Tag: Iran

Operation Decisive Failure

A front page story in today’s Washington Post highlights that the failure of the U.S.-backed, Saudi-led coalition campaign in Yemen is already becoming apparent:

Two weeks into a Saudi-led military campaign in Yemen, airstrikes appear to have accelerated the country’s fragmentation into warring tribes and militias while doing little to accomplish the goal of returning the ousted Yemeni president to power, analysts and residents say.

Foreign Policy makes similar points:

Through its backing of Saudi Arabia—with bombs, intelligence, refueling, and search-and-rescue capabilities—and Riyadh’s military intervention in Yemen, the United States is effectively at war with the impoverished land that occupies the southwestern heel of the Arabian Peninsula. That war is going spectacularly badly.

None of this should be surprising. Yemen’s history is replete with tribal conflict and failed invasions, as I highlighted yesterday in the New York Times. Yemeni insurgencies have defeated the British, the Egyptians, and the Saudis in the last 50 years alone.

Confused about the Middle East? So Is the United States

Since the Arab Spring, many Middle Eastern countries have fallen into political chaos like dominoes. This week’s explosion of conflict in Yemen is just the most recent example. Though many of these conflicts are based on local grievances, they are being exacerbated by the involvement of the region’s larger states, and by the United States.

America’s leaders denounce intervention by unfriendly states like Iran. Yet the United States ignores or even enables such actions by U.S. allies like Saudi Arabia. In doing so, America is simply contributing to the mess in the Middle East. Washington should back off and refuse to get more deeply involved in further Middle Eastern conflicts.

Yemen’s conflict is nothing new; the Houthi rebels have been active in Yemen for more than a decade, and captured the capital in January, forcing President Hadi to flee south. This week, as the rebels finally reached the southern city of Aden, Hadi fled, and apparently appealed to Saudi Arabia for help in combatting the Iranian-backed insurgency.

Yesterday evening, that help arrived in the form of a massive Saudi air campaign and a reported 150,000 troops. The Saudi efforts are supported by a number of other GCC and Arab states, as well as U.S. logistical and intelligence support.

But like everything in the Middle East today, this conflict isn’t as clear cut as it seems. The Houthis are indeed aligned with Iran, and probably receive monetary support. But they also represent a sizeable fraction of the Yemeni population, and many of their policies – such as opposition to U.S. drone strikes in Yemen – are widely popular. Even more confusing, the Houthis are also adamantly opposed to Al Qaeda, and have spent substantial time and resources fighting AQAP fighters inside Yemen.

This conflict fits with a broader pattern of post-Arab Spring clashes in the Middle East, conflicts which are complex and local in nature, but which are treated as simply proxy wars or sectarian conflicts. The fear that Iran might make gains in Syria, in Iraq, in Libya and elsewhere drives Saudi Arabia and other Gulf states to respond militarily, increasing tensions and conflict.

The U.S. response to this complex reality has been to reflexively back traditional U.S. allies. But in doing so, American policy has become confused, contradictory and overleveraged. We’re working towards similar goals as Iran inside Iraq, opposing them in Syria and Yemen, all while trying to reach a nuclear deal before the March 31st deadline. How this mess of policy contradictions is supposed to produce viable results is anybody’s guess.

Yemen has a long history of instability, and any military solution to the crisis will likely fail to produce a long-term solution; it will just paper over the problem. It’s not even clear whether the reinstallation of the Hadi government would be best for U.S. interests: though a Houthi government is unlikely to allow U.S. drone strikes against al Qaeda, they might prove more effective at fighting the group than the government has.

America should stop reflexively backing traditional U.S. allies in the region, and refrain from deeper involvement in these conflicts. Instead, we should think more clearly about when (and whether) the United States should be involved in Middle Eastern conflicts, and about how such actions fit our overall strategic goals. Because one thing is certain: further U.S. intervention in the Middle East would be an exceedingly bad choice.   

