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Iran Primer: Iran and the Gulf States


28 Oct 2010 18:201 Comment
AhmjadUAE.jpg[ primer ] Modern Iranian leaders -- from shahs to ayatollahs -- have sought a dominant role in the Gulf region because of Iran's economic and demographic weight, as well as the value of Persian Gulf oil shipping lanes. In the 1960s and 1970s, Iran was the preeminent Gulf power and guarantor of U.S. national interests in the region.

Iran's 1979 revolution dramatically altered Tehran's regional stance. Revolutionary leader Ayatollah Ruhollah Khomeini called for the overthrow of existing pro-American monarchs in the Gulf. Iraq's 1980 invasion of Iran pulled the Gulf Arabs and the United States into the brutal eight-year conflict, mostly on Baghdad's side.

The end of the Iran-Iraq War in 1988, the death of Ayatollah Khomeini in 1989, and the rise of more pragmatic leadership in Tehran led to an easing of tensions between Iran and the Gulf Arab states. The two subsequent "Gulf wars" in 1991 and 2003 weakened Iraq, thereby strengthening Iran's relative regional power. Iran's relationship with the smaller states of the lower Persian Gulf has historically been centered on trade. The emirate of Dubai has emerged as Iran's most vital Gulf trade partner and an occasional outlet to skirt sanctions.

The monarchy: 1941-1979

In 1968, Britain declared its intention to abandon all military outposts in the Persian Gulf. Mohammed Reza Shah Pahlavi sought to fill the British vacuum and become the "policeman of the Gulf." Washington encouraged Tehran by adopting a "twin pillar" policy, anointing both Saudi Arabia and Iran as guarantors of U.S. national security interests in the region. The Nixon administration opened the floodgates to U.S. arms purchases to Iran.

Although they were all pro-Western regimes, the Persian monarchy had tense exchanges with the Arab sheikhs across the Gulf. In 1968, the shah declared Bahrain a historic Iranian territory, only to pull back after a U. N. mission found that Bahrainis preferred independence. In 1971, Iran seized three strategic Persian Gulf islands -- Abu Musa and the Greater and Lesser Tunbs -- claimed by the newly formed union of seven emirates, known as the United Arab Emirates. The shah also refused to participate in the Arab oil embargoes of 1967 and 1973. He continued to sell oil to the West and Israel, a source of contention between Riyadh and Tehran. The shah also had serious ideological differences with socialist and Soviet-allied Iraq. The two countries had a serious dispute over the Shatt al-Arab waterway that required international mediation to resolve in 1975. Yet the shah's Iran -- with its large conventional army, high-tech weapons, large population, and strong ties to Washington -- seemed like the biggest power on the bloc in the 1970s.

Decade of conflict: 1979-1988

Iran's 1979 revolution dramatically altered the regional geopolitical balance in the Persian Gulf. Ayatollah Khomeini declared his intent to overthrow Gulf monarchs. Iran was implicated in a coup plot in Bahrain, unrest in Kuwait, and attacks on U.S. facilities in the Gulf states. In 1980, Iraqi President Saddam Hussein, sensing weakness from revolutionary chaos, attacked Iran to prevent the newly formed Islamic Republic from inspiring Iraq's own Shiite majority and to gain strategic depth on its border.

The Iran-Iraq War turned out to be a defining feature of Iran-Gulf Arab relations throughout the 1980s. In 1981, the five smaller states of the Gulf -- Bahrain, Kuwait, Oman, Qatar, and the United Arab Emirates (UAE) -- joined with Saudi Arabia in what was billed a security and political alliance, known as the Gulf Cooperation Council (GCC). The Gulf states sided largely with Iraq, although each state -- and even emirates within states -- charted their own path regarding Iran.

Saudi Arabia and Kuwait underwrote Saddam's war efforts to the tune of an estimated $40 billion. The new UAE federation was split. The emirates of Dubai, Sharjah, and Umm Al-Quwain remained neutral, fearful of jeopardizing trade and commercial links with Iran. Indeed, Dubai flourished as a resupply entrepôt (trading post) for the Iranian military. But the UAE capital, Abu Dhabi, supported the Saudi-Kuwaiti position.

