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Gulf crisis escalates as major corporations are forced to take sides

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The Gulf crisis that pits a United Arab Emirates-Saudi-led alliance against Qatar is escalating in discreet but no less worrisome ways that effect major third-party commercial interests and could increase international pressure for a resolution of the dispute.

In a major shift away from Saudi and UAE restraint in attempting to force the international community and multi-nationals from taking sides in the 11-month dispute, prominent financial institutions are being sucked into the dispute that erupted last June when the alliance declared a diplomatic and economic boycott of Qatar.

Executives of JPMorgan and HSBC advised Qatar last month, according to The Wall Street Journal, that they would not be involved in the Gulf state’s $12 billion bond issuance because it could jeopardize their relationship with Saudi Arabia.

The kingdom in April rushed a $11 billion bond sale of its own, its fourth international offering, to ensure that it went to market before Qatar did.

Qatar has responded to efforts to persuade financial institutions to reduce, if not halt dealings with the Gulf state by refusing do business with some Dubai-based bankers and consultants. The Qatari response has forced several Western institutions to do business with the Gulf state through their London offices, according to the Journal.

Some bankers and financial executives have, moreover, reportedly been detained at UAE airports because they had Qatari visas in their passports before ultimately being granted entry into the country.

Saudi Arabia, in an unusual move, took the market by surprise when it launched its bond without embarking on a traditional roadshow to market the offering and sought to complete the transaction in one day. The issuance was oversubscribed almost five times.

The Saudi attempt to undermine Qatar failed given that the Gulf state’s sale was similarly oversubscribed.

“This reflects the strength of the Qatari economy and the confidence of international investors,” a Qatari official gloated.

HSBC was one of the Saudi bond’s global coordinators while JP Morgan was one its lead managers. The two banks helped arrange Qatar’s last sale in 2016 of a $9 billion bond. Neither was involved in the most recent Qatari sale which was arranged among others by Deutsche Bank, Barclays and Credit Suisse, banks in which Qatar has significant stakes.

In January, Doha Bank, Qatar’s fifth-biggest lender, was forced to reduce the size of a two-year, $575 million bank loan that it had raised in December 2015 to $400 million, when it sought a one-year extension of the facility because Chinese, Hong Kong and Japanese banks opted not to participate.

The financial reverberations of the Gulf crisis contrast with failed attempts by the UAE-Saudi alliance in the immediate aftermath of the declaration of the boycott to strongarm African nations into supporting their punitive measures against Qatar.

Omar Ghobash, the UAE’s ambassador to Russia, suggested at the time that the anti-Qatar alliance could “impose conditions on our own trading partners and say you want to work with us then you have got to make a commercial choice.”

The quiet tit-for-tat between Qatar and international banks suggests that Saudi Arabia and the UAE, frustrated that Doha has proven to be resilient enough to resist surrendering to the alliance’s demands, have decided to step up the pressure.

The UAE and Saudi Arabia accuse Qatar of supporting militants and political violence, maintaining close ties with Iran, and interfering in the domestic affairs of its neighbours – accusations Qatar denies. Accepting the alliance’s demands would effectively amount to Qatar compromising its sovereignty and ability to chart its own, independent course.

The Wall Street Journal’s disclosure of the tit-for-tat with financial institutions comes days after newly appointed US Secretary of State Mike Pompeo on his first overseas trip in his new job told Saudi leaders in Riyadh that “enough is enough” and that the Gulf crisis must be brought to an end.

Stopping the rot in its tracks and averting the potential impact of the crisis on multi-nationals is certainly not the only reason for Mr. Pompeo’s stepped-up pressure on Saudi Arabia and the UAE. The United States wants to see a united front among its Middle Eastern allies as President Donald J. Trump gears up for a possible withdrawal on May 12 from the 2015 international agreement that curbs Iran’s nuclear program.

Nevertheless, forcing financial institutions to take sides in the Gulf crisis challenges Mr. Trump’s America First approach to policy and the interests of major US corporations – a move the president is unlikely to view kindly.

If financial institutions are continuously forced to take sides, Saudi Arabia and the UAE could decide to target other economic sectors as well as Asian nations that depend on the export of labour to the Gulf.

