Prince Saud al-Faisal, Saudi Arabia’s Foreign Affairs Minister since 1975, speaks softly and chooses his words carefully. So people should sit up and listen following his comments about Iraq made at the Council on Foreign Relations on 20 September.Prince Saud said coalition policies had failed to produce stability and that Iraq was heading towards disintegration. He declared that Western actions had effectively handed Iraq over to Iran, though a more tempered version of this alarming conclusion was made later in the week at a press conference in Washington. Prince Saud’s remarks come at a promising moment in Saudi-US relations. Washington needs to work with Riyadh on oil, the future of the West Bank and Iraq and how to woo Muslim youth away from violent radicalism. Saudi Arabia is using the fresh start represented by the accession of King Abdullah last month to lay the foundations for a more balanced partnership with the US. The White House’s price for Saudi co-operation is US pressure for further Israeli withdrawals from occupied Palestinian land. Results The tangible results of the new warmth in Saudi-US ties include relaxing US restrictions on Saudi Arabian visitors. This suggests that the comprehensive overhaul of the kingdom’s national identity system prompted by the 9/1l catastrophe has now been completed to US satisfaction. Saudi Arabia is hinting at groundbreaking political initiatives. The latest rumour is that two women are about to be named as Saudi ambassadors to Western nations. But Prince Saud’s comments show that Saudi Arabia and the US are still not on the same wavelength about future regional challenges. The Middle East priorities for the average US congressman right now are extricating American troops from Iraq in an orderly fashion and unconditional support for Israel. For the White House, Israel is a strategic liability in an era when Arab oil producers are back in command of world energy. For Saudi Arabia, however, the conflict between the Palestinians and Israel is a legacy issue that the US should have resolved decades ago. The fate of Iraq and the rise of Iran are the policy challenges of the future. As seasoned observers warned, the US attack on Iraq in 2003 had many unforeseeable consequences, but one that was widely forecast was a stronger Iran. No sensible step was taken to anticipate this possibility. In Iran, the US has only two choices: a strong but friendly Iranian government or a hostile but weak one. But following its military success in Iraq, the US openly toyed with the idea of replacing the Islamic regime with a feeble and pliable alternative. Its aggressive rhetoric stirred Iranian nationalist ire and helped contribute to the fall of moderates in the 2004 Majlis (parliament) elections and the presidential elections of June 2005. So the US has created the worst of all Irans: one that is both hostile and strong. It also feels it has the initiative. The Islamic republic is poised to absorb southern Iraq into its sphere of influence. The result will be an effective condominium with a population of more than 80 million people and the world’s largest petroleum resources. It can be said that Saddam Hussein’s deposition in 2003 has delivered the greatest Iranian victory since the battle of Qadisiyah in 636, when the Muslim army decisively vanquished the Sassanian Persians. Iranians still regard the defeat as a catastrophe. With the US’ unwitting help, they are poised to undo and even reverse the consequences of that historic moment. DIFX is born at a propitious moment The Dubai International Financial Exchange (DIFX), the Middle East’s newest stock market, was launched on schedule on 26 September. It plans to have 30-40 members and to process more than two dozen listings and offerings by the end of next year.