Ananta Insights | West Asia & North Africa Digest by Ambassador Mahesh Sachdev | November 2024

IA) Political Developments: Pan-Regional and Global Issues

Gaza Conflict:

On Oct 17, the Israel Defence Force (IDF) said that it had killed Hamas Supremo Yahya Sinwar in Rafah on the previous day. The death was later acknowledged byHamas as well. Israeli Prime Minister Benyamin Netanyahu wasted little time declaring that the killing of Sinwar “settled the score” with the “evil.” (Comment:While the death of Yahya Sinwar, 62, long-time Hamas leader and mastermind of Oct 7 attacks, brought closure to the personal revulsion the Israelis felt for him, it did not decapitate Hamas or led to the release of the remaining hostages.  The contemporary WANA history would perhaps cast him with a mix of extremes: deep abomination for Oct 7 shocking ambush and the huge human tragedy it unleashed, as well as his “martyrdom” for his “cause” and his grit and guile to survive 20 years in an Israeli jail, planOct 7 surprise on all-knowing Israeli state and survival for one year onIsrael’s “most wanted” list. It remains to be seen if his tactical surprise would remain a footnote in the long-term  regional history (– as Israel would like it to be), or become the dramatic trigger that brought home the indispensability of a two-state solution to the Palestinian issue – as Sinwar intended it to be.)

Yahya Sinwar’s death led to several calls, including by President Biden, forde-escalation and disengagement from Gaza beginning with a ceasefire and exchange of hostages with Palestinians in Israeli jails.  But Israel continued with its military activities in Gaza without any discernible pause or hint of an end game strategy. The mediators from Qatar, Egypt and the US resumed their efforts fromOct 27 with Egypt proposing a 10-day ceasefire in exchange for 4 Israeli hostages and further negotiations. However, this was not accepted by either side. On its part, Hamas said on Oct 29 that it was studying new proposals from mediators to end the Gaza war but reiterated its previous conditions,  viz. a complete Israeli military withdrawal from Gaza, end the Israeli-led blockade, allow unrestricted relief aid and are construction of Gaza, and a swap of Israeli hostages in Gaza for Palestinian prisoners in Israel. 

Despite clear IDF dominance of the Gaza theatre and Israel’s growing military engagement in Lebanon and with Iran, the territory continued to be convulsed by high levels of violence and growing anarchy. IDF was particularly active in northern Gaza where it claimed to be acting to thwart the return of Hamas militants, although some Palestinian saw it as an attempt to depopulate the area either to create a buffer zone or to make room for Israeli settlers. By the end of the month over 43,000 war-related deaths were reported in Gaza. IDF lost around 682 killed (304 on Oct 7 alone and 378 in Gaza during the ground offensive).

AFP reported on Oct 21 that Hamas had decided that a five-member committee based in Doha would succeed Yahya Sinwar to head Hamas for the interim period. It would comprise representatives of the two Palestinian territories and the community, namely Khalil al-Hayya for Gaza, Zaher Jabarin for the West Bank and Khaled Meshaal for Palestinians abroad. It also includes the head of Hamas’s Shura advisory council Mohammed Darwish and the secretary of the political bureau, who is never identified for security reasons. All current members of the committee are based in Qatar. (Comment: The five-member committee was initially formed after Hamas Political Wing head Ismail Haniyeh was killed two months ago in Tehran as his replacement. Some other reports have indicated thatYahya Sinwar’s 49-year-old brother Mohammed has taken the place of the slain duo, his elder brother and Mohammed Diaf, the Hamas military commander. He is based in Gaza. The future of Hamas and its leadership would become clear only after the hostilities end.) 

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 Hostilities between Iran and Israel.

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:

Flushed with her recent successes on the ground against Hamas in Gaza and Hezbollah in Lebanon, Israel took a more strident approach towards multilateral diplomacy. Thus, on Oct 28 the Knesset passed a law to ban the UN Relief and Works Agency (UNRWA) from operating inside the country. Israel sought to justify the move by citing the involvement of a handful of the UNRWA’s thousands of staffers in the Oct. 7, 2023 attack. The law passed will make it impossible for the agency to obtain any entrance permits to operate in the occupied West Bank and the Gaza Strip and for the agency to transport assistance through Israeli territory to Palestinians in need. The UN Secretary-General and the UNRWA Chief described the move as in opposition to the U.N. charter and in violation of international law. The move was also widely condemned internationally, including by the UN Security Council which on Oct 30 issued a statement adopted by consensus which “strongly warned against any attempts to dismantle or diminish” the operations and mandate of the UNRWA. (Comment: The new Israeli law is due to come into effect in 90 days – and might be designed to drive home the indispensability of Israeli supervision of UNRWA’s activities.)

Following the beginning of the IDF ground offensive in southern Lebanon, Israel repeatedly called on peacekeepers of the United Nations Interim Force inLebanon (UNIFIL) to abandon their positions. However, The UN peacekeeping chief said on Oct 3 that the force would continue to do its best to implement its Security Council mandate and remain in place despite aggressive IDF measures on the ground. On Oct 31, UNIFIL stated that it had recorded more than 30incidents in October resulting in property damage or injury to its soldiers. It added that of these about 20 could be attributed to Israeli military fire or actions, with “seven being clearly deliberate.”

On Oct 2, Israel’s foreign minister said that he was barring UN Secretary-General Antonio Guterres from entering the country because he had not “unequivocally” condemned Iran’s missile attack on Israel. The next day the UN Security Council said in a statement that “any decision not to engage with the UN Secretary-General or the United Nations is counter productive, especially in the context of escalating tensions in the Middle East.” It did not specifically name Israel.

A statement by a UN-mandated Commission of Inquiry on Oct 10 in advance of a full report accused Israel of “committing war crimes and the crime against humanity of extermination with relentless and deliberate attacks on medical personnel and facilities” in its assault on Gaza.

The Food and Agriculture Organization and the World Food Programme said in a joint report on Oct 31 that “acute food insecurity is set to increase in both magnitude and severity” across 22 countries and territories, including the PalestinianTerritories and Sudan.

On Oct 9, Saudi Arabia narrowly failed to win a seat on the UN Human Rights Council in an election for a 47-seat body. Comment: It was a serious blow to Riyadh’s efforts to boost the country’s rights reputation on the global stage.The Kingdom had also been rejected in its similar bid in 2020.

On Oct 2, Group of Seven (G7) leaders issued a statement expressing “strong concern” over the crisis in the Middle East but said a diplomatic solution was still viable and a region-wide conflict was in no one’s interest.

Three WANA countries, viz. Egypt, Iran and the UAE joined the BRICS organisation at its 16 Summit at Kazan in Russia on -Oct 20. While Saudi Arabia was invited to join BRICS, it has yet to make a decision. On the other hand,Turkey, a NATO member, has applied to join the BRICS. The Kazan Declaration issued at the end of the Summit had the following excerpt on the WANA region:

“Expressing concern over the worsening situation in Palestine, the declaration stated,”We reiterate our grave concern at the deterioration of the situation and humanitarian crisis in the Occupied Palestinian Territory, in particular the unprecedented escalation of violence in the Gaza Strip and West Bank.”

