In trying to determine what the next stage for the Iran – Saudi relationship might be, one must first look at similar relations between other states to see if they might contain clues.
What do these other states share in common, what factors might be different, and how did these states approach these conflict areas in an effort to either mitigate the problems, eliminate them altogether, or to just simply accept that they exist and move forward peacefully? In reviewing which states could lend an insight into the Iran-Saudi conflict we must first identify some of the factors that contribute to the problem. The following are some of the sources of conflict that weigh into the relations between the two nations:
- Religious sect differences
- Desire for regional hegemony
- History of armed conflict/invasion
- Cultural differences
- Presence of outside powers
- Territorial disputes
Considering these factors, there are a number of state conflicts that qualifies in one or more of these categories. During the great colonization periods England, France, and Spain had numerous clashes over issues such as regional hegemony and territorial disputes. More recently we’ve seen clashes between Pakistan and India caused mainly by religious differences, Germany against other nations during the World Wars in its desire for global hegemony, as well as two Asian powerhouses (Japan and China) that center around a number of factors such as cultural differences, historical resentment, and territorial disputes. Of these conflicts, some evolved where the nations now work collectively on many fronts. Others continue with strained relationships marked by periods of armed conflict such as between Pakistan and India. And yet others exist still as an uneasy stalemate with periods of muscle-flexing and posturing but devoid of any real military confrontation.
Looking at the examples of England, France, Spain and ultimately Germany we see nations that have had long histories of armed conflict, resulting in clashes both on home soil as well as via proxies. This is very much like Iran and Saudi Arabia today. Yet now these European nations are almost completely at peace with one another and work in unison with one another to overcome regional issues covering economics, immigration, and security. How did these nations, once committed to the destruction of one another, overcome those obstacles to get to this point and could this hold relevance for Iran and Saudi Arabia?
Since the end of World War II the nations of Europe have enjoyed a long period of relative peace. One major factor working in these nations’ favor was, ironically, the existence of the Cold War and reliance on the United States for military protection. The existence of NATO helped keep the peace by keeping the Soviet Bloc out of Western Europe as well as limiting each individual country’s ability to pose a threat to its neighbors. Another major factor is certainly the deterrence factor of nuclear weapons. Both France and England possess nuclear capabilities so an outbreak of such warfare has the potential for dire consequences. Additionally, factors such as the new wealth these nations were unwilling to risk, democratic governments which were more accountable to the will of the people as opposed to an individual leader’s whims, and largely open borders that led to more transcultural understanding across all of Europe, all contributed to greater peace and less tension.
In Pakistan and India we see two regional powers that are largely at odds due to their religious and territorial differences, just as in the Iranian-Saudi conflict. Since the partition of India and Pakistan in 1947, the two countries have engaged in numerous territorial, cultural and religious disputes, and as well as three instances of outright war. These disputes have mainly centered on the Kashmir region and again, like the case with Iran and Saudi Arabia, is the scene of local insurgents being used as proxies in the fight. Numerous periods of peace have occurred only to be broken by violent outbursts, such as the Mumbai terrorist attacks. A parallel can unfortunately be drawn to the mosque bombings inside Saudi Arabia, where they were ultimately attributed to Iranian-influenced groups inside Saudi territory.
In China and Japan we see regional powers with a long history of conflict that centers on their own desires for regional hegemony. What we also see that is similar to Iran and Saudi Arabia are factors such as territorial conflicts, economic conflict, the presence of US interests, and one nation claiming the cultural high road over the other. The presence of the United States in Japan and its deepening economic ties/interdependence with China helped to settle some of those military tensions, although they still do have areas of conflict over territorial claims. Economic transformation has basically shifted the tension from a once intensely military-based engagement to one more predicated on global positioning and diplomatic leverage. This is in fact a great positive sign of progress.
In 2006, after Prime Minister Abe assumed office in Japan, relations underwent a period of improvement as the two nations became more committed to high-level discussions. In an important symbolic gesture, Japan showed a willingness to admit and atone for some of its wartime atrocities against China. The two countries have also entered into joint ventures in oil and gas exploration, instead of competing for these resources inside disputed territorial areas. These two regional powers have grown to become two of the largest and most influential global economic powers. Their mutual economic interdependencies have provided a stable base upon which they are able to work on more productive overall relations. Economic collapse via war would be catastrophic to both nations so this interdependence has been a huge contributor in resolving differences.
