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Saudi Arabia, Iran and the probable end of the JCPOA

Giancarlo Elia Valori

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John Bolton, the current national security adviser of Trump’s Presidency who has replaced the already dismissed Gen. McMaster, believes that the 2015 nuclear deal with Iran is a “strategic defeat” for the United States.

Bolton also believes that it would always be better to follow the example of the Osirak attack on June 7, 1981 with the Israeli Operation “Opera” (or Babylon) or the Israeli attack of 2007 on the alleged Syrian nuclear reactor in the Deir-ez-Zor area.

A reactor, however, manufactured by North Korea.

That was the operation Israel named “Outside the Box”.

Hence, to quote again Bolton, “to stop Iran, bomb it”.

Not so long ago, the idea of the US national security adviser was also to bomb North Korea just to stop its nuclear activity.

How can the activities of immediate revenge on the South Korean territory be considered in the US strategic equation?

“Collateral damage”, i.e. the destruction of the only credible ally, apart from Japan, throughout Southeast Asia.

Now the agreement between the two Koreas and Kim Jong Un’s request for direct talks with President Trump have materialized – certainly not for fear of Bolton’s simplistic bomb religion.

Arms, however, never make politics.

Nevertheless they can be used, as little as possible, if you still have a political strategy in mind vis-à-vis countries, such as Iran and North Korea, which have never been afraid of the US carpet bombing.

If, however, the most reluctant countries with respect to Bolton’s brilliant ideas are destroyed, what would be the political result?

It would simply be the total loss of value of the US word towards all and each of the other members of the P5 + 1;  the likely and relevant residual counteraction by both North Korea and Iran on South Korea, the Lebanon and (obviously) Israel; finally, the almost inevitable trigger of a chain of actions and reactions that would set fire to the whole Greater Middle East.

What is the first goal? Just think about it for a moment.

It is obviously the total insularization of Europe, which still believes that its union and its single currency are not against US long-term interests.

The EU and Great Britain will soon realize that the strategic automatism inherited from the end of the Second World War has no longer value in the relations between the two shores of the Atlantic.

However, what could the rational goal of this military action against North Korea and Iran be, apart from Doctor Strangelove-style libido of some US decision makers?

Very probably no goal at all or the worst possible one, i.e. the closure of the whole system between Suez and the Persian Gulf, and finally the strategic non-viability of the entire Islamic Shi’ite or Sunni world, as well as the total block of the energy, political, strategic and defensive link between the European Union and the Koranic universe.

This would not be good even for the United States.

The fact is that, strangely, the well-known and very old mistakes of the US intelligence on the North Korean,  Syrian, Iraqi or even Libyan arsenals, make most of the US defense establishment even think that it is necessary to bomb more, and not less, the Axis of Evil- as Bolton clearly says.

The less we know about Syria, Iran and North Korea, the more we destroy them. A very logical idea. Hence also the wrong places would be bombed.

Let us also imagine to what extent a tactical bombing on North Korean positions would weigh and be impactful, just now that North Korea is starting a meaningful, verifiable and useful dialogue with South Korea and its strategic allies, namely Japan and the United States.

The logical consequence would be at least the US abandonment on the part of South Korea and Japan.

All this while President Trump is declaring from the rooftops  he wants to leave Syria and thus make his Sunni allies engage on the ground – although we can easily predict they will refuse flatly.

Hence they are all very dangerous options for the United States and the whole West, which would find themselves to no longer have credibility, clout and role throughout Asia.

For a power like the United States the fact of losing face and the value of its word, as well as always and often unreasonably choosing to resort to weapons, even when this is not devoid of dangers, are satanic temptations that the United States must avoid throughout the Middle East and Asia.

Hence the counter-arguments relating to Bolton’s “carpet bombing” are even obvious.

Firstly, as shown by the data provided in the last meeting (held around March 20, 2018) of the P5 + 1 (China, France, Germany, Russia, Great Britain, United Kingdom and the United States), i.e. the group that reached the nuclear deal with Iran in 2015, the Shi’ite Republic of Iran has so far fully implemented the rules enshrined in the eaty – as evidenced by the IAEA official data.

The IAEA report of February 22 was also accepted by all the JCPOA members, including the United States, who took note of Iran’s “continued adherence” to the letter and spirit of the 2015 deal.

What is the meaning of destroying with bombs – if they ever succeed in doing so without setting fire to its borders -a country that all signatories (including the United States) consider officially compliant with the implementation of the rules enshrined in the Joint Comprehensive Plan of Action?

To possibly achieve Syria’s cantonization?

Paraphrasing Voltaire, a great evil for a little good.

If anything, with a view to putting an end to the Sunni jihad on the Syrian territory, the E3 -i.e. the group of the three European countries belonging to the P5 + 1 – immediately pointed out, in a confidential report, that we could sanction other new people and entities – already identified -that collaborated in the Iranian (conventional) missile tests, in the framework of the seven-year cooperation between Iran and Syria.

A German idea immediately supported by France, which fears the disruption of its positions in Syria and elsewhere.

Germany has already made clear that it will not participate in any military operation in Syria jointly with the other Western powers.

Moreover, in Bolton’s mind – following his statements  to the letter – the only alternative to the so-called Syrian-Iraqi Caliphate would be a new Sunni State in Syria.

However, how could we be sure that this new Sunni State would not soon be turned into a safe haven for the Caliphate’s jihad, which has not yet been defeated between Syria and Iraq?

