West Asia & North Africa Digest by Ambassador Mahesh Sachdev | March 2023

IA) Political Developments: Pan-Regional and Global Issues 

Pandemics and Natural Disasters:

  • Two severe earthquakes struck south-central Turkey and north-western Syria on Feb 6 causing colossal death and destruction. The first, measured 7.8 on the Richter scale, happened before sunrise and was centred 26 km east of the Turkish city of Nurdagi; the second, 7.5 strong, took place 9 hours later and was centred 120 kms to the north of the first. The 11,000 aftershocks followed the twin earthquakes, the deadliest in modern Turkey’s history. In geotechnical terms, the twin earthquakes took place at the over 100 km rupture between the Anatolian and Arabian plates as they jostled across a “strike-slip fault” with solid rock plates pushing up against each other across a vertical fault line, building stress until one finally slips in a horizontal motion.
  • By the end of the month, the casualty figures from the twin earthquakes had crossed 51,000 – with over 46,000 dead in Turkey and over 6,000 in Syria. Additionally, over 108,000 were thought to have been injured in Turkey alone where more than 160,000 buildings containing 520,000 apartments collapsed or were severely damaged rendering over two million persons homeless. While the intensity on the Syrian side was far less, the 12 years of civil war and economic sanctions had left it divided and denuded of rescue capabilities. In particular, the quake straddles both sides of the tense and tenuous Idlib exclusion zone in north-western Syria where nearly 4 million anti-regime persons are holed in, largely dependent on humanitarian relief from Turkey. Moreover, Syria’s largest city, Aleppo, dilapidated by intense civil war, was closest to the first earthquake’s epicentre. On Feb 27, the World Bank Global Rapid Post-Disaster Damage Estimation (GRADE) report for Turkey put the “direct physical damage” at about $34.2 bn, but total reconstruction and recovery costs facing the country could be twice as high. Turkey’s own estimates put the cost of reconstruction at $50 bn. In addition, Turkey’s central bank spent $7 bn to keep the national currency stable after the earthquake. The heaviest damage occurred in 11 provinces in southern Turkey that have some of the country’s highest poverty rates, and host more than 1.7 mn Syrian refugees or about half the total Syrian refugee population in Turkey. It estimates that the earthquakes would also shave at least half a percentage point off Turkey’s forecast gross domestic product growth of 3.5% to 4% in 2023. On March 3, the World Bank released its GRADE report for Syria estimating the direct physical damages to be at $5.1 bn needing at least $7.9 bn in aid for recovery. The current value of the damaged and destroyed capital stock was estimated at 10% of Syria’s GDP. The widespread damages impacted 4 governorates, where around 10 mn of Syria’s population resides. Aleppo province, which was a major front line in the war, suffered an estimated 45% of total damages from the quakes, some 37% of the damage was in Idlib province, with 11% in the coastal Latakia province. The Syrian government said the death toll in the territory it controls was 1,414. More than 4,400 deaths have been reported in the rebel-held northwest by the United Nations. In general, the UN estimates of the disaster were significantly higher than the World Bank’s.
  • The international community was relatively quick to come to the assistance of the earthquake victims, even as a yawning gap remained, given the apocalypse. Over 45 countries – from Armenia to the Taliban – rushed in humanitarian assistance for the victims in cash and kind as well as the rescue teams. However, a $1 bn flash appeal made by the UN on Feb 16 was funded at just 9.6% of the total by March 7. (Comment: This may be partly due to donors’ preference for bilateral assistance)
  • The immense humanitarian tragedy had a collateral impact on the domestic situation in the two countries.  In increasingly centralised Turkey, President Recep Tayyip Erdogan had to apologise for the initial delay in rescue efforts. He later grandly promised to house all victims within one year. There were also allegations of official complicity and corruption by the builders of substandard structures built in violation of the earthquake-resistant building code. These led to the cases lodged against at least 612 builders. The earthquakes also shook up the calculations for the country’s next presidential and parliamentary elections on May 14, making the tight contest even more unpredictable. In Syria, President Bashar al-Assad was nudged by the UAE into opening two more humanitarian relief corridors for the victims of the Idlib exclusion zone – a seemingly magnanimous move that was calculated to win regional friends and influence recalcitrant Syrians at home and refugee camps in Turkey some of whom queued up to return.
  • The calamity also upended the long-coagulated regional and international equations. After over two years of aloofness, the Biden administration sent Secretary of State Antony Blinken to Ankara (20/2) with an earthquake aid package of $85 mn; he also had a meeting with President Erdogan. For the first time in a decade, Armenia opened its land border to Turkey (11/2) for sending relief material. Similarly, the catastrophe helped the regional political rehabilitation of long-ostracised President Bashar al-Assad after he had largely won the 12-year-old civil war.  Thus, foreign ministers of Jordan and Egypt – two countries long estranged from Syria – visited Damascus on Feb 12 and 27 respectively. Similarly, a delegation from the Arab Inter-Parliamentary Union visited Damascus on Feb 26 and met President al-Assad. On Feb 19, Saudi Arabia’s foreign minister Prince Faisal bin Farhan Al-Saud said that consensus was emerging in the Arab world that isolating Syria was not working and that dialogue with Damascus was needed “at some point” to at least address humanitarian issues, including earthquake relief and return of the refugees. Saudi Arabia has also sent two planes carrying aid to Syria, a first in more than a decade. Saudi minister refused to confirm the rumours that he may visit Damascus. Similarly, Kuwaiti foreign minister Sheikh Salem Al-Sabah said that his country was not dealing with Damascus and was providing aid through international organisations and Turkey. He added: “We are not going to change at this point in time.” Even the United States, with no love lost for the al-Assad regime, also exempted earthquake aid for Syria from tough sanctions imposed on the country for six months.
  • In his first speech since the devastating earthquakes, On Feb 18 Syria’s President Bashar al-Assad thanked other Arab nations for aid and rescue efforts after years of broken relations. Some 120 planes packed with humanitarian aid have landed in the country, about half of them from the UAE. (Comment: For their respective reasons, Turkey and Syria have both recently sought regional and international rehabilitation. In cynical terms, the calamity afforded the two nationalist governments to accelerate this process. Further Reading: “The earthquakes in Turkey and Syria have shaken both countries” The Economist Feb 9; “Bashar al-Assad does not want to let a calamity go to waste”, The Economist, Feb 16.)
  • Perhaps the only silver lining in the disaster was that the two oil pipelines crisscrossing the region carrying Iraqi and Azeri crudes to Turkey’s export terminals on the Mediterranean coast were not disrupted, except for the initial few hours. This prevented the calamity from causing any spike in the already precarious global energy situation.

