21 April 2000
For years, Iran turned a blind eye as Iraq smuggled thousands of barrels of oil a day across the Iranian part of the Shatt al-Arab waterway into the Gulf. No longer. A combination of factors, including Tehran’s very understandable desire to protect its own interests, has prompted a well-publicized clampdown on the illegal trade, leading Tehran to seize 10 vessels in one 24-hour period two weeks ago.
Iran’s decision to end its collaboration in the smuggling – for now, at least – was taken at the highest levels. Sources in Tehran tell Energy Compass that it came from the Supreme National Security Council, headed by Supreme Leader Ali Khamenei. Some suspect it may be connected to the internal upheavals that followed the defeat of former president Hashemi Rafsanjani’s conservative faction in recent parliamentary elections. For some time, Rafsanjani’s sons and close allies are rumored to have been linked to cross-border trade with Iraq, including oil smuggling.
At the same time, Iran is pursuing its own oil interests. First, it believes Iraq’s recent pronouncement that it intends to hike oil output to at least 3 million barrels per day in early May will sink international prices. Second, it is trying to stop Iraqi products competing with its own. Iranian fuel oil sales have been on a steady upward curve since last year, industry sources say, with some 200,000 b/d now available for export. Iraq’s ramp-up in gas oil smuggling to 70,000 b/d, according to US estimates, could eat into potential Iranian sales.
The clampdown also reflects a rethinking in political priorities as Iran moves to project a new image in the region. During US Defense Secretary William Cohen’s recent visit to Oman – the US’s chief military base in the Gulf – Tehran announced that it had signed a bilateral defense agreement with Muscat. Though Omani officials later said the agreement was on “security” rather than defense, the message was the same: Iran should be viewed as an ally by Gulf states, rather than a threat (Cohen described Iran as a threat several times during his trip).
Iran’s tentative rapprochement with its Gulf neighbors began a few years ago and has gathered pace under President Mohammad Khatami. Reformists recognize that it needs to shed its image as regional destabilizer if it wants to be seen as a counterweight to Saddam Hussein’s Iraq. High-level security talks with Saudi Arabia are scheduled during Iranian defense minister Ali Shamkhani’s trip to Riyadh next week, while Tehran plans to sign a security pact with the kingdom during the upcoming visit of Saudi interior minister Prince Nayef Ibn Abdel-Aziz – expected in the next couple of weeks. That could be followed by a similar security deal with another GCC member, Kuwait.
While the pacts don’t amount to defense accords, they are significant. First, they prove Iran is not allowing its dispute with the UAE over three islands in the Gulf – Abu Musa, and the Tunbs – to stand in the way of warmer relations with other Gulf states. Second, by cooperating with Saudi Arabia, Kuwait, Oman, and Qatar in combating regional drug trafficking and smuggling, and fighting terrorism, Iran is recognizing the concept of “Gulf security” – the idea used by the US to justify its military presence in the region. During a visit by his Yemeni counterpart, Ali Abdullah Saleh, this week, Khatami was quoted as saying that “security is vital for us all and we must work towards a joint security set up without foreign help, as their presence runs counter to such security objectives.” Finally, by presenting itself as a rational neighbor – unlike Iraq – Tehran hopes to attract Arab, as well as Western, investment, and encourage US allies to lobby on its behalf in Washington.
In the meantime, it’s doing some lobbying of its own. By barring Iraqi oil smuggling in its waters, Iran has unequivocally demonstrated that, at the right price, it is willing and able to cut off Saddam and his cronies’ source of personal income. So far, it has won a lifting in the US ban on imports of Iranian carpets, caviar and pistachio nuts, and an apology from US Secretary of State Madeleine Albright for America’s “short-sighted” policy during the Iran-Iraq war in the 1980s – though the US has also just clamped symbolic sanctions on four Iranian defense and industrial bodies. As a reciprocal goodwill gesture, Tehran recently authorized imports of American wheat and said it has no objections to the resumption of direct flights to the US.
Baghdad is itself partly to blame for the falling out with its erstwhile adversary, which became an ally after the invasion of Kuwait. Tensions increased recently when the US released satellite photos of bases in Iraq being used by the Mujahedeen-e-Khalq Iranian opposition group, saying they were built with the proceeds of illegal oil exports. Matters weren’t helped when the group increased cross-border raids, as well as mortar attacks in Tehran, which sources say hit a nerve with Khamenei, who was partly paralyzed in a Mujahedeen-e-Khalq attack some years ago.
But Iran cannot afford to turn its back on Iraq completely. It supported Saddam in the 1990s on the grounds that his replacement by an American stooge would do it no good. And as analysts are fond of pointing out, Iranian thinking isn’t uniform – which means shifts in the balance of power should be scrutinized closely.
Ruba Husari, London
(Published in Energy Compass, 21 April 2000)