• Political Developments
• Economic Developments
• Bilateral Developments
IA) Political Developments: Pan-Regional and Global Issues
WANA and Ukraine Conflict:
During the month under review, WANA countries had to contend with the Ukraine war in several ways. Turkey and Israeli leaders were engaged in containing the hostilities and negotiating a ceasefire. They were eventually unsuccessful. The major oil and gas exporters such as Saudi Arabia, the UAE and Qatar came under Western pressure to expand their production to help redress the central European countries’ dependence on the supplies from Russia. While these countries leveraged the sellers’ market in hydrocarbons, they were either unwilling or unable to raise production. Turkey, the UAE and Israel had also had to balance their ties with the anti-Russia group of countries with the extent of welcome to the Russian oligarchs and their enormous wealth. The Ukraine war-related sanctions on Russia complicated last-mile negotiations as Moscow wanted guarantees that its relations with Tehran under the renewed JCPOA would not be affected by the sanctions. Syria, too, came in for mention as a source of fighters for the Russian campaign. Lastly, countries with precarious economies such as Turkey and Egypt faced economic ruination as the conflict dragged on. The following specific developments are mention-worthy:
- Turkey’s mediatory efforts led to the first direct political-level contact between the warring sides. The Foreign Ministers of Russia and Ukraine met on March 10 on the sidelines of the Antakya diplomatic conclave. However, the talks did not yield any positive outcome. Turkey continued with her mediatory efforts with its Foreign Minister visiting Moscow on March 16. The contacts with the Ukrainian side were also maintained, with President Erdogan speaking with President Volodymyr Zelenskiy. In peace negotiations, Turkey also offered to act as a guarantor for Ukraine. On other hand, Turkey defied the NATO consensus by not imposing any sanctions on Russia. Indeed, on March 27, President Erdogan was quoted as saying that Turkey “cannot burn bridges with Moscow.” At the same time, Turkey brushed aside Russian protests about the supply of Turkey made attack drones to Ukraine, saying that these were commercial sales and not military assistance.
- Israel, too, tried to mediate between the antagonists. On March 5, Israeli Prime Minister Neftali Bennett flew to Moscow to meet with President Vladimir Putin. later spoke by phone with Ukrainian President Volodymyr Zelenskiy only to later declare that the prospects for mediation were poor. On March 20, Ukrainian President Zelenskiy delivered a virtual speech to members of the Israeli Knesset. The Israeli government also urged Ukraine’s 200,000-strong Jewish community to immigrate to Israel and removed bureaucratic hurdles to secure their arrival.
- On March 1, Iranian Supreme Leader Ayatollah Ali Khamenei blamed the Ukraine crisis on the US machinations.
- In his public instructions to the Russian Defence Minister on March 11, President Putin allowed for up to 16,000 “volunteers” from the Middle East to be deployed alongside Russian-backed rebels to fight in Ukraine. According to the Ukrainian intelligence sources, nearly 150 Syrian fighters had joined the conflict by March 15.
- The Western leadership pressed WANA stakeholders for help in the Ukraine conflict. British Prime Minister Boris Johnson visited Riyadh and Abu Dhabi on March 16 and was received by the two Crown Princes Mohammed bin Salman and Mohammed bin Zayed respectively. He, however, did not succeed in persuading them to raise their oil production to enable the west and central European countries to offset their dependence on the supplies from Russia. (Further Reading: “UK’s Johnson fails to secure public oil rise pledges after talks with Saudi, UAE”, Reuters, March 16, 2022; https://www.reuters.com/world/uk-pm-johnson-seeks-additional-oil-flows-uae-saudi-2022-03-15/). The US Secretary of State Anthony Blinken held a meeting with Abraham Accord countries (Israel, the UAE, Bahrain, Morocco and Egypt) at Sde Boker in Israel on March 27/28. He subsequently visited Morocco (where he also called on Abu Dhabi Crown Prince Mohammed bin Zayed al-Nahyan) and Algeria. Apart from rallying support for the Ukraine issue, he also sought to assure his regional interlocutors about the status of indirect negotiations with Iran. However, the Arab oil and gas exporters seem reluctant to respond to the exhortations to open the oil and gas spigots wider unwilling to take sides against Russia with the US perceived as an unreliable ally. On other hand, Saudi Foreign Minister Prince Faisal bin Farhan Al-Saud met Bektum Rostam, a special envoy for Ukraine’s president in Riyadh on March 19. During their discussions of the Ukraine crisis, the host emphasised the Kingdom’s support for de-escalation, protecting civilians and seeking negotiated political solutions and international efforts to resolve the crisis politically. On Mar 20-21 German Economy Minister Robert Habeck toured Qatar and the UAE to discuss long-term energy supplies. In Doha, he was received by Qatari Emir Sheikh Tamim bin Hamad Al-Thani. During the visit to the UAE, a clutch of German energy companies signed deals with ADNOC to set up hydrogen fuel-related demonstration plants.
