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STRATPOL Memo August 15

Canada and Saudi Arabia in a diplomatic row

A sudden deterioration has shaken the relations between Canada and Saudi Arabia last week after Canadian Foreign Ministry criticized the arrests of human rights activists in Saudi Arabia in a series of tweets. The Saudi response was quick and ruthless, expelling the Canadian ambassador from Riyadh and recalling their envoy in Ottawa. The Saudis also suspended new trade and investments as well as the state airline flights to Toronto and ended thousands of scholarships and even medical treatments in Canada.

The reason behind such overreaction may be an attempt of the Saudi crown prince Mohammed bin Salman to send a message that if a country wants to do a business with Riyadh, it has to turn a blind eye to its widespread human rights abuse. Bin Salman is often being portrayed as a reformist both at home and in the foreign media because he has initiated some cosmetic reforms such as lifting the ban on woman driving.

However, the crown prince is also pursuing an aggressive foreign policy: he is considered an “architect” of the Yemeni civil war and the blockade of Qatar, while at home he did not hesitate to arrest hundreds of influential businessmen. A recent negative coverage of Saudi Arabia in Canadian media due to the weapons deal signed with Trudeau’s government back in 2016 also likely contributed to the crown prince’s frustration.

Another aspect of this row is that neither the US nor Britain or any other European country supported Canada. While some argue that it is a result of the rise of populism, embodied by Trump and Brexit, others point to naive and even hypocritical foreign policy of Canadian Prime Minister Justin Trudeau.

Iran on the brink of collapse?

After US President Donald Trump withdrew from the 2015 Iran nuclear accord (JCPOA), tensions between the US and Iran, as well as the rest of the signatories, have been on the rise. Series of mutual threats between the two sides were followed by unilaterally re-imposed sanctions on Iran by Washington and were condemned by all global powers. In the first wave of sanctions, Iran’s ability to purchase US dollars will be targeted and will have an impact on the country’s trade in gold and other precious metals. The second wave of sanctions, much more draconian, is going to be imposed in November. These sanctions should prevent Iran from exporting oil, crippling the fifth-largest oil producer’s economy.

The EU strongly opposes the sanctions, but the main question is whether European companies would sacrifice trade with the US instead of Iran. China, Iran’s top oil customer, is on the EU’s side. According to the Chinese Foreign Ministry, “China’s business and energy ties do not harm the interests of any other country”. Even Iran’s Foreign Minister Mohammad Javad Zarif claims the US will not be able to prevent Iran from exporting oil.

The situation in Iran is slowly worsening day by day. Iran’s currency is in a death spiral, unemployment rate and youth unemployment rate hit 12,5% and 25%, respectively. Even though re-imposition of sanctions recently triggered protests in Iran, the impact on the regime has so far been negligent.

Power disruptions, water shortages, high temperatures and increasing price of food items are also fuelling the unrests, which led to the death of one and detention of 20 other people in Karaj near Tehran. Reportedly, protesters are also demonstrating against country’s clerical leadership, the intervention in conflicts in Yemen and Syria, and there have been reports of chants: “death to the dictator”, meaning the Supreme Leader Ayatollah Ali Khamenei.

Is the Caspian Sea a lake and why it matters

On Sunday, the Caspian Sea’s littoral states agreed in Azerbaijan on the potential division of its huge oil and natural gas resources. The convention will serve as a cornerstone for resolving the decades-long dispute between five countries – Russia, Iran, Azerbaijan, Kazakhstan, and Turkmenistan – vis-á-vis delimitation of its seabed.

Until the breakup of the Soviet Union, the status of Caspian Sea was regulated via bilateral treaties between Iran and the Soviet Union. These divided the lake into two sectors and resources were commonly shared. In the 1970s it was divided into sub-sectors along the median lines of the Soviet republics (Azerbaijan, Russia, Kazakhstan, and Turkmenistan) and Iran. Following the Soviet collapse treaties on borders were no longer applicable. Negotiations on its legal status and demarcation lines have been ongoing for almost three decades. 

On one hand, were it defined a sea, resources rights would be split between the competing nations in proportion to each one’s share of its coastline. However, Iran argues that since the Caspian Sea is an enclosed body of water with no direct connection to the world ocean internationally recognised maritime laws and regulations should not apply. If this was the case and it was designated a lake, the rights would be divided up equally. The details of the deal are yet to be known.

Kazakh President Nazarbaev claims that the agreement will allow for the continuation of the construction of various projects and setting fishing quotas on the basis of a “special mechanism of regular five-party consultations under the auspices of the Foreign Ministries.”

The dispute has caused that individual energy projects did not make much progress, effectively wasting the lake’s potential. The Caspian Sea contains 48 billion barrels of oil and 9 trillion cubic metres of natural gas in its proven offshore reserves.  Currently, one of the most problematic is the construction of the Trans-Caspian natural gas pipeline (TCGP) between Turkmenistan and Azerbaijan, which would allow Turkmen gas to bypass Russia on its way to Europe.

Analyst Ashley Sherman from Wood Mackenzie told Reuters that the immediate implications for the energy sector are likely to be limited.

STRATPOL Memos is a project which on a bi-weekly basis provides a short overview of the most important selected moments of Euro-Atlantic security and related areas. Our goal is to provide brief and informative comments with short analysis putting news into broader context.

Responsible editor Ondřej Zacha.

The text has not undergone language revision.