Political

Economic and social

Fiscal pressures:

A fiscal budget crisis triggered by the coronavirus pandemic and falling global oil prices exacerbated the structural factors just outlined. The pandemic also disrupted non-oil-based economic activity, particularly for informal workers in contact-intensive sectors. As a result, despite a modest recovery of oil prices in early 2021, Iraq’s economic outlook remains negative. According to the IMF, GDP contracted by 10.9% in 2020, with growth in 2021 forecast at only 1.1%.⁵

The Central Bank of Iraq (CBI) undertook a controlled currency devaluation in late December 2020 – a measure that had not been adopted for decades. Devaluation led to rising inflation almost overnight in a country that relies heavily on imports of basic goods. When combined with unemployment, delayed infrastructure projects and reduced investment in public services, this is likely to drive both violent anti-government demonstrations and insurgent activity. Moreover, the short-term tactic pursued by previous Iraqi governments of circumventing protests by offering public-sector jobs had built up further structural rigidities in Iraq’s finances.However, the current Iraqi government will have less recourse to such a strategy, due in part to the additional fiscal pressures created by the coronavirus pandemic.

Source: IISS

International

A new prime minister

On 6 May 2020, Mustafa al-Kadhimi was appointed Iraq’s new prime minister. Kadhimi, formerly the head of the Iraqi National Intelligence Service (a Western-aligned intelligence agency) and widely regarded as espousing a fairly pro-US viewpoint, came to office promising to respond to the demands of the October 2019 protesters, such as holding early elections in June 2021. He also sought to rebalance Western and Iranian influence in Iraq, particularly by reshuffling senior security posts in the MoI along with other intelligence agencies and Iraqi Army commands at the provincial level. Kadhimi also engaged in a Strategic Dialogue with the US, which was heralded as an opportunity to ‘reset’ Iraq–US relations, deepen economic and cultural ties, and place the US military presence in the country on a firmer legal and practical footing. However, these talks sparked a backlash from Iran-aligned elements, with a series of assassinations, including Kadhimi’s friend and adviser Hisham al-Hashimi in July 2020 and against activists in Basra during August 2020.

ISIS insurgency

The reporting period saw a modest resurgence in ISIS activity in Iraq, culminating in the 21 January 2021 twin SVIED attack on a clothing market in Baghdad’s Tayaran Square, resulting in several casualties in the first significant breach of the city’s security perimeter by ISIS since 2018. Shortly after, ISIS militants clashed with the PMU in the vicinity of al-Ayth, Salahaddin.

However, aside from these HPAs, Sunni-insurgent-group (SIG) activity remained largely constrained to sabotage, asymmetric hit-and-run SAF and IED attacks on the ISF, and assassinations and kidnappings to raise funds and prevent cooperation between local populations and the Iraqi government. These activities were largely confined to remote desert regions, and difficult-to-secure spaces such as the Hamrin Mountains, the Makhoul Mountains, the Diyala–Salahaddin border, southern Nineva and western Anbar province. ISIS also continued to exploit disputed territories and mixed-sect areas such as Diyala and Kirkuk. Meanwhile, ISIS activity in southern Iraq was constrained to infrequent probing hit-and-run SAF and IED attacks on PMU positions in Jurf al-Sakhar.

On 22 January 2021, Iraq’s CTS responded to the Baghdad attack by launching Operation Revenge of the Martyrs. Of note, an airstrike in Zaidan, Abu Ghraib, killed four insurgents including the ISIS ‘Emir of southern Iraq’, Abu Hassan al-Gharibawi. Meanwhile, a further airstrike killed the leader of the Islamic State in Iraq, Jabbar Salman Ali Farhan al-Issawi, in the vicinity of Kirkuk.

Iran–US conflict

An escalating military campaign against CJTF–OIR interests in Iraq followed Soleimani’s assassination in January 2020. Of note, two IDF incidents on Camp Taji (north of Baghdad), on 11 and 14 March, resulted in fatalities and injuries to coalition forces. In response, the US launched airstrikes against KH facilities in Babil, Karbala and south of Baghdad.Nevertheless, Western interests in Iraq continued to face hostile IDF from SMGs, focused mainly on the US Embassy compound in the International Zone. An escalating campaign of IED attacks also targeted logistics convoys contracted to the CJTF–OIR on the main supply routes through Dhi Qar, Diwaniyah, Babil and Baghdad.

In response, the US threatened to close its embassy in Baghdad in late September 2020, leading to panic among the Iraqi political class and the declaration of a unilateral ceasefire by SMGs. However, hostilities escalated again after the victory of Joe Biden in the November 2020 US elections as Iran and its Iraqi proxies sought to pressure the US administration to return to the JCPOA without preconditions or caveats. This culminated in the 15 February 2021 IDF attack on the US military base at Erbil International Airport, claimed by an SMG. The Biden administration opted for a restrained response, launching airstrikes against KH targets in Al-Bukamal, Syria, and leaving open a possible pathway to JCPOA compliance.

Splintering within the PMU

In April 2020, several factions of the PMU loyal to Najaf-based Grand Ayatollah Ali al-Sistani split from the PMU Commission. The brigades – Kataib Imam Ali, Ali al-Akbar, Abbas and Ansar al-Marjaiya – henceforth reported directly to the PMO. The move reflected discontent within the PMU at the efforts to install a KH commander, Abu Fadak, as de facto PMU chief following the assassination of Abu Mahdi al-Muhandis. Overall, the move by the so-called ‘shrine’ militias reflected broader fragmentation within the PMU/SMG structure following the removal of its central pillars (Soleimani/Muhandis).Soleimani’s replacement, Esmael Qaani, focused on building his own support base within Iraq’s SMGs, sponsoring the proliferation of new ‘splinter’ groups that broke off from more established factions and organised around the KH network. These new splinter groups have claimed responsibility for the majority of IED and IDF attacks on US and CJTF–OIR targets in Iraq between February 2020 and February 2021.

