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Implications of recent escalation in US-Iran tensions on Iranian domestic, foreign policy – Iran Analysis

Executive Summary

Over the months of April and May, the US took multiple measures as part of its “maximum pressure” campaign vis-a-vis Iran, including the revocation of sanction waivers to importers of Iranian oil and deployment of US military assets to the Middle East.

As a response to the perceived provocations, on May 8, Iran announced its decision to partially halt its commitments to the Joint Comprehensive Plan of Action (JCPOA) and set a 60-day deadline for European states to renegotiate the financial terms of the agreement, marking a highly significant development since the ratification of the nuclear deal in 2015.

The purported involvement of Iran and its affiliates in the recent uptick in attacks against US allies, particularly the May 12 attack against four naval vessels, including two Saudi oil tankers, off the coast of the UAE, has further fueled tensions in the region.

Iran has resisted direct negotiations with the US thus far, which indicates the high level of influence wielded by hardliners on the country’s foreign policy. Tensions are liable to remain high as both Iran and the US are likely to continue their strategic posturing in the region over the short term, in order to eventually coerce each other onto the negotiating table.

Western nationals operating or residing in Iran are advised to regularly review emergency and contingency protocols as a basic security precaution due to the risk of limited hostilities between Iran, the US, and its Gulf allies. Those operating in Lebanon, Iraq, and Syria are advised to maintain a low profile due to threat of attacks by Iranian-linked elements.

Current Situation

On May 8, Iran’s SCNS released a statement announcing Tehran’s decision to partially halt its commitments to the JCPOA and setting a 60-day deadline for European states to take steps to counteract the negative effects of US sanctions.

The US President Donald Trump subsequently issued an executive order to impose sanctions on Iran’s metal industry.

On May 11, the US sent Patriot air defense systems to US CENTCOM based in Qatar’s al-Udeid Air Base.

On May 12, the US Embassy in Baghdad issued a security alert advising “all US citizens of heightened tensions in Iraq” and the “requirement to remain vigilant.”

On May 12, Saudi Arabia’s official news agency stated that two out of the four civilian commercial cargo ships that were subject to a “sabotage attempt” near UAE territorial waters in the Gulf of Oman, off the eastern coast near Fujairah, were Saudi oil tankers.

On May 14, the Yemeni Houthis claimed unmanned aerial vehicle (UAV) attack against an oil pipeline belonging to the official Saudi Arabian Oil Company in Riyadh Province’s towns of al-Duwadimi and Afif.

On May 15, the US ordered the departure of all non-emergency US government employees stationed at the US Embassy in Baghdad and the US Consulate in Erbil from Iraq.

On May 18, the Federal Aviation Authority (FAA) issued an advisory warning of risks to civil aviation over the Persian Gulf and the Gulf of Oman.

On May 19, a rocket landed in the vicinity of Baghdad’s Green Zone, less than two kilometers away from the US Embassy.

On May 20, the Spokesperson of the Atomic Energy Organization of Iran (AEOI), Behrouz Kamalvandi stated that Iran’s 3.67 percent production capacity of enriched uranium had increased by four-fold.

On May 20, two ballistic missiles were reportedly intercepted over Mecca Province’s Taif and Jeddah. Yemeni Houthis denied involvement in the attack.

On May 24, the US announced additional deployment of 1,500 military personnel to the Middle East.

Background

In May 2018, the US President Donald Trump unilaterally withdrew from the JCPOA, also known as the Iran nuclear deal, which was negotiated between Iran and P5 +1 (US, UK, France, Russia, China and Germany) countries in 2015. Subsequently, the US re-imposed sanctions related to Iran’s export of oil in November 2018, but granted sanction waivers to eight countries including India, China, South Korea, Taiwan, Japan, Italy, and Turkey for a period of 180 days. On April 8, 2019, the US designated the Iranian Revolutionary Guard Corps (IRGC) as a Foreign Terrorist Organisation (FTO). This was followed by the US’s decision to end sanction waivers to importers of Iranian oil starting on May 2, 2019. Out of the seven sanctions related to Iran’s uranium enrichment and civilian nuclear energy cooperation, the US revoked two sanction waivers related to Iran’s uranium enrichment process under the JCPOA – one that allowed Iran to store excess heavy water produced in the uranium enrichment process in Oman and one that allowed Iran to swap enriched uranium for raw yellowcake with Russia. On May 5, US officials announced their decision to deploy an aircraft carrier and bomber task force to the Middle East citing indications of Iranian threat, but provided no further details. This prompted Tehran’s decision to partially halt its commitments to the JCPOA on May 8, 2019.

Assessments & Forecast

Impact of IRGC’s designation as an FTO:

The designation of the IRGC in its entirety, including its extraterritorial wing, the Quds Force, as a “terrorist entity” marks a highly significant development, as it constitutes the first ever instance wherein the US has labelled a country’s military organization as an FTO. Such a designation comes amid the US’s continued policy to apply “maximum pressure” on the Iranian government to end its alleged role in destabilization activities across the regional as well as the international stage. It forms part of the US’s efforts to depict the Iranian administration as “rogue” or an “outlaw”, and is aimed at further isolating Iran on the international stage.