Nevertheless Saudi Arabia, Turkey and Qatar have always had quite different ideas on how this new Sunni State should be, which would probably still be at the mercy of jihadist extremism.

Said extremism would immediately expand to Iraq and Jordan, thus undermining the lopsided strategic equation left on the ground by the United States after the hasty and ambiguous victories against Saddam Hussein.

What operational option would the United States choose, if Syria were destroyed to cantonizeit ethnically and according to religious fault lines?

A divided Syria and, indeed, cantonized as a Swiss valley is of no use to anyone, certainly not to Assad, but not to the various participants in the war against him, including the Caliphate’s jihad.

But not even to the United States, if you think about it.

In the first phase of the war against Assad, Saudi Arabia had placed all its eggs in the basket of a Lebanese Shi’ite, namely Okab Sakr, an old client of the Hariri family.

As is well-known, however, this family does not currently enjoy the favour of the new master of Saudi Arabia, namely Prince Mohammed Bin Salman.

In the Syrian theater, Qatar operated with a defector from  Assad’s regime and two other aides with minor roles and the new Qatari acquisition was Abdulrahman Suwais.

Nevertheless the geopolitical (and economic) clash between Saudi Arabia and Qatar immediately moved to the local Syrian clients of the various Arab powers, with Qatar using forces linked to the Muslim Brotherhood and Saudi Arabia using Sakr, its broker and intermediary for the war against Assad, that – however – collected battalions of jihadists not yet linked to the so-called Al Baghdadi’s Caliphate.

But in a quite haphazard way.

Moreover, all the three Arab and Muslim countries that supported Assad’ Sunni enemies have always thought that – apart from their rivalries – sooner or later the United States would have arrived to solve the Syrian issue for them.

This perception is the only rational factor we can note in President Trump’s current positions.

Former President Obama, however, did not claim the criterion of his “red line” in September 2013, after Bashar al-Assad allegedly using chemical weapons against a “rebellious” – i.e. Sunni and para-jihadist – part of his population.

Only in the summer of 2014 – immediately after Prince Bandar bin Sultan’s resignation as Head of the Saudi  intelligence-did real collaboration begin on the Syrian territory between Saudi Arabia, CIA and the US State Department.

Before the closure of the Syrian-Iraqi border, carried out by the so-called Caliphate in the summer of 2014, the many Sunni groups operated only with the huge resources provided by the various private donors, without much support from the Saudi government.

However, after the expansion of the Caliphate, Saudi Arabia, Qatar and Turkey agreed to support one single Sunni-jihadist movement, namely Jaysh-al Fatah(the “Army of Conquest”).

Nevertheless, some money still reached the multifarious and chaotic Sunni opposition to Assad’s Alawite and pluralist regime.

The “Conquest” movement was coordinated by the Saudi Koranic scholar, Abdullah Al Muhaysini, and the Jaysh forces operated mainly in Idlib and in Hama and Latakia.

Hence the jugular veins of the Russian-Syrian system.

In an interview of early April 2018 released to Time, however, Saudi Prince Mohammed bin Salman said: “Bashar can stay”.

The Saudi Prince’s reasoning is obvious: Saudi Arabia  wants to fund (possibly with a trillion US dollars)  Bashar al-Assad’s regime, even if he considers it takfir (apostate) so as to avoid Iran’s further penetration into Syria.

A Saudi strategic flexibility going as far as even creating a new relationship with the Jewish State.

What about the United States? Has it the same fantasy and creativity as Saudi Arabia?

However , the new “Sunni military alliance” – also created in 2015 around the Saudi forces – cannot replace the US military and strategic clout in the region.

Hence, according to Bolton and many of his aides, the United States should foot the bill and pay the price of the Islamic Military Alliance, an Arab NATO aimed against the Shi’ites and designed to favour the current oil balance of the OPEC Sunni system.

Hence why should the United States bring all this grist to the Saudi mill, just when the shale oil and gas make the United States autonomous from an energy viewpoint?

Moreover, during the last meeting of the “Sunni NATO” held at Manama in October 2017, the Head of this Alliance, namely Pakistani General Raheel Sharif, did not  mention any ongoing operation between Iraq, Syria and Afghanistan.

Therefore the limit of the Sunni engagement in Syria has  already been tacitly achieved.

Hence if the United States commits itself to fighting Iran – passively and in vain – after the manipulated destruction of the JCPOA, it will only serve the Saudi interest and not its own.

Yet another long war that will lead to nothing, but only to an increase in the US military budget – the now well-known North American military Keynesianism.

Real interests of the United States – no longer servants to  the House of Al Saud – which would be the interest of stabilizing the Middle East system to the lowest possible nuclear and conventional potential, possibly with a Conference between the P5 + 1 and Iran also meant for the new strategic redesign of the whole region, to be agreed also with Israel.

Nevertheless the European sanctions against Iran – the substitute for the US break with the JCPOA which, in all likelihood, will take place after May 12 – should anyway  be supported by all 28 EU Member States.

This would be the project of the E3, the EU countries of P5 + 1.

This is clearly just a way to avoid the May 12 deadline  proposed by President Trump – a snack of good European cuisine offered to the United States with a view to preventing it from reaching the bad military lunch against Iran.

However, how would the other non-European signatories of the 2015 deal react, when seeing that the United States increasingly behaves as a semi-legal actor and as a fully selfish element in the international geopolitical concert?

