Category: West Asia and the Middle East

  • Small States, Sovereign Wealth Funds and Subtle Power: A study of Qatar  and the United Arab Emirates

    Small States, Sovereign Wealth Funds and Subtle Power: A study of Qatar and the United Arab Emirates

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    Abstract

    This paper argues that Sovereign Wealth Funds can be an important foreign policy tool for small states. The author analyzes select investments of the Sovereign Wealth Funds of Qatar, Abu Dhabi and Dubai in the theoretical framework of subtle power. Subtle power is a means of exerting influence behind the scenes. This paper categorically analyzes sovereign wealth fund investments to understand how they contribute to the three sources of subtle power; physical and military protection, branding efforts, and diplomacy. The author does not dispute that these Sovereign Wealth Funds have financial motives, but adds nuance to the literature by arguing that they also hold political motivations. The paper finds that the structural difference in the governance model of Qatar and the UAE has resulted in a variation in the foreign policy roles of their Sovereign Wealth Funds. In the UAE’s case, Abu Dhabi’s Sovereign Wealth Fund takes the lead in matters related to physical security and diplomacy, whereas Dubai’s Sovereign Wealth Fund focuses on national branding efforts. Meanwhile, for Qatar, QIA acts as the primary instrument exuding subtle power across all three categories.

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  • Houthi attack on Abu Dhabi: Yemen civil war and Regional Complexities

    Houthi attack on Abu Dhabi: Yemen civil war and Regional Complexities

    On 17th January, the Houthis conducted their first attack on Emirati soil in years. Carried out in the heart of the country– Abu Dhabi –with the help of a UAV, the attack killed three foreign nationals working in the city– two Indians and one Pakistani. In the aftermath of the attack, the Arab Coalition intensified the air bombings of key strongholds of the Houthis, leading to an increase in civilian casualties in a proxy war that has already caused several thousand civilians their lives. The attack has also underlined the capabilities of the Islamist political outfit in striking a distant country, and not just its northern neighbour. The attack has also rendered the UAE as a country susceptible to attacks from hostile groups in the region.

    Costs of UAE’s intervention strategy

    Importantly, the attack has led to a scrutiny of UAE’s policy vis-à-vis the hapless South Arabian country. Not long ago, in February 2020, the Emirati leadership, in an official ceremony addressing the recent returnee personnel deployed in Yemen, added an achievement to its touted ‘Peace First’ strategy in the country[1]. The gulf country had begun its troop withdrawal from the war-torn country in July of 2019[2]. This move, though remarkable, was hardly surprising by a country that was stopped in its tracks after finding itself as a part of the Arab Coalition[3] back in 2015. But the withdrawal of troops from Yemeni soil didn’t mean a dilution of its involvement in the Civil War. The move by the Emirates was seen as merely a shift from direct involvement to an indirect one.[4] The leadership of the country had utilized its presence in Yemen to cultivate and build a network of belligerents of the Civil War, such as the Sothern Transitional Council (STC), Security Belt Forces and the Shabwani and Hadrami Elite forces to name a few.[5] A withdrawn and non-aggressive UAE depends heavily both upon and sponsors such groups to keep its influence in the country afloat. It had reportedly trained some 90,000 South Yemenis during its stint in the country.[6] These militias have fought, in the past, against the Houthis, Al-Qaeda in Arabian Peninsula (AQAP), Islah and the ISIS. In December last year, one such group, the Giants Brigades, attacked Houthis, eventually defeating them in the Shabwah province. The Houthi attack in January is seen as a retaliation for this precise attack.

    In December last year, one such group, the Giants Brigades, attacked Houthis, eventually defeating them in the Shabwah province. The Houthi attack in January is seen as a retaliation for this precise attack.

    Another key takeaway from the attack on 17th January is associated with the Saudi Arabia-UAE partnership. The Emirates, which contributed the second-largest troops to the Arab Coalition, had virtually abandoned Saudi Arabia in its effort to bring the Hadi government back to Sana’a. Since 2016 up to the troops’ pull-out, the country had focused mainly on counter-terrorism operations, primarily targeting Islah.[7] The two partners were pitted against each other when, in 2019, the Emirati-backed STC pushed itself into the provinces of Shabwa and Abyan held by the Saudi-backed government. Now, with the Houthis becoming a potent threat to the security of the UAE, the stress between the two governments is set to cool down. The attack has made UAE substantially, if not equally vulnerable, when compared with Saudis, to Houthis’ aggression. But it is not likely that the country will put an end to its troop withdrawal strategy. Its focus is likely to be on strengthening its security apparatus, something already visible in French, American and Israeli assistance.

    Attacks boost UAE-Israel Strategic Partnership

    The Houthis conducted another failed attack on Abu Dhabi in late January during Israeli President Herzog’s visit. The day was chosen to deliver a message to both Abu Dhabi and Jerusalem. This, and other numerous attempts by the Iran-backed Zaidi Shia militia to attack the Emirates, is set to further firm up the already burgeoning ties between the two. Immediately after the January 17th attack, Prime Minister Naftali Bennett offered Israeli ‘security and intelligence support’ to the victim state[8]. He committed to partner with the UAE to defeat ‘common enemies’. Right after the signing of the Abraham Accords, both the countries embarked upon strengthening security-related ties[9], leading to the signing of a strategic agreement to develop unmanned military and commercial vessels in November last year. Both the countries have been susceptible to attacks by Iran’s proxies. It is Israel’s North-eastern neighbour Syria that has posed a threat to its security. Now, Houthis’ reach to the Emirati soil renders Israel vulnerable to similar attacks, with speculations already in works in Israel.[10] Additionally, Houthis’ ties with Lebanese Hezbollah could aggravate the situation further. Israeli-Emirati partnership seems to be the greatest benefactor of the attack.

    the UAE has been applauded for pursuing a balanced approach between Saudi Arabia and the US on one hand and Iran and its allies on the other[13]. But with the continuous attack on Abu Dhabi by Iranian proxies, the relations between the UAE and Iran are set to face road blocks

    Just as Emirates was coping with the deadly attack from Yemen, another Iraq-based armed group conducted a drone strike on Abu Dhabi. Known by the name Awliyat al-Waad al-Haq, or the True Promise Brigades, the Shia Islamist group is widely believed to have close ties with both Tehran and Iraq’s Kataib Hezbollah. Though the Iranians have not publicly supported the attacks, they haven’t condemned them either. Moreover, the attacks on Abu Dhabi came just months after Emirati National Security Advisor Sheikh Tahnoun bin Zayed Al Nahyan visited Tehran where he touted his visit as a ‘turning point’ for the two countries[11] and visit of Iranian Deputy Foreign Minister Ali Bagheri Kani to Abu Dhabi, declaring that the two countries had agreed to open ‘a new chapter’ in their bilateral relations[12]. Also, the UAE has been applauded for pursuing a balanced approach between Saudi Arabia and the US on one hand and Iran and its allies on the other[13]. But with the continuous attack on Abu Dhabi by Iranian proxies, the relations between the UAE and Iran are set to face road blocks.

    Yemen’s Humanitarian Crisis

    Last year, in one of his first decisions regarding West Asia, President Biden revoked the Trump administration decision to recognize Houthis as a foreign terrorist group. After the recent attacks on Abu Dhabi and the al-Dhafra airbase, the Biden administration has been forced to reconsider its previous decision[14]. The US has, in response to the attacks, stepped up its naval deployment in the Gulf region, along with enhancing cooperation in intelligence and air defence with the Emirates. It also helped stave off other Houthi missile attacks on Abu Dhabi through US Patriot interceptors. The attacks also come at a crucial time when the talks between P5+1 and Iran regarding the Iran Nuclear Deal underway in Vienna. With eight rounds that have passed without any breakthrough, it remains to be seen how Houthi aggression impacts the JCPOA.

    The Civil War in Yemen is in its eighth year, with no signs of the end in near future. The casualties have reached as high as 377,000. It has resulted in a humanitarian crisis, pushing millions to the brink. According to a UNDP report, the war may cause more than 1.3 million casualties by 2030. Hence, we need to ask, has the international community failed to protect the Yemeni people?

    Notes

    [1] Jalal, I (2020, February 25), ‘The UAE may have withdrawn from Yemen, but it’s influence remains strong’ Middle East Institute https://www.mei.edu/publications/uae-may-have-withdrawn-yemen-its-influence-remains-strong

    [2] Ibid

    [3] Salisbury, P. (2020, July 1), ‘Risk perception and appetite in UAE Foreign and national security policy’ Chatham House https://www.chathamhouse.org/2020/07/risk-perception-and-appetite-uae-foreign-and-national-security-policy-0/8-case-study-uae

    [4] Jalal, I (2020, February 25), ‘The UAE may have withdrawn from even, but it’s influence remains strong’ Middle East Institute https://www.mei.edu/publications/uae-may-have-withdrawn-yemen-its-influence-remains-strong

    [5] Ibid

    [6] Ibid

    [7] Salisbury, P. (2020, July 1), ‘Risk perception and appetite in UAE Foreign and national security policy’ Chatham House https://www.chathamhouse.org/2020/07/risk-perception-and-appetite-uae-foreign-and-national-security-policy-0/8-case-study-uae

    [8] TOI staff, (2022, January 18),’Bennett offers UAE security and intelligence support after attack by Houthis’ Times of Israelhttps://www.timesofisrael.com/bennett-offers-uae-security-and-intelligence-support-after-attack-by-houthis/

    [9] Ulrichsen, K.C. (2021, August 6), ‘Restoring balance to UAE-Iran relations’ Doha Institute https://www.dohainstitute.org/en/PoliticalStudies/Pages/Restoring-Balance-to-UAE-Iran-Relations.aspx

    [10] Melman, Y. (2022, January 21),’After Abu Dhabi, is Israel’s Red Sea port of Eilat next target for Houthi drone strike’ Haaretz https://www.haaretz.com/israel-news/israel-red-sea-eilat-target-houthi-iran-drone-strike-abu-dhabi-1.10553018

    [11] Hafezi, H. (2021, December 6), ‘UAE security official pays rare visit to Iran to discuss ties, regional issues’ Reuters https://www.reuters.com/article/us-iran-emirates-idAFKBN2IL0ME

    [12] Ulrichsen, K.C. (2021, August 6), ‘Restoring balance to UAE-Iran relations’ Doha Institutehttps://www.dohainstitute.org/en/PoliticalStudies/Pages/Restoring-Balance-to-UAE-Iran-Relations.aspx

    [13] Ibid

    [14]  Landay, J (2022, January 20). ‘Biden says administration mulling re-designating Yemen’s Houthis a terrorist group’, Reuters https://www.reuters.com/world/middle-east/us-yemen-envoy-lenderking-visit-gulf-london-state-department-2022-01-19/

    Feature Image Credit: www.mirror.co.uk

    Image Credit: itv Times News

  • UAE’s industrialization drive and the potential for Sovereign Wealth Funds to unlock value

    UAE’s industrialization drive and the potential for Sovereign Wealth Funds to unlock value

    The United Arab Emirates has renewed its commitment to the fourth industrial revolution recently with an ambitious target of increasing the industrial sector’s contribution from AED133 billion to AED300 billion (US$ 81.7 billion) by 2031. The main objectives of this ten-year strategy are to leapfrog towards knowledge-intensive industries, apply technology-intensive solutions to retrofit current industries, and push manufacturing in industries like aerospace, pharmaceuticals, medical equipment, etc. However, these objectives are not novel. While the early development plans of the emirates’ primarily focused on diversifying the economy from hydrocarbon revenues, the ultimate objective was to expand towards knowledge-intensive industries. In line with this, economic development plans as early as 1991 record the rulers’ interests in building a manufacturing-oriented economy, but the success is yet to materialize. Even in the case of the most diversified emirate – Dubai, the main drivers of the economy as of 2020 were entrepot activities like trade (26.5%), transportation and storage (12.5%), and financial services (9.7%), while manufacturing contributed to 8.8%. These statistics can be further appreciated by recollecting that from the early 1990s, development plans for Dubai were made under the assumption that the annual real growth rate in its manufacturing sector would meet 7%.[1]  As of 2020, the growth rate in manufacturing is only 0.3%. While manufacturing-oriented industrialization was to play a key role in the economy, there have been considerable challenges in realizing it. This article first briefly recalls the historical development efforts of the emirate, then discusses reasons which could have hindered the country’s trajectory towards knowledge-intensive manufacturing, and highlights a potential development instrument the country can utilize to realize its objectives in the present day.

    Federal Structure and overcoming the Inequalities

    Being a federation every emirate was offered autonomy which retained the control of resources of the respective emirates’ within respective ruling families. This resulted in vast inequalities amidst emirates with Abu Dhabi and Dubai becoming relatively well off compared to others. The remaining emirates were dependent on the budget provisions from oil-rich Abu Dhabi to maintain the social contract over their respective emirates. This internal dynamic resulted in different approaches being taken for economic development in the country. To briefly summarize some of them – Dubai invested in infrastructure to improve its entrepot facilities and industrialize in sectors associated with hydrocarbon resources, Abu Dhabi began focusing on renewable energy and clean technology from the early 2000s,  Ras al-Khaimah benefitted from its low-cost production environment (up to 25-50% lower than in other emirates) to become the country’s manufacturing base, and Fujairah developed a storage and bunkering expertise due to its geographical location beyond the chokepoint of the Strait of Hormuz.[2] The developmental push from the emirates created a boom mainly in industries associated with hydro-carbon, real-estate, logistics, and finance. Although official data on sector-wise contribution to GDP remain unpublished, World Bank data confirms that as of 2019 about 16% of the UAE’s GDP is accredited to hydrocarbon sources. It also confirms that as of 2019, manufacturing value-added as a percentage of GDP stood at 8.7%.

