A New Era Beckons for Iraqi-Saudi Relations


Iraq is witnessing a rare moment of confidence. The defeat of the Islamic State in the country, along with the Iraqi government’s proactive measures to prevent conflict from erupting over territorial claims by separatist Kurds, has helped Iraq start to pull itself out of the abyss. An important but frequently overlooked subplot of this story is that Iraqi-Saudi ties are warmer than they have been in three decades — the partial result of a U.S. policy gambit.

The recent thaw in relations between Saudi Arabia and Iraq marks a key policy change. The United States and Saudi Arabia see the need for a strong Iraq to counter Iran’s expansionism and to bring a semblance of stability to a conflict-prone region. America’s policy towards Iraq now relies heavily on forging a strong Saudi-Iraqi partnership, which relieves the U.S. government from having to fund Iraq’s rebuilding. America’s new approach envisages closer security and economic cooperation between Iraq and its Gulf neighbors, working together to reverse the destructive sectarianism of the past few years. Iraqi Prime Minister Haider al-Abadi has capitalized on this change, turning it into an opportunity to seek regional support to address his country’s urgent reconstruction needs.

For war-ravaged Iraq, Saudi Arabia’s engagement bodes well. Iraqi leaders believe the relationship could lead to much-needed aid to rebuild its war-devastated provinces and stabilize Sunni-dominated areas of the country. Saudi Arabia, for its part, may share some of these goals, but its long-term vision is to fundamentally shift Iraqi politics away from being dominated by Iran. If rapprochement focuses on long-term partnership rather than merely diplomatic tête-à-tête, a new Saudi-Iraq relationship could fundamentally transform the region. Revitalized relations could strengthen the prosperity of both countries and help bring Iraq closer to its Arab kith with a view toward building a new security and economic environment in Iraq and the Northern Gulf. Any real change of the type envisaged by this new relationship will have to benefit ordinary Iraqis, something that could be realized by supporting Iraq’s rebuilding efforts and civil society sector.

A Complex History and a Recent Thaw

Since the Gulf War in 1991, relations between Saudi Arabia and Iraq have been severely limited. Given the invasion of Kuwait and Iraq’s isolation under sanctions, it was only in 2003 that a new political opening appeared on the horizon. Even then, relations did not improve, since Saudi Arabia feared the rise of Shiite political parties whose interests were increasingly seen to be tied to Iran, its regional rival.

A number of factors have converged recently to make Saudi Arabia reconsider its relationship with Iraq. Key factors in the rapprochement include the defeat of the Islamic State, the failure of the Kurdish referendum to carve out an independent state, and Iraq’s reconstruction needs — which are an opportunity to rebuild Iraq in ways that will help shift the balance of power away from Iran. Political willingness on behalf of the Abadi government has also been an important reason for this thaw. The prime minister’s position toward Saudi Arabia differs markedly from that of his predecessor, Nouri al-Maliki, who maintained a close relationship with Iran for several years. Securing a presence in the country, particularly before May’s 2018 elections, has also been a motivating factor for Saudi Arabia. In other words, it is in Saudi Arabia’s interest to support Iraq’s reconstruction and stability, which it views as a way to drive a wedge between Iraq’s Shiite elites and Iranian interests in the country.

In recent months, the opening of the Saudi Embassy in Baghdad and a consulate in Najaf, the rehabilitation of the Arar Border Crossing and the start of regular flights between the countries, in all cases the first since 1990, have attested to this warming of relations. Saudi Arabia’s recent participation in the Baghdad International Fair, which saw the participation of 60 Saudi companies, was also a welcome sign of an improved relationship. The international donor and investment conference, to be held in Kuwait this month, will mark a key milestone in the improving relationship between Iraq and its Arab Gulf regional neighbors.

Security and reconstruction top the agenda of the new Saudi Arabia-Iraq Coordination Council, inaugurated last year in Riyadh and intended to strengthen ties between the two countries. Partnerships within this still-tentative agenda are aimed at improving cooperation on student and cultural exchanges, investment in oil and gas, trade, and agricultural exports. But beyond separate bilateral agreements on these issues, a key aim of the Coordination Council, as envisaged by Saudi Arabia and the United States, is to extract Iraq from the clutches of Iran. Washington and Riyadh believe that reconstruction funding, if strategically invested, can be a way to improve Baghdad’s relations with its Arab neighbors. Since the United States has little appetite for engaging in Iraq’s reconstruction, it has encouraged Saudi Arabia and its Gulf partners to participate in those efforts. The United States has promised its full support to the Saudi-Iraqi partnership, investing political resources into this endeavor.

Reconstruction also has security implications: Iraq’s reconstruction using Gulf funding is seen as a way to transform Iraq’s political alliances. Supporting efforts to incorporate Iraq into the existing security framework of the Gulf by improving its relationship with Saudi Arabia will fulfill a key U.S. objective in the region. This is part of a wider American strategy to isolate the Iranian government and limit its expansionist presence in Arab countries.

