Death of the Blogosphere

Sometime in 2015, some of the most active Egyptian bloggers fell silent and stopped posting on their blogs. Some were jailed and others reinvented themselves as analysts and pundits. More than just bloggers, they had been a generation of young activists whose impetus to report on fraught Egyptian politics and disrupt official media narratives during and following the 2011 uprising seems largely to have petered out. What happened to them and where are they now?

Nadine El Sayed, professor of journalism at the American University in Cairo, has spent the last five years studying the demise of the blogosphere in Egypt. Out of the twelve blogs El Sayed closely monitored, seven turned up completely inactive in 2015 while the remaining five only showed one or two posts every year. Many of the bloggers became columnists and commentators in major media organizations or moved into politics, where they had to water down their opinions in fear of censorship and retribution by the state or the publishers. In El Sayed’s own words: they went “mainstream,” she said in an interview with the Cairo Review.

El Sayed was interested in knowing why many of these bloggers were not able to financially sustain their blogs. Many, she found, favored getting a regular pay slip from their new employers over growing and monetizing their blogs through selling advertisements or aggregating content with major news outlets. They had started blogging in the early 2000s out of passion and a desire to bring out the truth.

Now in their 30s and handling family responsibilities, bloggers found that taking paid positions offered them the security and financial stability they needed. “You have to remember that when these people were at the peak of their activity in 2006–2007, they were in their early 20s,” El Sayed said. “They grew out of that phase and started shifting into different identities.”

Ultimately, many bloggers sacrificed their independence in exchange for stability. It seems a likely choice in a country that has taken considerable steps to hamper remaining dissident voices. More than 400 websites are now blocked in Egypt. Public gatherings of ten people or more can be shut down as illegal protests, and many are still being arrested for voicing even the slightest opposition.

Some of the bloggers El Sayed writes about in her study have been dealt similar fates. Alaa Abd El-Fattah, once a software developer turned activist and blogger, is serving a five-year sentence while Samira Ibrahim and some other bloggers have been fired from their jobs for writing their opinions.

But the fight has not ended for many of them. El Sayed remembers a pivotal conversation with a source, who chose to remain anonymous: “He said, ‘I realize that I have to tone down my voice, but at the same time it is either that my message will not get to the masses at all or it will get to the masses, but in a more toned-down voice. So, which will it be?’” It is a decision that for El Sayed shows that even if Egypt’s most outspoken bloggers have been quieted, they will still not be completely silenced.

Oriental Hall, etc.

The Arab World is in crisis, and the media should deal with it as such. This is what the chairman of Al-Masry Al-Youm Publishing House Abdel Monem Said Aly told audiences attending a symposium titled “Media and Crisis,” hosted by AUC’s Arab Media and Society journal. Speaking about the shifting role of media in the Arab region, Aly said, “The role of the media is not just as a flashlight, but to help the country out of national dilemmas, to reconstruct the destroyed.” His advice to Arab journalists today? Return to the basics: inform and provide knowledge. Resist the urge to play “public attorney.”

Head of the Supreme Council for Media Regulation Makram Mohammed Ahmed said that Egypt’s media regulatory council is in need of major reform, but faces multiple challenges including impatience from voices critical of government regulation and castigation by the foreign press. Ahmed defended the council’s decision to regulate religious decrees, sports, and Ramadan television programming, but said that restoring trust in the media tops the government’s agenda. “We won’t be viable unless we restore the professionalism and credibility of the media.”

Zeid Al Sabban, a longtime Arab League official representing the Horn of Africa and Sudan, complained of the lack of Arab media coverage of the ongoing conflicts in Darfur and Somalia. Arab media, he said, heavily relies on material from the foreign press. As a result, both conflicts are framed to reflect foreign interests: the deployment of peacekeepers in the Darfur crisis, and on piracy to the exclusion of humanitarian concerns in Somalia. Sabban argued that the Arab tribal conflict in Darfur that deepened after the signing of a peace accord in 2006 was ignored in the Arab press. He called for strengthening Arab and African media, to provide deeper and more meaningful coverage of events taking place in the region.

The New Age of Renewable Energy

Near the town of Sweihan, in southern Abu Dhabi, construction is underway on what is slated to be the world’s largest solar project, an expanse of metal and glass expected to cover three square miles. At Sakaka, in northern Saudi Arabia, plans are proceeding for a massive solar installation whose electricity appears likely to sell for less than 3 cents per kilowatt hour, one of the lowest prices in the world. Morocco, which has opened at the foot of the High Atlas mountains a solar project composed of hundreds of curved mirrors, each the size of a bus, says that within a decade the country will produce half its electricity from renewable sources.

Renewable energy is undergoing a revolution. It is surging in scale and plummeting in price, and in the process it is deepening geopolitical rifts, upending corporate business models, and reshaping global energy markets. No place illustrates renewable energy’s unexpected rise and unpredictable ripples better than the Middle East and North Africa (MENA), a region in which several countries that for a century have produced epic power with energy from the ground are now finding compelling economic reasons to exploit energy from the sky. It is a shift that would have been unthinkable just a decade ago.

Geologists, investors, and policy makers have known for generations that this sandy patch of the planet brimming with buried fossil fuel also is blessed with vast supplies of wind and sunlight. What is changing is that they now see compelling financial reasons to care. A confluence of economic forces that they either didn’t sense coming or hoped would sputter has power brokers in the MENA region gunning to exploit the money-making potential of a suite of energy sources previously dubbed alternative but now entering the mainstream.

The renewable-energy transformation, still in its early days, begs two questions.

One is economic: who—which countries, industries, and individual companies—will win and lose in the diversification from energy that’s finite to energy that’s not? Another is environmental: will the renewable-energy ramp-up prove big enough to meaningfully help a planet that as a result of human activity has been heating up?

The answers will depend largely on finance and policy—which thus far have been economically inefficient and will have to become vastly more productive if renewable energy is to reach its economic and environmental promise.

Dirty Secret
The dirty truth about renewable energy is that it isn’t yet making much of an environmental difference. Whether it ends up protecting the planet—whether, that is, it significantly curbs carbon emissions—will depend on whether its costs decline far more radically than they have thus far. As such, a ruthless focus on wringing out excess cost should be the goal of policymakers who want to optimize renewable-energy sources and meaningfully increase their role in the greater economy.

History shows why cost will be key. Past energy transitions have been propelled by pushes: by broadly perceived crises such as wars, or oil embargoes, or threats to public health.

Japan enacted policies to increase its economy’s energy efficiency after World War II, which decimated the country’s infrastructure, forcing it to rebuild in a way that maximized the economic bang it squeezed from every energy buck.

France adopted nuclear energy as its main source of electricity generation following the Arab oil embargoes of the 1970s. The Organization of the Petroleum Exporting Countries (OPEC) embargoes of the seventies were geopolitical spasms that made oil, previously France’s main source of electricity, too risky a fuel on which to base an industrial economy. Germany, which at the time was powered in significant part by nuclear energy, began massive subsidies for the development of renewable energy in the wake of the 1986 Chernobyl nuclear disaster in Ukraine, an event that sent radioactive clouds over Germany.

Today, there is no such push.

For one thing, the world is awash in fossil fuel. In a tectonic shift from just a decade ago, the energy world is focused more on the specter of a peak in global oil demand than on a peak in global oil supply. The OPEC crude oil basket was selling in late January 2018 for about $68 a barrel. Though that was up sharply from oil’s price a year earlier, it was still below the price oil averaged over the previous decade.  That fact, combined with an increasing expectation that oil prices will remain low long-term, is threatening the treasuries of MENA economies that run on oil  exports.

For another thing, many people don’t regard climate change as a threat so immediate that they need to pay dearly to address it. A global poll by the Pew Research Center in 2015 found that, in China, the world’s largest greenhouse-gas emitter, only 18 percent of people thought climate change was a “very serious problem” and only 15 percent said they believed climate change would harm them personally. In the United States, the world’s second-biggest emitter, the numbers were higher but still short of a majority: 45 percent and 30 percent, respectively. In the Middle East, which has higher per-capita carbon emissions than any other region, the results were similarly blasé: 38 percent of people thought climate change was a very serious problem and 27 percent said it would hurt them personally. These are not numbers that suggest climate change is broadly seen as a crisis.

Because of this lack of a push—because “old” energy is plentiful and because most people don’t see climate change as an imminent threat to their livelihoods—the challenge for those who care about unlocking renewable energy’s vast potential is to create a pull. The challenge is to slash the cost of renewable energy so it competes with fossil fuels on price. That is starting to happen. Electricity from new solar and wind projects has become less expensive than electricity from new fossil-fueled power plants in certain places that have particularly prolific renewable resources, including some parts of the Middle East, and in markets that have particularly high conventional-energy costs, such as California.

However, renewable energy will have to scale up far more if it is to contribute meaningfully to curbing climate change. That will require a ruthless redesign of a variety of financing mechanisms and government policies, many of which were hatched to help incubate renewable energy but are proving unsustainably expensive. To matter to the planet, the renewable-energy push must be more than sincere. It must also be smart.

Renewable Realities
The energy economy is almost inconceivably large. What most people think of as renewable energy is only beginning to register in it. The International Energy Agency (IEA) calculates that renewable sources provide about 15 percent of global energy and about 24 percent of global electricity, up from 13 percent and 19 percent, respectively, in 2000. But the biggest source of renewable energy is old and polluting: biomass, a category that encompasses everything from dung to wood to grass, that is burned mostly in developing countries, and that is used mostly to produce heat. The biggest source of renewable electricity is dams, and they also are environmentally controversial. Around the world, from Egypt’s Aswan High Dam to Ethiopia’s Gibe III Dam to China’s Three Gorges Dam, massive hydroelectric dams have threatened ecosystems and communities’ livelihoods even as they have dramatically boosted energy access.

Wind and solar, the renewable sources widely seen as the greenest, together provide less than 2 percent of global energy and only about 5 percent of global electricity. But they are growing fast. They account for the majority of renewables’ growth since 2000, and they will account for the majority of renewables’ growth over the next quarter century, the IEA projects.

The extent of that future growth will depend largely on policy, because public policy in the energy world drives private investment. If public policy were wielded aggressively to make fossil fuels costlier and renewables cheaper, renewables could account for as much as 29 percent of global energy, and as much as 63 percent of global electricity by 2040, the IEA projects.

Other observers are even more bullish. Thomson Reuters predicts that, by 2025, solar will be “the primary source of energy on our planet.” If such a future materialized, the effect on the global economy would be profound and uneven, impacting everyday life in ways large and small. The effect on the environment would, however, be beneficial and real. Some would like it and some would not. Either way, it would constitute arguably the biggest energy transformation in human history.

The Rise of Renewables
The rise of wind and solar, typically seen as a triumph of technology, is more about scale. Technological advances have markedly improved the efficiency with which wind turbines and solar panels convert breezes and sunshine into electricity. But this sector has grown largely because its costs have dropped.

What has slashed its costs most dramatically are increases in manufacturing capacity and in operational know-how. The transformation of wind and solar power from experiments into explosive industries can be broken down broadly into three stages.

The first stage might be called the Age of Necessity. The use of windmills goes back a millennium or more; the first wind turbine built to produce electricity was installed in 1887 in Scotland. The first photovoltaic, or solar, cell—“photovoltaic” refers to the chemical process by which a semiconducting material converts sunlight into electricity—was developed in 1954 in the United States at Bell Labs. At first, these technologies were expensive, and so they were used where no other source of power was readily available. Early electricity-producing wind turbines were built on isolated farms, on mountaintops, and on islands. Early solar panels were used in rural villages and in space.

The second stage in the development of wind and solar power could be dubbed the Age of Subsidy. Spurred largely by environmental sentiment—first by opposition to nuclear power’s waste and proliferation threats and then by concern about fossil fuels’ climate consequences—European governments began around the early 1990s to roll out generous incentives to encourage the use of wind and solar. No longer were renewable energy’s disciples targeting just remote spots that lacked other energy options. Now they were aiming to provide greener, though more-expensive, alternatives to towns and cities served by modern electricity grids.

It was this Age of Subsidy that turned wind and solar power from a science project into a global industry. The transformation began in northern Europe—in Denmark for wind and in Germany for solar. These countries promulgated a subsidy they called a “feed-in tariff,” in which producers of electricity from wind turbines or solar panels were guaranteed contractually that, for a lengthy period—typically 20 years—they could sell, or feed in, to the power grid their renewable energy at a price higher than conventional electricity was fetching.

The feed-in tariffs socialized much of the cost of renewable energy, broadening it from individual investors to entire nations. They all but guaranteed renewable-energy investors predictable, long-term profits.

The European feed-in tariffs had two powerful effects. They enriched investors across Europe—not just bankers and lawyers, though they were among the beneficiaries, but also farmers, and business owners, and pensioners. In the process, by harnessing economic self-interest, European subsidies dramatically broadened the political constituency gunning for renewable energy. They also globalized the renewable-energy industry, attracting ambitious players from far beyond Europe who then expanded the renewable-energy market internationally. Chief among those players were savvy entrepreneurs from China.

China, the world’s most populous country, had become by the late 1990s the world’s factory floor, building everything from televisions to t-shirts and selling them around the globe at prices that undercut companies in myriad end markets. Starting in the mid-2000s, China turned its sights to renewable energy, which policymakers and top corporate officials decided would be a strategic and lucrative industry. They believed China was well-positioned to dominate it, and that in the process it could produce vast numbers of Chinese jobs.

In the decade since then, all levels of government in China—central, provincial, and municipal—have rolled out an increasingly coordinated and aggressive slate of policies to help the wind and solar industries. More than any other factor, it is this Chinese support that has transformed renewable energy from a European oddity into a global powerhouse.

Initially the Chinese incentives were all but exclusively for manufacturing: particularly in the case of solar panels, to build factories in China to make products for export to the West. But as the Chinese renewable-energy manufacturing industry grew, China expanded its support in two ways that have reshaped the global renewable-energy market, and that offered lessons for other countries, including those in the MENA region, that are eager to jump aboard the renewable-energy bandwagon.

First, after the global financial crisis in 2008 prompted many European governments to ratchet back the renewable-energy subsidies they were offering, the very European subsidies that had propelled the growth of China’s renewable industry in the first place, China launched feed-in tariffs of its own. It did so in an explicit bid to birth a vast new domestic market for China’s renewable-energy industry, a market that would more than replace the Western one whose subsidy-fueled growth was slowing.

Second, China boosted government spending on renewable-energy research and development. It reasoned that China would grow its renewable-energy equipment industry over the long term only to the extent it developed the industry’s innovative abilities. China’s investment in renewable-energy innovation is little understood in the West, because its results at this point are hard to quantify. Nevertheless, a Stanford University study of the Chinese solar industry that I led in 2017 documented mounting evidence that China is narrowing the renewable-energy innovation gap with the West.

Today, China is a major player in the wind and solar sectors. Four of the world’s top ten manufacturers of onshore wind turbines in 2016 were Chinese-based companies, according to Bloomberg New Energy Finance. And China produced 72 percent of all the crystalline solar panels sold globally in 2017, estimates IHS Markit, a data-analysis firm.

China’s production of wind and solar power is equally massive. In 2016, according to REN21, a global renewable-energy consortium, China added 23.4 gigawatts of wind-power capacity, or 43 percent of all wind capacity added globally that year, bringing China’s total installed wind-power capacity to 169 gigawatts, or 35 percent of the world total. Similarly in 2016, China added 34.5 gigawatts of solar-power capacity, or 46 percent of all solar capacity added globally that year, bringing its total installed solar-power capacity to 77 gigawatts, or 25 percent of the world total, according to REN21.

Critical Mass in the Age of Viability
The upshot is that, though wind and solar energy represent a tiny percentage of total global energy, they have achieved critical mass. They have arrived at a third stage, one with massive ramifications for the global economy: the Age of Viability.

What has ushered in renewable energy’s Age of Viability is an extraordinary, and extraordinarily fast, decline in renewable-energy prices. Driven first by Europe and then by China, the Age of Subsidy scaled up renewable energy. Those subsidies slashed renewable energy’s prices to levels that, in some locations and in some circumstances, now are lower than the prices of electricity produced by coal, natural gas, and nuclear power.

Wind and solar still are subsidized in major markets. And the wind and solar industries have assembled powerful lobbying machines gunning to preserve the subsidies. But many leading economies—the United States, and many countries in Europe, and even China itself—are reforming their renewable-energy subsidies in a bid to make them more economically efficient.

Yet something strange is happening: despite the rationalization of these subsidies, the percentage of electricity that these countries generate from wind and solar continues to grow. In 2016, wind and solar together accounted for nearly 20 percent of electricity generation in Germany, the world’s fourth-largest economy; nearly 15 percent in the United Kingdom, the fifth-largest economy; and 20 percent in California, which if it were a country would be the world’s sixth-largest economy.

The Age of Viability, though just starting, already is transforming global energy markets. Among the signs of that transformation, four stand out: a trade war over solar equipment between China and the United States; havoc that renewable energy is wreaking on the utility industry’s century-old business model; a conversion of certain powerful renewable-energy skeptics into boosters; and the pace at which renewable-energy prices continue to fall. All these developments would, a decade ago, have been inconceivable.

Trade fights between China and the United States are hardly new. Yet a trade fight over solar panels reflects a new world order. It began six years ago, when the U.S. government slapped tariffs on imported Chinese solar products, siding with a group of companies that manufactured solar cells and solar panels in the United States. The companies alleged Chinese exports violated World Trade Organization rules, asserting that the Chinese government was subsidizing them too heavily and that Chinese manufacturers were selling them in the United States at below their production cost, a practice intended to grab market share and known in trade circles as “dumping.” China denied both allegations, and it imposed tariffs of its own on U.S.-made polysilicon, an important raw material in the solar manufacturing process.

This geopolitical tit-for-tat is only intensifying. In January 2018, U.S. President Donald Trump imposed yet another round of tariffs on imported solar products. The supposed justification for his decision wasn’t even that China is violating international trade rules; it was merely that Chinese competition is hurting U.S. solar firms.

It is a farcical fight. Evidence shows that the U.S. tariffs actually are stunting, not expanding, U.S. solar manufacturing. It also suggests the tariffs are raising U.S. solar prices, slowing solar’s growth. None of this comes as much of a surprise; the politics of tariffs often are more about slogans than about substance. It does, however, emphasize the need for a new policy approach to renewable energy, one that recognizes the industry’s global footprint and that seeks above all to cut renewable energy’s cost.

Just as renewable energy in the Age of Viability is deepening tensions between geopolitical superpowers, it is upending the utility industry, a behemoth that once delivered returns so reliable it was seen as boring. Now the utility industry is besieged, forced by competition from renewable energy to scramble to remake itself.

Nowhere is this more evident than in Europe, where two of the continent’s largest power generators, RWE AG and E.ON SE, saw their profits decimated by the flight of consumers who installed solar panels on the roofs of their homes and businesses and began to generate their own power. As a result, RWE and E.ON each split into two. The details of their breakups differ, but the upshots are broadly similar: one entity now focuses on old energy sources, particularly coal and gas, and the other now focuses on building a business in renewables.

The same structural threat faces utilities in the United States, and they are responding in part by fighting the change and in part by embracing it. In several U.S. states in which large numbers of customers are defecting to rooftop solar systems, utilities are lobbying to restrict rules that let those consumers sell power they generate back into the electricity grid. These so-called net-metering policies have underpinned the economic allure of rooftop solar systems in the United States; rolling them back almost certainly would slow renewable energy’s growth. Meanwhile, some of these same utilities are trying to enter the renewable-energy business.

Nowhere in the world, however, are these twin trends in renewable energy—the boost in support from erstwhile utility foes and the drop in price—as striking as in the Middle East.

Middle Eastern Moves
The Middle East long has been the world’s poster child for energy excess. The region is among the last in the world to burn large amounts of oil to produce electricity; most countries abandoned that practice decades ago, deciding to save oil for transportation, a use for which no mainstream alternative to petroleum so far has taken hold. Everything in the Middle East that consumes energy—power plants, factories, houses, consumer appliances, cars, and trucks—tends to be notoriously inefficient.

None of this is an accident; it is the result of policy choices by the region’s rulers, who for decades have subsidized their citizens’ consumption of fuel and electricity as part of a grand political deal that has ensured the governments’ continued power. The Middle East has just 3 percent of the world’s population. But in 2016, the IEA says, the region doled out some 30 percent of the $260 billion spent globally on fossil-fuel consumption subsidies. The region is home, according to the World Bank, to five of the ten countries with the highest per-capita carbon dioxide emissions.

Things in the Middle East, however, are changing. Though still high by global standards, fossil-fuel subsidies in the region have fallen significantly over the past two years. Several countries, including Oman, Saudi Arabia, and the United Arab Emirates (UAE), have raised prices for gasoline and diesel fuel. And the region is beginning to embrace renewable power.

What is motivating the Middle East is what has always driven energy transformations: economics. In the case of the region’s net oil and gas exporters, such as Saudi Arabia, it is the need to reduce runaway domestic fossil-fuel consumption and thus maximize oil to sell, even at today’s relatively depressed prices, on the global market. In the case of the region’s net energy importers, such as the UAE, it is the allure of a domestic energy source that is becoming cost-competitive with foreign fossil fuel.

The IEA expects that, from 2016 through 2022, renewable-energy generation will grow faster in the MENA region than in any other part of the globe. The IEA forecasts a compounded annual growth rate for renewable-energy production in the MENA region, 9.1 percent, that is nearly twice the 5.2 percent rate it forecasts for the world. And that regional average encompasses higher rates for certain countries: 64 percent for Saudi Arabia, 63 percent for the UAE, 31 percent for Jordan, and 16 percent for Morocco.

Two caveats are crucial to keep in mind. First, these forecasted growth rates start from a baseline that approximates nil. Today, according to the IEA, renewable energy of all sorts accounts for approximately 0 percent of the MENA region’s total energy demand and 2 percent of its electricity generation. That 2 percent of power production comes almost exclusively from dams; wind and solar contribution to the region’s electricity mix rounds to naught.

The second caveat is deep uncertainty about whether MENA governments will follow through with the finance and policy reforms likely to be necessary to unlock the region’s vast wind and solar potential. The IEA says that, by 2040, renewable energy could account for between 3 percent and 16 percent of the region’s total energy demand and between 8 percent and 50 percent of the MENA region’s total electricity generation. That range is cavernous. One end represents a continuation of the status quo. The other represents a radically new energy future.

Which future materializes will depend almost exclusively on the trajectory of wind and solar. Anecdotally and rhetorically, the signs are bright. A slate of large renewable-energy projects—particularly solar—now under construction in the region has drawn robust investor interest. Seemingly every few months bring an announcement that yet another MENA project has been awarded through competitive auction to investors who have contracted to build it, operate it, and sell its electricity at a price that sets a new world-record low.

The consortia bidding for these projects are international, experienced, and well-funded.

A Widening Sun Belt
Buoyed by this market response, governments in the region are falling over each other to pledge increasingly ambitious national renewable-energy targets. From west to east, the ambition extends from Morocco, to Egypt, to Israel, to Jordan, to Saudi Arabia, to the UAE, to Oman. If all this enthusiasm pans out, it will constitute a momentous advance for clean energy.

Among the most ambitious players in the region is the UAE, which imports most of the natural gas it burns to produce electricity and thus is hungry for a homegrown energy source. In 2013, the emirate of Abu Dhabi opened the MENA region’s first large-scale solar project, the 100-megawatt first phase of a development called Shams, which in Arabic means sun. Since then, the UAE has upped the ante with a series of steadily larger and more cost-competitive solar projects. The latest is Sweihan, expected to be the largest solar project in the world and to come online in April 2019. It has a planned capacity of 1.2 gigawatts, an estimated price tag of $872 million, and a contract to sell electricity for 2.42 cents per kilowatt-hour, a price so low that it turned heads around the globe when it was announced.

The assortment of players in the UAE deal is instructive. A consortium of lenders, led by some of the largest banks in Japan, France, and Abu Dhabi, is raising $650 million in debt for the project. Another $220 million in project equity is coming cumulatively from the Abu Dhabi Water & Electric Authority, the emirate’s state-owned power utility, which is administering the project, and from Chinese solar manufacturer JinkoSolar and Japanese construction firm Marubeni Corp., which together are building the solar farm. In January 2017, the UAE announced that it “aims to increase the contribution of clean energy in the total energy mix to 50 percent,” though how much of that would come from which renewable sources isn’t clear.

Saudi Arabia, the world’s preeminent petroleum-fueled power, is pursuing renewable energy for a different reason: it wants to minimize the copious quantities of oil it burns domestically to produce electricity, thereby increasing the amount of black gold it can peddle to the world. The kingdom announced a series of renewable-energy plans in recent years that failed to materialize, largely because of domestic infighting over who would control the process.

Now, under Crown Prince Mohammed Bin Salman, the on-again, off-again drive appears to be on again. In April 2016, Crown Prince Mohammad announced “Vision 2030,” a plan to reduce the Saudi economy’s reliance on oil. Plenty of international observers doubt whether the kingdom can afford the capital projects that the plan envisions at a time of soft oil prices; the International Monetary Fund, among others, has expressed skepticism.

Nevertheless, as part of the implementation of the vision, the kingdom announced in early 2017 a National Renewable Energy Plan that targets the installation of 9.5 gigawatts of renewable-energy capacity by 2023. That is small by global standards; China, the world’s largest renewable power producer, added 58 gigawatts of wind and solar capacity in 2016 alone. Still, the Saudi target, if met, would begin to meaningfully diversify an economy overwhelmingly dependent on fossil fuel.

Saudi Arabia’s articulation of a firm long-term renewable-energy target has mobilized the market. In October 2017, the kingdom held an auction in which companies bid for the contract to build and operate the first solar project envisioned by the new national plan: the 300-megawatt solar project near the town of Sakaka. Just months after Abu Dhabi’s power authority participated in the winning bid for the Sweihan project in the UAE, a separate UAE entity, a renewable-energy company called Masdar, joined with EDF, the French electricity company, in a winning bid to build, run, and sell the power from the Saudi solar project.

The Masdar group bid at 1.79 cents per kilowatt hour, 26 percent lower than its UAE sibling, the Abu Dhabi Water & Electric Authority, had bid in the bigger UAE project. Had Saudi officials accepted it, it would have been a record low solar price. But in January 2018, Saudi authorities passed over the Masdar group’s bid, short-listing instead two slightly more-expensive ones: a 2.36-cent bid from Acwa Power International, a Saudi-based power producer, and a 2.66-cent bid from a consortium involving Japan’s Marubeni.

Saudi officials were expected to pick a winner in early 2018. Either deal will mark another remarkably inexpensive solar project in the Middle East.

Big and Clean?
The test now is whether this first trickle of Middle East renewable-energy projects turns into a torrent. That will depend on finance and policy. Unlike in Europe, where renewable-energy projects have relied on feed-in tariffs, or in the United States, where they have depended on tax breaks, those in the MENA region generally have relied so far on competitive auctions, in which the winners have obtained low-cost financing through government participation in the projects. The question is whether, in the Middle East and beyond it, this model is scalable.

With a typical fossil-fueled energy project, the bulk of the costs are for the fuel that needs to be bought over the several decades during which the project produces power. In a renewable-energy project, the fuel is free, which means the majority of the costs come upfront, in building the plant. As a result, renewable energy depends heavily on low interest rates, which are rising.

Other questions loom. One is transparency: in some Middle East renewable-energy projects, the seemingly rock-bottom winning bids have masked adders that will end up raising the price consumers pay for the renewable electricity. Another is longevity: whether, if oil prices stay low, governments in the region will decide to use the money with which they have been bankrolling renewable energy for something else.

