I) Political Developments
Regional Impact of Covid-19: Second Wave Lingers
The second wave of Covid-19 pandemic had a mixed impact on various countries of the WANA region which saw nearly 31% increase in confirmed cases and 25% increase in cumulative deaths during September 2020. (For comparison, India’s two figures were up 71% and 51% respectively.) Some states, such as West Bank & Gaza, Tunisia, Jordan, Morocco, Libya and Lebanon saw doubling in cumulative incidence and/or deaths during the month. As the result, the pecking order of the affected countries (see table below) got altered with most notably Iraq surging past Turkey and Saudi Arabia to the second place after Iran. The total number of affected cases in the WANA region crossed 2.6 million and the total fatalities crossed 65,000. By end of the month under review, Country-wise details were as under:
Cumulative Covid-19 Cases in WANA (as of Oct 1 2020)
|Country||No. of Confirmed Cases||No. of Deaths|
|Total World Wide||34,020,904||1,015,049|
|Total for WANA||2,635,875||65,861|
Source: Johns Hopkins University Coronavirus Resource Center.
Legend: *Increase of over 50% since last month; ** Double or more since last month
Covid-19 and the Individual WANA Countries:
- Israel became one of the first countries in the world to impose a lockdown for the second time to contain the pandemic. Restrictions were imposed from Sep 18 to Oct 9 to avoid a virus surge for three weeks – a period when many of Jewish holidays are celebrated. However, some saw the lockdown also aimed at disrupting the popular demonstrations against PM Benyamin Netanyahu.
- Iran – with region’s highest disease burden – was on alert to contain the third wave of the pandemic. The country saw the cases rising afresh as lockdown conditions were progressively relaxed to accommodate several Shia religious practices.
- Saudi Arabia announced on Sep 28 that owing to the pandemic the G20 Summit, scheduled to be held in Riyadh on Nov 22-22, would be held virtually. It will focus on “protecting lives and restoring growth by addressing vulnerabilities uncovered during the pandemic and by laying down foundations for a better future.”
- Saudi Arabia banned all flights from India, Brazil and Argentina to avoid the spread of the Covid-19 pandemic in these countries. The entry of any person who has been to these three countries during the previous 14 days was also forbidden.
- Saudi Arabia also announced the resumption of the “Umrah” pilgrimages from Oct 4
- The virus surge in Iraq was attributed to authorities’ incompetence in enforcing preventive measures and inadequacy of the healthcare apparatus. Iraqi medical workers stage protests to highlight the shortage of equipment, overwork and tribal retribution while handling the Covid-19 cases. (Please also see: “The most infected Arab state: Iraq is too broken to protect itself from covid-19” http://go.pardot.com/e/827843/o-protect-itself-from-covid-19/83r58/98038917?h=jkQNAHBAkpBq4dyFeljDFMdd0I5svK8PmYFmRxFrdQY)
The ceremony to mark normalisation of the relation between Israel and each of the United Arab Emirates (UAE) and the Kingdom of Bahrain was held at the White House on Sep 15 in presence of US President Donald Trump. Israel’s Prime Minister Benjamin Netanyahu, UAE Foreign Minister Sheikh Abdullah bin Zayed Al-Nahyan and Bahrain’s Foreign Minister Abdullatif Al-Zayani represented their respective governments. While President Trump, facing an election in few weeks and Israeli PM Netanyahu, facing a corruption trial and demonstrations at home, projected this ceremony as their major achievement, the two Gulf signatories portrayed this as a step towards an eventual resolution to the Israel-Palestine dispute. Trump administration was optimistic about some other moderate Arab regimes following suit. The Palestinian stakeholders – from Palestine Authority to Hamas downwards – saw this act as a break in Arab solidarity by the two Gulf States and bitterly denounced it as “an act of betrayal.”
- While acknowledged as an important and far-reaching breakthrough in Arab-Israel relations, the Abraham Accords were not seen as a dramatic development in ties between the three signatories as informal contacts have long existed among them. The process of normalisation itself can be traced to the international conference held in Manama in Nov 2018 at which the economic component of President Trump’s “deal of the century” was unveiled in presence of an Israeli delegation.
