IA) Political Developments: Pan-Regional and Global Issues
Gaza Conflict
Israel-Hamas hostilities in Gaza ebbed during the month as the Israel Defence Force (IDF) established its dominance of the theatre. Israeli Defence Minister Yoav Gallant declared on Sep 10 that the IDF was close to completing its mission in Gaza and was shifting its focus on the northern frontier against Hezbollah. Despite the withdrawal of some IDF units from Gaza, however, there was hardly any let-up in clashes and deaths. This was partly because Hamas and other Palestinian militants sought to regroup to take advantage of reduced IDF numbers and greater mobility among displaced Gazans. The violence also escalated as Israeli forces made greater use of armour and firepower to maintain their pressure. Attacks by drones and aircraft were also more frequent even as the global media attention shifted to the dramatic developments against Hezbollah. (Comment: Israeli officials’ “mission accomplished” statements were largely self-serving as they have not fully achieved any of their three goals: the decimation ofHamas, the release of all the hostages and ensuring that Gaza would never be used against Israel to launch an Oct 7 type attack.)
Israeli Prime Minister Benjamin Netanyahu asserted on Sep 2 that Israel must control the Philadelphi and Netzarim corridor along Gaza’s border with Egypt to prevent Hamas from receiving clandestine supplies of weapons, etc. (Comment: The Israeli insistence on controlling Philadelphi and Netzarin corridor cutting across Gaza midway were two of the deal breakers that scuttled the prospects of the ceasefire and exchange of hostages.)
On Sep 12, the United Nations Conference on Trade and Development (UNCTAD) published a report on the Palestinian economy after Oct 7. Accordingly, it assessed that since Oct 7 Gaza’s economy shrank to less than a sixth of its size, while unemployment in the occupied West Bank nearly tripled from 12.9% to 32% due to the loss of more than 300,000 jobs. The Palestinian economic misery has been accentuated by the declining international aid. Further, UNCTAD estimated that Israel has either deducted or withheld Palestine Authority’s revenue worth over $1.4 b since 2019.
A poll, conducted in early September by the Palestinian Center for Policy and Survey Research (PSR), found that 54% of people surveyed in the Gaza Strip and West Bank said the decision to launch the offensive on Oct 7 was correct. The figures for Gaza (39% approved while 57% disapproved) were in stark contrast to 64% approval in the West Bank. It marked the first time since Oct. 7 that a PSR poll found a majority of Gazan respondents judging the decision as incorrect. The poll also showed a drop in the number of respondents in Gaza who said they support Hamas to 35% from 38% in a previous poll taken in June. However, Hamas remained more popular than Fatah in both in Gaza and the West Bank.
The Wall Street Journal reported on Sep 19 that US officials now believe that a ceasefire deal between Israel and the Palestinian Islamist group Hamas in Gaza is unlikely before President Joe Biden leaves office in January. (Further Reading: U.S.Officials Concede Gaza Cease-Fire Out of Reach for Biden, WSJ, Sep 19.)
A Polio vaccination drive organised by the United Nations began in Gaza on Sep 1 as the beliigents agree to stop fighting for limited period in specific areas. It was able to reach 90%of the eligible children by Sep 16.
For developments in theWest Bank: Please see Palestine Authority and West Bank.
For details on the flare-up between Iran and Israel: Please see Iran.
For details on the Israel-Hezbollah tensions: Please see Lebanon.
For the Houthi missile attacks on Israel and the Red Sea area: Please see Yemen.
WANA andMultilateral Diplomacy:
On Sep 18, the United Nations General Assembly (UNGA) passed a non-binding resolution No. ES-10/24 by a 124-12 majority with 43 abstentions (India abstained) demanding that Israel end its unlawful presence in Occupied Palestinian Territories within 12 months. The resolution was based on its previous reference to the International Court of Justice to which the latter gave an advisory opinion in July that Israel’s occupation of Palestinian territories and settlements is illegal and should be withdrawn. (Comment: The resolution is the first to be formally put forward by the Palestinian Authority since it gained additional rights and privileges in September including a seat among UN members in the assembly hall and the right to propose draft resolutions.)
On Sep 11, the UN Secretary-General called the lack of accountability for the killing of the UN staff “unacceptable.” On Sept 23 heads of U.N. agencies including UNICEF and the World Food Programme along with other aid groups issued a joint statement demanding “an end to the appalling human suffering and humanitarian catastrophe” in the Gaza Strip.They pointed out that the Gaza conflict has led to the death of over 300 aid providers, two-thirds of them from the UN.
On Sep 12, the World Health Organisation evacuated 97 Palestinian patients from Gaza to the UAE for treatment.
Qatari Red Crescent donated $4.5 mn to UNRWA for the upkeep of 440 Gazans stranded in Occupied West Bank.
In a BBC interview on Sep 5, Karim Khan, Chief Prosecutor of the International Criminal Court said he was being consistent in seeking arrests of Israeli and Hamas leaders as the justice must be seen to be done. On Sep 20, Israel formally submitted a challenge to his request for the issuance of a warrant against three Israeli personalities in this case.
On Sep 9, Indonesia and the Gulf Cooperation Council began negotiations in Jakarta for signing a Free Trade Agreement. British Trade Secretary and Minister of Trade Policy visited Riyadh to discuss a new trade deal with their GCC counterparts. Britain estimates a free trade deal with the GCC could boost the UK economy by $2.10 bn over the long run.
TheWilmington Declaration issued on Sep 22 after the Quad Summit expressed deep concern about the humanitarian crisis in Gaza.
In their joint statement on Sep 14, G7 Foreign Ministers condemned the Iranian export of ballistic missiles to Russia.
WANA and the United States:
For bilateral developments concerning the United States and each of the UAE and Iraq, please see the respective country headings.
There was some flux in the US military deployments in the region. On Sep 11, the aircraft carrier USS Roosevelt was withdrawn from the region and was sent back to its US base. However, as the Israel-Hezbollah war exacerbated in the second half of the month, the US sent additional military units to the region.
On Sep 11, the US announced a $1.3 bn military assistance programme to Egypt despite the human rights concerns, which in past have resulted in partial cutbacks.
Qatar was admitted to the US visa-free entry programme on Sep 24. Separately, ex-President Donald Trump met with Qatari Emir and the Prime Minister On Sep 22.
