Hezbollah’s Lebanon role may block Saudi military aid

Significance These reports follow the visit of the new Lebanese president, Michel Aoun, who made the first foreign trip of his presidency to Saudi Arabia and Qatar on January 9-11. Saudi-Lebanese relations, formerly close, have been frozen since Riyadh cancelled 3 billion dollars of military aid in February 2016. Impacts Lebanon’s economy could see a significant upturn in the coming months as a result of the opening. Oger, the troubled company of Lebanese Prime Minister Saad Hariri, could regain Saudi government backing. If Saudi assistance is not renewed, Iran could begin to provide military support for the Lebanese army. Difficulties agreeing a new electoral law are likely to cause a postponement of parliamentary polls.

Subject Outlook for Pakistan-Gulf relations. Significance Pakistan's parliament last month voted against joining the Saudi-led military intervention in Yemen. Since then Pakistan's Prime Minister Nawaz Sharif and Chief of Army Staff Raheel Sharif have visited Riyadh to clarify the decision, reassuring Saudi Arabia of Pakistan's support in case of any external aggression against the kingdom. The Yemen intervention has exposed some faultlines in the relationship between the two allies, as well as in Pakistan's ties with other members of the Gulf Cooperation Council (GCC), some of whom -- most notably the United Arab Emirates (UAE) -- described Pakistan's decision as "dangerous and unexpected". Impacts Pakistan will lose leverage in GCC states as the latter opt to provide aid via multilateral, international mechanisms. Islamabad will be reluctant to share nuclear technology with GCC states -- primarily for fear of provoking Washington. China will increasingly become Pakistan's preferred diplomatic and economic partner, despite a degree of mutual suspicion.


Subject Israeli domestic politics update. Significance Prime Minister Binyamin Netanyahu's cabinet unanimously approved a bi-annual state budget for 2017 and 2018 on August 12. While the budget reflects a policy of greater spending on social affairs and lower taxes, its main importance is political. Once approved by the Knesset in November, the budget will pave the way for Netanyahu to remain prime minister until the next elections, at present scheduled for early 2019. Impacts In his fourth term, with more than ten years as prime minister, Netanyahu faces no major threats to his leadership. No progress is expected in the Israeli-Palestinian process in the short-to-medium term. Israel will seek to secure a ten-year deal on US military aid before end-2016.


Subject Pakistan's ties with Saudi Arabia. Significance Prime Minister Nawaz Sharif visited Saudi Arabia last week -- for the second time in two months. Much attention focused on Pakistan's potential role in the Riyadh-led counterterrorism alliance, with the kingdom looking for a concrete commitment. With Iranian President Hassan Rouhani due in Pakistan at the end of March, Sharif sought to calm Saudi concerns about deepening Pakistan-Iran economic ties. Both relationships are bound to be complex balancing acts. Impacts Pakistan's army is unlikely to send troops for Riyadh's overseas military campaigns for fear of stoking sectarian tensions within Pakistan. An excessively pro-Iran attitude by Sharif's government would annoy Pakistan's military. Sharif will avoid this, in large part to ensure his own administration lasts its full term to mid-2018. Pakistan's reluctance to join Saudi-led military operations will increase Saudi dependence on other Sunni military allies, eg, Egypt, Sudan.


Significance The Pakistan Muslim League-Nawaz (PML-N)’s five-year term ended on May 31. PML-N President Shehbaz Sharif faces a tough fight to become prime minister, with the main challenge set to come from Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) and further opposition provided by Bilawal Bhutto Zardari’s Pakistan Peoples Party (PPP). Impacts With Khan as prime minister, the military would likely have free rein to pursue an anti-India foreign policy. Khan would step up his criticisms of the war in Afghanistan and likely have a difficult relationship with US President Donald Trump. Pakistan under any government will pursue balanced diplomacy in the Middle East, seeking good ties with both Saudi Arabia and Iran.


Significance Parliament on June 16 ratified a new electoral law, averting the looming political crisis that threatened to leave the country without a legislature. Impacts New, non-sectarian political movements could launch street protests against the law, as they plan a strategy for the 2018 elections. Redistricting could incentivise collaboration between the larger Christian parties. Prime Minister Saad al-Hariri will try to boost his re-election prospects through improved government performance. Border security, Syrian refugee fears, infrastructure spending and rubbish collection will be key areas of focus. Only a major regional crisis such as war between Israel and Hezbollah would be sufficient to postpone elections again.


Significance Manama is seeking multiple means to adjust to the impact of the pandemic, publishing a two-year budget in November that targets a steady decline in the fiscal deficit. Although Bahrain secured improved terms for its most recent bond issue in September, its debt-to-GDP ratio is climbing, to almost 130% this year. Impacts The new premier may incline to a more rigorous approach towards subsidies, benefits and taxation, but is likely to proceed with caution. The death of the veteran prime minister, Khalifa bin Salman Al Khalifa, who was close to key donor Riyadh, could introduce a new variable. Investors’ future interest in Bahraini bonds will depend on their perceptions of Saudi Arabia as an effective guarantor.


Significance The Pakistani armed forces are reportedly already involved in the campaign: some troops have been deployed in Saudi Arabia and a naval ship is stationed off the Yemeni coast. However, Prime Minister Nawaz Sharif's government is facing strong public criticism for jumping into this conflict, and has been forced to seek parliamentary support. Parliament's decision will have serious repercussions for Pakistan's Shia-Sunni dynamic and key regional relations. Impacts Sharif's handling of Riyadh will be key to securing future aid, especially for the energy sector. Islamabad will not wish to alienate Tehran over Yemen, even though Yemen is relatively peripheral to Iranian interests. Pakistan's long-standing security ties with Gulf countries will not be fundamentally altered by its decision on Yemen.


Significance He arrived in Malaysia on February 26 and Indonesia on March 1. The tour also includes the Maldives, Brunei and China, and is intended to increase Saudi religious, political and economic influence in the region. Impacts Saudi Arabia-South-east Asia trade will likely diversify. The transnational crime MOU with Indonesia could accelerate Jakarta's drafting of new anti-terrorism laws proposed in 2016. Improved Indonesia-Saudi ties will somewhat insulate Jakarta from tensions over Pertamina’s Iranian oil field investments. Closer Malaysia-Saudi ties could help Malaysia’s Prime Minister Najib Razak politically ahead of the next election.


Subject India's foreign policy in South and South-east Asia. Significance Prime Minister Narendra Modi last month visited the Maldives and Sri Lanka, shortly after his election victory and reinauguration. Leaders of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) had been invited to his swearing-in ceremony. When Modi came to power in 2014, invitations to his inauguration were sent to leaders of all countries in the South Asian Association for Regional Cooperation (SAARC). Impacts India will try to improve infrastructure in its north-eastern states to facilitate integration with mainland South-east Asia. Delhi will seek support from Tokyo and Washington to execute development projects in the region. Pakistan in its diplomacy will turn more pronouncedly towards China and Saudi Arabia.


Significance The agreement provides US President Donald Trump a signature foreign policy achievement ahead of US elections in November, while giving Abu Dhabi an opportunity to cement ties with Washington in case of a change of president. It also constitutes a major diplomatic victory for Israeli Prime Minister Binyamin Netanyahu, amid rising domestic woes. Impacts Some other Arab states such as Bahrain or Oman might follow the UAE’s lead. Saudi Arabia is likely to be more cautious, especially as it is preoccupied with internal succession dynamics. European countries will call for the suspension of annexation to be made permanent and Israel to return to talks with the Palestinians.


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