Countries like Bangladesh and Pakistan, two of the most populous Muslim states, as well as India, home to the world’s fourth largest Muslim population, fear that Saudi Arabia could threaten to expel millions of migrant workers and expatriates in a bid to force them to join the boycott of Qatar.

Saudi Arabia has a history of using as leverage migrant workers, whose remittances constitute the backbone of foreign currency liquidity of many supplier countries and whose Gulf jobs reduce pressure on domestic labour markets.

Thousands of foreign workers in the kingdom have in recent years already lost their jobs as a result of Crown Prince Mohammed bin Salman’s efforts to replace them with Saudi nationals and financial difficulties encountered by major corporations like the Saudi Bin Laden Group and Saudi Oger.

Speaking to the BBC last June, former Bangladesh ambassador to Saudi Arabia Abdul Momen Chowdhury warned that “nothing is impossible” in how the kingdom might seek to build support for its campaign against Qatar. “If anyone obstructs what they want or does not agree with their opinions, they are never hesitant to act.” Mr. Chowdhury said.

Potential Saudi and UAE efforts to increase pressure on Qatar would reflect the fact that the two countries have boxed themselves into a corner by refusing to negotiate with the Gulf state unless it first accepts their demands.

The Gulf stalemate is reinforced by the fact that the international community has by and large refused to back the Saudi-UAE position and repeatedly called for a negotiated solution.

So far, the tit-for-tat with financial institutions has not forced any of the banks and financial majors to close offices on one side or the other of the Gulf divide.

Nonetheless, in a sign of the times, JP Morgan remains the region’s top merger and acquisition advisor, but no longer ranks among the top five banks in Qatar in terms of revenue. For the first time in nearly a decade, it doesn’t even rank among the Gulf state’s top 10.

Said a private equity firm executive in the Gulf: “If this continues, international banks will increasingly be forced to choose sides. That would take the Gulf crisis to a new and dangerous level.”

Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture, and the author of The Turbulent World of Middle East Soccer blog, a book with the same title, Comparative Political Transitions between Southeast Asia and the Middle East and North Africa, co-authored with Dr. Teresita Cruz-Del Rosario and three forthcoming books, Shifting Sands, Essays on Sports and Politics in the Middle East and North Africaas well as Creating Frankenstein: The Saudi Export of Ultra-conservatism and China and the Middle East: Venturing into the Maelstrom.

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Covid-19 Vaccine: A Mutual Partnership between Morocco and China

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Since the establishment of diplomatic relations between China and the Kingdom of Morocco (1958), a strong and rapid strategic development of mutual ties categorized contemporary collaboration.

On August 31th 2020, King Mohammed VI held telephone talks with Xi Jinping, President of the People’s Republic of China, which falls within the framework of the existing friendship between the two countries, which was strengthened through the signing of the Joint Declaration on the Establishment of the People’s Republic of China. A strategic partnership was signed by the King and Chinese President during the royal visit to Beijing in May 2016.

The phone talks between King Mohammed VI and the President of the People’s Republic of China touched on the development of bilateral relations in all fields, especially political dialogue, economic cooperation, and cultural and humanitarian exchanges. King Mohammed VI and President Xi Jinping also discussed the partnership between the two countries in combating “Covid-19”.

According to Moroccan Newsmedia, Minister of Health Khalid Ait Taleb is expressed his satisfaction with the signing up of a cooperation agreement between Morocco and China National Biotec Group Limited (CNBG) on the COVID-19 vaccine trials. This shared Moroccan-Chinese collaboration will allow the Kingdom of Morocco to be among the prior served in terms of the vaccine against the COVID-19 pandemic. Also, he added, under his Majesty, The Kingdom of Morocco would be able to take part in creating vaccines in sense of the exchange of Chinese expertise. Though, to strengthen the Sino-Morocco strategic partnership, to boost both countries’ international solidarity and promote health cooperation.

The issue of discovering an anti-“Covid-19” vaccine still raises several controversies, and altercations especially since the kingdom of Morocco issued its participation in the clinical trials of the Chinese vaccine, but without giving any details about how these trials were conducted, or, knowing its initial outcomes.

