IA) Political Developments: Covid-19 Pandemic
Regional Impact of Covid-19: Covid Comes Back
For several reasons, most WANA countries saw a resurgence in covid-19 cases and deaths during April 2021. New and more virulent mutants of the virus gripped the population already fatigued by year-long pandemic vigil. The ignorance of social-distancing norms during Nowruz festivities (straddling March-April), as well as the Holy month of Ramadan (which began in the second week of April), took its toll. There were mixed news on the vaccinations: Some countries, such as Israel, some GCC states and Morocco were able to curb the pandemic through mass vaccinations; however, in most of the remaining regional countries, the vaccination drive could not be sustained, resulting in more misery. As the table below shows, when compared to the previous month, the region saw a doubling of the rates of fresh infections (44.1% from 20.8%) and fatalities (16.0% from 9.6%) in April 2021.
Covid Related developments in Individual WANA Countries:
- Israel vaccinated 5 mn of its 9 mn citizens by April 22. Coincidentally, on that day the country had no deaths due to Covid-19, the first such day after 10 months.
- Fire at a large Covid hospital in Baghdad on April 25 killed 82 and injured 110 – mostly patients.
- After long denying the possibility, Turkey announced a national lockdown from April 29 to May 17.
- On April 10, Iran ordered a 10-day lockdown in 23 of the country’s 31 provinces to contain the fourth wave of the pandemic.
- On April 5, Saudi Arabia announced that it would permit only fully vaccinated persons to perform Umrah and Hajj pilgrimages.
- In a report on April 6, Amnesty International pointed out that prisoners, refugees, migrants and minorities in WANA countries suffered disproportionately during the pandemic
IB) Political Developments
Ambience of Ramadan
Muslim holy month of Ramadan commenced around April 13. Although the pace of social life abated somewhat during the month of fasting and piety, the political leaderships in most Islamic countries of the WANA region tried to connect with their people as well as across the borders with a message of Islamic solidarity and empathy. To exude “politico-religious correctness”, some leaders sought to break ice with their estranged neighbours – as some details below show. However, at this point, it is difficult to assess if some of these initiatives were merely tactics or hold promise of path-breaking regional amity.
Iran:
The Iranian nuclear file saw plenty of motion along two axes, viz. US rejoining the JCPOA and the nuclear enrichment, even as neither had any significant movement. On progressive lifting of the US “maximum pressure” economic sanctions in tandem with full Iranian compliance with the JCPOA terms, indirect talks facilitated by the “shuttle diplomacy” by existing 5-members commenced on April 6 but got no-where in a hurry. On April 30, US National Security Advisor Jake Sullivan conceded that the JCPOA talks were in an “unclear space.”
On the technological front, the Iranian government flaunted several achievements during the month, including quantitative and qualitative improvement in the centrifuges – simultaneously stressing the peaceful nature of their nuclear programme. Alternately, some of these “gains” were also highlighted by the Western media through regular leaks citing the IAEA sources monitoring the Iranian nuclear programme. On April 11, Iran alleged that an act of “nuclear terrorism” had caused extensive damage to the underground enrichment facility at Natanz and threatened retaliation against the unidentified perpetrator. While the US denied any involvement, Israel spoke with forked tongue: officially non-committal, but media claimed it to be a Mossad operation. In defiance of the disruption, Iran announced that it would raise the level of Uranium enrichment to 60% – a move President Biden described as “unhelpful.”
Comment:
A large part of this sparse outcome from the Shuttle Diplomacy at Vienna was due to internal disarray in Iranian polity with lame-duck moderates (who negotiated JCPOA) under attack from the resurgent radicals who smell blood at the approaching presidential election. Moreover, the Iranian penchant for Mutazayedat (overbidding) was also on full display: on April 3 – even before the talks commenced – Iran publicly rejected the step-by-step lifting of the sanctions.
South Korean Prime Minister Chung Sye-kyun paid a three-day visit to Tehran on April 10-12, focussed on the future of the bilateral economic relations stymied by blocked $7 bn of badly-needed Iranian oil proceeds by South Korean banks due to the US sanctions. Two days before, Iran released South Korean oil tanker Hankuk Chemi detained by Iran since January 21 for alleged “environment pollution”.
Russian Foreign Minister Sergey Lavrov visited Tehran on April 13 and was received by President Rouhani. Mr Lavrov stated that there were no limitations on bilateral economic and defence cooperation.
