Tag: Gulf states

Regional ripples from a nuclear deal

As gradual progress is made towards a potential nuclear deal with Iran, many question the implications that this agreement would have for the surrounding region. On Monday, the Woodrow Wilson Center hosted “The Iranian Nuclear Deal and the Impact on its Neighbors” to analyze the regional repercussions of a possible bargain. Abdullah Baabood, Director of the Gulf Studies Center at Qatar University, and David and Marina Ottaway, Senior Scholars at the Woodrow Wilson Center, discussed relations with the Gulf Cooperation Council (GCC) and neighboring Iraq, while Bijan Khajehpour, Managing Partner of Atieh International, analyzed the regional economic aspects of a nuclear deal.

The prospect of a nuclear bargain with Iran poses a great challenge for the GCC. According to Abdullah Baabood, each of the six GCC countries has a great stake in the Iranian nuclear deal and has many concerns regarding regional security, the economy, and the environment.

However, negotiations have been taking place secretly between Iran and the US, much to the dismay of the GCC. This is particularly insulting as the US is an important ally to the region, and a deal with Iran would be a major foreign policy issue with implications far beyond simply arms control. There is fear that Iran and the US will strike a grand bargain, resulting in the US leaving the region and Iran coming to dominate it.

The GCC fears this deal because it does not know how to interpret Iran’s status and whether or not it will strictly abide by the rules of the nuclear agreement. There is a great deal of unease about Iran spreading its wings throughout the Gulf and expanding its influence without restriction.

David Ottaway further analyzed the tumultuous relationship between Iran and Saudi Arabia over the past several decades. The two countries have a history of intense rivalry for regional dominance that is currently at its peak. However, there have been attempts recently to initiate dialogue between the foreign ministers. The main issue in these upcoming conversations will be determining the true meaning of détente for both the Iranians and the Saudis and exactly how to handle the challenge of energy and oil, as well as sectarian divides.

With the current situation in Iraq, Marina Ottaway highlighted the need to consider how the instability will affect a nuclear deal with Iran. The current sectarian division in Iraq could pose a threat to Iran, which has continued to back Prime Minister Maliki and ultimately has more influence than the US, due to its location. However, volatility is highly unfavorable for Iran and is not ideal for contracting a regional settlement in regards to its nuclear program.

Bijan Khajehpour then discussed the economic implications within the region, assuming there will be a comprehensive nuclear bargain with Iran.  There are four areas of either convergence or divergence between Iran and its neighbors. This includes:

  1. The energy sector
  2. Regional trade and cross-border investment activity
  3. Competition for economic and technological dominance
  4. International investment

The energy sector is a fundamental concern because of the growing demand for oil and gas reserves within the region. While the Persian Gulf holds nearly half of the world’s oil reserves, most states lack  natural gas resources, with the exception of Iran and Qatar. Other countries will need to import gas in the near future. “Keeping pressure on Iran’s natural gas sector is to the detriment of the whole region,” Khajehpour concluded, highlighting why energy efficiency will be a point of contention with the progress of an Iranian nuclear bargain.

There is still fierce ideological and strategic competition between Iran and the surrounding region over a possible nuclear deal. It has never been clearer to Iran’s neighbors that they must get involved in this bargain to have their vital interests addressed.

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Do Arabs like Obama?

Five years ago, President Obama promised in a landmark speech in Cairo to usher in a new chapter in America’s relationship with the Muslim world. On Tuesday, June 3, the Middle East Institute and the Arab American Institute co-hosted a discussion on how Arab attitudes have evolved in the five years following the speech. The panel included James Zogby, Marwan Muasher, Barbara Slavin, and Paul Salem, who moderated. The consensus:  while expectations for the Obama presidency did not live up to reality, his policy of non-intervention remains popular in the region.

The discussion was based on the results of a May 2014 Zogby poll, which was conducted across seven countries in the Arab world. The survey examined a host of issues, including the Arab-Israeli conflict, US policy on Syria, and the Arab world’s view of Iran. Unsurprisingly, Palestine was seen as the key obstacle to stability in the Middle East, followed by a perception of American over-interference in the region. The US approval rating did not break 50% in any of the countries surveyed, but Zogby noted a considerable increase from 2011. All three panelists attributed the uptick in American popularity to Obama’s retreat from the military interventionism of his predecessor.

There was one notable exception in the trend: Saudi attitudes towards the US have fallen sharply since 2011, largely because of America’s perceived ambivalence towards the conflict in Syria. Likewise, support for Iran has also fallen, due its support of the Assad regime.

Obama’s favorability ratings were higher that the US’s favorability ratings.  While the President’s lighter footprint in the world has softened Arab attitudes towards the US, America’s previous exploits in Iraq and Afghanistan have not been forgotten.

In every country polled, strong majorities said that maintaining good relations with the US is important. This suggests that there is no inherent ideological opposition to America. The majority of the Arab world’s qualms are with American policy.

