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Iran, Syria and Saudi Arabia

Giancarlo Elia Valori

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First and foremost, it is worth analyzing what the lifting of sanctions on Iran really means for Iran and the West.

The announcement made on January 16 last by the Iranian Shi’ite government and the P5 + 1 regarding the lifting of sanctions means that the IAEA has acknowledged that Iran has complied with all the terms and conditions of the JCPOA Treaty on the elimination of nuclear weapons and the control of the nuclear power for civilian uses by the Shi’ite regime (yet there would be much to add in this regard).

It is a decision resulting more from the Western economic crisis than the real Iranian willingness to stop its military-civilian nuclear activities. Nevertheless the Western geoeconomic collapse is now so fast that every global strategic choice must be sadly subjected to the needs of the economic and political survival of our social systems.

The EU, US and UN sanctions have now been basically lifted, especially with regard to the financial, transport, logistics and energy sectors, while the US embargo on Iran is still in place.

In this connection, data and statistics are more important than usual: so far the Iranian companies removed from the sanctions list are 278 in the transport sector; 114 in the energy sector; 16 in the fields of engineering, construction and manufacturing; 20 in the trading sector; 53 in the activities related to the nuclear cycle and finally 111 in the financial and insurance sectors.

Moreover, further 600 individuals and small to medium size companies have been removed from the list of sanctions on Iran.

About half of these 600 natural and legal persons operate in the transport sector, a fundamental sector for a nation like Iran whose economy is linked to oil.

In particular the Islamic Republic of Iran Shipping Lines, the National Iranian Tanker Company and their offices and affiliated companies.

In percentage terms, the lifting of sanctions has placed back on the scene 20% of Iranian energy companies, as well as 20% of its banks and insurance companies and only 9% of its companies working in the nuclear sector.

The remaining companies operate in the trading, engineering, construction, manufacturing and the import-export sectors.

Many of these companies, however, result to be still active in Iranian missile or anyway military activities. Several banks to which now sanctions are no longer applied still have ties with the covert networks of nuclear procurement, while other companies have been used as a cover for secret nuclear activities not declared to the IAEA.

It is worth recalling that, in accordance with the JCPOA agreement, Iran can still prevent the Vienna Agency’s visits and inspections to the sites having “military relevance” and, in any case, even the AIEA experts must be subjected to the Iranian government’s acceptance.

For the EU, however, the following transactions were excluded from the previous sanctions; the transfers of funds and the financial and banking exchanges and transfers between European and Iranian entities; the banking activities, with the possibility for the Iranian credit institutions to open branches in the EU region; insurance and reinsurance activities for the Iranian companies operating in Europe; the imports of oil, gas and petrochemical products from Iran; the EU investment in the Iranian mining sector; all the shipping and shipbuilding activities; the exports of gold, gems and coins, in which Iran is rich at least since the time of the Thousand and One Nights.

The United States have lifted their sanctions on Iran and on the non-US companies working with Iran, especially in the hydrocarbon sector, although a clear US government’s ban remains for US assets and individuals to still operate with the Iranian government.

However the sanctions list by sector is largely similar to the list we have already seen for the European Union.

Nevertheless the United Nations have retained the embargo on 36 natural and legal persons, while the sanctions regime remains in place for conventional weapons (lasting five years) and for the technologies regarding ballistic missiles (lasting eight years). Obviously also the restrictions on the nuclear-related technologies are maintained.

It is worth noting that, despite the P5 + 1 agreement, there are hundreds of Iranian natural and legal persons that have not been removed from the sanctions list.

They include 86 natural or legal persons for the United Nations, including the Bank Sepah; over 150 natural and legal persons for the European Union, including banks and oil trading companies, as well as over 160 for the United States.

Obviously many of these entities can be found in all the various lists.

So far we have provided the essential data to understand the issue. But what will be the geostrategic impact of the new interaction between Iran and the Western powers of the P5 + 1 agreement? As we all know, we are now faced with a situation of plummeting oil prices.

