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Home Page05 April 2016

The National Plan to Reform Saudi Arabia’s Economy:

Prince Mohamed bin Salman had a protracted interview with Bloomberg to explain more about the new plan of redeveloping Saudi’s economy. We can conclude the most important factors as follows:

Firstly: detecting actual results of ARAMCO requires a long period of time, and it has been announced that the actual results will appear by 2020. And as Saudi Arabia is considered to possess the required tools for an economic reforms, yet there still are certain doubts about obstacles to this project, the most important are:

1. Position of Power Circles:Since the inauguration of King Salman bin Abdulaziz, we have noticed a rapid ascension of the Salmans. Especially Prince Mohamed bin Salman, who received pivotal positions that controls the military and financial paths in the Kingdom. These include ARAMCO, the Economy and Development Council (which includes the new Investment Fund), Ministry of Defense and being the Crown Prince. All of these positions will likely raise questions among the sons of King Abdelaziz and others from the Saudi Family, as no one has ever controlled too many sensitive positions as such since the Kingdom’s establishment in 1932. Customarily, power used t one distributed among the family, with the main elite appears upfront.2.Position of the Conservatives:Parts of the family is expected to be agitated about the new procedures because ARAMCO is considered a very sensitive issue and transforming it to an energy company, regardless of its size, will be considered a change to the budget of Saudi Arabia. Also, these conservatives fear changes of the traditional economic form of the country which may cause fluctuations for the family’s budget in the future.3. Position of the Religious CircleNo such plan, which is open to world, has Saudi Arabia ever seen and it is expected to carry an equal social openness. And so, it is possible fot the kingdom t witness a split among the religious currents, supporters and opposers, for Saudi to pass its oil era and further spread its economic abilities nationally and internationally. We can notice that the only person who has been quoted in the interview was Minister Mohamed bin Abdulwahab who is considered one of the most important consultants for Prince Mohamed bin Salman.

Secondly: Prince Mohamed bin Salman has summed his opinion about oil prices in two main points: Saudi Arabia will reduce the production if Iran and other producers did the same Saudi Arabia is not at all worried from these prices, as the kingdom spends %40 more than its budget, but that as been decreased to %12 in 2015.Here, it important to note that Prince Mohamed bin Salman seems to implement strict policy towards corruption, as the additional expenditures have been tied with corruption for the past few years. A third point has been added during the oil situation analysis by Bloomberg which was that ARAMCO will regain its market share because of the decline in the American production due to price drop and expectations for increase in demand, regardless of Saudi’s loss in some of China and USA’s markets.

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G.C.CSaudi Arabia

value-added taxThirdly: Sources of non-oil income increaseSaudi Arabia seeks to generate additional 100$ billion of non-oil revenues by 2020. Officials present their expectations about the sources of this income as following: subsidy reform

green card-like program

other measures

fees to exceed foreign worker quotas

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Yemen

Firstly: Position of Parties Participating in the Upcoming Yemeni Negotiations

a. Ould Cheikh’s efforts to succeed in the upcoming negotiations:It seems that Ould Cheikh’s chance to succeed in reaching for a solution in Yemen is better than all previous opportunities. Also, the UN seems to be more accepting to deal with the multilateral diplomatic movement field dimensions that pushes opponent parties to consultations in Kuwait. Ould Cheikh is currently working on two tracks:

Taking advantage of the pacification on the Saudi-Yemeni territories that has been reached by the Houthis with the Kingdom recently. Taking advantage of the Arab Alliance’s field progress, especially in Sana’a, Jouf, Marib, Shabwah and Taiz, as Ould Cheikh realizes that this progress may lead to the implementation of the UN resolution 2216#.b. Position of Houthi-Saleh Alliance:The Houthi Al Suqoor (the Falcons) wing and Saleh seek to win the upcoming rounds of the war, their intentions seems tactical until the moment and they are not serious about attending the negotiations.c. Position of the KingdomThe kingdom has announced that it will respond strictly to any manipulation by the Houthis, and it [the kingdom] is currently working on two tracks:

Military: waiting for talks with Kuwait which means that conclusiveness in the field is the last, and ready, option. Political: this week we saw consultations with President Hadi that ended with the appointment of General Ali Mohsen Al Ahmar as the vice president, with retaining his position as the Deputy Supreme Commander of the Armed Forces. That surely is related to the opposition and the military path, also, Dr. Ahmed Obaid bin Dagir was appointed as a successor to Khalid Bahah.

