Beard and Marinelli
Middle East Security and Economic Review
5 January 2009 – 18 January 2009
Security
Iran:
U.S. Rejected Aid for Israeli Raid on Iranian Nuclear Site
In 2008, the United States declined to provide Israel with bunker-busting bombs for use on Iran's Natanz nuclear facility and refused to let Israeli Air Force jets use American-controlled airspace over Iraq for an aerial strike against Iran. However, it appears the US has stepped up its intelligence-collection efforts against Iran, though specifics are not forthcoming.
Source: New York Times 10 January 2009
Iran Using Fronts to Get Bomb Parts From U.S.
According to the US government, Iran is using multiple front companies, some headquartered in Dubai, to acquire parts for Iraq-bound Improvised Explosive Devices and metals vital for ballistic missile guidance systems.
Source: Washington Post 11 January 2009
Iraq:
New Paths to Power Emerge in Iraq: Cleric's Ascent to Local Strongman Illustrates Shift Underway
In this extended piece, the Washington Post's Anthony Shadid outlines the story of one ex-Sunni insurgent's path to power—and his plans to maintain that power once America troops leave Anbar province.
Source: Washington Post 13 January 2009
In Iraq's Provincial Elections, Main Issue Is Maliki Himself
After almost three years in power, Iraqi Prime Minister Nouri al-Maliki has earned a sizeable following among the Iraqi people, among whom he enjoys a reputation as an "Iraqist—not an Islamist" and a non-sectarian politician. Despite this goodwill, Maliki is regarded warily by some as an emerging strongman, especially by Kurdish and Shiite politicians.
Source: Washington Post 17 January 2009
Israel/Palestinian Territories:
Israeli Forces Push Deeper Into Gaza Strip: International Critics Warn of Worsening Humanitarian Crisis
Israeli ground forces moved into the northern half of the Gaza Strip, attempting to encircle the area's largest city while air and naval forces fired on southern areas of Gaza. The UN renewed its call for a cease-fire while the Israelis appeared closer to beginning armed engagement with Hamas forces.
Source: Washington Post 5 January 2009
For Israel, 2006 Lessons but Old Pitfalls
Israeli military leaders and government officials have tried to apply lessons from their 2006 engagement with Hezbollah to the current campaign in Gaza. For example, the planning for operations in Gaza began a year in advance, the press is barred from the field, and cell phones have been confiscated from Israeli soldiers involved in combat operations. However, some have pointed out that the Israeli government, like in 2006, has not clearly defined its objectives for this campaign.
Source: New York Times 6 January 2009
Hamas Pulling Back Into Crowded Cities, Beckoning Israelis: For Army, Pursuit Is Tempting but Risky
As Israeli ground troops move into the Gaza Strip, Hamas fighters appear to have retreated into urban centers. Experts and journalists characterize the Hamas maneuver as daring the Israeli forces to attack them. For Israelis, it seems their main objective at this point is to weaken Hamas and its ability to attack Israel before international pressure halts military operations.
Source: Washington Post 8 January 2009
Hamas Announces Ceasefire in Gaza
Hamas announced it would cease hostilities for one week. This announcement comes hours after Israel declared its own ceasefire.
Source: BBC News 18 January 2009
Lebanon:
Lebanese Fear Israel's Next Step
Citizens of southern Lebanon, home to Hezbollah, fear renewed attacks from Israel in light of the ongoing military campaign in Gaza.
Source: BBC News 17 January 2009
Commentary:
Strange Ideas…
John Bolton, American Enterprise Institute Fellow and former US Ambassador to the United Nations, has written an op-ed in the Washington Post encouraging a new solution to the Israeli/Palestinian crisis. In his "three-state Solution," Bolton calls for the retrocession of the Gaza Strip and the West Bank to Egypt and Jordan. Suffice to say, his plan is short-sighted and unrealistic.
