Menu

Middle East & African Monitor – 18 July 2017

  • US Recertifies Iran’s Compliance To Nuclear Accord But Warns Over “Misbehavior.”
  • Arab Quartet Vows To Maintain Pressure On Qatar.
  • Domestic Politics May Delay IMF Loan To Zambia – FITCH.
  • 1st Phase Of ‘Energy City’ Project In Saudi Arabia To Be Completed By 2021.
  • EGA Ponders Dual Listing.
  • Kenya’s CB Keeps Interest Rates Unchanged.
  • Nigeria’s Inflation Rate Continues To Ease.

REGIONAL COMMENTARY

US Recertifies Iran’s Compliance To Nuclear Accord But Warns Over “Misbehavior.”
The US government has again certified Iran’s compliance with the terms of the 2015 nuclear accord, (an ongoing 3-monthly review in which Washington judge’s Tehran’s adherence), but has warned that it will begin to police the accord more strictly in future, especially when it comes to Iran’s missile testing which the Trump administration has described as “undermining” the spirit of the agreement. According to an article on ‘The Hill’ website a number of senior US officials were quoted as saying yesterday that additional sanctions against Iran were being considered due to other non-nuclear “malign activities” by Tehran. “The malign activities outside the realm of the nuclear agreement include Iran’s support for terrorism, human rights abuses, backing of Syrian President Bashar Assad, and hostility to Israel. The President and the Secretary of State judge that these Iranian activities severely undermine the intent of the JCPOA which was to contribute to regional and international peace and security, and as a result, the President, Secretary of State, and the entire administration judge that Iran is unquestionably in default of the spirit of the JCPOA,” an official stated adding, “In our view, the previous administration allowed the nuclear agreement to be the tail that wagged the Iran policy dog. We are determined not to repeat that mistake and we are approaching all this as part of an integrated strategy to holding Iran accountable for its misdeeds in all respects and trying to contain the threats that Iran presents to our interest, and those of our allies and friends in the region. Moving forward, the Trump administration intends to engage a strategy that will address the totality of Iran’s malign behavior and not narrowly focus solely on the nuclear accord. The strategy includes new sanctions aimed at holding Iran responsible for its misbehavior in the region in a bunch of fronts.” Meanwhile rising political tensions between Iranian conservatives and ‘reformists,’ an issue that we have outlined in previous commentaries, appears to have been highlighted again this past week with the arrest of President Rouhani’s brother and former advisor, Hassan Ferydoun, on as yet unknown charges. During this year’s Presidential campaign and after, Hassan Rouhani has publically accused hardliners within the regime for trying to sabotage the nuclear accord and his plans to reform the Iranian economy.

Arab Quartet Vows To Maintain Pressure On Qatar.
The UAE’s Minister of State for Foreign Affairs, Dr Anwar Mohammad Gargash, was quoted by Gulf News as saying in London yesterday that Qatar; “Cannot be part of a regional organization dedicated to strengthening mutual security and furthering mutual interest, and at the same time undermine that security. We’ve sent a message to Qatar. We’ve said we are not there to escalate, we are not after regime change, we are after a change of behavior,” he said adding; “We need a regional solution and international monitoring, we need to be certain that Qatar, a state with US$300 billion in reserves, is no longer an official or unofficial sponsor of jihadist and terrorist causes.” Meanwhile the Egyptian Foreign Minister, Sameh Shoukry, has confirmed the Arab group’s commitment to maintaining their current sanctions against Qatar, "in light of what the quartet states see as Qatar's stalling and procrastination, and lack of concern for the concerns of the four states." Egypt has also announced that it plans to end visa-free entry to the country for Qatari citizens. "It does not make sense to keep making exceptions for Qatar and giving it privileges in light of its current positions, thus Qatari nationals will now have to apply for a visa in order to enter Egypt,” an Egyptian foreign ministry spokesperson was quoted as saying yesterday, although adding that, Qatari nationals with Egyptian mothers, those married to Egyptians, and Qataris studying in Egypt would remain exempt.

