- 10 minutes ago
In an interview on Chakravyuh, Dr. John Sfakianakis, Chief Economist of the Gulf Research Center, analysed the escalating geopolitical and economic crisis across West Asia.
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00:03the world is caught in an intense churn and caught in the midst of this chakravue of multiple wars
00:12two of the world's most vital energy fertilizer and trade choke points the state of hummus
00:18and babal mandab are currently under intense pressure a us-israel campaign that killed iran's
00:26supreme leader in february has now settled into a grinding war of attrition a war between russia
00:33and ukraine that started in february 2022 is now on for over four and a half years and that too
00:41is
00:41adversely impacting energy and fertilizer availability across the world the united nations has not been
00:49able to find any solution so far the old security architecture is collapsing the new one yet to take
00:58shape and the big fear will these wars escalate and what impact will it have on you and i and
01:07the world
01:07as we know it joining me on chakravue is dr john swiana kyanakis chief economist of the gulf
01:15research center and given his vantage point in reyad he can give us a ringside view of the latest
01:23developments in the region dr welcome iran and the us are using words as terrorists for each other
01:33is there still a glimmer of hope for peace and a negotiated settlement or do we see war clouds over
01:40the strait of humus and the babal mandib in your view sir well thank you very much for the invite
01:48uh gaurav unfortunately i see more war um even if war is not going to be the solution we're not
01:56going
01:57to solve anything both iran and united states are not going to solve anything there is going to be no
02:04no quick solution no end game and unfortunately both will use this era this period as a chance
02:13to get into an escalatory phase and i'll tell you why one is the midterm elections iran believes that
02:23this is the time when president trump will be quieter less capable to fight another war let's say a war
02:31that includes a 3.0 campaign where more bombings will come in so they will try and escalate whether
02:38directly or indirectly through the proxies in this case particularly the houthi in yemen and we have
02:46seen that over the last several days the houthis have been escalating their attacks onto saudi arabia
02:53other proxies will be iraqi militias so iran believes that this is the quiet phase of president trump
03:02because he is politically connected to the midterms he will care more about what's happening to the
03:08domestic situation equally i think there is a misunderstanding that the iran has because as
03:16president trump perceives that this is not how things will go if the iranians escalate president
03:23trump will return back and they will fire and they will escalate and they will take things into a new
03:31direction so i think we're into into this phase of misunderstandings and miscalculations as to the
03:38real reasons of why everybody is in the region this is extremely alarming both the us and israel have
03:46carried out intense bombing raids twice over iran if they were to repeat history would the result be any
03:54different are there any indications whatsoever that iran may not escalate or is there fear that iran's
04:03retaliation this time will be more fierce and across the region and very dangerous for for that entire
04:10region including saudi arabia so here gaurav you are bringing up an interesting point it could also be
04:18that they maintain low uh escalatory warfare which means that they can maintain low warfare some attacks
04:28not huge attacks not huge attacks they could be more selective so with the ua in qatar they might not
04:34really go after main cities and hotels and airports as they have done at the beginning of this war in
04:41february and march so they could very well keep them out because they have been talking and there are
04:48discussions going on between iran qatar and the ua however they could escalate with saudi arabia because
04:56at the initial phase of the war saudi arabia didn't receive the brunt of the iranian attacks
05:02actually it was spared it was the ua that received the bulk of these attacks so they could be more
05:09selective the iranians and it could be that they say look let's take it easy let's escalate a little
05:15bit but not to the full extent they will keep israel out because they don't want israel back in
05:21israel would very much want to participate in a 3.0 campaign and then their their reaction from
05:28the u.s could be more measured in that sense so they might not necessarily the u.s going on
05:34an all-out
05:35war but then again what will be the response of the u.s will they take the entire leadership out
05:41we have seen that even if you take the leadership out they have second layers and third layers and
