WORLD THIS WEEK

OPEC: The curious case ofOPEC’s production cuts

What happened?

On 5 October, the 13 members of the Organisation of Petrol Exporting Countries (OPEC) and 10 allies of the group forming the OPEC+, which includes Russia, met in Vienna to drop oil production quantities by two million barrels per day (bpd). Producing about 30 per cent of the world’s crude oil, this decision comes as the world grapples with an undersupply of oil by 1 million barrels per day and creates a tight supply of oil to the West which is already sifting through an energy crisis.

“A recession is one of the challenges we are looking at. We all know a recession affects supply and demand,” UAE’s Energy Minister Mazrouei said, and said that economic stressors were the key reason why the agency decided to cut production. The oil quota reduction came as a surprise to the West as they warned the organisation against such drastic measures, but the meeting offered no resolve to countries like the US, the UK, and the EU.

The OPEC defended its stance to say that the cuts were not meant to pit one country against another, but was a “pre-emptive measure”. Citing that the move was necessary, the decision was met with criticism by the US which said that OPEC was "aligning” with Russia. This decision was also considered a blow to the European Union, as sanctions on Russian crude oil and oil production are set to take effect starting in December. This said that OPEC+ does not target pricing but strikes “a balance in supply and demand.”

What does it mean?

For the US, the cut could lead to a reproaching of a kind, with the US seeking Venezuela and Iran out of its ‘pariah’ state and looking for sustainable options to produce its own domestic oil. For Russia, there is no reduction in output as part of the production cut decision by OPEC, rather it sees a slight balance in its reach. For the global market, the decision would incite a lower energy demand in the long term, with consumers seeking less energy-consuming services in the future.

ALSO IN NEWS

China: UN Human Right Council rejects proposal to hold debate on Xinjiang

On 6 October, the United Nations Human Rights Council rejected a motion to hold a debate on the alleged violation of the minority community in Xinjiang, China. The proposal to hold the debate was initiated by the US, Canada, Turkey and Britain. However, 17 countries voted in favour of the proposal, 19 voted against while 11 abstained from voting. The vote resulted in a victory for China while political analysts believe that the decision is a setback to the accountability efforts and moral compass of the West. The council has only rejected one other proposal in its 16-year history until the Xinjiang debate. The President of the World Uighur Congress Dolkun Isa expressed his disappointment with the council’s decision and said that he had hoped the Muslim countries would act to help the Uighur community.

Taiwan: President Tsai Ing-wen says that country will defend itself and not rely on others

On 6 October, Taiwan’s President Tsai Ing-wen virtually addressed the Global Taiwan Institute think tank in the US and said that the country would not depend on any country for its defence. During her speech, she first appreciated and thanked the US administration for upholding the US commitment to Taiwan’s security and the recent arms sale. She then said: “But we will not depend on others to come to our own defence. That is why I want to reiterate that Taiwan is fully committed to protecting our security and maintaining our democratic way of life. We're also working to adapt our defence strategy to the changing threats we face."

India: Free Trade Agreement with the UK

On 4 October, the Home Secretary of the UK during an interview with Spectator (a British magazine) addressed the issue of FTA with India. She said: “I have concerns about having an open borders migration policy with India because I don’t think that’s what people voted for with Brexit,” She added: “I do have some reservations. Look at migration in this country — the largest group of people who overstay are Indian migrants. We even reached an agreement with the Indian government last year to encourage and facilitate better co-operation in this regard. It has not necessarily worked very well,” India and the UK are working towards signing the FTA.

Sri Lanka: UNHRC resolution adopted

On 6 October, the UNHRC adopted a resolution on Sri Lanka titled “Promoting reconciliation, accountability and human rights in Sri Lanka.” Twenty countries voted for the resolution, twenty countries abstained from the voting and seven countries voted against the resolution. China and Pakistan were among the countries against the resolution. India, Nepal, Qatar, and Japan abstained from voting. Countries that voted for the resolution include the UK, the US, Argentina, Finland, France, Germany,

Mexico, the Netherlands, Paraguay, Poland, and the Republic of Korea.

