Entering a new era: The Iran Deal and beyond

(Deutsche Fassung des Artikels hier)

After years of negotiations, in mid-July an agreement was finally reached. Quite astonishingly, discussion everywhere is focused exclusively on Iran’s nuclear programme and the economic sanctions it served to justify. In reality, so much more is at stake: we are currently witnessing the emergence of a new order in the Middle East – and maybe a new world order. The geopolitical implications of the agreement, however, might only gradually become obvious in the years to come. Alongside the Minsk Agreement and an agreement on South-East Asia that will hopefully materialize sooner or later, the Iran Treaty has the potential of becoming something like a “21st century Tordesillas“.

The Iran nuclear agreement was met with near unanimous enthusiasm. The assertion that its main scope is in fact not the nuclear question does not seem convincing from the outset and probably needs some explanation. Obviously the text of the treaty concentrates on Iran’s controversial nuclear programme and the sanctions; it is well known that there were lengthy discussions dealing with the problem how to gradually reduce both and which monitoring mechanisms to adopt. But then again – was the nuclear programme ever more than a symbol of what appeared to be an irreconcilable antagonism opposing Tehran and Washington (and Jerusalem and Riyadh, as it were)?

At present there are two countries in the area already in possession of nuclear weapons. Even if Iran created its own nuclear weaponry, the only practical difference would be that the USA (and Israel) would think twice before attacking the country. In recent years, there was always – however seriously – the unspoken threat of such an attack looming. Right-wing politicians used it in their election campaigns, and one could say that the conflict had assumed the character of a populist knock-out argument in all the countries involved.

Iran & Saudi Arabia: a balance of terror eroding

Accordingly, the roles in the Middle East were clearly defined: following Iraq’s downfall, Saudi Arabia became the supreme Sunni power in the Gulf region and opposed to Iran in a balance of terror. Riyadh could be sure of unconditional backing by the USA (and in turn guaranteed that the dollar remained the global reserve currency), as could Israel. Tehran, on the other hand, was more or less openly backed by Russia and China. Both countries were engaged in wars in the area – diplomatically, but also more and more militarily.

It was no surprise that the West turned a blind eye on the deplorable human rights situation in Saudi Arabia with its much more despotic regime, whereas comparatively liberal Iran was constantly blamed for violating human rights. Moreover, there was hardly any criticism when the Saudis (as well as their allies) more or less openly supported jihadist Sunni militias, whereas every instance of Iran backing regional militias – albeit only diplomatically – was met with waves of indignation.

In recent years, however, cracks have emerged in the regional balance of power. On the one hand, Saudi Arabia is stuck in the quagmire of two regional wars, with no hope of victory or of any face-saving exit option. In both cases, there is a risk of the conflict spreading to the territory of Saudi Arabia itself, which could cause existing popular discontent to explode. In spite of massive domestic and external militarization and extremely costly welfare programmes, the days of the House of Saud may thus be numbered – which would suddenly leave the USA without an ally in this key area and caught between stools.

On the other hand, global developments are increasingly questioning Iran’s economic and political isolation. Tehran has good diplomatic relations with several key states and a growing number of trade agreements is being signed on barter or non-dollar basis. Last but not least there are plans for various pipelines to deliver Iranian gas east- as well as westwards. So even with the sanctions formally still in place we would see their de facto collapse in the medium term. In the event of that happening without Washington’s active interference, the consequences for the international standing of the USA would be severe.

Hence two reasons for the US government to feel a sense of urgency and a pressing need for action. It was Kerry’s and Obama’s last chance of keeping their hands on the levers in the Middle East and to assert their international leadership before the presidential campaign would nip any such delicate diplomatic effort in the bud. Apparently, they have not squandered this one-time opportunity.

Reshaping the Middle East

The Middle East is witnessing the dawning of a new era and a far-reaching opening-up of hitherto rigid alliances. In the medium term, this is likely to ease tensions in the region’s wars and conflicts and offer paths towards their solution – although real “peace” will probably not be around the corner.

Iran will officially become part of the “international community” once again and increasingly enjoy normal economic relations with the rest of the world. Given recent history, it is far from certain that US companies will be those reaping the most benefits. Politically as well as culturally, Iran is definitely a major player, and the significant boost it now receives means that it can expand its regional influence and rethink its alliances. Until now, Iran’s allies were in the East. It is an interesting question whether Iran will nevertheless seek full SCO membership (Shanghai Cooperation Organisation) or if, as a classical middle power, it will try to establish similarly good relations with all sides so as to maximize the country’s foreign policy options and hence its influence.

At present Saudi Arabia is also engaged in trying to diversify its alliances, notably by concluding deals with Russia in the field of armament, nuclear energy and investment. Because of the aforementioned reasons and it’s lack of cultural and political appeal it is extremely doubtful whether Riyadh will be able to retain its regional influence. In fact, the Saudis can probably count themselves lucky if they can honourably withdraw from regional armed conflicts and concentrate on stabilizing and modernizing their country. Its more or less total collapse can, however, not be fully ruled out – not a bright perspective at all in view of the weapons stockpiles in the region. Preventing this from happening might be the next major challenge on the horizon for international diplomacy in the Middle East.

