6, April 2023
Iran, Saudi Arabia move to reopen embassies, vow to bring ‘stability’ to Mideast 0
Top diplomats from Middle East rivals Iran and Saudi Arabia met in Beijing on Thursday, pledging to work together to bring “security and stability” to their turbulent region following a surprise China-brokered deal.
In a joint statement released after talks between Iranian Foreign Minister Hossein Amir-Abdollahian and Saudi counterpart Prince Faisal bin Farhan, the two sides vowed to continue to work together to improve ties.
“The two sides emphasised the importance of following up on the implementation of the Beijing Agreement and its activation in a way that expands mutual trust and the fields of cooperation and helps create security, stability and prosperity in the region,” said the statement.
Tehran and Riyadh announced a Beijing-brokered agreement in March to restore relations that had been severed seven years ago when protesters in Iran attacked Saudi diplomatic missions.
The ministers’ visit to Beijing came as French President Emmanuel Macron and EU chief Ursula von der Leyen were also in the Chinese capital, seeking to make Europe’s case in a meeting with Xi Jinping for bringing an end to the conflict in Ukraine.
The shock rapprochement between mainly Sunni Muslim Saudi Arabia, the world’s biggest oil exporter, and Shiite-majority Iran, strongly at odds with Western governments over its nuclear activities, has the potential to reshape relations across a region characterised by turbulence for decades.
The two sides “negotiated and exchanged opinions with the emphasis on the official resumption of bilateral relations and the executive steps towards the reopening of the embassies and consulates of the two countries”, Iran’s foreign ministry said in a statement.
Saudi state TV channel Al Ekhbariya aired footage of the pair shaking hands in front of Saudi and Iranian flags and then talking and smiling.
In a readout from state broadcaster CCTV, Beijing hailed “the first official meeting between the foreign ministers of the two countries in more than seven years” and Beijing’s “active mediation” in the diplomacy.
Under last month’s agreement, the two countries are to reopen their embassies and missions within two months and implement security and economic cooperation deals signed more than 20 years ago.
Saudi Arabia severed relations with Iran in January 2016, after protesters attacked its embassy in Tehran and consulate in the Iranian city of Mashhad over Riyadh’s execution of the Saudi opposition Shiite cleric Nimr al-Nimr.
Talks between the foreign ministers are expected to be followed by Iranian President Ebrahim Raisi’s visit to Riyadh.
Raisi accepted an invitation from Saudi Arabia’s King Salman, Iran’s First Vice President Mohammad Mokhber said on Monday.
Challenge to US
Iran and Saudi Arabia support rival sides in several conflict zones across the region, including in Yemen, where the Huthi rebels are backed by Tehran and Riyadh leads a military coalition supporting the government.
The two sides also vie for influence in Syria, Lebanon and Iraq.
Riyadh’s traditional ally Washington welcomed the detente agreement, but said it remains to be seen whether the Iranians will “honour their side of the deal”.
China’s success in bringing Iran and Saudi Arabia together has challenged the United States’ long standing role as the main outside power broker in the Middle East.
An expert told AFP that Beijing’s role would likely increase confidence that any deal would stick.
“Because China is a strong backer of Iran, Saudi should have more confidence in Iran’s ability to comply with the agreement, an issue that has always been in doubt,” said Joel Rubin, former US Deputy Assistant Secretary of State for Legislative Affairs.
Thursday’s meeting “suggests that the process hasn’t gone off track since the Beijing announcement last month”, said Ali Vaez, Director of the International Crisis Group’s Iran Project.
“But it’s still early days to judge whether this is just a tactical detente or a way-station towards strategic rapprochement.”
Warming ties
Officials from Iran and Saudi Arabia held several rounds of dialogue in Baghdad and Oman before they met in Beijing.
In 2016 a number of Gulf countries followed Riyadh’s action in scaling back ties with Tehran, but they have led the way in restoring diplomatic relations.
Iran welcomed an Emirati ambassador last September, after a six-year absence, and on Wednesday named its own ambassador to the UAE, following a nearly eight-year hiatus.
