Iran Nuclear Deal Pullout: Trumps’s Masterstroke?

There is a wide debate going on about President Donald Trump’s decision and timing in withdrawing from the Iran Nuclear Deal. Most analysts are terming it a horrible decision that is going to bring serious implications for the US foreign policy and dominance in the Middle East region. They are also predicting that Trump’s decision will undermine US efforts to bring peace on the Korean Peninsula as the pullout is going to raise serious doubts in Chairman Kim Jong-un’s mind ahead of the historic summit between the two leaders on June 12, 2018 in Singapore. Another argument is on ethical and moral grounds. In all the above what the analysts forget is, “Geopolitics never was and never will be about moral and ethics but only about the interests of nations”. Before we get down to the nitty-gritty we must remember that the pullout was both a poll promise by Trump which he had to fulfil to satisfy his vote bank as well as a geopolitical decision. Let us explore the latter now.

A nation’s geography and resources are as much its blessings as a bane and the case of Iran is no different. Iran holds the world’s fourth-largest proven Oil reserves (154.58 billion barrels) which have been drastically impacted by international sanctions. The only country in the region which holds more reserves is its arch-rival, Saudi Arabia (267.91 billion barrels). The historic enmity between the two countries has only grown with time. Though the two have never fought a direct war, the evolving dynamics in the region could bring them into direct military conflict in the short to midterm. Further, the long-running proxy conflict between Iran and Saudi Arabia has engulfed the region and set it on fire. The major proxy conflict regions so far are Syria, Yemen, Iraq, Bahrain, Qatar, Lebanon, Afghanistan, Pakistan and the Israeli–Palestinian conflict. However, this is fast expanding beyond the Middle East to countries like Nigeria, Morocco, parts of North and East Africa, parts of South Asia, Central Asia and the Caucasus. In this proxy war, Iran has currently emerged far bigger than the Saudis in the region by gaining significant influence in Syria, Lebanon, Yemen and Iraq. Iranian backed Houthis are also giving a hard time to the Saudi lead military alliance in the ongoing Yemen war.

If America would have stayed in the nuclear deal, it would not only further empower Iran economically but also empower the Iranian proxies like Houthis, Hezbollah, Kata’ib Hezbollah (KHA), Asa’ib Ahl al-Haq (AAH), Liwa Abu Fadl al-Abbas (LAFA), Hezbollah al-Hejaz, Badr Organization etc. that are conquering geographies for Iran.[1]  Moreover, with the Chabahar Port project gaining momentum, the Iranian influence in the region would have grown multifold. The recent victory against ISIS in Syria has significantly boosted Iranian confidence in proxy warfare. The Iranian influence in the region is growing to such an extent that even Russia, an old Iranian ally and partner in the Syrian conflict is having serious concerns about the Iranian influence on the Assad regime as despite all its checks and balances; Moscow is unable to execute its agenda as per the plans.[2] President Putin and other Russian diplomats have also repeatedly asked the Assad regime to work towards reducing the Iranian influence.

When the 2015 nuclear deal was implemented, Iran’s Islamic Revolutionary Guard Corps (IRGC) benefitted the most. The IRGC directly or through its associates controls 14 different economic super-hubs. A significant part of Iran’s economic institutions has also been handed over to Iran’s Supreme Leader in the guise of privatization through the Execution of Imam Khomeini’s Order (Setad).

As per a Reuters probe, the Setad has obtained holdings now valued at $95 billion. Today, Khamenei’s office and the IRGC control more than 50% of Iran’s GDP.[3] A 2017 book “The Rise of Iran’s Revolutionary Guards’ Financial Empire: How the Supreme Leader and the IRGC Rob the People to Fund International Terror” by NCRI- U.S. Representative Office details the IRGC economy. Another book “How Iran Fuels Syria War: Details of the IRGC Command HQ and Key Officers in Syria” by NCRI- U.S. Representative Office details how IRGC has been using the money to fund Iranian proxies in the region in its quest to control these geographies. As per the study documented in the book, Iran is allocating $15-20 billion annually to fund its war in Syria, out of which 1 billion goes towards just paying salaries to its proxy militias. Another $1 billion is channelled to the Lebanese Hezbollah and $1.3 billion to Hamas annually. The IRGC owns 90 of the 212 piers registered in Iran to transfer arms and ammunition to its proxies in the region. IRGC’s annual profit is estimated to be around $15 billion.

