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A crisis is brewing in the Middle East and Crown Prince Mohammed bin Salman is at its centre

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[vc_row][vc_column][vc_column_text]By Seema Guha

Is Saudi Arabia about to implode? Can ambitious Crown Prince Mohammed bin Salman’s audacious plans that have shaken up Saudi Arabia’s staid ruling family succeed? In the last few weeks, the House of Saud, which had for decades ruled by consensus, with one old monarch succeeded by an ageing brother, now suddenly open up to a new line when the baton is being handed over from father to son? The jury is still out on that.

But in recent weeks King Salman bin Abdulaziz al Saud Salman’s favourite son has proceeded with breath-neck speed to bring in sweeping changes in the oil rich kingdom. In the name of an anti-corruption drive, he has arrested eleven princes as well as scores of senior officials.

Prince Miteb, son of the late King Abdullah, and commander of the powerful National Guards, Saudi Arabia’s most prominent and outspoken businessman Prince Alwaled bin Talal, are all in the confines of a luxury hotel on charges of corruption. The Crown Prince is   taking down all possible rivals within the family.

Around the same time as these arrests, a helicopter crash killed Prince Mansour bin Muqrin, deputy governor of Asir province and a number of his officials. Clan and tribal loyalities run deep in the country and it is not yet clear if these large scale arrests and removal of four sitting ministers on charges of corruption would be taken lightly.

The 32-year old crown Prince, who was not in the limelight till his father became King, now yields enormous power. He is the defence minister and is in charge of major economic reforms, aimed at changing the kingdom’s reliance on oil and diversifying the economy. An ambitious plan Vision 2030 was unveiled by the Crown Prince recently. He is said to have worked out the vision with the help of top Western managers hired from across the world with huge salaries. He is also keen to list the state owned oil giant Aramco in the stock exchange.

By removing the commander of the National Guards, and placing one of his loyalists as chief, the Prince has indirectly also bought the elite force to report to him. He is the chairman too of the newly formed anti-corruption committee, which has wide reaching powers to trace funds and assets and prevent their transfers or liquidation on behalf of individuals and entities. All in all, the Crown Prince is calling the shots and virtually in charge of the kingdom. But by the arrests of powerful members of the royal family, he would have also made bitter enemies, who would be biding their time to strike back.

Anti-corruption drives are always popular among ordinary citizens. Saudi Arabia is no exception. The Crown Prince has publicly said several times that no one would be spared, not even those with royal connections. He has been as good as his word and this has been welcomed by the general public. However the question remains, is the anti corruption drive aimed at cleaning up the system or to target those who may one day challenge the Prince. Saudi Arabia has never been a transparent system and most members of the extended royal family have been conducting business in this way for generations. Saudi Arabia is not prepared for the change to transparency and accountability.

Prince Salman hopes to convert Saudi Arabia to a moderate Islamic kingdom and is taking on the powerful clergy wedded to the puritanical and austere Wahhabi school. The strict norms against music and entertainment, the segregation of men and women and other orthodox practices would be out of the window if the Prince had his way. He is popular among the young Saudis for his modern views. Religious police that enforced strict dressing for women and often abused power are no longer roaming the streets of Riyadh looking to bring offenders to book. Women are in the process of being allowed to drive. Entertainment, which also brings in the big bucks, is being encouraged by him.

The clergy plays a pivotal role in Saudi Arabia. The royal house of Saud, as custodians of the mosques at Mecca and Medina are venerated across the Sunni world and the state promotes the Wahhabi school of austere Islam. The King and clergy have so long ruled by consensus. The Crown Prince’s desire to turn the kingdom into a moderate Islamic state may in time turn them against the ruling family. But so far there are no signs of that happening as the Crown Prince has not yet ridden rough shod over clergy.

