Pager and walkie-talkie blasts targeting Hezbollah across Lebanon raise questions, stoke Middle East tensions

Analysis Pager and walkie-talkie blasts targeting Hezbollah across Lebanon raise questions, stoke Middle East tensions
A man holds a walkie talkie device after he removed the battery during the funeral of persons killed when hundreds of paging devices exploded in a deadly wave across Lebanon the previous day, in Beirut's southern suburbs on September 18, 2024 (AFP)
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Updated 26 September 2024
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Pager and walkie-talkie blasts targeting Hezbollah across Lebanon raise questions, stoke Middle East tensions

Pager and walkie-talkie blasts targeting Hezbollah across Lebanon raise questions, stoke Middle East tensions
  • Communication devices exploded simultaneously across Lebanon, killing at least 15 people and injuring thousands
  • Suspected Israeli attack represents an embarrassing security breach on such a scale that Hezbollah has almost no choice but to respond

LONDON: At precisely 3:30 p.m. local time on Tuesday, an estimated 3,000 pagers carried by Hezbollah members beeped several times before exploding simultaneously, killing at least 12 people and injuring thousands more across Lebanon and parts of Syria.

At least eight of the dead were reportedly members of Iran-backed Hezbollah, and the many wounded included Mojtaba Amini, Iran’s ambassador to Lebanon, who may have lost at least one eye.

But clips from security cameras in shops in Beirut and other locations, circulated on social media, illustrated the dangerously indiscriminate nature of the attack.

 

 

Many civilians going about their day also fell victim to the blasts as pagers exploded in supermarkets, on the streets, and in cars and homes. Among the dead were two children who were in the wrong place at the wrong time.

Fleets of ambulances ferried a reported 2,700 wounded to hospitals across Lebanon, where overwhelmed medics struggled to cope with multiple victims suffering serious wounds, mainly to their hips, where pagers are generally worn on belts, and to hands and eyes.

On Wednesday afternoon, further blasts were reported across Lebanon, this time reportedly involving hand-held radios, causing at least three further fatalities and a hundred more wounded, according to Lebanese state media.

 

 

Israel has neither confirmed nor denied responsibility for the attack. But on Wednesday a US official told AP that Israel had briefed Washington on the attack after it had been carried out and, with no other feasible suspect in the frame, there is little doubt that it was the handiwork of Mossad, Israel’s lethally inventive foreign intelligence agency.

It is also clear that, figuratively and literally, the pager attack was both designed and timed to send a message.

The opportunity to use pagers as an offensive weapon arose in February when Hezbollah leader Hassan Nasrallah publicly warned members to stop using cell phones, which are easily bugged and traced and have been linked with many assassinations executed by missile attacks.

 

According to a senior Lebanese security source quoted by The Times of Israel, Hezbollah then ordered 5,000 pagers, which were imported into Lebanon earlier this year.

Initial speculation was that Israel had somehow infected the pagers with code designed to cause lithium batteries inside them to overheat and explode. However, it has since emerged that the pagers used only ordinary AAA batteries.

Besides, the near-instantaneous and synchronized detonations, apparently triggered by incoming messages, suggest the pagers had all been fitted with a small amount of explosive and a miniature electronic detonator.

On Tuesday, a senior Lebanese security source told Reuters: “The Mossad injected a board inside of the device that has explosive material that receives a code. It’s very hard to detect it through any means, even with any device or scanner.”

On Wednesday, Gold Apollo, the Taiwanese firm whose brand name was found on the pagers used in the attack, denied involvement, saying the AR-924 models widely identified after the blasts had been made under license by a Budapest-based company, BAC Consulting KFT.




Hsu Ching-kuang, head of Taiwanese company Gold Apollo, speaks to the media outside the company's office in New Taipei City on Sept. 18, 2024, saying his company had nothing to do with the pager explosion attack in Lebanon. (AFP)

In a statement issued at 1:40 p.m. Taiwan time on Wednesday, Gold Apollo said: “This model is produced and sold by BAC. Our company only provides the brand trademark authorization and is not involved in the design or manufacturing of this product.”

