Lifting Sanctions on Iran: Shifting Sands or Major Earthquake?

Abstract

The nuclear deal and its ramifications have added new elements of tensions between the Islamic Republic and the Gulf States. The lifting of the sanctions will be a significant addition to Iran’s financial capacity, which is likely to further Iran’s Involvement in Iraq, Syria and Yemen. With King Salman’s new foreign policy approach to the Middle East, more Iranian involvement in the region with the removal of the sanctions is probably going to complicate regional politics between the Iran and the Gulf States and will exasperate the competition for regional and international influence.

The Kingdom of Saudi Arabia has severed its diplomatic relations with the Islamic Republic of Iran. In fact, this isn’t the first time that these countries have cut off diplomatic relations. The Kingdom first cut off ties in 1987, after clashes took place in Mecca between Saudi forces and Iran-led demonstrators. Riyadh had perceived this event as a serious threat to the security of pilgrims. These two shutdowns in relations follow in the path of the first time the Kingdom of Saudi Arabia and Iran under the Pahlavi monarchy fell out and cut ties in 1943. On that occasion, Saudi Arabia had executed an Iranian citizen after finding him guilty of “polluting the house of God”.[^1]

What is most significant about this development between Riyadh and Tehran is the timing. The Kingdom’s decision came a few days before the lifting of sanctions on Iran, which is one of the main ramifications of the nuclear deal between Islamic Republic of Iran, the five permanent U.N. Security Council powers (United States, Britain, France, Russia and China) and Germany (also known as the P5+1).

These two developments—the cutting off of relations and the lifting of sanctions—can be considered an important milestone in Arab–Iranian Relations in contemporary Middle Eastern politics. This paper will look at the implications of nuclear deal on regional politics and how the Arab World perceives the nuclear deal. How will this deal affect Iran’s Arab world, Gulf, and Saudi relations?

The Nuclear Deal

After nearly 12 years of negotiations, which began between Iran and three European countries (France, Britain and Germany) and then continued between Iran and the P5+1. On July 14, 2015, Iran and the P5+1 signed a Joint Comprehensive Plan of Action (JCPOA),[^2] a long term deal explaining the steps agreed on by Iran and the P5+1 to end the Iranian nuclear crisis. This JCPOA would limit the number of centrifuges to 5,000 instead of 20,000, while the JCPOA also required Iran to reduce its uranium enrichment by 98% for 15 years, including at the Fordo nuclear site. During these 15 years, the level of enrichment would be kept at 3.76%. At the Natanz nuclear site, enrichment will be limited to research purposes. In return, the reward for Iran is a lifting of

the sanctions which had been imposed on the country over the past 36 years by the international community. These sanctions include sanctions imposed by security council resolutions. It is important to highlight that the sanctions lifting process will take as long as it is necessary for the International Atomic Energy Agency (IAEA) to confirm the cooperation of Tehran, indicating that it will take some time to complete this implementation.

The Islamic Republic’s reaction to the Arab Spring also located Iran as a counter-revolutionary force in the Middle East.

By signing the deal, the international community has signaled that the Iranian nuclear program is a peaceful program and has nothing to deal with militarization. More importantly, it requires that Iran show long-term goodwill in its cooperation with the IAEA. Iran seems to have little choice in whether to achieve the steps required before January 16, 2016, the implementation day for lifting sanctions, as the impact of sanctions has done great harm to Iran’s economy and the lives of its people. Also important is how Iran’s image, which contributes to its soft power, has recently changed for the worse in the Arab World.[^3] The Islamic Republic’s reaction to the Arab Spring also located Iran as a counter-revolutionary force in the Middle East.

Considering the ramifications of the 2009 presidential elections, fragmentation within the political elite and the level of violence used against demonstrators against the outcome of recent elections into account, the nuclear deal looks like a savior for the regime. It will help to renew the regime’s internal legitimacy, and will also allow them to buy more time to focus on the political and economic challenges of the Arab Spring—especially in Syria, of course, though Iran is already stretched in Iraq and Yemen as well.

Reactions to the Deal

The reactions of the Arab countries were predicted even before they announced their views. To show that he is conscious of the concerns of the Arab world, President Barack Obama announced in his speech on the deal that the United States understood the Arab Gulf States’ concerns about the deal, but also argued that it would make the Middle East more secure.[^4]

It is known there were serious concerns that if the diplomatic efforts failed, war remained as an option.

