Iranian Supreme Leader Ayatollah Ali Khamenei appears in the wake of recent anti-government protests to have put his weight behind President Hasan Rouhani’s repeated calls for reduced military and Revolutionary Guards involvement in the economy.
Mr. Khamenei signalled his support by ordering the military and the Guards to start divesting from commercial holdings and businesses not related to their core tasks except for construction projects considered essential by the government.
The order serves not only to address protesters’ grievances that were sparked in part by losses suffered by millions of Iranians a result of the collapse of fraudulent financial institutions with links to the Guards and other public institutions. The financial entities lured investors with high interest rates that they could not pay.
Mr. Khamenei’s order could also sweeten Iranian efforts to persuade Europe to put in place legal measures that would allow it to invest in the Islamic republic even if the United States imposes new sanctions and withdraws from the 2015 international agreement that curbed Iran’s nuclear program.
Europe shares many of the United States’ concern about the role of the Guards in Syria, Yemen, Iraq and elsewhere in the Middle East and the fact that it runs Iran’s ballistic missile program but has insisted that the agreement should be maintained.
A target of US sanctions, the Guards reportedly are not opposed to a reduced stake that analysts say accounts for as much as 30 percent of the Iranian economy. The Guards operate, among others, Khatam al Anbia, a huge construction company with tens of thousands of employees that is involved in civil development, the oil industry and defense businesses. The Guards build roads, operate ports, manage telecommunication networks, and own business in sectors as far flung as finance and medical.
The “top brass have realized that running companies is actually not their competency. The poor management has been a drag on the economy and–as seen in the recent #IranProtests–a risk to internal security and to the prestige of the armed forces,” said Esfandyar Batmanghelidj, an Iran analyst, commentator and business consultant.
In a world in which everything is interlinked, disinvestment by the Guards and military as well as other public institutions like the Social Security Organization, Iran’s largest pension fund, would involve privatization in a country that has found it difficult to attract foreign investment because of the threat of a re-imposition of US sanctions conditionally lifted as part of the nuclear agreement.
US President has threatened not to renew US sanctions relief in May if Europe and the US Congress failed to work towards an agreement with Iran on an addition to the nuclear accord that would restrict Iranian missile testing and development, provide for expanded inspections of Iranian facilities, and extend prohibitions on nuclear-weapons work. Iran insists that the accord cannot be renegotiated.
Europe has been pressing the Trump administration not to walk away from the accord. Iranian officials have suggested that Tehran would adhere to the nuclear deal in case of a US walkout provided that it served its interests.
For Iran to see continued merit in the deal, it would have to believe that European companies would remain interested in investing in the Islamic republic. That would require the European Union adopting legislation that would shield European companies from US secondary sanctions that would target non-American entities invested in Iran.
Privatization of military and Guards-owned companies, given Iran’s undercapitalized financial markets and its small pool of viable domestic investors, would depend on foreign investors, who in turn are unlikely to risk being penalized by potential renewed secondary US sanctions.
“Europe should put in place a viable contingency plan if the United States continues backtracking on the deal and let Washington know it’s ready to use it… Europe will need to present a package (together with China and Russia) that can entice Iran to continue abiding by the core elements of the current nuclear agreement,” said Iran expert Ellie Geranmayeh.
Writing in Foreign Policy, Ms. Geranmayeh argued that Europe should initially attempt to secure from the United States exceptions to the potential sanctions modelled on the US penalties imposed on Russia that provide relief from enforcement for European companies.
“If Washington refuses this approach, European governments should publicly warn that in any instance where the U.S. Treasury actively enforces secondary sanctions targeting European companies dealing with Iran, the European Union will revive measures similar to its ‘blocking regulation’,” Ms. Geranmayeh argued.
The blocking regulation adopted by the European Union in 1996 thwarted then US President Bill Clinton’s attempt to force Europe and others to abide by US sanctions on Libya, Iran and Cuba. The regulation made it illegal for European companies to abide by US sanctions, gave them legal cover to refuse payment of US fines, and opened the door to the EU penalizing US companies in retaliation.
