Global Risk Indexes (18-01-2025)

Global 97 (+1 ▲)
MENA 96 (-1 ▼)
APAC 98 ( —)
Europe 98 ( —)
Africa 93 (+2 ▲)
AMERs 98 (+1 ▲)
Markets 97 (+1 ▲)
Farid al-Khaleqi, Middle East region analyst at Worldwise Analytica

Farid al-Khaleqi

Navigating the Sands of Time, Illuminating the Geopolitical Horizon

Gaza Ceasefire, Strategic Alliances, and Economic Adjustments Shape a Volatile MENA

The developments across the MENA region on January 18, 2025, underscore the complexity of its geopolitical landscape. Fragile truces, deepening alliances between adversarial powers, and economic recalibrations illustrate a region navigating profound uncertainties.

The Gaza ceasefire agreement represents a cautious step toward de-escalation, but its fragility is underscored by continued violence and internal dissent. While the deal outlines a six-week truce with phased hostages-for-prisoners exchanges, internal divisions within Israel's cabinet and opposition from hardliners like Itamar Ben-Gvir pose significant risks. The humanitarian crisis in Gaza remains dire, with only half of its hospitals functional and 12,000 medical evacuation requests pending. The U.N.'s mobilization of aid and WHO's efforts to rebuild Gaza's healthcare system highlight the critical need for international intervention, but operational challenges and mistrust remain barriers.

Lebanon's political realignment progresses cautiously as Prime Minister-designate Nawaf Salam seeks to form a new government. Despite initial resistance from Hezbollah and Amal, Salam's commitment to timely government formation indicates potential for reform. However, Lebanon's recovery hinges on addressing systemic economic challenges, rebuilding war-damaged infrastructure, and managing sectarian divides exacerbated by Hezbollah's marginalization. France and Saudi Arabia's engagement highlights a renewed Gulf and Western interest, but sustained support will be essential to prevent political stalemates.

Yemen's Red Sea dynamics continue to disrupt global trade. Despite a conditional ceasefire promise by the Houthis, shipping executives remain wary, with many opting for longer routes around Africa. The U.S. sanctions on Yemen Kuwait Bank reflect efforts to curb financial channels supporting Houthi operations. However, the Houthis' sustained missile attacks and alignment with Iran's Resistance Axis underscore the entrenched nature of this proxy conflict.

Strategic partnerships between Russia and Iran deepen as the two nations sign a 20-year treaty encompassing security, military cooperation, and economic ties. This agreement reinforces a geopolitical bloc antagonistic to Western influence, with implications for the Middle East and beyond. Iran's pivot towards Moscow reflects its recalibration following setbacks in Syria and Lebanon, while Russia seeks alternative allies amidst its estrangement from the West.

The Gulf's economic recalibrations underscore resilience but reveal vulnerabilities. Saudi Arabia's economic forecast downgrade by the IMF, due to extended OPEC cuts, highlights the challenges of oil dependence. Simultaneously, the UAE's trade agreements and Saudi Arabia's $100 billion mineral investment ambitions illustrate diversification efforts. However, these strategies remain tied to global economic trends, requiring robust fiscal management to navigate external shocks.

Strategic Implications: The MENA region's trajectory remains precarious. The Gaza ceasefire, while a positive step, lacks a comprehensive framework for lasting peace. Lebanon's political realignment offers opportunities for stabilization but requires sustained international engagement to manage sectarian divides. Yemen's maritime instability underscores the risks of proxy conflicts in critical trade corridors. Meanwhile, the Russia-Iran partnership signals a deepening geopolitical polarization, with potential ripple effects across the region. Economic diversification efforts in the Gulf demonstrate adaptability but also highlight the region's susceptibility to global market fluctuations. Without coordinated interventions, the MENA region risks prolonged instability with significant implications for global security and energy markets.

Geopolitical Risk Assessment for the Middle East
(18-01-2025)

The MENA region faces a critical juncture, with a fragile Gaza ceasefire, escalating strategic partnerships among adversarial states, and economic recalibrations amidst enduring conflicts. While certain agreements signal progress, systemic vulnerabilities and rivalries keep the risk of instability high.

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Developments to Follow for the Middle East (See All Global)

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