Philips to Sell-Down Retained Interest in Lighting within One Year to Transform into Focused Health Technology Company

By: Azhar Azam

The sale of – Koninklijke Philips (Royal Philips) – increased by 2.1% to EUR 17.8 billion for 2017 as the Dutch multinational goes through the process to spin off Lighting, Lumileds and Automotive, and other businesses in order to transform into a focused health technology company.

Major businesses – Personal Health (EUR 7.3 billion) and Diagnosis & Treatment (EUR 6.9 billion) were the key performers during the outgone year – reflecting 3% sales growth while Connected Care & Health Informatics (EUR 3.2 billion) business lingered flat.

The gross margins increased to EUR 8.2 billion – 46.0% of sales whereas adjusted EBITA income from operations rose 12.1% – to EUR 2.2 billion. The company also generated a strong free cash flow of EUR 1.2 billion for the fiscal year ended December 31, Annual Report 2017 released in February 20 stated.

Personal Health (EUR 1,221 million), Diagnosis & Treatment (EUR 716 million), and Connected Care & Health Informatics (EUR 372 million) businesses reported operating income growth of 16.7%, 10.4%, and 11.8% respectively – partially offset by losses in HealthTec Other (EUR 109 million) and Legacy Items (EUR 48 million).

Philips fixed contractual cash obligations and commitments stood at EUR 10.2 billion as of December 2017 – including major cash obligations of long term debt (EUR 4.3 billion), trade and other payables (EUR 2.1 billion), and interest on debt (EUR 1.8 billion).

Royal Philips ceased to consolidate Philips Lighting since the end of November 2017 as the company is gradually losing its interest in Philips Lighting business after November 28, 2017 ‘bookbuild offering’.

Following objective to fully sell down the stakes in Philips Lighting, the company made several transactions in 2017 to slice its stakes in Philips Lighting from 71.23% in December 2016 to 29.01% in December 2017.

Philips retained financial interest in in Philips Lighting represented EUR 1,264 million on December 31, 2017 – which the group plans to sell down within one year as well as placing the assets as ‘held for sale’.

The Netherlands technology company also completed the sale of 80.1% stakes in the combined Lumileds and Automotive businesses to certain funds managed by the affiliates of Apollo Global Management on June 30, 2017.

As a result of discontinued operations, employee headcount in Philips fell by 43,764 – to 70,967 in 2016. Employee strength however increased by 2,983 – to 73,951 in 2017 after the addition of image guided therapy, population health management, digital pathology, and other businesses.

Diagnosis and Treatment (25,757); Personal Health (23,170); Healthtech Other (13,965); Connected Care & Health Informatics (10,949); and Legacy Items (109) are the existing Philips employees by segment, from largest to lowest.

Roughly 45,954 of Philips workforce is located in Western Europe (21,055); North America (20,937); and other mature geographies (3,962). Precisely 27,997 people are employed in growth geographies.

The company has completed three two mergers and acquisitions (M&A) in the last few years – Volcano, and Spectranetics – to strengthen its image guided therapy business. It also completed acquisition of Wellcentive to compliment population health management portfolio.

In 2017, Philips also entered into a partnership B. Braun to innovate and accelerate growth in ultrasound-guided regional anesthesia and vascular access.

Diagnosis and Treatment business is the pivot to the Philips health technology strategy on the promise of precision medicine and least-invasive treatment and therapy. Based on sales, it is one of the world’s leading health technology companies along with peers like Medtronic, General Electric, and Siemens.

The competition is expected to intensify as the competitive landscape in the healthcare industry is growing with surfacing of new market players.

Philips Diagnosis and Treatment business segment comprises of Diagnostic Imaging (MRI, CT, Advanced Molecular Imaging, Diagnostic X-ray (digital X-ray, mammography, and integrated clinical solutions), Image-Guided Therapy (interventional X-ray systems including cardiology, radiology, and surgery and interventional imaging and therapy devices), and Ultrasound (diagnosis, treatment planning, and guidance for cardiology, general imaging, obstetrics/gynecology, and point-of-care applications).