The Iranian Challenge

While Saudi Arabia has been until recently largely absent from meaningful engagement in Iraq, Iran has forged extensive ties to Iraq’s political elites and has deep interests in the country. For political elites in Baghdad, Iran has been a reliable, and even indispensable, partner, using its military and intelligence resources to win favor and patrons in the country. It has provided military support to the Government of Iraq and the Kurdistan Regional Government in its time of need as well as the Popular Mobilization Forces, which were crucial in defeating the Islamic State.

The task of shifting politics in Iraq away from the orbit of Iranian interests is a daunting one and requires a transformation of Saudi Arabia’s political engagement with Iraq. Iran’s interests run deep in Iraq. Iraq represents a lucrative exports market, worth over $12 billion annually, which has helped bring billions in precious foreign currency into the Iranian economy. Iran’s privileged trade position in Iraq is also a result of its extensive political networks and influence over politics. From the shrine cities of Karbala and Najaf to the large markets in Basra and Baghdad, Iranian products dominate consumer markets. Alongside its ability to win government contracts from Iraqi government ministries — also worth billions — Iran has reaped enormous riches from Iraq since 2003. Any real partnership between Saudi Arabia and Iraq will have to evolve in the context of Iran’s economic dominance.

As far as Iran is concerned, any real outside investments in Iraq’s industries could eventually upend its advantage. After four decades of war, Iraq’s domestic non-oil industries are dilapidated or non-existent. Any money that the Iraqi government has will probably not go into supporting industry but rather to basic infrastructure rebuilding. For Iran, this is good news, since if the Iraqi government cannot support its own industries and enterprises, the markets remain open for Iranian exporters.

Opportunities and Challenges for Saudi Arabia

The burgeoning Saudi-Iraq partnership could help stimulate change for Iraq’s industries and help counter Iran’s political and economic domination. Saudi Arabia’s own resources, along with its impressive ability to tap into international capital, could strengthen domestic private sector development and provide support to capital-starved Iraqi businesses eager to service their own domestic markets. While this may not happen over the short term, Iraq offers substantial investment opportunities for those who know how to navigate the country’s complex bureaucracy. In this context, Saudi Arabia as well as its Gulf partners, are encouraging private-sector companies in the region to participate in rebuilding, which increasingly seems to be supporting Saudi-Iraq rapprochement.

Joint investment projects, focusing on strengthening economic integration, could herald a new age for cooperation. Planned investments in Iraq’s consumer markets and natural resources are a promising sign of improved relations. Such large projects, which are desperately needed in Iraq, will help stabilize the country, address social malaise, and provide a necessary check on Iran’s hegemonic control of the country’s economy. These areas of cooperation will obviously focus on oil and gas, but should also include more pro-employment activities such as transport, agriculture, education, and light industries.

Ploughing money to balance elite power struggles between Shia and Sunni groups in the country, as Saudi Arabia has done before, will not solve anything. Saudi Arabia should look to long-term, sustainable partnerships with the government of Iraq rather than siding with one political group. An approach that supports non-sectarian political groups will appease Sunni politicians in the country while weakening Iran’s dominance. Saudi Arabia’s efforts to strengthen its presence in the country, particularly before May’s national elections, underlines its seriousness about working with Iraq’s political groups. Riyadh’s support will also inadvertently boost Iraq’s increasingly nationalistic politics, which has been one of the defining outcomes of the war on the Islamic State.

Iran is closely watching Saudi Arabia’s first steps. Sunni politicians in Iraq have privately stated to me that Iran does not want Saudi Arabia to shift the balance of power in Baghdad. It fears that any large infrastructure projects funded by the Saudi government, particularly in the southern part of the country, would undermine Iran’s dominant position in Baghdad and Basra, and prefers to have Saudi money be used to rebuild war-affected provinces. In this context, the government of Iraq would do well to position Saudi Arabia as an indispensable partner to the country’s rebuilding.

How Riyadh Can Bolster Its Image in Iraq

Iran will not allow another key regional country such as Saudi Arabia to enter Iraq aggressively without a fight. While it will be the onus of the Iraqi government to offer the necessary protection and support, Saudi Arabia will have to actively strengthen its image across Iraq’s social and political landscape. Winning the support of the Iraqi population will be the surest way to protect the long-term interests of any Saudi-Iraq partnership.

To contrast itself with Iran, whose name and support to Shiite militia groups in the country creates a sense of apprehension among many ordinary Iraqis, Saudi Arabia would do well to build diplomatic and cultural ties to the Iraqi people. Recent polls in Iraq indicate that the population holds a negative view of Iran’s role in the country. Winning the trust of Iraq’s diverse social and cultural groups will establish the necessary foundations on which Saudi Arabia can build a credible partnership. The effort to build a partnership of the type envisaged by the Saudi-Iraq Economic Council will take place in a socially and politically fragmented country, with multiple and competing sites of power. Working in a top-down fashion will be inadequate. It is therefore not surprising that the new Saudi-Iraq Co-operation Council will also focus on cultural partnerships between the two countries across a number of fields.

