NBAD Middle East & African Monitor - 30 November 2016
Turkish Forces “Will end Assad’s rule” – Erdogan
President Tayyip Erdogan was quoted by the Hurriyet newspaper as saying last night, that his country’s decision to send its military into Syria was to remove Bashar Assad from office. “Why did we enter? We do not have an eye on Syrian soil, the issue is to provide lands to their real owners, that is to say we are there for the establishment of justice, we entered there to end the rule of the tyrant al-Assad who terrorises with state terror, we didn’t enter for any other reason,” Erdogan stated adding that Turkey could not “endure” the relentless killing of civilians and “had to enter Syria together with the Free Syrian Army.” He also criticised the UN for their perceived ongoing inability to end the conflict there, "Close to one million people died in Syria, and they continue dying. Where is the U.N.? What are they doing? We kept saying 'patience, patience, patience' but could not take it anymore and entered Syria.”
US & Iranian Navies continue to face-off in the Gulf
As we have mentioned in previous commentaries and for many months now, the US navy has accused Iran’s military of harassing and undertaking provocative activity against its vessels sailing through the Arabian Gulf, especially near the Strait of Hormuz. The latest spat occurred this past Saturday when the Pentagon claimed that an Iranian fast-attack boat had pointed its weapon directly at a US MH-60 Seahawk helicopter as it flew over international waters, adding that such actions were “unprofessional and unsafe.” The helicopter belonged to the Eisenhower Carrier Strike Group which was transiting through the Strait at the time of the incident, while the patrol boat belongs to the Revolutionary Guard’s Naval Force which took over responsibility for the country’s coastal defence in 2007. Since then the number of incidents has sky-rocketed including several high profile incidents such as the detention of 10 US sailors near Farsi Island earlier this year. In response the IRGC has branded the latest US allegation as “false” saying in the state-controlled Tasmin media that; "Some U.S. officials occasionally repeat such allegations, and it shows that they are seeking certain goals beyond their propaganda campaign against Iran. Therefore, we tell them with emphasis, stop the propaganda, you are the problem."
All eyes remain on OPEC
Its crunch day for the oil market today as OPEC holds its last scheduled meeting for the year, and the world waits to see if any sort of production/freeze agreement will be finalised. There has been some frantic and ongoing shuttle diplomacy taking place between various crude producing capitals right up to this morning, although it still remains unclear if a deal will be struck. However comments made earlier today by the Iranian Oil Minister suggesting that he was “optimistic” on an agreement being reached are encouraging. The meeting is due to start in Vienna at 0900 GMT.
Tunisia receives major financial boost
Tunisia, which has been struggling to emerge from the social and economic upheaval triggered by the ‘Jasmine’ revolution in 2011 is set to receive billions of dollars in direct aid and soft loans from various countries following a successful 2-day investment conference in Tunis yesterday. Amongst those countries and institutions pledging funds were; Qatar (US$1.25 bio), Saudi Arabia (US$800 mio), Kuwait (US$500 mio), Turkey (US$100 mio), the European Investment Bank (US$2.65 bio) and the Arab Fund for Economic and Social Development (US$1.5 bio). Meanwhile the government announced yesterday that it planned to conduct a EUR 1 bio bond issuance in January. All this will help stabilise finances but the country still faces serious challenges, international donors for example will want the economic reform and austerity process to continue, this will be a necessary but painful experience in the short-term, especially for the poorer sections of Tunisian society and thus raise the risk of further public protests.
Pressure builds on Ghana’s shilling
USD/GHS had been drifting within a range of 3.7000-4.0000 since September last year. However this was finally broken over the past few weeks and the pair now lies just below its previous all-time high of 4.4900. The reasons for this move include; recent broad-based USD strength, rising political risk with elections due to take place in early December and an increase in fiscal spending which is likely to test the patience of the IMF, which currently has a loan programme in place with Ghana. Further weakness of the local currency is expected and thus we suggest buying USD via the 3 or 6 month NDFs on any near term dips, with a target of 5.0000 for the Spot price within the same sort of time period.
Egypt’s CB eases FX restriction
According to a Bloomberg article published this morning, the Central Bank of Egypt has allegedly given local banks permission to sell up to 50% of their excess hard currency holdings to clients who do not qualify for the priority list and/or directly into the interbank market. This story has not as yet been officially confirmed.
Sterling & Wilson win solar contract in Morocco
India’s S&W have been awarded the contract to build a 170MW solar power facility in Ouarzazate.
Did you know that donkeys and camels were first domesticated in Ethiopia?
Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
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