IA) Political Developments: Covid-19 Pandemic

Regional Impact of Covid-19: Flattening the Curve

In January 2021, most of the WANA countries managed to lower the growth in their daily number of the Covid-19 cases. Thus during the month, for the entire region number of confirmed cases went up by 16.8% and deaths by 13.5% when compared with statistics for the previous month. The corresponding figures for Dec20/Nov 20 were 50.3% and 26.5% respectively. Surprisingly, the two rates for WANA were superior to the respective figures for the world at large. Moreover, out of 23 WANA countries in the table below, none saw the two numbers grow by more than 100% during the month.  The details are in the table below:

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Source: Johns Hopkins University Coronavirus Resource Center; 
Legend: = Nearly same since last month # Grew ~10% since last month; * Increase of over 50% since last month; ** Nearly Doubled since last month; ^ More than doubled

​​​Covid-19 and the Individual WANA Countries:

  • Despite topping the charts with 24% of the population given the first shot by Jan 31, Israel continued to see a high number of new cases this month. This led to measures such as an extension of lockdown till Feb 5 and ban on all international flights. Following global criticism, Israel donated 5,000 vaccine doses to the Palestine Authority on Jan 31.
  • Mass vaccination against Covid-19 commenced during the month in Bahrain, Morocco, Jordan, Egypt and Algeria.
  • In a counter-intuitive move, the UK and Denmark banned all flights from the UAE citing high Covid incidence and unreliability of the test reports.
  • Iran’s Supreme Leader Ali Khamenei banned (8/1) all Covid-19 vaccines from the UK and the US. On Jan 26 the country approved Russia’s Sputnik V vaccine for import and domestic manufacture. Cuba and Iran agreed to collaborate in Covid-19 vaccine research. 
  • The discrepancy in Covid-19 statistics from Turkey continued to raise eyebrows. (Please see: “One man’s terrorist: Covid-19 and repression in Turkey” The Economist, Jan 16 2021; http://go.pardot.com/e/827843/-CZDC1a8Nu9GKD12BHXYn-9mnxYkqs/gsmy8/166905401?h=IKRn5mLQSqKmytqZ1pBsbN1knOfpMGpmkou6TFxhmtU

IB) Political Developments

Iran:

With Trump administration determined to follow a scorched earth policy of “Maximum Pressure” till the very end, the bitter bilateral war of words escalated.  On other hand, incoming Biden administration insistence on Iran being in full compliance with JCPOA as a sine qua non for the US return to the agreement (publicly stated on Jan 27 by the new Secretary of State Anthony Blinken) created an unpalatable paradigm for Tehran suffering the debilitating economic sanctions for past three years. Thus in a major policy speech on Jan 8, Supreme Leader Ali Khamenei ruled out any negotiations over Iran’s missile programme or its involvement in the middle east as these “create stability and would definitely continue.” He also denied that Iran was in any rush to get the US to rejoin the JCPOA. On the US side, too, Secretary of State Blinken stated on Jan 19 that America would not take a quick decision to rejoin the JCPOA. Raising the ante, Iranian Majles had already passed a non-binding resolution that unless the US sanctions were lifted by Iranian new year on Feb 21, Iran shall expel the IAEA inspectors. On its part, Mike Pompeo, the outgoing US Secretary of State, on Jan 12 accused Iran of giving “home base to al-Qaeda”. He did not provide any evidence to substantiate the charge, which Tehran rejected as war-mongering lies. In a final show of pique and very little else, Tehran blacklisted President Trump and some of his senior officials on Jan 19 for “terrorism and anti-Human Right acts.”

There was no let-up in the Trump administration’s Maximum Pressure policy during its last few days. Thus it issued three sanction orders on Jan 5 (blacklisting 12 Iranian and a Chinese company), Jan 13 (blacklisting 2 foundations run by Supreme Leader’s office) and Jan 15 (blacklisting 7 Iranian and one each from the UAE and China)

An IAEA-leak on Jan 1 about Iranian plan to enrich the Uranium235 up to 20% level at its underground facility at Fordow, was criticised by the E3 (The UK, France & Germany) signatories of the JCPOA as a risky move.

