Explaining the Iran-Saudi rivalry
October 12th, 2011
07:37 AM ET

Explaining the Iran-Saudi rivalry

Editor's Note: Mohsen M. Milani is Professor of Politics and Chair of the Department of Government and International Affairs at the University of South Florida in Tampa.

By Mohsen M. Milani, Foreign Affairs

Yesterday afternoon, the U.S. government charged Mansoor Arbabsiar, a dual U.S.–Iranian citizen, and Gholam Shakuri, an alleged member of the Iranian Quds Force (a division of the Revolutionary Guards), with conspiracy to assassinate the Saudi Arabian ambassador to the United States, Adel Al-Jubeir, and to attack both the Saudi and Israeli embassies in Washington, D.C. Although the nature of Iranian government involvement remains to be seen, the indictment is just the latest story in the intricate cold war now developing between Iran and Saudi Arabia.

The two countries, at odds since the 1979 revolution in Iran and ever more so in the wake of the Arab Spring, are competing for dominance in global energy markets and nuclear technology and for political influence in the Persian Gulf and the Levant. Their conflict, with its sectarian overtones, has the potential to weaken pro-democracy forces in the Middle East and North Africa, empower Islamists, and drag the United States into military interventions. To avoid all this, the United States will need strategic imagination to devise ways to mitigate and manage the rivalry between Riyadh and Tehran.

Iran and Saudi Arabia are neither natural allies nor natural enemies but natural rivals who have long competed as major oil producers and self-proclaimed defenders of Shia and Sunni Islam, respectively. Until the Iranian revolution in 1979, their rivalry was managed and controlled by the United States, with whom they were both strategic allies. But after the Shah was overthrown, Saudi Arabia’s leadership became frightened by the Ayatollah Khomenei’s denunciation of the Saudi monarchy as antithetical to Islam and his ambition to export to the revolution to the Arab world. Saudi Arabia remained an ally of the United States; Iran became an implacable foe. Thereafter, the rivalry between Iran and Saudi Arabia became defined by the new U.S. strategy - ally with Saudi Arabia to offset Iran.

As a result, Iran sees Saudi Arabia as a wealthy, ambitious proxy of the United States and Saudi Arabia views Iran as a major source of instability in the region, believing that it seeks to establish a so-called Shia Crescent to dominate Arab Sunnis. The rivalry has shaped both countries' policies as they have attempted to contain and combat each other’s influence. They have accused each other of blatant interference in their internal affairs, including indirect support for acts of terrorism against each other.

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This struggle has played out most prominently in the energy sector, in which both Iran and Saudi Arabia are major forces. At first glance, Iran would seem to be on par with Saudi Arabia; the two countries’ combined oil and natural gas reserves are roughly the same, and Iran has the strategic advantage of sitting between the Caspian Sea and the Persian Gulf, as well as controlling the 34-mile wide Strait of Hormuz, through which roughly 40 percent of the oil traded worldwide is transported.

But U.S. sanctions on Iran have severely restricted its oil production and hindered foreign investments, handing Saudi Arabia the competitive edge. As a result, Saudi Arabia is winning the competition for preeminence in the global energy market. It is the leading member of the Organization of Petroleum Exporting Countries, a position held by Iran under the Shah. It controls $538 billion in foreign reserves, compared to Iran’s $105 billion. Saudi Arabia's nominal GDP totals $567 billion, far exceeding Iran’s $475 billion despite having a population only a third of the size of Iran’s. Saudi Arabia thus enjoys a level of economic clout that Iran can only envy, and, as a result, has no incentive to foster improved relations between Washington and Tehran.

Riyadh has used its influence in the energy markets to tame Tehran, lowering oil prices and attempting to limit foreign investment in Iran's oil and gas industries to cripple its already ailing economy. Saudi Arabia can easily compensate for lower oil prices by increasing its oil production and its total oil revenues, but Iran cannot; it lacks the capability to increase its oil production. With the growing demand for energy in emerging markets, the price of oil has not fallen much in the recent years and is unlikely to dip sufficiently to harm Iran. Moreover, Saudi Arabia has had little success in persuading China and India to decrease their involvement in Iran's energy sector. But a large decrease in oil revenues could have devastating economic consequences for Tehran.