Obviously if the United States unilaterally withdraws from the JCPOA, the chances of a war against Iran will increase significantly, but is it certain that the United States will  win it quickly and without extensive damage? Not at all.

Moreover, are we sure that the future world is still unipolar like the one immediately after 1989, as some residual and naive theorists of US operations in Iraq and Afghanistan still think?

Should we not currently say that both the great operations for “exporting democracy” have been a clear military, strategic, economic and geopolitical failure?

Iraq was almost given away to Iran which, in fact,is already using the Shi’ite majority of the Iraqi population as leverage. Afghanistan is still a strategic void where nothing has been decided yet, after almost two decades of war, while China is building its own Beijing-Kabul railway.

Hence if the EU accepts President Trump’s diktat on Iran to limit or abolish Iran’s missile activities, including the conventional ones, and its support for Bashar al-Assad’s regime, it will not achieve any of its goals.

Not even in this case is it conceivable that the United States limits their demands on Iran.

Iran, however, could choose to remain in the perimeter of the July 2015 deal, by stopping any regional agreement with Western powers and reacting immediately to local threats.

Another option – already partially verified in the recent meetings between the Iranian Foreign Minister and the  British government – could be to collaborate with the individual European countries of P5 + 1 on issues other than those pertaining to the nuclear deal as – in this case –  for the resolution of the Houthis’ Shi’ite insurgency in Southern Yemen.

A further option could be President Trump’s walking out of the JCPOA agreement- without saying goodbye – but  not preventing the European countries to keep on having economic relations with Iran, and avoiding secondary and non-territorial sanctions, especially in the financial and banking sector.

An unlikely scenario – the war in the Middle East is also a war against Europe, for its final disruption and destructing as a US ally that believed to be more important than the United States.

However, anything can happen. The instability and volatility of the current US Presidency bode well.

Furthermore, if China, Russia and the EU remain party to the 2015 deal, Iran will have every reason to stay within the JCPOA perimeter and thus remove any US justification for a military attack on Iran or for a further phase of US sanctions only.

Moreover, considering the unreasonable and never decisive  US presence in Yemen, Afghanistan, Syria, Iraq and elsewhere in the Middle East, Iran could also play the card of further military pressure on US targets in all these regions, thus making the US actions extremely costly and, above all, harmful to one or more US Sunni allies.

Conversely, if President Trump re-imposes all sanctions, including the secondary ones, but walking out of the  JCPOA, also Iran could withdraw from the July 2015 deal but remain in the nuclear non-proliferation system led by IAEA – and the two things are not connected at all.

Once again, what would be the rationale of a future US  military attack on Iran?

In all likelihood, Russia and China would maintain  relations with Iran, thus giving away the entire Shi’ite arc to Russia and China, which will use it excellently to ban all US presence beyond the Persian Gulf.

Hence the US strategic subjection to Saudi Arabia would be complete.

Moreover, Iran could make some surprise moves like the recent one by Kim Jong Un and inevitably make the United States sit at the bilateral table of talks on nuclear and even conventional weapons – and from a position of strength.

Having played all its cards on the fight against Iran, Saudi Arabia would be definitely taken aback and could not opt for a blind support to the United States during the new talks.

There is no guarantee it would be such as to serveall the Saudi regional interests.

Finally, the most unlikely scenario could be a EU that succeeds in convincing the United States to fully remain in the JCPOA, without any additional or already envisaged sanctions.

It is very unlikely and it is now clear that the US deep state wants to “bring democracy” also to Iran and, possibly, to the Shiite-Alawite part of Syria, thus destabilizing the most important Middle East buffer State and ultimately playing Russia’s and China’s game.

Clearly they will firmly keep the non-Sunni areas of the Syrian cantonization and will operate on them to reach the Arabian peninsula, thus heavily influencing the Sunni canton dreamed of by Bolton.

Obviously this will not happen with the war, but with the economic and infrastructural agreements we already see at work.

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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Middle East

Shifting Middle Eastern sands spotlight diverging US-Saudi interests

Dr. James M. Dorsey

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A series of Gulf and Middle East-related developments suggest that resolving some of the Middle East’s most debilitating and devastating crises while ensuring that efforts to pressure Iran do not perpetuate the mayhem may be easier said than done. They also suggest that the same is true for keeping US and Saudi interests aligned.

Optimists garner hope from the fact that the US Senate may censor Saudi crown prince Mohammed bin Salman for the October 2 killing of journalist Jamal Khashoggi in Istanbul; the positive start of Yemeni peace talks in Sweden with an agreement to exchange prisoners, Saudi Arabia’s invitation to Qatar to attend an October 9 Gulf Cooperation Council (GCC) summit in Riyadh, and a decision by the Organization of Oil Exporting Countries (OPEC) to cut production.

That optimism, however, may not be borne out by facts on the ground and analysis of developments that are likely to produce at best motion rather than movement. In fact, more fundamentally, what many of the developments suggest is an unacknowledged progressive shift in the region’s alliances stemming in part from the fact that the bandwidth of shared US-Saudi interests is narrowing.

There is no indication that, even if Qatari emir Sheikh Tamim bin Hamad Al Thani decides to accept an invitation by Saudi king Salman to attend the GCC summit rather than send a lower level delegation or not attend at all, either the kingdom or the United Arab Emirates, the main drivers behind the 17-month old economic and diplomatic boycott of the Gulf state, are open to a face-saving solution despite US pressure to end to the rift.