Regional competition in northern Iraq

Turkey continued to pursue PKK militants in northern Iraq, launching dozens of raids, airstrikes and artillery strikes. Most of this activity was concentrated in the mountainous regions of Dohuk, although operations were also noted in the northern sectors of Erbil, Sulaymaniyah and Nineva. Iran and Turkey also clashed over the Sinjar agreement, with Turkey suspecting that the Iran-aligned PMU were cooperating with PKK elements in Sinjar to preserve Iran’s land bridge to Syria through the territory. In early February 2021, it was reported that PMU units had been moved to the area after receiving intelligence pointing to an imminent Turkish military operation against Sinjar.

Human rights and humanitarian

The ISIS insurgency continues to feed on the marginalisation of Iraq’s Sunni community, particularly in areas affected by displacement or where local populations suffer abuses by Shia armed groups. There is also widespread belief in these areas that corruption has delayed reconstruction projects or siphoned off their funding. Other specific forms of discrimination, such as punitive counter-terrorism legislation and inadequate due process in terrorism-related trials, all pose a risk of future radicalisation.

Attacks on humanitarian workers in Iraq are relatively rare as most combatants (excluding the Islamic State) have an interest in seeing international-development and aid projects continue for political and financial reasons. However, intimidation, assaults and arrests against aid workers have been documented in Sunni IDP camps and in areas previously under ISIS control, along with accusations that aid workers are supporting ISIS. Elsewhere, a small number of incidents involving attacks on international aid workers were attributed to SMGs.

According to the United Nations High Commissioner for Refugees, more than 3m Iraqis have been displaced across the country since the war with ISIS escalated in 2014.⁶ This group has faced multiple humanitarian challenges including extreme poverty, mass executions, systematic rape and other human-rights abuses.⁷ As of late 2020, the Norwegian Refugee Council estimated that there remained at least 240,000 IDPs inside Iraq. In October 2020 the Iraqi government moved to shut down IDP camps, fearing that they may become institutionalised and function as a haven of militants and insurgent recruitment, and resettle or relocate IDPs. However, aid agencies warned that rushing to move IDPs to other camps or to communities that lacked the infrastructure and support networks to reintegrate displaced persons risked harming IDPs further.⁸

Political stability

Political and economic stability continues to be undermined by the country’s fragmented politics, which makes addressing many of the structural drivers of conflict more difficult. Compounding this, Kadhimi lacks his own political bloc in parliament, meaning he is forced to cut deals and balance between the various political factions to advance his policy agenda. Kadhimi proposed a plan for public-sector cutbacks designed to secure IMF budgetary assistance in a so-called ‘White Paper’ on economic reform.⁹ However, Iraq’s political class has repeatedly refused to countenance salary or pension cuts for public-sector employees. With an eye on forthcoming elections in 2021, politicians are reluctant to take ownership of unpopular austerity measures, especially at a time of rising inflation. Moreover, the Iraqi parliament, the Council of Representatives (CoR), has effectively had limitless power to rewrite the budget-proposal draft submitted by the government. Whereas the Federal Supreme Court had previously ruled as unconstitutional amendments made by members of parliament to Iraq’s federal budget law because they diverged too radically from the original text submitted by the Council of Ministers (CoM), it cannot currently mount such a challenge as it lacks a quorum. As a result, the CoM’s agenda for economic reforms was largely dismantled in the CoR by February 2021.

Relations with neighbouring and international partners and geopolitical implications

Kadhimi has sought to rebalance Iraq’s relations with its neighbours and between Iran and the US. This has involved reshuffling senior security posts in the MoI, army, CTS and various Iraqi intelligence agencies. In part, these moves were designed to reassure the US of the seriousness of the Iraqi government’s intent to reduce Iranian influence in the country’s security apparatus. Kadhimi’s outreach to the US during the Strategic Dialogue and his refusal to act upon the CoR’s January 2020 vote to expel US forces provoked opposition from both powerful Shia Islamist factions in Iraq and Iran, who are keen to see Kadhimi replaced by a less antagonistic figure.

On the economic front, the government has been keen to build bridges with Iraq’s Sunni neighbours, signing economic agreements with Kuwait and Saudi Arabia, and making progress on a plan to connect the Iraqi and Saudi electrical grids. Nevertheless, Iraq remains highly dependent on energy exports from Iran and Kadhimi has repeatedly been forced to back down from significant confrontations with Iran-backed groups who have directly challenged his authority.

Political scenarios

Various obstacles forced Kadhimi to postpone the early elections – initially scheduled for June 2021 – until October 2021, although many observers and Iraqi politicians expressed doubt over whether this postponed date will be met. The main obstacles to early elections include the lack of a quorum on the Federal Supreme Court, funding for the Iraqi Higher Electoral Commission, the registration and distribution of biometric data (particularly difficult for areas impacted by ISIS and high levels of displacement), and the resurgence of the coronavirus pandemic in early 2021.Should elections go ahead, the new electoral law (initially ratified in December 2019 but still subject to debate), which radically alters how elections in Iraq are conducted, is widely expected to be of most benefit to the Sadrist movement given its unique powers of local mobilisation.

Various new parties have emerged to represent the October 2019 protest movement. Of note, Imtidad, led by prominent Dhi Qar activist Alaa al-Rikabi, has attempted to mobilise the Iraqi youth as an untapped electoral demographic. However, it is unlikely that they will make significant electoral gains, given the fragmented nature of protest politics, voter apathy and the ability of the existing elite to shore up its position through violence and economic patronage.

Since the fall of Nouri al-Maliki in 2014, Iraq’s political class has preferred to keep power dispersed, dividing up the state and its resources in such a way that has prevented intra-elite conflicts escalating into violence. This tends to preclude the emergence of a dominant power centre that could drive political or economic change: this mode of politics is highly likely to persist following the elections. Thus, the Sadrists’ increased political influence will probably be somewhat offset by bandwagoning amongst other factions. In any event, the prime ministership, ministerial positions and directors general (senior civil-service positions) will continue to be divided among the main political blocs via backroom postelections negotiations. The outcome will most likely be agreement on another compromise candidate for prime minister with little autonomous power who will not threaten the core interests of the main political factions. As a result, there is little prospect of the Iraqi government pushing through meaningful political or economic reforms, particularly if these require approval by the CoR. Instead, Iraq’s political class will likely hope to hold the state together until oil prices rebound.

