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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. “

Middle East

The secret behind Trump’s moves in eastern Deir ez-Zur

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Trump’s desire for Syrian oil has led observers to consider it as the beginning of occupying oil wells in other countries, including Libya, Iraq, Saudi Arabia and other Persian Gulf Arab states.

The obsession of the U.S. president with money and oil is obvious for everyone and that is why U.S. military commanders have used this temptation by Trump to persuade him to keep some troops in Syria.

On October 28, Trump said, “We are keeping the oil — remember that. Forty-five million dollars a month?  We have secured the oil”.

Last week, news sources reported that the U.S. president has agreed to develop military missions to protect oilfields in eastern Syria.

The Turkish Anadolu Agency reported that the U.S. has established a new military base in the oil-rich parts of Deir ez-Zur in Syria.

In this regard, Trump announced the settlement of some U.S. companies in Syria’s east to invest in and exploit oilfields. It was a move that drew Russian backlash.

Russian opposition to Trump’s oil ambitions

Russian Foreign Minister Sergey Lavrov said in a statement in late October that the Syrian oil is the focus of U.S. attention. In a phone call with U.S. Secretary of State Mike Pompeo, Lavrov said it was important to refrain from “steps undermining the sovereignty and territorial integrity” of Syria.

Russian Defense Ministry spokesman Major General Igor Konashenkov also said, “This, what Washington is doing now — capturing and maintaining control through the use of arms over oil fields in eastern Syria — that is, to put it simply, international, state-sponsored banditry,” DW reported on October 26.

Konashenkov said tank trucks guarded by U.S. military servicemen and private military companies smuggle oil from fields in eastern Syria to other countries.

Russian Deputy Foreign Minister Sergei Vershinin also pointed to U.S. efforts to reinforce its presence in Syrian oil-rich lands, calling it an illegal act by Washington. Vershinin also said that Moscow will never accept the policy that the U.S. is pursuing in Syria.

The Russian Defense Ministry in recent weeks has also released satellite images of some areas in Syria showing that U.S. troops have created security guard to smuggle Syria’s oil. Earlier, images of eastern Syria were released documenting oil trucks were traveling across Syria-Turkey borders, an action which reveals the goals of those countries which support terrorism in Syria.

 Syria’s oil reserves

In terms of oil reserves, Syria is in 32nd place after Malaysia and ahead of Argentina, with 2,500,000,000 barrels. Syria’s known oil reserves are mainly in the eastern part of the country in Deir ez-Zor, the second largest Syrian province after Homs. The rest of reserves are in other provinces such as Hama, Ar Raqqah and Homs.

Before the beginning of civil war in 2011, Syria was extracting 385,000 barrels of light crude oil with an approximate value of €3 billion, which were being transferred to Homs via pipeline. 89,000 barrels of the extracted oil were being refined and used for domestic uses. The rest was being exported through port of Baniyas.

Lebanon has uncovered some oil and gas reserves in the Mediterranean. Syria can also explore some of these reserves as it has long coasts along the Mediterranean if it invests in its territorial waters.  

U.S. actions in eastern Euphrates

Now that the defeat of terrorists is clear to everyone, the U.S. is seeking to create an economic crisis in Syria by using oil as a tool against Damascus. This is the reason why it is seizing the country’s oil reserves and also pressures Damascus to accept Washington’s conditions.

From our partner Tehran Times

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Middle East

Middle Eastern protests: A tug of war over who has the longer breath

Dr. James M. Dorsey

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Mass anti-government protests in several Arab countries are turning into competitions to determine who has the longer breath, the protesters or the government.

In Algeria, Lebanon and Iraq, countries in which the leader was either forced to resign or has agreed to step down, authorities appear to be dragging their feet on handovers of power or agreed transitional power sharing arrangements in the hope that protesters, determined to hold on to their street power until a political transition process is firmly in place, either lose their momentum or are racked by internal differences.

So far, protesters are holding their ground, having learnt the lesson that their achievements are likely to be rolled back if they vacate the street before having cemented an agreement on the rules of the transitional game and process.

Algerians remain on the streets, seven months after President Abdelaziz Bouteflika was forced to step down, in demand of a complete change of the political system.

Scores of recent arrests on charges that include “harming national unity” and “undermining the morale of the army” have failed to deter Algerians who refuse to accept the military’s proposed December 12 date for elections.

