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From Nuclear to NewClear

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In the course of many visits to Iran over the years I have come to realise that no country is the subject of such fascination and mistrust in Iran as the United Kingdom. So my friends at ‘Tehran Times’ are interested to hear my thoughts in relation to Anglo-Iranian relations following the recent UK election. 

This election was fought and won by Johnson’s Conservative party in order to “Get Brexit Done” so that the UK will now definitively – after three years of political paralysis – leave the European Union. I believe this result to be positive for Iran for two reasons, the first being Prime Minister Johnson as a person, and the second being the new role and responsibilities of Johnson’s office as UK Prime Minister in international diplomacy and commerce for an independent UK.

Johnson as a Person

“Those are my principles, and if you don’t like them….well, I have others…..” Groucho Marx.

As with President Trump it is a mistake to view Prime Minister Johnson through the lens of rational statecraft. Johnson combines intelligence, idleness and pure expedience in equal measure. He owes his success to his capacity to delegate strategy and responsibility to capable and diligent subordinates such as Dominic Cummings, the Grand Vizier to Johnson’s Byzantine Caliph.

Perhaps the most important point for Iran’s decision-makers to bear in mind with PM Johnson is that, like his father Stanley before him, he genuinely likes and respects Iran and Iranians, and the country’s great culture, history and heritage. So, all things being equal, the accession to power of Johnson as a person is positive for Iran.

Johnson as UK Prime Minister

Unfortunately, all things are very far from equal for Iran in terms of access to the global economy, and the question is to what extent Iran’s access may improve after UK’s imminent Brexit departure from the European Union under Johnson’s leadership.

While much is made of the UK’s special relationship with the US, this has been poisoned by a unilateralist Trump administration which is thoroughly despised by the UK ruling class from which PM Johnson springs.  Despite a great deal of pro-American and anti-European rhetoric from within Johnson’s party, the reality is that, not least for geographic reasons, two thirds of UK trade is with EU members and this is unlikely to change soon. 

PM Johnson is  pragmatic enough, and has a big enough parliamentary majority for the next five years, to allow his more anti-European & pro-US elements to say what they like while he does what he likes. So what practical steps could be taken to improve UK/Iranian relationship?

Trade Clearing

That PM Johnson is willing to engage with Iran was clear from his visit to Tehran two years ago in December 2017. Unfortunately for him, his predecessor PM Theresa May, under instructions from the US, killed the release to Iran via the banking system of long outstanding funds which could open the way to further trust-building measures. 

New financial technology (Fintech) presents new options for innovative UK trade clearing which enable bank payment channels to be transcended. In the energy field, the UK may go beyond the political EU Energy Union project which aimed to both create a pan-European market in energy as a commodity and support the Euro as a currency by securing € denominated debt on energy. 

The fundamental flaw of the INSTEX mechanism is that it is reliant on banks as payment channels, and no major bank wishing to clear dollars is prepared to participate in INSTEX even for trade permitted under US sanctions. The UK may now transcend the INSTEX Euro trade clearing mechanism by creating a complementary trade clearing system in London. 

So a new UK/Iran trade clearing system may directly connect businesses wishing to supply for use in Iran permissible technologies such as desalination and renewable energy in particular.

How may this be achieved?

Petro Fintech

Financial Technology is the combination of law & accounting with information and communications technology (ICT). A new generation of online businesses emerged around 2001 from the ‘Internet Bubble’ of complex and crazy ventures. A similar new wave of Fintech is now emerging from the initial wave of “Blockchain” secure shared databases and “Coin” financial instruments with complex and vulnerable connections to the conventional financial system.

In the field of energy fintech Venezuela’s Petro instrument is an excellent case study. The first problem with this Petro is that it is technically backed, not by (say) gasoline or diesel fuel which the average Venezuelan can use, but by heavy grades of crude oil useful only to a few complex refineries. Secondly, this technical oil backing is useless even to complex refineries because Venezuela will not accept the Petro from them instead of dollars or even Euros in payment for oil.

In October 2008, the global banking system froze and the oil price collapsed, which OPEC mistook for lack of demand, but was simply due to the inability of oil buyers to clear payments using bank channels. Meanwhile, in Tehran I proposed, at a major conference chaired by H E Nematzadeh, a simple prepay instrument (“Petro”) returnable in payment for fuel supply. 