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On the political front, however, Tehran has outmaneuvered Riyadh. This success has been most apparent in Iraq, whose transformation from a Sunni- to a Shia-controlled country has shifted it from Riyadh’s orbit into Tehran’s. This represented a monumental setback for Saudi Arabia and an unintended strategic gift for Iran, which saw Iraq transform from an enemy into an ally. Iran has capitalized on the new Iraq to greatly expand its influence; the two countries are developing joint oil fields, and, according to the American Enterprise Institute, trade between them now stands at nearly $8 billion per year.

Although the United States and Iran both support the nascent Iraqi government, Saudi Arabia flatly opposes it for being too close to Iran. Indeed, Iran has supported extremist Shia forces in Iraq that have attacked the country’s Sunni community and U.S. soldiers. To weaken the government, Riyadh has declined to send an ambassador to Baghdad and has refused to forgive or reduce the huge loan it gave to Saddam Hussein to wage war against Iran in the 1980s, estimated to be almost $30 billion. And, according to WikiLeaks documents, Iraqi Prime Minister Nouri al-Maliki has accused Saudi Arabia of “fomenting sectarian conflict” and “funding a Sunni army.” The competition between Iran and Saudi Arabia over Iraq is only likely to escalate after U.S. troops withdraw later this year, threatening to further destabilize an already shaky political situation.

The Iranian-Saudi rivalry has also expanded beyond Iraq and into the greater Middle East, especially in the wake of the Arab Spring. Iran initially praised the uprisings in Tunisia and Egypt as Islamic awakenings, while Saudi Arabia championed the old order and criticized the United States for supporting the revolts and pressuring former Egyptian President Hosni Mubarak to step down. Indeed, Iran could not have been happier with the overthrow of Mubarak, who led the anti-Iran front among the Arab countries. Iran quickly moved to resume diplomatic relations with Egypt after years of strife, believing that an empowered Muslim Brotherhood and a new government that reflects the aspirations of the Egyptian people might turn Egypt into a potential ally due to its Islamist leanings. Having pledged $4 billion aid to Egypt’s military rulers, Saudi Arabia is determined to prevent normalization of relations between Cairo and Tehran.

Read: The Fight for 'Real Democracy' at the Heart of Occupy Wall Street.

Saudi Arabia truly panicked, however, when the Arab Spring reached its neighbor, Bahrain, which is connected by a 16-mile causeway to Saudi Arabia’s oil-rich eastern province, where 15 percent of the population is Shia. Saudi Arabia could not tolerate a revolt so close to its borders. And with its predominantly Shia population, which is ruled by Sunni overlords, Bahrain seemed ripe for dramatic change when protesters, including the suppressed Shia, gathered at Pearl Square to demand reforms. Fearing growing Iranian influence, Saudi Arabia persuaded Bahrain’s rulers to refrain from negotiating with the demonstrators and then sent troops to quash them. If the revolution in Tahrir Square in Cairo is the icon of a new Middle East, the demolition of Pearl Square is the symbol of the old order reasserting itself.

To justify the intervention, the Saudi government and its Bahraini allies accused the Shia community of acting on behalf of Iran and attempting to establish an Iranian satellite in Bahrain. Iran did, in fact, support the uprising and accused Saudi Arabia of committing “genocide” in its incursion. But it is unlikely that Iran will stage a military intervention in Bahrain, due to the presence of the U.S. Navy’s Fifth Fleet and because a protracted struggle by the Shia community in Bahrain serves the Islamic Republic’s interests more than a military confrontation with Saudi Arabia, giving Iran the opportunity to win influence with the Shia, among whom it had not previously enjoyed much sway.

For now, with its allies in control of Bahrain, Saudi Arabia seems to have the upper hand. But meaningful reform that will empower the Shia majority is essential for long-term stability. In navigating the Iranian-Saudi rivalry, the United States must pressure the Bahraini government to open up to the Shia, or risk the Shia population falling into the arms of the Iranians.

