West Asia & North Africa Digest by Ambassador Mahesh Sachdev | June 2021

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ANANTA ASPEN CENTRE

IA) Political Developments: Covid-19 Pandemic

Regional Impact of Covid-19The Pandemic tapers off as vaccinations rise  

Both incidences of Covid-19 confirmed cases and deaths continued to decline in WANA countries, led particularly by those with high mass vaccination ratios. Thus the growth in confirmed cases declined in the region to 9.5% (from 44.1% in April 2021) and the deaths went down to 11.3% from 16.0% in the previous month. The following table provides details:

Cumulative Covid-19 Cases in WANA (as of June 1 2021)

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Covid-19 and the Individual WANA Countries:

  • Eid al-Fitr celebrations during the second and third week of the month through the region were overshadowed by measures to prevent the spread of the Covid-19 pandemic.
  • On May 7 Saudi Arabia made it mandatory for all public and private sector workers to have Covid vaccination. While it permitted on May the visitors from 11, mostly western countries, subject to appropriate quarantine restrictions, entry from many other countries, including India, stayed banned.
  • Iran persuaded Iraq to release $125 mn of its frozen funds under the US sanctions for buying vaccines from Europe.
  • Israel ended most pandemic restrictions from May 23 onwards following the successful rollout of its mass vaccination drive. For instance, it reported only 12 new cases on May 22, as compared to over 10,000 every day during the peak in January 2021.
  • On May 25 Bahrain reported 28 fatalities from Covid-19, a new record, despite widespread vaccination using the Chinese vaccines.   
  • On May 13, the UAE allowed for emergency use of Pfizer and BioNTech vaccine for children aged 12 to 15 years. The vaccine is already permitted for older children. On May 18 UAE began offering a third shot of Sinopharm vaccine, amidst growing concerns about its low efficacy.

IB) Political Developments

Israel-Palestine Conflict 2021:

On May 10 a military conflagration commenced between Israel and Hamas group ruling Gaza with the latter shooting Qassam rockets at Jerusalem region. Over the next 11 days, the Israeli air force and artillery extensively bombed some 1500 targets in Gaza while Hamas fired 4,300 rockets targeting south and central Israel. The fighting, which ceased on May 21 after an Egyptian brokered truce was put in place, caused the death of 243 Palestinians (Israel claimed to have killed 225 combatants of Hamas and Palestinian Islamic Jihad) and 13 Israeli residents (including an Indian housemaid) and hundreds of injured persons. Israeli businesses lost $368 mn due to the conflict and Gaza suffered a $40 mn loss to the industry and $22 mn to its energy infrastructure. Among the collateral developments of the conflict were tensions between Jews and Israeli Arabs (comprising 21% of the Israeli population) leading to President Reuven Rivlin warning on May 12 of a Civil War. Israel also retaliated against the attempt to fire rockets from southern Lebanon.

Among the international repercussions of the conflict was a predictable resolution by the Organisation of Islamic Countries condemning Israel for its barbaric attacks on Gaza and accusing the UN Security Council of inertia. The UN Human Rights Council, too, waded into the developing crisis declaring on May 7 that East Jerusalem was an occupied Palestinian Territory subject to the international humanitarian law. On May 13, International Criminal Court prosecutor Fatou Bensouda told Reuters that despite the Israeli boycott, she intended to press ahead with her enquiry into the violations by Israel and Hamas since 2014.  Although the UN Security Council met frequently during the hostilities, the US delegation opposed any resolution being adopted favouring its bilateral approaches. In a significant statement on May 21, President Biden said that a two-state solution was the “only answer” to the Israel-Palestine conflict, emphatically reiterating decades-old US policy. He also emphasised that “there will be no peace” in the region if Israel’s right to exist as an independent Jewish nation was not acknowledged and accepted.
Comment: In retrospect, the Israel-Hamas conflict seemed preordained by long-simmering tensions over religious (restricted access to al-Aqsa mosque during Ramadhan) and property issues (court cases to evict long-staying Arab families in Sheikh Jarrah and Silwan precincts) in East Jerusalem. Further, the Israeli military establishment was wary of growing Hamas military capabilities and wanted to degrade them to avoid a 2014-type long conflict. The conflict’s three major geopolitical fallouts were: The Biden administration being forced to abandon its arms-length approach to the Middle East and being forced into intense interactions with Israel and several Arab leaders, esp. Egypt, which alone had a direct border with Gaza. Secondly, the conflict also put the Arab signatories of the Abraham Accords, viz. the UAE, Bahrain, Morocco and Sudan on the defensive, at least temporarily. Lastly, within Palestine, it pushed up the popular stock of Hamas for defying Israel for 11 days, in contrast to al-Fatah’s perceived lack of spine. 
Further Reading:  “In the Israel-Hamas conflict, the victory of cynicism”, Hindustan Times, May 25, 2021; https://www.hindustantimes.com/opinion/in-the-israel-hamas-conflict-the-victory-of-cynicism-101621928830548.html