- Follow up of the Abraham Accords along Israel – UAE axis was quite swift with measures under discussion on scheduled air services, energy, financial services, cybersecurity and several joint ventures. (For further reading: “India and the Abraham Accord”, The Hindu, Sep 22, 2020; http://go.pardot.com/e/827843/am-accords-article32662790-ece/83r5b/98038917?h=jkQNAHBAkpBq4dyFeljDFMdd0I5svK8PmYFmRxFrdQY )
Reactions to the Abraham Accords:
Though Abraham Accords broke the suspended animation in Arab-Israeli ties, the initial public reactions within the region were on predictable lines.
- In his speech to the United Nations General Assembly (UNGA), Palestine Authority President Mahmoud Abbas called upon the UNSG to convene an International Peace Conference in 2021 to find a solution to the dispute based on the Arab Peace Initiative. The Palestine Authority, Fatah and Hamas denounced the normalisation as “a betrayal” and “a stab in the back”. Eleven rockets were fired from Gaza into Israel on the night of the signing ceremony and Israeli military retaliated by bombing some Hamas installations.
- On Palestine’s reference, an emergency session of the Arab League Foreign Ministers was held virtually on Sep 9 but ended without any joint statement being issued. Notably, Saudi statement at the conference reiterated their support for Palestinian statehood, but without mentioning the two normalisations. Later on Sep 22, Palestine Foreign Minister Riyadh al-Maliki declined the rotating Chair of the Arab League for next six months saying that “there is no honour in seeing Arabs rush towards normalisation during its presidency.”
- As a direct reaction to Abraham Accords, Fateh and Hamas held a meeting in Turkey on Sep 24 and agreed to have the first general election in 15 years throughout the occupied territories including the East Jerusalem and Gaza. Hamas leader Ismail Haniya also visited Lebanon to meet with Hezbollah Chief Hassan Nasrallah.
- Iranian authorities were strident in their denunciation of the Abraham Accords. Supreme Leader Ali Khamenei stated on Sep 1 that the UAE had betrayed the Muslim world with the deal with Israel. President Hassan Rouhani said on Sep 16 that the UAE and Bahrain would “bear the consequences of their actions.”
- In an interview to al-Jazeera TV on Sep 3, Pakistani Prime Minister Imran Khan said “the Israel-Palestine issue will not be resolved unless there is a “just settlement” for the Palestinians, even if more countries decide to recognise Israel. Any one-sided settlement which is going to be imposed on the Palestinians is not going to work,” He also mentioned that if Pakistan accepted Israel and ignored the oppression of the Palestinians, “we will have to give up Kashmir as well then”, adding that this was not something Pakistan could do.
- Turkish President Recep Tayyip Erdogan also criticised the normalisation.
UNGA address by Saudi King Salman bin Abdulaziz on Sep 23 (coincidentally, Kingdom’s National Day) was preoccupied with Iran accusing it of “intensifying expansionist activities, create its terrorist networks, and use terrorism,” adding that this had produced nothing but “chaos, extremism, and sectarianism.” He called for a united front to contain Iran and stop it from getting weapons of mass destruction. The Saudi monarch urged for a “comprehensive and just solution” of the Arab-Israeli dispute based on the 2002 Arab Peace Initiative (proposed by Saudi Arabia) for ensuring the Palestinians obtain an independent state with East Jerusalem as its capital. “We support the efforts of the current U.S. administration to achieve peace in the Middle East by bringing the Palestinians and the Israelis to the negotiation table to reach a fair and comprehensive agreement,” he said without specifically endorsing the recently U.S.-brokered agreements by the UAE and Bahrain to establish ties with Israel.
Jared Kushner, Advisor to US President Trump visited Saudi Arabia on Sep 2 after the inaugural flight between Israel and the UAE.
On Sep 1, King Salman bin Abdulaziz dismissed Prince Fahd bin Turki bin Abdulaziz as commander of the joint forces in Saudi-led coalition fighting al-Houthis in Yemen. His son Prince Abdulaziz bin Fahd was also relieved of his post as deputy governor of the al-Jouf region. They were both accused of corruption and were referred to the investigative agencies.
Saudi presidency of state security claimed on Sep 28 that it had taken down a terrorist cell that had received training from Iran’s Revolutionary Guards in 2017, arresting 10 people and seizing weapons and explosives.
On Sep 7, a Saudi court commuted the death sentences awarded to five accused of the murder of exiled Saudi journalist Jamal Khashoggi two years ago into life imprisonment.
