Changing Political Landscape in the Middle East

President Trump’s announcement of US withdrawal from the Iran nuclear deal comes at a time, when the political landscape in the Middle East is changing fast. Hizbullah won the majority in Lebanon elections in early May. The Iraqi election results came within days of the US decision. Muqtada al-Sadr’s group emerged as the front-runner, while the sitting Prime Minister Haider-al-Abadi’s group finished third. Though government formation in Lebanon and Iraq will take time, these two developments will have a bearing on power equations within the respective countries, and the region.

The violence in Gaza following shifting of the US Embassy to Jerusalem continues unabated. The Syrian situation has witnessed the US, French and British air strikes, as well as missile exchange with Israel. The geo-politics has a bearing on oil prices, which are on an upward trajectory.

Hizbullah’s victory in Lebanese Parliamentary elections also saw decline in seats won by Prime Minister Saad Hariri. The elections will not change the government structure, which is based on distribution of power amongst Christian, Sunni and Shia groups. The Lebanese President is always a Maronite Christian, the Prime Minister a Sunni, and the Speaker of Parliament a Shia. But consolidation of Hizbollah’s strength in a state bordering Israel, cannot but be a cause of concern for Israel. The Saudi influence has weakened. This only accelerates the trend, which was already in progress. The Saudi displeasure with Hariri accommodating Hizbollah, his forced stay in the Kingdom and withdrawal of Saudi financial assistance is part of the chain of events, which began much before the elections.

Hizbullah’s victory in Lebanese elections also creates a complication for Iran. Traditionally, the most pro-Iran Shia group in Lebanon was Amal party. There have been clashes between Hizbullah and Amal. Much depends upon the course Hizbullah and Lebanese politicians decide. After recent Israeli strikes on Iranian targets in Syria, Nasrullah made a statement that Hizbollah can launch missiles on targets deep inside Israel. This is not a good portent. If however, Hizbullah gets integrated in Lebanese power structure, it will have some incentive to show moderation.

Parliamentary elections in Iraq took place after Haider–al-Abadi’s government had managed to stabilise the country. He took power when ISIS was in the ascendant. He steered the country to more equidistant position between US and Iran. The central government’s reach in the Kurdish region was extended after short lived declaration of independence by the Kurd regional government. Meanwhile, Iraq’s oil production, and exports have grown. The Iraqi elections witnessed contest between three principal groups. Muqtada–al-Sadr led Sairoon block, the Fatah group led by pro-Iran Hadi al-Ameri and Nasr block led by Haider-al-Abadi. There was a Sunni group led by Allawi and Kurds, who remained divided. In the event, Muktada-al-Sadr led block finished first, followed by Ameri’s group and Haider-al-Abadi finishing third.

Just before the election, Ayatulloh Sistani, the leading Iraqi cleric, gave a call not to vote for those, who have been tried and failed to bring corruption under check. This queered the pitch against Haidari-al-Abadi as well as pro-Iranian Shia groups. This statement, together with unemployment and corruption tilted the balance against the sitting Prime Minister. Muqtada-al-Sadr had led the fight against the US. But his victory does not mean strengthening of Iranian influence. He has also opposed Iran. He fought the elections in an unusual alliance with the communists and secularists. Last year he has visited Saudi Arabia. He will need an alliance with other groups to form the government. He himself is not seeking the Prime Minister’s post.

Iraq though a Shia majority state, has asserted its independence in both the secular and religious spheres. Ayatollah Sistani had given the call for the ouster of pro-Iran Maliki regime in 2014. This is despite his family links with Iran based clergy. His son-in-law is an Ayatollah in Qom, a major Shia seminary town in Iran. Iraq is also a rival to Iran for crude oil markets. It has replaced Iran as the second largest oil producer within Organisation of Petroleum Exporting Countries (OPEC). According to OPEC statistics, Iraq’s crude oil production last year was 4.469 million barrels per day, as against Iraq’s production of 3.833 million barrels per day. In the last quarter, Iraqi production averaged at 4.360 million barrels per day, as against Iranian production of 3.804 million barrels per day.

The US Administration has given a transition period of 3 to 6 months before the new sanctions against Iran are imposed. As and when this happens, this will result in reduction of Iranian crude coming to the market. Whether this can be made up by other producers remains to be seen. The US Shale oil production can be ramped up quickly. In the past, it has affected the OPEC market share. But, there is a constraint on pipe-line capacity in the US to evacuate Shale oil, and bring it to refineries and export terminals. In the past, Saudi Arabia was keen to replace Iranian market share, or encourage Gulf States to do so. But this year, the Kingdom wants higher oil prices. Prince Mohammad wants to partially privatise Saudi Aramco, the State owned company, and it wants higher market valuation in the IPO.

Geo-political tensions will certainly push up oil prices. Brent crude oil price, an important marker, has already climbed up from a low of US Dollars 27 in January 2016 to US Dollars 78 on 15th May, 2018. All indicators point to the oil prices climbing higher.

If the result of elections in Iraq and Lebanon throw up coalitions, which help moderate the sectarian divide, this will be a victory for democracy. What is of concern, however, is the situation in Syria, violence in Gaza and re-imposition of sanctions on Iran, which may ignite a wider conflict. So far, it has been a proxy war. The conflict will escalate if they draw in the principals.

(The Author has held diplomatic assignments in Egypt, Saudi Arabia, Libya and Iran)

(The paper does not necessarily represent the organisational stance. The author certifies that the article/paper is original in content, unpublished and it has not been submitted for publication/web upload elsewhere, and that the facts and figures quoted are duly referenced, as needed, and are believed to be correct.)