Magazine article Washington Report on Middle East Affairs

Iran Profiting from Gulf Crisis

Magazine article Washington Report on Middle East Affairs

Iran Profiting from Gulf Crisis

Article excerpt

While Iraq is struggling to keep its head above water in the face of an international trade embargo, Iran quietly is mending its fences with both the European Community and its Arab neighbors. Unless Iranian President Ali Akbar Hashemi Rafsanjani is unseated by elements opposed to his policy of restoring broken ties, there is every likelihood that Iran will be able to return to its prerevolutionary economic health within the next few years.

Tehran has renewed diplomatic relations with Great Britain, which broke them after the Iranian government called for the assassination of author Salman Rushdie, a British subject. This opens the door to entry of the European Community nations into the rebuilding of an economy still suffering from the bloody eight-year Iran-Iraq war. A great variety of proposals for West European participation in industrial, transportation and petrochemical projects can now be reconsidered. At the same time, negotiations for a $3-to-$4 billion state-guaranteed credit package offered by West Germany, France, Spain and the Netherlands can be resumed.

The foreign ministers of Iran and Saudi Arabia met in New York recently to discuss the resumption of diplomatic relations after a two-and-one-half-year rift. It was the most positive sign yet that the two countries may be moving toward a rapprochement after the political upheavals in the Gulf region before and after Iraq's invasion of Kuwait.

Since Iran already enjoys diplomatic relations with the other Arab states of the Gulf, a resumption of diplomatic relations with Saudi Arabia means that Tehran now has healed diplomatic wounds from the Iran-Iraq war and can resume trade contacts with all of the Arab states lining the western side of the Persian Gulf.

The resumption of diplomatic relations with Iraq, after Saddam Hussein's abject surrender on the terms of a peace treaty, marks yet another victory for Tehran. The Shatt-Al-Arab question has been settled in Iran's favor, and Iraqi troops are moving out of Iranian territory. Despite Iran's participation in the United Nations condemnation of lraq's invasion of Kuwait, clandestine trade is almost certainly resuming along the Iraqi-Iranian border, in violation of the boycott called for by the UN. Providing Iraq with food and other non-military supplies, for cash, will provide Iran with needed hard currency, so long as any is available from Iraq.

Assuming crude oil prices hold up at a higher level than those prevailing before the current crisis, Iran can now look forward to a period of reconstruction and revitalization of its economy, free from any threats from the Arab world. …

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