The Coronavirus and Its Geopolitical Implications in the Middle East
It has been a few weeks now that the whole world has been affected by the coronavirus crisis. The virus has caused already a high number of deaths while it is also destabilizing small and large economies across the world which may lead to widespread political unrest. This also applies to the Middle East, a region which already had to cope in the last few years with tense diplomatic and political crises, including countries like Iran, Israel, Yemen, Lebanon and Syria, to name a few.
Like elsewhere in the world, many political leaders in the region reacted to this pandemic by adopting protectionist measures both meant to protect public health and to avoid a disastrous domino effect in the economic sector. Some in Middle East have even decided to even adopt measures to avoid the return of nationals to their home country – in an attempt to avoid a further deterioration of the situation. The first country in the region to be badly affected was undoubtedly Iran which has very rapidly seen a rise in the amount of cases and deaths. Soon after, on 20 February 2020, Israel announced its first case and the number of people hit by the virus has since grown exponentially. For the moment, the contamination in countries like Jordan, Iraq or Lebanon is not as serious as the two-previously mentioned states; although severe geopolitical and economic repercussions can be observed in this particular area of the world.
Since the outbreak of the crisis, the Iranian government has had difficulties in slowing the spread of the virus. For his slow response, President Hassan Rouhani faced harsh criticism from not only his enemies but also from those within his own ranks. In Tehran, some ordinary people and politicians have started to express anger against their government whom they are blaming for its poor judgement and inability to apprehend the seriousness of the crisis. Even though the government approved a couple of measures at the beginning of the crisis to try to block the epidemic, it seemed that the current administration was willing, at first, to maintain economic activity. However, around mid-March, Ayatollah Ali Khamenei, the religious supreme leader who is also leading the military, issued a written order to the Commander in Chief of the Joint Armed Forces asking him to monitor the crisis, a move which was interpreted by many as a sign of distrust of the supreme leader towards the president.
Since the President had continued to argue in favor of not limiting economic activity and the military was willing to quarantine main cities and close off non-essential shops, Iran finally set up a response committee, bringing together both the military and the current administration. After a few days of confusion and disagreement between the two sides, the government apparently understood the necessity to take drastic measures to avoid more contagions. Nonetheless, the current situation is a serious setback for the country, already isolated due to the US sanctions. Indeed, on the one hand these sanctions prevent Iran from purchasing medical supplies and equipment needed to face the Covid-19 crisis. Yet, on the other hand, the already fragile Iranian economy is now paralyzed, unemployment is expected to reach an unprecedented rate and the government claims not to have enough resources to support millions of people under quarantine.
Another huge blow for the Iranian economy is the plummeting price of oil which is at one of the lowest levels in history. Although Iran has tried in recent years to diversify its state revenues and become less dependent on oil exports – especially under US sanctions – hydrocarbons still remain a substantial part of the state budget. As a consequence, Iran has asked for a five billion US dollar bailout from the International Monetary Fund in order to face the dramatic consequences of the coronavirus. This is the first time in 60 years that Iran has asked the IMF for help.
In terms of geopolitical moves, two main points deserve some attention. The first one is about Iran’s judiciary which recently announced the temporary release of about 85,000 prisoners and pardons for 10,000 others. This decision made by the Iranian authorities is aimed at reducing the spread of the virus. Among these prisoners, many of them are political prisoners from Western countries and other regions of the world. Thus, this health crisis could also represent some kind of opening for Western regions willing to repatriate their nationals currently jailed in Iran. The second point of attention is solidarity in the region. It has been a couple of years since relations between Iran and its neighbors have been at a low ebb, but some gestures of solidarity and assistance (such as humanitarian aid) towards Iran were made by Qatar and Kuwait. In addition, the Iranian Minister of Foreign Affairs had a call with his Emirati counterpart. These are encouraging signs in a conflict-torn region.
In Israel, the Covid-19 crisis has hit the country in very special circumstances: it has been more than a year since Israel has not had a government, although there is light at the end of the tunnel. Benny Gantz, leader of the Blue and White alliance party, last week became the Knesset speaker. Gantz was Benjamin Netanyahu’s main rival for the position of Prime Minister. In the current context, former PM Benjamin Netanyahu has apparently concluded a deal with Gantz to create a unity government to face the coronavirus pandemic and Netanyahu will probably remain as head of the executive for another 18 months. The pandemic has thus forced the two Israeli politicians to take an urgent decision to have a properly-functioning government in order to face the current crisis.