On Sep 28, the US indicted 3 Iranians for plotting to assassinate ex-President Donald Trump. Earlier on Sep 3, the US charged Hamas Chief Yahya Sinwar and five other Hamas leaders for killing 40 American nationals in the Oct 7 attacks. On Sep 6, Mohammed Shahzeb Khan, a Pakistani resident in Canada, was arrested in the US for planning a terror attack in New York City on Oct 7 anniversary on behalf of ISIS.
On Sep 23, the US Deputy Secretary of Treasury urged the Israeli Central Bank Governor to extend the arrangement with Palestinian banks for at least one year to avoid a financial crisis as nearly $10 bn worth of foreign trade transactions were at risk.
WANA and China:
Chinese Premier Li Qiang visited Saudi Arabia and was received by Crown Prince Mohammed bin Salman on Sep 11. He also met the Secretary General of the Gulf Cooperation Council. He later visited the UAE.
WANA and Russia:
Russian Foreign Minister Sergei Lavrov visited Saudi Arabia and was received by Crown Prince Mohammed bin Salman on Sep 9. They discussed bilateral cooperation and OPEC+ issues.
Sergei Shoigu, Secretary General of the Russian National Security Council visited Iran and was received by President Pezeshikan on Sep 17. The two sides expressed their keenness to upgrade their ties and were known to be giving the final touches to a new basic inter-state treaty to be signed by the two Presidents. The visit took place among some reports in the Western media that Russia was supplying nuclear technology in return for the supply of Iranian ballistic missiles a possibility that was mentioned during the US-UK Summit on Sep 15. Both Russia and Iran denied this allegation. (Further Reading: “Nuclear secrets for ballistic missiles? UK, US express growing concerns over rumoured Iran-Russia nuclear agreement”, ET Online, Sep 15.)
On Sep 28, the Russian foreign ministry issued a strongly worded statement condemning Israel for killing Hezbollah leader Sayyed Hassan Nasrallah calling it “yet another political assassination.”
In a deal mediated by the UAE, Russia and Ukraine exchanged 103 prisoners of war each on Sep 14.
WANA and Pakistan:
Media reports during the month indicated that Saudi Arabia has asked Pakistan to stop its beggars from coming to the Gulf country under the pretext of religious pilgrimage. Accordingly, the Saudi Ministry of Hajj has issued a warning to Pakistan’s Ministry of Religious Affairs expressing concern over the growing number of Pakistani beggars arriving in the country under Umrah visas. Saudi Arabia has warned that if necessary action is not taken by Islamabad, it can hamper religious and people-to-people ties between the two countries. Earlier Pakistani Senate Standing Committee on Overseas Pakistanis was informed by the government that around 90% of the beggars arrested abroad were Pakistani nationals.
IB) Political Developments
Israel:
Although Israel continued to be militarily engaged in Gaza in September, during the second half of the month it launched “Operation Northern Arrows” a no-holds-barred blitzkrieg against Hezbollah militia across its northern border. For Operational Details, please see the text under Lebanon. (Comment: After a bloody and messy war with Hamas in Gaza waged over the past year, Israeli military and strategic establishment appeared much better prepared against Hezbollah, a far more formidable adversary. By seizing the element of surprise, keeping up the unrelenting momentum and leveraging its edge in technology and intelligence gathering, Israel turned the table on Hezbollah and swiftly created a strategic asymmetry against the Shia militia. Israeli deep state also sought to redeem in Lebanon its reputation sullied by the October 7 intelligence fiasco and initial sloppy military response. Although the Israeli coup de grâce against Hezbollah created a new war paradigm by being tactically brilliant and flawlessly executed, its long-term success was still a wager against two factors: First, sustainability of the new campaign while Gaza business was still far from over and nearly 100 hostages remained in Hamas captivity; Second, apparent lack of an exit strategy, particularly if the initial successes against Hezbollah raised the spectre of a wider confrontation with Iran, leading to a regional conflict with global consequences.)
On Sep 17, Israeli Prime Minister Benjamin Netanyahu added a fourth goal to Israeli war strategy: The safe return of all Israeli citizens to their houses near the Lebanese border. (Comment: The first three war-related goals were enunciated after the Oct 7 incident and called for the decimation of Hamas, the Return of Hostages and ensuring that Gaza would never be used to launch an Oct 7-type attack on Israel. None of these three sweeping goals have yet been met and it remained to be seen if the fourth one would be attained.)
In a defiant and combative speech at the UN General Assembly on Sep 27, Prime Minister Netanyahu sought to justify Israeli military campaigns in Gaza Lebanon and elsewhere, roundly blaming Iran for vitiating the regional geopolitics and said “Enough is Enough.” He asserted that Israel was winning the war. His speech was boycotted by a large number of national delegates. (Further Reading: “Full text of Netanyahu’s UN speech: ‘Enough is enough,’ he says of Hezbollah, also warns Iran”, By Times of Israel Staff Sep 27.)
Initial dramatic successes against Hezbollah boosted PM Netanyahu’s popularity. An opinion poll released on Sep 30 showed that 43% of Israelis supported him; however, the poll still showed his Likud party still short of a Knesset majority. An earlier poll taken on Sep 18 found that 52% favoured a broad-scale war in Lebanon, 30% opposed it and 18% were undecided.
Israeli media reports continue to mention serious differences between PM Netanyahu and Defence Minister Yoav Gallant with the possibility of the latter being fired. On Sep 17, prominent Israeli business leaders called for Gallant to be retained. However, on Sep 29 PM Netanyahu inducted Gideon Saar as Minister without portfolio. The move was intended to increase the strength of the ruling coalition to 68 out of 120 seat Knesset, helping cut down dependence on support from ultra-religious parties as well as downsize Gallant.
On Sep 21, the Jerusalem Post revealed the discovery of an Iranian plot to assassinate PM Netanyahu and other Israeli leaders through an Israeli businessman living in Turkey.
On Sep 26, Israel secured an $8.7 bn aid package from the US to support its ongoing military efforts and to maintain a qualitative military edge in the region. It comprised $3.5 bn of the regular annual assistance and $5.2 bn additional funding for air defences.