Pakistani Foreign Minister Shah Mohammed Qureshi visited Tehran on April 21 during which he was received by President Rouhani who stressed better management of the common border and coordination on the Afghan Peace Process. During the visit, the third border crossing at Mard Pishin was inaugurated. He also met Mohammed Javad Zarif, his Iranian counterpart.
The unacknowledged maritime contestation with Israel continued unabated during the month. On April 6, “Iran Saviz”, an Iranian ship anchored off the Yemeni Red Sea coast for many years, was attacked. The ship alleged served as a mooring base for Iranian support to al-Houthis. A week later Israeli ship “Hyperion Ray” was attacked off the UAE coast.
On April 17, Iran accused the Gulf Cooperation Council to derail the Vienna nuclear talks by seeking the inclusion of its demands.
Tehran’s hyper-politicised elite was hugely disrupted by the leak of a three-hour-long audio recording made two months ago of an interview by foreign minister Mohammed Javad Zarif on April 27 lamenting the influence the powerful IRGC and its al-Quds Force had on the country’s foreign policy. While the revelations were largely known or suspected, they nevertheless shocked the political circles who did not expect Zarif, known for public moderation, political correctness and circumlocution to be so scathing in his criticism of IRGC hierarchy and some of his foreign counterparts. (Further Reading: “Iran’s Zarif criticises Revolutionary Guards’ influence in leaked tape” by Kasra Naji, BBC Persian Service, April 28 2021; http://go.pardot.com/e/827843/ews-world-middle-east-56889412/nwqdl/225450019?h=sJj5DuuztrAYHb0_QRbn60ln5IdJJZSSNL26ycn0u6k)
Turkey:
Turkey’s plans to host a 20-country, 10-day Afghan Peace Summit in Ankara from April 24 had to be postponed till after Ramadan (why was it planned during the Holy month anyway?) largely due to the Taliban’s reluctance. Instead, the foreign ministers of Turkey, Pakistan and Afghanistan (who attended virtually) met in Istanbul on April 23 to reaffirm their commitment to achieve a negotiated settlement for lasting peace in Afghanistan and urge Taliban participation. In this connection, President Recep Tayyip Erdogan has a conference call with Pakistani PM Imran Khan on April 16.
On April 24 President Biden declared, for the first time, that the United States considered mass killings of Armenians in 1915 during the First World War the Ottoman Empire as genocide. While this declaration fulfilled an electoral pledge, it touched a deeply emotive space in Turkey that has vehemently denied any culpability for this “non-event” over a century ago. President Erdogan asked the US to “look at the mirror” and reverse the “wrong step.” The declaration was widely seen as a setback for Turkey and caused the fall of the Istanbul stock market and the Lira.
EU/EC-Turkey summit was held in Ankara on April 6.
Comment:
The holding of the Summit itself marked a positive turn in Turkey’s relations with Europe which have passed through a rather turbulent phase for over a year as Ankara pursued an aggressive Islamic-nationalist policy, antagonising Greece, Cyprus and France, in particular. Still, the event managed to generate more heat than light as the hosts inexplicably ignored to provide an extra chair on the high-table for the European Commission President Ms Ursela von der Leyen – thereby underlining the debate about Turkey’s adherence to the “European values” and the gender-parity.
An Arab Barometer poll during the last week of April disclosed Recep Tayyip Erdogan to be the most popular leader among the Arab masses, thereby providing tangible evidence of his fan following although Turkey is widely detested by the Arabs as an unworthy former colonising power. (Further Reading: “Erdogan as Arab people’s choice reveals weakness of region’s leaders” David Gardner Financial Times, April 28 2021; http://go.pardot.com/e/827843/1d-3f46-4b84-830d-fdfffd30fbcd/nwqdn/225450019?h=sJj5DuuztrAYHb0_QRbn60ln5IdJJZSSNL26ycn0u6k)
Iraq:
On April 1, Prime Minister Mustafa al-Kadhimi visited Riyadh, a visit initially planned for in July 2020, but postponed due to King Salman’s indisposition. In the interregnum, the Arar post along the common land border was reopened in November 2020 after being closed for over 30 years since the 1990 Iraqi invasion of Kuwait. In January 2021 a drone, Saudis suspected to have been launched from Iraq by one of the pro-Iranian militias, caused an explosion in the al-Yamama Palace complex in Riyadh housing Royal establishment. Al-Kadhimi denied that it was launched from Iraq and asserted that Iraq would never allow its soil to be used to attack Saudi Arabia. Iraqi PM had a meeting with Crown Prince Mohammed bin Salman following which five bilateral agreements were signed including one establishing a $3 bn Joint Fund meant to raise Saudi investments in Iraq five-fold from their current level of SR 2 bn. After Riyadh, PM al-Kadhimi was reported to have visited the UAE.
