Group items tagged

Fiscal crises caused by falling prices limit governments’ room for domestic maneuver and force painful political choices

The economic profile of the Gulf states is not, however, typical of most oil-producing states. Most have a much lower ratio of oil reserves to population. Many large oil exporters have large and rapidly growing populations that are hungry for consumption, social spending, subsidies, and investment

In February, even before the coronavirus hit, the International Monetary Fund was warning Saudi Arabia and the United Arab Emirates that by 2034 they would be net debtors to the rest of the world. That prediction was based on a 2020 price of $55 per barrel. At a price of $30, that timeline will shorten. And even in the Gulf there are weak links. Bahrain avoids financial crisis only through the financial patronage of Saudi Arabia. Oman is in even worse shape. Its government debt is so heavily discounted that it may soon slip into the distressed debt category

Ecuador is the second Latin American country after Argentina to enter technical default this year.

Populous middle-income countries that depend critically on oil are uniquely vulnerable. Iran is a special case because of the punitive sanctions regime imposed by the United States. But its neighbor Iraq, with a population of 38 million and a government budget that is 90 percent dependent on oil, will struggle to keep civil servants paid.

Algeria—with a population of 44 million and an official unemployment rate of 15 percent—depends on oil and gas imports for 85 percent of its foreign exchange revenue

The oil and gas boom of the early 2000s provided the financial foundation for the subsequent pacification of Algerian society under National Liberation Front President Abdelaziz Bouteflika. Algeria’s giant military, the basic pillar of the regime, was the chief beneficiaries of this largesse, along with its Russian arms suppliers. The country’s foreign currency reserves peaked at $200 billion in 2012. Spending this windfall on assistance programs and subsidies allowed Bouteflika’s government to survive the initial wave of protests during the Arab Spring. But with oil prices trending down, this was not a sustainable long-run course. By 2018 the government’s oil stabilization fund, which once held reserves worth more than one-third of GDP, had been depleted. Given Algeria’s yawning trade deficit, the IMF expects reserves to fall below $13 billion in 2021. A strict COVID-19 lockdown is containing popular protest for now, but given that the fragile government in Algiers is now bracing for budget cuts of 30 percent, do not expect that calm to last.

Before last month’s price collapse, Angola was already spending between one fifth and one third of its export revenues on debt service. That burden is now bound to increase significantly. Ten-year Angolan bonds were this week trading at 44 cents on the dollar. Having been downgraded to a lowly CCC+, it is now widely considered to be at imminent risk of default. Because servicing its debts requires a share of public spending six times larger than that which Angola spends on the health of its citizens, the case for doing so in the face of the COVID-19 crisis is unarguable.

Faced with the price collapse of 2020, Finance Minister Zainab Ahmed has declared that Nigeria is now in “crisis.” In March, the rating agency Standard & Poor’s lowered Nigeria’s sovereign debt rating to B-. This will raise the cost of borrowing and slow economic growth in a country in which more than 86 million people, 47 percent of the population, live in extreme poverty—the largest number in the world. Furthermore, with 65 percent of government revenues devoted to servicing existing debt, the government may have to resort to printing money to pay civil servants, further spurring an already high inflation rate caused by food supply shortages

The price surge of the 1970s and the nationalization of the Middle East oil industry announced the definitive end of the imperial era. The 1980s saw the creation of a market-based global energy economy. The early 2000s seemed to open the door on a new age of state capitalism, in which China was the main driver of demand and titans like Saudi Aramco and Rosneft managed supply

The giants such as Saudi Arabia and Russia will exploit their muscle to survive the crisis. But the same cannot so easily be said for the weaker producers. For states such as Iraq, Algeria, and Angola, the threat is nothing short of existential.

Beijing has so far shown little interest in exploiting the crisis for debt-book diplomacy. It has signaled its willingness to cooperate with the other members of the G-20 in supporting a debt moratorium.

In a century that will be marked by climate change, how useful is it to restore profits and prosperity based on fossil fuel extraction?

The shock of the coronavirus is offering a glimpse of the future and it is harsh. The COVID-19 crisis drives home that high-cost producers are on a dangerously unsustainable path that can’t be resolved by states propping up their uncompetitive oil sectors. Even more important is the need to diversify the economies of the truly vulnerable producers in the Middle East, North Africa, sub-Saharan Africa, and Latin America.

