It’s all about organized lightening. Lights, sparks, brightness are symbol of life. It enables us to see the world with more clear vision. When rest of the world is aspiring to reach beyond the limits of the sky, countries like Pakistan are still facing power shortages. In Pakistan Summers are welcomed with a gift of 8000MW shortfall while winters embrace a cool and smoggy shortfall of 7000MW.
According to an estimate 1.3 billion people in the world are spending their lives without enjoying the benefits of electricity. Pakistan ranks atthe fourthposition among the list of countries that are facing energy deficit according to a United Nations Report, 2013.So, Pakistan is confronted with the problem ofhow to meet this energy crisis in best possible way?
The world consumption of energy has been increasing day by day. It’s not only the developing countries who are facing energy shortfall but even the developed countries are also trying for the means to enhance their total energy capacity. The economic feasibility of power production has two major modes of costs, i.e. fuel costs and capital cost. Advanced economies like the US, Japan, and China are relying on nuclear power plants, which are cost competitive, reliable and are capable to generate more energy. Beside, 449 nuclear power plants already operating in 30 countries,there are 60 others that are under construction in 15 different countries around the globe.Being one of the largest consumers of energy China plans to increase its nuclear power capacity up to 70% by 2020.Likewise, Japan and the US incorporateabout 30% and 20% oftheir totalelectric output through nuclear energyrespectively.
Considering the prevailing energy consumption of Pakistan, thermal and hydro powers are the major source of electricity generation. The total installed capacity of thermal power plants is 16599MW I.e. 61%, while that of Hydro power plant is7115MWi.e. 34% of the total electric output. Although, Pakistan is a nuclear power but unfortunately it contributes a very small portion of nuclear energy in total output.There has been a significant improvement in average shortfall of electricity from 7938MW to 2888MW with an increase in output i.e.11804MW to 18658 MW since 2013 to 2017 respectively. However, still it is now essential to take a better decision for selection of energy resources and nuclear is the best option.
Currently four nuclear power plants are successfully operating in Pakistan. KANUUP1, CHASHMA I, II, and III are producing almost 1030 MW of electricity altogether. Recently, in September 2017, CHASHMA IV started operating with a total capacity of 340MW. KANUUP is a Canadian Pressurized Heavy Water Reactor under international safeguards with a net design capacity of 125 MWe. CHASHMA I, II, and III are Canadian Pressurized Water Reactor (CNP) with design Capacity of 300, 300, 315 MWe respectively. Pakistan is on its way to construct two more nuclear power plants; KANUPP II and KANUUP III with Chinese assistance under international safeguards. The two plants are scheduled to be operationalized by 2020 and 2021 with total design capacity of 1100 MWe each. In the past couple of days China National Nuclear Corporation (CNNC) announced that it will build a one-million-kilowatt-class nuclear power unit with HPR1000 technology at the Chashma Nuclear Power Plant in Pakistan. This will be the seventh nuclear power unit that China has exported to Pakistan and the third HPR1000.
The reason why Pakistanshould do more for nuclear power plants is because they are cheaper and reliable than the coal fired plants. The total fuel cost of a nuclear power plant is typically one third of a cold fire plant. 1 kg of Uranium is equal to 3tons of coal and can produce upto 36000 KWh electricity. Furthermore, Uranium pallet of one inch has the capacity to producehigher amount of energy than one ton of coal because of itshigher density. Nuclear energy generates electric balance through diverse sources of electricity. Moreover,it also provides a wide array of jobs for engineers, mechanics and scientist and boosts economic growth with high pay packages. In addition to all that, nuclear energy reduces the effects of greenhouse emissions due its environmental friendly characteristics.
Pakistan is running its nuclear power plants in a safer mode under proper safety measures following the international standards.However, according to international bodies – non-proliferation regime, Non Proliferation Treaty (NPT) and Nuclear Suppliers Group (NSG) – Pakistan is not eligible for the nuclear trade with countries around the globeunless or until it signs the NPT.But Pakistan’scrippling energy sector demandsa nuclear energy to envisage a target of 8,800 MW of electricity by 2030.Countries which are not member of NPT should be allowed to do civil nuclear cooperation, because it is the right of every state to pursue peaceful civil nuclear program for fulfilling its energy needs.
