Monday, February 22, 2021

Iran, Turkey, Qatar Alliance: Will this mark a shift in MENA's Balance of power?

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Raya Tripathi

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Iran, Turkey, Qatar Alliance: Will this mark a shift in MENA's Balance of power?

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Global Views 360

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February 22, 2021

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Turkey-Qatar Alliance

Turkey-Qatar Alliance | Source: Turkish Think Tank

Qatar, Iran and Turkey have been forming an alliance—which impacts several countries—especially in the MENA (Middle East and North Africa) region. The move comes after Israel recently established its diplomatic relations with four Arab league countries, namely, United Arab Emirates (UAE), Bahrain, Morocco and Sudan. The article covers how this move can have an impact on the balance of power in the region.

Support for the Palestinian Cause

The three countries are critical of the Israel-Arab ties and support the Palestinian cause. Various Palestinian factions, including Hamas and Fatah as well, are shoring up ties with Turkey and other countries in the region that stand against normalization with Israel.

During his speech in the 75th United Nations General Assembly, Erdogan called out on Israel and proclaimed, “The occupation of Palestine is a bleeding wound.”

Since the Gaza attack, which killed 10 Turkish social activists aboard a ship by the Israeli commandos in international waters, the relationship between the two has only soured. After this incident, Turkey recalled its ambassador from Israel, downgrading the diplomatic status. Yet in 2016—after a few meetings—the relationship was restored. However, after another attack in Gaza in 2018, Turkey called back its ambassadors again and expelled the Israeli ambassador to Turkey. Since then they do not have full diplomatic status.

Following the attacks Erdogan—the president of Turkey—even called Israeli PM Benjamin Netanyahu “a terrorist.” The country has been openly supportive of the Palestinian cause, and has also sent aid for humanitarian relief to the Palestinians. Several Hamas leaders have been visiting, taking refuge, and even meeting with Erdogan.

On August 22, 2020, Hamas leader Ismail Haniyeh met Erdogan in Istanbul. Jibril Rajoub, secretary of Fatah’s Central Committee, as well arrived in Turkey on September 21, 2020 to meet with Haniyeh and his deputy Saleh al-Arouri and discuss ways to end the internal Palestinian division.

On the same day, Palestinian President Mahmoud Abbas phoned Erdogan and thanked him for his support for the Palestinian cause. The two have shared several calls since—discussing political developments and US pressure on the region to normalize ties with Israel and ways to face such pressure.

Turkey has tried to balance its relations with both Saudi Arabia and Iran, who happen to be arch rivals. But after the recent growing closeness with two of Saudi Arabia’s rival countries, Iran and Qatar, Turkey might end up straining its relations with Saudi Arabia.

Qatar-Saudi Arabia conflict

This diplomatic conflict is also known as the Second Arab Cold War (the first one being the Iran-Saudi Arabia Cold War). There is an ongoing struggle between the two countries to gain influence in the Gulf. Their relations strained especially after the emergence of Arab Spring. During that time, Qatar became in favour of the revolutionary wave, whereas Saudi Arabia was against it. Both the States are allies of the United States, but have a tussle in their ideologies. Both have avoided direct conflict with each other.

There are other issues between them which leads to further tussle-

1. Qatar broadcasts a news channel, Al Jazeera, which favours the Arab Spring.

2. Qatar has good relations with Iran, Saudi Arabia's rival.

3. Qatar also allegedly supported Muslim Brotherhood in the past. Which it denies.

The Qatar diplomatic crisis became worse in 2017. Saudi Arabia, the UAE, Bahrain and Egypt severed diplomatic relations and trade ties with Doha, and imposed a sea, land and air blockade on Qatar, claiming it supported “terrorism” and was too close to Iran. Yemen, the Maldives and Libya's eastern-based government also followed later. Qatar rejected the claims and said there was “no legitimate justification” for the severance of the relations.

How does this new alliance affect the other countries in the region?

The new alliance seems to lead into formations of two alliance groups or blocs in the region, with some countries siding with Iran, Qatar and Turkey and others with the Saudis and their allies. Another point to keep in mind is that Saudi Arabia is supported by the US, while two countries from the former alliance—Turkey and Iran—are supported by Russia. This will lead to further division among the Middle Eastern countries.

President Trump, Minister of Foreign Affairs of Bahrain, Israeli Prime Minister, and Minister of Foreign Affairs for the UAE Signing the Abraham Accords | Source: Trump White House Archives

This alliance can also affect the trade among these countries, and can severe the ties of many Middle Eastern countries. The biggest beneficiary is going to be Israel, which doesn’t have good relations with most of the Muslim world, except the ones which established diplomatic ties recently by signing the Abraham Accords.