Certainly Iran plans to flood and invade the global markets with huge amounts of oil and gas but, in this case, the clash between the country of reference of the “Party of Ali” and the country of reference of Wahhabi and Sunni purism, namely Saudi Arabia, could be turned from peripheral tensions – managed by proxies, such as the Yemeni Houthi for Iran or the “moderate” jihadists in Syria – into a direct war between the two entities of Islam.

Some experts estimate that the excess of oil production in the world amounts to 9-12 million barrels per day and, as is well-known, this has been lasting for 16 months approximately.

The United States have endeavoured to reduce prices with a view to destabilizing the economy and hence the Russian power projection between Ukraine and Syria. Saudi Arabia wants the fall of crude oil price to prevent the rise of the US shale oil which, in fact, needs a minimum price of 50 US dollars per barrel to break even the extraction costs. The European Union is floundering in an economic crisis and can afford only a smaller amount of oil.

It is a perfect geopolitical storm: the greater the fall in prices, or their irrelevance compared to costs (which is the real problem), the greater the internal competition among producers.

The oil demand has been falling since mid-2014 and Europe is cutting demand substantially, while the United States extract ever more shale oil and China reduces its oil imports.

If OPEC had read only the manuals of liberal neoclassical economics, it would have reduced extraction so as to keep prices high.

Conversely, Saudi Arabia has decided to increase extraction not to keep prices high (Saudi Arabia reaches the breakeven point with a price of 100 US dollars per barrel), but only to retain its market share.

Hence the ground for the war between Iran and Saudi Arabia will be the destruction or the driving away from the market – with terrorist and jihadist actions – of their respective allies having an oil-dependent economy.

The other variable is the rapid recovery of the Chinese economy, which could make prices increase beyond such a limit as to avoid a direct or indirect war between Shi’ites and Sunnis.

Currently China’s imports have increased by approximately 8% as against last year, but China is a major customer for Iran, for obvious technical and geopolitical reasons, while Saudi Arabia still is the second largest oil exporter to China. The first is the Russian Federation.

Moreover President Xi Jinping has further improved the Sino-Saudi relations, thanks to the visit he has paid this month to the Middle East.

Obviously China does not want the destabilization of the Greater Middle East and it is distributing its cards among all players so as to be the final broker of the new regional balance.

Indeed, this is the reason why Russia is actively mediating between Iran and Saudi Arabia so as to avoid both the confrontation and the expansion of the proxy wars which, in the Russian perspective, only benefit “NATO and the West.”

If the OPEC Islamic region set fire, what would happen to the Russian oil transport lines from Central Asia?

Furthermore, in view of the lifting of international sanctions, Iran has repeatedly stated that its oil will be managed on the market in such a way as to prevent further falls in oil prices.

Hence, as Iran has already maintained, it will produce “as much as the market can absorb”. But certainly it cannot help affecting the Saudi market area.

Nevertheless, there is a variable: the demographic and religious distribution of the Saudi population.

The Shi’ites living in Saudi Arabia are approximately eight million and are concentrated in the Eastern areas, where the headquarters of Saudi Aramco are located (in Dahran), as well as the largest oil field in the world, namely Ghawar, and the largest global terminal, namely Ras Tanura, in addition to the refinery of Abuqaiq, which is the largest one of the whole OPEC system.

The Shi’ites are the overwhelming majority of workers processing crude oil in the region and will be – or probably already are – “managed” by the Iranian brothers.

It is not hard to imagine what would happen if a Shi’ite uprising in Saudi Arabia’s Eastern province destabilized the production of the first OPEC country and added the largest oil production in the world to the Shi’ite economic and decision-making system.

However, keeping prices low allows to dispose of stocks more quickly.

Hence if Saudi Arabia keeps prices low to expand its market share, which is of primary importance compared to profitability, it is likely it wants direct confrontation with Iran.

According to the analysts of many Western merchant banks, the scenario of a real war between Iran and Saudi Arabia could lead to an immediate price peak of 300 US dollars per barrel, before stabilizing at 100 US dollars, which is the profitability limit of Saudi Arabia’s production.

It is worth recalling that Iran has a profitability level higher than Saudi Arabia’s. And this is a significant factor to assess the duration – and hence the winner – of the confrontation.

