Why Iraq is the winner of the Saudi-Iranian rivalry

Updated: Jul 21, 2020

Iraq is a country rising from the ashes following a US invasion and a lengthy fight against ISIS. Its geographical position, sandwiched between the two biggest players in the Middle East, is proving to be a considerable advantage.

While many may see the Middle East as a region of constant fighting and a million different warring sides, the modern region has a story much more akin to that of the post-war world. This Middle Eastern “Cold War” of sorts, is much more like the decades-long socio-political stalemate between the United States and the Soviet Union, then the millennia-long religious conflict it is normally portrayed as. In this war, Saudi Arabia and Iran find themselves both grappling for power and influence over the proper sect of Islam, the proper social and cultural lifestyle, and the identity of the proper leader of the region. In the midst of this conflict, Iraq has emerged as a powerful asset for each side. Sandwiched directly in between Saudi Arabia and Iran, this important state sees an increased desire in trade from both sides, looking to capitalize both monetarily and politically with the support of the Iraqi people. With both countries vying to seduce Iraq through generous trade deals and active diplomatic missions, as well as cooperation projects, Iraq finds itself in prime position to take advantage of this unique double opportunity.

The Iraqi Ministry of Foreign Affairs has gone so far as to state that its main priorities are “to rebuild and enhance Iraq's bilateral relations … re-engage [their] neighbors, strengthen relations with Arab countries and improve relations with the broader Islamic community.” (1) Herein lies the first step to Iraq’s path to success: stoic neutrality — by staying impartial, every door remains open.

Iraq is currently facing much the same dilemma that post-war Europe faced — being pulled from both sides by strong countries in the effort to win some influence war. Iran sees itself as the defender of Shia Islam — and by extension Iraq — a country now governed by a Shia majority. Saudi Arabia, on the other hand, hopes to gain control of the important buffer state, while simultaneously fulfilling American Anti-Iran sentiments (2). This sudden Saudi interest in Iraq is not random. Though secular in name, Saddam Hussein’s regime saw the majority Shiites being pushed to the margins. In the years following the fall of the Sunni-led Hussein regime, the new government has sought to reflect the new Shiite power (3). Due to fear of an impending Iranian satellite state being established in Iraq, the Saudi Kingdom has taken a very active diplomatic stance in Iraq, with hopes of countering Iranian current overwhelming influence (4). Riyadh has recently taken to a new approach in the “New Saudi Arabia-Iraq Coordination Council” — inaugurated last year in hopes of strengthening ties between the two countries, expanding student and cultural exchange, and broadening a wide range of Saudi investment in oil, gas, trade and agricultural exports (5).

None of this is to say that Iraq will soon be looking up to Riyadh — Iran still has a major grip on the country — a grip that Saudi Arabia cannot yet replicate. Iran still maintains strong connections with the Iraqi political and social elite, as well as a need to strengthen their deeply rooted interests in the nation. Iran has been a reliable, and even indispensable, partner, using its military and intelligence resources to win favor and patrons in the country (6). This connection is two-way as Iran values an increased volume in foreign currency, as it is much needed to keep the struggling Iranian Rial afloat. According to the Iraqi economic center, the Iranian exports to Iraq were worth $13 billion in 2017, “with Iran’s exports to Iraq doubling 17 times over the past decade.”(7) It seems unlikely that Iran will ever give up on this valuable relationship (8).

Yet, even with all the steps that the Saudi Kingdom has taken over the years, it seems that the path to friendship with Iraq is a nearly insurmountable mountain as of now. The painful memory that many Iraqis have over Saudi Arabia’s alleged sponsor of terrorism looms like a dark cloud over the horizon. Indeed, the terrible damage that terrorism has wrought cuts deep in the Iraqi psyche — both among the Shia and Sunni. If Saudi Arabia wants to regain civilian support in Iraq, they will have to work hard to fix their image.

As expected, Iraq has found strength in this aggressive pull on both sides — a gift on two fronts. The new Iraqi prime minister, Barham Salih, understands this unique position better than anyone else. On November 8th, 2018, the AP reported that “ Salih was in Tehran where he pledged to improve trade ties less than two weeks after the U.S restored oil sanctions that had been lifted under the 2015 nuclear accord.’’ The following Sunday, “Salih was received at the airport in Riyadh … [while] King Salman held a lunch in honor of the Iraqi president with ministers and high-level princes in attendance.” (9)

Following their meeting on November 17th, 2018, Iran’s President Rouhani was optimistic that through “bilateral efforts”, the two countries could raise the annual bilateral trade volume to “$20 billion in the near future” (10) Iraq also holds military alliance interest with Iran, as Iran’s “Revolutionary Guards played a key role in training and arming the mainly Shi’ite militias that helped defeat Islamic State.” (11) However, Iran is facing a major obstacle to their desire to expand trade with Iraq: US sanctions. This could once more benefit Iraq however, as, according to Muhanad Seloom, “an associate lecturer at the University of Exeter and former advisor to the Iraqi government;” these sanctions encourage Iraq to take advantage of their own oil resources — as Iraq is OPEC’s second-largest oil producer — especially exporting Kirkuk oil, as well as providing an opportunity for Iraq to grow independent from Iran in its energy needs. (12)

Saudi Arabia seemingly provides the answers for many of the problems that Iraq faces in its relationship with Iran. The main one being that they do not have to rely on Iran for its energy needs. The Saudi government’s desire to curry favor with Iraq is seen most clearly when, in June 2018, “Iran had cut electricity flow to Iraq from its grids after the latter failed to pay its accumulating debts. Saudi Arabia and Kuwait quickly looked to partially fill Iran’s void by sending diesel shipments to help generate electricity in the direst areas.”(13) In an effort to distance themselves from their terrorism implications, Saudi Arabia has taken to large investments in the struggling Iraqi infrastructure. For example, “Saudi foreign minister, Adel al-Jubeir, pledged $1bn in loans and $500m in export credit to support Iraq’s reconstruction after the war with Islamic State.”(14)

The key to Iraq, however, lies in Basra — Iraq’s richest province — and the easiest province to quickly reap the fruits of investment. These projects include investment in the outdated Basra petrochemical plant, which would lessen some of that region’s reliance on Iranian products. Furthermore, “Saudis have also eyed the scrub along the border, which the kingdom wants to turn into fertile fields by tapping underground aquifers. Iraqi officials hope it will finance railroads and reopen the pipeline that, until 1990, shuttled Iraq’s oil to the Red Sea.”(15) As long as Riyadh is financing these crucial projects, Iraq sees no problem in a “friendship”.

While Iran wants to keep its solid influence over its Shi’ite neighbor, Saudi Arabia is making active diplomatic and business moves in order to regain influence over Iraq. With two major regional powers are trying to seduce it and give what it takes to have Iraq under their sphere of influence, it’s time for Iraq to play smart, and benefit from this situation in order to rebuild itself politically, economically and socially.

By Timothy Motte

President and Founder, AfterThought Group

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