Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. Iran Nuclear Deal Regional Reverberations

Politics / Middle East Nov 28, 2013 - 12:13 PM GMT

By: STRATFOR

Politics

What was unthinkable for many people over many years happened in the early hours of Nov. 24 in Geneva: The United States and the Islamic Republic of Iran struck a deal. After a decadelong struggle, the two reached an accord that seeks to ensure that Iran's nuclear program remains a civilian one. It is a preliminary deal, and both sides face months of work to batten down domestic opposition, build convincing mechanisms to assure compliance and unthread complicated global sanctions.


That is the easy part. More difficult will be the process to reshape bilateral relations while virtually every regional player in the Middle East seeks ways to cope with an Iran that is no longer geopolitically encumbered.

Analysis
The foreign ministers of Iran and the six Western powers that constitute the so-called P-5+1 Group clinched a six-month deal that begins the curtailment of Iran's nuclear program while relaxing as much as $6 billion in sanctions -- basically those embargoes that do not require U.S. President Barack Obama to secure approval from Congress. Allowing Iran to enrich uranium to "civilian" levels while making sure the know-how is not diverted to military purposes will be complex.

There will be disruptive events along the way, but the normalization process is unlikely to derail. Both sides need it. The real stakes are the balance of power in the Middle East.

Iran is far more concerned with enhancing its geopolitical prowess through conventional means. Meanwhile, the United States wants to leverage relations with Iran in order to better manage the region in an age of turmoil. Contrary to much of the public discourse, the Obama administration is not facilitating a nuclear Iran.

Washington and the Middle East
The United States is prepared to accept that Iran will consolidate much of the influence it has accumulated over the 12 years since the Sept. 11 attacks. From the point of view of the Iranians, they had reached the limits of how far they could go in enhancing their geopolitical footprint in the U.S. war against Sunni Islamist militancy. The tightening sanctions threatened to undermine the gains the Islamic republic had made. Thus the time had come for Iran to achieve through geopolitical moderation what was no longer possible through a radical foreign policy.

Though the United States is prepared to accept an internationally rehabilitated Iran as a major stakeholder in the Greater Middle East region, it does not wish for Tehran to exploit the opportunity in order to gain disproportionate power. The strategic focus must now shift from nuclear politics to the imperative that the United States balance Iran with other regional powers, especially the Sunni Arab states.

The post-Arab Spring turmoil in the region has plunged U.S.-Arab relations into a state of uncertainty for two reasons: First, the autocratic regimes have become unreliable partners; second, the region is seeing the rise of radical Sunni Islamist forces.

A rehabilitated Iran, along with its Shiite radical agenda, serves as a counter to the growing bandwidth of Sunni radicalism. All strategies have unintended consequences. A geopolitically unchained Iran, to varying degrees, undermines the position of decades-old American alliances in the region. These include Turkey, Israel and the Arab states (the ones that have survived the regional chaos defined by anti-autocratic popular agitation, such as Saudi Arabia, Egypt and others).

Washington is not the only actor anticipating a shift in its regional ambitions. France initially challenged earlier attempts at a U.S.-Iranian accord, placing greater pressure on the Iranians -- much to the enjoyment of regional states such as Israel and Saudi Arabia. Though Paris has been eying the Middle East -- specifically the Sunni monarchies of the Persian Gulf -- as a larger potential market for its energy firms and defense exporters, France stands to gain little from unilaterally opposing a U.S.-Iranian deal. Rather, France sought to shape the talks and regional reactions to the benefit of its domestic industries. Germany and the United Kingdom, the other EU powers present at the talks, are hoping to gain greater exposure for their energy firms and exports to Iran's large domestic consumer base. Germany in particular enjoyed one of the largest non-energy trade relationships with Iran before the most recent sanctions program took effect.

Regional Reverberations
The United States and the rest of the P-5+1 are not the only ones attempting to reset their relationship with Iran. Ankara, though initially opposed to Iranian ambitions in Syria and competing for influence in Iraq, has pursued a warming of ties with Tehran over the past several months. Turkey is a rising regional power in its own right, but domestic infighting within Turkey's ruling Justice and Development Party is coinciding with a slump in the national economy. Meanwhile, Ankara is struggling to find a peaceful, political solution to its Kurdish issue. Turkey faces an uphill challenge in moving beyond the ring of Iranian influence on its borders, but a potential normalization of relations between Washington and Iran provides some opportunities for Ankara, even at the risk of empowering Iran's regional ambitions. The two countries face similar challenges from Kurdish separatism in the region, and the Iranian market and potential energy exports could help mitigate Turkey's rising dependence on Russian energy exports and potentially boost its slowing economy.

For all its rhetoric opposing the deal, Israel has very little to worry about in the immediate term. It will have to adjust to operating in an environment where Iran is no longer limited by its pariah status, but Iran remains unable to threaten Israel for the foreseeable future. Iran, constrained by its need to be a mainstream actor, will seek to rebuild its economy and will steer clear of any hawkish moves against Israel. Furthermore, Iran is more interested in gaining ground against the Arab states -- something that Israel can use to its advantage. The report about the Israeli security establishment seeing the deal as a positive development (in contradiction to the position of Israeli Prime Minister Benjamin Netanyahu's government) speaks volumes about the true extent of Israeli apprehension.

That leaves the Arab states, in particular Saudi Arabia and its Gulf allies, for whom a U.S.-Iranian rapprochement is a nightmare scenario. Riyadh and its neighboring monarchies are caught in the middle of the Arab Spring, which challenges them from within, and were long concerned with the rise of Iran. But now that their biggest ally has turned to normalizing ties with their biggest adversary, these countries find themselves bereft of good options with which to manage an Iran that will gain more from normalizing relations with the United States than it did with the American response to the 9/11 attacks.

Iran has played a large and visible role in bolstering the beleaguered al Assad regime during the Syrian civil war. Iran's potential reset in relations will bring no easy or quick resolution to Damascus. The Syrian regime will still face the daunting task of having to rout the rebels and secure large swathes of Syrian territory, a difficult task even in the unlikely scenario of a precipitous drop in Sunni Arab backing for the rebels following a more comprehensive agreement between Tehran and the West. Indeed, the Syrian conflict, Iran's support of Hezbollah and the future of Iranian influence in Iraq will form the more contentious, difficult stages of U.S.-Iranian negotiations ahead.

The Saudis, domestically at a historic crossroads, are trying to assert an independent foreign policy given the shift in American-Iranian ties. But they know that such a move offers limited dividends. Riyadh will try to make most of the fact that it is not in Washington's interest to allow Tehran to operate too freely in the region.

Likewise, the Saudi kingdom will try to work with Turkey to counterbalance Iran. But again, this is not a reliable tool, given that Turkish interests converge with those of Iran more than they do with Saudi Arabia's. Quietly working with Israel is an option, but there are limits to that given the Arab-Israeli conflict and the fact that Iran can exploit any such relationship. In the end, the Saudis and the Arab states will have to adjust most to the reality in which American-Iranian hostility begins to wither.

This analysis was just a fraction of what our Members enjoy, Click Here to start your Free Membership Trial Today! "This report is republished with permission of STRATFOR"

© Copyright 2013 Stratfor. All rights reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis.

STRATFOR Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in