Iraqi government spokesman Ali al-Dabbagh spoke at the US Institute for Peace yesterday, and is making the rounds of DC. He's made some news in his public remarks: in addition to calling for U.S. dialogue with Iran and pleading for American consultation with Iraqis over the pace and scope of troop withdrawals (see Spencer Ackerman for more), he announced (as far as I know, for the first time) an Iraqi proposal for an EU-style regional economic partnership building off of the existing Iraq and its Neighbors Group (grouping Turkey, Iran, Iraq, Syria, Jordan, Saudi Arabia, Kuwait, and -- possibly -- the other GCC states). He said that he had already spoken informally to Kuwait, Syria and Turkey about the idea, and -- as several audience members pointed out -- it's hard to imagine that the Iraqi government would propose something that hadn't already circulated through Tehran.
The proposal is obviously highly unlikely to go anywhere, given regional politics, Iraqi domestic realities, and the implausibility of any Arab government giving up sovereignty in any meaningful sense. But it's still interesting to think about the reasons for the proposal and its possible implications. The group's main purpose would seem to be to establish Iraq as the core of a new regional structure (Dabbagh said as much in his presentation). The inclusion of Turkey, for instance, may help Iraq with the Kurdish issue but makes little sense otherwise. A secondary purpose, however, is likely the search for an acceptable vehicle for reconciling the Iraqi government's relations with Iran and the U.S. while trying to establish itself as some kind of intermediary for, rather than a victim of, Saudi-Iranian competition.
The group most notably excludes Israel/Palestine and Egypt. To the extent that anyone pays attention to the proposal, I expect Amr Moussa and the Arab League to be extremely hostile, since it would undermine the Arab League (or what remains of it). Egypt will see this as an Iraqi attempt to undermine its leadership position in the Arab world (or what remains of it). Palestinians will very likely see the proposal as another step towards their marginalization as world attention inexorably shifts towards the Gulf. Dabbagh fielded a question about the exclusion of Israel by saying that it was limited to "Iraq's neighbors", but that doesn't stop the GCC states from being considered. Still, the proposed "region" does reflect a very real shift of power and global interest from the Levant to the Gulf.
While this particular proposal seems quite unrealistic, I do see merit in trying to somehow build on the Neighbors Group, which has had only limited impact thus far but could hopefully be revitalized by a new administration which actually believes in regional diplomacy. Including Iran within a regional security architecture should be a major strategic objective for the U.S. in some form or another as an endpoint for the President-elect's proposed tough dialogue and engagement with the Iranians. Some kind of GCC + 2 (Iraq and Iran) architecture seems like a more realistic objective here. But if Dabbagh's proposal at least sparks some creative strategic thinking about how Iraq and Iran might be re-integrated into the region then it will have served some purpose.