Iranian navy seized a South Korean Tanker Hankuk Chemi near Strait of Hormuz and detained its crew on Jan 4 for alleged polluting the sea. Some media reports suggested that the action was to have Seoul release some of the 7 bn dollars of Iranian funds in Korean banks in compliance with the US economic sanctions. This was denied by Tehran who urged South Korea not to politicise the issue. In a reverse case on Jan 25, Indonesia detained an Iranian tanker for illegally transferring oil within Indonesian waters to a Chinese tanker.

During a meeting in Tehran on Jan 31, Foreign Minister Javad Zarif told the visiting Afghan Taliban leader Mulla Baradar that the US was not a “good mediator” for the conflict.

Sudan:

On Jan 6, Sudan’s Justice Minister and visiting US Secretary of Treasury formally signed the Abraham Accords in Khartoum. The signing granted Sudan, for the first time in 27 years, access to over one billion dollars of international funds. The country has a foreign debt of $60 bn and suffers inflation of over 200% p.a.

On Jan 25, Israeli Intelligence Minister Eli Cohen visited Khartoum in what was first semi-public ministerial contact between the two countries which agreed to normalise the diplomatic ties. Although he was received by the Head of State and the Defence Minister, the visit was not publicised by the Sudanese side.

After clashes in long-disputed Fashaga region bordering Ethiopia, Sudan declared on Jan 1 that its military has taken full control of the territory. Subsequently, Ethiopia warned Sudan over the military build-up.

Following evacuation by the UN and AU peacekeepers from Darfur region, the clashes between the Arab nomads and the local settlers resulted in over 155 killed. Sudanese troops were deployed to quell the clashes.

Tunisia:

A political crisis erupted on Jan 5 following Prime Minister Machichi sacking the interior minister regarded as close to President Kais Saied. Subsequently, on Jan 16, the PM appointed 16 new ministers to the cabinet who were finally ratified by the Parliament on Jan 27.

Angry protests by youth from Jan 16 to mark a decade of “Arab Spring” convulsed the country.  While Tunisians have had a relatively peaceful transition to democracy, their socio-economic conditions continue to tough. The country has recorded a 1.8% annual economic growth during 2011-19 before Covid-19 pandemic forced a (-)8% contraction in 2020. The protests led to the army being deployed. Over 600 arrests were made. 
Further Reading: “Free but fed up - Despite democracy, Tunisians riot” The Economist, Jan 21st 2021;
http://go.pardot.com/e/827843/spite-democracy-tunisians-riot/gsmyb/166905401?h=IKRn5mLQSqKmytqZ1pBsbN1knOfpMGpmkou6TFxhmtU

Morocco:

On Jan 15, U.S. President Donald Trump received the “Order of Muhammad”, Morocco’s highest award, as a personal gift from King Mohammed VI, for his work in advancing a normalisation deal between Israel and Morocco.

State Department’s head of regional diplomacy for North Africa and the Middle East visited Western Sahara on Jan 9 in a vivid testimony to US recognition of Moroccan sovereignty over the territory.

On Jan 24, the Polisario rebels launched a rocket attack on the Guerguerat border crossing between Western Sahara and Mauritania. Moroccan sources claimed that the attack did not interrupt the normal border activities.
Comment:
The US recognition of  Western Sahara as a part of Morocco was a breakthrough for Rabat, which in turn obliged Trump by normalising the long-standing, though informal, ties with Israel. However, the US recognition provoked the Algerian-backed Polisario Front to flag the dispute through physical and diplomatic means. Its actions would also be aimed at having the US decision reviewed and preferably reversed by Biden administration.

