After the Taliban announced that the work of “Pashdan Dam” in Herat has been completed up to 80 percent and will soon be put into operation, it faced a wave of criticism in the Islamic Republic of Iran.

Eisa Bozorgzadeh, the spokesperson of Iran’s water industry, said that the construction of this dam will severely affect the drinking water of several million Iranians living in the city of Mashhad and called for an adjustment in the Taliban’s decision. Meanwhile, Ismail Baqaei, the spokesman of the Iranian Foreign Ministry, has requested the cooperation of the Taliban government to remove the obstacles to the entry of water from Afghanistan to Iran. He reminded that Iran’s rights and bilateral treaties between the two countries should be considered in the exploitation of water resources.

The Taliban recently completed the construction of the “Pashdan Dam” in Herat, and earlier, Zabihullah Mujahid, the spokesperson of the Taliban government, published a video of the gathering of citizens around this dam on his account in the X. The spokesperson of Iran’s Foreign Ministry has protested the withdrawal of water from Herat’s “Pashdan Dam” and said “exploitation of water resources and water basins cannot be done without respecting Iran’s rights in accordance with bilateral treaties or customary principles and rules, as well as the important principle of good neighborliness as well as environmental considerations.”

Esmail Baqaei said that Iran’s Foreign Ministry, in contact with the ruling authorities in Afghanistan, expressed its “strong objection and concern to the disproportionate limitation of water entering Iran or diverting the natural course of rivers”.

The authorities of the Taliban government have not reacted on the water issue so far.

Earlier, Bozorgzadeh also called the water withdrawal from Herat’s Pashdan Dam “one-sided exploitation” of the Hariroud River, which, according to him, “caused a violation of customary rights.”

He added that “the effects of this unilateral action by the Afghan side will not only affect the supply of drinking water and health of several million people, but also lead to widespread damage to the downstream environment.”

Pashdan dam, which is located in Karkh district of Herat, is one of the main sources of irrigation for the green areas of Herat city and the green belt of this province, and its construction started in 2010.

It is said that Pashdan Dam has the capacity to irrigate about 18 thousand hectares of land and produce two megawatts of electricity.

In the past, Iran has expressed concern about the number of dams and efforts to build more dams in Afghanistan.

Hirmand River is a potential point of conflict between Iran and Afghanistan  

The Hirmand River on the border of Iran and Afghanistan is a potential point of conflict over scarce water resources in the region between these two countries.

Iran and Afghanistan have signed a treaty for the use of Hirmand water in 1972, based on which the annual amount of water that enters Iran from the Hirmand River is determined, but Iran is not aware of the amount of water that enters Iran and this country is not satisfied with the flow of the water.

The water treaty between Afghanistan and Iran was signed between Musa Shafiq and Amir Abbas Hoyda, the then prime ministers of the two countries.

The officials of the Taliban government have cited the lack of rainfall and the lack of a device to measure the amount of water entering Iran as the main reasons for not reaching the amount of water that Iran has received, and they have claimed that in some years, Iran has received water more than the amount of water that is stipulated in the treaty between the two countries.

Almaz Fried Chicken, a new Indonesian fast-food chain, has opened 37 outlets across Indonesia in just a few months. Most of these are located in Greater Jakarta, with several others on Sumatra Island. This rapid expansion follows a widespread boycott of Israeli-related products.

In early December, Chief Executive Okta Wirawan stated that the chain expects to break even seven months after opening its first outlet in June. The company plans to open 10 more outlets by the end of the year, targeting consumers who previously frequented Western chains like KFC.

“Our customers feel that by buying Almaz products, they are not only getting quality food but also contributing to a noble cause,” Wirawan told Nikkei Asia. He added that the company is committed to donating 5% of its profits to charity, including aid to Palestinians.

More than a year after the outbreak of the Israeli-Palestinian conflict, customers in Muslim-majority countries such as Indonesia and Malaysia continue to boycott Western brands with links—or perceived links—to Israel. Food chains and consumer goods have been particularly affected, with local operations of major brands like KFC, McDonald’s, Pizza Hut, Starbucks, and Unilever taking a hit.

Conversely, the boycott has spurred the growth of local businesses producing similar products in both Southeast Asian countries. This trend has also benefited consumer goods and cosmetics manufacturers, potentially reshaping the consumer-facing sectors in Indonesia and Malaysia.

In Malaysia, many consumers have turned away from Starbucks and are now patronizing local caffeine suppliers like ZUS Coffee and Gigi Coffee. Independent cafes are also experiencing a surge in popularity.

“Since the boycott, we have seen more customers coming to independent cafes like ours,” said a barista at Artisan Roast Coffee in Kuala Lumpur. He noted that young Malaysians are embracing the coffee-drinking trend, with sales increasing by about 10% to 20%.

