Iran Is Breaking Out of Its Box

Jamsheed K. Choksy and Carol E. B. Choksy

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In April, startling pictures emerged from Beijing of Iranian Foreign Minister Hossein Amir-Abdollahian and his Saudi counterpart, Prince Faisal bin Farhan al-Saud, grinning and clasping hands with Chinese Foreign Minister Qin Gang. Relations between Sunni-controlled Saudi Arabia and Shiite-dominated Iran had been bitter for decades. But over the last five months, this long-standing hostility has been upended. Iran and Saudi Arabia have restored a security-cooperation agreement, reestablished commercial flight links, and unfrozen bilateral commerce. On June 6, seven years after its closure, Iran’s embassy in Riyadh reopened.

Tehran has not just accelerated rapprochement with Saudi Arabia. It has embarked on a charm offensive across the Arab world, seeking to reestablish diplomatic ties and economic influence in Bahrain, Egypt, Kuwait, Oman, the United Arab Emirates (UAE), and elsewhere. Iran sees an opening to take advantage of the United States’ confused and diminished ambitions in the Middle East, and its moves are contributing to the further displacement of the United States there.

To accomplish this reset, Tehran has pivoted toward a less ideological, more pragmatic, regional foreign policy. But Western and Arab countries should approach this shift with skepticism. Nothing in Iran’s politics indicates that it intends to be a good neighbor in the long run. And much evidence suggests that it aims to reclaim its role as a revisionist, revolutionary force, intent on securing regional hegemony. For Saudi Arabia and the rest of the Middle East, compromise with Iran is a big gamble. For the West, it could be a calamity.

A HISTORY OF TENSION

During his 37 years in power, Iran’s last shah, Mohammad Reza Pahlavi, transformed his country into the reigning Muslim power in the Middle East. Backed by Washington and armed with the best of American munitions, Iran dominated its Arab neighbors—even those, such as Egypt and Saudi Arabia, which also benefited from U.S. protections. After the 1978–79 Islamic Revolution, however, Iran’s standing deteriorated rapidly.

Sunni Muslim leaders became concerned that Iran intended to export Shiite radicalism in order to destabilize their governments. In 1981, six Gulf States formed the Gulf Cooperation Council to counter Iranian influence; throughout the rest of the decade, Tehran repeatedly clashed with Riyadh over control of Mecca. After a group of Iranians attacked Saudi security forces during the 1987 hajj pilgrimage, Saudi Arabia severed ties with Iran. A brief thaw in relations between Iran and the Gulf states began in the 1990s but ended in 2011, when Iran’s Islamic Revolutionary Guard attempted to assassinate the Saudi ambassador to the United States.

The Arab Spring only intensified Sunni leaders’ anxiety about Iran. In 2012, Saudi Arabia arrested a prominent domestic Shiite scholar, Ayatollah Sheikh Nimr Baqir al-Nimr, accusing him of meddling in Saudi politics on Iran’s behalf. After Nimr’s 2016 execution, protesters set fire to Saudi diplomatic missions in Iran and Riyadh expelled all Iranian diplomats; Kuwait, Bahrain, the United Arab Emirates, and even Sudan followed suit.

HOME FIRES START BURNING

But as Iran’s relations with neighboring countries degraded, Tehran’s leaders came under increasing stress at home. In 1999, protests rocked cities across Iran, first led by students fighting for more employment opportunities. Gradually, these student protests drew support from a much wider base of dissatisfied Iranians. Tensions simmered for a decade against Iranian leaders’ ruthless religious fundamentalism and the economic stress caused by foreign sanctions and fiscal mismanagement. In 2009, a rigged presidential election triggered a populist uprising in which over 200,000 protesters challenged the regime’s legitimacy.

Iran’s government clamped down on public expressions of dissent, yet protests continued. Water shortages and inflation added fuel to Iran’s domestic conflagrations; protests over soaring gas prices in the winter of 2019–20 spread to over 20 cities. In September 2022, Iranian leaders faced their most serious domestic challenge since the Islamic Republic’s founding when Mahsa Amini, a 22-year-old student, died after her arrest for purportedly wearing her hijab improperly. As urban and rural Iranians alike took to the streets, the regime led by Supreme Leader Ayatollah Ali Khamenei realized it was struggling for its survival.

