Leader Development & Education for Sustained Peace Program: Cross-Cultural, Geopolitical & Regional Education

LDESP Middle East News Update – July 2012

The bimonthly LDESP Iraq News Update has transitioned to the monthly LDESP News Update From the Middle East. The Middle East update will include news coverage from Iran to Egypt. As with all LDESP news briefs, the information contained within the Middle East News update is to increase situational awareness concerning events that may affect your mission.

Disclaimer: Articles are taken from established and diverse professional periodicals, news articles, and editorial commentaries from different countries, reflecting a range of political views/biases, that are intended to provide readers with a better understanding of various interests and perspectives regarding the situation in the region. News summaries may highlight only a portion of an article that is relevant to the readers and may not necessarily be the focus of the entire article or the headline. Opinions expressed in the articles, commentaries and features do not constitute endorsement by the Department of Defense, the US Navy, or the LDESP staff.

As Syria Writhes, Divided Powers Meet in Geneva

Foreign ministers of world powers gather in Geneva on 30 June to try and forge a common strategy to end the bloodshed in Syria, but differences between Russia and the West may thwart them. Kofi Annan, the former U.N. chief who is special international envoy on Syria, has been hoping for consensus on a plan for a unity government that, by excluding from the leadership figures deemed too divisive, would effectively mean President Bashar al-Assad stepping down. However, Moscow, a long-time ally of the Syrian strongman and an opponent in principle of what it sees as foreign meddling in domestic sovereignty, has voiced objections to any solution “imposed” on Syria from outside, while the United States and its European and Arab allies see no way ahead with Assad in power. After Russian Foreign Minister Sergei Lavrov and U.S. Secretary of State Hillary Clinton met over dinner in St. Petersburg on 29 June, Lavrov echoed Annan’s own earlier upbeat assessment of the chances of agreement, but a senior U.S. official sounded less confident and said differences remained. “We have a very good chance to find common ground at the conference in Geneva on 29 June. Lavrov told reporters, while also warning against what he called a counterproductive effort to dictate the outcome of a political transformation in advance. (…) Assad on 29 June dismissed the notion of any outside solution to the crisis which has imperiled his family’s four decades in power: “We will not accept any non-Syrian, non-national model, whether it comes from big countries or friendly countries. “No one knows how to solve Syria’s problems as well as we do.” (Reuters)

U.S., Russia Hold Talks on Syria’s Future Ahead of Geneva

The top U.S. and Russian diplomats failed on 29 June to bridge their differences over Syria on the eve of a landmark multinational conference that had been designed to sign off on a plan to ease Syrian President Bashar Assad out of power. “We may get there tomorrow, we may not,” a senior State Department official told reporters as U.S. Secretary of State Hillary Rodham Clinton left Russia for Geneva, where the conference will be held on 30 June. Clinton and Russian Foreign Minister Sergey Lavrov met for one hour in St. Petersburg, then shared dinner before Clinton left Russia. The official said the two talked through all the areas of differences and difficulties. Areas of difficulty and difference remain, said the official, speaking on condition of anonymity to discuss sensitive negotiations. The St. Petersburg meeting occurred ahead of the 29 June conference aimed at ending 16 months of brutal violence in Syria. There was hope they could iron out deep differences over the transition plan being pushed by U.N. envoy Kofi Annan. It calls for the formation of a national unity government that would oversee the drafting of a new constitution and elections. (Associated Press)

Syrian Opposition Rejects UN Deal Even As Clinton Admits No Guarantee of Success

Syrian opposition groups denounced a U.N.-sponsored international agreement to set up a transitional government in Syria, calling it “ambiguous” and “a farce,” even as U.S. Secretary of State Hillary Clinton acknowledged that there was no guarantee that the new deal would succeed in ending the 16-month-long Syrian crisis. The agreement, signed on a day following the killing of dozens of civilians, including at least 30 in an explosion on 29 June in a suburb of Damascus, drew disapproval from the Syrian opposition with the Local Coordination Committees, or LLC, who said, “The new agreement provides vague language which is open to interpretation. “This provides yet another opportunity for the regime’s thugs to play their favorite game in utilizing time in order to stop the popular Syrian Revolution and extinguish it with violence and massacres across Syria,” LLC said in a statement on 2 July, as reported by CNN. “Syrians will not accept engaging in any political track while the killing continues,” said Paris-based Syrian National Council spokeswoman Bassma Kodmani, as reported by United Press International. The deal calling for a transitional government based on “mutual consent” gives veto powers to Syrian President Bashar al-Assad, the opposition and other groups. It also doesn’t say how to implement the plans or how long it will take before the new government starts functioning. (International Business Times)

Syrian Opposition Makes New Push to Unite

The head of the Arab League urged Syria’s exiled opposition to unite on 2 July, saying they must not squander the opportunity to overcome their differences as Western efforts to force President Bashar Assad from power all but collapse. (…) But more than one year into the Syrian revolt, the opposition is still hobbled by the infighting and fractiousness that have prevented the movement from gaining the kind of political traction it needs to present a credible alternative to Assad. “There is an opportunity before the conference of Syrian opposition today that must be seized, and I say and repeat that this opportunity must not be wasted under any circumstance,” Arab League chief Nabil Elaraby told nearly 250 members of the Syrian opposition in Cairo. (…) The divisions are tied to issues at the heart of the revolution: Whether to seek dialogue with the regime and what ideology should guide a post-Assad Syria. Unlike Libya’s National Transitional Council, which brought together most factions fighting Gadhafi’s regime and was quickly recognized by much of the international community, Syria’s opposition has no leadership on the ground. Regime opponents inside and outside Syria are a diverse group, representing the country’s ideological, sectarian and generational divide. (…) Communication between those abroad and those in the country is extremely difficult. (Associated Press)

Assad’s Regime, Syrian Rebels Both Committed War Crimes: U.N. Official

The Syrian government and opposition are carrying out “serious” new rights violations including attacks on hospitals, United Nations human rights chief Navi Pillay said after briefing the U.N. Security Council on 2 July. Pillay renewed an appeal for the 15-nation council to refer the Syria conflict to the International Criminal Court but acknowledged that it would be a “political” decision. The U.N. official also said that both the government and the rebels are receiving more and more weapons, which is fueling violence in a 16-month conflict against Syrian President Bashar al-Assad. (…) The United Nations has said the violence has killed more than 10,000 people, while activist groups have put the death toll at more than 15,000. (Al Arabiya)

Egyptian High Court Dissolves Parliament

Judges appointed by Hosni Mubarak dissolved the Islamist-dominated parliament 14 June and ruled his former prime minister eligible for the presidential runoff election this weekend — setting the stage for the military and remnants of the old regime to stay in power. (…) The politically charged rulings dealt a heavy blow to the fundamentalist Islamic Brotherhood, with one senior member calling the decisions a “full-fledged coup,” and the group vowed to rally the public against Ahmed Shafiq, the last prime minister to serve under Mubarak. The decision by the Supreme Constitutional Court effectively erased the tenuous progress from Egypt’s troubled transition in the past year, leaving the country with no parliament and concentrating power even more firmly in the hands of the generals who took over from Mubarak. Several hundred people gathered in Cairo’s Tahrir Square after the rulings to denounce the action and rally against Shafiq, the presidential candidate seen by critics as a symbol of Mubarak’s autocratic rule. (…) Shafiq’s rival in the 16-17 June runoff, Mohammed Morsi of the Muslim Brotherhood, said he was unhappy about the rulings but accepted them. (Christian Science Monitor)

