Yemen to Reap the Fruits of GCC’s Reconciliation 

After three and a half years, the Gulf Cooperation Council’s (GCC) recent Al-Ula summit in Saudi Arabia finally ended the blockade of Qatar, although the extent to which the four GCC states involved in the summit — Qatar, Saudi Arabia, the UAE, and Bahrain — can reconcile and move toward a re-normalization of relations remains to be seen. The 2017 crisis was the worst rift in the history of the GCC, and its resolution will have significant consequences for the region’s geopolitics, with perhaps the most important case being the war in Yemen. Regardless of how much diplomatic progress can be made in mending the GCC rift, however, it appears that Yemen will benefit from this diffusion of tensions in Saudi-Qatari relations.

Since the inception of the Gulf crisis, war-ravaged Yemen has endured further political and ideological polarization. After the Arab Spring broke out a decade ago, Yemen’s government underwent a diplomatic spat with Doha over President Saleh’s allegations of Qatari support for the uprisings and a “terrorist” group — a direct reference to the Muslim Brotherhood-affiliated al-Islah Party. Together with Egyptian President Abdel Fattah el-Sisi, the Crown Princes of Saudi Arabia and Abu Dhabi set up an Arab axis against the Qatari-Turkish alliance and the Iranian-led “axis of resistance” under the banner of countering political and revolutionary Islam. It is clear that the escalation of the war in Yemen has been directly entangled with the Gulf dispute, and while it remains to be seen, exactly how the crisis’ resolution will correlate with Yemen’s path forward, the trajectory will likely be towards de-escalation.

A Political Battleground for the GCC

After two years of Saudi-led military intervention in Yemen to reinstall the Yemeni government that fled Sana’a after the Houthi-led coup, Riyadh and Abu Dhabi launched a blockade of Qatar. The two blockading GCC states went so far as to have reportedly threatened a military intervention against Qatar — a fellow GCC member state — justifying their aggressive posture against Qatar as necessary for the neutralization of Doha. According to Saudi Arabia and the UAE, Qatar allegedly fell into Turkey’s orbit, and the power of its Al Jazeera Media Network needed to be curbed.

In the process of these heightening tensions, Yemen became a military and political battleground for the intra-Gulf dispute. The UAE designated itself as backing certain political and military factions that confront what it describes as the Muslim Brotherhood and Qatar-affiliated forces. This affiliation became complicated after the UAE began to support Yemen’s Southern Transitional Council (STC), a separatist movement that does not fully recognize President Abdrabbuh Mansour Hadi’s government, fueling the Yemeni forces’ already- existing mutual allegations of loyalty to foreign countries, including the UAE, Iran, Qatar, and Turkey. The different forces fighting against the Houthis do not have the same allegiances, which both impedes their military effectiveness and further perpetuates a feeling of being pawns in a regional game.

The exiled Yemeni government, now in Riyadh, also supported the blockading countries, which further exacerbated the crisis. On June 5th, 2017, it cut ties with Qatar, accusing it of supporting the Houthis and other extremist groups in Yemen. In response, Qatar withdrew from the Saudi-led military coalition and suspended financial assistance to the Yemeni government, especially the Foreign Ministry cadre salaries.

Mending GCC Ties May Lead to End of War in Yemen

The ongoing dispute between Qatar and the blockading states has molded the crisis in Yemen as in a number of ways. First, as already illustrated, Yemen has become a direct arena for the Gulf states’ competing regional agendas. Saudi Arabia and the UAE have confined themselves to military and political control, while Qatar tried to garner influence through its strong media outlets. Second, the GCC’s internal divisions have been projected onto Yemeni forces. The division heightened Yemeni doubt regarding the Saudi-led coalition’s objective in starting the war in Yemen: was it to battle the Houthis, or the al-Islah Party? Finally, the harsh posture of Saudi Arabia and the UAE on Qatar has evoked similar apprehension for Oman, which has historically maintained neutrality in regional conflicts. Oman has likely been concerned about Qatar’s blockade affecting them more severely than the other GCC states, especially after the coalition’s military movements in the governorate of Al-Mahra, adjacent to its border with Yemen.

The settlement of the 2017 Gulf Crisis constitutes an opportunity for the Arab monarchies to adopt a cohesive stance towards the Houthis after years of division. However, the recent decision from outgoing President Trump to designate the Houthis as a foreign terrorist organization might put the GCC states under international pressure in how they engage with them  — especially Kuwait, Oman, and Qatar, whose stances against the Houthis have historically been less stringent.

This blossoming political reconciliation may redeem the GCC’s credibility and prestige, as well as that of the Saudi-led coalition role in Yemen, which has gradually attracted rising international criticism and suspicion over its unclear intentions and shifting agenda. Furthermore, the potential influence of the GCC reconciliation would help to restore trust between Yemeni parties fighting the Houthis, including the UAE-backed STC, the Saudi-backed Hadi government forces, and the al-Islah Party. Although the deal is intended to reduce the burden on Saudi Arabia in Yemen, some Yemenis fear that the UAE will translate it as a triumph and stimulus for further hegemony in Yemen. Additionally, after successfully mediating an end to the rift between the GCC states, Kuwait might seek to end the war in Yemen through mediation between Riyadh and the Houthis — mediation that Kuwait has already conducted in Yemen, albeit with limited success. By embracing their role as mediators in the Gulf, Kuwait’s leaders might be able to finally bring an end to the region’s crises.

It is hoped that the Al-Ula summit agreement will relax the divide between Qatar and the UAE in concert with Yemen’s Riyadh Agreement, and that Doha may resume financial assistance to the Yemeni government. Crucially, by re-establishing ties with Doha, Saudi Arabia expects Qatar to help bridge the rift between Riyadh and Ankara, so that they can realign against Iran and its affiliated groups, including the Houthis. Finally, this agreement illustrates that if Saudi Arabia can shift its policy and reconcile with Qatar after years of imposing “maximum pressure” on it, it may one day take the same measure with the Houthis, either formally or informally, and end the war in Yemen.

Omar Munassar is an independent researcher based in Istanbul with areas of expertise in the Arabian Peninsula, the Gulf region, and Turkey. He is recently a Ph.D. candidate in IR. He can be contacted at munassarir@gmail.com and tweets at @OmarMunasar 

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

GCC States Elusive Reconciliation: Rifts Continue for a Third Crisis

This month’s Gulf Arab summit—also known as the “Sultan Qaboos bin Said and Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah summit”—in al-Ula, Saudi Arabia was truly historic. Saudi Arabia, the United Arab Emirates (UAE), Bahrain, and Egypt at last lifted their blockade on Doha which began on June 5, 2017, in exchange for the Qataris agreeing to freeze legal actions against them. Doha not needing to meet any of the anti-Qatar Quartet’s initial 13 demands demonstrated the extent to which the blockade ended on terms that were highly favorable to Doha.

The Al-Ula communique is more likely to be a commitment to a Saudi-Qatari reconciliation rather than a Gulf Cooperation Council (GCC) reconciliation. Since the beginning of negotiations between Riyadh and Doha and throughout the past few weeks, there has been evidence of stagnation with regards to Abu Dhabi and Manama’s feuds with Qatar. Doha accused Bahraini jets of violating Qatari airspace on December 9, prompting Doha to complain to the United Nations Security Council; Manama denied the allegation. Three days later, the Qataris arrested three Bahraini sailors in Qatari waters. The communication between Manama and Doha seemed nearly impossible at the time of the summit, evidenced by the fact that the Bahraini sailors’ release came through Omani mediation. Additionally, only two weeks after the reconciliation, Manama announced the confiscation of properties in Bahrain that belong to a Qatari royal member (an uncle of Qatar’s emir).

The Qatari-Emirati feud might be deeper than Qatar’s dispute with either Bahrain or Saudi Arabia. It is clear that Doha and Abu Dhabi will continue to view regional conflicts in Yemen, Syria, Libya, and the Eastern Mediterranean through different lenses. Furthermore, the roles of Iran and Turkey in the Gulf region and broader Middle East will remain an obstacle to bringing both countries closer. The Qatari-Emirati stalemate is evident, as we have not seen a visible attempt to re-establish the communication channels between both countries, nor any attempt to heal the damage resulting from the blockade. This rift between the UAE and Qatar was unprecedented in the first place as both countries employed various media outlets to undermine the other.

Emirati media, press, and social media accounts have gone as far as attacking members of the Qatari royal family. Both during the three-and-a-half-years of the GCC crisis, and even after the al-Ula summit, the information war between Emirati and Qatari media platforms has raged on. The UAE’s media has accused the Qataris of financing extremist groups, while the Qatari backed media attacked Emirati military expansion in the Horn of Africa. The two countries’ diverging foreign policies and purported interference in each other’s domestic affairs have erected serious barriers and exacerbated trust issues. Also, whereas the Qatari-Saudi border crossing has reopened with people and goods crossing it, there has not yet been any reports about Emiratis and Qataris visiting each other in the other country.

