Saudi Arabia-Iraq

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Snapshot

A New York Times article in 2007 stated that a deep rift had emerged between Sunni-majority Saudi and its predominantly Shiite neighbour Iraq since the fall of the Baathist regime in 2003.[1] In fact, relations between the two countries have oscillated between shared strategic interest - Saudi Arabia supported Iraq during its 1980-88 war with Iran - to military confrontation - Saudi Arabia hosted the US-led response to Saddam Hussein's invasion of Kuwait in 1990 and contributed its own troops to the war effort.

In early 2012 Saudi Arabia named its first Ambassador to Iraq in more than two decades, restoring normal diplomatic relations between the two for the first time since the invasion of Kuwait. According to New York Times this could signal Saudi Arabia's desire for a stronger presence in Iraq in order to buttress agains the influence of Iran in the country. Relations had become particularly strained since the 2003 US-led invasion of Iraq, leading to a Shiite-led government which cultivated closer relations with Iran and Iranian-supported political movements inside Iraq.[2]

In response to increasing Saudi interference in internal Iraqi politics, a leaked US diplomatic cable from 2009 revealed that Iraqi Prime Minister Nuri Kamal al-Maliki was so concerned about the meddling that he asked US President Barack Obama to stop the Saudis from intervening. He complained that Saudi's effort to rally the Sunnis were heightening sectarian tensions in the country.[3]

In December 2011, in the aftermath of the Arab Spring and as military troops began to leave Iraq, the UK's Sunday Times reported that Saudi Arabia was anxious about the influence that Iran might have in the formerly occupied country. The notion of a democratic Iraq under majority Shia rule was considered a threat to Wahhabism and the political authority that it grants the Saudi government. Fears that Iraq could regain its oil production quota within the Organisation of Petroleum Exporting Countries (OPEC) had also led to complicated regional dynamics, since further growth of the Iraqi (and Iranian) economies could weaken Saudi influence on regional geopolitics.[4]

OPEC rivalry

Over 2012 press reported rising tensions within OPEC between the Saudis and the Iraqis, a result of disagreements over how much oil to pump and what level to target for global oil prices. Competing ambitions arise because while the Saudis would prefer high oil prices to fund $600 billion in planned social programs, the Iraqis are more focused on boosting production. Energy markets strategist Julius Walker notes that "ultimately there will need to be an agreement between the two as to how to balance these ambitions."[5]

The rising profile of Iraq is testing Saudi Arabia's usual role as "swing producer", the country within the group with enough spare capacity to tap in times of shortage and rich enough to withhold when the market is flooded.[6] An emerging alliance between former foes Iran and Iraq in OPEC could also undermine Saudi Arabia, historically the oil cartel's dominant force.[7]

In January 2010 CNN reported that Iraq's oil reserves and projected oil development could bring the country in line with the world's top oil producers within seven years, Saudi Arabia among them.[8] Baghdad-based oil expert Ruba Husari had stated that Iraq's rise would take "an important balancing act within OPEC to preserve the cohesion within the organisation while at the same time satisfy Iraq's huge needs which are bigger than any other member's", adding that "Iraq's potential return as a major oil producer undoubtedly creates a challenge for Saudi Arabia more than any other member in OPEC."[9]

Export infrastructure

The Iraq Pipeline through Saudi Arabia (IPSA) was constructed in the 1980s to transport Iraq oil to the Saudi Red Sea port of Mu'ajiz.[10] It ceased to be used during the Iraqi invasion of Kuwait in 1990 and was expropriated by Saudis in June 2001 as compensation for debts owed by Baghdad,[11] claiming that Iraq had not paid transit fees for many years.[12]

However in June 2012 the IPSA pipeline was reopened by Saudi Arabia in a move to offset Iranian threats to close the Straits of Hormuz. This would allow the Saudis to bypass Gulf shipping lanes and transport its crude from Red Sea terminals in case of such a move.[13] The following month Iraqi officials called on Saudi Arabia to reverse a decision banning Iraq from exporting crude through the pipeline. Government spokesman Ali al-Dabbagh said that Riyadh does not have the right to ban Iraqi oil exports through the line according to international law.[14]

References

  1. "Saudis’ Role in Iraq Frustrates U.S. Officials New York Times, 27 June 2007.
  2. "Saudis Pick First Envoy to Baghdad in 20 Years New York Times, 21 February 2012.
  3. "Meddling Neighbors Undercut Iraq Stability New York Times, 5 December 2010.
  4. "US withdrawal from Iraq: The kingdom betrayed" The Sunday Times, 31 July 2011.
  5. "Iraq's Oil Surge Could Threaten the Saudis Bloomberg, 20 December 2012.
  6. "Iraq's Oil Surge Could Threaten the Saudis Bloomberg, 20 December 2012.
  7. "OPEC: Iran-Iraq alliance weakens Saudis UPI, 4 January 2013.
  8. "Iraq oil may rival Saudi Arabia" CNN Money, 12 January 2010.
  9. "Iraq to rival Saudi Arabia in OPEC oil stakes: Analysts The Daily Star Lebanon, 24 December 2009.
  10. "Pipelines bypassing Hormuz open" Financial Times, 15 July 2012.
  11. "Saudi Arabia reopens oil pipeline with Iraq to counter Iran Hormuz threat Al Arabiya News, 29 June 2012.
  12. "Iraq says Saudi Arabia should allow oil exports through east-west pipeline Platts, 19 July 2012.
  13. "Saudi Arabia reopens oil pipeline with Iraq to counter Iran Hormuz threat Al Arabiya News, 29 June 2012.
  14. "Iraq says Saudi Arabia should allow oil exports through east-west pipeline Platts, 19 July 2012.