It will be interesting to see what policy Turkey will adopt: on the one hand, choosing Iran as an ally would seem promising in view of the latter’s gas reserves, and the fact that both countries (used to) maintain good relations with Russia could favour such cooperation. On the other hand, Ankara and Tehran have taken opposing sides in the Syrian conflict and cooperate with rivalling Kurdish groups. Also it should not be forgotten that Turkey certainly wouldn’t approve of Iranian regional hegemony looming on the horizon. If Saudi Arabia retains its position as a regional power, a regional “triopoly” of the three states appears to be the most probable outcome; incidentally, they represent three different tendencies of political Islam. Turkey would be able to choose which partner to cooperate with in any given situation and thus to tip the balance to its own advantage.

US can focus on stability, Israelis on societal problems

Presumably the USA would rather continue taking the Saudi’s side, though the newly emerging variety of options for regional alliances would probably translate into a reduction of their influence. At the very least (and according to their agreement) Washington would have to take steps to prevent Saudi Arabia from disintegrating, if they continue to regard the country as key guarantor of the role of the petrodollar. This, however, is far from certain since the monopoly of the dollar in the oil and gas trade is eroding rapidly anyway. Washington might actually have to develop a more neutral sense of interest in Middle East stability: Firstly so as not to put the region’s role as the global “petrol station” in jeopardy, and secondly to reclaim part of its own credibility as guarantor of order.

And what about Israel? In this scenario Israel has nothing to lose but a time-honoured bogeyman. Right-wing politicians will either have to chose their issues accordingly and start dealing with the actual problems of the country, or they will sooner rather than later find themselves losing their majority. Both cases would mean a political reorientation in the country: away from imaginary threats and towards the real challenges, as it were, economic worries, welfare and social inclusion and the question of the occupied territories. Not only would this definitely mean a very positive turn for Israel itself, it could also benefit the relations with neighbouring states. There would be some losers, however, namely those politicians and parties whose entire career and success was based on the fear of “the Iranian threat”.

Multipolarity replaces New Cold War

So much for the regional consequences. Even on a global level, however, we should expect a major reshuffle of the cards. For the past 15 years the world has increasingly witnessed a new power bloc confrontation, in a nutshell: “NATO and allies vs. SCO and allies”. Clashes kept springing up at the fringes, some took the form of “revolutions” and (civil) wars. More recently there was a growing threat of these becoming more than just proxy skirmishes, in particular in Ukraine and in Syria/ Iraq. A further escalation of this antagonism would almost certainly have resulted in a military conflict involving powers from both blocs sooner or later – with unpredic- table consequences since military conflicts tend to develop a momentum of their own.

This did not happen however and it seems that the risk of such a confrontation has all but vanished now. The “nuclear dispute” with Iran was the symbol of a Gordian knot of strategic entanglements. The fact that it has been cut is tantamount to a major relaxation of the system’s previously rigid bipolarity. Even more so as the Ukrainian government has simultaneously started implementing the Minsk Agreement, clearly as a result of western pressure: the country will be decentralized as requested, arms are withdrawn from the front, and the President ordered the disarming of the dangerously unaccountable right-wing militias.

Ukraine is now in a position where a constructive solution of the internal conflict should be much easier. Russia, on the other hand, can expect an easing of tensions with the West while the imminent danger of war on its southern border seems averted. Apparently, Russia is paying a price (to Germany or to the US?) in the form of not supporting the Greeks in their struggle with their Euro zone “partners”. Moreover, this trade-off may have motivated Moscow to exert influence on Tehran and to guarantee for the agreement concluded – it wouldn’t be the first time such guarantees have proved vital in securing a regional deal.

For the time being, the two big blocs will certainly persist, but the antagonism between them has been weakened due to the new-found possibility of alliances of (groups of) states across the bloc divide. In the medium term, the duality that had an almost manichean quality will become less important, though it will not disappear over night. In the longer run it is conceivable that the bloc system will give way to a system of relatively independent powers balancing each other and cooperating in more or less durable alliances – in other words, a truly multipolar world order.

New Tordesillas for a New World Order

If this happens – let’s not forget that in spite of many indications pointing in that direction there is, of course, still a possibility of unforeseen events preventing it – the nuclear agreement the “P5 + 1” concluded with Iran will go down in history to mark the birth of the new world order. The Iran deal would thus become a key part of a 21st century “Treaty of Tordesillas”.

The major remaining challenge towards that aim is finding a diplomatic solution to rivalling interests in East Asia, in particular to the conflicting territorial claims in the South China Sea. The fact that the West is exerting less pressure on Russia means that Moscow won’t have to support China at any cost and will therefore be in a position to act as a broker. Beijing might therefore be convinced to make concessions – provided Washington keeps a low profile and does not seek confrontation here, too.

The US would be well advised to do so because, all things considered, it should not be forgotten that the present global economic and currency system will be inadequate for an emerging multipolar world order and therefore require an overhaul. In this respect, Washington needs China’s goodwill and cooperation to ensure that the USA can at least partly retain their role as a global financial hub. While this hugely complex question can not be dealt with in detail here, it can be assumed that any economic system is basically merely the result of prevalent power relations cast into a particular economic shape. Therefore it seems evident that a major change in the global political system would necessarily see the emergence of a different economic and financial system – a process that surely isn’t going to be free of conflict either.


This article was published in German in late July and has not been updated.