As predicted the onset of Ramadan has led to difficulties with power, water and food supplies. In particular wheat imports, on which Egypt depends, have been affected by the drought and other problems in Russia. Although the country has stockpiles prices have already risen 30% and the death of one man of a heart attack whilst waiting in a bread queue was described as the first of many. There have been large food riots in previous years and these could be repeated, although the security forces should be able to cope.

Nationwide electrical shortages – even in more affluent areas and tourist resorts – led to a significant protest on 18 August, during which crowds burning tyres blocked the main highway south of Cairo. The lack of air conditioning and refrigeration is particularly aggravating during a summer Ramadan, and tensions may heighten towards the end of the period, as the effect of daily fasts mount. Power cuts at the time of the iftar meal – the evening breaking of the fast – are likely as the effects of nearly the whole nation preparing food and eating at the same time put particular strain on the poor electrical network.

The Government attempted to evade responsibility, but its protestations are generally weak. There have been calls for the Electricity Minister to be indicted, and a private lawsuit has been brought against him in the Administrative Court. It is possible that he will be sacrificed to calm public ire. The current anger may also have driven the confirmation of the site of the country’s first nuclear plant, at al-Dabaa in the Mediterranean city of Alexandria. However, even if it meets its optimistic planned in-service date of 2019 it will do little to alleviate problems over the next few years.

Cooking gas shortages are also causing discontent, reviving public ire over the 2005 deal to supply cheap gas to Israel. The Government is reported to be assessing the viability of buying back gas, although this will cost a great deal and the reports have since been denied. The continued public focus on this issue reinforces our assessment that the controversial pipeline to Israel remains a primary jihadist target.

Finally, public unrest is also possible around the second leg of a controversial match between Egyptian and Algerian football clubs, to be held in Cairo on 29 August. The first leg in Algeria saw violence on the pitch, and crowd trouble has generally been worse in Egypt. The two countries have rivalry dating back to 1990 and last November this spilled over into serious violence, although there is no expectation of anything on that scale.

President Mahinda Rajapaksa has again proposed an end to the two-term limit for the Presidency, despite strong objections from both the ruling coalition and the opposition. He had previously proposed to create an executive Prime Minister position, which the opposition supported so long as the Prime Minister is accountable to Parliament. It was presumed that Rajapaksa would then run for Prime Minister himself. But following advice from his legal counsel, he decided not to create the role because it would require approval by referendum.

Rajapaksa sees a referendum as too risky, despite having a firm hold on power and having won the elections in a landslide in April. Obvious vote-tampering would likely result in violence during or after the polls, undermining the Government’s legitimacy.

The new proposal would only need a Constitutional amendment to become legal, and the ruling coalition may soon gain the two-thirds majority needed to amend the Constitution. Two opposition United National Party (UNP) members crossed over to the ruling United People’s Freedom Alliance (UPFA) coalition on 5 August, bringing the total number of UNFP seats to 145. Only five more are needed to have a two-thirds majority, and three more MPs are reportedly planning to cross over soon.

Defections among political parties are common, with defectors likely offered bribes, or other perks as enticement. The Government seems increasingly autocratic, and close military and security cooperation with China may be influencing Rajapaksa’s vision for the future. He will not win an end to term limits without protest, but with his family in charge of key positions, including Secretary of Defence, he may be consolidating enough power to achieve this. More defections are likely as the Government becomes more powerful and politicians see it as in their interest to be on the winning side.

Radical cleric Abu Bakar Bashir was arrested on 9 August along with three senior members of Jemaah Ansharut Tauhid (JAT), the radical Islamic group set up by Bashir in 2008. He has subsequently been charged with terrorism offences and his associates with terror financing. These included allegations that he was supporting al-Qaeda in Indonesia (also known as al-Qaeda in Aceh), and that he was planning or motivating others to commit terror attacks. In particular he has been linked to the training camp that was raided in Aceh in February (see our 3 March Report).

Police have previously been unable to prosecute Bashir successfully for terror offences despite the fact that he has long been regarded as the spiritual influence of Jemaah Islamiyah (JI), the region’s most prominent jihadist organisation. The police claim to have a strong body of evidence against the cleric, including witness statements, taped phone conversations and bank transactions. It is thus possible that this time they may be able to make the charges stick, which would be a significant boost to counter-terrorism efforts.

However despite Bashir’s high profile, frequent inflammatory anti-Western rhetoric and calls for an Islamic state based on Sharia law, his relevance has declined in recent years.  This was demonstrated by the limited support for JAT from members of JI. The impact of his detention on insurgent operations in the country will therefore be limited.