- The Ukraine crisis-related economic sanctions hit a number of Russian oligarchs and disrupted their profitable links with, and stay in the Western capitals. In their efforts to relocate they zeroed on three WANA destinations, viz, Dubai, Istanbul and Tel Aviv. After initial confusion about the treatment of Russian oligarchs, the Israeli government confirmed its abidance with the western consensus in this regard and distanced itself, at least publicly, from them, many of them Jews. However, Turkey and the UAE were more ambivalent and emerging reports spoke of large scale relocation to these two destinations. (Further Reading: “How a playground for the rich could undermine sanctions on Russian oligarchs” New York Times, March 9; https://www.nytimes.com/2022/03/09/us/russian-oligarchs-sanctions-dubai.html)
WANA and Afghanistan:
- After months of confusion, a senior US diplomat visited the UAE and met on Mar 4 with the representatives of approximately 12,000 Afghans evacuees stranded in two camps in Abu Dhabi awaiting their final settlement. He however did not promise repatriation to all of them.
- On Mar 26, the United States cancelled talks in Doha with the Taliban over the latter’s u-turn on the girls’ education in Afghanistan
- On Mar 6, the Islamic State (Daesh) confirmed the death of its leader Abu Ibrahim Al-Hashemi Al-Quraishi in the US raid last month and announced Abu Al-Hassan Al-Hashemi Al-Quraishi as its new chief. Reuters quoted Iraqi intelligence sources as mentioning that the new Daesh leader was the brother of slain former caliph Abu Bakr al-Baghdadi, the founder of the organisation.
IB) Political Developments
The conclusion of an agreement between Iran and the United States to enable the lifting of the relevant economic sanction in response to Iranian compliance with the JCPOA terms remained elusive during this month as well. Among the causes for the suspended animation were the Iranian insistence to pull the country’s Islamic Revolutionary Guards Corps (IRGC) out of the US blacklist of Foreign Terrorist Organisations (FTO). A new complication arose out of Moscow’s demand that the Western economic sanctions imposed on Russia in response to her military action against Ukraine must not affect her economic ties with Iran. After much heart-burning between Tehran, Moscow and Washington, the Russian Foreign Minister declared in Moscow on March 15 during his meeting with his Iranian counterpart Hossein Amirabdollahian that the written US guarantees to this effect had been received. However, there was still no resolution to IRGC as an FTO conundrum. By March 27the US Special Envoy on Iran told a Doha conference “I can’t be confident it is imminent… A few months ago we thought we were pretty close as well.” He also added that regardless of what happens, many sanctions on the IRGC will remain. On the same day, Iranian Foreign Minister Hossein Amirabdollahian told the EU Negotiator Enrique Mora “the lack of an American political decision is the current obstacle we have in achieving results in Vienna talks.” The legislators of the two countries also waded into the contestations. Thus On March 13 160 of the 290 members of Iran’s Majles called for “economic, technical and political” guarantees that the United States will not renege on the country’s 2015 nuclear deal with world powers again as it did in 2018, and said American sanctions must be lifted effectively and comprehensively. The next day, 49 Republican Senators declared on March 14 that they would not back the revival of the JCPOA.
On March 13, Iran launched 12 missiles at the areas near a new U.S. consulate building in Erbil in Kurdish controlled northern Iraq. Iranian state media said Iran’s Revolutionary Guards Corps carried out the attack against Israeli “strategic centres”, suggesting it was revenge for recent Israeli airstrikes that killed Iranian military personnel in Syria. However, there were speculative reports attributing other motives to the attack. In a related development, on March 30 the US Treasury Department imposed sanctions on an Iranian national for assisting Iran’s missile programme by procurements of the various inputs. The US also said that it was working with Iraq to boost its missile defence capabilities.
The IRGC launched Noor-2, Iran’s second satellite on March 8.
Al-Jazeera reported on March 9 that Iran and Afghanistan were in talks to construct a 227 km long railway line connecting Khaf in Iran with Herat in Afghanistan. It was expected to cost $17 mn. The project is part of a proposed $2bn Five Nations Railway Corridor (FNRC) which would run through China, Kyrgyzstan, Tajikistan, Afghanistan and Iran for an estimated 2,000km.
