Is Iran winning their Mideast Cold War with Saudi Arabia?

By Robert Harvey | (Project Syndicate) | – –

LONDON – A cold war is taking place in a very hot place. A key component of the sectarian competition between Shia and Sunni Islam in the Middle East is geopolitical, with Iran facing off against Saudi Arabia and its Gulf allies in a struggle for regional dominance.

As with the original Cold War between the Soviet Union and the United States, the conflict does not involve direct military confrontation between the main rivals, at least not yet. It is being fought diplomatically, ideologically, and economically – especially in the oil markets – and through proxy wars, such as the conflicts in Syria and Yemen. There are few problems in the wider Middle East that cannot be traced back to the power rivalry between Saudi Arabia and Iran.

For the moment, the Iranians seem to be riding high. Following Supreme Leader Ayatollah Ali Khamenei’s decision to agree to an international deal limiting Iran’s nuclear capability to peaceful purposes, Western sanctions have been all but removed. Now that it is once again acceptable to do business with Iran, its ailing economy is set for a rebound. Meanwhile, Iran’s creeping de facto annexation of parts of Iraq – astonishingly, with American acceptance – continues because no one except the so-called “Islamic State” has the stomach to stand up to it.

Iran also has an overwhelming manpower advantage, with a population of an estimated 77 million, compared to Saudi Arabia’s 28 million. And while its army is far less well equipped than its rival’s, it is much larger. Moreover, Iran’s main Arab ally, Syrian President Bashar al-Assad, has been given a reprieve as the conflict in his country drags on without conclusion.

This has left the Saudis feeling abandoned and vulnerable. They believe that their great traditional ally, the US, betrayed them by concluding the nuclear deal with Iran. Meanwhile, they fear that the chaos in neighboring Iraq has exposed them to chronic strategic risks.

The Saudis are also recoiling under a barrage of criticism of their Wahhabi brand of Islam, which is widely blamed for incubating extremism and inspiring terrorism. Meanwhile, Saudi Arabia’s human rights record – including the denial of elementary rights for women – is under constant scrutiny.

Against this background, the Kingdom is taking the fight to its enemies. King Salman bin Abdulaziz Al Saud is the country’s above-the-fray ruler, but his son, Prince Mohammad bin Salman Al Saud, currently wields much of the power.

As Minister of Defense, Mohammad has continued the Saudi policy of backing anti-Assad rebels in Syria, in concert with Turkey, while unleashing a war on pro-Iranian tribesmen in Yemen (at an enormous humanitarian cost). He has also backed, if not instigated, an increase in domestic repression, and has launched an economic offensive against Iran – the consequences of which have been seen, until recently, in plunging global oil prices.

In early May, Saudi Arabia’s longstanding oil minister, Ali al-Naimi, was replaced by Khalid al-Falih, an ally of Mohammad’s. The reshuffle is an indication of Mohammad’s determination to use oil prices as a weapon against Iran and its ally, Russia. As the world’s swing producer, with boundless reserves of cheaply extractable oil, Saudi Arabia can flood or throttle the market at will.

And for now, the Saudis are flooding the market. They are seeking to rein in Iran and Russia, both of which need higher oil prices to sustain economic growth. And they are hoping to bankrupt the US shale-oil producers that have reduced America’s dependence on Middle Eastern oil. As Mohammad recently declared, the Kingdom doesn’t care about oil prices; “$30 or $70 – they are all the same to us.” Iran and Russia, by contrast, need a barrel of oil to be worth at least $70.

The US oil industry has proved more adaptable and resilient than expected; cheaper shale fields have opened even as old ones have closed. But the Saudi oil offensive has helped convince Iran and Russia to drag Assad, kicking and screaming, to the negotiating table.

Mohammad’s new economic plan, Vision 2030, unveiled in May, is another front in the economic war, designed to show that Saudi Arabia is immune to the domestic economic pressures afflicting Iran and Russia. The plan calls for economic diversification and envisages the establishment of a huge sovereign wealth fund to cushion the impact of lower oil revenues that the ruling class has traditionally used to purchase social peace.

The Saudi strategy is not without its costs. Gulf remittances of around $10 billion a year to Egypt (itself under increasing economic pressure and a dizzying fall in tourist receipts after recent terrorist attacks) have been scaled back to around $3 billion. And funding to Lebanon has been cut almost completely.

