MS Risk Blog

What will 2019 look like for Iran?

Posted on in Uncategorized title_rule

2018 has generally been troubling for Iran. The implementation of US sanctions, with the toughest ones targeting Iran’s financial and oil sectors in November, have resulted in the Islamic Republic facing economic difficulties and general poverty spread across the population. Inevitably, tensions have mounted between Iran and the US, played out through these restrictions and fighting in Syria and Yemen. Iran has publicly criticised the US decision to enforce sanctions, with Iranian President Hassan Rouhani urging Muslims across the world to unite against America. However, news of the US withdrawal from Syria is arguably music to Iran’s ears and could give them the upper hand which they have been waiting for. Additionally, the killing of dissident journalist Jamal Khashoggi in the Saudi consulate in Istanbul has meant that Saudi Arabia and the Crown Prince have been the subject of worldwide scrutiny, with the incident highlighting the conflict in Yemen and leading to a number of countries discontinuing arms deals with the Saudi Kingdom. Having its rival undercut in light of the death of Khashoggi, along with the promise of new relations between regions and looming potential advantages, means Iran is likely to raise its global status this year.

The US withdrawal of troops will have significant repercussions for Middle Eastern countries and could result in power play tactics between rival regions. On 19 December, US President Donald Trump announced that the US would be pulling troops from Syria. The unanticipated news has been met with a mixed reception of scepticism and praise, with some critics arguing the Islamic Republic will reap the benefits of the US withdrawal by way of the region increasing its influence across Syria and lessening the discomfort of the US sanctions by accessing the oil-rich region. According to Lina Khatib, a Middle East expert at Chatham House in London, removing American troops could raise the chances of Iran profiting from oil fields in the northeast. The US troops are currently stationed in areas which are rich in oil and near the border with Iraq. The presence of troops blocks Iran’s access to these fields and their freedom of movement into Iraq. If Iran were to gain access to oil, the US sanctions may be undermined to an extent, cutting the leash that Iran is currently on and putting the region in an undoubtedly influential position and free to further fund terrorist groups through the supply of weapons and funding without any resulting consequences from America. David M. Halbfinger of The New York Times writes that the American presence in Syria was exasperating for the Islamic Republic, as it hindered Iranian-backed militias from entering into the war-torn country from Iraq. The Iraqi border would be permeable if US troops were to pull out, allowing Tehran to easily move weapons and fighters between the countries. This could include supplying the Iranian-funded terrorist organisation Hezbollah with missiles which could be used to further exert their influence in Lebanon. Khatib agrees that withdrawing troops will “grant a lifeline to ISIS, threaten Israel and empower Iran.” Furthermore, it will “undermine Trump’s own promises and goals, boosting Iran’s fortunes instead.”

Iran and US relations are abysmal which only look set to continue, particularly in light of the sanctions. Eight countries have been given temporary waivers including China, India, Japan and South Korea. Iran have urged the UN to support them in light of these sanctions and take an official stance against the US. Many EU countries appear to be in support of Iran, with the EU promising to launch a special purpose vehicle. This would allow EU countries to circumvent the sanctions so they can continue trade with Iran. However, there is no sign of the materialisation of this special purpose vehicle. Iran has expressed its frustration with the EU’s pace in establishing this, but it is likely that it will be materialising this year as the EU has stated that it is keen to keep the 2015 nuclear deal as a matter of respecting international agreements and regional security. It is uncertain if the US sanctions will be tightening. The US has said however that it will not be issuing anymore waivers which indicates they are looking to turn up the heat on the region. Brian Hook, the US special representative for Iran said earlier this month that the US will grant no more waivers in light of the US need to deny the regime revenues. He said: “Eighty percent of Iran’s revenues come from oil exports and this is (the) number one state sponsor of terrorism…we want to deny this regime the money it needs.” The waivers given to these eight countries are only temporary however and will be expiring in May. It is uncertain whether or not Trump will renew them. If he does not and Iranian oil revenue is drastically reduced as a result, Iran could act out in retaliation. Marwan Kabalan, the Director of Policy Analysis at the Arab Centre for Research and Policy Studies, writes that Iran could act on its recent threats to close the Strait of Hormuz, which could hinder other Gulf states from accessing the oil market. Therefore, the foreseeable possibility of an escalation between Iran and the US is real.