Two British nationals imprisoned in Iran over spying charges were released on March 16 as the UK authorities returned GBP 400 mn funds held since Shah of Iran’s times.
The Iranian Oil Minister said that the country would aim to export 1.4 mbpd of crude during the country’s next financial year. (Further Reading: “The Gulf states are an economic lifeline for Iran” The Economist March 19; https://www.economist.com/middle-east-and-africa/2022/03/17/the-gulf-states-are-an-economic-lifeline-for-iran).
Israeli President Isaac Herzog paid a two-day visit to Turkey on March 9-10, the first such event in 14 years. He was received by President Recep Tayyip Erdogan who described the visit as “historic” and “a turning point” in Turkish-Israeli relations. He said Turkey was ready to cooperate with Israel in the energy sector, specifically reviving the old proposal of building a pipeline to transport the natural gas from Israel’s offshore Leviathan gas field to Turkey and then onwards to Western Europe. Despite visibly toning down its criticism of Israel ahead of Herzog’s visit, Ankara has ruled out abandoning its commitment to supporting Palestinian statehood.(Comments: Israel and Turkey, two pro-West non-Arab countries in the Middle East, have long collaborated on strategic issues, albeit in a low-key manner. However, under President Erdogan’s rule, Ankara has shifted to strident Islamism and has often been at odds with Israel over its policies on Jerusalem and Occupied Palestinian territories. Through the years of animosity, Turkey and Israel have maintained a robust trade, which stood at $6.7 bn in 2021. The steps towards a rapprochement with Israel come as Turkey, beset by economic troubles, has been trying to end its international isolation by improving strained ties with several countries in the region, including Egypt, the UAE, Saudi Arabia and Armenia.)
German Chancellor Olaf Scholz visited Ankara on March 14 to meet President Erdogan. The visit was overshadowed by the ongoing conflict in Ukraine.
On March 11, the foreign ministers of Turkey and Armenia held official talks on the sidelines of a diplomatic forum in Antalya. This was the first such contact since 2009 and could potentially lead to the restoration of bilateral diplomatic relations between two countries which share a common border and a contentious history.
On March 31, a Turkish prosecutor asked a court to halt the trial in absentia of 26 Saudi suspects over the killing of journalist Jamal Khashoggi in 2018 at the Saudi consulate in Istanbul and transfer the case to Saudi authorities.
(Comment: The case has clouded bilateral ties with Saudi Arabia with Riyadh effectively banning all Turkish imports. Its transfer to Saudi Arabia would remove a strong irritant in bilateral ties and help close a difficult episode. However, the two countries would continue to stand apart on several regional issues including Ankara’s support for the Muslim Brotherhood and the Kingdom’s abomination for the same as well as their respective self-image of the leadership of the Sunni Islam.)
In a rare joint statement on March 18, Israel’s prime minister and foreign minister pressed the United States against removing Iran’s Republican Guards Corps (IRGC) from her blacklist of Foreign Terrorist Organisations, under the terms of ongoing negotiations with Iran to revive the US return to the JCPOA accompanied by a lifting of some economic sanctions.
On March 10, Knesset approved a law denying the naturalisation of Palestinians from the West Bank or Gaza who are married to Israeli citizens.
In three attacks by armed Palestinians during the week to March 29, 11 Israelis were killed, the highest such toll in many years. Prime Minister Naftali Bennett tweeted “Israel is facing a wave of murderous Arab terror.”
Crown Prince Mohammed bin Salman (MbS) gave a wide-ranging interview to the Atlantic magazine of the United States published on March 3. In his candid remarks, he was quoted as saying that he did not care if US President Joe Biden misunderstands him. He said that he did not see Israel as an enemy but as a potential ally. He also hoped to reach an agreement with Iran.
(Further Reading: “Absolute Power”, The Atlantic, March 3; https://www.theatlantic.com/magazine/archive/2022/04/mohammed-bin-salman-saudi-arabia-palace-interview/622822/)
In an exclusive report on March 14, the Wall Street Journal said that Saudi Arabia had invited Chinese President Xi to visit the Kingdom and the visit could take place next May after Ramadhan. The paper also reported on the next day that while Saudi Arabia has been in talks with China over yuan-priced oil for six years but has sped up the negotiations this year. In a relevant development, the Kingdom regained the top spot as the crude supplier to China, the world’s largest importer in Jan-Feb 2022, when the bilateral oil supplies rose to 1.81 mbpd. (Further Reading: Saudi Arabia Invites China’s Xi to Visit Kingdom Amid Strained U.S. Relations, WSJ, March 14, 2022; Saudi Arabia Invites China’s Xi to Visit Kingdom Amid Strained U.S. Relations – WSJ)
On March 12, Saudi Arabia executed 81 persons accused of crimes such as terrorism and deviant beliefs largest number in many years. Iran condemned the mass executions in Saudi Arabia that reportedly included 41 Shi’ite Muslims. In an apparently linked move, it also suspended the fence-mending bilateral talks scheduled to take place the week after in Baghdad.
