Tag: Gulf states
Shore-up Jordan before it’s too late…
Ambassador Oded Eran (Senior Research Fellow, INSS, former Israeli ambassador to Jordan, the EU and NATO, and former head of the Israeli negotiating team with the Palestinians) and Eddie Grove (Research Assistant Intern, MEI and former Research Assistant Intern, INSS) co-authored an article entitled Threats to Stability in Jordan in the July 2015 issue of INSS Strategic Assessment. The article describes the challenges that Jordan must overcome in both the short-term and the long-term to remain stable.
Despite persistent predictions of the imminent demise of the Hashemite regime, Jordan has remained stable, buoyed by international aid from the US and the GCC. Jordan faces a growing jihadi threat, fueled largely by a poor economy and high youth unemployment. In the short-term, Jordan’s stability will be aided by low oil prices and a temporary rise in patriotism after pilot Muath al-Kasasbeh’s murder by ISIS. In the long-term, Jordan needs to address water and energy scarcity issues to remain stable and serve the needs of a growing population, including its many refugees.
Jordan has high unemployment, including a youth unemployment rate of ~30%. A few key reasons for this include:
- Jordan’s education system doesn’t provide students with necessary skills for the workforce.
- Jordanian students often choose fields of study that aren’t in high demand in the workforce.
- Syrian refugees compete for informal sector jobs.
Youth unemployment, often long in duration, leads to frustration. This frustration is compounded by a lack of avenues for political expression among Jordanian youth. Little real reform occurred during Jordan’s relatively small-scale Arab Spring protests.
Some discontented youth see jihadism as attractive. Experts estimate that there are 5,000-10,000 jihadis in Jordan, and that this number may have doubled since the Arab Spring. Jordan’s jihadis were traditionally mainly Palestinian, but growing numbers of ethnic Jordanians (East Bankers) have been joining the movement. East Bankers have traditionally been regime loyalists and comprise the majority of the military and security services. Cracks in their loyalty pose a serious threat to the regime.
The government closely watches jihadis; it arrests those who post jihadi content online and preachers who deliver extremist sermons. According to one expert, the vast majority of Jordan’s jihadis now sympathize with ISIS. ISIS has grassroots support, if not an organized presence. YouTube videos have shown pro-ISIS rallies in Ma’an and Zarqa and there is also evidence of ISIS sympathizers in Irbid. As of fall 2014, there were 1000-1500 Jordanian fighters in Syria, and 8% of Jordan’s population sympathized with ISIS. Ten percent didn’t consider ISIS a terrorist organization, and opposition to Jordan’s participation in coalition airstrikes was widespread: #ThisIsNotOurWar was a trending Twitter hashtag.
When Muath Al-Kasasbeh was murdered, it prompted an anti-ISIS backlash and a surge in patriotism. A February 2015 poll showed overwhelming support for Jordan’s participation in coalition airstrikes, and that 95% of the population now considered ISIS a terrorist organization. Confidence in PM Ensour’s government also increased. King Abdullah urged Jordanians to “hold their heads high.” This became a trending hashtag on Twitter. The surge in patriotism was not universal, however, as a Jordanian MP and a high-ranking Jordanian diplomat publicly derided this new slogan. In addition, an ISIS cell was arrested in Mafraq in March 2015, a poor city with many Syrian refugees.
The wave of patriotism will fade and energy costs will increase, so Jordan needs to address its water
and energy scarcity issues. Water scarcity may have been a contributory cause of Syria’s civil war, and Jordan is one of the world’s most water-scarce countries. Additionally, ~40% of the inputs into Jordan’s water networks become Non-revenue Water (NRW). NRW is essentially water that is not accounted for when customers are billed, due to leakage, illegal use, faulty meters, incompetent meter-readers, and poor accounting. Israel provides Jordan with water from Lake Kinneret, and this quantity may increase in the future. Jordan also plans to desalinate water at Aqaba. However, solving Jordan’s water crisis requires progress on multiple fronts, including NRW reduction (with the help of the international community). Climate change could worsen Jordan’s water woes, and comparisons between Jordan and Syria are ominous. Water scarcity drove internal migration in Syria, which combined with other factors like corruption, unemployment and inequality to ignite the crisis. Jordan displays similar risk factors.
Jordan must also address its energy scarcity issues. Jordan used to import natural gas from Egypt, but repeated terror attacks on the pipeline through the Sinai halted the imports and damaged Jordan economically, forcing it to import costlier petroleum products. Low oil prices provide a temporary respite. Fortunately, Jordan has plans to diversify its energy sources by 2020, with the following breakdown:
- 10% from wind and solar.