Mohammed Morsi Sworn in as Egypt’s President

Islamist Mohammed Morsi was sworn in on 30 June before Egypt’s highest court as the country’s first freely elected president, succeeding Hosni Mubarak who was ousted 16 months ago. Morsi promised a “new Egypt” as he was inaugurated as the Arab world’s first freely-elected Islamist president and Egypt’s fifth head of state since the overthrow of the monarchy some 60 years ago. (…) Morsi earlier took a symbolic oath on 29 June in Tahrir Square, birthplace of the uprising that ended Mubarak’s authoritarian rule last year, and vowed to reclaim presidential powers stripped from his office by the military council that took over from the ousted leader. But by agreeing to take the oath before the court, rather than before parliament as is customary, he is bowing to the military’s will in an indication that the contest for power will continue. (CBS News, Associated Press)

U.S. Pleased So Far With New Egyptian President, Clinton Says

U.S. Secretary of State Hillary Rodham Clinton says the Obama administration is pleased so far with commitments made by Egypt’s Islamist president-elect, Mohammed Morsi, but will reserve judgment on his government until it is up and running. Speaking to reporters in Finland on 26 June, Clinton said the U.S. was pleased that the new leader has pledged to respect Egypt’s international obligations, which Washington believes covers its 1979 peace treaty with Israel. She also said the Egyptian military, which is supposed to turn over power to the president on 30 June, deserved praise for “facilitating” a free, fair and credible election. (…) “We expect the transition to continue as has been promised by the (military) and we expect president-elect Morsi, as he forms a government, to demonstrate a commitment to inclusivity that is manifest by representatives of the women of Egypt, of the Coptic Christian community, of the secular non-religious community and, of course, young people,” she said. (…) The secretary also said, “We know a lot of work lies ahead. They have to write a constitution, they have to look at how they are going to deal with the judicial decision about the parliament and seating a new parliament.” (…) US officials have said the administration is willing to send a senior official to Cairo once Morsi is inaugurated and the military cedes the absolute power that it wields currently. (The Huffington Post, Associated Press)

Bahrain Opposition Says Leader Injured in Police Clash

The head of Bahrain’s leading opposition party was hit by a rubber bullet and a teargas canister during clashes with riot police late on 22 June, the party said, accusing the government of intensifying a crackdown on protests. Bahrain’s police said one man was taken to hospital and a number of other people were injured in the confrontation. (…) The leader of the opposition Wefaq party Sheikh Ali Salman was hit on the chest and shoulder by a rubber bullet and a teargas canister on 22 June, the movement said in a statement. It added several others were also injured including Hassan Marzouk, pictures of whom circulated on social media showing him lying on the ground covered in blood around the neck. Witnesses said large number of police turned out to stop the march. They said they saw police firing teargas and demonstrators throwing petrol bombs. “Security forces have been careful in dealing professionally with political leaders but this time was different. It seems a gradual crackdown is going on,” said senior Wefaq party member Matar Matar. “They are closing the small margin for freedom of expression.” The government has denied it is cracking down on demonstrations, saying it has allowed several to take place this year. (Reuters)

Bahrain to Pay $2.6 mln Compensation for Revolt Deaths

Bahrain will pay $2.6 million in restitution to 17 families over the deaths of 17 relatives last year during protests in the Gulf Arab state, a government statement said. Separately, a high court toughened charges against three policemen, ruling they would be tried for murder – exposing them to a possible death sentence – rather than manslaughter for killing three protesters. Bahrain, where the U.S. Fifth Fleet is based, has been under pressure to implement recommendations for police, judicial, media and education reform made by an investigative commission of international legal experts. But the country remains in turmoil as opposition groups continue protests for democratic reforms and against what they say is discrimination. (…) The dead were mainly protesters but included five security personnel and seven foreigners. The report said five people died due to torture. The High Criminal Court ruled that the three policemen accused of killing three protesters in March 2011 should face trial for murder – a change that could expose them to the death penalty, the information ministry (IAA) said in a statement. A fourth policeman was sentenced in absentia to five years in prison for assault in the wounding of a protester with birdshot, it said. The officer was hospitalised with severe injuries suffered in a bomb attack in April, the IAA said. Bahrain’s government has given parliament more rights of scrutiny over ministries and budgets but rejected opposition demands for full legislative powers and elected government. (Al Arabiya)

Yemen Launches Transitional Program for Stabilization and Development 2012-2014

Yemen and donors held on 2 July a meeting which was dedicated to launching and discussing the transitional program for stabilization and development 2012-2014, just as the country is preparing for a fund-rally donor meeting in Saudi Arabia on 4 September. The program included four themes focused on early economic and social needs and urgent priorities during the transition period ongoing under a power-transfer deal backed by the West. The deal was signed in November after the mass protests against the former regime. The urgent priorities are: restoring political, security and economic stability, med-term economic recovery plans, developing the system of good governance and state building, human resources development and youth aspirations, improving the infrastructure and expanding social protection. The planning ministry, which prepared the program with technical support from donors, estimated the financing gap to implement the program at about $5.85 billion. The meeting titled: strategic partnership forum, also discussed the joint social and economic assessment report which was prepared by the EU, the UN, the WB and the Islamic development bank in close collaboration with the ministry. The assessment report outlined the impacts of the 2011 mass protests on the social and economic situation and requirements, mainly emergency aid to implement the program within the efforts to help Yemen. (Yemen Post)

Hadi Meets Benomar, Hold Talks on Yemen Transition

President Abdrabu Mansour Hadi on 30 June met with the UN special envoy to Yemen Jamal Benomar who arrived in the capital Sanaa to continue supervising the democratic transition under a West-backed power-transfer deal reached in November, Saba reported. Hadi pointed to the important international efforts backing the transition in the country, saying they can help provide a good opportunity to prepare for and hold a successful comprehensive dialogue under the deal and the UN resolution 2014, the agency said. He brought up the victory on Al-Qaida militants in the south, stressing the importance further cooperate and develop partnership to fight terrorism, which has no country and no religion, Saba said. Benomar hailed the competence of the Yemeni government, assuring the UN Security Council has unanimously and unprecedentedly decided to help it overcome all challenges and lift the country out of the current situation to go toward development and prosperity. (Yemen Post)

UN Threatens Sanctions Against Yemen Opponents

The U.N. Security Council has unanimously approved a resolution supporting efforts by Yemen’s president to advance the country’s transition to democracy and threatening non-military sanctions against those trying to undermine the country’s national unity government. President Abed Rabbo Mansour Hadi was sworn in 25 Feb. to replace longtime leader Ali Abdullah Saleh, following an uncontested election aimed at ending more than a year of political turmoil. The country still faces many unresolved conflicts and security concerns, including from al-Qaida in the Arabian Peninsula. The resolution adopted on 12 June condemns “all terrorist and other attacks against civilians, oil, gas and electricity infrastructure and against the legitimate authorities.” It demands “the cessation of all actions aimed at undermining the government of national unity and the political transition.” (Associated Press)

Concurrent Protests Held in North Lebanon in Solidarity with Syrian People

Tripoli witnessed two demonstrations on 29 June in solidarity with the Syrian people and against the rule of President Bashar Assad. In Qibbeh, protesters launched their demonstration from Hamzah Mosque, calling for supporting the “Syrian revolution for freedom and dignity.” Carrying banners condemning the crackdown in Syria as well as posters with images of the bloodshed in Lebanon’s neighbor, the protesters chanted slogans against the regime and its president. Others chanted in support of the “revolution” and the Free Syrian Army. Some of the demonstrators set ablaze a Hezbollah flag bereft of its slogan – “The party of God is victorious” – in a message to the resistance group that it will soon be stripped of its weapons. A similar protest took place in the courtyard of the Grand Al-Mansouri Mosque in the old quarter of the city. Abu Rabih Beiruti – the head of the Committee for the Preservation of Tripoli’s Heritage – and Mukhtar Walid Durniq demanded the expulsion of Syria’s Ambassador to Lebanon, Ali Abdel-Karim Ali. They also called on local officials to provide aid to Syrian refugees in Lebanon. Beiruti said the northern port city would always support “the oppressed” and called for the establishment of a consulate for the Free Syrian Army in Tripoli. (The Daily Star)