Robert Harvey, a former member of the House of Commons Foreign Affairs Committee, is the author of Global Disorder and A Few Bloody Noses: The Realities and Mythologies of the American Revolution.

Via Project Syndicate

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Related video added by Juan Cole:

PressTV: “Iranian commander warns Saudi Arabia against Iraqi interference”

11 Responses

  1. This article is deeply problematic: it is a series of unsupported assertions that are largely false or at a minimum exaggerated. Let us briefly examine three problematic sentences:

    “Meanwhile, they [Saudi Arabia] fear that the chaos in neighboring Iraq has exposed them to chronic strategic risks.”

    Saudi Arabia continues to fund and support extremist groups in Iraq and Syria that are affiliated with Al Qaeda. If they were so concerned about chaos coming from Iraq, they would cease to arm extremist and mercenaries in Iraq and Syria. Failure to do so indicates they are far more preoccupied with their hegemony over regional security or stability. Their funding of these extremist groups and mercenaries is in contravention of international and human rights law, which is left unstated in the article above.

    “Meanwhile, Saudi Arabia’s human rights record – including the denial of elementary rights for women – is under constant scrutiny.”

    Where is it under scrutiny? In the UN? In US Congress? Has their been any repercussions of their denial of rights to women, minorities, and religious minorities? No… At a minimum, we should place an arms embargo on Saudi Arabia.

    ” Iran and Russia, by contrast, need a barrel of oil to be worth at least $70.”

    Saudi Arabia does not collect income taxes, or for that matter any taxes. The bulk of their government revenue stems from oil revenue. Saudi Arabia is largely just an oil company that has a seat in the United Nations. Failure to generate the same oil revenue of years past has now resulted in cutting of government programs in Saudi Arabia, and is fueling domestic criticism and opposition. In contrast, Iran and Russia collect income taxes. The international monetary fund suggests that Iran’s fiscal break-even price of oil is significantly lower than Saudi Arabia’s.

    Let us now examine two controversial assertions:

    “Meanwhile, Iran’s creeping de facto annexation of parts of Iraq – astonishingly, with American acceptance – continues because no one except the so-called “Islamic State” has the stomach to stand up to it.”

    What is this nonsense? Does the PM of Iraq complain about Iranian annexation of Iraq? Where is the evidence that Iran has annexed parts of Iraq, and embedded in this quote is the odious assertion “…no one except the so-called “Islamic State” has the stomach to stand up to it.” What? So the “Islamic State” isn’t committing mass pogroms in Syria and Iraq against the Yezidi, Shias, Christians, and Kurds, but rather standing up to Iran. The author of this article has swallowed too much Saudi propaganda.

    “But the Saudi oil offensive has helped convince Iran and Russia to drag Assad, kicking and screaming, to the negotiating table.”

    Iran and Russia were present at negotiations (without preconditions) prior to the fall of oil prices. It was Saudi Arabia and United States that placed preconditions on negotiations, which they later rescinded.

  2. “Western sanctions have been all but removed. ” I think you have overlooked the continuing interference of the USA and its stopping European banks from dealing with Iran.

    • Please describe how the US is preventing European banks from dealing with Iran. The British newspaper “The guardian” reports, “Iranian banks will soon re-establish connections with the European financial system, and private firms can now pursue business opportunities without fear of western punishment.” How is the US, as you state, “stopping European banks from dealing with Iran.”? Please provide evidence for your assertion.

      • Peter Jenkins, former UK Permanent Representative to the IAEA tells Iran Review:

        “U.S. officials would probably deny that the United States is failing to deliver on its part of the JCPOA bargain. They would say that they have made clear to European banks that they have nothing to fear provided they steer clear of Iranian individuals and entities that are specified on U.S. sanctions lists. They would argue that the way forward is for European banks to engage lawyers who can advise them on the intricate detail of U.S. sanctions provisions, and to perform due diligence to the utmost degree before doing business with Iranian counterparts.

        The problem with this guidance is that it implies significant costs for European banks without eliminating the risk that a European bank may inadvertently transgress and become liable to huge American fines – billions of dollars. It is understandable that European banks have been inhibited by that risk.”

