Gulf States Newsletter

PEOPLE, POLITICS & RESOURCES IN THE GULF REGION

www.gsn-online.com Volume 37 • Issue 959 • 28 November 2013 and P5+1 sign breakthrough nuclear deal

After days of intense negotiations, Iran and the six world powers signed a historic interim agreement aimed at resolving the Iranian nuclear crisis. But the deal with Shiite Iran will cause alarm in the Arab Gulf states, especially in , which has felt excluded from a process it fears could destabilise the region

n the darkest hours of Sunday, 24 November, after four days For the Arab Gulf states, the historic agreement was not a of intense negotiations, the announcement finally came. “We moment for joy. Saudi Arabia, in particular, will have watched the Ihave reached an agreement,” Iranian foreign minister dénouement of months of diplomatic activity with some Mohammad Javad Zarif posted on Twitter at 2:03am, and other trepidation – not only about the rising power of its enemy Iran, foreign ministers, emerging from the conference room in a but also about its own waning influence. feels very Geneva hotel where the deal was signed, confirmed. “Now the ignored, and fears being abandoned by long-time ally really hard part begins,” US secretary of state John Kerry told Washington, whose priorities have diverged. reporters. “We know this.” On an official level, the six states of the Gulf Co-operation The interim agreement between Iran and the world powers of Council (GCC) welcomed the deal. , Kuwait, and the P5+1 (China, France, Germany, Russia, the United Kingdom the UAE all put out statements via their official news agencies on and the United States, shepherded by European Union foreign the day it was signed; all used the word “welcomed”, and policy chief Catherine Ashton) is intended to last six months, described the agreement as a step towards safeguarding stability while the two sides seek a more permanent solution to the issue in the region. Saudi Arabia and Oman put out statements a day of Iran’s nuclear programme. In brief, the deal outlines around later. Saudi Arabia’s, buried in a news release about Crown $7bn worth of sanctions relief for Iran, in return for curbs on Prince Salman chairing a cabinet session at the Al-Yamamah nuclear activities ( see box, page 3 ). While there are many potential Palace, said the government had “viewed carefully” the spoilers in the weeks and months ahead, there is a realistic hope of agreement, and saw it as a “primary step towards a comprehensive a lasting compromise now that both sides have proven themselves able to move beyond posturing, and to negotiate hard. CONTINUED ON PAGE 3

Chinese plans Al-Awda Jordan set to take Saudi seat at UNSC China wants to inject more Islamist cleric Salman Al-Awda Saudi Arabia’s ally Jordan looks It may have taken a stand against energy into its relationship was known in the 1990s for his increasingly likely to take the seat the UNSC but, on 12 November, with the states of the GCC, radicalism, and spent several on the United Nations Security Saudi Arabia happily took up a Council (UNSC) that Riyadh and to mend the political rift years in jail. Since his release, place on the UN Human Rights dramatically rejected ( GSN with Saudi Arabia caused by he has taken a more moderate Council, standing unopposed after 957/6 ). On 18 November, the Jordan – in what looked like a Syria. With help from line, but in the aftermath of the Jordanian foreign ministry said it Bahrain’s King Hamad, Beijing and the overthrow swap – pulled out of that race. had presented an “official Elected alongside Saudi Arabia in is seeking to arrange the of Mohammed Morsi, his request” to UN chief Ban Ki-moon the Asia Pacific zone were China, first China-GCC Strategic criticism of the government and, on 21 November, the UN said Vietnam and the Maldives. Dialogue in two years, and to has picked up pace. Amassing the General Assembly would vote further develop business and huge followings on social on 6 December on whether to Human rights groups were quick energy exchange. China is media, and through his books, accept it. No other country has to condemn Saudi Arabia’s already Saudi Arabia’s largest TV appearances and other said it will stand. admittance to the council, on trading partner; the two media, Al-Awda has called for Jordan has twice been a non- which it previously served in nations also share a number of reform, praising the revolts permanent member of the UNSC, 2006-09 and 2009-12. The UAE strategic interests, and a world elsewhere in the region and in 1965-6 and 1982-3. Saudi is also on the council, having view divergent from the West’s warning of growing anger on Arabia, which has called for been elected in November 2012 democratic consensus. the Saudi street. comprehensive reform of the (GSN 936/5 ). Qatar’s term ends in council, has never been elected. 2013. —S EE PAGE 4 —S EE PAGE 8

ISSN 0953-5411 Cross-border Information Contents

POLITICS IRAN: Breakthrough nuclear deal 1 SAUDI ARABIA: Jordan set to take Riyadh’s seat on UNSC 1 GCC: China’s leaders look to consolidate connection 4 G S N SAUDI ARABIA/BAHRAIN: FAC report details 6 Gulf St ates Newsletter SAUDI ARABIA: Defence co-operation defines UK relations 7 SAUDI ARABIA: The return of Al-Awda? 8 Gulf States Newsletter Volume 37 • Issue 959 • 28 November 2013 SAUDI ARABIA: Salman Al-Awda’s open letter 9 GCC: UK visa waiver for four states 10 Sales and Service GCC: Tourists spend big in UK 10 Direct: +44 (0) 1424 721 667 BAHRAIN: Frustration grows on all sides 11 Fax: +44 (0) 1424 721 721 NEWS IN BRIEF: Kuwait, Iraq, UAE 11 Email: [email protected] Director Nick Carn ROYALS WATCH [email protected] OMAN: Role in Iran, decrees 12 Editor QATAR: Emir Sheikh Tamim, Amna Bint Abdelaziz 12 Fiona O’Brien ( fi[email protected] ) SAUDI ARABIA: Alwaleed Bin Talal, Mohammed Bin Nawaf 12 News editor Eleanor Gillespie ( [email protected] ) DEFENCE AND SECURITY Contributors YEMEN: Security vacuum expands 13 Gazwan Aldafai, Melle Lyklema, Abdulla AlMannai Cartographer ENERGY AND INDUSTRY David Burles OMAN: PDO corruption trial adjourned 13 Production Shirley Giles FINANCE Editorial director Jon Marks ( [email protected] ) UAE: Airlines break spending records 14 Publications director QATAR: Airline to launch Saudi service 14 Nick Carn ( [email protected] ) DIARY EVENTS: What’s on around the region 15

RISK MANAGEMENT REPORT Gulf States Newsletter Published fortnightly since 1974 QATAR: A ò1 – World Cup controversy continues 16 PO Box 124, Hastings, East Sussex TN34 1WP, UK SAUDI ARABIA: C2 – Riyadh feeling sidelined 17 Tel: +44 (0) 1424 721 667 Fax: +44 (0) 1424 721 721 GSN VIEW Email: [email protected] UAE: UK’s PM back on charm offensive 18 Cross-border Information Registered office: 19 Wellington Square, Hastings, East Sussex TN34 1PB, United Kingdom Directors: JJ Marks, JM Ford, NJ Carn, JD Hamilton, E Gillespie

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2 GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 Politics

Iran and P5 +1 sign breakthrough deal The agreement CONTINUED FROM PAGE 1 After four days of intense negotiations, Iran and the P5+1 – China, France, Germany, Russia, the United Kingdom and the United States solution to the Iran nuclear programme”, and towards (also known as the E3+3) – arrived at an interim agreement on 24 guaranteeing the right for all countries in the region to November aimed at limiting Iran’s nuclear programme. peacefully use nuclear energy. The deal will last six months. During that time, presuming both sides The animosity between Iran and Saudi Arabia is not only follow through on their promises, negotiations will continue to find a entrenched, it is the undercurrent that shapes most of today’s long-term, comprehensive solution. In brief, Iran agreed to limit its regional conflicts. Riyadh’s visceral mistrust of Tehran prompted nuclear programme and increase transparency, while in return, the an outpouring of alarm on social media, and in Saudi editorials. P5+1 said it would provide limited, targeted sanctions relief. The daily Okaz newspaper, under a headline that read ‘The According to the US Department of State, the details of the deal are: Catastrophe’, said “The future is black. We, Arabs, stand looking Iran has committed to: on but resigned… We fight.” Newspaper cartoons ridiculed the US for being outplayed by wily Iran. • Halt all enrichment above 5%; Saudis fear an unleashed Tehran will wreak havoc throughout • Neutralise its stockpile of near 20% uranium; the wider Middle East, feeding extant conflicts and firing up • Halt progress on its enrichment capacity; those which burn beneath the surface, such as that in Saudi • Halt progress on the growth of its 3.5% stockpile; Arabia’s Shiite East. “I am not happy with such a treaty,” chairman of the foreign affairs committee in Saudi Arabia’s • No further advances of its activities at Arak, and to halt progress on Majlis Al-Shura, Abdullah Al-Askar, told GSN , saying he feared its plutonium track; and the potential for a nuclear race, should Iran be allowed to • Unprecedented transparency and intrusive monitoring of Iran’s develop its nuclear capacity. “I am afraid of having a tsunami nuclear programme. which will change the whole map of the region.” In return, the P5+1 will: Arguably more disappointing to the Saudis than the text of the • Not impose new nuclear-related sanctions for six months; agreement itself is the manner in which it was reached. Saudi Arabia has felt sidelined in recent months – as vividly • Suspend certain sanctions on gold and precious metals, Iran’s auto exemplified by its fit of pique at the United Nations in October sector and petrochemical exports, potentially providing Iran (GSN 957/6 ) – and the news that secret talks had been taking approximately $1.5bn in revenue; place between the US and Iran for months, mediated by Oman, • License safety-related repairs and inspections inside Iran for certain will have given rise to more bile ( see also Royals watch ). Iranian airlines; “The problem was not so much the deal that was struck in • Allow purchases of Iranian oil to remain at their currently significantly Geneva, it was the way it was done,” Nawaf Obaid, an adviser reduced levels (60% less than two years ago). Some $4.2bn from these to Saudi Arabia’s UK ambassador Prince Mohammed Bin sales will be allowed to be transferred in instalments if Iran fulfils its commitments; Nawaf and former ambassador to the US Prince Turki Al-Faisal, told an audience at the European Council for Foreign Relations • Allow $400m in governmental tuition assistance to be transferred in London on 25 November. “How we feel is that we weren’t from restricted Iranian funds directly to recognised educational part of the discussions at all, in some cases we were – I would institutions in third countries to defray the tuition costs of Iranian go so far as to say we were lied to, things were hidden from us.” students; and • Facilitate humanitarian transactions that are already allowed by US Omani mediation law. Not long after the agreement was signed, news seeped out – first via the Associated Press , and later confirmed by other news states has the most straightforward relationship with Iran. While agencies – that senior US officials had been holding face-to- some of the meetings are said to have been clandestine – in face talks with Iranian counterparts, with the help of Omani Muscat and elsewhere, using back doors and military planes – mediation, since March, in a series of secret meetings about Kerry himself visited Muscat in May ( GSN 947/5 ) and when which Washington did not brief even close allies, such as Israel. Sultan Qaboos Bin Said Al-Said visited Tehran in late August, These high-level meetings, which followed on from a lower- level initiative begun in 2011, drew impetus from the election GSN noted the widespread speculation that he was there as a of relatively moderate President Hassan Rouhani in Iran in June US go-between ( GSN 953/9 ). (GSN 949/1 ). According to Obaid, the Saudis had been aware for some time The suggestion of Omani mediation is hardly surprising; Oman that such talks were going on; some press reports suggest it may has a long history of working as a mediator, and of all the Gulf even have been Riyadh that alerted Israel to their existence, a

GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 3 Politics strange but not implausible scenario, given the bizarre alignment God and the prayers of the Iranian nation were a factor in this of their feelings towards Iran. The sting came from Washington’s success,” Khamenei wrote. unwillingness to share the information. Saudi Arabia has little In the United States, where President Barack Obama faces confidence in the White House at present, and does not believe much resistance, both from domestic lobbies and from key ally the Obama administration knows what it is doing. Coming on Israel, whose Prime Minister Benjamin Netanyahu described top of intense Saudi frustration at Washington’s non- intervention and its own inability to change the course of the the breakthrough as a “historic mistake”, the state department war in Syria, the rehabilitation of Iran will add to the growing has been trying to stress the precautionary nature of the deal, Saudi sense of isolation. and the reversibility of the sanctions relief Iran has been offered. “In total, the approximately $7bn in relief is a fraction of the “This is all happening at a time when the Saudis feel powerless costs that Iran will continue to incur during this first phase and vulnerable and when they need to feel love and support under the sanctions that will remain in place,” the state rather than feel betrayed,” associate fellow at Chatham House department said. “Nothing is agreed to with respect to a Nadim Shehadi said. “They need to have confidence in comprehensive solution until everything is agreed to… If Iran American protection and so do the other GCC countries. This cannot address our concerns, we are prepared to increase is crucial for their security, which depends on their alliance with sanctions and pressure.” the US.” Such pronouncements are more of a measure of domestic What next? political temperatures than of the potential for a permanent In Iran – where 25 November marked 100 days of the Rouhani solution. The obstacles to the latter are undeniably many, but the government – the reaction has been predominantly positive. momentum of recent months, and the huge (and growing) The Iranian’s read into the deal a tacit acceptance of their right amounts of money, energy and commitment poured into the to enrichment (something which in fact the document neither process, will make a lasting agreement, however hard-fought, explicitly recognises nor denies), and Rouhani and Supreme increasingly attractive to all parties involved. If the Arab Gulf Leader Ayatollah Ali Khamenei exchanged public letters, states wish to make themselves heard within that process, they expressing their gratitude. Critically, both letters emphasised will likely have to get on board, at least to a degree. The timing the “next steps” of the negotiations, which will be even more of Saudi Arabia’s rejection of a UN Security Council seat looks precarious than what has passed before. “This can be the basis ever more foolish, as – with or without Riyadh – the US and for further intelligent actions. Without a doubt the grace of its allies steamroller on. China’s new leaders look to consolidate GCC link

On Beijing’s agenda for the Gulf region are rapprochement with Saudi Arabia, closer ties with the GCC, and even more intense economic relationships. Differences of opinion over Syria will not be allowed to stand in the way of closer relations between polities which see the world differently from the West

hina is looking for fresh impetus in its relationship with Business will continue to shape exchange with the Gulf. the Gulf Co-operation Council (GCC) countries. Though political ties have been frosty since Beijing blocked CAssisting it is Bahrain, whose King Hamad Bin Isa Al- moves at the UN Security Council to unseat Syrian President Khalifa is seen by Beijing as a key player in efforts to rebuild Bashar Al-Assad, Saudi Arabia and China maintain intense diplomatic bridges with Saudi Arabia. Beijing is looking to the commercial relations. Beijing is now Riyadh’s largest trading Bahraini GCC presidency to help broker agreement, at the partner ( GSN 935/12 ); according to ambassador to Saudi Arabia group’s annual summit in December, on holding the first China- Li Chengwen, bilateral trade rose by 14% in 2012 alone, to GCC Strategic Dialogue meeting in two years. $73bn – “comfortably exceeding the trade volume target between the two states for 2015, set at $60bn”. The ambassador The supposedly regular events were quietly shelved as Riyadh told a meeting hosted by businessman Saad Bin Abdullah Al- expressed its displeasure at China’s vetoing of UN resolutions on Ajlan that some 140 Chinese companies were operating in the Syria and its attitude towards Iran, but Chinese sources told Saudi market, with the total value of Chinese projects in Saudi GSN Beijing was hoping to hold one in early 2014. The aim Arabia estimated at around $18bn, pan-Arab daily Asharq Al- is to consolidate generally sound relations in the region, as part Awsat reported on 20 November. of a wider policy that is expected to unfold under President Xi Jingping, by which China emerges as a ‘balancing power’, sitting China’s huge demand for energy and other natural resources between traditional rivals Russia and the United States ( see box, will also drive its Gulf relations. In 2012, China took 7m-8m page 5 ). tonnes of liquefied natural gas (LNG) from Qatar, around 10%

4 GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 Politics of its output. This could grow, especially as Shanghai-based China’s foreign policy ambitions China State Shipbuilding Corporation subsidiary Hudong- Chinese President Xi Jingping is looking to greater political contact to Zhonghua Shipbuilding can now build huge LNG carriers. complement China’s status as the world’s second biggest economy. Beijing analysts told GSN this had pushed relations with Although Chinese analysts are emphatic that Beijing is far from seeing up the policy agenda – eased by the perception that, under its economic weight matched in the diplomatic or military spheres, they Sheikh Tamim Bin Hamad Al-Thani, Qatar will have a less agree that the People’s Liberation Army (PLA) is growing in proactive policy towards supporting what Beijing sees as sophistication, as well as size, and that the new leadership may be destabilising groups. tempted towards a more charismatic foreign policy than the Communist Party of China (CPC) top team they replaced in November 2012. Xi is Strategic relationship paramount leader in the new senior CPC line-up, accumulating jobs that include state president, party general secretary and Central Military Gulf leaders’ determination to stick to essentially authoritarian Commission president. political structures strikes a chord in Beijing. Likewise, the Assads. When Bashar Al-Assad visited China in 2004, an Chinese nationalist pride has been stirred by Xi’s ability to stand equal academic asked him: “The Baath Party has gone in Iraq; why to Russian President Vladimir Putin – and, when the time comes, to US President Barack Obama. Chinese analysts say Beijing sees itself should it survive in Syria?” To which Assad immediately replied: standing between two blocks, one including the United States and “The Communist Party of the Soviet Union disappeared, but Saudi Arabia, the other led by Russia and Iran. Balancing Russia and there is no sign of the Chinese Communist Party going, is the US remains China’s number one foreign policy priority, although there?” The Communist Party of China (CPC) and Syrian internal issues (including domestic security as well as further economic Baath party have decades of relations, which counts in the reform and a governance clean-up) outweigh everything. opaque Chinese decision-making process. Analysts note that China has consistently voted with Russia in the Beijing called for a new strategic relationship when former United Nations during periods of rising regional tension; it vetoed a prime minister Wen Jiabao visited the UAE in January 2012, a Syria resolution at a time when rising tensions with Japan in the East visit that also took in Saudi Arabia and Qatar. Beijing Middle China Sea were pushing Beijing to seek affirmation of Moscow’s support to counterbalance the US’ robust backing of Tokyo. East-watchers observe that Xi has an unusually well-developed feel for the region, having developed a range of contacts before Saudi Arabia was especially annoyed over China’s opposition to military he became president, including King Hamad, and deposed intervention in Syria. But in so doing, Beijing was sticking to two Egyptian president Mohammed Morsi. Xi visited Saudi Arabia central tenets of Chinese foreign policy: and Turkey as vice-president, and took an active interest in the • Non-intervention in other countries’ affairs, which has long been a Yemeni conflict. He made a point of meeting Iran’s Hassan central tenet in Chinese political philosophy. “We don’t care whether Rouhani at the most recent Shanghai Organisation summit; Assad is in power or the opposition,” one analyst said. By the same they had previously spoken by phone when Xi was vice- token, Beijing expects its political orientation – continuing rule by the president. CPC – not to be challenged. • Preserving peace outweighs other interests – such as the human In September, King Hamad, accompanied by finance minister rights that are central to many western foreign policy projections. For Sheikh Ahmed Bin Mohammed Al-Khalifa, visited China for this reason, China has rejected UAE calls, in the China-Arab dialogue talks aimed at boosting tourism, investment and financial sector forums, to put pressure on Iran over the disputed islands in the Strait of co-operation, as well as rebalancing Bahrain’s east-west relations Hormuz. in the aftermath of 2011 ( GSN 955/8 ). Xi is very receptive to such overtures, and also discussed moves to strengthen GCC relations with GCC and is ready to work with GCC to promote co-operation with his guest. the long-term stable, sustainable development of China-GCC Chinese sources say Beijing sees Bahrain’s current tenure of the co-operative relations,” a Chinese Ministry of Foreign Affairs GCC Supreme Council presidency as an opportunity to cement statement said. Among goals set out by Beijing was that both regional ties, and diplomats have been working to take the sides “actively prepare for the third round of China-GCC relationship forward. On 23 September, Chinese foreign strategic dialogue and ensure its success” and “push for the minister Wang Yi held a group meeting with senior Gulfis at restart of China-GCC [free trade agreement] FTA negotiations UN headquarters in New York, which was attended by the at an early date”. current and next holders of the GCC’s revolving presidency, Bahraini foreign minister Sheikh Khalid Bin Ahmed Al-Khalifa Security concerns and Kuwaiti foreign minister Sheikh Sabah Khalid Al-Sabah, as Defence sales are not expected to have a huge impact on well as GCC secretary-general Abdelatif Al-Zayani, who is relations. While recent trends towards diversification from US Bahraini. manufacturers have been noted by Beijing policy-makers, selling “Wang Yi expressed that the Chinese government under the arms is not a major priority. Analysts observe that in the 1980s new leadership attaches great importance to developing up to 20% of Chinese defence sales went to the Middle East; this

GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 5 Politics figure is down to around to 2%. Sales could rise again. Several Renewed bloodshed in Xinjiang – where killings mid-year in countries are interested in Chinese drones, for example, and a Tupan, Khotan and other centres have been blamed on Islamists potential Red Flag 9 missile sale to Turkey, backed by – points to tensions in China’s main Muslim minority area. technology transfer – “which meets [prime minister Recep Ethnic Uigurs feature large among the approximately 200 Tayyip] Erdogan’s ambitions”, one observer said – has aroused Chinese killed in the Syrian conflict whose passports have been much interest. returned to Beijing by the Syrian authorities. (However, this Protecting Chinese security interests is another major facet of number includes some non-Muslim Chinese, sources said.) policy that will find expression in Beijing’s Middle East relations. China’s opposition to intervention in Libya didn’t stop western Beijing is concerned that Saudi and other Gulf support for intervention in 2011 – a conflict that led China National Salafist groups could lead to more jihadist activity and instability Petroleum Corporation and other Chinese companies to that ultimately will impact on China itself. But it also sees major abandon operations in the country, leaving behind an estimated points of common interest with Riyadh. It is remembered that $18bn in investments. when former leader Hu Jintao visited Saudi Arabia in 2004, his The prospect of Jihadist groups gaining further traction is of speech to the Shura Council emphasised respect for the diversity most concern. Chinese strategists see the potential for conflict of cultures – during a period when the US ‘global war on terror’ to move eastwards, through Central Asia to eastern China. and Islamophobia were at their peak. FAC report tells UK to get tougher on Bahrain

A UK parliamentary committee has published a report on the UK’s relations with Saudi Arabia and Bahrain, and found little fault with the government’s policy towards Riyadh. The report advised the government to take a firmer line on Bahrain, however, and to designate it a country of human rights concern should it fail to implement reforms

he UK’s parliamentary Foreign Affairs Committee (FAC) Saudis in public for human rights abuses or the slow pace of published its long-awaited report on the UK’s relations reform would only trigger disengagement, and said the UK Twith Saudi Arabia and Bahrain on 22 November ( GSN government’s emphasis on gradual reform was realistic. 949/1 , 939/1 , 934/16 ). It was broadly supportive of the government’s pursual of good relations with the Gulf, but urged Public concerns over UK policy, the FAC said, had more to do London to put more pressure on Bahrain to reform. with a lack of communication on the part of the UK government than with misdirected policies. “The government The inquiry was first announced in September 2012, provoking appears to have a credibility problem and must do more to such dismay in Saudi Arabia that its ambassador to London, explain its policies and consider where it can point to specific Prince Mohammed Bin Nawaf Al-Saud, said at the time that Riyadh would be “re-evaluating” its historic relations with progress as a result of its human rights work,” the report said. It Britain. In fact, the Saudis – as GSN predicted – had little to recommended easing visa restrictions to help boost business – fear. After a year of gathering evidence – including 71 written a step which the UK is in the process of taking with four other submissions, six oral evidence sessions with academics, Gulf states ( see page 10 ). politicians, diplomats and human rights experts, a visit to Riyadh The UK’s defence sales to Saudi Arabia are the most and a series of informal meetings (including one with Bahraini controversial aspect of the bilateral relationship in the eyes of human rights minister Salah Bin Ali Abdulrahman and another with the secretary-general of Al-Wefaq, Sheikh ) – the public, and the FAC acknowledged concerns over human the report concluded that, while the Gulf states might be rights issues, corruption and the misuse of leverage, as well as the “particularly challenging” in terms of human rights and government’s strong denial that the arms it sells to Saudi Arabia democracy issues, “most are also wealthy and powerful, and contravene any European arms criteria or are used irresponsibly vitally important to many of the UK’s interests in the region”. by Riyadh. The FAC concluded that there was “little to suggest that ending the UK’s defence sales would have any effect on The FAC report was for the most part complimentary or neutral about government policy on Saudi Arabia. It noted “limited overall defence sales to Saudi Arabia, or that it would give the UK but worrying” evidence that the UK was not well perceived by additional leverage to effect positive improvements”, advising the Saudi population, especially young people, and advised the only that the government should adhere to its existing policy to embassy in Riyadh to make public engagement a priority. But ensure arms sold are not used for human rights abuses or internal it was supportive of diplomats’ assertions that chastising the repression, and provide evidence that it is doing so.

6 GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 Politics

Defence co-operation defines UK-Saudi relations

The Foreign Affairs Committee (FAC) described defence co-operation as • The Salem project initiated in 2007, overseen by Modsap. This deal underpinning the entire UK-Saudi relationship. The UK is one of the was for 72 Eurofighter Typhoons to be provided by BAE, along with three largest defence equipment suppliers to Saudi Arabia, alongside training programmes. In 2009, 24 planes were delivered, but price France and the US, supporting major defence sales directly through issues have delayed the outstanding aircraft. The initial contract was government-to-government contracts. “It is hard to obtain exact for £4.4bn, but it is thought to be ultimately worth around £20bn ( GSN figures as to the volume of defence trade as the government restricts 939/12 , 809/15 , 794/5 and others ); and the supply of some information; however, the UK has granted export • In May 2012, BAE won a contract to provide 22 Hawk advanced jet licences for almost £4bn ($6.5bn) worth of defence equipment over the trainer aircraft and 55 Pilatus PC-21 aircraft and other training last five years,” an FAC report on UK relations with Saudi Arabia and equipment. The deal is worth £2.5bn and is thought to preserve 250 Bahrain released on 22 November said ( see main story ). jobs at the BAE Systems factory in Yorkshire ( GSN 924/9 ). Once the Ministry of Defence (MoD) has signed an agreement with the According to the FAC, the UK maintains the following teams in Saudi Saudi government, it then places contracts with UK prime contractors Arabia: such as BAE Systems. The MoD oversees several of the main contracts through two main bodies: the Ministry of Defence Armed Forces Project • A small British Military Mission (BMM) of seconded British Army (Modsap) and Saudi Arabia National Guard Communications Project personnel that trains and advises the Special Security Brigade of the Saudi Arabian National Guard (Sang), providing advice on issues such (Sangcom). The projects’ operating expenditure is covered by a as officer training and developing basic military skills, as well as in management fee from the Saudi government, but details of the fee are more specialist areas such as counterterrorism; confidential. • A separate, specialised team to assist in the procurement and The FAC noted concerns about corruption, human rights and the misuse commissioning of a new communications system for Sang (Sangcom). of leverage. The UK’s Serious Fraud Office (SFO) has been investigating This team consists of one MoD civilian based in the UK and around 20 allegations of bribery against GPT Special Project Management, related UK military personnel and 50 MoD civil servants in Saudi Arabia; to Sangcom ( GSN 946/7 ), for example, and there are broader concerns about prioritising arms sales to a country whose human rights record • A larger team of UK civil servants and MoD personnel working for the the UK has acknowledged is of serious concern ( GSN 951/1 ). Ministry of Defence Saudi Armed Forces Project (Modsap). This team has around 80 staff based in Saudi Arabia, and another 112 in the UK. Major UK-Saudi defence sales agreements since 1985 are: It oversees the major defence co-operation agreements; and • The Al-Yamamah I and II agreements, initiated in 1985, for the supply • A small Royal Navy liaison team, made up of five Royal Navy of a package of military equipment by BAE Systems, worth more than personnel, which provides support to the King Fahd at £43bn by 2004. Al-Yamamah was officially closed in 2006, following . allegations of corruption and an SFO investigation, which prompted anger in Riyadh ( GSN 808/5 , 773/5 , 772/12 and others ); Overall, the UK has about 20 navy personnel, 40 army personnel and 70 air force personnel stationed in Saudi Arabia. By way of • The Saudi-British Defence Co-operation Programme (SBDCP), which comparison, the UK has similar numbers in the Netherlands working as provides support for equipment already in service in Saudi Arabia and Nato staff, personnel exchange and on bilateral engagement. In Oman, is overseen by Modsap. It is funded by the Saudi defence budget and the UK has the same number of army and navy personnel as in Saudi began operation in 2007; Arabia, and just under half the number of air force personnel.

‘Aggressive’ Bahrain its own making. “The UK must press with greater force and The committee took a stronger line on Bahrain, however, whose urgency for Bahrain to implement the BICI reforms, engage aggressive response to the 2011 uprising it said had seriously in dialogue and welcome UN mechanisms in order to “complicated” the British-Bahraini relationship. While it said re-establish good faith in its intentions. If there is no significant the UK was right to be understanding of Bahrain’s dilemmas, it progress by the start of 2014, the government should designate warned against unequivocal support for the Al-Khalifa Bahrain a ‘country of concern’ in its next human rights report.” government, whose failure to fully implement the The UK Foreign and Commonwealth Office (FCO) avoided recommendations of the Bahrain Independent Commission of listing Bahrain as a country of concern in its latest annual human Inquiry (BICI) it called “inexplicable”. rights report ( GSN 946/5 ), and any public criticism of the slow The FAC report came out the day before the two-year pace of reform has tended to be lukewarm. While the Bahrainis anniversary of the BICI’s report, released on 23 November 2011 would undoubtedly be unhappy with that appellation, it would (GSN 913/5 ). The BICI documented serious abuses by the arguably not affect the practical aspects of the bilateral state, and made a number of recommendations, which the relationship. Saudi Arabia is already listed as a ‘country of Bahraini government promised to implement. Many of concern’ by the FCO, but is nonetheless also listed as a priority Bahrain’s ongoing problems ( see page 11 ), the FAC said, were of market by the Department for Business, Innovation and Skills.

GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 7 Politics

Between them, the 27 so-called countries of human rights revealed details of a Defence Co-operation Accord, signed in concern had more than 3,000 UK government licences for October 2012 when foreign minister Sheikh Khalid Bin Ahmed strategic controlled goods worth more than $18bn, as of mid- Al-Khalifa visited London ( GSN 934/16 ). “We are 2013 ( GSN 951/1 ). disappointed that the government has provided so little detail to parliament and this committee on its most recent defence Warning that Whitehall must not be seen to be siding with the accord with Bahrain,” the report said. “It was predictable that Al-Khalifa, the FAC also recommended the government hold Bahrain would consider it a public signal of support and, if the more meetings with the , help non- government did not mean to send this message, it would have governmental organisations to access Bahrain, and try to get the been more sensible to have immediately released information UN special rapporteur on torture – whose visit has twice been about the accord and the UK’s reasons for agreeing it at this cancelled ( GSN 946/5 ) – another invitation from Manama. time.” The FAC has asked the government to provide more The FAC also regretted that the British government had not information about the accord. Th e return of Al-Awda?

