MENA Strategic Bulletin

Co-authored by Kanz Majdalawi and Morgan McLucas

A ceasefire in Lebanon, but Israeli aggression to continue

On Tuesday, Israeli Prime Minister Benjamin Netanyahu announced that his war cabinet had approved a 60-day ceasefire with Hezbollah in Lebanon, signalling a temporary halt in hostilities. However, Netanyahu made it clear that Israel’s military campaign in Gaza would continue unabated.

Under the terms of the agreement, Israeli forces are set to withdraw from southern Lebanon, while Hezbollah has agreed to relocate its troops and weapons north of the Litani River.

In place of Hezbollah and the IDF, the Lebanese army will deploy at least 5,000 troops in the area south of the Litani River, alongside UNIFIL, the UN’s peacekeeping force. An international committee, with participation from the US and France, will oversee the implementation of the ceasefire and ensure compliance with UN Security Council Resolution 1701, which brought an end to the previous war between Hezbollah and Israel in 2006.

Regional and stakeholder impact

In announcing the deal, Netanyahu was keen to frame it as a strategic victory over Hezbollah that would allow Israel to fully focus on Gaza and the threat posed by Iran. Hezbollah, once seen as Israel’s most immediate threat, has been much diminished, weakening Iran’s influence in the region.

While it lasts, the ceasefire is an opportunity for Israel to repair its diplomatic standing. From the outset, the Israeli invasion of Lebanon was a diplomatic liability for Israel, ignoring as it did President Biden’s requests for restraint. This drew international criticism and strained relations with key allies like the US and France. While the erosion of trust on all sides means that it is an uneasy truce of uncertain duration, Israel’s shift in focus towards Iran aligns with the incoming Trump administration’s priorities.

On the domestic front, the ceasefire deal allows Netanyahu to present a narrative of success to shore up his position politically.

What’s next?

While the ceasefire offers a temporary respite, the true objectives of both Israel and Hezbollah remain unfulfilled. The situation in Lebanon is far from settled, and this agreement, rather than signalling a lasting peace, is more likely a strategic pause before the next phase of the conflict.

Going forward, it seems Israel will prioritise countering Iran over other regional concerns. The prospect of a ceasefire in Gaza, despite calls from figures like UK Prime Minister Keir Starmer, has become more remote, with Netanyahu now more reliant on operations in Gaza to appease the hawkish elements of his cabinet.

With Trump’s support, Israel could feel emboldened to intensify its operations in Gaza or even escalate its actions against Iran. As Netanyahu recalibrates his military and diplomatic priorities, the region should brace for more aggressive Israeli moves, with Iran undoubtedly front of mind in its next phase of geopolitical manoeuvring.

Visit of Ras Al Khaimah ruler to Guangdong Province strengthens UAE-China relations

Ras Al Khaimah ruler Sheikh Saud Bin Saqr Al-Qasimi has signed a new cooperation agreement with Guangdong Province, China, aimed at boosting collaboration in the digital economy, advanced manufacturing, scientific and technological innovation, smart cities and cultural exchange. This agreement is part of the UAE’s strategic push to deepen ties with China, particularly in areas where Guangdong excels, such as electronics, automotive, textiles, pharmaceuticals and high-tech industries.

The emirate of Ras Al Khaimah is seen as a key part of this push, with the aim of increasing its standing in global trade and technological manufacturing. Sheikh Saud’s visit to China is his second trip in just three months, reflecting a concerted diplomatic push.

As China continues to be the UAE’s largest trading partner, with a bilateral trade volume of $82bn in 2023, this deepened engagement is poised to further strengthen the UAE’s position as a key player in the technology sector.

Regional and stakeholder impact

Beijing’s influence in the region is on the rise, as evidenced by its strategic mediation between Iran and Saudi Arabia in the 2023 Beijing Agreement. This move is part of a broader effort to secure vital markets, not only in Saudi Arabia and Iran but potentially in the UAE as well. From 2003 to 2022, the UAE invested $11.4bn in China.

Increased activity between the regions must be seen against the backdrop of Trump’s return to power, which is set to trigger aggressive policies against China. His administration is expected to impose tariffs on key sectors, particularly defence and technology, further complicating trade dynamics. As a result, Beijing is working to consolidate its trade relationships in critical markets.

What’s next?

The UAE’s technological relationship with China is expected to remain strong and continue expanding. Both nations are committed to boosting bilateral trade to $200bn by 2030, and the UAE will likely seek to maintain and strengthen this partnership – particularly in sectors like digital infrastructure and high-tech manufacturing.

As President Trump enters office and takes economic action against China, the UAE will look to manage relations with Beijing while also maintaining military ties to the US, as formalised in its designation as major US defence partner in September 2024. The UAE’s ability to navigate these competing interests will be crucial in maintaining its role as a key economic and geopolitical player in the Middle East.

Saudi Arabia steps up investment agreements to strengthen global supply chains

At the World Investment Conference in Riyadh on Tuesday, Saudi officials announced nine investment deals in the Kingdom’s mining and mineral processing industries. Worth over $9.32bn, the announcement heralds the latest injection of capital into a sector that has a key role at the heart of Saudi industrial ambitions.

The deals focus on downstream production, such as refineries and smelting plants. The first phase will include construction of a copper rod mill by Indian firm Vedanta, which aims for a capacity of 300,000 metric tonnes per annum (mtpa). Construction is expected to start in late 2025 or early 2026. Vedanta are also planning to build a copper smelter and refinery. Also involved is the Chinese Zijin Group, which is aiming to build a zinc smelter and a sulphuric acid plant.

Further plans include facilities for minerals critical in EV batteries, including plants for processing lithium carbonate, copper cathodes and copper foil. An investment by Australian firm Hastings Technology Metals also promises to process rare earths.

Regional and stakeholder impact

These deals go a long way towards the Saudi goal of a robust minerals industry. Despite having least 5,300 mining sites valued at $1.3trn in 2022, investment in copper production reflects gaps that still exist. The Kingdom is hoping to reduce reliance on copper imports and go a long way towards meeting current domestic demand of 365,000 mtpa. Furthermore, annual demand for copper in Saudi Arabia is set to double by 2035. Riyadh envisions the country as a major electric vehicle (EV) producer, and each battery requires an estimated 83 kg of copper alone.

To compete with the world’s largest EV producers, which can today be expected to each build upwards of a million fully electric cars or plug-in-hybrids per annum, will require an extra 332,000 mtpa of copper. If this can be sourced from domestic mines, Saudi Arabia will be closer to industry leaders (China, Germany and the US) who already have large domestic copper supplies. Lithium carbonate and rare earth production will reap similar benefits.

What’s next?

This announcement will attract further interest in the rapidly growing Saudi minerals industry, which in turn could spur additional investment, especially from those with a stake in the booming EV market.

As demand for key minerals like lithium, cobalt and nickel increases, Saudi Arabia’s rich mineral reserves position it to play an important role in the global supply chain. However, while the potential is undeniable, it is important to consider the track record of Saudi Vision 2030 projects, which have often been criticised for over-ambitious goals and frequent delays.