Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
US President To Announce Decision On Jerusalem Today.
According to various media reports, President Trump’s administration is planning to shift away from a previous and long-standing US policy, by formally announcing later today that it will recognize Jerusalem as the capital of Israel and begin preparations to move its embassy there from its current location in Tel Aviv. Such a decision although fulfilling one of Trump’s campaign promises, is extremely controversial and a number of leaders across the world have already expressed their deep concern over such a potential announcement. Saudi Arabia’s King Salman bin Abdul Aziz, was quoted by his country’s state-owned news outlet warning, that “such a dangerous step” taken prior to the achievement of a permanent settlement of the Palestinian issue “will harm peace talks” and “is likely to inflame the passions of Muslims around the world, due to the great status of Jerusalem and Al-Aqsa Mosque.” His comments echo that of the Arab League’s Secretary General, Ahmed Aboul Gheit, who said yesterday that this measure could have “dangerous repercussions” across the region, whilst Germany’s Foreign Minister, Sigmar Gabriel, stated that; “There are signs that America is going to recognize Jerusalem as the capital of Israel, without having reached an agreement with Europe on this subject we all know what the repercussions to that may be. The German stance on this question remains unchanged: The solution to the Jerusalem question can only be found through direct contacts between the two sides, anything that could exacerbate the crisis is counterproductive.” President Trump’s speech on this topic is due to begin at 18.00 GMT today.
GCC Summit Cut Short.
The region’s annual GCC Summit, which is normally conducted over a two-day period, was reduced to just one session, after Wednesday’s scheduled meetings were cancelled. In a closing speech last night, the Emir of Kuwait, Sheikh Sabah Al Ahmed Al Jaber Al Sabah, called for the appointment of a committee which would be charged with modifying GCC statues in order to create a mechanism that would help the group resolve any current or future disputes amongst its members. "The last six months have witnessed a rift in our Gulf home, but we must look to rebuild as the GCC has achieved a great many things, and still has a long road ahead," the Emir stated according to the KUNA news agency, adding that despite "negative developments and sorrowful events" over the past six months, GCC leaders “have managed to achieve calm” which he believed was an important step towards addressing the recent diplomatic dispute surrounding Qatar.” Meanwhile the UAE announced yesterday that it had formed a new joint cooperation committee with Saudi Arabia which is aimed at exploring and coordinating ways to expand all key aspects of their bilateral relations, including economic, political, military and cultural ties. This arrangement should not really come as a major surprise because initial high level discussions over such a widening of relations between the two countries were already conducted last year.
Nigerian MPs To Investigate Suspension Of SEC Chief.
Nigeria’s House of Representatives has announced that a parliamentary committee will be set-up to investigate last week’s decision by the country’s Finance Minister, Kemi Adeosun, to suspend the head of the Securities and Exchange Commission, as well as two other officials on allegations of corruption. According to Nigeria’s Premium Times newspaper, the house’s investigation was initiated on the back of claims that the suspensions may actually be linked to an ongoing SEC enquiry into the oil company Oando. “There are allegations of interference by the Ministry of Finance in the discharge of responsibility by SEC particularly, the Oando Forensic Audit matter, which was largely responsible for the DG’s suspension,” one MP, Diri Duoye, was quoted as saying yesterday. Meanwhile the Swiss government has confirmed that it will hand over to the Nigerian authorities a sum of US$320 mio which had allegedly been previously misappropriated from the West African country by one of its former leaders, Sani Abacha.
Saudi Arabia Has Completed Its Anti-Corruption Crackdown.
According to Saudi Arabia’s Minister of Commerce and Investment, Majid bin Abdullah al Qasabi, the government has completed its large scale crackdown on high profile individuals accused of corruption. “As far as I know, this is the case,” the minister was quoted by Reuters as saying earlier this week, adding; “Now the government will not keep its mouth shut when it sees a corrupt case, so definitely it will act. But this is in terms of its magnitude, in terms of scale, in terms of how, in terms of why, in terms of now, that’s it.” He also suggested that the large pool of funds seized in connection with this purge will be used to help fund local development projects. Meanwhile according to an article in the Arabian Business magazine, Saudi Arabia’s Attorney General, Sheikh Saud al Mojeb, said yesterday that most of the people who had been detained have agreed to a financial settlement with the authorities.
