Predicting what might happen in the Middle East and North Africa (MENA), has become particularly difficult in the past few years. The upheavals of the last five years, much more than to transforming society and dictatorial political systems, have contributed, especially, to fueling uncertainty. While in the West the stock exchanges, the markets and the economy have become more and more ’embedded in politics and society. Nevertheless, in 2017 there is a new perspective from where to start a general analysis, focused on key MENA countries, which have been protagonists, for good and bad, in 2017.
A good point of departure for the MENA forecast is not in the region. It’s in the United States. On January 20, Donald Trump will settle at the White House. More than even Ronald Reagan or George W. Bush, Trump looks sounds the alarm bells – and we know how things went with Regan and Bush. The first contributed, or rather participated in witnessing the changes that in a few years would have brought the opening, and eventual collapse, of the Soviet Union. Reagan engaged in various overt and covert wars in Central America. His policy on the Middle East revolved around an equilibrium based on Iraq and Iran, fighting each other. So long as these two were fighting, they were too busy to create risks for Israel.
Bush Jr., rather wanted to meddle in a strong and direct manner in the Middle East, invading Iraq and implementing the Project for the New American Century. The plan was to promote democracy, even by force if necessary. Iraq (and Afghanistan) were the most egregious examples of this policy, inspired by neo-conservative and neo-liberal ideologues such as Richard Perle. The latter had outlined the ideology and strategy of this ‘project’ clearly in the White Paper: “A Clean Break: A New Strategy for Securing the Realm.”
Beyond Iraq, Perle called Washington to bring ‘regime change’ to Iran and Syria. Hillary Clinton, although to a lesser extent, subscribed to this approach. In fact, had she won, the MENA forecasts for 2017 would have been very different. Mrs. Clinton would, as explained by herself on several occasions, followed a more aggressive policy in Syria. Clinton said he wanted to adopt a ‘No Fly Zone’ to prevent aircraft of Russian and Syrian air forces to attack rebel positions in Syria. But that would have opened the possibility for an American fighter jet to take down a Russian counterpart. This would have jumpstarted a political and military crisis as intense as the Cuban crisis of 1962.
The Trump presidency appears ready to accept the victory of the Syrian army and the leadership of Bashir al-Asad. Had the winner been Ms. Clinton on the other hand, Obama would have backed the rebels with more’ determination. Therefore, Trump’s win has already generated a significant shift. Indeed, Trump has brought the neo-conservative ideological epoch to a close.
In international politics, Europe, (but especially Germany) could react to Trump’s isolationism and to Putin’s nationalist policy by relying more on the European military. Or, especially in the shadow of the truck attack in Berlin on December 19, it might even accept a new bipolar arrangement ‘in Soviet style’. That is, with the blessing of the US, Russia would have undisturbed influence in some parts of Eastern Europe, such as Ukraine and Belarus. Europe and the USA would allow Syria to remain under Asad, resuming a role it has not played since the days of the USSR. If that were the case Putin would be less inclined to interfere in the US affairs (if that is proven) and the European Union. Of course, this second option seems the most probable. So, Syria, for the first time in five years, has better prospects in 2017. Probably, thanks to a better understanding between Trump and Putin, and especially compared to the anarchy that reigns now. In 2017, a peace process could get underway, involving all the belligerent non-jihadists, the Syrian government and other relevant players in the conflict. If the army of Damascus were to win – as is expected – taking back Aleppo and then Idlib Aleppo, the war should effectively end. In Iraq, the United States, will continue – or at least try – to support, along with other forces, attacks against the Islamic State.
Donald Trump will pay more attention to China than Russia. He could keep it at a propaganda war level, without the need to take serious decisions. And even this scenario is not so negative.
Europe Is Another Source for Trouble for MENA in 2017.
A victory of Marine Le Pen and Beppe Grillo, respectively in France and Italy could break the European Union and put an end to the Euro currency. Although ‘possible but unlikely, that’ would result in stricter policies towards migrants. A more ‘isolationist Europe could shift the center of gravity towards the source of the migration. Libya remains unstable and does not seem to have prospects to reunite – for now. But the victory of Marine Le Pen or even her center-right rival, Francois Fillon (pro-Putin and Trump) could lead to an agreement in favor of a less democratic – but more stable – government in Libya, led by General Haftar. The current Hollande has offered spurious support to Haftar in his attacks against ISIS in 2016. Sarkozy played a very important role in getting rid of Mu’ammar al-Qadhafi in 2011. Hollande has followed its predecessor, pursuing an aggressive policy towards Asad in Syria. But, the next French president could prove to be more ‘isolationist – this could lead to the emergence of a more ‘benevolent’ form of authoritarianism in a united Libya with Tripoli as its capital.
