Ananta Insights | West Asia & North Africa Digest by Ambassador Mahesh Sachdev | February 2025

IA) Political Developments: Pan-Regional and Global Issues

Syria:

Following “The Conference for Announcing the Victory of the Syrian Revolution” in Damascus attended by ministers from the interim government appointed by HTS and commanders of other allied militias, several announcements were made on Jan 29 of which two merit attention: First, declared Ahmed al-Sharaa as president of Syria for a transitional phase. Second, suspended the Syrian constitution and empowered al-Sharaa to form a temporary legislative council for a transitional period.  The announcement did not say when the new legislative body might be picked, or provide any new details for a timeline for the transition. The new legislative council would carry out its tasks until a new constitution is adopted. Addressing the conference, al-Sharaa said the first priority in Syria was to fill a vacuum in government “in a legitimate and legal way”.

On Jan 30, Qatari Emir Sheikh Tamim bin Hamad Al-Thani became the first Head of State to pay a visit to Syria after the overthrow of Bashar al-Assad. Qatari Prime Minister previously met al-Sharaa on January 16 in Damascus. (Comment: Qatar has moved in quickly to consolidate bilateral ties with Syria after al-Assad’s fall. It was one of the first to reopen its embassy in Damascus and Qatar Airways started flying to Damascus from Jan 7. Moreover, Qatar is said to have helped fund a 400% raise in public sector salaries in Syria from February 2025. Relevant to recall that the Qatari Emir was the only HoS to have boycotted al-Assad’s speech at the Riyadh Arab Summit last year marking Syria’s return to the Arab fold. Hence, the Qatari position on Syria has been consistent and appears motivated by outreach to Muslim Brotherhood affiliates.)   

Lebanese Prime Minister Najib Mikati visited Damascus on Jan 11 and was received by Ahmed al-Sharaa. They reportedly discussed the fate of nearly 800,000 Syrian refugees in Lebanon, the management of the common border and the prevention of unauthorised and undesirable activities across the border. (Comment: Syrian-Lebanese high-level contacts have been quite rare and this was the first Lebanese PM’s visit to Damascus in 15 years. The two sides have visa-free entry for each other’s citizens, which the new Syrian government ended on Jan 3, presumably to avoid Hezbollah’s activities in Syria. Lebanese are vary of Syrian interference in their already complicated socio-political ecosystem.)

Saudi Foreign Minister was in Damascus on Jan 24 and was received by Ahmed al-Sharaa. Earlier Syrian Foreign Minister and Defence Minister visited Saudi Arabia on Jan 2. They also visited the UAE, Qatar and Jordan.

French and German Foreign Ministers visited Damascus on Jan 3 and were received by Ahmed al-Sharaa. These were the first EU representatives to visit Syria after regime change. German FM said after talks that while Europe is prepared to offer its support, it won’t be “the sponsor of new Islamic structures.” She also demanded an inclusive government with Women and Kurds represented.

In an interview with al-Jazeera TV, Syrian Foreign Minister Assad al-Shibani urged the early lifting of sanctions on Syria to help mitigate the economy which is in dire straits with More than 90% of the 23 mn Syrians living below the poverty line, according to UN agencies. World Bank data estimated Syria’s economy was $23.63 billion in 2022 having declined by 54% in the decade of civil strife. Syria’s GDP shrank by 54% between 2010 and 2021, according to official data. The current turmoil is likely to exacerbate the situation. (Further Reading: Syria’s economy: The devastating impact of war and sanctions, Reuters Jan 6.)

The tense and uncertain situation concerning the Kurdish enclave in Syria’s northeast continued during the month despite extensive movement behind the scenes between Turkey and the US. The “basic demand” by the Commander of Self Defence Force (SDF) of the YPG Kurdish militia for decentralised administration, was rejected by the Syrian Defence Minister who wanted all militias to be either disbanded or brought under the Syrian army’s banner.  While Turkey regards the SDF which controls nearly 30% of Syrian territory in the north east as a terrorist threat due to its affiliation with PKK rebel Kurdish militia in Turkey, the US which raised the SDF to fight ISIS, supports it. The negotiations seem to be zeroing in on a solution under which PKK elements would quit the SDF which would be merged with the Syrian army. In the meanwhile, sporadic clashes continued between SDF and Turkey-supported Syrian National Army (SNA) militia, the most serious of these led to 37 deaths in Manbij on Jan 9. The Turkish military also announced on Jan 5 that it had ‘neutralised’ 32 terrorists in northern Syria.

On Jan 24, Turkey and Syria agreed to resume their negotiations for signing a free trade agreement. These were suspended in 2011. (Further Reading: “Why Syria is so coveted”, Rami G Khouri al-Jazeera, Jan 26.)

Gaza Conflict:

After over one year of sporadic but arduous negotiations involving top-level mediators from the United States, Qatar and Egypt, a complex ceasefire deal between Israel and Hamas-led militia came into effect on Jan 19.  Its six-week-long first phase provided for the cessation of hostilities, a partial withdrawal by the Israeli Defence Force (IDF) from some points in Gaza, the exchange of batches of Israeli hostages for the Palestinian prisoners in Israeli jails and accelerated supplies of the humanitarian relief material. While the mediators announced the final draft of the deal being reached on Jan 13, the Israeli cabinet approved it on Jan 18 by a 24-8 vote. (Comment: After 15 months and 12 days of brutal fighting, a shaky ceasefire finally took effect in Gaza. While IDF dominated the conflict, it was unable to vanquish the fighters of Hamas and Palestinian Islamic Jihad and towards the end, it became an urban war of attrition. The outline of the final deal was essentially unchanged since last April when Israeli leadership scuttled it over control of the Philadelphi corridor. This cusp of the transition at the White House concentrated the minds of the two antagonists and paved the way to the end of the hostilities, although the pathway to the subsequent two phases was yet to be negotiated. Further Reading: “What is in the Gaza ceasefire deal?” Reuters, Jan 19.)      

