Years of bitter regional rivalry between Iran and Saudi Arabia are allegedly coming to an end, according to Iraqi Prime Minister Mustafa Al-Kadhimi.

“Our brothers in Saudi Arabia and the Islamic Republic of Iran approach the dialogue with a big responsibility as demanded by the current regional situation,” said Kadhimi in an interview published on Saturday by the state-controlled Al-Sabah newspaper.

“We are convinced that reconciliation is near,” emphasized the Iraqi premier, who believes the entire Middle East region would benefit from such a reconciliation.

Last week, Ahmed Al-Sahhaf, an Iraqi Foreign Ministry spokesman, revealed that negotiations between Tehran and Riyadh “are continuing… and could perhaps lead to a restoration of diplomatic representation between Iran and Saudi Arabia,” according to the INA news agency.

Iran and Saudi Arabia have been regional rivals for years. While Saudi Arabia views itself as a leader of the Sunni Muslim world, Iran is the region’s leading Shiite Muslim nation. In 2016, Saudi Arabia decided to cut diplomatic relations with Iran after accusing the ayatollah regime of undermining the Saudi kingdom’s internal stability. At the center of the controversy was Saudi Arabia’s decision to execute the Shia cleric Sheikh Nimr al-Nimr after accusing him of incitement against the Riyadh government. Following violent protests and the burning of the Saudi embassy in Iran, Saudi authorities demanded that Iranian diplomats leave the kingdom within 48 hours.

At the time, the sharply deteriorating Iranian-Saudi ties troubled Washington. Saudi Arabia has officially been a regional U.S. ally for decades. However, at the same time, the former Obama administration made the controversial 2015 Iranian nuclear agreement a centerpiece of their Middle East foreign policy. Consequently, the Obama administration unsuccessfully urged calm between Iran and Saudi Arabia.

“We believe that diplomatic engagement and direct conversations remain essential in working through differences and we will continue to urge leaders across the region to take affirmative steps to calm tensions,” said an unnamed Obama administration official at the time.

The bitter rivalry between Iran and Saudi Arabia extends beyond the historic divide between Sunni and Shia Islam. At the center of the Iranian-Saudi Cold War was the battle over regional hegemony. This became particularly evident in the devastating civil war in Yemen. A Sunni-led alliance by Saudi Arabia backed the central government in Yemen. By contrast, the Iranian regime has supported the Houthis, an anti-regime Yemenite militia and a valuable pro-Iranian terrorist proxy in the wider region.

Located between Iran and Saudi Arabia, Iraq plays an important role in regional stability. The post-Saddam Hussein regime in Baghdad has tried to rebuild its fractured society after years of wars, insurgencies and political isolation.

Before becoming a broker between Saudi Arabia and Iran, Iraq had to restore its own diplomatic ties with the Saudi kingdom following years of strained relations under the former Saddam Hussein regime. The Saudis were also interested in improving their relations with an emerging new Iraqi administration. Following a political thaw, Saudi Arabia agreed in 2021 to invest some $3 billion in a new joint Saudi-Iraqi fund to facilitate economic development in the Iraqi private sector.

At the same time, the new Iraqi administration has strived to improve its equally strained relations with Iran. With the Shiite population around two-thirds of the Iraqi population, Baghdad made it a foreign policy priority to improve ties with Shiite Iran, in addition to mending ties with Saudi Arabia. With improved diplomatic ties on both sides, Iraq is uniquely positioned to facilitate a potential reconciliation between Iran and Saudi Arabia.

It is nevertheless unclear whether a true Saudi-Iranian reconciliation is possible given the countries’ diametrically opposed views on central regional issues such as Yemen and the emerging Arab-Israeli Abraham Accords. The Iranian regime is officially committed to Israel’s destruction and opposes Arab-Israeli regional peace. By contrast, Saudi-Israeli covert ties are growing and the Saudis have indicated that, under the right circumstances, Saudi Arabia could potentially join the United Arab Emirates, Morocco, Bahrain and Sudan in establishing formal diplomatic ties with the Jewish state.

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