On Kingdom’s national day (Sep 23), some Saudi dissidents in exile announced the formation of National Assembly Party (Naas, “People” in Arabic) to demand an end to the violence and repression.
Iranian President Hassan Rouhani used his speech at the UNGA on Sep 22 to denounce American pressure, emphasising that no matter the pressure, the Islamic Republic would refuse to budge.
President Rouhani publically lamented on Sep 5 that none of Iran’s friends offered any tangible help in combating the Covid-19 pandemic. On Sep 26, he put a figure of $150 bn on the economic damage caused by the US sanctions on Iran.
The International Atomic Energy Agency inspected the second of two suspected former secret atomic sites in Iran as agreed with Tehran in August in a deal that ended a standoff over access, the agency said on Sep 30. IAEA did not name the two sites to which Tehran had denied it access for seven months until the deal was made in August. On Sep 4 the IAEA stated that Iran had stockpiled 2105 kgs of low-enriched uranium while only 300 kgs were permitted under JCPOA. Separately, Iran said on Sep 22 that it strongly suspected that “internal agents” played a role in a massive explosion that occurred at Natanz nuclear facility on July 2 this year. It promised to provide details later.
On Sep 20, the US reinstated all the UN sanctions on Iran, including an indefinite ban on an arms embargo, set to expire as part of a 2015 nuclear deal between Iran and world powers. The Trump administration said the measures were being re-imposed under the “Snapback” mechanism of the JCPOA. The existing signatories of the JCPOA have maintained that the US, having left the agreement in 2018 on its own volition, had no authority to trigger the collective snapback. On Sep 15, President Trump warned Iran that any attempt to avenge Soleimani killing would result in a thousand-fold bigger US response. On Sep 21, the US sanctioned more than 24 persons and entities for their involvement in Iran’s nuclear programme.
The first of a group of three tankers carrying 820,000 barrels of gasoline and other fuel from Iran for gasoline-starved Venezuela entered the waters of the South American nation on Sep 28. A former chief commander of Iran’s elite Revolutionary Guards (IRGC), told reporters on Sep 27 that Iran received gold bars in exchange for the gasoline previously delivered to Venezuela, adding “we are helping them, giving them software and giving them ideas, such as how to mobilize the people and how to repel cyber-attacks.” Venezuela is also expected to ship its heavy crude to Iran.
On Sep 30, Iran reassured Azerbaijan and denied the ‘rumours’ of supplying arms to Armenia. President Hassan Rouhani’s chief of staff said his country was willing to mediate talks over the contested Nagorno-Karabakh region. He also warned against the two combatant countries, both with a common border with Iran to avoid the war spilling on to Iranian territory.
The elections to 10 remaining seats of the Majles, the Iranian parliament, which could not be held earlier due to pandemic, took place on Sep 11. Given the overwhelming majority of radicals in Majlis, the outcome was not expected to make a significant difference.
After prolonged high-wire diplomacy, Turkey agreed to resume negotiations with Greece over their maritime dispute in the shared Aegean Sea where Turkey raised the ante last month by deploying a ship for oil exploration. On Sep 17 President Recep Tayyip Erdogan articulated Turkey’s willingness to negotiate while expressing determination to stay the course on exploring the disputed waters.
- President Erdogan’s climb down after year-long trenchant nationalism was due to many factors, including the threat of EU sanctions, discussions with German Chancellor Merkel and EU Council President Michel, frictions with NATO, the US and France and growing economic stress. Moreover, Turkish assertiveness in the Islamic world had antagonised several important regional powers such as Saudi Arabia, UAE, Syria and Egypt. (Further reading: Erdogan thinks big: “Turkey’s strongman, Recep Tayyip Erdogan, takes to the world stage” The Economist, Sep 8 2020; http://go.pardot.com/e/827843/dogan-takes-to-the-world-stage/83r5d/98038917?h=jkQNAHBAkpBq4dyFeljDFMdd0I5svK8PmYFmRxFrdQY
- The Greece-Turkey dispute has a long and intractable history: In recent times, 60 rounds of negotiations over 14 years till 2016 failed to resolve it.
On Sep 23 Iraqi President Barham Salih told the UNGA, “We do not want Iraq to become a sort of playground for other forces which will kill themselves on our territory. We have witnessed enough wars and enough attacks on our sovereignty”.