Countries which are permanent members of the NPT and NSG should promote peaceful nuclear energy access to the developing countries. As this will improve their energy requirements and will help them eliminate poverty and human sufferings. Moreover, nuclear energy also has the potential to improve financial conditions of developing countries by making international markets accessible. It’s important to adopt the non-conventional indicators of power rather than merely relying on conventional means. Nukes should be meant to deter not to actually bring in the battle field. Once a country has acquired a nuclear technology it should further enhance it for peaceful purposes as well. Utilizing the nuclear technology for peaceful purposes would stabilize the international political economy. So, economic interdependencies would make war evitable.
Rebalancing Act: China’s 2022 Outlook
Authors: Ibrahim Chowdhury, Ekaterine T. Vashakmadze and Li Yusha
After a strong rebound last year, the world economy is entering a challenging 2022. The advanced economies have recovered rapidly thanks to big stimulus packages and rapid progress with vaccination, but many developing countries continue to struggle.
The spread of new variants amid large inequalities in vaccination rates, elevated food and commodity prices, volatile asset markets, the prospect of policy tightening in the United States and other advanced economies, and continued geopolitical tensions provide a challenging backdrop for developing countries, as the World Bank’s Global Economic Prospects report published today highlights.
The global context will also weigh on China’s outlook in 2022, by dampening export performance, a key growth driver last year. Following a strong 8 percent cyclical rebound in 2021, the World Bank expects growth in China to slow to 5.1 percent in 2022, closer to its potential — the sustainable growth rate of output at full capacity.
Indeed, growth in the second half of 2021 was below this level, and so our forecast assumes a modest amount of policy loosening. Although we expect momentum to pick up, our outlook is subject to domestic in addition to global downside risks. Renewed domestic COVID-19 outbreaks, including the new Omicron variant and other highly transmittable variants, could require more broad-based and longer-lasting restrictions, leading to larger disruptions in economic activity. A severe and prolonged downturn in the real estate sector could have significant economy-wide reverberations.
In the face of these headwinds, China’s policymakers should nonetheless keep a steady hand. Our latest China Economic Update argues that the old playbook of boosting domestic demand through investment-led stimulus will merely exacerbate risks in the real estate sector and reap increasingly lower returns as China’s stock of public infrastructure approaches its saturation point.
Instead, to achieve sustained growth, China needs to stick to the challenging path of rebalancing its economy along three dimensions: first, the shift from external demand to domestic demand and from investment and industry-led growth to greater reliance on consumption and services; second, a greater role for markets and the private sector in driving innovation and the allocation of capital and talent; and third, the transition from a high to a low-carbon economy.
None of these rebalancing acts are easy. However, as the China Economic Update points out, structural reforms could help reduce the trade-offs involved in transitioning to a new path of high-quality growth.
First, fiscal reforms could aim to create a more progressive tax system while boosting social safety nets and spending on health and education. This would help lower precautionary household savings and thereby support the rebalancing toward domestic consumption, while also reducing income inequality among households.
Second, following tightening anti-monopoly provisions aimed at digital platforms, and a range of restrictions imposed on online consumer services, the authorities could consider shifting their attention to remaining barriers to market competition more broadly to spur innovation and productivity growth.
A further opening-up of the protected services sector, for example, could improve access to high-quality services and support the rebalancing toward high-value service jobs (a special focus of the World Bank report). Eliminating remaining restrictions on labor mobility by abolishing the hukou, China’s system of household registration, for all urban areas would equally support the growth of vibrant service economies in China’s largest cities.
Third, the wider use of carbon pricing, for example, through an expansion of the scope and tightening of the emissions trading system rules, as well power sector reforms to encourage the penetration and nationwide trade and dispatch of renewables, would not only generate environmental benefits but also contribute to China’s economic transformation to a more sustainable and innovation-based growth model.
In addition, a more robust corporate and bank resolution framework would contribute to mitigating moral hazards, thereby reducing the trade-offs between monetary policy easing and financial risk management. Addressing distortions in the access to credit — reflected in persistent spreads between private and State borrowers — could support the shift to more innovation-driven, private sector-led growth.
Productivity growth in China during the past four decades of reform and opening-up has been private-sector led. The scope for future productivity gains through the diffusion of modern technologies and practices among smaller private companies remains large. Realizing these gains will require a level playing field with State-owned enterprises.