Israel:

Following the end of the mandated period to Benyamin Netanyahu on May 5, Israeli President Rivlin invited Yair Lipid, head of the Yesh Atid party with 17 members in 120-seated Knesset to form a government after last month’s elections giving him a 28-days for this purpose. Against all odds, by end of the month, he appeared poised to form an 8-party coalition comprising of the following parties with 61 seats, just enough for majority: Yesh Atid (17), Yesh Atid’s allies (34), Yamina (6) and United Arab List (4).

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Comment: Israel’s politics remained deeply fissured despite four general elections in less than two years. The proposed coalition, comprising of incongruent political tendencies from Israeli Arabs to Centrists and ultra-nationalists, is held together only by their determination to unseat Netanyahu, in the saddle for record 12 years, as well as need to avoid the fifth general election. While they may succeed in forming the government, it is likely to face its inner contradictions sooner than later.  

On May 17, the Biden administration approved arms sale worth $735 mn to Israel.

Israel’s own military exports hit $8.3 bn in 2020, having grown $1 bn over the 2019 figure. As in previous years, the bulk of the military exports went to unspecified countries in Asia and the Pacific region

On May 12 Israel and South Korea signed a bilateral Free Trade Agreement in Seoul. According to the FTA, South Korea will apply a zero tariff to 95.2% of the items it imports from Israel and Israel will apply the same tariff to 95.1% of those it imports from South Korea. In terms of import value, the percentages are 99.9% and 100% respectively. The annual bilateral trade was $2.4 bn.  This was the first FTA signed by Israel with an Asian country.

On May 20, Norway’s Oilfund, the world’s largest SWF with a $1.2 tn corpus, decided to divest from two Israeli companies for their activities in occupied Palestinian territories in violation of international law.

Iran:

On May 25, the Guardians Council (GC) approved 7 candidates for June 18 presidential election out of 585 applicants. These included two prominent hardliners (Ebrahim Raisi and Saeed Jalili), but no anti-establishment figures, such as former president Ahmedinejad. Moderates were weakly represented by Abdolnaser Hemmati, till recently the Central Bank governor. On May 27, Supreme Leader Ali Khamenei publicly endorsed the GC selection, dashing hopes of moderates, including current President Rouhani for the late inclusion of some of their representatives.

A round of the indirect talks to bring the US back into JCPOA and lift some of the American sanctions on Iran commenced on May 7. Despite occasional expression of optimism by Iran’s outgoing moderates as well as the Biden administration, there was no real breakthrough during the month. On May 23, US Secretary of State Antony Blinken conceded that the talks had made some progress, but added that he saw “no sign yet” that Iran was willing to take steps needed to remove the sanctions.

On May 20 a Canadian court ruled that the Iranian government owed damages to the families of the passengers aboard the Ukrainian flight all of whom perished when the airliner was shot down by the IRGC in January 2020 near Tehran airport. The court ruled that “on balance” the IRGC action amounted to an intentional act of terrorism. Relevant to note that most of the passengers were Canadian nationals of Iranian descent. The next day, Iran rejected the ruling of the Canadian court asserting that it had no jurisdiction over the matter.

On May 22, Iran unveiled a new locally built drone with a claimed range of 2000 kms. It was named Gaza in honour of the Hamas combatants.

According to Elliptic, a blockchain analytics firm, Iran-based operators were heavily using crypto-mining to circumvent the US sanctions to the tune of $1bn. It estimated that around 4.5% of the global crypto-mining takes place in Iran. In a related move, on May 27, Iran officially banned crypto-mining blaming it for power shortages.  

On May 15, Iran unveiled a domestically produced supercomputer called “Simorgh” with a performance capacity of 0.56 petaflops.

