Trump Opens “New Page” In US Relations With The Arab World.
The President of the National Council on US-Arab Relations, Duke Anthony, described this past weekend’s visit to Saudi Arabia by Donald Trump as a chance to heal relations with the Muslim world; “By selecting Saudi Arabia as the first stop on his historic visit, the first official one to any foreign country, President Trump has been prudent to seize an opportunity to turn a new and more positive page toward Arabs and Muslims in the region and beyond. The President’s visit has a chance to begin healing wounds that have been inflicted on Muslims the world over,” Anthony was quoted as saying by Arab News. The US president did indeed attempt to highlight his administration’s desire to reset US-Arab relations during a speech he gave at the Arab-Islamic-American Summit in Riyadh yesterday, in which he stated that his country would not try to impose its ideals on others, but rather focus on shared interests with its regional allies including the eradication of extremism; “Every nation has an absolute duty to ensure that terrorists find no quarter on their soil. But the nations of the Middle East cannot wait for American power to crush this enemy for them, the nations of the Middle East will have to decide what kind of future they want for themselves, for their countries and for their children, it is a choice between two futures, and it is a choice America cannot make for you. A better future is only possible if your nations drive out the terrorists and extremists.” Trump stated whilst also taking aim at Iran which he accused of creating instability in the region, and supporting terrorist groups. “No discussion of stamping out this threat would be complete without mentioning the government that gives terrorists all three: Safe harbor, financial backing and the social standing needed for recruitment. It is a regime that is responsible for so much instability in the region, I am speaking of course of Iran. From Lebanon to Iraq to Yemen, Iran funds, arms and trains terrorists, militias and other extremist groups that spread destruction and chaos across the region. For decades, Iran has fueled the fires of sectarian conflict and terror, it is a government that speaks openly of mass murder, vowing the destruction of Israel, death to America, and ruin for many leaders and nations in this room,” he said, adding that “The Iranian regime’s longest-suffering victims are its own people, Iran has a rich history and culture, but the people of Iran have endured hardship and despair under their leaders’ reckless pursuit of conflict and terror. Until Tehran is willing to be a partner for peace, all nations of conscience must work together to isolate it, deny it funding for terrorism, and pray for the day when the Iranian people have the just and righteous government they deserve.”
Rouhani Secures 2nd Term As Iran’s President.
Hassan Rouhani clinched a second Presidential term in a landslide electoral victory last Friday benefiting from a large voter turnout. It’s worth noting however that, although the Supreme Leader, Ayatollah Khamenei, praised the Iranian peoples participation level in these elections, he did not directly congratulate Rouhani, suggesting the President will likely continue to face a firm pushback on his more ‘reformist’ policies from hardliners within the regime. Such opposition was highlighted soon after the final results were announced in comments made by a conservative cleric, Reza Gholami, who the Guardian newspaper quoted as saying; “Mr Rouhani should not forget that more than 16 million people did not vote for him, so he should respect their right to criticise him.” Thus Rouhani faces a difficult road ahead in meeting the high hopes of his supporters, fending off internal political challenges, and dealing with a new US administration which is clearly in no mood to grant Tehran any fresh favours.
Oil Prices Firm Ahead Of OPEC Meeting.
Both WTI and Brent are holding steady above US$50 a barrel this morning ahead of the OPEC meeting later this week. We believe an extension of the OPEC/NOPEC output reduction agreement into Q1 of 2018 will be approved, and after the recent flush-out of stale long speculative positions combined with ongoing hard data by the EIA suggesting the market is closer to rebalancing despite the rebound in shale production, we also think there is now a genuine floor in the crude market around US$40. On Sunday Saudi Arabia’s Energy Minister, Khalid al Falih, referred to the potential extension of the output deal saying; "Everybody I talked to expressed support and enthusiasm to join in this direction. We believe that continuation with the same level of cuts, plus eventually adding one or two small producers, if they wish to join, will be more than adequate to bring the five-year balance to where they need to be by the end of the first quarter 2018."
Rival Forces Clash At Libyan Air Base.
A militia group calling itself the “Third Force” reportedly attacked an air base used by members of General Haftar’s Libyan National Army on Saturday. The “Third Force’ is supposedly loyal to the Tripoli based ‘Government of National Accord’ but the GNA’s Defence Minister has condemned the attack claiming the GNA had not ordered such an action and that a commission of inquiry into the matter had been set-up. Meanwhile the speaker of Tobruk’s parliament, which is home to the country’s internationally recognized rival administration to Tripoli , warned that this attack was considered to be a “serious breach” of a recent truce agreement.
Egypt Hikes Rates As Inflation Reaches Record Levels.
The Egyptian Central Bank hiked its benchmark overnight deposit and lending rates by 200bp to 16.75% and 17.75% respectively yesterday as the authorities look to tame inflation that touched 32.90% last month. The IMF has also been pressuring Egypt to tighten with Christine Lagarde warning in April that steps needed to be taken. “Here is clearly a question that needs to be addressed, I would say, head on, and that is inflation. The other reforms have to continue, but there has to be a special focus on inflation. I think that the Central Bank and the finance minister of Egypt are both aware and will, I hope, tackle the inflation risk, which is weighing on the population,” Lagarde said. Meanwhile the CB Governor, Tarek Amer, announced last week that the current US$100,000 limit on personal bank transfers would be lifted soon, as liquidity in the domestic FX market had improved significantly.
Ghana MPC Decision Today.
There are mixed expectations ahead of Ghana’s MPC meeting today, with most analysts split over whether or not the bank’s new governor will keep rates unchanged or decide to cut. We anticipate the latter with a possible 50 bp reduction of the current 23.50% benchmark rate.
Shell To Sell Its Tunisian Gas Fields.
Royal Dutch Shell is reportedly seeking a buyer for its gas assets in Tunisia, which it had inherited via its takeover of the BG Group in 2016.
Reuters reports suggest Shell is willing to offload its Tunisian fields for around US$500 mio.
World Bank Approves US$600 Mio Loan To Zambia.
The World Bank has agreed to provide Zambia with US$600 mio in financial support via soft loans distributed over a 3 year period.
“Stretch your legs as far as your blanket extends” – Egyptian Proverb meaning (Don’t live beyond your means.)
Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
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