Yellen Says Iran’s Actions Could Cause Global ‘Economic Spillovers’, Warns of More Sanctions

 US Treasury Secretary Janet Yellen speaks during a press conference amid the IMF-World Bank Group spring meetings, at the Treasury Department in Washington, DC on April 16, 2024. (AFP)
US Treasury Secretary Janet Yellen speaks during a press conference amid the IMF-World Bank Group spring meetings, at the Treasury Department in Washington, DC on April 16, 2024. (AFP)
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Yellen Says Iran’s Actions Could Cause Global ‘Economic Spillovers’, Warns of More Sanctions

 US Treasury Secretary Janet Yellen speaks during a press conference amid the IMF-World Bank Group spring meetings, at the Treasury Department in Washington, DC on April 16, 2024. (AFP)
US Treasury Secretary Janet Yellen speaks during a press conference amid the IMF-World Bank Group spring meetings, at the Treasury Department in Washington, DC on April 16, 2024. (AFP)

US Treasury Secretary Janet Yellen warned Tuesday of potential global economic damage from rising tensions in the Middle East and pledged that the US and its allies won't hesitate to use their sanctions powers to address Iran's "malign and destabilizing activity" in the region.

She made her remarks ahead of this week's spring meetings of the International Monetary Fund and World Bank, saying Iran's weekend missile attack on Israel "underscores the importance of Treasury’s work to use our economic tools to counter Iran’s malign activity."

She added: "From this weekend’s attack to the Houthi attacks in the Red Sea, Iran’s actions threaten the region’s stability and could cause economic spillovers."

Iran's missile attack on Israel early Sunday came in response to what it says was an Israeli strike on Iran's consulate in Syria earlier this month. Israel’s military chief said Monday that his country will respond to the attack, while world leaders caution against retaliation, trying to avoid a spiral of violence.

As the IMF and its fellow lending agency, the World Bank, hold their spring meetings this week, high on the agenda are the fast-rising tensions between Iran and Israel and what escalation could spell for the global economy.

Israel and Iran have been on a collision course throughout Israel’s six-month war against Hamas in Gaza. The war erupted after two armed groups backed by Iran led an attack on Oct. 7 that killed 1,200 people in Israel and kidnapped 250 others. An Israeli offensive in Gaza has caused widespread devastation and killed over 33,000 people, according to local health officials.

"We’ve targeted over 500 individuals and entities connected to terrorism and terrorist financing by the Iranian regime and its proxies since the start of the Administration," Yellen said, citing sanctions against Iran’s drone and missile programs, Hamas, the Houthi militias, Hezbollah, and other Iraqi militia groups.

"Treasury will not hesitate to work with our allies to use our sanctions authority to continue disrupting the Iranian regime’s malign and destabilizing activity," she said. "I fully expect we will take additional sanctions actions against Iran in the coming days."

The annual gathering will take place as other ongoing conflicts, including Russia's invasion of Ukraine, threaten global financial stability.

Yellen in February offered her strongest public support yet for the idea of liquidating roughly $300 billion in frozen Russian Central Bank assets and using them for Ukraine’s long-term reconstruction.

She said Tuesday that the US is "continuing to work with our international partners to unlock the economic value of immobilized Russian sovereign assets and ensure that Russia pays for the damage it has caused."

Yellen added that she will meet with Group of Seven finance leaders Wednesday to continue discussions on the topic and will look at "a series of possibilities, ranging from actually seizing the assets to using them as collateral."

Another major issue for this year's meetings on the US side, Yellen said, will be ongoing conversations about Chinese industrial policy that poses a threat to US jobs and the global economy. She traveled to Guangzhou and Beijing earlier this month, to hold "difficult conversations" with counterparts over what she describes as China's overcapacity in its wave of low-priced Chinese green tech exports that could overwhelm factories in the US and make it impossible to compete.

Yellen said she plans to meet later this week with her Chinese counterparts for a fourth meeting of the US-China Economic and Financial Working Groups, "to share information, identify potential areas of cooperation, and, when we disagree, frankly communicate concerns."

US Treasury and China’s Ministry of Finance launched the economic working groups in an effort to ease tensions and deepen ties between the nations.



Saudi Transport, Logistics Sector Set for 10% Growth in Q2

An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
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Saudi Transport, Logistics Sector Set for 10% Growth in Q2

An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)

As Saudi companies start reporting their Q2 financial results, experts are optimistic about the transport and logistics sector. They expect a 10% annual growth, with total net profits reaching around SAR 900 million ($240 million), driven by tourism and an economic corridor project.

In Q1, the seven listed transport and logistics companies in Saudi Arabia showed positive results, with combined profits increasing by 5.8% to SAR 818.7 million ($218 million) compared to the previous year.

Four companies reported profit growth, while three saw declines, including two with losses, according to Arbah Capital.

Al Rajhi Capital projects significant gains for Q2 compared to last year: Lumi Rental’s profits are expected to rise by 31% to SAR 65 million, SAL’s by 76% to SAR 192 million, and Theeb’s by 23% to SAR 37 million.

On the other hand, Aljazira Capital predicts a 13% decrease in Lumi Rental’s net profit to SAR 43 million, despite a 44% rise in revenue. This is due to higher operational costs post-IPO.

SAL’s annual profit is expected to grow by 76% to SAR 191.6 million, driven by a 29% increase in revenue and higher profit margins.

Aljazira Capital also expects a 2.8% drop in the sector’s net profit from Q1 due to lower profits for SAL and Seera, caused by reduced revenue and profit margins.

Mohammad Al Farraj, Head of Asset Management at Arbah Capital, told Asharq Al-Awsat that the sector’s continued profit growth is supported by seasonal factors like summer travel and higher demand for transport services.

He predicts Q2 profits will reach around SAR 900 million ($240 million), up 10% from Q1.

Al Farraj highlighted that the India-Middle East-Europe Economic Corridor (IMEC), linking India with the GCC and Europe, is expected to boost sector growth by improving trade and transport connections.

However, he warned that companies may still face challenges, including rising costs and workforce shortages.