Iraq/Iran as Case Studies

JOGMEC Seminar 2018

Big CaveatThis is my “Guess” – not “Fact”

No One Can Predict the Future

Trump Likes to Be Unpredictable

Your Guess is as Good as Mine!

Table of ContentsUS Policy = Trump Policy

Domestic Drivers of Trump Policy

Regional Voices on Trump Policy

Policy Results for Iraq

Policy Results for Iran

Too Few Hands4,000 Political Appointee Positions

1,200 Need Senate OK – 635 Key Positions

116 at State Dept; 53 at Defense Dept.

22 at Energy; 27 at Treasury; 11 at USAID

As of January 2018 – 245 Confirmed (38%)

146 Waiting (22%); 242 Not Nominated

Key Positions at 12 Months

0%

50%

100%

Trump Obama Bush Position Confirmed Position Empty

Policy People Missing

Trump’s Response

"Let me tell you, the one that matters is me, I'm the only one that matters.

Because when it comes to it that's what the policy is going to be.”

3 November 2017

Trump’s Policy Reactive Not Proactive – 壁打ち Not 将棋

No Strategic Vision – “Make America Great Again”Changes Daily – Delivered by TweetKey Factor is Trump’s Personal Image - and “Winning”Defined as Better/Smarter than Obama/Bush/Hillary

Input from Cable TVNo Interest in History; Does Not Read

Keyed to Supporter-Base IssuesGoal to Preserve, Not Expand Support

IsraelAIPAC (American Israeli Public Affairs Committee) “The mission of AIPAC is to strengthen, protect and

promote the U.S.-Israel relationship in ways that enhance the security of the United States and Israel.”

March 2016 – 4 of 5 Presidential candidates at AIPAC conference: Trump, Clinton, Cruz and Kasich. Only Bernie Sanders missing. Only Sanders is Jewish.

Trump promises to move US Embassy to Jerusalem. Calls Iran “biggest sponsor of terrorism in the world.”

Saudi ArabiaMoney Behind Many DC-Think TanksSaudi American Public Relations Affairs Committee The Arabia Foundation - Arab Gulf States InstituteMiddle East Policy Council - Middle East Institute

US-Saudi Arabian Business Council – “Who’s Who”Exxon, Chevron, Boeing, Lockheed, GE, Bechtel, FluorMorgan Stanley, Citigroup, Dow Chemical, Ford, Pepsi

Shares with Israel a “Common Threat” in Iran; Partners in Trump’s “Ultimate Deal” for Middle East

Now Let’s Look at Iraq/Iran

Iraq

2,5003,050 3,400 3,700

4,087

6,812

8,890

0

5,000

10,000

Jan-15 Jul-15 Oct-15 Jan-16 Jun-16 Dec-16 Dec-17*

US Military Returns to Iraq

Peak (2007): 170,000

With Troops Come Contractors

250600

1,400

2,0282,485

2,9923,592

2,300

3,0503,400

3,7004,087

4,5655,165

0

2000

4000

6000

Jan-15 Jul-15 Oct-15 Jan-16 Jun-16 Sep-16 Oct-16

US Defense Contractor Growth in Iraq

US Contractors US Troops

But US Companies Stay Away BP (United Kingdom) CNOOC (China) CNPC (China) Crescent Petroleum (UAE) Dana Gas (UAE) Daqing (China) Dragon Oil (UAE) Eni (Italy) ExxonMobil (US) Gazprom (Russia) Geo-Jade Petroleum (China) Itochu (Japan) JSOC Bashneft (Russia)

Kogas (South Korea) Lukoil (Russia) ONGC Videsh (India) Pakistan Petroleum (Pakistan) Pertamina (Indonesia) Petronas (Malaysia) Shell (Netherlands/UK) Sinopec (China) Schlumberger (US) UEG (China) Total (France) Zarubezhneft (Russia) Zhenhua Oil (China)

Mosul – November 2015

Mosul – July 2017

Destruction Widespread

$100 Billion – From Where?PM Abadi – $100 Billion Needed – “We cannot

provide it from our own budget” – 25 January 2018

Total US Aid since 2014 totals $1.7 Billion – $600 Million in 2017 called “short term focus” (anti-ISIS)

USAID Budget for 2018 – 32% Cut Expected

“For the long term, Iraq is going to have to provide these services” – USAID Counselor, December 2017

2017 – Hello Riyadh!