Saudi Arabia:

Pakistani Prime Minister Imran Khan paid a two-day visit to Saudi Arabia on May 7-9 during which he met Saudi Crown Prince Mohammed bin Salman (MbS). In an unusual but connected move, Pakistani Pakistan Army chief General Qamar Javed Bajwa arrived in Saudi Arabia on May 4 ostensibly to prepare for the visit. Gen Bajwa also called on the Saudi Crown Prince. The Joint Statement issued after the visit registered MbS welcoming the recent Indo-Pak ceasefire, adding, “The two sides emphasized the importance of dialogue between Pakistan and India to resolve the outstanding issues between the two countries, especially Jammu and Kashmir dispute, to ensure peace and stability in the region.” In a key agreement, both sides agreed to establish Saudi-Pakistan Supreme Coordination Council to be co-chaired by the Saudi Crown Prince and Pakistani PM.
Comment: This first bilateral Summit since 2019 was intended to restore normalcy in ties which have passed through a rough patch due to mutual misgivings over their respective centrifugal tendencies. While Pakistan was miffed at perceived Saudi diffidence over the J&K issue, Saudis were upset over Pakistan’s refusal to join the anti-Houthi coalition in Yemen and joining ranks with Malaysia and Turkey to upstage Saudi leadership of Islamic Ummah. For several reasons, both sides have felt isolated and vulnerable in their respective neighbourhoods and felt the need to reconnect. Nevertheless, this reset is unlikely to hark back to the golden era of bilateral ties in the late 1980s. 
Further Reading: “Pakistan, Saudi Arabia and the Night of Power”, Hindustan Times, May 13 2021; https://www.hindustantimes.com/opinion/pakistan-saudi-arabia-and-the-night-of-power-101620898190404.html 

On May 7, a senior Saudi Foreign Ministry official acknowledged contacts with Iran, saying that these were meant to reduce the “regional tensions”. He added it was too early to judge the outcome and Riyadh wanted to see “verifiable deeds”.

On May 29 the Philippines lifted the suspension of deployment of its manpower to Saudi Arabia, two days after it was imposed due to the reports about Pilipino worker having to bear the Covid related expenses in Saudi Arabia, such as testing, vaccination and quarantine, etc. Nearly a fifth of Pilipino overseas workers are deployed in Saudi Arabia and are the source of $1.8 bn in remittances annually.

In a move likely to echo around the Islamic world, on May 30 Saudi Minister of Islamic Affairs defended a week old order to all the Saudi mosques to lower the volume of their loudspeakers to a third of the maximum saying families had been complaining that competing speakers were keeping their children awake. The order also limited the loudspeaker use to broadcast the call to prayer and the signal for prayers to start. They are then to be switched off without broadcasting the full prayers and sermons.

Turkey:

Taking apparent advantage of Ramadhan spirit, Ankara made strenuous efforts to normalise its long-estranged relations with Egypt and Saudi Arabia. Political level dialogue resumed with each of them with Turkish delegations travelling to both capitals.

Deputy Foreign Minister level talks between Turkey and Egypt were held on May 5-6 in Cairo. The contentious bilateral issues included Turkish support and refuge to Egypt’s Muslim Brotherhood, diametrically opposite positions on Qatar, Libya and Israel, etc.

Turkish Foreign Minister Mevlut Cavusoglu travelled to Riyadh for talks with his Saudi counterpart Prince Faisal bin Farhan Al-Saud on May 10. The contentious bilateral issues included the closure of Saudi journalist Jamal Khashoggi’s murder in the Saudi consulate in Istanbul in October 2018, informal Saudi ban of import from Turkey (which have plummeted 98%), Turkey’s support to Qatar, perceived contests for primacy in Islamic Ummah, etc.
Comment: While ice was broken in these two talks, the several deep-rooted differences of interests and intense mutual antipathy, from shared Ottoman history to the current epoch as well as Ankara’s frequent bouts of no-holds nationalism are likely to make the recovery slow. However, the three Sunni powers do share some common perceptions about the withdrawal of the Biden Presidency from the region, threat perceptions from Iran and its inroads into Iraq and Levant as well as the need for a more effective response to Israel.  

