Peripheral Vision

This past week, Iran and the United States, along with the United Nations Security Council and Germany, announced a preliminary agreement limiting Iran’s nuclear program. The plan calls for inspections of Iranian nuclear facilities and a reduction in the number of Iranian centrifuges, reactors, and stockpiles of uranium and plutonium. It should extend the time necessary for Iran to make a nuclear weapon from around two months to about a year. In return, Iran seeks elimination of economic sanctions, which have severely damaged its economy.
Even though the United States and Iran have made headway on this agreement, if the United States hopes to eliminate the threat of nuclear warfare, it will need to secure the approval of Iran’s regional rivals, such as Saudi Arabia. The country is a vital player in U.S. foreign and economic policy in the Middle East.
The Saudis fear that lifting sanctions on Iran will allow its regime to funnel more money into its Shi’ite proxies, such as in Syria, giving Iran more regional control. This fear is growing more relevant, as Iran has recently funded rebels in Yemen and contributed to the country’s destabilization, according to U.S. intelligence.
Any sort of nuclear deal will need the Saudis on board because the United States relies on them to control oil prices. The world has already witnessed the Saudis’ immense geopolitical power when the country caused global oil prices to fall dramatically by maintaining high output last year.
In recent years, the United States has increased investment in shale oil and gas extraction. However, after the sharp drop in oil prices late last year, the cost of building more shale drills now outweighs the benefits, and the United States has been forced to decrease future investment. A decrease in U.S. oil production in the long run will cause the country to rely more on imports, further increasing the geopolitical power of oil exporters like Saudi Arabia.
In preparation for the lifting of sanctions, the Saudis are already increasing oil output in order to shut Iran out of the market. Iran has historically relied on oil exports for revenue, and has suffered a major economic crisis because of the sanctions and oil price drop. The Iranian government has even allowed citizens to buy their way out of mandatory military service, a sign of how desperate they are for cash. A significant reason why Iran is so open to negotiations now is because they offer the only way out of a grim economic future; when sanctions are lifted, an estimated 20 to 30 billion U.S. dollars will flood back into its economy.
The United States has recognized the Saudis’ importance to an extent by including them in discussions. For example, in a rare visit last month, U.S. Secretary of State John Kerry flew to Riyadh to assure the Saudis that the deal would not allow Iran to grow stronger. Additionally, in a call to King Salman of Saudi Arabia this past week, President Obama invited Arab leaders to Camp David to discuss the deal.
Still, the Saudis will maximize their leverage in the nuclear negotiations to get what they want: regional stability in their favor. If the United States does not make a satisfactory deal, the Saudis can certainly take matters into their own hands through their control of the oil market. What we do know is that the United States is best off heeding Saudi interests.