In practice, European companies, if forced to choose between doing business with the United States or Iran, would likely opt to steer clear of the Islamic republic. The EU would be banking on the expectation that the Trump administration would ultimately opt to compromise in a bid to avoid a deterioration of trans-Atlantic relations.
In announcing Mr. Khamenei’s support for reducing the stake in the economy of the military and the Guards, Iranian defense minister Amir Hatami cautioned that “the degree of our success depends on market conditions and the possibility of divestment.”
Said Mr. Batmanghelidj: “If success in privatization is to be achieved…Iran’s equity market investors will need foreign investors to help carry the burden and unlock the opportunity.”
With little insight into what entities will be put up for sale, European investors, even if the EU puts legal protections in place or cuts a deal with the United States, like their Russian and Chinese counterparts, are likely to take a wait-and-see attitude. That could put efforts to reduce the military and Guards’ economic stake in jeopardy, catching it between the rock of lack of Iranian transparency and the hard place of weak domestic financial markets and a limited pool of investors.
If that were not enough, Saudi efforts to counter Iran could further dampen foreign investor appetite. In a sign of the times, South Korean construction company POSCO Engineering & Construction in which Saudi Arabia’s Public Investment Fund has a 38 percent stake cancelled a $1.6 billion contract to build a steel mill in Iran because of objections by the company’s two Saudi board members.
Iran and Sudan’s Rapprochement in 2023: New Changes in the Regional Geopolitics of the Middle East
The Middle East is a strategic region that connects Asia, Africa, and Europe and has significant natural resources, especially oil and gas. The Middle East is also a source of various conflicts and crises that pose threats to regional and global peace. The change in Middle East politics can shape the social and political transformations of the people and societies in the region, as well as their relations with other regions. With that, Iran and Sudan’s rapprochement has brought a new dynamic into the politics of the Middle East.
Iran and Sudan have been allies since the 1989 coup that brought Omar al-Bashir to power, but their relations have been strained by the political and economic crisis in Sudan, the US sanctions on both countries and the regional rivalry with Saudi Arabia and Egypt. The rapprochement between Iran and Sudan in 2023 adds a new dimension to the regional geopolitics of the Middle East. It has strengthened Iran in the region, as it gained Sudan as a strategic ally and a potential gateway to Africa.
Currently in Sudan, the civil war erupted in April 2023 after a failed coup attempt by a faction of the military against the transitional government that replaced al-Bashir in 2019. The instability and conflict in both countries have affected their domestic and foreign policies. Iran has been facing internal challenges, such as protests, corruption, inflation, and environmental crises. Iran has also been involved in regional conflicts, such as the war in Yemen, the civil war in Syria, the tensions with Israel, and the nuclear standoff with the US. Sudan has been undergoing a political transition since the ouster of Omar al-Bashir in 2019, but the process has been disrupted by a military coup in October 2021. Sudan has also been dealing with humanitarian crises, such as food insecurity, displacement, and violence in Darfur and other regions.
By restoring ties with Sudan, Iran can expand its economic and political influence, as well as its access to natural resources and markets. Sudan can also serve as a counterweight to Saudi Arabia and Egypt, which have been hostile to Iran and have supported the opposition forces in Sudan’s civil war. This has challenged the Saudi-led coalition in the region, which has been trying to contain Iran and its allies. Saudi Arabia and its partners, such as the UAE, Bahrain, and Israel, have formed a bloc to counter Iran’s regional ambitions and to promote their interests. The rapprochement between Iran and Sudan can undermine their efforts and create new security threats for them. For example, Sudan can provide Iran with access to the Red Sea and the Bab al-Mandeb Strait, which are vital for Saudi Arabia’s oil exports.
