In a surprise statement from US President Donald Trump this week, it was announced that the United Arab Emirates (UAE) and Israel have signed an historic peace deal aimed at normalising relations between the two nations. Coming at a time of heightened regional tensions surrounding Israel’s plans to annex parts of the West Bank, the agreement has sent diplomatic shockwaves across the world. So what is the agreement and what does it mean for the region?

What is the agreement?

The Israel–United Arab Emirates Peace Agreement, also known as the Abraham Accord, is an agreement to establish official diplomatic ties between both countries. Brokered by Donald Trump, it is the third such agreement between Israel and an Arab nation, following Egypt’s agreement in 1979 and Jordan’s agreement in 1994. In return for full diplomatic relations, the agreement says that Israel will agree to drop its plans for annexation of parts of the West Bank.

The agreement is far-reaching in terms of its implications for UAE-Israeli cooperation and outlines plans for the exchange of embassies and normal trade ties between the two countries. Diplomats from both nations will meet to sign bilateral deals regarding investment, tourism, direct flights, security, telecommunications, technology, energy, healthcare, culture, and the environment, amongst other areas of mutual interest. In particular, Israel’s Prime Minister, Benyamin Netanyahu, said Israel would co-operate with the UAE in developing a coronavirus vaccine.

The UAE, Israel, and the US will join together to establish a “Strategic Agenda for the Middle East,” as the leaders “share a similar outlook regarding the threats and opportunities in the region, as well as a shared commitment to promoting stability through diplomatic engagement, increased economic integration, and closer security co-ordination.”

International Reactions

Responses to the surprise deal range from full-hearted support to enraged outcry. Several nations were keen to praise the deal. UK Prime Minister Boris Johnson expressed support for the agreement, saying “it was my profound hope that annexation did not go ahead in the West Bank and today’s agreement to suspend those plans is a welcome step on the road to a more peaceful Middle East”. The accord was also praised by Bahrain, and Oman hoped the agreement will help achieve peace in the Middle East. Egypt‘s President Abdel Fattah el-Sisi, a close UAE ally, celebrated the agreement, seeing it as “steps to bring peace in the Middle East.” Germany also expressed support for the announcement, with Foreign Minister Heiko Maas saying that the normalisation of diplomatic ties between Israel and the UAE “is an important contribution to peace in the region.” China has also indicated its support, with foreign ministry spokesperson Zhao Lijian saying “China is happy to see measures that are helping to ease tensions between countries in the Middle East and promoting regional peace and stability.” UN Secretary General Antonio Guterres hopes the agreement will be an opportunity to realise a two-state solution with Palestine.

Other nations were more cautious to show full support for the agreement and emphasised the need for Israel to honour its commitment to Palestine. Spain welcomed the agreement, hoping that “Israel’s commitment to suspend the annexing of parts of the West Bank will become permanent.” Simmilarly, France welcomed Israel’s decision to halt its annexation parts of the West Bank, with Foreign Affairs Minister Jean-Yves Le Drian saying this suspension “must become a definitive measure.” In the Middle East, Jordan said that the deal could push forward peace negotiations on the condition that it succeeds in convincing Israel to allow a Palestinian state on territory that Israel occupied in the 1967 Arab-Israeli War.

Other nations and groups were critical of the deal. Turkey criticised the “hypocritical behaviour” of the United Arab Emirates, with Turkish President Recep Tayyip Erdoğan threatening to suspend diplomatic relations with the Abu Dhabi administration or withdraw their ambassador. Palestine‘s President Mahmoud Abbas denounced the accord and Hamas have followed suit. Right-wing Israeli settlers are unhappy with the agreement, as plans for annexation are being suspended. But perhaps the most outspoken critic of the agreement is Iran, with President Hassan Rouhani saying the UAE made a “huge mistake” by normalising ties with Israel. The Islamic Revolutionary Guard Corps warned of dangerous consequences for the UAE, saying that the deal would accelerate Israel’s demise.

