The Gulf States and Iran

Working Paper

The Gulf States and Iran: Two Misunderstandings

and One Possible Game-Changer

F. Gregory Gause III, Ph.D.

John H. Lindsey ’44 Chair, Professor and Head, International Affairs Department,

Bush School of Government and Public Service, Texas A&M University

Nonresident Senior Fellow, Brookings Doha Center, Brookings Institution

© 2016 by the James A. Baker III Institute for Public Policy of Rice University

This material may be quoted or reproduced without prior permission, provided

appropriate credit is given to the author and the James A. Baker III Institute for

Public Policy.

Wherever feasible, papers are reviewed by outside experts before they are released.

However, the research and views expressed in this paper are those of the individual

researcher(s) and do not necessarily represent the views of the James A. Baker III

Institute for Public Policy.

This paper is a work in progress and has not been submitted for editorial review.

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The regional rivalry between Iran and Saudi Arabia is one of the salient

features of the current regional crisis in the Middle East. For those who see

the crisis as a sectarian fight between Sunnis and Shia, these two regional

powers are simply taking their assigned roles in a centuries-long drama

between the two major sects of Islam. This sectarian framing profoundly

misunderstands the nature of the regional crisis. Sectarianism is certainly a

part of regional politics. People are being killed in large numbers in Iraq

and Syria now, in part because of their sect. However, sectarianism is not

imposed on the region by Riyadh and Tehran. These two powers take

advantage of sectarianism, but they do not cause it. Rather, the salience of

sectarianism in Middle East politics today is the result of the weakening and

collapse of the state across the eastern Arab world. State weakening brings

forward sub-state identities, like sectarianism. In the ensuing civil wars, the

local players seek out regional allies. Sunnis naturally look to Saudi Arabia;

Shia to Iran. Sectarianism is a bottom-up phenomenon. Saudi Arabia and

Iran are simply playing a balance of power game, driven not by age-old

sectarian hatreds but rather by regional geopolitics.

The second misunderstanding about the Gulf states and Iran is not as

profound as the first, about sectarianism, but is important for

understanding the foreign policy dynamics of the Gulf region. Saudi Arabia

does not lead a unified Gulf Cooperation Council in an anti-Iranian policy,

despite what some of the GCC summit resolutions might say. The five

smaller states in the Gulf each has its own policy toward Iran. Bahrain and

the United Arab Emirates are relatively close to Saudi Arabia on this issue,

but Kuwait, Qatar and Oman follow their own path toward Iran. Any

effective policy in the Gulf has to recognize that fact.

Given the intensity of regional conflict at this time, it is hard to imagine

how it all might end. But the dramatic decline in oil prices since 2014 might

actually hold out some hope for a moderation in the level of conflict

between Iran and Saudi Arabia. A rapprochement between the two regional

powers would not end the conflicts in Syria, Iraq, Yemen and Lebanon,

which have their own domestic roots in state weakening and collapse.

However, an understanding between the two could reduce the regional

temperature and open up the possibility of diplomatic progress in these

conflicts.

Saudi Arabia vs. Iran: A Balance of Power Game

The salient reality of the current Middle East regional crisis is the

weakening and collapse of state authority in a number of Arab states.

Lebanon has not seen an effective central government since the 1970’s. An

Iraqi state enfeebled by military defeat and economic sanctions was

destroyed, as a matter of policy, by the United States in 2003, in the

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misbegotten notion that a new state could easily be rebuilt upon its ashes.

The nascent state of Palestine split between Hamas in Gaza and the

Palestinian Authority in the West Bank in 2007. The Arab Spring knocked

over the historically weak regime in Yemen, leading that normally fractious

country into full-scale civil war. The uprisings of 2011 led to state collapse

in Libya, abetted by NATO intervention against the Qaddafi regime, and a

brutal civil war in Syria.

Nature abhors a vacuum, and politics abhors a political vacuum. With the

collapse of state authority around the Arab world, local groups have actively

sought out the assistance of regional and international players in their own

civil conflicts. In some places, because of demography and history, local

societies have split along sectarian lines. That has certainly been true in the

Fertile Crescent, though even in Iraq and Syria the divisions are not purely

sectarian, with the Kurds – an ethno-linguistic group that includes both

Sunnis and Shia – asserting their own local autonomy. In Yemen, sectarian

differences between Zaydi Shia and Shafi’i Sunnis mix with tribal and

regional identities, along with ideologically extremist groups al-Qaeda and

ISIS, to create a hodge-podge civil war. In Libya, where almost everyone is

a Sunni Muslim, the divisions are tribal, regional and ideological, but no less

violent.

The direction of politics in these civil conflicts will determine the future of

the region, which is why so many outside powers are getting involved.