Europe’s neighbors are set to endure even more hardship when it comes to trade imbalances as their exports are due to collapse. They will be among the most affected from the ongoing fall in consumer demand in Europe given their heavy reliance on the continental market. The European Union’s share of total exports stands at some 65 percent for Morocco, 50 percent for Turkey, and 43 percent for Ukraine.

a perfect storm on Europe’s borders. The combination of recessionary economics, balance of payments difficulties, and surging unemployment has created a formidable challenge that will jeopardize domestic social contracts

The ensuing political and economic instabilities would not only create the conditions for the rise of radicalization in these afflicted societies but also trigger new cross-border movements and refugee flows across the Mediterranean.

In the absence of a global consensus, EU governments should consider shifting their IMF-held SDRs to financially strained neighboring countries. That would amount to a financial stimulus of about $95 billion with no fiscal impact on EU and national budgets.

the European Central Bank (ECB) should be more actively involved in establishing swap arrangements with the central banks of partner countries. Under such a scheme, beneficiary countries would obtain euros from the ECB against a collateral in their own currency. These arrangements would provide beneficiary countries with foreign exchange liquidity and replenish their reserves

more likely that the regime of Syrian President Bashar al-Assad has a hand in producing Captagon, reaping a profit that it can invest into its armed campaigns against civilians and damaging the health of many Syrians who are now addicted to amphetamines after years of war

“When Syria invaded Lebanon in the ’90s there were many reports showing the Syrian military were aiding and abetting hashish and opium production in the Bekaa Valley,”

Captagon production flourished in Syria after 2013, when a crackdown in neighboring Lebanon likely forced Hezbollah to relocate its drug production operations next door. The shift came at an opportune time for the Syrian regime, as it needed money to fund its military campaign against rebel groups

The majority of Syria’s Captagon production sites are in regime-held areas, according to Abu Ja’far, a former truck driver who worked between Homs, Rif-Dimashq, and Aleppo. “You only need some deserted homes and a few workers supervised by someone with strong connections,”

International organizations are unable to conduct research on the ground, meaning there is no concrete evidence linking the Assad regime to the Captagon trade. But sources say that strong protection would be required to produce, sell, and export the drugs from regime-held areas. “It was always possible in a country at war that those best placed to safely manufacture a drug in large quantities would be people in the regime … or in areas the regime were guaranteeing security,”

Last year, more than 33 million Captagon pills were seized in Greece after being shipped from regime-held Latakia. And in April this year, Saudi customs seized more than 44 million pills hidden in tea packaging from a company close to the Assad family.

At the height of its territorial control, the Islamic State was involved in the black market, trading looted antiquities, arms, and oil. But there is little evidence that the group ever produced Captagon—even if individual fighters used the drug on the battlefield. It would not have been sanctioned at the institutional level because of the group’s Salafism: Islamic State leaders punished people caught smoking or selling tobacco, making it unlikely they condoned the manufacturing of amphetamines.

Saudi Arabia has long been the No. 1 consumer of Captagon, which is popular among young and affluent partygoers. As conflict drags on in Libya, it is also possible the large shipment was destined for the port of Benghazi, with Europe as a transit point.

While much of the Captagon produced in Syria is destined for overseas markets, Syrians themselves suffer some of the worst damage from the trade. The worst-quality Captagon tablets are sold within Syria for as cheap as $1 per pill

Captagon is known to inhibit tiredness, hunger, and fear. But its use is now common among all demographics in Syria, not just fighters. The most common side effects include extreme depression, insomnia, malnutrition, and heart and blood toxicity

The effort comes as the United States and its allies wind down a six-year-long air campaign against a group that, at the height of its power, controlled an area the size of Britain and inspired bloody attacks across the West. Civilians suffered intensely under the group’s so-called caliphate, as militants conducted mass killings, enslaved women and children, and used gruesome violence to punish perceived transgressions. In response, the United States unleashed massive firepower, pounding militant targets with more than 34,000 air and artillery strikes since 2014, decimating the group and forcing survivors underground.

Throughout the campaign, strikes took place in crowded urban environments, where it was more difficult to distinguish between civilian and Islamic State targets. They also occurred in remote or militant-controlled areas, which complicated intelligence gathering and target verification.

Airwars has now matched its own information about the war’s civilian toll — drawn from local news, social media and civil society accounts — with data from the Pentagon’s U.S. Military Grid Reference System (MGRS), which for the first time identifies precise locations in more than 340 incidents.

The Pentagon’s disclosure marks the first time any military has provided this kind of detailed information about a major operation, offering a potential blueprint for greater transparency in the future.