The change in the US outlook on the Middle East has reduced its involvement and influence in the region. The US has shifted its focus to other strategic priorities, such as countering China’s rise, addressing climate change, and dealing with domestic challenges. The US has also withdrawn its troops from Afghanistan, Iraq, and Syria, and reduced its military aid and arms sales to its allies in the region. The US has also adopted a more balanced approach to the Israeli-Palestinian conflict, supporting a two-state solution and restoring aid to the Palestinians. The US has also resumed negotiations with Iran over its nuclear program, which was abandoned by the previous administration. The change in the US policy has created more space for regional actors to pursue their interests and initiatives without external interference or pressure.
Iran’s interest in Sudan’s Red Sea coast is mainly driven by its strategic and economic objectives. Iran wants to strengthen its influence in the region. Iran has decided to send military support to the Sudanese army in 2023, following talks between the foreign ministers of Sudan and Iran in Baku in July. Iran wants to secure the Red Sea and the Bab al-Mandeb Strait, which are vital for its oil exports and maritime trade. Iran has been hosting its naval fleets in Port Sudan for decades, to the dismay of Saudi Arabia, which lies opposite Port Sudan on the other side of the waterway. Also, Iran wants to expand its economic and political ties with other African countries, especially with the involvement of China as a mediator. China’s role can help reduce tensions and violence in the region, as well as foster greater integration and cooperation.
The position that the rapprochement between Iran and Sudan has reduced the US leverage in the region, as it lost a key ally and a potential partner in Sudan. The US has been supporting the democratic transition in Sudan and has lifted some of the sanctions that were imposed on the country for its human rights violations and its support for terrorism. The US has also provided humanitarian and development assistance to Sudan, as well as diplomatic and military support to the transitional government. The US has hoped to use its influence in Sudan to advance its interests and values in the region, such as promoting peace and stability, countering extremism, and resolving the conflicts in South Sudan, Darfur, and Ethiopia. However, the rapprochement between Iran and Sudan can undermine these efforts and weaken the US position.
It has increased challenges for the US in the region, as it faces a more assertive and resilient Iran and its allies. Iran and Sudan have been subject to US sanctions for their alleged support for terrorism, human rights violations, and nuclear activities. The sanctions have hampered their trade and investment opportunities, as well as their ability to import essential goods and services. The US has been pursuing a dual-track policy of pressure and diplomacy with Iran over its nuclear program and its regional activities. The US has imposed severe sanctions on Iran and its proxies, such as Hezbollah, Hamas, and the Houthis, and has supported Israel’s right to defend itself against Iranian threats. The US has sought to prevent Iran from acquiring nuclear weapons and to curb influence in the region. However, the rapprochement between Iran and Sudan can complicate these objectives and increase the risks of confrontation.
From a regional perspective, Saudi Arabia and its partners, such as the UAE, Bahrain, and Israel, have formed a coalition to counter Iran’s regional ambitions and promote their interests. They have also intervened militarily in Yemen, Syria, Iraq, and Libya to support their proxies and allies. Saudi Arabia has also offered economic and military assistance to Sudan and other African countries, such as Djibouti and Somalia, in exchange for cutting ties with Iran. Previously, Sudan has been a major contributor to the Saudi-led coalition fighting against the Iran-backed Houthi rebels in Yemen since 2015, but its participation has been controversial and costly for the Sudanese people.
The easing of tensions between Riyadh and Tehran has enabled Iran to restore ties with some of the Sunni-led Arab states that were previously aligned with Saudi Arabia against Iran, such as Sudan, Oman, Iraq, and Qatar. Also, it challenges the influence of UAE and Egypt in Sudan, which have been supporting the military-led transitional government since the ouster of Omar al-Bashir in 2019. The UAE and Egypt have been wary of Iran’s presence in the Red Sea and the Horn of Africa, and have sought to limit its access to ports and trade routes in the region. The Sudan-Iran rapprochement could undermine their efforts and create more competition for resources and influence in Sudan.
In conclusion, the Middle East is an arena of competition and cooperation among various regional and external powers. So, the rapprochement between Sudan and Iran has brought change in Middle East politics can alter the balance of power and interests among these actors, and create new opportunities or challenges for dialogue and partnership.