The move is largely symbolic, given the fact that US sanctions already target the IRGC and its leaders, affiliates, and subsidiaries such the Basij Resistance and the Quds Force and the US had already designated the IRGC as a “Specially Designated Global Terrorist” in 2017. However, the latest step will likely augment the existing pressure on Iran. Any individual or entity knowingly providing material support to the IRGC will now face the possibility of a 20-year US prison sentence. It will also impose immigration restrictions on members of the IRGC who attempt to travel to the US simply by virtue of their membership or affiliation to the organization. FORECAST: Given that the IRGC has significant stake in the Iranian economy, through this measure, the US likely intends to make it further difficult for foreign entities to conduct business with Iran, which, in turn, would have a negative impact upon the Islamic Republic’s economy. However, the fact that a large extent of the IRGC’s business dealings are known to be carried out through illicit channels, such dealings are unlikely to be significantly affected by the recent designation.

FORECAST: Moreover, such a move is also unlikely to alter Iran’s policies on the regional setting, like its involvement in supporting proxies such as the Lebanese Hezbollah, the Yemeni Houthis, and Shiite militias in Iraq such as the Harakat al-Nujaba (HNA). Rather, given the increased restraints faced by the IRGC, the recent move is liable to increase Iran’s motivation to expand its regional footprint through the above-mentioned proxies as well as other sponsored militias. To this effect, the Iranian government will continue to divert large funds, at the expense of its domestic population, in order to sustain its influence in neighboring countries. This, in turn, is likely to inflame already existing local grievances, which may result in further instances of widespread civil unrest in the country. However, on a broad basis, given Iran’s history of strategic culture and great power rhetoric, a majority of the Iranian populace views the US sanctions as the source of their economic hardship, as compared to the Iranian government’s policies. While this is partly aided by the intensive propaganda campaigns in the country, it nevertheless galvanizes unity in the face of a “foreign aggression”. Thus, it is likely that the Iranian administration will attempt to placate the inherent domestic concerns related to the government’s regional activities and support for its proxies amidst an economic crisis, by attempting to project strength vis-a-vis the US. This may take place through the continued portrayal of strength through military exercises, display of new defense equipment, such as the unveiling of the new domestically produced “Khordad 15” air defense system on June 9. Moreover, the Islamic Republic will seek to counteract the US’s measures by maintaining a relatively belligerent posture, given the influence wielded by hardliners on the country’s foreign policy.”

FORECAST: By continuing, or rather increasing support for its proxies, the IRGC may be able to effectively target its adversaries, namely the US, Israel, and Saudi Arabia-aligned countries in the Gulf over the coming months. In this regard, given that much of the recent attacks in the region, such as the May 19 rocket landing in Baghdad’s Green Zone near the US Embassy, the June 1 rocket attack into Israel’s Mount Hermon from Syria, or the spate of attacks against Saudi targets have consistently targeted Iran’s adversaries, it is likely that they were encouraged by Tehran in an effort to destabilize the region. Moreover, the fact that some of the attacks were carried out against energy-related targets, such as the May 12 targeting of Saudi oil tankers off the coast of UAE’s Fujairah in the Gulf of Oman and the May 14 Houthi-claimed UAV attack on the oil pipeline in Riyadh Province, suggests that Iran may be attempting to weaken the economies of Saudi-aligned countries, given their significant dependence on oil revenues. This would align with Tehran’s strategy of preventing its rival, Saudi Arabia, from expanding its influence in the region and subsequently positioning itself as the dominant regional power in the Middle East. This, in turn, would allow Iran to prevent the regional balance of power from significantly shifting away from itself, particularly in light of the reimposition of US sanctions.

Potential Ramifications of the imposition of various sanctions on Iran:

A) Oil-related sanctions:

The US’s refusal to extend the 180-day sanctions exemptions for importers of Iranian oil (China, India, South Korea, Turkey and Japan) from May 2 constitutes a core segment of the US’s “maximum pressure” campaign, as it aims to completely diminish Iran’s oil revenue. Although India and China, the two top importers of Iranian oil, were envisaged to face significant setbacks to its energy security policy due to the US move, it appears that both countries have planned for this eventuality and are effectively looking at alternate sources to fulfill their energy requirements. In this scenario, while neither of the two countries have officially announced their position on the future of Iranian crude imports, it is likely that imports from other key energy players such as Iraq, Saudi Arabia, and the UAE will feature on a higher side, specifically in the case of India. This will put further strain on Iran’s revenues from its oil sector, which, in turn, will have a significant adverse impact upon its national economy.

FORECAST: Given that the move has been anticipated since the reinstatement of US sanctions on Iran in November 2018, early indications suggests that apart from the initial shock, the decision has not drastically impacted the global oil market, despite fears of an oil price surge and supply disruptions. This is primarily due to a boost in Saudi Arabia’s oil production in May to fill the gap of Iranian crude, along with similar boosts in production by Iraq and Libya. However, Iran may resort to illegal trade of its oil in the black market, particularly in countries such as Yemen, where the Houthis have been reportedly deriving a majority of its income by selling Iranian oil. Furthermore, Iran may also attempt to export its oil through the use of “switch-off-the-transponder” tactics, which makes tracking ships increasingly difficult.