GCC:

41st Summit of the Gulf Cooperation Council (GCC) was held in al-Ula in northern Saudi Arabia on Jan 5. The event acquired special significance due to participation of Qatari Emir Tamim bin Hamad Al-Thani Qatar after a gap of three years marking an end to its bitter dispute with a four-country coalition comprising of Saudi Arabia, the UAE, Bahrain and Egypt. The Summit ended with the signing of al-Ula Declaration and a Solidarity and Stability Agreement. Jared Kushner, Adviser to President Trump, who mediated the end to this dispute, also attended the Summit.
Comment:
While al-Ula Summit marked the beginning of a formal reconciliation of Qatar with three GCC members and Egypt, its pace is likely to be glacial for several reasons. Firstly, none of the 13 demands made by the four countries on Qatar in mid-2017 – thereby precipitating the crisis – have yet been met.  Secondly, the external backers of Qatar, inter alia Iran and Turkey remain committed to Doha for their own economic and strategic reasons. Moreover, while Qatar has avoided adding fuel to fire, it has sent a message of defiance by largely overcoming the boycott. Indeed, the IMF noted that the Qatari economy shrank by 4.5% in 2020, the smallest contraction among Gulf countries. Qatar, which is set to host FIFA World Cup next year, would hope that the lure of football would over-ride the antagonisms generated by this dispute.
At a different level, the episode raises the questions about divergences within the GCC. While GCC Secretariat General is in Riyadh, the dispute showed the limits of Saudi Arabia’s preponderance over the regional grouping. Kuwait and Oman stayed out of the dispute with Qatar. The UAE - Saudi axis is fraying as evidenced by underlying differences on Yemen, Oil policy, the Abraham Accords and Iran. The GCC has been conspicuously absent during the pandemic. Many experts believed that the reconciliation at al-Ula was a mere gesture towards imminent transition at the White House. Be as it may, it would remain to be seen if this tactical move would resuscitate the GCC which enters fifth decade of its formation without many achievements to boast of.   

Iraq:

On Jan 19, Iraqi Cabinet decided to postpone the general elections from June to Oct 10 2021, to give the Election Commission “more time to prepare.”

Baghdad was rocked by the first suicide bombing in nearly three years on Jan 21 which killed over 32 people. It was claimed by ISIS. A week later the security forces announced the killing of Abu Yaser al-Issawi, ISIS head in Iraq and its deputy Caliph.

The turbulence in Iraq’s relations with the US continued. On Jan 7, an Iraqi court issued a warrant for the arrest of US President Trump for ordering the assassinations of Iranian Gen Soleimani and Iraqi Hashad al-Shaabi Shia militia Commander Abu Mahdi al-Muhandis a year ago. Next day the US blacklisted two Iraqis, including Faleh al-Fayyed, current head of the Hashad al-Shaabi, for human rights abuses during the 2019 anti-government riots. Iraq described this US action as “unacceptable.”

Palestine:

During the month the Palestinian Authority worked along several axes to reduce its diplomatic isolation in anticipation of Biden’s ascent to the White House. President Mahmoud Abbas visited Jordan, Egypt and Qatar. On Jan 17, Palestinian Authority decided to restore normalcy in its relations with Israel disrupted last year in the wake of Netanyahu government’s decision to take over partake part of occupied West Bank.  Accordingly, it resumed security cooperation and accepted over a billion dollars in the pending tax transfers. It quietly returned its ambassadors to the UAE and Bahrain, the two Abraham Accord signatories. It also decided against taking any remonstrative action against Sudan and Morocco for normalising relations with Israel.  In its statements, the PA called for a new peace initiative from Biden administration as well as greater involvement of the UN and the EU.

Domestically, al-Fatah ruling West Bank and al-Hamas ruling Gaza jointly decided on Jan 15 to have national elections this year after a gap of 15 years. While the Legislative elections would be held on May 22, the Presidential elections would take place on July 31.
Comment:
The dramatic softening of PA posturing demonstrated the erosion of its traditional veto on Arab countries ties with Israel. It was also motivated by the need to press Arab countries for funds and support needed to fight incoming elections. As of now, Algeria was reported to be the only Arab country continuing with its aid commitment to the PA.
Further Reading: “To the polls - Mahmoud Abbas calls for elections in Palestine” The Economist, Jan 30th 2021;
http://go.pardot.com/e/827843/lls-for-elections-in-palestine/gsmyd/166905401?h=IKRn5mLQSqKmytqZ1pBsbN1knOfpMGpmkou6TFxhmtU

Blue Nile Water Sharing:

The virtual talks on Jan 10 between Egypt, Ethiopia and Sudan under the AU aegis failed to break the longstanding deadlock over Grand Ethiopian Renaissance Dam (GERD).