Bolton writes that a strong Egyptian role in Gaza will help maintain stability in both areas. Of course, he offers no specifics on how beyond the vague contention that Egyptian control of the Gaza Strip will enable the country to manage the threat the Muslim Brotherhood and Hamas' brand of Islamism poses to the Mubarak regime. Bolton offers even less specifics about Jordanian control of the West Bank, save to say that it is "less urgent" than the Gaza's retrocession. Absent from his plan are solutions to the already thorny problem of how to administer and/or give up Israeli settlement in the West Bank. Are Israeli settlers going to become Jordanian citizens and taxpayers? And, lest we forget, why would Jordan willingly want to augment its Palestinian majority and perhaps threaten the Hashemite Kingdom's ability to govern?
To his credit, John Bolton does manage to make a good point in this mess. He writes that the "two-state solution" is dead and only continues to merit pursuit by all involved simply because it is the only thing left to do. The Palestinian Authority is weak, Hamas is not likely to acknowledge the existence of Israel anytime soon, nor is the Islamic Resistance Movement likely to pack up and leave the Gaza Strip willingly. Bolton's plan, however far-fetched, is an attempt to think outside the box. Let us hope that the Israelis, Palestinians, and Americans are all attempting to do the same.
Early Revisionism
As time goes by, leaders will try to cast their past conduct in the best possible light. American politicians are no exception. And George W. Bush's allies have started early, not waiting for the man to leave office beforehand. A Charles Krauthammer op-ed published recently in the Washington Post is an early attempt at this sort of revisionism concerning Bush's most well-known policy decision: invading Iraq. As such, it falls flat.
In his piece, Krauthammer argues that President-elect Barack Obama has already begun to rehabilitate George W. Bush's reputation by not immediately throwing out Bush's entire "anti-terror infrastructure." Krauthammer cites as proof Obama's refusal in an ABC News interview to promise to outlaw all interrogation techniques not permitted by the Army Field Manual. Obama also said that "Dick Cheney's advice was good, which is let's make sure we know everything that's being done," before throwing out Bush-era methods. I would say Obama's sentiment reflects a desire not to tie himself to certain policies (or against others) before he takes office, rather than a conscious desire to rehabilitate George W. Bush's low reputation. A smart man like Krauthammer should know better.
However, Krauthammer may be right. Bush's reputation may very well improve with time. However, I honestly doubt Barack Obama, the man who campaigned against the Bush era to win office, will be the man to start restoring his reputation.
Economics
Budgets:
Dubai Expects $1.1 Billion Deficit
"Dubai expects to post its first budget deficit in 2009 as major infrastructure projects weigh on its budget, but the Gulf trade hub plans to raise spending 11%, a senior policy-maker said yesterday. The government fiscal deficit was expected to reach 4.2bn dirhams ($1.14bn) in a 2009 budget based on an oil price of $45 a barrel, said Nasser al-Shaikh, director-general of Dubai's finance department. Total government spending in 2009 was expected to reach 135bn dirhams, Shaikh said, with 37.7bn dirhams of that to be spent on the public sector alone. 'As far as I know we have never had a deficit in Dubai before,' Shaikh said. 'Operationally we are at a surplus of 3bn dirhams but if you add investment in infrastructure, the deficit is 4.2bn dirhams,' he said, referring to major projects such as the emirate's metro network and new airport. These projects would not however be delayed or cancelled…'His Highness [the ruler of Dubai Sheikh Mohamed bin Rashid al-Maktoum] has made it very clear that we will continue with our projects, [Shaikh] said."
Source: Gulf Times [Qatar] 11 January 2009
Oman: $2.1 Billion Budget Deficit
"Non-OPEC oil exporter Oman approved a budget for 2009 with an estimated shortfall of 0.81 billion rials ($2.1 billion), the official Oman News Agency reported…The 6.424 billion rial budget, approved by Sultan Qaboos bin Said earlier on 1 January, was based on an average oil price of $45 a barrel, the agency said. The previous year's budget assumed the same price."