    In the context of UAE, the viability of proceeding with labour-intensive industries as a starting point was low as the country has a small Emirati population. Second, while most late developing countries have resorted to wage suppression to make production costs competitive, the UAE is restricted from doing so owing to the social contract it shares with its citizens

    Despite the autonomy every emirate has enjoyed, the overarching approach the country has used for economic development is to invite foreign firms to the country by providing business-friendly infrastructure and environment.[3]For the emirate of Dubai, which was most successful in diversification, Singapore’s development model was an inspiration for implementing policies promoting business-friendly infrastructure and environment.[4] Among potential factors that explain the challenge in the uptake of knowledge-intensive manufacturing in the UAE, this article focuses on two – First, the inherent characteristic of firm relocation, and second, the existence of a twin labour market in the country with high wage levels. Helleiner argued that it is easier to scale to knowledge-intensive industries when labour-intensive production processes exist locally, this way, production activities can upgrade vertically. The logic was that direct relocation of knowledge-intensive functions of industries would imply high costs to the firm. His thesis was based on the development of the Asian tigers whose development process benefitted from the vertical up-gradation of industrial activity. In the context of UAE, the viability of proceeding with labour-intensive industries as a starting point was low as the country has a small Emirati population. Second, while most late developing countries have resorted to wage suppression to make production costs competitive, the UAE is restricted from doing so owing to the social contract it shares with its citizens. UAE nationals are instead offered much better employment packages in the public sector which deters their participation in the private sector.[5] As a result, the private sector across all skill levels is significantly dependent on expatriate labour. In addition to this, foreign talents are paid twice as much as their home countries across all skill levels. Tong and Al Awad demonstrate that this is true not only for low-skilled and semi-skilled jobs but also for high-skilled jobs by comparing the average wages of high-skilled expatriates from the US and the UK. They compare their wage levels at home and in Dubai, control for purchasing power parities, and find that the salaries are twice as that in their home countries. Competition for knowledge-intensive industries has predominantly arisen from the global North and as income levels in the UAE are twice as much as that in developed countries, there is an inherent risk on the price competitiveness of products on a global scale.

    Development model, SWF, and Top-down Approach

    A difference in the UAE’s late development model relative to others in the category is that while the latter was challenged in capital accumulation, it was easily accrued for the UAE. The difficulty for the UAE lies in using accumulated capital to break the dependency. Thus, the way forward for the UAE lies in a radical rethinking of its development model. Where vertical integration by first relocating labour-intensive industries demonstrates a bottom-up approach to development, the UAE is better positioned to approach development in a top-down model of vertical integration having accumulated capital. Although public sector investment and involvement in the economy is high, there exists scope to increase the synergies between industry-leading companies and local producers through the public sector. In this case, a policy instrument with the potential to push economic development is the state’s Sovereign Wealth Funds (SWFs).

    The channelling of SWFs as a development policy instrument provides an opportunity for greater collaboration between international industry leaders and local businesses. Investing in the economic diversification of the country has been an important objective for the state’s SWFs. Some noticeable instances where the SWFs have built linkages between international companies and local businesses have been in the aerospace sector.[6] For instance, Mubadala entered into strategic partnerships with Airbus and Boeing in 2008 and 2009 respectively and launched Strata Manufacturing as a wholly-owned subsidiary of Mubadala in 2009. Soon after Strata Manufacturing was launched, the company concluded agreements with both Airbus and Boeing to manufacture aircraft parts at its aerostructures manufacturing facility in Al-Ain. This further continued when Strata Manufacturing received a ten-year contract from Boeing for the manufacture of Boeing 777’s empennage ribs and vertical fin rib for Boeing’s 787 Dreamliner. This development model is novel because it demonstrates how embedded autonomy, a key feature in the East Asian development model, can be replicated while collaborating with established international companies for economic development at home. Sovereign Wealth Funds as an institutional investor demonstrate how the state can be at the forefront of national development efforts from a transnational level.

    This top-down model of economic development through SWFs is a novel use of the investment vehicle as a policy instrument. It allows the state to direct development from a transnational level, which is an important operational condition for developmental states in an era of globalization

    An important lesson from late developers in East Asia and Southeast Asia is that state-directed capitalism is important for economic development. This top-down model of economic development through SWFs is a novel use of the investment vehicle as a policy instrument. It allows the state to direct development from a transnational level, which is an important operational condition for developmental states in an era of globalization. Although the UAE has demonstrated the use of this instrument in some cases, there is great potential to further drive economic development towards the fourth industrial revolution through SWFs. There will likely be more linkages built between local businesses and international companies through SWFs as the UAE moves forward to a knowledge-intensive economy. As the article highlighted above, there will be challenges moving forward in ensuring price competitiveness at a global level when operating in a labour market with price distortions. To this end, the challenge remains in finding innovative financing mechanisms by state investors in the short run and for policymakers to introduce suitable policies for correcting the price distortions in the long run. This ongoing effort in the UAE requires a closer examination from researchers, development practitioners, and policymakers as it is a unique development model and has the potential to deliver promising developmental lessons.

     

    Notes

    [1] Euromoney; London”, Periodical, (1997), World Economic Analysis, United Arab Emirates Document no.:198889294, ProQuest One Business.

    [2] Ulrichsen, Kristian Coates, The United Arab Emirates: Power, Politics And Policy-Making, p.87-129, Routledge, 2017.

    [3] Davidson, Christopher. The United Arab Emirates: A Study In Survival. 1st ed. Lynne Rienner Publishers, 2005.

    [4] Sampler, Jeffrey, and Saeb Eigner. Sand To Silicon. Dubai, UAE: Motivate Publ., 2008.

     

    [5] Davidson, Christopher. The United Arab Emirates: A Study In Survival. 1st ed. Lynne Rienner Publishers, 2005.

     

    [6] Ulrichsen, Kristian Coates, The United Arab Emirates: Power, Politics And Policy-Making, p.103-108, Routledge, 2017.

     

    Feature Image Credit: Asharq AL-awsat

  • Lessons from Gaza

    Lessons from Gaza

    The latest round of fighting between Israel and Palestinians within Israel and the Gaza Strip ended on Friday 21 May under an Egypt brokered ceasefire. Already categorised in the media as the Fourth Gaza War[1], the 11-day conflict left 232 Palestinians including 65 children killed and more than 1,900 wounded in aerial bombardments[2]. Israeli authorities put their death toll as 12, with hundreds injured due to rocket attacks while claiming to have killed at least 160 combatants[3]. One Indian civilian caregiver too lost her life in the line of duty.

    Patrick Kingsley’s piece in the New York Times provides a view of a series of events from early April that led to the current conflict[4]. Several avoidable actions in Jerusalem, such as cutting off loudspeakers at the Al Aqsa mosque on the first day of Ramadan to prevent Jerusalem Day celebrations at the Western Wall from being disturbed, closing off a popular plaza at the Damascus Gate where the faithful gather after prayers leading to nightly protests, and orders for the evacuation of Palestinian families from their homes as per existing law (an act seen by Palestinians as a precursor to their removal from East Jerusalem, the proposed capital of an independent Palestine) followed by clashes between Jews and Arabs –  together provided multiple triggers for the violence, aggravated further by Jewish right-wing groups marching through Jerusalem shouting provocative slogans.

    As the demonstrations gathered momentum with more Palestinians rallying in support of the families facing eviction, the order was stayed by Israel’s Supreme Court. The cancellation of elections to the Palestinian National Authority (PNA) by President Mahmoud Abbas added another element of uncertainty to the situation, fuelled by suspicion over his intent. The final straw was another police raid on the Al Aqsa Mosque on the last Friday of Ramadan and sealing off access to the mosque the next day. Sensing a cue, Hamas commenced rocket fire the following Monday from Gaza.

    International Crisis Group opines that ‘this occasion is the first since the September 2000 intifada when Palestinians have responded simultaneously and on such a massive scale throughout much of the combined territory of Israel-Palestine to the cumulative impact of military occupation, repression, dispossession and systemic discrimination[5]. It further goes on to explain how the dynamic of this conflict differs from earlier ones. Central to this is the role of Hamas – in terms of military capability through an expanded long-range rocket arsenal which has exponentially enhanced its ability to terrorize Israel’s civilian population, as also its political ambitions in trying to negotiate the future of Jerusalem as leverage for subsequent resolution of the Palestinian issue, instead of confining itself to Gaza. Tellingly, it also named its rocket offensive ‘Sword of Jerusalem’.

    The second noteworthy issue is about clashes in cities and townships across Israel and the West Bank, between Israeli Jews, Israeli Arabs and Palestinians leading to loss of life and property, something that had never happened since the Second Intifada. A state of emergency was declared in certain areas[6], and Israeli President Reuven Rivlin was constrained to warn of the danger of civil war[7]. Thirdly, as per United Nations Interim Force in Lebanon (UNIFIL) press releases of 17 and 19 May, rockets were fired on both days from South Lebanon across the Blue Line into Israel. Israeli artillery shelled the launch sites in retaliation. Also, Iranian complicity with Hamas was indicated when Israel downed an armed explosive drone, assessed to have been launched from either Syria or Iraq[8]. This raised the spectre of a wider conflict – the deepest fear of a nation-state surrounded by inimical neighbours, some of whom along with other non-state terrorist organisations refuse to recognize its right to exist.

    Strategic and military aspects of this short conflict along with outcomes warrant analysis to provide a glimpse of the way ahead. Though President Biden announced that Israel had agreed to a mutual unconditional ceasefire, it is unclear what Hamas’s final stand on the matter was. More so, since it had set two conditions for a ceasefire: that Israeli forces stop incursions into the Al-Aqsa compound, and desist from evacuating Palestinian residents from East Jerusalem. No guarantees appear to have been received on these.

    It appears, therefore, that since Hamas’s strategic aim of positioning itself as the champion of Palestinians through offensive action has been achieved, it could claim victory despite the high human, material and infrastructural cost. Israel has also claimed victory, by ensuring maintenance of the status quo along its borders and ensuring the security of its citizens at minimal cost, though with a perceptible fraying of its internal fabric. However prominent Israelis have criticized their government for lacking strategy and acting in ‘default mode’ in responding to Hamas in the same manner for the last 15 years[9].

    Essentially, this was a conflict characterized by tremendous force asymmetry between opposing sides.

    It is in the military domain that some interesting conclusions are drawn. This conflict did not witness any hand to hand fighting or launch of physical assaults, though Israel did use tanks and artillery against Hamas targets. Essentially, this was a conflict characterized by tremendous force asymmetry between opposing sides. The main weapon that Hamas used was unguided rockets of various ranges and dimensions.  While in earlier days these were received from Iran or other allies across the Egyptian border at Sinai or smuggled in through sea, Hamas has developed sufficient expertise to develop its systems, using primitive technology and materials such as steel tubing and chemicals for making explosives. Israeli estimates suggested that ‘most of Hamas’s arsenal of 5,000 to 6,000 rockets can strike somewhere between the Gaza border communities and 40-55 km. away.’[10] Other estimates posit that Hamas now has rockets with ranges of 200 km or more, some with warheads carrying hundreds of kilograms of TNT and shrapnel. Raw construction material even uses detritus from Israeli missiles, with three rocket manufacturing factories rumoured to be existing inside Gaza[11]. Overall, Hamas fired around 4,360 rockets during the 11-day campaign, including a sizeable number that fell short, inside the Gaza Strip itself[12]. The long-range versions permitted engagement of targets from just outside the Strip to as far North as Jerusalem.

    Hamas Qassam rocket ready for launch.    Photo and description: Forbes May 12, 2021

     

    Iron Dome carrying out intercepts – Image Credit: Businessinsider

    The Israeli response on the other hand was a combination of air power and ground-based air defence with the firepower of tanks and artillery – all state-of-the-art weapon systems with latest generation cutting edge technology, including Israeli variant F 16s, F 15 Air Defence aircraft and F 35 Stealth fighters. Videos of Israeli strikes are testimony to their effectiveness. Israel too gave its campaign a symbolic name ‘Guardian of the Walls’. The Iron Dome Missile Defence System proved its worth with engineers continuously upgrading its algorithms to improve interception capability against larger rocket salvos. This has enabled Iron Dome to intercept one of the largest barrages fired ever – of around 130 rockets towards Tel Aviv on 11 May. Despite attempts to saturate the system, Iron Dome was able to neutralize the majority, permitting only a handful to get through[13]. However, limitations of Iron Dome are becoming apparent- Israeli security officials estimate that opponents like Hezbollah can fire over 1,000 rockets per day from a stockpile of over 150,000[14], which could overwhelm its capabilities. Also, Israeli IFF (Identification Friend or Foe) techniques were shown to be wanting, as the downing of a Skylark reconnaissance drone by Iron Dome friendly fire indicates[15]

    Israeli soldiers fire a 155mm self-propelled howitzer towards the Gaza Strip from their position along the border with the Palestinian enclave on May 16, 2021. Photo: AFP/Jack Guez

    asymmetric warfare thrives on a logic of its own, where the intelligent application of limited resources by the weak ensures some degree of military success

    The above instance is a singular example of an asymmetry arising from one side’s lack of sophisticated warfighting equipment or access to technology being compensated for by sheer force of numbers, to defeat or stalemate superior enemy systems. Operations Research analysts have worked out a ratio of one Israeli dying for every 206 rockets reaching Israel in the first four days of fighting, with at least 134 rockets hitting populated areas[16]. Israeli military sources put the accuracy of these rockets at around 15 per cent. Though many fell in open areas, their deterrent effect was enough for Israelis to descend into their bomb shelters[17], thereby proving that even today, asymmetric warfare thrives on a logic of its own, where the intelligent application of limited resources by the weak ensures some degree of military success. This, despite a situation where most of the Artificial Intelligence, networked communication, quantum computing and precision standoff capability was on one side – though one could grant some level of technology available to Hamas, through its research laboratories in the Strip and inputs from Iran. Adding another dimension to such asymmetry in the larger context however is the history of injustice perpetrated on Palestinians over the years, providing strong psychological motivation in favour of any opponent of Israel.

