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Saudi effort to isolate Iran internationally produces results

Dr. James M. Dorsey

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Saudi efforts to isolate Iran internationally are producing results in North Africa and Central Asia. Authorities and religious leaders in Tajikistan and Algeria have in recent weeks accused Iran of subversive activity and propagating Shiism while Morocco last month announced that it was breaking off diplomatic relations with the Islamic republic.

While similar accusations have been lobbed at Iran in the past as part of a four-decade-long covert war between Saudi Arabia and the Islamic republic, the more recent incidents suggest that the Saudis are increasingly focussing on isolating Iran diplomatically.

In doing so they are benefitting from ultra-conservative Sunni Muslim Islam’s appeal in North Africa and Central Asia even if Saudi Arabia is believed to have substantially reduced its financial support for Salafi and other groups.

At times, like in the case of Algeria, a country in which Shiites account for at most two percent of the population and that has seen an increase in popularity of Saudi-inspired Salafi scholars, the allegations seem to involve above board Iranian activities that are unlikely to have the alleged effect of fomenting sectarianism.

The anti-Iranian campaign at times also appears to be designed to pressure countries like Algeria, whose relations with the kingdom are strained because of its refusal to adopt anti-Iranian Saudi policies. Algeria supports the embattled 2015 international nuclear agreement with Iran as well as Iran’s presence in Syria and has refused to declare Hezbollah, the Iranian-backed Lebanese militia, a terrorist organization.

In the most recent incident, Ash-Sharq Al-Awsat, a pan-Arab, Saudi-owned newspaper, quoted, former Algerian Ministry of Religious Affairs and Endowments official Idah Falahi as demanding the withdrawal of Iranian diplomat Amir Mousavi because of his “extensive contacts with civil society groups, through Facebook and social media” and alleged attempts to meddle in the dispute between Morocco and Algeria over the Western Sahara.

Morocco last month broke off diplomatic relations with Iran, alleging that Tehran had provided financial and logistical support as well as surface-to-air missiles to the Algerian-backed West Saharan liberation movement, Frente Polisario, using Hezbollah as an intermediary. Both Iran and Hezbollah have denied the allegation.

“It…became apparent that Mousavi was in fact an Iranian intelligence agent, whose remit was to interfere in the dispute between Algeria and Morocco over the Western Sahara conflict,” said Ash-Sharq Al-Awsat columnist Tony Duheaume.

The newspaper reported that Iran was seeking to recruit Algerian Shiites who travel to the holy city of Karbala in Iraq and was using Iranian companies as vehicles to promote Shiism. “With the launching of a production line for Iranian vehicles, plus another for the production of medicines, and with the two countries boosting their cooperation enormously in the private sector, Iran has ensnared Algeria through an ongoing succession of trade deals,” Mr. Duheaume said.

The newspaper quoted Algerian member of parliament Abdurrahman Saidi as charging that Iran was attempting to create a Shiite movement in North Africa. “The Algerian state is aware today that it faces the risk of sectarianism,” the newspaper asserted.

Algerian minister of endowment and religious affairs Muhammad Issa last year compared Iran to the Islamic State in an interview with a Saudi newspaper amid a growing anti-Iranian sentiment in Algeria.

An international book fair in Algeria banned Iranian books because they “incite sectarianism and violence” after Bou Abdullah Ghulamallah, the head of Algeria’s High Islamic Council, , charged that “thousands of imported books carry dangerous thoughts that are aimed at convincing the Algerian people that their Islamic religion is wrong.”

Iranian President Hassan Rouhani cancelled a visit to Algeria after an Arabic-language hashtag, #No to Rouhani’s visit to Algeria, went viral.

“It is difficult to corroborate allegations made in the Asharq al-Awsat report. It is also unlikely that Tehran would be able to significantly expand its influence in Algeria through the Shiite community,” said Ahmad Majidyar, the director of the Washington-based Middle East Institute’s IranObserved Project.

Its equally difficult to verify a link between Saudi-inspired Salafism’s increased popularity and rising anti-Iranian sentiment, but the development of anti-Shiite sentiment is not dissimilar to growing intolerance, anti-Iranian sentiment and anti-Shiism in countries like Tajikistan, Pakistan, Malaysia and Indonesia where the influence of Saudi-inspired religious ultra-conservatism is expanding.

Developments in Tajikistan, ironically a nation that has linguistic and cultural links to Iran, mirror the growing anti-Iranian sentiment in Algeria. Tajikistan’s Council of Ulema or Islamic scholars, this month accused Iran of trying to destabilize the country. The council charged that Iran was funding Muhiddin Kabiri, head of the opposition Islamic Renaissance Party (IRP), that has been designated a terrorist organization by the government.

