H I G H L I G H T S

• Political Developments 
• Economic Developments
• Bilateral Developments

IA) Political Developments: Regional and Global Issues

Impact of Omicron Covid-19 

While the Covid-19 Omicron wave seemed to be receding in most of the West Asia North Africa (WANA) region, it continued unabated in some pockets. The WHO reported on Feb 9 that infections and deaths were rising in the Eastern Mediterranean region (comprising of the Middle East, Egypt, Somalia, Sudan, Djibouti and Afghanistan, among others).  Although more than 35% of the region's population was fully vaccinated, one-quarter of the countries have not yet reached 10% vaccination coverage. 1,11,157 new cases were reported in Turkey on Feb 4, a new daily record. President Recep Tayyib Erdogan tested positive on Feb 5. On Feb 9, Palestine reported the hospitals filling up with over 11,000 new daily cases, up from an average of 300 a few weeks earlier. On other hand, highly vaccinated countries such as Israel, Saudi Arabia, UAE, Kuwait, etc announced the lifting of travel restrictions, with an eye towards the incoming tourist season, although most still required the RT-PCR tests. In a victory of politics over realism, on Feb 22, Iran, the region’s most affected country currently in its sixth Covid-19 wave, returned 820,000 AstraZeneca vaccine doses donated by Poland as these were manufactured in the United States.

WANA and Afghanistan:

  • Kabul-Doha Flights: On Feb 1, Qatar reached a deal with the Taliban to commence biweekly chartered evacuation flights.
  • Nearly 12,000 Afghan refugees stranded in camps in the UAE held three days of protests on Feb 9-11 to demand their promised repatriation and settlement in the United States.
  • On Feb 14, the Doha-based ambassadors of the Gulf Cooperation Council (GCC) states met the visiting Taliban Foreign Minister Amir Khan Muttaqi to stress the necessity of a national reconciliation plan that “respects basic freedoms and rights, including women’s right to work and education.” No promises were made by the Afghan side. (Comment: The episode reminded of the two long-held, albeit somewhat waggish, diplomatic adages: “Everything is Relative” and “Do as I say, not as I do!”)

Russian Invasion of Ukraine:

On Feb 24, Russo-Ukrainian tensions spiralled into open hostilities as President Putin ordered a “Special Military Operation.” The resulting crisis impacted the WANA region in two major ways. Geopolitically, it added to the regional instability and forced the WANA countries to clarify their respective stances on the hostilities and the unfolding humanitarian disaster. Geo-economically, it created supply chain issues, caused a spurt in prices of several essential commodities, esp. oil & gas, edible oils, wheat and Nickel. Further, as the US-led NATO sought to impose economic sanctions against Russia, several WANA countries needed to re-pivot. The following developments are relevant:

  • Turkey was the most affected WANA country by the hostilities partly because it has fostered good ties with both the warring sides. Turkey, an important NATO country, developed warm links with Russia, which supplies 46% of the imported natural gas and has been the largest source of tourists. At the same time, Ankara also sold its armed drones to Ukraine. On Feb 24 Turkish President Recep Tayyip Erdogan spoke to Ukrainian President Volodymyr Zelenskyy, and condemned the Russian invasion of Ukraine as “unacceptable” and a “heavy blow to regional peace and stability.” While President Erdogan criticised NATO and the West for “indecision”, Turkey did not impose any sanctions on Russia, saying on Feb 28 that Turkey could not abandon ties with either Russia or Ukraine. Ankara initially declined the Ukrainian request to disallow the Russian naval vessels a passage through the Dardanelles and Bosphorus straits. However, on Feb 27, Turkey changed its rhetoric and described the Russia-Ukraine conflict as a “war”. This permitted Turkey to invoke the relevant provisions of the 1936 Montreux Convention to limit naval transit of its Dardanelles and Bosphorus straits during wartime, or if threatened. Yet Foreign Minister Mevlut Cavusoglu sought to retain some flexibility by saying that Turkey could not block all Russian warships accessing the Black Sea due to a clause in the pact exempting the ships returning to their registered base. (Comment: As the accompanying map shows, the conflict zone is right across the Black Sea from WANA’s northern fringe. In particular, Turkey shares its maritime boundary with both the antagonists. The war threw up multiple new challenges for Ankara distracting it from fighting several fires at home and managing its wobbly ties with some other regional countries. Turkey’s adrenaline-charged diplomacy in recent months notwithstanding, the conflict exposed Ankara’s lack of clout with both Moscow and Washington, and it being out of sync with NATO mainstream. Further Reading:   “Turkey’s rapprochement with Russia may not survive the war in Ukraine” The Economist, 26/2/22;https://www.economist.com/europe/2022/02/24/turkeys-rapprochement-with-russia-may-not-survive-the-war-in-ukraine)

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  • Other WANA countries adopted positions on the Russia-Ukraine War largely based on their predilections. Thus, during the Feb 25 vote in the UN Security Council on the draft resolution condemning Russia, the UAE abstained but voted in favour of a similar resolution in the UN General Assembly later. The only WANA country to vote against the UNGA resolution was Syria, with President Bashar Al-Assad calling the Russian action “Correction of History.” Iran described the crisis as being “rooted in NATO provocations.” The WANA absentees at the UNGA included Algeria, Iran and Iraq. Morocco did not cast its vote. The remaining WANA countries voted in favour of the resolution which was adopted 141-5-35.

