The Middle East: Time for New Realism Contents

Chapter 6: Evolution of Middle East states

The transformation of state power

189.State power in the Middle East is transforming, both strengthening and weakening. State powers, moreover, are not always playing a constructive role. In this chapter, we consider the transformation of state power in the region, and the role that the UK can play, alongside its allies, to calm state conflict and pursue a stable balance of power, in which the UK can engage productively with as many regional actors as possible.

190.State power in the region is evolving:

Figure 6: Sectarian balance of power

map highlighting sectarian divide in MENA countries

Source: Derived from Stratfor, ‘Why Shiite Expansion Will Be Short-Lived’ 12 May 2015: [accessed 24 April 2017]

Saudi-Iranian rivalry

191.A competition for regional hegemony between Iran and Saudi Arabia, partly driven by mutual threat perceptions, waged as a sectarian and political conflict, is actively destabilising Bahrain, Iraq, Yemen and Syria. Professor Ansari described it as a “cold war”.248 Mr Crompton said it “used to be a cold war” but has been “essentially a hot war” for the last three or four years, playing out in Yemen and Syria.249 Both countries, said Dr Haass, have been waging “an indirect or proxy war” in Yemen, Bahrain and Syria. The worry, said Dr Haass, was “that the proxy or indirect war could get direct”.250

192.The principal points of conflict are currently Iran’s support of Shia militias (Iraq) and the intervention directly by the IRGC in Syria and Iraq; its support of proxies in Syria (Hezbollah) and Yemen (Houthis); and support for the domestic opposition in Bahrain. Saudi Arabia intervenes directly in Yemen and also supports its own proxies in Syria—Salafi jihadist militias—which are formally or informally allied with Jabhat Fateh al-Salem (formerly the Al Nusra Front, an al-Qaeda affiliate).

193.The Saudi-Iranian rivalry is mostly, but not exclusively, political in nature. A sectarian dimension helps fuel the conflict and domestic factors contribute heavily. Such tensions are likely to endure and could even increase as the Iran nuclear deal nears the end of its term and both countries compete on the international oil market. The interests of the international community are ill-served by this rivalry.

Consequences for UK policy

194.These regional shifts demand a reassessment of UK alliances and postures.

195.The evidence suggests that the new alignments do not work to the UK’s benefit. Twenty years ago, a British Foreign Secretary, said Mr Crompton, “could call Washington, perhaps Riyadh or Cairo, and possibly Tel Aviv, and solve maybe 85% of our policy”. Now, he “has to call more people, and some of the people he calls are not receptive”.251 Within the region, the UK has a fractious relationship with Iran and even long-standing allies such as Turkey are realigning. Professor Özkirimli informed us of the rising trend of “anti-West—anti-American and, to a certain extent, anti-British” sentiment that was permeating the Turkish domestic political discourse.252

196.The UK has to be more transactional and adroit in its alliances.253 The new era requires a calibrated approach recognising that a large number of allies do “not quite fit neatly on the spectrum of ally or partner but vary from issue to issue” said Dr Haass.254 Regional actors are, in the words of President Obama, “high-maintenance allies” seeking to “exploit American muscle for their own narrow and sectarian ends”.255 The uncomfortable fact is that, as Mr Haid put it, “you have to deal with what you have” and the UK does “not have that many options”.256

197.Turkey, for example, fits into this category, for despite the direction of internal travel, it remains a necessary partner. Turkey was described by Dr Jon B Alterman, Director, Middle East Programme, Centre for Strategic and International Studies, as a country “partly sliding into harsh autocracy” but on issues such as migration, Syria, Iraq and countering Da’esh, the UK found it to be a “crucial” partner.257

198.Finally, regional security is interconnected and requires a more coordinated approach. Reducing the tensions between Iran and Saudi Arabia requires a multi-faceted approach that is robust on Iranian foreign policy activities but, at the same time, reassuring to regional partners. As Mr Tom Fletcher CMG, former UK Ambassador to Lebanon, explained, policy can “often deal with these countries in isolation and fail to deal with the broader regional implications”.258 A second example would be the Israeli-Palestinian conflict, which may appear less salient at the moment, but has wider consequences for the sense of Sunni anger and regional stability.

199.Power amongst states in the region is in flux and the UK cannot rely merely on its traditional allies. The UK will have to be more transactional and adroit in its partnerships in the region. Despite concerns about their own internal political direction, the UK will have to maintain productive working relationships with principal regional countries.

200.It is not in the UK’s interest, nor in that of its principal allies, that the Saudi-Iranian rivalry should continue to spread geographically and to intensify. A determined effort should be made to develop a modus vivendi between these important Middle East states, perhaps in a wider regional framework.

Four fold approach

201.In order to build a more comprehensive, balanced policy for the region, we put forward four proposals.

Reframe the UK’s Iran Policy

202.The UK should position itself for a better relationship with Iran as a powerful Shia state, effective and active in foreign policy, and the second largest economy in the MENA region after Saudi Arabia.259 Dr Haass suggested there were three sets of policy issues around Iran. One, “what do we do about the agreement for the duration of the agreement?” Two, “what do we about Iranian behaviour not covered by the agreement” and finally, “what do we do about Iran in the nuclear realm beyond the agreement?”260

203.Building on the suggestions above, we suggest a more comprehensive British strategy on Iran below.

British-Iranian dual nationals

204.A particular concern for the UK is the fate of British-Iranian nationals who have been imprisoned in Iran. Lord Lamont thought it might be “some sort of deliberate campaign against dual nationals” by the hardliners wishing to undermine the deal, and prevent the return of dual-nationals “who obviously can do a lot of business in Iran”.261 Lord Lamont agreed that Iran’s policy endangered better economic and political relations between the UK and Iran.

205.It is in the UK’s interests to pursue a better relationship with Iran, and we recommend that this should be a key priority for the UK. More cooperative political and economic engagement will also depend on Iran ceasing its campaign of harassment against British-Iran dual nationals, in particular in the case of Mrs Nazanin Zaghari-Ratcliffe.

