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Iran and the nuclear deal after the US withdrawal from the JCPOA

Giancarlo Elia Valori

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The first operational implementation of the Agreement between P5 + 1 and Iran, namely the Joint Comprehensive Plan of Action, signed on July 15, 2015, dates back to January 16, 2016.

The data from the latest quarterly IAEA written report on Iran’s nuclear facilities provides information about some interesting new topics: the construction of the heavy-water Arak reactor, for example, has been stopped by the Iranian government.

Moreover, the Shi’ite Republic has decided voluntarily not to continue the testing of the equipment needed to operate with the IR-40 centrifuges which had initially been designed for the Arak reactor.

Furthermore, the technological materials and the nuclear fuel that had to be used for the Arak reactor were kept in safe and sure places under the ongoing monitoring of the Vienna-based International Atomic Energy Agency.

Moreover, Iran has always and continuously informed the Agency of the presence and production of heavy water at the Heavy Water Production Plant in Khondab, near Arak, which is expected to produce approximately 16 tons of heavy water per year.

These are IAEA data and information, which are also confirmed by official sources and not by the Iranian Republic.

On February 11, 2018, the IAEA checked whether the Khondab plant was active and the total heavy water held by Iran amounted to 117.9 tons.

Furthermore, again according to the IAEA, the Shi’ite Republic carried out no suspicious activity at the Research Reactor near Tehran nor in the facility for processing radioisotopes of Iodine, Molybdenum and Xenon, also located north of the capital city – a facility which is the main one for Iran’s current nuclear production.

Again according to the Vienna-based Agency, Iran has not carried out any activity beyond the limits imposed by the JCPOA in any of the other nuclear facilities that have been inspected by the IAEA.

Moreover, considering IAEA’s accuracy, it would be very difficult for Iran to keep other nuclear facilities fully secret, undetectable and untraceable by IAEA experts.

In Natanz, however, there are still 5,060 IR-1 centrifuges arranged and installed in thirty “cascades”.

The IR-1 centrifuges extract 3.5% of the natural uranium used there, but always low-enriched one.

They are based on the old Pakistani technology of the P1 ones, relying on an old Dutch design.

Some old or broken centrifuges have been replaced; others have extracted isotopes to date, for a total of 300 kilos of low-enriched uranium (LEU).

Furthermore, six “cascades” of centrifuges totalling 1,044 units are still active at Fordow, but all the equipment of the Iranian nuclear systems have been checked regularly and repeatedly with the best technologies currently available to the Vienna-based Agency.

Therefore, as stated in the latest report on Iran available to the IAEA, the Shi’ite Republic has systematically adapted to the JCPOA demands, although having now refused Imam Khomeini’s policy line whereby nuclear power was the “product of the devil”.

Hence what sanctions does President Trump want to impose on the Shi’ite Republic of Iran?

First and foremost, sanctions on the Iranian government’s and Iranian citizens’ purchase and use of US dollars. Secondly, sanctions on Iran’s trade in gold and other precious minerals, as well as on the direct or indirect purchase or transfer to Iran of graphite and other processed or non-processed minerals, such as aluminium, steel and coal (which, however, is obviously not a metal). Finally sanctions on the transfer of software for whatever kind of companies in Iran.

Furthermore a new type of sanctions will be imposed on  relevant” commercial transactions (but nobody can precisely measure this relevance) and on the purchase of Iranian currency or on the holding of rial-denominated funds or deposits outside the Shi’ite Republic. Sanctions are also envisaged on the purchase or sale of Iranian government debt securities and other restrictive rules are imposed even on the Iranian automotive sector.

An automotive sector which last year manufactured 1.5 million cars.

Further sanctions are also envisaged on Iranian-made carpets, on traditional food (pistachios, in particular), as well as on Iran’s port traffics abroad and finally on all oil transactions.

And here we come to the core of Iran’s nuclear issue, i.e. the sanctions on financial transactions involving the Central Bank of Iran, as well on commercial information concerning Iranian banks and clients, on any kind of insurance and reinsurance and, finally, on the energy sector – Iran’s real the economic heart.

While the Iranian oil purchases have been reduced “significantly” by non-Iranian third parties – very dangerous vagueness and indefiniteness for Europe – the US Treasury could decide not to impose sanctions on third parties trading with Iran.

In other words, a clear blackmail to the EU.

The sanctions on Iran-exported oil were put in place, for the first time, in 2012.

The underlying reason for them was the notorious   “terrorism” perpetrated with a huge amount of means and militants from all Arab countries and Turkey, the second NATO armed force.

However, let us revert to the oil economy.

Sanctions are objectively imposed on 20% of the oil and gas produced by Iran – and the situation has not much changed with the new Trump’s Presidency compared to Obama’s.

In other words, a quantity ranging from 500,000 to a million barrels a day.

In financial terms, a loss of over 1.5 billion dollars every month at the current oil barrel price.

Before the new sanctions – foreseeing the climate imposed by the current US Republican President – Iran had already pushed its crude oil production up to 2.7 million barrels a day.

Meanwhile, the issues relating to the new sanctions on the Iranian Shi’ite Republic will never be fully “operational” as they were in 2012, only because there is complete disagreement between the EU and the USA. The time needed to impose said sanctions will predictably be longer than usual.

In the meantime, crude oil demand is growing, considering OPEC’s and Russia’s restrictions on new extractions, as well as the crisis in Venezuela.