Sisi and the “New Republic” model in Egypt
Egypt’s participation came through President Abdel Fattah El-Sisi in the G20 meetings held in the Indian capital, New Delhi, over the course of September 9 and 10, 2023, as confirmation of what the new Egyptian Republic has achieved during the era of President “El-Sisi” at the Arab, regional and international levels, and what the new Egyptian Republic enjoys. From a pivotal and influential role in the region as a result of the vision and efforts of President “El-Sisi” in restoring Egypt to its position on the global stage. In addition to President Sisi’s vision of the new republic of Egypt in an attempt to re-integrate it to create balance with the new world order, and to emphasize its shift from unipolar control, to creating one world under the umbrella of “One Family… One Future”, India also chose a name and slogan for that summit. The reason for inviting Egypt to attend the G20 summit in India comes as a result of its status among the major countries organizing the summit, as the summit includes the largest international economic and political bloc, accounting for 85% of the global economic output and 75% of the volume of global trade. The observation worth noting remains that the differences between the major powers around the world, such as the United States of America, China and Russia, have been reflected in each party’s attempt to find new allies, by deepening the concept of a multi-power system, by creating a stronger world based on increasing the involvement of developing countries in the global economic processes, such as welcoming Egypt, the Emirates, and Ethiopia to join the BRICS economic group earlier at the G20 summit in India, in an effort to win the favor of many international parties from African and developing countries to reduce the financing gap and restructure debts that limit countries’ abilities to grow, and thus gain new allies from before. Various international powers. This was reflected in the agenda of the Egyptian leadership of President El-Sisi through understanding the mechanisms of this competition between China and the United States of America in neutralizing differences and diversifying Egypt’s economic relations with various international partners.
During his participation in the G20 summit in India, President El-Sisi is trying to present (the features of the new Egyptian Republic), which were reflected in the transformation of Egypt into a leading global commercial, logistical and industrial center, thanks to the national projects that were established in the new Egyptian Republic, whether in infrastructure and ports, in addition to establishing 17 industrial cities that include thousands of new factories, in addition to encouraging the establishment of factories to provide production requirements and raw materials in the new Egyptian Republic. Building the new republic during the era of President Sisi and promoting its most prominent features and projects confirms that Egypt is at the heart of the map of international and regional interactions, presents visions and approaches to Egypt’s economic dealings around the world at this time, and creates a kind of balance for Egypt in its relations around the world. In addition to marketing the national economy in Egypt, and confirming the merit of the political transformation in the new Egyptian Republic, in addition to reserving a role for Egypt in the economic partnerships and international blocs that are now being formed, such as Egypt’s joining of the world’s leading BRICS group of countries immediately before the G20 summit in India.
The conditions for holding the G20 summit internationally at the present time come in the midst of the Russian military operation in Ukraine and its effects on the shape of the international system and the Middle East, where the global order is being restructured again, as well as the architecture of the Middle East again, and it is in the interest of Egypt and the major G20 economic countries, to not be far from all these developments, and to restructure their relations in a way that allows them to benefit from all these developments. In light of these variables, the importance of President Sisi’s participation to discuss the mechanism and ways of providing effective support from the G20 countries to developing countries to achieve sustainable development goals, to confront the negative repercussions of the Russian-Ukrainian war on the economy, food, and energy, and what it led to many successive global crises. Also, in view of the multiple regional, continental and international roles that Egypt plays and the influential and major role it has now enjoyed with all parties, the features of the Egyptian project for modernization and development through which the new republic in Egypt, led by President “El-Sisi”, presents a model for comprehensive and sustainable development, as it adopts a multi-dimensional strategy.
If we analyze the final statement of the G20 Summit in India in the presence of President “El-Sisi”, we will see that it reflects the Egyptian agenda in the international action necessary to confront the challenges that the world is currently witnessing, whether on the security, military, political, economic and development levels, or the problems of hatred and discrimination and the importance of respecting the cultures and beliefs of peoples or anything related to confronting them. Climate problems. The statement also adopted the Egyptian point of view regarding Africa’s demands and the need to support the development efforts of its people. Knowing that the African Union has been accepted as a member of the G20, which is a major and notable qualitative development in the African march of advancement led by Egypt, under the leadership of President “El-Sisi”. This is if we focus on the speech of President “El-Sisi”, in his capacity as Chairman of the Steering Committee of Heads of State and Government of the “African Union Development Agency” (NEPAD), and his announcement of setting specific goals in consultation with African partners to support the countries of the continent, including enhancing continental economic integration, implementing the African development agenda and activating Continental Free Trade Agreement.