WANA and Ukraine Conflict:

  • Bloomberg News reported on Feb 28 that Russian oil exports remained resilient despite the full force of western bans. It quoted Kpler, an oil and gas movement analyser, that Russia shipped 7.32 mb/d of crude, fuels in February despite the EU banning most oil imports in Dec 2022 and fuels in Feb 2023
  • Saudi foreign minister Prince Faisal bin Farhan Al-Saud Arabia made a surprise visit to Kyiv on Feb 26 during which bilateral agreements worth $400 mn were signed. He was received by President Zelenskiy.
  • On Feb 23, the UN General Assembly met in an emergency session to pass resolution No. A/ES-11/L7 with a 141-7:32 majority demanding Russia “immediately, completely and unconditionally withdraw all of its military forces from the territory of Ukraine and called for a cessation of hostilities”. (Comment: The WANA countries voted on the resolution in the following manner: For: Bahrain, Egypt, Iraq, Israel, Jordan, Kuwait, Libya, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, Turkey, UAE and Yemen; Against:  Syria; Abstaining: Algeria, Iran and Sudan)
  • The top sanctions official of the U.S. Treasury Department visited the Turkish government and private sector officials on Feb 2 and 3 to urge more cooperation in disrupting the flow of such goods. He warned about the export to Russia of chemicals, microchips and other products that can be used in Moscow’s war effort in Ukraine, and it could move to punish Turkish companies or banks contravening sanctions. The issue was raised during the Feb 20 Ankara visit by US Secretary of State Antony Blinken. In response, foreign minister Mevlut said that Ankara will not allow the US and European sanctions to be violated in or via Turkey, and Ankara is taking steps to prevent it.  He added that the increase in Turkey’s trade with Russia is largely due to Ankara’s hefty gas and energy imports, which have tripled in cost.

WANA Regional  Security and Terrorism 

  • In a dramatic  escalation, Israeli troops killed 11 Palestinians and wounded over 100 others in a raid in the West Bank city of Nablus on Feb 22. The dead included two Islamic Jihad commanders along with another gunman. There were no Israeli casualties. In an apparent retaliation the next day, Gaza-based militants fired 6 rockets prompting Israel to carry out air strikes in a cross-border exchange. Mediation efforts by Egypt and the United Nations were pressed into service to contain the situation. On Feb 26, a Palestinian gunman killed two Israeli brothers as they were driving in the occupied West Bank, sparking attacks by Israeli settlers on houses and cars in a nearby Palestinian village of Hawara during which one Palestinian was killed. PM Netanyahu did not condemn the settlers’ violence; he simply told them not to take the law into their own hands.  The Arab-Israeli violence has killed 63 Palestinians, including gunmen and civilians, during the first two months of 2023. Twelve Israelis and a Ukrainian tourist died in Palestinian attacks in the same period. (Further Reading: “A new type of Palestinian militia is emerging” The Economist, March 2.)
  • On Feb 26 Israeli and Palestinian officials pledged to de-escalate surging violence after a meeting in Aqaba (Jordan), issuing a joint statement in which Israel said it would halt discussions about new settlement units in the occupied West Bank for four months. The first of its kind of gathering in years was also attended by senior U.S., Jordanian and Egyptian officials. However, Israeli PM Netanyahu denied soon thereafter that there was any freeze on the settlement activity.
  • On Feb 15 a UN report on al-Qaeda claimed that Seif al-Adel was now the “uncontested” leader of the militant group following the US assassination of Ayman al-Zawahiri in Kabul last year. Saif al-Adel (nom de guerre meaning Sword of Justice; real name: Mohammed Salahuddin Zeidan) is a former Egyptian special forces officer and a high-ranking member of al Qaeda with a $10 mn US bounty on his head. The U.S. State Department says Adel is based in Iran; a claim Iran denies.
  • On Feb 17, the US military stated that Hamza al-Homsi, a ‘senior’ ISIL official, was killed in a helicopter raid in north-eastern Syria. Four US soldiers were injured during the raid.
  • At least 53 civilians were killed in an attack on Feb 17 in Syria’s central desert province of Homs. The Syrian state media blamed the act on the jihadist militant group Islamic State.
  • On Feb 23, the British Navy seized anti-tank missiles and fins for ballistic missile assemblies during a raid on a small boat in the Gulf of Oman heading from Iran likely to Yemen.

Pakistan and WANA Region:

  • On Feb 11, UAE President Sheikh Mohamed bin Zayed Al-Nahyan received General Asim Munir, Chief of Army Staff of the Islamic Republic of Pakistan in Abu Dhabi.