Terrorism:

  • On Feb 3, the US Special Forces mounted a successful raid in an Exclusion Zone in Syria’s Idlib province killing Abu Ibrahim al-Hashemi al-Quraishi, leader of Islamic State in Iraq and Syria (ISIS, or Daesh) The collateral damage included a number of his family members. (Further Reading: “Factbox: Islamic State loses second leader in two years” Reuters, Feb 3, 2022; https://www.reuters.com/world/middle-east/islamic-state-loses-second-leader-two-years-2022-02-03)
  • Swedish telecom company Ericsson admitted on Feb 16 that some of its employees in Iraq might have bribed members of the ISIS armed group during 2011-19 to gain access to certain roads in the country. Following that disclosure, the company’s share price fell by 7% on the Stockholm stock exchange.
  • On Feb 18, Australia declared its intention to designate the Hamas group ruling Gaza as a “terrorist entity.”

Beijing Winter Olympics:

The 24th Winter Olympic Games were held in Beijing on Feb 4-20, 2022. While none of the WANA countries won any medals at the games, the Heads of States from Egypt, Qatar and the UAE honoured the Chinese President’s invitation to attend the inaugural ceremonies. Although Saudi Crown Prince was expected to attend but pulled out at the last minute. The UAE’s de facto ruler Sheikh Mohammed bin Zayed Al-Nahyan had a meeting with Qatari Emir Sheikh Tamim bin Hamad Al-Thani on the sidelines in Beijing – their first public meeting since Qatar was ostracised four years ago. (Comment: Presence of several HoSs from pro-West WANA countries, ignoring the US call for a political boycott of the games’ inauguration to protest the Chinese repression of its Uigur Muslim minority, showed the limits of the Pax Americana in the region.)

IB) Political Developments

Iran:

Iranian President Ebrahim Raisi paid a two-day visit to Doha on Feb 21-22, the first by an Iranian head of state to Qatar in 11 years. He held talks with Qatari Emir Sheikh Tamim bin Hamad Al-Thani and addressed the ongoing 11-country Gas Exporting Countries Forum (GECF) meeting. Four MoUs were signed during the visit relating to the plan to connect Iran and Qatar via an underwater tunnel, shipping, maritime trade and civil aviation.

Iran’s Interior Minister Ahmad Vahidi began a visit to Islamabad on Feb 14. During the visit, Vahidi met his Pakistani counterpart Sheikh Rasheed Ahmed, PM Imran Khan and the country’s army chief General Qamar Javed Bajwa. The two sides agreed to form a joint working group to look after border management, including security, trade and travel issues. The Afghanistan related issues were also discussed. (Comment: The 750-km long common border straddling a sparsely populated, difficult and neglected terrain has become a hotbed of drug smugglers and anti-state actors such as Baluchistani militias and Jaish al-Adl, an al-Qaeda affiliate sporadically active on the Iranian side.)

While there was plenty of anticipatory din about a final deal on JCPOA’s revival being at hand, the closure eluded the month after 10 months and 8 rounds of indirect negotiations between Iran and the United States in Vienna.  In fact, by the end of the month, new push-pull factors emerged from the Russia-Ukraine imbroglio which impacted the prospects of the deal. The hostilities and the resulting Western economic sanctions on Russia raised the geopolitical risks of the supplies of gas and oil from the world’s second-largest exporter. This, in turn, added to the urgency of clinching the JCPOA deal, so that the additional Iranian oil and gas could partially compensate for the curbed supplies from Russia. On the other hand, Russia strongly raised the issue of the new Western sanctions impacting upon its economic ties with Iran, negating the gains of the revived JCPOA and demanded guarantees/waivers. The net impact of these two factors was more heat and less light on the last mile journey of the JCPOA. Against this backdrop, some other markers on this issue were:

  • On Feb 4, the US restored the sanctions waiver to Iran to allow international nuclear cooperation projects. Iran welcomed the move, but wanted more.
  • The parliamentarians, on both sides, waded on to the executive turf with their hardened stances. 33 Republican senators warned President Joe Biden on Feb 7 that they would work to thwart implementation of any new Iran nuclear agreement unless Congress was allowed to review and vote on its terms. On the Iranian side, 250 of the 290 members of the Majles sent a letter to President Raisi on Feb 20 laying down six tough conditions for the revival of the 2015 Iran nuclear deal. 
  • Foreign Minister Hossein Amirabdollahian told Munich Security Conference that direct talks with the US were possible if  Washington was ready to take some tangible steps of goodwill on the ground such as freeing Iran's frozen assets abroad,"
  • In an exclusive report on Feb 17, Reuters quoted unidentified diplomats as disclosing that the draft JCPOA deal was to be implemented in phases with prisoner swap, the release of frozen cash and suspension of enrichment above 5% being front-loaded. The main phase involving sanctions-lifting, and Iran oil waivers would come later. (Further Reading: “Exclusive: Iran nuclear deal draft puts prisoners, enrichment, cash first, oil comes later – diplomats”, Reuters, Feb 17, 2022; https://www.reuters.com/world/exclusive-iran-nuclear-deal-draft-puts-prisoners-enrichment-cash-first-oil-comes-2022-02-17)
  • In a statement published in Iranian media on Feb 25, Mohammad Eslami, head of Iran's Atomic Energy Organization, said that even after the revival of the JCPOA, Iran would continue with enrichment of uranium by both 20% and 5%. He did not elaborate, even though the original JCPOA signed in 2015 envisaged Iran enriching uranium only up to 3.67% level.
  • On Feb 9, Iran unveiled "Kheibar Shekan", a new domestically-made missile with a 1,450 km range. (Comment: The name, which translates to “Kheibar Buster”, provocatively invokes early Islamic history. Khaibar was a prosperous Jewish settlement near Madinah that was conquered by Prophet Mohammed’s followers in year 7 AH.)

