On October 7, Hamas attacked Israel in a big way, killing 1,300 people. In response, Israel dropped bombs on the Gaza Strip, killing at least 2,215 people, in preparation for a possible ground invasion of the area.

“Saudi Arabia has decided to stop talking about possible normalization and has told US officials,” an AFP source who was familiar with the talks said.

The source talked on the same day that US Secretary of State Antony Blinken met with Prince Faisal bin Farhan of Saudi Arabia in Riyadh. This was the last stop on Blinken’s six-nation tour of the area.

After the meeting, the Saudi foreign ministry asked for “an immediate ceasefire in Gaza and its surroundings” and for aid to be sent right away to those in need.

The Gulf kingdom is home to some of the holiest sites in Islam, but it has never recognized Israel. It also did not sign the Abraham Accords, which were brokered by the US and led to official ties between Israel and its Gulf neighbors, Bahrain, the United Arab Emirates, and Morocco.

In the past few months, US President Joe Biden’s government has been putting a lot of pressure on Saudi Arabia to do the same thing.

‘No way’ to normalise

As de facto leader, Crown Prince Mohammed bin Salman, son of the ailing King Salman, set the terms for normalization. These included security promises from Washington and help with building a civilian nuclear program.

Last month, Prince Mohammed told Fox News that “every day we get closer” to a deal. He also said that the Palestinian problem was “very important” for Riyadh.

“That part needs to be fixed. “We need to make things easier for the Palestinians,” he said.

Many experts didn’t think the deal would work, even before the war started.

“Normalisation between the kingdom and Israel is an American initiative and project that the kingdom has welcomed in case the US could deliver an agreement addressing the conflict between the Israelis and Palestinians — one that the Palestinians would accept,” stated Saudi expert Hesham Alghannam.

“In reality, Israel was not really ready to reach an agreement with the Palestinians that would give them the minimum of their needs.”

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The head of the International Crisis Group’s Middle East office, Joost Hiltermann, said, “After seeing what’s happening in Gaza, there is no way that any Arab country can seriously talk to Israel about normalizing relations.”

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Ausaf Sayeed, external affairs secretary (consular, passport, visa, and overseas Indian affairs), told reporters during the official visit of Saudi Arabia’s Crown Prince and Prime Minister Mohammed bin Salman that talks were at the “discussion stage.”

Discussions between the two sides have begun. Proposals and concept notes have been traded, however at this point it is still merely at the discussion stage. Sayeed remarked, “The Saudi side is aware that we have worked out similar arrangements with other countries in the region.”

Commenting on the meeting between Prime Minister Narendra Modi and Mohammed bin Salman, he said, “The two leaders expressed their satisfaction at the volume of trade both countries have achieved, with India being the second-largest trading partner of Saudi Arabia and Saudi being the fourth-largest trading partner of India.”

In 2022-23, bilateral trade between India and Saudi Arabia totaled $52.76 billion, with exports totaling $10.73 billion and imports totaling $42.04 billion. The result was a trade deficit of $31.31 billion in the previous fiscal year between India and Saudi Arabia.

Last year, Indian authorities actively promoted the use of the rupee abroad, and in July 2022, the RBI announced plans to establish a mechanism to settle global commerce in rupees. Oil from sanctioned Russia at a discount was apparently an early implementation of this strategy when Russia invaded Ukraine in February 2022. However, the mechanism has not gained traction, and there are now rumors that negotiations between India and Russia to settle their bilateral commerce in rupees have been suspended since Russia had amassed billions of rupees in Indian banks that it could not use.

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In the past few months, India has inked a number of bilateral agreements to settle commerce in local currencies. Most recently, in the middle of July, an MoU was signed between India and the United Arab Emirates to establish a Local Currency Settlement System. It has also been discussed with Indonesia that cross-border transactions be settled in local currencies. To settle bilateral trade in local currencies, India may soon form alliances with Brazil, Argentina, South Africa, Senegal, and Tanzania, as reported exclusively by Moneycontrol in August.

After talking about how to settle trade in local currencies, India and Saudi Arabia agreed to speed up talks on an India-Gulf Cooperation Council free trade agreement and increase cooperation in the financial technology sector, according to External Affairs Secretary Sayeed.