At the moment the China-Japan case offers less hope for Iran and Saudi Arabia. In the present day one is hard-pressed to see economic opportunity building close interdependence between the two countries. The JCPOA accord may also end up only increasing tension over the short-term as Iran begins to gain greater global influence and establish more economic stability and prosperity for itself. This could engender a reflexive counter-balancing reaction from Saudi Arabia. Some would even argue it has already begun such economic strategies in the past two years by keeping the price of oil low. This is the opposite of what we have seen with China and Japan, where economic development on a global scale brought them closer together.
Analyzing these strategic conflicts shows that there are lessons to be learned that could lead Iran and Saudi Arabia along a path of conflict resolution. As is often the case, the devil is in the details. The presence and actions of a global superpower in the region (like the United States) can be an enabler of peace or an exacerbator of conflict. Trade and economic interdependence can break down prejudices and barriers and increase transcultural understanding, but that tends to be a slow process requiring patience from all parties involved. Communication and an element of trust, however, are essential across all of the conflict cases. If the opposing sides are unable to communicate, either through third parties or directly, then it becomes nearly impossible to develop the trust necessary to resolve issues. At the moment that still remains the biggest single obstacle between Iran and Saudi Arabia: a failure to communicate.
Battling for the Future: Arab Protests 2.0
Momentous developments across Arab North and East Africa suggest the long-drawn-out process of political transition in the region as well as the greater Middle East is still in its infancy.
So does popular discontent in Syria despite eight years of devastating civil war and Egypt notwithstanding a 2013 military coup that rolled back the advances of protests in 2011 that toppled Hosni Mubarak and brought one of the country’s most repressive regimes to power.
What developments across northern Africa and the Middle East demonstrate is that the drivers of the 2011 popular revolts that swept the region and forced the leaders of Egypt, Tunisia, Libya and Yemen to resign not only still exist but constitute black swans that can upset the apple cart at any moment.
The developments also suggest that the regional struggle between forces of change and ancien regimes and militaries backed by the United Arab Emirates and Saudi Arabia is far from decided.
If anything, protesters in Algeria and Sudan have learnt at least one lesson from the failed 2011 results: don’t trust militaries even if they seemingly align themselves with demonstrators and don’t surrender the street until protesters’ demands have been fully met.
Distrust of the military has prompted an increasing number of Sudanese protesters to question whether chanting “the people and the army are one” is still appropriate. Slogans such as “freedom, freedom” and “revolution, revolution” alongside calls on the military to protect the protesters have become more frequent.
The protests in Algeria and Sudan have entered a critical phase in which protesters and militaries worried that they could be held accountable for decades of economic mismanagement, corruption and repression are tapping in the dark.
With protesters emboldened by their initial successes in forcing leaders to resign, both the demonstrators and the militaries, including officers with close ties to Saudi Arabia and the UAE, are internally divided about how to proceed.
Moreover, neither side has any real experience in managing the crossroads at which they find themselves while it is dawning on the militaries that their tired playbooks are not producing results.
In a telling sign, Sudan’s interim leader Abdel Fattah Abdelrahman Burhan praised his country’s “special relationship” with Saudi Arabia and the UAE as he met this week with a Saudi-Emirati delegation at the military compound in Khartoum, a focal point of the protests.
Saudi Arabia has expressed support for the protests in what many suspect is part of an effort to ensure that Sudan does not become a symbol of the power of popular sovereignty and its ability to defeat autocracy.
The ultimate outcome of the dramatic developments in Algeria and Sudan and how the parties manoeuvre is likely to have far-reaching consequences in a region pockmarked by powder kegs ready to explode.
Mounting anger as fuel shortages caused by Western sanctions against Syria and Iran bring life to a halt in major Syrian cities have sparked rare and widespread public criticism of president Bashar al-Assad’s government.
The anger is fuelled by reports that government officials cut in line at petrol stations to fill up their tanks and buy rationed cooking gas and take more than is allowed.
Syria is Here, an anonymous Facebook page that reports on economics in government-controlled areas took officials to task after state-run television showed oil minister Suleiman al-Abbas touring petrol stations that showed no signs of shortage.
“Is it so difficult to be transparent and forward? Would that undermine anyone’s prestige? We are a country facing sanctions and boycotted. The public knows and is aware,” the Facebook page charged.
The manager of Hashtag Syria, another Facebook page, was arrested when the site demanded that the oil ministry respond to reports of anticipated price hikes with comments rather than threats. The site charged that the ministry was punishing the manager “instead of dealing with the real problem.”