However, even in this scenario, given the fiscal overextension of the state, spending on investment in services, development, reconstruction and humanitarian programmes will probably have to fall. Meanwhile, the state’s capacity to absorb increasing numbers of unemployed youth into the public sector will also be more constrained. This scenario is likely to drive localised and national discontent across Kurdish, Sunni and Shia provinces, fuelling insurgent activity and protests alike.

Escalation potential and conflict-related risks

ISIS networks are likely to continue to expand their operations in remote and difficult-to-secure regions of Iraq, taking advantage of political inertia at the heart of the Iraqi political system, and the discontent in Sunni communities over corruption and human-rights abuses. Nevertheless, HPAs in highly populated locales are unlikely, provided cooperation continues between key Iraqi security organs (primarily the CTS and the MoI’s Falcons Cell) and the CJTF–OIR, along with supportive airpower. The late February 2021 news that NATO was significantly expanding its advisory mission to Iraq indicates that the new US administration and its allies remain somewhat committed to cooperating to contain an ISIS resurgence, despite Washington also wanting to reduce its exposure in Iraq.

As seen in recent years, the Iraqi state and its parastatal armed factions have also become increasingly adept at deploying violence to quell protesters. However, such violence carries the risk of escalation, particularly if local (heavily armed) tribes engage on one side or another of the confrontation between protesters, the ISF and militias. A potential for violent escalation and a multidimensional – albeit localised – conflict involving these different parties cannot be discounted, particularly in hotspots for violent protest dynamics, most notably in Dhi Qar.

Strategic implications and global influences

The US–Iran conflict in 2021 will revolve around attempts to choreograph a return to the JCPOA, which is the stated objective of both sides. However, while the US and its allies continue to demand that Iran comply with the agreement before any lifting of sanctions, and to threaten to impose new conditions relating to Iran’s missile programme and regional proxy wars, Iran is unlikely to de-escalate its attacks on US and allied targets in Iraq. Moreover, Iraq’s so-called ‘resistance factions’ (the main SMGs) are unlikely to intrinsically link US military and diplomatic presence in Iraq to the JCPOA and will seek to maintain a level of hostility against the US and the CJTF–OIR irrespective of progress on the Iran nuclear agreement. Added to this, the Biden administration’s reduced appetite to undertake retaliatory military strikes in Iraq, or other high-risk actions – such as the Soleimani assassination – will likely embolden SMGs to intensify IED and IDF attacks on US-linked targets. This said, agreement on reciprocal confidence-building measures between Iran and the US is likely during 2021, with a return to the JCPOA the most likely scenario by the end of the year. While this may reduce tensions in Iraq, Iran and its Iraqi allies will probably continue to pursue US withdrawal from Iraq via a more gradual war of attrition on US and allied interests in the country.

Political

International

Failed peace negotiations

The 2020 Peace to Prosperity peace agreement drawn up by the Trump administration in January offered a political vision for Israeli–Palestinian peace. In defiance of international law, the political element of this so-called ‘Deal of the Century’ supported Israeli sovereignty over parts of the West Bank, including the Jordan Valley.¹² Constructed without Palestinian input or interest, the plan proved a non-starter and, instead, cemented Palestinians’ perception of the Trump administration as an unfit mediator. Future negotiations will be further complicated by the persistent inter-Palestinian political rivalry between Gaza-based Hamas and the West Bank-based PA, in spite of multiple attempts at political reconciliation. Increased diplomatic ties between Israel and the Arab- and Muslim-majority states, meanwhile, challenge Arab claims of support for the Palestinian cause, as laid out in the 2002 Arab Peace initiative, and have heightened Palestinian feelings of international alienation and disenfranchisement. Emblematic of this geopolitical shift, Palestinian leaders were not informed in advance of the 2020 Abraham Accords, and after the news broke the PA ‘accused the UAE of selling them out’.¹³

No end to Israel's settlements

In late 2020, 441,600 settlers were living in the West Bank across 132 settlements and 135 outposts, constituting approximately 14%of the entire West Bank population.¹⁴ In addition, over 220,000 Jews live in East Jerusalem across 13 Israeli neighbourhoods.¹⁵ In 2020, settlement expansion and creation continued. In February, the Higher Planning Council of the Civil Administration approved 1,737 housing units in West Bank settlements. This announcement followed the unveiling of the political portion of the Trump administration’s peace plan. The Peace to Prosperity plan, unveiled in late January 2020, offered endorsement for a de facto Israeli annexation of parts of the West Bank, backing a 2019 election pledge by Israeli Prime Minister Benjamin Netanyahu. Netanyahu, however, ultimately shelved these plans as part of the Abraham Accords.

While the Abraham Accords might have temporarily halted a unilateral Israeli annexation of West Bank territory, de facto Israeli annexation practices continued in 2020, in part to bolster Netanyahu’s support among the right wing amid his legal woes and alleged mishandling of the coronavirus pandemic. Peace Now, which began recording statistics in 2012, reported that Israel approved or forwarded construction of over 12,000 settlements in 2020, the highest annual number on record.¹⁶ Meanwhile, data compiled by Israeli human-rights group B’Tselem showed that between January and September 2020 at least 741 Palestinian homes were demolished by Israeli authorities on the grounds of lacking building permits – the highest statistics since 2016.¹⁷ In early January 2021, on the eve of Joe Biden’s assumption of the US presidency, Netanyahu approved the construction of 800 new housing units in Jewish settlements in the West Bank. This move set the stage for further tension between the Israeli prime minister and the new US president, as Biden is expected to reverse course from his predecessor and adopt the traditional American stance of opposing settlement constructions.