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Additionally, the two nations have determined a number of potential areas of cooperation. Some examples are the energy sector, the defense sector, the security sector, the education sector, the transportation sector, the healthcare sector, the tourism sector, the cultural sector, the space sector, and the semiconductor industry.

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China’s involvement in the issue was highlighted in an article published by the Global Times, a Chinese government-affiliated news outlet. The publication urged the international community to refocus on the Palestinian issue, emphasizing the collective responsibility to assist the Middle East in achieving peace and stability.

Seven persons were injured in a recent Palestinian suicide attack in Tel Aviv, carried out by a 20-year-old Palestinian, which highlights the urgency of mediation. Hamas, a Palestinian political organization, described the assault as a “first response to Israeli crimes against Jenin residents.” This incident and a succession of events that have escalated have increased the need for external intervention to de-escalate tensions.

Significantly, China’s attempt to mediate follows Israel’s extensive operation in Jenin involving drones and helicopters, which resulted in the largest assault in the northern West Bank in more than two decades.

The operation resulted in the death of at least ten Palestinians, the injury of eighty others, and the flight of thousands from the affected refugee camp. In response, Palestine severed all contacts, meetings, and security coordination with the Israeli government, vehemently condemning its brutal West Bank raids.

During a June 27 meeting of the UN Security Council, the Permanent Representative of China to the United Nations, Zhang Jun, emphasized the significance of breaking the cycle of violence between Israelis and Palestinians.

He emphasized the importance of upholding international law, halting unilateral actions that alter the status quo, honoring political commitments, and advancing the two-state solution. Zhang Jun’s comments demonstrate China’s desire to play a significant role as a regional arbitrator.

The expanding role of China in mediating conflicts is not limited to the Palestine-Israel conflict. The recent success in facilitating the resumption of diplomatic relations between Saudi Arabia and Iran has emboldened China to pursue additional diplomatic efforts as a mediator in international disputes involving Gulf states and beyond.

In June, President Mahmoud Abbas of the State of Palestine visited China, where President Xi Jinping proposed a three-point settlement for the Palestinian issue. President Xi emphasized the urgency of addressing the unresolved issue, which has caused the Palestinian people significant distress for decades.

The visit of Israeli Prime Minister Benjamin Netanyahu to China, scheduled for later this month, is anticipated by Chinese leaders. Although the trip has not yet been officially confirmed, experts and academics believe that Netanyahu’s visit could be instrumental in advancing a peaceful resolution to the Palestine-Israel conflict.

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According to some experts, Netanyahu’s decision to engage with China reflects Israel’s desire to remind the United States that other diplomatic options exist.

China seeks to facilitate the resumption of diplomatic relations between Saudi Arabia and Israel in addition to mediating the Palestinian-Israeli conflict.

Western nations, and the United States in particular, have yet to determine how they will respond to China’s newfound willingness to mediate in complex international issues.

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“The Government of the Republic of Maldives welcomes the Joint Trilateral Statement by the Kingdom of Saudi Arabia, the Islamic Republic of Iran, and the People’s Republic of China announcing that an agreement has been reached between the Kingdom of Saudi Arabia and the Islamic Republic of Iran, including an agreement to resume diplomatic relations between the two countries and reopen their embassies and missions, as well as the affirmation of respect for the sovereignty of the Republic of Maldives.” In light of these positive and welcome developments, the Government of Maldives has decided to reestablish diplomatic relations with the Islamic Republic of Iran, according to a government statement.

The Maldives severed political ties with Iran on May 17, 2016, while former President Abdullah Yameen was in office.

After China-led mediation talks, Saudi Arabia and Iran reestablished diplomatic ties. The two nations reaffirmed their respect for state sovereignty and their policy of non-interference in the internal affairs of other nations.

Included in the agreement is the reopening of their embassies and missions. This significant development follows years of tensions between the two countries, including an attack attributed to Tehran on the heart of the kingdom’s oil production that was devastating.

In accordance with the trilateral agreement under which China would host and sponsor talks between the Kingdom of Saudi Arabia and the Islamic Republic of Iran, “due to their shared desire to resolve their differences through dialogue and diplomacy, and in light of their brotherly ties.”

The three nations expressed their eagerness to make every effort to advance regional and global peace and security.

