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The Two-State Delusion

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Two decades after the signing of the declaration of principles (DOP) by Israel and the Palestine Liberation Organization (PLO) on the White House lawn, there is something unreasonable in the world’s continued adherence to the Oslo paradigm, tattered and battered as it is by years of a bloody fiasco.

The Palestinian Arab leadership has consistently and adamantly rejected the two-state solution since its first articulation in 1937 by the British Peel commission[1] and has, as consistently, advocated the destruction of the Jewish state. Still, it undertook a successful public relations campaign in the 1980s promoting the notion of a Palestinian state in the West Bank and the Gaza Strip—”the occupied territories.”

Over the years and especially in the wake of the DOP, the Palestinian demand for statehood has gained rapid political momentum and international acceptance. A succession of Israeli prime ministers—from Shimon Peres, to Ehud Barak, Ariel Sharon, Ehud Olmert, and Binyamin Netanyahu—embraced the idea, as did U.S. presidents Bill Clinton, George W. Bush, and Barack Obama. The paradigm for a final peace includes among its primary components Israeli territorial withdrawal and Palestinian sovereignty, political separation with reconciliation, compromise, and coexistence.

Yet twenty years on, the two parties find themselves further apart despite years of diplomatic wrangling. It is thus past time to examine and invalidate the paradigm that has taken hold in the hope that a new and less sanguinary one will take root.

A History of Failure

The concept of a Palestinian state appears just and reasonable. It evolves from the notion of a right to national self-determination for the stateless Palestinian people and their demand to end an Israeli presence in the territories captured in 1967. The terminology of decolonization regarding Jews who have settled in those territories fits this narrative of thwarted native Palestinian rights; ending the “illegality” of Israeli rule over the West Bank, the Gaza Strip, and East Jerusalem is a global political stipulation for conflict-resolution. From the November 1988 resolution in Algiers that called for Palestinian independence to the extensive diplomatic campaign of September 2011 to promote Palestinian statehood at the United Nations, the PLO dramatically altered the political parameters of the conflict and its resolution. In sketching the two-state solution of Israel and Palestine as representing complementary rather than contradictory elements in the puzzle of peace-making, values of equality and freedom radiated from both sides.

The Palestinian state idea had been proposed repeatedly in the post-1967 era,[2] and its feasibility, viability, and desirability were analyzed and advocated again and again. The idea was central to the Arab-originated Fahd plan of 1981 and the Fez plan of 1982 and was reintroduced two decades later in 2002 by the Saudis as the Beirut peace plan. On the Jewish side, the nongovernmental Council for Peace and Security founded in 1988 was book-ended by the so-called Geneva initiative of 2003—headed by two failed politicians, Yossi Beilin and Amnon Lipkin-Shahak—with centrist Labor and leftist political parties contributing their own details along the way, all promoting a Palestinian state alongside Israel. The two-state solution emerged within PLO circles in 1988 when Bassam Abu Sharif, a political advisor to Arafat, presented a position paper on the theme.[3]

However, when the Oslo accords between Israel and the PLO were signed in September 1993, there was no explicit mention that the peace process would culminate in a Palestinian state. Prime Minister Yitzhak Rabin, who had in 1974 rejected the notion of a “third state” between Israel and Jordan,[4] had reiterated this position in an autobiographical work in 1979, contending that a Palestinian “mini-state” in the West Bank and Gaza Strip would serve as a stage toward the “secular, democratic state of Palestine” that would rise “on the ruins of the state of Israel.”[5] Four years before concluding the historic agreement with Arafat at the White House, Rabin asserted that a Palestinian state would be a time-bomb for chaos and warfare,[6] and even with the establishment of the Palestinian Authority (PA) in 1994, it remained Rabin’s belief that the final version of the Palestinian entity must be less than a sovereign state.[7]

With that said, Palestinian sovereignty was, nevertheless, anticipated as the end-product of the Oslo process. Israel had acknowledged Palestinian peoplehood and rights in the 1978 Camp David-negotiated framework agreement for Middle East peace. It then recognized the Palestine Liberation Organization in 1993, agreed to the founding of the PA and its police force in 1994, and implemented territorial withdrawals from towns and rural areas in Judea-Samaria and Gaza in 1994-97. The International Donors’ Committee provided billions of dollars in aid to the PA, which established institutions for what could be termed a state in formation. Binyamin Netanyahu, leader of the opposition Likud Party in 1993, said he would abrogate the Oslo accords, but as prime minister in 1996, he failed to do so.[8] The Hebron protocol of January 1997 and the Wye River memorandum of October 1998 demonstrated that Netanyahu operated within the Oslo paradigm for peace by relinquishing Israeli control over land, which was linked to explicit Palestinian obligations such as combating terrorist organizations and preventing incitement. Soon afterward, the Israeli government cancelled additional withdrawals because the PLO did not fulfill its commitments but not because Jerusalem dispensed with the Oslo idea.

Faith in Oslo did not dissolve even when failure struck over and over again. In July 2000 at the Camp David summit, Ehud Barak offered Arafat Palestinian statehood with control over approximately 92 percent of the West Bank and the Gaza Strip and a political capital in the vicinity of Jerusalem. But Arafat spurned the offer, and a reign of terror and suicide-bombing ensued.

Despite the basic breakdown of diplomacy and although U.S. Middle East envoy Dennis Ross admitted that Oslo had failed, he remained convinced—having written eight hundred pages of close text detailing the intricacies, efforts, obstacles, formulae, and setbacks regarding “the missing peace”—that “there is room for creative diplomacy.”[9] Should failure not have brought about a reevaluation and some change in policy orientation?

In January 2002, President Bush called for an “end to occupation and [for] a peaceful democratic Palestinian state” as the prescription for peace, a formula endorsed a year later by the international “Quartet” (the United States, Russia, the European Union, and the United Nations). Another year later, Prime Minister Ariel Sharon also hitched onto the Palestinian state bandwagon as did his successors in Jerusalem—Olmert and Netanyahu—a few years hence. Yet negotiations, such as those between Olmert and PA president Mahmoud Abbas in the latter part of 2007, dragged on without results. The plethora of issues—from settlements and prisoners, to Palestinian institutions in East Jerusalem, to the Fatah/Hamas split—preoccupied and confounded the Israeli-Palestinian discussions without any satisfactory conclusion.[10]

On May 19, 2011, President Barack Obama affixed his name to the distinguished roster of supporters of a Palestinian state by advocating that “the borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps.”[11] Netanyahu reacted sharply that the Palestinian state could not come at the “expense of Israeli existence,” affirming that the 1967 borders were “indefensible.”[12] This set the political stage for a dispute between Washington and Jerusalem and assured that Israeli-Palestinian negotiations were not likely to renew soon. The Oslo paradigm was frozen: There were to be no negotiations, no Palestinian recognition of a Jewish state, and no peace in the offing. The three “nos” on Israel formulated at the 1967 Khartoum Arab summit—no negotiations, no recognition, and no peace—had been transformed and reformulated with their political core unchanged.[13]

Twenty years of the Oslo process filled with optimism and enthusiasm, adorned with Nobel prizes, grand summitry, and historic declarations that peace was “just around the corner” have delivered no peace. Firmly entrenched in its place, however, is a textbook example of cognitive dissonance written on a grand political scale. A final status agreement should have been consummated by 1999, five years following the “Gaza-Jericho First” stage in 1994, but neither Rabin’s assassination in 1995 nor the murder of 1,084 Israelis from September 2000 to October 2010 (along with 250 from 1993 until July 2000)[14] could quash efforts at advancing the process. True believers continue to argue that once a Palestinian state in the territories is established, the Oslo paradigm will be validated. For those afflicted with “Osloitis,” when the evidence counters their utopian paradigm, the bearer of bad news is defamed rather than commended for contributing to an alternative conceptual construct.