In the Levant, meanwhile, Saudi Arabia is truly pressing the advantage by exploiting the weakness of Syria, Iran’s staunch ally. Tehran’s hope of deterring an Israeli attack on its nuclear facilities and preserving a foothold in the Middle East revolves around supporting Damascus, which has long been the conduit for weapons and cash to Hezbollah and home to the Palestinian Islamic Jihad and Hamas. Although the alliance between Iran, Hezbollah, and Syria seemed stronger than ever at the beginning of the year - a Hezbollah-led coalition took power in Lebanon at the expense of the Saudi-backed Sunni government - the Arab Spring soon hit Syria and threw Iran’s support for the revolts across the region into doubt. Indeed, rather than express sympathy with Syria’s protesters, Iran became the single greatest defender of the repressive regime of Syrian President Bashar al-Assad. Although it will do everything possible to keep Assad in power, Iran is hoping to preserve Syria’s governing elite and security forces should he fall.

In an attempt to undermine the Iranian-Syrian alliance, Saudi Arabia declared its support for the pro-democracy movement in Syria and was the first Arab county to recall its ambassador from Damascus. If Saudi Arabia wins this particular battle, Iran will likely pursue much more aggressive policies against Saudi Arabia across the region, particularly in Bahrain and Iraq.

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Perhaps most significant, Iran and Saudi Arabia will continue their struggle over Tehran’s nuclear ambitions. The Saudis recognize that, once armed with nuclear technology, Iran will have a clear and fundamental strategic advantage. As a result, Saudi officials have threatened to pursue a bomb should Iran successfully develop one. Riyadh has already begun to develop a civilian nuclear energy program, negotiating with the United States and other countries to build 16 nuclear reactors in the next two decades. Saudi Arabia insists that, as a signatory to the Non-Proliferation Treaty, its nuclear program is for energy generation and peaceful purposes. Iran, which continues to insist that its nuclear program is also for peaceful purposes, has publicly supported Saudi Arabia’s nuclear energy program. But Iran is likely concerned that, as the international community focuses on its nuclear activities, Saudi Arabia, with Pakistan’s assistance, could quietly become a nuclear power.

In energy, geopolitics, and nuclear power, the rivalry between Iran and Saudi Arabia will likely deepen in the coming years. With plenty of petrodollars at their disposal, two powerful clerical establishments that push their own unique versions of Islam, and proxies and allies spread out across the Islamic world, Iran and Saudi Arabia will aggressively seek to reshape the new Middle East to preserve and expand their power.

To mitigate the potential for conflict, the United States should encourage Iran and Saudi Arabia to cooperate and reduce tension. U.S. interests are not always aligned with Saudi Arabia’s or inevitably antithetical to Iran’s. Unless the United States finds a way to navigate between the two countries and avoid automatically taking sides, the cold war between Iran and Saudi Arabia will push the region away from democracy, ultimately chilling the Arab Spring.

The views expressed in this article are solely those of Mohsen M. Milani.

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Topics: Iran • Saudi Arabia • Terrorism

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soundoff (237 Responses)
  1. 14313

    amazing, a hindu Jew spewing his hinduism absurdity about Islamic states, only fascist today a hindus criminal Jews, cousins of hindu criminal Nazis. Nazism = Zionism, difference of only on vowel, hindusim Judaism is fascism today none other, read some history before spewing your hinduism absurdity.

    October 12, 2011 at 10:25 pm | Reply
  2. If I had a penny for every stupid Republican

    Blame it on Ali.

    October 12, 2011 at 10:56 pm | Reply
  3. Hope Caper

    No country has killed more civilians than the USA. That is a fact. You can call that war, terrorism or kinetic military action. You can blame the poltical parties. You can believe the lies. You can look for solutions. If the recent polls are to be believed many Americans are not looking in the right place. I believe there is only one candidate that can give the Americans a chance regardless of political affiliation. Mentioning his name would be too easy. Do some reading, research, and discuss what you have found with friends. I hope you find the right person. Here is a hint go look at the record of all possible presidential candidates, choose the right one and if the traditional parties get in the way, take it to the streets. Good luck.

    October 12, 2011 at 11:22 pm | Reply
  4. Join siamak

    The Iranians chose Shia because they did not want to become Wahabbi Muslims. The Arab invaders have killed millions of Iranian "infidels" with the Islamic sword, which is still displayed on the Saudi flag. After 1400 years the Saudi aggression is still high, 19 of the 9/11 hijackers were Saudis. What should the US do? Read the book "Reset" by Steven Kinzer (misspell ?)