If governments are serious about expanding renewable energy, they will need to do more than declare targets and hold high-profile auctions. They will have to undertake politically painful economic reforms. Structural change will be necessary to mobilize the vast amounts of private capital that will be key to financing any meaningful clean-energy transformation. Four economic reforms, all focused on liberalizing energy markets, would prove particularly useful.

First, governments should accelerate their phase-out of fossil-fuel subsidies both to electricity producers and to consumers. These subsidies, rampant in the region, artificially advantage more-polluting energy sources over less-polluting ones. More to the point in the context of Middle Eastern economic realities, they incentivize the waste at home of hydrocarbons that could fetch higher returns if sold abroad.

Second, governments should introduce more market competition in the supply of electricity, which now remains, in most countries in the region, administered by the state. As the experience of less-regulated energy markets, particularly in Europe and the United States, has shown, market competition tends to turbocharge renewable-energy development. That frenzy can imperil fossil-fuel market leaders, forcing them to adapt quickly or risk being squashed. But early signs suggest savvy fossil-fuel giants can shift and survive.

Third, governments should move to integrate power markets and electricity grids, among countries in the Middle East as well as between them and the wider world. This will not be easy. The saga of Desertec, a German-led consortium that tried unsuccessfully over the past decade to engineer a massive project to ferry renewable electricity from North Africa to Europe, underscores the technical and political challenges. But, in Europe and the United States, open energy markets and interconnected grids have been important in maximizing renewable-energy penetration and in mitigating renewable-energy costs. Technology for long-distance electricity transmission is fast improving, and many countries in the MENA region have common and compelling economic reasons to try to make more-integrated markets work.

Fourth, as they move to build up domestic renewable-energy industries, governments should resist the allure of protectionism. Whether as tariffs or as laws mandating that renewable-energy equipment be made in a country in order to be installed there, policies that coddle manufacturers unable to compete without the help prove unsustainable. They stymie broader renewable-energy employment in the country that implements them, and they raise the cost of renewable energy both there and around the world.

Nearly two decades ago, as the global renewable-energy push was just beginning to gain steam, Sheikh Zaki Yamani, who was Saudi Arabia’s oil minister during the Arab oil embargoes of the 1970s, pithily framed the endgame he thought the trend would prompt. “The Stone Age came to an end not because we had a lack of stones,” he told the Telegraph, “and the Oil Age will come to an end not because we have a lack of oil.”

Yamani’s comment sounded to many like a note of caution for his country and his region—a swath of the planet blessed, and in important ways cursed, with groaning subterranean stores of fossil fuel. Today, there is no stronger sign of how far renewable energy has come than that it is taking root in Yamani’s backyard. Time will tell whether, in a part of the world in which new seeds have tended to grow slowly, this one withers or thrives.

Jeffrey Ball is the scholar in residence at Stanford University’s Steyer-Taylor Center for Energy Policy and Finance and a lecturer at Stanford Law School. He is also a nonresident senior fellow at the Brookings Institution’s Cross-Brookings Initiative on Energy and Climate. For fourteen years, he worked for the Wall Street Journal as a reporter, columnist, and the paper’s environment editor. His articles have appeared in the Atlantic, Fortune, New Republic, Foreign Affairs, Wall Street Journal, and Slate, among others, and he is the lead author of the 2017 Stanford report, “The New Solar System.” On Twitter: @jeff_ball.

Time for a New World Order

Global anti-establishment sentiments are laying the foundation for new political trends. Rightwing and leftwing populist politics continue to test the boundaries of democratic systems worldwide. Anti-establishment candidates have won highest office in several liberal democracies such as Donald Trump in the United States, Emmanuel Macron in France, and Narendra Modi in India. Leaders such as Vladimir Putin in Russia, Beji Caid Essebsi in Tunisia and Abdel Fattah El-Sisi in Egypt, Michel Temer in Brazil, and Xi Jinping in China rose to power as an expression of rejection of the immediate past and its turbulent transitions, and carry a mandate to create new realities and a better future.

The reemergence of populism is no doubt a factor but I believe that the causes for the state of world politics today is much deeper, highlighting fundamental questions about traditional political economic and social norms and practices. Superficial analysis would explain the reason behind all this as a struggle between revolution and evolution, or democracy and authoritarianism. These are incomplete premises, if one can even call them that. Revolutions mostly occur when natural evolution is stunted. And in today’s world, fully democratic or rigidly authoritarian countries rarely exist. The world operates within many shades of gray.

Democracy is seen by those who promote it as the ideal endgame. But even in democracies, the interests of the more powerful frequently come at the expense of domestic, regional, and international players. Besides, examples of turbulent political transitions worldwide demonstrate that a democratic culture is nurtured over time by practice. Opponents of democracy argue that it is a traumatic source of instability and insecurity. They, however, intentionally ignore its longer-term benefits, especially the sense of public ownership and the egalitarianism it creates in concept.

Authoritarian systems, on the other hand, are generally seen as a source of security and stability that is imperative for society’s wellbeing. Its opponents argue that authoritarian regimes fail to fulfill the expectations of their constituents in the long run because they refuse to provide space for their diverse, individual, and creative citizens to thrive. The Velvet Revolution in the late 1980s, Ukraine’s Orange Revolution at the turn of this century, and most recently the Arab awakenings show the consequences of longstanding inefficient authoritarian governments that failed their constituents.

Democracy and authoritarianism in their unregulated or overregulated extremes can lead to both disorder and stability, depending on which comes first. If applied arbitrarily, neither truly fulfills the needs of people today. Ironically, in promoting democracy, its protagonists frequently argue it is a source of stability, a characteristic that people attribute to the centralized authoritarian regimes they are living under, especially in the short term. Equally contradictory is that authoritarian countries now frequently bring up elections and the need to respond to their constituencies, basic concepts and procedures normally attributed to democracies and systems of shared government. It is no wonder that neither option has found true resonance among the majority of the world’s citizens.

The greater problem is that people are growing dissatisfied with the geopolitical paradigm established in 1945 at the end of World War II, consequently becoming the world order which governs us. Victors of World War II, essentially American and Soviet-led western and eastern European blocs, created a system that ensured their prominence in the current world order; they provided some return to cooperative parties but marginalized any power that contested their own. Today, the geopolitical paradigm is changing in many ways. For example, it can no longer be defined as bipolar, unipolar, or in fact even multipolar. The future will definitely not be Euro-centric. In a few years, 60 percent of the world’s middle class will be in Asia.

Equally important, the components of the post-World War II order have changed. Nation states, while still important, are increasingly affected by non-state actors, particularly mega economic entities like multinational corporations, and by the sociopolitical consequences of the rapid exchange of information. This brings into the fray every state, big or small, and even individuals at the center or fringes of society and makes their urgent satisfaction paramount.

The increasing election of anti-establishment candidates or revisionist candidates should not be taken as anything less than a clarion call to establish a new world order—one that is realpolitik in the short term but more compassionate and collective in outlook in the medium and long run. “Survival of the fittest” may be a short-term strategy, but it cannot be the standing principle by which we live. Realities of the discrepancy between countries having stability and security and those who do not, the glaring disparities between succeeding and failing political systems globally, and the disproportionate distribution of wealth and rampant abject poverty internationally, regionally and within nation states, cannot be challenged by regimes in this age of communications and technology. In a transparent and connected global society, disparities and injustices resonate much wider, louder, and quicker than the words of even the most eloquent or forceful political machine in democratic or authoritarian countries.

To move forward with a sustainable, stable, and secure future, the world should embrace a more representative geopolitical paradigm that is commensurate with the diversity of the twenty-first century. We should establish a more equitable world order where the benefits of economic growth are accessible to the majority of people—an order that promotes tolerant diversity in thought and politics through pluralistic societal norms and political systems.

It is high time we acknowledge that the existing geopolitical paradigm does not work, and that we need to create a world order that responds to the growing marginalized sectors of the community of nations.

Nabil Fahmy, a former foreign minister of Egypt, is the dean of the School of Global Affairs and Public Policy at the American University in Cairo. He served as Egypt’s ambassador to the United States from 1999–2008, and as envoy to Japan between 1997 and 1999. On Twitter: @DeanNabilFahmy.

Kirkuk’s Oil Chessboard

It was late at night in November 2017 when Sweden-based oil trader Samir Madani noticed something strange about the oil tanker he was tracking. Madani is a co-founder of TankerTrackers.com, a website that provides data on the movement and storage of oil around the world. The tanker he was following, named VALTAMED, had loaded oil at a port in Ceyhan, Turkey. The VALTAMED sailed south toward the Suez Canal. Unexpectedly, it stopped in international waters off the coast of Tel Aviv, where it turned off its AIS transponder.

The lines of ownership of oil are almost always clear today. With very few exceptions—the occasional contraband shipment to North Korea, the Niger Delta Avengers  militant group sabotaging oil supplies in Nigeria, and a power vacuum in Libya—the ownership of a barrel of oil can be tracked from its time in the ground to the well, to the pipeline, to the tanker, and all the way to the refinery. Madani had stumbled on a mystery.

Madani observed a change in the VALTAMED’s draught, or the distance between the waterline and the bottom of the tanker’s hull, and concluded that the VALTAMED, which was carrying nearly 1 million barrels of oil from the Kurdistan region of Iraq, was clandestinely transferring oil to Israel. The delivery was not logged. The VALTAMED remained in the dark for ten days off the coast of Israel before it finally reactivated its transponder and sailed north toward Cyprus. Over the next several days the ship sat empty until it finally returned to Ceyhan to pick up another cargo of oil from northern Iraq. This was the first of several clandestine oil shipments that Madani and TankerTrackers.com observed in the same place that month.

There had to be a good reason for the secrecy, because when an oil tanker turns off its AIS transponder it invalidates the insurance it has on that shipment of oil. This action represents an extreme tactic derided by risk managers, leaving such valuable cargo without insurance. This was not the only oil heading from Ceyhan to Israel. In fact, the data from TankerTrackers.com showed that between September 25 and December 13, Israel received over 36,000 barrels of oil per day from Ceyhan, making it the third-largest recipient after Greece and Croatia.

Madani and TankerTrackers.com had been paying particular attention to oil flowing out of the Kirkuk-Ceyhan pipeline, a 600-mile pipeline that runs northwest through Iraqi Kurdistan. The pipeline crosses into Turkey right at the junction of Iraq, Syria, and Turkey before making a sharp westerly turn and continuing to Ceyhan, a small Turkish port city on the Mediterranean Sea.

The Kurdistan Regional Government (KRG) built the pipeline in 2013. It was designed specifically to transport Kirkuk’s oil out of Iraq through territory occupied and defended by the KRG and not the Iraqi government. In the autumn of 2017, TankerTrackers.com was focused on the oil shipments from this specific pipeline to provide a clearer picture of how the Kurdish independence vote and reaction from the Iraqi government was affecting the flow of oil from the city of Kirkuk. Measuring the flow of oil would also provide some idea of whether the KRG or the Iraqi government controlled the oilfields. Control over the flow of oil was not just a sign of financial gain, but it also indicated political power. The flow of Kirkuk’s oil is a central interest, and highlights the essential economic motivations behind the diplomatic and military efforts of a half-dozen powerful parties in the Middle East.

The Stakes on the Board
After Saddam Hussein’s government was toppled in 2003, control of Kirkuk’s oil became a contest between the Iraqi government and the KRG. If the KRG could control the oil, it would gain an important economic and political tool in its quest for Kurdish autonomy and perhaps independence. On the other hand, if Iraq’s central government could control Kirkuk’s oil, it could solidify itself as the country’s sole power and secure the economic and political unity of Iraq.

Until 2013, the Iraqi government appeared to have the upper hand. In 2013, however, a third power—ISIS—destabilized the Iraqi state and sought control of oil resources for its caliphate. Kirkuk was caught in the middle and the KRG seized this moment to wrest control of Kirkuk’s oilfields from the Iraqi government.

In 2017, with ISIS militarily defeated in the region, the fight between the KRG and the Iraqi government resumed—but with even higher stakes. Since the end of 2017, regional powers like Iran, Israel, and Turkey all have had economic and political interests in Kirkuk’s oil. Russia, Saudi Arabia, and large international oil companies have financial and political interests at play as well. They all care about who controls Kirkuk’s oil, how it is used, and where it goes.

Some of the parties are striving for control of Kirkuk’s oil today, because they need it to generate revenue for their governments. Other parties seek to consume that oil, while others seek influence as investors. Some merely want to see the oil controlled by a political or business ally. One group wants to reap the financial benefits of transporting it while others need the oil to create an image of political power.

In this board game, political enemies sometimes find themselves to be business allies. Traditional opponents can become partners. In a region now experienced in upheaval and territorial disputes, the competition over Kirkuk’s oil is an extreme example of the struggle for natural resources, with countries, regional powers, terrorist groups, and international businesses—neighbors, allies, and enemies—each pursuing their own goals. Instead of ideology, tribalism, or power politics, the struggle for this section of northern Iraq is driven by economics.

“Baba Gurgur” the Father Fire of Kirkuk
Oil was officially discovered in Kirkuk in 1927, although hints of the oilfields had been seeping through the northern Iraqi earth since biblical times. According to historian Michael Quentin Morton, geologists had observed oil seeping into the riverbed of the Tigris River before the Turkish Petroleum Company (later renamed the Iraq Petroleum Company) decided to drill several wells in northern Iraq to see what lay below the surface. The fourth of these test wells was drilled near Kirkuk and called “Baba Gurgur,” meaning “father of fire.”

The name came from the fires that burned continuously on the oil and gas bubbling out of the ground. The geologists drilled at a rate of only 20 feet per day, so they were surprised that after just three months they had reached limestone. At this point they stopped, cemented the well, and then switched to percussion drilling.

At three o’clock in the morning of October 14, 1927, when the crew retrieved the drill bit, oil and gas burst out. The spray of oil was so high that it shot above the 140-foot oil derrick and covered not only the drillers but everything in a 400-yard radius. Very quickly it became clear that if the geologists did not stop the fountain of oil pouring out of Baba Gurgur, it would overflow the nearby wadi and contaminate the city of Kirkuk’s water supply.

Capping the well was a challenge, and it spilled 95,000 barrels of oil per day before drillers finally brought it under control. Over the next year, the company drilled other wells and established that an oilfield approximately 30 miles in length ran underneath the shallow layer of rock below the Kirkuk region. Later, that field was determined to hold about 12 billion barrels of oil, making it one of the world’s supergiant oilfields.

Production from the Kirkuk field did not begin in earnest until 1934, largely due to conflicts between the Iraq Petroleum Company’s various shareholders and because transportation to refineries and ports in Haifa and Tripoli required the construction of a new pipeline. The Iraq Petroleum Company operated the field until 1972, when the government of Iraq nationalized all of Iraq’s oil resources.

A Snapshot of Kirkuk
The city of Kirkuk is located approximately 150 miles north of Baghdad and, besides its oil wealth, has long been known for its multi-ethnic population. Iraqi Turkmen, Kurds, and Arabs all have significant populations in the city.

From the 1970s onward, Kirkuk’s oil fell under the jurisdiction of the Iraqi National Oil Company (INOC) until 1989, and was then broken into regional companies and handed to the North Oil Company, which was headquartered in the city and was an Iraqi state-owned company. After the 1991 Gulf War, strict limits were placed on Iraq’s oil exports, though the country was able to export several billion dollars’ worth of oil through an oil-for-food agreement reached in 1996.

When the United States invaded Iraq in 2003, Kirkuk, with its giant oilfield, was one of the first targets. Plans which originally called for the 4th Infantry Division to enter Iraq through Turkey to take Kirkuk were cancelled when Turkey refused to allow American troops transit rights. Instead, Kurdish forces working with a few U.S. Special Forces began their attack on April 9, 2003 and soon found themselves joined by Kirkuk’s own Kurdish population.

This catalyzed an internal uprising that forced Iraqi troops to flee the city. By the afternoon, Kurdish Peshmerga forces had captured the city, and, with it, an oilfield that could produce up to 900,000 barrels of oil per day.

In 2003, the Kurds, or specifically forces led by Jalal Talabani of the Patriotic Union of Kurdistan, suddenly found themselves in control of a city outside of the territory that had been technically designated as the Kurdish autonomous region after the Gulf War. However, the Kurds did not maintain control, and Kirkuk was not annexed into the formal Kurdistan semi-autonomous region. The KRG shortly relinquished control of Kirkuk to the Iraqi government. Although the KRG had some of northern Iraq’s oil resources under its control, without Kirkuk and its vast oilfields, economic independence could not be assured at the time.

Oil Chess Games and the Rise of ISIS
After the toppling of Saddam Hussein’s government, with the oil ministry in shambles, Iraq’s total oil production dipped as low as 1.3 million barrels per day from its pre-invasion high of 3.5 million barrels per day. As stability and security returned to Iraq in 2007 and 2008, total Iraqi oil production rose to 2.4 million barrels per day. Nevertheless, the Iraqi oil operation as a whole lacked the investment and expertise needed to repair damaged infrastructure. Even with better security, insurgent attacks on oil facilities and pipelines continued to hurt the oil industry. Other issues hampering the Iraqi oil industry included corruption, lack of appropriate legislation and regulation, and disagreements with the Kurdish population represented by the KRG.

In 2008 and 2009, the Iraqi oil ministry began offering contracts to foreign companies to operate existing oilfields or develop new assets. Although many foreign companies stayed away due to security concerns, BP and China National Petroleum Company (CNPC) did sign contracts. Meanwhile, the KRG signed agreements with ExxonMobil and Chevron. The invitations to outside oil firms were controversial as no foreign oil company had been involved in Iraqi oil resources since their nationalization in 1972, but they were also necessary for Iraq to raise its oil output and therefore its revenue.

After clamoring for the right to export oil in Kurdish territories on their own and make their own contracts with foreign oil companies, the KRG finally signed an accord with the Iraqi government that permitted the KRG to export 100,000 barrels per day from specific fields. Some 73 percent of the revenue would be designated to the Iraqi government, 15 percent to the KRG, and 12 percent to any foreign oil companies with which the KRG signed contracts. The agreement also allowed for future increases in oil exports. The Kirkuk field, however, was not one of the fields designated for Kurdish control.

In the years before the rise of the Islamic State in Iraq and Syria (ISIS), in the words of one Iraqi government official, Kirkuk languished as a “no man’s land.” According to a 2013 S&P Global Platts interview with the chairman of the local Kirkuk Governing Council’s committee on oil and gas, Kirkuk’s oil was stuck in limbo because the Kirkuk Governing Council believed that Iraq’s constitution gave it the right to be involved in all decisions related to oil and gas. The Kirkuk Governing Council was unhappy with the Iraqi oil ministry’s unilateral decision to grant BP a contract to do preliminary technical work on assessing Kirkuk’s oilfield and the development needed to increase its production.

The local Kirkuk government thought it was in the midst of a bidding process when the Iraqi oil ministry announced the contract with BP. The local council had hoped to attract the highest bids from ExxonMobil, Total, and Chevron. Some of these companies had already signed production-sharing contracts with the KRG for Kurdish-controlled oilfields near Kirkuk. However, the Iraqi government refused to recognize these Kurdish contracts. Kirkuk was stuck between a neglectful national government that had devoted most of its focus to Iraq’s southern oil resources and an autonomous Kurdish government looking to expand its power, influence, and control over Iraq’s northern oil resources.

The tug of war over Kirkuk’s oil might have been resolved through negotiation had another force not burst onto the scene in 2014. ISIS emerged in January in Fallujah. From there, ISIS expanded rapidly in Iraq, taking control of Mosul only six months later. To the KRG, based in Erbil, just east of Mosul and north of Kirkuk, it appeared that ISIS was bearing down on Kirkuk.

On June 13, the Kurdish Peshmerga advanced into Kirkuk, occupying the city as the Iraqi army retreated in the face of the advancing ISIS forces. Even though Kirkuk was officially outside of the area allotted to the KRG, the Peshmerga held Kirkuk for nearly three and a half years and the KRG fought to keep that city’s oil out of the hands of ISIS.

It was known, in 2014, that ISIS was funding itself through the illicit production, transportation, refining, and sale of oil. However, the depth and complexity of its oil operation were not generally understood until late in 2016, when the public was shown files seized during a 2015 U.S. military operation to kill Abu Sayyaf, the ISIS operative in charge of oil logistics. Matthew Reed, a D.C. analyst, examined the public documents at length to better understand how the ISIS oil operation worked and how the organization managed to make between $40 and $50 million per month in oil revenue. According to Reed’s research, ISIS controlled at least 253 oil wells in both Iraq and Syria before the May 2015 strike that killed Abu Sayyaf.

The material seized from Abu Sayyaf revealed what had likely been obvious to the Kurdish forces on the frontline—that ISIS was running a surprisingly sophisticated oil operation in which skilled oil professionals oversaw the operation of wells, pipelines, and refineries. In 2014, even though Peshmerga forces occupied Kirkuk and some of the surrounding areas, ISIS oil was being run through the city on its way across the border to Iran. ISIS tried several times to capture the Baiji Refinery, Kirkuk’s largest, and multiple times attacked the pipeline that transported oil from Kirkuk to the Turkish port of Ceyhan.

Eventually, ISIS managed to knock out 80 percent of the Iraqi leg of the pipeline. By September 2014, oil output from Kirkuk was down to only 90,000 barrels per day, a 90 percent drop from earlier that year.

The KRG ignored its oil disputes with the Iraqi government and simply struck out on its own. Iraq lacked the power to stop the KRG from making its own oil deals. In an agreement that seemed to defy traditional understandings of Middle Eastern allies and enemies, the KRG signed a contract with Turkey to cover the transportation and sale of its oil through the Ceyhan port. Despite the historical and continued animosity between the KRG and the Turkish government, Turkey arranged for the KRG to receive payment from the sale directly, and not through the Iraqi government.

In another unusual pairing, the first barrels of oil sold under this new arrangement went to Israel, which had terrible relations with Turkey at the time but was close to the KRG. Although Turkey could have theoretically shut down KRG oil sales to Israel, the country was more interested in the economic benefits of transporting KRG oil than in its geopolitical relationships.

With this new Turkish agreement in hand, the KRG decided to build a series of pipelines that ran entirely through its own territory. These pipelines bypassed the section of the Kirkuk-Ceyhan pipeline that was vulnerable. It hooked into the main pipeline at the border with Turkey.

Throughout 2016, the United States bombed ISIS oil assets and targeted the ISIS commander at its helm. The organization’s oil revenue dropped precipitously as a result. The combined ground offenses against ISIS from the Iraqi army, American advisors, Kurdish forces, and Shia militias made slow progress in Iraq. ISIS demolished or ignited oil assets as it retreated. Mosul was a particularly devastating example. The battle for the city lasted nine months, and ISIS torched so many oil wells that sheep grazing in the surrounding territory turned black.

The Great Oil Game
While Iraq was busy negotiating the details of a deal to cut oil production with its fellow Organization of the Petroleum Exporting Countries (OPEC) members in November 2016, the Kurds were just as busy looking for ways to increase oil production in northern Iraq. Even after Iraq agreed to an OPEC quota of 4.351 million barrels per day, the KRG signed an agreement with Rosneft in which the Russian oil company would invest billions of dollars in the KRG oil industry and export Kurdish oil to refineries in Europe. Commodities analysts questioned whether Iraq could honestly commit to the OPEC quota given its lack of control over northern oil.

By the summer of 2017, the KRG had expanded the territory under its control by about 40 percent. With Kirkuk, the oil reserves under Kurdish control grew from 6 percent to 20 percent of Iraq’s total. In 2016, the Kurds pumped 544,600 barrels per day—12 percent of Iraq’s total oil production. Out of Kirkuk alone, the Kurds were pumping between 350,000 and 400,000 barrels per day. Tensions between the Iraqi government and the KRG rose as the KRG refused to relinquish Kirkuk and its oil.

To complicate matters, on June 7, 2017, the KRG announced that in September it would hold a referendum on independence for its semi-autonomous region and also for additional territories including the Kirkuk region. Multiple attempts were made to dissuade the KRG from holding this vote, and yet all of the pieces needed for independence seemed aligned. The common goal of fighting ISIS had seemingly united disparate Kurdish parties. It had a strong army, hardened by years of fighting ISIS militants and bolstered with U.S. military equipment. The KRG controlled 28.5 billion barrels of oil—more than Nigeria—and it had the means to independently export and sell it.

With so much oil, a fledgling country like Kurdistan could build an economy.

On September 25, 2017, the people of Iraqi Kurdistan voted to seek independence. When the prime minister of Iraq called the vote “a strategic and historic mistake,” he also called for the KRG to turn over revenue from the sale of Kirkuk’s oil. As expected, Turkish President Recep Tayyip Erdoğan threatened to impose a severe blockade. Erdoğan easily could have halted the KRG’s primary source of income and stifled the Kurdish economy just by refusing to load the KRG’s oil into tankers at the Ceyhan port. However, to the surprise of many, he did not.

This was when TankerTrackers.com started watching the KRG berths in Ceyhan. It wanted to observe if Turkey would follow through on its threat. However, the data showed that Kurdish oil, including oil from Kirkuk, continued to flow unimpeded through Turkey with sales mostly to customers in Greece, Israel, Poland, Cyprus, and Croatia.

On October 17, three weeks after the independence referendum, the Iraqi government, with the support of Iranian-backed Shia militias, entered the city of Kirkuk and swiftly took control of its airport, military base, and multiple oil facilities. The ease with which Iraqi forces recaptured Kirkuk from Kurdish forces confounded most in the West who were not familiar with finer points of intra-Kurdish politics. Essentially, one powerful Kurdish party abandoned its posts. The group was accused of selling out the KRG to the Iraqi government in a deal orchestrated by Iran before Iraqi forces even marched on Kirkuk. The KRG lost control of Kirkuk’s oil.

During the battle and in its immediate aftermath, commodities analysts were looking for signs of whether the production and distribution of Kirkuk oil had been disrupted. Oil markets barely reacted, because there was a lack of evidence of an immediate disruption. With Iraq quickly regaining control of Kirkuk oil, the government had to decide how to transport it to sell. The government did not want to use the KRG bypass and the original pipeline was still out of commission. As a result, the Iraqi government decreased production. Several days after Iraqi forces retook Kirkuk the flow of oil was down to only 200,000 barrels per day from 600,000 barrels per day.

On October 25, the KRG officially suspended the referendum results. The Iraqi government restarted oil production in Kirkuk the next day and sent only 90,000 barrels per day through the Kurdish pipelines to Ceyhan. According to port agents in Ceyhan, that oil was marked for sale by SOMO, the Iraqi government’s marketing group. The flow of oil from assets still held by the KRG was also temporarily halted, but it resumed by October 30, according to port agents in Ceyhan.

Fifteen days later, on November 14, TankerTrackers.com observed the first clandestine shipments of KRG oil from the Ceyhan port. The explanation given for the clandestine nature of the transfers is that Baghdad had threatened legal action against customers of KRG oil from Ceyhan. Turning off the AIS transponders officially “hides” the transaction. However, satellite imagery revealed an Israeli refinery in Ashkelon received most of that oil. It is also unclear whether the Iraqi government could effectively fine any supposed violators.

Oil flow through the Ceyhan pipeline was still running at decreased levels. Indeed, the Iraqi government seemed to lack a clear plan for how to exploit one of the highest potential oilfields in the world. First, it announced it would divert Kirkuk’s oil to refineries in Iraq, though the refineries it has are not well-equipped to process that oil. Then, in an abrupt turn of events, Iraq announced that Kirkuk oil would shortly be trucked over the border to Iran and sold to Iranian refineries.