Nearly half of the Diagnosis & Treatment business revenue is derived from Diagnostic Imaging (49%) whilst Image-Guided Therapy and Ultrasound businesses make up 30% and 21% of the total business segment sales.

Double-digit growth in in Diagnostic Imaging order intake powered Philips to maintain strong growth in China, partially driven by strong toehold in private hospitals which was aided by strategic partnership with Health 100 – the largest health examination organization in China.

In a bid to drive growth in Diagnostic Imaging – Philips introduced digital MR Provida 1.5T system to provide enhanced clinical performance and increased productivity alongside introducing the latest configuration of its IQon Spectral CT, optimized to support the needs of emergency and oncology care.

Philips has also been shipping the world’s first and only fully digital PET/CT system – Vereos –since third quarter of 2017, enunciating to achieving market share over superb resolution, accuracy, and efficiency.

Supporting the transition to a circular economy, Philips continues to expand its Diamond Select refurbishment program – to actively pursue the trade in program of various medical equipment such as MRI, CT, and cardiovascular systems , to repurpose the materials. The practice will continue until all the professional healthcare equipment is covered.

Philips Personal Health business consisted of Health & Wellness (mother & child care, oral health), Personal Care (male grooming, beauty), Domestic Appliances (kitchen appliances, coffee, air, garment care, floor care), and Sleep & Respiratory Care (sleep, respiratory care, respiratory drug delivery).

In 2017, the four sub-segments contributed to the company sales by 21%, 25%, 32%, and 22% respectively.

Connected Care & Health Informatics business includes Patient Care & Monitoring Solutions (enterprise-wide patient monitoring solutions, diagnostic ECG data management, therapeutic care), Healthcare Informatics (IT solutions for radiology, cardiology, and oncology departments, PACS, EMR, UDM) and Population Health Management (solutions for increased patients engagement, satisfaction and compliance like telehealth, remote patient monitoring, cloud-based solutions for health organizations to manage population health).

Patient Care & Monitoring Solutions outperformed by generating 78% of total sales in Connected Care & Health Informatics business whilst Healthcare Informatics and Population Health Management interjected 15% and 5% respectively.

The annual base compensation of Philips board of management for 2017 was: F.A. van Houten (EUR 1,205,000); A. Bhattacharya (EUR 700,000); and M.J. van Ginneken (EUR 550,000).

In addition to annual base compensation, a variable annual incentive can also be earned by members of Board of Management on the achievement of specific targets. Based on on-target performance metrics, F.A. van Houten (105.4%), A. Bhattacharya (80.5%) and M.J. van Ginneken (75.5%) will realize annual incentive of EUR 1,270,166; EUR 553,392; and EUR 69,168 respectively in 2018.

Dar-ed Pakistan Total Debt: Every Pakistani Household Owes Rs. 830,000

By: Azhar Azam

Pakistan’s total debt and liabilities (TDL) watered up to perspiring $242.8 billion at the end of December 2017 – booking an increase of 47.3% or $78.0 billion since June 2013 when the PMLN’s government took up the baton. 

The increase in local currency is more vexing – 64.1% or Rs. 10.5 trillion – to Rs. 26.8 trillion from Rs. 16.3 trillion in June 2013. As a result, every Pakistani owes Rs. 129,000/- and each Pakistani household is indebted with Rs. 830,000.

Total debt and liabilities of the economy-torn country now makes 74.7% of gross domestic product (GDP) – up from 68.6% in June 2013, the figures released by State Bank of Pakistan (SBP) on Friday showed.

In four and half years, federal and provincial governments and public sector enterprises (PSEs) borrowed Rs. 6.7 trillion ($50bn) from banks to pole an increase of 65.0% in domestic debt and liabilities (DDL) – to Rs. 17.0 trillion ($153.9bn) from Rs. 10.3 trillion ($103.9bn) in June 2013.