Islamist cleric Salman Al-Awda has long had a huge following in Saudi Arabia, and in the 1990s was imprisoned for his opposition to the government. Since his release, he has taken a more moderate line, but his increasingly vocal calls for reform – amplified by social media – are again making waves

he Saudi government’s unequivocal support for the military time went on, the movement’s denunciation of the state’s overthrow of Egypt’s Islamist president, Mohammed Morsi, corruption, its failure to conform to Islamic values, and its close Tin July was met with widespread criticism at home ( GSN relationship with the United States grew louder. 951/1 ). Reflecting large swathes of public opinion, a number of When, in 1990, the most senior official body of clerics, the clerics, preachers and activists openly declared their anger at the Council of Senior Ulema, endorsed the government’s decision Al-Saud’s triumphalism at the demise of an Islamist government, to call in US troops after Iraq’s invasion of Kuwait, Al-Awda a feeling which intensified during the bloody confrontations became a strident critic of the government and, along with others between Egyptian Islamists and security forces in the weeks that such as Safar Al-Hawali, one of the Sahwa’s most prominent followed. speakers. Thousands of youths were mobilised in a confrontation One of the most outspoken was veteran Islamist cleric Sheikh between the Sahwa and the government that lasted for four years. Salman Bin Fahd Al-Awda, who declared to millions of Twitter Eventually, the so-called Intifadat Al-Sahwa (‘Sahwa Insurrection’) followers on 14 August, as security forces raided two camps of was crushed, and Al-Awda and many others were imprisoned. protesters expressing their support for Morsi: “Murder is a capital Following his release in 1999, Al-Awda shed his radicalism and offence and great aggression, especially when it is inflicted on adopted a more moderate line; one of the things for which he is innocents who want to express their legitimate demands through known is his criticism, in the past decade, of Osama Bin Laden, peaceful means”, and “Whoever helps a murderer – whether by with whom he had previously been associated. Al-Awda was seen word, deed, financial support, or even a gesture of approval – is an by many as having been co-opted by Riyadh ( GSN 694/5 , accomplice.” 686/7 ), but despite this, he retained a large measure of credibility stemming from his role as a leader of the insurrection; his Al-Sahwa Al-Islamiyya newfound moderation also attracted a huge youth following. For Born in around 1956 to a wealthy Buraydah family in the Najdi a time, he had a weekly television show on MBC and, in recent heartland of Saudi Arabia, Al-Awda remains one of the most years, he has become adept at harnessing the power of the popular and influential clerics in the country, and arguably one of internet. His prolific use of social media earned him the number the key figures to watch when assessing the potential for the rift four spot in Forbes Middle East top 100 Arab Twitterati in 2011, between the ruling elite and the clergy to expand. and today, he has close to 4m followers of his Twitter feed and In the 1990s, Al-Awda became a prominent leader of Al-Sahwa almost 2m ‘likes’ on his Facebook page. Al-Islamiyya (The Islamic Awakening), a movement that developed through the 1960s, influenced by the influx of Muslim Questions of revolution Brothers from Egypt and Syria who came to play an important Since the start of the so-called Arab Spring, Al-Awda has used role, especially in the evolution of state education. Ideologically, social media to praise public revolts across the region, while at the Sahwa was a mix of traditional Wahhabi thought and the the same time increasing his criticism of the lack of political ’s modern ideas about political reform, reform within Saudi Arabia. In late February 2011, he and a taking issue with both liberals and the Wahhabi establishment. As dozen others associated with the Sahwa signed a petition

8 GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 Politics entitled ‘Towards a State of Rights and Institutions’, which Al-Awda’s open letter called for, among other things, a fully elected parliament. It was Sheikh Salman Al-Awda’s so-called open letter was published via his after this that he lost his MBC show, Al-Hayat Kilma (Life is a Twitter account in March 2013; the site hosting the full text of his Word ). missive, Twitmail , struggled to remain up in the few hours following its In March 2012, he caused another stir when he published his release, so high was demand to read it. The letter sparked much online book As’ilat al-Thawra (Questions of Revolution ). When the book debate. topped sales lists at the Riyadh International Book Fair, the In it, Al-Awda says he is speaking out to be a “true friend” to Saudi authorities were quick to ban it, prompting Al-Awda to publish Arabia, one who speaks frankly out of love for the country, and to protect it online. A review of the book by King’s College London’s it from the chaos and infighting that will ensue if there is no reform. Madawi Al-Rasheed described Al-Awda as someone who had “Like all mankind, our people have their hopes, needs and rights. They “anchored peaceful collective revolutionary action in an Islamic will not remain silent forever when these are totally or partly denied,” he framework and reached out for humanist interpretations that writes (in a translation provided on 19 March by his separate, English- language Twitter feed). assimilate western intellectual positions with his own Salafi orientation”. Al-Awda’s engagement with the question of He notes the “negative feelings” that have accumulated over a revolution, she concluded, had “brought him back as a relevant considerable period of time, and says that, as anger escalates, religious figure at a critical moment in the Saudi and Arab public sphere”. and political leaders will lose their appeal, and the street will assume the leadership. He lists the causes of tension as administrative and fiscal As’ilat al-Thawra attempted to avoid the quietist obedience to corruption, unemployment, poor housing, poverty, lack of health and rulers customary for establishment Wahhabi clerics on the one educational facilities and lack of real prospects of political reform. hand, and jihadist revolutionary fervour on the other, and to A large part of the letter is taken up with the treatment of detainees, and provide a timely Islamic ideological framework for the their denial of personal rights – an issue that has often provoked revolutions gripping the region. The book was heavily criticised protests in his home town of Buraydah. He acknowledges that many by one of the most senior members of the Council of Senior members of the Al-Saud disagree with the policy of political detention, Ulema, Saleh Bin Fawzan Al-Fawzan, in the introduction to a and that much is left to the intelligence services. “It is incomprehensible book by Fahd Bin Suleiman Al-Fuhaid entitled The Crime that investigation and prosecution are under the Ministry of Interior, Against Islam in As’ilat al-Thawra (al-Janaya ala al-Islam fi Kitab while in other countries they are either independent or under the As’ilat al-Thawra ). Al-Fawzan argued that Al-Awda’s book was, Ministry of Justice,” he writes. He calls for political detainees to be in reality, a call for revolt and renunciation of obedience, built on released and explanations given for injustices against detainees. misleading arguments taken from sources hostile to Islam. He also berates the media. Official spokesmen, he writes, “sound Illustrating the crucial difference between the traditional miserable, belonging to the past. Nothing they say is inspiring, Wahhabi establishment clerics and the more politicised Sahwa, convincing or effective”. There is a need for impartiality, and to stop Al-Fawzan argued that Al-Awda denied the validity of the idea “persisting with the idea that foreign powers are behind the country's that religious scholars must obey the ruler, even when they problems”. disagree with him, to ensure Islam’s survival. A heavy-handed approach by the security forces will only aggravate matters and block reform. He warns that it is dangerous to make people An ‘open letter’ feel they have nothing to lose. “When revolt is suppressed, it develops In March 2013, Al-Awda went a step further, breaking the taboo into armed action; when it is ignored, it grows and expands. The solution is to take a timely and wise decision to forestall any possibility of on directly and publicly criticising the leadership, by publishing violence,” the letter says. an ‘open letter’ on his Twitter account ( see box ). The letter warned of anger that has swelled over time, as a result of administrative and fiscal corruption, unemployment, poor movement to succeed, it would need the active participation of housing, poverty, lack of health and educational facilities and the Sahwa, which is still the largest non-state organisation. lack of real prospects of political reform. “My words reflect Whether Al-Awda is still in a position to mobilise the Sahwa is what I have learnt from many social groups across several debatable. Not only is it difficult to gauge the extent of his regions,” he wrote. “As anger escalates, religious, political and influence in general, but it is also unclear whether the more social figures lose their appeal; the street will then assume the conservative members of the Sahwa could accept his leadership.” reconciliation of western intellectual positions with his own Salafi orientation. In September, Al-Awda told Moroccan news website Hespress that he did not exclude the possibility of an Arab Spring-type Other obstacles, such as the general distaste of the Saudi public uprising in Saudi Arabia, but argued – as in his book As’ilat al- for demonstrations, remain largely in place, though the almost Thawra – that people do not want a revolution, because the weekly protests calling for the release of political prisoners in outcome is not guaranteed. While this is certainly one reason Buraydah and Riyadh may signal a shift in this respect. And last why a popular uprising may not materialise in Saudi Arabia, but not least, the Saudi regime commands formidable resources other caveats need to be made. Arguably, for any protest for stifling protest. In the 1990s, the Sahwa Insurrection

GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 9 Politics eventually fizzled out because large portions of the Sahwa feared Saudi monarch King Abdullah Bin Abdelaziz, who comes losing the financial and institutional benefits they derived from second only to the Grand Sheikh of Al-Azhar, Sheikh Ahmad being part of a system that disproportionally rewards the clergy. Muhammad Al-Tayyeb. Al-Awda’s most recent television show – Laka Haqq (You Have As the reaction in Saudi Arabia to Morsi’s overthrow indicates, Rights ) – was taken off air in July 2013, but through his Islam events in the wider region may prove a critical factor in the Today website, his Facebook , Twitter and YouTube channels, books success or failure of movements for reform in the Gulf. Al- and newspaper articles, and his recently launched online Awda’s increasingly outspoken opposition to the way Saudi ‘encyclopaedia’ of all of his lectures, TV shows and writings, he retains many platforms for his reformist Islamist politics. And he Arabia is run, and the momentum he is building online, will is, it seems, being heard. A list of the world’s 500 most influential certainly feed in to a sense that, if it is to survive in the longer Muslims 2013, recently published by the Royal Islamic Strategic term, the Al-Saud must prove to be adaptable, and engage – at Studies Centre, puts Al-Awda in sixteenth place, several places least to some extent – with reform. But whether his efforts can higher than in 2012. He does, however, remain well below the make the leap out of the virtual world remains to be seen. UK visa waiver for four GCC states

