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ADB guarantee to cover North-South Commuter Railway operator payments

DOTR PHOTO

THE PHILIPPINES is seeking to borrow up to $800 million from the Asian Development Bank (ADB) to serve as a partial credit guarantee (PCG) that will ensure payments to the operator of the North-South Commuter Railway (NSCR) project, the bank said.

According to a project data sheet, the ADB said that the government requested the ADB to provide a PCG to ensure the winning operator is paid, while also addressing market concerns on the possibility of delayed or non-payment.

The availability of the PCG will ensure efficient and sustainable operations of the NSCR project, the ADB said, adding that this mechanism will encourage bidder participation, improve competition and strengthen the financial viability of the transaction.

“The PCG will backstop a standby letter of credit issued by a reputable commercial bank, mitigating liquidity risk and enhancing bankability,” the ADB said.

The proposed PCG of up to $800 million is the equivalent of 24 months of availability payment obligation, it said, adding that it is de-risking the Department of Transportation’s (DoTr) NSCR O&M public-private partnership (PPP).

“This PCG-backed letter of credit will support private sector participation in the operations and maintenance (O&M) of the NSCR under a long-term PPP arrangement,” it said.

Last year, the DoTr conducted  roadshows in Japan, Singapore and France to promote the P229.32-billion O&M contract for the NSCR project.

According to the instructions to prospective bidders, the final O&M concession agreement will be released on April 30. Bids will be accepted by May 29 at 11 a.m., according to the PPP Center.

To qualify for the project, the bidder must have a minimum net worth of P114.65 billion or its equivalent in foreign currency as of the 2024 financial year. For consortia, the lead member of the group must have an equity interest of at least 34% of both voting and non-voting shares of the O&M concessionaire, the DoTr said.

Bidders including consortium members or affiliates must include at least one entity with 10 years of experience in rail operations, specifically in managing a rail line that handles at least 45,000 passengers per hour in each direction.

At least one entity must have eight years of experience in maintaining railway infrastructure and systems, including the use of a computerized maintenance management system, and another must have eight years of experience in track and civil infrastructure maintenance.

The NSCR O&M deal will cover 15 years from the signing date of the contract, the DoTr said.

The 147-kilometer NSCR will connect Malolos, Bulacan with Clark International Airport, and Tutuban, Manila with Calamba, Laguna. The P873-billion project is co-financed by the Japan International Cooperation Agency and the ADB. It will have 35 stations and three depots.

Full operations are expected by January 2032; partial operations on the Malolos to Valenzuela segment by December 2027; and operations on the Clark to West Valenzuela segment by October 2028. — Ashley Erika O. Jose

PCC raises M&A notification thresholds

THE Philippine Competition Commission (PCC) has said it raised the thresholds for notifying the regulator about mergers, acquisitions, and joint venture transactions, with the new thresholds in effect starting March 1.

In a statement, the PCC said it increased the Size of Party  threshold for mergers and acquisitions (M&A) to P9.1 billion from P8.5 billion previously.

It also raised the Size of Transaction threshold for mergers and acquisitions to P3.8 billion from the previous P3.5 billion.

Both thresholds must be met for a transaction to be considered notifiable under Section 17 of Republic Act No. 10667, or the Philippine Competition Act (PCA), and Rule 4, Section 3 of its Implementing Rules and Regulations (IRR).

The revised thresholds also apply to joint venture transactions under Rule 4, Section 3(d) of the law’s IRR.

The PCC reviews the notification thresholds for mergers, acquisitions, and joint ventures to ensure they are up to date, ensuring that businesses are afforded regulatory certainty and protecting the welfare of consumers.

The PCC is also authorized to review transactions that fall below the notification thresholds. It may initiate a motu proprio (on its own initiative) review if it suspects a deal could significantly harm competition.

The commission is authorized to determine and adjust the thresholds for compulsory merger notification, following Sections 12(b) and 19 of the PCA, in relation to Rule 4, Section 8 of the IRR.

“The adjustment ensures that the notification thresholds reflect inflation, economic growth, and prevailing market conditions, while enabling the commission to effectively allocate its resources toward transactions that are more likely to have a substantial impact on competition in Philippine markets,” PCC said.