The council’s statement came days after anti-Iranian demonstrators in front of the Iranian embassy in Dushanbe demanded the return of Tajik religious students from Iran and accused the Islamic republic of supporting extremists and planning assassinations.

Iran has in recent years suspended charitable operations in the capital Dushanbe, including a hospital managed with Tajik health authorities, and halted its economic and cultural activities in Khujand, Tajikistan’s second largest city, on orders of the government.

“Nowhere is this contrast between the hyped-up Iranian threat and reality more evident than in Tajikistan,” said Eldar Mamedov, who is in charge of the European Parliament’s delegations for inter-parliamentary relations with Iran, Iraq, the Gulf, and North Africa.

Iran helped negotiate an end to Tajikistan’s civil war and an agreement between President Emomali Rahmon, a former Soviet Communist Party official, and the IRP. Mr. Rahmon, determined to demolish any opposition, banned the IRP in 2015.

The stirring of the anti-Iranian pot coincided with a Saudi effort to woo Mr. Rahmon who was invited last year to an Arab-Islamic summit in Riyadh with Donald J. Trump during the US president’s visit to the kingdom despite the fact that he is a bit player on the global stage. Tajikistan was earlier invited to join a Saudi-led Muslim counter terrorism force.

Like in Algeria, it also coincided with rising popularity of Saudi-inspired ultra-conservatism in Tajikistan.

In a move that garners favour in Riyadh, Tajikistan has opposed Iran’s application for membership in the Shanghai Cooperation Organization (SCO) that requires approval of membership by unanimous vote. Iran has observer status with the SCO, while Saudi Arabia has yet to establish a relationship.

By stirring the pot, Mr. Rahmon has a vehicle to maintain his iron grip at home and garner investment and financial support from the kingdom.

Saudi Arabia agreed last month to acquire a 51 percent stake, in troubled Tojiksodirotbank (TSB), Tajikistan’s largest bank. The Saudi investment was a life saver after other investors, including the European Bank for Reconstruction and Development (EBRD), turned the opportunity down.

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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Middle East

Battling for the Future: Arab Protests 2.0

Dr. James M. Dorsey

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Credit: Institute of Security Studies

Momentous developments across Arab North and East Africa suggest the long-drawn-out process of political transition in the region as well as the greater Middle East is still in its infancy.

So does popular discontent in Syria despite eight years of devastating civil war and Egypt notwithstanding a 2013 military coup that rolled back the advances of protests in 2011 that toppled Hosni Mubarak and brought one of the country’s most repressive regimes to power.

What developments across northern Africa and the Middle East demonstrate is that the drivers of the 2011 popular revolts that swept the region and forced the leaders of Egypt, Tunisia, Libya and Yemen to resign not only still exist but constitute black swans that can upset the apple cart at any moment.

The developments also suggest that the regional struggle between forces of change and ancien regimes and militaries backed by the United Arab Emirates and Saudi Arabia is far from decided.

If anything, protesters in Algeria and Sudan have learnt at least one lesson from the failed 2011 results: don’t trust militaries even if they seemingly align themselves with demonstrators and don’t surrender the street until protesters’ demands have been fully met.

Distrust of the military has prompted an increasing number of Sudanese protesters to question whether chanting “the people and the army are one” is still appropriate. Slogans such as “freedom, freedom” and “revolution, revolution” alongside calls on the military to protect the protesters have become more frequent.

The protests in Algeria and Sudan have entered a critical phase in which protesters and militaries worried that they could be held accountable for decades of economic mismanagement, corruption and repression are tapping in the dark.

With protesters emboldened by their initial successes in forcing leaders to resign, both the demonstrators and the militaries, including officers with close ties to Saudi Arabia and the UAE, are internally divided about how to proceed.

Moreover, neither side has any real experience in managing the crossroads at which they find themselves while it is dawning on the militaries that their tired playbooks are not producing results.

In a telling sign, Sudan’s interim leader Abdel Fattah Abdelrahman Burhan praised his country’s “special relationship” with Saudi Arabia and the UAE as he met this week with a Saudi-Emirati delegation at the military compound in Khartoum, a focal point of the protests.

Saudi Arabia has expressed support for the protests in what many suspect is part of an effort to ensure that Sudan does not become a symbol of the power of popular sovereignty and its ability to defeat autocracy.

The ultimate outcome of the dramatic developments in Algeria and Sudan and how the parties manoeuvre is likely to have far-reaching consequences in a region pockmarked by powder kegs ready to explode.

Mounting anger as fuel shortages caused by Western sanctions against Syria and Iran bring life to a halt in major Syrian cities have sparked rare and widespread public criticism of president Bashar al-Assad’s government.

The anger is fuelled by reports that government officials cut in line at petrol stations to fill up their tanks and buy rationed cooking gas and take more than is allowed.

