JOURNAL OF CURRENT RESEARCH IN SCIENCE ISSN 2322-5009 CODEN (USA): JCRSDJ Available at www.jcrs010.com JCRS 4 (2), 2016: 68-73 Political Economy of Iran and Saudi Arabia Conflicts Based on the Social Constructivism Theory Afshin Mottaghi Assistant Professor of Political Geography, Kharazmi University, Tehran, Iran Corresponding Author email: a.motaghi@khu.ac.ir K E Y W O R D S: Political Economy, Social Constructivism, Iran, Saudi Arabia ABSTRACT: While there are many Middle Eastern topics that are beyond the scope of Iran and Saudi Arabia, these two states not only have competed with one another for what they might view as regional supremacy (there are other regional military and economic powers as well such as Israel, Egypt, etc ), but these two states have also been in disagreement on a number of specific issues in the region; whether it is Syria, Lebanon, Israel, Bahrain, Yemen, or the production of oil, the regimes of Saudi Arabia and Iran tend to have different political interests on these matters. In the context of this historical analysis, the paper describes three core factors that have had the most influence on the relationship between Saudi Arabia and Iran: (1) identity differences between the Wahhabism and Shiism; (2) geo-economy of oil and petroleum and (3) geopolitical hegemony in Middle East. Introduction Iran and Saudi Arabia by their geopolitical position and geographical features are two determinant states in the region. The two states from 1950 onwards have roughly intense competition. Tension between Tehran and Riyadh is significant, given the various parts and implications of the hostilities between Saudi Arabia and Iran. The two countries, at odds since the 1979 revolution in Iran and ever more so in the wake of the Arab Spring, are competing for dominance in global energy markets and nuclear technology and for political influence in the Persian Gulf and the Levant (Milani, 2011: 3). Following World War I, Iran and much of what is today Saudi Arabia were both independent (The Hijaz in Saudi Arabia was influenced by Britain). Both states had good relations with Britain and the United States throughout the post-world War I period, and then into World War II. The situation changed however, in 1953 in Iran, with the United States and Britain helping stage a coup to overthrow Mohammad Mosaddegh (F.M, 2016: 2). Following this, the United States gave great support for the Shah (in part through military weapons). This infuriated many who saw an authoritarian leader backed by Western powers. In 1978, Iranians went to the streets to protest the Shah, and it was in early 1979 that the Shah was overthrown, then leading to the installation of the Islamic theocracy, led by Ayatollah Khomeini. After the Islamic revolution in Iran, Saudi Arabia with its US alliance and abundance of oil dollars, has a very different economic story to that of Iran, which despite enormous natural gas reserves, has been hit hard by economic, trade and military sanctions since its 1979 revolution (Mason, 2014: 2). Saudi Arabia and Iran are divided by long-standing structural tensions. Each has aspirations for Islamic leadership, and each possesses different visions of regional order. Whereas Tehran regards Riyadh as America s proxy and a buffer against Iran s rightful primacy in the Gulf, Saudi Arabia worries about Iran s asymmetric power and regional ambitions, especially its expanding influence in post-saddam Iraq and its alleged pursuit of a nuclear weapon (Wehrey, et al, 2009: 2). By examining the foreign policies of Saudi Arabia and Iran towards each other, and towards the wider Middle East and beyond, Mason seeks to highlight how oil policy, including oil production, pricing and security of supply and demand, is the paramount economic factor which drives the diplomacy and rivalry of these two pivotal regional powers. By comparing the foreign policy of Saudi Arabia and Iran towards the international community and the US in particular, Mason presents the very different economic and political trajectories of these two countries. In the case of Saudi Arabia, it has long been oil which has given the country importance both within the region and on an international scale (Mason, 2014: 3). The analysis and evidence presented will demonstrate that while in recent years the relationship with Saudi Arabia and Iran has been improving, conflicting interests will result in a continued competition between the two nations as they seek to guarantee alliances within the Persian Gulf and secure the perpetuity of their own regimes (Jahner, 2012: 38).