Superficial Reconciliation Will Not Cement Unresolved Divisions

Amid much celebration and rhetoric about Gulf Arab reconciliation, it is worth asking how much has changed in the Gulf sub-region as a result of the al-Ula summit. The end of the blockade indeed opens up new possibilities for greater cooperation between the GCC members in post-COVID-19 recovery, economic diversification, tourism, and other domains. Nonetheless, there is no denying that the underlying sources of tension between the monarchies on both sides of the GCC rift remain unresolved. Ultimately, the blockade was merely a symptom of these frictions, not their root causes. Without addressing the issues that led to the Gulf dispute breaking out in 2017, there is a risk of a third GCC crisis erupting in the future.

At the heart of the GCC feud are fundamental questions and concerns about the future of the Arab region. Should there be space in Arab states’ political arenas for Islamist parties? How should Gulf Arab states view the Islamist power centers that emerged in the post-Arab Spring period? How much independence should Arab media outlets enjoy? Additionally, there is no GCC consensus regarding sensitive questions about Turkey and Iran’s roles in the Gulf security landscape. Such topics, among others, remain unresolved. The GCC states must address them in order to avoid a third crisis.

Implications of the Rentier Social Contract on Political Liberalization

Questions about the evolutions of social contracts between the Gulf sub-region’s rulers and subjects are also likely to continue creating major sources of tension between the different monarchies. This is especially true considering political liberalization developing at different rates across the GCC states. For years, political liberalization has driven a wedge between Saudi Arabia and the smaller GCC states that have made, or at least considered such reforms.

Kuwait’s semi-democratic political system has often unnerved Saudi authorities, who are fearful that Saudi citizens may see Kuwait’s approach to governance, and demand that Saudi Arabia cease to be an absolute monarchy and instead adapt Kuwait’s governance. In a recent article published by the Brookings Institution, Yasmina Abouzzohour argued that Oman’s government “must first renegotiate its pseudo-rentier social contract with the population” and accept “some degree of political liberalization…” While Oman has been under more of this pressure due to its lesser level of hydrocarbon wealth than its GCC neighbors, all GCC monarchies will face these same dilemmas at some point in the future.

Prior to the blockade of Qatar in 2017, Qatari leadership often refrained from accelerating Doha’s political liberalization campaign that began to develop in the 1990s. This has largely been in response to Riyadh’s unfavorable stance on smaller GCC states’ liberalization efforts. So, officials in Doha have actually benefited from Qatar coming under siege in June 2017. Qatari government now feels more confident and comfortable liberalizing the country’s policies without the Saudi influence. Examples include amending residency laws for foreigners, dismantling the Kafala system, and moving towards announcing election for the Shura Council in November 2021. Now, regardless of the al-Ula summit’s outcome, Qatar’s embrace of greater openness and relative freedoms will remain a thorn in the side of Saudi Arabia. These dynamics most likely guarantee a continuation of friction between Riyadh and Doha moving forward.

Weaponized Media Undermines al-Ula Unity

The differing media landscapes within the six GCC countries are also a strain to intra-Gulf Arab relations. It was remarkable how soon after the al-Ula summit Manama issued a statement accusing Qatari state-owned media of misrepresenting facts surrounding a human rights issue in Bahrain. It is too early to tell whether Doha-headquartered networks like Al Jazeera will tone down their coverage and analysis on sensitive issues in other GCC states and Egypt. But unless that occurs, it is safe to assume that Qatari media will continue upsetting the states that included a closure of Al Jazeera as one of their 13 demands for reconciliation with Doha at the outset of the Gulf crisis.

Additionally, the vitriolic coverage of Qatar, along with outlandish accusations against Doha from anti-Qatar Quartet’s media outlets, will likely have a lasting and toxic effect on the Gulf’s media landscape. The extent to which the blockading countries weaponized their media outlets to damage Qatar’s reputation, both regionally and internationally, will have a longer-term impact on media in the polarized Gulf region. The signing of the al-Ula communique will not automatically heal these wounds.

It is also worthwhile to note that harm inflicted on people of the Gulf as a consequence of this three-and-a-half-year blockade will continue to put pressure on GCC countries’ relations despite the signing of the al-Ula communique this month. Unlike the first Gulf crisis in 2014, the second Gulf crisis had a huge impact on families and individuals at a citizen-to-citizen level.

A Lack of Structured Monitoring for Compliance May Foment Suspicion

While the al-Ula summit ultimately affords the GCC rulers an opportunity to address their differences in more diplomatic and less confrontational manner, the divide will remain deep. A legitimate concern is that the communique will prove to be too vague and lack mechanisms to monitor compliance with the terms. A real risk is that the al-Ula agreement will suffer the same fate as the one signed by GCC states in Riyadh in 2014. Given these factors, there is a possibility of a third Gulf crisis breaking out in the future, perhaps when factors related to U.S. foreign policy create conditions similar to those which existed shortly after President Donald Trump’s historic visit to Riyadh in mid-2017.

Within this context, there is a good chance that Qatar and the Quartet will continue to be wary and suspicious of each other. The blockading states’ 13 demands from 2017 were abandoned at this month’s Gulf Arab summit because, for now, they cease to be the basis for reopening borders. However, those demands reflect real differences that the three Gulf states and Egypt have with Doha. The al-Ula summit did not change that. In sum, despite major progress on the GCC reconciliation in al-Ula this month, the concept of Gulf Arab unity remains elusive.

 

Giorgio Cafiero is the CEO and founder of Gulf State Analytics, a geopolitical risk consultancy based in Washington, DC. His research interests include geopolitical and security trends in the Arabian Peninsula and the broader Middle East. 

Dr. Khalid al-Jaber is the Director of MENA Center in Washington D.C. Previously, he served at al-Sharq Studies & Research Center and as Editor-in-Chief of The Peninsula, Qatar’s leading English language daily newspaper.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Are We Witnessing an Institutional Shakeup in Oman?

A year has passed since Sultan Haitham bin Tariq Al Said acceded to power in Oman following the death of his cousin, Sultan Qaboos bin Said Al Said, on January 10, 2020. Sultan Qaboos had ruled Oman for almost half a century since July 1970 and spearheaded a ‘renaissance’ that transformed Oman into a modern state. Both the length of Sultan Qaboos’s rule and his reluctance to delegate authority meant that the transition to new leadership was always likely to involve significant changes in the style and substance of decision-making – especially against the backdrop of Oman’s rapidly deteriorating financial position and the economic dislocation caused by COVID-19. And yet, while the pandemic was truly a ‘black swan’ event that hit Oman (and the rest of the world) just as the transition to the post-Qaboos era was beginning, Sultan Haitham has responded with measures that are as intriguing as they are potentially far-reaching.

In a pair of decrees announced on January 11, 2021, the first anniversary of the morning last year when the envelope containing Haitham bin Tariq’s name as Sultan Qaboos’s choice of successor was opened, Sultan Haitham issued a new Basic Law of governance and administration to supersede the Qaboos-era Basic Law of 1996, as well as a new Council of Oman law that updated the rights, duties, terms of reference, and conditions of membership of Oman’s bicameral parliament. Media attention focused on the alteration of succession arrangements to include the designation of an heir apparent, namely the eldest son of the Sultan once he reaches the age of 21. This places 30-year-old Dhi Yazan bin Haitham Al Said, who has served as Minister of Culture, Sports, and Youth since August 2020, formally into the line of succession after the 65-year-old Sultan Haitham.

The formalization of the system of succession should assuage concerns expressed periodically during Sultan Qaboos’s reign by external observers at the apparent lack of certainty and predictability in long-term planning, although the 2020 transition was as smooth as it was quick and decisive. It detracts, however, from the signs of significant shift in policy focus that Sultan Haitham has overseen during his first year in power which, if carried through, could alter Oman’s institutional arrangements in meaningful ways. Moreover, the pace of policy announcements has quickened markedly over the past twelve months, as the new Sultan and revamped government have responded to multiple challenges, including some, such as mounting fiscal pressures, which had built up over a period of years.