The Iran nuclear deal, compliance and implementation

206.The endurance of the JCPOA is not a foregone conclusion. Speaking in October 2016, Professor Ansari believed that the deal was “in real danger of stalling, if it has not stalled already”.262 Ms Kinninmont explained the “major risk to the deal is … the perception in Iran that expectations of the economic dividend of the deal have been disappointed”.263 The view in Iran amongst the hardliners, said Mr Straw, is that the government “humiliated” itself by signing the deal and received nothing in return. The UK needs “to make sure that [the Iranians] get back more than they have so far received”.264 There has been “growing disillusionment” in Iran that the “West is reneging and that Iran is not seeing the benefits of the deal” said Lord Lamont.265

207.The major impediment has been the design of US sanctions relief set out in the JCPOA. Significant sanctions—”primary sanctions”—remain in place. US persons and companies continue to be broadly prohibited from engaging in transactions or dealings with the government of Iran, and Iranian financial institutions, unless such activities are authorised by the Office of Foreign Assets Control (OFAC), the US body which administers and enforces sanctions.266 The US has not approved the use of dollar clearing for transactions involving Iran; and the use of correspondent accounts has also remained subject to significant compliance oversight.

208.As a consequence, US banks, or any international banks with US connections, have been deterred from providing services to Iran. Lord Lamont explained that banks in Europe have been “fined huge sums” for breaching the “know your customer” regulations, with the result that “European banks are terrified to lend money or even to process payments”.267 It has, said Lord Lamont, “become extremely difficult to finance trade with Iran”.268 Mr Straw agreed that there were plenty of business opportunities, but in most cases “companies cannot get banking facilities because the big banks such as HSBC have withdrawn”.269 Neither Dr Carole Nakhle, Energy Economist, Crystol Energy, nor Mr Stewart Williams, Vice-President, Wood Mackenzie, saw many barriers to the Iran deal delivering a significant increase in oil production, including US sanctions, lack of investment and Iran’s own internal regulatory constraints.270

209.Even with an Obama administration “actively lobbying banks to ease up on lending to Iran”, the deal struggled to deliver.271 With a Trump administration and a Republican Congress opposed to the deal, the JCPOA is under real threat. The new US President has been highly critical of the nuclear deal, repeatedly calling it the “worst deal ever negotiated”, but he has also vacillated. At times, he has suggested it should be reformed and augmented, in his words “polic[ing] that contract so tough they don’t even have a chance”.272 Our witnesses suggested that the President was unlikely to renege on the deal, but the actions of the US—both its President and the Republican Congress—could undermine it,273 by augmenting the due diligence necessary for US companies,274 imposing new sanctions or threatening to re-impose sanctions lifted by the JCPOA.275

210.Lord Lamont, speaking to us in February 2017, feared the deal was imperilled: US sanctions relief, under the JCPOA, is exercised by a temporary presidential waiver of the Iran Sanctions Act 1996 which has to be renewed every four months.276 The next presidential waiver was due in April 2017. Mr Fitzpatrick did not think that the Trump administration would extend the waiver.277 Speaking to us in early March, Mr Tobias Ellwood MP, Minister for the Middle East and North Africa, FCO, was unable to state the UK’s position should the waiver not be extended.278 He wrote to us that “US sanctions, and the waiver renewal, are a domestic matter for the US”.279

211.On Tuesday 18 April, the US Secretary of State confirmed that Iran was compliant with the deal, the first certification by the Trump administration to the US Congress. The Trump administration also released a statement saying that it would launch an inter-agency review of whether the lifting of sanctions against Iran was in the United States’ national security. Tyler Cullis and Reza Marashi, of the National Iranian American Council, advised against optimism about a change of policy: “Trump’s certification of Iran’s JCPOA compliance is not inconsistent with the approach being advocated by Iran hawks to kill the deal”. The authors refer to a new sanctions bill being presented by the US Congress, addressing issues beyond the JCPOA, whereby the “Trump administration can kill the nuclear accord without launching a frontal attack on it”.280

212.Opposed to the US line is a broad coalition of international support. Mr Crompton, giving evidence in November 2016, said the UK would “argue strongly that we should stick with the agreement” and the UK “would want to honour” it.281 The High Representative for EU Foreign Affairs and Security Policy, Federica Mogherini, reiterated the EU’s support for the deal.282 Professor Brown suggested that “China will be a big supporter of not touching” the deal, having invested a lot of “political and diplomatic capital into it.”283 Mr Wilkinson said that China and Russia were making economic commitments in Iran and would not “just walk away from them because of a mercurial administration in the US”.284

213.Gulf States too have little interest in seeing the deal undone. Ms Kinninmont explained that while each country’s response had varied, “all of them have officially said they are in favour of it”.285 Mr Antoun Issa, Senior Editor, The Middle East Institute, noted that Oman and Qatar have been using the JCPOA as “an opening to develop economic ties with Iran”.286 Lord Lamont pointed out that there is also property investment from Saudi Arabia in Tehran and “Dubai is a major trading partner”.287 Even countries such as Saudi Arabia and Israel, firm opponents of the deal, are not opposed to the deal per se but the sense that with freed balances and lifted sanctions, Iranian foreign policy is now unconstrained as a result of the deal.288

214.Witnesses advised the Committee on helpful steps to support the JCPOA. Mr Kamel and Ms Kinninmont urged the UK to seek “alternative financing mechanisms”.289 Mr Kamel said that an alternative could come through “either Asian or Russian banks”, which highlights the point that there are non-Western powers unencumbered by US financial sanctions, like China, which could benefit from Iran’s ongoing frustration with opening Western markets.290 Mr Fitzpatrick suggested that European states could provide immunity to European firms doing business with Iran, which might fall foul of US sanctions. If “European firms were indemnified for any penalty imposed” by the US, they could continue to do business with Iran.291

215.On the other hand, Lord Lamont acknowledged that even the Iranian hardliners recognised, pragmatically, that the nuclear deal was the best option available at the moment; there is “no fallback option”.292

216.The Trump administration is unlikely to try to destroy the Iran deal, but the administration is also unlikely to take any steps to facilitate more effective sanctions relief to Iran. This will be a grave impediment to the sustainability of the Iran nuclear deal and it will mean that Iran’s ongoing frustration with opening Western markets will continue. A strategic opportunity will be lost as Iran looks to non-Western powers, like China and Russia, which will be able to develop faster and more extensive trade relations, opening new channels for financing trade and investment.