The thresholds were indexed against nominal gross domestic product growth of the previous calendar year. — Beatriz Marie D. Cruz

Cable landing station in Baler to take in $31M worth of investment from Japan-controlled telco

Workers install the 2Africa undersea cable on the beach in Amanzimtoti, South Africa, February 7, 2023. — REUTERS/ROGAN WARD

INFINIVAN, Inc., the Philippine telecommunications unit of Japan’s IPS, Inc., is investing $31 million to build a cable landing station (CLS) in Aurora province, in a bid to boost internet connectivity in Southeast Asia.

“The station itself will cost around $16 million, but because of the request for an expansion, we’re going to have another $15 million,” InfiniVAN, Inc. Chief Technology Officer Alberto C. Espedido told reporters on the sidelines of an event on Monday.

The company began the construction of its CLS in January, which will be operational by early 2028.

The Baler CLS forms part of the 8,000-kilometer Candle submarine cable system that will connect the Philippines, Indonesia, Malaysia, Singapore, Japan, and Taiwan.

Candle is being developed by a consortium that involves IPS, Meta Platforms, Inc., TM Technology Sdn. Bhd., PT XLSmart Telecom Sejahtera Tbk and several Asian carriers.

Mr. Espedido noted that the upcoming CLS will help support growing demand for artificial intelligence (AI), 5G, and data centers.

InfiniVAN is also in talks with a government-owned and -controlled corporation to acquire a CLS in San Fernando, La Union, he said.

The company is expected to announce its La Union acquisition by the second quarter, he said.

Also on Monday, InfiniVAN, IPS, IPO Pro, and Indian agentic AI platform Gnani.ai signed a strategic partnership to leverage AI and digital infrastructure for enterprises in the Association of Southeast Asian Nations.

The partnership seeks to exchange cross-border technologies to help businesses adopt AI-driven communication and customer experience technologies in the region.

It is also expected to strengthen trilateral economic and digital cooperation among the Philippines, Japan, and India.

The collaboration is also expected to boost industry confidence in AI and telecom-enabled digital solutions. It will also serve as a foundation for upcoming public-private cooperation on AI, telecommunications, and digital infrastructure, the companies said. — Beatriz Marie D. Cruz

All five provincial airport upgrade projects attract potential bidders

CAAP NAGA AIRPORT FB PAGE

THE Department of Transportation (DoTr) said the pre-bidding conference for the contracts to upgrade five provincial airports attracted potential interest for all five projects.

The DoTr said interested parties inquired about projects to develop or upgrade Antique Airport (indicative cost P96.44 million), Kalibo International Airport (P189.64 million), New Naga Airport (P431.33 million), Ormoc Airport (P419.92 million), and Tacloban Airport (P611.10 million).

IPM Construction and Development Corp. submitted the sole proposal for Antique Airport. The company also filed a proposal for Kalibo International Airport, the DoTr said.

Kalibo airport attracted two other interested parties, BM Marketing and Golden Rich A Concrete and Construction Corp.

The New Naga Airport development project attracted four bidders, the DoTr said — BM Marketing; Octagon Concrete Solutions, Inc.; BSP and Co., Inc.; and Red Diamond Construction.

BM Marketing also submitted a proposal for Ormoc and Tacloban airports. Other Ormoc bidders were Aqualine Construction Corp. and Red Diamond Construction.

Aqualine was the other interested party for Tacloban airport.

The DoTr’s airport upgrade program is focused on improving many provincial airports to accommodate at least narrowbody jets to handle growing passenger demand. The capacity to handle Boeing 737 or Airbus A320 aircraft — the most prevalent single-aisle jet models — also suggests upgrades to attract direct international flights. — Ashley Erika O. Jose

Mindanao ecozone development to be expedited — PEZA

FACEBOOK.COM/MINDAGOVPHOFFICIAL

THE Philippine Economic Zone Authority (PEZA) said it is collaborating with the Mindanao Development Authority (MinDA) to accelerate the development of economic zones (ecozones) on the island.

The partnership was formalized via a memorandum of understanding (MoU) signed by the two agencies on Feb. 24, PEZA said in a Facebook post on Monday.

“With 42 of the country’s 436 operating economic zones already located in the region, we see significant potential to further strengthen Mindanao’s investment footprint,” PEZA Director General Tereso O. Panga said.

The MoU will help accelerate the development of ecozones in priority areas identified in the Mindanao Development Corridors program.

“By aligning ecozone expansion with regional development strategies, the partnership ensures that investments translate into sustained economic opportunities for Mindanao communities,” PEZA said.

