Qatar Crises Likely To Be Protracted As Tillerson Heads For Home.
The US Secretary of State, Rex Tillerson, returned to Washington last night after four days of shuttle diplomacy which thus far does not appear to have resulted in any major breakthrough. The State Department only issued a brief statement on Thursday saying; "Based on his meetings, the secretary believes that getting the parties to talk directly to one another would be an important next step.” Meanwhile the UAE’s Minister of Foreign Affairs and International Cooperation has said that the Qatar issue can only be resolved by properly addressing the problem, not just by trying to ease tensions; "We believe that there are two ways of dealing with things, whether to try and ease tension or try to address a problem. We do not believe that an attempt to ease the tension will address the matter, but will lead to delaying the problem, which will lead to a doubling of the situation in the future. We in the region have decided not to allow any kind of tolerance towards extremist groups, terrorist groups and hate groups. Our region has suffered enough, so when nations like Saudi Arabia and Egypt have decided to do that, we are optimistic. If Qatar wants to be a member of this alliance, then it is more than welcome, but if Qatar wants to be on the other side, then as we say in Arabic, ‘It’s time to say good bye’,” Sheikh Abdulla was quoted as saying by ‘The National’ newspaper. His comments were echoed by the UAE Minister of State for Foreign Affairs, Anwar al Gargash, who tweeted this morning that; “We are headed for a long estrangement, we are very far from a political solution involving a change in Qatar’s course, and in light of that nothing will change and we have to look for a different format of relations.”
Nigeria Agrees To Consider Crude Output Cap.
Nigeria’s Oil Minister, Emmanuel Kachikwu, said this week that his government was willing to join OPEC/NOPEC’s crude output cap agreement once Nigeria could sustainably pump 1.8 mio bpd. “As a serious member of OPEC, we stand ready to support the cuts when we are sure that we can have a stable predictable production. We are still are below the 1.8 million barrel a day benchmark set for us by OPEC. I think that over the next one or two months, hopefully, we can get to that point where we can say the recovery has been tested, it is systemic and predictable,” Kachikwu was quoted via Bloomberg as saying, while a statement issued by his ministry later added; "Nigeria has reaffirmed its commitment to continue working with other players for the stability of the global oil market,”. The last time Nigeria was producing at 1.8 mio bpd was February 2016. Meanwhile oil prices have so far managed to sustain this week’s recent recovery rally supported in part by the sharpest weekly decline in US inventories in 10 months, and on stronger demand from China. The latest IEA data showed that China imported 8.55 mio bpd during the first half of this year, which a 13.80% increase over the same period last year and makes it the world’s biggest crude importer, followed by the US.
Djibouti Will Soon Be Home To China’s First Overseas Military Base.
Two Chinese naval vessels and an undeclared number of troops set sail for Djibouti this week ahead of the formal opening of China’s first overseas military base. Beijing has signed an initial 10-year lease for the base and will reportedly pay the Djibouti government US$20 million per year in rent. According to a statement on the Chinese Defence Ministry’s website the base; “will ensure China's performance of missions, such as escorting, peace-keeping and humanitarian aid in Africa and West Asia. It will also be conducive to overseas tasks, including military cooperation, joint exercises, evacuating and protecting overseas Chinese and emergency rescue, as well as jointly maintaining security of international strategic seaways.” Sitting as it does at the strategically important horn of Africa, Dijbotui already plays host to a number of foreign armies, including France, Italy and Japan, as well of course the US, whose current facility there is its only permanent base in Africa and is situated just a few miles from China’s.
IMF Congratulates Egypt On Reform Progress.
The Managing Director of the IMF released a statement yesterday confirming the fund’s board agreement to release the next US$1.25 bio loan tranche to Egypt, and congratulating the country on its progress so far with regards to implementing economic reforms. “I would like to congratulate the people of Egypt and the authorities for their success in pursuing their ambitious economic reform program. The approval by the IMF Executive Board of the First Review of the program shows the IMF’s strong support for Egypt in these efforts. We believe that these efforts will yield results. The government and the central bank have taken the right measures to rein in inflation, reduce the budget deficit, and set the Egyptian economy on a path to stability and growth. I am very pleased that the government has taken and will continue to take measures to protect the poor and vulnerable groups, including through increasing social spending. We look forward to continuing our partnership with Egypt to help unleash its economic potential and achieve higher and more inclusive growth that benefits all the Egyptians,” the statement by Christine Lagarde read.
London Attempts To Win Aramco Listing.
UK regulators yesterday unveiled radical new proposals governing the listing of state-owned firms on the LSE, in a move which many suggest is a clear attempt to win what could potentially be the world’s largest ever IPO, namely the listing of 5% of Saudi Aramco. Discussing the proposals, the head of the Financial Conduct Authority, was quoted as saying; “Sovereign owners are different from private sector individuals or companies, both in their motivations and in their nature. Investors have long recognized this and capital markets are well adapted to assess the treatment of other investors by sovereign countries.” Saudi Aramco will probably be listed on the Saudi Exchange, but the firm is also considering a float on either New York or London.
Tunisia’s Trade Deficit Widens.
Tunisia’s trade deficit widened by 25% during the first half of this year compared to the same period in 2016, and was driven by a sharp increase in imports. Imports rose by 16.40% to TND 23.60 billion while exports rose to TND 16.07 bio against TND 14.25 bio in H1 last year, according to the country’s office of statistics. Earlier this year the government announced a restriction on the import of certain goods such as luxury items in an attempt to rein in the deficit and protect the CB’s FX reserves. “The fall of the Dinar reflects this enormous trade deficit but there is no need to panic. We will take some decisions, we will limit some random imports, we have a lot of unnecessary imports,” The Prime Minister stated in April.
Namibia & Ghana’s Inflation Rates Ease.
CPI in Namibia eased to 6.10% y/y in June from 6.30% in May, while Ghana’s slipped to 12.10% against 12.60% the previous month.
Angola’s FX Reserves Continue To Fall.
Angola’s net foreign exchange reserves dipped to US$18.03 bio in May compared to US$18.435 bio in April and US$19.20 bio in March, according to the latest data released by the country’s Central Bank.
According to an article in Gulf Business magazine this week, the UAE’s first drone taxi could soon be taking passengers after several test runs in Dubai. The EHANG184 Autonomous Aerial Vehicle has been undergoing testing for safety and durability in different wind and weather conditions by Dubai’s Civil Aviation Authority. It can cruise for up to 25 minutes at 60 km per hour at heights of up to 3,500m above sea level and needs just one hour to fully recharge its battery. A Fail Safe system ensures that the machine will still operate safely without hindering its performance if there are any abnormalities in its operation, the manufacturer claims. Similarly, if the aircraft suffers from an unexpected malfunction while airborne, it will immediately find the nearest and safest location to land. The machine is equipped with a built in air conditioner, a light fixture and a cushioned seat, while the passenger can easily operate the drone with a touch of a screen. All that is required is to select the intended destination, and press go to operate.
Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
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