Oslo’s Unaddressed Fallacies

At the heart of the failed Oslo paradigm are a core group of fallacies that have been promoted as truths: that the land can sustain two opposing population groups; that the Arab goal of destroying Israel can be appeased through “painful concessions” (rather than defeated by an Israeli victory); and that this is not a conflict based on something as elemental and incendiary as religion. Not one can withstand close scrutiny.

Geopolitical conflict is frequently a function of a dearth of resources and cannot be resolved by a mere wish for human harmony. In this case, both land and water are scarce, and the less than 40-mile width of the land from the Mediterranean coast to the Jordan River is insufficient to accommodate two rival states with expanding populations and vibrant national ambitions. While there are a few small states living cheek by jowl like the Netherlands and Luxembourg that are not at each others throats, they do not face the other factors that have contributed to the Israeli-Palestinian impasse.

There is, moreover, a great likelihood that a Palestinian state ensconced in the West Bank and Gaza Strip would evoke a powerful zeal for further land concessions, not only from the Arabs of Ramallah or Nablus, but also among many Israeli Arabs in the Galilee, for example, of whom opinion surveys indicate their belief that Jews are foreigners in the Middle East.[15] Such a state could easily foment an insurgency within Israel, bringing along further disruptions and destruction in its wake. Indeed, the Palestinian belief that Tiberias, Haifa, and Tel Aviv-Jaffa are lost cities of Arab Palestine fuels a deep-seated rejectionism, which is manifested in the leadership’s adamant refusal to recognize Israel’s very right to exist as a Jewish state.[16]

Finally, the war against Israel is little more than a modern application of Qur’anic hostility toward Jews, expressing the ethos of jihad and the religious definition of Palestine as a sacred waqf (Islamic religious endowment). Buoyed with this faith and ideology, Iran and Hezbollah, al-Qaeda and the Muslim Brotherhood, Hamas, Islamic Jihad, and other Muslim elements dedicate themselves to destroying Israel once and for all. In this, they are only more obvious than the so-called moderate Fatah leadership, which makes use of religious imagery and imperatives whenever it suits its purpose. A two-state solution is, in essence, a betrayal of Islam although a Palestinian state could become the springboard for the ongoing campaign to undermine, overrun, and eradicate the Jewish state—fi Sabil Allah (in the path of God). All this is so because, as article 15 of the Hamas covenant declares, “the Palestinian problem is a religious problem.”[17]

The irrefutable conclusion is that the Oslo process brought no discernible change in the Palestinian attitude toward Israel. It remains a state that has to be eliminated. In May 2013, Mahmoud Abbas repeated the PLO’s position that the Palestinians would refuse, as they indeed have, to recognize Israel’s legitimacy as a Jewish state.[18] Jibril Rajoub, Fatah Central Committee member, declared soon thereafter that the Palestinians were the enemies of Israel, adding that if the Palestinians had nuclear weapons they would use them.[19] No less acerbic was a remark by Jamal Zahalka, Arab member of Israel’s Knesset, who on July 31, 2013, railed against his fellow-citizens and parliamentarians: “We [the Arabs] were here before you [the Jews], and we’ll be here after you’re gone.”[20]

In addition, the Oslo paradigm founders on the twin rocks of Palestinian factionalism and extremism as Palestinian society is hopelessly fissured by traditional identities and loyalties with extended family and tribal ties enduring despite a narrative of nationalism. The rural-urban split, the settled-refugee dichotomy, and the Muslim-Christian differentiation all confound integral social cohesion. Such a political tapestry, barely holding together despite decades of trying, baffles national unity, complicating the viability of any Palestinian state project becoming sturdy or stable.

 

These divisions have become further concretized by geopolitical partition. In 2007, Hamas seized control of Gaza after Israel’s disengagement-withdrawal from the strip two years earlier and the Islamists’ electoral victory over Fatah in 2006. The 40-kilometer geographic separation between the West Bank and the Gaza Strip, alongside the ideological and political enmity between Fatah-PA and Hamas, is a powerful obstacle to generating Palestinian unity. The conventional two-state proposal is a misnomer inasmuch as Gaza already constitutes a Palestinian “statelet,” so that another Palestinian state based in the West Bank would actualize a three-state solution. The fathers of the Oslo accords could not imagine in their wildest dream such a bizarre turn of events.

 

Lastly, an ethic of extremism has been embedded in the culture of Palestinian politics for the last one hundred years, beginning with Hajj Amin Husseini (1897-1974) and continuing through the tenure of Yasser Arafat (1929-2004), with a slew of other noteworthy firebrands such as Izz al-Din al-Qassam (1882-1935) and Ahmad Yassin (1937-2004) throwing fuel on the blaze in between. Five days before the Oslo signing, Arafat told an Israeli journalist that one day there would be “a united state in which Israelis and Palestinians will live together” (without Israel)[21] while in 1996, after Oslo, he forecast Israel’s collapse under the weight of an Arab return to the West Bank and Jerusalem, linked to psychological warfare that would convince the Israelis to emigrate.[22] The Arabs of Palestine have every reason to believe that the country is theirs alone because their leaders have been telling them that from the very beginnings of their own self-awareness as a people. For them, extremism is justified although this mental universe of self-delusion and fanaticism has not led them to a political victory.

