Petrostrategies - The World Energy Weekly

Petrostrategies - The World Energy Weekly

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The scenario of a Saudi Arabia-Iran dialogue gradually and cautiously takes shape in the Gulf

Petrostrategies, February 20, 2017

Donald Trump’s election success was greeted in very contrasting ways in the Middle East, depending on the countries and political orientations. His victory was welcomed by the leaders of the Gulf monarchies (even whipping up enthusiasm with their inhabitants) due to Trump’s very negative statements against Iran. In contrast, his election stirred up a lot of hostility in Iran and its allies in the region. After he had promised in his inauguration speech to “totally eradicate Islamic terrorism” from the face of the Earth, a few days later, the new US President labeled Iran as the “number one terrorist state”. His Defense Secretary, the retired General James Mattis (well-known and highly appreciated by the Gulf monarchies) told the Senate that Iran is “the greatest destabilizing force in the Middle East and its policies are contrary to our interests”. On both sides of the Gulf, the most stringent hardliners felt encouraged and justified in their hostility towards the opposing side. In these circumstances, an escalation of tensions could appear to be the most likely outcome over the next few months.

And yet, given the first concrete developments emerging from the region, it is a different scenario that may be taking shape: an attempt to ease the tensions between Iran and Saudi Arabia. Riyadh may believe that the arrival of Donald Trump strengthens its position—while it is suffering military setbacks in Syria (through respective allies)¬ and is struggling in Yemen—and that the right moment has come to try sitting at the negotiating table with Iran. The latter could feel threatened by the new US administration and also be tempted to take the diplomatic path. Tehran believes that an opportunity is coming to light. Before Hassan Rouhani departed for Oman and Kuwait last week, an official stated that the Iranian President’s “regional initiative” is “an opportunity that our regional friends should seize. Opportunity passes like a cloud. Take advantage of the good opportunity”.

The need to tackle the risk of the most conservative hawks and political orientations growing stronger in the Gulf states is in this respect spawning a common interest between the leaders of these countries, whatever side they are on. Especially since the neo-isolationist movement that is developing in the US is a source of concern for pro-western countries and also because Americans are becoming less and less dependent on imported oil. Donald Trump himself appears to be an unpredictable man, who is politically inexperienced and prone to outbursts of speech that can reserve some nasty surprises. He is too overtly in favor of Israel, which took advantage of his election to announce within two months three successive construction plans for housing in the occupied territories, involving over 6,000 settlements. His Chief Strategist, Steve Bannon, is a theorist of “war against Islam”. And prior to Benyamin Netanyahu’s visit to Washington last week, the White House made it known that Americans will no longer insist on pursuing a “two-state solution”, thus breaking away from a policy that every American government has followed since 1967. In short, for GCC countries, it is becoming increasingly difficult in the Arab-Muslim world to appear as an ally to the USA.

A succession of almost unnoticed moves made by Saudi Arabia in recent weeks suggests that Riyadh is leaving the door open for a possible resumption of political dialogue with Iran, albeit with a great degree of caution. In January 2017, Riyadh let the High Negotiations Committee (HNC - formed by the Syrian opposition in Saudi Arabia in 2016) take part in the Astana conference on Syria, which was sponsored by Russia, Turkey and Iran. Riyadh also embarked on talks with Tehran over the 2017 pilgrimage to holy places of Islam. At the end of their first telephone conversation, King Salman and Donald Trump agreed on the need for “rigorously enforcing” the 2015 agreement on the Iranian nuclear program, despite the fact that Riyadh had done its utmost to prevent this accord from materializing, while Trump for his part, only recently swore that he would rip this text up.

The most significant development occurred in January, when a letter was sent by the Emir of Kuwait to the Iranian President, proposing to the latter the opening of a dialogue between the GCC states and Iran on the basis of three principles: that Tehran should refrain from interfering in the affairs of the Gulf, respect the sovereignty of the GCC states, and comply with all of the decisions made by the UN Security Council. Iran accepted. “We should all look ahead and decide that together we will aspire to a future that will be different”, said the Iranian Foreign Affairs Minister. For his part, Ali Velayati, the chief Diplomatic Advisor of Iran’s Supreme Guide, said: “Our relations with Saudi Arabia have the potential of being revived and tensions could disappear”. There is no guarantee that, if opened, a dialogue between Iran and Saudi Arabia will succeed. Many of both of these countries’ internal and external forces will try to hinder the chances of such dialogue from succeeding. But there is still a chance that it will succeed.

Where oil is concerned, the opening of a Saudi-Iranian dialogue would make life much easier for OPEC. Already in November, Saudi Arabia agreed to OPEC authorizing Iran to boost its output, instead of lowering it, while in April 2016, it had demanded that Tehran participate in the effort to cut production. Russians and Saudis say they agreed to work together over the long term, in order to stabilize the oil market. A political dialogue has been established between Moscow and Riyadh since the emergence of Prince Mohammed ben Salman as the “strong man” of the Saudi Kingdom. Russia is all for an easing of tensions in the Gulf, which would reduce the risks of the US interfering in the affairs of this region. In theory, Donald Trump himself is not too keen to see his country getting stuck in the sinking sands of the Middle East. He described George W. Bush’s war against Iraq as a “serious mistake”, but it is not known whether this is because of the cost of the war ($1.7 trillion in direct costs, but as much as $6 trillion including payments to veterans over 40 years, according to US sources!) or because the US did not take advantage of the situation to get its hands on Iraqi oil, as he had regretted. For the time being, he seems to be more inclined to flex his muscles in Southeast Asia, both to counter the threat of North Korea, as well as to impress China and reassure Japan. But with him, anything is possible, especially the worst, it seems.