BusinessDay 03 Apr 2018

Tuesday 03 April 2018
FT
Sunni Saudi Arabia courts an ally in Iraq’s Shia
Can the kingdom and its reconstruction aid overcome distrust between Islamic sects?
ERIKA SOLOMON
ANALYSIS
C002D5556
BUSINESS DAY
A13
Beneath the golden dome
of the Imam Ali shrine
spreads the ramshackle
expanse of Najaf, the Iraqi
holy city for Shia Muslims,
who flock to it in their thousands.
Arab visitors bow as they pass
the shrine, Iranians sitting beneath
it recite lilting chants and Pakistani
worshippers rhythmically beat their
chests.
With little in the way of wealth
or resources, Najaf might seem an
unlikely place for anyone but Shia
pilgrims to seek out. Yet the city,
160km south of Baghdad, has an
unusual new suitor — the oil-rich
power on the other side of Islam’s
sectarian divide, Saudi Arabia. The
Sunni Gulf kingdom’s courting of
Iraq’s Shia clerical elite over the past
year could mark a transformational
shift in Riyadh’s regional strategy.
For decades, Saudi Arabia and
its Shia rival Iran have exploited the
centuries-old schism between Islam’s
Shia and Sunni sects to serve their
modern-day power struggles. Now,
Saudi officials are discreetly shuttling
messages to Najaf’s leading Shia
clerics, who, although wary of being
drawn into a proxy struggle, want to
hear Riyadh out. Last year foreign
minister Adel al-Jubeir made the first
visit to Iraq by a senior Saudi official
since 1990. Iraqi leaders have hinted
that Crown Prince Mohammed bin
Salman could also visit the country
soon, with some saying he would
include Najaf on any itinerary. But the
Saudi foreign ministry was forced on
Saturday to issue a statement saying
that no such trip was planned, after a
protest in Baghdad at the end of last
week against such a visit.
The stakes of this tentative rapprochement
are high. At its best,
Riyadh’s efforts to find Shia allies
against Iran could defuse sectarianism
that has sewn a bloody trail
of conflict across the region. At its
worst, the push could turn Iraq into
yet another stage for Iranian-Saudi
rivalries, played out most recently in
Kuwait. Opportunities to re-engage
crumbled after the 2003 US invasion
— with the long-repressed Shia
majority suddenly empowered and
facing hostility from Sunni factions,
many leaders turned to Tehran.
Iran’s Revolutionary Guards bolstered
Iraq’s hardline Shia militias.
Meanwhile, Iraqis accused Gulf
states, particularly Saudi Arabia,
of tolerating if not funding Sunni
jihadi groups like al-Qaeda and more
recently Isis that were fuelling civil
war in their country.
Saudi re-engagement with Iraq
has long been encouraged by western
powers, particularly the US.
Those efforts were bolstered last
year by visits by two influential Iraqi
Shia leaders, Muqtada al-Sadr, a
popular cleric and political leader,
and Haider al-Abadi, prime minister.
Now Prince Mohammed appears
to have embraced this strategy as a
way to challenge Iran’s expanding
regional influence, while he embarks
on a radical overhaul of his own
country’s economy.
“Saudi Arabia has realised that it
cannot do without coexisting with,
or tolerating Shiism,” says Diya al-
Assadi, an Iraqi parliamentarian
close to Mr Sadr. “Now, the Saudis
want to tell people that they are not
against Shiism, but they are against
Shiism influenced by Iran.”
The approach chimes with some
Fans cheer the Iraq football team during their match against Saudi Arabia in Basra, their
first game inside the country since the 1980s. Despite losing 4-1, the Saudi king promised
to build a 100,000-capacity stadium in the Iraqi capital © AFP
Yemen, Syria and Lebanon.
“It may be calm in Iraq now . . . but
the struggle between these two
forces is reaching a climax, and I
don’t see either side ready for dialogue,”
says the Iraqi Shia politician
Ali al-Adib. “This is a region pregnant
with surprises.”
Iraq and its Gulf Arab neighbours
have been estranged since the
1991 Gulf war, triggered by former
ruler Saddam Hussein invading
year war against Isis, but ending
the decade-long cycle of sectarian
violence that preceded it.
“Our hope is that these Arab
countries hurry up and enter the
market,” says Ahmed al-Kinani, a Shia
politician who heads parliament’s
economic committee and who was
formerly aligned with pro-Iran parties.
“Iraq is an important part of the
Arab world, and Iraq should return to
the Arab embrace.”
The Saudi charm offensive contrasts
starkly with Prince Mohammed’s
earlier attempts at countering
Iran. Its air war against Shia Houthi
rebels in Yemen has left thousands
dead and created a quagmire from
which there is no easy exit. A brazen
move last year to hold its Sunni ally,
Lebanese prime minister Saad al-
Hariri, in Riyadh and force him to
resign in a bid to push the Iranianbacked
Hizbollah group out of government
backfired.
Yet in Iraq, where Iran’s powerful
presence constrains Riyadh’s ambitions,
Saudi leaders could get it right.
