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Middle East and North Africa 2021. COVID-19 and Oil.

Socio-economic tensions rise but the COVID Pandemic buys time for governments under pressure. Tension between Ankara and Cairo.

There are two lenses through which to frame prospects for the Middle East in 2021: the results of the U.S. election and the Abraham Accords that established the framework for diplomatic relations between Israel and the Persian Gulf States starting with the United Arab Emirates and Bahrain. And both these factors are contained within the wider context of the COVID-19 pandemic and the financial and socio-economic effects it has had over the region and the world.

Women wearing face masks walk at a bazaar in Tehran, Iran. (Xinhua)

As far as the latter is concerned, the pandemic has meant that demand for oil will not recover in 2021, and prices will remain stagnant. While oil prices have recovered from the unprecedented dive in March 2020, they will likely continue oscillating between $35-45/barrel. And that is about 40% less than they were in the latter half of 2019 and early 2020. Fears of more lockdowns, and reduced industrial production, suggest demand for energy will remain low, as will prices.

Low Oil Prices and Negative Growth
The governments of most Middle Eastern oil-producing states need prices closer to $70-80 per barrel to balance the budget based on IMF projections for 2021. Given that, higher oil prices represented the best hope for an economic recovery of the oil exporting countries (with the exception of Qatar and possibly Oman, which have been changing focus to natural gas) Saudi Arabia, the UAE, Iran, Iraq, Kuwait, Bahrain, Libya and Algeria Bahrain and Kuwait will likely continue to experience an economic contraction. Cheap oil combined with the much lower migrant remittances will put pressure on all governments of the Middle East, which will struggle to maintain subsidies on basic products and already strained social services.

In July, the IMF expects GDP For the Middle East-Central Asia area to contract by -4.1% in 2020 – last April it expected a drop of 2.7%. Subsidy cuts on items such as flour, bread, sugar or rice have proven their ability to trigger anti-government demonstrations and riots. Higher prices for basic goods were among the principal factors that prompted the protests that the media ended up describing as the Arab Spring. The pandemic has exasperated conditions beyond any pre-Arab Spring level, given that tourism, one of the region’s most important non-hydrocarbon sectors of the economy, has collapsed. Nevertheless, that same pandemic has also served to contain unrest.

 COVID Keeps Demonstrators at Home
The violent demonstrations that built up in Iraq and Iran in late 2019 and early 2020 lost much of their momentum as fears of COVID spread and government-imposed lockdowns. And almost all Middle Eastern regimes have used the coronavirus factor narrow room for dissent.
On October 25th 2020, thousands of Iraqis protested in Baghdad
to mark the anniversary of the demonstrations of 2019, which left several hundred dead.
But those protests waned largely due to the Covid-19 pandemic, even if the heightened tensions between the United States and Tehran – which reached a peak in January 2020 after the assassination of General Suleimani – might also have played a role. Lebanon also experienced a period of turbulence in 2019 and 2020 in the wake of economic instability and anti-corruption protests against the government after a massive devaluation of the Lira. The anger was widespread and had the effect of uniting the various confessional groups, Shiites, Christians and Sunnis alike after Prime Minister Hariri wanted to impose new taxes.
The protests quelled in the wake of the pandemic, even as a new government was formed in April.
An explosion at a port storage facility in August, which killed 200 people, also served as a trigger for anti-government sentiment and the formation of a new government. But, despite some outbreaks of violence, the pandemic ensured demonstrations would not regain the strength of the last weeks of 2019.

The Hirak movement has profoundly changed the political landscape. (Middle East OnLine)

Similarly, in Algeria, the pandemic related lockdowns managed to stop even activists of the Hirak popular movement, which led intense, if relatively peaceful, anti-government demonstrations since the spring of 2019, which led to the resignation of President Abdelaziz Bouteflika. The protesters have achieved minor political gains, securing the resignation of key figures, but they have not succeeded in removing the political-military elite, which continues to occupy the highest levels of power. The Hirak protests have no reason to stop. The December 2019 elections failed to change the system, delaying substantial changes with the Abdelmadjib Tebboune’s victory. Tebboune represents the very system that the protesters want to demolish. The pandemic lockdowns, however, have given the government the room to increase repression both in the streets and in the media. In Algeria, as in Iraq, Lebanon and elsewhere, the pandemic has confined activists to their homes; even as malcontent continues to spread. This suggests, that as pandemic measures ease, demonstrations will intensify in various parts of the Arab world, potentially resurrecting the ‘Spring’ of 2011-2012.

