Iran and Saudi Arabia: regional rivalry

With the failure of the US and western imperialism to secure their rule and dominance in the Middle East by waging wars in Afghanistan, Iraq and Syria, regional powers have competed for influence. Turkey, Saudi Arabia, Qatar and Iran have all been vying for positions. Their competition has stoked sectarianism between Sunni and Shia Muslims, and they have used it to promote their influence.

The distinction between Sunni and Shia Muslims derives from a dispute over who should lead Muslims after the death of the Prophet Mohammed in 632AD. Shia constitutes between 10% and 15% of the world’s Muslims, but Shia form a majority of the populations in Iran and Iraq. In the Middle East there are substantial Shia minorities in Syria, Turkey, Saudi Arabia, Yemen and Lebanon. Saudi Arabia wants to be the world’s leading Sunni nation. Arguments between Saudi Arabia and Iran may cite seventh century battles, but it is not theological or historical disputes that are driving sectarian fights in the Middle East. They are being driven by the pursuit of money and the desperation of ruling classes to cling to and increase their power, at each other’s and the masses’ expense. Imperialism seeks, as ever, to profit from sectarian divisions and fosters them when it needs to.  

The Saudi monarchy fears the emergence of a strengthened Iran, supported by the US, Europe and Russia, in the region. They also fear that Saudi Arabia’s Shia population may be a channel for Iranian-inspired subversion. When the Saudi monarchy executed Shia Sheikh Nimr al-Nimr and 46 other people on 2 January 2016, it sent a warning to its Shia population, and everyone else in the country, that it will not tolerate any dissent, vocal or otherwise, as it begins to inflict heavy cuts on the economy and people’s living standards. Sheikh al-Nimr was a leading Shia cleric in Saudi Arabia, arrested in 2012 and sentenced to death in 2014 for ‘disobeying the ruler, inciting sectarian strife’ and ‘encouraging, leading and participating in demonstrations’. Al Nimr insisted on peaceful protest. After the initial uprisings in Tunisia and Egypt, Al Nimr supported demonstrations in the Eastern Province of Saudi Arabia in 2011. He campaigned for Shia social and religious rights in Saudi Arabia. Iran and the United Nations asked that no harm be done to Al Nimr. Following Al Nimr’s execution, the Saudi embassy in Tehran was attacked by protestors, as was a consular office in the Iranian city of Mashhad. Saudi Arabia broke off diplomatic relations with Iran and on 7 January Iran accused Saudi jets of targeting their embassy in Sanaa in Yemen. Iran then said it would freeze all commercial exchanges with Saudi Arabia.

Iran: a bonanza beckons

On 28 December 2015 a Russian ship was reported to be sailing away from Iran carrying almost all that country’s stockpile of low-enriched uranium. Within a month Iranian President Rouhani was in Italy signing deals worth $17bn and visiting France to buy a new fleet of 118 Airbus jetliners. Rouhani agreed deals with France worth $43bn, including with the French oil company Total, to buy 200,000 barrels of Iranian oil each day. The Financial Times was excited: ‘the reopening of Iran to world markets has lit up the prospect of a rare emerging market bonanza’ (27 January 2016). Iran had complied with the Joint Comprehensive Plan of Action agreed in July 2015 between Iran and the US, Russia, China, Britain, France and Germany to reduce its nuclear industry and prevent any imminent prospect of Iran producing a nuclear weapon, and so some sanctions on Iran could be lifted.

Iran contains the world’s third largest reserves of oil and gas. It has about 7% of the world’s proven mineral reserves, including copper, zinc and bauxite used in aluminium production. Sanctions have cost Iran over $160bn in oil sales in four years and $100bn of Iranian assets have been frozen in accounts abroad. With the removal of sanctions, an initial $32.6bn will be released to Iran. British Foreign Secretary Philip Hammond is keen that British capitalism shares in any ‘bonanza’: ‘The UK has played a central role, and I hope British businesses seize the opportunities available to them through the phased lifting of sanctions on Iran. The future is as important as the landmark we’ve reached today.’ On some estimates, Iran requires $150bn investment a year for the next five years. The International Monetary Fund projects Iranian imports rising to $115bn in 2020. Former Conservative Chancellor Lord Lamont has recently been appointed the British trade envoy to Iran. British trade with Iran is currently one-twentieth that of Germany.

Sanctions have pushed unemployment in Iran to over 30%, although officially it is 19%. According to Tehran University economist Said Leilaz, 70% of the population has seen its income fall in the past decade and food consumption has dropped 26%. Iran has faced not only harsh economic sanctions, but the threat of war from the US and Israel, plus covert attacks, including the killing of Iranian scientists and cyber warfare. Imperialism wants an alliance with a section of the Iranian ruling class and there are factions in Iran who want reconciliation with the US and European imperialism. This is not acceptable to Saudi Arabia, which is anxious that its status in relation to the US, in particular, might diminish, nor is it acceptable to Israel, which neither trusts Iran nor wishes to see its own strategic role in the Middle East undermined by imperialist reconciliation with Iran. Responding to the removal of sanctions, Israeli Prime Minister Netanyahu said that Israel would ‘continue to monitor all of Iran’s international violations’ of the nuclear agreement and ‘deal with’ any threat from Iran. Israel is the only Middle Eastern state that possesses nuclear weapons and it will not sign the Nuclear Non-Proliferation Treaty nor acknowledge that it has nuclear weapons. Iran always denied that it was producing a nuclear weapon and is a signature to the Treaty.

Almost immediately after the sanctions were removed from Iran, the US imposed additional selective sanctions, accusing Iran of carrying out two ballistic missile tests in breach of a UN Security Council Resolution. Having forced Iran to scale back its nuclear power industry, imperialism will be back to make more demands and to co-opt Iran’s ruling class in-to its web of regional alliances and subordinates.