    Coming to the issue of outcomes, it is apparent that notwithstanding the asymmetry in capability, Hamas’s strategy has paid off. Having realized that the situation during Ramadan (created by Israel mostly through application of a purely law and order cum security template) was tailor-made for exploitation, it made Jerusalem the focus of its campaign, escaping in one go from the confines of Gaza.

    With Palestinians rallying to its cause, resultant unrest in Israel and the West Bank and some support from Hezbollah in Lebanon, it was able to create a narrative in its favour. Notwithstanding its designation as a terrorist organization by the US, EU, UK and many other nations, it has garnered huge political capital, enabling it to rival the current Palestinian leadership as reports of Palestinians carrying green Hamas flags in cities on the West Bank, where the PNA traditionally holds sway, indicate[18]. The stark difference in respective casualty figures also helped, once again raising the issue of ‘proportionate vis a vis disproportionate response’, against the backdrop of repeated injustice to Palestinians over the last 70 years.

    The IDF on the other hand worked efficiently with their usual precision, taking out as many targets as possible from their prepared lists, including networks of tunnels, headquarters, senior Hamas commanders and research infrastructure in the minimum amount of time. Without a doubt, Israel is a clear winner in military terms.

    This conclusion however begs the larger question of whether military victory alone can decide winners and losers in world geopolitics. At the time of writing US Secretary of State, Blinken is on a four-day visit to the region, to interact with leaders of Israel, the PNA, Jordan and Egypt to strengthen foundations for a durable ceasefire. President Biden has signalled that West Asia is back on his agenda: in a hugely symbolic gesture, the US has announced its decision to reopen its Consulate in East Jerusalem and promised $32 million worth of aid to the UN in Gaza. White House spokesperson Jen Psaki has called this part of America’s efforts to rebuild ties with the Palestinians.

    Whether this effort will be to purely manage a crisis or look for a permanent solution is unclear. The latter venture will require creative thinking by Israel, Palestinians and their neighbours and a shift from absolute positions which have shackled the region for over 70 years.  In that eventuality, a fresh look at the Two-State Solution guaranteeing the right of both nations to exist as sovereign states might yet provide the alternative. Reverting to the status quo of April 2021 will not.

     

    Notes:

    [1] ‘Daily Chart. The Israel-Palestine conflict has claimed 14,000 lives since 1987’   The Economist  18 May 2021

    [2] ‘Israel-Hamas truce begins after 11 days of fighting, Palestinians celebrate’   Reuters 21 May 2021

    [3] Ibid.

    [4] ‘After Years of Quiet, Israeli-Palestinian Conflict Exploded. Why Now? ‘  Patrick Kingsley, The New York Times 15 May 2021

    [5] ‘The Israel-Palestine Crisis: Causes, Consequences, Portents’   International Crisis Group  14 May 2021

    [6] International Crisis Group 14 May 2021

    [7] ‘Israeli president warns of civil war as Jews, Arabs clash over Gaza’   Rami Ayyub  Reuters  13 May 2021

    [8] ‘Netanyahu: Drone shot down earlier this week was Iranian UAV armed with explosives’   Judah Ari Gross  The Times of Israel 20 May 2021

    [9] Maj Gen Giora Eiland Retired, former head of Israel’s National Security Council in comments to Crisis Group 14 May 2021

    [10] ‘What do Hamas and PIJ have in their rocket arsenals? – analysis’  Yonah Jeremy Bob The Jerusalem Post 11 May 2021

    [11] ‘Israel’s Gaza challenge: stopping metal tubes turning into rockets’ Arshad Mohammed, Jonathan Saul, John Irish and Parisa Hafezi, Reuters 24 May 2021.

    [12] Ibid.

    [13] ‘How Israel and Hamas returned to armed conflict’  The Economist  22 May 2021

    [14] ‘Is Iron Dome effective against Hamas rockets as originally thought?’  Yonah Jeremy Bob  The Jerusalem Post  14 May 2021.

    [15] ‘Iron Dome Shot Down an Israeli Drone During Israel-Gaza Fighting’ Yaniv Kubovich Haaretz 25 May 2021.

    [16] ‘Gaza’s rocket technology challenges Israeli defenses’  Michael J Armstrong  Asia Times 18 May 2021

    [17] ‘Israel’s Gaza challenge: stopping metal tubes turning into rockets’  Reuters 24 May 2021.

    [18] ‘Israel and Hamas Begin Cease-Fire in Gaza Conflict’  Iyad Abuheweila and Adam Rasgon  The New York Times 21 May 2021

     

    Image Credit: Wikipedia

     

  • Side-lining of Palestine Issue:  Threat to Palestinian Rights and Self-determination

    Side-lining of Palestine Issue: Threat to Palestinian Rights and Self-determination

    Over the years, the international concern for the resolution of the Palestinian conflict has been diminishing. Israel has consistently dodged the core issue of returning Palestinian lands (West Bank) they occupied in 1967. Instead, it has continued to create new settlements in the occupied territories. Israel, obviously, has no intention of returning to pre-1967 boundaries; this was clear when the current Prime Minister of Israel, Benjamin Netanyahu, announced his plan to annex the West Bank in May 2020.

    Image Credit: The New Arab

    He deferred its implementation as the normalisation of relations with the United Arab Emirates (UAE) gathered momentum. However, Netanyahu indicated that Israel will “never give up our rights to our land.” (Al Jazeera 2020). The situation and the perception created now is such that not annexing the West Bank would appear to be a concession from Israel.

    As the Arab countries are taking a realistic view in placing their national interests first, Palestine is no longer a priority issue for them.

    This paper looks at how the Palestinian issue is gradually side-lined over the last few decades by the international community. There are four factors that have contributed to this development. First is the increase in conflicts in the Arab world, which has led to fragmentation and disunity in their approach to the resolution of the conflict. As the Arab countries are taking a realistic view in placing their national interests first, Palestine is no longer a priority issue for them. Second is the realisation of the fact that Oslo deal was unfair to start with and how under the guise of negotiations Israel continued to expand settlements and limit any prospect of sovereignty for the Palestinians. The Palestinian authorities hung on to the Oslo deal even though it was flawed, leading to decades of standstill in negotiations. Third, with the rise of the militant groups around the time of 9/11, the Palestinian cause has lost significant sympathies, and Israel’s violent response is seemingly more reasonable in the views of the international community. Fourth, the United States has supported Israel consistently in many issues, keeping Israel on the safe side in international and regional politics, shielding it from any proactive criticism.

    A look at the brief history of the conflict is necessary to explore the four factors mentioned above.

    Brief History of the Conflict

    Palestine was part of the Ottoman Empire until its defeat and collapse World War I. The area became a British protectorate as the result of the armistice of 1919. It coincided with the persecution of the  Jews due to the rise of anti-Semitism across Europe. The 1917 Balfour Declaration by the British government promised the Jews a national home in Palestine. This decision failed to factor the rights of the Palestinians who have lived there for millenniums. Jews began migrating to Palestine in huge numbers despite vehement protestations from the Palestinians leading to the now perennial Israel-Palestinian dispute. As Britain vacated the region post-1945, it abdicated its moral responsibility and left the resolution of the dispute to the United Nations (UN). The withdrawal of the colonial powers and the ensuing chaos in the regions vacated by them is a recurring pattern in decolonization history. The UN tried to divide Palestine into two states; Israel and Palestine, with Jerusalem as a joint capital and an international zone. Neighbouring Arab countries saw this as a residual form of colonialism and went to war in 1948. The war resulted in the catastrophic displacement of thousands of Palestinians. This catastrophe is remembered as Nakba, a day with a lot of historical sentiment across the Arab World (Chomsky and Pappé 2015). Israel won but did not control Gaza or the West Bank. Israel occupied these areas in the six-day war in June 1967. The occupation of the West Bank continues till today, whereas Gaza is now under Hamas. Coupled with all this, there are massive human rights violations against the Palestinians. This includes humiliating Palestinians at checkpoints, arresting without trial, arresting Palestinian children etc. (Chomsky, and Pappé 2015). Moreover, when Palestinians file reports about being harassed by Israeli citizens, it does not get any attention as the conviction rate is only 3% (Oxfam 2019).

    One of the prime demands of the Palestinian struggle is a return to the borders of 1967; so that Palestine can exercise full sovereignty over Gaza and the West Bank. However, Gaza has been economically cut off because Hamas controls it, and there is a huge blockade against it making life in Gaza difficult and miserable. Hamas also attacks Israel, and this has always led the Israel Defence Forces (IDF) into retaliating. Whereas on the West Bank, there are thousands of settlements by Israel, virtually pushing Palestinians out. This settlement strategy is seen as a deliberate move to counter the demographic threat from the larger number of Palestinians inside Israel (Chomsky and Pappé 2015). The obsession with demographic re-engineering has been fundamental to Israel, and it does not intend to change its policy. It also couples this with closing Palestinian places, reducing the Palestinian economic structures present in East Jerusalem (Arafeh et al. 2017) etc. There are currently 8 million Israeli citizens of which 1.2 million are Palestinians (“Palestinian Citizens Of Israel” 2020). They are treated as second-class citizens and many of them are engaged in menial labour

    The fractures in Arab Unity  

    All the West Asian and North African countries were initially pro-Palestine during the cold-war and decolonization era. This could be associated with the Pan-Arab notion present during that period. Many Arab countries had recently secured independence, and the Palestinian injustice was still fresh in their memory. However, losing consistently in these wars was also a demotivator and blow to them; fiscally and otherwise. In the last few decades, several countries have established ties with Israel; Egypt in 1979, Jordan in 1994. This is also the time Pan-Arab spirit declined, and increased conflicts began to emerge amongst many West Asian and North African countries.

    These political conflicts include; countries taking sides in the Iran-Iraq war, funding proxy wars, taking sides on the invasion of Iraq, etc. Furthermore, security threats have been perceived to be heightened in many West Asian and North African countries due to the rise of religious radicalization and the rise of terrorist groups. Arab league relations have also been strained for various reasons, including the Syrian Civil War and over its membership (Reuters 2020).

    More importantly, Saudi Arabia and Iran have their cold war. The United States has exaggerated the Iranian threat, and both Saudi Arabia and Iran covertly fund proxy civil wars across West Asia, be it Yemen or Syria.

    Israel has emerged as a technological and military power in the region. Netanyahu says, “we believe in peace out of strength and we believe in alliances born out of Israel’s value as a technological, financial, defence, and intelligence powerhouse” (The Times of Israel 2020).  Many Arab countries may, therefore, find value in Israel’s technological capabilities. Parallelly, economic conditions in many Arab countries are worsening. Under these circumstances, with deep distrust amongst many Arab states and incentive for countries to be friendly with Israel, normalization of relations with Israel is taking place.

    Arab countries are putting their national interest first, and if the Palestinian issue is seen as an obstruction they have no qualms about relegating it to a side-issue.

    However, a majority of the Arab and Gulf countries still do not officially recognize Israel. This is where the significance of the UAE-Israel and Bahrain-Israel deal comes in. The United States uses these factions within West Asia and North Africa to pursue its agenda with Jared Kushner pushing for normalization. The United Arab Emirates and Bahrain announced decisions to normalize relations with Israel on 12th August and 12th September 2020, respectively. Many of the West Asian countries, Saudi Arabia, in particular, are close allies of the United States. As the USA nudges these countries with incentives,  Palestinian sovereignty or a fair peace treaty no longer seems to be a precondition to establishing ties with Israel. Arab countries are putting their national interest first, and if the Palestinian issue is seen as an obstruction they have no qualms about relegating it to a side-issue.

    Support for Palestine still exists, but it comes in fragments from different countries. It is important to remember that there is no coalition; no pressure; no one group that consistently fights for it.

    Long Term Effects of a Flawed Deal

    One will always remember the picture of the handshake between Yasser Arafat and Yitzhak Rabin facilitated by Bill Clinton while signing the Oslo Accords at Camp David. The Oslo Accords were an extremely publicized affair, and many proclaimed that peace to the decades-old conflict had been reached, but this was far from the truth.

    When the accord was signed in 1993, the Palestine Liberation Organization (PLO) was already weak. Additionally, there was also a general reduction of support for the PLO among Palestinians, as seen by the eruption of the first intifada, which was initially spontaneous (Hassan 2011).

    Image Credit: Aljazeera

    The Oslo accords had several terms and clauses, but it mainly called for the recognition between Israel and the PLO. The accord also stipulated that Israel would end its occupation in Gaza and certain parts of the West Bank (Oxfam 2019). There would be an interim self-governance strategy and, eventually, a shift of power in Gaza and West Bank to the Palestinian Authority (Hassan 2011). An interim period was given so that both sides would have time to “gain trust” with one another.

    The accord showed an ambiguity regarding when Israel would withdraw from Gaza. It did not recognize Israel’s occupation, and neither did it speak of the Palestinian refugees.

    However, there were many flaws with the deal from the beginning. The accord showed an ambiguity regarding when Israel would withdraw from Gaza. It did not recognize Israel’s occupation, and neither did it speak of the Palestinian refugees (Hassan 2011). There was no stringent enforcement of the deal and having no third party accountability also rendered Palestinians vulnerable, as is evident. Furthermore, the Oslo accords did not condemn or mention the human rights violations against the Palestinians (Oxfam 2019).  The flawed nature of the deal began to show signs of rupture from the early days as accounts speak of how, as early as 1994, after the accords were signed, the IDF still had control over most of the West Bank and made no plans to move and were hovering around the edge of Ramallah (Tolan 2018). The fundamental issue here was that the Oslo Accord was signed by two unequal partners with Israel displaying dominant power.