Comment:
Although Riyadh Summit seemed like an easy-to-miss event, it was anything but. Both its context and likely agenda were significant. This appears to be first substantial bilateral summit after nearly 30 years of being estranged neighbours. Saudi Arabia and Iraq, OPEC’s top two oil producers, have often competed for the growing Asian markets. The Summit was also important against the backdrop of the Biden administration’s unfolding regional policies including the likely withdrawal of troops from Iraq, reduced engagement with Saudi Arabia and the proposed rejoining of the JCPOA and phasing out of economic sanctions. While PM al-Kadhimi, former Iraqi intelligence chief, has kept his cards close to his chest, he is known to be wary of the extra-territorial Iranian influence over his country. Saudis too have concerns about the “Shia Crescent” encompassing Iran, Iraq, Syria and Lebanon and may have wished to strengthen al-Kadhimi. They both also have concerns about Turkey’s assertive profile in the Islamic world. Thus, the two sides had plenty to discuss and engage.
The Financial Times (18/4/2021) disclosed that Saudi and Iranian officials had met on April 9 in Iraq to ease their bilateral tension, particularly concerning Yemen and Lebanon. The event was facilitated by the Iraqi government. Some unconfirmed reports indicated the Saudi delegation being led by their intelligence chief. Subsequently, Iraqi President Barham Salih disclosed that the two sides have met “more than once in Iraq” without providing details.
On April 7, Iraq and the US held their first strategic dialogue (conducted virtually) since Biden Presidency. The joint statement issued afterwards took note of substantive improvements in Iraqi armed forces capabilities and agreed to hold further talks at a technical level to decide about the mechanism and timing of the withdrawal of some 2500 US troops and a similar number of the coalition forces. Meanwhile, sporadic rocket and drone attacks on the US military bases in Iraq continued.
Jordan:
In a surprise move on April 3, Jordan’s military publicly warned Prince Hamza bin Hussein, half brother of King Abdullah to avoid any action which could harm the “security and stability” of the country. The warning to Prince was a part of the wider security investigation into an anti-government plot with possible foreign links under which nearly 16 important Jordanians were arrested. In response, Prince Hamza released a video recording in English through the BBC to claim his innocence and allege that he has been detained and kept incommunicado at his house. He also denounced the ruling system as corrupt. After some pyrotechnical exchanges and a flurry of media reports, Prince Hamza issued a letter confirming fealty to King Abdullah who in a TV address on April 7 described the painful episode to be over and the situation to be “stable and serene.” The two appeared together on April 11 at a function marking the centenary of Hashemite rule over Jordan. The episode prompted widespread acknowledgement of Jordan’s geo-strategic importance and expressions of support for King Abdullah. In particular, the Foreign Minister of Saudi Arabia – which some unconfirmed media reports had alleged being involved – visited Amman on April 6 to reaffirm solidarity.
Comment:
The simmering tensions between King Abdullah and Prince Hamza have a long history. Shortly before he died in 1999, King Hussein had removed his brother Prince Hassan as Crown Prince and appointed Prince Abdullah. On taking over, King Abdullah appointed his half brother Hamza as the Crown Prince as per the wishes of their deceased father. However, he was removed from this position in 2004 and five years later King Abdullah appointed his son Hussein as the Crown Prince in 2009. These changes estranged Prince Hamza who sought to foster his following among the many Jordanians alienated by difficult economic conditions (due to the cascade-effect of low oil prices), the influx of refugees from Syria and Iraq and the Covid-19 pandemic. Thus, while King Abdullah might have scored a tactical victory, the incident – particularly when seen through the prism of recent parliamentary elections – showed Royalty’s vulnerability to both inner dissensions as well as a rerun of the “Arab Spring.”
Israel:
On April 6, President Reuven Rivlin formally asked outgoing Prime Minister Benyamin Netanyahu to form a new government following the Knesset elections last month.
The long-awaited trial of PM Netanyahu, charged with 3 cases of bribery, fraud and corruption, began on April 5.