“We express alarm over the situation in Southern Lebanon. We condemn the loss of civilian lives and the immense damage to civilian infrastructure resulting from attacks by Israel in residential areas in Lebanon and call for immediate cessation of military acts.”

On Oct 2, the foreign ministers of the Gulf Cooperation Council held an extraordinary session in Doha and issued a statement affirming their support for Lebanon and calling for a ceasefire in Gaza.

WANA and the United States:

The Middle East turbulence impacted and was, in turn, impacted by the run-up to theUS Presidential election on Nov 5. While the Biden diplomacy sought to calm the situation, Republican candidate Donald Trump came out strongly in support ofIsrael including telling PM Netanyahu on Oct 20 “Do what you have to do.” Amidst the reported Iranian plot to assassinate Trump, his campaign team asked on Oct 11 for “military protection” to thwart such a threat. In an unusual move, on Oct 13 the US secretaries of State and Defence jointly addressed a “private” letter – leaked to media two days later – called on Israeli Ministers of Defence and Strategic Affairs to implement a specified series of “concrete measures” within a 30-day deadline to reverse the deteriorating humanitarian situation in Gaza or face unspecified consequences by the US government. Somewhat paradoxically, the letter was issued the same day that the US announced the deployment in Israel, for the first time, of Terminal High Altitude Area Defence, or THAAD, an advanced ballistic missile defence system with nearly 100 US military experts to man it. (Comment: Leakage of the “Private Letter” betrayed that the exercise was intended to win back the segment of traditionally pro-DemocratAmerican voters such as Arabs, Muslims and left-liberals who felt alienated by the perceived pro-Israel tilt of Biden Presidency without losing the pro-Israel base. THAAD deployment, not asked for Israel, was to flag the US commitment toIsrael’s defence and to buy time for Tel Aviv’s planned retaliation against Iran till after the American Presidential election on Nov 5. In the event, both these moves did not have the intended outcome.)  

On Oct 24, the State Department approved the potential sale of TOW missiles to Saudi Arabia for an estimated cost of $440 mn.

On Oct 4, the US announced humanitarian assistance worth $157 mn to Lebanon.

On Oct 7, Al-Jazeera cited a report by Brown University’s Watson Institute to disclose that during the past year since the Oct 7 2023 attack, the US has spent $22.76 bn in support of Israel’s war on Gaza ($17.9 bn) and operations against the Houthis in Yemen ($4.86 bn). It also said that historically, since1959, Israel has been the biggest recipient of US military aid in history, taking in $251.2 bn cumulatively in inflation-adjusted dollars. 

On Oct 22, Secretary of State Anthony Blinken began his 11th tour of the WANA region since the beginning of the conflict. During the next three days, he visited Israel, Saudi Arabia and Qatar to meet with their respectiveHOS/Gs. The stated goal of arranging a ceasefire in the Gaza conflict eluded Blinken this time as well with the Israeli PM reportedly refusing to utilise the killing of Hamas leader Yahya Sinwar to wind down the conflict and pave the way to some hostages being released.  

After a gap of several weeks, the CIA Director returned to the region on Oct 31 together with two US envoys to push for peace in Gaza and Lebanon. He visited Egypt and Israel.  

Bloomberg reported on Oct 25 that the US has signalled to Saudi Arabia her readiness to help defend the kingdom against an attack by Iran or its proxies. This was apparently in response to the Gulf Cooperation Council states growing anxiety about being embroiled in the stand off between Iran and Israel. On Oct 10, in an exclusive Reuters reported that Gulf states were lobbying Washington to stopIsrael from attacking Iran’s oil sites because they are concerned that in such an eventuality, their oil facilities could come under fire from Tehran’s proxies. Both of these reports did not name any sources for the information. In the same vein, following Israeli air raids on Iran on Oct 26, the US asked all sides to de-escalate. 

WANA and China: 

Chinese President Xi Jinping met Iranian President Massoud Pezeshkian on Oct 23 on the sidelines of the BRICS Kazan Summit.  In a post-meeting media statement, Xi said that an early ceasefire and an end to the war in Gaza are key to easing regional tensions. Xi also said China will unswervingly develop friendly cooperation with Iran despite challenges in the international and regional situation. 

On Oct 14 in a phone call with his Israeli counterpart Israel Katz, Chinese Foreign Minister Wang Yi urged all parties involved in tensions between Israel and Iran to exercise caution and avoid escalating the situation. He also urged Israel to ensure the safety of UNIFIL personnel. Katz, in turn, asked China to express”a balanced and fair position in relation to the war”, citing the bilateral economic cooperation and pointing out that approximately 20,000 Chinese workers continue to work in Israel. 

WANA and Russia:

On Oct 20, President Putin met with UAE President Mohammed bin Zayed Al-Nahyan (MbZ) in Moscow. He said relations between the two states amounted to a “strategic partnership” and thanked him for mediation efforts in exchanging prisoners of war with Ukraine. (Comment: The UAE has mediated nine exchanges of prisoners of war between Ukraine and Russia, the latest taking place on Oct 18, with each side bringing home 95 persons. Bilateral Trade has tripled over the last three years and the bilateral investments are put at $7 bn. President Putin hosted a dinner in honour of MbZ, attaching personal importance to the bilateral ties.) 

On Oct 11, Russian President Vladimir Putin held talks with Iranian President Masoud Pezeshkian in Turkmenistan. The Iranian President was invited to pay an official visit to Russia. On Oct 31, Russian Foreign Minister Sergei Lavrov said that the Comprehensive treaty being finalised with Iran would include defence cooperation. 

WANA and France: 

OnOct 11, President Emanuel Macron called for an end to exports to Israel the armaments being used in Gaza and Lebanon. The call led to some sharp bilateral exchanges between him and Israeli PM Netanyahu. (Comment: France has little to lose as it has virtually no arms exports to Israel. Paris can potentially gain the goodwill of those opposed to the Israeli invasion of Gazaand Lebanon.)

WANA and the European Union:

OnOct 31, the EU President warned that the banning of UNRWA by Israel may lead to the annulment of the bilateral Association Agreement of 2000 providing the legal framework for bilateral trade. Comment: The EU is Israel’s biggest trade partner, accounting for 28.8% of its trade in goods in 2022, while Israel is the EU’s 25th biggest trade partner.

WANA and Sri Lanka:

OnOct 23, Israel’s national security council called on Israelis to leave the Arugam Bay area and other tourist areas in the south of Sri Lanka due to a terrorist threat. Two Western embassies also made similar advisories to their citizens. 

