Iran and the Gulf States
- The Persian Gulf states hold some two-thirds of the world’s proven oil reserves. Saudi Arabia is the largest Gulf oil producer, Iran a distant second.
- Iran’s population of 80.8 million is larger than the seven other Gulf states combined.
- A large population of Iranian nationals lives in the emirate of Dubai, Iran’s most important regional trade partner. Smaller populations live and work in Kuwait, Qatar and Bahrain.
- After World War II, Gulf geopolitics were dominated for five decades by a triangular balance of power among Iran, Saudi Arabia and Iraq. Beginning in the early 1990s, the Iraq corner of the triangle began to weaken, and Iran exploited this weakness by developing broad political, economic, social, and militia networks that deeply influenced the Iraqi state.
- The region has experienced three “Gulf wars”: the Iran-Iraq War of 1980-1988 fought to a brutal stalemate, the successful 1991 U.S.-led coalition to roll back Iraq’s invasion of Kuwait, and the 2003 U.S.-led war to remove Saddam Hussein from power. The 2003 war created an opening for Iran to expand its regional influence.
- By 2015, the traditional post-World War II balance of power no longer existed. It was replaced by robust Saudi-Iranian competition across the Middle East, most notably in Syria and Lebanon, but also in Yemen, Iraq, and Bahrain. The Saudi-Iran conflict is colored by sectarianism and Persian-Arab rivalry, though not driven by it. More traditional geopolitical concerns prevail.
- Persian Iran is the only non-Arab country in the Gulf region. Its predominant religion, Shiite Islam, is shared by a majority of Iraqis and Bahrainis and significant minorities in other Gulf states.
- Trade relations between Iran and the UAE have weathered the storm of sanctions, battered but not beaten. The UAE remains a vital trade lifeline for Iran, its second largest trade partner after China. Most of this total trade – valued at some $25 billion – comprises re-exports to Iran from Dubai ports.
- Iran and Oman serve as joint “policemen of the Straits of Hormuz,” the world’s most important oil chokepoint. Some two-fifths of the world’s globally traded oil passes through the Strait, which at its narrowest point is only 21 miles wide.
- Iran’s threats to “close down the Strait” in the event of military conflict ring hollow, as a closure would damage Iran’s own oil industry, the most vital source of state revenues.
- Qatar’s tactical outreach to Iran over the past few years has been strained by the Syrian civil war where the countries are on opposite sides.
- The name of the body of water linking these eight states has occasionally sparked diplomatic spats. For Iranians, it is indisputably the Persian Gulf. For many Arab states, it is either “the Gulf” or, more provocatively, “the Arabian Gulf.” Most official atlases refer to the body of water as the Persian Gulf.
- The world’s major oil players have largely abandoned Iran, but are circling again amid talk of sanctions removal. Still, they will tread with caution in the immediate aftermath of any deal, cognizant that implementation is full of obstacles.
- Iraq has surpassed Iran as the Organization of Petroleum Exporting Countries’ second largest producer. Despite Abu Dhabi’s misgivings about a nuclear deal, UAE-based companies are gearing up for trade and investment opportunities with Iran. If Iran achieves greater integration and if sanctions begin to fall, the most immediate regional beneficiary will be Dubai. The Persian Gulf commercial city-state is best positioned to grow its Iran trade and services network, and its logistics facilities from Dubai International Airport to the Jebel Ali container port will be well-placed to serve the Iranian market.
- Rising anti-Shiite sentiment prevalent across social media in several Gulf states and anti-Iran media messaging will continue to erode what little is left of Iranian soft power. Salafist jihadism will fuel new recruits not only satisfied with targeting Shiites, but also Iranian interests.
- Saudi-Iran rivalry will continue to play out across a disintegrating region.
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