Citizens from Kuwait, Oman, Qatar and the UAE are to be granted visa-free access to the UK from early 2014. Meanwhile, the UAE is getting closer to its ultimate goal of visa-free access to the European Union’s Schengen zone

he UK Home Office has announced it will launch a visa- Big spenders waiver scheme in 2014 for business travellers and tourists It is not hard to see why Britain is keen to get more Gulf nationals onto from four Gulf Co-operation Council (GCC) states, T its shores. In 2012, according to the national tourism agency namely Kuwait, Oman, Qatar and the UAE. The VisitBritain, the UK had just over half a million visitors from the Gulf Co- announcement, which has been in the pipeline for some time operation Council (GCC) states, who spent a total of £1.2bn ($1.9bn), (GSN 952/4 ), came at the Lord Mayor’s annual dinner on 11 and in the past five years, the total number of GCC visits and spend November, and was made by Prime Minister David Cameron, have increased by 17% and 58% respectively. whose Conservative government has shown considerable The average spend per visit by Gulf visitors is massively higher than interest in maintaining and improving relations with the GCC, that of other international visitors – around £2,124 ($3,417) in 2012, despite criticism from human rights organisations ( see page 6 and compared to a global average of just £600. In 2012, the average Saudi View ). visitor to the UK spent £2,354, compared to £858 for the average US The new electronic visa waiver (EVW) will be free of charge. citizen, £400 for the average French citizen, and £279 for the average Belgian. Applicants will have to submit an EVW at least 48 hours before they are due to travel, but will no longer need to provide The overall spend by GCC visitors to Britain in 2012 breaks down as biometric information, visit a visa application centre or hand in follows: UAE (£467m), Saudi Arabia (£260m), Kuwait (£273m), Qatar passports before travel. The EVW will be available for visits of (£86m), Bahrain (£48m) and Oman (£39m). VisitBritain says the up to six months; those wanting to work or study in the UK will potential spend in 2020 could be £729m for Saudi Arabia, £383m for the UAE, £310m for Kuwait and £132m for Qatar. still apply for visas in the normal way. VisitBritain’s 2013-16 GCC States Tourism Market Strategy targets The scheme will launch early in 2014 in Qatar, Oman and the 700,000 visits worth £1.3bn by 2016, and making the visa process UAE, with Kuwait starting a similar arrangement in a second more straightforward is a part of that. The strategy divides potential phase later in the year. Saudi Arabia and Bahrain will not take Gulf visitors into various categories, including Premium Arab Family part in the scheme, even though Saudi Arabia has been (“who generally centre their vacation around Knightsbridge, Mayfair identified as one of the main growth markets for visitors. and Kensington”), Emerging Middle-Class Arab Family, Arab Young Honeymooners and Arab Young Sophisticates (“drawn to gender- Separately, a 22 November report by the parliamentary Foreign specific holiday experiences that could involve sports/adventure, Affairs Committee (FAC) into Britain’s relations with Saudi fashion, shopping, arts and culture”). Arabia and Bahrain ( see page 6 ) said Saudis’ difficulty getting a visa undermined Britain’s stated priority of increasing bilateral trade. “We recommend that the government make improving According to the Home Office, visa applications from the GCC the visa regime a priority in its discussions with the Saudi have been growing year on year. In 2012, 30,148 visas were government,” the FAC said. A spokesman for the Home Office issued to UAE citizens, 20,490 to Qataris, 12,596 to Omanis told GSN that arrangements with all countries were constantly and 63,780 to Kuwaitis. In 2012, 530,000 visitors from the under review. GCC came to Britain, 6% more than in 2011. Visitors from the

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GCC spend an average of $3,417 per person per visit, compared to an overall average of around $900 ( see box, page 10 ). NEWS IN BRIEF KUWAIT/IRAQ European ambitions A Kuwait Airways plane landed in Iraq on 20 November for the Meanwhile, the UAE has been making significant progress in first time since the 1990 invasion of Kuwait. State news agency its attempt to get visa-free access to the 26 European countries Kuna quoted the director of Najaf airport Mortadha Al-Mousawi of the Schengen zone. On 21 October, the European as saying the Kuwait Airways Corporation (KAC) plane carried Parliament’s Committee on Civil Liberties, Justice and Home 100 passengers into the city, most of them visitors to the holy sites. Affairs voted overwhelmingly in favour of a visa waiver for UAE The airline plans two flights a week into Najaf. An Iraq Airways citizens, with 51 members voting for, two against and two plane landed in Kuwait for the first time since the Gulf War in abstentions. February ( GSN 943/10 ). KAC representative in Iraq Fahad Al- Rashidi described the achievement as the culmination of joint The text suggests a 90-day visa waiver for business, tourism or efforts over the past six months, and said he hoped other family-visit purposes. In return, the visa exemption is to be destinations in Iraq would soon be served by Kuwait Airways. reciprocated to all European Union citizens. UAE diplomats Bilateral ties between the neighbours have been steadily improving have been lobbying MEPs for months, to achieve the change in in the past year. visa regulations, and have tried to deflect criticism of ongoing UAE/KUWAIT: More Twitter jailings human rights abuses in the UAE which has on occasion The UAE has sentenced Waleed Al-Shehhi to two years in prison threatened to derail their efforts. and a fine of Dh500,000 ($136,000) for his tweets about the UAE As well as ease of travel, a visa waiver for the Schengen zone 94 trial ( GSN 958/7 , 948/6 ). Al-Shehhi was arrested on 11 May in Ajman, and charged under the new cybercrimes law, which would give the UAE considerable status: the only other country prohibits the use of information technology for activities that in the region exempted from visas is Israel, and the only Islamic could endanger national security or defame the government ( GSN countries Brunei and Malaysia. 936/4 ). He was convicted on 18 November. Al-Shehhi, an employee at the Authority for Standardisation and BAHRAIN Metrology, had posted comments on Twitter about the mass trial of Islamists, coverage of which was heavily censored ( GSN 950/7 , 949/7 ). He questioned the way the trial was conducted and called Frustration grows on all sides for the release of prisoners. Growing frustration at the year-long political stalemate has He was the second person to be convicted under the cybercrimes pushed both the government and the main opposition party Al- law; the first, Abdullah Al-Hadidi, served ten months in prison, also Wefaq to become more assertive, each taking actions perceived for making online comments about the UAE 94 trial. A second by the other as provocative. Meanwhile, other political groups, mass trial of Islamists – this time of 30 Egyptians and Emiratis accused of running a branch of the Muslim Brotherhood – is including pro-government groups and the Sunni and liberal under way. opposition, have tried to keep their distance from the escalation, preferring not to comment directly on the rising tensions. Also on 18 November, Kuwait sentenced Musaab Shamsah to five years in prison, for insulting the Prophet Mohammed on Twitter . Following his interrogation by the Public Prosecution on 3 According to the Associated Press , Shamsah made references to the November ( GSN 958/6 ), Al-Wefaq secretary-general Sheikh Prophet’s descendants in online posts in May. He is expected to Ali Salman told GSN he had been questioned for six hours, appeal. from 9am until just before 3pm. He was asked questions about the ‘Revolution Museum’ at Al-Wefaq headquarters, which had multiple images of rioters confronting the police with Molotov been raided by police a few days earlier. He said he had been cocktails and stones, and included items not referred to in the charged with inciting hatred against the interior ministry. “I BICI, including the death of a child and that of a protester. strongly rejected this accusation, as the museum didn’t show These images, and the repeated use of the word ‘revolution’, anything other than what was documented in the Bahrain were seen as incitations to violence. The source said another Independent Commission of Inquiry (BICI) and therefore person had also been charged (and, like Salman, released) with accepted by the authorities themselves,” he said. “insulting a statutory body, which is the Ministry of Interior, by Salman said he was also asked more general questions about Al- attributing to it untrue and fabricated incidents”. Wefaq’s attitude to violence. “I feel the museum issue was a Acting secretary-general of the National Democratic Action pretext to put pressure on the opposition and to open an avenue Society Radhi Al-Mousawi – whose party is allied to Al- by which the authorities can target Al-Wefaq, in addition to the Wefaq – would not comment on the escalation but told GSN recent detention and charges against my political assistant, Khalil he saw no light at the end of the tunnel. “Since the 10th of Al-Marzooq,” he said ( GSN 957/9 ). February 2012 (the start of the National Dialogue), and until One knowledgeable source told GSN the museum contained we suspended our participation in the Dialogue, we have been

GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 11 Royals watch constantly obstructed,” he said. The general secretary of Sunni by issuing one religious edict by the religious leader, but we in opposition group The Gathering of National Unity, Sheikh reality do not see any denunciation of the destruction we are Abdullatif Al-Mahmood, told Al-Wasat newspaper that seeing in the street and in schools or other places,” he said. opposition parties were playing the media, and called Al-Wefaq and its allies “aggravators”. “They can easily end the violence [email protected]

OMAN Loar, who returned to the US after four years in the job. Sheikha Amna is said to be highly regarded by museum staff, and has degrees from SULTAN QABOOS: Iran and decrees Carnegie Mellon University and the London School of Economics and There is much interest in Oman’s role in the recent US-Iran Political Science. The NMoQ is expected to open in the next couple rapprochement ( see page 1 ) and, on 4 December, Iranian parliament of years; in October, a QMA spokesman said all the pieces for the speaker Ali Larijani is due in Muscat for talks with the senior leadership. museum had been assembled, and that galleries would cover traditional On 21 November, Sultan Qaboos issued three decrees, of which two textiles and jewellery, the life of the Bedouins, general history, and the were of particular interest. The first (62/2013) established a National modern oil and gas industry. In mid-November, the QMA appointed Museum of Oman, affiliated to the Ministry of Heritage and Culture; powerful former energy minister Abdullah Bin Hamad Al-Attiyah to all archaeological artefacts held by the ministry will become the chair a committee that will write a history of Qatar’s oil and gas sector. property of the museum. Decree 64/2013 ratified Oman’s accession to the UN Convention Against Corruption. Oman – where pro-reform SAUDI ARABIA campaigners have been urging the government to tackle corruption ( see ALWALEED BIN TALAL: US-Saudi relations page 13 ) – is the last Gulf government to ratify the convention (the UAE did so in 2006, Kuwait and Qatar in 2007, Bahrain in 2010 and Saudi investor and businessman Prince Alwaleed Bin Talal Bin Abdelaziz Saudi Arabia in April 2013). Al-Saud spoke openly about Saudi-US relations and President Barack Obama’s second term in a late November interview with the Wall Street QATAR Journal . The paper noted that, although Alwaleed holds no important government post, “it is hard to shake the impression that here is the EMIR SHEIKH TAMIM: Regional meetings uncensored id of the reserved House of Saud”. The prince – who has Emir Sheikh Tamim Bin Hamad Al-Thani has had a busy few days. On not had an easy time recently with the US media, particularly Forbes 23 November, he took part in an unusual tripartite meeting in Riyadh (GSN 942/12 ) – said “America is shooting itself in the foot… we love with the Kuwaiti Emir Sheikh Sabah Al-Ahmed Al-Sabah and Saudi the United States. But what’s happening right now here, from Arabia’s King Abdullah Bin Abdelaziz Al-Saud – Sheikh Sabah first Republicans and Democrats, is just not helping the image of the United came to Doha, then he and Sheikh Tamim travelled together to Riyadh. States and is making this perception that America is going down a State media reports said the topics discussed included “the latest reality.” Regarding Obama’s stance on Syria, Alwaleed said: “He regional and international developments of common concern”, no blinked”, and on Iran he said Obama’s falling popularity explained his doubt with Iran and Syria topping the agenda. On 24 November, he “overeagerness” for an agreement made “very fast to at least put one received Turkish foreign minister Ahmet Davutoglu, who was on a issue in foreign policy aside”. Alwaleed also complained about the three-day regional tour of Qatar, Bahrain and Iran. Qatari foreign president’s infrequent visits to the kingdom (once during his first term), minister Khalid Al-Attiyah left for Bahrain shortly after his talks with compared with previous presidents such as Ronald Reagan who Davutoglu; Turkish media reported that a possible summit between cultivated personal ties. He noted the Saudis were pleased with leaders of Turkey, Qatar and Bahrain may soon be held in Manama. On secretary of state John Kerry’s three visits ( GSN 958/6 ). 26 November, the emir received Sudan’s foreign affairs minister Dr Ali MOHAMMED BIN NAWAF: The Times interview Ahmed Karti and Palestinian Prime Minister Dr Rami Al-Hamdallah; Saudi ambassador to London Prince Mohammed Bin Nawaf Bin Al-Hamdallah also held separate talks with Qatari Prime Minister Abdelaziz, who usually keeps a low media profile, has given a rare Sheikh Abdullah Bin Nasser Al-Thani. At the time of writing (27 interview to Britain’s The Times . He said Saudi Arabia would not sit by November), Lebanon’s caretaker Prime Minister Najib Mikati and a if Britain, the US and other world powers failed to curb Iran’s ambitious delegation were in Doha to meet the emir, reportedly as the first leg of nuclear programme, and that “all options are available”. He said the US’ a regional trip that will include Kuwait and the UAE and is aimed at “rush” to embrace Tehran as part of a broader reassessment of US gaining support for a proposal to house Syrian refugees in Syrian foreign policy in the region was “incomprehensible” and that territories on the Lebanese border. “appeasement hasn’t worked in the past, and I don’t think it will work AMNA BINT ABDELAZIZ: New museum director in the 21st century”. The prince was speaking on 22 November, as Sheikha Amna Bint Abdelaziz Bin Jassim Al-Thani has been appointed negotiators were locked in talks in Geneva. He said the kingdom had director of the National Museum of Qatar (NMoQ), which is under to defend itself, but he would not be drawn on whether Pakistan and construction. The Qatar Museums Authority (QMA), headed by the Saudi Arabia were co-operating on nuclear weapons stockpiling or emir’s sister Sheikha Mayassa Bint Hamad Al-Thani, said on 26 acquisition. He added that his country had adopted a new, more public, November that Sheikha Amna will oversee the progress of the museum more outgoing foreign policy. “We feel we have been let down and project and provide curatorial and managerial leadership. Sheikha Amna hence this is why we are asserting ourselves, making the message loud has been acting director of the Jean Nouvel-designed NMoQ since and clear,” he said. December 2012; she worked under the former NMoQ director Peggy [email protected]