Secondly: New Appointments

These new decision carried messages to three parties: 1. The Southerners: means that the head of government position is retained for them. 2. The Rest of the General People›s Congress Members at the Saleh Supporters Wing: means that Hadi and the Arab Alliance are the strong side at this stage. 3. The Houthis: who have demanded to transfer power to Bahah as a part of their perception of the political solution.As a Result: We can say that the general inclination, of the Yemeni crisis developments, is moving towards gradual pacification including current battles. The success of a real political alliance most be recognized and has proven that it has the ability to improve the negotiation process between conflicting parties. The kingdom’s view most be noted due to the importance of General Al Mohsen’s presence in power. Necessity requires his presence in such a advanced position in order to succeed in the process of political transition, into a phase where the state can manage the complicated situation in Yemen.

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Syria

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Lebanon

Indications of new roles in Lebanon:Since the beginning of the Syrian crisis, Moscow has been playing the role of the mediator between Iran (Hezbollah ) and Israel. This role has been active clearly after its intervention on the ground in Syria. While we know that the French have always played the role of mediator between the Saudis and the Iranians. Thus, this highlights two parallel tracks in Lebanon ; the Russian role and the French one within the framework of the mediation.

The visit of Hariri ( who is backed by Saudi Arabia) to Moscow increases the weight of the Russian role in Lebanon at the expense of the Iranian role. So, this may indicate the increase of Franjieh chances and at the same time cramming Aoun in the corner.

This indicates an increase of suspicions about the strategic differences between Iran and Moscow in the region, and the existence of a Russian-Saudi rapprochement again.

The upcoming visit to France is likely to go in the same context . which means any support for the Saudi-Russian rapprochement means a support to Suleiman Franjieh.

Between Franjieh and Aoun:Franjieh’s preparation to search for a consensus president would be an embarrassment for Aoun, who insists on running the elections from one side and connecting joining the parliament to be the president himself none else. In order to do this, Franjieh is relying on the support of his ally Hezbollah. It is important to note here that his other ally “ the party of troops” is differentiated in position from the latter in taking part in all the sessions of the election, and this perhaps was a sign of recognizing his mistake in recommending Michel Aoun.

The trend towards Tripoli:We notice the existence of a trend to create a political «Arabic» heaviness in Tripoli, which is equivalent in weight to Beirut, the capital . But with a differentiation in Arabic feature, which explains Hariri›s repeated visits and ongoing support for the reconstruction of Tripoli , the revival of banquets Islamic legitimacy and even the trial of some political candidates to gain the trust of the expounder and the removal of sectarian outlook.

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The Question of the Egyptian economy:The economic situation in Egypt is still moving towards the worst. The Gulf Investments are stumbling by the bureaucracy of the existing laws, where the government does not take the initiative to create a favorable investment climate. In addition to the bad political and security situations at the moment, and the enormous money spent by the government on huge projects which seemed pointless, such as : the Suez Canal. The important question here is : will the failure remain the dominant feature of the Egyptian economy?

Sisi›s speech:The recent speech of President al-Sisi has characterized by being not concentrated and the improvisation was not calculated. It looks that the aim of this speech was to calm down the Egyptian street. However, the president exaggerated in his spontaneity and he appeared to be incapable of achieving the goals he set for himself . Furthermore, he did not set a clearly defined economic or political program , in order to overcome the crises which Egypt suffers from.

The Options of Muslim Brotherhood :As we mentioned earlier, Brotherhood in Egypt still suffers from internal divisions and it does not seem to be able to overcome them in the near term. Moreover, the international support that was given to the period of rule in Egypt has ended. Obviously, its political activeness in Egypt is no longer effective. The question now is : will Muslim Brotherhood begin to disintegrate the group fully? Or it is possible to revise itself such as those carried out by the Islamic group in the nineties of the last century?

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Iraq

Firstly: Al Abadi›s Success Questions - The new ministerial cabinet formation may witness in the end of the National Shiite Coalition as a result of the multiple splits. And it is possible to say that in case that continues, Al Abadi may succeed in excluding names affiliated with sectarian politics. But current questions are:

1. The ability of Al Abadi to remain and tolerate the upcoming challenges

2. The ability of the Tribal Mobilization Forces to confront the Popular Mobilization Forces

- The American decision of appointing a Secretary of State moves towards the recovery of relations with the Arab countries, especially Saudi Arabia.

Secondly: Indicators of the Iranian Position’s Ambiguity

1. Questioning Diyala’s governor who is affiliated with Badr organization

2. The withdrawal of the Popular Mobilization Forces from some areas

3. Splits in the National Iraqi Alliance

We can look at these facts as proof for either:

Iranian position’s cooling-off period aiming to achieve changes soon; or Considering Iran to be passing through a status of weakness due to the recent clear splits in the Iranian politics domestically.

Thirdly: ISIS ISIS’s recent bombings can be seen as a reaction to its lose of control in many area, with the progress of security forces. Yet, it seems that ISIS still maintains huge influence on media to send its messages.

