Saudi Arabia’s use of ECA finance in Iraq is making Iran nervous

(Economist, London, 8 March 2018) At a conference in Kuwait last month, the Saudi foreign minister, Adel al-Jubeir, pledged $1bn in loans and $500m in export credit to support Iraq’s reconstruction after the war with Islamic State (IS). Saudi interest in Iraq was initially pricked by America, which has been marshalling Gulf support to help stem Iran’s push west. Iraq, under Saddam, threatened to invade Saudi Arabia. More recently, it has allowed Shia militias backed by Iran to set up camp on the Saudi border. In response the kingdom, which considers itself the region’s Sunni champion, is accused of bankrolling Sunni jihadists in Iraq. In 2015 Muhammad bin Salman was central to restoring diplomatic relations with Iraq and last year reopened the kingdom’s borders. He has shifted money from Sunni politicians to more effective Shia ones. Diplomats note the disparity in help offered by Saudi Arabia and Iran, which pledged nothing at the February conference in Kuwait. “Having failed to outfight Iran, the Saudis now want to outspend it,” says a delighted Iraqi official. Meanwhile, EU officials are trying to think of mechanisms to counter potential future sanctions against European companies and banks, the more important challenge is how to entice Iran to remain committed to the nuclear deal, even if Washington withdraws. Iranian officials have been clear that Tehran would only stay committed if it receives enough benefits from staying in the deal.