However, Iran may have a bargaining chip or two hidden up its sleeves. On 9 January 2019, Iran confirmed that it has detained US navy veteran Michael R White at a prison in the region. The circumstances of White’s detention remain uncertain. The Associated Press in Tehran consider the possibility that the Islamic Republic could be using this arrest as a leverage in negotiations between itself and the US, given its history of detaining westerners and dual nationals to give them clout. Iran is already under fire for the high-profile detention case of Nazanin Zagheri-Ratcliffe, who was arrested and sentenced to five years imprisonment in 2016 for allegations of spying. Additionally, the conflict in Yemen could help further Iran’s agenda for power. Although the December peace talks between the Iranian-backed Houthis and Saudi-led coalition were largely successful, Hodeidah has been subject to an extremely fragile truce between the warring parties. The last few weeks have already seen violations, including an incident where bullets struck a vehicle carrying Patrick Cammaert, who is overseeing the truce in Hodeidah. The incident highlighted the hostile and volatile environment in Yemen, which Iran is most likely hoping will continue. Marwan Kabalan suggests that it is not in Iran’s interests to help reach a final settlement in Yemen between warring parties. The region hopes to keep Saudi-Arabia occupied in Yemen so they do not have the resources to undertake activities against Tehran on other fronts in the Middle East. Additionally, and arguably somewhat ambitiously, Iran may be hoping to use the Yemen conflict as a bargaining chip in a multi-complex deal to lift the US sanctions and recover the Joint Comprehensive Plan of Action (JCPOA), which Iran enjoyed under the Obama administration. This could be a feasible possibility this year if the ceasefire between the warring parties completely disintegrates and the UN is forced to make a decision and divert a further humanitarian disaster. The UN is already struggling to keep the peace agreement together, so a lapse of ceasefire looks likely. Given the desire of a number of European countries to safeguard the 2015 Nuclear deal and the real possibility of the complete fragmentation of the ceasefire and the likely humanitarian catastrophe that will follow, Iran could potentially find itself in a strong position to free itself of the US sanctions.

It is likely that Iran will build a closer diplomatic relationship with both Turkey and Iraq. It is probable that Turkey feels side-lined due to the US withdrawal in Syria, along with the sting that came with the US threats not to attack the Syrian Kurds. Despite the scrambled attempt of US officials to smooth things over, we have witnessed the relationship between Turkey and the US grow frosty. Turkish Foreign Minister Mevlüt Çavuşoğlu has remarked that the US will struggle in its withdrawal from the war-torn region, particularly in separating from the Kurdish fighters it allied with to fight ISIS. He stated: “It is hard to break up with a terrorist organisation after being involved with it at this level.”The comments came a day after a reportedly tense visit between US National Security Adviser John Bolton and officials in Turkey. John Bolton has stated the US will not withdraw troops from northern Syria until it receives guarantees from the Turkish government that the Syrian Kurdish forces will not be attacked. The remarks have angered Turkey, with President Erdogan accusing Bolton of making a “serious mistake.” Mevlüt Çavuşoğlu has also warned that Turkey will launch an offensive against Syrian Kurdish forces if the US delays the withdrawal of troops from Syria. In an inflammatory tweet on 13 January, Trump threatened to “devastate” Turkey economically if it attacked Kurdish forces in Syria, stating that a 20-mile “safe zone” should be established. Erdogan has approved the formation of this zone, after a phone call with Trump in an attempt to clear the air after the US threats. The Kurds have rejected the US proposal on the grounds that it infringes on the sovereignty of Syria. Nevertheless, however many phone calls the leaders make to one other, tensions will likely still remain and it is possible the disagreements could push Turkey closer towards Iran. The two countries have already been interacting positively since Erdogan came to power in 2002 as the leader of the Justice and Development Party, an Islamist political party. In mid-December, Iran and Turkey vowed to work closer together on Syria. Hassan Rouhani and Turkish counterpart Erdogan held a joint press conference after meeting each other in Ankara. Rouhani stated Iran, Turkey and Russia will continue with the Astana negotiations on Syria’s future. Erdogan agreed that Turkey is “deepening [its] cooperation with Iran,” emphasising that the country does not endorse the US sanctions on Iran. A close relationship between the two states would be a snub to the US and beneficial to Iran’s status in the Middle East.

