President Joe Biden and House Republicans are currently deadlocked over the possibility of raising the debt ceiling, drawing the US closer to a potential default, which would have global consequences.
If the crisis is not resolved within the next 10 days, the US could fall headlong into a recession – but the American economy would not be the only one affected.
Here's how a US debt default would affect the Middle East.
What impact would a US debt default have on the Mena region?
Saudi Arabia, the UAE, Bahrain, Iraq, Oman, Kuwait and Qatar all hold significant sums in US treasuries and would see massive contractions in their financial markets.
Others with large debt finance, such as Egypt and Lebanon, would also be hit hard.
The US also plays a critical role in the geographic distribution of assets in the sovereign wealth fund portfolios of oil- and gas-producing countries in the Middle East, according to experts.
So, if the stock prices of publicly listed US companies or the values of other assets plunge, these regional sovereign wealth funds will feel the pain.
What would happen to the value of the US dollar?
A US default is likely to wreak havoc on financial markets across the Middle East.
The US dollar has, since the end of the Second World War, been the world's top choice for currency reserves held by central banks and foreign institutions – and those in the Middle East are no exception.
More than half the world's currency reserves are held in US dollars and the currency has long been considered one of the world's most secure assets.
Any hit to confidence in the US economy due to a default or uncertainty would cause investors to sell US treasury bonds, which would, in turn, weaken the dollar.
What would happen to the price of oil?
Oil prices would be affected as part of a broader precipitation of a global economic slowdown that will push prices down, experts say.
Already on Monday, crude oil prices fell amid ongoing concerns about the continued deadlock in negotiations.
“The debt ceiling and/or an actual default would set the stage for a longer-term economic downturn, where you have persistently low-energy prices for the foreseeable future in a poor macroeconomic environment,” Robert Mogielnicki, senior resident scholar at the Arab Gulf States Institute in Washington, told The National.
“That combination is going to be a really tricky situation to turn into something positive on the domestic front for these governments.”
What would happen to more fragile Mena economies?
A weakened US dollar would make payments more expensive for low-income countries that are already struggling with debt, as well as create new global and geopolitical uncertainty.
“It would make the job that they nations need to do – fiscal reforms and other steps to either stabilise their economies or make them more sustainable – even harder to do,” Mr Mogielnicki said.
The impact would be heavily felt in Egypt and Lebanon, in particular, as well as countries in North Africa.
Could Mena start to rely more on the Chinese yuan?
Mr Mogielnicki said that a major change in value of the US dollar would drive debates in Gulf Co-operation Council countries over de-dollarisation, or reducing reliance on the greenback as a reserve currency and medium of exchange.
Despite weakening exports from China to western countries, the yuan has been gaining more importance in international trade amid growth of its share of global trade settlement currency.
“It would add fuel to the fire to ongoing conversations about de-dollarisation,” Mr Mogielnicki said.
“This type of event in Washington would vindicate the position in favour of advocating for seeking a strategy to engage with other currencies in the global system.”
THE BIO
Favourite holiday destination: Whenever I have any free time I always go back to see my family in Caltra, Galway, it’s the only place I can properly relax.
Favourite film: The Way, starring Martin Sheen. It’s about the Camino de Santiago walk from France to Spain.
Personal motto: If something’s meant for you it won’t pass you by.
SHOW COURTS ORDER OF PLAY
Centre Court (4pm UAE/12pm GMT)
Victoria Azarenka (BLR) v Heather Watson (GBR)
Rafael Nadal (ESP x4) v Karen Khachanov (RUS x30)
Andy Murray (GBR x1) v Fabio Fognini (ITA x28)
Court 1 (4pm UAE)
Steve Johnson (USA x26) v Marin Cilic (CRO x7)
Johanna Konta (GBR x6) v Maria Sakkari (GRE)
Naomi Osaka (JPN) v Venus Williams (USA x10)
Court 2 (2.30pm UAE)
Aljaz Bedene (GBR) v Gilles Muller (LUX x16)
Peng Shuai (CHN) v Simona Halep (ROM x2)
Jelena Ostapenko (LAT x13) v Camila Giorgi (ITA)
Jo-Wilfried Tsonga (FRA x12) v Sam Querrey (USA x24)
Court 3 (2.30pm UAE)
Kei Nishikori (JPN x9) v Roberto Bautista Agut (ESP x18)
Carina Witthoeft (GER) v Elina Svitolina (UKR x4)
Court 12 (2.30pm UAE)
Dominika Cibulkova (SVK x8) v Ana Konjuh (CRO x27)
Kevin Anderson (RSA) v Ruben Bemelmans (BEL)
Court 18 (2.30pm UAE)
Caroline Garcia (FRA x21) v Madison Brengle (USA)
Benoit Paire (FRA) v Jerzy Janowicz (POL)
The biog
Name: Mohammed Imtiaz
From: Gujranwala, Pakistan
Arrived in the UAE: 1976
Favourite clothes to make: Suit
Cost of a hand-made suit: From Dh550
More about Middle East geopolitics
The%20Sandman
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Squads
India: Kohli (c), Rahul, Shaw, Agarwal, Pujara, Rahane, Vihari, Pant (wk), Ashwin, Jadeja, Kuldeep, Shami, Umesh, Siraj, Thakur
West Indies: Holder (c), Ambris, Bishoo, Brathwaite, Chase, Dowrich (wk), Gabriel, Hamilton, Hetmyer, Hope, Lewis, Paul, Powell, Roach, Warrican, Joseph
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Global state-owned investor ranking by size
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The specs
Engine: 2.0-litre four-cylinder turbo
Power: 178hp at 5,500rpm
Torque: 280Nm at 1,350-4,200rpm
Transmission: seven-speed dual-clutch auto
Price: from Dh209,000
On sale: now
More on animal trafficking
Padmaavat
Director: Sanjay Leela Bhansali
Starring: Ranveer Singh, Deepika Padukone, Shahid Kapoor, Jim Sarbh
3.5/5
The biog
Name: Younis Al Balooshi
Nationality: Emirati
Education: Doctorate degree in forensic medicine at the University of Bonn
Hobbies: Drawing and reading books about graphic design
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
The specs: 2018 Opel Mokka X
Price, as tested: Dh84,000
Engine: 1.4L, four-cylinder turbo
Transmission: Six-speed auto
Power: 142hp at 4,900rpm
Torque: 200Nm at 1,850rpm
Fuel economy, combined: 6.5L / 100km
UAE’s revised Cricket World Cup League Two schedule
August, 2021: Host - United States; Teams - UAE, United States and Scotland
Between September and November, 2021 (dates TBC): Host - Namibia; Teams - Namibia, Oman, UAE
December, 2021: Host - UAE; Teams - UAE, Namibia, Oman
February, 2022: Hosts - Nepal; Teams - UAE, Nepal, PNG
June, 2022: Hosts - Scotland; Teams - UAE, United States, Scotland
September, 2022: Hosts - PNG; Teams - UAE, PNG, Nepal
February, 2023: Hosts - UAE; Teams - UAE, PNG, Nepal
Small Victories: The True Story of Faith No More by Adrian Harte
Jawbone Press
JOKE'S%20ON%20YOU
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