After 1984, Saudi Arabia and Kuwait were pulled into the war after Iraq struck Iran's main oil export terminal and Iran retaliated by striking at tankers of Gulf nations allied to Iraq. The United States intervened by reflagging Kuwait and Saudi tankers, which in turn raised tensions between Tehran and Washington. After a U.S.-flagged ship was hit, the U.S. Navy bombarded an Iranian oil platform in October 1987. U.S.-Iran tensions ultimately led to the accidental shooting down of an Iranian civilian passenger plane by the USS Vincennes, killing 290 passengers and crew, in July 1988.

The war finally ended when Iran accepted U.N. Resolution 598 in August 1988. Ayatollah Khomeini said accepting the terms was akin to drinking "a poisoned chalice." There was no clear victor, but the triangular balance of power between the Gulf big trio -- Iraq, Iran, and Saudi Arabia -- largely remained intact.

Rafsanjani's bridge-building: 1989-1997

Shortly after he assumed the presidency in 1989, Akbar Hashemi Rafsanjani proclaimed, "Iran needs to stop making enemies." He signaled a substantive shift in foreign policy from an aggressive revolutionary state to a new pragmatic coexistence. Rafsanjani saw the GCC states not as ripe pawns to be toppled, but as cash-rich investors to entice. Prince Saud al-Faisal, the Saudi foreign minister, suggested shortly thereafter that the two countries could see "a future of positive relations."

But the third piece of the triangular balance of power, Saddam Hussein's Iraq, seethed at the sight of his fellow Arab states making conciliatory gestures to Iran. He also seethed at the war debt that he accrued, which he expected Kuwait to forgive since he had fought the dreaded "Persian menace" and "the scourge of Khomeini" on behalf of all Arabs. Unable to come to terms with Kuwait, Saddam Hussein invaded in August 1990.

President George H. W. Bush organized an international coalition to liberate Kuwait and protect its Saudi ally. Iran treaded a fine line during the 1991 Gulf War, neither siding with Washington nor hindering its war effort, despite U.S.-Iran tensions. Tehran's neutrality in the Gulf War did not sway Washington. In 1993, the Clinton administration announced its policy of "dual containment," targeting both Iraq and Iran. But Rasfanjani's position did alter GCC perceptions of Iran. Trade increased. Direct flight links were restored. And money began flowing more freely across borders. The Rafsanjani era offered Iran and the region a soft landing from the war's ravages and the revolution's zealotry.

Khatami's rapprochement: 1997-2005

The 1997 election of Mohammad Khatami introduced a period of outreach in his attempt to launch a "dialogue of civilizations." In December 1997, Tehran hosted the Organization of Islamic Conference (OIC) summit. Among the delegates was Crown Prince Abdullah, the de-facto Saudi head of state, and the most senior Saudi visitor to Iran since the 1979 revolution. The Saudi-Iran détente was accelerating. When President Clinton also initiated an outreach to Iran, several GCC states lined up to play intermediary between Washington and Tehran, although a breakthrough never occurred.

The September 11, 2001 terrorist attack on New York City and Washington D.C. altered the dynamics of U.S.-Iran relations. Within the next two years, President George W. Bush launched two wars on Iran's borders -- in Afghanistan in 2001 and in Iraq in 2003. The U.S. ouster of Saddam Hussein particularly rocked the region -- and ended up dramatically changing the balance of power in Iran's favor.

For Iran, the U.S.-led war knocked out a primary rival. Tehran also sensed an opportunity to shape and influence post-Saddam Iraq. Over the next two years, Iran's Islamic Revolutionary Guard Corps (IRGC), and ministry of intelligence began a sophisticated campaign using both hard and soft power. Tehran's growing role distressed the GCC states. In 2005, Saudi Foreign Minister Prince Saud Al-Faisal expressed some of the frustration, "We fought a war together to keep Iran from occupying Iraq after Iraq was driven out of Kuwait. Now we are handing the whole country over to Iran without reason."

Rising oil prices also gave Tehran new economic leverage. Flush with new cash, Iranians looked for regional investment opportunities and increasingly turned to Dubai, which emerged as Iran's offshore business center -- its Hong Kong.

