West Asia & North Africa Digest by Ambassador Mahesh Sachdev | January 2022

HIGHLIGHTS

• Political Developments 
• Economic Developments
• Bilateral Developments

IA) Political Developments: Regional Issues

Impact of Omicron Covid-19 
As Omicron strain of SARS-Coronavirus knocked on the doors of West Asian states, preventive steps were hurriedly put in place. The first such cases were reported in Saudi Arabia (Dec 1), the UAE (1/12), Kuwait (8/12), Qatar (17/12), Iran (19/12) and Gaza (26/12). The First Omicron death was reported in Israel on Dec 21. Among the measures put in place were the following:

  • The Booster Jabs (On Dec 30, Israel ordered 4th dose of vaccine to immunity challenged citizens; On Dec 20, Kuwait made booster shot compulsory after 9 months)
  • Travel Restrictions (Israel put a general travel ban for Britain and Denmark from Dec 19 and to the US on Dec 21; Kuwait mandated the 3rd jab for citizens wishing to travel abroad; On Dec 26, Iran banned the entry of the travellers from West Europe for next 15 days; On Dec 26, Oman began permitting entry only to those with double vaccination)
  • Other Measures: Turkey began administering domestically developed Turkovac anti-Covid vaccine from Dec 30. On Dec 28, the UAE approved Sinopharm’s first protein-based anti-Covid vaccine. On Dec 23, Lebanon banned the entry to social places for the unvaccinated.
  • Miscellaneous: On Dec 31, Israel detected the first case of combined infection of Covid-19 and flu. Calling it “Florona.”  Israel was also engaged in combating cases of the avian flu among the migratory cranes, 5000 of whom reportedly perished due to the outbreak. However, no transmission of the A(H5N1) virus to humans has been reported so far. On Dec 29, Mumbai airport made RT-PCR tests mandatory for passengers arriving from the UAE.

These and other measures notwithstanding, a surge in daily Covid-19 cases was reported in many WANA countries. Turkey had 36,684 cases on Dec 29, the highest in 6 months; On the same day, the UAE reported 2234 cases, the highest since June 2021.

WANA and Afghanistan:

  • Islamic FMs Meet on Afghanistan: 17th extra-ordinary session of the OIC Council of Foreign Ministers was held in Islamabad on Dec 19 to consider the “humanitarian situation in Afghanistan.” Of 57 OIC members, 20 sent their foreign ministers and 10 others were represented at DyFM or MoS level. Nearly 70 foreign delegates and International organisations were invited as observers. Even as the Taliban government is not recognised by the OIC, their Foreign Minister was present at the conference. The event concluded by issuing a 31-para Final Resolution urging various engagements with “Afghanistan” (disingenuously obfuscating it with the Taliban government, which was not named). It decides to appoint an OIC ASG as Special Envoy of the Secretary-General of the OIC for Afghanistan. ​​​Comment: The session, hustled and choreographed by Pakistan with tacit Saudi approval, was a facile success for Islamabad. While it succeeded in getting a reasonably good gathering at less than three weeks notice. It also was able to get some visibility for the Taliban whose Foreign Minister Amir Khan Muttaqi was present. However, Pakistan’s thinly disguised but elaborate ventriloquisms to gain acceptance and assistance for the Taliban regime, its proxy, were not rewarded. Neither recognition nor financial commitments were offered. Tellingly, the Taliban Foreign Minister was not included in the event’s family photograph: thus turning the gathering into a ‘Hamlet without the Prince’. If OIC’s track record on following up on such gatherings is of any guidance, the event is unlikely to cause any ripples in the Kabul river. Interestingly, the Foreign Ministers of all five Central Asian countries preferred to honour their prior commitments to attend the third India-Central Asia dialogue hosted by Indian External Affairs Minister on the same day in New Delhi. ​​Further Reading: OIC Final Resolution (Document No. OIC/EX-17-CFM/2021of Dec 19 2021) can be perused at https://www.oic-oci.org/docdown/?docID=8652&refID=4260.
  • Perhaps with an eye to the Islamabad event, Saudi Arabia despatched aid to Afghanistan on Dec 17, by six cargo flights as well as by 200 trucks going overland from Pakistan.
  • The semi-official Iranian news agency Tasnim reported a gunfight between Iranian soldiers and Taliban on Dec 1 in the village of Shaghalak in Hirmand county caused by some local misunderstanding. No casualties were reported.
  • During their Doha Summit on Dec 6, Turkey and Qatar agreed to work together to stabilise Afghanistan.

Gulf Cooperation Council
Riyadh SummitThe 42nd Summit of the Gulf Cooperation Summit was held in Riyadh on Dec 14 by issuing a largely anodyne Riyadh Declaration. The summit urged Iran to take concrete steps to ease tension while reiterating a call to include the region in talks between global powers and Tehran aimed at salvaging their nuclear agreement. The Saudi crown prince Mohammed bin Salman toured the capitals of all other five GCC states during Dec 7-8 to invite their HOS/HOG for the summit. During these visits, a 725 kms highway linking the Kingdom with Oman was inaugurated and a $5 bn Saudi investment in Bahrain’s development project was announced.