Without active public outreach, Saudi Arabia could find it difficult to shed its image of being party to the terrorism that has cost Iraq billions and affected millions of lives during the past few years. In particular, Saudi Arabia has found it difficult to shed its image of being a sponsor of terrorism and radical Wahhabism in the region, which underpinned the ideological footing of al Qaeda in Iraq and later, the Islamic State. Some private donations to the Islamic State have allegedly come from Saudi Arabia, which has contributed to destabilizing Iraq and the wider region. It is not surprising that over the past few years, and especially from 2003, Saudi Arabia’s image in Iraq, in both Sunni and Shia areas, has become closely linked with terrorism and the terrible damage it has wrought. Improving relations would probably require Iraq’s economically richer neighbor to spearhead trust-building activities, overcome religious political and divides, and work to build cultural ties between the two countries.

Saudi Arabia should seriously consider managing a long-term grants scheme to support domestic Iraqi nongovernmental organizations, many of which have deeper links to their constituencies than the often-disconnected Iraqi political elites and the state institutions they control. Providing support to Iraq’s numerous grassroots organizations could radically transform aid giving in the region, proving Saudi Arabia’s keen interest in distancing itself from a history of sectional, religious, and political funding. Currently, there are over 3,000 NGOs registered with the Iraqi NGO Directorate, the government’s regulatory body. Working with these NGOs across the country and potentially partnering with the directorate in Baghdad to facilitate this will be a great step forward for Saudi-Iraq relations.

Small grants ranging from $5,000 to $25,000 could be a cost-effective way to build trust and improve Saudi Arabia’s image in Iraq. Projects could focus on peaceful and religious co-existence and cultural diversity, but also possibly community oriented “quick-fix” activities that emphasize small-scale rebuilding. Factoring in Iraqi ownership on these projects will enhance efforts to build credible ties between the two countries. Funding peaceful cultural-based nongovernmental activity will help Iraq transition to a post-conflict environment in which Saudi Arabia is viewed as a credible long-term partner, galvanizing support from the grassroots and buttressing improved relations from the bottom up.

A professionally managed Saudi cultural initiative in Iraq would go a long way to counter Iran’s cultural diplomacy and religious activities, which started in 2003. Iran’s activity has included student exchanges, free trips to Iran’s key religious sites, support to militia and political party NGOs, and efforts to spread Iran’s religious views of Shiite Islam across Iraq’s mosques and schools. The use of public spaces in this regard has recently seen a backlash against Iranian encroachment, a sign of lingering frustration of Iran’s role in the country. Muqtada al Sadr’s visit to meet with Crown Prince Salman last year was also a major event, representing shifting alliances and the advent of a new, non-sectarian politics emerging in Iraq. A leader of Iraq’s poor Shia communities, al Sadr’s visit to the Kingdom sends a clear signal that Shia political leaders are willing to work with Saudi Arabia. Al Sadr’s noted anti-Iranian and nationalist politics, as well as his expansive Sadrist Movement and network of local activists, could be a valuable asset to the Saudi-Iraq partnership.

Working with the people of Iraq directly through community-based and non-governmental organizations could fast-track Saudi’s presence as a reliable partner. Supporting non-religious and non-political projects could be part of the Kingdom’s broader new turn to “moderate Islam.” Cultural, vocational, educational, and humanitarian support should all be considered part of this initiative. Such efforts, if designed in a context of improved relations over the long term, should strengthen Saudi Arabia’s standing at an important time for Iraq’s rebuilding.

America has done well to bring together Iraq and Saudi Arabia with a view to stabilize the region. By bringing the two countries closer together, the United States will realize key regional goals: improving the security of the Northern Gulf and incorporating Iraq into an existing security framework, as well as helping the war-devastated country utilize reconstruction funds from its Gulf neighbors. Making good on this new friendship will not be easy, however. Years of mistrust and the absence of a credible Arab partner in post-2003 Iraqi politics means Saudi Arabia is playing catch-up. The tasks ahead are fraught with challenges, especially in light of the fierce competition that any such partnership will experience. As such, the focus should surely be on making ordinary Iraqis, who have suffered from four decades of war, directly benefit from any proposals for change.


Dr. Mehiyar Kathem is Research Associate at University College London. He recently completed a PhD program at the School of Oriental and African Studies where he researched peacebuilding interventions and the formation of Iraq’s domestic NGO sector after the 2003 war. He can be reached at m.kathem@ucl.ac.uk and tweets from @mehiyar.

Image: State Department