Middle East & North Africa

The interim nuclear deal between Iran and the P5+1 countries opens up real prospects of resolving an issue that has generated enormous tensions in the region for years with threats of military strikes and imposition of draconian sanctions against Iran and diplomatic drives to pressure third countries to curtail their relationship with that country.

Hassan Rouhani's election as President and Obama's willingness to pursue a political solution have made this breakthrough possible. US and EU sanctions have undoubtedly had a biting effect on the Iranian economy and made the regime seek fresh talks with the West.

The US position too has evolved lately, with more talk of a diplomatic solution and less military rhetoric, even as the sanctions screw has been inexorably tightened to bend Iran's will. The Israeli lobby as well as Saudi clout within the US political system have worked against any reconciliation with Iran, with excessive rigidity of thinking on non-proliferation issues touching Iran and antipathy towards it because of the 1979 hostage episode complicating any negotiating process. The changing political landscape in the Arab world, with Egypt in turmoil, Libya unstable and the Syrian situation not only escaping Western control but also spawning extremist, Al Qaida-linked forces, the appetite for a military confrontation with Iran has, however, been diminishing and the US president's preference for a political solution has been gaining force.

Balance

After being upstaged in Syria by the Russian president, Obama would have wanted a balancing success in Iran, even if America has obvious geo-political interest in breaking the Iran-Assad-Hezbollah axis that is also accentuating the Shia-Sunni conflict. He has resisted being bull-dozed by Israeli-generated domestic pressures into creating a political impasse with Iran by imposing unconscionable conditions that would inevitably compel military action. He also understands that unwillingness to explore a negotiated solution and taking an unvarnished hard-line position would lose him support of some of his partners, make minimum consensus building with Russia and China in the UNSC on sanctions unsustainable and generally alienate the international community.

The salient features of the interim agreement shows a genuine effort by Iran to create favourable conditions for a final agreement in the next six months. Iran has agreed to halt enrichment over 5 per cent for six months and dismantle "technical connections" allowing such enrichment, neutralise its stockpile of near-20 per cent enriched uranium by diluting it to below 5 per cent within that period, cease installing new centrifuges at its Fordow plant and leave those it has in Natanz inoperable, grant daily access to Fordow and Natanz to IAEA inspectors and not to commission its heavy water reactor in Arak as planned in 2014. These substantial concessions have prompted Obama to claim that Iran's breakout period for becoming nuclear has been stretched.

Rights

In return, Iran has obtained relatively little. Sales of Iranian oil will remain at their currently reduced level as a result of sanctions, with only $4.2 billion from them transferred in installments as and when Iran fulfils its commitments. Iran will have access to $ 1.5 billion revenue from trade in gold and precious metals and some sanctions on Iran's auto sector and petrochemical exports will be suspended for six months. Safety-related repairs and inspections inside Iran for certain Iranian airlines will be licensed. Most of the sanctions will thus remain in place, with Iran's approximately $100 billion in foreign exchange holdings remaining largely inaccessible or restricted.

The Iranians are claiming that the interim agreement recognises their NPTrooted right to enrichment, whereas Secretary Kerry has publicly rejected this claim and affirmed that this issue remains unsettled. President Obama has added the contestable twist that the NPT does not confer enrichment rights. The NPT permits the peaceful use of nuclear energy and therefore low uranium enrichment under IAEA safeguards for fuelling civilian nuclear reactors is implicitly allowed by it. However, because enrichment technologies for civilian purposes can also be used for military purposes, US law forbids the export of such technologies. This became a thorny issue even in India-US nuclear negotiations, with India claiming that "full civilian nuclear cooperation" included the transfer of enrichment and reprocessing technologies and the US demurring.

Welcome

US leaders seem to be making negative statements on enrichment rights to placate those domestic lobbies that remain opposed to any compromise on the nuclear issue with Iran. If the interim agreement allows Iran to enrich unto 5 per cent and dilute its 20 per cent enriched stock to 5 per cent too, it is implicit that the US has accepted Iran's right to enrichment up to this level under strict IAEA safeguards. It would be preposterous to suggest that Iran can be divested of this right in the second phase of nuclear negotiations.