The companies that will certainly be hit by the US sanctions are very important for the big business activities that were already shaping in 2017.

They include Boeing and Airbus – the latter has already delivered its aircrafts to Iran, but always a few compared to the 100 already programmed by Air Iran and Aseman Lines.

A contract worth 19 billion US dollars for the Iranian national airline and additional 17 for Aseman Lines.

General Electric, too, has obtained significant orders from its Iranian customers for oil infrastructures and for oil and gas fixed transport lines.

As easily expected considering President Macron’s recent explicit reactions, another company negatively affected in the vast global business community is the French Total.

The French oil multinational has a contract with the Chinese company CNPC, which is worth 2 billion US dollars, to develop the offshore oil and natural gas field of South Pars.

Total has already spent 90 million dollars to comply with the terms of the contract, while the Iranian state-owned company will obviously not reward foreign participants until production begins.

Other companies damaged are also Volkswagen and the French car group PSA.

As early as last year the Germans had again started to sell cars to the Iranians, but they will soon have to change their strategy in that very promising market.

However, the price of petrol and other fuels for transport or heating purposes will increase steadily all over the world.

Therefore, the game of restrictions and sanctions on Iran is now in the hands of Saudi Arabia, one of the real winners of the round of sanctions the USA has just imposed on Iran.

The Saudi oil Minister has already said that “he is committed to maintaining the oil market stability”.

Minister Khalid al Falih has added that the Kingdom will work with all those that, outside or inside OPEC – the clarification is subtle and very important – intend to mitigate any damage resulting from future limitations of oil availability.

Last April Iran produced approximately 3.8 million oil barrels a day, but no one can predict when and how oil extraction in that country shall really decrease.

Hence we are noting an artificial shift of energy markets from Iran to the pro-Saudi universe, which certainly also favours the US shale oil and gas producers that need quite high oil barrel prices to create margins and reinvest their capital, at least in the short term.

It also likely, however, that many Iranian oil and gas consumers will have little to do with this US round of sanctions.

China, for example, which is currently Iran’s largest oil customer.

But also European companies and some Asian countries could be damaged by US sanctions.

Damage that, however, would be limited, based on the indications provided by US documents.

In fact, they would affect fewer than 200,000 barrels per day up to reaching 500,000 barrels per day after six months since the implementation of President Trump’s sanctions.

Moreover, as already seen, other producers could quickly fill the Iranian void, such as Saudi Arabia, Iraq or even Russia, while in 2019 – thanks to its shale oil and gas – the United States will reach a level of extraction equal to as many as 11.9 million barrels a day.

The US shale oil and gas standard applies only if the price per barrel is sufficiently high.

Almost paradoxically, only the predicted increase in US shale oil and gas would be probably enough to fill the void and gaps left by the sanctions against Iran.

Certainly Europe can do many things to definitively avoid becoming irrelevant at strategic and geo-economic levels.

Things it does not do because it is still slave to a World War II mentality that neither the US Democrats nor the Republicans currently have.

Moreover, its trade with Iran almost doubled in 2017 alone.

For example, Europe could give reliable and unambiguous signs to Trump’s Presidency by repeating – as sometimes happened – the blocking regulations within the EU market to prevent any European individual or company from being obliged to accept the US secondary sanctions, which must never depend on non-EU courts for their legal resolution and settlement.

Europe could also improve the financial conditions of European companies that operate also in relation to Iran, by protecting the lines of credit to the Shi’ite Republic, with liquidity always denominated in euros and not in US dollars.

Moreover, it would be very useful to centralize the operations for protecting the European business in Iran within the E3, i.e. the group of EU countries belonging to the P5 + 1 which already negotiated the nuclear deal with Iran in July 2015.

The geopolitical issue mainly lies in the Iranian missiles, which may or not be armed with nuclear warheads.

This has been the strategic theme of President Trump and also of the most recent positions of the Israeli Prime Minister.

According to the statements made by Gen. Ali Jafari, the Commander of the Iranian Revolutionary Guards, currently Iran’s military and scientific research focuses only on the missiles having a maximum range of 2,000 kilometres.

Said missiles, however, can hit Saudi Arabia, Israel and most of the US bases in the Middle East.

It is obvious, however, that they are missiles for conventional deterrence.

Moreover, also Saudi Arabia has a vast missile arsenal.

The Saudi Strategic Forces operate from five different bases, but above all from Al Watah, 200 kilometers south of the Saudi capital city.

There is also the Saudi base of Asir, recently hit by some Yemeni missiles, probably Iranian-made, launched at the beginning of last April.

Saudi carrier networks are often maintained by Chinese technicians and, considering the large Saudi participation in the Pakistani nuclear project, it is very likely that the Sunni Kingdom could now acquire nuclear warheads fairly easily.

Saudi missiles, too, should have a maximum range of 2,650 kilometres.

Furthermore, Iran does not yet have an air weapon capable of fully exploiting these missile networks and, in any case, the Saudi/Iranian ratio of military forces is still 5 to 1.

On January 29, 2017, Iran launched a medium-range ballistic missile and in March 2017 two other short-range ones. On June 18, 2017 there was the operational launch of eight missiles targeted to the Daesh-Isis bases in Syria, in response to a terrorist attack suffered by Iran.

On September 23, Iran fired a new missile followed by a carrier for launching Simorgh-type satellites, which, however, is not designed to return back to the atmosphere.

