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Iran's government drastically cut subsidies for gasoline, electricity and basic food items. Gasoline prices were raised from 1,000 rials (about 10 cents) per liter to 4,000 rials. As a result gasoline consumption is down 14% in early January from the prior month. Use of public transport is up 20%. Fares for Tehran's buses and subway went up by 20%, far less than the price increase for gasoline. The government introduced a $40 per person monthly stipend to soften the impact especially for poor families. Iranians are gradually tightening their belts and adjusting to the price increases, reducing wasteful energy use. Iranians have one of the highest rates of wasteful energy consumption in the world, according to IMF. This is because Iran has so far provided generous subsidies, covering 80% of the cost of energy and basic food items. President Ahmadinejad has introduced the Smart Subsidy Plan which calls for a gradual five year phaseout. These cuts will save $100 billion a year, according to government estimates, and is supported by the IMF. Iran is rigorously monitoring price increases in retail stores to ensure that retailers are not passing on the increases to customers. Trucking and transport businesses are allowed to raise their fees by only 15% to cover rising costs including the 837% fuel price increase....

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Nawaz Sharif's wife Kulsoom is expected to win the parliamentary seat from which the former prime minister was ousted by a decision of the Supreme Court.

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As Russia makes gains in the whole Donetsk region in eastern Ukraine the UK approves use of its long range missiles inside Russia. Biden is on the verge of making a similar decision as Iran sends long range ballistic missiles to Russia according to reports in NYT. Use of American long range missiles is not expected to affect Russia's overall military position in the Donetsk region in the east. The US and president Biden has only reluctantly provided support for use of US weapons systems to not risk escalating the war. Even artillery on the Russian side was off the list of approved use till Russia used it in Kharkiv border region at which point it was approved. Russians see Kiev as the origin of the Russian State in the 1400's, and eastern region of Donetsk as Russian if western Ukraine seeks to join NATO and EU. Britain has opposed Russia since 1750 as it saw Russia as the threat to an Empire it was building in South Asia, in India that financially supported its Empire worldwide. Britain has a long history of engaging Russia in conflict to protect British trade interests and expand its imperial influence as in the Crimean War fought in 1850's against Russia with the French to gain control of the Ottoman Empire and its Arab states for its trade and imperial interests. Republicans other than Mr. Trump and his supporters are for stronger support to Ukraine following US policy of opposing invasion to achieve military goals since 1900 against the Japanese in China and the Vietnam War was fought on the same basis in the 1960's considering the South Vietnamese state as an independent republic, just  invaded by the north, by North Vietnam, just as the US had done in the Korean War between North and South Korea. In the Vietnam War nationalism played apart with the Vietnamese nationalism prevailing by 1970.   ...

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The new prime minister of Pakistan Abbasi consults with former prime minister Sharif in Murree, Pakistan, after the Supreme Court disqualifies Sharif from the position. Sharif's brother, Shahbaz, the chief minister of Punjab province will contest a by-election for parliament to replace Abbasi.

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A NATO summit has tension and uncertainty with president Trump pushing forward his idea that Europe should take on a larger share of the burden for its own defense. Some of this goal was achieved with the jawboning style of Mr. Trump- NATO plans to increase military spending and increase EUropean governments share of defense spending. A European Defense Fund with 13 billion euros of funding is being set up to develop military capabilities. This is also what Mr. Trump hopes to accomplish by using this approach where other approaches were resisted by Germany in previous American administrations from Bush to Obama. It is also why Mr. Trump says he thinks NATO is now stronger than before, even though his approach throughout is unorthodox from Korea to NATO. Europeans see a divergence between the U.S. and EU on issues- such as Iran, Middle East and Israel, and Mr. Trump's efforts to maintain good ties with Russia meeting Mr. Putin after the Summit. This leads to a sense that the U.S. cannot be depended on in the face of threats to the EU. Mr. Trump's policy suggests the U.S. has no permanent friends or permanent enemies, will follow its own interests independently of its transatlantic partners, says one expert. At the root of the problem lies Trump's conviction that the European nations benefit economically by spending less on defense and thrusting more of the burden on the U.S. -even after 2 costly wars have diminished American desire to take on responsibility especially as other economies have prospered better than the U.S. ...