05:47fourth layers in anticipation of of something happening killings of of the leadership and
05:53remember that they were planning for this the leadership for for decades so they have planned
05:59a generational of command and control structure in the likelihood of assassinations you know when
06:06we speak to the iranians they tell us that they have seven lines that are already prepared even if
06:12you take out the top rung the second rung the third rung the fourth fifth sixth and then the seventh
06:16are already waiting in the wings and are being prepared and by the time you take them out the
06:22next seven would be in place but if we were to specifically talk about saudi arabia what does
06:28this current scenario mean for saudi arabia especially with the houthi front also activated so
06:34there's crisis on the on the state of homo's front and there's crisis at the babal mandab front and
06:40the east west pipeline also adversely impacted yeah you're bringing up very interesting points so let
06:48me begin by one basic approach to the whole thing which is yes it is challenging for saudi arabia
06:56because now they are the target of whether it's directly run or indirectly through these proxies as i
07:03said the houthi and the iraqi militias but what i think will not happen definitely after being an
07:10observer in saudi arabia and the gulf is that the regime is not going to collapse it's not going to
07:15be destabilized we're not going to see the end of the the leadership of muhammad bin salman so for the
07:24last 60 years a lot of people have made a lot of money predicting the end of saudi arabia this
07:31is not
07:31how saudi arabia ends this is not going to happen now i've been reading over the last several days
07:37that this is going to create a collapsing regime in saudi arabia so that's out of the question what
07:45will happen is that at some point president trump will step in and will provide support to saudi arabia
07:52because saudi arabia is very critical to mr trump's president trump's election campaign if saudi arabia
08:00cannot export oil out of the babel mandab or up to the north or if the east-west pipeline continues
08:09to be attacked now they're fixing it most likely in the next few days it's back online but yet again
08:15i'm sure it's going to be hit however if the u.s doesn't come in and deal a severe blow
08:22to the
08:23houthis and to the iranians we're going to see a continuation of the crisis for oil which means that
08:30five to six million barrels of oil will be offline for a very long period of time which means
08:35president trump will have an inflation problem a yields problem as we see today and the last few
08:41days 10-year yields are skyrocketing 30-year yields are skyrocketing not good for the u.s economy stock
08:49markets falling that's very bad for president trump he loses the elections so the likelihood of losing the
08:56elections because of a crisis in the middle east although he doesn't want to admit it is extremely
09:01high so he will partake and he will help saudi arabia he will help saudi arabia maintain stability
09:09but also deal with the southern problem in yemen because this is very crucial at this point so i think
09:16he's trying to leverage himself and his points of action but he will come to the help of the saudis
09:24okay so what's your take on the mecca agreement uh and reports both turkey and pakistan are unwilling
09:32to be drawn into direct armed conflict um uh not with the houthi forces uh with the uh nor with
09:39iran
09:40will saudi arabia will they be feeling let down uh let down both by the united states and by mecca
09:46alliance partners so in some ways there is a feeling of of being let down initially by the u.s
09:55although the u.s is the strategic partner and they do provide military assistance and it's not by
10:02surprise that the f-35s were approved by the state department uh over the last several days
10:09however my response to my american colleagues is that that that's good but it will take uh many
10:15years until those f-35s are delivered so they need to be uh matching with rewards and their actions
10:22together um operationally support to saudi arabia and it will have to be done sooner rather than later
10:29so that is important number two you mentioned the pact the mecca pact and i think that remains to be
10:37seen whether it's operational and whether pakistan and turkey can help out at the moment i don't
10:42expect them to help in a meaningful way pakistan prior to the mecca agreement has historically helped
10:49saudi arabia with troops knowledge technical support today in saudi arabia you have 8 500 pakistanis
10:57operating in different domains so that needs to be seen but saudi arabia also needs to change its way
11:04the way the way it sees itself and the region and in many ways the entire gulf after this crisis
11:09is