From 2006 to 2012, however, Iran set up and arranged five missile tests, all reported and already sanctioned by the USA.

Currently Iranian missiles are supposed to total approximately one thousand, all medium and short-range ones, with Russian or North Korean design and especially Chinese technical assistance.

The UN Security Council Resolution No. 2231, which accepted the JCPOA, also states that “Iran shall not test any ballistic missile”, while there are no UN official bans on the subject.

There are currently ten types of Iranian carriers, while spacecraft and satellites are launched by two types of two-stage carriers, namely Safir, and the aforementioned Simorgh, both using liquid fuel.

There are currently three types of Iranian cruise missiles: firstly, the KH-55 which can carry (even) fissile material up to 3000 kilometres – a missile obtained illegally from Ukraine in 2001.

Secondly the Khalid Farzh, which has a range of 3,000 kilometres and can carry a payload of almost 1,000 kilos. Thirdly the Nasr-1, a missile for anti-ship and anti-tank uses, capable of destroying targets up to 3,000 tons of weight – as Iranian sources maintain.

Between 2000 and 2002 Iran also exported many conventional missile carrier and many spare parts to Libya.

Nevertheless, since 2007 the UN Security Council has already forbidden Iran from selling or transferring conventional weapons. It has also prohibited third countries from acquiring any type of Iranian military supplies, unless this is permitted by a specific UN Security Council’s declaration.

From 2012 to 2015, however, Iran sent weapons to the Taliban in Afghanistan, to Assad’s regime in Syria and, most likely, also to other countries in the Middle East.

In all likelihood, although having signed the Chemical Weapons Convention, Iran keeps on producing chemical and bacteriological warfare agents.

Also the other primary geopolitical players in the Gulf and in Greater Middle East are doing so.

Nowhere as on the Middle East military theatre the Gospel criterion of casting the first stone applies.

Hence it is good to never believe that the problem of N and BC proliferation holds true only for Iran, because there are also Saudi Arabia and Egypt, which has dealt with weapons for Iran and above all North Korea – not to mention the new nuclear treaty signed on December 11, 2017 between Egypt and the Russian Federation for the construction of a nuclear reactor in El-Dabaa, 140 kilometres west of Alexandria.

Not to mention, finally, the Jordanian nuclear reactor inaugurated in December 2016, which was built in collaboration with the University of Seoul.

A few days ago, Saudi Arabia made it clear that if Iran manufactures its nuclear bomb – as the Westerners say – it will quickly turn to its military nuclear plan.

All these topics shall be discussed at the forthcoming UN High Level Conference on Nuclear Disarmament scheduled before the end of this year.

Therefore, the issue lies in developing a real nuclear-weapon-free zone throughout the Middle East, with specific characteristics and internal structures operating within the IAEA – and this is also an old Iranian proposal, clearly targeted to Israel.

Nobody, however, has a real interest in a nuclear zero-sum game in the oil area.

It is a serious mistake. A Russian, Chinese, Israeli and EU alliance could really change things in the nuclear system of the entire Middle East.

Nevertheless, we could also think of an agreement within the United Nations that can mutually guarantee – at the lowest possible conventional level – all the countries in the region.

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

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The Causes and Effects of the United States “Long Goodbye” to the Middle East

Lawrence Habahbeh

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A glance at a world map reveals one great reason why the Middle East (ME) claims the attention of great power centres of the world.  A roughly rectangular area stretching from the Adriatic Sea, East to the black sea ,and south to the Indus River.   The ME is a joining point of three continents, Europe, Asia, and Africa and one of the most vital crossroads on the planet.   It is the cradle of world civilization and the birth place of the three monotheistic religions, Islam, Christianity, and Judaism.    Further, it is rich in oil, gas, and other commodities.   According to British Petroleum 2019 (BP) Statistical review of World Energy, the Middle East holds 836 billion barrels of proven oil reserves, which constitutes 48% of world total.   In comparison to other regions of the world, it holds 3X the proven oil reserves of the U.S, Canada and Mexico combined, and 58X the proven oil reserves of Europe.   Likewise, the Middle East has the world’s largest proven reserves of Natural Gas (NG); standing at 38.3% of the world’s total, while the Common wealth of Independent States (CIS) holds the second largest reserves at 31.9%.

Historically, the strategic foundation for the U.S. involvement in the Middle East was shaped by several policy objectives reflecting both regional dynamics and U.S. interests.  These strategic interests centred primarily around protecting the reliable free flow of commodities and commercial activity through well known checkpoints in the Arabian Peninsula, especially the strait of Hormoz and Suez canal; supporting the security, stability, and prosperity of U.S. partners in the region, including the State of Israel; preventing the proliferation of weapons of mass destruction, countering Jihadist movements, and terrorism.  Since 2011, geopolitical tensions, trade disputes, and changes in the international security landscape have tested the US-ME relationship, and have caused the strategic pillars of the U.S. Involvement in the region to undergo a state of transition, hastened by three major factors: 