The Saudi and Iranian delegations expressed their appreciation and gratitude to Iraq and Oman for hosting dialogue rounds between the two countries in 2021 and 2022.

The two parties also expressed their appreciation and gratitude to the leadership and government of the People’s Republic of China for hosting and sponsoring the negotiations, as well as for the efforts it made to ensure their success.

It is pertinent to note that ties between Saudi Arabia and Iran were severed in 2016 following the storming of the Saudi embassy in Tehran during a dispute between the two nations over the execution of a Shi’ite Muslim cleric by Riyadh.

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Iran, the leading Shi’ite Muslim state in the Middle East, and Saudi Arabia, the region’s largest oil exporter and Sunni Muslim power, have supported opposing sides in proxy wars in Yemen, Syria, and elsewhere.

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Despite ongoing talks between Islamabad and the International Monetary Fund (IMF) to restart the USD 6 billion rescue package from the IMF, Pakistan is on the edge of bankruptcy as Pakistan’s economic crisis is facing a dismal future with no immediate bright outlook.

As to what appears to be the nation’s closest encounter with a nightmare that has come true, all the ruling parties in Pakistan discover themselves mentally and financially bankrupt as Pakistan’s economy collapses.

Since the April transition of power, the parliament has continued to malfunction, parliamentary sessions were being dissolved, terrorism showed its ugly face once more, and the political unrest has worsened with each new day, harming the economy.

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Although the State Bank of Pakistan’s new “new me” personality, the numbers speak for themselves. Under Imran Khan’s administration, Pakistan’s overall obligations and debts have surpassed PKR 50.5 trillion, representing a rise of almost PKR 20 trillion. According to SBP data, the deficit in current accounts has risen to 4.7% of GDP, far higher than the intended range of 2-3% for 2021.

News About Pakistan Economy

The State Bank’s foreign exchange holdings fluctuate from crisis to crisis but have recently stabilized a little thanks to a $3 billion loan from Saudi Arabia as part of a $4.3 billion package of aid. It was anticipated that this would boost Pakistan’s exchange rate. Not at all. The rupee continued to fall against the dollar, reaching 179, suggesting severe economic conditions.

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The State Bank puts the burden on budgetary allocations to high debt servicing costs and food imports, particularly vegetables, wheat, and sugar. The high cost of cotton imports to support Pakistan’s manufacturing sector has also depleted foreign exchange reserves. Earlier, Pakistan had agreed to purchase all of these items from India due to pressure from business people. Still, the plan failed as a result of political pressure, and this automatically led to Pakistan’s economic crisis.

Syed Shabbar Zaidi, a former chairman of the FBR (federal board of revenue), declared that Pakistan would never be able to pay its debts. In a lengthy Twitter chat, he claimed that “bankruptcy” is a situation where loans cannot be repaid from expected earnings. That is a logical assertion that is difficult to challenge.

Saudi Arabia To Rescue

As the nation waits for the ninth assessment of a $7 billion IMF (International monetary fund)  rescue package, Pakistan is expected to obtain a multi-billion monetary support deal from an old ally Saudi Arabia.

According to the two representatives of the finance ministry, the Saudi deal would include oil on future payments and deposits to increase the nation’s foreign reserves.

Saudi Arabia weighs boosting Pakistan investment to $10 bln

Ishaq Dar, the finance minister, expressed previous optimism about starting discussions with Saudi Arabia early.

Pakistan’s economy is experiencing a balance of payments crisis as the current account deficit increased and central bank reserves dropped to $6.7 billion, just enough to cover one month’s worth of imports.

The backing of Saudi Arabia may give Pakistan more negotiation leverage when attempting to begin talks with the International Monetary Fund over a stalled bailout. The IMF’s conditions for an agreement, which include boosting power and fuel prices as well as taxes, have yet to be accepted by Islamabad up to this point.

The country’s foreign exchange reserves are rapidly depleting, and financial markets expect the IMF program to be restarted within the next few days.

Bankrupt #Pakistan goes powerless!
Country shuts malls, markets, wedding halls to save energy as it grapples with economic crisis. Watch this report #IndiaFirst | @ShivAroor pic.twitter.com/E0SzoO25PL

— IndiaToday (@IndiaToday) January 4, 2023

Ways To Preserve Money And Sources

During a press conference with other cabinet members, Pakistan’s defense minister Khawaja Asif announced that the energy conservation plan “is being enforced immediately.”

