STRATFOR: MENA – Annual Forecast 2016


MENA will face new security challenges in 2016, after the black swans events that marked 2015: the Russian military intervention in Syria, the signing of the Iran nuclear deal, the downtaking of the Russian fighter jet by the Turkish forces.

All Eyes on Turkey

Turkey will be the most critical player to watch. Although Ankara has encountered a number of hurdles, a more politically secure government under the leadership of President Recep Tayyip Erdogan will be much more assertive beyond Turkey’s borders this year.

Turkey is already preparing for an operation west of the Euphrates River in northern Syria to flush out Islamic State militants along its border. In addition to countering the Islamic State, Turkey wants to keep a check on Kurdish expansion in northern Syria and ultimately wants to create a „safe zone” for Syrian refugees within Syria.

Turkey is not interested in absorbing more of the refugee burden for the sake of easing European concerns, but Ankara does intend to use European anxiety about migrant flows to reinforce its foothold in Europe and secure backing for its military actions in Syria.

The United States will likely facilitate Turkey’s heavy air campaign in northern Syria while pursuing a second offensive that will rely on mostly Kurdish rebel proxies east of the Euphrates.

Turkey will emphasize its intent to rely principally on Sunni Turkmen and Arab rebel proxies to clear and hold the Islamic State-infested territory, but Ankara will also have a contingency plan ready in case it needs to deploy ground forces.

Moreover, Turkey and the United States will work with Saudi Arabia, the United Arab Emirates, Qatar and possibly other Arab countries such as Egypt and Jordan to assemble a coalition for anti-Islamic State operations in Syria.

This will add manpower to the current mission while also helping Ankara avoid reviving the historical resentment inherent in returning Turkish troops to Arab soil.

Russia will be the greatest complicating factor in Turkey’s plans. The Russian objective in Syria is multilayered, and Moscow will not stray from its partnership with the government of Syrian President Bashar al Assad in trying to weaken the Islamic State. This partnership means that Russia will need to confront forces trying to weaken the Syrian government, including the array of rebel forces that the United States, Turkey, Saudi Arabia, Jordan and Qatar are relying on in their own fight against the Islamic State. Russia’s dual targeting of Islamic State militants and Syrian rebels will prevent a more coherent coalition against the Islamic State from forming and will widen the divide between Turkey and Russia.

Russia will try to scuttle Turkey’s military plans by increasing its presence in Syria. This will mainly mean further use of air assets over northern Syria. Turkey will not necessarily stand down in the face of this pressure. Negotiations to deconflict the battlefield are likely, but they also do not eliminate the potential for skirmishes. As Russia-Turkey relations visibly deteriorate, Moscow will not want to push Ankara too far. The more Turkey finds common cause with its NATO partners, the more vulnerable Russia will be in the former Soviet sphere.

The deterioration of the relationship between Turkey and Russia will give the United States and its partners in Central and Eastern Europe an opportunity to draw Ankara into a tighter alliance. Neither Turkey nor Russia can afford a complete break in relations, but trade ties are bound to suffer while strategic energy projects are likely to experience further delays. This will give more urgency to Turkey’s push to pursue energy projects in Azerbaijan and the Kurdish regions of Iraq. Turkey will also be more compelled to make progress in negotiations over the reunification of Cyprus in order to edge its way into eastern Mediterranean energy projects.

The Syrian battlefield is split between a dizzying array of competitors and interests. This all but assures that any attempt to implement a cease-fire or forge a final power-sharing agreement will be extremely limited. The foreign stakeholders are now willing to increase military support for their proxies. Though this will balance out the battlefield, it will also further decrease the incentive for either side to compromise to advance negotiations.

As Turkey grows more assertive in the Middle East, its competition with Iran in Syria and Iraq will intensify. While reinforcing the al Assad government alongside the Russians, Iran will exploit divisions in the Kurdish regions of Iraq to counter Turkey’s efforts to tighten its economic and energy links in northern Iraq at the expense of Baghdad. Russia could also revive its ties with Kurdish militant factions as a lever against Ankara. Turkey will commit a limited number of troops to training operations for Sunni fighters in northern Iraq. Even as Turkey tries to build on its relationship with Massoud Barzani’s Kurdistan Democratic Party to deepen its foothold in the Kurdish regions of Iraq, Turkish relations with the Kurdistan Regional Government will inevitably run into complications as Turkey continues to pursue Kurdish rebels who use Iraq as their refuge.

The Islamic State Persists

The Islamic State core in Syria and Iraq will suffer notable losses this year, though the aspiring caliphate is unlikely to suffer total defeat. The weakening of the Islamic State as a conventional force in its core territory will encourage its leadership to call for more terrorist operations in the West and across the Middle East. As seen in the Paris attacks, hard-to-detect grassroots cells will continue to pose a serious threat. Competition within the global jihadist landscape will also motivate attacks, particularly in the Maghreb, Arabian Peninsula and West Africa, where al Qaeda nodes are most relevant.

Iran Returns to the Oil Markets

Major Middle Eastern oil producers are entering another stressful year of low oil prices and expensive foreign policy commitments. The implementation of the Iran nuclear deal at the beginning of the year will add at least 500,000 barrels per day to the oil market followed by a slower production increase over several months.

Iranian President Hassan Rouhani will trade on the success of the nuclear deal to campaign for moderates in February elections for the parliament and Assembly of Experts, which is the body in charge of appointing and reviewing the performance of Supreme Leader Ayatollah Ali Khamenei. However, it will take time for Iranians to see the positive economic benefits of the deal. Khamenei can be expected to use his informal influence over parliament and the Guardian Council, which vets candidates for the elections, to balance against the moderates, driving more competition in Iran’s conservative political landscape. This implies greater challenges ahead for the Rouhani government when it comes to limiting the political and economic influence of the Islamic Revolutionary Guard Corps as investors move into Iran.