WANA and European Union:

On Oct 16 the European Union (EU) and the Gulf Cooperation Council (GCC) held their first summit in Brussels. In a joint statement at the end of the summit, the two sides agreed to revive the negotiations on a free trade agreement. They will also hold biennial summits, the next in Saudi Arabia in 2026. On the Middle East, the statement expressed “utmost concern” over developments in Israel, Gaza and Lebanon, called for an immediate ceasefire and urged all parties to comply with their obligations under international law.  (Comment: Although EU-GCC FTA negotiations were launched 35 years ago, these were stalled as the GCC found the EU reluctant to allow free access to their petrochemical products.This stalemate led to these talks being suspended in 2008. While geopolitical uncertainties of the conflicts in Ukraine and the Middle East have given impetus to their reconvergence, it would be interesting to watch if this time the outcome is more positive.)

IB) Political Developments 

Hostilities between Iran and Israel:

The month began with Iran launching around 180 rockets, including hypersonic missiles and Fattah missiles at several military targets in Israel on Oct 1. These were in retaliation to various Israeli military and other campaigns against the “axis of resistance” three non-state actors (viz. Hamas, Hezbollahand al-Houthis), the killing of Hamas Political Head Ismael Haniyeh in Tehranand Hezbollah Chief Syed Hassan Nasrallah, etc. While Iran’s Islamic Revolution Guards Corps claimed 90% of Iranian projectiles hit their targets, Israel counter claimed that most were either intercepted or failed to cause any significant damage to any vital military facility. According to the Israeli version, while most were aimed at central and southern Israel, the only causality was a Palestinian killed in the Occupied West Bank. US Defence Department stated that this time Iranian salvo was twice as intense as the first time in April. On Oct 2, the Iranian foreign minister declared that the retaliatory action was over. (Comment: Truth is said to be the first casualty in any conflict and this seemed to have been particularly true of this round. On Oct 27, Al-Jazeera quoted Jeffrey Lewis, anon-proliferation expert at the Middlebury Institute of International Studies, as stating that analysis of satellite imagery showed at least 30 impacts atIsrael’s Nevatim Airbase alone housing F35A stealth jets. The US decision to deploy THAAD in Israel for the first time following the Iranian missile attack seems to suggest the inadequacy of Israel’s missile defence in facing a swarm of Iranian missiles.)   

The promised Israeli riposte to the Iranian attack came on Oct 26 in the form of three waves of air force strikes over six hours involving nearly 100 planes which targeted some 20 military sites in three clusters in Tehran, Ilam and Khuzestan provinces. The aim was to destroy Iran’s border radar systems, missile batteries and fuel mixers for the rockets. On the way, the Israeli planes flew over Syria and Iraq and crippled their anti-aircraft assets as well. According to media reports Israeli planes used long-distance rockets to stay out of the Iranian anti-aircraft system’s range. In an address to the raid team, Israeli Defence Minister Yoav Gallant said that following Israeli airforce strikes on their radars and air defence systems, Iran was at a disadvantage that could be exploited in the future. Israel claimed that all aircraft returned safely. Iran on the other hand played down the attack as having caused “limited damage”, but admitted to 4 deaths. On Oct 30, the Iranian Defence Minister denied that Israeli air raids had disrupted the missile production. (Comment: Israeli leadership seemed to have several objectives in launching this raid. Firstly to settle the score with Tehran and to set the stage for more aggressive action against the latter’s nuclear and oil-related assets. Secondly, to further demoralise the Iranian proxies by showing that their principal backer was on the ropes. Thirdly, to influence the US presidential elections in favour of Trump who was publicly in favour of such raids while the incumbent demurred. Lastly, to create a new domestic groundswell in favour of PM Netanyahu and the ruling Likud coalition. Further Reading: “Israel’sStrike on Iran Was Smart. Now Take the Win.” by Marc Champion, Bloomberg, Oct 26.) 

AsIran-Israeli tit-for-tat resumed afresh during the month, there was considerable media speculation that a weakened Iran could pursue a nuclear weapon option to regain her deterrence against Israel. On Oct 7, while speaking at a security conference, CIA Director by CIA Director William Burns said although Iran has advanced its nuclear program by stockpiling uranium enriched to near weapons-grade levels, the US had not seen any evidence Iran’s leader had reversed his 2003 Fatwa declaring the nuclear weapons to be un-Islamic. (Further Reading: Thereis no evidence Iran has decided to rush toward building a nuclear weapon, CIA director says, NBC News, Oct 7.) 

Israel:

Ina speech to the Knesset on Oct 28, Israeli Prime Minister Benjamin Netanyahu hoped to reach peace deals with more Arab countries once the war againstIranian proxies Hamas and Hezbollah is complete. “I aspire to continue the process I led a few years ago of the signing of the historic Abraham Accords, and achieve peace with more Arab countries” he said.

In continuing friction between PM Binyamin Netanyahu and Defence Minister Yoav Gallant the latter had to “postpone” his visit to Washington, scheduled to begin during the second week of October, over objections from the PM. On Oct 28, the Israeli Defence Minister said that Hamas and Hezbollah were no longer effective proxies for Iran. 

Reacting to the publicly rendered advice from Washington about targets in Iran for retaliation, the Israeli PMO declared on Oct 15 that Israel would listen to the US, but act according to its national interest.

On Oct 28, Israel’s defence ministry signed an ILS2 bn ($536 mn) deal with local Rafael Advanced Defense Systems and Elbit Systems to expand production of a new laser-based missile defence. The proposed high-power laser called Iron Beam is designed to counter aerial threats, including rockets, mortar bombs, drones and cruise missiles and could be operational in the next year.

There was no let up in sporadic terrorist incidents within Israel, caused mostly byIsraeli Arab citizens who comprise over a fifth of the total population. On Oct1, at least six people were killed and nine wounded when two gunmen got off a tram in Tel Aviv and opened fire on passers-by. On Oct 27 one person was killed and dozens injured when a truck driven by an Israeli Arab struck a bus stop at a major intersection near Tel Aviv. 

During the month Israel’s security agencies claimed to have broken up three separate Iranian spy rings making at least 9 arrests. 

Palestine Authority and West Bank:

Under US pressure, the Israeli cabinet agreed to authorise the Finance Minister to sign a waiver to extend cooperation between Israeli and Palestinian banks for another month on Oct 31, the day the existing waiver terminated. (Comment: The waiver allows Israeli banks to process shekel payments for services and salaries tied to the Palestinian Authority without the risk of being charged with money laundering and funding terrorism. Without it, Palestinian banks would be cut off from the Israeli financial system.)

Talks were held in Cairo on Oct 9 between representatives of Hamas and Fatah on plans for cooperation after the war in Gaza. No specific conclusions were reached. (Comment:The talks were the first since the two groups met in China in July and agreed on steps to form a Palestinian unity government for Gaza and the occupied West Bank.)