“Riyadh is laying the groundwork
for patient, long-term engagement,
doing the hard work of rebuilding
ties, relationships and even its public
image,” says Elizabeth Dickinson,
a Gulf analyst for the International
Crisis Group. “We see real potential
for Saudi engagement with Iraq to
forge a new model in how to whittle
back Iranian influence in the region.”
Najaf is a natural target. Its leading
clerics wield huge influence over Iraq,
and the Shia world more broadly. A
major coup for Riyadh would be developing
a relationship with Najaf’s
Grand Ayatollah. Few clerics are as
influential as the elderly, hermitic
Ali al-Sistani. In 2014, with a single
fatwa (religious decree), he sent tens
of thousands of Iraqi men to join
paramilitary groups fighting Isis after
it seized over a third of the country.
Mr Sistani’s office, itself critical
of Iranian intervention, is still wary
of Saudi overtures, local officials say,
but has maintained back-channel
communications. In Najaf and across
Iraq, Riyadh is appealing to a shared
Arab identity — something Iraq does
not have with Iran’s Persian majority.
In February, the Saudi Arabia
football team played Iraq in the
southern city of Basra, their first
game inside the country since the
1980s, a match attended by 60,000
fans. Despite losing 4-1, the Saudi
king promised to build a 100,000-capacity
stadium in Baghdad.
The kingdom has also sent delegations
of businessmen and jour-
The Iraqi Shia leader Muqtada al-Sadr meets Crown Prince Mohammed
bin Salman in Jeddah, Saudi Arabia, last year © Reuters
Shia worried by Iran’s increasingly
powerful role in the country. Najaf
clerics have long been leery of Iranian
interventionism. Some Shia
politicians, riding a wave of Iraqi
nationalism after defeating Isis,
are playing up their shared identity
with the Gulf Arab states as part of
their bid to gain support for Iraq’s
estimated $88bn reconstruction
effort. They see development as key
not only to rebuilding after a threenalists,
many of whom had not visited
the country in decades, fuelling
nostalgia for an era before wars tore
Iraq apart. Adham Fakher, an Iraqi
economist, says some delegates
wept as Iraqi officials greeted them.
“I was really surprised,” he recalls.
“These two communities were genuinely
very excited to meet.”
But that excitement has cooled as
Saudi visitors begin to grapple with
the daunting scale of Iraq’s corruption
problems and devastated infrastructure.
A member of one delegation
sent a note to the Iraqi National
Business Council, Mr Fakher said,
detailing concerns over security
and Iraq’s banking system, which
critics say is outdated, corrupt, and
reluctant to fund investment.
Investment is what Baghdad
wants most. So far, Iraq has gained
new direct flights with Riyadh and
the signing of 18 memoranda of
understanding for oil and gas projects,
but little direct investment. At a
recent reconstruction conference in
Kuwait, Gulf states offered little aid
— the $3.5bn pledged came mostly
in loans and credit facilities.
“We thought money was going to
come pouring in,” one Iraqi banker
says. “After the conference, we felt a
lot of it was talk.”
But in Basra, Iraq’s oil and economic
hub, the head of the local
investment authority, Ali Jassib,
remains optimistic: “Even if it’s all
talk — it doesn’t matter. It’s still an
attempt at a new start and refreshed
relations.” The opening of a consulate
in Basra is a sign Riyadh aims
to support Saudi investors, he says,
pointing to talks between Sabic, the
Saudi chemical company, and Shell
to invest in its $11bn petrochemical
project. Meanwhile, Basra’s investment
authority aims to attract Gulf
money for railway and agricultural
projects.
Thaer Abdel-Zahra, one of the
owners of Basra’s popular Times
Square Mall, says he has noticed a rise
in interest from Gulf investors. His
partners recently met representatives
of Kuwait’s Alshaya group, a major
franchise owner, with brands like
H&M, McDonald’s and Starbucks.
“God willing, within a few months
you’ll see a Starbucks downstairs,”
he says.
His concern is that Iranian-backed
parties controlling administrative offices
may try to strangle Saudi investors’
bids for land and licences, via red
tape. “There is a long way and a short
way to get these,” he says. “They will
push the Saudis the long way.”
Businessmen say US officials
are facilitating a lot of the activity
to counter Tehran’s influence. Iran,
Iraq’s second largest trading partner,
exported $12bn worth of goods in
the past year according to Iranian
state media.
US involvement worries some
proponents of Saudi rapprochement,
like Sadr supporters — many
of whom once fought US forces.
They argue that alongside belligerent
anti-Iran rhetoric coming from
Washington, it could push Riyadh to
over play its hand. “We really don’t
want Iraq to end up as the rubbish bin
of a regional Iranian-American-Saudi
dispute,” says Salah al-Obaidi, a Najaf
cleric and relative of Mr Sadr.
Diplomats say Iran has stayed on
the sidelines, trying to assess whether
there is any benefit, to it, from a Gulf
presence in Iraq. Tehran’s attempt to
unify several Shia political blocs to
reinforce its position in the country
ahead of Iraq’s May parliamentary
elections, fell apart within days. “That
incident shows us [not to] believe
people who say Iran controls everything,”
says one western diplomat.
“The big card they play is — look, we
will always be there for you.”