Yemen:

The outgoing Trump administration decided on Jan 12 to designate the Ansarallah (“al-Houthis”) of Yemen as a “Foreign Terrorist Organisation”. This was done despite warnings by the UN and several aid organisations that such an action could be a setback to the peace talks and further jeopardise the world’s most serious humanitarian crisis. The decision took effect from Jan 19, albeit with various caveats permitting the humanitarian aid. After taking over the White House, the Biden administration decided on Jan 25 allow all previous deals with al-Houthis to continue for a month while it reviewed the decision. In their initial response on Jan 14, al-Houthis said that this designation would not affect their participation in the peace efforts.

A report of the UN Sanctions Monitoring Group release on Jan 26 accused both sides of the conflict, Yemeni government and al-Houthis of financial crimes such as money laundering and fund diversion.

Oman:

On Jan 11 Sultan Haitham bin Tariq Al-Said approved a raft of changes to Omani Constitution. The most significant among these was the Basic Law establishing a specific and stable mechanism for the transfer of the governing authority and a mechanism to appoint a crown prince.  Yet another decree introduced a new law to regulate the functioning of the Council of Oman, the country’s parliament. The changes also guaranteeing more rights and freedoms for citizens – including equality between men and women.

The changes to the Constitution were followed up the next day by the appointment of Dhi Yazan bin Haitham, 30-year old eldest son of Sultan as the Crown Prince.
Comment:
The Constitutional changes were promulgated on the first anniversary of Sultan Haitham’s reign. These may appear to be natural political evolution, but signify a break from the suspended animation in Oman’s polity during the past decades of late Sultan Qaboos who rule Oman for nearly half a century. They are also an important part of the ongoing decentralisation of power from the Court of the Sultan, who was on taking over one year ago his own Crown Prince, Prime Minister, Minister of Foreign Affairs, Finance and Defence as well as the Governor of the Central Bank. While the process seemed to have been smooth so far, it needs to be watched for its impact on governance and political stability particularly in an era of serious economic challenges faced by the Sultanate (detailed in the “Economic Developments” below). 

Israel:

In an apparent rush to leverage the departing Trump administration, Israeli cabinet ordered the construction of more Jewish settlers’ homes in the occupied West Bank: 800 were approved on Jan 11 and further 365 on Jan 17.
Comment:
Currently, 440,000 Jewish settlers live among 3 mn Palestinians. While the UN considers these Jewish settlements illegal and an obstacle to peace, the Trump administration changed the longstanding US policy in Nov 2019 to declare that it does not consider the settlements in the West Bank a violation of the international law.  
Further Reading: “In Shift, U.S. Says Israeli Settlements in West Bank Do Not Violate International Law” NY Times, Nov 18, 2019; http://go.pardot.com/e/827843/ael-west-bank-settlements-html/gsmyg/166905401?h=IKRn5mLQSqKmytqZ1pBsbN1knOfpMGpmkou6TFxhmtU

Israeli Chief of Staff Gen Kohavi said on Jan 26 that Israeli Defence Forces were refreshing their operational plans against Iran. He was earlier quoted as saying that Israel air force had hit over 500 targets in Syria during 2020. Most of them were believed to be linked to Iranian forces in that country.

Israel formally opened its embassy in Abu Dhabi on Jan 24.
Further Reading: “Abrahamic profits - Emirati and Israeli bosses cannot wait to do business” The Economist, Jan 25th 2021,
http://go.pardot.com/e/827843/ses-cannot-wait-to-do-business/gsmyj/166905401?h=IKRn5mLQSqKmytqZ1pBsbN1knOfpMGpmkou6TFxhmtU

Turkey:

After few months of trenchant nationalism, Turkish government projected moderation towards the EU during January. While meeting the EU ambassadors on Jan 12, President Recep Tayyip Erdogan said that he wants to improve Turkey’s relations with the EU and in particular save ties with France from tensions. Foreign Minister Cavusoglu visited Brussels on Jan 21 to meet with his EU counterpart Josep Borrell. He asserted that Turkey’s destiny was to be part of the European family. After a tense four year hiatus, Greece and Turkey resume their talks on resolving their maritime border dispute. The two delegations met in Istanbul on Jan 25 for 61st round of talks, which have been going on for 14 years without any breakthrough. In a similar vein, it was announced on Jan 21 that Turkey would recommence talks on the future of the divided island of Cyprus with the EU and the UN in early March 2021.    