    Therefore, while the buzz around the accords was still on, in reality, Israel continued policing Palestinians and establishing settlements in the West Bank area.

    No matter the initial motive, the Oslo accord, in 2020, can be analyzed as a distraction and cover-up by Israel while they continued their settlements. There is evidence supporting this as today there are 600,000 settlers in West Bank compared to 115,600 in 1993 (Oxfam 2019).

    Another significant issue is that Mahmoud Abbas and the Palestinian Authority (PA) have no framework other than the failed and biased Oslo accords. Owing to the proclamation that this accord would end the conflict, the PA became stuck in this framework. The way forward, as said by researcher Victor Kattan is that “The PA must produce a concrete vision of the state it wants to establish” (Arafeh et al.2017).  This lack of vision by the leaders is one of the reasons for the stagnation in the negotiations. Till today, Abbas and PA threaten to quit the accords and routinely proclaim that the Oslo deal is no longer valid. However, this should have come decades ago, during the second intifada in the year 2000, which illustrated that the Oslo accords were unfavourable towards the Palestinians. It shows the PA’s failure as a representative body, and their approval rate by the Palestinian public has reduced drastically.

    There have been talks to solve the dispute after Oslo deal, for instance, the Taba Summit. However, none have gained the clout or effort that the Oslo deal garnered.

    Militancy

    Ever since the attack of 9/11, the conversation surrounding militancy has increased. Invasion of Afghanistan and Iraq by the United States, a world power, ensured that the world knew the stance of the West on militancy.

    Militancy and violent retaliation by the Palestinians armed groups have been major issues, and the world witnessed the Munich massacre of the Israeli Olympic team in 1972. Furthermore, there have been Palestinian militant factions, which is where organizations such as Hamas come in. The first intifada led to Hamas’ formation and the second intifada helped Hamas gain clout (Uslu and Karatas 2020). Hamas has been deemed a terrorist organization by the United States, the European Union, because of its fundamentalist ideology and use of violence. This also led to the Palestinian struggle to lose sympathies of the international community due to its wariness of militant groups. Hamas takes a more “hard-line” approach towards Israel and is infamous for its rocket attacks against Israel from Gaza and suicide bombings (Uslu and Karatas 2020).  Israel and Hamas are also very wary of negotiating with each other. So far, the only talks between the two groups have been to swap prisoners.

    Many have criticized Hamas for the use of violence, however, Israel and other states cannot condemn the violence being deployed by Hamas, while Israel itself consistently shows violent behaviour towards the Palestinians. Hamas gained clout after the intifadas showed the deplorable conditions of the Palestinians in the occupied territories and Gaza. Termination of aid to Gaza on account of peoples’ support to Hamas has created more problems in terms of economy and livelihood. In the end, it is Palestinian people who suffer the most.

    Pro-Israel Policies of the United States  

    The United States is a close ally of Israel; technologically, financially, and otherwise. Israel, too, provides intelligence and acts as the “eye” of the United States from the West Asian region. The US-Israel relationship was instrumental in limiting the erstwhile Soviet Union’s influence in West Asia during the cold war (Beauchamp 2018). Much of the aid the United States gives to Israel is military aid, and as an important defence ally, Israel receives state-of-the-art weapon systems and intelligence sharing (Congressional Research Service 2019). The US has played a critical role in Israel’s emergence as a technology power and a major arms exporter.

    The United States has used its veto in the security council several times to protect Israel, including when the UN looked at taking action to prevent  Israel’s invasion of Lebanon and to stop the construction of walls inside the West Bank (Zunes 2012).

    The Israel caucus and lobby in the United States is powerful and many pro-Israeli outfits/individuals are major funding sources for Congressional elections (Cook 2018). The American Israel Public Affairs Committee (AIPAC) has financially backed people in the congress, which has influenced the decisions made by many lawmakers. For instance, billionaire, Sheldon Adelson, funded 82 million dollars to Republican’s election and is known for his pro-Israel sentiments. He even pushed for the USA embassy to be moved to Jerusalem from Tel-Aviv and has also proven to be unconcerned about giving Palestinians voting rights in Israel (McGreal 2018).

    The Donald Trump administration has taken the support for Israel one step further. Trump supports Israel in controversial issues that many shy away from addressing due to the politics in West Asia and Palestine’s historical symbolization. Trump came up with a peace deal for Israel and Palestine which was criticized severely and rejected by Palestine as the negotiations did not involve them (Holmes et al. 2020). The fact that Trump did not involve Palestinians in the negotiation shows how one-sided and utterly dismissive he is of the Palestinian authorities and people. The refusal of the right to return for Palestinian refugees, keeping Jerusalem as an undivided capital of Israel, recognizing Israeli settlements are among many reasons why the deal is flawed. The United States also brokered two peace deals in West Asia, the UAE-Israel peace deal first, followed by the Bahrain-Israel deal. It has also has been pushing other Arab countries to normalize relations with Israel (Barrington and Williams 2020).

    The Trump administration also shifted the United States embassy to a contested and occupied Jerusalem in 2018. All the more, this ultimately recognized and legitimised Israel’s occupation of the West Bank. After Trump’s announcement to shift the embassy, Israel’s housing minister declared that Israel was developing 14,000 “new settlement units” in Jerusalem (Arafeh et al. 2017). Mohamoud Abbas also asserted that the United States could not be a reliable mediator after shifting capital to Jerusalem. However, the United States has continued to meddle and create a one-sided mediated plan (Arafeh et al. 2017).

    Trump has also continued to cut out aid for Palestine, which has severe repercussions for Gaza’s already poorly funded city. In 2018, after Palestinians Authorities blamed Trump for being partial, he cut 200 million dollars in economic aid and cut funding to the United Nations Relief Work Agency (UNRWA), the primary network in helping Palestinian refugees (Holmes 2020).

    During the US presidential elections, Netanyahu appealed to evangelical supporters in the United States. In a virtual conference, he said that Trump might give him the green-light to annex certain parts of the West Bank that have religious significance in the Bible (Ravid 2020). The President-Elect Joe Biden has clearly highlighted that he would review these decisions, recognise Palestinians’ right to self-determination and adopt a more balanced approach.

    It is evident that the Trump administration has played a significant role in side-lining the Palestinian issue.

    Looking Ahead

    The Palestine problem has stretched far too long, with many “negotiations” that have failed to address the historical injustice done to the Palestinians. Amidst all this, clashes continue between protestors in Gaza and Israeli forces. While there are mass casualties and acts of aggression on both sides, there is no denial of how poorly Israel has treated Palestinians over the decades. Furthermore, most issues regarding Palestine have been put on the back-burner, however, the Arab League stepped up to condemn the unfair Trump Peace Deal, which is the bare minimum it could have done.

    There needs to be more initiative from the side of the PA to have a more concrete plan for the future of Palestinian sovereignty. The PA is also dominated by older elites, but with changing aspirations of the Palestinians, there need to be more women and younger people in the body.

    Additionally, for Palestinian sovereignty to be achieved, there has to be a major restructuring of the PA. It is clear that PA has been stripped of its power over the years and afflicted with corruption, has not improved the Palestinians’ situation. There needs to be more initiative from the side of the PA to have a more concrete plan for the future of Palestinian sovereignty. The PA is also dominated by older elites, but with changing aspirations of the Palestinians, there need to be more women and younger people in the body.

    There is some importance given to Palestine in the United Nations such as making Palestine as a presiding chair for the G77 or the United Nations Security Council Resolution 2334, which says that “altering the demographic composition, character, and status of the Palestinian Territory occupied since 1967, including East Jerusalem… (is) in violation of international humanitarian law” (SC Res 2334 2016). However, voting pro-Palestinian at some UN resolutions, having Palestinian authorities come over, and reiterating a “two-state solution” is no longer enough. Furthermore, different countries use this issue as a political tool to show their “sentiments.” Instead, there needs to be more proactive international collaboration to fight for Palestinian rights consistently. The Palestinian issue is a fundamental human rights issue and should be urgently addressed before the already minimal fragments of Palestine disappear under Israel.

    References

    “Palestinian Citizens Of Israel”. Institute For Middle East Understanding, 2020, https://imeu.org/topic/category/palestinian-citizens-of-israel. Accessed 25 Sept 2020.
    Al Jazeera. “Netanyahu Says West Bank Annexation Plans Still ‘On The Table’”. 2020,   https://www.aljazeera.com/news/2020/08/13/netanyahu-says-west-bank-annexation-plans-still-on-the-table/. Accessed 12 Sept 2020.
    Arafeh, Nur et al. “Trump, Jerusalem, And The Future Of Palestine – Al-Shabaka”. Al-Shabaka, 2017, https://al-shabaka.org/roundtables/trump-jerusalem-future-palestine/. Accessed 6 Sept 2020.
    Arroyo, Carmen. “Palestinian Children, The True Victims Of The Conflict”. The Wire, 2020, https://thewire.in/world/palestinian-children-true-victims-conflict-israel. Accessed 5 Sept 2020.
    Barrington, Lisa, and Dan Williams. “After UAE-Israel Breakthrough, Kushner Pushes Other Arabs To Go Next”. Reuters, 2020, https://www.reuters.com/article/us-israel-gulf-usa/after-uae-israel-breakthrough-kushner-pushes-other-arabs-to-go-next-idUSKBN25S5QC. Accessed 20 Sept 2020.
    Beauchamp, Zack. “Why Are The US And Israel So Friendly?”. Vox, 2018, https://www.vox.com/2018/11/20/18080080/israel-palestine-us-alliance. Accessed 16 Sept 2020.
    Chomsky, Noam, and Ilan Pappé. On Palestine. Haymarket Books, 2015.
    Congressional Research Service. U.S. Foreign Aid To Israel. Congressional Research Service, Washington D.C, 2019.
    Cook, Jonathan. “Under Trump, The Israel Lobby Is A Hydra With Many Heads”. Middle East Eye, 2018, https://www.middleeasteye.net/opinion/under-trump-israel-lobby-hydra-many-heads. Accessed 7 Sept 2020.
    Hassan, Shamir. “Oslo Accords: The Genesis and Consequences for Palestine.” Social Scientist, vol. 39, no. 7/8, 2011, pp. 65–72. JSTOR, www.jstor.org/stable/41289422. Accessed 30 Sept. 2020.
    Holmes, Oliver et al. “Trump Unveils Middle East Peace Plan With No Palestinian Support”. The Guardian, 2020, https://www.theguardian.com/world/2020/jan/28/donald-trump-middle-east-peace-plan-israel-netanyahu-palestinians. Accessed 1 Sept 2020.
    Holmes, Oliver. “US To Give Palestinians $5M In Coronavirus Aid – 1% Of What Trump Cut”. The Guardian, 2020, https://www.theguardian.com/world/2020/apr/17/us-aid-palestinians-coronavirus-trump-cut. Accessed 22 Sept 2020.
    McGreal, Chris. “Sheldon Adelson: The Casino Mogul Driving Trump’s Middle East Policy”. The Guardian, 2018, https://www.theguardian.com/us-news/2018/jun/08/sheldon-adelson-trump-middle-east-policy. Accessed 17 Sept 2020.
    Oxfam. From Failed To Fair Learning From The Oslo Accords To Foster A New Rights-Based Approach To Peace For Palestinians And Israelis. Oxfam, Oxford, 2019, pp. 3-24, https://oxfamilibrary.openrepository.com/bitstream/handle/10546/620904/bp-failed-to-fair-oslo-accords-011119-en.pdf. Accessed 6 Sept 2020.
    Ravid, Barak. “Netanyahu Presses Trump By Lobbying U.S. Evangelicals To Back Annexation”. Axios, 2020, Accessed 29 Sept 2020.
    Reuters. “No Consensus Yet For Syria Return: Arab League Chief”. 2020, https://in.reuters.com/article/us-mideast-crisis-syria-arabs/no-consensus-yet-for-syria-return-arab-league-chief-idUSKCN1Q014R. Accessed 15 Sept 2020.
    SC Res 2234, UNSC, UN Doc S/RES/2334 (23 December 2016) < https://www.un.org/webcast/pdfs/SRES2334-2016.pdf> accessed 15 September 2020
    The Times of Israel. “PM Said Seeking To Formalize Relations With Saudi Arabia Before Next Election”. 2020, https://www.timesofisrael.com/pm-said-seeking-to-formalize-relations-with-saudi-arabi-before-next-election/. Accessed 24 Sept 2020.
    Tolan, Sandy. “Was Oslo Doomed From The Start?”. The Nation, 2018, https://www.thenation.com/article/archive/was-oslo-doomed-from-the-start/. Accessed 17 Sept 2020.
    Uslu, Nasuh, and Ibrahim Karataş. “Evaluating Hamas’ Struggle in Palestine.” Insight Turkey, vol. 22, no. 1, 2020, pp. 109–124. JSTOR, www.jstor.org/stable/26921171. Accessed 30 Sept. 2020.
    Zunes, Stephen. “Putting The UN Veto In Perspective”. Huffpost, 2012, https://www.huffpost.com/entry/syria-russia-un-veto_b_1267495?guccounter=1. Accessed 21 Sept 2020.
  • UAE-Israel Deal: An Analysis of its Regional Impact

    UAE-Israel Deal: An Analysis of its Regional Impact

    Introduction

    The recently brokered Abraham Accords Peace Agreement between the United Arab Emirates and Israel marks the beginning of the potential shift in West Asia’s existing power relations. Driven by their security interests, and in an attempt to amplify their power projections in the region, the two countries have come together, in what is being seen, as an opposition to the Iranian axis of influence. Although the normalization of relations with Israel marks a huge setback for the possibility of a Palestinian Statehood, several Arab countries are expected to jump on the bandwagon, with Bahrain having already concluded a treaty after UAE. This article highlights the eclectic mix of reactions from various players in West Asia and the potential opportunities and setbacks it brings with itself.

