Carnegie scholars assess the Middle East in the year ahead, including potential game changers that could have a big impact for the future of the region.

Joseph Bahout | Is Lebanon Running Out of Luck?

Lebanon has a history of disappointing its detractors. In recent years, every end-of-year forecast for the country has been deeply pessimistic, due to the destabilizing impact of the Syrian civil war next door, but the Lebanese have shown a quite miraculous and remarkable resilience. This year could well be another example, but the signs of alarm are multiplying.

With no end in sight to Syria’s war, the refugee flow is likely to rise, or at best, remain constant. For Lebanon, this is deeply distressing. Nearly one out of three inhabitants is a displaced Syrian today, most of them living in extremely dire conditions and in regions where the proximity to an increasingly hostile Lebanese population increases the risk of lethal friction by the day. Hopes for a pledge by Lebanon’s bickering political and sectarian factions not to instrumentalize this time bomb have proven to be wishful thinking. For the moment, the refugee issue remains a humanitarian and socioeconomic burden, but if current trends continue it will inevitably transform into a political and security challenge.

A second alarming indicator is the widening political vacuum in the country’s institutional edifice. The presidency is vacant, the parliament has extended its own mandate, and the cabinet is barely functional, almost unable to decide on more than day-to-day issues. To this is added challenges to the office of chief to the armed forces and expected extensions to the mandates of several other security and intelligence heads.

One way of coping with such stresses could be to intensify dialogue between Lebanon’s contending forces and figures. Such talks, while not always effective at solving underlying problems, have helped defuse conflict and provided a minimal safety net for the country in the past. But today, the Syrian and regional power struggles have raised the stakes in Lebanon high enough to threaten to sweep away all such conflict management mechanisms and put the country’s political forces on a collision course again.

Since 2005, Lebanon has turned “muddling through” into an art of governance. However, the perpetual balancing act that the Lebanese are now so used to—and to which they have accustomed the world—is becoming increasingly perilous and difficult. Lebanon has escaped a breakdown so far, through perseverance and a bit of good luck, but from now on that might not be enough to keep the country out of the abyss.

Nathan J. Brown | The Road Ahead in Palestine

Nathan J. Brown Brown, a professor of political science and international affairs at George Washington University, is a distinguished scholar and author of six well-received books on Arab politics.

In Palestinian politics over the coming year, there are several developments that seasoned observers may warn that might be unexpected but are very disruptive. However on closer look, they turn out to be neither unexpected nor necessarily disruptive. While much international attention has been focused on a diplomatic process between Palestinian and Israeli leaders and the possibility of a negotiated solution to the conflict between the two societies, those with their eyes on developments on the ground have focused on a series of less happy but likelier possibilities. If those occur over the coming year, they will disappoint many but will not be true surprises. And current realities are so deeply entrenched that it may be that even the most seemingly disruptive events cannot affect them.

One possibility is a governance crisis in the Palestinian Authority (PA), perhaps arising over a succession problem—President Mahmoud Abbas will turn 80 in the coming year and no clear procedures exist for replacing him— or perhaps a more severe collapse, a possibility increasingly discussed among Palestinians. Yet the Palestinian leadership in Ramallah seems increasingly irrelevant to most of those it (incompletely) governs with each passing year; a crisis at the top might affect daily life far less than what might be expected, with various bureaucratic and social service structures soldiering on in a headless manner since they serve so many interests.

A second possibility would be an eruption of fighting in Gaza. The last conflict between Israel and Hamas was enormously destructive of lives and property among the unfortunate population of Gaza, but it left the political situation fundamentally unchanged. A new round of fighting is increasingly discussed—but it is not clear that it would have any practical result other than more destruction and further rounds of donor conferences.

A third possibility would be a revival of Fatah-Hamas reconciliation. Like the fighting in Gaza, the periodic bouts of Palestinian brotherhood seem to affect little on the ground. The current state of enmity between the organizations may give way to polite (if insincere) smiles over the coming year, but a true reunification of Palestinian political structures faces so many internal and external obstacles as to seem unlikely in the extreme over the short term.