Signalling that the invitation and an earlier comment by Prince Mohammed that “despite the differences we have, (Qatar) has a great economy and will be doing a lot in the next five years” do not indicate a potential policy shift, UAE Minister of State for Foreign Affairs Anwar Gargash insisted that the GCC remained strong despite the rift. “The political crisis will end when the cause behind it ends and that is Qatar’s support of extremism and its interference in the stability of the region.,” Mr. Gargash said, reiterating long-standing Saudi-UAE allegations.

Similarly, United Nations-sponsored peace talks in Sweden convened with the help of the United States may at best result in alleviating the suffering of millions as a result of the almost four-year old Saudi-UAE military intervention in Yemen but are unlikely to ensure that a stable resolution of the conflict is achievable without a lowering of tension between Saudi Arabia and Iran. Even humanitarian relief remains in question with the parties in Sweden unable to agree on a reopening of Sana’a airport to facilitate the flow of aid.

More realistically, with the Trump administration, backed by Saudi Arabia and Israel, determined to cripple Iran economically in a bid to force it to alter its regional policies, if not change the regime in Tehran, chances are the Yemeni conflict will be perpetuated rather than resolved.

To Yemen’s detriment, Iran is emerging as one of the foremost remaining shared US-Saudi interests as the two countries struggle to manage their relationship in the wake of Mr. Khashoggi’s killing. That struggle is evident with the kingdom’s Washington backers divided between erstwhile backers-turned-vehement critics like Republican senator Graham Lindsey and hardline supporters such as national security advisor John Bolton. The jury is out on who will emerge on top in the Washington debate.

The risks of the Saud-Iranian rivalry spinning out of control possibly with the support of hardliners like Mr. Bolton were evident in this week’s suicide bombing in the Iranian port of Chabahar, an Indian-backed project granted a waiver from US sanctions against the Islamic republic to counter influence of China that support the nearby Pakistani port of Gwadar.

Iranian officials, including Foreign Minister Mohammad Javad Zarif and Revolutionary Guards spokesman Brigadier General Ramadan Sharif suggested without providing evidence that Saudi Arabia was complicit in the attack that targeted the city’s police headquarters, killing two people and wounding 40 others.

Iran’s semi-official Tasnim news agency, believed to be close to the Guards, said the attack was the work of Ansar al-Furqan, an Iranian Sunni jihadi group that Iran claims enjoys Saudi backing.

Iran’s allegation of Saudi complicity is partly grounded in the fact that a Saudi thinktank linked to Prince Mohammed last year advocated fuelling an insurgency in the Iranian province of Sistan and Baluchistan that incudes Chabahar in a bid to thwart the port development while Mr. Bolton before becoming US President Donald J. Trump’s advisor called for US support of ethnic minorities in Iran.

In a bid to create building blocks for the fuelling of ethnic insurgencies in Iran, Pakistani militants have said that Saudi Arabia had in recent years poured money into militant anti-Iranian, anti-Shiite madrassas or religious seminaries in the Pakistani province of Balochistan that borders on Sistan and Baluchistan.

The divergence of US-Saudi interests, agreement on Iran notwithstanding, was on display in this week’s defeat of a US effort to get the UN General Assembly to condemn Hamas, the Islamist group that controls the Gaza Strip. Saudi Arabia, despite the kingdom’s denunciation of Hamas as a terrorist organization and its demand that Qatar halt support of it, voted against the resolution.

The vote suggested that Mr. Trump may be hoping in vain for Saudi backing of his as yet undisclosed plan to resolve the Israeli-Palestinian dispute that is believed to be slanted towards Israel’s position.

Saudi ambassador to the UN Abdallah Al-Mouallimi said the defeated UN resolution would “undermine the two-state solution which we aspire to” and divert attention from Israel’s occupation, settlement activities and “blockade” of territories occupied during the 1967 Middle East war.

Saudi Arabia’s changing status and the divergence of longer-term US-Saudi interests was also evident in this week’s OPEC meeting in Vienna.

To get an OPEC deal on production levels, the kingdom, once the oil market’s dominant swing producer, needed an agreement with non-OPEC member Russia on production levels as well as Russian assistance in managing Iranian resistance, suggesting

The agreement, moreover, had to balance Mr. Trump’s frequently tweeted demand for lower prices, and the kingdom’s need for higher ones to fund its budgetary requirements and Prince Mohammed’s ambitious economic reforms and demonstrate that the Khashoggi affair had not made it more vulnerable to US pressure.

The emerging divergence of US-Saudi interests in part reflects a wider debate within America’s foreign policy community about what values the United States and US diplomats should be promoting.

With some of Mr. Trump’s ambassadorial political appointees expressing support for populist, nationalist and authoritarian leaders and political groups, the fact that some of the president’s closest Congressional allies back the anti-Saudi resolution illustrates that there are red lines that a significant number of the president’s supporters are not willing to cross.

All told, recent developments in the Middle East put a spotlight on the changing nature of a key US relationship in the Middle East that could have far-reaching consequences over the middle and long-term. It is a change that is part of a larger, global shift in US priorities and alliances that is likely to outlive Mr. Trump’s term(s) in office.

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Qatar’s decision to leave OPEC

Giancarlo Elia Valori

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The Emirate of Qatar will leave OPEC as from January 1, 2019.

