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2019 annual forecast

Nov 19, 2018 | 20:48 GMT

8 mins read

Middle East and North Africa

The Middle East and North Africa is the world's crossroads. It encompasses the Arabian Peninsula, the mountains of Iran, the plains of Turkey, the deserts of the Levant, the lands north of the Sahara and all coasts in between. The story of the region, as is so often the case of places stuck between foreign players, is the story of trade, exchange and conflict. The traditional powers of the region are Turkey and Iran — Saudi Arabia and Egypt are the current Arab powers — and their competition for influence over the region's weaker states makes the Middle East and North Africa an arena of violence and instability.
The Middle East and North Africa encompasses the Arabian Peninsula, the mountains of Iran, the plains of Turkey, the deserts of the Levant, the lands north of the Sahara and all coasts in between.
(Chris Jackson/Getty Images)

Key Trends for 2019

The U.S.-Iran Collision Course

The U.S.-led sanctions campaign will hurt Iran, but it won't lead to the collapse of the Iranian government even as the country's economy struggles. By increasing sanctions, the United States hopes to coerce Iran to return to the negotiating table. This will not work; while Iran is known for its political feuding, its parties will prioritize regime stability over their usual politicking. Moreover, sanctions have intensified popular unrest, which strengthens the political capital of conservatives and hard-liners against the administration of moderate President Hassan Rouhani. Furthermore, Iran's assertive intelligence and security apparatus will be empowered by the need to deepen Iran's defensive strategy in the face of the intensifying pressure. 

Iran will do what it can to retaliate against its aggressors, stopping just short of provoking a conventional military response — for now.

Tehran will be tempted to retaliate by harassing U.S. and allied vessels in the Persian Gulf, conducting ballistic missile tests or resuming its nuclear activities, but it will only do so when absolutely necessary. Instead, Tehran will more readily employ cyberwarfare, conduct covert operations, or use its key regional proxies to strike back at the United States, Israel and the Gulf states. Iran wants to avoid provoking a conventional military strike against itself, but as political support from the European Union weakens over 2019 and economic guarantees are replaced by political rhetoric, Tehran will be more willing to engage in sharper retaliatory measures. Learn more about Iran's strengths and vulnerabilities.

A chart showing the exchange rate of the Iranian rial over time

The United States Bolsters Regional Allies

In carrying out its regional strategy, which hinges on containing Iran, the United States will lean on two sets of allies with similarly aligned objectives. The first set includes allies most concerned about Iran and willing to embrace hard-hitting anti-Iranian policies: Israel, Saudi Arabia and the United Arab Emirates. These countries are rapidly overcoming decades of mistrust and conflict to better coordinate against Tehran in cyberspace, in enforcing sanctions, and even militarily

The United States will rely on its allies in the Persian Gulf to assist with Washington's Iran containment strategy.

The second set of allies, Kuwait, Oman and Qatar, is more loosely aligned and less willing to take a tough position on Iran. These countries can provide strategic, diplomatic and economic value to the United States in certain regional conflicts and crises. An improved alignment between them could reduce the intensity of the Qatar blockade, but the underlying conflict among members of the Gulf Cooperation Council will endure. Learn more about how these countries will attempt to demonstrate their strategic utility to the United States.

Spotlight on Saudi Arabia

Saudi Arabia will have to manage growing concerns over Crown Prince Mohammed bin Salman throughout 2019. In the wake of exiled Saudi journalist Jamal Khashoggi's murder, the crown prince's actions will come under increasing international scrutiny. Although he remains well entrenched within the Saudi monarchy, Crown Prince Mohammed's dominant position still depends on support from his father, King Salman, and quiet resistance will continue to build within the royal family. Some of Riyadh's key allies will limit military support and foreign direct investment to Saudi Arabia, but crucial relationships are unlikely to shift

The stain of the Khashoggi affair will linger on the House of Saud into 2019.

Riyadh will continue to advance its Vision 2030 goals over the coming year, easing austerity measures in response to positive economic signs — higher oil prices in 2018, the opportunity to make up for decreased Iranian oil exports, and a relatively successful non-oil revenue generation strategy. This means the kingdom can avoid making hard structural changes to the Saudi economy, especially the labor markets. Complaints over housing, salaries and quality of life will compel the state to use its fuller royal purse to douse grievances with cash. Read more about the troubles facing Saudi Arabia in the wake of the Khashoggi affair.

