27/2:
We are chasing a US reaction now but this is escalation but not unexpected.
Pakistan-India: Pakistan ‘shoots down two Indian jets’ over Kashmir http://www.bbc.co.uk/news/world-asia-47383634
26/2:
Khan’s reaction in the new context is critical to the next phase of his US relationship:
Mohammad Javad Zarif: Iran’s foreign minister announces resignation http://www.bbc.co.uk/news/world-middle-east-47362962
Mohammad Javad Zarif: Iran’s foreign minister announces resignation http://www.bbc.co.uk/news/world-middle-east-47362962
A sign the hardliners are running out of patience.
22/2:
That’s what was reported on PBS.
This out of Jerusalem:
https://m.jpost.com/Middle-East/Iran-navy-conducts-massive-drill-in-Persian-Gulf-Sea-of-Oman-581452
The conflicting reports are driving a wedge in Western foreign policy.
“Any adventurism on the part of India to threaten the sovereignty of Pakistan will be met with assured retaliation,” he said. (Khan)
After the attack in Pulwama on Thursday, India has renewed its diplomatic efforts to make the case against what it says is Pakistan’s state support for terrorism.
This builds upon many years of India condemning Pakistan in diplomatic pronouncements made with friendly countries. In India’s joint statements with the US and others, they now name specific Pakistan-based terrorist groups such as JeM, Lashkar-e-Taiba and D-Company, a criminal syndicate led by the Pakistan-based Indian fugitive Dawood Ibrahim.
Pulwama attack: What are Modi’s options? http://www.bbc.co.uk/news/world-asia-india-47278145
Pulwama attack: Pakistan warns India against military action http://www.bbc.co.uk/news/world-asia-india-47290107
Pakistan warns India against attack http://www.bbc.co.uk/news/world-asia-india-47290107
Saudi Arabia signs $20bn in deals with Pakistan http://www.bbc.co.uk/news/business-47274672
Cash-strapped Pakistan rolls out red carpet for Saudis http://www.bbc.co.uk/news/world-asia-47255560
300 Land cruisers in the middle of a dangerous intersection:
Pakistan, India, USA, Yemen, Israel and Saudi Arabia.
Update after last night’s call:
https://www.nationalreview.com/corner/mike-pompeo-meets-with-top-european-diplomat-after-pence-slams-eu-approach-to-iran/
The EU and the U.K. don’t need this right now. As US foreign policy making processes become more fractured they do not need added pressure on NATO (yes, with Brexit) on the way.
Let’s take this slowly and from the top.
I am using the Jensen report, various cited news sources and foreignassistance.gov as well as the Factbook if I have to. Although everyone should be clear by now that both Iran and Pakistan have little material impact on Oil prices or on OPEC (outside of regional security).
As expected India have given Khan more to explain on Monday-
Pulwama attack: India will ‘completely isolate’ Pakistan http://www.bbc.co.uk/news/world-asia-india-47249133
The summit in Warsaw, including background and Pompeo versus Pence views was going to be a long read for this weekend as any and all participants in Middle Eastern economies and IMF based decisions asked for something before 25/2 meeting in Doha.
This week’s events made me start the piece early and I’m publishing now because there is too much for 1 summary.
Some background:
US foreign aid (now foreign assistance) included Pakistan as 1 of its main recipients (as of 2015). Before the Khan government came to power they received c. $933 million for a number of projects: IE
Non proliferation, anti-terrorism, de-mining and related projects. Specific anti narcotics programmes (mostly paying farmers not to grow poppy for the Taliban). The Air Force bases and Kashmir support projects were not included as they come out of the DOD budgets. Well, that much made Pakistan the 5th highest recipient and also meant they cooperated with the UN on non-proliferation. Anyone who was around for WMDs will remember the debate as to whether Pakistan knew Valerie Plame’s identity before the disinformation campaign broke out of Chad. Yes the same Chad I highlighted as an increased risk in your January Africa briefing.
Since Khan came to power he has found the Trump administration as not so generous. The claim has been for some time that The Obama administration let Pakistan off the hook too often as not only were they responsible for tribal intelligence dissemination and collection but also for patrolling the more difficult regions (Urqett for example) for Taliban and any other anti Revolutionary Guard gangs.