Interestingly, this context has led to some cooperation between the Palestinian Authority and Israel as well. In the last months, and especially since US President Donald Trump unveiled his “deal of the century” for the Middle East, relations between the two sides have been frosty and the emergency has brought them back to the table. The crisis is especially worrying in Israel, Palestine and the Gaza Strip, because of the high population density of these areas. Moreover, health systems in Palestine and the Gaza strip lack the resources (due to an Israeli blockade) to correctly confront the Covid-19. While many Israelis feel that Netanyahu has taken sufficiently strict measures, many also fear that these somehow violate Israeli democratic values and civil rights. Israel has for example allowed the Shin Bet, its interior security service, to track people infected by the virus. This decision was adopted unilaterally, without the approval of the Knesset, which raises profound concerns about the separation of power. Economically, Israel and Palestine are expected to greatly suffer from the situation (a loss of around four billion dollars according to the Israeli Ministry of Finances). Israel has for the moment resisted a total lockdown, but less people are going to work and the government is preparing a financial package to support small- and medium-sized businesses. One must also not forget that Israel – like the West Bank – is increasingly relying on the tourism sector which is now totally immobilized. For Palestinians, economic consequences can also be felt and the Palestinian Authority has lately ordered a total lockdown of the West Bank.
Although the Levant region is not the most affected area by the coronavirus, this issue joins a long list of military, political and economic concerns in the region. Among some of the main concerns include: the ongoing civil war in Syria; the region of Idlib in northwest Syria has become a regional battlefield and is a humanitarian disaster; Jordan is doing its best to welcome political refugees on its territory but is clearly lacking resources; and Iraq is struggling to constitute a new government and the country has to go through times of heightened tension since the death of the Iranian General Soleimani.
In the region, four principal concerns can be expressed regarding the spread of the coronavirus. First, the Levant region has one of the highest numbers of internally displaced people (IDP) and refugees. According to the UNHCR, Syria’s ongoing war has resulted in more than six million IDPs and five million refugees. Despite efforts of some countries and international agencies to help, living conditions in the overcrowded camps remain very precarious and a contamination of such a camp could have disastrous consequences. Second, as briefly outlined above, the long series of political crises have characterized the Levant region in recent times which has led, in most cases, to a weakening of both the political structures in place and the public trust towards the current regimes. Many citizens in the region feel that their country is being ruled by some politicians who don’t have any electoral legitimacy. Therefore, this makes it also difficult for many regimes in power to adopt measures which will be duly respected by their citizens.
Third, the clear lack of resources of the various national health systems makes it even more complex to track the virus and to have a realistic idea of its expansion in the region. In Syria, on 29 March 2020, only eight cases had been identified, which is very low in comparison to all the neighboring countries (Pakistan for example has blamed coronavirus cases on returnees from Syria). Thus, there is a high probability that the number of cases in some of the countries in the region is much higher than the current official data – due to the absence of an efficient detection process. The fourth and last concern is linked to Iran. Most of the states in the Levant region – such as Lebanon, Syria and Iraq – have good relations with Iran which is the country most affected. These three states have close economic ties with Tehran and trade is still ongoing between a majority of these countries, which might contribute to the spread of the virus throughout the whole region.
Collapse of the price of oil
The six monarchies of the Gulf Cooperation Council (GCC), namely Saudi Arabia, the United Arab Emirates, Qatar, Oman, Kuwait and Bahrain, have not been spared by the Covid-19 either. Even though it is slowly spreading in these countries, there are less reasons to be worried concerning the public health in the GCC countries than the Levant region. However, economic spillovers will probably be more serious for the monarchies, whose balance of payment greatly depend on hydrocarbons. For example, 50% of Kuwait’s public revenues depend on the hydrocarbon industry (oil and gas mainly). In the strongest monarchy of the region, Saudi Arabia, 40% of public revenues are linked to this industry as well. Thus, the economic development of these six countries relies heavily on the sector which is currently going through hard times. They not only depend on a high demand, but also on a high price of natural resources.