While the latter have played an instrumental role during the pandemic to stabilize employment, deliver key services and, in some cases, close local government budget gaps, their ability to drive the next phase of growth is questionable given lower profits and productivity growth rates in the past.
In 2022, the authorities will face a significantly more challenging policy environment. They will need to remain vigilant and ready to recalibrate financial and monetary policies to ensure the difficulties in the real estate sector don’t spill over into broader economic distress. Recent policy loosening suggests the policymakers are well aware of these risks.
However, in aiming to keep growth on a steady path close to potential, they will need to be similarly alert to the risk of accumulating ever greater levels of corporate and local government debt. The transition to high-quality growth will require economic rebalancing toward consumption, services, and green investments. If the past is any guide to the future, the reliance on markets and private sector initiative is China’s best bet to achieve the required structural change swiftly and at minimum cost.
First published on China Daily, via World Bank
The US Economic Uncertainty: Bitcoin Faces a Test of Resilience?
Is inflation harmful? Is inflation here to stay? And are people really at a loss? These and countless other questions along the same lines dominated the first half of 2021. Many looked for alternative investments in the national bourse, while others adopted unorthodox streams. Yes, I’m talking about bitcoin. The crypto giant hit records after records since the pandemic made us question the fundamentals of our conventional economic policies. And while inflation was never far behind in registering its own mark in history, the volatility in the crypto stream was hard to deny: swiping billions of dollars in mere days in April 2021. The surge came again, however. And it will keep on coming; I have no doubt. But whether it is the end of the pandemic or the early hues of a new shade, the tumultuous relationship between traditional economic metrics and the championed cryptocurrency is about to get more interesting.
The job market is at the most confusing crossroads in recent times. The hiring rate in the US has slowed down in the past two months, with employers adding only 199,000 jobs in December. The numbers reveal that this is the second month of depressing job additions compared to an average of more than 500,000 jobs added each month throughout 2021. More concerning is that economists had predicted an estimated 400,000 jobs additions last month. Nonetheless, according to the US Bureau of Labour Statistics, the unemployment rate has ticked down to 3.9% – the first time since the pre-pandemic level of 3.5% reported in February 2020. Analytically speaking, US employment has returned to pre-pandemic levels, yet businesses are still looking for more employees. The leverage, therefore, lies with the labor: reportedly (on average) every two employees have three positions available.
The ‘Great Resignation,’ a coinage for the new phenomenon, underscores this unique leverage of job selection. Sectors with low-wage positions like retail and hospitality face a labor shortage as people are better-positioned to bargain for higher wages. Thus, while wages are rising, quitting rates are record high simultaneously. According to recent job reports, an estimated 4.5 million workers quit their jobs in November alone. Given that this data got collected before the surge of the Omicron variant, the picture is about to worsen.
While wages are rising, employment is no longer in the dumps. People are quitting but not to invest stimulus cheques. Instead, they are resigning to negotiate better-paying jobs: forcing the businesses to hike prices and fueling inflation. Thus, despite high earnings, the budget for consumption [represented by the Consumer Price Index (CPI)] is rising at a rate of 6.8% (reported in November 2021). Naturally, bitcoin investment is not likely to bloom at levels rivaling the last two years. However, a downfall is imminent if inflation persists.
The US Federal Reserve sweats caution about searing gains in prices and soaring wage figures. And it appears that the fed is weighing its options to wind up its asset purchase program and hike interest rates. In March 2020, the fed started buying $40 billion worth of Mortgage-backed securities and $80 billion worth of government bonds (T-bills). However, a 19% increase in average house prices and a four-decade-high level of inflation is more than they bargained. Thus, the fed officials have been rooting for an expedited normalization of the monetary policy: further bolstered by the job reports indicating falling unemployment and rising wages. In recent months, the fed purview has dramatically shifted from its dovish sentiments: expecting no rate hike till 2023 to taper talks alongside three rate hikes in 2022.
