The Great Realignment

How the Turkish threat fundamentally changes the geopolitical landscape of the Middle East.

Commercial Summary: Turkey’s victory in Syria is transformative for the entire Middle East. For a start, it risks uniting too many regional rivals against Turkey, as Iran fears for its own interests in Iraq, and as Israel, Egypt, and the Gulf Arabs fear the rise of the Muslim Brotherhood and its ability to transform their societies. However, Israel’s insistence on expanding into Judea and Samaria/the West Bank, Egypt’s poor economic situation, and the Gulf Arabs’ need to appease their anti-Israel populace, place a limit on these parties’ ability to cooperate against Turkey. Iran faces an existential choice: the Islamic Revolution’s pan-Islamist ideology has failed, but its possible replacement, Persian-Shia nationalism, requires a monarchic, not democratic, system. Iran freed from the Islamic Republic would be a natural ally of Israel. We invite readers to reach out and arrange a free briefing to discuss the commercial implications of these changes.

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Turkey’s victory in Syria rehsapes the region and gives Turkey a strong edge in the three-way struggle for the leadership of the Muslim world, which we wrote about a few years ago.

Turkey’s success in Syria imposes new strategies on each of Saudi Arabia, Israel, the UAE, Egypt, and Iran. For Iran in particular, the last few months have shown the failure of the pan-Islamic ideology of the Islamic Revolution, making succession to Khamenei a far bigger challenge. For Israel, the risk of a unified Sunni leadership across Syria, Lebanon, Jordan and Turkey is a far bigger threat than anything Iran could generate.

This piece sets out the strategies and challenges faced by the main players. Future pieces will discuss the commercial implications in each theatre of the new Gulf Arab - Iranian - Israeli - Turkish competition

Israel

For the Jewish state, the removal of former Syrian President Bashar al-Assad may be a defeat masquerading as a victory. Assad’s Alawite regime was clear in its unwillingness to openly challenge Israel, and in wanting to be merely a conduit and a supporter for the Resistance Axis.

By contrast, a Sunni Islamic regime in Syria risks inspiring the Jordanian opposition, where the Muslim Brotherhood - Hamas’ parent organisation - is the second most important force after the Hashemite Crown. Turkish consolidation in northern Iraq and Syria would turn Jordan into a ripe fruit that simply falls into the neo-Ottomans’ laps.

If Jordan, like Syria, falls to the Muslim Brotherhood and its offshoots, Israel would find itself in dire straits. Rather than facing Gaza, where Israel, after a year of fighting, is still struggling to achieve a stable success, Israel would find itself facing a much longer border with a population five times Gaza’s and with an open supply line to both Turkey and Iran. This would occur while Syria and Lebanon also become Turkish zones of influence - where Syria goes, Lebanon tends to follow. Meaning that the threat from Iran, which relied on what turned out to be inchoate forces of Syrian Alawites, Lebanese Shia, and Gazan Sunnis, would be replaced with a single, cohesive, Sunni threat extending from Anatolia to Syria, Lebanon, Jordan, and Gaza, and with far greater legitimacy than Iran’s, given the Ottoman legacy and the Sunni majority.

Theoretically, Israel is interested in stabilising Jordan economically and politically. However, religious Zionists’ insistence on colonising the West Bank and expelling the Palestinians are fully at odds with that theoretical interest. The religious Zionists may believe that the same tactics applied to Gaza can be applied to Jordan in the future, if the situation were to warrant it.

The UAE and Saudi Arabia

The Al Nahyan leadership of the UAE, like Saudi Arabian Crown Prince Mohammad bin Salman, has committed itself to confronting political Islam, both Sunni and Shi’a, while displaying stunning pragmatism.

However, Mohammad bin Salman appears to believe in the Confucian saying: “there cannot be two suns in the sky, nor two emperors on the earth” - at least with regards to the Gulf. The two countries, while sharing interests, should also be understood as competitors waiting to seize on the weakness of the other.

Saudi Arabia and the UAE will compete and collaborate to limit the influence of Turkey, but their differences make their efforts less effective, just as occurred when they were trying to contain Iran. Israel, in partnership with the US, can limit the negative effects of their competition by pressuring them to put aside their differences in certain areas, but this will be met with limited success.

On the other hand, Israel’s own actions against the Palestinians limit its ability to publicly cooperate with the UAE and Saudi Arabia: even though neither country is democratic, they do rely on some form of public legitimacy, and significant parts of their populations and media establishments view Israel’s actions with some horror. This encourages Saudi Arabia and the UAE to draw closer to Iran, as a prospective reliable partner against Turkish influence, which also does not pose a domestic threat.

Iran

The choice facing the Iranian military - both formal forces and the Islamic Revolution Guards Corps - is between Islamism and Shi’a-Persian nationalism.

The disaster of the loss of the Shah was this: as a monarch, he could alternate between religious legitimacy, monarchic legitimacy, and nationalist legitimacy. A secular republican regime does not have recourse religious legitimacy, obviously. Critically, it also does not have access to nationalist legitimacy, as it would promote the nationalism of other minorities in Iran, such as the Kurds, Baloch, Azeris and Arabs. Nationalism, on its own, is a centrifugal force, and needs to be tempered with centripetal forces like monarchy and faith, as the Ottomans and Hapsburgs understood.

