‘This Is Colonialism, Not Investment’: Iran-Aligned Bloc Stalls Iraq–Saudi Deal
A quorum walkout by pro-Iran parties and armed groups halted a parliament session on an Iraq–Saudi bilateral investment treaty amid fears of political and territorial repercussions
Despite the Saudi-Iranian rapprochement in 2023, after the two countries signed normalization agreements, Iran continues to confront Saudi Arabia on several fronts—including in Iraq, where Tehran is working to block Saudi investments that could total as much as $100 billion.
On Tuesday, September 16, 2025, pro-Iranian Shiite parties and militias disrupted a session of the Iraqi parliament. Withdrawals by lawmakers prevented the chamber from reaching a quorum in a meeting scheduled to discuss and approve the text of the bilateral investment treaty (BIT) between Iraq and Saudi Arabia. The agreement, originally drafted in 2017, has yet to be ratified.
Iran and allied Shiite parties and militias in Iraq say they fear that large-scale Saudi investments in Iraq’s western and southwestern regions—bordering Saudi Arabia and Jordan—could lead to a Sunni autonomous region. Such a development would weaken Shiite influence in these areas, many of which are Sunni-majority and share borders with Syria, a critical corridor for the transfer of weapons into Lebanon.
The Iraqi-Saudi project under discussion grants Saudi companies investment rights in desert lands along Iraq’s western borders with Saudi Arabia, Jordan, and Syria, as well as in the provinces of Anbar, Najaf, and Muthanna. Projects cover agriculture, energy, infrastructure, and other sectors, and were first agreed upon in 2018.
In May 2024, Iraq signed 12 memoranda of understanding with Saudi companies for investments, and in November 2024, the two countries signed the final draft of the investment promotion and protection agreement. According to the official announcement, the deal aims to create a safe, attractive environment for Saudi investors in Iraq.
These investments would have expanded into other sectors, creating hundreds of thousands of jobs for Iraqis and stimulating industries
Shiite lawmaker Saud al-Saadi told a press conference: “This agreement grants millions of dunams to Saudi companies, which harms Iraqi interests. This is colonialism, not investment.”
Qais al-Khazali, leader of Asaib Ahl al-Haq, one of the main Iran-backed militias, said in a statement: “The Saudi regime seeks to seize vast areas of Anbar, Najaf, Muthanna, and Basra under the guise of investment. This comes in parallel with steps toward normalization with Israel.”
Farouq Ali, a real-estate company owner and investment specialist in Iraq, told The Media Line: “Iran still places a veto on Saudi investments, fearing Saudi economic influence that could expand into political influence.”
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The businessman added: “Billions of dollars in investments have been blocked by pro-Iranian parties and militias in Iraq solely because they are Saudi. Armed factions oppose them for their own personal interests.”
Ali continued: “These investments would have expanded into other sectors, creating hundreds of thousands of jobs for Iraqis and stimulating industries such as logistics, agriculture, construction, and contracting. But all of this is postponed indefinitely.”
The idea of a Sunni autonomous region in Iraq dates back to 2006. After the eruption of sectarian war that killed hundreds of thousands of Sunni Iraqis, calls emerged to form a Sunni region composed of several Sunni-majority provinces: Anbar—which alone covers nearly a third of Iraq’s territory—along with Nineveh, Salahuddin, and Kirkuk. The proposal was rejected due to concerns about losing a resource-rich region, particularly the oil-rich Kirkuk.
Opponents also warned that such a region could sever Iran’s land corridor to Syria, since these provinces border Syria, Jordan, and Saudi Arabia.
Abdullah al-Qurghuli, a Sunni Iraqi politician, told The Media Line: “This is not about rejecting a Sunni region, or even about Saudi investments in Iraq. It is about the presence of Shiite militias near the Saudi border.”
The politician continued: “These militias seek to remain close to Saudi Arabia so they can strike if ordered by Iran. They also want to control these investments and capture their revenues instead of allowing Saudi Arabia to benefit.”
Al-Qurghuli also pointed out: “There are large camps in these deserts. Although these militias lack the ideas or tools to invest there, they will nevertheless obstruct the project.”
This would give Riyadh significant influence in Iraq—something Iran rejects, even if it has reconciled with Saudi Arabia
He added, “Saudi investments would displace Iranian ones and create hundreds of thousands of jobs, meaning those people would align directly or indirectly with Saudi Arabia. This would give Riyadh significant influence in Iraq—something Iran rejects, even if it has reconciled with Saudi Arabia.”
Abbas al-Khazraji, a Shiite Iraqi political analyst, told The Media Line: “No one can accept granting all of these lands to a single country, especially in such sensitive areas. There are already Saudi investments in Iraq, particularly in Baghdad, which no one opposed. But on this scale, it is unprecedented.”
The analyst added: “We do not trust the Saudis. Iran has previously offered to invest in these areas, so why reject Iran and accept Saudi Arabia?”
In recent years, Baghdad has hosted multiple investment exhibitions, with major participation from economic delegations from several countries, including Saudi Arabia. Dozens of Saudi businesspeople have traveled to Iraq, while Iraqi businesspeople have also visited Saudi Arabia.
Saudi Arabia has already invested in Iraq’s construction and contracting sector and is developing several residential investment cities in western Baghdad, as well as the capital’s largest shopping mall. In 2023, Riyadh allocated nearly $24 billion for investments in several countries, including Iraq.
Majid al-Khalidi, a Saudi economic journalist, told The Media Line: “It is not surprising that Iran opposes these Saudi investments in Iraq. Tehran views everything through a political lens, while Saudi Arabia sees it as support for Iraq and a major investment opportunity for a country exhausted by wars.”
He added: “There are more than 13 agreements between Iraq and Saudi Arabia in the investment sector, some of which are still awaiting implementation.”