Lebanon enters its second months of protests with the government going through the motions but ultimately failing to respond to demands for a technocratic government, a new non-sectarian electoral law and early elections.

An effort to replace prime minister Saad Hariri with another member of the elite, Mohammad Safadi, a billionaire businessman and former finance minister, was rejected by the protesters.

We are staying here. We don’t know how long – maybe one or two months or one or two years. Maybe it will take 10 years to get the state we are dreaming of, but everything starts with a first step.” said filmmaker Perla Joe Maalouli.

Weeks after agreeing to resign in response to popular pressure, Iraqi prime minister Adil Abdul Mehdi appears to be increasingly firm in his saddle.

Much like what prompted US President George H.W.. Bush to first call in 1991 for a popular revolt against Saddam Hussein and then give the Iraqi strongman the tools to crush the uprising, Mr. Mehdi is holding on to power in the absence of a credible candidate acceptable to the political elite to replace him.

Mr. Mehdi’s position is strengthened by the fact that neither the United States nor Iran wants a power vacuum to emerge in Baghdad.

Backtracking on Mr. Mehdi’s resignation and refraining from appointing a prime minister who credibly holds out the promise of real change is likely to harden the battle lines between the protesters and the government.

The tugs of war highlight the pitfalls protesters and governments need to manoeuvre in what amounts to a complex game with governments seeking to pacify demonstrators by seemingly entertaining their demands yet plotting to maintain fundamental political structures that anti-government activists want to uproot.

The risk of a tug of war is that protests turn violent as happened in Hong Kong or in Lebanon where cars of parliamentarians were attacked as they drove this week towards the assembly.

Meeting protesters’ demands and aspirations that drive the demonstrations and figure across the Middle East and North Africa, irrespective of whether grievances have spilled into streets, is what makes economic and social reform tricky business for the region’s autocrats.

Its where what is needed for sustainable reforms bounces up against ever more repressive security states intent on exercising increasingly tight control.

Sustainable reform requires capable and effective institutions rather than bloated, bureaucratic job banks and decentralisation with greater authorities granted to municipalities and regions.

Altering social contracts by introducing or increasing taxes, reducing subsidies for basic goods and narrowing opportunities for government employment will have to be buffered by greater transparency that provides the public insight into how the government ensures that it benefits from the still evolving new social contract.

To many protesters, Sudan has validated protesters’ resolve to retain street power until transitional arrangements are put in place.

It took five months after the toppling of president Omar al-Bashir and a short-lived security force crackdown in which some 100 people were killed before the military, the protesters and political groups agreed and put in place a transitional power-sharing process.

The process involved the creation of a sovereign council made up of civilians and military officers that is governing the country and managing its democratic transition.

Even so, transitional experiences have yet to prove their mettle. Protesters may have learnt lessons from the 2011 popular Arab revolts that toppled the leaders of Tunisia, Egypt, Libya and Yemen.

Yet, this time round, protesters lack the broad-based international empathy that 2011 uprisings enjoyed and are up against more than domestic forces backed by conservative Gulf states.

Powers like Russia and China make no bones about their rejection of protest as an expression of popular political will.

So has Iran that has much at stake in Iraq and Lebanon, countries where anti-sectarian sentiment is strong among protesters, even if the Islamic republic was born in one of the 20th century’s epic popular revolts and is confronting protests of its own against fuel price hikes.

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Middle East

Iran’s next parliamentary election hinges on economic problems, US sanctions effective

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It seems any faction focuses on solving the economic problems, has more chance for victory in the parliamentary elections.

The eleventh elections of the Islamic Parliament in Iran will be on Feb 21, 2020 across the country. Seyed Salaman Samani spokesman of Interior Ministry said in an interview that has published on the official website of the ministry.

About 4 months have remained to the elections, but the politicians and parties have started to organize their campaigns and planning for victory.

The current parliament was formed from 41 percent Reformers and Moderates, 29 percent Principlists, 28 percent Independents and 2 percent Minorities, according to the ISNA News Agency.

In Tehran, capital of the country, all seats were gained by the Reformers, but some important cities such as Mashhad as the second city in the country, the Principlists were decisive winners.

But the majority of people and political activists are serious dissatisfactions concerning the function of the parliament, even some experts have emphasized on the famous slogan that says: “Reformer, Principlist, the story is over.”

This situation has formed, while Iran`s Parliament has been under control between two parties in the past years. So, some experts seek up the third faction for improving the country’s position, but so far the third faction has had not a leader and specific structure.