Daily violence and military clashes

Violent clashes between Israelis and Palestinians occurred – if mostly on a limited, small scale – both in the West Bank and Gaza. In August 2020, in a reported attempt to pressure Israel to ease its economic blockage of Gaza, Hamas fired rockets towards Israel, which responded with airstrikes on the Strip. A Qatari-mediated ceasefire agreement, reached in late August 2020, came to an end in December when Israeli air raids targeted Hamas positions in Gaza. A UN report found that between January and October 2020, Israeli forces carried out 42 incursions in Gaza, causing damage to agricultural land and vegetation.¹⁸ The Gaza Ministry of Agriculture reported that damages exceeded US$32,000.¹⁹

In the West Bank, Palestinians and Israelis were embroiled in repeated confrontations. 2020 witnessed a surge in settler and Jewish extremist violence targeting Palestinians, reportedly spiking by 78%between 17 and 30 March compared to the same period in 2019.²⁰ Settler violence also claimed Israeli victims. A January 2021 Haaretz article documented an increase in settler attacks aimed at Israeli soldiers and police officers in the West Bank; 2020 saw 42 instances of such attacks compared to 29 in 2018.²¹ Israeli forces and Palestinian civilians also frequently engaged in violent confrontations. In October, IDF troops clashed with Palestinians at al-Amari refugee camp, leaving 53 Palestinians injured, according to reports by the Red Crescent.²² B’Tselem found that Israeli security forces were responsible for the deaths of 23 Palestinians over the course of 2020 in the West Bank, including six children.²³

Human rights and humanitarian

Israel continued to enforce severe and discriminatory measures against Palestinians, including restrictions on the right of movement within the West Bank and travel between the Gaza Strip and the West Bank, into East Jerusalem, Israel and abroad. Daily life in the West Bank was further complicated by Israeli road closures, which constitute a method of collective punishment. In January and February 2020, B’Tselem documented the blocking of entrances to five West Bank villages, partly in response to locals throwing rocks at Route 505. These blocks preceded limitations on movement that were imposed on all West Bank residents (by both the Israeli military and the PA) in an attempt to control the spread of the pandemic.²⁴ Restrictions on press freedom and the application of a carrot-and-stick policy by the PA have also sought to curtail Palestinian journalists from exposing societal flaws. Human-rights groups have repeatedly shed light on extra-judicial arrests and the persecution of journalists who are suspected of opposing Fatah-led government policies.²⁵ Egyptian and Israeli restrictions on movement out of Gaza harm the civilian population to an equal extent. These restrictions include limiting approval of permit applications from Palestinians seeking medical treatment outside of Gaza to ‘exceptional humanitarian cases’.

Regular outbreaks of violence between Gaza’s Islamist rulers and Israel, together with infighting among Palestinian factions, have affected public facilities and worsened an already precarious humanitarian situation. Considering the deteriorating health system in Israeli-occupied territory and the ongoing spread of COVID-19, in December 2020 and January 2021 international aid groups called on Israel to ‘maintain health services’ and, in accordance with the Fourth Geneva Convention, provide vaccines to the approximately five million Palestinians in these areas.²⁶ While Israel rejected any legal responsibility, in early February Israeli officials agreed to give a total of 5,000 doses of the COVID-19 vaccine for the inoculation of front-line Palestinian medical workers, claiming the move was ‘a clear necessity’ for Israel’s battle with the pandemic.²⁷ Anxious about delays in access to the World Health Organization’s COVID-19 Vaccines Global Access (COVAX) initiative, the PA approved emergency usage of the Russian Sputnik V vaccine in January 2021 – offering a soft-power win for Russia and increasing the potential for Russian expansion in the Middle East.²⁸ Nevertheless, financial limitations, in addition to uncertainties regarding vaccine delivery and medical storage capabilities, will continue to challenge the vaccine roll-out. At the same time, it remained unclear to what extent the PA would share its vaccines with Gazan inhabitants and how Israeli-imposed delays would complicate future shipments.²⁹

Economic and social

Failed peace negotiations have hampered any viable Palestinian economic development. Restrictive import and export policies, in addition to the territories’ reliance on foreign aid and Israeli management of Palestinian taxes and import duties, have had a devastating effect on the Palestinian economy. Since 2007, Egypt and Israel have imposed a crippling economic blockade on the Gaza Strip, resulting in a shortage of basic products, including food, medical supplies, fuel and construction materials. A 2020 UN report found that Gaza had suffered losses amounting to US$16.7bn due to the ongoing occupation and economic siege, resulting in serious water and electricity shortages, and endemic poverty and unemployment.³⁰ Gisha, a human-rights organisation, reported that the unemployment rate in Gaza reached 49.1%in the second quarter of 2020, an increase of two percentage points compared to 2019, in part due to the outbreak of COVID-19 and the resulting contraction in economic activities.³¹ At the same time, the World Bank reported that the share of ‘poor households’ increased to 64%in Gaza, compared to 30%in the West Bank.³² In January 2021, Qatar pledged to continue its funding to the Strip by providing US$360m in an effort to reduce tensions between Israel and Hamas and provide relief to the local economy.³³

A reduction in Israeli–Palestinian cooperation resulting from impending threats of Israeli annexation had dire effects on Palestinian fiscal stability in 2020. The UN found that the fiscal crisis derived primarily from a collapse in domestic tax revenues during the coronavirus emergency, but also from the Palestinian government’s refusal in early June to receive maqasa (tax revenues) from Israel.³⁴ Under the 1994 Paris Protocol, which governs Israeli–Palestinian economic relations, Israel is supposed to collect value-added tax, import duties and other taxes on the PA’s behalf and transfer them on a monthly basis. The PA is highly dependent on these tax revenues; they account for approximately 60%of its budget. As a result of this decision, hundreds of thousands of Palestinian civil servants – some 15–20%of the PA’s economy, according to an assessment by the World Bank – did not receive their salaries. In November 2020, the PA announced that it would return to accepting the monthly transfers of taxes. According to Palestinian Prime Minister Mohammad Shtayyeh, the decision to resume contacts with Israel was based in part on confronting the ongoing health crisis.

Prospects for peace

The Israel–Palestinian Territories peace process remains mired in a hazardous stalemate. The ongoing political instability in both Israel and the Palestinian Territories has been compounded by the coronavirus health crisis. At the same time, the ongoing governmental and economic crisis in Israel has pushed the conflict down the order of urgency. Indeed, after the December 2020 collapse of the coalition government between the Blue and White party and Likud over the failure to agree on a national budget in December, new national elections were called for March 2021 – the fourth to take place in just two years. The legally embattled Netanyahu is likely to stress Israel’s vaccine success and recent normalisation with Arab-majority nations to secure his political survival.