Bitcoin now faces a volatile passage in the forthcoming months. While the disappointing job data and Omicron concerns could nudge the ball in its favor, the chances are that a depressive phase is yet to ensue. According to crypto-analysts, the bitcoin is technically oversold i.e. mostly devoid of impulsive investors and dominated by long-term holders. Since November, the bitcoin has dropped from the record high of $69,000 by almost 40%: moving in the $40,000-$41,000 range. Analysts believe that since bitcoin acts as a proxy for liquidity, any liquidity shortage could push the market into a mass sellout. Mr. Alex Krüger, the founder of Aike Capital, a New York-based asset management firm, stated: “Crypto assets are at the furthest end of the risk curve.” He further added: “[Therefore] since they had benefited from the Fed’s “extraordinarily lax monetary policy,” it should suffice to say that they would [also] suffer as an “unexpectedly tighter” policy shifts money into safer asset classes.” In simpler terms, a loose monetary policy and a deluge of stimulus payments cushioned the meteoric rise in bitcoin valuation as a hedge against inflation. That mechanism would also plummet the market with a sudden hawkish shift.
The situation is dire for most industries. Job participation levels are still low as workers are on the sidelines either because of the Omicron concern or lack of child support. In case of a rate hike, businesses would be forced to push against the wages to accommodate affordability in consumer prices. For bitcoin, the investment would stay dormant. However, any inflationary surprises could bring about an early tightening of the policy: spelling doom for the crypto market. The market now expects the job data to worsen while inflation to rise at 7.1% through December in the US inflation data (to be reported on Wednesday). Any higher than the forecasted figure alongside uncertainty imbued by the new variant could spark a downward spiral in bitcoin – probably pushing the asset below the $25000 mark.
Platform Modernisation: What the US Treasury Sanctions Review Is All About
The US Treasury has released an overview of its sanctions policy. It outlines key principles for making the restrictive US measures more effective. The revision of the sanctions policy was announced at the beginning of Joe Biden’s presidential term. The new review can be considered one of the results of this work. At the same time, it is difficult to find signs of qualitative changes in the US administration’s approach to sanctions in the document. Rather, it is about upgrading an existing platform.
Sanctions are understood as economic and financial restrictions that make it possible to harm the enemies of the United States, prevent or hinder their actions, and send them a clear political signal. The text reproduces the usual “behavioural” understanding of sanctions. They are viewed as a means of influencing the behaviour of foreign players whose actions threaten the security or contradict the national interests of the United States. The review also defines the institutional structure of the sanctions policy. According to the document, it includes the Treasury, the State Department, and the National Security Council. The Treasury plays the role of the leading executor of the sanctions policy, and the State Department and the NSS determine the political direction of their application, despite the fact that the State Department itself is also responsible for the implementation of a number of sanctions programmes. This line also includes the Department of Justice, which uses coercive measures against violators of the US sanctions regime.
Interestingly, the Department of Commerce is not mentioned among the institutions. The review focuses only on a specific segment of the sanctions policy that is implemented by the Treasury. However, it is the Treasury that is currently at the forefront of the application of restrictive measures. A significant part of the executive orders of the President of the United States and sanctions laws imply blocking financial sanctions in the form of an asset freeze and a ban on transactions with individuals and organisations. Decrees and laws assign the application of such measures to the Treasury in cooperation with the Department of State and the Attorney General. Therefore, the institutional link mentioned in the review reflects the spirit and letter of a significant array of US regulations concerning sanctions. The Department of Commerce and its Bureau of Industry and Security are responsible for a different segment of the sanctions policy, which does not diminish its importance. Export controls can cause a lot of trouble for individual countries and companies.
Another notable part of the review concerns possible obstacles to the effective implementation of US sanctions. These include, among other things, the efforts of the opponents of the United States to change the global financial architecture, reducing the share of the dollar in the national settlements of both opponents and some allies of the United States.
Indeed, such major powers as Russia and China have seriously considered the risks of being involved in a global American-centric financial system.
The course towards the sovereignty of national financial systems and settlements with foreign countries is largely justified by the risk of sanctions.
Russia, for example, is vigorously pursuing the development of a National Payment System, as well as a Financial Messaging System. There has been a cautious but consistent policy of reducing the share of the dollar in external settlements. China, which has much greater economic potential, is building systems of “internal and external circulation”. Even the European Union has embarked on an increase in the role of the euro, taking into account the risk of secondary sanctions from “third countries”, which are often understood between the lines as the United States.