After Clashes, Lebanon’s Majority Steps Up

In recent days, the northern Lebanese city of Tripoli has been the site of highly publicised clashes between diverse political and sectarian groups. However while this small minority battles, the majority of Lebanese citizens are standing up against violence – both online and on the ground. Soon after the clashes began, Lebanese civil society activists condemned the spread of violence through Facebook, Twitter and blogs. Their calls for national unity and to disarm the city circulated online in record time. Building on this public support, activists created new social media pages – many of which gathered over a thousand members. These ordinary Lebanese citizens are standing up to show that they reject violence, that they are organising to stop it and that, ultimately, they refuse to be silent. (…) Demonstrators waved Lebanese flags, sang the national anthem and demanded an immediate response to the city’s problems of rampant poverty and a lack of security, which are seen as interrelated. They called on the state to provide better security and reiterated the need for street militias to disarm. The non-violent protest brought together the President of the Municipal Council, members of parliament from the region, as well as leaders from all faith groups and other members of civil society. Their message was clear: Lebanon needs to return to the rule of law and provide security for all, throughout the country. (Hurriyet Daily News, Common Ground News Service)

Monthlong Lebanon-Wide Security Plan Takes Effect

The police and army foiled attempts to block roads with burning tires in Beirut on 27 June as the monthlong security plan for Lebanon took effect. Internal Security Forces stopped a group of men in Zoqaq al-Blat from blocking roads with burning tires in protest at the arrest of a suspect who attacked Al-Jadeed headquarters earlier this week. (…) The security plan was launched in Beirut’s southern suburb of Msharaffieh. Interior Minister Marwan Charbel went to Msharaffieh on June 27 morning to inaugurate the project, which he had formulated with the country’s security agencies. (…) The plan calls for the Army and ISF personnel, in coordination with General Security, to man checkpoints on main roads and increase their patrols day and night. The police will request the support of the Army if deemed necessary during any raid. The source also said that the plan aims at restoring trust between security personnel and citizens by swiftly arresting those who violate the law. (The Daily Star)

Sliding Oil Price Rebalances Middle East Economy

Ziad Makhzoumi, chief financial officer of Arabtec ARTC.DU, the United Arab Emirates’ biggest construction firm by stock market value, thinks the region’s economy will probably ride out weak oil prices comfortably. But he sees a risk.If oil drops below the price at which energy-exporting countries in the Gulf can balance their state budgets – a scenario which he thinks unlikely – infrastructure and other building projects will slow down or in some cases halt. Fortunately, “governments are more prudent and forecast better now than they did many decades ago, and can juggle things to maximize the use of limited funds or make their cash go longer,” Makhzoumi told Reuters. Across the Middle East, executives like Makhzoumi are wrestling with the implications of the plunge in oil prices over the last several weeks. If the lower prices are sustained, or if oil falls further, it could be the most significant event for some economies since last year’s Arab Spring uprisings. Cheaper oil may boost growth in some of the weakest states while cooling it in the booming Gulf energy exporters. (…) Overall, said Liz Martins, senior economist for the Middle East and North Africa at HSBC in Dubai, the oil price drop could be good for the region, “by bringing the cost of oil down to a level which is more sustainable for everyone in the long term.” (Reuters)

Politics Hinders Aid to Arab Spring Economies

The international community, including the biggest Western economies and wealthy Gulf Arab oil exporters, pledged tens of billions of dollars of assistance last year. But only a small fraction of that sum has actually been handed over; in some cases, aid flows appear to be blocked or slowed by politics, economic policy or tight state budgets.”There is no such thing as a Marshall Plan for the MENA (Middle East and North Africa) region,” said Alia Moubayed, senior economist for the Middle East at Barclays Capital in London, referring to the U.S. aid scheme which helped Europe recover after World War Two.”Resource-rich Arab countries are channeling their financial support directly to Arab Spring countries in need based on their own economic and political strategic interests.” (…) “Calls for a Marshall-type plan come at a time when the economies and financial systems of the U.S. and the euro zone are experiencing a debt crisis, and they are not in a position to provide the necessary funds for such a plan,” said Yousif. (…) Since government-to-government aid is having only mixed success in solving the problems of Arab Spring economies, many analysts think the private sector needs to become more involved. (…) Ultimately, analysts said, Arab Spring economies will need to find ways to lure more foreign direct investment to fill the gap left by limited foreign aid. (Reuters)

Middle East Crude-Sentiment Weak, Demand Set to Fall

Sentiment in the Middle East crude market weakened on 29 June with global oil demand set to slow this year, weighing down prices in a market that is amply supplied. Global oil demand is expected to grow at the slowest pace this year since the financial crisis due to mounting economic weakness, a Reuters poll showed, with China’s slowing consumption growth expected to barely offset falling demand in developed economies. No deals could be confirmed on 29 June, as trading for August-loading cargoes has ended, trader said. Brent crude rose above $93 per barrel on 29 June after European leaders agreed on steps to tackle the region’s intractable crisis in a move that could lift the global economy and fuel demand, while supply disruptions also contributed. (Reuters)

Turkish-Syrian Relations Plunge

On the eve of the NATO meeting called by Turkey to discuss Syria’s downing of its plane, relations between the two neighbors are on a dangerous slope amid international calls on both sides to show self-restraint and avoid a military showdown. Turkey has said that Syria on 22 June shot down its military aircraft in international airspace and that it would formally consult with NATO allies on a reaction. Envoys from NATO member states will meet in Brussels on 26 June to discuss the issue amid very low expectations that it will induce a military strike against Syria. Since downing the jet on 22 June, Syria has been saying that the jet violated its airspace and asserted that it won’t tolerate any encroachment upon its sovereignty. (…) Syria also has launched its own threats. Spokesman Makdissi pointed out that Syria would react to any aggressive measure taken by the NATO. “If it (the NATO meeting) has an aggressive nature, we say to them: the Syrian land is sacred for the Syrian army.” Since the very beginning of the Syrian crisis, Turkey has been sympathetic with the Syrian opposition activists and has given safe haven to many of them. It is one of the countries that are most critical of the Syrian government and harbors on its territories around 33,000 Syrian refugees. (China Daily, Xinhua News)

Syria’s Assad Expresses Regret for Shooting of Turkish Warplane

While the circumstances of the shooting remain disputed, Mr. Assad was quoted in the Turkish newspaper Cumhuriyet on 2 July as saying: “I say 100 percent, I wish we did not shoot it down.” Turkey says the unarmed warplane was back in international airspace after straying into Syrian airspace when it was shot down. Syrian officials have said it was close to shore batteries that opened fire on it over Syrian waters. (…) The Turkish authorities have also ordered antiaircraft batteries to the 550-mile border with Syria and changed their rules of engagement with Syrian forces, threatening to respond militarily to any Syrian deployments they see as threatening. The Turkish military said on 2 July that it had scrambled fighter jets for three days in a row in response to Syrian helicopters approaching the boarder, Reuters reported, but that there had been no violation of Turkey’s airspace. (…) The interview, conducted in Damascus on 1 July, was published on the same day as Human Rights Watch accused the Syrian authorities of abuse of their opponents amounting to a crime against humanity. The report came as the uprising in Syria continued into a 16th month with thousands of people reported killed and diplomatic efforts to end the crisis hampered by international divisions. (The New York Times)

Iran Ready to Restore Diplomatic Relations With Egypt, FM Says

Iran’s foreign minister Ali Akbar Salehy on 2 July said that his country was eager to exchange ambassadors with Egypt. Salehy was quoted by the website of Tehran Times as saying, “Iran has always expressed its interest in upgrading political relations between Tehran and Cairo to the level of ambassador, and, whenever the Egyptian side is ready, the Islamic Republic of Iran is ready to enhance ties between the two countries.” (…) Diplomatic relations between Egypt and Iran were severed more than 30 years ago, but since Hosni Mubarak was toppled in popular uprising last year, both Cairo and Tehran have signaled interest in renewing ties. (Egypt Independent)

