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Why the JCPOA Won’t Turn Iran Into the Next Saudi Arabia

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Of all the anxieties surrounding this summer’s groundbreaking accord between the United States and the Islamic Republic of Iran, concern over oil has been among the most prevalent. Once the terms of the Joint Comprehensive Plan of Action (JCPOA) are firmly in place, sanctions on Iran’s economy, including a set of rigorous restrictions on its oil industry, will begin to recede.

This could unleash a potentially-gargantuan supply of Iranian oil onto an already-saturated world oil market and augment the abilities of the Islamic Republic to influence regional politics. The Washington Institute has warned that a “post-sanctions windfall” will allow Iran to “rescue the Syrian regime, reshape Iraq’s political environment, expand its terrorist proxy activities in various theaters, and otherwise amplify the effects of its destabilizing regional posture.”

There is fuel for such speculation. Iran has the fourth-highest proven oil reserves in the world, and the second-largest gas reserves. If it gains the ability to tap these enormous resources, Iran could potentially become a major world oil and gas producer, rivaling Saudi Arabia, its major regional competitor.

Yet it is far from certain that the JCPOA will have anything like the cataclysmic effect some have predicted. Moreover, it is questionable how far Iran will push its newly-freed oil economy once sanctions are lifted, with a host of infrastructural challenges, as well as some compelling historical experience, potentially foiling the country’s rise into major petro-state status.

Before the U.S. began pressuring it to give up its nuclear ambitions, Iran was a major oil exporter, second only to Saudi Arabia among the OPEC member-states. Production reached 4 million barrels per-day (bpd) in 2007 before dropping to 3.6 million bpd in 2011; sanctions took that down to 2.85 million bpd by July of 2015, with exports dropping from 2.6 million bpd to 1.4 million bpd.

Expectations for Iran to immediately increase its production one sanctions begin to taper off are high. Iran’s oil minister Bijan Zhanganeh boasted in July that Iran would increase its national production by 1 million bpd within one month of sanctions being lifted. While more moderate analysts debate this figure, most agree that Iranian production will increase by the end of 2015, dropping the anticipated price of crude by $10-12 per barrel.

While the impact of greater Iranian production could further depress oil prices which have struggled for over a year, Iran will likely experience a sudden economic stimulus. The World Bank estimates that Iran’s economic growth forecast for 2016 could increase from 3% to a robust 5% if the JCPOA is approved, signaling a real end to the economic stagnation that set in with the sanctions regime.

Commentators and skeptics of the Iran deal have suggested that Iran’s aspirations to regional hegemony will finally become attainable once oil revenues are freed from sanctions limitations. There is the immediate impact of $150 billion in frozen assets to consider, money Iran will potentially be able to access once sanctions are lifted. This enormous windfall along with greater oil revenues will lead to a more strident Iranian policy, challenging Saudi and Gulf interests and ratcheting up support for Bashar al-Assad’s regime in Syria.

But considerable debate surrounds the precise amount of capital Iran has locked away in overseas accounts: $150 billion is the oft-quoted sum, but the Obama Administration has dropped its estimate from $100 billion to $50 billion, and one analysis in Fortune based on information from Iran’s Central Bank suggests that only $29 billion will be immediately available.

Depressed world oil prices will likely increase Iran’s oil revenues by a relatively small amount, from $50 billion to about $65 billion, roughly what it was earning in 2013 before prices fell. Rather than a sudden, tremendous surge in new assets, Iran will see a modest and gradual financial windfall over the course of 2016 and 2017.

How that new income will affect Iran’s foreign policy is difficult to say with any precision. The regime spends an estimated $10 billion per year on foreign “adventures” like the wars in Syria and Yemen, yet this amount dropped in 2014 in light of lower oil prices and seems trifling when compared to the amounts spent by Riyadh on similar endeavors. Saudi Arabia military spending surpasses that of Iran by five times and the UAE’s small force spends 50% more than Tehran on new weapon systems and arms. It is unlikely that any increase in oil revenues will upset this balance.

