29 January 2012

STRATFOR, Iran and the Middle East

A few weeks ago the famed STRATFOR site was attacked by hackers and suffered an embarrassing setback. Their answer was to make the entire site free to everyone for a short period of time. I figured that this was my only chance to see first hand what George Friedman and his colleagues produced for their subscribers.

Well, to say that I was surprised would be an understatement. I expected complex analyses based on inside information and solid geopolitical theories. What I found was a series of binary propositions that took policy statements as axiomatic starting points. By binary propositions I mean "on the one hand" and "on the other hand" arguments with no tangible conclusions.

Iran is a case in point.

I am sure my tiny readership is well aware of the tension between Iran and Israel, the recent American embargo that will force most countries to stop dealing with Iran and the Iranian threat to block the Strait of Hormuz.

In June, STRATFOR ran a piece (one of their freebies) that suggested that the US was leaving the region and as Saudis were suspicious that the US might abandon them, leaving them exposed to Iran, they might be getting ready for a rapprochement with Iran. The link to their site is gone but the piece is still at Bill O'Reilly's mirror site (yes, that Bill O'Reilly).

To me, this is an astonishing proposition to advance. The idea of Wahhabi Saudis cozying up to Shiite Iranian is like American evangelicals considering to join the Church of Latter Day Saints. Someone who knows nothing about the underlying religious dogma might see them as versions of Christian faith but ask either party and they would simply laugh at the idea.

Moreover, I could not believe that someone actually took the US declaration of an exit from the region at face value. As I suggested in October, leaving behind 50,000 personnel in five heavily fortified, city-size bases does not seem like a departure to me.

It is unthinkable that the US would leave Saudi Arabia and the Gulf Emirates with no protection. Not to mention Israel. In fact, if you believed that the US spent a couple of trillion dollars and sacrificed almost five thousand American lives on a "freedom" mission, I would salute you for your innocence and gullibility.

Fast forward to last week. Friedman had an assessment of the situation and suggested that the US was planning to make a deal with Iran and within that arrangement it might accede to three major Iranian demands:
First, it wants the United States to reduce its presence in the Persian Gulf dramatically. Having seen two U.S. interventions against Iraq and one against Afghanistan, Iran is aware of U.S. power and the way American political sentiment can shift. It experienced the shift from Jimmy Carter to Ronald Reagan, so it knows how fast things can change. Tehran sees the United States in the Persian Gulf coupled with U.S. and Israeli covert operations and destabilization campaigns as an unpredictable danger to Iranian national security. 
Second, the Iranians want to be recognized as the leading power in the region. This does not mean they intend to occupy any nation directly. It does mean that Iran doesn't want Saudi Arabia, for example, to pose a military threat against it. 
Third, Iran wants a restructuring of oil revenue in the region. How this is formally achieved -- whether by allowing Iranian investment in Arabian oil companies (possibly financed by the host country) or some other means -- is unimportant. What does matter is that the Iranians want a bigger share of the region's vast financial resources.
I have to premise this with the caveat that Friedman and his  STRATFOR colleagues do not think that Iran has nuclear ambitions. They also assume that even if Iran developed nuclear weapon capabilities, it would not be a threat to the region.

Given that premise, what I fail to understand is this: if the US agrees with this assessment (and I think, contrary to public pronouncements, both the Americans and the Israelis do), why would they give in to such substantial demands? Why would they push the Gulf Emirates and the Saudis under the Iranian bus?

This is how Friedman explains this:
The key point in this scenario is the future of U.S. relations with the countries of the Arabian Peninsula. Any deal between Iran and the United States affects them two ways. First, the reduction of U.S. forces in the Persian Gulf requires them to reach an accommodation with the Iranians, something difficult and potentially destabilizing for them. Second, the shift in the financial flow will hurt them and probably will not be the final deal. Over time, the Iranians will use their strengthened position in the region to continue pushing for additional concessions from them. 
There is always danger in abandoning allies. Other allies might be made uncomfortable, for example. But these things have happened before. Abandoning old allies for the national interest is not something the United States invented. The idea that the United States should find money flowing to the Saudis inherently more attractive than money flowing to the Iranians is not obvious.
Even the last sentence is truly astonishing to me. The US has always gone to amazing lengths to protect, absolve and immunize Saudi Arabia. Even a massive terrorist plot, you know, "the one that changed everything," was not enough to cast doubt on them. 15 of the 19 hijackers were Saudi citizens and yet, no one uttered a single accusatory word. Their terrible human rights record, casual beheadings, zero rights to women are never discussed. All you see is president after president walking hand in hand with one of the aging sons of Ibn Saud.

Despite all that, we are to believe that the US might look with equanimity to an Iranian ascendancy at the expense of Saudis. And they would happily and quietly leave the region, now that Operation Iraqi Freedom, or whatever that was called, is over.

All I can say is, wow.

Iran's Options

Leaving  STRATFOR analyses aside for a moment, I think the plan that the US put together when they realized that it was impossible to control the regional distribution of oil and gas through military subjugation is working very nicely. And that plan put Iran in a difficult bind.

When you look at the map after the Arab Spring, you see that Arab nationalism is on the wane and the Islamic identity is on the rise. From North Africa to Egypt, Islamist parties are coming to power. At the same time, these new comers are very keen on appearing as moderate parties. In a way, with this new wave, Wahhabi Islam is retreating and moderate Islam is re-emerging after a 30-year hiatus.

Within that framework, instead of reminding them of the Ottoman Empire, as it normally should, Turkey seems to provide the Arabs of the region with an example and a model to follow: Forget nationalism and military backed secularism and invest in a moderate Islamic democracy. And they seem to be going for it. Even five years ago, this notion would have been unthinkable.

