Global Risk Indexes (29-01-2025)

Global 97 (+1 ▲)
MENA 95 ( —)
APAC 96 ( —)
Europe 98 ( —)
Africa 98 (+1 ▲)
AMERs 96 (+1 ▲)
Markets 98 (+2 ▲)
Farid al-Khaleqi, Middle East region analyst at Worldwise Analytica

Farid al-Khaleqi

Navigating the Sands of Time, Illuminating the Geopolitical Horizon

MENA at a Crossroads: Gaza Rebuilding, Red Sea Threats, and Proxy Conflicts Shape Regional Stability

The Middle East and North Africa remain in a precarious state as January 29, 2025, highlights a mix of fragile ceasefires, geopolitical maneuvering, and economic recalibrations. While diplomatic engagements in Gaza and Syria offer glimmers of stability, broader risks tied to Red Sea security, Lebanon's instability, and Turkish domestic politics continue to challenge regional order.

Gaza's humanitarian situation remains dire despite incremental progress in the ceasefire process. Hundreds of thousands of displaced Palestinians continue returning to northern Gaza, but the absence of a coherent reconstruction framework poses risks. The reunions of families after 15 months of separation underscore the deep societal wounds left by the war. Israeli hardliners are pressuring Prime Minister Netanyahu to abandon the second phase of ceasefire talks, demanding a complete military victory over Hamas. However, ongoing prisoner swaps, with another six Israeli hostages set for release by the end of the week, indicate that negotiations remain the primary tool for de-escalation. Meanwhile, former U.S. President Trump's suggestion of relocating Palestinians from Gaza to Jordan and Egypt has been firmly rejected by regional actors, including Germany's Chancellor Scholz, highlighting the continued tension over long-term governance solutions.

The Red Sea remains a focal point of geopolitical concern as a Hong Kong-flagged container ship caught fire under unknown circumstances off Yemen's coast. While the crew was safely evacuated, the incident raises alarms over continued maritime security threats, particularly as the Houthis maintain their disruptive posture. Shipping insurers and commercial operators remain wary, with traffic increasingly rerouted around Africa, adding costs to global trade. The Houthis' previous statements limiting attacks to Israeli-linked vessels have done little to reassure major shipping companies, as the broader risk of miscalculation and spillover remains high.

Lebanon continues to teeter on the edge of deeper instability. Israeli airstrikes in Nabatieh, which wounded 24 people, have been condemned by Lebanon's caretaker Prime Minister Najib Mikati as a violation of the ceasefire agreement. Hezbollah's insistence on an immediate Israeli withdrawal from southern Lebanon, despite U.S. efforts to extend the ceasefire deadline, suggests that tensions could escalate rapidly. The decision by Dubai conglomerate Al Habtoor Group to withdraw all planned investments from Lebanon due to political instability and Hezbollah's dominance underscores the country's deepening economic crisis. The UAE's reopening of its embassy in Beirut reflects a cautious diplomatic re-engagement but does not indicate confidence in Lebanon's governance stability.

Syria's evolving political landscape continues to draw international attention. A high-level Russian delegation has arrived in Damascus for the first time since Bashar al-Assad's removal, aiming to secure Moscow's long-term military presence at Tartous and Hmeimim. Meanwhile, Syria's finance minister has begun discussions with the EU regarding potential sanctions relief, marking a critical moment in Damascus' attempts to re-enter the global financial system. The EU's gradual relaxation of select economic restrictions signals a willingness to work with the new government but remains conditional on internal reforms.

In Turkey, President Erdogan's escalating crackdown on opposition figures'including the arrest of pro-Kurdish officials and talent managers accused of links to the 2013 Gezi Park protests'underscores his efforts to consolidate power. The removal of another elected pro-Kurdish mayor and military operations against Kurdish militants in northern Syria and Iraq highlight Ankara's continued focus on Kurdish containment. At the same time, opposition calls for early elections suggest a volatile domestic political trajectory.

Economic shifts in the Gulf highlight strategic recalibrations. Saudi Arabia and the UAE continue leveraging foreign investment, with Riyadh's Mecca and Medina real estate markets opening to international investors and Abu Dhabi expanding its holdings in European healthcare. Meanwhile, Saudi Energy Minister Abdulaziz bin Salman has engaged in talks with OPEC members ahead of the February 3 ministerial meeting, where production policies will be reviewed. With global oil demand remaining unpredictable and Washington pressuring for lower prices, Gulf states face balancing economic growth with geopolitical leverage.

Strategic Implications: The region remains in a fragile equilibrium where de-escalation efforts in Gaza and Syria must be weighed against rising tensions in Lebanon, the Red Sea, and Turkey. The future of Gaza hinges on political negotiations, while maritime security threats could extend beyond regional conflict zones if left unchecked. Lebanon's economic and political vulnerabilities continue to deter foreign investment, and Syria's diplomatic reintegration remains conditional. Gulf economic strategies offer resilience, but external pressures'particularly from the U.S. on oil pricing'add complexity to decision-making. Moving forward, coordinated diplomatic engagement and security management will be essential in mitigating the region's multifaceted risks.

Geopolitical Risk Assessment for the Middle East
(29-01-2025)

Despite efforts toward de-escalation in Gaza and Syria, proxy conflicts, maritime threats, and political instability in Lebanon and Turkey contribute to sustained high risk. Economic recalibrations in the Gulf offer resilience, but regional divisions and external pressures keep uncertainty high.

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