    Palestine

     Several countries held strongly pro-Palestine policies during the Cold War and decolonization period. However, in the last few decades, many have established ties with Israel; Egypt in 1979, and Jordan in1994 and now UAE and Bahrain in 2020. That being said, majority of the Arab and Gulf countries still officially do not recognize Israel. The United Arab Emirates announced its decision to normalize relations with Israel on 12th August 2020. There are many reasons why UAE and Bahrain decided to establish diplomatic relations with Israel; according to some analysts it is to counter Iran’s influence in the region, but for some it is also to establish trade and business contacts.

    However, do these developments indicate that countries in the Arab world are moving gradually into accepting Israel’s occupation of Palestinian lands as ‘fait accompli’? A significant development that needs to be recognised is the fact that many West Asian countries no longer demand the return of Palestinian lands as a precondition to normalizing ties with Israel.

    The Palestinians in the West Bank and Gaza have strongly criticised the deal and see it as betrayal of their rights and cause by the international community.

    It is long-known that Israel will not return to pre-1967 boundaries; in May 2020 Benjamin Netanyahu explicitly stated his plan to annex the West Bank. He has, however, postponed the implementation of his decision, probably indefinitely, in the interests of the deal that is likely to benefit Israel greatly.

    The Palestinians in the West Bank and Gaza have strongly criticised the deal and see it as betrayal of their rights and cause by the international community.  Banners  displaying “Treason” and “No to normalization with the occupier’ have come up across the region.  The Palestinian Authority, in very obvious response, have rejected the deals. These accords, as they rightly fear, affect the future of Palestinian sovereignty and legitimize Israel’s occupation.

    Turkey  

     President Recep Tayyip Erdogan sees himself as the champion of Muslims ever since he came to power in 2002. Under Erdogan, Turkey has pursued a clear pro-Palestinian stance. Turkey has indeed provided aid to Palestine at various times, including during COVID-19. It has criticized Trump’s peace plan for the Israel-Palestine conflict, for ignoring Palestinians’ legitimate rights. Not surprisingly, Turkey is clearly unhappy with UAE’s and Bahrain’s steps to normalize ties with Israel. Turkey has threatened with the option of halting diplomatic relations with UAE over the deal.

    However, for Palestinians Turkey’s statements ring hypocritical and hallow. Turkey was one of the earliest and the first Muslim majority state to recognize Israel in 1949. Turkey and Israel have a long history of intelligence cooperation. Even in the current situation, Turkey is focused more on dealing with the UAE on this issue, rather than Israel. Nevertheless, speaking for Palestinian rights in the international forum is equally important. In that respect, Turkey’s voice in support of the Palestinian cause is an important one.

    Saudi Arabia

     Saudi Arabia, long seen as the champion of Islamic nations, particularly in view of the fact that it is home to the two holiest shrines of Islam. Therefore, this peace agreement is a shock to the conservatives who form the majority in the Kingdom. This move by the UAE is seen as going along with the Jewish regime that denies the rights of the Palestinian Muslims. However, the Foreign Minister, Faisal bin Farhan Al Saud said the deal could be seen as positive, but his country will not normalize relations until peace is signed with the Palestinians,  within the framework of the Arab Peace Initiative.  Saudi Arabia’s track record of its unwavering support to the Palestinian cause from the days of the Yom Kippur war, also known as Ramadan War, makes the nation’s stance on the ‘Abraham Accords’ more influential than any other Gulf country. The advocacy for Palestinian state runs deep in the Saudi people. As a result, Saudi leadership’s slightest inclination towards the agreement could spark unrest among its citizens.

    The current regime under the Crown Prince of Saudi Arabia, Mohammed bin Salman (MBS), who is a very capable leader compared to his predecessors because of his broader outlook to mend diplomatic ties with the regional enemies, yields an element of uncertainty as he may be inclined towards the accord. The political and ideological differences between the people of Saudi and their leader might spark cynicism towards the government; hence, support for the accord is implausible in the short term.

    Israel, which shares the Red Sea coastline with the country and is a major player in technology innovations in the region, makes it an ideal ally for the Kingdom.

    The idea, however, is not wholly inconceivable because of MBS’s Vision 2030. Upon ascending the throne, the Crown Prince has constructed an elaborate plan to detach the Kingdom’s dependence on its natural resources and focus on bringing in diverse investments into the country. One of the main plans is to develop the Red Sea Coastline by exploiting its tourism prospects by building a smart city. Israel, which shares the Red Sea coastline with the country and is a major player in technology innovations in the region, makes it an ideal ally for the Kingdom. One of the other factors that could generate a coalition between Saudi Arabia and Israel is their common enemy, Iran.

    If MBS does accept the accord, it may not come as a surprise, but that does not warrant the fact that there is a high possibility of the decision shocking many conservative and religious establishments.  In retrospect, that could give birth to the “new” Saudi Arabia that the crown prince has promised to build.

    Qatar

    Qatar, which is considered the most developed state in the Gulf region, is in the middle of a diplomatic standoff with the regional players. Its dispute with the two major states, Saudi Arabia and UAE, has made the state go out of its way to establish diplomatic ties with parties that are not particularly approved by the GCC. The state has not given any official statement on the accord, but it’s closeness with Iran may be taken as an unofficial veto to the accord in itself. Qatar’s close relationship with the US and Iran has been a subject of debate ever since the Gulf crisis, but the state has somehow managed not to let the relationship cut across each other. This particular agreement with Israel orchestrated by the Trump government could pressure Qatar to push and resolve its issues with the UAE.

    Like any other Arab country, Qatar has advocated for the Palestinian state. It took it a little further by investing in the Gaza Strip, funding welfare payments to the coastal territory. One can suspect that the Emirati’s decision to form a coalition with the Israeli state will only deepen the ties between Qatar and Palestine.

    Though the Qatar government has been silent about the accord, Doha based news media, Al Jazeera has not shied away from raising concerns regarding the agreement. It even went to the extent of calling the accord ‘PR stunt’ initiated by the UAE. It’s support to Palestine and capitalisation of the hashtag ‘normalization as betrayal’ have received a lot of criticism from those countries that support the agreement. Qatar has always been hostile to Israel’s treatment towards the Palestinian state but has managed to have practical relations with Israel.

    Iran  

    As the world witnesses the coming together of the United Arab Emirates and Israel, two of the former adversaries, it comes as no surprise that Iran has been aggressively lashing out against the deal. With Iran still reeling under the economic pressure of the US sanctions, President Rouhani has called the deal a ‘betrayal’, aimed at satisfying the United States at a time when President Trump prepares himself to run in the national election in November. The leader of Iran-backed Hezbollah has also condemned the deal on similar grounds. Iran’s disapproval stems from two main factors – first, from its support for the Palestinian statehood; and second, more realistically, due to the increasing influence of Israel-United States nexus in the region and consequently its declining axis of influence. Iran’s insecurity is speculated to have stemmed from the confluence of actors that oppose the Islamic Republic’s attempts to establish its hegemony in the region. The confluence opens up the possibility of shifting the regional balance of power in favour of Israel, and Saudi Arabia, under the shadow of the United States. While Saudi Arabia and Israel do not yet have an official diplomatic relationship, various reports suggesting backdoor diplomacy between the two countries have surfaced over the years. The common factor bringing the two countries together has most often been assumed as the perceived threat from Iran.

    Iran and UAE, on the other hand, while maintaining a meaningful trade relationship, continue to have persistent sources of bilateral tension.

    On the other hand, while Iran and Israel have often been engaged in rhetoric of bellicose jingoism towards one another, it is essential to note that both the countries maintained a friendly relationship before the Iranian revolution of 1979, with Iran being the second Muslim country recognizing the state of Israel.

    Iran and UAE, on the other hand, while maintaining a meaningful trade relationship, continue to have persistent sources of bilateral tension, one of which is the unresolved territorial dispute over the islands of Greater Tunb, Lesser Tunb, and Abu Musa, which lie near the critical Strait of Hormuz, providing access to key shipping lanes. Despite UAE’s historical claims over their sovereignty, the islands that were forcefully occupied by Iran continue to be a strain in the relationship between the two countries. A second irritant is a growing relationship between UAE and the United States, with the former becoming one of the largest importers of US weapons and providing the US with military bases and intelligence on Iran. Worried about the growing Iranian aggression, the country has maintained a strong security relationship with the United States and has often supported the UNSC resolutions to bar sensitive materials and technology to Iran.

    Yemen

    The conflict in Yemen that began to unravel with the spread of Arab Spring in 2011 has resulted in an unprecedented loss of civilian lives across the country, making Yemen one of the world’s worst humanitarian crises. The Israel-UAE deal, which reflects the beginning of normalization of ties between Arab countries and Israel, cannot be seen in isolation from the region’s larger volatile landscape. The Peace Treaty, as it is being termed, brings with itself a plethora of threats that seek to shift the existing power relations, without aiming at the cessation of violence. UAE’s increasing outreach must be looked at in the context of its increasingly interventionist policies, especially in Yemen. The deal may ultimately lead to more interference and militarization in Yemen, prolonging the prospects for conflict resolution, and sustaining hostile conditions.

    Varied responses to the deal can be seen with the Yemeni government, and the Houthis, an armed group championing Yemen’s Zaidi Shia Muslim minority, coming out in opposition to the deal in a bid to continue their support for Palestine. On the other hand, it comes as no surprise that members of the Southern Transitional Council (southern separatists), which gets its support from the UAE, have applauded the treaty to build cooperation between UAE and Israel.

    Interest and interference in Yemen are of tremendous strategic significance to both Israel and UAE.

    Interest and interference in Yemen are of tremendous strategic significance to both Israel and UAE. In a show of its strengthening military projection, UAE seized control of the Yemeni island of Socotra, located in the Indian Ocean,allegedly allowing Israel to establish its presence in the region. The archipelago sits at a crucial strategic position en-route to Bab el-Mandeb, providing access to key shipping lanes.

    On the other hand, while there exists no diplomatic relationship between Yemen and Israel, the latter has often been seen intervening in the ongoing conflict in Yemen, “under the pretext of defending its interests in the Red Sea and the Strait of Bab-El-Mandeb”. With a military base already constructed at Emba Soira in Eritrea, Israel continues to increase its strategic presence across the Strait. Further, as speculations about the possible Houthi-Iran cooperation spread across the region, Israel’s surveillance centres continue to monitor the armed group’s actions and other actors in Yemen.

    Conclusion

    Palestine is a very sensitive and rousing issue for most of the citizens in West Asia. It is a shared memory of betrayal and expulsion; indeed, many politicians in West Asia use Palestine as an element in their speech and citizens also use it during slogans referring to Palestine protests.

    That being said, these deals are coming at a time when Israel is increasing its hawkish behaviour towards the Palestinians. Once the annexation happens, one cannot help but wonder how it could change the landscape of West Asia. Thus far, the progress made is the mild indication of some major players in the region favouring the accord.  Analysts suspect that the support for the accord will gain momentum in the long-term side-tracking religious, cultural and social identities to maintain diplomatic relations for economic growth.  If all countries, therefore, become friendly with Israel, will the annexation only receive loud threats with no actions?

    This study is put together by Dharika Athray, Rupal Anand, and Vrinda Aiyaswamy. All of them are Research Interns at TPF.

  • Poverty, Inequality, and Marginalisation as Forms of Structural Violence in Pre-Conflict Syria

    Poverty, Inequality, and Marginalisation as Forms of Structural Violence in Pre-Conflict Syria

    The injustice and inequality built into the structural institutions of the Syrian society can be referred to, what has been called as the ‘structural violence’, by the well-known Norwegian sociologist, Johan Galtung.  

    The ongoing civil war in Syria that has resulted in large-scale loss of lives, and forced displacement of millions across the region, is being seen as one of the bloodiest conflicts of this century. While countries continue to witness the horrors of visible atrocities and war crimes, the underlying layers of structural and cultural violence continue to buttress the egregious brutality which is often more direct, and physical.

     

    Although the war is often seen as a result of the outburst of pro-democracy protests in 2011, a close examination of the country’s socio-economic structures would enable one to get a detailed insight into the underlying layers of frustration caused due to large-scale poverty, inequality, and marginalisation. One would also find that the relatively peaceful structure, which existed before the protests of 2011, was held intact largely due to the existence of single-party dominance, where one actor (Hafez al-Assad, and later Bashar al-Assad) held all power and authority, while those existing in lower ranks of society continued to lack resources, as well as opportunities to challenge the dominant power.

    The Syrian economic crisis has existed long before the commencement of the civil war.

    The injustice and inequality built into the structural institutions of the Syrian society can be referred to, what has been called as the ‘structural violence’, by the well-known Norwegian sociologist, Johan Galtung.  The violence, here, is reflective of a position “higher up or lower down in a hierarchy of exploitation-repression-alienation”, where the parties involved are determined either to keep the hierarchy intact or to completely obliterate it. In the case of Syria, the deprivation of the most basic and non-negotiable needs, which threatened the citizens’ need for survival, has been the primary cause for aggression to come into existence. The factors that, thus, led to the conflict in Syria can be seen rooted in years of repression, poverty, and lack of representative institutions, which manifested in the form of protests, or the Arab Spring of 2011.

    The Syrian economic crisis has existed long before the commencement of the civil war. Since the beginning of the economic crisis, Syria’s institutional structures have failed to meet the rising needs and rights of its population. In the 1980s, the country was trapped in a downward spiral of a fiscal crisis, as a result of large-scale drought, and due to both, domestic and external factors. The crisis led to high food deficit, and an increase in the cost of living, leading to a rise in patronage networks which provided small circles of elites with profitable businesses. These networks became increasingly popular in real estate and land management, leaving out large sectors of Syria underdeveloped.