First; In a speech by former Secretary of Defence James Mattes at Johns Hopkins University, School of Advanced International Studies, January 19, 2018, he asserted” Great Power competition, not terrorism, is now the primary focus of U.S. national security”.  Further, according to President Obama’s June 2015 National Military Strategy and also President Trump’s January 2018 National Defence Strategy  (NDS), they both acknowledged that the shift in U.S. strategic direction is driven by a return to great power competition with China and Russia, underlined by a rising trend in strategic cooperation between two countries on many issues across many regions of the world, In fact; this strategic cooperation can be seen taking shape in the economic and military spheres.  For example, according to various press reports, in September of 2019, Chinese and Russian troops took part in joint military manoeuvres; dubbed, “Tsentr-2019” to strengthen their military readiness.  Further, direct trade between the two countries is increasing.  According to data from statista, trade between Russia and China reached a record level, exceeding $100 billion compared to previous years.  Likewise, China’s natural gas imports from Russia more than doubled in 2019 subsequent to operating the “Power of Siberia”  gas pipeline with a total initial capacity of 5 Billion Cubic meters (BCM) of gas, and a targeted capacity of 38 BCM by 2025, which constitutes 13% of China’s 2018 demand.  Equally important; China’s expanding major economic development project, the Belt and Road (BRI) initiative.  The BRI initiative is an ambitious plan to build an open and balanced regional economic architecture connecting dozens of countries in Asia, Eurasia, and Europe by constructing six international economic corridors and an extensive rail network linking China to Europe through a “new Eurasian Land Bridge”.  In the same way, the project aims to construct economic corridors linking China, Mongolia, and Russia; also, China to west, central, and South Asia. 

The evolving dynamics of economic corridors connecting all sub-regions in Asia, and between Asia, Europe, and Africa is consistent with the ideas of the Eurasianist Aleksandr  Dugin’s, and the ideas advanced in his book published in 1997 titled “Foundations of Geopolitics”, in which he calls for the realization of a Unified Economic Landscape called Greater Eurasia.  Greater Eurasia refers to countries that are on the territory of the Eurasian continent across Asia, Europe and the Middle East.  It consists of two regions of energy consumption (Europe & Asia Pacific) and three regions of energy production (Russia and Arctic & Caspian & Middle East) in between.  It includes 91 countries, which represents two-thirds of the world population, exports of goods and services and GDP.

These evolving and developing geographic and economic integration projects based on strategic cooperation between Russia and China create a geographic mass of countries across, Asia, Europe, and the Middle East that are increasingly interdependent, and their interests are more closely intertwined than ever before.  Consequently; shifting geopolitics in Greater Eurasia driving the strategic convergence in economic power between Russia and China is posing challenges to U.S. leadership in the region and the world.   These interactions between Russia and China in the military and economic spheres demonstrate a growing trend in strategic cooperation between the two countries and may be driven by an ideological denominator, where both countries view the U.S. as the “Glavny Protivnik”.

Second; according to the U.S Energy Information Administration (EIA), the United States became the world’s largest producer of petroleum hydrocarbons and the largest producer of oil with a total production capacity of 12.7 million barrels of oil per day as of March 2020, surpassing the daily production capacity of both Russia and Saudi-Arabia.  In the same manner; according to BP’s 2019 Statistical Review of World Energy report, the U.S. is still the world leader when it comes to natural gas production, averaging approximately 920 billion cubic meters of gas in 2019, followed by Russia, Iran, and Qatar.  As a result, the United States is undergoing an oil and natural gas production renaissance that will likely continue to change the global energy landscape, and lead to wide-ranging regional and global geopolitical implications.   The Age of Abundance for the U.S is driving the change in relations with regional allies, which, in part, will be redefined based on relations that are built around competition in the global gas market, and the supply of cleaner energy sources, especially, Liquefied Natural Gas (LNG).

Third; according to the CIA’s Global Threats Report  2019.  The ME region is highly vulnerable to changes in the frequency and severity of heat waves, droughts, and floods, and that combined with Poor Governance – leads to increased food and water insecurity.    As a result, it is very likely that there will be an increased risk of social unrest, migration and tension between regional State, and non-State actors.

It stands to reason that the U.S. views the strategic benefits derived from maintaining the  historical strategic pillars, and policy objectives in the ME vis-à-vis the strategic risks associated with such policy as costly and no longer viable because of the greater strategic threats posed by both Russia’s aggression towards its neighbours in Europe in consequence of Russia’s own economic, political, and social agenda, which opposes the international liberal order promoted, and protected by the U.S. since the second world war., and China’s expanding financial and economic influence, and strategic cooperation with Russia in multiple domains to amass political and strategic advantage through improved economic and energy connectivity projects in Europe, Eurasia, Middle East, and Asia pacific.  Therefore; U.S vital strategic interests lay elsewhere and the U.S. views Russia and China as a greater strategic risk than Iran and Al-Qaeda, and that requires the U.S. to “do less” in the Middle East.  In consequence, from U.S perspective the Middle East region is no longer a priority for the United States.  

The strategic implications of the ongoing U.S. long goodbye to the M.E. region over the past decade have shifted the regional geopolitical environment and caused the formation of a power vacuum where state and non-state actors competing in a multi-level and proxy executed competition to gain diplomatic, economic, and strategic advantage.  As a result, three regional spheres of influence emerged vying for control and power in the region, including the conservative wing, comprising Saudi Arabia (GCC, less Qatar), Egypt, Jordan, and Israel. The anti-American wing includes Iran, Syria, and Hezbollah.  Lastly the Islamist wing includes Turkey, and Qatar.  Add to this complex geopolitical landscape, Russian and Chinese inroads through military, economic, and weapons sales to regional actors to increase their regional influence.  In fact; in recent years, Moscow has strengthened its military foothold in Syria and secured access to military bases on the Mediterranean Sea, in order to expand its regional political, military, and economic influence.  Moscow’s regional engagement has solidified since 2015 Russian intervention in Syria.  Moreover, Russia’s expanding military exercises and weapons sales with Egypt selling 2$ billion worth of aircrafts to Cairo.  Further, Moscow support and expanded ties with Khalifa Haftar in Libya,  talks to sell S-400 Missile Defence System to Qatar, cooperation with Saudi Arabia to stabilize global oil markets, and strengthening relations with Israel and Iran are clear indications of Moscow’s increasing influence in the Middle East region.