In North Africa countries like Egypt and Morocco recognise Israel. However, most of the North African countries also supported the Arab Springs, which is against the ideas of Saudi Arabia. The Islamic holy land seriously seems to have less Arab allies when it comes to opposing the Arab Springs.

In fact, there can be impacts on trade and diplomatic ties with other countries outside the Middle East and North African region as well. Countries will have to balance their relations with both these groups.

How does it affect the Balance of power in the region?

In international relations, balance of power refers to the posture and policy of a nation or group of nations protecting itself against another nation or group of nations by matching its power with the power of the other side.

There has been a Cold War situation between Iran and Saudi Arabia as they are very (perhaps most) influential powers in the region. But Saudi Arabia is still more influential as a business as well as a soft power—it has a richer economy, oil exports, and most importantly, being the holy land where every Muslim comes for Hajj pilgrimage—it has Mecca and Medina. It is the land where the Prophet Muhammad first delivered his messages and teachings. Iran may try to compete in the economic part, but isn't equally as challenging in the religious part—although it is an important country for the Shia Muslims.

There have been arms embargo on Iran by the UN for arms race. Russia and China have been eager to supply Iran with advanced jets, tanks and missiles, which is quite alarming for its Gulf Arab neighbours, especially its primary adversaries like Saudi Arabia and the UAE.

On 14 September 2019, drones were used to attack the state-owned Saudi Aramco oil processing facilities at Abqaiq and Khurais in eastern Saudi Arabia. The Houthi movement in Yemen claimed responsibility, joining it to events surrounding the Saudi Arabian intervention in the Yemeni Civil War and stating that they used ten drones in the attack from Yemen. Saudi Arabian officials said that many more drones and cruise missiles were used for the attack and these originated from the north and east, and that they were of Iranian manufacture. The United States and Saudi Arabia have stated that Iran was behind the attack while France, Germany, and the United Kingdom jointly stated Iran bears responsibility for it. Iran has denied any involvement. The situation has only exacerbated the Persian Gulf crisis.

By forming this new alliance, supporting the Palestinian cause—with Qatar—even supporting the idea of Arab Springs; the Iran-Turkey-Qatar alliance has a new power with them. What remains to be seen is the other Middle Eastern country’s decision—whether they support this new alliance and the Palestinian cause or go for yet another fragile “peace-building” initiative in the already disturbed region.

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April 13, 2021 7:47 AM

Are India's Antitrust laws effective at controlling monopolies?

On 15th of July 2020, Reliance Industries Ltd (RIL) held its annual general meeting of the shareholders. The chairman and managing director Mukesh Ambani, announced that global tech giant Google would be investing $4.5 billion in Jio Platforms. Facebook also has acquired a 9.99% stake in Jio Platforms. This is the first time in the world that both the global tech giants have invested in the same entity. These investments have boosted the confidence for Jio Platforms and also for India’s growth but there have been questions and speculations about the potential anti-competitive makeup of these deals.

The objective of this article is to explore the interpretation and the effectuality of Antitrust laws in India.

Anti-competitive practices are those business practices which firms engage in to emerge as the or one of the few dominant firms, who will then be able to restrict inter firm competition in the industry in a bid to preserve their dominant status. The Collins English dictionary defines antitrust laws as those laws that are intended to stop large firms taking over their competitors by fixing prices with their competitors, or interfering with free competition in any way. These laws focus on protecting consumer interests and promoting a competitive market. The word ‘Antitrust’ is derived from the word ‘trust’. A trust was an agreement by which stakeholders in several companies transferred their shares to a single set of trustees.

In present-day India, talking about market dominance Reliance Industries Ltd (RIL), resembles American company—John D Rockefeller's Standard Oil Company—of the early 20th century. Mukesh Ambani holds the highest ability to influence markets and policy in every sector in which RIL is present—petrochemicals, oil, telecom, and retail. Many industry experts and critics suggest that Ambani has used his political clout to twist the regulatory framework in his favor.

Gautam Adani, founder of Adani Group | Source: Twitter

Furthermore, economic power in aviation infrastructure is clustering into a few hands as well. In 2019, the Adani Group bagged the 50-year concession to operate all the six Airports Authority of India-operated airports—Lucknow, Jaipur, Guwahati, Ahmedabad, Trivandrum, and Mangaluru—which were put up for auction. The company also obtained a controlling stake in ‘The Chhatrapati Shivaji Maharaj International Airport, Mumbai’ from GVK Airports. Moreover, Adani Group is now set to construct the Navi Mumbai International Airport. The group is now eyeing Indian Railways while they have already established an alarming monopoly in green energy and sea ports. While Airports are natural monopolies, one private company controlling more than 8 important airports is not good news to airlines.

