STRATFOR CEO George Friedman assesses the uncertainties of the Middle East, including the rise of Iran, and explains why U.S. military options are very limited.
Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, STRATFOR cannot guarantee their complete accuracy. Colin: It's a cliche, but the only certainty in the Middle East is uncertainty. There are many moving parts in the region and many of the unexpected events of recent weeks add to that uncertainty, along with planned developments such as the American troop withdrawals from oil-rich Iraq. Welcome to Agenda with George Friedman, who joins me to give his latest assessment. George: Well, the single most important thing to be concerned about and be watching is the withdrawal of the United States from Iraq, which we've talked about before, and the Iranian response to that. The Iranians have made it very clear that regard the American withdrawal as a vacuum and that they intend to fill the vacuum. We have seen some substantial tension emerge between Saudi Arabia and Iran — including of course the story that Iranian operatives were planning to assassinate the Saudi ambassador to the United States and destroy the Saudi Embassy. We've also seen, of course, the Bahrain events in which the Saudi army has occupied Shiite Bahrain to protect its Sunni ruling family, where clearly the Iranians have had some degree of control. And we've also had a report, about two weeks ago, about a shooting in eastern Saudi Arabia, in which gunmen wounded nine soldiers. None of these by themselves is particularly troubling, until you take them all together and see that we have growing pressure from the Iranians to take advantage of the opening that's been left to them, and that obviously creates tension between Saudi Arabia and Iran, and that the Iranians are increasing their position. When we turn to Syria, where Assad still has not fallen — and for all the expectations that he would be unable to hold out, he has held out quite well to this point — we also see the possibility that if Iran manages to take a dominant position in Iraq and Assad does not fall, you will see a situation where Iranian influence moves through Iraq, through Syria, for Assad's their ally, and into Lebanon where Hezbollah's operating, on a continuous line, creating an Iranian sphere of influence to the north of Saudi Arabia and along the southern border of Turkey. This would be dramatic change in the balance of power in the region and it would also be something that would reshape the global balance, as the world is dependent on oil from this region and is going to cooperate with whoever has it. So we are in a position now where the promised American withdrawal from Iraq is nearing its conclusion, where it's pretty clear the U.S. is not going to be leaving very many troops, if any, in Iraq after the end and we are seeing the new game develop — the game between Saudi Arabia and Iran. Colin: I assume from what you're saying, you don't foresee much coming out of the backstage negotiations the U.S. has been having with Iran for some time. George: Well, there have certainly been reports of that. I believe that there have been back channels to Iran. The problem is that, whereas it's clear what the United States wants, which is that Iran should restrain itself in all its dealings, it's not clear that Iran sees any reason to do that. This has nothing to do with Iran's nuclear capability or lack of nuclear capability. The fact is that Iran is the leading conventional power in the region. With the United States gone it is able to assert itself, if not directly militarily then indirectly through covert forces and political influence, extensively. Why should the Iranians negotiate with the United States? Well, one reason is that the Iranian perception of the United States is that the United States is utterly unpredictable, quite irrational and extremely powerful and that combination frightens the Iranians. The Iranians remember very well how they bet on Ronald Reagan and released hostages to Reagan that they wouldn't release to Jimmy Carter and what a bad bet that was. So they're aware of two things: that they don't have that a clear of an understanding of American politics and secondly, that the United States being unpredictable could harm Iran in some way and that might cause them to want to reach some sort of understanding with the United States. But at this point the American posture is simply one that is prepared to allow this evolution to take place. Last week we saw some very harsh words by President Obama concerning the attempted assassination in Washington. It's not clear that that's being followed up in any way, and the signal that's being delivered to the Iranians is that the road is open to their influence. Colin: This is a big worry for the Saudis. George: The Saudis are deeply concerned about what would happen in a world where the United States was not there to protect them and the Iranians were quite assertive about it. But the Saudis are also ultimate pragmatists. The primary interest of the Saudi royal family is preserve the regime and the Saudi royal family. If what they have to do is reach some accommodation with the Iranians, they will do so. And this is really one of the questions that confronts us in the region. The Iranians have staked their claim; we know what they're doing. The Americans could attempt to reach some sort of accommodation with Iran. Or the Saudis might. If the Saudis do, the United States is completely frozen out and therefore it's extremely important to figure out what the U.S. is doing. There's also, of course, the military option. But the fact is the United States can't possibly invade Iran and secondly the amount of air power it would take to truly suppress Iran's military is enormous and probably greater than the United States has easily available. Knocking out their nuclear sites would not in any way weaken their conventional power and wouldn't really address the current issue. So the United States has only limited military options, assuming that the United States doesn't want to go nuclear, which I don't think it wants to and I don't think it will. It has limited options against Iran militarily. It is not moving the Iranians to want to negotiate with the United States. The Saudis may be reaching out to the Iranians, whatever the hostility is, to see what sort of deal they may want. So there's a game being played that's very complex, fairly subtle and the U.S., in some ways, is so subtle that it's very hard to understand what it's doing. Colin: And given what you've said, the oil sector in Iraq is potentially exposed to Iranian ambitions. But you've seen western construction companies in the last few days signing contracts worth billions of dollars to develop that sector. George: Well, the ability of the oil industry to make bad geopolitical moves is legendary. They are betting that in the end Kurdistan will be allowed a degree of autonomy from Baghdad, so that the contracts they're signing in Baghdad - in Kurdistan - remain intact. They're also making the assumption that in the end the Shiite community in southern Iraq will be resistant to the Iranians. All that's possible, but it's a serious bet. It'd be interesting to look at those contracts and see, apart from the press release amount, how much is actually being committed now. I suspect that in these contracts, a great deal of the money will be committed later - six months or year down the road -and relatively little now. Everybody is holding their breath and waiting and all the announcements of increased activity, I suspect, are things that are going to be on hold for a bit. Colin: And then we have the unexpected prisoner exchange between Israel and the Palestinians. What do you think is going to flow from this, given that significantly, the present Egyptian government was the broker? George: Well I think what really has happened is first the military junta running Egypt has proved to be more resilient than was anticipated by some, although we never doubted for a moment that they were quite capable of holding onto power. The Egyptian negotiation of settlement has two sides to it: one, the Egyptians have always been cautious about Hamas and in negotiating the settlement it gives them a substantial political influence over Hamas, as their closest neighbor. Hamas on the other hand faces a blockade from Egypt just as much as it does from Israel and really must listen to the Egyptians. It may be that Egyptian pressure on Hamas helped facilitate this exchange and it may be that Hamas will find itself under more political pressure from Egypt to make some other accommodations with the Israelis. After all, the Egyptian government does not want to see an uprising in Gaza that might initiate resistance in the streets to the Egyptian government and its treaty with Israel. And has, of course, no intention of abrogating that treaty with Israel and therefore it wants to diffuse the situation with Hamas. I think it was something like that that took place on this and I think the Egyptians may continue this process. Colin: George will continue to watch this closely. George Friedman, there, ending Agenda for the week. Thanks for being with us. Goodbye.