217.Relations between Iran and the West, and the future of the Iran nuclear deal, are imperilled by the political context in 2017: a hostile US administration; impending elections in Iran; and European supporters of the deal such as France and the UK consumed by their own internal political debates.

218.The interests of the UK Government are clear. The UK should continue to support the Iran nuclear deal, whether or not it is supported by the US. It will have to work closely with its European partners, and Russia and China, to ensure the sustainability of the deal. The UK must also be more transparent and vocal in its support, especially within the UNSC.

219.There is sufficient international support to ensure that the Trump administration will not be able to resurrect the international coalition to rebuild sanctions or impose new ones on Iran.

220.Nevertheless, US sanctions remain a serious impediment to opening up the banking sector, and attracting new finance and investment into Iran. The UK, alongside its European partners, should consider active measures to ease banking regulations and to open up new sources of finance and investment to Iran. This policy would make it more attractive for Iran to persevere with the JCPOA, however unhelpful US actions may be.

Contain Iran’s foreign policy

221.Iran’s foreign policy is deeply concerning to regional partners and destabilising to the region. Dr Haass said that “Iran is now essentially an imperial power”, advancing its interests via proxies and through domestic populations penetrating Iraq, Lebanon, Yemen and Bahrain.293 Professor Ansari explained that in order to compensate a domestic hard-line constituency, “Iranians have started to show a much more robust and muscular regional foreign policy”.294 Dr Al Hamli, from the UAE, said the major security threat was “Iran and the politicisation of religion”. Iran, continued Dr Al Hamli, was “weakening the region to gain as much control as it can.”295

222.Lord Lamont countered that Iran has been acting defensively. Iran has deep insecurities: surrounded by armed Gulf countries, a hostile US, “the invasion of Saddam Hussein is ever present”, and it views its alliances with groups such as Hezbollah as an instrument of “asymmetric defence”.296

223.The approach by international actors have been two-fold. The UK has been attempting to reassure Gulf allies. Mr Crompton explained that the “beefed-up UK effort” in the Gulf was to reassure Gulf allies that the UK’s “commitment to their security is as it was before”.297 The US has been attempting to contain Iran’s foreign policy. In response to Iran firing a medium-range ballistic missile, called the Shahab (29 January 2017), the US administration unilaterally imposed new sanctions on Iran, charging that Iran had defied UNSC Resolution 2231 (2015). The then US National Security Adviser, Michael Flynn, put “Iran on notice”. 298

224.UNSC Resolution 2231 “calls upon Iran not to undertake any activity related to ballistic missiles designed to be capable of delivering nuclear weapons”.299 Mr Fitzpatrick said that from the range of the missile, it could be stated “pretty confidently that it was capable of carrying a nuclear weapon” and was therefore, by “spirit and arguably the letter”, in breach of the Resolution.300 On the other hand, in Resolution 2231, Iran “is called upon not to undertake any activity” which is not a clear prohibition.301 According to The Iran Project, a US non-government group of former diplomats, the latest missile test is “inconsistent with the spirit” of the UN Resolution but not a “violation”.302

225.There are clear procedures at the UN for the imposition of sanctions, with breaches considered by the UN Sanctions Committee. This process was not adhered to by the US. The Minister, Mr Ellwood, reminded us that the US can impose its own sanctions unilaterally. We asked Mr Ellwood whether the UK had been consulted in advance of the US imposing sanctions; the Minister did “not know” whether that had been the case.303

226.As for the US putting Iran “on notice,” that provokes more questions than answers. Mr Fitzpatrick said that nobody “really knows what that means. It was a vague red line” but speculated it might mean further missile tests would spur US sanctions, or that Iran should cease harassing US naval vessels.

227.Mr Fitzpatrick viewed US policies with “concern” and welcomed “concerned partners of the United States trying to counsel restraint” without making the White House feel that other “countries are ganging up on it”.304 Mr Fitzpatrick saw a useful role for the parties to the Iran nuclear deal to consult in advance and to offer the US some “good advice … not to go off the deep end”, ensuring that “any new sanctions are carefully measured so they do not violate the terms of the Iran nuclear deal”.305

228.The international community is limited in its capacity to respond to Iranian provocation in the region, but the approach by the US has a dangerous escalatory logic.

229.We recommend that the external parties to the Iran nuclear agreement should find a way to discuss amongst themselves any hostile foreign policy actions by Iran in order to form a united and proportionate international position on Iranian actions.

230.A proportionate and effective response to Iranian provocation will include the parties to the Iran nuclear agreement agreeing their collective position, exerting private diplomacy with the Iranians, setting clear red lines and agreeing on the diplomatic and financial measures to respond to Iranian actions. It will also have to recognise that Iran has legitimate security interests and needs to be recognised as having a role as a regional power.

231.The UK has so far demonstrated little capacity to influence the position of the US bilaterally, and must now act closely with European allies in order to do so.

After the deal

232.The JCPOA constrains Iran’s nuclear options through a combination of physical limits on numbers and types of centrifuges for eight years and on fissile material production for a further 13 years, to be followed by gradual evolution of its enrichment activities (for exclusively peaceful purposes), as well as continued verification measures.306 It does not eliminate the risk that Iran will seek to acquire nuclear weapons after that time.