    While the country witnessed a decreasing overall debt and a noticeable rise in the GDP in the 2000s, large sections of the population were excluded from benefitting from these growth rates due to differences in wage rates and declining job opportunities. Increasing inequality was reflected in a paper published by the UNDP, which claimed that 65.6% of all labour in Syria belonged to the informal sector in 2010, with Aleppo and Idlib ranking first with over 75% of their workforce belonging to the informal sector. Further, the four years of drought between 2006 and 2011, and the consequent failed economic policies led to a significant decline in the agricultural sector’s output, forcing 2 million to 3 million Syrians into abject poverty.

    Additionally, the oil revenues fell from more than 14% of GDP in the early 2000s to about 4% in 2010 due to depleting reserves. According to a report, overall poverty in Syria in 2007 impacted 33.6% of the population, of which 12.3% were estimated to be living under extreme poverty. Noting the degree of inequality in Syria in 1997, the report found out that the lower 20% of the population had a share of only 8% in expenditure, while the richest 20% of the population share about 41% of the expenditure. The degree of inequality further decreased in 2004. Moreover, the widely disputed region of North-Eastern Syria witnessed highest levels of inequality in 2007, in addition to deprivation of living standards, and worst levels of illiteracy, and access to safe water, just four years before the outbreak of the civil war. The unequal access to resources was also starkly reflected in the housing situation of the country before the war, where over 40% of the population lived under informal housing conditions, – through squatting, or on lands obtained without legal contracts.

    In addition to the economic crisis, Syrians have been the victims of decades-long political repression, in the form of restrictions on freedom of expression, torture, and enforced disappearances. The political institutions have historically been unstable, with three military coups taking place in 1949 alone, followed by one more in 1954, in addition to the Ba’athist-led coups of 1963 and 1966. The Syrian security forces (Mukhabarat) are known to have detained citizens without proper warrants even before 2010, many of whom have reportedly been tortured in prisons. In their attempts to keep the hierarchy of power relations intact, the centralised institutions are known to clamp down on any public demonstrations, with frequent arrests and employment of state violence.

    The conflict which started with citizens demanding their basic needs and rights has been sustained over the years by the involvement of foreign states, and increased state brutality which has been responded to by an increasingly similar, if not equal, force by the rebellion groups.

    Years of conflict have exacerbated the economic crisis, pushing both the state and its citizens, into chaos, with more than 80 per cent of the Syrian population living below the poverty line, with an unemployment rate of at least 55 per cent in 2018. With most of the business networks now being controlled by the selected few elites, the population at large continues to suffer the brunt of both structural, and direct violence.

    The conflict which started with citizens demanding their basic needs and rights has been sustained over the years by the involvement of foreign states, and increased state brutality which has been responded to by an increasingly similar, if not equal, force by the rebellion groups. The country, now, witnesses itself entangled in a cycle of conflict, where the war has led to steep economic deterioration, political repression, and physical violence, which in turn has led to further widespread cataclysm.

    Image Credit: Photo – Aleppo-Syria destruction in 2019 and  Syria Map – Adobe Stock

  • Lebanon’s Food Security Crisis

    Lebanon’s Food Security Crisis

    Security has been a buzzword in the arena of International Politics since the Cold War, and this is widely recognized to be the subject’s genesis as articulated by Barry Buzan and Lene Hansen in their book, The Evolution of International Security Studies. The traditional view of security as largely related to military is the aspect that is given the most prominent focus in discourses on the subject. However, since the 1990s, “societal security” and concepts related to people are broader and sub-concepts such as food security have gained in importance. Food security looks at how much food is available, the access and affordability of food to all people in a country. Food security is also the ability of the country to keep sufficient food available during tough times, such as inflation, disasters, and other such hardships. The Food Climate Research Network speaks of the five factors of food security; availability of food, access to food, utilization of food, stability, and malnutrition. Perhaps food security is one of the most essential forms of security, as the lack of food leads to starvation. This is the reason one hears of bread riots and bread in many protest slogans; ‘bread’ symbolizes food security and represents people’s survival. The economic meltdown of Lebanon and the failure of governance has created a human catastrophe of instability and poverty. The recent Beirut explosion has highlighted not only the failure of the government but a complete breakdown of safety and social security for its common citizens. Under the current circumstances, Lebanon’s food security situation is a major cause for concern.

    Hikes in Food Prices

    Lebanon today is a country with massive debt, income inequality, with much of its revenue going towards servicing of national debts. In addition, Lebanon has been facing high inflation for the last few months, making it very difficult for families to access food. As a result, basic food items are overpriced and in short supply; for instance, a pat of butter costs 9.4 Euros.  Meat, fruits and other commodities have become luxuries for most Lebanese citizens. There are huge breadlines across Lebanon, and many grocery stores cannot afford to buy food to sell to consumers. The COVID-19 crisis has compounded the economic crisis. Prices of eight basic food items have increased by 56%. Lebanon’s food crisis is so grave that parents are bartering their children’s toys and furniture for food online.

     Economic collapse and Food Security

    The most circulated pictures over the last few weeks on media are of the explosion in Beirut and the spillage of grains. This blast occurred because of the unsafe storage of ammonium nitrate and has led to the death of over 200 people, with over 6,000 injured so far. There are many still missing. For Lebanon, this is a triple layer of burden, as the country is fighting a mismanaged economy, a pandemic, and now the horrific aftermath of the explosion. Post the explosion, many countries and global institutions have rushed emergency support by providing minimal aid and funding to facilitate fast recovery from this catastrophe.  While the world has come together to help Lebanon, the situation remains grim because of the shortage of various necessities like medicine and food. The second-largest port in Lebanon, Tripoli has some storage of flour; however, this suffices to cover just one month’s requirements. Beirut port, the largest in Lebanon, is virtually unusable because of the blast. The port infrastructure is severely damaged, thus hurting imports. Lebanon is a country that relies hugely on imports; it imports 85% of its food from outside, making this a major crisis . By one estimate the blast has destroyed 120,000 metric tons of grains, and this could affect food availability as well as sky-rocketing of food prices. The United Nations Food Program reiterated that Lebanon is in a grim situation regarding food security. The current assessment is that the grains can sustain them for less than a month.

    Grim Outlook and Tough Challenges

    The looming food security crisis is a direct fall-out of the economic collapse and multiple crises facing the country. Discontent with the government in Lebanon is not new, since the protests have been on since last October. The explosion and its resulting loss of life and property have triggered waves of protests again, forcing Hassan Diab, the Prime Minister of Lebanon, to step down from his office on 10th August. Decades of poor governance, entrenched kleptocracy, corrupt political class, criminal negligence, incompetence and economic mismanagement have led to the current catastrophe. The former economy minister, Nasser Saidi, says that ‘Lebanon is on the brink of the abyss of depression, with GDP declining by 25% this year, growing unemployment, hyperinflation, and humanitarian disaster with poverty exceeding half the population. The growing food crisis and poverty could lead to famine conditions’. The government will need to address income inequality, large-scale corruption, and the role of foreign players in contributing to the economic collapse.  Financial institutions and other creditors, more often foreign powers, need to suspend debt repayments and allow the Lebanese economy to recoup; since a considerable portion of the revenue goes into debt servicing, which is unsustainable for long.  International funding agencies, while sympathetic to the common peoples’ plight, are hesitant to go ahead with aid due to the poor governance track record of the political class. By some estimates, they put the immediate requirement for humanitarian aid and the cost of rebuilding essential infrastructure post the blast at USD 15 billion. This pales compared to the even bigger mess in the financial system. Ghazi Wazni, the country’s finance minister who quit with the rest of the government last week, has put the total losses in the banking system at $83 billion, and a black hole in the central banking system of $50 billion. The people are displaying discontent over the sectarian politics that have afflicted the country for decades and are the root cause of endemic corruption. Last year’s protests led to a new government in December, which was forced to resign post the explosion.

    Amidst the political crisis, food security is increasingly the major problem in Lebanon for months now. The blast has left 300,000 people homeless.  International Organizations and Civil Society Organizations, Ukraine, Russia, and the United States are enabling and mobilizing food supplies.

    Poverty is the immediate concern; there are already one million Lebanese in poverty, with the likelihood of more than half of the Lebanese population falling into poverty. Food shortages will most likely result in starvation, malnutrition, and death. Looking at the five tenets of food security mentioned above, Lebanon satisfies neither of the five criteria. Lebanon is an example of how decades of factional strife, warlordism, corruption, and power in the hands of the kleptocratic elite can push a country and its people into the abyss of poverty. While resolving Lebanon’s food security crisis is possible through immediate international aid and support, resolving the larger problem of its economic mess and humanitarian catastrophe will need international intervention.

  • The Geopolitics of Syria’s Reconstruction

    The Geopolitics of Syria’s Reconstruction

    Introduction

    Syria’s territories are controlled by a variety of actors – Al Assad’s regime (with Russia and Iran as its supporters); Kurdish dominated self-administration (with a small number of US troops supporting them); Turkey and its affiliated militias; and the Syrian Salvation Government affiliated to the Hay’at Tahrir al-Sham (HTS), a former al-Qaida offshoot.

    Fragmentation of the state’s territories, as the state lost control of its territories, resulted in the emergence of a network of localised war economies with numerous local and foreign actors being involved. War economies emerged in territories held by Assad’s regime as well as those under the control of various other opposition parties, characterised by an increase in smuggling of goods (among which essential goods, crude oil and arms were popular), extortion, rent seeking for essential services, and taxation of goods at checkpoints established by the warring parties, including local warlords, opposition armed groups or regime’s militias. The Syrian Arab army is also reported to have engaged in rent seeking behaviour through the establishment in recaptured territories (Hinnebusch, 2020).

    Another area of priority for armed opposition groups is the border crossings with Turkey whose access they have sought to control. The Ahrar-Al Sham group, established control over the Bab al-Hawa crossing between 2015-16, and earned around $5 million per month. Armed opposition groups have been involved in conflict with each other over control for border crossings, particularly conflict between Hay’at Tahrir al-Sham (HTS) and Ahrar al-Sham in 2017 (al-Kattan, 2017).

    The Syrian army (that was cross-sectarian) is in crisis of its reducing force size as it is hampered by resistance to conscriptions and many desertions. The Alawite sect was co-opted into the state’s army, political and security apparatus, resulting in tensions along sectarian lines. Another significant development was that those among the pre-war elite who advocated for a political solution based on power sharing were expelled from it, resulting in the contraction of the core to comprise of individuals along sectarian lines. Further, pro-regime militias emerged as pro-government communities were forced to rely on themselves for their defence, leading to a widespread localisation of power to fiefdoms (al-Kattan, 2017).

    The political, economic and security dimensions of the conflict which led to the emergence of war economies has been accompanied by shift of composition of the economy marked by the emergence of ‘war commanders’ and a decentralised elite, who capitalised on evading sanctions, served as middlemen between the armed groups of the state and opposition and established monopoly upon the supply of goods and services.

     These developments further led to the emergence of new centres of power which existed alongside the existing regime that consolidated its power by strengthening its relations with the new elite, army and security sector.

    The domestic dynamics of the Syrian conflict are closely related to a wider geopolitical struggle among regional and external actors who act as patrons for the domestic actors.

    In addition, by portraying itself as a bulwark against radical Islamism and strengthening its relations with influential individuals in minority communities and providing them with disproportionate authority within their societies, the regime’s efforts have redefined existing social hierarchies and co-opted pro-regime minority leaders to power. The regime’s policies, throughout the war, have not only strengthened the neo-patrimonial nature of the State and its relations with its multiple networks but lead to the decentralisation of a system of neo-patrimonialism (Middle East Institute & Etana Syria, 2020).

    The domestic dynamics of the Syrian conflict are closely related to a wider geopolitical struggle among regional and external actors who act as patrons for the domestic actors. The Syrian conflict that began as an internal conflict emerged into a proxy conflict where regional struggle for influence played out between the ‘resistance axis’ comprising of Hamas, Hezbollah and Iran, and Sunni dominated ’moderate’ states comprising of Saudi Arabia, Qatar and Turkey. The latter wished replace the Assad regime that was aligned towards the ‘resistance axis.’ Iran considers the Syrian conflict as threat to its survival and its ability to support Hizbollah against Israel.  The rival axes instrumentalised sectarianism as a part of their discourse and in their support for proxies. However, the interests of those within the Sunni camp clashed (with Turkey and Qatar’s support for the Muslim Brotherhood and Saudi Arabia and UAE against the Muslim Brotherhood and its version of political Islam) resulting in division of the Sunni camp further leading to the division of their proxies (Aita, 2020).

    The global struggle for power between the US and Russia, with the former promoting a liberal world order and advance its hegemonic interests, and the latter interested in increasing its sphere of influence, limiting US intervention while emphasising on state sovereignty. Russian intervention in Syria in support of the Assad regime tilted the power balance in its favour allowing the regime to gain control of its lost territories.

    Image Credit: Al Araby

    US sought to limit direct intervention in Syria while relying on proxies and financial sanctions (that it pursued along with the EU) to pressurise Assad’s regime to compromise to a solution that would promote its interests. Assad’s regime, due to its connection Iran, Shia militas in Iraq and Hezbollah in Lebanon, was able to manage despite the external pressure it faced. US attention and efforts were diverted to controlling ISIS. In 2019, while US withdrew from Northern Syria due Turkish intervention against the Kurdish forces, it announced it would redeploy its forces to the energy reserves in Deir ez-Zor to prevent Assad’s forces or ISIS from gaining control over them (Hinnebusch, 2020).

    The geo-political struggle for influence in the Syrian conflict among regional and global actors, has also transcended into efforts to capitalise on Syria’s post-war reconstruction efforts and business.