Turkey: 

President Recep Tayyip Erdogan paid a visit to the UAE on Feb 14-15 during which he met Mohammed bin Zayed (MbZ) Al-Nahyan, the de facto ruler and Mohammed bin Rashed Al-Maktoum, Vice President and Prime Minister. 13 bilateral MoUs in various sectors, including defence cooperation were signed. They also decided to launch the negotiations for a bilateral Comprehensive Economic Partnership Agreement (CEPA). This was President Erdogan’s first visit to the UAE since 2013 and marked a long period of tense bilateral relations which were broken only in Nov 2021 when MbZ visited Ankara. (Comment: After nearly a decade of estrangement caused largely by their respective muscular policies in the WANA region, the two exhausted sides re-discovered the virtue of the re-engagement driven largely by economic considerations. If this budding friendship takes the shape of an alliance, it could have major implications for the region. A UAE-Turkey CEPA could potentially eclipse some of the advantages of Indo-Emirati CEPA signed this month, particularly due to the sharp devaluation of the Turkish currency in recent months.)

On Feb 22, President Erdogan commenced a tour of three African countries, viz. Senegal, DR Congo and Guinea Bissau.

On Feb 2, the commercial flights recommenced between Yerevan and Istanbul after two years long suspension. (Further Reading: “Caucasian thaw: The Turkey-Armenia relationship is thawing” The Economist, Feb 5 2022; https://www.economist.com/europe/2022/02/03/the-turkey-armenia-relationship-is-thawing)

On Feb 28, the leaders of the six opposition parties in Turkey signed a joint declaration outlining their plan to restore the parliamentary system and strip the powers of the presidency if they win the 2023 elections. (Comment: President Erdogan and his AK Party have been in power continuously since 2003 – till 2014 as Prime Minister and since then as President. However, they have lost their appeal and look their most vulnerable in the year before the presidential election, due to economic mismanagement with annual inflation of over 50%, authoritarian tendencies and diminishing returns from their Islamist agenda. Despite deep divisions in the opposition ranks, the 6-party declaration has the potential to create a unified opposition candidate in Kemal Kilicdaroglu, the leader of CHP, the largest opposition party.)   

Israel:

In a speech in Jerusalem to Jewish American leaders on Feb 20, Israeli PM Naftali Benett said "The emerging (JCPOA) deal, as it seems, is highly likely to create a more violent, more volatile Middle East." He also ruled out Israel accepting Iran as a nuclear threshold state, adding, for the effect "Israel will always maintain its freedom of action to defend itself." 

A US Congressional delegation led by the House of Representative Nancy Pelosi arrived in Israel on Feb 15. While she reiterated the "iron-clad" US support for Israel's security, she also expressed the commitment to a two-state solution "that enhances stability and security for Israel, Palestinians and their neighbours". She met Palestinian President Mahmoud Abbas in Ramallah on Feb 17.

Israel participated in the US-led International Maritime Exercise 2022 (IMX22) held in the Middle East from Jan 31. IMX22 involved navies of nearly 60 countries including Saudi Arabia and Oman.

On Feb 7, the African Union Summit failed to reach a decision on the renewal of Israel’s observer status to the organisation. It formed a committee of six heads of states to build a consensus on this issue. 

On Feb 1, the Israeli police admitted to the cases of anomalous domestic use of the Pegasus spyware developed by NSO, an Israeli company. A number of investigations including one by the Israeli Attorney General have been ordered into this scandal. On Feb 7, Prime Minister Bennett vowed to respond to this serious matter. To complicate life further, a second Israeli company named QuaDream with a similar spyware product also surfaced.

PM Bennett said on Feb 1 that Israel was speeding up the development of a laser system to intercept incoming drones and missiles. He said that a prototype of this system would be available within one year.

On Feb 19, the Democratic Republic of Congo said that it was close to recovering $2 bn worth of mining assets from Fleurette Group owned by Israeli investor Dan Gertler, who is under sanctions by the US treasury for unethical practices.

On Feb 1, Amnesty International accused Israel of imposing apartheid on the Palestinians.

Saudi Arabia:

On Feb 9, US President Joe Biden and Saudi King Salman bin Abdulaziz discussed energy supplies and developments in the Middle East, including in Iran and Yemen, during a phone call. (Comment: This teleconversation was contextually significant on two accounts. It was the first acknowledged call by Biden with the Saudi monarch in nearly one year. Biden has refused to speak with de facto ruler Crown Prince Mohammed bin Salman (MbS), whom a CIA report assessed as having approved an operation to capture or kill murdered journalist Jamal Khashoggi in 2018. According to some unconfirmed reports, MbS was present to assist his father during the conversation with President Biden but declined to talk to him as the call was meant only for King Salman. These lingering interpersonal friction between Biden and MbS have affected bilateral ties eroding Washington’s capacity to persuade Riyadh to increase the Saudi oil production.)

