IA) Political Developments: Covid-19 Pandemic

Regional Impact of Covid-19 From Pandemic to Endemic?  

While there was an unmistakable decline in Covid-19 cases and deaths, given previous upturns it was still too early to say if it was the beginning of the end of the pandemic. The 28-day data showed fresh cases and deaths to be down by 30% and 20% over the previous period. Although the cumulative cases and death rose by high single digits, these growths were significantly lower than the previous month’s. The 28-day numbers fell in most countries, with Iran – till last month source of nearly half of regional cases and deaths - being the best performer: cases and deaths were down by nearly half and a third respectively. The full vaccinations in Iran were still low at 19%, but that ratio doubled over the last month. Among those countries where cases and deaths continued to rise were Turkey (-which overtook Iran for having most cases, despite a higher vaccination rate), Palestine, Syria and Yemen. Alarmingly enough, the full vaccination rates were in single digits in WANA’s populous countries such as Sudan, Egypt, Syria, Iraq and Algeria. The following table provides details:

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Covid-19 and the Individual WANA Countries:

  • There were signs of equivocation in the UAE policy towards Covid-19 restrictions as the authorities tried to juggle strictness with the need to ensure high participation at the Dubai Expo 2020, Arab world’s first such big mass event set to commence on October 1. After initially stating (September 10) that the Expo visitors would not need to show any proof of full vaccination, they later said (15/10) that the visitors would be required to show having been vaccinated or tested negative within the past 72 hours.  On Sep 10, the UAE lifted all restrictions for fully vaccinated residents to return. In a related move, on Sep 16, UAE claimed to be using trained sniffer dogs to detect the Covid-19 cases with a success rate of 98.2%.
  • On Sep 16, Iran approved several foreign vaccines, including J&J, Sputnik Light and Bharat Biotech’s Covaxin for domestic use to fight the fifth wave of the Pandemic. It was eight months after Supreme Leader Ali Khamenei had banned all foreign vaccines.
  • On Sep 7, Saudi Arabia lifted the entry restriction on entrants from the UAE and two other countries.

IB) Political Developments

WANA and Afghan Transition:

The following Afghanistan related events took place in the WANA region during the month:

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  • From Sep 5, the US Secretaries of Defence Lloyd Austin, and State Antony Blinken separately visited several WANA countries, including Saudi Arabia, Qatar, Bahrain, Kuwait, Egypt and Israel to thank the concerned countries for assisting the final stages of the American withdrawal from Afghanistan. After the Kabul evacuation, attention shifted to the American military bases in the WANA region. (Please see the map illustration alongside)
  • On Sep 6, the Iranian Foreign Ministry condemned the attack on Panchshir valley and foreign interference (read, Pakistan), which it called to be investigated. Two days later, on Sep 8, Tehran expressed concern at the lack of inclusiveness in the interim government formed by Taleban. 
  • Qatar continued its engagement with Taleban during the month. Qatar's foreign minister Sheikh Mohammed bin Abdulrahman Al-Thani visited Kabul on Sep 12 to hold talks with Prime Minister Muhammad Hasan Akhund of Taliban-ruled Afghanistan, in the highest-level foreign visit to Kabul since the militant group seized the capital last month. During the meeting, he called upon the country's new rulers to "involve all Afghan parties in national reconciliation." Conspicuously, the Afghan team for the talks did not include Deputy PM Mullah Abdul Ghani Baradar, till recently head of Taleban Political Office in Qatar. On Sep 3, the Qatari Foreign Ministry declared that it was working to open a humanitarian corridor to aid Afghanistan. On Sep 5, “Qatari Ambassador to Afghanistan” was quoted by al-Jazeera as saying that the Kabul airport has been repaired to receive aid and domestic flights have resumed. On Sep 9, Qatar Airways flew its first civilian flight from Kabul to Doha with 113 passengers.
  • On Sep 8, Saudi Foreign Minister Prince Faisal bin Farhan Al-Saud affirmed the Kingdom’s support for "the choices the Afghan people make regarding the future of their country, away from external interference." He went on to hope that the formation of the caretaker administration will be "a step in the right direction towards achieving security and stability, rejecting violence and extremism, building a bright future in line with these aspirations" 

Further Reading: (i) “The Muslim world is at the cusp of two geopolitical cross-currents”, by Mahesh Sachdev, Hindustan Times, Oct 4,‘21: https://www.hindustantimes.com/opinion/the-muslim-world-is-at-the-cusp-of-two-geopolitical-crosscurrents-101633249263817.html; (ii) “What next for Islamists in the Arab world?” The Economist, Sep 17, ‘21;
https://www.economist.com/middle-east-and-africa/2021/09/18/what-next-for-islamists-in-the-arab-world

Iran:

Iran joined Shanghai Cooperation Organisation (SCO) and President Ebrahim Raisi took part in its summit on Sep 17 held in Tajikistan. It was his first foreign visit since becoming the President.