Fate of the Father Fire
The fate of Kirkuk’s oil has yet to be resolved as the players continue to vie for influence over this single resource. Control of this oil is crucial for political control and influence within Iraq. Though the government in Baghdad appears to have a slight upper hand, another period of political instability could easily return control to the KRG or a rogue group. The immediate players, the KRG and the Iraqi government, are not the only ones with stakes in the game. A host of secondary and tertiary players are all pursuing their own economic and political interests. As has been evident, these interests are not always clear-cut. In many cases, energy business interests and geopolitical interests directly contradict each other.

The KRG’s interest in Kirkuk’s oil is fairly straightforward. Even though Kirkuk was not part of the original semi-autonomous Kurdish region, the KRG clearly, if not legitimately under Iraqi law, held and exploited Kirkuk’s oil until recently. If the KRG could regain control of Kirkuk oil, it would obtain a large revenue source and enough money to sustain a government and to serve as a foundation for a new economy.

In terms of prospects, the KRG is left with only two avenues for leverage over Kirkuk’s oil. It can attempt to retake Kirkuk militarily from the Iraqi forces (an unlikely move given the internal disputes and fragmentation of the KRG since losing Kirkuk) or it can negotiate a new revenue-sharing deal with the Iraqi government. In December 2017, Argus Media and Reuters reported that the Iraqi government proposed a respective 12 and 12.6 percent revenue-sharing plan with the KRG. This is less than the pre-ISIS revenue-sharing plan and, not surprisingly, the KRG said it was not interested.

ISIS, though largely destroyed and defeated in Iraq, serves as an important lesson on the vulnerability of Iraqi’s oil resources. The organization’s primary oil interests were revenue and sabotage. Its ability to quickly establish a sophisticated network of oil production, transport, and illicit sales could easily be reproduced by a future militant organization and used to fund nefarious practices in Iraq or elsewhere. A different rogue group could seize control and exploit the oil for its own economic purposes, perhaps to fund its own activities.

The Iraqi government has the most to lose in the fight for control over Kirkuk’s oil. Its primary interest is revenue, coupled with the long-term goal of increasing production from the Kirkuk field to its potential. Iraq hopes that the Kirkuk field could soon produce 1 million barrels of oil per day, with the necessary investment, pressure maintenance, and repairs to its infrastructure. At the same time, Iraq must keep Kirkuk’s oil out of the hands of the KRG and any terrorist organization to prevent them from receiving the revenue.

Controlling and exploiting Kirkuk’s oil is also a sign of the Iraqi government’s sovereignty and power, something it sorely needs to project after years of instability and weakness. Iraq’s sudden desire to sell Kirkuk’s oil to Iran might not be the optimal solution for the Iraqi government but it would effectively prevent the KRG or a terrorist organization from financing themselves.

The Iraqi government’s prospects for maintaining control of Kirkuk’s oil seem promising, but it is unclear if it will be able to entice foreign companies to return to the area given the geopolitical risks. BP, which was originally contracted for minor technical studies pre-ISIS, has been mentioned by the Iraqi government as a potential partner, but plans have not progressed beyond BP’s commitment to study ways of boosting Kirkuk’s capacity.

Though Iran is a major oil producer in its own right, the country seems to have taken a very keen interest in Iraqi oil, and particularly Kirkuk’s oil. Iran’s oil industry suffered during the sanctions regime as necessary repairs to aging fields were neglected. After sanctions were relaxed in 2016, Iran was able to jumpstart its oil production but could not keep producing at a high rate. Oil production has fallen off, and Iran continues to suffer shortages in refined products. It cannot supply its population with enough gasoline and diesel fuel. Iran has made overtures to the Iraqi government and has entered into an agreement to ship 30,000 to 60,000 barrels per day of oil from Kirkuk to refineries in Iran by truck. The two governments have further agreed to build a pipeline to connect Kirkuk’s oilfields with an Iranian refinery just over the border. This will be the cornerstone of a larger oil swap, in which Kirkuk’s oil will travel to Iran via a pipeline and Iraq will receive oil from Iran at its facilities in southern Iraq.

Iran’s motivation to secure access to Kirkuk’s oil is economically driven. It seems that Iran is logistically unable to supply its northern refineries with crude oil or requires the specific grade of crude oil that Kirkuk produces. The pipeline, which would take at least two years to build, and the crude oil swap deal are both evidence of Iran’s long-term interest in northern Iraq’s oil industry.

A long-term crude oil swap contract would intertwine the Iraqi and Iranian oil industries to a great extent. In many ways their oil policies would be united. Together, Iraq’s and Iran’s oil reserves rival those of oil giant Saudi Arabia, and combined they could present a challenge to Saudi Arabia’s de facto control over OPEC policy. Even though OPEC makes decisions by consensus, Saudi oil minister Khalid Al-Falih uses Saudi Arabia’s larger production capacity and massive reserves to persuade and compel smaller oil-producing countries to agree to Saudi-friendly policies within OPEC. Iranian oil minister Bijan Namdar Zangeneh would love to have the kind of influence Al-Falih has, and with Iraq’s oil, Iran could challenge Saudi Arabia within OPEC in the coming years.

An integrated Iraqi–Iranian oil industry would give Iran an influential voice in OPEC, and it would establish Iran as a valuable partner in the oil industry. Iran has struggled to attract foreign companies to partner with the National Iranian Oil Company on oil projects since sanctions ended. With greater influence in the oil market and a say over Iraq’s oil resources, Iran might be able to attract better partners despite the risks of doing business with Iran.

Iran’s prospects depend largely on whether the Iraqi government maintains control over Kirkuk and is able to subdue Kurdish nationalism. If so, Iran’s role in helping the Iraqi government secure its control will give Iran significant geopolitical influence over Iraq. Pipelines physically connecting both oil industries would certainly cement this relationship. Still, a pipeline is at least two years away.

Turkey might throw a wrench into Iran’s plans. Despite vehement opposition to Kurdish independence in northern Iraq, Turkey did more than any other country to improve the KRG’s strength between 2014 and 2017. Turkey has profited from the KRG’s oil and, specifically during that period, from the KRG’s Kirkuk oil. However, Turkey does not necessarily need the KRG to control Kirkuk to continue benefiting from Kirkuk’s oil; it only needs to make sure that the oil is not going to Iran. Turkey has made it clear that it prioritizes revenue over ethnic or political stands in this arena.

Even as Baghdad continues negotiations with Iran, the Iraqi government ordered the repair of the original Kirkuk–Ceyhan pipeline. If Turkey can entice Iraq to rebuild the destroyed sections of the Ceyhan–Kirkuk pipeline, it will be able to bypass its former business partners, the Kurds, and continue to profit off of the sale of northern Iraq’s oil.

Meanwhile, Israel is watching to see if a major source of oil will be cut off. Access to crude oil has always been a challenge for Israel, because most of the nearby suppliers refuse to sell to it. Gasoline in Israel is very expensive as a result. Since 2015, it is believed that Israel has received as much as 77 percent of its oil from the KRG. These numbers actually could be higher because of the clandestine shipments like those discovered by TankerTrackers.com.

If Kirkuk oil is permanently diverted to Iran, Israel would suffer the loss of an important source of crude oil. Is this enough for Israel to support any effort by the KRG to retake Kirkuk? The prospect is unlikely but not impossible.

With Iraq’s recapture of Kirkuk, Saudi Arabia has suddenly renewed its interest in Iraq’s oil industry. The Saudi government is looking to strengthen its geopolitical relationship with the Iraqi government and present itself as an alternative to Iran. Generally, the Saudis seek security along their northern border from bad actors in Iraq and are looking to extend their regional influence beyond the Persian Gulf monarchies. In terms of oil, the Saudis would like to turn Iraq into a reliable partner within OPEC, like Kuwait and the United Arab Emirates, for example. More importantly, Saudi Arabia does not want Iraq’s oil policy to fall under the influence of Tehran.

Iraq also presents Saudi Arabia with investment opportunities. Saudi ARAMCO the Saudi national oil company, is flush with capital and looking for avenues to invest that money. The beleaguered Iraqi oil industry presents an opportunity for the Saudis. ARAMCO has everything Iraq needs—expertise in mature oil reservoir management, connections to the best international oil service providers, logistics support, and a strong management team. Al-Falih traveled to Iraq at the beginning of December and signed eighteen separate memoranda of understanding with Iraq designed to increase cooperation between the Saudi and Iraqi oil industries. Sabic, Saudi Arabia’s partially state-owned petrochemicals manufacturer, confirmed plans to open an office in Iraq as well. So far, Saudi Arabia’s prospects in Iraq have been confined to southern Iraqi oil assets, but if Saudi Arabia is serious about investing in Iraq’s oil industry, Kirkuk will be on Saudi Arabia’s radar. No one in the industry knows more about getting the most out of an aging, low-pressure field than ARAMCO.

Watching this game unfold from the periphery are international oil companies (IOCs) and Russia. Between 2014 and 2016, IOCs pulled out of contracted development projects in northern and central Iraq. ExxonMobil walked away from six exploration areas in the Kurdistan region and Chevron gave up an interest near Erbil in 2015. ExxonMobil cited instability in the Sulaimaniyah region (on the border between Iraq and Iran) as the reason for pulling out of three blocks. These companies will most likely wait to see how the relationship between the KRG and the Iraqi government unfolds before diving back into asset development in Iraq.

American-based IOCs will be hesitant to venture into any Iraqi region with Iranian influence. The U.S. government, for its part, is relatively uninterested and has had a hands-off policy regarding international oil in recent years.

Working directly with the KRG is also a risky proposition, given its internal instability and unsettled oil relations with Baghdad. To enter the region, an IOC would need to commit significant capital and risk the safety of personnel at a time when all IOCs are significantly decreasing their exploration and production activities worldwide. For most IOCs, Iraq just does not present an attractive opportunity at the moment.

Russia, on the other hand, showed a great interest in Iraqi oil under Kurdish control. There is evidence that Russian oil giant Rosneft agreed to finance a $1 billion gas project in Iraqi Kurdistan right before the KRG held its independence referendum. Some sources said that Rosneft’s investments in the Kurdish region topped $4 billion. This comes on top of $1.2 billion that Rosneft lent the KRG to help finance Kurdish oil exports in February 2017. With the Iraqi government controlling Kirkuk’s oil, the question is whether Russia will find as much opportunity.

Once again, parties are coming from near and far to stake their claim on this valuable commodity. Both the KRG and the Iraqi government consider Kirkuk’s oil key to their future economic success. Who controls Kirkuk’s oil, however, reverberates far outside of Iraq’s borders. Regional powers like Israel, Turkey, Iran, and Saudi Arabia all seek to benefit economically from the development, sale, transport, or purchase of Kirkuk’s oil. Even farther outside this Middle Eastern web, major IOCs like BP and Exxon and Russian oil giants like Rosneft wait to see who will win the game.

Ellen R. Wald is an energy historian and a non-resident scholar at the Arabia Foundation in Washington D.C. She also teaches Middle Eastern history and policy at Jacksonville University. She writes a column for investing.com and is the author of the forthcoming book Saudi, Inc.: The Arabian Kingdom’s Pursuit of Profit and Power. On Twitter: @EnergzdEconomy.

Reflections of a Statesman

Amre Moussa, 81, is a household name in Egyptian foreign policy, Arab regional politics, and international diplomacy. He is best known for his tough stances against Israel, which have earned him a rare kind of fame and distinction in Egypt and the Arab World. An interview of him debating then-Israeli Foreign Minister Shlomo Ben Ami about the status of Jerusalem and the Palestinian state from 2000 continues to resonate on social media even today. He called Israel’s assault on Gaza in 2009 an “act of aggression.”

His distinguished career as a diplomat began at the Egyptian foreign ministry in 1958 where he worked his way up to become Egypt’s ambassador to India and subsequently Egypt’s Permanent Representative to the United Nations. He served as Egypt’s Minister for Foreign Affairs during the Hosni Mubarak regime—a post he filled starting in 1991 for ten years during which Egypt led a strong, active role in regional and international politics. Moussa then became the sixth secretary-general of the League of Arab States between 2001 and 2011. With his signature tenacity and clear-headedness, he breathed new life into the regional organization, attempting to restructure it, and took important stances in the Arab–Israeli conflict such as endorsing the 2002 Arab Peace Initiative (to end Israeli occupation in exchange for Arab normalization with Israel) and visiting a besieged Gaza in 2010 to pressure Israel to lift its blockade.

When the uprising broke out in Egypt in 2011, Moussa joined the masses on the streets, expressing his support for calls for change. That year also marked Moussa’s transition from diplomacy to politics, prompting his presidential candidacy in the 2012 elections which eventually ended with the victory of the Muslim Brotherhood candidate, Mohammed Morsi. “I did well that I lost the elections,” he later said. After the June 30 uprising, which resulted in the overthrow of the Muslim Brotherhood regime, Moussa was elected to head a fifty-member constitutional committee that was responsible for drafting Egypt’s 2014 constitution, recognized to be one of the most progressive and liberal constitutional documents in Egypt’s history.

In late 2017, Moussa published his memoirs, the first part of a trilogy: a 700-page book entitled Ketabiya (My Testimony) covering his early life up until his last day as Egypt’s foreign minister in 2001. The upcoming two parts are expected to cover his tenure as the secretary-general of the Arab League and developments in Egypt after the 2011 uprising.

Cairo Review Associate Editor Asmaa Abdallah spoke with Moussa in Cairo on January 16, 2018.

CAIRO REVIEW: Why is the Arab World in crisis?
AMRE MOUSSA: I would say that the main reason was the bad governance in the countries that have witnessed the upheavals—revolutions at the end of 2010 and the beginning of 2011 and thereafter. Bad governance has led to a lot of mistakes in dealing with the economic, social, and educational issues that have to do with the lives of people. Young people felt let down, that they don’t really count. They have a lot of hopes and they look to the future, to what kind of life they’re going to get. Governments did not cater to this issue. They were very busy with maintaining the status quo at the time and with catering to the interests of the ruling circles rather than the interests of the people.

Therefore, the cumulative effects of bad governance since the end of the monarchy in Egypt and through all the governments since, without exception, have led to this case of frustration that has led to outbursts of anger. You could argue that before the revolution of 1952, the dossiers of education, agriculture, and industry were very well developed. Some can also claim that under [Gamal Abdel] Nasser the poor people were better served. You can say so but the net result of all this is what we have seen: that the poor people were not in good shape. Had there been real success in any of these eras, under any of those governments, we wouldn’t have been in such a situation. In fact, had they succeeded—just one of them, not all of them—the wave of protests of 2011 wouldn’t have happened.

CAIRO REVIEW: To what extent do you feel the Arab World has learned from these failures?
AMRE MOUSSA: If you want it in one or two words: not much. But if you want to go deeper—in Egypt, 60 percent of the population is under the age of 35 and if you look at people aged 40 or 45, you will find that this number goes up to 70 percent. In Saudi Arabia alone, young people account for 70 percent. You have to bet on those people. [They] are going to effect the change. I also have to bet on these things: the spirit of the twenty-first century and the new things that this spirit introduces into the lives of people such as social media and what’s coming after that. With this you can safely bet that, yes, change will have its effect. The negative cumulative effect of bad governance will have to be reversed. And so, you bet on young people.

CAIRO REVIEW: There is much speculation especially in policy circles abroad about the emergence of a new “regional order.” At the heart of much of this speculation is the demise of the core Arab systems and states. How can the Arabs address this issue?
AMRE MOUSSA: I strongly believe [in that], and I was one of the early politicians who talked about a new regional order. After everything that happened, the big headline, if you want to describe the situation in the region, is change. There was the idea that the Middle East and the Arab World needed different governments under the so-called “moderate Islam” or the so-called “creative anarchy” and all of them come together. Creative anarchy—the theory has come from abroad, and you can find a lot of literature about that coming from, in particular, the neoconservatives in America. It was Mr. [Recep Tayyip] Erdoğan who started talking within international circles about the moderate Islamic regime as if this is the only regime, the only government, the only system that could defeat the radicals. And he wanted Egypt to partner with Turkey to advance this theory, which was bought by many Western circles.

The idea that moderate Islam rules and bears the responsibility to defeat the radicals is a flawed theory all the way. I consider it flawed because the issue isn’t who is moderate and who is not? What do we mean by moderate Islam? What do we mean by radical Islam? What do we mean by a new era? I thought and said that publicly at that time, that what we need is a new order that would take into consideration the rule of law, constitutional life, and to connect with the twenty-first century. And this cannot be achieved when we still have the mentality of the twentieth century, in fact even the mentality of the fourth and fifth centuries, so it was a flawed theory from the beginning.

CAIRO REVIEW: How can the new order be achieved?
AMRE MOUSSA: I started in 2010 to talk about the Arab Neighborhood Policy, and put that in the form of a plan that I introduced to the [Arab] summit of 2010 in Sirt, Libya: that we must change, we must engage all our neighbors in Africa, in Asia, and in the Mediterranean. My point was that in Africa for example, the southern belt under the North-African Arab countries, like Chad, Niger, Mali have a lot of common relations with us—religious, cultural, and so on—and our interests would do better if we worked together. This area is called Sahel and Sahara, the southern rim of the Arab World. Then we talked about the Horn of Africa, bringing in Ethiopia and Eritrea, because the rest are members of the Arab League (Sudan, Somalia, Djibouti) and opening the door for other African countries to have associate membership or observer membership.

From Asia, that would be Turkey, Iran, and Israel, but Israel under clear conditions, first to accept the Arab Peace Initiative of 2002 and start meaningful negotiations to settle the conflict with the Palestinians. We have no other quarrel with the Israelis except on the issue of Palestine and the occupation. Otherwise, we don’t have any old enmities with Israel as we do with empires that we have entered into several wars with like Persia or the Ottoman Empire and its bleak history with us. It is a very clear-cut conflict. So, I put forth those conditions so that Israel can accept or tell us its view. As for Iran, we call on Iran to enter a dialogue with us—a dialogue where we get its position on the Arab initiative and on Palestine, its policies in the Gulf, its policies vis-à-vis the Emirati islands, and we sit and see what it wants to say.

It was not accepted by the Arabs, and Egypt was the first country to oppose what the Secretary General, who happened to be Egyptian, had proposed.

CAIRO REVIEW: Why did they oppose it?
AMRE MOUSSA: For several reasons, it is something new, and we were the rulers at that time. We were happy with the situation as is: “Please don’t shake it. Because if you shake it, it might crumble.” They were happy as they were. They felt if we just open one or two windows, the wind will blow in.

CAIRO REVIEW: Do you think Arab countries would be more open to the idea today?
AMRE MOUSSA: I think that now there is no other way but to think of a new regional order. There’s another suggestion or idea: we should think of an organization for security and development, like the Organization for Security and Co-operation in Europe whereby we can get all of them or start with a few members, Arabs, Africans, Asians, not necessarily all of them. The first initiative, the Neighborhood Policy, was that we would be over forty countries, but with this one perhaps six or seven or eight.

CAIRO REVIEW: Is there a political will to do this?
AMRE MOUSSA: Perhaps if we talk about six or seven countries, that would be acceptable.

CAIRO REVIEW: Throughout your diplomatic career, you’ve been an outspoken critic of Israel and its policies. How do you view alleged rapprochements between Israel and several Arab states including Saudi Arabia at the expense of the Palestinians?
AMRE MOUSSA: That’s not new. For so long there have been these talks under the table, this time from this Arab country, that time from another. The point is, do you dare come to the table and talk? I don’t think any Arab government would do that. Therefore, it will continue that way: you go and say a few nice words, but you cannot promise that the Arabs will accept that Jerusalem will be the capital of Israel. Not a single state can because we are all bound by the Arab initiative. It is the bible, the only document that all the Arabs unanimously have voted for. Even Saddam Hussein.

CAIRO REVIEW: Do you believe Trump’s Jerusalem decision could have been averted?
AMRE MOUSSA: No, I think that President [Donald] Trump and his closest associates were under the wrong impression when they came to the region. They said what they wanted to say, and they got the impression that they can do it. Trump, when he first came to the region, was not really known as he is today, after in particular his recognition of Jerusalem as the capital of Israel. This move has burned up all the credentials of the American diplomacy so I believe that we have to be firm because we are losing anyway.

So now, we have to lose and believe that we are losing but the Palestinian question is not going to go away and we have to insist. Why should we give something to Israel without a quid pro quo? Israel never accepted the Arab initiative, never accepted any resolution by the Security Council or any international institution, so what do they want? They want the status quo to remain the same. They don’t care about two states, one state. No, just the status quo. To rule over the West Bank, to exclude Gaza, and to build settlements and let the fait accompli do the work. We have to be very aware of this and our policies should try to prevent this and come up with ideas, such as negotiations.

If I were the one to decide, I would say that the timeframe for negotiations is six months, but there has to be a resolution by the Security Council calling on us to negotiate and approving an agenda within a timeframe. And then after that period, the results should be put before the Security Council. But I agree with Abu Mazen that America cannot play a go-between [role] anymore or be the honest broker after what happened with Jerusalem. I don’t think American brokering has any chance.

CAIRO REVIEW: You’ve mentioned in a recent article that it’s time to put the one-state solution on the table. Could you tell us more about how you see this as a viable solution?
AMRE MOUSSA: I believe that the offer for the Palestinians to have a state of their own is a good idea but a dishonest proposal. The United States and Israel want the Palestinians and Arabs to chase after something. Exactly like a carrot moving at a certain speed and a rabbit running after it at the same speed, so the rabbit will never catch the carrot, but the carrot will never disappear from the sight of this rabbit. That’s where we are, in vicious circle after vicious circle. That’s where the idea of a Palestinian state has really defeated the Palestinians because the Israelis were free to do whatever they wanted—settlements, Jerusalem, et cetera—but the Palestinians were not free. They were bound by the shackles of Oslo and the Israelis violated all the provisions of Oslo.

The idea of the Palestinian state has become a hoax. Although the idea is good, and the Palestinians have that right definitely, but as you see it has been used against them. So, what do the Israelis want? A Jewish state. What do the Palestinians want? A Palestinian state. If the Palestinians can’t have a Palestinian state, then the Israelis shouldn’t get a Jewish state. Only one state for all of them, so I suggested that in light of what I see as a campaign of deceit. The agenda of whatever negotiations coming up will be two points: the first is a Palestinian and a Jewish state, or one state for all. But we should not continue to play the same losing game. They were laughing at us.

CAIRO REVIEW: How do you see the different parties responding to this?
AMRE MOUSSA: This idea is gaining ground within the Palestinian rank and file. This idea is being mentioned now repeatedly in many foreign ministries in Europe and in America, and in Russia. The big capitals. When and how to do it? You can tell me the Israelis will not accept, but they didn’t accept the Palestinian state. And those who say that [Benjamin] Netanyahu accepted the Palestinian state, they are again deceiving us. They never accepted the independent state for the Palestinians. If this is the case, don’t waste my time. Let us go into negotiations for six months. Accept the state, what are the conditions for that? If they are not serious, then let us negotiate the one-state [solution]. They will run out the room. Let them run.

CAIRO REVIEW: It seems that the impetus driving certain Arab countries toward rapprochement with Israel is the fear of a rising Iran. Do you feel that is justified? Why is it that they look to Israel as the protector?
AMRE MOUSSA: They look to Israel as the key to American policy and support. That Israel would be more powerful, more convincing to America than anybody else in pushing the United States against Iran. But I believe that it is exactly the opposite. If some of us think that we will use Israel against Iran, in fact, Israel is the one that will be using us and then at the first chance, once they agree with Iran again, they will drop us. Because with Iran there are two or three specific points that bring both of them against each other: the issue of missiles, the issue of having Iranian forces maintain a presence around Israeli-controlled territories, and the issue of terrorism. We cannot deny that Iran is part of the region and a very important country, but they have gone too far; they started to exaggerate, and to feel a kind of haughtiness to the extent that one of their leaders declared less than a year ago that Iran is the country that calls the shots in four Arab capitals and he named them. I believe it was an insult to all of us and to the people of those countries to say so. Also, one of their officials said our business is to revive the Iranian empire whose capital is Baghdad. This is an insult. This should be an eye-opener. But this needs an Arab brainstorming first. What are we going to do? Would Israel be interested in such a situation?

CAIRO REVIEW: Yes, the Arabs should be brainstorming. How do you see the role of the Arab League in all this?
AMRE MOUSSA: The Arab League is the mirror of the Arab World, and the Arab World is in total disarray, that’s why the Arab League cannot do much now. But we should not get rid of it. We should try to keep it and support it as much as possible, until we agree on a new order. This is what we need: a new regional order and within it a new Arab order. Not one without the other. A regional order is coming. It is being discussed in many foreign ministries and in many think tanks all over the world. What kind of regional order? And what is the role of Iran? And the role of Turkey? The role of Saudi Arabia?

And here I wish to put on record that the absence of Egypt has created a void in Arab leadership. The return of Egypt is the sole guarantee that Iran or Turkey are not going to go very far in their plans. We have seen Turkey encircling Egypt, encircling the Arab World, with bases in the Gulf and bases in the Red Sea. Iran, you’ve seen its influence in Yemen, Syria and Iraq, and the [Shia] crescent that many talked about. So, with Iran very active, with Turkey very active—and I consider Turkey more serious, more dangerous than Iran—where is our plan? What is our point of view? Should we continue to be on the defensive or should we be aggressive and come with up ideas? This is what I hoped and I am sure Egypt can do, but because of the circumstances we all know, I think for the time being Egypt and Saudi Arabia should synchronize their policies to the best of their abilities and try to fill the void. If there is Iran, Turkey, or Israel, there is Saudi Arabia and Egypt together in this equation.

CAIRO REVIEW: And what do you think Egypt’s role in the region should be?
AMRE MOUSSA: In all that is happening, Egypt should be invited to all conferences or brainstorming sessions or closed-room discussions about the future of the region. The security in the Gulf. Security in the Red Sea. Security in the Mediterranean. Security in Sahel and Sahara. The situation in the Horn of Africa. Egypt is a country to reckon with. Yes, we got into trouble after the hijacking of the revolution. Many things would have changed. But the Muslim Brotherhood didn’t give us any chance, as we all know.

CAIRO REVIEW: What lessons did Egypt learn from all that?
AMRE MOUSSA: The cumulative effect of bad governance has to come to a halt. I believe that the campaigns against corruption that we see are a good sign. Reform is so important but I can’t put the answer in a very brief sentence. Respect the constitution and the rule of law. This is the key for stability and the key for progress and respecting the spirit of the twenty-first century. Here in Egypt we really need it. We have been terribly affected by what happened in 2011 and paid a heavy price for that.

CAIRO REVIEW: And do you think we are on the right track today?
AMRE MOUSSA: We are in a much better position now. Just imagine if the Muslim Brotherhood continued ruling. And it was a stupid rule. I said several times. I didn’t oppose them because they were the Muslim Brotherhood but because they were terrible at governing. They governed Egypt as if they were a group sitting in the street and whatever comes to their mind they say it.