233.Dr Hamli feared that there was a risk “that Iran is still moving forward to obtain a nuclear weapon in secret through its military facilities”.307 Lord Lamont disagreed, pointing to the continued limitations: the monitoring of centrifuge capacity—rotors and bellows—will last until 2036, the production of Uranium ore concentrate will be monitored until 2041 and the Additional Protocol, once ratified, would give the International Atomic Energy Agency (IAEA) access to Iran’s suspected sites. Iran has also agreed to “abide in perpetuity with the provisions” of the Non Proliferation Treaty (NPT).308

234.Other witnesses were less reassured and suggested a “follow-on agreement” which would include, suggested Dr Haass, the “kind of constraints we want to continue on Iranian nuclear capability”. Without an agreement in place, it is possible that the break-out time—the time Iran would need to produce a nuclear weapon—would “literally become negligible”. He suggested an international group—in the same format that negotiated the JCPOA—to consider such an agreement.309

235.Another option would be to “generalise and globalise” the terms of the JCPOA.310 Lord Hannay of Chiswick (a Member of this Committee) and Thomas R. Pickering have suggested using the terms of the JCPOA, such as the limits on uranium enrichment (quantity and quality) and the monitoring and inspection regimes, to set an international standard.311 Such an approach, they argue, could take “Iran out of a special category and make it part of an international regime which should be widely applied to all states”, and break the deadlock over negotiating a Fissile Material Cut-Off Treaty.312 The authors argue that the Permanent Five members of the UNSC should take the lead.

236.Lord Lamont thought the suggestion a “very good idea, but it would require a lot of very energetic diplomacy”. Many of the non-aligned countries would not wish to agree to a standard that did not put the UK and US on the same basis, and it would also be challenging to get the US to sign up.313 Mr Fitzpatrick agreed that globalising the constraints in the JCPOA would be the “best way to extend the duration of the deal”. He believed that JCPOA terms such as the IAEA verification measures and the ban on highly enriched uranium could become the global standard. As for US opposition, Mr Fitzpatrick reminded us that in a decade there might be a different US administration in place.314

237.Action should be taken by the parties to the Iran nuclear deal to consider what will follow it. These will have to include robust monitoring mechanisms and sufficient inducements to make it attractive to Iran.

238.The terms of the Iran nuclear deal could be broadened into an international standard, making Iran less of a special case. We urge the UK Government to extend some energetic diplomacy to secure backing amongst the P5 of the UN Security Council to explore such ideas.

Review the relationship with the Gulf States

239.The Gulf states “have been a massive priority for this Government in terms of trade and defence strategy”, said Ms Kinninmont.315 The UK has, Mr Crompton told us, “fundamental, deep-rooted interests on the Arab side of the Gulf and we want to strengthen them”.316 The Foreign Secretary pointed out that UK exports to the Gulf are worth £20 billion annually.317 The Minister, Mr Ellwood, pointed to the 5,000 UK businesses operating in the Emirates and substantial investment by Gulf States into the UK.318 Mr Crompton also pointed to the importance of the security relationship between the two sides.319

240.As part of a post-Brexit diplomatic effort, there has been a closer security alignment between the UK and the Gulf monarchies. The Prime Minister addressed the GCC Summit in Bahrain on 7 December 2016 stating that “Gulf security is our security”.320 The Foreign Secretary pointed to upgraded commitments: Britain’s Gulf Defence Staff is being located in Dubai; the Al-Minhad air base in the UAE provides a hub for the Royal Air Force; in Oman, the British Army is establishing a Regional Land Training centre and HMS Juffair (Bahrain) will be a naval support facility. Britain has, in total, 1,500 military personnel and seven warships in the Gulf region, and intends to spend £3 billion on its military commitments in the Gulf over the next decade. 321

241.The UK’s policy of arms sales has already been discussed (Chapter 3) but witnesses also raised the question of Saudi Arabia and other Gulf monarchies acting directly counter to UK national security. Dr Renad Mansour, Asfari Fellow, Middle East and North Africa, Chatham House, told us that Saudi Arabia pays “a lot of money to Wahhabi schools and organisations that act against the UK’s interests”.322 Mr al-Khoei noted that Saudi Arabia had been called “the number one global financial hub for Islamic terrorist groups worldwide”.323 Mr Haid countered that the government of Saudi Arabia has been trying to move in a different direction but agreed that the Kingdom had not done enough to control wealthy Saudis privately funding terrorist groups.324

242.Mr al-Khoei broadened his criticism to Kuwait and Qatar, two countries named by the US Treasury Department as “allies who are not doing enough to combat the supply” of funds to Islamic terrorist groups.325 Mr al-Khoei noted that it is “clear” that the UK “gives almost unconditional support” to its Gulf Arab allies who have “not been very helpful in combatting the various radical forces”. The UK, counselled Mr al-Khoei, should do more to say “enough is enough”.326

243.An oft-stated argument is that the close relationship with these monarchies offers the UK particular access and influence. Mr Michael Stephens, Research Fellow, Middle East, Royal United Services Institute, made the case: the fact that the UK “can sit in a room with the King of Saudi Arabia puts us well above 99.9% of other countries”.327

244.Other witnesses were sceptical. In Bahrain, Mr Luther said the UK Government’s argument that “private diplomacy is the best, most effective means” to address regressions in human rights has not been demonstrated.328 Dr Christopher Davidson, Reader in Middle East Politics, Durham University, agreed that the UK has not been able to exert any meaningful pressure and UK officials have been “praising Bahrain’s supposed progress on human rights, whereas in fact the exact reverse has happened”.329

245.Influence is a two-way street: Lord Lamont said that the close relationship with the Gulf monarchies could mean that the UK tended to “see things entirely through the Arab countries’ eyes” and did “not see the insecurities that the Iranians have”.330 Mr Fletcher had observed that “many [British policies] suggested to the region that we had picked a side”. Partly due to the difficult relationship with Iran, when a crisis hit “often the first telephone calls would be to Doha, Riyadh or Tel Aviv. We would get only one side of that debate”.331

246.In 2015, the Government committed to defining a Gulf Strategy. The Strategic Defence and Security Review stated that the UK would set out its “vision of our future relationships with partners in the region in our new Gulf Strategy.”332 Mr Crompton qualified that by a Gulf strategy, the Government meant “essentially building on what we have done before”, and he did “not think there [was] a plan to publish it as such”.333 Mr Luther pointed out that there had been an expectation that the UK would re-evaluate its approach after the Gulf summit (December 2016), but this has not proved to be the case.334

247.The UK has a crucial interest in maintaining a clear-eyed but close relationship with the Gulf monarchies. As political authority collapses in many Middle East countries, the UK needs a good working relationship with the remaining stable countries. We also recognise the shared interests: defence sales, non-defence commercial interests and trade, the fight against terrorism, and security of energy supply throughout the Gulf.

