New leader of Muslim Brotherhood, Mohamed Mahdi Akef, pledged moderation and peaceful opposition to regime. President Hosni Mubarak said 1 January that his son, Gamal, would not inherit power; statement strongest response yet to speculation that Mubarak preparing dynastic succession. Diplomatic relations with Iran likely to be restored in coming days.

Guardian Council, supervisory body composed of hardline judges and clerics, vetoed candidacies of close to half those intending to run in February general election, including 80 current MPs. Disqualifications caused storm of protest and sit-in by MPs. Guardian Council later reinstated 1,160 of over 3,000 vetoed candidates, but reformists, led by President Khatami, said move insufficient. Crisis deepened following threat by reformists to boycott election if disqualifications upheld. Meanwhile, U.S. and European diplomats unhappy with Iranian progress in suspending enrichment of uranium – Iran reportedly still acquiring enrichment-related equipment. IAEA negotiating with Iran to ban such activities.

U.S. looking to amend plan for handover of power to provisional Iraqi government as pressure mounting for elections to be held in June. Pressure coming chiefly from Ali Hussein al-Sistani, leading Shiite cleric, and his followers: 100,000 marched through Baghdad 19 January. American and UN officials discussed possible modifications to original plan, which calls for transitional assembly to be selected by local caucuses rather than directly; all options reportedly back on table, including elections. Sistani said would not drop election demand unless UN agreed with U.S. contention that elections not feasible; UN assessment likely to be completed in February. Lakhdar Brahimi appointed special adviser to Kofi Annan and expected to devote much time to Iraq. Two-man team arrived in Baghdad to inspect security situation for potential UN return. Attacks continue unabated: 18 January suicide bombing outside CPA HQ killed 25, and attacks across Iraq 31 January left at least 18 dead. 300 Coalition soldiers, including 253 Americans, killed by hostile fire since declared end of combat operations on 1 May 2003.

Investigation of Israeli PM Ariel Sharon on bribery and corruption charges could result in indictment in coming weeks; if indicted, PM may be forced to resign. Sharon repeated his plan to unilaterally disengage from parts of West Bank and Gaza if no progress made toward peace in coming months. Palestinian PM Ahmed Qurei called for international pressure on Israel to halt construction of controversial security fence; said Sharon plan to withdraw behind fence would destroy chances of 2-state solution. 100,000 Israelis, including many settlers, demonstrated against Sharon in Tel Aviv 11 January, protesting plan to dismantle some settlements as part of withdrawal. Prisoner exchange between Israel and Hezbollah completed 29 January (see Lebanon section below). Violence continued: suicide bus bombing in Jerusalem left 10 dead 29 January; 8 Palestinans killed in Israeli raid in Gaza 28 January; female Hamas suicide bomber killed 4 Israelis in Gaza 14 January.

Relations with Israel deteriorated over security fence. Amman says fence will make viable Palestinian state impossible, and could lead Palestinians to move to Jordan, where they already make up majority of population.

Following years of negotiation, German-mediated prisoner exchange between Israel and Hezbollah took place 29 January. Deal saw Israel release 23 Lebanese, 400 Palestinian, and 12 other Arab prisoners in exchange for Israeli businessman and bodies of 3 soldiers. Agreement reached despite violence along Lebanese border and tensions between Israel and Syria, Hizbollah’s main backer. On 19 January Hizbollah guerrillas fired anti-tank missile at IDF bulldozer which had crossed several meters into Lebanese territory, killing Israeli soldier. Israeli warplanes struck Hizbollah positions in southern Lebanon following day.

American and British inspectors returned to Libya to prepare for dismantling of WMD programs. Extent of Libyan nuclear advances and sophistication of international black market for WMD technology surprised Western officials, deepened proliferation concerns. Some Arab countries reportedly complaining behind scenes that Libyan renunciation of WMD weakens prospects of getting Israel to do same. Israeli officials, meanwhile, said secret talks with Libya on improving ties held in Paris; Libya denied talks took place.

Former Islamist mayor released on bail 20 January after being detained for 2 weeks following return from exile in Belgium. President Taya accused Islamists of seeking to destabilise government.

Signs of modest improvement in bleak human rights situation. King pardoned 33 political prisoners 7 January, weeks after announcement that Justice and Reconciliation Commission will be created to investigate past abuses.

Crown Prince Abdullah announced launching of reform process in cautious televised speech. New satellite news channel began broadcasting; opening bulletin delivered by female presenter. Six killed in capture of suspected terrorist in Riyadh 29 January, including 5 members of Saudi security forces.