Speaking at Munich Security Conference on Feb 19, Saudi Foreign Minister Prince Faisal bin Farhan Al Saud made several important points. He said the fifth round of direct talks with rival Iran was being planned despite a "lack of substantive progress". He accused Iran of continuing to provide the Houthis with ballistic missile and drone parts as well as conventional weapons. He also said if the 2015 nuclear pact was revived that should be "a starting point, not an endpoint" in order to address regional concerns. He said that Saudi Arabia was committed to energy market stability and promised  (without any specifics being mentioned) that it would continue to work with our (OPEC+) partners. He also urged Lebanon to Lebanon offer stronger signals that it is serious about reform to secure support from the international community.

Saudi Arabia declared Feb 22 as its “founding day” to mark the day in 1727 when Mohammed bin Saud, founder of the first Saudi state, took over the emirate of Diriyah - a remote town that now lies on the northwest edge of the Saudi capital Riyadh. The day is to be marked every year as a national holiday. Saudi Arabia would continue to mark its National Day on Sept. 23, commemorating the victory of Al Saud over rival tribes from the Hejaz region and the conquest of the two holy sites of Islam, Mecca and Medina, in 1925. The kingdom of Saudi Arabia was proclaimed later in 1932. (Comment: Significance of the “founding day” lies in it being the anniversary of a seminal political event in history. Hitherto, Saudis have traced their kingdom’s history to 1745 when Mohammed bin Saud, a tribal leader, forged an alliance with Islamic preacher Mohammed ibn Abd al-Wahab, to create a theocratic kingdom based on purist doctrine is often referred to as the Wahabi Islam. Hence, many historians see marking of the “founding day” as a continuation of the ongoing process of de-emphasising the religious aspect of the kingdom.)  

The UAE:

The United Arab Emirates intercepted and destroyed three drones that penetrated the Gulf country's airspace over unpopulated areas early on Feb 2. The responsibility for launching the attack using four drones was taken by Alwiyat al-Waad Al-Haq (The True Promise Brigades), a little known Shia militia based in Iraq, citing UAE interference in Yemen and Iraq as justification. In wake of the incident, the UAE Foreign Minister Sheikh Abdullah bin Zayed phoned his Iranian counterpart Hossein Amirabdollahian and discussed the Yemen crisis. To reassure the Emiratis and bolster their air defences, the US sent the destroyer USS Cole and a few top-line fighter aircraft. US Central Command Chief also visited on Feb 6. France too promised to help secure the Emirati airspace. Comment: Unlike the previous two drone attacks in recent weeks claimed by the Houthis militia in Yemen, this attack was launched from southern Iraq. While it was foiled, the unprovoked attack seemed intended to notch up the threat perception in Abu Dhabi.

On Feb 23, The UAE defence ministry said it intended to sign a contract to buy from China 12 of the L15 training and light combat aircraft, with the option for 36 additional jets of the same type. The price of the deal was not disclosed. The deal, probably the first for Chinese aircraft, was in apparent defiance of strict conditions imposed on defence cooperation with China being insisted by the US for the supply of the state-of-art F-35 planes to the UAE.  

A 3-member delegation from UAE’s Federal National Council paid an official visit to Israel on Feb 7. Separately, on Feb 8, the two countries signed MoUs on cooperation in the field of medicine and tourism.

A report on Feb 2 by Equidem, an international NGO, alleged serious labour abuses of mostly Asian workers by the concerns which built the infrastructure of Dubai Expo 2020 and managing it. (Further Reading:
https://www.equidem.org/assets/downloads/Equidem_EXPOsed_Report.pdf)           

Iraq:

On Feb 13 Iraq's Supreme Federal Court ruled that former foreign minister Hoshyar Zebari is not eligible to run for the presidency amid corruption allegations. (Comment: The ruling prolonged a political standoff caused by hung parliamentary elections in October 2021. Under the Iraqi constitution, the country’s President has to be a Kurd, to be elected by the unicameral parliament. He then invites the leader of the Parliament’s majority coalition to form the government. The legal ineligibility of Mr Zebari, the most likely candidate to win, has therefore thrown a spanner in the political apparatus already on the edge due to low voter participation in the last election and deep politico-ethnic rifts. The court ruling, nevertheless, highlighted endemic corruption in Iraq, OPEC’s second-largest oil producer, blighted with a very high level of poverty and poor governance. It also exposed a pervasive sense of impunity among the political elite.) 

On Feb 15, Iraq's federal court deemed an oil and gas law enacted by the Kurdish Regional Government (KRG) in 2007 as unconstitutional. The court decision stated that the KRG must hand over all crude from the KRG and neighbouring areas to the federal government, represented by the oil ministry in Baghdad. The ruling also declared invalid all the KRG oil contracts with oil companies, foreign parties and states for exploration, extraction, export and sales. The ruling also required the oil ministry to audit all agreements concluded by the KRG with oil and gas companies. KRG leader, Masoud Barzani, described the federal court's opinion as "purely political" and contrary to the Iraqi federal constitution and hoped that the issue would be resolved amicably between the two governments. (Comment: The court ruling on this existential issue has profound implications for the KRG – Iraqi government ties that go beyond the oil economy. The Law under question allowed KRG to regulate and administer the oil and gas resources in Kurdistan independently of the federal government. The KRG crude is exported through a pipeline that runs from Iraq's Kirkuk region to the Turkish port of Ceyhan. These exports were around 500,000 bpd in H1/2021, earning $1.7 bn, the mainstay of the KRG economy and its fiscal autonomy. The court ruling on this longstanding controversial matter could potentially open the old Kurd-vs-Arab wounds in Iraq. Moreover, Kurd Militias, the Peshmerga, played a critical role in saving Iraq from the scourge of Daesh when Baghdad’s own army had melted away. The country is still in no condition to force the court verdict. Lastly, the current tight oil market could do without such rumblings. Contrary to KRG President’s opinion, the federal court verdict is purely legal and its resolution would require deft political handling and a compromise. This space would need to be watched for further developments.)

