What a U.S.-Iran Entente Would Look Like

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T STRATFOR WE TRY TO KEEP TRACK OF minute details related to global events. At the same time though, we do not allow ourselves to get bogged down in the proverbial weeds or trees. Instead we focus on the forest as a whole and what the forest will look like over a temporal horizon.

So, while everyone else Tuesday was obsessing over the latest U.S. plans for a fresh round of sanctions against Iran, we were trying to understand what the world would look like if the United States and Iran brought three decades of hostility to an end. Most people would deem the exercise as ludicrous given Tuesday’s events. But STRATFOR has long been saying that with no viable military options to attempt to curb Iranian behavior, and an inability to put together an effective sanctions regime, Washington has only one choice, and that is to negotiate with Tehran on the issues that matter most to both countries.

We are not just talking about the nuclear issue, but rather the key problem of the balance of power between a post-American Iraq and the entire Persian Gulf region. The agreement signed in Tehran by the leaders of Iran, Turkey and Brazil is the first public evidence that the two sides could agree to disagree in roughly the same way the United States and China did in the early 1970s.

While both Washington and Tehran have a lot to gain from a detente, an end to their hostile relationship — which at the moment is far from assured — would have immense implications for a number of players in the region and around the world. This is a subject that has been intensely discussed among our analysts who cover the various regions of the world. Rather than craft a flowing narrative on their ruminations, STRATFOR presents them here in raw form.

An Iran with normalized relations with the United States is a challenge for both Washington and Tehran. The former more so than the latter because it is about the United States according recognition upon a state not because it has accepted to align itself with U.S. foreign policy for the region, but because there are no other viable options for dealing with Tehran. The United States can live with Iran driving its own agenda because of geography, but geography becomes the very reason why many U.S. allies are worried about an internationally rehabilitated Tehran. These include the Arab states, particularly those on the southern shores of the Persian Gulf, and Israel. Iran already has the largest military force in the region — which will only grow more powerful once Tehran is no longer encumbered by sanctions. It will, however, be some time before Iran is able to meaningfully project or sustain conventional military force, though it already exercises considerable influence via regional proxies. Even now, despite all the restrictions, it is still able to finance its regional ambitions — a situation that would only improve once foreign investments pour into the Iranian energy sector.

For the Persian Gulf Arab states, Iran’s return to the global energy market is as much a threat as its military power. Israel is already dealing with the rise of hostile Arab non-state actors, an emergent Turkey and an Egypt in transition, so from its point of view a rehabilitated Iran only makes matters worse for Israel’s national security. To a lesser degree, the Turks and the Pakistanis are concerned about Iran returning to the comity of nations. Ankara wants to be the regional hegemon and does not want competition from anyone — certainly not its historic rival. The Pakistanis do not wish to see competition in Afghanistan, nor do they want their relationship with the United States affected.

The United States has been hobbled by the memories of the 1979 hostage crisis for a generation now, while the importance of oil to the global system makes security in the Persian Gulf an unavoidable commitment for American forces. During the Cold War, when the United States did not have to worry about Gulf security or Iranian ambition, the United States was emotionally, militarily and diplomatically free to encircle the Soviets, parlay with the Chinese, induce the Europeans to cooperate, dominate South America and use Israel to keep the Middle East in check. We are in a radically different world now. But once the United States lets go of the expensive and unwieldy security and emotional baggage caused by Iran, Washington’s ability to reshape the international system should not be underestimated. And that says nothing of what an Iran with a free hand would do to its backyard.

The trajectory of this hypothesized rapprochement coincides with the trajectory of increasing U.S. military capacity. Though U.S. ground combat forces remain heavily committed now, this will change in the years to come. This trajectory is already taking shape, but a U.S.-Iranian entente would accelerate the process. A United States with a battle-hardened military accustomed to a high deployment tempo without the commitments that defined the first decade of the 21st century will have immense capability to deploy multiple brigades to places like Poland, the Baltic states or Georgia. Its naval deployments will be able to spend less time in the Arabian Sea and Persian Gulf and more time loitering in places like the South China Sea. These capabilities will certainly create friction with states like Russia and China. The United States is on this trajectory with or without Iran, but with a U.S.-Iranian rapprochement, it is possible on a more rapid timetable and to a greater degree.

An Iranian-U.S. rapprochement would be a relief to Europe. The Europeans are exhausted by having to keep up with U.S.-Middle Eastern problems, and while the Iranian imbroglio has not forced the Europeans to commit any troops, they are worried that it may in the future. Europeans, especially the French and the Germans, would welcome a Tehran-Washington reconciliation from an economic perspective as well. Both want to use Iran as a market for high-tech products, and France has its sights set on the South Pars natural gas field in the Gulf. Iranian natural gas reserves, estimated to be the second largest in the world, would potentially fill the Nabucco pipeline and give Europe an alternative to Russian energy exports.

Russia has no interest in seeing the United States and Iran come to terms with each other. Iran may be a historic rival to Russia, but it’s a rivalry the Russians have been able to manipulate rather effectively in dealing with the United States. Building Iran’s Bushehr nuclear power plant and threatening to sell S300 strategic air defense systems to Iran are Russia’s way of capturing Washington’s attention in a region that has consumed U.S. power since the turn of the century. Moscow may be willing to give small concessions over Iran to the United States, but its overall interest is to keep Washington’s focus on Tehran. The more distracted the United States is, the more room Russia has to entrench itself in the former Soviet space and keep Europe under its thumb. If the United States manages to work out an understanding with Tehran and rely more heavily on an ally like Turkey to tend to issues in the Islamic world, then it can turn to the pressing geopolitical issue of how to undermine Russian leverage in Eurasia.

East Asia’s major powers would, in general, favor a U.S. rapprochement with Iran. Japan, China and South Korea, the world’s second, third and 13th biggest economies respectively are all major importers of oil and natural gas. If the United States were to lend its support to Iran as a preeminent power in the Middle East, it would not only open up Iran’s energy sector for greater opportunities in investment and production, but also relieve the Asian states of some of their anxiety about instability in the region as a whole, especially in the vulnerable Persian Gulf choke point through which their oil supplies are shipped. Moreover, these states would leap at new opportunities for their major industrial giants to get involved in construction, energy, finance and manufacturing in Iran, which would all be facilitated by American approval. A U.S.-Iranian entente would pose a problem only to China. Not only would it bring yet another of China’s major energy suppliers into the U.S. orbit and strengthen U.S. influence over the entire Middle East, it would also shrink China’s advantage as a non-U.S. aligned state when it comes to working with non-U.S. aligned Iran. Nevertheless, the economic possibilities of China working with Iran without provoking American aggression would likely outweigh the concerns over U.S.-Iranian vulnerabilities. That is unless an Iranian-facilitated withdrawal from Washington’s wars resulted in the United States putting more pressure on China.