US foreign policy in Middle East could have economic impact

AMERICA’S so-called ‘pivot’ towards Asia and its surprise agreement in principle with Iran on its nuclear programme in November 2013, have caused a heightened degree of uncertainty among the ruling elite and political players across the Middle East and North Africa, especially in the Gulf, writes a World Review guest expert. US policy in the Far East and the Middle East may have had little direct linkage so far, but it is becoming increasingly more intertwined as perception grows in the Middle East that the US is disengaging from the region. This uncertainty has been compounded by America’s perceived lack of effective diplomatic and political engagement with key players in the Gulf. In fact, US military presence continues to be very strong, and remains largely unaltered. But America’s failure to enforce its own red line over Syria’s use of chemical weapons or to confront Iran on the freezing of nuclear enrichment served to undermine trust in the US as a strategic ally. The Iran agreement was seen as America turning on its head its long held and key strategic position in foreign policy favouring Arab states of the Gulf over Iran. Middle East governments and rulers consider their own survival an integral part of the security and defence relationship with the US but America seemed to have unilaterally, and without warning, changed its position when it did not stand by its long-term ally, former Egyptian President Hosni Mubarak, who was toppled in a popular revolt in February 2011. The US offered no backing for the military intervention in Bahrain by the Peninsula Shield Forces in 2011, a Gulf Cooperation Council joint rapid intervention force dominated by Saudi troops. This was in support of the Sunni monarchy against a Shia uprising. This lack of support has opened a key gap and will change US strategic alliances in the region for the foreseeable future. There is a gap between the priorities of a global US foreign policy, which is perceived to lack direction and Gulf regional policy objectives. This should have been bridged by intensified US diplomatic and political engagement in the Gulf, and with Saudi Arabia to ensure a minimum degree of stability. US engagement continues to be seen by Gulf States as insufficient and lacking substance. Instability in the Middle East remains significant to America's interests in the Far East and its overall economic health, despite its reduced dependence on Middle East energy imports because of its shale gas revolution. America’s largest trading partners - Japan, China and Europe - will continue to depend on Middle Eastern energy long after North America achieves hydrocarbon self-sufficiency. The price of oil will continue to be a tax on global stability. If the US pivot towards the Pacific is perceived in the Middle East as disengagement leading to the development of a vacuum and further instability, this will return to haunt the US economically. This perception of 'betrayal and disengagement' has been matched by a growth in Russia’s political stature in the region. Russia is seen to have stood by its allies in Syria and Ukraine and defended its long-held geopolitical interests. Russia is seen as less fickle, more sure-footed and remains a trusted ally. This opening was exploited by the Russians when it held its first exclusive ‘2 plus 2’ meeting, with Egypt, in Cairo in November 2013. The talks were aimed at reviving Egyptian-Russian military and political cooperation. Field Marshall Abdul Fattah al-Sisi, elected Egyptian president in June 2014, was defence minister at the time. The talks covered a reported US$2 billion arms deal funded by the Gulf States. Saudi Arabia, the United Arab Emirates (UAE) and Kuwait had already pledged roughly US$13 billion cash aid and hydrocarbons to Egypt following the overthrow of the Muslim Brotherhood regime in June 2013. The combined effort was aimed at replacing the roughly US$1.5 billion of chiefly military aid provided to Egypt by the US since the Camp David peace accords with Israel in 1979. Egypt will depend on, and therefore be part of, the Gulf geopolitical sphere, rather than exclusively that of the US, for the foreseeable future. The US should recognise that the consequences of allowing the gap between its global choices and the regional realities will increasingly become a problem. China, in addition to being a trading partner, is America’s largest lender. Major shocks to oil prices as a result of instability in the Middle East would unhinge China. The most likely scenario is that the US will shift its strategy towards managing the consequences of Middle Eastern instability instead of trying to find lasting solutions.

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