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Economy, Investment

Much like many Gulf states made a foray into traditional sports like football a couple of decades ago, these same governments are investing in e-sports as the next horizon in sports and entertainment.

 

Saudi Arabia, Qatar, and the UAE all have established power within European football and their own burgeoning domestic competitions. Enterprising public funds and private individuals now view e-sports much in the same way they used to view European football, a place for Gulf states to park their profits and purchase public relations power.

 

What was once a niche is now a booming industry that is expected to surpass a market value of $1.5 billion by 2023.

 

American and Asian firms have been the traditional powerhouses in the industry due to their large player base, but companies across the globe have stepped in the ring in recent years.

 

In 2019, the Dubai firm W Ventures pumped $50 million into E-Sports in the Middle East region. Kuwaiti telecommunications company Zain Group launched an e-sports brand in December 2020 that is planning to host events across the region.

 

And to top it all, Saudi Arabia set out perhaps the most ambitious e-sports plan in the region as part of their Vision 2030 initiative. As part of the plan, Saudi Arabia is planning for the gaming industry, including e-sports, to account for a whopping 1 percent of the country’s total economy when 2030 rolls around.

 

Factors including, the massive growth potential in the gaming industry, a population becoming more economically affluent, and economies in desperate need of diversification, are combining to jumpstart e-sports in the region.

 

But as with many trendy economic moves, there are some questions surrounding the sustainability of the industry. Is the Middle East’s move to e-sports a public relations exercise or one with genuine economic potential?

 

Taking a look at the region’s current demand for gaming, other region’s forays in e-sports and macroeconomic trends of regional economies can begin to answer these questions.

 

 

Signs of Growth

Many E-Sports have been hampered by the coronavirus pandemic and travel restrictions, but the boom in online streaming services seen across the world also has had its impact in the Middle East, opening up the potential for bigger markets.

 

Both casual and professional gamers have flourished on Twitch and other streaming platforms as viewership has massively grown during coronavirus lockdowns. In 2020, 4.4 million viewers tuned into thousands of Arabic-language Twitch streams just in the UAE, Bahrain, Oman, and Saudi Arabia.

 

And many industry insiders point to the MENA region as one of the fastest-growing gaming markets in the world.

 

Not all of these viewers are watching competitive e-sports matches, as casual gaming is also a massive sector of growth both on online platforms and in the Middle East. The two different types of gaming have some crossover and represent different possibilities for companies.

 

To meet demand in both sectors, several high-profile game publishers have opened dedicated servers in the Middle East to serve the rise in casual and professional players. Activision launched servers in Riyadh and Jeddah for Call of Duty in early 2020, and Fortnite and Valorant also received dedicated Middle East servers to cope with the increased demand.

 

While plenty of new customers have been brought on in the region, server capabilities represent a barrier to entry for professional players and tournaments. But, with recent improvements due to increased demand from casual players, the Gulf states could become a hotbed for professional e-sports.

 

Much like in Asia, Europe, and the United States, with a rise in gaming has come a rise in gaming personalities. Even professional athletes in the region have combined their traditional athletic career with a professional e-sports career. For example, the Qatari Ahmed Al Meghessib plays for Al Ahli on the real pitch and PSG on the virtual pitch in the video game FIFA.

 

Is Gaming Here to Stay?

 

The gaming industry undoubtedly saw massive growth in certain areas as more people stayed home in 2020 into the current year. But as major economies begin lifting pandemic restrictions, there is some worry about a potential collapse in player base, viewership, and interest.

 

Regardless, gaming remains a massive industry and in economies such as the Middle East, many more players are expected to contribute to the overall industry.

 

In East Asia and the United States, some of the earliest regions to have serious e-sports competitions, many viewed the sensation to be a simple flash in the pan. But, decades later the overall e-sports market was $1.5 billion in 2020. This number is only predicted to increase, and several firms in the Middle East have jumped into this growing market.

 

Both big names in the e-sports world like Red Bull and homegrown e-sports outfits are hoping to cash in on the growing market.

 

And while it may seem far-fetched to some, governments in the region are no stranger to ambitious projects. Some might find it strange to see Saudi royals launching interests into gaming, but Prince Faisal bin Bandar has been a driving force behind Saudi Arabia’s push into the e-sports space.

 

The coronavirus pandemic has only driven home the need for Gulf state economies to diversify away from the oil and gas sector and into more sustainable ventures.

 

Certainly, gaming and e-sports are no replacement for the massive oil profits many states currently enjoy, but it is clearly viewed by certain actors within the economies as a viable avenue for further diversification.

 

Just like in other sectors, states like Saudi Arabia are contesting with more conservative and traditional ideals as bigwigs attempt to further ‘modernise’ economies.

 

As Prince Faisal told Wired, “One woman came to one of our events with her father and he said, ‘no, there are too many men here, you have to leave.’ We had to sit him down and explain what we’re trying to do, and then he was fine. This is not something that is taboo. Your sons and daughters are athletes, they are the best at what they do and they should have the opportunity to thrive.”

 

With the explosive nature of social media and gaming, one thing is for sure: the Gulf states’ investment in the gaming sector will spur thousands of kids to try to make it as a professional gamer. Whether or not that leads to economic prosperity on a broader scale is another story waiting to be told.
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Economy, Geopolitics

In recent years, one of the biggest buzzwords at the crossroads of urban planning and technology has become the “smart city.” Across the globe, governments and institutions are developing plans, making pitches, and closing deals to make cities more technologically advanced or “smart”.

The United Nations projects that 68% of the world’s population will live in urban areas by 2050, an enormous increase over the span of just 100 years when roughly 30% of the world’s population were urban dwellers. Mass growth across the globe and especially in the growing economies of Asia and Africa will have innumerable impacts on the world economy, environment, and how we live.

Smart cities are pitched as a way to bring cities into the future with an emphasis on sustainability, economic growth, and improved quality of life.

One region that has been heavily focused on rapid urban expansion and economic diversification seems almost tailor-made for the advent of the smart city, the Persian Gulf.

As Gulf nations fight against growing worries over the impact of climate change and a global turn away from oil, various leaders have set out some bold, ambitious plans to reinvigorate economies and reduce emissions.

But there are many concerns surrounding smart cities and their implications for citizens. Smart city proponents offer plenty of bold solutions, but many question marks remain including if it’s simply a very effective marketing campaign for big technology.

Nonetheless, a whole gamut of futuristic smart city plans is in the works, and we will take you through some of the plans in the Gulf, and what their impact may be on the region, its citizens, and geopolitics.