The reintroduction of Iranian oil to the market makes Saudi Arabia unlikely to significantly scale back production in the first half of 2016 to defend the price of oil. Once Saudi Arabia has been able to assess the price impact of Iran’s return — as well as taking into account declining U.S. production — Riyadh could modify its energy output in the second half of the year. However, the Saudi’s will not be able to coordinate a sustainable production cut with other major OPEC and non-OPEC producers. Mostly because of their smaller populations, the United Arab Emirates and Kuwait will have an easier time coping with another year of lower oil prices. Saudi Arabia, on the other hand, will have to finance a growing budget deficit through debt issuances while making small and incremental spending cuts.

The Next Phase of the Yemen Conflict

The Saudi-led coalition will continue to push forward on the battlefield in Yemen against Houthi fighters and forces loyal to former Yemeni President Ali Abdullah Saleh as they approach a resolution to the current phase of the crisis. Whether this resolution takes the shape of a military push into Sanaa or a negotiated settlement ahead of a push will depend on the resolve on the part of both sides to continue the fight. For the Saudi-led coalition and Yemeni anti-Houthi elements, a drive into the mountainous core of Yemen will mean a slow in the advance with considerable casualties and loss of equipment. Higher losses could increase friction between members of the coalition, such as Saudi Arabia and the United Arab Emirates, over which Yemeni parties to support. As Yemen moves toward resolution of the conflict, non-state actors will pose greater security threats while the Yemeni security apparatus is weakened and distracted. The Southern Resistance Movement’s growing autonomy will fuel calls for an independent „South Yemen,” moving the country along a path toward eventual split between north and south.

Israel’s Security Dilemma Grows

As the fight in Syria becomes more complex, the Israeli government will work to maintain a relationship with as many players on the battlefield as possible to be prepared for worst-case scenarios. Israel can be expected to keep close to both the United States and Russia to keep tabs on the battlefield. The country will also maintain its right to carry out airstrikes against Hezbollah and Islamic State targets near its border. Turkey’s growing role in the region will compel Israel to try to improve its relationship with Ankara.

The Israeli-Palestinian conflict will be defined by a cycle of persistent, low-level Palestinian radical attacks in the West Bank and Israel, which will provoke continued local retaliation and the Israeli security responses. From its base in Gaza, Hamas will try to avoid another direct confrontation with Israel, but Israel’s policy of holding Hamas responsible for endorsing attacks, along with attempts by a fledgling Islamic State in Gaza to goad Hamas into conflict, could broaden Israel’s intervention in the Palestinian territories. Hezbollah will welcome these distractions for Israel as the group tries to balance its commitments in Syria with defending its home turf against pockets of Sunni rebels trying to undermine Hezbollah’s role in the Syrian war. An emerging Saudi-Iranian consensus on selecting a Lebanese president will also help to defuse a more serious spillover of the Syrian conflict into Lebanon.

A Difficult but Manageable Year for Cairo

No credible challenge to Egyptian President Abdel Fattah al-Sisi’s hold on power will emerge this year. Taking advantage of lower oil prices, the government will proceed cautiously with subsidy reform in an effort to shore up its fiscal position and secure assistance from the International Monetary Fund. The opposition will remain fragmented, enabling the government to manage potential bouts of social unrest. A persistent jihadist threat concentrated in the Sinai Peninsula but with the potential to carry out attacks in core urban areas of the country will drive heavy defense spending and could further undermine the tourism sector. Russia will be able to leverage the jihadist threat to deepen its security relationship with Cairo, though the Egyptian government will continue to maintain a careful balance among its Gulf sponsors, the United States and Russia. Egypt’s offshore natural gas potential in the eastern Mediterranean will spur energy cooperation among Egypt, Cyprus and Israel.

North Africa Fights Instability

Algeria will be under significant financial stress as it struggles to cope with the fallout from low oil prices. Spending cuts and selective tax increases are unavoidable, though the government will manage to dodge major subsidy reform to avoid stoking significant social unrest. Slow and uneven movement can be expected on other reforms that aim to improve the country’s energy investment climate and ultimately increase energy production to shore up government revenues. Despite Algeria’s precarious economic position, the government will not sacrifice defense and security spending.

Preparations for Algeria’s eventual political transition will occur at a steady pace. Part of the preparation could entail some progress toward constitutional reforms designed to rebalance power between the president and prime minister. Algeria will encourage and host negotiations among competing Libyan factions to try to mitigate instability on Algeria’s eastern border while avoiding direct military engagements beyond its borders.

U.N.-brokered negotiations to form a Libyan unity government between rival camps in Tripoli and Tobruk will continue dragging under the weight of intractable disputes between warring parties. Libyan oil production and exports will fluctuate but will remain depressed overall in 2016. International oil companies will continue to prefer to work with Tripoli-based institutions over parallel institutions out of Tobruk. This will push the internationally recognized Tobruk government toward compromise with its rival. However, sustaining a power-sharing agreement will be extraordinarily difficult. The inevitable sidelining of more hard-line factions will feed into ongoing security challenges.

The growing Islamic State presence in Libya, especially given the militant group’s increasing propensity for foreign attacks, will trigger greater foreign involvement in the country. However, this activity will be limited primarily to air and special operations strikes and working with local actors to undermine the group. The Islamic State in Libya will focus on consolidating its power in the city of Sirte but will seek to extend westward toward Misrata from Abu Grein and eastward toward Ajdabiya from Nawfaliya. As the Islamic State emerges as a power player in Libya, Misrata militias will direct more of their efforts against the militant group.

Annual Forecast 2016 is republished with permission of Stratfor.

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