As an energy prepay (“credit”) instrument Iran’s reality-based Petro will be issued by fuel producers or refiners, not by Iran’s banks or government. The NewClear combination of transparent issuance, professional system management and mutual assurance by a Protection and Indemnity (P&I) club agreement will enable a Petro Clearing Union. 

Proofs of Concept

Every network is founded by its first connection. There is no reason why Iran’s frozen assets in the UK, whether long outstanding debts, or ongoing gas production, cannot be mobilised using simple effective energy credit clearing. In this way, projects may be mobilised in Iran exempt from US sanctions and with suppliers and contractors willing and able to implement them, but unable to access conventional payment via banking channels.

Moreover, in Iran itself, all of the elements now exist to rapidly introduce the Petro domestically in order to reduce the initial frictions from reducing subsidies. 

My colleagues and I stand ready, as we have since 2004, to at last commence the implementation of a new generation of financial technology both domestically and in bilateral UK/Iran trade clearing: in this way Iran may advance from nuclear to NewClear agreements.

From our partner Tehran Times

Middle East

UAE-Israel relations risk being built on questionable assumptions

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A year of diplomatic relations between the United Arab Emirates and Israel has proven to be mutually beneficial. The question is whether the assumptions underlying the UAE’s initiative that led three other Arab countries to also formalise their relations with the Jewish state will prove to be correct in the medium and long term.

UAE Crown Prince Mohammed bin Zayed laid out the strategic assumptions underlying his establishment of diplomatic relations, as well as its timing, in a conversation with Joel C. Rosenberg, an American-Israeli evangelical author and activist, 18 months before the announcement.

Mr. Rosenberg’s recounting of that conversation in a just-published book, Enemies and Allies: An Unforgettable Journey inside the Fast-Moving & Immensely Turbulent Modern Middle East, constitutes a rare first-hand public account of the Emirati leader’s thinking.

Mr. Rosenberg’s reporting on his conversation with Prince Mohammed is largely paraphrased by the author rather than backed up with quotes. The UAE’s interest in building good relations with American Evangelicals as part of its effort to garner soft power in the United States and project itself as an icon of religious tolerance, and Mr. Rosenberg’s willingness to serve that purpose, add credibility to the author’s disclosures.

Mr. Rosenberg’s reporting, wittingly or unwittingly, has laid bare the potential longer-term fragility of the relationship that is evident in Prince Mohammed’s timing for the UAE’s recognition of Israel as well as the assumptions on which the Emirates has argued that relations would contribute to a resolution of the Israeli-Palestinian conflict.

What emerges is that the UAE and Israel have a geopolitical interest in cooperating to contain Iran and militias in Lebanon, Syria, Iraq and Yemen that are associated with the Islamic republic. They also reap economic benefit from the formalisation of a relationship that has long existed de facto.

When it comes to the Israeli-Palestinian conflict, however, the implication is that public support for the relationship could prove to be fickle even though comment on social media in a country that tightly polices freedom of expression was dominated by supporters of the Emirati government.

Prominent Emirati political analyst Abdulkhaleq Abdulla described the public backing as “a show of support for the government rather than a show of support for ‘normalization’ (with Israel) as such.” Mr. Abdulla was speaking in May as Israeli warplanes bombarded the Gaza Strip in a conflict, sparked by protests in East Jerusalem, with Hamas, the Islamist group that governs the territory.

He noted that “no matter what your national priorities are at the moment or regional priorities are at the moment, when stuff like this happens, the Palestinian issue comes back and hits you.”

It was this sensitivity that persuaded Prince Mohammed that the door would close on establishing diplomatic relations with Israel without a solution to the Palestinian problem if then Israeli Prime Minister Benyamin Netanyahu were to go ahead with his plans to annex parts of the West Bank occupied by Israel during the 1967 Middle East war.

“The only way to stop Netanyahu from grabbing what the Emiratis saw as Palestinian land was to go full Godfather and make Bibi an offer he couldn’t refuse,” Mr. Rosenberg wrote referring to Mr. Netanyahu by his nickname.

A proposal by the Trump administration that the UAE and other Arab states sign a non-aggression and non-belligerency pact with Israel without establishing diplomatic relations with the Jewish state gave Prince Mohammed the opening to push his plan.