“The country is enduring a trying time.” He even said that The plan calls for all government facilities and workplaces to use the least amount of energy possible and commits to developing a procedure allowing personnel to work remotely over ten days. At the current rate, the country cannot use electricity.

There were no lights on during the most recent cabinet meeting. He led by example by mentioning that the meeting occurred in the open.

Pakistan Economy 2025

The Planning Commission has given Prime Minister Imran Khan a general overview of the proposed economic growth strategy. Next month, the draught strategy will be presented to the National Economic Council (NEC) for its preliminary approval. The PTI government’s growth strategy was completed around the close of its fourth year in office and will be implemented beginning with the start of the following fiscal year, which will be Imran Khan’s final year in office.

By concentrating on trade links with China and industrial areas with a competitive advantage, the plan aims to achieve sustained growth.

The ultimate goal is to increase per capita income from its current $1,638 to over $2,100 while maintaining an average economic growth rate of 5.9% for 2022 to 25.

Conclusion

Pakistan could collapse within a year or so, according to economists. According to them, a debt restructuring that includes partial debt forgiveness and rescheduling—while technically still considered a default—would offer a more orderly solution to the debt dilemma than the chaos that resulted from Sri Lanka’s default last year.

Better news came from a fundraiser held on Monday in Geneva to aid Pakistan’s recovery from floods the previous summer. According to a tally released by Pakistan, trade blocs and countries like the European Union, China, and the United States, as well as multilateral lenders like the Islamic Development Bank, have offered about $9 billion to assist in the rebuilding. The majority of the funds came in the form of recent multilateral agency loans.

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This year, India will no longer be the major economy with the fastest growth rate. This is because growth has slowed due to less demand at home and abroad.

The first official estimate for the fiscal year that ends in March says that the gross domestic product will grow by 7%. This estimate was released by the Statistics Ministry on Friday. This is different from what the Reserve Bank of India and the median estimate of economists in a Bloomberg poll said would happen.

This follows a rate of growth of 8.7% the year before. It will be second only to Saudi Arabia, which is expected to grow by 7.6%, thanks to gains from a rise in energy prices.

The Indian government uses the advance estimate to decide how to spend money in the federal budget that will be released on February 1. This will be Prime Minister Narendra Modi’s last full-year spending plan before elections in 2024.

Aditi Nayar, an economist at ICRA Ltd. in New Delhi, said, “The main numbers are about what we thought they would be.” She also said that strong, but mixed, domestic consumption should be able to ease some of the pain caused by weak exports.

India’s current fiscal year got off to a good start, and people hope that pent-up demand will help Asia’s third-largest economy get better. But the optimism didn’t last long because central banks tightened monetary policy in a way that had never been done before to stop high inflation. This is pushing many developed economies toward recession and slowing growth in others.

So far this fiscal year, the Reserve Bank of India has raised its benchmark rate by 225 basis points, but it’s not done tightening. Most economists think that the central bank will raise interest rates by another quarter point at its next policy review on February 8. Core inflation has stayed steady, so this is what most economists expect.

The #data indicates that despite the geopolitical uncertainty and fear of a #globalgrowth slowdown, the Indian #economy has shown resilience. In fact, the 2QFY23 GDP growth print remains next only to Saudi Arabia. pic.twitter.com/tJAqrCO84a

— International Journal of Banking Economics&Finance (@journal_banking) December 6, 2022

Gross value-added, which is what is left after taxes and subsidies are taken out, is expected to grow by 6.7%. The output of manufacturing is expected to go up 1.6%, the output of mining is expected to go up 2.4%, and the output of agriculture is expected to go up 3.5%.

Gross fixed capital formation, which is a proxy for investment, is expected to go up 11.5%, while government spending is expected to go up 3.1%. 7.68% growth in private consumption is expected.

Sunil Sinha, an economist at India Ratings and Research Pvt., a local branch of Fitch Ratings Ltd., said that a healthy growth in gross fixed capital formation shows that the government is still putting a lot of effort into capital spending and is giving the ongoing recovery the help it needs. But for the Indian economy to grow and get back on its feet in a sustainable way, he said, the private corporate sector capex must come back to life.

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