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This report says the 1.5 million barrels a day is actually a 1.16 million barrels a day cut as Nigeria, Venezuela and Angola may just not cut production by their 341,000 barrels a day. To that Iran also has to cut its 200,000 barels a day. So the Saudis may end up having to do the cuts of about a million barrels a day with the Emirates and Kuwait. And Deutsche Bank says that it takes about 15 months for oil prices to stabilize after these cuts. So prices could keep falling well into 2009 as the recession deepens worldwide. Some anaysts say the Saudis ended up contributing to the global crisis through their minimal efforts to restrain oil prices or divert some of the petro dollars to new exploration, rather than to cheap liquidity that fueled the housing bubble.

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Former prime minister Nawaz Sharif's PML-N party wins 125 of 269 seats in Pakistan's parliament. The Tehreek-e-Insaf party of Imran Khan won 31 seats and the PML-N party of the current president Asif Zardari won 32 seats mostly in Sindh province. Independents won 31 seats and some of these independents are likely to support Sharif in forming a new government. Election turnout of 60% showed a large degree of enthusiasm in this election and hopes for economic revival in Pakistan. The focus of Sharif will be on improving the economy, tackling electricity shortages, and building infrastructure. Sharif promised to pursue peaceful relations with India and Afghanistan, and keep the focus on the economy. Sharif and his advisers are bringing a new deftness in the dealings with the Army, the Pakistan Taliban, saying he would call for a halting of drone strikes, limiting the role the U.S. plays in the region, both positions popular in Pakistan, separating differences with former president Musharraf from the institutional role of the military. Small business owners and large business support Sharif's efforts to tackle electricity shortages, with an estimated loss of $12 billion in idled factories alone. The long period of political conflicts between the military, the judiciary and the political parties have led to neglect of Pakistan's economy, as neighboring countries in Asia surged ahead. The realization that popular pressure for improving standards of living and the economic opportunities are both huge has led to an extraordinary election, and put Sharif at the centre of an important new beginning for Pakistan. ...

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DJT says Iran does not want to talk to the Europeans, it wants to talk to the Americans. He says it is hard to stop the war when one side is winning. Russia and the US have better relations than under the Biden administration which is proving to be an important factor in this war. As it is about nuclear proliferation, not regional powers- the Israelis, the Saudis and the Iranians. Both Russia and the US are technologically sophisticated powers with different interests, they are world powers because they have first and foremost important responsibilities in nuclear non proliferation and the health of the planet. By allowing regional conflict in Eastern Europe to cloud this fact and not engage with Russia as a world power the US under Obama and Biden had failed to grasp a key principle of peaceful relations since World War II. We argue that "western powers" is a concept of colonial powers France and Britain, and western civilization is the reliable concept that includes Russia, and includes China and India that have embraced the creation of the modern world by western civilization. ...

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Bret Stephens of NYT shows a lack of knowledge of European history and remains oblivious of the disastrous consequences of Reagan's policies that he lauds. He cites Reagan as saying to his own audience - "My idea of policy towards the Soviet Union is simple, some would say simplistic. It is "We win, you lose."  The US did not win through Reagan policies, it began three decades of US involvement in wars in Iraq, Afghanistan, the Middle East, with Iran, that have wasted trillions of dollars and many lives, a period in which it created space for the emergence of China as a world power with newer infrastructure built in a period in which China could quietly rebuild and modernize while the US frittered away its vital resources to the point that funding was missing for vital infrastructure rebuilding and education was not financed by the government as it had done in the early postwar years. The classic European History book by Cambridge historian Brendan Simms, "Europe- The Struggle for Supremacy 1453 to the Present" shows that every time any country became too powerful, the others regardless of religion, old ties or other affiliation joined together to counterbalance and restore the balance- Britain, France, Russia, Austria-Hungary were never allowed to become too dominant. The idea that the Soviet Union collapsed because of Reagan's policies is incorrect- it would have collapsed a decade later without Reagan as by the 1980's the people running the government and the ordinary people had realized the system was not meeting the aspirations of Russians. By buying into this myth Americans were embroiled in useless wars and in so doing probably destroyed more wealth in a short time than any period in world history- the trillions of dollars of oil wealth transferred not to countries such as China or India that had to pull themselves by the bootstraps but to Arab desert regions that were itself not benefitted because they went to fight wars and destruction. ...

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Denning says that because of the enormous repercusions on Iran's economy of a war in the Persian Gulf, a more likely scenario is not the cutoff of supplies of Iranian oil altogether but a smaller list of buyers for Iranian oil, making Iran sell the oil at a discount. Saudi Arabia's and Libya's added production would bring more oil to the market. The impact will be larger on Europe because of the decline in the value of the euro, with Brent crude on a 12 month average basis costing 14% more now than in the peak price in 2008. By comparison in dollar terms the comparable figure is 4% higher for the U.S. At a price of Brent crude of $120 in 2012, according to Citigroup, energy costs would take up 9% of world GDP, putting pressure on a economic recovery in Europe and the U.S.

