US election 2020: towards a shift in US-Iran relations and a new Middle East regional order? / Part 2

Returning to the JCPoA

Iran-US relations might witness a turnaround. The main challenge for the Biden administration will be to recreate trust in the Iranian government. The Trump administration’s withdrawal from the deal has left a deep sense of mistrust which is likely to persist given the lack of guarantees that a new deal would be sustained. However, there is a symbolic value in the US’s return to the JCPoA as it counts as an admission that withdrawing from the agreement was a mistake.

In the US, despite the growing politicisation of the JCPoA issue, there is unity among the democrats in supporting diplomacy. Although fatigue from involvement in middle eastern conflicts already existed under the Obama administration, the democrats are convinced that the Trump administration has exacerbated regional dynamics due to the lack of an efficient crisis management system. Conflicts in the region might continue to spill into other regions, and the dominant view in the democratic camp is that diplomacy deployed under Obama worked and needs to be restored. Indeed, while before 2013 the notion of US-Iran dialogue was taboo when backchannel dialogues started, communication did work and achieved results. Moreover, in abandoning Trump’s unilateral policies, the Biden administration will restore transatlantic unity and cooperation with European partners. This can assist in process issues such as sequencing and compliance arrangements.

In reinvigorating diplomacy, across the domestic spectrum there are several calls for Biden not to cave in and go back to the original JCPoA, with suggestions that he should use sanctions as leverage. However, leverage is often not well-defined and is often exaggerated.

On the Iranian side, with hardliners arguably growing in power and controlling the parliament, the supreme leader will be unlikely to support Rouhani in returning to the JCPoA.

On the economic dimension, Iran will need compromise for its economic survival. In recent years, the drop in oil revenues and the resulting rise in its budget deficit has forced Iran to become ideologically more flexible. For the business community in Europe, resuming cooperation with Iran requires normalisation.Rising tensions are bad for business and Europe lacks economic sovereignty due to the extraterritorial effects of the US sanctions. In France, there is an impression that Iran wants more for less (e.g. the idea of compensation from the Iranian side).

The first step towards de-escalation can be to allow Iran to resume its oil exports. It should be recalled that the main risk of war in 2019 arouse because of the sanctions on Iranian oil. If the US cooperates, Europe can return to importing Iranian oil. Furthermore, while US companies will not go to Iran because of the US Congress, European companies could revive their interest in investing in the Islamic Republic, provided that the appropriate conditions were there. In 2015, Obama himself pushed for European companies to go to Iran.

Under Trump, with the intense US-China competition it was also difficult for Europeans and Chinese partners to work together in Iran. Russia and China can play a role here since European companies are prepared to work with their banks to ease tensions with Iran. In addition, there is a role for Russia and China in deepening trust between the US and Iran. However, although both countries are signatories to the JCPoA agreement, Russia has not proven interested in pushing for a resolution on the nuclear file. A US return to the JCPoA might take away from Russia a potential role of mediator regarding the tensions in the region.

Conclusion

It is going to be difficult to reverse the conflict trajectory in the Middle East, as the region remains continuingly divided, not just between the GCC and Iran but also within the GCC itself, with fault lines between the Saudi-UAE camp and the Qatari-Turkey camp. Moreover, unlike during the initial JCPoA period, today, with growing geostrategic competition, great power competition is prominent. The US will not be a dominant player as the entire region, and not just Iran, has hedged towards developing relations with Russia and China.

Multipolarity and complex conflict dynamics require a global compact to be addressed so that the region’s conflicts stop serving any player’s interests. Instability in the Persian Gulf region is not in the interest of any state. For example, with China importing 40% of its oil from the region, any instability can threaten energy security and negatively impact the global economy. But to launch a global compact common denominators on which we can build consensus are needed. De-escalation should go beyond the nuclear issue to include region-wide conventional arms dialogue and issues such as Iran’s missiles and regional activities along with Saudi Arabia and the Emirates’ assertive regional policies and arms purchases.

The best place to start can possibly be Yemen. All actors have signalled an interest in removing themselves from the conflict. This is the arena where Iran has the least vested interests in the long term while it proves to be strategic for Saudi Arabia. There are also strong domestic pressures and issues of legitimacy that can be used as an opportunity. Since regional wars are costing regional actors a high price both domestically and in terms of their capacity to respond to their peoples’ needs, stopping such conflicts might be of existential value for them.

Leadership will be needed to overcome the current conflict traps. The US will have to work with Europe and Russia to transform the region from a playing field for geostrategic competition into an arena where actors can find overlapping interests.

 

Read the first part here: US election 2020: towards a shift in US-Iran relations and a new Middle East regional order? / Part 1 (8 January 2021)