Afghanistan and WANA Region:

  • On Feb 8, the foreign ministry of the Islamic Emirate of Afghanistan announced a relief package of 10 million Afghanis ($111,024/-) and 5 million Afghanis ($55,512/-) to the victims of the earthquake victims in Türkiye and Syria respectively.
Regional and International Developments
  • The UAE hosted the first vice-ministerial meeting of the I2U2 Business Forum in Abu Dhabi on Feb 25. Apart from the political level participation, it brought together senior private and public sector representatives from the four countries to discuss opportunities for cooperation between the business communities.
  • A senior US delegation led by the deputy assistant secretary of defence for the Middle East visited Riyadh during the third week of the month for defence talks with the six-nation Gulf Cooperation Council. The discussions covered the “full set of threats from Iran” in the region and “increased Iranian-Russian military cooperation for use in Ukraine”.  This meeting was to be held last October but was postponed due to a row between Washington and Riyadh over oil policy.
  • Sultan al-Jaber, the UAE climate envoy and designated president of the COP28 climate summit stated on Feb 15 that his main priority would be to keep alive the goal of limiting global warming to 1.5 degrees Celsius as the world falls behind on the target. He brushed off criticism over his designation as COP28 president given his role as head of the ADNOC, UAE’s state oil giant, telling Reuters that tackling climate change required a united effort.
  • On Feb 12, Real Madrid defeated al-Hilal of Saudi Arabia 5-3 to win FIFA Club World Cup held in Morocco. This was the Spanish team’s fifth successive win of the title.
  • News Website Politico reported on Feb 12 that Saudi Arabia had cobbled together a joint bid with Egypt and Greece to jointly host the FIFA World Cup tournament in 2030.

IB) Political Developments

Iran:

Iranian president Ebrahim Raisi paid a three-day state visit to China on Feb 13-15, the first such visit in two decades. Among the dozens of officials in his delegation were six ministers (economy, petroleum, foreign affairs, trade, transport, urban development and agriculture), the country’s top nuclear negotiator and its central bank chief. In the joint communique released after the visit, the two sides railed against “efforts by certain governments to politicise the work” of the IAEA in Iran, promised cooperation on ensuring regional security, and cooperation on fighting “terrorism”. Twenty substantial agreements were inked during the trip under the rubric of the 25-year comprehensive bilateral cooperation document signed in 2021. (Comment: Looking through the new China-Middle East paradigm created at President Xi’s triple summits in Riyadh a couple of months ago, President Raisi’s state visit came out more as a damage limitation exercise.  Chinese investments in Iran were only $162 mn during the first year of Raisi Presidency, far shorter than those in Afghanistan during the same period. China, nevertheless, remains Iran’s largest trade partner, with Iranian customs data for the first 10 months of the current Iranian calendar year that ends in March showing Iranian exports at $12.6 bn and imports at $12.7 bn. Meanwhile, reports emerged that Sinopec, China’s state-owned energy giant, has pulled out of the significant Yadavaran oil field project near the Iran-Iraq border holding nearly 3 bn barrels of recoverable reserves. Earlier in 2019, China pulled out of developing phase 11 of Iran’s offshore South Pars gas field in the face of US economic sanctions.)

Iran’s nuclear enrichment file continued to flutter during the month. On Feb 28, a Reuter’s despatch quoted from a report of the International Atomic Energy Agency, the UN nuclear watchdog stating that it was in discussions with Iran on the origin of uranium particles enriched to up to 83.7% purity, very close to weapons grade, at its Fordow enrichment plant. The report also said Iran’s stock of uranium enriched to up to 60%, which is being produced at two sites, had grown by 25.2 kg to 87.5 kg since the last quarterly report. The total stockpile of uranium enriched to that and lower levels is estimated at 3,760.8 kg, the report said. According to IAEA terminology, around 42 kg of uranium enriched to 60% purity is a “significant quantity”, defined as “the approximate amount of nuclear material for which the possibility of manufacturing a nuclear explosive device cannot be excluded”. On the same day, the US Under Secretary of Défense for Policy deposed to a House of Representatives hearing stating that Iran could make enough fissile for one nuclear bomb in “about 12 days”, down from the estimated one year it would have taken while the 2015 Iran nuclear deal was in effect. Earlier on Feb 21, Secretary of State Antony Blinken said it was up to Iran to engage to resolve a deadlock over its nuclear programme, and accused it of enabling Russian aggression in Ukraine. While accusing Tehran of failing to engage in the JCPOA, he added that it was “not on the table now.” He said that the US, together with Israel, was committed to ensuring that Tehran “never acquire a nuclear weapon”. The IAEA reported on an unannounced inspection on Jan 21 critical of Iran for making an undeclared change to the interconnection between the two clusters of advanced machines at its Fordow plant enriching uranium to up to 60% purity. This led to a joint statement by the US, Britain, France and Germany accusing Iran of being inconsistent in meeting its nuclear obligations. On its part, Iran’s nuclear chief stated, “We immediately offered explanations that were communicated the same day and the agency inspector also became aware of their mistake.” he also denounced that confidential IAEA reports are regularly leaked to the media.

In his public speech on the 44th anniversary of the 1979 Islamic revolution on Feb 12, President Raisi denounced “enemies” for sparking unrest in the country. Among the accomplishments of the revolution highlighted on the occasion were a 1650 kms range cruise missile “Paveh” and an underground airport. Iranian Supreme Leader Ali Khamenei pardoned tens of thousands of prisoners to mark the occasion. Exiled groups opposed to the Islamic revolution held meetings and a joint press conference at Georgetown University in the US.

On Feb 10 Iran claimed to have arrested the “main perpetrators” of the Jan 27 drone attack on a military site in the central city of Isfahan, in which Israeli “mercenaries” were involved.