In the last months, and especially since January, oil prices have seriously collapsed. The Brent crude fell to around 25 dollars a barrel by the end of March, its lowest price since the Iraq War. From beginning of January 2020 to the end of March 2020, Brent crude has lost about 60% of its value. This collapse is obviously related to the coronavirus crisis and to the international chaos it has created. Since January 2020, demand for hydrocarbons has greatly decreased – as a consequence of the standstill of the global economy. In the beginning of March 2020, the OPEC cartel met in Vienna to try to find a coherent solution to the current crisis. Both Saudi Arabia (representing OPEC) and Russia then tried to conclude an agreement on a strategy to follow, yet both countries were unable to reach a deal. Saudi Arabia was willing to cut its production to support crude price, whereas Russia wanted to maintain the status quo, since Moscow thought that a reduced production would otherwise be beneficial to the growth of US shale producers. This set off a game of chicken in which nobody wants to lose even if it goes at the expense of oil prices. Not all Gulf Cooperation Council countries are equally dependent on the price of oil – Qatar’s economy relies, for example, more on the exports of liquefied natural gas (LNG) – but the regional situation could deteriorate if the global economy does not quickly recover from the Covid-19 and if the energy market does not stabilize.
In terms of public health, as previously mentioned, national healthcare systems in the six monarchies are efficient and modern, there is thus less worry about this area’s ability to manage the health crisis. Nonetheless, if public revenues were to remain lower than usual in the long-term, it could potentially have disastrous consequences for the region’s ability to correctly cope with the virus. Moreover, the virus will also have profound economic consequences on the tourism sector, an area which has exploded over the last years in the region. Several high-level events attracting plenty of foreign tourists and investors, such as the Expo 2020 in Dubai, are expected to be canceled.
On a diplomatic level, 2020 is the year of Saudi Arabia’s presidency of the G20. This puts a lot of pressure on the Saudi monarchy which will have to find concrete solutions together with its 19 other partners to stop the current global spread of the virus. Indeed, on 26 March 2020, a virtual Summit was organized by the presidency and King Salman of Saudi Arabia called on his partners to find a global answer to overcome the global health crisis. Last but not least, one must also notice that some of the GCC monarchies – Qatar, Kuwait and the UAE – have sent medical supplies and humanitarian aid to Iran. This is not really surprising coming from Qatar, as Qatar and Iran have these last years developed strong political and economic ties (to the fury of some Sunni-led monarchies). Kuwait has also had constructive and friendly contacts with Teheran. However, bilateral relations between the United Arab Emirates and Iran have recently been relatively tense and it is noteworthy that UAE has reached out and offered its help to Iran.
In Yemen, the civil war which started around 2015 is still raging with the Houthi rebel fighters opposing the Abdrabbuh Mansur Hadi-led government (backed by the military coalition led by Saudi Arabia). The war between both sides has been one of the bloodiest in history and the humanitarian situation is a disaster. According to the Office for the Coordination of Humanitarian Affairs (OCHA), 24 million people (more than two-thirds of the country’s total population) are in need of some kind of humanitarian or protection support. If, in addition to that, Yemen was also affected by the coronavirus, consequences would be dire as the healthcare system is totally ruined as a result of the war. To this day, no case has been identified in the country. On 23 March 2020, Antonio Guterres, Secretary General of the United Nations, called on an immediate ceasefire across the world in order to face the pandemic together. The Saudi coalition spokesperson supported this initiative, which was also warmly welcomed by the Abdrabbuh Mansur Hadi-led government. The separatists also backed this ceasefire a few days ago. However, peace in the area did not last long as Saudi Arabia claims to have intercepted two ballistic missiles on 28 March 2020. The real question concerning Yemen is whether, in the case Covid-19 would spread in the country (it is quite doubtful though that there is still no cases at the moment), the various actors involved in the conflict could put the civil war aside in order to manage a new potential humanitarian crisis in a country which is already in a precarious state.
Ultimately, national circumstances and realities need to be taken into account when trying to draw a general conclusion about the situation in the Middle East. Iran and Israel are the two most badly affected countries in the region at the moment and their proximity to the Levant region raises serious concerns about a potential increase of cases in countries such as Syria, Jordan or Iraq, which still today have to deal with a very tense political climate in the area. The spread of the Covid-19 in the Gulf monarchies is not as rapid as in other countries, but economic spillovers due to the current oil price war will probably be tremendous for them. Lastly, Yemen has currently no official coronavirus case and hopefully, the situation will remain as it is, since the country is already coping with an extremely worrying humanitarian situation.
Nonetheless, some positive signs can be seen, such as the help by three countries provided to Iran or the desire to set political ambitions aside in order to focus on the fight against the coronavirus in Yemen. Let us hope that all actors in the region will keep a cool head and will favor a coordinated and comprehensive approach to face this global health crisis.
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