Iran’s Regional Policy

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Jon Alterman: Ali Vaez is the Iran Project director and senior advisor to the president at the International Crisis Group, where he's worked for more than a decade. He is also an adjunct assistant professor at Georgetown University's Walsh School of Foreign Service, and I have guest lectured in his class. Ali, welcome to Babel.

Ali Vaez: Thank you, Jon, it's great to be back.

Jon Alterman: Were you surprised that China brokered a deal between Iran and Saudi Arabia in mid-March?

Ali Vaez: I was surprised but I wasn't shocked.  There were five rounds of negotiations facilitated by the Iraqis and Omanis prior to the announcement of this deal in Beijing, and I had a sense that the Saudi-Iranian geostrategic rivalry in the region had reached a phase of diminishing returns. If this deal had been announced in Baghdad or Oman, it would've been much less of a shock, but if you look at the set of motivations on both sides (and the Chinese side as well), all the stars had aligned perfectly to finalize this deal.

Jon Alterman: Was the fact that it was made in Beijing a reflection of Iran's China strategy? What is Iran's China strategy?

Ali Vaez: Iran pivoted to the East about two decades ago, mostly as a result of Western sanctions which shifted Iran’s balance of trade from the West and Europe to China. Since the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA) agreement in 2018, Iran had also realized that it had few geostrategic options other than developing closer ties with China and Russia. That is not a position that is comfortable for Iran. Iranian leaders know that China and Russia are aware of this dependency, and that they exploit Iran because of it. This is especially true of China, which demands massive discounts on Iranian energy exports. But Iran is left with little choice. In the same way that the agreement was a gesture toward China from the Iranians, it was a signal to Washington from Saudi Arabia that Riyadh has alternatives if the United States does not take their security concerns into account and act in a more serious and reliable way.

Jon Alterman: But an argument that the Obama Administration had made was that Saudi Arabia needed to do precisely this, and Saudi Arabia was resistant to taking this step during the Obama Administration. Now, you say that they're doing it as a way to show the United States that they have alternatives. How do you disentangle the insistence of regional states in wanting a security umbrella against Iran and the feeling that they have to engage Iran because there is a sense the United States isn't willing to provide that security umbrella?

Ali Vaez: I would argue the Saudis were resistant primarily because they had not tested the alternative in 2015 when President Obama called for de-escalation and his words turned into blasphemy in the eyes of the Saudis and Emiratis. They got the policy alternative that they were looking for under the Trump Administration, when the United States put Iran into a corner under tremendous pressure. But that backfired against them. Iran lashed out in 2019, first with attacks on Fujairah in the UAE and then with a spectacular attack on Saudi Aramco facilities in September. The UAE and Saudi Arabia quickly realized that they’d become collateral damage in this kind of confrontation between the Iran and the United States, and that as long as U.S. personnel and assets were not directly affected, the United States would not come to the rescue. That was the wakeup call which led the UAE to establish channels of communication with Iran in 2019 and to normalize their relationship in 2022, and the Saudis followed the same policy with a bit of a lag.

Jon Alterman: So, what is the broader Iranian strategy toward their neighbors? Like I have, I’m sure that you have heard any number of Arab officials and experts complaining that Iran controls four Arab capitals. There's the whole “Shi’a Crescent” language that King Abdullah of Jordan has put forward. Does Iran genuinely seek a sort of accommodation with Arab states? Does it think that having relations with Arab states will let it continue to push its advantage against the Arab states? Where does this go?

