Will the deal sow chaos in the Middle East, or are these fears totally overblown?

This week`s agreement over Iran`s nuclear program marked a historic shift in relations between Tehran and its erstwhile Western enemies.

The accord -- which limits Iran`s nuclear program in exchange for sanctions relief -- came after months of negotiations between Tehran and the P5+1, the five permanent members of the U.N. Security Council and Germany. It was a particularly striking breakthrough in relations between Washington and Tehran, after nearly four decades of open hostility.

The deal also sent reverberations through the Middle East. Tehran`s regional rivals, particularly Saudi Arabia, publicly welcomed the deal but privately smarted over the apparent rapprochement between the U.S. and Iran. Israeli officials slammed the deal as dangerous and vowed to stop its passage through U.S. Congress.

Ali Vaez, the International Crisis Group`s senior analyst on Iran, spoke about the impact of the deal on Iranian foreign policy.

Do you expect sanctions relief to bolster Iran`s ability to support its allies and proxies in the region?

No one can reject the fact that a fraction of resources made available after sanctions relief could be used to advance Iran’s regional policies. Yet past experience shows that the direct impact of financial resources on Iranian policy is really marginal.

Iran’s regional policies are often low-cost. Iran’s support for proxies in the region probably costs it hundreds of millions of dollars -- at most, a few billion -- while under the deal, Iran will have access to around $100 billion via sanctions relief.

It’s important to look at what happened over the past two years since the interim nuclear deal, which provided Iran with some sanctions relief. Iran got access to around $14 billion, but during the same period, it lost half of Iraq and Syria to ISIS, and [Iran`s ally] Assad’s position has deteriorated in Syria. More assets don’t necessarily allow Iran to project more power. Conversely, before the interim agreement, Iran was under severe sanctions for several years. Iran’s economy was suffering, but that didn’t make the country a force of moderation in the region.

Iran’s policies are not about the amount of money in their bank account, but stem from geostrategic calculations and threat perceptions.

Iran’s policies are not about the amount of money in their bank account, but stem from geostrategic calculations and threat perceptions. As long as Iran feels encircled by the U.S., inferior in conventional military terms to other countries in the region, and excluded from the regional security architecture, Tehran will resort to its “forward defense policy,” supporting proxies to deter attacks on Iranian soil.

All this focus on Iran’s assets is nonsensical. On both sides of the discussion, you have people going to extremes -- some saying all the money will be used for domestic purposes, others saying all the money will go to Hezbollah. The reality is somewhere in between.

If the P5+1 wanted to prevent any risk of Iran using resources for its regional policies, they would have had to provide no sanctions relief to Iran. Those advocating that are basically arguing against the deal, because the basic principle of the deal is sanctions relief in exchange for nuclear restrictions.

But they’re making a mistake. Without a deal, we would not go back to the status quo ante; we would see a more aggressive Iran, which feels more threatened and a greater need to project power and deter its enemies from striking at home.

Do you expect Iran to coordinate more with the U.S. and Europe over policies in the Middle East after the deal?

This deal is a transactional agreement, but it does have transformational potential. It could bring cooperation on issues of common interest.

For Tehran, the most important country is Iraq -- they have a very long border and any instability could have a spillover effect. A knock-on effect of the deal could be Iran and the U.S. cooperating in a more direct way in Iraq, instead of going through Iraqi intermediaries. Iranian and U.S. interests overlap in Iraq and they could cooperate in a more direct way in the conflict against Daesh [the Islamic State].

By cooperating, would they be more effective against the Islamic State?

Yes, and it would be a new chapter in relations. The taboo of contact between Iranian and Western diplomats has been broken, but to do the same between their militaries would be a whole new chapter. It could also be very useful in avoiding unintended conflict in the Persian Gulf.

But expectations must be realistic. The end game in Iraq is different for Iran [than it is for] the U.S. The distrust between Iran and Washington is not going to vanish. If you look back at relations between Iran and the West, they are replete with missed opportunities. Often, an ill-judged statement or action has squandered opportunities for cooperation.
How might the deal affect the regional balance of power between Iran and Saudi Arabia?

The deal probably reinforced the view that Iran’s star is rising, and will exacerbate clashes along sectarian fault lines around the region. I want to be optimistic about the potential of cooperation, but in the short term, there will likely be more conflict.

Iran and Saudi Arabia need to find a modus vivendi. Iran is one of the biggest and most historical countries in this part of the world, and will continue to play a big role in the regional dynamics. But because of the Saudi perception that Iran is ascending and the U.S. is leaving the region, it behooves Iran to take confidence-building steps that would signal that the deal has not come at the expense of Saudi Arabia, and that Iran is not seeking to dominate the region.

How might this impact the war in Yemen?

Yemen is probably the lowest-hanging fruit. Yemen is in Saudi Arabia’s backyard, and its security is a key priority for the kingdom. This could be a good place for Iran to start. But given the fact that Iran has limited influence on the Houthis, it’s not easy to see what they could actually do.

Do you expect the deal to change Iran’s calculus in Syria?

No. Syria is an integral part of Iran’s “forward defense policy.” Iran is not going to withdraw. However, Syria has been costly to Iran -- both financially and in terms of reputation -- and Iranians would welcome a way out which doesn’t require them to compromise their interests.

This would require all the key players to realize there is no military solution and a compromise has to be found. There are two key elements: Iran has to realize the status quo ante -- Assad ruling the entirety of Syria -- has gone, and Saudi Arabia has to realize that Iran’s influence cannot be eliminated.

Those who are arguing against the continuation of sanctions simply don’t understand who the biggest beneficiaries of the sanctions are.

If the parties are to parlay the positive intentions and calm the tensions in the region, there needs to be a contact group of regional countries and world powers, which creates the security infrastructure in which all countries in the region can feel safe and secure. That is not an easy feat. That is probably as complicated as the nuclear negotiation itself.

Is there anything you think people have overlooked about how the deal could impact Iran`s foreign policy?

One aspect is that those who are arguing against the continuation of sanctions simply don’t understand who the biggest beneficiaries of the sanctions are.

Iran’s Revolutionary Guards (IRGC) are responsible for many of these regional policies, and they were one of the biggest beneficiaries of the sanctions economy. That’s one reason why Iran was able to expand its influence during the sanctions economy. The IRGC replaced the foreign companies who left Iran under sanctions, they monopolized trade channels, they benefited from the lack of competition, and they engaged in illicit trade.

How have the IRGC reacted to the nuclear deal?

They have been supportive of the negotiators. They get their cues from the supreme leader, who, at the end of the day, is their commander in chief. So far, the supreme leader’s reaction has been positive and the IRGC would never contradict the supreme leader. Further, the IRGC is not monolithic -- there are some who feel threatened by the deal, and others who see opportunity in it.

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