Implications for International Relations

The agreement certainly came as a surprise to many and could alter relationships in the region. The closer alignment of Israel and the UAE is indicative of a wider trend in the region of Sunni Arab states viewing Iran as a greater threat than Israel; counteracting this threat is more important to them than resolving the Palestine Conflict and this deal could see Israel and the UAE collaborating further in the future to oppose Iranian regional influence. Thus tensions between Iran and Sunni Arab states could increase as a result of the accord.

Although the public announcement of the deal was unexpected, diplomats in the region have long been aware of clandestine UAE-Israel ties. The normalisation of diplomatic relations is in line with Mohammed bin Zayed Al Nahyan’s aggressively interventionist foreign and security policies which have backed the Saudi-led war in Yemen, opposed Islamist movements and state sponsors such as Qatar and Turkey, and intervention in the Libyan civil war. Israel and the UAE already cooperate on intelligence issues and Israeli diplomats have been present at the Abu Dhabi HQ of the International Renewable Energy Agency. The UAE is not alone in the region in terms of developing underground ties with Israel – Bahrain, Oman, Saudi Arabia, and Qatar are all known to have discreetly engaged with the Israelis, and perhaps the UAE’s normalisation will set a precedent to be followed by other Gulf nations.

Although the deal sees the UAE formally recognising Israel as a nation, their embassy will not be located in Jerusalem. Despite commiting to abandon plans to annex parts of Palestine, Netanyahu clarified that the “application of Israeli sovereignty” was not off the table, but rather temporarily suspended. The raprochement of the two nations is certainly a step in a new direction, but still far from seeing eye-to-eye on issues in the region.

The Abraham Accord will certainly change the dynamics in the Middle East. While some see this as an opportunity to foster peace in the region, others fear that Palestine will be forgotten and abandoned if other Arab nations normalise ties with Israel. It goes to show that diplomacy in the Middle East is fast moving and often unpredictable, and it will be interesting to see what ensues from the agreement once the dust from this ground-breaking accord settles.

Sources

Al Araby: “Erdogan says Turkey could suspend relations with UAE after Israel deal”

The Guardian: “The UAE-Israel deal will make a two-state solution even less likely”

The Times of Israel: “Iran: UAE made ‘huge mistake’ with Israel deal, and now faces ‘dangerous future’”

Arab News: “World leaders voice hope UAE-Israel deal could kickstart Middle East peace talks”

BBC News: “Israel and UAE strike historic deal to normalise relations”

Al Jazeera: “How the world reacted to UAE, Israel normalising diplomatic ties”

New York Times: “Israel and United Arab Emirates Strike Major Diplomatic Agreement”

Photo Credit: Grand Mosque at Abu Dhabi, United Arab Emirates. Photo by Kel Avelino on Unsplash

Countries around the world are struggling to cope with the economic consequences of the COVID-19 pandemic, but Lebanon was heading towards crisis before the virus became an issue. Once admired as a beacon of stability in an increasingly unstable region, Lebanon is facing an unprecedented economic crash and a massive rise in poverty. So what’s happened and how did the country get to this position?

What’s happening

Lebanon is facing its worst economic crisis in the modern era. The local currency, the Lebanese Lira, is in freefall and lost 60% of its value over June, as well as decreasing in value by 80% since October. Grappling with an economy on the verge of hyper-inflation, the government has been unable to fund wheat imports, leading to bread shortages. Other essentials, such as medicines, safe drinking water, power, and internet access, are in short supply as thousands descend into poverty; the world bank projected that over half of the population would fall below the poverty line this year. With the world’s third highest public debt to GDP ratio and an umeployment rate of 25%, the government has announced that they will default on their foreign debts.

Many Lebanese feel that the government is not doing enough to support people and the economy, and many people have taken to the streets in the largest anti-government protests seen in over a decade. Public pressure led to the resignation of Prime Minister Saad Hariri, leading to the formation of a new government in January. However, a change in leadership has not brought the drastic change needed to the country and protests are still ongoing.