Nuclear File: In his virtual address to the UNGA session on Sep 21, President Raisi said that his country considered the useful (JCPOA) talks whose ultimate outcome is the lifting of all oppressive (U.S.) sanctions. That theme was echoed by him and Foreign Minister Hossein Amirabdollhian who said on Sep 2 that while Iran agreed “in principle” to resume the JCPOA talks, the current Iranian administration “prioritised good relations with neighbours”. In an exercise in brinkmanship, Iran stonewalled IAEA access to surveillance equipment, until IAEA Chief Rafael Grossi dashed to Tehran on Sep 12 to have a stopgap agreement on the matter. On Sep 14, Iran appointed Deputy FM Ali Bagheri Kani to lead the nuclear talks. 
Comment: For several reasons, the Raisi administration seemed to have calculated that time was on its side in its confrontation with the West over JCPOA. For one, with the radicals in control of all the organs of power in Iran, it felt no domestic pressure from competing political streams. Secondly, with no general elections due in foreseeable future, it could afford to ignore the popular discontent from economic conditions. Thirdly, with higher oil prices and a sellers’ market, its clandestine supplies of crude and refined products were in greater demand and fetched more revenue. Lastly, calibrated defiance of the IAEA inspection regime and JCPOA enrichment limits enabled Iran to march towards a nuclear capability while putting the onus on the “inhumane and illegal” US sanctions. While doing so, it was careful to avoid any formal condemnation by an international body, such as IAEA, which could justify any military action.  

Official Pakistani sources revealed that one Pakistani soldier was killed and another wounded in firing on Sep 29, by the “terrorists” at Chukab on Pakistan – Iran border.

On Sep 3, the US Department of the Treasury sanctioned four Iranian “intelligence officials” for allegedly targeting an Iranian-American journalist and human rights activist living in the US.  

The UAE:

Abu Dhabi Crown Prince Mohammed bin Zayed Al-Nahyan visited the UK and had a summit with PM Boris Johnson on Sep 16. Abu Dhabi Sovereign Fund Mubadala announced its intention to invest £10 bn in the UK during the next five years.

On Sep 25, the UAE cabinet was reshuffled. The major change was to bring in Sheikh Maktoum bin Mohammed bin Rashid Al-Maktoum, Dubai Ruler's son and the current Deputy Ruler of Dubai as the new Deputy Prime Minister and Finance Minister. Mohammed bin Hadi al-Husseini replaced long-serving Obaid Humaid al-Tayer as the Emirates' Minister of State for Finance, while Maryam al- Muhairi was appointed as the Minister of Climate Change and Environment. Suhail Mohamed al- Mazrouei, the current energy minister, was given the additional responsibility of infrastructure.

On Sep 16, the EU Parliament passed a strongly worded resolution on the human rights situation in the UAE and called for “all other human rights defenders, political activists and peaceful dissidents” detained in the country to be freed. It urged EU member states to boycott the Dubai Expo 2020, “in order to signal their disapproval of the human rights violations in the UAE”, recommending they “withdraw their sponsorship”. The EU Parliament resolutions are not binding on the European Commission or the EU member states. The UAE Foreign Ministry issued a statement rejecting the resolution as “factually incorrect.” 

On Sep 14, Minister of State for Foreign Trade Thani al-Zeyoudi announced the UAE’s intention to have expedited trade talks with 8 countries, Viz. India, the UK, Turkey, South Korea, Ethiopia, Indonesia, Israel and Kenya, to negotiate economic agreements. The eventual objective of these talks with each of these countries would be to enter into comprehensive economic accords encompassing trade, foreign direct investment and sectors like tourism. The UAE's combined annual non-oil trade with the eight countries was close to $70 bn at pre-pandemic levels. Officials estimate, for example, non-oil trade with India could rise from $40 bn a year pre-pandemic to $100 bn within five years of an economic deal being reached. He also said the UAE was focused on strengthening its own economy and was not paying attention to what others were doing in the region, though added that economic competition between states was natural and healthy.
Comment: This was part of the efforts by the UAE to bolster its status as the Middle East commercial hub after it was hit hard by the pandemic with its economy contracting last year, and as it faces increasing economic competition from Saudi Arabia. Further Reading: “Middle Eastern foes are giving diplomacy a shot”, The Economist 17/9/2021 https://www.economist.com/middle-east-and-africa/2021/09/18/middle-eastern-foes-are-giving-diplomacy-a-shot