11:10over they will need to rethink of how they can bring a true unified army and military together
11:17if not done saudi arabia will need to apply the conscript so conscription needs to begin and they
11:24need to think much more like a switzerland uh than than in the past they need to bring in conscription
11:31they need to make it mandatory they need to make not just a professional army but they need to bring
11:36a society in arms into bear and they need to institutionalize that that's a very interesting
11:44perspective sir um and and something that you know that that's uh new for us to understand uh in terms
11:51of
11:51how saudi arabia is looking at the road ahead but um uh you know dr sphagnus is there pressure or
11:59will
11:59there be pressure on saudi arabia as you mentioned they will relook a strategy but will they be under
12:04pressure to improve ties with israel uh sign the abraham accord and would that make them safer uh
12:11there were some reports in public domain that seem to indicate that uh israelis uh helped uae with
12:18intelligence inputs and air defense uh is that a new architecture that could come up in west asia
12:25i i think at the moment it's more hypothetical and aspirational than real if anything the arab world
12:32uh sees israel from a much more distance perspective than closer perspective and uh that i think is as a
12:41result of uh the way in the eyes again of the arab world what they have dealt and how they
12:47have dealt
12:47with uh the gaza issue and how also they have responded to various crisis be it in lebanon in
12:54syria and so forth again it's a perception of the arab world and today i think relations between israel
13:00and saudi arabia are not at their best i think that uh we're not going to see anytime soon an
13:06abraham
13:07accord signed between the two countries um that will take time and saudi arabia has clearly indicated
13:13that they want to see the resolution of the two-state solution on palestine before anything
13:19is signed that is the position of saudi arabia so that is a challenge to see anything changing
13:25which of course creates complexities um for what you said in terms of technical support military support
13:31intelligence support and you indicated also the uae being much closer and in 2021 as you know
13:39bahrain and the uae have signed uh the abraham accords which creates peace but in the eyes of many
13:46right now that is not a workable solution for saudi arabia so that would also indicate that even though
13:55u.s president donald trump spoke very highly uh very recently of uh the india middle east europe
14:02economic corridor as a way to overcome the two choke points uh whether it's the state of humus
14:09or babal mandab in the future uh you know imec as you well know sir came during india's g20 presidency
14:16that was inked that time does it still remain a concept paper and a long way to go before it
14:23can be
14:23actioned on ground
14:26so i on the specifics of imec i know that in india people are far more focused and concentrated and
14:34also passionate because it does provide the gateway for india to go out of the region and approach
14:41europe and the middle east important corridors for trade and prosperity and and wealth and it is
14:48not necessarily a replacement but kind of a response to the one belt one road but it's far deeper the
14:56one belt one road um in terms of what it has done in west asia but also in east asia
15:02and also in many
15:03parts of of africa and that's more with the ability of the chinese to penetrate debt and and markets in
15:12in the african continent however i would say that today the way the gulf is responding to this the
15:18gulf countries is that everybody is individually becoming independent and they're trying to find
15:23solutions to the challenge of the strait of hormuz and the babal mandat my response to it is that
15:30most likely the gulf countries are not going to uh replace imec but they will find find parallel
15:37solutions so the uae will build more pipelines qatar will have to build a solution to its lng challenge
15:44which is today they export nothing in terms of lng so they need to find a solution how they get
15:49that
15:50lng product out kuwait saudi arabia will do the same and so not necessarily will they use imec as the
15:57solution because they have individual logistical supply challenges uh to that that imec produces imec also
16:05is a political response uh and it brings in israel and today as i said saudi arabia and israel are
16:12not
16:13at the level where they can have an honest um geographic and geoeconomic relationship to that
16:19that was aspired back uh when india announced it during president biden's days so i think we're far
16:27away from this but we are finding that the gulf is is rediscovering the logistical uh sense of its
16:35existence now remember as we are also in the gulf trying to find solutions to pipelines and supply