So Trump reduced the foreign aid by approximately $600 million. Current 2019 entitlement sits at c. $360 million.
Well that is not enough for Khan so he has been trying to get his economic stimulus package off the ground another way. After the Egypt deal in 2016 (Deutsche) he expected to be able to use his foreign assistance payments as loan guarantees.
That brings us to the various articles below. He has met with Lagarde (IMF chief) and is clearly doing so again in Doha AFTER he meets with a US envoy on Monday the 18th of February.
That is why I’m publishing this rough draft now.
Today’s tragedy in Kashmir aside (40 killed) along with yesterday’s attack against the Iranian Revolutionary guard (27 killed) means increased risk in 2 sectors: nuclear and foreign assistance.
I will let the dust settle from Warsaw for at least 1 more news cycle before I digest it but what is critical is the motivation for Khan’s movements.
The $400 million Iran deal during the Obama administration was to circumvent sanctions against Iran by providing them foreign assistance through another channel. The hard liners in Qom were not interested (Iran with nuclear capability protects them against an Israel with nuclear capability) but the reformers and diplomatic services in Tehran were. They realised that the money was a step closer to loosening the sanctions that stop them from real economic reform. Oil is traded in dollars for a reason. The sanctions specifically stopped any and all nations and corporations from dealing with Iran in US dollars.
Putin recently invested c. $50 billion but that was in Rubles and not in cash.
A reminder why:
Crude oil – production
4.068 million bbl/day (2016 est.)
country rank: 5
Crude oil – exports
1.342 million bbl/day (2014 est.)
country rank: 12
Crude oil – imports
33,710 bbl/day (2014 est.)
country rank: 59
Crude oil – proved reserves
158.4 billion bbl (1 January 2017 est.)
country rank: 4
Refined petroleum products – production
1.801 million bbl/day (2014 est.)
country rank: 12
Refined petroleum products – consumption
1.922 million bbl/day (2015 est.)
country rank: 13
Refined petroleum products – exports
272,600 bbl/day (2014 est.)
country rank: 29
Refined petroleum products – imports
47,750 bbl/day (2014 est.)
country rank: 85
Natural gas – production
184.8 billion cu m (2015 est.)
country rank: 3
Natural gas – consumption
186 billion cu m (2015 est.)
country rank: 5
Natural gas – exports
8.38 billion cu m (2015 est.)
country rank: 25
Natural gas – imports
9.55 billion cu m (2015 est.)
country rank: 28
Natural gas – proved reserves
33.5 trillion cu m (1 January 2017 est.)
country rank: 2
Iran would challenge the US as a producer. And clearly hold OPEC over a barrel. I love that joke.
Again for context:
The US numbers:
Crude oil – production
8.853 million bbl/day (2016 est.)
country rank: 3
Crude oil – exports
590,900 bbl/day (2016 est.)
country rank: 23
Crude oil – imports
7.85 million bbl/day (2016 est.)
country rank: 1
Crude oil – proved reserves
36.52 billion bbl (1 January 2017 est.)
country rank: 11
Refined petroleum products – production
20.08 million bbl/day (2016 est.)
country rank: 1
Refined petroleum products – consumption
19.69 million bbl/day (2015 est.)
country rank: 1
Refined petroleum products – exports
4.67 million bbl/day (2016 est.)
country rank: 1
Refined petroleum products – imports
2.205 million bbl/day (2016 est.)
country rank: 3
Natural gas – production
766.2 billion cu m (2015 est.)
country rank: 1
Natural gas – consumption
773.2 billion cu m (2015 est.)
country rank: 1
Natural gas – exports
50.52 billion cu m (2015 est.)
country rank: 7
Natural gas – imports
76.96 billion cu m (2015 est.)
country rank: 4
Natural gas – proved reserves
8.714 trillion cu m (1 January 2016 est.)