In the same way, China’s strategic cooperation with Middle Eastern countries is on the rise.  For instance, the region is China’s No.1 source of imported petroleum products.  According to the U.S. Energy Information Administration, over 50% of Chinese Oil imports come from Saudi Arabia, UAE, Iraq, and Iran, with Saudi Arabia providing 16% of Oil imports.  Further; Qatar, is the one of largest LNG suppliers to China.  Moreover, In July 2018, China and the UAE announced an upgrade to their 2012 strategic partnership to a “comprehensive Strategic Partnership”- China’s highest level of diplomatic relations, outlining cooperation in wide range of fields such as politics, economics, trade, technology, energy, renewable energy, and security.   Likewise, In Egypt, in September 2018 President Sisi visited Beijing and signed 18$ billion worth of deals with China including projects covering rail, real estate, and energy.  Again, Chinese construction firms are heavily engaged in constructing Egypt’s new administrative capital outside of Cairo and developing the Red Sea port and industrial zone.  Likewise, Jordan, Israel, and Egypt are important to China’s expanding BRI initiative.   The majority of Chinese trade with Europe passes through the Suez Canal, and China is expanding the cooperative zone around the canal by expanding the port and shipping facilities.   Finally, Jordan joined the Asian Infrastructure Investment Bank in 2015, and Israel high speed rail project with China that will connect Tel Aviv on the Mediterranean to Eilat on the Red Sea.  Clearly, the multitude of Chinese driven infrastructure projects in the region are an indication that countries in the Middle East are welcoming China’s economic investments, and if history is a gauge of future developments, then it is reasonable to conclude that China is likely to increase its political engagement and expand its military presence in the region to protect and secure its economic interest.

In 2017, during a visit by president Trump to Saudi Arabia, the Riyadh declaration was announced.  The declaration is a U.S. proposal for a multilateral regional arrangement between Gulf Cooperation Council nations (GCC), including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, in addition to Jordan and Egypt, dubbed the Middle East Strategic alliance (MESA).  The proposal centres on the idea of a regional system with shared security, economic, and political architecture.   According to data from the World Bank Development Indicators (WBDI) (2018), the MESA boasts a combined GDP of $2.3 trillion and represents a market of 175 million consumers.  The proposal joins an increasing number of regional alliances that exist across the globe, such as the three seas initiative (3SI), the Eurasian Economic Union (EEU), and the Regional Comprehensive Economic Partnership (RCEP), among others.  Since its announcement, an ongoing dispute among the competing, regional spheres of influence, due to differences in their respective interests, capabilities, and threat perceptions has caused little progress in the future trajectory of this multilateral arrangement.

Finally, the reality is that the U.S. should not fully extricate itself from the region due to the U.S. great power competition with China and Russia, which the Trump Administration has placed at the centre of its national security strategy.   Instead, the U.S. should invest in its regional network of allies and partners to work together to maximize their strengths and address common challenges that are vital to U.S. national security and geopolitical stability.  The U.S. should push for and hasten the strategic convergence of the MESA member States by promoting deeper coordination and interaction among participants through multilateral cooperation in the economic, political, security, and energy spheres by calling to build the tools and the governing institutions to govern MESA operations and decision making such as a Middle East Strategic Alliance Council with prime ministers as members, the Middle East Strategic Alliance Economic Commission to manage the organizations day to day decision making activity, the Middle East Strategic Alliance Court system, tasked with managing disputes among member States, and a Middle East Strategic Alliance development bank and stabilization fund to support and drive integration efforts through regional lending and investment programs to boost, along an East-West axis, cross-border economic development, energy, water, transportation, and digital infrastructure connectivity projects.

As noted above, the U.S. should reposition itself at the helm of key Middle East dynamics, while simultaneously working with regional partners to balance Russian and Chinese inroads and expanding patterns of influence in the region.  Else, a lack of a clear, unified strategy for the Middle East, will perpetuate the current Hobbesian state of a bellum omnium contra omnes, which renders the whole Middle East system in a quantum state of neither at peace, nor at war, but, entangled in a super position of both states simultaneously; waiting for an observer; to implement the wrong policy option, resulting in the collapse of the state function; into a wilderness of tempestuous combustion; likely, paving the way, to the last age of Pax Americana.

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Economic Crisis Does Little to Dampen Mohammed bin Salman’s Pricey Ambitions

Dr. James M. Dorsey

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When Saudi Finance Minister Mohammed Al-Jadaan announced austerity measures in May, including an $8 billion USD cut back on spending on Vision 2030 — Crown Prince Mohammed bin Salman’s ambitious plan to restructure the Saudi economy — economists and pundits assumed that was the death knell for trophy projects like NEOM, a $500 billion USD plan for a futuristic mega smart city on the Red Sea.

Economists and pundits may want to think again.