16:42chains uh the rest of the world is trying is trying to de-link itself from the state of hormuz
16:49and also decarbonize very quickly a case in point the industrial vision of korea for 2035
16:56they want to be 50 percent less reliant on gulf oil and that is very monumental and very important
17:02india needs to address and look at the same uh because it does create challenges it indeed does
17:09so dr sviakyanik is the two biggest superpowers of the world united states unable to extract itself
17:18uh from from west asia unable to defeat iran russia unable to stop attacks from ukraine
17:25are we to look at this as nato and russia taking on each other through proxies is that what the
17:33situation is in both the battle theaters well i think when we look at the middle east nato doesn't
17:41want to be involved um i think the closest they come is through this um aspedus which is uh the
17:49way to
17:50secure freedom of navigation in the red sea which is a nato plan um and it has presence in the
17:57red
17:57sea so aspedus is the closest but nato doesn't want to be involved the uk really uh doesn't want
18:04to be involved although recently they provided a refueling aeroplane to saudi arabia but saudi arabia
18:10has plenty more refueling planes uh than what the uk is providing so that's too late too little
18:16when it comes to the uk and the uk is kind of uh trying to think of what exactly is
18:22its foreign
18:23policy and what is it exactly doing in the middle east france and italy uh they're equally trying to
18:30search where they are but they have their own problems uh i want to grab take you back to europe
18:36where europe has a crisis in terms of an economic crisis a productivity crisis and also what do they
18:42do with ukraine and russia as you alluded to because the war seems not to be ending anytime soon
18:48and i think that is creating challenges for europe as well and what will they do in the winter where
18:54they have a diesel crisis today in europe there is a huge diesel crisis which is also infused and add
19:00and aided by the war in ukraine because the ukrainians have been given a freedom card to destroy every
19:07russian refinery and now europe has to find diesel and that creates an issue so they need to really
19:13rethink what exactly is this war and the stickiness of inflation on european citizens is partially being
19:20created by that and not just by the middle east crisis and then more so how do we fight uh
19:27how do
19:27we fight these never-ending wars that is a crucial issue oh absolutely because both these wars are
19:34becoming never-ending wars but for a moment and before i switch focus to the other battle uh theater
19:41the russia ukraine theater i want to take a couple of questions on this theater uh strait of hormuz and
19:47babal mandab the houthis they've seized mocha and perim island they've resumed attacks on the
19:53saudi shipping saudi uh pipeline they're claiming there's a maritime embargo so how close is the red sea
20:01to becoming hormuz on steroids or the second bottleneck and what does this mean for saudi oil exports
20:09and for saudi vision 2030 well in any case let me start with the uh with the obvious which is
20:18vision
20:182030 prior to the war was being restructured reprioritized so i think this is adding to the
20:26reprioritization of the country and what it does with vision 2030 and not everything could be done
20:33under vision 2030 and i think it's about time that a lot of it is being restructured reprioritized
20:39because they're only finite resources so this is one number two on the issue of the babal mandib
20:45uh clearly it needs to be addressed so if you cannot get product out that creates an issue and even
20:51if
20:51saudi ships and vessels cannot get product out and then mbs uh goes to egypt in order to address the
20:58issue of storage but also creating these trade routes where tankers can provide um a lot of crude
21:06through the pipeline that connects connects egypt to the med to the mediterranean uh that is not a
21:13solution so who steps in america has to step in uh all this talk about the u.s talking to
21:18the houthis
21:19needs to be materialized um and evidence so that there is freedom of navigation that is a big
21:26challenge for america's hegemony and presence in the middle east if america doesn't get involved
21:31america is already facing a 1956 suez crisis like the british happened and did in 1956 so my belief is
21:39that if america doesn't step in it will end america's hegemony in the middle east um which is i think
21:45fast
21:46coming to an end and that is a reality saudi arabia will have to find solutions saudi arabia already
21:52is shipping more oil out of the uh strait of hormuz and again here we need to recognize that america
21:59is
21:59trying its best to unblock and provide freedom of navigation but the challenge is if you have both
