The heightened interest in cryptocurrencies across the Gulf is taking place alongside global efforts to both regulate digital assets and attract cryptocurrency firms.
Kuwaiti Foreign Minister Sabah Khaled al-Sabah’s visit to Tehran on January 25 was officially billed as a bilateral meeting, but also widely reported to have included a broader outreach to Iran by Kuwait’s partners in the Gulf Cooperation Council, including Iran’s major regional rival, Saudi Arabia. The GCC was at least in part responding to repeated overtures from senior Iranian officials for dialogue. What is the basis for this outreach and the tensions it must overcome? Why is it happening now? And is a meaningful thaw between Iran and the Gulf Arab countries possible?
How Tensions Reached a Boiling Point
Iran and most of the GCC countries, notably Saudi Arabia, have been rivals at two interlocking and crucial levels since at least the 1979 Islamic Revolution in Tehran. First, when Iran broke with the United States, it essentially became a competitor with Arab states for influence in the Gulf region, rather than part of the same global and Middle Eastern alliance. Second, when Iran adopted an “Islamic” perspective and presented itself, despite its Shia orientation, as an alternative leader of the global ummah (Islamic community) and center of political and religious authority in Islam in general, it was on a collision course with Saudi Arabia ideologically as well as strategically.
Relations between the two countries and their allies waxed and waned over the decades, and there have been several periods of significant thawing between them. But, for the most part, they have seen each other as rivals and behaved accordingly. Several of the Gulf Arab countries, including Saudi Arabia, Kuwait, and, above all, Bahrain, also see Iran as a potential domestic threat because of their own Shia populations, and both real and imagined Iranian efforts to radicalize them and create Hezbollah-like subversive and even terrorist organizations in the Gulf. During the 1980s, the Iran-Iraq War served as a proxy for the Gulf countries to contain Iran by supporting Iraq, which also ensured that the attentions of Baghdad were otherwise occupied.
The 2003 U.S. overthrow of the Saddam Hussein regime created power vacuums in Iraq, to a lesser extent the Gulf region, and the Middle East more broadly. That initiated a new era of sectarian conflict, with the two largely Shia and Sunni blocs led respectively by Iran and Saudi Arabia, which enjoyed the strong support of other Gulf Arab countries like the United Arab Emirates and Qatar. Between 2005 and 2010, Iran and the Gulf states, particularly Saudi Arabia and the UAE, competed for influence in Lebanon and among the Palestinians, as well as in Iraq. The Arab uprisings that began in earnest in 2011 solidified the broadly sectarian character of this political rivalry for regional influence.
The crucial turning point in defining these camps was probably the Iranian split with Hamas over the uprising in Syria, eliminating the one strong relationship Iran had with a noteworthy Sunni Muslim political actor and core member of the Muslim Brotherhood movement. The war in Syria forced Hamas to choose between its convenient relationship with Iran and its identity as a Sunni Muslim Islamist and Muslim Brotherhood entity.
Iran has had more success, for a wide variety of reasons, than Saudi Arabia in exerting clear-cut authority over the members of its alliance. But Saudi Arabia has mobilized to reach beyond its more traditional allies in recent years, forging new ties to Sudan and some Muslim Brotherhood-affiliated groups such as Hamas and Islah in Yemen, among others. Saudi Arabia’s ace in the hole had been the alliance with the United States, which is a predominant military presence in the Gulf region. However, the Obama administration’s nuclear negotiations and aspirational rapprochement with Tehran, together with its rhetoric about a “pivot to Asia,” dismissal of Gulf Arab partners as “free riders,” and aversion to the use of U.S. military force, most notably regarding the chemical weapons “red line” in Syria, left Riyadh and its Gulf Arab partners feeling abandoned and exposed. This built on an earlier disappointment with the United States, whereby the unintended consequences of the two major responses to the 9/11 terrorist attacks – the ouster of the Taliban in Afghanistan and the overthrow of Saddam Hussein in Iraq – greatly strengthened Iran’s strategic regional position.
During the latter part of 2015 tension started to build, particularly over Syria, where Iran joined with Russia, Hezbollah, and Iraqi Shia militias that Tehran directly controls, in a massive military intervention in the Syrian conflict to prop up the teetering government of President Bashar al-Assad. Late in that year there was considerable controversy about the annual hajj pilgrimage to Mecca, with hundreds of pilgrims, many of them Iranians, killed in a stampede, and ensuing recriminations from Tehran against Riyadh and its ability to manage the holy sites and the pilgrimage (which is a core element of the Saudi state’s fundamental claims of legitimacy). Events reached a boiling point in January 2016 when Saudi Arabia executed the secessionist Shia cleric Nimr al-Nimr, along with over 40 al-Qaeda-linked Saudi Sunni extremists. Iranian mobs ransacked Saudi diplomatic missions in the country and the current levels of tension were essentially defined in the aftermath of that paroxysm.
