Jihadists will slow stabilisation of Yemen's south

Significance The bombing represents the latest setback to Saudi Arabia and the United Arab Emirates (UAE)'s efforts to stabilise southern Yemen and reinstall the government of President Abd Rabbu Mansour Hadi. ISG is just one of a number of sub-state actors that have been empowered by the conflict and that will seek to challenge central government authority. Impacts Insecurity in Aden will deal a blow to the legitimacy of the Saudi-backed Hadi government. A major setback in the south will reflect badly on the reputation of Saudi Defence Minister Deputy Crown Prince Mohammed bin Salman. Reconstruction efforts in southern Yemen will place increased long-term strain on the Saudi budget in particular. Southern Yemen could emerge as a key battleground in the rivalry between al-Qaida and ISG for leadership of the global jihad.

Significance The government was ejected from the city in clashes with the separatist Southern Transitional Council (STC) in August. Earlier this month, the sides signed a Saudi-brokered peace deal that provides for power sharing and the government’s return to Aden. Saudi Arabia is now responsible for most of the south: the Saudi military has taken over from departing forces from the United Arab Emirates (UAE). Impacts UAE forces stationed away from the areas of recent fighting may remain to support local partners. If it were successfully implemented, the deal would strengthen anti-Huthi forces, either in renewed fighting or in peace negotiations. The Huthis will attempt to disrupt the agreement, not least by launching drone attacks against Saudi forces in Aden.


Significance The initial focus was on professionals employed in the south-western border governorates; however, there are growing reports of an impact across the country, also including unskilled workers. This comes as the Saudi-led coalition continues its intervention in the Yemen conflict that began in 2015. The Riyadh-based government-in-exile has protested. Impacts Anti-Saudi sentiments will strengthen among Yemenis of all political affiliations. Mutual trust between Riyadh and the internationally recognised government of Yemeni President Abd Rabbu Mansur al-Hadi will decline further. In south-western Saudi Arabia, fear and anger between people of Yemeni origin and nationals will rise, undercutting long-term cultural ties.


Subject Political impact of subsidy reform. Significance Saudi Arabia introduced its first major cut to energy subsidies in January, leading to a rise in petrol, diesel, fuel oil, natural gas and electricity prices. Further cuts will be necessary to avert a fiscal crisis -- but with cheap energy seen as a basic part of the social contract between the government and the population, such measures are expected to have wide-reaching political repercussions. Impacts A decision to reverse subsidy cuts in the face of protest would undercut government credibility and reduce the prospect of further reforms. Yet persisting with subsidy reforms could damage government legitimacy and political capital among the youth and lower classes. Successful reforms will improve the long-term economic outlook, and the succession prospects of Deputy Crown Prince Mohammed bin Salman.


Significance The government has recently taken some modest steps to rein in the budget deficit, including cuts in energy subsidies, and has promised to improve disclosure of its fiscal performance, but is preparing further measures to put the economy on a sustainable long-term footing. Impacts Subsidy cuts and the prospect of VAT could cause popular resentment because they will affect ordinary citizens more severely than the elite. These measures will widen the income gap and, in the longer run, could increase pressure for more accountable forms of government. Land and other asset sales could generate controversy if businesses associated with the royal family are receiving special treatment. Capital spending cuts will create anger among the business community if projects linked to the deputy crown prince are protected. A prolonged fiscal squeeze could stoke tensions within the royal family and damage the credibility of the deputy crown prince.


Subject The potential for violence in Ghardaia Significance Violent clashes took place on July 8 in the oasis city of Ghardaia in the south of Algeria, between the region's two major communities, the Arabs and the Berbers. Clashes between the two groups have occurred sporadically since the 1970s. However, the most recent ones were the most violent so far: 23 people died and dozens were injured. The government deployed 8,000 troops in the city, but the escalating violence has raised concerns about the government's ability to resolve the conflict. Impacts More violence in Ghardaia would damage the government's reputation, undermining its ability to solve domestic crises. This would lead to a further loss of credibility at home and abroad. It could also cause concerns among oil investors, at a time when Algiers is looking to increase its hydrocarbons production.


Subject Prospects for the Gulf states to end-2017. Significance Gulf Cooperation Council (GCC) countries agree on the need to check Iran’s regional aspirations, but differ radically on how to achieve this goal -- pushing Saudi Arabia, Bahrain and the United Arab Emirates (UAE) to open confrontation with Qatar and leaving Kuwait and Oman caught uncomfortably in the middle. At the same time, they face the major challenge of adjusting their economies to long-term expectations of lower oil revenue.


Significance The Hadi government and the STC have been slow to implement the November 2019 Riyadh Agreement on power-sharing in the south. Tensions have again been rising between the two sides in recent weeks, with each making contradictory appointments to official positions in Aden. Impacts Emirati backing could encourage the STC to control Hadi’s government, undermining its anti-Huthi offensive in Marib. Saudi Arabia could further boost support for pro-Hadi forces because of UAE tensions, and strengthen them on the Marib front. Increased fragmentation of the political spectrum will make a long-term solution to the country’s crisis even more unlikely. The suffering and despair of millions of Yemenis will intensify.


Significance The trial comes amid an escalating crackdown against domestic opposition forces. The crackdown has been presented as a response to Iranian-backed subversion, but the government also has grounds for concern about popular discontent at worsening economic conditions, particularly among the country's Shia majority. Impacts Unpopular fiscal adjustments alone are unlikely to prompt major civil unrest, but could reinforce the Shia community's sense of exclusion. Hardliners are likely to intensify the crackdown further as economic reforms target allied business interests. The crown prince has a chance to rebuild influence on the back of economic reform, but hardliners will continue to dominate. Bahrain's dependence on Saudi Arabia for financial and security support will increase, although Riyadh faces formidable challenges itself.


Significance The elections were originally scheduled for October 8, but in response to the ruling the government has now announced a four-month delay. Impacts Israel will use Palestinian divisions and Abbas's lack of electoral legitimacy to postpone negotiations further. Despair resulting from internal stagnation and the lack of a peace process is likely to fuel further 'lone wolf' attacks on Israelis. The bar on Mohammad Dahlan may reduce aid to the Palestinians from his backers in the United Arab Emirates (UAE) and Saudi Arabia.


Subject Yemen humanitarian situation. Significance December will mark the ninth month since a coalition led by Saudi Arabia and the United Arab Emirates started fighting against an alliance of Huthi militants and forces loyal to former President Ali Abdallah Saleh in an attempt to reinstate the government of President Abd Rabbu Hadi Mansour. As a result, over 80% of the country's population of 26 million are in need of emergency assistance, and vital infrastructure has been destroyed. Impacts Yemen's social and political disintegration will deepen, and will be difficult to reverse. Concerns over the the humanitarian crisis's political impact will accelerate efforts to broker an end to the conflict. Traumatic stress, child malnutrition and lost schooling will reduce labour force capabilities for a generation. Reconstruction costs will put further stress on Saudi, UAE finances.


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