The Saudi numbers:
Crude oil – production
10.46 million bbl/day (2016 est.)
country rank: 2
Crude oil – exports
7.273 million bbl/day (2014 est.)
country rank: 1
Crude oil – imports
0 bbl/day (2014 est.)
country rank: 184
Crude oil – proved reserves
266.5 billion bbl (1 January 2017 est.)
country rank: 2
Refined petroleum products – production
2.221 million bbl/day (2014 est.)
country rank: 9
Refined petroleum products – consumption
3.237 million bbl/day (2015 est.)
country rank: 7
Refined petroleum products – exports
1.621 million bbl/day (2014 est.)
country rank: 6
Refined petroleum products – imports
486,900 bbl/day (2014 est.)
country rank: 18
Natural gas – production
102.3 billion cu m (2015 est.)
country rank: 9
Natural gas – consumption
102.3 billion cu m (2015 est.)
country rank: 8
Natural gas – exports
0 cu m (2014 est.)
country rank: 173
Natural gas – imports
0 cu m (2014 est.)
country rank: 181
Natural gas – proved reserves
8.602 trillion cu m (1 January 2017 est.)
country rank: 5
So yes it is about Gazprom and Belarus and The Ukraine and Crimea (we do not have time) but it also about a safe (from Iranian nuclear weapons) US being self sufficient which has always been considered the number 1 way to increase US National Sexurity. The largest proponent of that : current National Security Adviser John Bolton who agrees with continued sanctions against Iran and no new nuclear deal. He and Pence agree but Pompeo does not.
So we have another emerging risk scenario where increased chatter, media and speculation will increase interest and velocity and volatility in assets, commodities and portfolios.
More complexity. Don’t forget though. Trump’s choice for World Bank chief and the IMF (Where Lagarde goes next is a big question) makes it easy to see why Pakistan are moving in so many directions at once and the Rebels have started their terror campaigns again.
All sources below.
https://nation.com.pk/10-Feb-2019/imran-to-meet-imf-chief-in-dubai-today
https://nation.com.pk/13-Feb-2019/afghan-taliban-to-meet-imran-khan-us-envoy-on-feb-18
Iran
Iran suicide bombing ‘kills 27 Revolutionary Guards’ http://www.bbc.co.uk/news/world-middle-east-47231959
Warsaw summit: Why Iran is the elephant in the room http://www.bbc.co.uk/news/world-middle-east-47214083
Al-Jazeera:
US-led Middle East conference in Warsaw: All you need to know
Widely perceived as a US attempt to isolate Iran, Arab and European delegates will gather alongside Israel’s Netanyahu.
by Jan Smolenski & Virginia Pietromarchi
13 Feb 2019 GMT+3
Warsaw, Poland – A United States-led two-day conference on “peace and security” in the Middle East started on Wednesday – a gathering denounced by uninvited Iran as “dead on arrival”.
Slate:
Coalition of the Unwilling
The U.S., not Iran, is the country that looks isolated and marginalized at this week’s conference in Warsaw.
https://www.google.co.uk/amp/s/slate.com/news-and-politics/2019/02/trump-warsaw-conference-iran-pence-giuliani-pompeo.amp
Iran warns neighbours after bombing kills Revolutionary Guards http://www.bbc.co.uk/news/world-middle-east-47238711
Happy hunting.
1 more reason Bolton made such hawkish comments this week:
Ex-US Air Force officer Monica Witt charged with spying for Iran http://www.bbc.co.uk/news/world-us-canada-47231777
Finally:
As a side note:
That is Europe in turmoil (Italy and Spain not withstanding) as they see the elections in the horizon.
That is the UK. More on that tomorrow as it was a big night for May but also a tough day for her Transport minister. In fact it has been a bad week for British political risks again because both parties are looking at rumours of rebellions and the £ has traded below 1.28 as of this writing (an early £ update is ready for tomorrow).
That is the US under a National Emergency as of tonight.
That is the Middle East in even more disarray after Warsaw and the above. Loss of lives not or gotten.
Africa: ongoing turmoil in Zimbabwe and Chad as well as the Nigerian elections where neither party has the answer to eradicating poverty for the next generation or reconciling the oil anomaly. Nigeria briefing is due Monday.
Weather is also a factor this week. Storms in both South Africa and California (Pineapple Expeess) mean both maritime premiums and forecasts are being recalculated and commodity markets (including dark markets: non exchange trade commodities like avocados) are in play.
Russia, Israel and China are eerily quiet. Netanyahu was in Warsaw but that made 1 analyst wonder where he is spending the weekend.
experimental 