Geopolitics

Iran's Deepening Isolation On The World Stage

The Islamic Republic foreign minister made a series of trips recently to shore up support among his country's few remaining allies. He returned empty handed.

Iranian President Hassan Rouhani welcoming the Iraqi prime minister
Ahmad Ra'fat

-Analysis-

LONDON — Iran is busy with its diplomatic maneuverings in the Middle East and beyond, but it has yielded little. As Iran's oil minister, Bijan Namdar-Zanganeh, put it: "No country is willing to sign a deal with Iran anymore."

The country's most recent overtures were to Moscow, where Foreign Minister Mohammad Javad Zarif went seeking two things from his Russian counterpart, Sergei Lavrov. One was to renew a 20-year accord the countries signed in the 1990s under President Mohammad Khatami, set to expire late in February 2021. The second was for Russia to respond to Israeli fighter jets intermittently bombarding Iranian positions in Syria and those of its proxy militias.

The Russians were evasive with the first request, saying they were unprepared to renew any agreement, and repeated their position on Syria, namely that they deplore the attacks but would not act against Israeli jets.

While Zarif was in Moscow, President Vladimir Putin found time to speak by phone to U.S. President Donald Trump and discuss, in particular, the renewal of an arms embargo on Iran that is to expire in mid-October 2020. Russia opposes its extension sine die, but may accept a renewal of four or five years. Certain European countries are planning to present that option to the UN Security Council.

On an earlier trip, to Iraq, Zarif also left empty handed. The Iranian diplomat is often termed Iran's Tariq Aziz, a reference to the Iraqi foreign minister under Saddam Hussein. Aziz was arrested after the dictator's overthrow and died in prison in 2015. He was the only regime official that Hussein, considering him considered able to exert some influence on his European counterparts, would send abroad. And at times he was effective, as is Zarif, who has occasionally managed to "sell" the Islamic Republic's policies to Western states including the United States under President Barack Obama.

In Baghdad, as a presidential adviser told Kayhan London, Prime Minister Mustafa al-Kadhimi told Zarif, in so many words, that it was time for Iran to stop meddling in Iraq's internal affairs and for it to "understand the new situation." Al-Kadhimi reportedly made it clear that the United States was a "suitable" partner for Iraq and the departure of U.S. troops — which is an Iranian demand — is not desirable. He said his only stipulation, with respect to the U.S. military presence, is that Iraqi soil not be used for military action against neighbors, including Iran.

The unnamed Iraqi official told this paper that al-Kadhimi wants to open the Iraqi market to trade with Arab states and did not want Iran to be Iraq's sole gas and power supplier. Iraq is reportedly negotiating with Saudi Arabia for gas supplies and with other countries for electricity.

Before Zarif's visit, al-Kadhimi visited two border districts where in recent months, the Iran-backed Hashd al-Sha'bi militia had been charging money to let goods across the frontier. The Iraqi government has retaken control of the posts.

In a recent meeting with Iran's Supreme Leader Ayatollah Ali Khamenei, al-Kadhimi stressed Iraq's independence and politely ignored Ayatollah Khamenei's request for reprisals against the United States for its targeted killing in Iraq of Qasem Soleimani, the late major general with the Islamic Revolutionary Guard Corps, and of Abu Mahdi al-Muhandis, head of an allied militia.

Khamenei said Iran would not interfere in Iraq's relations with the United States, but expected its "Iraqi friends' to "get to know America and know that America's presence in any country is the source of corruption, damage and destruction." He repeated that Iran wants U.S. troops to leave, as their presence "is a source of insecurity."

Al-Kadhimi insisted, in turn, that Iraq wants cordial relations with its neighbors, but would pursue a foreign policy based on its national interests.

Lebanon and Iraq are starting to push the clerical regime away.

In Lebanon, despite the country's bankruptcy and the influence Iran's proxy militia Hezbollah wields over the government of Prime Minister Hassan Diab, the government has refused an offer to buy Iranian oil and pay for it in Lebanese pounds. Energy Minister Raymond Ghajar stated days before that Lebanon was not planning on buying Iranian oil, in an apparent response to the proposal made by the Hezbollah chief Hasan Nasrallah.

Beirut-based analyst Said Kaywan told Kayhan London that Nasrallah's proposal had one goal, which was to pay the Lebanese pounds directly to Hezbollah as Iran, now under U.S. sanctions , had little money left to pay its militia.

Until recently, Lebanon and Iraq were part of Iran's regional "resistance" against Israel and the West. But now they too are starting to push the clerical regime away. And while Iran's ambassador in Moscow, Kazem Jalali, has recently insisted that Iran would buy Russian arms, Moscow seems less keen on expanding ties with Iran as crucially, these could harm its extensive ties with the monarchies of the Persian Gulf.

Even China is dragging its feet over a reported 25-year strategic pact with Iran. As a Xinhua agency correspondent told Kayhan London, this too would threaten China's ties with the Arab states of the Persian Gulf. Currently, he pointed out, China had trade worth over $350 billion with the six members of the Gulf Cooperation Council and Iraq, roughly equivalent to the total amount in would hypothetically invest — over the course of 25 years — were the treaty to go through.

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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