12 GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 Defence and security & Energy and industry

YEMEN appointments of a number of officials associated with Sunni Islamist party Al-Islah. Security vacuum expands The relationship between Hadi and Basindwa continues to worsen, two years after the transition agreement was signed. The security vacuum in Yemen has continued to expand as According to Yemeni media on 25 November, Hadi has political factions battle for control of the security forces. retracted ten decrees recently issued by Basindwa, as the power Insecurity is plaguing central provinces such as Dhamar, where, struggle between the executive and the coalition cabinet (which on 24 November, deputy governor Abdullah Mayseri was is split between Hadi’s General People’s Congress (GPC) and kidnapped, and Taizz, where Mohammed Moneer, a nephew of Al-Islah) deepens. governor Shawqi Ahmed Hayel, remains in the hands of kidnappers. There have also been a number of violent attacks The process of restructuring the military and security forces has in Sanaa, including the killing of a Belarussian defence now moved on to mid-level officers, bringing Hadi into direct contractor by gunmen on a motorbike on 26 November. On conflict with General Ali Mohsen Al-Ahmar, presidential adviser 22 November, Houthi MP Abd Al-Kareem Jadban was killed for military affairs and close to Al-Islah, which is seen by many when leaving a mosque, and on the evening of 20 November, as trying to monopolise the armed forces following the removal journalist Mohammed Ali Al-Emad survived a car-bomb of those loyal to former president . Basindwa’s attempt on his life. Fighting between Houthi and Salafi groups appointments were widely seen as favouring Al-Islah. Al-Bayda, continues in the northern province of Sadah ( GSN 958/1 ), and Shabwah and Hajjah have governors allied to Ali Mohsen and Al-Qaeda in the Arabian Peninsula remains a threat. Al-Islah, preventing any dissent on this occasion. But elsewhere, Meanwhile, the country seems headed towards a constitutional there were objections. crisis. Tensions between political factions were intensified Meanwhile, the National Dialogue Conference – which should following the announcement of two decrees by Prime Minister have ended in September – limps on. UK ambassador to Sanaa Mohammed Basindwa and interior minister General Jane Marriott was quoted in local media as saying the conference Abdulqader Qahtan appointing new security directors for the would have a “brief extension” to allow for further negotiations provinces and Sanaa. Sources said the timing of Basindwa’s and a final agreement. UN envoy Jamal Benomar left Sanaa for decree on 12 November, just as President Abd Rabbu Mansour New York on 25 November to file his latest progress report. Hadi was landing in Beijing for a state visit, was not coincidental, but stemmed from the president’s objections to the [email protected]

OMAN Sheikh Yousuf Al-Felaiti, is rumoured to be part of a larger investigation into the energy sector. “It is too early to say the extent of corruption in Oman,” one observer familiar with the PDO corruption trial adjourned trial said. “They are still investigating and what they have found A case relating to allegations of corruption at Petroleum now is the tip of the iceberg. It stretches back for many years. Whether it will go all the way to the retired ministers, let’s wait Development Oman (PDO) opened at Muscat Primary Court in and see, but I doubt it because the public prosecutor is their mid-November, and was adjourned until early December. On man.” trial are PDO tenders committee head Juma Al-Hinai, and two officials – managing director Parambathekandi Mohamed Ali and A key demand of Omani protesters in 2011 was that officials be a finance department employee – at a prominent construction investigated for corruption ( GSN 919/1 , 897/4 , 896/3 ). There company named widely in the Omani press as Muscat Securities have been several high-profile cases relating to corruption or Market-listed Galfar Engineering & Contracting. fraud, but few long jail terms for those found guilty. One of the most high profile took place in 2005, the so-called Al-Hinai is accused by the public prosecutor of receiving electricity fraud case, linked to irregularities found in the OR200,000 ($519,413) from Galfar, which was allegedly accounts of the Oman National Electric Company, which was seeking to extend the term of a PDO contract it had won in owned by prominent merchant families. Some 31 people, 2011. Al-Hinai has denied receiving the money but, according including a former Omani ambassador to the UK, a member of to press reports, the prosecution claims he admitted doing so the state council and a former undersecretary at the Ministry of during the investigation. Ali claims not to have known of the Electricity and Water, were convicted of misappropriation, deal. In a related case, PDO’s northern sector director-general bribery, abuse of position and forgery. Sentences ranged from a has also been accused of taking bribes. few months to 14 years. While initially seen as a victory against PDO is 60% owned by the government, with the rest split official corruption, all of the accused were granted a royal pardon just months after the trial closed. between Royal Dutch Shell (34%), Total (4%) and Portugal’s Partex Corporation (2%). The case, being heard by Judge [email protected]

GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 13 Finance

UAE airlines break records, spend big at airshow

Emirates, Etihad and placed combined orders worth more than $170bn on the first day of the Dubai Airshow, breaking records and making no secret of their ambitions. also spent more than $20bn on aircraft; Boeing was the big winner, with Airbus also seeing massive sales

ubai’s Emirates airline set a new record on the first day of Qatar Airways to launch Saudi service the Dubai Airshow with the announcement it was placing Qatar Airways (QA) is to launch domestic operations in Saudi Arabia in Dorders worth an estimated $99bn. Emirates will purchase H1 2014, under the name Al Maha Airways. Chief executive Akbar Al- 250 Boeing 777Xs (comprising 35 Boeing 777-8Xs and 115 Baker told Reuters at the Dubai Airshow on 18 November that the Boeing 777-9Xs), plus 50 purchase rights, an order valued at airline would start with the main Saudi cities, including Riyadh and $76bn – making it the single largest aircraft order by value in the , and then move to the second-tier cities. The project has been history of US commercial aviation. in the pipeline for well over a year. QA and each won a domestic carrier licence late in 2012 ( GSN 939/15 , 929/12 , 927/13 ), In a separate deal worth $23bn, Emirates, which is chaired by the first foreign airlines to win such a licence for what is potentially a Sheikh Ahmed Bin Saeed Al-Maktoum (uncle of Dubai ruler highly lucrative market. Sheikh Mohammed Bin Rashid Al-Maktoum), ordered 50 Airbus Saudi Arabia’s price cap on domestic flights has caused headaches for A380 aircraft. The airline has the world’s largest fleet of Airbus domestic carriers, but Al-Baker said he hoped to resolve the issue. 380s, and a dedicated hub for the super jumbo at Dubai “There is huge potential but also many challenges in the Saudi market,” International Airport. Emirates’ total firm order book now stands he was quoted as saying. “We have an undertaking from the Saudi at 385 aircraft (excluding options or purchase rights), comprising authorities that they will resolve the two contentious issues of price cap 214 Boeing 777s, 101 Airbus A380s and 70 A350s, at a total and fuel subsidies.” estimated value of $166bn. On the opening day of the airshow on 17 November, QA announced it had signed a letter of intent to buy 50 Boeing 777-9Xs, valued at around Boeing was the big winner at the airshow, with Qatar Airways $19bn. It also placed an order for five Airbus A330-200 Freighters and spending another $19bn on 50 Boeing 777-9Xs ( see box ). In a for eight additional A330-200F options – a deal worth another $2.8bn. smaller deal, but one which shows similarly grand ambitions, low- The following day, QA said it had awarded a $300m order for Trent 700 cost carrier flydubai placed an order for 100 Boeing 737MAXs engines, to power those five Airbuses, to Rolls-Royce. “We are not and up to 11 next-generation Boeing 737-800s, at an estimated overdoing it,” said Baker on the spree of plane order announcements cost of $11.4bn. Deliveries are due to begin in H2 2017. from Gulf airlines ( see main story ). “We are all growing in this region… and if we are growing, we must be doing something right.” Flydubai, launched in mid-2008 by the government of Dubai and also chaired by Sheikh Ahmed Bin Saeed Al-Maktoum, has only Etihad also announced the acquisition of a 33.3% stake in Swiss 33 Boeing 737s in service, with another 17 already on order. Its carrier Darwin Airline, which will offer Etihad’s first branded giant new order is the biggest ever Boeing single-aisle aircraft regional operations under a new Etihad regional badge and livery. purchase in the Middle East. The airline has more than doubled The airline has stakes in airberlin, Air Seychelles, Aer Lingus and the number of destinations in the past two years (to 65), carried Virgin Australia and will acquire 49% of Air Serbia from January 5.1m passengers in 2012, has around 1,200 weekly flights, and has 2014. It also recently received regulatory approval for a 24% become the second largest carrier, by passenger numbers, investment in India’s Jet Airways. operating out of Dubai International. Not to be outdone, Abu Dhabi-based national UAE airline Mubadala deal Etihad, whose chairman is Abu Dhabi Investment Authority At least one UAE company will also get a slice of the Boeing pie. managing director Sheikh Hamad Bin Zayed Al-Nahyan, On 18 November, Boeing and Mubadala Development announced its largest ever fleet order on 17 November, spending Company (MDC) announced a strategic agreement that will see more than $67bn on almost 200 aircraft. Etihad – which has a MDC supply as much as $2.5bn-worth of enhanced composites fleet of 86 aircraft, with more than 80 on firm order – said it had and machined metals to Boeing commercial programmes, ordered 87 Airbus (50 Airbus A350 XWB, 36 Airbus A320neo including the 777X and 787. Boeing and MDC have also agreed family aircraft and one Airbus A330-200F) and 56 Boeing aircraft to work together to develop pre-preg and carbon fibre (25 next-generation Boeing 777X aircraft, 30 Boeing 787-10 manufacturing capabilities in Abu Dhabi. This follows a ten-year Dreamliners and one Boeing 777 freighter), with a further 56 deal signed in April 2012, valued at around $1bn, which agreed that MDC subsidiary Strata Manufacturing would produce 777 options and purchase rights. Etihad valued the Boeing deal at empennage ribs and 787 vertical fin ribs, and was positioned to $25.2bn. The new aircraft will be powered by 127 GE Aviation, build the vertical fin for the Dreamliner ( GSN 922/12 ). 115 Rolls-Royce and 52 CFM engines. Passenger aircraft deliveries will start in 2018. [email protected]