Secretary Kerry is not wrong in emphasising the difficulties ahead in negotiating a final deal. Israel, anguished by the interim deal, has called it a "historic mistake". How far it can use its weakening clout within the US political system on this issue to derail the delicate negotiating progress ahead remains to be seen. The Saudis, more quietly, will do their bit to create impediments as they are deeply perturbed by the shift in the balance of power that is occurring in the region, with Iran's regional status gaining western recognition. The danger from the hard liners in Iran crippling future discussions on the ground that the government has made too many concessions cannot be ignored. Distrust between the West and Iran is so deep, and the history of nuclear negotiations between the two so marred by bad faith, that hiccups cannot be ruled out. India would have every reason to welcome the interim agreement and applaud the good sense of both sides in reaching it.

Click here to read the original article published in India Today. 

“Whether by design or accident, the nuclear deal struck in Geneva this past weekend is about far more than centrifuges, enrichment and breakout times.

Ultimately, the success of the nuclear negotiations will help determine who and what will define Iran for the next few decades.

Will Iran be defined by the confrontational and bombastic approach of its former President Mahmoud Ahmadinejad and the conservatives around him? Or will it be defined by the more open and moderate approach of its current President Hassan Rouhani and his energetic and respected Foreign Minister, Javad Zarif.”

-“Nuclear Deal will Define Future Iran,” Reuters, November 25, 2013.   

“The Obama administration moved quickly to sell the agreement to nervous U.S. allies, particularly Israel, and to persuade lawmakers not to push ahead with new economic sanctions that could prompt Iran to abandon the six-month freeze on its nuclear program set under the accord. In interviews, Secretary of State John F. Kerry defended the deal, saying that the United States and its allies believe that the agreement ensures Iran will either abide by the terms or face the reinstatement of measures that have crippled the country’s economy.”

-“After Iran nuclear deal, tough challenges ahead,” Washington Post, November 24, 2013.

“The White House has to persuade skeptical lawmakers to hold off on imposing new sanctions on Iran during the next six months. That may be a hard sell given the number of lawmakers from both parties who want to increase the sanctions on Iran rather than softening or relieving any of the existing measures. Senate Majority Leader Harry Reid of Nevada, a close White House ally, has said he's prepared to take up a tough new sanctions bill when the Senate comes back into session next month. The bill would almost certainly pass if it was put to a full vote. Secretary of State John Kerry said Obama was prepared to veto new sanctions legislation, but that's a battle the White House would dearly love to avoid.”

-“Deal Reached to Halt Iran's Nuclear Program,” Foreign Policy, November 24, 2013.

“The U.S. readiness to talk with Tehran, after decades of mistrust, has angered some people in Israel, who said it was a form of appeasement. But supporters of the deal say it will encourage Iran to be more open about its true nuclear aims, which it says are peaceful.

Israel's parliamentary opposition leader Isaac Herzog said Netanyahu should minimize confrontation with the Obama administration "and restore the intimate dialogue with the leaders of the big powers."”

 -“Netanyahu sending security aide to U.S. for talks on Iran,” Reuters, November 25, 2013.

“The Iranian foreign minister pointed to Israel’s animosity with Iran and fury of the Israeli leader over the victory of Iran’s diplomacy in Geneva talks, and said, “In these negotiations we want to build the trust of the world in the fact that we are not after nuclear weapons; so why have the enemies been terrified in such a way and why are they crying out?”

-“AEOI Chief: Structure of Iran’s N. Program Unaffected by Geneva Deal,” Fars News Agency, November 25, 2013.

“Gary Sick, a former National Security Council Iran expert who now teaches at Columbia University, said the bilateral U.S.-Iran communication was about ‘laying the groundwork’ for the interim deal concluded in Geneva. ‘The real negotiations, of course, took place with the P5+1’ he said, but the secret U.S.-Iran talks were a way ‘to break the ice a little bit.’ There has been more direct communication between Washington and Tehran in the last few months, he suggested, than in the 34 years since the Iranian revolution.”’

-“Nuclear deal raises prospects (and fears) of broader US-Iran thaw,” Al Jazeera America, November 24, 2013.

“…The interim nuclear agreement signed in Geneva on Sunday by Iran and the six big powers has many of the flaws of Munich and Paris. But it has none of their redeeming or exculpating aspects.

After Geneva there will come a new, chaotic Mideast reality in which the United States will lose leverage over enemies and friends alike.”

-“Stephens: Worse Than Munich,” The Wall Street Journal, November 25, 2013. 

Just as the United States has had to adapt to a world where its power is unmatched but no longer will determinant, Israel have to do the same. With enlightened leadership this adaptation could strengthen the Jewish state, securing the nation through integration in its region rather than domination of it. For now Israel is some way from this mind-set. Its overriding prism is military. It was important that President Obama set down a marker, as he has through this deal, one that may spur new strategic reflection in Israel.