Israel:

On Feb 2, Chadian President Mahamat Deby inaugurated his country’s embassy in Tel Aviv in Israel, building on bilateral relations that were established five years ago. Chad severed its ties with Israel in 1972. These were re-established in 2018 during the last visit by the father of the current president. (Comment: Israel and Chad have shared concern about the spread of Islamic militancy in Sub-Saharan Africa. However, the two sides have nuanced foci: while Israel is more concerned about Shia militancy, Chad’s military has been quite active against regional off-shoots of al-Qaeda and ISIS.)

On Feb 12, Israel’s far-right cabinet approved the legalisation of nine illegal settler outposts in the occupied West Bank, drawing condemnation from the Palestinian Authority, which called the move an “open war” against its people. On Feb 20, the UN Security Council issued a presidential statement expressing “deep concern and dismay” over Israel’s settlement activity. The statement replaced a draft resolution, disapproved by the US, that would have explicitly condemned Israeli policies. It also underscored what it called the “obligation of the Palestinian Authority to renounce and confront terror”. Earlier on Feb 14, five foreign ministers (the US, Canada, the UK, France, Germany and Italy) issued a joint statement opposing the Israeli decision.

On Feb 18, a senior Israeli diplomat was evicted from the African Union’s annual summit in Ethiopia. (Comment: Israel’s accreditation as an observer to the African Union has often been mired in controversy with powerful members such as South Africa and Algeria opposing it.)

On Feb 15, Knesset passed a law to revoke the citizenship of Israeli Arabs convicted of terrorism and who get financial aid from the Palestinian Authority. It could also see Palestinian residents of occupied East Jerusalem stripped of their residency rights. The Palestinian Ministry of foreign affairs described the law as “the ugliest form of racism.”

Despite strong opposition at home and abroad, on Feb 20 Knesset voted to push ahead with a contested overhaul of the country’s judicial system championed by PM Netanyahu’s government. It ignored a compromise plan floated by Israeli President Isaac Herzog on Feb 12. The government maintains that the reforms are designed to end overreach into politics by an unrepresentative Supreme Court, while the critics say it seeks legal changes that will hurt Israel’s democratic checks and balances, foster corruption and bring diplomatic isolation.

On Feb 26, El Al became the first Israeli airline to use a new corridor over Saudi Arabia and Oman to Asia, cutting two and a half hours from civilian overflights to Bangkok. The flights to India are likely to begin using this corridor in six months.

An Israeli-linked tanker was lightly damaged in an attack on Feb 10 by an airborne object while sailing through the Arabian Sea. The Liberian-flagged tanker Campo Square was plying about 300 nautical miles off the coasts of India and Oman.  On Feb 18, Israeli PM Netanyahu blamed Iran for the attack, prompting Iran to strongly reject its involvement.

On Feb 2, a Reuters report quoted Israeli military sources claiming drones use up to a ton of gravity bombs that produce no noise or smoke as they fall, making them hard to anticipate or evade.

Turkey: 

Turkey’s holdout on ratification of NATO membership applications by Finland and Sweden continued during the month despite relentless pressure from fellow members of the defence alliance. The matter was raised by the US secretary of state Antony Blinken during his visit to Turkey, first by a senior Biden administration representative. In a letter to President Biden on Feb 2 a bipartisan group of 29 senators said that the US Congress could not support the $20 bn sale of F-16 fighter jets to Turkey until Ankara ratifies the NATO memberships of Sweden and Finland. Speaking before a meeting of NATO defence ministers on Feb 14 alliance’s secretary general Jens Stoltenberg said it is more important that Finland and Sweden join the military alliance quickly rather than at the same time. He visited Ankara on Feb 16 to press Turkey on this issue. However, Turkish foreign minister Mevlut Cavusoglu reiterated Turkey’s position that it would evaluate Finland and Sweden’s bids to join NATO separately. (Comment: Except for Hungary and Turkey all other NATO members have already ratified the membership of the two Nordic states. Turkey accuses them of harbouring “terrorists” – mainly motley anti-Erdogan dissidents and Kurdish militants – and insists on their handing over as a precondition.)      

The UAE:

The 5-day International Defence Exhibition (IDEX) concluded in Abu Dhabi on Feb 24 with 65 country participants, including the US and Russia. The United Arab Emirates signed defence deals worth a total of Dh23.34 bn ($6.36 bn) with the local defence production group EDGE being a major beneficiary.

Syria:

On Feb 20, Syrian President Bashar al-Assad travelled to Oman, his first foreign trip since the deadly earthquakes and amidst signs of easing isolation after nearly 12 years of civil war. Al-Assad met with Sultan Haitham bin Tariq who looked forward to Syria returning to have normal ties with all Arab countries. Oman withdrew its ambassador to Syria in 2012 and reinstated its ambassador in 2020, the first Gulf state to do so.

During the month, Syria continued to be at the receiving end of an undeclared Israeli campaign to degrade Iranian military presence in the country. Thus, missile strikes in central Damascus on Feb 19 reportedly targeted a building in central Damascus where a gathering of Syrian and Iranian technical experts in drone manufacturing was said to be underway. Syrian media mentioned that the attack caused five deaths and 15 injuries. Israel made no comments about the attack.

Lebanon:

The banks in Lebanon went on strike on Feb. 7 protesting against the snowballing legal measures they have been facing since Lebanon’s economy began to unravel in 2019. They suspended their strike for a week following PM Najeeb Mikati’s move. However, according to revelations in a Swiss newspaper, Lebanese Central Bank’s long-time governor Riad Salameh and his brother Raja are alleged to have transferred $330 million to Swiss accounts via an offshore company. Switzerland’s financial regulator investigated 12 banks and launched enforcement proceedings against two of them in this connection.

