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Gulf Allies Back Iran Deal

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Gulf Allies Back Iran Deal

iranAfter much deliberation and consideration given to the strong convictions of Sunni hardliners against the Iran nuclear deal, the various U.S. allies in the Persian Gulf region (namely Saudi Arabia and the United Arab Emirates) have voiced their approval for the landmark multilateral agreement.

Much of the Gulf states' reservations come from Iran's propensity to foment Shiite insurgencies in its proxies like Syria and Yemen.

While it is true that Tehran's strategic battle for regional supremacy with the Saudis, a competition undoubtedly colored by Sunni-Shia divides among Muslims, these challenges have and will continue to face the Sunni governments of the Middle East regardless of the Iran deal; and although it's also true that the lifting of sanctions will help lift Iran's influence relative to its powerful neighbors, the United States' traditional geopolitical allies in the region eventually conceded that the nuclear deal "represented the best option for regional stability," according to the foreign minister from Qatar.

U.S. Secretary of State John Kerry, who has been trying to sell the deal to the dignitaries gathered under the banner of the Gulf Cooperation Council, which includes representatives from Qatar, Bahrain, Oman, and Kuwait in addition to Saudi Arabia and the UAE. Together these 6 Gulf nations represent the best buffer against regional instability that the United States has. Similar to the Qatari minister's admission that they must settle on the best option among many, the U.S. seems content to do the exact same insofar as its alliances in the region are concerned.

arab-bombInternational observers will likely find encouragement in this development. Though it definitively solves nothing (as is also the case with the Iran deal itself), it does quell immediate concerns that the tensions in the Middle East will erupt over a perceived sign that the global community is "going soft" on Iran, which is still technically considered a state sponsor of terrorism. (Cuba recently made it off the list.) Hardliners have actually intimated that the U.S. is fomenting worse regional instability with the nuclear deal, though it's hard to see how no deal and more sanctions—as suggested by former Arkansas Governor and 2016 GOP presidential candidate Mike Huckabee on the news program The O'Reilly Factor—does anything to improve icy tensions with Tehran, lacking concrete incentives for cooperation.

Impact on Global Markets

oilAnother important development accompanying the Iran deal is, with the removal of crippling economic sanctions, Iran's considerable crude oil reserves will finally hit the open market. Storage tankers filled with crude have been idling while the sanctions remained in place, but the Islamic Republic plans to make this huge inventory of oil available within a week of restrictions being eased. This previously untapped source of oil will only add to the global supply glut, driving crude prices lower still. Frozen assets totaling in the tens of billions of dollars will also be made available to the Iranians, possibly spurring new economic development and integration with trading partners.

At the same time as the announcement of the Gulf states' public support for the deal, a trilateral meeting is being held in the Qatari capital of Doha between the U.S., Saudi Arabia, and Russia regarding the geopolitical quagmire in Syria, involving both ISIL and the controversial Assad regime. While Russia (and Iran) have reasons to prop up Assad, the Saudis and Americans are pushing for him to capitulate so that friendly rebel groups can direct their efforts against ISIL, not a failed and internationally unpopular government. While the Syrian situation is far from being resolved, perhaps the symbolic accord between America's Gulf allies and the Islamic Republic of Iran will breathe new goodwill into the Syrian debate.

About the Author

Everett Millman

Everett Millman

Analyst, Commodities and Finance
Managing Editor

Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.

In addition to blogging, Everett's work has been featured in CoinWeek, Advisor Perspectives, Wealth Management, Activist Post, and has been referenced by the Washington Post.

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