The agencies agreed to provide technical support, align annual planning and investment promotion initiatives, and jointly undertake business matching and promotional activities to attract both domestic and foreign investors.

PEZA will provide guidance on investment facilitation, ecozone registration, and incentive mechanisms, it said.

MinDA Chairman Secretary Leo Tereso A. Magno said the authority will work closely with local government units, partner agencies, and private investors to promote existing ecozones and identify candidate sites.

“The MoU signing marks a strategic step toward advancing sustainable countryside development and enhancing Mindanao’s position as a competitive and investment-ready region,” MinDA said.

PEZA has approved 18 new projects valued at P12.86 billion at its January meeting, including sites in the National Capital Region, Calabarzon, Central Visayas, Bicol Region, Northern Mindanao and Soccsksargen. — Beatriz Marie D. Cruz

VAT compliance: Insights into RR No. 1-2026

The landscape of Value-Added Tax (VAT) for Registered Business Enterprises (RBEs) has undergone a significant recalibration. With the issuance of Revenue Regulations (RR) No. 1-2026, the Bureau of Internal Revenue (BIR) has refined the framework initially established by RR No. 9-2025. This latest issuance is not merely a set of technical corrections; it represents a strategic adjustment to the rules governing local sales by RBEs under the National Internal Revenue Code, as amended by Republic Act No. 12066.  

BRIDGING THE GAP: FROM RR 9-2025 TO RR 1-2026
RR No. 9-2025 introduced a paradigm shift by mandating that local sales of goods and services by RBEs be subject to 12% VAT, regardless of their income tax incentive regime or location. Crucially, it shifted the liability to pay and remit this VAT to the buyer.

Recognizing the administrative and financial complexities this created, RR No. 1-2026 amends Sections 3, 4, and 7 of the prior regulations. The new rules seek to clarify filing procedures, offer registration flexibility, and, perhaps most importantly, prevent the “accumulation” of input VAT for certain enterprises.  

KEY INSIGHTS AND STRATEGIC OPPORTUNITIES
While many may focus solely on the extended deadlines for the e-invoicing requirement, several deeper insights and opportunities emerge from RR No. 1-2026:

Optional VAT registration as a shield: RBEs under the 5% Special Corporate Income Tax (SCIT) or Gross Income Earned (GIE) regime now have the option to register as VAT taxpayers specifically for their local sales. This is a strategic lever: it allows these enterprises to participate in the VAT chain without losing their existing fiscal incentives, such as VAT zero-rating on local purchases or exemptions on imports directly attributable to their registered activities.

An RBE dealing heavily with VAT-registered domestic customers may choose VAT registration to:

• Simplify invoicing;

• Avoid buyer-side remittance complexities; and

• Enhance commercial attractiveness to customers needing input VAT credits.

This transforms VAT registration from a compliance burden into a commercial strategy decision.

Preventing ‘stuck’ input VAT: A major relief is provided to VAT-registered Domestic Market Enterprises (DMEs). Previously, the requirement for the buyer to remit VAT could lead to accumulated, non-refundable input VAT for the seller. RR No. 1-2026 excludes these RBE-sellers from the “buyer-remit” rule, allowing them to file and pay VAT as regular taxpayers and thus utilize their input VAT credits effectively.

Without this clarification, DMEs would have suffered accumulating input VAT due to buyer-remittance mechanics under Section 295(D). RR 1-2026 prevents cascading VAT inefficiencies and protects the neutrality of the VAT system. This is a technical correction with macroeconomic significance.

Operational flexibility in bulk sales: For transactions involving bulk shipments from ecozones or freeports covered by multiple invoices, buyers can now opt for a single VAT payment via BIR Form No. 0605. This reduces the administrative burden of per-transaction filing, provided a list of all covered invoices is presented to the Bureau of Customs.

Extended system grace period: The deadline for reconfiguring invoicing systems (e.g., CAS, POS) to use the term “VAT on Local Sales” has been extended to Dec. 31, 2026. This provides businesses with ample lead time to ensure technical compliance without the immediate threat of penalties. 

Governance and audit readiness: The amendment increases traceability, as the VAT must be paid before goods are released and the documentary trail becomes more transaction-specific.

Expect audit analytics to increasingly match:

• Invoices;

• BIR Form 0605 filings; and,

• Customs release data.