Saudi Arabia and the UAE

The most well-known smart city projects in the Gulf region are found in Saudi Arabia and the UAE. Saudi Arabia’s NEOM project has received plenty of media coverage for its lofty goals, and the UAE has a host of plans under the umbrella of the Economic Vision 2030.

Both plans promise futuristic, sustainable cities that will both help the countries reach short-term environmental goals and diversify their oil-dependent economies. Plenty of commentators have called into question the feasibility of some of the more ambitious goals, but certainly many elements of smart cities are already under construction and use.

Saudi Arabia’s NEOM and the UAE’s Masdar City are the headliners for the respective country’s smart city plans. Both are being constructed from scratch and have received mixed responses from an environmental and economic standpoint.

Masdar City has been in the works since 2006 and was pitched as both a smart and zero-carbon city. Ten years later, The Guardian ran a headline declaring that the futuristic city might, in fact, become the “world’s first green ghost town”.

While Masdar City has not lived up to all the hype and has been classified by many as a failure, the company behind it, Masdar (Abu Dhabi Future Energy Company) is still active in 30 countries. The UAE still holds up Masdar City and the company behind it as playing a pivotal role in Abu Dhabi’s ambitions to become a world leader in sustainability.

Masdar City is still of great interest to urban planners, but it may end up as a cautionary tale and giant showpiece rather than a functional city.

Urban planners and government officials descended on the planned smart city in February 2020 during the UN World Urban Forum held in Abu Dhabi. But as reported in Bloomberg, Masdar City is still far off from feeling like a real city, “the streets of Masdar City seem to be occupied mostly by tour groups coming to check out the master-planned clean-tech hub near Abu Dhabi’s international airport.”

According to Masdar’s website, only 1,300 residents call Masdar City home.

And while its futuristic, carbon-zero plans have wowed the world, the UAE is emitting more than it ever has. The country’s global carbon emission share is steadily increasing, and per capita, it has the fifth-highest CO2 emissions per capita, sandwiched between many of its Gulf neighbours.

Both Masdar City and NEOM have received plaudits for their ambitions, but plenty of sceptics remain concerned considering both country’s rising emissions.

Saudi’s NEOM project is newer and tops Masdar City’s ambitions. Neom is a smart city that includes several marquee projects including The Line, which promises to make the city car and street-free, built completely in a line rather than a typical concentric city.

The Line and NEOM have left plenty of urban and city planners scratching their heads, but there is big money behind the project, the Saudi Public Investment Fund has pledged $500 billion to the project.

And while there are questions about feasibility and sustainability, NEOM is the perfect place to consider smart city’s true potential and danger, surveillance.


Smart City aka the Surveillance City

Smart city plans dazzle the public with shiny new technology and promise to greatly improve the daily lives of urban dwellers with new-fangled gadgets and transport out of The Jetsons. There are plenty of definitions of what a smart city actually is, the most defining feature is the use of interconnected information communication technologies. And for those who look deeper, the real potential and driving force behind smart cities is data collection and surveillance.

According to Foreign Policy, “56 countries worldwide have deployed surveillance technologies powered by automatic data mining, facial recognition, and other forms of artificial intelligence.”

One of the key technological components of this AI surveillance that is the backbone of many smart cities is the burgeoning industry of 5G. 5G has been beleaguered by an array of often bizarre conspiracy theories, but the potential of the new technology is to be the backbone of a more interconnected data collection apparatus.

As Sue Halpern writes for the New Yorker, “a system built on millions of cell relays, antennas, and sensors also offers previously unthinkable surveillance potential.”

This potential has led to a gold rush for the latest AI technology with American and Chinese firms competing over the multi-billion dollar and growing industry.

Neom’s data collection potential is billed as the beefiest in the world. Joseph Bradley, head of technology and digital at Neom, told ZDNet that Neom’s 5G infrastructure Neos will collect 90% of the communities’ information compared to the paltry 1% collected by contemporary smart cities.

In the plan, each Neom resident would receive a unique ID number to process data from “heart-rate monitors, phones, facial-recognition cameras, bank details, and thousands of internet-of-things devices around the city.”

Bradley assured that residents would be given the option to opt-out, and the whole project is pitched as a way to improve the lives of citizens, giving city services the ability to know when you fell down and eliminating the need for keys, a simple fingerprint scan will do.

But as the public becomes increasingly more aware and potentially paranoid about data collection, experts are left wondering whether residents will want to move into these smart cities.

 

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Economy, Geopolitics, Investment

For Middle East watchers, the conflict between Saudi Arabia and Iran seems to manifest itself in nearly every area. From proxy wars and blockades, diplomatic rows and everything else in between, Saudi Arabia and Iran jostling for regional dominance is a familiar topic of conversation.

 

But Crown Prince Mohammed bin Salman struck a different tone in a recent interview with Saudi state television. MBS focused on diplomatic possibilities and stated, “we are working now with our partners in the region and the world to find solutions for these problems. At the end of the day, Iran is a neighbouring country. All what we ask for is to have a good and distinguished relationship with Iran.”

 

The news comes as American President Joe Biden is seeking to repair the multilateral nuclear deal with Iran, which his predecessor Donald Trump pulled out of. Analysts have regularly pointed to the election of Biden as a marked changed in American diplomatic relations with Saudi Arabia, which had enjoyed especially close ties with America under Trump.

 

In early April, it was revealed that Saudi Arabia and Iran held secret talks in Baghdad in an attempt to restore official diplomatic relations between the two countries after they were broken five years ago. The talks were not immediately confirmed by either state, but the MBS’s recent interview suggests the two nations may be seeking closer ties.

 

Saudi Arabia and Iran still have plenty to hash out, and the question remains as to how much American foreign policy has changed, but for now, it looks like both sides are at least interested in coming to the diplomatic table.

 

Recalibration

            Iran-Saudi relations have been strained, and they have culminated in various proxy conflicts and a Saudi-led blockade against Qatar, which the Saudi-led coalition argued was becoming too close to Iran.

 

The blockade against Qatar lasted three-and-a-half years, but the Saudi coalition did not get the outcome it was looking for. Qatar became closer with Saudi’s regional rivals Iran and Turkey, and the small country was able to withstand the crushing blockade.

 

Combine the failed Qatari blockade with brutal and seemingly never-ending proxy conflicts in Syria and Yemen, and Saudi Arabia and Iran may see their costly and destructive path as bad for business.

 

Attracting foreign investment to Saudi Arabia has proven difficult. The assassination of Jamal Khashoggi has loomed large in Western media, and the Kingdom is still struggling to recover from it on a diplomatic front.