Said Syrian journalist Danny Makki: “It (Syria) is a pressure cooker.”
Similarly, authorities in Egypt, despite blocking its website, have been unable to stop an online petition against proposed constitutional amendments that could extend the rule of President Abdel Fattah el-Sisi until 2034 from attracting more than 320,000 signatures as of this writing.
The petition, entitled Batel or Void, is, according to Netblocks, a group that maps web freedom, one of an estimated 34,000 websites blocked by Egyptian internet service providers in a bid to stymie opposition to the amendments.
Mr. El-Sisi is a reminder of how far Arab militaries and their Gulf backers are potentially willing to go in defense of their vested interests and willingness to oppose popular sovereignty.
Libyan renegade Field Marshall Khalifa Belqasim Haftar is another, Mr. Haftar’s Libyan National Army (LNA) is attacking the capital Tripoli, the seat of the United Nations recognized Libyan government that he and his Emirati, Saudi, and Egyptian backers accuse of being dominated by Islamist terrorists.
The three Arab states’ military and financial support of Mr. Haftar is but the tip of the iceberg. Mr. Haftar has modelled his control of much of Libya on Mr. El-Sisi’s example of a military that not only dominates politics but also the economy.
As a result, the LNA is engaged in businesses ranging from waste management, metal scrap and waste export, and agricultural mega projects to the registration of migrant labour workers and control of ports, airports and other infrastructure. The LNA is also eyeing a role in the reconstruction of Benghazi and other war-devastated or underdeveloped regions.
What for now makes 2019 different from 2011 is that both sides of the divide realize that success depends on commitment to be in it for the long haul. Protesters, moreover, understand that trust in military assertions of support for the people can be self-defeating. They further grasp that they are up against a regional counterrevolution that has no scruples.
All of that gives today’s protesters a leg up on their 2011 counterparts. The jury is out on whether that will prove sufficient to succeed where protesters eight years ago failed.
As Marsha Lazareva languishes in jail, foreign businesses will “think twice” before investing in Kuwait
IF THERE IS one thing to glean from the case of Marsha Lazareva, it’s that foreign businesses must now think very carefully before investing in Kuwait.
For more than a year, Lazareva, who has a five-year-old son and is one of Russia’s most successful female investors in the Gulf, has been held in the Soulabaiya prison by Kuwaiti authorities. Those authorities claim she ‘stole’ half a billion dollars, a claim she strenuously denies.
Human rights groups and prominent officials, including the former FBI director, Louis Freeh, and Jim Nicholson, former Chairman of the Republican Party and former US Ambassador to the Vatican, have called for her release and expressed concerns about the apparent absence of due process in a country where Lazareva has worked for over 13 years. Both Freeh and Nicholson visited Kuwait in recent weeks with Neil Bush, son of the late President George H. W. Bush. Bush has said Lazareva’s incarceration ‘threatens to darken relations between the U.S. and Kuwait, two countries that have enjoyed a long and prosperous relationship.’
Russian officials have been equally concerned. Vladimir Platonov, the President of the Moscow Chamber of Commerce and Industry, confirmed that a single witness gave testimony in Kuwaiti court, and only for the prosecution. ‘I myself worked in prosecution for more than eight years, and I cannot imagine any judge signing off on an indictment like this,’ he said. ‘One fact of particular note is that Maria was given 1,800 pages of untranslated documents in Arabic.’
Serious questions surrounding the safety and future viability of investing in Kuwait are now being raised. Through The Port Fund, a private investment company managed by KGL Investment, Lazareva has contributed hundreds of millions of dollars to local infrastructure and economic development projects during her time in the country. Until 2017, when a Dubai bank froze $496 million without cause, she had worked largely unobstructed.
But as things stand, more foreign investment is unlikely to be forthcoming. Jim Nicholson has said that the ‘imprisonment and harassment’ of Lazareva ‘threatens’ U.S. support. adding that the ‘willingness of the U.S. to do business with Kuwait’ is based on ‘its record as a nation that respects human rights and the rule of law’. Mark Williams, the investment director of The Port Fund and a colleague of Lazareva’s, has called on international investors to ‘think twice before doing business in this country’.
These comments will surely concern the Kuwaiti government, who said last year that FDI was ‘very crucial’ to the success of its Kuwait Vision 2035 road map. In September 2018, the FTreported that the government planned to reverse its traditional position as an investor in order to diversify its economy, carrying out a series of reforms designed to facilitate foreign investment and assist investors.