US Oil Output Forecasts Are ‘Overstated’ According to MIT Report.
Researchers at the Massachusetts Institute of Technology have published a study in which they suggest that the EIA may be overstating its forecast rise in shale drilling and production. “The EIA is assuming that productivity of individual wells will continue to rise as a result of improvements in technology. This compounds year after year, like interest, so the further out in the future the wells are drilled, the more that they are being overestimated,” one of the authors of the report was quoted as saying by Bloomberg, explaining that his team’s research had discovered that in fact it was not improved technology that been the prime driver behind a jump in shale production, but rather low energy prices, which led drillers to focus on sweet spots where oil and gas are easiest to extract.
Moodys Issues A ‘Stable’ Outlook For The GCC’s Banking Sector.
Moodys Investor Services issued a statement this morning in which it pronounced a stable outlook for GCC banks, despite a generally sluggish economic environment. “The outlook for GCC banks is stable overall reflecting strong financial fundamentals, particularly in the largest banking systems, that provide resilience to profitability and loan quality challenges from slower economies. Fiscal and geopolitical risks however continue to pose challenges for various countries. Moody's forecasts that real GDP growth in the region will pick up slightly to around 2% in 2018 from 0% in 2017, as oil prices stabilize between US$50 and US$60 a barrel. Although fiscal consolidation efforts in the region will persist, key regional infrastructure projects, such as UAE Expo 2020, World Cup Qatar 2022 and the Saudi National Transformation Program will support capital spending and credit growth which should expand by 5% in 2018. Banks' capital levels will remain broadly stable and well above Basel III minimum regulatory requirements, in a context of modest credit growth in 2018. Combined with high loan-loss reserves, this provides banks with strong loss-absorption capacity. Tangible Common Equity ratios will remain broadly in the 11%-16% range and problem loan coverage, at around 95%+ across the region, is high. Low cost and stable deposit based funding, combined with elevated liquidity buffers will remain a credit strength of GCC banks. In 2017, governments injected liquidity from international debt issuances, thereby easing a lengthy funding squeeze which had stemmed from low oil prices,” the agency’s statement read.
MSCI To Continue Using Onshore US$/QAR Rate.
MSCI announced late yesterday that it had decided to continue to use the current onshore FX rate when valuing Qatari shares for the time being, but would "closely monitor the accessibility of the Qatari FX market and may potentially decide to switch to the offshore exchange rates in the future should the situation materially deteriorate".
Egypt Set To Receive Final Tranche Of World Bank Loan.
Egypt will this week receive the final US$1.5 bio tranche of a US$3.15 bio development loan from the World Bank this week.
Zambia Plans To Begin Refinancing Its Eurobonds.
An official from Zambia’s MOF has been quoted by Reuters suggesting that the government in Lusaka plans to start refinancing US$2.8 bio of its Eurobonds in 2019 in an attempt to lower country’s debt servicing costs.
European Union Issues Global Tax Haven ‘Blacklist.’
The EU last night issued a list of 17 countries who it claims need to amend their tax governance policies in order to help support a drive to clampdown on large-scale global tax evasion. Some of the countries included are : Bahrain, Grenada, Panama, South Korea and the UAE. You can read the EU’s detailed statement on this topic here
Did you know that the Arab mathematician and astrologer, Ibn al Haytham who lived in Basra around 965 AD, was the first person to describe how the eye works? He carried out experiments with reflective materials and proved that the eye does not sense the environment with “sight rays,” as other scientists had believed up until then. He also discovered that curved glass surfaces can be used for magnification. His glass “reading stones” are considered to be the world’s first magnifying glasses. It was from these that spectacles were later developed.
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