Saudi Arabia-Iran: Surprise Overtures

Reality has set in, with a growing realization among Saudi officials that the administration of US President Joe Biden is serious about reaching a new nuclear pact with the kingdom’s arch foe Iran. At risk of being left behind, Riyadh is now showing signs of pragmatic policy by engaging in rare direct talks with Iran to ease tensions in the region and more importantly, to safeguard its own national security. Earlier this month, Saudi and Iranian officials held "tension-easing talks" in Baghdad that focused on Iran's objections to several projects and investments that Riyadh plans in Iraq, according to a Mideast Gulf-based source. Saudi Arabia agreed to the low-level talks in an effort to limit Iran's "interference" in the projects, which the kingdom hopes will bolster Iraq's economy and overall stability, the source explained. Another source told Energy Intelligence that the issue of ending the Yemen war, now in its seventh year, was also part of the discussions, but no real progress was made in terms of reaching an agreement (EC Apr.2'21). Nonetheless, Western diplomats note that it was a good step toward opening the door to further talks. Iranian officials have framed the talks more broadly, even welcoming the rare engagement with Saudi Arabia. Iran "has always welcomed dialogue with the Saudi kingdom and sees it as beneficial to the people of both countries and regional peace and stability," Foreign Ministry spokesman Saeed Khatibzadeh told a press conference on Monday, without actually confirming that the talks had taken place. Sources say the talks were facilitated by Iraqi Prime Minister Mustafa al-Kadhimi, who is keen to ensure that the planned Saudi projects, possibly including in Iraq's Akkas gas field, do not face any obstacles. For its part, the kingdom’s investment strategy in Iraq is not necessarily driven by commercial interest, but has generally been seen as a way of strengthening ties with its northern neighbor and weakening Iran’s pervasive influence there. It has been successful to an extent, at least in terms of bringing Iraq closer into the Gulf fold, and coincided with Iraq achieving unusually high compliance with its Opec oil production quota. But more urgent considerations appear to be informing Riyadh's secretive overtures to Tehran, which come at a time of ongoing drone and missile attacks on Saudi oil infrastructure by Yemen's Iran-backed Houthi rebels (related). Saudi watchers say the kingdom’s leadership wants to end this threat, which also endangers its economic diversification plans and ability to attract foreign investment. At the same time, however, US and Iranian officials are negotiating a return to the 2015 nuclear deal, which Riyadh strenuously opposed (related). The regular Houthi attacks have not been met with any direct US moves to protect the kingdom, with Washington's public response largely limited to statements of condemnation. The US has even pulled out several of its Patriot anti-missile systems in recent months. Saudi sources say this was mainly due to the limited number of Patriot systems the US has in the country and the need to routinely send them back home for upgrades and maintenance. But to fill the defense gap, the kingdom took matters into its own hands this week, signing a deal with Greece to borrow a Patriot air defense system to protect its energy facilities. Deep-Running Rivalry Could Impact Opec