Persian Gulf On the Brink

For the past two years, Rouhani has kept on hammering his four “commandments”, which, taken together, are meant to change the perception/brand of Iran from a religious, extremist, aggressive, subversive and isolated country to a country everyone (well, nearly everyone) would want to be friends with:

  • Thou shall not build nukes: The long-awaited JCPOA seems to justify this commandment and Tehran is now pushing for a global banning of nukes in the hope of denuking Israel – Critics will note that the JCPOA is not “water-tight” that it does not effectively bar Tehran from building nukes in the future.
  • Thou shall fight against terrorism: Redefining terrorism, terror-bashing and fighting ISIS in Iraq and in Syria are posed as “proof” of Rouhani’s WAVE initiative to fight terrorism and extremism – Critics would counter that Tehran continues to support terrorist militia such as Hezbollah, Islamic Jihad, Hamas etc…and continues to support local Shiite militia in Yemen, Bahrain, Saudi Arabia etc..
  • Thou shall lead Iran out of isolation: The nuclear deal, the numerous trade delegations and the popularity of Rouhani/Zarif in the West are all bridges meant to legitimize Iran – Critics would point out that the nuclear deal is far from being implemented and that any breach of the deal, from either side, will place pressure on all of Tehran’s new partners.
  • Thou shall not meddle in thy neighbors’ affairs: The repeated calls for Islamic unity are meant to turn this commandment into a fact although the truthfulness of this call and its practicalities remain questionable – Critics will say that Tehran is still dutifully trying to “export the revolution” by infiltrating governments through pro-Shiite/Tehran groups.

Rouhani may have been able to successfully sell his new brand of Iran to its proxies/allies (Lebanon, Syria, Iraq), to the NAM countries it represents, to the EU and even to the US, but some of its neighbors, specifically Saudi Arabia, Bahrain, the UAE and now, Yemen, are not buying in. Instead, they are breaking diplomatic ties and getting ready for more proxy wars or even the possibility of a direct war with Tehran.


Tehran-Riyadh Rivalry

Tehran and Riyadh have been regional enemies since the Islamic revolution. Tehran, keen on “exporting the revolution“, wants to oust the ruling monarchy in Saudi Arabia in favor of an pro-Shiite Islamic government. The Saudis look on Tehran as the meddling neighborhood extremist which has to be brought to order.

The rhetoric between Tehran and Riyadh, which has always been fiery in the past is reaching explosive levels: The last incident to spark some fiery rhetoric is Tehran’s politicizing of the pilgrim tragedy in Mina, Saudi Arabia. Tehran is not only accusing Saudi Arabia of mismanagement, it is hitting home in many different ways that the tragedy a) was pre-planned by the Saudis to kill Iranian pilgrims, b) proves that Saudi Arabia is incapable of managing the Hajj and c) is worthy enough to spark a war. Whether Tehran really believes that the tragedy was not an accident or whether it is ready to begin an out-and-out war with Riyadh is questionable but the message is clear: Tehran feels strong enough to butt heads openly with Riyadh.

The Saudis have been on edge since the beginning of the nuclear negotiations have retaliated with their own fiery rhetoric ranging from threatening to enter the civil war in Syria, accusing Tehran of trying to arm the Houthi rebels in Yemen, purchasing its own nuclear weapons and more.


Choosing Sides

Tehran’s neighbors have always been subject to its meddling on political and military levels. In some countries (Lebanon, Syria, Iraq), Tehran has succeeded in becoming the de facto leaders the countries while in others (Yemen, Bahrain, Kuwait, Saudi Arabia, Afghanistan), it is still striving to do so.

Tehran’s methods of subversion focus mainly on identifying and supporting defiant, and predominantly pro-Shiite, factions in neighboring countries. These factions or militias receive money, weapons and training by Tehran or its proxies (mostly Hezbollah) in the hope of overthrowing the local government. In the case of Yemen, they actually succeeded in doing so for a while until the Saudis began an open war against the Tehran-backed Houthi rebels.

The targets of Tehran’s meddling and subversive nature have to take sides and it is no surprise that Yemen, Bahrain and the UAE have chosen Riyadh over Tehran, recalling diplomats from Iran.

Kuwait hasn’t severed diplomatic relations yet but has also been targeted by Tehran’s meddling and is currently in the process of a trial of 26-man Iranian-backed terror cell this month.

Even Lebanon, which has long been under Tehran’s rule is accusing Tehran of medlding in its presidential elections, an accusation that was, of course, dismissed by officials in Iran.