Iraqi Foreign Minister Fuad Hussein concluded a two-day visit to Tehran on Sep 27, to discuss boosting political and economic ties, and the role of the United States in the region. He was received by President Hassan Rouhani, Foreign Minister Mohammad Javad Zarif, and parliament Speaker Mohammed Bagher Ghalibaf. This was the first high-level political contact since Iraqi Prime Minister Mustafa al-Kadhimi visited Tehran in July.
On Sep 3, French President Macron paid a short visit to Baghdad during which he met with President Salih and PM al-Kadhimi. This was the first VVIP in visit since the new Iraqi government took over three months ago.
On Sep 9, Head of the US Central Command announced in Baghdad that the number of US troops in Iraq would come down from 5200 to 3000 during September.
On Sep 20, Iraqi armed groups fired two Katyusha rockets at the Baghdad airport which missed the target and hit a house killing five civilians and injured two children. It was the first time in months an attack led to several civilian casualties.
Iraqi media reported that in a phone call to President Barham Salih the US Secretary of State Mike Pompeo threatened to close the US embassy in Baghdad if Iraqi authorities were unable to ensure its security. The US reiterated on Sep 30 that her embassy in Iraq would be closed unless the Iraqi government took action to stop frequent rocket and IED attacks by Iran-backed groups and rogue armed elements against the American presence in the country pointing out that between Oct 2019 and July this year about 40 rocket attacks have targeted the US embassy or bases housing American troops in Iraq. Foreign Minister Fuad Hussein called the threat “dangerous” because “the American withdrawal from Baghdad will lead to withdrawals by other embassies as well”. PM Mustapha al-Kadhimi assured Baghdad-based diplomats that his government would provide them with the requisite security.
On Sep 7, President Bashar Al-Assad received Russia’s Deputy PM Yuri Borisov and Foreign Minister Sergey Lavrov. He sought greater Russian investments in Syria to defeat the US economic sanctions.
On Sep 24, the US granted $720 mn in humanitarian assistance to Syrian refugees both within and outside the country. However, in a statement on Sep 30, US Treasury Secretary Steven Mnuchin announced having blacklisted 13 entities and 6 individuals what it called “key enablers” of Syrian President Bashar al-Assad’s government.
On Sep 28, Armenian envoy to Russia said some 4,000 fighters from Syria took part in hostilities after being deployed by Turkey. Azerbaijan swiftly denied this allegation.
On Sep 26, Lebanon’s PM-designate Mustapha Adib quit his mandate to form a new cabinet – extending the dysfunctional state of affairs even further. Reports indicated that his attempts to form a technocratic cabinet was thwarted by Shia groups of Amal and Hezbollah which refused to let go of the economic ministries that have long been assigned to them on a confessional basis. As Mr Adib’s appointment was pushed by French President Macron under his plan to reform the country’s politics and economy, it was a serious setback to the entire process.
On Sep 27, French President Emmanuel Macron publicly gave Lebanese politicians another four to six weeks to implement his roadmap to avert disaster and chaos in that country. In particular, he asked Hezbollah to decide to remove its ambiguous existence between a pro-Iran militia and a serious political party. In response on Sep 29, Hezbollah’s leader Sayyed Hassan Nasrallah said his movement welcomed French efforts to help Lebanon out of the crisis but that did not mean President Macron could act like judge, jury and executioner, and ruler of Lebanon.”
French attempts to hustle Lebanon’s political elite into accepting and implementing President Macron’s reform package was successfully deflected. The fissiparous but wily politicians – under tremendous pressure from months of popular discontent, an economy in tailspin and accountability for Aug 4 port blast – nevertheless acted in unison to prevent their collective privileges and private fiefdoms being demolished. This irresistible force vs. immovable object contest resulted in a high-stake blame-game being played on an increasingly brittle platform with Lebanon’s people and her economy being the main victims. (Further reading: “Lebanon’s fractious politics puts French lifeline at risk” by Ellen Francis, Reuters, Sep 23; http://go.pardot.com/e/827843/ment-politics-an-idUSKCN26E32F/83r5j/98038917?h=jkQNAHBAkpBq4dyFeljDFMdd0I5svK8PmYFmRxFrdQY)
On Sep 8 the United States sanctioned two former Lebanese ministers of transport and finance for aiding Hezbollah.