Images of BAC’s headquarters — a modest, semi-detached building on Szonyi Street in the north of Budapest — have spread on social media, but BAC has yet to comment. Its website went offline on Wednesday and the profile of its owner and managing director was deleted from LinkedIn.

It is, however, extremely unlikely that any genuine company would knowingly take part in such an operation, risking Hezbollah’s wrath, knowing full well that the devices would be easily traced back to it. This has provoked some speculation that BAC, established only in 2022, might have been a front company operated by Israeli intelligence.




Combo image showing a walkie-talkie (right frame) that was exploded inside a house in Baalbek, east Lebanon, on Sept. 17, 2024, and a man holding a walkie talkie device after he removed the battery following the pager explosions. (AP/AFP)

A more likely scenario is that the batch of pagers ordered by Hezbollah were intercepted en route to Lebanon by Israeli agents — most probably at a port or airport, where typical customs and shipping delays may have given agents, working with local collaborators, enough time to meddle with the devices.

Budapest, the capital of Hungary, is a major transport hub on the River Danube and is home to Csepel Freeport, the country’s principal port.

Wherever the devices were tampered with, “the use of pagers bears the hallmark of Israel weaponizing digital technology to achieve political ends,” Ibrahim Al-Marashi, associate professor in the Department of History at California State University San Marcos, told Arab News.




Social media photo showing a pager battery that exploded during an apparent Israeli attack on Sept. 17, 2024 against users of the device in southern Lebanon. (AFP)

Israel has “form” in such warfare. In 2010, “a code known as Stuxnet, snuck into a USB drive, caused Iranian centrifuges to accelerate to the point that they destroyed themselves.”

In 1996, Hamas bombmaker Yahya Ayyash was killed when explosives hidden inside his cell phone were triggered remotely by Israeli agents.

“The advantage of the most recent attack in Lebanon is that it allows Israel to strike from a distance while claiming plausible deniability, avoiding a US rebuke at a time when Washington has pressured Israeli Prime Minister Benjamin Netanyahu not to strike Hezbollah,” said Al-Marashi.

But the pager attack, he warned, could lead to a dangerous escalation.




Ambulances are surrounded by people at the entrance of the American University of Beirut Medical Center, on Sept.17, 2024, after explosions hit locations in several Hezbollah strongholds around Lebanon. (AFP)

“Hezbollah does have the ability to weaponize the digital in retaliation, raising the possibility that violent non-state actors might even pursue artificial intelligence to retaliate against their adversaries.”

Given the complexities of the operation, and the sheer workload involved in sabotaging thousands of devices, there is little doubt that the attack would have been weeks, if not months, in the planning.

But it is the timing of the attack that sends the most worrying signal.

The day after Hamas attacked Israel on Oct. 7, its ally Hezbollah began firing missiles into northern Israel — a near-daily bombardment that has increased steadily in intensity, forcing the evacuation of thousands of Israelis from the border region.




Lebanese army soldiers stand guard in Beirut on September 17, 2024, after an Israeli pager device attack against the Hezbollah in southern  Lebanon on September 17. (AFP

After a meeting of its Security Cabinet on Monday night, barely 12 hours before the pagers were detonated, Netanyahu’s office announced that “the Security Cabinet has updated the objectives of the war to include the following: Returning the residents of the north securely to their homes. Israel will continue to act to implement this objective.”

At the same time, reports suggested Netanyahu was on the brink of buckling to the extremist elements in his cabinet by sacking his Defense Minister Yoav Gallant, who has criticized him for having no postwar plan for Gaza, and replacing him with Gideon Saar, leader of the New Hope — The United Right party.

On Wednesday, the day after the pager attack, reports in Israeli and other media, citing anonymous US and Israeli officials, suggested it had been planned originally as “an opening blow in an all-out war against Hezbollah.”