Tehran, riding high on its new-found popularity with Russia, China and the EU is testing the limits of its power in the region. Its new friends are attracted to the huge potential economy a sanction-free Iran will represent but its neighbors are less interested in the potential economic boom with Iran. Instead, they are worried that Tehran’s regional and global aspirations, guided by the will to “export the revolution”, will mean an increase in  meddling in their governments’ businesses. The nuclear deal, which was supposed to bring peace to the region has only “deepened” the existing “battle lines”.


Does Khamenei Unite or Divide?

khamenei unitesKhamenei is calling the Arab states and/or their Muslim citizens to unite under Islam against the West. The “and/or” part is crucial since he is not only calling on the leaders of Arab states who are already aligned with ideals of the Islamic brotherhood. The call is also meant to reach the ears of citizens of Arab states which are not aligned with Iran or its fervent Islamic government and in inciting them to rise up against their governments in the name of Islam.

That is why, on the one hand, Khamenei calls for Shiites and Sunnis to unite against the global arch enemy and “Great Satan”, the US,  while at the same time, he calls to relieve Iran’s regional arch enemy, and Sunni leader, Saudi Arabia, of control over Islam’s holy sites.

This isn’t a new call: Khomeini has been calling on his Muslim brothers to do so since 1979. Khamenei picked up the call under the guise of a “Global Islamic Awakening”. But the call for creating a unified Muslim front has escalated over the past few years due to the military, economic and political developments in the Middle East and the world.


Islam vs. “the West” vs. “the East”

west iran eastAlthough its very name implies it, this call is only nominally a religious one: Islam is not presented as an alternative to Christianity, Judaism, Buddhism or any other religion. Instead, it is presented as the solution to the multitude of problems that plague the citizens of Arab states, problems that are conveniently packaged as “the West”, “imperialism”, “colonialism”, “arrogant powers” etc…In fact, it isn’t really a solution but a means to unite any citizen of any state who sees himself/herself as victimized by “the West” either directly or through his/her government which is friendly with the West.

Many Arab states have gone through the Arab Spring only to find themselves free from the dictators who ruled them but torn of their national identities. Iraqis, Egyptians and Libyans initially celebrated ridding themselves of Saddam, Mubarak and Ghadaffi but they were soon disillusioned by the politicians and leaders who tried to fill the vacuum. In some countries, as in Jordan and Saudi Arabia, the ruling families retained their powers while in others, such as in Syria and Yemen, the revolution escalated into a prolonged civil war.

Meanwhile, the North American and the Western European states are weakening. Whether this is as a result from economic and political mismanagement or from a lack of coherent national identity brought on by an influx of immigrants and a generation of citizens who take less pride in their national identity and have more solidarity with their global identity.

The weakness of the West is highlighted by the growing success of the Eastern superpowers like China, as a world economic leader, and Russia, as the historic opposer of the West. The leaders in China and Russia are far from heeding the call of Islamic unity but they all understand that this call is aimed at hurting the West, and specifically the US, in whose downfall they have a vested interest.


Shiites vs. Sunnis vs. “the Rest”

Spect_Sunni_Shia_SEKhamenei’s call to unify Muslims requires all Muslims to put aside their rival interpretations of Islam to fight the West. Unfortunately, the battles between the different factions of Islam echo the battles that were fought many centuries ago between the Christian states aligned under Catholicism against all the other Christian leaders who defied the Vatican. There and then in Europe, as today in the Middle East, the battles are fought not over religion but over the power that religion offers the leaders of the states.

Khamenei’s call to Islamic unity is extraordinary since Shiites represent at most 15% of the worlds’ Muslims and a unification of Islam by the Shiites would be a major victory for the minority faction. Were this call to originate from the Sunnis, as it did many centuries ago in the Islamic conquest of the Middles East and Northern Africa, the call to unity might have sounded more natural and less political.

Were the differences between Tehran and Sunni states only religious, there might have been an affinity to unite. But, much as in the case of Europe in the sixteenth century, religious differences only played a nominal part while the real reasons to heed the battle cry of a religious war could be found within the mindsets of the rulers themselves. The fight for the “ideal” form of Christianity was heavily overshadowed by England’s king Henry VIII’s wish to divorce and remarry and for his hot-cold relationships with France’s king Francis I and Spain’s emperor Charles V.