But the hot blooded Prince is not merely cracking down on perceived enemies within the kingdom. Like the rest of Sunni powers, Saudi Arabia has always regarded Shia Iran with suspicion. Since state structures in Iraq collapsed following the American invasion and the sectarian war led to blood baths across the country, Iran’s clout there has increased manifold. Saudi Arabia and the smaller Gulf countries, worried about Iran’s growing influence in the region, are out to eradicate Iran’s footprints in the region. A proxy war is on between Saudi Arabia led Sunnis and Shia Iran in Syria, Yemen, Iraq and Lebanon. There Hizbollah is backed by Iran and Saudi Arabia has already triggered a crisis by forcing prime minister Hariri to resign. Hariri announced his resignation from Saudi Arabia last week.

The Saudis have cultivated excellent ties with US President Donald Trump. Unlike Obama, Trump regards Iran as a principle enemy of the US. He is already in the process of pulling out of the landmark nuclear agreement signed between Iran, the US, France, China, UK, Russia and Germany. The new line up in West Asia is Saudi Arabia, US and Israel ranged against Iran and Russia. Bashar-al Asad of Syria is also with them. The resignation of Hariri is escalating the crisis in the region. Saudis and Israel (which is against Hezbollah in Lebanon) are bent on pushing Iran to a corner. A recent missile attack by Houthi rebels of Yemen at Riyadh International airport, is being blamed on Iran. War drums are beating in West Asia. Unless the Crown Prince is restrained, the oil rich states may soon be in turmoil. War in the region will affect oil supplies and could hit the world economy. Countries like India, that gets most of its supplies from Saudi Arabia, will be hard hit. However, though Donald Trump himself is as aggressive as the Crown Prince, saner elements within the US establishment like Secretary of State Tillerson are urging restraint.

Will the Crown Prince listen? He has had little success in the war in Yemen, or in the blockade of Qatar (for allegedly playing footsie with terror groups) spearheaded by Saudi Arabia. He would be looking to Lebanon to take on Hezbollah. Neither Iran nor the Hezbollah are pushovers, and if Saudi Arabia continues to its current disastrous ways, the region may well implode.[/vc_column_text][/vc_column][/vc_row]

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India considers tax relief to attract foreign investors amid Iran war impact

India is evaluating tax incentives, including a possible capital gains tax exemption on government securities for foreign investors, to support capital inflows amid economic pressures linked to the Iran war.

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India is considering a set of measures aimed at attracting more foreign investment as the ongoing Iran war continues to create pressure on the country’s economy, according to reports citing government sources. One of the key proposals under discussion is the removal of capital gains tax on investments made by foreign portfolio investors (FPIs) in government securities.

The move comes at a time when geopolitical tensions in West Asia have pushed up global oil prices, weakened investor sentiment and increased pressure on the Indian rupee. India, which imports a significant share of its crude oil requirements, has been among the countries closely monitoring the economic fallout from the conflict.

Government exploring ways to boost capital inflows

Officials are reportedly evaluating tax-related incentives to make Indian debt markets more attractive to overseas investors. The proposed exemption on capital gains from government securities is aimed at encouraging foreign portfolio investment and supporting capital inflows during a period of heightened global uncertainty.

The government is seeking to counter the impact of foreign capital outflows that have intensified amid concerns over the Iran conflict and its implications for energy markets and global economic growth.

Rupee and markets under pressure

Recent weeks have seen increased volatility in financial markets, with foreign investors pulling money out of Indian equities. Analysts have linked part of the pressure on the rupee to rising oil prices and continued overseas investor withdrawals.

Market participants believe that measures aimed at attracting foreign investment into government securities could help improve investor confidence and provide support to the domestic currency.

Broader economic concerns

The Iran war has added to concerns about inflation, economic growth and India’s external sector. Higher energy prices can increase import costs and put pressure on inflation, while sustained foreign capital outflows may affect financial market stability.

While no final decision has been announced, discussions on easing tax rules for foreign investors reflect the government’s efforts to strengthen capital inflows and cushion the economy from external shocks.

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US proposes new tariffs on India over forced labour concerns amid trade negotiations

The United States has proposed additional tariffs on imports from India and 59 other economies following a Section 301 investigation into forced labour-related trade concerns.