Accordingly, despite those who attempt to question it, China’s vaccines constitute a trendy choice because they are affordable and can be distributed in a substantial and more successful capacity. Yet, several states which face similar economic issues, people, and ambiance-based impediments are likely to see China’s vaccines as the obvious choice. That does not mean it will be the sole state they do trade with, as several of the states have more than one trade partner.

Though, Chinese vaccines have a competitive price and making capacity, allowing developing countries like Morocco a way out of the pandemic as fast as possible. Unlike European companies, is not only about business; China has also agreed to give billions of vaccines.

China has timely released the latest vaccines information, China’s vaccines are gaining international steam and a growing number of states are following up to obtain them. Whilst the achievements of Moderna and Pzifer are widely lauded, in the end, these companies only complete a part of the jigsaw in ending the COVID-19 crisis. Not everyone has the privilege or infrastructure to buy them. Therefore, the accomplishment of SinoVac, CanSino, and SinoPharm are set to play a significant role in making a difference for billions of people around the world.

According to Jamal Eddine Bouzidi, a doctor specializing in chest diseases, allergies, and immunology, president of the Moroccan Association for Fighting Tuberculosis and Respiratory Diseases, pointed out: “They say that the Chinese vaccine is purely safe, but to make sure of that.” You must wait for a long time because there are side effects that may appear after a period of up to two years or after months at least. Therefore, we might say that it is 100% safe. “

He added, “All vaccines that are produced around the globe go through many phases in the laboratory, then they are analyzed and checked on mammals and followed by humans. And when tested on humans, they also go through three stages; and during each stage, the number” of people subject to testing, so that the effects are discovered. Side effects of the vaccine and its effectiveness. “

Under such circumstances, The Moroccan minister noted that the vaccine, according to the statements of Chinese officials, is successful at a rate of between 97 and 98 percent, and is given in two doses with a difference of 14 days, and the antibodies are manufactured within a month and can sustain in the blood to defend the body for two years. “The vaccine experiments will originally involve volunteers as of next week,” the official said.

Ait Taleb highlighted that the agreements reached will allow Morocco to have its vaccine as soon as possible with the help of our Chinese health expertise. The signing of the agreements will allow Morocco to launch its first experience of clinical trials.

Meanwhile, Al-Bouzidi considered that what is being said is the “only guess”, indicating that the near-term side effects of this vaccine are high temperature, a little fatigue, slight pain at the injection site, and some tremors. The long-term symptoms are not yet known.

As acknowledged by Chinese officials, “Jun Mao” said the signing of the agreements paves the “excellence of strategic relations between China and Morocco in terms of cooperation against COVID-19, which is entering a new phase.” The Chinese diplomat Mao reaffirmed that Rabat and Beijing’s commitment to deepening their cooperation through the clinical trials. He said he hopes the newly-signed agreement will yield “decent results” as soon as possible for the peoples of the two countries.

In conclusion, China has big expectations for the Kingdom of Morocco as the latter has an extreme pond of resources to spur its anticipated vision and China’s economic growth. As a superpower, China’s motive in partnership with Africa through the creation of more legality and impartial world order places the East Asian giant is a powerful stand to provide more substantial aid to Africa under win-win cooperation.

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The Muslim world’s changing dynamics: Pakistan struggles to retain its footing

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Increasing strains between Pakistan and its traditional Arab allies, Saudi Arabia, and the United Arab Emirates, is about more than Gulf states opportunistically targeting India’s far more lucrative market.

At the heart of the tensions, that potentially complicate Pakistan’s economic recovery, is also India’s ability to enhance Gulf states’ capacity to hedge their bets amid uncertainty about the continued US commitment to regional security.

India is a key member of the Quad that also includes the United States, Australia and Japan and could play a role in a future more multilateral regional security architecture in the Gulf.

Designed as the backbone of an Indo-Pacific strategy intended to counter China across a swath of maritime Asia, Gulf states are unlikely to pick sides but remain keen on ensuring that they maintain close ties with both sides of the widening divide.