Relatives mourn Fatima Abdallah — a 10-year-old girl killed in Israel's pager device attack — during her funeral in the village of Saraain in the Bekaa valley on September 18, 2024. (AFP)
 

According to The Times of Israel, a Hezbollah operative “had come to suspect the devices had been tampered with.” He was killed before he could alert his superiors, but the decision was taken to detonate the pagers before the plot was uncovered.

The question now is whether Israel is poised to follow up the pager attack, perhaps as was planned, with an all-out assault against Hezbollah in Lebanon.

“We have been teetering on the brink of a wider war for many months now,” Sanam Vakil, director of the Middle East and North Africa program at the London-based Royal United Services Institute, told Arab News.

“Hezbollah and Iran have made it clear they don’t want this broader conflict to erupt, but Israel cannot end the war in Gaza without addressing the security crisis on its northern borders with Iran, Lebanon and Syria.




Mourners carry the coffin of Mohammed Mahdi, son of Hezbollah legislator Ali Ammar, who was killed Tuesday after his handheld pager exploded, in the southern suburb of Beirut, Lebanon, on Sept. 18, 2024. (AP)

“In order to address this security imbalance, which puts at risk the safety of the broader population but also that of those displaced since the war began, Israel is trying to target and degrade the ‘Axis of Resistance’ to stave off further threats,” she said, referring to the loose network of Iranian proxies throughout the region.

“But this strategy could certainly push the groups and Iran to respond and eventually draw in regional states and above all the US.”

Most Israelis, said Daniel Seidemann, an Israeli lawyer and founder of the nongovernmental organization Terrestrial Jerusalem, “will tell you that war with Hezbollah is inevitable, but a large percentage say: ‘Not now.’

“The priorities for many are a ceasefire in Gaza, release of the hostages and dialing down the tension in Lebanon. Hezbollah can wait,” he told Arab News.

“Hezbollah, actively backed by Iran, is a much greater threat to Israel than Hamas and the general perception is that there will eventually be a war with Hezbollah, but Israelis know this will be much different than what we have witnessed in the past. It would mean years of war and vast devastation.

“But Netanyahu has a vested interest in the perpetuation of the war, which would be good for Netanyahu but intolerable for Israel.”

 

 

What happens next, added Seidemann, “is not only an Israeli decision. Will the US provide the munitions and the rest of the world the legitimization to pursue a protracted war in Lebanon?

“The bottom line is that right now, anything can happen.”

For Al-Marashi, “there are a lot of variables in regard to further escalation that make predictions difficult, more difficult than at any time in analyzing systemic conflicts in the Middle East.

“Despite US sanctions on Iran, news emerged over the weekend that Iran has launched a satellite into space and allegedly has provided ballistic missiles to Russia.

“Second, the Houthis in Yemen have overcome a technical hurdle, launching a ballistic missile against Israel and having it hit Israeli soil, meaning Israel’s system that intercepts such missiles failed.




An Israeli firefighter works to put out a blaze after rockets were fired from Lebanon towards Israel, amid cross-border hostilities between Hezbollah and Israel, in Kiryat Shmona, Israel, on Sept. 18, 2024. (REUTERS)

“From that perspective, both Israeli adversaries have demonstrated they can overcome technical hurdles, signaling to Israel that it is not invulnerable.”

Were a regional war to escalate, he added, “it would put US positions in Bahrain and Iraq in the crosshairs of the Axis of Resistance. Biden, seeking to ensure a Kamala Harris victory in the US election, is most likely going to pressure Israel not to escalate matters prior to the election.

“At the same time, if war in the Middle East helped Donald Trump, that would work to the advantage of Netanyahu, who would prefer a Trump presidency.”

The Middle East, said Brian Katulis, senior fellow for US foreign policy at the Washington-based Middle East Institute, “has been teetering on the edge of a wider escalation for much of this past year, with the risk of nation-states going directly to war with one another growing.”




