Iraq Can Move Arab States to New Economic Focus

The 23rd Arab League Summit is now under way in Baghdad. Unlike the 22 non-emergency summits that preceded it, this one will be worth watching, and for two reasons.

First, to the surprise of many, the Arab League has become an organization of consequence. In the wake of revolutions across the region, the league has commanded something of a leadership role. In Libya, it was instrumental in ushering in and legitimizing foreign intervention against Muammar Qaddafi’s regime. And on Syria, through its proposals for monitors and peacekeeping forces, the league has been the most active international organization seeking to end the violence Bashar al-Assad has unleashed on his citizens.

The other reason for paying special attention to this summit has to do with its host, Iraq. The last Arab League Summit held in Baghdad was in 1990, just months before Saddam Husseininvaded Kuwait. Since then, Iraq has effectively been out of the Arab fold -- on account of war, sanctions, occupation and sectarian strife. This week’s event marks a major milestone for Iraq and is the most tangible sign of its potential re- emergence as a regional player.

The meeting offers the Baghdad government its first real opportunity to demonstrate how it intends to orient itself as a regional actor. Iraq has understandably been consumed by internal challenges over the past nine years. This inward focus has led to a foreign policy focused on alleviating Iraq’s debt burden, getting out from under United Nations Chapter VII sanctions, gathering support for the fight against terrorism and extremism, and urging greater acceptance of the new Iraq.

A Regional Role

Thus far, Iraq has generally avoided the task of articulating its position on key regional issues or its aspirations as a regional power. This failure to stake out such a role is mostly the result of major disagreements among Iraq’s political elites about how they see their nation in relation to its neighbors. Some of Iraq’s leaders see Iran as the country’s greatest threat to sovereignty, while others see the meddling of Arab nations in Iraqi domestic affairs as the most detrimental.

The Arab League Summit will give observers more insight into what sort of role Iraq will seek in the months and years ahead. Several paths are possible:

-- One scenario is that Iraq fully re-integrates itself into the Arab world, assuming traditional Arab stances toward regional issues such as Palestinian statehood, Israel, and Iran’s nuclear program, and that Iraq will give key shared institutions such as the Organization of Petroleum Exporting Countries priority over national interests.

-- Another possibility is that Iraq reclaims its regional prominence, but does so more on an independent and progressive basis. Iraq might work with nearby states on a common security framework, help shape the shared response to a nuclear Iran, be sympathetic to (if not an advocate for) political reforms among its neighbors, and promote more pragmatic and flexible solutions to other regional issues.

-- Or Iraq might choose to develop itself as an unaligned state, seeking to isolate itself from regional quagmires and focusing on the promotion of national interests. Iraqis often talk about their oil policy as indistinguishable from their foreign policy. If this is the case, one might interpret the results of Iraq’s “bid rounds” for contracts with foreign companies as an indication that Iraq’s international priorities are to reintegrate itself into the global market and to build relationships broadly, without giving the U.S. or regional countries any pride of place within Iraq.

-- Finally, and most distressingly, Iraq could be absorbed partially or fully into Iran’s sphere of influence. In this scenario, Iraq might have some leeway in domestic matters, but internationally it will support Iran, especially in the face of a confrontation over Iran’s nuclear program. Over time, economic and physical infrastructure will integrate the two countries, while links between their security apparatuses grow stronger.

Domestic Political Factors

So, which of these futures is most likely? Several factors will come into play. The most important pertain to domestic politics. As we have already seen, the current government of Prime Minister Nouri al-Maliki, which is dominated by Shiites, has led to Iraq’s cool treatment by most Sunni Arab states. Ironically, this frostiness has had the effect of pushing Iraq even closer to Iran.

Iraq’s geopolitical situation, and its need to export large amounts of oil through terrain that others control or have huge sway over, will be another factor. Iraq cannot afford (literally or figuratively) to agitate all its neighbors simultaneously.

Iraq’s relationship with the U.S. will, of course, also be influential in determining its trajectory. The withdrawal of all U.S. forces from Iraq at the end of 2011 made the scenario where Iraq is a regional power, but one with considerable independence from traditional Arab views, much more unlikely. Without the U.S. comfortably and visibly in its court, Iraq may have a tougher time confronting the established views of its Arab neighbors.

The final two scenarios -- Iraq as an unaligned state, or solidly in the sphere of Iranian influence -- are much more plausible now that American troops have departed.

The inevitable focus on Syria right now will make it difficult for Iraq to use the summit to demonstrate its intention to fully re-integrate into the Arab world. Unlike most other Arab states, Iraq has been distinctly reluctant to pressure Assad to step aside. While it is saddening to see Iraq -- a country whose people know the wrath of ruthless dictators better than any other in the region -- shy away from condemning Assad, the Maliki government has sectarian sympathies for the Syrian government, whose Allawite character is very close to Shiism. Moreover, Iraq is nervous about what sort of government would follow Assad, and the real possibility that it will be led by the Muslim Brotherhood, a conservative Sunni group.

Developing Resources

Despite these understandable concerns, Iraq’s Arab neighbors will see any effort by the Iraqi government during the summit to skirt the Syrian issue as proof of what they have long suspected: Iraq is the lackey of Iran.

Iraq will be unable to escape a focus on Syria this week. But it can still use the event to set the tone for the next year, during which it will assume the chairmanship of the Arab League. In doing so, Iraq would be wise to introduce a new focus to Arab League deliberations: prospects for economic diversification and for regional economic cooperation. These issues have received the short end of the stick in such meetings, which traditionally have centered on political issues.

Yet, in the wake of the Arab revolutions, regional leaders are more likely than ever to equate economic prosperity with their own political survival, whether they are part of the new wave or of the old guard. This should lead to new thinking.

For example, many efforts to industrialize and create new jobs will require natural gas for electricity. Yet, the region’s significant gas resources remain largely undeveloped. Politics has hindered what should be obvious commercial connections. Instead of importing gas literally from the other side of the Iraqi border, Kuwait imports gas through the Dolphin pipeline from more distant Qatar. Saudi Arabia burns huge quantities of oil it could export, instead of using its own gas resources or importing from neighbors.

A focus on economic diversity and cooperation would not only address real needs in the region, it could also make clear that Iraq is at the heart of a potential solution. Having large amounts of undeveloped oil and gas resources, a strategic location and a significant internal market, Iraq has the potential to use its energy wealth to help integrate the region.

By bringing these economic issues to the fore in the next few days, Iraq can begin to carve for itself a critical, if more independent, role in the Arab world and win the respect -- and perhaps ultimately even gratitude -- of its neighbors.

(Meghan L. O’Sullivan, a professor at Harvard University’s Kennedy School of Government and former deputy national security adviser in the George W. Bush administration, is a Bloomberg View columnist. The opinions expressed are her own.)

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