Rumors of Saudi Succession, Updates on Yemen, Good News for the EU

Geopolitical Futures

Cracks in the Saudi royal family. Saudi Prince Ahmed bin Abdulaziz has returned to Riyadh after spending several months in London. Brother to the current king, Ahmed was heir apparent to the throne until Crown Prince Mohammed bin Salman jumped the line of succession. His return has therefore fueled rumors of intensified familial opposition to his rule – opposition that was created by his rise to power but aggravated by the killing of Jamal Khashoggi. Among the most aggrieved are Saudi Arabia’s conservatives, who consider regressive many of MBS’s reforms, such as allowing women to drive. According to reports from Voice of America, Ahmed plans to convene a meeting of the family council for the express purpose of curbing MBS’s power through the appointment of a guardian. Division among the ruling family would undermine Saudi Arabia’s efforts to counter Iran and obstruct its plan to reform the economy.

Signs of strain between China and Pakistan. The government in Beijing invited a group of Pakistani Uighurs to meet with Chinese diplomats to quell concerns over China’s treatment of Uighurs, a Turkic Muslim minority concentrated in western Xinjiang province. China’s mass detention of Uighurs had received almost no attention in the Muslim world, but it eventually came under fire from Pakistan’s minister of religious affairs in late September. The criticisms came just as Pakistani Prime Minister Imran Khan had a meeting with Saudi officials, during which he secured investment for Gwadar port. He also received financial support for Pakistan’s looming balance of payments issue. Beijing’s invitation to meet is meant to improve its image in, and curry favor with, Pakistan, which is looking for more investment partners for the China-Pakistan Economic Corridor.

Updates on Yemen. The Saudi-led coalition has carried out airstrikes in Hodeida, reportedly killing as many as 150 Houthi militants. If true, it would be deadlier than most airstrikes the coalition has conducted heretofore and, combined with the 10,000 reinforcements being sent to the city, suggests the offensive is intensifying. Meanwhile, Iran has endorsed Pakistan as mediator in an attempt to end the war, an idea that surfaced after Pakistan’s prime minister visited Riyadh to secure investment for CPEC. All this comes, of course, just after Washington finally called for a cease-fire.

Moldova drifts away from the West. On his second official visit to Russia, Moldovan President Igor Dodon said Wednesday he had made a “breakthrough” in a meeting with Russian President Vladimir Putin. The breakthrough came in four parts: an agreement that Russia would drop duties on Moldovan exports by July 2019; an amnesty deal for Moldovans living in Russia who have violated the country’s immigration laws; Russian funding for infrastructure projects in Moldova; and a mutual decision to declare 2019 “Moldova’s Year in Russia” – and 2020 “Russia’s Year in the Republic of Moldova.” (We assume that’s a figurative “in,” though it’s hard to be sure with Russia, which has wanted Moldova to move away from the EU and toward Moscow.) Some of this is wishful thinking. Balkan Insight noted, for example, that while Putin touted a 14 percent increase in Moldovan exports to Russia during the first half of the year, Moldovan data show that those exports actually fell by 8 percent. And more than two-thirds of Moldovan goods went to the EU. Economics aside, however, the meeting with Putin is Dodon’s second high-level conference in as many weeks that indicates Moldova may be hedging its bets on the EU: Dodon hosted Turkish President Recep Tayyip Erdogan on Oct. 17 in a bid to strengthen their countries’ bilateral ties. Although we’ve spent more time talking about the clash of U.S. and Russian interests in Belarus and Ukraine, Moldova is an active battleground too – one on which U.S. ally Romania is keeping a close eye.

China’s private sector continues to struggle. More than 50 publicly listed companies have received local government investment this year alone, according to a report by Nikkei Asian Review. Financial distress, aggravated in no small by part by the trade war, has forced their hand. All told, local governments have provided $4 billion to prevent further financial calamity and forestall bankruptcy. Some have even invested in companies outside of their own jurisdiction. The trend is yet another indication of the difficult financial position in which China finds itself. It risks undermining Beijing’s efforts to rein in reckless local government spending and cannibalizing private sector growth.

Some good news for the EU. Eurostat’s monthly unemployment release noted that unemployment in the EU is down to 8.1 percent – the lowest level in the bloc since January 2000. Just five countries had unemployment rates exceeding the EU average: Greece (19 percent), Spain (14.9 percent), Italy (10.3 percent), France (9.3 percent) and Croatia (8.2 percent). At the same time, youth unemployment is still high in some Southern European economies, including Greece, Spain and Italy, where the rate is above 30 percent. Unemployment is one of the EU statistics we monitor especially carefully because, after the 2008 financial crisis, it revealed how the bloc’s various members were weathering the storm. For most countries, unemployment has become less of an issue – indeed, many EU members are competing with one another to attract more workers. But the unemployment rate in Greece, Spain and Italy looms large for the EU, as does the unsettling fact that many young people in these countries, whose combined gross domestic product falls just short of Germany’s $3.6 trillion, face dismal job prospects. It’s a reminder that though things have gotten better for the bloc as a whole – certainly better than we expected – they’re still not good for everyone.

Honorable Mentions

  • Iran’s annual inflation rate has reached 274 percent. Turkey’s central bank has raised its inflation expectations for the year to 23.5 percent from 13.4 percent.
  • Mexico has reinforced its southern border with Guatemala as U.S. President Donald Trump calls for more soldiers at the U.S.-Mexico border.
  • The Syrian Democratic Forces has said Turkey’s artillery attacks have forced it to table its offensive against the Islamic State, creating another obstacle in U.S.-Turkey relations.
  • Russia has imposed sanctions against Ukraine, freezing the assets of 322 individuals and 68 businesses.
  • The United Kingdom has scrambled fighter jets to intercept two Russian bombers that came near British airspace.
  • Japan deployed a coast guard vessel to Australia for the first time. It is expected to remain there for a month.
  • Several Serbian intellectuals have been barred from entering Montenegro. They were detained at the border on their way to speak at a conference commemorating the 100 year anniversary of the decision to unite Serbia and Montenegro.
  • The Fatih, a Turkish deep-sea drillship, has begun operations in the Eastern Mediterranean.
  • India has received a waiver from the U.S. to import Iranian oil once sanctions resume Nov. 4. In exchange, India agreed to reduce imports by a third.