Tensions escalated this year, as the U.S.-brokered negotiations between Ethiopia and Egypt unraveled and new talks mediated by the African Union began

The Ethiopian government does broadly engage in “computational propaganda,” according to a 2019 report from the Oxford Internet Institute. Agencies there use human-run social media accounts to spread pro-government propaganda, attack the opposition, and troll users. The same goes for the Egyptian government.

Social media users from the two countries frequently collide on the Internet, but seem to do so most often on Adel el-Adawy’s Twitter page: As a member of a prominent Egyptian political dynasty, a professor at the American University in Cairo, and the most visible disseminator of the Egyptian perspective on the dam in English, he has amassed a significant following. Adawy, whose pinned tweet is a picture of himself shaking hands with Egyptian President Abdel Fattah al-Sisi, posts frequently about the Nile and Ethiopian affairs, especially when things get sticky.

It’s possible that the engagement is coming from concerned Ethiopians at home and abroad, at the encouragement but not the behest of Ethiopian officials. “I have friends who joined Twitter just for the sake of this. It’s highly emotional and nationalistic,” said Endalkachew Chala, an Ethiopian communications professor at Hamline University in Minnesota.

Construction of the dam was completed in July, and the filling of its reservoir started soon after amid heavy rains but before an agreement between Ethiopia, Egypt, and Sudan was signed. The U.S. government, a top source of aid for both Ethiopia and Egypt, said in August that it would halt some aid to Ethiopia over what it saw as a unilateral move to progress with the dam.

For both countries—Egypt since the 2011 fall of Mubarak and Ethiopia since the 2012 death of strongman Prime Minister Meles Zenawi—national identity has been in flux

the first known time these kinds of digital tools have been used by people from one African country against people from another, said Gilbert Nyandeje, founder and CEO of the Africa Cyber Defense Forum. “It only means one thing. It means we should expect this more and more.”

at the core of Egyptian identity is the Nile, so bolstering nationalism means defending the Nile, too. And officials have encouraged this outlook: One sleekly produced video shared on Facebook by the Ministry of Immigration and Egyptian Expatriates Affairs warned, “More than 40 million Egyptians are facing the threat of drought and thirst.… The cause of water shortage is Ethiopia building a dam five times bigger than its needs.”

a show of vulnerability rare in Arab power politics. But the strategy has helped garner global sympathy for Egypt, even as its Nile claims are framed by Ethiopia as the result of unjust colonial-era agreements in which Egypt’s interests were represented by British colonizers.

the dam provided a unifying issue around which Ethiopians of all ethnic backgrounds could rally. “We do have a lot of divisions—ideological, ethnic, tribal, religious,” said Chala, the Ethiopian professor. “But even though we have these bitter divisions, Ethiopians have overwhelmingly supported this Nile dam especially on social media.”

Ethiopian officials, meanwhile, continue to encourage Ethiopians to post about the dam online and often use the #ItsMyDam hashtag in their own social media posts. This use of social media to rally around the dam has also meant that Ethiopia’s massive global diaspora can get involved, without having to worry about frequent in-country Internet shutdowns that otherwise curtail online movements there.

The thousands of Ethiopian refugees, asylum seekers, and migrants living in Egypt are now facing greater pressure and harassment from Egyptian citizens and authorities since the dam tensions started to heat up

in Ethiopia, it has meant that any domestic criticism of the dam from an environmentalist point of view—namely, that it could disrupt ecosystems and biodiversity, even within Ethiopia—is met with derision

for both countries, surging nationalist sentiment means that it’s harder for officials to agree to, and for the public to accept, compromise

the main sticking points now are related to dispute resolution, drought contingency plans, and future upstream projects. And yet, much of the online rhetoric remains maximalist, even rejecting items that have already been unanimously decided—such as the existence of an Ethiopian Nile dam in any form—raising the possibility that the online tensions and attacks may not subside anytime soon

“If this administration wants to be serious about protecting democracy as a broad policy approach, there are really few places more significant.” It wouldn’t cost a lot, Feldman points out. But making clear that Saied’s moves are unacceptable would “show we actually believe in democracy and we’re not being merely situational about it.”

the Arab tyrannies and monarchies have been urging Saied on toward more authoritarianism and lumping Ennahdha together with extremist Islamist groups

democracy has not been terribly rewarding so far for Tunisia. Saied’s power grab was actually popular among large masses who have complained of rampant corruption and are suffering terribly for basic needs.

