The Real ‘Deal Of The Century:’ Sanctions Relief For Iran In Exchange For Peace In Yemen

The Real ‘Deal Of The Century:’ Sanctions Relief For Iran In Exchange For Peace In Yemen


We may have stepped back from the brink with Iran, but that doesn’t mean war is out of the question.

Iran remains angrier than it has been in decades, driven by US sanctions strangling its oil-dominated economy. Tehran has responded by attacking oil installations, ships, US bases and a US embassy. Worse, Iran’s uranium enrichment is moving steadily toward the bomb threshold. It has no incentive to moderate its behavior.

Meanwhile, America’s partner in the Persian Gulf, Saudi Arabia, has a problem. It needs stability more than ever.

The kingdom is hosting the prestigious G20 summit this year, which offers the chance to restore the Saudi regime’s international standing after its murder of dissident Jamal Khashoggi. But Saudi Arabia is trapped between a wrathful Iran and its own disastrous war in Yemen. Both places are bristling with missiles that pose virulent threats to a safe and successful G20. 

Could a multi-party compromise help? Maybe.

Yemen’s Houthi rebels, backed by Iran, are a key source of the danger to Saudi Arabia. The Houthi control the Yemeni capital and a generous complement of missiles and drones that occasionally hit targets inside the kingdom. But the Houthi also appear ready to stand down in hopes of halting the destruction of their homeland

The Trump administration, too, is on the failing end of a reckless gamble. President Trump pulled America out of the six-nation JCPOA nuclear deal, re-imposing sanctions on Iran that have caused Tehran’s eruption of reprisals.

Not only is the Iranian regime not collapsing under sanctions as Trump had hoped, but American pressure is enabling a hardline renaissance in the Islamic Republic and – disastrously – more open Iranian pursuit of nuclear weapons

Like the Saudis, Trump needs some sort of face-saving de-escalation. Much of America says Trump’s assassination of an Iranian general last month makes the US more likely to go to war. Although more Americans approve than disapprove of the strike, only 36% of Americans support Trump’s Iran policy. 

Fortunately, the planets are lining up for a solution holding plausible “wins” for Trump, as well as the Iranian supreme leader, the Saudi crown prince, and the Yemeni Houthi.

The path involves Trump trading partial relief of Iran sanctions for Tehran’s help in ending both the war in Yemen and Houthi attacks on Saudi Arabia – just in time for the G20. 

Can the Saudis and Iranians do business? Might the US be willing to trade sanctions relief for an Iranian climbdown in Yemen? Might the Houthis go along? Hard to say. Is it worth exploring? I think so.

A sanctions relief-for-peace plan might just provide all four players with big enough gains to sell the compromises to their publics.

Let’s look at the calculations of each player.

Saudi Arabia

Saudi Arabia has a lot at stake. The kingdom’s role in the Yemen war is unpopular among Saudis who see the war’s financial and human toll – almost 100,000 dead and two million displaced – as an indefensible detour from pressing domestic problems. 

Internationally, the war has poisoned the kingdom’s image to the point where diplomats and business leaders are becoming loath to lend legitimacy to the regime.

The Saudi leadership was rattled by Iran’s September strikes on the Abqaiq oil processing facility and the Khurais oilfield. The Saudis and their allies in Abu Dhabi have stopped urging more confrontation with Iran and now seek to de-escalate.

With the G20 coming up, Saudi leaders are increasingly desperate. I attended the G20 inception conference in Riyadh in January, amid rumors—probably untrue—that incoming Houthi missiles had been intercepted near the conference venue. 

Clearly Iran’s cooperation will be needed for a successful G20. Any failure to cool the Yemen civil war before the November summit could be a deal-breaker for world leaders who might otherwise be willing to give Riyadh another chance.

Iran

Iran’s price for stability is sanctions relief, maybe even partial relief. In early 2018, Iran was exporting as much as 2.5 million barrels of oil per day. Now, Iran smuggles out a few hundred thousand b/d, at best. The results have been dire. Iran’s GDP shrunk nearly 10% last year. 

Iran is already showing interest in resolving tensions with Saudi Arabia. Washington’s acquiescence to, say, 500,000 b/d of oil exports might be enough of a carrot to convince Tehran to negotiate with the Saudis over Yemen. Iran would certainly gain in a modest way from playing along, but substantial US sanctions would remain in effect. 

United States

For the Trump administration, leveraging Iran sanctions to reach a cease fire in Yemen would transform an increasingly indefensible Iran policy into foreign policy achievement. 

In 2018, Trump said his unilateral pullout of the Iran nuclear deal was meant to squeeze concessions from Iran. That hasn’t happened. But an Iran-backed peace agreement in Yemen would certainly count as a concession. Achieving it would demonstrate that Trump’s strategy had at least partly succeeded, allowing the US president to tell the world about a possible improvement in the humanitarian catastrophe in Yemen. 

Of course, Washington’s grievance with Iran extends well beyond Yemen to the Iranian nuclear and missile programs, and its support of proxy militias around the Middle East. Therefore any sanctions relief would be proportional to the problem addressed.

Yemeni Houthi

For Yemen’s Zaidi Shia Houthi rebels, face-to-face peace talks with Saudi Arabia would raise their profile relative to the internationally recognized Yemeni “government,” mainly exiles living in Saudi hotels whose support is on the decline. 

Saudi Arabia could concede a role for the Houthi in exchange for an agreement regarding Iranian support and future custody of the Houthis’ arsenal of Iranian drones and missiles. 

While the Yemeni civil war is more complex than portrayed here, it is clear that cooperation between Iran and Saudi Arabia could at least assist in a solution.

Potential deal-breakers

What could go wrong? Plenty. 

First, Israel and its backers in Washington are not going to sign onto any watering down of US sanctions. Israeli Prime Minister Netanyahu let slip last year that war with Iran was in Israel’s interest. Of course, the Trump administration and the American public have little appetite for carrying out such a war. If Israel wants to preserve its nuclear monopoly in the Middle East, compromise may be the more effective path.

Second, the Houthis may lack sufficient incentive to play along. The Houthis are not Iranian proxies that follow direct orders from Tehran, like militia in Iraq and elsewhere. And the Saudis will find it difficult to concede the Yemeni capital, Sanaa, to Houthi control. Other parties are involved. Creativity will be required.

Finally, a partial solution in Yemen might reduce US-Iranian hostilities, but would not end them. 

Iran is not going to accede to the Trump administration’s full list of demands for sanctions relief. As long as US sanctions continue – even in reduced form – Iran and its proxies will attack US interests and pursue a uranium enrichment program that could bring it the bomb, or at least breakout capacity. Iran is preparing for long-term proxy battles with the US around the region.

A return to a more stable US-Iran relationship requires a return to nuclear talks – perhaps covering broader issues like proxies and missiles – in exchange for full retraction of US sanctions. 

But US-Saudi-Iranian cooperation over Yemen could be the catalyst that gets things moving.

* * *

Jim Krane is the Wallace S. Wilson Fellow for Energy Studies at Rice University’s Baker Institute for Public Policy. He is the author of the 2019 book Energy Kingdoms: Oil and Political Survival in the Persian Gulf



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