- 14% oil shale.
- 6% nuclear.
- 29% natural gas.
- 1% imported electricity.
- 40% petroleum products.
Unfortunately, this won’t happen, at least not by 2020. Israel may import gas from Israel, but this is politically challenging and Israel’s gas companies are embroiled in an anti-trust dispute with the Israeli government. Gas from Gaza is more politically palatable for Jordan, but is unlikely to come online soon for political reasons. Jordan imports LNG from Qatar, but this is costlier than gas via pipeline. Little progress has been made on the wind and solar projects, and Jordan’s nuclear ambitions may never come to fruition because of high costs and international opposition. Oil shale (not to be confused with shale oil) has never before been extracted on a commercial scale and may not be viable at oil prices below $75/barrel.
Costly energy imports damage Jordan’s economy (and therefore its stability) as follows:
- High energy prices increase the cost of living for struggling Jordanians.
- Jordan’s remaining energy subsidies are a burden on the government’s budget and divert funds from key areas.
- Energy subsidies crowd-out private sector investment.
Energy diversification (with the help of the international community) would alleviate these issues, and help counteract the poor economic conditions that contribute to the rise in jihadism.
Israel has a strong interest in preserving Jordan’s stability, as Jordan is a buffer state. Jordan used to
export goods through Syria, but Israel has allowed Jordan to use Haifa’s port for exports, and is improving the facilities there. The Israeli-Palestinian conflict is always a complicating factor in Israeli-Jordanian relations; the majority of Jordan’s population is Palestinian, causing a political climate in which Jordan requires at least a semblance of progress in Israeli-Palestinian negotiations to ensure quiet domestically. Jordan’s 2014-2015 UN Security Council membership further complicates this balancing act.
To shore-up Jordan’s stability, Israel can:
- Increase bilateral cooperation (this has likely already happened).
- Expedite water and gas transfers.
- Allow for greater access of Jordanian products to Israel, but more importantly, the Palestinian market.
- Increase its use of Jordan’s port of Aqaba, which could produce mutual benefits.
In addition, the US and GCC must keep up financial assistance to Jordan, but ensure that this assistance addresses long-term issues. The immediate risk posed by ISIS is likely not a frontal attack. ISIS rather seeks to exploit pockets of poverty and unemployment within Jordan, including among East Bankers. Financial resources are needed to prevent this.
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Nuance in regional reactions to the Iran deal
On Wednesday, the Wilson Center hosted a panel on “The Iran Nuclear Deal: The View from the Region.” Speakers included Muath Al Wari, Senior Policy Analyst at Center for American Progress, Deborah Amos, International Correspondent for NPR, Shlomo Brom, Visiting Fellow at Center for American Progress and Fahad Nazer, Political Analyst at JTG Inc. The event was moderated by Henri J. Barkey, Director of the Middle East Program at the Wilson Center.
Al Wari analyzed the UAE response to the nuclear deal. He claimed the UAE concern is less about the nuclear aspect and more about the fact that Iran ran a clandestine program under the authority of a state that is willing to undermine other governments in the region. However, Emiratis have decided to look towards the future, believing President Obama secured the best deal possible. The UAE is now looking at what the deal means for future Iranian encroachment in the region and what the US and other P5 countries will do to constrain Iran. The UAE hopes that Iran will normalize its regional behavior. In the coming days, the Emiratis will study the outcomes of King Salman’s visit to the US.
Al Wari criticized the sectarian portrayal of the nuclear deal. Regional concerns about the deal are linked to the geopolitical security competition. Sectarianism is exacerbated by the competition and contributes to it. His belief is that the deal is an American tool to prevent escalation in the Middle East—the agreement is a formal check on Iranian hegemony and encroachment.
Amos explained that the deal so far is unsurprisingly irrelevant to daily life, but the consequences of the agreement will be tested on the ground. She reiterated Al Wari’s words—the Gulf States want to know if attention will be paid to non-nuclear developments that are heating up. That said, the deal unlocks significant trade potential regionally (especially for the UAE and Oman) and globally. The calculus of power has already shifted, with Europeans sending trade delegations and major American companies, such as Apple, preparing to tap into the Iranian consumer market.
