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.”
Turkey and the time bomb in Syria
The Turkish attack on northern Syria has provided conditions for ISIS militants held in camps in the region to escape and revitalize themselves.
Turkey launched “Operation Peace Spring” on Wednesday October 9, claiming to end the presence of terrorists near its borders in northern Syria. Some countries condemned this illegal action of violation of the Syrian sovereignty.
The military attack has exacerbated the Syrian people’s living condition who live in these areas. On the other hand, it has also allowed ISIS forces to escape and prepare themselves to resume their actions in Syria. Before Turkish incursion into northern Syria, There were many warnings that the incursion would prepare the ground for ISIS resurgence. But ignoring the warning, Turkey launched its military attacks.
Currently, about 11,000 ISIS prisoners are held in Syria. ISIS has claimed the responsibility for two attacks on Qamishli and Hasakah since the beginning of Turkish attacks.
Meanwhile, Donald Trump said that Turkey and the Kurds must stop ISIS prisoners from fleeing. He urged European countries to take back their citizens who have joined ISIS.
It should be noted that the U.S. is trying to prove that ISIS has become stronger since the U.S. troops pulled out before the Turkish invasion, and to show that Syria is not able to manage the situation. But this fact cannot be ignored that ISIS militants’ escape and revival were an important consequence of the Turkish attack.
Turkish troops has approached an important city in the northeast and clashed with Syrian forces. These events provided the chance for hundreds of ISIS members to escape from a camp in Ayn Issa near a U.S.-led coalition base.
The camp is located 35 kilometers on the south of Syria-Turkey border, and about 12,000 ISIS members, including children and women, are settled there. The Kurdish forces are said to be in charge of controlling these prisoners.
Media reports about the ISIS resurgence in Raqqa, the former ISIS stronghold, cannot be ignored, as dozens of terrorists have shot Kurdish police forces in this city. The terrorists aimed to occupy the headquarters of the Kurdish-Syrian security forces in the center of Raqqa. One of the eyewitnesses said the attack was coordinated, organized and carried out by several suicide bombers, but failed.
In response to Turkey’s invasion of Syria, the Kurds have repeatedly warned that the attack will lead to release of ISIS elements in the region. Turkey’s President Recep Tayyib Erdogan denied the reports about the escape of ISIS prisoners and called them “lies”.
European officials fear that ISIS prisoners with European nationality, who have fled camps, will come back to their countries.
Kurdish forces are making any effort to confront Turkish troops in border areas, so their presence and patrol in Raqqa have been reduced.
Interestingly, the Turkish military bombarded one of temporary prisons and caused ISIS prisoners escaping. It seems that ISIS-affiliated covert groups have started their activities to seize the control of Raqqa. These groups are seeking to rebuild their so-called caliphate, as Kurdish and Syrian forces are fighting to counter the invading Turkish troops. Families affiliated with ISIS are held in Al-Hol camp, under the control of Kurdish forces. At the current situation, the camp has turned into a time bomb that could explode at any moment. Under normal circumstances, there have been several conflicts between ISIS families in the camp, but the current situation is far worse than before.
There are more than 3,000 ISIS families in the camp and their women are calling for establishment of the ISIS caliphate. Some of SDF forces have abandoned their positions, and decreased their watch on the camp.
The danger of the return of ISIS elements is so serious, since they are so pleased with the Turkish attack and consider it as an opportunity to regain their power. There are pictures of ISIS wives in a camp in northern Syria, under watch of Kurdish militias, showing how happy they are about the Turkish invasion.
In any case, the Turkish attack, in addition to all the military, political and human consequences, holds Ankara responsible for the escape of ISIS militants and preparing the ground for their resurgence.
Currently, the camps holding ISIS and their families are like time bombs that will explode if they all escape. Covert groups affiliated with the terrorist organization are seeking to revive the ISIS caliphate and take further actions if the Turkish attacks continue. These attacks have created new conflicts in Syria and undermined Kurdish and Syrian power to fight ISIS.
From our partner Tehran Times
The Turkish Gambit
The only certainty in war is its intrinsic uncertainty, something Turkish President Recep Tayyip Erdogan could soon chance upon. One only has to look back on America’s topsy-turvy fortunes in Iraq, Afghanistan and even Syria for confirmation.
The Turkish invasion of northeastern Syria has as its defined objective a buffer zone between the Kurds in Turkey and in Syria. Mr. Erdogan hopes, to populate it with some of the 3 million plus Syrian refugees in Turkey, many of these in limbo in border camps. The refugees are Arab; the Kurds are not.
Kurds speak a language different from Arabic but akin to Persian. After the First World War, when the victors parceled up the Arab areas of the Ottoman Empire, Syria came to be controlled by the French, Iraq by the British, and the Kurdish area was divided into parts in Turkey, Syria and Iraq, not forgetting the borderlands in Iran — a brutal division by a colonial scalpel severing communities, friends and families. About the latter, I have some experience, having lived through the bloody partition of India into two, and now three countries that cost a million lives.
