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Saudi oil coup fails; diplomatic victory for Iran

21 January 2016 06:30 pm - 0     - {{hitsCtrl.values.hits}}


During a visit to sanctions-hit Iran in 2012, at Laleh International Hotel, which was Hotel Intercontinental before the 1979 revolution, a shopkeeper told me that business was so bad that he hardly got one customer a day. It was only two months after the United States had imposed the toughest ever trade sanctions on Iran, warning the world’s banks that they would be cut off from the US system if they got involved in oil transactions with Iran.

Foreign currency was in short supply and even the Foreign Ministry found it difficult to pay for air tickets of participants invited for conferences in Iran.  The economy was in a major crisis and the people were becoming increasingly restless. The government had to act fast before the situation led to countrywide protests, which could be seized on by the West to implement its regime change formula.

It was against this backdrop that Hasan Rouhani from the moderate camp was elected as president the following year (2013). The dilemma he faced was whether to pursue the peaceful nuclear programme, which was the pride of the nation, or to fold it up in a bid to give the people the prosperity they had been dreaming of since the 1979 revolution. He chose the latter and agreed to comply with the United Nations’ Security Council’s demand to scale down the nuclear programme.  Accordingly, Iran, following a deal last year, decommissioned 12,000 centrifuges, shipped 98 percent of its enriched uranium to Russia, removed the core of its heavy-water reactor and filled it with concrete, and allowed UN experts to inspect its nuclear facilities.

Last Saturday, when the International Atomic Energy Agency certified that Iran had complied with all the conditions and lifted the sanctions related to the nuclear programme, President Rouhani stood vindicated. The nationalists or the hardliners had criticised him for surrendering Iran’s sovereignty to the West and called his government’s deal with the world powers last year a national humiliation.

The Rouhani government has emerged a winner, after years of confrontation Iran had with the West. The confrontation at times evoked fears of a major region-wide war, with Israel threatening to bomb Iran’s nuclear facilities, while Washington said all options, including military response, were on the table, and Saudi Arabia urged the US to cut off the snake’s head, referring to Iran.

Given the crisis situation in West Asia today with wars in Syria, Iraq and Yemen, not to mention the growing ISIS threat, the end of sanctions has placed Iran in a position of strength in the context of the ongoing power struggle with Saudi Arabia.

The two countries back opposing sides in the conflicts in Syria, Yemen and other conflict situations in West Asia and elsewhere. It is said the Syrian civil war was orchestrated by Saudi Arabia and other Gulf States, with the US, nod largely for two reasons: 1. To deny Iran a contiguous zone of influence spreading across Iraq, Syria and Southern Lebanon where the Shiite militia group, Hezbollah, functions as Teheran’s linchpin; 2. To replace pro-Iranian Assad with a pro-Saudi president who would permit the building of a pipeline that would take Saudi and Qatari gas and oil to Europe via Syria and Turkey, a project that, if implemented, would eat into Russia’s share in the European market.

Following the successful negotiations that led to Iran’s nuclear deal with world powers, the United States is now inclined to make compromises not palatable to the Saudis and Israelis in a bid find a political solution to the Syrian crisis. This follows a global outcry over the refugee crisis, described as the worst humanitarian crisis since World War II, and security concerns over terror attacks in Europe.

To the chagrin of Saudi Arabia, the US has, in recent months, increased contacts with Iran, once pilloried by US presidents as a rogue state, worked out prisoner swaps through secret talks and welcomed the inclusion of Iran in international talks on the Syrian crisis. But at the same time, Washington, hours after the lifting of the international sanctions on Saturday, announced fresh sanctions on Iran with regard to the Islamic Republic’s missile programme. This is perhaps a move to pacify Saudi Arabia and Israel, which see Iran as a bigger threat to the region than the terror group ISIS.

But the biggest misfortune to Saudi Arabia came when its ill-thought-out strategy to bring down oil prices by increasing production boomeranged. The Saudis, in their bid to punish Russia and Iran for their support for Assad, probably thought that falling prices would deal a crushing blow to the oil-export-dependent economies of the two countries that were already struggling to cope with western sanctions.

The Saudi overproduction was also aimed at driving US shale oil producers out of business. But, instead, it is Saudi Arabia which is now suffering with oil prices falling to US$ 27 – the lowest in a decade -- this week amid a global economic slowdown and a slump in China’s economic growth.

Now with Iran set to release 500,000 barrels a day to the world market, in addition to millions of barrels of oil in its storage, oil prices are expected to slide further, plunging oil producing nations into an economic crisis, which in turn may lead to a global recession, about which the IMF issued a warning this week.
On the other hand, Saudi Arabia’s arch rival Iran is about to reap a windfall with US$ 100 billion frozen Iranian money being released by the West. It is said Iran will get about US$ 30 billion of this money in the coming weeks and the country has already made plans to use the money to revive the economy. Probably this was why President Rouhani described the lifting of the sanctions last Saturday as a golden page in Iran’s history.

Iran had little to lose by complying with the IAEA conditions. Over the years, it has mastered nuclear technology, and developed short-, medium- and long-range missiles in addition to anti-tank missiles and drones. Besides, in the first place, Iran did not have a weapons programme. It was those pro-Israeli and pro-Saudi strategists who misled the American public into believing that Iran was pursuing a weapons programme just as they lied with regard to Saddam Hussein’s weapons of mass destruction. The US intelligence services, probably, knew this. 

The Barack Obama administration should be commended for not getting caught in the trap laid by those who were promoting a US war against Iran. 
The ideal situation would be for peacemakers to bind Saudi Arabia, Iran, Israel, the United States and other players in a peace deal. But the reality on the ground is that conflicts are driven by national interests that manifest themselves in the form of sectarianism, terrorism and greed. Beware; the war corporations are not going to rest.

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