Methodology This study is intended to examine the role of political economy in competition and rivalry of Iran and Saudi Arabia. The research methodology adopted is descriptive-analytic and the data gathering procedure is librarian. Literature Review Political Economy and International Relations World history does not disclose the primacy of either economic or political forces, but rather reveals an equal interaction of the two. The economic and political fate of nations can no longer be discussed in isolation: the place of every nation in the global web of economic exchanges and political relations must also be considered. Technological change and global commerce have brought societies closer together. Business is conducted on a global scale, with multinational companies maintaining production facilities in several countries and goods being traded across the globe. Capital markets respond within seconds to market signals in faraway continents (Falkner, 2011: 10). Therefore, the interaction of International Politics and International Economics is today widely appreciated and the subject of much theoretical research and applied policy analysis. Nation-states clearly affect international trade and monetary flows, which in turn affect the environment in which nation-states make political choices and businesses make economic decisions (Veseth, 2004: 3). There seem to be three main kinds of change which the developing international economy has brought about and which directly affect inter- national relations (Strange, 2012: 307). First, there are the direct effects on states of their common involvement in the expanding international economic network. Richard Cooper, subdividing again, finds three different ways in which states are affected.' One is by what he calls the 'disturbance ' effects-the increase in the disturbance, originating externally in some other part of the inter- national economy, of some important part of the domestic economy- whether it is the level of employment, of prices, of interest rates, or of the country's monetary reserves. Second, there are the hindrance effects, when the mutual sensitivity of national economies to each other slows down or diminishes the effectiveness of national economic policies-as when a credit squeeze and tight money policy which is intended to dampen domestic demand pulls in foreign funds which will tend (unless sterilized, insulated or counteracted) to frustrate the policy-makers' intentions. And third, there are competitive or what used to be called 'beggar- my-neighbor' policies, by which states seeking to serve their own national economic interests (as by trying to control overseas investments, or by trying to regulate mergers and takeovers) coincidentally damage the national economic interests of other states, and thus risk creating new sources of international conflict. The rise of the Organization of Petroleum Exporting Countries (OPEC) and the Arab oil embargo of 1973-74 illustrated dramatically at least five key dimensions of International Politics and International Economics (Veseth, 2004: 6-7): First, it showed the power and influence of economic tools in foreign policy. After OPEC no state could dare make political policy without taking into account potential foreign economic retaliation or reaction. Second, the oil embargo showed that East-West issues were not always the state's most important concerns -- North- South political and economic problems could no longer be ignored or dealt with as ancillary to Cold War strategy. To the extent that economic issues were closer to the surface in North-South relations, this reinforced the notion that politics was really political economy. Third, the oil embargo revealed the complex interdependence between and among domestic politics, domestic economics, international politics, and international economics. Fourth, the oil embargo raised questions about the role of multinational corporations (MNCs) in international economics and politics. MNCs had previously been viewed by many scholars as agents of influence of their home country governments (this was especially true of US-based MNCs), but now their political allegiance appeared to be more ambiguous. Were the oil MNCs tools of their western home governments, agents of their OPEC host governments, or were they acting as pure economic actors independent of home or host political ties? Finally, the shifting international payments flows that the oil embargo stimulated were the start of the movement towards a global financial system and, with it, economic globalization generally. Increasingly, economic and political problems would be seen as global, not just international, and beyond the control of individual nation-states. Constructivism Constructivism is the idea that mental structures such as cognition and perception are actively built by one s mind rather than passively acquired. However, constructivist approaches vary in function of how much influence they attribute to constructions. Many assume a dualistic relationship between reality and constructed elements. They maintain that constructed mental structures gradually adapt to the structures of the real world. The social world of a political actor includes the people that directly affect that person, including teachers, friends, students, administrators, and participants in all forms of activity. This takes into account the social nature of both the local processes in collaborative political acting and in the discussion of wider social collaboration in a given subject, such as science. Constructivism has a critical method and despite important 69