An ultra-orthodox Jewish congregation of Lag B’Omer at Mount Meron on April 24 turned into a stampede, crushing 45 people to death.
On April 8, PM Netanyahu declared that International Criminal Court (ICC), which recently opened an enquiry against Israel and Palestinian combatants for War Crimes since 2014, is to be told that Israel did not recognise its authority.
Clashes broke out on April 24 at Damascus Gate precinct of East Jerusalem between Palestinians protesting at Israeli barricades, far-right Jewish groups and Israeli police. These barricades, ostensibly to control the Ramadan crowd, were eventually removed.
Israel and Greece signed a $1.65 bn multi-year defence deal on April 18 to establish an academy for the Greek air force.
Foreign Ministers of Israel, Greece, Cyprus and the UAE met in Nicosia on April 16.
Libya:
Libyan Prime Minister Abdulhamid Dbeibeh led a delegation to Ankara on April 12-13 for a session of the bilateral High-Level Strategic Cooperation Council which he co-chaired with Turkish President Recep Tayyip Erdogan. The two sides reiterated their commitment to the controversial bilateral maritime agreement. President Erdogan pledged to support Libya towards unity, reconstruction and defence.
The visit to Ankara was preceded by a day by visit of the Greek Foreign Minister to Tripoli who was received by alternate PM Hussein Atiya.
On April 6, Italian Prime Minister Mario Draghi visited Tripoli to meet with the newly installed Government of National Unity. The visit aimed to leverage Italy’s role as the former colonial power and neighbour across the Mediterranean Sea.
The UN Security Council approved on April 16 the deployment of 60 ceasefire Monitors to Libya.
In a sign of lingering frictions between Libyan factions, on April 26 PM Dbeibeh was prevented from holding a cabinet session in Benghazi by gunmen belonging to Gen Haftar’s LNA.
Morocco:
Moroccan Foreign Ministry expressed “regret” on April 25 at Spain having provided Covid-19 medical treatment to Brahim Ghali, the 73-year old leader of Polisario, an Algeria-based movement fighting for the independence of Western Sahara.
Yemen:
Iranian Foreign Minister Javad Zarif met with al-Houthi spokesman Mohammed Abdul Salam in Muscat on April 26. Iranian sources quoted Zarif as having urged him towards a political solution to the Yemeni civil war.
Among the drone and missile attacks on Saudi targets claimed during the month by al-Houthis were on Riyadh (April 1), on Aramco refineries in Jeddah and Jubail as well as on Khamis Mushyat and Jizan (all on April 12).
Syria:
On April 18 Syrian parliament approved the proposal to hold the Presidential election on May 26. President Bashar al-Assad was expected to run for his third 7-year term.
On April 25 the Russian Air Force claimed to have attacked and destroyed an anti-government base in north-eastern Syria killing up to 200 militants.
Palestine Authority:
In a televised speech on April 30, PA President Mahmoud Abbas indefinitely postponed both parliamentary and presidential elections previously scheduled to be held on May 22 and July 31 respectively. He cited uncertainty about Israeli permission for the elections in the East Jerusalem area. The decision to postpone the elections, first in 15 years, was criticised by the Hamas militant group which rules Gaza.
Comment:
President Abbas, 85, apparently shied away from holding the elections in view of multiple risks this exercise could entail. Firstly, his control over al-Fateh organisation which has dominated the PA has come to be questioned by the dissidents, such as Marwan Barghouti and Nasser Al-Qudwa, for various acts of commission and omission including his inability to forestall Israeli annexations. Secondly, Hamas, which has a stronghold over Gaza, has been gaining popularity in West Bank as well. This could well mean the al-Fateh losing the parliamentary majority as well as the Presidential vote two months later. Thirdly, while PA was able to resist Trump’s “deal of the century”, it does not automatically mean the restoration of the two-state solution. With the GCC states getting cosy with Israel and the Arab Rejectionists in disarray, the Palestine cause has increasingly been rudderless. Under the circumstances, both President Abbas and his backers felt that the status quo was preferable to a tryst with unpredictability. (Further Reading: “Binyamin Netanyahu and Mahmoud Abbas try to hold on to power” The Economist, May 1 2021; http://go.pardot.com/e/827843/-abbas-try-to-hold-on-to-power/nwqdq/225450019?h=sJj5DuuztrAYHb0_QRbn60ln5IdJJZSSNL26ycn0u6k)
On April 7, the Biden administration announced $235 mn aid to Palestinians, thus reversing the 2018 Trump ban. The money was to go to UNRWA (150 mn), economic development ($75 mn) and $10 mn for peace-building.