Saudi Arabia and its allies broke or reduced diplomatic relations with Tehran, hardened their attitude toward Iran and its allies, convinced the Arab League to declare Hezbollah a terrorist organization and GCC countries to make supporting it a crime, and intensified rhetoric about Iran’s destabilizing activies in the region. Iran responded by intensifying its efforts in Syria, expanding its role in supporting the Houthi rebels and their allies fighting a war against Saudi and other Gulf Arab forces in Yemen, and increasing efforts to mobilize Shia opposition groups in the Gulf Arab states, especially Bahrain. Saudi-Iranian tensions have rarely been more combustible than they became in 2016.
Why Outreach Now?
Several key factors contribute to the apparent mutual outreach regarding the need to repair relations with the Gulf Arab states, particularly Saudi Arabia. The most important of these probably revolve around complex strategic developments in Syria. At first glance, the Gulf Arab states, particularly Saudi Arabia and Qatar, which have been key supporters of Syrian rebel groups, might appear to be approaching Iran from a position of relative weakness, having suffered a massive setback with the fall of Aleppo to pro-Assad forces.
This was indeed a blow to their aims, but Iran’s position in Syria is not as straightforwardly advantageous as it may appear. As negotiations on the Syrian conflict in Kazakhstan’s capital Astana have demonstrated, the Aleppo victory has contributed far more to strengthening the Russian hand in Syria than the Iranian one. The Russian invitation to the new Trump administration in Washington to join the talks, over vehement injections from Tehran, demonstrates that the interests of Iran and Russia in Syria and their vision for the future are hardly synonymous. Indeed, the Astana talks seem primarily to be bilateral exchanges between Russia and Turkey, with Iran as a very secondary player, largely having to defer to Moscow’s imperatives, at least on the international diplomatic stage. So, while Iran certainly achieved a strategic victory in Syria with the fall of Aleppo, it did not emerge in control of the situation in that country, and Russia appears to have much more leverage, at least for now.
In the immediate context, Iran’s allies and interests in Syria do seem secure. But Russia’s long-term commitment to Assad’s future, and therefore Tehran’s ability to ensure the security of its land bridge to Hezbollah in Lebanon, may be unreliable. Tehran cannot assume that, over time, Moscow won’t find other, more attractive options in Syria that don’t include accommodating all of Hezbollah’s interests, not to mention Iran’s. As things stand, they simply aren’t in the driver’s seat, and that’s a source for long-term anxiety hidden beneath the veneer of what is undoubtedly a short-term victory. As always, in Syria, it’s complicated.
Moreover, the inauguration of Donald J. Trump as U.S. president has alarmed Tehran, and with good reason, and largely encouraged the Gulf Arab countries. Iran notes with concern the numerous and vehement anti-Iranian comments from Trump and many of his key advisors and appointees, and their virtually unanimous skepticism about, at times bordering on categorical opposition to, the Iran nuclear agreement. GCC countries can’t be any more certain about what Trump administration policies will look like than anyone else, so their optimism must be extremely cautious. However, their most important relationship with the United States is the military one, and their greatest hopes for improved relations with Washington hinge on the scope, nature, and posture of the U.S. presence in the region. Therefore, the confirmation of Defense Secretary James Mattis, with whom they have a long history of mutual respect and understanding, and with whom they believe they share a remarkable degree of agreement on key policy issues, particularly Iran, may be the best news they have received from Washington in many years.
No one knows what will happen, and the emergence of a neo-isolationist U.S. approach that pulls even further back from the region is possible. But for now, the United States remains a key player in the Gulf region, and the change of power in Washington appears most likely to strengthen the Saudi position and pose a range of new challenges for Iran. A flare-up of tensions between Washington and Riyadh on one hand and Tehran on the other has developed in the past few days, with Pentagon sources suspecting that a Houthi attack on a Saudi naval frigate off the coast of Yemen may have actually been aimed at U.S. naval targets and new Iranian missile tests prompting an exchange of recriminations with the Trump administration.
Bases for Mutual Understandings
Little is publicly known about the nature of the message the GCC sent to Iran via the Kuwaiti foreign minister. But the idea that the trip was entirely about bilateral relations and didn’t involve Kuwait’s GCC partners, most notably Saudi Arabia and the UAE, appears to be incorrect. The Gulf Arab states seem to be responding to the repeated overtures from Iran, and particularly Foreign Minister Mohammad Javad Zarif, and attempting to explore what might be possible during this period of uncertainty following the fall of Aleppo, the emergence of Russia as the dominant player in Syria, and the uncertainty surrounding the new Trump administration.
Despite the high levels of tension that have accrued in recent months, there have been several developments that demonstrate neither side sees the relationship as a zero-sum equation. Most dramatically, Iran and the Gulf Arab states, including Saudi Arabia, were able to reach an agreement regarding oil production and pricing in OPEC in November, even bringing in non-OPEC producers in an effort to halt the freefall of energy prices. The Gulf countries agreed that Iran could raise production while Saudi Arabia, the UAE, and Kuwait all agreed to reduce their own. This was by no means a capitulation by these countries, which saw the agreement as very much in their own interests, but it did involve an accommodation of Iran’s position that had previously been declined.
