MoU on the rocks, Saudi-UAE tensions, Egypt state control

The US-Iran memorandum of understanding has come under further strain this week, raising the risk that the recovery in the Gulf economies gets derailed. Elsewhere, geopolitical tensions between Saudi Arabia and the UAE appear to moving into the economic realm amid reports of delays to bank transfers between the two countries. Meanwhile, developments in Egypt this week reinforce our concerns that the state and the military will be reluctant to reduce their role in the economy. The result is that, in the long-term, Egypt will struggle to achieve the growth rates of 7-8% that it could be capable of.