The arrest does however provide a worrying indication that there is growing international support for Islamist radical groups in Indonesia (and throughout the region – see also today’s Malaysia Report). Bashir’s lawyer appeared to admit that JAT was involved in the Aceh training camp, along with other groups, but said that its purpose was to train people to take part in the global jihad rather than domestic terrorism. On 11 August al-Qaeda released a statement in which it acknowledged the existence of the operation in Aceh, and the police claim that the relatively large funding of USD 100,000 also suggests international involvement. Finally it has been revealed that five men linked to Bashir arrested on 7 August for plotting car bombings had connections to a French national, Frederic Salvi, who is a known radical activist. It is possible information gleaned from their interrogation led to the arrest of the cleric. 

We assess that jihadists in Indonesia retain the ambition to carry out domestic attacks, as evidenced by the number of plots that the security forces have foiled in recent months. Whilst the security forces have proven effective the sheer weight of effort implies that they will succeed in getting through at some point, and will most likely target areas frequented by Westerners or Government buildings and personnel. International support will increase the chance of success, and the growing international aspect highlights the risk to firms of inadvertently laundering money that is to be used in terror financing.

On 10 August an explosive device attached to a timer was defused outside a bus company office in Zeytinburnu, a residential suburb of Istanbul. The bomb was discovered near the local tax office, which may have been the intended target given that police claimed three other bombs had previously been defused in the vicinity. The Kurdistan Workers’ Party (PKK) and/or the affiliated Kurdistan Freedom Falcons are the most likely culprits given their recent attacks on security forces in Istanbul (see our Report of 2 July).

 The incident suggests a broadening of targets beyond the security forces which have been the PKK’s principal focus since the abandonment of its ceasefire in June. Activity in Istanbul remains concentrated on relatively soft targets and there is no evidence of an improved capability to operate in the more hostile, central areas of the city. However, on 4 August police detained five suspected PKK members at Istanbul’s main Esenler bus station. Although there is no indication that an attack was imminent – the authorities did not claim the seizure of a device or explosives – the suspects reportedly had sketches of locations in the city that they planned to attack. The planned targets are unknown but we believe the PKK retains a desire to strike the central areas of Istanbul, despite the significant operating difficulties.

 The PKK may seek to mark the 15 August anniversary of its first strike on a Government target with an attack on a state installation or the security forces. The threat is considered greatest in the group’s southern and eastern strongholds where PKK violence remains concentrated. There were several skirmishes with security forces and a number of strikes in the region in this period, including an arson attack on a Turkish Petroleum oil facility in Batman Province and the bombing of an Iraqi-Turkish oil pipeline in Sirnak Province.

 There have been several PKK attacks on energy infrastructure in recent weeks and the threat to the sector may be increasing. As we reported last time, the targeting of pipelines from Iran and Iraq may be intended to relieve pressure on Kurdish militants in those countries. Meanwhile, one soldier was killed and several wounded by alleged PKK gunfire in northern Ordu Province. This, however, is outside the group’s usual area of operations and may have been related to organised crime groups operating in the region.

Bloodshed returned to Karachi with a vengeance during this period. Once again, the majority of victims were members of the Muttahida Quami Movement (MQM, largely members of the Mohajir community of Muslims who arrived from British India at Partition in 1947) and the Awami National Party (ANP, which is dominated by the Pashtuns). The violence peaked after the 2 August assassination of Raza Haider, a Shia parliamentarian representing the MQM at the Sindh Assembly; this triggered four days of violence in which at least 87 people died.

 Senior members of the MQM blamed the ANP and vowed to retaliate. MQM leaders also accused the ANP of links to extremism and claim that 150 members have been killed in the past three weeks. An ANP Senator, however, credibly claimed that most of the victims were members of the Pashtun community attacked in retaliation. The police, meanwhile, announced the detention of several members of Lashkar-e-Jhangvi (LeJ) in connection with the assassination. The authorities have blamed LeJ for several other sectarian attacks in the city this year, but local reports suggest that the arrests have more to do with placating an angry population than actually finding the perpetrators. Despite this lack of faith in the police, Prime Minister Gilani ruled out the use of the military. The disturbances are reducing but violence could resurface with little provocation.

 Meanwhile, officials in Lahore demolished a mosque that was being constructed illegally by clerics from Jamiat Ahle Hadith, a hard-line religious group, on Government land in the city’s Green Town area. Local press reports suggested that locals had been threatened with blasphemy charges if they attempted to stop construction. It is notable that the demolition of illegal structures associated with Islamabad’s Lal Masjid (Red Mosque) in 2007 was the spark for the siege of the mosque which in turn led to the resumption of violence in the country’s north-west, which continues to this day. That said, there has so far been no response from Jamiat Ahle Hadith, which suggests that the authorities may well be able to contain any protests which do result.