An armored personnel carrier of the United Nations Interim Force in Lebanon (UNIFIL) patrols along al-Khardali road along the Israel-Lebanon border on September 17, 2024. (PhotAFP)

It was, he told Arab News, important to keep in mind the two core drivers of events — “a regime in Iran that operates with a revolutionary ideology that seeks to upend the state order of the Middle East, and an increasingly right-wing Israeli government that rejects a two-state solution and is unable to see the historic opportunity it has in opening relations with key Arab states if it took steps to define a clear end to this war that leads to a State of Palestine.”

In this context, “the US and outside actors such as Europe, China, and Russia can play important roles in trying to shape the trajectory of events in the region, but the main drivers are the regional actors themselves.

“One interesting pivotal grouping is the Arab Gulf states, particularly Saudi Arabia, who do not want to see a wider regional escalation with Iran but do want to advance a two-state solution.”

Right now, however, even as uncertainty remains about Israel’s next move, much depends on how Hezbollah will respond to the extraordinary blow it suffered on Tuesday.

The attack, described by a Hezbollah official as “the targeting of an entire nation,” has been condemned as “an extremely concerning escalation” by Jeanine Hennis-Plasschaert, the UN special coordinator for Lebanon.

 

 

In the past year, Hezbollah has suffered the loss of more than 400 fighters, including senior commander Fuad Shukr, to Israeli airstrikes in Lebanon.

But the pager attack represents an embarrassing security breach on such a scale that if it is to save face, Hezbollah’s leadership has almost no choice but to respond with more than the usual daily delivery of a handful of rockets.




Hashim Safieddine, a Shiite Muslim cleric and the head of Hezbollah's Executive Council, speaks during the funeral of persons killed after hundreds of paging devices exploded in a deadly wave across Lebanon the previous day, in Beirut's southern suburbs on September 18, 2024. (AFP)

After Israel’s multiple airstrikes in southern Lebanon last week and now the pager attack, “we are more on the precipice of a regional war than ever,” Kelly Petillo, program manager for Middle East and North Africa at the European Council on Foreign Relations, told Arab News.

“We will have to see how Hezbollah will retaliate now, and the level of that response will determine where this goes. But these episodes are an indication that things are heating up and we are close to the precipice.”

As for Netanyahu, after almost a year of fighting in Gaza, the fear now is that his answer to growing domestic criticism over the apparent absence of a postwar plan may be an even more nightmarish scenario — more war, only this time in Lebanon.

 


Palestinians fear repeat of ‘Nakba’

Palestinians fear repeat of ‘Nakba’
Updated 8 sec ago
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Palestinians fear repeat of ‘Nakba’

Palestinians fear repeat of ‘Nakba’
  • Israel’s war against Hamas has forced 1.7m Gazans to flee homes, often multiple times

JERUSALEM: Palestinians will mark this year the 77th anniversary of their mass expulsion from what is now Israel, an event that is at the core of their national struggle.

But in many ways, that experience pales in comparison to the calamity now faced in the Gaza Strip — particularly as President Donald Trump has suggested that displaced Palestinians in Gaza be permanently resettled outside the war-torn territory and that the US take “ownership” of the enclave.

Palestinians refer to their 1948 expulsion as the Nakba, Arabic for catastrophe. Some 700,000 Palestinians — a majority of the prewar population — fled or were driven from their homes before and during the 1948 Arab-Israeli war that followed Israel’s establishment.

After the war, Israel refused to allow them to return because it would have resulted in a Palestinian majority within its borders. 

Instead, they became a seemingly permanent refugee community that now numbers some 6 million, with most living in slum-like urban refugee camps in Lebanon, Syria, Jordan and the Israeli-occupied West Bank.

Israel’s rejection of what Palestinians say is their right of return to their 1948 homes has been a core grievance in the conflict and was one of the thorniest issues in peace talks that last collapsed 15 years ago. The refugee camps have always been the main bastions of Palestinian militancy.