248.Nevertheless, despite some minor improvements, many countries of the region continue to remain repressive. On key issues of public and parliamentary concern, the Government has not been able to demonstrate that private diplomacy has been able to influence the direction of policy.

249.The UK has to go to considerably further lengths to improve transparency and accountability around its relationships in the Gulf. The UK has not taken the opportunity to set out a clear assessment of its objectives in the region, to which it can be held to account.

The Israeli-Palestinian dispute

250.Prospects for progress on the Middle East Peace Process are bleak. The Foreign Secretary judged it to have been “bogged down, static, [and] paralysed for some years now”.335 The Rt Hon Jack Straw, former Foreign Secretary (2001–06), was “very pessimistic about the prospect of any resolution”.336 The “important thing is not the exact shape” of the outcome, suggested Dr Alterman, but that there is a process so that “Palestinians feel that something is happening [towards] accomplishing some of their needs” and that “Israelis feel there is some prospect of becoming a more normal state with a more normal set of security concerns”. “The problem is that we do not have that process” he added.337

251.Witnesses were also clear that neglect of the issue would be myopic. The Israeli-Palestinian conflict is far from the only conflict in the region, nor is it the most deadly, but it does occupy a special place in the region’s political life and in the psyche of the Arab people. Mr Daniel Levy, President, US-Middle East Project, explained its “iconic” meaning: “Palestine is still a rallying cry” and is “pointed to as a very important and legitimate grievance in how the Middle East is treated by the West”.338 Mr Nicholas Pelham, Middle East Affairs correspondent for The Economist, saw the conflict as a “black stain on western efficacy in the region” and judged that the “knock-on effect [of a resolution] would be quite considerable”.339

252.The prospects for progress on a two-state solution have, however, dimmed considerably in the last year on two fronts: the US and Israel.

253.In February 2017, President Trump dropped the US commitment to a two-state solution, surrendering the decision to whatever “both parties like”.340 Second, his continued threat to move the US embassy to Jerusalem, which would recognise Jerusalem as the capital of Israel, remains an inflammatory option. Third, his choice of David Friedman—an opponent of the two-state solution and advocate of Israeli settlements—as ambassador to Israel may raise tensions.

254.The politics and policies of Israel diminish the possibilities of peace, specifically the rapid expansion of settlements beyond the agreed 1967 borders of Israel.341 Under Prime Minister Benjamin Netanyahu, the extent and geography of settlements have increased. Since his return to power in 2009 and 2014, the settler population has increased by over 80,000, including at least 16,000 in the West Bank itself. Between 2009 and 2014, construction began on 9,000 new settlement units in the West Bank and 3,000 more in East Jerusalem. This brings the total settler population in East Jerusalem and the West Bank to at least 570,000.342 Mr Levy drew our attention to a recent bill, passed in the Israeli Knesset on 6 February, which would allow the expropriation of privately owned Palestinian land, “legalising essentially the theft of Palestinian private property”.343

255.The rate and location of these settlements, specifically chosen to make a contiguous Palestinian state an impossibility, makes Israeli policy very problematic. The building and legalisation of settlements “makes the potential operation of a separate Palestinian state incredibly difficult” said Mr Straw.344 The Minister, Mr Ellwood, said that the “growth of settlements is coming perilously close to making [the two-state solution] an impossibility”.345 Mr Netanyahu’s tactic, said Mr Levy, was to suggest the Israelis are “ready for peace while making the conditions impossible and making the realities on the ground ever less amenable to two states”.346

256.The Israelis are treated with kid-gloves by the international community. They “can do anything” said Mr Straw, and “they suffer no penalty at all”.347 Mr Levy explained the perception in Israel that:

“while the rhetoric escalated, the practical upshot of that international opprobrium was almost zero … those who condemned settlements on Mondays and Wednesdays were expanding their trade, scientific, military intelligence, technology and sport co-operation with Israel on Tuesdays and Fridays”.348

257.There has also been a “rare … confluence of interests” between some Arab states and Israel. Upheavals in the Middle East have led “moderate Arab countries … to see Israel, as a strategic asset, a countervailing force to regional threats, an ally in promoting stability and prosperity.”349 Egypt and Jordan for some considerable time have had constructive relationships with Israel, with the Egypt-Israeli peace treaty dating to 1979. Mr Crompton was “pleased that Turkey has made efforts to improve relations with Israel”.350 There is a shared antipathy between Saudi Arabia and Israel towards Iran. In August 2016, a Saudi delegation visited Israel and met with senior officials.351 The “game that is really in play here”, feared Mr Levy, is that the Israelis are testing “the hypothesis of how far they can go in their relations with certain Arab states without having to concede anything on the Palestinians”.352

British policy options

258.Successive British Governments have reaffirmed their commitment to the two-state solution. In November 2015, the UK National Security Strategy and Strategic Defence and Security Review said the UK would

“take every opportunity to promote a peaceful two-state solution through the Middle East Peace Process, as the only way to secure lasting peace”.353

The Minister, Mr Ellwood, reiterated that the UK remained “absolutely focused on saying that the two-state solution is what we want to achieve”.354

259.Previous UK Governments have also been clear that the expansion of Israeli settlements beyond the agreed 1967 borders is a breach of international law and an impediment to peace. The 23 December 2016 UNSC Resolution 2333, of which the UK is a signatory, said that:

“the establishment by Israel of settlements in the Palestinian territory occupied since 1967, including East Jerusalem, has no legal validity and constitutes a flagrant violation under international law and a major obstacle to the achievement of the two-state solution and a just, lasting and comprehensive peace”.355

260.Witnesses suggested a series of measures to strengthen the long-standing UK policy of advancing the two-state solution.