Muscat’s Money Problems

Oman faces a difficult fiscal situation which has been magnified considerably by the economic fallout from the COVID-19 pandemic. Government debt as a ratio of GDP has risen rapidly since oil prices crashed in 2014, from 4.9 percent that year to 31.5 percent in 2016, 47.5 percent in 2018, 60 percent in 2019, and a forecast of more than 80 percent of GDP by the end of 2020. A year into the coronavirus crisis, Oman’s fiscal deficit is projected to have grown from 7.1 percent in 2019 to 18.3 percent in 2020. The Omani government unveiled a four-year Medium-Term Fiscal Plan in November 2020 which set out measures to cut the deficit and raise revenues, especially non-oil revenues, by 2024. The measure which attracted the most attention was an announcement that an income tax would be imposed on high earners beginning in 2022. This came several weeks after a separate confirmation that a Value Added Tax (VAT) of 5 percent on many goods and services, initially planned for 2018, would belatedly come into force in April 2021.

The imposition of new forms of taxation – direct as well as indirect – is a critical element of the plan to achieve fiscal sustainability in the 2020s. In particular, the income tax breaks new ground in the six Gulf States and marks a departure from the regional norm in terms of what was considered politically feasible in a system in which the state has acted as the distributor to, rather than an extractor of wealth from, its citizens. For this reason, the rollout of Oman’s income tax will be watched closely by regional and international observers, although the lack of any real pushback so far suggests that public attitudes toward taxation have shifted amid recognition that Oman’s present financial situation is no longer sustainable in the long (or even the short) run.

A New State Model?

Indeed, what makes the Omani case so intriguing is that leaders, including Sultan Haitham himself, have used language over the past year to describe the direction of travel that is strikingly distinct not only for Oman but also for the region. In his first major address as Sultan, in February 2020, the Sultan noted the importance of “citizens’ partnership” in the next phase of nation building. In his National Day speech on November 18, the Sultan referred to steps underway to “revise the legislating and auditing measures and develop instruments of questioning and accountability so that they might constitute a cornerstone for future activity in Oman.” In the same speech, Haitham also announced the establishment of a Social Security scheme intended to form “an overarching canopy of social protection.”

Oman’s Foreign Minister, Sayyid Badr bin Hamad al-Busaidi, used an interview with local media in Muscat in December 2020 to make the point that the redesign of Omani fiscal policies would be based on the principle that “those most in need of support will always receive it, and that those most able to contribute should always do so.” To that end, al-Busaidi stated that social security and personal taxation would be designed “in such a way as to ensure that those who enjoy wealth and privilege are able to make their full contribution to the collective good.” Speaking the same month at the Manama Dialogue on regional security in Bahrain, al-Busaidi added that the scope of ‘what security means today’ should be expanded to include “the everyday security of those whose daily lives depend upon our ability to distribute our collective resources in a manner that is widely perceived by a strong social consensus, as just and fair.”

Consistent Signs of Shakeup

Specific details about the income tax and social security scheme are still to be released, and it was notable that when the plans for VAT were laid out, they included the largest number of exemptions in any of the Gulf States that have so far implemented VAT, thereby lessening its impact on individuals’ finances. However, statements such as al-Busaidi’s suggest that the leadership in Muscat is fully aware of the significance of the shift toward personal taxation, and of the new obligations that such a move will entail. It is still too early to tell whether the Oman of Sultan Haitham’s era will evolve into a form of constitutional monarchy until the policies are implemented and put into practice.

With that said, the moves announced so far are consistent with the signs of a wider shakeup of institutional and governing arrangements that is imprinting Sultan Haitham’s stamp on Oman as firmly as Sultan Qaboos did in the years after he came to power in 1970. The past year has seen a careful restructuring of government ministries, including the Ministry of Energy and Minerals, to better align with contemporary public policy challenges, the creation of new institutions such as the Oman Investment Authority and Energy Development Oman, and the delegation of powers to a capable younger generation of officials both in Muscat and across the country’s eleven governorates. While the roots of several of these policy decisions date to the final period of Sultan Qaboos’s life, the pace of change under Sultan Haitham has accelerated significantly and makes Oman a country to follow in the eventual post-COVID world.

 

Dr. Kristian Coates Ulrichsen is a Baker Institute fellow for the Middle East and Non-Resident Senior Fellow at Gulf International Forum. Working across the disciplines of political science, international relations and international political economy, his research examines the changing position of Persian Gulf states in the global order, as well as the emergence of longer-term, nonmilitary challenges to regional security. Previously, he worked as senior Gulf analyst at the Gulf Center for Strategic Studies between 2006 and 2008 and as co-director of the Kuwait Program on Development, Governance and Globalization in the Gulf States at the London School of Economics (LSE) from 2008 until 2013.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Let the Turbines Spin: Iran’s Opportunity to Combat Climate Change

The cold season is upon Iran and air pollution levels are on the rise yet again and the pandemic was not able to change much in this front. With more than 19,600 premature deaths per year and an annual cost to the Iranian economy upwards of $13 billion or 3.2% of its GDP, air pollution has been taking a hefty toll on Iranian society and economy, calling for long-term solutions to this decades-long problem. Iran is facing a major challenge to reduce massive, wasteful, and unjust fossil fuel subsidies and implement a tolling system in Iran’s congested cities. Yet, promoting renewable energy to combat climate change is another piece of the puzzle for reducing air pollution and fossil fuel dependency in Iran. In fact, increasing the share of renewable energy in Iran’s energy mix is the most effective and economically feasible strategy to reduce the country’s air pollution and other forms of environmental degradation.

High Cost, High Reward

Solar and wind energies boast immense potential, but as of now constitute less than 1% of Iran’s total energy mix. Renewable energy overall constitutes less than 7%, with 6% in hydropower and less than 1% in solar and wind energy. While this number is relatively low at the moment, it is both technically and economically feasible to address all of Iran’s electricity demand through hydro, wind, and solar sources. Electricity generation from solar farms and photovoltaic cells is economically most justifiable in areas with Direct Normal Irradiation (DNI) above 5 kWh per meter square per day, which is true in more than 75% of the country or areas in Figure 1 shaded in orange, red, and purple colors.

Figure 1. Solar Atlas of Iran (Source: World Bank Group, ESMAP, Solargis)

Also, Iran is located in a wind belt, where wind speed at the height of 40 meters averages 5 meters per second in at least a quarter of the country. This is shown in Figure 2 for areas of the country shaded in green, yellow, orange, red, and dark purple colors.

Figure 2. Wind Atlas of Iran (Source: https://globalwindatlas.info)

The Iranian government has taken important steps in promoting wind energy, but financing this shift proves to be the main obstacle. Heeding this immense potential, the Iranian government has put in place policies and attractive incentives to increase the share of renewable energies in Iran’s energy mix. When it comes to electricity generated from wind, the government offers 20-years guaranteed power purchase agreements (PPAs) with a Feed-in-Tariff (FiT) of 2.1 cents per kWh, which is about 10 times the wholesale retail price of 0.23 cents per kWh for electricity generated from fossil fuel power plants. However, considering the cost of the purchase, installation, operation, and maintenance of the turbines, a FiT of 2.1 cents per kWh results in a -13% Internal Rate of Return (IRR), which is clearly unacceptable from an investment point of view. For the private sector to invest in development of utility scale wind farms in Iran, a FiT of at least 12 cents per kWh is required, which will result in an IRR of 5.5%.

It is important to realize that the FiT for wind energy was indeed around 14.5 cents per kWh between 2013 and 2018, which resulted in Iran’s installed wind capacity to increase from 150 MW to around 300 MW (Figure 3), but it has since been reduced to the current level of 2.1 cents per kWh because of large and continuous depreciation of the Iranian rial vis-à-vis major currencies in the past three years. The Iranian rial collapsed by more than 600%, or seven-folds, from around 37,000 rials per USD in 2017 to the current exchange rate of around 250,000 rials per USD. In turn, the FiT for wind energy has been reduced to 2.1 cents per kWh.

Figure 3 – Development of wind capacity in Iran, 2000-2018 (Source: Tavanir, detailed statistics of Iran electric power generation, 2018.)

Tapping Potential and Making Strides

Reducing large, wasteful, and socially unjust fossil fuel subsidies can free enough of the government budget to finance the growth of renewable energy, namely wind energy. The survival of the Iranian wind energy industry depends heavily on the ability of the Iranian government to commit to a FiT that is equal to or larger than 12 cents per kWh in the long run. At first look, the Iranian government seems to lack the ability to commit to such a FiT for 20 years. Severe and prolonged economic and financial sanctions and rapid depreciation of the Iranian rial have negatively impacted the government’s fiscal position significantly, leaving no room for the government to commit to economically suitable FiTs for wind and other renewable energy sources. However, reviewing energy policies of the Iranian government in the past decades reveals the grim reality that fossil fuel subsidies have ranged somewhere between 20% and 30% of Iran’s GDP, year after year. For example, a 2019 IMF working paper estimates that Iran’s post-tax energy subsidies (including all kinds of fossil fuel, electricity, and water) were about $111 billion or around 30% of the country’s GDP in 2015. In 2018, the government reduced fossil fuel subsidies to $69 billion, which was 15.3% of the country’s GDP and 16% of total global energy subsidies. Since then, energy subsidies have again increased to about $110 billion because of the substantial continuous depreciation of rial vis-à-vis major currencies in the past three years.