Under the terms of the exchange during the first phase of the ceasefire agreement, Hamas was set to release 33 hostages (alive or bodies of the dead) in return for nearly 2000 Palestinian prisoners in Israeli jails. On Jan 19, Hamas release three Israeli girl soldiers in return for 90 Palestinian prisoners including 69 women and 21 boys. Subsequently, on Jan 25, 4 Israeli male soldiers were swapped for 200 Palestinians. On Jan 30, Hamas freed three Israeli and five Thai hostages and Israel released 110 Palestinian prisoners after delaying the process in anger at how Hamas sought to showcase its armed fighters to project its undaunted control and swarming crowds at handover points.  On Jan 27, Hamas announced that 8 of the 33 hostages to be released were dead.

The Gaza conflict took a horrific toll during more than 15 months of fighting: by Jan 15, at least 46,707 Gazans were dead (one out of every 50 people) and At least 110,265 people have been injured (one in 20 people). 1.9 mn of Gaza’s 2.3 mn people have been internally displaced. 85,000 tonnes of explosives dropped damaging 171,000 structures, 69% of the total.  As per the UNDP, the war resulted in more than 42 mn tons of debris that may take a decade to clear. The post-war reconstruction could take up to 2040 and could cost at least $50 bn. A Lancet study released on Jan 9 claimed that the total causality figure could be 40% higher than hitherto counted. 

On Jan 14, US Secretary of State Anthony Blinken said Hamas has replenished its fighting losses by making fresh recruitments of up to 15,000 fighters.

For developments in the West Bank: Please see Palestine Authority and West Bank.

For details on the flare-up between Iran and Israel: Please see Iran.

For details on the Israel-Hezbollah tensions: Please see Lebanon.

For the Houthi missile attacks on Israel and the Red Sea area: Please see Yemen. 

WANA and Multilateral Diplomacy:

Several WANA regional developments evoked multilateral diplomacy during the month, including the following:

1. On Jan 12, Saudi Arabia hosted a Foreign Ministers’ conference on Syria in Riyadh attended by Bahrain, Egypt, France, Germany, Iraq, Italy, Jordan, Kuwait, Lebanon, Oman, Qatar, Spain, Syria, Türkiye, the UAE, the UK, the US, League of Arab States, the EU, His Excellency the GCC, and the UN Special Envoy for Syria. (Further Reading: Chair’s Statement of the Riyadh Meetings on Syria; Jan 12.)

2. On Jan 27, the chief of the UN Relief and Works Agency (UNRWA) informed the UN Security Council about the disastrous consequences of an imminent Israeli ban on its activities from January 30. On Jan 29, 9 seven European countries issued a joint statement condemning the Israeli decision to terminate the 1948 UNSC Resolution setting up the UNRWA. On Dec 19, the UN General Assembly voted overwhelmingly (137-12: 22) to ask the International Court of Justice for an opinion on Israel’s obligations to facilitate aid to Palestinians that is delivered by states and international groups including the UN. Earlier on Dec 11, the UNGA adopted two resolutions with an overwhelming majority. The first demanded an immediate, unconditional and permanent ceasefire between Israel and Palestinian militants Hamas in the Gaza Strip and the immediate release of all hostages. The second resolution supported the UN Palestinian Relief and Works Agency (UNRWA) and deplored a new Israeli law banning its operations in Israel from late January. (Further Reading: “What Israel’s UNRWA ban means for millions of Palestinians: By the numbers” Al-Jazeera, Jan 29.)

3. On Dec 20, the UN Security Council unanimously adopted resolution  2766 extending the term of the UNDOF for another six months. It also simultaneously expressed concern that the military activities in the area could escalate tensions and emphasised the need for the status quo to be maintained. (Comment: Taking advantage of the force vacuum on the Syrian side, Israel has reoccupied the demilitarised zone hitherto petroled by the UNDOF.)

4. On Dec 19, the UN Secretary-General said that Israeli airstrikes on Syria are violations of the country’s sovereignty and territorial integrity and “must stop.” 

5. The D-8 organisation for economic cooperation among 8 Muslim countries held its summit in Cairo on Dec 19. (Comment: The members of D-8 are: Bangladesh, Iran, Indonesia, Malaysia, Nigeria, Pakistan, Turkey and Egypt. The organisation was established in 1997 to foster economic cooperation among Muslim countries but has conspicuously produced more heat than light – probably because the affluent Gulf Arabs have stayed out of it, preferring bilateral deals. D-8 Cairo Summit allowed the newly installed Iranian President to pay a rare visit to Egypt.) 

