sales for onward shipment to buyers in East Asia.

The Treasury accused PGPICC of using the firms' bank accounts, along with those of Hong Kong and Malaysia-based PZNFR Trading, to collect millions of dollars in proceeds.

Separately, the State Department sanctioned Singapore-based Pioneer Ship Management for allegedly managing a vessel that carried Iranian petroleum products and Hong Kong-based Golden Warrior Shipping Company, for alleged transactions related to Iranian oil and petroleum products.

The actions freeze US-based assets and generally bar Americans from dealing with them. Others that engage in certain transactions with the targeted firms also risk being sanctioned.

The steps represent the third round of US-Iran related sanctions against Chinese firms in the last two months.

Since taking office in 2021, US President Joe Biden has been loath to sanction Chinese entities engaged in oil trade with Iran due to hopes of securing an agreement to revive the 2015 Iran nuclear deal.

Efforts to resurrect the deal - under which Iran had curbed its nuclear program in exchange for relief from US and other sanctions - have so far failed, leading Washington to look for other ways to increase pressure on Tehran.

"The United States continues to pursue the path of diplomacy to achieve a mutual return to full implementation of the Joint Comprehensive Plan of Action," the Treasury's Under Secretary for Terrorism and Financial Intelligence, Brian Nelson, said in the statement, referring to the 2015 deal by its formal name.

"Until such time as Iran is ready to return to full implementation of its commitments, we will continue to enforce sanctions on the illicit sale of Iranian petroleum and petrochemicals."

Reacting to the new sanctions, Iran's Foreign Ministry spokesperson Nasser Kanaani said in a statement that Iran will respond decisively and firmly to the White House's continuation of sanctions.

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 seeking oil payments from India in UAE dirhams

Russia is seeking payment in United Arab Emirates dirhams for oil exports to some Indian customers, three sources said and a document showed, as Moscow moves away from the US dollar to insulate itself from the effects of Western sanctions.

Russia has been hit by a slew of sanctions from the United States and its allies over its invasion of Ukraine in late February, which it terms a "special military operation".

Russian oil major Rosneft is pushing crude through trading firms including Everest Energy and Coral Energy into India, now its second biggest oil buyer after China.

Western sanctions have prompted many oil importers to shun Moscow, pushing spot prices for Russian crude to record discounts against other grades.

That provided Indian refiners, which rarely bought Russian oil due to high freight costs, an opportunity to snap up exports at hefty discounts to Brent and Middle East staples.

Moscow replaced Saudi Arabia as the second biggest oil supplier to India after Iraq for the second month in a row in June.

At least two Indian refiners have already settled some payments in dirhams, the sources said, adding more would make such payments in coming days.

The United Arab Emirates, seeking to maintain what it says is a neutral position, has not imposed sanctions on Moscow, and the payments could add to the frustration of some in the West, who privately say the UAE's position is untenable and siding with Russia.

The trading firms used by Rosneft have started asking for the dollar equivalent payment in dirhams from this month, the sources said.

Russia wants to increase its use of non-Western currencies for trade with countries such as India, its foreign minister Sergi Lavrov said in April.

The country's finance minister last month also said Moscow may start buying currencies of "friendly" countries, using such holdings to influence the exchange rate of the dollar and euro as a means of countering sharp gains in the rouble.

The Moscow currency exchange is preparing to launch trading in the Uzbek sum and the dirham.

Dubai, the Gulf's financial and business centre, has emerged as a refuge for Russian wealth.

India, also maintaining a neutral position, recognizes insurance cover by Russian companies and has offered classification to ships managed by a Dubai-based subsidiary of Moscow's top shipping group to enable trade.

India's central bank last week introduced a new mechanism for international trade settlements in rupees, which many experts see as a way to promote trade with countries that are under Western sanctions, such as Russia and Iran.