Jordan:

The US President Joe Biden hosted a private lunch for the visiting King Abdullah II of Jordan at the White House on Feb 2. In a subsequent White House statement, Biden recognised Jordan’s “crucial role as the custodian of Muslim holy places in Jerusalem”, and reaffirmed the close friendship between the US and the Hashemite Kingdom. He also reiterated his “strong support for a two-state solution” to the Israeli-Palestinian conflict and thanked King Abdullah for “the role he and Jordan play as a force for stability in the Middle East”.

Jordan’s Foreign Minister Ayman Safadi has arrived in Damascus on the first such visit since the Syrian conflict started. He also visited Turkey later to show Jordan’s “solidarity” after earthquakes struck the two countries on Feb 6. Jordan has provided humanitarian relief to both countries.

Qatar:

On Feb 24, FATF, a global financial crime watchdog, asked Qatar to “make important improvements in certain areas, including in its law enforcement response to money laundering and terrorism financing in particular and its use of financial intelligence.” It praised Qatar’s technical compliance with its standards as “very strong” but added that it would follow up its statement with a full mutual evaluation report on Qatar by May 2023.

On Jan 25, Emir Tamim and Bahrain Crown Prince & PM Salman bin Hamad Al-Khalifa had a teleconversation aimed at “joint efforts to resolve all outstanding differences” (Comment: Otherwise, an anodyne happenstance, this was the first high-level public bilateral contact between the two members of the GCC. Even two years after lifting the boycott of Doha by four Arab countries, Bahrain has been the only holdout from full reconciliation with Qatar. The phone call follows the participation of Bahrain’s King Hamad and Qatari Emir Tamim at a regional Summit in Abu Dhabi on Jan 18. The differences between Bahrain and Qatar are longstanding and straddle their royal families, territorial disputes and regional politics. In recent years, Manama has felt upstaged by Doha, as the latter leveraged its vast reserves of natural gas.)

Sudan:

On Feb 2, Israeli foreign minister Eli Cohen concluded a ground-breaking, but semi-public, visit to Sudan during which he was received by Gen. Abdel Fattah al-Burhan, Head of Sudan’s ruling Sovereign Council. While there was no joint statement issued, Sudan’s foreign ministry said a deal was agreed upon to “move forward towards normalising relations between the two countries”. The Israeli foreign ministry said that although Israel and Sudan had finalised a deal to normalise relations, a signing ceremony was expected only following a transfer of power from the military to a civilian government in Khartoum. Notably, Burhan’s deputy, General Mohamed Hamdan Dagalo, publicly said he had no knowledge of the visit and did not meet the delegation – which hinted at dissension among the ruling clique on this issue.

Russian foreign minister Sergey Lavrov visited Sudan on Feb 8-9 seeking to bolster the bilateral economic ties, especially in infrastructure. The visit was part of an African tour seeking to expand Russian influence at a time when Western nations have sought to isolate Moscow with sanctions over the war in Ukraine. (Comment: In past, Sudan has flirted with the Soviet Union/Russia as a Pavlovian reaction to outflank Western ostracisation. Such moves have included a reported offer of a naval base to Russia and deployment of the Wagner Group on its soil in return for gold mining rights. This pro-Russia tilt has the support of some elements of Sudan’s Islamist lobby. This tendency is, however, countered by the mainstream politico-military establishment’s closeness to the pro-Western Arab countries such as Egypt and the GCC states.)

Tunisia:

On Feb 21, President Kais Saied ordered the expulsion of undocumented migrants from Tunisia, saying immigration was a plot aimed at changing his country’s demographic composition. In a statement issued on Feb 24, the African Union Commission expressed “deep shock and concern at the form and substance” of the remarks. It added “The Commission Chairperson strongly condemns the shocking statement issued by Tunisian authorities targeting fellow Africans which go against the letter and the spirit of our Organisation and founding principles.” Next day Tunisia’s foreign ministry expressed surprise at the AU statement and rejected what it called “baseless accusations.” President Saied said he was not racist and that migrants living in Tunisia legally had nothing to fear. According to official figures Tunisia, which has a population of some 12 million, is home to more than 21,000 citizens from sub-Saharan African countries. However, a larger number of illegal immigrants, mostly from Sub-Saharan Africa also reside in the country, either moonshining or awaiting crossing over to Europe. (Comment: Some observers believe that President Saied’s diatribe was meant to divert attention from his growing unpopularity.)

UGTT, the powerful umbrella organisation of Tunisian trade unions, took to the streets of eight cities on Feb 18 to protest against President Saied’s policies, accusing him of trying to stifle basic freedoms including union rights.

Iraq:

On Feb 7, Iraq officially devalued its currency, the Iraqi Dinar to a parity of 1300 to a US Dollar. (Comment: Iraqi currency’s value plummeted following the US Federal Reserve’s introduction of tighter controls on international dollar transactions by commercial Iraqi banks in November to prevent alleged greenback smuggling to Iran. The Iraqi dinar, earlier selling at 1,470 dinars against the dollar, has recently fallen to 1,690 dinars per dollar. The US pressure has also forced Baghdad to raid the perpetrators estimated to be responsible for siphoning off around $100 mn a month to Tehran.)