The mounting strains with Pakistan are also the latest iteration of a global battle for Muslim religious soft power that pits Saudi Arabia and the UAE against Turkey, Iran, and Asian players like Indonesia’s Nahdlatul Ulama, the world’s largest Islamic movement.

A combination of geo- and domestic politics is complicating efforts by major Muslim-majority states in Asia to walk a middle line. Pakistan, home to the world’s largest Shiite Muslim minority, has reached out to Turkey while seeking to balance relations with its neighbour, Iran.

The pressure on Pakistan is multi-fold.

Pakistani Prime Minister Imran Khan charged recently that the United States and one other unidentified country were pressing him to establish diplomatic relations with Israel.

Pakistani and Israeli media named Saudi Arabia as the unidentified country. Representing the world’s second most populous Muslim nation, Pakistani recognition, following in the footsteps of the UAE and Bahrain, would be significant.

Pakistan twice in the last year signalled a widening rift with the kingdom.

Mr. Khan had planned to participate a year ago in an Islamic summit hosted by Malaysia and attended by Saudi Arabia’s detractors, Turkey, Iran and Qatar, but not the kingdom and a majority of Muslim states. The Pakistani prime minister cancelled his participation at the last moment under Saudi pressure.

More recently, Pakistan again challenged Saudi leadership of the Muslim world when Foreign Minister Shah Mahmood Qureshi complained about lack of support of the Saudi-dominated Organization of Islamic Cooperation (OIC) for Pakistan in its conflict with India over Kashmir. The OIC groups the world’s 57 Muslim-majority nations. Mr. Qureshi suggested that his country would seek to rally support beyond the realm of the kingdom.

Turkish President Recep Tayyip Erdogan, on a visit to Pakistan earlier this year, made a point of repeatedly reiterating his country’s support for Pakistan in the Kashmir dispute.

By openly challenging the kingdom, Mr. Qureshi was hitting Saudi Arabia where it hurts most as it seeks to repair its image tarnished by allegations of abuse of human rights, manoeuvres to get off on the right foot with incoming US President-elect Joe Biden’s administration, and fends off challenges to its leadership of the Muslim world.

Pakistan has not helped itself by recently failing to ensure that it would be removed from the grey list of the Financial Action Task Force, an international anti-money laundering and terrorism finance watchdog, despite progress in the country’s legal infrastructure and enforcement.

Grey listing causes reputational damage and makes foreign investors and international banks more cautious in their dealings with countries that have not been granted a clean bill of health.

Responding to Mr. Qureshi’s challenge, Saudi Arabia demanded that Pakistan repay a US$1 billion loan extended to help the South Asian nation ease its financial crisis. The kingdom has also dragged its feet on renewing a US$3.2 billion oil credit facility that expired in May.

In what Pakistan will interpret as UAE support for Saudi Arabia, the Emirates last week included Pakistan on its version of US President Donald J. Trump’s Muslim travel ban.

Inclusion on the list of 13 Muslim countries whose nationals will no longer be issued visas for travel to the UAE increases pressure on Pakistan, which relies heavily on exporting labour to generate remittances and alleviate unemployment.

Some Pakistanis fear that a potential improvement in Saudi-Turkish relations could see their country fall through geopolitical cracks.

In the first face-to-face meeting between senior Saudi and Turkish officials since the October 2018 killing of journalist Jamal Khashoggi in the kingdom’s consulate in Istanbul, the two countries’ foreign ministers, Prince Faisal bin Farhan and Mevlut Cavusoglu, held bilateral talks this weekend, on the sidelines of an OIC conference in the African state of Niger.

“A strong Turkey-Saudi partnership benefits not only our countries but the whole region,” Mr. Cavusoglu tweeted after the meeting.

The meeting came days after Saudi King Salman telephoned Mr. Erdogan on the eve of a virtual summit hosted by the kingdom of the Group of 20 (G20) that brings together the world’s largest economies.

“The Muslim world is changing and alliances are shifting and entering new, unchartered territories,” said analyst Sahar Khan.