ENHANCING ADMINISTRATION AND COMPLIANCE
Ultimately, RR No. 1-2026 ultimately strengthens tax administration in three critical ways:

• Improves revenue certainty – By requiring VAT payment prior to ecozone release, leakage risk is minimized. VAT collection shifts from post-transaction enforcement to pre-release compliance.

• Enhances system alignment – The regulation harmonizes investment incentive rules, VAT mechanics, and Customs procedures.

Administrative coherence reduces interpretative disputes.

• Encourages voluntary compliance – The optional VAT registration feature reflects a modern compliance philosophy, incentivizing structured participation rather than imposing rigid mandates. The extended system reconfiguration deadline also demonstrates regulatory flexibility, building trust rather than fear-based enforcement.

The transition from RR 9-2025 to RR 1-2026 underscores the BIR’s commitment to addressing taxpayer concerns. By identifying specific scenarios, such as those involving DMEs or bulk shipments, where the original rules were “administratively unfeasible” or financially detrimental, the BIR has shown a commendable responsiveness to taxpayer feedback.  

For the taxpayer, these amendments improve compliance by replacing rigid mandates with flexible options. The three-year lock-in period for optional VAT registration ensures stability in the tax base while allowing enterprises to align their tax status with their actual business models. Ultimately, by refining the “VAT on Local Sales” mechanism, the BIR is fostering a more transparent and equitable tax environment that balances the government’s need for revenue with the operational realities of the modern enterprise.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Kim M. Aranas is a director from the Tax Advisory & Compliance practice area of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Gilas Pilipinas braces for next big battle in July

GILAS PILIPINAS — FIBA

IT WAS a stinging loss to mighty Australia that left Gilas Pilipinas with a feeling of letting its adoring supporters down.

Now the Nationals intend to use it as fuel heading to the next big battle in July.

The Pinoy dribblers got a harsh reality check in the form of a 93-66 beating on Sunday night at a packed SM MOA Arena, unable to keep in step with the charging Boomers in the second half, 55-33, after staying at a manageable five-point deficit in the first 20 minutes.

With this, they reeled to a 0-2 output showing in the second window of the FIBA World Cup Qualifiers after falling short on Feb. 26 in a fighting 66-69 loss to New Zealand (NZ).

“It was painful, especially at home. We had higher hopes and it didn’t work out for us. But, you know, we’re going to look forward to July,” said coach Tim Cone.

The July window gives Gilas (2-2 overall) a chance at atonement against Australia (4-0) and NZ (2-2). But the task gets exponentially harder as it would both be played at the two powerhouses’ home courts.

“It’s so honorable to play and be with this team. And just having that opportunity is fantastic. So when we come back together in July, it’s always going to be a special thing. And I think we’re going to come back with renewed fire.”

Such fire will have to come with lots of learning, especially improved scheming in setting up Justin Brownlee (JB) and the Gilas gunners for quality shots after practically firing blanks in the twin losses at home.

“It’s back to the drawing board for me a little bit. I think we’re going to have to look a little bit at our offense and maybe try to simplify things a little more,” said Mr. Cone.

“But, you know, for a game and a half, I couldn’t have been more proud about our defense. And that was one of the things we really wanted to correct coming into this window. You see, the moment you don’t defend, the game can get away from you in a hurry. And that’s exactly what happened to us in that second half (against Australia).”

Mr. Brownlee, who had his worst scoring game versus NZ (four points) but rebounded with a 20-point outburst against the Boomers, expects the squad to emerge from this episode wiser.

“I think this window definitely gave us a lot of experience playing with teams like New Zealand and Australia. They give you that high level. These two are some of the best teams worldwide,” JB said.

“I appreciate the experience just like for sure the whole team did and the coaching staff and the whole program. Hopefully, we will get better from it,” he added.

Notes: The first Philippine-Australia match in the country since the ugly brawl of 2018 in Bocaue went about smoothly, proving that the two sides have both moved on from the incident and are now enjoying a harmonious relationship. Post-game, the Nationals and the Boomers posed together for photos at center to applause from the crowd. Filipino fans also cheered and offered high fives to the Aussies as they made their way to the dugout. — Olmin Leyba

Creamline seeks share of All-Filipino lead against tough Galeries Tower

CREAMLINE — FACEBOOK.COM/PREMIERVOLLEYBALLLEAGUE

Games on Tuesday
(FilOil Arena)
4 p.m. – Choco Mucho vs Nxled
6:30 p.m. – Creamline vs Galeries Tower

CREAMLINE hopes to continue re-establishing itself as a legitimate title contender of old as it eyes a fourth straight win and a share of the lead against a dangerous Galeries Tower on Tuesday in the PVL All-Filipino Conference at thee FilOil Arena.

