Update: Iranian Protests Continue

By Michael N. Nayebi-Oskoui

I think an update will be helpful as Iran’s current spate of protests continue into their third month. I would like to state at the beginning of this update that as a personal matter, I stand with all people—especially the world’s youth—who yearn to live free, safe and productive lives. The people of Iran are no exception.

It’s also important to note that Iran has no semblance of a free or impartial media; there is a dearth of objective information about crowd sizes, and the number of deaths and arrests. This is by the regime’s own design. I have no doubt that the regime is arresting as many people as they can, and that state violence has proven to be fatal—likely hundreds of times. But every video and anecdote and photograph and story shared by protestors with the outside world is done with a stated goal and purpose. As I tell members of my own family, everything you’re seeing come from Iran is designed to break hearts, enrage, drive up engagement and support—not too difficult a thing when the opponent is the Islamo-fascist Iranian regime. But take certain characterizations with a grain of salt.

As I mentioned in our last update when protests began to escalate, Iran has been in the midst of several—often overlapping—periods of significant unrest, correlating with the sharp decline of the economy beginning in 2017. The current phase of protests lead by Iranian youth is not one that lists economic grievances at its core. The pithy, emotive slogan of “woman, life, freedom” presents a (n exceedingly Western friendly) set of demands around human rights and basic dignity. But make no mistake: Iran is a very poor country, and only getting poorer.

It’s also worth noting that despite many peoples’ assumptions, Iran is not a very young country. The 18–30-year-old cohort is the smallest segment of Iranian society.

Since the early 1980s, Iran has seen one of the most precipitous drops in birthrates in the world:

Data and image courtesy of World Bank

But let us not gloss over the truly sorry state of the Iranian economy. Iran’s current GDP per capita is less than Egypt’s. This is not a comparison most countries would welcome, and certainly not on the losing end. (Both are poorer, on a per capita GDP basis, than Iraq.) Iran’s youth face entrenched unemployment (near 30%). Iranian inflation is high (over 50%). The average Iranian household’s annual income is less than $10,000 USD. This is important context—for Iranian expats and descendants of Iranian expats living abroad, especially those who left Iran during the 1950s and the 1979 Revolution, the idea of deeply entrenched poverty in Iran is a surprise. Or a reality they have chosen to ignore.

But in the various and constant pensioner protests (pensions haven’t kept up with inflation), in the protests to fuel price hikes that lead to 2019’s Bloody Aban, in Khuzestan’s violent water protests of 2018, 2021, and 2022, in the various localized labor disputes of petroleum workers, the Haft Tappeh sugar factory, et al the common unifying thread is a deteriorating economic condition. And most of all: individuals’ dependance on the regime, its subsidies, and cash payments.

Tehran will blame sanctions and yes, sanctions have played a large role in eroding the Iranian economy, but blame is most fairly set squarely at the feet of the regime’s bad actions and economic mismanagement. This doesn’t change the fact, though, that most Iranians would struggle to pay for groceries if the regime disappeared tomorrow. Economic realities are not determinative, and I am not claiming that the limited ability of the Islamic Republic to soften the harshness of day-to-day life means that they will stay in power forever. But the quandary between freedom and food is not unique to Iranians, especially in their neighborhood: Libya, Syria, Iraq, Lebanon, and Yemen are all salient examples of the difficult transitions facing post-Revolutionary societies.

Which should not suggest I’m advocating for one outcome or another. I’m sure my “dream scenario” would align with many Iranians’, but I am in the business of delivering objective, data-driven analysis. This is why my overall assessment from August still holds: I don’t think the protests in Iran have risen—yet—to global geopolitical significance, despite the very emotional and human toll being paid by protestors. Why not? We haven’t seen any dissolutions or cracks within the ruling elite. Iran’s regional ambitions have not been curtailed. Tehran has not been cowed into accepting limits on its nuclear ambitions. Its regional adversaries are not ascendant. And we have not yet seen the kind of sustained, massive, cross-societal uprisings or protests needed to push a government out of power.

It’s also worth noting that due to geography and demographic makeup, Iran’s vast military, security and intelligence services are designed with domestic occupation in mind. This was as much true under the Shah as it has been after 1979—that the very same apparatus used to subjugate Iran’s population can be used to achieve regional ambitions beyond Iran’s borders is a bonus. Iran’s largest security challenge has always been from within; every region, sometimes every set of neighboring mountain valleys hosts a stunningly diverse array of cultures, ethnicities, languages and sectarian differences. I find it exceedingly unlikely that popular unrest will bring down the current clerical regime in Iran unless elements within the regime themselves choose to use public unrest to shift the structures of power.

The situation remains fluid, however, and there are several things I’m watching for to see any potential changes to our assessment:

  • What is the size and make up of protests? Rather than seeing current protests as a new phenomenon, I instead see them as the entry of Iran’s youth into a growing, years-long movement of unrest against the Iranian regime. As I laid out earlier, the regime’s ability to contain dissent has all but disappeared. This is one of the most difficult questions to answer, as both the government and protest channels are not objective sources. Outside of restive areas like Kurdistan and Baluchistan, however, videos and photos of protests rarely show crowds larger than a few dozen to low hundreds. The crowds, especially when hooliganism takes over at night, are very young and disproportionally male. This will have to change if we’re going to see security forces shift tactics.
  • Are security forces shifting tactics? The regime has been able to continue relying on local police and Basij forces, using a mix of live fire and less-lethal methods to push back crowds of protestors. This tells us several things, including protestor tactics are not becoming more sophisticated, and the numbers of protests (and numbers of protestors) are not overwhelming this first-line defenses of the regime. There have been no serious defections loss of support among the regime’s enforcers.
  • Are protest tactics shifting? Despite social media hashtags claiming an #IranRevolution, or some journalists’ descriptions of scenes in certain cities being a “war zone” protestors are largely disorganized and diffused, contained to neighborhoods. Protestors are still largely using tire fires, burning the contents of dumpsters, and using petrol bombs (Molotov cocktails) and hurling stones in their engagements with regime security forces. We’re not seeing the formation of neighborhood militias. There are no significant signs of people being armed. Protestors aren’t building IEDs. The smoke, especially from trash and tire fires, equally obfuscates and adds dramatic flair to clashes—but hasn’t caused a substantive weakening to the regime. It is likely inhibiting larger/older crowds from gathering on the streets. Similarly, I tend not to focus on statues, banners, and posters of regime figures being attacked. If the parliament building gets sacked, however, that’s a different story…
  • Is there unified, nation-wide participation? Many activists and the journalists they speak to will point to crowds of people in cars, shuttered shops, calls for labor strikes, etc as signs of passive but unwavering resistance to the regime. Maybe? The reality goes both ways. I would suggest many people look to the George Floyd protests that rocked cities across the United States (and eventually lead to the largest domestic mobilization of National Guard forces since WWII). Whether or not a business is closed in solidarity or in anticipation of violence isn’t always immediately discernable—leading both sides to be able to claim what they want. During the 1979 Revolution, the bazaaris, local business owners and traders, added considerable economic and social pressure on the Shah when they joined protestors in the streets. After decades of sanctions and the rise of the Islamic Revolutionary Guards’ (IRGC) role in the domestic economy, the number/size/scope of bazaar participation in modern protests is limited but still excites the expat community.
  • Has the regime lost civil society? As of now, despite all the heartache, teachers and professors are still working. People are still sending their kids to school. Debris from protests is still being cleaned out of the streets. Mail is still being delivered. Fuel is still being refined. Food is still showing up on shelves. The quotidian minutia of the system comes together day after day, even after weeks of protests.

And most important:

  • Is the regime still able to meet its basic economic commitments to the Iranian people? This might not make a sexy TikTok or dramatic share on Twitter, but if fuel prices rise—or petrol stations run out, the regime is in serious trouble. If the Islamic Republic can no longer provide subsidized bread, it likely has no future. Think of the ignoble end of the Rajapaksa dynasty in Sri Lanka—once the government could no longer guarantee access to basic staples like food and fuel, their fate was already sealed.

In addition to the things we’re looking for, I have some additional observations:

  • There is a different kind of intensity when it comes to protests within Iran’s Kurdish regions, and in the long restive province of Sistan and Baluchistan. These are Sunni majority areas with distinct cultural and linguistic identities and histories of agitating for independence even before the 1979 Revolution. Iran’s Kurds are also the most politically organized pocket of resistance, with ties to militant Kurdish groups in Turkey and Iraq and a large, international diaspora. While protestors might chant “woman, life, freedom” the tone and timber of resistance among Iran’s Kurds and Baluchi populations (and to a lesser extent, Azeri) leads me to think that we are looking at the early stages of a renewed and bloody phase of conflict in both areas.
  • Kurdish and Baluchi independence is anathema to most Iranians, however, which is likely why protestors are still organizing around the death of Mahsa Amini, a young Kurdish woman who died in police custody, and under the current banner of “woman, life, freedom.” But expect challenges to Iran’s territorial integrity, militancy, and a different magnitude of violence from state forces in response. The Islamic Republic will be keen to follow in the footsteps of Saddam’s Iraq and Syria’s al Assad regime in pitting restive minorities against its majority populations.
  • While many are comparing Iran’s Supreme Leader to the Assad and Saddam regimes, there is a major difference: Iran’s ruling elite does not represent an ethnic or sectarian minority.
  • I don’t see any outside power—US, EU, Russia, Saudi Arabia, Israel, etc—stepping in and forcing regime change. Also, I would not hold my breath regarding the return of the Shah’s family to power…

We’re not there yet, but I am often asked what I think “comes next” in terms of Iran, or what a post-ayatollah world looks like. I think the rule-by-ayatollah model is the most unpopular and weakest link of the current system. On paper, Iran’s clerical elite lend legitimacy to the IRGC, its subsidiaries like the Basij, and so on. And minus an initial short period after the revolution, Iran has only had one non-clerical president: Mahmoud Ahmadinejad. In reality, however, the ayatollahs and mullahs and so on are enabled and defended by the IRGC and the various state apparatuses they control. While I do not think this was always the case, the dependency of the part of the mullahs has increased significantly in recent years, especially since the 2009 Green Movement and with the rise of the sanctions economy. (If you want to get especially conspiratorial and discuss how the only winners in an Iran with an entrenched social protest culture and never-ending sanctions are the IRGC, you’ll find plenty of people who’d agree with you.) All this is to say, I think a charismatic, nationalist-populist leader could do very well for himself. Especially if he came from an IRGC background and could present a non-clerical face that would maintain much of the various state elements in place—namely the plum position of IRGC alumni.


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Iranian Drones and Russian Desperation

Russia’s reliance on Iran for armed drones and missiles is a resounding fall from grace for the one-time defense manufacturing rival to the United States. And a telling indicator of not only just how far the Russians have fallen, but how few reliable friends Moscow has left. It is also a stunning reversal in leverage for Putin, who for decades has used his ability to lean on Tehran (especially when it comes to US-Iranian spats) as a tool against Washington, DC.

