Saudi Arabia-Iran agreement

From time to time, a supernaturally predictable Middle East offers something quite unpredictable.

Iranian Foreign Minister Hossein Amir-Abdollahian (left) shaking hands with Saudi Arabian Foreign Minister Prince Faisal bin Farhan (right) and Chinese Foreign Minister Qin Gang (center) during a meeting in Beijing on April 6, 2023. Source:https://www.thinkchina.sg/chinas-saudi-iran-deal-only-defensive-response-western-security-challenges

Since the Arab Revolts of 2011, the Middle East has experienced increased instability and a struggle for regional hegemony between Saudi Arabia and Iran. However, on March 10, 2023, the Islamic Republic of Iran and the Kingdom of Saudi Arabia signed an agreement mediated by the People's Republic of China. Under this agreement Tehran and Riyadh restored their diplomatic ties, triggering a potential shift in power dynamics in the region.

This agreement and China's role has been the subject of analysis. In this note, the significance of this event and its implications beyond the Middle East will be explained.

It is important to look back a little, since 1979. In Iran, Iran's Islamic revolution brought to power a Shiite leader and a regime whose ideology and policies challenged Saudi Arabia, the guardian being the custodian of the two holiest sites of Islam and the undisputed leader of the Sunni branch of the Islamic world.

Since the 1979 Islamic Revolution and the 1991 Gulf War, Saudi Arabia and Iran have been vying for hegemony in the Middle East. Despite growing bilateral tension, the two states have also tried to reach understandings. It is worth mentioning that after the first Gulf War, Tehran and Riyadh signed an agreement in 1998. In this agreement, the two states negotiated to strengthen economic, cultural and technological cooperation, but not military cooperation.

In 2001, the two states signed another agreement on internal security cooperation. The agreement covered the fight against organized crime, terrorism and drug trafficking. According to Ali-Asghar Khaji, Iran's ambassador to Saudi Arabia, this is the most important breakthrough in the history of relations between the two countries. However, its implementation would be delayed for two decades.

In December 2010, Mohamed Bouazizi, a young unemployed man, set himself on fire in front of the town hall of Sidi Bouzid, Tunisia, when the police prevented him from setting up his street stall. This act of personal and desperate protest lit a fuse that spread throughout the Arab world. This would start the Arab Revolts, most notably in: Tunisia, Egypt, Syria, Libya, Yemen.

This struggle is accompanied by a shift in U.S. foreign policy, paying greater attention to regional dynamics in the Asia-Pacific region. This shift started during the presidency of US President Barack Obama. Meanwhile, a new player would quietly enter the region, the People's Republic of China.

In recent years, Beijing has become a major importer of oil from both Iran and Saudi Arabia. This region has been the source of up to half of China's imported oil. To secure these energy resources, Beijing has engaged in state-to-state negotiations, and has been working with its counterparts in the different Middle East to establish the institutional and financial regulatory frameworks aimed at facilitating and expanding inter-regional activities for the implementation of the Silk Road and Strip project in the region, taking advantage of increased US involvement in the region.

The 2011 protests would lead to increased rivalry between Saudi Arabia and Iran, in the wake of the subsidy war between the two powers, especially in the civil war in Syria and Yemen. However, the turning point would come in 2016.

In January 2016, Riyadh executed the cleric, Nimr al-Nimr, a well-known Shiite reformist, and his nephew, Ali al-Nimr, on charges of membership in a terrorist group. This led to a group of Iranian protesters storming and ransacking the Saudi embassy in Tehran. This event triggered the severance by Riyadh of its ties with Tehran, and a tug of war between the two powers, through subsidiary conflicts in: Syria, Yemen, Iraq and Lebanon.

Map 1: Rivalries between Saudi Arabia and Iran in the Middle East. Source: https://www.i24news.tv/en/news/middle-east/160456-171117-saudi-iran-dispute-unlikely-to-take-israel-to-war-analysts

Israel, which sees Iran as a mortal threat, in a sense "backs" the Saudi effort to contain Tehran, and has taken advantage of the juncture to establish and consolidate its diplomatic ties with the Persian Gulf monarchies. Israel and Saudi Arabia were the two countries that most vehemently opposed the 2014 nuclear deal or Joint Comprehensive Plan of Action (JCPOA).

