Beneath Saudi officials’ tough talk on the Regional Headquarters Program lies a strong desire for constructive engagement with top global firms and attracting greater inflows of foreign investment.
AGSIW's publications are also available in Arabic. Help AGSIW expand its Arabic-language analysis.Donate
On May 26, the Iraqi Parliament adopted the “Criminalizing Normalization and Establishment of Relations with the Zionist Entity Law.” It prohibits any Iraqi individual, institution, or organization from communicating with any Israeli entity or representative in the “cultural, political, scientific, commercial, economic, media or security sphere” and dictates that such ties are punishable by death or imprisonment. Out of 329 members of parliament, 275 Shias, Sunnis, and Kurds attended the session, and all voted in favor of the legislation. Coming in the aftermath of the Abraham Accords and the apparent opening of most Gulf Cooperation Council countries to closer ties to Israel, even symbolic political grandstanding could complicate efforts by Iraqi Kurdish, Sunni, and even Shia factions to cultivate closer ties with GCC states, as well as Israel, and gain greater distance from Tehran’s grip.
The main champion of the law was Shia cleric Muqtada al-Sadr, whose allies effectively won the October 2021 parliamentary elections. Despite severe political disputes and a breakdown of the process to form a government in Iraq after more than eight months, Sadr was able to rally his allies in the Kurdistan Democratic Party and Sunni Sovereignty bloc as well as his Shia rivals from the Coordination Framework, which is led by former Prime Minister Nuri al-Maliki and has become a “blocking third” preventing the formation of a new government. The Coordination Framework includes pro-Iranian Shia militias and is closely aligned with Tehran, so it was unsurprising the group joined Sadr’s bid. Indeed, Sadr’s main intention may have been to avoid being outbid and outflanked by Tehran’s Iraqi allies on opposition to all things Israeli. But, for the Sunnis and Kurds who enjoy strong ties with the GCC countries that have been improving relations with Israel, the bandwagoning with Sadr and the Coordination Framework was probably also an effort to avoid negative political fallout. Yet for them, unlike Tehran’s allies, it could produce significant negative consequences.
The law was a test for the loyalty of Sadr’s Kurdish and Sunni allies who have become a part of his National Salvation Coalition in a thus far unsuccessful effort to form a majority government. Sunni Parliament Speaker Mohammed Halbousi owes his post to Sadr, while the Kurdistan Democratic Party is seeking Sadr’s support for its candidate for Iraq’s presidency. Therefore, the Kurds and Sunnis had obvious motivations to support Sadr’s anti-Israel legislation. Further, if the Sunnis had rejected the bill, they could have come under serious pressure and potential protests by the Shias, and it was likely that Halbousi would have lost his job. Therefore, the Kurds and Sunnis’ “yes” vote was a defense strategy designed to avoid the wrath of increasingly domineering Shia rule in Baghdad. Nonetheless, the law may be detrimental to both of these constituencies by limiting their diplomacy and outreach to the GCC countries. On its face, the new law even threatens to consolidate and centralize control over all aspects of Iraqi foreign policy and international relations by the Shia-controlled Baghdad government.
The Kurdistan Regional Government’s own missteps helped lay the groundwork for the law that will likely cause it headaches. In September 2021, Erbil allowed a U.S. research group to hold a conference that promoted normalizing Iraqi diplomatic and other relations with Israel. Some prominent Sunni Arab figures attended the conference and endorsed that agenda. The event sparked an intense negative backlash from the Iraqi government, Shia parties, and much of the public. Sadr sharply criticized the conference and even urged the government to arrest those who attended it. He also vowed to “work legally, mentally and patriotically” to ban any additional such conferences or meetings and suggested he would take stronger measures if his bloc gained the majority in the October 2021 elections. After the passage of the law, Sadr called on Iraqis to take to the street to celebrate the new legislation and demonstrate national unity in the face of the backlash from the international community.