A report this month from Human Rights First indicated that the restoration of Arab dictatorships may be generating a new generation of terrorists; in Egypt, a harsh crackdown on democracy and human rights activists by Abdel Fattah al-Sisi, a former general who seized power in 2014, has led to active recruitment by the Islamic State in Egypt’s prison system. 

“It’s time to stop saying it’s early days [for this administration] because we’re six months in and there is no palpable new approach.” In February, the Biden administration approved a $197 million sale of missiles to Egypt days after the Egyptian government detained family members of a U.S.-based Egyptian American human rights activist.

The president is as much a practitioner of realpolitik as he is an advocate of democracy, and it’s clear his main interest is not in nurturing new democracies but in herding together the mature industrial democracies against major authoritarian threats such as China and Russia.

hortly before Saied’s takeover, the U.S. government’s Millennium Challenge Corporation approved nearly $500 million in aid to strengthen Tunisia’s transportation, trade, and water sectors. Saied’s government is also seeking a three-year $4 billion loan from the International Monetary Fund, which answers to pressure from Washington and other major capitals. Washington has other leverage as well: In 2020, the United States signed on to a 10-year military cooperation program with Tunis, and the two sides regularly hold joint exercises. And in the last decade, Washington has invested more than $1 billion in the Tunisian military, according to U.S. Africa Command.

Tunisia has had no support for its transition within the Middle East North Africa region and far too little support from other democracies in Europe and the United States

“I think we often forget that democratic revolutions are almost never successful on the first attempt,”

Cambridge Analytica’s parent company, SCL Social Limited, worked with the UAE to create a social media advertising campaign attacking Qatar, a Gulf rival that’s home of the largest U.S. military base in the region. Though better known its use of “soft power” through projects like Al Jazeera, Qatar has also been reported to use disinformation, as well as allegedly hacking the email of the Emirates’ powerful ambassador to Washington.

the Emiratis worked with ex-NSA spies to hack the devices of U.S. citizens. And both Saudi Arabia and the UAE are among the biggest customers of NSO, the Israeli firm that sells the spyware Pegasus, which they have used to target dozens of activists, journalists and academics

In 2011, during the heady days of the Arab Spring, social media and digital technology was touted as the force that would help liberate the region from authoritarian rule and bring democracy. Now, authoritarian regimes in the Gulf, along with Western companies and expertise, are using digital technology and social media to try and hack democracy wherever they find it, including in the U.S. The effect is clearest, however, in the Middle East. With critics silenced through incarceration, surveillance, torture, or death, opposition voices are increasingly fearful of self-expression, meaning that the digital public sphere is simply a space to praise the regime or engage in banal platitudes.

so much has changed in both countries and the world, but the enmity between the two governments remains frozen in time, and Americans’ understanding of Iran and its people has progressed very little.

The UAE is far from alone in using aggressive tactics to try to bend the U.S. political system to its liking. Saudi Arabia, Qatar, Israel, Taiwan and scores of other governments run influence campaigns in the United States in an effort to impact U.S. policy.

But the intelligence community’s scrutiny of the UAE indicates a heightened level of concern and a dramatic departure from the laudatory way the country is discussed in public by U.S. secretaries of state and defense and presidents, who routinely emphasize the “importance of further deepening the U.S.-UAE strategic relationship.”

People who shared information about the report declined to provide a copy of it. They said the activities attributed to the UAE in the report go well beyond mere influence peddling.Story continues below advertisementOne of the more brazen exploits involved the hiring of three former U.S. intelligence and military officials to help the UAE surveil dissidents, politicians, journalists and U.S. companies. In public legal filings, U.S. prosecutors said the men helped the UAE break into computers in the United States and other countries. Last year, all three admitted in court to providing sophisticated hacking technology to the UAE, agreeing to surrender their security clearances and pay about $1.7 million to resolve criminal charges. The Justice Department touted the settlement as a “first-of-its-kind resolution.”

The UAE’s armed forces have fought alongside U.S. troops in Afghanistan, Iraq and Syria. The country also hosts 5,000 U.S. military personnel at al-Dhafra Air Base and U.S. warships at the Jebel Ali deep-water port.

There are no elections or political parties in the UAE, and no independent judiciary. Criticism of the government is banned, and trade unions and homosexuality are outlawed. Freedom House ranks the gulf state among the least free countries in the world.

