Qatar’s foreign ministry on Thursday announced the embassy for Chad was closed in retaliation for Chad’s decision to cut diplomatic ties. Qatar gave personnel 72 hours to leave the country. The foreign ministry’s statement read: “The Foreign Ministry in the State of Qatar has expressed its rejection and condemnation of the reasons contained in the statement issued by the Ministry of Foreign Affairs of the Republic of Chad concerning the closure of the Embassy of the State of Qatar in N’Djamena. The statement also said the reason of closure of the Qatar Embassy in N’Djamena is “political blackmail against the State of Qatar with the intention of joining the siege countries for very well known reasons”. On 5 June, Saudi Arabia, […]
Qatar has remained defiant throughout its unprecedented summer diplomatic crisis with Saudi Arabia and other Gulf Cooperation Council (GCC) states which have brought immense pressure to bear on the tiny gas and oil rich monarchy through a complete economic and diplomatic blockade imposed by its neighbors. However, on Thursday it unveiled a stunning geopolitical realignment when it announced the restoration of diplomatic relations with Iran in a move that is arguably its greatest act of defiance yet. The Qatari foreign ministry announced early Thursday that “the state of Qatar expressed its aspiration to strengthen bilateral relations with the Islamic Republic of Iran in all fields” and reportedly informed Iran by phone of plans to return the Qatari ambassador to Tehran for the first time since it broke relations in 2016.
The move is significant because the chief accusation leveled against Qatar by its former GCC allies, especially Saudi Arabia, is of growing too close to Iran while sponsoring and funding terrorism. For the Sunni gulf states “funding terrorism” is more often a euphemism meaning links to Iran and Shia movements in the gulf. Ironically, there is ample evidence demonstrating that both sides of the current gulf schism have in truth funded terror groups like al-Qaeda and ISIS, especially in Syria. But Qatar’s announcement sends an audacious and daring message essentially signalling that the country remains unbowed by Saudi pressure, and that the severe economic sanctions designed to bring Qatar to its knees may result in a geopolitical backfiring and new regional order as Iran stands to benefit.
Image source: Iran’s Payvand News Service
On June 5 Saudi Arabia, UAE, Bahrain, and Egypt cut ties with Qatar in a dramatic move that resulted in a near total blockade of the small country which encompassed air, land, and sea. Even commercial airline flight paths were diverted mid-air at the time, causing multiple major regional carriers to cancel future flights to Doha’s Hamad International Airport. Aggressive economic sanctions followed, including food blockages – most of which had previously been supplied by land via Saudi Arabia. While energy-rich Qatar has the highest per capita income in the world, its residents have faced a summer of empty supermarkets and long lines to get basic staples. Reports of extreme and creative ways Qataris have attempted to get around the blockade include an ongoing plan to fly thousands of dairy cows on Qatar Airways jets into the country.
Qatari companies were expelled from Saudi Arabia, as well as individuals from diplomats (who were give 48 hours to leave) to farmers. While stock prices immediately slumped and imports plunged (by 37.9 percent in June compared with May), the government’s making up the difference in rising costs through subsidies has made life bearable – and Qatar actually appears to be resilient and weathering the storm. The nation’s oil and gas sector, which accounts for more than half of the country’s GDP, is what is carrying the country through. Analysts have consistently characterized Qatar’s oil and gas as vulnerable yet largely “unaffected” throughout the crisis – this partly because exports to Japan, China, India, and South Korea account for nearly three quarters of its total exports and have remained untouched by the boycott. The UAE, though firmly on the Saudi side of the spat, relies on sourcing 30% of its energy needs from Qatar to keep the lights on, and a major gas pipeline connecting the two countries has kept pumping all summer.
Fresh financial data out today confirms that Qatar is set to at least in the near term persist through the crisis while avoiding collapse, with some sectors remaining surprisingly strong. No doubt its leaders are keenly aware of this and emboldened in their shots fired across the Saudi bow as they restore diplomatic relations with Iran. Qatar’s former adversary across the Persian Gulf has throughout the summer shipped food supplies into the blockaded country, as well as allowed Qatari flights increased use of Iranian airspace in largely symbolic acts aimed at poking the Saudis. But it’s Qatar’s shared massive natural gas field with Iran – with the South Pars Field owned by Tehran and the North Field owned by Doha – that has been the biggest stabilizing lifeline of the crisis. Though Thursday’s figures show that:
Qatar is still far from restoring its imports to normal. Imports recovered by only 6.3 percent month-on-month to 6.24 billion riyals ($1.71 billion) in July; they were 35.0 percent below their level in July 2016.