On Sep 30, Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan declared the UAE’s candidature for the non-permanent seat in the UN Security Council for which election is to be held in June next year.
In an exclusive report on Sep 22, Reuters quoted unnamed sources as being optimistic about an initial agreement by yearend to supply F-35 stealth fighters jets to the UAE despite US commitment to maintain Israel’s qualitative military edge.
In a tweet on Sep 29, PM Sheikh Mohammed bin Rashid Al Maktoum said that the UAE plans to launch an unmanned spacecraft to land at the moon in 2024. The UAE’s “Amal” probe is currently on its way to Mars.
On Sep 11, Bahrain decided to normalise her relations with Israel. This step, announced mere four days before White House ceremony on Sep 15, showed a sense of demurral on this issue in Manama as it assessed fallout of the earlier decision by the UAE and awaited signals from Riyadh.
In his speech to the UNGA on Sep 24, King Hamad bin Isa Al Khalifa called for “intensified efforts to end the Palestinian-Israeli conflict in accordance with the two-state solution … leading to the establishment of an independent Palestinian state, with East Jerusalem as its capital, based on the resolutions of international legitimacy and the Arab Peace Initiative.”
The issue of removal of the US tag on Sudan as “a sponsor of terrorism” gained prominence as it was seen as an obstacle in securing foreign investments and credits for the economically stressed country under a transitional government. While PM Hamdok’s government has sought to meet other conditions such as compensating the US victims of terrorism, it is stuck on the American demand to normalise ties with Israel. Against this backdrop, The ruling council head, General Abdel-Fattah al-Burhan, and Justice Minister Nasredeen Abdelbari travelled to Abu Dhabi on Sep 20 for a bilateral visit after which the latter met U.S. officials present in the UAE to discuss the “removal of (the) name of Sudan from the list of states sponsoring terrorism, support of the transitional period and writing off American debts on Sudan”. US Secretary of State Mike Pompeo sent a formal letter to the US congressmen informing them of administration processing the deletion of Sudan from the list of countries sponsoring terrorism and hope to complete it by end of October 2020.
- Sudan has multiple challenges ranging from uneasy power-sharing between generals and politicians, a moribund economy, hyperinflation, huge foreign debt of $72 bn to legacy of Gen. Bashir’s 30-year kleptocracy and Covid-19. The proverbial common man’s expectations of a “democratic dividend” is fast turning into a popular frustration. Against this backdrop, the government pressed the US for a decision to take Sudan out of the latter’s list of countries supporting terrorism as a panacea which could boost investment and foreign aid. Sudan has been in this list since the mid-1990s when it hosted Osama bin Laden and his al-Qaeda and acted as a conduit for Iranian weapons to Hamas in Gaza.
- Although Khartoum switched to a pro-US stand since 2001, the US has kept Sudan in the list putting several stiff conditions such as payment of $335 mn to the US terror victims and their families and normalisation of relations with Israel. To prepare a domestic consensus on this issue, several Sudanese political forces held a joint press conference in Khartoum on Sep 30 urging the authorities to accept a US offer to normalise relations with Israel in exchange for removing the country from the US list. Later, General Mohamed Hamdan Dagalo, influential deputy head of the transitional military council, also pitched in by claiming that seeking relations with Israel was not the same as ‘normalisation’.
On Sep 30, the U.N. Food and Agriculture Organization said that one-third of country’s cultivated land and about 3 million people from agricultural households were affected by the floods in the Blue Nile and torrential rains, worsening already acute levels of food insecurity. Over 120 people had died.
There were some tentatively hopeful signs in the decade-long civil war in the country which had seen many a false start. As the informal ceasefire since mid-August continue to hold, the political contacts between the two warring sides – Tripoli-based Government of National Accord (GNA) and Benghazi-based Libyan National Army (LNA) – were held from Sep 6 in Morocco with the local foreign minister in the chair. By Sep 11, this “Libyan Dialogue” had progressed to discussion on allocation of key posts in the proposed national government. On Sep 17, Fayez al-Serraj, GNA Prime Minister since 2015, offered to resign by October end. Three days earlier, LNA PM Abdallah Al-Thani and his cabinet tendered their resignations amidst street protests against mal-administration.
