from Energy Realpolitik and Greenberg Center for Geoeconomic Studies

Iranian Interests, Iraqi Oil, And The U.S. Response

People attend a funeral procession for Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis, who were killed in an air strike at Baghdad airport, in Tehran, Iran January 6, 2020. Official Khamenei website/Handout

January 8, 2020

People attend a funeral procession for Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis, who were killed in an air strike at Baghdad airport, in Tehran, Iran January 6, 2020. Official Khamenei website/Handout
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My grandmother had a saying: “Think before you speak.” The saying, said to me and my brothers as children, was intended to help us avoid mindlessly blurting out something we would later regret. I cannot help thinking of my grandmother’s useful adage in watching the news regarding the ongoing conflict between Iran and the United States.

For days, I have been trying to craft a blog on the topic of the current state of conflict across the Middle East. My efforts started before the Christmas holiday when I was trying to update an opinion article I published in the Houston Chronicle in early December about how widening political unrest across the Middle East and beyond could lower the operational resilience of oil producers within the Organization of Petroleum Exporting Countries (OPEC) to respond to unexpected events that could hit global oil markets in 2020.

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But events on the ground have been fast moving and while this basic point about oil is obviously relevant, it seems now any geopolitical analysis has to start with a better understanding of the geopolitical conditions emerging in the aftermath of the U.S. attack that killed Iranian Commander Qasem Soleimani.

Every nation has core strategic interests that do not vary with the personalities leading them or the nature of the ideological bent of a particular ruling elite. We often forget that in U.S. foreign policy and it leads us to mistakes.

Iran has a core national interest in making sure there is not a brutal ISIS-led state on its border. That goal doesn’t conflict with U.S. interests. While the escalating events of recent days shows that the United States needs to reflect on the costs that Iran can impose on American interests in an escalating conflict, Iran’s leaders also need to reflect on how their own activities in Iraq and Syria contributed to the outgrowth of ISIS. It is very unclear if destabilization of other neighboring governments is a core national interest of the Iranian population. Proxy militias on the ground can, in fact, have diverging interests from their sponsors.

My point is that if strategists don’t ask the right questions, leaders won’t get the right answers.

Iran, like any other nation, has many core interests and one of those core interests is to make sure that the government, state military, and militias of Iraq are not a direct threat to Iran’s citizens. It is reasonable for average Iranians, even those who do not support the foreign policy of their government, to have this concern. It is a basic concern that would not go away, for example, even if there was a shift in the Iranian government that ushered in a more benign foreign policy. “Regime change” will not alter this Iranian concern vis a vis Iraq. Any successful U.S. policy must recognize that all nations have core strategic interests that go beyond ideology and often stem from geography. The Islamic Revolutionary Guard Corps (IRGC) news outlets have been running commentaries blaming Iranian President Hassan Rouhani for pushing the country from “a state of peace to a state of war.” The tone of the commentaries, especially in light of subsequent events, could suggest that the IRGC faction believed an escalation in conflict was on its way. But IRGC’s tactical aims and motives shouldn’t cloud analysis of Iran’s geography and how it shapes legitimate core interests of the country. Any negotiations to conflict resolution must consider this.

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The next step to analysis is to consider the momentum of history. Looking at the conflict between the U.S. and Iran, it is tempting to give in to the sentiment that history is destiny. Americans watched in horror as Iranian protesters and militia leaders stormed the U.S. embassy in Baghdad at the end of December in an event that appeared intended to rekindle historical memories of the frightening capture of U.S. diplomats in 1979. But yet another tragedy is that the subsequent U.S. attack on Soleimani is almost certainly reigniting renewed anger that links to the historical overthrow of Iranian nationalist Prime Minister Mohammad Mosaddegh, who famously led resistance to foreign interference in Iran’s oil industry and political affairs back in 1950s. Conflict resolution efforts must address these historical pathologies head on or risk failure.

Iraqi anti-government, nationalist protestors have called for an end to rampant government corruption and a major revamp of the current system of political patronage that enabled Iran’s interference in Iraq’s every day affairs. Iran benefits from overland trade with Iraq that more recently included complex energy arrangements that help Tehran obviate some of the economic pain of the tightening vise of U.S. sanctions. Protests briefly halted production at the smaller Nasiriyah oil field in late December and anti-government demonstrators had also blocked roads to major southern oil fields such as the Majnoon field and even the giant Rumaila field, preventing oil workers from reaching certain sites for a brief period of time. There has been an ongoing risk that some oil workers could consider joining anti-government demonstrators. Unrest seems almost certain to delay Iraq’s plans to implement its South Iraq Integrated Project, a vast water and infrastructure scheme needed for future expansion of Iraq’s oil production and export capability.

Thus, there are multiple ways the current U.S.-Iran-Iraq situation could bring about a fresh disruption in oil supplies. Any escalation in ongoing violence inside Iraq constitutes one clear risk to Iraq’s oil exports. If diplomacy aimed to diffuse the situation falters and U.S.-Iraqi relations further sour, the United States could also decide to impose restrictions on Iraqi oil exports if there is evidence that Iran is a direct beneficiary of Iraqi oil trade. Finally, there are risks to the oil industries of other regional players such as Saudi Arabia, which has already suffered attacks linked to Iran. Proxy battles that involved sabotage, cyber, and bombings of Saudi and Iranian oil installations go back two years.

Foreign ministers from Saudi Arabia, Egypt, Jordan, Yemen, Sudan, Somalia, Eritrea, and Djibouti met in Riyadh to discuss cooperation in counter threats to shipping along the Red Sea and Gulf of Aden. The United States and Britain are increasing their military presence to protect shipping in and around the Strait of Hormuz.

Any diplomatic effort to diffuse the current U.S.-Iranian situation must carefully consider the path forward for Iraq. There is no question that the United States must take into account its broader regional interests, but any solution will need to consider Iran’s core security concerns rather than focusing heavily on its ideological bent. Iraq’s leaders must also weigh the somber reality of the country’s neighborhood. Withdrawal of U.S. advisors from Iraq won’t solve the country’s multitude of problems since there is a long line of other players in addition to Iran ready to fill any vacuum as events on the ground in Syria and Libya demonstrate.

It is high time to end the repeating patterns of death and destruction that have characterized the geopolitics of oil in the Middle East. A younger generation of Iranians, Iraqis, and other youth from across the region deserve better. Hopefully, the brinksmanship of the last few days will give all parties involved the incentive to negotiate for different future in good faith.

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