In a conference held last year with the major oil extraction companies worldwide, Iran decided to change the crude oil commercial rules, by allowing the booking of reserves though maintaining the ownership of soil.

Iran will attract at least 30 billion US dollars of investment in its oil, with 25-year contracts for the foreign companies extracting in the new oil fields and some offsetting mechanisms for price fluctuations.

Despite sanctions, Iran is the second largest economy in the Middle East and the seventh in Asia as a whole. We can imagine what might happen after the lifting of sanctions.

It is a struggle for hegemony over oil, through which the world and Western economies are controlled and governed and – subject to the careful Russian mediation and China’s balanced policy between the parties – nothing prevents the worst from happening.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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Middle East

Israeli contrasts: Likud’s favoured soccer teams veers left as Bibi turns further right

Dr. James M. Dorsey

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The contrast could not be starker. As Israel plays a dangerous game of US politics by restricting or banning visits by controversial Democratic members of Congress to seemingly please President Donald J. Trump’s prejudiced electoral instincts, the owner of a notorious Jerusalem soccer club draws a line in the sand in confronting his racist fan base.

The contrast takes on added significance as prime minister Benyamin Netanyahu woes Israel’s far-right in advance of elections on September 17 given that storied club Beitar Jerusalem has long been seen as a stronghold for his Likud party.

Mr. Netanyahu’s barring of Congresswomen Rashida Tlaib and Ilhan Omar was as much a response to Mr. Trump’s tweeted suggestion that they should not be allowed to visit Israel as it was catering to his right-wing base that includes Beitar’s fans.

Beitar is the only Israeli squad to have never hired a Palestinian player. Its fans, famous for their racist slogans and bullying tactics, have made life impossible for the few Muslim players that the club contracted in its history.

Messrs. Netanyahu and Moshe Hogeg, the Beitar owner and tech entrepreneur who founded social mobile photo and video sharing website Mobli and crypto transactions platform Sirin Labs, are both treading on slippery ground.

Mr. Netanyahu, who initially raised out of respect for the US Congress no objection to the planned visit by Ms. Tlaib and Ms. Omar, has ensured that Israel for the first time in decades can no longer be sure of bi-partisan support in the Congress and beyond and is likely to become a partisan issue in the run-up to next year’s US presidential election.

His pandering to Mr. Trump sparked rare criticism from the American Israel Political Action Committee (AIPAC), Israel’s most powerful and influential lobby in the United States even though AIPAC agrees that Ms. Tlaib and Ms. Ilham support the Boycott, Diversification and Sanctions (BDS) movement that targets Israel.

“We disagree with Reps. Omar and Tlaib’s support for the anti-Israel and anti-peace BDS movement, along with Rep. Tlaib’s calls for a one-state solution. We also believe every member of Congress should be able to visit and experience our democratic ally Israel first hand,” AIPAC tweeted.

A breakdown of bi-partisan support for Israel may not be what Mr. Netanyahu wants, but it may be, in a twist of irony, what Israel needs. It would spark a debate in the United States with a potential fallout in Israel about whether Mr. Netanyahu’s annexationist policy and hard-line approach towards Palestinian aspirations serves Israel’s longer-term best interests.

Israel’s toughening stand was evident on Tuesday when police broke up an annual soccer tournament among Palestinian families in East Jerusalem on assertions that it was sponsored by the Palestinian Authority, which is barred from organizing events in the city. The tournament’s organizer denied any association with the Authority.

In a dismissive statement, Israeli public security minister Gilad Erdan’s office scoffed: “We’re talking about scofflaws who lie and blame the agency that enforces the law when they know full well that the Palestinian Authority is involved in the event that Minister Erdan ordered halted.”

The incident was emblematic of an environment that prompted columnist and scholar Peter Beinart, writing in The Forward, a more than 100-year old, left-wing Jewish weekly, to argue that “the United States has a national interest in ensuring that Israel does not make permanent its brutal occupation of the West Bank and blockade of the Gaza Strip.