261.First, advised Lord Williams, a “little more political robustness is required with the government of Israel”.356 Israel, said Mr Pelham, “pretty much holds all the cards”. If Israel is not willing to negotiate on a two-state solution, it should be recognised that it is a “single jurisdiction … controlling not just the Israeli population but the Palestinian population”, added Mr Pelham.357

262.The UK Government has shown no such increase in robustness. In December 2016, despite co-sponsoring the UN Resolution condemning settlements, the Prime Minister distanced the UK from the outgoing Obama administration’s criticism of the Israeli government and its policy of settlements. On 29 December, the outgoing Secretary of State, John Kerry, warned that the rapid expansion of settlements in the occupied territories meant that the “status quo is leading toward one state and perpetual occupation”.358 A statement by the Prime Minister’s office criticised Mr Kerry’s language and said that while settlements are “illegal” they are “far from the only problem”, and stressed that the people of “Israel deserve to live free from the threat of terrorism, with which they have had to cope for too long.”359

263.Second, a functioning Palestinian Authority is critical to delivering peace. To date, attempts to build up the Palestinian Authority have made slow progress, or even stalled and need to be rethought. The UK, Mr Levy judged, could “constructively be part of that rethink”.360 Lord Williams agreed that anything the UK could “do now to invest politically in the Palestinian Authority” would be a “very positive step forward”.361 Brexit makes it more challenging for the UK to play a significant role as the UK may not have the leverage of the EU, which is the largest multilateral donor to the Palestinian Authority.362

264.Third, the UK Government could support EU diplomacy, including the French-led initiative to revive the peace process. Lord Williams explained that were “an initiative to be brought forward by the UK, France and Germany, that would certainly be noted”.363

265.In fact, the UK has recently weakened its support of EU diplomacy on this issue. The UK is the “key player in blocking Council conclusions”, said Mr Levy, which is empowering other EU countries to break the EU line.364 In January 2017, the French hosted a conference, bringing together 70 countries, which reaffirmed their commitment to the two-state solution.365 The UK took what Mr Levy described as a “very degrading, dismissive attitude to the Paris conference”, by refusing to align itself with the subsequent Paris Declaration (15 February 2017).366 Mr Levy saw the UK’s approach as part of “a post-Trump phenomenon”—an “ingratiation initiative” with the new US administration.367 The Foreign Secretary dismissed the international conference as “diplomatic ventures” not really aimed at producing a resolution but “domestic political posturing in the run-up to various elections”.368

266.A negotiated two-state outcome remains the only way to achieve an enduring peace that meets Israeli security needs and Palestinian aspirations for statehood and sovereignty, ends the occupation that began in 1967, and resolves all permanent status issues. We condemn the continuing Israeli policy of the expansion of settlements as illegal and an impediment to peace.

267.On its current trajectory, the Israeli-Palestinian dispute is on the verge of moving into a phase where the two-state solution becomes an impossibility and is considered no longer viable by either side. The consequences would be grave for the region. The resolution of the Israeli-Palestinian dispute must remain high amongst British foreign policy priorities. The Government should be more forthright in stating its views on these issues despite the views of the US administration.

268.The aim at this juncture is to ensure that the climate for diplomacy does not degrade any further.

269.In the absence of US leadership, it is time for the Europeans to play a more active role. The UK should support European diplomacy, including the French-led initiative. The International Conference intends to meet again at the end of 2017 and the UK should undertake to support it meaningfully, both politically and financially. It is also an opportunity to bring moderate states of the region on board to build a broad coalition of international support.

270.The balance of power in the delivery of peace lies with Israel. If Israel continues to reduce the possibilities of a two-state solution, the UK should be ready to support UNSC resolutions condemning those actions in no uncertain terms. The Government should give serious consideration to now recognising Palestine as a state, as the best way to show its determined attachment to the two-state solution.369

Regional approaches to cooperation

271.As Lord Williams put it, regional organisations are “weaker in the Middle East than in most areas of the world”.370 There is, however, nothing inherent about the region that makes it impossible for such structures to exist, and for too long the question of the Israeli-Palestinian conflict has been used as a pretext for preventing such cooperation.

272.The idea of adopting a regional approach to enhanced cooperation and security in the Middle East has generated some interest over the years.371 At the International Institute for Security Studies Manama Dialogue (2008), the foreign minister of Bahrain made statements in favour of:

“the establishment of a regional organisation in which all the countries of the Middle East and North Africa are members, without exception … a genuinely Middle Eastern body in which Middle Eastern countries sit down to reach Middle Eastern solutions to Middle Eastern issues”.372

273.There are sub-regional groupings such as the GCC (created in 1981), the Arab League (formed in 1945) and the Organisation of Islamic Cooperation (founded in 1969). There are challenges facing all these bodies. The Arab League excludes non-Arab states, most notably Turkey, Iran and Israel; the same applies to the GCC, which is more exclusive.373 Lord Williams noted the ineffectuality of these groupings: the Arab League is a “lifeless body” and he saw “[n]ot much more” sign of life in the Organisation of Islamic Cooperation.374 Dr Davidson said that the GCC has had “a rather troubled … [and] lacklustre reputation” with regards to its capacity to organise itself.375

274.Witnesses thought the suggestion of a regional framework was a helpful one. Professor Ansari said that regional stability required the means “to find some regional security organisation”. He added that it would be “difficult to achieve in the current circumstances but that does not mean that we should not try”.376 Dr Mansour agreed that any steps that could encourage “talking to your enemy rather than ignoring them” should be encouraged. The aim should be to “try to find where there are commonalities, particularly economics but also security commonalities”.377 Lord Lamont agreed that regional security required the “main players all having a say”.378

275.Witnesses were, however, sceptical of the capacity of the states of the region to deliver for three reasons: any discussion would require a net reduction in the Saudi-Iranian rivalry; states have shown marked distrust of any proposals and have been incapable of the necessary organisation.379 Dr Davidson warned us of the “long history of failed attempts to create similar sub-regional organisations”.380

276.A regional multilateral architecture cannot be realistically pursued as a short -term option but, as in Europe after World War II, more as a medium to long-term objective. As Professor Peter Jones has written:

“The Middle East desperately requires some rules of behaviour for its states and a mechanism to allow for ongoing dialogue over security issues. As the experience of other regions has shown, individual conflicts, no matter how serious, need not stand in the way of regional institutional development”.381

277.The process of building more multilateral structures in the region is a long-term one. The process of working within institutional structures helps produce progressive changes in the economic sphere and can help strengthen rules of conduct in the political sphere.