Support for Iran’s regional allies, proxies and clients will likely be overshadowed by investment that Iran will direct towards is domestic oil industry. Some of Iran’s most important oil fields are 70 years old and after a decade of sanctions the country’s infrastructure, from the wellhead to the refinery, has suffered considerable degradation for want of investment. Even the CIA, in a recent intelligence analysis, predicts that Iran’s economy will take precedence over support for regional allies.

An estimate from Iran’s oil ministry puts the total cost of industry upgrades at $200 billion, roughly half of Iran’s gross domestic product. Iran will have to pump a considerable amount of its new revenues into re-building its industry, and while external agents (including the massive Western oil firms like Royal Dutch-Shell, ENI and Total) have shown considerable interest in investing, the Obama Administration continues to warn off American companies, arguing that Iran’s aging infrastructure makes it a poor candidate for increased investment.

Even if its production reaches former levels, Iran must fight to win back market share from Saudi Arabia, which has increased its own production to record levels in order to force out new producers and bring the price back up. Saudi Arabia dominates the oil market and will likely continue to do so, as its production level (nearly 10 mbd) dwarfs that of Iran. Iran must effectively triple its current production level in order to compete, a feat that could take decades to accomplish.

Finally, a strong historical argument exists that might very well deter Iran from aggressively embracing increased oil production. Oil revenues largely funded the 1960s and 1970s regime of Mohammed Reza Shah Pahlavi, who pumped most of the country’s earnings into its military and expansive modernization programs. The Shah’s policies made Iran a regional power but over-heated the economy, created powerful inflationary effects and so destabilized his regime that it collapsed in the 1978-79 Islamic Revolution.

Ayatalloh Ruhollah Khomeini, Iran’s Supreme Leader, cut Iran’s oil production in half after 1980, causing it to fall from 6.6 million bpd to 3 million bpd. He believed Iran needed a “revolutionary economy” separate from the wider capitalist world.

Khomeini may have been driven by ideological concerns more than hard economics, but his reasoning was largely validated by post-1970s scholarship. Influential texts by Terry Lynn Karl, Hossein Mahdavy and Richard Auty point to a “resource curse” that affects country’s overly dependent on export earnings and rents from oil production. Today, oil-rich economies like Venezuela and Russia are struggling with such dependence.

If history is any guide, Iran will likely steer clear of such a policy, using its new oil revenues to bolster domestic economic growth and infrastructural development, shoring up the political support for its hardline regime (which has staked a considerable amount on reducing sanctions) while continuing its support for regional proxies and allies. The effect of a sanctions-free Iranian oil industry may take some years to reveal itself, but it is unlikely to be as dramatic as some have speculated. After all, the world oil market remains glutted; the Middle East remains a region riven by conflict; and neither the U.S. nor Iran have indicated that they plan to alter the nature of their postures towards one another. Iran’s oil may alter this situation, but it probably won’t upend it completely.

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Unified Libya will come only via ballot box, ‘not the gun’-UNSC

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A boy runs in the ruins of the Bab al-Aziziyah compound in Tripoli, Libya. © UNICEF/Giovanni Diffidenti

Libya is at a “delicate and fragile juncture in its path to unity and stability”, the UN Political Affairs chief told the Security Council on Monday, urging the international community to remain united in supporting national elections postponed last month. 

In welcoming positive developments across three different tracks of intra-Libyan dialogue, Rosemary A. DiCarlo, Under-Secretary-General for Political and Peacebuilding Affairs, also recognized the challenges that must be overcome.  

“So many Libyans have told us, the way towards a stable and united Libya is through the ballot box, not the gun”, she said. “We must stand with them”. 

Postponed elections 

Growing polarization among political actors, and disputes over key aspects of the electoral process, led to the postponement of long anticipated elections on 24 December.  

The High National Commission for Elections (HNEC) cited shortcomings in the legal framework along with political and security concerns. To address this, the House of Representatives has established a Roadmap Committee to chart a new political path that defines an elections timetable and process. 

