The Middle East is undergoing an era of revolutionary change that is challenging the foreign policies of the United States and virtually all regional states. In this new environment, opportunities and challenges exist for a number of regional and extra-regional states to advance their national interests, while attempting to marginalize those of their rivals. Despite these changes, the Arab Spring and revolutions in countries such as Tunisia, Egypt, and Libya have not altered some of the more fundamental aspects of the Middle East regional situation. One of the most important rivalries defining the strategic landscape of the Middle East is between Iran and Saudi Arabia. The competition be- tween these two states is long-standing, but it is espe- cially important now. Political relationships that have endured for decades, such as the one between Iran and Syria, now seem to be in some danger, depend- ing upon how current struggles play out. The stakes in this rivalry can thus become higher in an environment of revolutionary upheaval. Saudi Arabia and Iran have been rivals since at least the 1979 Iranian Islamic Revolution. This intelligence study points out, this competition has taken a variety of forms and was especially intense in the aftermath of the Iranian revolution. Under Iranian President Mohammad Khatami (1997-2005), the ri- valry relaxed to some extent, but a permanent détente was not possible because of a backlash within the Iranian political system. The successor presidency of Mahmoud Ahmadinejad further damaged relations and the Saudi-Iranian relationship was dealt an espe- cially serious setback over the Saudi-led intervention into Bahrain. Because the current Saudi-Iranian rival- ry is taking place in a variety of countries of interest to the United States, an awareness of the motivations and issues associated with the rivalry is important to U.S. policymakers. Dr. Terrill clearly identifies the struggle as region-wide, encompassing countries as far apart as Egypt, Bahrain, Yemen, Lebanon, Syria, and espe- cially Iraq, where the United States is preparing to withdraw almost all of its troops. He also notes that while U.S. interests often overlap with those of Saudi Arabia, such is not always the case. Saudi Arabia and the United States often work well together in seeking to contain Iranian influence, but Saudi Arabia also is an absolute monarchy opposed to Arab democracy or any democratic reform of the existing monarchical systems. Saudi Arabia and Iran have often behaved as seri- ous rivals for influence in the Middle East, especially the Gulf area, since at least Iran’s 1979 Islamic Revolution and the 1980-88 Iran-Iraq War. While both nations define themselves as Islamic, the differences between their foreign policies could hardly be more dramatic. In most respects, Saudi Arabia is a regional status quo power, while Iran often seeks revolutionary change throughout the Gulf area and the wider Middle East with varying degrees of intensity. Saudi Arabia also has strong ties with Western nations, while Iran views the United States as its most dangerous enemy. Per- haps the most important difference between the two nations is that Saudi Arabia is a conservative Sunni Muslim Arab state, while Iran is a Shi’ite state with senior politicians who often view their country as the defender and natural leader of Shi’ites throughout the region. The rivalry between Riyadh and Tehran has been reflected in the politics of a number of regional states where these two powers exercise influence.
The 2011 wave of pro-democracy and anti-regime protests, now known as the Arab Spring, introduced new concerns for both Saudi Arabia and Iran to con- sider within the framework of their regional priorities. Neither government’s vital interests were involved in the outcome of the struggle in Tunisia where the Arab Spring began, but both leaderships became especially interested in these events once the unrest spread to Egypt. While Saudi Arabia watched the ouster of Egypt’s President Hosni Mubarak with horror, the Iranian leadership saw some potential opportunities. Riyadh’s decision in late May to grant Egypt $4 billion in loans and grants quickly became a powerful incentive for Cairo to consider Saudi priorities, especially in light of Egypt’s declining tourism revenues and the interruption of Western private investment in the Egyptian economy. Both nations are continuing their efforts to improve relations with post-Mubarak Egypt, although Saudi Arabia’s financial resources give it an advantage in the struggle for influence.
Iran seeks to expand its power in the Gulf, which is a key area of competition between the two states. Saudi Arabia and to varying extents other Gulf Arab states often seek to contain Iran’s quest for dominance. In the struggle for Gulf influence, Saudi Arabia has consistently maintained a vastly higher level of politi- cal clout with local states than Iran. Iran currently can- not hope to overshadow Saudi regional influence in the Gulf, but it does seek to influence Gulf Arab states and is especially interested in pressuring them to min- imize or eliminate their military links to the West. In recent years, Sunni-Shi’ite tension in the Gulf seems to have been rising for a number of reasons. Such prob- lems reached a high point with the March 2011 Saudi- led military intervention in Bahrain. Consequently, it is increasingly likely that the rivalry between Riyadh and Tehran will intensify in the near future. In this environment, U.S. intelligence officials and policy- makers will correspondingly need to be aware of the possibility that Saudi Arabia may overestimate Ira- nian involvement in any regional crisis and at times conflate Shi’ite assertiveness with Iranian activism on the basis of their own form of worst-case analysis and very little evidence.