What makes such massive subsidies even more unjustifiable and ludicrous is the fact that more than 82% of such subsidies end up in the pockets of the Iranian households in the top income decile. Moreover, because of the large price difference in gasoline between Iran and its neighboring countries, smuggling of gasoline and diesel outside of Iran has been commonplace and amounts to more than 8 million liters per day in 2019, albeit a decline from 2018’s 12 million per day figure. Clearly, fuel smuggling benefits only the smugglers and the economies of the destination countries, at a massive cost for the Iranian economy.

Considering the inequitable, inefficient, and ineffective nature of energy subsidies in Iran and its immense pressure on governments finances, it only makes sense to reduce or remove them altogether. As seen in Table 1, in order to meet 5% of Iran’s estimated total electricity demand through wind energy, the annual cost for a FiT of 12 cents per kWh would be $1.5 billion. Based on a very conservative estimate of explicit (and not hidden) fossil fuel subsidies of $70 billion a year, the annual cost of this FiT for the government would be about 2.14% of the fossil fuel subsidies in Iran. Moreover, the capital needed to develop and maintain the wind farms hosting 16,500 660-kilowatt Vestas V47 wind turbines would be around $12.86 billion or just 18% of the total cost of subsidies of fossil fuels in one year.

FiT = 12 cents per kWh
Estimate total electricity demands for Iran (TWh)250
5% of the estimated total electricity demand (TWh)12.5
Number of turbines needed to meet 5% of demand16,497
CapEx & OpEx (million $)12,865
CapEX & OpEx as a percentage of a conservative figure of $70 billion fossil fuel subsidies (%)18%
Total cost of FiT for the Government (million $)1,500
Cost of FiT as a percentage of a conservative figure of $70 billion fossil fuel subsidies (%)2.14%

Table 1 – Estimated cost of FiT and capital expenditures for meeting 5% of Iran’s estimated total electricity demand through wind energy. (Note: CapEx and OpEx are capital expenditures and operational expenditure, respectively.)

Wind energy can also help address some of Iran’s other challenges including air pollution and high unemployment rates among educated youth. In addition to reducing dependency on fossil fuels, the development of the wind industry in Iran will also create tens of thousands of green jobs in Iran’s labor market, which is suffering from high unemployment rates among educated youth, while also reducing CO2 emissions by around 18.5 million metric tons per year,[1] an amount that is equivalent to the CO2 emitted by 4.6 million cars in a year or 27% of Iran’s transportation fleet. Further, it would reduce water consumption at Iran’s current thermal plants by about 18.5 billion liters per year and result in more than $160 million savings in the public health outcomes.[2] By tapping into its immense wind energy potential, not only can Iran reduce its dependence on fossil fuel as a source of energy in the long run, but it can also take steps, albeit small, in making dents in other challenges facing the country.

Amin Mohseni-Cheraghlou is an assistant professor in the Department of Economics at American University in Washington, D.C. He has also taught at the University of Tehran in the faculties of Economics and World Studies. His areas of expertise are Development Macroeconomics, International Political Economy, Economies of the Middle East and North Africa (MENA), and Islamic Economics and Finance. A research consultant for the World Bank Group since 2007, Amin writes frequently on topics related to development economics and economies of the Gulf and the MENA region. He holds a Ph.D. in Economics, an M.A. in International Development, and a B.S. in Electrical Engineering.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Developments Policies in Saudi Arabia: Challenges and Opportunities

Executive Summary:

This report explores the various economic development strategies and paradigms implemented by the Saudi state since the 1970s to encourage economic growth, stability, and diversification. Over the past several decades, the Kingdom has achieved remarkable gains in infrastructure and industry, particularly due to large-scale investments in hydrocarbons and downstream production. However, the country’s youth remain disenfranchised and largely have not benefited from the accumulation of oil wealth. As the inclusion of youth in the economy is vital for the nation’s political, economic, and social stability, Saudi Arabia faces an acute imperative to address the underlying factors stifling youth engagement and reimagine previous development theories.

Currently, two alternate visions compete for ascendancy in the Kingdom: further development of production downstream to oil, and diversification of the economy into sectors like tourism and entertainment.

Through historical analysis of dominant development strategies, this report analyses Saudi Arabia’s approaches to economic development contextually:

  • Saudi Arabia established tariffs and import quotas – a strategy commonly known as “import-substitution industrialization” – to promote a domestic manufacturing base.

Under the leadership of King Faisal, Saudi Arabia briefly pursued this strategy in the early 1970s. However, the political and economic conditions of Saudi Arabia – notably the presence of merchant families that were traditionally entitled to monopolies on imports – made this approach unworkable.

  • Saudi Arabia attempted to drive industrialization through exports to foreign countries.

This approach was based on the growth trajectory of several economies in Asia, which underwent successful industrialization in the 1970s. However, this model also failed to work in Saudi Arabia, owing to the lower quality and higher price point of Saudi exports compared to their Asian rivals.

  • The Saudi leadership pursued a unique approach to economic development consistent with its conditions.

After the failure of import substitution and export-led growth, the Saudi state pursued a unique industrialization strategy based on the state’s natural advantage in oil production and downstream development. Because of Saudi Arabia’s comparative advantage in petroleum extraction, it pursued development in the petrochemical industry, such as the manufacturing of plastics. This approach has been

fairly successful, although Saudi Arabia continues to face challenges such as corruption, inefficiency from state-run monopolies, and high youth unemployment.

Finally, the report evaluates the present approaches of the kingdom to economic development, particularly under the leadership of Crown Prince Mohammed bin Salman (MbS). Ultimately, rather than establishing the “correct” way to pursue industrialization, the report charts a compromise between alternative development theories, recognizing both the need for further investment in downstream oil production and the necessity for economic diversification. The importance of diversification is especially clear in light of the COVID-19 pandemic, which has drastically impacted the oil sector and placed the future of the Gulf economies in question.

The findings from this research enable a historically informed, comprehensive understanding of the challenges and opportunities posed by various economic development strategies in the Saudi Kingdom. In light of enduring youth unemployment and global economic decline as a result of the pandemic, robust, imaginative economic development strategies are urgently needed.

Read full report here

GCC 41st Summit: Prospects and Challenges for Stalled Crises

Biden, Iran and the JCPOA: A Race to Save Diplomacy

آينده روابط ايران و آمريكا در دوران بايدن: فرصت‌ها و چالش‌ها

What the Al-Ula GCC Summit Has (and Has Not) Accomplished

Did Saudi Crown Prince Mohammed bin Salman’s embrace of Qatari Emir Sheikh Tamim bin Hamid signal a conclusive end to the “Gulf Crisis” that began in June 2017? One would hope so, but things might be more complicated than most observers think. A structural challenge for the Gulf Cooperation Council (GCC) has been that none of the states have the leverage to coerce the others to submit to their will. Consequently, as long as the strategic interests of the GCC countries diverge, perpetual tensions will endure. The current Gulf confrontation did not begin in 2017; its origins lie in dynastic intra-GCC rivalries going back several decades. The same four countries that blockaded Qatar in 2017 – the “Quartet” – earlier attempted to facilitate the overthrow of the Al-Thani family in 1996, and later withdrew their ambassadors from Doha in 2014. Ending the 2017 blockade is a welcome step, but it might be only the next chapter in an unending story. 

From most accounts of the Al-Ula summit, Qatar made no real concessions to the Quartet. Sheikh Tamim bin Hamid, Qatar’s ruler, agreed to withdraw the international lawsuits his country filed against the closing of its neighbors’ airspace and territorial waters. However, this was not a significant concession; the suits would have been rendered moot by the reopening of Saudi airspace in any case. Given this, why would Saudi Arabia (and to a lesser extent its Quartet partners Bahrain, the United Arab Emirates, and Egypt) agree to lift the blockade? 

One answer is that there has been an overarching trend towards regionalized security arrangements related to a transition in America’s leadership and the perceived withdrawal of Washington from the Middle East. Furthermore, even though Qatar did not agree to any of the Quartet’s initial demands, Saudi Arabia found that lifting the blockade has nonetheless been a politically rewarding move.

Why UAE, Egypt and Bahrain Signed, Despite Reservations

The government of the UAE has reluctantly signed on to the agreement likely to avoid isolation. However, its minister of state for foreign affairs included a serious caveat: a statement that the Al-Ula Declaration was the “beginning of a new dialogue” rather than a full-fledged reconciliation. Bahrain and Egypt have issued similar reservations.

