A dangerous tit-for-tat game is afoot in the Middle East

The US, China and Russia are entangled in a complex way. And the rising tensions in the region are already disrupting shipping and the oil trade

Vivek Y. Kelkar

[From Unsplash]

The military crisis unfolding in the Middle East is getting extremely serious. An escalation of the crisis could upset a fragile global economy, already suffering the impact of the Russia-Ukraine war and the US-China-Taiwan crisis. It’s a powder keg that threatens to explode with just one small miscalculation by any player—Israel, the US, Hamas, Iran and the Iran-backed militias including the Houthis and the Hezbollah.

The threads in the Middle East are extremely convoluted. Each key global power, whether the US, China or Russia, is entangled in some complex way and the entanglements make it very difficult to find a solution. The US has been keen to draw a China-Iran-Russia axis and paint it as a rogue. But within the Middle East at least, the three countries have considerable points of likely alignment. The regional powers like Iran and Saudi Arabia have their own complex, convoluted threads to unwind, some knotting back into either Beijing or Washington.

Yet, the events are fast moving and could well end up upending older alignments in the medium-to-long term, even some of the more recent ones like the bonhomie between Iran and Saudi Arabia. There are now distinct regions involved in the fracas, not just Gaza and the Red Sea, but also Jordan, Iraq and Syria. Predictions could be perilous.

On February 5, the US again bombed Houthi strongholds in Yemen. On February 2, the US struck more than 85 Iran-linked targets in Iraq and Syria. This was in retaliation for the killing of three US soldiers in Jordan. The US noted that it had bombed facilities that included the command-and-control operations centres, intelligence centres, and weapons storage sites of regional groups that were linked to Iran-supported militias or Iran’s Islamic Revolutionary Guard Corps (IRGC) and its branch, the Quds Force. Iran had denied that it was behind the Jordan attack, noting that groups like The Islamic Resistance in Iraq, a coalition of Iran-linked groups, act independently.

US President Joe Biden has vowed that he will hit the Iran-backed militias in the region whenever advised to do so by his military. It marks a dangerous, high risk tit-for-tat game. Israel’s relentless battle over Hamas in Gaza continues. The US simultaneously pushes for a diplomatic solution. Yesterday, the US Secretary of State, Antony Blinken flew to Saudi Arabia, his fifth trip to the Middle East since the Israel-Hamas war that started on October 7, 2023. His goal is to get the big regional powers to push for a ceasefire, bring Hamas under control and secure the release of Israeli hostages. He will travel on to Egypt, Qatar and Israel. But little seems likely.

The non-state actors

In the Red Sea, the Houthis, officially known as Ansar Allah, a Shia Islamist political and military organisation backed and armed by Iran, are continuing to threaten shipping. The Houthis back Hamas and have vowed to retaliate against Israel and the US, for what it sees as an unjust war in Gaza.

Beyond the Houthis and the Hezbollah, the Iranians back several other groups in the region, including the Islamic Resistance in Iraq and the Palestinian Islamic Jihad. The Fatemiyoun Brigade and the Zainabiyoun Brigade operate from Syria. In Iraq, there are the Kata’ib Hezbollah (which bombed the US sites in Jordan) and the Badr Organisation. All these groups are funded and managed by the IRGC (Iran’s Islamic Revolutionary Guard Corps) and have now actively entered the conflict in some form or the other.

Worse, the Houthis are engaged in what could even be called an undeclared war with the US and its allies who are attacking Houthi strongholds in Yemen. The US is continually targeting underground weapons storage facilities, missile systems, launchers, etc., in Yemen, that the Houthis have used to attack Red Sea shipping, seriously disrupting the world’s most crucial sea trade route and affecting global trade.

The China factor

China, meanwhile, is largely playing possum. It would rather not be seen as doing anything that impacts its relations in the Middle East long-term, and would prefer that the US does the hard diplomatic toil. Beijing has made half-hearted attempts calling for peace but has done nothing substantial to diplomatically end the crisis.

China has huge investments across the Middle East, including countries like Saudi Arabia, Oman and UAE. It’s not just the largest trading partner for Saudi Arabia and the UAE but also one of their largest investors, investing across manufacturing, infrastructure and construction. The infrastructure and construction projects are roughly inversely co-related to the GDP of each country in the region.

More significantly, China’s massive new manufacturing hub in the King Salman Energy Park in Saudi Arabia envisages both significant Chinese personnel working across the projects along with security personnel to ‘ensure the safety of China’s investments’—a privilege that only the US has enjoyed hitherto. It has signed some of the biggest natural gas deals in history with Qatar, guaranteeing it not only gas security but sufficient volumes to allow it to play a swing role in global markets, if the need so arises.

It is Iran’s largest oil customer and biggest trading partner with payments made both through barter and the hard currency that Iran needs. Iran’s leaders met with their Chinese counterparts four times in 2023. China has also serious stake in stability around the Bab-el Mandeb Strait in the Red Sea, with its military base in the African port of Djibouti, just a short distance from the Houthi-controlled part of Yemen.

China is not above running with the hare and hunting with the hounds in the Middle East. It’s wooing Iran, buying up its oil and trading without firmly investing to the extent that it has in, say, Saudi Arabia. Beijing recognises Iran’s economic value and geographical advantages in Central Asia and West Asia, but it also recognises that Tehran’s rivals like Saudi Arabia, Oman and the UAE have the cash it needs for its FDI, now that Western money sources as slowly withdrawing.

Beijing recognises that investments in Saudi Arabian infrastructure, for instance, won’t collapse like they have in Pakistan and other parts of the world, because the Saudis are motivated and cash-rich. It also recognises that there might come a point where the Saudi relationship could be pushed to counterweigh any US advantages in the Middle East.

