The Iran trap

Stuck in the Middle East

The US has been trying to extricate itself from costly wars in the Middle East for far too long. The Iran deal was part of that story, an attempt to redirect its resources in containing China’s influence. But with Iran’s hardliner new president Ebrahim Raisi, taking over on August 5th, that strategy is no longer viable, and China’s containment harder to achieve, argues Christian Emery.

Since the Biden Administration committed itself to trying to revive the 2015 Iranian nuclear deal, six rounds of negotiations in Vienna have failed to achieve an agreement. Talks will soon resume with a new Iranian administration led by Ebrahim Raisi, a hard-line protégé of Supreme Leader Ayatollah Khamenei, whose election was largely assured by the de-selection of rival candidates. Many assume that a deal is now unlikely to materialise, given Raisi’s harsh anti-American rhetoric and close political association with Khamenei, who recently issued a withering critique of what is currently on offer from Washington.

For the US, reaching a deal on the nuclear issue has mostly been about preventing another costly military intervention and freeing up resources from a region that is no longer strategically vital.

That might be an overly pessimistic view, but the Biden administration needs to be more realistic about what it can secure from a deal. This is not just because it will face a more intransigent and politically toxic negotiating partner, but because the intervening 6 years have diminished the geopolitical advantages first envisioned in the JCPOA, a landmark accord requiring Iran to verifiably dismantle most of its nuclear programme in exchange for sanctions relief.

An agreement bringing with Iran back into compliance with the JCPOA is still likely, but an accord on the nuclear issue is no longer a realistic vehicle for America’s  to solve wider regional issues and provide cover exit strategy from the region, for and the redirection of resources  a strategic rebalancing to Asia towards containing China’s influence in Asia.


The geopolitics of the JCPOA Iran deal and the illusion of ‘strategic rebalancing’

For the US, reaching a deal on the nuclear issue has mostly been about preventing another costly military intervention and freeing up resources from a region that is no longer strategically vital,  and redeploying them instead to one that is, the Asia-Pacific region.

Announced with much fanfare in 2011, the 'Pivot to Asia' was Obama's answer to criticisms that his administration lacked a grand strategy. The theory behind it was that the US energy revolution had greatly reduced the strategic importance of the Persian Gulf and decades of failed wars and support for illiberal allies had not provided the US with many tangible benefits. In an era of significant fiscal constraints, resources tied down in the Middle East would have to be moved into Asia, which would be the new locus of trade and international relations in the 21st century. America's preoccupation with the Middle East was only aiding and abetting China's rise.


Obama’s problem was that just as these plans were being developed in 2011-12, there seemed a very strong possibility that Israel would launch military strikes against Iranian nuclear sites. If Israel did so, inevitable Iranian retaliation would make it extremely difficult for the US to avoid getting involved. Another costly US intervention in Middle East would be fatal to his ‘Grand Strategy’ of pivoting from the Middle East to Asia. Critically, US officialsalso hoped that reaching a deal with Iran would be a starting point for a broader ‘grand bargain’ that could dampen down Iran’s hostility to Israel and the Gulf States. Given that Washington’s military presence in the region was historically geared towards protecting Israel and the Gulf States, reducing this threat diplomatically was a crucial pillar of Obama’s rebalancing strategy.

For Iran was of course a willing partner for any, acquiescing to a process that aimed to remove US troops from around its borders. This goal fulfils strategic and ideological goals that goes to the very heart of its post-revolutionary identity. Although the political choreography to reach a deal was hard, achieving this plus the removal of crippling sanctions, in return for limits on a nuclear programme that is not (contrary to popular opinion) a fundamental pillar of Iran’s its security strategy, was a strategic no-brainer for Iran in 2015. It was this potential geopolitical boon for the Iranians that most worried the Gulf States.

Rather than being a platform for achieving regional stability, the region was awash with failed states, proxy wars, and the terrifying spectre of ISIS.