It is hard to pinpoint a unified Arab position towards the Iranian nuclear deal. Arab states have different positions towards the Islamic republic. This division has helped Iran regionally over the last 36 years. One can say that there is an Arab Gulf States position which welcomes the deal, from one perspective; however, the states remain concerned on the other hand because their welcome of the deal comes in the context of an antiwar position.

It is known there were serious concerns that if the diplomatic efforts failed, war remained as an option.  Arab Gulf States and Saudi Arabia in particular have raised the fact that Iran may use the outcome of the nuclear deal to promote its power further in the Arab region. Such concerns have been based on the fact that sanctions will be lifted, offering Iran the financial resources to impose itself further on the Middle East region. It is known that after the sanctions are lifted, Iran will instantly gain access to $50-100 billion of oil revenues which had been sequestered in American and European banks under the sanctions mandate.

The Gulf position towards the deal was shaped by the change of American foreign policy under Barak Obama administration. It has become clear that the Obama administration has limited its involvements in the Middle East region in comparison with the previous American administrations. Washington has appeared to be obsessed with focusing on Iran and its nuclear program, and the same time ignoring the Arab Gulf States’ concerns about Iran’s regional adventures and designs.

According to the Arab Gulf perspective, Iran was rewarded rather than punished, a fact that can be understood by the Islamic Republic intervening more and bringing more instability to Gulf states.

This deep disappointment within the Kingdom of Saudi Arabia first manifested itself in October 2014, when the first move towards the deal was achieved through the signing of the Joint Action Plan,[^5] which was considered the base for the JCPOA signed in July 2015. This disappointment has also been reflected in Saudi’s Decisive Storm[^6] operation in Yemen started in early 2015. This military operation moved the conflict between Saudi Arabia and Iran into a new phase and replaced a cold war with a real one. The operation came a few months after King Salman took power. The changing internal politics in Saudi Arabia has contributed to quick action from Riyadh. The main aim of the operation is return the legitimate government of Yemen, which had been defeated by the Houthis and Ali Abdullah Saleh’s forces, to power. Decisive Storm can be considered an early response from Saudi Arabia and its allies to the long term deal between Iran and the west over the nuclear program.

Not Only the Deal

The dispute between Iran and Saudi Arabia is not shaped only by the nuclear deal and its ramifications, including the lifting of sanctions. The relationship has occurred in phases since 2003. This is the year when Iran secured Iraq as its third political locus of influence after Syria and Lebanon.[^7] To Riyadh, Iranian involvement was perceived as a serious threat to its interests in the Middle East.

It is hard to deny that Saudi Arabia was worried by what Iran was doing in Iraq, Syria and Lebanon.

At that stage, the perceived threat was believed to be lessened by three realities: first, the isolation of Iran internationally; second, strong relations between the Kingdom of Saudi Arabia and the United States; and third, the Saudi domination of the oil market and its impact on oil prices. Those factors put Saudi Arabia on a strong platform in facing the perceived Iranian threat. The impact of these factors also increased economic pressure on the Islamic Republic government. Having said that, it is hard to deny that Saudi Arabia was worried by what Iran was doing in Iraq, Syria and Lebanon.

The Competition Beyond the Middle East

There were also another two regions of competition: West Africa and Central Asia.
The Saudi interpretation of what has happened in Iraq in 2003 is a defeat of the Sunnis and Arabs in the Middle East, with the direct support of the United States and its Arab allies. The Shia revival in the Middle East after the invasion of Iraq has empowered Iran in the Middle East. Therefore, a new phase of relations between Riyadh and Tehran has begun. In this phase, Iran has appeared more dynamic compared with Saudi Arabia. The Kingdom was still influenced by its belief in “strong relations” with the United States. All this did not prevent the two countries communicating, however, even under the presidency of Mahmoud Ahmadinejad from 2005-2013. At that time, it seems that decision making circles in Saudi Arabia were not interested in entering into any serious confrontations with Iran.  The explanation for such lack of interest is likely the three factors mentioned above. However, a new factor has emerged: the Arab Spring.

