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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 "La Centrale Finanziaria Generale Spa", he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group and member of the Ayan-Holding Board. 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 of "Honorable" of the Académie des Sciences de l'Institut de France

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Why no global outcry over Saudi war in Yemen?

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On Sunday, the US intelligence agency confirmed that the brazen killing of Saudi journalist Jamal Khashoggi was ordered by the Saudi crown prince Mohammad Bin Salman, which must have finally given some comfort to his restless soul. The truth was not hidden from the world, as it was already established by the Turkish authorities, but now we have the word straight from the horse’s mouth.

Khashoggi’s killing led to unprecedented global outcry against the Saudi regime because of its wanton disregard for human rights. It dominated newspaper headlines and primetime TV discussions for weeks as the mystery surrounding the dissident journalist’s killing grew.

To their credit, Turkish government authorities left no stone unturned to unravel the murder mystery and expose the masterminds of the most diabolical crime. The whole world waited with bated breath because suddenly something had stirred people’s conscience.

Today everyone knows about Khashoggi and everyone knows his murderer. Everyone is talking about it and tweeting about it. But, hold on, this is not the only crime his murderer has committed. His murderer has the blood of thousands of Yemenis on his hands and he is directly responsible for the starvation of millions of people in Yemen. Does the world know about it? Does it care?

A much-anticipated UN Security Council resolution calling for a cessation of Saudi-led war in Yemen and for the humanitarian aid to be allowed to reach millions of starving people was reportedly “stalled” this week after British Foreign Secretary Jeremy Hunt, who had moved the resolution, met the Saudi crown prince in Riyadh.

The prince, reports say, ‘threw a fit’ about the resolution. He didn’t like the idea of food reaching the starving Yemenis because he wishes to see them killed either through bombardment or with starvation. Hunt surrendered tamely because UK happens to have arms trade with the Saudi regime.

Saudi-led war in Yemen has stretched into its third year now, killing more than 10,000 people and leaving the country completely devastated. The humanitarian situation in the war-ravaged country has been termed ‘catastrophic’ by aid groups. And the world has chosen to be a mute spectator.

The blockade of the country means around 18 million people don’t have access to food, which could eventually and inevitably lead to the worst famine in more than a century. Already 2.2 million children are acutely malnourished and fighting for their lives. The World Food Program warned this week that the country was “marching to the brink of starvation”.

Why has the world chosen to be silent even as warnings of famine have assumed alarming proportions? Akshaya Kumar, a senior Human Rights Watch official, says it’s because of the “sway” Saudi has over some members of the UN Security Council, which has prevented the UN in naming and shaming the regime in Riyadh. “At this point, vague appeals to ‘all parties’ to improve their behavior won’t work; Any resolution that doesn’t specifically mention the Saudi-led coalition by name and call it out for its role in the carnage in Yemen won’t have the required effect in Riyadh,” he said in an interview.

The patronage of world powers like the United States and United Kingdom has ensured that Saudi rulers escape culpability for their war crimes in Yemen. Their support for the Saudi-led coalition in the form of arms, training, intelligence, and refueling of bombers has compounded the misery of Yemenis. The two countries continue to sell billions of dollars in arms to the Saudi regime, thus are directly complicit in the war crimes being committed against the Yemenis.

While bombings by the Saudi-led coalition have devastated the country, US drones have also been flying in the air. A new report by AP documenting civilian deaths in Yemen reveals that the US drones have contributed to several civilian killings this year, while pretending to be fighting Al-Qaeda’s local franchise. What Americans did in Iraq and Afghanistan previously, they are now doing that in Yemen, directly and indirectly.

Today millions of children in Yemen weigh less than an average American’s weekend lunch. One of them dies every ten minutes due to acute malnutrition and various diseases. United Nations has already estimated that 10 million people may starve to death, majority of them children, due to the Saudi-led war and blockade. Yet, there is no anger, no outrage, no vigils, no street demonstrations, no primetime TV debates, no editorials. It is a forgotten war.

Human rights have been reduced to a joke by the Saudi-led coalition and its international sponsors involved in Yemen war. The only way to end this war is to stop arms sale to the Saudi regime and to hold all parties – which includes Saudi Arabia, UAE, Kuwait, Bahrain, Qatar, Sudan, Egypt, Jordon, Morocco, US and UK – accountable for their war crimes.

First published in our partner MNA

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Gulf countries pivot towards Israel: Can Arab recognition be foresighted?

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The visit of Israeli Prime Minister Benjamin Netanyahu to Oman surprised the entire world and delivered a message of smoothening of relations between Oman and Israel. This event has marked the first ever visit by any Israeli leader to Oman in 22 years. The Israeli Prime Minister and the Sultan discussed ‘Ways to enhance the peace process in the Middle East’ as well as other issues of ‘joint interest’. For Netanyahu, a milestone was achieved in the form of Oman recognition of Israel as normalizing relations with fellow regional states is one of the important clause of Netanyahu’s policy. Moreover, an Israeli Minister Yisrael Katz attended an International Transport Conference in Oman and proposed a railway link to connect Persian Gulf with the Mediterranean Sea. However, the railway link isn’t confirmed yet, it was just proposed in the conference. In parallel, Israeli Culture and Sports Minister Miri Regev attended Abu Dhabi Grand Slam 2018 in United Arab Emirates, where for the first time in history the national anthem of Israel was played. Similar approach was adopted by Israel towards Qatar. These changing dynamics can foresight the future of Gulf politics, that is, gulf countries can align with Israel to counter the influence of Iran in the region and for this purpose gulf countries may recognize Israel.