    With diversion of US efforts towards constraining ISIS, Russian intervention, growing differences between Saudi and Qatar, Saudi and UAE intervention in Yemen, have all resulted in a gradual withdrawal of the GCC, leading to a rise in the role played by Turkey, Iran and Russia. Turkey’s role and interests evolved from installing a Brotherhood government and targeting the regime to controlling the Syrian Kurdish PYD, which it views as a terrorist organisation. The threat of a confrontation with Moscow in Syria allowed it to participate in the Astana Process and a gradual realignment of its policy with that of Russia’s policy. More recently, Turkey and Russia have brokered a ceasefire deal in Idlib.

    The geo-political struggle for influence in the Syrian conflict among regional and global actors, has also transcended into efforts to capitalise on Syria’s post-war reconstruction efforts and business.

    This paper explores the local, regional and international dimensions of reconstruction and development Syria while analysing the impact the war has had on the political economy of Syria.

    Internal dynamics of Syria’s reconstruction

    The internal dynamics of Syria’s reconstruction are characterised by conflict among Syrian actors (supported by external actors) for resources and instruments that would lead them to strengthen their control. The regime views reconstruction efforts as a means to consolidate its authority and power over the country.

    Image Credit: NYT

    While the efforts made by the regime to consolidate its power and authority served its objectives and reduce the costs of governance, they have led to the decentralisation of political and security apparatus at the local levels. In addition, Iran and Russia continue to establish relations based on patronage with several Syrian clients. The integration of Hezbollah, Iraqi Shi’i militias and Iran’s revolutionary guards, have further loosened the control the regime holds over the security apparatus and strengthened sectarianism.

    The efforts of Assad’s regime have been directed at satisfying its loyalist elite on whom it is vitally dependent to legitimise its authority and power, and to a lesser extent the public.

    The regime sought to prevent local security apparatus from capitalising on their autonomy by incorporating them into the newly established units under centralised defence forces as in the case of the 5th Army Corps, although this was only partially successful. Russian intervention and participation in the conflict allowed it to establish order in the army.  The paucity of manpower further prevents the regime from extending its authority over the entire country, forcing it to continue to depend on its relations with tribal leaders and local warlords (Hinnebusch, 2020).

    The efforts of Assad’s regime have been directed at satisfying its loyalist elite on whom it is vitally dependent to legitimise its authority and power, and to a lesser extent the public. It encouraged its loyalists to participate and reap benefits off the war economies during the war as its authority over its local proxies declined, while the threat of being targeted by the opposition has ensured that the elites remain loyal. With the localisation of war, the regime has strengthened its relations with the elite while consolidating its power by encouraging investment of income and revenues earned through illicit means into the formal economy. The elite, the warlords, who are partners in the conflict are increasingly participating in the formal economy by setting up formal companies and businesses. However, there remains much to be done to fully integrate them into the productive economy, discourage involvement in rent seeking, and to promote the revival of a productive economy (Sinjab, 2017).

    One of the major effects of the conflict and its resulting socio-economic and political patterns has been the lawlessness, that serves as a deterrent to socio, economic and political cohesion, further preventing the investments required for reconstruction.

    Legislation aimed at Reconstruction

    The regime’s economic strategy for reconstruction namely the ‘National Partnership’, enforced in 2016, allows public bodies to form private investment companies while supporting the establishment of private firms.

    Image Credit: BBC

    Private investors are encouraged to investing in the remaining public property allowing the government to retain its influence on the economic movements. This serves the purpose of attracting new investors to invest in lucrative opportunities while the investments serve to support regime’s prime customers and clients. The legislation also enables them to obtain and secure public sector properties at the cost of the state treasury’s finances, thereby raising a doubt regarding the ability of the ‘new elite’ to alter the nature of the enterprise. Another significant measure taken by the regime as part of its reconstruction repertoire are property and urban reconstruction laws, including the Law 66 of 2012 and Law No 10 of 2018, that expropriate land and property from displaced opposition supporters in substandard living conditions and reallocate them to new upscale housing. This is meant to gather the support of the regime’s loyalists. The regime by creating uncertainty about the security of the property could discourage all investors with the exception of a few capitalists (Daher, 2018).

    Despite the fact that restrictions on capital movement makes it very difficult to attract investments into Syria, the Syrian government is implementing policies and schemes to attract financial aid from outside. It intends to tax finance inflows ranging from money sent by expatriates into Syria for humanitarian aid, which must be channelled through NGO’s funded by the regime. It also intends to attract $100 billion worth Syrian currency held outside Syria through tax concessions and by launching the Syrian International Business Association (SIBA) under the auspices of World Bank. Analysts warn about the difficulties associated with investments from other nations. They suspect that given the dispersion of investments, diaspora would find it difficult to compete with loyalists for reconstruction contracts and there may be issues with fraudulent officials and widespread corruption. The assets of those businessmen who left the state have been frozen. Lastly, the US and EU-imposed multilateral sanctions led to Syria being cut off from the international banking system(Aita, 2020).

    The Syrian Government has declared that reconstruction contracts will be granted to its supporters and not countries who supported its opposition. It has also offered concessions in order to attract investments from Russia and Iran, but this may jeopardize Syria’s financial independence in the coming years.

    Reconstruction of Syria would lead to stronger relations with Iran and Russia followed by simultaneous decline in relations with the West (to whoom it exported a major portion of its oil ) and the Arab Gulf. Previous economic partners may engage in reconstruction in areas where there is negligible regime-control. The reconstruction parameters are bound to affect Syria’s social fabric. The gap between the rich and the poor has widened due to the war economy. The rigged economy will put the interests and benefits of the common people in peril.

    Geopolitical Dynamics of Reconstruction

    The geopolitical struggle over reconstruction among competing players at the regional level is centred around increasing one’s own influence, either through direct intervention or proxies. Considering that different parts of Syria is under the control of different parties there is every chance that Syrian reconstruction effort may not be an integrated effort across the nation but rather take the form of parallel reconstruction initiatives across the many different areas of Syria.

    The global geo-economic factors influence whether resources become available for reconstruction and on what terms. Because the powers that are geopolitically strongest on the ground in Syria (Russia, Iran) are geo-economically weaker than those who lost the geopolitical conflict (US, EU, Gulf), the latter are using the capital that they can withhold and obstruct or seek to leverage their contribution to effect the looming winding down of the military conflict on their terms. They, together with the World Bank, are making their participation conditional on a political settlement. Specifically, this will affect whether the regime will be able to reconstitute authority over the country’s territory and its reconstruction, or will be forced into some sort of power-sharing/territorial confederation or, these failing, reconstruction deepens fragmentation. If the parties do not reach a compromise the outcome could be a frozen conflict consolidated by separate and minimalist reconstruction tracks.

    Further, regional and global actors that have not participated in the conflict happen to be economically stronger and have the means to mobilise resources. Their support and resources to fund the reconstruction and development of Syria remain contingent on the ability of Assad’s regime to fulfil their conditions of a political settlement.

    Russia’s Reconstruction Support

    Russia’s role in Syria’s reconstruction have been driven by the benefits a stable Syria could provide it. It has provided Assad’s regime with support in economic and military terms and settled Syria’s debt. Russia also seeks to renew and recoup its pre-war investments in infrastructure and energy sector, and establish new contracts in geo-strategic areas. Assad’s regime has been granted a preferential role in redevelopment of its energy and infrastructure sectors. The state of the Russian economy has made lesser resources available for investment. The risk of investing in Syria due to the political and security climate and the threat of being targeted by US sanctions have led to minimal investment into Syria. The entities that have invested are operated/owned by oligarchs close to Putin, and those under sanctions, for instance, Gennady Tim-Chenko’s construction company (Van Veen, 2020).

    Russia has realised that it lacks the resources to actively finance Syria’s reconstruction effort and instead focussed its efforts on building the state institutions necessary to provide adequate security infrastructure, which is an important pre-condition for any reconstruction effort.

    Russia has realised that it lacks the resources to actively finance Syria’s reconstruction effort and instead focussed its efforts on building the state institutions necessary to provide adequate security infrastructure, which is an important pre-condition for any reconstruction effort. Simultaneously it tried to seek support from the European Union and international organisations to create the necessary infrastructure required to facilitate the return of refugees based out of Europe while ensuring the attainment of a political settlement that helps Bashar Al Assad to stay in power (Daher, 2018).

    Image Credit: NYT

    Russia has also worked with the Assad regime to implement policies aimed at the return of refugees thereby addressing some of the requirements and requests of the European Union. However, Bashar Al Assad has so far only paid lip service to such requests.  For instance a law intended to promote reconstruction projects has been amended under Russian pressure but without any major changes to its provisions and was used to expropriate the property of Syrians who fled abroad.

    Iran’s Role

    Iran has provided Assad’s regime around $16billion worth of financial aid since 2012.It has provided an additional $3.5 million in 2013 which was further extended by $1 billion in 2015 and $6.4 billion and $700million to pro-Iran militias in Syria.   It has expressed its interests in participating in the reconstruction of Syria. Iranian entities were awarded numerous contracts worth millions of dollars to initiate redevelopment of the electricity infrastructure by the central government as well as local governments but are yet to be implemented. The Iranian Revolutionary Guards, who have considerable experience in participating in the reconstruction of Iran after the Iran-Iraq war and own vast construction companies in Iran, have entered into agreements in the sectors of mining and communications. While Iran has stated it would offer $1 billion for reconstruction, the amount it pledged is a minuscule amount of the total funds required. Iran’s participation in Syria’s reconstruction is also likely to be limited due to the impact of US sanctions on its own economy(Van Veen, 2020).

    Diminished role of US, EU and Arab States

    As for regime controlled parts of Syria, Washington moved to block reconstruction funding in these areas. US pundits argued that the regime would inevitably be empowered by reconstruction and should not be rewarded for its brutal repression of the uprising; anti-regime interest groups moved not only to preclude US funding but also to erect obstacles to others participating in reconstruction. In April 2018 the US Congress passed the No Assistance for Assad Act (NAAA) which was designed to prevent any drift from humanitarian assistance to reconstruction stabilization, and according to Faysal Itani, had the effect of ‘killing any World Bank dreams to get funding to operate in Syria’. Indeed, the US has a long history of directing the flow of world financial capital via sanctions, conditionality, etc. for its geopolitical purposes; in Syria, it seeks to manipulate money (geo-economics) to obtain what it could not achieve via geopolitics: specifically, keeping Syria a failed state that would make it a resource-draining burden for Russia and its allies.

    The US has used its influence in North-Eastern Syria, to counter efforts by the Assad regime to consolidate its power over Syria which is a precursor to a “nationally integrated” reconstruction. Establishing control over energy reserves is essential for Assad’s regime to pursue its reconstruction efforts successfully. The US, by controlling reserves in the North-East Syria, has been able to deprive Syria’s access to essential resources.

    US efforts in reconstruction have been motivated by its interests to deter any reconstruction efforts sponsored by the regime through geo-economics measures such as sanctions, when its geo-political efforts have had limited success in motivating Syria and its allies in pursuing a political solution in line with US policy interests.

    The US campaign against ISIS devastated Raqqa but reconstruction there has remained limited to stabilization measures. The Trump administration tried to get the Saudis to assume the burden of reconstruction (asking for $4 billion). The US goal was to start enough reconstruction to deter any move in the area to join regime sponsored reconstruction efforts (Alaaldin et.al., 2018; Burcher, 2018; Harris, 2018; US Congress, 2018;). US efforts at convincing Saudi Arabia to undertake reconstruction efforts have not been successful as the latter offered relatively smaller amount (al-Khateb, 2020).

    US efforts in reconstruction have been motivated by its interests to deter any reconstruction efforts sponsored by the regime through geo-economics measures such as sanctions, when its geo-political efforts have had limited success in motivating Syria and its allies in pursuing a political solution in line with US policy interests.  It simultaneously blocked reconstruction funding directed towards territories under the control of the regime. The Caesar Act, now incorporated into the National Defence Act of 2020, targets investment into Syria, through individuals and businesses coming into the ambit of the UN sanctions (Hinnebusch, 2020).

    While the EU has provided substantial aid to Syrian refugees in Syria’s neighbouring countries, it has made its aid and participation in reconstruction contingent on efforts to reach a political solution that is in accordance with ‘UNSCR 2254 and the Geneva Communique’

    The EU has been affected by the Syrian Conflict due to the influx of refugees and large-scale migration of its citizens to partake in terrorist activities. While the EU has provided substantial aid to Syrian refugees in Syria’s neighbouring countries, it has made its aid and participation in reconstruction contingent on efforts to reach a political solution that is in accordance with ‘UNSCR 2254 and the Geneva Communique’ (Van Veen, 2020).

    Russia is making efforts to broker a political settlement of sorts, with Turkey’s support, to convince EU to invest in reconstruction to enable refugees to return. While the EU seems to be relying on the inability of Syria’s allies to support its funding and thus force Assad to agree to the EU’s conditions, the regime does not seem to be interested in accepting EU conditions and give up its power in return for support of its reconstruction. However, individuals EU states have participated in reconstruction efforts in a limited manner in both the regime-held as well as opposition-held areas.

    Turkey continues to be one of Syria’s top trading partners. Numerous Syrian businessmen who have been exiled have invested in Turkey, around 26% of foreign investment in Turkey in 2014 originated from Syrian businessmen, particularly in its border regions with Syria. While a number of exiled Syrian businessmen supported the opposition, their investment would be instrumental, if mobilised, in territories held by Turkey and its militias at a time when refugees are returning to the region. While the Syrian government is against the participation of Turkey in the reconstruction of Aleppo, Russia’s efforts in mediation would lead Turkey to participate in the reconstruction process. Turkey has invested significantly in establishing institutions facilitating the governance of areas under its control and also in building economic infrastructure in these areas (Daher, 2018).

