Iran sanctions lifted: What is next?

After 37 years on the same day another significant event for Iran took place. EU and the US sanctions, imposed on the country because of the refusal to suspend its nuclear program, were lifted. The lifting of sanctions and the transformation of Iran from pariah to a very promising partner can also be called a new era in the history of the country.

It should be noted that these processes occur on the background of a sharp deterioration of relations between the two regional powers and longtime antagonists - Iran and Saudi Arabia. The region is in fact divided into two camps.

Some experts believe that the lifting of sanctions against Iran will lead to a further escalation in the region. This is explained by the fact that Iran by agreeing to limit its nuclear program, did not abandon its expansionist plans in the Middle East. It is assumed that as Iran gets access to its previously frozen huge financial resources, as well as to Western technology and investment, Tehran's appetite and opportunities will only increase. Such a turn of events does not satisfy almost all of the oil monarchies of the Gulf, Saudi Arabia in the first place, Israel and Turkey are not happy about this either. We can say that the first time the views of the Arabian monarchies, Israel and Turkey are identical. The Iranian threat like the sword of Damocles hangs primarily over heads of such countries as Bahrain, with majority of population composed of Shiites, but the ruling Al Khalifa family professes Sunni Islam and is under the patronage of the Saudis. Bahrain, located in close proximity to the coasts of Saudi Arabia, also has a strategic importance for Iran.

The conflicts in the region 

Apart from the bloody conflict in Syria, which in varying degrees engages Iran on the one hand, and Turkey and the Gulf states on the other hand, there is also a non-subsiding conflict in Yemen, fierce competition in Lebanon, struggle for Bahrain and Iraq. As well as the Hezbollah factor. 

It would be naive to believe that after the lifting of sanctions, Iran will abandon its regional ambitions and stop interfering in the internal affairs of neighboring Arab countries.

I believe that the lifting of sanctions against Iran can lead to a new spiral of tension in the region.

In the Syrian direction, Iran can increase support for Hezbollah and use this organization against the Syrian opposition and Israel. Along with this, it is possible that competition between Iran and Russia in Syria will increase. Tehran in its hard times began supporting the Syrian regime. Now that the financial capabilities of Iran have increased, it may want to play a more active role in the Syrian conflict. Here Iran will have to encounter the interests of Moscow.  

We should expect activation of the pro-Iranian forces in Lebanon. Perhaps this activation will lead to the short-term destabilization of the situation in the country. 

Regarding Yemen, Iran will ramp up efforts to help the Houthis.  It is an important direction for Tehran. The war in Yemen allows to fetter part of the forces of Saudi Arabia and makes Riyadh to spend considerable funds to continue the war. In Iraq, Tehran will try every possible way to maximally bind Baghdad to itself and to keep the Iraqi leadership in its orbit.

Considering the disruption between Iran and Hamas, Tehran can shift its attention to smaller groupings in order to maintain the tension at the Israeli borders.

Undoubtedly, Iran will continue to play a destabilizing role in Bahrain, in areas of Saudi Arabia inhabited by Shiites. Any actions in the above directions will face with counteraction from Saudi Arabia. Iranian activity in the Caucasus is also possible.  In Azerbaijan, recently the breeding ground of Iranian influence on the Apsheron Peninsula was neutralized. It is possible that Tehran will try to win back the game.

Iranian great power statehood

Many believe that the Shiite ideology dominant in Iran, completely neutralized nationalist or chauvinistic attitudes in society. It is not nearly so true. A very large layer in the Iranian establishment considers the country as a sort of empire and a regional superpower with claims for the status of one of the world powers. In these circles, the attitude toward Arabs and Turks, as well as toward Arabic and Turkic world, is very ambiguous. Many consider the Persian Gulf as an internal Iranian reservoir, and the existence of the Arab States there as a historical misunderstanding. Also, the existence of Azerbaijani state on the borders of Iran is considered as threat to the integrity of Iran within its present borders. In private conversations with the Iranians one can hear all sorts of racist jokes and comparisons against their Arab and Turkic neighbors, in particular addressed to the Arab monarchies of the Persian Gulf. A sufficiently large part of Iranian society approves the expansionist aspirations of the elite. These aspirations fit perfectly into the Iranian perception of their country as a regional power.

But it should not be assumed that Iran is the only force in the region and, for example, the Arab monarchies are powerless before the onslaught of Tehran. Saudi Arabia together with its allies is a very serious power on the regional scale. In addition, the establishment of military ties between Saudi Arabia, Qatar and Turkey serves as an additional guarantee of security and a counterweight. Of course, it is perfectly understood in Tehran. The military presence of Turkey in the region can at times complicate the task of Iran. 

Dissatisfaction with this fact is expressed in different ways, including through the Iranian media, totally controlled by the state. Anti-Turkish campaign in the Iranian media is not of a temporary, sporadic nature. On the contrary it focuses on the long term. The Iranian leadership is aware that it will not be able to subjugate the Arab countries, if Ankara will stand behind them. Even under conditions where the United States in some way have withdrawn themselves from the region, head-on collision with Turkey does not bode well for Iran. Therefore, at this stage, Tehran gives more preference to information and tactical warfare against Turkey and its regional allies.

Iranian oil

For a long time, the possibility of Iran to enter the oil market loomed over traders and exporting countries. The oil price already experienced some pressure from the Iranian factor. Finally, when the sanctions against Iran have been lifted, the markets naturally reacted to this, but the dramatic price collapse did not take place.

Passions heat up as Iran states about the intention to increase oil exports.  Intention – is a good thing, but in practice things are not so simple. Firstly, the Iranian oil sector was hit hard by sanctions, no matter how Iranian side waves it off. The effectiveness of oil extraction and production capacity in Iran is very low. The reason for that is the extreme deterioration of the equipment and inefficient exploitation of fields. Like it or not, it is impossible to increase production in the shortest time. But this is only half the issue. Even if Iran miraculously succeeds to increase oil production in the shortest time, it will be difficult to find buyers for it. Since, most countries, traditional buyers of Iranian oil, during the sanctions reoriented to Saudi oil, and have contracts with Saudi Aramco and buy raw materials from them at a discounted price.

In general, the lifting of sanctions against Iran is certainly the beginning of a new era for the country. But will this new era be productive and useful for the entire Middle East; soon we are all going to know for sure.

* Ali Hajizade, political analyst, head of the project “The Great Middle East”