With US ApplauseUS Secretary of State Tillerson “This new reopening of relations between Saudi Arabia

and Iraq is extremely important to stability of the region and to the future of Iraq. There will be new economic opportunities created from the Saudi-Iraqi agreement.”

Saudi Foreign Minister Al-Jubeir “Saudi Arabia and Iraq have historic, familial, and

economic ties. We are neighbors sharing a long border. We have similar ambitions, we are both oil producers, and we are both Arab countries.”

US Policy – Bullets OK; Aid NOGive US Military Free Hand to Defeat ISISEstimates of 1,000 ISIS fighters still active

Don’t Repeat Mistakes of Past PresidentsBush – “Nation Building”; Obama – Disengagement

Oppose Iran’s Influence; Support Saudi TiesKeep PM Abadi in Power (May 2018 Election)Prevent Return of former PM Maliki (“Iran's Puppet”)

But No US Aid Money – No “Soft-Power”Let Saudis Pay for Reconstruction – “America First!”

Now the Hard One - Iran

Iran – As the EU Sees It

For Good Reason

30%28%

21%

8%5%

8%

0%

5%

10%

15%

20%

25%

30%

35%

China EU India Japan South Korea Other

Iran Oil Exports: Nov - Dec 2017

No US Business Lobby

0

5

10

15

20

25

2014 2015 2016 2017 (Jan - Nov)*

Billi

on U

SD

Iran Imports and Exports: US vs EU

US Total Trade EU Total Trade

Breakdown of US NumbersIran total 2017 trade with US - $130 Million,

down from $172 Million in 2016

2/3rds - US exports of agricultural goods, particularly soybeans/soybean oil

US imports from Iran - almost 100% art work and carpets (Persian rugs)

No Fortune 500 names! No Lobby Power!

But What About Boeing?Boeing Contracts for 110 Commercial Aircraft – worth

$20 Billion – and “Tens of Thousands” of Jobs (Boeing Claims in 2016)

License Still Under Review – Chances Look Dim

But, Boeing Stock Rose 107% in Last 12 Months

Prospects of Higher Defense Spending Offset Iran?

“As the government provides us details and guidance, we will adjust our activities if required” (Boeing)

Boeing Not Worried - 107% Up

Meanwhile – New SanctionsUS Treasury Office of Foreign Assets Control sanctioned Iran 10 times in last 12 months:

Jan 12, 2018 – Human Rights Jan 04, 2018 – Missile Program Nov 20, 2017 – IRGC and Counterfeit Currency Oct 13, 2017 – IRGC and Global Terrorism Sep 14, 2017 – Cyber-Crime Jul 28, 2017 – Missile Program Jul 18, 2017 – Transnational Criminal Activity May 17, 2017 – Missile Program Apr 13, 2017 – Human Rights Feb 03, 2017 – Missile Program

JCPOA - Nuclear Deal“Certification” – Every 90 daysTrump “Certified” Twice – 18 April 2017, 17 July 2017Trump “De-Certified” Last Time – 13 October 2017Congress Failed to Take Action under 60-day windowCertification Due Again in Mid-March – if not, so what?

“Sanctions Waiver” – Every 120 daysTrump “Waived” 3 Times – 17 May, 14 Sept, 12 Jan 2018 Next Deadline – 12 May 2018 – Trumps says ‘Not Again’Refusal to waive would re-impose severe sanctions

Nuclear Deal = Obama-CarePrimary Aim – Undo Obama “Success”Encouraged by Anti-Iran Base and Regional Voices

Calls Both a “Bad Deal” – “Tear-Up!”But No Replacement; Doesn’t Want ResponsibilitySeek to Undo Both Programs Indirectly

In Iran Deal, this Means:Encourage Iran Itself to Withdraw by Other PressureDiscourage Foreign Investors by Continued Uncertainty

Policy Result – Hostile But Unclear

Near-Term “Guess” No Clarity on JCPOA or Nuclear Sanctions

Impede Iranian Access to Global Market

Increase Non-Nuclear Sanctions

Encourage Internal Protests as Possible

Hope for Favorable Internal Changes

Bottom LineNo One Can Predict Future US Policy

Don’t Expect Certainty – Won’t Come

Make Choices Based on “Best Guess”

Don’t Use PowerPoint for that Guess!

Only Easy Questions Please!