High-level consultations continued during the month between the Irbil-based Kurdish Regional Government (KRG) and the federal government of Iraq about bringing the former’s oil governance and revenues under Baghdad’s nominal control as per January 2023 ruling by the country’s federal supreme court. The court also ruled that the Baghdad government’s transfer of money to the KRG to pay salaries in 2021 and 2022 violated Iraq’s budget law. KRG has rejected the court ruling as “political”, creating a stalemate. By the end of the month, the parliament announced a classic move to buy more time on this issue by appointing a committee to study the revision of the constitution. (Comment: The dispute has far-reaching consequences: Firstly, it lies at the heart of Iraq’s federal constitutional arrangement providing autonomy to the KRG. Secondly, oil export revenues via Turkey are the economic lifeline of the KRG which it is reluctant to yield to Baghdad, which has been tardy in sharing its part of the federal revenues. Thirdly, Iraqi PM Mohammed al-Sudani’s political survival depends on the support of the Kurdish Democratic Party (KDP) ruling the KRG. If KDP, which holds 31 seats in National Assembly, withdrew its support, the al-Sudani government is likely to lose the majority in the parliament and fall. Last but not the least, KRG is also geopolitically important regionally as a symbol of Kurds’ national aspirations and as the bulwark against ISIS.)

Morocco:

Spanish Prime Minister Pedro Sanchez visited Rabat on Feb 2 for a summit with King Mohammed VI of Morocco. The two countries signed about 20 agreements to boost trade and investment, including credit lines of up to 800 mn euros. A joint declaration issued after the visit made no mention of Spain’s enclaves in Morocco, although it reiterated Spain’s new position unequivocally acknowledging the historical sovereignty of Morocco over its territory in Western Sahara through the autonomy plan on Western Sahara. (Comment: In March 2022, Spain abandoned its longstanding neutrality over Western Sahara, its former colony, to take a pro-Morocco position. While this angered Algeria and Polisario Front, the territory’s independence movement, it was a corresponding diplomatic victory for Morocco. Spain apparently followed the earlier US decision as a part of the Abraham Accords and its larger and growing economic stakes in Morocco. While Spanish exports to Algeria were only around 1 bn euros in Jan-Nov 2022, it exported 10.8 bn euros worth of goods to Morocco, its third largest market abroad.  Spain is also attracted by Morocco’s 45 bn euros investment plans for infrastructure development by 2050.)

Egypt:

Egyptian Foreign Minister Sameh Shoukry travelled to Syria and Turkey on Feb 27 in the first such visit in a decade. He described the visit to the two earthquakes devastated countries as ‘primarily humanitarian.’ In Damascus, he was received by President Bashar al-Assad and his counterpart. In Turkey, he visited Adana to meet foreign minister Mevlut Cavusoglu. Egypt has rendered humanitarian assistance to the two countries. (Comment: Egypt has been trying to mend her ties with both Syria and Turkey, which have been strained for over a decade for different reasons and the earthquake relief provided a convenient ruse to step up the detente.  Ties with Damascus were broken in 2011 after Syria was suspended from the Arab League owing to the brutal repression of the Arab Spring. Ties with Ankara deteriorated sharply after a military coup in Egypt in 2013 against the Muslim Brotherhood government, many of whose members were given asylum in Turkey.)  

Yemen:

In a sign of easing of the decade-old conflict in Yemen, a container ship carrying general commercial goods docked at al-Houthi controlled main port of Hodeidah on Feb 26 for the first time since at least 2016.

Libya:

On Jan 12, CIA Director William Burns visited Tripoli to meet Libya’s PM Abdulhamid al-Dbeibah. He later visited Benghazi to meet Gen Khalifa Haftar. The visit followed the transfer of Abu Agila Mohammad Mas’ud Kheir Al-Marimi, a Lockerbie bombing suspect to the United States by the Tripoli-based Government of National Unity.

Kuwait:

On Feb 14, the US State Department approved a sale worth $250 mn of planning and support services to Kuwait’s military medical command.

Oman:

On Feb 23, the Vatican and Oman decided to commence full diplomatic ties. With that move, the Vatican now has diplomatic ties with all GCC countries except Saudi Arabia. (Comment: While Oman has negligible Christians among its nationals, a large number of expatriates – including Indians and Filipinos – in the country are Roman Catholics.)

Bahrain:

On Feb 8, the High Court in London ruled that Bahrain cannot claim state immunity to block a lawsuit brought in the UK by two dissidents who allege the Bahraini government hacked their laptops with “FinSpy” spyware in 2011 and sought damages for the psychiatric harm.

II) Economic Developments

Oil & Gas Related Developments:

The global oil market remained largely stable with Brent oil price registering $82.43/barrel on Feb 27, having declined 3.7% during the month. The oil was under downward pressure due to several factors such as strong Russian supplies, the Federal Reserve’s continued fiscal tightening as stagflation lingered in the west and uncertainty about Asian oil demand recovery.  However, receding trends notwithstanding, major producers continued to exude optimism about the foreseeable demand. Thus, in an interview published by Energy Aspects on Feb 16, Saudi Energy Minister Prince Abdulaziz bin Salman said the current OPEC+ deal, agreed upon last October to cut oil production targets by 2 mbpd, would be locked in until the end of the year. In its monthly bulletin released on Feb 14, OPEC predicted that the Global oil demand would rise this year by 2.32 mbpd. The projection is 100,000 bpd higher than last month’s forecast – its first upward revision in months. OPEC expects Chinese demand to grow by 590,000 bpd in 2023. Some observers saw rising demand, curbed OPEC+ production and lower upstream investments leading to a tighter and more volatile market. This was reflected in a growing number of oil observers seeing a possible return to $100 a barrel during 2023, even as Goldman Sachs lowered its Brent 2023 price forecast to $92 a barrel from $98 and its 2024 price forecast to $100 from $105. The energy sector was rich pickings for eye-popping contradictions: An IEA report on Feb 16 put the governments’ global energy subsidies at $1 tr in 2022. This did not prevent the west’s five oil supermajors from collectively reporting a record $150 bn in profits during 2022; The latter also announced their major upstream investment decisions in several new geologies such as Mozambique, Tanzania, Guyana, etc. (Further Reading: “Where on Earth is big oil spending its $150bn profit bonanza? The Economist 11/2.)

