Iran looks to shore up regional ties

What’s happened?

Iran’s president, Masoud Pezeshkian, and the supreme leader, Ayatollah Ali Khamenei, held talks in Tehran, the Iranian capital, with Iraq’s prime minister, Mohammed Shia al-Sudani, in early January, focused especially on the role of Iranian-aligned militia in Iraq’s affairs. The meeting forms part of wider efforts by the Islamic republic to navigate regional relationships following the recent fall of its key Syrian ally and in anticipation of a return of “maximum pressure” US policies under the president-elect, Donald Trump.

Why does it matter?

Iran faces a highly complex foreign policy agenda in the wake of the overthrow in December of the Assad regime in Syria, its core regional ally (compounding the disarray inflicted by Israel on Hezbollah, its key non-state proxy) and as Mr Trump threatens to reprise the bellicose military and economic approach to Iran of his previous term. Mr Sudani was widely reported to be requesting Iran’s sanction to circumscribe the activities of the Popular Mobilisation Forces (PMF, an alliance of mainly Shia, Iranian-aligned militia operating in Iraq), in response to US and other external pressure to do so and to avert potential US (or Israeli) attacks on the PMF in Iraq under the new US president. However, a statement following his meeting with the supreme leader, the ultimate foreign policy arbiter, firmly praised the militias’ role in Iraq, and although Iran might allow some tactical restructuring of the PMF’s role in order ease domestic and international difficulties for a major ally, the recent defeats inflicted on other regional proxies make it unlikely to accept any fundamental weakening of those still intact, including Yemen’s Houthis.

The Iranian government is also attempting to preserve and expand the rapprochement with major Sunni Arab states under way before the outbreak of the Israel/Hamas war in October 2023 upended regional politics. Reconciliation with Saudi Arabia earlier in that year remains tentatively in place, with the kingdom’s temptation to exploit its rival’s weakness tempered by its continued desire to exit Yemen’s frozen civil war, which requires Iranian buy-in. In December a slow-moving reconciliation with Egypt reached a milestone when Mr Pezeshkian held bilateral talks with his counterpart, Abdel Fattah el-Sisi, during a multilateral summit in the North African country, giving rise to a joint expression of hope for the imminent restoration of full diplomatic relations.

The Houthis’ ongoing attacks on Red Sea shipping, which are sharply reducing the crucial revenue that Egypt earns from Suez Canal traffic, present a major obstacle. However, Mr Sisi might hope that reconciliation will offer opportunities to persuade Iran to rein in its Yemeni proxy, while the two share suspicion of Syria’s new Islamist authorities. On the latter, it is notable that in the last two weeks Iran has shifted towards statements of support for a Shia “ resistance” in Syria.

What next?

Iran will attempt to preserve and expand rapprochement with key Sunni Arab powers, in anticipation of intensified political and economic pressure from the new US administration and to mitigate the spillover effects of recent setbacks in Syria and elsewhere on its regional influence. However, a corollary scaling-back of support for disruptive proxies will be constrained by a countervailing desire to shore up residual state and non-state alliances to compensate for these reversals, while US sanctions will severely limit the economic gains from the reconciliation policy.

The analysis and forecasts presented in this article are drawn from EIU’s Country Analysis service. This comprehensive solution offers essential insights into the political and economic outlook of nearly 200 countries, empowering businesses to manage risks and develop effective strategies.