Emirati Crown Prince Mohammed bin Zayed (MbZ) appeared to have gained the confidence and even deference of MbS three years ago when the decision to break with Qatar was taken. The Al-Ula Declaration seems to indicate that MbS has chosen to distance himself from his UAE counterpart. The fact that Abu Dhabi has developed into the first inner-Gulf country that may be strong enough to challenge Riyadh without outside assistance cannot have escaped Saudi attention.

Bahrain, on the other hand, had little choice but to agree to the Al-Ula Declaration. Saudi Arabia has reduced it to political vassalage, and the UAE provides the lifeline keeping its economy afloat. The same can be said of Egypt, which faces challenges from Turkey in Libya and the Mediterranean and from Islamist opposition at home. Cairo badly needs a continued inflow of Gulf investment to keep its economy afloat and its domestic enemies at bay.

A Transition in Washington’s Leadership Makes a Regional Solution More Urgent

With regards to U.S.-Saudi relations, the Al-Ula agreement serves as a win-win for Riyadh’s relations with both the outgoing and incoming American administrations. First, Joe Biden’s election victory provided the impetus for the Saudi decision to seek a rapprochement with Qatar. MbS has every reason to fear that a Biden administration will be hostile to him personally as he prepares to take the throne. With a Democratic majority in both the upper and lower chambers of Congress, Biden’s pledge to end U.S. support for the Saudi military intervention in Yemen and hold MbS accountable on human rights issues will meet little opposition. MbS must also have concerns about how Biden’s administration might not welcome his accession to the throne if King Salman abdicated or otherwise passed from the scene before the next American elections in 2024. 

Second, the rapprochement gives outgoing President Donald Trump another diplomatic victory in the Middle East as he seeks to build his legacy. From Trump’s perspective, resolving the Gulf rift appeared to be simple when compared to the other unwieldy conflicts across the region. There may, of course, be other backdoor arrangements between MbS and the Trump administration that have yet to come to light.

Although both the outgoing and incoming administrations will welcome the lifting of the blockade, each has significantly different priorities for U.S policy in the Gulf region. In contrast to Trump, who made the GCC states and confronting Iran his primary focus, Biden will place more emphasis on diplomacy with Iran and reentering the JCPOA. The President-elect will not ignore GCC interests altogether, but seems unlikely to allow them to hinder his return to the agreement with Iran. The GCC states fear the U.S. will revive policies of the Obama era, an era that marked the beginning of America’s decreasing security role in the region. This pushes them to seek their own regional security solutions, with the development of a more united front between the GCC states as a first priority. Therefore, we should see the lifting of the blockade and the Emirati and Bahraini normalizations with Israel as steps in attempting to develop regionalized security.

Saudi Arabia Exploits Domestic Opportunities from Summit

Saudi Arabia exploited every opportunity to use the Al-Ula Agreement to capitalize on strategic messaging that benefits it economically and politically. Notably, although the Al-Ula conference was a GCC summit meeting, King Salman did not appear at any of the sessions, apparently wishing to pave the way for his son’s succession. His conspicuous absence could be an attempt to display MbS as a statesman, and rebrand him as a regional problem-solver.

Hosting the summit in Saudi Arabia’s newly-rebuilt ancient city of Al-Ula portrayed the Kingdom as the regional leader, while also heralding a new era of Saudi Arabia’s modernization and development under MbS. Photoshoots at the summit in front of the Maraya Concert Hall (the world’s largest mirror-clad building) served as a subtle tourism marketing strategy for Al-Ula, a trading center dating to the sixth century BC, while further showcasing progress in Saudi economic development.

An Overarching Trend of Regionalized Security

The Al-Ula Declaration should not be viewed as an epoch-making geopolitical event, but rather as a milestone in an overarching search for regionalized security. However, the agreement offers some opportunities for geopolitical maneuvering. Saudi Arabia sees this as an important development to facilitate fence-mending with Turkey. The Al-Ula Declaration effectively signals Riyadh’s abandoning the blockading Quartet’s ‘thirteen demands’ against Qatar, which included a demand to close the Turkish military base in Qatar, thus removing a serious obstacle to rapprochement with Ankara. The November 2020 phone call between King Salman and Turkish President Recep Tayyip Erdogan to discuss improving Turkish-Saudi relations was a crucial first step. 

The UAE has caught on to the possible Turkish-Saudi rapprochement and may be de-escalating with Turkey. Although the UAE’s relations with Turkey have grown acrimonious over the past decade, there have been signs of some de-escalation after the Al-Ula summit. Shortly after the summit, Anwar Gargash, the Minister of State for Foreign Affairs, stated that the UAE is Turkey’s number one trading partner in the Middle East and “we don’t cherish any feuds with Turkey”, an unsurprising response when following UAE politics as it is known for adapting quickly to unfolding regional events. Last year’s de-escalation with Iran is another example of this behavior.

The summit does not mark a fundamental change in GCC-Iran relations. Fearing a repeat of their problems, Qatar has made it clear that regardless of its agreement with the blockading states, it will not change its relations with Iran. Saudi Arabia, for its part, will continue to view Iran as its main security threat. However, depending on how much progress the Al-Ula agreement will lead to in resolving the conflicts in Libya, Syria and Lebanon, and the potential reinstatement of the JCPOA, the aggregate effect of the reduction of regional tensions could indirectly affect Iran’s standing in the region. 

Moving Forward, There is Much Work to Be Done

The Al-Ula summit agreement was a confidence-building measure that offers Qatar a framework for moving towards further regional reconciliation. This will require Qatar to deploy agile diplomacy to further develop bilateral relations with members of the Quartet. This appears to have begun with the announcement by the Qatari Minister of Foreign Affairs, Mohammed Al-Thani, that bilateral talks between Qatar and Egypt are underway.

In the near term, the 2021 GCC Summit appears to have created concrete motion towards resolving intra-GCC disputes. On the surface, at least, the six countries have shown that they can overcome their differences. Riyadh, in particular, needs to demonstrate to the incoming Biden administration that it speaks for a united GCC and should keep the reconciliation process on track. But intra-GCC differences and their underlying rivalries have not gone away, and could unexpectedly reappear in a future Gulf crisis.

Dr. Dania Thafer is the Executive Director of Gulf International Forum and a Professorial Lecturer at Georgetown University’s Center for Contemporary Arab Studies.

Ambassador Patrick Theros is a Strategic Adviser for Gulf International Forum. Previously he held positions as Political Advisor to the Commander in Chief, Central Command; Deputy Chief of Mission and Political Officer in Amman; Charge D’affaires and Deputy Chief of Mission in Abu Dhabi; Economic Counselor in Damascus; and U.S. Ambassador to the State of Qatar.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Prospects of Resolving the Gulf Crisis at the 41st GCC Summit

GCC Leaders Echo Political Will to Resolve the Rift but Reconciliation Remains Elusive

Dr. Dania Thafer

Executive Director, Gulf International Forum

The 41st GCC Summit in Saudi Arabia will address important regional matters and resolving the Gulf crisis is paramount to a united GCC front in addressing them. One of them is to confront a radically different U.S. foreign policy towards the Gulf region. President-elect Biden is inclined to revive the JCPOA with Iran and the GCC is likely not going to be central to his Gulf foreign policy to the same degree it was for the Trump administration. Moreover, there could be scaling back of military presence in the Gulf. Therefore, many issues including relations with Iran will be a top agenda item for the GCC summit. Turkey and Israel, and the future of Palestinians will also be chief geopolitical agenda items. A halfhearted effort to resolve the GCC crisis is a sign that region-wide political fissures will continue.

Although there appears to be political will among GCC leaders to resolve the crisis, there is merit to suspect another fumbled effort. The fact that the summit is not being held on neutral grounds such as in Kuwait or Oman can be a signal that full efforts have not been applied to diffuse tensions, albeit it is noteworthy to mention that past agreements, such as the 2014 Riyadh agreement, have been signed on Saudi territory. Another sign that reconciliation efforts may not have been fruitful is the fact that Qatar’s Foreign Minister did not attend the Manama pre-summit meeting.

Additionally, recent escalations between Bahrain and Qatar should raise questions about whether reconciliation discussions are a wholly good faith exercise. Letters submitted by Qatar to the United Nations Security Council alleged that Bahrain clashed with Qatar over the enforcement of maritime boundaries and flew its fighter jets over Qatar’s territorial water. If true and intentional, this would be an indicator that there are efforts to supplant ongoing negotiations. It is no secret that when it comes to GCC affairs, Bahrain does not act independently, especially in affairs that concern the interests of both Saudi Arabia and the United Arab Emirates.