 

Saudi Arabia’s much-publicized turn from oil-dependency to a more diversified economy relying on tourism and green technology necessitates better relations. Saudi Arabia is looking to become a regional economic hub but has thus far found it difficult to compete with other Gulf states.

 

A diplomatically keen Saudi Arabia is not a surprise considering their continued intervention in the region is racking up high costs while delivering more instability to the region. If a deal can be hashed out with Iran, Saudi Arabia might stand to gain immensely in the short term.

 

However, in Iran, the latest development around leaked tapes from Foreign Minister Javad Zarif has divided the political establishment. On the leaked audio tapes, Zarif complains that the Islamic Revolutionary Guard Corps has more power than him over military and diplomatic decisions.

 

Iranians are set to head to the polls for a presidential election in June, and the frank statements from Zarif have divided Iranian political parties on how the country should act in regards to the nuclear deal.

 

Vienna has been the host to renewed talks on the Iranian nuclear deal and if reincorporating the United States into the deal and lessening sanctions against Iran is possible. As Trump unilaterally pulled the United States out of the agreement, Zarif and President Hassan Rouhani have been pushed into a corner, especially after Zarif’s comments were leaked. Due to the upcoming elections, and the United States’s assassination of popular General Qasem Soleimani in early 2020, President Rouhani and Zarif may be compelled to resist a renewed deal with the Americans due to political concerns.

 

Saudi Arabia wants to see the nuclear deal strengthened and has expressed a desire to be consulted on the negotiations. With increasing pressure on Iran, it is difficult to imagine a strengthened deal that would also pull in other regional countries like Saudi Arabia.

 

If re-entering the deal may already be a step too far, then providing concessions to Saudi Arabia is unlikely to fly.

 

Relations with America

            When President Biden entered the Oval Office, many believed it would drastically change the country’s relations with Saudi Arabia and Iran. The US would no longer provide Trump’s blank chequebook to Saudi Arabia, and Biden was keen to re-enter the Iran deal thus lifting some sanctions against Iran.

 

While both countries have made adjustments to the new administration, it is unclear whether it will yield different results.

 

MBS has insisted that there only minor differences between Riyadh and Washington. Despite calls from members of his party, Biden has balked on taking action against the Crown Prince for his alleged involvement in the Khashoggi assassination.

 

And while the US House of Representatives voted to limit arms sales to Saudi Arabia, the Biden Administration approved a $23 billion weapons sale to the Kingdom. Biden is allowed to continue sales to Saudi Arabia if he certifies that the country is not involved in killing dissidents.

 

Biden’s half-baked stance on America’s involvement in supporting Saudi Arabia in Yemen, pulling offensive forces while keeping defensive missions in place, has been criticized as murky and continuing to aid Saudi Arabia with its offensive efforts.

 

And while there seems to be interest from the Biden Administration and Democrats for re-entering the Iran nuclear deal, it’s unclear whether that can be achieved under the same agreement. With the United States pulling out of the Iran deal and assassinating the most powerful general in Iran, the Iran nuclear deal was always going to be difficult.

 

Making it shakier are reports of US Coast Guard ships off the Iranian coast being ‘harassed’ by the Revolutionary Guard Corps. Iran undoubtedly views the United States as an aggressor, and if that does not change or political realities in Iran do not allow for improved relations, Biden may not see improved relations with Iran.

 

A slight recalibration may see a better relationship between Saudi Arabia and Iran, but if too many geopolitical factors do not change, it is equally likely that the bloody stand-off continues.

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Corporate citizenship, Economy

At the end of March, Saudi Crown Prince Mohammad bin Salman unveiled the Saudi Green Initiative, a plan that includes a number of ambitious projects to reduce the country’s carbon emissions by 60%. Some headline-grabbing projects include planting 50 billion trees, 10 billion of which in Saudi Arabia, preservation of coral reefs, and a large boost to alternative energy sources.


Saudi Arabia claims the project would be the largest afforestation project in world history. To pair with the Saudi initiative, MBS also announced a Middle East Green Initiative targeting regional collaboration.


The announcement comes ahead of several key climate conferences including the Leader’s Climate Summit on 22-23 April and the United Nations Climate Change Conference (COP26) from 1 to 12 November.


Saudi Arabia and the Middle East region broadly stand to be greatly impacted by the forces of climate change. Warming temperatures will lead to drastic effects on Saudi Arabia’s ecology, deepening water scarcity, endangering biodiversity, and severely damaging the nation’s agricultural industry.


The Saudi Arabian economy has profited immensely from the growth in the fossil fuel industry, putting the nation in an awkward position when it comes to climate change. A significant number of scientists argue mankind needs to keep a majority of fossil fuels in the ground to stave off the worst impacts of climate change.


As one of the world’s largest oil producers in the world, climate activists may be sceptical of Saudi Arabia’s recent announcement, but regional stability and the country’s liveability are on the line. The Kingdom has also been known for its big promises related to infrastructure projects, which some critics have called vanity projects.


Currently, pressure is growing on state institutions to act on climate change, and it will continue to be one of the dominant issues on the global stage. More than just domestic policy, the Saudis likely see climate policy as a way to collaborate with global partners and get back in the good graces of former allies.

 

Green Initiative: What is it?

           

The Saudi Press Agency said the two initiatives are broadly part of the Kingdom’s plan that defines “an ambitious road map that rallies the region and significantly contributes to achieving global targets in confronting climate change.”


The press agency specifically mentioned desertification as a main climate change concern for Saudi Arabia and the region. The initiatives plan to increase cover vegetation, reduce carbon emissions, and preserve marine habitats.


Both initiatives will have smaller initiatives within them to address specific topics including planting trees, land rehabilitation, and more. The Kingdom is targeting a 4% contribution to global targets limiting land degradation and a 1% contribution to the global initiative to plant 1 trillion trees.

 

Another eye-catching goal laid out in the announcement is Saudi Arabia’s plan to convert 50% of its energy consumption to renewable sources by 2030.  The goal is lofty as less than 1% of the Kingdom’s energy currently comes from renewables.

 

The announcement was lighter on details about the Middle East Green Initiative, but it did mention knowledge-sharing, Saudi Arabia’s commitment to plant 40 million trees outside of the Kingdom, and the need to focus on international collaboration on the issue.

 

The ambitious environmental plans are part of Saudi Arabia’s larger Vision 2030, the wide-reaching project to diversify the Kingdom’s economy and attract foreign investment outside of the oil sector.

 

International Reaction

 

The announcement received positive attention from foreign heads of states and regional partners.


