2019 Global Risk Forecast – MENA and Central Asia

Growing socio-economic pressures that have been in evidence across most of the MENA region over the past few months are unlikely to ease in 2019, elevating the risk of further protests and unrest.

 

Middle East and North Africa — Compounding factors for further regional instability

Executive summary

Growing socio-economic pressures that have been in evidence across most of the MENA region over the past few months are unlikely to ease in 2019, elevating the risk of further protests and unrest, a risk exacerbated by the upcoming anniversaries of the 2011 uprising across the region and attempts to emulate the success – and the violence – of ‘yellow vest’ protests in a number of countries, in particular Egypt, Israel, Tunisia and Turkey.

While there have been marked improvements in Iraq’s overall political and security profile, pockets of insurgency will continue to challenge a return to stability in northern and western Iraq, a threat compounded by Islamic State (IS)’s resilience in a number of strongholds, notably in Syria‘s Deir al-Zour province. IS will also continue to exploit the growing divisions between state and non-state actors vying for power in Libya that have been delaying much-anticipated legislative and presidential elections, and the safe return of diplomatic missions and businesses to the country.

Read more: Elections likely to further entrench divisions rather than unite Libya

Elsewhere in the region, the growing tensions between Israel and Gaza-based militant/Islamist groups will continue to threaten border stability and the risk of an escalation of the violence at the border and into Israel. In view of these developments, Israel is expected to take an increasingly protectionist and aggressive stance over national security in a tense regional climate, and as US allies worry about provocative Iranian moves to protect both its economy and regional status in the wake of the US sanctions.

Elections to Watch and Unrest Vectors

Demonstrations organised in a number of countries to denounce the rising cost of living and/or political paralysis run the risk of gradually morphing into wider anti-government protests as organisers intend to emulate the success of the French ‘Yellow Vest’ protests.  This will raise the risk of violence as the emergence of copycat movements takes place in the region ahead of the anniversaries of the 2011 uprising and key elections throughout the year. The risk is particularly elevated in Egypt, where the government is expected to intensify its crackdown on dissent and any form of unrest, but also in Jordan, Israel, Turkey and Tunisia, where political tensions will rise ahead of the presidential and parliamentary elections scheduled for November 2019 and where a ‘Red Vest’ movement appears to be gaining momentum. Neighbouring Algeria will also be holding presidential elections in April, which will likely see the re-election of Abdelaziz Bouteflika for a fifth term-should he decide to run again-in the absence of any credible opposition and amid an apparent purge of Algeria’s military leadership aimed to consolidate power around the ailing president. A bleak economic outlook, combined with political apathy among a growing young population that feels increasingly disconnected from political life, however, is likely to increase the civil unrest risk in the six-month outlook.

Water Insecurity

Access to water will become a major security issue in 2019 and beyond. While water insecurity is felt more severely in the hot summer months, especially in Iraq and Libya, failure to meet the demands of populations increasingly frustrated with the lack of an effective political response and adequate public services – and, as seen in the summer in Basra, safe water – will elevate the risk of civil unrest. Many governments lack the resources to maintain and develop water and power infrastructure. The MENA region is home to some of the most water-stressed countries in the world, including Oman, and  the bouts of extreme weather and flash floods that led to more than 30 fatalities in Kuwait and Jordan in November 2018 illustrated the challenges facing government in a region that remain largely unprepared to deal with major natural disasters and the effects of climate change.

Read more: Glass half full: How water-intensive companies can mitigate risk

While the high number of refugees and Internally Displaced Persons (IDPs) who have fled the violence in Iraq and Syria will continue to strain infrastructure in Jordan, Lebanon, Turkey and the Kurdistan Regional Government (KRG), raising the risk of sustained tensions with local populations, governments will have to prepare for conditions that threaten to exacerbate the conflict risk at national, cross-border and regional levels if left unaddressed, with the additional risk that state forces, militias or terrorists groups could exploit water resources and scarcity as an instrument of power, including in Yemen.

Israel and the Palestinian Territories

Violence at the Gaza border will continue as weekly protests, which have been ongoing since 30 March 2018, show no sign of abating. A volatile situation will continue to threaten the safety of border communities in Israel, raising the risk of anti-government protests in Tel Aviv. This will also threaten the overall climate of stability that has been prevailing outside of the occupied territories as ‘lone-wolf’ attacks, including stabbings, shootings and vehicle-rammings, against Israeli security forces and civilians increase in frequency. While a relative calm has returned to the Gaza Strip after Palestinian factions agreed on 13 November to an Egyptian-brokered deal with Israel following the most serious flare-up of border violence since the 2014 Israel-Hamas war, past ceasefires have been short-lived, and a number of stumbling blocks will remain, if not increase, making the prospect of a lasting truce increasingly dim for 2019.

Campaigning will be set against the backdrop of a possible indictment against Netanyahu on corruption charges, which will exacerbate already heightened political tensions.

 

A worsening security climate, even temporary, will also continue to test a fragile coalition government and will encourage Prime Minister Benjamin Netanyahu to pursue increasingly nationalist policies and legislation as the premier tries to stamp his authority to retain the support of conservative members of the coalition, and the population, ahead of early elections scheduled for 9 April 2019. Netanyahu’s Likud Party stands very strong chances of securing re-election, but campaigning will be set against the backdrop of a possible indictment against Netanyahu on corruption charges, which will exacerbate already heightened political tensions.

Iran, The Gulf and Turkey

Regional tensions are also set to increase after the second wave of US sanctions against Iran came into force on 4 November. While the Iranian government has been keen to downplay the effects of the measures, the new sanctions will continue to severely affect Iran’s economy, which already saw the rial plunge against the US dollar last year. This will result in the prices of basic goods soaring and a sharp decrease in purchasing power, in turn raising the protest risk as the impact of sanctions is gradually felt across the country and the government and businesses are unable to pay the salaries of their employees. Iran’s reaction has so far been limited to military drills and bellicose rhetoric towards the US and its allies in the region, but increased economic pressure will translate into provocative moves by the Islamic Revolutionary Guards Corps (IRGC), including missile tests and threats to blockade the strategic Strait of Hormuz, but also increased activity in cyber warfare.

Such actions will unnerve regional rivals (Saudi Arabia) and countries that perceive Iran as an existential threat (Israel, the UAE, Bahrain). The sanctions will gradually alter traditional regional alliances but also reinforce the Qatar-Turkey-Iran bloc that emerged at the onset of the Gulf Cooperation Council (GCC) crisis. Rather than weakening Iran’s influence in the region, the sanctions will deepen regional divides and escalate anti-US sentiment. This will have a major destabilising effect for those countries, especially Iraq and Turkey, which depend on Iran to meet their domestic energy needs and the demands of the population for basic public services, including electricity.

Iran has every interest in honouring the pledges set out in the 2015 Joint Comprehensive Action Plan (JCPOA or ‘nuclear deal’) if it wants to secure a chance to maintain or develop contracts with Western partners still party to the agreement. However, failure by Europe to implement mechanisms that will generate, or protect, businesses in Iran – which appears difficult at the current juncture – or a severe deterioration of the economic situation in Iran, could prompt Tehran to seek a different route and restart, or speed up, its nuclear programme.

Read the full 2019 Global Risk Forecast here

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