Now, many Palestinians fear a repeat of their painful history on an even more cataclysmic scale.

All across Gaza, Palestinians in recent days have been loading up cars and donkey carts or setting out on foot to visit their destroyed homes after a ceasefire in the Israel-Hamas war took hold Jan. 19. The images from several rounds of mass evacuations throughout the war — and their march back north on foot — are strikingly similar to black-and-white photographs from 1948.

Mustafa Al-Gazzar, in his 80s, recalled in 2024 his family’s monthslong flight from their village in what is now central Israel to the southern city of Rafah, when he was 5. At one point they were bombed from the air, at another, they dug holes under a tree to sleep in for warmth.

Al-Gazzar, now a great-grandfather, was forced to flee again in the war, this time to a tent in Muwasi, a barren coastal area where some 450,000 Palestinians live in a squalid camp. 

He said then the conditions are worse than in 1948, when the UN agency for Palestinian refugees was able to regularly provide food and other essentials.

The war in Gaza has forced some 1.7 million Palestinians — around three quarters of the territory’s population — to flee their homes, often multiple times. That is well over twice the number that fled before and during the 1948 war.

Israel has sealed its border. Egypt has only allowed a small number of Palestinians to leave, in part because it fears a mass influx of Palestinians could generate another long-term refugee crisis.

Israel has long called for the refugees of 1948 to be absorbed into host countries, saying that calls for their return are unrealistic and would endanger its existence as a Jewish-majority state. It points to the hundreds of thousands of Jews who came to Israel from Arab countries during the turmoil following its establishment, though few of them want to return.

Even if Palestinians are not expelled from Gaza en masse, many fear that they will never be able to return to their homes or that the destruction wreaked on the territory will make it impossible to live there. One UN estimate said it would take until 2040 to rebuild destroyed homes.

Yara Asi, a Palestinian professor at the University of Central Florida, says it’s “extremely difficult” to imagine the kind of international effort that would be necessary to rebuild Gaza.


Iranian currency plunges to record low after fresh US move

Iranian currency plunges to record low after fresh US move
Updated 4 min 4 sec ago
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Iranian currency plunges to record low after fresh US move

Iranian currency plunges to record low after fresh US move
  • It remains unclear how funding for Iranian activists and opposition figures would be affected by the USAID decision

TEHRAN: Iran’s currency plunged on Wednesday to a record low of 850,000 rials to $1 after US President Donald Trump ordered a restart to the “maximum pressure” campaign targeting Tehran.

Trump’s order calls for halting Iran’s oil exports and pursuing a “snapback” of UN sanctions on Iran. However, he also suggested he didn’t want to impose those sanctions and wanted to reach a deal with Iran.

The move comes as Trump’s moves to freeze spending on foreign aid and overhaul, or even end, the US Agency for International Development have been lauded in Iranian state media.

Meanwhile, ordinary Iranians worry what all this could mean for them.

“It encourages hard-liners inside Iran to continue repressions because they feel the US would have less capability in supporting Iranian people who seek freedom,” said Maryam Faraji, a 27-year-old waitress in a coffee shop in northern Tehran.

Iranian media say Trump’s cuts could stop the opposition in Iran

The state-run IRNA news agency said that “cutting the budget of foreign-based opposition” could “affect the sphere of relations” between Tehran and Washington.

Newspapers, like the conservative Hamshhari daily, described Iran’s opposition as “counterrevolutionaries” who had been “celebrating” Trump’s election as heralding the “last days of life of the Islamic Republic.”

They then “suddenly faced the surprise of cut funding from their employer,” the newspaper crowed.

Even the reformist newspaper Hammihan compared it to a “cold shower” for opponents of Iran’s theocracy abroad, an idea also expressed by the Foreign Ministry.

“Those financial resources are not charity donations,” Esmail Bagahei, Iran’s Foreign Ministry spokesman, said during a briefing with reporters. “They are wages paid in exchange for services.”