In Indonesia, Fore Coffee is quickly capitalizing on this opportunity. Two months after the Israel-Hamas conflict began, Fore obtained halal certification to support its rapidly expanding operations.

“Indonesia is the largest Muslim country, so having this halal certification impacts our sales quite significantly,” Fore co-founder and CEO Vico Lomar told Nikkei Asia in December. “Maybe the boycott itself is helping local people to like local products,” he added.

According to a consumer survey published by GlobalData in July, nearly half of respondents worldwide have joined boycotts against certain brands due to recent wars and conflicts. In Malaysia and Indonesia, however, the figure is much higher, at around 70%.

The share prices of Indonesian and Malaysian listed companies affected by the boycott of Israel have fallen significantly since October 2023.

Indonesia and Malaysia have long been staunch supporters of Palestine. Neither country has diplomatic relations with Israel. At a recent meeting of several Muslim-majority countries in Egypt, Indonesian President Prabowo Subianto condemned the double standards of Western countries on human rights concerning Palestine. “Human rights are not for Muslim peoples. This is the reality. This is very sad,” he said.

Malaysian Prime Minister Anwar Ibrahim has intensified his criticism of the United States for its support of Israel. He has rejected pressure to recognize Hamas as a terrorist group and has banned Israeli ships from entering Malaysian ports.

The People’s Bank of China (PBoC) plans to cut interest rates this year as it makes a historic shift towards a more orthodox monetary policy to align with the U.S. Federal Reserve and the European Central Bank.

In a statement to the Financial Times, the PBoC said it is likely to cut interest rates from the current 1.5 per cent level “at an appropriate time” in 2025. The bank added that it would prioritize “the role of interest rate adjustments” and move away from “quantitative targets” for credit growth, which would mean a transformation in Chinese monetary policy.

Most central banks, like the Fed, have a single policy variable, the benchmark interest rate, which they use to influence credit demand and activity in the economy. In contrast, the PBoC not only sets a large number of different interest rates but also provides informal guidance to banks on how much they should expand their loan books.

While this guidance has been the most important tool in managing the economy for decades – as credit has been channeled to high-growth sectors such as manufacturing, technology, and property – officials within the PBoC now believe reform is urgent.

“Interest rate reform will probably be the real focus of the PBoC in 2025,” said Richard Xu, chief China financial analyst at Morgan Stanley in Hong Kong. “China’s economic development urgently needs to move away from a mindset that focuses solely on expanding the market size [of banks’ loan books],” he added.

Loan demand has collapsed due to a prolonged slowdown in the property market. The PBoC also fears that loan growth targets will lead to indiscriminate lending without considering risk, which in the long run means waste.

“In line with the requirements of high-quality development, these quantitative targets have been phased out in recent years,” the central bank said. “The PBoC will pay more attention to the role of interest rate control and improve the formation and transmission of market-oriented interest rates.”

As part of the regime change, the PBoC announced last year that its main policy instrument would be the seven-day reverse repo rate instead of the interest rates it has used to date.

The reduced emphasis on credit growth targets could rein in overcapacity in China, which has led to domestic bad debts and disruptions in global industries such as steel.

But the central bank is struggling to implement the change in interest rates because the government wants to channel money into the high-tech and manufacturing sectors, which were easier under the old credit expansion system.

Even as it tries to make a structural change in policy, the PBoC is also under pressure to revitalize the Chinese economy. The central bank has cut the seven-day interest rate twice and the five-year rate, which affects mortgage prices, three times through 2024 as part of its most aggressive stimulus package since the Covid-19 pandemic.

These moves came in the context of President Xi Jinping’s commitment to achieve 5 percent economic growth despite problems in China’s property sector and trade tensions with the U.S.

PBoC governor Pan Gongsheng and his predecessors Yi Gang and Zhou Xiaochuan pushed for risk-based pricing of loans in recent meetings with officials from some of China’s largest banks, according to participants.

Bankers attending the meetings warned of possible confusion in pricing long-term loans as the market is used to the PBoC’s guidance, noting the difficulty of switching to the new system.

For international investors, if the PBoC succeeds, Chinese monetary policy will start to resemble the system they are used to in the U.S., Europe, or Japan.

For the first time in two decades, the central bank also bought government bonds on the open market in 2024 to inject money into the financial system, following the Fed’s policy.

Analysts said the PBoC still lacks some key ingredients for an interest-rate-based system, such as a program of routine, public meetings to make policy decisions.

Without such guidance, “market participants may find themselves guessing what will happen next,” said Haibin Zhu, China economist at JPMorgan Chase.