CAIRO REVIEW: In your memoirs, you make a clear distinction between Mubarak the man and Mubarak the president. Given the criticism you’ve received before for defending the deposed president and suggesting he should not go on trial, how complicated was it to write about him?
AMRE MOUSSA: I also made a distinction between Mubarak the president in the early years, Mubarak in his mid-term, and Mubarak in the last years. I wrote things as I saw them. I didn’t discuss that with him or anyone else. I wa honest in praising him as a person and as a president. My criticism centered on the last few years and on certain incidents; you can call that disagreement. But generally speaking, I believe that President Mubarak did well. Many of us differ over certain aspects like succession, like Egypt’s role in the Middle East, like the trickledown theory. There can be an honest difference of opinion.

CAIRO REVIEW: On the regional front, what options does Egypt have to secure its Nile River water share?
AMRE MOUSSA: This is a complicated issue. I called upon the media not to delve deeply into this question. They don’t know details, they don’t read well, they don’t have the legal background or the legal arguments. But what President [Abdel Fattah] El-Sisi said that it’s not a question of war, I support that. It’s a question of rights. This is a good beginning. Short of going to war, are these countries prepared to be fair with us? Because if they’re not going to be fair with us, we will not be fair with them. We’re not necessarily talking about a bloody confrontation, but we’ll certainly be uncomfortable and we’ll certainly find any way to guarantee our rights, and there are a lot of issues involved.

CAIRO REVIEW: Moving to the elections, in 2011, you left the top post at the League of Arab States to run for elections. What made you decide to move from diplomacy to politics?
AMRE MOUSSA: I used to say I had served as ambassador of Egypt for ten years, and as foreign minister for ten years, and as secretary-general of the Arab League for ten years, and therefore, I wanted to leave the world of diplomacy and get back to Egypt at that moment. Egypt was in turmoil so I thought I should go in and try to help as much as I can through my candidacy for the presidency. Now in hindsight, I believe that I did well that I lost the elections.

There was a lot of opposition—institutional opposition against the type of candidate that I was. I was not what was needed in the minds of some at that time, in particular the Muslim Brotherhood who decided to have it for themselves and they moved their support quickly from a president that they knew to a president that sympathized with them to their own candidate. All in a matter of few months. And they wanted to change the constitution through constitutional declarations, committees, statements, to a full constitution in 2012 that was totally a constitution based on …. the same kind of thinking as Iran. They wouldn’t accept. They pressed and pressured to avoid me as much as they can. And I was clear that I don’t believe in what they believe in.

CAIRO REVIEW: Why do you believe you did well not to win?
AMRE MOUSSA: I believe that no one would have afforded a president that believes in liberal ideas and wants to connect with the twenty-first century. What was in their minds is to go back centuries, not to go forward even one day.

CAIRO REVIEW: Does that mean there’s no constituency for that liberal approach?
AMRE MOUSSA: What I believe in is the spirit of the twenty-first century and the young people. When we see that all other societies are advancing and moving forward steadily the situation will change. We cannot afford, and we cannot accept, especially the young people, to stay put while all societies move forward. I believe that the regime today is aware of that.

CAIRO REVIEW: And how do you view the election scene now?
AMRE MOUSSA: I’ve already announced that I am not running. Ruling Egypt is not easy. [Former Head of Egyptian Intelligence] Omar Suleiman used to tell me, not anyone can rule [the country]; ruling Egypt is very difficult. For that reason, the arrangement today is better because there is chaos in the region and terrorism threatening Egypt.

CAIRO REVIEW: What is the arrangement?
AMRE MOUSSA: The constitution, the parliament, and a big chance for President El-Sisi to be re-elected. You cannot say anything else. That’s how it is. We can accept this for the time being. But to have another candidate without any institutional or partisan background or anything, how will he rule? He must have an international network to protect the country. Many of the candidates lack many things, which is why it is better for the status quo to continue.

Russia’s New Energy Gamble

Having abandoned any attempt to join the Western global political order, Russia seems to have quickly found a new self-image: as the center and core of the Eurasian supercontinent, it can reach in all directions and provide a bridge between Europe and China on both ends. In this context, the Middle East has emerged as a central axis of Russia’s strategic concerns, perhaps for the first time in the country’s history.

In his recent book What Is Russia Up To in the Middle East?, Dmitri Trenin shows how the Middle East was always marginal to Russian geopolitical interests. When progressing south, Russian military expansion had its eyes on the Balkans or Istanbul, in some periods extending to British India, Afghanistan or northern Iran, but a serious push beyond those areas was never considered. Against Ottoman Turkey, Russia waged twelve wars. It took the czarist army half a century to prevail over the mountaineers of the North Caucasus. Russia also conquered Central Asia and invaded Afghanistan, a military adventure that left little appetite for a return to the heart of the Muslim world. But neither the Russian Empire nor the Soviet Union had ever fought directly in Arab lands. In 2015, something genuinely new and unexpected took place. Russia stepped into the Syrian conflict.

Any exercise considering what the Kremlin’s intentions and goals might have been has to start by noting how Syria offered a unique opportunity for promoting Russian strategic interests. By 2015 the United States had exhausted all choices there and showed signs of disinterest and disengagement. A Russian military intervention would constitute something of a revolution in global affairs. For the first time since the end of the Cold War, a country other than the United States would be projecting military force far away from its borders without consulting or involving Washington in the decision.

Syria had never been considered important for Russian national interests, but in the new global landscape that would quickly change. After all, Syria was a critical issue for Turkey and Iran. The refugee crisis was affecting the European Union in powerful ways and China saw the Syrian corridor linking West and Central Asia to the Mediterranean as potentially decisive for the “Belt and Road” initiative, its project of trade and infrastructure development across the Eurasian supercontinent.

With every other major actor reluctant to get involved in the Syrian civil war, Russia had an opening—not to solve the political and humanitarian crisis but to become the most important factor in any future solution.

Once these initial elements were considered, more interesting possibilities started to appear. Between 2013 and 2015, the Russian economy had been under extreme pressure, not so much because of the sanctions imposed after the Ukraine crisis but as a result of the precipitous fall in energy prices. As a major oil and gas producer, Russia had neglected to prioritize energy geopolitics, paying a steep price for that. While China, highly dependent on inward energy flows, had spent decades extending its influence and leverage in Central Asia, Africa, and South America—preparing for all possibilities and diversifying energy supply routes—Russia knew it had more energy resources within its borders than it could ever need and customers were forever assured a more or less mechanical result of a growing and more balanced global economy. But that set of assumptions neglected how other producers can hit your interests by manipulating market prices.

By 2015 the Kremlin was certain that the United States and Saudi Arabia were deliberately lowering oil market prices to squeeze Russia and Iran. With their budgets so highly dependent on oil revenues, Iran and Russia could be effectively pressured into limiting their expansionist agendas. One could even hope that they would become more inclined to abandon their nuclear ambitions, in the case of Iran, and aggressions against Ukraine, in the case of Russia.

At the end of 2015, a 10 percent cut in public spending in Russia was the best evidence of the growing stress from the pincer movement of international sanctions and low energy prices in an economy that depends on crude at $100 a barrel. Faced with a direct challenge, Russia decided that the Middle East was now the arena where its future would be decided.

One Map, Three Regions
In October 2017, Rosneft Chief Executive Officer Igor Sechin took the unusual step of presenting a geopolitical report on the “ideals of Eurasian integration” to an audience in Verona, Italy. One of the maps projected on the screen during the presentation showed the supercontinent—what Russian circles call “Greater Eurasia”—as divided between three main regions. For Sechin, the crucial division is not between Europe and Asia, but between regions of energy consumption and regions of energy production. The former are organized on the western and eastern edges of the supercontinent: Europe, including Turkey, and the Asia Pacific, including India.

Between them we find three regions of energy production: Russia and the Arctic, the Caspian, and the Middle East. Interestingly, the map does not break these three regions apart, preferring to draw a delimitation line around all three. They are contiguous, thus forming a single bloc, at least from a purely geographic perspective.

Sechin’s map has a number of other interesting elements. As noted already, Turkey is left on the European side of the line delimiting the energy production core in the west. The same is true for Ukraine, which although unavoidable in this context is still an unusual inclusion in a map sanctioned by the highest echelons of Russian state power. If one looks at the world through the prism of energy geopolitics, then Ukraine is a European country—a consumer, not a producer.

Some of the most persistent foci of conflict in the contemporary world are located on the delimitation line between regions of energy production and energy consumption: eastern Ukraine, northern Iraq, Syria, Afghanistan, and North Korea. The fact may not be entirely coincidental. Many of these transition zones have become valuable prizes in the global fight for energy resources, with major powers often supporting rival internal factions in their bids for influence and control.

In other cases, the “foci of conflict” are transit hubs for energy flows, determining who has control over them in case of future conflict. More interestingly, transition zones are often fault lines between different political and economic models. It seems to be the case, for example, that the attempt to create a form of personal rule in Syria in the absence of oil wealth created the need for sectarian politics.

Sectarianism—the persistent promotion of mistrust and conflict between different ethnic or religious groups—functions as an alternative to oil, a form of compensation for the lack of oil resources such as those at the disposal of royal families of the Arab Gulf. It provides the ruling elite with a third method of obtaining consent from the governed, distinct from both oil patronage and the social rights of a developed democracy. Lost between two competing models, Syria has been unable to develop a genuinely stable variety of consensual politics.

The map illustrates an important point about Russia’s new self-image. From the point of view of energy geopolitics, Europe and the Asia Pacific are perfectly equivalent, providing alternative sources of demand for energy resources. Russia has been struggling to abandon its traditional orientation toward Europe, hoping to benefit from the flexibility of being able to look both east and west to promote its interests. It seems that Sechin and Rosneft can place themselves in that position much more effortlessly.

Sechin’s map subtly makes one final—and decisive—point. As you consider the three areas it delimits, it becomes apparent that two of them are already led and organized by a leading actor: Germany in the case of Europe and China for the Asia Pacific. Production chains within these highly industrial regions are increasingly managed by German or Chinese companies, which tend to reserve the higher value segments for themselves. Their spheres of influence extend to all important inputs, with one glaring exception: energy. In order to address this vulnerability, the two regions of energy consumption will be attracted to the core region, where they need to ensure ready and secure access to energy resources. And their efforts may well be made easier by the fact that the core region of energy production lacks a hegemon capable of ensuring its survival as an autonomous unit in the Eurasian system.

One further and decisive factor must be mentioned here. As the United States drastically increased its oil and gas production over the last ten years—a result of the shale gas revolution—its role in global energy geopolitics started to shift. Two trends have become dominant. First, Washington no longer sees the Middle East as critically important for its safety and prosperity. What was a constant of American foreign policy for almost a century now seems open to revision. If domestic supply can now take the place of imports, the United States is less pressured to invest in peace and stability in the Middle East. It is not difficult to speculate that its response to the Syrian civil war would have been different—much more active and resolute—before the shale gas revolution. This fact naturally opened opportunities for Russia, already discussed above.

Second, the new energy abundance in the United States might justify using energy as a geopolitical tool—steering energy flows and influencing market prices so as to reward friendly states and punish others. As we have seen, the Kremlin grew convinced that the United States was doing just that with regards to Russia and Iran. Attempts to use energy markets to drive geopolitical outcomes reinforced Russia’s conviction that it needed to acquire higher levels of dominance in global energy markets, pushing it to intervene more actively in the Middle East.

It is from this perspective that Russia’s renewed interest in the region must be understood. By consolidating all three energy-producing regions under its leadership, Russia can take the decisive step in shaping the new Eurasian system. Its interests lie more decisively in organizing a common political will for the core region than in recovering the old dreams of integration with Europe.

That the Syria military intervention is now regarded as a success—while the intervention in Ukraine led nowhere—may point to the fact that the former, but not the latter, took into account the facts of geopolitics.

On the one hand, Russia feels at home in the Middle East. The pursuit of shifting goals against a background of persistent chaos or state disorder appeals to Russian strategic culture and its early success in Syria was quickly put to use. Suddenly Russia became an important interlocutor for every country in the region. Turkey, Iran, Saudi Arabia, Iraq, and Israel all have significant interests in Syria, so they all need Russia, the new effective overlord above Bashar Al-Assad. On the other hand, Russian leverage in Europe and China depends on the extent to which Moscow is able to increase its control over energy production. Efforts after 2013 to engage China as a growing destination for its energy exports suffered from the obvious difficulty that China had already developed a diversified pool of suppliers and was therefore in a position to dictate purchasing terms that Russia found unattractive.

That a deal was finally reached with Saudi Arabia at the end of 2016 to collectively reduce oil production and give a boost to global oil prices is a direct result of Russia’s ability to influence decisions in the Middle East. Less than a year later, the agreement achieved its objective of raising oil prices to a level of $60 per barrel. King Salman’s visit to Russia in October 2017 was the first ever by a Saudi monarch. With Russia facing a new set of sanctions, Moscow now appears interested in exploring new sources of investment and capital. They may well include Saudi Arabia, following the announcement of more than $3 billion in potential investment deals upon the king’s visit.

Energy Diplomacy
In two other maps, Sechin proceeded to show how energy projects offer the best example of Eurasian integration. Major companies from Europe, Russia, China and elsewhere typically pool capital and expertise, investing in exploration and refining projects from Scotland and Egypt to Vietnam and Indonesia. Eurasian integration implies the participation of energy consumers in energy production through investments in the shareholder capital of producers. Rosneft is a good example, with 50 percent of shares owned by the Russian state and stakes from BP, Qatar Investment Authority, Glencore, and CEFC China Energy.

Moscow’s attempts to spread itself across the Middle East can be understood through a series of deals signed in the last two years. The oil and gas giant LUKOIL, the second largest company in Russia after Gazprom, is in negotiations to start production at the newly discovered Eridu field in Iraq. Gazprom Neft, Gazprom’s oil arm, has taken exploration blocks in Iraqi Kurdistan while also operating the Badra field in southern Iraq. Rosneft has signed cooperation agreements in Kurdistan and Libya and has bought a 30 percent stake in Egypt’s giant Zohr offshore gas field.

The very same day he delivered his speech on Eurasian geopolitics, Sechin announced that Rosneft would take control of Iraqi Kurdistan’s main oil pipeline, boosting its investment in the autonomous region to $3.5 billion, despite Baghdad’s military action sparked by a Kurdish vote for independence. The move helped shield Kurdistan from increasing pressure from Baghdad.

Two weeks later, Sechin went on to sign a preliminary pact with the National Iranian Oil Company, the first step before a binding deal to participate in Iran’s oil and gas projects over the next few years, with investments totaling up to $30 billion and a production plateau of 55 million tons of oil per year.

Four Russian oil companies have even begun negotiating for opportunities in Syria, a venture driven as much by politics as by commercial interest. The aim is not to explore and extract Syria’s modest petroleum reserves, of course. By actively participating in rebuilding and operating Syrian oil and gas infrastructure, Russian energy companies will be in control of a critical transit route for Iranian and Qatari oil and gas heading to Europe, bringing two rival producers closer to its orbit and tightening its stranglehold on the European gas supply. In 2009, Qatar proposed to run a natural gas pipeline through Syria and Turkey to Europe. Instead, Al-Assad forged a pact with Iran to build a pipeline from the Persian Gulf and then through Iraq and Syria and under the Mediterranean. This project had to be postponed because of the war. When it is resumed, Russia will be in control.

It is in the very nature of the Eurasian system described by Sechin that the core energy production region—provided it is sufficiently united and organized—will benefit from its central position, being able to pick and choose between east and west in order to obtain the most favorable terms. Russia and the Middle East are now part of the same geopolitical unit. It took the Russian military intervention in Syria for the world to start to come to terms with this reality.

Bruno Maçães is a senior advisor at London’s Flint Global, and a senior fellow at Renmin University in Beijing and the Hudson Institute in Washington, D.C. He was the Portuguese Europe Minister from 2013 to 2015. He is the author of The Dawn of Eurasia. On Twitter: @MacaesBruno.

Egypt Re-Energized: An Industry Report

Egypt boasts a rich oil and gas history dating back to 1886. Over the last 125 odd years, the country’s petroleum industry has seen mostly good times, but the last two decades have seen downtimes too, most recently in its failure to meet domestic energy demand. The situation is looking up once again, but there are plenty of challenges.

Upcoming changes will be both social and technological. Egyptians have long enjoyed energy subsidies making fuel and electricity affordable, but this governmental band-aid was never sustainable. Many are acutely feeling the pains of recent austerity measures by President Abdel Fattah El-Sisi’s government. If the government follows through on its reform measures, the situation should indeed improve the socioeconomic lot for the average citizen, and the country as a whole.

Technologically, the country will put a greater focus on natural gas production in the near term, as well as enhanced oil recovery techniques. However, more importantly, renewable energy is set to take a significant role in the future of Egyptian power generation. This development has several implications. First, the industry will see plenty of foreign direct investment aligned with the global initiative to fight climate change. Second, the further development of its renewable energy sector will result in long-term job creation. Third, Egypt has severe pollution problems and renewable energy can contribute to cleaning up the environment, both domestically and globally, by utilizing a clean and sustainable power supply. And lastly, some of Egypt’s natural gas and crude oil will be freed up for export, adding to its revenues base.

Recent History
Long a producer and exporter of crude oil, Egypt saw its production from existing oilfields begin to decline in the mid-1990s, ultimately becoming a net oil importer in 2007. This turn of events, combined with Egypt’s explosive population growth over the last two decades (going from around 66 million in 1997 to over 97 million at current estimates), has resulted in the country’s energy demand vastly outstripping available supplies—from all sources—including renewable energy. At the turn of the century, however, significant natural gas discoveries in the Mediterranean boosted investor confidence and the country bustled with excitement at the promise of riches this “other” hydrocarbon resource would bring. This newly discovered resource became the answer to an economic prayer, or so it was thought.

Major oil and gas companies from around the world were eager to help Egypt monetize this resource and agreements were quickly put in place to construct two liquified natural gas (LNG) export terminals, one at Idku (on the Mediterranean coast just east of Alexandria), the other at Damietta (also on the coast), just 60 kilometers from the mouth of the Suez Canal. The construction of these two facilities was undertaken at a lightning pace from breaking ground to completion. The first LNG exports came in December 2004 from the Damietta facility and in May 2005 from Idku. With buyers lined up and contracts in place, foreign currency earnings bolstered the Egyptian economy, and declining oil production was no longer an overriding concern.

Egypt became the King of the Mediterranean region with two world-class LNG projects under its belt. The export possibilities were endless at a time when European nations were desperately trying to diversify supply sources and lessen their dependence on Russian oil and natural gas. Meanwhile, rapid growth in Asian energy demand contributed to a very lucrative LNG export game.

Life was good, for a time.

But as years went by the effects of a population explosion and the growth of its industrial base required more power resources. This eventually resulted in natural gas contracted for LNG export markets being diverted to domestic facilities. The power situation became so dire that countrywide power cuts became a daily occurrence, with electricity use hitting a record daily high in August 2014 of 27,700 megawatts (MW), 20 percent more than the national grid could provide.

It was apparent the country had hit a critical juncture and decisive governmental action was needed.

As a result, the LNG export facility operators found themselves increasingly unable to meet their global export supply obligations, as natural gas receipts decreased each year. By February 2013, the plant at Damietta had been idle. Meanwhile, BG Group was forced to declare a force majeure in 2014 on contracted LNG deliveries from its plant at Idku as state-owned Egyptian Natural Gas Holding Company (EGAS) began diverting larger-than-expected volumes to domestic facilities.

Adding insult to injury, Egypt had to begin importing LNG in July 2015 to ease its energy crunch. So, not only did Egypt lose a revenue stream, it had to begin spending the little hard currency it did have. This, at a time when tourism, Egypt’s main income generator, had not nearly returned to the levels it had enjoyed during pre-uprising times. Further, although the country’s sabotage-beleaguered Arab Gas Pipeline did return to operations in early 2013, its exports to Israel ceased, and flows to Jordan were significantly curtailed, eliminating an additional source of income from government coffers.

As a result, from 2012 forward, Egypt’s economy went into a downward spiral, going from a core inflation rate low of just over 4 percent in late 2012, to a high of 35.6 percent in July 2017.

Getting Back on Track
Only the reform of Egypt’s energy sector will provide an answer to many of its woes. A cohesive plan then is needed to address the pervasive energy shortages and stimulate the ailing economy. Such a plan has eluded Egyptian leaders who for decades have followed short-sighted policies.

The political will to end the power shortages and cuts should have come sooner. That said, the political and social situations, especially since the Arab Spring and resultant uprising, have served as a distraction, diverting attention to other pressing issues. Fortunately, since President El-Sisi took office in June 2014, solid steps have been taken to put the proper infrastructure in place to enable state parastatals to perform their missions. Officials have also sought guidance from institutions able to provide assistance by transferring technology, and have worked to obtain funding to carry out development projects.

External agencies, such as the International Monetary Fund (IMF), have long encouraged Egypt to enact reforms and reduce, or remove, energy subsidies to enable channeling of funds into much-needed social programs for health and education. In 2014, these subsidies amounted to about 10 percent of the Gross Domestic Product (GDP), a staggering figure. The government finally took a necessary step in mid-2014 and implemented a range of subsidy reductions.

Subsidies on energy were cut, which caused the price of natural gas, diesel, and other fuel products to rise significantly—in some instances by more than 75 percent. This created mass discontent and protests by those citizens most hurt by the measure. Later, in July 2016, Finance Minister Amr Al-Garhy announced state energy subsidies would be cut further and would fall to 35 billion Egyptian pounds—at that time the equivalent to about $3.94 billion—down from 61 billion Egyptian pounds ($6.92 billion) in the 2015/16 budget.

These initial actions have poured dividends into the Egyptian economy. According to the Central Bank of Egypt, foreign currency reserves went from $12.8 billion in March 2016 to $25.1 billion by March 2017. This growth is attributed to a variety of factors, most notable being the floating of the Egyptian pound, and the move to eliminate energy subsidies. More importantly, the government’s commitment to reform earned it a $12-billion loan package from the IMF in November 2016 that will be disbursed over a three-year period. Although unpopular with low- to mid-income citizens, the loan comes with stiff terms which are geared toward building confidence in the government and its institutions, as well as attracting foreign direct investment.

With spiraling costs and lack of jobs for the increasing numbers of youth entering the job market, the government needs to quickly put social programs in place to offset the impacts these measures are having on the poor before it finds itself faced with a deepening civil crisis. The answer clearly lies in diversifying and properly monetizing Egypt’s energy mix.

The Resource Pool
Egypt’s hydrocarbon deposits are located in several regions—the Nile Delta, Eastern Desert, Western Desert, Gulf of Suez, and the Mediterranean. Each of these regions has played an important role throughout the country’s petroleum history, and all still contribute to its energy totals, some more than others.

The jewel in Egypt’s crown this century has been the offshore Mediterranean where the resources once dedicated to the LNG export scheme are located. More recently, a “super giant” natural gas discovery was made in August 2015 by the Italian firm ENI. The Zohr gas field discovery is a game-changing development for the country’s ailing power sector. The volume of natural gas resources accumulated from this discovery through 2016 confirmed a potential of 30 trillion cubic feet (Tcf).

Taken in context, this discovery alone added more than 61 percent to Egypt’s previous recoverable natural gas reserve totals, meaning “able to be taken out of the ground and monetized.” Additionally, recent major natural gas discoveries were made by other oil companies that will add to the country’s ability to get back on track, though not on the scale of Zohr. Bringing these reserves online and into the power grid is of paramount importance to meeting domestic power demands and export contract obligations.

Now that the natural gas resources have been determined and the country is rapidly approaching energy self-sufficiency, the question is will there be a surplus? And if so, where will it go?

While Egypt has obtained the energy resources to address its own energy needs in the near- to mid-term, so too have Cyprus and Israel. Combined, the trio have over 117 Tcf of natural gas that is believed to be recoverable. This means that its neighbors will likely also be looking for export markets. Further, the global LNG market is already oversupplied with an abundance of products available from many sources around the globe. Regionally, in addition to Egypt’s closest neighbors entering the LNG market, there are growing supplies elsewhere on the continent already—Algeria, Angola, Equatorial Guinea, and Nigeria, for example, while massive natural gas resources are nearing the development phase in Mozambique and Tanzania, which both have LNG projects planned.

Although natural gas is currently the focus, and rightly so, crude oil still plays an important role. In fact, while global markets for both commodities are sluggish, crude oil sales translates to “money now.” With all of the natural gas reserves available for domestic use, the country may once again become a net oil exporter, enabling it to earn hard currency, and in turn aid in controlling inflation.

With the development of these natural gas resources already in full swing, more emphasis can be placed on exploration for additional oil reserves. Further, engaging partners with the ability to deploy enhanced oil recovery technology to bring more oil out of the ground in already productive oil wells can add to its available resources.

Egypt’s Renewed Energy
The development of the renewable energy sector is key in the country’s long-term energy self-sufficiency plans. Egypt has grand plans for its renewable energy sector. While already a producer of solar and wind energy, only 3 percent of power generation comes from renewable sources.

In May 2017, it was announced that the country would seek to increase by 20 percent the share renewable energies contribute to the power mix by 2022, and 37 percent by 2035. The International Finance Corp., the World Bank’s lending arm, is set to contribute $1 billion in funding to Egypt, with 70 percent of that amount slated for the country’s renewable energy initiative. The country is receiving additional funding from various development institutions as well, and has a line of investors waiting to bid on upcoming projects.

Solar is the main focus of the country’s current development efforts, with wind energy also set for significant expansion. With Egypt’s abundance of sunlight from north to south, and enviable wind speeds from several coastal and inland regions, both its solar and wind power offer additional opportunity to bring to an end the country’s energy crisis.

Further, with massive trash dumps and landfills prevalent throughout the country, it would seem waste-to-energy (W2E) technologies could not only offer a solution to Egypt’s energy needs, but also contribute to cleaning up its cities, reducing extraordinarily high levels of pollution from open burning, and in turn create a healthier living environment for its citizens.

Also, renewable and clean energy would contribute to mitigating the effects of climate change. There are existing W2E projects in the country, though their impact is nominal at present. However, with the sheer volume of waste available in Greater Cairo alone, a significant impact could be realized in a relatively short period of time if this option were pursued more vigorously.

Authorities are aware of its potential, but finding an acceptable startup cost to return balance from the energy produced, along with intergovernmental bickering and shunning of responsibility, have kept W2E’s furtherance at a snail’s pace. In November 2017, it was announced another pre-feasibility for W2E was to be undertaken. But unless governmental will is in play as it is with other natural resources, this renewable resource with far-reaching impacts may fall by the wayside indefinitely.

Egypt Running on Nuclear
One of the most interesting developments in Egypt’s energy sector is fairly recent. Egypt has held nuclear energy ambitions for a number of years, but nothing concrete has materialized. That looks set to change as an agreement for the construction of the El-Dabaa nuclear plant was signed in December 2017 with Rosatom State Atomic Energy Corp. of Russia.

The El-Dabaa nuclear facility should see commercial operations start up in 2026, according to Minister of Electricity and Renewable Energy Mohamed Shaker. The plant will contain four nuclear units and be able to produce 4,800 MW of electricity if plans proceed. To provide further support for its nuclear ambitions, Egypt is set to establish a nuclear power industry regulatory agency this year.

The Opportunities
The development of Egypt’s various energy resources offers some obvious benefits as well as some that are not so obvious. The authorities will have to be savvy to turn these resources into gold.

With significant oil and gas infrastructure in place, as well as over a century of experience in the petroleum sector, the country could offer its experience to its neighbors. With both Israel and Cyprus on the fast track to develop their resources, and both having a surplus of domestic requirements, Egypt could become a regional hub for natural gas, providing its existing LNG export infrastructure as a service. In addition, Egypt has a highly developed petrochemical industry which creates various products from plastics to fertilizers that its neighbors could take advantage of, saving them the cost of either continued imports or building their own infrastructure.

