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By:

Ruddhi Phadke

22 September 2024 at 10:17:54 am

Oil, Missiles and the Gate of Tears

As the Houthis target Saudi Arabia’s energy infrastructure, the widening West Asia conflict raises fresh concerns over global oil supplies and India’s economy. As President Donald Trump struggles to extricate the United States from the increasingly intractable conflict with Iran, the Middle East has become more combustible still. The Houthis, the Yemeni militia once regarded as a peripheral actor in the region’s wars, have opened a new front with remarkable audacity. Over the weekend, they...

Oil, Missiles and the Gate of Tears

As the Houthis target Saudi Arabia’s energy infrastructure, the widening West Asia conflict raises fresh concerns over global oil supplies and India’s economy. As President Donald Trump struggles to extricate the United States from the increasingly intractable conflict with Iran, the Middle East has become more combustible still. The Houthis, the Yemeni militia once regarded as a peripheral actor in the region’s wars, have opened a new front with remarkable audacity. Over the weekend, they launched coordinated strikes involving ballistic missiles, cruise missiles and drones against Saudi Arabia's energy infrastructure, hitting sensitive Aramco facilities in Jazan and Yanbu. The attacks were not merely another salvo in Yemen’s long war but a warning that the conflict is spilling across borders and drawing ever more of the Gulf into its vortex. This is not the first time the Houthis have targeted Saudi Arabia since the Iran conflict erupted. Riyadh and the Yemeni militia have traded blows before, in a rivalry that stretches back more than a decade. Although a fragile truce had tempered hostilities, the recent escalation has shattered any illusion of stability. Last week, the Houthis effectively closed the Bab-el-Mandeb Strait to Saudi shipping, bringing a substantial portion of the kingdom's oil exports to an abrupt halt. The narrow maritime chokepoint linking the Red Sea to the Gulf of Aden is one of the world's most vital trade arteries, carrying nearly 10 percent of global seaborne oil. For Saudi Arabia, it is an economic lifeline, with an estimated three-quarters of its oil exports passing through the strait. By disrupting this route and now striking Aramco's production facilities in Jazan and Yanbu, the Houthis are attacking not only the kingdom’s present oil exports but also its future production capacity. These strategic blows are being delivered with relatively inexpensive ballistic missiles and drones, allowing a lightly equipped militia to inflict outsized economic and geopolitical costs. The anti-ship cruise missile – Al-Mandab, named after the strait itself, can strike targets up to 300 km away. This radar guided missile costs a few hundred thousand dollars. Cheap Weapons Another example is the QUDS - a subsonic cruise missile gifted by Iran. It can travel nearly 150 km and costs just 50,000 dollars to make the missile. Houthis also rely on cheap drones like the SHAHED series. Some of the cheaper variants like SHAHED 131 cost just 10,000 dollars. Experts highlight that the Houthis are hurting the Saudi economy with weapons that cost less than what an average American makes in a year. The Yemeni group says that they are in no mood to stop the attacks. This leaves us with two big questions: Where are Trump’s guarantees and where is Pakistan? The United States has always projected itself as a net security provider, a pitch that was sold to Riyadh for decades. Today, when Saudi Arabia is battling Houthi attacks, the United States is missing. Islamabad is missing in action too. Islamabad has a mutual security pact with Riyadh. An attack on one is to be treated as an attack on the other as per the agreement. When it comes to billion-dollar loans or weapons, Pakistan is usually the first in line. When it comes about keeping promises, Islamabad is nowhere to be seen. Coming back to the Bab-el-Mandeb (which literally translates as the “Gate of Tears”), the name now carries an ominous resonance, especially if that gateway remains closed. For Saudi Arabia, the strait is an economic artery. The kingdom’s prosperity is built on the uninterrupted flow of oil exports, and any disruption to this vital route threatens its economic foundations. Today, Iran has tightened its grip around the Strait of Hormuz, while the Houthis are turning the Bab-el-Mandeb into another pressure point. The conflict is no longer confined to Iran’s borders or its confrontation with the United States. It has spilled into the Red Sea, into the arteries of global commerce, and into the heart of the world’s largest oil-producing region. Impact on India Renewed Houthi attacks on Saudi Arabia, particularly targeting Aramco oil facilities, could have significant economic and strategic implications for India, one of the world’s largest crude oil importers. India imports nearly 85 per cent of its crude oil requirements, with Saudi Arabia remaining among its top suppliers. Any disruption to Aramco’s production or export infrastructure could tighten global oil supplies, leading to a spike in international crude prices. Higher oil prices would increase India’s import bill, widen the current account deficit, and put pressure on the rupee. Costlier crude could also fuel inflation by raising transportation, manufacturing and energy costs, complicating the Reserve Bank of India’s efforts to manage price stability. The attacks also heighten concerns over the security of energy infrastructure and shipping routes in the Gulf. If hostilities spill over to the Red Sea or threaten maritime traffic through the Bab el-Mandeb Strait, shipping insurance premiums and freight costs could rise. This would affect not only crude oil imports but also India’s trade with Europe and West Asia. India also has strategic interests in the Gulf due to the presence of over nine million Indian expatriates in the region, many of whom live and work in Saudi Arabia and neighbouring countries. Escalating conflict could pose risks to their safety and disrupt remittance flows. While India has diversified its crude sourcing in recent years by increasing imports from countries such as Russia, Iraq and the UAE, prolonged instability in West Asia would continue to expose the Indian economy to energy price volatility. The situation underscores the importance of expanding strategic petroleum reserves, diversifying energy imports, and accelerating the transition towards renewable energy to reduce dependence on imported fossil fuels.