In a high-profile expose, three former US Intelligence Operatives involved with illegal hacking on behalf of the UAE security agencies’ “Operation Raven” agreed to cooperate with the FBI investigators. They also paid a fine of $1.685 mn)
Further Reading: “Ex-U.S. intel operatives admit hacking American networks for UAE” Reuters, Sep 15, 2021; https://www.reuters.com/world/us/american-hacker-mercenaries-face-us-charges-work-uae-2021-09-14 

On Sep 12, the UAE announced a $6.5 bn scheme over the next five years to boost employment of the Emiratis by the private sector.
Comment: Such “Emiratisation” drives have been launched in past as well, but have had a limited impact with the private sector continuing to prefer expatriates for being more pliable and cheaper. 

Israel:

Prime Minister Neftali Bennett met Egyptian President Abdul Fattah el-Sisi in Sharm al-Sheikh on Sep 13. This was the first such bilateral meeting in over a decade. 
Comment: The Sharm al-Sheikh summit signifies a dramatic improvement in Israel-Egypt bilateral ties facilitated by the positive role played by Cairo in arranging – and stabilising – a ceasefire between IDF and Hamas in May 2021. This episode has also allowed two sides also to improve their links with the US overcoming the Biden administration’s initial reluctance. Cairo and Jerusalem have now greater congruity on regional issues such as Iran and Syria.

In his address to the UNGA on Sep 27, PM Naftali Bennett said that Iran had crossed “all red lines” in its nuclear program and vowed that Israel would not allow Tehran to acquire a nuclear weapon. He conspicuously avoided mentioning the Palestine issue in his speech.

On Sep 7, Chief of General Staff Gen Aviv Kohavi warned in a media interview that the military plans dealing with Iran’s nuclear programme have been “greatly accelerated.” He added “a significant chunk of the boost to the defence budget, as was recently agreed, was intended for this purpose. It’s a very complicated job with much more intelligence, much more operational capabilities, much more armaments. We’re working on all these things,” He also said efforts were underway throughout the Middle East to check Iran’s allies, the main objective being to “minimising Iranian presence in the Middle East with an emphasis on Syria … But these operations take place throughout the Middle East. They’re also against Hamas, against Hezbollah.”

Six Palestinian prisoners, five of them from Islamic Jihad and the remaining one from al-Fatah, serving long sentences escaped from maximum security Gilboa jail on Sep 6 by digging a tunnel. Even as the escape embarrassed the Israeli security establishment, all of them were rearrested by the end of the month. Israel holds 4,650 Palestinian prisoners.

Saudi Arabia:

On Sep 4, US President Joe Biden directed the Justice Department and other agencies to begin a six-month process of declassifying documents related to the FBI’s investigations into the September 11, 2001 attacks. He was reacting to the pleas from victims and their families who wanted evidence to snare the Saudi government. However, the first tranche of the report revealed some contacts between the perpetrators, most of whom were Saudis and the Kingdom’s embassy in Washington, there was ‘no smoking gun.’ 

On Sep 6 Saudi Crown Prince Mohammed bin Salman received a call from Abu Dhabi Crown Prince Mohammed bin Zayed. Their off-again, on-again bromance created some buzz.

US National Security Advisor Jake Sullivan and US Special Envoy for Yemen Tim Lenderking visited Saudi Arabia on Sep 28 and were received by Crown Prince Mohammed bin Salman and Deputy Defence Minister Khaled bin Salman. Apart from the Yemeni conflict, they also discussed the global oil market.

Turkey: 

On Sep 29, Turkish President Raceb Tayyip Erdogan had a meeting in Sochi with his Russian counterpart Vladimir Putin. Apart from discussing the situation in Syria and Libya, they also discussed defence cooperation. Turkey, a NATO member has incurred Washington’s opprobrium by ordering an S-400 anti-aircraft missile system from Russia. US President Joe Biden reportedly snubbed President Erdogan by declining to meet him on the sidelines of the UNGA session. This led to the Turkish President publically criticising the American policies on Turkey related issues. 

