Previous Reviews
Number 66 ● March 6, 2014
ARAB-IRANIAN RELATIONS IN THE PERSIAN GULF AFTER THE GENEVA INTERIM AGREEMENT
Chelsi Mueller*
The interim agreement concluded in Geneva on November 23, 2013, according to which Iran agreed to limit its nuclear program in exchange for an easing of sanctions, produced varied reactions from the six Arab states that make up the Gulf Cooperation Council (GCC). In the hours and days that followed, several prominent members of the Saudi royal family openly vented their frustration with the agreement, coming at a time when Iranian fueled sectarian violence in Syria appeared to be on the cusp of igniting tensions across the region. Prince Turki al-Faisal expressed anger that Saudi Arabia was kept out of the secret talks and Prince Mohammed bin Nawaf bin Abdulaziz denounced the agreement as a “dangerous gamble” (Wall Street Journal, December 15, 2013; New York Times, December 17, 2013). The reactions from other Gulf Arab states were less antagonistic, ranging from cautious optimism to thinly veiled enthusiasm. The UAE, having lucrative trade ties with Iran, was among the first to welcome the agreement: its foreign minister was en route to Tehran before the ink on the Geneva accord was yet dry. Qatar, Kuwait and Bahrain cautiously welcomed the nuclear agreement as did the Sultanate of Oman, which played a behind-the-scenes role in bringing the parties together.
After concluding the agreement with the six world powers (The United States, Russia, China, the UK, France and Germany), Iran’s first priority was mending the strained relations with the states in its own backyard. Within a week of Geneva, Iranian Foreign Minister Mohammad Javad Zarif set out on a tour of the Persian Gulf, which included visits to four of the GCC’s six member states. Iran has long sought to persuade the wealthy, oil and natural gas producing states of the Persian Gulf littoral that a greater role for Iran would provide greater security for the region. But Iran’s aggressive regional policies and nuclear standoff with the West, especially during the eight year presidency of Mahmoud Ahmadinejad, came at the expense of amicable ties with its Gulf Arab neighbors. Iran was particularly embarrassed in November 2010 when leaked diplomatic cables revealed that the UAE crown prince had characterized Iran’s nuclear program as “more dangerous than al-Qaeda” and that Saudi King Abdullah had implored the U.S. to “cut off the head of the snake” (see also Iran Pulse no. 42, January 16, 2011). Given the importance of the Persian Gulf in Iran’s strategic thinking, the Islamic Republic sought to invest the diplomatic capital earned at Geneva in mending its strained ties with the Arab Gulf states. Mohammad Javad Zarif described improvement of ties with the Persian Gulf states as “a central plank of the Islamic Republic’s Foreign Policy” (Press TV, January 2, 2014). Iran’s leaders have also calculated that a rapprochement with member states of the GCC, which enjoy close defense and political ties with the U.S., could influence how the next stage of nuclear negotiations will unfold.
During a 4 December 2013 meeting that took place in the Emirati city of al-‘Ain, the UAE’s President and ruler of Abu Dhabi, Sheikh Khalifa bin Zayed al-Nahayan, welcomed the nuclear deal and told Iran’s Foreign Minister that his nation aspires for "strengthened security and stability in the region and cooperation between countries” (WAM, December 4, 2013). In recent years, Abu Dhabi has taken a more alarmed view of Iran’s nuclear program and has accused Iran of meddling in the affairs of Arab states in the region while Dubai has demonstrated a more accommodating, business-first approach. Therefore it is not surprising the UAE’s Vice-President and ruler of Dubai has been more forthright in his praise for the deal. In a rare interview, Sheikh Mohammad bin Rashid al-Maktoum urged the international community to lift the sanctions and re-affirmed his belief that Iran’s nuclear program is peaceful (BBC, January 13, 2014).
Relations between Iran and Dubai are deeply historic and organic. Between the 1880s and 1920s Dubai was settled by Iranian merchant families, especially Sunni families, from the southern province of Fars. Their trade and financial links with Iran helped establish Dubai’s expanding port town as the main trans-shipment center for goods that were re-exported to Iran. Unofficial estimates suggest that as many as 80% of all Emirati nationals today are descended from Iranian immigrants to the emirates. In addition to Emirati nationals of Persian heritage, there is an estimated half million Iranian nationals living and working in the country today and as many as 8,000 Iranian-owned businesses.