IMF Report on GCC Economies: On Dec 16, the IMF issued a 39-page paper titled “Economic Prospects and Policy Challenges for the GCC Countries – 2021” giving its assessment of the economies of the 6 member states. While praising the policymakers for quickly responding to the twin challenges of Covid-19 and the oil price shock, it urged then caution to navigate a challenging and uncertain landscape. In particular, it advised them to continue with accommodative macroeconomic policies till the pandemic ends, ensure financial stability to sustain economic growth and diversification and accelerate the ongoing reforms to drive productivity and diversification.

The following table sums the various statistics on the GCC economies:

IB) Political Developments

Iran:
After nearly a month of the indirect talks at Vienna aimed at restoring the original JCPOA, there were scant signs of progress leading to plenty of frustration, growing pessimism and mutual finger-pointing. The talks were suspended twice during the month during Dec 3-9 and Dec 16-27. While the US and Europe-3 (The UK, France & Germany) accused Iran of playing for time to cover going full ballast on the ground, Iran continue to insist that it was serious (President Raisi on Dec 11) but wanted full lifting of the US economic sanction at the start.

During the month, the Iranian military and Revolutionary Guards Corps (IRGC) conducted several military exercises aimed at thwarting attacks at its nuclear installations. These included an air defence drill near Bushehr nuclear plant (Dec 20) and five-day military exercises held in 3 Gulf-facing provinces (Dec 21-25) which concluded by firing 16-type of missiles and 10 drones. Earlier in response to press reports on Israeli Defence Minister’s Washington visit to discuss military operations against Iran, an unnamed military official was quoted on Dec 11 as a warning that “providing conditions for military commanders to test Iranian missiles with real targets will cost the aggressors a heavy price.”

On Dec 15, IAEA and Iran agreed on a deal to replace the four surveillance cameras at a centrifuge-parts workshop at Tesa Karaj complex. This averted the US threat to have Iran sanctioned by the IAEA Board of Governors.
Comments: As the JCPOA negotiations moved towards its denouement, the only thing that could be safely predicted was that the status quo was unsustainable making a disruption more likely, partly due to miscalculation or overbidding.
Further Reading: “Iran-US: faltering nuclear talks enter dangerous phase” by Andrew England and Najmeh Bozorgmehr, Financial Times, Dec 28; https://www.ft.com/content/5a5a7ed5-6476-4d92-bc4b75f9e58e107c?accessToken=zwAAAX4FKYBokc9aWn7VZHZNktO8S3X55Y4QfA.MEUCIQCN61eUQGpRabj2-YyN1LEtFa3lWbHUsAQ9RNE8CZt-YAIgbUkjIaccXzdTnWAqt4xbFfQT2GoZhD_dWdicuSgNgZM&sharetype=gift?token=25049d44-d83d-46e4-8bf9-3032c3c45c46; and

“Will 2022 be a crunch year for West Asia?” by Mahesh Sachdev, Hindustan Times, Jan 10, 2022; https://www.hindustantimes.com/opinion/will-2022-be-a-crunch-year-for-west-asia-101641827951235.html

Sheikh Tahnoon bin Zayed Al-Nahyan, UAE’s National Security Advisor visited Tehran on Dec 6. (For details, please  see the item under The UAE)

Syrian Foreign Minister Faisal Mekdad visited Tehran on Dec 5-6.

On Dec 30, Iran tried unsuccessfully to launch three research payloads into outer space using its Simorgh rocket. Iran has so far launched four satellites in 2009, 2011, 2012 and 2020, the last being a military satellite.

On Dec 22, a member of the Tea Board of Sri Lanka said that his country intended to pay back $251 mn Iranian debt through $5 mn monthly supplies of tea over the next five years. He claimed that the method of payment would not violate United Nations or American sanctions, because tea was categorised as a food item on humanitarian grounds, and no black-listed Iranian banks would be involved.  

On Dec 28, Iran banned crypto-currency mining to prevent winter electric blackouts. The practice is said to consume nearly 600 MW of power.

Israel:
Israeli Defence Minister Benny Gantz visited Washington on Dec 8 to meet with the US officials. Some reports suggested that the discussions concerned the military options to stop Iran from developing nuclear weapons.

The US National Security Advisor Jake Sullivan visited Israel on Dec 22 on Iran nuclear issue. He met with Israeli PM, Foreign Minister and Defence Minister. During his public remarks, he implied that the time frame for nuclear diplomacy with Iran may be exhausted within weeks.

On Dec 31, the Israeli Defence Ministry signed a deal with the United States to buy 12 Lockheed Martin Corp CH-53K helicopters and 2 Boeing KC-46 refuelling planes for the total price of around $3.1 bn.
Comment: Israel has always been highly sceptical about Iranian nuclear intentions and has opposed the JCPOA. Sporadic media reports have linked Israel to several covert attempts to thwart the Iranian nuclear programme. While the Biden administration was initially willing to revive the JCPOA, one year of stalled negotiations have gradually convinced it to put “other options” on the table. There is yet another possibility of Israel and the US using the threat of military action to dislodge Tehran from its hard-line on this issue.
Further Reading: “Exclusive: U.S., Israel to discuss military drills for Iran scenario” ReutersDec 8; https://www.reuters.com/world/exclusive-diplomacy-stutters-us-israel-discuss-military-drills-iran-scenario-us-2021-12-09

On Dec 26, the Israeli cabinet approved a blueprint to double the Jewish population in Golan Heights within the next five years by building 7300 new housing units for 23,000 settlers. The area, seized by Israel from Syria during the 1967 war and annexed in 1981, is internationally recognised as an occupied territory. It is inhabited by nearly 20,000 Druze, who continue to regard themselves as Syrian nationals. Syria denounced the decision.

