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GSN Risk Grade: D4↓ Recent developments- Presidential compromise: Talks between the main Kurdish political parties appear to have led to a breakthrough on an agreed candidate for the federal presidency – which has divided them since the October general election.

GSN Risk Grade: D4 Recent developments- Kadhimi to remain? A group of Iran-backed Shia parties known as the Co-ordination Framework may back Prime Minister Mustafa Al-Kadhimi for another term of office, according to local media reports.

Bahrain’s latest GSN Risk Management Report remains unchanged at C3 with the political outlook showing positive momentum while the economic and financial outlook is negative. GCC allies led by Saudi Arabia are pressing harder for economic reforms. The oil price hike may generate some extra funds and but difficult deficit reduction measures are needed. King Hamad Bin Isa Al-Khalifa appears to be concentrating more power in the hands of Crown Prince Salman Bin Hamad Al-Khalifa, but in an opaque public sphere there is also speculation about his standing compared to that of his brother Sheikh Nasser. Majority Shia community concerns over social disadvantage and human rights abuses remain a big issue that gains only a limited hearing from the authorities and much of the media.

Iraqi Kurdistan’s GSN Risk Management Report grade of D4 with a negative outlook for economic and financial risk remains unchanged. The Patriotic Union of Kurdistan (PUK) and Kurdistan Democratic Party (KDP) continue to negotiate over a possible joint candidate for the federal presidency, held since October 2018 by PUK nominee Barham Salih. Not date has been set for the fifth Kurdistan Parliament election, but preparations have begun for a poll in 2022.  The Kurdistan Regional Government earned net revenues of $1.7bn in 2021 from crude exports via the Ceyhan terminal in Turkey but some receipts are stuck in Lebanese banks due to currency restrictions. Local economic, security and political conditions have resulted in large outward waves of migration towards Europe.

Political rapprochement between GCC rivals, along with rich pickings from high oil prices and a successful coronavirus vaccine rollout meant the past year has been a relatively benign one for those outside the region’s conflict zones, according to GSN’s annual survey of developments across the region. In this special issue, we present refreshed Risk Management Reports for each of the nine countries in the region (as well as the Kurdistan region and individual UAE emirates) and some big picture analysis to complement GSN’s usual detailed focus on the minutiae of political and business life.

Yemen remains on GSN's worst grades for both political and financial risk in this latest Risk Management Report. The United Nations is continuing peace efforts, led by special envoy Hans Grundberg, but any lasting peace remains elusive, with the potential for wider regional conflict to flare up again and factions entrenched in their fiefs. In January, the UAE condemned the seizure by Houthi forces of  a UAE-flagged ship in the Red Sea while it was en route from Socotra to the Saudi port of Jizan as an act of piracy. The Paris Club group of international creditors has extended the debt service suspension initiative (DSSI) programme, covering debt due up to end 2021.

Political, financial and economic risk grades for the UAE Federation stay unaltered at the highest level in GSN's latest Risk Management Report, reflecting the overall stability of the polity. In recent developments, Abu Dhabi, in the role of ‘Little Sparta’, has driven the UAE’s activist regional policy from East Africa to the Yemeni island of Socotra while retrenching in Libya and other conflict zones. Rapprochement with Israel has continued and relations with Qatar remain uneasy, despite the Gulf Co-operation Council ending the 40-month boycott.

GSN maintains Qatar’s B1 risk grade with a positive momentum for political risk in its most recent Risk Management Report. It still has many critics, but Qatar is finalising plans for the Fifa World Cup. The Arab Cup, won by Algeria in December, provided a successful test run of facilities. An expensive PR machine will argue that the Al-Thani-dominated emirate has considerably improved workers’ rights and created a more inclusive political system. Qatar’s global standing benefited from its central role in the Afghanistan drama

Both Abu Dhabi and Dubai retain GSN’s highest grade for political risk and the former also for economic and financial risk in this new Risk Management Report. Dubai’s economic risk rating is unchanged but is a notch lower than its neighbour’s with negative momentum. Recent developments include the largest budget in the Ajman’s history evidence of an economic recovery in Dubai, Sharjah government expectations of a significant increase in revenues and the signing of a contract initiating the Al-Sinniyah island development in Umm Al-Quwain.

GSN has made no change to Saudi Arabia’s B2 grade with downward momentum for both political and financial/economic risks in its latest Risk Management Report. Long referred to as the kingdom’s de facto ruler, Crown Prince Mohammed Bin Salman (MBS) is more fully in charge, while his father, King Salman Bin Abdelaziz, the ruling family’s long-standing disciplinarian who until recently had remained a real force, now seems cloistered in Neom. Identification with the crown prince is the key for ambitious Saudis. He has put more focus on projecting Saudi soft power abroad and wooing key stakeholders at home. The outcome of reforms, which are often designed by international consultants, is impossible to gauge, but their success or failure will define the MBS years.

Iran has not changed its D5 risk grade with negative momentum for political risk in its latest GSN Risk Management Report. Talks to revive the 2015 JCPOA nuclear deal between Iran and world powers continued behind closed doors in early 2022, with Tehran insisting that all sanctions are removed. President Ebrahim Raisi increased spending plans in his first budget based on expectations of economic growth. Further talks with Saudi Arabia are expected.

In GSN's most recent Risk Management Report, Iraq's D4 risk grade with negative momentum for the economic and financial outlook  remains unchanged as politicians in Baghdad continue to argue over the formation of a new government. Political violence and the influence of Iran-backed militias remains a problem. The heavily oil-dependent economy performed better in 2021 thanks to increased global prices.

GSN Risk Grade: D↓4 Recent developments Election results: The Kurdish Democratic Party (KDP) cemented its position as the main Kurdish political force at the 10 October general election, winning 33 seats, up from 25 in 2018.

Arab/Islamic and other financial institutions Low spreads for Apicorp bond: The Dammam-based Arab Petroleum Investments Corporation (Apicorp) in February raised a $750m bond, which despite record low spreads and yield was 2.5-times over-subscribed.

Regional institutions and developments Arab League: The UAE has called for Syria to be brought back into the League of Arab  States, a decade on from the start of the civil war which has ravaged the country and led to the Assad regime’s suspension from the pan-Arab body in November 2011.