Saudi Arabian-Iranian Relations: External Rapprochement and Internal Consolidation

Within the discipline of sociology and the field of international relations is found a longstanding proposition that regimes in trouble at home create enemies abroad. The idea is that external conflict leads to internal cohesion. When a population perceives an external threat, its members coalesce to face the common enemy; they “rally around the flag.” Creating an enemy is an effective means to boost the popularity of a regime and deflect attention from pressing domestic problems.1

By any measure, the 1990s were an enormously difficult decade for Saudi Arabia. Begun with the turmoil of the Gulf War, the decade was witness to opposition, Islamism, succession struggles, demonstrations, internal challenges and socioeconomic distress. Yet in a time of domestic uncertainty and instability, the regime nurtured a risky and innovative foreign policy.  There were certainly other choices. Why risk rapprochement with an old enemy at a time of uncertainty at home? Why not maintain the status quo? Better yet, why not exacerbate the threat in order to solidify the position of the Al Saud family? More precisely, why did the leadership in Saudi Arabia think it would be better to moderate relations with an old enemy in the face of pressing domestic problems rather than painting Iran as the specter of evil?

In this paper, I examine the ongoing rapprochement between Saudi Arabia and Iran. The symbolic and material context of this relationship is of critical importance. The Gulf region has 65 percent of the world’s proven reserves of crude oil and 33 percent of its natural-gas reserves. Saudi Arabia and Iran are the first and second largest producers within the Organization of Petroleum Exporting Countries (OPEC). Given their strategic location, both have been the site of an intense arms race. They have been a key ally and an enemy of the United States. These two countries also claim leadership of the Sunni and Shia portions of the Islamic community (umma). At first blush, these appear to be strange bedfellows. On the surface, the ongoing rapprochement between old enemies does not seem to make much sense. Yet, if we dig deeper, we find multiple reasons, not least among them the prominence of the United States in the region.

TWO TO TANGO

The relationship used to revolve around competition for legitimacy as Islamic leaders. In 1979, the threat that Iran posed to Saudi Arabia was about the power of ideas – the export of a revolutionary Islam. That is no longer true. Now the foreign policy relationship reflects a more nuanced and complex set of factors that lie at the intersection of domestic and international challenges. Too often domestic politics are submerged in analyses of foreign policy in favor of international factors.

The preponderance of analyses suggests that the rapprochement derives from the election of the reformist Muhammad Khatami in 1997. This is problematic, first, because relations began to thaw in 1991, six years before Khatami’s election. Diplomatic maneuvering began long before he assumed the presidency. Second, and more problematic, is the suggestion that Saudi Arabia was a passive object or had sought rapprochement previously only to be rebuffed by Iran. Khatami is only one-half of the equation. Equally important was the succession struggle in Saudi Arabia that ensued in the wake of King Fahd’s incapacitating stroke in 1995. Real rapprochement occurred only as Abdullah found more solid footing in his power struggles with familial contenders. To integrate these two observations, consider the fact that, at a March 1997 Islamic summit meeting in Pakistan, Crown Prince Abdullah asked Iranian President Rafsanjani to visit the kingdom.

It takes two to tango. It is not at all clear that rapprochement would have occurred between Fahd and Khatami as it has between Abdullah and Khatami. The impetus comes as much from Saudi Arabian as from Iranian leadership. It behooves U.S. policy makers to comprehend the mutuality of this relationship.

We must assume that the conditions that forged the hostile relationship have changed. But has Iran tempered its ideological challenge to Saudi Arabia? Does Saudi Arabia perceive less of a threat because of that? Did they come together in the face of some common threat, such as Iraq? Or is it really about U.S. hegemony in the region? For Iran, the United States was the key enemy. For Saudi Arabia, the United States was the key provider of their security. What conditions have changed? Certainly, Saudi security is still dependent on the United States, and, certainly, Iran still struggles with ostracism by the United States. However, domestic politics in both countries have changed. Both Abdullah and Khatami decided that they could benefit from moderating the relationship, and, in the process, both have further consolidated their own domestic positions.

We cannot extract the person of Abdullah from the equation. Abdullah has a strong nationalist voice (Saudi, Arab and Islamic). He is astute and independent. Abdullah is more closely attuned to domestic voices than Fahd ever was. He is not so intimately tied to the United States. His Islamic credentials are largely untarnished; even the Islamist opposition has always been hesitant to criticize his devotion. Caught in a succession struggle with the Al Fahd (the Sudairi Seven), he had to move boldly and carefully to consolidate his position. Abdullah championed a series of domestic reforms and regional initiatives in the late 1990s.