    October 13, 2011 at 12:17 am | Reply
  5. SAUD

    First: Shia people are less than 5% in Saudi Arabia.
    Second: I don't know why CNN makes full coverage about Saudi Arabia and overlooked What is happening in the US.

    October 13, 2011 at 1:38 am | Reply
  6. DoNotWorry

    U.S. military and corporations want a war with Iran. Bow down and sacrifice your children to the Mayan god of war.

    October 13, 2011 at 2:12 am | Reply
  7. BigR

    If Mansoor Arbabsiar is dual citizen and one is US. Does that make the US behind this plot also, just as the US has accused Iran. Iran may be behind it, but you need some proof not just citizenship stats.

    October 13, 2011 at 4:05 am | Reply
  8. Amir E M A

    Saudization, this is a term which I learnt while I was in Saudi Arabia,it means because no Saudi Arab Men likes to work,( the work is done by the foregone workers,) this plan is introduced to force Saudis to actually wakeup and go to work. At the end of the day they have to rely on Foregone Powers and theIr politics. Comparing them to country like Iran is a big joke

    October 13, 2011 at 7:09 am | Reply
    • Ned

      Forgone, like gone before. Perhaps foreign is the word you'd prefer.

      October 13, 2011 at 5:43 pm | Reply
  9. Patriotic Bahraini

    Just would like to clarify some issues mentioned about Bahrain,

    First of all Bahrain’s population is estimated to be approximately 550,000 of which there is no official census statistics of the sectarian divide. Furthermore the only scholars that mention Shia’s comprise 75% of the population are that of the Bahraini Opposition who only seeks to justify their agenda therefore those figures are null and void. Hypothetically even if we do hold those figures as fact that does not necessarily mean that the majority are opposition, the shia sect in Bahrain can be further divided into many tribes and races (e.g. nationalized ex shah Iranians) of which a sizable portion is loyal to Bahrain’s leadership.

    Next the author is giving Bahrain too much political leverage apart from housing the US Navy fifth fleet, the island is of a very small geographical mass, its population is minuscule and in terms of natural resources it is barren, therefore Bahrain is of no tangible consequence to Iran or Saudi Arabia. However, symbolically Bahrain serves as an ideal battle ground for power play to the determent of the majority of its intelligent, moderate and peace loving citizens. Iran has openly and clearly meddled and aided in three prominent coup attempts that have occurred since the 1979 Iranian revolution but to no avail, they keep insisting on meddling and their proxies in Bahrain keep complying regardless of the growth and development in the country.

    Another false fact in this report is Saudi quashed the protests in Bahrain, that is not true, while Saudi Arabia did send in the Peninsula shield force they were basically meant to send the USA a veiled message that was indicative of worsening relations between the two countries. Obama’s inconsistent and hypocritical foreign policy was threatening the whole region; therefore these recent event regarding the new assassination ploy has really left me dumbfounded as to his again apparent shift of policy direction.

    October 13, 2011 at 10:44 am | Reply
  10. rehyn

    So far the Saudis are mighty calm about this.

    October 13, 2011 at 1:29 pm | Reply
  11. Ned

    Oh, this is Mossad all day.

    October 13, 2011 at 5:40 pm | Reply
  12. SAS

    you have a small penis

    October 13, 2011 at 7:12 pm | Reply
  13. Dino

    Simple psy op's and diversionary tactics meant to divert attention from Operation Fast & Furious and Eric Holder. Americans will believe anything these days.

    October 13, 2011 at 8:41 pm | Reply
  14. Dino

    Washington (CNN) - Congressional investigators issued a subpoena Wednesday for communications from several top Justice Department officials - including Attorney General Eric Holder - relating to the discredited

    October 13, 2011 at 8:44 pm | Reply
  15. frootyme

    Rivalry between Saudi Arabia and Iran is created by United States of America. Iran was just fine until their democratic government by thrown out by US funded dictator and terrorist: the Shah of Iran. Then US instigated Iraq to attack Iran to start a 10 year old war. Huh....