The Creamline Cool Smashers have quickly recovered from a nightmarish start that saw them getting felled by the PLDT High Speed Hitters almost a month ago and reemerging from it with three straight wins including a 25-18, 26-24, 25-20 triumph over the Capital1 Solar Spikers last Feb. 21.

At 3-1, the Rebisco-owned franchise is one victory short of catching up with PLDT (4-1) at the helm.

And expect the 10-time league champion to shoot for nothing less than a win in its 6:30 p.m. showdown with Galeries Tower (2-3).

“We talked about the need to get this win because it will put us in a better situation,” said Creamline coach Sherwin Meneses.

But Mr. Meneses knows they will be facing a Galeries Tower squad that has improved by leaps and bounds this conference.

“Knowing Galeries (Tower), we can’t afford to rest and just set them aside easily because we’ve seen how good their performance were recently,” he said.

Also eyeing to climb up the standings are Nxled (3-2) and Choco Mucho (2-3), which collide at 4 p.m. — Joey Villar

Australia’s Hannah Green wins second HSBC Women’s World Championship in Singapore

AUSTRALIA’S Hannah Green held off Auston Kim on Sunday to win the HSBC Women’s World Championship in Singapore for the second time.

Green, the 2024 champion, balanced three birdies and three bogeys on an eventful back nine to finish with a 3-under 69 and a final score of 14-under at Sentosa Golf Club. The 2019 Women’s PGA Championship winner tapped in for bogey at the 18th for her seventh LPGA Tour title.

“When I did win Singapore two years ago, I went on to win two other tournaments that season and pretty much had my best season on tour,” said Green, 29. “So having a win so early in the season gives me a bit more flexibility with the tournaments that I can play. So I’m hoping that this puts me in good stead for the rest of the year.”

Green was at 16-under after birdies at the first, 11th and 13th holes and an eagle at the par-5 eighth hole. Her birdie at the par-3 15th helped her survive a bogey-bogey finish.

“I knew that I had enough of a lead to be able to get away with making mistakes coming down the stretch. But I think 15 was the real turning point,” she said.

First- and second-round leader Kim nearly chased down her first title, matching the low round of the day with a 67 to finish one shot behind Green in the 72-hole, no-cut tournament.

Kim carded six birdies and an eagle at No. 8, but a bogey at the par-3 15th proved costly for the 25-year-old American.

“Overall, I think it was a really solid week,” Kim said. “A great way to start the year. I hit a lot of bad shots but I also hit a lot of good ones, and it was really confidence boosting. I hit all these bad shots, and I didn’t feel like I had anything chose to my A game, but I was still able it pull off a result like this and play some really solid golf.”

Australia’s Minjee Lee (72 on Sunday), Angel Yin (71) and France’s Pauline Roussin-Bouchard (68) tied for third place at 11-under with South Korea’s Haeran Ryu (72) another shot back in solo sixth.

World No. 1 Jeeno Thitikul of Thailand finished with a 73 and tied for 31st at 2-under, one shot behind defending champion Lydia Ko (72) of New Zealand. — Reuters

Gilgeous-Alexander’s 30 leads Thunder past Mavs

SHAI GILGEOUS-ALEXANDER scored 30 points to lead the Oklahoma City Thunder to a 100-87 road win over the Dallas Mavericks on Sunday.

It was the 123rd consecutive game for Gilgeous-Alexander to score 20 or more points, moving him within three of tying Wilt Chamberlain’s NBA record.

Gilgeous-Alexander did break Chamberlain’s record for consecutive 20-plus point games on the road with 59.

The Thunder have won back-to-back games and seven of their last nine and swept the season series between the teams, beating the Mavericks for the third time this season.

The Mavericks have dropped three consecutive games and 13 of their last 15. Dallas was held to fewer than 100 points for the first time since Nov. 22 against Memphis.

Oklahoma City took the lead for good just more than three minutes into the game, but though they quickly moved up by double figures, the Thunder couldn’t shake Dallas until late.

The Thunder struggled from beyond the arc for much of the game, going just six of 29 (20.7%) through the first three quarters.

Oklahoma City took the lead with an early 12-0 run fueled by six points and an alley-oop assist from Gilgeous-Alexander.