The U.N. Compensation Commission (UNCC) announced on Feb 9 Iraq had completed the payment of $52.4 bn to compensate 1.5 mn individuals, companies and governments who proved damages due to its 1990-91 invasion and occupation of Kuwait. The largest claim approved by the UNCC was for $14.7 bn in damages incurred by the Kuwait Petroleum Corporation (KPC) after departing Iraqi troops set fire to its oil wells. The compensation was deducted from Iraq’s oil revenues.

Yemen:

On Feb 28, the UN Security Council adopted resolution 2624 renewing the Yemen sanctions regime for one year, called the Houthis a terrorist group and added the Houthis as an entity to the Yemen sanctions list, subject to the measures of the targeted arms embargo in resolution 2216, for having engaged in acts that threaten the peace, security, and stability of Yemen. The resolution was adopted with 11 votes in favour and four abstentions decided that the Houthis as an entity would be subject to the arms embargo contained in its previous Resolution 2216 (2015) which targeted only individuals from the Houthi group for an arms embargo, not the Houthi group as a whole. It also strongly condemns the cross-border attacks by the Houthis, including on Saudi Arabia and the UAE, and demanded their immediate cessation. (Further Reading: “UNSC imposes arms embargo on Houthis in Yemen” Mar 1 2022;  http://www.xinhuanet.com/english/20220301/48f72df7f5294d2eb958a3f2e6fe0f5e/c.html)

Reuters reported on Feb 8 that the easing of  the fighting in Marib-Shabwah sector that had seen the UAE-backed Giants Brigades inflicting heavy losses on the Houthi militia a few weeks ago.

On Feb 14, air-raids by the Saudi-led coalition destroyed a satellite station in Sana’a allegedly used to control the drones launched by the Houthis.

On Feb 23, the US Department of the Treasury imposed new sanctions targeting the front companies and ships that worked with a branch of Iran’s Islamic Revolutionary Guard Corps to smuggle petroleum and other commodities to help fund the Houthis.

Libya:

On Feb 10, Tobruk-based Libyan Parliament named former Interior Minister Fathi Bashaga to replace Abdul Hamid al-Dbeibah as head of a new interim government. The development came as Mr Dbeibah survived an assassination attempt in Tripoli. He refused to demit office – creating a possible return to the country being run by two vertically divided governments, GNA-based in Tripoli and Benghazi-based-LNA. On Feb 13 the UNSG's special adviser on Libya called on both Libya's interim prime minister Abdulhamid al-Dbeibah and his parliament-designated successor Fathi Bashagha to preserve calm and stability. The only silver lining to this parlous slide was that the tenuous ceasefire between the two sides continued to hold.

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Lebanon:

The refusal of Central Bank’s governor to attend a judicial hearing on Feb 22 about his conduct of official business caused considerable confusion and intrigue. He is also under investigation in Switzerland and France.

Hezbollah Chief Sayyed Hassan Nasrallah continued to be in the headlines for his hard stand against Israel and the GCC states. On Feb 8, he described the Kuwaiti proposals for reconciliation between Lebanon and the GCC as “the dictates”. On Feb 16, he claimed that Hezbollah had acquired the capacity to convert its existing stock of rockets into precision missiles and was able to produce drones. He thanked Iranian experts for this feat.

On Feb 1, Reuter cited a circular from the Lebanese Foreign Ministry to its diplomatic missions to seek funding by the Lebanese diaspora, etc to supplant limited official funding. 

Sudan

On Feb 23, Gen. Mohammed Hamdan Daglo, the second-highest-ranking member of the ruling military junta, led a delegation to Moscow that included Ministers of Finance, Energy, Agriculture and Mining. (Comment: The visit was seen as the military junta’s drive to break the international isolation imposed after the dismissal of civilian-military co-habitation arrangement.)

On Feb 12, Sudan's military leader General Abdel Fattah al-Burhan dismissed Western threats of sanctions. He also rejected domestic criticism, mainly by Islamists, of the meetings between Sudanese and Israeli officials maintaining that these were part of the security and intelligence cooperation rather than political in nature.

On Feb 4, opposition group Sudan Professional Alliance (SPA) refused to participate in the UN-mediated efforts to resolve the confrontation between the ruling military government and civilian agitators demanding democracy.

Bahrain:

In a dramatic up-scaling of the bilateral ties established only in October 2020, Israeli Defence Minister Benny Gantz and Prime Minister Naftali Bennett visited Bahrain on Feb 2-3 and Feb 14-15 respectively. They were received by King Hamad bin Issa Al-Khalifa and Crown Prince & PM Salman bin Hamad Al Khalifa. The visits, not previously announced, led to the signing of a Memorandum of Understanding on bilateral Defence Cooperation on Feb 3, the first such framework signed between Israel and a Gulf country. On Feb 12, the two countries also decided to permanently station an Israeli naval officer in Manama ‘to secure the freedom of navigation in the region’ and to liaise with the Bahrain-based US Fifth Fleet. (Comment: Israeli forays towards Bahrain are significant for several reasons. The ruling Sunni clan feels vulnerable at home –with mostly Shia population, which has been restive for nearly a decade – and regionally by Iran, and to a lesser extent by neighbouring Qatar.  Secondly, the island state is quite closely allied to Saudi Arabia, the regional bulwark. Lastly, Bahrain was the traditional hub of economic activity in the Gulf, it has been overtaken by Qatar and the UAE in recent decades. It hopes that ties with Israel would help it to catch up.)

