Iraqi Kurdistan, facing an acute financial crisis, has a newfound opportunity to attract desperately needed foreign investment from Saudi Arabia, but regional tensions between Tehran and Riyadh could hamper its efforts.

A large Saudi trade delegation led by Sami Bin Abdullah al-Obeidi, chairperson of the Council of Saudi Chambers, and accompanied by the Saudi ambassador to Iraq and the consul general to Erbil, visited the Iraqi Kurdistan Region July 23-25, meeting with business leaders and government officials, including Prime Minister Nechirvan Barzani, to explore economic opportunities in the energy, agricultural, industry and tourism sectors. Although no agreements were signed, the parties agreed to work toward expanding economic relations, as Saudi Arabia plans to establish a direct trade link from its Arar border crossing into Anbar province and on to the Kurdistan region.

“Some of [the Saudi businessmen] have expressed the desire to build an entire industrial city in the Kurdistan region and build factories that would export to the rest of Iraq,” Abdulaziz al-Shammari, Saudi ambassador to Iraq, told Rudaw on July 25. 

In a positive sign for bilateral trading opportunities, Shammari remarked, “The [Arar] border crossing will open in the next 10 months and it will see large-scale trade exchange.” He also said to expect direct flights between Erbil and Riyadh in the coming months and raised the possibility of Saudi banks opening branches in the region.