A US-Saudi Bidding War with Iran

Something extraordinary, albeit not unexpected, is happening in the Persian Gulf region. The United States, lacking a coherent strategy to deal with Iran and too distracted to develop one, is struggling to navigate Iraq’s fractious political landscape in search of a deal that would allow the United States to keep a meaningful military presence in the country beyond the end-of-2011 deadline stipulated by the Status of Forces Agreement (SOFA.) At the same time, Saudi Arabia, untrusting of U.S. capabilities and intentions toward Iran,appears to be inching toward an unsavory accommodation with its Persian adversary. Iran clearly has the most to gain from this dynamic in the short term as it seeks to reshape the balance of power in the world’s most active energy arteries. But Iranian power is not deep, nor absolute. Iran is racing against a timetable that hinges not only on the United States’ ability to regain its bandwidth, but also on Turkey’s ability to grow into its regional role.

The Iranian Position

Last week, Iran’s Defense Minister Ahmad Vahidi said something that caught our attention. Speaking at Iran’s first Strategic Naval Conference in Tehran July 13, Vahidi said that the United States is “making endeavors to drive a wedge between regional countries with the aim of preventing the establishment of an indigenized security system in the region, but those attempts are rooted in misanalyses and will not succeed.” The indigenization effect that Vahidi is speaking of refers to the Iranian redefinition of Persian Gulf power dynamics, one that would ultimately transform the local political, business, military and religious affairs of the Gulf states to favor the Shia and their patrons in Iran.

From Iran’s point of view, this is a natural evolution, and one certainly worth waiting centuries for as it seeks to concentrate power in the hands of Shia in Mesopotamia, eastern Arabia and the Levant at the expense of the Sunnis who have long dominated this land. Ironically, Iran owes its thanks for this historic opportunity to its two main adversaries – the Wahhabi Sunnis of al Qaeda who carried out the 9/11 attacks and the “Great Satan” who brought down Saddam Hussein. Should Iran succeed in filling a major power void in Iraq, a country that touches six Middle Eastern powers and demographically favors the Shia, Iran would theoretically have its western flank secured as well as an oil-rich outlet with which to further project its influence.

So far, Iran’s plan is on track. Unless the United States is able to permanently station substantial military forces in the region, Iran remains the most powerful military force in the Persian Gulf region. Through its deep penetration of the Iraqi government, Iran is also currently the best positioned to influence Iraqi decision-making. Washington’s obvious struggle in trying to negotiate an extension of U.S. forces in Iraq is perhaps one of the clearest illustrations of Iranian resolve to secure its western flank. The Iranian nuclear issue, as we have long argued, is largely a sideshow; the real imperative for Iran is to consolidate its position in Iraq. And as this weekend’s Iranian incursion into northern Iraq (link) - ostensibly to fight Kurdish militants – shows, Iran is willing to make measured, periodic shows of force to get that very message across

Iran is already well on its way to accomplishing its goals in Iraq, but it needs two other key pieces to complete Iran’s picture of a regional “indigenized security system” that Vahidi was speaking of earlier. The first is an understanding with its main military challenger in the region: the United States. Such an understanding would entail everything from ensuring Iraqi Sunni military impotence to expanding Iranian energy rights beyond its borders to placing limits on the U.S. military activity in the region, all in return for the guaranteed flow of oil through the Strait of Hormuz and an Iranian pledge to stay clear of the Saudi oil fields.

The second piece is an understanding with it main regional adversary: Saudi Arabia. Iran’s reshaping of Persian Gulf politics entails convincing its Sunni neighbors that resisting Iran is not worth the cost, especially when the United States doesn’t seem to have the time nor the bandwidth to come to their aid. No matter how much money the Saudis throw at western defense contractors, any military threat by the Saudi-led GCC states against Iran will be a hollow one without an active U.S. military commitment. Iran’s goal is to therefore coerce the major Sunni powers into recognizing an expanded Iranian sphere of influence at a time when U.S. security guarantees in the region are starting to erode. Here is where we see the Iranians making some noteworthy progress.

The Saudi Position

Saudi Arabia has already been greatly unnerved by the political evolution that is taking place in Iraq. What appears to have sent the Saudi royals over the edge and to the negotiating table with Iran, however, is the situation in Bahrain.

When Shiite-led protests erupted in Bahrain in the spring, we did not view the demonstrations as a natural outgrowth of the so-called Arab Spring. There were certainly overlapping factors, but there was also little hiding the fact that Iran had seized on an opportunity to paint a nightmare scenario for the Saudi royals: an Iranian-backed Shiite uprising spreading from the isles of Bahrain to the Shiite-concentrated, oil rich Eastern Province of the Saudi kingdom. This explains why Saudi Arabia was so quick to respond to the Bahraini unrest when it led a rare military intervention of GCC forces in Bahrain at the invitation of Manama in an attempt to stymie a broader Iranian destabilization campaign. The demonstrations in Bahrain are far calmer now than they were in mid-March at the peak of the crisis, but the concerns of the GCC states have not subsided, and for good reason. Half-hearted attempts at national dialogues aside, Shiite dissent in this part of the region is likely to endure, and this is a reality that Iran exploit in the long term through its covert capabilities.