Israeli Finance Minister unveiled plans for the 2025 budget on Sep 3 with steep spending cuts to fund the war. The war-related expenses were put at $ 66 bn till the end of 2025. Of this amount, $25.9 bn has already been defrayed till August 2024. The annual fiscal deficit had reached 8.3% of the GDP and the annual economic growth was cut to 1.1% for 2024 and 4.4% for 2025. On Sep 9 a supplementary budget for the current year was passed by Knesset mainly to provision $906 mn for internally displaced persons.
Massive protests rocked Israeli streets on Sep 1 following the discovery of the bodies of six Israeli hostages in Rafah killed by Hamas hours before the IDF assault on their hideout. For the first time, the country’s largest trade union also joined them to demand a ceasefire in Gaza to have all hostages released.
Palestine Authority and West Bank:
Palestine Authority (PA) President Mahmoud Abbas delivered his speech to the UNGA session on Sep 26. He called for a comprehensive and permanent ceasefire in Gaza, an end to attacks by Israeli settlers in the West Bank and East Jerusalem, the delivery of humanitarian aid throughout Gaza and a full withdrawal of the Israeli military from the enclave. “We refuse the establishment of buffer zones or taking any part from Gaza,” he said. “We will not allow a single centimetre of Gaza to be taken.” He said that the PA should have control over all Palestinian territories and that it would hold elections once the war is over.
On Sep 22, the Israeli military authority closed down the Al-Jazeera bureau in West Bank for 45 days alleging that it was being used “to incite terror, to support terrorist activities.” The Qatar-based TV channel’s office in Israel was shut down months ago.
Despite ongoing operations in Gaza, Israeli forces continued their frequent raids in the Occupied West Bank (OWB) during the month to snuff out the centres of Palestinian militancy, particularly those belonging to Hamas and Palestinian Islamic Jihad. One of the longest and most persistent of such actions in two decades involved hundreds of Israeli troops and was centred on the northern West Bank cities of Jenin, Tulkarem and Tubas and lasted 9 days till Sep 6. 14 militants and 7 civilians were killed and 30 arrested during the campaign. Elsewhere, three Israeli policemen were killed in a West Bank shooting on Sep 1. On Sep 8, a lone Jordanian gunman shot dead 3 Israelis at King Hussein Bridge over the Jordan River between Jordan and the West Bank. On Sep 19, an Israeli raid killed 6 Palestinians in Qabatiya city in the West Bank.
Lebanon:
Israeli military and intelligence services waged a ten-day long (Sep 17-27) intense multi-pronged campaign that devastated Hezbollah militia, lending serious blows to its leadership, communication system, organisational structure as well as hardware. Hezbollah, which had pushed IDF out of southern Lebanon in 2000 and stalled its military campaign in 2006 for over a month, was long regarded as the most potent non-state actor arrayed against Israel across its northern border. For nearly a year since Oct 7, it has waged a projectile war against IDF in support of Hamas in Gaza that has forced over 60,000 Israelis out of their homes in northern Israel. However, on Sep 17, its debacles began with nearly 3000 pagers exploding simultaneously killing 12 and injuring over 2000 of its middle-level cadres. The next day a large number of walkie-talkie sets and radio communication devices exploded killing 20 Hezbollah personnel and injuring nearly 450 of them. These two incidents created panic and chaos because Hezbollah had banned mobile phones which were suspected of being hacked by Israeli intelligence and relied on pagers, etc. as safer options. However, Israeli agents seem to have infiltrated the supply chains of these electronic equipment and rigged them with explosives which were triggered by remote signals. A wave of targeted assassinations by air, missile and drone attacks followed which culminated in the killing of Hezbollah Secretary General Sayyed Hassan Nasrallah in an underground bunker in the Dahiya suburb of southern Beirut on Sep 27 in massive air attacks using more than sixteen 2000 pounder bunker buster bombs. Nasrallah, 62, died along with several commanders and an Iranian general who were in a conference in the Hezbollah war room. His death was preceded by the assassinations of several Hezbollah senior commanders including Hashim Aquil, acting commander of the Radhwan special unit designed to infiltrate into Israel for an Oct 7 type of invasion (killed on Sep 20), Ahmed Wahebi, commander of military operations Radhwan Special unit (Sep 21), Ibrahim Qubaisi, commander of missile and rocket forces (Sep 24) and Mohammed Ali Ismail, missile unit chief who died with Hezbollah Secretary-General on Sep 27. By the end of the month, some reports indicated that only one of the members of the Hezbollah Military Council, its top decision-making body, had survived Israeli onslaught. Also killed were the Hamas leader in Lebanon and three members of the Popular Front for Liberation of Palestine located in Beirut. The assassination drive was accompanied by intense air and missile attacks on Hezbollah’s hardware assets throughout the month. While Hezbollah responded by launching artillery barrages, missiles and drones the numbers and frequencies were lower than expected. By Sep 30, the Lebanese Health Ministry counted the hostilities as having caused 1640 deaths during the month, the majority of them Hezbollah fighters. 50 Israelis, including soldiers and civilians, were also killed. (Comment: Israel seemed to have long prepared for this 10-day blitzkrieg to decapitate Hezbollah. It had internalised the lessons learnt during its past sub-optimal campaigns and honed effective and elaborate military and intelligence strategies. Perhaps its sharp single-minded focus on infiltrating Hezbollah’s structure was at the expense of Hamas allowing the latter to spring the Oct 7 surprise. Human intelligence wise, Israel might have exploited political and sectarian factions in Lebanon opposed to Hezbollah, its moles in Iran and Syria, where Hezbollah has long anchored President Bashar al-Assad militarily. Its cutting-edge capabilities in telecom and cyber surveillance would have given it an edge. Relevant to point out that while it claimed responsibility for various assassinations, Israeli sources kept silent about their involvement in pager and walkie-talkie explosions. Israel also disregarded the huge collateral damage caused to innocent lives and infrastructure. Further Reading: “How Israeli spies penetrated Hizbollah”, FT, 29/9/24.)
On Sep 30, in his first speech after Nasrallah’s assassination, Deputy Hezbollah leader Naim Qassem sought to shore up the morale of militia fighters by promising that Hezbollah would choose a new leader at the ‘earliest opportunity.’ He also asserted that Hezbollah would continue to resist Israeli aggression. On the other hand, Israeli PM Netanyahu asserted in a TV address, “These are momentous days”, calling the assassination “a turning point” in the war. “One year later, blow after blow … their hopes have dashed. Israel has momentum; we are winning,” he added. Israeli defence ministry promised that the next phase in the against Hezbollah was to begin “soon.”