Brom delved into the nuances of the Israeli stance on the nuclear deal. For Israel, Iran’s nuclear program and the possibility of it acquiring nuclear weapons has always been a central issue. Indeed, Iran’s nuclear program is the centerpiece of Netanyahu’s foreign policy. He believes he won the elections because of his strong security agenda and perceives Iran as an existential threat. Many Israelis think the combination of a religious and ideological regime with nuclear weapons could lead to Iran striking Israel. However, Netanyahu’s opinion isn’t representative of all Israelis. Many dissenters coming from the Israeli security and foreign policy community, including Brom, believe the agreement is not perfect, but still better than no agreement. A better agreement would have been unlikely.
Like Brom, Nazer also cautioned against making generalizations about regional players. He thinks it is too simplistic to assume that all Saudis think the nuclear deal will usher in an Iranian hegemony with American blessings. Instead, he thinks the Saudi position has shifted slightly. The Saudis are no longer committed to preventing the deal from being implemented. The Saudis support any agreement that prevents Iran from acquiring nuclear weapons and guarantees the reinstatement of sanctions if Iran doesn’t comply. After Saudi Foreign Minister Al Jubeir’s visit to Washingon, he openly commended the robust inspection of the verification regime and provision of “snapback” sanctions.
At the same time, the Saudis are maintaining a wary position on the deal. Saudi Arabia is not depending on the US and hoping for the best. High-level Saudi officials have had meetings with Russians, Europeans and other key leaders. Prince Faisal has also said Saudis will expect the same nuclear standards for themselves and should be permitted at least the same levels of uranium enrichment capability as Iran. Prince Bandar has compared the Iran agreement to the nuclear agreement President Clinton signed with North Korea. He feels President Obama is not keeping the lessons of Korea in mind.
The US and Saudi Arabia also have differing threat perceptions. President Obama thinks Saudis need to worry less about an external threat from Iran and focus on the internal implosion stemming from a generation of youths with few hopes for the future. Conversely, the prevailing sentiment in Saudi Arabia is that Iran constitutes a serious threat. Saudi Arabia and Iran have been on polar opposite ends in Syria, Yemen, Iraq and Lebanon. Nazer believes there is a serious credibility gap between Saudi Arabia and Iran, which could lead the Saudis to take matters into their own hands, as they have done in Yemen.
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Europe at sea
On Monday, the Hudson Institute hosted a conversation with Rear Admiral Chris Parry, Royal Navy (Ret.), entitled Europe at Sea: Mediterranean and Baltic Security Challenges. Seth Cropsey, Senior Fellow, Hudson Institute, moderated. Admiral Parry spoke about the challenges that Europe faces, given that it is surrounded by water on three sides, and outlined several alternative political futures for Europe.
The threats to Europe from the sea are not new. In 1983, the USSR had a plan to attack Europe through the Central Front plus the Baltic and Mediterranean Seas. Understanding the way the Russians view the Black and Baltic Seas is crucial to understanding Putin’s motives. They have a very short coastline on the Baltic Sea. Until they took Crimea, they had a short Black Sea coast as well. This has always made the Russians nervous. Russia and the Scandinavian countries also have competing claims in the Arctic. Russia’s claims extend far beyond the UN Convention on the Law of the Sea, and Russian icebreakers now escort vessels through the Arctic.
Europe, however, is more worried about the Mediterranean because of unstable states in North Africa and the Levant, as well as migration both by sea and overland through Turkey. There is a risk for the return of Barbary piracy, as well as for seaborne terrorist attacks on coastal tourist areas. Northern Europe believes that it is the responsibility of Southern European countries to deal with this. The EU is not set up to make political decisions because it is an economic union with political pretensions. The effort needed to run the EU saps energy from efforts to address seaborne security threats.
Parry spoke about how influence has shifted, such that the important global players are now the US and the East Asian countries. The US is well-placed to benefit from globalization. If Europe isn’t careful, it will decline and become strategically irrelevant. In the future, Parry sees:
- An increase in the use of state power by non-Western countries.
- Small amounts of high-quality force will be decisive.
- Increased proxy activity, because states don’t want to directly confront each other.
- WMD proliferation.
- Increased terrorism.
- Diffusion of technology and weaponry.
There will be both irregular threats from terrorism, criminality, disasters and disease, as well as renewed threats from China, Russia, ISIS, Marxist revivalists (in Greece, for example), regional aspirants and weapons proliferation. Europe will need to contain a Middle Eastern equivalent of Europe’s Thirty Years War, ensure access to natural resources, and adapt to climate change.