Due to the Reformers supporting of President Hassan Rouhani in the last presidential elections and lack of his rhetoric realization, the position of the Reformers has weakened increasingly. For example, Rouhani said during the contests of the presidential elections about 2 years ago in Iran television that If Iranians reelect me, all sanctions even non-nuclear sanctions will be lifted. But now, the sanctions against Iran have increased and the economic situation of the people has hurt extremely.

But recently, many celebrities of Iran have regretted concerning supporting Rouhani like Ali Karimi the former football player and Reza Sadeghi the famous singer, they demonstrated their regret on social media. So, some suggested that the victory of Principlists in the elections is certain.

“The Principlists need not do anything; they are comfortably the winner of the next parliamentary elections.” Sadegh Zibakalam, an Iranian academic reformist said in an interview with Shargh Newspaper.

“We have no chance for parliamentary elections and next presidential elections unless a miracle happens,” he added.

The Iranian Principlists are closer to Iran`s supreme leader and guard corps than the Reformers. A political face in the right-wing like, Mohammad Bagher Ghalibaf with the slogans “New Parliament ” and “Neo-Principlism ” has recalled young people to receive their ability to provide the elections list. Ghalibaf launched his third presidential campaign for the Iranian presidency on April 15, 2017, but on May 15, 2017, Ghalibaf withdrew, but he supported Ebrahim Raisi who is the current chief of Iran`s judiciary.

Another face is the former president Mahmoud Ahmadinezhad. Some experts say Ahmadinezhad has a great plan for the next elections but so far he has not spoken about it. Recently he criticized toughly from the government of Rouhani and Iran’s Judiciary. Recently, some of his close activists arrested by Iran’s Judiciary, and they are in Evin Prison now. Some analyzers say Ahmadinezhad has high popularity, just as the people have welcomed warmly lately on his travels across the country.

JAMNA or “Popular Front of Islamic Revolution Forces” is another chance for Principlists in the next elections. JAMNA founded in late 2016 by ten figures from different spectrum of conservative factions, in the end, the party elected Ebrahim Raisi as a candidate for the presidential election but Raeisi defeated.

But Reformers are not hopeless, Mohammad Khatami as the leader of the Reformers, who served as the fifth President of Iran from 1997 to 2005 has said statements recently. He has wanted from the government to qualify the Reformers candidates for participation in the political event.

One of the Reformer’s big problems in the history of Iran `s elections has been the disqualification by the Guardian Council. According to Iran constitution, all candidates of parliamentary or presidential elections, as well as candidates for the Assembly of Experts, have to be qualified by the Guardian Council to run in the elections.

Some Reformers in reformist newspapers state that they will take part in the parliament elections on this condition the majority of Reformers’ candidates will be qualified by the Guardian Council.

Some analysts said the Iran parliament has not enough power in order to improve the country’s situation. Just as the parliament has approved the bill of “United Nations Convention against Transnational Organized Crime” by a 126 vote in last year, but the Guardian Council has disagreed with it and its fate shall determine by Expediency Discernment Council, while the government has frequently emphasized on the bill. The government believes the approving the bill will cause to reducing the bans about the economic transaction with the world.

Generally, Iran`s economic position is very critical currently, tough sanctions by Trump administration and the defeat of the nuclear deal (JCPOA) has caused that Iranians to be under serious problems. The stuff prices and inflation are at the highest level since Iran`s revolution in 1979. So, it seems any faction that focuses on solving the economic problems, has more chance for victory in the parliamentary elections. Also, the more important issue is the participation rate of people. If dissatisfactions about economic problems will be continued, hope and joy between people would reduce the rate of Participation in the next elections. Some experts say based on experiences in Iran, when the rate of participation in the elections is reduced, the Principlists has a more chance for the victory, because the gray spectrum that is not black or white, usually has a willing to the Reformers. the spectrum includes younger people even teenagers in the urban society.

Some political observers say the gray spectrum has not very willing to participate in the next elections. Some suggested that the future situation, especially in the economic field is very important to make the willingness about the gray spectrum to participate.

Analysts said the winner of the presidential elections 2 years later is the winner of the parliamentary elections on Feb 21, 2020. The majority of the next parliament will affect the political space across the country. This procedure in Iran has precedent. Like the victory of the Reformers in the last parliamentary elections that it caused the Rouhani victory about 2 years ago.

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