27 March, 2021 Update: Iran-China, Myanmar, Suez Canal

It’s becoming an active weekend around the world with hotspots flaring and some geopolitical and economic situations requiring close attention. We’ll start off in Tehran, then move on to Myanmar and wrap up in the Suez Canal.

Iran and China officially signed the long-anticipated 25-year strategic cooperation agreement on Saturday. The Comprehensive Strategic Partnership, or CSP as it is referred to, has been discussed for years and speculation has been rampant. The agreement is centered on economic activity, according to a wide variety of third-party sources and analysts. However, there’s reason to suspect that military and intelligence cooperation also makes up a sizeable portion of the agreement. Neither country has revealed any concrete details on the agreement, leaving the terms a mystery to practically everyone outside of government circles in Tehran and Beijing. The confidentiality surrounding the CSP will no doubt only fuel further conjecture. Yet the one fact that cannot be disputed is that the CSP will bring a new era of increased Chinese influence in the Persian Gulf region. As well as perhaps emboldening Iran at a time when its relationship with the United States continues to decline.

Saturday has been a bloody day in Myanmar. Troops and police have reportedly killed 114 protesters around the country as government suppression of the protests has escalated to a new level. The heavy hand comes on Armed Forces Day, an annual holiday celebrated in Myanmar. Apparently, the military’s preoccupation with the protests in the cities has motivated the Karen National Union (No Joke, the Karens have organized 😊) to seize a military base in the Kayin state. The KNU has rejected the 1 February military coup. “Their bullying and killing of unarmed civilians across Myanmar is against our revolutionary force’s beliefs. We cannot accept inhumane acts, not only in Kayin state, but also in other areas,” Saw Htoo Ka Shaw, a KNU official said in a statement earlier today.

The MV Ever Given remains aground in the Suez Canal. Efforts continue to get the large container ship dislodged from its present position. On Friday evening, Egyptian officials expressed some hope after the ship’s rudder was freed. However, concern is growing over the economic fallout if the Ever Given remains unmoved for an extended period of time. Shipping analysts already estimate that the gridlock of container ships and oil tankers at either end of the canal has held up $10 billion in trade daily. It will simply be a matter of time before this situation has long term effects on economies and markets across the world. There is no firm timetable on when the Suez will be reopened to traffic. The one certainty hanging over the situation is that with the majority of global retail trade moving via sea, the effects will also soon be felt by shoppers in practically every country.

Ending Hostilities In Yemen Will Not Be So Easy

After Sunday’s drone and missile attacks against oil facilities and other targets in Saudi Arabia, the United States expressed alarm at the ‘genuine security threats’ the Saudis are facing from Yemeni-based and Iranian supported Houthi rebels. Not to sound facetious, but I honestly do not understand why the Biden administration is just now waking up to the realization that the Houthi rebels pose a danger to Saudi Arabian territory and economic interests. This past weekend saw Saudi Arabia’s largest oil export terminal at the port of Ras Tanura targeted. No damage was caused to the terminal, but fragments from an exploding ballistic missile did fall on the nearby ARAMCO facility.

Sunday was not the first time that the Houthis launched drone and missile attacks against economic targets inside of the Kingdom. The attack against the Abqaiq facility in 2019 caused considerable damage and affected Saudi Arabia’s oil production. The most recent attacks are not expected to have an effect on either production, or oil prices beyond today. Yet the attacks have helped to demonstrate how complicated ending the civil war in Yemen will be. The Houthis are clearly not prepared to talk peace right now, as this weekend revealed.

The White House has apparently noticed this, and the Biden administration sounds downright miffed. “We continue to be alarmed by the frequency of Houthi attacks on Saudi Arabia. Escalating attacks like these are not the actions of a group that is serious about peace,” White House press secretary Jen Psaki told a press conference.

Well, to be fair, its probably not entirely the Houthis decision whether or not they come to the peace table. Tehran has reestablished its influence with the Yemeni-based group and is calling the shots once again. The US has not helped the prospects of ending the war in Yemen much lately either. Last month the Biden administration removed US support for Saudi military operations inside of Yemen. Though a bit naïve, the move was an act of good faith. Unfortunately, it has had almost the exact opposite effect and is enticing the Houthis to resume attacks on the economic infrastructure of Saudi Arabia.

The Biden administration will eventually learn how to navigate the Yemen quagmire, but it is coming at a cost.