The primary reason for this choice is the Emirate’s project to become the world leader in the natural gas market, raising its production from 77 million tons per year to 110 million tons. However, there is obviously also a geopolitical and energy decision underlying Qatar’s current choice.

This is the Emirate’s final response to the boycott and blockade imposed by Saudi Arabia on Qatar in June 2017, with the support of the United Arab Emirates, Bahrain, Yemen, Maldives, the Libyan GNA, Egypt and Jordan – based on Saudi Arabia’s generic accusation whereby Qatar was supposed to sponsor and support “terrorism” on its own.

The blockade was imposed two days after President Trump had met as many as 55 Heads of Arab and Muslim countries to build a sort of NATO equivalent, always against “terrorism” – an alliance to be set up immediately to counteract, above all, the Shiite and Iranian danger.

Let us leave aside the twenty-eight pages taken from the report of the US Senate on September 11, which would definitively prove the connection between those Al-Qaeda operatives and the Saudi regime – as well as the many multiannual reports of private and public funding to the jihadists and finally the lines of credit opened again by eminent citizens of the Wahhabi Kingdom in favour of Al Baghdadi’s Syrian-Iraqi Caliphate.

The Saudis, however, are too rich not to be believed, especially by the USA – hence the great blockade on Qatar succeeded also with the support of some Western countries.

For the whole Middle East, their troops, like the US ones, reported to CENTCOM, at the Al Udeid base  having its headquarters precisely in Qatar.

The strategic characteristics of Qatar, which today wants to build its autonomous natural gas organization –  independent of the oil one of OPEC, which does not deal with gasand is, however, dominated by Saudi Arabia –  are many and particularly interesting: firstly, the Qatari people are probably the richest citizens in the world.

If we assume that the Americans’ average income is 100, that of Qatari citizens is 187.4.

Just about the size of the Falkland Islands, the Emirate has 1.9 million residents, with a very high and growing share of immigrants.

From 2000 to 2010 the Emirate’s economy grew by a 12.9% average per year.

Its future growth up to 2022 is expected to be 18% higher than the current one.

There is also an interesting geopolitical sign: Qatar  participated – with great commitment – in the Western operations against Gaddafi by supporting, in particular, the black market of Cyrenaica’s oil, together with the Turkish intelligence services.

Nevertheless Qatar supports also some “rebel” jihadist Syrian groups against Assad, thus doing half a favour to US allies – while hosting, since 2013, a political office of the Afghan Taliban, which is well known and also frequented by the US intelligence service operatives.

Qatar’s global industrial and financial investments, however, are manifold.

Through its sovereign fund, the Emirate owns significant shareholdings of the Agricultural Bank of China – and certainly the Qatari decision to leave OPEC has been blessed by China. It also has shareholding in the Airbus Group; the London Stock Exchange (15.1%); Volkswagen (17%); Lagardère, a large and diversified media and publishing company; the Paris St.Germain football club; the Virgin megastore;  the HBSC, one of the largest banking groups in the world; Credit Suisse (5.2%) and Veolia, a French water and gas utility and service company.

Not to mention the countless real estate operations: Porta Nuova in Milan; Westin Excelsior in Rome; Gallia in Milan; Costa Smeralda in Sardinia;  Deutsche Bank; Barclay’s; Royal Dutch Shell; Tiffany; Siemens; the Heathrow airport; Walt Disney and the Empire State Building.

In addition to many other shareholdings not mentioned in this paper.

However, it has also a 3% shareholding of Total, which for Italy is an extremely important sign; a majority shareholding of the Miramax entertainment and movie company, as well as shareholdings in Rosneft, the Russian giant of natural gas and raw materials, and in the big five-year project for liquefied petroleum gas (LPG) in Germany and in the EU – a 30 billion US dollar project, of which 10 invested for Germany alone.

Therefore, between Qatar and Saudi Arabia, in the fight  between oil producers and natural gas extractors, there is a real war for the hegemonic conquest of technologically advanced areas and of Europe, in particular, with a view to definitely acquiring markets and using their diversification opportunities.

Moreover, Qatar is at least as rich in natural gas as Iran (and, together with the Shiite Republic, it participates in the exploitation of the South Pars II marine field), but also as the Russian Federation.

The new  Qatar-centred “gas OPEC” means, therefore, that there is no longer the US-friendly Sunni oil OPEC,  precisely the one that organized the great petrodollar recycling started after Egypt and Syria’s Yom Kippur war against Israel in 1973.

Oil recycling at a “high” price against the US dollars which, after the end of the Bretton Woods agreements, led to the new hegemony of the US currency and its inappropriate exchange rate, despite its internal fundamentals.

“The dollar is our currency, but it is your problem”, FED Governor Paul Volcker said to his fellow Governors of the European Central Banks.

At that time, there was not yet the weak and irresolute timidity of the Euro to make the picture more complex.

The European currency is not a lender of last resort, but it plays the game of the global currency as an alternative to the US dollar, with the operational results we can imagine.

It is therefore no mere coincidence that the only strategic uses of the Euro were the minimum Iranian ones, in the oil Stock Exchanges of the islands in the Persian Gulf, or the more paraded than real ones by Saddam Hussein.

In essence, reverting to the geopolitical sense of the very recent Qatari decision to leave OPEC, this means that the 600,000 barrels/day of oil extracted from Qatar are considered fully marginal by it and certainly can never compete with Saudi Arabia’s 11 million barrels/day of Saudi Arabia.

