Iran and Iraq: The Shia Connection, Soft Power, and the Nuclear Factor
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Without satisfactory working relationships among Washington, Tehran, and Baghdad, the future stability of the new Iraqi regime could be in doubt. Iran has immediate influ ence on Iraqi politics because of history and geography, as well as economic, ethnic, religious, and paramilitary ties. The extent to which Iran uses this influence to negatively affect events in Iraq will be determined in large part by the future relationship between Iran and the United States. Iranian influence in Iraq is widespread, but its impact is ambiguous. Iran provided financial support to Shiite-backed political groups that helped them win a near majority in the Iraqi elections held on January 30, 2005. The success of those elections, with approximately 58 percent of Iraqis participating-despite a violent campaign by insurgents aimed at disrupting the vote-has changed the political calculus in Iraq. The insurgency failed in its aim to seriously disrupt or delegitimize the elections, thus bolstering both the provisional Iraqi government and the position of the United States.
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Although alleged Iranian support for some insurgent actions appears to contradict its open stance of supporting legitimate Shiite-backed political groups, such activity highlights broader Iranian intentions of covering all its bases in Iraq in the event of a serious downturn in relations with both the United States and a future Iraqi government. Most of all, Iran does not want to see a new threat from Iraq re-emerge. The threat could be manifested in a number of ways: by a Shiite-Sunni civil war, the establishment of an independent Kurdish state in northern Iraq, the establishment of a rival Shiite clerical government, or the establishment of a united government that is closely allied with the United States. To ensure that it can influence any potential outcome, Iran has established relationships of varying degrees with almost every faction in Iraq, in effect hedging its bets. Tehran's mullahs have shown anxiety about a strong, pro-Western government in Baghdad that could offer permanent basing rights to U.S. forces and perhaps even have relations with Israel. But the conservative mullahs are also concerned, although more ambivalent, about the emergence of a strong Shiite-dominated clerical government in Baghdad. The complexities of the Shiite religion suggest that there would be rivalry between the clerical establishments, with Iraq's powerful religious centers of Najaf and Karbala eventually providing alternative sources of theological discourses to Qom, the religious center of Iran; yet this could be the case even without a clerical government in Baghdad. What Iran would prefer to see ideally in Iraq is a friendly neighbor that presents no discernable threat to its clerical regime either militarily or politically.
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Iran's long-term energy scenarios, however, make investments in this sector's infrastructure a pressing concern. And if the regime views oil as a diminishing asset in the longterm, its efforts will most likely center around its natural gas reserves—the second-largest in the world after Russia's. Natural gas is a more difficult and costly product than oil to develop and bring to the market. Unlike crude oil, which has well-established pipelines and shipping routes to customers worldwide, natural gas must either be liquefied at the source of extraction or pumped to specific markets over long pipelines or to terminals for liquefaction and subsequent transportation by sea in liquefied natural gas ships. Not only are the initial capital costs of building a gas-exporting infrastructure very high, but unlike oil, which commands a worldwide benchmark price, the gas market is more regionalized, and prices vary widely. To develop a gas supply relationship requires long-term commitments on the part of the producer and the purchaser, meaning long-term contracts with high up-front capital investments. Most investors are unwilling to engage in long-term gas deals if the political situation in the producer country is uncertain. Iran's quest to seek export outlets for its abundant natural gas reserves has been hurt by U.S. sanctions, which have been paralleled by the active intervention of U.S. diplomats in international forums and with individual countries to veto or discourage Iran's gas export deals. As long as the U.S.-Iranian relationship remains hostile, foreign investors, including foreign governments, will be cautious about laying out billions of dollars for Iranian gas projects. Add to this the byzantine and often corrupt manner in which business is conducted in Iran and it can be seen why investors would prefer to do business with Iran's gas-producing neighbors Qatar, Oman, and the United Arab Emirates rather than deal with the mullahs and face the wrath of the U.S. executive and legislative branches. Iran's ability to fully exploit its abundant natural gas sources would be significantly improved if it ended its quarrels with the United States and U.S. sanctions were terminated.
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Despite Iran's undoubted success in embedding itself deeply into Iraqi politics and its continued, almost gleeful defiance of the United States, the EU, and the IAEA on the nuclear issue, it would be unwise for Iran's leaders to take their current good luck for granted. The Islamic Republic faces significant social and economic challenges that can only be made more difficult by alienating the West. The embarrassing and objectionable statements by its new president calling for Israel's destruction have harmed Iran's international image and aroused further anxiety domestically regarding his behavior. Regionally, Iran has poor relations with its Arab neighbors, and it cannot be assumed that Iraq's Shiite community will remain friendly and grateful indefinitely. Iran's vital national interests could be helped by ending the standoff with the United States. Likewise, the United States has more to gain than lose if it adopts a more coherent and pragmatic policy toward the Islamic Republic.