Oil prices have hovered over $60 and touching $70 as the Gulf crisis unfolded.
The January 3 killing of Maj. Gen. Qasem Soleimani, commander of the Al Quds Force of the Iranian Revolutionary Guards Corps (IRGC), in a US drone attack at Baghdad airport have had multiple consequences, in Iran and abroad. Iran expectedly retaliated five days later by firing a barrage of missiles at two Iraqi military bases, after alerting the Iraqis. Iran claimed killing 80 “American terrorists”, in what was more symbolic revenge, as no loss of Iraqi or American lives was reported. For now, the point of further escalation into open hostilities has passed, although the faultlines persist, if anything with deepened hostility.
In order to exacerbate domestic Iranian civil unrest, which was manifest preceding the Soleimani killing, US President Donald Trump ramped up sanctions, while offering talks on January 8. Thousands of Iranian mourners, who had poured into streets wanting revenge, turned against their own government after the Iranian military accepted mistakenly shooting down a Ukrainian airliner, killing many Iranians with dual Canadian-Iranian nationality. Iran in turn kickstarted its stalled nuclear enrichment programme by resuming research on advanced centrifuges, pulling old equipment out of the boxes and threatening to enrich uranium beyond limits imposed by its 2015 nuclear deal with P-5+Germany. On January 12, the Guardian Council, a 12-member group of which half are the Supreme Leader’s nominees, debarred dozens of current members as also reformist and liberal candidates from running in the forthcoming parliamentary election. Among them are prominent figures like Ali Motahari, son of a close associate of Ayatollah Kho
meini, father of the Islamic revolution. The hardliners were beginning to circle their wagons, preparing to defy America.
With a sulking and irate IRGC on the defensive after the airliner incident, Iranian President Hassan Rouhani found his voice on January 16 when he berated the disqualifications, arguing: “This way is not an election”. He further invoked Gen. Soleimani as a non-partisan figure who talked to all political factions. Mr Rouhani’s message of national unity was criticised by the Guardian Council as creating tensions and undermining unity. Thus, a deep churn is underway in Iran though it is difficult to say that it would not end like many times in the past when the regime and the IRGC have shown resilience in quelling dissent. The danger, as The Economist puts it, is that although Iran could perhaps successfully strike a deal with the US by moderating its nuclear and regional-hegemonic ambitions, the “guards corps brought closer to power and made thirsty for revenge, by the loss of its brightest star, is unlikely to see things that way”.
The danger lurks of Iran digging in for the long haul, as seems to be happening, and through its proxies and allies, launching a big revenge attack on senior American military brass or prominent ruling family members of US allies like Saudi Arabia and the UAE. Such an attack close to the November presidential election will put President Trump in a bind. Retaliation may be seen by the US electorate as a failed West Asia-Gulf policy and cause turbulence in energy markets. But not retaliating would open him to the charge of being indecisive or even cowardly. Iran played a decisive role in the defeat of President Jimmy Carter in 1980 by refusing to release kidnapped US diplomats before the last vote was counted and Ronald Reagan’s victory known.
This year’s Raisina Dialogue was held in New Delhi against this backdrop. Seven “have been” heads of state/government and a dozen-odd foreign ministers adorned the podium. Choosing to flatter the host while former Afghan President Hamid Karzai talked of a “humane world order”, another leader suggested India as the fittest to lead a global alliance of democracies. Former Canadian PM Stephen Harper went a stage further by lauding Narendra Modi’s vision of India as a new kind of nationalism independent of Western liberalism. That all this was in conflict with the reality of popular protests over the Citizenship Amendment Act, the use of brute force by the police in some BJP-run states to disrupt protests and a challenge to Indian federalism, rule of law and constitutionalism seemed not to matter.
Two noticeable factors emerged. First was Russian foreign minister Sergey Lavrov, on the eve of resigning to enable President Vladimir Putin’s constitutional changes, took exception to the US-India construct of “Indo-Pacific”. He called it an attempt to contain China, which would be music to Chinese ears. That China’s Belt and Road Initiative is spreading all over continental Eurasia is obviously not seen as containment of India or Russia by the latter. This was proof positive of the newly-emerged but still evolving Russia-China compact in Eurasia, particularly Central Asia. Second was the quiet presence of a US delegation led by deputy national security adviser Mathew Pottinger, in New Delhi ostensibly for the Raisina Dialogue, when Iranian foreign minister Javad Zarif was also in town. External affairs minister S. Jaishankar, when quizzed about Iran-US ties, simply said they are individualistic nations and that the “ball is in their court”. It is more than likely some direct or indirect contact between the two adversaries must have been made, probably facilitated by India. It’s too soon after the Soleimani killing to really imagine any meaningful engagement, but often deft signalling can be the starting point of a détente.
During Mr Zarif’s call on Mr Narendra Modi, the focus was clearly on bilateral ties as there is just no space for high-level mediation between President Trump and Ayatollah Khamenei. But even an uneasy stalemate is not good for business or investment. Oil prices have hovered over $60 and touching $70 as the Gulf crisis unfolded. Saudi Aramco stock, on which Crown Prince Mohammad bin Salman has based his diversification strategy, is 10 per cent lower than its peak in mid-December, costing the Saudis $200 billion lower valuation. The European Union resorting to a dispute resolution mechanism over Iran’s nuclear deal to try save it has been taken amiss by the US. With Sultan Qaboos of Oman dead, one more sensible buffer is gone. The Crown Princes of the UAE and Saudi Arabia must realise that unleashing President Trump on Iran can be a mixed blessing. His gameplan is driven by his own domestic and international calculations, but the game is played in their neighbourhood. An old Indian adage correctly advises: if you live in the pond, do not enrage the crocodile.