New Special Adviser 

Last month, Stephanie Williams was appointed Special Adviser on Libya, having served as acting Special Representative and head of the UN Support Mission, UNSMIL, last year.  

To date, she has undertaken wide-ranging consultations, including with members of the Government of National Unity (GNU), the High National Election Commission, the House of Representatives, and candidates for presidential and parliamentary elections.  

Oil-rich Libya has descended into multiple crises since the overthrow of former rule Muammar Gadaffi in 2011, which in recent years saw the country divided between rival administrations – a UN-recognized Government of National Accord (GNA) based in the capital Tripoli, and that of the self-styled Libyan National Army (LNA), led by General Khalifa Haftar.  

Ms. Williams has reiterated that the focus of the political process now, should remain on holding “free, fair, inclusive and credible national elections” in the shortest possible timeframe. 

“In all her meetings, the Special Adviser highlighted the 2.8 million Libyans who have registered to vote”, said Ms. DiCarlo, adding that she also called on everyone to respect the will of the Libyan people and to adhere to the timeline agreed to in the Libyan Political Dialogue Forum (LPDF) roadmap, which was endorsed by the Security Council

Welcomed developments 

The UN political affairs chief said ongoing dialogue among political, security and economic actors from across the country was key. 

“We have seen reports of consultations between the Speaker of the House of Representatives and the President of the High State Council, as well as among presidential candidates from western and eastern Libya”, she said.  

On the security track, there have been meetings among various armed groups, as well as the Chief of General Staff of the Western Military Forces under the GNU and the acting General Commander of the rival LNA, with the participation of military chiefs and heads of military departments from both sides.  

Turning to the economy, further steps have been taken to reunify the Central Bank of Libya.  

Moreover, renewed efforts continue to advance national reconciliation based on the principles of transitional justice.  

Security situation 

While the ceasefire has continued to hold, “political uncertainty in the run up to the elections has negatively impacted the overall security situation”, the political chief informed the Council, including in Tripoli. 

It has resulted in shifting alliances among armed groups affiliated with certain presidential candidates, she added. 

Similarly, unfulfilled demands made to the GNU by the Petroleum Facilities Guards (PFG) in western Libya resulted in the shutdown of oil production, causing the National Oil Corporation to declare in December, force majeure – a clause that removes liability for natural and unavoidable catastrophes. 

Following negotiations between the PFG and the GNU, Oil production was restored on 9 January. 

To implement the ceasefire agreement, last month military representatives from opposing sides, called the 5+5 Libyan Joint Military Commission (JMC), discussed with Turkish and Russian authorities, an Action Plan to gradually withdrawal mercenaries and foreign fighters from the country.     

At the same time, despite serious logistical and security challenges, the UN Support Mission in Libya (UNSMIL) continued its work to establish a ceasefire monitoring hub in Sirte, pending the GNU’s approval on accommodation and office facilities. 

Human rights concerns 

“The human rights situation in Libya remains very worrying”, said Ms. DiCarlo, noting “documented incidents of elections-related violence and attacks based on political affiliation”, which she described as obstacles toward a conducive environment for free, fair, peaceful and credible elections. 

“We are particularly concerned that women and men working to protect and promote women’s rights continued to be targeted by hate speech, defamation and incitement to violence”, she stated. “Some of the disturbing social media posts that posed a threat to the safety and security of these persons were removed after UNSMIL brought them to the attention of social media platforms”.  

Meanwhile, arbitrary detention by State and non-State actors continued across the country, with many detainees subjected to serious rights abuses. 

Migration management  

The situation of migrants and refugees is also highly concerning.  

“Large numbers of migrants and refugees attempting to cross the Mediterranean Sea and returned to Libya continue to be detained in inhumane and degrading conditions with restricted humanitarian assistance. Thousands are unaccounted for”, the UN official said.  