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Donald Trump statement

The United States has proposed imposing additional tariffs on imports from India and 59 other economies after concluding that these countries have not taken sufficient steps to prevent the importation of goods allegedly linked to forced labour. The proposal was announced by the Office of the US Trade Representative (USTR) as part of an investigation conducted under Section 301 of the US Trade Act.

According to the USTR’s findings, India could face an additional tariff of 12.5% on goods exported to the United States. The proposed measure is part of a broader plan targeting 60 economies, with tariff rates ranging between 10% and 12.5% depending on the findings related to each country.

India among countries facing higher tariff proposal

The USTR said India had not effectively enforced restrictions on imports made using forced labour, describing the issue as a burden on US commerce. The agency argued that inadequate enforcement by major trading partners creates unfair competition for American workers and businesses.

While countries including Canada, Mexico, the European Union and the United Kingdom are proposed to face a 10% tariff, India is among a larger group of economies that could be subjected to a 12.5% duty under the recommendation.

Proposal comes during India-US trade discussions

The tariff proposal has emerged while Indian and US officials are engaged in trade negotiations aimed at strengthening economic ties between the two countries. A US delegation led by Assistant USTR Brendan Lynch is currently holding discussions with Indian officials in New Delhi.

India’s Commerce Ministry has indicated that discussions with the United States on the matter are continuing and noted that the proposed tariffs have not yet been finalised. The USTR has invited public comments on the proposal until July 6, with a public hearing scheduled for July 7 before any final decision is taken.

Certain products may remain exempt

The proposed tariffs include exemptions for several categories of goods, including some energy products, pharmaceuticals, rare earth materials and selected agricultural commodities. Additional details regarding sector-specific measures, including proposed textile-related actions, are expected to be released separately.

The latest move follows a Section 301 investigation launched earlier this year into forced labour concerns across global supply chains. Any final decision on imposing the tariffs will be made after the consultation process is completed.

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Trump reportedly rebukes Netanyahu over Lebanon strikes amid ceasefire concerns

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US President Donald Trump reportedly delivered a sharp rebuke to Israeli Prime Minister Benjamin Netanyahu during a phone call over Israel’s military actions in Lebanon, as concerns grow that renewed hostilities could jeopardise fragile diplomatic efforts in the region.

According to multiple reports, Trump expressed frustration over Israeli strikes linked to ongoing tensions with Hezbollah in Lebanon. The reported exchange came at a sensitive time, with Washington attempting to prevent further escalation while also pursuing broader diplomatic discussions involving Iran.

Reports point to unusually tense exchange

Sources cited in international reports said Trump used unusually strong language during the conversation, warning that continued military actions risked damaging efforts to stabilise the situation. One report claimed Trump told Netanyahu that his actions were hurting Israel’s international standing and complicating diplomatic initiatives.

The reported disagreement followed Israeli operations against Hezbollah-linked targets in Lebanon. While Israeli officials argued that the actions were a response to security threats and ceasefire violations, the US administration has been pushing for restraint to avoid a wider regional conflict.

Lebanon fighting threatens broader diplomatic efforts

The latest tensions come amid efforts to maintain a ceasefire framework between Israel and Hezbollah. US officials have been involved in discussions aimed at reducing hostilities and preventing attacks on major Lebanese population centres, including Beirut.

Reports indicate that Trump personally intervened to discourage further escalation and support negotiations intended to preserve regional stability. Hezbollah has reportedly signalled a willingness to consider a broader ceasefire arrangement if reciprocal commitments are made.

Differing public messages after the call

Despite reports of a heated conversation, Trump later suggested publicly that discussions had been constructive and that progress had been made toward reducing tensions. Netanyahu, however, maintained that Israel would continue to respond to security threats and would not alter its overall approach toward Hezbollah if attacks persisted.

The developments highlight growing challenges facing diplomatic efforts in the Middle East, where the conflicts involving Israel, Lebanon and Iran remain closely interconnected. Analysts say any major escalation in Lebanon could further complicate ongoing negotiations and increase instability across the region.

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