The current UNGA President Volkan Bozkir, a Turkish diplomat-politician, paid an official visit to Pakistan on May 26-28 at the invitation of Pakistani Foreign Minister Shah Mahmoud Qureshi.  During the visit he addressed the Pakistani parliament and held talks with Mr Qureshi. He publicly urged Pakistan to raise the Jammu and Kashmir issue at the UN fora in a more forceful manner. (For India’s reaction to Mr Bozkir’s statements, please see Bilateral Developments.)
Comment: The warm embrace among the outgoing UNGA President and Islamabad’s nomenklatura was mutual. The visit allowed Pakistan to finally showcase a modicum of international support after a long string of failures in its anti-India campaign for the J&K issue. On the other hand, the event allowed Mr Volkan Bozkir, a 70-year old AKP leader, to burnish his international Islamic credentials before demitting office – which he could hope to monetise politically either within Turkey or in Islamic Ummah at large. Indeed, within 10-days of the Islamabad visit, the UNGA elected Maldives foreign minister Abdulla Shahid as his successor. 

Syria:

According to the official figures, the incumbent President Bashar Al-Assad was re-elected on May 26 with a 95.1% favourable vote. Nearly 78% of the eligible voters participated in the election which was jointly denounced as fraudulent by the foreign ministers of France, Germany, Italy, the UK and the US.   
Comment: Though the presidential election had a predictable outcome, it signifies a turning point not only in the turbulent decade-long civil strife but also in the  two-decades-long presidency of Bashar Al-Assad as well as six decades of the Arab Baath Socialist Party under the Al-Assad clan. President Bashar Al-Assad may have defied his obituary-writers, but his civil war victory is pyrrhic and his claim to control 70% of the country quite tenuous. The May 26 elections may mark a tapering down of the military confrontation, but it is going to be a long and meandering way back to “politics-as-normal” in Syria with deep ethnic fault-lines, particularly between the Sunni mainstream and ruling Alawite minority. Moreover, many domestic and foreign players active during the past decade may still complicate the winding down: the sworn enemies may escalate their asymmetric, low-key conflict, while the supporters may present their hefty IOUs.

Morocco:

Near 8000 asylum-seeking migrants, mostly Moroccans, illegally crossed over to the Spanish enclave of Ceuta during May 17-19. This created a bilateral crisis with Spanish Prime Minister Pedro Sanchez rushing to Ceuta, which has a population of only 80000. Pointing to Moroccan border control authorities not preventing these asylum seekers from crossing over, Spanish Foreign Minister Arancha González Laya accused Rabat of retaliation against a decision by Spain last month to allow entry for medical treatment to Brahim Ghali, leader of Polisario Front fighting for the independence of Western Sahara from Morocco. In the event, Mr Ghali left Spain for Algeria on June 2.
Comment: Moroccan attempt to weaponise asylum seekers appears to be a high-risk strategy. On one hand, it put Spain and others on notice about Rabat’s determination to hold on to the Western Sahara, Spanish colony till 1975. On other hand, it played straight into the hands of the Islamophobes among European right-wingers. Relevant to note that nearly 8 mn strong Moroccan diaspora in the EU is its second-largest Muslim community. To say the least, they are very useful to their mother country which has a population of 36.5 mn.

Egypt:

Egypt was instrumental in securing a ceasefire between Hamas and Israel on May 21, thus ending 11 days of hostilities. For this purpose, its intelligence chief Abbas Kamel shuttled between Jerusalem, Gaza City and Ramallah. Subsequently, Israeli foreign minister Gabi Ashkenazi visited Cairo on May 29 to discuss with his Egyptian counterpart Sameh Shoukry the consolidation of the ceasefire.

On May 4 Egypt signed a $4.5 bn deal to acquire 31 Rafale jet fighters from France.

South Korean supertanker Ever Given, which caused a multi-day disruption in the Suez canal continued to be detained in Egypt during the month on court order.

Qatar:

Emir Sheikh Tamim bin Hamad al-Thani visited Saudi Arabia on May 10 to hold talks with Crown Prince Mohamed bin Salman. This was the first bilateral visit by the Emir to any of the former “boycotting countries” and coincided with Eid al-Fitr festivities.

Foreign Minister Mohammed bin Abdulrahman bin Jassim Al Thani also visited Cairo on May 25, first such visit to Egypt in three years. He rendered an invitation for President Sisi to visit Qatar.

On May 6, Ali Sherif al-Emadi Finance Minister of the country since 2013, was sacked and arrested over alleged embezzlement of funds. No detailed charges were published. The government sought to reassure the stakeholders of the country’s economic stability not being affected by this sudden development.

