The Baghdad conference itself isn't as important as what follows


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August 30, 2021

On Saturday, Iraq hosted the Baghdad Conference for Co-operation and Partnership. Between the pointlessly cynical and the wildly celebratory, many reactions thus far have been of guarded optimism – and with good reason: it is far too soon to know what, if any, the concrete outcomes of the conference might be. More importantly, the nature of its goals requires time to develop. Greater regional and economic co-operation is not achieved in a one-day event but, possibly, through the processes that might be launched thereafter.

The impulse behind the conference was a very ambitious one: to gather regional players around the table in Baghdad where, despite their cross-cutting rivalries and antagonisms, they would declare their support for Iraq and perhaps take a step towards greater regional co-operation. The self-evident logic underpinning the idea was that Iraqi stability helps strengthen regional stability and that a stable region means a stable Iraq.

In that spirit, Iraq hosted France, Jordan, Saudi Arabia, Kuwait, Iran, Turkey, Egypt, Qatar and the UAE in addition to the general secretaries of the Arab League, the Gulf Co-operation Council and the Organisation for Islamic Co-operation. The participants included four heads of state and three heads of government. Attending as observers were representatives of the G20, the EU and the UN.

That Iraq managed to bring these powers, with all their contradictions and competing interests, around the table in Baghdad is an achievement in and of itself. The optics – barring the Iranian representative’s intentional diplomatic faux pas – were undoubtedly positive for the Iraqi government, for Iraq and for anyone interested in regional stability. That being said, many are asking: so what? To what end? Will the conference change or achieve anything?

Leaders of all the countries who took part in the Baghdad conference. EPA
Leaders of all the countries who took part in the Baghdad conference. EPA

The simple answer is that it is too soon to be asking such questions. The conference was not supposed to bring about a new regional reality. It was meant to test the waters and to try to build on recent positive shifts in the politics of the region. It was a first step – and only a proposed one at that – towards greater regional dialogue and co-operation. Those anticipating a diplomatic climax were undoubtedly disappointed but the problem was not with the conference as much as it was with their expectations. Whether or not it achieves its stated goals depends on the extent of follow-up, commitment and buy-in that can be sustained over the coming months.

States do not gather at a conference and announce major diplomatic and strategic changes without lengthy and painstaking prior negotiations. The Baghdad Pact, for example, was years in the making before its formation in 1955. In that sense, the Baghdad Conference somewhat reverses the order: it sought to convince the participants to begin the process through which such negotiations can take place. The end goal would be greater dialogue towards more regional de-escalation, increased co-operation and economic partnership and integration.

Leaving the medium-to-long-term potential of the conference aside, there was an immediate benefit on the day. Besides the positive symbolism of the gathering, the conference facilitated a series of bilateral side-meetings between countries who until recently had often been at odds with each other. The UAE and Qatar, the UAE and Iran, Egypt and Qatar, Egypt and Iran and others. Even if the long-term goal of greater regional co-operation remains out of reach, the value of periodically holding such conferences and encouraging dialogue between competing powers was evident in these side-meetings.

A Syrian man walking next to damaged buildings following regime air strikes in the Syrian rebel-held town of Douma in 2018. AFP
A Syrian man walking next to damaged buildings following regime air strikes in the Syrian rebel-held town of Douma in 2018. AFP

There has been a push in recent years towards regional de-escalation, and the aforementioned side-meetings were of course a product of these shifts and not of the conference itself. Yet, such gatherings provide a forum that can give expression to positive diplomatic developments and lend them added momentum. Indeed, one of the aspirations of the organisers was for the Baghdad Conference to be an annual event hosted rotationally amongst the participants. In time, this may yield more concrete frameworks of co-operation and integration; alternatively, if the necessary commitment is found to be lacking, it could end up being a redundant annual meeting much like the Arab League summits. It all depends on the seriousness, or lack of it, that accompanies the lofty sentiments voiced at the podium.

Problems are there to be managed and it is through such frameworks that contentious issues can be addressed

Understandably, the Middle East’s recent political history does not inspire confidence. Vested interests, ideological dispositions and the tendency towards zero-sum calculations have repeatedly distorted regional dynamics in the Middle East and foreign policy towards it. This may present the region with some unique challenges but it is clearly a mistake to assume that its peoples must resign themselves to a Hobbesian struggle for dominance amongst the region’s key powers.

It is natural for states to compete. Contentious issues are likewise a natural part of international relations. The EU and the Association of South-East Asian Nations are not utopian examples of diplomatic harmony: they are frameworks for co-operation, dialogue and partnership. Problems are there to be managed and it is through such frameworks that contentious issues can be addressed to the mutual satisfaction of all concerned. It may be unrealistic to imagine a Middle Eastern version of the EU but it is not unreasonable to push for greater integration and co-operation to foster better communication, more predictability and a greater degree of mutual understanding amongst competitors.

The joint statement issued at the end of the conference mentioned the establishment of a follow-up committees comprised of the foreign ministers of the participating countries. These committees are supposed to meet regularly to discuss strategic economic and investment projects proposed by Iraq and to prepare for future regional conferences. If the follow-up committees fail to follow up, then Saturday’s conference would have been a one-off, feel-good diplomatic event – not without value but neither with any meaningful substance. In other words, more politics and less diplomacy. Having commendably succeeded in holding the meeting, the challenge now confronting Iraq and the participant states is to build on whatever goodwill was engendered at the conference to turn it from an event into a process with tangible positive outcomes.

Fanar Haddad was a senior adviser on international affairs to the Prime Minister of Iraq and was on the organising committee of the Baghdad Conference for Co-operation and Partnership

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Will the pound fall to parity with the dollar?

The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.

Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.

New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.

“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.

The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.

The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.

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Updated: August 31, 2021, 11:27 AM