TSG IntelBrief: Saudi Arabia’s Escalating Fight with Iran
March 7, 2016

Saudi Arabia’s Escalating Fight with Iran

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Bottom Line Up Front:

• Saudi Arabia and its Persian Gulf allies are stepping up attempts to pressure Iran’s most significant ally, Lebanese Hizballah, in its home base of Lebanon

• The Saudi withdrawal of $4 billion in aid to Lebanon’s armed forces in February was intended to trigger a backlash against Hizballah’s support for Syria’s President Bashar al-Assad

• Last week’s declaration by the Saudi-led Gulf Cooperation Council that Hizballah is a terrorist organization will harm the group—as well as Lebanon more generally—both economically and politically

• The Lebanese state remains too fractured and weak to curb Hizballah’s armed strength or its ability to serve Iran’s regional interests, despite the Saudi and Gulf actions.

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The regional Sunni-Shi’a sectarian rift has expanded in part because of the escalating regional conflict between the main regional Sunni power, Saudi Arabia, and the primary protector of regional Shi’a interests, Iran. In recent years, Saudi fears of expanding Iranian power have been stoked by the domination of Shi’a factions in post-Saddam Iraq; new ties between Iran and the United States that produced the July 2015 nuclear agreement; extensive Iranian and Hizballah support to Syria’s embattled President Bashar al-Assad; and a rebellion by Zaydi Shi’a Houthi rebels in Yemen that drove the government of Sunni president Abd Rabbuh Mansur Hadi into exile. The Saudi-Iran rivalry resulted in an outright break in relations in January 2016 after Iranian protesters sacked two Saudi diplomatic facilities in Iran in response to the Saudi execution of a dissident Shi’a cleric, Nimr al-Baqr al-Nimr.  

The Saudi-Iran rift is also engulfing the allies of the two powers, and currently threatens to undermine the fragile state of Lebanon. Iran and Saudi Arabia cooperated to settle the long Lebanese civil war in 1989, and subsequently sought to maintain a rough balance of power there. In recent years, with Iranian arms and funding, Hizballah has united other Lebanese Shi’a behind it and has emerged as the most powerful armed force in the country, in many ways marginalizing the multi-sectarian Lebanese Armed Forces. The main Saudi protégé faction in Lebanon is the Sunni-dominated Future Movement of Sa’ad Hariri, son of the ex-Prime Minister and businessman Rafiq Hariri who was slain in 2005, allegedly by Syrian-backed Hizballah agents. The faction has lost influence since the Hariri killing. Lebanon’s Christian community—which by national accord holds Lebanon’s presidency—has historically opposed Hizballah. However, Lebanese Christian leaders have acquiesced to Hizballah’s growing influence in Lebanese politics, perhaps due to fear among Christians of a Sunni-dominated region; both Iran and Hizballah have capitalized on the fears of minority groups. Hizballah’s strength has grown to the point where the Lebanese state was unable to prevent Hizballah’s Iran-supported intervention in Syria on behalf of the Assad regime in 2013—an involvement that has included the deployment of about half of Hizballah’s 10,000-man militia in Syria at any one time. Earlier, in 2006, the Lebanese state was unable to restrain Hizballah from escalating border incidents with Israel into a several month war that left much of Beirut damaged.     

The Hizballah intervention in Syria, supported and facilitated by Iran, has made Lebanon yet another arena for the Saudi-Iran rift to play out. In January, Lebanon’s Foreign Minister—whose Free Patriotic Movement is a Hizballah ally—refused to join an Arab League condemnation of Iran over the sacking of the Saudi facilities in Iran. In February, Saudi Arabia announced it had withdrawn a $3 billion grant to the Lebanese Armed Forces for the purchase of French equipment—including helicopters, coastal patrol vessels, artillery units, and vehicles—and had also cancelled a $1 billion grant to Lebanon’s internal security forces. The move appeared intended to cause Saudi allies in Lebanon and the Lebanese Armed Forces to confront, rather than continue to cooperate with, Hizballah. The move might also have reflected Saudi financial difficulties, including the severe drop in oil prices that is causing Saudi Arabia to draw heavily on its $600 billion in foreign exchange reserves. However, most experts believe the Saudi cutoff could make Lebanon even more dependent on the aid Iran gives Hizballah, in many ways achieving the opposite outcome from what the Kingdom seeks. 

In early March, the Saudis continued the campaign by engineering a Gulf Cooperation Council (GCC)-wide declaration of Hizballah as a terrorist organization, accusing it of conducting ‘hostile acts’ in the GCC countries. The GCC states simultaneously banned or advised against travel by their citizens to Lebanon, cutting off the vital tourism spending by Gulf visitors. The GCC was united on the terrorism declaration—a clear contrast to January when Oman, the GCC state closest politically to Iran, refused to join the other GCC states in cutting or downgrading relations with Iran. The terrorism declaration sets the stage for the GCC countries to potentially expel Lebanese expatriate workers who sympathize with Hizballah, an action that would cost Lebanon hundreds of millions of dollars in worker remittances. The terrorism declaration was a further step to encourage Lebanon’s factions to break with Hizballah, as well as a signal to European countries to banish Hizballah from Europe’s banking system and to isolate the group diplomatically. Heretofore, European countries had only designated Hizballah’s military wing, and not the organization writ large, as a terrorist group. The GCC countries appear to be attempting to compel European countries to choose between engaging Hizballah or losing billions of dollars in GCC arms purchase contracts. The terrorism declaration followed by a few months a Hizballah sanctions law passed by the U.S. Congress and signed by President Obama. The new law provides for barring from the U.S. financial system any foreign bank that does business with Hizballah. 

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For tailored research and analysis, please contact: info@soufangroup.com

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