On Mar 24, a UK court awarded sole custody of two adolescent children of Dubai ruler Sheikh Mohammed bin Rashed Al-Maktoum to his estranged wife Princess Haya bint Hussein, from the Jordanian royal family, after a high profile three-year-long proceedings. He also ordered Sheikh Mohammed to pay GBP 554 mn for the children’s long-term security and maintenance. While ordering the highest ever award in a family custody battle in a British court, the judge said that Sheikh Mohammed had “consistently displayed coercive and controlling behaviour” against family members who defied his will and described his behaviour towards the Princess Haya as ‘domestic abuse.’ A statement issued on behalf of Sheikh Mohammed maintained “his denial of the allegations made in these contentious proceedings.”
On Mar 30, the Iraqi parliament adjourned its session until further notice after failing to elect a new President of the Iraqi Republic due lack of a quorum. (Comment: This was the third failure of the Iraqi parliamentarians to elect the new President. The Iraqi federal court has given the legislators until April 6 to choose a new president, missing this deadline could further deepen the political crisis in the country where October 2021 elections resulted in a deeply fractured verdict. After months of negotiations among various political groupings, a majority coalition is yet to emerge. So, the country not only has neither a new Prime Minister nor a new President, who has to be a Kurd. The old incumbents are continuing.)
The seven-year-old conflict saw two potentially important breakthroughs during the month even as the fighting escalated. Following a 3-day ceasefire by al-Houthis from Mar 26, the Saudi led coalition also halted all military operations from Mar 30. Thus an UN-sponsored ceasefire for two months came into operation, for the first time in many years. The cessation of hostilities was preceded by intensified conflict as al-Houthis kept up with their missile and drone attacks on Saudi Arabia, successfully hitting Saudi Aramco’s oil facility in Yanbu (March 20) and petroleum products distribution station in Jeddah causing a fire in two storage tanks (March 25). Saudis retaliated by the intense bombing of Hodeida and other ports under al-Houthi control on March 27. The US responded to these Houthi attacks by sending Patriot interceptor missile batteries to Saudi Arabia.
On Mr 28, a Saudi-hosted conference on Yemen’s future began in Riyadh, without al-Houthi participation.
A pledging conference for UN humanitarian work in Yemen on Mar 16 yielded commitments for $1.3 bn, far shorter than the $ 4.27 bn sought by the United Nations.
On Mar 14, Prime Minister Najib Mikati declared that he would not seek re-election in a parliamentary election scheduled for May 15. His declaration further complicated the electoral politics of the troubled country, where the Prime Minister is traditionally a Sunni Muslim. Relevant to note that Mr Mikati’s predecessor Sa’ad al-Hariri has already quit politics. 27 of the parliament’s 128 seats are reserved for Sunnis.
An IMF technical team concluded its visit to Lebanon on March 1 to take stock of the work done so far towards an IMF aid program and outline the next steps needed. A successor IMF staff mission is being planned, an IMF spokesman revealed on Mar 17. On Mar 30, Lebanon’s Cabinet approved a long-delayed draft capital control law paving the way for its final approval by the parliament. The enactment of the law is a key pre-condition for the release of the badly-needed IMF assistance program.
On Mar 21, an investigative judge slapped corruption charges against Riad Salameh, the country’s Central Bank Governor for nearly 30 years, and his brother, Raja Salameh, who was arrested last week. A week earlier, the judge froze the assets of six of the country’s largest banks and those of their board of directors. The banks responded with a two-day protest strike. In this connection, on Mar 28, France, Germany and Luxembourg seized properties and frozen assets worth 120 million euros ($130 mn) in an operation linked to money laundering in Lebanon.