6. Keeping up the pressure on Israel, Pope Francis described on Jan 9 the situation in Gaza as “Shameful.” 

WANA and the United States:

Following the change in the incumbency of the White House on Jan 20, the United States policy towards WANA issues lurched sharply towards the right. Even before his inauguration on that day, President-elect Donald Trump became a potent influencer of the course of events in the region. His appointees for the WANA-facing political jobs, such as Secretary of State (Marco Rubio), NSA (Michel Waltz) and Special Envoy for the Region (Steve Witkoff) had a strong pro-Israel bias. Following his public warning to Hamas (“Hell to Pay”), a hitherto elusive cease-fire deal was reached on Jan 16 and implemented from Jan 19. Among the early Executive Orders issued by Trump 2.0 was the lifting of sanctions on some Jewish settlers in the Occupied West Bank.  While all foreign aid was frozen on Jan 24 pending a review, exceptions were made in the case of Israel and Egypt as these two countries continued to receive their annual largesse of 3.3 bn and 1.3 bn respectively. Further on Jan 25, the Biden-era ban on supply of 2000 lbs bombs to Israel was lifted. Even earlier, in its final three weeks before the handover, the Biden administration tried to clean up its Israel-agnostic image with various parting shots. On Jan 3, the State Department notified the Congress of the proposed $8 bn arms sales to Israel comprising ammunition for aviation platforms and artillery shells. On Jan 14, Secretary of State Anthony Blinken laid out plans for post-war management of Gaza – more as a matter of record than implementation during the last week of the Biden era. The outgoing Biden administration also imposed several sanctions on Sudan’s warring factions for violation of human rights.

On Jan 26, President Donald Trump said Jordan and Egypt should take in Palestinians from war-ravaged Gaza, a suggestion rejected by Hamas and rebuffed by Jordan and Egypt. (Further Reading:  “Gaza and Trump’s ‘expanding the canvas’ Strategy”, Mahesh Sachdev, The Hindu, February 11.)

Trump era began with a bang as big-ticket economic announcements came in fast. On Jan 7Hussein Sajwani, an Emirati billionaire owner of Damac group announced $20 bn plans for putting up new data centres in the US. During a video conference on Jan 23 at Davos, President Trump let it be known that the first substantive call he made after taking over was with Saudi Crown Prince Mohammed bin Salman, who promised to invest $600 bn in the US, only to be told by the former to round the figure off to a trillion dollars. In the same event, he called for OPEC to lower oil prices.

The US remained the largest arms exporter during 2024 with sales totalling $318.7 bn of which WANA countries were the major recipients. Turkey and Israel were major buyers with purchases worth $23 bn and $18.8 bn respectively.

The US House of Representatives passed a resolution by a 243-140 majority imposing sanctions on the International Criminal Court for issuing Warrants of Arrest against the Israeli PM and two other personalities. 

WANA and the European Union: 

European Union General Affairs Council met on Jan 27 in Brussels and agreed on a roadmap to ease sanctions on Syria. The majority of member states favoured that the EU should take a gradual and reversible approach to retain leverage as it encourages the new authorities in Damascus to respect fundamental rights and implement inclusive policies.

WANA and Russia:

On Jan 17, Presidents of Russia Vladimir Putin and Iran Masoud Pezeshkian signed a 20-year Strategic Partnership Agreement (SPA) in Moscow. (Comment: Although the publicised version of the SPA is quite comprehensive with its ambit including defence, technology, energy, trade, etc, it is not a military pact. It, nevertheless, pulls together, two countries under severe Western economic sanctions into an alliance which can have a sum greater than its parts. It may also be intended to deter the Western countries and Israel from moving militarily against either one of the two. It also further cements their ties that have drawn closer through the Syrian crisis, memberships of OPEC+ and BRICS as well as the North-South Economic Corridor. Further Reading: “Key provisions of Russia-Iran strategic cooperation treaty”; Reuters, Jan 17.) 

A Russian delegation led by a Deputy Foreign Minister visited Syria and was received by de facto leader Ahmed al-Sharaa on Jan 28. While the two sides were taciturn about the discussions, these being the first formal contacts since the ouster in early December of President Bashar al-Assad, whose regime Moscow actively supported against the rebels, who replaced him. Media reports spoke of the Russian side showing keenness to continue having two military bases – a naval facility in Tartus and an airbase at Hmeimim – in the northwest of Syria and promising to help with post-war reconstruction. The new Syrian rulers demanded reparations for war damages by Russia and wanted Moscow to extradite Bashar al-Assad and his cohorts to face justice in Syria. (Further Reading: “Syria asks Russia for reparations”, FT Jan 28.)   

Speaking at his annual end-of-the-year news conference on Dec 20, President Vladimir Putin denied claims of Russia’s loss with the fall of the Bashar Al-Assad regime in Syria. “You want to present what is happening in Syria as a defeat for Russia,” Putin asserted. “I assure you it is not … we have achieved our goals.” He also said that Russia had offered to maintain bases there “for humanitarian purposes.” He also admitted to having evacuated 4,000 Iranian fighters during the regime change. Earlier on Dec 16, Russian Foreign Minister Sergei Lavrov said that it was up to the Syrians to determine their future.

On Dec 23, two Russian Deputy Premiers visited Tehran to invite Iranian President Masoud Pezeshkian to visit Russia in early 2025 to sign a comprehensive cooperation agreement with the Eurasian Economic Union.

On Nov 18, Russia vetoed a resolution calling for a ceasefire in Sudan accusing the sponsors of double standards with the Gaza conflict.

WANA and Pakistan:

On Jan 16 Pakistan’s central bank said that the UAE had agreed to roll over two of its deposits of $1 billion each placed with the State Bank of Pakistan for another year. These were maturing this month. On Jan 21, the Pakistani Finance Minister said at Davos that a deal was underway with two Middle Eastern banks for a $1 bn loan.