U.S. officials and independent watchdogs have warned that smuggling and money-laundering in the UAE have allowed criminals and militants to hide their wealth there

Though the UAE has maintained strong bipartisan support in the United States, it cultivated a particularly close connection to the Trump administration, which approved the $23 billion sale of F-35s, MQ-9s and other munitions to the gulf state. The transfer, which has faced resistance by congressional Democrats, has not moved forward yet but is supported by the Biden administration.

changing climate is forcing families to sell off their livestock and pack up for urban centers such as the region’s largest city, Basra, in search of jobs and better services

As hotter, more-crowded cities become the future of a warming world, a lack of preparedness will only exacerbate the discontent already fraying the social fabric

decades of U.S.-backed sanctions and war, combined with the weight of corruption and neglect, have left Basra’s infrastructure unable to adequately support the 2 million people the city already houses — let alone the rising tide of newcomers.

According to official figures, Basra province has a population of over 3 million — an increase of at least 20 percent in 10 years. And most of that growth has been in its urban areas

nearly 40 percent of farmers across the country reported an almost total loss of their wheat crop.

Social media has been awash with photos showing water buffaloes lying dead on the cracked mudflats of southern Iraq’s dried-out marshlands

12 percent of residents were newcomers who had settled in Basra over the past decade, mostly because of water scarcity and a lack of economic opportunities. The number is even higher in other southern Iraqi cities, such as Shatrah and Amarah.

water degradation in the province cost Iraq $400 million in lost animals, palm trees and crops in 2018 alone

As he saw it, migration was only making the situation worse, and he felt that the slow tide of arrivals was changing his city. “Their mind-set is different; we don’t know how to deal with them,” he said. “They don’t respect the laws here.”

Decades of government neglect in rural areas, particularly in the education sector, have left many of the migrants illiterate.

often struggle to access the city’s formal labor market and instead rely on temporary employment as construction workers or truck drivers, or hawking goods from carts in the street. And their habits and attitudes clash with those of their urban cousins.

political leaders in southern Iraq have started blaming the city’s crime rate — as well as other problems — on its migrants.

A few years ago, huge demonstrations decrying corruption and unemployment were crushed with deadly force. Since then, every summer has brought scattered daily protests over authorities’ failure to provide basic services.

“This is how you drive these people into criminality, by discriminating,” she said. “They move to irregular neighborhoods where there’s no proper public services and no employment. And then social issues will emerge.”

When a heat wave forced the shutdown of Basra’s power grid in August, the homes of newcomers and longtime residents alike were plunged into darkness as millions spent sleepless nights drenched in sweat

“My dreams in this country are being lived by a dog in Europe,”

The UAE has plans to develop the Middle East’s most advanced commercial satellite to produce high-resolution satellite imagery. It has also set the ambitious goal of building a human colony on Mars by 2117.

Ukraine at the time dismissed the assertion as untrue and politically motivated. “This is complete disinformation from the Russian side,” Viktor Vyshnov, deputy head of Ukraine’s Maritime Administration, told Reuters. “This was done to justify the closure of these districts of the Black Sea under so-called ‘danger of mines.’ ”

A 1907 international treaty prohibits countries from laying unanchored mines designed to damage ships unless they can be controlled or are “constructed as to become harmless one hour at most after the person who laid them ceases to control them.”

Meanwhile, Turkey said Monday that it had neutralized a mine detected off the coast of Igneada, a town in the country’s northwest near the border with Bulgaria, while on Saturday another mine, which was thought to have drifted from the Black Sea, forced a temporary closure of the Bosporus, the key waterway that runs through Istanbul.

fears that the conflict between Russia and Ukraine could threaten traffic in the Bosporus, a choke point for global energy supplies and commerce.

On Saturday, Turkey’s defense minister, Hulusi Akar, described the mine as “old” and said Turkey had been in touch with the Kremlin and with Kyiv about its appearance in the Bosporus.

Taken together, the Biden administration’s strategy appears to Saudis and other observers as an attempt to wrest the power to set oil prices away from OPEC+. If the move is successful, then it would make it impossible for Saudi Arabia to have the revenues to achieve its own development goals.

it should be abundantly clear why many Saudis are beginning to shift their gaze eastward. But I would counsel them that their hopes of China replacing the United States as a partner for Saudi Arabia are naive

Imagine the Ghost of Christmas Yet to Come showing us our region without U.S. technology, innovation, defense cooperation, and security relations. Imagine a region where the benefits and limits of personal freedom are not subjects to be debated by the people and their rulers—as Saudis are increasingly doing as our country reforms—but things dictated by a centralized one-party state that sees God as its enemy.