An accomplished populist, Sadr is well aware that the prospect of any opening to Israel is anathema to Tehran’s allies in Iraq. Unlike Gulf Arab countries, such as the United Arab Emirates, Bahrain, and Qatar (which had trade-level diplomatic relations with Israel in the 1990s), Iraq was a central player in the Arab-Israeli wars. The 1967 debacle and the cultural trauma that swift defeat inflicted on Arab societies remains a part of the cultural and psychological matrix of some Iraqis. By contrast, the Gulf countries that have opened to Israel were not independent in 1967 and did not experience the brunt, if any, of the trauma. Outlawing actual dealings with Israel, and even forbidding merely advocating for any form of opening to Israel, may be a largely symbolic gesture, but it could resonate with some of the Iraqi public. That, in turn, underscores the gap in perceptions between a wide range of constituencies in Iraq and many of those in GCC societies.
The Kurds in particular have come under increasing pressure because of the KRG’s history of dealings with Israel and, especially, recent allegations that it has been allowing the creation of a secret Israeli military base in Erbil. A Kurdish “no” vote could have appeared to validate accusations that the government of the Kurdish region and its main parties have been quietly cozying up to Israel in a manner unacceptable to most of the rest of the country. These accusations were used by Shia militia groups deployed on the border of the Kurdistan region to justify and rationalize several recent attacks on Erbil. While the Kurds sought to create some perceptions of distance from Israel by voting in favor of the law, the new legislation could nonetheless have ramifications for the Kurdish region. The Kurds have developed a barely concealed relationship with Israel, and 24% of the Kurdistan region’s oil exports were purchased by Israel in 2021. The law, if enforced as written, will prevent these crucial commercial transactions and the development of broader relations with Israel going forward. At the very least it provides the KRG’s Iraqi adversaries with new leverage and grounds for criticism.
The law could also have painful economic consequences for the rest of the country, in particular the central government in Baghdad. Although the article in the original draft that would have prohibited any companies operating in Israel from investing in Iraq was removed, the law is still likely to deter investment, particularly if there is any effort to enforce it. Investors could worry about financial and ethical repercussions from working in Iraq. That would create a range of new concerns and possible obstacles to foreign direct investment in Iraq by companies that feel constrained by their own policies or the laws in their home countries that would penalize anything that looks like cooperating in a boycott of Israel. Western companies, already concerned about insecurity and lack of rule of law in Iraq, could have even less incentive to invest in an environment riddled with legal uncertainty.
Abraham Accords’ Impact on Iraqi Politics
The initiative of the UAE, followed by Bahrain and Morocco, to normalize relations with Israel has had significant positive and negative consequences for Iraqi politics and discourse. Both the anti-corruption protests in Iraq beginning in October 2019, which led to the establishment of the “October 25 Movement,” and the Erbil conference, coming in the wake of the Abraham Accords, stirred the idea of a potential opening to Israel among some Iraqis. The argument for normalizing relations notes that Iraq has strong cultural ties with Iraqi Arab and Kurdish Jewish communities in Israel that have persisted despite the lack of diplomatic ties between the two countries. The argument holds that Iraq could benefit from using these familial and cultural ties to open commercial and diplomatic relations with Israel. More than 200,000 Jews of Iraqi origin live in Israel, so these cultural and family ties could serve as a strong ground for normalizing relations to the mutual benefit of both countries. But outspoken advocates of an opening to Israel came under heavy criticism by most Shia political elites and parties, among others, who accused them of being witting agents of a Zionist and U.S. plot to undermine Shia power in Iraq as well as supposedly betraying the Palestinian cause. Sadr vowed that he would never allow normalization with Israel even if that required shedding his own “blood.” Therefore, the ostensible objective of the law is to institutionalize a legal guardrail to prevent any Iraqis from seeking to promote new ties with Israel. Its intended or inadvertent consequence may also be to limit Iraq’s shared interests with the Gulf Arab countries that are strengthening relations with Israel. Many of its key backers may hope that the new law will help ensure Shia domination of Iraq’s national foreign policy and, more broadly, align Iraq’s orientation with that of Iran.