Syria is Here, an anonymous Facebook page that reports on economics in government-controlled areas took officials to task after state-run television showed oil minister Suleiman al-Abbas touring petrol stations that showed no signs of shortage.

Is it so difficult to be transparent and forward? Would that undermine anyone’s prestige? We are a country facing sanctions and boycotted. The public knows and is aware,” the Facebook page charged.

The manager of Hashtag Syria, another Facebook page, was arrested when the site demanded that the oil ministry respond to reports of anticipated price hikes with comments rather than threats. The site charged that the ministry was punishing the manager “instead of dealing with the real problem.”

Said Syrian journalist Danny Makki: “It (Syria) is a pressure cooker.”

Similarly, authorities in Egypt, despite blocking its website, have been unable to stop an online petition against proposed constitutional amendments that could extend the rule of President Abdel Fattah el-Sisi until 2034 from attracting more than 320,000 signatures as of this writing.

The petition, entitled Batel or Void, is, according to Netblocks, a group that maps web freedom, one of an estimated 34,000 websites blocked by Egyptian internet service providers in a bid to stymie opposition to the amendments.

Mr. El-Sisi is a reminder of how far Arab militaries and their Gulf backers are potentially willing to go in defense of their vested interests and willingness to oppose popular sovereignty.

Libyan renegade Field Marshall Khalifa Belqasim Haftar is another, Mr. Haftar’s Libyan National Army (LNA) is attacking the capital Tripoli, the seat of the United Nations recognized Libyan government that he and his Emirati, Saudi, and Egyptian backers accuse of being dominated by Islamist terrorists.

The three Arab states’ military and financial support of Mr. Haftar is but the tip of the iceberg. Mr. Haftar has modelled his control of much of Libya on Mr. El-Sisi’s example of a military that not only dominates politics but also the economy.

As a result, the LNA is engaged in businesses ranging from waste management, metal scrap and waste export, and agricultural mega projects to the registration of migrant labour workers and control of ports, airports and other infrastructure. The LNA is also eyeing a role in the reconstruction of Benghazi and other war-devastated or underdeveloped regions.

What for now makes 2019 different from 2011 is that both sides of the divide realize that success depends on commitment to be in it for the long haul. Protesters, moreover, understand that trust in military assertions of support for the people can be self-defeating. They further grasp that they are up against a regional counterrevolution that has no scruples.

All of that gives today’s protesters a leg up on their 2011 counterparts. The jury is out on whether that will prove sufficient to succeed where protesters eight years ago failed.

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As Marsha Lazareva languishes in jail, foreign businesses will “think twice” before investing in Kuwait

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IF THERE IS one thing to glean from the case of Marsha Lazareva, it’s that foreign businesses must now think very carefully before investing in Kuwait.

For more than a year, Lazareva, who has a five-year-old son and is one of Russia’s most successful female investors in the Gulf, has been held in the Soulabaiya prison by Kuwaiti authorities. Those authorities claim she ‘stole’ half a billion dollars, a claim she strenuously denies.

Human rights groups and prominent officials, including the former FBI director, Louis Freeh, and Jim Nicholson, former Chairman of the Republican Party and former US Ambassador to the Vatican, have called for her release and expressed concerns about the apparent absence of due process in a country where Lazareva has worked for over 13 years. Both Freeh and Nicholson visited Kuwait in recent weeks with Neil Bush, son of the late President George H. W. Bush. Bush has said Lazareva’s incarceration ‘threatens to darken relations between the U.S. and Kuwait, two countries that have enjoyed a long and prosperous relationship.

Russian officials have been equally concerned. Vladimir Platonov, the President of the Moscow Chamber of Commerce and Industry, confirmed that a single witness gave testimony in Kuwaiti court, and only for the prosecution. ‘I myself worked in prosecution for more than eight years, and I cannot imagine any judge signing off on an indictment like this,’ he said. ‘One fact of particular note is that Maria was given 1,800 pages of untranslated documents in Arabic.’

Serious questions surrounding the safety and future viability of investing in Kuwait are now being raised. Through The Port Fund, a private investment company managed by KGL Investment, Lazareva has contributed hundreds of millions of dollars to local infrastructure and economic development projects during her time in the country. Until 2017, when a Dubai bank froze $496 million without cause, she had worked largely unobstructed.

But as things stand, more foreign investment is unlikely to be forthcoming. Jim Nicholson has said that the ‘imprisonment and harassment’ of Lazareva ‘threatens’ U.S. support. adding that the ‘willingness of the U.S. to do business with Kuwait’ is based on ‘its record as a nation that respects human rights and the rule of law’. Mark Williams, the investment director of The Port Fund and a colleague of Lazareva’s, has called on international investors to ‘think twice before doing business in this country’. 