The Dubai of today is a major source of Iranian imports and the principal transit hub for goods—legal and illegal—arriving to Iran from other countries. In recent years, owing to the scarcity of oil refineries in Iran, Dubai has made a large profit from the delivery of gasoline refined by Chinese and Emirati companies. Consumer items arriving via Dubai, especially American “contraband,” also reap a pretty penny in Iranian resale markets. Small and medium sized boats lining Dubai creek have ferried everything from foodstuffs to car parts, electronics, livestock, cosmetics and home appliances across the narrow waters of the Strait. But international sanctions and pressure from the United States have made the conduct of business between Iran and the UAE more difficult in recent years, especially as companies linked with Iran’s Revolutionary Guard (IRGC) and banks linked with Iran have been blacklisted, and Dubai’s bustling ports have been brought under close scrutiny. The difficulty of doing legitimate business with Iran has hurt thousands of Dubai businesses engaged in the trans-shipment trade. It is estimated that the Emirates’ annual trade with Iran dipped from 23 billion in 2011 to 4 billion in 2013 (Bloomberg, November 11, 2013). While it is clear that many Emirati businesses have quit dealing with Iran, there has also been much evidence to suggest that others have continued to trade illegally. It is difficult to estimate the actual extent of illegal trade because the successful smugglers don't leave much evidence.
The United Arab Emirates is among the Arab states most poised to benefit economically from the lifting of sanctions against Iran; however, its dispute with Iran over the ownership of three small islands in the Persian Gulf has complicated every diplomatic encounter since Iran’s occupation of them in 1971. The three islands, possessed with offshore oil resources and strategically located just inside the narrow Strait of Hormuz, are the traditional tribal domains of two of the emirates, Sharjah and Ras al-Khaimah, and their ownership has been a subject of conflict between Arabs and Iranians in the Gulf for centuries. Assertive actions on the part of Iran, including a surprise visit to Abu Musa by President Ahmadinejad and the decision taken by the IRGC to locate a naval base on the island in 2012, have earned a sharp response from the UAE: Abu Dhabi condemned Ahmadinejad’s visit in the strongest possible terms, recalled its ambassador from Tehran, and cancelled a football match between the two countries. But given the enormous dividends that could attend a UAE-Iranian rapprochement in the post-sanctions era, it is was not surprising that Zarif’s December visit to the UAE was accompanied by rumors that the two countries had reached a tentative settlement on the disputed islands (Defense News, December 9, 2013).
An unnamed Saudi government advisor accused the UAE of hypocrisy in its dealings with Iran, calling its actions “mind-boggling” given that “the Iranians are still occupying legitimate sovereign islands belonging to their brothers . . .” (BBC, January 13, 2014). The Saudis’ hostility toward Iran’s ambitions in the Persian Gulf was aptly expressed by Prince Turki al-Faisal when he told a German newspaper, “we prefer to call it the Arabian Gulf” (Die Welt, January 17, 2014). The Saudis, who have conceived of the GCC as a Saudi-led security apparatus against Iranian expansion in the Gulf, viewed Iran’s recent diplomatic initiative to Kuwait, Qatar, the UAE, and Oman as a flagrant effort to undermine Saudi Arabia by exploiting divisions among the GCC member states.
Saudi Arabia and Iran are mired in a bitter contest, not just for dominance in the Persian Gulf, but also for dominance in the region. The two regional heavyweights, which purport to represent Sunni and Shi‘i Islam respectively, have long been engaged in a contest for regional dominance which has recently been played out on the battlegrounds of Iraq, Lebanon and Syria. Their introduction of money and weapons have transformed the insurgency in Iraq, unrest in Lebanon and civil war in Syria into proxy wars between two rival camps, which have been defined largely in terms of the Sunni-Shi‘i divide. Saudi Arabia has supported Sunni militants against the Iranian backed Shi‘a in Iraq; it has backed the beleaguered Lebanese government opposite the Shi‘i Hizballah which takes it orders from Tehran; and it has backed Sunni fighters battling the Iranian-backed regime of Bashar al-Assad. Saudi Arabia also believes that Iran’s pursuit of nuclear capability is yet another gambit employed in its quest for regional dominance. While the Saudis have always publicly voiced a preference for a diplomatic solution to the nuclear standoff, they were taken aback by the announcement of the interim deal, negotiated without their knowledge or input. Washington’s diplomatic opening to Iran, conveys to the Saudis a broader indication that the U.S. is gradually acquiescing to Iran’s designs on the region.