-“Israel's Iran Dilemma, “The New York Times, November 25, 2013. 

“This is a sham from beginning to end. It’s the worst deal since Munich…It’s really hard to watch the president and the secretary of state and not think how they cannot be embarrassed by this deal.”

-“Charles Krauthammer: Worst since Munich,” Politico, November 26, 2013.

The debate about whether Islamist or secular parties could better guarantee a smooth transition to stable and democratic governance was central to the entire meeting. Some participants argued that discussing ideologies and their compatibility with democracy is a futile exercise since “people are interested in programs and results, not in ideologies,” while others countered that “one cannot discuss transition to democratic, rights-respecting governance without discussing the relation between religion and the state.”

The political dynamic in countries in transition is also marked by the contrast between institutional politics versus “street politics,” and by large generation gaps. Using mainly social media outlets, youth activists wield a new kind of power. Incoming leaderships are often fragmented and inexperienced, or project a sense of inclusion of people with differing views.

Many participants expressed concerns about the security and economic situations of several countries in the region. The deteriorating security environment, terrorism (in Libya, Tunisia, and Egypt) and sectarian violence continue to pose a threat to both political and economic stability.

The regional economies are facing rising public debt, inflation and unemployment, particularly among educated youth-—all of which pose difficult challenges for these countries already burdened by a volatile and fragile political environments. “Newly elected governments did not come with a new economic model,” a participant explained. Wary of taking risks while they are managing the political transition, new leaders have delayed key economic reforms, such as reducing state subsidies. The question was raised whether new economic governance can really be postponed much longer: after all, the populations of these countries expect not only more political participation but also more concrete results towards economic stability.

Participants noted a trust deficit between the EU and North African countries undergoing transition. This is attributed to Western support for former regimes, the EU’s domestic concerns at its southern neighborhood, and, more recently, the backlash triggered by the flow of refugees from North Africa. Most participants contended that the EU should take a proactive strategic approach to the region. This would mean offering cooperation in areas of capacity building, promoting the rule of law, and reforming the police, judiciary and the economy. The latter would include reforming the fiscal system, subsidies and the energy sector in particular. These are key areas for security, political stability and economic recovery for countries in transition.

The transition process that began in Tunisia since 2011 will continue for years to come. Despite many setbacks, participants pointed to noteworthy achievements in a relatively short period of time: new constitutions drafted; empowerment of women in public life; and a qualitative and quantitative development of civil society organizations. In addition, unions and syndicates for trade, laborers, lawyers and journalists have emerged. There is also a growing free press, which allows for the possibility of public criticism of political elites and the continued efforts to support national dialogues in Libya, Tunisia and Yemen.

Civil Society Organizations

Since 2011, the number of civil society organizations has grown dramatically, particularly in Egypt, Tunisia and Libya. In some countries, these organizations have nearly doubled in number. Tunisia has witnessed the creation of 5,000 new civil society organizations in less than two years. In Libya, 3,000 new organizations emerged since the fall of Qaddafi.

Civil society organizations are also taking on a broader range of issues. They are debating new topics that used to be considered taboo under the old regimes, such as corruption, gender equality, women’s rights, and the rights and freedoms of ethnic and religious minorities.

Civil society organizations had a crucial role in leading the protests on the streets of Tunisia, Egypt and Libya, and they are now equally important in implementing the longed-for reforms, having become “a real partner and a real force of objection,” as one participant put it. The current roles of civil society organizations in Tunisia and Egypt demonstrate a noteworthy difference. In Tunisia, syndicates, labor unions, the League of Human Rights, the law and bar association, and the Tunisian General Labor Union (UGTT) played a key role in brokering a dialogue between the opposition and the government. In Egypt, conversely, civil society and human rights organizations have been marginalized in the public debate following the demise of President Mubarak. Moreover, many political parties, including often conservative ones, have used human rights jargon in an attempt to project a liberal, democratic image. More importantly, debates on human rights, civil liberties and freedoms often spark conflicts with the more conservative ruling parties, renewing the age-old debate on the compatibility Islam with democracy.

In Egypt, Tunisia and Libya, a significant number of civil society organizations are led by young motivated leaders with little management experience. They lack the capacities to fully represent and advocate their organizations’ concerns at the political level. This has an impact on politics, since many parties look to these young leaders, hoping they will become the face of the popular revolutionary movements.