Lebanon:

On Sep 10, President Aoun issued a decree appointing Najib Mikati, a Sunni Muslim tycoon, as the Prime Minister –Designate, ending a year-long quest for political stability. Mr Mikati’s cabinet won a vote of confidence (by 85-15 margin) on Sep 20 for a policy programme (based on French prescription) that aims to remedy a devastating economic crisis. Earlier on Sep 17, the new government raised the fuel prices and appointed an auditor for going through the Central Bank accounts. The negotiations with IMF, which sanctioned a $1.35 bn SDR injection as a stop-gap measure, for a financial rescue package were also authorised. PM Mikati visited Paris on Sep 24 and was received by French President Macron. 
Comment: Najib Mikati, who has served twice before as Lebanon’s Prime Minister, was acceptable to the country’s fractious political elite as he did not belong to any political dynasty. However, getting their endorsement would appear to be the easier part. It remains to be seen if the same long-entrenched political elite would continue to support the implementation of a tough politico-economic reform programme needed to get Lebanon out of the current mess: 78% of the population is currently living below the poverty line, annual inflation is 138% and the national currency has lost nearly 90% of its value vis a vis the US Dollar during past two years. Moreover, the self-preserving political elite has stubbornly avoided tampering with the confessional appointments system long regarded as the sine qua non for the governance reforms needed to pull out of the quagmire. 

On Sep 16, the European Union Parliament adopted a tough resolution condemning the Lebanese political parties for the country’s devastating economic crisis. It called for general elections to be held on time in May 2022 and the creation of an international humanitarian task force under the auspices of the United Nations to ensure that aid distribution is effective and protected from political patronage networks, in order to improve donor confidence. It also urged the EU to adopt targeted sanctions on Lebanese officials engaged in corruption and obstructing the Beirut Port explosion investigation.

On Sep 16, Hezbollah began bringing Iranian fuel into Lebanon via Syria, a move to ease a crippling energy crisis, but in violation of the U.S. sanctions.

Palestine:

In his speech at the UNGA on Sep 24, President Mahmoud Abbas accused Israel of destroying the two-state solution with actions that could lead Palestinians to demand equal rights within one bi-national state comprising Israel, the West Bank and Gaza.

The reconstruction of the infrastructure destroyed in Gaza during the Hamas-Israel conflict in May 2021 is set to commence in October 2021, Gaza authorities announced on Sep 26. They said that Qatar and Egypt had each committed $500 mn for this purpose. 

Bahrain:

Israeli Foreign Minister Yair Lapid visited Bahrain on Sep 30, the first such visit following the Abraham Accords last year. He was received by King Hamad bin Isa Al-Khalifa and Crown Prince and PM Salman bin Hamad Al-Khalifa. Several bilateral MoUs were signed dealing with healthcare, medicine sports, water and environmental conservation. He also inaugurated the Israeli embassy in Manama. The Gulf Air commenced twice-weekly service to Tel Aviv. 

Qatar:

On Sep 7, Emir Sheikh Tamim bin Hamad Al-Thani received US Secretaries of Defence and State who expressed American appreciation for Qatari assistance during the withdrawal of US forces from Afghanistan. The visitors conceded that “No country has done more than Qatar in this respect.”

In his address to the UNGA on Sep 21, Emir Sheikh Tamim stressed the significance of the continued support of the international community to the Afghan people “at this critical stage, and to separate between humanitarian aid and political differences”. “It’s also important to continue dialogue with the Taliban,” he added. “Boycotting them would only lead to polarisation and reactions, whereas dialogue could be fruitful.”

On Sep 9, Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani visited Tehran and Islamabad to meet his two counterparts. The talks in Tehran were couched in anodyne minimalism. At the joint press conference with Pakistani Foreign Minister Shah Mehmood Qureshi, the two sides called on the international community not to make humanitarian aid to Afghanistan conditional on political developments under the new Taliban government. 

Following Palestinian Authority’s refusal to act as a conduit for Qatari financial aid to Gaza, the UN stepped into that role. This led to $40 mn Qatari assistance being delivered in Israeli currency to the needy families in Gaza. While the Qatar funds had in past been also used to provide salaries to the Gaza civil servants, this has not been resumed yet.

On Sep 29, the US and Qatar took coordinated action to sanction some unspecified financial conduits in the Gulf for Hezbollah militia in Lebanon.   

Libya:

The political climate continued to be unsettled in the wake of the scheduled Presidential and Legislative elections on December 24, with various actors jockeying for advantage. Thus, on Sep 21 Tobruk-based House of Representatives (Parliament) passed a no-confidence motion against the Tripoli-based Government of National Accord (GNA). The Parliament also adopted a new electoral law providing for those desirous of participating in elections to stand down for three months from their current official positions. These legal moves were rejected by the Tripoli-based High Council of State creating an impasse in the way of the proposed elections. Gen Khalifa Haftar, head of the Benghazi-based Libyan National Army (LNA) and the Parliament Speaker Aquila Saleh temporarily stood down from their respective positions on Sep 22, indicating their intention to contest the elections.