Similarly, external debt and liabilities (EDL) jetted 46.0% or $28.0 billion at an average of more than $6.0 billion annually – to $88.9 billion from $60.9 billion in June 2013. Central government’s EDL for FY2017 remained $14.4 billion.

First half (July to December) of FY2018 being the basest during which the total external borrowings and obligations grew sorely by $5.8 billion and is likely to double for the twelve-month period ending June 30.

The sharp rise in EDL also beats the prediction of the incumbent Punjab Finance Minister Dr. Ayesha Ghaus Pasha’s husband and Former Finance Minister Dr. Hafeez Pasha that Pakistan’s external debt and liabilities will sail through $90 billion by June 2019.

In a latest development, the government also confessed that the country has deteriorated its external debt paying capacity and also growth of external debt in proportion to the foreign exchange reserves has considerably increased.

External debt servicing combined with always-mounting imports is one of the largest harm to the bleeding national economy. Since June 2013, Pakistan has spent $29.5 billion on account of external debt’s principal and debt servicing.

The FY2017 recorded the highest ever external debt servicing year – repaying $8.1 billion, $6.5 billion in principal loans reimbursement and $1.6 billion in interest payment. In 6M-FY2018, a total of $3.6 has already been incurred on the same account.

Sharif-controlled government continues to camouflage its inefficiency and failure to discharge its managerial responsibilities by blaming Middle Eastern turmoil and capital investments in CPEC-linked projects for country’s flagging economic conditions but is inaudible on torpid exports, rising current account deficit, and dropping rupee value.

As powerful former finance minister Ishaq Dar manages to survive in a western hospital over JIT syndrome, Pakistan’s economy however drastically needs some candid financial clinicians to get rid of ‘intensive care unit’.

US FY2019 Defense Budget: Where $716 billion will be Spent?

By: Azhar Azam

National defense and national security

Originally conceived from national defense to protect a nation state militarily – national security today is broader concept which is assumed by the enacting government to shield the country and citizens from an array of military and non-military threats.

Though the scope of national security now embraces several strategic and diplomatic measures destined for economic, institutional, political, energy, ecological, and transnational security as well as protection from terrorism and natural disasters – yet national defense engulfs all.

US is the country with largest national defense budget

United States is the country with the largest national defense budget in the world – spending more than the defense budgets of China, France, India, Japan, Russia, Saudi Arabia, and United Kingdom combined.

Recent Pentagon’s budget request for FY2019 centers US National Security Strategy (NSS), National Defense Strategy (NDS), and Nuclear Posture Review (NPR) in response to growing political, economic, and military influence of China and Russia in addition to deter and counter North Korea and Iran.

The plugged strategies and assessment embark on to build a more lethal, agile, and ready US joint Force to counter adversaries, protect American people, advance American influence, and preserve peace through strength.

US proposed national defense budget for FY2019

Proposed US national defense budget supersedes all previous to a record $716 billion for FY2019 – including $617 billion for DOD Base Budget, $69 billion for Overseas Contingency Operations (OCO), and $30 billion for other defense expenditures.

Pentagon’s delegates exclude $30 billion other defense outflows as it attaches to Energy and other departments which are responsible to superintend American nuclear weapons. Moreover under OMB direction, OCO funding will move to base budget with effect from FY2017 – that will reduce OCO size while staying in the same topline.

Department of Defense (DOD) funding (Base + OCO) would increase from $612bn in FY2018 to $686bn in FY2019 – an increase of $74bn from the running fiscal year. The defense budget would steadily grow and is forecasted at $742bn through FY2023.

Department of Defense (DOD) is however confronting snags over continuing resolutions (CR) despite both chambers of Congress – the House and the Senate – lifted the spending caps through March 23 to end a brief partial government shutdown.

