What Awaits the Middle East in 2023?

Weathering the Storm in the West
Credit: pan demin / Shutterstock.

Individually and collectively, the countries of the Middle East and North Africa (MENA) have experienced a slew of concerns in 2022 as the world has shifted under the weight of superpower conflicts. The unfathomable security and economic consequences of Russia's invasion of Ukraine, Iran's massive anti-regime protests, and the United States' withdrawal from Afghanistan were the defining aspects of MENA's most pressing strategic concerns.

The Middle East region has been boiling with regional and domestic conflicts for decades. They range from tribal competitions to civil wars, geopolitical conflicts, and fighting against state-sponsored militia and ideological terrorist organizations. Many of these conflicts have been stuck at a stalemate for decades. Over time, the relatively stable countries in MENA learned to work their way around these regional conflicts to keep developing on the national level.

Nevertheless, the new conflicts on the world stage and those happening on the verges of the region, including the re-rise of Taliban in Afghanistan and the shaking of the Mullah-led regime by popular protests in Iran, have forced MENA leaders to prioritize cooperation over rivalry. 

As the year draws to a close, it appears that the region's leaders have already figured out how to exit this internationally imposed state of emergency, promising a less stressful progression in 2023.

Credit: AP

ECONOMIC CRISES AND OPPORTUNITIES

Economy-related mishaps were the overwhelming theme for the Middle East region, and the entire world, in 2022. The clash between western and eastern world superpowers, namely the United States and Europe on one side versus Russia and China on the other, is expected to continue throughout 2023. Russia does not seem disposed to withdraw its troops from Ukraine any time soon, while the United States is still pouring generous finances and military equipment into supporting the Ukrainian army. This simply means more economic shockwaves will continue to hit the fragile economies in MENA in the coming year.

The global standoff around the war in Eastern Europe is based on inflicting as much economic pain as possible on each other. In the process, several countries in the Middle East and Africa found themselves struggling with a cluster of crises ranging from the scarcity of food commodities and energy resources to the uncontrollable rates of inflation and national currency depreciation. Most countries in North Africa, perhaps with the rare exception of Morocco, have been frying in this economic pan since the beginning of the Russia-Ukraine war in February.

In particular, Egypt is allegedly the MENA country that has been suffering the most from this war. Russia, Ukraine, and Belarus are top suppliers of grains and tourists to Egypt, which is one of the world’s top five importers of wheat. The Egyptian population of more than one hundred million citizens consumes an average of four million tons of wheat per year. At least 80% of this consumption is imported from Russia and Ukraine. Meanwhile, Egypt’s tourism sector, which represents more than 9% of Egypt’s GDP, is highly dependent on the Russian and Eastern European tourists who used to flood Red Sea resorts in the winter and spring seasons.

Notwithstanding the Egyptian state's sincere efforts to control these massive economic losses, the Egyptian economy is heading into the new year with a load of uncertainties. Governmental initiatives to secure basic commodities, generous deposits from neighbors in the Arab Gulf, and a modest loan from the International Monetary Fund (IMF) have kept the Egyptian economy barely standing during 2022. However, the purchasing power of the Egyptian Pound has severely declined because of the dollar scarcity and the rapidly spiking inflation. At the end of 2022, the inflation rate reached 21%. Egypt has not seen inflation at such a high dash since 1965 when the inflation surged to 26% causing a severe recession.

People shop at an open market in Istanbul, Turkey, December 5, 2022. REUTERS/Dilara Senkaya

That being said, there are positive indicators that make Egyptians hopeful that the new year may be relatively less economically stressful, regardless of the outcome of the war in Ukraine. Official statistics show that Egypt’s volume of exports has increased by 12% in the last quarter of 2022 compared to the same period in 2021, and the GDP has increased to 4.4% in 2022 from 3.3% in 2021. In addition, the new discoveries of hydrocarbon resources in Egypt’s maritime zone in the Eastern Mediterranean, and Egypt’s rising profile as a hub for natural gas, are quite promising for the Egyptian economy in the medium term. In June, the European Union signed a landmark agreement with Egypt and Israel to import their liquefied natural gas production as a substitute for the sanctioned Russian gas.    

RISING POWERS

Energy is one of the winning cards on the table of international conflicts. Saudi Arabia and the Arab Gulf countries, which owns a great portion of the world’s fossil energy resources, have cleverly used this card in 2022 to protect their economies from being dragged into the tug of war between the eastern and western superpowers. Saudi Arabia is the top producer of crude oil in the MENA region and the third in the world after the United States and Russia. Next to it, Qatar is the top producer of natural gas in the region, and the top third in the world after Russia and Iran.

