From Missiles to Diplomacy: Iran’s Dual-Front Strategy

By Fatin

For the Islamic Republic of Iran, recent times have been anything but calm… From the sudden change in presidency to the growing regional escalation, the Regime has found itself navigating very turbulent waters.



Tehran, it’s time to react! The latest challenge concerns the death of Hezbollah's leader in Lebanon – Hassan Nasrallah – one of the closest allies of Iran, which has severely tested the country’s deterrence strategy. In fact, following Nasrallah's death, the regime decided that the time had finally come to respond, launching an unprecedented attack on Israel with over 200 ballistic missiles, most of whom were intercepted. Israel has not yet responded to the attack, but it promised major retaliation. Even though the attack was surprising, it had a minimal impact, mainly because Iran focused on targeting military infrastructures and deliberately avoided causing civilian casualties.



New Engagement Efforts. At the international level, Iran’s President Pezeshkian seemed determined to resume nuclear discussions with the EU and the US after years of deadlock. Recently, he addressed the Joint Comprehensive Plan of Action (JCPOA) members at the UN General Assembly, expressing his willingness to revive the Deal and lift the sanctions imposed on the country. Pezeshkian's focus on engagement with the US and Europe marks a shift from his predecessor Raisi. However, Iran's close alliance with Russia and the growing tensions between Israel and Iranian proxies in the region make it politically difficult for the US and Europe to embrace Pezeshkian's overture.





The ECJ Annuls EU-Morocco Fishing-Farming Deal
By Hafssa

The court had its say. Last week, the Court of Justice of the European Union (ECJ) annulled the EU-Morocco 2019 fisheries agreement for breaching the self-determination principle and consent of Sahrawis in the Western Sahara. In simple terms, the top EU court says that goods coming from the contested territory should not bear the label ‘Moroccan’, and waters adjacent to the Western Sahara are not Moroccan. This is a blow to Moroccan diplomacy, but also… to the Council and the European Commission.



I can’t believe you did that! For Rabat, the ECJ’s judgement is a stab in the back. The EU is Morocco’s first trading partner (€23.4 bn worth of exports in 2023 alone) and for many years, the two parties turned a blind eye to the complexity of the Sahara dispute to safeguard mutual interests. Brussels learnt to let things go, whereas Rabat relied on cash to exert pressure on European institutions (aka Moroccogate scandal). But good times don’t last forever. For now, Morocco is trying to play the charismatic guy by saying that the ECJ’s judgement is “out of sync with reality.” It is unclear what this laconic statement entails… Maybe this whole situation is the cost of filtering allies through the prism of territorial integrity.



Bad for some, good for others. It is still being determined how this dispute will unfold in the next 12 months, but what is certain is that Morocco will not engage in a deal that is believed to undermine its territorial integrity. For Rabat, Moroccan waters include the Western Sahara and any compromise is hors de question. That said, the judgement was music to the ears of the Algeria-backed Polisario, which claims to represent the Sahrawi people. At the societal level, the court’s decision might stabilise the price of fish and vegetables. This is the common assumption among a few middle-class Moroccans who struggle to make ends meet. Sovereignty and territorial integrity are big words that are not as important as having the means to put food on the table.





Gas Might Jeopardize Saudi-Iranian Reconciliation
By Michele

Despite continued mediation over the past two years, the controversy surrounding the exploration and exploitation of the Al-Dorra gas field (Arash in Persian), between Kuwait and Saudi Arabia on one side, and Iran on the other, intensifies as regional tensions increase.



Genesis of the dispute. The gas field was discovered in 1967 and lies across the contested maritime boundaries between Kuwait and Iran, and the Saudi-Kuwaiti “neutral border area”. Estimates of Al-Dorra’s buried treasure range north of 10 trillion cubic feet of gas, making its exploitation vital for Kuwait. Unlike its two neighbours, Kuwait does not have access to natural gas deposits, which will yield much greater economic returns than oil in the green transition era. After refusing Iranian proposals to share access to the field, based on disproportionate claims of up to 70% of the field, Saudi Arabia and Kuwait announced a joint agreement for exploration in March 2022. In response, Iran’s national oil company NIOC began drilling an exploratory well but stopped shortly after.



Who is the boss? Most recently, the dispute was revamped by Riyadh and Kuwait’s progress on their joint project and a GCC statement about exclusive Kuwaiti and Saudi ownership of the field. Unhappy, the Iranian foreign ministry and various press agencies strongly condemned the statement, as well as repeated calls by Iranian officials to go ahead with exploration and a most recent statement by the CEO of NIOC about preparations for drilling being made.



This dispute shows that as long as old grievances persist, the progress of the Saudi-Iranian reconciliation will remain vulnerable. Especially as the region holds its breath for Israel’s potential retaliation against Iran, Teheran has stated that any use of the Gulf’s airspace is unacceptable and will incite a response from Iran, threatening to spell the end of Saudi-Iran rapprochement.





Türkiye’s Double-Digit Inflation Is Cooling
By Hafssa

Some good news…finally. Türkiye’s inflation rate dropped to 52% after reaching a peak of 75% in May. This is in part the result of a 50% interest hike that the Central Bank carried out (in comparison with 8.5% last year), aimed at curbing price growth. A high interest rate indeed lowers demand and by default, spending, thus lowering inflation. Interestingly, this is exactly what Erdoğan had once called “the mother of all evil.”



It’s early to celebrate. Türkiye may have entered the disinflation phase, but it is too optimistic to think that there won’t be any new peaks. Purchasing power is still low, and markets regularly change price labels (in the name of inflation). Needless to say rent – especially in Istanbul – is still out of touch with the average Turkish income. An apartment that used to cost 7,000 TL monthly now costs 20,000 TL. Hence, Erdoğan might be foregoing some of his stubbornness to let experts do their work, but the truth is that his popularity will remain shaky in the months to come.