An important thing to notice is that the countries smoothening their relations with Israel are members of GCC, where Saudi Arabia is at the top of hierarchy- the major decision maker in Middle East- which means without Saudi Arabia’s willingness and its interests, GCC countries cannot take such a big decision. Now here a question arises, why would Saudi Arabia allow this approach?

The main reasons are; firstly, the crown prince Mohammad Bin Salman have cordial relations with Israel’s top leadership and he(MBS) is seen as a potential ally by Israel in Middle East, the major reason why Israel demanded US to side by Saudi Arabia in Khashoggi murder case. Second, it would be very difficult for Saudi Arabia- the self-proclaimed leader of the Sunni Muslim world- to recognize Israel while other states in the region still oppose the existence of a Jewish state in Middle East. Recognition of Israel by other GCC countries would make it far easier for Saudi Arabia to recognize Israel or at least to melt ice. Lastly, the Khashoggi murder case have already deteriorated the international image of Saudi Arabia, at this point of time the country cannot afford to bear another blame as Muslim countries think it would be injustice to Palestinians if Israel is recognized.

So will Saudi Arabia follow the suit and recognize Israel? The question still remains ambiguous, but since Saudi Arabia haven’t opposed these action of GCC countries and a continuous diplomatic support from Israel to Saudi Arabia have been visible although both countries do not have diplomatic relations, it can be predicted that something is going on, between both of these states which they have chosen  not to disclose now. Coming to Qatar, since Qatar is also involved in this process of developing diplomatic relations with Israel, it can prove to be a catalyst in the troubled Saudi/Qatar relations as helping Saudi Arabia to develop relations with Israel while other Arab states are doing the same can lift up the entire blame from Saudi Arabia. Maybe the sanctions over Qatar will be lifted or just become less intensified. Qatar sees it as an opportunity to regain the similar status in the region as well as to reconstruct relations with the other Arab countries.

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Turkish Newspaper Implicates UAE’s Crown Prince in Covering Up Murder of Khashoggi

Eric Zuesse

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Saudi Crown Prince Mohammed bin Salman al-Saud, and UAE Crown Prince Mohammed bin Zayed al-Nahyan, are close friends and allies, who jointly lead the war against Houthi-led Yemen. On Sunday afternoon, November 18th, a leading Turkish newspaper, Yeni Şafak, reported the two leaders to have also collaborated in hiding the murder on October 2nd in Istanbul of Washington Post columnist Jamal Khashoggi.

Yeni Şafak headlined “Dahlan ‘cover-up team’ from Lebanon helps hide traces of Khashoggi murder” and reported that on October 2nd, “A second team that arrived in Istanbul to help cover-up the murder of Saudi journalist Jamal Khashoggi was dispatched by Muhammed Dahlan, UAE Crown Prince Muhammed bin Zayed’s chief hitman in the region, … according to an informed source who spoke to Yeni Şafak daily on the condition of anonymity.”

On November 16th, the Washington Post had headlined “CIA concludes Saudi crown prince ordered Jamal Khashoggi’s assassination”.

Bin Salman and bin Zayed are U.S. President Donald Trump’s closest foreign allies other than, possibly, Israel’s Prime Minister Benjamin Netanyahu. All four men are determined that there be regime-change in Shiite Iran. This anti-Shia position bonds them also against the Houthis, who are Shiites, in Yemen, where bin Salman and bin Zayed lead the war, and the United States provides the training, logistics, and weapons. Both bin Salman and bin Zayed are fundamentalist Sunnis who are against Shia Muslims. Israel and the United States are allied with these two princes. Saudi Arabia’s royal family have been committed against Shia Muslims ever since 1744 when the Saud family made a pact with the fundamentalist Sunni preacher Mohammed ibn Wahhab, who hated Shia Muslims. Thus, Saudi Arabia is actually Saudi-Wahhabi Arabia, with Sauds running the aristocracy, and Wahhabists running the clergy.

In 2017, in Saudi Arabia’s capital of Riyadh, Trump sold, to the Saudi Crown Prince, initially, $350 billion of U.S.-made weapons over a ten-year period (the largest weapons-sale in world history), and $110 billion in just the first year. That deal was soon increased to $404 billion. For Trump publicly to acknowledge that Salman had “ordered Jamal Khashoggi’s assassination” would jeopardize this entire deal, and, perhaps, jeopardize the consequent boom in America’s economy. It also would jeopardize the U.S. alliance’s war against Shiites in Yemen.

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