On March 1, Prime Minister-designate Fathi Bashagha submitted his Cabinet to the Tobruk-based House of Representatives, where 92 of 101 legislators in attendance approved it. The new government included three deputy prime ministers, 29 ministers and six ministers of state. The cabinet appointed by the prime minister of the new rival government, Fathi Bashagha, was sworn in later on Mar 3, though not all ministers attended. The Cabinet was ushered in despite the refusal of the Tripoli-based Prime Minister Abdul Hamid al-Dbeibah to quit raising the spectre of re-igniting the civil war between Tripoli-based GNA and Benghazi–based LNA. In a statement on Mar 3, the United Nations voiced concerns that the voting on the new cabinet was flawed. The UN also offered mediation and on Mar 11 the UNSMIL managed to have the rival military groups withdraw from Tripoli, thus staving off an escalation of the situation.
To complicate the precarious situation further, Libya’s National Oil Company announced that the Sharara oilfield, the country’s largest producing 290,000 barrels a day, was closed on March 3 after an unknown group shut down one of its main valves. The action was reportedly to demand better payment conditions for the NOC employees.
On March 17, At least 17 people were reported killed and four villages burned down in the gold-rich Jabal Moon mountain area of western Sudan bordering Chad, after attacks by the suspected Janjaweed, a militia linked to the Khartoum government. The victims were mostly agrarian non-Arab communities who have, for years, witnessed repeated attacks by predominantly Arab armed groups.
On March 21, the US sanctioned Sudan’s Central Reserve Police for “using excessive force against the peaceful demonstrations.”
On March 18, Syrian President Bashar al-Assad paid a visit to the United Arab Emirates. He was received and seen off by Sheikh Mohammed bin Zayed Al-Nahyan (MbZ), the de facto ruler of the UAE. He also met with Sheikh Mohammed bin Rashed Al-Maktoum, Ruler of Dubai and Vice President & PM of the UAE. MbZ “stressed that Syria is a fundamental pillar of Arab security and that the UAE is keen to strengthen cooperation with it.” The visit drew a sharp rebuke from Washington, with the State Department saying it was “profoundly disappointed and troubled” by what it called an apparent attempt to legitimize Assad. (Comment: President al-Assad’s visit to the UAE is significant in multiple ways. This was his first visit to an Arab state since the Syrian civil war began in 2011 and indicated his ongoing rehabilitation in the Arab world after a decade of ostracisation and demonisation. For the UAE, it signifies the unadulterated pursuit of her national interest. Additionally, Abu Dhabi shares Damascus’ disdain for both the political Islamists and the Arab Springers. The UAE could also have been motivated by huge projects for post-war reconstruction. At the international level, the UAE playing host to the Syrian President could have meant to flaunt Abu Dhabi’s foreign policy independence away from the Pax Americana and curry favour with Moscow, the patron of the Syrian regime. The ties with strongly anti-Zionist Syria could also be meant to burnish the Gulf state’s Arab credentials following her dramatic foray with Israel over the past two years. Damascus could also help Abu Dhabi to mend fences with Tehran. Ironically, the Abu Dhabi Summit coincided with the 11th anniversary of the beginning of the Syrian civil war.)
On March 25, the UN-sponsored talks in Geneva on the political future of Syria, under the rubric of the Constitutional Committee comprising the regime, opposition and the civil society concluded without any significant progress being made.
On March 7, President Kais Saied made “temporary” appointments of the new members of the Supreme Judicial Council dealing with the independence of judges. He had suspended the Council last month but was forced into retrieving the step after widespread protests against this dictatorial measure.
On March 30, President Saied announced the dissolution of the national parliament. The measure came nearly eight months after his suspension of the body in July 2021 at the beginning of his Presidential rule. Parliament’s dissolution was bitterly criticised by the opposition as yet another sign of the country losing its democratic political institutions and slipping back into dictatorship.
On March 10 the US officially designated Qatar as a major non-NATO ally, fulfilling President Biden’s promise during the bilateral summit last month at the White House.
On March 290, Qatari Foreign Minister Mohammed bin Abdulrahman Al Thani and Finance Minister Ali bin Ahmed Al Kuwari called on Egyptian President Abdel Fattah el-Sisi in Cairo and Prime Minister Mostafa Madbouli. They announced that Qatar will invest $5 bn in Egypt, officials have said, signalling an improvement in ties between the two nations which were estranged till early 2021.
On March 21, Egyptian President Abdel Fattah al-Sisi hosted Israel’s prime minister Neftali Bennett and Sheikh Mohammed bin Zayed, the de facto leader of the United Arab Emirates for a meeting in Sharm al-Sheikh. President al-Sisi stressed Egypt’s commitment to security in the Gulf and “rejection of any practices that seek to destabilise it.” There was no official comment on Israeli PM’s participation in the Summit.
On March 30, Saudi Arabia deposited $5 bn in Egypt’s Central Bank to help the country cope with the financial stress caused by the Ukraine crisis.