It remains unclear how funding for Iranian activists and opposition figures would be affected by the USAID decision.

The lion’s share of money for civil society in Iran has come through the US State Department’s Near East Regional Democracy fund, known by the acronym NERD, which grew as an American response to the Green Movement protests in 2009.


Gaza is integral part of future Palestinian state, EU spokesperson says

Gaza is integral part of future Palestinian state, EU spokesperson says
Updated 21 min 47 sec ago
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Gaza is integral part of future Palestinian state, EU spokesperson says

Gaza is integral part of future Palestinian state, EU spokesperson says
  • “The EU remains firmly committed to a two-state solution,” the EU spokesperson said

BRUSSELS: Gaza should be an essential part of a future Palestinian state, said a European Union foreign policy spokesperson on Wednesday, adding that the EU was committed to a two-state solution for Israelis and Palestinians.
President Donald Trump has proposed for the United States to take over war-ravaged Gaza after resettling Palestinians elsewhere. The comments have drawn global condemnation.
“We took note of President Trump’s comments. The EU remains firmly committed to a two-state solution, which we believe is the only path to long-term peace for both Israelis and Palestinians,” the EU spokesperson said.
“Gaza is an integral part of a future Palestinian state,” he added.


Israel says to boycott UN Human Rights Council over ‘anti-Semitism’

Israel says to boycott UN Human Rights Council over ‘anti-Semitism’
Updated 28 min 46 sec ago
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Israel says to boycott UN Human Rights Council over ‘anti-Semitism’

Israel says to boycott UN Human Rights Council over ‘anti-Semitism’
  • Israel is an observer state and not one of the 47 member states of the UNHRC

JERUSALEM: Israeli Foreign Minister Gideon Saar on Wednesday accused the UN Human Rights Council of anti-Semitism as he announced Israel would boycott the United Nations body.
“This body has focused on attacking a democratic country and propagating anti-Semitism, instead of promoting human rights,” Saar said in a post on X.
The minister cited Israel being “the only country with an agenda item dedicated solely to it” and the subject of more resolutions than “Iran, Cuba, North Korea and Venezuela combined.”
“Israel joins the United States and will not participate in the UNHRC,” Saar said.
In response to the boycott announcement, UNHRC spokesman Pascal Sim said Israel had “observer state status” within the rights body and was “not one of the 47 member states.”
As such, it cannot “withdraw from the council,” he added.
Israel has previously participated in periodic reviews that UN members must submit to the UNHRC.
For several years, however, it has boycotted debates on the “human rights situation in Palestine and other occupied Arab territories.”
US President Donald Trump on Tuesday signed an executive order saying Washington was withdrawing from a number of United Nations bodies, including its Human Rights Council.
The executive order also said it withdrew the United States from the UN relief agency for Palestinians, UNRWA, with which Israel cut ties on Thursday accusing the body of providing cover for Hamas militants.


Why pressure is growing to finalize UK-GCC free trade agreement

Why pressure is growing to finalize UK-GCC free trade agreement
Updated 6 min 7 sec ago
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Why pressure is growing to finalize UK-GCC free trade agreement

Why pressure is growing to finalize UK-GCC free trade agreement
  • Britain’s financial woes and US President Donald Trump’s trade wars loom over negotiators working to get deal over the line
  • The deal would eliminate tariffs, reduce trade barriers, and facilitate business cooperation in key sectors like AI and renewables

LONDON: The UK’s economic fragility and global turmoil from President Donald Trump’s trade wars have given increased impetus for Britain to reach a free trade agreement with the Gulf Cooperation Council.

Talks for a deal between the six-nation bloc and Britain are continuing apace after restarting in September and are said to be at an advanced stage.

Yet the agreement could not come soon enough for the UK government, which is struggling to breathe life into a stagnant economy.

Prime Minister Keir Starmer has prioritized growth, and a GCC FTA would bring a significant boost to the UK’s finances and the governing Labour Party’s political fortunes.

