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◼ REMARKS Bloomberg Businessweek May 27, 2019Amid all this, the rivalry between Iran and Saudi Arabia
has only grown. In Yemen, a civil war that started during
the Arab Spring devolved into a proxy war between Saudi
Arabia and Iran in 2015, when the Saudis and allied Gulf States
intervened against Shiite Houthi rebels, who are armed and
backed by Iran, in the north of the country. Saudi-led bom-
bardment has pushed Yemen to the brink of famine, leading
the European Union to call it “the worst humanitarian cri-
sis in the world.”
Successive U.S. presidents have cozied up to the oil-rich
Saudis, whose kings are the custodians of Islam’s most import-
ant holy sites. Since the establishment of the rule of the aya-
tollahs and Shiite theologians in 1979, Iran has sought to paint
itself not only as a spiritual alternative to Sunni hegemony
but also as the main anti-imperialist bulwark in the region.
It views itself as a buffer against U.S. aggression and inter-
ference and as the defender of the cause of the Palestinians
against Israel. Wrapping themselves in their regime’s revolu-
tionary zeal, Iranian officials often point out how Saudi Arabia
is guided by cash and fealty to Washington.
As Trump settled into his presidency, his administra-
tion curried favor with the heir to the Saudi throne, Prince
Mohammed, widely referred to as MBS. The Saudi fixation
with Iran under MBS has become so intense that analysts now
wonder if Saudi Arabia will break the ultimate taboo in the
Islamic world: establish relations with Israel.
The Iranian threat has had a silver lining for Israel in the
form of warming ties with the Arab Gulf States. While Saudi
Arabia and the Emirates are unlikely to establish formal dip-
lomatic relations with Israel until there’s a peace agreement
with the Palestinians, the former enemies are cooperating on
security and intelligence to counter Iran’s attempts to extend
its influence. Arab countries see Israel as “an indispensable
ally” in their efforts to fight Iran and the terrorist organization
Islamic State, Netanyahu told Brazil’s Globo TV in January,
calling it “a revolution in relations with the Arab world.”
Israel’s government and opposition are largely united
behind a policy of containment against Iran. One poten-
tial source of discord is the 2015 nuclear deal crafted by the
Obama administration, which Netanyahu fiercely opposed.
While Israeli policymakers unanimously thought the agree-
ment was a bad deal, some thought that once it was signed, it
was better to keep it alive than to enter a gray area where the
accord is semi-on and semi-off. In response to Trump’s deci-
sion to withdraw from the deal, Iran this month accelerated
the rate at which it’s enriching low-grade uranium fourfold
and threatened to abandon the deal that prevented it from
reaching the levels of enrichment that could allow it to pro-
duce a nuclear weapon.
While Israel sees Iran as an existential threat, the Saudi-
Iranian rivalry is something more hoary: a chasm of misun-
derstanding and mistrust between the two societies, which
despite geographic proximity are divided by language, reli-
gion, and ethnicity. Iran, as a non-Arab Muslim nation, has
traditionally been viewed with a mixture of curiosity andsuspicion by Saudis. While some Saudis look upon Iran’s
Shiite interpretation of Islam as heretical, on the Iranian
side there’s a sense of cultural superiority because Persia
is much older than Saudi Arabia as a nation-state. Indeed,
Iranians are proud of their own, albeit limited, version of
democracy. Iranian Foreign Minister Javad Zarif has touted
his country’s political system while taunting its neighbor
for exporting terrorism based on Wahhabism, the Islamic
doctrine espoused by the Saudi state. Middle-class Iranians
mock Saudi Arabia for its showboating princes, lack of any
sort of representative democracy, and for its treatment of
women. Recently, the Saudis have tamped down any official
rhetoric on Shiite heterodoxy in an attempt to improve ties
with the Shiite Arabs who dominate Iraq’s politics. The mod-
eration also has a domestic security angle: Saudi Arabia has
a significant Shiite population, mostly in its Eastern prov-
ince. For that matter, Iran has a large Arab minority in its
Khuzestan region.
Saudi Arabia and Israel have other, more pecuniary rea-
sons to fear Iran. Unlike other Gulf States, which are almost
entirely dependent on energy income and run as large, inef-
ficient welfare states, Iran has a large, diverse, and relatively
developed economy—despite years of U.S. sanctions aimed at
crippling it. Iran produces its own automobiles, pharmaceuti-
cals, and defense equipment. Its population, 81 million, rivals
Turkey’s and is on average better educated. In the 2018 United
Nations Human Development Index, Iran is first behind the
top-tier countries, ranked 60th. Turkey ranks 64th.
But Trump’s sanctions are having a devastating effect on
Iran’s economy. The currency crashed, sending prices of
imports and inflation skyrocketing. About 70% of small facto-
ries began to close late last year because of raw material and
hard-currency shortages, the state news agency IRNA reported.
Trump believes his “maximum pressure” will eventually force
Iran back to the negotiating table and has said repeatedly that
Iran will “call” him when it’s ready to talk. But U.S. Secretary of
State Mike Pompeo’s list of 12 demands on Iran would amount
to total capitulation, forcing it to cede not only its nuclear pro-
gram but also all of the foreign policy gains it’s made in the
region. The Iranians are defiant, believing they can wait out a
change in U.S. leadership.
In the meantime, Iran’s capacity to wreak havoc on U.S. and
allied interests in the Middle East can’t be underestimated, nor
can the possibility of an escalation to military conflict. The U.S.
has blamed Iranian proxies for recent attacks on pipelines in
Saudi Arabia and on tankers transiting the Strait of Hormuz.
Only 21 miles wide at its narrowest point, the strait is a crucial
chokepoint for the international oil trade. In mid-May, Saudi
Arabia’s minister of state for foreign affairs, Adel al-Jubeir, sum-
moned the media for a press conference in the middle of the
night. “The kingdom of Saudi Arabia doesn’t want a war,” he
said. “But we won’t stand with our hands bound in light of
the continued Iranian attack, and Iran needs to realize that.
The ball is in Iran’s court.” <BW> �With Golnar Motevalli, Ladane
Nasseri, Michael Arnold, and Vivian Nereim