For some reason, western leaders were thinking that they could use the petroleum wealth of Arab Gulf countries to manipulate the global energy market and protect Europe from paying the price for the sanctions they imposed on Russian natural gas. Senior politicians from the United States, the United Kingdom, and Europe visited the region in an attempt to convince the OPEC+ leaders in Saudi Arabia to increase the volume of oil production. On the flip side, China has been courting Saudi Arabia and Russia has been courting the UAE with the hope to align them with their camp.

However, the new strategy-oriented leaders of the region, especially the Saudi Crown Prince, have decided not to get involved in this international game. This wise strategic thinking has been keeping the Arab Gulf countries immune to the damaging effects of the Russia-Ukraine war and is believed to put the Gulf region in even more advanced economic and political positions in the coming year. As has been the case with all the major events that have been happening since the eruption of the Arab Spring, it seems that the Arab Gulf countries will continue to take the lead on most of the geopolitical and economic issues that are expected to face the MENA region in the new year and for many years to come.

An investor monitors a screen displaying stock information at the Abu Dhabi Securities Exc3hange June 25, 2014. REUTERS

As part of the changing world order, it may not be surprising to see Saudi Arabia, with this strategic policymaking practice and economic influence, rising as a new superpower in the coming decade.

GEOPOLITICAL BALANCES

Concurrently, the global conflict between Russia and the West has offered Turkey a golden opportunity to prove itself as a geopolitical star in 2022.

Turkey has been playing a tremendous role on the economic, diplomatic, and military fronts, in mitigating the influence of the war in Eastern Europe on the rest of the world. Turkey has mediated talks between the Russians and Ukrainians, safeguarded the Black Sea against the consequences of the ongoing war, and is now leading an impressive effort to facilitate the cargo ships of grain traveling from Ukraine to other countries, rescuing millions of people from famine.

In 2022, Turkey has also been able to fix its torn ties with Saudi Arabia, UAE, Israel, and eventually Egypt. Mending the broken ties between Egypt and Turkey, in particular, is paving the way for a new geopolitical balance in the Eastern Mediterranean region, and better control of the state-sponsored militia and terrorist organizations that have been wreaking havoc all over the region for years.

In the New Year, Turkey’s geo-strategic importance is expected to be steadily growing, mainly due to its prospective role as a NATO ally in managing conflicts in Afghanistan and Iran on behalf of the United States. Turkey is the only country that can keep a perfect balance between the competing alliances that it deals with, extending from the United States and Europe, NATO, Russia, and Eurasia, to the Middle East and Southeast Asia. Turkey has become a key strategic actor that none of these power coalitions can do without.

PEACE AND SECURITY

The domestic conflicts in Libya, Syria, and Yemen are expected to grow even bigger. That is despite the Russian regime’s being too busy with the war in Ukraine and the Iranian regime’s being too busy with the popular outrage.

At least since June, Russia has been withdrawing its troops and mercenaries from Libya and Syria to help with its so-called military operation in Ukraine. Counterintuitively, this allowed a space for the conflicting parties inside Libya to further escalate their heated conflicts by depending on local militia groups. This has not only given the militias more financial and political leverage but also added an extra layer that further complicates the political solution.

Cars burn on a street after a Russian military strike, amid Russia's attack of Ukraine, in Kherson, Ukraine December 24, 2022. Ukrainian Presidential Press Service/Handout via REUTERS

Russia’s temporary absence in Syria, and Turkey’s outreach to the Assad regime have paved the way for renewed Turkish operations in northern Syria and Iraq against the PKK and YPG organizations. That coupled with the interventions of the Iranian regime in the Levant region may further threaten the Kurdish communities there.  

In Yemen, the reconciliation initiative that Saudi Arabia and UAE led in 2022 is apparently faltering, while the Iran-sponsored Houthi militia is recapturing key territories in the north and controlling decision-making in the state bureaus. The potential fall of the Iranian regime under the growing pressure of popular protests may mean a better future for Yemen, but it all depends on how the popular protests are going to unfold in Iran throughout 2023.

In contrast to this melancholy, the words “reconciliation, rapprochement, and inclusivity” have been written, read, and heard many times in the Middle East this year. In 2022, we have seen reconciliations happening between Turkey and Arab Gulf countries, between Qatar and Egypt, and even between Israel and its Arab neighbors. The Al-Aula agreement, which ended years of diplomatic conflicts between the Arab Gulf states, was the first spark for this reconciliatory mindset that has been electrifying the region in the past two years. This trend of rapprochements is expected to continue gaining momentum throughout the new year as international conflicts are expected to intensify. 


Related Articles