Can Iran dominate the Gulf?

The future U.S.-Iran détente will be based on the ‘balance-of-power approach’ instead of direct military commitment

Dr. Naser al-Tamimi

Published: Updated:

The U.S.-Iran detente could be the biggest geopolitical development of this year. The signing of a final agreement on the Iranian nuclear program may represent a strategic shift in the geopolitics of the Middle East. It is true that there is opposition within the United States and Iran, but it is clear that there is also a strong determination to bring the agreement to completion before the end of 2014.

Recently, Susan Rice, Obama’s national security adviser, summarized the shift in U.S. policy had been driven by a conviction that America “can’t be consumed 24/7 by one region, important though it is”. Stratfor founder and Chairman George Friedman in his book, “The Next Decade,” goes further to argue: “as a solution to the complex problems of the Middle East, the American president must choose a temporary understanding with Iran that gives Iran what it wants, that gives the United States room to withdraw, and that is also a foundation for the relationship of mutual hostility to the Sunni fundamentalists. “

Within that context, the U.S.-Iran detente will be based on balance-of-power approach as alternative to direct military commitment. This balance will cover three key areas, the Iranian power against Arabs, Iranian oil against the Saudis, and Shia’a against Sunnis. As the Financial Times columnist Philip Stephens describes it meticulously: “The U.S. has swapped its role as the Middle East’s pre-eminent power for that of an offshore balancer.”

Win-win situation

In the end, as the optimists in Washington prefer to say, both sides (Iran and America) look at it as a classic win-win situation as it was with Nixon’s policy towards China. Iran finds a way out of its international isolation and an escape from devastating sanctions. The U.S. guarantees a nuclear-weapon-free Iran and gains a potentially valuable partner to combat Sunni extremists in Syria, Iraq, Lebanon and Afghanistan.

In the end, as the optimists in Washington prefer to say, both sides (Iran and America) look at it as a classic win-win situation as it was with Nixon’s policy towards China

Dr. Naser al-Tamimi

The problem with this approach: it is still “suffering” from the Cold War mentality. To compare the historic breakthrough done by Nixon with China to what Obama is doing now with Iran is a political fantasy. Iran is not China and never will be. Even if Iran is China, the question here: who is the Soviet Union here? Does the U.S. consider the Sunnis or China as the “new Soviet Union?”

The strategy of an “offshore balancer” represents a disaster to the Middle East region and beyond as may exacerbate the sectarian tensions, intensify the “proxy” wars and will not guarantee a nuclear-weapon-free Iran. To be sure, in the Nixon era, America was in the rise, but is currently experiencing declining.

A political fantasy

Iran has to worry about its position weakening in the Levant at a critical point in its negotiation with the United States. Instability in Iraq; jeopardise Iran’s own security. Its ally in Lebanon; Hezbollah, has become embroiled in Syria’s civil war. The Assad regime in Syria, even if it survives the ongoing civil war may turn out to be a liability not a viable asset.

It is true that Sunni extremists in Syria, Iraq and Lebanon are stronger than ever. However, to suggest that Iran can fight them represents a political fantasy. On the contrary, any Iranian interference will complicate the situation and brings strong reaction of the Sunni Muslims and Arab nationalists. Iraq has provided a model in this regard. Exclusionary and sectarian politics which have been implemented by Iraqi Prime Minister Nouri Al-Maliki against Sunni Arabs and Kurds have become the main catalyst for insurgency which currently engulfs western Iraq.

Iraq is seeking to develop its economy and increase oil production to more than 6 million barrels by the end of the current decade. In order to achieve these targets, the country needs internal stability and good relations with all its neighbours including Iran, Turkey, the Gulf States and Jordan. The dilemma for Iran is a weak Iraqi state may eventually lead to the disintegration of the country, a nightmare scenario for Tehran and the region. On the other hand, a stable, strong and prosperous Iraq will deepen Tehran’s fears. In that context, it will be difficult to maintain the status quo, and Iraq will continue to be a great challenge.

Questionable control

In Syria, even if the regime of Bashar al-Assad survived, its control over Syria is questionable. Tehran, despite its recent rapprochement with the West, is most likely to continue its support for the Assad, and the Gulf States will continue to support the Syrian opposition. However, without a political settlement Iran can’t guarantee the survival of the regime in the medium or long term. Perhaps most importantly, Tehran’s involvement in Syria is not popular back home. As the time passes by the Syrian quagmire could drain the Iranians resources and backfire.

In Lebanon, Hezbollah - Iran’s main ally - stands at a crossroads. If they continue to support the Syrian regime this could lead to a war of attrition that ultimately lead to weaken the party among its core supporters and in Lebanon itself amid the growing strength of the Sunni jihadists. Hezbollah’s opponents will continue attempting to capitalize on its distraction over stretched in Syria while weakening the group’s position at home.