Earlier on Dec 6, Israel decided to delay the implementation of a settlement plan in the West Bank citing the need for an environmental study. It involved constructing nearly 5,000 new housing units on the road connecting East Jerusalem with Ramallah, capital of the Palestine Authority.

Israeli Foreign Minister Yair Lapid visited Egypt on Dec 9 among the signs of warming bilateral ties under the new Israeli government. He held talks with his Egyptian counterpart Sameh Shoukry and was received by President Abdel Fattah el-Sisi. The talks were mainly concerned with deepening the Egypt-brokered truce between Israel and Hamas after an 11-day conflict in May 2021.

On Dec 6, the Israeli government placed stricter restrictions on the export of its cyber technologies. These require the buying countries to commit to using them to prevent only a limited list of terrorist acts and serious crimes.

Saudi Arabia:
As a part of his Gulf tour, French President Emmanuel Macron visited Jeddah on Dec 4 to meet Saudi Crown Prince Mohammed bin Salman (MbS). He thus became the first Western head of state to publicly meet with the Saudi leader since the murder of Jamal Khashoggi’s murder by Saudi agents in the Kingdom’s consulate in Istanbul in Oct 2018. The visit had two tangible consequences: reconciliation between Saudi Arabia and Lebanon and the signing of five agreements with French firms in such areas as hydrogen-fuelled vehicles, carbon-capture technology, artificial intelligence and local manufacturing.

On Dec 8, the US Congress allowed the $650m sale of missiles and missile launchers to Saudi Arabia.

On Dec 10, the Saudi Ministry of Islamic Affairs prohibited the activities of Tablighi Jamaat in the Kingdom, calling it “one of the gates of terrorism”. The Jamaat has been active in several South Asian countries, including India, where this Saudi step was received by some circles with a sense of shock.

On Dec 17, MbS launched a $20 bn plan to develop Central Jeddah.

The UAE:
French President Emmanuel Macron’s visit to the United Arab Emirates (UAE) on Dec 3 yielded a large economic bonanza. The UAE ordered 80 Rafale fighter jets and 12 Caracal military helicopters in a deal worth $19.23 bn, the largest order ever for French warplanes. In addition a swathe of economic agreements which included $5.2 bn and $1.4 bn investments by ADQ and Mubadala respectively with the French Ministry of Economy and Finance, a $1.58 bn deal between Borouge and Technip to set up a polyolefin manufacturing plant at el-Ruwais on EPC basis. The UAE denied that the deal for Rafale was a replacement for the US-made F-35.
Comment: Over the past many decades, France has assiduously cultivated Al-Nahyans, the ruling family of Abu Dhabi emirate, where it maintains a discreet military base. The gift package worth over $27 bn leveraged this relationship. Significantly, the military procurement deal did not have the offset condition that the UAE normally insists upon.

Israeli Prime Minister Naftali Bennett visited the UAE and met de facto UAE leader Mohammed bin Zayed Al-Nahyan (MbZ) on Dec 13. This was the first time that an Israeli PM had met MbZ publicly and the visit acknowledged the growing geostrategic significance of bilateral ties since the signing of the Abraham Accords last year. While Israeli PM and MbZ made cryptic and politically correct remarks in public, Iran was thought to have loomed large in their in-camera discussions.  

Sheikh Tahnoon bin Zayed Al-Nahyan, UAE’s National Security Advisor paid a rare visit to Tehran on Dec 6 during which he was received by President Ebrahim Raisi. He also had discussions with his Iranian counterpart Ali Shamkhani, Secretary of Iran’s Supreme National Security Council. “Improving ties with the regional countries is my government’s priority, therefore we welcome improving ties with the UAE. The security of the regional countries is intertwined, and Iran supports the security of the Persian Gulf states.” Raisi was quoted by Iranian state television as having told Sheikh Tahnoon, who rendered an invitation to the Iranian President to visit the UAE.
Comment: Sheikh Tahnoon, a brother and confidant of MbZ. His recent visits to other capitals of Syria and Turkey have become a template to repair tense bilateral relations. His mission to Tehran was perhaps even more important and sensitive as the UAE and Iran have had multilayered relations: while they have a history of tensions over 3 strategic Gulf islands, attacks on maritime traffic as well as perceived Iranian muscularity, Dubai is perhaps most valuable import sanction-busting centre for Iran. The UAE would prefer to inure its ties with Iran from growing tensions on the latter’s nuclear and regional activities.

The UAE announced that it was suspending negotiation with the US over the $23 bn acquisition of 50 F-35 fighter jets. Reuters quoted a UAE official source as saying “Technical requirements, sovereign operational restrictions, and cost/benefit analysis led to the re-assessment.” The US, on its part, has expressed its readiness to move forward on this deal, which has got entangled in the UAE’s growing strategic ties with China.

A US treasury department delegation visited the UAE on Dec 13 to warn the Emirati banks about compliance with the US economic sanctions against Iran.
Further Reading: “Analysis: Stuck in the middle? UAE walks tightrope between U.S, Israel and Iran”, Reuters, Dec 12; https://www.reuters.com/world/stuck-middle-uae-walks-tightrope-between-us-israel-iran-2021-12-12

A UAE defence delegation visited Turkey to follow up on the decisions taken during the Ankara bilateral Summit last month.

