SYRIA
News out of Idlib appears to have dramatically slowed down over the past couple of days, which suggests (though doesn’t prove, to be sure) that the steps Turkey has taken to reinforce its outposts in the province and to arm its rebel proxies really have caused the Syrian government to rethink its plans. In the meanwhile Ankara says it’s still working with Russia and Iran to come up with a peaceful solution to the Idlib situation. To give Recep Tayyip Erdoğan credit, for as weak as he looked coming out of that summit with Vladimir Putin and Hassan Rouhani earlier this month he may have reversed his fortunes with his recent moves.
Meanwhile, US forces in southern Syria just finished conducting a major eight day military exercise with their Maghawir al-Thawra proxy force at their base in Tanf. The exercise was meant to discourage Russia from making any kind of threatening move toward Tanf, which it had been warning about.
YEMEN
Fighting continues to be heavy around Hudaydah, where the Saudi-led coalition has resumed its offensive following the collapse of peace talks in Geneva over the weekend. At least 10 civilians have been reported killed this week in the fighting along with a substantial but unknown number of Houthi fighters. Coalition ground forces advancing from the south and east in an effort to cut the roads connecting Hudaydah to Sanaa and Taiz. Those efforts appear to have succeeded.
TURKEY
Erdoğan’s possible success in Idlib could be counterbalanced by his economic problems. The man who thinks that interest rates are a global banker conspiracy against the almighty Turk just watched his central bank hike Turkey’s rate 6.25 points to 24 percent. Coincidentally (?) the lira gained a little against the dollar on Thursday, though that could be more about perception than any hard economic realities.
IRAQ
A group of ISIS fighters reportedly stormed a medical facility in Kirkuk province on Thursday, making off with supplies and kidnapping two men in the process. Villages and small towns in the province are increasingly coming under small-scale assaults by suspected ISIS militants as the Iraqi government has opted to protect Kirkuk’s cities and oil infrastructure at the expense of the rest of the province.
Haider al-Abadi says he has several public works projects in the hopper to improve Basra’s water quality, one of the main drivers of recent protests there. Abadi’s chances of remaining Iraqi Prime Minister have gone from “yeah, probably, I mean who else could it be” to “oh God no, are you nuts” in just about a month, but it doesn’t seem like he’s going to put up much of a fight when it comes time for him to go. Which would be good of him. Meanwhile, his erstwhile coalition partner Muqtada al-Sadr is now saying that he’ll take his Sairoon party, the largest in parliament, into the opposition unless Iraq gets a non-partisan technocratic government. Good luck with that–all available evidence suggests that such a thing does not exist.
ISRAEL-PALESTINE
Paraguay may be taking its Israeli embassy back to Tel Aviv, but the Czech Republic looks like it’s heading for Jerusalem. It’s really a no brainer–a chance to suck up to Donald Trump while immiserating some Arabs.
At LobeLog, Paul Pillar compares the September anniversaries of the Camp David (next Monday) and Oslo I (today) accords:
This month marks anniversaries of two major agreements signed at the White House that appeared to be major steps toward a comprehensive Arab-Israeli peace but never produced such a peace. On September 17, 1978, Israeli Prime Minister Menachem Begin and Egyptian President Anwar Sadat concluded an accord, negotiated at Camp David and mediated by President Jimmy Carter, that established principles for an Egyptian-Israeli peace treaty and for starting a process to lead to Palestinian self-determination. On September 13, 1993, Israeli Prime Minister Yitzhak Rabin and Palestine Liberation Organization Chairman Yasser Arafat shook hands on the Oslo I accord, which had been negotiated under Norwegian auspices and established what became known as the Palestinian Authority. The key provisions of both agreements were supposed to be temporary, but follow-on agreements for lasting arrangements that would assure both Israeli security and Palestinian self-determination never happened. The stronger side—the side with the land and the guns—was comfortable with the status quo, and the agreements made that side even more comfortable. What was supposed to be temporary became permanent.
At Foreign Policy, meanwhile, journalist Dalia Hatuqa correctly views the Trump administration’s approach to the Palestinians as a distillation of past US policy rather than any sort of fundamental break with it:
For decades, Palestinian leaders have engaged in a rigged peace process, seeking to force the international community’s blueprint for a Palestinian state onto the population of the West Bank and Gaza. The United States, meanwhile, has sought to maintain the fiction that it is an honest broker and neutral mediator.
The Trump administration has finally dropped that mask, revealing Washington’s true colors. As offensive as the pro-Israel mantras emanating from the White House may be for Palestinians, it is a clarifying moment.