Much of the disruption appears to be to big-ticket items. Imports of aircraft parts were down 40.5 percent from a year ago at 292 million riyals in July. The diplomatic crisis has deprived Qatar Airways of two of its biggest markets, Saudi Arabia and the UAE.
But as analysts have consistently predicted:
Thursday’s trade figures suggested the sanctions are not affecting Qatar’s natural gas exports – July exports of petroleum gases and other gaseous hydrocarbons rose 7.8 percent from a year ago – and are no longer slowing other exports much.
As a result, Qatar’s trade surplus expanded 78.1 percent from a year earlier to 11.91 billion riyals in July, although it edged down 4.8 percent from the previous month.
And though prices on basic staples continue to rise (for example food and drink prices rose 4.2 percent in July from June), even this may stabilize:
Analysts think the sanctions damage should ease in coming months as new shipping routes develop. Qatar Navigation launched a direct Qatar-Turkey service this week after starting a container service to Kuwait last week; construction of a food processing and storage facility at Qatar’s Hamad Port received $440 million of bank financing this week.
The so-called “13 demands” presented by the quartet of Arab countries sanctioning Qatar on June 23 have unsurprisingly remained unfulfilled while today’s announcement further signals Qatar’s willingness to forge alternate permanent ties away from the GCC alliance which has defined much of short history as a young nation-state. The announced willingness to form fresh ties with Iran comes just days after Saudi Arabia began somewhat bizarrely and aggressively promoting an exiled Qatari royal family member and prominent businessman, Sheikh Abdullah Bin Ali Al-Thani, whose family was forced out in 1972. The Saudis would like nothing more than be in a position to hand pick their choice for the Qatari throne and reduce Qatar to a vassal state.
From the Saudi and GCC perspective, the list of pre-conditions for lifting the embargo remain in effect, and include (according to India’s English news site The Wire):
- Close down Al Jazeera television network and all its affiliates, plus other Qatar-funded news outlets
- Close a military base operated by Turkey
- Expel all citizens of Saudi Arabia, Egypt, UAE and Bahrain currently in Qatar
- Hand over all individuals wanted by those four countries for terrorism
- Stop funding any extremist entities that are designated as terrorist groups by the US
- Provide detailed information about opposition figures Qatar has funded
- Shut down diplomatic posts in Iran
- Expel members of Iran’s elite Revolutionary Guard
- Conduct trade and commerce with Iran only in conformity with US sanctions
And yet surprisingly it appears Qatar is increasingly in the geopolitical driver’s seat, having called the bluff of the more powerful GCC states led by Saudi Arabia and backed by Saudi allies like the US and even Israel. For now it appears tiny Qatar is defying the odds, and its potential to successfully navigate the current economic and diplomatic full frontal assault has huge repercussions for the entire region. As accurately predicted by a comprehensive report by Middle East scholar Mouin Rabbani produced earlier this summer:
The big winners so far are Iran, Syria, and their Lebanese ally Hizballah, who cannot but be delighted by the audible cracks in the alliance ranged against Damascus and Tehran and that may well spell the end of the GCC. Iran and Hizballah will additionally hope that Hamas has finally learned the lesson that no ally of the United States can be a true friend of the Palestinians. Turkey has also, yet again, demonstrated that in today’s Middle East it has a role to play in every crisis and that others ignore Ankara’s interests– whether in the Gulf, Syria, or Iraq–at their peril. On the flip side, there are growing noises within Riyadh and Abu Dhabi that the campaign should expand to include Turkey–which has recently been claiming that the UAE is implicated in the 2016 coup attempt against Erdogan.
Will we all look back on this moment when future historians trace the end of the GCC? Did the Saudis finally overreach in their anti-Iran fanaticism to become the authors of their own demise? The surprising emergent Iran-Qatar alliance is sure to at least be the start of a new regional order where the Saudis can no longer dictate terms no matter how many Western powers stand at their side.