The benefits would also be plentiful for Gulf countries, many of which have embarked on extensive reforms to diversify their economies away from hydrocarbons and toward modern sectors.

Saudi Crown Prince Mohammed bin Salman receives British Prime Minister Keir Starmer in Riyadh. (SPA/File)



Details of the negotiations are closely guarded, but economists and experts told Arab News they believe a final deal is close and that there is will from both sides to get the agreement in place.

“The UK government has signaled that it wants to attract more investment into the economy, and its new drive for growth should certainly give momentum to the determination of UK negotiators to push forward the talks on the FTA toward a satisfactory conclusion,” said Bandar Reda, secretary-general and CEO of the Arab-British Chamber of Commerce.

“With a fair degree of optimism then we can probably look forward to a positive outcome being achieved a little sooner than previously expected.”

The UK believes a GCC FTA would increase bilateral trade by 16 percent and could add an extra £8.6 billion ($10.7 billion) a year to the existing £57.4 billion worth of annual trade between the two sides.

Officials say it could also boost UK annual workers’ wages by around £600 million to £1.1 billion every year and increase UK GDP by between £1.6 and £3.1 billion by 2035.

The UK has been looking to forge fresh trade deals since leaving the EU, its biggest trading partner, in 2020.

With already strong trade links and historic ties to Gulf countries, establishing an agreement with the GCC as a whole became a priority.

Consisting of Saudi Arabia, the UAE, Qatar, Bahrain, Oman and Kuwait, the GCC economic and political union is also seeking to make more trade agreements as a bloc.

Britain's Queen Camilla, Qatar's Emir Sheikh Tamim bin Hamad al-Thani, Britain's King Charles III and Sheikha Jawaher bint Hamad bin Suhaim al-Thani in London. (AFP/File)

A UK government report published in 2022 said an FTA with the GCC “is an opportunity to boost trade with an economically and strategically important group of countries, support jobs and advance our global interests.”

After the July election brought in his new UK government, Starmer prioritized relations with the Gulf, and a seventh round of trade negotiations got underway.

Jonathan Reynolds, the business and trade secretary, visited the region in September and delegations have traveled back and forth since.

The latest negotiation team from the GCC was in London last month, according to the Department for Business and Trade.

Starmer traveled to Saudi Arabia in December and met with Prime Minister and Crown Prince Mohammed bin Salman. He also visited the UAE and hosted the Qatari emir in London.

Several deals were announced during those meetings, as the new government made clear that attracting foreign investment from Gulf countries was key to its growth strategy.

Opinion

This section contains relevant reference points, placed in (Opinion field)



At the same time, the economic pressures on Starmer’s administration have increased. Despite a relatively strong start to 2024, the UK economy failed to grow in the second half of the year.

Chancellor Rachel Reeves came under fire for her first budget, which dented business confidence with a series of tax hikes.

With UK borrowing costs hitting their highest level for several years last month, boosting trade with a bloc like the GCC through an FTA would be a significant boon for Starmer.

But it is not just the UK’s domestic economic woes that are looming over negotiators. With the US administration’s threats to impose tariffs on both allies and adversaries causing global financial uncertainty, Gulf countries will also be keen to ease trade restrictions with a major partner like the UK.

British Prime Minister Keir Starmer meets UAE President Sheikh Mohamed bin Zayed Al Nahyan at the Shati Palace in Abu Dhabi. (AFP/File)



“One effect of the threat of tariffs might be to add urgency to the negotiations to conclude the UK-GCC FTA,” Reda, of the Arab-British Chamber of Commerce, told Arab News.

Primarily, the agreement would remove or reduce tariff barriers to trade between GCC countries and the UK, easing the flow of goods and services.

The average tariff applied to UK exports by the GCC is around 5.5 percent, whereas imports from the Gulf face a 5.8 percent levy. However, the UK places no tariffs on oil and gas bought from GCC countries, and this accounts for most of the import value.