BAHRAIN
Also at LobeLog, Giorgio Cafiero argues that the Trump administration’s willingness to indulge the Bahraini government’s worst excesses might lead to the radicalization of the country’s Shiʿa majority:
The Trump administration’s increasingly aggressive tactics to counter Iran, which have entailed strengthening Washington’s support for the Bahraini monarchy, place virtually no pressure on Manama’s rulers to enact reforms or address the political and socio-economic grievances of the opposition. The Bahraini leadership’s insistence that Iran and Lebanese Hezbollah are behind the country’s unrest continues to shape its arguments—well-received by the anti-Iranian Trump White House—that Western support for the Al Khalifa rulers in Manama is essential to countering Tehran’s assertive regional conduct. In fact, Manama will likely continue its harsh crackdown against what is left of the opposition. Certain Bahraini Shia oppositionists advocate collaboration with the Islamic Republic. If they gain more of an upper hand within the opposition, the regime’s worst fears about increased Iranian influence risk becoming self-fulfilling prophecies.
SAUDI ARABIA
Former US Solicitor General Ted Olson is apparently now working for the Saudis to lobby against a bill that could make OPEC liable under US antitrust law. Penalties would kick in if OPEC members were found to be manipulating oil production to alter prices–which is kind of, you know, OPEC’s entire reason for being. There’s a middling chance that the bill might get through Congress but it’s anybody’s guess what would happen if it were to hit Donald Trump’s desk. Trump is naturally disinclined to do anything that might upset the Saudis, but on the other hand he has urged them to increase oil production in the past and this bill would give him leverage to prod them to do so.
IRAN
While protests over the state of Iran’s economy have died off, for now, the AP says discontent is growing among Iranian merchants and shopkeepers–the “bazaar class,” who historically have played an important role in major Iranian political developments:
Bazaar families opposed the Iranian Shah Mohammad Reza Pahlavi and supported the 1979 Islamic Revolution that saw him replaced by the Shiite theocracy and elected officials. More recently in June, protesters swarmed Tehran’s Grand Bazaar and forced shopkeepers to close their stalls, apparently in anger over the rial dropping to 90,000 to the U.S. dollar on the black market despite government attempts to control the currency rate.
The rial in the meantime has dropped as much as 150,000 to $1 with many anticipating further drops as the U.S. restores punishing sanctions on Iran’s crucial oil industry in early November. The Trump administration denies it is seeking to overthrow Iran’s government through the economic pressure, though Iranian officials say the link between the two is clear.
Fear over the economy has brought many to the Grand Bazaar in recent days to buy what they can before their savings further dwindle away.
Concerns over the renewal of US sanctions are high, but there’s also a fair amount of anger directed toward the Iranian government and its spending priorities (in particular, Syria).
Iran’s oil customers are already cutting back purchases in advance of US sanctions coming back online in November, even China and India–both of which had talked about resisting these sanctions. Iran’s oil sales are down to 2.1 million barrels per day from 2.7 million, and analysts expect them to bottom out at 1.2 million–a far cry from the zero the Trump administration wants but still a bit cut. Iran will presumably use every trick it can to continue selling oil, in addition to threatening European nations with a pullout from the nuclear deal. Mitigating the damage to the Iranians somewhat, oil prices are climbing again, into the $70s per barrel, and they’ll likely go higher as Iranian supply shrinks further. The Trump administration will lean on Saudi Arabia to boost production and keep prices where they are, at least (see above), but ultimately the Saudis will do whatever makes them the most money–and, anyway, there’s no certainty that they can increase production that much.
Meanwhile, Josh Rogin at the Washington Post reports that Treasury Secretary Steve Mnuchin is working within the Trump administration to thwart plans to punish the SWIFT financial network if it refuses to boot Iran in response to US sanctions:
Iran rejoined SWIFT in 2016 as part of the nuclear deal that Trump withdrew from this year. Now, other top Trump administration officials and lawmakers want SWIFT to banish Iran again, but Mnuchin and his department are internally opposed to using pressure to force SWIFT to take action, three senior administration officials said.
In interviews, the officials said Mnuchin has been slow-rolling the decision-making process to delay final consideration by the president. Following a July 26 Principals Committee meeting on Iran, the Treasury Department was tasked with producing an options memo laying out possible sanctions on SWIFT, its board members or their banks. Almost two months later, the document is missing in action — which prevents Trump from making a decision.
Neither Rogin nor the neocons he interviewed for his piece seem particularly pleased with this news, but it’s possible Mnuchin has figured out what they haven’t: that pressuring European leaders to knuckle under to the Trump agenda is going to hasten the day when those same European leaders decide that they need to form new financial networks that don’t have anything to do with the United States.
The Foreign Exchanges Companion 