Digital currencies and new payment technologies also pose a threat to the effectiveness of sanctions. Moreover, here the players can be both large powers and many other states and non-state structures. It is interesting that digital currencies at a certain stage may present a common challenge to the United States, Russia, China, the EU and a number of other countries. After all, they can be used not only to circumvent sanctions, but also, for example, to finance terrorism or in money laundering. However, the review does not mention such common interests.
The text does propose measures to modernise the sanctions policy. The first one is to build sanctions into the broader context of US foreign policy. Sanctions are not important in and of themselves, but as part of a broader palette of policy instruments. The second measure is to strengthen interdepartmental coordination in the application of sanctions in parallel with increased coordination of US sanctions with the actions of American allies. The third measure is a more accurate calibration of sanctions in order to avoid humanitarian damage, as well as damage to American business. The fourth measure is to improve the enforceability and clarity of the sanctions policy. Here we can talk about both the legal uncertainty of some decrees and laws, and about an adequate understanding of the sanctions programmes on the part of business. Finally, fifth is the improvement and development of the Treasury-based sanctions apparatus, including investments in technology, staff training and infrastructure.
All these measures can hardly be called new. Experts have long recommended the use of sanctions in combination with other instruments, as well as improved inter-agency coordination. The coordination of sanctions with allies has escalated due to a number of unilateral steps taken by the Trump Administration, including withdrawal from the Iranian nuclear deal or sanctions against Nord Stream 2. However, the very importance of such coordination has not been questioned in the past and has even been reflected in American legislation (Iran). The need for a clearer understanding of sanctions policy has also been long overdue. Its relevance is illustrated, among other things, by the large number of unintentional violations of the US sanctions regime by American and foreign businesses. The problem of overcompliance is also relevant, when companies refuse transactions even when they are allowed. The reason is the fear of possible coercive measures by the US authorities. Finally, improving the sanctioning apparatus is also a long-standing topic. In particular, expanding the resources of the Administration in the application of sanctions was recommended by the US Audit Office in a 2019 report.
The US Treasury review suggests that no signs of an easing are foreseen for the key targets of US sanctions. At the same time, American business and its many foreign counterparties can benefit from the modernisation of the US sanctions policy. Legal certainty can reduce excess compliance as well as help avoid associated losses.
From our partner RIAC
Start your days with a better morning routine
Your morning sets the tone for the day to come. By starting the day with intent you’ll find yourself in...
The French Dispatch: The Year 2022 and European Security
2021 has been rich in negative events for European security: the world has witnessed the collapse of the Open Skies...
Pragmatic Proposals to Optimize Russia’s Pledged Rehabilitation of Ethiopia
Russian Ambassador to Ethiopia Evgeny Terekhin pledged that his homeland will help rehabilitate his hosts after getting a clearer understanding...
Surging electricity demand is putting power systems under strain around the world
Global electricity demand surged in 2021, creating strains in major markets, pushing prices to unprecedented levels and driving the power...
Grace and a Tennis Celebrity
Among the character traits we cherish in fellow humans, grace is often more noticeable in its absence. The recent saga...
Kazakhstan, like Ukraine, spotlights the swapping of the rule of law for the law of the jungle
When a Russian-led military force intervened earlier this month, it did more than help Kazakh President Qasym-Johart Toqayev restore and...
Neighbours and Crises: New Challenges for Russia
Through all the discussions that accompanied the preparation of the Valdai Club report “Space Without Borders: Russia and Its Neighbours”,...
Russia4 days ago
Russia’s Potential Invasion of Ukraine: Bringing In Past Evidence
East Asia4 days ago
Japan’s Rohingya Policy: Deviation From Long-held Distinction
Development4 days ago
Davos Agenda 2022 to Mobilize World Leaders around Global Challenges
Tech News4 days ago
Coding – what is it and what are the benefits?
Reports4 days ago
Moroccan Economic Growth Could Accelerate with the Full Implementation of Reforms
Defense2 days ago
Why shouldn’t Israel Undermine Iran’s Conventional Deterrence
New Social Compact2 days ago
Age No Bar: A Paradigm Shift in the Girl Child’s Marriageable Age in India
Americas3 days ago
The Forgotten Analogy: World War II