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Earlier, we examined the employee costs of the truckload carriers in 2Q17. Here, we’ll go through the fuel expenses as a percentage of operating …
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Israeli authorities have begun the construction work of three new settlements in Bethlehem’s southern illegal settlement outpost of Gush Etzion, located in the south of the occupied Jerusalem, The Palestinian researcher on settlement affairs, Suhail Khaliliya, told Quds Press that the new project is part of the Israeli plans to expand the outpost, which he revealed to have been built on a land that was seized by the occupation with the aim to build thousands of new settlement units. Khaliliya added that the project’s plan includes transferring the Giv’at Asaf military outpost into the new settlement, in addition to the construction of some 6,000 new settlement housing units as part of previously approved plan. He pointed out that one of the […]
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Authored by Daisy Luther via The Organic Prepper blog,
The division in America has become so dramatic over the past year that many people can only foresee it heading one place: Civil War.
There’s a pronounced uptick in violence and protests (ofte…
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While virtually nobody expects anything market shattering, or even moving, to be released during either Janet Yellen’s or Mario Draghi’s speeches tomorrow (recall from our preview what UBS said: “Don’t expect news at Jackson Hole. Chair Yellen has told us what she wants to about normalization, for now. Financial stability matters, but it isn’t new” and as such it will be “nothing to skip lunch over“), moments ago the full agenda of the 3-day central banker, tenured economist and assorted hanger-on symposium was released, and as expected both Janet Yellen and Mario Draghi are speaking, at 10am and 3pm local ET respectively. What is strange is that while Yellen has only 30 minutes dedicated for her opening remarks, Draghi’s luncheon address is a full hour long.
Reminder of what bears look like at Jackson Hole
The full agenda of tomorrow’s key events is below. There are some additional panels held on Saturday which can be found on the Kansas City Fed’s website.
As another reminder, unlike previous years, few analysts expect anything material to be unveiled in tomorrow’s academic setting as the ECB got cold feet on unveiling tapering once the EURUSD approached 1.20.
Our full preview can be read here, and if that’s not enough, here is a cheat sheet from the WSJ on what to expect.
Talk of the Lodge
The theme of this year’s conference is “Fostering a Dynamic Global Economy”:
- Kansas City Fed President Esther George will host an opening reception Thursday evening, but the conference will kick off in earnest Friday morning.
- At 10 a.m. EDT Friday, Fed Chairwoman Janet Yellen will deliver a speech on financial stability. Then, two research papers will be presented and discussed, followed by a panel discussion on international trade. Around 3 p.m. EDT, European Central Bank President Mario Draghi will deliver a much-anticipated luncheon address.
- On Saturday, two more research papers will be presented and discussed, followed by another panel discussion.
Beyond the Agenda
The formal program will focus on serious economic questions, but a number of subplots will play out as well into the weekend:
- This is Ms. Yellen’s third Jackson Hole appearance in four years, but it could be her last as chairwoman. Her term is up in early February, and it isn’t known if President Donald Trump will reappoint her — plus, she hasn’t said if she would accept the nomination. Handicapping who might replace her could be a topic of discreet discussion during the gathering.
- Mr. Draghi’s Friday speech will be closely watched for clues about the path forward for the ECB’s quantitative-easing program, with potentially big implications for European and world markets.
- The Fed already has signaled it may begin to shrink its balance sheet as soon as September, but officials have been split over whether a rate increase should be on the agenda for later this year. In interviews on the sidelines of the conference, Fed officials are likely to drop more hints about the path forward for monetary policy.
- For the fourth year in a row, the liberal Center for Popular Democracy’s Fed Up campaign will be on hand for the Jackson Hole gathering. It organized a Thursday panel on why some economists think the Fed should consider raising its 2% annual inflation target and a Friday press conference “in which dozens of workers will rally in support of another term as chair for Janet Yellen with signs, costumes and theater,” the group said. Last year, several top Fed officials sat down with the activists.
- You can take the central bankers out of Washington, but it seems likely that events back in the capital will still be on their minds. Mr. Trump’s coming appointments to the Fed, possible changes to postcrisis regulations, the prospects for an overhaul of the tax code, the potential for unexpected shocks from trade disputes or a fiscal-policy mishap — they could all be topics of conversation in Wyoming.