Though Putin constitutes an existential threat, Parry noted that defense expenditure in Europe is declining. NATO countries still however spend more than non-NATO countries. It spends far more to shoot down a cheap missile than the missile costs; this unsustainable cost ratio must decrease. NATO has failed to resist coercion in Ukraine. Hitler knew he would win at Munich because he knew the British and French wouldn’t go to war. Putin is using traditional hard power and is confused by our lack of response. Russia’s Baltic Sea exercises are designed to resist NATO forces.
Scandinavia is nervous. Europe has become strategically dependent on the US; some European countries have armies that aren’t prepared to go to war. The UK is investing in new aircraft carriers but is hollowing out the rest of the Royal Navy. To resist coercion at sea from Russia, a change in attitude is needed.
Parry also spoke about the Middle East and North Africa (MENA). The Iran deal represents what is possible, rather than what is desirable. China and Russia have been keen to maintain Iran as a client state and suppress its nuclear ambitions. In the rush to welcome Iran into the global economy, we need to be careful about the security dimensions. As a result of the Sunni-Shiite conflict in MENA, the “Great Satan” tag will shift from the US to Saudi Arabia. China has invested heavily in new trade routes. It may get the bulk of its future oil and gas from Shiite Iran and Shiite-dominated Iraq. But China could also move into the Southern Gulf States if the US and Europe reduce their commitments there.
Like Russia, China is increasing its naval presence, sometimes disregarding the UN Convention on the Law of the Sea. There are increasing numbers of Chinese warships in the Indian Ocean as well as Chinese ships in the Mediterranean and Chinese icebreakers in the Arctic. China views its oil rigs as sovereign territory, which means that it believes it can base missiles and surveillance off of them. This is illegal under international law.
Parry outlined three different potential futures for Europe:
- A Eurasian future: the US drifts to the Pacific and Europe pursues economic cooperation with Russia and China.
- A maritime future: Parts of Europe, the US, Canada, Australia, New Zealand, Japan, and Korea together control trade on the seas. The sea is the physical equivalent of the World Wide Web and controlling it is vital for international trade.
- A fragmented future: There are no eternal friends or enemies, just interests, and each country pursues its own interests. Europe’s separatist movements could also lead to a fragmented future.
According to Parry, the US now faces choices as well. Unconventional oil and gas have been a game-changer for the US economy. The US has to decide whether it will use this money to remain strategically dominant or turn inward. The 2016 election will be crucial. In the future, if it becomes clear that help isn’t coming from the US, European countries will seek accommodation with Russia and East Asian countries will seek accommodation with China. This will have major geostrategic consequences.
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Peace picks July 20-24
1. Iran and the Future of the Regional Security and Economic Landscape | Tuesday, July 21st | 9:00 – 12:00 | CNAS | REGISTER TO ATTEND | Under the deal, Iran will put significant limitations on its nuclear program in exchange for sanctions relief from the international community. But the details and effects of the agreement are far from simple. Iran’s regional rivals, who are core U.S. partners in the Middle East, are deeply concerned about how the deal will change regional power dynamics. There are also questions about economic competition, particularly in energy markets, in the aftermath of
the nuclear deal. Keynote address by: Dr. Colin H. Kahl, Deputy Assistant to the President and National Security Advisor to the Vice President. Panelists include: Dr. Suzanne Maloney, Senior Fellow, CMEP, Brookings, David Ziegler, Distinguished Fellow and Director, Project on the Middle East Peace Process, WINEP, Melissa Dalton, Fellow and Chief of Staff of the International Security Program, CSIS, Elizabeth Rosenberg, Senior Fellow and Director, Energy, Economics, and Security Program, CNAS, Colin McGinnis, Policy Director, U.S. Senate Committee on Banking, Housing and Urban Affairs, Sean Thornton, Senior Counsel, Group Financial Security BNP Paribas, and Caroline Hurndall, Head of Middle East Team, British Embassy. Moderators include: Ilan Goldenberg, Senior Fellow and Director, Middle East Security Program, CNAS and Zachary Goldman, Executive Director, Center on Law and Security, NYU School of Law and Adjunct Senior Fellow, CNAS.