“MbZ was open to the idea, but he now realized it would not be enough to pull Netanyahu away from his desire to annex large swaths of the West Bank. The only way to get what he wanted, MBZ recognized, was to give Netanyahu what he wanted most – full peace, full recognition, full normalization. But MbZ would have to move fast” to pre-empt the Israeli prime minister Mr. Rosenberg summarised, referring to Prince Mohammed by his initials.

Quoting then Emirati minister of state for foreign affairs, Anwar Gargash, rather than Prince Mohammed, Mr. Rosenberg regurgitates hopes publicly expressed by Emirati officials that the establishment of diplomatic relations would reinvigorate moribund Israeli-Palestinian peace talks.

The establishment of diplomatic relations promised to be “a 360-degree success, one that goes beyond trade and investment,” Mr. Rosenberg quoted Mr. Gargash as saying.

Emirati economy minister Abdulla Bin Touq said the UAE hoped to boost trade with Israel to US$1 trillion over the next decade. Emirati officials were further banking on the fact that strong cultural and people-to-people ties – absent in Israel’s initial peace treaties with Egypt and Jordan in the 1980s and 1990s – would put flesh on a skeleton of Arab-Israeli relations and ensure that Israel refrains from acts like annexation that would upset the apple cart.

Mr. Netanyahu’s successor, Prime Minister Naftali Bennett, has put those hopes to bed. He has unequivocally rejected the notion of an independent Palestinian state alongside Israel, refused to negotiate peace with the Palestinians during his term, and suggested that the improvement of social and economic conditions would satisfy Palestinian aspirations.

That could prove to be a risky bet given a shift to the right in Israeli public opinion, the growing influence of conservative religious segments of society, and the fact that some 600,000 Israelis who populate settlements built on the West Bank and in East Jerusalem make a two-state solution de facto impossible. That would leave a one-state solution as the only solution.

For that to work, Palestinians would have to buy into Mr. Bennett’s approach that is informed by the concept of “shrinking the conflict” that seeks to marginalise the Palestinian problem, put forward by Micah Goodman, an Israeli academic who chose to build a home in a West Bank settlement.

“Twenty per cent of Israelis are on the extremes, for either withdrawing from the territories or annexing them,” Mr. Goodman says. “The remaining 80 percent who don’t want to rule over the territories or relinquish them don’t have a way to talk about the conflict, so they just don’t think about it. Which is the tragedy of the Israeli center.”

Shrinking the conflict, rather than solving it, is what Mr. Goodman calls “replacing indifference with pragmatism.” He suggests that initiatives such as the creation of corridors between Palestinian enclaves on the West Bank and a border crossing to Jordan “up to the level that the Palestinians feel they are ruling themselves, without the capacity to threaten Israel” would tempt Palestinians to buy into his concept. Mr. Goodman’s plan would ensure, in his words, that Palestinians “don’t get anything like the right of return, a state or Jerusalem.”

Prince Mohammed appears, based on Mr. Rosenberg’s account of his conversations with the UAE leader and other Emirati officials, to have adopted the approach.  

“MbZ believed that by breaking the mould and making peace with Israel without giving the Palestinian leadership veto over his freedom of movement, he could open the door for other Arab countries to see the benefits and follow suit,” Mr. Rosenberg wrote.

Bahrain, Sudan and Morocco were quick to follow the UAE’s example. Some 300 Iraqi tribal and religious leaders, activists and former military officers called last week for diplomatic relations with Israel in a gathering in the Iraqi Kurdish city of Erbil.

“Just as we demand that Iraq achieve federalism domestically, we demand that Iraq join the Abraham Accords internationally. We call for full diplomatic relations with Israel and a new policy of mutual development and prosperity,” said Wisam Al-Hardan, a spokesman for the group and onetime tribal militia leader that aligned with the United States to fight al-Qaeda in 2005.

Mr. Rosenberg noted that “as more Arab states normalized relations with Israel, MbZ and his team believed it could create the conditions under which the Palestinians could finally say yes to a comprehensive peace plan of their own with Israel.”

