In Geopolitics Today: Wednesday, July 27th
East African Crude Oil Pipeline Facing Roadblocks, The US and Afghanistan in Talks to Unfreeze Assets, and other stories.
Iran-Russia Trade Ditches US Dollars
As part of a recent set of meetings between Iran and Russia, the two countries appear to have agreed to abandon the US dollar in bilateral trade. Iran's Economy Minister Ehsan Khandouzi announced on that the US dollar has officially been ditched in his country's trade relations with the Russian Federation.
The Iranian minister said the dollar has been replaced with the Russian ruble in Iran-Russia business, with similar plans in the works for similar with arrangements with China, India and Turkey. As part of Russian President Vladimir Putin’s visit, the two countries also signed a $40 billion deal between Russian energy companies and Iran's state-owned National Oil Company. Under the agreement, the Russian firm will invest in developing six gas and oil fields in Iran's south.
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The Philippines Abandons Deal to Buy Russian Helicopters
The new government in the Philippines has scrapped a $227 million deal to purchase 16 Russian Mi-17 military transport helicopters. Philippine Ambassador to the US, Jose Manuel Romualdez, has stated that the decision to cancel the deal was made due to fears that the United States would choose to sanction the Philippines by applying the Countering America’s Adversaries Through Sanctions Act.
Under the agreement, the first batch of Mi-17s would have been scheduled for delivery in 2024, with the aircraft intended for combat, search and rescue, and medevac operations by the Philippines armed forces. Instead, Manila is likely to increase military transfers from the United States in the coming years. In February, the Philippine Department of National Defense placed an order for 32 Sikorsky S-70i Black Hawk multipurpose helicopters from PZL Mielec, a Poland-based Lockheed Martin subsidiary. For Russia, an appeal and discussions is likely to follow, but there is little time remaining for the Philippine government to reconsider.
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East African Crude Oil Pipeline Facing Roadblocks
The East African Crude Oil Pipeline (EACOP) being built in Uganda and Tanzania is facing criticism. A number of non-governmental organizations (NGOs) have expressed environmental concerns around the development of EACOP, arguing that the project could lead to the displacement of thousands, destroy farmland, and devastate ecosystems.
Political leaders in the region see the domestic oil and gas extraction as a means to improve energy security and support their economies, which in turn could reduce poverty. The Ugandan and Tanzanian governments recognise the potential of oil exploration and production, and therefore intend to finance the pipeline with a loan before construction can begin. Yet resistance has come in the form of a movement against the project which is specifically targeting banks and insurers to convince them not to fund the pipeline.
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The US and Afghanistan in Talks to Unfreeze Assets
Officials from the US and Afghanistan have exchanged proposals over the potential release of some $7 billion in frozen Afghan central bank reserves. Washington is holding the funds in a trust fund, and is seeking to incentivise the Taliban government by offering Afghan reserves in exchange for concessions as Afghanistan is in the midst of an economic crisis.
The US proposal would reportedly see roughly half of the total disbursed to a third-party “trust fund” that would then be responsible for transfers to Kabul if “reforms” at the central bank are implemented. The other half remains in the the US to be used for a potential disbursement to victims of the September 11, 2001 terrorist attacks. Despite such harsh terms, Afghan officials have reportedly embraced the talks, showed a willingness to engage with US officials, but remain hesitant to accept the US proposal.
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