It’s a star-studded attendance list for this year’s conference, at least for the world of central banking:
- Fed governors Lael Brainard and Jerome Powell are in attendance, along with many leaders from the Fed’s 12 regional banks, including New York Fed President William Dudley , Boston Fed President Eric Rosengren, Chicago Fed President Charles Evans , Cleveland Fed President Loretta Mester , Dallas Fed President Robert Kaplan , Minneapolis Fed President Neel Kashkari , San Francisco Fed President John Williams , Atlanta Fed President Raphael Bostic and, of course, Ms. George.
- In addition to Mr. Draghi, the roster includes a number of foreign central bankers, including Bank of Japan Gov. Haruhiko Kuroda , European Central Bank executive board member Benoît Coeuré , Bank of England deputy governor Ben Broadbent , Bank of Mexico Gov. Agustín Carstens , Riksbank Gov. Stefan Ingves and Bundesbank President Jens Weidmann .
- Several former Fed officials also will be in attendance, including former Fed Vice Chairmen Alan Blinder and Donald Kohn , former Kansas City Fed President Thomas Hoenig , and former Fed governors Kevin Warsh and Randall Kroszner .
- The list also includes a handful of current and former government officials: Andrew Olmem , special assistant to Mr. Trump on financial policy on the National Economic Council; David Malpass , the Treasury undersecretary for international affairs; Keith Hall , director of the Congressional Budget Office; Jason Furman , former chairman of the Council of Economic Advisers under President Barack Obama; and Glenn Hubbard , who was chairman of the Council of Economic Advisers under President George W. Bush.
- And of course, the conference is full of high-profile academics, such as Harvard University’s Martin Feldstein (a former CEA chairman under President Ronald Reagan), Carmen Reinhart and Kenneth Rogoff ; Stanford economist John Taylor ; Alan Auerbach of the University of California-Berkeley; and Kristin Forbes of the Massachusetts Institute of Technology. –A number of those people — including Messrs. Hubbard, Taylor and Warsh – have been in the mix as Fed watchers try to predict who might replace Ms. Yellen if she doesn’t serve a second term at the Fed’s helm. National Economic Council Director Gary Cohn , who Mr. Trump has said is a top candidate to lead the Fed, won’t be in the audience.
- The attendance list has some notable absences: Vice Chairman Stanley Fischer isn’t among the participants this year, nor is Philadelphia Fed President Patrick Harker or St. Louis Fed President James Bullard .
Jackson Hole, 2016
Oil prices were volatile early on Friday as the market tried to gauge the potential impact of Hurricane Harvey.
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For the past couple of weeks, Democrats and the mainstream media teamed up to carefully advance a new narrative intended to shift the blame for Obamacare’s implosion onto the Trump administration. Their argument was a relatively simple one: the m…
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Earlier this month, ‘Project Baltimore’, an investigative reporting initiative, which was launched in March 2017, by Sinclair Broadcast Group Inc. uncovered a Baltimore City school with zero students profi…
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By Chris at www.CapitalistExploits.at
Last week, China bypassed the World Trade Organisation agreements and using an old law officially launched a probe into Americas intellectual property practices.
China’s foreign affairs minister, talking of America, stated that:
“We’ve come to the conclusion that they’re in an economic war and they’re crushing us.”
Reiterating this stance, a Chinese Communist Party spokesman went on to say:
“The economic war with America is everything and we have to be maniacally focused on that.”
“If we continue to lose it, we’re five years away, I think, 10 years at the most, of hitting an inflection point from which we’ll never be able to recover.”
China’s president Xi Jinping explained things further:
“It’s my duty and responsibility to protect the Chinese workers’ technology and industry from unfair and abusive actions.”
“We will stand up to any country that unlawfully forces Chinese companies to transfer their valuable technology as a condition of market access. We will combat the counterfeiting and piracy that destroys Chinese jobs.”
Actually, none of that happened. At least not that way around.
Think about it for a minute. Put the shoe on the other foot and it seems outrageous… because, well, it is.
Ok now I’ve just three things to say about this.
