The death of Ayatollah Khomeini in 1989 and the ascentof Ali Akbar Hashemi Rafsanjani as Iran’s new presidentresulted in a pragmatic change in Iran’s Middle East policyand launched the second phase of Iran-GCC relations,extending from 1989 to 1997. Under President Rafsanjani,Iran abandoned its “regime change” objectives vis-à-vis theGCC countries and focused instead, during the first yearsof Mr. Rafsanjani’s presidency, on improving diplomaticrelations with its Arab neighbors, with the strategicobjective of encouraging the GCC countries to abandontheir security arrangements with the United States and enter instead into a regional security alliance with Iran. This objective proved unattainable, however. Still skepticalof Iran’s motives, the GCC countries remained committed to their military alliances with the United States.
Iraq’sinvasion of Kuwait in 1990, which was defeated by U.S.-led international forces, strengthened U.S.-GCC relations,much to Iran’s displeasure. Nevertheless, although itmaintained neutrality during this war, Iran opposed theIraqi occupation of Kuwait, and this posture provided an opportunity for a partial improvement in Iran-GCCrelations. Iran and Saudi Arabia restored diplomaticrelations in 1991, though those relations remained relativelycold during the remaining years of Mr. Rafsanjani’spresidency. Iran maintained independent diplomaticrelations with the other, smaller GCC countries, but theserelations were often influenced by the state of Saudi-Iranrelations. The third phase of Iran-GCC relations began in 1997 whenIran hosted the annual meeting of the Organization of theIslamic Conference (OIC) only a few months after theinauguration of President Mohammad Khatami. Hostingthe conference increased the legitimacy of the Islamicgovernment of Iran among Muslim nations and paved theway for a further improvement of relations between Iranand Arab countries.
Better relations with Iran were alsopartly due to the rising power of Crown Prince Abdullah,who had been serving as the de facto leader of Saudi Arabiasince 1995 and was interested in strengthening SaudiArabia’s regional ties. Former Iranian president Rafsanjanivisited Saudi Arabia in 1998, and this visit—the first high-ranking Iranian visit to the Saudi kingdom since the 1979revolution—led to a further warming of relations. SaudiArabia also encouraged other GCC countries to improvetheir ties with Iran. The expansion of diplomatic and economic ties betweenIran and Saudi Arabia during the third phase was moresubstantial than before and included several diplomaticvisits. One important area of cooperation pertained tocrude oil policy within OPEC. Saudi Arabia and Iran wereboth suffering from the low price of oil in the mid-1990s(when prices fell below $10 per barrel in some months).Improved relations allowed for better coordination of OPECproduction quotas, which eventually led to higher oil pricesafter 1999. Another benefit of improved Iran-Saudi relationswas the resumption in September 1997 of direct flightsbetween Tehran and Jeddah for the first time in eighteenyears.Iran’s relations with other GCC members have alsoimproved in recent years, but they remain sensitive tospecific bilateral concerns. Among GCC countries, Omanand Qatar have maintained the warmest diplomaticrelations with Iran since the 1979 revolution; both countriessought normal and cordial relations with Iran despite beingclose allies of the United States. By contrast, Bahrain’sruling regime has had a tense relationship with Iran onaccount of its own ethnic mix. While the ruling regimebelongs to the Sunni sect, Shiites constitute the majorityof the population, and the ruling al-Khalifa family, whichmaintains close ties with the United States and GreatBritain, is concerned about Iran’s influence among BahrainiShiites. Furthermore, until the late eighteenth centuryBahrain was periodically under Iranian rule before it becamea British protectorate
. After Iran’s Islamic Revolution, someShiite clerics in Bahrain called for the creation of an Islamicgovernment, but their political aspirations have beenfrustrated by the al-Khalifa ruling family. In recent monthsthe government of Bahrain has arrested many Shiite activistsand revoked the citizenship of a prominent Shiite clergy,Ayatollah Hossein Mirza Nejati, but Iran has maintained a neutral stance and refrained from offering any formalsupport for the political struggle of Bahraini Shiites.Iran has a minor territorial dispute with Kuwait and amore serious dispute with the United Arab Emirates. TheIran-Kuwait dispute revolves around an offshore gas field called Arash by Iran and al-Durra by Kuwaitis.
The field isclaimed by both nations, and in recent years Iran has tried toresolve the dispute by calling for its joint development. Iran-Kuwait relations deteriorated after the Islamic Revolution,but in recent years both countries have taken positive stepsto improve their diplomatic and economic ties. Iran and the UAE have an unresolved dispute over threesmall islands in the Persian Gulf. Iran occupied the islandsof Abu Musa, Greater Tunb, and Smaller Tunb in November1971, a month before the British withdrawal from the PersianGulf and the creation of the UAE as an independent nation.At that point the emirate of Sharjeh claimed sovereigntyover Abu Musa, while the emirate of Raas-al-Kheimahclaimed the Tunb islands. As Sharjeh and Raas-al-Kheimahbecame part of the UAE, the islands dispute evolved into anIran-UAE dispute that is yet to be resolved.
In spite of this dispute, Iran and the UAE have maintained diplomatic relations in the past three decades, and theUAE has emerged as one of Iran’s largest trade partners—aseeming contradiction that is explained, perhaps, by