Iranian General Warns Israel

A senior Iranian military general warned Israel against attacking the Islamic Republic saying it will “mark the end of its existence.” Iranian Army deputy chief of staff Brig. Gen. Mostafa Izadi warned Israel against waging military strikes on Iran’s uranium enrichment sites. “If the Zionist regime [of Israel] tries to take any action against us, it will mark the end of its existence and there is no doubt that they are unable to harm the [Islamic] Revolution and the establishment in any way,” the government-backed Press TV quoted him saying on 23 June. “The existence of numerous [Iranian] islands in the Persian Gulf has provided us with great capabilities, making the Islamic Republic the superior defense power in the region,” he said. (United Press International)

Saudi Arabia-Bahrain Union Reflects Gulf rivalry

In the new Middle East, formerly suppressed political parties, movements, and ideas are increasingly shaping a political and ideological discourse that departs from previous paradigms. An equally important trend that is receiving less attention, however, is the mobilization of counter-revolutionary and reactionary forces opposed to the changes taking place in the region. In this regard, Saudi Arabia’s proposal to forge a formal union with Bahrain, a subject that topped the agenda in a summit of the leaders of the Gulf Cooperation Council (GCC) member states in Riyadh in May, warrants a closer look. The collective call for freedom and democracy that has toppled despots in Tunisia and Egypt and threatened the survivability of other autocracies, including key Saudi allies, has not sat well with Riyadh. The onset of public demonstrations in Bahrain in February 2011 elicited Saudi Arabia’s most forceful response to date. (…) The protests in Bahrain raised particular alarm in the Saudi Arabai for three reasons: 1. The expressions of dissent in a fellow Arab monarchy and GCC member demonstrated that the GCC was not immune to the brand of democratic activism being exhibited elsewhere in the Arab world. 2. Bahrain is led by a Sunni monarchy that presides over a largely impoverished and underserved Shi’ite majority that makes up at least 70% of the country’s total population. (…) 3. Saudi Arabia believes that the unrest in Bahrain and elsewhere in the region strengthens the hand of its rival, Iran. (Asia Times)

Iraq Transition Raises Thorny and Expensive Questions

Why doesn’t the Iraqi government seem to like us? Why won’t Prime Minister Nouri al-Maliki give better treatment to the U.S. government officials whose military freed Iraq from Saddam Hussein and whose employees now are trying to make his country better? Why are we giving more than $1 billion next year, mostly to Iraq’s military, while its oil income has soared, supposedly putting the Baghdad regime in surplus? These questions emerged on 28 June during a congressional hearing on the transition from a military to a civilian-led U.S. mission in Iraq. (…) Thomas R. Nides, deputy secretary of state for management and resources, took time on 29 June to discuss some issues on the Chaffetz list. Nides, who has monitored State’s takeover in Iraq from the Pentagon, insisted the Iraqis “want us there in a positive way.” (The Washington Post)

Violence Surge Spurs Fear for Iraq’s Stability

A half year after the U.S. military left Iraq, dire predictions seem to be coming true: The country is mired in violence and the government is on the verge of collapsing. With no relief in sight, there’s growing talk of Iraq as a failed state as al-Qaida’s local wing staged near daily attacks that killed at least 234 people in June. Iraq no longer suffers widespread retaliatory killings between Sunni and Shiite extremists that brought the country to the brink of civil war. But the spike in violence heightens fears that Iraq could limp along for years as an unstable and dangerous country. June was the second-deadliest month since U.S. troops withdrew from Iraq in mid-December as insurgents exploited the political struggles between the country’s ethnic and sectarian factions. More significant than the numbers was the fact that insurgents appeared able to sustain the level of violence over a longer period than usual. There was a major deadly bombing or shooting rampage almost every three days, many targeting Shiite pilgrims. (Az Central News, Associated Press)

Iraq PM Calls for Early Elections

Iraqi Prime Minister Nuri al-Maliki has called for early elections, a statement said on 27 June in the latest move in a series of political crises that has seen his opponents seek to unseat him. (…) The next parliamentary polls are due to be held in 2014. According to Article 64 of the constitution, parliament may be dissolved by an absolute majority vote. The process can be initiated in two ways, either by a request from one-third of MPs or by the prime minister after it is first approved by the president. President Jalal Talabani’s position on the issue was not immediately clear. Parliamentary elections in March 2010 did not produce a clear winner, leading to months of political jockeying that only led to formation of a government in December. Even so, such key positions as the defence and interior ministers remain vacant to this day, and are meanwhile held by Maliki. (…) Reidar Visser, an Iraq analyst and editor of the http://www.historiae.org website, said he believes the chances of parliament being dissolved are slim. (Agence France Presse)

Iraq’s Economy Shows Signs of Growth

Iraq is finally open for business, says al-Assadi, a powerful entrepreneur whose network of construction and other companies has won millions of dollars in Iraqi government contracts. “International companies are starting to come to Iraq,” he says. Buoyed by an increase in oil production and declining violence, Iraq’s economy is showing signs of life. (…) The International Monetary Fund forecasts Iraq’s economy will grow 11.1% this year to about $144 billion. (…) Encouraging U.S. investment One of the encouraging signs of Iraq’s economic recovery is foreign investment. Last year, Iraq attracted $55.67 billion in foreign investment and other commercial activity, a 40% increase from the previous year, according to Dunia Frontier Consultants. (…) Outmoded regulations Still, Iraq has made only limited progress in diversifying its economy.(…) Crony capitalism? Many investors are still taking a short-term view, looking for guaranteed government contracts rather than risking capital in expensive investments that might not pay off for years. (…) Despite drawbacks, economists and business people see enormous potential in Iraq. (USA Today)

Nuclear Negotiations Fail to Close Gap Between Iran and Major Powers

Iranian negotiators have used a PowerPoint presentation to spell out their position at “intense and tough” nuclear talks with major powers in Moscow, but the new techniques could not disguise the wide gap between Iran’s aspirations and the international community’s demands for them to curb their steadily growing nuclear programme. During a full day of talks in a Moscow hotel, the chief Iranian negotiator, Saeed Jalili, repeatedly called for relief from international sanctions and international recognition of Iran’s right to enrich uranium. He also rejected a multilateral confidence-building proposal for Iran to suspend the production of 20%-enriched uranium – widely viewed as a significant proliferation risk – shut the underground plant where much of it is made, and export its stockpile of the material. In return for these demands – which a senior western diplomat summarised as “stop, shut and ship” – the six-nation group negotiating with Iran, comprising the US, UK, Germany, France, Russia and China, offered to provide fuel for a medical research reactor, as well as help on civilian nuclear safety and parts for civilian airliners. Jalili rejected this offer. He called for sanctions relief in return for co-operating with the UN nuclear watchdog, the IAEA, and international acceptance of Iran’s right to enrich uranium, something the west is refusing to grant without far greater Iranian transparency on its programme. (The Guardian)

Iran Takes Defiant Steps Over New Sanctions

Iran took defiant steps on 2 July in response to the intensified Western sanctions aimed at stifling its oil exports, announcing legislation intended to disrupt traffic in the Strait of Hormuz, a vital Persian Gulf shipping lane, and testing missiles in a desert drill clearly intended as a warning to Israel and the United States. (…) The legislation calls for Iran’s military to block any oil tanker heading through the strait en route to countries no longer buying Iranian crude because of the European Union embargo, which took effect on 1 July. (…) In the second saber-rattling step, Iranian news agencies announced that the elite Revolutionary Guards Corps had begun three days of missile testing in the desert region of the central province of Semnan. Brig. Gen. Amir Ali Hajizadeh, a commander of the exercises, was quoted as saying they were intended as practice responses to attacks by “adventurous nations,” a reference to Israel and its most important ally, the United States. Israel, which regards Iran as its most lethal enemy, has not ruled out conducting pre-emptive military strikes on Iranian nuclear facilities if it concludes that the Iranians are on the verge of nuclear bombmaking capability. (The New York Times)