 

Four Insurmountable Oslo Issues

 

Early in 1993, the Oslo negotiators concluded that a full and immediate resolution of the conflict was an impossible task, preferring instead to conceive of peace-making as a staged process rather than a single, decisive event. The major points of contention would be left to a later phase following the initial and practical launching of the accord. In the final status negotiations, peace would be achieved when the outstanding issues could be settled to the satisfaction of the Israelis and Palestinians alike.[23]

 

The religious-cum-political issue of the holy city of Jerusalem represented perhaps the most intractable problem to be resolved. Despite the Jewish people’s millennial connections to Zion, Israel’s June 1967 decision to apply its law and administration over the entire united city as its capital was rejected by the Palestinians and their abettors in the international community. At Camp David in July 2000, contorted and repeated efforts were made to formulate an agreement that would accord Palestinians sovereignty over the Arab-inhabited peripheral areas of Jerusalem, jurisdiction over the inner neighborhoods, and Palestinian governance over the Muslim and Christian quarters of the Old City. In these plans, the Temple Mount, the holiest site in Judaism, would be handed over to a Palestinian administration that claimed it as the al-Haram al-Sharif (sacred precinct). Prime Minister Barak’s negotiating position, although it seemed to waver over the summit days, demanded Israeli sovereignty over West Jerusalem and the post-1967 Jewish neighborhoods around the city but also over the inner Arab-inhabited Jerusalem neighborhoods such as Sheikh Jarrah and Wadi Joz. He firmly rejected Palestinian sovereignty over the Temple Mount while Arafat apparently called for Palestinian sovereignty over all of Jerusalem.[24] In the end, Arafat spurned the deal, and the world will never know if further Israeli concessions, like recognizing absolute Muslim control and Palestinian sovereignty over the Haram al-Sharif, would have perhaps elicited Arafat’s agreement. Palestinian militancy regarding Jerusalem has continued over the years, leading to assaults upon Jews in the Old City area and stoning attacks on the Temple Mount. These attacks have occurred despite an Israeli policy to limit and sometimes prohibit Jewish prayer on the mount. Self-imposed Israeli renunciation of Jewish religious rights merges with and perhaps evokes Palestinian violence.

 

An even greater sticking point is the final status of the so-called Palestinian refugees. The unyielding Palestinian demand that the “right of return” be acknowledged and implemented is a call for Palestinian “justice” that carries within it the seed for Israel’s destruction. The “right of return” has become sacred dogma for Palestinians. Perhaps equally fixed is the Israeli rejection of the idea as suicidal for the Jewish state. A growing constituency of Arabs in Israel echoes the “return” theme.[25]

 

This Palestinian position, sustained by a contrived memory of forced dispossession and nurtured by political rigidity, has been met with an equally steadfast Israeli rejection although Barak was willing to concede a symbolic number of returning refugees in July 2000.[26] The refugee issue proves clearly that the Palestinian intent is to Arabize Israel and obliterate the Zionist enterprise. These are not the building blocks for the two-state solution envisaged by the Oslo negotiators.

 

Of late, the issue of the “settlements”—Jewish communities—has become the international community’s bête noire. The Jewish presence in Judea and Samaria, numbering more than 120 localities with more than 330,000 people, may have begun in part as a perceived security imperative, but early on, it also expressed the immutable right of the Jewish people to live in and control the Land of Israel west of the Jordan River. For the Palestinians however, these communities were concrete evidence of Zionist expansionism and colonial occupation. The Palestinian position has become monolithic, demanding a dismantling of all Israeli communities and the expulsion of all their residents.

 

Meanwhile, Israeli governments forged a public consensus around those population blocks to be retained in any future agreement, a position endorsed by President Bush in 2004.[27] The Palestinian position hardened further in 2010 when Abbas, encouraged by President Obama, demanded a complete cessation of all construction activity, not only in the territories but also in post-1967 Jerusalem neighborhoods such as Har Homa and Ramat Shlomo, which are on the eastern side of the city.[28] In short, the settlement issue brought the sides to political wrangling that froze the already-stalled Oslo process. A Judenrein West Bank, recalling what Menachem Begin did in expelling Jews when handing over the Sinai Peninsula to Egypt in 1982, and what Ariel Sharon similarly did in the Gaza Strip in 2005, was not the future that many Israelis had in mind when imagining the contours of peace.

 

The fourth intractable issue is one of borders. A final political map delineating the outline of a Palestinian state is tied to the Arab demand that Israel withdraw to the June 4, 1967 lines. No Israeli government ever agreed to such a total retreat, which runs counter to U.N. resolution 242, which established the land for peace formula in the wake of the 1967 war: Barak wavered between 88-93 percent of the West Barak while Sharon and Netanyahu considered withdrawal from perhaps 50 percent of the area.[29] Military control of the Jordan Valley remains of particular importance for Israel to prevent both future smuggling of weapons and terrorists through Jordan into Palestine and to constitute a defensive line for Israel’s eastern front facing the Arab states across the river. Israel would have to evacuate 100,000 residents in the unlikely event that final borders would exclude many smaller Jewish localities dispersed throughout Judea and Samaria beyond the larger population centers such as Ariel, Maaleh Adumim, and the Etzion block.[30] This grim scenario alone would be sufficiently critical to hamper an agreement, considering the national trauma that resulted from the expulsion of 8,000 Gush Katif residents from Gaza in August 2005. This is not the kind of public atmosphere that would generate Israeli support, let alone enthusiasm, for any peace based on the Oslo parameters.

 

Conclusion

 

While Israelis consistently poll in support of a Palestinian state, the reasons for abandoning the idea have multiplied over time. Palestinian nationalism with its malignant and rogue features remains committed to destroying Zionism. The Fatah media and school curricula indoctrinate the Palestinian people and youth to disparage Jews as “evil” and Israel as a “cancer.”[31] Palestinian military forces train for the possibility of future fighting with Israeli military forces,[32] and Palestinian diplomacy, like the recent failed attempt to get the U.N. to grant it unconditional statehood, remains the stuff of wily bazaar bargaining in a diplomatic war of attrition. It is clear that the Palestinian public has never really accepted the two-state solution as a final end to the conflict.[33] This was given vivid expression in the last interview by the late Faisal Husseini, the prominent PLO leader, who infamously compared the Oslo process to a Trojan horse that would bring about Israel’s demise.[34] More recently, Abbas Zaki, Fatah Central Committee member, confessed that “it’s not acceptable to say we want to wipe Israel out … It’s not [acceptable] policy to say so. Don’t say these things to the world. Keep it to yourself.”[35]

 

Obstacles also exist in addressing the practical aspects and nitty-gritty details of a Palestinian state centered in the West Bank. Israel’s security-related conditions regarding demilitarization and control of airspace and military monitoring stations on West Bank hilltops meet with unwavering Palestinian opposition on all counts.[36] A state of Palestine, founded in a moment of desperation and born in bitter acrimony, will lack the space to absorb millions of refugees should the expatriate Palestinian community opt for emigration and be fated for economic impoverishment (discounting the billions of dollars donated to the PA by the international community since 1994). Based on everything a dispassionate observer can testify to since the 1994 establishment of the Palestinian Authority, this Palestinian state, awkwardly sandwiched between Israel and Jordan, has all the likelihood of becoming a failed state—fragile, mismanaged, tending to disorder and civil war.[37]

 

As such, the two-state paradigm trumpeted by Oslo has been invalidated with the growth of the magnitude of dissonance. There is just no sound political basis for an Israeli-Palestinian peace agreement. All basic final status issues escape resolution. Yet, there has never been an admission of error, let alone an apology by Peres or Bill Clinton, Bush, Sharon, Olmert, Obama, or Netanyahu in their advocacy of a two-state solution. Speaking of the predominant role played by Peres in the Oslo saga, the contemporary grand master of realpolitik, Henry Kissinger, once remarked that Peres had “the trait of French academics who tend to believe that the formulation of an idea is equivalent to its realization.”[38] The same could be said of all those well-intentioned diplomats and politicians who have followed in Peres’s footsteps. Small wonder that, notwithstanding the plan’s abysmal failure and likely calamitous future, the intellectual brainwashing exercised by the Oslo paradigm has not yet loosened its grip over people’s minds as evidenced most recently by John Kerry’s heroic, but ultimately doomed, attempt to resuscitate the “peace process.”[39]

 

Mordechai Nisan is a retired lecturer in Middle East Studies at the Hebrew University of Jerusalem and at other academic institutions in Israel. His most recent book is Only Israel West of the River (CreateSpace Independent Publishing Platform).