As for the renewable resources, Egypt has the opportunity to become a regional, or even a continental, leader with the billions of dollars of investment awaiting project approval from authorities. Minimizing red tape and bureaucracy is key to swift development and utilization. Historically, weak governmental and regulatory infrastructure, as well as reluctance by mid- and even senior-level management to make decisions have led to project delays and investor frustration. This needs to change and should be addressed in line with ongoing reforms.

In addition to adding energy resource options to its portfolio, the renewable sector offers a significant avenue for job creation, both directly and indirectly, from field technicians to senior management. As the world rapidly moves toward greener and more sustainable economies, “clean” energy can be implemented in all sectors. Energy-efficient appliances and buildings, and increased use of clean fuels, are just a few ways in which Egypt can expand its portfolio while working toward its sustainability goals and cleaning up its own backyard by reducing pollution and reducing greenhouse gas emissions.

Opportunity also exists for investors to target the consumer who can benefit on an individual level. Home solar-power-generation products offer a low-cost solution to the rural poor and lower-income urban citizens who cannot afford energy following the removal of energy and food subsidies. There are numerous, affordable, pay-as-you-go home solar solutions offered around the continent that could easily be deployed in Egypt.

Egypt’s geographical position is prime, with easy access to European, North African, and Middle East markets, not to mention the Suez Canal providing an easy route for products destined for markets farther east. The country is now experiencing severe growing pains, but at the end of the day its population stands to benefit.

Egyptians are poised to gain from bridging technologies while still benefiting from oil and gas expertise and building on it. Egyptians should see their household and business energy expenditures fall more in line with other living/operating costs without the artificial support of subsidies. This, along with less pollution, and a stronger international voice should yield a more secure and confident Egypt moving into the future.

Dianne Sutherland is founder, publisher, and editor-in-chief of Petroleum Africa and Alternative Energy Africa magazines. Previously, she served as deputy editor of Oil & Gas North Africa magazine (2001–2002). She has contributed to Invest in Africa, Africa Oil Week Showguide, and Msafiri, among others.

A New Kingdom of Saud?

The Kingdom of Saudi Arabia is undergoing a process of change in its social, economic, and political structures unseen since its founding in 1932. Crown Prince Mohammed Bin Salman and a group of close advisors, aided by an army of multinational consultants and investment bankers, have been driving this transformation.

Prince Mohammed and his team are seeking to restructure the Saudi economy, lessening its dependence on oil and creating more socioeconomic opportunities for the Saudi people. In 2016, “Saudi Vision 2030” was launched, providing an ambitious blueprint to achieve these goals and more. What are the various dimensions of these ongoing reforms and what are their prospects and challenges? What impact will they have on state-society relations in Saudi Arabia? More importantly, are these reforms part of a genuine nation-building program, or are they a vehicle for Prince Mohammed to solidify his hold on power for decades to come?

Diversification: Easier Said than Done
Saudi Arabia has attempted to create a diversified economy for more than four decades, albeit with limited success. Since the early 1970s, Saudi Arabia has pursued nine successive five-year development plans (1970–74 to 2010–15) that sought to transform its relatively underdeveloped oil-based economy into a more diversified one.

At the core of the development plans were five key goals. Firstly, the Saudi leadership sought to improve the standard of living and the quality of life for the Saudi population. Next the Saudi government planned to diversify the country’s economic base and reduce its dependence on the production and export of crude oil. Other important goals were to develop the kingdom’s human capital, as well as increase the role of the private sector in the national economy. Finally, the five-year plans aimed to achieve a balanced development path among the vast regions of the kingdom.

Arguably, Saudi Arabia has made the most progress toward the goal of improving livelihoods for Saudi citizens, as almost all socioeconomic metrics have shown remarkable development. In addition, public works programs have transformed the kingdom’s infrastructure through building airports, highways, bridges, hospitals, and schools across the country.

The kingdom’s human capital has also developed, but foreign workers remain integral to the economy despite years of “Saudization” policies mandating that a higher percentage of the country’s jobs go to citizens. As a result, while Saudi Arabia’s private sector continues to grow, the number of Saudis working in it remains relatively low, with an estimated 70 percent of the labor force currently employed by the public sector.

Meanwhile, diversification efforts have been less successful, with oil and oil- related industries still accounting for roughly 90 percent of the kingdom’s export earnings, 87 percent of budget revenues, and 42 percent of Gross Domestic Product (GDP) in 2017. The drop in oil prices from a high of $115 per barrel in 2013 to under $40 per barrel in late 2015 hit Saudi Arabia’s public finances hard. The combination of lower oil prices and a rapidly growing population has lent added urgency to Saudi policymakers pursuing radical reforms.

The Vision 2030 document itself is not detailed, but more specifics are included in the National Transformation Program 2020 (NTP) and the Fiscal Balance Program 2020 (FBP), both also launched in 2016. The NTP seeks to reduce the civil service workforce by 20 percent in the next two years and increase the overall efficiency of the public sector. As part of the NTP, the government has established the National Center for Performance Management, Adaa, which means performance in Arabic, to monitor and report on the progress of public sector reform. The NTP also includes a strong imperative to increase the role of the private sector in the economy.

The government launched the “Removing Obstacles to the Private Sector” Program to identify unnecessary red tape that may impede the growth of the private sector. In addition, the government established a small and medium-sized enterprises authority to support the development of such firms through training, funding, and advocacy. The state has also implemented a number of regulatory and legal reforms that are designed to spur further growth in the economy. These include updated competition, company, insolvency, franchise laws, expedited business visa applications, and a commercial mortgages law.

In terms of fiscal policy, the government has been no less ambitious. The FBP and the 2017 budget set out an aggressive fiscal consolidation program. According to the IMF, the government aimed to reduce the fiscal deficit to 7.7 percent of GDP by 2017, balance the budget by 2019, and generate a fiscal surplus by 2020. Key to achieving these goals is an expected increase in non-oil revenues, including foreign investment, increased tourism, and new taxes and fees.

Using the kingdom’s strategic location, Vision 2030 entails creating a futuristic city and a logistical hub that stretches between Saudi Arabia’s northwestern borders with Jordan and Egypt. The city, called “Neom,” is designed to make Saudi Arabia a key regional hub for trade and investment.

The kingdom is also hoping to attract investments in the non-oil mining sector, such as in gold, phosphates, and uranium. Also, Vision 2030 calls for boosting the number of pilgrims traveling to Mecca for Hajj and Umrah pilgrimages. Moreover, Saudi Arabia is expected to tax tobacco products and carbonated drinks, introduce a value-added tax (VAT), increase expatriate worker levy fees, raise energy and water prices, and add an assortment of smaller taxes and fees.

To Spend or Not to Spend
A key aspect of Saudi Vision 2030 is how to fund it. The plan is to create a $2 trillion sovereign wealth fund—the world’s largest—composed of Saudi Arabia’s current Public Investment Fund (PIF) which would absorb the proceeds from the sale of 5 percent of Saudi ARAMCO, in addition to those from a number of other privatization initiatives that are not yet clear.

State-owned ARAMCO, or the Saudi Arabian Oil Company, is the world’s largest oil producer and perhaps its most valuable company. It traces its roots to 1933 when Saudi Arabia granted American giant Standard Oil permission to search for oil. The resulting California-Arabian Standard Oil Co., or CASOC, eventually struck liquid gold near Dhahran in 1938. CASOC changed its name to the Arabian-American Oil Co., or ARAMCO, in 1944, and the powerhouse went on to discover the world’s largest onshore oilfield in eastern Saudi Arabia.

Oil demand and revenues surged following World War II, and in 1950, the Saudi government—after threatening to nationalize the industry—negotiated the “50/50” Agreement, claiming half of ARAMCO’s income. After Saudi Arabia led Organization of the Petroleum Exporting Countries (OPEC) in imposing an oil embargo against Western supporters of Israel during the 1973 October War, the kingdom quickly bought major stakes in ARAMCO, before taking full control in 1980. The current name, Saudi ARAMCO, was decreed in 1988.

Historically, Saudi Arabia’s PIF, established in 1971, made low-key investments in local industries the government wanted to develop. This has changed under the crown prince, and the fund now invests more aggressively in a wide range of companies and projects both domestically and internationally, including a $3.5 billion stake in Uber. During President Donald Trump’s visit to Riyadh in May 2017, the PIF signed a Memorandum of Understanding (MOU) with Blackstone, the U.S. private equity firm, to provide half the capital for a $40 billion infrastructure fund.

During the Future Investment Initiative Conference in October 2017 held in Riyadh’s Ritz Hotel (which a month later would hold detained princes and businessmen who were arrested in an anticorruption purge), the PIF announced a $45 billion partnership with Japan’s SoftBank to create a technology fund, and also signed an MOU with Virgin Group to invest $1 billion in Virgin Galactic. During the conference, the futuristic Neom city was also announced.

The PIF is now central to the government’s diversification plans. As it beefs up its value, it will continue to increase its investments domestically, regionally, and internationally, with the aim of creating a major new revenue stream. To that end, the sale of a stake in ARAMCO is integral to the implementation of Vision 2030 as it would dramatically increase the value of the PIF and turn it into a global investment behemoth. However, a number of key issues remain that must be dealt with before the sale goes ahead.

Firstly, valuation—how much is 5 percent of ARAMCO worth? Prince Mohammed and his advisors have floated a valuation of ARAMCO at $2 trillion, but investors have valued it at as low as $400 billion. According to the Oxford Institute of Energy Studies, as ARAMCO does not own the oil reserves and only has the monopoly on the extraction of the reserves, the value of the company is based on the global price of oil. The profit per barrel in turn depends on the level of taxes and royalties ARAMCO pays the government.

The fact that the government can increase taxes at a later stage increases the sovereign risk, which will negatively affect the valuation of ARAMCO.

Secondly, should the kingdom list ARAMCO on a stock exchange as planned, or offer the stake for sale as a private listing for institutional investors? As this is likely to be one of the largest listings ever undertaken, it may require a large foreign exchange as the Saudi stock exchange is unlikely to be able to absorb all of it. According to the Economist, a listing in a foreign market like the United States would expose the company to increased obligations, such as conforming to U.S. Security and Exchanges Commission standards on reserves accounting, even if the reserves belong to the Saudi government. Such obligations would also force ARAMCO to open its books publicly and adhere to a multitude of transparency guidelines, which the Saudis would be hesitant to do.

Thirdly, the ongoing Gulf Cooperation Council (GCC) crisis, which pits Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt against Qatar, has raised concerns about regional stability and is likely to have a negative impact on the general investment climate. When asked about the impact of the crisis on Saudi Arabia’s diversification plans, Prince Mohammed was bullish and dismissed the Qatar situation as a small problem that will not have an impact.

Some analysts disagree, predicting that a continuation of the GCC crisis is likely to have a negative effect on foreign investment in all of the GCC states. Moreover, the Saudi investment climate may have worsened in the short term by the recent arrests of a number of princes and business tycoons. While these arrests were carried out under the guise of anticorruption efforts, the arbitrary and opaque nature of the crackdown means that foreign investors will be very cautious about entering into commercial agreements with Saudi entities or businesspersons that may at any later stage fall out of favor and be targeted in an extrajudicial manner.

For all these reasons and more, the Saudis have been cautious in their approach to listing ARAMCO. As of January 2018, no decision has been made on where to list, but according to some reports, the government is considering a listing on the domestic stock exchange combined with a private placement to institutional investors. Such an approach that avoids a foreign listing would signal that the Saudis are keen to keep the oil giant’s books closed from the scrutiny that it would face in a foreign market.

Political Cost of Reforms
A pillar of the Saudi social contract has been the allocation of oil rents to the population in exchange for loyalty and fidelity to the Saud clan. A key weakness of Vision 2030 is its lack of focus on the potential political consequences of economic reforms.

The plan seems to assume that its ramifications will be easily borne by the Saudi population. However, the IMF postulates that the potential failure of the reforms to produce economic growth and ultimately private sector jobs for Saudis may lead to either rising unemployment and social pressures or increased public employment, which would have negative fiscal implications. If the government becomes unable to sustain its current level of payouts to the population, this will almost certainly result in rising public dissatisfaction.

As more austerity measures are pursued, the social contract between the population and the government is likely to come under unprecedented stress. According to a report by Chatham House, an effective renegotiation of the social contract is critical if the government is to secure the public’s buy-in on the socioeconomic changes that it is attempting to make.

This renegotiation is already unfolding. While it is unlikely that Saudi Arabia will democratize soon, the recalibration of its authoritarian bargain may mean greater avenues for involving the public in decision-making and some increased transparency and accountability.

Seven years after the Arab uprisings, chaos has resulted in some of the region’s countries affected by changes brought on in 2011. Consequently, Saudi Arabia’s argument for stability holds strong sway.

The government is presenting itself as a bulwark against regional instability. It has also encouraged hyper-nationalistic discourse, which was evident in the 2017 National Day celebrations, and its rhetoric regarding the ongoing GCC crisis. According to the Arab Gulf States Institute, this push to reinforce the Saudi identity is part of a long-term effort by Gulf states that aims to increase a sense of national belonging, where loyalty to the state takes precedence over the tribe, region, or sect.

The arrest of a number of Saudi princes and business tycoons in November 2017, besides helping Prince Mohammed consolidate his power, is also designed to show the population that King Salman and his son are serious about fighting corruption, however selective this fight may be.

Overall, the government needs to increase its levels of transparency and openness. While all these new monitoring and reporting institutions are admirable, they are still government bodies. For Vision 2030 to have a chance for success, there has to be involvement from civil society actors and more freedom of the press. The exact opposite has been happening as the government has cracked down on dissent and has jailed many of its critics, including a number of journalists and writers.

Barriers to Transformation: Education and Training
As a result of the government’s push to increase the employment of Saudis in the private sector, companies are facing substantial difficulties in hiring and retaining suitable local talent. Education and training remain key issues as the Saudi educational system—despite going through a multitude of reforms—is still unable to provide enough graduates who are able and willing to work in the private sector.

Saudi workers demand higher wages and underperform in the private sector, creating an array of issues for multinational firms operating in the country that need to meet their Saudization quotas. By 2030, a full half of the Saudi population is expected to be under the age of 25. Educating, training, and placing those youth in economically productive jobs is one of the biggest challenges Saudi policymakers face in the coming decade.

Significant investments in education over the past two decades have led to a sharp increase in university enrollment figures, making the kingdom a regional leader in terms of educational attainment. However, the quality of Saudi education remains a key issue. Primary and secondary education has historically been biased toward religious subjects at the expense of STEM (science, technology, engineering and mathematics) subjects.

In the 2015 Trends in International Mathematics and Science Studies (TIMSS) global rankings which take place every four years, Saudi students ranked in the lowest tenth percentile in both mathematics and science. Similar to other Arab countries, the Saudi education system encourages memorization over the development of problem-solving and creative thinking skills.

At the university level, increased investment has led to a rise in the number of graduates, but the Saudi economy is increasingly unable to absorb them into the workforce. Sustained economic growth over the past two decades has indeed increased the number of white-collar private-sector jobs. However, many of these new positions are being filled by expats.

Saudi Women: The Fight for Equality Continues
In the World Economic Forum’s 2016 Gender Gap Report, Saudi Arabia ranked 141, ahead only of Syria, Pakistan, and Yemen. The male guardianship system in the kingdom remains a major obstacle toward equality. Saudi women need their male guardian’s approval to access healthcare, get married, travel, work, or open a business.

Over the past decades, Saudi Arabia has made incredible progress in terms of women’s education and currently more than half of all university graduates are women. Despite this progress, the unemployment rate for women is 32.7 percent. Saudi women continue to face formidable cultural and regulatory barriers of entry to the labor market. Women tend to work in a limited number of sectors such as healthcare and education. There are also restrictions on mixed gender workplaces, which further constrains employment options for women.

The Vision 2030 document states that the goal is to increase women’s participation in the workforce from 22 percent to 30 percent. The end of the driving ban for Saudi women is a step toward achieving that goal, and signals the government’s willingness to pursue socioeconomic liberalization and face down pressure from the religious establishment and more conservative elements of society. In addition to the end of the driving ban, the government has moved to remove a number of restrictions on women over the past years including the ability to access some public services and attend sports events in stadiums. The next phase for the fight for women’s rights in the kingdom is to dismantle the male guardianship system. This will be the true litmus test for Saudi modernizers in the government.

Neom: Desert Dreams
The plan to build Neom, a city operated by artificial intelligence, manned by naturalized Saudi robots, and powered by the sun, is certainly ambitious, but the plan raises more questions than answers.

To start with, aside from the robots, who will build and work in the city? The Saudi government already struggles to convince Saudis to work in the private sector, and executing a plan of this magnitude will certainly require, at least in the short to medium term, a surge of foreign consultants and contractors to build, then operate such a city.

Secondly, Saudi Arabia’s technology and industrial sectors do not have the capacity to undertake such an endeavor, meaning that all the necessary technology and equipment will have to be imported.

Thirdly, the costs of building and sustaining such a city can easily consume much of the amounts raised from the ARAMCO IPO and other revenue-generating initiatives, and there is no guarantee that the city would generate the types of returns needed to attract outside investment.

Such urban megaprojects have had mixed results in Saudi Arabia. The six “New Economic Cities” announced in 2005 are yet to be populated and as a result are not operating as intended. The most advanced of them in terms of development and infrastructure, King Abdullah’s Economic City (KAEC), has not been able to attract the projected number of residents, businesses, or investors. So far, nothing about Neom shows that it may have a different fate.

A Prince with a Plan, or a Plan with a Prince?
Central to Saudi Arabia’s drive to reform and Vision 2030 is Prince Mohammed, who was promoted to Crown Prince in June 2017 in what was considered a bloodless coup against a respected and powerful veteran prince, Mohammed Bin Nayef. Is Saudi Vision 2030 a historical attempt at reforming the kingdom, or is it a vehicle for an ambitious young prince to become king and rule Saudi Arabia for decades to come?

The truth is likely somewhere in the middle. The combination of lower oil prices and demographic changes has certainly increased the pressure on Saudi policymakers to attempt to deal with these issues before they come to a head at a later stage. To that end, Prince Mohammed is the right prince at the right time to attempt to push through some of these much-needed reforms. However, should the plan stall or fall short of realizing its ambitious goals, the Prince Mohammed brand is likely to be tainted—domestically, regionally, and internationally.

The internal cohesion of the Saudi royal family remains an issue in light of Prince Mohammed’s moves to consolidate power, most recently by removing Prince Mutaib Bin Abdullah from command of the Saudi Arabian National Guard and arresting him with a number of other princes, technocrats, and businessmen.

While such moves may endear Prince Mohammed to the Saudi public as a fighter of corruption, internally they may add to Saudi royals’ resentment over the meteoric rise of Prince Mohammed. Should Vision 2030 stall or fail to achieve some of its stated objectives, it is likely the prince would face increased internal opposition from disgruntled elites resentful of his meteoric rise and the ongoing purges.

The relentless speed at which Prince Mohammed and his team are trying to remake Saudi Arabia is a cause for concern. According to IMF’s Director of Middle East and North Africa Masood Ahmed, “the transformation of oil-exporting economies is no easy task and will be a long-term project. It will require a sustained push for reforms and well-thought-out communication.” The kingdom would be better served by pursuing reform plans that proceed at a slower but more sustainable pace.

Saudi Arabia faces a number of long-term structural obstacles in education and employment, which may take generations to fully overcome. Doing so will require strong political will, flexibility, a willingness to reassess goals along the way and the public’s acceptance of the reforms, as they will take years to bear fruit. Time will tell if Prince Mohammed has the patience, or aptitude, for a slow-paced but sustained transformation of the kingdom.

Adel Abdel Ghafar is a fellow at the Foreign Policy program at Brookings Institution and the Brookings Doha Center, where he served as acting director of research from 2016 to 2017. He is the author of Egyptians in Revolt: The Political Economy of Labor and Student Mobilizations 1919–2011 and is the lead editor of The Contemporary Middle East: Revolution or Reform? On Twitter: @AdelAGhafar.

The Widening Saudi–Iran Divide

New regional and international coalitions are forming with respect to the Middle East and Persian Gulf. An alliance of Donald Trump-led America, Israel, Saudi Arabia, and the United Arab Emirates faces a new coalition of Iran, Russia, Iraq, Bashar Al-Assad controlled-Syria, Hezbollah and grassroots regional forces such as the Popular Mobilization Forces in Iraq and the Syrian Defense Forces. The geopolitical competition between these opposing sides can more specifically be described as between the regional states seeking U.S. security guarantees and the creation and consolidation of a U.S.-led regional security order, and those states—such as Iran, Russia, and Syria—who despite their interests not wholly aligning on all fronts, have the overlapping strategic aim of fostering a multipolar regional order where they each have greater autonomy.

The Persian Gulf is consequently among the most significant geopolitical theaters in the world and will decide the fate of the global order. The chief rivalry in the region—between Saudi Arabia and Iran—is in fact a proxy for the competition between states seeking multipolarity (Iran) and those seeking to bandwagon off continued U.S. regional and global hegemony (Saudi Arabia).

The regional powers of Iran, Saudi Arabia, Turkey, Egypt, and Israel and two global powers of Russia and the United States are the two consequential regional and international set of actors deciding the region’s fate. More specifically, the rivalry between Saudi Arabia and Iran is among the most significant factors affecting the future of the Middle East, especially the Persian Gulf.

A Changing Power Alignment
Changing political and economic realities have forced the United States to be more active outside of the Middle East and Persian Gulf. This has opened a new space for diplomatic transitions and transformations across the Middle East and North Africa (MENA) region in which the Iran–Saudi divide appears to be the primary conflict.

After decades of importing fossil fuels, the United States is now positioned to be a leading global exporter of hydrocarbons. The biggest economic challenge to U.S. global dominance is China and, more lately, India. Both of these countries comprise nearly 40 percent of the global population and have the highest rates of economic growth. China, for example, is already the world’s largest economy by purchasing power parity. Meanwhile, Russia under Vladimir Putin has regained its position as a global power and is establishing strategic relations with rising powers across the world, including Beijing and Delhi. The United States thus has no choice but to balance increasing Chinese dominance in the Pacific.

Given Iran’s expanding regional influence, the foremost concern of Israel, Saudi Arabia, and some other regional Arab states is that as the United States disengages from the Middle East and Persian Gulf, the subsequent vacuum is not filled by Iran and Iran’s allied powers. This worry is amplified by the fact that the Arab World as a whole is in decline and traditional Arab powers have either collapsed or are stricken with domestic crises.

In light of these circumstances, Riyadh’s foreign policy in the region can be summarized in three points. The first point is to keep U.S. military, security, political, and economic dominance over the region, especially in the Persian Gulf. The second is to ally with Israel to gain the support of the powerful international Zionist movement. The third is to confront Iran and its regional allies such as Syria, Iraq, Hezbollah and popular forces such as Al-Hashd Al- Shabi (Popular Mobilization Forces) on all fronts.

In response, Iran’s strategy works to resist U.S. hegemony and improve Iran’s relations with other global powers. Resisting Israel and supporting Hamas and Hezbollah and the Houthis in Yemen are mainstays of the Iranian foreign policy. Iran furthermore seeks all-out confrontations with takfiri terrorist groups, whose root ideology is Wahhabi Salafism, such as Al-Qaeda, Jabhat Al-Nusra, the Islamic State in Iraq and Syria (ISIS), and so on. Finally, Iran hopes to act as a counterbalance to Saudi efforts to impose hegemony over the smaller Arab Persian Gulf sheikhdoms.

The Rift Writ Large
Today, the Saudi–Iran diplomatic feud affects regional developments across the Middle East and North Africa. Here are some of the most important places where the Saudi–Iran divide is felt.

Iraq and Syria
Iran played a decisive role in halting ISIS’s expansion in 2014 and preventing two Arab countries, Iraq and Syria, from falling under its dominance. Top Iraqi generals have stated that without Iranian support, Baghdad would have fallen to ISIS. Masoud Barzani, then president of Iraq’s Kurdistan regional government, has also stated that, “Iran was the first country to provide us with weapons and ammunition,” when Erbil was on the verge of falling to ISIS.

However, today with the destruction of ISIS and Iran’s integral role in bringing this about, hostility has risen between Saudi Arabia and Iran as Riyadh has sought to frame Iranian efforts as interventions in the affairs of Arab countries.

Yemen
The Saudi war on Yemen has caused a severe humanitarian disaster with over 20 million people in need of humanitarian assistance; 7 million are only a single step away from famine; tens of thousands have been killed or injured, and millions of refugees displaced. How did we get to such an impasse?

Some may remember that the Zaydis—a sect of Islam of whom the Houthi rebels are adherents—ruled Yemen for over a thousand years until 1962. In that year, republican army officers instigated a coup with the backing of Egypt and spurred a civil war in which Saudi Arabia ironically backed the Zaydis. Subsequent decades saw nominally Zaydi strongman Ali Abdullah Saleh rule over North Yemen and later a unified Yemen with Saudi backing. Notably, Saleh was a backer of Iraqi dictator Saddam Hussein and supported his war against Iran during the 1980s.

After the Houthi uprising, the twists and turns of politics have resulted in Saleh fighting alongside the Houthis he once repressed and against Saudi forces. When Saudi Arabia began its military campaign against Yemen in 2015, Saleh reached out to Iran and offered a strategic partnership against the Saudis, but Iran rejected his offer. In late 2017, Saleh tried to re-align himself with the Saudis, an act which resulted in his death.

Although there are many exaggerations regarding Iran’s influence and intervention in Yemen, the fact is that since Saudi Arabia’s invasion of Yemen, Iran has supported the Houthis to resist Saudi Arabia and Saudi allies. Saudi Arabia considers Yemen to be in its own backyard and does not tolerate Iranian influence in the country. Likewise, Iran does not tolerate Saudi Arabia dominating Yemen and undermining the Houthis and Zaydis.

The bottom line is any final peace must save Yemen from a total collapse, address Saudi Arabia’s security concerns, and come to a regional agreement in which Yemen is free from foreign domination. Iran and Saudi Arabia both need to have an immediate meeting to negotiate an inclusive plan aimed at reaching an immediate and complete ceasefire, ending foreign incursions, facilitating widespread humanitarian assistance, resuming broad national dialogue, addressing the concerns of the various factions and stakeholders inside the country in a non-zero-sum manner, agreeing on a power-sharing system, and establishing a national unity government.

Lebanon
Saudi officials regularly accuse Iran of interference and seeking to manipulate Arab politics and create proxy groups for itself. Chief among Saudi complaints has been Hezbollah in Lebanon. Since Hezbollah has emerged as a major military, security, and political power in Lebanon and as a powerful deterrent against Israeli aggression in Lebanon, Saudi Arabia’s main fear has been that Hezbollah is an Iranian ally ruling and/or dominating Lebanon.

After large parts of Iraq and Syria fell to ISIS, Lebanon too faced a serious threat from the terrorist organization. Hezbollah played the decisive role in eliminating the threat ISIS posed to Lebanese soil. Although Hezbollah played a helpful role in defeating ISIS, its actions exacerbated Saudi concerns because Hezbollah moved from playing a national role in Lebanon to a newfound regional role, specifically in Arab countries.

This has played into Saudi Arabia’s greater worry that the regional balance has tipped in Iran’s favor and that Hezbollah is the Arab movement advancing Iran’s influence in the Arab World. Therefore, any plan for Saudi–Iran rapprochement would require the normalization of Saudi–Hezbollah relations. Here Iran can help foster a Saudi–Hezbollah relationship in which Hezbollah ensures an appropriate position for Saudi Arabia in Lebanon and the region.