2. Women and Countering Violent Extremism: Strengthening Policy Responses and Ensuring Inclusivity | Tuesday, July 21st | 9:30-12:30 | USIP | REGISTER TO ATTEND | Women worldwide suffer disproportionately from violent extremism and conflict. Women’s key roles in society put them in ideal positions to prevent extremist violence. Yet, 15 years after the United Nations Security Council vowed to reverse the broad exclusion of women from leadership in security and peacebuilding, they
remain marginalized. On July 21 at USIP, experts from civil society, the United Nations, academia, and the U.S. government will discuss ways to include women in efforts to counter violent extremism. The debate will directly inform U.S. government officials preparing for major international conferences on these issues this fall. The U.N. Security Council recognized in 2000 (in its Resolution 1325) that we need women to help lead in global efforts at resolving violent conflict. Several current wars and conflicts underscore how the recent surge in violent extremism has given new urgency both to protecting women and including them in solutions. The U.N. secretary general’s special representative on sexual violence, Zainab Bangura, will discuss that imperative, having recently visited Syria and Iraq. Speakers include: Zainab Hawa Bangura, Special Representative of the UN Secretary General on Sexual Violence in Conflict, Ambassador Anwarul K. Chowdhury, Former Under-Secretary-General and High Representative of the UN, Timothy B. Curry, Deputy Director, Counterterrorism Policy, U.S. Department of Homeland Security, Eric G. Postel, Associate Administrator, USAID, Robert Berschinski, Deputy Assistant Secretary, Bureau of Democracy, Human Rights, and Labor, U.S. Department of State, Carla Koppell, Chief Strategy Officer, USAID, Nancy Lindborg, President, USIP, Chantal de Jonge Oudraat, President, Women in International Security, Susan Hayward, Director, Religion and Peacebuilding, Governance, Law and Society, USIP, and Jacqueline O’Neill, Director, Institute for Inclusive Security. Moderator: Kathleen Kuehnast, Director, Gender and Peacebuilding, USIP.
3. Islamic extremism, reformism, and the war on terror | Tuesday, July 21st | 10:00 – 12:00 | AEI | REGISTER TO ATTEND | President Barack Obama has said that the Islamic State (ISIS, ISIL, Daesh) and other extremist groups do not represent true Islam. The extremists, however, dispute this.
This leads to a basic question: What role, if any, does Islam play in fomenting terrorism? As extremist forces increasingly sow destruction, how should policymakers respond? How prevalent are moderates, and how serious are regional calls for a “reformation” within Islam? What role, if any, can the US play to encourage reform? How do anti-Islamic polemics undercut reform? Panelists include: Jennifer Bryson, Zephyr Institute, Shadi Hamid, Brookings Institution, Abbas Kadhim, Institute of Shia Studies, Zainab Al-Suwaij, American Islamic Congress, Husain Haqqani, Hudson Institute and Former Pakistani Ambassador to the United States, and Mohamed Younis, Gallup. Moderators include: Michael Rubin, AEI and Danielle Pletka, AEI.
4. Negotiating the Gulf: How a Nuclear Deal Would Redefine GCC-Iran Relations | Tuesday, July 21st | 12:00-2:00 | The Arab Gulf States Institute | REGISTER TO ATTEND | As a nuclear agreement between Iran and the P5+1 was recently finalized, few in the international community have more at stake than Iran’s Arab neighbors across the Gulf. Will the agreement usher in a new era of detente in the Middle East? Will Iran emerge as a more responsible partner, not just to the West but also to
regional powers? Can Iran and the GCC states begin to identify areas of cooperation to bring about more stability and security to the region? Will the agreement truly prevent Iran from developing nuclear weapons, or does the Middle East stand on the brink of another, particularly dangerous, arms race? Speakers include: Suzanne DiMaggio, senior fellow and the director of the Iran Initiative at New America, Jamal Khashoggi, Saudi journalist, columnist, author, and general manager of the upcoming Al Arab News Channel, Nadim Shehadi, director of the Fares Center for Eastern Mediterranean Studies, Fletcher School, Tufts University, Mohammad Ayatollahi Tabaar, fellow, Rice University’s Baker Institute for Public Policy and, assistant professor, Department of International Affairs, Bush School of Government and Public Service, Texas A&M University.