UK Foreign Secretary Dominic Raab said, “We welcome Saudi Arabia’s plan to plant 10 billion trees, combat pollution & preserve marine life as an important step in their climate ambition. As COP26 President we’ll work with Saudi Arabia to support their drive to protect the planet ahead of COP26.”


Russia is also set to work with Saudi Arabia on the initiative as The Russian Direct Investment Fund (RDIF) said it is “very impressed” by MBS’s ambitions.


A spokesperson for UN Secretary-General Antonino Guterres said “we’re following with great interest the efforts made by countries like Saudi Arabia to step up their climate ambitions.”


Saudi Arabia and bin Salman have been marred in an international diplomacy snare since the assassination of Jamal Khashoggi and the Kingdom’s heavy-handed role in the Yemeni Civil War and the destabilization of Yemen. As Vision 2030 and Saudi Arabia’s economic diversification plans rely heavily on drawing in foreign investment, the Kingdom is in need of some positive PR.

 

Ahead of COP26 in Glasgow, Saudi Arabia has laid down ambitious plans, ones that mirror its Western partners, such as Prime Minister Boris Johnson’s tree-planting initiative.


While Saudi Arabia desperately needs to counteract the negative impacts of climate change for its own national security and ecology, the planned initiatives also serve as an international PR boon. And that begs the question, are MBS and the Kingdom of Saudi Arabia serious about climate change?

 

Economy Built on Oil or Green Paradise?

 

One of the announced initiatives that has received the most international press is the Kingdom’s plan to plant 10 billion trees within their borders. But Saudi Arabia is the third-driest country on Earth, and without details on how the country plans to plant all the trees, sceptics will remain wary of the tree-planting bonanza.

 

Some environmental activists and climate scientists are buoyant about tree-planting’s potential to reverse some impacts of climate change. But other scientists have pointed to overhyped statistics and argued that planting trees is not a catch-all solution that avoids addressing the real problem.


Simply put, planting trees can help the overall environment and help mitigate carbon emissions, but reforestation is a complex endeavour. The bigger problem that faces the world climate is greenhouse gas emissions.

 

The announcement of the Green Initiative does include a promise to increase renewable energy consumption to 50% of the country’s energy, but how the number two oil producer in the world can achieve such a feat seems far-fetched in the short timeframe of nine years.


In recent years, Saudi Arabia has shown little effort in meeting its Paris Agreement goals with other big oil-producing states like Russia and the United States in a similar boat.


Like many other countries, Saudi Arabia has failed to meet their modest climate targets in the past. Ahead of COP26, it means the Kingdom has plenty of room to improve or follow down a familiar path, using ambitious climate projects as bait for foreign investment and improved foreign relations rather than a genuine

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Economy, Geopolitics, Investment

A futuristic, sustainable city to house one million residents without cars, streets, or emissions and all built in a straight 170-kilometre line? It sounds like something out of a science fiction novel, but it’s part of Saudi Arabia’s plan to diversify its economy.

 

Saudi Crown Prince Mohammed bin Salman unveiled his most ambitious project, a 170-kilometer city called The Line, related to the proposed city Neom in January 2021 with a slick promotional video.

 

A diverse megacity with an emphasis on sustainability, contouring urban life to nature, and artificial intelligence-driven public services, the project is not short on ambition. But, international media and independent observers have noted the lack of details thus far.

 

Furthermore, critics question the feasibility of the project considering past Saudi projects to build cities in the desert including the incomplete King Abdullah Economic City.

 

The Line and Neom are also not being built on ‘virgin land’ as some consultants claim, with activists and tribal community members outraged as the Huwaitat tribe is forced off their land. Activist and Huwaitat tribal member Abdul-Rahim al-Howeiti was killed by Saudi police forces in April 2020.

 

So why build a $500 billion speculative city project on desert land partially occupied by tribal members? Is it part of MBS’s plan to modernize the Saudi economy and revolutionize Saudi society or is it a cash grab for Western firms as Saudi Arabia spends its petrodollars?

 

Forward Thinking or Petrodollar Problem?

 

During the Crown Prince’s tenure thus far, Saudi Arabia has aggressively emphasized economic diversification. Saudi’s Public Investment Fund has been routinely injecting cash into tourism projects and paying Western influencers to promote Saudi tourism to American and European travellers.

 

Since the inception of the petrodollar, OPEC nations and other oil-producing nations are paid for oil in US dollars, Saudi Arabia has been a frequent investor in American firms. In 2016, Uber received $3.5 billion from the Public Investment Fund.

 

But as concerns about Saudi Arabia’s dependency on oil grow, or if read more generously, growing worry about climate change and resulting ecological disaster, MBS and Saudi Arabia have looked to depart from their traditional petrodollar economy.

 

As the petrodollar became widely used in the 1970s, Saudi Arabia became awash in US dollars. Since it’s not easy to simply convert the massive amounts of US dollars into local currency, oil-rich nations had to turn to different spending measures.

 

During periods of peak oil prices, a phenomenon known as petrodollar recycling was employed. The Saudi Public Investment Fund was founded in 1971, giving the Saudi state the ability to spend this money abroad on foreign firms that could use American dollars.

 

This economic model has also led to a wide array of ambitious vanity projects as OPEC nations periodically are pumped with more petrodollars than they can efficiently spend in their domestic economy.

 

This economic structure has largely remained intact and the PIF has ratcheted up investments in foreign firms in recent years including a shrewd $7.7 billion purchase of blue-chip American stocks during the COVID-fuelled stock market downturn.

 

But recently, MBS has shown a preference to perhaps turn away from this oil-dependent petrodollar model. Saudi Arabia announced a plan called “Programme HQ” a project to lure multinationals away from Dubai and increase foreign investment in their country.

 

The plan highlights the Kingdom’s struggle to attract large foreign investment outside of the oil industry. Saudi Arabia has always been able to attract foreign companies to throw petrodollars at, but it has long been a one-way street.

 

Even under Programme HQ, Saudi Arabia is offering massive tax breaks, but due to political controversies, foreign money might elect to stay away from investing in Riyadh.

 

Neom and The Line are incredibly ambitious, but they are not completely unprecedented in Saudi or regional history. If it succeeds, the project would be a great shift in the economy of Saudi Arabia, and a potential way out of the petrodollar trap as it would greatly increase foreign investment.

 

However, this is dependent on turning the ambitious plans on paper into reality and convincing the international community that a line city in the middle of the desert is a desirable location to visit, do business in and move to.

 

Can it Succeed

 

As stated before, The Line is scant on details. A promotional video on the official Neom YouTube channel mentions “invisible technology” that will generate “carefree and open urban space” as an animated underground network called “The Spine” displays a metro and high-speed rail.