The Iran Policy Clownshow

I’ve been talking about U.S.-Iran policy to groups around the United States for about eight years now. Many members of these groups—World Affairs Councils, university groups, local groups interested in Middle East policy—disagree with my general take on Iran and the Middle East, but I’ve always gotten a fair hearing and good questions.

Given that, it’s been both amusing and depressing to watch the political spectacle that’s been happening in Washington this week. It all began when Bill Kristol’s favorite senator, Tom Cotton (R-AR), got 46 of the other 53 Republican Senators to join him in signing an “open letter to the leaders of the Islamic Republic of Iran,” trying to scare the clerical leadership away from a diplomatic deal by threatening to scotch it themselves once Barack Obama is out of office. Cotton, a Harvard Law grad, was subsequently chided on his understanding of the U.S. Constitution both by the Iranian foreign minister, Javad Zarif, as well as by Jack Goldsmith, a conservative lawyer who worked on the legal aspects of the war on terror for the George W. Bush administration.

In response to media inquiries, GOP Senators gave embarrassing explanations of the letter. Most absurd was Cotton’s protestation that the letter was intended to help produce a better deal. This claim is absurd not because the causal pathway from this letter to a better deal is dubious (although it is), but because Cotton has made perfectly clear that his goal is the destruction of negotiations, not improving them. As he remarked at a January Heritage Foundation event:

the end of these negotiations isn’t an unintended consequence of Congressional action, it is very much an intended consequence. A feature, not a bug, so to speak.

Yemen’s Chronic Instability

The last few days have brought dramatic news from Yemen: rebels occupied the presidential palace, initially forcing constitutional concessions and then the resignation of President Abdurabuh Mansur Hadi. The president was, at least nominally, a U.S. ally, cooperating with U.S. forces on drone strikes against Al Qaeda in Yemen (AQAP).

Yemen itself had even been hailed as one of the few successes of the Arab Spring, with a negotiated transition resulting in steps toward democracy. But such an interpretation glosses over Yemen’s long history of instability, as well as intervention by foreign powers. The current conflict is not only a popular uprising, it’s a proxy war, one that has been worsened by U.S. policy in Yemen.

Yemen has experienced chronic instability throughout its history, in large part because of interference from Saudi Arabia, which has long been worried about Yemeni influence. The first Saudi king, Abdulaziz, is reputed to have called his senior sons to his deathbed, admonishing them to “keep Yemen weak.” The Kingdom has at various times provided funds not only to the Yemeni government, but also to various opposing tribal leaders.

The most recent iteration of Yemeni instability is a decade-long civil conflict between the Saudi-backed Yemeni government, Sunni militias, and a Zaidi Shi’a militia group known as the Houthis. This latter is also known as the Shabaab al-Marmineen (or the Believing Youth), and is believed to receive large quantities of funding and arms from Iran (and formerly Syria). The insurgency has spanned a decade, with only sporadic ceasefires, resulting in widespread death and displacement. The Houthis even initiated cross-border attacks against Saudi Arabia in 2009, which led to a large-scale Saudi invasion of Northern Yemen.

The Houthis were also heavily involved in the 2011 protests against Yemeni dictator Ali Abdullah Saleh, although they rejected the Saudi-negotiated transfer of power to then–Vice President Hadi. Since late last year, the Houthis have controlled large parts of the capital Sanaa, although power has remained nominally vested in the hands of the Hadi government.

The crisis in Yemen is thus not only a civil conflict, but also a proxy conflict between Saudi Arabia and Iran. In this, it is similar to the early Syrian civil war, which was initially driven by Saudi support for rebel groups and Iranian support for the Assad regime. While the situation in Yemen is unlikely to deteriorate in this way, it is worth focusing on the fact that many conflicts in the Middle East are actually driven by larger regional actors, some of them U.S. allies.

U.S. involvement in Yemen has also helped to worsen this crisis. The Hadi government’s support for U.S. drone strikes against AQAP contrasts strongly with Yemeni popular opinion, which has been widely outraged by the killing of innocents. Such unfortunate killings are driven by U.S. reliance on Yemeni targeting data: Yemeni leaders have a tendency to present political rivals as terrorists in order to engineer their demise. These deaths have driven growing anger at the Hadi government.