Sectarian divisions

Saudi Arabia opposed any removal of sanctions from Iran and it has undergone a series of setbacks in its attempt to exert influence in the Middle East. It has funded and equipped jihadi groups in Syria but they have failed to remove the Assad government, which Iran supports. Saudi Arabia has failed to defeat the Houthis in Yemen, which it accuses Iran of supporting as they are fellow Shia Muslims. Iran backs Hezbollah in Lebanon, which is also Shia and is fighting on the side of government forces in Syria.

Saudi Arabia and Kuwait encouraged Iraq to attack Iran in 1980 and funded Iraq’s war on Iran from 1980 to 1988. They felt threatened by the 1979 Iranian revolution. Saddam Hussein and the Ba’athist regime in Iraq also saw a potential threat from the Shia majority in Iraq being inspired by the Islamic Revolution in Iran. The US, Britain and others armed the Iraqi regime. Since the overthrow of Saddam Hussein in Iraq in 2003, the Shia majority population have dominated the government there and are viewed by Saudi Arabia as allied with Iran. In Bahrain, when the majority Shia population launched protests for democracy in 2011, Saudi Arabia and the United Arab Emirates sent troops to brutally suppress them. Saudi Arabia’s Eastern Province is the most oil rich part of the country and its population is predominantly Shia, and from whom came Sheikh Nimr al-Nimr.

Saudi Arabia is the largest and richest of the six Gulf Co-operation Council (GCC) countries, which also comprise Qatar, Kuwait, the United Arab Emirates, Bahrain and Oman. With financial surpluses accumulated from oil and gas sales these states have increased their weight in the global political economy. By the end of 2014 net foreign assets of the GCC countries stood at $2.27trillion. Gulf capital is especially present in Tunisia, Jordan, Egypt, Lebanon, Syria and Palestine. When General Sisi led the military overthrow of the Muslim Brotherhood government in Egypt in 2013, Saudi Arabia and other GCC states, (but not Qatar which supported the Muslim Brotherhood), rushed $12bn aid to the new military government. Saudi Arabia and the GCC exercise political power in the Middle East and elsewhere courtesy of the huge revenues they have accumulated. With the fall in oil prices and the rise of Iran as an oil and gas competitor, Saudi and GCC influence in the Middle East may be undermined. Iran could boost oil exports by 500,000 barrels a day within weeks and add another 500,000 a day in a year, when the world is already producing 1.5m barrels a day more than it uses.

Oil prices are down 70% in 18 months. Oil provides 90% of Saudi government revenue. The Saudi budget deficit was $98bn in 2015 and its foreign reserve assets held abroad dropped a record $108bn last year. Since the 1980s high oil prices allowed Saudi Arabia to quadruple its per-capita income, to import migrant labour, provide free health care and fuel and petrol subsidies and to offer routine pay rises for its domestic workforce. Now the subsidies are to be cut, taxes are to be raised, public spending cut and services are to be privatised.

Among the proposals the Saudi government is examining is the privatisation of the world’s biggest oil company, Aramco. This sale was suggested by the US-based management consultancy McKinsey. Aramco not only generates most of the Saudi government’s income, it is responsible for building schools, hospitals and stadiums, a flood defence system and shipbuilding and solar energy. A full share listing of Aramco would run into trillions of dollars, compared to Alphabet, owner of Google, currently the world’s most valuable company, worth $568bn. The sale of Aramco would render Saudi Arabia as an offshore subsidiary of Wall Street and the City of London. One unnamed energy industry source said of the proposed sale, ‘What we’re seeing is a money grabbing exercise. This is not policy.’ Indeed, but money grabbing is what the Saudi regime will be tempted by and what finance capital craves.

The Saudi royal in charge of Aramco is also the defence minister; Deputy Crown Prince Mohammed bin Salman, son of King Salman. On 2 December 2015 the German intelligence agency, BND, said that Saudi Arabia had adopted ‘an impulsive policy of intervention’ in the Middle East and described the 30-year-old Deputy Crown Prince as a political gambler who is destabilising the Arab world through proxy wars in Syria and Yemen. He was ‘prepared to take unprecedented military, financial and political risks to avoid falling behind in regional politics’. Given that the balance of forces is tilting adversely for Saudi Arabia, the BND was issuing a warning. With oil prices down and government revenues falling, Saudi Arabia may not be able to sustain the war on Yemen or its military budget without a reckless sale of its most valuable asset.    

Saudi Arabia spends around $55bn on weapons annually, compared with Iran’s $10bn. The US and Britain are major weapons suppliers to Saudi Arabia. According to the United Nations, Saudi jets have been bombing schools and hospitals in Yemen; they do this with US and British supplied planes and bombs. The British Ministry of Defence says that six British military personnel are helping the Saudis to choose their targets and to ‘comply with the rules of war’ (Robert Fisk, The Independent, 11 January 2016). On 8 January the BBC revealed that more than 250 officers from Saudi Arabia had been trained at the British College of Policing. This is training to operate in one of the most brutal regimes on the planet. When King Abdullah of Saudi Arabia died in January 2015, British Prime Minister David Cameron ordered that the Union Flag be lowered in his honour. This symbolises the importance of Saudi Arabia and the Gulf to British imperialism.

No doubt if there are arms sales to be made to Iran as well as to Saudi Arabia, British companies will be lining up to get the orders and fuelling sectarian wars, all in the name of our security. For as long as the Middle Eastern regimes are turned against each other they will be made beholden to US, British and European imperialism through arms sales and political support. Behind the wars in Syria, Iraq and Yemen are Saudi Arabia and Iran and behind Saudi Arabia and Iran stand the imperialist powers and Russia. British imperialism out of the Middle East!

Trevor Rayne


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