On March 19, Algeria announced the recall of her ambassador to Spain to protest the “abrupt about-turn” by Madrid, which had previously maintained neutrality in the decades-old conflict over its former colony. On the previous day, the Spanish foreign minister backed a 2007 proposal by Morocco to offer Western Sahara autonomy under its sovereignty, describing it as the “most serious, realistic and credible basis” to end the long-running conflict.
II) Economic Developments
Oil Related Developments:
The international oil eco-system was buffeted by several impetuses during the month. These included the economic fallout of the Russian invasion of Ukraine, anti-Covid lockdown in Shanghai in China, the largest consumer of crude, al-Houthi attacks on Saudi oil installations, lack of progress on Iran JCPOA and lifting of the US sanctions, disruption in oil exports from Libya and the Caspian Sea as well as the relative inability of the American shale producers to get their act together to leverage very high oil prices. In this regard, the following specifics are worthy of mention:
- Even as the Western countries were reluctant to cut their huge dependence on Russian hydrocarbons, Russia’s role as the second-largest exporter of crude (averaging 4 to 5 mbpd) and the largest exporter of gas (200 mcm/d) cast a long shadow on the market as the war in Ukraine showed no sign of ending. The oil prices swung wildly during the month reaching the peak of $139.13/barrel for Brent on March 6. These fell below $100/barrel on March 16 as indications emerged that the West and Central European importers were unlikely to shun Russian crude. (Further Reading: “Russia energy chaos triggers biggest market shock in decades” Bloomberg, March 5; https://www.bloombergquint.com/markets/russia-energy-chaos-triggers-the-biggest-market-shock-in-decades)
- On March 1, the members of the International Energy Agency (IEA) agreed to release 60 mn barrels of crude from their reserves to cool the prices. However, the markets were disappointed with the inadequate size of this release and oil prices went up that day by nearly 7%.
- During their monthly meeting on March 1, the OPEC+ group of oil exporters led by Russia and Saudi Arabia stuck to their planned monthly increase of 400,000 bpd nonchalantly disregarding the pleas from consumers to raise their production by a larger. They also ignored signs that the OPEC+ group was consistently producing below its ceiling: It produced about 1.05 mbpd below its agreed targets in February 2022 and the gap is set to widen as IEA projected on March 16 that up to 3mbpd of Russian oil may not be able to find buyers from April onwards. Even at their next monthly meeting on March 31, OPEC+ decided to stick with its planned increase of 432,000 bpd. In a move seen to be more political than technical, the group decided to stop using the IEA data replacing it with the reports from consultancies Wood Mackenzie and Rystad Energy.
- Strict lockdown in Shanghai and other cities in China, the world’s largest importer of crude, from March 28 also affected the demand pushing the prices lower by 7%.
- On March 1, Reuters quoted three unnamed tanker trackers to estimate that Chinese imports of Iranian oil exceeded 700,000 barrels per day (bpd) for January, surpassing the 623,000 bpd peak recorded by Chinese customs in 2017 before former U.S. President Trump reimposed sanctions in 2018 on Iranian oil exports. On March 3, the Iranian oil minister expected that country’s oil production can reach the top level within two months of the lifting of the US economic sanctions.
- On March 30, Saudi Aramco declared that its net income in 2021 grew by 124% to $110 bn from $49 bn in the previous year. This was largely due to huge disruptions in the oil market in 2020 caused by the Covid-19 pandemic and a stellar recovery in the oil prices in 2021.
Following economy-related developments took place in WANA countries:
- On March 4, the Paris-based global financial crimes watchdog the Financial Action Task Force (FATF) added the UAE to its “Grey Watchlist” calling upon it to “demonstrate progress on facilitating international anti-money laundering investigations, on managing risks in certain industries including real estate agents and precious stones and metal dealers, and on identifying suspicious transactions in the economy.” The designation is deemed as a blow for the country in accelerated economic competition with Gulf neighbour Saudi Arabia, the world’s top oil exporter and biggest Arab economy. It also took place against the backdrop of the Russian oligarchs and banks increasingly using the UAE as their new “safe haven” for their investment as well as the crypto-currencies dealings. (Further Reading: “Dubai a favourite destination as some Moscow-based bankers beat a path to exit” Reuters, March 10; https://www.reuters.com/markets/europe/dubai-favorite-destination-some-moscow-based-bankers-beat-path-exit-2022-03-10/)
- On March 26, Godman Sachs projected Turkey’s current account deficit in 2022 to rise to $32 bn, or 4.0% of the GDP, from 2.5% previously projected. It cited rising commodity prices due to the war in Ukraine and Ankara’s reluctance to raise rates as the main reasons for CAD’s deterioration.