B) Uranium enrichment-related sanctions:

The May 8 statement released by the SNSC, which was reiterated by Iranian President Rouhani in a televised address, represents a pronounced effort by the Islamic Republic to project strength in response to perceived US provocations in recent years. The decision to halt its partial commitments under the JCPOA regarding enriched uranium and heavy water reserves follows the US’s May 4 revocation of the two sanction waivers, which practically forces Iran to completely overhaul its production of heavy water and uranium enrichment or continue production and find itself in breach of the JCPOA. Moreover, the five sanction waivers that were extended were also reduced from 180 days to 90 days, in which the remaining adherents of the JCPOA are allowed to cooperate with Iran on the sites of Bushehr, Arak, and Fordow without facing US sanctions.

This was followed by the May 20 announcement from the Spokesperson of the Atomic Energy Organization of Iran (AEOI), Behrouz Kamalvandi according to which, Iran’s 3.67 percent production capacity of uranium had increased by four-fold. However, Iranian officials reportedly stressed that the uranium would be enriched only to the 3.67 percent limit set under the JCPOA. Thus, although Tehran still remains party to the JCPOA, its increased capacity to produce enriched uranium suggests that Iran is likely to soon exceed the 300 kg uranium stockpile limitation set by the accord. FORECAST: However, as indicated in Rouhani’s speech, Tehran will likely retain its enriched uranium (upto 300 kg) and heavy water (upto 130 tons) rather than selling them to other nations while remaining within the limits prescribed in the nuclear deal over the short term, at least until July 8. This would allow Iran to project its adherence to the terms set under the JCPOA.

FORECAST: However, as per the joint statement released by France, Germany, and the UK on May 9, while the European states expressed “regret” over the reinstatement of US sanctions and continued to pledge their willingness to support alternate trade mechanisms such as the Instrument in Support of Trade Exchanges (INSTEX), they also categorically rejected Tehran’s 60-day ultimatum for negotiations. While this highlights their unwillingness to publicly be strong armed onto the negotiation table, it is also indicative of their reluctance to oppose US policies. Furthermore, the reimposition of the US sanctions has increased the risk of conducting business with Tehran for foreign companies, several of whom have already ceased their operations in the Islamic Republic. This is likely to have a significant adverse impact upon Iran’s economy over the coming months.

C) Metal industry-related sanctions:

The US President Donald Trump’s May 8 decision to impose new sanctions on Iran’s metal industry are aimed at undermining Iran’s revenue from the export of industrial metals, the country’s largest non-oil sector, which reportedly accounts for approximately ten percent of its export economy. While Iran’s mining industry was already facing severe setbacks due to shipping and payment restrictions, the recent move is liable to inherently impact employment provided by the metal as well as the automotive industry, which reportedly constitutes almost six percent of Iran’s total labor force. This is liable to significantly exacerbate domestic workers’ grievances, which have manifested in the form of persistent localized demonstrations across Iran over the recent months.

FORECAST: In this context, public protests surrounding employment, pensions, inflation, increase in the prices of basic commodities and other economic-related issues are liable to continue in a significant manner over the coming weeks and months. Such demonstrations will likely take place across Iran, including in major cities such as Tehran, as well as in outlying provinces such as Khuzestan and Kordestan, where the locals comprising of an Arab-majority or Kurdish population perceive themselves as marginalized by the Shiite Iranian government’s policies. This will not only increase the threat of civil unrest in the country as a whole, but also exacerbate sectarian tensions between the countries minority communities and the Shiite-led government.

Lack of direct engagement, continued strategic posturing liable to prolong tensions in the region:

The Iranian administration’s current position to resist direct negotiations with the US, albeit agreeing to mediation talks with Japan, highlights the high degree of influence wielded by hardliners on the country’s foreign policy at this juncture. Such elements continue to criticize the Rouhani administration’s moderate approach towards dealing with the US and aspire to correct the perceived weakness with which the terms of the JCPOA were negotiated in 2015. FORECAST: This, combined with the relative lack of tangible economic benefits from JCPOA, is liable to further embolden segments of hardliners and conservative elements within Iran’s political sphere. This may result in further appointments of such elements in key leadership posts, which is liable to significantly hinder the popularity of more moderate officials, consisting of figures such as President Hassan Rouhani and Foreign Minister Javad Zarif. This is underscored by the appointment of General Hossein Salami, a prominent hardliner within Iran’s military establishment as the IRGC’s Commander-in-Chief on April 21. Such appointments are not only liable to increase the anti-US rhetoric emanating from the Islamic Republic but also significantly hamper the potential for backchannel negotiations with the US, which are generally conducted by more moderate officials.

FORECAST: On a regional level, tensions are liable to remain high due to the strategic posturing of the two countries, in order to eventually coerce each other onto the negotiating table. The deployment of US warships, including an aircraft carrier and a bomber task force on May 5, the sending of Patriot missile systems on May 11, as well as the decision to deploy an additional 1500 US military personnel to the region, is likely to significantly increase tensions in the Persian Gulf waters and the Strait of Hormuz over the coming weeks and months. This is particularly in light of Tehran’s persistent effort to assert its authority as the legitimate custodian of security across its territorial waters. These tensions may manifest in the form of limited confrontation between the naval forces of the two sides, which constitutes a general risk to shipping through the critical energy choke point.