Ali Vaez: For Iran, the deal with Saudi Arabia was more of a tactical move than a strategic move in the sense that at this moment Iran is primarily focused on crisis management. It's dealing with a confluence of crises at the same time. It has tensions with Azerbaijan to the north. It has tensions over the Iraqi Kurdistan Region, where Iranian dissident groups reside, and Tehran has concerns about Israel’s growing presence around Iran. To that list, add domestic unrest that Iran has been dealing with over the past seven months, and growing tensions over Iran’s nuclear program and the deepening rift between Iran and the West over Iran’s supply of weapons to Russia to deploy in Ukraine. With all of that, I think the Iranians want to close off at least one potential front for tensions in the Gulf. That’s also a similar factor motivating the Saudis and Emiratis. They want to get themselves out of the line of fire in case there’s another round of confrontation between Iran and the West. Strategically, Iran is still focused on its “Axis of Resistance” that provides it with a forward defense against Israel.  But that policy is primarily focused on the Levant. It's an axis that goes from Tehran to Baghdad to Damascus and Beirut. Iran really never wanted to expand that zone of influence into the Arabian Peninsula, but the war in Yemen provided Iran with an opportunity to turn the table against Saudi Arabia and the UAE, which it felt were undermining Iran in the Levant by support non-state actors in Syria to curb Tehran’s influence there. That’s why I think Iran had reached a  point of diminishing returns. It has basically won in Syria—in terms of the primary objective of preserving Syria's geostrategic orientation against Israel. In Yemen, one of the commitments that Iran made in the agreement with Saudi Arabia was to stop arming the Houthis. That too, was already a fait accompli because it had become much more difficult for the Iranians to do that anyway. That is usually when diplomatic opportunities occur—when the only options left aren’t as attractive.

Jon Alterman: Do you think it was part of Iran's intention to try to put  a wedge between the United States and Saudi Arabia?

Ali Vaez: I think Iranians are realistic enough to understand that it’s not possible. The Iranians understand that at the end of the day, the Saudis might be discontent with U.S. policy in the region but they can’t really rely on any other security guarantor. Nobody will be able to dislodge U.S. military primacy in the Gulf anytime soon. But I think there were domestic calculations for the Iranians here that were far more important than an attempt to drive a wedge between the United States and Saudi Arabia. There were alleged ties to the Iran International channel, a satellite TV network that has quickly turned into Iran’s version of Fox News—a very popular but divisive network in Iran which Iranian leaders believe was responsible for fueling protests in the past few months. For the first time, that gave the Saudis an internal security card that Iran cared about and that could be exchanged for the Yemen question, which the Saudis view as a question of internal security. Yemen is not really a foreign policy issue for Saudi Arabia. I don’t think the Iranians are under any illusions that they would be able to create a serious rift between the Saudis and the Biden administration.

Jon Alterman: As Iran makes greater diplomatic ties with Saudi Arabia, the UAE, or Kuwait, does that change the way that Tehran thinks the United States is going to think about Gulf security? Does it change the way that Gulf states think about the United States and Gulf security?

Ali Vaez: There is a general perception about the United States pivoting away from this region which started under the Obama administration. In practice, we don't really see any evidence for it on the ground. In fact, the United States has a higher number of troops and military assets in the region now than it did in the beginning of the Obama administration. But there is a perception that the United States’ foot might still be on the ground in that part of the world, but its heart and head are somewhere else. And in that, I think both sides see opportunities and risk. The Saudis have obviously tried to hedge their bets by maintaining ties with Russia, despite U.S. efforts to cut them off. The Saudis are also increasingly moving towards rapprochement with Israel, which could happen when Mohammed bin Salman (MBS) becomes king. It’s the same for the Iranians. They see U.S. disengagement from the region as an opportunity to deepen relations and bring down the temperature, at least in the subregion. There is another motivation here from the Iranians, which is that they have learned that economic ties with regional countries are more immune to U.S. pressure than economic ties elsewhere. Iran’s trade with South Korea and Japan disappeared almost overnight when the United States withdrew from the JCPOA in 2018, but even the Trump administration could not manage to cut off Iran’s economic ties with the UAE, Iraq, and Turkey. So the Iranians see an opportunity in these relationships for creating lifelines for the Iranian economy, which given the deep troubles it is in right now, is a vital interest for them.

Jon Alterman: Do you read anything into the fact that a lot of these negotiations have been quite visibly handled by Ali Shamkhani, the head of Iran’s Supreme Council on National Security, rather than Iranian foreign minister Hossein Amir-Abdollahian. In many ways, Abdollahian had articulated the idea that Iran would not worry so much about the West and would instead focus on its own neighborhood, and to some extent, the East.

