Policy toward the Persian Gulf, one of the more successful facets of U.S. foreign policy over the last decade, is headed for rougher times in the next. "Dual containment," the strategic heart of U.S. policies toward Iran and Iraq, is unraveling. Alliance support in Western Europe is slipping, internal differences in the Gulf Cooperation Council are growing, the potential for instability in Saudi Arabia has become dramatically evident, and a faltering Middle East peace process puts new pressure on Gulf regimes. America's Gulf policy contains time-honored myths, holdovers from the Cold War, and many formulations that have become cloudy or rigid with use. Those basic principles require reexamination. Moreover, the continuing risk of terrorism against the large U.S. military presence in the region highlights the looming challenges to regional strategy.


Gulf policy is founded on the principle that access to the region's oil is critical to Western -- indeed, global -- prosperity. The Gulf's many small oil-producing states are largely incapable of defending themselves against larger players in the region. Since the collapse of the Soviet empire, however, serious military threats to oil access in the Gulf have diminished drastically. Even the Iran-Iraq War of 1980-88 with its assaults on oil platforms, pipelines, terminals, and tankers did not seriously affect the oil market or Western economies. No military power today has the capability to deny the West access to oil, although perceptions of Western vulnerability remain widespread. No anti-American dictator in the Middle East -- not Saddam Hussein, the Ayatollah Khomeini, or Muammar al-Qaddafi -- has attempted to hinder oil sales to the West. What actual task, then, does "maintaining" the flow of oil entail?

Even if a cutoff of oil is only a remote possibility, the West has been concerned that no cartel or group of oil-producing states be able to exert monopolistic control over oil prices. American support for Saudi Arabia, whose oil policies are dedicated to perpetuating moderate prices over the long term, has been the centerpiece of this strategy. With the Saudis' ability to decisively influence prices by varying their enormous production, other producers have found it difficult to significantly affect pricing. While the United States is opposed to any monopoly in oil, in reality the Saudis already possess monopoly-like control over production and pricing. Even if major oil-producing states tried to raise price levels by cutting production, how long would it be before other producers rushed in to profit from the market vacuum? Although a decrease in production is a stated goal of OPEC, it is not consistent with individual OPEC members' interests. Seizure of one Gulf state by another ... la Saddam is, of course, unacceptable, but that has less to do with energy security than with preventing a grab for power by hostile states in a strategic region. "Oil" may have been part of the early rationale for U.S. intervention after Iraq invaded Kuwait in 1990, but the real stakes were larger: U.S. leadership and global order. The slogan of Gulf War critics, "No blood for oil," never really applied.

Above all, the notion of U.S. engagement in the region to assure "reasonable oil prices" should take into account the cost of deployments in the Gulf. The Pentagon pays out between $30 billion and $60 billion a year for defense of the Gulf (depending on how you cost it), a formidable sum for protecting the import into the United States of some $30 billion worth of oil. Thus Americans pay what amounts to a substantial hidden gasoline tax that Europeans and Japanese, benefiting from American willingness to "carry the burden," largely escape. And other Western countries are unlikely to take up that burden on a permanent basis since few European policymakers view a military presence in the Gulf as necessary to ensure that the oil keeps flowing.


Some U.S. strategists suggest America has a broader interest in preventing the rise of any regional hegemonic power anywhere, especially one capable of threatening global stability through the use of force. Implicit in this formulation is retention of the U.S. role as primary security arbiter in the Gulf and maintenance of the U.S. presence there as a symbol of a global American security commitment. In some respects it would be more accurate to describe this objective as preserving U.S. hegemony in the Gulf. As American involvement in the Gulf has grown, particularly since the war for Kuwait, a U.S. forward presence in manpower, weapons, and supplies for future Gulf defense has burgeoned. All this encourages perception of the United States as the ultimate security guarantor for regimes in the region, placing American prestige and credibility on the line across the board. Under these circumstances almost any assertion of greater regional influence by any actor appears a direct challenge to Washington requiring some kind of response. Being out on a limb in the Gulf leaves little room for fine calculations of national interest.

In the eyes of some, the U.S. military presence in the Gulf is part of a broader strategy of access and pre-positioning for potential U.S. intervention worldwide consistent with their vision of America's role as global security arbiter. This ambitious vision, however, faces substantial challenges in the post-Cold War era of diminishing budgets, narrowing definitions of U.S. strategic interests, and the steady emergence of new regional powers.


Often invoked, this goal is particularly imprecise, probably unattainable, and at odds with future trends. Major political and social change in the Gulf in the not too distant future is a certainty and will, by definition, be destabilizing. The United States cannot aim at freezing the status quo. In fact, it has an extremely limited ability to shape or respond to internal developments affecting Gulf regimes -- especially the most likely challenge, dramatized by the 1995 and 1996 bombings of American facilities in Saudi Arabia. The only realistic U.S. security objective in the Gulf is prevention of cross-border aggression. Beyond that, there is little the United States can do to "preserve stability," when the threats are largely internal and the links between stability and the oil flow so weak.