There is one potentially disruptive surprise—a positive one—that should not be completely discounted: an international recognition of the realities I have described here. The deeply problematic, unjust, and troublemaking nature of current realities have been steadily met by powerful international actors with an assurance that they only, more deeply, affirm the importance of making the “peace process” succeed. That claim no longer seems fully convincing to those who have mouthed it so consistently over the past two decades. Perhaps the coming year will be one in which they finally grapple with the implications of their failure.

Michele Dunne | Egypt’s Economy and Stability in 2015

Michele Dunne Dunne is an expert on political and economic change in Arab countries, particularly Egypt, as well as U.S. policy in the Middle East. More > @MicheleDDunne

Egypt’s security and economic situations will be volatile in 2015. On the security side, President Abdel Fattah el-Sisi so far has not been able to deliver on a promise to end a Sinai-based insurgency led by the extremist group Ansar Beit al-Maqdis, which recently declared its affiliation to the Islamic State. More attacks, such as those recently seen in Sinai, the Western Desert, and even the Mediterranean coast near Damietta, could increase disenchantment among military or police. Moreover, the harsh methods used in Sinai, as well as against Islamists throughout Egypt, might fuel radicalization more than fight it.

The insurgency is playing out only a few hours’ drive from the Red Sea beaches to which Egypt hopes to lure tourists, one factor that will shape whether the Egyptian economy rebounds. Another is whether the mega projects, the centerpiece of Sisi’s economic strategy, take off and show results. But by the end of 2015, it will become apparent whether the second Suez Canal project is going well and creating jobs; the same can be said of a pledge to build one million houses.

An energy crisis will also affect Egypt’s economy and stability in 2015. A partial cut in energy subsidies, a plan to pay back billions in arrears to foreign companies, and falling oil prices will help the government, but it is not yet clear whether they can prevent the rolling power outages that frustrated Egyptians and hampered productivity during the hot months. Egyptians were fatigued by unrest in summer 2014 and wanted to give the newly-elected Sisi a chance, so protests were minimal. But if the blackouts happen again in summer 2015, they could create a sense that things are not working out well under Sisi as hoped.

Intissar Fakir | Tunisia’s Tenuous Democracy

Intissar Fakir Intissar Fakir is a fellow and editor in chief of Sada in Carnegie’s Middle East Program. More >

Tunisia may represent a last hope for pluralistic politics in a region where winner-take-all attitudes toward electoral politics persist. The country’s political trajectory in 2015 and beyond will depend on whether the secularist party Nidaa Tounes avoids exclusionary politics and how the Islamist Ennahda party responds to being in the opposition, or worse, to being wholly marginalized.

Nidaa Tounes has indicated plans to form a government without Ennahda—their prerogative following their win in the legislative elections in October and the presidential election in December. These victories likely represent voters’ desire to empower a new party to work on economic development and improve security. But Nidaa Tounes may be tempted to read these victories as a mandate to consolidate their power and shut out the Islamists.

Given the success Egypt’s rulers have had with their own anti-Islamist policies, pushing Ennahda aside might not appear to carry great political risks for Nidaa Tounes regionally or even internationally. And while Nidaa Tounes is under no obligation to invite Ennahda into its new government, if it seeks to exclude them not just from the cabinet but also from the political space, Tunisia could again find itself deeply polarized and in crisis.

Tunisia as the success story of the Arab Spring is a popular narrative. But great uncertainty remains regarding the outlook for the transition from dictatorship to electoral democracy. How Nidaa Tounes acts in the coming year will provide a clearer sense of whether enthusiasm about Tunisia is warranted, or if a slide toward political instability and polarization, potentially leading to greater authoritarianism or chaos, is what can be expected.

Lina Khatib | The UAE’s Bold Regional Ambitions

Lina Khatib Khatib was director of the Carnegie Middle East Center in Beirut. Previously, she was the co-founding head of the Program on Arab Reform and Democracy at Stanford University’s Center on Democracy, Development, and the Rule of Law. More >

While much attention is given to the regional roles of Saudi Arabia and Qatar, and their longstanding rivalry, another Gulf country that was once a political outlier is slowly rising to steal Qatar’s limelight. That country is the United Arab Emirates.