On Sep 29, the US House of Representatives passed the “Libya Stabilisation Act”, a bipartisan bill, authorising the Biden administration to impose sanctions on “foreign persons leading, directing, or supporting certain foreign government involvement in Libya … foreign persons threatening the peace or stability of Libya … [and] foreign persons who are responsible for or complicit in gross violations of internationally recognised human rights committed in Libya”.
Comment: The Libya Stability Act is on shaky legal grounds, being a typical US exercise in jurisdictional over-reach. At the same time, it can be argued that such actions concentrate the minds of the concerned extraneous actors and can arguably have a salubrious impact on the current fluid situation in Libya.

Syria:

President Bashar al-Assad travelled to Moscow for a summit with President Vladimir Putin on Sep 13. Putin told him the main problem in Syria was the presence of foreign forces without permission or a U.N. mandate, "which clearly runs counter to international law."

On Sep 8, Syrian army troops entered Deraa al-Balaad, the birthplace of the uprising against President Bashar al-Assad's rule, for the first time since it lost control over the area a decade ago. This followed weeks of “good cop, bad cop” tactics as Syrian forces and their Iranian allies surrounded the region while Russian military police negotiated rebel forces’ exit from the region to Idlib exclusion zone in the north-west of Syria bordering Turkey.
Comment: Following this success, al-Assad regime now has, for the first time in a decade, total control of this strategic region first bordering the Israeli occupied Golan Heights as well as Jordan.

As a sequel to Deraa al-Balaad capture, there was rapid normalisation of Syria’s long-estranged ties with Jordan, which had at times supported anti-Assad forces. Syrian Defence Minister and Chief of Staff visited Jordan on Sep 20 followed by the visit of a team of several Syrian Ministers on Sep 27. On Sep 29, Jordan fully opened the bilateral border at Nasib-Jaber crossing for bilateral and transit trade.  

An official report by the UN High Commissioner for Human Rights published on Sep 25 put the death toll in the Syrian conflict at least 350,209 identified persons. The report expected the real number to be significantly higher. According to these statistics, one in each 13 death was either woman or child.

On Sep 9, a French court held the Syrian President’s uncle Rifaat Al-Assad guilty of property fraud and sentence him to 4 years in jail, which he is unlikely to serve due to old age. His properties worth Euro 90 mn in France and Spain were to be seized.   
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Tunisia:

On Sep 22, several decrees were published in the official gazette aimed at strengthening President Kais Saied’s executive powers, enabling him to rule through decrees ignoring the constitutional provisions. These measures were criticised by the opposition as a coup. President also expressed his intention to appoint a committee to review the Constitution.  

On Sep 29, President Kais Saied appointed Najla Bouden Romdhane as the new prime minister. She is an engineer without political experience and would be the first woman PM in the Arab world. She is Tunisia’s tenth Prime Minister since the Arab Spring in 2011.
Further Reading: “Autocracy has filled the ideological vacuum in the Middle East” David Gardner Financial Times, Sep 28 2021; https://www.ft.com/content/48d42014-2daa-4b0b-abd0-a6d2ffbfdf69    

Egypt:

Egypt’s Abdel Fattah el-Sisi, King Abdullah II of Jordan and the Palestine Authority President Mahmoud Abbas held a summit on Sep 2 in Cairo aimed at the revival of the stalled Middle East Peace Process and strengthening the ceasefire between Hamas and Israel. 

There were efforts to reconcile Egypt’s relations with its estranged neighbours: Egypt and Libya’s Tripoli-based Unity Government signed 14 MoUs during PM Abdul Hamid Dbeibeh’s summit with el-Sisi in Cairo on Sep 16. The event, by itself, indicated radical realignment of Egypt’s posture of backing the renegade LNA administration led by Gen Khalifa Haftar. The Foreign Ministers of Syria and Egypt met on Sep 24 in New York on the sidelines of the UNGA session. It was their first such meeting in a decade. The second round of Deputy Foreign Minister level talks with Turkey was held in Ankara on Sep 8.  

US NSA Jake Sullivan visited Cairo on Sep 29 to discuss with President el-Sisi several regional issues including Israel – Palestine two-state solution, Libya, Tunisia and Sudan. They also discussed the human rights situation in Egypt following the US decision to withhold $130 mn military aid from Egypt over lack of progress on this issue.  

Morocco:

On Sep 8, Morocco held the elections for the Parliament (395 seats) and the Regional Bodies (678 seats) with the Electoral College of 18 million voters. The turnout was around 50%. The results unseated ruling PJD, in power since the new constitution was promulgated in 2011, as it got only 12 seats in the Parliament. In comparison, three other parties NRI, PAM and Isteqlal party got 102, 86 and 78 seats. These three parties formed a coalition with 270 seats and on Sep 10 King Mohammed VI appointed the NRI leader Aziz Akhannouch, a billionaire businessman, as head of the new government.
Comment: The elections were held against the backdrop of economic crisis, pandemic, lack of politico-economic reforms, unemployment and popular alienation all of which led to low voter turnout. The country is essentially an absolute monarchy, the “Makhzen” (the Royal Court) calls the most important shots and the electoral politics has limited sway.

