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stratEGIC Monthly (August 2022):

Spotlight on Iraq, Iran and Pakistan

by Nikola Zukalová, Ashleigh White and Veronica Stigliani

The seventh issue of the stratEGIC Monthly, featuring three analyses of key issues that defined the Euro-Gulf space in August 2022, focuses on:

 

  1. Iraq in GCC Countries’ Calculations;

  2. The Return of Kuwait and UAE Ambassadors to Iran;

  3. Qatar’s Investment in Pakistan’s Future.

 

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Iraq is a Crucial Piece of the Puzzle

 

By Nikola Zukalová

 

Over the past years, the Gulf Cooperation Council (GCC) countries, together with allies, have prioritised  resetting economic and political ties with Iraq. This has manifested in the opening of borders to increase trade volumes, the linking up of power grids and boosting visitation frequencies so that personal ties can develop. Due to its size, natural reserves, historical and religious importance and strategic position in the centre of the Middle East — proximate to the GCC countries — Iraq’s political fate is tied to the wider region and the projects that are in the mix. Supporting Iraq’s stability, its economic life and development is therefore of vital interest to the GCC, even without bringing competition with powers (re: Iran) into the equation. Following the Baghdad Summit (August 2021), the hosting of Saudi Arabia-Iran talks, participation in the GCC+3 Summit with the US (July 2022), Iraq has more openly embraced rapprochement with other Arab countries and the participation of Prime Minister, Mustafa Al-Kadhimi, in the five-party summit together with the leaders of Bahrain, Egypt, Jordan and the United Arab Emirates (UAE) in El Alamein (22 August) signalled Iraq’s willingness to work with key regional powers in shaping the region’s future. Within this context, the GCC countries have also intensified security cooperation — such as border controls and naval capabilities — including the joint Kuwait, Iraq and US naval drills a week after the El Alamein meeting. 

 

However, Iraq’s domestic scene remains in flux nearly two decades after the US-led Operation Iraqi Freedom and the subsequent civil war. In August, this came to a head with the spiralling escalation of the political struggle between Muqtada Al-Sadr and the Iran-backed parties clustered around the Coordination Framework which slipped into violent clashes on 29 August. This episode illustrated both the fragility and complexity of Iraq’s system and the unresolved issues including the uncontrollable flow of weapons, the weaponisation of political identities (re: rampant sectarianism) and elite power struggles. Al-Sadr — who seamlessly manoeuvres between receiving support from, and denouncing, Iran — displayed his ability, and willingness, to hold the country hostage to his political ambitions. In response to the violence, most GCC countries reaffirmed support for Iraq’s unity, security and stability, while urging their citizens to leave the country, but refrained from interfering in Iraq’s domestic matters. This situation underscored the need for GCC countries to continue rapprochement with Iraq but also to prepare for the worse—a return to protracted violence. Given that Saudi Arabia and Kuwait share long, porous borders with Iraq, they are more sensitive to the local security situation and are invested in assisting stabilisation efforts. Repercussions are unlikely to remain regional and hence Iraq’s stability is, in fact, a global issue and should be a key strategic priority for NATO and the EU. The pace of Iraq’s plunge into chaos must serve as a warning to both the GCC and European security officials and policy-makers of the consequences of disengagement with Baghdad.

 

Qatar’s Investment in Pakistan’s Future

 

By Ashleigh White

Between 23 and 24 August, the Emir of Qatar, Tamim bin Hamad Al-Thani, welcomed Pakistan’s Prime Minister, Muhammad Shehbaz Shariz, for an official visit to Doha—the latter’s first since assuming office in April 2022. Of particular focus was the deepening of trade and investment ties and advancing energy related cooperation. The visit cemented the two countries’ tight relations with the announcement of the Qatar Investment Authority interest in investing $3 billion (USD) in Pakistan’s economy. This is much needed for Pakistan, which is facing serious economic turmoil, including foreign reserves dropping as low as $7.8 billion, the lowest since 2019. An extreme drop in foreign reserves, which only allows for about a month of imports for the highly populated nation; the drop is mainly due to increased debt payments and a lack of external financing. As food and fuel prices, and inflation, continue to soar as a result of the Russia-Ukraine war, Pakistan saw significant economic retractions resulting in a drying-up of foreign reserves as they have attempted to pay rising importation and transportation costs of key commodities. Consolidating ties with Qatar will help Pakistan pay some of its energy and defence bills, in addition to supplying much needed foreign reserves for sky rocketing importation costs. 