On Sep 30, caretaker Prime Minister Najib Mikati said that the Lebanese government was ready to fully implement a UN Security Council resolution 1701 that had aimed to end Hezbollah’s armed presence south of the Litani River as part of an agreement to stop war with Israel. He also committed that immediately upon the implementation of the ceasefire, Lebanon would be ready to send the Lebanese army to the area south of the Litani River and to carry out its full duties. He added that Lebanon’s parliament would then convene to elect a consensus president.
On Sep 25, the US and France issued a joint appeal for a 21-day ceasefire on the Israel-Hezbollah conflict. Israel turned it down the next day.
The Muslim world’s response to Hezbollah’s debacles in general and the killing of Nasrallah in particular were along predictable lines. It threatened to upend the fragile political stability within Lebanon as Hezbollah’s rivals sought to reposition themselves. Iran and Syria strongly commiserated death of Nasrallah who had steered Hezbollah for 32 years into a potent force. Within the Arab world, the opinions were split along the Shia-Sunni divide, even as some saw it through the anti-Israel and anti-West prism.
Iran:
There was plenty of diplomatic flux around Iran during the month under review as President Masoud Pezeshkian’s administration sought to project a moderate profile nuanced away from his hardline predecessor. Thus, in his first press conference on Sep 16, President Pezeshikan said that direct talks with the United States were possible if it abandons hostility with Iran. In a speech at the UN General Assembly session on Sep 24, he said “We are ready to engage with participants of the 2015 nuclear deal. If the deal’s commitments are implemented fully and in good faith, dialogue on other issues can follow.” He, nevertheless, condemned Israel for waging a genocide against the Gazans. Separately, he said that Iran was prepared to de-escalate with Israel as long as it sees the same level of commitment on the other side. Iranian foreign minister too echoed the President’s views. (Comment: During September Iranian establishment remained on the horns of an acute dilemma concerning if and how to retaliate against Israel for its perceived crimes against the Islamic Republic without precipitating an all-out regional war. A major concern was that while Iran had significant offensive capabilities in terms of missiles, drones, etc., it lacked resources to defend itself from state of art Israeli arsenal. Moreover, its vital strategic assets such as nuclear and oil facilities were highly vulnerable to Israeli air and missile attacks.)
A controversy broke out on Sep 6 as the US expressed alarm at reports of Iran transferring hundreds Fath 360 ballistic missiles with a range of 121 km to Russia presumably for use against Ukraine. On Sep 10 E3 countries (France, Germany and the UK) issued a joint statement condemning Iranian action. They announced new sanctions including cancellation of their air services agreements with Iran and banned Iran Air from their skies. Iranian foreign minister denied the missile transfer blaming the reports on “faulty intelligence.” Russian spokesman parried the issue saying that Iran was an important partner. On its part, the Ukrainian foreign ministry summoned the Iranian Cd’A to protest the missile transfer to Russia. Kyiv also pointed out that Russia has so far launched 8060 Iranian drones at Ukrainian targets in its ongoing war.
On Sep 26, Iran denied the US allegations of its involvement in targeting former President Donald Trump or other former US officials.
Following the Israeli assassination of Hezbollah Secretary General, Iranian Supreme Leader Ali Khamenei was taken to a “safe place” on Sep 28.
On Sep 14, the Islamic Revolutionary Guard Corps launched a 60 kg satellite Chamran-1. It was launched using a Qaem-100 rocket. It was the second satellite launched by Iran this year.
On Sep 22, IRGC announced the arrest of 12 persons for collaborating with Israel. It did not provide any other details.
Yemen:
On Sep 15, the Ansar Allah (aka al-Houthis) militia claimed to have launched, for the first time, a hypersonic missile at Israel over 2000 kms away. Israel claimed that the missile had been intercepted and its fragments fell near Tel Aviv, the first time a Houthi missile was able to do that since July 2024. While there were no direct casualties, 9 persons were lightly hurt. Prime Minister Netanyahu said that Israel would make the Houthis pay a “heavy price” for this act. Indeed, on Sep 29, Israeli planes bombed Houthi port and power facilities in Hodeidah and Ras Issa. Four persons were killed and 29 wounded in the attack. Relevant to note that in his first press conference in Tehran on Sep 16, President Pezeshikan denied that Iran had provided Hypersonic missile technology to the Houthis. However, a UN report by an independent panel of experts released on Sep 26 stated that Iran and Hezbollah had enabled al-Houthi militia to make rapid advances in military technology.
Separately, on Sep 8, al-Houthis claimed to have shot down a USAF MQ9 drone, the eighth time they have done so.
Al-Houthis kept up their campaign to disrupt the international maritime traffic near the Baab al-Mandeb choke point. On Sep 2, they attacked two crude carriers flying Saudi and Panamanian flags respectively. These vessels suffered superficial damage and were able to continue their onward journeys. Maersk Lines reported that Houthis’ attacks had resulted in a 66% decline in traffic through the Suez Canal. Reuters reported on Sep 19 that the cost of insuring a ship through the Red Sea more than doubled since the start of September and some underwriters are pausing cover due to high risks. Salvaging operations to tow away Sounion oil tanker with 1 mn barrels of crude hit last month by Houthis resumed on Sep 14 and the ship and its cargo was towed away to safety by Sep 16.
Turkey:
On Sep 4, Egyptian President Abdel Fattah el-Sisi visited Turkey for the first time in 12 years since he overthrew the Egyptian government run by the Muslim Brotherhood, regarded as close to Turkey. He met President Recep Tayyip Erdogan and the two discussed ways to normalise the bilateral relations as well as the conflict in Gaza. The two sides signed 18 memoranda of understanding on cooperation in energy, defence, tourism, health, agriculture, finance, culture, education, and transport. As a follow-up of the bilateral reconciliation, on Sep 10 Turkey was invited, for the first time in 13 years, to attend the Arab League foreign ministers’ meeting held in Cairo. (Comment: Although reconciliation between Egypt and Turkey is ongoing, their respective orientations remain divergent on many issues such as ties with the US and the West, Israel, Libya, Iran and Russia. Moreover, their two struggling economies also compete for favours from the oil-rich Gulf states where Egypt has a headstart.)
