Opinion: Iran must choose between guns and jobs

JERUSALEM (MarketWatch) — The Iranian-backed insurgency in Yemen has been blocked and is now on the retreat, as predicted here six months ago

Tehran’s increasingly embattled imperial project underscores an internal struggle whose outcome will shape Iran’s post-sanctions economy.

Like the German army in 1943, which had come within 250 miles of the oil-rich Caspian Sea when it was blocked in Stalingrad, Iran’s encroachment into the Arab world has just been blocked east of its destination.

The Bab-al-Mandab straits, wedging the Red Sea at the Arabian Peninsula’s southwestern corner, lie where Asia is but 18 miles from Africa. Had Iran’s local Shiite proxies conquered this place, Tehran would have controlled the Suez Canal’s southern entrance, where one tenth of global commerce passes annually.

This scenario became realistic last spring after the Houthi rebels took the nearby city of Aden, terminus of Arabia’s historic spice road, and now Yemen’s main seaport.

Just how Iran decided to meddle in Yemen, and why, is unclear. It may have been part of a quest to enter Africa, it might have been part of a Shiite hope to someday overtake Mecca, and it might have simply not been properly thought out.

Whatever they thought, the Iranians provoked an Arab backlash that they did not predict, and for which they arrived unprepared.

The Iranian penetration into Arabia, though involving advisers and materiel rather than troops, was an intolerable intrusion from the Sunni Arab viewpoint. That is why, even before the pro-Iranian rebels could begin advancing from Aden, a Saudi-led coalition began bombing rebel targets mercilessly while the Egyptian navy blockaded the sea.

By July the rebels quit Aden, and the sense of defeat intensified last week when deposed President Abd-Rabu Mansour Hadi returned to his country from exile.

The Yemeni war itself is marginal from an international viewpoint. Split between hostile regions, tribes, and religious denominations, Yemen has been at war with itself since the 1960s. What lends it global importance is Iran’s role, the role that began with an offensive and has now become a retreat whose meaning foreign investors had better learn.
Struggle at economy’s expense

Iran’s encroachment into the Arab world began 35 years ago, when it struck an alliance with Syria through its Alawite minority, before sinking roots in Lebanon through its Shiite minority, and then effectively snatching Baghdad, through Iraq’s Shiite majority.

The events in Yemen mark this thrust’s climax and also the beginning of its end.

The Yemeni rebels’ agreement last week to enter into peace talks based on a U.N. resolution that demands their withdrawal “from all areas seized during the latest conflict” could not have happened without Tehran’s approval.

Iran’s Yemeni setback is joined by its failures in Syria, where the Assad regime has lost some three-quarters of his land while winning the indefinite enmity of his citizenry’s Sunni majority.

The redoubled Russian role in that arena is also a setback for the Iranians, because while it improves Assad’s position, it also means that when the fighting finally subsides Tehran will learn that its role as Syria’s foreign protector has been lost to Moscow.

In Lebanon, Tehran’s Shiite militia, Hezbollah, has been exhausted while fighting in Syria under Iranian command. Having suffered thousands of casualties, it is now retreating from the Syrian heartland to the Lebanese border.

In Iraq, Iran’s allies are at war with the Sunni minority with which they are not likely to harmonize even after Islamic State is crushed.

It is against this backdrop of imperial overextension that Moscow now looks to seduce Tehran with arms offers that Iran’s leaders can’t refuse, and its economy can’t afford.

Tehran and Moscow were drawn to each other economically as the sanctions Iran faced due to its nuclear program were joined by those imposed on Russia due to the fighting in Ukraine. The problem was that the two economies have little to offer each other, since both rely excessively on oil exports.

A Russian announcement in summer 2014 that it will take Iranian oil, and thus help Tehran bypass sanctions, in turn for things like construction of power plants, was seen as impractical posturing. Russia doesn’t need oil. However, talk last year of arms deals sounded logical, and has since also began materializing.

In August Tehran announced Russian surface-to-air S300 missiles began arriving in Iran, and Iranian officials said last month they signed a $21 billion deal to buy Russian aircraft and satellite equipment.

The announcement made it sound as if this hefty sum was largely about civilian goods, like midsized Sukhoi-100 passenger planes. It isn’t. What this deal really represents is the beginning of an elaborate, long-term, multibillion-dollar arms relationship.

What began with Russia’s arms-bonanza in Egypt, after Obama’s abandonment of Hosni Mubarak, and what became a big Russian buildup in Syria, will now advance to refurbishing the large Iranian army’s entire air force, armored corps, artillery corps, and missile batteries.

Arms are what Russian industry does well, and what Iran’s hardliners — the same ones who masterminded its regional misadventures — are out to buy, even before Tehran has earned its first post-sanctions dollar.

http://www.marketwatch.com/story/iran-must-choose-between-guns-and-jobs-2015-10-16