One by one the diplomats are returning to Damascus. In the wake of Barack Obama’s decision to appoint a new ambassador to Syria, King Abdullah of Saudi Arabia has followed suit. However, a new Saudi ambassador represents more than a mirroring of western rapprochement with the Ba’athist regime – it is an olive branch between two states that have been locked in opposition for the last four years.

While Washington seemingly steps up its attempts to woo President Bashar al-Assad away from Iran, Saudi Arabia is working in conjunction to lure him into the so-called moderate Arab camp. With King Abdullah himself expected to visit Syria soon, could this ambassadorial appointment mark the first step in ending the latest round of the Arab cold war?

Malcolm Kerr described the 1950s and 1960s in the Middle East as an “Arab cold war” pitting Nasser’s Egypt and allies against conservative Iraq, Jordan and Saudi Arabia. Though the actors and ideologies have changed, some form of cold war in the Arab world has remained ever since, whether Cairo’s temporary exclusion after making peace with Israel in 1979, or Syrian-Saudi-Egyptian collusion with the US against Saddam Hussein’s Iraq in 1991. Its latest embodiment is well known: Syria, Hezbollah and Hamas, under the patronage of Iran, face allies of the US in Egypt, Jordan and Saudi Arabia. While verbal attacks have dominated, with the “moderates” stoking fears of a “Shia Crescent” challenging Arab Sunni hegemony and the “radicals” lambasting Egypt’s inaction during the Gaza war, violence has erupted too, notably when Saudi and Syria’s proxies fought gun battles in Beirut last year.

So why is Saudi, arguably the bitterest of Syria’s Arab rivals, extending a hand to end this cold conflict now? Riyadh has three priorities that promote reconciliation with Damascus. Firstly, it wishes to contain Syria’s close ally, Iran, and particularly fears its nuclear programme. The Sunday Times recently reported a green light from Riyadh for an Israeli attack on Iran through Saudi airspace. Though this has not been confirmed, it is fair to say Riyadh would shed no tears over an Israeli strike. However, it would fear a domestic backlash should Hezbollah and Syria retaliate against Israel, and prying Assad from Ahmadinejad’s embrace seems the best way to avoid this. The uncertainty in Tehran following the recent post-election protests has catalysed Saudi’s renewed effort to detach Syria from Iran.

Another key factor is Lebanon. Saudi has long backed Saad Hariri and his supporters in the “March 14” group who emerged victorious in June’s elections. Yet despite their victory Syria’s allies – Hezbollah and the “March 8” group – remain powerful and some kind of compromise is needed if a functioning government is to be formed in Lebanon. Having already tried and failed to neutralise the opposition by military force, when Saudi-backed Sunni militants were swiftly defeated by Shia gunmen in May 2008, Riyadh understands it must enter dialogue with Damascus to keep the peace with Hezbollah and consolidate Hariri’s electoral victory.

The final and arguably greatest priority for Riyadh is to toe Washington’s line. Under George Bush, when the US’s tone was confrontational, Saudi was similarly demanding of Syria. In contrast, following Obama’s less antagonistic approach, Saudi and other Arab allies are softening their stance. King Abdullah of Jordan, the inventor of the “Shia Crescent” theory, has been in Damascus recently trying to sell Obama’s peace initiative to Assad. Egypt has similarly invited Syria to help moderate Palestinian reconciliation talks, while Saudi’s new ambassadorial appointment is the latest of several gestures of reconciliation during 2009.

So will these measures win over Syria and end the latest Arab cold war? Ostensibly Damascus is weak and in need of allies: Hezbollah is still reeling from electoral defeat and Iran is subdued domestically and isolated internationally. Moreover, US sanctions are starting to have an impact on the Syrian economy, and Obama’s support is crucial if the long-occupied Golan Heights are to be recovered. Surely ditching Iran and embracing the Arab moderates is the best way to ensure the dual goals of economic development and returning territory?

Yet from a position of seeming weakness Assad is proving to be increasingly shrewd in foreign relations. He has turned the Lebanese defeat to his advantage by emphasising Syria’s lack of interference – something that has won plaudits from the French president Nicolas Sarkozy among others. Similarly, a recent interview on western television has helped his British-born wife Asma present a more positive view of the country. Yet, at the same time as promoting western and Arab rapprochement, Assad has shored up the Iranian alliance by being the first leader to congratulate Ahmadinejad on his re-election.

Contrary to American and Saudi wishful thinking, it is the Iranian alliance that has given Syria its regional importance and allowed it to confront the moderate Arab states despite military and economic weakness. Assad has spoken of a desire to be the bridge or back-channel for the west to Tehran – and for this he needs to retain the alliance, not abandon it in some grand bargain for diplomatic realignment and economic investment. While his strategy of playing both sides to maximise gains for Syria might include welcoming Saudi’s advances, this won’t permanently end the latest Arab cold war and may ultimately make it slightly colder.