On May 27, Qatar pledged $500 mn for the reconstruction of Gaza which faced large scale destruction during 11-days of hostilities. It was also separately revealed that Qatar had been aiding Hamas with $30 mn in cash every month.

Afghan negotiators – representatives of the Kabul government and the Taliban – met in Doha on May 14
Further Reading: “Foreign workers in Qatar get some basic rights”, The EconomistMay 8th 2021; https://www.economist.com/middle-east-and-africa/2021/05/08/foreign-workers-in-qatar-get-some-basic-rights

Lebanon:

Caretaker foreign minister Charbel Wehbe resigned on May 18 after he publicly hinted at Gulf monarchies involvement in creating and fostering Islamic State in Iraq and Syria (ISIS) during the last decade. Saudi Arabia, the UAE, Kuwait and Bahrain formally protested at his imputation.

French Foreign Minister Jean-Yves Le Drian visited Beirut on May 6 on a mission to speed up the formation of a new Lebanese cabinet. After his call on President Michel Aoun, he warned against a “collective suicide” caused by blocking acts by some of the country’s politicians, whom he did not name. He also hinted at restrictive measures against some such individuals.

The US Treasury Department imposed sanctions on seven Lebanese men with ties to Hezbollah for allegedly transferring half a billion dollars in violation of the US economic sanctions.

Yemen:

Al-Houthis refused to meet Martin Griffiths, the UN mediator for Yemen in Oman on May 6 for unknown reasons.

Tim Lenderking, the US special envoy for Yemen concluded his consultations with Saudi Arabia, Oman and Jordan. Subsequently, the US decided to sanction two al-Houthi military officers commanding the offensive operations in Marib theatre.
Further Reading: “Peace on hold: Houthi rebels look to take Marib, prolonging Yemen’s war”, The Economist,  May 8th 2021; https://www.economist.com/middle-east-and-africa/2021/05/08/houthi-rebels-look-to-take-marib-prolonging-yemens-war

Sudan:

The Peace Talks between Sudan’s Interim Transitional Government and Sudan Popular Liberation Movement-North (SPLM-N) began on May 27 in Juba. The function, facilitated by South Sudan, was attended by ITG Head Gen Abdel Fattah al-Burhan and SPLM-N Leader Abdel Aziz al-Hilu.

On May 24, International Criminal Court in The Hague commenced the trial of the pro-government Janjaweed militia commander Ali Mohammed Ali Abd-Al-Rehman accused of war crimes in Darfour province of Sudan between 2003 and 2004.

Libya:

In an interview to al-Jazeera aired on May 5, Libyan Prime Minister Dbeibeh claimed that 80% of the country’s governance structures split between the two antagonistic factions has been unified. He added that a joint military commission comprising of five officers each from GNA and LNA was currently trying to coordinate the military matters. He endorsed the maritime agreement signed by the GNA government with Turkey.

In her interaction with the visiting Turkish delegation led by the foreign minister, Libyan foreign minister Najla al-Mangoush called for the departure of the foreign fighters brought in by Turkey, citing the concerned UNSC resolution. There are estimated to be around 20000 foreign fighters in the country.

GCC:

The fortieth anniversary of the founding of the Gulf Cooperation Council passed on May 25 without any whimper as the regional body continued to struggle for its inner cohesion to face multiple eco-political challenges.

Oman:

The country witnessed rare three-day-long public protests mainly by youth complaining about unemployment, lay-offs and general worsening of economic conditions. These demonstrations began in Sohar on May 24 and spread to several Omani cities before petering off on May 29 as Sultan Haitham ordered the release of the detainees while promising to create 32,000 more jobs and subsidising the private sector for hiring more Omanis. After the initial ham-handed response, the police and security agencies adopted a softer approach towards the demonstrators. Oman also approached Saudi Arabia and other GCC members for economic assistance to mitigate the distress.

Algeria:

Following the adoption of a new constitution and presidential elections, the legislative elections were announced to take place on June 12.

On May 19, the authorities declared the Movement for the Autonomy of Kabylie (MAK) and the Rachad opposition movement as illegal and terrorist entities.

Iraq:

On May 27, Qassem Muslih, head of the pro-Iranian Popular Mobilisation Forces in Anbar province was arrested under anti-terrorism laws for a string of assaults on Ain al-Assad airbase where the US and allied forces are deployed.