When we saw in late June that the Saudi Arabia was willingly drawing down its military presence in Bahrain at the same time the Iranians were putting out near-daily feelers on negotiations with Riyadh in the local press, we discovered that the pieces of a Saudi-Iranian negotiation were falling into place. The Saudis cannot fully trust U.S. intentions at this point in time. The U.S. position in Iraq is tenuous at best, and Riyadh cannot rule out the possibility of Washington entering its own accommodation with Iran and leaving Saudi Arabia in the lurch. The United States has three basic interests: to maintain the flow of oil through the Strait of Hormuz, to drastically reduce the number of forces it has devoted to fighting wars with Sunni Islamist militants (who are also by definition at war with Iran,) and to maintain a balance of power in the region that prevents any one state – either Arab or Persian – from controlling all the oil in the Persian Gulf. If the United States comes to the conclusion that it doesn’t have any real good options in the near term to deal with Iran, a U.S.-Iranian accommodation, however jarring on the surface, is not out of the question.

More immediately, the main point of negotiation between the United States and Iran is the status of U.S. forces in Iraq. Iran would prefer to see U.S. troops completely removed from its western flank, or at least a small enough force that could be held hostage to Iranian force through conventional or unconventional means. The United States, on the other hand, is trying to maintain at least a division of troops in Iraq that would be equipped and readied to respond to acts of Iranian aggression.

This is where the U.S.-Iranian negotiation seems to be stalling, but taken altogether - the threat illustrated by Bahrain, the tenuous U.S. position in Iraq and the potential for Washington to strike its own deal with Tehran - Riyadh may be seeing little choice but to search out a truce with Iran, at least until it can get a clearer sense of U.S. intentions. Such a truce would primarily aim to arrest Iranian covert activity amongst Shiite dissidents in the GCC states to ensure the security of the Sunni monarchist regimes in the near term.

In return, Iran can be expected to make a variety of demands, all revolving around the idea of Sunni recognition of an expanded Iranian sphere of influence. This is where things get complicated, though. The United States could theoretically strike an accommodation with Iran, but would do so with the ability to rely on Sunni regional resistance to Iran to maintain a relative balance of power. If the major Sunni powers reach their own accommodation with Iran, independent of the United States, the U.S. position in the region becomes all the more questionable. Can the United States ensure, for example, that Saudi Arabia won’t bargain away U.S. military installations in a negotiation with Iran?

This is an idea that was broached by the Iranian defense minister in the same speech last week when he said, “the United States has failed to establish a sustainable security system in the Persian Gulf region, and it is not possible that many vessels will maintain a permanent presence in the region."What Vahidi is conveying to his fellow Iranians as well as to the Sunni Arab powers is that a U.S. security guarantee in the region does not hold as much weight as it used to, and with Iran now filling the void, the United States is going to face a much more difficult time trying to maintain its existing military installations. The question that naturally arises from Vahidi’s statement is the future status of the U.S. military Fifth Fleet in Bahrain, and whether Iran can instill just the right amount of fear in the minds of its Arab neighbors to jeopardize the U.S. military presence in the region.

The Long-Term Scenario

The current dynamics place Iran in a prime position – its political investment is paying off in Iraq and it is sitting in the middle of a bidding war between the Saudis and the Americans that is helping to fill out the contours of Iran’s regional sphere of influence. But Iranian power is not that durable in the long term. In a country as endowed with energy resources, yet as populous and mountainous as Iran, the cost of internal development means Iran can get by economically, but cannot prosper like many of its Arab competitors. Add to that a troubling demographic profile in which ethnic Persians only constitute a little more than half of the country’s population and developing challenges to the clerical establishment, and Iran has a great deal to keep itself occupied internally while trying to seize opportunities abroad.

The long-term regional picture also has the odds stacked up against Iran. Unlike Iran, Turkey is an ascendant country with the deep military, economic and political power to influence events in the Middle East; that too, under a Sunni banner that fits more naturally with the region’s religious landscape. Turkey is also the historical, indigenous check on Persian power, and though it will take time for Turkey to grow into this role, strong hints of this dynamic are already coming to light.

In Iraq, Turkish influence can be felt across the political, business, security and cultural spheres as Ankara is working quietly and fastidiously to maintain a Sunni bulwark in the country and steep Turkish influence in the Arab world. And in Syria, though the Alawite-regime led by the al Assads is not at a breakpoint, there is no doubt a confrontation building between Iran and Turkey over the future of the Syrian state. Turkey has an interest in building up a viable Sunni political force in Syria that can eventually displace the Alawites, while Iran has every interest in preserving the current regime so as to maintain a strategic foothold in the Levant.

For now, the Turks are not looking for a confrontation with Iran, nor are they necessarily ready for one. Regional forces are accelerating Turkey’s rise, but it will take experience and additional pressures for Turkey to translate rhetoric into action when it comes to meaningful power projection.

The Iranians are thus in a race against time. It may be a matter of a few short years before the United States frees up its attention span and is able to reexamine the power dynamics in the Persian Gulf with fresh vigor. Within that time, we would also expect Turkey to come into its own and assume its role as the region’s natural counterbalance to Iran. By then, the Iranians hope to have the structures and agreements in place to hold its ground against the prevailing regional forces, but that level of long-term security depends on Tehran’s ability to cut its way through two very thorny sets of negotiations with the Saudis and the Americans while it still has the upper hand.