Plagued by questions about the project’s strategic value at a time when the kingdom is struggling with the economic fallout of a pandemic, the impact of an oil price rout, and controversy over the killing of a tribal leader who resisted displacement, NEOM last week sought to counter the criticism by hiring a US public relations and lobbying firm.

NEOM’s $1.7 million USD contract with Ruder Finn – a PR company with offices in the US, Britain, and Asia – was concluded as the kingdom sought to salvage another trophy project, the acquisition of English Premier League soccer club Newcastle United, beset by accusations that the Saudi government had enabled TV broadcasting piracy in its rift with fellow Gulf state Qatar.

The controversy proved to be a lesson in the reputational risk involved in high-profile acquisitions. Piracy was not the only thing complicating the acquisition of Newcastle. So was Saudi Arabia’s human rights record as a result of mass arrests of activists and critics and the 2018 killing of journalist Jamal Khashoggi in the Saudi Consulate in Istanbul.

With the publication of a damning report by the World Trade Organization (WTO), Saudi Arabia moved quickly to counter the criticism by removing boxes of BeoutQ, an operation that pirated sports broadcasts legally contracted by BeIN, the sports franchise of state-owned Qatari television network Al Jazeera. BeoutQ broadcasts were carried by Saudi-based Arabsat.

BeoutQ was taking advantage of the banning of BeIN in the kingdom as part of the three-year-old Saudi-UAE diplomatic and economic boycott of fellow Gulf state Qatar. Saudi sports cafes began broadcasting BeIN for the first time immediately after release of the WTO report.

Like the Saudi response to the WTO, NEOM’s contract with Ruder Finn seems to be an effort to repair reputational damage.

Ruder Finn’s mandate appears designed to counter the fallout of the killing in April of Abdulrahim al-Huwaiti, whom the government labelled a terrorist, and to project NEOM as a socially responsible corporation bent on engagement with its local community.

Taking issue with the suggestion that NEOM was in damage limitation mode, Ali Shihabi, a political analyst, former banker, and member of NEOM’s advisory board who often reflects Saudi thinking, argued in a series of tweets that project NEOM was about much more than refuting negative media reporting.

“There is much more substance to NEOM than ‘flashy projects.’ NEOM will be heavily involved in serious projects like advanced desalination, innovative desert agriculture and more use of solar and wind energy, etc. that are very relevant to the country and the region’s urgent needs. These have been very well planned/researched and some are already being executed,” Mr. Shihabi wrote, admitting that the company behind the project had yet to detail its plans.

Mr. Shihabi’s claims were seconded by Ruder Finn in its filing to the US Department of Justice as a foreign agent.

“NEOM is a bold and audacious dream,” Ruder Finn said. “It’s an attempt to do something that’s never been done before and it comes at a time when the world needs fresh thinking and new solutions.”

Ruder Finn’s contract was announced after NEOM said that it was taking multiple steps to demonstrate that it was being “socially responsible and [would] deliver . . . impactful, sustainable and committed initiatives.”

In lieu of Mr. Shihabi’s anticipated detailing of NEOM’s grandiose plans, Ruder Finn’s filing to the Department of Justice as a foreign agent, as well as NEOM’s announcements, seemed less geared toward projecting the futuristic city’s economic and environmental contribution and more towards repairing damage caused by the dispute with local tribesmen and the killing of Mr. Al-Huwaiti.

Mr. Al-Huwaiti, a leader of protests against alleged forced evictions and vague promises of compensation, was reportedly killed in a gun fight with security forces.

Mr. Al-Huwaiti predicted that he would be either detained or killed in a video posted on YouTube hours before his death. In the video, he claimed that whatever happened to him would be designed to break the resistance of his Huwaitat tribe to their displacement.

He denounced Prince Mohammed’s leadership as “rule by children” and described the kingdom’s religious establishment that has endorsed the Crown Prince’s policies as “silent cowards.”

An estimated 20,000 people are expected to be moved out of an area that Prince Mohammed once said had “no one there.”

NEOM declared earlier this week that it would be offering English-language lessons at its recently established academy and that some 1,000 students would be trained in tourism, hospitality, and cybersecurity.

At the same time, the government said that eligible Saudis would be compensated for loss of land with plots along the coast as part of a program to improve standards of living.

Online news service Foreign Lobby Report reported that Ruder Finn would produce informational materials, including a monthly video to promote NEOM’s engagement with the local community as well as visual materials highlighting the company’s fulfillment of its social responsibility.

Ruder Finn’s efforts were likely to do little to convince the kingdom’s critics.

Writing in Foreign Policy in April, Sarah Leah Whitson, Human Rights Watch’s former Middle East and North Africa Director, and Abdullah AlAoudh, a Saudi legal scholar, dismissed NEOM’s grand ambitions. Mr. AlAoudh’s father Shaykh Salman Al-Odah, a prominent reformist religious scholar, has been imprisoned in Saudi Arabia since 2017 for advocating an end to the rift with Qatar.

“Whether the NEOM project is even remotely viable, given the global financial collapse because of the coronavirus and rising Saudi debt amid historically low oil prices, is highly doubtful,” Ms. Whitson and Mr. AlAoudh said. “The only result we’ve seen from this vision for a futuristic city is the promised destruction of a historic community and the death of a Saudi protester, using archaic means with no room for modern notions of rights and justice.”

