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GSN Risk Grade – B↑1 Overview Politics: Al-Thanis have ruled since the mid-19th century, reinforced by British recognition of their right to govern. 25 years after independence in 1971, the peninsula gained hugely in power, confidence and wealth with ‘Father Emir’ Sheikh Hamad Bin Khalifa Al-Thani’s drive to develop gas reserves.

GSN Risk Grade – B↓3 Overview Politics: Sultan Haitham Bin Tariq Bin Taimur Al-Said was named ruler in January 2020, succeeding the late Qaboos Bin Said Al-Said as the 15th ruler of the Al-Busaidi dynasty (founded in 1750). Qaboos was a monumental figure who, having deposed his father in 1970, had led Oman since 1970. The succession process was quick and smooth, orchestrated via the Royal Family Council. Haitham has moved cautiously in the opening period of his rule, broadly following his predecessor’s domestic and regional policies.

The UAE’s non-oil economy contracted by 6.2% in 2019, its first fall since 2011, as the coronavirus pandemic and lower oil prices hit activity, according to Ministry of Economy data. Overall GDP fell by 6.1%. Among the worst-affected sectors, hotels and restaurants contracted by 24% due to the lockdowns and a lack of tourists.

GSN Risk Grade – D↓4 Overview Politics: Disagreements between the autonomous Kurdistan Region of Iraq (KRI) and the federal Iraqi government in Baghdad have been a source of major tensions. The 2005 constitution gave the KRI an identity distinct from Iraq, as a federal entity recognised by Iraq and the United Nations; the 2010 Erbil agreement outlined how power would be shared.

GSN Risk Grade – D↓4 Overview Politics: Iraq attained its independence as a kingdom in 1932; it became a republic in 1958. Saddam Hussein’s dictatorial presidency was marked by conflict, including the 1980-88 war with Iran, the 1991 Gulf war and the US-led occupation in 2003, which removed the Baathist regime.

The economy is expected to return to pre-Covid-19 levels by next year, according to a Fitch Ratings update published on 12 April. The agency affirmed the country’s long-term foreign currency issuer default rating at B+ with a stable outlook. It said real gross domestic product (GDP) had contracted by 5.8% last year.

GSN Risk Grade – C↑3↓ Overview Politics: The Al-Khalifas came to power in 1783, driving the Persian empire from the archipelago. The British empire entered into an alliance with the Al-Khalifa 200 years ago; only in 1971 did Bahrain declare independence.

Sources working closely with the government say Muscat may be able to avoid having to ask its neighbours for another bailout. There had been widespread speculation that the large fiscal deficit and shortage of reserves would force Oman to approach richer GCC countries to ask for further assistance in the short to medium term; such subventions would have come with a political price.

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.

Governments in the Gulf and across the wider region have maintained their defence spending despite the pressures brought on by low oil revenues and the year-long Covid-19 crisis. This may not be sustainable in the medium-term, but the International Institute for Strategic Studies (IISS) expects defence spending this year to hold up relatively well, in part because defence spending has historically been a priority area.

The International Monetary Fund’s Article IV reviews of Oman and Bahrain, published on 12 and 14 February respectively (following ‘virtual missions’), give further detail of how the Gulf Co-operation Council’s weakest economies have fared over the past year. Oman’s GDP fell by 6.4% last year, which was better than a previous IMF estimate of a 10% slump. Bahrain’s economy shrank by 5.4%, as non-oil GDP fell by 7%. The IMF praised both countries’ response to the Covid-19 pandemic, including the restrictions they imposed on travel and businesses, and their additional expenditure on healthcare and social support.

Prime minister Sheikh Sabah Khalid Al-Hamad Al-Sabah appears to have no real plan for passing a new debt law through the National Assembly, despite another large deficit forecast in the 2021/22 budget, announced on 25 January, of KD12.1bn ($40bn). This is based on an average oil price of $45/bbl. Kuwait needs around $90/bbl to balance its budget. The Central Bank of Kuwait continues to reduce the value of the dinar as a way to fix its deteriorating balance of payments issues; the currency has lost 5% of its value against the dollar since March 2020.

Risk Management Report – GSN Risk Grade – D↓4↓ Overview Politics: Sultan Haitham Bin Tariq Bin Taimur Al-Said was named ruler in January 2020, succeeding the late Qaboos Bin Said Al-Said as the 15th ruler of the Al-Busaidi dynasty (founded in 1750).

Risk Management Report – GSN Risk Grade – B↓2 Overview Politics: Governed by the Al-Sabah family since the 18th century, Kuwait gained independence from Britain in 1961, with a constitution confirming the hereditary monarchy but giving significant powers to an independent judiciary and elected assembly.

Risk Management Report – GSN Risk Grade – D↓4↓ Overview Politics: Disagreements between the autonomous Kurdistan Region of Iraq (KRI) and the federal Iraqi government in Baghdad have been a source of major tensions. The 2005 constitution gave the KRI an identity distinct from Iraq, as a federal entity recognised by Iraq and the United Nations; the 2010 Erbil agreement outlined how power would be shared. The Kurdistan Regional Government (KRG) has long protested these agreements’ lack of implementation.