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A public policy blog from AEI
On August 24th, Qatar announced that it was sending an Ambassador back to Tehran. This move by Doha sparked a series of columns in Saudi and Emirati publications that highlighted Qatar’s close relations with the Quartet’s (Saudi Arabia, UAE, Bahrain, and Egypt) mutual opponent, rival, and at times, “fren-enemy” — the Islamic Republic of Iran.
Similar to previous publications during the feud, most of these stories can be considered hyperbolic disinformation that reasserts the Quartet’s core complaint that Qatar is making nice with the enemy and thereby undermining the Gulf Cooperation Council (GCC). Washington commentators and US officials also met these reports with concern, given the Trump administration’s efforts to pushback on Iran’s regional behavior. While Iran does present a dangerous problem the GCC must solve, Qatar’s relationship with the Islamic Republic is quite complex.
The Quartet has tried to use this feud with Qatar as an opportunity to brand itself as the newly integrated “Arab NATO” and thereby shoulder the President’s call for greater pushback on Iran. Due to geography and economic necessity, Qatar is not well positioned to be a part of this vanguard. Nevertheless, the Quartet has since portrayed Doha as the wayward sheep that needs to be pulled back into the herd.
The problem with this type of targeted branding is that it’s not entirely true, leaving policymakers in Washington facing a conundrum. If regional states such as the GCC and Egypt are going to be the backbone of a regional strategy to confront Iran, Washington will need to tailor US policy objectives to what is politically, geographically, and economically feasible for each member of the GCC. As a result, the US must encourage these states to work together where there is common ground and allow for flexibility where there are differences.
United Arab Emirates
The Crown Prince Mohammed bin Zayed and his team in Abu Dhabi have a clear commitment to addressing Iran’s regional behavior and have taken strides in pushing for a stronger response to Tehran. Despite these plans and progress, the UAE remains a major economic partner of Iran.
The UAE is Iran’s largest non-oil trading partner and source of imported goods, which total $23.7 billion. In 2013, the UAE accounted for 96.7% of GCC exports to Iran. In 2016, the UAE accounted for more than 62% of GCC imports from Iran, while Oman accounted for 26%.
The lion’s share of this economic activity goes through the Emirate of Dubai. The global city-state is a major hub for re-exports to Iran. In light of international sanctions, most nations conduct their bilateral trade with Iran through its welcoming business environment.
Iranian non-oil exports to the UAE has seen an overall rise since its low of $1.72 billion worth of commodities exported in the fiscal years 2006–7. Iran’s annual trade with UAE has continuously seen deficits. However, between the fiscal years 2011–12 and 2016–17, the gap has become narrower and reached its lowest level at $1.13 million in 2015.
Alongside this trade, Dubai has been a major hub for banking with the Islamic Republic. Dubai authorities have stepped up efforts in recent years to prevent questionable financial transactions, yet money laundering still occurs, notably through the Hawala system.
To be fair to Abu Dhabi, Crown Prince Mohammed bin Zayed has taken steps in recent years to trim back the UAE’s deep economic ties with Iran. While public data is never complete, trade with Iran is down to:
Export/Import Trade in 2016 (Source: UN Comtrade)
Iran still remains a major economic partner of the UAE, and any moves against Iran by the UAE will naturally be constrained by their complicated relationship. There is little support for cutting ties with Iran in the Dubai business community.
Washington should encourage the UAE to diversify its economy and reduce its relations with Iran. However, policymakers need to be cognizant of the steps the UAE can realistically take, given this complicated geo-economic relationship with Iran.
The House of Saud considers Iran its main geopolitical rival. Since King Salman took office, relations with the Islamic Republic have descended in a downward spiral. The most pressing issue between the two countries is the war in Yemen, while opportunities for dialogue continue to be spoiled by Tehran’s support for the Houthi rebels.
According to sources in the Gulf, Riyadh recently requested that Prime Minister Abadi of Iraq explore with Tehran an opportunity for Saudi and Iranian officials to begin dialogue on regional issues. Saudi Arabia recently sent a delegation to Iran on the official reason to inspect the Saudi diplomatic facilities damaged during the January 2016 protests, which were in response to the execution of Nimr Nimr. This may prove to be an opportunity for Saudi Arabia to find a settlement for Yemen, which has been a costly endeavor so far.
Additionally, Riyadh has deep concerns with Iran’s continued attempts to meddle in the Eastern Province and in Bahrain. Senior Bahraini officials have noted the degree to which Tehran continues to interfere in the Kingdom’s domestic politics as well as provide arms shipments to Bahraini dissidents. While Manama certainly has domestic challenges, including political reform to accommodate the majority Shi’a population into the state’s political future, Iran has continually interfered in the state much to the anger of both Riyadh and the ruling Al Khalifa family.
Regardless of the possible outcomes, any improved relations between Tehran and Riyadh pose interesting implications for Washington. While the US should not necessarily discourage dialogue, it poses a complication as the White House explores the future of the JCPOA and its strategy against Iran.
Qatar, Oman, and Kuwait
The Sultan of Oman has traditionally held positive relations with Tehran, and viewed the JCPOA as an opportunity to revive trade and commerce with the Islamic Republic. Kuwait as well has welcomed opportunities for additional dialogue between the GCC and Iran.
With regard to Qatar, it must find a way to navigate the geopolitical constraint imposed by the nature of the relationship between Saudi Arabia and Iran. Since Qatar and Iran share the South Pars/North Field natural gas reserve, it is an economic necessity that both countries maintain a degree of realist and pragmatic relations. Due to these geopolitical realities, Qatar cannot act as the fulcrum to a GCC-led campaign against Iran.
This isn’t to say that Doha doesn’t consider Iran a threat. For example, Qatar’s military posture has been focused on positioning themselves strategically against potential Iranian interference, largely due to significant differences over Syria. Additionally, Doha has not forgotten that it was Iranian backed groups who kidnapped, and held for months, members of the Qatari royal family in Iraq.
The recent blockade by Qatar’s neighbors, including a restriction of airspace and land routes for food and other supplies, has created a situation where Qatar pragmatically has used Iranian airspace to maintain its status as a global transportation hub. Simultaneously, they have hedged against this increased cooperation with Iran, exploring alternative land and maritime routes. This level of apprehension is key to understanding the balancing act Qatar must perform in handling relations with its neighbors. The practical argument for restoring an Ambassador to Tehran, who met today with Foreign Minister Zarif, has merits given the current political predicament Qatar faces.
Leaders in Washington and the GCC should continue efforts to resolve the ongoing conflict and remember, as President Trump stressed last week, that the much larger threat is Iran. If the GCC is to take this threat seriously, they will see that the embargo has unintentionally pushed Qatar to adapt in ways that has increased its cooperation with Iran.
As Washington develops and implements its strategy to counter Iran, US policymakers need to be more adequately informed on the complexity of the Gulf’s relations with Iran. Without taking this complexity into account, President Trump will consistently feel let down by his Gulf partners.
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