The inter-Palestinian political struggle has equally hampered the possibility of any effective mediation. The Fatah–Hamas division, despite repeated brokering attempts by Egypt and other actors, enables Israel and its allies to invoke the ‘no partner for peace’ narrative to justify the absence of mediation. Despite their public, unified opposition against Israeli annexation, a new initiative in 2019 that aimed at ending the Fatah–Hamas split failed to make significant progress in 2020. A democratic solution might resolve the impasse with parliamentary elections scheduled for 2021, along with the first presidential elections in 15 years to be held in July, as announced by Abbas at the start of the year. Recent polls suggest a tight contest. In December 2020, the Palestinian Center for Policy and Survey Research found that 38%would vote for Fatah in parliamentary elections, against 34%for Hamas. The centre also predicted that Hamas would have the edge in a presidential vote, with 50%preferring the Hamas leader Ismail Haniyeh and 43%preferring Abbas. Nevertheless, it remains unclear whether the various parties, in addition to the international community, will enable a fair electoral process and accept the election results.³⁵ Indeed, in early 2021, it was reported that the PA and Hamas were both targeting each other’s supporters in an effort to foil their upcoming election participation.³⁶

Strategic implications and global influences

Faced with an ongoing global health crisis and a focus on near-peer competitors, Israeli–Palestinian peacemaking will not top the international community’s foreign-policy agenda in 2021. Significant challenges will likely prevent the EU from becoming a key player in the conflict in 2021, such as the continuing pandemic, a far-right political surge and its dogged commitment to an ‘illusory status quo ante’.³⁷ Nevertheless, bolstered by a new occupant in the White House and a new EU foreign-policy head, the European bloc is likely to deepen its ‘differentiation policy’ of excluding Israeli settlements from bilateral relations with Israel while pushing for a unified Palestinian engagement.

Bilateral relations between the US, the key Middle East interlocutor, and Israel/the Palestinian Territories are bound to change with the new Biden administration. While the new president is unlikely to prioritise Israel or a new Israeli–Palestinian peace effort, he is expected to return a modicum of credibility and objectivity to US mediation of the Israeli–Palestinian negotiations, following four years of Donald Trump’s unabashedly pro-Israeli policies. An early telling sign, just six days after taking office, was the decision to restore aid to the Palestinians and reinstate contributions to the United Nations Relief and Works Agency for Palestine Refugees, the UN agency that provides aid to the Palestinians. Israel’s fractured government, conversely, will need to adapt to a new, downgraded ranking on the list of US foreign-policy priorities. Israelis are bracing for what they believe will be a downturn in relations with Washington; a post-election poll showed that 74%of Israelis believe that the new US administration will be less friendly. This perception, however, does not augur well for renewed peace negations; only 2%of Israelis polled in July 2020, while Trump was still in power, believed that a peace deal would be ‘Very likely’ by 2025.³⁸ With several key US foreign-policy officials signalling an intent to re-enter the Iran nuclear deal, Israel is expected to capitalise on recent normalisation deals with the Arab world in an effort to solidify its anti-Iran campaign while consolidating a domestic status quo.

Political

International

UN diplomatic efforts

In April 2020, the United Nations Special Envoy for Yemen Martin Griffiths began diplomatic efforts between warring parties, leading to a proposal for a joint declaration between the Hadi government and the Houthis. The proposed declaration focused on achieving a national ceasefire, the creation of a power-sharing government and the economic revival of the country, but agreement on the final text remained elusive. This comprehensive approach to the conflict was intended to overcome the limitations of diplomacy focused on local de-escalation, as was the case of the December 2018 UN-brokered Stockholm Agreement. This agreement had committed the recognised government and the Houthis to an immediate ceasefire in the port city of Hudaydah (plus Saleef port and Ras Isa Marine Terminal) and to the creation of a joint committee to address the situation of the sieged city of Taizz. Though it succeeded in averting fighting in this crucial port city, the deal was only partially implemented, generating distrust and concern that a localised approach would undermine a broader settlement.

Unsuccessful COVID-19 ceasefire

In April 2020, Saudi Arabia declared a two-week unilateral ceasefire in Yemen to allow the country to cope with its first registered cases of COVID-19. However, this quickly broke down: the Houthis rejected the truce and the different factions remained focused on achieving military gains or containing rivals on the ground. Conversely, the coronavirus pandemic offered the Houthis an opportunity to tighten repression and information flows, thus further centralising their model of security governance.¹¹

Progress towards the Riyadh Agreement

In the areas under the formal control of the Hadi government, alliances remained fluid and political breakdowns often led to violence. The Saudi-brokered Riyadh Agreement, signed in November 2019 between the Hadi government and the STC, had outlined the formation of a government with an equal proportion of northern and southern ministers as well as the reorganisation of the security apparatus and the redeployment of military forces to the positions held before August 2019 clashes. However, on 25 April 2020, the STC declared that it would ‘self-govern’, effectively abandoning the Riyadh Agreement. The declaration statement was rejected by most southern governors (including those in Abyan, Hadramawt, Lahij, Mahrah, Shabwa and Socotra¹²), achieving a consensus only in Aden and Dhale, the geographical backbone of the STC’s leadership. Successive Saudi-led de-escalation efforts in Abyan led the STC to withdraw its self-government declaration in June and to accept an implementation mechanism. In December 2020, the formation of a power-sharing government represented a successful, if still partial, implementation of the Riyadh Agreement.

Geopolitical competition between Gulf monarchies in southern Yemen

Saudi Arabia has gradually replaced the UAE as the main power broker with the STC. The Riyadh Agreement gave the kingdom direct supervision of the SBF and other elements of the Popular Resistance Forces until their incorporation within the Yemeni Ministry of Defence.¹³ However, despite reducing its military involvement from 2019, the UAE maintained strong connections with southern prosecessionist groups. In Mahrah, Saudi Arabia used local alliances, military units and outposts to carve out an area of influence, but it continued to compete with Oman and the UAE. In July 2020, pro-STC and pro-UAE local forces seized the island of Socotra – a geostrategic linchpin for military, commercial and maritime routes through the Gulf, Africa and Asia – replacing its governor, a Hadi loyalist, and assuming control of government sites.