That may prove to be over-optimistic. Addressing the United Nations General Assembly this week, President Mahmoud Abbas warned that the Palestine Authority would withdraw its recognition of Israel and press charges against Israel in the International Criminal Court if Israel did not withdraw in the next year from the West Bank and East Jerusalem and lift the 14-year-long blockade of the Gaza Strip.

The assumption underlying Prince Mohammed’s hopes that Palestinians as well as Syria, Jordan, and Lebanon for that matter, would ultimately fall into line, creates a false equation between most Arab states and those bordering on Israel or under Israeli occupation.

Most Arab states like the UAE have existential issues with Israel that need to be resolved, which makes public opinion the potentially largest constraint on recognition of the Jewish state. There is no doubt that for Palestinians the issue is nothing but existential. The same is true for Jordan that has historic connections to the West Bank and whose population is more than half of Palestinian descent.

Similarly, Lebanon and Syria host large numbers of Palestinian refugees. Syria, moreover, has its own issues with Israel given the latter’s occupation of the Golan Heights since 1967.

Improving the social and economic conditions of the Palestinians are unlikely to satisfy their minimal needs or those of Israel’s immediate neighbours. Not to mention what the accelerated prospect of a de facto one-state solution to the Palestinian problem would mean for an Israel confronted with the choice of being a democratic state in which Palestinians could emerge as a majority or a Jewish state that sheds its democratic character and claim to be inclusive towards its citizens.

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Syria: 10 years of war has left at least 350,000 dead

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A decade of war in Syria has left more 350,200 people dead, High Commissioner Michelle Bachelet told the Human Rights Council on Friday, noting that this total was an “under-count of the actual number of killings”.

These are a result of a war that spiralled out of the 2011 uprising against President Bashar al-Assad’s rule.

Based on the “rigorous work” of the UN Office for the Coordination of Humanitarian Affairs (OCHA), she said that the tally, which includes civilians and combatants, is based on “strict methodology” requiring the deceased’s full name, the date of death, and location of the body.

People behind the numbers

In the first official update on the death toll since 2014, Ms. Bachelet informed the Council that more than one in 13 of those who died due to conflict, was a woman – 26,727 in all – and almost one in 13 was a child – a grim total of 27,126 young lives lost.

The Governorate of Aleppo saw the greatest number of documented killings, with 51,731 named individuals.

Other heavy death tolls were recorded in Rural Damascus, 47,483; Homs, 40,986; Idlib, 33,271; Hama, 31,993; and Tartus, 31,369.

Behind each recorded death was a human being, born free and equal, in dignity and rights”, reminded the High Commissioner.

“We must always make victims’ stories visible, both individually and collectively, because the injustice and horror of each of these deaths should compel us to action.”

More accountability needed

Her office, OHCHR, is processing information on alleged perpetrators, recording victims civilian or combatant status and the type of weapons used, Ms. Bachelet said.

To provide a more complete picture of the scale and impact of the conflict, the UN agency has also established statistical estimation techniques to account for missing data.  

The High Commissioner explained that documenting deaths complements efforts to account for missing people and that her office has been helping the families of the missing, to engage with international human rights mechanisms.

Given the vast number of those missing in Syria, Ms. Bachelet echoed her call for an independent mechanism, with a strong international mandate, to “clarify the fate and whereabouts of missing people; identify human remains; and provide support to relatives”.

No end to the violence

Today, the daily lives of the Syrian people remain “scarred by unimaginable suffering”, the UN human rights chief said, adding that they have endured a decade of conflict, face deepening economic crisis and struggle with the impacts of COVID-19.

Extensive destruction of infrastructure has significantly affected the realization of essential economic and social rights, and there is still no end to the violence.

It is incumbent upon us all to listen to the voices of Syria’s survivors and victims, and to the stories of those who have now fallen silent for ever”, the High Commissioner concluded.

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Middle East

Lessons Learned: US Seek to Salvage their Relations with the Syrian Kurds

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The hasty retreat of the US troops from Afghanistan has left a sizeable dent in the reputation of the White House among the American public, in the Middle East and the world in general. Washington was criticised heavily for the betrayal of the Afghan government, which paved the way for Taliban to storm to power.

It’s only natural that such events created a breeding ground for uncertainty among US allies in the region. Some of them started to reevaluate their relationship with the White House after the Afghan fiasco; others were having doubts about the US’ commitment beforehand. Current situation forces Washington to take firm actions to validate their status as a powerhouse in the region. There are indicators that US leadership has found a way to regain trust from its allies starting with Kurdish armed units in Syria.