278.Since the smaller Gulf states have demonstrated more economic dynamism and political flexibility in recent years, assisting these countries with further economic integration could help them move towards closer working relations. Here British trade policy can be a useful tool (see Chapter 8).

238 Q 56 (Richard Haass)

239 Q 197 (Rory Stewart MP)

240 Q 12 (Ali Ansari)

241 Q 185 (Mark Fitzpatrick)

242 Q 156 (Lord Lamont of Lerwick)

243 Q 20 (Neil Crompton)

244 Q 38 (Lord Williams of Baglan)

245 Q 20 (Neil Crompton)

246 Q 122 (Haid Haid)

247 Q 123 (Hayder al-Khoei)

248 Q 12 (Ali Ansari)

249 Q 20 (Neil Crompton)

250 Q 65 (Richard Haass)

251 Q 20 (Neil Crompton)

252 Q 107 (Umut Özkirimli)

253 We address the question of British policy towards Gulf Arab allies further below.

254 Q 59 (Richard Haass)

255 Q 149 (Carole Nakhle)

256 Q 124 (Mr Haid Haid)

257 Q 223 (Jon B Alterman) and Q 24 (Neil Crompton) and see Q 107 (Umut Özkirimli) for Turkey’s internal politics

258 Q 177 (Tom Fletcher)

259 World Bank ‘Overview: Iran’: [accessed 25 April 2017], Q 94 (Rt Hon Jack Straw) and Q 178 (Tom Fletcher)

260 Q 59 (Richard Haass)

261 Q 158 (Lord Lamont of Lerwick) Lord Lamont referred to Ms Nazanin Zaghari-Ratcliffe and Mr Kamal Foroughi both of whom are imprisoned in Iran.

262 Q 11 (Ali Ansari)

263 Q 43 (Jane Kinninmont)

264 Q 93 (Rt Jack Hon Straw)

265 Q 156 (Lord Lamont of Lerwick)

266 US Department of Treasury, ‘Iran Sanctions’ 15 December 2016: [accessed 26 April 2017]

267 A record fine of $8.9 billion was imposed on BNP Paribas for concealing transactions on behalf of Sudan, Iran and Cuba.

268 156 (Lord Lamont of Lerwick)

269 Q 91 (Rt Hon Jack Straw)

270 Q 151 (Carole Nakhle and Stewart Williams)

271 Q 43 (Jane Kinninmont)

272 Flynt Leverett, Chapter 8: Middle East and North Africa, in ‘America’s International Role Under Donald Trump’, Chatham House, 18 January 2017: [accessed 25 April 2017]

273 Q 183 (Mark Fitzpatrick), Q 43 (Jane Kinninmont) and Q 220 (Jon B Alterman)

274 Q 151 (Stewart Williams)

275 Q 183 (Mark Fitzpatrick), Q 43 (Jane Kinninmont) and Q 42 (Ayham Kamel)

276 Q 156 (Lord Lamont of Lerwick)

277 Q 183 (Mark Fitzpatrick)

278 Q 191 (Tobias Ellwood MP)

279 Letter from Tobias Ellwood MP to Lord Howell of Guildford, 13 March 2017 (MID0013)

280 Tyler Cullis and Reza Marashi, ‘Has Donald Trump learned to love the Iran deal?’, The Huffington Post, 19 April 2017: [accessed 26 April 2017]

281 Q 22 (Neil Crompton)

282 European Union External Action, ‘Statement by Federica Mogherini on the first Anniversary of the Implementation of the JCPOA’, 16 January 2017: [accessed 24 April 2017]

283 Q 51 (Kerry Brown)

284 52 (Henry Wilkinson)

285 Q 44 (Jane Kinninmont)

286 Written evidence from Antoun Issa (MID0003)

287 Q 161 (Lord Lamont of Lerwick)

288 Q 44 (Jane Kinninmont) and Q 187(Mark Fitzpatrick)

289 Q 43 (Ayham Kamel and Jane Kinninmont)

290 Q 43 (Ayham Kamel)

291 Q 185 (Mark Fitzpatrick)

292 Q 157 (Lord Lamont of Lerwick)

293 Q 59 (Richard Haass)

294 Q 12 (Ali Ansari)

295 Q 72 (Ahmed Al Hamli)

296 Q 156, 161 (Lord Lamont of Lerwick)

297 Q 22 (Neil Crompton)

298 Robin Wright, ‘Trump puts Iran “on notice”’, New Yorker, 2 February 2017: [accessed 28 March 2017]

299 UN Security Council Resolution 2231 (2015), 20 July 2015, S/RES/2231/2015: [accessed 27 April 2017]

300 Q 184 (Mark Fitzpatrick)

301 UNSC Resolution 2231, ibid. By contrast, for example, UN Security Council Resolution 1929 (2010) which says that Iran “shall not undertake any activity related to ballistic missiles capable of delivering nuclear weapons” which does represent a clear prohibition. UNSC 2231 is more ambiguous in its language.