New Houthi ground offensives

In 2020, with the Houthis sensing Saudi fatigue and disarray in the Hadi camp, conflict intensified in Abyan, Bayda, Hudaydah, Jawf, Marib, Nihm and Taizz. According to the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), Yemeni front lines increased from 33 to 47, after a long period of military stalemate.¹⁴ The Houthis seized the city of Hazm in Jawf and made advances in Marib province towards Marib City, the stronghold of the Hadi government and army. No humanitarian progress was made in breaking the siege of Taizz city, which has been besieged by the Houthis since 2015, making it the theatre of the longest ground battle in this phase of the conflict. Local fighting during 2020 also prevented the implementation of the Stockholm Agreement. In response to a shooting incident in Hudaydah, the Hadi government withdrew in March from the UN-chaired Redeployment and Coordination Committee that had been tasked with overseeing a ceasefire and the redeployment of forces in the city under the Stockholm Agreement.

Houthi missile and UAV attacks

The conflict continued to spill over Yemen’s boundaries in 2020, with increased Houthi attacks against civilian – notably economic and infrastructural – targets in Saudi Arabia. The Houthis also combined ballistic missiles and UAVs with waterborne improvised explosive devices (WBIEDs) launched in the Red Sea waters against civilian vessels. The group increased its level of coordination with Iran-affiliated armed groups in the Middle East, and Iranian individuals and entities provided significant supplies of weapons and other components.¹⁵

Human rights and humanitarian

At the time of writing, the conflict had already caused 233,000 deaths, including 131,000 from indirect causes such as lack of food, poor health services and damaged infrastructure.¹⁶ About 24 million Yemenis (out of a total population of 31m) required humanitarian assistance and 5m were on the brink of famine.¹⁷ In 2020, natural disasters such as floods and locust swarms exacerbated the humanitarian situation. At least 172,000 people were displaced in 2020, 82% of which was due to the conflict, with 1m internally displaced persons (IDPs) camped in Marib governorate.¹⁸ In 2020, the UN cut about 75% of its programmes in Yemen due to decreased US funding and systematic obstruction in Houthi-held areas (and sporadically Aden).¹⁹ The Houthis continued to use landmines and child recruitment, while arbitrary detentions and repression of journalists occurred throughout the country.

Political stability

The formation of a power-sharing government in December did not end disagreements and violence. The anti-Houthi camp has been plagued by fragmentation and mistrust due to competition over power and resources, as well as clashing political agendas, notably between secessionists and Hadi loyalists and between Al-Islah and the STC.

Economic and social

Economic profiteering by all warring factions has devastated the Yemeni economy. In 2020, fuel shortages at gas stations particularly hit Houthi-held areas. Using its de facto authority, the Houthis introduced an Iranian-style khums (one-fifth) law in June, which, when applied, would allow them to collect 20% of the value of public resources and private assets to be redistributed to the Hashemite class, to which the Houthi leadership belongs, but not the majority of Yemenis who instead have tribal lineage.

An ongoing currency crisis – which began in 2017 with the central bank’s decision to float the riyal – also worsened.²⁰ The currency depreciation led to high food prices mostly in southern governorates. Coupled with lacking or delayed payments of public salaries – including those in the security and health sectors – and the fact that 90% of Yemen’s food supply depends on imports, this further deteriorated the humanitarian outlook.²¹ COVID-19 restrictions (mostly lifted by October 2020) also affected Yemenis’ work and income, as most of the population survives on temporal jobs.

The Yemeni economy also experienced a fall in remittances caused by the drop in global oil prices, the impact of the COVID-19 pandemic and the implementation of labour-nationalisation policies introduced by the Gulf Cooperation Council states where most Yemeni migrants live and work.

Relations with neighbouring and international partners and geopolitical implications

External actors continued to play a significant role in the conflict, on a formal (Saudi Arabia) and informal (Iran, the UAE) level. Oman’s traditional neutrality on Yemen was threatened by the military build-up of Saudi forces on its border with Yemen’s Mahrah province and the permeability of coastal and border crossings where weapons smuggling occurs. The United Nations Security Council (UNSC) documented the transhipment of Iranian arms and equipment to smaller boats (dhows) in Omani waters, ultimately destined for the Houthis.²² At the time of writing, no strong evidence supported claims of leverage in Yemen by actors such as Qatar or Turkey. The signing of the Abraham Accords in 2020 was met with contrasting reactions from Yemeni groups: the Houthis condemned them while the STC remained open to possible relations with Israel.

Political scenarios

Yemen’s ongoing political-military fragmentation is likely to continue. Stability in the de facto Houthi quasi-state will primarily depend on two dynamics. Firstly, the evolving relationship between the saada elite (Houthi leadership) and the tribal population: tribal resistance to Houthi rule has risen as Houthi repression of unarmed populations continues unabated, especially in Hajjah, Ibb and Bayda.²³ The khums tax issue is a case in point, as people living in Houthi-controlled areas will be taxed by the Houthi authorities despite economic collapse and lack of services. Secondly, intra-Houthi leadership competition has become more apparent with the development of competing security and intelligence structures and business interests.

From a political-military-economic perspective, the survival of the internationally recognised government depends on controlling the ‘oil and gas triangle’ of Marib, Shabwa and Wadi Hadramawt.²⁴ If the Riyadh Agreement is gradually if tentatively implemented, tensions within the secessionist movement could reflect shifting foreign patronage, with Saudi Arabia supplanting the UAE. In STC-held areas, armed groups are proliferating: Salafi factions (such as the SBF, the Facilities Protection Force, the Support and Reinforcement Brigades and the Asifah Brigade) are active, particularly in Aden and Lahij governorates, prompting violent skirmishes for territorial control.

Source: Yemen Polling Center, ‘Perceptions Of The Yemeni Public On Living Conditions And Security-Related Issues’, April 2020*

In the south, AQAP is trying to regroup under the new leadership of Khalid Batarfi, a Saudi-born militant with Hadhrami origins. Having suffered operational setbacks, AQAP is likely to continue prioritising sectarian attacks against the Houthis over the fight against ISIS–Y for control of the Yemeni jihadi landscape. If renewed large-scale fighting occurs in the south, the most extremist Salafi wing of the STC could coalesce with AQAP and local offshoots against northern groups.