In the same manner, the Saudis are weary of Khamenei’s call not based on its religious merit but simply because Riyadh and Tehran are self-defined regional rivals. They listen to Zarif’s warnings that ISIS is an equal threat to Sunnis and Shiites with understanding, but are weary of Iran’s agenda to stir up horrified and scared Sunnis against their leaders.


The fact that the call for Islamic unity emerges from Khamenei places more emphasis on the particular interests of Iran than on the collective goal of Muslim states.


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Saudis on Nuclear Deal: US is Damned if it Does and Damned if it Doesn’t

damned if you do
Obama’s efforts to sign a nuclear deal with Iran have rattled the US’s historical allies in the region. It was expected that Israel would loudly object to any nuclear deal with Iran but the reactions of the Gulf States, with Saudi Arabia at their head, are now bordering between fear and hysteria.

Can the US successfully juggle its relations with Iran and the Gulf States without dropping any of them? Probably not.

In order to do so, Saudi Arabia would have to believe that a nuclear deal would stop Iran’s dash for nuclear break-out which it obviously doesn’t. Furthermore, it would have to believe in the US’s threat of war against Iran if Tehran does build a bomb, and the Saudis seem to doubt this as well.

So the US finds itself in the worst position ever in which it is damned if it does and damned if it doesn’t. In any scenario, the US is bound to lose face and the faith of its current allies.


The Saudis Don’t Trust Tehran

iran flagThe Saudis have much to fear: Relations between Riyadh and Tehran soured with the Islamic Revolution in 1979 and festered when Saudi Arabia backed Iraq in the Iran-Iraq war in the 80’s. For years, Iran has been putting pressure on the Saudis’ dominance in the Gulf. Whether this is part of a Sunni-Shiite conflict, Tehran’s efforts to “export the revolution” or financial interests, the power struggle between these neighbors has been on for years and has been escalating through proxy wars fought by Iran in Lebanon, Syria, Iraq and Yemen.

Tehran has an infamous track record of meddling in local politics of neighboring states out of the pretext of “helping” factions, which “happen to be” friendlier to Iran, Shiism and the Islamic Revolution. Usually such efforts by Tehran were met by Riyadh with disapproval or proxy fighting through third party militia. But, the Saudis attack on Yemen, following the Iranian backing of the Houthi rebels, is a game changer which has escalated the tensions between the two rivals.

Saudi Arabia is not only worried about proxy wars or of wars in proxy states. Saudi Arabia, unlike the USA, doesn’t have the “luxury” of its own nuclear arsenal which might inhibit Tehran from nuking Riyadh. One nuclear bomb over Riyadh will extinguish the Saudi empire and its ruling family with it. Thus, making it harder to trust Iran with nukes.

It is the mix of all of these fears which has placed Riyadh at the starting line for an arms race with possible nuclear dimensions.


The Saudis Don’t Trust Washington Either

4cb347149fb092bf0e1b4db0a26c0705Obama seems to be stuck between a rock and a hard place: On the one hand, he is wooing Tehran in an effort to control its nuclear program and to destroy ISIS militia in Iraq and in Syria. On the other hand, he is trying to keep allies such as Saudi Arabia in line. Standing on both sides of the fence might seem possible as long as there is no direct and open conflict between Iran and Saudi Arabia. In such a case, Obama will then have to choose.

But the Saudis don’t really believe that a nuclear deal with Iran will stop Tehran from building a bomb. Nor do they believe that the US is ready for an open war against Iran if it does renege on the nuclear deal. Riyadh’s disbelief in the placating messages from Tehran and from Washington are striking a wedge between Riyadh and Washington, a wedge which presented itself in the form of the snub of King Salman when he refused to attend a meeting between Obama and the Gulf states in Camp David last week.

Obama can keep on juggling Iran and Saudi Arabia with polished rhetoric only up to a point in which Iran and Saudi Arabia clash directly and not through proxy wars. If Iran continues to reassert its support for Houthi rebels in Yemen, no smooth talking can help Obama in keeping both sides happy.


Obama’s options are clearly limited and he is bound to place the US in a position of conflict in all possible scenarios. The region has turned into a huge unlit bonfire that’s just waiting for a spark to ignite. When it does, the US may be forced to war with a potential nuclear dimension. In the meantime, Obama’s administration is passing the buck to the next generation of leaders.


Successes and Failures of Rouhanomics


According to President Rouhani, the recession in Iran is definitely over: Inflation is down from 40% to 15%, economic growth rose from minus 6.8% to 4% and Iran is ready to weather the dropping oil prices instigated by “some countries” (those who supported Iraq in Iran-Iraq war according to parliament speaker Larijani) to hurt Iran.