Palestine and Israel
The Saudi–Israel relationship, which for years has been operating behind the scenes, is now being made public. In November 2017, Israeli Energy Minister Yuval Steinitz stated of Israel’s developing ties with Saudi Arabia, “We have ties that are indeed partly covert with many Muslim and Arab countries, and usually (we are) the party that is not ashamed.… It’s the other side that is interested in keeping the ties quiet. With us, usually, there is no problem, but we respect the other side’s wish, when ties are developing, whether it’s with Saudi Arabia or with other Arab countries.”

In recent years, commentators and analysts have highlighted how previously covert ties between Saudi Arabia and Israel were moving toward becoming public. A Saudi alliance with Israel to confront Iran is a red line for Tehran, therefore any Saudi–Iran rapprochement would need Riyadh’s assurances that it would not engage by any means with Israel against Iran.

The cause of Palestine which for decades was the top source of angst and unity in the Muslim world has been sidelined to such a degree that less is heard about Palestinians in the Arab World. This was made clear after the Trump administration recognized Jerusalem as Israel’s capital in December 2017, which was met with protests on the Arab street but only token condemnations from Arab leaders. Tel Aviv has also succeeded in convincing Saudi Arabia to help it pressure Palestinians to accept Israeli demands, with outlets such as the New York Times reporting that while Saudi Arabia officially opposed the Jerusalem move by Trump, in private Crown Prince Mohammed Bin Salman has pressured Palestinian Authority President Mahmoud Abbas to accept maximalist Israeli demands on Jerusalem and Israeli settlements.

For Iran, establishing a unitary Jewish state over all of Historic Palestine and effectively destroying Palestinian resistance against Israeli occupation is tantamount to the capitulation of the Islamic world on the Palestinian cause and would mark the beginning of complete Israeli superiority over the region. As such, Iran’s strategy is to nip in the bud Israel’s expansionist strategy within the occupied Palestinian territories.

An Israeli official even recently declared that Egypt’s Sinai Peninsula was the only possible location for a Palestinian state. In short, the Arab World is on the verge of a historic capitulation on the issue of Palestine with Iran being one of the few actors in the region directly opposing Israeli aggressions against the Palestinian people.

Egypt
In the wake of the Arab Spring, Egypt has conclusively lost its position as the historic leader of the Arab World and Saudi Arabia has replaced it.

Notably, Egypt has also had a significant shift from Hosni Mubarak to Abdel Fattah El-Sisi in its foreign policy. Former U.S. Secretary of State John Kerry has revealed how many regional countries asked Washington to bomb Iran during the nuclear crisis. “Every leader I met with in the region …, [including Egyptian president Hosni] Mubarak, personally, to my face, said, ‘You have to bomb Iran, that is the only thing they understand,’” Kerry stated in November 2017.

El-Sisi, on the other hand, has steadfastly opposed efforts to instigate war with Iran and supports the Arab armies and governments, including Syria’s, that are fighting ISIS. At the same time, however, El-Sisi has largely stood behind Saudi claims about Iran’s purported expansive regional influence, but Tehran understands this position given Egypt’s current dependence on financial support from Saudi Arabia and the UAE.

Egypt and Iran also share being the region’s two civilizational wellsprings and despite the fact that they lack full diplomatic relations, have numerous shared interests. For Tehran and Cairo, Wahhabi–Salafist ideology and terrorist groups like ISIS and Al-Qaeda are a mutual threat. Finally, Israeli disarmament of its nuclear weapons and a Middle East WMD-free zone are a mutual interest as is preventing Sunni–Shia war.

The Persian Gulf Divide
The Gulf Cooperation Council (GCC)—comprised of Saudi Arabia, the UAE, Qatar, Kuwait, Oman, and Bahrain—was founded in 1981 as a union among the Persian Gulf Arab sheikhdoms to confront Iran. Since that time, the GCC states have spent hundreds of billions of dollars of their wealth on arms from the United States.

The creation of the GCC also raised fears among the smaller GCC states of their succumbing to Saudi dominance—as Saudi Arabia is the largest and most populous GCC state. Qatar is a case in point. Despite it being a Wahhabi monarchy (like Saudi Arabia) it has sought to balance its foreign relations and pursue an independent foreign policy in order to safeguard itself from potential Saudi hegemony.

The fiasco surrounding the 2017 siege of Qatar by Saudi Arabia and the UAE has lent credence to Qatari worries—with Qatari officials regularly proclaiming that Saudi Arabia seeks their capitulation to Saudi dominance in their internal and external affairs. The crisis has effectively marked the end of the GCC as a collective grouping. As of late 2017, Saudi and Emirati officials have signaled their desire to focus on improving their bilateral relations at the expense of the GCC.

After the Saudis and Emiratis imposed a blockade on Qatar, Qatar had but one path for survival: Iran. If Iran had closed its borders as well, Qatar would have collapsed and the Saudis in short order could have achieved their objective of regime change. Iran, however, opened its borders, stood against Saudi interference, and defended the territorial integrity and sovereignty of Qatar. Tehran understood that if the Saudis were successful in Qatar, it would have become a model for Saudi Arabia to implement on the other smaller GCC states and create a “Saudi bloc” rather than a “GCC bloc.”

Importantly, although Turkey also played a substantial role in defending Qatar, the Saudi strategy of bringing regime change in Qatar collapsed only because of the reaction of Iran—which shares a sea border with Qatar—to preserve the Qatari state.

The example of Qatar is helpful when looking at the future relations between Saudi Arabia and Iran. Basically, the Saudis and the Iranians have two choices: confrontation or cooperation.

Perils of Confrontation
This would be a continuation of the status quo. The combative strategies of Tehran and Riyadh will result in ever-increasing hostilities between them. The international community, meanwhile, will continue in its failure to manage regional crises in order to reduce tensions between Iran and Saudi Arabia.

With the traditional Arab powers in disarray, the idea of any broader Arab union has also been discredited. The following circumstances currently hold in the region: Syria and Libya, traditionally two major Arab powers, will take decades to return to their previous positions before their civil wars. Egypt as the traditional leader of the Arab World is to such an extent beset by terrorism and unprecedented economic, security, and political challenges that it will also take years to recover to its historic regional position.

Iraq too, which used to have the most powerful Arab army, is also drowned in crises and will take decades to get to the point it was at before its war with Iran. An inter-Arab war is underway as indicated by Saudi Arabia’s attack on Yemen and the Qatari blockade. The wealth of Saudi, Emirati, and Qatari sheikhs which could be used to improve the welfare of Arab and Muslim countries is instead being spent on war and bloodshed. Israel has gained unprecedented benefits and strategic leverage given the developments in the Arab World. Arab unions such as the GCC and Arab League have proved defunct. The plight of the Palestinians, which used to be a source of Arab unity, has fallen from consideration for Saudi Arabia and the UAE.

The option of Saudi–Iran confrontation will have one main loser, the Muslim world, and one prevailing winner, Israel. It will result in increased instability throughout the region and the expansion of sectarianism. Additionally, any prospect of diminishing takfiri terrorist groups such as ISIS and Al-Qaeda will be eliminated and their actions will continue in perpetuity—wreaking havoc on the world and threatening the security of the great powers such as Russia, the United States, China, and Europe.

Furthermore, if an unfair “peace” is imposed on the Palestinians—that is, not predicated on a Palestinian or on a popular referendum—it will not be sustainable and the resistance against the Israeli occupation will only grow. Ultimately, this option is a lose-lose for everyone. Indeed, the continuation of a zero-sum relationship between Iran and Saudi Arabia will at the end portend negative implications for the national interests of both countries. Any Iranian “victories” that result in the weakening of its regional neighbor Saudi Arabia will be a loss for Iran and vice versa.

Prospects for Cooperation
Saudi officials claim Iran seeks regional hegemony and to rebuild the “Persian Empire.” Riyadh views Iranian influence in places such as Iraq, Syria, Yemen, Lebanon and beyond as humiliating for itself and the Arab World. Iran, on the other hand, is chiefly concerned with establishing security for itself after having fallen victim to centuries of foreign dominance in its modern history. Attention should be paid to six facts in this regard:

First, Washington has always sought regime change in Iran, and Saudi and Israeli officials have been the biggest cheerleaders for this. Kerry confirmed that in 2017 during the nuclear crisis period, in meetings with Israeli, Egyptian, and Saudi officials.

Second, Iranians have not forgotten Saddam Hussein’s 1980 invasion of their country. The United States, Saudi Arabia, and most other regional Arab states supported Saddam during this war—which resulted in the deaths of hundreds of thousands of Iranians, many being the victims of ballistic missile strikes or chemical weapons attacks.

Third, not only is Iran surrounded by U.S. military bases, but the United States has flooded the region with arms. President Barack Obama sold the Saudis more than $115 billion worth of weapons and Trump has so far signed agreements to sell more than $350 billion. Meanwhile, Iran spends one-fifth of what Saudi Arabia spends on its military, despite having over twice the population. Even the UAE, with a native population of 1.4 million, spends twice as much as Iran on its military.

Fourth, Iran has since the 1979 revolution been subject to unprecedented draconian sanctions by the United States, which has grown addicted to sanctioning Iran.

Fifth, the United States and its allies have waged a covert war in the form of terrorism and cyber-attacks against Iran for years, including by supporting the Mojahedin-e Khalq (MEK) Iranian opposition group—which for decades has engaged in terrorist actions on Iranian soil, cooperated with Iraqi dictator Saddam Hussein during the Iran–Iraq War, and has been responsible for the death of upwards of 17,000 Iranian civilians. The MEK’s origins hail back to its opposition to the Shah’s regime, but after the revolution it engaged in renewed militancy against the new Islamic Republic state. Iranians have also not forgotten that several of their nuclear scientists were killed in Tehran’s streets by Israeli agents.

Sixth, the United States has always kept the option of a military attack against Iran on the table. Robert Gates, the former U.S. defense secretary, has noted how the Saudis want to “fight the Iranians to the last American.”

Finally, the fact is that Iran faces serious threats on its borders. These threats are from terrorist groups, failed states such as Iraq and Afghanistan, and nuclear-armed states such as Pakistan. As one Iranian military officer has said, roughly 60 percent of Iran’s border are “not controlled by the neighboring country.”

These realities have compelled Iran to have an active, preemptive, and deterrent role in the region in order to secure it borders, centralized governance, and national cohesion. To achieve these aims, Iran’s foreign policy goals have been centered on confronting threats, stabilizing the region, and improving its self-sufficiency in the production of weapons of deterrence, including ballistic missiles.

At the same time, another undeniable reality is the shortcomings of Arab countries—that is, the autocratic nature of their governments and their poverty-stricken populations—factors which have little to do with Iran. These pitfalls of the Arab state have naturally resulted in increased Iranian influence. However, rather than admit their own shortcomings, Saudi officials including Foreign Minister Adel Al-Jubeir regularly blame Iran for all regional ills.

In order to decrease tensions and enter into a process of cooperation, Riyadh and Tehran must gain a correct understanding of each other’s national security threats. The cooperation option should entail Riyadh and Tehran to openly and without preconditions enter into bilateral dialogue and put all of their security concerns and aims on the negotiations table.

Forums for Iranian–Arab dialogue should be convened by figures with technocratic backgrounds ranging from scientists to diplomats. To decrease sectarianism in the Muslim world, Sunni–Shia dialogue forums should take place to include Sunni scholars from Al-Azhar in Cairo and religious leaders from Saudi Arabia and other Sunni countries, as well as Shia clerics from the Qom and Najaf seminaries.

Dialogue between the six GCC states, Iraq, and Iran should take place without preconditions and at the foreign minister level, with the aim of creating an institutionalized security cooperation system in the Persian Gulf. The foreign ministers should hear each other’s concerns in a constructive dialogue and take steps toward producing tangible and fair solutions.

A potential model can be the Organization for Security and Co-operation in Europe (OSCE) and the European Union. One foundation for immediate negotiations can be UN Security Council Resolution 598, which laid the basis for ending the 1980–88 Iraq–Iran War and requests the UN secretary-general “to examine, in consultation with Iran and Iraq and with other states of the region, measures to enhance the security and stability of the region.”

A sustainably peaceful relationship between Iran and the GCC states must be predicated on the principles of non-interference in domestic affairs, respect for territorial integrity, and sovereignty. By adhering to these tenets and engaging in such dialogue, over time these states can move toward broader cooperation in matters of security, economics, culture, military, and politics and foster the creation of a nuclear weapons and WMD-free zone in the Persian Gulf.

In moving toward a security and cooperation system in the Persian Gulf, leaders in both Saudi Arabia and Iran should be cognizant of the fact that while outside great power intervention in the region may come and go over the years, both countries will remain neighbors forever. They cannot afford to let animosities between them continue to grow and sow the seeds of perennial conflict. If each country is to reach its potential and prosper, they must live side by side in peace.

Seyed Hossein Mousavian is a Middle East Security and Nuclear Policy specialist at the Program on Science and Global Security in the Woodrow Wilson School of Public and International Affairs at Princeton University. He previously served as Iranian ambassador to Germany (1990−97) and spokesman for Iran’s team in nuclear negotiations with the European Union and the International Atomic Energy Agency (2003–05).  From 2005 to 2007, he served as foreign policy advisor to Ali Larijani, then secretary of the Supreme National Security Council and chief nuclear negotiator. Mousavian was head of the Foreign Relations Committee of Iran’s National Security Council from 1997 to 2005 and served as the vice president of the Center for Strategic Research for International Affairs between 2005 and 2009 and as general director of Foreign Ministry for West Europe between 1987 and 1990. He is the author of The Iranian Nuclear Crisis: A Memoir, Iran-Europe Relations: Challenges and Opportunities, and his forthcoming book, Iran and the United States: An Insider’s View on the Failed Past and the Road to Peace.

Creators Meet Censors

The summer of 2017 unmasked a turning point in Egyptian cinema: it is when the Egyptian state propaganda seems to have finally succeeded in steamrolling the entertainment and film industry. In recent years, habitual reports of lawless murders, torture, and countless human rights violations have caused the local police’s popularity to significantly drop. Despite that, Egyptian cinema was churning out some of the biggest pro-police narratives in recent years, including the highly popular TV series Kalabsh (Handcuffs) and the box-office smash El-Khaleya (The Cell), to name a few, alongside a multitude of forthcoming projects.

In its recent history, Egyptian entertainment has shown a considerable engagement with reality, tackling some of the hot-button issues of the day within the boundaries set by former regimes. Issues such as state corruption to the institutionalization of religion were on the table. Not since the heyday of the monarchy (the early days of Egyptian cinema in the 1930s and 1940s) has mainstream cinema become so detached from reality as it is today. Aside from the rare stab at some of the state-affiliated institutions like in the 2016 film Mawlana (The Preacher) with its censure of government-sponsored preachers, cinema in particular has become increasingly domesticated, comprised primarily of disposable entertainment free of the sociopolitical subtext that distinguished previous-era films and serials.

The chilling state of the Egyptian entertainment industry today is worlds apart from the euphoric stint following the January 25 uprising in 2011. That was a time when the role of censorship was diminished; when many political boundaries were broken. Open denunciation of the Hosni Mubarak regime became the norm and heated confrontation with the subsequent Muslim Brotherhood (MB) rulers could not be prevented. Even the army was tactfully and briefly attacked in a few works. But the veneer of optimism that imbued the nation’s cinema in 2011 and 2012 swiftly morphed into cynicism and suspicion. Political instability, the rise and fall of the MB, and the collapse of the opposition had thrown the country into disarray before the military reassumed full power. In consequence, censorship quickly took root in a manner unseen since the reign of former President Gamal Abdel Nasser.

At its core, this is a story of the power struggle between the Egyptian state and a billion-dollar industry that has gained enormous social and political leverage over the past few years. To date, the entertainment industry, television or film alike, has continued to prosper on a staggering scale, breaking viewership records with each passing year. The billions pouring into cinema and television have transformed the industry into a gigantic enterprise—too big, too powerful for the current regime to fully control.

This power struggle translated into a standoff between the creators and storytellers, and the authority, manifested both directly in the censorship body, and indirectly via various new supervision bodies (the Higher Council for Organizing Media and the General Council for Drama Organization), not to mention the covert influence of the Ministry of Interior and other state institutions. This resulted in severe compromises, confusion, and great stubbornness from both camps. For example, a number of drama makers were forced to scrap their projects altogether. Some were compelled to offer apologies for the remotest send-up of the current regime while others refused to bend to the regime’s pressure. While it would appear that the regime has gained the upper hand, in reality, it is one battle won in a grand war with no end in sight.

The 2011 Buildup
In the final years of the Mubarak era, the film industry was hit by several fluctuations. The two largest conglomerates monopolizing cinema—Oscar–Al-Nasr–Al-Massa and Al-Arabia—were hindering the progress of the Arab World’s biggest, and only, film industry. Box-office grosses were shrinking and the stocks of the country’s biggest action and comedy stars were gradually falling. Meanwhile, the labor movement, several counter-culture movements, as well as continuous civil unrest, were brewing—the popular hunger for realism became irrepressible.

The unabashed star director of this period was Khaled Youssef, iconic Egyptian director Youssef Chahine’s protégé and self-appointed spokesperson of the poor and the marginalized. Throughout a number of pictures beginning with Kheyana Mashroua (Legitimized Infidelity) in 2006 and ending with Dokkan Shehata (Shehata’s Store) in 2009, Youssef created a misshapen body of work exploring the lower class’ disgruntlement with poverty, corruption, and police brutality. The most prophetic manifestation of Youssef’s vision came with Heya Fawda (Chaos, This Is), a sensationalist melodrama co-directed with Youssef Chahine that depicts the residents of a middle-class neighborhood rising up against the lawless police officers ruling their district.

It was the independent film wave, however, that acted as a precursor to the uprising. Films by Ahmad Abdalla (Heliopolis, 2009 and Microphone, 2011) and Ibrahim El-Batout (Ein Shams, 2008 and Hawi, 2010) captured the sense of overriding despair and stagnancy that defined the second half of the 2000s in Egypt and upturned Youssef’s or the mainstream cinema’s sensationalism. Characters in these films were largely the angry middle class trying to find their place in a country living on borrowed time. Composed of washed-out colors, the digital photography employed in these films injected an apocalyptic feel into their narratives. Even in Microphone—the most upbeat of these films—there is a pervading sense of helplessness.

Microphone was released in Egyptian theaters on January 25, 2011, the day Egypt’s largest uprising began. A month later, the Egyptian entertainment landscape would change for good.

Revolution Mania
For one brief year, an unprecedented window of freedom opened up for artists. A wave of shoddily made, celebratory works would surface in the wake of Mubarak’s overthrow—reactionary, short-sighted films presenting watered-down chronicles of the eighteen days of the uprising. Among the various films of this group were Tamer Ezzat, Ayten Amin, and Amr Salama’s three-part documentary Al Tayeb, Wal Shares, Wal Seyasi (The Good, the Bad, and the Politician); the anthology film 18 Yom, which translates as 18 days (now blocked from screening by the censorship board); and Ahmed Rashwan’s Mawloud Fi 25 Yanayer (Born on the 25th of January). These films—along with older productions such as Sarkhet Namla (The Scream of an Ant) and El-Fagoumy whose endings were embarrassingly altered to incorporate the events of the uprising—offered linear, oversimplified storylines compressing the highly complex events of the revolution into easily digestible narratives permeated with transient certainty rarely detected in subsequent films. Distinct in these films were the close endings that cast no doubt over any possible political or social disruption.

A more sobering look at the uprising was illustrated in El-Batout’s Venice Film Fest contender, El Shetta Elly Fat (Winter of Discontent, 2012). A tale of redemption centered around a traumatized ex-political prisoner who comes back to life with the 2011 protests, the film ends with a long text superimposed over a black screen detailing the abuses and violations committed by the military in the wake of Mubarak’s overthrow.

The most inquisitive picture of the period though was Yousry Nasrallah’s Cannes competition nominee, Baad Al-Mawkea (After the Battle). Set in the immediate aftermath of January 2011, the film centers on the unlikely romance between an upper middle-class activist and a blue-collar camel rider, who was ostracized from his community after taking part in the notorious “Battle of the Camel” (a pivotal day of the uprising when men riding camels and horses attacked the Tahrir Square protesters). Interspersed with documentary footage of the impassioned activist movements, Nasrallah’s largely misunderstood film aptly captures the zeitgeist of the era: the desire to break socioeconomic and sexual barriers, the growing rigidness of the left, and the rise of the deep state.

Most notably, Nasrallah challenges the legitimacy of the revolution narrative, questioning the streamlined historical chronicle of an event with interminable unanswered questions. Nasrallah casts doubt on the clear-cut heroes and villains of the post-Mubarak era. He sheds a light on the lesser-known beneficiaries of the revolution and asserts the impossibility of reaching the full truth behind what happened on those fateful eighteen days. The film concludes with the bleakest ending in all revolution films, as the rider is accidentally injured in the Maspero demonstration in the first, and only, time where the Coptic Christian massacre would be depicted on Egyptian screens . . . the last time the transgressions of the military are scrutinized.

Television dramas also capitalized on the revolution mania, offering long-form narratives exploring the decaying pre-2011 culture that led to the uprising. Examples from the 2012 slate include the Belal Fadl-penned El-Heroob (The Getaway), Adel Adeeb’s Bab El-Khalk, and Mohammed Bakir’s Taraf Thaleth (Third Party). Enjoying more time, and arguably more freedom, to develop their characters and plotlines, the first roster of the post-2011 TV dramas offered more depth and insight than their cinematic counterparts, even if the mood remained deceptively upbeat at the end of every story.

The Mood Darkens
With the start of Muslim Brotherhood rule in the second half of 2011 and the election of Mohamed Morsi the following year, the tone of the stories grew darker. The limitless buoyancy of spirit found in earlier films would soon be replaced by skepticism and anxiety; the idealism of the uprising would fade and be upended by moral uncertainty.

The MB-era films were tinged with growing weariness toward the economic instability and distrust of the conservative, political establishment. Mainstream movies such as Sameh Abdelaziz’s Tatah and Amr Arafa’s Samir Abol Nil tapped into this sentiment. Tatah took a step toward presenting scattershot criticism of the police and the self-centered opposition, while Arafa’s picture criticized the duplicitous, manipulative media. The Egypt of both films is one governed by chaos and insecurity, a country of worn-out citizens in search of stability, guidance, and saving.

The same ubiquitous sense of bedlam and confusion also informs Ahmad Abdalla’s near-wordless Farsh we Ghata (Rags and Tatters, 2013), an impressionistic snapshot of the immediate aftermath of the uprising. Dispensing with the romanticism of the earlier revolution films, Abdalla’s indie paints a stark picture of the Egyptian society, one ravaged by violence, disquiet, and fear. The Egypt Abdalla depicts bears more resemblance to today’s Egypt than the one of 2011. The mistrust and paranoia Abdalla evokes so subtly would prove to be prophetic, heralding the failure of the uprising and the subsequent wave of sanctioned violence.

While films of this period primarily relied on suggestion and caricature, television forcefully engaged with the more explicit concerns of the day. Most artists began to confront the growing threat of the MB and political Islam. The two most obvious examples were Mohamed Gamal Al-Adl’s Al-Daeya (The Preacher) about a young Islamic televangelist who falls in love with a violin player, and the Waheed Hamed- scripted Bedoon Zekr Asmaa (Without Mentioning Names) that charts the rise of Wahhabism in the 80s. Both serials capitalized on the sharp decline in popularity of the MB, painting a largely black and white picture of an enormous brainwashed, self-serving sect that uses religion to quench its thirst for power and money. Most dramatists chose to vilify the MB leaders by showing the contradiction between Islam and how they practiced it. They are shown to misinterpret Islamic scriptures rather than adhere to deeply held convictions that grew out of an Egyptian-specific Islamic identity. Hamed’s timidly met 2017 sequel to the 2010 series, Al-Gamaa (The Brotherhood), which tracks the rise of the group, adopts the same strategy—a formula that would become the guiding norm in depicting the MB on screen.

Slipping through the cracks of an exceptionally lenient censorship was Mohammed Yassin’s serial Moga Hara (Heat Wave), an immensely daring account of Egypt’s dingy underworld that frankly tackled hugely risqué topics such as polyamory, homosexuality, and sex work through the story of a violent cop and his young revolutionary brother. Amid the suffocating fears from the possible Islamization of Egypt, the unabashedly liberal, surprisingly progressive Moga Hara emerged out of nowhere as a sudden slap on the face, openly presenting everything the MB were adamant on eliminating.

June 30 and the Diminishing Window of Freedom
The police storming of the MB’s protest camp on August 14, which led to the deaths of more than a thousand Brotherhood supporters and the eventual election of Abdel Fattah El-Sisi, marked a turning point for freedom of expression. New taboos for drama would emerge: the military, presidency, and judiciary could not be criticized; the Muslim Brotherhood could not be sympathetically depicted; the cinematic representation of loose moral conduct could no longer be tolerated.

Signs of new restrictions arrived in April 2014, only a couple of months before El- Sisi’s election. A film production starring Lebanese sex icon Haifa Wehbe, Halawet Roh (Beauty of Rooh)a remake of Giuseppe Tornatore’s 2000 Oscar-nominated Maléna—was pulled from theaters on orders of Egypt’s then-prime minister, Ibrahim Mahlab. Already, the movie was topping the local box-office within ten days of its release, scoring more than 1 million Egyptian pounds, or approximately $140 thousand.

Although the film was eventually re-released after winning the court case, Mahlab had ordered the film to be sent back to the censorship authority—even though it had already passed it without substantial cuts—for review. As a result, the then newly appointed head of censorship, Ahmed Awwad, resigned in protest, propelling various intellectuals, artists, and filmmakers to herald Mahlab’s decision as the start of a new dark age for Egyptian cinema.

This would also mark the beginning of many confrontations between drama creators and El-Sisi’s regime, represented by the censorship body, administrative force, and various independent agents fighting to impose a new set of moral codes that do not essentially deviate from the MB’s prematurely halted policies. The first two years of El-Sisi’s presidency were characterized by nationalist fervor and extreme anti-Muslim Brotherhood sentiment. Testing the new boundaries of censorship, film and TV makers steered away from politics, channeling their efforts into largely apolitical social dramas and diverting entertainment.

One of the last major TV productions to tackle the uprising was Mariam Abou-Ouf’s Embratoryet Meen? (Whose Empire?), a satire chronicling the aftermath of the uprising, leading up to the end of the MB reign in 2013. Uniform in tone and consciously superficial and one-dimensional, Embratoryet Meen? closely follows the government-sponsored narrative of the time, refraining from discrediting the uprising, highlighting the subsequent disarray, and blaming the MB for the country’s economic fallout.

Embratoryet Meen? aside, the most revealing aspect of this period was not what was being presented in dramas but rather what was not. Any reference to the military was gone; criticism of the police was kept to a minimum; the uprising became the elephant in the room, central events the dramas could revolve around but never openly discuss or dissect.

Several oppositional voices from the entertainment industry were silenced, witch- hunted, or exiled. TV satirist Bassem Youssef was the most famous example, but several film stars such as Amr Waked, Mohammed Attiya, and Khaled Abol Naga, along with writer Belal Fadl, met the same fate. Abol Naga in particular received the most heat. After criticizing the military and El-Sisi at the Cairo Film Festival in 2014, a media maelstrom erupted in the wake of his statements, transforming him into box-office poison. Since 2014, Abol Naga has not been featured in any Egyptian films or serials.