        This interview can be found on the foreign policy blog LobeLog.

        Furthermore, polling by IranPoll(dot)com for the Center for International and Security Studies at the University of Maryland indicates the displeasure that is rising in Iran as a result of the lack of economic improvements from sanctions being lifted, among other things. LobeLog has an article discussing some of the difficulties remaining sanctions are putting on investments and banking.

        • That there are certain Iranian officials and entities on the U.S. sanctions list does not prevent European banks from engaging with Iran. All major banks, European or otherwise, have legal departments to work on such matters. The fact is, with the sanctioned exceptions, European banks are free to deal with Iran.

          Regarding displeasure in Iran as a result of economic improvements, that is primarily a result of Iran’s own internal politics and internecine fighting among various factions. Foreign investors are reluctant to put large amounts of money into a country with as much uncertainty as Iran exhibits.

          To name just two: Iran does not have a great reputation for courts enforcing contracts in cases involving foreign entities. Likewise, Iran (primarily via the Revolutionary Guards) has a history of holding and imprisoning foreigners without reason. Neither of these likely instills confidence in foreign investors to put both funds and personnel at risk.

        • It is my understanding that, because the US has sanctions against Iran that preceded and are NOT part of the nuclear issue, American banks are reluctant or perceived to be reluctant to do business with European banks financing projects in Iran. This may seem counter-intuitive but even talk about sanctions on other countries can freeze the investment environment.

  3. Iran is not ‘winning’. Bogged down at 2 war fronts against Sunni Islamist militants, still diplomatically isolated from the West, facing economic assault from Saudi Arabia despite lifting of Western sanctions, losing Eastern influence amongst Sunni majority nations and even African nations due to Saudi maneuvering as well as watching Shiite populations in the ME losing out, and possible future internal conflict if there’s anything to go by the latest news of a Saudi prince addressing Iranian rebels in France.

    link to dawn.com

    • The re-entry of Russia into the Middle East changes everything. The Shanghai Cooperation Organization will admit Iran as a member, and that will affect where China decides is the part of the region that has a future. Logically, China is looking beyond simple resource extraction to building new sweatshops that will progress into real regional production of Chinese brands. Saudis will not lower themselves to work in sweatshops. And pipelines from Iran to China can be fully located in SCO territory, but pipelines from Saudi Arabia can’t.

      The poorer Sunni states are letting the Saudis lead them into barbaric Medievalism, without the imported luxury goods.

  4. In addition to the valid points in the article, an enduring existential “threat to Saudi Arabia from Iran is not that it is ‘Persian’ or Shia, but that it is simultaneously Islamic and republican—that it seeks to integrate principles and institutions of Islamic governance with participatory politics and elections while maintaining a strong commitment to foreign policy independence.” Saudi royals, in contrast (and for obvious reasons), preach to their citizens the necessity of coupling an absolute monarchy and Islam. (For the same reasons, Saudi royals see the Muslim Brotherhood as a serious threat.) link to detailedpoliticalquizzes.wordpress.com

  5. “[N]o one except the so-called “Islamic State” has the stomach to stand up to it”–“it” being Iran.

    ISIS is not “standing up to” Iran. It is “standing up to” the entire Muslim world. Singling out Iran shows a real lack of understanding of the Middle East, or a dangerous partisan agenda cloaked as “expert opinion.”

    What has Iran done that other of our “allies” has not done? Support terrorism? Saudi Arabia funded the creation of al Qaeda, the Taliban, and ISIS. Pakistan uses terror as a quotidian instrument of foreign policy. Israel daily terrorizes the Palestinians. Indeed, Israel was born of Zionist terror.

    Iran denies human rights? Iran gives women far more human rights than any Wahhabi state, and most Sunni states. Israel denies full religious rights to female Jews. Try being a female Jew and pray at the Western Wall.

    Iran is trying to dominate the region? Earth to Robert, that is what all countries try to do. Why should Iran back off and watch Saudi Arabia, Israel, Turkey, and every other nation in the region try to dominate it? If Iran backs off, will we?

    Framing the region as the West versus Iran is a relic of the imperialist past–a time for which the Brits seem now more than ever for which to deeply pine.

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