Afghanistan: UNDP releases annual report on the economic situation On 7 October, the United Nations Development Program released a new report on Afghanistan’s economic situation titled “One Year in Review: Afghanistan Since August 2021.” The report stated that the already-declining Afghan economy lost nearly USD five billion after August 2021 and is reversing “in 12 months what had taken 10 years to accumulate.” Following the release of the report, the Assistant Secretary- General and Director of the Regional Bureau for Asia and the Pacific said that even before the Taliban’s takeover, Afghanistan had a small economy of USD 20 billion, saying: “What was already a very small economy. If you think about pre-Taliban, it still was a $20 billion economy but then in a year though, lost about $5 billion.”

Pakistan: COAS Gen Bajwa meets with US Defence Secretary

On 5 October, Chief of Army Staff General Qamar Javed Bajwa met with US Defence Secretary Lloyd J. Austin, National Security Adviser Jacob Sullivan and other officials during his five-day visit to the United States. During the meeting, matters of mutual interest, regional security and bilateral cooperation in various fields were discussed. A statement released by the Inter-Services Public Relations (ISPR) said: “Both sides had convergence on major international issues, including Afghanistan,” and also on the “need for cooperation to avoid humanitarian crisis and improving peace and stability in the region.” Meanwhile, Secretary Austin via Twitter said: “This year marks the 75th anniversary of relations between the U.S. and Pakistan. It was my pleasure to host Pakistan’s Chief of Army Staff, General Qamar Javed Bajwa, to the Pentagon where we discussed our long-standing defence partnership and areas of mutual interest.”

Iran: More US sanctions imposed following Mahsa Amini’s death and curbing protests

On 6 October, the Biden administration has issued more sanctions against Iran officials over the suppression of protests in the country following Mahsa Amini’s death in police custody. The new sanctions target Iran’s interior minister Ahmad Vahidi, communications minister EisaZarepur, and head of Iranian cyber police force Vahid Mohammad Naser Majid. The US Treasury official Brian Nelson said that “the rights to freedom of expression and of peaceful assembly are vital to guaranteeing individual liberty and dignity.”

The UK: Government withdraws the tax cuts plan On 3 October 2022, The Chancellor of Exchequer Kwasi

Kwarteng announced that the government is scrapping the 45 per cent rate of income tax on income over GBP 150,000 tax-cut plan in response to widespread criticism. On 26 September, the pound fell to USD 1.03 as a response to the growth plan announced on 23 September and investors started to demand a high rate of interest. On 23 September, Kwarteng proposed the "Growth Plan" to the parliament to pull up the declining British economy to help address inflation, helping the public tackle the cost-of-living crisis, and helping businesses.

Europe: Member-states submit proposal to impose sanctions on Iran for violent action against growing protests

On 03 October, new proposals were submitted to the EU to impose sanctions against Iran for its violent response to the ongoing protests. Germany, France, Denmark, Spain, Italy, and the Czech Republic have put forth 16 proposals for new sanctions which are said to target institutions and individuals primarily involved in the suppression of the protests. These proposals will be discussed by the EU foreign ministers on 17 October. Germany’s Foreign Minister AnnalenaBaerbock called the crackdown due to the fear of the power of education and freedom. She also expressed the limitations of their actions in a tweet which said, "It is also difficult to bear that our foreign policy options are limited. But we can amplify their voice, create publicity, bring charges and sanction. And that we are doing." These protests erupted nationwide due to the death of women in police custody over the issue of hijab.

The US: Lockheed and Thales to build advanced missile manufacturing capabilities for Australia

On 4 October, Lockheed Martin along with Raytheon and French defence firm Thales announced a sovereign missile project which will manufacture and transfer to Australia same level of technology and development and advanced programs in cruise missile manufacturing like Hellfire and Joint Air-to-Surface Standoff Missile ( JASSM).

About the authors

Ankit Singh, Harini Madhusudan and Rashmi Ramesh are PhD Scholars in the School of Conflict and Security Studies at the National Institute of Advanced Studies. Avishka Ashok, Apoorva Sudhakar, Padmashree Anandhan, Rishma Banerjee, Sai Pranav, and Anu Maria are Research Associates at NIAS. BhoomikaSesharaj and Madhura Mahesh are research interns at NIAS.