Another victim of El-Sisi’s expansive crackdown was Ahl Eskenderya (The People of Alexandria), directed by Khairy Bishara, and written by Fadl. A multi-character series set in 2010 prior to the outbreak of the uprising, the serial touches upon police desecrations, the media’s closely knit relationship with the Mubarak regime, and corruption of the business elite. For reasons undisclosed to date, the 22 million Egyptian pound-budget series was prohibited from broadcast—a sign of the regime’s intolerance toward any criticism, several commentators have interpreted.

But it wasn’t until 2016 that the regime would show its true colors with a series of direct and indirect bans that cast any doubt about the new regime’s agenda aside. During El-Sisi’s first year, in an attempt to show itself as open and democratic, the government gave shooting permits to a limited number of controversial films. The first was Mohamed Diab’s Eshtebak (Clash), a multi-character drama set entirely in a police van shortly after the June 30 military takeover. A shallow, reductive treatment of a severely divided Egypt of the time, the film, nonetheless, offers a rare sympathetic depiction of the Muslim Brotherhood for the first and last time since 2013. The other film was Swedish-Egyptian Tarik Saleh’s, The Nile Hilton Incident, a noir thriller about police corruption set on the eve of the uprising. Both films met inhospitable fates the following year.

The state security, according to Saleh, forced him to suspend production and move it to Morocco, which was used as a stand-in for Cairo. The Sundance award-winning film has not been screened anywhere in Egypt thus far. In the case of Eshtebak, director Diab was accused in state media of tarnishing Egypt’s reputation and advocating reconciliation with the Muslim Brotherhood (it was broadcast shortly after the film opened in Cannes’ “Un Certain Regard” competition).

The uproar surrounding Diab and his producer, Islamic scholar Moez Masoud, did not thwart Eshtebak’s release in theaters, however. With the backing of mega Egyptian star Nelly Karim and the successful commercial record of the director and scriptwriter, the film proved too big for the regime to kill. However, it marked the first of the many battles between the entertainment industry’s robust commercial force and the El-Sisi administration.

If the more controversial Eshtebak could pass censorship, observers believed, so could Tamer El Said’s Akher Ayam El-Madina (In the Last Days of the City). El Said’s nine-years-in-the-making debut feature is a loose, formless record of life under the last days of Mubarak—a panorama of young lost souls trying to make sense of their dying city. Apart from an overuse of the “Down with the military rule” chant, Akher Ayam remains mostly apolitical, capturing the smothering frustration and transformation of Cairo but never taking a swipe at any political institution.

But it did not pass censorship. Less than a month before it was scheduled to premiere in Egypt at the Cairo International Film Festival, the festival’s management pulled it, claiming that El Said breached their agreement by participating in more festivals than agreed before Cairo. The management of the festival, which is entirely financed by the Ministry of Culture, attested that censorship had no influence in the matter and that their decision had nothing to do with the film’s content.

To date, the censorship board has not given the film approval. Its cinema release in April last year was delayed and later scrapped altogether. Many suspect that El Said’s role in Mosireen—the non-profit media collective founded after the uprising to document its aftermath, including military violations—could be one reason why the film failed to win the fight with censorship. Another is the vocal support of former presidential nominee and staunch critic of El-Sisi, Mohamed ElBaradei, of the movie. Without the backing of a major producer or a film star, Akher Ayam failed to win its fight with censorship in spite of the widely empathetic international press. Shrewdly, the censorship authority of the new regime does not issue straightforward ban decrees; instead, it refrains from delivering any verdict at all to avoid being accused of stifling artistic freedoms.

Over the past year, the conflict between the regime and the mushrooming entertainment industry has intensified. In a speech given in May last year, El-Sisi criticized Egyptian cinema’s depiction of slum areas, vowing to disallow any negative representations of the country’s destitute districts and their inhabitants. A few months after El-Sisi’s speech, the Sobky brothers were forced to change the title of their lighthearted comedy Ashan Khargeen (Because We’re Going Out) for its suggestive sexual innuendos. Meanwhile, the duo’s heavily promoted action film Gawab Etekal (Arrest Letter) was held from release after the censorship board demanded multiple changes over the final cut. The Sobkys eventually prevailed: the film—which presents a complicated, three-dimensional picture of its MB protagonist, a feat that did not go down well with the censorship—was later released.

Money, again and again, would prove be the only force the regime cannot conquer. The Higher Council for Organizing Media, an organization set up by the president in 2016 to act as a supportive body of censorship, has incessantly attempted to control the content of entertainment, only for producers to throw their notes out of the window. Thus, in the last Ramadan season, more risqué subjects involving sex and sexuality, deviant behavior and dysfunctional relationships have been introduced, sidestepping both the official censorship and the council. The gigantic amount of money invested in these productions make them principally immune to censorship. Directors and producers are succeeding in pushing censorship limits without breaking the aforementioned taboos of this period such as not criticizing military, presidency, and judiciary, to name a few.

Recognizing the growing influence of the entertainment industry, the regime, this year, pushed out a number of works that glorify Egyptian police and dismantle the decades-old brutal image of the Ministry of Interior workers. These include El- Kheroog (The Exit), Saba Arwah (Seven Souls) and Shehadet Milad (Birth Certificate), Zel El-Rais (The President’s Shadow), Al-Hossan Al-Aswad (Black Horse), and especially Kalabsh. Released in 2017, the show portrays policemen as self-sacrificing, law-abiding civil servants struggling to fight the corruption and aggression of post-2011 Egypt. The makers of these dramas blame police brutality on low-ranking police officers, who are framed instead for committing the countless violations that continue to make headlines today.

Class, in other words, is the main factor separating the good cops from the few bad seeds. Class plays an even more palpable role in Tarek El-Eryan’s El-Khaleya, an action thriller centering on a police officer pursuing the terrorist cell responsible for the death of his colleague. The policeman, dashing film star Ahmed Ezz, is portrayed as a rich playboy whose vengeful impulses are offset by his morally strict colleague, a well-off detective. The source of wealth for these men is unknown, but the conclusion drawn from these serials and films collectively is this: hunger for money, and not necessarily power, is that what corrupts, and that’s why the low-ranking police officers are more liable to commit violations rather than their educated, financially stable superiors.

News reports of course, which implicate policemen of different rankings and backgrounds in the unremitting abuses, prove otherwise. For the shooting of the film, El-Eryan admitted that members of the ministry of interior’s special operations unit were used as extras; the ministry also helped El-Eryan in securing the shooting permits.

The success of El-Khaleya and Kalabsh have encouraged more filmmakers to tap into the same nationalist sentiment. According to reports, a gigantic production documenting the period between January 25, 2011 and June 30, 2013 is in the making. The film is reported to highlight the role of the military in ridding Egypt of the MB threat. Furthermore, the military seems to be taking on some cultural production of its own. The department of Morale Affairs, part of the Egyptian Armed Forces, has announced plans of collaborating on a new film about the 1973 October War hero Ibrahim Al-Rifai. A former spokesman for the Armed Forces is allegedly involved in a newly established production company called Bright Future.

Not since the heyday of Nasser has the relationship between art and the state been so closely intertwined. Cinema is moving away from politics and social problems while television has become the greater reflector of reality. In engaging with current social reality, television has, therefore, become the more potent, more politically charged platform where the battle of influencing public opinion is fought. In the absence of opposition media, TV dramas could also acquire more importance than before. As mounting battles with censorship will ensue, millionaire producers are conjuring different ways to work around the system.

However, the vast majority of mainstream filmmakers are caving in to the demands of the regime, adhering to the representations fed by the authorities, and churning out mindless entertainment. Lacking the big bucks, small, independent cinema, with its critical, leftist leanings, is expected to continue fighting the censorship battle. Indie filmmakers will continue to tussle with censorship, as small-time producers face the possibility of pulling out of the business altogether. The battle between El-Sisi’s regime and drama-makers may have been settled on the film front; in television, however, the fight wages on.

Joseph Fahim is an Egyptian film critic and programmer. He is the Arab film delegate of Karlovy Vary International Film Festival and consultant for various film festivals around the globe. He is a former member of Berlin Critics’ Week and the former director of programming at the Cairo International Film Festival. From 2005 to 2012, he was the arts and culture editor at the Egyptian English-language daily, Daily News Egypt. He has written for Al Jazeera InternationalMiddle East InstituteMiddle East EyeAl MonitorNewsweek Middle EastEgypt Independent, the NationalVérité, and CineVue, and co-authored many books on Arab cinema. His writings have been published in five different languages. On Twitter: @joseph_fahim.

Flawed Diplomacy in Libya

Since 2014, many actors have tried to mediate a negotiated solution to the Libyan crisis but have failed. The nexus of this conflict is the split between eastern and western Libya, which was set in motion by the events of May 2014 when General Khalifa Haftar appointed himself the leader of the Libyan National Army, and launched “Operation Dignity,” a military campaign to purge Libya of all Islamists. Following elections that same year and in response, a pro-Islamist coalition called Libya Dawn forced the elected parliament to flee from the capital in Tripoli and relocate to the eastern city of Tobruk. Today, the main fissure in Libya remains the divide between east and west, with now-Field Marshal Haftar and his Libyan National Army allied with the Tobruk-based parliament or House of Representatives against a United Nations-sponsored ruling body in Tripoli.

Various efforts were made by multinational, regional, and international actors to resolve the ongoing conflict. However, the behavior of these actors, in which they stated apparent support for mediation while supporting one faction over another on the ground, empowered various local actors, among them Haftar, who has only paid lip service to the idea of a negotiated solution but never committed to it. Ultimately, Haftar—who seeks to militarily take over the entire country—appears to have utilized the various mediation efforts, exerted mostly by foreign actors, to buy time and plan the steps needed to overtake his rivals.

For three years, Haftar has acted as a spoiler of peace in Libya. His forces seized control of Libya’s oil infrastructure in the east and used it as a bargaining chip with Tripoli and the international community. Haftar also replaced elected municipal leaders across the east with loyal military officers to solidify his authority in the eastern province.

Meanwhile, the Libyan National Army has advanced to seize key localities, including the strategic military base in the central region of Jufra, in order to consolidate Haftar’s control beyond the east. This most recent move, following talks with his rival, Fayez Al-Sarraj, in Abu Dhabi, indicates a strategy of engaging in hollow negotiations at the international level while advancing a military campaign and shaping the power balance on the ground. Haftar also reportedly seeks to establish alliances with tribes in Libya’s west to strengthen his forces for further westward expansion.

Prolonged and uncoordinated mediation initiatives not only benefit Haftar by giving him further time to consolidate power in the east and build alliances in the west but also severely weaken all negotiations on Libya.

At the same time, the various regional and international actors who have launched separate negotiation efforts aimed at bringing the rival parties together in Libya have led simultaneous interventions in pursuit of their own interests and therefore limited the chances for a successful UN-led process. The result of this dynamic has been the overall degradation of the opportunity for peace in Libya.

The UN Non-Deal
The United Nations has formally led mediation efforts in Libya since 2014 with the goal of forming a single, unity government. The Libyan Political Agreement (LPA) was signed in Skhirat, Morocco in December 2015, effectively establishing a Presidency Council (PC) made up of a nine-member executive body led by a president and a consultative body. The agreement subsequently formed a unity government called the Government of National Accord (GNA) headed by Al-Sarraj—however, this executive body was never approved by the House of Representatives (HoR) in the east and was therefore toothless from the start. Aside from never being fully implemented, the LPA was repeatedly undermined by both developments on the ground in Libya and interference from outside actors, such as Egypt and the United Arab Emirates, seeking to elevate their proxy supporters in the country.

The efforts in Libya were run by the UN Support Mission to Libya (UNSMIL), a political mission established in 2011 to support the country’s transitional authorities in post-conflict efforts. In September 2014, following the country’s split, United Nations Special Representative and Head of UNSMIL Bernardino Leon announced the start of a political dialogue that would aim to establish a unity government in the country. While this political dialogue eventually led to the signing of the Skhirat agreement, the fraught negotiation process unfortunately produced an agreement that did little to bring an end to the conflict.

The political dialogue put together by Leon was weak to begin with and loosely held together the different players in the conflict. Representatives from the rump, previous parliament of the General National Congress (GNC) initially refused in July 2015 to sign a draft agreement during talks, believing that the agreement would sideline their camp (the agreement made the HoR the sole legislative body and the GNC a consultative High State Council). Indeed, tensions continued between the General National Congress and the PC/GNA following the latter’s establishment; this was demonstrated by repeated attacks on Tripoli in 2016 and 2017 by pro-GNC militias aimed at weakening the GNA.

Rejections by the HoR also stalled the negotiation process during 2015: even after the agreement was signed, parliamentary members stalled its implementation by refusing to recognize the GNA, thereby sidelining any progress resulting from UN mediation. They did so under the influence of Haftar who de facto controlled the parliament and therefore had an interest in seeing the mediation fail. Ultimately, the UN went ahead with pushing through an agreement that pressured the Libya factions into negotiations but did little to establish the conditions for the actual implementation of a deal or its enforcement.

Another factor that contributed to the weakness of the deal was the questionable legitimacy of the UN process following the departure of Leon in November 2015 amid a scandal over his ties with the United Arab Emirates (UAE). This incident severely damaged the credibility of UN’s mediation efforts in Libya—the UAE has intervened in Libya’s conflict solidly on the side of Haftar and the HoR. German diplomat Martin Kobler, Leon’s successor, was able to push through a deal in Skhirat to establish the LPA, but the damage had already been done to the UN’s standing in Libya.

Even if the LPA had garnered broad support from the start, its success rested largely on the ability and willingness of the international community to provide the GNA with unified support and backing to stabilize the country. While key regional stakeholders, as well as international actors in Europe, expressed support for the UN process, the Libyan Political Agreement, and the resulting Government of National Accord, their actions showed otherwise.

Regional Interventions
Libya’s neighbors, as well as other regional players, have also played a significant role in negotiations. Although on some occasions these actors played a positive role by supporting the UN process and convening Libya’s disputing parties, more often than not they pursued competing self-interests that, rather than help initiate progress toward a resolution, revealed regional rivalries that were playing out in Libya.

Libya’s closest neighbors, Egypt, Algeria, and Tunisia, are the most threatened by regional instability stemming from the Libyan conflict. The three nations engaged in a series of tripartite meetings from late 2016 to mid-2017 aimed at finding a solution to the political deadlock in the country. They agreed on two common principles: the preservation of Libyan territory and sovereignty and hence a rejection of foreign military or political intervention in Libyan domestic affairs, and the elevation of a political dialogue over a military solution—and yet, it is precisely the violation of the first principle that has prevented a realization of the second.

Egypt
Maintaining stability in Libya is in the national interest of Egypt, which is already battling an Islamist insurgency in the Sinai Peninsula and is wary of security threats posed by extremist groups operating from Libyan territory. As such, Cairo has played an important role in organizing a meeting between Al-Sarraj and Haftar in an attempt to get them to reach a political agreement. In February 2017, they both visited Cairo for anticipated in-person talks stewarded by Mahmoud Hegazy, chief of staff of the Egyptian Armed Forces. However, upon arriving in Cairo, Haftar refused to meet with Al-Sarraj, forcing Hegazy to shuffle back and forth between the two men.

The critical challenge for Cairo proved to be in pushing Haftar to follow through on meeting with Al-Sarraj and engaging in good faith in a negotiation process. The Egyptian military has since 2014 provided support to Haftar, perceiving him as the only actor that has the ability to establish security on Egypt’s porous western border with Libya. Yet in Cairo, Haftar appeared willing to bargain that Cairo would maintain its support for his military campaign in Libya even if he failed to cooperate in negotiations. Indeed, this gamble proved to be right. Cairo continued to express support for Haftar while confronting extremist spillovers from Libya. It even called on the United Nations to exempt the Libyan National Army from the UN arms embargo on Libya in order to facilitate the legal supply of weapons to Haftar.

Nevertheless, the Cairo meetings did set the stage for peace talks held later in the year in Abu Dhabi and Paris. While no formal agreement was signed between Al-Sarraj and Haftar, the two reportedly agreed on a number of amendments that would need to be made to the LPA as part of an eventual political agreement.

Algeria and Tunisia
Algeria and Tunisia, while both participating in tripartite talks with Egypt, assumed more removed roles in their individual efforts to mediate a solution. Diplomatic efforts by Algiers sought to balance Cairo’s influence in Libya. Algiers is nervous that a more forceful intervention by Cairo in the conflict on the side of Haftar could worsen existing security challenges on its border with Libya. Tunis is also primarily concerned with threats emanating from its shared border with Libya—militants from Libya have crossed into Tunisia and perpetrated attacks against security forces—and the impact of these threats has largely been on Tunisia’s fragile political system and its struggling economy.

United Arab Emirates
Following the Cairo meeting in early 2017, the UAE emerged as a major player in negotiation efforts. The UAE’s involvement in the Libyan conflict was not new. Along with Cairo, Abu Dhabi provided material support to Haftar and his military campaign in Libya beginning in 2014, although simultaneously it rhetorically endorsed the UN-led process. In May 2017, Abu Dhabi elevated its role as a key player by hosting Al-Sarraj and Haftar for their first in-person meeting since early 2016. The meeting was hailed as a breakthrough: while no official statement was made by either party, the meeting appeared to bring Al-Sarraj and Haftar closer together on key amendments to the LPA and the possibility of holding elections in 2018.

In reality, the meeting demonstrated an effort by Haftar to force a conditional surrender on Al-Sarraj and boost his own standing in the international arena. Afterwards, deadly clashes in Libya between pro-GNA forces and Haftar’s Libyan National Army made clear the cavernous divide between such meetings at the international level and movements on the ground in Libya, as well as Al-Sarraj’s weak standing in Libya.

Ultimately, regional mediation efforts in Libya have done little to further the legitimacy of the UN negotiation process. In some cases, they actually eroded the UN process. Regional leaders such as Cairo and Abu Dhabi lent rhetorical support to UNSMIL and the LPA while simultaneously hosting separate negotiation tracks that emboldened, rather than tempered, Haftar and his ambitions. The regional pattern of mediation that emerged was one of lip service to the official UN process amid pursuit of narrow national interests. The pattern would also play out at the international level.

Window for Paris
The most significant development in the mediation process came in July 2017 when French President Emmanuel Macron hosted Al-Sarraj and Haftar in Paris for direct talks. Nothing new was accomplished at the talks.

Al-Sarraj and Haftar both formally agreed to a joint declaration that emphasized a political solution but which did not specify a clear political path out of the conflict. Rather, the negotiations appeared to first, garner Haftar further legitimization on the international stage, and second, boost France’s role with regards to international deliberations on Libya.

The meeting occurred at a critical time for Haftar, namely following his victory over whom he called “terrorists” in the eastern city of Benghazi after waging a three-year battle. The end of fighting in Benghazi was important for Haftar because from his perspective, the victory asserted the strength of his Libyan National Army and reinforced his image as Libya’s savior.

Moreover, Haftar now had the opportunity to turn his attention to his self-proclaimed mission to militarily take control of Libya from the scourge of extremists and institute stability.

Haftar, therefore, was in a strong position when he attended the Paris summit. His confidence in this fact was clearly demonstrated afterwards, when he immediately snubbed Al-Sarraj as weak and alleged that members of the PC were connected to terrorist organizations. Moreover, the widespread Western media attention that Haftar received during and after the summit was a clear indicator of his success in gaining considerable standing as a legitimate player in the Libyan conflict and in emerging from the talks as a winner. Some praised Haftar for expressing the willingness to participate in future elections in Libya and to engage in a peaceful political process, but his past behavior suggests that such rhetoric was a hollow panacea to a plan he had no intention to follow.

France’s motivations for hosting the meeting cannot be overlooked. For years, France has sought to safeguard its interests in Libya, particularly its influence in the south. Paris has therefore not hesitated to lend support to various sides of the Libyan conflict and appears to have laid its bets on Haftar. The July summit in effect elevated Paris as the key European player in Libya and sidestepped Rome, which historically has been the major European actor in Libya and was not notified about the summit prior to its occurrence. Italy has since 2014 made some efforts to jumpstart negotiations in Libya by hosting more specific, ad hoc meetings of tribal elders and local municipal authorities to create a more locally based network to better support the UN-led negotiations. However, the migration crisis that has pulled Rome’s attention toward the immediate impact of Libyan instability on its own shores created a window for Paris.

“Too many cooks spoil the broth”
The plethora of mediation efforts led by various regional and international actors has overall hindered legitimate progress toward a negotiated solution for Libya. On the face of it, Libya’s neighbors and international stakeholders rhetorically support the UN process and the LPA (although there exists a general consensus that the LPA must be amended). Yet these actors have simultaneously pursued their own interests in Libya and to varying degrees hijacked the negotiation process. The UN Support Mission to Libya has candidly acknowledged the threat that these multiple-negotiation tracks pose to the UN process in Libya. As Special Envoy and current head of UNSMIL, Ghassan Salamé of Lebanon, said in September 2017 following Paris’s efforts, “Too many cooks spoil the broth.” The UN mission cannot credibly work with Libyans to find a solution to the conflict while its nominal supporters engage in actions that ultimately undercut its efforts. Indeed, Macron and others purport to support UNSMIL but their maneuvers weaken UN authority. It also strengthens Haftar’s position, as Cairo, Abu Dhabi, and Paris appear to have aligned themselves with the strongman. This is probably why the UN has not been able to seize ownership over the process or change the current course.

Upon taking up his post in mid-2017, Salamé made clear that he would work to bring international and regional stakeholders in Libya under the authority of the UN umbrella. He warned of ad hoc mediation initiatives that muddy the waters. To that end, Salamé held a number of meetings with Western and regional foreign ministers, as well as local Libya stakeholders, throughout the summer of 2017. These efforts culminated in the announcement of a new UN Action Plan for Libya at the United Nations General Assembly in September.

The UN plan aims to establish a clearly sequenced transition process to resolve Libya’s political crisis and build the confidence of Libyans in governing institutions. The first stage of the plan involves convening Libya’s key political actors—one delegation from the HoR and one from the High State Council—to amend the LPA. The amendments will most probably consist of reducing the number of members of the PC from nine to three, abolishing controversial Article 8 (which stipulates that the military will be under civilian oversight by the PC), and a few other minor changes.

The second stage envisions a highly inclusive National Conference sponsored by the UN Secretary General, which will provide an opportunity for marginalized groups or those that have been reluctant to join the political process to participate in the transition. The National Conference will also bring together key bodies already engaged in the political process, including the HoR and the High State Council. Following the conference, the HoR and the Constitutional Drafting Assembly (CDA) will work together to review and refine—based on recommendations from the conference—a draft constitution issued by the CDA in July 2017 that has come under some criticism because it was not inclusive enough and did not address the issue of decentralization. In parallel, the High National Elections Committee will prepare for an upcoming constitutional referendum and legislative and presidential elections, and dialogues will be organized with armed groups in order to reintegrate them into the political process and civil life. A key component of this effort will be a focus on national reconciliation, which is sorely needed in Libya. These steps will all pave the way for the constitutional referendum and national elections, which will complete the UN’s vision for a successful transition.

Salamé’s plan, while ambitious, lays out a useful, step-by-step process for a resolution to Libya’s political crisis. Yet several major challenges remain that could derail these efforts. First, Salamé’s plan could threaten the interests of both Al-Sarraj and Haftar. Under the plan, Al-Sarraj would lose his authority as head of the PC/GNA sooner if immediate amendments are made to the LPA than he would if such amendments were pushed further down and elections took place first. Haftar would also appear to prefer that elections occur sooner rather than later; he may seek to boost his legitimacy by participating in elections. However, reforms to the LPA and the establishment of a new constitution would likely place unwelcome restrictions on his authority.

Finally, it remains unclear whether Salamé has succeeded in bringing regional and international parties engaged in Libya under the UN umbrella. If actors such as Egypt, the UAE, or France perceive a Libya under Haftar’s control as the scenario that best fits their interests, Salamé may face severely limited prospects for success. He will likely face an uphill battle in keeping the new UN transition plan on track and ensuring that both Libyan and international stakeholders engage in the process in good faith.

While Salamé is attempting to reassert UN leadership over the process, these efforts will be unsuccessful if they cannot garner confidence among Libya’s rivals and neutralize spoilers and external players.

Indeed, even as Salamé attempts to build a consensus for his transition plan, Haftar continues to pursue his own interests away from the negotiation table. Just weeks after the announcement of the new UN action plan, while Salamé was convening delegations from the HoR and High State Council to jumpstart negotiations, Haftar continued his tour of Europe by meeting with the Italian Ministers of Defense and Interior, Roberta Pinotti and Marco Minniti, respectively. Through his strategy of garnering international recognition as a key player in Libya, Haftar is ensuring that he will be a thorn in the side of any UN plan the strongman views as damaging to his interests. Meanwhile, amid flares of intense fighting among GNA and Libyan National Army-aligned groups in key cities such as Sabratha in October 2017, Haftar could easily find casus belli to denounce the negotiation process and take decisive military action against the GNA. This fact demonstrates what has been a key challenge for negotiations since 2014: Libya’s actors will not sit back as negotiations take place. Mediation, rather, provides a useful cover for spoilers to expand their authority while superficially supporting efforts aimed at peace.

Karim Mezran is a senior fellow at the Atlantic Council’s Rafik Hariri Center for the Middle East. He is also an adjunct professor of Middle East studies at the Johns Hopkins School of Advanced International Studies (SAIS). Previously, he was director of the Center for American Studies in Rome. His recent publications include “Libya: Negotiations for Transition” in Arab Spring: Negotiating in the Shadow of the Intifadat; “Libya” in Political and Constitutional Transitions in North Africa: Actors and Factors; and “Libya in Transition: from Jamahiriya to Jumhuriyyah?” in The New Middle East: Protest and Revolution in the Arab World. On Twitter: @mezrank.

Elissa Miller is a nonresident fellow with the Atlantic Council’s Rafik Hariri Center for the Middle East. She previously served as an assistant director in the Hariri Center (2015–17). Prior to that, she served as a project assistant at the National Democratic Institute for International Affairs. On Twitter: @elissafmiller.

Energy Is America’s New Power

Windfall: How the New Energy Abundance Upends Global Politics and Strengthens America’s Power. By Meghan L. O’Sullivan. Simon & Schuster, New York, 2017. 496 pp.

When the Donald Trump administration released its National Security Strategy in December 2017, it celebrated the arrival of the United States as an energy-dominant world power. The production and export of U.S. oil and natural gas were a departure from previous decades, in which fears over scarcity and import dependency drove much of the country’s involvement in turbulent regions, most notably the Middle East. The new energy abundance, by contrast, puts the United States in an enviable geopolitical position. The report, which outlines America’s security concerns to Congress, explicitly states: “As a growing supplier of energy resources, technologies, and services around the world, the United States will help our allies and partners become more resilient against those that use energy to coerce.”

The prevalence of energy in a security strategy would not come as a surprise to Meghan O’Sullivan, former Deputy National Security Advisor to President George W. Bush for Iraq and Afghanistan, whose new book Windfall: How the New Energy Abundance Upends Global Politics and Strengthens America’s Power charts how U.S. oil and gas production has and will continue to recast geopolitics in the years to come. At a time when U.S. influence seems to be eroding abroad, accelerated by a mix of long- and short-term factors including the current U.S. President’s approach to diplomacy, energy remains a space where the country still maintains significant advantages. As O’Sullivan describes, U.S. energy abundance provides a range of opportunities, if Washington is smart enough to seize them.