Khatami’s reformist voice grew increasingly confident in spite of persistent challenges from the clerics. He sought to re-enter the community of nations after the fervor and isolation that followed the revolution. In late 1998-early 1999, he began to consolidate his position after the murders of several Iranian intellectuals. When Iranian intelligence was implicated, Khatami channeled public outrage and anger against the ministers of interior and intelligence. This solidified his power. And in February 1999, reformist candidates won the local Iranian elections. Yet the United States still calls Iran part of the “axis of evil” a full 23 years after the revolution.

Rapprochement is not a zero-sum game for Iran, Saudi Arabia or the United States. Indeed, it is more complex than that. To illustrate this complexity, I will focus on the nexus of domestic and international concerns. First, I briefly portray the historical development of the relationship between Iran and Saudi Arabia and other members of the Gulf Cooperation Council (GCC). Second, I ask why rapprochement and examine where Saudi and Iranian interests converge and where they conflict. Finally, I suggest what the rapprochement means for U.S. foreign policy.

TENSIONS OVER TIME

Under the Shah, 1950s-70s

On the one hand, Saudi Arabia may have implicitly recognized that policies of the shah, in effect, guaranteed its stability and protected it from external threats like Iraq, the Yemens and the Soviet Union. Iran protected the status quo. The shah also supplied labor to the Arabian Peninsula and rallied Gulf producers to stand united in negotiations with Western oil companies. On the other hand, these decades were also characterized by a healthy skepticism and distance between the countries, even when they were both threatened in the 1960s by Nasser and Arab nationalism. And even though both were under the U.S. defense umbrella, Saudi Arabia was never close to Iran, as it feared the loss of its national autonomy. The kingdom was always suspicious of the shah and never endorsed any formal security system with him.

The Iranian Islamic Revolution,  1979

Ayatollah Khomeini was a genuine threat to the Al Saud, due to his claims of a divine right to rule. Saudi Arabia saw Tehran as a threat to the entire region and feared the export of revolution. There was extensive communication between Iran and the Shii communities in the Eastern Province. This was a contest over Islamic legitimacy with both regimes claiming religious leadership. Fahd called the situation in Iran “contrary to the interests of Islam, the entire Muslim world, and the stability of Middle East.” Saudi Defense Minister Sultan ascribed developments in Iran to “international communism.” He warned about Soviet expansion into Afghanistan and feared that Iran without the shah would fall to Moscow, thus endangering the whole Gulf.

Importantly, the turmoil in Iran was coupled with the 1979 takeover of the Great Mosque in Mecca by Juhaiman al Utaibi and his followers. Simultaneously, there were Shii demonstrations in the streets of many towns in the Eastern Province. To wrap himself ever tighter in the mantle of Islam, Fahd changed his name from “Your Majesty King Fahd” to “Custodian of the Two Holy Mosques of Mecca and Medina, King Fahd.” He sought to appropriate the power and legitimacy of Islam.

Iran-Iraq War, 1980-88

During the subsequent war between Iran and Iraq, Saudi Arabia assisted Iraq, as both feared the Islamic regime in Tehran. In 1982, GCC Secretary-General Abdullah Bishara told a gathering that “Iran’s quest for supremacy in the Gulf was the primary threat to stability of the GCC.” For its part, between 1981 and 1986, Iran was openly belligerent to the Saudi Arabian monarchy and its relationship with the United States. The Iranian regime regularly called the Al Saud regime un-Islamic, as it tried desperately to shore up the new republic. There were economic consequences of this competition as well: when Saudi Arabia flooded the international markets with oil 1985-86 (following an Iranian offensive at the port of Fao), oil prices plummeted. Iran was indeed hurt by the shortfall in revenue.

Hajj Demonstrations, 1979-87

The annual pilgrimage (hajj) in Mecca became a focal point for this tension. Throughout this period, Iran argued for the politicization of hajj experience (hajj as legitimate venue for protest and debate), whereas Saudi Arabia maintained that the hajj was a strictly personal experience of worship. After the 1979 takeover of the Grand Mosque in Mecca by al Utaibi, there were charges of Iranian involvement in the uprising. While no evidence was forthcoming, the events still engendered tension as Iranian clerics had apparently distributed “seditious” literature in the mosque.

There were clashes at hajj in 1981 in Medina when Iran called for the overthrow of the Al Saud. In Mecca, one million pilgrims protested against the United States and Israel and shouted pro-Khomeini slogans. Five years later in 1986, Saudi security forces discovered arms and explosives carried by Iranian pilgrims during the rituals. Tragically, in 1987, 400450 Iranian pilgrims died at hajj, killed by Saudi security forces. Once again, Iran questioned the credentials of the Al Saud to serve as “keepers of the holy cities.” There were mutual calls for the downfall of the Khomeini and Al Saud regimes. The break came the following year, in 1988, when Riyadh formally cut diplomatic ties with Tehran and Iran formally boycotted the hajj.