Ayatollah Khomeini and Ayatollah Khamenei sought to make Iran into a pan-Islamic power, casting Iran as the enemy of the West and the protector of Muslim causes everywhere - hence the support for Kashmir and Palestine. They thought that this was enough to keep Iran itself together as well.

However, Iran’s dalliance with pan-Islamic legitimacy has reached a dead end: Hamas is not erased, but it is severely weakened, and it welcomes the new Sunni rulers of Syria; Assad’s Syria, which formed the lynchpin of Iran’s influence in Lebanon, is lost; Hezbollah severely underperformed against Israel, and is severely weakened given the loss of the Syrian supply lines and strategic depth; Iraq is a powder keg with some factions seeing a chance to rid themselves of Iranian influence; and Turkey is is on the warpath, keen to prevent Iran from again threatening its underbelly as it did between 2012 and 2024. Four decades of hard work by the Islamic Revolution have come to naught. The proxy strategy has completely failed.

Therefore, the Islamic revolution has been discredited, and even the Iranian military, including perhaps elements of the IRGC, sees this. Which makes the succession to Khamenei far more challenging. With late President Ra’isi dead, the only one who can secure the IRGC’s interests is Mujtaba, Ayatollah Ali Khamenei’s son. But if the mantle is passed in a hereditary manner, why should it go to a Khamenei and not a Pahlavi? And why should even a Khamenei rule as a pan-Islamist, not a monarchic nationalist?

A nationalist or monarchist Iran would find a natural ally in Israel, with the shared aim of containing political Islam and keeping the Arabs from becoming a challenge. The two countries may find a willing partner in the Gulf Arab monarchies. Unlike the Gulf Arabs, a monarchist or nationalist Iran would have far less concern with the plight of the Palestinians.

Turkey

Erdogan knows that his successes in Syria risk unifying the Israelis, the Arabs and the Persians against him. To make Turkey a true global power, the one missing ingredient is cheap, reliable energy. The import of energy is the biggest drain on Turkey’s current account. And the solution is obvious: capture Erbil, Mosul, and Kirkuk, develop their energy resources, silence the incompetent Shi’a government of Baghdad, and cut Iran down to size.

A version of a map of Turkey that often makes it on Turkish TV, which shows parts of northern Iraq and Syria as part of the Turkish state. Source: Foreign Policy.

Would Erdogan dare do it? Conquering northern Iraq and Syria would be hailed by the Muslim public from Malaysia to the Maghreb - or so Erdogan’s Islamists would believe. However, Russia and Iran, as well as the United States, Israel and the Gulf Arabs, would immediately turn against him, but it is less obvious what they can do in response - sanctioning Turkey would disrupt EU supply chains at a time when European firms are already reeling, and it would raise security risks to both Greece and Bulgaria. Moreover, Iran and Russia would likely calculate that managing the Turkish threat by helping Erdogan’s energy problem is less costly than confronting a Western-backed Turkey. Turkey does not face a realistic threat of its enemies uniting against it, but most likely can manage its rivals by playing them off against each other.

Incidentally, Erdogan most definitely would not want Jordan destabilised too soon - before Turkey can take and develop energy resources in northern Iraq. The fall of Jordan to the Muslim Brotherhood would impose another Jewish-Sunni conflict at a time when Turkey is not yet prepared.

Egypt

We had anticipated that the Gaza war would bring Egypt a bailout. We had also said that Egypt had no interest in economic reform. Rather, Egypt wants to use its geopolitical importance to milk its foreign backers indefinitely. The IMF, playing right into Egypt’s hands, just allowed it to slow down reforms so that the Egyptian government can continue to provide benefits and social support for low and middle class families. In reality, the Egyptian regime has no interest in a viable middle class, as it was the middle class that formed the bedrock of the Muslim Brothers and that led the 2011 uprising.

Therefore, the one question is whether the military will tire of President Abdul Fattah al-Sisi and decide to be rid of him, in a bid to appease growing public discontent and to lead Egypt into a more active role, given the existential challenge that Turkey’s Muslim Brotherhood ideology poses for the existing military regime. Given that it is the army that leads the Egyptian state, a coup is always a possibility which is by definition unforecastable.

In the meantime, Egypt will back the Arab states against Turkey, as it fears that the Syrian example will affect both Jordan, its partner in peace with Israel, and itself. Egypt is aligned with the Gulf Arabs in perceiving a threat from the Muslim Brotherhood. And it will demand significant economic support from the Gulf Arabs, the EU, the IMF, and Israel for taking action against that threat. Meaning that Egypt’s influence over this process will remain far below its potential.

By contrast, an ambitiously-led Egypt, seeing an existential Islamist challenge, may set its sights on dominating the Arab Gulf states, or at least eastern Libya and northern Sudan, ensuring that it is a capable challenger to Turkey, Israel and Iran. For the current regime, however, survival is the only aim, and complacency is the only policy.

We invite readers to reach out by replying to this email to discuss the commercial implications of these geopolitical shifts, and how they affect regional debt markets and sustainability, local currencies - especially Turkey and Egypt - energy markets, investment opportunities, Syria’s reconstruction, regional security risks, and other issues of interest.