Bloomberg reported on Jan 21 quoting the Pakistani petroleum minister that a deal with Saudi Arabia for the sale of a stake in the copper and gold mining project located at Reko Diq in Balochistan was still in the process of negotiating key details, including where the minerals will be processed. Canadian company Barrick Gold owns 50% of the project, while Pakistan’s federal and provincial governments own the rest. Manara Minerals Investment Co., a Saudi firm backed by the sovereign wealth fund, had announced plans earlier to buy the Pakistan government’s minority stake in the project for a reported minimum of $1 bn. However, due to disturbed conditions in Balochistan, the Saudi buyer prefers to move the minerals elsewhere for processing while Pakistan would like to have some of this processing locally. The Pakistani minister also noted that other bidders may be still involved in the discussion, with the deal expected to close within the next five months. The project is targeted to begin production in 2028. 

IB) Political Developments 

Israel:

The ruling coalition faced stress on the decision to have a ceasefire in Gaza from Jan 19, with two ultra-religious parties threatening to leave. Otzma Yehudit, a party led by National Security Minister Itamar Ben-Gvir, walked out of the coalition calling the ceasefire decision a “reckless deal” while the Religious Zionist Party led by Finance Minister Bezalel Smotrich, later decided to remain in the coalition. 

On Jan 21 army chief Gen Herzi Halevi tendered his resignation with effect from March 6, taking responsibility for the massive security lapse on Oct. 7, 2023, when Palestinian Hamas gunmen from Gaza carried out a cross-border attack on southern Israel. (Comment: Political leadership under Prime Minister Benjamin Netanyahu has resisted call for an official enquiry into the causes of the security breach, apparently hoping that the subsequent military gains would overlay such a demand.)

Defence Minister said on Jan 28 that Israeli troops would stay atop recently reoccupied Mount Hermon indefinitely.

President Trump’s Middle East envoy Steve Witkoff met PM Netanyahu on Jan 29. The envoy also visited Gaza and Riyadh.

A panel appointed by PM Netanyahu on the military preparedness for confrontations on multiple fronts released its report on Jan 6 recommending that Israel may need to spend an extra $3.6 bn per year. It also advised the country to prepare for a possible war with Iran.

YL Ventures, a global venture capital firm, reported on Jan 7 that Israeli cybersecurity firms raised $4 billion in 2024, more than double that of 2023. The surge was led by firms seeking to protect the cloud along with a surge in artificial intelligence. In a related development, WhatsApp said on Jan 30 that Israeli spyware company Paragon Solutions targeted 90 of its users, including journalists and members of civil society. 

On Jan 22, a Moroccan citizen stabbed 4 Israelis in Tel Aviv.

Palestine Authority and West Bank:

The security situation in the northern Occupied West Bank (OWB) continued to be complicated as both the Palestinian Authority Security Forces (PASF) and Israeli Defence Force (IDF) continued their respective campaigns against Hamas and Palestinian Islamic Jihad (PIJ) militants in Jenin, Tulkarem and Tubas. PASF siege around Jenin, which began on Dec 5, continued during much of the month leading to at least 13 killed in clashes including six PA security officers and one gunman. IDF launched its massive operation “Iron Wall” on Jan 21 against Hamas and PIJ fighters in Jenin. It involved hundreds of Israeli troops backed by helicopters, drones and armoured vehicles fighting sporadic gunbattles with Palestinian militants while carrying out searches in the streets and alleyways for weapons and equipment.  By Jan 30, IDF claimed having killed at least 18 militants and detained 60 wanted individuals, dismantling over 100 explosive devices and seizing a weapons manufacturing workshop. Israeli Defence Minister visited the Jenin refugee camp on Jan 30 and affirmed that the IDF will remain there even after the large-scale raid is complete to ensure that militants do not return. The IDF operation caused extensive damage and displacement to civilians and civic infrastructure. On Jan 28, an Israeli air raid killed 10 persons in Tubas. Three Israelis were killed in a shooting incident on Jan 8 in northern OWB for which Hamas took responsibility. (Comment: Although the objectives of PA and IDF were co-terminus, their impetuses were different. PA wanted to show that it could subjugate Hamas and PIJ in Gaza after the Israeli withdrawal. IDF, on the other hand, wanted to prevent Hamas and PIJ from taking root in the West Bank and plan an Oct 7-type attack. Israel also wanted to put pressure on the militants following a cease-fire in Gaza and drive home its advantage following the Trump administration’s lifting of sanctions against some of the 700,000 Israeli settlers in 160 settlements in OWB.)

On Jan 12, Israel’s Finance Minister declared that it would use tax revenue it collects on behalf of the Palestinian Authority to pay the pending dues of nearly $544 mn owed to state-run Israel Electric Co. This decision coupled with the withholding of other funds crimped PA’s capacity to pay salaries to its employees.

On Jan 1, PA temporarily halted operations of al-Jazeera television in the territory including its broadcasts, citing the network’s dissemination of “inciting material.” 

Lebanon:

During the month under review, Lebanon’s hitherto moribund polity began drawing some advantages from the chastening of Hezbollah militia after the recent conflict with Israel. Thus, the country’s parliament managed to elect a President of the country nearly two years after the last occupant demitted office. The head of the Lebanese army Joseph Aoun was elected on Jan 9 with 99 votes out of a 128-member parliament, comfortably scoring a needed 2/3^rd majority. Hezbollah and Amal had to reconcile and support his candidature as their candidate chose to withdraw. In his inaugural speech, President Aoun emphasised that the state of Lebanon has the exclusive right to bear arms in the country, a riposte to heavily armed Hezbollah and some other militias. Media reports on Jan 31 indicated that the US had lobbied against Hezbollah’s nominee being appointed as the new Finance Minister.  