Undersecretary of Defense, CFO and Comptroller, David L. Norquist and Director, Force Structure, Resources, and Assessment, Joint Staff, Lt. Gen. Anthony R. Ierardi defended the increase of $74 billion in a news briefing as the US forces have chafed $406.5 billion in ‘lost readiness, maintenance, and modernization’ over the period of five years and ‘with the bipartisan budget agreement, that hemorrhaging stops.’

Adding more troops to reinforce military end strength 

One the fattest defense budget would add a total of 25,900 troops to the US military end strength in FY2018-19 and 56,600 through FY2023 – bringing active and reserve components to 2,155,800 and 2,186,500 through FY2019 and FY2023 respectively.

Major Acquisition Plans

In pursuit of developing a lethal force, DOD has major weapon acquisition plans of $144.3 billion in FY2019 such as 77 Lockheed Martin’s F-35 Joint Strike Fighter combat aircrafts for $10.8 billion, 15 Boing’s KC-46A Pegasus Tanker aerial refueling aircrafts for $3.0 billion and 24 Boing’s F/A-18E/F Super Hornet multirole fighter jets for $2.0 billion.

Another 10 anti-submarine Boeing’s Poseidon P-8 aircrafts will be purchased for $2.2 billion with 54 ships to be purchased in the next five years – the current size of 289 ships will increase to 326 ships by FY2023.

Missile defense program surges from $8.5 billion in FY2017 to $9.9 billion in FY2018 and FY2019 and with an additional procurement of 20 missiles, the capacity will be raised from 44 to 63 by FY2023.

Two Virginia-class Submarines for $7.4 billion and three DDG-51 Arleigh Burke-class Destroyers for $6.0 billion are also on the DOD shopping list to reinforce the US navy strength. Two each of these naval systems were purchased in FY2018 also.

Besides purchase of fighter and strategic jets, missile defense, submarines, and multi-mission offensive and defensive destroyers – various other aircrafts, combat and cargo helicopters, munitions, nuclear deterrent, space, and ground systems will also be part of DOD procurement plan.

Military pay, benefits, and compensation

Military pay and benefits and compensation funding is the single-largest defense expenditure which nearly makes half of DOD base budget and also includes defense health program (DHP), DOD education activity, family housing and others.

For the FY2019, the proposed military pay rise is 2.6 percent – which beats FY2018 pay rise and will be the largest in nine years. Linked with employment cost index, the pay of an E6 Army staff sergeant will be increased by $1,169.

A sum of $10.5 billion will be spent on facilities investments in FY2019 – 7% more than the prior year’s $9.8 billion. Facilities investments represent operational and training facilities, maintenance and production facilities, and improving lifestyle of service member and their families such as schools, barracks, and medical facilities.

Overseas Contingency Operations (OCO) in Afghanistan, Iraq, and Syria

FY2019 defense budget also outlines $69 billion for Overseas Contingency Operations (OCO) on account of Operation Freedom’s Sentinel (OFS) in Afghanistan ($46.3bn), Operation Inherent (OIR) in Iraq and Syria ($15.3bn), European Deterrence Initiative (EDI) in Europe ($6.5bn), and Security Cooperation (0.9bn).

OFS in Afghanistan and OIR in Iraq and Syria also comprise $5.2 billion for Afghanistan Security Forces Fund (ASFF) including support for Afghan Air Force (AAA) and Afghan Special Security Forces (ASSF) and $1.5 billion to train and equip Iraqi Security Forces (ISS) and vetting Syrian opposition forces.

Operations/Forces Protection ($14.7bn), In-Theater Support ($20.0bn), Equipment Reset and Readiness ($10.9bn), Classified Programs ($10.3bn), and European Deterrence Initiative ($6.5bn) are the other major classifications of OCO funding in FY2019.