302 The Iran Project, ‘Iran Statement Missiles Response’ , 2 February 2017: [accessed 24 April 2017]

303 Q 191 (Tobias Ellwood MP)

304 Q 185 (Mark Fitzpatrick)

305 Q 184 (Mark Fitzpatrick)

306 Joint Comprehensive Plan of Action, 14 July 2015, Vienna: [accessed 24 April 2017]

307 Q 72 (Ahmed Al Hamli)

308 Q 159 (Lord Lamont of Lerwick)

309 Q 59 (Haass)

310 Lord Hannay of Chiswick and Thomas R. Pickering, ‘Trumping Proliferation: From a one-off deal to a global standard’, European Leadership Network, 6 December 2016: [accessed 26 April 2017]

311 Lord Hannay of Chiswick and Thomas R. Pickering, ‘Building on the Iran Nuclear Agreement’, Survival, vol. 59, no 2, April–May 2017, pp 153–166

312 Lord Hannay of Chiswick and Thomas R. Pickering, ‘Trumping Proliferation: From a one-off deal to a global standard’, European Leadership Network, 6 December 2016: [accessed 26 April 2017]

313 Q 159 (Lord Lamont of Lerwick)

314 Q 188 (Mark Fitzpatrick)

315 Q 46 (Jane Kinninmont). See also Figure 2 on defence exports.

316 Q 23 (Neil Crompton)

317 Rt Hon Boris Johnson MP, ‘Britain is back East of Suez,’ 9 December 2016,: [accessed 31 March 2017]

318 Q 194 (Tobias Ellwood MP)

319 Q 23 (Neil Crompton)

320 Rt Hon Theresa May MP, Prime Minister’s speech to the Gulf Cooperation Council 2016, 7 December 2016: [accessed 24 April 2017]

321 Rt Hon Boris Johnson MP, ‘Britain is back East of Suez’, 9 December 2016: [accessed 24 April 2017]

322 Q 19 (Renad Mansour)

323 Q 124 (Hayder al-Khoei)

324 127 (Haid Haid)

325 Q 127 (Hayder al-Khoei)

326 Q 124 (Hayder al-Khoei

327 Q 32 (Michael Stephens)

328 Q 102 (Philip Luther)

329 Q 33 (Christopher Davidson)

330 Q 160 (Lord Lamont of Lerwick)

331 Q 178 (Tom Fletcher)

332 HM Government, National Security Strategy and Strategic Defence and Security Review 2015, Cm 9161, Chapter 5, para 5.57: [accessed 24 April 2017]

333 Q 23 (Neil Crompton)

334 Q 102 (Philip Luther)

335 Q 142 (Rt Hon Boris Johnson MP)

336 90 (Rt Hon Jack Hon Straw)

337 Q 220 (Jon B Alterman)

338 Q 173 (Daniel Levy)

339 Q 66 (Nicholas Pelham)

340 ‘Donald Trump says US not committed to two-state Israel-Palestine solution’, The Guardian, 16 February 2017: [accessed 31 March 2017]

341 The “Green Line” or 1967 borders are the demarcated lines setting out the internationally agreed borders of the State of Israel.

342 Report of the Middle East Quartet, Foundation for Middle East Peace, July 2016: [accessed 25 April 2017]

343 Q 173 (Daniel Levy)

344 Q 90 (Rt Hon Jack Straw)

345 Q 190 (Tobias Ellwood MP)

346 Q 172 (Daniel Levy)

347 92 (Rr Hon Jack Straw MP)

348 Q 173 (Daniel Levy)

349 Tamir Pardo, former Mossad Chief, Speech at the Meir Dagan Conference on Security and Strategy at Netanya College, 21 March 2017: [accessed 26 April 2017]

350 Q 24 (Neil Crompton)

351 ‘Can Israel and the Arab States Be Friends?’, The New York Times, 27 August 2016: [accessed 26 April 2017]

352 Q 172 (Daniel Levy)

353 HM Government, National Security Strategy and Strategic Defence and Security Review 2015, Cm 9161, November 2015, para 5.63: [accessed 24 April 2017]

354 Q 190 (Tobias Ellwood MP)

355 United Nations Security Council, Resolution 2334 (2016), 23 December 2016, S/RES/2334/2016:–2016.pdf [accessed 24 April 2017]

356 Q 37 (Lord Williams of Baglan)

357 Q 66 (Nicholas Pelham)

358 ‘Kerry rebukes Israel, calling settlements a threat to peace’, New York Times, 28 December 2016: [accessed 16 March 2017]

359 ‘Theresa May’s criticism of John Kerry Israel sparks blunt US reply’, The Guardian, 29 December 2016: [accessed 26 April 2017]

360 Q 173 (Daniel Levy)

361 Q 37 (Lord Williams of Baglan)

362 European Commission website, ‘European Neighbourhood Policy and Enlargement Negotiations’: [accessed 25 March 2017]

363 Q 40 (Lord Williams of Baglan)

364 Q 173 (Daniel Levy)

366 Q 173 (Daniel Levy)

367 Q 174 (Daniel Levy)

368 Q 142 (Rt Hon Boris Johnson MP)

369 This would follow the House of Commons vote (October 2014) which supported the recognition of the state of Palestine.

370 Q 38 (Lord Williams of Baglan)

371 Peter Jones, ‘Structuring Middle East Security’, Survival, vol 51, No. 6, December 2009–January 2010, pp 105–122

372 Quoted in ibid.

373 Peter Jones, ‘Structuring Middle East Security’, Survival, vol 51, No. 6, December 2009–January 2010, pp 105–122

374 38 (Lord Williams of Baglan)

375 Q 32 (Christopher Davidson)

376 Q 18 (Ali Ansari)

377 Q 18 (Renad Mansour)

378 Q 162 (Lord Lamont of Lerwick)

379 Q 32 (Christopher Davidson), Q 32 (Michael Stephens) Q 18 (Ali Ansari) and Q 38 (Lord Williams of Baglan) and Peter Jones, ‘Structuring Middle East Security’, Survival, vol 51, No. 6, December 2009–January 2010, pp 105–122

380 Q 32 (Christopher Davidson)

381 Peter Jones, ‘Structuring Middle East Security’, Survival, vol 51, No. 6, December 2009–January 2010, pp 105–122

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