Outside of the Gulf countries polled (Saudi Arabia and the UAE), Iran was not seen as a major destabilizing factor in the region. In fact, the President’s attempt to find a negotiated solution to the Iran nuclear impasse found a great deal of support outside the Gulf. According to Slavin, the insignificance of the Iranian nuclear issue in Arab public opinion is unsurprising, as Iran was never seen as a direct threat in much of the Arab world. In fact, she suggested that some derive a perverse satisfaction from the idea that a Middle Eastern country other than Israel might acquire nuclear weapons.

Muasher noted that the results of the survey highlighted an interesting paradox in Arab public opinion: while the Arab-Israeli conflict is cited as the primary challenge to US-Arab relations, it is followed closely by the perception that the US is overly meddlesome in the region. It was thus unclear how the respondents expected the conflict to be resolved, as an American-led resolution would necessitate American intervention. He also noted that support for US foreign policy was at its highest when it refrains from interfering in the region.

While an earlier poll found that in most Arab countrie, 65% or more opposed President Assad, this survey found little support for US intervention in the conflict, vindicating Obama’s policy of non-interference. Zobgy further suggested that support for Assad could in fact rise if the US chose to pursue a military option in Syria.

While American approval ratings are on the upswing, the poll found that both Iran and Turkey have lost the support they enjoyed earlier in the decade. Iran’s decline began with in 2006 and accelerated with the failed Green Revolution of 2009; however, all three panelists attributed the majority of the decline to Iran’s support of Assad. Turkey, which has dedicated the better part of the last twelve years to mending ties with its Arab neighbors, has seen its popularity fall in the wake of the Arab Spring. It was unclear why this started in 2011, as Erdogan’s heavy-handedness did not begin until 2012.

One unexpected finding was that only 21% of those polled in Lebanon thought the Syrian conflict was a pressing issue. Slavin suggested that this was due to the country’s diverse population, with close to two-thirds identifying as either Shiite or Christian and therefore more likely to sympathize with the regime and discount the conflict’s significance. Lebanon’s support for Iran also far outpaced the other countries in the survey, due to Iran’s generosity towards Lebanon following that country’s 2006 war with Israel.

Of all the countries polled, Palestinians were surprisingly the most likely to say that the US acted evenhandedly towards both Palestinians and Israelis (30%). According to Muasher, this is possibly because Palestinians are simply exhausted by the conflict and are willing to give the Americans the benefit of the doubt. Zogby added that Obama has gone further than other American presidents in emphasizing the importance of recognizing Palestinian rights.

Nonetheless, the speakers noted that if America remains unable or unwilling to negotiate a two-state solution, then it should step aside and allow someone else to take the lead—perhaps the EU, or the UN. America’s window of opportunity in this regard is closing fast. At some point it will taken out of the game, whether it chooses or not.

Ultimately, five years after his Cairo speech the sentiment is that Obama has not lived up to expectations. Nonetheless, public opinion has rebounded somewhat from its nadir in 2011.  This is primarily due to America’s policy of non-interference in the Middle East, and in spite of its failure to mediate a solution to Arab-Israeli crisis.

“We are living in the house that George [W. Bush] built,” Zogby said.  Had America not exhausted its resources and goodwill in Iraq, it might have been able to pursue other issues, including the peace process, more successfully.

 

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Reform first

Steven Cook, who knows lots about Egypt, offers an insightful analysis of its impending financial and economic problems.  In a word, Egypt could go broke and the state could disintegrate:

Egypt’s economy remains shaky and the threat of a solvency crisis lingers. Indeed, the continuation of violence, political protests, and general political uncertainty—even after planned presidential and parliamentary elections—along with a hodgepodge of incoherent economic policies, all portend continuing economic decline. This in turn could create a debilitating feedback loop of more political instability, violence, and economic deterioration, thus increasing the chances of an economic calamity and yet again more political turmoil, including mass demonstrations, harsher crackdowns, leadership struggles, and possibly the disintegration of state power.

Only Gulf generosity has kept Egypt’s foreign currency reserves above the minimum required, tourism is in a tailspin, debt is close to 100% of GDP and subsidies (especially for fuel) burden the state’s budget.  There are many ways in which Egypt could be sent into default.  I recommend you read Steven’s trenchant account.

But much as I am taken with his account of the problems, I find it difficult to see merit in the options he discusses:  US loan guarantees, US debt relief, foreign assistance to pay down domestic debt and Gulf fuel transfers.  He also proposes, in the event of default, that the US support the military, provide financial assistance and restore food aid.  None of this is contingent on Egyptian economic reforms.

Here is where I depart from Steven:

It is up to the Egyptians to undertake reforms to forestall this outcome. Given the fact that the Egyptians have done little in this regard, a solvency crisis is entirely plausible. Consequently, the United States has a strategic responsibility to do what it can in Egypt to prevent the causes of insolvency…

This is a slippery slope:  he is proposing that the US try to prevent insolvency, even though the Egyptians have been unwilling to undertake reforms.  Doing so will relieve some of the pressure on Cairo to undertake reforms, make insolvency more likely and increase pressure on the US to prevent it.  Moral hazard lights are flashing.