Ironically, the Houthi fighters are themselves strongly opposed to AQAP and actively engage in combat against the group. There is even evidence that the United States has cooperated with the Houthis on targeting AQAP.

The situation in Yemen remains fluid. The country appears to have no leader, and it is unclear whether the Houthi occupation of the capital constitutes a coup or not. But in either case, the United States should stay out of the conflict, evacuating the embassy if Sanaa becomes too dangerous. The crisis in Yemen is typical of the country’s long-running instability, and the pressures it faces from regional powers. U.S. involvement won’t help.

Iran’s Economy, With and Without a P5+1 Agreement

The haggling between Iran and the so-called P5+1—the permanent members of the United Nations Security Council, plus Germany—is scheduled to come to a close on Monday, November 24th. The two parties each want different things. One thing that Iran would like is the removal of the economic sanctions imposed on it by the United States and its allies.

After decades of wrongheaded economic policies, Iran’s economy is in terrible shape. The authoritative Economic Freedom of the World: 2014 Annual Report puts Iran near the bottom of the barrel: 147th out of the 152 countries ranked. And the “World Misery Index Scores” rank Iran as the fourth most miserable economy in the world. In addition to economic mismanagement, economic sanctions and now-plunging oil prices are dragging Iran’s structurally distorted economy down. So, it’s no surprise that Iran would like one of the weights (read: sanctions) on its economy lifted.

Just how important would the removal of sanctions be? To answer that question, we use the Institute of International Finance’s detailed macroeconomic framework. The results of our analysis are shown in the table and charts below the jump.

Oil Price Blues (Read: Dangers) for Some

As the price of crude oil continues its downward tumble towards $80 per barrel, I am reminded of a similar scenario from near the end of the Cold War in the 1980s. When Saudi Arabia announced in 1985 that protecting oil prices was no longer its main priority, oil production surged and prices fell off a cliff, briefly plunging below $10 per barrel, as I had correctly predicted.

Lower prices delivered a fatal blow to the Soviet economy, which ended up seeing $20 billion per year in oil revenues evaporate. The resulting fiscal shortfalls proved to be a dagger in the heart of the U.S.S.R.

On October 1st of this year, Saudi Arabia’s national oil company announced that it had abandoned a policy of price protection and would start to focus on protecting its market share. Combined with falling global demand and rising supplies elsewhere, oil prices have fallen accordingly. This has put a squeeze on eight of the world’s top oil producers. States like Iran, Venezuela, and Iraq can only balance their current budgets at oil prices ranging from $110 to $135 per barrel (so-called break-even prices).

If oil prices stay below $90 per barrel for any length of time, we will witness massive fiscal squeezes and regime changes in one or more of the following countries: Iran, Bahrain, Ecuador, Venezuela, Algeria, Nigeria, Iraq, or Libya. It will be a movie we have seen before.

Falling Oil Prices Put Producers Between a Rock and a Hard Place

Over the last few months, the price of Brent crude oil lost over 20% of its value, dropping below $90 just yesterday and hitting its lowest level in over two years. In consequence, oil producers will no longer be able to rely on oil revenues to pay their bills. The fiscal break-even price – a metric that determines the price per barrel of oil required for a nation to balance its budget at current levels of production – puts the problem into perspective.

Using data from Bloomberg and Deutsche Bank, I prepared a chart showing the break-even prices for the world’s major oil producers and the price on Brent crude. Over the past six months, Brent crude fell far below the break-even price for eleven of the top oil producers in the world; Iran, Venezuela, Nigeria, and even Saudi Arabia can no longer finance their governments’ largess through oil revenues.

The combination of oil markets flying into a perfect storm and excessive government spending puts most of the world’s oil producers between a rock and a hard place, where they will stay for some time.

Pages