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It is hard to imagine that one is even writing about this, as shocking as it is- the 4 or 5 minutes between a decision to launch nuclear weapons and the end of life on this planet earth as we know it. Here Sam Nunn, a U.S. senator who was part of the negotiations for arms control and who is the leading American in this field talks about the unimaginable danger. He says the strategy from the Cold War where Russia and the U.S. put their nuclear forces in a position to be launched within minutes, 4 to 5 minutes, is outdated and needs to be changed. Hillary Clinton described the issue in the television debate. Yet this was not discussed because of the nature of the 2016 presidential election with lack of serious discussion.  And both Nunn and Clinton emphasize that once the missiles are in the air they cannot be ordered to go back. Accidental error, judgemental error, informational error in which one side thinks the other has launched a missile, a firing by mistake, are possible. In this situation Nunn says Trump is temperamentally unfit, and Clinton is fit to take on the responsibility. Yet the question this raises is as Nunn signals- is anyone but God fit to make this decision to launch nuclear weapons. Nunn says it is outdated and wrong to have only a few minutes, as such a decision cannot be made in a few hours or days, much less in 5 minutes. Nunn brings up a discussion he had in Moscow when he brought this up with Russians and president Putin. Russian president Putin told Nunn that he was fully aware of this. Putin's response was- "Senator Nunn, at some point it becomes automatic."  Nunn does not clarify what this means, or what Putin means to say. For people on the planet it is not enough to have Reagan, Gorbachev, Clinton, as Nunn mentions being responsible people for a nuclear decision. The current state of affairs is simply shocking and the lack of attention to this is also shocking. Equally dangerous is that 20 countries have weapons usable nuclear material, and sophisticated hacking of command and control processes is another danger.       ...

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President Trump announces the U.S. withdrawal from the Iran Nuclear Agreement of 2015 signed by president Obama. He calls it a bad deal and "a one sided agreement, that "didn't bring, calm, didn't bring peace, and never will." Since the signing of the agreement the conflicts in the Middle East have increased and relations between the U.S. and Iran have deteriorated under the Trump administration. During the election campaign candidate Trump and Republicans had criticized the deal and deal never gained Republican support. It was also not initially supported by France which called for stronger safeguards on nuclear weapons development. The appointment of John Bolton as National Security Adviser, and Mike Pompeo as the new Secretary of State, who were strong critics of the Iran nuclear deal also influenced president Trump. He was also influenced say aides by the success of his policy with North Korea of imposing strong bargaining pressure with tough sanctions on North Korea including Chinese sanctions, which led to the talks between North and South Korean presidents and the planned Trump meeting with Kim Jong-Un of North Korea. Iran's president Rouhani says Iran will stay with the agreement as the EU countries Germany, France plan to support the agreement. This could also leave an opening for future talks with Iran on a new peace agreement as  president Trump talked about Iranian people deserving a better deal at the end of his 11 minute announcement. As Stephens points out in a op-ed in the NYT Iran's economy needs the removal of sanctions so that focus could shift to economic development, as the lifting of sanctions have yet to result in increasing living standards and building infrastructure neglected during the sanctions years. ...

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One military expert says even if half of the Iraqi army can be put in shape it could turn the tide against the ISIS. Advice from U.S. military experts is for the Iraqi army to focus only on the ISIS and avoid hurting relations with the Sunni population. Advisers are seen as making a difference and needed also for the tribal forces. A major difficulty is that Shiite militias and advisors from Iran play a role in the forces loyal to prime minister Maliki. Following the U.S. training of the Iraqi Army at a cost of over $25 billion there was a period under prime minister Maliki when he appointed officers more for loyalty than for military skills and training. With the U.S. withdrawal the Iraqi Army languished in this situation. Reporters from NYT and WSJ have documented extensively the weakness of the Iraqi Army in commanding officers, in training and in equipment.

