Tehran comes in from the cold

Washington’s rocky détente with Iran has been one of the most important geopolitical stories of the 21st century. What's to come next?

By David Patrikarakos

It has taken a long time to get here. More than 30 years ago, during what came to be known as the 1979-81 hostage crisis, Iranian militants stormed the US embassy in Tehran and took diplomats prisoner. Understandably enraged, Washington froze billions of dollars of Iranian assets under its control, broke off diplomatic relations and imposed a trade embargo. So began an era in which US sanctions against Iran became the norm. Last Saturday, however, nuclear-related economic sanctions on the country were lifted.

Washington’s rocky détente with Iran has been one of the most important geopolitical stories of the 21st century. The non-existent relations between Washington and Tehran that continued for over three decades were both unique (the US maintained an embassy in the USSR throughout the Cold War) and bad for the region and for international security as a whole.

What comes next, however, is unlikely to be uniformly positive. First, there are the economic consequences. The BBC estimates that now Iran can sell its oil on the international market again, it could soon be exporting 300,000 barrels a day. This considerable influx of oil on to the market will inevitably drive the price of oil – already sitting at a long-term low of less than $30 a barrel – even lower.

Weak oil prices will do little for Middle East stability at a time when the region is highly unstable, even by its own standards. Most immediately, revenues for Saudi Arabia, which is already facing unprecedented problems as a result of financial mismanagement and low oil prices, will be cut even further.

The kingdom needs a political win, or, failing that, a convenient enemy for its people to focus on. Saudi Arabia, as the pre-eminent Sunni power in the region, is already fighting a proxy war with the Shia Iran in Syria and Yemen and is terrified of growing Iranian influence. The combination of financial pressure and the prospect of an unchained Iran will probably make King Salman more determined than ever to assert Saudi influence and counter perceived Iranian aggression wherever he sees it.

Despite the nuclear deal, Iran shows no sign of reining back its activities in the region. Its new access to about $100bn of previously frozen assets will only further enrage the Saudis, who fear that much of this cash will be used to fund Iranian-backed Shia militias in Iraq and Iran’s Quds force, at present engaged in propping up Bashar al-Assad’s murderous regime in Syria.

Iran may have come to a deal with the US but its supreme leader, Ayatollah Ali Khamenei, has made it clear that a wider détente between the two nations is not on the table. President Hassan Rowhani called the end of sanctions a “glorious victory” and, as far as the furtherance of his political agenda goes, he was right. But he only ever had Khamenei’s reluctant blessing. Rowhani was free to negotiate to get the sanctions relief that Iran so desperately needed but not to improve relations to the degree that the Islamic Republic would risk being seen as becoming friendly with its long-standing American enemy.

Now that the deal has been done, Khamenei is likely to become even more intractable. This is especially true of Iran’s foreign policy adventures run by the Revolutionary Guards. The Guards have huge power in Iran, both politically and economically, and if it comes to a choice between them and Rowhani, the supreme leader will, to quote Osama Bin Laden, back the “strong horse”.

Perhaps the clearest indication of what is to come arrived with the news that, a day after the sanctions were lifted, Washington had imposed a new set of sanctions on Iran over its ballistic missile programme. Iran railed against the US, claiming that these sanctions had “no legal or moral legitimacy”. The sense of déjà vu was inescapable.