Iran’s role in fanning the flames of sectarian conflict across the region has been a cause of alarm for all of the dynastic Gulf rulers, who fear the spread of sectarian unrest and revolutionary fervor to their domains. Qatar, which like Saudi Arabia has been funneling money and weapons to armed groups battling Iran’s proxies in Syria, welcomed the nuclear deal, but urged the world powers to include the GCC states in the next round of talks, on account of their stake in regional stability. Bahrain, an island kingdom composed of a Shi‘i majority and ruled by a Sunni minority, accuses Iran of instigating the Shi‘i uprising that led to a brutal series of crackdowns in 2011 (see Iran Pulse No. 45, May 20, 2011). While Bahrain welcomed a negotiated solution to Iran’s nuclear program, it remains suspicious of Iran on account of Iran’s ties to Shi‘i groups in Bahrain. As recently as January 3, 2014, the Bahrain government accused Iran’s Revolutionary Guards of providing explosives to Shi‘i oppositionists who planned to carry out attacks in the Kingdom.
The Sultan of Oman has long stood out from his counterparts in the GCC for his steady relations with Tehran. While the Saudis have become more intrepid in their willingness to criticize Iran’s behavior, Sultan Qaboos has kept quiet, preferring not to antagonize its large neighbor. Oman has also sought to maintain its independence in the Saudi-dominated GCC by carving out a role for itself as a bridge between Iran and the United States. New details have emerged outlining the Sultan’s role in hosting high level secret talks between Iranian and American negotiators over the course of the last year. This came on the heels of his earlier success in securing the release of three American hikers held by Iran. Oman’s role as a facilitator has not been without financial incentive: according to an Omani-Iranian memorandum of understanding signed in August 2013, Oman is set to become the marketing center for Iran’s natural gas, after the construction of a sub-sea pipeline that will carry Iran’s natural gas to the Sultanate (Press TV, November 4, 2013).
Iran’s recent diplomatic initiative toward the GCC was accompanied by one anomaly—a feature of Iranian policy which has undermined its diplomatic efforts for decades—the amalgamation of overtures and threats. Zarif has repeatedly expressed Iran’s interest in shoring up ties with Riyadh and Manama to improve cooperation on issues of mutual interest, particularly regional security. Meanwhile a semi-official Persian language newspaper having close ties to the IRGC issued a thinly disguised threat, when it reported that a senior advisor to Supreme Leader Ali Khamenei has predicted that some of thetraditional Arab monarchies in the Persian Gulf will have disappeared by the year 2030. He further warned that they should heed the lessons learned from the fate of the deposed Shah (Tasnim, January 10, 2014). The prospect that Iran could further stir the pot in one or more of the Arab Gulf monarchies, such as it has already been accused of doing in Bahrain, is an ominous hazard for all of the Arab Gulf States. The threat that Iran poses to the stability of these traditional, autocratic regimes is the primary reason why some of the more independent-minded states of the GCC will seek to improve ties—especially trade ties—with their neighbor to the north, while continuing to rely upon the American security umbrella as protection from the destabilizing actions of Iran’s revolutionary regime■
*Chelsi Mueller is a junior research fellow in the Center for Iranian Studies and a Ph.D. student in the Department of Middle Eastern and African History at Tel Aviv University.
T h e A l l i a n c e C e n t e r f o r I r a n i a n S t u d i e s ( A C I S )
Tel Aviv University, Ramat-Aviv 61390, Tel Aviv P.O.B. 39040, Israel
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Iran Pulse No. 66 ● March 6, 2014
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