On Feb 7, Bahrain introduced the Golden Residency Visa, to be renewed indefinitely, including the right to work in Bahrain, unlimited entry and exit, and residency for close family members. The visa is aimed at attracting investors, entrepreneurs, and highly talented individuals.

Jordan:

On Feb 3 The United States Department approved weapons sales worth nearly $4.3 bn to Jordan, the UAE and Saudi Arabia. The largest of these went to Jordan comprising of 12 F-16C Block 70 fighter jets, radios targeting pods and associated munitions components including guided-missile tail kits valued at $4.21 bn.

On Feb 20, prominent international newspapers published a report based on leaked information in Credit Suisse managing secret accounts of prominent people, including King Abdullah II of Jordan who alleged had at least six accounts with tens of millions of Swiss francs.  The Royal Palace called it "inaccurate, old and misleading" information.

Palestine:

On Feb 7, a session of the PLO's 141-member Central Council was held in Ramallah. It appointed Hussein Al-Sheikh, 61, to the PLO's Executive Committee. He is likely to be eventually elevated to the Secretary-General of the body. It also elected Rawhi Fattouh, 73, as the head of the National Council, PLO's highest decision-making body. The appointments of the two confidants of President Mahmoud Abbas, 86, were seen as an early sign of a succession plan to ensure moderate leadership of the Palestine Authority in future. The session was boycotted by both Hamas and Islamic Jihad.

Syria:

On Feb 15, the visiting Russian Defence Minister Sergei Shoigu had a meeting with President Bashar Al-Assad in Damascus. The Russian Minister was in Syria in connection with an exercise by the Russian military.

Tunisia:

On Feb 6, President Kais Saied dissolved the Supreme Judicial Council dealing with the independence of judges, capping months of his sharp criticism of Tunisia’s judiciary for being corrupt. However domestic and international protests at this latest authoritarian measure forced a revision. On Feb 10, the Minister for Justice clarified that the law regulating the Council will be reformed as part of a ‘participatory’ process.  (Further Reading:A recession threatens Tunisia’s President Kais Saied” The Economist, Feb 18, 2022; https://www.economist.com/middle-east-and-africa/2022/02/17/a-recession-threatens-tunisias-president-kais-saied)

Blue Nile:

On Feb 24, Ethiopia began generating electricity from the Great Ethiopian Renaissance Dam (GERD) over the Blue Nile. Although the generation of 375 MW of power in the first phase was domestically applauded in a country with 2/3rd population has no access to grid power, it drew protests from Sudan and Egypt, the lower riparian countries vitally dependent on Nile waters.    

II) Economic Developments

Oil Related Developments:

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  • During the month, the global oil and gas market remained volatile as it see-sawed between two ​​​​​competing geopolitical risks: The prospects of Iranian oil exports being resumed after the JCPOA deal being revived and threat of the supply-side disruptions in gas and oil due to Ukraine-Russia tensions. The latter eventually broke into a full scale war on Feb 24 with several western countries imposing economic sanctions, including on oil and gas from Russia, the world’s third-largest producer and second-largest exporter. As the momentum built towards each of the two trends, the market factored in the respective risks. As the month ended, the market increasingly got range-bound due to delays in the JCPOA and the worst-case scenario about a disruption in Russian gas supplies appeared increasingly unlikely. After having flirted with $140/barrel level, the Brent crude futures settled at $100.99 on Feb 28, moving up nearly 10% during the month.
  • The 23-member OPEC+ group ignored the market volatility with studied nonchalance and maintained their commitment to raising their production only by 400,000 bpd in February, notwithstanding the calls from IEA and the US to raise production much higher to contain the price of the crude. Analysts pointed out that due to several producers not being able to meet their respective production quotas, the actual collective production of the OPEC+ group was ~900,000 bpd short in January 2022. This underproduction not only resulted in a tighter market, it also caused ~$21 bn loss of oil revenue collectively to the OPEC+ members during 2021. On Feb 28, OPEC+ Joint Technical Committee monthly report lowered its forecast for the 2022 oil market surplus by about 200,000 bpd to 1.1 mbpd.
  • On Feb 11, the IEA raised its baseline estimate of global demand by nearly 800,000 bpd, correcting past underestimations. The change also indicates the oil demand having just about recovered to a pre-pandemic high of 100.3 mbpd in Q4/2021. A full demand rebound remains expected in Q3/2022.
  • During the month, Saudi Arabia and Kuwait raised oil prices for the Asian buyers.
  • Buoyed by the higher oil prices, Saudi Aramco management began considering going for a new stock market offering, much bigger than the record $29.4 bn IPO launched in 2019. On Feb 23, Aramco closed the $15.5 bn deal with Blackrock-led consortium for the gas pipeline leasing. Separately, on Feb 13 the Kingdom decided to transfer Aramco shares worth $80 bn to Public Investment Fund (PIF) to be used for domestic investments. On Feb 21, Saudi Aramco CEO said that his company was in talks with various partners in China, its largest market, for new investments. He also said that the company plans to reach a sustainable production capacity of 13 mbpd by 2027.
  • As the JCPOA endgame began, there was considerable speculation about the impact of resumed Iranian exports on the global oil market. On Feb 3, the Raisi administration claimed that its oil exports had increased by 40% compared to the final month of President Hassan Rouhani’s administration in August 2021. Neither absolute numbers nor clarifications if the increase was in volume or value terms were provided. On Feb 10, Reuters quoted several oil trade observers putting Iranian oil exports averaging between 600,000 bpd to 1.2 mbpd, most of it going to China. (Comment: Iranian oil exports, being subject to the US economic sanctions, are mostly made surreptitiously, often in the name of other sources. Further, Iran does not currently have any OPEC quota. Further Reading: “As nuclear talks resume, Iran's oil exports increase”, Reuters Feb 10; https://www.reuters.com/business/energy/nuclear-talks-resume-irans-oil-exports-increase-2022-02-10)
  • Reuters reported exclusively on Feb 14 that the $27 bn deal between France's TotalEnergies and Iraq in September 2021 had stalled amid disputes over terms and risks being scrapped by the country's new government. The Iraqi oil ministry denied this report. Separately, crude production in Iraq declined by nearly 500,000 bpd this month as the West Qurna-2 oil field was shut for maintenance and the production at Nasiriya suffered due to protests.
  • As the Ukraine crisis escalated, the EU countries’ high dependence on the Russian gas supplies came into question and pressure mounted on Qatar, the largest exporter after Russia, to replenish the likely shortfall. On Feb 1, Qatar said that it cannot unilaterally do so as most of its LNG sales were locked into long-term contracts with the Asian buyers. The Qatari energy minister said on Feb 22 that the divertible volumes that can be shipped to Europe was only 10-15% of Qatari current LNG exports.