On Sep 2, Turkey formally applied to join the BRICS group, the first NATO member to do so.
On Sep 6, Turkey’s spy agency chief visited Libya to meet with Prime Minister Abdulhamid al-Dbeibah in Tripoli. The visit took place against the backdrop of growing financial and oil-related disputes between the rival Libyan administrations.
Media reports prominently indicated that New York City Mayor Eric Adams was arrested on Sep 26 for charges of receiving illegal campaign contributions since 2014 from several Turkish sources, some of them tied to the Ankara government.
On Sep 3, Turkey requested China to partner in the exploration of the rare earth elements needed for electric vehicle batteries.
Turkish forces continue to act against Iraq-based Kurdish rebels: an airstrike on Sep 2 was said to have destroyed 20 targets in northern Iraq and three Kurdish fighters were killed by a drone strike on Sep 4. On Sep 14, Turkey announced the arrest of an operative of the Islamic State in Khorasan Province for the bombing of the Santa Maria Italian Church in Istanbul on Jan. 28, 2024.
Sudan:
Intensified fighting between the Sudan Armed Force and the Rapid Support Force (RSF) militia Rapid was reported in several parts of the country during the last week of September. North Darfur capital el-Fasher was under assault by the RSF, but the city continued to be held by the SAF. On the other side, on Sep 26 SAF launched a concerted military campaign to reoccupy the capital Khartoum leading to intense fighting. In this context, the UAE accused SAF of shelling the residence of her ambassador in Khartoum; it was denied by the SAF.
The humanitarian situation in Sudan continued to be dire. In a joint statement on Sep 3, three aid agencies warned, “Sudan is experiencing a starvation crisis of historic proportions. And yet, the silence is deafening. People are dying of hunger, every day, and yet the focus remains on semantic debates and legal definitions.” On Sep 21 the UNSG expressed grave alarm about the humanitarian crisis in the besieged city of el-Fasher. While the UN has said that more than 14,000 people have been killed and 33,000 injured as the war triggered the world’s largest displacement crisis, these numbers are widely regarded as understating the reality.
Syria:
On Sep 23, President Bashar Al-Assad sworn in the new Cabinet led by Prime Minister Mohammed Ghazi al-Jelali. It had new appointments as minister for foreign affairs, finance and electricity. The new cabinet follows parliamentary elections held in July 2024.
Unclaimed Israeli air attacks aimed at disrupting the flow of Iranian military hardware and personnel to Syria and Lebanon continued during September. According to the UK-based Syrian Observatory for Human Rights, in 2024, at least 60 such attacks have killed more than 208 persons including 46 Syrian military men, 43 Hezbollah fighters and 24 IRGC personnel. Among the most spectacular of such attacks was a helicopter-borne assault on Sep 9 by Israeli commandoes on an underground Iran-backed missile production facility located at Masyaf in Syria north of the Lebanese border. (Further Reading: “Israeli Commandos Carried Out Raid on Secret Weapons Site in Syria”, NYT Sept. 12.)
The US CentCom claimed to have killed 37 Hurras al-Deen fighters in central Syria in a campaign during Sep 16-24.
Iraq:
On Sep 11, Iranian President Masoud Pezeshkian paid an official visit to Iraq, his first foray abroad since taking over nearly two months ago. He held talks with Iraqi PM al-Sudani. The two sides signed 14 memoranda of understanding during the visit which also included Kurdistan Regional Government capital Irbil. (Comment: The visit was significant in both bilateral and regional contexts. While Iraq has gained internal stability under al-Sudani, he is politically dependent on Iran-allied Shia political parties and their powerful militias which would need to be co-opted in the next general election in 2025. While the Iraqi economy has gained strength from higher oil revenues, it still depends on Iran for natural gas and various consumer products. In general, politically and economically isolated Iran needs Iraq more than vice versa. Regionally, the Iraqi government has apprehensions that in case of a wider conflict breaking out, its territory may become the battleground between Iran and her local proxies, on one side, and Israel and the US, on the other. As it is motley Iraqi militias have been launching projectiles at Israel and the US bases in Iraq and Syria in support of the Axis of Resistance.)
On Sep 27, Iraq and the United States jointly announced having reached an agreement to wind down the presence of the US-led military coalition in Iraq against ISIS in two phases. The first phase – expected to end in September 2025 – will include “ending the presence of coalition forces in certain locations in Iraq as mutually determined.” The second phase would see the US continue to operate in Iraq in some capacity “at least through” 2026 to support ongoing anti-ISIS coalition efforts in Syria. (Comment: This obfuscatory arrangement did not provide any clarity about the final withdrawal of the US forces in Iraq. While the US is keen to have its presence for monitoring and checking Iranian influence in Iraq and Syria, it realises that its troops are exposed to hostile militias. Similarly, Iraq – with a weak defence force, might not be averse to the US presence as a counterpoise to bullying by Iran and its local proxies. For domestic optics, the Iraqi government however needs to be seen as calling for the withdrawal of the Western forces from its soil.)
On Sep 20, Iraq placed a $2.8 bn order for a missile system with a South Korean company.
21 persons were executed on Sep 25 for terrorism in Iraq.
Iraq held its first census in 27 years on Sep 1.
Saudi Arabia:
In a speech on Sep 18 at the Shoura Council on behalf of King Salman, Crown Prince Mohammed bin Salman stated “The kingdom will not stop its tireless work towards the establishment of an independent Palestinian state with East Jerusalem as its capital, and we affirm that the kingdom will not establish diplomatic relations with Israel without that.” He also strongly condemned the “crimes of the Israeli occupation” against the Palestinian people. (Comment: This policy statement by MbS was quite categorical and seemed designed to put to rest any speculation about early reconciliation between Riyadh and Tel Aviv. It was also meant to show that the Kingdom was with the proverbial “Arab-Islamic Street” on Gaza mayhem.)