 

[1] The Peel commission recommended the incorporation of the Arab part of western Palestine into Transjordan, ruled by Emir Abdullah ibn Hussein, rather than its constitution as an independent state.
[2] For example, Richard J. Ward, Don Peretz, and Evan M. Wilson, The Palestine State: A Rational Approach (Port Washington, N.Y.: Kennikat Press, 1977); Mark A. Heller, A Palestinian State: The Implications for Israel (Cambridge.: Harvard University Press, 1983).
[3] Mark Tessler, A History of the Israeli-Palestinian Conflict, 2nd ed. (Bloomington and Indianapolis: Indiana University Press, 2009), pp. 535-8, 711-29.
[4] Yediot Aharonot (Tel Aviv), July 26, 1974.
[5] Yitzhak Rabin, Pinkas Sherut, vol. II (Tel Aviv: Ma’ariv, 1979), p. 583.
[6] Ma’ariv (Tel Aviv), Feb. 10, 1989.
[7] David Makovsky, Making Peace with the PLO: The Rabin Government’s Road to the Oslo Accord (Washington and Boulder: The Washington Institute for Near East Policy and Westview Press, 1996), p. 123.
[8] Yossi Beilin, “Oslo Kvar Betocheinu,” Yisrael Hayom (Tel Aviv), July 27, 2011.
[9] Dennis Ross, The Missing Peace: The Inside Story of the Fight for Middle East Peace (New York: Farrar, Straus and Giroux, 2004), p. 800.
[10] “The Israeli-Palestinian Conflict: Annapolis and After,” Middle East Briefing, no. 22, International Crisis Group, Jerusalem/Washington/Brussels, Nov. 20, 2007.
[11] Barack Obama, remarks on the Middle East and North Africa, State Department, Washington, D.C., May 19, 2011.
[12] Al-Jazeera TV (Doha), May 19, 2011.
[13] “The Khartoum Resolutions,” Sept. 1, 1967, The Jewish Virtual Library.
[14] Ross, The Missing Peace, p. 782.
[15] The Jerusalem Post, May 19, 2011.
[16] “My Country Palestine,” Fatah PA TV, July 13, 2011, in MEMRI Bulletin, Middle East Media Research Institute, Washington, D.C., July 26, 2011; YNet News (Tel Aviv), Aug. 28, 2011.
[17]Hamas Covenant 1988,” Yale Law School Avalon Project, accessed Oct. 29, 2013.
[18] Al-Hayat al-Jadida (Ramallah), May 4, 2013, quoted by Palestinian Media Watch, Jerusalem.
[19] Al-Mayadeen TV (Beirut), in Palestinian Media Watch Bulletin, May 8, 2013.
[20] Israel Hayom, Aug. 1, 2013.
[21] Efraim Karsh, Arafat’s War: The Man and His Battle for Israeli Conquest (New York: Grove Press, 2003), pp. 59-60; idem, “Arafat Lives,” Commentary, Jan. 2005.
[22] The Jerusalem Post, Feb. 23, 1996; Yedidya Atlas, “Stockholm Revisited,” Israel radio 7, May 10, 1996.
[23] Makovsky, Making Peace with the PLO, chap. 2-3.
[24] Shlomo Ben-Ami, Hazit Le’lo O’ref: Masa el Gvulot Tahalich Hashalom (Tel Aviv: Yediot Aharonot, 2004), pp. 165-95; Ross, The Missing Peace, pp. 686-7.
[25] L. Barkan, “Israeli Arab Leadership Jockeys for Central Role in Palestinian Leadership,” Middle East Media Research Institute, Inquiry & Analysis Series Report, no.721, Aug. 11, 2011.
[26] Ron Pundak, “From Oslo to Taba: What Went Wrong?” Survival, Autumn 2001, pp. 31-45.
[27] The Washington Post, Apr. 15, 2004.
[28] YNet News, Nov. 10, 2010.
[29] Ha’aretz (Tel Aviv), Nov. 4, 2006; The Times of Israel (Jerusalem), Feb. 19, 2013; “Peace Negotiations in Name Only,” DebkaFile (Jerusalem), Sept. 23, 2013.
[30] Giora Island, “The Future of the Two-State Solution,” Jerusalem Issue Brief, Jerusalem Center for Public Affairs, Feb. 8, 17, 2009.
[31] Al-Aqsa TV (Gaza), July 13, 2008;Religious War,” Palestinian Media Watch, Jerusalem, July 3, 2013.
[32] Gal Luft, “The Palestinian Security Forces: Capabilities and Effects on the Arab-Israeli Military Balance,” Ariel Center for Policy Research, Shaarei Tikva, Oct. 2001; CNS News, July 7, 2008.
[33] Benny Morris, “Eliminating Israel,” The National Interest, July 19, 2011.
[34] Al-Arabi (Cairo), June 6, 2001.
[35] The Blaze (New York and Dallas), Oct. 3, 2011.
[36] Dore Gold, “Banging Square Pegs into Round Holes,” Jerusalem Center for Public Affairs, Dec. 2008.
[37] Charles W. Kegley, Jr., and Eugene R. Wittkopf, World Politics: Trend and Transformation, 7th ed. (Boston: Bedford/St. Martin’s, 1999), p. 372.
[38] Henry Kissinger, Years of Renewal (New York: Simon and Schuster, 1999), p. 376.
[39] The New York Times, July 19, 2013.

 

Middle East

Shifting Middle Eastern sands spotlight diverging US-Saudi interests

Dr. James M. Dorsey

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A series of Gulf and Middle East-related developments suggest that resolving some of the Middle East’s most debilitating and devastating crises while ensuring that efforts to pressure Iran do not perpetuate the mayhem may be easier said than done. They also suggest that the same is true for keeping US and Saudi interests aligned.