Following economy-related developments took place in WANA countries:

  • On Feb 17, Turkey’s Central Bank Monetary Policy Committee held its one-week repo rate unchanged at 14%, despite annual inflation having notched up to 48.7% last month. Thus, the nation’s yield when adjusted for inflation to almost -35%, the lowest by far among emerging market peers. The country’s current account deficit during 2021 was estimated to have reached $15 bn. However, the government hoped that the tourism revenue would match the pre-pandemic level of $34.5 bn, buoyed partly by 44% depreciation in the local currency vis a vis the US Dollar. (Further Reading: “Analysis: Erdogan's plan to steer Turkish economy out of winter of crisis”, Reuters, Feb 16; https://www.reuters.com/markets/currencies/erdogans-plan-steer-turkish-economy-out-winter-crisis-2022-02-17)
  • On Feb 11, Finance Minister Shaukat Tarin told the Senate that Pakistan would have to return $3 bn borrowed in October 2021 to Saudi Arabia within a year with 4% annual interest. He also said that Pakistan would start getting crude oil from Saudi Arabia on deferred payments from March 2022.  
  • On Feb 1, the Saudi minister of communication and IT said that the Kingdom had launched investments worth $6.4 bn in future technologies in a bid to diversify its economy from oil in the face of fierce regional competition. He projected this initiative to create “a minimum of another 100,000 to 250,000 jobs” over the next eight years.
  • IMF Executive Board Concluded the 2021 Article IV Consultations with the UAE and published its report on Feb 17. It praised the UAE government for moving quickly to address the health and economic effects of the pandemic. It saw the economic recovery gaining momentum, supported by the UAE’s early and strong health response, continued supportive macroeconomic policies, and rebound in tourism and domestic activity related to the delayed Expo 2020. The report put the UAE population at 9.28 mn and per capita GDP at $38,661 in 2020. It put the GDP growth rate for 2020, 2021 and 2022 at -6.1%, 2.2% and 3.5% respectively. (Further Reading: The 67-page IMF report is available at: https://www.imf.org/en/Publications/CR/Issues/2022/02/17/United-Arab-Emirates-2021-Article-IV-Consultation-Press-Release-and-Staff-Report-513265?cid=em-COM-123-44316)
  • On Feb 9  Dubai government media office said that the emirate  planned to attract 50 MNC within the next three years
  • The Israeli economy grew 8.1% in 2021, its fastest growth since 2000. It also benefitted from a sharp rebound from a 2.2% contraction in 2020. The central bank has projected a GDP growth of 5.5% in 2022. The annual inflation rate rose to 3.1% in January 2022. On Feb 13, OECD Secretary-General urged Israel to cut red tape in traditional industries so they can boost productivity and catch up with the country's booming high-tech sector. He said "The remarkable productivity of Israel's vibrant high-tech sector stands in stark contrast to the lower productivity levels in more traditional lagging sectors which employ most of the workforce in Israel." He warned that Israel faced structural challenges and wide socio-economic gaps due to a "two-speed economy".

