How the U.S. - Iran deal has changed Middle East

How the U.S. - Iran deal has changed Middle East

Iranian’s economy suffered due to isolation

June 2015 , Marked a new era for the Iranians as the international sanctions had reached an end . After stark negotiations and summits bringing together Tehran and P5+1, a middle ground has been reached. The Obama administration had largely imposed sanctions leaving the Iranian economy in harsh recession. This is ,in fact ,a major reason for making Tehran rethink its strategy in dealing with the west and the US, especially following the surprising election victory in 2013 of the "moderate" Rohani. In 1979, the United states had embarked its first embargo on Iran ,but the economy of the latter harshly deteriorated after the recent added sanctions on trade by The EU , Japan and South Korea in 2013 .Actually, In January 2013, Iran's oil minister acknowledged for the first time that the fall in exports was costing the country between $4bn and $8bn (£2.5bn-£5bn) each month. Iran is believed to have suffered a loss of about $26bn (£16bn) in oil revenue in 2012 from a total of $95bn (£59m) in 2011. Moreover, the inflation rate soared in 2013 as Iran’s Central Bank reported inflation to be at 22.2 percent, under President Mahmoud Ahmadinejad’s subsidy reform plan implemented in December 2010, the government has withdrawn subsidies on food staples, electricity, water, and gas, further pushing up prices and affecting companies and households alike1. The reserves of Iran are no longer capable of satisfying the nation’s demands ,so sustaining the needs of the Iranian has become a priority for Rouhani especially when elections were approaching. The deal will definitely bring back the economy to life, since it will allow Iran to access $100billion, which had been seized by the international community while Tehran continued to develop its own nuclear deterrent. More importantly, Iran can now return to the oil market, and is expected to start exporting an estimated 300,000 barrels per day immediately2. It is expected that Iran will emerge again not only economically but even politically. The Mainstream Media has largely celebrated the victory of the west after signing the deal, neglecting the fact that the latter reflects the emergence of a primary ennemy to western allies (Israel and Saudi Arabia) in the region.

Diplomacy is Obama’s administration brand

Obama’s administration showed great determination first ,in bringing the Iranians into a round table of negotiations ,and second in finding a middle ground to convince them to stop their suspicious uranium enrichment activities. Though, Iran has long defended its Uranium enrichment process as a peace keeping technology, the West has always looked at them skeptically. Through history, Tehran has largely financed non state actors like Hezbollah in Lebanon and Hamas in Palestine so its willingness to take it to the next level by waging a nuclear war in the Middle East might be a plan B that had to be contained, for the Western point of view. The white house have drastically diminished interventionism in the region during Obama’s presidency, both for the extreme complexity in conflict resolution, the Syrian war as an example, and above all in order to prevent the mistakes of the Bush administration. This time they opted for diplomacy and negotiations. And even the U.N. publically appreciated these efforts: "This achievement demonstrates that international proliferation concerns are best addressed through dialogue and patient diplomacy," said Ban Ki Moon's spokesman in a statement. "This is a significant milestone that reflects the good faith effort by all parties to fulfill their agreed commitments," he added.3

The “old” allies's reaction

However ,on the one hand the deal will undoubtedly have positive effects for Tehran (taking into account the reactions of other regional powers, which were quickly manifested), on the other hand it might be a double edged sword for the balance of power maintained by Washington in a hot area like the Middle East. The most disappointed by the above mentioned deal are in fact the most faithful American allies: Israel and Saudi Arabia and whose reactions, some of which are already tangible, are changing the geopolitical scene of the Middle East. The fact that Saudis were disappointed with the agreement appeared to be evident during Obama's visit to Riyadh in April 2016, when King Salaman did not wait for the American president in '' King Khalid International Airport "and sent the governor of the capital Faisel bin Bandar instead. Among the several reasons that led the Saudi king to make a similar move ,which holds a strong political symbolism were, the meeting of Gulf Cooperation countries ,a "28 pages report" drawn up by the US Congress about a possible Saudi complicity in the events of September 11, and the previously mentioned deal. It seems that the Saudis are now looking forward to new strategies in the region without the support of the Americans, who are now considered as a too unpredictable and unreliable ally. The agreement with Iran was considered as a second betrayal made by Washington. The first one was in 2003 following the invasion of Iraq.Actually, Washington did not limit the rise of Shiite groups in Baghdad ,fortifying the axis Damascus and Tehran (with the support of the Lebanese Hezbollah and the Moscow)4.It is evident that the Saudi geopolitics in the Middle East has always been fundamentally based on strengthening Sunni coalition present in conflict areas of the region ,which although enjoying a military superiority has never fully reaped the fruit of prevailance , as demonstrated the war in Yemen and partly also the Syrian conflict with the inability to topple Assad.