On Sep 29, an EU court annulled EU-Morocco trade agreements on agriculture and fisheries as these were entered into “without the consent of the people of Western Sahara.” Both EU and Morocco reacted to the judgement by stating that they would act to ensure continuity of the bilateral trade. 

Algeria

On Sep 22, Algerian Presidency announced the closure of the country’s airspace to all Moroccan planes ‘in view of the continued provocations and hostile practices on the Moroccan side.
Comment: Algerian recent moves against Morocco commenced on August 24 2021 when diplomatic relations were severed. The immediate provocation for the airspace closure was the war of words at the UNGA that escalated with the Moroccan PR calling at a NAM meeting for “the right of self-determination for the people living in the Kabylie region” in reference to Algeria’s Tamazight-speaking minority which has been restive for some time. He had suggested Algeria should not deny that while backing self-determination for Western Sahara.

Former Algerian President Abdelaziz Bouteflika, who ruled the country for two decades from 1999, passed away on Sep 17. He was 84 and was buried in the Martyrs’ Cemetery in Algiers without the usual fanfare. 
Comment: President Bouteflika straddled the past six decades of Algeria in his three Avatars: as an FLN fighter for Algerian independence (1954-61), as the flamboyant Foreign Minister in the 1960s and 1970s as President of the country (1999-2019) when he ended the Islamic insurgency. However, his last decade, during which he was largely incapacitated, was marred by stultifying governance and increased corruption by le Pouvoir. He was unseated due to popular unrest against his plans for the fourth term. He had paid a state visit to India in 2001, becoming the first Muslim head of State to be invited as the Chief Guest on our Republic Day. Further ReadingBye-bye, Bouteflika: Algeria’s ex-president is dead, but his regime lives on”, Obituary in The Economist 25/9/2021 https://www.economist.com/middle-east-and-africa/2021/09/25/algerias-ex-president-is-dead-but-his-regime-lives-on

Yemen:

On Sep 22 a UN Meeting co-hosted by Sweden, Switzerland and the EU to garner aid for mitigating the humanitarian crisis in Yemen succeeded in getting pledges for additional 600 mn dollars.

On Sep 6, the Houthi militia succeeded in capturing Rahabah east of Sana’a town from President al-Hadi’s forces. The Houthis continue to press their offensive onto the oil city of Marib in central Yemen, the last stronghold of President al-Hadi’s forces.  

Iraq:

An ISIL attack on Sep 5 killed 12 Iraqi policemen at Kirkuk.

Sudan

On Sep 21, Sudanese authorities foiled a coup attempt allegedly by “military officers and civilians” supporters of deposed President Omar al-Bashir. Among those arrested, were 11 military officers.

Kuwait:

A Swiss court convicted Sheikh Ahmed Al-Fahad Al-Sabah – a member of Kuwait Royal family, former OPEC SG and 8-time President of the Olympic Committee of Asia – of political manipulation to allege a false coup d’etat conspiracy in Kuwait. He was sentenced to 30 months in jail, half of the period being suspended. He denied any wrongdoing and vowed to appeal against the verdict. 

II) Economic Developments

Oil Related Developments:

  • OPEC The OPEC monthly report, published on Sep 13, lowered the global oil demand by 110,000 bpd to an average of 99.70 mbpd in Q4/2021, citing the impact of the delta variant of the pandemic. The report predicted that global oil consumption would catch up with its pre-pandemic level in 2022. Later on Sep 28, OPEC’s 2021 World Oil Outlook projected robust growth in oil demand till its likely plateau in 2035 and urged higher upstream investment to avoid a shortfall. Please see the Graphics below for details on short term and long term projections: (APT: Accelerated Policy and Technology) 