Ms. DiCarlo pointed out that hundreds of foreign nationals were expelled from Libya’s eastern and southern borders without due process, with some “placed in extremely vulnerable situations across remote stretches of the Sahara Desert without sufficient food, water, safety and medical care”. 

“The United Nations remains ready to work with Libyan authorities on a long-term national response to migration and refugee management in line with international law to include addressing human rights concerns”, she assured. 

Accountability  

To ensure political progress, Elham Saudi, Co-founder and Director of Lawyers for Justice in Libya, said that all who commit abuses must be held accountable, including mercenaries. 

She noted that without law, revenge would be the only winner.  

Ms. Saudi also maintained the importance of an enabling environment for all rights advocates, especially women, and expressed hopes for a human-rights based approach in how Libya is governed, going forward. 

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Embarking on Libya’s Noble Foray Into the Future

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On Saturday the 22nd of January, activists from across the civil society spectrum in Libya gathered over Zoom with one purpose in mind; publicly declaring their support for the 1951 Libyan Independence Constitution. Despite the political turmoil which has engulfed the country since the Arab Spring began in Tunisia in 2011, a strong civil society movement which supports a return to our historical constitution, has always existed in Libya. These supporters, who represent a significant number of Libyans from across the country, see the restoration of the 1951 constitution as the only way to shape their future.

Libya has been through an immeasurable amount of internationally led initiatives, all aimed at providing Libya with long term “solutions”. Only over the course of the past decade, one can count the UN-brokered Skhirat agreement in December of 2015, the 2017 Paris meeting, the 2018 Palermo conference alongside Mohammed bin Zayed’s Abu Dhabi gathering in February 2019. Followed by Putin and Erdogan’s joint call for a ceasefire in 2020, alongside the first (2020) and second (2021) Berlin conferences alongside UN-sponsored talks in Geneva, each and every one of these efforts amounted to nothing.

The main reason behind these, perhaps well-intentioned but failed attempts, was the simple fact that none of these efforts had any grounding in Libyan history or the support of the Libyan people. Reaching consensus in a society as heavily divided as that of Libya, is a significant challenge. However, placing our faith in our history will undoubtedly provide us with a solution that is closer to the hearts of citizens of our nation and which has the potential to assist in competing factions finally putting their differences aside.

This was the catalyst of Saturday’s meeting which sought to once and for all provide an authentically Libyan solution to the issues which have been plaguing the country for over a decade. The first of these is the preservation of our territorial integrity which has for too long been challenged by foreign actors. It is high time that a long term resolution for our country’s ills is found that ensures the exclusion of foreign elements from shaping the future of our great land.

The second issue the gathering sought to underscore was the need to build an inclusive future for all members of Libyan society. For far too long, our country has excluded citizens of certain political persuasions, cultural backgrounds or those who hold different opinions. Every Libyan deserves equal opportunities, protection of basic rights alongside access to justice. This has been impossible in a country which for so long has lacked a cohesive national identity.

These two issues are indeed intertwined with the third issue which the conference sought to highlight, namely, our demand to return to constitutional legitimacy under the leadership of our Crown Prince Mohammed El Hasan el Rida el Senussi. As the sole heir to the throne of King Idris, passed down through the late Crown Prince Hassan, Prince Mohammad is the leader our country has yearned for.

With leadership claims grounded in historical fact that cannot be upended by foreign or domestic elements, from an ideological standpoint, Prince Mohammad serves as an anchor, offsetting challenges to stability posed by foreign elements. This is strengthened by his position as  the scion of a family which has been in Libya for centuries and founded the Senoussia movement, briniging with it Islam, to the country. Furthermore, historical memories of the reign of King Idris, which saw religious tolerance, gender equality and security for its citizens, reflects the future which Libyan’s would like to see for themselves today.

Bringing together journalists, academics, human rights defenders and political activists, Saturday’s gathering was indeed revolutionary. It would have been unimaginable that such a gathering would even have taken place a mere decade ago. Representing not only themselves, but a wide range of segments of Libyan society, those attending over Zoom broadcasted a powerful message; a rejection of foreign attempts top shape the future of the country alongside a return to historical, constitutional, legitimacy under the leadership of the only man who can help Libya exit the current quagmire and begin its noble foray into the future.

