Paul Salem is Vice President for International Engagement at the Middle East Institute in Washington DC
November 04, 2022
Americans are set to go to the polls on November 8. At stake at the federal level is control of the House of Representatives and the Senate, in addition to outcomes affecting legislatures, governorships and other positions at the state level.
According to latest estimates, Republicans have a high chance of gaining a majority in the House, and a 50-50 chance of gaining control of the senate. American voters are most focused on domestic issues, such as high inflation, gas prices, crime, illegal immigration, the question of abortion and a looming recession. Although the Russian war in Ukraine occupies a fair amount of media space, foreign policy issues in general are not playing a significant role in voter decision making.
Foreign policy is generally set by the president and the executive branch, but the bicameral Congress still casts a long shadow on foreign policy. The House controls spending, so foreign policy decisions that require spending – on things like aid to Ukraine or international Covid-19 relief – require house approval. In the carrots and sticks that the US might use in foreign policy, the White House can generally decide on the sticks, but the carrots will require congressional approval.
The Senate has a say in confirming, or blocking, White House nominations to ambassadorial and other high positions of government; and it can use this privilege to influence the executive branch. Congress can also object to or delay foreign arms sales, which can influence White House political calculations, but actually blocking an arms sale requires a very difficult veto-proof majority vote in both houses.
It’s important to note that, two years before the next presidential election in 2024, we can expect that whatever majority the Republicans gain, they will use it to harass, obstruct and weaken the Democratic administration, in order to give the next Republican presidential candidate a wider path to the White House. So expect President Joe Biden’s administration to be more distracted and tied down by congressional investigations and obstructions if the opposing party gains control of either chamber of Congress.
America's two major parties each have very different views towards Israel's incoming prime minister, Benjamin Netanyahu. AFP
Expect Biden’s administration to be more distracted and tied down by obstructions if the opposing party gains control
On the foreign policy issues themselves, however, it is noteworthy that despite fierce and deep divisions on domestic policy, Republicans and Democrats are significantly aligned on foreign policy. Both parties have favoured a tough stance against Russia and in support of Ukraine. It is true that Republican positions are divided between hawkish positions that favour more effective military support of Ukraine than the Democratic administration has offered so far, while a minority in the party are less hostile to Russia and beginning to sour on large scale economic and military support for Ukraine. In a time of potential recession, a Republican Congress might balk at sending billions of dollars to Ukraine.
Both parties have taken a tough stance on China and a Republican-controlled congress would likely continue in that vein.
In the Middle East also, the positions of the two parties are no longer far apart. A case in point is Iran: the Democratic administration has almost given up on a return to the nuclear deal with Iran, and the Republicans have opposed a return to the deal all along. A Republican Congress would make a return to the deal even more unlikely.
On relations with the Gulf, both parties understand the economic and strategic importance of relations with Saudi Arabia, the UAE and their neighbours, but are equally upset by the recent OPEC+ decision to boost oil production as well as the continued warm relations between the Gulf and Russia, while Washington sees Vladimir Putin’s Russia as the West’s new mortal enemy. The hosting of Chinese President Xi Jinping in three upcoming summits in Saudi Arabia will also raise concerns in Washington. US-Saudi relations are longstanding and deep, but the tension in relations is real, and the midterm elections will not ease it. The idea that the crisis is only with the Democratic party has been surpassed by events; there are deep wells of concern within the Republican party as well. Vigorous diplomacy on both sides is needed to overcome the current tension, build on common interests and avoid a deeper split.
Both American parties also share broad support for Israel and for the recent Abraham Accords that were concluded toward the end of former president Donald Trump’s term. The next big step in Washington’s eyes would be a potential breakthrough between Israel and Saudi Arabia. But with Israeli politics lurching to the extreme right, and troubled relations between Mr Biden and the Saudi Crown Prince, a breakthrough might have to await the next occupant of the White House in 2025.
So the midterm elections in the US will not have a dramatic impact on current US-Middle East relations. The return, or not, to a nuclear deal with Iran will remain – as it currently is – in Iran’s court. But the protest movement in Iran, and allegations of Iran sending of drones to aid Russia’s war in Ukraine make a return to a deal even less likely. Instead, we might be facing a military escalation within the region as reports surface of potentially imminent attacks on Saudi Arabia.
The uneasiness in US-Saudi relations will likely continue for some time, at least until the Russian war in Ukraine eases or ends, and/or until energy markets ease again. But with escalating Russian bombing campaigns in Ukraine, and Europe facing the energy crisis of an oncoming winter, tensions are likely to get worse before they get better.
The world is indeed going through a transformative set of shocks and challenges. The US and Gulf countries have some common, and some divergent, interests. It is important for both sides to maintain the win-win aspects of their many economic, political, security and cultural relations, while managing the natural strains that develop as a result of some divergent interests. The midterm elections will not change the fundamentals of the relationship, but are worth watching closely as new leaders and new power balances begin to take shape in Washington. But in foreign policy it is still the presidential elections – coming up next in 2024 – that are the elections to watch.