Despite their preoccupation with operations in Gaza and Lebanon, Israeli forces continued their frequent raids in the Occupied West Bank (OWB) during the month to snuff out the centres of Palestinian militancy, particularly those belonging to Hamas and Palestinian Islamic Jihad. An Israeli airstrike on Oct 3 killed aHamas official, but also at least 18 people in the Tulkarem refugee camp. (Comment:These instances of considerable collateral damage from IIDF attacks feed the popular rage against Israel as well as discredit the PA and al-Fatah. FurtherReading:  “Palestinian Authority treads tightrope in West Bank crackdown on militants”, Reuters,Oct 26.)    

Lebanon:

Italian Prime Minister Giorgia Meloni visited Lebanon on Oct 18, becoming the first Head of Government to do so since the beginning of the Israeli ground offensive in the south of the country, where an Italian troop contingent is deployed with the UNIFIL. She later visited Jordan and Israel.

Iranian Parliament Speaker arrived in Lebanon on Oct 12 on a visit aimed at showing the flag and shoring up the morale of Hezbollah which has had some recent setbacks.

On Oct 2, Prime Minister Najib Mikati said that Lebanon needed a ceasefire in hostilities between Israel and Hezbollah, saying around 1.2 mn people inLebanon had been displaced by Israeli attacks. He hoped to deploy 10,000 Lebanese army troops in the south if a ceasefire is agreed. Later, on Oct 29amidst media reports about advanced negotiations for a US-mediated 60-day ceasefire under which IDF would withdraw to the international border and Hezbollah would move north of the Litani River, PM Mikati expressed Lebanon’s readiness to implement UN Security Council resolution 1701 of 2006. 

On Oct 29 Hezbollah announced the appointment of Naim Qassem, its long-time spokesman, as its new leader.  In his first TV address, he said that the group will keep fighting in its war with Israel until it is offered ceasefire terms it deems acceptable adding that “So far no project has been put forward that Israel agrees on and is acceptable for us to negotiate it.” He also asserted that Hezbollah’s capabilities were still available and these were commensurate to a long war. PM Netanyahu told the two US envoys on Oct 31 thatIsraeli acceptance of the ceasefire proposal would be conditioned on it being able to counter any threats to its security and the safe return of its people to northern Israel. 

Intense hostilities between IDF and Hezbollah continued during the month. Apart from air attacks, IDF also began a ground offensive in southern Lebanon on Oct 1 for which the fourth division of the Israeli army was inducted on Oct 8. On Oct 3, an Israeli air attack killed Hashem Safieddine, recently appointed head of Hezbollah and successor to Syed Hassan Nasrallah.  On Oct 11, Hezbollah announced the formation of a new command to supervise the ground operations.  Hezbollah continued to fire volley of rockets at Haifa and other targets, mostly in northern Israel. On Oct 23, it introduced precision-guided missiles and a new type of drone in its attacks. From Oct 20, Israeli attacks began targeting branches of the Al-Qarad Al-Hassan Association and other bodies managing Hezbollah funds. 

Ina report for an international conference aimed at helping Lebanon held in Paris on Oct 24, the UN DevelopmentProgram painted a bleak picture of the country’s economy, now in its fifth year of financial crisis, exacerbated by the IDF-Hezbollah conflict. The report said that Lebanon’s GDP was expected to fall by 9.2% during 2024 and would contract further over the next two years. The Lebanese minister in charge of crisis responsibility said that the monthly cost of looking after the 1.3 mn internally displaced persons alone was $250 mn. The conference, attended by 70 national delegates as well as international organisations, was addressed by the President of France and the PM of Lebanon. It received pledges totalling nearly a billion dollars of which the US alone contributed $300 mn. Of the total, $800 mn was earmarked for humanitarian assistance and $200 mn for the Lebanese Armed Forces. 

Lebanon’s health ministry said on Oct 30 that 2,825 people have been killed in Israel’s military campaign in Lebanon since October 2023, two-thirds of them during the past five weeks. More than 1.2 mn people have been displaced. Over 90 Israeli soldiers have died in conflict with Hezbollah. (Comment: Intense conflict between IDF and Hezbollah affected Lebanon’s socio-political situation tottering at the edge of instability reminiscent of two decades of civil war. 1.3 mn internally displaced persons (IDPs), a quarter of Lebanon’s population, are mostly Shias from the south who have often moved to zones populated by other sects. The original residents wonder if Israel would bomb their areas in pursuit of Hezbollah cadres who may be hiding among the IDPs. They also worry that the refugees may settle down permanently in their areas, upsetting the delicate inter-confessional balance. Secondly, while some non-Shia Lebanese may resent overbearing Hezbollah and may not be displeased to see it being downsized, they are also apprehensive about the day after IDF leaves and the Shia militia reasserts itself – perhaps leading to the resumption of the civil war. Some sections of the Lebanese political elite also see this tumult as an opportunity to usher in political changes, which may open a new can of worms in this fragmented society.)

Iran:

For Hostilities between Iran and Israel, please refer to the first item in this Part.

Although Iranian President Masoud Pezeshkian’s visit to Qatar on Oct 2 was ostensibly to participate in the AsiaCooperation Dialogue being held in Doha, it was overshadowed by the massiveIranian missile attack on Israel on the previous day. At a joint press conference in Doha with Qatar’s Emir, he said that if Israel acts in one way against Iran, then Tehran will respond more severely. Media coverage of the visit mentioned the accompanying Iranian foreign minister holding a meeting with his GCC counterparts.  

Delivered a rare Friday sermon on Oct 4, Iran’s Supreme Leader Ayatollah Ali Khamenei said Iran and its regional allies will not back down against Israel and called for unity among Muslim nations. Following Israeli air attacks on the previous day, Khamenei on Oct 27, exhorted the officials to neither exaggerate nor downplay the damage caused by the Israeli aggression before determining how to respond to it. 

Foreign Minister Abbas Araqchi visited Lebanon on Oct 4 intended as a show of Iran’s solidarity with Hezbollah. He said that any ceasefire in Lebanon should be in tandem with Gaza. 

Foreign Minister Abbas Araqchi began a tour of Gulf Arab states on Oct 8 during which he was received by Saudi Crown Prince Mohammed bin Salman. (Comment: Anxious to avoid any fallout from Iran-Israel hostilities, the six Gulf Cooperation Council countries sought to assure Tehran of their neutrality in the conflict. Simultaneously, they pressed the Biden administration to pressIsrael to avoid hitting Iranian oil facilities which could prompt Iran or her proxies to hit similar assets in the GCC states.)

On Oct 29, an official spokeswoman said that the government proposed to triple the defence outlay in the next budget for the year beginning in March 2025. She did not provide any details. (Comment: Iran’s defence outlay was 10.3 bn in 2023 while that of Israel was $27.3 bn. Following the attack “on its soil for the first time since the Iran-Iraq War in the 1980s”, strengthening defence preparedness has acquired some urgency in Tehran for at least two reasons: firstly, the doctrine of reliance on proxies to avoid war coming to Iran proper seem to have failed; secondly, in any likely standoff with Israel and the US, Iran needs to procure state-of-art foreign defence platform- which are expensive. At the same time aTrump Presidency is likely to curb Iranian oil revenues thus leaving less for defence.)  