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“Kurdish Spring”: drawing to a close?

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For decades, the Kurdish problem was overshadowed by the Palestinian one, occasionally popping up in international media reports following the much-publicized arrest of the leader of the Kurdistan Workers’ Party (PKK), the genocide of Iraqi Kurds and the scandalous referendum in Iraqi Kurdistan. A few years ago, the Syrian and Iraqi Kurds’ opposition to the “Islamic State” (banned in Russia) pushed them to the forefront of global politics with the media now talking about the so-called “Kurdish Spring.”

In short, the Kurdish problem boils down not only to the absence of independent statehood for 40 million people, who account for approximately 20 percent of the population of Turkey and Iraq, and between eight and 15 percent of Iran and Syria, but also to the refusal by Ankara, Tehran and Damascus to discuss the possibility of an autonomous status for the Kurds. Today, the very issue of Kurdish independence is being hushed up, at least in public.

The first example of Kurdish statehood in modern history was in Iran: in 1946, the Kurdish Autonomous Republic was proclaimed in the city of Mahabad, only to survive less than a year. Since then, the Iranian authorities have spared no effort to make sure the name of one of the country’s provinces (Kurdistan Ostan) is the only remainder of the Kurds’ presence in the Islamic Republic. The situation is further aggravated by the fact that the Kurds, most of whom happen to be Sunnis, are a hurdle on Tehran’s official course to achieve the religious unity of the Iranian people.

Since all Kurdish organizations, let alone political parties, are outlawed, most of them are based in neighboring Iraqi Kurdistan. For most Kurdish organizations, the original goal of gaining independence has increasingly been transformed into a demand for autonomy for Kurds inside Iran.

The other “pole” of Kurdish nationalism is Iraqi Kurdistan. The history of the region’s autonomy goes back to 1970, and since the 90s, it has been sponsored by the Americans, who needed a ground base for the “Gulf War.” In 2003, the Iraqi Peshmerga helped the Anglo-American troops to topple the country’s ruling Ba’athist regime.

Under the current Iraqi constitution, Kurdistan enjoys broad autonomy, bordering on the status of an independent state with nearly 40 foreign consulates general, including a Russian one, officially operating in the regional capital Erbil, and in Sulaymaniyah.

Following the referendum on independence (2017), which was not recognized by either Baghdad or the world community (except Israel), Baghdad sent troops into the region, forcing the resignation of the President of the Kurdistan Regional Government and the founder of the Kurdistan Democratic Party (KDP) Massoud Barzani. He has maintained a close presence though, with both the current president and the prime minister bearing the same surname.

According to various sources, the armed forces of the Iraqi Kurds number between 80,000 to 120,000, armed with heavy weapons, armored vehicles and tanks, and their number keeps growing. Who are they going to fight? Erbil is on fairly good terms with Turkey and Iran, the autonomy’s two “windows to the world,” and you don’t need a huge army to keep the remnants of jihadist forces in check, do you? Iraq? Iraq is a different matter though, given the presence of disputed territories, the unsettled issue of distribution of oil export revenues, and a deep-seated rejection of the 2017 Iraqi military invasion.

However, the political ambitions of the Barzani and Talabani clans, who divided Iraqi Kurdistan into zones of influence back in the 70s, are obviously offset by oil revenues, and are unlikely to extend beyond the “return” of the territories lost to Baghdad in 2017.

The Turkish factor is a major factor in the life of Iraqi Kurdistan: several thousand Turkish military personnel are deployed there, checking the activity of mountains-based armed units of the Kurdistan Workers’ Party, which is branded by Ankara as a “terrorist” organization. Baghdad is unhappy about their presence, while Erbil, rather, pretends to be unhappy as it is in a state of undeclared war with the PKK itself. At the same time, Turkish soldiers are standing by to nip in the bud any further attempts by the region’s Kurdish authorities to gain sovereignty as Ankara fears that an independent Kurdish state will set a “bad example” for Kurds living in Turkey proper.