Kurds

Iraq›s Kurds:In every crisis between the Kurdish parties , the Iraqi- Kurdish party resort to the threat of withdrawing from the political process or separation. It is possible to interpret its usage by Barzani in this particular circumstance that it aims to monopolize the presidency of the region.

Turkey›s Kurds:There is a raise of voices of the TCK; a new youth branch of the PKK . This branch is very anti-perfectionists and Justice and Development Party. It is also known by its dramatic whirl , and this causes disputes between it and the older generation. In addition to the movement of hawks Kurdistan, where it seems that Erdogan will exploit the disputes between the younger generation of TCK›s which belongs to PKK in Turkey and the greatest generation and push them to beat each other.

Authority Conflicts in Iran: The last attack on Rafsanjani has shown the size of conflict in the Iranian regime structure, between the conservatives and reformists to the extent of Rouhani’s visit to Austria getting cancelled last Wednesday for security reasons. Yet, most analysis explained that the real reason was for him to remain with Rafsanjani during this organized attack. Rafsanjani’s tweet may be interpreted as a criticism of the Army of the Guardians of the Islamic Revolution. That Army’s recent missile tests, targets to block all diplomatic efforts by the Rouhani to normalize relations between Iran and the West. Reading between the lines of anti-Rafsanjani statements shows a very a fierce attack on the nuclear deal. Furthermore, the conservatives are trying to use the recent tweet to launch an attack on the reformists policies, including the nuclear deal, economic policy. This attack comes in a very sensitive timing in a domestic point of view, a few weeks before the parliamentary re-elections that both parties are hoping to obtain majority at.

Iran’s Declaration on Increasing Its Forces in Syria:

1. Came as a challenge from the Army of the Guardians of the Islamic Revolution towards the USA’s declaration of further supporting the Kurdish forces in Syria.

2. Assured Syria’s military, financial and political (regime) support by Tehran, even after the Russian withdrawal.

3. This declaration can also be understood as a letter of reassurance and support to pro-Assad forces which felt weak after Russia’s partial withdrawal.

Iranian Mediation between Armenia and Azerbaijan:

Here, Iran is trying to express its intentions in developing its role in the region as a retainer of regional peace. That is exactly what Iran has been trying to signify since the nuclear deal negotiations with

the USA until today. It is unexpected for Iran to succeed in imposing any settlement, at least in the near future, in spite of having good relations with both Armenia and Azerbaijan. Furthermore, as the tensions between both

conflicting countries have been developing for the past 20 years, and so, finding a resolution requires more than an Iranian mediation.

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Iranianmedia

Iran’s Position Towards Hamas Highlighting that Hamas is ungrateful to Iran and that Iran is persistent towards anti Muslim Brotherhood movement in Egypt. Iran is also skeptical about Egypt’s ability to solve Hamas’s problems, and that the latter will eventually seek help again from Iran. In that case, seeking help from Iran will first require an apology from Hamas to Tehran. Iran is committed to liberation movements in the region, and that the Arab countries are what opposes these movements. Also, strangling these movements, such as Hamas, is implemented through Arab countries, the Gulf especially. This level of blame towards the movement shows that Iran cannot contain it anymore, on the other hand, the movement is not willing to offer all its options to Iran again.

Iran’s Message to Sunnis Iran is promotes that Sunnis are the ones affected the most by ISIS, and that embracing them will not only affect Sunnis now, but will also affect their [Sunnis] existence in this region in the future. Also, Sunnis must lose hope to return to their cities, which will remain destroyed, because the international community will not be able to meet reconstruction requirements.

Egyptian Situation- It is clear that Egypt takes special importance for Iran, and increasing confrontations between the Legislative Council with the army, and the conflict between security and the army in the interest of weakening these institutions with no solutions to the current problems being offered. And so, Iran is promoting the idea that the GCC’s reliance on a failed such as Egypt is erroneous. Iran seems to be present in many forms in the Egyptian arena and isn’t far from what is happening.

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First: The military superiority:The Israeli declarations -which warns that the superiority of the Israel›s military in the region is now threatening after talking about the pursuit of the Arab countries to buy quality weapons from the United States - obviously aim to guarantee getting additional military aid from Washington, where Israel is seeking to extend the provision of assistance before the US President, Barack Obama, leaves the White House in January 2017.

Second: Netanyahu location and the atmosphere of calmness in Gaza:It is expected that the declared positive figures of the Israeli economy contribute in increasing the popularity of Prime Minister Benjamin Netanyahu after his popularity had declined recently. It seems that the ghost of the threat of his government›s fall is not possible currently. Especially, after penetrating some news of allowing the establishment of a new Islamic party in Israel, after his dissolve to the Islamic Movement Party headed by Raed Salah . In addition to the increasing news about absorbing the resentment of Gaza Strip through decreasing the blockade, and the news about the opening of a seaport under the auspices of the Turkish guarantee.