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Iran’s other arch-rival; Israel has also been very critical of the growing Iranian influence in the region due to its security concerns and Iran’s possible nuclear program. Today, Iran is sitting at the Israeli borders with its empowered and battle-ready Islamic Revolutionary Guard Corps (IRGC) and proxy Hezbollah in Lebanon and Syria and the situation could not be worse. Israel has been lobbying with the US, European Union, Russia and other countries to reduce Iranian influence and this is also another key factor in Washington’s pullout of the deal. Since the Syrian conflict began Israel has been carrying out strikes against Hezbollah in Syria targeting its militias and assets. Israel has already fought a war against Hezbollah in 2006 known as Israel–Hezbollah War[4] or 2006 Lebanon War where it faced heavy casualties, highlighting the failure of Israeli defense forces.[5] The five-member Winograd Committee, appointed by the Israeli government to examine Israel’s conduct of the 2006 war (where Israel lost 119 soldiers and more than 40 civilians) concluded that “Israel’s diplomatic efforts allowed the country “to stop a war which it had failed to win”. Since then, Israel is waiting to take revenge with Iran and its proxy Hezbollah. As we already explained in our last piece if a war breaks out between the two, it will be a never-ending war.

The growing Sino-Iranian cooperation is another concern for the US which has furthered this decision. China actively helped Iran in the development of its nuclear program from 1990-96 by training its nuclear scientists, building a research nuclear reactor in Isfahan, providing enriched uranium and dual-use technology, etc. though China later withdrew from the program under American pressure.[6] Off late the Sino-Iranian relations are again picking up and Iran will be playing a crucial role in the success of China’s Belt and Road Initiative.[7] In return, it will gain greater Chinese investments in the country further empowering its capability to fund its proxies.

Let us talk about Oil & Gas now. The US is set to become the world’s biggest Oil producer this year, surpassing Saudi Arabia and overtaking Russia with output well above 10 million barrels daily.[8] At a time when the US is about to flood the global markets with its Oil & Gas, it would have been foolish to allow Iran to achieve its dream of feeding the European energy needs and booming its economy with European trade and investments. Though Iran would have reduced the European dependency on Russian Oil & Gas it would have also made Europe less dependent on America. For the EU countries, this backstabbing is a bitter pill that will take a long time to digest but unfortunately, they lack credible alternate options. They could look to China but an alliance with China comes with its own cost.

Iran is also India’s third-largest Oil supplier behind Iraq and Saudi Arabia currently. India imported 184.4 MT million tons (MT) of crude Oil during April 2016- January 2017, Iraq supplied 38.9 MT, Saudi Arabia 30.9 MT, Iran 18.4 MT, Venezuela 15.5 MT, Nigeria 14.9 MT followed by Kuwait 10.2 MT.[9] Sanctions on Iran have impacted their bilateral trade in the past and are expected to do so again after President Trump’s decision to pullout from the deal. Iran is not only India’s third largest crude supplier but also an ally and holds the key to India’s strategic game in Afghanistan, Central Asia and beyond including two airbases in Tajikistan. India is also developing Iran’s Chabahar Port and its companies have committed investments exceeding $20 billion. The pullout could provide India with a great opportunity. It could leverage its good relations with the US and Iran to ensure Iranian Oil and Gas supply at lowered prices in rupees. India has also not been very vocal about the ongoing crisis in the Middle East. However, it is time that India must consider mediating between the US and Iran to defuse the ongoing crisis and use its good offices to secure its strategic interests in Iran and Central Asia as is expected of an emerging global power.

All the above dynamics clearly showcase the Iranian might. In such a scenario, a more economically empowered Iran with a legitimate nuclear deal where the hatred for America lies in the heart of the regime would have presented a far greater challenge to the American foreign policy and its influence in the region. As we detailed in our 2016 book, “The New Global Order”, the world will soon witness the rise of the Shiite Militia which we can already see happening in the last couple of years. Shiite Militia is bound to grow multifold and across geographies in the decade to come. Trump’s decision to walk out of the Iranian Nuclear Deal in the above light is completely justified.