On Dec 9 the UAE authorities announced that from Jan 1, 2022 the government office would observe four and a half day working week – from Monday morning to Friday afternoon. The private sector was given the freedom to decide their hours. The ground-breaking move to shift from Saturday-Thursday week was intended as a part of a wider exercise to attract and retain global businesses in the UAE. In the same direction on Dec 27, the UAE issued the first marriage licence to a non-Muslim couple.

On Dec 10, Emirates Airlines announced the suspension of its highly profitable flights to Nigeria following the dispute between the two civil aviation authorities. Nigerian side was angered by the UAE granting their Air Peace only one slot a week at Sharjah airport and retaliated by restricting Emirates to the same frequency in Nigeria.

Turkey: 
The third Turkey-Africa Partnership Summit was held in Istanbul on Dec 16-18 attended by 16 African heads of state. In his address to the Summit, Turkish President Recep Tayyip Erdogan promised greater cooperation with the African countries in economic, defence and counter-terrorism domains. He also pledged to deliver 15 mn vaccine doses to them.
Comment: Under President Erdogan, Turkey has made energetic efforts to have substantive ties with Africa. Since coming to power in 2004, PM/President Erdogan has made no less than 50 trips to the continent, visiting over 30 countries. In the first 11 months of 2021, bilateral trade reached $30bn. Turkish companies were involved in executing projects worth $78bn on the continent which employed 25,000 Africans. More than 14,000 African students had studied in Turkey. While Turkey has leveraged historical ties with the former Ottoman Empire colonies in North Africa, it has also fostered economic and defence ties with Sub-Saharan Africa. Many of the thrust areas of Turkey’s quest for Africa overlap with India-Africa Forum Summit goals.
Further Reading: “Final Declaration of the 3rd Turkey-Africa Partnership Summit has been published”, https://247newsbulletin.com/world/57444.html

President Erdogan visited Doha for the 7th annual strategic dialogue with Qatari Emir Sheik Tamim bin Hamad Al-Thani. Although 15 bilateral agreements/MoUs were signed, no large ticket Qatari investments were announced, even as Turkey was battling a serious monetary crisis. Despite this freeze, Qatar remains the second-largest investor in Turkey with FDI worth $33.2 bn and $15 bn in currency swap arrangements.

Turkish Foreign Minister Mevlut Cavusoglu visited Dubai on Dec 15, where he was received by the UAE Vice President and PM Mohammed bin Rashed Al-Maktoum. They discussed follow up measures to implement the decisions taken during Ankara Summit in the previous month.
Comment: Ankara-Doha bromance seemed to have cooled somewhat perhaps as a corollary of Turkey improving ties with the UAE, Qatar’s bête noire.

On Dec 22, US State Department expressed concern at Turkey supplying to Ethiopia the military drones, which have played a decisive role in turning the tide against the Tigrayan rebels.

Libya:
Months of international pressure and domestic gerrymandering came to nought on Dec 21 when the High National Electoral Commission (HNEC) decided to postpone the country’s presidential election scheduled three days later. The HNEC did not announce any new date for the election.

Comment: The postponement was always on the cards as the preparatory process turned into a zero-sum game between the two regimes: Tripoli-based GNA and Benghazi-based LNA differed on such basic precursors as the electoral law, qualification of the candidates, etc. The HNEC decision was a huge setback to the national reconciliation process, but it merely represented a triumph of Libya’s fractious reality over an implausible ambition. Moreover, a flawed election with a disputed outcome could have certainly been far worse, as it would have reignited the hostilities and foreign meddlers. Meanwhile, it’s back to the future with the UN mission resuming the national reconciliation process.
Further Reading: “Libya’s presidential election was meant to unite the country” The Economist, Dec 18 2021;  https://www.economist.com/middle-east-and-africa/2021/12/18/libyas-presidential-election-was-meant-to-unite-the-country

During Dec 17-18, over 164 migrants drowned in two boats that sank off the Libyan coast while attempting to cross the Mediterranean Sea to seek asylum in Europe.

Iraq:
On Dec 27, Iraqi Supreme Court officially ratified the results of the parliamentary elections held two months ago. It rejected all bids against the results including those by pro-Iranian political parties which fared badly in the polls. This validation by Supreme Court effectively ended their street protests and paved the way for the Iraqi President to convene the session of the new parliament within the next 15 days.
Comments:  Despite several procedural inadequacies and allegations of rigging, the electoral process has largely stood the test of fidelity of public opinion. The voter had a humongous variety of candidates to choose from, but his verdict was less sectarian-based than in the previous elections. Lower turn-out also signalled voters’ frustration with the muhasasa-based political elite’s disconnect with ground issues such as lawlessness, lack of civic amenities, corruption and mal-governance.  While increasing voter maturity bode well in the long run, in the immediate future it created a hung parliament with the largest winner, Shia cleric Moqtada al-Sadr’s group, having no more than 73 of the total 329 seats. This was a prescription for even more protracted horse-trading to cobble up a majority coalition and potential for political instability. On the positive side, there were some indications of Iran playing a stabilising role by reining-in her proxy militias in Iraq to accept the electoral defeat.
Further Reading: “Iran seeks to cool tensions in Iraq”, Reuters, Dec 22 2021; https://www.reuters.com/world/middle-east/iran-seeks-cool-tensions-iraq-2021-12-22   

The Governors of Nassiriya and Najaf resigned on Dec 24 and Dec 25 in the wake of the mass protests in their respective provinces.

