...

Weekly actual topics in Azerbaijan (Nov. 25-29)

Analysis Materials 4 December 2013 11:48

Why Saudi Arabia is worried about lifting Iran's sanctions

The contention between Iran and its Arab neighbors across the Gulf waters is by no means a new phenomenon. To be sure, Arabs and Persians find little to agree upon and have had a rocky relationship for more than a century and a half. Indeed, the two sides can't even agree on the name of the body of water that separates the desert kingdom from the Islamic Republic.

There is little hope that there could ever be a serious rapprochement between the Gulf Arabs and the Iranians. To say that memories in this part of the world run deep would be a terrible mistake. They run very deep. And little changes over time. The hate, distrust and fear the Arabs and Iranians have of each other remains as pronounced today as it was when Shiites and Sunnis first began to mistrust each other after the death of the Prophet Mohammad.

Today one finds those identical feelings still permeate Iranian and Arab societies, except that today that animosity is backed up by some of the most modern and some of the best military hardware that money can buy. With its vast supplies of oil and natural gas reserves, Saudi Arabia and the other oil producing states in the region can afford to go on a shopping spree, looking for the most modern weapon systems. Those countries have experienced no difficulty in building and maintaining modern armies. The Gulf Cooperation Countries -- Kuwait, Bahrain, Qatar, Saudi Arabia, the United Arab Emirates and Oman -- have been eager to dispatch their relatively small armies to conflicted areas so that their soldiers and officers can gain first hand experience, as was the case in 1990 when the Saudi, Qataris and Emaratis participated in expelling Saddam Hussein from Kuwait.

Iran, on the other hand makes up in numbers what they lack in hardware. With the sanctions in place, Iran has faced some difficulty in replacing some military hardware, as its air force, made up mostly of U.S. and French warplanes. After the horrid experiences suffered in the Iraq-Iran War, the Iranians vowed to never allow themselves to fall into such a situation again. This is one of the prime reasons pushing Iran to acquire nuclear weapons.

As a result of a breakthrough in the Geneva talks between Iran and the West, sanction will allow Iran to receive badly needed cold hard cash and you can rest assured that there will be a long line of countries hoping to sell Iran the weapons it needs.

Putting aside all military issues for a brief moment, and if all possible, ignoring the religious fervor that divides Arabs and Persian, there remains yet one more point of contention: economics. Some analysts believe the economic factor driving the Saudi's quest is almost as strong as the politics surrounding the Syrian conflict. What frightens the Saudis? The Saudis (and the other Gulf Arabs) look at Iran with trepidation and worry that once the sanctions are gone, so too could the U.S.-imposed stability, as unstable as might have been, nevertheless, kept Iran economically trailing behind the Saudis.

The House of Saud rightfully fears that with the sanctions lifted, and production costs kept low by years of continued sanctions will inevitably attract U.S. companies eager to do business in the Islamic Republic. Reuters reports in a dispatch from the region that lifting of sanctions on Iran could bring as much as 800,000 barrels of oil per day on the international market. To entice foreign investment after years of sanctions the Iranians are very likely to offer investors cut rate prices. This naturally worries the Saudis.

For the Iranians, the disappearance of sanctions translates into potential revenues worth $54.4 billion in oil exports per year and based on statistics for the first year only.

In fact it will not be too long before Americans are joined by their European colleagues for a stab at re-entering the Iranian marketplace. For Iran's new president lifting the sanctions could not have been better timed. If the businesses attracted by Iran's bargain basement price succeed in luring foreign corporations back to Iran, the result would trigger an important job creation program. With the government fighting a sinking economy and rising unemployment hovering around 15.3 per cent, this new boom will place Iran on track to economic recovery. For Saudi Arabia however, confronting a wobbly Iran is bad enough. Facing an economic stable and potentially nuclear-armed opponent is no doubt Saudi Arabia's nightmare.

Latest

Latest