5. Russian Expansion – A Reality or Fiction: A Conversation with Elmar Brok | Tuesday, July 21st | 12:30-1:30 | German Marshall Fund | REGISTER TO ATTEND | With the Minsk II ceasefire in eastern Ukraine looking increasingly shaky, Europe risks a frozen conflict for years to come. However, is Russian President Vladimir Putin finished in Ukraine? Can the United States and Europe expect more aggression from the Kremlin or is consolidation Russia’s strategy now? What do the future of Russian relations with the European Union and Germany look like and what role do sanctions play in this calculation? Elmar Brok, chairman of the European Parliament’s Committee on Foreign Affairs, will answer these questions and provide analysis of U.S.-European views toward Ukraine and Russia. GMF, the Konrad Adenauer Foundation, and the European Parliament Liaison Office are pleased to jointly host this conversation.
6. Saudi Arabia’s Scholarship Program: Generating a “Tipping Point”? | Tuesday, July 21st | 1:oo | Atlantic Council | REGISTER TO ATTEND | Westerners most commonly associate the Kingdom with oil, religious conservatism, and a deeply unstable region. Our panelists will challenge such conventional perceptions by examining the seismic economic, social, and governmental changes underway, many of which evidently result in part from the deliberate Saudi government investment in its human capital. The panel will present the thesis that, having sent over 200,000 Saudi youth abroad in the past ten years with the King Abdullah Scholarship Program, the Kingdom is already experiencing powerfully transformative economic and social advances. Ambassador Francis Ricciardone, Atlantic Council Vice President and Director of the Council’s Rafik Hariri Center for the Middle East, will moderate the discussion. Hariri Center Associate Director Ms. Stefanie Hausheer Ali will present key data and analysis on the scholarship program’s origins and size as well as its costs and benefits from her case study for the King Salman Center for Innovative Government. Dr. Rajika Bhandari, Deputy Vice President of the Institute of International Education (IIE) and Director of IIE’s Center for Academic Mobility Research and Impact, will discuss the Saudi scholarship program within the context of other international scholarship programs and the types of impacts such programs can have. Ms. Samar Alawami, an American University graduate of the scholarship program and researcher at the King Salman Center for Innovative Government, will discuss how the scholarship is impacting her generation. Ambassador James Smith, President of C&M International, will reflect on the changes in Saudi Arabia he witnessed during his tenure as US Ambassador from 2009 to 2013.
7. Rebuilding Afghanistan: Transparency & Accountability in America’s Longest War | Tuesday, July 21st | 6:30 pm – 8:30 pm | PS21 | REGISTER TO ATTEND | As the longest running and one of the most expensive wars in U.S. history winds down, just where did the money go? PS21 is delighted to present a discussion with the man looking into that very question, Special Inspector General for Afghanistan Reconstruction John F. Sopko, and Just Security. Speakers include: John F. Sopko, Special Inspector General for Afghan Reconstruction, and Andy Wright, Founding Editor, Just Security
8. Nigeria: A Conversation with President Muhammadu Buhari | Wednesday, Jul 22nd | 9:45 – 11:15 | Located at USIP but sponsored by NDI | REGISTER TO ATTEND | Please read: Important information for guests attending public events at USIP. In a milestone for Nigeria and multi-party democracy in Africa, Muhammadu Buhari was elected president in March, becoming the first opposition candidate to unseat an elected Nigerian president through the ballot box. Following a vigorous political campaign period, Nigerians successfully managed a relatively peaceful electoral process and government transition. As the new government begins its mandate, political, economic and security pressures remain intense, including the escalating insurgency of Boko Haram and unresolved conflicts across the country. President Buhari’s remarks at USIP will come on the last of his three days in Washington, following his July 20 meeting with President Obama. All guests should arrive no later than 9:45 am to pass through security. Doors to the event will close promptly at 10:00 am.
9. Arbitrary Justice in Saudi Arabia: How Activists Have Organized against Due Process Violations | Wednesday, July 23rd | 11:30 – 1:00 | Located at Open Society Foundations but sponsored by Americans for Democracy & Human Rights in Bahrain and Amnesty International | REGISTER TO ATTEND | Americans for Democracy & Human Rights in Bahrain (ADHRB) and Amnesty International are cosponsoring an event to shed light on the absence of Rule of Law in Saudi Arabia. The discussion will outline the specific deficiencies within the Saudi criminal justice system that lead to the
commission of human rights violations, including judges’ lack of independence, practices of arbitrary and incommunicado detention, and a catch-all anti-terrorism law. Discussion will then turn to highlighting the cases of those activists, including members of the Saudi Civil and Political Rights Association (ACPRA) and human rights lawyer Waleed Abu al-Khair, who have sacrificed their independence to raise awareness of human rights abuses and bring reforms to this system. Panelists include: Abdulaziz Alhussan, Visiting Scholar at Indiana University’s Center for Constitutional Democracy and former attorney for several ACPRA members, Hala al-Dosari, Saudi activist and women’s health researcher, Sunjeev Bery, Director of MENA Advocacy at Amnesty International USA, and R. James Suzano, Acting Director of Advocacy at ADHRB.