Ali Vaez: There are multiple factors here. First, the Saudis were always interested in talking to Iranian security officials because they believe that Iran's regional policy is not run by diplomats in the foreign ministry, but by the Islamic Revolutionary Guards Corps (IRGC) and the security apparatus. On the Iranian side, there were a few factors involved. The secretary of the Supreme National Security Council—the role Ali Shamkhani holds—used to play a very prominent role before the Rouhani administration.

Jon Alterman: When Rouhani had that job.

Ali Vaez: Yes—Hassan Rouhani had that job as key national security advisor. He was also the chief nuclear negotiator. He was the one who negotiated a security agreement with Saudi Arabia in 2001. It was only under the Rouhani administration that the foreign ministry came to the center, when Foreign Minister Mohammad Javad Zarif became the face of Iran’s diplomatic outreach, both to the West and to the region. The regional outreach was not successful, of course, so now it’s basically a return to factory settings, with the secretary of the Supreme National Security Council playing that prominent role. Second, Iran’s current foreign minister, Hossein Amir-Abdollahian, is one of the most hated Iranians in the Arab world because he was deputy foreign minister when the Syrian crisis started and he became the face of Iran’s strategy in Syria. The Syria crisis was deeply visceral and emotional for Arab states, and it was the same kind of reaction you now see Europeans have toward Ukraine. On the other hand, Ali Shamkhani is an Iranian Arab. He speaks perfect Arabic. He received the highest medal of honor from King Abdullah of Saudi Arabia—the only Iranian who’d been honored in that way. So he’s an entirely different character, and as you well know, personalities and people matter in diplomacy. So I think Ali Shamkhani was much better placed for doing this job. In addition, with the Raisi administration, you have a really weakened government, and in that too, there was an opportunity for Shamkhani to play a more prominent role.   

Jon Alterman: Do you think over time that growing ties with the region, growing ties with Asia eventually bring the West along?  That they can work from the inside out the same way that sometimes in the Bush administration, people said the road to Jerusalem is through Baghdad? Is, is the way to Washington through Abu Dhabi and Riyadh?

Ali Vaez: I think that would be the right way of looking at things if we still had the capacity for strategic thinking in the United States, but in the same way that I said Iran had agreed to this deal based on tactical calculations, I think the Biden administration (and the Saudis) are also looking at all this in the short term. We’re only 18 months away from the next presidential election in the United States, and that will determine whether there will be significant continuity or strategic change in how the United States sees the region. Ironically, I would argue that the perception of U.S. disengagement and unreliability—both as a diplomatic negotiating partner and security guarantor—has actually created diplomatic opportunities in the region. I also think it is time for us to start learning the lesson that the compartmentalization that the Obama administration pursed in trying to resolve the nuclear issue as the most urgent issue—regardless of what was happening in the rest of the region—has failed. In reality, tensions in one area can easily spill over into another. Even though there was a successful nuclear deal, it did not survive the broader context of enmity between Iran and U.S. allies in the region. In 2015, Iran had good relations with Europe and was on speaking terms with the United States, but had bad relations with its neighbors. Now, it’s the other way around. In that, I think there is an opportunity to look at the nuclear issue in a different way. Instead of negotiating a nuclear deal between Iran and the West, there could be a deal between Iran and the region. In that way, you would shield off this part of the world, which carries at least one-third of seaborn energy exports on the global level. It would be beneficial for all sides: China, the United States, Europe, and everyone.

Jon Alterman: What would that look like? What would it look like in terms of the International Atomic Energy Agency (IAEA)? What would it look like in terms of the UN Security Council? And what would it look like in terms of what the JCPOA didn't address—which is the ballistic missile threat, arguably a much larger issue for Iran’s neighborhood than the nuclear file.