India waits to lasso diamantaire Mehul Choksi

Mumbai: India rubbed its hands gleefully as the Belgium Police honoured its request to arrest the absconder diamantaire Mehul Chinubhai Choksi – more than seven years after he, along with his nephew Nirav Deepak Modi - allegedly duped the Punjab National Bank of nearly Rs. 13,800-crores.

 

The scam involving the ‘Mehul Mama-Nirav Bhanja’ erupted in Jan 2018, after the PNB lodged a complaint with the Central Bureau of Investigation (CBI).

 

By then the kin, along with many of their family members, winked and slipped out of the country, leaving a rattled India rubbing its palms in disappointment.

 

A political-cum-financial storm raged, embarrassing the Bharatiya Janata Party government of Prime Minister Narendra Modi a year before the Lok Sabha elections.

 

Multiple agencies launched a multi-pronged probe into what became the biggest banking scam in the past quarter century – and almost four times bigger than the stock market-cum-banking fraud the late Big Bull Harshad Mehta had inflicted on the Indian economy 33 years ago (in April 1992) – when it was just opening up.

 

In Belgium

According to official reports, Choksi was living with his Belgium citizen-wife Preeti in Antwerp, a global diamond hub, presumably for the past 18 months on a ‘residency permit’ acquired through questionable means, for medical reasons.

 

Earlier, he shot to the headers (June 2021) while being taken in a wheelchair to a court by the Dominican Republic's Police on charges of sneaking into the small country in the Caribbean Sea, North America.

 

Interestingly, as the Antigua & Barbuda government initiated the process to cancel his citizenship acquired through an investor visa, Choksi had suddenly gone ‘missing’ till he surfaced in the Dominican Republic.

 

The April 2025 action by Belgium followed a request by India’s CBI and the financial frauds specialist Enforcement Directorate (ED) to nab Choksi as the InterPol had revoked his Red Corner Notice in 2023.

 

Mama and Bhanja

‘Mama’ Choksi is the founder-owner of Gitanjali Group while ‘bhanja’ Nirav’s Firestar plus other companies – and the duo, with some PNB officials hand-in-glove – conspired to make a ‘mamu’ of not only PNB, but other banks, as it subsequently tumbled out.

 

After making a quiet exit, Choksi was detected living in the verdant Antigua & Barbuda Isles (West Indies), then attempted entry to the Dominican Republic, was sent back to Antigua & Barbuda and then went to Belgium where he was nabbed on Sunday.

 

Similarly, Modi was found sauntering on the streets of London and nabbed in March 2019. He remains in jail there since India's extradition is still pending.