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Iraq is Iran's most promising market for gas exports. Iraq needs the gas for its power stations now that Islamic State has been decisively cleared from Iraq. Yet Iraq is having difficulty making payments to Iran for gas supplies because banks are not ready to handle the payments with the reimposed tighter U.S. sanctions and restrictions. The deputy head of media at the Electricity ministry in Iraq, Sadoun Shehan, told WSJ that transfer of money by Iraqi banks is prevented because of U.S. sanctions. U.S. sanctions were reimposed by the Trump administration after they were lifted in January 2016. The new sanctions prohibit gas exports from Iran. Iran had hoped to make the sales and also export to the European Union when sanctions were lifted. Iranian exports of gas that started in 2017 were itself delayed for 4 years by the war from Islamic State.  Iran has the second largest reserves of natural gas in the world. The Trump administration's sanctions have led to a drop of Iranian crude shipments by 29% in 3 months and added to upward pressure on oil prices to take prices to $80 a barrel. This issue has implications for India and China, particularly India as it faces both higher prices for oil and the tight restrictions in purchase of Iranian oil. ...

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The Trump administration proposes a zero policy for Iranian oil imports which says the U.S. will grant zero exemptions to countries importing Iranian oil.  Big importers China and India are likely to resist this policy.

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Israeli prime minister Netanyahu retracts his statement about rejecting a two state solution in an interview with Andrea Mitchell of NBC News. He says he meant that it was not possible under the current conditions with terrorism in the Middle East, Iran pursuing a nuclear weapon, and the Palestinian Authority having an alliance with the militant Hamas movement. In 2009 Netanyahu said he supported a two state solution in a speech at Bar-Ilan University, and the statement before the election was meant to bring out larger number of right wing votes. He also clarified his comments about Israeli Arabs "voting in droves," as meant to bring out large numbers of his own voters to vote, saying Israeli Arabs voting was "sacrosanct." The White House response was to say that it was free to support a two state solution at the United Nations, and U.S. president Obama discussed the comments on Israeli Arabs- seen widely as racist baiting- with Netanyahu in a phone conversation. The rift between the two leaders is now seen as irreparable and bigger than ever....

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A Pakistani court finds former prime minister Nawaz Sharif guilty of corruption. Sharif is sentenced for 10 years in prison and his daughter Maryam Sharif to 7 years. The corruption case is based on 4 apartments in central London which prosecution claims were bought with money from kickbacks during Sharif's period as prime minister in the 1990's, and later passed on to his sons and daughter. Mr. Sharif's party is the frontrunner in the upcoming election.

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The WSJ provides a fact check of Trump statements on crime, debt, and taxes. Trump says he is looking at a new plan for taxes not the $10 trillion in tax cuts over 10 years reducing tax collection by 22%, but something about a third of the size. No details are available on the plan. WSJ disputes Trump's statement that the U.S. is "one of the highest taxed nations in the world." WSJ points out that the U.S. in 2014 for federal, state and local government taxes collected 26% of gross domestic product in taxes, compared to average of 34% for about 30 countries, according to OECD. Debt to GDP ratio is about 75% that is high, but because of low interest rates the budget deficit is less than 3% of GDP, which is close to the long run average. For this reason economists say the government should invest in infrastructure and R&D that supports long run economic growth. On crime the record is mixed with increase in Chicago, Los Angeles, and New York City, but decreases in Washington D.C. and Baltimore. Police shootings were 67 in 2016 compared to 62 in July 2015, and the high being 280 officers in 1974 when Nixon was President. Crime was an issue in the 1968 Republican National Convention during the Vietnam era protests, police shootings and terror incidents attracted attention in July 2016, yet the situation today is very different from the war protests of the Vietnam era. On terrorism fact checks by the NYT and in Lyrarc shows Clinton at State Department and Panetta at Defense Department taking hawkish stands only to hit a barrier from President Obama for taking action needed in Syria, Iraq and Libya. Panetta's new book calls for robust action where needed. A Clinton administration would take action with allies in the Middle East. Even Hollande and Obama who pulled the U.S. and France out of following up in the French-British Sarkozy-Cameron led intervention in Libya, have changed policy, with Obama calling it his biggest mistake. France under Hollande with the U.S. is now actively engaged in the Middle East, having changed policy. It is highly unlikely that a Trump led policy which alienates most allies in the Middle East- Iran, Iraq and Saudis- is likely to work better than a determined Clinton-Panetta led effort which has support of the local countries on the ground actually currently on both sides because of complexities of Middle Eastern politics.  On trade a new administration will still have to work with China, India, the European Union, and other countries, as global trade supply chains are not likely to evolve overnight. Lessons will have been learned by Clinton about the need to bring back jobs and ensure the strength of U.S. manufacturing. Economic and jobs growth will require prudence in strengthening U.S. manufacturing coupled with global cooperation, which a Trump administration that alienates trading partners without the possibility of making any serious immediate gains in jobs, is highly unlikely to do better.      ...