Gulf Arabs eye Obama overtures with suspicion in wake of Iran talks

(Reuters) - The world powers' interim nuclear accord with Iran coupled with U.S. President Barack Obama's call for political reform in Gulf Arab countries has rattled Washington's traditional allies in the region.

Fearing change at home could play into the hands of Iran, their rival for influence across the Middle East, Gulf Arab leaders will have much to disagree over with Obama at a summit he has invited them to at Camp David and is expected soon.

But they are also taking matters into their own hands, as the Saudi intervention in Yemen shows.

Obama told the New York Times on Tuesday that the greatest security threat for the Sunni Muslim Gulf was not Shi'ite Iran but poor governance and extremism at home.

Although some Gulf Arab citizens and activists may agree with Obama's diagnosis, their leaders view change at home as a recipe for chaos that Tehran could capitalize on.

"We're astonished that the United States thinks this is a formula for success in this region," said Sami al-Faraj, a Kuwaiti analyst and adviser to the Gulf Cooperation Council, a political and economic alliance.

The Arab Spring uprisings of 2011 which had held out hope of democratic change have for the most part collapsed and given way to sectarian wars in Yemen, Syria and Iraq involving Shi'ite Iran's armed allies and hardline Sunni Muslim militant groups such as Islamic State.

"The youth who participated (in the Arab Spring) need to realize that their actions have undermined the state system in a way that has made their countries susceptible to Iranian intervention," al-Faraj told Reuters.

The framework agreement over Iran's disputed nuclear program reached in Switzerland last week could also alter the picture, although all sides have said many differences still need to be overcome before a final accord is reached.

But the Gulf Arab leadership believes Iran will still seek to interfere in their affairs.

"There's a track record. There is systematic action that has been going for years on the idea of exporting the (Iranian) revolution," the United Arab Emirates foreign minister, Sheikh Abdullah bin Zayed al-Nahyan, told reporters on Wednesday.

"Each time we try to get close to Iran or work with Iran, we see Iran try to wreak havoc and difficulty for our states and our region."

U.S. air cover for Iranian-backed Shi'ite militias battling Islamic State in Iraq has also raised questions in the Gulf over a possible shift in alliances by their superpower ally.

BIGGEST THREATS

Reforms are a highly sensitive subject among Gulf Arab monarchs, who have long stabilized their states either by generous welfare payouts to citizens or stamping out dissent.

In his interview with the New York Times, Obama said youth unemployment, political dysfunction and sympathy for extremism within Gulf Arab states needed to be tackled to eliminate national security threats.

"How can we build your defense capabilities against external threats, but also, how can we strengthen the body politic in these countries, so that Sunni youth feel that they've got something other than (Islamic State) to choose from," Obama said.

"I think the biggest threats that they face may not be coming from Iran invading. It's going to be from dissatisfaction inside their own countries," he said.

Activists in the region have long shared this view.

"Gulf regimes have directed their security apparatus at suppressing peaceful and pro-democracy protesters at the same time they've turned a blind eye to those who espouse sectarian extremist ideology," said Bahraini activist Ala'a al-Shehabi.

Bahrain, home to the U.S. Navy's Fifth Fleet, was swept by unrest when the majority Shi'ites demanded political reforms but the uprising was suppressed by a Saudi military intervention.

Activists there say their struggle is about political reform, not about advancing their sect or extending Iranian influence.

But Obama's words may be too little, too late for them.

"It signals there may be a change in the intentions of the Obama administration. But the comments don't reflect U.S. policy as it appeared to those of us who were fighting for the kind of change he now says is needed," Shehabi said.

STRENGTH OVER YEMEN

The tentative rapprochement between Tehran and Washington has convinced many Gulf Arabs that a new regional axis is taking shape that will make them vulnerable to Iranian intrigue.

Saudi Arabia's leadership and many of its people have taken heart from its military campaign in neighboring Yemen. Its air strikes, mounted with Arab allies, has targeted the Iran-allied Houthi militia which controls most of Yemen - and received U.S. approval.

"The public demand in Saudi Arabia right now is not for more democracy, but to handle the external threats," Saudi commentator Jamal Khashoggi said.

"The Saudis feel more assured since they took matters into their own hands. The issue that was bothering Saudi Arabia linked to the (nuclear) deal was that it was going to leave the Iranians unchecked in the region - that part is being handled today, not by the Americans, but by the Saudis."

But the campaign has done little to push back the Houthis and the Gulf Arabs are sitting out the nuclear talks in Switzerland.

"Saudi Arabia would rather have had a chair at Lausanne, instead it's left to stabilize a neighboring country it had helped destabilize," Iyad al-Baghdadi, an Arab Spring activist deported from the UAE last year, tweeted.

"Saudi Arabia and her satellites will realize too late that the biggest existential mistake they made was standing against the Arab Spring."

(Editing by Michael Georgy and Angus MacSwan)