WASHINGTON - The United States Institute of Peace (USIP) has released a new report by author Joseph McMillan predicting another era of increased difficulties between Saudi Arabia and Iraq over oil policies, the effects of the democratization of Iraq on its neighbors, and potential cross-border religious influence. The report, entitled Saudi Arabia and Iraq: Oil, Religion and an Enduring Rivalry, is the third in a series of reports about Iraq and its neighbors.

"Riyadh's policy toward Baghdad over the next several years will probably be dominated by four key concerns about the future of Iraq: domestic stability, foreign meddling, oil production policy, and Iraq's political evolution (especially the role of the Shia)," McMillan explains. "Of these, far and away the most important to Riyadh is stability."

One stability issue is the "flow of terrorists" between Saudi Arabia and Iraq, which strains Riyadh's relations with Baghdad as well as with Washington, McMillan says. "All three governments share an interest in preventing Wahhabi jihadists from filtering out of Saudi Arabia into Iraq and continuing to foment violence."

In the report McMillan states that while U.S. and Saudi perspectives on Iraq will be quite similar in the near term, with both countries tightly focused on restoring peace and order and preventing the propagation of terrorism spurred by the fighting in Iraq, there is ample room for divergence. Long-term concerns for Iraq-Saudi relations include the prospect of a "Shia political awakening" in the Gulf region; Saudi Arabia's status as leader of the Islamic world; and divergent oil policies.

In light of decades of strained relations, McMillan suggests that public shows of solidarity may pose "a prudent way of ensuring threat potential areas of friction do not develop into points of confrontation."

About the Author: Joseph McMillan is a senior research fellow at the National Defense University's Institute for National Strategic Studies. He will be in Washington until Friday, January 27, 2006 and after Friday, February 3, 2006. Please contact Dave Thomas at 202-685-3140 to schedule an interview.