Others look at the same economy and can only see a nightmare which is becoming more volatile daily: they see an economy crashing along with oil prices, stock market and currency rates and a budget whose goals are not focused on economic successes but political survival. Or as an article in the WSJ put it –”Rouhanomics, in other words, is less about growth than it is about regime self-preservation.”


Rouhani’s 2015 budget soothes hard liners and allies

LEBANON-HEZBOLLAH-PARADE-ASHURAA country’s budget is a blue-print of its political agenda: It puts numbers on ideas and shows us not only what the government “thinks” but just how serious it is about issues that made it into the budget and those that didn’t. Since a country’s budget is “the walk behind the talk”,  let’s take a look at where Rouhani’s walk is taking Iran.

Take, for instance, a 48% hike in the IRGC’s budget in 2015. For the past few weeks, Rouhani attacked the IRGC, albeit never directly, for promoting corruption and for blocking sanctions relief which would hurt IRGC businesses. Despite these attacks, he found a way to give the IRGC a raise. Similarly, the Intelligence Ministry received a whopping 40% budget increase.

Why would a moderate president allocate so much money to military might? Because his foreign policy which began as a rapprochement to the West to lift sanctions has evolved into a joint manifest destiny with his neighbors and allies, namely Syria, Lebanon, Iraq and Gaza.

  • Damascus needs Tehran to end the civil war – a defected Syrian commander put it succinctly: “Assad sold Syria to the Iranians“.
  • Baghdad needs Tehran to end ISIS’s rampage – Iraqi officials, especially Shi’ite ones, praise Tehran while 7,000 IRGC troops moved into Baghdad.
  • Beirut & Gaza, Hamas & Hezbollah all need Tehran to continue to operate politically and militarily.

And all are eyeing Iran’s roller-coaster economy with fear and trepidation knowing that the flow of Rials, oil and ammunition could end in a flash despite this year’s budget.


The link between oil and sanctions

oilAlthough some economists explain the crash of oil prices on increased production of shale fuel in the US, Tehran, and most of the world, believe that the blame should be aimed at Saudi Arabia and the US. Although many Westerners scoff at “oil plot“, there is probably some truth to it: The Saudis don’t trust the UN nor the West to seriously hinder Tehran’s development of a nuclear bomb and regional domination and are hitting back effectively where sanctions have failed. As oil prices crashed by about 50%, so did Tehran’s stock market and its Rial and suddenly, Tehran, on the brink of a major economic turnaround brought on by the nuclear negotiations and deals which effectively circumvented sanctions, found itself crashing back down.

Tehran’s search for partners to circumvent sanctions was placed on high priority with Russia heading the list. Moscow had extended a hand to Tehran since the beginning of the nuclear negotiations last year but as time went by, that hand was filled with Rubles. High level deals of trading oil for food went on simultaneously with deals to build new Russian nuclear reactors in Iran. Moscow had found a business partner who was willing to settle for lower prices due to sanctions and possibly a political and military partner in Moscow’s never ending cold war with Washington. And then, the oil crash hit Russia and the Ruble followed the Rial’s catastrophic drop and suddenly it looked like two shipwrecked sailors helping each other on a life raft.

Rouhani may be a moderate but he is a politician first and he understands the need for hardliners to support him at least until a nuclear deal is signed. Without them, Khamenei could pull the plug on his foreign policy, sanctions would remain and Rouhani’s promise of moderacy would be shelved as an election slogan much like George Bush’s infamous “read my lips” promise on taxes.


Rouhani taxes his electorate, the middle class

iran-economy-rial-2012-1-26Rouhani won the election through a middle class who had had enough of Ahmadinejad’s anti-West rants and the resulting crippling sanctions. He offered them hope to lift all sanctions and preserve national dignity. Now, over a year and a half later, he will be stabbing them in the back with a 23% increase in taxes and hefty reductions in subsidies to the poor. Word leaked out that even Khamenei’s huge financial empire might be taxed for the first time but everyone is still holding their breath for Khamenei to accept such a move.

Yes, Rouhani is also initiating a move to approve of “hundreds” of projects in the oil and gas industry, as well as railways and trade ports but all of these projects might be abandoned if the oil prices don’t rise to give Rouhani the breathing space he needs to keep these projects alive. Rouhani might be tempted to slim the infamously bloated Iranian bureaucracy which absorbs nearly 80% of fiscal expenditure in wages but instead, he decided to increase the budget for the judicial system which is repeatedly under fire for abusing human rights.