Meanwhile, throughout the 2010s, Sunni monarchs had watched uneasily as Washington’s attention turned away from the Middle East. Riyadh became mired in an unwinnable war with the Tehran-backed Houthis in Yemen; over the course of this conflict, Iranian-made cruise missiles and drones struck targets even inside Saudi Arabia, including, in 2019, a facility owned by Aramco, the Saudi national oil company. Gulf Arab nations began to worry that they could not afford to endure ongoing Iranian-sponsored terrorist attacks, let alone potential direct strikes from Tehran. The prospect of restoring diplomatic relations with Iran became appealing as a way to tamp down tensions, protect their citizens, and safeguard their economies.

INVITATIONS TO A MERGER

Throughout 2021 and 2022, intense reconciliation talks in Baghdad laid the groundwork for the resumption of bilateral ties between Riyadh and Tehran. Saudi Arabia sought reassurances from Iran that the war in Yemen could be resolved and that Iran would not encourage Shiites living in eastern Saudi Arabia to rebel. Following four days of mediation by China, in early March of this year, the two countries announced their intent to resume diplomatic relations. The Saudi foreign minister visited Tehran on June 17, reflecting a breathtaking pace of normalization.

Other Sunni-dominated countries also responded eagerly to Iran’s overtures. After conducting talks over the telephone in mid-2022, Abu Dhabi announced the return of its ambassador to Tehran. This March, in tandem with the Saudi-Iranian rapprochement, Iran’s deputy foreign minister for legal and international affairs met with a Kuwaiti delegation to begin resolving long-disputed maritime borders. The Iranian foreign ministry is seeking the restoration of ties with Bahrain, which would benefit Sunni rulers in Manama by mitigating their tensions with local Shiite Muslims.

Iran is charming countries beyond the Gulf, too. Last December, Iran’s foreign minister and Egyptian President Abdel Fattah el-Sisi held talks in Jordan to discuss reestablishing diplomatic ties, which were cut in 1980 after Cairo offered refuge to Iran’s last shah. Cairo hopes that cooperation with Tehran will further its own strategic interests, including expanding its influence over Iranian-supported armed factions such as Hamas within Gaza. Libya, for its part, announced in March that the Iranian embassy in Tripoli would open for the first time since 2011. And last July, at the Non-Aligned Movement forum in Azerbaijan, Sudan’s foreign minister met with his Iranian counterpart to restore bilateral relations severed seven years ago at Saudi Arabia’s request.

Leaders in Tehran calculate that alleviating economic stress can help defuse protests over their restrictive religious rule. Their diplomatic efforts are meant to lay the groundwork for more trade and, most likely, steps to evade crippling U.S. sanctions. Just a day after the Beijing agreement, the Iranian economic minister led a delegation to Jeddah to discuss making payments for bilateral trade in local currencies, bypassing dollars and euros. The Iranian and Qatari central banks are developing arrangements to help unfrozen Iranian assets from other nations reach Tehran.

Days after Iran and Saudi Arabia inked their agreement in Beijing, for the first time, the UAE invited Iran’s minister of roads and urban development to its annual Middle East Rail conference in Abu Dhabi to discuss improving transport links along the International North-South Transport Corridor, a thoroughfare for cargo from Russia to India that traverses Iran. Also in May, the Omani and Iranian finance ministers met in Jeddah during the Islamic Development Bank Group’s annual meeting to begin working to reincorporate Iranian corporate entities into the Gulf’s southern commercial hubs. Tehran and Muscat signed a joint development agreement for their shared offshore Hengam oil and gas field.

Leaders in Tehran calculate that alleviating economic stress can help defuse protests over their restrictive religious rule.

Farther west, in March, Libya and Iran established a joint economic cooperation committee, which allowed Iranian mercantile vessels to dock at Misrata for the first time in ten years. In April, Tunisia’s president agreed to bilateral visits with his Iranian equivalent, shifting a hitherto largely military relationship toward an economic one in which Tunisia will become a gateway for new Iranian exports to sub-Saharan Africa. Iran’s finance minister recently met with his Algerian counterpart to discuss boosting bilateral investment and trade, and sources close to Morocco’s leaders indicate that Moroccan-Iranian bilateral relations will soon be mended, affording Tehran new trade routes across North Africa.