Kuwait:

Prime Minister Sheikh Sabah Al-Khalid Al-Sabah and his cabinet resigned on Jan 13 within a month of being appointed following a stand-off with the Parliament which insisted on scrutinising the Ministers. On Jan 24, Emir Nawaf al-Ahmed al-Sabah formally reappointed Sheikh Sabah Al-Khalid Al-Sabah as the Prime Minister.

Libya:

On Jan 16, former Foreign Minister of Slovakia Jan Kubis was appointed as the UN’s new Envoy for Libya.

After an UN-sponsored dialogue in Tunis, 75 prominent Libyans decided on Jan 19 the composition of an Interim Executive Authority (IEA) to oversee the transition to the general election to be held in December 2021. The IEA’s Presidential Council, which would replace current Tripoli-based Government of National Accord, would comprise of a Prime Minister to be assisted by 3 Deputy PMs. On Jan 30, the UN declared to have received 21 nominations for the PM and 24 nominations for the other 3 members of the Presidential Council.
Comment:
While the current round of the UN-sponsored dialogue has gone further than before, the decade-old Libyan peace process has seen many false dawns. In particular, Benghazi-based LNA led by mercurial Gen Haftar has not categorically declared its willingness to dissolve itself under the new dispensation. Its foreign backers such as the UAE, Egypt and Russia have not heeded to call to withdraw from Libya. For that matter, neither has Turkey, which backs the GNA, agree to disengage. Moreover, it remains to be seen if various tribal militias would respect the incipient UN arrangement, which is not supported by any peace-keeping force. The UN negotiators would thus be hoping against hope to convert the war-weariness among ordinary Libyans into a sustainable peace and institution-building over next few years.

Lebanon:

On Jan 19, Switzerland stated that Riad Salameh, Governor of Banque du Liban, the Central Bank of the country, is being investigated for financial crimes. On Jan 28, Lebanese authorities also opened a case of dereliction of duties against Mr Salameh, who has been in his position for the past 27 years.
Comment:
Lebanon has been in a deepening multi-pronged financial crisis which has seen the country default on its sovereign debts. It’s currency has been in free fall and its GDP has suffered a sharp decline .In a formerly prosperous society, nearly half of the population now lives below the poverty line. The crisis has led to months of angry demonstrations demanding a revamp of the confession based political appointments. However, the country’s diverse and often-divided political elite has hung together to play the usual musical chairs and deflect the demand for a political recast. Against this backdrop indictment of Riad Salameh has become the first fall guy, irrespective of its merits, comes in as a handy ploy.

UAE:

On Jan 30, the UAE adopted amendments to its citizenship laws permitting grant of nationality to foreign investors and professionals. The terms of such award of nationality were not announced.

Saudi Arabia:

On Jan 29, Nigeria repatriated from Saudi Arabia hundreds of its jobless nationals stranded due to pandemic related travel ban. 

Somalia:

A car bomb attack against a Turkish road construction project near Mogadishu on Jan 2 killed 31 persons, including a Turkish national. Islamic militant group Al-Shabab claimed responsibility for the attack.

Algeria:

On Jan 1, President Abdelmadjid Tebboune signed into law the country’s new constitution. President Tebboune left the country again on Jan 10 to Germany for treatment for an unspecified ailment.

Long jail sentences to the two former Prime Ministers and two former ministers were upheld by the Court of Appeal on Jan 28.

Syria:

ISIS claimed credit for an ambush on a bus near Hama on Jan 3 in which at least 9 persons died.

The fifth round of the UN-sponsored  Syrian Constitutional Committee was held in Geneva on Jan 25.

Qatar:

Talks between Afghan groups resumed on Jan 5 in Doha after a three-week break. There was, however, no let-up in violence in that country.