 

However, India is keeping its fingers crossed that it may finally lay hands on Choksi, bring him to India and face trial in the PNB scam, though it may take time.

 

Born in Mumbai (1959) and educated in Gujarat, Choksi, 66, and wife Preeti have three children.

 

The Rs. 13,800-crore PNB scam

In the modus operandi revealed after India’s second-largest PSU bank PNB admitted it was scammed, Choksi and Modi used fraudulent Letters of Undertaking (LoU) to get overseas credits or loans from Indian banks.

 

The PNB first informed the Reserve Bank of India (RBI) of the fraud and then lodged a criminal complaint with the CBI in Jan. 2018, plus another CBI complaint in Feb, that led to a FIR against Modi and Choksi and their companies.

 

The ED entered the scene to probe the allegations of money-laundering through the LoUs – which they allegedly misused to avail short-term business finances from foreign branches of Indian banks.

 

The probe said that the duo were availing the LoUs from the PNB’s Brady House Branch from March 2011, and over the next six-seven years, managed to get a whopping 1,200-plus LoUs like a breeze with the help of some friendly bankers within.

 

Post-scam, the gold-diamond companies Gitanjali Group and Firestone Group with multiple operations in India and abroad have largely wound up, while some personal assets of the mama-bhanja have been auctioned to recover a part of the dues.

 

ED's plea to declare Choksi fugitive stuck for seven years

Even as absconding diamantaire Mehul Choksi, a key accused in the Punjab National Bank loan fraud case, has been arrested in Belgium, the ED's plea to declare him a fugitive economic offender has been pending before a court in Mumbai for nearly seven years.


Choksi, 65, and his nephew diamantaire Nirav Modi are the prime accused in the Rs 13,000 crore PNB bank loan fraud case. Choksi was arrested in Belgium following an extradition request by Indian probe agencies, official sources said on Monday.


The Enforcement Directorate had filed the application in July 2018, seeking to declare Choksi an FEO and confiscate his assets under provisions of the Fugitive Economic Offenders Act.


However, the matter has witnessed repeated delays owing to a barrage of applications filed by the accused in the PMLA court and the Bombay High Court alleging procedural lapses in the Enforcement Directorate's plea.


"The court is kept busy with frivolous applications, and hearing on our application to declare him (Choksi) an FEO has been adjourned for the past seven years,” an ED officer had said after the hearing was once again deferred this February.


"The court should have continued the hearing and taken a decision on the future course of action once the application was moved," the officer had said.

He had urged the court to take note of the repeated filing of similar applications and to not entertain them.


Choksi's lawyer had informed the court that the accused was undergoing treatment for suspected cancer in Belgium and intended to file an application in connection with his health.


Under the FEO Act, an individual can be declared a Fugitive Economic Offender if a warrant has been issued against him for an offence involving Rs 100 crore or more and he has left India while refusing to return. Once declared an FEO, the person's property can be confiscated by the investigating agency.


Choksi had challenged the ED's application in the Bombay High Court, alleging that the agency "had not followed proper procedure before filing the application and, hence, it stands vitiated".


However, in September 2023, the High Court dismissed his plea, ruling that the ED had adhered to the prescribed format under the FEO Act. It also vacated a stay on the special court's proceedings.


Despite this, the hearing on declaring Choksi FEO could not commence, with Choksi continuing to file applications before the special court through his lawyers.


While most of these pleas have been dismissed, a few remain pending. His latest attempt to stall proceedings through a plea to recall the notice issued on the ED's FEO application was rejected in December 2023.


According to ED officials, Choksi left India under suspicious circumstances in early January 2018.


Shifting stance

Choksi's counsel has argued that the ED kept shifting its stance on the material grounds for declaring him an FEO and that the suspension of his Indian passport made it impossible for him to return for investigation.

The court, however, rejected this argument, stating that the notice was issued based on accurate information and not based on "wrong facts or mistaken assumptions".


ED claimed the accused left the country under suspicious circumstances in the first week of January 2018.


Nirav Modi has already been declared as an FEO by the special court. He has been lodged in jail in London since 2019.

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