Beyond the geopolitical intrigue, the shoddiness of Iranian tech underscores the determination of Russian leadership to inflict as much pain and damage to Ukrainian civilians and infrastructure as possible. Iranian drones are unreliable, loud, and easily shot down. Russia has to overcompensate by sending small swarms all at once to take out their intended targets–many of which are residential areas, train stations, and power infrastructure. Really hard to accidentally target any of these over a half-dozen times…


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First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
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Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Iran Grapples With Protests…Again

Iran is in the midst of one of the most serious rounds of public unrest since November 2019, when a hike in fuel prices sent potentially hundreds of thousands of Iranians out into the streets. Dozens of structures were burned during those protests, statues of regime figures pulled down, and plenty of calls for death of Supreme Leader Ayatollah Khamenei and the Islamic regime itself. Outside observers estimate over a thousand Iranian citizens were killed, and over ten thousand were arrested. Current protests are being met with the same harsh response by regime security forces, even if we have not yet reached the scale of brutality seen in 2019. In January of 2020, Iranian military forces shot down Ukraine International Airlines Flight 752, setting off another wave of intense national protests. Iran has had a series of significant protests movements since then, sparked by everything from the country’s abysmal handling of the COVID-19 epidemic, to runaway inflation, drought and lack of water in places like Khuzestan, etc. 

The most recent protests were sparked by the death of Mahsa Amini, a 22 year old Kurdish Iranian woman who was arrested because of improper adherence to hijab laws while visiting Tehran with her brother. While details out of the Iranian regime are sparse, activists say that head injuries sustained at the hands of Iran’s morality police lead to her death in custody. Another round of national protests has erupted since her death on September 16, though what had initially started as a women’s rights protests against hijab rules has quickly escalated to encompass the broad swathe of frustrations and discontent of many Iranian citizens, especially the youth.

I don’t think there is anywhere in the world where protests are watched with as much bated breath as Iran. In part due to history (mass social unrest lead to the collapse of the Shah’s regime in 1979), in part due to international intrigue (since the fall of the Soviet Union, the US has had few feuds that have lasted as long as the one with Iran), and in part due to Iran’s own behavior (Iran is an aggressor state against most of its neighbors and has links to militant groups around the Middle East and world).

And so the gruesome death of a young Kurdish woman, and the subsequent protests around it, have captivated a rapt audience. It would be an almost too delicious irony if the death of a young Kurdish woman who refused the imposition of the hijab was the ultimate downfall of the Iranian regime. Unfortunately, that is unlikely to be the case. And while Iran’s Kurds remain perhaps the most organized, most politically active subgroup of Iran’s multi-ethnic society, Iranian Kurdish desires for autonomy/statehood are largely anathema to most other Iranians. It’s hard to imagine current solidarity would extend much beyond any potential toppling of the regime.

Iran’s constant protests are unlikely to stop anytime soon, and while they do point to an erosion of the regime’s ability to maintain an iron grip over its citizens, current protests are unlikely to lead to a direct exit of the ayatollahs and mullahs at the apex of the regime. Frustration is a powerful motivator, but Iran’s protestors lack a charismatic national leader or unifying ethos beyond discontent. Ayatollah Khomeini famously leaned on a pan-Iranian, Shi’ite identity enforced with a big stick to create his vision of a post-Shah Iran. And that big stick remains in the hands of the regime today, ready to cudgel any opposition back into submission. Until that changes, or pillars of the regime defect, or significant foreign aid and coordination steps in on behalf of the protestors, Iran is destined to continue an unfortunate pattern of everyday citizens yearning for change clashing with a regime determined to crush them to ensure its own survival. 

The above was written by our Director of Analysis here at ZoG, Michael Nayebi-Oskoui. The video below is obviously from me.


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This Is How the World Ends, Part I

by Peter Zeihan, Melissa Taylor, and Michael N. Nayebi-Oskoui

I like to say that I sell context. It’s all about how seemingly disparate things like age structures and trade patterns and political evolutions and technological advances interact. In any such dynamic system there are winners and losers. My concern is that the global system itself now faces a moment of truth in which the countries of the world, first and foremost the United States, will fail to rise to the occasion. Which is a nice way of saying that what I’m really seeing – what I’m really selling – is the end of the world.

This world system was put into place 70 years ago. The core of the international system during the Cold War was the Americans’ support of the global trade and security order. The Americans agreed to provide global and regional security to their allies in exchange for deference on security matters. When issues of economic import rose to prominence, the Americans tended to give way. When issues of strategic import rose to prominence, the Americans tended to get their way because that was the deal.

This arrangement froze geopolitics as previously independent countries were pulled into a massive, interconnected system because of not only America’s overwhelming economic and military power, but also the power of the alliance structure it controlled. This was sucha powerful force that it even pulled in America’s enemies one-by-one and allowed them to rise, fueled on exports. In the process, the US made the global economy dependent on the relatively free flow of goods, people, and money while also alleviating the need for the large militaries that defined the first half of the 20th Century. In other words, the US and its alliance shifted every global system that mattered for literally every country in the world.

Everyone except the US, which managed throughout this to remain isolated economically. It maintains its own military, largely produces what it needs (though it imports a lot of what it wants) and remains the largest economy in the world. With the fall of the Soviet Union and the end of the Cold War, just as the world began to truly bet their economies on the American plan, the American’s need for this incredibly expensive system faded. It’s taken the US awhile, but it finally noticed.

There is no replacement for US power, economic or military. “Europe” as a concept, China, and Russia are all in existential struggles and each of them is likely to lose. There is no alternate reserve currency. There is no one who can react to any event anywhere in the world like the US can. The Americans are leaving a power vacuum and we know what happens in power vacuums.

I’ve been speaking and writing about this approaching “end” for the better part of the past decade. One of the fun things – and incidentally, one of the things that helps keep me sane – is that it is all very abstract. I can blithely note that wars will happen, that supply chains will break down, that the lights will go out, that famine is an inevitability, but so long as the timeframes are fuzzy and the locations are over the horizon it is easy to speak and write with a degree of detachment. This doesn’t affect me, and certainly not right now.