Author’s note: An initial version of this story was first published in Inside Arabia

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Middle East

Netanyahu’s plan to annex West Bank: Old and new problems

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Israel’s Prime Minister Benjamin Netanyahu has announced plans to establish as of July 1 Israeli sovereignty over the Jordan Valley and over some areas of Judaea and Samaria, also known as parts of the West Bank and the River Jordan, which fell under the  control of Israel as a result of the 1967 Six-Day War. At present, about half a million Israelis reside in these areas. However, most countries, citing international law, consider Israeli settlements in the West Bank illegal on the grounds that they pose an obstacle to clinching peace with Palestinians.

The announcement of the Israeli leader had nothing sensational about it. Israel’s policy, aimed at de facto annexing Palestinian territories and at legal acts regarding Israeli communities in the West Bank, undergoes no substantial changes. But this time, the issue under consideration is the legitimization, the establishment of the legal status of these territories as Israeli.

Ideas of this kind are constantly circulating within the ranks of the country’s right-wing politicians. Moreover, being a staunch Zionism maximalist and after 15 years in power, in the course of which he frequently enjoyed a parliamentary majority,  Benjamin Netanyahu could have easily secured this status. However, political caution and pragmatism held him back. That’s why the question is why these plans have acquired a clear-cut shape now, with even a date set for the start of the process.

There seem to be many reasons for this. Naturally, some are personal. At the peak of success, in connection with the transfer of the US Embassy to Jerusalem and Washington’s recognition of Israel’s sovereignty of the Golan Heights, and also, following a triumphant recovery from the long-running government crisis, Benjamin Netanyahu is set on strengthening his positions, on winning the support of a maximum number of Israelis, particularly in the light of recent events, after his case went to court.[1]

But the main reason is overall support of Israel from the Trump administration. Never before were relations between Washington and Jerusalem that close.

Undoubtedly, what triggered the process was the ambitious and difficult-to-implement draft agreement proposed by US President Donald Trump to secure peace between Israel and the Palestinians, which, in the opinion of the White House, guarantees a final settlement of the Israeli-Palestinian dispute and puts an end to the more than 70 – year conflict in the Middle East.  The 180-page document stipulates that Israel maintains its sovereignty over the territory of the Jordan Valley, Judea and Samaria. In addition, Washington insists that Jewish settlements on Palestinian lands should be recognized as territory of Israel. That is, all Jewish settlements will remain in their places, including 15 remote settlements which are in no way connected to territories that will be handed over to Israel.

It’s no secret that the draft was developed by Trump’s officials within the framework of consultations with Israelis. The document, presented by Trump on January 28, 2020, was dubbed “the deal of the century”. After the presentation, Israeli and American teams got down to work to make maps of West Bank areas which Israel could annex first under the plan. Although, the American and Israeli positions do not always coincide.

Yet, the coming on the scene of the “deal of the century” and the Netanyahu plan are no accident. Times are changing.

Firstly, after a months-long political crisis in Israel a coalition government has been formed which will be run by Likud leader Benjamin Netanyahu for 18 months, and the remaining 18 months after November 17, 2021 (if nothing extraordinary happens) until the next elections – by Kahol Lavan leader Benny Gantz. Thus, the political instability at home has been neutralized.

The coalition agreement which has been achieved in Israel hinges on a document signed by Netanyahu and Gantz on behalf of their parties Likud and Kahol Lavan. This document regulates division of power, the functioning of the new government, and a detailed procedure of decision-making with the right of veto. One important reservation is that expansion of Israeli sovereignty (or annexation) can be proclaimed by Netanyahu and his party without the consent of Gantz, and accordingly, his party. This is the only political area which has such a reservation which abolishes veto.

What speaks of Netanyahu’s “resoluteness” is a changed role of Israel in regional and global affairs. Having integrated into the global economy, Israel, without any exaggeration, has achieved a lot, both technologically, and in terms of security potential. This was backed by progress in the demographic sphere (which is important for Israel), and in the economy. In 2000 the population of Israel was a little over 6 million, in April 2020 – 9,2 million. (At the time of the declaration of independence in 1948 Israel was home to 872 700). In 2000 per capita GDP totaled $ 21038, by 2020 it increased to $ 42823.

The hefty reserves of natural gas which were discovered on Israel’s Mediterranean coast in 2010 and which are already being developed form a foundation of the country’s energy independence and enable it to become a gas exporting country. All this contributes to Netanyahu’s confidence.

Israel’s position in the Middle East is changing as well. The Arab neighbors have become less adverse to it. Gulf monarchies, along with other Arab nations are getting closer and closer to Israel in their confrontation with Iran. Europe, preoccupied with migrant-related problems, is  less critical of Israel and  less protective of Palestinians. Meanwhile, Palestinian political institutes, just like Palestinian leaders, are split between the West Bank and Gaza, which makes them weaker politically.

On the whole, the Palestinian issue appears to be tiring for many actors in the  Middle East.

Therefore, a combination of positive factors, both subjective and objective, has set the stage for the  appearance of Trump’s “deal of the century” and led to the present announcement of the Israeli prime minister. 

US and Israeli leaders are in a hurry: November 3, 2020 – the day of the presidential elections in America – may become critical for the far-reaching plans of the parties concerned.

It needs to acknowledge, however, that if put into effect, the Netanyahu plan is fraught with severe consequences for Israel proper, and for the rest of the Middle East.