U.S. Adds Forces in Persian Gulf, a Signal to Iran

The United States has quietly moved significant military reinforcements into the Persian Gulf to deter the Iranian military from any possible attempt to shut the Strait of Hormuz and to increase the number of fighter jets capable of striking deep into Iran if the standoff over its nuclear program escalates. The deployments are part of a long-planned effort to bolster the American military presence in the gulf region, in part to reassure Israel that in dealing with Iran, as one senior administration official put it last week, “When the president says there are other options on the table beyond negotiations, he means it.” But at a moment that the United States and its allies are beginning to enforce a much broader embargo on Iran’s oil exports, meant to force the country to take seriously the negotiations over sharply limiting its nuclear program, the buildup carries significant risks, including that Iran’s powerful Islamic Revolutionary Guards Corps could decide to lash out against the increased presence. (…) “The message to Iran is, ‘Don’t even think about it,’ ” one senior Defense Department official said. (The New York Times)

Iran Acknowledges Oil Exports Down 20-30 Percent

ran acknowledged for the first time on 27 June that its oil exports have fallen sharply, down 20-30 percent from normal volumes of 2.2 million barrels daily. A National Iranian Oil Company official in Moscow denied exports had been hit by sanctions against Iran’s nuclear program, saying that oilfields were under maintenance and crude production was being diverted for refining. But the admission that exports have fallen substantially is a change of tack from Tehran which until now has denied that the U.S. and European measures have had much or any impact. (…) Customers in Europe and Asia have been scaling back purchases of Iranian crude ahead of European Union bans on imports and tanker insurance for ships carrying Iranian crude that are due to come into effect on 1 July. (Reuters)

Iran Grain Barter Deals Crash; Considers Big Buys

Iran’s attempts to secure millions of tons of wheat via sanction-beating barter deals with India and Pakistan are failing, and Tehran is poised to pay premium prices on international markets to secure food and stave off unrest. Food is not targeted under Western sanctions aimed at deterring Iran’s nuclear program, but in recent months it has paid high prices for grain to work around a freeze on financial transactions due to the measures. Iran had turned to India and Pakistan for wheat to meet some of its needs, but international grain traders say talks with both Delhi and Islamabad are deadlocked.”There is great doubt in the market about whether the Indian deal will happen. They are never going to get the phyto-sanitary standards worked out,” one European grains trader said. “Given the potential for food shortages to erode support for the regime, Iranian leaders are likely to continue to take an active role in attempting to secure high volume grain shipments through bilateral agreements. Despite some deals falling through, Iran has so far been relatively successful in securing large orders using its state food buyer.” (Reuters)

Saudi Readies Oil Line to Counter Iran Hormuz Threat

Saudi Arabia has reopened an old oil pipeline built by Iraq to bypass Gulf shipping lanes, giving Riyadh scope to export more of its crude from Red Sea terminals should Iran try to block the Strait of Hormuz, industry sources told Reuters. Riyadh took the step as international pressure grows on Iran to curb a nuclear program that Western powers say has a covert military purpose. A European Union embargo on buying Iranian oil takes full effect on 1 July, cutting Tehran’s income. (…) The effects of tensions have been diverse, with Saudi Arabia’s decision to widen its export routes the latest evidence of states in the region preparing for difficulties. The Iraqi Pipeline in Saudi Arabia (IPSA), laid across the kingdom in the 1980s after oil tankers were attacked in the Gulf by both sides during the Iran-Iraq war, has not carried Iraqi crude since Saddam Hussein invaded Kuwait in 1990. (Reuters)

Saudi Arabia Plans to Fund Syria Rebel Army

Saudi officials are preparing to pay the salaries of the Free Syria Army as a means of encouraging mass defections from the military and increasing pressure on the Al Assad regime, the Guardian has learned. The move, which has been discussed between Riyadh and senior officials in the US and Arab world, is believed to be gaining momentum as a recent flush of weapons sent to rebel forces by Saudi Arabia and Qatar starts to make an impact on battlefields in Syria. Officials in the Saudi capital embraced the idea when it was put to them by Arab officials in May, according to sources in three Arab states, around the same time that weapons started to flow across the southern Turkish border into the hands of Free Syria Army leaders. Turkey has also allowed the establishment of a command centre in Istanbul which is co-ordinating supply lines in consultation with FSA leaders inside Syria. The centre is believed to be staffed by up to 22 people, most of them Syrian nationals. (…) Interviews with officials in three states reveal the influx of weapons which includes Kalashnikovs, rocket-propelled grenades and anti-tank missiles started in mid-May, when Saudi Arabia and Qatar finally moved on pledges they had made in February and March to arm rebel forces. The officials, who insisted on anonymity, said the final agreement to move weapons from storage points inside Turkey into rebel hands was hard won, with Ankara first insisting on diplomatic cover from the Arab states and the US. (Gulf News)

UAE Uncertain Even if Global Markets Hold Up

Activity levels on the Dubai Financial Market General Index (DFMGI) were very low last week, with volume falling close to the lowest level of the year. The DFMGI closed at 1,451.87, down 18.58 or 1.26 per cent for the week. Market breadth was bearish with 21 declining issues and only eight advancing. Last week the DFMGI closed below support of five of the prior six weeks. It remains to be seen whether any real technical damage was done. (…) The chart pattern of the DFMGI looks like it’s been trying to form a bottom but there is no confirmation yet. It had a chance to rally the past few weeks but was unable to get going. If the bulls cannot rally the market soon we could be faced with continued choppiness around the bottom as we head deeper into the summer months and holiday period.If the global markets can hold up for a while longer the DFMGI still has a chance to rally. A daily close above 1,488.36 resistance would be needed to signal strengthening and give the index a chance of trending higher from there. (Gulf News)

UAE Armed Forces Particpate in UN Peace Keeping Missions

The UAE has always given its full support for the use of UAE forces in international peacekeeping missions in countries affected by armed conflicts and wars.General Shaikh Mohammad Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, said in a statement to the Nation Shield after the conclusion of the joint military exercise “Gulf 2012”. (…) The magazine emphasised the strength of the military and its key role in international peacekeeping efforts that include operations in Lebanon, Somalia, Kosovo, Afghanistan and recently Libya.The Armed Forces have also involved in aid distribution, with patrols sometimes facing attacks by insurgents and, on occasions, fighting their way out of Taliban ambushes. Their role includes providing protection for relief workers and offering a stable environment for the rebuilding of communities in a number of provinces. Their involvement over the past five years reflects the Government’s desire to see a Muslim presence in reconstruction efforts in Afghanistan, which include work on new schools, medical clinics and mosques. (Gulf News)

Kuwait’s Political Crisis

The Kuwaiti opposition raised the bar on 24 June to an unprecedented level. At a rally held outside the National Assembly building, several thousands gathered to protest the dissolution of the elected parliament by the constitutional court. The court ruling, the first of its kind in the state’s history, annulled a decree issued by the Emir Shaikh Sabah Al Ahmad Al Sabah earlier this year to dissolve the parliament. In February, another election was held and a new parliament (the current one) was elected. Under the court ruling, the 2012 elections are void. Thus, it ruled that the dissolved parliament, elected in 2009, should be reconvened and the 2012 parliament should be dissolved. The ruling came amid a rigorous crisis between the government and the 2012 parliament in which two ministers were forced to resign and which led to fears of political instability. Today, the opposition, which controls the majority of seats in the 2012 parliament, says a new political arrangement, between the people and the ruling family, is a must. Its leaders have called, during the 26 June rally, for constitutional amendments that would create “a parliamentary system” whereby the prime minister is elected directly. (Gulf News)