Oil, used as a geoplitical weapon by Saudi Arabia

Moreover, the Saudis are waging a battle that in the long term might be proven to be dangerous for their own fate: the one linked to the oil price. Being the top producer of crude oil on a global scale as well as one of the most influential member of OPEC, the Saudis have promoted a strategy based on increasing oil production and price deterioration . In fact, oil prices had decreased from $ 111.84 a barrel in June 2014 to $ 49 in January 2015. Despite the fact of being now stabalized at $ 45 a barrel ,experts do not expect large increases. This crisis has clearly proven that oil prices go well beyond the classic rules of supply and demand, being instead a geopolitical weapon. Looking from the Saudis lens, there are the Russians as the first allies of Tehran, the Americans themselves in recent times particularly engaged in the extraction of "shale oil", and of course the Iranians who have just came back in the hydrocarbons market with an end to sanctions and who might have been the most adversely affected by lower prices5. But,by demonstrating the implications of Riad choices on the global market, it should be noted that pursuing this strategy Saudis have estimated losses of up to $ 150 billion in 2015 only, consuming part of the reserves accumulated over the years.

Suspicious ties; Israel and Saudi arabia

But a shift away from the Americans as their primary allies has paid to a strengthening of relations with another old ally in the region, Israel. The Israelis could indeed play an important role even in the latest geopolitical moves of Saudis, who took advantage of the Egyptian economic deficit and the good diplomatic ties with al-Sisi that have benefited in the "concession" of the two islands on the Red Sea, Tiran and Sanafir, in exchange for a maxi investment plan promised by King Salman and warmly welcomed during his visit to Egypt last April6. Both islands, although almost totally uninhabited, have a strategic role in the Middle East as they present an access point to Israel into the Red Sea. On the other hand, they are located at the entrance of the Gulf of Aqaba, where the Israelis have some of the most important ports. The two islands were occupied by Jerusalem in 1967 during the Six Day War and later returned to Cairo in 1982, following the Camp David peace accords. The recent Saudi claim can be analysed once again as a symptom of the regional fears of Saudi Arabia from Iran, who have the great advantage of the geostrategic control of the Strait of Hormuz, where a fifth of the world’s energy passes. And although it is very unlikely Tehran will attempt to block it , the Saudi move is seen as an insurance policy to maximise their chances in diversifying their exports and trade routes7. But ,another interesting analysis comes from Gerusalem Post, an Israeli magazine, which explains how the ultimate control of the two islands by Saudi Arabia could open the doors for the construction of a new canal parallel to the Suez canal8. Constructions are expected to be about 100 km long and should follow the border with Jordan and then begin to move west about 80 miles north of Eilat. It would be a more ambitious and bigger project than that of Suez, which work had began in 1859 and ended after 10 years by the French. Israelis also argue that the new channel does not threaten Egyptian hypothetical trades but rather would be an added value for the region because it could allow access to the large supporting tankers which exceed the depth and width of Suez. Despite the Israeli unpredictability, the canal seems to be a rather ambitious project to be realized in the near future, even if it gives us an idea of what could be the most powerful alliance in the "post-American" Middle East, the one between Israel and Saudi Arabia, always considering that a candidate like Clinton could mend US relations with old allies.

Giovanni Tranchina and Nawres Ben Aycha 

1. http://www.iar-gwu.org/node/428
2. http://www.bbc.com/news/world-middle-east-35342439
3. http://www.presstv.ir/Detail/2016/01/17/446068/world-response-jcpoa-implementation-/
4. http://www.ilsole24ore.com/art/mondo/2016-04-19/la-guerra-greggio-arabia-e-iran-062537_PRV.shtml?uuid=ACo2mXAD
5. http://www.huffingtonpost.it/2015/12/09/petrolio-calo-arabia-saud_n_8756220.html
6. http://www.aljazeera.com/news/2016/04/egypt-give-saudi-arabia-red-sea-islands-160411060631501.html
7. http://www.middleeasteye.net/columns/why-saudi-arabia-decided-reclaim-its-islands-egypt-now-352329237
8. http://www.jpost.com/Opinion/An-Israeli-Suez-Canal-393225