Gulf Crisis and War, 1990-91

There was longstanding mutual suspicion in the Gulf. Iran and Iraq already distrusted each other over the Shatt-al-Arab dispute and eight-year war. Saudi Arabia and Iraq distrusted each other historically, as the Hashemites had challenged the Al Saud and assumed power in Iraq. Later, the ideology of socialism was anathema to Saudi Arabia. The consequence was that Iraqi aggression against Kuwait eased relations between Saudi Arabia and Iran.

Between Iraqi missiles and Iranian restraint, the Gulf War was a turning point in the relationship. The honeymoon between Saudi Arabia and Iraq ended as soon as Iraqi missiles landed in Saudi Arabia. Iran condemned the Iraqi invasion of Kuwait. While it chided Saudi Arabia for inviting U.S. forces in, it also understood the military buildup. The “GCC plus 2” was suggested after the war to provide for regional security, but Saudi Arabia never really trusted Syria and Egypt (the plus two) and maintained secret ties to Iran.

Post-war Saudi Domestic Crises

The Gulf War and its wake were a time of domestic crises in Saudi Arabia. As U.S. troops dug in and bases were constructed, there were demonstrations in the streets, petitions to King Fahd demanding change, tapes of fiery sermons circulating in the suqs and universities, and opposition groups articulating grievances. There was a convergence of dissent among various social groups. Saudis – rich and poor, Sunni and Shia, men and women, rural and urban – were tired of ad hoc and arbitrary governance. Further, the official ulama (clergy) were supplemented by a skilled and powerful popular-level clergy whose fatwas (religious opinions) often garnered more public support than did the official ones. A powerful Islamist social movement took form. In addition, when King Fahd had a serious stroke in 1995, the ruling family was wracked by succession struggles between the Al Fahd and the partisans of Abdullah.

This tension tapped into an already distressed socioeconomic environment. Unemployment hovered around 12 percent in the general population but soared to 30 percent among recent male college graduates. Yet the economy depended almost entirely on the import of a foreign labor force. Per capita income had fallen from a 1981 high of $17,800 to $6,700 in 1995. The once-fabulous infrastructure built during the boom was now crumbling. About 50 percent of the booming population (birthrate of 3.5-4.2 percent) was under the age of 15. Alarmingly, there were new social problems of guns, drugs and crime. All of this created a fertile field for dissent in Saudi Arabia.2

RAPPROCHEMENT

Tentative

In the midst of tremendous domestic uncertainty, tentative feelers were sent out to begin a process of rapprochement with Iran. Foreign Minister Saud al Faisal’s visit to Iran in 1991 signified the beginning of improved relations. Indeed, diplomatic ties were reestablished. Iran was eager to convince Saudi Arabia that the days of funding international extremists were over. The countries also reached an agreement on hajj participation. In 1996, when Saudi Arabia boycotted the U.S.-sponsored MENA Economic Summit in Doha, Iran applauded its stance. As Saudi Arabia began to distance itself from the United States, Iran welcomed the show of strength. Throughout 1997, Abdullah worked to consolidate his position (and invited Rafsanjani to visit); in the same year, Khatami was elected president of Iran.

A Joint Economic Commission was established, direct flights between the capitals were approved, and a $15-million joint industrial committee began operations. At the year-end meeting of the Organization of Islam Conference (OIC) in Tehran, Khatami and Abdullah embraced, a photo-op that did not go unnoticed. Even the GCC summit recognized that “Iran was turning a new page in GCC relations.” When Abdullah consolidated his position at home in 1998, he announced significant domestic reforms in Saudi Arabia and reportedly lectured Secretary of State Madeleine Albright on U.S. foreign-policy failures in the region.3

Landmark

Two landmark accords indicate the solidification of the rapprochement. When Saud al Faisal went to Iran in May 1998, the wide-ranging final accord covered economics, culture, trade, science, technology and sports. Also, there would be bilateral investments in industry, mining, transport, petrochemicals and possibly tourism. Industrial and technical memos of understanding outlined Saudi Arabia’s participation in oil and gas pipelines between Iran and India. These achievements were capped when Khatami traveled to Saudi Arabia, the first such visit since the revolution.

One year later, Iran had a trade surplus with its new economic partner of $6.9 million (primarily reflecting trade in cathode copper and carpets as well as benzene, white cement and apples). This was a 32percent rise in exports to Saudi Arabia in one year. In 1998, Iran had recorded a trade deficit with Saudi Arabia.