How Lebanon got here

Many see the collapse of Lebanon’s economy as something that was inevitable. Successive Lebanese governments have been accused of economic mismanagement, endemic corruption, and overspending. But the main catalyst for the current situation was the shortage of foreign currency in October 2019, causing the value of the Lebanese Lira to fall against the dollar on the black markets that emerged. To increase revenue, the government introduced sweeping tax proposals on commodities such as tobacco, petrol, and voice calls, but these plans were fiercely opposed by Lebanese citizens and were thus rescinded. Although a lockdown imposed in March in response to the COVID-19 pandemic forced many protesters off the streets, it also worsened the economic crisis and exposed the inadequacies of the country’s welfare system.

Following the resignation of Saad Hariri, Hassan Diab assumed the position of Prime Minister promising economic reforms, but these have been forgotten and not implemented. Many blame ruling elites who have built up their own wealth over the years while failing to reform the struggling economic system. Lebanon’s economic crisis is ultimately the result of poor economic policy and institutional corruption.

Implications for international relations

Lebanon’s economic crisis also has implications for the future of Lebanon’s foreign policy and relations. Lebanon has sought support from the International Monetary Fund, but after six weeks of discussion, talks have stalled due to arguments within the Lebanese delegation. This comes alongside a reduction in international transfers as more foreign banks want to avoid the Lebanese banking sector, which faces accusations of mismanagement.

The international community have not been keen to help Lebanon’s struggling economy. The country’s western allies have been offering an $11 billion loan package since 2018, but this is on the condition that the government implements reforms in the public sector; as these changed haven’t been made, the loans have not been granted. Furthermore, many nations are concerned about Iran-backed Hezbollah’s involvement in Lebanese politics, and on this basis wealthy Persian Gulf nations are refusing to offer assistance to the country. The US has repeatedly said that any aid offered to Lebanon would be on the condition that Hezbollah withdraws from government.

In order to access foreign aid and investment, Lebanon would have to dramatically change their domestic and foreign policies, particularly in relation to Iran and Hezbollah, which would be destabilising for the region and create a more complex and dangerous situation. But until even the smallest reforms in Lebanon’s fiscal policies are made, the international community will be reluctant to offer any form of financial support to the nation.

What can Lebanon do now?

Writing for Forbes, Tatiana Koffman makes two suggestions for how Lebanon can deal with their fiscal issues, although neither of them are without their drawbacks. The first is dollarisation, a policy where a nation adopts the dollar as their main form of currency. This was used by Zimbabwe in 2009 following hyperinflation. Adopting the dollar is seen as a safe currency substitute, particularly for nations with high dollar-based debts and imports.

Dollarisation poses two problems. Firstly, by adopting the US currency, a nation surrenders its financial future to the stability of America. Secondly, the COVID-19 pandemic has engendered a global shortage of dollars, and driving a demand for this currency in Lebanon would only bolster black markets.

The second suggestion is adopting cryptocurrencies like Bitcoin, which is now widely being used in Venezuela. The advantage of these digital currencies are that they are independent of governments and banks. Expats can also safely send funds into the country using Bitcoin without undergoing government scrutiny. However, a switch to Bitcoin would require mass education and awareness of Lebanese communities, which is difficult at a time when many public places are closed and internet connections are unreliable.

The next few months will be crucial in determining Lebanon’s financial and political future. The international community cannot continue to ignore the situation when thousands are facing starvation and extreme poverty, and the Lebanese government will not survive if it doesn’t implement reforms to support the population. But in a time of global uncertainty, it will be hard to predict what the next steps for Lebanon will be.

Sources

The Washington Post: “The lights go out on Lebanon’s economy as financial collapse accelerates”

Forbes: “Lebanon’s Currency Crisis Paves The Way To A New Future”

CNN: “Dumpster diving, blackouts and suicides. Lebanon’s woes laid bare as crisis deepens”

BBC: “Lebanon: Why the country is in crisis”