I think/fear that I’m about to lose that insulation. The end is pretty god-damn nigh. Exactly how this plays out is still very much up in the air. The blow by blow will matter immensely in the short and even medium term. So I’m going to lay out the most recent big events that seem to be giving shape to the Disorder over the course of several newsletters.

Event 1: The United States withdraws from the Iran nuclear deal (May 8)

The Obama administration did not sign the U.S. up to the nuclear deal because it thought Iran would suddenly become an upstanding member of the international community. After decades of being the region’s arbiter, the American security apparatus in specific and the American public in general wanted to get out of the region. That meant the White House needed to make a choice.

Option one was to appoint a “winner.” This “winner” would patrol the region, keep the local powers in line, and in general do what the Americans had done: keep the region as stable and static as possible.

The Obama team didn’t like the candidates. Iran was out as a matter of principle. Saudi Arabia didn’t field a meaningful army, much less a navy. Israel was potent, but small, and the religious angle meant it could never lead the region. Turkey may have been capable, but it had unrelated interests in Europe and the Caucasus and the Mediterranean, and so could never concentrate its efforts on such a gangly region like the Middle East.

Even then, there was no guarantee that any “winner” would look out for American interests unless a large American military presence remained… which would defeat the point of a sustained withdrawal. And the last thing Washington wanted was to cause the emergence of a new regional hegemon that was not consistently pro-American.

That left option two: establish a regional balance of power so the region would self-regulate. This balance, ultimately, is what the nuclear deal sought to achieve: partially rehabilitate Iran, partially reintroduce it into the international system so that Iran could counter – and be countered by – the other regional players. In doing so – or so the theory goes – the region’s wars will be many, but limited.

The key selling point of the balance-of-power option was that the Middle East has so many competing centers of power that no single country would ever be able to gain a significant, long-term advantage. That would keep any of the (many) expected battles bottled up within the region. It sounds a bit cruel, but the ongoing civil wars in Syria and Yemen are good examples of the balance-of-power strategy working because those conflicts keep the region’s powers at one another’s throats.

Trump’s withdrawal from the nuclear deal does two things. First, it wrecks the balance-of-power strategy by gutting the possibilities of the region’s most active player: Iran. The resurrection of global financial sanctions on Iran will – at a minimum – halve the country’s export earnings by year’s end. This means the Americans will need a new strategy for the region. At present, the Trump administration hasn’t offered anything as to what that might be. But that is an issue for another day.

From my point of view, the second outcome of the withdrawal is far more important. The old/new sanctions on Iran uncaps what has traditionally been the Americans’ most potent economic weapon: secondary sanctions.

Secondary sanctions are not something the Americans have ever used often or liberally. They present would-be sanctions busters with a choice: do business with the sanctioned country (in this case, Iran) or do business with the United States. Since the Iranian market is roughly 1% the size of the American market, there may be a bit of whining but for most firms that’s not all that difficult a decision. And that’s before you consider the long-term demographics of the world’s major economies.

What is truly different this time around is the presence of some institutional infrastructure the Obama administration set up a few years back to force the Iranians to negotiate the nuclear deal in the first place. Via an exhausting series of bilateral negotiations, the Obama team got a good hard grip on something called SWIFT, a system for managing financial transfers between various players in the international space. They used this newfound power to apply secondary sanctions to anything that touched the U.S. dollar. Since the U.S. dollar is the only global currency of exchange (the euro position has been shrinking for years, and even the Chinese yuan has been backpedaling of late) the end result was to cut any sanctions-busters out of pretty much all international trade, even if those sanctions-busters have no direct exposure to the American market.

I think the Trump administration fully understands just how powerful of a tool it just picked up, and that tool is perfect for the job of pretty much everything else on the administration’s international agenda.

Up next: Europe Guts Itself.

Revisiting Iran

By Peter Zeihan and Michael N. Nayebi-Oskoui

The White House has been strongly hinting for two weeks that President Trump is unlikely to “re-certify” the Joint Comprehensive Plan of Action (JCPOA) or as it’s better known, the Iran Nuclear Agreement. The emotions from across the political spectrum range from jubilation to outright hysteria though, it’s important to note, the reactions don’t fit neatly within American party lines (plenty of Democrats had to be strong-armed into supporting the deal, and more than a couple Republicans believe it is in America’s interest to stay within the accord). The reality of the matter is much more complicated, though I believe it’s safe to tell everyone to take a deep breath and calm down.

A quick and dirty discussion of the mechanics of the JCPOA are in order. Technically speaking, it’s a non-binding political agreement (remember the Paris Climate Accords?). The Iran Nuclear Deal is not a treaty. It’s a series of interconnected agreements and a complex set of verification steps and was designed to make it easy for the United States to pull out or re-apply sanctions on Iran at will. To that end, the American president has to re-certify the agreement every 90 days, as well as sign off on a series of sanctions waivers that cover periods of time from a couple of months to a year. We’ll come back to this part.

The agreement, however, was approved by Congress, and in the event that President Trump or any of his successors decide to refuse certification of the deal – essentially declining to admit that Iran is holding up its end of the bargain – Congress has 60 days to attempt to change portions of the JCPOA they disagree with or (re)apply sanctions both old and new.

That last bit about sanctions is where things get tricky, before we even get into the fact that Congress couldn’t get anything done in 60 days in a normal political season, let alone when they’re racing to hammer out a budget and attempt to forge some sort of tax reform deal. The JCPOA and the Presidential waivers cover a web of sanctions that are both those passed by Congress and those that came into effect via executive order. The latter is where Trump could snapback previous executive sanctions and apply new ones if he feels Congress isn’t taking Iran to task as much as he’d like.

