Monthly briefing: 13 key developments in the region

21 June 2022
Regional growth to reach 5.3 per cent; Abu Dhabi forms $10bn fund with Egypt and Jordan; US president to visit Saudi Arabia; Iraq yet to form a government; Damascus airport hit by Israeli missile attack; Algeria cuts ties with Spain

By Colin Foreman, Wil Crisp, Dominic Dudley, Jennifer Aguinaldo, Neha Bhatia and Indrajit Sen

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UAE forms $10bn fund with Egypt and Jordan
Riyadh inches closer to nuclear deal
Iran switches off cameras at nuclear sites
Buoyant oil lends Baghdad brief respite
Libyan oil exports slashed amid violence

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ECONOMY

Regional growth to reach 5.3 per cent in 2022

Economic growth in the Middle East and North Africa (Mena) region will reach 5.3 per cent in 2022 before slowing to 3.6 per cent in 2023, according to the Washington-based World Bank.

Strong growth in oil-exporting markets and a waning of the Covid-19 pandemic’s impact in countries with high rates of vaccination will promote growth in the Mena region.

GCC economies are expected to grow at a rate of 5.9 per cent this year before slowing to 3.7 per cent in 2023 and 3.2 per cent in 2024, the bank said. A growth rate of 7 per cent is expected in Saudi Arabia this year.

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OIL

Prices spike as Opec suffers significant loss of output

Oil prices rose in June following the announcement by oil producer’s group Opec that production had fallen in May after it agreed not to lift output capacity for the month.

Output dropped by 176,000 barrels a day (b/d) from April to about 28.5 million b/d in May. Brent prices closed at $121.17 following Opec’s output announcement.

Declines of a combined 252,000 b/d from Libya, Nigeria and Iraq outweighed supply hikes totalling 118,000 b/d from Saudi Arabia, the UAE and Kuwait during the month.

News of the drop accelerated concerns of undersupply in the market. Brent crude was trading at $113.21 at 12pm GST on 20 June.

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UAE

Abu Dhabi forms $10bn fund with Egypt and Jordan

The UAE, Egypt and Jordan have signed an industrial partnership for sustainable economic growth to unlock opportunities in the agriculture, food and fertilisers; minerals; petrochemicals; pharmaceuticals; and textiles sectors.

A $10bn investment fund managed by Abu Dhabi-backed ADQ Holding has been formed to accelerate the joint targets.

Initiatives to be explored under the partnership include developing opportunities in the combined $5bn-worth of textile industries in all three countries. Expansion projects worth more than $21bn will also be developed in the petrochemicals and manufacturing sectors, in addition to $23bn-worth of projects in the metals sector to manufacture high-value products such as glass, wires, car components and solar panels. Read more


SAUDI ARABIA

Biden to visit Saudi Arabia in first Middle East trip

US President Joe Biden will visit Saudi Arabia and is expected to have meetings that will also be attended by Crown Prince Mohammed bin Salman al-Saud in his first tour of the Middle East since taking office.

The trip is due to take place on 13-16 July and will include visits to Israel and the West Bank.

The US president is expected to seek a boost in Saudi oil production during his visit to the kingdom, marking a shift in policy for Biden, who as a presidential candidate linked the killing of journalist Jamal Khashoggi to the Saudi crown prince. Riyadh denies involvement in the murder.

Biden is also expected to attend a meeting of the GCC plus Egypt, Iraq and Jordan during the trip. Read more


IRAN 

Tehran switches off cameras at nuclear sites

Iran has started switching off cameras at its nuclear plant facilities after reports emerged that the country is beginning to
enrich uranium closer to weapons-grade levels.

Tehran is understood to have started installing advanced centrifuges in a cluster at an underground enrichment plant, and to have plans to add two more such clusters.

About 27 cameras were installed at Iranian nuclear facilities as part of the 2015 deal forged between Tehran and China, France, Germany, Russia, the UK, the US and the EU.

The latest move will further delay the reinstatement of the 2015 nuclear pact, for which negotiations have slowed in recent months. Read more

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IRAQ

Government formation talks remain in disarray

Iraqi Shia leader Muqtada al-Sadr has withdrawn from the political process and ordered 73 politicians from his party to quit the assembly citing corruption.

Al-Sadr was the winner of the parliamentary vote in Iraq and his bloc’s resignation further dents the process to form a new government in the country.

The October election saw him win 73 of the parliament’s 329 seats in a blow to Iran-backed Shia rivals that lost about two-thirds of their seats.

Al-Sadr requires a two-thirds majority in parliament – which is needed to elect Iraq’s next president, prime minister and new cabinet – but has so far failed to garner adequate support. Read more


Iraqi Shia leader Muqtada al-Sadr said on 15 June that he had decided to withdraw from the political process, citing corruption. Credit: Getty Images


SYRIA

Damascus airport hit by Israeli missile attack

Syria said in June that Damascus International airport had suffered major damage following an Israeli missile attack conducted as part of air raids targeting government troops and Iran-backed fighters from Lebanese Shia group Hezbollah. Damascus said runways, navigation lights and the airport’s lobby were damaged as part of the air strike from Golan Heights.

Israel says attacks in Syria are necessary to prevent Tehran from gaining traction in its vicinity. Damascus’ ally Russia – which maintains air bases in Syria and with whose support President Bashar al-Assad has gained the upper hand in the decade-long Syrian conflict – condemned the strike.


WESTERN SAHARA

Algeria cuts ties with Spain over territory dispute

Algeria has halted foreign trade with Spain after it suspended their bilateral 20-year-old friendship treaty in June and banned imports from the country.

Algeria backs the Polisario movement that is seeking independence for the Western Sahara region, to which neighbouring Morocco also makes claims.

In March, Spain recognised Rabat’s plan to grant the region autonomy rather than full independence, prompting Algeria to recall its ambassador to Spain at the time.

Threatened Algerian-Spanish ties are expected to complicate the North African country’s relations with the EU as the bloc seeks alternatives to Russian energy imports.


LIBYA

Clashes erupt as the power struggle continues

Clashes broke out between Libyan armed groups in June between the Stability Support Force, which backs Libya’s interim Prime Minister Abdul Hamid Dbeibah, and the Nawasi Brigade, which supports Fathi Bashagha, a political rival.

Gunfire and explosions were heard across Tripoli on 10 June. Bashagha attempted to seize power by force in May, leading to clashes between his armed groups and those backing the interim premier.

Dbeibah was appointed under a UN-led process to lead Libya to elections, which were initially set for December 2021 but were later postponed indefinitely.

Bashagha was appointed in February by the parliament to take over after claiming Dbeibah’s tenure has ended, but the interim prime minister has said he will relinquish power only to an elected official. Read more


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