Far from immune to the global crisis – but making concerted strides towards immunity in some instances – the Middle East and North Africa region (MENA) has fared similarly to the rest of the world over the last year. That is to say that the universal impact of the pandemic has been felt across MENA, although the paths that the various countries have taken have been disparate.
Middle East
Early lockdowns in several countries helped to contain the number of coronavirus cases, and a number of success stories emerged from the region with Israel and the United Arab Emirates (UAE) – numbers one and two, respectively – frontrunners in rolling out their vaccine programmes. While distinct, both countries have adopted an agile approach to sourcing and distributing the vaccine.
Reportedly paying more than twice the amount for the Pfizer/BioNTech vaccine than certain EU countries, Israel has been ahead of the chasing pack in inoculating its population (though the government, which has a national digital public health record, ceded the data of its citizens to Pfizer in exchange for ten million vaccines). In another first, Israel will be offering booster shots to adults with pre-existing health conditions in an effort to combat the Delta variant, which is responsible for the recent surge in the number of cases. Israel, which had dispensed with all non-pharmaceutical interventions in early summer, has now reinstated the mandatory wearing of masks on public transport and for indoor gatherings.
Early lockdowns in several countries helped to contain the number of coronavirus cases, and Israel and the UAE – numbers one and two, respectively – were frontrunners in rolling out their vaccine programmes.
The UAE was the first country to approve the Sinopharm vaccine back in early December, also forming an agreement with China to manufacture the vaccines in the Emirates; Gulf Pharmaceutical Industries started producing the vaccines in April. Despite this, the UAE remains on the UK government’s list of red countries where it was placed back in January 2021 and, in early July, Saudi Arabia also suspended flights to and from the country in response to a surge in the Delta variant.
Dubai remains the legal centre in the Middle East, home to many international firms as well as key regional players. While there have been few new international entrants to the Dubai market, several firms have bolstered their on-the-ground offerings in recent months. However, there has been a general trend towards exiting the market, with the departures of Winston & Strawn and offshore law firm Conyers from the UAE in recent years examples of this. The legal market in the UAE continues to be well known for its hard-hat approach, with construction and infrastructure expertise in demand across the Middle East region.
Away from the coronavirus, Saudi Arabia’s Vision 2030 continues apace. The programme, which was launched in 2016, has the intended objective of diversifying the petrostate’s economy away from an overreliance on oil and stimulating growth in other sectors. So far, it has been the high-profile entertainment and sporting events – ranging from boxing matches to F1 races – that the country has hosted that have generated international headlines. However, it is the Kingdom’s ambitious infrastructure projects that will arguably prove the most fertile ground for lawyers in the region. Vision 2030, pioneered by Crown Prince Mohammed bin Salman, has three giga-projects at its core: Neom, a model metropolis intended to rival Dubai, which will be powered on green energy; entertainment megacomplex Qiddiya; and the Red Sea Project, a luxury tourism destination that is expected to be a special economic zone. All are already under construction and have created a considerable work stream for law firms and construction companies alike.
In addition to its planned mega projects, Saudi Arabia is also bulking up its ports market share. In early 2021, the Red Sea Gateway Terminal, the largest terminal operator in Saudi Arabia, sold separate 20% interests to China’s Cosco Shipping Ports and Saudi Arabia’s Public Investment Fund. The company intends to use this investment to shore up its expansion plans on both an international and domestic scale, with a plan to invest in three international ports in the next five years.
The company has also stated that it will be focusing on ports of strategic importance, targeting those that are essential to imports including food.
Despite the excitement around its various mega projects, Saudi Arabia remains best known for the strength of its oil reserves and its flagship brand, Saudi Aramco, the state-owned petroleum and natural gas company. Saudi Aramco continues to occupy the number one spot in Forbes’ Top 100 list of companies in the Middle East, a list that includes over a third of Saudi Arabian companies. Its stock, like that of many oil companies, fell sharply in 2020 as the need for oil dropped internationally and global supply chains were disrupted. As a result of falling oil prices Saudi Arabia, along with other members of the Organization of the Petroleum Exporting Countries (OPEC), agreed to cut oil production, with global production reduced by between 9.7 million barrels per day and 5.8 million barrels per day at various points between May 2020 and April 2021.
In Saudi Arabia, Vision 2030 has three giga-projects at its core: Neom, Qiddiya, and the Red Sea Project. All are already under construction and have created a considerable work stream for law firms.