The flights
Fly Etihad or Emirates from the UAE to Moscow from 2,763 return per person return including taxes. Where to stay
Trips on the Golden Eagle Trans-Siberian cost from US$16,995 (Dh62,414) per person, based on two sharing.
Sheffield Wednesday v Manchester City
Reading/Cardiff City v Sheffield United
Chelsea v Shrewsbury Town/Liverpool
West Bromwich Albion v Newcastle United/Oxford United
Leicester City v Coventry City/Birmingham City
Northampton Town/Derby County v Manchester United
Southampton/Tottenham Hotspur v Norwich City
Portsmouth v Arsenal
If you’re going to go grey, a great style, well-cared for hair (in a sleek, classy style, like a bob), and a young spirit and attitude go a long way, says Maria Dowling, founder of the Maria Dowling Salon in Dubai.
It’s easier to go grey from a lighter colour, so you may want to do that first. And this is the time to try a shorter style, she advises. Then a stylist can introduce highlights, start lightening up the roots, and let it fade out. Once it’s entirely grey, a purple shampoo will prevent yellowing.
“Get professional help – there’s no other way to go around it,” she says. “And don’t just let it grow out because that looks really bad. Put effort into it: properly condition, straighten, get regular trims, make sure it’s glossy.”
Founders: Abdulmajeed Alsukhan, Turki Bin Zarah and Abdulmohsen Albabtain.
Based: Riyadh
Offices: UAE, Vietnam and Germany
Founded: September, 2020
Number of employees: 70
Sector: FinTech, online payment solutions
Funding to date: $116m in two funding rounds
Investors: Checkout.com, Impact46, Vision Ventures, Wealth Well, Seedra, Khwarizmi, Hala Ventures, Nama Ventures and family offices
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
COMPANY PROFILE
Name: Qyubic Started: October 2023 Founder: Namrata Raina Based: Dubai Sector: E-commerce Current number of staff: 10 Investment stage: Pre-seed Initial investment: Undisclosed
How Tesla’s price correction has hit fund managers
Investing in disruptive technology can be a bumpy ride, as investors in Tesla were reminded on Friday, when its stock dropped 7.5 per cent in early trading to $575.
It recovered slightly but still ended the week 15 per cent lower and is down a third from its all-time high of $883 on January 26. The electric car maker’s market cap fell from $834 billion to about $567bn in that time, a drop of an astonishing $267bn, and a blow for those who bought Tesla stock late.
The collapse also hit fund managers that have gone big on Tesla, notably the UK-based Scottish Mortgage Investment Trust and Cathie Wood’s ARK Innovation ETF.
Tesla is the top holding in both funds, making up a hefty 10 per cent of total assets under management. Both funds have fallen by a quarter in the past month.
Matt Weller, global head of market research at GAIN Capital, recently warned that Tesla founder Elon Musk had “flown a bit too close to the sun”, after getting carried away by investing $1.5bn of the company’s money in Bitcoin.
He also predicted Tesla’s sales could struggle as traditional auto manufacturers ramp up electric car production, destroying its first mover advantage.
AJ Bell’s Russ Mould warns that many investors buy tech stocks when earnings forecasts are rising, almost regardless of valuation. “When it works, it really works. But when it goes wrong, elevated valuations leave little or no downside protection.”
A Tesla correction was probably baked in after last year’s astonishing share price surge, and many investors will see this as an opportunity to load up at a reduced price.
Dramatic swings are to be expected when investing in disruptive technology, as Ms Wood at ARK makes clear.
Every week, she sends subscribers a commentary listing “stocks in our strategies that have appreciated or dropped more than 15 per cent in a day” during the week.
Her latest commentary, issued on Friday, showed seven stocks displaying extreme volatility, led by ExOne, a leader in binder jetting 3D printing technology. It jumped 24 per cent, boosted by news that fellow 3D printing specialist Stratasys had beaten fourth-quarter revenues and earnings expectations, seen as good news for the sector.
By contrast, computational drug and material discovery company Schrödinger fell 27 per cent after quarterly and full-year results showed its core software sales and drug development pipeline slowing.
Despite that setback, Ms Wood remains positive, arguing that its “medicinal chemistry platform offers a powerful and unique view into chemical space”.
In her weekly video view, she remains bullish, stating that: “We are on the right side of change, and disruptive innovation is going to deliver exponential growth trajectories for many of our companies, in fact, most of them.”
Ms Wood remains committed to Tesla as she expects global electric car sales to compound at an average annual rate of 82 per cent for the next five years.
She said these are so “enormous that some people find them unbelievable”, and argues that this scepticism, especially among institutional investors, “festers” and creates a great opportunity for ARK.
Only you can decide whether you are a believer or a festering sceptic. If it’s the former, then buckle up.
Six large-scale objects on show
Concrete wall and windows from the now demolished Robin Hood Gardens housing estate in Poplar
The 17th Century Agra Colonnade, from the bathhouse of the fort of Agra in India
A stagecloth for The Ballet Russes that is 10m high – the largest Picasso in the world
Frank Lloyd Wright’s 1930s Kaufmann Office
A full-scale Frankfurt Kitchen designed by Margarete Schütte-Lihotzky, which transformed kitchen design in the 20th century