The UAE is poised to become one of the key political and economic players in the Middle East in 2015. Following a hard blow to its economy in the global financial crisis of 2008, the country has managed to largely recover and is diversifying and expanding its economic activities once again. But while the UAE’s economic ambitions are well known, it is only recently that the country has embarked on a quiet political project aimed at positioning itself as a regional and even global player. It has rapidly escalated its foreign initiatives, from training the armed forces of the Transitional Federal Government in Somalia to educating 13,000 imams in Afghanistan to engaging in active combat both in Libya, where it has been attacking Islamist militias, and as part of the coalition against the Islamic State extremists in Iraq.

Despite its multiple engagements, the UAE has been careful not to repeat Qatar’s mistake of attempting to upstage its bigger brother Saudi Arabia. Instead, it has chosen to keep a low profile and to present its role as a “helper” instead of rival to the Kingdom. Its release in late 2014 of an extensive list of organizations classified as “terrorist,” which were mainly linked with Qatar’s ally the Muslim Brotherhood, went a long way to appease Riyadh’s anxiety about a potential resurrection of the Brotherhood, which Saudi Arabia regards as a key political threat. In this, the UAE has managed to earn the trust of the Kingdom, which will allow it to maneuver quietly but strategically within the Gulf Cooperation Council and beyond in the years to come.

Marwan Muasher | The Impact of Low Oil Prices

Marwan Muasher Muasher is vice president for studies at Carnegie, where he oversees research in Washington and Beirut on the Middle East. More > @MarwanMuasher

Two major developments in 2014 for the Middle East have been the evolution of an inclusive, peaceful, and stable Tunisian model of governance and an exclusive, violent model represented by the so-called Islamic State. But below the surface of politics, other forces are stirring. A third major development for the region’s historical transformation may be the falling price of oil.

A sustained drop in oil prices to 70–75 dollars a barrel will deeply affect Middle Eastern politics. It will have an immediate effect on the ability of countries such as Russia and Iran to continue supporting the Syrian regime at current levels. Saudi Arabia and the UAE’s policy of supporting the Egyptian government economically might not be affected in the short term, as both countries have amassed large reserves in the last few years, but a sustained lower price level might have an effect on Saudi Arabia’s ability to provide domestic stimulus packages to keep its population content over the medium term.

Oil importing countries with semi-rentier economic systems will also be affected, and will probably witness a drop in remittances and outside assistance from Gulf countries. Some speculate that lower oil prices might aid the political reform process. As they weaken rentier systems in the region, they might force governments to take needed economic and political reform policies. But it still remains to be seen whether the net effect of lower outside revenues, partly balanced by a lower energy bill, will be positive, neutral, or negative when it comes to serious reform.

Whatever the case, it is clear that the effect of new oil price levels will not be limited to the economic sphere and will have a significant bearing on the pace of the transformations underway in the region.

Karim Sadjadpour | Iran’s Economic Woes

Karim Sadjadpour Karim Sadjadpour is a senior fellow at the Carnegie Endowment for International Peace, where he focuses on Iran and U.S. foreign policy toward the Middle East. More > @ksadjadpour

2015 has the makings of a perfect storm for Iran’s economy, which is now hemorrhaging on three fronts. Tehran loses billions of dollars per year to maintain the Syrian regime of Bashar al-Assad, tens of billions due to falling oil prices, and hundreds of billions over the last few years due to economic sanctions. The prolongation of these three trends could have dramatic consequences.

In Russia a similar triad—slashed oil revenue, overreach in Ukraine, and consequent economic sanctions—recently collapsed the Russia ruble. While Iran isn’t Russia, in some cases it’s worse. The sanctions Iran faces are far more onerous, its reliance on oil revenue is far greater, its intervention in Syria is far more consuming, and its cash reserves are far smaller.

Absent an economic reversal, might Tehran be forced to reconsider its support for Syria, its nuclear redlines, or even—à la Cuba—its longstanding ideological opposition to the United States? History tells us this is unlikely, as Tehran has long been willing to subject its population to sustained hardship rather than compromise on its core ideological principles.

Yet we also know from history that high expectations—the kind that Iranian President Hassan Rouhani has built up for a nuclear deal—that go unfulfilled are often a trigger for popular agitations. In 2015, Iranian Supreme Leader Ayatollah Khamenei will have to decide which option is more dangerous to his domestic interests: the political risks of doing a deal with the United States, or the economic risks of no deal.