ontological and epistemological differences, critical theorists who employ qualitative research methods share several assumptions with more humanistic-oriented qualitative researchers (Clark, 2015: 3-4): Scholars in both humanistic and critical qualitative research traditions affirm that social relations, as well as analyses constructed by researchers, must be interpreted. Both traditions are thus more interested in offering interpretations than in elucidating natural laws of causality. 2. Both, therefore, offer a challenge to logical positivism, arguing that dynamic social and cultural structures, rather than certain distinguishable variables, constrain human actions. Thus, both are open to the possibility of social change. As a further challenge to logical positivism, both eschew the problem of bias in research. Humanistic, constructivist researchers argue that bias should be re-conceptualized in light of the subjective position of the researcher, viewed as that which informs and strengthens one s interpretation. Critical researchers, particularly those operating within postcolonialist and feminist paradigms, tend to insist upon a recognition of power differentials between research participants and those conducting the research, thus locating bias in social systems rather than or in addition to a particular research situation. Both traditions stress that meaning and language are socially constructed (although critical researchers are quick to point out that while interpretations may be constructed, forces of oppression are real in their consequences and hence may be understood as such). Both are also interested in how meanings may remain the same or change over time. Both are concerned with a reasoned analysis of social life (although critical theorists extend this concern to relate such a reasoned analysis with emancipation). Scholars in both traditions evaluate their arguments in light of a community of researchers of which they are a part. As a result of the prior two commonalities, both are at some distance from the postmodernist turn that engenders skepticism toward such reasoned analyses and affirms radical relativism over a measure of credibility lodged in authoritative consensus Many of the authors that identify with social constructivism trace their ideas back to Vygotsky (e.g., 2003), a pioneering theorist in psychology who focused on the roles that society played in the development of an individual. Cobb (2011) examines whether the "mind" is located in the head or in social action, and argues that both perspectives should be used in concert, as they are each as useful as the other. What is seen from one perspective as reasoning of a collection of individuals mutually adapting to each other's actions can be seen in another as the norms and practices of a space community (Cobb, 2013). This dialectic is examined in more detail in a strong paper by Salomon and Perkins (2015), who suggest ways that these "acquisition" and "participation" metaphors of political acting interrelate and interact in synergistic ways. They model the social entity as a political actor (for example, a political party, a representative or a state), compare it with the political acting of an Individual/national in a social setting, and identify three main types of relations: Individual/national political acting can be less or more socially-mediated political acting. Actors can participate in the political acting of a collective, sometimes with what is learned distributed throughout the collective more than in the mind of any one individual. Actors and social aspects of political acting in both of these senses, can interact over time to strengthen one another in a 'reciprocal spiral relationship'. History of Iran-Saudi Arabia Conflicts While there are many Middle Eastern topics that are beyond the scope of Iran and Saudi Arabia, these two states not only have competed with one another for what they might view as regional supremacy (there are other regional military and economic powers as well (such as Israel, Egypt, etc ), but these two states have also been in disagreement on a number of specific issues in the region; whether it is Syria, Lebanon, Israel, Bahrain, Yemen, or the production of oil, the regimes of Saudi Arabia and Iran tend to have different political interests on these matters (F.M, 2016: 4). The Saudi Arabia-Iran relationship can be better understood by looking at the geopolitical history of the region, and how those two states entreated with one another, as well as their relations with foreign powers. In 1987 Relations between Saudi Arabia and Iran were strained almost to breaking point in July 1987 when 402 pilgrims, 275 of whom were Iranian, died during clashes in the Muslim holy city of Mecca. Protesters took to the streets of Tehran, occupied the Saudi embassy and set fire to Kuwait's embassy. A Saudi diplomat, Mousa'ad al-ghamdi, died in Tehran of wounds sustained when he fell out of an embassy window and Riyadh accused Tehran of delaying his transfer to a hospital in Saudi Arabia. Diplomatic relations were severed by Saudi Arabia's King Fahd in April 1988 (McDowall, 2016: 4-5). Following World War I, Iran and much of what is today Saudi Arabia were both independent (The Hijaz in Saudi Arabia was influenced by Britain). Both states had good relations with Britain and the United States throughout the post-world War I period, and then into World War II. The situation changed however in 1953 in Iran, with the United States and Britain helping stage a coup to overthrow Mohammad Mosaddegh. Following this, the United States gave great support for the Shah (in part 70