But despite these changes, which have propelled Kuwait to 96th—higher than the Middle East average—in the World Bank’s ‘Ease of Doing Business’ report, investors may be unwilling to take the risk so long as Lazareva remains in jail. Lazareva’s lawyers have accused Kuwait of violating international law by breaching a long-standing bilateral investment treaty with Russia. Lord Carlile of Berriew, QC has brought the case to the attention of the British public and the EU, writing in The Times that ‘there is no evidential basis to justify any claim of dishonesty, corruption or any other criminal wrong’. He added: ’Anyone thinking of doing business in Kuwait should read on with mounting concern.’
What’s worth remembering is that Kuwait is an important, long-standing ally of the UK, and a country generally seen as stable and fair. It is equally a major non-NATO ally of the United States, where there are more than 5,000 international students of Kuwaiti origin in higher education. But these relationships, and the investment to which they have historically led, have been cast into doubt. And it now seems certain that relations will continue to sour so long as Marsha Lazareva languishes in Soulabaiya.
Economic reform in the Gulf: Who benefits, really?
For Gulf leaders, long-overdue economic reforms were never going to be easy.
Leaders like the crown princes of Saudi Arabia and the United Arab Emirates, Mohammed bin Salman and Mohammed bin Zayed, quickly discovered that copying China’s model of economic growth while tightening political control was easier said than done. They realised that rewriting social contracts funded by oil wealth was more difficult because Gulf Arabs had far more to lose than the average Chinese. The Gulf states’ social contracts had worked in ways China’s welfare programmes had not. The Gulf’s rentier state’s bargain—surrender of political and social rights for cradle-to-grave welfare—had produced a win-win situation for the longest time.
Moreover, Gulf leaders, struggling with mounting criticism of the Saudi-UAE-led war in Yemen and the fall-out of the killing of journalist Jamal Khashoggi, also lacked the political and economic clout that allowed China to largely silence or marginalise critics of its crackdown on Turkic Muslims in the troubled northwestern province of Xinjiang.
The absence of a welfare-based social contract in China allowed the government to power economic growth, lift millions out of poverty, and provide public goods without forcing ordinary citizens to suffer pain. As a result, China was able to push through with economic reforms without having to worry that reduced welfare benefits would spark a public backlash and potentially threaten the regime.
Three years into Mohammed bin Salman’s Vision 2030 blueprint for diversification of the economy, Saudi businesses and consumers complain that they are feeling the pinch of utility price hikes and a recently introduced five per cent value-added tax with little confidence that the government will stay the course to ensure promised long-term benefit.
The government’s commitment to cutting costs has been further called into question by annual handouts worth billions of dollars since the announcement of the reforms and rewriting of the social contract to cushion the impact of rising costs and quash criticism.
In contrast to China, investment in the Gulf, whether it is domestic or foreign, comes from financial, technology and other services sector, the arms industry or governments. It is focused on services, infrastructure or enhancing the state’s capacities rather than on manufacturing, industrial development and the nurturing of private sector.
With the exception of national oil companies, some state-run airlines and petrochemical companies, the bulk of Gulf investment is portfolios managed by sovereign wealth funds, trophies or investment designed to enhance a country’s prestige and soft power.
By contrast, Asian economies such as China and India have used investment fight poverty, foster a substantial middle class, and create an industrial base. To be sure, with small populations, Gulf states are more likely to ensure sustainability in services and oil and gas derivatives rather than in manufacturing and industry.
China’s $1 trillion Belt and Road initiative may be the Asian exception that would come closest to some of the Gulf’s soft-power investments. Yet, the BRI, designed to alleviate domestic overcapacity by state-owned firms that are not beholden to shareholders’ short-term demands and/or geo-political gain, contributes to China’s domestic growth.
Asian nations have been able to manage investors’ expectations in an environment of relative political stability. By contrast, Saudi Arabia damaged confidence in its ability to diversify its oil-based economy when after repeated delays it suspended plans to list five per cent of its national oil company, Saudi Arabian Oil Company, or Aramco, in what would have been the world’s largest initial public offering.
To be sure, China is no less autocratic than the Gulf states, while Hindu nationalism in India fits a global trend towards civilisationalism, populism and illiberal democracy. What differentiates much of Asia from the Gulf and accounts for its economic success are policies that ensure a relatively stable environment. These policies are focused on social and economic enhancement rather than primarily on regime survival. That may be Asia’s lesson for Gulf rulers.
Author’s note: first published in Firstpost
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