By taking on La Familia, a militant Beitar Jerusalem fan group that has driven the club’s discriminatory policy, Mr. Hogeg is going not only against Mr. Netanyahu’s policies that emphasize Israeli Jewish nationalism at the expense of the rights of Palestinians with Israeli citizenship as well as those subject to occupation.

He is also challenging a global trend spearheaded by civilizational leaders like Indian prime minister Narendra Modi who, two weeks after depriving Kashmiri Muslims of their autonomy, is planning to build detention camps for millions of predominantly Muslim Indians suspected of being foreign migrants, Victor Orban who envisions a Muslim-free Hungary, and Xi Jinping who has launched in China’s troubled, north-western province of Xinjiang the most frontal assault on Islam in recent history

The degree of polarization and alienation that civilizational policies like those of Messrs Netanyahu, Modi, Xi and Orban is highlighted by the fact that Mr. Hogeg’s battle with his fans is over a name.

Ali Mohammed is Beitar Jerusalem’s latest acquisition. The only Muslim thing about him is his name. Mr. Mohammed is a Nigerian Christian.

That wasn’t good enough for the fans who demand that he change his name. During Mr. Mohammed’s first training session fans chanted “Mohamed is dead” and “Ali is dead.”

Unlike his predecessors, Mr. Hogeg seems unwilling to back down. He has threatened to sue the fans for tarnishing Beitar’s already battered reputation and demand up to US$500,000 in damages. Lawyers for Mr. Hogeg have written to fans demanding an apology.

“They are very good fans; they are very loyal. They love the club and what it represents … but they’re racist and that’s a big problem,” Mr. Hogeg said.

Convinced that the militants are a minority that imposes its will on the majority of Beitar fans, Mr. Hogeg takes the high road at a time that the likes of him threaten to become an endangered species.

“I was surprised to find that Mohamed is not Muslim, but I don’t care. Why should it matter? He’s a very good player. As long as the player that comes respects the city, respects what he represents, respects Israel, can help the team and wants to play then the door will be open. If those radical fans will fight against it, they will lose. They will simply lose,” Mr. Hogeg said.

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“Today Saudi Arabia finally lost the war on Yemen.”

Eric Zuesse

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On August 17th, an anonymous German intelligence analyst who has perhaps the world’s best track-record of publicly identifying and announcing historical turning-points, and who is therefore also a great investigative journalist regarding international relations (especially military matters, which are his specialty) headlined at his “Moon of Alabama” blog, “Long Range Attack On Saudi Oil Field Ends War On Yemen”, and he opened:

Today Saudi Arabia finally lost the war on Yemen. It has no defenses against new weapons the Houthis in Yemen acquired. These weapons threaten the Saudis economic lifelines. This today was the decisive attack:

Drones launched by Yemen’s Houthi rebels attacked a massive oil and gas field deep inside Saudi Arabia’s sprawling desert on Saturday, causing what the kingdom described as a “limited fire” in the second such recent attack on its crucial energy industry.  …

The Saudi acknowledgement of the attack came hours after Yahia Sarie, a military spokesman for the Houthis, issued a video statement claiming the rebels launched 10 bomb-laden drones targeting the field in their “biggest-ever” operation. He threatened more attacks would be coming. 

New drones and missiles displayed in July 2019 by Yemen’s Houthi-allied armed forces

Today’s attack is a check-mate move against the Saudis. Shaybah is some 1,200 kilometers (750 miles) from Houthi-controlled territory. There are many more important economic targets within that range.  …

The attack conclusively demonstrates that the most important assets of the Saudis are now under threat. This economic threat comes on top of a seven percent budget deficit the IMF predicts for Saudi Arabia. Further Saudi bombing against the Houthi will now have very significant additional cost that might even endanger the viability of the Saudi state. The Houthi have clown prince Mohammad bin Salman by the balls and can squeeze those at will.

He went on to say that the drones aren’t from Iran but are copies from Iran’s, “assembled in Yemen with the help of Hizbullah experts from Lebanon.”