 

The project is also billed to be zero emissions and powered by “100% clean energy” while preserving 95% of the surrounding nature. Alongside the environmental promises, developers say The Line will create nearly 400,000 jobs and massively increase the country’s GDP.

 

The Line is part of the larger Neom project, a metropolis being built in Tabuk, Saudi Arabia in the northwest of the country.

 

Without getting too far into the weeds on the feasibility of the speculative city based on the limited public information, what we can investigate is what geopolitical ramifications such a project could have.

 

Neom and The Line are set to be built on the Gulf of Aqaba, an area of water that borders Jordan, Israel, and Egypt.

 

Saudi Arabia has been one of the leading Arab nations seeking rapprochement with Israel in recent years. Some of the more ambitious plans for Neom and The Line would require normalized diplomatic relations with Israel, a prospect that would anger Palestinians.

 

Riyadh has also shifted its diplomatic tone in recent months as it prepared for the new Biden Administration in Washington. President Biden said he would be much harsher on Saudi Arabia than his predecessor as the US and Saudi Arabia enjoyed close ties during President Trump’s four years in the Oval Office.

 

But President Biden has refused to sanction Saudi Arabia or the Crown Prince despite American intelligence linking MBS with the 2018 Jamal Khashoggi assassination.

 

The Khashoggi assassination continues to dog bin Salman’s public image, but the West’s reluctance to exact retribution exemplifies Saudi Arabia’s close ties with the West and the pivotal role it plays diplomatically in the region.

 

If Neom and The Line are to even get off the ground, MBS will likely have to regularly pull out the pocketbook and continue splashing the cash in foreign economies. Whether or not they will return the favour to Saudi Arabia is the massive bet the Crown Prince is making with Neom and The Line.

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Economy, Geopolitics, Investment

It’s no secret that Saudi Arabia is making moves to diversify its economy away from a reliance on oil. Riyadh has heavily focused on tourism, but also hinted at ventures in sports, invested large sums in blue-chip Western firms, and is now turning its attention to luring large multinational firms to the nation’s capital.

 

Saudi Arabian Crown Prince Mohammed bin Salman is pushing for “Programme HQ”, a plan to draw in multinationals from the regional business hub of Dubai, UAE, according to the Financial Times.

 

The laundry list of incentives includes a 50-year tax holiday, scrapping the tough quotas to hire Saudi nationals for foreign firms, and protections against an array of future regulations. MBS is hoping to attract regional offices of companies like Google.

 

But the Saudis face stiff competition from Dubai, an established business hub with quick flight connections to Europe and a more Western education system for the children of foreign executives.

 

The ambitious project is part of the Kingdom’s even more ambitious Vision 2030, a program led by MBS to diversify and modernize Saudi Arabia’s economy and infrastructure.

 

With strong competition from the UAE and a damaged reputation abroad after the Jamal Khashoggi assassination, Saudi Arabia may face an uphill battle in its quest to meet its lofty goals by 2030.

 

Brewing Rivalry?

In recent regional geopolitical matters, the United Arab Emirates has been cast as a strong Saudi ally. Relations have not always been rosy in the past, but the two Gulf states have found cooperation against Iran as a fruitful venture.

 

The two were the most important players in the blockade of Qatar that spanned three and a half years and attempted to economically strangle their neighbour. The blockade, originally put in place due to the Saudi coalition’s concerns about the growing relationship between Qatar and Iran, was ended at the start of 2021. While the Saudis led the charge for reconciliation, some analysts say to appease the incoming Biden administration, the UAE expressed more reluctance.

 

The allies have also become deeply involved in the Yemeni Civil War, an ongoing conflict that has left Yemen in ruins, over 200,000 Yemenis dead, and over 3 million citizens displaced. The active role of the two states in the death and destruction has also led to concerns on the world stage that have already spilled over into other areas.

 

Both Italy and the United States recently blocked arms sales to Saudi Arabia and the UAE for their active role in Yemen.

 

After years of close relations and an expanding footprint in the region, the Saudi-UAE partnership is being put to the test by its worsening international standing. As Saudi Arabia continues its push for economic diversification it may need to tamper the ratcheting tensions with Iran, a game that might require more diversification in terms of allies and partners.

 

Not only Qatar, but even Israel is looking to benefit from improved relations with the Gulf states as a potential realignment in the Middle East takes place.

 

Biden

Arguably one of the biggest catalysts for Saudi Arabia’s geopolitical realignment in the last months has been the anticipation of the new Biden administration. While Biden’s Secretary of State seems keen on remaining hawkish on Iran, a public reversal on the Trump administration’s cosy relations with the Kingdom has already been established.

 

The Biden campaign team said the Trump administration “wrote Saudi Arabia a blank cheque,” and the Biden presidency is looking to focus more on human rights concerns in Saudi Arabia.

 

Much of the increase in the Saudi’s purchasing of arms sales began under the Obama administration, and the current pause on arms sales to Saudi Arabia was pitched by Secretary of State Antony Blinken as a routine reassessment of the country’s arms sales to Saudi Arabia and the UAE.

 

While President Biden was Vice President from 2008-2016, he and the administration were not known to have a particularly strong stance on Saudi Arabia.

 

Further than just arms sales, a hardened relationship with the United States could damage Saudi’s chances of attracting foreign business headquarters under their Programme HQ plans.

 

Some businesses like Google, Alibaba, and Western Union have announced increased office space and investment in Saudi Arabia, but Riyadh has yet to convince a major firm to move their regional headquarters to the country. And deals like Google’s cloud service made with Saudi oil company Aramco have led to public dismay among employees.

 

“The biggest challenge MBS has in remaking the Saudi economy is getting foreign companies to invest in Saudi Arabia… Despite all these enticements, it hasn’t happened,” MBS biographer Justin Scheck told The Daily Beast.

 

Before the Khashoggi assassination, Saudi Arabia was already struggling to attract foreign investment, and this already with the “blank cheque” from the Trump administration in full effect. The Kingdom’s most ambitious plans are still hampered by a poor image internationally, and with a new administration, MBS and Saudi Arabia have had to seek a new path internationally.

 

Whether the Kingdom will be able to pull foreign firms away from their allies in Dubai largely depends on how much Saudi Arabia can mend their reputation and how receptive foreign governments and businesses are to the public relations offensive.

 

While Saudi Arabia may struggle to find foreign firms to move to Riyadh, recent history has shown that foreign firms are eager to cover for the potential of heavy investment from the Public Investment Fund of Saudi Arabia. But now the task lies ahead for MBS to reverse the course and convince foreign firms to invest in his country.