Initially the OCO budget reflected $89 billion which was edited over Congressional action to $69 billion – moving some items into the DOD base budget. The reassembly possibly relays in-theater support ($20bn) to support US combat operations and other support activities outside Afghanistan, Iraq, and Syria. The DOD topline nevertheless remains unchanged at $686 billion.

Oil War Shakes both Shale and Sheikhs

By: Azhar Azam

Behind falling oil prices

Back in November 2014, Saudi-led Organization of Petroleum Exporting Countries (OPEC), refused United States to cut the oil production in a bid to lock its 43% global market share. Instead, Saudi Arabia continued to increase the oil production, purging market share from US shale oil producers.

For 2015 and 2016, Saudi Arabia crude oil output averaged highest at 10.14million barrels per day (mb/d) and 10.41 mb/d respectively. Saudi managers rationalized the larger output as the production cut will buzz the oil prices in international market and only the competitors will benefit from this.

US media and analysts characterized it an attempt to bankrupt US shale oil producers and stem the flow of US shale oil in the world market. In due course, Saudi Arabia’s ratcheting up the oil production drove crude oil price down to lowest ever below $28/b in early 2016.

OPEC thus made sure to keep the oil prices low enough so that the US oil reserves never enter the world supply to jeopardize OPEC’s influence. However in doing so, OPEC’s oil export revenues including Iran meticulously fell from $934bn in 2014 to $509bn in 2015 and $433bn in 2016.

OPEC’s oil export revenues were at the apex $1,131bn in 2012.

However in subsequent years, all the petro states loomed into a tug of oil war over weak demand, vulnerable global economic activity expressly declining commodity prices in China, market shift toward other fuels and US shale oil boom.

According to Trade Map/ITC, crude oil export revenues worldwide which reached at peak $1,680bn in 2012 – glided down to $662bn in 2016. Saudi Arabia and Russia were the vilest victims, both of whose export revenues fell from $305bn to $136bn and from $181bn to $74bn respectively.

Oil prices on the rise again

In November 2016, OPEC and some non-OPEC members including Russia agreed to cut the crude oil production which aided global oil prices to increase as the OPEC Reference Basket (ORB) averaged $62.06/barrel in December 2017 – highest since June 2015.

The prices of ICE Brent and West Texas Intermediate (WTI) crude oil also increased to $64.09/barrel and $57.95/barrel respectively after long time at the close of last year, according to recent OPEC monthly oil market report.

According to latest short-term energy outlook (STEO) by the US Energy Information Administration (EIA), Brent and WTI crude oil prices averaged $54.15/barrel and $50.79/barrel respectively for 2017 and are expected to increase up to average $62.39/barrel and $58.28/barrel respectively for 2018.

World oil demand estimate is roughly unchanged at 97.8mb/d in 2017 whereas global oil supply eased at 97.7 mb/d in December 2017 due to North Sea and Venezuelan lower output, says International Energy Agency (IEA).

China takes over United States as world’s largest crude oil importer

China transcended the United States as the world’s largest oil importer in 2017 – importing 8.4 million barrels per day (b/d) as compared to America’s 7.9 million b/d for the concluded year, EIA said. 

The US energy controller found that the new refinery capacity, strategic inventory stockpiling and declining domestic oil production were some of the influential factors for the recent increase in China’s oil imports.

Russia and Brazil were the major gainers which increased their oil exports to China from 9% to 14% and 2% to 5% for 2016 and 2017 respectively – at the cost of OPEC countries whom oil exports to China declined from peak 62% in 2012 to 56% in 2017.

Russia also pushed Saudi Arabia behind in crude oil exports to China – exporting 1.2 million b/d against Saudi Arabia’s 1.0 million b/d. OPEC and some non-OPEC nations including Russia agreed to cut down the crude oil production in an attempt to rebalance the international oil prices.

United States crude oil production fast-tracks

While some of the OPEC and non-OPEC countries are in the process of implementing the plans of easing down the oil production, the United States is going the other way – pump up the production.

