Saudi Arabia took a big step this week in improving its diplomatic relationship with the Iraqi government, a neighbor that Saudi officials have long viewed with wary eyes and with much suspicion.

After postponing indefinitely its plans to reopen the Saudi embassy in Baghdad and dragging out its decision to appoint a permanent ambassador for Iraq, Riyadh finally tapped one of its diplomats to begin the work of rebuilding the kingdom’s relationship with its northern neighbor. While the ambassador of choice for the Iraq job is already the kingdom’s emissary to Jordan, the simple task of naming an ambassador to Baghdad is an enormous accomplishment for a country that has frequently viewed Iraq through foggy glasses.

There is also one more caveat to the nomination. Although Saudi Arabia will now open official diplomatic contacts with their Iraqi counterparts, the Saudi ambassador will remain at his residence in Jordan most of the time — an indication that the House of Saud will remain cautious in its new approach.

Saudi officials are quick to point to the lack of security in Iraq as a justification for the delay in reopening its embassy. And with shootings, roadside bombings and suicide bombers still a fact of life for many Iraqis in the capital (not to mention other parts of the country), that justification has often worked. Now that Iraqi-Saudi diplomacy is back on however, people will begin to wonder how much longer King Abdullah and his circle of advisors can continue to operate without a presence in Baghdad.

The reestablishment of direct contact between Iraqi and Saudi officials is all the more remarkable when considering the contentious history that the two countries have had with one another for the past three decades.

Even before Iraq’s invasion of Kuwait in 1990, Saudi officials constantly viewed Saddam Hussein as a principle Arab competitor for regional leadership. Iraq’s enormous oil reserves, coupled with Hussein’s penchant for military adventurism, would give any leader sleepless nights. But for the Saudis, who shared an enormous desert border with Iraq and had the most to lose from an assertive Baghdad, Saddam was an irritant that could not be ignored. His quick triumph in Kuwait and threatening posture toward the kingdom during the early 1990s was undoubtedly the lowest point in the relationship between the two countries.

The collapse of Saddam Hussein’s regime provided only short relief. Iraq’s Shia community would ascend as the new power brokers in the Iraqi government, all of a sudden depriving Sunnis of the position of privilege that they had held on to for so long. The growth of Shia power in Iraq was naturally taken advantage of by Iran, the so-called guardian of Shia Islam and Saudi Arabia’s biggest adversary in the Middle East today.

The personal relationship between King Abdullah and Iraqi prime minister Nouri al-Maliki was none too neighborly (PDF) either, with the Saudi king calling Maliki an Iranian puppet and the prime minister complaining about the kingdom’s unwillingness to crack down on anti-Shia sermons. Maliki also refused to hide his absolute disdain for Saudi Arabia’s lax border controls which gave Saudi jihadists the opportunity to enter into Iraq and join the country’s surging anti-American and anti-Shia Al Qaeda branch.

With all of this in mind, the nomination of an ambassador to Iraq will not heal all of the wounds. Both countries hold major grievances with one another, which Maliki has unfortunately resisted in resolving with his increasingly autocratic behavior toward Iraqi Sunni leaders more broadly. Formal conversations among Saudi and Iraqi officials, however, will finally bring both countries face to face, in the same forum.