In 2000, Saudi Arabia eased visa access for Iranian businessmen. Joint projects on water and the manufacture of buses were initialed, and Iran agreed to send doctors, nurses and medical professionals to Saudi Arabia. Iran asked Saudi Arabia to lift pilgrim quotas (to 1000 pilgrims per million population). Both countries talked with Kuwait about maritime borders. Such economic strides were augmented by new political and military relations. For example, when Iran successfully tested Shehab 3 missiles in summer 1998, Saudi Arabia did not respond negatively or aggressively. As they grew closer, Saudi Arabia distanced itself from the Taliban in Afghanistan, recalling their envoy from Kabul and forcing out the Taliban representative in Riyadh.  When the Taliban massacred thousands of Shiis and murdered nine Iranian diplomats, tensions escalated between Iran and the Taliban.

Oil: The Lubricant

Iran and Saudi Arabia have cooperated since 1999 to orchestrate OPEC policy and bring prices up from the twelve-year low of 1998.4 At the Vienna meeting, both agreed to huge production cuts along with Venezuela, and they were joined by non-OPEC Russia, Mexico, Oman and Norway. Oil did eventually rebound to $25/barrel from $13 in 1999. But by April 2000, Saudi Arabia promised Washington that it would work to stabilize oil prices; this resulted in prompt criticism from Iran for bowing to the U.S. demand to lower prices.

Steps Towards Security

Iran and Saudi Arabia signed a security pact in April 2001. It focused on drug trafficking – a domestic problem for both countries – but also included cooperation on money laundering, border surveillance, and the administration of water and territorial matters. Though a significant step, this agreement was still less about actual military cooperation and more about internal security and non-interference.5

The accord contained no extradition clause, which would have forced Iran to turn over its citizens if U.S. assertions are true about Iranian involvement in the 1996 al Khobar bombing. Iran still rejects the U.S. charge of involvement; the United States is steadfast in its assertions. Furthermore, Iran stated that the United States was simply worried because of the rapprochement and wanted to stoke tension between the new partners. Still, in June 2002, Iran demonstrated its commitment to the pact when its security agencies handed over to Saudi authorities 16 Saudi nationals allegedly linked to al Qaeda.6

In addition to the formal accord, Prince al Walid bin Talal, the mega investor from Riyadh, announced he would invest in Iran if invited to do so. There was talk about actual petrochemical cooperation between Saudi Arabian Basic Industries Corporation and Iran’s National Petroleum Company, and a joint bank was proposed. Parallel agreements were signed that concern cooperation on the environment, flora, fauna, shipping, news agencies, security and airline offices. Indeed, there was a sharp rise in trade between the two countries, to $248.5 million in 2001 from $133 million in 2000 and $95 million in 1999.7 In early 2003, the fifth session of the Joint Iran-Saudi Arabia Commission was successfully concluded. There were already 18 Saudi-Iranian joint ventures in operation.

Other GCC States and Iran

Iran needs strong bilateral ties with the individual member states of the GCC, the peninsular security-economic alliance, in order to reduce the tendency of that body to automatically define everything as a larger organizational issue. Iran, of course, would like the GCC to be less dependent on the United States for military security. GCC regimes may fear the example of democracy in Iran. However imperfect and fledgling its democratic process, Iran is simply not the military or revolutionary threat it used to be to the GCC countries.

GCC members vary in the warmth they feel towards Iran. Saudi Arabia, Oman and Qatar enjoy relatively warm relations with Iran, Bahrain is in the middle and is being actively courted, while Kuwait and the UAE have notably cool relations that have been rapidly thawing in the aftermath of September 11. An Omani air force commander said, after a visit to Iran, that a joint security force would be a good idea. Iran courted Bahrain, praising Bahraini domestic reforms. It also sought security arrangements with Bahrain, Oman and Yemen.  Trade has surged between Iran and each of the GCC states.

For its part, however, Kuwait was concerned over rapprochement. It preferred the expansion of the GCC defense force to provide protection and deter Saddam Hussein (the force currently numbers 5,000 men; Kuwait hopes for 22,000). Likewise, rapprochement with the UAE is strained by the ongoing “islands dispute.” While this dispute is an irritant between Saudi Arabia and Iran, the dispute does not prevent rapprochement. Indeed, the UAE would like the dispute settled in its favor before full rapprochement. Saudi Interior Minister Nayef was careful to note, however, that the accord had nothing whatsoever to do with the islands dispute, thereby separating Saudi interests from those of the UAE.