14 GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 Events

4-5 December: MENA Business Infrastructure Protection, Dubai 11-13 February: Middle East Electricity, Dubai Web: www.businessprotectionsummit.com Web: www.middleeastelectricity.com 5-8 December: Basra Oil and Gas Conference, Basra 11-13 February: Solar Middle East, Dubai Web: www.basraoilgas.com Web: www.solarmiddleeast.ae 4-5 March: Saudi Downstream Forum, Yanbu Al-Sinaiyah 2014 Web: www.saudidownstream.com 19-22 January: International Petroleum Technology Conference 18-19 March: Trade compliance in the Middle East, Dubai To be held in Doha. Web: www.iptcnet.org/2014/doha Web: www.americanconference.com 28-29 January: Syndicated Lending Middle East, Dubai 13-15 April: Annual Middle East Petroleum & Gas Conference Web: www.iiribcfinance.com/event To be held in Dubai. Web: www.mpgc.cc

North Africa Hardball Gulf merchant families A one-day high-level roundtable discussion of political risks, Produced by GSN publisher CbI’s due diligence and to be held on 16 December, organised and led by analysts research team, the Merchant Family Series provides from Gulf States Newsletter (GSN) publisher, Cross-border essential intelligence to all investors interested in Information . understanding the Gulf business environment. CbI chairman and internationally recognised Maghreb Oman’s Zawawi family expert Jon Marks ,will head an expert panel of regional analysts, including: One of just a handful of merchant families who dominate business in Oman, the Zawawis have benefited from their • John Hamilton senior Algeria and Libya analyst CbI . proximity to Sultan Qaboos Bin Said Al-Said, and remain • Noman Benotman president Quilliam influential in politics. The family has also extended its reach globally, with investments in the US, the UK and beyond. • Michael Willis King Mohamed VI Fellow in Moroccan and Mediterranean Studies, St Antony's College, Oxford Published in January, this 12-page report takes a close look at University the family, examining where it came from and where it is going, considering its historical roots and the sources of its • Patrick Smith editor Africa Confidential significant wealth. It looks at the assets the family controls, The panel will lead discussions on the prospects for the providing profiles of Zawawi businesses, as well as countries of the region over the 2014-2015 period, biographies of the key personalities. including energy and finance trends and policy directions. Based on the discussions, the event will end with a scenario- ’ Al-Futtaim family building session to draw up a number of forecasts for the region’s direction in 2014-15. Al-Futtaim is one of the biggest names in Dubai and, increasingly, the wider Middle East’s retail, automotive and Previous North Africa Hardball roundtables have attracted property development sectors. This report, published in May, government figures, diplomats and former ambassadors, plus highlights the risks and opportunities associated with the Al- representatives from companies including Shell, BG, Statoil, Futtaim. It explains how politics and business combined to Petroceltic, JOGMEC, Hess, HSBC, Anadarko Algeria, create an immense family fortune. It reveals, for example, RWE, National Bank of Abu Dhabi, Weir Oil & Gas, Actis, how the family played a key role in infrastructure projects that Norton Rose, Pinsent Masons, Maersk, AGCO International have defined Dubai. and Jones Day. Dissecting the two huge Al-Futtaim business portfolios – Places are limited to preserve the roundtable format. looking not just at assets, but at the processes and dynamics driving the businesses – the report gives insights valuable not Book before 29 November for a £100 discount only to those who do business in Dubai, but also to anyone Book online at http://africahardball.com interested in the socioeconomic structure of the emirate, and or email [email protected] Tel:+44 (0)1424 721667 the ways of doing business in the Gulf. www.gsn-online.com/merchant-families

GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 15 Risk management report: Qatar

GSN Risk Grade — Aò1: World Cup controversy continues as Amnesty slams treatment of workers

Overview

POLITICS : The Al-Thani family has ruled Qatar since the mid-19th century, its ECONOMY : Rising oil prices have made Qatar increasingly wealthy: the emirate power entrenched at the end of the Ottoman Empire with British recognition topped Forbes ’ list of the world’s richest countries in 2012, and has a predicted of its right to govern. Full independence was declared in 1971 and, officially, GDP per capita of $99,838 in 2013. Real GDP growth is forecast to The country is slowly moving towards democracy. Elections have been held accelerate as diversification into manufacturing, financial services, trade and since 1999 for a Central Municipal Council, though voter turnout has halved hotels pays dividends. The government has invested massively in to around 40%, reflecting disillusionment. The 2003 constitution also infrastructure, and economic expansion has led to rapid growth of the labour approved plans for a 45-member parliament, two thirds elected, but this has yet market. Around 94% of the workforce is foreign, and only a small percentage to be implemented. of nationals are employed in the private sector. Qatar is also known for its In the past two decades, Qatar has gained hugely in power and confidence, led huge overseas investments: sovereign wealth fund the Qatar Investment by the ambitious partnership of former emir Sheikh Hamad Bin Khalifa Al- Authority was set up in 2005, and owns vast real estate portfolios worldwide. Thani (who overthrew his father in 1996) and his prime minister and foreign Like most Gulf states, energy, and especially huge gas reserves, have been the minister Sheikh Hamad Bin Jassim Al-Thani (HBJ). The tiny state is known principally for its extreme wealth and energetic foreign policy; Doha’s support mainstay of the economy, with hydrocarbons contributing around 58% of for Islamist groups has seen it highly involved in the politics of the region, GDP. Qatar holds the third largest gas reserves in the world (around 895.8tcf, post-Arab Spring, to the irritation of Gulf neighbours such as Saudi Arabia, mostly located in an offshore field shared with Iran which is not much smaller which opposes the Muslim Brotherhood. In late June, Sheikh Hamad handed than the country itself) and is the biggest exporter of LNG. Its capacity is still power to his son Tamim; the new emir had long been groomed for the top job, increasing, though it has a self-imposed moratorium on developing new and is not expected to radically change direction. Qatar has become an projects until 2015 which will slow hydrocarbons income. Qatar has increasingly important ally to, and investor in, the West, and is home to relatively low reserves of oil, some 25.4bn barrels, and produces around 1.45m Centcom, the Pentagon’s regional command. b/d of crude and condensate.

Recent developments

HOUSEKEEPING : Emir Sheikh Tamim has been settling into the top job, and spent spending goes up ahead of the soccer World Cup. Without careful management, the relatively quiet summer months starting to put his house in order. In his Qatar’s budget could slip into deficit by 2015-16 for the first time since 1998. inaugural speech, Tamim suggested he would focus more on domestic issues than WORLD CUP : Plans for the World Cup have been dogged by controversy over had the previous administration, saying he wanted efficiency and greater whether to hold it in summer or winter and widespread criticism of Qatar’s transparency. His choice of prime minister – Sheikh Abdullah Bin Nasser Al- mistreatment of migrant workers, including a 17 November report by Amnesty Thani – seemed to back this up. Sheikh Abdullah, who also retains the interior ministry, has a military background and is known for his strong work ethic. International that said workers were suffering serious abuse and exploitation. Tamim’s cabinet selection appears to have been relatively meritocratic, and Fifa president Sepp Blatter has said the treatment of construction workers in several underperforming ministers were removed. The finance ministry is said Qatar is “unacceptable”, but that he is convinced, following a meeting with Emir to be more disciplined under incoming minister Ali Sharif Al-Emadi, who was Sheikh Tamim earlier in November, that Doha is taking the issue very seriously. previously at Qatar National Bank. Blatter also blamed western contractors for the unfair treatment of employees. Fifa has said it wants to see concrete improvements by March 2014. Meanwhile, ECONOMIC PRAGMATISM : After years of dizzying economic expansion, Qatar must the November unveiling of designs for the 40,000-seater Al-Wakrah stadium, by now get to grips with a number of economic challenges: the new emir will have Zahad Hadid Architects and Aecom, provoked a different kind of furore. The to juggle flat or falling revenues, inflation, rapid population growth and huge design was inspired by the historic fishing town of Al-Wakrah nearby, and construction commitments for the 2022 World Cup. Growth is now focused on specifically the sails of the pearl fishing dhows which moor there. But public non-hydrocarbons, which expanded by 10.2% in H1 2013, compared to an consensus is that the aerial view of the stadium looks like a giant vagina. increase of just 0.8% for oil and gas. Overall GDP growth was 6%. But the government remains dependent on oil and gas revenues, and is therefore VISA WAIVER : Qatar is one of four Gulf states that will be granted visa-free access susceptible to changes in international oil markets; if oil prices go down as to the UK from early 2014. The UAE and Oman will also take part in the visa expected, the coming years will see revenues stabilise, or decline, even as capital waiver, with Kuwait joining in a second phase later that year.