US Policy in the Middle East Will not Change
Meanwhile, even as protests are prevented from spilling over into the streets, governments in the Middle East and North Africa in 2021 will have to come to terms with a waning American presence in the region. Since the end of World War II, the United States made the Middle East a priority. Washington provided security for a handful of monarchs ruling over vast mineral resources in exchange for unlimited access to those resources, which represented the engine of western industrial capitalism. Yet the United States has become far more energy independent, exploiting its own oil and gas deposits, using new techniques. It no longer needs the oil of the Persian Gulf.

And it does not matter when Joe Biden replaces President Trump this January, Washington’s retreat from the region will continue. After all, Trump merely continued the policy initiated by Barack Obama, who launched the so-called ‘leading from behind’ policy, marked by Washington’s gradual redeployment of troops away from the Middle East (Obama focused on Iraq), leaving its Middle East ‘vassals’ with more responsibility for their internal and regional stability. Obama presented the Iran nuclear deal, halting Tehran’s pursuit of nuclear weapons as a way assure Israel and Saudi Arabia (The Joint Comprehensive Plan of Action – JCPOA, signed in 2015), while pushing for a two-state solution in the Israeli-Palestinian conflict and for reforms in the Gulf as the pillars that would help support greater Middle Eastern autonomy.

Obama’s plans were thwarted by his insistence on interfering in regional crises in Syria, while failing to extricate US troops from Afghanistan. Trump’s major change was in removing any pretense from US policy. His administration has stopped pushing for reforms. It has also put less pressure on Syria, and almost completely relinquished any claim in the future of Libya. Rather, his policy has focused on improving ties between Israel and some of its Arab neighbors, such that Tel Aviv now has diplomatic relations with Abu Dhabi and Manama. However, the Abraham Accords, given the dire socio-economic framework in the MENA region, made all the worse by the effects of COVID, could produce the kinds of political changes Washington would appreciate without the need for military intervention.

The Abraham Accords Could Change the Region
More States could open negotiations with Israel simply as a way to secure better ties to the United States and in the hope of obtaining greater economic support from the West and some of the Gulf States themselves. Even Iraq or Lebanon would find it convenient to establish ties to Israel. Indeed, Biden  might pursue diplomatic openings with Iran, lifting sanctions, as in the JCPOA, in exchange for Tehran applying less direct pressure on Iraq or Lebanon – and in turn for Israel to provide greater assurances of renouncing the full annexation of the West Bank and even the establishment of a Palestinian State – from pursuing relations with Israel. Of course, such a process would take longer than a year, but it’s clear that the Abraham

The flags of the US, United Arab Emirates, Israel and Bahrain are screened on the walls of Jerusalem’s Old City. (Photo: Yonatan Sindel/Flash90)

Accords will have significant ramifications in 2021. It’s also clear that the cause of Palestinian independence, much less statehood, has lost its cachet in the Arab World. In 2020 it became clear that the Palestinians’ best friends in the Middle East are Iran and Turkey. The Gulf monarchs have become too busy seeking ways to protect their lifestyles in the wake of energy market changes, while the once Arab nationalist republics have been trying to recover from the deep traumas of invasion and occupation (Iraq) and vicious civil /proxy war (Syria). And it’s no longer clear for how long Iran will be able to pursue the ideological priorities of the Islamic Republic, as it faces its own crisis of legitimacy – one kept in check by the pandemic related social distancing restrictions.
Finally, it should be noted that the Arab States have become more concerned about Turkey than Israel. Turkey’s neo-Ottomanism presents a deeper threat in the Islamic context to the likes of Saudi Arabia. Erdogan has made significant symbolic moves to present his government as the true protector of Islam.

Turkish President Recep Tayyip Erdogan.

Turkey is a position to continue occupying parts of northern Syria while keeping Kurdish nationalism in check. Turkey has thwarted the ambitions of Egypt in Libya, supplying important military support for the Tripoli based and Muslim Brotherhood affiliated government, led by Fayez al-Serraj against the UAE/Egyptian backed government effectively led by Gen. Khalifa Haftar. In that sense, apart from Saudi Arabia and the UAE, it is Egypt that considers Turkey a threat – and war between the two almost broke out in Libya. A September 2020 truce in Libya has quelled tensions, but there are few assurances it will last, and tensions between Ankara and Cairo could yet flare up in 2021.

Alessandro Bruno

 

 

 

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