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  • Natural Gas GASTECH Conference, held in Dubai from Sep 21, considered the sharp rise in prices of natural gas, particularly in Europe where it has gone up by 280% this year. The price spike was blam
  • ed on a steep rise in post covid consumption, low storage inventories, high demand for gas in Asia, less Russian and LNG supply to Europe than usual, high carbon prices and outages. The analysts expect prices to remain elevated until 2022 or even 2023. 
  • Brent oil rose to a three-year high above $80 a barrel on Sep 28 before falling slightly. OPEC+ Joint Technical Committee (JTC), which met on Sep 29, saw the oil market in a 1.1 mbpd deficit this year, but having a 1.4 mbpd surplus next year under its base scenario. It projected demand growth of about 6 mbpd in 2021 and of 4.2 mbpd next year. Despite projecting a shortfall, the JTC did not recommend any revision to the OPEC+ production plan which provides for only a 400,000 bpd monthly rise by the 23-country producers’ group.
  • On Sep 5, Iraq and France’s Total Group signed a $27 bn deal for four large energy projects over the next 25 years. It would involve measures to enhance oil and gas recovery from existing oil fields in southern Iraq and a large solar power project.
  • A Reuters report on Sep 17 claimed that Iran was currently earning more from petroleum products exports than crude exports, the latter being under US sanctions. The report estimated that Iran exported petrochemicals and petroleum products worth almost $20 billion in 2020, twice the value of its crude exports. The wire agency also reported on Sep 25 that Iran and Venezuela had commenced an arrangement to swap Iranian condensate with Venezuela’s heavy oil. On Sep 28, Reuters reported quoted estimates by Kpler, a commodity analytics firm, implying that year-to-date Chinese oil imports from Iran have averaged 553,000 bpd through August 2021. The agency also said that the US has taken up the issue with China at a diplomatic level.
  • On Sep 5, Saudi Aramco lowered the price differential of light crude for delivery to the Far East in October by $1.3 per barrel. Saudi oil supplies to China in August 2021 surged 53% from a year earlier to 1.96 mbpd, enabling the Kingdom to continue to be China’s top crude source.​​​​​

Following economy-related developments took place in individual WANA countries:

  • Turkey’s economy, largest in WANA (2020 GDP $720 bn), grew by 21.7% in Q2/21 according to official data released on Sep 1. The economy is expected to grow by 8% in 2021 after having grown at 1.8% in 2020. However, the growth is mired in high inflation stuck at the 19% level. On March 23, the Turkish Central Bank reduced the bank rate by 1% to 19% and this counter-intuitive move, reportedly under Presidency’s pressure, sent the national currency to a record low of 8.895 to the US dollar.
  • Saudi Arabia’s preliminary 2022 budget statement was released on Sep 30 painted an optimistic picture buoyed by higher oil income, which contribute nearly half to the revenue. The economy, which contracted by 4.1% in 2020, is expected to grow by 2.6% in 2021 and 7.5% in 2022.  Thanks to higher revenue (forecast to go up by 19% in 2021), the budgetary deficit for 2021 was expected to be 2.7% of the GDP instead of the 4.9% initially projected. The figure for 2020 was 11.2%. Continuing tight fiscal policy despite higher revenues, the fiscal deficit is projected to come down to 1.6% of the GDP in 2022 and turn to a 0.8% surplus in 2023.  In a significant move, Saudi Sukuks (Islamic Sharia-compliant bonds) were allowed to join the Emerging Markets Government Bond Index (EMGBI) from April 2022. The Sukuks have a par amount currently outstanding of $81.6 bn.
  • To mark 50 years of the formation of the UAE, the authorities announced on Sep 5, their plans to launch 50 new economic initiatives and attract $150 bn in FDI during the next 9 years. Separately, in its report following an Article IV Mission to the UAE on Sep 30, IMF estimated the country’s economy to have contracted by 6.1% in 2020, but its non-oil sector could grow by over 3% this year. Earlier on Sep 22, the UAE Central Bank projected the national economy to grow by 2.1% in 2021 and 4.2% in 2022. During the month, the UAE banking system continued to focus on various measures against money-laundering practices. In its 2020 Review, Abu Dhabi Investment Authority (ADIA) – UAE’s largest SWF worth $649 bn – committed itself to focus on investments in technology, and climate change mitigation.
  • According to official statistics released on Sep 1, the Egyptian economy grew by 3.3% in the financial year ending on June 30. It is expected to grow by 5.4% next year.
  • An IMF statement on Sep 12 detailed the extent of the economic difficulties of Oman in 2020, but also showed the improvement made since. The economy that shrank by 2.8% last year is expected to grow by 2.5% in 2021. The total government debt which reached 81.2% in 2020 is expected to come down to 70.7% this year. Similarly, the fiscal deficit came down from 19.3% of the GDP last year to 2.4% this year.
  • World Bank President David Malpass visited Sudan on Sep 29, the first such visit in fifty years as the country gradually rejoined the global economic mainstream. He expressed optimism about the country’s future after meeting Prime Minister Abdalla Hamdok. The World Bank committed about $2bn in grants during next year to help tackle poverty and inequality, and boost growth.
  • On Sep 2 Israeli Knesset gave preliminary approval to the national budget for the financial year 2022. The budget provided for a fiscal deficit of 6.8% of the GDP in 2021 and 3.9% in 2022. The figure was 11.6% in 2020 when the Israeli economy was battered by the pandemic. Due to domestic political uncertainties, it was the first time in three years that national spending was ratified.
  • On Sep 3, Lakson Group of Pakistan and Sharjah-based Air Arabia announced the formation of a low-cost joint venture airline to be called ‘Fly Jinnah.’
  • Qatar Airways reported on Sep 27 that its revenue loss for last financial year ending on 31.3.2021 topped $4bn, and its passenger numbers plunged by 82% y/y as the pandemic gutted demand.