Iran has made clear its eagerness to form a closer alliance to Iraq. On 16 January, Iranian foreign minister Mohammed Javad Zarif remarked that Iran wants to rebuild Iraq in the wake of the fight against ISIS. Stating that Iranian firms should have a key role in rebuilding Iraq, he argued that the US did not defeat ISIS, but rather it was the Hashed Al Shaabi. Hashed partnered with Iraqi forces in 2014 to fight ISIS in Iraq, whilst receiving military and political support from Tehran. Zarif has said that whilst Iraq looks to rebuild, Iranian firms should be favoured because of the support his country provides and the higher “costs” of working with European or American companies. Last week, Tehran and Baghdad discussed the expansion of their ties in light of the recent US sanctions. On 10 January, the Iranian Minister of Petroleum and Iraqi Prime Minister Adel Abdul-Mahdi met to discuss ways to boost cooperation between the country. The meeting took place a day after US Secretary of State Mike Pompeo visited Iraq, in a somewhat fruitless attempt to persuade Baghdad to restrict its ties with Tehran and steer the region towards western influences as the US begins withdrawing troops from Syria. The meeting allegedly confirmed the “deep relations between the two countries, the two neighbouring peoples and the importance of strengthening them in areas that serve the interests of the two peoples, foremost of which is cooperation in the fields of oil and gas.” The Iraqi prime minister has previously announced that Iraq “will not be part of the [US] sanctions regime, as it will not be part of aggression against any country.” A strong Iran-Iraq allegiance could possibly lead to Iran exerting influence over the Iraqi government and would be counter to previous US efforts.

The weakening of Saudi Arabia may continue into 2019. The Saudi regime has been the focus of criticism, driven by Western media and human rights organisations such as Human Rights Watch and Amnesty International.  The fact that Saudi Arabia has been diplomatically weakened and undermined over the death of Khashoggi has been fortunate for Iran, mainly due to the fact that Saudi Arabia is their main rival when competing for power and influence in the Middle East. Recently, the media have given special attention to women’s rights activists in the Saudi kingdom, with the region coming under reproach due to allegations of the mistreatment and imprisonment of these activists. Earlier this month, Mike Pompeo discussed the issue of jailed women’s rights activists with the Saudi Prince. The recent case of Saudi woman Rahaf al-Qunun who made international headlines after barricading herself in a hotel room in Thailand to avoid extradition back to Saudi Arabia, has drawn global attention to Saudi Arabia’s authoritarian rules and the lack of rights bestowed to women and girls. The critical focus on the Arab region is beneficial for Iran as Saudi Arabia diplomatically weakened means that Iran has a stronger footing in the Middle East and is in a more flexible position to exert its power.

Despite an economically difficult year, Iran could potentially strengthen its global status in 2019. Through bolstering relations with Turkey and Iraq, accessing Syria, overcoming the US sanctions and bargaining and undermining, Iran could get its economy back on track, expand its influence and wield its dominance across the globe. In particular, the withdrawal of troops in Syria presents an opportunity for the Islamic State to boost its authority and amp up animosities with the US.