The note worth noting for me remains that President Sisi’s meetings during the G20 summit were not limited only to the leaders of the participating countries, but rather extended to the heads and representatives of international organizations and groups on various continents and those responsible for them, the most prominent of which is President Sisi’s participation in the African-European Summit. The mini conference, which was held on the sidelines of the G20 summit. The most important agenda put forward at the top of President Sisi’s agenda, during his participation in the summit of the Group of Twenty major economic countries, was the emphasis on strengthening Egyptian and international efforts to facilitate the integration of developing countries into the global economy in an equal manner, against the backdrop of the mutual opportunities and advantages that this provides. It contributes to attracting investments and achieving economic growth and development for all parties. Also, in light of Egypt’s previous hosting of the “COP27” climate summit in Sharm El-Sheikh, President “El-Sisi” will be keen to determine the extent of developed countries’ commitment to their pledges within the framework of international agreements and mechanisms to confront climate change, and to enable developing countries to increase their reliance on new and renewable energy sources.
Accordingly, President “El-Sisi” was keen to present the features of the new Egyptian Republic during the G20 Summit in India, which was a source of great confidence from all international partners in the strength of the Egyptian economy. This is not the result of the moment, but the result of great economic work undertaken by Egypt since years during the era of President “El-Sisi”, and it reflected positively on the increase in foreign investment inside Egypt, and on the occurrence of many successes in the field of cooperation between Egypt and major international companies, especially with the strength of the Egyptian economic situation now, as a result of the reform measures taken by the new Egyptian Republic during the era of President “El-Sisi”. Therefore, during his participation with the permanent members of the G20 in the India Summit, President “El-Sisi” was keen on a pioneering plan aimed at enhancing trade between India, Egypt and various countries of the Middle East and Europe, as it will thus link the regions that represent about a third of the global economy, which represents the pinnacle of success for the New Republic of Egypt during the era of President “El-Sisi”.
The Surge in Saudi Arabia’s Tourism
Saudi Arabia, a land traditionally synonymous with oil and Hajj pilgrimages, is making headlines with its burgeoning tourism sector. Over a three-month period, the kingdom witnessed a staggering inflow of 7.8 million people, generating a revenue of $9.86 billion in the first quarter of this year. This unprecedented growth has not only stimulated the Saudi economy but has also thrown a spotlight on the country’s untapped potential in sectors beyond oil.
Saudi Arabia has long been a destination for religious tourism, particularly for the Muslim pilgrimages of Hajj and Umrah. With the sacred cities of Mecca and Medina within its borders, the Kingdom has drawn millions of devout Muslims from around the world. This influx has inevitably contributed to the revenue stream, especially in sectors like hospitality, food, and travel.
Saudi Arabia’s Vision 2030, an ambitious blueprint for diversifying its economy, aims to reduce dependency on oil revenues and invest heavily in various sectors, including tourism. Spearheaded by Crown Prince Mohammed bin Salman, Vision 2030 encompasses transformative projects like the Red Sea Resort and NEOM, a planned $500 billion megacity. These initiatives intend to open Saudi Arabia to international tourists, attracting a demographic that goes beyond religious pilgrims.
Saudi Arabia has gradually eased its travel restrictions and visa policies to make it more tourist friendly. The introduction of the e-visa system, in particular, has made it easier for travelers to visit the Kingdom.