Last year Iran said Kuwait had sent its first ambassador to Tehran since 2016.
Iran has also welcomed a potential rapprochement with Bahrain, a close Saudi ally, which in the past accused Iran of backing a Shiite-led uprising in the Sunni-ruled kingdom, an accusation Tehran denies.
Source: AFP
7, April 2023
Russia’s Invasion of Ukraine and Cost-of-Living Crisis Dim Growth Prospects in Emerging Europe and Central Asia 0
Economic activity in the Europe and Central Asia region is likely to remain subdued this year due to the ongoing fallout from Russia’s invasion of Ukraine, persistent high inflation and tighter financial conditions, says the World Bank’s Economic Update for the region, released today.
Regional output is now expected to grow by 1.4% in 2023, substantially better than the previously anticipated 0.1%. The positive, though deeply depressed, economic activity in 2023 reflects a softer contraction of Russia’s economy and an improvement in Ukraine’s outlook. Regional growth is expected to increase to an average 2.7% over 2024-25 as inflation eases, domestic demand recovers, and the external environment improves.
A sharp rise in consumer prices, particularly for food and energy, resulted in median annual inflation spiking to 15.9% by late 2022 in the emerging markets and developing economies (EMDEs) of Europe and Central Asia, the highest in more than 20 years, and the highest among all developing regions of the world. Inflation averaged less than 4% in Europe and Central Asia EMDEs before it began rising in 2021.
The outlook remains highly uncertain. Growth in 2023 may be weaker if the war caused by Russia’s invasion of Ukraine escalates further, food and energy prices continue to increase, interest rate hikes accelerate globally or in the region, or there is a sudden reversal of capital flows to the region. There could be spillovers to growth from the current banking developments in some advanced economies.
Ukraine’s economy is projected to grow by 0.5% this year, following a staggering contraction of 29.2% in 2022, the year of Russia’s invasion of the country. While the economic toll suffered by Ukraine as a result of the invasion is enormous, the reopening of Ukraine’s Black Sea ports and resumption of grain trade, as well as substantial donor support, are helping support economic activity this year. According to recent World Bank estimates, the cost of reconstruction and recovery in Ukraine has now grown to $411 billion, which is more than 2 times the size of Ukraine’s pre-war economy in 2021.
Türkiye experienced two devastating earthquakes on February 6, 2023, which have resulted in direct damages of about $34.2 billion, or 4% percent of the country’s 2021 GDP, according to World Bank estimates. Actual costs to meet the full range of recovery and reconstruction needs could be double the direct damages. Incorporating the impact of the recent earthquakes, growth is projected at 3.2% in 2023, rising to an average of 4.2% over 2024-25, underpinned by government support to households and investment amid ongoing reconstruction efforts.
Against the background of slow growth and high inflation, the report includes a special focus chapter on the cost-of-living crisis, which examines the impact of high inflation on the standards of living of people in the region.
“Inflation erodes the real incomes of people – and high inflation affects the poorest much more than the richest segments of the population,” said Ivailo Izvorski, World Bank Chief Economist for Europe and Central Asia region. “To better protect vulnerable groups and promote economic growth, policies should take into account the varying impacts of inflation across different income levels and use more precise indicators to measure the actual cost of high prices on the poorest.”
Governments across the region responded to the cost-of-living crisis with social assistance and subsidies, the latter involving moratoriums on energy price increases, reduced public transport fees, and caps on electricity and natural gas prices for households and businesses.
The report’s analysis, however, reveals the unequal burden of the cost-of-living crisis. It finds that inflation was 2 percentage points higher for the poorest 10% of the population compared to the wealthiest 10%. This difference exceeded 5 percentage points in some countries in the region, including Moldova, Montenegro, and North Macedonia.
Policies that do not account for the different inflation rates faced by households are likely to provide inadequate support to vulnerable groups and may end up being both inefficient and less effective, the report notes. It recommends going beyond the standard consumer price index (CPI) to measure inflation in order to capture more precisely the actual cost of living of the poorest. This is essential for designing better growth and poverty alleviation policies.