Undoubtedly, the initiative voiced by Prime Minister Netanyahu will prove explosive for the current political situation in the country, which is complicated enough without it. Protests are already rolling through Israel against the expansion of sovereignty to the West Bank. Even Netanyahu’s supporters are fully aware that the risks in the Netanyahu-proposed strategic game are extremely high. A great deal is put on stake: human lives, security, economy, the country’s international image. That is why voices against the plan are heard ever more frequently, demanding that the date of the start of the sovereignty declaration procedure be postponed.

Moreover, on June 9 the Israeli Supreme Court of Justice passed a ruling that could come crucial for the country and for the Israeli-Palestinian settlement process. The Court abolished a law under which Jewish settlements in the West Bank which were built on Palestinian territories illegally, can be legalized.

The Netanyahu plan boosts the risk of a new intifada, new terrorist attacks from radical Islamists. Naturally, Palestinians are highly adverse to the move. Deputy chief of the JAMAS “political bureau” Saleh Aruri has made it clear that a return of “armed confrontation” to the West Bank has become a possibility, “more probable   than some could imagine”.

A political storm at home will have a negative effect on Israeli economy and will undermine its defense potential, its power to confront JAMAS, Hezbollah and their ally – the Islamic Republic of Iran.  Tehran will get a good stimulus for activating anti-Israeli propaganda, for convincing its Arab neighbors of Israel’s wickedness, for expanding financial and military support of Palestinians in their struggle for a Palestinian state, for initiating a new phase of the hybrid war against the Jewish state.

The fledgling Israel-friendly architecture for the Middle East, which envisages a certain normalization of relations with Arab opponents, may crumble in a flicker of an eye.

Without doubt, Arabs will condemn the Netanyahu plan, though it may happen that Egypt, Saudi Arabia and some other Gulf states, having joined the anti-Israeli chorus, will not risk jeopardizing cooperation with it.

Europe, which is a major trade partner of Israel, is against the Netanyahu plan. Israel is closely integrated with European cooperation programs, including in education, scientific research and innovations, which yield considerable mutual benefits. All this may now be put under threat. The position of the European Union on annexation is clear and consistent: the EU «does not recognize any changes of the 1967 borders, unless they are acknowledged by Israelis and Palestinians». The EU urges Israel to refrain from annexation.

China and Russia will adhere to their present positions, based on the resolutions of the UN Security Council and international law. Moscow and Beijing, while defending their views, will strive to prevent a deterioration of bilateral relations with Israel.

The Russian position on the Netanyahu plan was spelled out by Russian Ambassador to Israel Anatoly Viktorov, who said that implementation of intentions to apply Israeli sovereignty to parts of the West Bank seemed a very dangerous scenario. Annexation of Palestinian territories by Israel will cross out prospects for a Palestinian-Israeli settlement and trigger a new upsurge of violence.

The ambassador reiterated a position in favor of a two-state solution on the basis of a commonly recognized international framework. He pointed out the need to secure an early resumption of direct talks between Israel and the Palestinians under the patronage of the United Nations in order to negotiate a final status and achieve a comprehensive peace settlement on the basis of UN resolutions and the Arab Peace Initiative.

Earlier (on May 20) Russian Foreign Minister Sergei Lavrov, speaking on the phone  with Israeli Foreign Minister Gabi Ashkenazi, confirmed Russia’s readiness in tandem with other members of the Middle East Quartet (Russia, the USA, the EU, the UN) to contribute to the reset of a peace process by means of a dialogue between Palestinians and Israelis.

The Palestinian-Israeli problem is clearly a knotty issue which has been a point of unsuccessful talks for more than 70 years. It penetrates the political, diplomatic and military space of the Middle East, affecting the situation in different parts of the region. The putting into effect of the Netanyahu plan on expanding the Israeli sovereignty to the Jordan Valley and parts of Judea and Samaria, coupled with Trump’ “deal of the century”, will surely cause an explosive reaction worldwide, in Israel proper, and throughout the Middle East.

It looks like the only positive thing about Netanyahu’s and Trump’s controversial and dangerous plans is that these projects have yet again attracted the attention of the world community to the Palestinian problem, an acute issue of our day. But July 1 is just round the corner! 

[1] Reference: On May 24 the first session of the Jerusalem District Court got under way to consider three cases which were filed against Prime Minister Benjamin Netanyahu. This is the first time in Israel’s history when an incumbent prime minister is officially accused of criminal wrongdoing. 

The first inquiry against the prime minister was held in 1999-2000. Back then, the police sued him on five charges – bribery, an attempt to embezzle state property, fraud, abuse of office and attempts to impede the inquiry. However, all lawsuits were closed before reaching court for lack of evidence.

The year 2016 saw a new inquiry which was conducted within the framework of three separate cases known in the press as «Case 1000», «Case 2000» and «Case 4000». On the basis of these cases the Israeli Prosecutor-General Avichai Mandelblit issued official charges against Netanyahu on November 21st, 2019. On  «Case 1000» and «Case 2000» the prime minister is charged with fraud and abuse of trust (Article 284 of the Criminal Code provides for a three-year imprisonment), on «Case 4000» he is charged with fraud, abuse of trust and bribery (Article 290 of the Criminal Code, up to 10 years in prison). On January 28, 2020 all cases were transferred to the Jerusalem District Court.

Benjamin Netanyahu denies all charges saying that all the cases against him have been fabricated for the purpose of removing right wingers from power.

From our partner International Affairs

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