FORECAST: Tensions are also likely to increase between Saudi-aligned countries and Israel on one side and Iran on the other. Iran may encourage its backed elements, particularly the Yemeni Houthis, to increase their attacks against targets in Saudi Arabia and the UAE. This would also align with the Houthis’ aim of weakening the economies of countries that are part of the Saudi-led Coalition in Yemen in order to reduce their ability to engage in the ongoing civil war in the country. Iran may also use its proxies and backed elements in Syria and Lebanon, such as the Lebanese Hezbollah, to put pressure on the US by using them as leverage against Israel, the US’s closest ally in the Middle East. This may manifest in the form of attacks against Israel by Iranian-backed elements in Syria, as witnessed on June 1, when a rocket was launched from Syria towards Israel’s Mount Hermon. However, such attacks are likely to remain limited and constrained to areas within close proximity to the Syria-Israel border. This is because an attack deep inside Israeli territory would trigger a large-scale conflict between Israel on one side and Syria and Lebanon on the other, and Syria is currently not interested in such a scenario given its preoccupation in hostilities with rebel forces.

FORECAST: Overall, as tensions between the US and Iran get prolonged, the risk of a military confrontation between the two countries will increase. Such a military confrontation is likely to be limited at least in the short term, with Iran attempting to use its proxies as a means to put pressure on the US and its Gulf allies and the US retaliating with a further increase in military presence in the Persian Gulf. While Iran is currently not interested in a broad conflict with the US given that its economy is unlikely to be able to sustain such a cost, as previously assessed, the influence of hardliners on the country’s foreign policy reduces the possibility of backchannel negotiations. This combined with the fact that the US is unlikely to agree to any terms that do not significantly diminish Iran’s nuclear and military capabilities, further reduces the possibility of successful negotiations. Therefore, as these tensions persist over a long period of time, the risk of a full scale conflict between the US and Iran cannot be ruled out.

Recommendations

Travelers are advised to regularly review their emergency and contingency procedures as a basic security precaution, as the current tensions between Iran on one side and the US and its Gulf allies on the other may manifest in some form of cold war or even a limited or full military confrontation.

Western nationals operating or residing in Iran are advised to remain cognizant to prevailing negative sentiment toward the United States and other North American and Western European countries.

US citizens and other Western nationals operating or residing in other countries in the Middle East with sizeable Iranian-backed elements are advised to keep a low profile and maintain heightened vigilance, given the potential for attacks by such groups.

Those operating vital infrastructure, particularly in the oil sector, in Saudi Arabia are advised to review security protocols in light of the threat posed by Yemeni Houthi-perpetrated attacks, particularly through the use of UAVs.

Those planning to operate commercial aircraft over the Persian Gulf and the Gulf of Oman are advised to exercise heightened caution and remain apprised of further FAA notices regarding the increased threat to aviation in this region.

Qatar’s decision to withdraw from OPEC in January 2019 part of increasing effort to break from Saudi influence – Qatar Analysis

Executive Summary

The Qatari announcement of a planned withdrawal from the Organization of the Petroleum Exporting Countries (OPEC) largely stems from Qatar’s inability to influence decisions made by the organization due to Doha’s relatively low oil output.
This development highlights the continued efforts by Qatar to implement Qatari-centric policies, which effectively are causing the state to distance itself from the the Gulf Cooperation Council (GCC), mainly due to Doha’s interest in breaking away from Saudi influence, as the latter retains wide influence over OPEC and the GCC.
Although Qatar’s withdrawal will likely not have significant effect on OPEC, the limited backlash the country is facing after announcing its plan to withdraw may prompt Oman, who shares similar interests, to follow suit in the future.
Travel to Qatar may continue as normal while adhering to cultural norms and avoiding making any statements critical of the Qatari Emir and government officials.

Download the 2019 Global Travel Risk Map now.

Current Situation

The Minister of State for Energy Affairs Saad bin Sherida al-Kaabi, who is also the president and chief executive of Qatar Petroleum (QP), stated on December 3 that Qatar will withdraw its membership of The Organisation of the Petroleum Exporting Countries (OPEC) starting on January 2019.
Al-Kaabi stated that the decision comes after Qatar reviewed ways to enhance its international role and plan long-term strategy. As the world’s largest exporter of liquefied natural gas (LNG), Qatar intends to focus its efforts on developing its natural gas industry and increasing its LNG production to 110 million tonnes by 2024. The minister emphasized that for him to “put efforts, resources and time in an organization that we are a very small player in […] practically it does not work, so for us it’s better to focus on our big growth potential.”
He added that the Gulf state would nevertheless continue to produce oil, as the state-run oil firm QP planned to increase its production capability to 6.5 million barrels of oil equivalent a day from 4.8 million over the next decade. In addition, Qatar remains interested in expanding its international oil investments from abroad and would “make a big splash in the oil and gas business.”
Meanwhile, on December 9, the emir of Qatar Sheikh Tamim bin Hamad al-Thani did not attend the GCC summit in Riyadh, and sent a lower-ranking delegation instead.