The topical EIA STEO (STEO) estimated that the US crude oil logged a production average of 9.2 million b/d in 2017 and will average 10.6 million b/d in 2018 – highest since 1970 when the country averaged 9.6 million b/d.

EIA further projects US crude oil production in 2019 to average 11.2 million b/d. In its previous STEO, EIA reported that the US crude oil noted a record production of 10.038 million b/d for November 2017 which was also the highest since 1970 and the second highest US monthly production ever.

Despite rising production, US crude oil imports grow

In 2017, the United States managed to lower the petroleum deficit to lowest $95.9bn and petroleum export to highest $12.0bn on the record besides overall rising energy production for the year.

Albeit all these domino-effects, the US Census Bureau states that the US annual crude oil import quantity increased by 72 million barrels or 2.6% as well as import value by $31bn or 31% in twelve-month period of 2017 as compared to previous year.

The crux of the rising US crude oil imports despite increasing production is the OPEC’s including Iran terribly low cost of production per barrel and also these countries have sweet crude which is easy to access, recover, and refine.

As stated by WSJ-Rystad Energy UCube graphics, total cost of oil production per barrel for Saudi Arabia is just $8.98 whilst it in only $9.08 and 10.97 for Iran and Iraq respectively. Russia has a much higher production cost of $19.21/barrel mainly due to gross taxes of $8.44/barrel.

At the same time, per barrel cost of production for US shale and non-shale is $23.35/barrel and 20.99/barrel respectively including gross taxes, capital spending, and production, administrative, and transportation costs.

This smallest cost of production provides Middle Eastern countries to survive at the lowest international crude oil prices but in an age of fourth-industrial revolution, they too cannot just outlast on oil alone though the United States definitely can!

Facebook Revenue Sprints Amid Odd Tailbacks

By: Azhar Azam

As a result of several updates sought to encourage interaction between the people instead of spending more time on passive public content – Facebook users worldwide consumed an estimated of 50 million fewer hours every day in 2017.

And also for the first time in the company’s history, the social media activities of the-most revenue generating North American daily users have fallen to 184 million for Q4-2017 as compared prior period.

CEO Mark Zukerberg of the world’s largest online social media and social networking company said while speaking at a fourth quarter and full-year 2017 results conference call on January 30.

Amid odd tiny tailbacks, the California-based Corporation yet is trotting a dream run as its scooped its revenue impressively by 47% or $13.0bn to mouthwatering $40.7bn for the year 2017 ended December 31.

The company truly revolutionized and dominated the social media and social networking industry within a brief spell of few years; levitating its operating income by $7.8bn at a stellar growth rate of over 62%.

FB common stock value has now dashed to $179.60 from just $23.56 on 16-November-2012. Its Market cap today has also cruised to 526.7bn from mere $41.6bn on 09-November-2012, according to Google Finance.

Ads purchased by the marketers which are appeared on mobile phones is the major source of revenue for the FB – accounting for about $40.0bn or more than 98% of the company’s total revenue for the twelve-month period.

Ad revenue from US & Canada region made up nearly half (49%) or $19.5bn of the total Facebook ad revenue way ahead of Europe (9.7bn), Asia-Pacific ($6.7bn), and Rest of World ($4.0bn) zones.

At the same time, daily active users (DAUs) and monthly active users (MAUs) horsed by14% each to 1.40 billion and 2.13 billion respectively at the close of 2017 – led by growth in the markets of India, Indonesia, and Brazil.

From largest to lowest, Asia-Pacific (499mn), Rest of World (441mn), Europe (277mn), and the United States and Canada (184mn) were the top regions in terms of daily active users on the virtual dais.

FB worldwide average revenue per user (ARPU) increased by 20% to $20.21 – US & Canada ($84.41), Europe ($27.41), Asia-Pacific ($8.92), and Rest of World ($6.2) for 2017, the company notified in its Earnings Presentation.

