Economics

Things seem to be going from bad to worse for Lebanon’s economy. On Aug. 23 Fitch downgraded its credit rating to CCC, meaning both it and Moody’s now rate the country’s bonds as junk. Ten days later, on Sept. 2, Lebanon’s top officials and bankers declared the country was in a state of economic emergency and said emergency measures would be taken.

Economic development paradigms have shifted focus over past decades: from minimizing imports to encouraging exports as the path to prosperity. Individual countries in the Middle East and North Africa (MENA) have had little success under either paradigm — the result being stagnant economies and high unemployment, especially among young people. Perhaps now is the time for MENA countries to follow a different path and focus on harnessing the power of their collective domestic demand to foster economic development.

Unlike most other goods, the inflation-adjusted prices of oil and oil derivatives actually became cheaper in the years after the Syrian uprising and the loss of most of the country’s oil fields. Iran stepped in to fill the gap by shipping oil by sea through the Suez Canal. In recent months, however, these shipments seem to have ground to a halt, crippling regime-controlled areas. This paper examines several competing explanations for the slowdown in Iranian oil shipments, explores a range of possible responses for the Assad regime, and takes a closer look at the implications for the regime, its allies, and regular Syrians.

The Israeli-Palestinian conflict remains a destabilizing element in an already volatile Middle East. The Palestinians are too weak to wrest their independence from Israel. But as long as their right to self-determination is denied, they are likely to engage in regular violence targeting Israel. Absent outside intervention, Israel is powerful enough that it can suppress Palestinian demands for freedom — but it is not able to completely pacify the Palestinians. Thus, the conflict continues, punctuated every few years by rounds of more significant violence.

This week’s briefing on recent news and upcoming events in the region including the Turkish-U.S. crisis meeting in Ankara on Syria, the resumption of U.S.-Taliban negotiations, Trump’s creation of a new “dovish” line on Iran, a rise in Egypt’s poverty levels, Sudan’s democratic transition, the easing of female guardianship rules in Saudi Arabia, and the end of the ceasefire in Idlib, featuring Charles Lister, Marvin G. Weinbaum, Paul Salem, W. Robert Pearson, Mirette F. Mabrouk, Thomas W. Lippman, and Robert S. Ford.

The fifth generation of mobile phone networks (5G) is poised to become a key enabler of the digitalization of economies and societies. Digital transformation is at the heart of GCC nations’ ambitions to accelerate economic diversification, deliver public services more effectively and efficiently, and promote sustainable growth. GCC ambitions to accelerate the large-scale deployment of 5G dovetail with those of China’s hi-tech giant Huawei, which is competing for market share in infrastructure and smartphones. However, the US push to stymie Huawei’s efforts to expand the reach of its networking technologies has emerged as a potential stumbling block to more extensive ties between that company and GCC wireless carriers and customers.

OPEC+ nations have ended speculation about whether they would continue oil production cuts by agreeing to a nine-month extension. Led by the global petroleum powers Saudi Arabia and Russia, the group agreed on July 2 to extend the current level of cuts until the second quarter of 2020.

This week’s briefing on recent news and upcoming events in the region including Imran Khan’s visit to the White House, tensions between President Trump and Congress over Turkey’s new S-400 system, escalation in the Straits of Gibraltar and Hormuz, military restructuring in Iraq, increased collaboration on the region’s power supply, and changes to Egypt’s social safety net, featuring Arif Rafiq, Gonul Tol, Ruba Husari, Robert S. Ford, Dr. Ibrahim Saif, and Mirette F. Mabrouk.

When it was signed four years ago, the Iran nuclear deal was widely perceived as a diplomatic triumph, a move that would help reintegrate Iran into the global economy and restore its relations with the West. Things haven’t quite turned out that way, however.

The idea of establishing a Levant Union — one not unlike the European Union (EU), but composed of the Levantine states of Lebanon, Syria, Iraq, Palestine, Jordan, and by extension, Egypt and Cyprus — is one that ought to be explored. Such an arrangement would offer untapped potential for trade, supported by the growing trend toward greater regionalization, fueled by the rise in protectionism, increasing multipolarity, and corporate regionalization.

It is easy to overlook the fact that food security could be an issue of concern in the Gulf Cooperation Council. After all, its member states have some of the world’s highest per capita income levels. Food supplies in the Gulf are normally abundant and stable. Were they to be disrupted, however, it could lead to food security challenges and a chain of adverse consequences for human security throughout the region.

In this week’s Monday Briefing, MEI experts Gerald Feierstein, Guney Yildiz, Nathan Stock, Elizabeth Dent, and Eran Etzion provide analysis on recent and upcoming events including this week’s Bahrain “workshop” on Palestine’s economic development, an opposition victory in Istanbul’s rerun election, the release of a portion of the Trump administration’s Israel-Palestine peace plan, the fracturing of the Global Coalition to Defeat ISIS, and Tuesday’s trilateral meeting between the U.S., Israel, and Russia.

Istanbulites are only few days away from delivering their verdict on who will run the city for the next five years. The June 23rd election marks the second time in the last three months that local voters will choose their mayor, and the stakes are high for both sides.

In late May, Saudi Aramco signed an agreement to buy 5 million tons per annum of liquefied natural gas (LNG) from San Diego-based Sempra Energy’s planned LNG terminal in Port Arthur, Texas. The deal exemplifies Saudi Aramco’s determination to boost the share of LNG and petrochemicals in its portfolio before its long-awaited public offering in 2021.

Over the past few months, an awkward courtship has been going on between Iraq and its two most polarizing neighbors, as Tehran and Riyadh attempt to convince Baghdad of the merits of their respective orbits. While both sides make compelling points, the fact is that Iraq is exceedingly happy to occupy the middle ground, geopolitically and economically, between the two regional powers.