Israeli security is a key U.S. goal in the Middle East, but direct links with the Gulf are tenuous. With the major exception of Iran's role in Lebanon, Israel's problem with terrorism is basically local in origin. The chief threat to Israel from the Gulf lies in the use of weapons of mass destruction, especially missiles, against it. Israel's exposure to the missile threat is no greater than that of U.S. regional forces or the region's other states or, very shortly, given missile systems' growing reach, Russia, India, or Europe. Broader U.S. antiproliferation policies aim at meeting this contingency. At this point, Israel's security, however important, does not represent an extra dimension of U.S. Gulf policy.


U.S. security assistance and presence in the Gulf have led to tacit U.S. preferential access -- although certainly no monopoly -- in sales to the Gulf states, especially of arms (although Israeli and congressional opposition have limited arms transfers). While all states want to encourage the sale of domestic products, the unacknowledged defense cost of maintaining access to this politically driven market raises questions about subsidizing the export of American products. In Iran and Iraq, moreover, the United States has pursued higher strategic objectives regardless of the costs for trade and investment. Access to Gulf markets may well be a leading concern for Europe and Japan, but it cannot drive American strategy.


While this goal has long ranked among the leading U.S. global objectives in policy rhetoric, it is often assigned a lower priority when it complicates the pursuit of other goals, including "stability." If the United States wants the Gulf to move toward political maturity and responsible government, liberalization is a prerequisite, but the process will also produce turmoil and change. Washington's dilemma -- how to square liberalization with the search for stability and a preference for the status quo -- grows more urgent with each passing year. Long-suppressed change will only be more convulsive when it occurs.


The greatest challenges to Gulf stability will come from within, as the authoritarian political order in the region is strained by shrinking state budgets, rising birthrates, the cost of social services, and unemployment. Ideas of democracy, participation, and social equality are spreading among elites who either have been schooled in the West or are well versed in Western political principles, while a growing, educated middle class seeks a greater voice in governance. Citizens' demands for reductions in the privileges of ruling families meet deep resistance from rulers, but all Gulf regimes are feeling strong pressure to reform and liberalize. Nearly all face some Islamist challenge from within, particularly where most other opposition parties are suppressed. Bahrain confronts an economically disenfranchised, oppressed, and increasingly insurgent Shiite majority. The Saudi royal family, like the shah of Iran 20 years ago, seems not to grasp the nature of the internal opposition and by now might not even survive the slippery slope of genuine political reform.

U.S. military clout will be of little use against turmoil within the Gulf states. Furthermore, it is, to many Muslims, a provocative presence when stationed on what for them is holy soil; Saudi Islamist dissidents regard its removal as a top priority. The United States must continue its support for liberalization in the region to help avert violent political change and anti-American reaction, already latent. The rub is that while regimes will suffer serious consequences if they fail to liberalize, liberalization can also open the door to social and ethnic fragmentation and other disorders of the democratization process that follow from long-suppressed opposition suddenly released.

In dealing with dilemmas of internal change, the United States will need to distinguish between support to states and support to regimes. Washington cannot afford to become deeply and publicly identified with governments that are losing popular support and sliding toward a legitimacy crisis. Easy in theory, in practice making a distinction between regime and state is difficult in the Gulf, where the two are often conflated, and diplomacy naturally involves dealing with existing regimes. U.S.-Saudi cooperation against internal and externally based Saudi dissidents, in the name of a struggle against terrorism, is particularly risky. While terrorism is a genuine threat, it is in the interest of many regimes in the Middle East to brand virtually all opponents as terrorists. These dilemmas suggest that the United States should quietly but firmly apply declared political values of human rights, due process, and wider participation that transcend ties with specific regimes or individuals.


The critical weakness of the United States' policy toward Iraq and Iran is its parallel treatment of two disparate regimes that present sharply different problems calling for different solutions. Dual containment is a geopolitical dead end -- at best a holding pattern until more auspicious times. Its legal rigidities, necessary for enforcing complex sanctions against the two targeted nations, perpetuate the confrontation. Most of Washington's allies believe the United States has demonized Iran and refuse to do the same.

Washington's identification of Iran as one of the chief threats to global security has not, therefore, prevented allies from developing close economic ties with the Islamic Republic. While Iran steadfastly aims at weakening neighbors by ideological means, its interests, unlike Iraq's, are tied to maintenance of the territorial status quo in the Gulf: as the "natural hegemon" of the Gulf, it loses whenever any other country in the region gains power. Furthermore, unlike Iraq and Saudi Arabia, which can choose from a variety of pipelines, Iran depends on a Gulf open to shipping as the only large-scale outlet for its oil exports.