1. Whenever a government – who we should remind ourselves is not a producer but rather a consumer of resources – states that they are having “their” intellectual property stolen, this should make the private individuals, corporations stakeholders, and employees of those companies stand up and say: “Whoah! Hang on a second… You don’t own that. I do. What the hell?”
It’s a strange situation where the guy who got a C average in his high school finals and never made it into university but actually runs a business dealing with China can see it makes no sense but a politician with a degree from Oxford cannot.
When some Chinese company copies the iPhone, it’s not Washington’s IP they’re stealing. It’s Apple’s. Nobody wants Washington’s IP because raw sewerage isn’t valuable. That Washington lays claim to the IP of all US businesses should scare the isht out of any US-based company.
Which brings me to my second point…
2. Imagine you’re a US company with most of your value in your business being in IP. Now, imagine further that Washington brings about a trade war. What happens next?
Well, your product has just been cut off from THE world’s fastest growing consumer market in the world, and the decision as to whether or not you would participate in that market was just taken away from you whether you like it or not.
That’s all dandy if you’re 4. Parents need to make those calls for you until you’re emancipated. But you’re a grown adult entirely capable of making that judgement call all by yourself.
A US-led trade war vs. China would be disastrous for tech firms targeting the world’s fastest growing consumer market.
A couple of reminders are worth looking at…
When I was explaining how China is increasing political global power, I mentioned that China is:
- Asia’s largest trading partner
- US largest trading partner
- Germany’s largest trading partner
- Australia’s largest trading partner
- Russia’s second largest trading partner (after Germany)
- Africa’s largest trading partner
- South America’s largest trading partner
So you see the trend is most certainly established, and this trend is like a supertanker – difficult to turn around. It’s certainly a lot smarter to get on the right side of that trend than to fight it… which is impossible.
The other thing with IP is precisely what I was rabbiting on about in when discussing the coming financial disruption. You see, governments, and the nation state in particular, survives by commandeering assets. Don’t believe me? Stop paying your property tax and find out who exactly owns your house.
This sort of control is kinda easy when the assets are Billy’s steel factory but when it’s something like Vitalik Buterin’s Ethereum platform or Google or Baidu… or any number of the thousands of companies out there where IP forms the largest value component, then things get a wee bit trickier for the nation states.
Moving IP is really very easy. It involves cancelling your gym membership, downloading software onto an encrypted drive in the cloud, and booking a one-way ticket to someplace friendlier.
3. And the third thing… Ok, I lied. I’ve only 2 things to say, though I do think there’s a single reason for all this.
The Real Reason for This Stupidity
While it could backfire more spectacularly than a 50-year old Lada, it’s probably this:
Washington’s strategy to dealing with North Korea has been attempting to get Xi to do the dirty work on that snotty kid next door who’s making them look impotent. It’s silly as I mentioned last week when I explained how brain dead sanctions on young Kim really are, which is all the more reason why politicians will pursue it.
Let me make a suggestion, because let’s face it, I’m not here to do anything other than figure this stuff out and see where and why capital will flow in any particular direction.
Governments, most of them being more broke than Borris Becker after Forbes & Manhattan screwed him over, are coming for our assets. The toughest assets to actually seize are those that live in the “digital world”… which is to say their value is more often than not in intellectual property and as such they can “live” pretty much anywhere.
The Best Investment Tip You’ll Read All Year
If you’ve a business built on IP, then may I suggest that looking NOW, ahead of trouble, for the best domicile could well provide you with the best ROI you’ll ever get.
And I won’t charge you a cent for the advice, though you can send donations to Bitcoin Address: 1LNjVKrv8pT1n5SZxkhNpPN9JPWxMwnHmm
Seriously, though remember Zimbabwe, which I spoke about recently? Well, after Mugabe seized all the fixed assets, they found that without the intellect available (it’d fled) those assets became worthless. And while that’s the case the intellect has moved on. It now provides value in other countries, countries that are more receptive to value.
Cast your vote here and also see what others think holds more value
“If protection of intellectual property begins to disappear, creative companies will disappear or never get started.” — Steve Jobs
Liked this article? Then you’ll probably like my other missives on
this topic as well. Go here to access them (free, of course).
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