Qatar plays the game with its natural gas – it does not play its oil cards.

The current Qatari operation, however, implies a strategic choice in the near future, which could be the creation of a “gas OPEC” with Russia and Iran, in view of a doubling of the LPG prices in 2019, with China becoming the world’s LPG top consumer and the USA the world’s top oil extractor, albeit with the new and expensive shale techniques, which generate profits only with high oil barrel prices.

Or an economic and financial alliance between Qatar, China, Japan and Russia, which could marginalize the dollar area by reducing it to oil.

At geopolitical level, this will certainly mean greater instability – not necessarily fully peaceful – between the Emirate and the Saudi Kingdom, while the former will invest – also within the EU – in the industrial processing  of LPG, which mainly regards plastics, resins and all synthetic products from hydrocarbons.

If Russia – which also plays on the Saudi table – will be able to control its oil production, in line with the Sunni OPEC, the Qatari operation will be successful, but only for the creation of the new LPG market, and Qatar will not affect the positions already reached by Saudi Arabia and its  allies.

Conversely, if Russia and Iran increase oil production, the pro-Saudi OPEC will definitely collapse and the African, Indonesian and South American production areas shall  look for other regional cartels and, hence, for other geopolitical axes.

Furthermore, the bilateral relationship between the USA and Saudi Arabia will be put to an end, given the new US production and oil power, its global exporting capacity and, finally, its autonomy from the Middle East political and financial cycles.

Moreover, according to the Emir’s policy lines, the Qatari economy  is focused on attracting and accumulating foreign investments, especially after the 2017 blockade, which has attracted much capital from Asia and the Middle East itself,  in addition to the opening of new ports and the creation of  new Special Economic Zones.

Both Saudi Arabia and Qatar have used the so-called Arab “springs” to broaden their personal power and create strong competition among the Gulf countries.

Moreover, Qatar has used the phase following the Arab “springs” to redefine its traditional expansion axes: the special relationship with the Muslim Brotherhood and its traditional link with Iran.

The Emirate, in fact, believes that the Muslim Brotherhood is the central axis of Arab politics and, hence, intends to support it.

While all the others repress it, in line with Saudi Arabia.

Even after the fall of the “Muslim Brotherhood” regime in Egypt – with the coup organized by Al Sisi in 2013 against Mohammed Morsi – Qatar keeps on supporting the fraternal Ikhwan or also Hamas and all the other organizations that have integrated into the global network of the Muslim Brotherhood.

The Saudi tension with Qatar also results from the Qatari geo-economic link with Iran and, above all, from Iran’s  economic growth after the 2014 JCPOA agreements on the Iranian nuclear capacity. Saudi Arabia wants to avoid said agreements leading to the economic, oil and military recovery of the Shiite Iran.

Furthermore it cannot be ruled out that, in the near future, Saudi Arabia – possibly supported by the USA, which now believes in every “counterterrorist” storytelling – even organizes a coup against Al-Thani and the current Qatari ruling elite.

The sequence of attempted and failed coups is already long.

It would be a geopolitical suicide, but it may happen.

Pakistan, Bangladesh and other countries are now dependent on the remittances sent from Qatar by their fellow citizens to their homeland, even if, as countries, they sided with Saudi Arabia during the blockade imposed on Qatar in 2017.

Since the beginning, however, Tunisia refused to condemn Qatar (and Italy should be more careful to these infra-Islamic shifts), while Turkey – which operated with Qatar  during the Libyan jihadist uprising – does not accept the Saudi diktat. The same obviously holds true for Iran and – probably less intuitively – for Oman.

After an ambiguous phase, even the Russian Federation  – which had not well foreseen the internal conflict on Qatar within the Gulf Security Council in 2017 – has gradually  linked itself to the Emirate, even without questioning its ties with Saudi Arabia.

Moreover, the United States has even discovered it still has a large military base in Qatar and hence cannot afford a worsening of the infra-Arab conflict and, above all, of the infra-Wahhabi conflict between Saudi Arabia and Qatar.

Obviously the issue of relations between Qatar and “terrorism”, or the link between Qatar and Iran, is a completely uncertain and widely manipulated issue.

The Emir’s speech that expressed support for Iran and Hamas and criticized the other governments of the region – a speech that allegedly was to be held on May 23, 2017 – was never delivered. There had been announcements widely publicized by the Saudi and Emirates’ news agencies, but the Emir’ speech had never been delivered.

In this regard, the official Qatar’s news agency in Doha talked about the hacking of Qatari websites, but not even this is certain.

There is also the issue of the one billion US dollars paid  as a ransom to “bandits” in Iraq by some members of the Emir’s family.

It is ascertained that part of that money arrived at the Syrian Al-Qaeda “section”, Jabhat Tahrir al Sham, with a share of funds that – not too strangely – later reached the Iranian government.

Certainly there is also the already-mentioned support for the Muslim Brotherhood and there are now ascertained links between the Ikhwan and some Iranian financial and political-military networks.

Everything is possible in the Middle East.

In Doha there is also a “historical” office of the Palestinians and also one of Hamas, which has always been an integral part of the Muslim Brotherhood, while it is certain that large amounts of money were sent by Qatar to the Egyptian Brotherhood during Morsi’s government and that the Ikhwan militias from every part of the Middle East were trained in Qatar.