The spinoffs of the Russia-Ukraine conflict continued to perturb the global hydrocarbon ecosystem during the month, even as Russian exports were put at 7.32m b/d of crude+fuels in February by Kpler. On Feb 8, noted American investigative reporter Seymour Hersh published his report alleging the US complicity in blowing up in the Baltic Sea of the Nordstream pipeline laid to transport Russian gas to Germany in June 2022. (Further Reading: “How America Took Out The Nord Stream Pipeline” by Seymour Hersh Feb 8.) While the US declined the responsibility, Russia threatened Washington with the consequences. An EU ban on seaborne imports of Russian refined fuels commenced on Feb 5. Additionally, G7 and the EU countries agreed to price caps for petroleum products that trade at a premium to crude oil, such as diesel and those that sell at a discount, such as fuel oil and some types of naphtha. Meanwhile, the oil trading giant Trafigura claimed that a “shadow fleet” of 600 tankers was currently transporting Russian oil around the world. Thus, about 400 crude oil vessels, or a fifth of the global fleet, had “switched” from mainstream trades to “ostensibly do Russian business” which, despite western sanctions and oil price caps was roaring. The remaining 200 ships of this fleet were oil product tankers. According to the Financial Times, at least 16 ships hitherto engaged in shadow fleet smuggling Iranian oil had since switched to the Russian oil trade. (Further Reading: Iran’s ‘ghost fleet’ switches into Russian oil Financial Times, 7/2.)

Unlike the relatively stagnant crude sector, natural gas continued to see some long-ranging developments to take advantage of the dramatic softening prices from its peak reached in 2022. A Reuters exclusive report on Feb 13 said that China National Petroleum Corp (CNPC) was close to finalising a deal to buy LNG from QatarEnergy (QE) over nearly 30 years from the latter’s massive North Field expansion project. The deal would be modelled on SINOPEC’s deal with QE signed in Nov 2022 for 27 years, the longest-ever such deal for the commodity. Although China’s total LNG imports shrank nearly 20% in 2022 as more Russian gas was piped in, Beijing’s imports of Qatari LNG surged 75% last year from 2021 to 15.7 MT, making up a quarter of the nation’s total imports. (Comment: As Beijing’s ties with the US and Australia, Qatar’s two biggest LNG export rivals, are strained, Chinese national energy firms increasingly see QE as safer. China is the world’s largest importer of natural gas and Qatar its largest exporter.) Reuters also reported on Feb 9 that Germany and Oman were in advanced talks to sign a long-term LNG deal lasting at least 10 years as Berlin continues its search for alternatives to Russian fuel supplies. There was no financial closure during the month of TotalEnergie’s $27 bn mega deal with Iraq involving four oil, gas and renewables projects. Qatar was expected to acquire a 20-25% stake in the project. On Feb 13, Israel became a crude exporter for the first time as Energean Group’s first crude oil consignment from Karish offshore field in the eastern Mediterranean was loaded on a ship. This became possible only after US-mediated indirect sea-border demarcation with put in place with Lebanon last year. Production from Karish from about 41,000 barrels of oil equivalent a day to 150,000 boe/d by the end of the year and 200,000 boe/d in 2024. On Feb 21, operators of Leviathan, a much bigger Israeli deep offshore gas field, approved $100 mn plans to ramp up production during the next three years. It currently produces 12 bcm of gas per year for sale to Israel, Egypt and Jordan. (Further ReadingIsrael’s first crude oil exports to start from Energean project, The Financial Times, Feb 13.)

Following economy-related developments took place in WANA countries:

  • Turkey is to establish a fund for post-earthquake reconstruction. This facility would sit outside the regular budget and allow the government to act without having to abide by fiscal rules. Turkey’s annual inflation declined slightly to 55.18% in Feb from 57.68% in the previous month. However, soaring inflation has resulted in Turks buying more gold as a hedge against runaway inflation. Thus, Switzerland sent 58.3 tons of gold worth $3.6 bn to Turkey in January 2023, a likely monthly record. In comparison, Swiss gold exports were 11 tons in 2021 and 188 tons in 2022. The number of foreign visitor arrivals jumped 56.6% y/y in Jan 2023 to 2 mn, boosted by the devaluation in the Lira.
  • In the first week of the month, Saudi Arabia’s statistics agency released flash estimates of GDP growth in Q4/22, during which the non-oil activities sector grew 6.2%, outperforming broader economic growth of 5.4% in the quarter. This was likely to confirm the Kingdom’s position as the fastest-growing economy among the G-20. Addressing an international technology forum in Riyadh on Feb 6, the Saudi Minister of ICT said that tech giants were to invest more than $9 bn in the kingdom. Microsoft will invest $2.1 bn in a global super-scaler cloud, while Oracle has committed $1.5 bn to build a new cloud region in Riyadh. China’s Huawei will also invest $400 mn in cloud infrastructure for its services in Saudi Arabia and another cloud region in partnership with oil giant Aramco. No time frames for the investments were mentioned. On Feb 21 Saudi Arabia deposited $1 bn in Yemen’s Aden-based central bank to help the Riyadh-backed government cope with a weak currency and high fuel and commodity prices.
  • Bloomberg reported on Feb 9 that UAE’s First Abu Dhabi Bank (FAB) is exploring an all-cash bid for Standard Chartered in the range of $30 bn to $35 bn. FAB, which is worth about twice as much as the StanChart, would have the acquisition funded by its backers, which include Abu Dhabi SWF Mubadala Investment Co. and the emirate’s ruling Al Nahyan family. On Feb 27, Abu Dhabi’s International Petroleum Investment Co (IPIC) and its unit Aabar Investments agreed to pay $1.8 bn to settle a legal dispute over the scandal at Malaysian state fund 1MDB. During a telephone conversation with UAE President Sheikh Mohamed bin Zayed Al Nahyan on Feb 13, Nigerian President Mohammadu Buhari requested a resumption of Emirates flights to Nigeria and the lifting of a “blanket” visa ban imposed on Nigerians by the UAE. President Buhari assured the UAE leader that the issue of the Emirates funds was receiving appropriate attention alongside those of other foreign airlines operating in Nigeria. (Comment: Chronic shortage of foreign exchange has forced the Nigerian central bank to restrict foreign airlines from repatriating their ticket proceeds out of the country. This led to Emirates suspending its flights to Nigeria twice last year.)
  • Israeli currency Shekel has slid nearly 10% during the month since hitting a high of 3.34 on Jan 25, on talk of local firms pulling bank accounts from Israel and foreign investors staying away due to the government’s proposed judicial changes. Meanwhile, the country’s annual inflation reached 5.4% in January, its highest level since 2008. On Feb 20, the Bank of Israel on Monday raised its benchmark interest rate by another half a percentage point to 4.25%, also the highest since 2008.
  • On Feb 22, Iraq‘s central bank unveiled plans to allow trade from China to be settled directly in yuan for the first time, in an attempt to overcome the short supply of the dollars.
  • On Feb 9, President Abdel Fattah el-Sisi announced that Egypt was prepared to offer all the companies run by the military-affiliated National Service Project Organisation to investors.
  • On Feb 1, most GCC central banks, except Qatar raised their key interest rates after the Federal Reserve increased its target interest rate by a quarter of a percentage point.
  • Lebanon devalued its currency by 90% from 1507.5 to a US dollar to 15000, even as the black-market rate remained at around 60,000 to a greenback.
  • On Feb 1 Airbus and Qatar Airways settled their 18-month-old dispute over the safety of grounded A350 jets, averting a potentially damaging UK court trial following a blistering $2 bn feud.
  • Further Reading: (a) “Arab petrostates must prepare their citizens for a post-oil future” The Economist, 09/2; (b) After decades of empty talk, reforms in Gulf states are real—but risky” The Economist, 09/2.

III) Bilateral Developments

  • In separate messages to the two heads of state on Feb 6, Prime Minister Shri Narendra Modi deeply condoled the loss of lives and damage to property in Turkey and Syria due to a massive earthquake. A large-scale relief effort titled ‘Operation Dost’ involving prompt despatch of the relief material as well as deployment of a 99-member team of disaster relief experts from the Indian army and NDRF to the two affected countries was launched. Two IAF  C-17 aircraft with 6 tons of emergency relief material & medical teams reached Syria & Turkey within 24 hours of the disaster. On Feb 20, the PM interacted with members of the two Indian earthquake relief teams on their return from the two countries.
  • India Energy Week (IEW), a flagship event of the world’s third-largest energy consumer, was held in Bengaluru on Feb 6-8. It evoked participation from over 650 exhibitors and over 30 ministerial speakers. The following highlights emerged from the IEW: (a) Shri H.S. Puri, minister for petroleum and natural gas, said that India has diversified its sources of oil imports to 39 countries from 27 two years ago. He, however, said that the country, the world’s third-biggest oil importer and consumer, will continue to buy most of its oil from the Middle East for a long time. (b) the CEO of Petronet LNG, India’s top gas importer, said that it would seek up to 1 million tonnes per annum (mtpa) in additional liquefied natural gas (LNG) supplies when it renews its 8.5 mtpa long-term deal with Qatar, before end of the year. India’s LNG imports fell for the second straight year in 2022, mainly due to higher domestic production of natural gas from RIL’s KG basin and lower demand due to higher LNG prices as utilities switched to coal-fired power production. (c) ONGC Videsh Ltd (OVL) currently has a stake in 32 oil & gas projects in 15 countries, spanning upstream and mid-stream projects. OVL’s crude and gas output was 12.5 MT in 2021-22. It is expected to decline this year due to lower production in Russia’s Sakhalin 1 project, in which ONGC has a 20% stake. OVL does not face any issues in raising funds and has a debt of $3-4 bn compared to a net worth of more than $6 bn.
  • The Indian official data released on Feb 17 disclosed that Russian oil imports climbed to a record 1.4 million barrels per day (bpd) in January 2023, up 9.2% from the previous month, with Moscow still the top monthly oil seller to New Delhi accounting for about 27% of the 5 mbpd of crude imported by India. Russia was followed by Iraq, Saudi Arabia, the UAE and Canada. During April-January, the first ten months of this fiscal year, however, Iraq continued to be the largest oil supplier to India, while Russia became the second-biggest supplier, replacing Saudi Arabia which is now in third place. Rising purchases of Russian oil have reduced the share of supplies of India’s crude imports from OPEC to the lowest in more than a decade. However, on Feb 8 Reuters cited official data to state that India’s fuel demand slipped in January by 4.6% over the previous month due to lower mobility in the cold weather in parts of the country and a slowdown in industrial activity. Bloomberg quoted commodity-data firm Kpler on Feb 28 as Russia will keep selling as much oil as it can to India despite the rebound in Chinese demand. It put India’s crude imports from Russia

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