How Mr. Erdogan will persuade the Arab Syrian refugees to live in an enclave, surrounded by hostile Kurds, some ethnically cleansed from the very same place, remains an open question. Will the Turkish army occupy this zone permanently? For, we can imagine what the Kurds will do if the Turkish forces leave.
There is another aspect of modern conflict that has made conquest no longer such a desirable proposition — the guerrilla fighter. Lightly armed and a master of asymmetric warfare, he destabilizes.
Modern weapons provide small bands of men the capacity and capability to down helicopters, cripple tanks, lay IEDs, place car bombs in cities and generally disrupt any orderly functioning of a state, tying down large forces at huge expense with little chance of long term stability. If the US has failed repeatedly in its efforts to bend countries to its will, one has to wonder if Erdogan has thought this one through.
The Israeli invasion of Lebanon in 1982 is another case in point. Forever synonymous with the infamous butchery at Sabra and Shatila by the Phalange militia facilitated by Israeli forces, it is easy to forget a major and important Israeli goal: access to the waters of the Litani River which implied a zone of occupation for the area south of it up to the Israeli border.
Southern Lebanon is predominantly Shia and at the time of the Israeli invasion they were a placid group who were dominated by Christians and Sunni, even Palestinians ejected from Israel but now armed and finding refuge in Lebanon. It was when the Israelis looked like they were going to stay that the Shia awoke. It took a while but soon their guerrillas were harassing Israeli troops and drawing blood. The game was no longer worth the candle and Israel, licking its wounds, began to withdraw ending up eventually behind their own border.
A colossal footnote is the resurgent Shia confidence, the buildup into Hezbollah and new political power. The Hezbollah prepared well for another Israeli invasion to settle old scores and teach them a lesson. So they were ready, and shocked the Israelis in 2006. Now they are feared by Israeli troops.
To return to the present, it is not entirely clear as to what transpired in the telephone call between Erdogan and Trump. Various sources confirm Trump has bluffed Erdogan in the past. It is not unlikely then for Trump to have said this time, “We’re leaving. If you go in, you will have to police the area. Don’t ask us to help you.” Is that subject to misinterpretation? It certainly is a reminder of the inadvertent green light to Saddam Hussein for the invasion of Kuwait when Bush Senior was in office.
For the time being Erdogan is holding fast and Trump has signed an executive order imposing sanctions on Turkish officials and institutions. Three Turkish ministers and the Defense and Energy ministries are included. Trump has also demanded an immediate ceasefire. On the economic front, he has raised tariffs on steel back to 50 percent as it used to be before last May. Trade negotiations on a $100 billion trade deal with Turkey have also been halted forthwith. The order also includes the holding of property of those sanctioned, as well as barring entry to the U.S.
Meanwhile, the misery begins all over again as thousands flee the invasion area carrying what they can. Where are they headed? Anywhere where artillery shells do not rain down and the sound of airplanes does not mean bombs.
Such are the exigencies of war and often its surprising consequences.
Author’s Note: This piece appeared originally on Counterpunch.org
Could Turkish aggression boost peace in Syria?
On October 7, 2019, the U.S. President Donald Trump announced the withdrawal of American troops from northeast Syria, where the contingent alongside Kurdish militias controlled the vast territories. Trump clarified that the decision is connected with the intention of Turkey to attack the Kurdish units, posing a threat to Ankara.
It’s incredible that the Turkish military operation against Kurds – indeed the territorial integrity of Syria has resulted in the escape of the U.S., Great Britain, and France. These states essentially are key destabilizing components of the Syrian crisis.
Could this factor favourably influence the situation in the country? For instance, after the end of the Iraqi war in 2011 when the bulk of the American troops left the country, the positive developments took place in the lives of all Iraqis. According to World Economics organization, after the end of the conflict, Iraq’s GDP grew by 14% in 2012, while during the U.S. hostilities the average GDP growth was about 5,8%.
Syria’s GDP growth should also be predicted. Not right away the withdrawal of U.S., French, British, and other forces, but a little bit later after the end of the Turkish operation that is not a phenomenon. The Turkish-Kurdish conflict has been going on since the collapse of the Ottoman Empire when Kurds started to promote the ideas of self-identity and independence. Apart from numerous human losses, the Turks accomplished nothing. It is unlikely that Ankara would achieve much in Peace Spring operation. The Kurds realize the gravity of the situation and choose to form an alliance with the Syrian government that has undermined the ongoing Turkish offensive.
Under these circumstances, Erdogan could only hope for the creation of a narrow buffer zone on the Syrian-Turkish border. The withdrawal of the Turkish forces from the region is just a matter of time. However, we can safely say that the Turkish expansion unwittingly accelerated the peace settlement of the Syrian crisis, as the vital destabilizing forces left the country. Besides, the transfer of the oil-rich north-eastern regions under the control of Bashar Assad will also contribute to the early resolution of the conflict.
It remains a matter of conjecture what the leaders of Saudi Arabia, the United Arab Emirates, and Russia agreed on during the high-level talks. Let’s hope that not only the Syrians, but also key Gulf states are tired of instability and tension in the region, and it’s a high time to strive for a political solution to the Syrian problem.
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