The problem was that immediately after signing the deal JCPOA America got sucked back into the Middle East by the brutal aftermath of the Arab Spring; first in Libya, then in Syria, then in Iraq, and indirectly in Yemen. At the same time, opponents of the JCPOA at home and abroad, pushed back hard. Washington underestimated the challenge of unpicking the sanctions levied against Iran. Rather than being a platform for achieving regional stability, the region was awash with failed states, proxy wars, and the terrifying spectre of ISIS. The strategic value of America’s presence in the region seemed less diminished than proponents of a withdrawal claimed.

Then came the trauma of the Trump administration. Trump first assured the Gulf allies that he was a willing partner in confronting Iran’s rising power but then told stunned leaders in Riyadh they were solely responsible for any Iranian retaliation and played down US security interests in the Gulf. To reinforce the message he promptly abandoned the Kurds, the only ally who has recently shed blood in the service of American interests. Iran responded to sanctions by increasing its stockpile of enriched uranium and harassing shipping in the Strait of Hormuz.

The immediate cause of the collapse of the JCPOA can be attributed to Trump unilaterally abrogating an international treaty registered at the UN Security Council. But in truth it was already struggling. From the Iranian perspective this was mainly because of Washington’s inability to provide effective sanctions relief. But also because it had not, demonstrably, facilitated an orderly US withdrawal from the region. Rather than free up resources to better contain China, the US’s original aim of the Iran deal, doubts about Washington’s reliability and Iran’s economic isolation created opportunities for Beijing to establish a foothold in the region. China signed a $400 billion 25-year deal with Iran and became Saudi Arabia’s largest trading partner. With China’s overt and covert support, the Saudis are beginning to develop the requirements for a nuclear programme, even securing a domestic source of uranium.

In 2017, China opened its first overseas military base in Djibouti, strategically located between the Red Sea and the Gulf of Aden. The Middle East is an increasingly lucrative destination for Chinese military technology exports and Beijing’s development model, focussed on improving living standards rather than political freedoms, is attractive to illiberal states looking for technological assistance on infrastructure developments. China has also proved adept at navigating the various regional rivalries. Signing a $400 billion 25-year deal with Iran hasn’t prevented it from becoming Saudi Arabia’s largest trading partner. With China’s overt and covert support, the Saudis are beginning to develop the requirements for a nuclear programme, even securing a domestic source of uranium.

China’s pivot to the Middle East does not currently threaten America’s position as the dominant external security provider. But it was clearly not factored into Washington’s plan to refocus its efforts on containing China. South Korea, Japan, and Taiwan all rely on access to the Persian Gulf to meet nearly all their fossil fuel consumption. US allies in Asia were supposed to feel reassured that America was diverting resources from the Middle East to protect them in their own neighbourhood. Instead, they worry that the pivot is encouraging China’s growing role in the Middle East and eventually Beijing might be able to choke off their energy supplies. These tensions persuaded many in Washington that it was not feasible to draw down America’s ability to project power into the Middle East. Yet under Trump, the US continued to work at cross-purposes, insisting its allies needed to fend for themselves but also sending 14,000 more troops to the region.  

Biden’s strategy in the Middle East is certainly better managed yet there’s still widespread confusion about America’s long-term intentions in the region. The Biden administration has forcefully rhetorically disowned Trump’s Middle East policy yet continues to adhere to the same ‘maximum pressure’ policy of Iran sanctions and has launched drone strikes against Iranian-backed forces in Syria. The Pentagon has closed several bases in Qatar, but only to transfer them to Jordan,  apparently to counter the threat of Iranian-backed militias in Iraq. Washington abruptly withdrew US troops from Afghanistan, by no means an unwise policy, but one with worrying consequences for Iran. The decision to remove US combat troops from Iraq received much fanfare, but overall US troop numbers in the region remains more or less the same as when Obama negotiated the JCPOA. In short, whilst Iran probably accepts the basic premise that Biden wants to reduce America’s footprint in the Middle East, they are viewing the whole project with a mix of confusion, scepticism, and deep-seated anger.


