By Jim Krane
The historic nuclear deal between Iran and the West has stirred up a hornet’s nest of opponents, who warn darkly of “appeasement” and a new age of Middle East conflict and proliferation.
Many of these folks appear to harbor unrealistic expectations of multilateral negotiations, to put it kindly. At the end of the day, the courageous pact has a better chance of improving US strategic interests in the Middle East. It may even provide an environmental benefit.
The fact is, America and Iran share common interests that have long been thwarted by the lack of ties. If the agreement plays out as its signatories hope – and that remains a big “if” –rapprochement between Washington and Tehran will open all sorts of avenues for furthering US strategic aims in the Middle East.
For starters, we’re on the same side in Iraq and Afghanistan. In both cases, we back fragile democracies battling terrorist insurgencies. Washington and Tehran are also viscerally opposed to the Sunni fanatics of ISIS, or the Islamic State.
Since Iran lives in the same neighborhood as these combatants, it could provide valuable help.
Of course, America and Iran are not on the same side of all conflicts in the Middle East. We continue to side with Iran’s opponents in Lebanon, Syria and Israel’s occupied territories. But Iran’s return to the international fold – and a growing middle class – might dampen its ideological fervor.
Across the Persian Gulf, America’s Arab allies are also vociferously opposed to the nuclear deal. Their worry about Iranian nuclear weapons disguises a more visceral fear of Iran’s return to center stage in the Middle East. Over the longer term, Iran’s re-emergence could undermine of their influence in Washington, in oil markets, and in the Gulf itself.
To some extent, these fears are founded. The Gulf monarchies have certainly benefited from Iran’s isolation. It is possible that some of those advances could be lost.
However, the Gulf oil monarchies have also undermined their strategic value to the West on their own, by consuming crude oil in quantities large enough to threaten the longevity of their exports. The Saudis appear to be pursuing an economic strategy that aims to replace exports of crude oil with refined products.
Iran could soften the blow with a little energy diplomacy. If trade sanctions are lifted, Iran could build a natural gas export business that would no longer be subject to US opposition.
For the gas-short region surrounding Iran, this would be a welcome development. Five of the six Gulf monarchies – all but Qatar – are in search of gas for power generation. Oman and Kuwait are already talking with Iran about securing natural gas. The United Arab Emirates has even built a gas pipeline under the Persian Gulf to Iran, which now sits empty. Dubai has taken bids to build a giant coal-fired power plant because of the unavailability of gas.
Further east, India and Pakistan have also sought pipeline connections to Iran. Partly due to American opposition to trade with Tehran, these countries have been turning to coal for their electricity needs, adding to the disastrous increase in emissions of carbon dioxide and toxic particulates.
The more that clean, low-carbon natural gas replaces coal or oil in power generation, the better off everyone is. With a nuclear deal in place, American policymakers should move quickly to reverse their opposition to Iranian gas exports.
There are certainly potential losers from any improvement in US-Iran relations.
Israel, with its newfound reserves of natural gas and monopoly on nuclear weapons in the Middle East, is one. Israel’s predicament is partly the fault of bad strategy on its president’s behalf. Netanyahu’s grandstanding so thoroughly alienated the Obama administration that he squandered much of his influence in the White House. Instead of shaping the outcome, the Israeli leader unwittingly enabled the Iran deal.
Elsewhere, optimism over Iran’s energy renaissance should be tempered with caution. Iran is the most timeworn oil producer in the Middle East. It discovered oil in 1908, during the era of the first Texas oil boom. Iran’s mature oil fields now need maintenance and technology that can only be supplied by international firms when sanctions are lifted.
That means Iran cannot regain prominence in energy markets unless it abides by the terms of the nuclear deal. The agreement’s clever “snap back” provisions, which call for a quick restoration of sanctions for any violation, will make foreign investors understandably wary.
Thus, investors’ bets on Iran’s oil and gas hinge on Tehran’s compliance with an intrusive verification mission. That mission has strong opponents within conservative circles in Iran and Washington.
Therefore the Iranian economy – and, ultimately, popular support for the government – depend upon full compliance with the international bargain just signed in Vienna.
At the end of the day, it is smart incentives like these, rather than political bloviating, that stand the best chance of deterring Iran from nuclear weapons.
Jim Krane is the Wallace S. Wilson Fellow for Energy Studies at Rice University’s Baker Institute for Public Policy.