Ali Vaez: Of course, you still won’t be able to resolve everything at the same time. I'm not talking about a grand bargain here. I’m talking about setting the foundations of the kind of security engagement in the region that could eventually result in a regional architecture that everyone feels protected by—regardless of their size and conventional military capabilities. That would require regionalizing some aspects of the

nuclear deal. For instance, if you put a 5 percent limit on enrichment level across the subregion, between Iran and the Gulf Cooperation Council (GCC), you basically permanently ensure that no country in that part of the world will reach the kind of capacity that Iran has right now, which is a major source of concern. The Iranians could agree to that because they are not being singled out, and the GCC wouldn’t really be giving up much because they don’t have the nuclear fuel cycle technology anyway. In return, economic incentives for Iran could come from the region, and not from the West. It would give the Saudis (or the Bahrainis, for instance) leverage over Iran that they currently don’t have. The Saudi finance ministry has already started talking about this. Iran would also benefit from that because it no longer believes that sanctions relief from the West will ever materialize. At the regional level, the Qataris also wanted to make massive investments in Iran as part of the JCPOA revival. The Saudis now want to it. The Emiratis wanted to do it, so we’re in a different world than we were. Smart diplomacy can use these completely different circumstances and come up with a more creative design that would ensure a more sustainable arrangement that addresses the nuclear issue and some regional issues. On top of that foundation, you can start building additional layers. The problem with ballistic missiles is that we can't expect Iran to unilaterally give up on a capability that it believes is its sole reliable conventional deterrent. So, what you need is some kind of a rebalancing of conventional capabilities in the region. You of course need limits on some of these transfers to Iranian allies—at least shielding the subregion from those kinds of weapons transfers. You have to start somewhere, and I do believe that this kind of a nuclear deal for regional trade quid pro quo is a good place to start.

Jon Alterman: Of course, Iran has been a pioneer in developing asymmetric threats, not just its nuclear capability but with its use of proxy groups and all kinds of other tools. Would you expect that if you can get an agreement on nuclear issues in the region, it can start expanding to all the unconventional things that are ultimately what all of Iran's neighbors worry about?

Ali Vaez:  I don’t want to be starry eyed here, but again, we have to look at recent history and learn from it. Why did Iran attack Saudi oil infrastructure in 2019? It wasn’t because of its rivalry and competition with Saudi Arabia, which has always existed. It escalated because we got into a zero-sum game with this idea that Iran could be put in a box under pressure from the United States and contained, while the rest of region could flourish. That has proven to be completely wrong. The policy of dealing with Iran as a pariah or a rogue state motivated Iran to act as one. If we enter into a completely different kind of engagement with Iran—which we’re in the early phases of—then there would be less motivation for Iran to pursue that kind of policy because it would have more to lose. That’s why I think Iran has now agreed to slow down its support for the Houthis. There are realistic limitations there. The Houthis are not really an Iranian proxy, so there is a ceiling on how much influence Iran has on them. But it has control over weapons transfers, and we have seen the number of cross-border attacks on Saudi Arabia from Yemen drop significantly. Those kinds of development are possible. Now, as you’ve heard, China is interested in organizing an Iran-GCC summit in Beijing. I don’t expect much of substance to come out of that. It seems to be more of a publicity coup, but I think there is an opportunity to build on what China has made possible and create more interdependency between Iran and the GCC, which would put constraints on how far Iran is willing to go in deploying its asymmetric capabilities against countries in the Gulf. Again, that doesn’t mean that Iran’s policy in the rest of the region will change, especially its enmity with Israel. Lately, we’ve seen de-escalatory pattern in Iran. The Supreme Leader issued thousands of pardons to people arrested during protests to bring down the temperature internally. The deal with Saudi Arabia was an attempt to bring down the temperature in the Gulf. But that de-escalatory pattern is motivated in part by the escalatory pattern between Iran and Israel and the United States. Israel is targeting Iranian assets in Syria more and more. Iran retaliates against the United States, which is much more exposed in Syria. We’ve seen fatalities from that on the U.S. and Iranian sides. None of the dynamics that I’m describing is going to resolve the problems in the Levant. But that doesn’t mean that progress in the Gulf is not possible because of those tensions.

Jon Alterman: Ali Vaez, thank you very much for joining us on Babel.

Ali Vaez: It is an absolute pleasure.