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.