10. On Knife’s Edge: The International Criminal Tribunal for the former Yugoslavia’s Impact on Violence Against Civilians | Wednesday, July 23rd | 12:00-1:00 | Wilson Center | REGISTER TO ATTEND | The post-Cold War era has witnessed horrific violence against non-combatants. In the Bosnian War alone, tens of thousands of civilians died. The founders of the International Criminal Tribunal for the former Yugoslavia (ICTY)—and then of the permanent International Criminal Court (ICC)—hoped these courts might curb such atrocities. However, we still know very little about their actual impact. This talk will draw on the ICTY’s experience as the first wartime international criminal tribunal to provide insight into how and when these institutions might affect violence against civilians. Speakers include: Jacqueline McAllister, Title VII Research Scholar, Ph.D., Northwestern University, Assistant Professor, Kenyon College and John R. Lampe, Senior Scholar Professor Emeritus, Department of History, University of Maryland, College Park.
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Global implications of the oil price crash
The steep decline in oil prices has been one of the most significant global economic developments over the past year. On Tuesday, the Carnegie Endowment held an event on “Oil Price Trends and Global Implications” to address the consequences. The panelists included Aasim M. Husain, Deputy Director in the Middle East and Central Asia Department of the IMF and Chair of the IMF Interdepartmental Oil Group, Uri Dadush, Senior Associate at the Carnegie Endowment and Mark Finley, General Manager for Global Energy Markets and US Economics at BP. The event was moderated by Michele Dunne, Senior Associate in Carnegie’s Middle East Program.
Husain assessed that the drop in oil prices will persist in the medium-term. Initially, when oil prices fell, futures prices did not fall with spot prices. Instead, spot prices fell around mid-year while futures prices started to fall in October. Markets expect some recovery of spot prices, but because of decline in long-term oil prices, the recovery will not be full—oil prices will not go back to $90-$100 per barrel, but they can go back to $70-$75 per barrel. Futures prices are predicted to remain in the $40-$100 range.
The drop in price was a result of decrease in demand as well as increase in supply. Unlike in 1986, when Saudi Arabia’s sudden increase in supply crashed oil prices, in 2014 the world experienced the shale gas revolution, lower extraction costs for oil and lower demand. Basically, a combination of factors led to the oil price crash, although supply factors played a larger role.
Unsurprisingly, “pass-through”—the change in oil price passed on to consumers—was minimal worldwide. Since many countries regulate or fix petroleum prices, consumers did not get the entire benefit of the oil price decline. The biggest pass-throughs were in Europe at 80% and in North America at 50%. Husain claimed that if oil prices were fully passed through, global growth would increase by 1% in a year.
The beneficiaries of the low oil prices have been governments and state-owned enterprises. What they do with revenue determines the consequences of the oil price shock. Some may increase government spending, while others may save more. The losers have been oil-producing countries that are receiving lower oil revenues and therefore have less to invest in global financial markets. Fortunately, many of these countries have accumulated large buffers that will give them time to make adjustments to the price decline.
Finley attributes lower oil prices mainly to changes in supply. In 2014, global consumption was in line with the long-term historical average, but supply was exceptionally strong—global oil production grew at almost twice the historical rate. All the net growth came from outside the OPEC countries, with the US shale gas revolution leading the way. In 2014, the US surpassed Saudi Arabia and Russia to become the world’s largest oil producer since 1985. Both Canada and Brazil also saw record increases in oil production and achieved all-time record levels on average in 2014. Global demand and non-OPEC production have begun to respond to lower oil prices, but the substantial increase in oil production means that the market remains significantly oversupplied.
Like Husain, Finley believes the persistent decrease in oil prices will continue through the medium-term. However, one must keep in mind ongoing supply disruptions in the Middle East and North Africa. Finley warned that any policy must be robust across a range of prices or be able to adapt to significant and unexpected price changes in the future.
Dadush believes oil price shocks stimulate economic activity in the short-run by redistributing income towards people who consume more with a high propensity to consume. But this effect lasts only so long. There will be—and already are—significant cutbacks in energy investment. Oil is only 2% of the world GDP when one looks at production, so an oil price change even by 50% doesn’t have a huge stimulatory effect on world supply. This means the stimulus from the oil shock is short-lived even if there is high pass-through.
