July 16, 2012

TSG IntelBrief: Iran: Foreign Policy Setbacks Reinforce Effect of Sanctions

As of mid-July 2012, Iran's foreign policy remains a product of the ideology of its Islamic revolution blended with the pursuit of long-standing national interests (including the overriding interest in ensuring the United States and its allies will not overturn the revolution itself). Despite the formidable challenges ahead, Iran's leaders are steadfast in believing in their country — one with a storied history —  as a major regional power.  

Some interpret Iran's foreign policy objectives as aggressive — an attempt to overturn the power structure in the Middle East that Iran believes favors the United States, Israel, and Sunni Muslim regimes such as Egypt, Jordan, and the Gulf states. At the same time, Iran downplays its underlying intent to empower fellow Shiites against the Sunni Muslims that dominate the region. And sufficient evidence exists to suggest Iran might very well pursue its foreign policies to the point of asserting itself as a regional hegemon...if it were to become a nuclear-armed state. 


Arab Spring Yields Become a Net Loss for Iran

Some believed Iran would benefit strategically from the Arab Spring uprisings that have thus far toppled the leaders of Egypt, Tunisia, and Libya. To be sure, Iran has gained from these events. For example, the new President of Egypt, Mohammad Morsi, appears willing to significantly improve relations with Iran. Since the fall of Hosni Mubarak, Egypt has also allowed Iranian ships to transit the Suez Canal. Still, any realignment of Egypt with Iran will be limited by Egyptian military leaders who retain significant influence in post-Mubarak Egypt.

Some also expected that Iran would likely gain from the Shiite uprising in Bahrain that began in February 2011. However, with the support of Saudi Arabia and other Gulf states, the Sunni minority government of the Al Khalifa family has kept the protest movement constrained, and has done so with few concessions. Saudi Arabia has indicated that a Shiite takeover of Bahrain will not be permitted under any circumstances — a position the United States implicitly supports, although it is working to promote compromise between the Bahrain government and the Shiite opposition. As a result, Iran has not materially benefit from the unrest in Bahrain.   

It is the Sunni-led uprising against President Bashar Al Assad of Syria that poses the most significant strategic threat to Iran. It has been the alliance with Syria that has enabled Iran to put pressure on its mortal adversary, Israel. Syria, led by the Shiite Alawite community to which Assad belongs, has been the channel through which Iran has funneled rockets and other weaponry to Lebanese Hezbollah which sits, well armed, on Israel's northern border. Should Assad fall, an outcome that is increasingly likely, Iran will lose the strategic benefit that Syria provides. Furthermore, Iran would have lost its closest Arab ally to a takeover by Sunnis who would likely align with Iran's adversaries, to include Saudi Arabia, the other Persian Gulf states, and Jordan. This explains why Iran has sent operatives from its Revolutionary Guard-Quds Force to help Assad organize his defenses against the opposition.     

The fall of Assad would also likely hurt Lebanese Hezbollah itself, which is Iran's main proxy in the Middle East. A Sunni-led Syria is likely to support Lebanon's Sunni Muslim community and halt support for Shiite Hezbollah, presumably weakening Hezbollah in its struggles against other parties in Lebanon.

Hamas — another Iranian proxy — is drifting out of Iran's orbit because of the Syrian uprising. Hamas controls the Gaza Strip and is in position to pressure Israel from the south, employing rockets and other lethal weaponry. Nonetheless, Hamas is a Sunni movement that resents both Assad's violence against the Sunni opposition and Iran's support for Assad. Hamas' Damascus-based leaders left Syria permanently in 2011 and Iran reportedly has cut funding to Hamas as a consequence of a growing Iran-Hamas rift.   


Other Difficulties for Iran's Regional Position

The potential loss of its most important ally is not the only difficulty Iran faces. Just two years ago, NATO member Turkey was attempting to forge a compromise in the nuclear negotiations between Iran and the international community — a compromise that could have led to an easing of sanctions against Iran. As of 2012, however, Turkey has joined in the U.S.-led sanctions by cutting purchases of Iranian oil. Further, Turkey is the most active supporter of the opposition to Assad of Syria.

On another front, it has long been assumed that Iran was a strategic beneficiary of the U.S. decision to oust Saddam Hussein, insofar as a Shiite-led government composed of pro-Iranian officials replaced him. However, with U.S. troops withdrawn from Iraq as of the end of 2011, Iraq is attempting to return to the Arab fold — which is dominated by Sunni regimes such as Saudi Arabia — after twenty years of estrangement. This trend was highlighted by Iraq's hosting of an Arab League summit in late March. A supposed Iranian proxy in Iraq — the faction of cleric Moqtada Al Sadr — is resisting Iranian pressure to remain part of Iraqi Prime Minister Maliki's governing coalition. Should Sadr's resistance to Iran's pressure hold, his shift toward Maliki's opponents could bring down the Iran-friendly Prime Minister.        The Persian Gulf states are similarly standing up to Iran and joining U.S. containment efforts. Saudi Arabia is selling all the oil it can to customers abandoning Iran. Meanwhile, the United Arab Emirates is enforcing all banking sanctions against Iran, and both Qatar and Saudi Arabia are reportedly leading the Gulf states' collective effort to arm the Syrian opposition — partly in an effort to deal a strategic setback to Iran. Virtually all the Gulf states are purchasing sophisticated U.S. weaponry, particularly missile defense systems.

Iran May Be Tempted to Lash Out

Iran's growing isolation in the region could produce unexpected — and unwelcome — results. First and foremost, U.S. officials emphasized in early 2012 that they see a new dimension to the Iranian threat: the potential for Iran to try to commit acts of terrorism in the United States homeland. This represents a change from the previous view in Washington that the risk of American retaliation made it highly unlikely Iran's leaders would authorize attacks inside the United States.

There is also potential for Tehran to create a crisis in the Strait of Hormuz — through which approximately 40% of internationally traded oil flows — out of frustration over the degree to which sanctions are harming its economy. And the harm is considerable. Iran exported 2.5 million barrels of oil per day in 2011, but is estimated to be exporting only 1.2 million barrels per day in July 2012 as the European Union embargo on Iranian oil kicks in. Iran could try to implement its threats to close the Strait in order to raise world oil prices and thereby recoup some of the revenue Iran is losing through lower sales volume. Alternatively, Iran might conclude that creating a Persian Gulf oil crisis would cause U.S. allies to insist that the oil export sanctions on Iran be eased.

Overshadowing such strategic considerations is the specter of the U.S. military and its well-advertised deployment of forces in the region. Leaders in Washington have made it abundantly clear that any Iranian attempt to close the Strait would be countered by U.S. military force, with American naval capabilities having been specifically enhanced in the region for precisely this scenario.

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