Source: FX Street 1 January 2009
Iran Projects Oil Price of $37.5 for Budget
"Iran's 2009-10 budget is expected to be based on an oil price of $37.5 per barrel, a 'logical' level in view of last year's price fall, Oil Minister Gholamhossein Nozari was quoted as saying on Sunday…Economists said last year's budget was officially based on a price of about $40 a barrel but, when withdrawals from an oil revenue reserve fund and other crude-related earnings were taken into account, the state needed $70 or more to balance its books. The government has been seeking to reduce subsidies, a heavy drain on state coffers, including discussing utility bill hikes."
Source: Asharq al-Awsat 4 January 2009
SAGIA: 2008 Budget Surpluses Will Sustain Development Spending
"A declining oil price will have little impact on development plans for Saudi Arabia this year, according to a senior executive at the Saudi Arabian General Investment Authority (SAGIA). Abdulmohsen Al-Badr, chief executive officer of SAGIA's Global Competitiveness Forum, says the huge surplus accumulated by the kingdom over the past few years through record oil prices will ensure that development will continue through 2009. 'The deficit is something like SR65bn ($17.35bn) for 2009, but that will not amount to debt,' he says. 'The surpluses we have over 2008 and before will sustain spending.' SAGIA is responsible for one of the largest development projects in the kingdom, overseeing plans for six new economic cities at sites around the country. In November, King Abdullah bin Abdulaziz al-Saud announced that SR1.5 trillion will be spent over the next five years on infrastructure and other government projects. However, Riyadh is expected to post a budget deficit this year - the first time it will have done so since 2002."
Source: Construction News 9 January 2009
Banking:
Kuwaiti Bank in Default on Majority of Short-Term Debt
"Global Investment Houses KSCC defaulted on most of its loan repayments as the seizure of global credit markets hampers refinancing of Kuwait's biggest investment bank's short-term debt. Global is 'in default on the majority of its financial indebtedness' after a capital-repayment default in December on one of its syndicated facilities and because of the 'cross-default provision,' the bank said today in a statement to the London Stock Exchange, where its global depositary receipts are listed. Global continues to service all interest and coupon payments on time."
Source: Bloomberg 8 January 2008
Global Meltdown:
Dubai: House Prices Drop 8% in Q4 2008, but Still Higher than Q4 2007
"House prices in Dubai dropped by an average of 8 per cent between October and December 2008, according to research by Colliers International. The fall in prices wiped out any gains that were made during the second and third quarters of last year. Transaction volumes were also 45 per cent down in the fourth quarter compared to the third quarter. Colliers believe that a combination of tighter liquidity and negative sentiment were the key factors for the fall in prices and transaction volumes. International exchange rates also played a role, as the decline in the value of major currencies made dirham-denominated assets more expensive and discouraged some international investors. Despite the drop in prices and volumes, year-on-year prices rose by 59 per cent from the same period in 2007."
Source: Middle East Economic Digest 13 January 2009
Kuwaiti Foreign Minister: Arabs $2.5 Trillion Poorer Because of Credit Crunch
"Arab investors have lost 2.5 trillion dollars from the credit crunch, Kuwaiti Foreign Minister Sheikh Mohammad al-Sabah, whose country hosts an Arab economic summit next week, said on Friday. 'The Arab world has lost 2.5 trillion dollars in the past four months' as a result of the global financial crisis, Sheikh Mohammad told a press conference following a joint meeting of Arab foreign and finance ministers in Kuwait. He also said that about 60 percent of development projects 'have either been postponed or cancelled' by the six-nation Gulf Cooperation Council (GCC) states because of the global meltdown."
Source: Breitbart 16 January 2009
Iran, China Sign Oil Development Deal
Iran's official news agency says the country has signed a $1.76 billion deal with China to develop the North Azadegan oil field in southwestern Iran near the Iraq border. The IRNA report says the deal was signed Wednesday between the National Iranian Oil Company and the China National Petroleum Corp. Iran's Oil Minister Gholam Hossein Nozari says the field has an estimated 6 billion barrels of crude oil and will produce 75,000 barrels of oil per day for 25 years.
Source: Breitbart 14 January 2009