Optimists garner hope from the fact that the US Senate may censor Saudi crown prince Mohammed bin Salman for the October 2 killing of journalist Jamal Khashoggi in Istanbul; the positive start of Yemeni peace talks in Sweden with an agreement to exchange prisoners, Saudi Arabia’s invitation to Qatar to attend an October 9 Gulf Cooperation Council (GCC) summit in Riyadh, and a decision by the Organization of Oil Exporting Countries (OPEC) to cut production.

That optimism, however, may not be borne out by facts on the ground and analysis of developments that are likely to produce at best motion rather than movement. In fact, more fundamentally, what many of the developments suggest is an unacknowledged progressive shift in the region’s alliances stemming in part from the fact that the bandwidth of shared US-Saudi interests is narrowing.

There is no indication that, even if Qatari emir Sheikh Tamim bin Hamad Al Thani decides to accept an invitation by Saudi king Salman to attend the GCC summit rather than send a lower level delegation or not attend at all, either the kingdom or the United Arab Emirates, the main drivers behind the 17-month old economic and diplomatic boycott of the Gulf state, are open to a face-saving solution despite US pressure to end to the rift.

Signalling that the invitation and an earlier comment by Prince Mohammed that “despite the differences we have, (Qatar) has a great economy and will be doing a lot in the next five years” do not indicate a potential policy shift, UAE Minister of State for Foreign Affairs Anwar Gargash insisted that the GCC remained strong despite the rift. “The political crisis will end when the cause behind it ends and that is Qatar’s support of extremism and its interference in the stability of the region.,” Mr. Gargash said, reiterating long-standing Saudi-UAE allegations.

Similarly, United Nations-sponsored peace talks in Sweden convened with the help of the United States may at best result in alleviating the suffering of millions as a result of the almost four-year old Saudi-UAE military intervention in Yemen but are unlikely to ensure that a stable resolution of the conflict is achievable without a lowering of tension between Saudi Arabia and Iran. Even humanitarian relief remains in question with the parties in Sweden unable to agree on a reopening of Sana’a airport to facilitate the flow of aid.

More realistically, with the Trump administration, backed by Saudi Arabia and Israel, determined to cripple Iran economically in a bid to force it to alter its regional policies, if not change the regime in Tehran, chances are the Yemeni conflict will be perpetuated rather than resolved.

To Yemen’s detriment, Iran is emerging as one of the foremost remaining shared US-Saudi interests as the two countries struggle to manage their relationship in the wake of Mr. Khashoggi’s killing. That struggle is evident with the kingdom’s Washington backers divided between erstwhile backers-turned-vehement critics like Republican senator Graham Lindsey and hardline supporters such as national security advisor John Bolton. The jury is out on who will emerge on top in the Washington debate.

The risks of the Saud-Iranian rivalry spinning out of control possibly with the support of hardliners like Mr. Bolton were evident in this week’s suicide bombing in the Iranian port of Chabahar, an Indian-backed project granted a waiver from US sanctions against the Islamic republic to counter influence of China that support the nearby Pakistani port of Gwadar.

Iranian officials, including Foreign Minister Mohammad Javad Zarif and Revolutionary Guards spokesman Brigadier General Ramadan Sharif suggested without providing evidence that Saudi Arabia was complicit in the attack that targeted the city’s police headquarters, killing two people and wounding 40 others.

Iran’s semi-official Tasnim news agency, believed to be close to the Guards, said the attack was the work of Ansar al-Furqan, an Iranian Sunni jihadi group that Iran claims enjoys Saudi backing.

Iran’s allegation of Saudi complicity is partly grounded in the fact that a Saudi thinktank linked to Prince Mohammed last year advocated fuelling an insurgency in the Iranian province of Sistan and Baluchistan that incudes Chabahar in a bid to thwart the port development while Mr. Bolton before becoming US President Donald J. Trump’s advisor called for US support of ethnic minorities in Iran.

In a bid to create building blocks for the fuelling of ethnic insurgencies in Iran, Pakistani militants have said that Saudi Arabia had in recent years poured money into militant anti-Iranian, anti-Shiite madrassas or religious seminaries in the Pakistani province of Balochistan that borders on Sistan and Baluchistan.

The divergence of US-Saudi interests, agreement on Iran notwithstanding, was on display in this week’s defeat of a US effort to get the UN General Assembly to condemn Hamas, the Islamist group that controls the Gaza Strip. Saudi Arabia, despite the kingdom’s denunciation of Hamas as a terrorist organization and its demand that Qatar halt support of it, voted against the resolution.

The vote suggested that Mr. Trump may be hoping in vain for Saudi backing of his as yet undisclosed plan to resolve the Israeli-Palestinian dispute that is believed to be slanted towards Israel’s position.

Saudi ambassador to the UN Abdallah Al-Mouallimi said the defeated UN resolution would “undermine the two-state solution which we aspire to” and divert attention from Israel’s occupation, settlement activities and “blockade” of territories occupied during the 1967 Middle East war.

Saudi Arabia’s changing status and the divergence of longer-term US-Saudi interests was also evident in this week’s OPEC meeting in Vienna.

To get an OPEC deal on production levels, the kingdom, once the oil market’s dominant swing producer, needed an agreement with non-OPEC member Russia on production levels as well as Russian assistance in managing Iranian resistance, suggesting

The agreement, moreover, had to balance Mr. Trump’s frequently tweeted demand for lower prices, and the kingdom’s need for higher ones to fund its budgetary requirements and Prince Mohammed’s ambitious economic reforms and demonstrate that the Khashoggi affair had not made it more vulnerable to US pressure.

The emerging divergence of US-Saudi interests in part reflects a wider debate within America’s foreign policy community about what values the United States and US diplomats should be promoting.

With some of Mr. Trump’s ambassadorial political appointees expressing support for populist, nationalist and authoritarian leaders and political groups, the fact that some of the president’s closest Congressional allies back the anti-Saudi resolution illustrates that there are red lines that a significant number of the president’s supporters are not willing to cross.

All told, recent developments in the Middle East put a spotlight on the changing nature of a key US relationship in the Middle East that could have far-reaching consequences over the middle and long-term. It is a change that is part of a larger, global shift in US priorities and alliances that is likely to outlive Mr. Trump’s term(s) in office.

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Qatar’s decision to leave OPEC

Giancarlo Elia Valori

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The Emirate of Qatar will leave OPEC as from January 1, 2019.

The primary reason for this choice is the Emirate’s project to become the world leader in the natural gas market, raising its production from 77 million tons per year to 110 million tons. However, there is obviously also a geopolitical and energy decision underlying Qatar’s current choice.

This is the Emirate’s final response to the boycott and blockade imposed by Saudi Arabia on Qatar in June 2017, with the support of the United Arab Emirates, Bahrain, Yemen, Maldives, the Libyan GNA, Egypt and Jordan – based on Saudi Arabia’s generic accusation whereby Qatar was supposed to sponsor and support “terrorism” on its own.

The blockade was imposed two days after President Trump had met as many as 55 Heads of Arab and Muslim countries to build a sort of NATO equivalent, always against “terrorism” – an alliance to be set up immediately to counteract, above all, the Shiite and Iranian danger.