US Airstrike targets Iranian Proxies In Syria

The United States launched an airstrike on Thursday evening against a border crossing point on the Syria-Iraq border that has been utilized by a Iranian-supported militant groups in the past. The attacks came in response to recent rocket attacks against US and coalition personnel in Iraq and the continued threat that Iranian proxy groups pose to them and their operations. This was the first US military action taken under the direction of President Biden. The decision for the attack was made after the Biden administration consulted with US allies. Shortly after 6 PM Eastern Time two F-15E Strike Eagles dropped JDAMs on multiple targets at the border crossing point.

The United States has stated it ultimately holds Tehran responsible for the actions of Iranian proxies. Thursday’s airstrike is proof that the Biden administration plans to hold firm to this policy. At least on the surface. A single US airstrike against a target with no viable connection to the recent rocket attacks in Iraq gives the impression of being little more than a slap on the wrist, as well as a message to Iran at best. These renewed attacks are a tactic being used by Tehran to increase pressure on Iraq’s government and simultaneously seeking leverage over the new US administration. After a brief period of calm late last year, the situation in Iraq returned to one more reminiscent of earlier in 2020 with regular attacks being made against Iraqi government and US military targets.

Practically speaking, last night’s airstrike should have no effect on US attempts to negotiate with Iran over the future of JCPOA compliance. Of course, should Tehran find it in their best interests to use the attack as a bargaining chip, it will. The White House needs to keep that in mind.

Beijing Chimes In On The Iran Nuclear Deal

The Chinese government publicly stated today its belief that events surrounding Iran’s nuclear program have reached a “critical point” and only the easing of US economic sanctions will end the present stalemate. Chinese Foreign Ministry spokesperson Wang Wenbin made the statement just one day after Iran officially began restricting international inspections of its nuclear facilities. The Iranian move is intended to pressure European nations and the United States into ending the heavy economic sanctions now in place, and eventually restoring the Joint Comprehensive Plan of Action (JCPOA). The United States removed itself from that agreement, commonly referred to as the Iran nuclear deal, in May 2018. The US withdrawal from JCOPA, followed by the application of harsh economic sanctions, led to severe economic consequences for Iran.

With a new administration now in Washington, there’s been hope that the deal can be resurrected. So far, neither side has been willing to make the first move. Tehran is demanding that the sanctions be lifted before serious talks begin and the United States wants full compliance from Iran before any future move towards restarting the deal begin. This is the stalemate Wang Wenbin was referring to in his comments.

China has long favored a US return to the JCPOA as well as Iranian compliance. Salvaging the 2015 deal would serve Chinese interests in the region well. Beijing and Tehran are reportedly close to finalizing a 25 year trade and military agreement that will see China invest $400 billion into Iran’s communication, transport and infrastructure areas in exchange for a deeply discounted supply of Iranian oil. If these are actually the terms of the agreement then it’s in China’s interest to see the nuclear deal return to its original form. The problem is that the terms of the trade and military agreement between Iran and China have become something of an urban legend in the Middle East. The terms and conditions of the agreement might’ve been exaggerated quite significantly and not be the trojan horse that a good number of analysts and politicians have claimed.

US Ends Support For Saudi-Led Military Operations In Yemen

On Thursday President Joe Biden announced an end to US support for Saudi Arabian-led military operations in Yemen. He pointed to the large-scale humanitarian crisis going on in that country as being a key motivation behind this decision and lays blame for the present situation in that country at the feet of Saudi Arabia. Iran and the Iranian-backed Houthi rebels have apparently played no role in Yemen’s suffering according to the curious rationale behind the Biden administration’s decision. The reversal of policy is also nothing short of a slap in the face to Saudi Arabia, a strategic partner of the United States.

All of the combatants and the nations supporting them are responsible for what has transpired in Yemen. Yet the Biden administration has chosen to make an example out of Saudi Arabia. To be fair, the Saudis and their allies have been fighting the Houthi rebels inside Yemen for five years now without resolution. The Saudi intervention has largely checked Iranian ambitions on the southern end of the Arabian Peninsula, though this has caused a tremendous amount of collateral damage in Yemen, as well as a limited amount in Saudi Arabia itself. By ending US support for future operations in Yemen, the Biden administration runs the risk of emboldening Tehran and providing them with an opening to repair frayed relations with the Houthis and reestablish its foothold in Yemen.  

Biden also announced an end to ‘relevant’ arms sales, though he provided no details on just what this means. It probably indicates a pause to some of the arms deals the Trump administration worked out with Saudi Arabia and the United Arab Emirates, a major ally of the Saudis in the Yemen conflict. Biden did assure the Saudis that the US will continue to play a key role in the Kingdom’s defense, but that promise gives the appearance of a pat on the head to Riyadh, as well as a warning that the future political and military decisions by the Kingdom will bring about consequences if they fail to fall in line with the foreign policy designs of the Biden administration in the Persian Gulf region.