This factor has changed the dynamics of relations between the Islamic Republic and Kingdom of Saudi Arabia to some extent. This change of dynamics has increased the possibility of confrontation, as can be seen in the cases of Bahrain, Syria and Yemen. Riyadh sent its first message to Tehran through Bahrain. This happened when the Gulf Cooperation Council sent military forces in March 2011 to Bahrain to maintain order. The forces were led by Saudi Arabia.[^8] The GCC message was well received and the reaction of the Islamic republic indicated its anger.[^9] The Iranian focus was on Saudi Arabia as the main player leading the GCC.

Since the GCC sent forces to Bahrain, relations between the Islamic Republic and the Kingdom of Saudi Arabia have deteriorated. A new phase of a “war of words” has begun. The Kingdom was subjected to criticism—including over Saudi foreign policy concerning Bahrain and Syria—from religious figures and revolutionary guard personnel. New unflattering terminology has spread in the Iranian media such as Wahhabi and Takfiri.[^10]

Saudi Arabia’s actions in Bahrain did not change the old Iranian perception of Saudi foreign policy. This perception indicated that Riyadh was hesitant to act, relying on the United States and its traditional coalitions. Therefore, Iran was shocked by the Saudi-led military operation in Yemen. Decisive Storm was just the second step—after sending troops to Bahrain—in Saudi Arabia’s reaction to Iranian intervention into the GCC security zone. In this context it is important to remember the political changes in the house of Saud. King Salman and the changes he brought to the Saudi political sphere have had their impact on the changes in Saudi foreign policy towards Iran. Tehran seems to be skeptical about the Salman era and perceives him negatively, not expecting that he will stay in power for long.[^11]

What Is Next?

With this legacy of mistrust, Saudi Arabia has decided to cut all diplomatic relations with the Islamic Republic of Iran. The event came in the context of the execution of Nimr Al-Nimr and attacks by groups of Iranians on the Saudi Embassy in Tehran and the consulate in Mashhad.

A linkage has been made between the cutting of diplomatic relations and the lifting of sanctions. This may make sense. However, the context of relations between Saudi Arabia and Iran indicates that the crisis is beyond immediate remedy and that relations have been cut for that reason. To Saudi Arabia, Tehran has not taken Saudi Arabia’s interests seriously in the region. Iranian actions outside the Arabian Peninsula, such as in Syria, Iraq and Lebanon, appear to Saudi to be manageable. However, Iran’s strengthened presence on Saudi Arabia’s borders within the Arabian Peninsula, such as Bahrain and Yemen, are moves Riyadh does not seem ready to forgive.

It is important to remember that the population of Iran in the early 1980s, when sanctions were implemented, was around 40 million: the population of Iran after lifting sanctions is about 77 million.

The nuclear deal and its ramifications have added new elements of tensions between the Islamic Republic and the Gulf States. The Kingdom of Saudi Arabia has appeared as a leading critic in this phase of the confrontation. It seems that Riyadh is now more determined to face and fight Iranian foreign policy actions in the Gulf region and in the Levant as a whole. But while Saudi determination seems to be strong, serious steps are needed. The first step is gaining a realistic understanding of how lifting sanctions may affect Iranian foreign policy behavior and the internal politics of Iran. It is important to avoid any exaggeration of the impact of lifting sanctions on Iran’s regional foreign policy. In this context, it is important to remember that the population of Iran in the early 1980s, when sanctions were implemented, was around 40 million: the population of Iran after lifting sanctions is about 77 million. This element tells us a lot about the serious challenges will face Iran ahead.

Any miscalculation will have a damaging impact on what has been done to confronting the policies of the Islamic Republic. It is also important to remember the timing of the lifting of sanctions. It has happened while oil prices are very low. This will have implications on the Iranian financial expectations and policies. The second step is to have a comprehensive understanding of the implications of lifting sanctions on Iranian society, including the social and cultural risks and the question of how the regime will face these risks.

The Islamic Republic is always concerned with so-called “cultural invasion”, which may affect the ideas and values of young Iranians. This has also to deal with political awareness.  Knowing this larger context will be extremely helpful in deciding the priorities that Saudi Arabia and its allies need to consider to limit the interventions of the Islamic Republic. The third step is related to communication and the opening of serious channels with other players, such as Turkey, Pakistan, China, India and Russia. These are the platforms Iran is targeting for the future. In sum, there is a serious need for the Middle East to move beyond western-centric choices.