Escalation potential and conflict-related risks

On the strategic Red Sea coast, the West Coast Forces led by Tareq Saleh remain excluded from UN- and Saudi-brokered agreements according to the April 2015 UNSC Resolution 2216, which remains the legal basis for negotiations. These anti-Houthi forces, courting Emirati and Saudi patronage, may pursue their territorial ambitions, especially in Mokha and the Bab el-Mandeb Strait. The floating oil-storage and offloading tanker, Safer, carrying more than a million barrels of crude oil, that is moored off Yemen’s western coast also risks generating severe damage to the environment and fishing in the Red Sea as negotiations with the Houthis over access to the tanker and the sale of its oil continue to suffer delays.

The increasing presence of ballistic missiles in Yemen, combined with strengthened Houthi–Iranian coordination, also increases the risk of miscalculation and potential border crises, particularly on the west coast of Saudi Arabia (targeting its energy infrastructure, airports and ports) and in Red Sea waters (with sea mines and WBIEDs targeting commercial vessels). Houthi missile and UAV attacks against Saudi Arabia are increasingly perceived as not just a bilateral problem but a regional issue by the US and the European ‘E3’ group (France, Germany, United Kingdom). Escalating attacks and intensifying Houthi anti-Israeli rhetoric have also triggered defensive moves by Israel, including the deployment of Iron Dome and Patriot missile-defence batteries around Eilat.

Prospects for peace

Yemen’s stabilisation would require the containment and resolution of several micro-battles on the ground. De-escalation at the local level and increased coordination between central and local authorities is crucial for political and economic reconstruction. Such progress remains geographically limited. For example, in the oil-rich regions of Hadramawt, Marib and Shabwa, governors retain 20% of energy revenues for local development programmes, in coordination with the Hadi government.²⁵ In the Outcome Document of the Comprehensive National Dialogue Conference (2013–14), Yemeni parties had already agreed upon the principle of federal government, but this would require strong and legitimised central institutions to work effectively in practice.

Strategic implications and global influences

The Biden administration, which reversed the previous designation of Ansarullah as a terrorist organisation, is working to regain political leverage over Yemen’s warring parties – for instance with selected sanctions on Houthi leaders – and on Saudi Arabia – by ending US offensive operations in Yemen and arms sales to Riyadh. While this might restart the diplomatic process, the prospects of a durable national agreement for conflict resolution remain poor.

Regional energy and maritime security could be threatened by Yemen’s ongoing violence. Its coasts and waters are critical for freedom of navigation in the Red Sea–Bab el-Mandeb Strait–Indian Ocean triangle, especially given the competition between major states in the Horn of Africa and the western Indian Ocean such as China, India, Iran, Qatar, Russia, Saudi Arabia, Turkey, the UAE and the US. However, the presence of sea mines in Red Sea waters and the weakness and fragmentation of Yemeni maritime forces complicate multilateral efforts to protect the freedom of navigation in the area. In relatively stable areas, Yemeni oil production and export is likely to continue. Oil export from Yemen restarted in 2019, with around 40% more barrels per day exported compared to 2018 and destined for Asian markets.²⁶ Beyond Hadramawt’s fields, Marib also resumed extraction and export in 2020. In the case of a full-scale ground attack by the Houthis against the area, the oil industry could be affected.

Political

Economic and social

International

Changing military dynamics

Frustrated by the military stalemate along the front line in southern Tripoli, in early 2020 Haftar decided to advance elsewhere. In a surprise move on 6 January, the LNA took control of Sirte, opening a second front and threatening the nearby city of Misrata, the main revolutionary stronghold opposed to Haftar’s political project. The advance was made possible by the about-face of the 604th Brigade, which switched allegiance to Haftar and left the GNA-affiliated Sirte Protection Force. This allowed Haftar’s forces to take control of the strategic Ghardabiya air base.¹¹

Despite the increased military support from his foreign sponsors, Haftar’s success in Sirte remained sporadic and relied on co-optation. Moreover, territorial expansion exposed the LNA to the risk of overstretching. When Turkey started to double down on its local allies, gaining aerial supremacy in Tripolitania using both TB-2 Bayraktar and ANKA S-1 drones (highly effective in neutralising the Russian-made Pantsir S-1 air-defence systems supplied by the UAE), the LNA’s offensive started to crumble. Launched in March 2020, the GNA’s Operation Peace Storm drove out Haftar’s forces from Sabratha and Sorman, relieving pressure west of Tripoli. The Watiya air base fell in May, in a prelude to the LNA’s withdrawal from Tarhouna, which had been one of its main springboards for launching Operation Flood of Dignity in 2019.

After the fall of Tarhouna, Russian private contractors from the Wagner Group were redeployed to the Jufra air base, where Moscow had already moved several military aircraft in May, raising concerns about a Russian military presence on the southern flank of NATO. As a result of Russia’s hybrid warfare and Egypt’s threat of a direct military intervention, the Turkish-backed counter-offensive lost momentum. The conflict froze along the Sirte–Jufra ‘red line’, giving political negotiations a new chance.

International peace initiatives

Inconclusive peace talks in Moscow on 13 January 2020 gave the European Union, until then paralysed by the conflicting agendas of some of its member states, a chance to reaffirm its central role over the Libyan crisis. A conference held in Berlin on 19 January 2020 adopted a number of positive measures, such as the International Follow Up Committee and the Joint Military Commission (JMC, also known as 5+5), which proved to be crucial in the de-escalation phase. However, it failed to end foreign intervention, as evident by the multiple and flagrant violations of the arms embargo, which eventually led to the resignation of the UN Special Representative of the Secretary-General (SRSG) Ghassan Salamé in March.

Following the LNA’s withdrawal from Tarhouna, Egypt unsuccessfully launched a ceasefire initiative known as the Cairo Declaration, elevating Saleh as a political alternative to the discredited Haftar. On 21 August 2020 both Saleh and the GNA Prime Minister Fayez al-Sarraj issued separate statements calling for a ceasefire, providing an opening for the acting UN SRSG Stephanie Williams to relaunch the peace process.

On 23 October 2020, the warring parties signed a landmark ceasefire agreement in Geneva. UNSMIL began facilitating the intra-Libya dialogue through the newly established LPDF, which eventually resulted in the establishment of a new executive authority in February 2021. Despite the UN’s leadership in bringing conflict parties closer, it is interesting to note the important role played by Russia and Turkey during the negotiation process. Indeed, the agreement to resume oil exports and production reached in September 2020 was negotiated in Sochi, Russia, a clear indication of Moscow’s growing clout in Libya.