And in any case, there are serious doubts whether the relief of sanctions would benefit the Iranians since corruption is so rampant that most of the relief will benefit mullahs and IRGC officials.


Minister ImpeachementAny way you look at it, it seems that Rouhani’s façade as a moderate is crumbling down as fast as oil prices: Rouhani was voted in to strike a deal with the West but when that deal remained elusive, he turned to the East and to his neighbors who seemed more eager to cooperate than the demanding and unsatisfied West. And now, as the economic crunch is being felt, he is focusing inwards, to the Iranian people to help him survive. Meanwhile, the Iranians who had believed that Rouhani would save them from the economic disaster they had felt under Ahmadinejad, will have to keep on paying the bill for a regime which continues to place national pride over well-being.

Rouhani & Nuclear Negotiations: Back to the Future.

rouhani back to the futureToday (2013): President Rouhani Promises “More Transparency”

It is hard to get a clear picture of Rouhani simply because he is not as easily pegged as his predecessor. While Ahmadinejad revelled at giving the world the proverbial finger, Rouhani will definitely take the path less travelled by Iranian leaders over the past 8 years. His strategy will be more in tune with the West’s and he will make Iran’s suspect nuclear program more transparent.

The biggest question remains whether Rouhani’s walk will match the expectations of his talk? Will Tehran back down from nuclear ambitions that include building the bomb?

In order to answer this, it is interesting to note that Rouhani’s criticism of his predecessors is based on two themes:

Later, at his first press conference as president, he opened the first stages of negotiations by promising  “greater transparency” but little else.

Perhaps, in order to understand how Rouhani will approach the negotiating table in 2013, it would be worthwhile to observe how he did so in 2003-2005.

Rewind (2003-2005): Rouhani Promises, Stalls, Promises, Stalls…

At the time, Rouhani was the head of Iran’s Supreme National Security Council and Mousavian was a senior member on the negotiating team. The negotiations with the EU3 (UK, France & Germany) ended in Iran’s “voluntary” suspension of enrichment which was soon reversed.

Back then, Iranian diplomacy was focused on buying time: “Iran agreed – in exchange for further negotiations – to suspend its enrichment program, as well as to sign and implement the Additional Protocol. Tehran thus avoided non-compliance with the IAEA’s resolution…a pattern which was to repeat itself throughout the crisis.” Furthermore, this agreement to buy time was underscored by the fact that “Iran would not accept the Additional Protocol” in any case.

The Iranian negotiating team understood one simple fact: the EU3 were serious about getting Iran to the negotiating table but they were not serious about the consequences of Iran’s stalling tactics. The negotiations began to loop around the EU3 accusations, the Iranian denials, the Iranian promises to sign, the Iranian stalling tactics and back to the EU3 accusations.

Rouhani later bragged that reaching an agreement allowed Tehran to develop other parts of its nuclear program without any real trouble because although enrichment was temporarily halted, Iran began to develop aspects of its nuclear program that went way beyond a peaceful nuclear program.

Or as  Mousavian later claimed, Iran’s negotiating team had managed to “(take) the wind out of the sails of the American push for international convergence against Tehran’s interests“, allowing Iran to preserve its nuclear technology.

Play (2013 and onward): Rouhani will Promise, Stall, Promise, Stall…

Rouhani will probably not change the course of Tehran’s nuclear program but he will want to change the course of the sanctions this program incurred.

In order to do so, he will probably do what he did best in 2003-2005 – stall. Under Ahmadinejad, Tehran stalled repeatedly (12 fruitless meetings in 2012 alone) but the negotiating team lead by Jalili took the hardline road based mostly on Iranian pride and its willingness to defy the world.

Rouhani’s method of stalling includes handing out carrots at every round of negotiations and then finding a loophole to gain more time.

Should the West open its arms and believe that Rouhani will be a game changer for Khamenei’s nuclear ambitions? Not advisable since Rouhani will accept this strategy as a weakness that can be exploited.

Should the West increase its sanctions and pressure Rouhani into fulfilling his promise to the Iranian people? Not advisable either since Rouhani will exploit this strategy as an injustice that exemplifies the “arrogant powers”.

In short, as Dennis Ross succinctly put it – “Talk to Iran’s New President. Warily” and be ready to increase sanctions if necessary