 

 

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Economy, Geopolitics

With a historic peace deal announced between the United Arab Emirates and Israel in mid-August, US Secretary of State Mike Pompeo embarked on a whirlwind tour of the Middle East in search of more peace deals with Israel.

 

The normalizing of relations between UAE and Israel was met with fanfare from the Trump administration, with President Trump’s senior adviser and son-in-law Jared Kushner on the first direct flight from Israel to the UAE.

 

The next step for the United States government was to send Pompeo to the UAE, Bahrain, Oman, and Sudan in search of more good news for the administration. But Pompeo was unable to secure any further declarations and the Secretary of State went back to Washington empty-handed.

 

Each state has relations with the United States beyond Israel, and some viewed them as a roadblock to further negotiations. For example, the Sudanese Prime Minister said the issue of normalization of ties with Israel should not be linked with the country’s removal from the US state sponsors of terrorism list.

 

The best news Pompeo received was from Oman, whose leader Sultan Haitham bin Tariq al-Said praised the UAE-Israel deal but did not comment on his own country’s relations with Israel.

 

Ahead of Pompeo’s visit to the region, Israel announced it expected Bahrain and Oman to follow in the UAE’s footsteps, but hopes have been tempered slightly after no new big announcements.

 

Before Pompeo’s visit, Israel said it also expected to normalize relations with several Muslim-majority African countries.

 

With some expectations that the UAE-Israel peace deal might cause some diplomatic issues in the Arab world for the UAE, it has been Palestinians who have voiced the biggest concerns.

 

Palestine

 

The peace deal is a great concern for many Palestinians considering the decades-long agreement between countries in the Arab world to put pressure on Israel to return annexed land. 

 

Palestinian President Mahmoud Abbas said he “rejects and denounces the surprising announcement by Israel, the United States and the UAE,” and called it a “betrayal of Jerusalem, Al-Aqsa Mosque and the Palestinian cause.”

 

Palestinian officials also insist they were not consulted about the UAE deal before it was announced.

 

The UAE has billed the normalization as a measure to stop further annexation in the West Bank. However, Israeli Prime Minister Benjamin Netanyahu said annexation was “still on the table” after the UAE deal.

 

Furthermore, a discrepancy in the English and Arabic versions peace deal has triggered skepticism among Palestinians. The Arabic version of the deal released by UAE state media, said, “the agreement … has led to Israel’s plans to annex Palestinian lands being stopped.” But in English, the agreement was only said to “led to the suspension of Israel’s plans to extend its sovereignty”.

 

This small detail is of immense importance as Palestinians fear Israel could continue annexation at a later date after a suspension of its plans.

 

Egyptian President Abdel Fattah al-Sisi, among other leaders of Arab countries, spoke in support of the deal while calling on Israel to drop plans to further annex portions of the West Bank.

 

The United States, while always an ally of Israel, has become a very vocal and outward supporter of Israel and has sought to shift the state of regional politics in Israel’s favor. The UAE deal was a huge win in this direction, and with other countries supporting the deal, other leaders may follow suit.

 

What has been hailed as a huge win for the Israelis has been met with condemnation and worry from many Palestinians. The New York Times characterized the deal as swapping one nightmare for another, instead of annexation, the Palestinians now have to fight for their struggle to be viewed as relevant with unanimous support faltering. 

 

The Grand Mufti of Jerusalem resigned from a UAE forum promoting peace after he called the UAE’s normalization of relations with Israel, “a stab in the back of Palestinians and Muslims, and a betrayal for Muslim and Christian holy sites in Jerusalem.”

 

However, whether the Trump administration has permanently realigned the geopolitical situation in the region remains to be seen.

 

Pompeo, Trump Use Israel as Foreign Policy Victory

 

Pompeo was not only busy with diplomatic events; the Secretary of State also spoke to the Republican National Convention from Jerusalem to tout the President’s foreign policy credentials.

 

Pompeo called the UAE-Israel peace deal “a deal our grandchildren will read about in their history books.” He also held up the Trump Administration’s decision to move the United States Embassy to Jerusalem.

 

Domestically, there was more concern about potential violation of the Hatch Act, a law that prohibits civil service employees in the federal government from engaging in some forms of political activity, than the contents of the speech. Pompeo has denied any legal wrongdoing, but Democrats in the House have said they intend to pursue an investigation.

 

This episode sheds some light on the limitations of viewing the Trump administration’s policy as a blip.

 

With Trump facing reelection in two months, according to polls his days in the Oval Office may be numbered. Despite this reality, the UAE plowed ahead with the Israel peace deal, and some comments from other Arab states may suggest a more permanent realignment in the region.

 

With that said, Pompeo and Kushner have been yet unsuccessful in securing further public affirmations that point in the direction of similar deals.

 

The reluctance on some states to join in can be chalked up to multiple reasons, including domestic politics, regional relations, American relations, and the uncertainty surrounding the Trump administration.

 

However, Pompeo’s trip to the region and the UAE-Israel peace deal show that Israel is currently able to achieve a deal with an Arab country with favorable terms. Unfortunately for the Palestinians, Arab solidarity is shakier than ever before in modern memory.

 

While current events spell out more potential peace in the region, what it means for peace within Israel is up in the air.

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Economy, Geopolitics, Investment

A Saudi-led consortium’s bid to purchase Newcastle United failed after months of controversy surrounding the planned takeover.

 

The biggest sticking point was the Premier League viewing the Saudi Public Investment Fund (PIF), the group behind the bid, as a proxy for the Saudi state.  Saudi Crown Prince Mohammed bin Salman is the chairman of the Saudi Public Investment Fund.

 

But the group cited “this difficult phase marked by the many real challenges facing us all from Covid-19,” as a chief reason for the deal falling apart.

 

The deal falling through was a surprise to many as the deal was in its final stages. Newcastle’s current owner Mike Ashley, CEO of Sports Direct, will keep the £17 million deposit put down by the Saudi-group. The final deal would have seen the club sold for £300 million.

 

The collapse of the deal is a major setback for Saudi’s sovereign wealth fund, as the purchase of a Premier League club could have been a huge public relations coup. Saudi Arabia has struggled in the public eye of the West after the murder of Jamal Khashoggi in a Saudi consulate in Turkey.

 

Some recent investments from the fund have also decreased massively in valuation. In May, Softbank announced its Vision Fund, in which the Saudi sovereign fund invested $45 billion, lost $17 billion in the last fiscal year after it wrote down the value of WeWork and Uber.

 

Despite the setbacks, the Saudi Public Investment Fund announced it was still keen to continue the takeover if the Premier League gave the deal the green light. Newcastle United fans have also petitioned the Premier League to provide more details as to why the takeover deal was abandoned after four months of negotiations.