On Jan 13 President designated Nawaf Salam, Chief Justice of the International Court of Justice, as the next Prime Minister of Lebanon in place of Najib Mikati, who has served in a caretaker capacity since 2021. While he got elected with 84 votes, cabinet formation took a long time as various religious confessions needed to be accommodated.  The appointment was given the cold shoulder by Hezbollah and its Shia political partner Amal Party.

In a sign of changing political fortunes in Lebanon away from the Iranian preponderance, Saudi Foreign Minister Faisal bin Farhan Al-Saud visited Lebanon after a gap of 15 years and was received by President Aoun. Saudi FM cryptically emphasised the need for reforms in Lebanon. (Comment: Way back in 1989, Saudi Arabia facilitated the end of the Lebanese civil war and put in place the current political dispensation in the country through the Taif Agreement, which showed Saudi sway over Lebanon then. It is therefore an irony for Saudi FM to call for reforms. Time, perhaps, for Taif Accord 2?)    

Lebanese Economy Minister put the total damages inflicted on the country during the recent war with Israel at $ 20 bn, a figure higher than the country’s GDP of $18 bn in 2023.

Israel unilaterally decided that its forces would stay put in south Lebanon beyond the 60 days stipulated in the ceasefire agreement, which was to run till Jan 27. On Jan 26, IDF fired on the Lebanese citizens trying to return to their homes in anticipation of Israeli withdrawal killing 24 persons. Israel eventually declared, with US support, that the new deadline for withdrawal would be Feb 18. Lebanese authorities stated that 83  citizens had died at the hands of Israelis since the ceasefire on Nov 27.

Iran:

With President Trump, the architect of the ‘maximum pressure’ policy against Iran in his first term, beginning his second term on Jan 20, the stage was set for resumed confrontation. This development, coupled with an aggressive Israeli government flushed with recent victories against Iranian proxies raised the spectre of concerted US-Israel military action against Iran’s nuclear installations. Trump has vowed to return to the policy he pursued in his previous term that sought to use economic pressure to force the country to negotiate a tougher deal on its nuclear programme, ballistic missile programme and regional activities. Trump lost no time in issuing an executive order reinstating the maximum pressure policy and taking strong steps to implement the ban against Iranian oil exports, estimated at $30 bn last year, mostly to China. For the record, the Iranian foreign minister said in an interview with al-Jazeera TV aired on Jan 31 that Iran would respond immediately and decisively if its nuclear sites were attacked which would lead to an “all-out war in the region.”  He added that it would be “one of the biggest historical mistakes the U.S. could make.” On the other hand, Iranian Vice President for Strategic Affairs Javad Zarif was sent to Davos where he called for conciliation and resumption of talks even as IAEA Chief Grossi claimed on Jan 22 that Iran had nearly 200 kg of 60% enriched uranium stockpile and was “pressing the gas pedal further on enrichment.” On Jan 6 French President Macron warned that Iran’s nuclear programme was “nearing the point of no return.” 

Iran also engaged in some sabre rattling of its own during the month to scare its opponents. On Jan 4, it began two-month-long war games to “practice the fight against air, missile and electronic warfare threats in real battlefield conditions… to protect the country’s skies and sensitive and vital areas.” On Jan 18, it unveiled an underground naval base. A senior Revolutionary Guards commander said on Jan 27 that Iran has purchased Russian-made Sukhoi-35 fighter jets without clarifying any numbers or whether they had already been delivered. (Comment:  The Su-35 procurement by Iran has long been rumoured. If confirmed this would be the first new major air combat platform obtained by Iran since the Islamic revolution in 1979.)

The U.N. human rights office said on Jan 7 that at least 901 people were executed by hanging last year in Iran, compared with 853 in 2023. Most of the executions were for drug-related offences but also included criminals, political dissidents, alleged spies and people connected with mass protests in 2022.

Yemen:  

Following three drone attacks on the Tel Aviv area by al-Houthis in the preceding two days, on Jan 10 Israeli air force attacked power stations and ports in al-Houthis-controlled areas. These and other hostilities have resulted in the operations at Yemen’s Red Sea ports falling by three-fourths.

A spokesman for Ansar Allah (aka al-Houthis) said on Jan 18 that their hostile activities against Red Sea shipping and missile/drone launches against Israel would stop once an effective ceasefire takes hold in Gaza. They fired a missile at central Israel on the same day. However, on Jan 20, al-Houthis further clarified that: (i) they would stop targeting Israeli-linked ships “upon the full implementation of all phases of the agreement”; (ii) in the event of any aggression against the Republic of Yemen by the US, the UK, or Israel, “the sanctions” will be reinstated against the aggressor. (Comment: International maritime activity reacted cautiously to al-Houthi announcements about de-escalation and there was no perceptible immediate uptick in shipping traffic across Baab al-Mandeb.)

On Jan 22, al-Houthis released 25 crew members of Galaxy Leader after over one year of detention. On Jan 25, they also released 153 prisoners of the Yemeni civil war. In a contrarian move on Jan 24, however, al-Houthis detained 7 UN staff members – leading to all the UN activities in their area being suspended. (Comment: After months of hostilities and fire-eating rhetoric, al-Houthis seemed to be inclined to de-escalate with an eye to the collapse of the “Axis of Resistance” led by Iran. They did not want to be the last man standing.)