All this makes China cautious.

The other players

Russia too has irons in the fire across Iran, Syria and Iraq. It is distracted by the war it has imposed in Ukraine, but it is more than willing to allow a conflagration in the Middle East take over the West’s attention—particularly Washington’s. Russia has made extensive use of Iran’s Shahed drones and missiles in its war with Ukraine. Russia has committed to develop Iran’s oil and gas infrastructure though its own firms, Gazprom and Rosneft, are cash strapped. Its commitments have been reiterated repeatedly over the past year. Iranian Prime Minister Ebrahim Raisi visited Moscow last December and met Putin. A new cooperation treaty involving defence, technology and trade is said to be in the final stages of negotiation. Russian foreign minister, Sergei Lavrov, held several talks with his Iranian counterparts and Raisi over the past year, including visits to Tehran.

Russia retains a strong military presence in Syria, despite its constraints. In January, a Russian helicopter flew near the cease-fire line between Israel and Syria, near the Golan Heights. It wasn’t the first time. Russia also announced two new military positions along the Syrian border. The moves are seen as deliberate, intended to deter Israel from attacks along the cease-fire line.

The Saudis and other players in the Middle East will not want the crises to worsen. Their economies are at a crucial point, where they’re making big bets on a post-oil future. Yet, countries like Qatar have substantially backed Hamas over the years and, like the others in the Middle East, cannot be openly seen as backing Israel or the US in the crisis, given that the key factor in the crisis is religion. Ironically, Qatar is also home to the largest US military base in the region.

What might happen?

Much depends upon how soon a cease fire between Israel and Hamas can be agreed upon and implemented. Israel continues to dismiss calls for a Palestinian state. The release of hostages by Hamas is a key issue for Tel Aviv, but Hamas too wants several prisoners in Israel to be released, including the controversial Marwan Barghouti, seen as a successor to Palestinian Authority President Mahmoud Abbas. Both sides are intractable and Blinken is busy trying to get them to at least a basic agreement.

Egypt is worried that Israel will expand the conflict to the Rafah area along its borders, which is choc-a-bloc with displaced Palestinians. Major shipping companies have already started avoiding the Red Sea. But an immediate disruption of the oil trade by the Houthis or other Iranian-backed organisations is unlikely. None of the non-state actors would be keen to damage the interests of either Islamic countries or Russia and invite their ire, at least not in the near future. Yet, the danger cannot be discounted. A perceived threat to the oil trade, with an escalation of the conflicts, will see prices spike higher and negatively impact an already pressured global economy.

In January, Iran seized a US oil tanker that had loaded in Iraq in the Gulf of Oman. Its proxies, the non-state actors, are watching Tehran’s moves and an escalation in the conflict could send any current calculations into a tailspin. Non-state actors do not measure the consequences of their actions in terms of international relations or geopolitics. The US tactic of bombing does not demotivate non-state actors either. It’s not known to what extent they would desist from their attacks if a cease-fire came into place, though it would take considerable wind from their sails.

This set of actors measures in terms of the destruction they cause to the US, Israel and the West. They also see this as an opportunity to escalate the crisis and achieve their long-term anti-Israeli goals, while driving out US presence. The Iranian regime could well see this as an opportunity to fight using regional proxies, keep Israel burning and the US uncertain, giving it a chance to expand its nuclear programme and aid its friend, Russia, by diverting attention from Ukraine.

The Houthis are not attacking Russian or Chinese freight in the Red Sea either. What is more likely in the immediate term is an intensification of attacks on non-oil cargo, seriously disrupting trade routes to the West, besides putting pressure on both freight and insurance costs on European supply chains originating from Asia. This could just be the needle that sends the now fragile EU economies into a keel.

The increased US presence in the region is not to China’s advantage. Beijing is keen to build its own level of control over these waterways and emerge as a power in the region. If it can’t rein in Iran and its proxies, its options are limited. But a conflagration could cause serious problems for its economy that’s already facing strong headwinds.

The situation is fluid and much will depend upon how the Arab states and China will move, and can control. The fate of the world has never been more deeply controlled by non-state actors.

Dig deeper

  • Regional war is upon us if Biden does not halt the Gaza carnage | Arab News
  • Yemen’s Houthi militia ‘ready for peace’ with Saudi Arabia | Arab News
  • Xi And The Red Sea: Protect Iran Or China’s Economy? Forbes
  • How have Red Sea attacks by Yemen’s Houthi fighters affected companies? Al Jazeera
  • Iran’s Regional Armed Network | Council on Foreign Relations
  • Middle East investments in China to bloom in amount, scope in 2024 as sovereign wealth funds aim to diversify: bankers | South China Morning Post
  • Masterclass: The World in 2024 | Founding Fuel

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About the author

Vivek Y. Kelkar
Vivek Y. Kelkar


The Cosmopolitan Globalist

Vivek Y. Kelkar is a researcher, journalist, and strategy consultant with extensive global top management experience across the media and the corporate world. Kelkar focuses on writing, research, and analysis across several global and Indian publications and delivering strategic solutions to a select clientele.

Kelkar is skilled at analyzing the nuances of political economy, industry, and corporate strategy. He has extensive experience of new product launches, marketing, business strategy, investor relations, and M&A.

A former editor of The Strategist at the Business Standard and a Senior Editor of Business Today, Kelkar has written extensively for The Spectator, Asia Times, Singapore Business Times, Asia Inc., and Asian Business. Kelkar has an M.A. in International Political Economy from the University of Sheffield, U.K. and an M.B.A. from the Ashridge Business School. He is also a visiting faculty at several universities.

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