ABSTRACT
This chapter offers an account of Saudi-Iranian relations during the presidency of Ali Akbar Hashemi Rafsanjani. Rafsanjani's personality and diplomatic skills, as well as those of his allies, proved crucial in this foreign policy change and in the betterment of Iran's regional relations, including those with Saudi Arabia. Relations between Iran and Saudi Arabia were tense at the end of the Iran-Iraq war. The Tankers War was raging in the Gulf region and the battle was approaching the kingdom's frontiers. Ayatollah Khomeini's death in 1989 was a turning point in Iran's foreign policy orientation, as post-revolutionary Iran ushered in a seemingly smooth transition. The damage to Iran's oil fields and the lack of foreign investments exacerbated the country's inability to compete with international markets. The first post-revolution economic plan was intended to restructure the economy by adopting a market-friendly orientation, attracting foreign investments and increasing the production of consumer and industrial goods.