On Dec 9, the US-led troops in Iraq concluded their ground support mission as per the common agreement. The remaining forces, estimated at over 2000, are to be deployed as trainers and advisors.

During the first week of the month, the Islamic State carried out two attacks in Iraqi Kurdistan killing 17 persons, including 4 Kurdish soldiers.

Lebanon:
The UN Secretary-General Antonio Guterres began a four-day visit to Lebanon on Dec 19 to express international solidarity with the country facing multiple challenges. He met President Michel Aoun and other political leaders and called for steps to end the political paralysis.  

Lebanon took measures to end its economically ruinous estrangement with some GCC countries. After dogged resistance for weeks, Information Minister George Kordahi tamely resigned on Dec 3 paying the price for publicly criticising the Saudi military role in Yemen. This paved the way for French President Macron to effect a reconciliation between Lebanon and Saudi Arabia during his visit to the Kingdom on Dec 4. On Dec 15, Lebanon deported Shia dissident group al-Wefaq, banned in Bahrain since 2016, for using Lebanon as a “platform for spreading hatred or hostility” towards Gulf and Arab countries.
Comment: These actions revealed a slow but steady decline in the political preponderance of Hezbollah, the country’s most powerful militia. Among related evidence to Hizbollah’s waning fortunes were President Aoun’s public call for a defence dialogue between the army, people and the resistance, asserting that the primary responsibility to defend the country lies with the State and its armed forces. There were also reports of the largest Christian outfit in Lebanon, the Free Patriotic Movement, indicating that it intends to end its Mar Mikhael Agreement of 2006 with Hezbollah and Amal which has shaped the country’s polity for nearly 16 years. The country has been convulsed by a serious economic meltdown and sporadic youth agitation against confession-based politics and corruption. Nearly half of the Lebanese population is living below the poverty line. Lebanon is scheduled to have parliamentary elections in May 2022 and presidential elections thereafter.

Lebanese Deputy Prime Minister put the losses in the country’s financial sector at between $68 bn to $69 bn. Quantification of this figure is seen as a crucial first step to enable the Lebanese government to negotiate a rescue package with the IMF.

Qatar:
On Dec 9, Qatar Airways sued Airbus Industries in a London court for $618 mn in compensation for grounding of 21 of its A350 jetliners due to surface flaws.  The airline has been the largest customer for the A350 planes having ordered 80 of these in a multi-billion dollar deal. On other hand, the planemaker has asserted that there was no airworthiness issue as the same has been confirmed by the European regulators.

In a high profile case, Qatar’s court of appeal on Wednesday upheld a conviction for bribery and misuse of funds against Abdullah Ibhais, a former employee of the 2022 soccer World Cup organising committee but reduced his jail sentence to three years from five. He was arrested in 2019 and has claimed to be singled out for speaking up for migrant workers in the Gulf Arab state, an assertion echoed by human rights groups.

On Dec 18, the FIFA Arab Cup football tournament concluded in Doha with Algeria beating Tunisia 2-0.  

Palestine:
Israeli Defence Minister Benny Gantz hosted Palestine Authority (PA) President Mahmoud Abbas at his residence on Dec 28. During the three-hour-long meeting, the first such contact since the bilateral peace process was suspended in 2014. The two sides discussed operational and administrative measures concerning the West Bank. Israel’s defence ministry announced “confidence-building measures” with the PA which included a $32m advance payment to the PA in taxes collected on its behalf by Israel and the granting of 600 extra permits allowing Palestinian businessmen to cross into Israel. Both the Israeli ruling coalition and PA are riven by deep fissures on Israel-Palestine Peace Process. Hamas, which rules Gaza organised violent protests against the meeting calling it a betrayal of the Palestine Cause.  

The municipal elections were held on Dec 10 with more than 400,000 Palestinians were eligible to cast ballots for representatives in 154 village councils in the West Bank, where  Palestinian Authority has limited self-rule. While the municipal votes are typically held every four or five years, the presidential and the parliamentary elections have been repeatedly postponed. The elections were not held in Gaza, whose Islamist rulers Hamas boycotted the vote amid a rift with Abbas’ Fatah party.

Yemen:
On Dec 27 al-Houthi militia allowed Sana’a airport being temporarily used for the UN operated flights. The airport, closed since 2015, has rickety facilities due to disrepair and the Saudi-led coalition’s air-attacks, the last of which was only a week before.

On Dec 22, the World Food Programme (WFP) said that it would reduce food rations for 8 mn people in Yemen from next month due to a lack of funding from donors. The agency feeds 13 mn people a month in Yemen. The UN agencies, including the WFP, earlier warned of programme cuts, after only $2.68 bn of $3.85 bn requested from donors for this year had been received as of the end of Oct 21.

Sudan
Mass protests continued during the month in Khartoum and other major cities of Sudan demanding the resignation of Prime Minister Abdallah Hamdok and his military backers to be replaced by a representative civilian administration. They also called for a freeze in international aid to the regime.