 

Qatar is among several GCC states that have recently focused on investing in Pakistan. Saudi Arabia is currently considering extending the term of the $2 billion loan provided to Pakistan in 2021, in addition to a $4.2 billion support package also provided. The UAE and Kuwait have also invested in Pakistan for economic restructuring. The GCC countries are working to incentivise Pakistan to limit reasserting ties with Iran, increase GCC-Pakistan cooperation, and encourage Pakistan to continue its counter terrorism efforts. Although, Pakistan’s relations with India remain hostile, Qatar and other GCC investments do not indicate that GCC-India relations would be affected. In fact, Qatar has invested an increasing amount in India including $2 billion (+) in Indian companies since 2020. Additionally, Bahrain, Saudi Arabia and the UAE have all invested in sectors of India’s economy over the past year. The GCC countries continue to play a balancing act between India and Pakistan in order to increase influence in South Asia, and in general bolster the region’s international standing. 

 

Kuwait and the UAE Reinstate Ambassadors to Iran After Six Years

 

By Veronica Stigliani

 

Kuwait and the United Arab Emirates (UAE) announced the return of their ambassadors to Iran, six years after downgrading their relations to Tehran in the aftermath of the Nimr Al-Nimr Crisis where state-encouraged Iranian demonstrators seized Saudi Arabia’s embassy in Teheran and ransacked its consulate in Mashhad. This was in protest to Riyadh’s execution of Al-Nimr — a Shia cleric —  as part of a wider spate of executions for terrorist activities. The decision to reengage with Iran follows Saudi Arabia’s own rapprochement but is more than an outcome of this development. The two GCC countries have been recalibrating their international relations according to new contexts which increasingly includes Iran. The El-Alamein Summit — where representatives from Bahrain, Egypt, Iraq, Jordan and the UAE gathered to discuss enhancing regional stability — is connected to the Iran dossier and the potential return of the US to the Joint Comprehensive Plan of Action (JCPOA, re: the Iran nuclear deal) was high on the agenda. As was the wider push to return to a balance of power and interests in the wider region. In this way, the UAE Foreign Ministry’s pronouncement that the reestablishment ‘is designed to advance bilateral relations and achieve common interests’ and Presidential Spokesperson Anwar Gargash’s remark that the intention is to pursue a ‘zero problems’ approach with neighbours, indicates the UAE’s intentions. In fact, Abu Dhabi has been undertaking a rapprochement not only with Iran, but also with Israel and Turkey, showing that it identified the three (non-Arab) countries that will play an increasingly crucial role in unfolding regional dynamics. 

 

Similarly, Kuwait has long attempted to maintain cordial relations to Iraq and Iran and has long sought to coordinate with Riyadh in the development of its Iran policy. The reinstatement of the Kuwaiti envoy to Teheran was a reflection of the wider Saudi Arabia-Iran thaw in relations. But it is also important to note that Kuwait has, in the past, attempted to reduce tensions and its then (2017) Foreign Minister, Sabah Al-Khaled Al-Sabah, claiming that his country was ‘genuinely willing to have normal relations with Iran … [as] a channel of communication will bring benefit to both sides.’ Kuwait has adopted similar positions on other occasions, including the internal-GCC diplomatic crisis (2017-2021), when it maintained a relatively equidistant position between Qatar on one side and Bahrain, Egypt, Saudi Arabia, and the UAE on the other, in the attempt to gain the role as regional mediator. 


Kuwait and the UAE are working on foreign policies based on constructive relations with all neighbours, understanding the benefits of avoiding engaging in confrontations with other countries while being considered a valuable interlocutor to the wider international community. Managing to work on such a delicate equilibrium not only grants them a reinforced diplomatic role, but opens up ever new possibilities from political, economic, and security perspectives.