June 28, 2018 | The Jerusalem Post

Analysis: How Gulf States can get Europe to Abandon Iran

The protests sweeping across Iran are a clear sign the country’s economy and its Islamic revolutionary system are ready to buckle.

The Gulf states can play a critical role in stymieing the Tehran regime’s financing of terrorism across the Middle East by pushing Europe to pull the plug on investments in Iran.

Take for example the economic and diplomatic measures taken by Saudi Arabia against Germany for Chancellor Angela Merkel’s largely pro-Iranian regime foreign policy. The kingdom’s Crown Prince Muhammad bin Salman is “deeply offended” by the German government and froze new business with the Federal Republic. In November 2017, Riyadh withdrew its ambassador from Berlin, to punish then-foreign minister Sigmar Gabriel’s claim that Lebanon “could not tolerate the adventurism that has spread there,” a reference to Saudi efforts to stunt the ever-increasing control by Hezbollah and Iran of the Land of the Cedars.

On the economic front, Bloomberg News reported in March that Saudi government agencies had been told not to renew some nonessential contracts with German companies. Deutsche Bank’s investments in the kingdom were among those at risk, as is its possible participation in energy giant Saudi Aramco’s forthcoming initial public offering, which “could be the largest share sale ever.”

All of this reinforces a prescient 2016 Wall Street Journal column written by my colleague Mark Dubowitz, the chief executive of the Foundation for Defense of Democracies, and David Weinberg, who is now at the Anti-Defamation League. 

“Riyadh holds sovereign-wealth funds valued at almost $700 billion, and its pension funds have foreign investments of about $70b.,” they wrote. “Those sums alone give the kingdom enormous leverage over anyone considering investing in Iran. Saudi Arabia could make the financial players choose a side: They can have Riyadh’s business or Tehran’s, but not both.”

Germany exported goods and services worth €6.6b. ($7.7b.) to Saudi Arabia in 2017, according to the Federal Republic’s statistics office. By contrast, German exports to the Islamic Republic of Iran reached €3.5b. in 2017, up from €2.6b. in 2016. France and Britain are also engaged in, and seeking additional, massive trade deals with the Saudis.

As Dubowitz and Weinberg wrote, “Riyadh projects long-term opportunities for foreign investment at $344b. Muhammad bin Salman, the kingdom’s economic czar (and the king’s son), has embarked on a privatization program that will likely increase the size of this pie.”

Questions abound regarding the kingdom’s next move – along with its Gulf allies the UAE, Bahrain and other Arab League countries that are opposed to Iranian aggression – in their efforts to pressure Europe to slash ties with Iran.

Without question, the time is ripe – if the Gulf monarchies wish to flex their economic muscle in Europe – to further tighten the economic vice on the clerical regime in Tehran. The Financial Times reported on Wednesday, “The Iranian economy is expected to deteriorate further.” The Wall Street Journal reported on Tuesday that the US expects all countries to cut oil imports from Iran to “zero” by November 4 or risk sanctions, a senior State Department official said. Iran’s Supreme Leader Ayatollah Ali Khamenei is showing signs of acute anxiety about the protests of ordinary Iranians against his regime, stating on Wednesday in a meeting, “the judiciary must confront those who disrupt economic security.”

Potent US sanctions and restrictions on Iran’s purchasing power coupled with sanctions on Tehran’s energy and oil business – to be implemented in 2018 – will surely compound the economic chaos in the Islamic Republic.

An additional and largely underutilized diplomatic pressure point: the Gulf countries could encourage European foreign ministers to follow the lead of US Secretary of State Mike Pompeo on Iran. He tweeted on Wednesday, “Iran’s corrupt regime is wasting the country’s resources on Assad, Hezbollah, Hamas & Houthis, while Iranians struggle. It should surprise no one #IranProtests continue. People are tired of the corruption, injustice & incompetence of their leaders. The world hears their voice.”

Writing on The Washington Examiner website on Monday, Michael Rubin, a scholar in resident at the American Enterprise Institute, neatly captured the trajectory of the Islamic Republic of Iran: “Like the Soviet Union and all other regimes that depend on repression rather than the consent of the governed, it is doomed to fail. The question has never been if, but when. And, increasingly, as regime officials send tens of billions of dollars outside the country, as Supreme Leader Ali Khamenei nears the end of his life, as the economy continues its death spiral, and as protests now spread to the Tehran bazaar, it seems that the answer to that question could be tantalizingly near.”

The Gulf countries, with their economic might, have tremendous potential to influence change in the policies of European countries toward Iran. Its use could represent a tipping point in economic warfare against Iran’s regime, thwarting its drive for nuclear weapons and halting its terrorism throughout the region.

Benjamin Weinthal reports on human rights in the Middle East and is a fellow at the Foundation for Defense of Democracies. Follow him on Twitter @BenWeinthal.

Follow the Foundation for Defense of Democracies on Twitter @FDD. FDD is a Washington-based nonpartisan research institute focusing on national security and foreign policy.