Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
Iraq & Turkey Warn Kurdistan Following Referendum - Airlines Suspend Flights.
The repercussions of a recent independence referendum in Iraq’s Kurdish region continued this week with Baghdad not only announcing an international flight ban, but also calling on foreign governments to shut their missions in Erbil, and even considering deploying national army units to Peshmerga controlled areas such as Kirkuk. On Wednesday Iraq’s Prime Minister, Haider al Abadi, called on the region to hand over control of its main airports in Erbil and Sulaimaniyah to the federal authorities or else all international flights into and out of Kurdistan would be banned. This request was rejected by the Kurds and thus no such flights will be permitted as from 6pm local time today. A number of airlines including FlyDubai, Royal Jordanian, Lufthansa, Turkish Airlines, Qatar Airways, Iran Air, MEA, EgyptAir had already suspended their fights to the region as a result of this still developing situation. The referendum result, reportedly saw 92% of Kurds vote in favour of independence according to the Kurdistan election commission, and while the outcome is not legally binding according to Iraqi national law, Kurdistan officials including their leader, Massoud Barzani felt that it would give them more leverage in their hoped for future negotiations on the topic with Baghdad. Whether this strategy will be successful in the long run remains to be seen, what it has done in the short-term however is to sharply increase regional tensions yet again, with Al Abadi stating that he would not hold independence talks on the basis of an “unconstitutional referendum” and that anyway his government would never “abandon the unity and sovereignty of Iraq." Meanwhile Turkey’s President Erdogan was quoted by the BBC describing the referendum as a “betrayal” and warning that “If the Kurdish regional government do not go back on this mistake as soon as possible, they will go down in history with the shame of having dragged the region into an ethnic and sectarian war."
Will Women Drivers Provide A Boost To Saudi Arabia’s Economy?
Saudi Arabia’s decision earlier this week to allow women to drive in the Kingdom is not only momentous from a purely historical point of view, it also suggests that the government is clearly prepared to take important but very culturally sensitive steps in its drive to transform the country both economically and socially. Rental car company shares have risen on the news and manufacturers such as Ford and VW are already releasing TV adverts aimed at potential new female buyers. While it’s probably still too early to analyze the possible overall effect this specific move could have on the domestic economy, especially as the deadline for lifting the ban on women driving is set for June next year, a recent research piece published by Bloomberg on the topic estimates that it, combined with a consequent increase of female engagement in the labour market, could contribute as much as US$90 bio towards the Kingdom’s economic output by 2030. This view is supported by the Gulf Research Centre where one of their respected regional economists, John Sfakianakis, was quoted by CNN as saying that; “Lifting the ban will have an enormous trickle-down effect for many sectors of the economy from automobiles, to retail consumption and greater productivity. More women will have the ability to work but also have an incentive to work as more will be able to save, because they won't have to pay for drivers.”
Talks Over Rerun Of Kenyan Election Collapse.
Negotiations between Kenya’s main opposition party, the ‘National Super Alliance’ (NASA) and officials of the electoral commission, over how the proposed October rerun of last month’s annulled Presidential election should be handled, collapsed yesterday after the ruling ‘Jubilee’ party reportedly submitted two new bills to parliament proposing amendments to some of the country’s current electoral laws. Following the election talks walkout the leader of the NASA, Raila Odinga, warned that his party was preparing to its resume street protests next week in order to stop what he alleged was the ruling party’s attempt to turn Kenya into a one-party State. “All actions by the President and his deputy William Ruto show they want to turn Kenya into a dictatorship, we are calling for peaceful demonstrations throughout the country to resist the attempt to rig presidential elections in favour of Jubilee. Kenyans should stand up and tell Uhuru and Ruto that the country doesn’t belong to them. You are aware that the talks between NASA, Jubilee and IEBC collapsed after Jubilee introduced new bills in Parliament to change electoral laws, we will resist the introduction of new laws, we will lead the people in fighting for their hard-earned democracy,” Odinga was quoted as saying by Kenya’s Standard newspaper.
GCC Debt Issuances Remain In Vogue With Investors.
This week’s US$12.5 bio international bond issuance by Saudi Arabia attracted an overall US$41 bio in bids and we continue to see very strong demand for it in the secondary market underlining the ongoing appetite by foreign investors for such regional debt.
Egypt Keeps Interest Rates Steady.
The Egyptian Central Bank kept its benchmark interest rates unchanged following yesterday’s regular MPC meeting, with the o/n deposit and lending rates remaining at 18.75% and 19.75%. This decision was pretty much expected especially as inflation appears to have peaked and while the government prepares to conduct a EUR 1.5 bio bond issuance by the end of November.
Nigeria Prepares For Eurobond Issuance.
Nigeria’s debt-management office has announced that it hopes to issue a US$2.5 bio Eurobond in November this year, although parliament would still need to approve such a sale. “The domestic debt is high in terms of cost and interest rate. We want to use the external borrowing to lengthen the maturity profile of our borrowing, we have done 15-years bonds and were told that we can look at a 20- or 30-year tenor,” a spokesperson for the DMO was quoted as saying by Reuters yesterday, adding that this could lower the overall interest cost by 10%.
Inflation In Zambia Creeps Up.
Inflation in Zambia rose to 6.60% this month from 6.30% in August due in part to an increase in power tariffs.
Qatar Airways Buys 49% Stake In Meridiana.
Qatar Airways has purchased a 49% stake in AQA Holdings, the parent company of Italy’s second largest airline Meridiana.
UAE Prepares To Implement Sugar & Tobacco Tax.
Next week will see the introduction of a 50% tax on normal soft drinks and a 100% duty on cigarettes and energy drinks sold in the UAE. The move has been hailed by the World Health Organization as “cost-effective way” to reduce smoking.
Note: The Bahrain markets will be closed on the 1st and 2nd of October 2017.
“Arrogance diminishes wisdom” – Arabic proverb.
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.