The numbers for key metrics – daily active users (DAUs), monthly active users (MAUs), and average revenue per user (ARPU) do not generally include Instagram, WhatsApp, and Oculus – the other FB subsidiaries.

Recounting the history, FB was declined a merger offer in early 2004 for just $75 million by MySpace – the largest social networking company in the world then (2005 to 2008) – christening the deal expensive.

MySpace must be nostalgic to skip such a stifling opportunity to team up with FB which the impostors worldwide make 600,000 attempts every day to hack users’ accounts, access their messages, data, and other personal information.

FB may also remorse to turn down a job to WhatsApp co-owner, Brian Acton, in 2009 and five years later, was enforced to acquire the same company for $19 billion. It also bought Instagram for about $1 billion in 2012.

On the basis of MAUs worldwide, FB’s Facebook (2100 million) is the world #1 in social network and its Instagram (800 million) is place at #3 in the world. Google’s YouTube (1500 million) is the only challenge to FB.

In social networking apps, again FB’s Messenger and WhatsApp with 800 million MAUs each are contending for top spot. WeChat (938,000 MAUs) and QQChat (861,000 MAUs) are trailing the both FB’s affiliates by far.

Although FB is leading the outdoing everyone in MAUs however it is not the frontrunner in Alexa top-500 sites on the web. Google (#1) and its YouTube (#2) have loftier Alexa ranks than Facebook (#3) while China’s Baidu is at #4.

Incentives and Perks
FB is one of the few companies that offers paid paternity/maternity leave of 4-months to new fathers and mothers who work for it; 21-days paid vacations and unlimited sick leave are granted separately. It also pays $4,000 on baby-born and $3,000 in baby-sitting expenses a year.

Free meals are also provided to FB employees all day long ‘from burgers and fries to vegan options’. ‘The food is some of the best in the valley, and they are quite good about showing allergens and ingredients in food.’

100% paid health insurance, subsidized visits to doctors, bankers and barbers shops at FB campus, free dry cleaning, gym membership discount of $700 subsidy, free bike service/repair shops, regular ice cream socials, work from home on Wednesdays, and shuttle service to and from FB’s Menlo Park, California are some of the other perks company provides to its employees.

Non-executive staff gets an opportunity to have weekly Q&A sessions with CEO and other executives too. Mark Zuckerberg, the FB founder, takes homes just $1 on account of salary every year as chairman and chief executive officer of the Facebook Inc.

However, unlike traditional companies, FB and its peer companies are exposed to greater financial risks that could adversely affect its operations such as decrease in user engagement, inability to continue to increase user access, inability to maintain or increase marketer demand, changes to third-party policies that limit to deliver or target advertising on mobile devices, decisions by marketers, loss of advertising market to competitors, the degree to which the users cease or reduce the number of times they click on ads and many more.

DOD pressurizing SIGAR Releasing Unclassified Afghanistan District-Control Data

Department of Defense (DOD) is pressing the legitimate US watchdog – Special Inspector General for Reconstruction in Afghanistan (SIGAR) – to release unclassified data regarding the number of districts and population being controlled, contested or influenced by either Afghan government or the insurgents.

The accusation which textured in a letter by John F. Spoko was accompanied by quarterly report on Afghanistan for the period of October 2017 to December 2017 to Congress, the Secretaries of State and Defense.

This is for the first time that the SIGAR has specifically been instructed such an injunction by the DOD since January 2016 when the US regulator began reporting district-control data in Afghanistan, report detailed.

SIGAR branded the obstruction as a ‘disappearance from public disclosure and discussion’ after frequent recounts that the number of districts being controlled or influenced by the Afghan government has continuously been falling to the insurgents in the country.

Additionally, for the first time since 2009, the DOD also classified the exact number of troops serving Afghan National Defense and Security Forces (ANDSF) – proclaimed to be a vital measure of ANDSF reconstruction though itself published the figures in its December 2017 unclassified report.