With regard to the Iranian nuclear deal, the panelists agreed that the return of Iranian oil will increase supply, but it is unclear by how much because of uncertainty about Iran’s capabilities and the response of other OPEC producers. Any volume of incremental Iranian production would simply add to an already oversupplied market.
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Iran’s return to oil markets
Thursday, the Wilson Center focused on “Middle East Energy: Beyond an Iran Nuclear Deal,” which explored the oil and gas sectors’ future given Iran’s possible sanctions relief. Speakers included David Goldwyn, President of Goldwyn Global Strategies LLC, David Gordon, Senior Advisor of the Eurasia Group, Julia Nanay, Principal at Energy Ventures LLC and Jean-Francois Seznec, a non-resident Senior Fellow at the Atlantic Council. The event was moderated by Jan H. Kalicki, Wilson Center Public Policy Fellow and Energy Lead.
Gordon talked about potential energy market responses with the entry of Libya and Iran into the market. Libya’s entry last year put downward pressure on oil prices. The country is currently in the process of building up its export volumes, but the political and security fragility remains. Iran’s market impact is also uncertain. There may be competition between Iran and the Gulf Cooperation Council (GCC) states for market share. Iran’s success is far from assured. The current uncertainty ends up being bearish for energy markets, which will lead to the strengthening of the US dollar. Only the risk of supply disruption and failure of nuclear talks could be bullish for markets.
If sanctions are lifted, Nanay thinks Iran’s key goal is to become the second largest producer in OPEC. Saudi Arabia’s oil production amounts to 10.3 million barrels a day, while Iran is at 2.8 million barrels a day. Iraq’s is a bit higher. Iran might bring back 700-800,000 barrels a day, with 20 million barrels released quickly and efficiently. Sanctions have also prevented oil revenues from flowing back to Iran. There may be as much as $100 billion that could be released quickly, possibly half from China. International oil companies (IOCs) also owe large sums to Iran.
Possible losers from sanctions relief are the Saudis, Russians, Nigerians and Kuwaitis. The Saudis and Russians have been able to capture some exports to China. Sanctions relief would decrease the market share of all oil exporting countries that have benefited from having Iran off the oil market.
Iran has several stalled projects with significant market potential in the oil and gas sectors. A South Pars project requires 24 phases to develop fully, of which 11 phases have already been done without sanctions removal. Iran is looking to complete more phases by next year. Iran has also planned three big Liquefied Natural Gas (LNG) projects. Iran can ship this LNG to Europe and supply its neighbors, such as Saudi Arabia and Kuwait, but politics may complicate partnerships. The only neighbor Iran has a good relationship with is Oman. An Iran-Oman gas pipeline is possible, but the countries may disagree on price.
Seznec disagreed with Nanay on Iran’s potential in the oil market. Iran will require technology and investment that would make it dependent on IOCs. Instead, Iran can emphasize natural gas, which both Iran and the Gulf states need. The GCC states—especially Saudi Arabia—could partner with Iran in the gas sector. The Saudis have the technology and money to help the Iranians redevelop their gas fields. The Kingdom is seeking to avoid overdependence on crude oil. Instead, it wants to add value by building capacity for refined products and chemicals. Their vision is eventually to get out selling crude and leave Iran and Iraq as the “third world countries” that produce raw materials.
Goldwyn commented on Iraq’s position in the oil market. He believes Iraq might increase production by completing the revamp of the Al Faw Peninsula, but that is an $8-10 billion dollar project.
On the Baghdad-Kurdistan Regional Government deal, Goldwyn pointed out two reasons for the unraveling:
- Baghdad hasn’t paid Kurdish forces what it owes.
- The Kurds are not exporting the agreed-upon average of 550,000 barrels per day.
If Iraq is unable to increase production much and Iran produces an additional 500-800,000 barrels a day, there is no need for OPEC quota renegotiation, Goldwyn said. There is room for rapprochement on economics between Iran and the Gulf states. But first there must be rapprochement on security. If Iran reduces its involvement in Yemen and Iraq, there is potential for détente with the Saudis, who would also have to do their part in reducing the flow of funds to Al Qaeda and ISIS. If both parties deliver, an economic deal is on the horizon. Otherwise, the current situation will continue, with the Saudis better financed and more competitive than any other player in the Gulf.
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