 

While the deal might not be completely dead, the prolonged process and massive money put up shows the PIF and the Saudi state are still keen on further diversifying their economy and wealth. However, that process may come at a higher price due to strained diplomatic relations and poor public relations.

 

Economic Diversification

 

The Saudi state and the PIF have long been pushing for more diversification in order to lessen the country’s dependency on oil. The push has been spearheaded by Crown Prince bin Salman, who has deployed a charm offensive on Western companies and politicians.

 

But in the wake of Khashoggi’s murder, the business relations between foreign companies and the Saudi state have become more difficult.

 

Shortly after the incident in 2018, an array of businesses, media companies, politicians, and international organizations pulled out of business deals or refused to attend business forums in Riyadh.

 

The private ventures most supportive of the Saudi state also found themselves in hot water in the wake of the scandal. Uber, who received a $3.5 billion cash injection from the PIF in 2016, stepped into the scandal when its CEO Dara Khosrowshahi dismissed the murder as a “mistake”.

 

Not only has the push for economic diversification come with diplomatic headaches, but some of its most high-profile investments have resulted in massive losses that predate the coronavirus economic crisis. As of late 2019, the PIF had lost $1 billion due to its investment in Uber.

 

Spending Big in the Crisis

 

But big losses and the current economic crisis have not scared off the sovereign wealth fund. The PIF has been pouring money into many ventures as the worldwide economic impact was beginning to hit, attempting to snap up shares in deflating industries.

 

According to the Financial Times, Yasir al-Rumayyan, governor of Saudi Arabia’s sovereign wealth fund, said at a virtual investment conference in April, “you don’t want to waste a crisis . . . So, for us, definitely we are looking into any opportunities.”

 

The PIF invested in a wide range of industries including the hardest hit, acquiring a 5.7% in Live Nation, an American events promoter, and a 7.3% stake in Carnival, the American cruise line.

The Saudis have also been snapping up shares in blue-chip companies with household names like Disney, Facebook, BP, Boeing, and Citigroup.

 

But critics abroad and domestically are beginning to criticize the tactic of splashing cash in foreign companies as it simultaneously funds proxy wars and potentially ignores economic damage at home.

 

The Footprint of Saudi Wealth Domestically and Abroad

 

The PIF’s expanding international investments and its interest in purchasing an 80% stake in a top-flight English football club have drawn attention to the Saudi’s aggressive strategy during uncertain times.

 

The coronavirus crisis has been a devastating period for the Middle East, at first for economic reasons, and now due to a rise in infections for public health reasons. The world economy was brought to a standstill for several months, and it is still far from reaching its pre-pandemic levels.

 

Oil prices have picked up in recent days and weeks, but they are still far off of pre-pandemic levels.

 

And while oil prices were slowly recovering, the rate of coronavirus infections took off in Saudi Arabia. The number of cases is currently stabilizing at over 1,000 a day after peaks of over 4,000 daily confirmed coronavirus cases.

 

$1 billion was pumped into Saudi businesses to keep them afloat during the crisis, but the near-term, as in many countries, still looks grim.

 

The economic developments may put a damper on some of Saudi Arabia and MBS’s more ambitious goals, including Neom, a $500 billion futuristic city planned to be built in the country’s barren northwest.

 

Saudi Arabia’s international engagements may also serve as a thorn in their side. While the Khashoggi murder has proven to be a much worse diplomatic hit, the Kingdom’s involvement in worsening the humanitarian crisis in Yemen through war still draws harsh criticism from many corners.

 

With an aggressive and risky strategy during an unprecedented economic standstill globally, the PIF and Saudi Arabia may pay for its bet against the house. But with growing economic sway in many Western institutions, MBS and Saudi Arabia could be playing a long game that will see them sheltered from their gravest sins.     

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The coronavirus pandemic and subsequent near worldwide shutdown of international travel has hit every economy, but those countries who rely on tourism dollars have been especially impacted. With the European Union wrestling the virus under control after a debilitating number of months, European countries are beginning to open up their borders to other countries with similar numbers of coronavirus cases.

 

The EU announced the first fifteen countries on June 30 that would be allowed access into the EU, and the list includes three North African countries that draw Europeans for tourism in the summer: Morocco, Algeria, and Tunisia. Airlines and the tourism industry will welcome the move, but some countries are still holding off for similar access to the countries, including Spain.

 

Spain is holding out for a reciprocity agreement with Morocco that would allow Spaniards to travel to Morocco. The European Union is also only provisionally open to China on the condition that EU citizens are allowed back into China.

 

Morocco has had one of the strictest responses to the coronavirus with an array of limitations including a complete ban of printing and distributing physical newspapers. Morocco began their lockdown on March 20 when it still had less than 100 cases.

 

An early lockdown prevented Morocco from getting hit with the hardest of the coronavirus and as of July 2, the country of 36 million people has had only 12,854 confirmed cases and 228 deaths. But the Moroccan government has played it very safe and only began lifting the lockdown on June 24, the same day they announced a record 563 coronavirus cases.

 

 

Open for Business?

 

The European Union may have deemed Morocco safe, but the Moroccan government did not immediately open up its borders to European travel. While Moroccans flocked to the beach to celebrate a reopening of public life, the government refused to reciprocate the opening of its border with Europe.

 

Morocco’s coronavirus success story has also come at a high cost with immense restrictions on civil liberty and economic fallout from a stalled economy. Human Rights Watch detailed the case of a woman who was jailed for posting a video online making that poked fun at a strict civil servant enforcing coronavirus rules.

 

The economic fallout from coronavirus has been shared across the globe, but Morocco’s economy comprises heavily on several sources of money that have been heavily impacted by the spread of the virus. Approximately 7% of the country’s GDP comes from remittances from citizens working abroad, a number which is expected to dip in 2020 due to the pandemic.

 

In 2019, the tourism sector accounted for 7% of Morocco’s GDP, and 750,000 people were employed in the industry. Tourism has been brought to a standstill, and the government has tried to encourage domestic tourism to mitigate a predicted $3.4 billion shortfall thanks to coronavirus.

 

The OECD detailed Morocco’s economic woes related to tourism as 2.5 indirect jobs are related to the country’s tourism industry. One industry indirectly related to tourism, gas stations, saw an 80% decrease in revenue in March at the beginning of the lockdown.

 

With an emphasis on domestic tourism, the Moroccan government is acknowledging its reliance on tourism while still remaining cautious about opening its border. While extreme caution has led to concerns in the business world, the Moroccan government’s strong response will help the country build its reputation with coronavirus-fearing travellers.