Assessments & Forecast

This decision highlights the independent policies the Qatari leadership is striving to implement. Thus, as production targets within OPEC are usually set by leading oil exporters, such as Saudi Arabia, Qatar likely withdrew its membership given its much smaller outputs in crude oil, which prevented it from circumventing the directions laid out by the organization. This is partly due to Qatar’s current efforts to raise its oil production, which contradicts the expectations of cuts from OPEC members, due to low oil prices. That said, this potential increase in oil production will remain limited, due to Qatar’s efforts to further focus on the LNG sector, of which Qatar is the leading exporter. FORECAST: However, Qatar’s withdrawal from OPEC is unlikely to significantly impact the organization, given that Qatar’s contribution to it remained marginal, as the state has a share of approximately 2% of OPEC’s output.

In addition to the availability of natural resources and the economic aspect, the intended withdrawal of Qatar from OPEC stems largely from a desire of the state to further disassociate from some other GCC members, namely the UAE and Saudi Arabia. In this context, recent developments point to Doha’s increasing efforts to seek independence from neighboring states, including Sheikh Tamim’s sending a delegation composed of lower-ranking officials to the December 9 GCC summit, as opposed to attending himself. It is likely that the withdrawal from OPEC was in preparation for several months or years by the Qatari government. Qatar may have refrained from implementing it so far due to the ongoing blockade from Saudi-aligned states, following their severance of ties with Doha in June 2017, in order to avoid escalating the crisis.

However, since this status quo has largely prevailed in recent months, the Qatari government likely chose to announce the planned withdrawal now, with the expectations that at this point in time it will not yield a significant response from the blockading states. This may have been bolstered by the current weakened position of Saudi Arabia’s Crown Prince Mohammed bin Salman (MbS), due to the allegations of his involvement in ordering the killing of journalist Jamal Khashoggi at the Saudi Consulate in Istanbul on October 2. Given that MbS remains fragile amidst this international backlash, the Qatari leadership may have announced their withdrawal from OPEC knowing that the Crown Prince would not take measures to oppose the move, as he is currently trying to rehabilitate his international image by projecting moderation.

In addition, Qatar’s withdrawal from OPEC is more specifically meant to move away from Saudi Arabia’s influence, with which regional rivalries have increased in recent years. Thus, following the announcement of withdrawal from OPEC, a Qatari official reportedly stated that Qatar does not want to depend on Saudi Arabia, as the latter controls OPEC due to their vast oil reserves.
FORECAST: Going forward, Qatar will continue striving to break away from Saudi influence and that of the rest of the GCC over the coming months, by pursuing more Qatari-centric policies, both in terms of economic and of foreign policy. For the former, as announced, this will manifest in slightly increasing Qatar’s oil output and focusing on the highly-beneficial production of LNG, while the latter may include measures aimed at strengthening relations with Iran. This will likely be further prompted by the overall hawkish policies enacted by Saudi Arabia under the direction of MbS, which is fostering disunity among the GCC states.

Recommendations

Travel to Qatar may continue as normal while adhering to cultural norms and avoiding making any statements critical of the Qatari Emir and government officials.
In light of the ongoing dispute between Qatar and regional states, it is advised to anticipate potential disruptions to services and to remain cognizant of developments and their potential effects on travel and business continuity.

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How countries such as Saudi Arabia, Bahrain, UAE, Egypt cutting ties with Qatar is likely to influence the region – Middle East & N. Africa Analysis

Current Situation

During the morning hours of June 5, Saudi Arabia, Bahrain, Egypt, and the UAE announced the cutting of all diplomatic ties with Qatar.  The Hadi-led government in Yemen, as well as Libya’s anti-Islamist House of Representatives (HoR) similarly announced the severing of diplomatic ties with Qatar on the same day. The first four countries issued a 48-hour ultimatum to Qatari diplomats to evacuate their respective nations, while similarly issuing an ultimatum to all other Qatari citizens to leave within two weeks. Additionally, Saudi Arabia, Bahrain, Egypt, and the UAE announced that they had closed their airspace for Qatari aircrafts, and that all flights by airliners from these countries to Qatar were suspended. Qatari naval vessels will also not be allowed to use the countries’ seaports to anchor, while land travel between Qatar and Saudi Arabia will be limited to non-Qatari nationals only.

Additional measures implemented against Qatar include the expelling of the country from the Saudi-led coalition in Yemen and its anti-Islamic State (IS) coalition in Syria. These measures were implemented based on accusations that Qatar is “supporting and financing extremist groups” across the region, as well as encouraging sectarianism and subversive elements operating in the abovementioned countries. Meanwhile, Qatar’s Ministry of Foreign Affairs issued a statement that the accusations are “absolute fabrications” and “proves that there are premeditated intentions to cause damage to Qatar”.

How countries such as Saudi Arabia, Bahrain, UAE, Egypt cutting ties with Qatar is likely to influence the region - Middle East & N. Africa Analysis | MAX Security
Map of countries affected by travel restrictions on Qataris

Assessments & Forecast

Severing ties may hurt Qatar economically, push its policy towards more pro-Iranian approach; limited impact on regional conflicts

While the new development is unlikely to have any effect on Qatar’s and any of the other impacted countries’ security conditions in the short term, we assess that this measure may lead to multiple local and regional ramifications over the coming months. For instance, approximately 90 percent of Qatar’s imports of food products are transferred through land from Saudi Arabia. Thus, in light of the border closure between the two countries, Doha will likely be forced to divert a large amount of resources in developing its maritime trade, including in the form of improving its seaport infrastructure, as now its imports via sea are liable to be enhanced significantly. Moreover, given the high-profile nature of the event, there remains a possibility that the turn of events will impact global markets, and particularly the oil sector, as it may be perceived as a source of instability across this oil-rich region.