By the end of Khatami's term in 2005, most of the GCC states were again wary of Iran. Iraq was being shaped more by Iran than any other regional state. Sunni Arab states from as far as Egypt and Jordan began to whisper about fears of a Shiite crescent taking hold of the region. The Gulf was in deep flux.

Ahmadinejad's brinkmanship: 2005-present

The surprise election of the populist Mahmoud Ahmadinejad in 2005 again changed the dynamics of Iranian foreign policy -- this time back to the hardline positions of the early revolution. The regime immediately announced a resumption of uranium enrichment. And Iran's controversial nuclear program immediately became the focal point of its foreign policy and world diplomacy. Iran's Gulf neighbors were at least as alarmed as Israel and the United States.

Saudi Arabia and Iran increasingly found themselves vying for regional influence in proxy battles in Lebanon, the Palestinian territories, Iraq, and even Afghanistan. The days of détente seemed a distant memory. In Iraq, Saudi Arabia's Sunni monarchy tried to protect the Sunni minority while Iran worked with an array of Shiite groups and the two major Kurdish parties to influence the budding Iraqi state. Iraq's March 2010 elections seemed to indicate that Iran's efforts had paid off. Immediately after the disputed elections, three of the top four candidates turned up in Tehran for "consultations" with Iranian officials.

A microcosm of the rivalry played out in the United Arab Emirates. For years, Iran's one GCC ally was oil-less Dubai in the UAE, the Gulf's rising commercial center which was home to as many Iranians as Emiratis. Tehran's rival was oil-rich Abu Dhabi, the politically powerful UAE capital allied with the United States. Dubai's 2008 financial crisis and Abu Dhabi's subsequent bailout of its overleveraged brother tipped the balance in Abu Dhabi's favor.


* In 2009, Dubai-Iran trade was estimated at $10 billion, a fall from the estimated $12 billion figure in 2008, due to the global financial crisis and tighter controls by UAE authorities on Iran trade. New rounds of sanctions and more stringent oversight by Abu Dhabi is expected to lower the trade numbers further in 2010, but Iran remains the UAE's fourth largest trade partner after China, the United States, and India. Most trade represented goods from around the world that land in Dubai ports and are re-exported to Iran.

* Iran and Oman serve as joint "policemen of the Straits of Hormuz," the world's most important oil chokepoint. Some two-fifths of the world's globally traded oil passes through the Strait, which at its narrowest point is only 21 miles wide.

* Iran's threats to "close down the Strait" in the event of U.S. or Israeli strikes ring hollow, as a closure would damage Iran's own oil industry, the most vital source of state revenues.

* Qatar has increasingly reached out to Iran, even discussing ways to bring Tehran into regional security discussions.

* The name of the body of water linking these eight states has occasionally sparked diplomatic spats. For Iranians, it is indisputably the Persian Gulf. For many Arab states, it is either "the Gulf" or, more provocatively, "the Arabian Gulf." Most official atlases refer to the body of water as the Persian Gulf.

The future

* An Israeli attack on Iran's nuclear facilities could spark a wider regional war with dramatic repercussions for the Persian Gulf region, leading to a skyrocketing oil prices, and potential conflict between Iran and America's key Gulf Arab allies, Saudi Arabia and the United Arab Emirates.

* The world's major oil players have largely abandoned Iran, but are active in Iraq. If Iraq achieves its ambitious oil targets, it could surpass Iran as the Gulf's second largest producer within a decade. This would have repercussions for the regional balance of power.

* The Iran-Dubai trade relationship will be tested by sanctions and U.S. pressure. But historic links are too deep to imagine a drastic reduction in trade, even though Iranian merchants may not feel as welcome as in the past.

Afshin Molavi is a senior fellow at the New America Foundation. This article is presented by Tehran Bureau, the U.S. Institute of Peace, and the Woodrow Wilson International Center for Scholars as part of the Iran project at iranprimer.usip.org.

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1 Comment

What does the author mean by "the Gulf States"? There is no such thing as "the Gulf" on any respectable geographical map. There is "the Gulf of Mexico", "Gulf of Finland", "Gulf of Thailand", "Leyte Gulf", ..., "Gulf of Alaska", and "the PERSIAN Gulf".

The author needs a lesson in geography (and history). Please be specific when referring to well-established geographical names.



Shahsavand / October 28, 2010 8:35 PM