The report titled ‘Enhancing Security and Stability in Afghanistan’ stated Ministry of Defense manning authorization at 195,000 military troops and 5,502 civilian employees. Furthermore, the police force authorized to Ministry of Interior stood at 157,000 personnel.

Responding to the allegation, the US military backpedaled and blamed ‘a human error in labeling’ for the incident of classifying key data on Afghanistan war. US-led NATO Resolute Mission spokesperson said in a statement that it was the intent to classify or withhold information which was available in prior reports.

All six ANA corps are simultaneously conducting operations against the insurgents in their respective areas whereas there is also a significant uptick in the US airstrikes and special operations in Afghanistan. In October alone, US has dropped 653 munitions which is record high since 2012 and three-fold of the last year.

Despite all these offensive strikes, Afghan government has failed to increase the influence over its population. In a press briefing on November 28, General Nicholson said that 64% of the population is under government’s control, 12% is under insurgents’ control or influence and the rest 24% is being contested for.

As of October 2017, Afghan government’s control or influence on its population has significantly declined to 64% from 69% in August 2016. Similarly, Afghan government has also considerably lost its control or influence in districts from 72% in November 2015 to only 57% in August 2017.

As a result, the insurgents’ control or influence on Afghanistan districts has substantially been increased from just 21% to 30% as well as the district proportion in contest have also risen from 7% to 13% for the same period.

SIGAR said that the district-control data for October 2017 is not releasable as the Resolute Support (RS) mission directed the overseer ‘not to publicly release the unclassified October 2017 data’.

The statistics, particularly of district-control, are emphatically worrisome since the Afghan government has set a target to gain control over 80% of the country’s population within next two years.

A recent BBC report spanned over months of research also finds that Taliban are active in 70% of the Afghanistan territory – much more area after US combat troops withdrawal in 2014. The report further highlights that Taliban are openly operating and conducting attacks from the areas where nearly half of the Afghanistan population is dwelling.

Although there is consensus agreement between US and Afghan governments that reconciliation and political settlement with Taliban is the only way to ensure durable peace and security however this quarter ended with no progress on peace talks between the two stakeholders.

According to annual survey by Asia Foundation, 52.3% of the Afghanistan people see the possibility of peace talks with Afghan Taliban and about 15.7% of the respondents had sympathy for them, the SIGAR report to the US Congress underscored.

Since the transition of security responsibility toward the ANDSF, insider attacks have been the greatest concern for the Afghan forces. In the reported quarter, the number of personnel killed in action (KIA) has doubled as compared to same periods in 2015 and 2016.

In the first 10 months of 2017, a total of 58 insider attacks were reported including 52 ‘green-on-green’ (insider attacks on Afghan forces) and 6 ‘green-on-blue’ (insider attacks on NATO forces). This number is almost the same for 2016 when a total of 59 insider attacks (56-3) were reported.

Besides hefty appropriations on account of Afghanistan reconstructing, the United States has spent $8.7 billion in 2016 on to control the production and cultivation of narcotics. Nevertheless, opium production and area under cultivation has broken all records – up by 87% and 63% respectively.

DOD claimed to have destroyed 25 drugs labs in Afghanistan from November through December 13, 2017 – denying $80 million in drug and $16 million in direct revenue to Taliban. But SIGAR questions the accuracy of the figures as States Department’s Bureau of South and Central Asian Affairs (SCA) did not provide any detail on the counter-narcotics strategy in Afghanistan.

Since FY2002 through December 2017, the United States has appropriated about $122.1 billion for relief and reconstruction in Afghanistan – $74.8bn for security including counter-narcotics, $33.0bn for governance and development, $3.4bn for humanitarian aid, and $10.9 billion for civilian operations.

Notwithstanding spending hundreds of billions of dollars in Afghanistan reconstruction and to defeat Afghan Taliban – the US military is ending up with instructing SIGAR not to release public data on district-control in Afghanistan and Afghan government to play down the freshest BBC report.