Iran, Saudi Arabia & The Return of the Wolf : The Tussle for the Middle East
On the 100-year anniversary of the Sykes-Picot agreement the Middle East continues to be in a constant state of flux, our screens bombarded with a seemingly endless stream of macabre news items. Amongst the carcass of criminal groups and failed states, we will focus on what we feel may dominate the region’s future – Iran-Saudi relations.
After years of isolation, and with the majority of sanctions ‘lifted’, investors are queuing up to explore opportunities in Iran. It presents many positives however, scratch beneath the surface and some structural issues could act as major drags on future growth. Furthermore, it is likely the conservative theocracy will try to stymie Iran opening up too rapidly.
The past 2 years have been far more turbulent for Saudi Arabia. The war in Yemen has been costly and has resulted in a frustrating stalemate. While the decision to maintain oil production at full capacity – to squeeze US shale oil producers – has produced mixed results. There have also been reports that internal dissent to King Salman’s rule is growing (though such reports should be taken with a pinch of salt – the late Said K. Aburish writing in 1994 ‘predicted’ the imminent collapse of The House of Saud within a decade).
Amidst these transitions Saudi Arabia and Iran are clashing on a number of issues. Both are engaged in proxy wars across the region, as Saudi looks on aghast as Iran continues to spread its influence, while rhetoric from both sides becoming increasingly sectarian.
Geopolitical tensions will undoubtedly increase over the next few years falling short of direct war. While our primary focus is on Iran and Saudi Arabia, we will also discuss the re-emergence of Turkey and the implications this has for the region. We strongly feel that the emergence of a new Saudi-Turkish alliance has the potential to transform the region. Amidst this poor geopolitical background, we will highlight some of the key economic themes in Iran and Saudi for the short and medium term.