Tuesday, January 5, 2016

Drawing Battle Lines in the Middle East

While it has often been overshadowed by more pressing issues in headlines, the bellicosity Iran and Saudi Arabia have for decades shown one another is arguably one of the most pressing concerns for the region. The culmination of events over the weekend involving the two countries - Saudia Arabia's mass execution of 47 individuals including a prominent Shiite cleric, and the subsequent violent protests occurring at the Saudi Arabian embassy in Iran - underscore this point perfectly. Now the Middle East, a region already at the precipice of outright catastrophe, is in a particularly precarious position. What happens next between the two countries will reverberate across the entire Middle East and, in certain ways, the globe.

Saudi Arabia has long been a bastion of Sunni Islam while Iran, for decades the black sheep of the region, has been a home to Shiites, the minority of the two in the region. As far back as the Revolution in 1979, Iran and Saudi Arabia have been seen as bitter enemies, constantly attempting to one-up one another and choosing proxy battlegrounds along the way.

Two of these battlegrounds exist right now: Syria and Yemen. Since the uprising began in Syria five years ago, Iran has desperately attempted to help prop up President Asad, who is of a minority Shiite sect called Alawite. Unlike its leader, however, Syria is a predominantly Sunni state--giving Saudi Arabia entree into the conflict in an attempt to restore power to the majority religious population.

Anti-Saudi Arabia protest. Courtesy of WSJ

A civil war has similarly erupted in Yemen and continues to serve as a proxy battle for Iran and Saudi Arabia, who have taken sides. In a particularly decisive move, Saudi Arabia began conducting airstrikes and providing military support on a mass scale to the government of Yemeni President Abd Rabbuh Mansur Hadi. Iran, meanwhile, has been providing military and logistical support to the houthi insurgency, loyal to former Yemeni President Saleh, which has waged all-out warfare against the sitting government.

These battles have had lasting repercussions for the entire region--most notably the governance vacuums they have created in Syria and Yemen that have permitted the Islamic State to thrive. The emerging diplomatic conflict between Iran and Saudi Arabia may prove to be a much more urgent geopolitical issue, however.

Tragically, the disagreement comes just as progress was being made in Syria peace talks. Both Iran and Saudi Arabia have participated in multi-national talks in recent weeks, demonstrating the possibility of a preliminary agreement being reached in the coming months. Hundreds of thousands have died in Syria to date and much of the country has been reduced to rubble--it is well past time that a ceasefire was negotiated. Should tensions continue to flare between Iran and Saudi Arabia, however, it is likely that the scheduled talks in Geneva later this month will be put on hold--something the Syrian people cannot afford.

Secretary of State Kerry with Saudi King Salman. Courtesy of WSJ

The disagreement also has the possibility of undermining the Iran nuclear agreement that was signed last year. The United States has been placed in a precarious position: on one hand, President Obama is striving to improve relations with Tehran following the agreement in an effort to not only strengthen the agreement, but make Iran less of a hostile player in the region. Iran tests of ballistic missiles in recent weeks have caused distrust and stoked anger in the U.S. as well as Iran; the U.S. cannot afford any more issues. Saudi Arabia, however, is the leading ally of the U.S. in the region, and will see any warmth towards Iran as hostility towards themselves and a degradation of the relationship. President Obama must walk the diplomatic tightrope and ensure that both sides feel that they are being treated respectfully.

Finally, the disagreement has and will continue to affect the global oil market. Brent shares fell on Monday on news of Saudi Arabia's decision to sever diplomatic ties with Iran. With Middle Eastern countries producing so much of the world's oil, the reminder that it remains a highly volatile region will be unsettling to investors. Further, while Saudi Arabia has vowed to keep production high, any escalation in conflict that more quickly drains their monetary reserves will result in a halt of production, sending oil prices soaring and hurting American consumers.

As of today, Saudi Arabia, Bahrain, and Kuwait have all severed diplomatic ties with Iran following the protests in Tehran over the weekend. The United Arab Emirates has also downgraded their diplomatic ties. It is unclear how Iran will respond, but the United States is urging both sides to exercise caution moving forward. The entire region's stability likely depends on it.