The US:

The US Middle East policy made several topsy turvy turns during Trump-Biden transition. Most important among these was Trump administration signing a $23 bn arms deal with the UAE on Jan 19/20 to transfer 50 F-35 Stealth fighters and up to 18 armed drones. However, on Jan 27 the Biden administration put all the arms deals with the UAE and Saudi Arabia on hold pending a policy review. One of the first executive order issued by President Biden overturned the Trump era ban on entry of citizens from some Muslim countries, including such WANA countries as Iran, Libya, Somalia, Syria, Yemen and Sudan. On Jan 29, relief was given to 6700 Syrian immigrants living in the US and facing deportation.  On Jan 29, Biden Presidency named Robert Malley, associated with JCPOA negotiations during the Obama era, as the US Special Envoy on Iran.  The designation of al-Houthis as Foreign Terrorist Organisation was also kept in abeyance by the new administration (23/1) pending a review. The acting US permanent Representative to the UN stated on Jan 25 that the new US government supported a two-state solution to the Israel-Palestine dispute and would overturn several related decisions. In his first major pronouncement, the new NSA Jake Sullivan listed China, Afghanistan and Iran as the priority areas. On Jan 27, Biden administration also announced a moratorium on new oil and gas exploration leases on the US land.
Further Reading: “From Histrionics to Hysteresis: White House Change, Middle East and India” by Mahesh Sachdev, Jan 23 2021;
http://go.pardot.com/e/827843/a-digest-from-histrionics-to-h/gsmyl/166905401?h=IKRn5mLQSqKmytqZ1pBsbN1knOfpMGpmkou6TFxhmtU  

Italy:

On Jan 29, Italy’s left-leaning government permanently halted all arms and ammunition exports to the UAE and Saudi Arabia.

II) Economic Developments

Oil Related Global Developments:

An OPEC report on Jan 3 on eve of OPEC+ meeting saw the oil outlook as full of downside risks. The Brent oil price ended 2020 above $50/barrel, having doubled since April 2020 lows, but still nearly a fifth down y/y.

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The OPEC+ group meeting on Jan 4-5 saw considerable haggling between Saudi Arabia seeking to freeze the collective output due to resurgent Covid-19, and Russia which wanted to adhere to the previously agreed increase in collective output. Eventually, on Jan 5, Saudi agreed to cut its output voluntarily by 1 mbpd during Feb & March 2021, while Russia and Kazakistan each got a symbolic 75,000 bpd rise in their production quotas.
Comment:
The deal helped destock the stored crude on high seas allowing the Brent price to recover to $57/barrel by Jan 12.

The Energy Information Agency (EIA) of US estimated on Jan 13 that during 2020 OPEC’s net oil exports averaged 25.8 mbpd yielding collective net revenues of $323 bn – the lowest in 8 years. These were $1.2 tr at their peak in 2012 and stood at $595 bn in 2019. EIA expects these to rise to $397 bn in 2021.

Oil Related Country Specific Developments:

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  • In an interview with the Financial Times, Sultan al-Jaber, Chief ADNOC of the UAE stated that his company would “miss no opportunity” to enhance its production capacity from current 3 mbpd to 5 mbpd by 2030. ​​​​​​Comment: The UAE NOC’s drive for higher production capacity is in mark contrast to the conventional streak among the Seven Sisters to diversify away from hydrocarbons and reduce their E&P budgets. BP, for instance, had famously claimed last year that the world oil demand could have already peaked in 2019. ADNOC’s contrarian policy was perhaps meant to monetise the underground crude before the global demand plummets forever.   Further Reading: Adnoc defies retreat from oil with push to pump up output By Anjli Raval and Simeon Kerr FT, Jan 18 2021; http://go.pardot.com/e/827843/d3-f494-46a8-842c-ccf7124ad43d/gsmyn/166905401?h=IKRn5mLQSqKmytqZ1pBsbN1knOfpMGpmkou6TFxhmtU .
  • Iraq signed a deal with Chinese oil importers for advance payment of $ 2 bn in return for a commitment to supply oil at a favourable price. Comment: The deal helped to shore up precariously low Iraqi forex reserves. But it also made Iraq cut supplies to many of its traditional clients, including India.