Let us leave aside the twenty-eight pages taken from the report of the US Senate on September 11, which would definitively prove the connection between those Al-Qaeda operatives and the Saudi regime – as well as the many multiannual reports of private and public funding to the jihadists and finally the lines of credit opened again by eminent citizens of the Wahhabi Kingdom in favour of Al Baghdadi’s Syrian-Iraqi Caliphate.

The Saudis, however, are too rich not to be believed, especially by the USA – hence the great blockade on Qatar succeeded also with the support of some Western countries.

For the whole Middle East, their troops, like the US ones, reported to CENTCOM, at the Al Udeid base  having its headquarters precisely in Qatar.

The strategic characteristics of Qatar, which today wants to build its autonomous natural gas organization –  independent of the oil one of OPEC, which does not deal with gasand is, however, dominated by Saudi Arabia –  are many and particularly interesting: firstly, the Qatari people are probably the richest citizens in the world.

If we assume that the Americans’ average income is 100, that of Qatari citizens is 187.4.

Just about the size of the Falkland Islands, the Emirate has 1.9 million residents, with a very high and growing share of immigrants.

From 2000 to 2010 the Emirate’s economy grew by a 12.9% average per year.

Its future growth up to 2022 is expected to be 18% higher than the current one.

There is also an interesting geopolitical sign: Qatar  participated – with great commitment – in the Western operations against Gaddafi by supporting, in particular, the black market of Cyrenaica’s oil, together with the Turkish intelligence services.

Nevertheless Qatar supports also some “rebel” jihadist Syrian groups against Assad, thus doing half a favour to US allies – while hosting, since 2013, a political office of the Afghan Taliban, which is well known and also frequented by the US intelligence service operatives.

Qatar’s global industrial and financial investments, however, are manifold.

Through its sovereign fund, the Emirate owns significant shareholdings of the Agricultural Bank of China – and certainly the Qatari decision to leave OPEC has been blessed by China. It also has shareholding in the Airbus Group; the London Stock Exchange (15.1%); Volkswagen (17%); Lagardère, a large and diversified media and publishing company; the Paris St.Germain football club; the Virgin megastore;  the HBSC, one of the largest banking groups in the world; Credit Suisse (5.2%) and Veolia, a French water and gas utility and service company.

Not to mention the countless real estate operations: Porta Nuova in Milan; Westin Excelsior in Rome; Gallia in Milan; Costa Smeralda in Sardinia;  Deutsche Bank; Barclay’s; Royal Dutch Shell; Tiffany; Siemens; the Heathrow airport; Walt Disney and the Empire State Building.

In addition to many other shareholdings not mentioned in this paper.

However, it has also a 3% shareholding of Total, which for Italy is an extremely important sign; a majority shareholding of the Miramax entertainment and movie company, as well as shareholdings in Rosneft, the Russian giant of natural gas and raw materials, and in the big five-year project for liquefied petroleum gas (LPG) in Germany and in the EU – a 30 billion US dollar project, of which 10 invested for Germany alone.

Therefore, between Qatar and Saudi Arabia, in the fight  between oil producers and natural gas extractors, there is a real war for the hegemonic conquest of technologically advanced areas and of Europe, in particular, with a view to definitely acquiring markets and using their diversification opportunities.

Moreover, Qatar is at least as rich in natural gas as Iran (and, together with the Shiite Republic, it participates in the exploitation of the South Pars II marine field), but also as the Russian Federation.

The new  Qatar-centred “gas OPEC” means, therefore, that there is no longer the US-friendly Sunni oil OPEC,  precisely the one that organized the great petrodollar recycling started after Egypt and Syria’s Yom Kippur war against Israel in 1973.

Oil recycling at a “high” price against the US dollars which, after the end of the Bretton Woods agreements, led to the new hegemony of the US currency and its inappropriate exchange rate, despite its internal fundamentals.

“The dollar is our currency, but it is your problem”, FED Governor Paul Volcker said to his fellow Governors of the European Central Banks.

At that time, there was not yet the weak and irresolute timidity of the Euro to make the picture more complex.

The European currency is not a lender of last resort, but it plays the game of the global currency as an alternative to the US dollar, with the operational results we can imagine.

It is therefore no mere coincidence that the only strategic uses of the Euro were the minimum Iranian ones, in the oil Stock Exchanges of the islands in the Persian Gulf, or the more paraded than real ones by Saddam Hussein.

In essence, reverting to the geopolitical sense of the very recent Qatari decision to leave OPEC, this means that the 600,000 barrels/day of oil extracted from Qatar are considered fully marginal by it and certainly can never compete with Saudi Arabia’s 11 million barrels/day of Saudi Arabia.

Qatar plays the game with its natural gas – it does not play its oil cards.

The current Qatari operation, however, implies a strategic choice in the near future, which could be the creation of a “gas OPEC” with Russia and Iran, in view of a doubling of the LPG prices in 2019, with China becoming the world’s LPG top consumer and the USA the world’s top oil extractor, albeit with the new and expensive shale techniques, which generate profits only with high oil barrel prices.

Or an economic and financial alliance between Qatar, China, Japan and Russia, which could marginalize the dollar area by reducing it to oil.

At geopolitical level, this will certainly mean greater instability – not necessarily fully peaceful – between the Emirate and the Saudi Kingdom, while the former will invest – also within the EU – in the industrial processing  of LPG, which mainly regards plastics, resins and all synthetic products from hydrocarbons.

If Russia – which also plays on the Saudi table – will be able to control its oil production, in line with the Sunni OPEC, the Qatari operation will be successful, but only for the creation of the new LPG market, and Qatar will not affect the positions already reached by Saudi Arabia and its  allies.

Conversely, if Russia and Iran increase oil production, the pro-Saudi OPEC will definitely collapse and the African, Indonesian and South American production areas shall  look for other regional cartels and, hence, for other geopolitical axes.

Furthermore, the bilateral relationship between the USA and Saudi Arabia will be put to an end, given the new US production and oil power, its global exporting capacity and, finally, its autonomy from the Middle East political and financial cycles.

Moreover, according to the Emir’s policy lines, the Qatari economy  is focused on attracting and accumulating foreign investments, especially after the 2017 blockade, which has attracted much capital from Asia and the Middle East itself,  in addition to the opening of new ports and the creation of  new Special Economic Zones.

Both Saudi Arabia and Qatar have used the so-called Arab “springs” to broaden their personal power and create strong competition among the Gulf countries.

Moreover, Qatar has used the phase following the Arab “springs” to redefine its traditional expansion axes: the special relationship with the Muslim Brotherhood and its traditional link with Iran.

The Emirate, in fact, believes that the Muslim Brotherhood is the central axis of Arab politics and, hence, intends to support it.

While all the others repress it, in line with Saudi Arabia.