Many of the civil society organizations in Egypt, Tunisia and Libya often find themselves in the midst of regional powers’ polarization. In Tunisia for example, the reform of the legal and political framework regarding the establishment and funding of civil society organizations is quite liberal and allows for foreign funding to be directly channeled to civil society. While this is helpful for the growth and development of needed civil society, it also allows the politicization of money for various political agendas.

Economic Challenges

While “there is no political transition without economic reform, and vice versa,” there can be no economic reform without security reforms either. Since 2011, for example, five consecutive Tunisian governments with no clear political agenda have negatively impacted the economy, discouraged the business community and scared away foreign investors. Furthermore, a decline in tourism has worsened an economy hammered by rising unemployment, inflation and a banking system on the brink of collapse. Tunisia could be heading for a major economic crisis.

A report published by E3G and the EastWest Institute, presented during the consultation, points out that a decline in living standards is one of the most important factors leading to instability. There is a high risk of instability driven by persistent youth unemployment, regional and social inequalities, dependence on low-value and underperforming sectors, harmful exposure to global food and energy price shocks and strong competition from emerging economies. Moreover, given worsening fiscal balances caused by lower exports, high energy prices and food subsidy payments, net oil and food importers have ever-fewer resources to buffer these risks. MENA economies face significant constraints on growth due to shortages of energy and water, which is further exacerbated by climate risks.

Energy markets and energy subsidies require new attention. Growing populations will increase demand for energy, particularly for oil and gas that are still the main resources consumed. Energy subsidies based on actual consumption reward and promote consumption indiscriminately; they need to be reduced to cut public spending, while still protecting the poorer population. The energy mix also needs to be diversified and must include renewables energy.

Conclusions and Recommendations

1. The EU should engage in strategic partnerships with the countries in transition in Europe’s southern neighborhood at diplomatic, economic and social levels. Medium and long-term support for key areas of capacity and institution building, rule of law, education and economic governance should be provided.

Building on the its experience as a model for regional integration, the EU should provide advice and assistance to North Africa on how to move forward with its political transition to encourage reconstruction and regional integration.

In economic terms, the Free Trade Agreements between the EU and North African countries should be reassessed to give countries in transition better access to EU markets—both for products and for people. If North African economies will prosper, the EU will benefit as well.

2. The role of civil society organizations has been crucial during and after the elections in countries in transition. Their young leaders and representatives need to develop their leadership capabilities, expertise in conflict and project management and public standing. Partnerships with academia could provide support.

3. Civil society organizations rely heavily on foreign funding, which can be beneficial but also provides ample opportunity for misuse and for regional polarization. Transparency in the financial and legal frameworks is essential for better monitoring of foreign funding to civil society.

4. A call was made for an Arab-Arab learning process on transition to democratic governance in North Africa, as there is almost no exchange among civil society organizations, parties and relevant voices within the region. Participants believed that it is possible to set up such inter-regional dialogue that includes political leaders, parliamentarians and civil society organizations.

5. Knowledge of and experience in trust-building and mediation processes are weak in the MENA region. Training Arabic-speaking facilitators for national dialogue processes would be useful.

6. Governments in countries in transition should overcome old divides and seek to form public-private partnerships with the business sector to benefit the economy and the population, e.g. by cooperating in the field of education, vocational training and promotion of young entrepreneurs.

7. There is a crucial need for fiscal reform, banking reform and reform of government subsidies, notably in the energy sector. Energy subsidies in Egypt and Tunisia have failed to alleviate expenses for the poorer communities. They drive consumption and increase public debt. From an economic and a social perspective, subsidies need to be reduced and to be directed to those who need them most. Governments of countries in transition have feared initiating such reforms, which require public discourse and broad public and political support to avoid clashes and crises.

8. The MENA region depends mainly on oil and gas with no renewables; there is a critical need to address the energy mix in the MENA region through the diversification of energy resources and more efficient consumption. As the water-food-energy nexus will affect the MENA region—with water shortages, higher food prices (due to climate change), growing energy consumption and prices—policy makers should not only seek to promote higher growth rates but also economic resilience, providing protection against shocks. This could be a topic for regional cooperation.

9. Natural resources management in the Eastern Mediterranean involving Egypt, Israel, Lebanon, Palestine, Syria, Cyprus and Turkey could provide a good opportunity to encourage regional cooperation, sustainable exploitation and the establishment of an inter-regional market.