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Two Paths to the Future in the Middle East

Jan 23 , 2020

At 1 am on January 3, 2020, the convoy of Qasem Soleimani, Major General of the Islamic Revolutionary Guard Corps (IRGC) and commander of its elite Quds Force, was hit by several missiles of the US MQ-9 Reaper on Baghdad Airport Road. As the convoy cars exploded in flames killing 10 people, whatever was left of Soleimani could be identified only by his ring. Ironically, several of the ten perished Iranian and pro-Iranian commanders had been instrumental in the defeat of the Islamic State.

 
Two days after the assassination, Iraq’s Prime Minister Adil Abdul-Mahdi addressed his parliament suggesting that Soleimani was on a peace mission to de-escalate tensions with Saudi Arabia, while Iraq was brokering the talks. The effort by the Congress to agree on a resolution to limit Trump’s war powers against Iran, which most Americans support, is a move in the right direction but it can neither reverse the past policy mistakes nor halt the current escalation.
 
The assassination seeks to accelerate regime change in Iran. It follows years of misguided covert operations. And it is no longer the only alternative in the region.
 
From Trump’s U-turn to new Iran sanctions
         
Only a few years ago, there was still great hope in Iran. After years of diplomacy, the comprehensive nuclear accord (JCPOA, July 2015) was achieved between Tehran and the five permanent members of the UN Security Council – China, France, Russia, UK, and the US - plus Germany together with the European Union (EU).
 
Under the deal, Iran agreed to eliminate its stockpile of medium-enriched uranium, while gaining relief from US, UN and multilateral sanctions on energy, financial, shipping, automotive and other sectors. After years of struggle, Iran’s oil production and economy began to recover. Yet, already during the Trump transition, the Congress paved the way for the ongoing escalation by extending the Iran Sanctions Act (ISA) for a decade.
 
Subsequently, Trump began developing a far more muscular policy against Iran to benefit from Saudi economic and geopolitical support. In May 2017, US and Saudi Arabia signed a historical arms deal, which totaled $110 billion immediately and $350 billion over a decade. In return, the Trump White House began a coordinated escalation to counter Iran and withdrew from the nuclear deal. After Iran’s missile attacks against two US bases, which purposefully shunned human targets, Trump promised further ratcheting up of economic sanctions against Iran.
 
Worse, since early 2017, the Trump administration has greenlit clandestine operations that seek to soften Iranian “moderates,” while pushing “hawks” into strategic moves that the White House could use a pretext for regime change and ever-new rounds of sanctions. Initially, Trump relied on the neoconservative John Bolton’s “Shah scenario” for regime change. It has been followed by covert operations by some of the most controversial CIA officials that have also been deeply involved in the detention and interrogation program condemned by the 2014 Senate report, whereas the current head of CIA was charged for the destruction of torture videotape evidence.
 
Critical observers see the covert signature of the head of the CIA and its Iran desk chief as one catalyst behind the 2019-20 Iranian protests.
 
US regime changes versus Chinese economic development     
 
Unsurprisingly, Iraqi parliament has called for the expulsion of US troops from the country. Oil and military exports are seen as the main reason to US interest in the Middle East. After all, Iran and Iraq hold some of the world’s largest deposits of proven oil and natural gas reserves. Combined, their reserves exceed those of Venezuela, which has the world’s largest proved reserves. Moreover, Saudi Arabia and UAE account for 22% and 7% of total US military arms exports
 
China’s effective presence in the region began to increase only in the early 21st century, but it differs from the US role which stems from the postwar era. Moreover, in the past decade, the international environment that gave rise to the tacit US-Saudi pact has crumbled with the US shale gas revolution, while the spread of brutal terror and counter-terror pose questions about US goals in the region.
 
In contrast to China’s emphasis on economic development, the US approach has been predicated on political and strategic alliances and regime change. The list of these interventions is long, particularly in the Middle East where it includes the coups and interventions in Syria, Iran and Iraq, and Lebanon. After the US became an oil importer and the 1970s energy crises, the proclivity for intervention intensified.
 
In the past, major oil and gas exporters earned significant revenues from the US, but today China ranks as the top export destination for Saudi Arabia, Iran, Kuwait and Oman. If successful, China’s Belt and Road Initiative (BRI) could be seen as a 21st century Marshall Plan that can accelerate infrastructure investments, particularly in modernizing medium- and low-income nations. In 2018, the Middle East and North Africa leapfrogged other emerging economies as a destination for BRI projects, which boomed to an estimated $28.1 billion. Since the BRI launch, these investments have soared to more than 123 billion in the past half a decade.
 
In comparison, US total economic and military assistance amounted to $50 billion in 2017. In the Middle East, most went to Iraq ($3.7bn), Israel ($3.2 bn) Egypt ($1.5 bn), Syria ($0.9 bn) and Yemen ($0.6 bn). Even combined, these revenues account for barely a third of Chinese BRI projects in the region, however – and their objectives are not constructive.
 
From Iran escalation to global contraction?
 
Before 2015, Iran’s economy shrank by 9% for two years, due to sanctions. After stabilization, sanctions relief enabled Iran’s oil exports to return to nearly pre-sanctions levels, boosting 7% economic growth in 2016. Growth broadened to the non-oil sector. Real GDP growth was projected to rise toward 4.5% over the medium-term. After the US withdrew from the nuclear deal, secondary sanctions drove Iran’s economy into mild recession as major companies exited to avoid being penalized by the US.
 
Thanks to Trump policies prior to Soleimani's assassination, Iran’s economy was expected to undergo a second consecutive year of recession and contract by 8.7% in 2019/20. Inflation was estimated to reach 38% annually with mounting fiscal pressures. But stagnation is not enough for the Trump administration, which appears to be fostering a steep contraction, possibly Iran's economic collapse.
 
Historically, US stance in the Middle East has rested on assertive politics, economic sanctions, military interventions, covert operations and regime change. In the Trump era, the darker side of this stance has grown paramount, as evidenced by the alienation of US allies in Europe. In contrast, Chinese stance relies on political cooperation, economic development, non-interference and explicit opposition to clandestine activities and regime change. With the BRI projects, China has potential to accelerate economic development in the region.
 
As elsewhere around the world, there is room for both the US and China in the Middle East. The rise of multipolarity in the region holds the promise for a more peaceful, stable and prosperous future – particularly now that US escalation in the region has potential to cause a global contraction in the course of 2020.

 

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