III)  Bilateral Developments

  • Prime Minister Narendra Modi had a teleconversation with Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al-Nahyan on Sep 3. Their discussion centred on bilateral relations.
  • Prime Minister Modi received visiting Saudi Foreign Minister Prince Faisal bin Fahran Al-Saud on Sep 20. The Saudi FM had talks with EAM Dr S. Jaishankar during his 3-day visit to India, the first by a Saudi Minister since the pandemic. Apart from the bilateral issues the two sides also discussed the Afghan situation.
  • UAE Minister of State for Foreign Trade Thani al-Zayoudi visited India on Sep 22 to jointly inaugurate with Commerce and Industries Minister Shri Piyush Goyal the bilateral negotiations for a Comprehensive Economic Partnership Agreement (CEPA). The two sides aim to conclude the negotiations by end of 2021 and implement it by March 2022. They have expressed confidence that a CEPA would boost the bilateral trade from the pre-covid level of $60 bn to $100 bn in five years. (Comment: While sharing the common goal of early conclusion of a bilateral CEPA, the two sides have varying objectives. While India wants to leverage the UAE as a regional trading hub to boost its exports to $400 bn this financial year, the UAE wishes to pre-empt a growing competition from Saudi Arabia and make up for the lost opportunities due to the pandemic and disrupted supply chains. On conclusion, CEPA would be India’s first FTA in a decade. However, given the UAE's role as a trading hub and its advantages in manufacturing due to low energy prices and Special Economic Zones, India would need to be careful on the coverage of rules of origin. Moreover, Indian entrepreneurs may leverage CEPA for round-tripping either capital or products or services to the Indian market. Even without CEPA, it is not uncommon to find high-end FMCGs from the UAE in the Indian market.)   
  • Contretemps was once again visible between India and Turkey. President Erdogan’s address at the UNGA included the following reference to the Jammu and Kashmir dispute: “We maintain our stance in favour of solving the ongoing problem in Kashmir for 74 years, through dialogue between the parties and within the framework of relevant United Nations resolutions.” Hours later, EAM Dr Jaishankar met with his Cyprus counterpart on the sidelines of the UNGA and his post-meeting statement emphasised the need to adhere to the relevant UN Security Council resolutions in respect to the Island nation, which Turkey invaded in 1970s carving out a large enclave not recognised by any other country.
  • Admiral Karambir Singh, Chief of the Naval Staff (CNS), paid a three-day official visit to Oman on Sep 27–29 to consolidate bilateral defence relations with Oman, as also to explore new avenues for defence cooperation. On Sep 27, the two navy Chiefs signed an MoU for the exchange of White Shipping Information. The MoU would facilitate bilateral information exchange on merchant shipping traffic and contribute to enhanced maritime safety and security in the region.
  • On Sep 7, INS Tabar conducted a Maritime Partnership Exercise with the units of the Egyptian navy off Alexandria.
  • India imported 4.2 mbpd of crude in August 2021, 23% higher than the previous month. The share of Middle Eastern crude in India's August oil imports declined to 61.8%. The OPEC share in India's overall imports fell nearly 10% to 67.7% during the month being compensated by higher imports from the US and Mexico. However, an OPEC study confidently predicted that India would be hooked to oil for years to come. (Further Reading: “OPEC Says India Will Be Hooked on Oil for Years to Come” Bloomberg 29 Sep ’21; https://www.bloombergquint.com/markets/opec-says-india-will-be-hooked-on-oil-for-years-to-come#!/homepage)
  • Reliance Industries Ltd said on Sep 29 Saudi Aramco Chairman Yasir Al-Rumayyan met all regulatory criteria for his appointment as an independent director. A major foreign investor has objected to his proposed appointment which is to be voted upon by the shareholders till Oct 19.
  • On Sep 2, ONGC Videsh Ltd (OVL) relinquished an offshore oil block in Israel due to "very poor" prospects for hydrocarbons. 
  • Remaining 31 cricket matches of the Indian Professional League resumed in the UAE on Sep 19 with fans being allowed in stadia. The matches would be played in Dubai, Abu Dhabi and Sharjah with the final to be held on October 15. 

 

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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