The White House is giving up on the nuclear deal with Iran. Why and what should we expect as a result?
Besides disregarding Israel’s interests (something that happens much more often than Israel would like to), Obama’s deal broke one more “convention.” Since the 1980s, the Gulf monarchies, first of all, Saudi Arabia, have paid the United States for its “protection.” And the main scarecrow in the region is Iran. The Sunni elites are worried that the Shias may rise, so, Obama’s peacekeeping was a kind of treachery for them.
The Republicans think likewise. So, now we are witnessing a setback to the pro-Saudi paradigm and the breakdown of the Democrats’ legacy in the Middle East. And one of the steps the Republicans have taken to this end is the decision that the Saudis should replace the Americans in Syria.
After 2008, the White House faced two major tasks. The first one was reindustrialization: the crisis crushed the illusions that post-industry was the crown of economic progress. In fact, it meant exodus of capital – something we have regularly seen since the decline of Holland and Northern Italy in the 18th century.
The second task was to put an end to the endless counter-guerrilla war in the Greater Middle East and to redirect the funds spent on it towards the struggle against much bigger challenges coming from China.
One of the key factors here is demography: the war is archaizing public institutions and this results in growing birth rate. Unless things are bad enough for people to die out or rush abroad, demographic pressure is giving birth to new “fighters against crusaders.” The methods to prevent this are known, but massacres or bombings are already regarded as mauvais ton. In this particular case, the Americans needed to leave but to stay: for Obama, growing influence in the region was a prerequisite of reindustrialization.
His doctrine was as follows: to use “conservative” means for reanimating the U.S. industry, means based on the principles of globalism, free trade and flow of capital. Obama hoped that advanced technologies, cheap energy resources and no trade barriers with economies that were not a match to the United States were enough for reindustrialization. He planned to create Trans-Atlantic and Trans-Pacific partnership, a single economic area with players having almost as expensive labor force but no American energy prices in exchange.
The second goal was to stabilize the situation in Iraq in order to boost oil production there. But stability was impossible without a compromise with Iran. So, the best option was to impose sanctions against the Iranians as a guarantee against any conflicts with them.
Cheap energy was also a good way to undermine Russia’s ambitions and to destabilize the local regime.
But that strategy implied problems with Israel and Saudi Arabia. After 2015, we could see how much acceptable low oil prices were for the Saudis. As regards Iran, it has long been paranoia for the Saudi dynasty, whose only major asset, oil, is concentrated in Shia provinces. On the other hand, the Saudis have always been there to manipulate prices as a way to create problems for Iraq and thereby to encourage its Sunni majority.
This is why Obama was so demonstrative in supporting the “Arab spring” in Egypt in 2011, where power went to the Muslim Brotherhood, a force supported by Saudi Arabia’s rival, Qatar. The Americans had lots of motives in mind, but the key one was to pressure the Saudis.
Obama’s doctrine has yielded very modest results in economy and very dubious achievements in foreign policy. The American industry is growing, but its share in GDP is not changing. It has become clear that low energy prices without protectionism and/or cheap labor force are ineffective, first of all, because they stimulate economies where energy resources have a big share in the price of finished goods, that is, developing nations with low wages. Along with low customs barriers, this constitutes big pressure on developed industries. We would like to remind you that the postindustrial era and China’s global trade expansion started in the 1990s, when prices were ultra-low. Besides, for the Americans, low global price of energy resources implies low benefit from their own growing production.
Nor will they get anything from the opening of the Iranian market. All the bonuses will go to the Europeans.
Trans-Atlantic free trade zone has not become a reality: the EU is reluctant to exchange the huge surplus in its trade with the United States for transfer of industry to America. And that was the second and the last nail in the coffin of Obama’s economic doctrine. The “moderate Islamists” have been driven underground in Egypt and are being finished in Syria.
For the current White House protectionists, the Iranian deal is a useless artefact if compared with Saudi billions. Nor do they need irritants like the “moderate Islamists” any longer. What they need to do is to rebrand their anti-Assad propagandists.
Concerning the possibility of escalation, starting as an opponent of the United States’ military presence in the Middle East, Trump has ended incorporating strong neo-conservatives into his team. And the withdrawal from the deal was just the first step in a whole series of events. Israel’s last reaction to Iran’s presence near its borders was one of them.