Moreover, after months of bitter recriminations over the hajj, which Iran boycotted in 2016, in January Saudi Arabia invited an Iranian official delegation to visit the country to discuss the resumption of Iranian participation in the pilgrimage. Iranian pilgrimage officials welcomed the invitation and said both sides were determined to make sure up to 8,000 Iranians could participate in the 2017 hajj.
The death of former Iranian President Ayatollah Ali Akbar Hashemi Rafsanjani was a reminder of an important period of relatively good relations during his tenure in office, and also of the difficulty of finding Iranians who can speak credibly to the Gulf Arabs. Condolences, however, were used to send mixed messages by Saudi Arabia, being fulsome but privately delivered to his family and not publicly addressed to Iran as a whole. Therefore, Rafsanjani’s passing highlighted both the potential and the obstacles facing Saudi, and broader Gulf Arab, reconciliation with Iran.
Morocco, which has close diplomatic and economic relations with many of the Gulf Arab countries, especially the UAE and Saudi Arabia, has recently restored full diplomatic relations with Tehran, in October 2016 dispatching an ambassador to Iran for the first time in seven years. This may not directly affect Iranian-Gulf Arab relations, but Morocco is unlikely to have proceeded if Saudi Arabia and the UAE objected. These countries are no longer urging their allies to eschew all dealings with Iran and might find the Moroccan diplomatic presence in Tehran another useful discrete conduit to the Iranian leadership.
Prospects for Progress
More moderate forces in Iran have been consistent in rhetorical outreach to the Gulf Arab states, making sure to leave the impression that the door is always open to progress. But Iranian policies, including aggressive efforts to spread Tehran’s influence regionally, including inside the Gulf Arab states themselves, and missile development and testing, send the opposite message. In the current climate, words do little to offset deeds. Saudi Arabia, in particular, does not appear to be particularly optimistic about any potential opening with Iran in the immediate future. Skepticism from the UAE and Qatar is also detectable.
Yet these countries allowed, and perhaps even encouraged, Kuwait to approach Iran on a multilateral as well as bilateral basis during the foreign minister’s visit. Kuwait’s interests in maintaining its relatively good relations with Iran are obvious. Among many other factors, including trade, Kuwait has its own special history with Iraq, giving it a somewhat broader sense of the range of threats beyond just Iran than it may have GCC partners. Moreover, Kuwait has been able to avoid the sectarian tensions that have destabilized Bahrain and caused bouts of unrest in the Eastern Province of Saudi Arabia, and has been at pains to ensure that its relatively well-integrated Shia population does not become angered or restive. Among the GCC states, Oman has the best relations with Iran, but is increasingly not fully trusted on these issues by many of its partners. Kuwait, then, was a logical and effective choice for a relatively discrete multilateral outreach that could be incorporated within, and subordinated to, a bilateral Kuwaiti-Iranian agenda.
The mediation efforts thus far do not appear to have broken the logjam or provided the basis for a real, even modest, reset. Sources in the region emphasize that the Gulf Arab message basically repeated positions that have been circulating in different forms for some time, most notably after the last GCC summit in Bahrain in early December 2016. The summit communique listed three key points for dialogue with Iran: resolving the territorial dispute with the UAE through either direct negotiations or international mediation; demands that Iran cease “interference in the internal affairs of the GCC member states and the whole region,” abide by “international conventions and treaties, and stop harboring terrorist groups, including Hezbollah”; and that Iran should abide by the terms of the nuclear deal with the permanent five members of the U.N. Security Council plus Germany.
Despite the numerous potential bases for greater Iranian-GCC cooperation – including possible economic and maritime trade expansion or coordination in the fight against extremist groups hostile to both Iran and the Gulf Arab states like the Islamic State in Iraq and the Levant and al-Qaeda – short-term progress between the two parties will not be easy. Many mutual suspicions must be overcome, and sufficient groundwork laid, to make major progress in reversing the growth of tensions during 2015 and 2016. The parties do seem willing to explore what is possible in the medium term. Iran and the Gulf Arab countries will ultimately have to find a modus vivendi. The recent level of tensions is unsustainable in the long run and outright war is virtually unthinkable. Both sides will soon enough discover various limitations to their regional ambitions, and encounter the dimishing returns ulimately inherent to proxy conflicts, if they have not already.
Kuwait has indicated willingness to keep exploring the options for more progress, though the GCC is pressing for an Iranian commitment to stop “interfering in Gulf affairs” and start “respecting the sovereignty of the GCC states.” Therefore, additional GCC efforts to find a way forward are likely. But it will require more dialogue, ministerial visits, and, crucially, adjustments of behavior, policy, and rhetoric by both Iran and the Gulf Arab countries for them to accomplish a meaningful rapprochement.
The regulations introduced to travel and civil status laws will limit the state’s ability to intervene in the private sphere.
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