These new developments may also impact expatriates, including Westerners operating in Qatar and the GCC, particularly given the suspension of flights between the GCC countries and Qatar and the closure of the land border with Saudi Arabia. In light of the likely increase in logistical difficulties in traveling between Qatar and the above-mentioned countries, exacted upon expatriates by the measures, it is likely to damage Qatar’s national economy. Though the impact on GCC residents seeking to enter Qatar is yet to be determined, it cannot be ruled out that Qatar will implement punitive measures and ban GCC citizens and residents from entering the country.

The partial isolation of Qatar may affect several conflicts and political rivalries across the region. With regards to Iran, Doha is liable to improve its bilateral relations and economic ties with Tehran, as now Qatar would be compelled to compensate for its political and economic setback. Moreover, in Yemen, in the short-term, Qatar’s absence from the Saudi-led coalition may slightly reduce the latter’s on-the-ground capabilities in fighting against the Iranian-backed Shiite Houthis. However, given Qatar’s already limited role in the coalition, as well as the aforementioned arms deal with the US, in the medium to long-term the Saudi-led coalitions is unlikely to be significantly impacted by Qatar’s absence from the coalition.

In Syria, in light of the already heightened internal divisions between rebel factions, it remains possible that this new development will further exacerbate tensions between rebel groups supported by Qatar on one side, and factions backed by Saudi Arabia and the UAE on the other. Should the event indeed lead to an economic recession in Qatar, their supported factions on-the ground would suffer from a shortage of resources, thus forcing them to disband or merge into other factions. With this in mind, should scenarios eventually materialize, it would potentially tip the scale towards the pro-government forces in the Syrian conflict.

In Libya, the development may constitute a boost to the HoR and its allied Libyan National Army (LNA), given their conflict with the pro-Islamist General National Congress (GNC) and its affiliated militias, which are partially supported by Qatar. That said, Qatar’s direct involvement in this conflict has significantly waned in recent years, particularly since the March 2016 arrival of the UN-backed Government of National Accord (GNA) to the designated capital of Tripoli, and therefore any implications on the conflict will remain limited.

Cutting ties with Qatar likely linked to global, regional developments involving Iran, new US administration

Today’s development comes amidst years of tensions between Saudi Arabia, Bahrain, UAE, and Egypt on one side, and Qatar on the other, surrounding multiple issues, chiefly the latter’s alleged direct involvement in the internal affairs of countries throughout the region. This is particularly relevant to Qatar’s long-standing support for Muslim Brotherhood-linked political elements across the Middle East and North Africa, as the countries in this Saudi-led alliance view the Islamist organization is a subversive element and a threat to their respective governments. Additional contentious issue include Qatar’s overall positive relations with Iran, as opposed to that of the other Gulf Cooperation Countries (GCC), with the exception of Oman, which remain strong adversaries of Tehran. This is highlighted by numerous past economic agreements between Tehran and Doha in recent years, such as the agreement from February 2014 to create a joint free trade and economic zones between the two countries. A further issue that contributed to the strained relations with Qatar throughout the years is the cooperation of the Qatari-based news outlet al-Jazeera, which had been accused by the aforementioned countries of attempting to undermine their, as well as their regional allies’, governments.

That said, despite these strained relations, Qatar and the other GCC countries’ relations can be characterized over the past several years by intermittent escalation and rapprochement between the sides. For instance, on December 9, 2014, Qatar agreed as part of a GCC summit, to establish a regional police force in order to improve coordination regarding drug trafficking, money laundering, and cybercrime, as well as announced its “full support to al-Sisi-led government in Egypt”. This followed Saudi officials’ March 9, 2014 threats to impose sanctions against Qatar, including in the form of sea blockade, in light of Doha’s persistent support for Muslim Brotherhood-linked elements across the region. However, the complete cutting of diplomatic relations between the aforementioned Saudi-aligned countries is highly notable given its wide scale and scope, as it includes significant restrictions on Qatar and its citizens.

We assess that this escalation is linked to global and regional geo-political developments, largely with regards to Iran and the new Donald Trump administration in the US. With this in mind, in recent years, under the Obama administration, relations between Saudi Arabia and its allies on one side, and Washington on the other, were oftentimes strained due to the US’ perceived efforts to approach Tehran, which was likely viewed by Riyadh as coming at its expense. In light of the aforementioned normal relations between Qatar and Iran, Saudi Arabia and the other GCC countries were likely felt compelled to prevent Qatar from approaching the Islamic Republic too much, as this would have significantly undermined their sense of security and regional interest.

Since President Trump’s inauguration, Washington increased its anti-Iranian rhetoric, while at the same time strengthened its ties with Saudi Arabia. This is highlighted by the May 15 UAE-US defense agreement, as well as the 350 Billion USD agreement between Riyadh and Washington involving an arms deal, and Saudi investments in the US. Thus, there remains a potential that the recent visit of President Trump to Saudi Arabia in late May, as well as the US’ growing support for Saudi Arabia and its allies, motivated the Kingdom to implement these measures, as part of the shared interest with the US in tackling Iran and its allies’ influence throughout the region. With this in mind, given Saudi Arabia’s decreasing need for Qatar’s cooperation on security and political support amidst the ongoing rivalry with Shiite Iran, it is likely that Saudi Arabia assessed that it is no longer obligated to maintain positive bilateral relations with Qatar, prompting this development.