Added Imtiaz Ali, another analyst: “In the short term, Riyadh will continue exploiting Islamabad’s economic vulnerabilities… But in the longer term, Riyadh cannot ignore the rise of India in the region, and the two countries may become close allies – something that will mostly likely increase the strain on Pakistan-Saudi relations.”

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Assassination of top Iranian Nuclear Scientist: A big Tragedy

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Image source: Wikipedia

On the sad incident of the assassination of a top Iranian nuclear scientist, the UN spokesman said, “We urge restraint and the need to avoid any actions that could lead to an escalation of tensions in the region.” Turkey termed the assassination of Mohsen Fakhrizadeh as an ‘act of terrorism’ while the EU calls it ‘criminal’ and urges ‘maximum restraint.’ Anger can be seen in Iran and the region. The whole region is worried and mourning.

Masses are demanding to investigate the assassination act thoroughly and punish the responsibles. It is a straight forward criminal act and a direct threat to Iran’s sovereignty. The whole world is upset and can not forgive.

It was well-known that the US assassinated General Qasim Sulymani in Baghdad just a few ago. The retaliation from Iran was just appropriate, and the US could not digest it yet. Top nuclear Scientist’s assassination is not accepted under any circumstances, and any retaliation will be justice.

Iran has the capability and will to retaliate. Although we all – peace-loving people request Iran to cool down and observe restrains, at the same time, we understand, if the aggressors are not checked, it will happen again and again, and maybe in more intensity and frequency. If the retaliation is severe, then the aggressor may not dare to attempt again in the future. A minimum level of deterrence is required to maintain. Otherwise, further assassinations are encouraged.

The ruthless assassination of Dr. Fakhrizadeh on Friday 27 November is not just ‘another’ routine incident—it’s causality is more significant than it’s aftermath. The Western world engaged Iran under JCPOA in October 2015. Things were smooth, and Iran was in full compliance with the deal. Internation Atomic Energy Agency (IAEA) was regularly monitoring Iran’s nuclear facilities and confirmed the fullcompliance. All the signatories of JCPOA were also satisfied, except President Trump. Even his administration has not noticed any deviation from Iran, but after having a close presentation from the Israeli prime minister Netanyahu, President scrapped the JCPOA in 2018. The unilateral withdrawal of President Trump from the nuclear deal was widely criticized but was celebrated by Israel. Since then, Iran was under immense pressure from the US as well as Israel.

Highly classified speculations are that the final decision to eliminate Fakhrizadeh was perhaps taken last Sunday 22 November, in a semi-secretive meeting in the Saudi coastal resort of Neom—attended by Mike Pompeo, Benjamin Netanyahu, Yossi Cohen, and Prince MBS.

There are other views that Fakhrizadeh’s assassination is another big conspiracy to destabilize global peace and stability, which might hinder the transition of power to newly elect-president Joe Biden. As a result, President Trump remains in control. Strong possibilities are that the outgoing President Trump will make the most of the power transfer transition period—taking big decisions to please his external partners/friends (Isreal and anti-Iran Arab states). Some say this killing will reduce Iran’s negotiating powers—should Joe Biden/Tony Blinken revive the JCPOA. Some global security pundits comment, this assassination was aimed at infuriating Iran, instigating it to react with military force against Israel, prompting the US and its regional allies (Israel, KSA, UAE, and Bahrain) to declare an all-out direct war on Iran.

It is relatively early to say something precisely, that what happen? How happened? And What will happen next? All are view points, and no authentic opinion is concluded. But one thing is very much clear, the region is a cooked volcano and may burst any moment.

It may destabilize the whole region; the oil-rich region may halt oil supply to the Western world. The Oil prices may shoot up; Industrial growth may be harmed, inflation may hike up, the global economy may suffer adversely.

It is also possible that the Arab and non-Arab Muslim world be divided visibly and further harm the Muslim world. Irrespective of any country or nation, or religion, humankind will suffer at the end of the day. Irrespective of race, religion, ethnicity, we must urge the safety of human lives.

The world community must proactively play a positive role in saving humankind and the loss of precious lives. Bloodshed is not permissible in any religion, society, or law, especially because we claim to be a civilized world and should act as civilized.

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