Iran’s western province of Sistan-Balochistan bordering Afghanistan and Pakistan continued to be restive during the month. Afghanistan’s Tolo News reported that on Oct 14-15, Iranian Border Guards in Sarbaz district opened fire on illegal Afghan immigrants, killing dozens of them. On Oct 26, 10 Iranian Border Guards were killed in a skirmish with Sunni rebels and drug smugglers.

On Oct 19, Iran held joint naval exercises in the Indian Ocean with the navies of Russia and Oman.

Former Iranian President Ahmedinejad caused some shock by revealing on Oct 1 in a media interview that 20 agents in Iranian intelligence’s anti-Mossad unit were found to be Israeli spies.

Yemen:  

On Oct 17, the US Air Force raided five al-Houthi weapon storage locations in Sana’a and Saada, using B2 stealth bombers for the first time. (Comment: Some observers regarded these heavy raids on difficult-to-reach targets as a message to Iran about the vulnerability of its nuclear sites from similar attacks.)

There was a noticeable lull in al-Houthi attacks on maritime vessels in Baabal-Mandeb choke point. Only reports during the month on such attacks mentioned a missile and drone attack on Oct 10 on a Liberia vessel which suffered some minor damage, targeting a Maltese vessel on Oct 18 and claimed targeting of three vessels on Oct 28. In the last two instances, there were no reports of any damage being inflicted.

Saudi Arabia: 

Speaking at the Future Investment Initiative conference in Riyadh on Oct 31, Saudi Foreign Minister Prince Faisalbin Farhan Al-Saud said Israeli actions in northern Gaza could only be described as a form of genocide. He reiterated that the kingdom would not recognise Israel without a Palestinian state, adding on that proposed step, Saudi Arabia is “quite happy to wait until the situation is amenable,” before moving ahead with normalisation. Prince Faisal added that potential U.S.-Saudi agreements about trade and artificial intelligence are “not tied to any third parties” and “can progress probably quite quickly.”

“Some of the more significant defence cooperation agreements are much more complicated. We would certainly welcome an opportunity to finish them before the (end of the Biden) administration’s term, but that’s reliant on other factors outside of our control,” he said. He also said while Kingdom’s relations with Iran are moving in the right direction, they are complicated by the issues of regional dynamics.” (Further Reading: Saudiforeign minister: A two-state solution is more urgent than ever” FT, Oct 3.)

Undaunted by a serious oil revenue squeeze, Bloomberg reported on Oct 14 that SaudiArabia was preparing to begin construction work on its next giga-project in Riyadh: a cube-shaped skyscraper big enough to fit 20 Empire State Buildings making it the largest built structure in the world.

Turkey: 

On Oct 23, two terrorists attacked high-value Turkey Aerospace Industry headquarters in Ankara killing 5 persons and wounding 22. The attack was claimed by PKK, the Kurdish separatist group. In retaliation, Turkey launched air attacks on Kurdishtar gets in Iraq and Syria for the next two days.

Fethullah Gulen, 83, a Turkish Islamic preacher and philanthropist died on Oct 21 in self-imposed exile in the UnitedStates, where he had lived since 1999. (Comment:  Gulen, founder of the Hizmet movement of Islamic charity that later spread across the world with millions of followers, was initially an ally of President Recep Tayyip Erdogan, whose AK Party also had Islamic nationalism as its ideology. However, the two fell out after the 2016 failed military coup in Turkey with Erdogan accusing Gulen of involvement init. Gulen was tried and sentenced for his involvement and his outfit was declared a terrorist organisation. He always protested his innocence.)

On Oct 22, Turkey relaxed work permit requirements offering temporary work permit exemptions to certain groups, including refugees and professionals, delivering essential services.

Sudan:

On Oct 28 the UN Secretary-General told the UN Security Council that the Sudanese people were living through a “nightmare of violence, hunger and displacement”,and countless others are facing “unspeakable atrocities”, including widespread rapes. He added that the country’s warring military and paramilitary forces are escalating attacks with outside powers “fuelling the fire.”  The country faces the world’s largest displacement crisis with More than 11 million people have fled their homes, including three million to neighbouring countries. Nearly 25 million people –half of Sudan’s population – need aid as famine has taken hold in displacement camps. 18 months of hostilities have led to the death of at least 24,000 persons.

Some reports during the month under review indicated that the Sudan Armed Force (SAF) gaining the upper hand over the Rapid Support Force (RSF) in fighting particularly around the capital Khartoum and el-Gezira, where a local RSF commander defected to SAF amidst a bloody battle.

Syria:

Unacknowledged Israeli air and missile attacks targeting Hezbollah and Iranian military assets in Syria continued during the month. According to the Syrian Observatory for Human Rights quoted by BBC on Oct 9, Israeli air and artillery strikes have targeted Syrian territory on 104 occasions since January, killing at least 296 people and resulting in the damage or destruction of about 190 targets.

Iraq:

On Oct 4, Iraq-based pro-Iran militia fired rockets at Israel leading to the death of two Israeli soldiers and injuries to more than 20 others. The US-based news site Axios subsequently reported that Israeli intelligence sources expect Iran to use Iraq-based Shia militias, e.g. Kataib Hezbollah and Nujaba, as proxies to launch rocket attacks on Israel. For Iraqi authorities, it raised the spectre of the country being sucked into the regional war between Iran and Israel. According to a Reuters report, Iraq approached Iran twice during October to urge them to ask these militias to desist but was rebuffed by Tehran saying that Iraqi militias make their own decisions. (Further Reading:“Iraqtries to avoid a regional fight as militias fire at Israel”, Reuters, Oct31.) 

Results of the elections to the 100-seated Parliament in Iraqi Kurdistan were announced on Oct 30. Accordingly, the KDP of Massoud Barzani won 39 seats and the PUK of Jalal Talabani got 23. The two parties have ruled the region in a coalition since 1992 and are likely to continue despite some differences having emerged among them. The voting percentage was 72%.

Ending a yearlong deadlock, on Oct 31 Iraq’s parliament elected Mahmoud al-Mashhadani as its new Speaker. (Comment: Under a power-sharing system designed to avoid sectarian conflict, Iraq’s president is a Kurd, its prime minister a Shi’ite and its parliament speaker a Sunni. Mashhadani, who previously served as parliament speaker from 2006-08. The unicameral Parliament’s Speaker is pivotal in maintaining legislative order and facilitating dialogue between diverse factions in Iraq’s often fragmented political landscape.) 

On Oct 22, Prime Minister Mohammed Shia al-Sudani said that Islamic State’s commander for Iraq had been killed in an operation in the Hamrin Mountains in the northeast of the country.