Inter-tribal violence in Darfur province led to the death of 138 people in recent weeks. On Dec 31 the World Food Programme suspended its operations in North Darfur following the ransacking of its warehouses in the State capital meant to feed 2 mn people.

Syria:
Israeli jets attacked warehouses in Latakia port on Dec 7 and 28 inflicting considerable damage to what were reported to be Iranian munitions.

Tunisia:
On Dec 13, President Kais Saied announced that Tunisia would hold a referendum on a new constitution on July 25 2022, exactly one year after he suspended Parliament and seized near-total executive authority in the country. This would be followed by the general elections next December.

Kuwait:
A new cabinet under Prime Minister Sheikh Sabah al-Khalid was formed on Dec 28.
Comment: The longstanding political deadlock between the sections of the royal family and opposition MPs has stalled badly needed politico-economic reforms in Kuwait. It was the third cabinet to be sworn in this year, the preceding two having been rejected by the parliament. In an unprecedented move, three opposition MPs were included in the cabinet this time.  The Emir Sheikh Nawaf Al-Ahmad Al-Sabah hoped that this reform would resolve the situation and unlocked the reforms.

II) Economic Developments

Oil Related Developments:

  • Once again OPEC+ decided on Dec 2 to stick with its pre-scheduled monthly output rise of 400,000 bpd, ignoring the consumers’ pleas for a larger production. The differences were however a bit muted this time due to a collective decision by the US, India and some other consumers to release oil from their strategic reserves. Moreover, the fast-spreading Omicron variant of the virus threatened to curb the global demand. An IEA report on Dec 14 projected that Omicron impact aside, the global oil supply may outstrip the demand during the month. OPEC SG Mohammad Barkindo also added on Dec 4 that the global oil demand was expected to rise by 5.7 mbpd in 2021 and further 4.2 mbpd in 2022, when it would exceed the pre-Covid consumption level. Making a longer term projection, he also claimed that the oil and gas would still comprise nearly half the global energy consumption in 2045. Speaking at the World Petroleum Congress in Houston on Dec 8, OPEC SG called attempts to cut investment in oil and gas to combat climate change as “misguided.” He argued that a lack of investment in oil and gas upstream would curb their production and disrupt the transition to cleaner fuels. ​​​​​​​Comment: In retrospect, OPEC+ strategy to stick to its regular monthly production increase paid off well in an uncertain oil market by insuring supply-side predictability.
  • Verisk Maplecroft, a risk consultancy, said on Dec 16 that climate change could affect access to an equivalent of 600 bn barrels, 40% of the world’s total recoverable oil and gas reserves. Major producers such as Saudi Arabia, Iraq and Nigeria could be the worst affected.
  • Saudi oil exports averaged 8.26 mbpd in Oct 2021, the highest since the pandemic. Buoyed by increased demand, on Dec 5 Saudi Aramco raised oil prices for Asia for January 2022 by $0.60/barrel.
  • On Dec 6, Saudi Aramco signed a $15.5 bn lease-and-leased-back deal for its gas pipeline network with Hassana Investment Company, backed by the Blackrock consortium. The deal is modelled on the earlier $12.4 bn oil pipeline deal with EIG group.
  • On Dec 24, Egyptian Gas and Petroleum Corporation signed a deal with Italy’s Eni for oil exploration in the Gulf of Suez and the Nile Delta involving the investment of over $1 bn.

Following economy-related developments took place in individual WANA countries:

  • Turkey’s monetary travails continued during December largely due to the contrarian easy-money policies being pursued despite very high inflation. This created a large gap between the inflation (~20%) and central bank rate (15%) leading to pressure on the Lira, the national currency. The Lira declined to a month low of over 17 to the US Dollar on Dec 17. This prompted the government to wheel in a swathe of measures to protect the Lira depositors in the banks leading to sharp appreciation of the Lira value from the lower base, although this could not be sustained. Thus, the Lira’s value against US Dollar rose by 50% during the third week (Dec 20-25) but fell by 20% during the next week (Dec 27-31). Lira ended the year 2021 at 13.295 to the US Dollar, having fallen by ~40% during the year. Trading at the Istanbul stock market had to be often halted on Dec 17 to prevent the indices from nose-diving, although the index still declined by 7% on that day. President Erdogan was the main protagonist of the easy money policy under which the central bank rate has been lowered by 500 base points in the past four months calling it the “War for Economic Independence.” The action was also initiated against the currency speculators, etc. Among other developments in this saga were the appointment of a new Finance Minister (Dec 2), Fitch and Moody’s lowering the country outlook to “negative” (Dec 2/3) and repeated intervention by the Turkish Central Bank to prop up Lira.  On the positive side, however, cheaper Lira helped make Turkish exports more competitive.
  • Saudi Arabian economy grew by 7% y/y during Q3/21. Thanks to higher oil revenue and spending curbs, Saudi Arabia expects a fiscal surplus of 2.5% in 2022, after nearly 8 years of budgetary deficits. The figures for 2020 and 2021 were -11.2% and -2.7% respectively. The country’s draft budget for 2022 puts spending at SR 955 bn, down 6% over 2021. Noticeably the defence budget is to be cut by 10%. According to the budget, Saudi Arabia recorded 2.9% GDP growth in 2021 and is expected to grow by 7.4% in 2022. The future growth is to be driven by proposed SR1 tr domestic investment by Public Investment Fund, country’s SWF, during next 5 years to 2025. Saudi Arabia also unveiled a plan to create a holding company under PIF for the country’s 22 airports for their eventual privatisation.
  • Iran’s draft budget for the next financial year, to begin on March 21 2022, has an outlay of $50.2 bn. While presuming the US economic sanctions to continue, it projects oil exports to average 1.2 mbpd.
  • Among the economic reforms announced during the month in the UAE were allowing the creation of companies for acquisition or merger purposes and removal of the requirement for the Emirati majority among a company’s board of directors. The UAE was also reported to be working on the possible removal of import monopolies of some big merchant families. Family-owned businesses, from small companies to the conglomerates built over the decades by leading merchant groups, make up 90 per cent of the UAE’s private sector, which itself accounts for around three-quarters of employment. Further Reading: “UAE pushes merchant families to open up to competition” by Simeon Kerr, Financial Times, Dec 26; https://www.ft.com/content/116b083a-1811-4501-ad9b-2f6a3183db3e
  • In Oct 2021, Tunisia’s public debt climbed by 12% y/y to reach 102 bn Dinars or 81.5% of the GDP.  While the foreign debt was 49% of the GDP remaining 32% was domestic debt.
  • An IMF team visited Lebanon and met PM Najib Mikati on Dec 7 to put in the framework for a rescue package for Lebanon’s moribund economy.
  • On Dec 8, Bahrain announced that the VAT would be doubled to 10% from Jan 1 2022.
  • On Dec 6, Yemen’s internationally recognised government replaced the governor and deputy governor of the Central Bank as the value of the country’s currency plummeted to 1700 to a US Dollar, more than three times the official rate of 530.
  • On Dec 13  Israeli Finance Minister said that the country intends to import foreign workers for its booming high-tech sector on a trial basis to offset a pandemic-era labour shortage.
  • With the tailwind of the increasing oil revenues during the year, WANA bourses had a bull charged 2021.  Thus the year saw the respective indices of the following stock market scale new heights: Abu Dhabi (up 68%), Saudi Arabia (+30%), Dubai (+28.3%), Kuwait (+26.2%), Oman (+13%), Qatar (+12%), Egypt (10.2%) and Bahrain (7.5%).\
  • According to the Economist Intelligence Unit, the WANA region had the dubious distinction of having both the world’s most expensive and the cheapest cities, Tel Aviv and Damascus respectively.

III)  Bilateral Developments

  • The third round of talks with the UAE on bilateral Comprehensive Economic Partnership Agreement (CEPA) was held on Dec 6-10. Commerce and Industries Minister Piyush Goyal announced on Dec 13 that the two sides intended to wrap up these negotiations by the next month. He held consultations with several Indian stakeholders during the month over the CEPA contents.  
  • India’s Vice Chief of Army Staff Lt. Gen. C. P. Mohanty visited Qatar on Dec 8-9.
  • INS Sudarshini, a sails training ship of  the Indian navy paid a month-long visit to the Gulf during which it visited Muscat, Dubai and Bandar Abbas ports.
  • Indian government stated in the parliament on Dec 6 that Sudan owed ONGC Videsh Ltd (OVL) $560 mn in unpaid oil dues and cost of Khartoum-Port Sudan oil pipeline. The state-owned OVL has initiated arbitration proceedings against the Government of Sudan to recover the dues and has terminated the Exploration and Production Sharing Agreement (EPSA). The arbitration tribunal at the International Court of Justice in Hague is hearing the matter.
  • According to a Brazilian report, in 2020 India ended Brazil’s 15-years reign as the Arab world’s largest food supplier. India supplied 8.25% of the Arab world’s food imports that year.
  • India, the world’s largest rice exporter, has high acceptability of its Basmati variety in the WANA region to which 72% it’s 2020-21 exports were destined. Main WANA buyers of Indian Basmati rice were Saudi Arabia (22% of India’ global exports), Iran (16%), Iraq (14%), Yemen (7%), UAE (5%), Kuwaiti (4%), Qatar (2%) and Oman (2%). In addition, Iraq and the UAE also figured among large buyers of non-Basmati rice, taking 2% each of India’s global exports.
  • On Dec 27, the UAE lifted the five-year old ban on import of Indian poultry and eggs put in the wake of cases of avian flu in some parts of India
  • India’s oil imports totalled 4.32 mbpd in November, up 6.4% from October and 9.2% from a year earlier. Of these, Imports of WANA region was 3.07 mbpd or 71.1% of the total imports. This proportion rose significantly as Indian importers leveraged a reduction in the prices of the Middle Eastern oil blends relative to the Brent. Indian refineries processed 5.25 mbpd of crude during November 21, the highest since the Covid-19 pandemic. They operated at 104.6% of their installed capacity. India’s November crude production fell about 2.4% to around 590,000 barrels per day from the same month last year but was little changed from October. The natural gas output jumped 23.1% to 2.87 bcm during Nov 2021, up 23.1% y/y.
  • On Dec 7, Reliance India Ltd and Abu Dhabi emirate-owned Chemicals Derivatives Company (TA’ZIZ) announced an agreement to start a more than $2 billion chemical production partnership in Ruwais. Their joint venture, called TA’ZIZ EDC & PVC, will construct and operate a Chlor-alkali, ethylene dichloride (EDC) and polyvinyl chloride (PVC) production facility. The proposed JV is to be a catalyst in the planned $5 bn Ruwais Derivatives Park. Separately, RIL was also planning to make the first oil purchase of 500,000 barrels of the UAE’s Das crude through RINL, its recently established Abu Dhabi-based oil trading subsidiary.
  • UAE-based Aster Healthcare, owned by NRI-businessmen Dr Azad Moopen, decided to hive of fast-growing Indian operations to have them rise to half of the group’s global revenue, from 25% at present. It currently operates 455 establishments–27 hospitals offering 5,000 beds (4,000 in India across 14 hospitals in five states), 126 clinics and around 300 pharmacies (around 80 in South India) and had a group top-line of around Rs 10,000 crore in FY21 of which Rs 2,500 crore came from India.
  • On Dec 13, India’s Harnaaz Sandhu was crowned was crowned as Miss Universe in the event held at Eilat in Israel.