Let us now analyze how the American walkout of the deal is going to play out. The first thing this will impact is the growing economic cooperation of Tehran with various countries. The primary beneficiaries here are going to be the US and its allies in the region. Saudi Arabia and the UAE were concerned with the growing economic cooperation between Tehran and GCC countries like Qatar, Oman and Kuwait and will now be able to have a better grip on the Gulf Cooperation.

The pullout is also going to significantly impact the Iranian capabilities to fund its proxies. This is important to curtail the growing Iranian might and influence in the region and provide a breather for US allies like Saudi Arabia and the UAE in the region to build their sphere of influence. In the Syrian conflict, the pullout will force Iran to cede some space to Russia and Turkey. The Saudi-led military alliance is also going to gain in the Yemen conflict. Saudi Arabia will gain the opportunity to build its military and economic capabilities now to emerge as a counter against the growing influence and military threat of Ankara in the region. Putting Tehran on the backfoot will boost Tel Aviv to carry out even more aggressive strikes against Iranian proxies in Syria. It is quite probable that Israel could feel confident enough to get into another direct military conflict with Hezbollah in Lebanon and Syria in a Second Israel-Hezbollah war.

The economic and military cooperation of US adversaries like China and Russia with Iran is going to be significantly impacted by the American decision to walk out of the nuclear deal as any dealings with Iran will attract US sanctions. This gives the US further leverage in negotiations with China on trade and North Korea. This also provides the US with a bargaining chip in trade and other strategic negotiations against its European allies. A crippled Russia that is reeling under sanctions will get a welcome respite with the booming Oil prices allowing President Putin to deliver his domestic economic commitments and keep his economy positive. The above is necessary to have him on board before the nuclear negotiations with North Korea begin.

In the light of above, President Donald Trump’s decision to walk out of the deal and reinforce sanctions on Iran is a geopolitical masterstroke. However, the US administration needs to handle the calculated risk of a pullout delicately as this possesses the potential to draw a wedge between the US and its European allies impacting their transatlantic partnership along with an increased cost of negotiations with North Korea over denuclearization.

Notes:

  1. Meet the Proxies: How Iran Spreads Its Empire through Terrorist Militias http://www.thetower.org/article/meet-the-proxies-how-iran-spreads-its-empire-through-terrorist-militias/
  2. Russia, Turkey, and Iran: Cooperation and Competition in Syria https://dayan.org/content/russia-turkey-and-iran-cooperation-and-competition-syria#_ednref15
  3. Cracks in Russia-Iran alliance open options for Trump https://www.reuters.com/article/us-cohen-iran-commentary/commentary-cracks-in-russia-iran-alliance-open-options-for-trump-idUSKBN1EX298
  4. An Emerging Split Between Russia and Iran Over Syria  http://www.soufangroup.com/tsc-intelbrief-an-emerging-split-between-russia-and-iran-over-syria/
  5. Iran And The Revolutionary Guards’ Economic Powerhouse https://www.forbes.com/sites/realspin/2017/03/29/iran-and-the-revolutionary-guards-economic-powerhouse/2/#7d5f032c50c3
  6. 2006 Israel–Hezbollah War https://en.wikipedia.org/wiki/2006_Lebanon_War
  7. 2006 War Called a ‘Failure’ for Israel http://www.washingtonpost.com/wp-dyn/content/article/2008/01/30/AR2008013000559.html
  8. Medeiros, S. Reluctant Restraint: The Evolution of China’s Non Proliferation Policies and Practices, 1980-2004. Palo Alto.Ca: Stanford University Press, 2007. P. 11.
  9. Belt and Road Initiative and China-Iran cooperation https://moderndiplomacy.eu/2018/03/20/belt-and-road-initiative-and-china-iran-cooperation/
  10. Iran Ready for Broader Cooperation With China https://financialtribune.com/articles/national/77649/iran-ready-for-broader-cooperation-with-china
  11. US forges ahead on oil and gas exports pledge https://www.ft.com/content/41818388-164f-11e8-9e9c-25c814761640
  12. Iraq pips Saudi to become India’s top oil supplier https://economictimes.indiatimes.com/industry/energy/oil-gas/iraq-pips-saudi-to-become-indias-top-oil-supplier/articleshow/63171218.cms

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