Saudi Arabia:

During a Saudi Crown Prince Mohammed bin Salman to Egypt on Oct 15 the two sides agreed to form a Supreme Coordination Council to deepen their bilateral cooperation.  

Egypt:

On Oct 20, President Abdel Fattah el-Sisi warned that regional troubles may force a re-evaluation of the $8 bn financial support package with the IMF signed in March 2024 requiring it to reduce subsidies, divest public sector assets and allow its currency to float freely — measures that have triggered public fury. President cited revenue loss of up to $7 bn during past 7 to 10 months including the Suez Canal income reduced to a third after Houthi attacks on the Red Sea shipping. In response, the IMF Managing Director said on Oct 24 that while it was open to adjustments, she ruled out any change in the size of the package.

 On Oct 20, Egypt was declared “Malaria-free” by the WHO.

Egypt-Eritrea-Somalia:

On Oct 10 Presidents of Egypt, Eritrea and Somalia held a summit in Asmara where they agreed to boost cooperation for regional security amid heightened tensions in the Horn of Africa in the context of al-Shabab terrorism in Somalia as well as Ethiopia’s overtures to gain sea access through a deal with breakaway Somaliland. They highlighted the importance of “confronting interference in the internal affairs of the countries of the region under any pretext or justification; coordinating joint efforts to achieve regional stability.”

Tunisia: 

Presidential elections were held in Tunisia on Oct 6 with incumbent President Kais Saied facing two officially approved weak candidates. The next day, the Independent High Authority for Elections declared the President as having been re-elected with 90.7% votes in his favour. Only 28.8% of the eligible voters cast their vote, the lowest rate in any election since the Arab Spring that brought democracy to the country in 2011.  

Kuwait: 

On Oct 28, Kuwaiti authorities began issuing work visas of validity less than one year for expatriates working for government contracts.  

Morocco: 

French President Emanuel Macron visited Morocco on Oct 29 largely to repair three-year-old bilateral tensions over French immigration curbs. In his address to the Moroccan parliament, he stated the following about the disputed Western Sahara territory, “For France, this territory’s present and future fall under Morocco’s sovereignty. This position is what France will advocate to helpMorocco in international organisations.”  (Comment: Western Sahara, former Spanish colony is a dispute between Morocco, which has annexed it, and Algeria which backs the Polisario Front seeking its independence. Under Trump 1.0, the US became the first P5 country to recognise Moroccan sovereignty over Western Sahara in return for Rabat joining the Abraham Accords. By giving up its past ambiguous position on this issue in favour of Rabat, France hopes to normalise bilateral ties with Morocco and win lucrative contracts.) 

On Oct 4, the European Court of Justice (ECJ) ruled that the European Commission breached the right of people in disputed Western Sahara to self-determination by concluding two trade deals in 2019 with Morocco which were therefore invalid. Morocco slammed the ruling as “blatant political bias” while the Polisario Front hailed the verdict as a “historic victory” for the area’s Sahrawi people. 

Qatar:

In his annual speech to open the Shoura Council session on Oct 15, Emir Sheikh Tamim bin Hamad Al-Thani declared that a referendum would be held soon on a set of constitutional amendments, including a proposal to decide if the members of the council should be nominated.  (Comment: Qatar held its first-ever elections in 2021 to elect two-thirds of the members of the advisory Shura Council. The elections sparked rare tribal tensions in Qatarafter some members of the Murrah, a large but restive Bedouin tribe, found themselves disfranchised. Thus, Qatar which takes moral high ground on human rights through its Al-Jazeera TV, finds itself reneging even on baby steps towards a more representative governance.)

II) Economic Developments

Oil & Gas Related Developments:

Global Issues:

Brent for December delivery on Oct 31 was $73.16 a barrel having gained 1.0% during the month, reversing the declines during each of the previous four months.October saw considerable turbulence due to Iran and Israel attacking each other, Libyan oil production’s return and the continuation of the tepidity of the Chinese demand. The oil prices reacted strongly to each of these developments – for example, it crossed $80/barrel on Oct 7 on fears of anIsraeli attack on Iranian oil facilities. The continued strength of the USDollar also had a dampening effect on a well-supplied market.  

In its monthly report on Oct 14, OPEC further reduced its assessment of the average growth of global oil demand during 2024 to 1.93 mbpd, 0.1 mbpd lower than the last month. For 2025, too it lowered the expected average increase of demand identically to 1.63 mbpd.  70% of the estimated reduction was due to declining Chinese demand rooted in economic stagnancy and the switch to EVs. OPEC’s production in September was estimated to have averaged 26.61 mbpd down 480 kbpd over the previous month with Libyan disruption causing 38% of the lost production. Following a UN-brokered political settlement, Libyan oil production started returning to normal from Oct 3 onwards. The report put the OPEC+ total production at 40.1 mbpd in September 2024, down 557,000 bpd from August due to unrest in Libya and a cut by Iraq. After online consultations on Oct 3, the OPEC+ Monitoring Committee declared that there was no change in the previous decision to gradually unwind the 2.2 mbpd voluntary oil production cuts from Dec 1.

Bloomberg reported on Nov 1 that US oil majors have had a dramatic surge in their oil and gas production even as OPEC and OPEC+ were dithering about raising output. Exxon’s oil and gas production increased 24% from a year earlier while Chevron grew output by 7%.

Ina detailed report on Oct 31, Bloomberg assessed that the global LNG market is set to remain tight until mid-2026 due to several production projects being delayed and stronger-than-expected demand for the fuel in Asia. The buyers won’t have the upper hand until early 2027 when new supply will finally arrive, potentially flooding the market for years to come. From an average price of about $9 per million British thermal unit (mn Btu) from 2000 to 2020, the cost of LNG surged in 2022 to an all-time high of more than $50 per mn Btu on disruption in supplies from Russia due to the Ukraine war. Although Prices have cooled since then, still, at around $13 per mn Btu now, they remain about 40%higher than they were before the war.

Country Specific Developments: 

According to the official data released on Oct 24, Saudi Arabia’s oil and refined products export revenue in August 2024 dropped to $17.4 bn, 6% lower than the previous month and the lowest level of monthly revenue since June 2021. On Oct 5, Saudi Aramco increased the official selling price of its main Arab Light crude grade for buyers in Asia by 90 cents to a premium of $2.20 a barrel against the regional benchmark.

Iran’s oil production was once again under the spotlight during the month due to the threat of Israeli attacks as well as growing prospects of the election of Donald Trump, a “Maximum Pressure” hardliner on Iran. While Iran’s oil production plummeted due to severe sanctions being imposed during Trump 1.0, it has revived during Biden’s Presidency to 3.4 mbpd, near its full capacity and close to its pre-Trump level. Its exports are estimated to have reached 1.5 mbpd mostly headed to China. (Further Reading: Oil’sWar Premium Will Fade After Israel’s Iran Strike, Bloomberg, Oct 26.)  