Enter The new era of President Ebrahim Raisi

Raisi’s victory in the June 2021 Iranian presidential election illustrates how the failure of the JCPOA and bludgeoning economic sanctions has fuelled a shift to the right in Iranian politics. The reform movement has been decimated and hard-line conservatives have consolidated power across the elected and unelected branches of the political system. This will undoubtedly make a nuclear deal harder to negotiate.; Iran’s position will likely harden and theThe Biden administration faces the challenge of winning domestic support for removing sanctions against a regime now led by a president who himself is the subject of US sanctions and accused by human rights organisations of organising the execution of thousands of political prisoners in the 1980s.

The experience of the last decade should teach Washington that it would be misguided to assume that economic pressure, however severe, will convince Iran to cave to its demands

Yet it is still more likely than not that Iran and the US will eventually reach some kind of agreement. Raisi, who has populist economic instincts, needs sanctions relief to even make a start on his promises of a million jobs per year, reducing inflation to a single-digit figure (the current rate is almost 50 percent), reversing a huge fiscal deficit, diversifying exports, resolving the problems of high rents, and ending shortages of a wide range of basic items that have led to mass protests. Given his shaky popular mandate, he’s unlikely to countenance the only alternative: severe reform of the economy requiring him to simultaneously tackle endemic elite corruption and inflict further suffering on ordinary Iranians via major austerity and a bonfire of state subsidies.  

The experience of the last decade should teach Washington that it would be misguided to assume that economic pressure, however severe, will convince Iran to cave to its demands. But it’s still fundamentally the case that Tehran is in the market for a deal.


The case for a scaled-down nuclear agreement

Under pressure from regional allies, US negotiators are trying to tie sanctions relief on the nuclear issue to Iran committing to future discussions on its regional policies and ballistic missiles. It seems extraordinarily unlikely that the incoming Raisi administration will accept that position.  Firstly because that’s also the settled view of Khamenei, who will have the final word on any deal.  Secondly, because Iran has lost faith in the idea that the nuclear deal can help usher the US out of its neighbourhood. The Raisi administration will therefore pursue a narrow deal that trades sanctions relief for a return back to the original limits on its nuclear programme established by the JCPOA.

Washington should therefore strongly consider abandoning the policy of ‘linkage’. It is simply not realistic to expect a deal to produce Iranian participation in any regional initiative involving the US.

Any likely deal will be a long way from Washington’s original hope that it could serve as a vehicle to achieve the stability required to facilitate an orderly US rebalancing towards the Asia-Pacific region. The strategy has failed due a combination of push back from US allies and domestic opponents of the JCPOA, the instability that followed the Arab Spring, Trump’s irresponsible handling of foreign policy, Iran’s calculation that the US isn’t serious about withdrawing, concerns about China’s growing influence in the Middle East, and Washington’s inability to put in place alternative regional security arrangements or burden-sharing.

But a scaled-down nuclear deal still achieves the not inconsiderable goal of preventing an Iranian nuclear weapon and therein preventative military action or regional nuclear proliferation. Resolving the nuclear issue will still give Washington the bandwidth to produce a more clear-eyed and consistent foreign policy for balancing China’s rising influence. What’s clear is that continuing the current policy of sanctions will only draw China into closer cooperation with Iran. The nuclear deal has not been able to open up opportunities for a Saudi-Iranian rapprochement, but there are some encouraging signs that Saudi Arabia and Iran are serious about improving relations bilaterally. Given how their rivalry has helped China increase its economic and security relations with both sides, the Biden administration would be wise to encourage this rapprochement. This may be the legacy of the stalled US pivot – not that it led to a significant ramping down of the US presence, but that it convinced regional states that they must increasingly rely on themselves to provide regional stability.

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Aaron O'Neal 5 August 2021