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Middle East Tensions Near Boiling Point

December 7, 2017

Middle East Tensions Near Boiling Point

GCC meeting

The 38th Gulf Cooperation Council (GCC) Summit resulted in a showdown between Qatar and its Saud-led alliance counterparts.

Saudi King Salman decided to send a lower diplomatic delegation in his place, chipping away at the stability in the region. Additionally, in an unexpected move, Saudi Arabia and the United Arab Emirates (UAE) announced that the two countries have formed a new economic and military partnership, separate from the GCC. Arab analysts have already indicated that this could deal a deadly blow to the role of the GCC.

Officially, the decision made by UAE’s ruler Sheikh Khalifa bin Zayed Al Nayhan and the Saudi King is not linked to the ongoing Qatar crisis. However, the symbiosis currently showing between Saudi crown prince Mohammed bin Salman and Abu Dhabi’s crown prince Sheikh Mohammed bin Zayed is the main force behind this bilateral cooperation agreement.

The direct impact wasn’t clear within the first few hours of the GCC meeting. Analysts speculated how the news of the fresh Saudi-Emirati military and economic cooperation would impact the six-member GCC meeting. Until the new alliance was announced, the media was primarily focused on the ongoing Qatar crisis, especially due to the fact that the Qatari Emir was in attendance. Insiders, however, already expected that the new agreement would have a detrimental effect on the GCC meeting, given the impact of the council’s two main supporters decided to create their own military, political, and economic alliance.

Riyadh and Abu Dhabi have clearly been paving the way for a confrontation with Iran and Qatar for several months, while also setting up major economic projects in their own countries as they coordinate military operations in Yemen, Syria and Libya. Two weeks ago, Emirati analysts indicated that the UAE would take a primary role in regional conflicts, which has now come to the surface more clearly.

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Gulf States Not Willing To Cut Production Despite Asset Depletion

February 24, 2016

Gulf States Not Willing To Cut Production Despite Asset Depletion

The oil exporting countries of the Gulf Cooperation Council (GCC) are likely to report twin deficits due to the downturn in oil prices and a supply glut that could expand, but even as assets are being depleted at an alarming rate none is in enough trouble to cut production.

According to the National Bank of Abu Dhabi (NBAD)’s 2016 Global Investment Outlook, the region faces “significant asset depletion” as it will have to further adjust to low oil prices, which the report estimates will remain between $25 and $45 for the remainder of the year.

At the end of 2014, the countries of the GCC—which includes Saudi Arabia, Kuwait, Qatar, UAE, Bahrain and Oman—had about $3 trillion in net foreign assets. But by the end of 2015, they had divested some $210 billion in those assets, and the bank is predicting another loss of $180 billion in assets by the end of this year.

The UAE has reduced energy subsidies and put non-critical projects on hold, and is also considering value-added tax (VAT), income and corporate taxes, privatizations and bond sales to add to government coffers.

The UAE is faring better than others, according to NBAD because of its high financial reserves and its move to diversify away from oil and gas to some extent. Oil revenue makes up some 65 percent of the UAE’s government income. And while countries that rely on oil exports alone for revenue will be further hit by the flooding of the market with Iranian oil, the UAE’s diversified economy will benefit to some extent from renewed bilateral trade with Iran.

The UAE’s budget deficit is even expected to improve 4 percent this year. But the bank warns that UAE equities could be oversold, and “cheap in terms of valuation”, and the UAE currency, the dirham, might be overvalued by as much as 25 percent.

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An Introduction to Yemen’s Emergency

March 28, 2015

An Introduction to Yemen’s Emergency

By Helen Lacker, who has worked in all parts of Yemen since the 1970s and lived there for close to 15 years.  She has written about the country’s political economy as well as social and economic issues.  She works as a freelance rural development consultant in Yemen and elsewhere and is currently also engaged in research on hydro politics in Yemen. Her latest book as editor:  – Why Yemen Matters,Saqi books 2014. This piece first appeared at Open Democracy on January 25, 2015.

The determination of the mass street demonstrations and occupations throughout the country in 2011 were insufficient to firmly exclude the former ruler from future involvement in Yemeni politics. Although Ali Abdullah Saleh was forced to abandon the presidency in November 2011 under pressure from the Gulf Cooperation Council  (GCC) and the United Nations Security Council (UNSC), neither the GCC, the UNSC nor indeed the Yemeni people were able to force him out of the country. He remained in Yemen as a major force subverting the transitional process.

Hadi, the rock and the hard place

His successor, former Vice President Abdu Rabbu Mansour Hadi, surprised many by not acting as a mere puppet to Saleh, but was unfortunately unable to manage the political transition towards a new Yemen. While most of the commitments included in the GCC agreement were formally implemented,  in practice the transitional regime was unable to make the fundamental changes which were essential to bring about a ‘new’ Yemen and transfer power away from the previous elite groups. In addition to the points below, this was largely because the GCC/UNSC sponsored deal remained firmly within the confines of neoliberal policies and did not clearly and explicitly support a fundamental transformation and democratization of the country, which would challenge its existing elites.

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