III) Bilateral Developments

  • On Feb 18, Prime Minister Shri Narendra Modi and UAE de facto ruler Sheikh Mohamed bin Zayed Al Nahyan witnessed the signing of the bilateral Comprehensive Economic Partnership Agreement (CEPA) in New Delhi by Indian Minister of Commerce and Industry Shri Piyush Goyal and Emirati Minister State for Foreign Trade Mr Thani Al Zeyoudi. CEPA), India's Prime Minister's office said that CEPA was expected to boost the annual bilateral trade from $60 bn to $100 bn within the next three to five years.  Shri Goyal said that the deal could create more than a million jobs for India in the next few years, particularly in labour intensive sectors such as the auto industry, plastics, leather and engineering. He also mentioned although the CEPA was negotiated in record 88 days, it was concluded after consulting various stakeholders and the requisite safeguards to protect the Indian interests. Shri Goyal also expected that a CEPA with GCC countries would be signed by the end of 2022. (Comment:  Both sides had their reasons to feel sated over the CEPA. For the UAE, it was the first CEPA since it began pursuing such pacts last September in a bid to strengthen its status as a business hub in wake of growing competition from Saudi Arabia. For India, too, it marked a new beginning in international economic diplomacy after unedifying experience earlier. Despite a concerted PR drive to project the CEPA as an omnibus solution to the multiple challenges to the Indian economy from the tepid export growth to the rampant unemployment, a lot would depend on how the various elements of the deal pan out on the ground in the next few months.)
  • On Feb 1, PM Modi has a teleconversation with Sheikh Salman bin Hamad Al-Khalifa, Crown Prince and Prime Minister of Bahrain.
  • EAM Dr S Jaishankar visited Doha on Feb 9 and met with his Qatari counterpart Sheikh  Mohammed bin Abdulrahman Al-Thani. EAM also had separate meetings with his Iranian and Saudi counterparts on Feb 19 on the sidelines of the Munich Security Conference.
  • There were several developments relating to defence cooperation with WANA Countries: 
  1. Lt. Gen. Fahd Bin Abdullah Mohammed Al-Mutair, Commander of the Royal Saudi Land Forces, arrived in India on Feb 14 on a two-day visit. This was the first-ever such visit from Saudi Arabia to India and followed General MM Naravane’s visit to that country in Dec 2020.
  2. Rear Admiral Saif Bin Nasser Bin Mohsin Al Rahbi, Commander of the Royal Navy of Oman (CRNO) began a goodwill visit to India on Feb 14.
  3. 11th meeting of the Indo-Omani Joint Military Cooperation Committee was held in New Delhi on Jan 31 under the co-chairmanship of Omani Defence Secretary-General Dr Mohammed Bin Nasser Bin Ali Al–Zaabi and Indian Defence Secretary Dr Ajay Kumar. Omani SG was received by Raksha Mantri Shri Rajnath Singh on Feb 1. He also visited some defence establishments.
  • On Feb 14, the OIC issued the following statement:

“The General Secretariat of the Organization of Islamic Cooperation (OIC) expresses deep concern over recent public calls for genocide of Muslims by the ‘Hindutva’ proponents in Haridwar in the State of Uttarakhand and reported incidents of harassment of Muslim women on social media sites as well as banning of Muslim girl students from wearing hijab in the State of Karnataka.

“The continued attacks targeting Muslims and their places of worship, the recent trend of anti-Muslim legislations in different States and rising incidents of violence against Muslims on flimsy pretexts by ‘Hindutva’ groups with impunity, are indicative of the growing trend of Islamophobia.

“The OIC General Secretariat calls upon the international community, especially the UN mechanisms and Special Procedures of the Human Rights Council, to take necessary measures in this regard.

“The OIC General Secretariat further urges once again India to ensure the safety, security and wellbeing of the Muslim community while protecting the way of life of its members and to bring the instigators and perpetrators of acts of violence and hate crimes against them to justice.

  • The next day, Shri Arindam Bagchi the Official Spokesperson of the Indian Ministry of External Affairs gave the following response:

"We have noted yet another motivated and misleading statement from the General Secretariat of the Organisation of Islamic Cooperation (OIC) on matters pertaining to India.

Issues in India are considered and resolved in accordance with our constitutional framework and mechanisms, as well as democratic ethos and polity.
The communal mindset of the OIC Secretariat does not allow for a proper appreciation of these realities. OIC continues to be hijacked by vested interests to further their nefarious propaganda against India.
As a result, it has only harmed its own reputation.”

New Delhi February 15, 2022 (Further Reading: https://www.oic-oci.org/topic/?t_id=30849&ref=19650&lan=en and https://www.mea.gov.in/response-to queries.htm?dtl/34867/Official+Spokespersons+response+to+media+queries+regarding+recent+statement+by+General+Secretariat+of+the+OIC) 

  • On Feb 5, the UAE authorities apprehended Abu Bakar Abdul Gafur Shaikh, an accused in Mumbai serial blast case of 1993 in which killed 257 people and injured 713. This aide of Dawood Ibrahim was on the run for 29 years and is being extradited to India.
  • During the first 10 months of FY22, India imported crude worth $94.3 bn, |petroleum products worth $19.9 bn and LNG worth $9.9 bn. It also exported petroleum products worth $33.4 bn. All these figures are nearly double of the corresponding figures in the previous FY21, due to lower prices and slump in consumption due to the Covid-19 pandemic.  In comparison, India’s crude import bill for the entire year 2020-21 was $62.2 bn.
  • According to official projections, India's fuel consumption in FY23 could rise by 5.5% to 214.5 mn tonnes from the revised estimates of 203.3 mn tonnes for the CFY22.
  • Iraq continues to be the largest source of crude to India, supplying 1.3 mbpd during January 22, nearly a third of total imports.
  • Reuters reported on Feb 24 that India was planning to import urea from Iran under a Rupee payment arrangement.
  • On Feb 9, The Economic Times disclosed that Qatar Investment Authority (QIA) could invest up to $1.5 bn in “Bodhi Tree” a joint venture by Uday Shankar and James Murdoch being formed to invest in media and consumer technology opportunities in Southeast Asia, with a particular focus on India.

 

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The previous issues of West Asia & North Africa Digest are available here: LINK
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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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