Yezid Sayigh | Can Syria Stay Solvent?

Yezid Sayigh Yezid Sayigh is a senior fellow at the Carnegie Middle East Center in Beirut, where he leads the program on Civil-Military Relations in Arab States (CMRAS). His work focuses on the comparative political and economic roles of Arab armed forces and nonstate actors, the impact of war on states and societies, and the politics of postconflict reconstruction and security sector transformation in Arab transitions, and authoritarian resurgence. More >

Although none of its foes has the ability to bring it down, the regime of Syrian President Bashar al-Assad is likely, in 2015, to face its toughest challenges since the Syrian crisis started nearly four years ago. This may compel the regime to engage seriously with one or another of the diplomatic initiatives launched by various parties at the end of 2014—but that is a remote prospect—or else experience increasingly significant cracks within the ranks of its own social and institutional constituencies.

The regime is already struggling to keep afloat financially, but the deepening economic difficulties of its staunchest external allies, Russia and Iran, are set to intensify in 2015, making them more likely to curtail than to increase their assistance. This will have knock-on effects for the regime’s ability to absorb growing discontent within loyalist constituencies. These outcomes are caught between sharp rises in the cost of living, exhaustion of savings, and a lack of secure opportunities for investment on the one hand, as well as the regime’s declining ability to support the national currency’s exchange rate and real wages in the public sector on the other. Regime forces are already badly stretched, but societal discontent limits its ability to generate further combat manpower to meet the looming threat of the Islamic State, an increasingly assertive al-Qaeda wing known as the Nusra Front, and more effective moderate rebels in the south.

The question is whether the worsening economic circumstances of Russia and Iran will prompt them to lessen their burden in Syria, by pushing the Assad regime much harder to make substantive concessions toward a political transition. Or, failing that, to commit to UN Special Envoy to Syria Staffan de Mistura’s proposal to “freeze” the conflict in Aleppo as a first step toward a political dialogue, which the United States and the European Union have endorsed. The time may be coming when the regime’s loyalist constituencies demand engagement with one of these initiatives and no longer take no for an answer.

Frederic Wehrey | Historic Transition in Oman

Frederic Wehrey Frederic Wehrey is a senior fellow in the Middle East Program at the Carnegie Endowment for International Peace. His research deals with armed conflict, security sectors, and identity politics, with a focus on Libya, North Africa, and the Gulf. More >

The one corner of the Arab world you never hear about could be due for a shake up in 2015.

In Oman, the failing health of Sultan Qaboos bin Said al Said, who has ruled the country for 44 years, has caused widespread concern about what’s next. The seventy-four-year old monarch has long been absent from the country for medical treatment, and his unprecedented failure to make an appearance at the country’s national day in November this year raised anxiety to a new level. The Sultan has no biological offspring and has not publicly designated a successor by law. A royal family council has to pick a successor within three days of the Sultan’s death, but the composition and workings of this body are largely opaque and, to date, it has not yet convened. Omani insiders say there is no senior member of the royal family among the Sultan’s relatives with enough respect to manage the transition smoothly, opening up the field for potential jockeying and instability. In 1997, the Sultan stipulated that if the royal council could not decide, a “defense council” would open a sealed envelope, into which he had already placed the names of two cousins.

Regardless of who takes over, Oman’s domestic politics and regional orientation are likely to shift. Oman’s pivotal role as a back-channel mediator is largely tied up in the figure of the Sultan—whether on the secret U.S.-Iranian nuclear talks or brokering the release of Western hostages held by al-Qaeda in the Arabian Peninsula—and it is unclear if his successor’s clout can carry this forward. Many Omanis worry about growing Saudi influence after Qaboos’s death: will Oman continue to be the “principled dissenter” within the club of Gulf monarchies or will it fall closer into line with its larger neighbors?