Ruler Accepts Resignation of Government

Kuwait’s ruler has accepted the resignation of the prime minister and his Cabinet, the OPEC nation’s official news agency said on 1 July,laying the groundwork for a new government to be formed. The decision is the latest step aimed at breaking a political stalemate in that has pitted Kuwait’s Western-backed ruling dynasty against conservative Islamists and other opposition lawmakers. An order from the emir, Sheik Sabah Al Ahmad Al Sabah, called for the government to continue on a caretaker basis until another is chosen, the Kuwait News Agency reported. The Cabinet handed in its collective resignation last week. That move and the emir’s subsequent acceptance are seen as formalities after a court ruled 20 June that parliamentary elections held in February were unconstitutional. Prime Minister Sheik Jaber Al Hamad Al Sabah, a member of the ruler’s family, was quoted 1 July as saying he and his Cabinet resigned “for the sake of abiding by all relevant legal and constitutional procedures as well as sound implementation of the rule of the Constitutional Court.” (ABC News)

US Plans Significant Military Presence in Kuwait

The United States is planning a significant military presence of 13,500 troops in Kuwait to give it the flexibility to respond to sudden conflicts in the region as Iraq adjusts to the withdrawal of American combat forces and the world nervously eyes Iran, according to a congressional report. The study by the Senate Foreign Relations Committee examined the U.S. relationship with the six nations of the Gulf Cooperation Council — Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman — against a fast-moving backdrop. In just 17-19 June, Saudi Arabia’s ruler named Defense Minister Prince Salman bin Abdul-Aziz as the country’s new crown prince after last week’s death of Prince Nayef, and Kuwait’s government suspended parliament meetings for a month over an internal political feud. The latest developments inject even more uncertainty as the Middle East deals with the demands of the Arab Spring, the end to U.S. combat operations in Iraq at the end of 2011, fears of Iran’s nuclear program and the counterterrorism campaign. (Fox News, Associated Press)

Kuwait Seeks Missiles

The U.S. Defense Security Cooperation Agency reports that Kuwait is seeking 300 AGM-114R3 HELLFIRE II missiles from the United States. The deal under the Foreign Military Sales program would include associated equipment and support and would be worth about $49 million. “Kuwait intends to use these defense articles and services to modernize its armed forces and expand its existing air force architecture to counter threats posed by potential attack,” the agency said in its notification to Congress. “This capability will serve to deter potential attacks against strategic targets across Kuwait, to include infrastructure and resources vital to the security of the United States.” The package deal would include containers, spare and repair parts, support and test equipment, repair and return support, training equipment and personnel training. (United Press International)

S&P Raises Oman’s Outlook to Stable from Negative on Increased Stability

Standard & Poor’s Ratings Services raised its outlook to stable from negative on the Sultanate of Oman, citing political reforms and economic measures that are helping restabilize the county. S&P affirmed the county’s A sovereign rating. S&P said Oman has been subject to geopolitical risk, though the country has maintained strong alliances with foreign powers and has remained neutral and independent in its region. The ratings are further supported by Oman’s prudent investment policies and substantial government asset positions. Recently the government gave large handouts to its citizens by committing to create 75,000 jobs; S&P believes a significant number of the jobs will be public, causing social spending to rise. The government has reformed over the years to include a checks and balances system under Sultan Qaboos, who has been the ruling monarch for 41 years. The uncertainty regarding the succession of the sultan’s role provides some risk for Oman’s ratings, which could be further lowered if political pressures intensify or the country produces weak fiscal results. S&P anticipates Oman’s fiscal surplus to reach around 5% this year, contingent on the export oil price averaging around $100 per barrel. (The Wall Street Journal)

Oman Frees Some Protesters, Keeps Others in Jail

An Omani court has freed on bail some activists detained during a peaceful protest earlier in June, but will hold four people charged with making “defamatory” comments until the end of proceedings, lawyers said on 27 June. Oman, a Western-allied, small oil exporter that flanks a major crude shipping route out of the Gulf, has detained more than 30 people in recent weeks over protests that erupted after strikes at petroleum facilities over pay and pension issues. The walkouts were the biggest Oman has seen since a spate of protests last year against corruption and unemployment inspired triggered by “Arab Spring” uprisings in Tunisia and Egypt. Oman’s sultan – in power for 42 years and the longest-serving Arab head of state since the fall of Libya’s Muammar Gaddafi last year – promised thousands of jobs and unemployment benefits in response to last year’s unrest. But disgruntled Omanis say those measures are not being implemented and have periodically taken to the streets. Police rounded up at least 22 people outside a Muscat police station two weeks ago during a peaceful protest calling for the release of activists who had criticized the government’s response to their demands. Most were charged with demonstrating illegally and disrupting traffic. Other suspects arrested in their homes were accused of publishing statements insulting public officials. (Reuters)

Oman Plans Islamic Finance Rules Before Year-End

A regulatory framework for Islamic finance is taking shape in Oman as government bodies move towards meeting the country’s stated aim of making sharia-compliant products available to the public this year. But logistical challenges and the limited size of the market may prevent entrants to the business from making quick profits. (…) This complements efforts by the country’s central bank to introduce a law that will supervise Islamic banks; the law is in its final stages of review, said Mohammed Al Abri, senior director at the CMA. Last year, after insisting for years that its banking industry should be purely conventional, Oman reversed its stance and said it would introduce Islamic finance, partly to prevent outflows of funds to sharia-compliant institutions elsewhere in the Gulf. But the introduction of the regulatory framework may not produce a rapid surge of activity. (Al Arabiya)

Key Political Risks to Watch in Bahrain

A political standoff is festering in Bahrain with no reconciliation in sight as street protests and clashes with police persist more than a year after an Arab Spring uprising. Following is a look at political risk factors in Bahrain: INTERNAL CONFLICT (…) Since then it has pursued a legal crackdown on the protest movement, re-arresting and prosecuting rights activist Nabeel Rajab, raiding homes of some suspected protesters and threatening clerics with legal action. (…) What to watch: – Government bans on protests organized by Wefaq – An escalation in arrests of opposition activists – Legal moves to crack down on social media FRAUGHT RELATIONS WITH IRAN Friction with Iran rose in May after a Gulf summit that discussed a possible political union among Gulf Arab states, starting with Bahrain and Saudi Arabia. Iran and Bahraini opposition groups denounced the plan. (…) What to watch: – Status of nuclear talks between Iran and the West IMPACT ON ECONOMY Bahrain, long a banking and tourism hub, has become a shadow of its former self since the social unrest broke out. (…) The International Monetary Fund has said that Bahrain should come up with policies that resolve public grievances and restore confidence in its economy. (…) What to watch: – Bahrain’s sovereign rating, banks returning or leaving – Capital outflows, state of tourism and real estate market – Plans for LNG facility, output from shared Abu Saafa field. (Reuters)

Yemen’s Problems Run Deeper than Security

Below the surface of drone strikes and violence, Yemen is a country struggling with deeper problems. The end of bloody protests during the Arab Spring and a 33-year presidency gave some Yemenis inspiration that the road to socio-economic and political change is near. This road however, is riddled with challenges deeper than al-Qaeda cells and insurgents. The deeper problems in Yemen are the high-unemployment rates, widespread poverty, lack of food, and economic under-development. (…) There are strategies and inspiration that Yemen can adopt to move forward in a positive direction. Yemen is one of the poorest countries in the Arab World because of its economic under-development. This is a continuing problem that was not addressed under president Ali Abdullah Saleh and is continuing into Abd Rabbuh Mansur Al-Hadi’s tenure as president. Yemeni oil-production makes up 25% of its gross domestic product (GDP) and almost 70% of the country’s revenue. (…) Internationally, it is important for Yemen to continue to work with international financial institutions such as the World Bank and International Monetary Fund (IMF). Temporary multi-lateral aid is not a permanent solution, however it is patchwork that Yemen needs to stand on its own two feet for the short term. (Asia Times)