Iran’s closest Arab ally has been Syria, and Teh- ran has been watching the 2011 popular unrest in Syria with considerable alarm. Syrian leaders some- times believe that their country is or could become the junior partner in the relationship with Iran, and Damascus has disagreed with Tehran on a variety of important issues within an overall context of coop- eration and friendly ties. The Syrian relationship with Riyadh is different. As a monarchy, Saudi Arabia has maintained a long tradition of distrust towards Syria, which defines itself as a republican and sometimes a revolutionary regime. While the Saudis have been willing to work with Damascus on occasion, they do not have much in common with the Syrian govern- ment beyond Arabism. More recently, both Saudi Arabia and Iran have needed to consider how Syrian unrest impacts upon their interests. Tehran clearly has the most to lose, and it is mostly standing by its Syr- ian ally. The previous Saudi détente with Damascus was significant, but Riyadh never viewed the Assad regime as an ally and could be expected to take some pleasure in seeing Tehran lose its most important Arab partner should this regime fall. On the negative side, Riyadh almost certainly would not view the turmoil in Syria as an unqualified Saudi victory even if the Assad regime was overthrown and replaced by an anti-Irani- an government. The Saudi leadership remains ultra- conservative and, correspondingly, takes a dim view of both revolutionary upheaval and Arab democracy, although Riyadh would almost certainly seek to main- tain a high level of influence with any post-Ba’athist government. If Syrian President Assad is overthrown, the United States may seek to work with Saudi Arabia and other friendly states to make certain that Syrian financial and military ties to Iran do not survive the transition.
In a major bid to enhance its regional influence, Tehran has attempted to portray itself as the leading power supporting Palestinian rights and opposing Israel through a variety of means, including supplying weapons and funding to Palestinian militants. Saudi Arabia has made numerous efforts to help the Pales- tinians and to use its financial resources and political influence on their behalf, but it has also served as the chief sponsor of an Arab League peace plan that is of interest to some Israeli leaders. Riyadh maintains nor- mal political relations with both of the major Pales- tinian political parties, Fatah and Hamas, the latter of which has been designated a terrorist organization by the United States. Saudi influence with Hamas has de- clined steadily in recent years and been almost totally displaced by that of Iran. Elsewhere in the Levant, large numbers of Lebanon’s Shi’ites consider Iran to be an important ally that has extended considerable support to the Lebanese in resisting what they define as Israeli aggression. In this environment, the United States will almost certainly wish to continue to pursue the Middle East Peace Process for both its intrinsic val- ue and in order to undermine Iran’s efforts to enhance its role in Lebanon and the Palestinian territories. The future of Iraq is a central concern for both Iran and Saudi Arabia, as well as the United States. The planned withdrawal of U.S. troops from Iraq will also complicate the Saudi-Iranian rivalry in the region. The departure of U.S. troops may radically change the ways in which regional states help their Iraqi support- ers. After the United States withdraws the remainder of its military forces from Iraq, it will be difficult for Saudi Arabia and the other Sunni Gulf monarchies to remain passive should Iran continue to arm Iraqi Shi’ite militias. One of the most troubling ways in which Iran exerts its influence in Iraq is through vari- ous Shi’ite militia organizations that engage in terror- ism and strikes against U.S. troops and other targets inside Iraq. These pro-Iranian militias are sometimes called Special Groups. Iran has considerable influence with them and provides weapons and training to some of these forces through the elite Iranian Revolutionary Guards Corps’ al-Quds Force.
Finally, U.S. diplomats and military leaders deal- ing with Iraq must be prepared for Iranian attempts to take advantage of serious disagreements between Baghdad and Riyadh after Washington withdraws its troops from Iraq. To contain Iran while supporting stability and democracy, the United States must be prepared to mediate between Saudi Arabia and Iraq and limit Iranian efforts to insert itself into such a pro- cess. Since key Saudi concerns may involve Iraqi gov- ernment actions in Sunni Arab areas, the United States will have to be aware of issues in those areas, and be prepared to support measures to increase Sunni Arab willingness to participate in the political system along with a Shi’ite and Kurdish willingness to share power.