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Iran may befriend the West one day, says Vali Nasr, but that day has not arrived yet.

In this series, Rudyard Griffiths, chair of the Munk Debates, Canada's leading public-affairs forum, discusses evolving issues with top analysts and policy-makers

What drives the worsening relations between Saudis and Iran?

We're seeing a great power rivalry. Saudi Arabia and Iran both crave influence and importance. What has intensified this competition is the Arab Spring and collapse of a number of major Arab states. The civil wars in Syria, Iraq and Yemen have incentivized Iran and Saudi Arabia to move aggressively to roll back the influence of their rival.

Against this backdrop, the Saudis are very unhappy with the U.S.-Iranian nuclear deal. Once the United States decided that it was going to talk to Iran, it signalled that it's no longer willing to follow the Saudis' long-standing strategy of isolating Iran. For the Saudis, Iran was already difficult enough to contain before it started to establish footholds in Iraq, Syria and Yemen.

This is why Saudi Arabia is keen on playing the sectarian card. Iran is a Shia country; it's a non-Arab country, and, if you create hostility among Sunnis toward Iran, this is an effective and comparatively low-cost way to block what might otherwise be unimpeded Iranian influence in the region.

How do these heightened tensions affect the war against Islamic State?

By playing the sectarian card, the Saudis have made the war much more difficult on two fronts. First, stoking sectarianism fuels the Islamic State narrative – IS is an anti-Shia, anti-Iranian, fighting machine. The more you emphasize sectarianism, the more you help the appeal of IS among Sunni populations.

Second, by putting the focus on Iran, the Saudis make it much more difficult for the U.S. and its international allies to actually prosecute a war against IS. For example, our principal force for fighting IS in Iraq is the Shia government of Iraq and its mostly Shiite security forces. If the United States supports Saudi Arabia on the execution of Shiite clerics, it risks alienating the Iraqi government. If the U.S. takes too harsh a position , then it runs the risk of alienating Sunnis.

This is not what the United States needs. The U.S. strategy was built on getting everybody inside the same tent. The Saudis have basically torpedoed international efforts to end the war in Syria through diplomatic needs. I think, for the first time, the United States is now really facing the fact that Saudi strategies are counterproductive to its goals.

Is there a risk of an outright war between Saudi Arabia and Iran?

I don't think either wants to go to war. But they will fight each other through proxy conflicts. Take the case of Yemen. This is a country in which al-Qaeda was very active. There was already a civil war. By heightening sectarianism, the Saudis have actually helped, not just al-Qaeda, but also IS to set up shop as anti-Shia forces. And by bombing Yemen essentially into a failed-state situation, it's not very difficult to imagine that IS will take over large chunks of Yemen, the way it took over large chunks of Iraq and Syria. The Saudis have no solution or capacity to manage these crises. So they're inevitably going to end up on the lap of the West – just like Syria and Iraq have.

Why does the United States continue to support Saudi Arabia?

There is a tremendous amount of inertia in American policy. We know the Saudis wield power by harping on the conservative, intolerant interpretation of Islam that Europeans, Canadians and Americans have all identified as dangerous to global stability. When we look at our relationship with Saudi Arabia closely, it really does not have, strategically, the legs to go the distance. The problem remains, however, that Iran, despite the nuclear deal, is not ready to come in from the cold yet. This creates a pause, so to speak, in American foreign policy because there is worry that the nuclear deal may not go far enough, or Iran may continue to threaten Israel or play the role of a regional spoiler. In short, perhaps our skepticism about our alliance with Saudi Arabia is moving faster than our enthusiasm about Iran replacing Saudi Arabia as a main ally .

What diplomatic reset for the West could address the problem?

In the short run, it's important to encourage Iran to maintain a pragmatic approach. Iran, for now, has not sought to take punitive measures against countries that broke off relations on the urging of the Saudis.

Next, the United States, Europe and Canada should exert a lot of pressure on the Saudis to tone down their rhetoric. If some cooling off takes place, it's possible for regional actors like Turkey, Pakistan or Egypt to play a mediating role, and find a way for the Saudis to walk back from the extreme position that they have taken.

Over the longer term, the United States needs to not just give Saudi Arabia advice and reassurance, but actually conduct diplomacy with Riyadh like we do with every other country. In other words, we shouldn't give the Saudis a blank cheque.

The critical issue here is that Iran is an adversary, not an ally. We have limited leverage with it, and our expectations of Iranian behaviour are low. Saudis are an ally. We're not surprised when Iran undermines the American policy in the region. We shouldn't expect the same of Saudi Arabia, nor should we tolerate such behaviour from an ally.