Even after the fall of the “Muslim Brotherhood” regime in Egypt – with the coup organized by Al Sisi in 2013 against Mohammed Morsi – Qatar keeps on supporting the fraternal Ikhwan or also Hamas and all the other organizations that have integrated into the global network of the Muslim Brotherhood.

The Saudi tension with Qatar also results from the Qatari geo-economic link with Iran and, above all, from Iran’s  economic growth after the 2014 JCPOA agreements on the Iranian nuclear capacity. Saudi Arabia wants to avoid said agreements leading to the economic, oil and military recovery of the Shiite Iran.

Furthermore it cannot be ruled out that, in the near future, Saudi Arabia – possibly supported by the USA, which now believes in every “counterterrorist” storytelling – even organizes a coup against Al-Thani and the current Qatari ruling elite.

The sequence of attempted and failed coups is already long.

It would be a geopolitical suicide, but it may happen.

Pakistan, Bangladesh and other countries are now dependent on the remittances sent from Qatar by their fellow citizens to their homeland, even if, as countries, they sided with Saudi Arabia during the blockade imposed on Qatar in 2017.

Since the beginning, however, Tunisia refused to condemn Qatar (and Italy should be more careful to these infra-Islamic shifts), while Turkey – which operated with Qatar  during the Libyan jihadist uprising – does not accept the Saudi diktat. The same obviously holds true for Iran and – probably less intuitively – for Oman.

After an ambiguous phase, even the Russian Federation  – which had not well foreseen the internal conflict on Qatar within the Gulf Security Council in 2017 – has gradually  linked itself to the Emirate, even without questioning its ties with Saudi Arabia.

Moreover, the United States has even discovered it still has a large military base in Qatar and hence cannot afford a worsening of the infra-Arab conflict and, above all, of the infra-Wahhabi conflict between Saudi Arabia and Qatar.

Obviously the issue of relations between Qatar and “terrorism”, or the link between Qatar and Iran, is a completely uncertain and widely manipulated issue.

The Emir’s speech that expressed support for Iran and Hamas and criticized the other governments of the region – a speech that allegedly was to be held on May 23, 2017 – was never delivered. There had been announcements widely publicized by the Saudi and Emirates’ news agencies, but the Emir’ speech had never been delivered.

In this regard, the official Qatar’s news agency in Doha talked about the hacking of Qatari websites, but not even this is certain.

There is also the issue of the one billion US dollars paid  as a ransom to “bandits” in Iraq by some members of the Emir’s family.

It is ascertained that part of that money arrived at the Syrian Al-Qaeda “section”, Jabhat Tahrir al Sham, with a share of funds that – not too strangely – later reached the Iranian government.

Certainly there is also the already-mentioned support for the Muslim Brotherhood and there are now ascertained links between the Ikhwan and some Iranian financial and political-military networks.

Everything is possible in the Middle East.

In Doha there is also a “historical” office of the Palestinians and also one of Hamas, which has always been an integral part of the Muslim Brotherhood, while it is certain that large amounts of money were sent by Qatar to the Egyptian Brotherhood during Morsi’s government and that the Ikhwan militias from every part of the Middle East were trained in Qatar.

Obviously, at least initially, the guerrilla warfare in Libya after Gaddafi’s fall was a clash between the forces supported by the Qatari intelligence services and those organized by the other Emirates, with a specific role played by Turkey – a loyal ally of Qatar – above all at economic level.

Westerners’ stupidity did the rest.

Moreover, Qatar also sent its troops so that the Sunnis could regain control in Bahrain during the 2011 Shiite uprising.

Nor should we forget that, apart from the Al Udeid US base in Qatar, Turkey itself is building its base in Qatar for as many as 5,000 soldiers – a base located in Tariq bin Ziyad, south of the capital city.

However, how does the Gulf Cooperation Council (GCC) – the instrument of confrontation between Saudi Arabia and Qatar – work?

Is it not affected – like OPEC – by an internal weakness that blocks it for any relevant decision?

The GCC was founded in 1981. However, the monetary union, which has been gradually abandoned by Oman and the Emirates, has never been reached.

And the GCC still regards Iran as an “imperialist” factor of radical destabilization of the Arabian peninsula, especially with the organization of Shiites in Saudi Arabia and in other areas of the Emirates.

The Shiites within the Saudi regime account for 15-20%, especially in the major oil extraction areas. Obviously the Saudi regime does not want to destabilize these areas and, above all, it does not want to break the link between the USA and the Sunni world of the Arabian Peninsula – a break that, in the near future, would lead to the victory of the Iranian  Shiites.

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Iran: Which way to go?

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The US withdrawal from the Joint Comprehensive Plan of Action (JCPOA), seriously hampered the chances for keeping the landmark accord in place.

The accord, signed in 2015 by the P5+1 group of countries — China, Germany, France, Russia, the United Kingdom and the United States — with Iran, requires Tehran to maintain a peaceful nuclear program in exchange for sanctions relief.

According to the IAEA, Iran strictly abides by the terms of the JCPOA, while the international community is unable to do the same, no matter how much politicians in the EU and other countries would like to stick to its provisions – all because of US pressure.

Sadly, the United States has financial and economic levers to punish not only Iran, but also foreign companies doing business with the Islamic Republic. Given the choice of either maintaining business relations with the US and the rest of the world or with Iran alone, there is little wonder which of the two options they will go for. This doesn’t necessarily mean that they will do this under US pressure. Business always goes where the money is and sticking with the US looks a more profitable way to go. This is exactly what business-savvy Donald Trump is staking on.

In 2018, some 100 foreign companies, including big ones as Shell, Volkswagen, Daimler, Peugeot, Airbus, Total, PSA, Siemens, and Russia’s LUKOIL and Zarubezhneft, started pulling out of Iran even before the US sanctions, announced by President Trump in May, actually took effect. However, although bending under Washington’s pressure, the authors of the 2015 Iran nuclear deal (Russia, China, Britain, France and Germany) as well as the European Union as a whole and many other countries around the world are still interested in keeping the nuclear accord alive. Why?

First, the JCPOA is a truly historic document which, possibly for the first time ever (not mentioning, of course, the Treaty on the Non-Proliferation of Nuclear Weapons – NPT) has curbed the nuclear ambitions of a particular country and put its nuclear program strictly in line with international laws and IAEA requirements. This is a vivid example of the world countries’ effective diplomatic work, which created a precedent of genuine confidence of the parties for the sake of preserving the nuclear non-proliferation regime.

Secondly, Iran a leading player in the volatile region of Western Asia, which incorporates the Middle and Near East, the Caucasus, the Caspian Sea zone, and Central Asia.

Thirdly, it should be borne in mind that Iran is a powerful source of hydrocarbons, and that its territory is an important transit route for oil, natural gas and other products to the world market. A well-educated population and a relatively developed industry and agriculture attract the attention of world business. In addition, the 70-million-strong Iran, which boasts one of the world’s biggest militaries, is an important factor in West Asian and world politics.