The Thunder led by as many as 16 points in the first half but Dallas quickly cut that deficit in half.

Oklahoma City finally pulled away to start the fourth quarter, even with Gilgeous-Alexander on the bench.

Isaiah Joe scored eight consecutive Thunder points during a 10-2 run to start the final quarter that extended Oklahoma City’s lead to 22.

Isaiah Hartenstein had three assists during that decisive stretch, including twice finding Joe for 3-pointers to help the Thunder show some life from beyond the arc.

Dallas did pull within 14 with less than five minutes to go.

Chet Holmgren added 19 points and nine rebounds in the win while Joe added 14 off the bench.

Caleb Martin led the Mavericks with 18 points while Brandon Williams and Max Christie added 14.

Dallas’ Klay Thompson left the game late in the second quarter with an adductor contusion and did not return. — Reuters

Lionel Messi, Miami score four in second half to upend Orlando

LIONEL MESSI recorded a brace, Telasco Segovia scored the tiebreaking goal in the 85th minute and assisted on two others and Inter Miami dominated the second half to record a 4-2 comeback victory over host Orlando City on Sunday night.

Mateo Silvetti added a goal and an assist in Inter Miami’s four-goal second half that erased a 2-0 deficit. The Herons (1-1-0, 3 points) bounced back from a 3-0 season-opening loss to Los Angeles FC.

Messi, who scored in the 57th and 90th minutes, has eight goals in five meetings against the Lions across all competitions.

Marco Pasalic and Martin Ojeda scored goals for Orlando City (0-2-0, 0 points).

Orlando was unable to clear the ball out of its zone on the tiebreaking sequence.

Miami’s German Berterame came up with the ball to begin the sequence. Segovia eventually received it and booted a right-footed shot into the net.

Three minutes later, Orlando City’s Colin Guske pulled Messi down and was given his second yellow card. The automatic upgrade to red led to Guske’s ejection, leaving the Lions with just 10 men for the rest of the match that included 10 minutes of stoppage time.

Messi then took a free kick from close range in the 90th minute and sent a left-footed shot past the wall and inside the left post to give the Herons a two-goal lead.

Dayne St. Clair made three saves for Miami, which outshot Orlando City, 16-12, and placed eight shots on target to the Lions’ five. Maxime Crepeau had four stops for Orlando City.

Orlando City won both regular-season meetings last season, prevailing by scores of 4-0 and 3-1.

Miami woke up fast after the halftime break.

Silvetti was beyond the box when he ripped a right-footed shot into the left corner of the net in the 49th minute. — Reuters

Israel strikes Lebanon following Hezbollah attacks, widening Iran conflict

AN EXPLOSION caused by a projectile impact after Iran launched missiles into Israel following Israel and the US launched strikes on Iran, in Tel Aviv, Israel, Feb. 28, 2026. — REUTERS/GIDEON MARKOWICZ

JERUSALEM/TEL AVIV/DUBAI/BEIRUT — Israel launched new air strikes targeting Tehran and expanded its military campaign to include attacks on Iran-backed Hezbollah militants in Lebanon on Monday, as US President Donald J. Trump signaled the US-Israeli military assault on Iranian targets could continue for weeks.

Israel said it was attacking sites connected to Lebanon’s Shi’ite Muslim Hezbollah militants, one of Tehran’s principal allies in the Middle East, after Hezbollah acknowledged launching missiles and drones toward Israel in retaliation for the killing of Iran’s Supreme Leader Ali Khamenei.

Israel carried out air strikes on the Hezbollah-controlled southern suburbs of Beirut, with more than a dozen explosions rocking the Lebanese capital. Israel said it also struck senior Hezbollah militants near Beirut.

The Hezbollah and Israel tit-for-tat attacks, which follow a US-brokered ceasefire in 2024, widen the conflict that has spread through the Middle East since the United States and Israel attacked Iran on Saturday, sending oil prices soaring and snarling air travel.

The Israeli military said Hezbollah was “fully responsible for any escalation” and warned residents of dozens of villages in southern and eastern Lebanon to evacuate.

Shortly after 7 a.m. (0500 GMT), air raid sirens were triggered across Israel, including in Tel Aviv and Jerusalem, warning of a fresh Iranian attack.

A new wave of missiles is being launched from central parts of Iran towards “enemy locations,” Iran’s state media said on Monday morning.