Supported by

10008153272?profile=RESIZE_584x

The previous issues of West Asia & North Africa Digest are available here: LINK
………………………………………………………………………………………………
(The views expressed are personal)
………………………………………………………………………………………………

Related

News

Latest

Insights

The Indo-Pacific Economic Framework for Prosperity: Key Opportunities & Concerns for India

Arohana An Ananta Podcast Series

News

Letter

Ambassador Sharat Sabharwal, Former High Commissioner of India to Pakistan and Distinguished Visiting Fellow, Ananta Centre

AFPAK DIGEST

Pramit Pal Chaudhury, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta
Mr AK Bhattacharya, Editorial Director, Business Standard, Distinguished Fellow, Ananta Centre Editorial Director

Pramit Pal Chaudhury, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta

Ambassador Ashok Sajjanhar, Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of

Ambassador Ashok Sajjanhar, Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of

Australian High Commissioner- Ambassador Series ( 30 May 2024)

Tweets:https://x.com/AusHCIndia/status/1796460242710229478 Articles:https://www.timesnownews.com/india/australia-high-commissioner-sees-potential-for-indias-role-in-aukus-collaboration-article-110571507https://economictimes.indiatimes.com/news/defence/india-is-australias-top-tier-security-partner-says-high-commissioner-green/articleshow/110598184.cms?from=mdrhttps://www.myind.net/Home/viewArticle/india-is-our-indispensable-partner-in-the-indo-pacific-says-australian-envoy-philip-greenhttps://www.wionews.com/world/india-is-our-indispensable-partner-in-indo-pacific-australian-envoy-philip-green-727380https://organiser.org/2024/06/01/240595/bharat/india-an-indispensable-top-tier-security-partner-for-us-australian-envoy-phillip-green/

News

Letter

Ambassador Sharat Sabharwal, Former High Commissioner of India to Pakistan and Distinguished Visiting Fellow, Ananta Centre

AFPAK DIGEST

Pramit Pal Chaudhury, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta
Mr AK Bhattacharya, Editorial Director, Business Standard, Distinguished Fellow, Ananta Centre Editorial Director

Pramit Pal Chaudhury, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta

Ambassador Ashok Sajjanhar, Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of

Ambassador Ashok Sajjanhar, Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of

Australian High Commissioner- Ambassador Series ( 30 May 2024)

Tweets:https://x.com/AusHCIndia/status/1796460242710229478 Articles:https://www.timesnownews.com/india/australia-high-commissioner-sees-potential-for-indias-role-in-aukus-collaboration-article-110571507https://economictimes.indiatimes.com/news/defence/india-is-australias-top-tier-security-partner-says-high-commissioner-green/articleshow/110598184.cms?from=mdrhttps://www.myind.net/Home/viewArticle/india-is-our-indispensable-partner-in-the-indo-pacific-says-australian-envoy-philip-greenhttps://www.wionews.com/world/india-is-our-indispensable-partner-in-indo-pacific-australian-envoy-philip-green-727380https://organiser.org/2024/06/01/240595/bharat/india-an-indispensable-top-tier-security-partner-for-us-australian-envoy-phillip-green/

News

Letter

Ambassador Sharat Sabharwal, Former High Commissioner of India to Pakistan and Distinguished Visiting Fellow, Ananta Centre

AFPAK DIGEST

Pramit Pal Chaudhury, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta
Mr AK Bhattacharya, Editorial Director, Business Standard, Distinguished Fellow, Ananta Centre Editorial Director

Pramit Pal Chaudhury, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta

Ambassador Ashok Sajjanhar, Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of

Ambassador Ashok Sajjanhar, Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of

Australian High Commissioner- Ambassador Series ( 30 May 2024)

Tweets:https://x.com/AusHCIndia/status/1796460242710229478 Articles:https://www.timesnownews.com/india/australia-high-commissioner-sees-potential-for-indias-role-in-aukus-collaboration-article-110571507https://economictimes.indiatimes.com/news/defence/india-is-australias-top-tier-security-partner-says-high-commissioner-green/articleshow/110598184.cms?from=mdrhttps://www.myind.net/Home/viewArticle/india-is-our-indispensable-partner-in-the-indo-pacific-says-australian-envoy-philip-greenhttps://www.wionews.com/world/india-is-our-indispensable-partner-in-indo-pacific-australian-envoy-philip-green-727380https://organiser.org/2024/06/01/240595/bharat/india-an-indispensable-top-tier-security-partner-for-us-australian-envoy-phillip-green/