- On March 25, the Standard and Poors revised Saudi outlook to “Positive” from “Stable” citing a sharp rise in oil revenues. In a relevant development, Bloomberg reported on March 25 a jump in the value of the Yuan following a Saudi hint that it could use the Chinese currency in parts of the oil deals, instead of the US Dollar.
- On March 8, Lockheed Martin announced its intention to invest $1 bn in Saudi Arabia, in such areas as manufacturing, R&D and MRO (maintenance, repair and operations) initiatives across the kingdom, and upskilling Saudi industry.
- On March 21, Egypt devalued its national currency, the Pound, by 14% in wake of the deterioration in the country’s monetary health due to the Ukraine crisis.
III) Bilateral Developments
- The Indian Ministers of Commerce and Industry, Information and Steel visited the UAE during the month to showcase business opportunities in India at the Dubai Expo 2020 against the backdrop of the recent signing of the bilateral CEPA. Among the various announcements made during the visits was the establishment of the bilateral “Investment Council’ as well as the projection of the bilateral trade reaching the $100 bn mark over five years.
- The 48th Council of Islamic Foreign Ministers Meeting (CIFM) was held in Islamabad on March 22. In his inaugural address, Pakistani Prime Minister Imran Khan Niazi urged the Islamic Ummah to do more for the emancipation of Palestinians and Kashmiris. The meeting was attended by over 600 delegates from the Organisation of Islamic Cooperation (OIC). The visiting Chinese Foreign Minister Wang Yi also addressed the gathering. Although the Taleban Foreign Minister was in Islamabad, Afghanistan was not officially represented at the meeting. Among the various documents adopted was Islamabad Declaration which contained the following two references concerning India:
“We renew unwavering solidarity with the people of Jammu and Kashmir and express full support for their inalienable right to self-determination in accordance with the relevant resolutions of the UN Security Council and the OIC, and the wishes of the Kashmiri people. We condemn massive violations of their human rights in the Indian Illegally Occupied Jammu and Kashmir (IIOJK).
We reiterate rejection of India’s illegal and unilateral actions since August 5, 2019 aimed at altering the demographic composition of the occupied territory, suppressing the realization of the inalienable right of self-determination of the Kashmiris, in violation of UN Security Council resolutions, and international law including the 4th Geneva Convention.
We declare that the final settlement of the Jammu and Kashmir dispute in accordance with UN Security Council resolutions is indispensable for durable peace in South Asia. We reiterate our call on India to: a) reverse its unilateral and illegal measures instituted since 5th August 2019; b) cease its oppression and human rights violations against the Kashmiris in Indian Illegally Occupied Jammu and Kashmir; c) halt and reverse attempts to alter the demographic structure and to redraw electoral constituencies in IIOJK; and d) take concrete and meaningful steps for full implementation of the UN Security Council resolutions on Jammu and Kashmir.
We express grave concern over the violation of Pakistan’s airspace, threat to passenger aircraft and dangers to peace and security in South Asia arising from the launch of supersonic missile on 9 March 2022 by India. We call on India to fully abide by international law and norms of responsible State behavior and conduct a joint probe with Pakistan to accurately establish facts.
We acknowledge Pakistan’s pivotal role as an anchor of stability in South Asia, and commend its role and efforts for promotion of regional peace, based on the UN Charter principles including sovereign equality of States, political independence, non-use or threat of use of force and pacific settlement of disputes.”
“We denounce the systematic and widespread policy of discrimination and intolerance against Muslims in India, which has led to their political, economic and social marginalization. We are deeply alarmed by the most pernicious attacks on the Muslim identity in India as manifest in the discriminatory laws and policies targeting the Hijab. We call upon India to immediately revoke such discriminatory laws, ensure the rights of the Indian Muslims and protect their religious freedoms.”
- On March 24, the Spokesman of the Indian Ministry of External Affairs had the following response to media queries on references to India in the statements and resolutions adopted in the meeting of the Organisation of Islamic Cooperation in Pakistan:
“The statements and resolutions adopted at the meeting demonstrate both the irrelevance of the Organisation of Islamic Cooperation as a body and role of Pakistan as its manipulator.
References have been made to India that are based on falsehoods and misrepresentation. The absurdity of this body commenting on the treatment of minorities, that too at the instance of a serial violator of human rights like Pakistan, is so evident.
Nations and Governments that associate themselves with such exercises should realise the impact it has on their reputation.”
