Middle East: The end of Ramadan brings fresh problems

Qatar

Already a byword for insecurity and danger, the Middle East has this past month been plunged into further crisis by a number of issues. Qatar and six other states have all but come to blows, internal tension is brewing in Iran between the political and religious hierarchy, and an unexpected change in Saudi succession could drastically redraw the geopolitical map. These are interesting times indeed.
Qatar’s as-expected rejection of the thirteen demands made by Saudi Arabia et al has prolonged the wider Middle East crisis into another week. There was never really any expectation that Qatar would accede, as agreeing to the terms would essentially put the state in a position of subservience to Saudi Arabia and the UAE in political, financial and reputational terms. However all eyes will now be on the neighbours, for their response. Two potential courses for action now exist. The first is where the coalition accepts the need to continue negotiation in the hope of finding a solution. The second sees the coalition fully expecting a refusal, and arguing that this gives them justification to take more immediate and unilateral action.
At present there are few signs of which way the wind will blow. Any military movement would have huge repercussions for all sides, but it is difficult to see a peaceful way out of this now. For Qatar to bow down would be weakness, for the coalition to back away would be embarrassment.
More unexpected news came from within Saudi Arabia, where King Salman unexpectedly changed the line of succession, naming his own son Mohammed bin Salman as Crown Prince in place of his nephew Mohammed bin Nayef. While this seems to confirm the new trend in Saudi royalty of passing the throne down the bloodline of the current king, rather than between the sons of the first King as has been done previously, the impacts for the region could be far greater.
Mohammed is the architect of the Saudi military campaign in Yemen, which has been a failure at every level, not least in doing nothing to stop the worst famine and cholera outbreak seen in decades. He is the leading figure behind Vision 2030, an ambitious plan to move away from the Kingdom’s dependence on oil, but so far the beneficial impacts have been debatable. He will be charged with finding a path between the maintenance of an absolute autocracy and a cautious reform package. Above all, Mohammed’s relatively youthful age of 31 means that he could be King for several decades and thus shape the Middle East in his image for many years. His willingness to diversify, to promote reform and to tackle terrorism will all be watched and tested. It is to be hoped that he is up to the challenge.
Meanwhile across the Gulf in Iran, newly-re-elected and pro-reformist President Rouhani, returned to power in a landslide victory, has crossed swords with the Supreme Leader Khamanei. The spat began when the Ayatollah publicly proclaimed that Rouhani was ‘polarising’ Iranian society, and Rouhani was subsequently insulted and booed at a national rally with chants of “Death to the liar”. Khamanei has shown no indication that he will call for the anti-Rouhani demonstrators to cease.
It appears that the dispute centres over the role to be played by civil society in Iran, and whether tentative democratic steps might be made or whether the country will remain totalitarian. At the present time, the latter faction is very much in the ascendant. No matter the size of Rouhani’s mandate, he will never be able to overcome the Supreme Leader.
These events may be happening in isolation but taken all together they represent a sizeable shift in the politics of the Middle East and could have serious repercussions for trade and business in the region. Already Iran is struggling to regain business following the lifting of sanctions and an internal power struggle will do nothing to soothe investor confidence. Saudi Arabia needs to get its economy back on a surer long-term footing lest it scare away investors who think the country is too risky a prospect if it refuses to move forward. And above all, the Qatar crisis needs to be resolved as it dominates every other social, economic and political issue at present. The Middle East cannot be seen as a premier investment destination if it is essentially at war with itself.

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