In 2018, former U.S. President Donald Trump was clear on two aspects of his Middle East policy: Iran is the source of the region's ills and sanctions are the main tool to counter it. Hence, he withdrew the US from the JCPOA in May 2018. Donald Trump imposed economic sanctions on Iran and adopted a tougher policy against Tehran.

This juncture and Iran's further isolation allowed Israel and the Arab monarchies to publicly consolidate their diplomatic ties, through the Abraham Accords, in 2020. At the same time, China managed to carefully capitalize on the US and EU withdrawal from Iran, and has maintained close ties with the various states in the Middle East.

However, despite the tension between Riyadh and Tehran, these two states have held talks in Oman and five rounds in Iraq in the last two years to mend ties.

Today, Saudi Arabia, Qatar and the United Arab Emirates rule the Gulf with relatively young and assertive leaders. Riyadh, faced with the lack of commitment from the United States, its main traditional partner, has been improving its ties with Russia and China for some time.

Saudi Crown Prince Mohammed bin Salman is beginning to feel the consequences of the war in Yemen on his economy, just as he is trying to implement an economic diversification program, Vision 2030. China is seen as an important partner in providing the technology and expertise needed to develop the kingdom's defenses.

In December 2022, Chinese President Xi Jinping visited Saudi Arabia, and hosted summits with Gulf Arab leaders and heads of state of other Middle Eastern countries. In February 2023, Iran's President Ebrahim Raisi accompanied by a large delegation, including six ministers, including the ministers of oil and economy and the Governor of the Iranian Central Bank paid an official visit to Beijing.

This visit took place in a situation where, Tehran has been experiencing intense protests in a context of a severe economic crisis as a result of the reimposition of US sanctions in 2018 and the effects of the pandemic.

Two other recent factors explain this diplomatic rapprochement are Turkey and Israel. With regard to Turkey, presidential elections will be held on May 14, where the current Turkish president, Recep Tayyip Erdogan, is deeply unpopular for economic reasons.

Alongside this, in Israel, the current Prime Minister, Benjamin Netanyahu formed a coalition government with hard-line and ultra-religious parties, announcing annexations in the West Bank. Throughout the past month, the Israeli-Palestinian situation has deteriorated violently. Iran has proclaimed itself the protector of Palestinian rights, and the resurgence of the Palestinian issue could further Iran's claims, and threaten Saudi Arabia's role as leader of the Muslim world.

On March 10, 2023, under the mediation of China, Iran and Saudi Arabia signed the restoration of diplomatic relations. This agreement enshrines respect for national sovereignty and non-interference in internal affairs and a commitment to reactivate the 1998 and 2001 cooperation agreements.

This reactivation of diplomatic ties is triggering a change in the dynamics and balances of power in the region. It is worth mentioning, last April 15, 2023, a prisoners swap took place between the military coalition led by Riyadh and Yemen's Houthi rebels, backed by Tehran. These gestures could reduce hostilities in conflicts in Syria and Yemen, and could weaken Israel's aspirations to normalize diplomatic relations with other Arab states, especially Saudi Arabia.

This agreement also has ramifications and impact beyond the region. For China, mediating the rapprochement between these two long-standing Middle Eastern rivals has key strategic and symbolic dimensions. Moreover, it demonstrates Beijing's desire to play a growing role in the power dynamics in this region.

From a strategic standpoint, Beijing needs to maintain the free flow of oil from the region. As the rivalry between Washington and Beijing intensifies, the United States has restricted Chinese access to Western technology and markets, Beijing needs to look elsewhere for stable flows of trade, technology and energy, and the Middle East plays a prominent role.

However, China's ability to continuously pressure Iran on behalf of Saudi Arabia will always be a test for China's relationship with both sides. On the one hand, Iran's nuclear ambitions are also unclear. In the context of the China-mediated deal between Saudi Arabia and Iran, it is highly unlikely that Iran will give up its nuclear ambitions, which remain and will remain a collective threat in the region.

Another factor to take into account is the public unrest in Iran. Their evolution could jeopardize the fulfillment of this agreement with Saudi Arabia and poses an arduous task for China to maintain the stability of the Iranian leadership.

In conclusion, this agreement between Saudi Arabia and Iran represents a possible step forward in a historically tense relationship and shows how: the US and above all the EU have an increasingly limited role in the region. It remains to be seen how the internal situation in Iran and the rest of the region will evolve in the short and medium term. It is possible that this agreement will lead to regional stability and greater cooperation, but time will tell.