March 24, 2022
- Earlier on March 16, India had also sharply reacted to the OIC’s invitation to the Chairman of the All Parties Hurriyat Conference stating “India does not expect Organisation of Islamic Cooperation (OIC) to encourage actors and organisations engaged in terrorism.”(Comment: Pakistan had several motives for hosting the 48th CIFM. It wanted to turn the page over its differences with Saudi Arabia over perceived efforts to create alternate Islamic leadership with Turkey and Malaysia three years ago, help Taleban gain recognition among the Islamic world, put India in the dock over the change of status of Jammu and Kashmir as well as allegations of discrimination against Indian Muslims and whitewash China’s mistreatment of her Uyghur minority. Despite attempts at meticulous timing, which included holding the event the day before “Pakistan Day” celebrations and a fortnight before the advent of the holy month of Ramadan, things did not go as per the choreography. Pakistani opposition threatened to blockade the venue and submitted a no-confidence motion against PM Niazi to the parliament which eventually removed him on April 3. Thus, his inaugural address at CIFM also became his swan song.) (Further Reading: https://www.oicoci.org/topic/?t_id=33947&t_ref=22694&lan=en and Official Spokesperson’s response to media queries on references to India in the statements and resolutions adopted in the meeting of the Organisation of Islamic Cooperation in Pakistan
- Following supply disruptions from the Ukraine conflict, India scurried to make alternative arrangements for Potash, a strategic input for fertilisers. On March 21, Indian Potash Limited (IPL), a PSU signed an MoU with Israel Chemicals Limited (ICL) for the supply of Muriate of Potash (MOP) for the period 2022 to 2027 with a yearly quantity of 6 to 6.5 Lakh MT in the presence of Dr Mansukh Mandaviya, Union Minister of Health & Family Welfare and Chemicals and Fertilizers. On March 22, Dr Mansukh Mandaviya received a Jordanian delegation led by their Minister of Investment, Kheiry Yaser Abdel-Monim Amr. They discussed the supply of Phosphatic and Potassic fertilizers and raw materials from Jordan to India.
- A UAE army delegation visited India on March 21-26 on a tour of Indian Army training establishments and to attend the Inaugural Army-to-Army Staff Talks.
- During the month, Egypt, the world’s largest importer of wheat, showed interest in procuring the commodity from India to make up for disrupted supplies from Russia and Ukraine.
- On March 21, the Ministry of Petroleum and Natural Gas provided the following figures for India’s hydrocarbon imports for the last five years:
- There were indications during the month which suggested the continued increase in India’s oil demand. Thus, India’s crude imports rose in February to 4.86 mn barrels per day (bpd), their highest since Dec 2020. Iraq (23%), Saudi Arabia (18%), the UAE (11%) and the USA (8%) were the top four suppliers of crude to India. These were up 5% from January and were up 24% from February 2021. On other hand, India’s gasoline and gasoil sales rose above pre-COVID levels of 2019 in the first half of March. State-controlled retailers sold 3.53 million tonnes of gasoil from March 1 to 15, up 32.8% from a month earlier. The sales of gasoline were 1.24 million tonnes, up 18.8%.
- On March 30, India decided to more than double the price of locally produced natural gas from April 1 for the first half of the next fiscal year, India will raise the price of locally produced gas from old fields for April-September to a record-high $6.1 per mn metric British thermal units (mmBtu) from the current $2.90/mmBtu. It will raise the ceiling price for gas produced from more challenging fields to $9.92 per mmBtu from $6.13 per mmBtu. (Comment: This sharp upward revision reflects a surge in global prices. It meets the longstanding demand of local gas producers and is expected to spur gas prospecting and production.)
- On March 18, Bloomberg quoted unnamed sources to report that the Adani Group, led by India’s richest tycoon Gautam Adani, has held preliminary talks on a range of potential cooperation and joint investment opportunities with Saudi Aramco and the country’s Public Investment Fund. The idea of buying part of the PIF’s stake in Aramco as an asset swap has been under consideration. Relevant to note that till last year Saudi Aramco was in similar talks with India’s Reliance India Ltd of Mukesh Ambani. (Further Reading: “Gautam Adani explores partnerships with Saudi Aramco” Bloomberg, March 18;https://economictimes.indiatimes.com/industry/energy/oil-gas/gautam-adani-explores-partnerships-with-saudi-aramco/articleshow/90310028.cms)
- On March 25, New Medical Centre, NMC, formerly owned by Dr B.R. Shetty, an NRI tycoon, exited receivership in the UAE after nearly two years.
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(The views expressed are personal)