However, tensions between fellow OPEC members and traditionally close allies Saudi Arabia and the UAE emerged in late 2020 and continued to rumble on, coming to a head in summer 2021 with the UAE refusing to back Saudi Arabia and Russia’s plan to maintain cuts to oil production levels to the end of 2022. The UAE has fared particularly badly as a result of the cuts, with Saudi Arabia emerging as a winner and further cementing its position at the top of the tree in the oil stakes. The impasse turned out to be short-lived, though, with reports emerging in July that a compromise had been agreed, raising the UAE’s oil production to a level that it found palatable. Several observers have speculated that this will lead to a further fracturing in the relationship between states that are both allies and rivals in the Middle East – something that is already evident in the UAE’s burgeoning friendship with Israel, with the UAE recently becoming the first Gulf country to open an embassy in Tel Aviv following the Abraham Accords peace agreement in summer 2020. By contrast, Saudi Arabia and Israel do not have an established diplomatic relationship in place.
In a positive move for the region, Saudi Arabia and the UAE ended their embargo against Qatar in early 2021. Qatar, which will host the 2022 FIFA World Cup, has its own roadmap for growth, the Qatar National Vision 2030. Less ambitious in scope than Saudi Arabia’s seismic Vision 2030, the National Vision also aims to move the country away from a reliance on its oil reserves to instead focus on economic, social and environmental growth. International law firms operating in the country tend to have a strong projects bent and expertise acting for state-owned enterprises. In a one-in, one-out move, Crowell & Moring opened in Doha in the fourth quarter of 2020, taking on Squire Patton Boggs’ office, inheriting a team that has substantial infrastructure experience.
Restrictions remain in place in Saudi Arabia barring international law firms from fully operating in the country. Instead, they function in association models with local law firms. A key deal in the offing relating to Saudi Arabia is the intended sale of its gas pipeline, a much-hyped transaction that should attract a posse of high-end lawyers.
Unsurprisingly, the UAE and Saudi Arabia remain the key markets for M&A deals across the region. The headline deal in 2020, although more than a year ago now, was Abu Dhabi National Energy Company’s merger with Abu Dhabi Power Corporation, which saw the transfer of power and water generation, transmission and distribution assets to the former company. The combined utility has assets worth $54bn.
North Africa
In contrast to rapid vaccine rollout programmes in some countries in the Middle East, the situation is markedly different in North Africa. According to information provided by Reuters as of mid-July, Morocco is out in front with 28% of its population estimated to have had the vaccine, Tunisia at 9%, Algeria at 3% and Egypt at just 1%.
In a positive move for the region, Saudi Arabia and the UAE ended their embargo against Qatar in early 2021. Qatar, which will host the 2022 FIFA World Cup, has its own roadmap for growth, the Qatar National Vision 2030.
Morocco’s automotive industry is also showing encouraging signs, with Peugeot joining Renault and Dacia in starting production in the country in 2019, setting up a plant in Kenitra. The country has the continent’s largest passenger car industry, with automotive Morocco’s largest export sector; reports place the industry’s share of GDP between 16% and 20%. A number of major automotive suppliers are also present in Morocco, while China’s BYD also recently opened a factory in the country. The EU, however, remains Morocco’s largest trade partner, in large part due to its proximity to Spain and connections to France, and frequently serves as a gateway into the wider European economic region, with the automotive industry contributing significantly to goods imported by the EU. Morocco’s location has enabled it to function as a base for international law firms looking to do business in the country and the wider North African region, with the country serving as a bridge between Europe and North Africa.
Firms in Morocco are predominantly based in Casablanca and international firms include Gide Cuatrecasas Casablanca – a unique Moroccan collaboration between elite Spanish and French firms Cuatrecasas and Gide Loyrette Nouel; DLA Piper; Clifford Chance; Baker McKenzie Maroc; and Norton Rose Fulbright. Baker McKenzie Maroc’s team recently acted for Suez in its attempts to avoid a hostile takeover by Veolia, although a merger agreement between the two companies was agreed in spring 2021.
In a situation far from unique in 2020, tourism to Egypt dried up almost overnight. Despite this, according to data provided by the IMF, Egypt was one of the few emerging markets to record positive growth in 2020.
Restrictions imposed by governments globally in response to the pandemic significantly impacted Egypt’s tourism trade, a key economic driver in a county which is the second-most popular tourist destination in Africa. In a situation far from unique in 2020, tourism to the country dried up almost overnight. Despite this, according to data provided by the International Monetary Fund (IMF), Egypt was one of the few emerging markets to record positive growth in 2020. Government measures, including the suspension of tax payments, monetary support to those businesses most impacted by the pandemic and a reduction in policy interest rates, together with IMF support, helped to bolster the country’s economy. Further growth is forecast for 2021.
Despite divergent approaches and vastly different geopolitical and economic climates, there is some reason to be hopeful for countries across the Middle East and North Africa. Fuelled by rising oil prices, Saudi Arabia, in particular, has strong reason to look forward to the year ahead. While Qatar eagerly awaits the kick off of next year’s World Cup to showcase what is set to be the largest global sporting event the region has ever held. LB