Saudi Arabia and Iran are the primary among them, but not the only

players in the game. They seek to advance their interests in a balance of

power game. Iranians have in this game in the past backed Sunnis, like

Hamas, and Saudi Arabia has backed Shia, like Iyad Allawi, the former

prime minister of Iraq and head of the Iraqiyya Party. Mr. Allawi is a

secular man, to be sure, but a Shi’i by birth. For the most part, the Iranians

and the Saudis are invited into these civil conflicts by co-sectarians, because

Iran has developed long relationships with Shi’a groups in Iraq and

Lebanon, and because Sunnis in Syria and elsewhere, faced with Iranian

support for local Shi’a, naturally turn to the leading Sunni power in the

Arab world in Saudi Arabia.

The good news here is that Riyadh and Tehran are not playing out some

primordial, centuries-long conflict. They can in the future, as they have in

the past, compose their differences. The bad news is that, as long as states

are weak and civil conflicts are raging in the eastern Arab world, the

incentives for them to be involved in these conflicts, to balance off and

contain the influence of the other, will continue.

The Gulf States and Iran

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Any realistic view of regional geopolitics has to take into account the

different positions the smaller Gulf states take toward Iran. They hardly fall

in lock-step behind Riyadh. Bahrain and the UAE are closest to Saudi

Arabia on regional geopolitics. The Al Khalifa regime in Bahrain, a Sunni

ruling house in a Shia majority country that experienced massive upheavals

in the Arab Spring, has affixed itself tightly to the Saudis. The Bahraini

regime sees an Iranian hand behind its domestic opposition, sometimes

with reason but frequently using the Iranian bogeyman as an excuse not to

acknowledge the real political grievances of its citizens. The UAE

leadership nurses a grudge against Iran over the islands of Abu Musa,

Greater Tunb and Lesser Tunb, occupied by the Shah on the eve of British

withdrawal from the Gulf in 1971. It has joined Saudi Arabia in the current

intervention in Yemen, against the pro-Iranian Houthi movement, in a new

experiment in regional military muscle-flexing. Still, the merchants in

Dubai maintain an active trade with Iran across the Gulf.

The other three Gulf monarchies take some amount of distance from

Riyadh regarding policy toward Iran. Oman has maintained a business-like

relationship with Tehran since the Revolution. It hosted the secret talks

between the Obama and Rouhani administrations that led to the recent

breakthrough in Iranian-American relations. Kuwait has a substantial Shia

minority, but, unlike Bahrain, has integrated its Shia citizens more fully into

the political system, to the extent that the Kuwaiti Shia community is now

among the most enthusiastic royalists in the country, while tribal Sunnis

vote for “opposition” parliamentarians. Qatar shares the extensive North

Dome gas field in the Persian Gulf with Iran. A normal relationship with

Iran is an absolute necessity for Doha.

Lower Oil Prices: A Possible Game-Changer?

Sustaining a forward and aggressive foreign policy is an expensive

proposition, for both Saudi Arabia and Iran. It is possible that, over the

course of 2016, the fiscal realities of lower oil prices might induce both sides

to rethink, if not their overall rivalry, at least its intensity. There are two

drivers here. One is the simple cost of sustaining clients throughout the

region and, for the Saudis, direct intervention in Yemen. The second is the

realization that only through some kind of production-restraint agreement

among major OPEC and non-OPEC oil producers can oil prices be pushed

up significantly in the short term.

The Saudis already seem to have arrived at this point. They are talking with

the Houthis about a political solution in Yemen. They have engaged with

Russia on the idea of capping oil production, though they made clear at the

meeting of OPEC and non-OPEC oil producers in Doha on April 17, 2016

that they will not agree to a freeze if the Iranians do not join as well. It will

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take some time for Iran to get there. Tehran is still in the throes of

sanctions removal after the signing of the Joint Comprehensive Plan of

Action, and is hoping to increase its share of the world oil market. It is

likely to be disappointed in the results, at least on the fiscal side. Selling a

bit more oil at a vastly decreased price is hardly going to provide Tehran

with a windfall. But it is possible, by the end of 2016, that the Iranians

might be willing to talk with the Saudis about a deal for an oil production

freeze, or even cuts, among major producers.

Such a deal could lead to a greater willingness in both Tehran and Riyadh to

lower the regional temperature. A Saudi-Iranian rapprochement will not

solve the regional crisis. Only the restoration of state authority in Iraq and

Syria will do that, and that is not happening anytime soon. But even a

modest movement by the two regional powers toward a more normal

relationship could set the stage for diplomatic moves to reduce, if not end,

the killing and provide some greater stability to the region.

 

F. Gregory Gause, III is Professor of International Affairs and holder of the

John H. Lindsey ’44 Chair at the Bush School of Government and Public

Service, Texas A&M University, and head of the School’s Department ofInternational Relations.