No.  That is not the path we should go down.  We should encourage Egypt to put forward a plan for reform first, then provide assistance.  The way to do this without putting the US on the front line is to encourage Cairo to go first to the International Monetary Fund for money.  This is politically difficult in Egypt, as everyone knows the IMF will condition its assistance on reforms.  But it is a lot better for the US than asking American taxpayers to pay for Egyptian fuel subsidies.  And Field Marshall, soon to be President, Sisi should be expected to do unpopular things as early as possible in his mandate.  He surely won’t do them as the time approaches for another election.

Steven envisages the IMF eventually playing what he calls

an important role in assisting the next government to redraw Egypt’s social contract in a way that is both politically acceptable at home and can command the strong support of the rest of the world….foreign donors will need to accept a slower reduction in subsidies than under a conventional IMF program in order to increase the likelihood that Egyptians can make headway on reforms in a coordinated and more coherent manner.

I’ve got no problem with this:  a slower than usual reduction in subsidies may be necessary, though it seems to me the IMF has in fact accepted some pretty slow reductions from other countries as well.  What I object to is providing unconditional US assistance and then expecting the IMF to succeed in negotiating conditions.  The IMF should go first.  The US can then be generous, promising its taxpayers that the money it provides will in fact finance a transition away from subsidies.

The US has gotten very little for the billions it has provided Egypt in the past.  Cairo is headed back to military autocracy and its economy to insolvency.  Nor has Egypt gotten rich off the aid.  A lot of it was wasted on military hardware Egypt didn’t need but American companies were glad to sell.  The best that can be said is that the money encouraged Egypt to maintain its peace treaty with Israel, though Cairo had ample other reasons to avoid yet another, likely unsuccessful, war once it regained sovereignty over Sinai.

We need to avoid being trapped into another several decades of fruitless expenditure on aid to Egypt.  Reform first is the way to go.

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Peace Picks April 21 – 25

1. America’s Great Game: The CIA’s Secret Arabists and the Shaping of the Modern Middle East

Monday, April 21 | 4 – 5:30pm

6th Floor, Woodrow Wilson Center; 1300 Pennsylvania Ave NW

Reservations requested because of limited space: WHS@wilsoncenter.org

The CIA has an almost diabolical reputation in the Arab world. Yet, in the early years of its existence, the 1940s and 1950s, the Agency was distinctly pro-Arab, lending its support to the leading Arab nationalist of the day, Gamal Nasser, and conducting an anti-Zionist publicity campaign at home in the U.S. Drawing on a wide range of sources, Hugh Wilford uncovers the world of early CIA “Arabism,” its origins, characteristic forms, and eventual demise.

 

2. Iraq After 2014

Tuesday, April 22 | 12:30 – 2pm

Kenney Auditorium, SAIS (The Nitze Building), 1740 Massachusetts Ave NW

REGISTER TO ATTEND

Ambassador Zalmay Khalilzad, counselor at CSIS, President and CEO of Khalilizad Associates, and former U.S. ambassador to Iraq, Afghanistan, and the United Nations, will discuss this topic.

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Peace Picks March 17 -21

There were a few cancellations and postponements today due to the weather. Nevertheless, here are our picks for DC events this week:

1. Peace and Stability in the Central African Republic

Tuesday, March 18 | 9:30 – 11am

Brookings Institution, Falk Auditorium; 1775 Massachusetts Avenue NW

REGISTER TO ATTEND
Register for the live webcast

The Central African Republic has become one of the most challenging humanitarian, security and political crises on the African continent since the coup that unseated President Francois Bozizé one year ago. Violence along community and religious lines has claimed thousands of lives, and more than one million people remain displaced. Strong domestic and international efforts are needed to address the humanitarian and security crisis as well as restore state authority and consolidate peace in the country.

On March 18th, the Africa Growth Initiative (AGI) at the Brookings Institution will host a conversation with Archbishop Dieudonné Nzapalainga, Imam Omar Kabine Layama and Reverend Nicolas Guérékoyamé Gbangou, the Central African Republic’s highest-ranking Catholic, Muslim and Protestant leaders, respectively. Their work to prevent violence and promote interreligious tolerance has won national and international praise. AGI Senior Fellow Amadou Sy will moderate the discussion, which will include questions from the audience.

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Something Americans will like

Deputy Secretary of State Bill Burns gave a fine speech yesterday at CSIS on “A Renewed Agenda for U.S.-Gulf Partnership”  heavy on security, resolving regional conflicts and supporting “positive” transitions (you wouldn’t want to use the D word in the Gulf).  Too bad the agenda bore so little semblance to the changing reality.

The Gulf will of course remain important to the US and to the rest of the world.  Its oil resources are the life’s blood of much of the global economy.  An interruption in supply, as Bill rightly pointed out, would cause an increase in oil prices worldwide, with possibly catastrophic impacts on growth and investment.

But the political economy of Gulf oil is changing.  The United States is importing less of it, down now to about 20% coming from the Persian Gulf.  And that represents a shrinking percentage of total US oil requirements, as our own oil production is increasing rapidly.  Asia is importing more Gulf oil.  China takes the lion’s share of Hormuz-transported oil, India another big chunk.  The International Energy Agency forecasts that 90% of Persian Gulf oil will go to Asia within a generation.  Why would such a dramatic shift in oil trade not affect geopolitics? Read more

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