Tehran’s oil power

The Gulf Arab States are still vital to the world economy and will be in the next few decades. Iran’s radical policies generally put it at odds with the oil consumers, specially the Asian powers (China, India, Japan, and South Korea). However, today most Iranian oil is heading towards Asia, and the country relies on Russian and Chinese arms sales. This equation will not change in the foreseeable future. Certainly, the Iranian market opens prospects for American companies, but the complexity of Tehran’s political system might limit the volume of the foreign investments. According to Business Monitor International (BMI), the Iranian Revolutionary Guards has substantial business interests which are estimated to comprise around 30 percent of the overall economy.

Asian powers (China, Japan, Indian and South Korea) have strong economic ties with GCC, Saudi Arabia in particular. The volume of trade between Asian powers and GCC hit more than $618 billion by the end of 2012 (Japan 182.3 billion), (India 156.7 billion), (China 155.1 billion), and (South Korea 124.3 billion). The trade with Saudi Arabia alone reached almost $ 227 billion (China 73.3 billion), (Japan 63.1 billion) and (India 41.4 billion). By comparison, the Asian powers trade with Iran in the same period was about 75.8 billion dollars (China 36.5 billion), (India 15.9 billion), and (South Korea 14.8 billion), (Japan 8.6 billion). Not to mention multi-billion dollar projects with Asian companies in the GCC and millions of Asian workers.

Furthermore, Iran needs to modernise its infrastructure. Tehran cannot ignore Asian companies. This situation will play a great role in curtailing Tehran’s expansionist tendencies. Iran also cannot ignore the strong relationship that connects China, Saudi Arabia and Pakistan. Here, these three forces if they believe in the future that Iran has crossed the “red lines,” especially with regard to the nuclear issue, they may re-assess their policies and provide Saudi Arabia with the opportunity to acquire nuclear weapons.

Rising power

Additionally, the GCC is rapidly becoming a global trading bloc with total merchandise trade of more than $ 1.5 trillion, making the GCC countries rank 12 globally. Further highlighting the importance of the GCC countries, the combined foreign assets of Gulf governments, state institutions, and banking systems (i.e. excluding the non-financial corporate sector), are estimated around $ 2.5 trillion last year. This rising economic power cannot be ignored by many countries.

Perhaps most importantly, Iran will not be able to compete with Saudi Arabia (let alone the GCC countries combined) in the global oil market for a long time. According to BMI’s assessment; raising Iran’s production capacity to the 4 million mark where output was in 2009 prior to the latest round of sanctions, would require more significant upstream investment and possibly years given the extent of the deterioration in the sector.

Even if Tehran will be able to raise its oil production, it means the need for new markets and today the demand is concentrated in Asia, especially China and India. In addition, Saudi Arabia’s refining capacity will jump to 5-6 million barrels per day before the end of this decade. This situation gives the Asian powers leverage to deal with Tehran and provide Riyadh with great flexibility to deal with OPEC’s quotas and the needs of its customers.

Iran’s own vulnerability

Iran itself is not immune of ethnic tensions. Given that ethnic Persians constitute 50-60 percent of the population, (according to some estimates, minorities such as Azeris, Kurds, Arabs, Baluchis comprise 40-50 percent of Iran’s population), and these minorities are geographically concentrated, the country could become vulnerable to separatist pressure, especially if ethnic minorities are provided with external support. Iran is also not immune from political turmoil over the coming years; if the regime promises do not materialised. This could exacerbate intra-regime political infighting, poor economic performance, insufficient democratic representation and the absence of social freedoms.

Iran maintains important economic relations with Arab Gulf States. Aggressive actions toward the GCC countries would be likely to jeopardize Iran’s own interests. On top of that, Iran also cannot ignore the growing strategic triangle between China, Saudi Arabia and Pakistan.

Ultimately there are limits to Tehran’s power. Iran is not a superpower and suffers from significant domestic problems. Iran should know more than anyone else that the Middle East, which shattered the former colonial powers, the goals of the Soviet Union and the dreams of the American new-conservative “democratic” project, could easily smash any expansionist polices of Tehran. The shortest way for the return of a great country such as Iran is to have a nuclear weapon-free Middle East, good relations with its neighbours and hard work to meet the legitimate aspirations of its own people.

Dr Naser al-Tamimi is a UK-based Middle East analyst and author of the book “China-Saudi Arabia Relations, 1990-2012: Marriage of Convenience or Strategic Alliance?” He is an Al Arabiya regular contributor, with a particular interest in energy politics, the political economy of the Gulf, and Middle East-Asia relations. The writer can be reached on Twitter: @nasertamimi

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