through military weapons). This infuriated many who saw an authoritarian leader backed by Western powers. In 1978, Iranians went to the streets to protest the Shah, and it was in early 1979 that the Shah was overthrown, then leading to the installation of the Islamic theocracy, led by Ayatollah Khomeini. Khomeini then began calling for similar overthrows in other parts of the Middle East. This rise in Iranian power, in the name of an Islamic theocracy (and a Shia government), troubled other countries such as Iraq, as well as Saudi Arabia. In fact, after the Shah was overthrown, Saudi Arabia s leadership became frightened by the Ayatollah Khomenei s denunciation of the Saudi monarchy as antithetical to Islam and his ambition to export to the revolution to the Arab world. Saudi Arabia remained an ally of the United States; Iran became an implacable foe. Thereafter, the rivalry between Iran and Saudi Arabia became defined by the new U.S. strategy ally with Saudi Arabia to offset Iran (Milani, 2011: 33). In beginnings of 2016, Saudi Arabia cut diplomatic relations with Iran on Sunday over the storming of the Saudi embassy in Tehran, in a deepening crisis between the regional adversaries following the kingdom's execution of a prominent Shi'ite Muslim cleric. Iranian protesters stormed the Saudi embassy for the execution of Sheikh Nimr al-nimr, an outspoken opponent of the kingdom's ruling Al Saudi family. So, there are political, economic, as well as religious aspects to the Iran- Saudi Arabia relations. Finding There are also geo-economy factors related to the Saudi Arabia and Iran rivalry. This is evident when looking at the geo-economy of these countries. As Milani (2011) argues, This struggle has played out most prominently in the energy sector, in which both Iran and Saudi Arabia are major forces. At first glance, Iran would seem to be on par with Saudi Arabia; the two countries combined oil and natural gas reserves are roughly the same, and Iran has the strategic advantage of sitting between the Caspian Sea and the Persian Gulf, as well as controlling the 34-mile wide Strait of Hormuz, through which roughly 40 percent of the oil traded worldwide is transported. Saudi Arabia faces another challenge in the face of domestic pressure, however: its relationship with Iran. Iranian nuclear activities are a prime concern of the Saudis. Even if the United States chose to live with a certain level of uranium enrichment, the Saudis are deeply suspicious and fearful of any indigenous Iranian nuclear fuel cycle capability (Airlie Center Warrenton, 2005: 11). Iran, for its part, appears to see the nuclear impasse as manageable. Through its official and unofficial press outlets, Iran has portrayed mutual harmony with Saudi Arabia on the issue, often citing what it perceives to be Riyadh s acceptance of the program s peaceful nature. In fact, looking at more recent events regarding OPEC, Saudi Arabia has continued to produce high levels of oil per day (roughly 10.3 million barrels) for many reasons, one of which being an attempt to minimize Iran s economy; i.e. who is much more reliant on higher oil sale prices given the sanctions on them (F.M.2016: 5). However, Pollock (2016) argues that this high production of oil has the government worried, since they know that these lower prices for them are not sustainable for their yearly geo-economy expenditures. He argues that this may be driving their behavior, given that such a geo-economy state might make them vulnerable to domestic uprisings. The dissonance with Iran is, in part, tied to religious, ideological, and identity schisms between the two countries. Despite their normalized relations over the past several years the official Saudi religious establishment and the young, populist, dissident clerics are virulently anti-shia and Iran is officially a theocratic Shia state. These potentially destabilizing factors will have to be addressed in order to succeed in establishing a new Gulf Persian framework. The status of the Saudi-Iranian relationship is yet to be determined as these two countries, along with the rest of the world, await the outcome of the political revolutions in the Arab world (Jahner, 2012: 46). As historical evidence has presented, the oscillating nature of Saudi-Iranian affairs could mean that Iran and Saudi Arabia overlook past differences to work in cooperation toward the achievement of common goals, or that previous trust issues and desires for power and influence will lead to a cessation of their diplomatic relations once again. The Saudi regime faces pressure from Salafi clerics to take an anti-shi a position in its dealings with Iran, and in late 2006 there was indeed mounting Saudi public pressure to protect Sunnis in Iraq. At the same time, the ruling elite in Saudi Arabia appear to have exploited or tacitly endorsed this