On Jan 22, the Trump administration redesignated al-Houthis as a “Foreign Terrorist Organisation.”

Salvaging of the tanker MT Sounion stranded in the Red Sea after the al-Houthi attack on Aug 21 was completed on Jan 13 without the oil being leaked.

Turkey: 

A Turkish delegation led by the Trade Minister visited Bangladesh and was received by Chief Adviser Muhammad Yunus on Jan 9. According to a media report, the Bangladeshi side asked Turkey to set up a local defence industry. The two sides agreed to expand and deepen their ties beyond the textiles sector. (Comment: Annual bilateral trade currently runs around $1 bn and is largely confined to the textiles sector with a slightly favourable trade balance for Bangladesh. Dhaka looks to Turkey to reduce her reliance on India, particularly in the defence sector where it ranks Turkey’s  fourth largest buyer cumulatively over the past decade.)  

On Jan 7, President Recep Tayyip Erdogan met in Ankara with Masrour Barzani, Prime Minister of Iraq’s Kurdish Regional Government. President Erdogan claimed that Turkey is working to ensure that Syria’s transformation over the last month will not bring new instabilities to the region. 

Iraq:

Prime Minister Mohammed Shia al-Sudani paid an official visit to the United Kingdom on Jan 13-14 during which a bilateral security deal as well as a strategic partnership accord were signed. The value of the entire package of civil and military contracts was put at $15 bn. (Comment: The visit took place amidst the seismic shifts in geopolitics around Iraq as the regime in Syria was toppled and Iran’s regional profile attenuated. Following its recent gains in Syria, Turkey adopted an even more aggressive posture against Kurds, who have a sizable presence in northern Iraq.)

In a press interview on Jan 16, Iraq’s Foreign Minister said that his government has been trying to convince powerful pro-Iran Shia armed factions in the country to lay down their weapons or join official security forces. He also expressed worries about instability in Syria leading to a resurgence of Islamic State in Iraq and Syria (ISIS).

Sudan:

While the Sudan Armed Forces (SAF) continued to gain on several fronts against the Rapid Support Force (RSF), the latter seemed to plan for a separate fiefdom in the Darfur region in the West. SAF pushed back RSF units from the Omdurman suburb of the capital Khartoum and broke the siege of the defence headquarters in Khartoum enabling a celebratory visit by its leader Gen Abdelfattah el-Burhan to the capital on Jan 26. Earlier on Jan 8, the SAF captured Wadi Madani, a strategic junction 200 kms south of Khartoum and the capital al-Jazeera province, Sudan’s breadbasket. On the other hand, RSF and its allied militias still controlled most of the vast and resource-rich Darfur region bordering South Sudan, Chad and Libya, except el-Fasher, the capital of northern Darfur province where it had a siege of SAF garrison. WHO reported that a drone attack on a hospital in el-Fasher on Jan 25 killed over 70 persons.  

Saudi Arabia:

Six Iranians were executed by Saudi authorities on Jan 1 after being convicted of drug smuggling. Iran protested the executions.

Saudi Minister of Economy and Planning stated on Jan 20 that his country was still assessing the invitation to join the BRICS organisation. 

To attract overseas investments, Saudi Arabia began allowing foreigners to invest in publicly traded companies owning real estate in the holy cities of Makkah and Madinah for the first time on Jan 27.

Somalia:

On Jan 11, Ethiopian Prime Minister Abiy Ahmed and Somalia’s President Hassan Sheikh Mohamud held a meeting in Addis Ababa at which they agreed to restore the bilateral diplomatic relations strained by Ethiopia’s attempts to gain sea access through breakaway Somaliland. Turkey has been mediating between the two countries.

United Arab Emirates:

On the sidelines of Abu Dhabi Sustainability Week, on Jan 14 the UAE signed individual Comprehensive Economic Partnership Agreements with Malaysia, Kenya and New Zealand.  Emirati Trade Minister hoped that negotiations with a CEPA with the European Union would begin this year.  (Comment: The UAE’s bilateral CEPA campaign began with India in 2022 with a great deal of fanfare. However, three years on the UAE has signed similar agreements with several countries, many of whom are India’s competitors. This correspondingly reduces the value addition to India from its own CEPA with the UAE.)

On Jan 28, EDGE, a state-owned weapons maker in the UAE, announced a $10 mn purchase of 30% of the Israeli drone detection technology firm Third Eye. The Emirati group also invested $12 mn in a joint venture with the Israeli company. (Comment: This was the first such publicly announced defence tie-up with Israel since the beginning of the Gaza conflict and showed two things: The UAE’s return to business as usual with Israel and Abu Dhabi’s high priority to creating a state-of-art drone defence system at the earliest.)  

On Jan 28, Dubai-based billionaire Khalaf Ahmad al-Habtoor announced cancelled all planned investments in Lebanon due to continuing instability and plans to sell all his properties and investments in the country estimated at $ 1 bn having already suffered losses worth $1.4 bn over the past few years.  (Comment: The real estate and retailing billionaire’s decision to cut his losses would perhaps have as much to do with the UAE potentially being in Hezbollah’s crosswires for cosying up to Israel.)