Blue Nile Water Sharing:
The Democratic Republic of Congo, as current chair of the African Union, hosted a meeting of foreign and irrigation ministers of Ethiopia, Egypt and Sudan in Kinshasa on April 3-5 to resolve longstanding differences over Grand Ethiopian Renaissance Dam (GERD) over the Blue Nile. The meeting ended without any agreement and was followed by a bitter blame game between Ethiopia and each of Egypt and Sudan. With the approach of the rainy season (during which Ethiopia recharges GERD), the level of bellicosity rose. On April 7, President Sisi warned of the potential for conflict on this issue. Ethiopian offer for technical data sharing on the GERD water charging was rejected by Egypt and Sudan who both have been demanding a legally binding agreement over the operation of the dam. On other hand, Ethiopia rejected the proposal to hold a tripartite summit on this issue.
Lebanon:
Longstanding Central Bank Governor Riad Salameh was in cross wires for the embezzlement of $300 mn (as alleged by an official Swiss prosecutor) as well as general mismanagement of national monetary policy. In a national address on April 7, President Michel Aoun blamed Central Bank Governor for the collapse of the national financial sector as well as stalling the audit of the bank’s accounts – a precondition for the resumption of much needed foreign aid to revive the economy. President also criticised politicians for providing political cover for the Governor. On April 30, the Lebanese State Prosecutor opened a probe into the misconduct of the Governor and his brother.
Saudi Arabia:
Saudi leadership sought to mend their relations with their long-estranged neighbours. Thus, on April 26, Foreign Minister Prince Faisal bin Farhan Al-Saud visited Qatar to deliver King Salman’s letter of invitation to Emir Sheikh Tamim bin Hamad Al-Thani. In a TV interview on April 28, Crown Prince Mohammed bin Salman said that despite Tehran’s “negative behaviour”, Saudi Arabia wanted good relations with Iran adding, “We want Iran to prosper and grow.” The Crown Prince also said, “There is no doubt the Houthis have strong ties with the Iranian regime, but they are Yemenis with Arab instincts,” urging the group to accept a ceasefire deal. Two+ days later Iranian Foreign Ministry welcomed “this change in Saudi tone.”
Comment:
Although Ramadan spirit of Islamic solidarity and camaraderie provided some impetus, Saudi friendly gestures towards Qatar, Iran and al-Houthis appeared to be part of a broader drive to cut their geopolitical losses and focus on geo-economics instead. It is also a tacit acknowledgement of their policies of containing the three antagonists have not produced desired results. Moreover, these initiatives can be seen as mirroring the unfolding Biden foreign policy on these three issues. However, these Saudi isolated gestures, by themselves, do not undo the bilateral Karmas dating back years. It would, nevertheless, create an air of anticipation among Saudi watchers.
The United Arab Emirates:
On April 13 Biden administration informed the Congress of its intention to proceed with a $23 bn weapons sale signed on Jan 19 by the outgoing Trump Presidency. The deal involved 50 F-35 jets, 18 MQ-9B UAVs and their missiles and accessories. This move prompted several Congressmen to reassert legislative oversight function over this large and controversial state-of-art weapon systems sale to a foreign government.
Comment:
Trump administration’s last-minute approval of this deal – the final example of his transactional diplomacy – was sharply criticised, not the least by incoming Biden-ites, for several reasons from a major decision from a lame-duck presidency to eroding Israel’s qualitative military edge to the unpredictability of the UAE’s military engagements and ambitions. However, within three months quiet but effective lobbying by the UAE as well as the American weapon exporters’ lobby managed to push the deal through the new dispensation. Plus ça change, plus c’est la eme chose.
On April 20, the UAE extended the term of a $2 bn interest-free loan to Pakistan made in January 2019 from Abu Dhabi Fund – a gesture significantly mitigating the recipient’s precarious finances. This was perhaps the most tangible positive outcome of the three day UAE visit of Pakistani Foreign Minister Shah Mahmood Qureshi, who failed to convince his hosts to lift the visa ban on Pakistani nationals imposed in November 2020.
