Monday, October 15, 2012

The Shiite Crescent Recedes; Iran's Power Wanes !

With global attention fixated on Iran's nuclear program, an equally significant development for Iran's strategic outlook is being overlooked. The Shiite Crescent that began to take shape in the wake of the 2003 U.S. invasion of Iraq has effectively receded. Regardless of the outcome of the nuclear issue, Iran poses a much smaller threat to the region than it did just a few short years ago. A number of events have converged to put Iran back in the box it now finds itself in. The most obvious and consequential of these are the onset of the Arab Spring and the uprising in Syria.

The concept of a Shiite Crescent was predicated on an unbroken chain of Iranian influence stretching into the heart of the Middle East via Iraq and Syria, and continuing on to the Levant and Palestine through Tehran's ties with Hezbollah and Hamas. Given its location, Syria was always the lynchpin of this crescent. The loss of a friendly government in Damascus would deny Iran an overland route to ferry supplies to Hezobollah in Lebanon. Iran's only option would be to supply Hezbollah by sea.......a perilous course given that the waters in between are dominated by Tehran's adversaries. In either scenario, then, Iran's aid to Hezbollah is set to steadily decline.

Significantly, this decline in aid will coincide with Tehran demanding more from its Lebanese ally as its low level conflict with Israel and the U.S. intensifies. Hezbollah's willingness to continue shouldering these costs cannot be taken for granted, especially given its growing domestic troubles. Without Hezbollah''s support, however, Iran's ability to wage an asymmetric campaign against the West is very much in doubt. Indeed, this year's string of failed attacks on Israeli diplomats and interests has demonstrated quite clearly the limitations of Iran's asymmetric capabilities. Also, the Arab Spring has significantly curtailed Iranian influence in Palestine by straining Iran's relationship with Hamas...likely irreversibly. The relationship between Tehran and Hamas, a Sunni group, was always built more on mutual necessity and Hamas' new links with Egypt's Muslim Brotherhood has allowed it to pivot away from Iran.

The Syrian uprising and the Arab Spring, important though they are, are only the most prominent examples of Iran's diminishing fortunes. Nearly as consequential are Iran's growing economic woes. Instead of using the extra revenue from high energy prices to address the structural defects of the Iranian economy, the government exacerbated existing problems by increasing subsidies to he lower classes that comprised this peasant dead-shit President Mahmoud Ahmadinejad's main constituencies. This policy's weakness became evident when the global financial crisis caused a sharp drop in the price of oil and natural gas, forcing Ahmadinejad to revamp his generous entitlement spending. Iran's economic outlook remains dim for the foreseeable future, in part due to the Western sanctions on its energy, shipping and banking sectors.

According to recent estimates, sanctions have already caused Iran's oil exports to decline by 45% and reduced the value of its currency, the rial, by 80% relative to the dollar, including an incredible 40% drop in the past week. The people are growing restive. Furthermore, the sanctions' impact are likely to be magnified by the economic downturn that the world's largest rising powers, including China and India, are now facing. As their own economic production declines in the near term, these states will have less incentive to cheat and circumvent the West's sanctions against Iran. Additionally, as the global economy slows, whatever oil Iran is able to sell ill come at a lower price, further draining the Iranian treasury.

The Way I See It....Iran's regional position has suffered due to greater pushback it is encountering from regional and extra regional states. Some of this is inevitable given the anxiety Iran's post-2003 rise caused among the Arab states, Israel and the United States. Nonetheless, Iran's own policies have only added to its troubles. In particular, its stupid threatening to push Israel into the sea or just wipe it out militarily. Also threatening to close the Strait of Hormuz, through which 20% of global oil supplies travels, has proved to be a major strategic blunder. It caused jittery Arab states to more openly align with the U.S. against Iran, as evident from, among other things, their reported willingness to consider hosting larger missile defense systems, as well as their participation in the massive U.S.-led naval exercise in the Strait of Hormuz last month.

I see that Iran's continued support for the Assad regime has sapped its soft power in the Arab world, which has afforded Arab leaders greater freedom of action in balancing against Tehran, in part by strengthening regional organizations that exclude Iran, including the Arab League and the Gulf Cooperation Council, while undercutting organizations that Iran is a member of, such as OPEC. While the world continues to focus on Iran's nuclear program, Iranian political standing in the Middle East has suffered a string of serious setbacks. Iran's centrifuges may continue to spin, but the sun has set on the Shiite Crescent, for now at least.

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