Nonetheless, with Washington’s intensified pressure to resolve the crisis, this iteration of talks seems to be more promising than prior attempts. The best outcome for the Gulf rift appears to be the parties walking away with confidence-building measures which could be a framework for future negotiations. This could include Saudi Arabia lifting the air blockade on Qatar, something the Trump administration has been prioritizing. Even if this were the case, there will still be a trust-deficit between Qatar and the blockading states at all levels, and it will require more than a signed summit agreement to return to the pre-2017 intra-GCC relations.

What the GCC Summit Can (and Cannot) Fix

Dr. Kristian Coates Ulrichsen

Baker Institute Fellow for the Middle East, Rice University; Non-Resident Senior Fellow, Gulf International Forum

There seems to be the political will among GCC leaders to move on from the bitterness and rancor that marked the impact of the Trump era on intra-Gulf relationships, at least on the surface. Whether or not any agreement to end the Gulf crisis can resolve the deeper damage to social relationships following three and a half years of insults and accusatory finger-pointing is another matter. What has made the post-2017 crisis in the Gulf different from its predecessors has been that it was not confined to a difference between ruling elites, but directly affected the peoples and communities in each country. Ties of trust cannot be restored by a written agreement at a political level and will take time to repair. 

If an agreement – preliminary or final – is reached, it will need to contain stronger mechanisms to monitor compliance at the GCC level. The fact that the GCC Secretary-General is no longer a representative of one of the states involved in the rift gives some ground for optimism, but it is important that the GCC itself can strengthen its own dispute resolution mechanism to prevent or at least minimize the risk that the deal might itself become an object of future contention, as happened with the 2014 Riyadh agreement. If the GCC can reassert its authority and provide a supporting framework to any agreement, it may facilitate the rebuilding of political (and eventually social) trust – but this process will undoubtedly take longer than one summit meeting to achieve. 

Gradual Steps Forward

Dr. Courtney Freer

Assistant Professorial Research Fellow, the Middle East Centre at the London School of Economics; Non-Resident Senior Fellow, Gulf International Forum

The invitation of Qatari Emir Sheikh Tamim bin Hamad al-Thani to this month’s GCC summit is certainly an important step towards resolving the ongoing blockade of Qatar, building on years of mediation work led by Kuwait and more recent discussions between Qatar and Saudi Arabia. While a complete resolution of the crisis would be a welcome achievement, I think that it will be difficult to reach a compromise within one GCC meeting, especially given the uncompromising nature of the demands that the blockading countries placed on Qatar in June 2017. Instead of a clear and decisive resolution, I predict the implementation of confidence-building measures, perhaps beginning with the opening of airspace or loosening of economic barriers in place towards Qatar, as a means of moving towards resolution of the crisis.

Although these developments at the official level are encouraging, the very public and sudden nature of the start of the crisis, and the issuance of the demands in June 2017, mean that it will likely take years for full trust to be reached again, not just among the governments involved but also at a more personal and social level as well. Because the crisis was so publicly put in place, both national and non-national populations on either side of the rift have become emotionally involved either in opposing or supporting it. Therefore, leaders on both sides of the rift will also need to make efforts to “sell” the resolution of the crisis to their people in a way that demonstrates the strength of their position over the past three years, but also their move towards resolution at this time. As a result, I think a gradual easing of the blockade is the likeliest outcome of the upcoming summit.

A Return to Normality?

Professor David Des Roches

Associate Professor, Near East South Asia Center for Security Studies; Non-Resident Senior Fellow, Gulf International Forum

The death or irrelevance of the GCC has been loudly proclaimed by analysts and skeptics since its formation nearly 40 years ago. Yet the GCC continues to move forward at its own pace, sometimes shaping events and sometimes watching from the sidelines. Unlike the European Union, the members of the GCC seem happy with a laissez-faire approach to regional integration. Rather than seeking an “ever-closer union” as an end in itself, the GCC members are content with an a la carte approach which brings members together for necessary collective action and remains mostly dormant in the absence of any crisis. 

This approach is not what we in the West are used to seeing from regional organizations, but it seems to have served the GCC members well. None of these countries are democracies, and while all of the GCC states are Arab, there is a great diversity of history, government, traditions and even religion among its ranks. Therefore, a relatively inactive GCC in times of tranquility seems to meet the needs of its member states.  

Of course, the path of the GCC has not always been smooth, and has rarely been as disrupted as it is now. Three of the members (UAE, Saudi Arabia, Bahrain) have imposed a de facto blockade on a fourth (Qatar). The remaining two countries (Kuwait and Oman) have seen their venerated long-time rulers replaced in 2020.  Iran has continued to strengthen its proxies in Iraq, Lebanon, and Yemen, and has stepped up its attacks against GCC interests with direct attacks on Saudi oil infrastructure and naval mine attacks on commercial ships off Fujairah, in the Strait of Hormuz, and in the Red Sea. 

Add to this the political flux in the ultimate guarantor of the GCC ‘s sovereignty, the United States. The incoming president ran on a platform of confronting GCC states over their appalling human rights records and curbing American military support for the Saudi and Emirati intervention in Yemen. Taken together, these factors will certainly lead to a challenging GCC summit – and probably the most challenging since the U.S. invasion of Iraq.  

What can we expect from this summit? First, we can expect the Saudi hosts to advance a GCC-wide vision which dovetails with the far-sighted goals of Saudi Vision 2030. Even if nothing else is resolved, there will be a commitment to enhanced regional economic development and a statement calling for enhanced use of modern technology and economic cooperation.  

Second, we can expect a (carefully worded) denunciation of Iran’s malign activity in the region, as well as a call for a settlement of the situation in Yemen, Iraq, and Syria. Israel will not be mentioned, unless it is to welcome the recent rapprochement with Bahrain and the UAE. If this makes it into the communique, it will mean that other GCC countries will join the Abraham Accords. 

The biggest issue to be resolved, however, is the Qatar blockade. The West is reconsidering its support for the GCC states; the new American administration will almost surely look for an opportunity to scale back its military forces in the region. It is very difficult to justify American forces being put in harm’s way to protect non-democratic governments, even against clear aggression, if those countries cannot cooperate to defend themselves. For this reason, the summit is the best opportunity to cut the Gordian knot of animosity and bad blood which has poisoned intra-GCC relations; if there is not a resolution to the Qatar issue there, it will be viewed as a failure.

These remarks are the opinion of Professor Des Roches and do not reflect the view of any U.S. government agency or organization.

Cooperation on Display at the GCC Summit

Samuel Ramani

Non-Resident Fellow at Gulf International Forum and a Doctoral Candidate at the University of Oxford’s Department of Politics and International Relations

The January 5 GCC summit in Riyadh presents the best opportunity for a resolution of the Gulf crisis since the Qatar blockade began in 2017. As President-elect Joe Biden is expected to reassess the U.S.-Saudi Arabia partnership, Saudi Crown Prince Mohammed bin Salman wants to assuage concerns about Riyadh’s destabilizing conduct in the Middle East. A normalization with Qatar would advance Saudi Arabia’s rebranding efforts. This scenario could buy Saudi Arabia time to strike compromises with the Biden administration on other contentious issues, such as the war in Yemen and re-engagement with Iran. 

Saudi Arabia could frame a partial détente, which allows Qatari civilian planes to fly over Saudi airspace and de-escalates the information war, as proof of “new thinking” in Riyadh. This outcome is more plausible than an immediate reset, as Qatar will likely avoid making concessions to Saudi Arabia. Qatar’s Emir Tamim al-Thani has also yet to accept King Salman’s invitation to Riyadh. It remains uncertain whether other blockading countries will follow Saudi Arabia’s lead. Egypt’s President Abdel Fattah el-Sisi might attend the summit, and Cairo’s outreach to the Qatar-aligned Government of National Accord in Libya could inspire similar negotiations with Doha. Abu Dhabi Crown Prince Mohammed bin Zayed’s ideational conflict with Qatar over political Islam and Qatar’s recent detention of 47 Bahraini fishing boats could prevent the UAE or Bahrain from reconciling with Doha. 

If a partial resolution of the Gulf crisis unfolds, the GCC summit will likely have a marginal geopolitical impact. The Qatar-Turkey security partnership remains a contentious issue for Egypt, the UAE, and, to a lesser extent, Saudi Arabia. The Qatar-UAE rivalries in Tunisia, Libya and Somalia will also persist. GCC-level dialogue on the COVID-19 pandemic and macroeconomic issues could grow, but security cooperation will be undermined by divergent threat assessments amongst its members. Moreover, Qatar’s mistrust of Saudi Arabia and the UAE could linger for decades after this crisis. This could cause smaller-scale diplomatic disputes, mirroring the withdrawal of the Saudi, Emirati, and Bahraini ambassadors from Qatar in March 2014, to recur in the years to come.