There are other complicating factors here, namely the five other nations who are members of the accord (including a France that has steadfastly refused to renegotiate the terms of the deal as its companies race to access Iranian energy plays and the third largest market in the Middle East). Europe as a whole and France, Germany, and Britain in particular are loathe to re-enter a difficult and prolonged negotiations with the Iranians given all the other problems they’re dealing with (like RussiaMerkel’s declining power, and an overhaul of the socioeconomic pillars of political life…  just to name a few), and traditionally have had a much easier time dealing with Tehran than the Americans.

At the end of the day, though, not much is likely to immediately change. There is a strong argument to be made that it’s bad for America’s long-term interests to be seen as an unreliable partner to international agreements as well as further alienating EU/NATO partners, but the most likely scenario is that President Trump refuses to certify, the US Congress gets busy doing nothing, and that Iran continues trading and dealing with Europe, Russia, and China. Meanwhile, the US create a unilateral sanctions system to target Iran – perhaps with secondary sanctions to target European and Asian players who are doing business with Iran. That’d return us to the status quo ante that defined the US-Iran relationship for not only much of the Obama administration, but also the past four decades.

So… now what? If the US is serious about disengaging from the Middle East—and the relatively standoffish (in terms of the US response) American action in Libya, Syria, post-ISIS Iraq, and Yemen are goods signs that the US is indeed serious—there are few realistic options on how to contain the Middle East quagmire.

Option one is to establish a regional balance of power. This requires encouraging Turkey to be an independent actor rather than a state that is a mere adjunct of NATO (check), turning a blind eye to Saudi Arabia’s tendency to spawn Sunni terror groups (check), and somewhat rehabilitating Iran in the international community so that it can counter the other two. That last was the Obama administration’s rationale for the nuclear deal in the first place. The advantage of this route is that the region’s various players become locked into a never-ending death struggle that so consumes them, they lack (ideally forever) the freedom to act out-of-region.

Option two – which appears to be Trump’s preference – is to anoint one of the three major players to run the region in the Americans’ stead. Those of us who remember the heady days of sword-dancing and orb-touching from President Trump’s earlier visit to Saudi Arabia will not be surprised to hear that the likely beneficiary of the Trump administration’s emerging Middle East policy is Riyadh. What’s more important is that Riyadh certainly thinks so, too. From lip service moves such as allowing women to drive, to staging a practice war against mountain-bound Shi’ite-aligned rebels in Yemen, to buying-off and/or strong-arming regional Arab competitors such as Egypt and Qatar, the Saudis are certainly trying to set themselves up as the regional powerhouse.

But Saudi Arabia is an odd choice. It is a desert country completely dependent upon oil sales, predominantly to a China that hopes to challenge US hegemony in the Pacific. It is the only of the three that is not a democracy, and shows zero interest in even considering shifting its domestic politics in a liberal direction. It’s primary foreign policy strategy is to spam out militant groups to turn its rivals’ neighborhoods into post-apocalyptic carnage zones (its hands were in the rise of al Qaeda, the Taliban and ISIS). Between its deliberate lack of civil society, its brittle political culture and its monochromatic economy, it simply doesn’t have any of the “normal” levers of power that would allow it to be a regional hegemon without a great deal of ongoing help.

And if it needs a great deal of ongoing help, that doesn’t really mesh with the core American desire to get out of the region.

The Next Iraq War

Trouble is (again) brewing in Iraq.

The Middle East is a wild and wacky place. The core issue is geographic: basic resources – especially water – are in short supply and resource competition breeds violence. Cultural and sectarian differences are what outsiders are often aware of, and for good reason. Out-of-region powers ranging from the British to French to Russians to Americans have been playing Persians and Turks and Arabs of various flavors against one another for centuries. First to get beneficial trading relationships with the Eastern world (think spices and silk), then to keep potentially hostile forces locked up in the sand box, and finally to get preferential access to the bounty of oil and gas resources in the area.

The Middle East boasts five major civilizational zones, four of which we’ll examine here. What sets them apart from the wastes that dominate the broader region is the simple fact that they have water. It is a basic concept, but it bears stating plainly: water enables agriculture enables populations enables cities enables education enables technology enables a military. Without water, it is damnably hard to develop into, well, anything.

  1. Anatolia (aka Asia Minor, aka Turkey). This first zone gets both the most and the most reliable rainfall. The real gem is western Anatolia – not only is this zone (relatively) wet, its mountains low, and its valleys broad, it directly abuts the Sea of Marmara: a warm temperate zone with fertile lands and excellent trade opportunities, making it among the world’s richest and most advanced regions going back to antiquity. Move further east in Asia Minor, however, and the land rises and sharpens. The Marmara region can – and often has – projected power deep into the Middle East, but it must always first negotiate its own internal rugged zones before venturing out. For the past half millennia, Anatolia has been home to the Turks.
  2. Persia (aka Iran). The second-most powerful regional geography are the Persian Highlands. Geographically an extension of eastern Anatolia, the lands are riven by dozens of minor mountain chains generating hundreds of tiny valleys with dozens of distinct cultural and linguistic communities. Like the Turks, the Persians can only venture out when they have their internal house in order. They’re getting close. It has taken the largest group – the Persians – the better part of recorded history to consolidate the messy region under their control, in part by promulgating a multi-ethnic/religious, semi-nationalist identity we know today as “Iranian”.
  3. The Levant (aka the Eastern Mediterranean shore). Whereas Persia is shot through with micro-climates and hundreds of separate identities, the Levant’s mountains are lower, its valleys bigger, and its flat lands more contiguous, meaning it has only generated a score of so peoples. It is also somewhat hived off from the other areas by mix of deserts and mountains, allowing the bigger fish in this smaller pond to carve out their own worlds. The Jews proved capable of re-creating their ancient homeland, albeit at the cost of the Palestinians who had been living there since the Old Testament was completed. A more motley crew involving Sunni, Shia, Maronite Christians and others has attempted with some success to spackle together Lebanon. The Alawites of the northern Levantine coast partnered with the Shia and Christians of the mountains to dominate the interior cities of Homs, Hama, Aleppo and Damascus to run Syria – a partnership that has yet to breakdown despite the agonizing civil war.
  4. Mesopotamia (aka Iraq). In the final area it hardly ever rains at all, but it still has water courtesy of the Tigris and Euphrates Rivers. The saddle of desert land separating the pair is so low that stone-age level irrigation technologies can turn it green. Unique among the four for its broad, unified flat lands, when Mesopotamia is able to rise it is able to rise very quickly (all the neighbors are constantly dealing with the agony of a difficult, rugged, arid geography while the lowlanders simply shift around some water and build roads through flat areas for a quick economic pick-me-up). As such Mesopotamia is the most likely region to launch invasions…but also the power that is the least defensible and most likely to get wrecked in a prolonged war.