The story of how that abundance came about is an all-American one. It arose out of the exploration and production of what is called tight oil—oil that is buried under shale rock formations that, for decades, had been technologically and economically hard for companies to extract. The 1973 Arab oil embargo, imposed by the Organization of the Petroleum Exporting Countries (OPEC) to punish countries supporting Israel during and after the Yom Kippur War, galvanized efforts by its victims to explore alternatives to Middle Eastern imports. A beneficial investment environment, aided by technological improvements and generous provision of royalties to private property owners, provided the perfect storm for the tight oil renaissance in the early 2010s.

The effects of that confluence of factors shook the energy world. Breaking the Arab monopoly on oil led to the rise of the United States as an oil and natural gas exporter, which not only had numerous benefits for the United States, but also contributed to greater energy security for the rest of the world. It has given the United States the power to compete with foreign countries using energy to coerce its allies and partners—a point that in the National Security Strategy is directed at Russia, which has, in the past, cut off natural gas supplies to Eastern European states for political reasons. O’Sullivan cautions the administration though, stating that the low oil price environment will not completely erase Russia’s desire to projects its power over its near-abroad (Ukraine and the Baltic States) or the Middle East. Greater energy abundance, however, does give the United States an important economic tool to push back against coercion by rival powers.

For OPEC members, the new abundance represents a challenge, as consistently high U.S. production levels have, along with other factors, kept crude oil prices at persistent lows. While many Middle Eastern producers have large surpluses to ride out the storm, many others in the cartel do not. For every Saudi Arabia who can rely on drawing down funds for government revenue from a sovereign wealth fund, there is a Nigeria who is facing risks to regime survival. As O’Sullivan notes, resource curses take their toll when states who rode a wave of rents from natural resources find the money flow cut off.

Venezuela is one prominent example. It was already hard to manage with oil prices high. When they dropped, it pushed the country to the brink of collapse. In no other country have the dynamics of energy markets caused so much direct political and economic strife.

Even for an energy power like Saudi Arabia, this is a challenging time. O’Sullivan’s book went to press before Crown Prince Mohammed Bin Salman’s crackdown on corruption, which included the arrest of dozens of the kingdom’s richest men. The move was widely interpreted as a consolidation of power as the crown prince embarks on an economic modernization program designed to diversify his country’s economy. The low oil price environment is a critical contributing factor to the need for this plan and Prince Mohammed seems to have concluded that the future prosperity of his country cannot rely on a price rebound alone.

For consumer states like China, the reverse is true. What had been a difficult geopolitical situation is now made comparatively calmer. In the mid-2000s, the hallmark of Chinese foreign policy was building strong relationships with countries like Sudan, who were pariahs to the rest of the international community but could reliably sell Beijing oil. With the new global energy abundance, however, China feels that it can purchase the oil it needs through a smoothly operating and well-supplied free market. Beijing seems particularly encouraged that the United States is invested in being an oil and natural gas exporter to China. O’Sullivan suggests that this could provide the foundation for further U.S.-China energy cooperation, with energy potentially bringing two geopolitical competitors closer together.

If Windfall has a weakness, it is something that is well beyond O’Sullivan’s control. The book was going to press as Trump’s administration was still in its early months. Consequently, it has missed the extent to which his “America First” campaign rhetoric has been translated into actual policy. In particular, its energy and climate change policies have only recently come into full focus. Thus, the book could not predict the full scale of Trump’s current hollowing out of the country’s diplomatic corps, or the extent to which his administration has undermined environmental protection regulation. The energy abundance O’Sullivan describes is ramping up at a time when the instruments the United States needs to fully exploit it are rapidly dwindling.

Thus, while O’Sullivan rightly calls for greater attention and activity by the United States on climate change, the administration has announced its intention to withdraw from the Paris Agreement, undermining a multilateral initiative that enjoys support worldwide. To date, it has not articulated how to re-engage with international climate change governance in a way that its allies and partners find credible. O’Sullivan sees an opportunity to tightly incorporate energy into the North American Free Trade Agreement (NAFTA), as Canada, Mexico, and the United States actively trade oil and gas. Trump’s trade rhetoric has threatened that integration, potentially capsizing NAFTA’s renegotiation. O’Sullivan’s vision of energy leadership embraces multilateralism, free trade, and cooperation with allies. To date, Trump’s approach to foreign policy has veered to the opposite direction.

Whether President Trump’s current policy trajectory is reversible will depend ultimately on whether the political complexion of Congress changes, and if he himself is ultimately reelected in 2020. In the meantime, he seems likely to continue to impose strategic and economic damage, not just in energy. The ability to harness America’s new energy abundance may ultimately have to await a commander-in-chief who sees more clearly an active international role for the United States in the same way that O’Sullivan does.

Neil Bhatiya is research associate for the Energy, Economics, and Security Program at the Center for a New American Security. On Twitter: @NeilBhatiya.

India’s Teflon Man

On November 8, 2016, Indian Prime Minister Narendra Modi delivered a sudden and shocking address about a new, high-risk policy—one that would dominate discussions in India for weeks. He told his nation that a radical new demonetization policy would be implemented to rein in the problem of black market money. “These steps are a part of our battle against corruption, black money, and counterfeit notes,” he declared. This entailed removing much of India’s cash from circulation—including the popular 500- and 1,000-rupee banknotes—and with immediate effect.

In the days that followed, Indians struggled to deal with the disappearance of cash in a country where only 4.4 percent of the population has access to credit or debit cards. About a week after demonetization came into effect, local media reported that nearly three dozen people had died. Several people lacked the money to pay for desperately needed medical care; others suffered heart attacks while waiting in long lines to withdraw increasingly precious cash; and a few committed suicide when they failed to secure the proper banknotes.

Unhappiness about the new policy propelled tens of thousands of protesters into the streets. Between April and June of 2017, the country’s Gross Domestic Product (GDP) growth fell to 5.7 percent—the lowest rate since the January–March quarter in 2014. Some economists attributed this plunge in part to demonetization.

And yet, Modi’s popularity has remained intact, despite confronting repeated major policy setbacks during his three-plus-year tenure as prime minister. For instance, a Pew poll released in November found that nearly nine out of ten Indians hold a favorable view of him. Also, in India Today’s latest State of the Nation poll, released in August, nearly two-thirds of the nation described him as “outstanding” or “good.” Modi’s feat is reminiscent of Ronald Reagan—a leader who weathered all types of challenges and crises, and with relatively little damage to his reputation. Observers coined a moniker for Reagan: The Teflon President. If you’re given the Teflon title, it means that like Teflon, the nonstick-coating, bad things don’t stick to you. Indeed, Modi is India’s Teflon man.

His new and effective leadership style and the current state of Indian politics have enabled him to weather policy challenges and enjoy the status of India’s most popular national political figure. Indeed, the Pew poll from November found that his favorability rating was thirty percentage points higher than his closest competitor, Rahul Gandhi of the Indian National Congress Party.

I’ve written previously for the Cairo Review about Modi’s sterling reputation abroad as a globetrotting diplomat who knows how to ink big deals and promote India’s political and economic interests.

At home, however, he’s struggling.

Demonetization is just the tip of the iceberg. Modi has largely failed to deliver on the economic reform plan that he pledged to undertake after his landslide victory in the 2014 national election. Even his one big-ticket economic reform success, a Goods and Services Tax, introduced in July 2017 to standardize value-added tax regimes, has ironically been cited as another reason for India’s current economic slump, thanks to the immediate shock it delivered to the economy. The prime minister has also fallen short on his promise of jobs. According to one estimate, India lost 1.5 million jobs over the first four months of 2017. Even back in 2015, members of a key Modi support base—the Patel clan—took to the streets demanding better jobs.

Meanwhile, communal tensions have been sharp, with periodic reports of lynching of people—mainly Muslims—alleged to be “beef-eaters” (Hindus do not consume beef). The government as it carries out its social agenda—one rooted in Hindu nationalist principles—has announced new policies that discriminate against Muslims and other religious minorities that include limitations on the sale of cattle for slaughter as an example. Additionally, in March, Modi appointed a hardline Hindu monk, Yogi Adityanath, as the new chief minister of Uttar Pradesh, India’s most populous state. Adityanath harbors virulently anti-Muslim views and, among other forms of hate speech, has called on Muslims that don’t like yoga to leave India or drown themselves. What has particularly upset government critics is that New Delhi has not only been slow to investigate violent incidents involving discrimination but also often fails to condemn them at all. This all may play well with Modi’s Hindu nationalist base, but not with many of India’s nearly 200 million Muslims nor with its human rights community and liberals more broadly. Indeed, protests broke out across the country last summer to bring attention to what protesters decried as government inaction in the face of rising mob violence.

Not surprisingly, amidst this highly charged climate, Hindus and Muslims have sparred violently. In one incident in July, one person died and dozens were injured in the state of West Bengal when armed Muslims went on a rampage after a student posted an offensive cartoon of the Prophet Mohammed on Facebook.

A People’s Man
Modi has weathered these challenges in part because of the new type of leadership he brings to India—leadership that’s earned him strong repositories of public support that can withstand inevitable shocks. His concern for efficiency, incorruptibility, and accountability—terms that are not commonly associated with Indian governments in the immediate past—helps explain why he has so endeared himself to the Indian public.

To many Indians, he represents a dramatic break from the country’s political past. In a nation with a political class riven with corruption, Modi is clean. He’s not the product of a political dynasty like the Gandhi family that runs the Indian National Congress, India’s chief opposition party. Much has been made of his highly efficient, high-energy, no-sleep work ethnic—and how he’s sought to have it rub off on his subordinates. His government has issued new rules that threaten punishment if civil servants don’t arrive at work on time. Additionally, just several months after taking office, Modi instituted a new system that uses fingerprinting technology to monitor government employee attendance.

Modi also acts boldly to promote accountability. In a possible acknowledgment of his government’s struggle to tackle economic challenges, he ordered a major shakeup of his cabinet in September 2017. He also hasn’t hesitated to crack the whip further down the hierarchy. For example, he fired 129 government workers last May for poor performance.

Consider as well the policy issues that Modi has elevated to prominence. He embraces issues bound to resonate among India’s general population the most—such as jobs. One of his government’s signature policies is “Make in India,” an effort to attract the world’s best companies to India to work with local companies in manufacturing—a sector that hasn’t achieved as much global success as India’s services sector. Make in India aims to strengthen local companies and thereby increase employment. Building one of his major policy initiatives around jobs certainly endears him to the masses, and especially an initiative that Modi has tirelessly championed at home and abroad and that boasts an omnipresent marketing campaign. Indeed, the main symbol of Make in India—a stalking lion comprised of cogs and wheels—is seen frequently around India, emblazoned on building walls and imprinted on billboards. This campaign extends abroad as well. In 2015, when Hanover, Germany, hosted the world’s biggest industrial fair, the city was seemingly taken over by the Make in India lion, with the image appearing on cars, trams, and in parks.

Another Modi policy priority that strikes a deep chord with the masses is anticorruption. Corruption has long generated national disgust in India; the previous government became engulfed in graft scandals that sparked mass protests in 2011. Demonetization is at its core an anticorruption measure. This helps explain why, despite the economic slump and protests it has sparked, demonetization is actually a popular policy. Just days after implementation, an Indian poll found that 75 percent of respondents supported it.

Modi’s ability to resonate with the masses can also be seen in how he engages with the Indian public. He addresses the Indian people in a strikingly personal way. Several weeks after demonetization was implemented, Modi made a speech that some observers credited for preventing the premier from suffering a drop in public opinion. In the speech, Modi acknowledged the hardships brought on by demonetization and became emotional when explaining that the “mission” of the policy had obliged him to sacrifice his family life.

The prime minister also turns to social media to interact directly with the public. Modi, along with his Bharatiya Janata Party (BJP), embraced this medium with gusto on the campaign trail—a tactic that helped him carry the youth vote, a critical constituency in a nation where half the population is below 25 and nearly two-thirds are 35 or under. Modi’s foreign minister Sushma Swaraj even responds to pleas for help on Twitter from Indian nationals experiencing trouble abroad. These strategies further endear Indians to Modi and his government.

No Real Contenders on India’s Political Hill
It’s not just Modi’s leadership style that helps him through the tough times. His popularity is also bolstered by favorable political headwinds. The bottom-line reality about Indian politics is that the ruling BJP faces little major competition on the political stage. The Indian National Congress Party, which ran the previous government and was a longtime pillar of power in Indian politics, has fallen on very hard times since suffering a shellacking in the 2014 election. To be sure, it has scored some successes in recent years—including galvanizing opposition to an ultimately failed Modi initiative to facilitate the ability of Indian businesses to acquire land. In reality, the Congress Party, a long-established and well-funded dynastic party, can never be counted out. But for now, it is a shadow of its former self and has struggled in state elections over the past three years, with victories in only two state polls over the last two years.

The Congress Party’s deep unpopularity is rooted in corruption scandals and in the perception that it represents little more than an old, fossilized party out of step with present-day India. Additionally, in December, Congress chief Sonia Gandhi transferred party leadership duties to her son Rahul. Many Indians regard him as an awkward figurehead—the very antithesis of Modi.

The other main BJP competitor is the Aam Aadmi Party (AAP), which rose to prominence on a strident anticorruption platform during the height of the antigraft protests in 2011. However, the AAP has struggled to acquire national clout. It is effectively a local party in New Delhi, where it runs the city government. Its leader, Arvind Kejriwal, has inspired Indians with his populism and anti-status quo message. However, his impact—like the party he leads—is local, and not national.

Modi and the BJP are the undisputed kings of India’s political hill. The BJP has triumphed in most state elections over the last two years. This includes the biggest prize of all: a resounding victory in Uttar Pradesh in May 2017. One of the only electoral setbacks for Modi has been his party’s loss in Bihar, one of India’s most populous and poorest states, in 2015—a defeat that can be chalked up to, among other things, a poorly run campaign that failed to appeal to Bihar’s large and poor agricultural class.

Tellingly, just a few months after the Bihar electoral loss, Modi unveiled a new national budget with new investments in agriculture and relief measures for India’s poor and debt-ridden small farmers. The agricultural poor are a key constituency of the Congress Party, and Modi was likely intent on enhancing his party’s efforts to win them over. In fact, he’s been quite successful. Since getting beaten in Bihar in late 2015, the BJP has won seven state elections—Assam, Goa, Gujarat, Himachal Pradesh, Manipur, Uttarakhand, and Uttar Pradesh. These triumphs are in part a validation of Modi’s popularity, given that Modi himself was heavily involved in campaigning in several of these elections—and especially in Gujarat, his home state.

With the BJP having won six out of the seven state elections in 2017 (the only loss was in the state of Punjab), the party’s confidence is high looking ahead to the eight state polls scheduled for 2018. So long as his popularity remains intact, the party is likely to continue its strategy of using Modi as an active campaigner. The risk, of course, is that should his soaring reputation suffer a blow, his personal involvement in state election campaigns could backfire for the party’s electoral prospects.

Despite being a Teflon man, Modi is still vulnerable. He faces many detractors, including Muslims victimized by discriminatory policies, secular liberals who oppose those policies on principle, middle-class urbanites who can’t get jobs, and residents of the volatile Kashmir region who resent Modi’s heavy-handed security policies. In fact, the detractors could increase in number if signature projects like demonetization continue to sputter and if Make in India fails to take off.

And yet, for now, Modi’s new brand of leadership, and the popular goodwill engendered by it, shield him from large-scale public opposition. This doesn’t entail outright immunity, but rather a form of insulation. Whereas many other leaders would become beleaguered, Modi has remained strong—and, barring any unforeseen circumstances, perfectly positioned to overwhelm his opponents in the 2019 national election.

Michael Kugelman is the deputy director of the Asia Program and senior associate for South Asia at the Woodrow Wilson International Center for Scholars. He is a regular contributor to Foreign Policy, Foreign Affairs, and the National Interest, and has also written for the New York Times. On Twitter: @MichaelKugelman.

Winter 2018

As armed conflicts, diplomatic crises, and geopolitical rivalries dominate much of the coverage on the Middle East, it is easy to lose sight of the broader long-term trends shaping the region. Among the factors driving these changes is the region’s shifting energy landscape. Once considered the world’s predominant energy producer, the Middle East is slowly losing that special status. It must now contend with the shale revolution in North America, which has propelled the United States to become a top global producer of oil and natural gas. After years of dependence on hydrocarbons as a source of revenue, the Arab World’s oil and gas producers are tapping into the promise of renewable energy. And in an era where the Middle East no longer holds the same dominant position in global energy markets, much of the region is exploring post-oil futures as regional energy consumption patterns continue to rise.
Our Special Report: Middle East Energy Futures explores the complex political, geopolitical, institutional, and economic implications brought about by these developments. In our lead essay “The New Age of Renewable Energy,” Jeffrey Ball examines whether the region can put in place the institutional and policy frameworks necessary to transform the nascent market in renewables into a full-blown energy revolution. Bruno Maçães in his essay, “Russia’s New Energy Gamble,” sheds light on how the Middle East figures in Russia’s strategy to position itself as the dominant energy producer in Eurasia.
Ellen R. Wald’s essay “Kirkuk’s Oil Chessboard” presents an insightful analysis on how one of Iraq’s most important oil-producing regions is becoming increasingly enmeshed in the Middle East’s burgeoning conflicts. In “A New Kingdom of Saud?” Adel Abdel Ghafar reflects on the implications of Saudi Arabia’s transformation as it pursues the “Vision 2030” plan unveiled by Crown Prince Mohammed Bin Salman. Dianne Sutherland surveys Egypt’s growing energy potential resulting from recent natural gas discoveries in the eastern Mediterranean in an incisive industry report titled “Egypt Re-Energized.”
And continuing our coverage of the region’s evolving conflicts, we are proud to feature essays by Karim Mezran and Elissa Miller on the ongoing diplomatic processes addressing the Libyan crisis, and by Seyed Hossein Mousavian analyzing the regional implications of the growing rivalry between Saudi Arabia and Iran. The Cairo Review Interview is with former Egyptian Foreign Minister and secretary-general of the Arab League Amre Moussa, who offers his perspective on regional security and Egyptian politics.
Finally, Joseph Fahim presents his assessment on the state of Egyptian cinema, and Michael Kugelman provides an analysis of the domestic challenges facing India’s Prime Minister Narendra Modi as he seeks to push through an ambitious reform agenda.

The Iranian-Israeli Confrontation in Western Syria

In their latest meeting on November 11, U.S. President Donald Trump and Russian President Vladimir Putin affirmed joint implementation of an early July ceasefire plan to establish a “de-escalation zone” in southwestern Syria. More precisely, the zone, meant to reduce fighting in southwestern Syria, covers Daraa province bordering Jordan and Quneitra province bordering the Israeli-occupied Golan Heights.

While the arrangement has helped stabilize Syria and reduce the scale of violence between conflicting factions, it has sounded alarm bells in neighboring Israel.

Israeli leaders are concerned that the scheme will afford Iran, its regional arch foe, an unprecedented opportunity to carve out a foothold in Israel’s backyard in the wider Golan region.

Indeed, the Islamic Republic has, ever since its establishment in 1979, confronted Israel by proxy only, that is, through Lebanese Hezbollah and Palestinian groups such as Hamas and Islamic Jihad. Now Iran has found itself, for the first time over the past four decades, only a few kilometers from Israeli territory.

Once consolidated, such a position would be decisive for possible conflicts in the future between Israel and Iran or its allies. As Israeli Intelligence Minister Yisrael Katz indicated during a security conference in Tel Aviv on September 11, in the event of military confrontation, Iran will be able to deploy “tens of thousands of Shia militiamen … from various countries” on Israel’s northeastern borders.

To prevent this from happening, Israel has adopted a multi-pronged strategy that consists of efforts to target Iranian Revolutionary Guards and allied militias at the Quneitra and Golan regions, and to intercept the transfer of advanced weaponry to Hezbollah, including midrange missiles. The Israeli strategy to counter Iran has been pursued systematically since the tide of war turned in favor of the Bashar Al-Assad regime following the recapture of Aleppo in late December 2016, though it has been in place for a longer time.

One of the most significant and provocative developments along these lines took place on January 18, 2015, when Israeli jets struck a convoy in Mazraat Amal in the Quneitra region. The airstrike killed six Hezbollah and Iranian Revolutionary Guards members.

Less than two weeks later, on January 30, Hezbollah retaliated by launching an ambush rocket attack against an Israeli convoy near the border with Lebanon that left two soldiers dead.

In September 2017, Israeli jets allegedly targeted a military facility near the northwestern town of Masyaf in Syria’s Hama province, where the Syrian government was thought to be producing chemical weapons and storing surface-to-surface missiles. The attack, carried out shortly after the initial U.S.–Russian agreement on the creation of “de-escalation zones” in Syria, was intended to send a signal of dissatisfaction to both Washington and Moscow.

Notably, in late August, the chief of Mossad Yossi Cohen had paid an official visit to the White House to inform the Trump administration of Israel’s objections to the scheme. Almost simultaneously, Israeli Prime Minister Benjamin Netanyahu met with Putin in Sochi to raise concerns about the possibility of Iranian military consolidation in southwestern Syria.

Moscow supports the de-escalation scheme basically because it wants to end the conflict on its own terms, which will confer on Russia the status as a superpower to reckon with and—unprecedented in its history—as a global peace-broker.

For the Trump administration, on the other hand, the top priority is defeating the Islamic State and helping Kurds carve out their own foothold in the northeast as a sort of American surrogate that will protect U.S. interests in Syria. While Iran’s actions in Syria are of great importance to the United States, they do not seem to be understood in Washington as threatening vital U.S. interests. This is, of course, not the case for Israel.

Sources close to Syrian opposition groups have repeatedly warned about the presence of Iranian forces and Shia militia groups in the Quneitra region.

Hezbollah Al-Nujaba, an Iran-backed Iraqi paramilitary outfit, is one of these groups that has gone so far as to form a “Golan Liberation” unit within its ranks and declared its readiness to “liberate the Golan” from Israeli occupation. The first public announcement of this came in March 2017, that is, shortly after the recapture of Aleppo, which relieved Iran-backed militia forces stationed in northwestern Syria of a formidable battlefield challenge and thus enabled them to concentrate their manpower and firepower alike on the southwestern and eastern fronts.

Iran-orchestrated moves in western Syria are not limited to militia mobilization. Western intelligence sources have claimed that Iranian forces have been trying to establish a permanent military base near Damascus. Satellite images have spotted construction activity at a site outside Al-Kiswah south of Damascus, formerly used by the Syrian Arab Army. Notably, Israeli missiles hit the Al-Kiswah compound on December 2, reportedly leaving a number of Iranian soldiers at the site dead and wounded.

Apart from relying on its air force, Israel is also working with Syrian rebel groups—like Fursan Al-Joulan or Golan Brigade—to create a “buffer” against Iran-backed militias in the Quneitra province. The cooperation mainly includes provision of medical services, financial assistance, and intelligence sharing. There are also reports about Israeli collaboration with such extremist groups as Ahrar Al-Sham and Hayat Tahrir Al-Sham (formerly Nusra Front) and even the Islamic State to push back against pro-Assad forces.

The fact is that Iranian military or paramilitary entrenchment in southwestern Syria will enable it to open a new front against Israel on its northeastern borders in the event of conflict. Coupled with established Hezbollah presence in southern Lebanon—which overlooks northern Israeli territory—this development can effectively change the balance of power between the two regional nemeses in favor of Iran.

Maysam Behravesh is a PhD Candidate in the Department of Political science and an Affiliated Researcher in the Center for Middle Eastern Studies (CMES), Lund University, Sweden. On Twitter: @behmash 

2030 Agenda: Prerequisites for Success in Africa

On September 25, 2015, the 193 member states of the United Nations unanimously adopted the 2030 Agenda which aims to eradicate poverty, fight inequality, and protect the environment, with the ultimate objective of “leaving no one behind.” However, as 2030 approaches, African countries continue to face a myriad of daunting challenges to implementing the global agenda’s seventeen Sustainable Development Goals (SDGs) and 169 targets, as well as the objectives of the 2063 Agenda, “The Africa We Want”—adopted by the African Union in 2013.

In this respect, these challenges and the approaches to tackling them in various country situations were at the heart of discussions at the Symposium on Governance for Implementing the Sustainable Development Commitments in Africa which took place in Addis Ababa, Ethiopia from December 11–13, 2017. Organized by the United Nations Department for Economic and Social Affairs (UNDESA), the United Nations Institute for Training and Research (UNITAR), the United Nations Development Programme (UNDP), the Organization de la Francophonie (OIF) and the United Nations Economic Commission for Africa (UNECA), the symposium was attended by top-level African governmental officials from ministries of Planning, Finance, Development and Poverty Eradication—the latter title being used in Namibia—in addition to representatives of African academic and training institutes.

First, the challenges were identified: lack of good governance, dwindling trust in civil service, limited capacity of the civil servants in many African countries, lack of awareness amongst the masses regarding the importance of the SDGs and their link to national development plans, and, most importantly, the lack of necessary funding. Expectedly, the challenge of lack of good governance was less emphasized by the representative government officials in attendance, who focused more on the positive achievements realized by their respective countries and highlighted the less tangible cultural and social challenges they face.

The discussions then revolved around ways of resolving these challenges. Several sessions were dedicated to finding the best ways possible to build the capacities of African civil servants. A task force headed by UNITAR and UNDESA was formed with the mandate of strategizing the urgent long-term actions needed for the development and capacity building of African civil servants on the implementation of SDGs, and mobilizing as well as encouraging training institutes around Africa to integrate the SDGs in their curricula. Amongst the concerns raised on the issue of civil servant training is that often after receiving the necessary training they are not sufficiently empowered to implement the needed changes in their workplaces. Other times, although they are given the necessary technical skills, there is a deep culture of “resistance to change,” which is difficult to overcome.

Successful implementation of the SDGs necessitates many prerequisites. Business as usual is not an option. According to an Overseas Development Administration (ODA) report in 2015, if we are to succeed in implementing the SDGs worldwide there need to be major changes in the way countries operate and allocate resources. If current trends continue, according to the ODA speculations in 2015, none of the goals and targets will be met. In a subsequent report by ODA in 2017, they also pointed out the need for countries to work on resolving the needed tradeoffs between the implementation of the different goals; for example, economic growth and income inequality cannot be expected to improve simultaneously; there needs to be a tradeoff. Governments will need support in resolving these key tradeoffs through access to analytical and computational tools.

Funding is key. Relying solely on ODA to enable African nations to effectively implement the SDGs is not sufficient. According to the World Bank representative there is a dire need to mobilize national public resources, and both international and local private resources, and induce them to contribute to development objectives. Research into areas where the private sector can contribute and realize profits has been conducted. One of the arguments made is that unless the private sector contributes positively to development, there may come a time when it will be unable to operate because of the lack of a viable environment.

Developing the needed institutions for implementation is also key. It is not enough to have the structures in place, but more importantly to have these structures functional. For example, establishing a ministry of education with a dismal quality of education or where educational services are not available is pointless. So is having an existing parliament that does not practice its role in holding the government accountable. This is the case sometimes with many of our so-called African institutions.

Africa is rich in its resources, but a lot still needs to be accomplished to improve the quality of life for the African citizen. Conducting a debate about the challenges to sustainable development is one step in the right direction. Let us try to be optimistic.

Laila El Baradei is associate dean for graduate studies and research for the School of Global Affairs and Public Policy and professor of public administration in the Department of Public Policy and Administration at the American University in Cairo. On Twitter: @Egyptianwoman.