The new Biden Administration has largely been focused on fulfilling its election promises in its first month in power. After reversing an extensive list of Trump policies via executive orders, Biden is now focusing on the Middle East. In stark contrast to his predecessor, Joe Biden's administration is taking a reserved and diplomatic approach towards the ongoing crisis in the Middle East region. While the new administration is yet to fully address Iranian Sanctions or the JCPOA-agreement, it has stepped up the pressure on some Arab countries by temporarily blocking U.S. arms sales to Saudi Arabia and the UAE. In yesterday's "historic" speech, Biden addressed U.S. military support for the Saudi-led anti-Houthi alliance currently fighting in Yemen. International media has been largely focused on the perceived hard-line position taken by Biden. By removing full-scale offensive military support for Saudi forces, Washington seems to be pushing for a diplomatic solution to the conflict, in which Saudi Arabia, the UAE, and others are fighting a proxy war against the Iranian supported Houthi forces. Diplomatic sources indicate that the move is a "routine administrative action", noting that it was standard for incoming administrations to review large arms deals initiated by outgoing administrations. Still, Biden's moves are not going to go down very well in the respective Arab Gulf capitals. Other major players, such as Egypt, Israel, and Jordan will be watching Biden's moves carefully in the coming months. Among the sales that have been put on hold is a massive $23 billion (€19 billion) deal to supply the UAE with 50 Lockheed-Martin F-35 stealth fighter jets. The deal was made in the final days of the Trump presidency, after the November 6 election. It remains unclear whether or not other Trump arms deals are also going to be targeted, such as the December 29 2020 approved potential sale of 3,000 precision-guided missiles, worth as much as $290 million, to Saudi Arabia.
The reaction from Arab governments to yesterday's Biden speech have been very positive, as was expected. None of the countries involved are willing to put their relationship with Washington at risk. Saudi Arabia's Minister of State for Foreign Affairs, Adel Al Jubeir, stated that Biden's "historic" speech confirms "America's commitment to work with friends and allies" on resolving conflicts. Hi words carried a tacit but clear undertone that Washington not forget the larger picture, which includes both Iran and Iraq, and focuses on both geopolitics and energy.
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In the coming weeks and months, the Biden Administration will be focusing on the JCPOA agreement and its constraints. While Democrats and European nations may be hoping for a fast revamp of the Iran deal, there are significant hurdles in the way of achieving such a feat. First of all, the former JCPOA agreement has already been attacked by several European nations due to a lack of control mechanisms. Secondly, Iran's growing missile capabilities, which have already been used in Iraq, Syria, Yemen, and Lebanon, are a major concern for any potential JCPOA signatories. Thirdly, Iran's current posture with regards to nuclear enrichment will discourage Washington, France, and Germany from coming to the table. While none of these issues are particularly new, Biden's position on all of them remains unclear, and will likely depend on his broader foreign policy in the Middle East.
The Biden Administration's role and relationship with the Arab Gulf states is yet to be established. The postponement of arms deliveries and the blockage of so-called offensive arms to Saudi Arabia, and potentially others, could be setting the scene for a potential political crisis in the region. If this relative aggression towards Arab Gulf nations is combined with a more positive attitude towards Iran, without adressing the concerns of Saudi Arabia-UAE-Israel and Egypt, then Washington will risk losing its key allies in the region. Since the Obama era, the traditionally friendly security and economic relationships between Washington and the GCC region have been severely weakened. A new perceived pro-Iranian and anti-Arab strategy could lead to Washington coming under fire in the Middle East.
It is not only U.S. interests in the region that could be threatened by a new course of action in the Middle East, but also the U.S. and European economies. A new pro-Iranian vision of the Middle East could give birth in the GCC arena to a willingness to increase already growing cooperation with Russia, China, and India. Strategic posturing could also result in a less lenient approach from Arab oil nations towards Biden's energy strategies and the U.S. shale recovery. OPEC+ is evidence of the growing economic strength of non-U.S. economies. Broad support from the U.S. for a new JCPOA agreement and increasing pressure on Arab regimes would only increase this new economic force and could also lead to a very volatile oil and gas market. President Biden will have to play his hand carefully in the Middle East to avoid global economic and geopolitical ramifications.
By Cyril Widdershoven for Oilprice.com
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Dr. Cyril Widdershoven is a long-time observer of the global energy market. Presently he works as a Senior Researcher at Hill Tower Resource Advisors. Next… More
Comments
Saudi Arabia and other Arab Gulf oil producers whose budgets depend on the oil revenue for 85%-90% and who need oil prices higher than $80 a barrel to balance their budgets can use the money they spend on arms deals to plug the deficit in their budgets and finance major projects needed to diversify their economies.
I have always argued that Saudi Arabia and other Arab Gulf States would benefit economically, strategically and financially rom building bridges of trust with Iran. There are no fundamental issues between Saudi Arabia and Iran. They can both be the top regional powers in the Gulf. Moreover, cooperation between them could bring stability and prosperity to the Gulf region and would also support crude oil prices and also ensure the safety of Saudi oil infrastructure.
Any future deal by the Biden administration to re-join the Iran nuclear deal (JCPOA) and lift the sanctions or ease them on Iran shouldn’t be automatically interpreted to mean weaker relations with Saudi Arabia and other Gulf States.
However, I hasten to add that a new deal between the United States and Iran won’t see the light of day soon.
Iran has made it clear that that it will neither agree to any limits on its nuclear and ballistic missile development programmes nor will it negotiate with President Biden without a lifting of US sanctions first or at least a significant easing of them. This is something President-elect Biden will find difficult to accept and therein lies the rub.
On the other hand, one has also to consider the unthinkable eventuality that Iran might be happy with the level of success it has achieved so far in nullifying and evading US sanctions. It might even think that the sanctions are a small price to pay for forcing the ejection of US military presence from Iraq and making Iraq a vassal of Iran thus achieving a spectacular geopolitical victory.
Iran’s Foreign Minister, Mohammed Zarif once boasted that if there is an art that we have perfected in Iran that we can teach to others for a price, it is the art of evading sanctions. To this could be added the Iranian Goreh-Jask oil pipeline which when completed by the end of March 2021 will allow Iranian crude oil exports to bypass the Strait of Hormuz and will also enhance its geopolitical reach immeasurably by allowing it to be able to use the threat of closing the Strait of Hormuz for political reasons without hindering its own oil exports.
By the way, Venezuela has successfully learnt from Iran the art of evading US sanctions and paid for it in gold.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London