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Stability and Instability in the Gulf Region in 2016: a Strategic Net Assessment

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Stability and Instability in the Gulf Region in 2016: a Strategic Net Assessment Strategic Net Assessment: Stability in the Gulf Region 13.6.2016 AHC 1 Stability and Instability in the Gulf Region in 2016: A Strategic Net Assessment By Anthony H. Cordesman With the assistance of Max Markusen and Eric P. Jones Working Draft: June 15, 2016 Please provide comments to [email protected] Cover: MOHAMMED HUWAIS / Stringer Strategic Net Assessment: Stability in the Gulf Region 13.6.2016 AHC 2 INTRODUCTION ...................................................................................................................................... 7 I. KEY CHALLENGES TO REGIONAL AND NATIONAL STABILITY ............................................ 8 KEY AREAS OF RISK .................................................................................................................................................. 8 TRENDS IN CONFLICT AND SECURITY PROBLEMS ............................................................................................... 9 TRENDS IN POLITICS, GOVERNANCE, DEMOGRAPHICS, AND ECONOMICS ................................................... 10 ILLUSTRATING THE FORCES THAT SHAPE THE GULF REGION ....................................................................... 10 THE IMPACT OF ISLAM AND THE STRUGGLE FOR ITS FUTURE ....................................................................... 11 Figure I.1 The Growing Global Impact of Islam ................................................................................ 12 Figure I.2: Differing National Attitudes Towards the Role of Islam in Governance and the Rule of Law ................................................................................................................................................ 14 Figure I.3: Soufan Estimate of Source of Foreign Volunteers or “Fighters” for ISIS – Part One ....................................................................................................................................................................... 15 Figure I.3: Soufan Estimate of Source of Foreign Volunteers or “Fighters” for ISIS – Part Two ...................................................................................................................................................................... 16 Figure I.4: BBC Estimate of Source of Foreign Volunteers or “Fighters” for ISIS – May 2015 ..................................................................................................................................................................... 17 THE CHALLENGE OF GOVERNANCE AND CORRUPTION ................................................................................... 18 Figure I.5: Government Effectiveness and Failed Secularism: ................................................... 19 Figure I.6- Part One: Corruption .............................................................................................................. 20 Figure I.6 - Part Two: Corruption ............................................................................................................ 21 Figure I.7: Government Effectiveness vs. Control of Corruption .............................................. 22 Figure 1.8 : Impact of Governments on Press Freedom Index – 2015 .................................... 23 Figure 1.9 Excessively Large Paramilitary and National Security Forces ............................. 24 Figure 1.10 – Part One: Satisfaction with the State: 2013 ............................................................ 25 Figure 1.10 – Part One: Satisfaction with the State: 2013 ............................................................ 26 THE CHALLENGE OF DEMOGRAPHICS, POPULATION GROWTH, AND “YOUTH BULGES” ........................... 27 Figure I.11: Gulf Population Trends ...................................................................................................... 28 Figure I.12: Comparative Demographic Pressure in Gulf Countries by Individual Country (1950-2050) in Thousands ...................................................................................................... 29 Figure I.13: The “Youth Bulge” in the Gulf .......................................................................................... 30 Figure I.13: The “Youth Bulge” in the Gulf .......................................................................................... 31 Figure I.14: Hyper-Urbanization in the Gulf ...................................................................................... 32 THE CHALLENGE OF ECONOMIC GROWTH, MODERNIZATION, AND CHANGES ........................................... 33 Figure I.15: Correlation Between Violence and Ease of Doing Business ............................... 34 Figure I.16: Per Capita Income and Wealth in the Gulf, Comparing 2000 and 2015 in Key Countries ................................................................................................................................................... 35 Figure I.17: Gini Index .................................................................................................................................. 36 Figure I.18: Population Below Poverty Line (in Percent) ............................................................ 37 Figure I.19: Official Unemployment Rates .......................................................................................... 38 Figure I.20: Youth Employment vs. Labor Efficiency ..................................................................... 39 Figure I.21: Youth Labor Employment vs. Unemployment ......................................................... 40 Figure I.20: Youth Employment vs. Labor Efficiency ..................................................................... 41 CONFLICT WITHIN THE ISLAMIC WORLD, SUNNI-SHI’ITE TENSIONS, THE RISE OF ISLAMIC EXTREMISM ................................................................................................................................................................................... 42 THE ISRAELI-PALESTINIAN ISSUE ....................................................................................................................... 42 U.S. STRATEGIC COMMITMENTS ......................................................................................................................... 43 II. IRAN’S STABILITY, INTERNAL SECURITY AND MILITARY CAPABILITIES .................... 44 IRAN’S RISK STATUS .............................................................................................................................................. 44 Figure II.1: Iran: Summary Risk Assessment ..................................................................................... 45 IRAN’S POLITICAL SYSTEM AND REGIME ........................................................................................................... 47 IRAN’S GOVERNANCE ............................................................................................................................................. 48 Figure II.2: World Bank Rating of Governance in Iran ................................................................... 49 IRAN’S ECONOMIC, AND DEMOGRAPHIC STRUCTURE ...................................................................................... 49 IRAN, PETROLEUM AND THE LIFTING OF SANCTIONS ..................................................................................... 55 Iran’s Capability to Raise its Exports ........................................................................................................ 56 Strategic Net Assessment: Stability in the Gulf Region 13.6.2016 AHC 3 Figure II.3: EIA Estimate of Iranian Petroleum Liquids Production ........................................ 57 Iranian Competition for Market Share with Other Regional Exporters .................................... 58 Figure III.4: Iran’s Limited Production Compared to Other Middle Eastern States .......... 59 Figure II.5: Saudi Production Trends .................................................................................................... 59 The Impact of the “Crash” in Petroleum Prices .................................................................................... 60 World Bank Estimate of the Economic Impact of Lifting Nuclear Sanctions ........................................................ 62 IMF Estimate of the Economic Impact of Lifting Nuclear Sanctions ........................................................................ 62 Figure II.6 – Part One: IMF Estimate of the Economic Impact of Lifting Sanctions ........... 64 Figure II.6– Part Two: IMF Estimate of the Economic Impact of Lifting Sanctions ........... 65 IRAN’S MILITARY CAPABILITIES AND THE US AND ARAB GULF STATES ..................................................... 66 Military Spending and Current Military Forces ................................................................................... 66 The Iranian Nuclear Deal ............................................................................................................................... 67 IRAN VERSUS THE US AND THE SOUTHERN GULF STATES ............................................................................. 69 THE IMPACT OF IRAN’S EVOLVING MILITARY THREAT ON THE GULF MILITARY BALANCE .................... 71 TRENDS IN MILITARY SPENDING FAVOR THE GCC STATES ........................................................................... 72 THE TRENDS IN MODERN ARMS TRANSFERS ARE EVEN MORE FAVORABLE ............................................. 72 Figure II.7: Iran’s Military Spending Compared to the GCC States ..........................................
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