Human rights and humanitarian

Indiscriminate shelling and air and drone strikes caused frequent civilian casualties, while targeted assassinations against prominent human-rights activists prompted international outcry.¹² Evidence that private contractors and PMCs were responsible for several violations of international humanitarian law clearly emerged after the LNA withdrawal from Tripolitania.¹³ Explosions caused by landmines and remnants of war also took place in the southern district of Tripoli (Ain Zara and Salahuddin) where the Wagner Group was present.¹⁴ The difficulty of conducting clearing operations prevented the return of an estimated 392,000 internally displaced persons, as of January 2021.¹⁵

Local groups were also responsible for gross violations and war crimes. For example, 27 mass graves were discovered in Tarhouna after the LNA withdrawal, shedding light on the brutal rule of the Kani Brigade affiliated with Haftar’s forces.¹⁶ International organisations such as the International Criminal Court were investigating war crimes and crimes against humanity in Libya. However, significant hurdles remain, such as insufficient funding causing delays to the work of the Independent Fact-Finding Mission on Libya established by the UN Human Rights Council in 2020.

Economic and social

The new round of fighting in Libya further strained a health service already struggling after years of neglect and fragmented governance, as well as violence, with hospitals and medical staff frequently targeted by conflict parties. The above left it overexposed to the spread of the coronavirus pandemic. As of 28 February 2021, Libya had registered 132,458 confirmed cases of COVID-19 and 2,174 related deaths.¹⁷ Government restrictions to combat COVID-19 worsened the economic crisis caused by the conflict, the oil blockade and plummeting global oil prices.¹⁸ In war zones civilians were caught between lockdown and LNA airstrikes in densely populated areas. Government-imposed restrictions also had a huge impact on the living conditions of migrants and refugees, resulting in the loss of livelihoods, food insecurity and reduced healthcare access, as well as affecting voluntary returns and resettlement programmes.¹⁹

Relations with neighbouring and international partners and geopolitical implications

The 2019 MoU between the GNA and Turkey had offered the latter the opportunity to expand its military footprint in Libya as well as advance territorial claims in the eastern Mediterranean Sea based on the mavi vatan (blue homeland) doctrine. However, escalating tensions in the region led to the emergence of an anti-Turkey axis, highlighted by the establishment in September 2020 of the East Mediterranean Gas Forum that included Ankara’s main regional rivals.

The revamp of the EU Naval Force Mediterranean (EUNAVFOR MED) also proved controversial for Turkey, as Operation Irini was established to enforce the arms embargo in Libya at the end of March 2020. The new mission deepened fissures between Ankara and Brussels, while creating rifts inside NATO. Naval incidents between European and Turkish vessels led to frequent protests by Ankara and Tripoli, which deemed Operation Irini too focused on the maritime dimension of the arms embargo, with insufficient monitoring of the arms supply to the LNA via military-transport aircraft or across Libya’s terrestrial border with Egypt.

Political scenarios

The October 2020 ceasefire agreement represented a watershed moment in the Libyan transition process. Even if fighting had already diminished by the summer due to external and internal factors, the ceasefire gave new momentum to the UNSMIL-facilitated negotiations. The first round of the LPDF in Tunis in November 2020 followed widespread popular protests in August 2020 that clearly indicated the Libyan people’s frustrations and expectations for change. Organised by the Libyan Hirak (movement), the protests put additional pressure on the leadership, forcing both Sarraj and the prime minister of the interim government, Abdullah al-Thinni, to announce their resignations, paving the way for a much-needed and long-awaited turnover in the Libyan political elite.

The LPDF’s vote on 5 February 2021 to appoint an interim executive authority, including a new GNU led by the Misrata businessman Abdulhamid al-Dbeibah and a three-member PC led by Menfi and including Musa al-Koni and Abdullah al-Lafi, represents an important opportunity to reverse the political fragmentation since 2011. The new GNU is expected to shepherd the country to elections on 24 December 2021 and eventually to a referendum on the draft constitution. However, it will have to navigate a hostile environment in which frustrated and marginalised actors may try to spoil the political process.²⁰

Escalation potential and conflict-related risks

Full implementation of the ceasefire agreement is required to complete Libya’s transition to democratic and representative institutions. In this context, reports of a trench being constructed between Sirte and the Jufra air base by the Wagner Group threaten prospects of reconciliation, especially as the ceasefire agreement stipulated that all foreign forces and private contractors should leave Libya by 23 January 2021.

Reports about the continuing presence of 20,000 foreign fighters – including Turkish military forces, Russian private contractors and Syrian fighters, as well as Chadian non-state armed groups and Sudanese militias – further signal the privatisation of war and highlight Russia’s and Turkey’s growing sway on the ground, which makes any successful political solution contingent on their support. Without this, the prospect of a frozen conflict along the Sirte–Jufra ‘red line’ looms.

Strategic implications and global influences

The outcome of the 2020 US elections helped create fertile ground to relaunch political negotiations. The first foreign-policy moves of the Biden administration – including the review of arms sales to the UAE and the recalibration of US relations with Saudi Arabia – suggested a change of attitude towards the Gulf monarchies, which had seen Haftar as instrumental in containing revolutionary movements and political Islam in Libya.

Already aware of the LNA’s limited military capabilities and sceptical of Haftar’s chances in taking Tripoli, Egypt was particularly receptive to these changing regional dynamics. In trying to cultivate relations with authorities in Tripoli, Cairo effectively decoupled from the counterrevolutionary front to preserve its geostrategic gains in Libya. These included a buffer zone along its western border against Turkish-backed armed groups, secured to date by the LNA’s control of Cyrenaica.

The Cairo Declaration and the Sirte–Jufra ‘red line’ were clear attempts by Egypt to reinforce its clout in a conflict that had been tending towards a Russian–Turkish military duopoly. Compared to Ankara’s staunch commitment to the GNA, however, Moscow adopted an opportunistic approach, diversifying its strategy and cultivating relations with different stakeholders.²¹ In the event of a resumption in hostilities, this could reinforce Moscow’s central role, especially considering Russia’s excellent relations with two major Libyan neighbours: Algeria and Egypt.