The development comes amidst a diminishing political influence of the Islamist Muslim Brotherhood organization across the Middle East and North Africa over the past two years. In this context, it remains possible that Saudi Arabia no longer felt compelled to maintain good relations with Qatar, following the reduction of the threat stemming from the Muslim Brotherhood, as opposed to previous Saudi attempts to pressure Qatar to abandon their support for the Islamist organization in return for the improvement of relations with the other GCC countries.

Recommendations

Travel to Qatar may continue as normal while adhering to cultural norms and avoiding making any statements critical of the Qatari Emir and government officials, despite the aforementioned new restrictions. That being said, those operating in Qatar over the coming days and weeks are advised to stock up on food and basic products, due to the possibility that these will be in shortage due to the declared measures. Those operating throughout the Middle East and North Africa, and particularly in Saudi Arabia, Bahrain, UAE, and Qatar are advised to remain cognizant of developments and potential effects on travel and business continuity given the current lack of full information regarding the various restrictions that will be in effect. This is particularly relevant for the possibility of unexpected border closures between the relevant countries over the coming days and weeks.

 

This report was written by:
Asaf Day – MAX Security’s Senior Intelligence Manager, Middle East & North Africa

Intelligence Analysis: Bahrain’s Most Volatile Villages

As Bahrain celebrated its “National Day” holiday on December 16, the frustrated efforts of the Shiite-led opposition to isolate the Khalifa monarchy for its allegedly repressive policies continued to be ever more apparent. Formula One races, international conventions, a record-setting year for cruise-ship dockings and Kim Kardashian’s newest milkshake franchise expansion all signal that despite nearly two years of civil unrest, Bahrain’s image as an international trade and business hub remains largely intact. The credit goes to the Khalifas, who have successfully exploited regional tensions to keep ties with the West warm and the Saudi military waiting across the King Fahd Causeway, ensuring this strategic piece of island real estate never becomes the southern doorstep of an Iranian-led Shiite Crescent.

Shiite activists from the February 14 movement stage a march.
Shiite activists from the February 14 movement stage a march.

Predictably, the rise in violence amongst Bahrain’s opposition has been widely attributed as a natural result of feelings of abandonment by the international community. When (or if) Bahrain’s opposition movement will take the form of a low-level insurgency remains anyone’s guess. But amidst brewing tensions nationwide, some Shiite villages stand out as particularly angry. If things do get uglier, here is a short list of Bahraini opposition hubs which may just earn themselves an Arab Spring household name along with Syria’s Homs or Libya’s Misrata.

Continue reading Intelligence Analysis: Bahrain’s Most Volatile Villages

Strategic Analysis: Why Netanyahu can’t sell a unilateral strike

Over the past four years, Benjamin Netanyahu has succeeded in propelling the Iranian threat into the forefront in both Israel and around the world. The crisis over Tehran’s nuclear program now overshadows potentially crippling political and diplomatic issues in Israel,  such as growing economic disparity and the stalled peace process with the Palestinians. Yet, Netanyahu has failed to convince the Israeli public that Iran’s nuclear program must be stopped- or delayed- at all costs.

Benjamin Netanyahu has failed in convincing Israelis of the need to delay Iran’s nuclear program, even without help from the United States.

A recent poll conducted by Tel Aviv University showed that only 27% of Jewish Israelis support a unilateral strike by their government on Iranian nuclear facilities. Those results come amidst an ongoing chorus of criticism against such preventative action from Israel’s most distinguished ex-military chiefs and politicians, including President Shimon Peres. To garner this much needed public support for such a crucial decision, Netanyahu must stop speaking to Israelis’ hearts and minds on the Iranian threat, and start speaking to their wallets.
Continue reading Strategic Analysis: Why Netanyahu can’t sell a unilateral strike

Intelligence Analysis: Who will fight for Iran’s nuclear program?

Last week Iran sent a high-level envoy, Saeed Jalili, on a particularly controversial public-relations tour to Lebanon and Syria, the most explosive corner of the region. After ruffling feathers during a Beirut stopover, Mr. Jalili traveled to Damascus to meet with President Bashar al- Assad, where he declared the ties between Iran, Syria, and Hezbollah to be an “axis of resistance.”

Israeli pilots prepare for flight. Iran has since warned of massive retaliation in response to an Israeli attack on it’s nuclear facilities

Jalili is an iconic figure, whose position as the head of Iran’s Supreme National Security Council also affords him the role of chief negotiator for Iran’s contentious nuclear program. Amidst a deadlock in negotiations and a rehashing of threatening rhetoric, Jalili’s visit was meant to remind the Israelis that Iran’s proxies on Israel’s northern doorstep remain ready and willing to plunge the region into chaos if Israel strikes Iran’s nuclear facilities.

It appears however, that Iran’s allies in the eastern Mediterranean may not be as keen about going to war for the ayatollahs as Tehran would like – and the Israelis know it.

Continue reading Intelligence Analysis: Who will fight for Iran’s nuclear program?