Obviously, at least initially, the guerrilla warfare in Libya after Gaddafi’s fall was a clash between the forces supported by the Qatari intelligence services and those organized by the other Emirates, with a specific role played by Turkey – a loyal ally of Qatar – above all at economic level.

Westerners’ stupidity did the rest.

Moreover, Qatar also sent its troops so that the Sunnis could regain control in Bahrain during the 2011 Shiite uprising.

Nor should we forget that, apart from the Al Udeid US base in Qatar, Turkey itself is building its base in Qatar for as many as 5,000 soldiers – a base located in Tariq bin Ziyad, south of the capital city.

However, how does the Gulf Cooperation Council (GCC) – the instrument of confrontation between Saudi Arabia and Qatar – work?

Is it not affected – like OPEC – by an internal weakness that blocks it for any relevant decision?

The GCC was founded in 1981. However, the monetary union, which has been gradually abandoned by Oman and the Emirates, has never been reached.

And the GCC still regards Iran as an “imperialist” factor of radical destabilization of the Arabian peninsula, especially with the organization of Shiites in Saudi Arabia and in other areas of the Emirates.

The Shiites within the Saudi regime account for 15-20%, especially in the major oil extraction areas. Obviously the Saudi regime does not want to destabilize these areas and, above all, it does not want to break the link between the USA and the Sunni world of the Arabian Peninsula – a break that, in the near future, would lead to the victory of the Iranian  Shiites.

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Middle East

Iran: Which way to go?

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The US withdrawal from the Joint Comprehensive Plan of Action (JCPOA), seriously hampered the chances for keeping the landmark accord in place.

The accord, signed in 2015 by the P5+1 group of countries — China, Germany, France, Russia, the United Kingdom and the United States — with Iran, requires Tehran to maintain a peaceful nuclear program in exchange for sanctions relief.

According to the IAEA, Iran strictly abides by the terms of the JCPOA, while the international community is unable to do the same, no matter how much politicians in the EU and other countries would like to stick to its provisions – all because of US pressure.

Sadly, the United States has financial and economic levers to punish not only Iran, but also foreign companies doing business with the Islamic Republic. Given the choice of either maintaining business relations with the US and the rest of the world or with Iran alone, there is little wonder which of the two options they will go for. This doesn’t necessarily mean that they will do this under US pressure. Business always goes where the money is and sticking with the US looks a more profitable way to go. This is exactly what business-savvy Donald Trump is staking on.

In 2018, some 100 foreign companies, including big ones as Shell, Volkswagen, Daimler, Peugeot, Airbus, Total, PSA, Siemens, and Russia’s LUKOIL and Zarubezhneft, started pulling out of Iran even before the US sanctions, announced by President Trump in May, actually took effect. However, although bending under Washington’s pressure, the authors of the 2015 Iran nuclear deal (Russia, China, Britain, France and Germany) as well as the European Union as a whole and many other countries around the world are still interested in keeping the nuclear accord alive. Why?

First, the JCPOA is a truly historic document which, possibly for the first time ever (not mentioning, of course, the Treaty on the Non-Proliferation of Nuclear Weapons – NPT) has curbed the nuclear ambitions of a particular country and put its nuclear program strictly in line with international laws and IAEA requirements. This is a vivid example of the world countries’ effective diplomatic work, which created a precedent of genuine confidence of the parties for the sake of preserving the nuclear non-proliferation regime.

Secondly, Iran a leading player in the volatile region of Western Asia, which incorporates the Middle and Near East, the Caucasus, the Caspian Sea zone, and Central Asia.

Thirdly, it should be borne in mind that Iran is a powerful source of hydrocarbons, and that its territory is an important transit route for oil, natural gas and other products to the world market. A well-educated population and a relatively developed industry and agriculture attract the attention of world business. In addition, the 70-million-strong Iran, which boasts one of the world’s biggest militaries, is an important factor in West Asian and world politics.

What needs to be done to resist US sanctions and, thereby, save the JCPOA?

To solve this complex task, Iran and all countries willing to preserve the accord, above all Britain, France, Germany and the EU as a whole, should work together. This is already being done now with the direct and active participation of Russia and China.

Today, the main priorities are:

Providing legal assistance to companies doing business with Iran. The practical implementation of the EU-declared blocking statute, which declares null and void US sanctions against Iran on its territory, prohibits European companies from observing them, as well as implementing any decisions by foreign stemming from these sanctions. The blocking statute also allows European organizations to take legal action to make up for the losses incurred as a result of the implementation of sanctions at the expense of persons who caused these losses (meaning the US government).

It is also necessary to establish an independent payment system that would safeguard European businesses against US sanctions on Tehran (a special purpose vehicle, SPV, to facilitate financial transactions with Iran) with the possible involvement, among others, of the French and German central banks.

The EU is creating a special legal entity to carry out transactions with Iran. Other participants will be able to join in, which will allow European companies to work with Iran in keeping with European legislation – something like the SWIFT banking system, only on a European scale and based on the euro.

This will be an extremely difficult task for Europeans, both from “political” (a real challenge to the US) and technical standpoints. EU foreign policy chief, Frederica Mogherini, said: “The involvement of the Finance Ministers of the E3 [France, Germany, UK] is of key importance at this stage. They are working hard to finalize it. I cannot tell you a date, but I can tell you that work is continuing and is progressing in a positive manner.”