These comments will surely concern the Kuwaiti government, who said last year that FDI was ‘very crucial’ to the success of its Kuwait Vision 2035 road map. In September 2018, the FTreported that the government planned to reverse its traditional position as an investor in order to diversify its economy, carrying out a series of reforms designed to facilitate foreign investment and assist investors.

But despite these changes, which have propelled Kuwait to 96th—higher than the Middle East average—in the World Bank’s ‘Ease of Doing Business’ report, investors may be unwilling to take the risk so long as Lazareva remains in jail. Lazareva’s lawyers have accused Kuwait of violating international law by breaching a long-standing bilateral investment treaty with Russia. Lord Carlile of Berriew, QC has brought the case to the attention of the British public and the EU, writing in The Times that ‘there is no evidential basis to justify any claim of dishonesty, corruption or any other criminal wrong’. He added: ’Anyone thinking of doing business in Kuwait should read on with mounting concern.’

What’s worth remembering is that Kuwait is an important, long-standing ally of the UK, and a country generally seen as stable and fair. It is equally a major non-NATO ally of the United States, where there are more than 5,000 international students of Kuwaiti origin in higher education. But these relationships, and the investment to which they have historically led, have been cast into doubt. And it now seems certain that relations will continue to sour so long as Marsha Lazareva languishes in Soulabaiya.

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Middle East

Economic reform in the Gulf: Who benefits, really?

Dr. James M. Dorsey

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For Gulf leaders, long-overdue economic reforms were never going to be easy.

Leaders like the crown princes of Saudi Arabia and the United Arab Emirates, Mohammed bin Salman and Mohammed bin Zayed, quickly discovered that copying China’s model of economic growth while tightening political control was easier said than done. They realised that rewriting social contracts funded by oil wealth was more difficult because Gulf Arabs had far more to lose than the average Chinese. The Gulf states’ social contracts had worked in ways China’s welfare programmes had not. The Gulf’s rentier state’s bargain—surrender of political and social rights for cradle-to-grave welfare—had produced a win-win situation for the longest time.

Moreover, Gulf leaders, struggling with mounting criticism of the Saudi-UAE-led war in Yemen and the fall-out of the killing of journalist Jamal Khashoggi, also lacked the political and economic clout that allowed China to largely silence or marginalise critics of its crackdown on Turkic Muslims in the troubled northwestern province of Xinjiang.

The absence of a welfare-based social contract in China allowed the government to power economic growth, lift millions out of poverty, and provide public goods without forcing ordinary citizens to suffer pain. As a result, China was able to push through with economic reforms without having to worry that reduced welfare benefits would spark a public backlash and potentially threaten the regime.

Three years into Mohammed bin Salman’s Vision 2030 blueprint for diversification of the economy, Saudi businesses and consumers complain that they are feeling the pinch of utility price hikes and a recently introduced five per cent value-added tax with little confidence that the government will stay the course to ensure promised long-term benefit.

The government’s commitment to cutting costs has been further called into question by annual handouts worth billions of dollars since the announcement of the reforms and rewriting of the social contract to cushion the impact of rising costs and quash criticism.

In contrast to China, investment in the Gulf, whether it is domestic or foreign, comes from financial, technology and other services sector, the arms industry or governments. It is focused on services, infrastructure or enhancing the state’s capacities rather than on manufacturing, industrial development and the nurturing of private sector.

With the exception of national oil companies, some state-run airlines and petrochemical companies, the bulk of Gulf investment is portfolios managed by sovereign wealth funds, trophies or investment designed to enhance a country’s prestige and soft power.

By contrast, Asian economies such as China and India have used investment fight poverty, foster a substantial middle class, and create an industrial base. To be sure, with small populations, Gulf states are more likely to ensure sustainability in services and oil and gas derivatives rather than in manufacturing and industry.

China’s $1 trillion Belt and Road initiative may be the Asian exception that would come closest to some of the Gulf’s soft-power investments. Yet, the BRI, designed to alleviate domestic overcapacity by state-owned firms that are not beholden to shareholders’ short-term demands and/or geo-political gain, contributes to China’s domestic growth.

Asian nations have been able to manage investors’ expectations in an environment of relative political stability. By contrast, Saudi Arabia damaged confidence in its ability to diversify its oil-based economy when after repeated delays it suspended plans to list five per cent of its national oil company, Saudi Arabian Oil Company, or Aramco, in what would have been the world’s largest initial public offering.

To be sure, China is no less autocratic than the Gulf states, while Hindu nationalism in India fits a global trend towards civilisationalism, populism and illiberal democracy. What differentiates much of Asia from the Gulf and accounts for its economic success are policies that ensure a relatively stable environment. These policies are focused on social and economic enhancement rather than primarily on regime survival. That may be Asia’s lesson for Gulf rulers.

Author’s note: first published in Firstpost

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