He has been predicting for a long time that this war couldn’t be won by Crown Prince Mohammed bin Salman al-Saud (MbS). In the present report, he says:

The war on Yemen that MbS started in March 2015 long proved to be unwinnable. Now it is definitely lost. Neither the U.S. nor the Europeans will come to the Saudis help. There are no technological means to reasonably protect against such attacks. Poor Yemen defeated rich Saudi Arabia.

The Saudi side will have to agree to political peace negotiations. The Yemeni demand for reparation payments will be eye watering. But the Saudis will have no alternative but to cough up whatever the Houthi demand.

The UAE was smart to pull out of Yemen during the last months.

If he is correct (and I have never yet found a prediction from him turn out to have been wrong), then this will be an enormous blow to the foreign markets for U.S.-made weapons, since the Sauds are the world’s largest foreign purchasers of those, and have spent profusely on them — and also on U.S. personnel to train their soldiers how to use them. So (and this is my prediction, not his), August 19th might be a good time to sell short U.S. armament-makers such as Lockheed Martin.

However: his prediction that “the Saudis will have no alternative but to cough up whatever the Houthi demand” seems to me to be the first one from him that could turn out to have been wrong. If the Sauds have perpetrated, say, $200 billion of physical damage to Yemen, but refuse to pay more than $100 billion in reparations, and the Housis then hit and take out a major Saudi oil well, isn’t it possible that the Sauds would stand firm? But if they do, then mightn’t it be wrong to say, at the present time, that: “Today Saudi Arabia finally lost the war on Yemen.”? He has gone out on limbs before, and I can’t yet think of any that broke under him. Maybe this one will be the first? I wouldn’t bet on that. But this one seems to me to be a particularly long limb. We’ll see!

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The message behind the release of Iranian oil tanker

Mohammad Ghaderi

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The Gibraltar court ordered the Iranian oil tanker Grace 1 to be released. The tanker was seized by the British Royal Marines about a month ago. 

This verdict was the ending of an elaborate game designed by John Bolton National Security Advisor of the United States and Mike Pompeo, carried out by the Britain government. 

With seizing the tanker, Bolton was trying to put psychological and political pressures on Iran and force other countries to form a consensus against Iran, but he couldn’t fulfill any of these goals. 

Iran’s firm, logical and wise answer to the seizure of Grace 1 (like making solid legal arguments) and the seriousness of our country’s armed forces in giving a proper response to Britain’s contemptuous act, made the White House lose the lead on reaching its ends. 

Washington imagined that the seizure of Grace 1 will become Trump’s winning card against Iran, but the release of the tanker (despite disagreement of the U.S.) became another failure for the White House in dealing with Iran.  

Obviously, London was also a total loser in this game. It is worth noting that U.S. was so persistent about keeping the oil tanker in custody that John Bolton traveled to London and insisted on British officials to continue the seizure of the ship. Their failure, however, clearly shows that the White House and its traditional ally, Britain, have lost a big part of their power in their relations with Iran. 

Clearly, the illegal seizure of the Iranian oil tanker by Britain proceeded by the seizure of a British tanker by Iran and the following interactions between the two countries is not the whole story and there is more to it that will be revealed in coming days. 

What we know for sure is that London has to pay for its recent anti-Iran plot in order to satisfy Washington; the smallest of these consequences was that Britain lost some of its legal credibility in international arena as it illegally captured an Iranian oil tanker. 

The order of the Gibraltarian court revealed that London had no legal right to seize the Iranian oil tanker and nobody can defend this unlawful action. Surely, Iran will take all necessary legal actions to further pursue the matter.  

In this situation, the Islamic Republic of Iran is firm on its position that it doesn’t have to follow the sanctions imposed by the European Union on other countries (including Syria). 

No entity can undermine this argument as it is based on legal terms; therefore, Iran will keep supporting Syrian nation and government to fight terrorism. This is the strategic policy of the Islamic Republic and will not be changed under the pressure or influence of any other third country. 

Finally, it should be noted that the release of Grace 1 oil tanker was not only a legal and political failure for Washington and London and their allies but it was also a strategic failure. Undoubtedly, the vast consequences of this failure will be revealed in near future. 

From our partner Tehran Times

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