Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
Turkey-US Dispute Sees Visa Services Suspended.
A serious diplomatic row has erupted between the US and Turkey after an employee at the US embassy in Ankara was arrested late last week over his alleged links to the banned Gulen movement. In response to the arrest of Metin Topuz, (who is a Turkish national), the US embassy suspended all non-immigrant visa services in the country, a move quickly replicated by Turkey’s consulate in Washington. The US administration has said it was “deeply disturbed” by the arrest and that the charges were “without merit,” while the US ambassador to Turkey, John Bass, was quoted by the VOA claiming that the detention of Topuz, “does not strike me as pursuing justice. It seems to me more a pursuit of vengeance.” US-Turkish ties were strained even before this latest development, due primarily to ongoing demands by Ankara for the extradition of Fethullah Gulen from the US, but also over disagreements on how to handle the Syrian crises, last year’s arrest of a US pastor in Turkey, based on claims he also had links to Gulen, and US Grand Jury charges initiated against 15 members of President Erdogan’s bodyguard on reports they beat-up a number of protestors outside the Turkish embassy in Washington during Erdogan’s official visit to the US in May this year. This most recent dispute triggered a sharp sell-off in Turkish financial markets this morning, with the Lire tumbling more than 2.50% against the US dollar thus far.
As US Decision On Nuclear Accord Approaches Iran Issues Fresh Warnings.
As we mentioned last week, it looks increasingly likely that the Trump administration will not certify Iran’s compliance with the terms of the 2015 agreement governing its nuclear program at the upcoming 3-monthly review this Thursday, and then leave it to congress to decide whether or not this “spirit of non-compliance” deserved a snap-back of US sanctions on the country. However it’s not clear at this stage if those congress members who have long-called for the re-imposition of tough sanctions on Tehran, have enough support in the house to push such an action through. Meanwhile the head of Iran’s Revolutionary Guards, Mohammad Ali Jafari, warned yesterday that if such sanctions were re-enacted it would end forever "any chance for engagement" between his government and Washington. His comments follow those made on Saturday by President Rouhani who was quoted by the FT suggesting that the world would condemn the US for violating an international agreement.
Qatar Ponders US$9 Bio Bond Sale.
Qatar is reportedly already conducting talks with various banks over a potential bond issuance as it seeks to replace some of the funds which left the country following the sanctions effort initiated by the Arab quartet against Doha in June this year, according to a Bloomberg article published this morning. If such a sale should go ahead most expect it to be similar in size to the US$9 bio issued last year, it will also give a clearer picture of investor sentiment towards the country. Meanwhile QNB will most likely also be seeking to refinance a US$ 3 bio loan which is set to mature during Q1 of next year.
US Approves Major Arms Deal With Saudi Arabia.
According to a press release issued by the Pentagon on Saturday, the US State department has approved the sale of 44 THAAD anti-missile defence systems including 16 mobile fire-control and communication stations to Saudi Arabia in a deal worth up to US$15 bio. “This proposed sale will support the foreign policy and national security objectives of the United States by improving the security of a friendly country. This sale furthers US national security and foreign policy interests, and supports the long-term security of Saudi Arabia and the Gulf region in the face of Iranian and other regional threats. This potential sale will substantially increase Saudi Arabia’s capability to defend itself against the growing ballistic missile threat in the region,” a statement published on the Pentagon’s ‘Defence Security Cooperation Agency’ website read.
Moodys Maintains Stable Outlook On UAE Banking System.
Moodys has retained its stable outlook on the UAE’s banking system saying in statement published on the agency’s website that this decision; “Reflects the sector’s economic resilience, strong capitalization, stable funding and liquidity conditions.,” and adding that it expects stronger economic growth in the UAE next year which in turn “will support the banking system's credit growth, whilst stable oil prices and further international bond issuances will continue to support funding and liquidity conditions in the country.”
S&P Affirms KSA Ratings – Expects “Generous” Aramco Dividend Policy.
Standard & Poors has affirmed its A-/A2 long and short-term sovereign credit ratings on Saudi Arabia with a stable outlook. In a statement the ratings agency said its decision was driven by; “Our expectation that the Saudi authorities will take steps to consolidate public finances and maintain government liquid assets close to 100% of GDP over the next two years,” although adding that it could lower its ratings if it observed “a further deterioration in Saudi Arabia's public finances.” S&P also said that it expected Aramco to embrace an attractive dividend policy when it floats a portion of the company next year. “The government will be incentivized to encourage Saudi Aramco to follow a generous dividend policy to compensate for the reduction in tax revenues. In this way, the interests of investors and the government will be more aligned,” S&P stated. Saudi Arabia lowered its oil sector tax rate from 85% to 50% earlier this year.
Omantel Raises Stake In Zain.
Oman Telecommunications has agreed to buy a further 12% stake in Zain for around US$945 mio according to a recent Reuters report. Omantel already has a 9.84% share in the Kuwaiti based firm.
S&P Affirms Morocco Ratings.
S&P has affirmed its BBB-/A3 long and short-term ratings on Morocco saying it expects the government will continue to follow a path of “budgetary consolidation and growth enhancing reforms.”
Oman Reports US$6.50 Bio Budget Deficit.
Oman has reported a US$6.50 bio budget deficit for the first 7 months of this year, compared to US$9.60 bio over the same period last year. According to official data, total spending fell by 2.70% due to various rationalization measures implemented by the government, while oil sector related revenues rose driven primarily by the improvement in global crude prices.
Did you know that Egypt’s Great Pyramid in Giza was built as a burial place for King Khufu (2589-2566 BC) and took more than 20 years to construct? It is built from over two million blocks of limestone and stands 460 feet high, while the base takes up almost as much space as five football fields.
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