(Bloomberg) -- The U.S. may be trying to isolate Iran with new economic sanctions, but a look around the Middle East shows it will take a lot more to curb the Islamic Republic’s growing influence as it vies for regional dominance with Saudi Arabia.
In Lebanon, that reach was on full display this week as an Iranian-backed group and its allies made gains in elections. Supporters on motorcycles waving yellow flags stopped outside the Saudi embassy in Beirut with a message for the royal family: “Death to Al Saud.”
President Donald Trump pulled out of the 2015 deal that put limits on Iran’s nuclear program in exchange for rapprochement with the West. He said on Tuesday he wants to force Iran into a new agreement that will foster peace in the Middle East. The problem for Trump is that Iran has been entrenching in the region for years, deepening its presence since the 2011 Arab Spring after leaders were toppled, governments weakened and war broke out in Syria.
In most cases, the rise has been at the expense of Sunni Muslim groups supported by U.S. ally Saudi Arabia. Shiite Iran and its proxies have fielded fighters that have helped Syrian President Bashar al-Assad prevail over his mostly Sunni opponents. Pro-Iran Houthi militias in Yemen fire ballistic missiles at will at Saudi Arabia, including two intercepted on Wednesday over the capital Riyadh.
In Iraq, Tehran’s influence has been growing since the 2003 U.S.-led invasion removed Sunni President Saddam Hussein, who had kept Iran at bay. Elections there on May 12 may give Iran more clout as groups it supports vie for power.
“It’s Iran's regional influence that the Trump administration seeks to roll back and the tool that they have at their disposal is the nuclear deal,” said Kamran Bokhari, senior fellow with the Center for Global Policy in Washington. “But it’s not clear how nixing it will accomplish this goal.”
The Lebanese militant organization Hezbollah is Iran’s biggest success at exporting the 1979 Islamic Revolution, what Bokhari called an “old investment bringing in new dividends.” The group has a network of charities providing social aid and affordable health care that its Shiite supporters benefit from. It won its first legislative seat in Sunni-dominated Beirut and triggered the celebration in front of the Saudi embassy.
The Saudi-backed coalition led by Prime Minister Saad Hariri’s party has disintegrated and changes to electoral districts cost him votes. It allowed Hezbollah and its allies to make advances as the economy splutters, debt mounts and Lebanon relies on pledges of money from donors.
“The wise Lebanese nation expressed their comments by voting no to the U.S. and no to Zionists in spite of all the dirty dollars that the U.S., Zionists and their regional followers spent to harm Lebanon,” Iran’s Tasnim news agency quoted Ali Larijani, the nation’s parliament speaker, as saying. “Donald Trump should realize that political and military pressure against people of the region will be faced with the voice of nations who stand against bullies,” he said.
For all the victory talk, gains in places like Lebanon mask an increasing malaise at home in Iran. The nuclear deal has failed to deliver on promises of new prosperity, foreign investment didn’t materialize and officials are figuring out how to avoid a banking crisis -- all putting strain on President Hassan Rouhani.
That leaves Iran and its leadership vulnerable should the U.S. decide to turn the screws because most of the pressure will be financial, said Ayham Kamel, head of Middle East and North Africa research at Eurasia Group.
“Entering an era of containment is going to damage Iran’s position long term and no amount of proxies can compensate for that strategic shift in the balance of power,” said Kamel.
In the meantime, Hezbollah and its partners now make up a majority in the Lebanese Parliament following Sunday’s elections. It means Iran can now entrench its presence through Lebanon’s legal institutions and not just through Hezbollah’s military power, said Sami Nader, head of the Levant Institute for Strategic Studies in Beirut.
Hezbollah supporters taunted Sunnis with chants of “Ha, ha, Beirut is now Shiite” and placed the party’s flags on a monument dedicated to Sunni Prime Minister Rafiq Hariri. Father of the current premier, Hariri was a close confidant of the Saudi royal family and one of the most influential Sunni figures before his assassination in 2005.
In 2004, Jordan’s King Abdullah, a Saudi ally, warned of such a scenario where Iran would establish a Shiite crescent of dominant governments and groups stretching from the Islamic Republic into Iraq, Syria and Lebanon in a bid to expand its influence.
That’s now resonated with the Saudis. Crown Prince Mohammed bin Salman, for whom undermining Iran is a top priority, told Time magazine Tehran is “the cause of problems in the Middle East” and if “you don't watch it, it could turn into a threat.”
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