The United Arab Emirates:
On Sep 23, Sheikh Mohammed bin Zayed Al-Nahyan became the first President of the United Arab Emirates (UAE) to be formally invited to the White House. MbZ separately met Vice President Kamala Harris. The reports indicated that despite the regional geopolitical turmoil, the Summit talks were focused on strengthening the bilateral cooperation in the emerging artificial intelligence sector where the UAE has big ambitions and has set aside a corpus of $100 bn under G42 – an SPV created for this purpose. The US also designated the UAE as the second major defence partner after India. (Comment: The US private AI stakeholders are gung ho about partnering with the UAE which has both mega-capital and surplus energy resources needed by this sector; The US authorities are wary of growing Chinese presence in this sector of the UAE and have insisted upon the UAE avoid being used as a conduit by the Chinese companies to siphon off the US advanced technology. After weighing the odds, the UAE decided to either de-emphasise its AI-related ties with Chinese companies or sanitise them to meet the US terms. This has led to major tie-ups between the US AI giants and the UAE companies; for instance, Microsoft has entered into two AI JVs with G42 worth $1.5 bn. Others including Nividia are also in the fray. Interestingly, one of the UAE thrust areas includes the development of Hindi language chatbot applications similar to OpenAI’s ChatGPT.)
In the same vein, WSJ reported on Sep 22 that Chip giants such as TSMC and Samsung were in discussions with the UAE authorities to build chip-making mega-factories worth over $100 bn.
On Sep 14, a senior UAE official denied the Reuters report that in case of a Trump win in November US presidential elections, his country would revive the negotiations to acquire F35 stealth fighters from the US. (Comment: During the last week of the Trump Presidency, the White House approved the sale of state of art F35 jets to the UAE. The deal was cancelled by the UAE when the Biden administration sought to impose strict conditions on military cooperation with China. The UAE’s denial avoids Abu Dhabi appearing to be a pro-Republican partisan in the forthcoming US elections.)
The UAE Foreign Minister stated on Sep 14 that his country would not support any post-war plan for Gaza without the creation of a Palestinian state. (Comment: Since the beginning of Israel’s war on Gaza, the UAE – the initiator of the Abraham Accords four years ago – has been trying to balance her substantive ties with Israel with the need to align with the Arab-Islamic solidarity on the Palestinian Cause – even as it has little love lost for the Hamas militia. The foreign minister’s statement appears aimed at moving the position closer to that held by Saudi Arabia and other Arab-Islamic stakeholders.)
On Sep 2, the UAE began a two-month-long amnesty for illegally staying foreigners on its soil: they were given the option to either get regularised or to quit the country without penalties.
Egypt-Ethiopia-Somalia
During the month under review, Egypt’s relations with Ethiopia took a turn for the worse due to two developments. The two countries addressed communications to the UN Security Council over the controversial Greater Ethiopia Renaissance Dam (GERD) on the Blue Nile, each accusing the other of behaviour contrary to international law. Secondly, on Sep 23 Egypt began to supply military hardware to Somalia which has been at odds with Addis Abeba after landlocked Ethiopia signed a deal in January with the self-declared breakaway Republic of Somaliland over access to the sea and possible use of the coastline for a naval base.
Tunisia:
On Sep 26, one of the two candidates approved by the Election Commission for the Presidential election in early October was sentenced to 6 months in prison for submitting “falsified papers.” Media reports also spoke of dozens of arrests of cadres belonging to Ennahdha, the main party opposed to President Kais Saied, who is seeking re-election in a deeply fractured society.
Kuwait:
On Sep 8, the Kuwaiti Emir accepted the resignation of Deputy Prime Minister and Minister of Oil Emad al-Atiqi.
Libya:
On Sep 26, the two rival administrations in Libya agreed on the name of the new Central Bank Governor, thus paving the way to the resolution of a month-long multi-pronged economic crisis that has also affected oil production which went down from over 1 mbpd to 450,000 bpd. The UN-mediated the crisis resolution.
Jordan:
Parliamentary elections, held on Sep 10, resulted in the Islamists bouncing back reflecting enhanced popular concern over aggressive Israeli actions in Gaza and West Bank. Islamic Action Front emerged as the largest bloc having gained 31 out of 138 seated House. On Sep 15, King Abdullah II appointed Jafar Hassan, a Palace confidant, as the next Prime Minister. (Comment: Jordan has a quota-based parliament seats with approved political parties, tribes, women, etc. designed to curb the representation of the majority of Palestinian descent population. This, in turn, causes voter apathy and the turnout in the election was only 32.25% of the total 5.1 mn voters.)
Algeria:
The Presidential election, held on Sep 7, was marked by 48% turnout. The incumbent President Abdel Madjid Tebboune won by 94.7% votes with the remaining two candidates collectively getting only 5% of the total votes. (Comment: Despite transitional difficulties including Hirak-spearheaded protests, President Tebboune has gained popularity by spending lavishly on social programmes. He has also been supported by the EU countries which have come to depend increasingly on the Algerian natural gas piped to the European consumers, to cope with disruption in supplies from Russia due to the Ukraine conflict.)
II) Economic Developments
Oil & Gas Related Developments:
Global Issues:
The Brent for November delivery on Sep 30 was at $72.14 having declined 5.5% during the month. It saw considerable turbulence during the month and was trading at below $70 on Sep 10 – a two-year low mainly due to oversupply and falling demand from China, the world’s largest importer. However, a combination of positive factors, such as a 50 bps cut by the US Federal Reserve, postponement of OPEC+ production increase, a force majeureon Libyan output and geo-political tensions between Israel, Lebanon and Iran in the second half of September reversed the trend.
Most observers, nevertheless saw oil prices under pressure in the middle term: JP Morgan Chase not ruling out the oil price falling below $60/barrel in 2025 and the Citi Group projected the oil market to be oversupplied by nearly 1 mbpd next year. Only Goldman Sachs expected the oil to average around $80/barrel in 2025. IEA monthly bulletin on Sep 12 showed that the World oil consumption increased by 800,000 bpd in H1/24, barely a third of the expansion in the same period of 2023. It was the lowest rate since oil demand crashed during the 2020 pandemic. In sharp contrast, OPEC’s annual outlook for 2024, published on Sep 24 raised its forecasts for world oil demand for the medium and long term, citing growth led by India, Africa and the Middle East due to increasing populations, middle class expansion, urbanization and a slower shift to electric vehicles and cleaner fuels. OPEC expects world oil demand to reach 118.9 mbpd by 2045, around 2.9 mbpd higher than expected in last year’s report. The report rolled out its timeline to 2050 and expects demand to hit 120.1 mbpd by then. OPEC Secretary General reiterated that he saw no peak demand for oil. On the other hand, IEA sees a peak being reached before 2030 while BP projects oil use will peak in 2025 and decline to 75 mbpd in 2050. Exxon Mobil expects oil demand to stay above 100 mbpd through 2050, similar to the current level.