Factbox Selected economic indicators

• HEAD OF STATE AND GOVERNMENT : Emir Sheikh Tamim Bin Hamad Al-Thani (since 2011 2012 2013 2014f 2015f 2013) GDP (% change)* 13.0 6.2 5.1f 5.0 6.6 • HEAD OF GOVERNMENT : Sheikh Abdullah Bin Nasser Bin Khalifa Al-Thani GDP ($bn)** 171.5 192.4 199.9f 209.9 220.6 • POPULATION (2011): ): 1.9 m (99% urban, 13% under 15) Gross nat savings*** 61.0 60.8 59.1f 56.5 52.3 • RELIGION (2004): 77% Muslim (of which 10% Shia) CPI inflation (% change) 1.9 1.9 3.7f 4.0 4.0 • PERCEIVED CORRUPTION RANK (2011): 7.2 (0-10, where 0 is highly corrupt) Gen govt total exp*** 31.0 31.1 27.0 28.2 28.1 • PER CAPITA GDP (2011): $ 92,501 Gen govt gross debt*** 37.0 35.8 32.8 29.8 28.9 • HUMAN DEVELOPMENT INDEX RANKING (2011): 37 (of 187) Current a/c bal ($bn) 52.0 62.3 59.2f 53.8 46.1 • OIL RESERVES (END 2011): 25.4bn bbls * Constant prices, ** Current prices, *** % of GDP, f = forecast • CURRENCY (END 2012): $1 = 3.64 Qatari riyals Sources: UNDP, World Bank, Pew Forum, Transparency International, Opec, QCB Source: IMF, World Economic Outlook Database, October 2013

16 GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 Risk management report: Saudi Arabia

GSN Risk Grade – C2: Riyadh feeling sidelined as Iran signs nuclear deal with world powers

Overview

POLITICS : Saudi Arabia is the giant of the Gulf Co-operation Council, not least ECONOMY : Saudi Arabia is the world’s largest oil exporter and, according to Opec, because of its massive oil wealth. Established in 1932, the kingdom is an has the second largest reserves (265.4bn bbls), behind Venezuela. Saudi absolute monarchy. To date, all rulers have been sons of Abdelaziz Bin Saud, production can reach in excess of 10m b/d (some estimates suggest as high as the first monarch; a few younger family members have recently taken more 12.5m b/d), and it is the only producer with significant swing capacity, making senior positions, but there is much speculation about what will happen when it critical to oil markets. The kingdom also has the fourth largest natural gas the aged first generation of Al-Saud eventually cede control. Reigning 89- reserves in the world, according to the International Energy Agency. On a year-old King Abdullah Bin Abdelaziz took over in 2005 on the death of his domestic level, oil wealth provides the bulk of earnings and revenue. The brother Fahd, and has overseen some reform of education and the judiciary. government is under pressure to change domestic fuel consumption patterns, He faces many problems, including a poor underclass, booming population, which, driven up by population growth and fuel subsidies, could threaten high unemployment and unrest in Shiite communities in the Eastern exports. Crude exports have declined from their peak in 2012, but high global Province. Foreign policy is driven by the desire to maintain regional oil prices and a reduction in government spending are expected to maintain hegemony and to compete with Iran. Riyadh’s relationship with Washington large (albeit reduced) fiscal and current account surpluses. has been stormy at times, but is sustained by a mutual dependence. Saudi Away from oil, Saudi Arabia has set its sights on being one of the world’s most Arabia has a poor record on human rights, and severely restricts freedom of competitive economies. This has led to huge infrastructure investment, expression. Despite small advances, women’s rights continue to be limited: improvements to transport systems (seaports, airports, road links, rail), moves women may not drive, and must have permission from a male guardian to towards a competitive wholesale electricity market, and massive investment in travel, work or enrol in higher education. King Abdullah has said women will education (literacy rates have climbed from 33% in 1970 to 83% now), health be fully involved in the four-yearly municipal council elections (the country’s and technology. Officially, the kingdom’s unemployment rate is 10.5%, but only polls) and, in early 2013, women were for the first time appointed to the that discounts large numbers of working-age Saudis. Around 90% of Saudis 150-member shura council. who work are thought to be employed by the government.

Recent developments

IRAN : Saudi Arabia gave a cautious official welcome to the landmark agreement mass destruction. Jordan is now expected to take up the UNSC seat, signed by Iran and the P5+1 in Geneva on 24 November, though prominent following a UN General Assembly vote scheduled for 6 December. royals have criticised the deal. Iran agreed to curb some of its nuclear US RELATIONS : The spat with the UN reflected growing frustration with activities in return for around $7bn in potential sanctions relief. The interim Washington, particularly over its inertia on Syria. US secretary of state John deal will last six months, while negotiations continue to try to find a lasting Kerry made a fence-mending visit to Riyadh on 3 and 4 November and met solution. Riyadh will be very anxious about the West’s rapprochement with King Abdullah Bin Abdelaziz for the first time. Both sides made substantial public its enemy, particularly at a time when the Saudi leadership has little assurances that the relationship was as strong as ever. However, it is clear that confidence in Washington’s ability to act wisely in the region. Nawaf Obaid, tensions will remain as the Syrian crisis continues and Riyadh’s pleas for western a senior fellow at the King Faisal Center for Research and long-time adviser intervention are ignored. The nuclear deal with Iran will do little to reassure to former Saudi ambassador to the US Prince Turki Al-Faisal, told an Saudi Arabia, which has felt sidelined by western powers in recent months. audience in London on 25 November that Saudi Arabia was angry at not having been briefed about secret talks between Iran and the US in recent ILLEGAL WORKERS : A seven-month amnesty for illegal migrant workers ended on months. He said Riyadh would continue to pursue its own foreign policy 3 November and, within days, thousands of workers accused of violating goals. immigration and labour laws had been rounded up. It is part of government plans to get more Saudis into the workplace, especially in the private sector, UN RELATIONS : Despite having campaigned hard for a non-permanent member where an estimated 90% of employees are foreigners. Newswires said more seat on the United Nations Security Council (UNSC), Saudi Arabia shocked than 60,000 illegal workers had been deported, with interior minister Prince the world by rejecting the seat when it won it. The Ministry of Foreign Mohammed Bin Nayef promising that more would follow. Reuters reported at Affairs released a statement on 17 October which blamed the UNSC for a least three deaths in violence linked to the crackdown. Around 4m people are long list of wrongs, including failing to solve the Syrian crisis or the Israeli- thought to have corrected their status during the amnesty, with another Palestinian issue, and not making the Middle East a zone free of weapons of million leaving the country voluntarily.

Factbox Selected economic indicators

• HEAD OF STATE AND GOVERNMENT : King Abdullah Bin Abdelaziz Al-Saud (since 2011 2012 2013f 2014f 2015f 2005) GDP (% change)* 8.6 5.1 3.6 4.4 4.3 • CROWN PRINCE : Salman Bin Abdelaziz GDP ($bn)** 669.5 711.1 718.5 746.8 770.6 • POPULATION (2011): 28.1 million (82% urban, 30% under 15) Gross nat savings*** 50.7 49.5 47.6 47.0 44.4 • RELIGION (2009): 97% Muslim (of which 10-15% Shia)

• PERCEIVED CORRUPTION RANK (2011): ): 4.4 (0-10, where 0 is highly corrupt) CPI inflation (% change) 3.7 2.9 3.8 3.6 3.5 • PER CAPITA GDP (2010): $ 20,540 Gen govt total exp*** 35.5 36.8 37.0 36.1 36.6 • HUMAN DEVELOPMENT INDEX RANKING (2011): 56 (of 187) Gen govt gross debt*** 5.4 3.7 3.3 2.8 2.4 • OIL RESERVES (END 2011): 265.4bn bbls Current a/c bal ($bn) 158.6 164.7 138.9 132.0 115.6 • CURRENCY (END 2012): $1 = 3.75 Saudi riyals * Constant prices, ** Current prices, *** % of GDP, f = forecast Sources: UNDP, World Bank, Pew Forum, Transparency International, Opec, Saudi Arabian Monetary Agency Source: IMF, World Economic Outlook Database, October 2013

GULF STATES NEWSLETTER • VOLUME 37 • ISSUE 959 • 28 NOVEMBER 2013 17 GSN view

Britain’s Cameron back on charm offensive in UAE

British Prime Minister David Cameron was back in the UAE for the third time and Abu Dhabi Crown Prince Mohammed Bin Zayed Al-Nahyan (MBZ), with in as many years on 16 November, this time heading to Dubai just ahead of whom he dined at the Emirates Palace in Abu Dhabi. the 17-21 November Dubai Airshow ( see page 14 ). There was immediate It can be no coincidence that, just a few days earlier, Cameron announced political gain to be had from the UAE’s deals with Airbus, worth more than that Britain would introduce a visa waiver for UAE citizens ( see page 10 ). The $60bn. A380 wings are designed and assembled at UK sites in Filton and Broughton, part of an Airbus programme worth around $24bn to the UK move had been widely anticipated ( GSN 952/4 ) but its timing will have economy; Cameron has made considerable noise about revitalising sweetened the mood at his meetings in the UAE. Britain has also been actively relationships with the Gulf, and was able to conclude that the new deals backing Dubai’s bid to host World Expo 2020, a vote on which was due as resulted from this effort. “This new order will sustain 2,500 jobs across the GSN went to press. “This is Dubai’s moment,” Cameron was quoted as saying UK and opens an opportunity for Rolls-Royce to bid to supply the engines in a in late October. “As you approach Dubai, its incredible skyline makes a further multibillion deal that would benefit Derby,” he said in a statement. stunning first impression. But as I discovered when I visited last year, you “The Etihad deal for 50 A350s with Rolls-Royce engines is worth a further leave with a lasting impression of something far greater.” £3bn ($4.8bn) to the economy and will secure 4,000 jobs over the next three Downing Street has been far less loquacious on the subject of ongoing human years.” rights abuses in the UAE, however. Rather than commenting directly, for Not everyone agrees that Cameron’s Conservative government has re- example, on the mass trials of Islamists that have repeatedly featured in the energised Gulf relationships. The UK parliamentary Foreign Affairs Committee press, Cameron has generally stuck to sweeping, anodyne statements about (FAC) concluded in a 22 November report ( see page 6 ) that there was no reform and friendship. In November 2012, for instance, he told an audience evidence that the relationships had been neglected under previous at Zayed University that the British-Emirati relationship must not be “a governments, and that what was currently under way was primarily a relationship based on lecturing or hectoring”, and spoke of the need for the rebranding exercise. “building blocks” of an open society, rather than calling for social change. But the British prime minister seems intent on wringing as much business out Cameron’s charm offensive does, for the most part, seem to be working, and of the Gulf as possible, in particular the UAE. As GSN has long reported, the business has been coming Britain’s way ( GSN 946/10 , 935/5 ). But as time UK has poured much time and effort into winning a massive contract to supply goes on, and human rights abuses continue, his blinkered courtship of the Typhoon fighter jets to the UAE, and submitted a formal bid in around UAE may come back to haunt him. Now that the FAC has finished considering September ( GSN 955/9 ). That will also have been on the agenda as Cameron London’s relationships with Saudi Arabia and Bahrain, it might do well to met Dubai ruler Mohammed Bin Rashid Al-Maktoum (MBR) on 16 November, scrutinise the British government’s fondness for the Emirati dirham. Gulf States Newsletter

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