Iran's desire for 'a seat at the table' felt in Davos

At a dinner in the Swiss ski resort of Davos this week, Prime Minister Mohammed Shia al-Sudani hosted business and political leaders to showcase Iraq's improved security and finances.

As the private event was about to end, two attendees told Reuters, news reached some guests that Iran had fired ballistic missiles at what it said was an Israeli "spy headquarters" in Erbil, the capital of Iraqi Kurdistan.

"Some people at the dinner were checking if their houses have been hit," said one guest, who asked not to be named because the dinner was closed to media.

The strikes by the Islamic Revolutionary Guard Corps (IRGC) in the oil and gas rich region was the most direct intervention by Iran, and sparked fears of the Israel-Hamas conflict spreading in the Middle East.

While Iran's proxies, Hezbollah in Lebanon and the Houthi rebels who have attacked shipping in the Red Sea off Yemen, have stepped in since it began in October last year, Tehran has made it clear it wants to avoid war with Israel.

But for some at the World Economic Forum (WEF), where the agenda was dominated by three areas of conflict in which Tehran is involved, the Iraq missile attack highlighted Iran's desire to play a role in how the war in Gaza is resolved.

"The Iranians want a seat at the table," a senior source with direct knowledge of Tehran's thinking told Reuters, explaining its actions were meant to give Iran a voice and not allow the U.S. and Israel to dictate the outcome.

"The real question is 'what is the end game for Iran and Hezbollah and now increasingly the Houthis?' They don't want Israel and the U.S. to dictate the pace of (the) Gaza war," Vali Nasr, a Middle East expert at the Johns Hopkins School of Advanced International Studies, said in Davos.

"One man's escalation is another man's deterrence."

Iran's Foreign Minister Hossein Amirabdollahian, the only official delegate from the Islamic Republic in Davos, said on Wednesday that attacks against Israel and its interests by the "Axis of Resistance" would stop if the Gaza war ends.

"I'm extremely worried. I think we have both seen spread and escalation," U.N. Special Envoy for Syria Geir Pedersen said at a WEF panel on the Middle East two days after the strike.

"I do believe Iranians do not want further escalation ... I think they are playing with fire," said Pedersen, who was listed on the Iranian foreign ministry's website as one of the senior officials with whom Amirabdollahian would meet in Davos.

Amirabdollahian did not respond to Reuters questions at Davos. Iran's foreign ministry could not be reached for comment.

The United States and other Western nations accuse Tehran of supplying drones and equipment to the Houthis and Russia for its war in Ukraine, as well as funding Hamas.

Iran says it supports the Houthis but denies arming them. While publicly acknowledging selling armed drones to Russia, Tehran says it has not provided any to attack Ukraine.

KURDISTAN

The Erbil strikes also reminded the world of oil exporter Iran's deep involvement in the politics of its neighbour Iraq.

The day after, a visibly upset Iraqi Kurdish Prime Minister Masrour Barzani gathered members of his delegation and some media at the Kurdish House on the Promenade in Davos.

"What's surprising - we are not a part of this conflict. We don't know why Iran is retaliating against civilians of Kurdistan, especially in Erbil," Barzani told reporters.

A close friend of Barzani, the multimillionaire Kurdish businessman Peshraw Dizayee, was killed in the attack.

Iran defended the strikes, saying it had a "legitimate right to deter national security threats".

Baghdad has recalled its ambassador from Tehran in protest and Sudani has called the attacks a "clear aggression" against Iraq and a dangerous escalation.

Sudani's spokesman did not respond to a request for comment.

U.S. IMPACT

Be it in Davos or elsewhere, the difficulty of establishing dialogue with Iran is its involvement in conflicts via proxies.

This strategy was designed by Qaseem Soleimani, the commander of the IRGC's foreign operations force Quds who was killed by a 2020 U.S. military strike on Baghdad airport.

Iran promised to retaliate.

"His legacy lives on: a network of deniable but deployable arms-length proxies across the region," a Western executive working in the Middle East, who asked not to be named due to security concerns, told Reuters.

Soleimani was killed during the third year of Donald Trump's presidency. The former U.S. President exited a nuclear deal with Western powers in 2018 and imposed new sanctions on Iran.

Tehran's ability to fund wars hinges on its ability to generate enough oil revenue and Trump threatened to sanction all buyers of Iranian oil, slowing its exports to a trickle.

Under U.S. President Joe Biden, Tehran has steeply raised oil exports. Biden's administration says it does not intend to lessen pressure on Tehran or allow its oil to reach global markets.

Tehran now exports more than 2 million barrels per day, 2% of global supply, more than half of it to close ally China.

Biden, who polls indicate is likely to face Trump in the race for the U.S. presidency later this year, has refrained from tightening sanctions on Iran.

Energy analysts say Washington is keen to avoid a gasoline price rally, a sensitive subject in an election year. Biden has also failed to persuade Iran's arch-rival Saudi Arabia to raise oil supply amid strained relations with Riyadh.

A top European oil executive in Davos said that if Trump returns for a second term it would be a game-changer for Iran.

"If Trump returns to the White House, he will make two phone calls. One to his "friend Saudi" to ask for more oil. One to China to ask to stop buying Iranian oil or face a new trade war. Then, things may start to change," the executive told Reuters.