An Iraqi official stated on Oct 12 that the country produced 3.94 mbpd of oil in September, less than its OPEC+ output quota of about 4 million bpd, (Comment: Iraq has been producing well over its quota for quite some time and had promised not only better compliance but also further reduction to compensate for past overproduction. With prices under pressure due to excess of supplies over demand, this issue has caused barely concealed friction among producers.) 

On Oct 1, the UAE’s ADNOC announced the acquisition of Covestro, a German Chemical maker, for €11.7 bn, the largest deal so far of a European firm by aMiddle Eastern company. (Comment: The deal was significant in atleast two ways: it was part of cash-rich ADNOC’s global acquisition drive; secondly, it indicated a shift away from hydrocarbon as a polluting fuel to feedstock for petrochemical products.)

Following economy-related development took place in WANA countries:

Regional Economic Developments

In its Middle East and Central Asia economic outlook published on Oct 31, the International Monetary Fund expected the regional growth in 2024 to be 2.1%, down from a 2.7% estimate inApril. It cited conflicts, geopolitical uncertainty and oil-production cuts as the reasons for the downgrading of growth. It slightly decreased its forecast for next year to 4%.

World Bank President Ajay Banga warned on Oct 15 that a significant widening of the Israel-Gaza war could lead to a major impact on the global economy. He said that the war has had a relatively small impact on the global economy thus far, but a significant widening of the conflict would draw in other countries that are larger contributors to global growth, including commodity exporters.  (Further Reading: “Explainer:What Middle East conflict means for the global economy” Reuters, Oct 3.) 

Economic Developments in Individual WANA Countries:

The eighth edition of the Future Investment Initiative (FII), dubbed as Davos in Desert, was held in Riyadh on Oct 29-31 with a large number of Global financiers flocking to Saudi Arabia’s annual flagship event. It was hosted by the $925 bn Public Investment Fund (PIF), the Saudi SWF. With the Kingdom feeling the economic headwinds due to lower oil revenues, Riyadh has increasingly pushed for the event to be used to facilitate inward investments into Saudi Arabia for Crown Prince Mohammed bin Salman’s Vision 2030. There was also talk of downsizing the Neom project for a futuristic city in the northwest of the Kingdom and seeking a further $50 bn as debt. A dominant theme at this year’s FII was making Saudi Arabia a hub for Artificial Intelligence leveraging cheap and copious power available. This year, the forum is hosting a “New Africa Summit” with speakers from the continent’s mining and banking sectors. Last year, deals worth $17.9 bn were agreed at FII, according to the Saudi state news agency, and organisers expect $28 bn in deals to be announced this year. (Further Reading: “Saudi Arabia’s wealth fund pivots from international investments”, FT Oct 29.)

On Oct 12, the IMF urged Turkey to accelerate its fight against inflation, stressing that the authorities’ existing gradual approach prolonged the period during which risks might occur.” Indeed, official data release later showed that despite the Central Bank retaining a 50% base rate, the annual inflation in October fell only marginally to 48.6% from 49.4% in the previous month.  On Oct 11, Turkey imposed anti-dumping duties on some steel imports from China, India, Russia and Japan.

Thanks to a continuing surge in valuations, a large listing of state-owned stocks in Abu Dhabi and a string of large IPOs in Dubai, the total market capitalisation of the UAE-based bourses crossed one trillion dollars during the month. Public official criticism of P&O shipping’s labour practices led to a controversy, when the owner, DP World threatened to walk away from the London Gateway project worth £1 bn. However, following some negotiations, the project was back on the rails on Oct 12. LuLu Group’s initial public offering of 25% of its stocks for an expected $1.43 bn was over subscribed within hours of it being opened on Oct 28. The IPO of the group owned by Yusuff Ali, an Indian billionaire, was the largest in the UAE so far this year. (Further Reading: Dubai’s Allure to Expats Is Weighing on City’s Infrastructure, Bloomberg, Oct 13.) 

On Oct 31 Israeli cabinet began considering the draft budget for 2025 aimed at sustaining the “longest and most expensive war in Israel’s history” with significantly lower revenues. It provides spending of 744 bn Shekels with 161 bn going for debt servicing and 102 bn for defence. An ILS 40 bn austerity drive is to raise taxes and curb expenditure. The draft budget aims to bring down the deficit from the current 8.5% of GDP to 4% in 2025. The Economic growth is forecast at 0.4% in 2024 and 4.3% in 2025. The government hopes to have the budget approved by the Knesset in Jan 2025. Though the annualised inflation fell to 3.5%, it was still outside the central bank’s comfort zone of 1% to 3%. The annual growth during Q2/24 grew at the annualised rate of 0.3%. The decline in growth was largely due to lower government expenditure. On Oct 29 Israel’s Finance Ministry put the economic loss due to the escalation in the military conflict with Hezbollah in Lebanon over the past month at about ILS 14 bn ($3.75 bn). On Oct 1, Standard and Poor’s’ rating agency decided to downgrade Israel’s long-term credit rating to A from A+ with a negative outlook as it saw the current hostilities persisting till 2025. International passengers at Tel Aviv’s Airport fell 43% y/y in the first nine months of 2024 as most foreign airlines ceased their flights due to insecure conditions. Despite Israeli authorities claiming minimal damage from the Oct 1 Iranian missile barrage, some 2500  claims for compensation worth $40 to $53 mn were submitted in the following two weeks, according to figures provided by Israel’s tax authority, making it the most costly since the start of the war a year ago. More than half of these were for damage to apartments and several businesses in the vicinity of north Tel Aviv. The direct cost of funding the war in Gaza through August was ILS 100 bn ($26.3 bn), according to the finance ministry. The Bank of Israel reckons the total could rise to 250 bn shekel by the end of 2025, but that estimate was made before Israel’s incursion into Lebanon to battle Hezbollah, which will add to the tally. In 2023 foreign direct investment into Israel dropped by 29% on the year to $16.4 billion, the lowest since 2016. Data from the three months to June show seasonally adjusted GDP remained 1.5% below pre-Oct 7 levels. ($1=ILS3.47)

On Oct 25, the Financial Action Task Force decided to put Lebanon on its financial crime watch grey list of countries under special scrutiny. Because of its war-like situation, FATF has given the country one extra year till 2026 to make suitable changes so that it can be delisted (Comment: Lebanon has been under severe financial stress since 2019 and the situation has not been helped by the lack of collective political will to undertake financial reforms. The grey-listing is likely to further deter investment in Lebanon and could impact the already tenuous relationship between some Lebanese banks and the global financial system.)  