Iran’s efforts are yielding dividends. Trade with Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia, and the UAE has risen by approximately ten percent since 2022. Going forward, reestablishing ties across the Middle East can decouple Iran’s currency flows from the dollar and the euro, allowing Iranian goods to bypass American and European sanctions. Arab countries stand to benefit from exporting their products, which often include Western technologies that the United States and the European Union prohibits them from selling forward, to lucrative Iranian markets. Iran’s well-educated population makes it an attractive setting into which Gulf high-tech startups could expand.

DANGEROUS LIAISONS

Thanks to ten years of a shifting, confused U.S. foreign policy in the Middle East, Arab nations also feel that they have little choice but to cooperate more closely with Tehran. The United States once functioned as a shield against Iranian aggression for Sunni nations. But these countries see signs that the U.S. commitment to protect them is waning. Unchecked by the United States, Iran is expanding its alliances with Russia and China. Over the past year, Tehran has brazenly sought to seize tankers transporting Saudi and UAE petrochemicals across the Gulf, and it has occasionally succeeded.

When Saudi officials met with their Iranian counterparts in Beijing, Saudi Arabia tacitly accepted Iran’s influence in Lebanon, Syria, and Yemen and its presence in Gulf diplomatic circles. The UAE has concluded that effective security cooperation with the United States is failing, despite the presence of the U.S. Navy’s Fifth Fleet in nearby Bahrain. In March, Abu Dhabi withdrew from the Combined Maritime Forces, a multinational partnership to counter nonstate actors on the high seas.

By choosing to reconcile with Iran, especially via China, Sunni leaders are stepping back from their hitherto special relationships with Washington. Both the UAE and Saudi Arabia chose to publicize their decisions to reestablish diplomatic ties with Iran before even notifying Washington. Even more ominous for the United States, in May, China hosted a dialogue among Iran, Oman, Saudi Arabia, and the UAE, to discuss establishing a joint naval fleet to conduct security operations in the Persian Gulf.

THE U.S. MUST RESPOND

As Arab leaders rush to reconcile with Tehran, the United States’ go-to diplomatic tools—sequestration, economic sanctions, and military restrictions—are becoming increasingly irrelevant. The Biden administration appears to have decided that downplaying these developments is the savvy strategy. In June, John Kirby, a spokesperson for the U.S. National Security Council, said nonchalantly that if “more integration, more dialogue, and more transparency throughout the region … can de-escalate tensions,” that would be “all to the positive.”

This is the wrong approach. Iranian President Ebrahim Raisi promises that Tehran merely “seeks economic integration with other countries.” Iran’s long expansionist history, however, as well as the bulk of its current leaders’ actions suggest otherwise. Just a few weeks ago, the Islamic Revolutionary Guard’s naval commander insisted that every ship passing through the region seek permission for its route by speaking in Farsi or face attack.

There is no evidence that Iran’s recent diplomatic overtures reflect any change to the core foreign policy doctrine that Supreme Leader Khamenei laid out in 2010. Not only do “the shores of the Persian Gulf and much of the Gulf of Oman belong to [Iran],” he said, but Iran must vigorously “demonstrate its power” throughout the region, because “this is our historical, geographical, and regional duty.” Washington must remember that Iran’s hegemonic identity and ambitions have lasted for decades, outlasting regime changes, and its claims to want to play a peaceful, neighborly role in the region date back mere months. Even now, Iran continues to express its unwavering ambition to dominate the region by maintaining its hold over the contested Abu Musa, Greater Tumb, and Lesser Tumb islands, which it annexed in 1971. This will permit it to choke off energy flows if the United States retreats further.

For this reason, Arab states are also taking a gamble in seeking hasty diplomatic rapprochements with Iran. Rather than rushing to appease Tehran with diplomatic agreements, other Arab countries must first demand that Iran prove its commitment to becoming a trustworthy regional partner. Tehran can start by halting its threats against tankers carrying oil and gas from Arab nations and stopping providing weapons to Yemeni factions, who use them to attack Saudi Arabia.

In the absence of such proof, the Gulf Arab nations and their other Middle Eastern counterparts should continue to lean on the United States. But the United States must reciprocate. By tangibly shoring up its security commitments in the Middle East and consistently objecting to Iran’s threats in the Persian Gulf and the Gulf of Oman, Washington can reinforce its military, diplomatic, and economic engagements with its Sunni Muslim allies to reassure them that the United States has not abandoned them.