 On 28 July the Japanese oil tanker M Star was damaged, and one crew member injured, in what was initially described as an “onboard explosion” whilst travelling through the Strait of Hormuz less than ten miles from the UAE and Oman. The vessel was carrying 2.3 million barrels of crude and bound for Chiba, Japan but has since docked at the UAE’s Fujairah port to assess the damage. Various theories have been put forward, including that the tanker was attacked. Piracy is rare in the Strait, however, while neither al-Qaeda nor other terrorist groups have shown an ability to operate there. The US Fifth Fleet, stationed in Bahrain, said that the tanker had not requested assistance, which also undermines this theory.

 A second explanation posited that the tanker had collided with a semi-submerged object, such as a submarine or shipping container. Photos depict a uniform square-shaped dent, however, and there are no signs that it dragged against another moving object. The tanker could have struck a jetty at port, but this is likely to have been noticed prior to its departure. The damage fits closely to the inner structure of the vessel. The collapse of one or more of the ship’s storage tanks would produce a sound resembling an explosion, is not unprecedented, and would have produced this type of damage. Thus, whilst details remain sparse, mechanical or human error cannot be ruled out.

 The cautious approach of the UAE, Oman and US to the incident probably aims to avoid any premature accusations against Iran, which has threatened in the past to shut down the Strait of Hormuz were it attacked by Israel or US. Despite the introduction of new UN, US and EU sanctions on Iran, an unprovoked attack on a tanker bound for Japan would be unlikely at this time. The media attention devoted to the incident shows the sensitivities surrounding the strategically important Strait, as well as the efforts of key regional players to manage potential sources of tensions.

 The ruling coalition United People’s Freedom Alliance (UPFA) and the opposition United National Party (UNP) have agreed in principle to create an executive Prime Minister position. The PM would be accountable to Parliament. The agreement came amid special talks between opposition leader and former President Ranil Wickremasinghe and the UPFA leadership.

 The move will curtail President Mahinda Rajapaksa’s powers, but it is probably a ploy for him to retain executive power; he had previously attempted to gain the right to amend the Constitution and end the two-term limit on the Presidency. Most likely he will attempt to become the next Prime Minister, thus retaining his hold on executive power. Indeed, it was his party, the Sri Lanka Freedom Party, which proposed the new post. The UNP says it approves these moves because they reverse the transfer in 1978 of executive power to the President, away from the Cabinet and Parliament led by the PM. But it opposes vesting executive power solely in a PM who is not held accountable to the Parliament, and these details are yet to be addressed.

 There is concern that the Government is becoming increasingly autocratic – the ruling coalition won a landslide in the 2010 Parliamentary elections, and may be unwilling to give up power. It is sprinkled with Rajapaksas. The President’s son Namal became an MP at the last election and nepotism remains in evidence: Rajapaksa’s brother Gotabhaya is Defence Secretary, and yet another sibling is Parliamentary Speaker. The coalition is well organised, evidenced by the quick appointment of the new Cabinet in April. In some respects this could bode well for stability as the country seeks to boost economic development.

 Tensions over the alleged activities of Hizballah in Lebanon continued to rise during this period. The Israeli Defence Forces (IDF) released imagery which they claim shows newly-constructed Hizballah military installations near to civilian buildings such as schools and hospitals. The IDF had earlier shown the intelligence to the UN Security Council in June – an attempt to mark the fourth anniversary of the Lebanon conflict by highlighting the failure to enforce the Security Council Resolution that brought an end to the fighting (which prohibits the presence of paramilitary forces south of the Litani River).

 While these claims may be justified – Hizballah remains active in UNIFIL’s area of operations (see today’s Lebanon Report) – previous allegations emanating from Tel Aviv have lacked credibility. We continue to consider Israeli accusations that Hizballah obtained Scud missiles in May to be unreliable, as were reports in this period that the movement received a large quantity of Iranian rockets via Syria and northern Iraq.

 The UN Secretary General blamed the Scud reports for increasing the potential for conflict in the region and Israel’s latest allegations have further increased tensions across the northern border. Both Israel and Hizballah retain clear motivations to avoid renewed hostilities but, should political conditions change, a minor incident could spark significant escalation – the 2006 war was triggered by a relatively small Hizballah raid. There are many hawkish political and military figures in Israel who would welcome an opportunity to restore the IDF’s reputation and the scheduled end of both the proximity talks and the settlement freeze in late September could yet prove a turning point.