22:06straits you have a double whammy so can america provide freedom of navigation and that is a challenge
22:12this is where we need to see if america's hegemony is enforced or it has really come to an end
22:18so that
22:19is to your question you know because if there is a vacuum then perhaps china will seek to occupy
22:26the vacuum is china in a position to occupy that vacuum would gulf countries be keen uh or okay with
22:33china trying to to move in if china were to do that there are two questions here sir the gulf
22:39nations
22:39they've absorbed multiple missile strikes drone strikes on airports energy sites cities
22:45has this conflict ended that that impression that west asia was safe or dubai was safe riyadh was safe
22:55doha was safe you know they were global economic capitals or can they still recover and regain lost paradise
23:07yeah no i believe in resilience and i think that the gulf countries have shown resilience
23:12uh much less in a uniform way aligned um than individually individually they have shown a lot
23:20of resilience different attitudes and policies and that i think is to the credit of everybody
23:27yes the reputation has been tarnished of course uh it goes without saying that when you have drones
23:33coming into different parts of the gulf if not all parts of the gulf uh nobody has been spared
23:39you see them in kuwait you see them even in oman um that is a credibility issue however still all
23:47of
23:47these countries are sitting on huge uh bastions of wealth huge reserves and as they're thinking about
23:54their future uh whether it is made in uae made in ksa made in in qatar and all of that
24:01that's coming out of
24:02the challenged moment which is to think of an existential issue of what do we do after the war
24:07is over and we need to have a standing army a fighting army conscription will be an issue citizenship
24:14they need to grant it to many people who are coming not necessarily from the tribes but outside of the
24:19region from the subcontinent maybe this is very revolutionary but they need to see how this new
24:24security of of um of the gulf is going to be recreated and rethought but i'm giving a lot of
24:31ability
24:31for them to exist because uh they they really for them it's it's existential if they don't think of
24:38other ways they will cease to exist very normally and remember they need to make peace all of them both
24:45with israel and with iran iran will not disappear at any time soon even if you have three irans or
24:51two
24:51irans whether the regime will disappear will implode you will have a military coup in three four years
24:58time when the sanctions take effect real effect deep effect still all the countries in the gulf will
25:04have to deal with the country across the pond across the gulf whether it's called the persian gulf
25:11arabian gulf or the gulf in general they need to deal with iran like the arab governments they need
25:17to deal with israel israel is not going to disappear they'll have to mend their their their issues and
25:23they'll have to make peace so they have to learn to make peace and coexist with each other but in
25:29the
25:30short term do you see that happen what's your prediction more conflict uh prolonged conflict
25:35grinding war or do you see peace do you see any silver lining so the silver lining is not yet
25:45there
25:45i still see that we will have this continuation of no peace no war uh instability uncertainty because
25:53it plays to the tune of the iranian regime it plays to the tune of the irgc because if they
26:00go to peace
26:01then citizens will have to think okay what is my livelihood what do i do every day am i unemployed
26:07do i have you know 100 inflation and what happens to the banking system these are really serious issues
26:13but when you have war citizens don't think about that and the regime cares much less about human
26:20life we've seen the december demonstrations having killed more than 60 000 people so they will kill more
26:27so people don't want to die so i think they will stay inside and you will see the regime thinking
26:33of
26:33more escalation because it serves their existence they remember regime stability but also regime existence
26:40is far more important than making peace that i think is at the core of the principle of the irgc
26:47so they will escalate we will see more war not necessarily extreme war but low phase war low
26:54kind of campaigned war is more of the name of the day rather than peace okay on that note and
27:02that
27:02does sound very very alarming and does clearly no good news for global economy or energy and food
27:08fertilizer supplies but for your perspective dr svakyanakis for joining me here on the chuck review
27:15podcast as always many thanks sir thank you
27:19gods
27:20no
27:20no
27:20no
27:21no
27:22no
27:22no
27:22no
27:22no
27:23no