In an exclusive report on May 22, Reuters claimed that in a change of strategy, Iran was now creating a small loyal militant elite force from cadres hand-picked from various pro-Iranian militias. The latter were now feeling neglected by their Iranian mentors.

II) Economic Developments

Oil Related Developments:

  • OPEC output rose by 280,000 bpd during May 2021 to an average of 25.52 mbpd. In its monthly bulletin issued on May 11, OPEC stuck with its optimistic project of a 6.6% increase (or 5.95 mbpd) in global oil demand by the end of 2021. The IEA also saw the glut in global oil inventories mostly gone due to the surging demand. The oil prices saw a steady increase during the month ending up at $69.32 for the Brent crude – the only blip coming during May 20-24 due to speculation about the return of the Iranian oil.​​​​​​
  • Saudi Aramco’s net profit rose by 30% in Q1/2021 to $21.7 bn on rising oil prices. It was thus able to maintain its dividend commitment for the quarter at $18.8 bn, most of which going to the Saudi state.
  • Iraq unveiled plans on May 3 to invest $3 bn in Basrah Gas Company over the next 5 years.
  • On May 28, Indonesia agreed to release Iranian tanker MT Horse and its crew after 125 days in captivity on charges of suspected illegal oil transfer in its territorial waters to a Panama registered tanker, MT Freya.

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

  • On May 3, IMF’s issued a report after the Article IV mission to Saudi Arabia. The report revised its GDP growth figure: accordingly, Saudi GDP contracted by 4.1% in 2020 and is forecast the growth to be 2.1% in 2021 and 4.8% in 2022. Non-oil growth is projected at 3.9% in 2021 and 3.6% in 2022 compared to a contraction of 2.3% in 2020. Real oil GDP growth is projected at -0.5% in 2021 (-6.7% in 2020). The unemployment rate for Saudi nationals increased to 15.4% in Q2/20 before declining to 12.6% in Q4/20. CPI inflation increased to 3.4% in 2020 with the higher VAT rate but eased in recent months and is projected at 2.8% in 2021. The fiscal deficit widened in 2020 to 11.3% of GDP (4.5% of GDP in 2019) as oil revenues fell and spending increased, and it was financed by new borrowing and the drawdown of government deposits. IMF staff projects the fiscal deficit to decline to 4.2% of GDP in 2021. The Saudi female labour force participation rate is estimated to have increased by 13% to over 33% over the past two years. Saudi Arabia’s own official data published on May 4, showed that fiscal consolidation (lower spending and higher taxes) resulted in Kingdom reducing its budgetary deficit to $ 1.97 bn in Q1/21 from $9 bn in Q1/20. This allowed the Kingdom to mitigate the loss of 9% y/y decline in oil income during the quarter. On May 24 Saudi finance minister expressed optimism about raising $55 bn through privatisation of the state assets. On May 18, Crown Prince committed a regional donors’ conference that the Kingdom would provide financial assistance worth SR 3 bn to Africa this year.
  • Tunisian economy shrank by 3% in Q1/21 largely due to a decline in tourism. PM Machichi indicated on May 1 that Tunisia was seeking a $4bn loan from the IMF.
  • The UAE official data centre put the GDP decline in 2020 at 6.1%. The country attracted foreign investment of $19.88 bn in 2020, up 44.2%. Much of it was due to ADNOC rent-seeking deals. The UAE announced on May 19 that it would allow 100% foreign ownership of companies from June 2021.  The UAE and Israel signed a double taxation avoidance treaty on May 31 in Abu Dhabi. Amazon decided on May 27 to set up 3 service data centres in the UAE in 2022 to serve the ME region.
  • Intel Chief visited Israel where it is the largest employer in the high-tech sector with a headcount of 14,000 workers and $15 bn in investments. Apart from the ongoing construction of a $10 bn chip fabrication facility, he announced other $600 mn investments on May 2. On May 24, the Tel Aviv stock exchange declared itself to be SPAC ready.
  • Turkey’s Lira fell to a new low of 8.6125 to a dollar on May 29. The currency has plummeted by 16% since mid March when President Erdogan fired the Central Bank governor. The country has 17% inflation and a bank rate of 19%.
  • Sudan cleared African Development Bank arrears through a bridging loan of $425 mn. This allowed it to avail of new fundings from ADB including a grant of $207 mn. The country has $50 bn in foreign debts.  IMF conducted a second review of the country which is expected to facilitate HIPC debt relief.
  • On May 29, Standard and Poors revised Bahrain’s economic outlook to “negative” from “stable” citing financial pressures and high debt.
  • On May 15, Egypt commenced dredging Suez Canal to extend its second lane by 82 kms at its southern end.
  • Standard and Poors, in its report on May 4 predicted that the global Islamic finance industry, currently worth $2.2 bn would grow by 10-12% over 2021-22. Despite the pandemic, it registered a 10.6% growth in 2020. 