On Sep 3, Goldman Sachs issued a report analysing the impact of Artificial Intelligence applications on the hydrocarbon sector during the next decade. While it projected AI to boost power demand by around $2/barrel of oil equivalent, it saw “AI could potentially reduce costs via improved logistics and resource allocation … resulting in a $5/bbl fall in the marginal incentive price, assuming a 25% productivity gain observed for early AI adopters.” It specifically estimated a potential saving of about 30% of the costs of a new shale well by AI. Additionally, an AI-induced 10% to 20% increase in the low recovery factors of the US shale could boost oil reserves by 8% to 20% (10-30 bn barrels).
On Sep 4, OPEC+ decided to delay by two months the planned gradual unwinding of the cut of 2.2 mbpd from October 1 by eight of its members. OPEC+ statement said after the end of November, this cut will be gradually phased out every month starting on Dec. 1 until November 2025, “with the flexibility to pause or reverse the adjustments as necessary.” Within OPEC, however, lower Libyan production compensated for overproduction by some other members. (Comment: The decision to delay the beginning of the rollback of the cuts reflected weak market fundamentals which could have worsened by 180,000 bpd of extra OPEC+ crude flowing into it. At the same time, there were signs that OPEC+leader Saudi Arabia, which had voluntarily curbed its production was beginning to tire of lower oil revenues. Further Reading: “Saudi Arabia ready to abandon $100 crude target to take back market share”, FT, 26/9.)
Country Specific Developments:
On Sept 3 Italian energy engineering group Saipem won two offshore oil and gas EPC contracts in Saudi Arabia worth around $1 bn in total.
Iraqi PM said on Sep 17 that the closure of the Iraq-Turkey oil pipeline may persist due to disagreement between the Iraqi government and the Kurdish Regional Government over how much to pay international oil companies operating in the country’s north for their production. Even with the pipeline closed, Iraq was producing slightly more than its OPEC quota.
Oil major Exxon Mobil Corp revealed on Sep 25 that it had paid $7.4 bn to the UAE in taxes and royalty payments, more than it had paid to any other country globally.
On Sep 2, Libya’s National Oil Company declared force majeure on el-Feel, its biggest oil field, thereby widening the shutdown of oil production by over half of normal. The crisis was caused by the power struggle between two competing governments ruling the country.
Reuters reported on Sep 2 that due to a shortfall in domestic production, Egypt leaned upon Saudi Arabia and Libya to finance the purchase of gas cargoes worth at least $200 mn to ease its energy crisis this summer.
On Sept 6, Russia‘s economy ministry revised its oil and gas export forecasts for 2024 by $17.4 bn from the previous estimate to $239.7 bn thanks to a more positive price outlook. The crude oil exports are seen rising to 4.8 mbpd this year with the average price rising this year by $5.50/barrel to $70 per barrel. Russian oil production is seen at 10.42 mbpd this year, slightly lower than in 2023.
Following economy-related development took place in WANA countries:
Regional Economic Developments
On Sep 18, most central banks of the Gulf Cooperation Council states reduced their bank rate by 50 bps to mirror the move by the Federal Reserve to maintain their peg to the US dollar.
Economic Developments in Individual WANA Countries:
An IMF report on Sep 5 saw Saudi Arabia’s oil revenue rising until 2026 before declining quicker than previously expected through to the end of the decade. However, on Sep 15, Standard and Poor’s saw the Kingdom running a smaller current account surplus of about 1.2% of the GDP through 2027. It raised Saudi Arabia’s outlook to positive from stable and flagged the possibility for future ratings increases as it saw the kingdom press ahead with economic reforms. Official data from the Saudi finance ministry released on Sep 30 put the country’s GDP growth at 0.8% in 2024 after a contraction last year. The growth was expected to pick up to 4.6% largely due to higher oil revenues. The fiscal deficit was expected to rise to 2.9% of the GDP due to lower oil income and a spending boost. The Kingdom was expected to go for significant spending cuts to lower the fiscal deficit to 2.6% in 2025 even as cumulative investments in Vision 2030 projects reached $1.3 tr, up 4% y/y. The inflow of FDI into Saudi Arabia stagnated recording $9.7 bn in H1/24.
Turkey’s economic indicators demonstrated divergent trends during September. The country’s annual GDP growth rate was lowly 2.5% in Q2/24 (it was 0.1% sequentially between Q2/Q1) largely due to a very tight monetary policy with a high bank rate of 50%. However, at its monthly meeting on Sept 19, the Turkish Central Bank decided to continue with the bank rate to bring the inflation rate further down from 61.78% in July. Further, on Sep 27, a minimum corporate tax of 10% was introduced to reduce the budgetary deficit. On Sep 7, Fitch Ratings upgraded Turkey’s credit rating sovereign rating one notch higher to BB- from B+. This was the second upgrade this year, reposing confidence in the continuation of mainstream policies to bring down inflation.
Dubai stocks grew by 12% during Q3/24 reaching valuations which were at a 10-year high. This was despite the oil price turbulence and inclement regional geopolitics. A Bloomberg report on Sep 9 quoted a wealth management firm projecting that over 6,700 dollar millionaires are expected to move to the UAE in 2024. That’s up 70% since 2022 and means the country will take the global pole position for the third straight year. This was partly because Dubai and Abu Dhabi are increasingly seen as stable tax havens as the governments elsewhere raise taxes on the rich to make up for lost revenue in economies marked by lower growth and geo-political uncertainties. Thus, Dubai International Finance Centre has become one of the top 20 global financial hubs and Abu Dhabi has emerged as a preferred centre for family offices for the global uber-rich community.
Official statistics released during September continued to show the impact of war-related stress on the Israeli economy which grew at an annual rate of 0.7% during Q2/24. The annual budgetary deficit climbed to 8.3% of the GDP in August, far above the target of 6.6% for 2024. The annual inflation climbed further to 3.6% in August. 40,000 companies were expected to go bankrupt in the next few months, denting Israel’s reputation as a start-up nation. On Sept 27, Moody’s downgraded Israel’s credit rating two notches to “Baa1” from “A2” and maintained a negative outlook amid concerns about the economic impact of escalating conflict with Hezbollah and Iran. Even as Israel maintained that all its harbours were functioning normally, on Sept 27 Maritime security and industry groups raised the risk level for ships calling at Israeli ports, particularly Haifa which has faced Hezbollah projectile attacks.