India has established antitrust laws to promote competition. For 40 years, India followed the Monopolies and Restrictive Trade Practices Act 1969 (MRTP). This act was based on principles of import substitution and a command-and-control economy. However, over time several amendments had to be made to the act. In 2002, the Indian approved a new comprehensive competition legislation. This is called the Competition Act 2002. The act focused on regulating business practices in order to prevent practices having an appreciable adverse effect on competition (AAEC) in India. The act primarily regulates three types of conduct: anti-competitive agreements (vertical and horizontal agreements), abuse of a dominant position, and combinations such as mergers and acquisitions. The act lists out the cartel agreements that it intends to prevent. This list includes price-fixing agreements, agreements between competitors seeking to limit or control production, market-sharing agreements between competitors and bid-rigging agreements. These agreements are called “cartel” arrangements.

The competition Act is enacted by the Competition Commission of India (CCI), which is exclusively responsible for the administration and enforcement of the Act. It comprises a team of 2 to 6 people appointed by the government of India. The CCI has previously handled high-profile cases. In 2018, CCI imposed a fine of Rs135.86 crore on Google on the grounds that Google misused its dominant position and powers to create a search bias. In another important case, the CCI, ordered a probe into Idea, Vodafone and Airtel when Reliance Jio owner Mukesh Ambani lodged a complaint against the three for forming a cartel and denying Jio the POI required for network connection, causing multiple call failures. The Cellular Operator Association of India was also probed for encouraging the same.

In some cases, the Competition Commission has been successful in tackling activities that are against the free competitive market. However, critics and economists believe that the act is now unable to adapt to the changing business environment in e-commerce, telecom, technology and the government’s role in distorting competition. Demonetization and GST drove the formalization of the economy. One consequence of them was that bigger, better organized players gained at the cost of smaller ones with lesser resources. The Insolvency and Bankruptcy Code (IBC) was designed to solve the problem of non-performing assets (NPAs) of banks. But consequentially, it has also led to a consolidation in many sectors.  

However, CCI has expressed inability to consistently adjudicate punitive measures due to obligation in several cases. This points to the loopholes in the very provisions of the Competition Act 2002. In an Economic and Political Weekly (EPW) article, Aditya Bhattacharjea—an Economist—argues that even though the 2002 Act represents an improvement from the MRTP Act which was extremely restrictive, the present act also remains riddled with loopholes and ambiguities. According to Bhattacharjea, this creates unnecessary legal uncertainty, which acts in advantage of lawyers and law firms. For instance, the act allows the CCI to leave some scope of flexibility for “relative advantage, by way of contribution to the economic development.” Bhattacharjea argues that this may allow large firms to justify their anti-competitive practices in the name of development.

Mark Zuckerberg and Mukesh Ambani having online interaction after Facebook invested in Jio Platforms | Source: NDTV

Data portability plays a significant role in determining market power of certain firms. In 2017, the CCI closed cases against both WhatsApp and Jio involving allegations of predatory pricing and privacy violations. In both these decisions, the regulator did not consider the restrictions around data portability as a competitive advantage. The possible data leveraging advantage for the attempted monopolization could be the ‘portfolio effect’. Portfolio effect refers to increasing the range of brands, by bundling of telecom or messaging service and other service offerings or illegal vertical restraints, even predatory pricing. This in turn may lead to greater ability of further leveraging, deterring innovation and results in degradation of quality. Another possible advantage is explained as the theory of leveraging. The best example of leveraging is when Microsoft entered the media-player market by extending its quasi-monopoly on the operating systems market by taking advantage of the indirect network effects. In case of Facebook acquiring 10% of Jio’s shares, it is a concern that both entities could potentially use WhatsApp’s market dominance in telecom and social networking services and establish dominance in e-commerce market through anticompetitive acts.

There was a consensus among Indian policymakers at the time of the 1991 economic reforms that economic liberalization would eliminate the nexus between the business elites and the policymakers. On the contrary, the relationship between these two groups got further strengthened.

On the other hand, few critics and industrialists argue that extreme restrictions on growing companies hampers the progressive growth of the national economy. While RIL’s Jio looks like a cause for concern, the company has also saved Rs. 60,000 crores for annual savings in India. In addition to that, the entry of Jio to the telecom industry has led to a rise in data consumption and improved accessibility and affordability of the internet across the nation.

However, the concern still lingers as the question of whether this growth is a result of actual innovation or crony capitalism remains unsolved.

However, the fact that telecom, organized retail, ports and airports have two or three players controlling the bulk of the sector needs to be addressed. A healthy competition is quintessential for long-term growth and innovation. Harmful trade practices and cartelization does not only affect small manufacturers but also the general public.

The government, CCI and other lawmakers must closely examine the present laws and provisions and need to see if they are required to amend the act.

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