The model was made even more desirable with Turkey pretending to pick a fight with Israel and its explosive economic growth within this new arrangement, especially, in the last three years.

Partly as a result of the rise of Turkey and partly because of its own missteps, Iran has become a solitary figure in the region. The one place everyone pointed to emphasize Iran's influence was Syria and Syria is imploding. It was not a natural alliance to begin with, as Syrian Alawites have very little in common with Shiites other than professing a preference for Ali over the other three Caliphs (I oversimplify but the links are there for the nuances). Hefez Assad's Baath party had even less to do with the Iranian mullahs.

Given this conjuncture, let's look at Iran's options using the STRATFOR method.

On the One Hand

Iran could escalate the tensions hoping that the other side will back down. They have been giving mixed signals to give the impression that they might just do that. Recent reports that Iran might halt its oil exports to EU countries is one example. Their threat to close down Hormuz Strait is another.

The first threat might create some difficulties for Greece and Italy as they get 50 and 30 percent of their oil (respectively) from Iran. But such a ban would also hurt Iran economically. Saudi Arabia already pledged to increase its production to make up the difference (and Iran quickly threaten them about this pledge).  If that happens, and Saudis dispatch more oil to EU countries the only loser will be the Iranian economy. This could add to social unrest and make it harder for the ruling elite to maintain the existing uneasy truce with the reformists.

One additional long term consequence of an Iranian oil embargo against EU would be to add urgency to the proposed oil pipelines through Turkey and contribute to Turkey's plans to become a global energy hub.

The second threat has even worse consequences for the Iranian regime. The US already declared that it would consider the closing of the Strait of Hormuz a casus belli and would remove such a blockade by force. A confrontation with the US might have unintended consequences for Iran

The Iranian region of Khuzestan, previously known as Arabestan (i.e. the land of Arabs as the suffix "stan" means country or land of), has been the focus of the Americans for a long time. This is the oil rich region of Iran situated next to Basra region of Iraq right by the Shatt al-Arab. Besides producing close to 90 percent of Iran's oil, the majority of its population is composed of ethnic Arabs (hence the previous denomination).

This is the region Saddam wanted to annex during its epic war with Iran. Interestingly, the local Arabs sided with Iran at the time. But throughout the first decade of this century there have been reports that the US was working hard to sway their opinion against the central authority and there is enough evidence of serious local grievances on the part of the local Arabs.

An armed confrontation with Iran over Hormuz Straits might provide a pretext to escalate the hostilities to "save" Khuzestan and this time around the locals might be a lot more agreeable to the idea of becoming independent and keep the oil revenues in their new country.

It might sound like a far-fetched scenario right now but if hostilities were to ensue over Hormuz there is no telling where the US would stop and carving Khuzestan out of Iran would be a very rewarding outcome from their perspective. And I doubt that the ruling clergy would take that gamble.

On the Other Hand

Iran could simply accept to negotiate with the US over its nuclear plans.

Three days ago, unexpectedly, Ahmadinejad offered to resume talks in his typically defiant style:
 In a speech made in Kerman, southeastern Iran, and broadcast on state television, he accused the West of trying to ruin negotiations in order to put increased pressure on Iran.
"It is the West that needs Iran and the Iranian nation will not lose from the sanctions," the president said 
"It is you who come up with excuses each time and issue resolutions on the verge of talks so that negotiations collapse,'' he said. 
"Why should we shun talks? Why and how should a party that has logic and is right shun talks? It is evident that those who resort to coercion are opposed to talks and always bring pretexts and blame us instead."
And today, Iran allowed IAEA inspectors to visit their nuclear facilities
Iran's ambassador to the IAEA, Ali Asgar Soltaniyeh, said the inspection was aimed at foiling enemy plots and will prove the peaceful nature of Iran's nuclear work.
My take is that Iran is not going to go for the On The One Hand, i.e. belligerence scenario. It contains nothing but bad options for Iran and it could quickly escalate into something extremely detrimental for the regime's survival.

Going for the Other The Other Hand scenario, that is negotiating with the West over its nuclear program means that Iran will have to accept to remain a secondary power in the region and acquiesce to being contained by Turkey.

Far from making demands over the region's oil revenues and establishing its dominance, it will agree to live in the shadow of its highly emulated Sunni neighbor.

In other words, in my not very humble opinion, STRATFOR got it exactly backwards.

What is Turkey Doing About All This?

For its part, Turkey has been working hard to minimize the onerous nature of this eventual arrangement. It declared itself opposed to the oil embargo and last year it voted against it (along with Brazil) when it was still a member of the UN Security Council.

After the US law was passed a month ago, it voiced its opposition to it and agreed to join it "reluctantly."

Recently, the Turkish Minister of Foreign Affairs made a joint declaration with his Russian counterpart and offered to host Iranian nuclear talks:
Turkey and Russia share a similar stance on Iran, Turkish Foreign Minister Ahmet Davutoglu said at a Jan. 25 news conference with Russian Foreign Minister Sergei Lavrov, World Bulletin reported. Turkey's border with Iran has always been peaceful and will remain so, Davutoglu said. He added that Turkey is ready to host Iranian nuclear talks, which should resume rapidly. Turkey has not launched an initiative to intervene in the Iranian nuclear issue or target any of its neighbors in NATO-related activities, he said.
This last sentence is a veiled reference to the missile shield system recently installed in Turkey. Its inclusion is quite telling, as Davutoglu has trying to assuage Iranian fears that the system (with its twin in Israel) will be Israel's eyes in the region.

If you have been reading this blog, you know my views about the grand play in the region.

From that perspective, gently making Iran accept a lesser regional role would be an important step for the success of that plan.

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