During the 1980s, several regions in southeastern Turkey declared themselves “liberated” from Ankara. In 1984, the “Marxist-Leninist” PKK (created in 1978) prevailed over all the other local Kurdish groups and declared war on the Turkish authorities. Following the arrest of their leader in 1999, the PKK militants were squeezed out of the country into Syria and Iraq, despite the fact that discarding the slogan of creating a “united and independent” Kurdistan, the party had already settled for a demand for Kurdish autonomy within Turkish borders.

For many decades, the Turkish authorities denied the very existence of Kurds as an ethnic group. During the 2000s, in a bid to sweeten the pill for the Kurds, and meeting the requirements of the European Union, the Turkish government came up with the so-called “Kurdish initiative,” lifting the ban on the use of the Kurdish language, returning Kurdish names to a number of settlements, etc.

Legal organizations and parties, advocating the rights of the Kurds, were granted greater freedom of action. However, this did not prevent the authorities from banning such parties for “connections with terrorists” and “separatism.” The current Kurdish party (creation of any associations on a national basis is prohibited) – the Peoples’ Democracy Party – is also under serious pressure with some of its leading members currently behind bars.

However, the apparent defeat in the military conflict with NATO’s second largest army is forcing Turkey’s Kurdish nationalists to focus on a legal political struggle.

During the past few years the main attention of the international community has for obvious reasons been focused on the Syrian Kurds, who for many decades remained “second-class citizens” or even stateless persons in their own country. Any manifestations of discontent, which occasionally boiled over into uprisings, was severely suppressed by the authorities.

With the outbreak of the civil war, the Kurds assumed the position of armed neutrality, and in 2012, announced the creation of their own statehood with the capital in El Qamishli. Six years later, the name of the quasi-state was changed from a “democratic federation” to an “autonomous administration,” meant to demonstrate the refusal by the authorities of Syrian Kurdistan to pursue their initial demand for independence.

Needless to say, that change of priorities was prompted by the occupation by Turkish troops and their proxies of parts of the Kurdish territories. In 2019, Ankara halted its military advance only after the Kurds had allowed Syrian troops into the areas under their control, and international players “dissuaded” Ankara from any further expansion.

In addition to the Turkish factor, another important factor with a serious bearing on the situation are US troops and members of American military companies who remain in northeastern Syria without any legal grounds for their presence.  Back when the current US President was Chairman of the Senate Foreign Relations Committee, he promoted the idea of ​​creating a Kurdish state in Iraq and Syria. The Kurds have long lost their faith in Washington’s desire to grant them independence, but in bargaining with Damascus for the delimitation of powers, they never miss a chance to refer to US support.

However, in recent years, the Syrian Kurds (and not only them) have had ample opportunity to feel the results of Washington’s unreliability as a partner.

A lack of trust in the Americans, on the one hand, and the constant threat from Turkey, on the other, are forcing the Kurdish leaders to ramp up the negotiation process with the leadership of the Syrian Arab Republic. Moreover, the Kurds are pinning their hopes for the success of the negotiations primarily on the mediation of Russia, given Moscow’s allied relations with the Syrian authorities. Besides, Moscow maintains working ties with the leadership of the self-proclaimed autonomy, and with the leaders of the opposition Kurdish parties.

Meanwhile, the negotiations are stalling with Damascus opposed to the idea of either autonomy or the preservation of the Kurdish armed forces’ organizational independence. It is still imperative, however, for the sides to agree on certain conditions. The “return” of the Kurds can become a turning point in the intra-Syrian confrontation as the Americans will feel too “uncomfortable” in a united Syria, and the Turks will lose the main argument for their continued occupation of the border zone, which will now be controlled not by “terrorists,” but by the central government. Which, by the way, is gaining more and more legitimacy even in the eyes of yesterday’s irreconcilable opponents.

From our partner International Affairs

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