The recent revenue of $9.86 billion from tourism serves as an immediate economic shot in the arm for Saudi Arabia. The numbers are impressive, especially when compared to other nations with robust tourism sectors. The surge in tourism directly translates into increased Gross Domestic Product (GDP) and employment opportunities. The tourism sector has started to become a pivotal component of the Saudi economy, potentially contributing to a percentage rise in the annual GDP. The massive inflow of tourists is also expected to generate job opportunities, especially in hospitality, retail, and transport.
Saudi Arabia has recently been grappling with a fragile economic situation, exemplified by a current account deficit. The influx of tourism revenue significantly ameliorates this concern, facilitating a healthier balance of payments and boosting financial reserves. The robust earnings from tourism herald a new phase of financial diversification for Saudi Arabia. As the country reduces its dependency on oil revenues, a balanced economic portfolio incorporating tourism revenue minimizes vulnerability to global market fluctuations in the oil sector.
The surge in tourism is also a strong magnet for foreign investment. Investors are likely to see the economic uptick as a signal to invest in Saudi tourism and related sectors. Moreover, it opens doors for international collaborations and partnerships. Whether it’s in marketing strategies to promote tourism or technology transfer for sustainable practices, global partnerships are expected to enrich Saudi Arabia’s tourism landscape in multiple dimensions.
The tourism boom also brings a wave of cultural interchange. The conservative nation is now exposed to various global perspectives, which could be a step toward more progressive societal norms. However, this sudden rise in international exposure raises questions about the country’s cultural ethos. How will a traditionally conservative Saudi society balance its deeply rooted customs and religious norms with the more liberal attitudes of a diverse global tourist populace?
Saudi Arabia’s staggering earnings in a short period elevate it to the league of nations like the United Arab Emirates, which earned $44.4 billion in tourism. It is clear that Saudi Arabia has not only joined the tourism competition but has also managed to give some of the leading nations a run for their money.
Impact on Industries
The sheer number of tourists flocking to Saudi Arabia in such a short span undoubtedly places a considerable demand on the hospitality industry. Hotels, resorts, and other lodging options need to be ready to accommodate millions, which creates a positive ripple effect in related sectors like construction, interior design, and facility management. Moreover, there’s a corresponding need for improved public infrastructure, including roads, airports, and mass transit systems to cope with the influx of visitors.
As part of the country’s broader digital transformation goals, the Saudi government is looking at adopting smart city technologies not only for its futuristic NEOM project but also in existing cities to facilitate smooth tourism operations. This could mean the rise of app-based services that guide tourists, digital information kiosks, electronic payment gateways, and similar tech-savvy enhancements that modern travelers expect.
With a multicultural visitor base, the demand for a diverse range of food options is inevitable. This change is likely to fuel a boom in the food and beverage industry, perhaps even encouraging a more cosmopolitan culinary scene in Saudi Arabia, which is traditionally dominated by Middle Eastern cuisine.
Any surge in tourism comes with environmental ramifications, and Saudi Arabia is no exception. From pollution and waste management to natural resource consumption, the country needs to invest in sustainable practices to mitigate the environmental impact of its booming tourism sector.
Saudi Arabia is located in a geopolitically sensitive area, and thus security is a significant concern. The country will need to invest in both physical and cyber security measures to protect its visitors and its newfound economic interests.
Saudi Arabia’s astronomical rise in tourist numbers and the corresponding billions earned in revenue mark an unprecedented shift in the country’s economic and social landscape. It is a bellwether not just for Saudi Arabia but also for how countries can pivot their economies in the 21st century. The transformation from a mono-economy, dependent on fossil fuels, to a diversified portfolio that includes a burgeoning tourism sector, could serve as a model for other nations seeking to adapt and thrive in a rapidly changing global marketplace.
The next ten years will be crucial for Saudi Arabia, not only to maintain this momentum but also to address the associated challenges effectively. If managed wisely, this sea change in Saudi tourism could be a cornerstone in the country’s long-term growth and stability, fundamentally altering its role and reputation in the global arena. With strategic planning, investment in sustainable practices, and a commitment to evolving without losing sight of its cultural heritage, Saudi Arabia is well on its way to defining a new future for itself and setting a precedent for the world to follow.
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