A graphic showing the family tree of a key Saudi faction

The Syrian Cauldron Could Spill Over  

In the closing stages of the Syrian civil war, five key powers — Turkey, Russia, Iran, the United States and Israel — are competing for influence and control. Moscow and Tehran firmly back Syrian President Bashar al Assad but differ not only in the levels of support they provide but also in their overall objectives. Russia has used the Syrian conflict to expand its footprint in the Middle East and will be protective of its gains and materiel, though Moscow has little desire for open conflict with Turkey, the United States or Israel. Iran, on the other hand, will be more aggressive in its support for Damascus, especially in opposition to Ankara and Washington. Tehran will also continue to build up its forces inside Syria as a deterrent to Israel and as a means to supply Hezbollah, its powerful ally in nearby Lebanon. Israel will attempt to foil Iran's plans but is intrinsically wary of sparking an unintended conflict with Russia. 

A map showing the Syria battlespace

Turkey and the United States remain opposed to Assad's rule, but despite being NATO allies, they will pursue their own agendas in Syria. The United States is focused on eradicating remnants of the Islamic State in the country, though Washington more broadly seeks to remove Iranian influence from Syria as part of its anti-Iran strategy. Challenging Iran in Syria creates tension between the United States and Russia — Moscow cannot and will not force out Iran. Despite efforts to deconflict, the possibility of a military incident involving U.S. and Russian assets is not beyond the realm of possibility

The possibility of a breakout conflict involving the major powers overseeing the Syrian conflict is conceivable in 2019.

Turkey, for its part, will maintain its focus on containing Kurdish forces in Syria. This is problematic for the United States, which uses the Kurdish People's Protection Units (YPG), a group Ankara sees as a terrorist organization, as an ally against the Islamic State and as a proxy against Iran. In Syria's northwest, Turkey's pledge to protect Idlib province could stretch Ankara's credibility as a local partner, especially given Damascus' stated goal of total reconquest. Idlib could well become a flashpoint among Turkey, Iran, Syrian loyalist forces and, more remotely, Russia. Given the opposing interests in Syria, the potential for accidental escalation or even a state-to-state confrontation in 2019 is higher than ever, though every power will take steps to avoid this. Learn more about the possibilities for state-to-state confrontation and what 2019 will hold for the Syrian conflict

Handling Turkey's Fragile Economy

The biggest challenge facing Turkey in 2019 will be its distressed economy. As well as managing record inflation, President Recep Tayyip Erdogan will have to contend with a privately held corporate debt bill roughly equal to a quarter of the country's gross domestic product — all while avoiding another lira crisis. Erdogan will be politically compelled to broaden his support base ahead of local elections in the spring, courting financially concerned Turks from across the electoral spectrum, some of whom have been turned off by the president's nationalist policies. Turkey's brittle economy also weakens Ankara's position when it comes to dealing with key partners in the West. The U.S. relationship with Turkey is increasingly fractious thanks in part to Ankara's growing ties with Russia and Washington's support for the YPG in Syria. 

President Recep Tayyip Erdogan will have his work cut out in 2019 to stabilize the Turkish economy.

Because of its vulnerability to U.S. economic pressure, Turkey will attempt to shore up foreign investment and maintain stable economic relations with Europe. However, Turkey's historically complex relationship with the European Union will complicate that effort. Beyond stabilizing its economic situation, Ankara will continue to pursue other core imperatives in 2019, including the containment of autonomous Kurdish movements in Turkey's former Ottoman domains. Ankara will exert whatever influence it can in northern Syria and continue military strikes against Kurdistan Workers' Party positions in northern Iraq. Learn more about Turkey's precarious economic position going into 2019.

A chart showing key Turkish economic indicators

Related Forecasts

These Stratfor analyses provide additional insights for the year ahead

Key Dates to Watch

  • January: The inaugural meeting of the Middle East Strategic Alliance (MESA) — dubbed the "Arab NATO" — could take place.
  • January: The heads of state of the African Union will hold a summit in Egypt.
  • Feb. 17-22: Financial Action Task Force (FATF) plenary meeting in Paris at which Iran's status will be discussed.
  • March: Local elections will be held in Turkey.
  • April: The presidential election in Algeria will be held.
  • August: Annual Iranian naval drills take place in the Strait of Hormuz.
  • November: Israeli parliamentary elections must be held by the end of the month.
  • Unknown Date: 2020 Iranian parliamentary elections will be announced.

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