The Kurds became a key ally to the US in their quest to defeat ISIS in Syria. Washington helped to create the predominantly Kurdish Syrian Democratic Forces (SDF), who consequently established control over oil-rich regions in the north-eastern Syria. However the rapid rise of Kurdish influence triggered discontent from other parties of the Syrian conflict: the Assad government and Turkey, who considers SDF an offshoot of the PKK, designated as a terror group by the Turkish authorities. Under this pretext Ankara conducted three full-scale military operations against the Kurds in spite of its membership in the US led coalition.

Turkey remains a major headache for the US in northern Syria as it obstructs the development of a Kurdish autonomy. US failure to act during the Turkish offensive on Al-Bab and then Afrin is still considered one of the most agonizing experiences in the recent history of American-Kurdish partnership. On the flip side, this relationship had its bright moments. US forces were persistent in their cooperation with the Kurds despite Donald Trump’s efforts to withdraw US military presence from Syria. Furthermore, former Pentagon’s chief James Mattis increased funding of SDF in 2019 to a record high of $300 million.

Although the US cut back its support for the Kurds after proclaiming victory over ISIS, it’s still sufficient for SDF to stay among the most combat-capable forces in Syria. US provide machinery, equipment and ammunition, but most importantly teach the Kurds the skills to profit from their resources. Besides training SDF rank soldiers, the American troops prepare their special forces HAT (Hêzên Antî Teror, Anti-Terror Forces) primarily tasked with establishing security on oil facilities as well as detection and elimination of terrorists. In terms of their equipment they practically hold their own even against US troops. During their operations HAT fighters use standardized weaponry, night goggles and other modern resources.

Regardless of all the US aid military capabilities of SDF have one critical vulnerability, namely the lack of air defense. This weakness is successfully exploited by Turkey who uses their drones to bomb Kurdish positions. For the last couple of months the number of air strikes has significantly increased, which brought SDF to find new methods of deflecting air attacks.

There are good grounds to believe that Washington accommodated their partner’s troubles. Thus a source from an US air-base in Middle-East who asked to keep his name and position anonymous told us that on the 18th of September three combat-capable trainer aircraft T-6 Texan have been deployed to Tell Beydar air-base in Hasakah province, Syria. According to the source American instructors have begun a crash course in air pilotage with the candidates picked form the SDF ranks long before the airplanes arrived to their destination. This is implicitly confirmed by the large shipment of US weaponry, machinery and ammunition to Tell Beydar delivered on the 17th of September that included missiles compatible with Texan aircraft.

The sole presence of airplanes, even trainer aircraft, prompts a change in the already existing power balance. T-6 Texan can be used not only for air cover but also as a counter tool to Turkish “Bayraktar” UAVs especially if US grant Kurds access to intel from the radars situated on US air bases. Ultimately, from Turkey’s standpoint it must look like an attempt from the US military to create PKK’s own air force.

This being said the US are better off using political means rather than military if the goal is to handicap Turkish interests in Syria. The groundwork for this has been laid thanks to a reshuffle in the White House under Biden administration. First came the resignation of former US Special Representative for Syria Engagement James F. Jeffrey infamous for his soft spot for Turkey, who has been openly promoting pro-Turkish views in the White House during his tenure. In addition to the loss of their man in Washington, Turkey has gained a powerful adversary represented by the new National Security Council coordinator for the Middle-East and North Africa Brett McGurk. McGurk is a polar opposite to Jeffrey and has sided with the Kurds on numerous occasions. He is well respected among the leaders of SDF because of his work as Special Presidential Envoy for the Global Coalition to counter ISIS.

The only yet the most important question that is yet to be answered is the position of US president Joe Biden. So far Biden’s administration has been avoiding radical shifts regarding its Syria policy. Development of cooperation with the Kurds considering they have proven their reliability might come as a logical solution that will also allow the White House to show their teeth. Washington cannot endure another Afghanistan-like fiasco that will destroy their reputation figuratively and their allies literally. Even with all possible negative outcomes taken into account the enhancement of cooperation with the Kurds outweighs the drawbacks and remains the optimal route for the US.

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