 Prime Minister Netanyahu met President Obama in Washington on 7 July. Both sides were keen to emphasise the positive atmosphere, in sharp contrast to Netanyahu’s last visit in March when a spat over settlement construction in East Jerusalem caused a significant deterioration in US-Israeli relations. Although the warm noises may boost Obama’s political prospects ahead of the US mid-term elections in November, little appears to have been achieved in regard to the peace talks. Subsequent discussions between Obama and Palestinian President Mahmoud Abbas failed to produce a clear indication as to how the peace process might be taken forward while Israel continues to demolish Palestinian homes in East Jerusalem.

 Abbas faced serious domestic criticism over the failure of past negotiations, and so has demanded progress in the proximity talks before any face-to-face meeting with Netanyahu. However, these preparatory discussions appear to be deadlocked over Tel Aviv’s reluctance to give further ground on settlements (see below) and its refusal to discuss the borders and security arrangements of a future Palestinian State. Indeed Amr Moussa, the Secretary-General of the Arab League, has already described the proximity talks as ‘failing’.

 Egypt’s Foreign Minister warned that the League would appeal to the UN Security Council to declare a Palestinian State if the talks fail to achieve progress by September. This was clearly intended to draw parallels with Kosovo – which has achieved de-facto statehood despite an unsuccessful attempt to win Security Council recognition.  Washington is almost certain to reject any Palestinian declaration of statehood but, because it quickly endorsed Kosovo’s secession, the initiative could further damage US standing in the Middle East. Should the move win considerable international support, it will also create further international difficulties for Tel Aviv (given the presence of Israeli troops on Palestinian territory).

 The Palestinians believe, probably rightly, that Netanyahu is playing for time. The Cabinet remains the principal obstacle to any package of confidence-building measures which might convince Abbas to enter direct talks. Defence Minister Ehud Barak and Deputy Prime Minister Dan Meridor broadly support a set of concessions while Foreign Minister Avigdor Lieberman remains implacably opposed (as do many others in the conservative-dominated ruling coalition). These divisions provide a useful excuse for Netanyahu and the Prime Minister appears resolute in his determination not to bring the more moderate Kadima Party into the coalition.

 It remains unclear whether Netanyahu will extend the ten-month moratorium on settlement construction in the occupied territories beyond its 26 September deadline. Comments made in Washington suggest that he will not and reflect the vocal domestic opposition to a renewed freeze. This remains a key issue for the Palestinians, particularly as construction has hardly slowed during the last eight months because so many new buildings were authorised prior to the moratorium. An extension to the freeze would likely see the first genuine slow down in building work for years, hence the increasing agitation (reported last time) among the settlers and their supporters.

Several uncorroborated reports this period described the growing threat from Bangladesh’s Islamic militants. For example, it was claimed that three factions of the banned group Harkat ul-Jihad ul-Islami (HuJI) had reunited and planned to execute attacks, whilst another stated that members of another outlawed organisation, Jamaat ul Mujahideen Bangladesh (JMB), were training in the Sundarbans forest in the South. However, none of these warnings appear linked to current arrests of extremists or attack-planning. Nor are they likely to be related to the charging of 60 JMB members for an arms heist in 2003, or the indictment of an alleged HuJI leader for an assassination attempt on current Prime Minister and Awami League (AL) leader, Sheikh Hasina, in 2000.

 Separately, it was reported that a number of Bangladesh Islamic militant groups had formed a conglomerate in cooperation with al-Qaeda and Pakistani militants to carry out attacks in Bangladesh. While several members of the al-Qaeda-linked Pakistani militant group, Lashkar-e-Tayba (LeT), were arrested in Dhaka in November 2009 for planning attacks on the US and Indian diplomatic sites, there is no compelling evidence of a high-level relationship between Bangladeshi militant groups and either LeT or al-Qaeda. The security forces also probably restrain their ability to operate internally and abroad. The threat warning of HuJI attacks against US and Bangladeshi diplomatic missions in India’s West Bengal mentioned in today’s India report does not therefore appear to be credible.

 The claims of a resurgent threat may allow the Government to justify its increasingly secular position, as demonstrated by crackdowns on both banned Islamic militants and opposition Islamist groups (see below). Its policies may have the unintended consequence of increasing internal radicalisation, which could reverse the security services’ largely successful efforts to combat extremism since the JMB’s last wave of attacks in 2005-6.