Between the competing nationalities, ethnicities (map courtesy of the Gulf/2000 Project), religions, clans and factions, there just isn’t anything that most – much less all – of them can agree on. Or at least there wasn’t until about four years ago. That’s when the Islamic State popped up.

Istanbul, Turkey

Unlike Persia or the Levant where it rains or Mesopotamia where irrigation is easy, the lands in the Middle East’s middle are hard desert. The Euphrates does flow through the area, but the middle Euphrates’ banks are steeper than those in southern Iraq, so the “green zone” from the high point above one bank to the other is typically but a few miles. With so little usable land stretched across so much empty, in no era has controlling this narrow ribbon been worth the effort, particularly since desert raiders can easily punch anywhere into it.

Consequently, the regional powers simply leave what is today western Iraq and eastern Syria alone until some of the local crazies (or resource competitors, if you’d rather) cause sufficient problems that one of the regional powers feels moved to send the army in and burn everything to the ground. The Islamic State is merely the most recent manifestation of a problem that has plagued this area since the dawn of civilization.

IS owes not just its rapid rise, but its very existence, to the Middle East’s recent geopolitical disarray. Syria has been locked into a civil war and been unable to patrol, much less act decisively, in its eastern lands. Israel’s glee at watching the Syrian war continue to wreck its primary regional foe has prevented it from acting. After their World War I defeat, the Turks closed themselves off from the world and ceased participating in Middle Eastern affairs; they are out of practice. Iraq faced not only the U.S. occupation and its own civil war, but its Western-trained and -supplied army proved so incompetent that it had to be disbanded. Iran has had bigger fish to fry in Iraq – a country it is hoping to turn into a client state – and Syria – a regional ally it very nearly lost. Americans, gun-shy from their Iraqi occupational experiences, didn’t want to take the lead on another Middle Eastern war. (Incidentally, the only reason Americans care at all about IS is that a few idealistic Americans refused to believe that the local mass-murdering militant group known for enslaving or beheading any Christians they came across would target even secular American aid workers.)

But all this and more has recently changed.

Six years into the Syrian civil war, the Iranians (and Russians) have poured in resources sufficient to turn the tide in the government’s favor. Anti-government rebels in the country’s west have suffered a litany of defeats, freeing Damascus to push more resources against IS in the east. The Turks have recently consolidated their own internal political schisms and for the first time in a century, started venturing out again. Syria and Iraq are the first step on a broader…regional tour. The Iraqi army was re-mustered, re-trained and re-supplied, and during the past year it has made steady gains against IS in Fallujah, Ramadi and Mosul. American forces did a bizarre dance of advising-but-not-fighting-but-ok-sort-of-fighting-sure-really-fighting.

One functional regional power would have been enough to roll IS up given time, but three plus some international add-ons were more than enough to decimate it. At long last, IS in its Middle East “caliphate” form is rapidly deteriorating after a two-year-long staccato of steady, significant losses. Recently their “capital” at Raqqa fell, and what little remains of the institutional core of IS-prime is itself no longer a significant geopolitical threat. It has been a long, messy, bare knuckle brawl, but it is nearly over.

Tehran, Iran

Given the cast of characters we’re talking about there was never 100% unity behind how or if or when or to what extent IS needed to be crushed, but to have folks as widely divergent as Persia and Arabia, Russia and America, Israel and Syria on the same page – however briefly – is far more than a mere historical footnote.

Now, with the unifying threat the Islamic State posed largely fading into the desert, things in the Middle East are about to get a hell of a lot uglier. No longer will everyone be putting their other beefs aside to deal with the threat of IS. Now they have to deal with each other.

The next crisis will boil up out of Iraq, a country comprised of three mutually-loathing groups:

Iraq’s Arab Shi’ites make up the bulk of the population, and have for centuries. But being the majority does not work for them. Living primarily in the southeast edge of the country near Iran, their Shi’ite beliefs have placed them at odds with the Sunni Ottoman, Hashemite and Baathist leadership that have ruled Mesopotamia since the 16th century. Proximity to Iran should have had benefits, but then again being Arab subjects of a Persian empire isn’t a great position to be in. With roots in the marshy swamplands of the southern tip of Iraq, these Arabs have long been poor, but Iraq’s Shi’ite core now rests atop most of Iraq’s superfields. After the fall of Saddam and the introduction of representative democracy thanks to the United States, Iraq’s Shi’ite Arabs (with plenty of community organizing thrown in by Iran) have the numbers and oil wealth, much to the dismay of everyone around them. As much as the Iranians want to have Shi’ites running things in Baghdad, they don’t want a wealthy, ethnically Arab oil competitor on their western flank who can challenge their regional role. Iraq’s Shi’ites have grown to resent not only their typical Sunni masters, but also Iranian attempts at puppeteering Iraqi suffering to their benefit. Iran saw this coming, and has spent decades sowing infighting and competition among Iraq’s Shi’ites – and it did so expertly.