The EU was understood to be working to reduce the profile of LNA leader Gen Khalifa Haftar. To this end, they were considering the lifting of sanctions on Aguilah Saleh, head of LNA parliament, and Nouri Abusahmain, president of GNA’s general national congress. At the same time, the EU imposed sanctions on three companies from Turkey, Kazakistan and Jordan for violating the UN arms embargo on Libya.
- The Libyan civil war, now in its tenth year, seems to be moving towards a denouement. The near- simultaneous resignations of the two PMs, both facing stalemated conflict and growing unpopularity, as well as the EU pro-activity were unlikely to be coincidences and may indicate concerted attempts to rearrange the political landscape by removing the obdurate war horses and bring in moderate leaders who could enter into a grand political deal. Libyans on both sides of the conflict were war-weary and financially stressed. Moreover, the global economic meltdown also reduced the funds the foreign sponsors could pump-in to back up their respective clients in Libya. However, several attempts over the past few months to broker a peacemaking deal between the two sides have floundered.
US and Qatar held their strategic dialogue in Washington on Sep 14 with Qatari Deputy PM Mahammed bin Abdulrehman Al-Thani and Secretary of State Mike Pompeo co-chairing it with the participation of the US secretaries of treasury and commerce and their Qatari counterparts. In his opening remarks, Pompeo urged early resolution of Qatar’s discord with the four-country coalition.
Following formal launch of negotiations on the future of Afghanistan between Kabul government and the Taliban in Doha on Sep 12, the first direct talks were held on Sep 15. US Secretary of State Mike Pompeo attended the opening ceremony.
Amnesty International said on Sep 19 that the foreign workers in Qatar continue to be mistreated despite promises to improve rights ahead of the 2022 World Cup.
An official statement on Sep 29 said Amir Sheikh Sabah Al-Ahmad Al-Sabah, 91, had died in a hospital in the United States since July following surgery for an unspecified condition in Kuwait. On Sep 30, his brother and designated successor Crown Prince Sheikh Nawaf al-Ahmad al-Sabah, 83, was sworn in as the new Amir of Kuwait, a country with world’s sixth-largest crude reserves. Kuwait, which borders Iraq, Iran and Saudi Arabia, has a population of 4.8 mn of which 3.4 mn are foreign expatriates, including nearly a million Indians.
- Sheikh Sabah Al-Ahmed Al-Sabah’s public life spanned almost entirety of the State of Kuwait since its independence in 1960. He was the country’s foreign minister for four decades (1963-2003), prime minister (2003-06) and it’s Amir since then. He was called “Dean of the Arab Diplomacy” for his consummate skills in resolving regional disputes and played a critical role in the formation of the Gulf Cooperation Council. He was, however, unable to resolve the deep schism within the GCC since 2017 caused by the boycott of Qatar by Saudi Arabia, the UAE and Bahrain. His conciliation at home could also not resolve the frictions within the two branches of the royal family as well as between the royal family and the parliament.
- With deaths of Oman’s Sultan Qaboos and Kuwaiti Amir Sheikh Sabah this year, the GCC leaderships completed a generational shift.
- Further reading: “A king of co-operation: The death of Kuwait’s emir robs the Gulf of a real diplomat” The Economist, Sep 30, 2020; http://go.pardot.com/e/827843/bs-the-gulf-of-a-real-diplomat/83r5l/98038917?h=jkQNAHBAkpBq4dyFeljDFMdd0I5svK8PmYFmRxFrdQY
On Sep 27, the two warring sides agreed to an UN-brokered exchange of prisoners of war. With 1081 persons, including 15 Saudis and 4 Sudanese, it was the largest such exchange during five years of civil war.
On Sep 10, al-Houthi militia claimed to have hit an unspecified important target in Riyadh. Saudis retaliated by launching 11 airstrikes on Sana’a on Sep 13
Despite Covid-19 related lockdown, there was no let-up in weekly popular demonstrations against PM Benyamin Netanyahu.
On Sep 10, Algerian parliament adopted the draft bill for constitutional reform, paving the way for it being put to a popular referendum on Nov 1. While President Tabboune asserted that the bill fulfilled his electoral promise, the popular opposition group “Hirak” rejected it as a cosmetic ploy and sought real reforms to the country’s political structure.