III)  Bilateral Developments

  • The international discussions Israel-Hamas hostilities forced India to undertake a delicate balancing act with some variance. Thus, during open discussion on the issue at the UN Security Council on May 16, India’s Permanent Representative dutifully concluded by reiterating “India’s strong support to the just Palestinian cause and its unwavering commitment to the two-State solution”, but not before condemning, “The indiscriminate rocket firings from Gaza targeting the civilian population in Israel.” In comparison, Israel’s “strikes into Gaza, have caused immense suffering and resulted in deaths, including women and children” were described as “retaliatory” and received no wrap on the knuckles. On May 27, India abstained from voting on the anti-Israel resolution at the Human Rights Council which was passed by the 47-membered body by 24-09 vote. India’s statement on that occasion conspicuously omitted chanting the mantra about the ‘strong support to the just Palestinian cause’, leading to some speculation about a further drift of its position towards Israel.
  • In a hard-hitting statement on May 28, the Indian Ministry of External Affairs criticised Volkan Bozkir, President of the UN General Assembly, for his comments on Jammu and Kashmir made during his recent Pakistan visit, saying his “misleading and prejudiced” remarks does “great disservice to the office he occupies”. The MEA statement also said his remarks are “unacceptable” and his reference to the Indian union territory is “unwarranted”. (Please also see under Turkey)
  • On May 17, Iran handed over the Farzad-B gas field discovered by ONGC Videsh Ltd in 2000 to Petroparas, a domestic oil company for development. There was no official comment from India.
  • India and Oman renewed two key defence agreements during the month: for military cooperation and maritime security respectively.
  • According to the official Indian statistics, the FDI inflow from Saudi Arabia saw a 30-fold annual increase: from $90 mn in FY2020 to $2816 mn in FY2021.  Thus the Kingdom became one of the top 10 investors in India last year.
  • On May 12, An Indian court dismissed DR B.R. Shetty’s petition against denial of permission to travel abroad. It upheld the executive decision on basis of the Bank of Baroda complaint about not honouring his personal guarantees against his group’s dues owed to the bank. 
  • India received supplies for combating the second wave of Covid-19 from several WANA countries during May 2021, including Israel, Saudi Arabia, Bahrain and the UAE.
  • Indian refiners processed 4.9 mbpd of oil during April 2021 which was 12% below the figure for the previous month showing a decline in consumption due to economic dislocation of the second wave of Covid-19. At the same time, the figure was 35% high than the figure in April 2020. LNG imports during April 2021 were similarly affected. Separately, the FY2021 saw OPEC share of India’s crude imports falling to 72% from the normal 80% as India continued to diversify its purchases. India resumed normal purchases from Saudi Arabia which had been affected by lower procurement in the previous two months. In an interview with PTI on May 30, Saudi Ambassador to India said that his country was committed to meeting India’s crude requirements.
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  • On May 12, the Indian cabinet approved the Memorandum of Understanding between the Institute of Charted Accountants of India (ICAI) and the Qatar Financial Centre Authority.
  • On May 24, India and Israel signed a three-year work program for cooperation in Agriculture.
  • Bureau for Control of Cricket in India (BCCI) announced on May 29 that the remaining 31 matches in the Indian Premier League would be played in the UAE during September–October this year. These were suspended on May 4 due to the second wave of Covid pandemic in India.
  • Indian two- and three-wheeler company TVS expanded operations in Iraq during this month with the launch of two new products.


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(The views expressed are personal)
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Pramit Pal Chaudhury, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta

Ambassador Sharat SabharwalFormer High Commissioner of India to Pakistan and Distinguished Visiting Fellow, Ananta Centre

AFPAK DIGEST

Pramit Pal Chaudhury, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta

Pramit Pal Chaudhury, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta

Pramit Pal Chaudhury, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta

Ambassador Ashok Sajjanhar, Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of

Ambassador Ashok Sajjanhar, Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of

AFRICA DIGEST

Pramit Pal Chaudhury, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta

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