    While Jordan and Lebanon have expressed interest in participating in the reconstruction of Syria, the resources they can mobilise are limited.  The Gulf countries have, no doubt the resources required for reconstruction, but have made their role in Syria’s reconstruction contingent on withdrawal of Iran and its proxies and in case of some countries, a regime change. The UAE as expressed its interest in participating in Syria’s reconstruction so as to limit Iran’s influence. However, Yazigi (2017) states that reconstruction efforts, in the case of  Lebanon, were contingent on a solution that emphasised upon power-sharing, backed by regional and international actors and substantial financial aid from Saudi Arabia. It is unlikely that either of the two scenarios would play out in the case of Syria.

    China: A Possible Contender?

    the Chinese state considers Al Assad’s regime as a bulwark against terrorism and its relations with the regime an asset in combating Uighurs who are participating on the behalf of terrorists.

    China has expressed its interest in participating in the reconstruction of Syria to advance its interests through investments in economy and geo-strategic areas such as the maritime sector, and to develop and connect its Belt and Road Initiative in the region. Given China’s interests, size and nature of China’s capital, China becomes a viable partner in the reconstruction of Syria.  China conducted a trade fair in 2018, which was attended by 1,000 Chinese companies and witnessed an investment of $2 billion for the reconstruction and development of Syria’s industrial sector. Private investors have been concerned about the widespread corruption in Syria and the threats of being targeted by US sanctions. Moreover, the Chinese state considers Al Assad’s regime as a bulwark against terrorism and its relations with the regime an asset in combating Uighurs who are participating on the behalf of terrorists.

    Conflict Resolution vs Conflict Management

    Given that the warring parties consider the conflict to be more-or-less of a zero-sum game, territorial and social fragmentation of Syria, it would be extremely difficult for them to pursue means to resolve the conflict through creating the need for the conflict to be managed and downsized (Dacrema, 2020). The non-recognition of certain non-state actors by the rival sides and questions regarding the participation of non-state actors in negotiations, which would only serve to legitimise them further, complicates the process of negotiating a solution.

    Temporary Arrangements

    A strategy that would allow for the management of the conflict would be to negotiate temporary agreements and deals. Turkey and Russia have been able to broker temporary ceasefires at multiple instances, throughout the conflict, in the Idlib region. Temporary arrangements would help build confidence among the warring parties in the long run, and reduce the possibility of escalation of war (Dacrema, 2020).

    Conclusion

    Given that the warring parties prefer a status quo in comparison to the resolution of a conflict and value their geo-political and economic interests, it is highly unlikely that parties would push for resolution of the conflict. In consideration of a political stalemate, reconstruction efforts among the warring parties are likely to take place parallelly, as they have played out with the localisation of the conflict. While resources in the territories held by the regime are being diverted to areas that have remained loyal during the conflict and/or areas of strategic importance with areas formerly occupied by opposition forces receiving relatively lesser attention; territories under Turkish control and those held by the Kurdish forces have witnessed efforts aimed at stabilising the territories.

    Russia and EU have the potential and the leverage required to emerge as power brokers in the reconstruction and initiate the process in a manner that promotes social, economic and political cohesion in the long run.

    Russia and EU have the potential and the leverage required to emerge as power brokers in the reconstruction and initiate the process in a manner that promotes social, economic and political cohesion in the long run. The likelihood of being able to convince themselves that the possibility of achieving one’s interests alongside the other is a far better option in comparison to its alternative of a failed state, which threats both their interests. However, their ability to convince their allies and their clients (in this instance, Assad regime is Russia’s client) and the mistrust between both the parties as well as between their allies poses a challenge.

    Russia’s efforts in brokering a constitutional committee for Syria under the aegis of the UN is an indicator of a compromise. Hinnebusch (2020) suggests that “it is not impossible to move incrementally toward a minimalist sort of political settlement that might acquire enough international legitimacy to open the door to some reconstruction funding.” While the likelihood of this occurrence is difficult amid conflicting interests, it cannot be overruled.

    The humanitarian aspects of the conflict and urgent need for reconstruction to alleviate tangible and intangible costs of the conflict have largely been ignored. The warring parties have been preoccupied with advancing and fulfilling their interests at the cost of ordinary Syrians. There is a need for parties to acknowledge and make efforts towards the realisation of the urgency of reconstruction that is vital for securing the social and economic interests of ordinary Syrians. The likelihood of the same, however, is questionable.

     

    References

    Aita, S. (2020). Reconstruction as a political-economy issue: The case of Syria. Retrieved 28 June 2020, from https://www.thecairoreview.com/tahrir-forum/reconstruction-as-a-political-economy-issue-the-case-of-syria/

    al-Kattan, R. (2017). Retrieved 25 June 2020, from https://www.atlanticcouncil.org/blogs/syriasource/the-economic-case-for-syria-s-stabilisation/

    al-Khateb, K. (2020). US outsources Syria aid to Gulf. Retrieved 4 July 2020, from https://www.al-monitor.com/pulse/originals/2018/08/us-outsources-syria-aid-gulf.html

    Dacrema, E. (2020). Three Concepts to Understand the Future of Syria. Retrieved 25 June 2020, from https://www.oasiscenter.eu/en/what-future-for-postwar-syria

    Daher, J. (2018). The political economic context of Syria’s reconstruction : a prospective in light of a legacy of unequal development. Retrieved 3 July 2020, from https://core.ac.uk/display/162303203

    Hinnebusch, R. (2020). The Battle over Syria’s Reconstruction. Retrieved 1 July 2020, from https://www.globalpolicyjournal.com/articles/development-inequality-and-poverty/battle-over-syrias-reconstruction

    Human Rights Watch. (2019). Rigging the System. Retrieved 25 June 2020, from https://www.hrw.org/report/2019/06/28/rigging-system/government-policies-co-opt-aid-and-reconstruction-funding-syria#_ftn114

    Middle East Institute, & Etana Syria. (2020). Manufacturing Division: The Assad Regime and Minorities in South-west Syria. Retrieved 2 July 2020, from https://www.mei.edu/publications/manufacturing-division-assad-regime-and-minorities-south-west-syria

    Sinjab, L. (2017). How Syria’s War Economy Propels the Conflict. Retrieved 25 June 2020, from https://syria.chathamhouse.org/research/how-syrias-war-economy-propels-the-conflict

    Veen, E. (2020). The geopolitics of Syria’s reconstruction: a case of matryoshka. Retrieved 27 June 2020, from https://www.clingendael.org/publication/geopolitics-syrias-reconstruction-case-matryoshka

    Yazigi, J. (2017). Analysis: No Funds to Foot Syria’s Reconstruction Bill. Retrieved 1 July 2020, from https://www.newsdeeply.com/syria/community/2017/12/04/analysis-no-funds-to-foot-syrias-reconstruction-bill

     

    Main Image Credit: Palmyra before its destruction by ISIS – www.citymetric.com 

     

  • Lebanon’s Economic Crisis and Political Unrest

    Lebanon’s Economic Crisis and Political Unrest

    The Lebanon crisis illustrates the outcome of an inefficiently regulated market economy, shaped by long-term instant gratification of economic policies. Economy is run by corrupt institutions with ingrained crony capitalism, bureaucratic regulations and over-reliance on foriegn exchange.

    Lebanon is a free market economy in West Asia, bordered by Syria and Israel and the Mediterranean Sea, and hence, was a frequent recipient of spillovers of unrest and refugee crisis from the neighbouring countries. It is a service-sector dominated (majorly, banks and tourism) economy with a GDP of $56.9 billion─ growth rate of 0.2%, compared to 0.6% the previous year and a workforce of 2.4 million out of which 30 percent include Syrian refugees. The country relies heavily on imports (consumer goods, machinery and equipment etc) with a low dependence on exports (vegetables, non-precious metals and textiles). For years, Lebanon used foreign remittances such as transfers from non-resident Lebanese, foreign deposits and high government loans to balance the trade deficit. Lebanon exchange rate had been kept fixed at 1500 pounds per dollar which was also a fiduciary currency in Lebanon. Thus the higher demand for dollars to fixate the exchange rate, and meet the domestic demand for dollars, is levelled using foreign deposits by offering high yield rates, which had to be further funded by more deposits at even higher interest rates. These faulty policies had sustained the economy until interest payments had snowballed into heavy burden.

    Figure 1: trend of GDP per capita in Lebanon

    Source: Trading Economics

    Lebanese economy is also characterized by high government debt, substantially from domestic banks, borrowed primarily for reconstruction of the economy post civil war (1975-90). Over the years, the government relied more heavily on deficit financing to meet government spending, while the weak governance and corrupt politicians moved along with unfulfilled reforms and poor economic development. There was an underprovision of basic necessities like hassle-free electricity supply, regular water and waste management. On the other hand, crony capitalism had built up, with favours laid out to private businesses which were ultimately owned by rich, exploitative politicians. The debt-to-GDP ratio peaked to 150% by 2019, with a budget deficit of 11.5% of GDP and 50% of the revenues are consumed in debt servicing. This led to an economic crisis, followed by a political crisis, and ultimately snowballed into a financial crisis, rendered vulnerable and  in desperate need of foreign aid to see the day.

    Evidently, though Lebanon crisis started in late 2019, it is the result of long term economic policies mismanaged by corrupt political elite; when the government proposed to tax ‘free-calls in Whatsapp’ to meet the mounting budget deficit in October 2019, protests erupted across the country, catapulting into political unrest and ousting the prime minister. Investors and citizens lost confidence in the system, and led to reducing capital inflows.

    Their sovereign bonds were rated as highly risky assets (probable default),  leading to interest rates as high as 15%. The political uncertainty and the liquidity crunch, led to freezing of external deposits, while the steady domestic and foreign demand for dollars persisted, leading to a shortage of USD. The banks levied restrictions (weekly quotas) on dollar withdrawals, the dollar rate spiked, depreciating the pound, and reducing the purchasing power of the pound. This had squeezed the middle and low income strata the most, draining their last pounds of savings, since their debts substantially constituted dollar repayments. Businesses relying on dollars for most part were affected as the price of imports sky-rocketed, and the oil crunch tightened until the central government stepped in to ease the situation. The condition degraded further by the onset of Coronavirus and the lockdown, which led to widespread unemployment and inflation. The World Bank estimated that 50% of Lebanese population could be pushed below the poverty line by 2020 if immediate action is not taken.

    The debt of Lebanon has built up to 124464 billion LBP, i.e nearly $82 billion and the country has become the 3rd most indebted country in the world. In March 2020, Lebanon government, as a decisive step to prioritize the domestic concerns of the country and retain sustainable foreign exchange reserves in the economy, had defaulted on the Eurobond debt of $1.2 billion for the first time. The ailing economy seeks to restructure the other outstanding debts amounting to $31 billion and has been seeking advice, especially from the IMF on debt restructuring measures. There is a need for an ‘economic rescue plan’ to protect the depositors from this worst economic crisis Lebanon has faced.

    Figure 2: trend of Lebanon government’s debt

    Source: Trading Economics

    Foreign aid from the institutions is a big responsibility, as it would demand austerity measures from the economy that had dwelled in capitalistic pleasures for so long. Though, CEDRE and foreign countries like France and UK have promised ‘soft’ loans to the Lebanese government, economists believe that external aid would be unproductive, and will become an additional debt burden on the already bleeding financial system unless government inculcates greater transparency and accountability to the public, ousting corruption and following through on long-term economic policies with commitment.  Lebanon government is also seeking aid from the IMF. But  this would certainly entail strict reform targets linked to the outflow of credit and hence, is very unlikely.

    For the immediate future, Lebanon’s economic policies should be directed towards increasing  self-reliance in the economy, with higher focus on manufacturing sectors to create employment. Financial policies to stabilize the economy are of primary concern. It is time to make up for the blunders of non-performing investments in the electricity industry. Investments on infrastructural development should be realized and substantial attention should be given to improving  socio-economic conditions of the people. Construction and manufacturing industries should be supported. Actions should be taken to handle the refugee situation, and check the drain of human capital out of the country.   It could be said that Lebanon’s government has a long way to go before it can regain the confidence of its people and the foreign investors in order to stabilize the economy.

    Current Scenario

          Covid 19 has a destructive and deleveraging impact on all the economies, and Lebanon is no exception. The economy is heavily dependent on the service sector, especially tourism, and foreign remittances. The impact of the coronavirus pandemic has been devastating on the money the expats send home, which makes up nearly 12.7% of the GDP, making Lebanon the second-most remittances dependent middle-eastern country, only behind Palestine. Amid the collapsing economy and the disruption triggered by the Covid-19 pandemic, the only certainty is the gathering pace of Lebanon’s political unrest.

     

    REFERENCES

    https://www.nytimes.com/2019/11/15/world/middleeast/lebanon-protests-economy.html?action=click&module=RelatedLinks&pgtype=Article

    https://www.nytimes.com/2020/05/10/world/middleeast/lebanon-economic-crisis.html

    https://www.trtworld.com/magazine/what-s-behind-lebanon-s-economic-crisis-35874

    https://www.nytimes.com/2020/03/07/world/middleeast/lebanon-debt-financial-crisis.html

    https://www.nytimes.com/2019/12/03/world/middleeast/lebanon-protests-corruption.html?action=click&module=RelatedLinks&pgtype=Article

    https://www.theguardian.com/world/2020/mar/07/lebanon-to-default-on-debt-for-first-time-amid-financial-crisis

    https://www.nytimes.com/2020/03/07/world/middleeast/lebanon-debt-financial-crisis.html

    https://www.nytimes.com/2019/10/23/world/middleeast/lebanon-protests.html

    DATA- https://data.worldbank.org/country/lebanon

    https://www.britannica.com/place/Lebanon/Trade

    https://tradingeconomics.com/lebanon/government-debt

     

    Image Credit: Adobe Stock