Egypt decided to continue with high interest rates to curb the inflation spurt expected from the drive to cut the subsidies. Saudi PIF was instructed by Crown Prince Mohammed bin Salman to transfer $5 bn to Egypt as a deposit to help shore up its finances.
On Sep 30, Oman’s National Oil Company OQEP launched a $2 bn IPO, the Gulf’s largest in 2024.
Inflation in Egypt declined marginally to 25.7% y/y in July.
III) Bilateral Developments
On Sep 6, President of India Smt Droupadi Murmu received the credentials of Mr Reuven Azar, Ambassador of the State of Israel.
Abu Dhabi’s Crown Prince Sheikh Khalid bin Mohammed Al-Nahyan paid an official visit to India on Sep 9-11 an invitation from Prime Minister Shri Narendra Modi. He was accompanied by several UAE Ministers and businessmen. Sheikh Khaled called on the President. He held talks with PM following which the following five bilateral documents were signed:
MoU in the field of Barakah Nuclear Power Plant Operations and Maintenance between Emirates Nuclear Energy Company (ENEC) and Nuclear Power Cooperation of India Limited (NPCIL)
An Agreement for long-term LNG supply between Abu Dhabi National Oil Company (ADNOC) and Indian Oil Corporation Limited (1 mn tons annually for 15 years from 2025)
MoU between ADNOC and India Strategic Petroleum Reserve Limited (ISPRL)
Production Concession Agreement for Abu Dhabi Onshore Block 1 between Urja Bharat (an IOCL-BPCL JV) and ADNOC
MoU between the Government of Gujarat and Abu Dhabi Developmental Holding Company PJSC (ADQ) on food park development in India.
Sheikh Khaled also visited Mumbai where he and his delegation participated in the India-UAE Business Forum, a platform for business leaders and officials from both sides to brainstorm future cooperation between the countries in various areas. A soft launch of work on the bilateral virtual trade corridor (VTC) was held in Mumbai. A round of the official bilateral trade talks also took place. In the week preceding his India visit, Sheikh Khaled inaugurated the IIT campus in Abu Dhabi. (Comment: The two sides seemed to have decided to invest diplomatic capital in Sheikh Khaled, the harbinger of the third generation of the Abu Dhabi Royal Family. Having him hosted by the PM in India as well as associated with important strategic initiatives in nuclear energy, hydrocarbons, education and food supply chains was no coincidence. Neither was the timing of the visit when geopolitics of the West Asia was on the boil. As the Crown Prince of Abu Dhabi, Sheikh Khaled is in the normal course, likely to succeed MbZ as the next President of the UAE. Relevant to note that although bilateral trade has notched up an annual growth of 7.1% since the signing of CEPA three years ago, nearly two-thirds of it is still concentrated on oil and jewellery.)
During his meeting with Palestine Authority President Mahmoud Abbas on the sidelines of the UN General Assembly’s annual session in New York on Sep 22, PM Shri Narendra Modi expressed India’s deep concern about the situation in Gaza.
On Sep 30, PM Shri Narendra Modi had a telephone conversation with Israeli PM Benyamin Netanyahu urging for a de-escalation in the ongoing regional conflicts.
External Affairs Minister Dr S. Jaishankar visited Riyadh on Sep 8-9 for the first meeting of the foreign ministers of India and the six Gulf Cooperation Council member countries. During his interaction, the EAM called for a resolution of the Palestinian issue through a ‘two-state solution’. He also called for a ceasefire in the Gaza conflict “as soon as possible”. Turning to bilateral relations, he added that the relationship between India and the GCC is rooted in a “rich tapestry of history, culture, and shared values.” He also pointed out “Close to 9 million Indians work and live amongst you, acting as a living bridge between us. Their contributions to your economic progress are widely recognised. We thank you for ensuring their welfare and comfort.” EAM also held bilateral talks with some of the foreign ministers. Relevant to note that India-GCC trade was $184.46 bn in FY23 and the two sides have commenced negotiations for a free trade agreement.
On Sep 16, the official spokesman of the Indian Ministry of External Affairs stated the following:
“We strongly deplore the comments made regarding minorities in India by the Supreme Leader of Iran. These are misinformed and unacceptable. Countries commenting on minorities are advised to look at their record before making any observations about others.”
He was reacting to the statement made at X by Iranian Supreme Leader Ali Khamenei earlier on the same day:
“The enemies of Islam have always tried to make us indifferent with regard to our shared identity as an Islamic Ummah. We cannot consider ourselves to be Muslims if we are oblivious to the suffering that a Muslim is enduring in #Myanmar, #Gaza, #India, or any other place.”
(Comment: The original statement made in Persian mentioned India, while the English version carried by the official news agency IRNA did not.)
Indian armed forces participated in two military exercises in Oman during the month. In IAF contingent arrived in Omani island on Massirah on Sep 11 for Eastern Bridge VII exercises lasting 11 days. The next day an Indian army contingent reached Salalah for counter-terrorism exercises titled al-Najah V.
The sixth session of the Indo-Saudi Joint Committee on Defence Cooperation took place in Riyadh on Sep 4.
The sixth session of the India-Egypt Joint Trade Committee held at the level of Economic Advisor, Deptt of Commerce, concluded in New Delhi on Sep 26.
On Sep 25, the Indian embassy in Beirut issued a travel advisory for Indians to exercise extreme caution and strongly advised against travelling to Lebanon.
Reuters quoted a post by the Maharashtra Chief Minister on Sep 6 as saying that India’s Adani Group and Israel’s Tower Semiconductors were planning a $10 bn semiconductor project in the state.
On Sep 15, India’s Polymatech disclosed that it was planning a $15 mn investment in Bahrain in a plant to fabricate essential 5G and 6G components.
On Sep 6, Indian EV maker WardWizzard Innovations disclosed plans for a joint venture in Saudi Arabia to manufacture 2, 3 and 4-wheeler electric vehicles.
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