Still, removing the tariffs would help businesses on both sides by reducing costs but would particularly benefit the UK given that its exports account for 60 percent of total trade.

Perhaps more important, according to Freddie Neve, lead Middle East associate at the London-based Asia House think tank, would be removing red tape faced by importers and exporters.

Primarily, the agreement would remove or reduce tariff barriers to trade between GCC countries and the UK, easing the flow of goods and services. (SPA)



“While reducing tariffs on these goods is an obvious target in the negotiations, arguably a larger opportunity relates to the reduction of non-tariff barriers,” Neve said. “These relate to regulations, standards, and procedures required of foreign firms to do business.

“A government analysis published before negotiations counted over 4,500 non-tariff measures applied by the GCC on the UK. Naturally, some of these will have been ameliorated by recent Gulf economic reforms, but an FTA that reduces these barriers would make it easier for UK companies to operate in and across the GCC.”

While the timing of the FTA would be good for the UK it also fits perfectly with the timetable of economic diversification underway in the GCC.

An FTA negotiation is a vast and complex process and there may well still be sticking points to be ironed out before a final deal is reached. (AFP/File)

Saudi Arabia and the UAE in particular are moving away from reliance on oil revenues to modern, technology-driven economies.

Investing in the UK means they are able to tap into services and expertise in sectors where Britain has a competitive advantage, such as technology, life sciences, creative industries, education and financial services.

In particular, the UK’s 2022 assessment predicted an FTA would allow for cooperation in “industries of the future” such as artificial intelligence and renewable energy, in which Gulf countries are investing heavily.

“Over the past three years, innovations in AI and related sectors to do with the digital economy, e-commerce, advanced data and computing have developed enormously,” Reda said. “The Gulf states have all been seeking to position themselves at the forefront of these developments that are reshaping how we do business.

“These areas open up major new areas for UK-GCC cooperation as we all seek to maximize the potential offered by AI and cutting-edge tech. The FTA should give a tremendous boost to cooperation in these industries of the future.”

INNUMBERS

• 16% Potential increase in bilateral trade resulting from UK-GCC free trade agreement.

• £8.6bn What the FTA could add to the existing £57.4bn worth of annual bilateral trade.

• £1.6-£3.1bn Possible boost to UK GDP by 2035, raising wages to £1.1bn per year.


An FTA negotiation is a vast and complex process and there may well still be sticking points to be ironed out before a final deal is reached.

Douglas Alexander, the UK’s minister of state for trade policy and economic security, said in December that negotiators on the GCC agreement continued to have “constructive discussions on areas of sustainable trade,” such as environment and labor.

MPs have raised questions over whether the UK should be focusing on a GCC-wide agreement rather than individual deals with Gulf countries, citing variations in policies and regulations across the bloc.

But the GCC countries have been developing their concerted approach to trade and are pursuing similar agreements with the EU, China, and Turkiye.

Prime Minister Keir Starmer has prioritized growth, and a GCC FTA would bring a significant boost to the UK finances. (SPA/File)



“Negotiations with a bloc are always more challenging than bilateral deals,” Justin Alexander, a director at US consultancy Khalij Economics, told Arab News. “However, the GCC is functioning in the most joined-up way I have seen in my career, and all the GCC members are important partners for the UK, so it is highly motivated to make this work.”

He said he was not aware of any significant obstacles remaining in the talks and believed the deal is very near completion.

“The most significant element of the UK-GCC FTA for both sides will be the fact that it has been done, setting a precedent for further trade deals for both parties,” Alexander said. “Both sides are open, globally integrated economies and would benefit from modern trade deals.”

The Department for Business and Trade said trade deals played a “vital role” in the government’s mission for economic growth.

“We’re seeking a modern trade deal with the Gulf as a priority, and our focus is securing a deal that delivers real value to businesses on both sides, rather than getting it done by a specific date,” the department said.