Other Economic Developments:

  • IMF’s World Economic Outlook Update release on Jan 27 had the following relevant extract concerning MENA countries:

          (Percent change in GDP, unless noted otherwise)                                           
​​​​​​                                                                               8572131652?profile=RESIZE_584x
Two main take-aways from the table above were: Firstly, while IMF forecasts the oil prices to rise by 21.2% this year, they would still be lower by end of 2021 than two years ago. Secondly, despite the oil price surge in 2021 (2.6%) gain for the Saudi economy would be lower than the MENA average of 3.0%.

  • Two Qatari banks, Al-Rayan and Al-Khalij Commercial decided to merge on Jan 8. The combined entity with asset-base of $ 47 bn would be the second-largest bank of Qatar.
  • Saudi Crown Prince Mohammed bin Salman announced on Jan 28 that Aramco would sell more of its shares with the proceeds going to Public Investment Fund (PIF) to bolster PIF’s corpus from current $400 bn to $1 tr by 2025. Earlier on Jan 14 Saudi government had announced that the PIF would invest $40 bn annually within Saudi Arabia for the next five years.
  • Oman’s economy shrank by 10% in 2020 and the fiscal deficit rose to 8% of the GDP. The national budget, presented on Jan 1, plans to introduce radical measures including the introduction of 5% VAT. The country was seeking its third bond sale in 3 months totalling $3.25 bn. It may need to borrow $4.2 bn in 2021.
  • Apparently buoyed by the moves towards country’s reunification, on Jan 3 the Libyan Central Bank introduce a unified exchange rate of US Dollar 1 = 4.8 Dinars 
  • Iraq signed a deal with Chinese oil importers for advance payment of $ 2 bn in return for a commitment to supply oil at a favourable price.

III) Bilateral Developments

  • On Jan 28, Prime Minister Narendra Modi had a teleconversation with the Sheikh Mohammed bin Zayed Al-Nahyan, Crown Prince of Abu Dhabi.
  • Indian Cabinet formally approved a Memorandum of Understanding with the UAE for cooperation in earth science related domains.
  • On Jan 14, Indian Cabinet approved plans to bring forward the 20% ethanol blending with petrol by 5 years to 2025. Currently, the blending level is 8.5%. This was being done to reduce crude imports and to create a bigger revenue stream for the farmers.
  • Shortly after 5 PM on Jan 29, a low-intensity explosive device exploded near Israeli chancery in central New Delhi. While no one was hurt, the explosion damaged glasses of three cars parked nearby. Indian police and security agencies investigating the blast were tight-lipped, but the news media hinted at Iranian involvement. India’s external affairs minister spoke to his Israeli counterpart over this incident.
  • On Jan 18, India supplied two Italian-made harbour cranes worth $25 mn to Iran’s Chabahar port.
  • India’s oil imports for 2020 averaged 4.04 mbpd, down 10% over the previous year. In a contrarian manner, the imports for Dec 2020 were over 5 mbpd, a 3-year high figure – and 11.6% higher than the corresponding figure for 2019.
  • India supplied AstraZeneca Covid-19 vaccines to Morocco and Saudi Arabia during this month.

 


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(The views expressed are personal)
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About the author

Ambassador Mahesh Sachdev

Former Ambassador of India to Algeria, Norway and High Commissioner to Nigeria and Distinguished Fellow, Ananta Centre 

Ambassador Mahesh Sachdev retired from Indian Foreign Service in October 2013. His 35-year diplomatic career included three Ambassadorial assignments spanning 11 years to Algeria, Norway and Nigeria – all major oil exporters. Nearly half of his diplomatic career was spent dealing with the Middle East. He is fluent in Arabic and knows some French.

Amb. Sachdev is currently the President of Eco-Diplomacy & Strategies, a consultancy in Delhi. He was Founder-President of the UAE-India Business Council and a Consultant to Jamia Millia Islamia University. He has authored two well received “Business Manuals” on Nigeria (Sept 2014; second edition in Oct. 2018) and the UAE (Sept 2016). He comments on strategic, economic and cross-cultural issues in media in India, Gulf and Africa.

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