Egypt:

On Jan 29, President Abdel Fattah el-Sisi declared, “Regarding what is being said about the displacement of Palestinians, it can never be tolerated or allowed because of its impact on Egyptian national security. The deportation or displacement of the Palestinian people is an injustice in which we cannot participate.” (Comment: President Trump’s proposed US takeover of Gaza after relocating its residents in Egypt and Jordan put Egyptian authorities in a quandary: either they would be burdened with responsibility for settling an additional population sympathetic to Hamas (an offshoot of the Muslim Brotherhood of Egypt) or lose American annual financial and military grants which are badly needed particularly in current times of financial stress. The authorities tried to oppose it through ventriloquist means: engineering popular demonstrations against it in Egypt and Gaza as well as getting Arab consensus for an alternative reconstruction plan for Gaza.)  

II) Economic Developments

Oil & Gas Related Developments:

Global Issues:

Although the Brent for February delivery gyrated wildly during January, it moved up by only 2.8% from $74.64/barrel on Jan 1 to $76.76/barrel on Jan 31. The price rose sharply to cross $81/barrel on Jan 11 as the Biden administration announced crippling new sanctions on a large number of producers, shippers and insurers of Russian crude. This move also directed demand to the Middle Eastern suppliers, making the Gulf prices firmer.

A Reuters survey published on Jan 7 put the OPEC output during December at 26.46 mn bpd having fallen by 50,000 barrels per day from the previous month. The decline was largely attributed to the UAE and Iran lowering their production by 90Kbpd and 70Kbpd respectively even as Nigeria and Libya each raised their output by nearly 50 Kbpd. 

OPEC monthly bulleting published on Jan 16 maintained the global oil market growing robustly by 1.4 mbpd each in 2025 and 2026. 

While Saudi Aramco Chief stated that the robust Chinese demand was still driving the global oil market, Bloomberg issued a contrarian report on Jan 20 pointing out that the overall Chinese demand has grown by less than 300,000 bpd in 2024  – nearly half of the average rise of around 600,000 bpd in previous years. Moreover, the report believed that the actual consumption was falling due to faster adoption of EVs as the government announced a $11 bn stimulus for a vehicle trade-in scheme taking the proportion of EVs in new vehicles to 46.8% in 2024. It thought that most of the increased demand was being directed to replenishing the country’s strategic petroleum reserves.    

Arab oil minister congregated in Riyadh on Jan 28 to mark the 50^th anniversary of the Arab Energy Fund. 

On Jan 1, Russia and Ukraine ended their gas transit arrangement for supplying natural gas to Western Europe.

On Jan 22, President Donald Trump publicly asked OPEC to reduce oil prices as he announced the “Drill, Baby, Drill” campaign to boost oil and gas production in the United States. 

Country Specific Developments: 

Saudi Aramco and Maaden, a state mineral exploration company, signed an agreement on Jan 16 to produce lithium from oil and gas fields by 2027.

On Jan 10, TotalEnergies began building a gas processing facility at Ratawi field in Iraq designed to process 50 mcf of gas per day. This $250 mn project is part of a 2023 deal with Iraq on a $27 bn of projects to collect gas for electricity, increase oil production, treat seawater to use in the water-intensive oil production processes, and build a 1 Gigawatt solar park.

Following economy-related development took place in WANA countries:

Regional Economic Developments

According to a preliminary annual report from Global SWF published on Jan 1, sovereign funds from Abu Dhabi, Qatar and Saudi Arabia invested a record $82 bn in 2024 or 62% of the total global SWF spending of nearly $136.1 bn. Abu Dhabi’s Mubadala Investment Company and its subsidiaries deployed $29.2 billion in 2024 overtaking Saudi Arabia’s Public Investment Fund which cut its investment spend by 37% to $19.9 bn in 2024 from $31.6 bn the previous year. PIF was more focused on the domestic economy and aimed to reduce the fund’s investments abroad.

In a detailed analysis, Bloomberg projected 2025 to be an unsettled year for commodities. It was pessimistic about the fall in prices of oil and iron ore but predicted relatively higher demand than supplies for coal and coffee. (Further Reading: “Prepare for a Bumpy Year in Coffee, Oil and Other Commodities”, Javier Blas, Bloomberg Jan 1.) 

Saudi Arabia was the WANA region’s top destination for foreign tourist arrivals in 2024, having received nearly 30 mn visitors, up 10% from the previous year. Most of them were pilgrims to Islam’s two holy shrines. The Emirate of Dubai was the second most visited destination having had 18.72 mn tourists followed by Morocco (17.4 mn) and Egypt (15.7 mn). 

Economic Developments in Individual WANA Countries: 

IMF lowered its forecast for Saudi GDP growth by 1.3% to 3.3% for 2025 and to 4.1% for 2026 citing the extension of OPEC+ oil production cuts. On Jan 6, the Saudi Public Investment Fund (PIF) signed a $7 bn Islamic loan with 20 international and regional banks. It also hinted at plans to borrow $37 bn to fund huge projects under Vision 2030. Saudi Finance Minister told at Davos that the Kingdom’s total investments in the US were around $770 bn and Crown Prince Mohammed bin Salman was looking to raise them further. During Italian PM Giorgia Meloni’s visit to Saudi Arabia, the two sides signed bilateral contracts worth nearly $10 bn on Jan 26. 

Following a sharper-than-expected decline in the annual inflation rate to 44.38% in December 2024, the Turkish Central Bank lowered its bank rate by 250 bps to 45% on Jan 23.