Yemen Military Making “Some Progress” Against Al Qaeda in the Arabian Peninsula

It has not been widely noted, but the Yemeni military has made some important progress this week in its battle against al Qaeda in the Arabian Peninsula. Yemeni forces have killed at least 17 al Qaeda militants this week and Yemen’s government claims to have regained control of two key AQAP strongholds. Militants were reportedly routed from their positions in Jaar and Zinjibar in the more remote Southeastern section of the country. (…) U.S. officials say they are encouraged by the recent offensive against AQAP, but note new Yemeni president Abd-Rabbu Mansour al-Hadi needs more resources and better military coordination to maintain the pressure. The worry is that any pullback or let up could give AQAP time to “dig in”. (…) Most analysts now believe that al Qaeda in the Arabian Peninsula represents the greatest immediate terror threat to the US and the West, surpassing core al Qaeda in Pakistan in terms of numbers of fighters and capabilities. (CBS News)

Alarmed Israel Tightens its Sinai Border

The Israeli military will deploy mobile radar systems along the Sinai border with Egypt amid fears that Palestinians, possibly aided by militants linked to al-Qaida, plan to step up attacks on the Jewish state.The emergence of a jihadist organization in the vast wilderness of the Sinai Peninsula on Israel’s southern flank, its least defended frontier, is causing deep concern in Israel’s military and intelligence establishment because it may reflect Egypt’s lurch toward Islamist rule. (…) But the Feb. 11, 2011, downfall of Egyptian President Hosni Mubarak, a staunch supporter of Egypt’s 1979 peace treaty with Israel, in a pro-democracy revolution, immensely complicated Israel’s security situation on its southern border. Mubarak’s ouster after weeks of bloodshed in the streets put the future of the landmark pact, which the vast majority of Egypt’s 82 million oppose, in serious doubt. There have been several attacks mounted from Sinai since August 2011, when eight Israelis were killed in the worst terrorist assault in years. Two 122mm rockets fired from southern Sinai hit Israel earlier in June. (United Press International)

In Outreach to Egypt, Israel Urges Continued Peace

An Israeli official says Prime Minister Benjamin Netanyahu has dispatched a letter to the new Egyptian president calling for continued peace and collaboration between the two countries. The exchange was the first between Netanyahu and Mohammed Morsi since the election of the Muslim Brotherhood candidate last week. Israel and Egypt signed a peace treaty in 1979 that was upheld under former President Hosni Mubarak. Since his ouster, Israel has been concerned over whether Egypt’s new Islamist leaders will honor it. The Israeli official said the letter was dispatched 1 July, speaking on condition of anonymity because of the sensitivity of the matter. Morsi has pledged to respect Egypt’s treaties but the Brotherhood has said adjustments to the Israel-Egypt accord may be needed. (CBS News, Associated Press)

Israeli PM Dissolves Committee to Reform Draft Law

Israel’s prime minister on 1 July dissolved a high-profile committee assigned to reform the country’s military draft law to spread the burden among more sectors of society, conscripting ultra-Orthodox Jews and requiring Israeli Arabs to do civilian service.The issue is one of the most charged in Israeli society and could create a coalition crisis. The country’s secular majority considers the mass exemptions unjust, while the ultra-Orthodox claim they are serving the state by serving God. (…) The court-mandated aim was to end sweeping exemptions for ultra-Orthodox Jews, but Netanyahu has said national service is a burden that must be shared by all, including Israeli Arabs. The committee tackled that issue as well but failed to reach agreement. (ABC News, Associated Press)

Israel’s Netanyahu Faces Coalition Crisis

A fierce debate over how to draft religious men into the Israeli military has sparked the first crisis in Prime Minister Benjamin Netanyahu’s newly expanded coalition government. The government is racing to draw up a new draft law ahead of a court-ordered Aug. 1 deadline. The Supreme Court has ruled the current system, which exempts ultra-Orthodox men from mandatory military service, is illegal. On 2 July, Netanyahu disbanded a parliamentary committee working on a new draft law due to deep disagreements among its members. Ultra-Orthodox parties oppose any change in the current system. Netanyahu’s decision led his largest coalition partner, Kadima, to threaten to leave the government. Kadima only joined the coalition in May with the goal of reforming the current draft system. (…) He said that the disbanded committee, led by a Kadima lawmaker, would still issue its recommendations this week, and that if Netanyahu did not take the “necessary step” of using the report as the basis for a new draft system, “the national unity government will come to an end.” An Israeli official said that Netanyahu was working behind the scenes to resolve the standoff. The official, speaking on condition of anonymity because he was not authorized to discuss the matter with the media, said Netanyahu planned a series of meetings with coalition partners this week in search of a solution. (Associated Press)

Israel-U.S. Drill Will Boost Missile Plans

The upcoming U.S.-Israeli missile defense exercise Austere Challenge 12 to be held in the Jewish state is designed to accelerate integration of their missile systems and will have a big impact on their defense industries. The joint maneuvers, scheduled for October, will undoubtedly mean greater joint development of advanced systems like Israel Aerospace Industries’ Arrow-3 project designed to shoot down ballistic missiles outside Earth’s atmosphere that’s now under way between state-owned IAI and the U.S. Boeing Co. (…) But the growing partnership in developing missile defense systems, which is most cases means U.S. funding for Israeli projects that the Americans need to counter the threats they face points to a level not only of development but also operational deployment that has not been seen before. This has been largely driven by Israel’s allies in the U.S. Congress, both Republicans and Democrats, and by the powerful American Israel Public Affairs Committee.  U.S. President Barack Obama has endorsed these efforts, in part, at least, because he faces a tough re-election campaign. But merging Israel and U.S. missile projects provides a boost for the U.S. defense industry at a time of shrinking military budgets. (United Press International)

In New Blow to Palestinian Unity, Hamas Stops Registering Voters in Gaza

In a new setback to reconciliation attempts with Fatah, Hamas has stopped registering voters in the Gaza Strip, a necessary step towards elections which the Islamic movement agreed to hold just five weeks ago. Sami Abu-Zuhri, a spokesman for Hamas, said 2 July that the move came following Fatah’s “selective” adoption of the reconciliation process. He added that PA security forces continue to arrests Hamas members in the West Bank, scaring away movement members from enlisting in the West Bank voter registry for fear of persecution. (…) The Palestinian Authority lambasted Hamas’s decision on 2 July. PLO official Yasser Abed Rabbo told the Voice of Palestine radio station that Hamas “continues to place hurdles and excuses before the reconciliation process, underscoring its lack of willingness to end the divide.” (…) Hamas and Fatah have been at odds for the past five years since Hamas’s violent takeover of the Gaza Strip in June 2007. The PA continues to arrest and summon Hamas members in the West Bank, prompting hundreds of Palestinians to demonstrate on 30 June and 1 July in Ramallah. In an interview with Maan on 2 July, Palestinian billionaire and independent politician Munib Masri warned that the continuation of the political divide between Fatah and Hamas will lead to “a second Nakba,” a reference to the tragedy of the creation of Israel which fragmented Palestinian society. (The Times of Israel)

Palestinian Authority in Financial Trouble, Refused Loan by IMF

The Palestinian Authority may be in danger of collapse. In the midst of a financial crisis that is threatening its ability to function, it has now been refused a $100 million bridging loan via Israel from the IMF. Palestinian Authority Prime Minister Salam Fayyad approached Bank of Israel Governor Stanley Fischer in search of Israeli assistance earlier this year. Fischer got approval from Israeli Prime Minister Benjamin Netanyahu to spearhead an Israeli request for a bridging loan. As the Palestinian Authority is not a state, it cannot technically apply for an IMF loan on its own.  In order to circumvent the problem, Israel applied for the IMF loan on the Authority’s behalf, planning to forward the money directly to the PA. The PA would then in turn repay Israel, who would then repay the IMF. However, the IMF felt compelled to refuse, based on the grounds that it did not want to set a problematic precedent for loans by proxy. (RT)