Domestic Politics May Delay IMF Loan To Zambia – FITCH.
Fitch ratings agency has warned in a recent statement that its current sovereign credit ratings on Zambia may be under threat due to potential delays in the approval of an IMF loan package for the central African country. “Progress towards an IMF program for Zambia remains slow and may be further delayed by domestic political events. Our expectation of an IMF program is a key support to Zambia's 'B'/Negative sovereign rating. The IMF's most recent mission to Zambia, which concluded last month, resulted in the Zambian authorities agreeing with the IMF on the ‘remaining actions needed to reach staff-level agreement’. But the IMF's end-of-mission statement suggests that recent progress has been slower than expected, and that there are still obstacles to reaching a deal. It noted continuing revenue shortfalls and the possible emergence of new arrears, and highlighted the need for improved fiscal discipline,” the FITCH statement read adding; “Domestic political pressures could also distract the authorities' focus from the economy. On 12 July, the Zambian Parliament approved the ‘enhanced security measures’ that President Edgar Lungu instituted earlier in the month after a fire destroyed the country's biggest market. Tensions have been increasing since the main opposition leader Hakainde Hichilema was arrested and charged with treason in April, for supposedly obstructing President Lungu's motorcade. Political stability has been a rating strength for Zambia, which has experienced less political violence or election-related instability than many 'B' and 'BB' category sovereigns. The key rating drivers continue to be fiscal and external deficits and their effect on public sector debt and the economy's vulnerability to shocks. The key risk stemming from domestic political tension or uncertainty would be if it escalated to a point which jeopardized the IMF's and other lenders' willingness to provide Zambia with external financing.”

1st Phase Of ‘Energy City’ Project In Saudi Arabia To Be Completed By 2021.
The first phase in the construction of an ‘energy’ city in the eastern region of Saudi Arabia will be completed by 2021 according to a statement released by Saudi Aramco. The official Saudi press agency claims that this new industrial city will be developed on a 50 sq km of land close to Abqaiq, a Saudi Aramco gated community and oil-processing facilities located in the eastern province of the country. The CEO of Aramco, Amin Nasser, said the development was part of an overall government effort to localize industries and services related to energy. “It will create an ideal and integrated environment to attract global investments; establish and develop a large number of small- and medium- enterprises, and stimulate innovation and entrepreneurship, Nasser said. Earlier this month Saudi Arabia’s Council of Ministers approved Saudi Aramco's offer to establish a company to manage the development of the new city.

EGA Ponders Dual Listing.
The world’s fourth largest aluminum company, Emirates Global Aluminum, is reportedly considering listing on both the Abu Dhabi and Dubai exchanges according to a recent Bloomberg report. The UAE based firm, which is jointly owned by Abu Dhabi’s sovereign wealth fund, Mubadala Investment Company, and the Investment Corporation of Dubai, is planning an IPO that could potentially raise up to US$3 bio.

Kenya’s CB Keeps Interest Rates Unchanged.
Kenya’s Central Bank kept its benchmark lending rate unchanged at 10% following its regular MPC meeting yesterday. This decision was pretty much expected especially as the country’s inflation rate has recently fallen back into single digit territory.

Nigeria’s Inflation Rate Continues To Ease.
Nigeria’s CPI rate dipped for the fifth month in a row in June, slipping to 16.10% against 16.25% in May according to the latest official data.

18-07-2017-a

AND FINALLY…
A baboon reportedly broke into the 108MW power station supplying electricity to the Zambian town of Livingstone last week, disturbing the transformer and cutting power to over 40,000 homes. The animal apparently also suffered an electric shock but managed to survive the ordeal.

Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
MarketInsights&Strategy@nbad.com
Tel: +971 2 6110 127

Disclaimer:
To the fullest extent allowed by applicable laws and regulations, National Bank of Abu Dhabi PJSC (the “Bank”) and any other affiliate or subsidiary of the Bank, expressly disclaim all warranties and representations in respect of this communication. The content is confidential and is provided for your information purposes only on an “as is” and “as available” basis and no liability is accepted for or representation is made by the Bank in respect of the quality, completeness or accuracy of the information and the Bank has undertaken no independent verification in relation thereto nor is it under any duty to do so whether prepared in part or in full by the Bank or any third party. Furthermore, the Bank shall be under no obligation to provide you with any change or update in relation to said content. It is not intended for distribution to private investors or private clients and is not intended to be relied upon as advice; whether financial, legal, tax or otherwise. To the extent that you deem necessary to obtain such advice, you should consult with your independent advisors. Any content has been prepared by personnel of the Global Markets division at the Bank and does not reflect the views of the Bank as a whole or other personnel of the Bank.