In his turn, Russia’s Deputy Foreign Minister Sergei Ryabkov said that this was fraught with problems.

“We need to redouble our efforts here and this is what we are doing now with both Europeans and Iranians.”

Meanwhile, the Iranians, who have so far been strictly implementing the terms of the 2015 nuclear accord, are losing faith in the EU’s ability to resolve the problem. Therefore, it may take several months to see whether this plan is really working.

Speeding up the process of shifting to the use of national currency in trade with Iran (primarily by Russia, China, India, Turkey, which have done this before) would be of much help to Tehran.

In order to move around the financial and banking hurdles erected by the United States, it would be advisable to enlist the help, whenever possible, of Islamic banks in Muslim countries for cash transactions to and from Iran. The Islamic banking system has its specific features that are hard to destroy from the outside, even by a financial superpower like the United States.

The same is true about small and medium-sized companies in Muslim countries used as intermediaries in financial transactions with Tehran. Moreover, it is small and medium businesses, and not necessarily in Muslim countries alone, that can play the main role in maintaining trade and other economic relations with Iran.

Therefore, it would be equally desirable for the EU to provide legal and financial assistance to small and medium-sized companies in Europe, which are willing to do business with Iran, and to shift the main load from big companies to medium and small firms for financial transactions with Iran in Euros. Even though they will hardly be able to completely replace the giant companies, small and medium-sized firms have all they need to offset at least part of the losses. According to Iranian estimates, Tehran hopes to establish business relations with many of the 23 million or so small and medium-scale enterprises in Europe in order to circumvent US sanctions. Moreover, Iran has good experience in getting around tough sanctions between 2012 and 2016.

What can Tehran do under these circumstances?  First and foremost, it should establish a business triangle of Iran-EU, Islamic banks and Islamic small and medium-sized businesses, build close trade and economic partnership with European and other small and medium-sized businesses. This is quite feasible because the Americans will find it hard to keep an eye on a huge number of enterprises, much less trace their transactions in Euros, especially if the European Union contributes to such cooperation with Iran.

Iran’s Supreme Economic Coordination Council recently allowed the country’s private sector to sell crude oil abroad as a way of circumventing US sanctions. This is the first time the Iranian private companies have been granted permission to trade in oil. Tehran should avail itself of this opportunity as soon as possible.

As for Iran’s time-tested methods of tackling sanctions like, for example,  the use of “ghost” oil tankers, which switch off their automatic identification system (AIS) transmitters not to disclose their route and destination, as well as selling “unrecorded” oil at reduced prices, I can assume that these methods have been used before and are being used today.

It seems that, in view of the situation at hand, Tehran should also recall its oil-for-goods project with Russia, prepared back in 2014, whereby Iran supplies oil to Russia (at least 100,000 barrels per day – about 5 million tons a year) in exchange for industrial equipment and machinery. Four years ago, the plan was never implemented in full because Iran, already withdrawing from the sanctions regime in keeping with the JCPOA, was no longer interested in it.

There was only one shipment made in November 2017, to the tune of 1 million tons. The project could be revived now. Russia’s Promsyryeimport, which is part of the Russian Energy Ministry and was created expressly with this project in mind, will implement the Russian side of the deal.

A program of developing two Iranian oil fields, Aban and Peydar, by Promsyryeimport (which replaced Zarubezhneft) and Iran’s Dana Energy Company, could also be considered.

Overall, the across-the-board cooperation between Russia and Iran against US sanctions could contribute very significantly to minimizing their impact.

Tehran will certainly put to maximum use the great potential of the Islamic Revolutionary Guard Corps (IRGC), which proved so effective during the period of hard-hitting sanctions of 2012-2016 and which controls between 25% and 35% of the country’s economy and 25% of all its capital.

In 2012-2016, the IRGC set up a large-scale system of circumventing the sanctions by controlling considerable “gray” financial flows to, through and out of Iran. IRGC intelligence was gathering information abroad about the “weak” spots in the sanctions system, about the most effective ways of circumventing sanctions, and was also obtaining data on new technologies Iran was not allowed to buy.

Iran and countries opposed to US sanctions against it are looking for ways to ease their impact. Even though completely neutralizing the negative effect of these sanctions will hardly be possible, a certain let-up is quite possible.

Well, the Iranian response to the US sanctions could at times be controversial, but Washington’s exit from the JCPOA and the US sanctions themselves are by no means legal either.

In October, President Hassan Rouhani warned that the previous four months had been a difficult time for the Iranians and that the coming few months would be equally hard. He said that the government would make every effort possible to tackle the situation. Meanwhile, Tehran says it will stick to the terms of the JCPOA as long as its other signatories (save for the US, of course) do the same. Can they do this?

The situation is complex and unpredictable. For Iran, much will depend on whether the JCPOA is kept alive without the US, if Tehran is able to maintain, albeit limited, financial and economic cooperation with foreign countries, primarily with small and medium-sized businesses, and whether it is satisfied with the results of this cooperation.

How will the sanctions, and especially the fall in oil production and exports, affect the national economy and the life of ordinary Iranians? A good question, given the impact the internal political situation can have on the alignment of political forces in the country.

The outcome of this struggle may not take too long coming. Maybe six months, when a European mechanism against Washington’s unlawful withdrawal from the JCPOA and the resumption of its sanctions on Iran is already in place and the deadline set by President Trump for the eight importers of Iranian oil has expired.

First published in our partner International Affairs

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