Palestinians Detain Dozens in Weapons Crackdown

Palestinian President Mahmoud Abbas has launched his broadest weapons crackdown in years, for the first time confronting his own loyalists, including rogue security officers and gunmen linked to his Fatah movement. The arrest raids conducted in recent weeks are a response to high-profile vigilante shootings that threatened to undermine law-and-order successes in this West Bank town, seen as key to Palestinian statehood claims. Some 200 people were detained and dozens of guns seized in recent weeks, many in the northern West Bank district of Jenin, Palestinian police said 2 July. Just under half the detainees were released after surrendering their weapons, while others remain in custody on suspicion of weapons dealing, extortion and shooting attacks, said police spokesman Adnan Damiri. (…) At the same time, Palestinian human rights groups have criticized Abbas for curtailing basic freedoms in the West Bank under the guise of security. (Bloomberg Business Week, Associated Press)

Egypt Stocks Soar as Morsi Takes Office

Egyptian stocks rocketed to a five-week high on 2 July in the first trading session since the country’s first freely-elected president took office. The benchmark EGX30 climbed 4.97 per cent to close at 4,942.4 points – its highest level since 24 May – marking the exchange’s sixth consecutive day of gains. “It is optimism over the election and about how smoothly the process went over in late June,” Mohamed Kotb of Naeem Brokerage told Reuters. “Investors see a president has been elected and are anticipating a new government that finally will deal with the country’s problems, putting the economy as a priority.” Total turnover was around three times the recent average, hitting LE752 million ($124.2 million). From the day’s 180 listed stocks, 158 gained in value and 16 declined, a result reflected in the broader EGX70, which increased 3.2 per cent. Heavyweight shares performed strongest, many of them zipping well over the 5 per cent level which forces a 30-minute freeze on trade. (Ahram Online)

Jordan Growth Capped by Regional Unrest

Jordan’s economic growth slowed to 3% year on year in the first quarter of 2012, data showed on 27 June, and the finance ministry cut its forecasts for the full year as sluggish private sector growth hurt the aid-dependent economy. The turmoil of the Arab Spring in neighbours such as Syria and Egypt has cast a shadow over investment, while extra social spending has further strained public finances. The finance ministry said it now expects the economy to expand around 2.7% this year, lower than earlier projections of at least 3%. Growth in the first quarter was fuelled by a 14% expansion in the tourism sector followed by 8.9% growth in the electricity and water sector. Transport saw an 8% rise. GDP grew 3.1% in the fourth quarter of 2011 and 2.3 in the first quarter of last year. Officials say it will take time to get back to previous growth rates that averaged 7% annually before the global downturn in 2008. (Gulf Times)

UN Urges Jordan to Open Camp for Syrian Refugees

Jordan must open a refugee camp for thousands of Syrians fleeing the fighting in their country, a U.N. official said 3 July, just hours after another 1,000 crossed the border. The appeal from Andrew Harper, the U.N. refugee agency’s representative to Jordan, came during a sudden spike in numbers, adding to 140,000 Syrians already in the country. (…) Both the U.N. and Jordan’s Interior Ministry estimate an average of 400 Syrians were crossing into Jordan daily before the sudden surge. Harper said a camp must be built to accommodate recent arrivals because of overcrowding at the government’s Bashabsheh holding facility. More than 2,000 Syrians are being housed there while their information is being processed. (…) Jordan has not opened a refugee camp it built this spring in the hamlet of Ribaa Sarhan, near its border with Syria. It could house 1,000 Syrian families. (Fox News, Associated Press)

High-Level Israeli-Palestinian Meeting Early July

Palestinian President Mahmoud Abbas will meet with Israel’s new vice prime minister in early July, an aide said on 28 June, although expectations are low that the rare high-level talks will help restart long-stalled peace negotiations. Israel’s Shaul Mofaz, leader of the centrist Kadima Party, is to hold talks with Abbas on 1 July at the Palestinian leader’s West Bank headquarters in Ramallah, said Abbas aide Saeb Erekat. Mofaz spokesman Imri Mazor said efforts were being made to arrange a meeting, but did not specify a date. Negotiations to establish a Palestinian state alongside Israel broke off in 2008. Efforts to restart them have failed because hardline Prime Minister Benjamin Netanyahu and Abbas cannot agree on the ground rules. Abbas says there is no point in talking as long as Israel keeps building settlements for Jews in the West Bank and east Jerusalem, lands Israel captured in the 1967 war, along with the Gaza Strip. Half a million Israelis now live in the war-won territories the Palestinians want for a future state. Netanyahu refuses to freeze settlements and argues talks should resume without preconditions. (Bloomberg Business Week, Associated Press)

Russia Willing to Recognize Palestinian State

Visiting Russian President Vladimir Putin praised his Palestinian counterpart on 26 June for what he said was a “responsible” position in negotiations with Israel, frozen for nearly four years, and said Russia had no problem recognizing a Palestinian state. (…) Russia is an important Mideast player, in part because it is a member of the Quartet of mediators that includes the United States, the European Union and the United Nations. Of the four, Russia is seen as the most sympathetic to the Palestinians but has little sway over the group, because the United States has traditionally claimed the dominant role in mediating between the two sides. (The Daily Star)

Putin Urges Palestinians to Show Restraint

The Russian president had talks with the leader of the Palestinian Authority Mahmoud Abbas and took part in the opening of a Russian cultural centre in Bethlehem. (…) On 25 June, during the visit to Israel, Israeli Prime Minister Benjamin Netanyahu asked Vladimir Putin to bring the need to start a dialogue home to Palestinians. (…) “I’d like to mention the responsible position of the Palestinian leadership and personally President Mahmoud Abbas, their adherence to a peaceful settlement on the basis of international law and the principle of two states. I am convinced that any unilateral actions prior to the final reconciliation are counterproductive. It is necessary to show restraint and stick to the previously assumed obligations. Undoubtedly, the speedy reestablishment of political unity in Palestine would contribute to the settlement of the conflict.” (…) Mahmoud Abbas assured Putin once again that Palestine does not intend to renounce the peaceful settlement with Israel but it has several conditions. (The Voice of Russia)

Palestinians Enjoy Land Victory in Israeli Courts

More used to enduring eviction orders than enforcing them, Palestinians are relishing the Israeli government’s discomfort as it struggles to evacuate five settler buildings in the occupied West Bank. Israel’s supreme court upheld a petition by a group of Palestinian landowners in May, mandating a demolition order by 1 July against the apartment blocs that sit on Ulpana Hill above the Palestinian village of Dura al-Qara.But Israel’s leaders are studying every way to avoid the political fallout of sending in the bulldozers, and tentatively plan to uproot the massive, red-roofed homes and move them by rail to safer legal ground. (…) In all, some 350,000 Israelis live in the West Bank against 2.5 million Palestinians. (…) A bill sponsored by far-right Israeli parliamentarians to legalize all settler homes on private land was opposed by Prime Minister Benjamin Netanyahu and voted down on 6 June. But on the same day, Netanyahu approved the construction of 851 new apartments throughout the West Bank to placate the settlers for the 30 to be lost on Ulpana Hill in the Beit El bloc, and to burnish the government’s settler credentials. (Reuters)

Israel Starts Vacating West Bank Outpost

Residents of Israel’s Ulpana settlement outpost in the West Bank began leaving their homes on 26 June in compliance with a court ruling that their homes are illegal. But the government later filed a request to the High Court seeking to delay by more than four months removal of the buildings themselves, built on private Palestinian land. Prime Minister Benjamin Netanyahu’s largely right-wing coalition, which leans heavily on the settler movement for support, has repeatedly sought to stall implementation of the court’s judgement last year that five apartment buildings in the outpost, a neighbourhood of the Beit El settlement, must be dismantled. The latest deadline for implementation is 1 July. The first stage of evacuation went peacefully on 26 June, with 15 of the neighbourhood’s 30 families moving their possessions to adjacent temporary homes, with help from defence ministry workers. (The Daily Star)

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