AMMAN, Jordan – Any doubt that U.S. Defense Secretary Ashton Carter has a tough job selling the Iran nuclear deal to Mideast allies was probably erased by an exasperated question from Jordan’s top military officer.
“Sometimes, it’s difficult for us to know what the U.S. strategy is,” Gen. Mashal al-Zaben told Carter in remarks overheard by reporters during a photo opportunity Wednesday evening in Amman. “What’s going on?”
Carter is traveling through the Middle East this week trying to demonstrate the U.S. commitment to traditional allies, including Israel and Saudi Arabia. His tour, however, only underscores the depth of discontent over an accord that is upending an already tumultuous region.
“Despite our best efforts, most of the region sees this deal as a glass half empty for them,” says Vali Nasr, a former senior adviser to the State Department. “There’s a very clear disjuncture between the way we see it and the way the rest of the region sees it.”
With much of the Arab world mired in conflict or chaos, the prospect of an Iran unfettered by international economic sanctions and exercising greater regional influence explains the disquiet that greeted Carter Wednesday in Saudi Arabia and Jordan.
Al-Zaben’s confusion is shared across the Arab world, though it’s felt perhaps most acutely in Saudi Arabia. Forces aligned with the Saudis confront Iranian allies in Yemen, Syria, Lebanon and Iraq.
Carter visited Iraq on Thursday, as his spokesman said that U.S.-backed Iraqi forces may be ready to retake the town of Ramadi from Islamic State terrorists within weeks.
U.S. officials argue that by preventing Iran from obtaining a nuclear weapon, the agreement will make Israel and the Arab states more secure. In the U.S. view, the allies’ fears that the sanctions relief encompassed in the pact will unleash Iran to provide additional support for terrorism – and eventually replace the Arab states at the center of the U.S. Middle East strategy – are exaggerated.
Despite such talk from both Washington and Tehran, Nasr, dean of the Johns Hopkins School of Advanced International Studies, says the Iran agreement is forcing Israel and much of the Arab world to recalculate long-standing balance-of-power assumptions.
“Bringing a country the size of Iran, and with its broad regional ambitions and broad regional purview, out from the cold is a seismic event,” says Nasr. “It completely rearranges the chessboard.”
While congressional opponents of the nuclear deal focus on the prospect of Iran cheating, “the region is worried about what happens if Iran abides by it,” said Suzanne Dimaggio, director of the Iran Initiative at New America in New York.
A primary focus for critics is the more than $100 billion in Iranian funds held in restricted accounts outside the country. As Iran complies with provisions of the agreement, that frozen money will be returned to the Islamic Republic.
Netanyahu says Iran will use the added funds to arm regional proxies. The U.S. has branded Iran a state sponsor of terrorism since 1984 and just last month described Iran’s support in 2014 for groups such as Hezbollah, Hamas and Palestinian Jihad as “undiminished.”
Some Israeli national security officials are less alarmed about any potential financial windfall. While more Iranian money may go to helping Iran’s allies, including the Syrian regime of Bashar al-Assad, Ami Ayalon, the former head of Shin Bet, Israel’s internal security service, says “this is not the major issue to believe that the deal is good or bad.”
U.S. officials, including Secretary of State John Kerry, note that the Arab states far outspend Iran on defense.
The Saudi military budget alone is almost six times that of the Islamic Republic. The six Gulf Cooperation Council countries collectively outspend Iran almost 10 to 1, according to an April report from the Center for Strategic and International Studies in Washington.
“If they organize themselves correctly, all of the Arab states have an untapped potential that is very, very significant,” Kerry said in an interview with Al-Arabiya.
Any financial infusion also will challenge the Iranian government to balance its citizens’ desire for a better life against the regime’s regional ambitions.
Iranian President Hassan Rouhani was elected in 2013 on an economic reform platform. With parliamentary elections scheduled for February, and his own re-election bid expected one year later, he faces popular demands to boost spending on domestic needs.
Iran will start its post-agreement life in a deep economic hole. The economy shrank by 9 percent over the two years that ended in March 2014. Years of international financial and oil-related sanctions have left gross domestic product 15 percent to 20 percent smaller than it otherwise would have been, U.S. Treasury Secretary Jacob J. Lew said in April.
Investment withered under sanctions, falling from about $30 billion annually to roughly $6 billion, said Djavad Salehi- Isfahani, an economics professor at Virginia Tech University.
“We had almost no investment for three years in a row,” he said. “You have hundreds of development projects, government-owned projects that are in a standstill, and the government owes private contractors – the engineers who do all the work – $30 (billion) to $50 billion.”
Rouhani doubled investment in his first year in office, but Salehi-Isfahani says the remaining backlog could absorb perhaps $35 billion.
As Iran’s funds return, officials must keep the 16.5 percent inflation rate from soaring, says economist Heydar Pourian, editor-in-chief of Iran Economics magazine. The central bank will need to sell government securities to avoid an unhealthy expansion of the money supply, a “sterilization” process it lacks experience with.
Whatever eventually happens inside Iran, the Middle East is undergoing a slow-motion earthquake. For the U.S., the challenge is how to balance reassurance for uneasy allies against preserving the option for a better relationship with Iran.
“That’s the hardest single question for us going forward,” says Ilan Goldenberg, a former Iran team chief at the Pentagon. “How do we balance?”
