Friday, July 03, 2009

Middle east elections shake up region's peace diplomacy

International News Services

By Paul Cochrane in Beirut

June has been a month of elections in the Middle East. As happens every now and again in a region pretty thin on democracy and heavy on dynastic rule, there are elections that matter. The outcome of the Lebanese and Iranian elections fall in this rather rare category, with the Lebanese result retaining a status quo the West is happy with, while the Iranian 'result' is further souring relations with the US and Europe.

For despite being on either side of the Middle East, with Beirut and Tehran being as geographically far apart as London and Rome, the results play into the region's fractious politics. The common ground is Israel and the Iranian-backed Hizbullah. The Lebanese Shiite political party is deemed a terrorist organization by the West for its resistance stance against Israel, with the Islamic Republic a financier and ideological inspiration for Hizbullah. The largely unexpected defeat of the Hizbullah-led coalition was therefore welcomed by the international community, with the US having threatened to cut off military aid to Lebanon if the March 8, Hizbullah-led coalition had won. By Lebanese voting in by a narrow margin the more pro-Western March 14 coalition – certainly pro free market and the capitalist business model – the country has been rewarded with continued US military aid and relative stability that will help get Lebanon back on its feet after the political and economic roller coaster ride of the last four years.

Indeed, projections indicate that Lebanon will have its best summer season ever, with over two million tourists expected to descend on this Mediterranean country by the year end. Currently, not a hotel room is available, and retailers have stocked up for what they hope is a bumper season. If Lebanon gets through the summer without any incident, the country will be well on track to having positive growth in 2009, an anomaly for much of the region as well as the rest of the world, largely due to the strength of the country's banking system.

A few years ago when global financial institutions were easing access to credit and banks were lending way beyond their means, Lebanon's Central Bank governor opted for the conservative approach, requiring banks to have 30% of their deposits in cash. While some disapproved at the time, in the long run conservatism has paid off, with Lebanon's banking sector attracting deposits from the crisis hit Gulf and Lebanese expatriates concerned about the security of Western financial institutions. The election results are an added boon for Lebanon's financial as well as hospitality sectors.

But while the outcome is positive for business, there will be no rapprochement with Israel, given the opposition's sizable presence in parliament and Hizbullah still holding on to its weapons. Lebanon's big brother, Syria, has come out and said it is against any peace talks, while Iran under a second term of Ahmedinejad is likely to be even more vitriolic towards Israel than before. That will mean strong support for Hizbullah as well as Palestine's Hamas.

And although the US State Department saying it will send an ambassador to Damascus after a four year hiatus is a step in the right direction towards renewed engagement, Iran and Syria are strengthening ties. Economically, bilateral trade is minimal at $200 million a year, but Tehran and Damascus are necessary friends in a region where all other countries' political leaders are considered 'moderate' by Washington DC.

Damascus now has to decide how close it wants that relationship to be as the country tries to come in from the cold. Any offer Israel could propose to Damascus in return for peace would require major incentives, way beyond even the return of the Golan Heights, which Israel has occupied since 1967.

In Iran, the protests against the 'rigged' results have tailed off, but international relations are deteriorating to even worse levels than they were prior to the election. With Iran booting out two British ambassadors, and London responding in kind, European relations are getting strained. The US has also come out to criticize the outcome of the election. There is now a strong possibility that further sanctions will be imposed on the Islamic Republic. This will not help the high unemployment levels the country has, or the rampant inflation. It could also make it harder for Iran to get hold of the technology it needs to extract gas and oil from non-conventional fields. Ultimately, while Iran promises to be an attractive emerging market, the lack of engagement between Tehran and the West suggests the country will remain essentially cut off for more years to come. This presents security concerns from Palestine to Afghanistan.

Israel is still whipping up the threat Iran's nuclear aspirations pose for regional stability, one of the few cases where the Sunni majority Gulf countries see eye-to-eye with Israel, wary of the rise of a powerful Shiite Iran. If Iran becomes further isolated, Tehran will play fully on its opposition stance towards Israel and 'meddling imperialists' Britain and the US. With Tehran saying that foreign hands have been at work in the post-election protests, animosity and suspicion will only deepen. For the West this is a major set back, coming at a time when the West could do with tapping into Iran's abundant energy supplies, and better coordination and support from Tehran to deal with the challenges NATO faces in Afghanistan and in Iraq. Indeed, in the 30 years since the Islamic Republic was founded, Iran has been one of the missing pieces in the puzzle towards stability in Central Asia as well as the Middle East.

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