The Sunni Arabs have a long cultural pedigree, with tribal links to Saudi Arabia and especially Jordan. Bedouin tribesmen gave their support and legitimacy to the Hashemite monarchy (a branch of which still rules in Amman). Sectarian links to distant Ottoman sultans, and tribal links to Saddam gave the sectarian minorities oversized control and the lion’s share of state oil revenues (before American-led forces bombed them twice, the Sunni triangle had excellent connectivity with Baghdad, European-built highways, good hospitals and universities even as Shi’ite Iraqis were living like 14th century peasants). Unfortunately, the Sunni live along the fringe of the broad, arid expanse of Iraq’s Western Desert. Of late their fortunes have reversed: they have no oil, their sons are wooed by an alphabet soup of militant groups, and they are vehemently opposed to any subgroup – be it Shi’ites or Kurds – dismantling what they view as an inherently Arab Iraqi state or taking their share of national oil revenues… which comes from oil fields they no longer control. In addition to having fallen the furthest, the Sunni Arabs are the smallest of the three groups. They simply cannot win at either representative democracy or open warfare, so they have learned to change the game and fight irregularly, kicking over the table. Iraq’s Sunnis are the ones who ran the Baath insurgency and the local al Qaeda chapter against the Americans, and who gave birth to the Islamic State.

Iraq’s Kurds are a subgroup of a broader community stretching from Iran through Iraq and Turkey to Syria. Like most other groups in the Middle East, the Kurds are as prone to infighting as anyone else. More in fact, as they hail from not only the steppes of northeastern Syria, and highlands of Iraq, but also the riven mountain valleys of southeastern Anatolia and northwestern Iran. Simply – if not entirely accurately – put, Iraq’s Kurds are divided between pro-Turkish and Iranian camps, and Iraqi Kurds have been slow to support Syrian Kurds in their fight against IS or Turkish Kurds in their armed resistance against Ankara (with Iranian Kurds another entity entirely). Iraq’s Kurds also have something no other Kurdish group does: control over significant oil and natural gas reserves. This infuriates Iraq’s Sunni Arabs to no end for taking the money, Iraq’s Shi’ites to no end for taking de facto political control of their territory, and gives the Kurdish Regional Government in Erbil an effective bargaining chip against Baghdad. It also – so far – makes them valuable to Turkey, an oil importer.

It is the final of these three groups that perked up my attention recently. On September 25 they held an independence referendum in which some 90% of the electorate is believed to have shown up, with 93% of voters answering in the affirmative.

Pretty much everyone – including the United Nations and the United States, the two groups who have most aggressively supported Kurdish rights – have condemned the vote and called upon all parties to ignore the results.

“Why?” you might ask. And it’s not a stupid question.

The Kurds have suffered greatly at the hands of Iran, Turkey and Iraq, and their many waves of refugees haven’t exactly been welcomed in Europe with open arms despite their relatively secular approach to religion. They’ve certainly been Washington’s regional ally of choice, asking for little while supporting American efforts throughout their region with land, basing rights, tactical and strategic intelligence, and – when push has come to shove – some of the most badass fighters the region has ever produced. Of late they have done most of the heavy lifting against both the Assad regime and the Islamic State.

The problem is that the battles against IS achieved something that no other conflict in the region ever has: it gave the various factions of Kurds a singular enemy to fight, helping craft a proto-identity that might actually help the notoriously fractured ethnic group unify. And if the Kurds all agree that they are the same people, then an independence vote – regardless of obstacles – makes a lot of sense.

And that’s a problem for everyone.

It’s a problem for the Iraqi Arabs of all sectarian stripes who see Kurdish territories as theirs. It’s a problem for the Iraqi Shia who see their northern tier coming unhinged and a loss of northern oil revenues. It’s a problem for the Americans who would like nothing more than to get the hell out of the region, but who feel responsibility to their loyal Kurdish ally and would prefer to not leave them in a lurch – no matter how self-imposed that lurch is. It’s a problem for Iran and Turkey and especially Syria where local Kurdish communities have identities forged in the common anti-IS effort and who all directly border a would-be independent Iraqi Kurdistan. And it is a problem for the Iraqi Kurds, whose landlocked nature means that without the buy-in of the other regional players any independent Kurdistan would be so economically broken and dysfunctional as to make Bolivia look wildly successful.

And that’s only half the problem.

The other half is that the Islamic State was not an import – it was the noxious weed that took root in the fractures of Iraqi society. The Kurds’ push toward independence risks pushing those fractures further, and a destabilized Iraq (and yes, it can always get worse than what we see now) risks pulling its neighbors down with it. To give you an idea of just how disruptive that would be to, well, everyone in the neighborhood, the only country in the world supporting the Kurdish referendum is… Israel.

With the shiny disco ball of IS crashing down, the players of the Middle East are taking stock of each other as the lights turn back on. No longer facing a common enemy, each major player is seeking to capitalize on the weakness of their competitors. The Levant and Mesopotamia are in need of rebuilding, and Iran, Turkey, and Saudi Arabia want to limit risks while maximizing their own strategic gains in the process. Baghdad and Damascus will protest loudly during any vivisection of their territories, but the Kurds are looking to reap the rewards of fighting on the front lines against IS. Their success against the informal forces of the Islamic State has them feeling up for a fight, though the regular armies of the regional states will not be routed as quickly. Current US/NATO support belies how little overt (if any) military support the Kurds can expect in a fight against Ankara, Baghdad and Tehran, and yet the vast majority of the population is expecting Erbil to act in accordance to the referendum, and to find some dividends on the huge amount of suffering endured by Kurdish people in their frontline fight against IS.

And never forget that should the regional powers start battling an emerging Kurdistan, the no-mans-land of western Iraq and eastern Syria will once again fall off the region’s collective radar…granting yet another breed of desert militant the perfect environment to gain strength once again.

