Iraq may stand to benefit from heightened US-Iran tensions
WASHINGTON D.C. — Iraq could stand to benefit from "gigantic" economic deals with US companies if it capitalises on elevated tension as Baghdad tries to maintain a balancing act, suggested American analyst David Pollock in Rudaw's most recent episode of The Washington Perspective.
Pollock is the Bernstein Fellow at The Washington Institute, focusing on regional political dynamics and related issues. He is also the director of Project Fikra, the Institute's think-tank aimed at countering the spread of extremism in the Middle East.
Pollock's comments come amid a period of "deliberate heightened tension" between the two countries. The United States' application of "maximum pressure" in the form of hardline policies like its withdrawal from the JCPOA (more widely known as the Iran nuclear deal) last year, the re-imposition of ever-growing sanctions since November, the designation of the 120,000-strong Islamic Revolutionary Guard Corps (IRGC) as a foreign terrorist organization, and the deployment of warships to the Persian Gulf have sparked fury in Iran. Iran has retaliated by setting a 60-day deadline for new terms for its nuclear deal on May 8.
Despite this rhetoric, Pollock believes that neither side actually wants military action to take place, nor provocative actions with a higher certainty of military conflict have been threatened without actually being carried out. He offers the example of the multiple threats made by Iran over the course of several years to close the Strait of Hormuz that have failed to materialise, even though attacks on allied US vessels have taken place — while "sabotage" attacks by unknown assailants in the vicinity of the strait have taken place on the vessels of US allies, the strait remains open.
Iran would stand to benefit from avoiding any embroilment in military action, as it still has a lot to gain with the JCPOA, at least with regards to its remaining European and Russian cosigners. With an economy being crippled (source) by US sanctions, the potential economic benefits of adhering to the deal would be too great for Iran to disrupt through military action with the United States. However, limited conflict with Iran could be, according to Pollock, politically beneficial for Trump on the domestic front in the run up to the 2020 presidential election, despite some inevitable backlash.
Iran's use of more aggressive rhetoric is arguably more about "domestic consumption" and the support of Iranians at home than it is a concrete threat to the United States. The inflammatory to-and-fro between the two countries is not new, but Pollock posits that this period of heightened tension is exceptional because under a Trump administration, the possibility of military intervention is somewhat more likely. Pollock cites a US policy maker's recent remark that "unrelenting force" could be used in response to an Iranian transgression deemed serious enough to warrant it.
The United States is very aware of where Iran's offensive strengths lie, and concentrates its rhetoric accordingly. Pollock highlights that Iran poses a 'real threat', especially in terms of attacks on US and Israeli targets such as consulates which can be enacted through its proxies. As such, he notes that almost any speech on Iranian aggression made by Trump's administration makes reference to Iran's proxies elsewhere in the Middle East, including Hezbollah in Lebanon and the Houthi rebels in Yemen.
Olive branch "offers on the table" made by both the United States and Iran are a performative facade according to Pollock, exemplified by the 12-point demands laid out to Iran by US Secretary of State Mike Pompeo upon the United States' withdrawal from the nuclear deal — demands which Pompeo says were known by the US to be unattainable.
Amid all the provocative military posturing, the United States is in very real terms trying to wean itself and its allies off of Iranian oil, increasing its own production by 1.2 million barrels per day while trying to get Saudi Arabia and the UAE to produce more oil. Despite this, Saudi, the largest OPEC producer, has said that it has no plans to increase its oil production in 2019 to make up for Iran's expected decreased exports.
The Iraqi central government inhabits a position where it may be able to capitalise off US-imposed sanctions on Iran. Pollock argues that, while Iraq clearly has immediate term needs and dependencies, it is actually in the position to make "gigantic" deals with the United States and to some extent, Chinese companies, particularly in terms of oil industry development.
Baghdad appears to be taking advantage of these possibilities, in the form of initial deals like the $53 billion agreement last week with ExxonMobil and PetroChina. Pollock argues this would be a better option in the medium-term than its current "dependence" on Iran.
This perspective comes at a time of apparent Iraqi anxieties about potentially being caught in the crossfire of heightened US-Iran tensions. Iraqi Prime Minister Adil Abdul-Mahdi repeatedly has said the country doesn't want to be sucked into an international tug-of-war between the United States and Iran, while former Iraqi Prime Minister Nouri al-Maliki said last Friday that the United States and Iran should refrain from “beating war drums,” and instead choose dialogue.
In the short term, allowances need to be made for an infrastructurally weak Iraq so that it can cover its most immediate needs, including an electricity supply that is heavily dependent on Iranian exports, particularly in the south of Iraq. The Trump administration initially issued waivers alongside its sanctions on Iranian oil so that countries that were heavily dependent on Iranian oil would still be permitted to purchase it. However, Pompeo announced on April 22 that these waivers will no longer be renewed, leaving Iraq's short-term requirements in a precarious position for the foreseeable future.
The official Kurdistan Regional Government (KRG) position has been that it will follow the position of central Iraqi government. If this stance is maintained the latter's capitalisation on Iranian sanctions through deals with the United States or other countries could be potentially lucrative for the KRG.
Pollock's advice to the KRG to move forward would be to put distance between itself and Iran, keeping dealings with them to the "barest minimum.” Iran having far less strength economically than it once did — he brings up the fact Iranians are now trying to cross the border into the Kurdistan Region to find jobs. Iranians now make up the largest contingent of foreign worker arrivals in the Kurdistan Region. The KRG ought to instead focus on nurturing more fruitful economic relationships "with Turkey, the US, with Europe, with Arab countries".