If Syria and even Libya could embark a path to greater stability and less conflict, Algeria is one of the MENA countries to watch most closely in 2017. Still crippled by falling oil prices, Algeria, Africa’s third largest economy, is expected to have an estimated deficit of $25 billion.
Meanwhile, the future looks bleak for the government of Abdelaziz Bouteflika. Algeria faces the problem of rising unemployment, a trade deficit (for the first time in more than 20 years), a fall in the value of the dinar, and the probable dismissal of many public servants, posing the risk of social conflict. The conditions are like those that preceded the first-round victory of the Islamic Salvation Front (FIS) in the 1992 elections. That ended up sparking a ten year long civil war, which left 150,000-200,000 dead. The planned adoption of an increase to the VAT, adds further risk of social unrest. For now, the Algerian executive seems to be content to fill in the gaps. But, to counter the decline in tax revenues, the tax on petroleum products will increase for the second consecutive year. All while the Algerians saw the price of gasoline increase by 40% since January 1. While higher, the oil prices are still much lower than they were in the heydays of the 2001-2008 period.
Moreover, Algeria’s aging President Bouteflika presents a risk all by himself. The president is being forced to take more medical leaves – rather long ones due to various medical problems. His illness and, especially, the lack of a credible successor could bring the sort of ‘Arab Spring’ chaos that the generous budgets fueled by high oil prices had allowed until two years ago. As in 1992, the Islamists could try to seize power. As in the Tunisian, Libyan and Egyptian cases, the turmoil will surely encourage many people to leave, seeking asylum in Europe.
Meanwhile, in neighbouring Tunisia, there are signs of a slow improvement at least as far as the economy is concerned. The Central Bank of Tunisia BCT, announced that economic growth should continue an upward trajectory although at a slower pace than that estimated earlier in 2016. Tunisia does not depend on an oil economy like its neighbours. Recent projections point to an increase in GDP at constant 2010 prices of 2.2% in 2017 and 2.8% in 2018. Many EU countries can only envy such rates. The minor key is tourism. The impact of terrorism has weighed heavily in reducing the numbers of foreign visitors. At the time of writing, German authorities are seeking a Tunisian suspected of involvement in the truck attack in Berlin. Should Tunisia remain stable, however, it could enjoy a gradual strengthening of tourism activity, contributing to the gradual restoration of the hotel and related activities.
Jordan is another MENA country to watch in 2017. A recent terrorist episode in the fortress town of Karak, 120 km south of capital Amman – points to potential problems ahead. Tourism could suffer, at least in the short term, while the attack reflects the risks the Kingdom has endured because of a massive influx of refugees from Syria.
Not since the 1970’s when thousands of Palestinians arrived after two successive wars between the Arabs and Israelis, has the country faced such strong systemic threats. Jordanians renewed their Parliament in a vote in September. on Tuesday. Many women won seats in Parliament, but so did the Islamists of the Muslim Brotherhood.
Nothing suggests that in 2017 the war in Yemen will end. 206 was a terrible year for the civilian population, hundreds of thousands were displaced and overall conditions have only worsened. Thanks to higher oil prices,
Saudi Arabia will be more inclined to continue its war effort. But, poverty and living conditions for Yemenis have worsened in 2016 and there’s no solution. The price of many foods has increased and some 60% of inhabitants could risk starvation. Anywhere from 11,000 to 12,000 civilians have been killed in the fighting over the course of 2016.
In Egypt, the risks remain such that political changes are neither contemplated nor desirable. During 2016, the country showed it has yet to manage, let alone absorb, the turmoil of 2011 and 2013 – the fall of Presidents Mubarak and Muhammad Morsi (of the Muslim Brotherhood) respectively. A bombing at the Coptic Orthodox Church of Saints Peter and Paul and the likelihood of a terror attack against an Egyptair airliner (flight Air MS804) have not helped improve the situation. For the past few years, the most populous Arab country has endured attacks and continuous radicalization. In response, the State shall remain in the hands of the armed forces. In 2017, the State will likely reiterate, further tightening security.
Tourist numbers will continue to decline, putting more pressure on already tight finances. While oil prices have increased by about 15%, Egypt’s finances will continue to endure shortfalls. Because of lower fuel costs, many shipping companies send their vessel around the Cape of Good Hope on routes to and from Asia. They do it to avoid having to pay higher fees for the recently expanded Suez Canal, reducing Cairo’s royalties’ intake. Meanwhile, those same lower oil prices have forced many businesses in the oil producing Gulf States to shut down with the result that many Egyptian migrants are returning home. This means, the Egyptian state will collect less foreign exchange for the country’s system, due to the decline in remittances.