Pentagon Budget Cuts: A Cause For Concern?

By Jay R.

What does a ‘leaner’ American military mean for the Middle East? In a word: Proxies. 

President Obama addresses reporters from the Pentagon.

On January 5, President Barak Obama announced from the Pentagon that the American defense budget was going to see significant cuts – approximately 500 billion dollars over the next ten years. The announcement sounded alarms both at home and abroad, with many concerned that the United States would surely lose its military superiority and squander its influence in the Middle East. However, such concerns are baseless and unfounded as the United States will continue to maintain a military budget that is greater than the next top ten military spenders combined.

Over the last decade, the United States has been involved in two counterinsurgency wars – Iraq and Afghanistan – totaling a cost of nearly 1.3 trillion dollars. Participation in the Iraq conflict has ended and the US is slowly drawing down its forces in Afghanistan in anticipation of a 2014 exit. The ending of these two wars will significantly absorb the budgetary cuts that the Obama administration is planning. Furthermore, the United States government and citizenry alike have lost all appetite for any military commitment that would result in the deployment of its troops to the Middle East again, therefore diminishing the likelihood for their reappearance anytime soon.    Continue reading Pentagon Budget Cuts: A Cause For Concern?

Yemen’s Greatest Challenge

By Gabi A.

Getting the oil flowing again is a basic requirement for the success of any future government.

An oil pipeline in Northern Yemen.

Even as fears of continued factional conflict continue to attract media attention, the question of economic stability and sustainability in Yemen has barely received the consideration needed to avoid a spiral into the status of a failed state. The interim government in the country faces difficult political challenges in the weeks ahead as it prepares for what many observers are hoping will be the country’s first free election. The head of the interim government, Vice President Abed Rabbo Mansour Hadi, is already facing calls to resign as protests continue to rage in the streets of the capital city of Sanaa with demonstrators facing off against forces loyal to now supposedly deposed President Ali Abdullah Saleh.

The destruction brought on by the nearly-ten-month uprising against the regime of Saleh has wreaked havoc not only on the delicate political system but also on the nation’s oil production infrastructure that provides the lifeblood for the economy. Oil exports are responsible for somewhere between 60-70% of government revenues and 90% of overall national exports.      Continue reading Yemen’s Greatest Challenge

Yemen: Progressing Into Chaos?

By Jay R. and Gabi A.

Continued violations of the recently signed GCC power transfer agreement indicate that Yemen may be entering into a new status quo of instability.  

In January of this year, Yemen’s citizenry amassed in the streets initially demanding reform and change in areas of unemployment and corruption, but then shifted their cries to the ouster of their president, Ali Abdullah Saleh. On January 27, approximately 16,000 demonstrators gathered in the capital, Sana’a, which was followed by a subsequent assembly of more than 20,000 people just one week later. But it was not until the “Friday of No Return” that the government claimed the first three lives of the revolution on March 11 setting off a wave of unrest that would escalate to opposition armed resistance in the form of an alliance between tribal chief Sheikh Sadiq al-Ahmar and General Ali Mohsen al Ahmar of the First Armored Brigade; no relation.

Activists stage demonstrations in Sana’a against immunity for President Saleh. (Xinhua)

Some argue that the hostilities which erupted between Saleh loyalists and opposition tribesmen and defectors reached the level of civil war. The Gulf Cooperation Council (GCC) peace initiative was originally expected to quel this unrest, has appeared to  have ultimately failed to do just that in the immediate term. As part of the aforementioned initiative, Yemen’s President Saleh received immunity against prosecution for his perceived crimes against the protest opposition movement. Such a concession has enraged the people, who continue their movement to express their disapproval.  As such, thousands of Yemenis continued to march in the cities of Sanaa and Taiz.
Continue reading Yemen: Progressing Into Chaos?

The Saudi Confederacy Proposal: Have the lines been drawn?

By  Jay R.

The agreement of nearly every Arab gulf state to the Saudi’s confederacy proposal highlights their concerns over the Islamic Republic’s pursuit of nuclear weapons.

Gulf nation leaders meet at a GCC conference in Riyadh. (SPA)

When the Arab peoples aligned with the British against their Ottoman rulers during the First World War, they did so under British assurances given to King Faisal that in return, the Arabs would receive their independence in the form of their own sovereign kingdom. The kingdom was to span from Turkey’s southern border in the north to the Arabian Sea in the south, and bound by Persia in the east to the Mediterranean Sea in the west. These Arab aspirations were dashed, however, when they discovered the Sykes-Pikot treaty, in which Britain and France had secretly agreed to divide the Arabian territorial spoils amongst themselves.

It is largely because of this British-French agreement that the borders of the greater Middle East are abundant with unnaturally straight lines. There have been previous attempts by these nations to break these perceived artificial boundaries, most notably by Egypt and Syria with their formation of the United Arab Republic, and the two’s confederation with North Yemen to form the United Arab States. Throughout these attempts, which took place from 1958 to 1961, there were even hopes of Iraq joining their ranks. However, the experiment was short lived as Gammal Abdul Nasser, the Egyptian leader over the confederation, failed to institute a fitting political system for the new administration, resulting in Syria’s secession through military coup, and the Republic’s ultimate demise. Continue reading The Saudi Confederacy Proposal: Have the lines been drawn?