 

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Gulf States Embolden Morocco as Temperatures Rise in Western Sahara

December 2020 will be remembered as a watershed month for US-Morocco relations. President Donald Trump recognized Moroccan sovereignty over Western Sahara as part of a deal in which the North African kingdom became the fourth Arab state to formalize diplomatic relations with Israel this year. The outgoing administration’s stance on the Western Sahara conflict positions the US, and no longer France, as Morocco’s biggest western backer in relation to this decades-old territorial dispute. The Trump administration’s position will embolden Morocco in its conflict with the Polisario Front (Frente Popular de Liberación de Saguía el Hamra y Río de Oro—POLISARIO), which has represented the Sahrawi people’s aspiration for independence since Spanish colonial rule amid the 1970s.

Along with strong support from the US and a growing number of African countries, Morocco also benefits from backing by the six Gulf Cooperation Council (GCC) members. Amid a period of deep polarization in the Arabian Peninsula, the Western Sahara crisis constitutes a rare case of a contemporary Arab-Arab conflict in which all six GCC states are on the same page. Underscored by how the Arabian monarchies all uniformly voiced support for the Moroccan military in its clashes with the POLISARIO when the Western Sahara conflict unfroze in November 2020 after a tense 29-year ceasefire, all GCC countries see it in their national interest to back Rabat against the POLISARIO.

Historical Context

History and ideology are relevant to why GCC states back Morocco’s position in the Western Sahara conflict. The POLISARIO is a left-wing, socialist organization and Algeria has been its main foreign sponsor since the end of Spanish colonial rule in Western Sahara. The pro-independence group also received support from Moammar Qaddafi’s Libya, Fidel Castro’s Cuba, and the Soviet Union. During the Cold War, the Kingdom of Saudi Arabia had a mostly negative view of these governments which naturally aligned Riyadh against the POLISARIO and its agenda of armed struggle against Moroccan control of Western Sahara.

In contrast to the civil wars plaguing Libya and Yemen, the Western Sahara conflict is a “known quantity in the region and the sides were chosen long ago,” explained Dr. Jacob Mundy, an associate professor of peace and conflict studies and Middle Eastern and Islamic studies at Colgate University.[i] With Rabat and Riyadh aligned with western powers, the Saudi kingdom has for decades seen it in its interests to support Morocco against the POLISARIO. The Saudis have done so by providing significant financial support to the North African country’s military, which contributed to Morocco’s success in terms of capturing roughly two-thirds of the territory in the 1975-1991 war. As Mundy opined, “the motivations were Arab monarchical solidarity in the context [of the 1970s] when Arab nationalism was still ascendant, especially after the fall of the Sanusi monarchy in Libya, which Morocco tried to restore, and the 1979 Iranian revolution, which further solidified ties between the Arab Gulf, Morocco and the United States to Rabat’s benefit in the war against POLISARIO.”[ii]

Throughout the post-Cold War era, Rabat has, for the most part, maintained balanced relations with all GCC states even when tensions have risen between the sub-regional organization’s different members. At least initially from 2015-2018, Morocco joined the Arab coalition in Yemen. Rabat’s relationship with Iran has also deteriorated with Morocco’s government accusing Tehran and Lebanese Hezbollah of supporting the POLISARIO by providing the group with missiles. Such dynamics have positioned Morocco to receive backing from all GCC states as it seeks to consolidate and legitimize its control of Western Sahara. “Rabat has effectively managed to protect its independence while avoiding antagonizing any of the GCC countries,” stated the International Crisis Group’s Riccardo Fabiani. “This strategy has paid back Morocco when the situation with the POLISARIO precipitated.”[iii]

Yet polarization within the GCC, especially since the siege of Doha began on June 5, 2017, has at times added complications to Rabat’s relations with some of the blockading states. By refusing to back the blockade of Qatar, Rabat kept itself on excellent terms with Doha, yet Morocco’s “passive” position vis-à-vis the GCC crisis angered Abu Dhabi. From 2017 until 2019/2020, Emirati-Moroccan relations suffered significantly with the UAE’s leadership believing that Rabat took the “wrong” stance on Qatar.

However, the escalation of Turkish military intervention in Libya in late 2019 and early 2020 changed the picture. Abu Dhabi’s disappointment with Algeria’s refusal to openly side against Ankara in the Libyan crisis at this point gave the UAE reason to view support for Rabat over Algiers as serving Abu Dhabi’s interests in countering Turkey’s “neo-Ottoman” agenda. In other words, with the UAE viewing the struggle against Ankara’s clout in Libya as an increasingly high priority, Abu Dhabi was willing to look past the problems it had with Morocco due to the North African kingdom’s refusal to join the anti-Qatar bandwagon in 2017. Such factors help explain why the UAE took a pro-Moroccan position this year when the Western Sahara conflict reheated.

Furthermore, the role of the West is key to understanding why the UAE and other GCC members have embraced a pro-Rabat stance on this conflict. Ultimately, the European powers most sympathetic to the POLISARIO have more liberal, left-wing governments that do not have much sway in Abu Dhabi and other Arabian capitals. Yet the US and France, which are staunchly supportive of Morocco against the POLISARIO, are the two main powers that have clout in the Emirates and other Gulf Arab states. Thus, supporting Morocco in Western Sahara serves to bring the UAE into further alignment with Washington and Paris, as well as Israel, especially in light of Rabat recently normalizing diplomatic relations with Tel Aviv.

Gulf Arab Interests in Western Sahara

In Western Sahara, Saudi Arabia and the UAE have some interests. There are joint Moroccan-Saudi investments in this territory and the Emiratis will possibly deepen their involvement in the Western Sahara via investment projects that would accompany Abu Dhabi’s consulate in Laayoune. Indeed, the UAE and later Bahrain opening consulates to Rabat in Western Sahara’s largest city has served to boost the perceived legitimacy of Morocco’s conduct in Western Sahara.

Nonetheless, it is fair to contend that the Gulf Arab monarchies’ main interests vis-à-vis Western Sahara pertain to their relationships with Morocco. A widespread view in the Gulf is that being Morocco’s “good friend” means supporting Rabat’s position that every inch of the Western Sahara is sovereign Moroccan land. GCC members have vested interests in ensuring that Morocco remains a stable North African country, and Gulf Arab governments believe that backing Rabat against the POLISARIO and, by extension, Algeria is critical to achieving this goal. Essentially, the Gulf Arab states believe that long-term stability in Morocco requires Rabat triumphing in its quest to consolidate its control over Western Sahara.

As Saudi Arabia is a heavyweight in the Muslim world, Riyadh’s pro-Morocco position helps the Maghrebi kingdom defend its actions against the POLISARIO before the Islamic world. Along with a strong emphasis on backing from the US, France, and more African Union members, the Gulf Arab states’ support for Rabat in relation to the Western Sahara serves to legitimize Moroccan control of this territory from the perspective of a growing number of Sunni Arab governments.

The Algerian Factor and Risks of Greater Regional Instability

But how will GCC support for Morocco in the Western Sahara conflict impact Gulf Arab countries’ relations with Algeria? It is a safe bet that Saudi Arabia and other Arabian monarchies’ backing of Morocco against the Algerian-sponsored POLISARIO will continue to inform Algerian perceptions of Gulf Arab states undermining the security and stability of Algeria. However, the damage could be limited.

Throughout the past ten years Algeria has disagreed with Gulf Arab states on a host of issues from the Syrian crisis to the NATO-led military intervention in Libya in 2011. But Algiers managed to prevent such disagreements from disrupting Gulf Arab (specifically Emirati) investments in Algeria such as DP World ports or Algiers and Abu Dhabi’s institutionalized ties. As Samuel Ramani, a doctoral researcher at Oxford University, explained, “GCC disagreement on Western Sahara is par for the course…I think Algeria and GCC countries have learnt to compartmentalize this disagreement.”[iv]

It is in Libya where Algeria has far more serious concerns about certain GCC states’ actions. That said, there are concerns about how the type of violence that has plagued Libya for years could be unleashed in Western Sahara. Experts warn that the collapse of the 1991 UN-brokered ceasefire and the Trump administration’s decision to recognize Moroccan sovereignty over the territory threaten to fuel greater instability throughout other parts of Africa. Naturally, the implications are very serious for Algerian security. “The ongoing conflict also increases the risk that some of the complex constellation of armed groups in the Sahel may be pulled into war,” according to Andrew Lebovich of the European Council on Foreign Relations. “Several of these groups have ties to both Morocco and Algeria, while some fighters – particularly those in Malian Arab armed groups – have family links and commercial ties to Western Sahara. And other fighters and young people in the region may be drawn in if the violence continues, as has happened for years in Libya’s cascading internal and proxy wars.”