 

 

Eager to Open

 

One of Morocco’s neighbours reacted more swiftly when the EU began discussing opening up their borders to international travel. Tunisia, another sunny North African nation with a hearty tourism industry, opened its borders to international travel on June 27.

 

Tunisia’s tourism industry is familiar with shocks to its international reputation as it has had to recover from a terrorist attack that killed 38 European tourists in 2015. 2011 Arab Spring protests also reduced international travel from countries with richer tourists.

 

But Tunisia’s touristic draw has proven to be resilient, and the government has shown a greater eagerness to open its borders than Morocco. Tunisia also has a better control over the virus with single-digit case numbers trickling in every day.

 

Tunisia and tourism companies will likely advertise Tunisia’s low level of coronavirus cases and success in suppressing the virus to attract European tourists back to their shores.

 

Rising unemployment numbers have also caused civil unrest in Tunisia with protestors in southern Tunisia demonstrating against the lack of jobs provided by the government. Tunisian police fired tear gas at protestors to disperse a crowd in Tataouine.,

 

Civil unrest due to an economic downturn has not been restricted to Tunisia, Moroccan taxi drivers also demonstrated against coronavirus restrictions. Algeria, another North African country that gained access to the European Union has had sustained protests for over a year. The Algerian movement was able to kick out long-time president Abdelaziz Bouteflika, but they have been less active due to coronavirus restrictions.

 

 

Stability

 

Of Morocco, Algeria, and Tunisia, Morocco has been the most stable in recent years, and this confidence may lead them to the decision to hold off on European tourists until further safety precautions are in place.

 

No country reliant on tourist dollars will fare well if an outbreak occurs due to tourism, but with rising unemployment, some governments will be more receptive to opening than others.

 

If countries like Morocco and Tunisia are able to keep coronavirus numbers down while opening up to tourists for the summer season, they will benefit from the harsh coronavirus regime. It may be the big payoff that many citizens are waiting for, a tourism-induced boost to the economy as a reward for patience and a tough suppression of the virus.

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In mid-April, Turkey was in the thick of the coronavirus crisis averaging over 4,000 new cases a day, but three weeks ago President Recep Tayyip Erdogan declared “mission accomplished”, and government spokespeople said the virus has been contained. At the start of June, the country opened up most public places with the government eager to wake the economy out of its lockdown slumber.

 

Europe’s tampering of the coronavirus spread, along with Turkey and other countries’ proclaimed containment, has been viewed positively. However, there are still many questions left to be answered about how society moves forward.

 

Even leaving aside the chequered past of the ‘mission accomplished’ claim, Turkey may have the virus contained, but the world economy is entering a great period of uncertainty. The country has flattened the curve, yet it is still averaging 900 coronavirus cases a day and the next one to two months will be telling for Ankara.

 

Turkey’s response has received plaudits from some circles, including the WHO, for its quick response and high-capacity, quick-turnaround testing. But the Turkish Medical Association has been critical of Erdogan’s response, and chairman Sinan Adiyaman said the June 1 reopening of the economy is “too early”.

 

Erdogan has shown that he is particularly sensitive to the short-term economic impact of sustained coronavirus measures after he scrapped a sudden curfew and weekend lockdown in 15 municipalities. Turkey was seeing a slight uptick in cases heading into the weekend of June 6th, but the president said the measures “would lead to some social and economic consequences.”

 

 

Circuit Breakers

 

The original sudden announcement of new measures less than a week after announcing a large-scale reopening of the economy looked like a less severe version of Singapore’s ‘circuit breaker’ measures. Singapore, a densely populated city-state, originally received widespread praise for their handling of the coronavirus, but in early April they had to introduce and reintroduce various measures to quell a large uptick in cases.

 

Turkey’s original plan to put Ankara, Istanbul, and 13 other municipalities under a weekend lockdown looked like an admission that the virus spread had the potential to once again grow out of control.

 

The WHO said on June 8 that there was “no time to take (the) foot off (the) pedal” considering the high numbers of coronavirus cases around the globe. The United States, Brazil, Mexico, and India are all seeing continued increases in new cases. South Korea, the country with perhaps the best virus response, is still working to stamp out hotspots with economic disruption.

 

Some political commentators have floated the idea of on-off lockdown measures in the event of a new wave of coronavirus measures. Thus far, Erdogan has remained particularly aware of the economic consequences of widespread lockdowns, but this strategy still leaves the country like many other vulnerable to a second wave considering new cases remain high and most of the populations can still catch the virus.

 

As the pandemic continues countries will also have to be prepared to adapt to changes with how the virus acts. Turkey expanded the symptoms list for people to receive a coronavirus test.

 

But while Turkey, one of the most important economies in the region, declared mission accomplished in its fight against coronavirus for publicity reasons, the fight against the virus and economic fallout will continue in the long-term.

 

 

Tourism

 

Turkey has a booming tourism industry that grossed $34.5 billion in 2019, and some estimates have tourism contribution to the country’s GDP at 12%. The opening of the massive Istanbul Airport in 2018 sent a clear message that Turkey has hedged its bet on its growth as a tourism and transportation hub.

 

It has been no secret that tourism has been one of the hardest-hit sectors in the world economy with international travel coming to a near standstill over the last three months. As early as May, the Turkish government began announcing measures in an attempt to assuage travelers’ fears and ensure tourist dollars continue to flow into the country.

 

Even with international travel slowly restarting, it is unclear whether high-dollar tourists will resume international travel en masse over the summer. As European countries incentivize their citizens to take holidays in their own country to boost low tourism numbers, a much slower summer should be expected.

 

This second wave of economic impact could wreak havoc on the tourism sector and adjacent businesses such as shops and restaurants.

 

While some are trying to keep up hope, Erkan Yagci, chairman of the Mediterranean Touristic Hoteliers and Investors Association told Reuters, “We have to be realistic, this will be a slow process. The opening of 50% (of hotels) in July would be a big success in my opinion.” He also added that foreign currency earnings resulting from tourism could drop 60-70% with domestic tourism also decreasing by 50%.

 

 

Foreign Affairs

 

With the tourism industry in store for a difficult summer, Turkey still finds itself involved in several potential conflicts that could pop off at any moment.

 

Turkey’s intervention in Libya received a new wrinkle as Erdogan announced ‘agreements’ with American President Donald Trump who sits on the opposite side of the conflict. The Americans have yet to release exactly what the talks were about, but some sources reported Erdogan linked Kurdish rebels to Antifa, the loosely organized antifascist movement drawing ire from Trump as nationwide protests rock America.

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