In its legal isolation of Iran, the United States has ruled out all "carrots" or accommodation; furthermore, any alteration now would require a change of mindset in Congress, where the issue has become politicized and entrenched. Unlike the confrontation with Iraq, which hinges on one man, Saddam Hussein, the confrontation with Iran could drag on for decades. The United States has excluded any option that could involve Iranian strategic participation, even where it might coincide with American goals: on policy toward Iraq and the weakening Saddam, and above all on Central Asian, Caspian, and Caucasian pipelines. Flat rejection of pipelines through Iranian territory -- which, for practical reasons, most of the region's states and many oil companies would prefer -- opens the way to Russian monopoly. New east-west routes for oil, gas, railroads, and trucking along the old Silk Road are on hold until Iran, with its central position, can be included. All these contradictions will grow increasingly untenable. U.S. policy might even pull off the extraordinary trick of driving archrivals Iran and Iraq into a tactical alliance, as both now fear the United States more than each other.

Saddam Hussein's continued rule in Iraq is extremely harmful for the region as well as for his own people. His departure is almost a prerequisite for the positive evolution of the region, but it may not happen, partly because Washington, strangely, has avoided calling for it directly. Sooner or later, U.S. policy will have to acknowledge that Iran and Iraq are the two biggest players in regional security issues and take steps to anticipate their eventual integration into a security architecture.


Gulf security today rests on a strong unilateral U.S. commitment to the Gulf states. As yet, there is no regional security organization that can accommodate, even at the level of a discussion forum, the interests of all Gulf states. The Gulf Cooperation Council (GCC) does not include Iran or Iraq, while Saudi Arabia, the richest nation in the Gulf, is a net security consumer rather than a provider. Gulf leaders have made a few attempts to create partial collective security structures. The GCC, originally conceived as an economic cooperation organization, reluctantly developed a rudimentary joint military capability specifically to deter attack from Iran or Iraq, which it demonstrably failed to do. Even with Western assistance, the GCC’s military arm is likely to remain an aggregation of national military institutions disinclined to close cooperation.

Then, too, GCC relations are fraying. Many Gulf states are at odds with each other: Qatar vs. Bahrain, Qatar vs. Saudi Arabia, Saudi Arabia vs. Yemen, Oman vs. Saudi Arabia, etc. Smaller states distrust Saudi dominance of the council and worry about a longer-term Saudi threat to their sovereignty. Members are also likely to differ on such issues as the pace of regional reform, tactical policy toward Iran and Iraq, and degree of commitment to the "Arab cause." Nor is there reason to assume solidarity will grow.

The very notion of the Gulf as a geopolitical region is affected by post-Cold War developments in the Caucasus and Central Asia, proposals for pipelines through the region, and the growing roles of Turkey, the Kurds, and even India and Pakistan (the last two of which have large communities in the Gulf states constituting a major element of the work force). All this will call for expanded conceptions of security and additional flexibility on Washington's part.

More and more, other states' energy needs and concerns will come into play in the production and pricing of Gulf oil. Europe, Japan, Russia, and even China will increasingly bump up against U.S. strategic interests. A tight oil market could compel actors to forge special security bonds with individual Gulf states, including Iran and Iraq, to gain privileged or guaranteed access to inexpensive oil. One could even imagine, however unlikely, a return to the traditional competition for control of energy resources through exclusive arrangements and destabilizing arms-for-oil deals.


Crafting a new Gulf policy requires laying aside myths and conducting a review of future requirements from the ground up. The essential American strategic goals in the Gulf are maintaining the willingness of major Gulf oil powers to sell oil at market prices, lessening the strategic cost of oil to the United States through increased burden-sharing with allies, and, more generally, seeing the Middle East gradually integrated into the international order, with the consent of its people.

The Gulf is unique in its configuration of many small and vulnerable oil states, those states' strategic importance, and the global stake in regional stability. For these reasons, the international community, working through the United Nations or by other agreement, should consider according the region special international status. Violation of a country's borders, unacceptable anywhere, should be viewed as particularly reprehensible here. Such international status would help deter adventurism by Iraq, Iran, or even Saudi Arabia against their small neighbors. And violations would be more certain to evoke a sharp international response -- although the source of that response requires further consideration.

Since intervention by outside powers has been a major grievance of much of the Arab world and Iran over past decades, the region's countries have a clear incentive to adhere to security principles that would reduce the likelihood of Western intervention. Some kind of regional forum must be established to encourage frank discussion of the security interests and concerns of all parties, along with transparency of action and military behavior. Confidence-building measures along the lines of those promoted by the Organization for Security and Cooperation in Europe are appropriate for the Gulf, and have already drawn the interest of several Gulf states. This is a long-range vision, but the foundations must be laid now.