It is not clear how the Algerians will react to recent developments that have raised temperatures in Western Sahara and threaten Algeria’s own security. With Washington’s unilateral action regarding Western Sahara emboldening Morocco while Algeria is in a weak economic position, officials in Algiers see their country becoming increasingly vulnerable to the US, Morocco, Israel, and GCC states’ foreign policy agendas. In the words of Algeria’s prime minister, Abdelaziz Djerad, there is a “real threat on our borders, reached by the Zionist entity”. Most likely, Algeria will turn to Russia for more backing, which could significantly exacerbate tensions in north-western Africa and provide the Kremlin more opportunities to gain clout at the expense of Western powers—itself a goal that Moscow has spent years pursuing.

Ultimately, the future of Western Sahara is the most sensitive and important foreign policy dilemma facing Rabat. The Moroccan doctrine says that Morocco taking full control of Western Sahara is necessary in order to prevent the kingdom from crumbling. At the end of the day, it is an existential issue from Rabat’s perspective.

Despite the risks of the Western Sahara conflict escalating and driving greater instability across the Maghreb and Sahel, the leadership in Rabat is taking advantage of current circumstances to act boldly in this territory that it has occupied since the 1970s. In the process, the six GCC states are playing an important role in giving Morocco a greater sense of confidence in this conflict. Betting on a lack of international focus on the conflict, along with support from the US and GCC states, Morocco aims to further consolidate its control over Western Sahara. However, by embracing such a pro-Morocco position in the Western Sahara conflict, the Gulf Arab monarchies are giving Algeria more reason to grow weary about the “Gulf moment” in the Maghreb.

 

Giorgio Cafiero is the CEO of Gulf State Analytics. He is a frequent contributor to Middle East Institute, Atlantic Council, Carnegie Endowment for International Peace, Middle East Policy Council, Al Jazeera, New Arab, Qatar Peninsula, Al Monitor, TRT World, and LobeLog. Throughout Cafiero’s career, he has spoken at international conferences and participated in closed door meetings with high-ranking government officials, diplomats, scholars, businessmen, and journalists in GCC states, Iran, Turkey, and Egypt. From 2014-2015, he worked as analyst at Kroll. Cafiero holds an M.A. in International Relations from the University of San Diego. 

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

 

Refrences:

[i] Jacob Mundy, Interview with Author, December 11, 2020.

[ii] Jacob Mundy, Interview with Author, December 11, 2020.

[iii] Riccardo Fabiani, Interview with Author, December 11, 2020.

[iv] Samuel Ramani, Interview with Author, December 12, 2020.

 

The Geopolitical Implications of America’s Presidential Transition on the Gulf

In the final weeks of the Trump administration in Washington, the President is still fighting to contest the results of the election and refusing to concede to his opponent, President-elect Joe Biden. As the administration makes one attempt after another to change the election results, the rest of the world has watched carefully. While typically a winner is declared on election night, this time the world watched election results followed by dozens of court cases filed by President Trump and his lawyers. Then, on December 15, 2020, President-elect Biden was confirmed by the votes of the Electoral College, one of the last few formal steps before the inauguration.

The Trump administration leaves a negative legacy in many ways, in some quarters, Trump is perceived as failing to successfully address any pressing issue in American politics. Despite promising to balance America’s budget deficit, it has ballooned under his leadership. The unemployment rate is high, and America’s trade deficit has also grown substantially during the pandemic. Relations with Washington’s historic allies in Europe are at their worst in a half-century. Yet the biggest damage may be the polarization between liberal and conservative Americans with increasingly opposed beliefs, and some U.S. analysts fear that the country might be facing civil war due to the president’s continued contempt for democracy.

America’s Internal Challenges

These recent events might reflect the demise of American hegemony as the sole global superpower. In history, the decline of major powers usually starts from the inside rather than the outside. While the time, place, and external circumstances are different, what is happening in the United States has distinct parallels to what happened to the British Empire after the Suez Crisis: internal splits, economic deterioration, and the loss of a moral sense of national values. America’s controversial wars in Iraq and Afghanistan may be what historians will refer to as the start of the American moral crisis.

What we see on the American political scene is telling about what is happening in the country as a whole. The United States lost a sense of direction to righteousness a long time ago. What probably brought the country to its current status was a set of factors that emerged in the way Obama and Trump ruled the country. Although the two presidents came from different political parties and had very different political philosophies, they each lacked an understanding of the changes within the United States and in the world. This is similar to the British rule of Anthony Eden and Harold McMillan, who came after the Second World War and believed that it was possible to “turn back the clock of history.”

The issues that President Trump will pass to President Biden on January 20th cannot be resolved except through a political overhaul that addresses the polarization within the American society. This will require a gargantuan effort that may not be feasible for the next administration to pursue. Even at the level of the two parties, any prominent member who cooperates with the other party is “considered a traitor,” as former President Barack Obama noted in his recent book, “A Promised Land.” Obama told the story of a Republican official who had embraced him because of his success in treating the economic crisis in 2009. That member was forced to leave the party due to the harsh criticism he received.

Biden’s situation in 2021 is much worse than Obama’s was in 2009. While the Republican Party appears united among its members, Biden is facing a number of divisive movements within his party. The most powerful of these is the leftist, progressive wing of the party, some of whom signed a letter last week demanding an immediate return to the nuclear agreement with Iran.

Because of this discord, the Biden administration will likely be hesitant to make important decisions immediately. Consequently, the United States will probably stall in place for a time, due to social polarization and economic problems. As the U.S. economy flounders, China has signed a free-trade agreement with 14 other nations from Asia and the Pacific that will help each of them recover their economies faster than the US.

The free trade model is moving to the East, similar to most Western values. While the concept of free trade came from the Western liberal thought – “let him work, let him pass” – it has shifted to another place with a modern application. While Trump and his elite circle pushed the deceptive slogan, “America First,” which caused isolation and lack of confidence, Biden now puts forward America “at the head of the table.” However, this slogan is also misleading. While America now has a seat at the table of the international community, it is no longer at its head.

How to Deal with Iran

The first test for Biden’s foreign policy will be how to deal with Iran. For this, there are several scenarios. Biden might go for a quick return to that agreement without any modification, as the left wing of the Democratic Party is asking him to do. However, by doing so, Biden would be giving Iran the green light to create more chaos in the region than it already does. The second possible scenario is to return to pressuring Iran – presumably through sanctions – to negotiate its ballistic missile program and its regional policies. This scenario has the United States again facing Iranian blackmailing, and these negotiations will go on for years, probably beyond Biden’s four-year term. The ceiling for progress here is very low, due to the deep mistrust between the two sides. And if the administration is preoccupied with other international issues, such as relations with China and Russia, then little progress will be made in negotiations with Iran.

Some see the Iranian nuclear issue as an obsession for the West and the United States in particular. In fact, the priority for Iran’s neighbors is not its nuclear program, but its meddling in their internal affairs. Iran’s interference has led to serious chaos in these Arab states that will be hard to fix. For example, because of the Iranian policies in the region, the meaning of a “state” and its institutions have totally changed in Lebanon, Syria, Yemen, and Iraq. However, the grand prize for Iran would be instability in the Gulf states, which have long opposed Tehran. America’s increasing reluctance to further commit to the Middle East’s regional struggles might encourage Tehran to do so.

Confronting this dangerous possibility leads to thinking about a response and a defense strategy made up of four linked steps. The first of these is the formation of an “Arab Wall”, composed of stable Arab countries apprehensive about Iran’s expansion. The second step must be to end the ill-conceived Gulf rift and unite the Gulf Cooperation Council (GCC), since the danger coming from Tehran will not spare anyone. Third is a diplomatic and intellectual presence of an Arab influence in Washington to explain the Arab position and concerns. Finally, the Arab states must pursue internal reforms and work on building a serious and healthy model of a modern civil state, including economic diversification efforts, democracy promotion, and human rights measures.

Iranian apologists have long engaged in “whataboutism”, responding to criticism of Iran’s human rights record with criticism of human rights in the GCC countries. A successful effort by the Arab states to improve their records would not only be a moral end in itself, but would greatly improve the Arab nations’ position in Washington and deprive the Iranian regime of a potent weapon. These four steps are indispensable for facing possible American retreat from the region and the possibility of increased Iranian threat.

 

Dr. Mohammad Al-Rumaihi is a Professor of Sociology at the University of Kuwait. He holds a Ph.D. from Durham University and has published more than 20 books about the social and political changes in the Arab Gulf states. He has been an Editor-in-Chief for prominent newspapers and magazines in Kuwait and other Arab Gulf states and was Secretary-General of the National Council for Culture, Arts and Literature 1998-2002.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Subscribe
Subscribe to Receive Latest Updates from GIF.