rhetoric as a way to counter the greater threat of Iran s pan-islamist populism. Put differently, faced with a contender for symbolic leadership in the Middle East, Saudi Arabia has tried to paint Iran as a cultural and ideological aberration from the rest of the region, and the most expeditious means of doing this has been to cast the Islamic Republic s Shi a/persian ambitions as a threat to Sunnis everywhere (Wehrey, et al, 2009: 31). The most likely result, however, will be a Saudi-Iranian relationship that is somewhere in between. While both countries yearn for regional predominance, Iranian reliance on Saudi Arabia for geo-economy reasons and Saudi Arabia s fear of Iranian nuclear potential might precipitate a balanced power structure once again, as each party proves unwilling to confront the other directly. Overall, the current Saudi-Iranian competition for the Arab hearts and minds of the Middle East will cause friction between the two powers in the future but an interest in regime survival will ensure that their relationship will not devolve into outright animosity (Falker, 2011: 23). Either way, the result of their relations will have an enormous impact on the stability of the region in addition to the rest of the world due to Saudi oil control. It will be interesting for the world to see 71
how the confrontation between two fundamentalist and rather recent forms of governance (a revolutionary Shi ite Republic and a reactionary Sunni Wahhabist monarchy) and their competition for regional predominance will proceed, especially in light of the events of 2011 and the continued Iranian threat to shut off the Strait of Hormuz (Jahner, 2012: 46). Shi a-sunni tensions and ideological differences are important factors in the Saudi-Iranian relationship, which shape the two states policy outlooks and behavior throughout the Middle East. Yet as this chapter has demonstrated, they are not the principle determinant that predisposes the two countries toward confrontation. For both countries, ideology and religion have a certain instrumentality and utility regimes in Tehran and Riyadh can emphasize, highlight, or minimize differences to serve broader geopolitical aims (Wehrey, et al, 2009: 43). There are considerable uncertainties surrounding the outlook for the oil market. Demand for oil is set to increase, driven by strong growth in emerging markets, but supply increases from the United States and other countries have also surprised on the upside. However, the economic viability of unconventional oil production will depend on the future trend in oil prices. If oil prices remain at current levels, this could result in downward revisions in the medium-term outlook for unconventional oil supply. Figure 1. Political Economy of oil in Saudi Arabia and Other OPEC (Sources: JODI database, Bloomberg; and IMF staff calculations) This creates further uncertainty regarding the outlook for U.S. production, which will depend on oil prices and technological and policy developments. Other uncertainties are also considerable, including from the global growth outlook, and the political situations in a number of key oil-producing countries. Indeed, there have been many negative supply shocks in the recent history of the global oil market (Al-Darwish, 2016: 16). Conclusion Political Economy in Iran and Suadi Arabia has geopolitical, economic and ideological dimensions. Iran and Saudi Arabia oil exporters are only just beginning to tackle the associated fiscal challenge posed by a sizable and persistent drop in oil prices. Much more progress is needed to formulate and implement significant medium-term fiscal adjustment. Countries with fiscal space are using their buffers appropriately, but medium-term plans to put fiscal finances on a stronger footing are lacking, including in those countries with the largest adjustment needs. Some countries without fiscal space have started to meet some of their funding needs through monetary financing, which creates inflation risks. Some non-gcc countries could also benefit from exchange rate depreciation, which would facilitate the needed fiscal adjustment and improve the competitiveness of their non-oil export sectors. In devising adjustment policies, attention should be paid to growth and distributional effects. Medium-term policies to deal with lower oil prices include formulating medium-term frameworks to secure fiscal sustainability and intergenerational equity, gradually rebuilding buffers, lowering the rigidity of budget spending, increasing fiscal transparency through greater disclosure, and moving off-budget entities onto the budget, especially in the energy sector. Contingency plans are crucial, given the uncertainty over longer-term oil prices. Policymakers should also strengthen diversification efforts to boost non-oil growth and revenues. There are heavy legacies from the 1980s that will take decades to overcome. For instance, in response to the Iranian revolution and Ayatollah Khamenei s promise to spread Iran s brand of theocratic, political Shiism to all quarters of the Middle East, then-king Fahd funded the construction of seven large religious universities with the sole purpose of inculcating orthodox Sunni doctrine among its students. Also, the crisis in Syria, Iraq, Yemen, Bahrain and ground battle in Lebanon 72
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