Unsurprisingly, Iran enthusiastically lauded the law. Tehran’s new ambassador to Baghdad, Mohammad Kazem Al-e Sadeq, called the act “historic,” saying, “We congratulate the representatives of the brotherly Iraqi people in the House of Representatives for their vote on the law criminalizing normalization with the usurping Zionist entity.” However, and equally predictably, the United States, the United Kingdom, and Israel condemned the legislation. The State Department pointedly noted that it “stands in stark contrast to the progress Iraq’s neighbors have made in building bridges and normalizing relations with Israel, creating new opportunities for people throughout the region.” Understandably, the Gulf Arab countries’ positions regarding the law have been muted since they have an obvious interest in downplaying any negative impact of the new legislation. Additionally, they want to avoid the perception of interfering in domestic Iraqi politics and risk reversing the improvement in recent years of their diplomatic and political influence with the Iraqi government and significant factions in the country, including Sadr’s own bloc.
Just days after the passage of the law, the UAE and Israel signed a free trade agreement, paving the way for bilateral trade to reach $10 billion – an indication of the deepening of the Emirati-Israeli relationship at a strategic level with the strong support of Washington. In addition to the UAE, Bahrain, and Morocco, Saudi Arabia has taken steps that could point Riyadh toward its own eventual opening to Israel. Saudi Arabia lifted the ban on Israeli passport holders visiting the kingdom for investment and business purposes, which has become more frequent, albeit typically conducted quietly and behind the scenes, but which now may be more evident.
Iraq’s law criminalizing relations with Israel could simply be a domestic political gesture aimed at appeasing Iran and its most fervent clients while also appealing to traditional Arab grievances and sympathy for the Palestinians. However, if the law is enforced rigorously or in a politically pointed manner, it could spell significant trouble for Iraq. If, for example, the government in Baghdad attempts to pursue charges against the authorities or business and cultural entities in the Kurdistan region, that could spark tensions between the Kurdish region and much of the rest of Iraq with its Sunni and Shia Arab character and widespread religious and nationalistic antipathy toward Israel. The law could also be a significant impediment to foreign direct investment in Iraq, in particular in its energy industries and resources. Even if the law is not enforced, Washington, for example, could potentially cite it to discourage, punish, or prohibit investment by U.S. or foreign companies on the grounds that participating in a commercial boycott of Israel is unlawful in the United States. Moreover, because it is so pointedly at odds with the general trend among Gulf Arab countries, the new law could significantly complicate Iraq’s gradual reintegration into the community of Arab states, in particular with its Gulf Arab neighbors that can offer much needed economic, energy, and investment assistance.
There are many laws on the books in Iraq, and indeed most countries, that exist in principle but are ignored in terms of practical impact and are not enforced. The consequences for Iraq of this new legislation will depend primarily on whether it is intended as a political exercise that has served its purpose for the meanwhile or will be used by populist, nationalist, and pro-Iranian forces within the Iraqi state as a cudgel against any entities and individuals, including in the KRG, that continue to seek closer ties not merely to Israel, but to the Gulf Arab states that are developing their own relationships with the Israelis. The consequences will also depend on the degree to which key external stakeholders (principally the Gulf Arab states that are normalizing relations with Israel, Israel, and the United States) choose to respond punitively to the passage and any implementation of this law.
*Correction: The piece initially had the incorrect year for the protests.
is a non-resident fellow at the Arab Gulf States Institute in Washington and the Mustafa Barzani Scholar of Global Kurdish Studies at American University’s School of International Service. He is a TEDx speaker and former lecturer at the University of Kurdistan Hewler. He received his PhD from the Carter School for Peace and Conflict Resolution at George Mason University.
is a senior resident scholar at the Arab Gulf States Institute in Washington.
With a mix of condemnation, maneuver, and strategic calculation, Gulf countries are navigating the current crisis.
Through its careful examination of the forces shaping the evolution of Gulf societies and the new generation of emerging leaders, AGSIW facilitates a richer understanding of the role the countries in this key geostrategic region can be expected to play in the 21st century.Learn More