What needs to be done to resist US sanctions and, thereby, save the JCPOA?

To solve this complex task, Iran and all countries willing to preserve the accord, above all Britain, France, Germany and the EU as a whole, should work together. This is already being done now with the direct and active participation of Russia and China.

Today, the main priorities are:

Providing legal assistance to companies doing business with Iran. The practical implementation of the EU-declared blocking statute, which declares null and void US sanctions against Iran on its territory, prohibits European companies from observing them, as well as implementing any decisions by foreign stemming from these sanctions. The blocking statute also allows European organizations to take legal action to make up for the losses incurred as a result of the implementation of sanctions at the expense of persons who caused these losses (meaning the US government).

It is also necessary to establish an independent payment system that would safeguard European businesses against US sanctions on Tehran (a special purpose vehicle, SPV, to facilitate financial transactions with Iran) with the possible involvement, among others, of the French and German central banks.

The EU is creating a special legal entity to carry out transactions with Iran. Other participants will be able to join in, which will allow European companies to work with Iran in keeping with European legislation – something like the SWIFT banking system, only on a European scale and based on the euro.

This will be an extremely difficult task for Europeans, both from “political” (a real challenge to the US) and technical standpoints. EU foreign policy chief, Frederica Mogherini, said: “The involvement of the Finance Ministers of the E3 [France, Germany, UK] is of key importance at this stage. They are working hard to finalize it. I cannot tell you a date, but I can tell you that work is continuing and is progressing in a positive manner.”

In his turn, Russia’s Deputy Foreign Minister Sergei Ryabkov said that this was fraught with problems.

“We need to redouble our efforts here and this is what we are doing now with both Europeans and Iranians.”

Meanwhile, the Iranians, who have so far been strictly implementing the terms of the 2015 nuclear accord, are losing faith in the EU’s ability to resolve the problem. Therefore, it may take several months to see whether this plan is really working.

Speeding up the process of shifting to the use of national currency in trade with Iran (primarily by Russia, China, India, Turkey, which have done this before) would be of much help to Tehran.

In order to move around the financial and banking hurdles erected by the United States, it would be advisable to enlist the help, whenever possible, of Islamic banks in Muslim countries for cash transactions to and from Iran. The Islamic banking system has its specific features that are hard to destroy from the outside, even by a financial superpower like the United States.

The same is true about small and medium-sized companies in Muslim countries used as intermediaries in financial transactions with Tehran. Moreover, it is small and medium businesses, and not necessarily in Muslim countries alone, that can play the main role in maintaining trade and other economic relations with Iran.

Therefore, it would be equally desirable for the EU to provide legal and financial assistance to small and medium-sized companies in Europe, which are willing to do business with Iran, and to shift the main load from big companies to medium and small firms for financial transactions with Iran in Euros. Even though they will hardly be able to completely replace the giant companies, small and medium-sized firms have all they need to offset at least part of the losses. According to Iranian estimates, Tehran hopes to establish business relations with many of the 23 million or so small and medium-scale enterprises in Europe in order to circumvent US sanctions. Moreover, Iran has good experience in getting around tough sanctions between 2012 and 2016.

What can Tehran do under these circumstances?  First and foremost, it should establish a business triangle of Iran-EU, Islamic banks and Islamic small and medium-sized businesses, build close trade and economic partnership with European and other small and medium-sized businesses. This is quite feasible because the Americans will find it hard to keep an eye on a huge number of enterprises, much less trace their transactions in Euros, especially if the European Union contributes to such cooperation with Iran.

Iran’s Supreme Economic Coordination Council recently allowed the country’s private sector to sell crude oil abroad as a way of circumventing US sanctions. This is the first time the Iranian private companies have been granted permission to trade in oil. Tehran should avail itself of this opportunity as soon as possible.

As for Iran’s time-tested methods of tackling sanctions like, for example,  the use of “ghost” oil tankers, which switch off their automatic identification system (AIS) transmitters not to disclose their route and destination, as well as selling “unrecorded” oil at reduced prices, I can assume that these methods have been used before and are being used today.

It seems that, in view of the situation at hand, Tehran should also recall its oil-for-goods project with Russia, prepared back in 2014, whereby Iran supplies oil to Russia (at least 100,000 barrels per day – about 5 million tons a year) in exchange for industrial equipment and machinery. Four years ago, the plan was never implemented in full because Iran, already withdrawing from the sanctions regime in keeping with the JCPOA, was no longer interested in it.

There was only one shipment made in November 2017, to the tune of 1 million tons. The project could be revived now. Russia’s Promsyryeimport, which is part of the Russian Energy Ministry and was created expressly with this project in mind, will implement the Russian side of the deal.

A program of developing two Iranian oil fields, Aban and Peydar, by Promsyryeimport (which replaced Zarubezhneft) and Iran’s Dana Energy Company, could also be considered.

Overall, the across-the-board cooperation between Russia and Iran against US sanctions could contribute very significantly to minimizing their impact.

Tehran will certainly put to maximum use the great potential of the Islamic Revolutionary Guard Corps (IRGC), which proved so effective during the period of hard-hitting sanctions of 2012-2016 and which controls between 25% and 35% of the country’s economy and 25% of all its capital.

In 2012-2016, the IRGC set up a large-scale system of circumventing the sanctions by controlling considerable “gray” financial flows to, through and out of Iran. IRGC intelligence was gathering information abroad about the “weak” spots in the sanctions system, about the most effective ways of circumventing sanctions, and was also obtaining data on new technologies Iran was not allowed to buy.

Iran and countries opposed to US sanctions against it are looking for ways to ease their impact. Even though completely neutralizing the negative effect of these sanctions will hardly be possible, a certain let-up is quite possible.

Well, the Iranian response to the US sanctions could at times be controversial, but Washington’s exit from the JCPOA and the US sanctions themselves are by no means legal either.

In October, President Hassan Rouhani warned that the previous four months had been a difficult time for the Iranians and that the coming few months would be equally hard. He said that the government would make every effort possible to tackle the situation. Meanwhile, Tehran says it will stick to the terms of the JCPOA as long as its other signatories (save for the US, of course) do the same. Can they do this?

The situation is complex and unpredictable. For Iran, much will depend on whether the JCPOA is kept alive without the US, if Tehran is able to maintain, albeit limited, financial and economic cooperation with foreign countries, primarily with small and medium-sized businesses, and whether it is satisfied with the results of this cooperation.

How will the sanctions, and especially the fall in oil production and exports, affect the national economy and the life of ordinary Iranians? A good question, given the impact the internal political situation can have on the alignment of political forces in the country.

The outcome of this struggle may not take too long coming. Maybe six months, when a European mechanism against Washington’s unlawful withdrawal from the JCPOA and the resumption of its sanctions on Iran is already in place and the deadline set by President Trump for the eight importers of Iranian oil has expired.

First published in our partner International Affairs

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