IMF Staff concluded a visit to the United Arab Emirates and issued a preliminary report on Jan 23 highlighting the following aspects: (a) Near-term growth is strong and expected to remain healthy at around 4% in 2025 despite the hydrocarbon GDP growing only above 2.0%; (b) Inflation is expected to remain contained around 2.0% in 2025; (c)  The fiscal surplus is expected to moderate to around 4%  of GDP in 2025 from an estimated 5% of GDP last year. (d) Non-hydrocarbon revenue is projected to increase steadily in the coming years with the ongoing implementation of the corporate income tax; (e) Public debt remains contained at around 30% of GDP; (f) The current account surplus is projected at around 7.5% of GDP; (g) The international reserves are healthy at over 8.5 months of imports. (h) Banks’ exposure to the real estate sector has declined by 4% to 19.6% during the period Dec 2021 to Sept 2024. 

Enhanced war spending raised Israel’s debt-to-GDP ratio to 69.0% from 61.3% in 2023 and raised the budgetary deficit to 6.9%, the Finance Ministry said on Jan 21. Earlier on Jan 13, the Ministry disclosed that the government borrowed a record $75.9 bn, the finance ministry said on Monday, surpassing the country’s previous record in 2020 during the Covid pandemic. About 81% of the borrowing was from the country’s local bond market. On Jan 6, the Bank of Israel left the bank rate unchanged at 4.5% for the eighth time running. While the inflation was 3.4%, it was expected to rise. The bank expected the country’s economy to grow by 4% in 2025 as it recovers from the war conditions. Following the conclusion of a ceasefire deal with Hamas, the Israeli stock market jumped by 4.4% during the week ending on Jan 17, the best performance in the world.

In an interview with Reuters published on Jan 13, Syria’s new central bank governor, Maysaa Sabreen, indicated a string of measures being contemplated to professionalise the institution. These included greater autonomy over monetary policy decisions backed by a draft law, expansion of Islamic banking, and conducting a review of FX, and gold reserves. She wanted to avoid printing money due to inflationary impact. (Comment: She was the first female to be appointed to head the central bank and was an exception to the otherwise male-dominated HTS regime. She faces a run-down banking system due to 13 years of civil war and economic sanctions. The annual inflation is estimated to be around 100% annually and the national currency, the Pound, has plummeted from 50 to a dollar in late 2011 to 13,000 on Jan 13 2025.) 

III) Bilateral Developments 

• Commerce and Industry Minister Shri Piyush Goyal visited Oman on Jan 27-28 for the 11^th session of the Joint Commission Meeting (JCM) which he co-chaired with his Omani counterpart. He was received by Omani leadership including Deputy Premier for International Cooperation, Foreign Minister and Chairman of Oman’s Special Economic Zones Authority. The two sides also signed a protocol to amend the bilateral Double Taxation Avoidance Agreement. He also participated in the Joint Business Council Meeting co-hosted by FICCI and Omani Chambers and addressed a meeting of the CEOs’ forum. (Comment: The bilateral trade between Oman and India was 8.94 bn in FY 24. The two sides have been negotiating a Comprehensive Economic Partnership Agreement (CEPA) and hope to conclude it at an early date.The Indian diaspora, estimated at 6.8 lakhs,  is the second largest expatriate community in Oman after Bangladesh.)

• Minister for Coal and Mines Shri G. Kishan Reddy, paid a three-day official visit to Riyadh, Saudi Arabia on 14 to 16 January to attend the Ministerial Round Table of the Future Minerals Forum 2025.

• Minister for Minority Affairs and Parliamentary Affairs Shri Kiren Rijiju visited Saudi Arabia from 11 to 14 January to finalise the preparations for the forthcoming Haj pilgrimage, signing the bilateral agreement for Haj 2025 and related activities.

• 19^th Foreign Office Consultations with Iran were held in New Delhi on Jan 3 at the level of Foreign Secretaries. The Iranian Foreign Secretary called on the EAM. 

• A Ministry of External Affairs statement on Jan 16 said, “We welcome the announcement of the agreement for the release of hostages and a ceasefire in Gaza.” India also hoped that the agreement would lead to a safe and sustained supply of humanitarian assistance to the people of Gaza.

• There were several signs of changes in India’s petroleum sector. Firstly, as the new and tighter US sanctions on transport and insurance of Russian crude took effect from Jan 10, Indian importers scurried to tie up alternate suppliers, mostly from the Gulf region. (Comment: Nearly 60% of Russian sea-borne crude exports averaging around 1.5 mbpd were being supplied to India at a discounted rate.) Secondly, India’s refiners switched to exporting their diesel supplies from Europe to Africa and Asia. This was prompted by several factors, including the unsettled situation in the Red Sea area, growing output in Europe itself and enhanced supplies from the US refiners. (Comment: India’s refined product exports stood at $48 bn in FY24.) Thirdly, India’s fuel consumption in December rose 2.1% year on year to 20.67 MMT, its highest level since last May.

• The Economic Times reported on Jan 14 quoting unnamed developers in Dubai as saying that almost 50% of the buyers in new projects are from India and nearly 70% (of them) from smaller towns. Ironically, ten days later on Jan 24, the same paper reported that the Enforcement Directorate will issue notices to buyers of Dubai properties to scan if they have violated foreign exchange laws and indulged in money laundering.

• Saudi Arabia tightened work visa rules for Indian workers who were now asked for pre-verification of professional and academic qualifications.

• On Jan 15, NPCI International Payments Limited (NIPL) announced a partnership with UAE-based payment solution provider Magnati to advance QR-based Unified Payments Interface (UPI) merchant payments via point-of-sale (POS) terminals in the Middle East. (Comment:  With this partnership, more than 12 mn Indians travelling to Dubai and the UAE annually, would be able to make UPI-based payments.)