Iran Sanctions Lifted

On Jan 17 the IAEA gave the green-light to the Iranian nuclear industry – indicating that Tehran was implementing the U.S.-Iranian nuclear deal in both the spirit and letter. With that stamp of approval, some of the sanctions that have hindered the Iranian energy sector are immediately lifted. The Iranian government issued a flurry of celebratory statements, including one from the Oil Ministry indicating that Iranian exports would increase by 500,000 bpd within a week and by another 500,000bpd by year’s end.

Mmmmm….not so fast.

Yes, the rapprochement between the Americans and Iranians massively shifts the regional (and global) geopolitics. And yes, now that sanctions are lifting Iran’s energy output will rise, but an extra 1 million bpd of Iranian crude this year is, well, silly.

First of all, Iran’s not yet out of the proverbial woods. The next step in the normalization is that the United States has to formally lift a raft of sanctions – and the Republican-dominated U.S. Congress gets a say. Considering that the Obama administration couldn’t get a bill passed that criminalizes the president’s own Democratic Party right now if it tried, the idea that there will be any agreement on a topic as touchy as Iran is, well, ludicrous. The Republicans, unfortunately from their point of view, probably lack the votes needed to veto the deal, but they’ll do what they can to increase the controversy and to try to milk the issue for as much political capital as possible. The soonest that the United States is likely to flash its own green light will be April. Only then will non-American firms feel sufficiently confident to start sniffing around the Iranian oil patch.

Second, it isn’t as if the only obstacles to renewed Iranian oil output growth are American. Iran’s laws to facilitate foreign investment into its energy sector are, in a word, unhelpful. Until recently the Iranians used a complicated system called buy-back, in which energy producers would sink in cash, do their work, and produce crude without any ownership interest in the field or the oil. Iran then “allowed” the foreign firms to “buy back” the crude at a price that Tehran determined on a whim. Given that foreign investors have no ownership, profitability, guarantees, consistency or recourse, Iran has probably damaged its own production capacity more than U.S. sanctions. This system is in the process of being overhauled, but it will be – bare minimum – a year before it’s clear if the new system makes more sense. Or works at all.

Persian Gulf Image

Kharg Island, Iran

Third, between buy-back and sanctions, much of Iran’s oil output has been shut-in and many fields will have to be re-evaluated before production can be re-started. That process alone will take several months, and until it is done what foreign investment that manifests will be sunk into exploration, not production. Add in the fact that global energy prices are low (and seem to be going lower) and there just isn’t much reason for foreign companies to get too involved too quickly.

What work will be done in the Iranian oil patch will simply be because Iran itself can once again purchase the equipment it needs for its domestically-run projects. That’s far from insignificant, but the total for new output for 2016 will probably be in the range of one-quarter of the Iranians’ idealized numbers.

Which doesn’t mean that Iranian oil won’t hit the market. Iran probably has about 30 million barrels in storage depots and tanker ships in various places around the world. One of the sanctions that already has been lifted because of the IAEA go-ahead opens these volumes up for sale. Assuming that Iran floods the markets with this oil at the rate of 500,000 bpd, these stored volumes can flow for a full two months. Even if this pushes prices as low as $20 a barrel, that’s still over a half billion dollars in income.

Funny thing is, the world might actually get an extra blast of Middle Eastern crude this year – it just won’t be coming from Iran. Instead, the source will be Saudi Arabia and its allies in Kuwait, Qatar and the UAE. The primary reason the Saudis launched their price war in late 2014 – and doubled down on it in late 2015 – wasn’t to crush the American shale patch, but instead to crush Iran before it could fully recover from its sanctions. Iran’s commitments in Syria, Lebanon, Yemen and more all show the classic signs of costly over-leverage. In Riyadh’s mind, now that Iran’s sanctions are on the way out, the financial pressure on Iran needs to be redoubled. The result will be an intensification of Riyadh’s two-track strategy: up the money flowing to foes of Iran in all theaters and up the flow of Saudi oil to minimize interest in and output from Iran’s oil fields. Which leads us to a weird world in which oil prices go lower for longer even as the Middle East gets more violent.

Saudi and Iranian Tensions Surface

It has been quite the week-end in the Middle East, and things are just getting started.

 

On Jan 2nd, Saudi Arabia executed 47 Shia dissidents including cleric Nimr al-Nimr. Rhetoric from Shia-dominated Iran flowed fast and furious within minutes, with protestors setting fire to the Saudi embassy in Tehran. In retaliation the Saudis severed diplomatic ties with Iran the following day.

 

Despite a year of weak prices, shale output has continued to ratchet up in the United States. That, plus a mix of trade and demographic shifts as well as a long-overdue strategic realignment in the aftermath of the Cold War and the Iraq war, is nudging the United States away from actively managing the Middle East. Without the … calming effect of U.S. active involvement in the region, there is nothing to prevent Saudi and Iranian regional fears and ambitions from colliding. And so they are.

 

Saudi Arabia and Iran have now faced off on opposite sides in blood feuds in Syria, Lebanon, the Palestinian Territories, Yemen, and Afghanistan. Both have attempted to keep the conflict one of the cold or proxy variety.

 

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The Persian Gulf

The execution of al-Nimr indicates that this at-arm’s-length strategy is now changing. Iran has long encouraged rebellion among the Saudis’ Shia minority in the country’s Eastern Province, with attempts to foment Shia unrest – like al-Nimr’s dissidence – as one of their chief tools.

 

Al-Nimr’s execution and the severing of relations indicate that the Saudis, at least, are ready for the conflict’s next stage. It’s unlikely that the rest of the world is: Eastern and Khuzestan, unfortunately, are home to the bulk of the two country’s oil production facilities.