    October 15, 2011 at 6:42 pm | Reply
  16. AllAMERICAN

    Plain Simple, America wants Saudi to fight its war with Iran. Saudi is good old friend and will never refuse to do so. Its only a matter of time. Wait and Watch...

    October 16, 2011 at 4:43 pm | Reply
  17. Ali Akber Mehdi

    Wrote by Mohsen M Milani "but the Shiites are unslakeable in their hatred towards Sunnis." With due regads, I would say that this is not true.
    I read almost all of the comments/replies on this page, but sorry to say that none of them gestured towards "Historical Facts" and divisions among these two major parts of Islam.
    Let my briefly to explain:-
    Muslims are divided in to two major parts, i.e Shia and Sunni
    Sunnis are further divided in to four parts called "Hanafi", Shafai", "Maliki" and "Haunbali".
    There is no hatred between Shias and Sunnis sects except Hanbalis...(Saudis). they are also called "Wahhabis"
    confilicts being observed, are between Shias (Iran) and Hanbalis sunnis (Saudi Arabia).
    again I would say that Shia has not hatred towards sunni Muslims.
    The root of hatred between these two parts of Muslims has historical backgound, whic starts from almost early Isam era, when fights between Muaawiya and ALi occured.
    Apparently Muaawiya succeeded.
    Now in present world Hanbali/Wahhabis (Saudi Arab) trying to capture more areas (like pakistan, Afghanistan, Chechania etc etc) to impose thier ideology/sect. For this purpose they formed Al-Qaida and many other fully armed organization, active in Pakistan Afghanistan etc..
    Ameracan and the western world, definitly knows that Al-Qaida, Sepah-e-Shaba, Lashkar Jhangvi etc belongs to sunni (Wahhabi), whom are financed by Saudi arab and other (like Kuwait, Behrain etc)
    It is very amazing on the part of US and western world, who do not recognizing their actual enimy.
    A big question arise in this regard????????????

    October 17, 2011 at 9:52 am | Reply
  18. BeergoTrary

    Take a look, if you need any of legal forms.

    October 22, 2011 at 4:31 pm | Reply
  19. Blessed Geek

    Romance of ancient medianite-iranian rivalry and intrigues repeats itself and lives on.

    Medianites were an ancient western persian tribe that had spread westwards where present day Arabs live. Medes was in constant rivalry with their Iranian persian brothers. Why do these two persian brothers hate each other so much. So much that when their brothers chose Sunni Islam, the Iranian brothers chose Shia Islam. Don't you see those aryan arabs are actually ancient western persians?

    The prince of persia needs to redeem himself for the utter defeat and humiliation by the prince of greece that occurred more than 2000 years ago. And his brother deliberately stands in the way to annoy him. It took Alexander only a small contingent to totally disintegrate the vast and well-equiped persian empire. Yet now, the western powers, the prince of greece is in control of the world, and the eastern magi stand by observing silently but not passively, like a tiger waiting for its prey.

    China has always waited and always exploited the spoils that come its way. The spoils of war without fighting the war.

    Sounds like fairy tale? Or biblical mythology coming to life. A mythology is an epic so large and so complicatedly romantic (or romantically complicated) that it is almost always impossible to be true – but not necessarily impossible.

    October 24, 2011 at 11:58 pm | Reply
  20. sean Honan

    As someone who was born in Ireland who is aware of the pointlessness of sectarianism. Its funny how "sacred" this practice is. Its doesn't matter on the geography. Its the same story, The angry and dis-effected youth gets screwed, the youth who is unable to discern that they are the architects of there own life, so they look to their elders for answers and guidance. They get deceived by warmongers and charlatans ... the "1 percent " who make their money. All endorsed by the governments of the world.......
    The best business in the world....

    January 19, 2012 at 3:57 pm | Reply
  21. стоимость услуг личной охраны

    I have been exploring for a bit for any high-quality articles or blog posts in this kind of house . Exploring in Yahoo I finally stumbled upon this website. Studying this info So i'm glad to exhibit that I've an incredibly excellent uncanny feeling I found out exactly what I needed. I so much undoubtedly will make certain to don?t disregard this web site and give it a look regularly.

    January 28, 2013 at 3:28 pm | Reply
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