III) Bilateral Developments 

• President of India Smt Droupadi Murmu President Murmu paid a State visit to Algeria on Oct 13-15. As a special gesture, President Murmu was received at the Algiers airport by Algerian President Abdelmadjid Tebboune. Later the two leaders held delegation-level talks. Smt Murmu received several Algerian dignitaries and addressed the India-Algeria Economic Forum and the Sidi Abdellah Science and Technology Pole University. Her programme also included visits to historic and cultural sites. She was accompanied by MoS Sukhanta Majumdar and two MPs. (Comment: The visit was the most significant bilateral development since Algerian President Bouteflika was in India as Chief Guest in 2001. It was not only the first visit to Algeria by an Indian President, but it was also the first in-visit since President Tebboune’s inauguration last month for a second term. India and Algeria share cordial relations with cooperation in several fields including strategic areas like oil and gas, defence, and space. Bilateral trade was$1.733 mn in 2023 and was nearly in balance.)

• On Oct 22, Prime Minister Shri Narendra Modi had a meeting with Iranian President Dr Masoud Pezeshkian, President of the Islamic Republic of Iran, in Kazan today on the sidelines of the 16th BRICS Summit. They reviewed bilateral relations and discussed ways to further strengthen cooperation in various fields. They noted the signing of the long-term contract of Chabahar Port as an important milestone in bilateral relations and reaffirmed its significance for the reconstruction and redevelopment of  Afghanistan and enhancing trade and economic linkages with Central Asia. The leaders also exchanged views on regional developments, including the situation in West Asia. The PM expressed deep concern over the widening of the conflict and reiterated India’s call to de-escalate the situation, protection of civilians and the role of diplomacy in resolving the conflict. PM invited President Pezeshkian to visit India.

• On Oct 4, a Ministry of External Affairs Spokesman gave the following figures for Indian nationals in the affected West Asian countries: approximately 3,000 people reside in Lebanon, primarily in Beirut; 30,000, mostly caregivers and workers, live in Israel; and around 10,000, including 5,000 students, are currently in Iran. He also stated that as of now, flights are still operating from Israel, Iran, and other countries, providing people with the option to leave if they desire. Consequently, India has not yet initiated an evacuation process to bring back Indians from these and other countries in the region. The MEA Spokesman also issued statements on Oct 2 and Oct 26 following the exchange of projectiles between Iran and Israel respectively. Both statements called for all concerned to exercise restraint and return to the path of dialogue and diplomacy. These added that the ongoing hostilities are to nobody’s benefit, even as innocent hostages and civilian populations continue to suffer.  Oct 2 statement also advised Indian nationals to avoid all non-essential travel to Iran.

• Minister for Commerce and Industry Shri Piyush Goyal visited Saudi Arabia to take part in the 8th Future Investment Initiative(FII) – also dubbed as Davos in Desert held in Riyadh on Oct 29-30. He met withSaudi Ministers for Industry & Mining Resources and Investments and identified opportunities for bilateral synergy in sectors such as pharma, auto and petrochemicals. (Comment: India is Saudi Arabia’s second-largest trading partner while Saudi Arabia is India’s 4th largest trading partner with total trade of $43 bn in FY24. 3,700 Indian companies operate in Saudi Arabia and have invested $ 2 bn in that country. Cumulative Saudi investments in India were $3.22 bn until June 2024, far lower than their potential. Over 2 mn Indian expatriates live in Saudi Arabia.)

• The 12th meeting of the India-UAE High-LevelJoint Committee on Investments was held in Mumbai on Oct 7. It was co-chaired by Shri Piyush Goyal, Indian Minister of Commerce & Industry, Government ofIndia and Sheikh Hamed bin Zayed Al Nahyan, Managing Director of Abu DhabiInvestment Authority (ADIA). It was announced on that occasion that the Bilateral Investment Treaty (BIT) signed on 13th February 2024 in Abu Dhabi, had entered into force with effect from August 31, 2024. (Further Reading:Ministry ofFinance Press Release of Oct 7 2024).  Also disclosed that ADIA has opened an office in the GIFT city in Ahmedabad. Further, the Indian Institute of Foreign Trade (IIFT) is to open its first overseas campus in Dubai. The second meeting of the Joint Committee (JC) under the India-UAE Comprehensive Economic Partnership Agreement (CEPA) was held in the UAE on Oct 14 at the Additional Secretary Commerce level. It resolved to raise the quantum of annual bilateral non-oil trade to $100 bn by 2030. (Comment: CEPA, signed in 2022 has had a beneficial impact on the bilateral flow of investments. The UAE is India’s 4th largest foreign investor with $3.35 bn committed in 2023 across a wide range of sectors, representing a threefold increase over 2022. Indian FDI into the UAE in 2023 totalled $ 2.05 bn, more than 2021 and 2022 combined. The BIT is expected to spur the trend.However, a lot would depend on the UAE oil revenues in future. At the same time, Indian stakeholders were appalled by the misuse of CEPA to push items such as gold, silver, platinum, dry fruits and even dates into India in violation of the rules of origin norms.)

• On Oct 7 India’s minister of oil and natural gas Shri Hardeep Singh Puri expressed the confidence that the country will be able to navigate through any hit to oil supplies from any potential widening of the Middle East conflict. While inaugurating the India Chem exhibition in Mumbai on Oct 18, he said that India is likely to invest $87 bn during the next decade in the petrochemical industry expanding its capacity from 29.62 mt to 46 mt in 2030.

• After falling for two consecutive months in August and September, India’s fuel demand rose by 2.9% y/y in October to 20.4 mt or 4.8 mbpd. It was also revealed that during H1/24 India’s oil imports had risen by 4% y/y. While the crude was imported from more than 36 countries, the prominent sources (with their percentage share of the Indian market were: Russia (39%), Iraq (18%), Saudi Arabia 913%), UAE (8%) and the UA (5.5%) 

• Chief of Naval Staff Admiral D. K. Tripathi paid an official visit to the UAE on Oct 21-24. Indian Navy’s first training squad comprising 3ships visited Iran (Bandar Abbas, Oct 1-4), Oman (Muscat, Oct 5-9), Bahrain(Oct 13-16) and the UAE (Dubai, Oct 18). Separately, the navies of India andOman conducted Naseem al-Bahr exercises on the Goa coast.

• At the request of the Indian authorities, on Oct 11 the UAE arrested Saurabh Chandrasekhar, alleged mastermind of the Rs 6500 crore Mahadev online booking scam.   

• On Oct 23, GMR announced that it has secured a commitment from ADIA for Rs 6300 crores.

• Following its long-term crude supply deal with Russia, Reliance Industries moved back its spot market negotiating team from Dubai to India. It also shifted its Petrochem trading team from Dubai to Malaysia.

• On Oct 3, the Chairman of the Gems and Jewellery ExportPromotion Council of India the conflict in West Asia may favour India’s diamond exports.

• On Oct 1, Bohun Bagan Football Club of Kolkata informed the Asian Football Federation that its team would not be travelling to Iran for the Asian Champions League match with Tractor SC scheduled for Oct 2 at Tabriz citing security concerns.