Meeting the coming challenges in the Gulf will require greatly increased consultation and burden-sharing -- indeed, partnership -- with America's European allies and Japan. There is tension between Washington's desire to spread the costs and its determination to maintain control of policy formulation. We propose that Washington reach agreement with allies first on what the realistic and essential security needs of the Gulf are and then on how these needs are to be met and paid for. European security requirements will probably be more modest than American ones, but Europe consumes much more Gulf oil. A more modest consensus on requirements and agreement on sharing costs will not only be far cheaper for the United States but will provide a predictable basis for joint action when international norms are violated in the region. The effect of a coordinated transatlantic or G-7 approach on the behavior of Iran or Iraq could be formidable.

Indeed, if Washington and Europe are ever to reach consensus on global strategic partnership and sharing of responsibility, the Gulf is arguably the best place to start because the stakes are recognizably high. Furthermore, Congress may not be willing to indefinitely fund U.S. protection of "European oil," inequitably shared. Consultations should focus on ground rules for Gulf state behavior, handling of internal challenges to regimes and the need for reform, agreement on what constitutes a genuine threat to oil or the regional order, and the types of responses required to address these issues.

Management of the heavy flow of arms to the Gulf is another area urgently requiring cooperation, complicated by the fact that the United States and other Western nations benefit financially from such sales. Ending the transfer of weapons of mass destruction is particularly pressing; the United States must accord that issue top priority, even at the expense of other important items on the agenda.

If America and its partners can reach even rough consensus on a few general rules limiting arms transfers, not only will the allies be more likely to play by them, but the group will be better able to pressure supplier states that currently do not conform at all: Russia, China, and North Korea, among others. Europe's looming vulnerability may spur its cooperation in preventing the spread of weapons of mass destruction and the means for their delivery. With the growing reach of ballistic missile systems available to Gulf states, Europe, even more than the United States, will need to worry about its exposure to the consequences of regional conflict and political blackmail.

If the West or the United States is to deter aggression by larger Gulf states, the temptation will be to continue efforts at forward deployment to facilitate future defense efforts. Yet forward deployment brings many dilemmas of its own. It strains perceptions of legitimacy and sovereignty within the Gulf states and ties the United States more tightly to the preservation of existing regimes. While forward presence may permit a swifter response with massive force, only the nearly unprecedented aggressiveness of a Saddam Hussein would call for such an intervention. The economic and political costs of maintaining a large-scale regional presence require careful assessment, not least because of the persistent risk of terrorism against U.S. forces.

Over the longer run the Gulf must begin to assume some responsibility for its own security. The sooner the status of Iran and Iraq is normalized, the more likely a balance will emerge that will help keep aggressive instincts at bay and make a broader security dialogue possible. The regional security forum whose establishment we advocate must begin by engaging all states of the region in a dialogue in which legitimate security needs are expressed and acknowledged. No progress toward regional self-defense is thinkable until then.

The current American near-monopoly of both the security system and bilateral security arrangements virtually suspends "normal geopolitics" in the Gulf; worse, it encourages local actors to avoid dealing clearly with one another on security matters, especially those that touch the stability of ruling families. Bilateral security arrangements cannot be eliminated overnight, nor should they be. But movement toward an effective regional architecture is essential if risks are to be reduced.


U.S. strategy must reflect the inevitability of change in the Gulf over the coming decades. American influence on the internal evolution of key regions may be limited. But the United States can judge opposition groups and successor regimes -- especially Islamists -- by their behavior, and it can avoid policies that make hostility toward Washington a self-fulfilling prophecy. The United States should not hesitate to make the ouster of Saddam an explicit feature of its Gulf policy, while still anticipating the eventual reintegration of both Iran and Iraq into the regional security order.

Above all, U.S. strategy must treat cooperation with Western allies as an opportunity, not a constraint. A new multilateral approach, while complicated to manage, is more in tune with the realities of the next century: the rising financial and diplomatic costs of unilateralism, uncertain defense budgets, an apparent American unwillingness to go anywhere or fight any battle, and the likely multipolar character of the world in the making. Multilateralism is a source of leverage for U.S. leadership in the Gulf. More important, it expands the membership and the responsibility of the club of like-minded states with shared values -- the only sound basis for long-term security worldwide.

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  • Graham E. Fuller is a senior political analyst at Rand and a former Vice Chair of the National Intelligence Council at the CIA. Ian O. Lesser, a former member of the Policy Planning Staff at the State Department, is also a senior political analyst at Rand.
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