FIVE-YEAR REGIONAL OUTLOOKS
MIDDLE EAST AND NORTH AFRICA
The judgments in this paper were made by the NIC’s Strategic Futures Group in consultation with outside experts and Intelligence Community analysts and do not reflect official US Government policy or the coordinated position of the US Intelligence Community.
The Middle East and North Africa (MENA) region during the next five years faces wide-ranging challenges that overwhelmed governments will be ill-equipped to address. These challenges stem from longstanding economic, demographic, environmental, and security trends. Popular discontent in the region is acute because of high unemployment, corruption, deteriorating living standards, and poor government service provision. COVID-19 is compounding these trends and further highlighting weaknesses in most MENA countries. Facing declining resources and greater public unrest, several regional governments are responding with tighter security measures rather than risking reforms. These dynamics are increasing the chance of new or renewed domestic or regional conflict.
MENA states will continue to face mounting economic challenges during the next five years, including high levels of debt, bloated public sectors, high unemployment levels, and in the case of the Gulf states, potentially sluggish oil prices. The pandemic is exacerbating many of these economic conditions. As a result, many countries in the region could see further disruptions to public services, declining living standards, and rising poverty that will exacerbate public discontent.
The COVID-19 pandemic is taking a heavy toll on MENA populations, worsening existing humanitarian challenges, including displaced populations and food insecurity. Containing the virus will be slow, given the high population density, weak health services, lack of adequate infrastructure in many places, and vulnerable populations in the conflict zones and refugee camps. Iran has suffered from the highest number of cases in the region, and countries throughout the Levant and North Africa have struggled to manage the pandemic. While most Gulf states have done relatively well at containing the virus, Saudi Arabia’s death toll is among the top five in the region.
The pandemic risks more food insecurity, particularly among refugee populations. The region is one of the world’s largest importers of food, leaving it vulnerable to the supply chain disruptions and export restrictions brought on by COVID-19. The region’s conflict zones and refugee populations are already coping with food insecurity, but other countries, especially Lebanon, are also at risk.
Environmental Challenges Mounting
Most regional governments are unprepared to cope with the looming complications of climate change, such as rising heat levels and declining water resources. Some countries will be able to afford expensive, new adaptations, such as Qatar’s efforts at outdoor air conditioning and Gulf states expanding desalination projects, but in many MENA countries, governments’ inability to address water and heat challenges will increase public frustration with government performance and potentially spark new migration flows.
The gap between public demands for improved services and governments’ ability to deliver is widening and likely to fuel more social unrest during the next five years. The COVID-19 pandemic has added an additional layer of strain on populations that already perceived regional governments as lacking legitimacy, transparency, and capacity.
Governments are likely to be more fragile, unable to co-opt support with economic and social incentives, and increasingly reliant on security services to maintain stability. With rampant corruption, strained resources, and increasing concerns about stability, governments are unlikely to take risky steps to improve governance and transparency. Individual leaders might be removed and minor reforms implemented, but systematic changes are likely to be put off.
With ongoing internal conflicts serving as venues for broader regional tensions, and the region flush with new arms imports, MENA is at increasing risk of new or expanded interstate conflict. Proxy conflicts are ongoing with Egypt, Saudi Arabia, or the UAE often supporting one side, and Qatar and Turkey the other. Unresolved tensions between Israel and Iran, and between Saudi Arabia and Iran, playing out in part in Iraq, Syria and Yemen, could easily escalate into full blown conflict or drag in other regional players. This dynamic also increases the likelihood of gray zone conflict, such as cyber attacks.
Ongoing domestic instability, regional rivalries, and weak government capacity are creating more openings for outside actors to exert influence. Both Russia and China are likely to look for opportunities in the region, but their influence will be tempered by complex local histories and the many ethnic and sectarian rivalries. Amid widespread perceptions that the United States is pulling back, many MENA states are seeking to diversify their partnerships to increase their flexibility to address security, technology, and economic challenges. China and Russia are looking to take advantage of vacuums and disarray, but generally stop short of security guarantees. Others, such as France, India, Japan, and the United Kingdom, are increasing their engagement and investment in the region.
IRAN BETTER POSITIONED ON SOME REGIONAL CHALLENGES
Iran shares some similar fault lines with other MENA countries, especially economic and environmental challenges as well as lack of transparent governance. However, it is better positioned demographically and has some economic and technological advantages, which may help it mitigate popular discontent.
There are a number of significant uncertainties for the near-term future of this region that offer potential for more promising future trajectories.
Economic and Energy Sector Recovery
How and when key aspects of regional economies, including oil prices, remittances, and tourism, recover from the COVID-19 downturn remains unclear. While the IMF initially predicted energy-driven recovery in Gulf states in 2021, additional waves of COVID-19 are likely to continue to depress global demand and prices. Increased focus on renewable sources of energy could further depress oil prices. The pandemic could lead to structural changes in regional economies; for example, the departure of large numbers of guest workers from Saudi Arabia could provide an opportunity to increase Saudi employment.
Declining Resonance of Arab-Israeli Conflict
For most of the past century, the Arab-Israeli conflict has both divided the region and shaped the focus and behavior of leaders and their populations. However, since the Arab Spring, this conflict seems to have lost some of its centrality as the youthful populations have little personal memory of the Arab-Israeli wars and seem more focused internally on government reforms and job prospects. It is unclear whether this conflict will once again capture the imagination and catalyze the actions of the region’s populations, particularly the youth. The muted official and public reactions to the Abraham Accords suggest that for now populations and their governments may be more consumed with local challenges, particularly the pandemic.
MENA regimes, with few exceptions, have weak foundations that are often devoid of legitimacy and are increasingly reliant on repression to maintain stability. While dissatisfaction with these regimes probably is widespread, it is uncertain which, if any, regimes in the region will be challenged or collapse during this time period. The ongoing conflicts in Libya, Syria, and Yemen have led governments and their populations to prioritize security over much needed reforms for much of the past decade, but populations are growing weary and could reach a tipping point.
For more than 50 years, terrorism has been a feature of the Middle East, first motivated by nationalist aspirations and then increasingly by Islamic extremist narratives and sectarian conflicts. How terrorist tactics might evolve, who employs terrorist tactics, and which governments or groups become targets are key uncertainties for the region during the next five years. Longstanding groups, such as Hizballah and HAMAS, probably will continue to play central roles in their respective communities, but popular support for the remnants of ISIS and its affiliated groups is to be determined.
Role of Women
Women and girls in MENA have made great strides in educational attainment in recent years, but they still face significant discrimination in legal rights, employment opportunities, and government and leadership roles. A broad range of research highlights that women’s equality appears to foster increased socioeconomic development and political stability, and women’s empowerment as political leaders is correlated with greater government responsiveness, decreased levels of corruption, and lower levels of civil conflict. In the past few years, women in the Middle East have achieved a few leadership milestones, including the region’s first female interior and defense ministers in Lebanon, the region’s first female speaker of a legislative body in the UAE, female presidential candidates in Tunisia and Iraq, and Saudi Arabia had its first female ambassador. If the roles and rights of women improve significantly in the next few years, the region could witness some corresponding improvements in governance and stability.
TECH: A REGIONAL ENGINE OF GROWTH
The tech sector—driven by Israel and potential Arab partners—may offer a bright spot in economic growth and development during the next five years. For more than a decade, Israel’s tech sector has attracted a steady increase in foreign direct investment to the country as well as a current account surplus of nearly four percent of GDP in 2020, notwithstanding ongoing tension between Israel and its neighbors, according to EIU data.