00:00Now let's get more with Hassanein Malik, Managing Director for Emerging Market Equity and Geopolitical Strategy at Telemer.
00:07Hassanein, good to speak with you and to have you on.
00:10Look, I want to focus on the next 30 days and the naval blockade and the removal of that naval
00:16blockade.
00:17What impact would that have on the economies of the Persian Gulf over the next, again, month or so?
00:28Well, the economies with the most positive exposure to the resumption of oil flows through Hormuz are obviously those ones
00:34who suffered the most from the blockade.
00:36And that really means within the GCC, the likes of Kuwait, Qatar, Bahrain, a little further afield, Iraq.
00:43Those are the ones that have the highest leverage to the reopening of Hormuz.
00:47More broadly, if we do see a ceasefire hold sustainably, then the economy that's the most geared, arguably, is the
00:55tourist and transport-driven economy of Dubai.
00:58And those would be the ones, I would say, within the region that are the most exposed to the upside
01:03of a somewhat durable ceasefire.
01:08And you mentioned, Hassanein, some of the divergences that would be brought about in the aftermath of this conflict between
01:17Gulf allies or the GCC.
01:19Do you think that once this is done and dusted, that we're going to see more of these divergences fueled?
01:26You know, we're talking about the relationship between Saudi Arabia, the United Arab Emirates, and what impact would that have?
01:34I think it's very unlikely that after this war, and it's still, remember, a big assumption that this war has
01:41truly ended.
01:42There are many slips ahead between where we are right now and getting a lasting settlement, so going from ceasefire
01:48to settlement.
01:50If we were to get to that point, there are some scars left by this war.
01:56There are scars as far as the U.S.'s relationship with many of its allies.
02:01Obviously, in the region, the memories of how U.S. bases served as a spark for Iranian attacks, a reason
02:10for Iranian attacks, rather than a line of defense against those attacks.
02:14That will last for a long time.
02:15The fact that this war was started by the U.S. and Israel, really without much input from the GCC,
02:22who would have been very much against this sort of war.
02:25And the fact that once the blockade of Hormuz had started, the U.S. was not able to call upon
02:30its traditional allies in NATO, in Europe, in the U.K., in India, Japan, South Korea, to help unblock Hormuz.
02:38Those scars will last for some time.
02:42Then you have divisions within the GCC.
02:44And obviously, the most important one is between Saudi Arabia, which has developed its defense relations more deeply with Pakistan,
02:52Turkey and Egypt, and the UAE, which has fallen back on its Abraham Accord relationship with Israel and has also
02:58withdrawn from OPEC.
03:00So those lasting divisions, that stress, that strain, that will persist.
03:04And then, of course, through all of that, you have Iran having emerged, arguably, as a stronger regional power with
03:09a more hardline leadership.
03:13So you bring a very good point here, and it's the shifting sort of paradigms in the region.
03:19I remember during the 12-day war last year how Gulf officials or some Gulf officials would bring up the
03:26point about how Israel could become the biggest regional threat.
03:31Do you think that equation has shifted back to Iran being the number one enemy in the region?
03:37Or are Gulf officials, do you think, factoring in the fact that Israel could be a player that could unravel
03:45all of this going forward?
03:49I think it depends where you ask that question in the Gulf.
03:52So from, for example, the UAE perspective, which bore the brunt of Iranian collateral damage in terms of ballistic missile
04:00and drone attacks,
04:02there is a legitimate reason for them to regard Iran again as a significant security threat.
04:08I think in the rest of the GCC, arguably, some of those countries will regard Iran's actions during this war
04:15as having been conducted with some restraint,
04:17and this war having been catalyzed by the intelligence, the actions, the rhetoric, and the persuasion that the Israeli government
04:24has had on the Trump administration.
04:26I think also when you look at the fallout from this war, and again, assuming we have reached the end,
04:31which is still a fragile assumption,
04:33you look at the state of Israel and you see that it has effectively expanded its territorial control in Syria,
04:41in Gaza, in the West Bank, and, of course, in South Lebanon.
04:46And that's why the fact that Israel is not a party to this ceasefire is openly critical of it, and
04:52not just the government, but the opposition in Israel as well.
04:55Remember, they're going into an election in October where there's no senior politician that wants an end to hostilities on
05:01the fronts.
05:01I think the view across the broader region, with perhaps the exception of the UAE, is that Israel is still
05:10a significant security disruptor in this region.
05:14Hasnain, looking at the deal as it stands right now, what to you is the biggest risk there?
05:20What to you could cause the biggest unraveling of the whole peace accord?
05:25I think the first most important thing is to what degree Iran wishes to twin its deal with an end
05:35to hostilities in South Lebanon between Israel and Hezbollah.
05:39Because Israel doesn't appear to show any willingness to withdraw from South Lebanon,
05:43and Hezbollah is still seeing benefit in demonstrating its ability to fire rockets at northern Israel.
05:50So if Iran continues to twin its security with the end of that conflict, I think that's the number one
05:56risk to this ceasefire.
05:58Number two is just the fact that, remember, this was just an agreement to stop fighting.
06:02This was an agreement to resolve any of the intractable issues around nuclear, around regional proxies,
06:09around what has transpired through the war now around the control of the Strait of Hormuz,
06:14let alone the regime, the nature of the regime in Iran.
06:17None of those issues have been resolved by this deal.
06:19But all of that remains still to be negotiated.
06:21That could take a very long time with many obstacles along the way,
06:25not least obstacles within each country, within the U.S., within divisions within the Republican Party and within Iran,
06:32around how the hardliners and the pragmatic conservatives behave,
06:35and, of course, within Israel, which, as I say, appears to have no interest in a cessation of hostilities in
06:42the first place.
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