Egyptians in many parts of the country held angry demonstrations on Sep 25 as Friday of Rage to protest against a country-wide drive to demolish illegally built structures. Unlike, earlier demonstrations these were held not by youth but by affected families, such as slum dwellers. One person was killed in clashes with the police.
On Sep 3 the US affected a $100 mn cut in her aid to Ethiopia for starting to fill up the Grand Ethiopian Renaissance Dam on the Blue Nile without agreement with the two downstream countries, viz. Sudan and Egypt.
On Sep 18 Somali President Mohamed Abdullahi Mohamed appointed Mohamed Hussein Roble as the new prime minister. The appointment of a political newcomer as PM was seen as cementing power around the presidency ahead of elections due next year.
On Sep 27, King Abdullah dissolved the Parliament to pave the way for the general election on Nov 10. The step came amidst a wave of popular disenchantment over economic hardship worsened by the coronavirus pandemic and alleged official corruption. The Islamic Action Front, the political arm of Jordan’s Muslim Brotherhood which has been at odds with the Royalty, declared its willingness to take part in the polls. IAF had boycotted elections for a decade before participated in last on held in 2016.
On Sep 2, Parliament approved a cabinet comprising of 25 ministers and 3 state secretaries under prime minister Hachem Mechichi. This was the third cabinet since the general elections earlier this year.
Islamic State claimed responsibility for a knife attack in Sousse that killed a police officer. In subsequent chase and shootout, the police killed three assailants.
II) Economic Developments
- On Sep 15, the Paris-based IEA cut its 2020 global oil demand outlook by 200,000 barrels per day (bpd) to 91.7 million bpd. It was its second downgrade in as many months.
- According to the International Monetary Fund, the oil revenues in the Middle East and North Africa fell from more than $1 trillion in 2012 to $575bn in 2019.
- In its annual report released on Sep 14, oil major BP declared “oil era to be over” and predicted that the global oil demand was unlikely to recover to pre-Corona levels. BP decided to slash its hydrocarbon related capex from $13 bn in 2019 to an annual average of $9 bn during 2021-25 concurrently increasing spending on renewable. (Further reading: “The new energy order: Is it the end of the oil age?” The Economist Sep 17, 2020;http://go.pardot.com/e/827843/7-is-it-the-end-of-the-oil-age/83r5n/98038917?h=jkQNAHBAkpBq4dyFeljDFMdd0I5svK8PmYFmRxFrdQY)
- Brent crude for November delivery ended the month on 30/9 at $40.95 a barrel. West Texas Intermediate was at $40.22 a barrel. Brent oil price sank below $40/barrel on Sep 8 for the first time since June due to a reduction in Chinese imports.
- OPEC turned 60 this month. It was founded in Baghdad on Sep 14 1960. In its monthly report issued on 60th anniversary, it expressed pessimism about the oil demand recovery due to continuation of the Covid-19 pandemic. It raised the global loss of average demand in 2020 to 9.46 mbpd and reduced the expectation of recovery in 2021 by 770,000 bpd to 6.62 mbpd.
- OPEC+ review meeting on Sep 17 urged better quota compliance pointing out that during Ma-August this year, collective overproduction has averaged around 2.38 mbpd. Although the oil inventories around the world had fallen during recent weeks due to higher compliance by OPEC+, they were still 260 mn barrels above the 5-year average putting a bearish pressure on prices.
- While OPEC oil output rose to 24.05 mbpd in August, the average demand for OPEC crude during 2020 was expected to be only 22.6 mbpd.
- On Sep 18, LNA Leader Gen. Khalifa Haftar declared his willingness to lift his forces embargo on oil exports for a month, subject to some conditions. This led to Libyan National Oil Company (NOC) lifting the force majeure from Sep 20 on oil installation bereft of foreign fighters thus resuming the exports after nine months. The oil production is expected to reach 260,000 barrels a day by end of September. JP Morgan Chase and Goldman Sachs forecast that output will rebound to over half a million barrels a day by the end of 2020. Comment: Libya has lost over $ 9 bn in oil revenue due to the blockade by LNA imposed in January. This has hurt both sides of the conflict as, despite the hostilities, the NOC shared its revenue between them. The loss of oil income had led to anti-government demonstrations on both sides forcing them to reach a compromise. The frontline has ground into a stalemate with neither side able to mount a decisive blow.
- On Sep 14, Kuwait cancelled $400 mn worth of upstream project in the country’s north due to slack demand.