Although the Sultanate weathered the Arab Spring protests, there are persistent grumblings in the long-marginalized governorate of Dhofar and other peripheral areas. Much of Oman’s ability to manage this dissent was due to the Sultan’s personal legitimacy and to the influx of Saudi money after 2011. The post-Qaboos era will coincide with a potential diminishing of those funds due to falling oil prices. All of this will take place against a backdrop of enormous geostrategic importance: Oman sits aside the Strait of Hormuz, through which 40 percent of the world’s oil traffic passes.

Katherine Wilkens | The Kurds in 2015

Over the last year, the rise of the Islamic State and the U.S. decision to intervene militarily in Iraq and Syria have enhanced the influence of Kurdish actors in the region. Despite their minority status, Kurdish political parties are well positioned in 2015 to influence the course of events in Iraq and Syria and, to a lesser extent, Turkey. Infighting remains a wild card that could weaken the Kurdish hand, but the “Kobane effect” may help the Kurds develop a more united front in the new year.

In Iraq, the threat posed by the Islamic State, along with the steady drop in global oil prices, have set back dreams of independence for Kurdistan. Kurdish President Massoud Barzani has been criticized for his handling of the Islamic State issue and the Kurdish Regional Government (KRG) appears to have suffered from his over-reliance on Turkey. Nevertheless the re-engagement of the United States in the region now is likely to benefit the KRG. While a recent Baghdad-Erbil oil agreement recognizes the central government’s role in controlling oil exports, it also positions Erbil to expand output from the new KRG-Turkish pipelines and enhances its position within the new Iraq. For the time being, Iraqi Kurds will likely use their growing influence to consolidate their position within a united, though troubled, Iraq.

In Turkey, as the parliamentary elections of June 2015 draw near, time may be running out for the peace process between Ankara and Abdullah Öcalan, the imprisoned leader of the Kurdistan Workers Party (PKK), an outlawed Kurdish group in Turkey. Although a final agreement will be hard to reach, the strong position of the PKK’s Kurdish allies in Syria now offers a unique opportunity to make a deal involving mutual concessions on both sides of the border. However, such a bold move would require support from Barzani, who has been reluctant to do anything to enhance the PYD’s role in Syria.

In Syria, the dramatic Kurdish defense of the border town of Kobane has transformed the relationship of the Democratic Unity Party (PYD), a Syrian Kurdish group linked to the PKK, with both Washington and the Iraqi Kurds. The PYD seeks to position itself as a strong, secular ally against the Islamic State, while refusing to commit fully to the rebellion against Syrian President Bashar al-Assad. The key question for 2015 will be how far Washington will be willing to explore this complex relationship over Turkish objections and likely mixed signals from Erbil.

Maha Yahya | Seasons of Migration From the South

The vacillating political transition in Arab countries has brought with it waves of population displacements on a scale not witnessed since the end of World War I. More than 53 percent of the world’s refugees are in the Arab region, host to only 5 percent of the global population, while conflict has affected at least nine countries. These population shifts are driven increasingly by identity politics and are irrevocably transforming the social and political constitution of the region.

The effects of these conflicts on the lives and livelihoods of Arab populations are of seismic proportions. Millions have lost loved ones, homes, and means of sustenance. For host communities, there is increased competition for available jobs and pressure on existing infrastructure. Lebanon, already home to around 400,000 Palestinian refugees is a case in point. Almost 20 percent of its population today are Syrian refugees. The spillover of the Syrian conflict into the country threatens both the refugees and the country’s fragile peace. Another example is the the spillover of the Libyan conflict into Tunisia, which can also destabilize the North African country.

The impact of these displacements extends far beyond the present. The return of millions of people to their homes of origin is challenging on multiple fronts. Perhaps the most pertinent is the fate of the hundreds of thousands of children who are out of schools, leaving them without the skills needed for economic independence and vulnerable to future exploitation. Bonds of trust between different religious, sectarian, ethnic, or tribal communities have also been broken in countries such as Iraq, Yemen, Libya, and Syria, and the scars between communities are not only political but social as well. The region is being forcibly transformed into a mosaic of unconnected polarized communities. These have significant political implications for regional and global security and stability.

Even though these great migrations do not signal the end of Arab nation states, they point to their considerable failures. If left unchecked, they also herald an era of even greater catastrophes and the need for a global response that exceeds humanitarian support. Whether global and regional powers choose to heed this call remains to be seen.