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First, the strategic location of the Turkish Republic:We notice a pivotal development in the position of Turkey and its importance within the regional and international space. It is possible to recognize it through :

The remarkable progress in the Turkish-European relations and the escalation of the importance of Turkey›s role within the central files of the EU.

The Turkish role is considered as a platform for event management and strategic issues in the region. Especially, being the explicit power on the ground in the Middle East.

We can interpret the central role of Turkey through the evolution of Turkey›s alliances with the international and regional parties, including its relationship with the Gulf .

Increasing the political weight of Turkey in front of Iran and Russia, because of the increasing level of its presence and influence within the files that intersect with these countries. Plus, the superiority of the importance of Turkey›s role within certain paths.The sensitivity and importance of Turkey›s role in the Caucasus through the presence of ethnic, social and economic ties with Turkey. Especially in Azerbaijan, which includes cooperation in the gas sector as well as the military one.

One of the consequences of the aforementioned contexts is the need for the United States to Turkey in more than one level. Therefore, it is possible to say that these factors will push President Barack Obama to accept Turkey and its policies regardless of any divergence of views.

Second, at the tactical level:1. There is an escalation in the relationship between Turkey and the United States, and the situation has exacerbated because of Washington›s support for the Kurds in Syria. Though, this opposes what Turkey views as a supreme national interest. This might stimulate the intervention of the Turkish military in the future.

2. According to the factors that have been mentioned above , we don not think that Turkey will play according to the old rules. It looks that she will formulate her own rules in order to keep her benefits. This point in particular will control how the Americans will deal with theTurkish politics.

3. Turkey is trying to control the Syrian-Turkish border by providing artillery support for the opposition forces against the Islamic and Kurdish state, but this could develop into a confrontation between the Turkish troops and the US ones in northern Syria.

4. It is important to note that the level of the Turkish-European relationship in the current period is much higher than the Turkish-US one. It is possible to say that this new situation has helped Turkey to acquire the joints of additional power. So, Turkey no longer depends on the United States to support its strategic weight.

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Firstly: Scandal of Panama Papers

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- Germany receives a new blow with the announcement of the involvement of Deutsche Bank, the most important financial establishment, in facilitating tax evasion operations, in addition to the Hamburg Bank. This involvement is the considered the third scandal for the German institutions. That does not only threatens with a series of legal procedures but is a new stigma that affects the moral capital and international reputation enjoyed by the «Made in Germany” mark. - The involvement of the German bank, which is considered the backbone of German economy and the EU’s most important financial pump, comes after previous investigations that affected transparency of wall street banks. And so, that will result in a broad investigation process that will include the European financial system which may explain the recent Euro crisis and the fall of the Greek economy. Furthermore, the development of several other economies in Europe and setting some sort of legal supervision.

Russia and the West

- The political figure that has been targeted by Panama Papers’ repercussions was The Russian President Vladimir Putin. The media responded and accused the west of trying to destabilize Russia and inciting public opinion against leaders. - This campaign confirms that the hybrid war is raging between Russia and the West. Also, that this campaign is aimed at Russian financial and economic elites mainly, which form circles of influence around President Putin In an attempt to hide and push it to reconsider their positions. If the Russian president enjoys immunity, those who are around him may be vulnerable to the accountabilities and investigations by international entities, including the US treasury. - This campaign can be regarded as an indirect message to the Russian President, and that he will have to show more cooperation. Otherwise, more of these scandals may soon be anticipated and might mention him by name.

Secondly: New Regulations for Europe’s Security - The meeting of the US President Obama with the NATO Secretary General on the NATO’s 67th anniversary carries a special symbol, especially after the continuous talks about the US’s abandonment of its commitment to ensure European security and stability since the cold war. It seems that the United States already decided, and is preparing for, a new era of deterrence policy toward the Russian hostility which targets the eastern states. - It is expected that the next NATO summit, which will be held in Warsaw, will be more meaningful as a lobby led by Washington is expected to attend, a lobby that consists of new NATO members that feel the Russian threat on their sovereignty and territorial integrity. Noting that this is an issue that still faces resistance from countries like Germany and France, both which still prefers diplomatic and non-escalating solutions. - The renewal of the US commitments through Atlantic cooperation (NATO) will this time have new conditions. These conditions will require Europe to take more responsibility through allocating more of its budget towards defense, also, reconsidering social welfare policies. As the US today is concerned with the welfare of its own people, while foreign policies will not be responsible for securing others at their [American people] expense.

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