Other Country-Specific Economic Developments:
- According to figures from the US Foreign Military Sales programme, the sales of US weapons to the WANA region in 2019 more than doubled from the previous year, viz. $25 bn from $11.8 bn. Counter-intuitively, Morocco (almost $12 bn) was the biggest buyer in the region, followed by the UAE (over $4.7 bn), Bahrain ($3.37bn), Qatar (about $3bn) and Saudi Arabia (roughly $2.7 bn).
- On Sep 14, Moody assigned Turkey its lowest ever sovereign credit rating of B2 –five levels below investment grade. The rating agency warned Turkey of an imminent balance of payment crisis as the government debt has risen from 32.5% of the GDP in 2019 to 42.9% of the GDP in 2020 and the FE reserves have fallen by over 40% to $44.9 bn on Sep 4. Lira, the Turkish currency, continued to decline, reaching a record low of 7.8325 on Sep 28 – a decline of 24% from the end of last year. Despite several monetary steps by the central bank including raising bank rate by 2% (to 10.25%) on Sep 24 and spending nearly $80 bn in defence of the Lira this year, its value has fallen by 20% in 2020 – among the worst performers this year.
- Saudi Arabia’s economy shrank by 7% y/y in Q2/20 official data showed on Sep 30. Both the private and the government sectors recorded a negative growth rate of 10.1% and 3.5%, respectively. While the non-oil sector, shrank by 8.2%, the oil sector declined by 5.3%. The government’s revenue, 80% of which comes from the hydrocarbon sector, fell almost 50% year-on-year in Q2/20. The IMF expects the Saudi economy to contract 6.8% this year and bounce back to 3.1% growth in 2021. Saudi Arabia posted a 1% economic contraction in Q1/20. The oil prices, currently hovering around $40/b, are far short of the $76.01/b the IMF says Saudi Arabia needs to balance its state budget this year. The Saudi unemployment rate in the Q2 surged to an all-time high of 15.4%. Fitch Ratings estimated the Saudi budget deficit to rise to 15% of GDP in 2020, one of the widest levels in the Middle East. Faced with a steep resource shortfall, the authorities have slashed spending, taken austerity measures and raised taxes including a tripling of value-added tax (VAT) from 5% to 15%. Aramco has also been forced to cut or delay major projects and SABIC to raise $1 bn in biggest corporate bond sales in the WANA region this year.
- UAE central bank said on Sep 23 that the national economy would contract by 5.2% in 2020 – a figure even higher than IMF projection of 3.5% for the country’s GDP. S&P rating agency put Dubai total debts, inclusive of those of the Government-Related Enterprises (GREs), at $ 79 bn or 77% of emirate’s GDP. However, S&P did not foresee Dubai repeating the crisis of 2010, as the emirate was able to raise new funds this time.
- Iranian Rial continued to decline against the US dollar, reaching on Sep 23 a new low of 2,72,500/- as against official parity of 42,000/- to a dollar.
- Trading Economics cited the UN figures to put the UAE exports to Iran at $10.23 bn in 2018, making it among Iran’s top trade partners. If correct, this would perhaps be the largest bilateral trade volume between any two WANA countries.
III) Bilateral Developments
- On Sep 22, India’s Permanent Representative to the UN at New York tweeted the following: “We have seen remarks by President of Turkey on Indian UT of Jammu & Kashmir. They constitute gross interference in India’s internal affairs and are completely unacceptable. Turkey should learn to respect the sovereignty of other nations and reflect on its own policies more deeply.”
- India’s Crude oil imports in August fell about 23.4% from a year earlier to 15.15 mn tonnes, or 3.58 mbpd – a sixth consecutive year-on-year drop. On a month-on-month basis, imports rose 9.9% from 13.79 mn tonnes or 3.26 bpd in July. Exports of refined products were also down 13.5% in August from a year ago to 4.59 mn tonnes.
- Reuters reported quoting unnamed sources on Sep 29 that Abu Dhabi’s investment fund Mubadala was in advanced talks to invest up to $1 billion in Reliance Retail.
- On Sep 27, the UAE authorities put the financially troubled NMC group belonging to Indian tycoon B.R. Shetty under official administration. NMC’s healthcare facilities, its core business, were permitted to continue normally to combat the Covid-19 pandemic.