Comment:
The gesture hinted at the gradual improvement in the Pakistan-UAE relations, perhaps as a quid pro quo to Pakistan’s willingness to toe the UAE line on issues ranging from Islamabad’s relations with Delhi (a UAE facilitated Ceasefire), Kabul and Tehran as well as the Bustard hunting trips to Sind by UAE’s notables.
On April 11, the UAE selected Nora al-Matrooshi, a 27-year old mechanical engineer, as the Arab world’s first female astronaut trainee. She is to join NASA Astronaut Candidate Class. She would be the fourth member of the Emirati Space Programme, one of whom travelled to the International Space Station in 2019.
On April 21 Dubai Multi Commodity Centre (DMCC) announced that it is going to deploy blockchain technology to track all precious metals trade on its floor. Comment:
This move was perhaps intended to deflect repeated criticism and threat of blacklisting of the UAE by the FATF for suspicious forex dealings.
Sudan:
Sudan continues to take measures to normalise its ties with the West during the month. On April 1, it paid $355 mn to the US victims and their families of various al-Qaeda attacks including the twin embassy attacks in Kenya and Tanzania. This was done as a part of the deal to be delisted from the US list of State Sponsors of Terrorism. On April 6, the Sudanese cabinet repealed the domestic law passed in 1958 to boycott the Israeli products.
132 people were killed in tribal clashes in West Darfur state beginning April 5. The UN peacekeepers have withdrawn from this area a few months ago.
Following tense relations with Ethiopia, Sudan asked the UN for withdrawal of Ethiopian peacekeepers from the south of the country.
Somalia:
The simmering political tensions about the attempts by President Mohammed Abdullahi Mohammed to extend his rule, which ended in February 2021, by two years burst into fighting in capital Mogadishu on April 25 between his backers and the National Salvation Council supporters opposed to it. Eventually, a ceasefire was organised and on April 30 the lower house of the federal parliament nullified the special law extending President Mohammed’s term and to return to the 17 September Electoral Agreement allowing for indirect presidential and parliamentary elections. Prime Minister Mohamed Hussein Roble is mandated to evolve an electoral schedule.
II) Economic Developments
Oil Related Global Developments:
- On April 30, a barrel of Brent crude stood at $67.25, having gained 8% during the month. A Reuters poll on that day expected the price to average $64.17 during 2021 while the price since the beginning of the year averaged $62.30.
- On April 1, the 23 oil ministers of the OPEC+ group agreed to increase collective production by slightly over 2 mbpd from their current level over the quarter in roughly equal monthly tranches. This collective increase would include a reversal of 1 mbpd of voluntary production cut undertaken by Saudi Arabia last month. Thus, by July 2021, OPEC+ would have made up for three fourth of 9.7 mbpd cuts affected last year to balance the demand loss due to the Covid-19 pandemic. According to observers, by then the glut of extra oil produced in 2020 would have also vanished due to a dramatic spurt in demand as pandemic curbs receded in most major consumer countries. On April 28, an OPEC+ policy meeting reaffirmed the earlier decision despite a sharp decline of crude demand in India, the world’s third-largest producer, due to the record number of Covid-19 cases.
- OPEC secretariat’s monthly report released on April 13 expected accelerated global recovery in 2021 to increase the global oil demand by 5.95 mbpd or by 6.6%.
- Saudi Arabia agreed to sell 49% of its oil pipeline assets for $12.4 bn to a consortium led by the Washington-based EIG Global Energy LLC. The figure was twice the FDI inflow to Saudi Arabia and 1% of the national GDP. Thus Saudi Arabia joined the UAE, Qatar and Oman in monetising non-core oil assets. Further, in a TV interview on April 27, Crown Prince Mohammed bin Salman hinted at Saudi Arabia being in talks with a leading global energy company (thought to be one or more Chinese groups) to sell 1% of Saudi Aramco – a deal worth nearly $19 bn at current valuation. (Further Reading: “Why are Middle East states selling off oil assets?” Bloomberg, April 28 2021; http://go.pardot.com/e/827843/-states-selling-off-oil-assets/nwqds/225450019?h=sJj5DuuztrAYHb0_QRbn60ln5IdJJZSSNL26ycn0u6k)
- On April 26, Libya’s National Oil Company lifted a week-long force majeure on oil loading from the eastern port of Hariga after settling a financing dispute with the new Government of National Unity (GNU). This restored Libyan oil production to 1.3 mbpd, its highest level in eight years. While Libya is an OPEC member, it is exempt from the organisation’s production quota.