ASSAULT TO CONTINUE UNABATED, WHITE HOUSE SAYS
The Israeli military said late on Sunday that its air force had established aerial superiority over Tehran, and that a wave of strikes across the capital had targeted intelligence, security, and military command centers.

Sounds of explosions were heard in different parts of the Iranian capital Tehran on Monday morning, according to state media, while Reuters witnesses heard loud blasts in Dubai and the Qatari capital Doha.

Kuwait said its air defenses intercepted hostile drones, in a third consecutive day of Iranian retaliatory strikes on neighboring Gulf states.

Britain’s Royal Air Force base Akrotiri in Cyprus was hit by a suspected drone strike overnight, but damage was limited and there were no casualties, Cypriot authorities and the UK’s Ministry of Defense said on Monday.

A senior White House official told Reuters that while Mr. Trump would at some point talk with new potential leadership in Iran, the military campaign would go on. The official did not identify any individuals as part of the new leadership.

“President Trump said new potential leadership in Iran has indicated they want to talk and eventually he will talk. For now, Operation Epic Fury continues unabated,” the official said.

Iran’s President Masoud Pezeshkian on Sunday said a leadership council composed of himself, the judiciary head and a member of the powerful Guardian Council had temporarily assumed the duties of Supreme Leader.

In an X post on Monday, Ali Larijani, who was adviser to Iran’s Mr. Khamenei, said his country would not negotiate with Mr. Trump. He said the US president had “delusional ambitions” and was now worried about US casualties.

FIRST US CASUALTIES
The first US casualties of the campaign, including the deaths of three service personnel, were confirmed on Sunday. Two US officials, speaking on condition of anonymity, told Reuters the US service members were killed on a base in Kuwait.

Mr. Trump paid tribute to the three killed as “true American patriots” but warned that there will likely be more casualties. “That’s the way it is,” he said.

An extended military campaign could pose a major political risk for Mr. Trump’s Republican party ahead of US midterm elections that could decide the fate of Congress. Only around one in four Americans approve of the operation, according to a Reuters/Ipsos poll on Sunday.

But in a video posted on Sunday, Mr. Trump vowed military strikes on Iran will continue until “all our objectives are achieved” without providing specifics. He said the assault had so far wiped out Iran’s military command and destroyed nine Iranian navy ships and a naval building.

American aircraft and warships have struck more than 1,000 Iranian targets since the start of major combat operations on Saturday, the US military said.

Mr. Trump called on Iran’s military and police, including the powerful Islamic Revolutionary Guard Corps, to stop fighting, promising immunity for those who surrender and threatening “certain death” for those who resist. He reiterated calls for the Iranian people to revolt against the government.

“I call upon all Iranian patriots who yearn for freedom to seize this moment, to be brave, be bold, be heroic and take back your country,” Mr. Trump said in the pre-recorded video. “America is with you.”

In interviews with multiple news outlets, Mr. Trump said the military campaign against Iran could continue for at least four weeks.

EXISTENTIAL CHALLENGE FOR IRAN
Following the death of Mr. Khamenei, Iran faces a power vacuum that could leave it in chaos, but the Trump administration has not outlined longer-term aims for the country.

Iran’s Revolutionary Guards said on Sunday they had hit three US and UK oil tankers in the Gulf and the Strait of Hormuz and attacked military bases in Kuwait and Bahrain with drones and missiles. Shipping data showed hundreds of vessels including oil and gas tankers dropping anchor in nearby waters with traders expecting sharp jumps in crude oil prices on Monday.

Global air travel was also heavily disrupted as continued air strikes kept major Middle Eastern airports closed, including Dubai — the world’s busiest international hub — in one of the biggest aviation interruptions in recent years. Asian airline shares plunged on Monday, with some major carriers down more than 5%.

It remained unclear what the longer-term prospects were for Iran to rebuild its leadership and replace 86-year-old Mr. Khamenei, who had held power since the death of the founder of the Islamic Republic, Ayatollah Ruhollah Khomeini in 1989.

Experts said that while his death and those of other Iranian leaders would deal Iran a major blow, it would not necessarily spell the end of Iran’s entrenched clerical rule or the sway of the elite Revolutionary Guards over the population.

Still, it was too early to say how the Iranian people would respond to the changes. A new analysis of Iranian social media from Redpoint Advisors, a global intelligence firm, suggests the public is already looking beyond Mr. Khamenei for his replacement. — Reuters

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