Following economy-related developments took place in individual WANA countries:
- On April 11 IMF warned of rising debt in countries of the Middle East and Central Asia as the collective fiscal deficits in 2020 rose to 10.8% of the GDP from 3% in 2019.
- During the month, outlines of an ambitious economic strategy for Saudi Arabia emerged aimed at spurring domestic investment. The Shareek (Partner) plan for the next decade, spearheaded by Crown Prince Mohammed bin Salman centred around large mostly state-owned companies, such as Saudi Aramco, SABIC, PIF, etc channelling their dividends into domestic investments to hand holder smaller Saudi companies. This was expected to provide $7 tr in investments during the next decade into domestic projects and give a fillip to the drive to diversify the economy away from oil. However, some sceptics pointed out that the proposed strategy could endanger the current Saudi government’s fiscal dependence on the dividends from these Public Sector units. (Further Reading: “Saudi Crown Prince’s latest economic plan comes with big risks” Bloomberg, April 18 2021:
- http://go.pardot.com/e/827843/omic-plan-comes-with-big-risks/nwqdv/225450019?h=sJj5DuuztrAYHb0_QRbn60ln5IdJJZSSNL26ycn0u6k)
- Turkey’s attempt to square the monetary circle continue as on April 7 President Erdogan reiterated his commitment to have both bank rate and inflation in single digits from 19% and 16.2% at present and the Lira has fallen 12% since sacking of the last Central Bank Governor in November 2020. However, the first meeting of the Central Bank Monetary Committee under the new Governor on April 15 left the bank rate unchanged. The government’s ban on all crypto-currencies, accompanied by shutting down of the crypto-exchanges and arrests of the operators, disrupted the $1.7 bn daily trade in crypto-currencies in Turkey, the world’s third-largest.
- The IMF estimated this month that Iran’s accessible foreign reserves fell from $123bn in 2018 to just $4bn last year. (Comment: Although Iran’s gross reserves are much higher, most of that sum is unusable because of sanctions. The number, if correct, indicates the precarious nature of Iranian finances and a dire need for relief from the US economic sanctions)
- On April 15, Qatar unveiled a draft law allowing, for the first time, foreign investors to fully own listed companies. If adopted, the law could boost fund inflows by $1.5 bn annually.
- On April 18, Syria devalued its currency the Pound, by 50% from 1256 to a dollar to 2512. A new Governor for the Central Bank was appointed on April 20.
III) Bilateral Developments
- On April 13, Prime Minister Shri Narendra Modi congratulated King Abdullah II and the people of the Hashemite Kingdom of Jordan on the 100th anniversary of the founding of the state of Jordan. PM also published his remarks on that occasion.
- On April 14, Reuters reported that the UAE government had facilitated secret talks between high-level intelligence officials of India and Pakistan in January 2021 in Dubai to break the bilateral impasse and gradually normalise ties. The report attributed ceasefire between their forces, toning down the propaganda exchanges to the understanding reached at these talks. It also hinted that the two sides had agreed to hold elections on their respective sides of Jammu and Kashmir during this year. This and other reports on past contacts led to speculation about possible meeting among the two foreign ministers both of whom visited the UAE during the third week of April. This was denied by both sides.
- India’s state-linked oil importers reported bought one third less crude from Saudi Arabia during the month for May 21 delivery than normal. Meanwhile, India’s fuel demand rose to its highest in March 21 since Dec 2019, but declined by 7% y/y in April 2021.
- According to a Financial Times report, the 2019 deal between Saudi Aramco and Reliance Industries Ltd to acquire 20% of latter’s O2C business for around $15 bn, had been revived, albeit would now likely to involve a “share : cash stakes” arrangement instead of a pure cash transfer envisaged earlier. The report was however contradicted by a subsequent Bloomberg article with an evocative title: “Sorry, Saudi Aramco, Reliance Industries just isn’t that into you” by David Fickling, April 29 2021; http://go.pardot.com/e/827843/-for-a-1-stake-in-saudi-aramco/nwqdx/225450019?h=sJj5DuuztrAYHb0_QRbn60ln5IdJJZSSNL26ycn0u6k
- On April 5 India imposed anti-dumping duty for 5 years on flexible slabstock polyol, used as the input for foam mattresses, imported from Saudi Arabia and the UAE.
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(The views expressed are personal)
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