In a major breakthrough, on 10 March 2023, Saudi Arabia and Iran signed an agreement to restore their diplomatic relationship, which was severed in 2016 after the Saudi Embassy in Tehran and Consulate in Mashhad were ransacked by protesters demonstrating against the Saudi execution of Shia cleric Nimr Al Nimr.
Both countries agreed to respect each other’s sovereignty and not interfere with each other’s internal affairs. They also agreed to implement the security cooperation agreement they had signed in 2001 and to cooperate in other fields such as economy, trade, investment and others.1 The agreement was signed in Beijing which mediated between the two and, in recent months, has taken the five rounds of Iraq-mediated talks in 2021 and 2022 between Saudi Arabia and Iran to fruition.
For Saudi Arabia, its military involvement in Yemen has not achieved the intended outcome of pushing the Houthis out of the capital Saana; rather, it has proved to be a drain on its economy. Riyadh, therefore, wants an acceptable resolution and honourable exit from the war in Yemen. Ever since 2015, Saudi Arabia has faced a large number of missile and drone attacks from the Houthis which has emerged as a critical national security challenge for the Kingdom.
By signing an agreement with Iran to restore normalcy, Saudi Arabia hopes to protect borders and critical infrastructure from the Houthi attacks. Also, to achieve the targets they have put before themselves under Saudi Vision 2030, long-term peace with Iran is necessary. Prolonged military engagement in Yemen is a hindrance to achieving such goals. Therefore, an agreement with Iran is a practical move by Saudi Arabia in terms of its national security and economic development.
By restoring diplomatic relations with Saudi Arabia, Iran would try to end the increasing isolation it is facing in the region and beyond. Besides, it expects to receive support from the regional countries over its nuclear issue. An agreement with Saudi Arabia would help cement its ties with other members of the Gulf Cooperation Council (GCC) as well, particularly Bahrain and the UAE. The agreement would come as an immediate relief for the Iranian government which has been facing protests in recent months.
The agreement, if implemented fully, has the potential to substantially improve the situation in Yemen. The end of the Saudi military operation in Yemen and restraint on the part of the Houthis can significantly reduce armed violence in the country. It can also significantly improve the humanitarian situation and help the country rebuild its economy. Immediately after the announcement of the agreement, the Yemeni government and the Houthis started talks on prisoner exchange in Geneva.2 But, at the same time, local factors independent of Iran and Saudi Arabia may continue to create tensions in the country. In their vicinity, the maritime security environment in the surrounding waters of the Gulf and the Red Sea can improve as a result of the increasing cooperation between the two countries.
The situation in countries like Syria, Lebanon and Iraq may not improve soon. Iran has an upper hand in these countries and has built its constituency over decades of political and economic engagement. Saudi Arabia, on the other hand, does not have the advantage that Iran has in these countries. The behaviour and activities of Hezbollah in Lebanon and Iran-backed militia groups in Iraq and Syria do not look to change immediately.
The Saudi–Iran agreement will have implications for US–Saudi relations. Although the US and Saudi Arabia are strategic partners and Saudi Arabia is an important regional ally of the US in West Asia, its normalising of relations with Iran at a time when Vienna nuclear talks remain inconclusive, points towards a tough road ahead for their bilateral relationship. Besides, the agreement brings China to the Gulf region as an actor interested in regional security and as a geopolitical challenger to the US. Saudi Arabia taking foreign policy decisions concerning Iran with Chinese mediation is a snub to the US.
While the US has traditionally adopted the policy of divide and rule and has pitted one country against another, China has, through mediation, brought Saudi Arabia and Iran together successfully. By doing so, China intends to shape the perception of the international community about its image and role as a neutral and benevolent player in the turbulent Gulf region.
Saudi–Iran rapprochement will have an impact on the Israel–Saudi Arabia relationship. Although Saudi Arabia and Israel do not have a formal diplomatic relationship, they have been holding indirect talks in recent times. In the aftermath of the Abraham Accords that led to the UAE and Bahrain normalising relations with Israel, there is a lot of speculation about Saudi Arabia joining the Abraham Accords. Israel wanted Saudi Arabia too to join the Abraham Accords.
But the Kingdom restoring ties with Iran has come as a severe jolt to the Israeli ambitions. Israeli Prime Minister Benjamin Netanyahu has blamed the failure of President Joe Biden’s regional policy and the policies of previous governments of Yair Lapid and Naftali Bennett for the success of the agreement.3 Israel’s relationship with the Gulf Arabs still remains challenging as regional geopolitics continue to unfold faster than expected.
Chinese mediation between Saudi Arabia and Iran conveys a significant change in the status quo in the regional geopolitics in West Asia. China, as a mediator, has been acceptable to Saudi Arabia and Iran, as both countries enjoy a strong relationship with it. China has supported Iran over a number of issues including the nuclear issue. In 2021, they signed a comprehensive long-term agreement for 25 years whereby China pledged to invest around US$ 400 billion in Iran in different sectors.4 Facing sanctions from the US, Iran has looked up to China for trade and political support. China has also defied the US sanctions and has continued to buy oil from Iran.5 There has been a regular exchange of visits between the two at the highest levels.
Saudi Arabia has also established a strong economic relationship with China. Saudi Arabia is the largest exporter of oil to China. There is a convergence of interests between the two over the Chinese Belt and Road Initiative (BRI) and the Saudi Vision 2030 where both have committed to cooperating with each other.6 Chinese President Xi Jinping visited Riyadh in December 2022 and held talks with the Saudi leadership and the GCC leaders as well.
Although China has traditionally maintained ties with the Gulf countries mainly on trade and energy issues, in recent times, it has made statements on the regional security issues in the Gulf. In the first GCC–China Summit for Cooperation and Development meeting in Riyadh in December 2022, President Xi expressed interest to contribute to the regional security in Gulf by supporting and cooperating with the GCC countries.7 The successful Chinese mediation looks like the beginning of a new era of Chinese influence in the Gulf. To be able to maintain its presence in the US-dominated Gulf though would be the real litmus test for China.
The rapprochement puts a check on the widening gap between the two regional powers. Despite the optimism exhibited by both Iran and Saudi Arabia, there still remain a number of challenges before them. First of all, how far can Iran address and alleviate the Saudi sensitivities and concerns about the peaceful nature of its nuclear programme remains a big question. Secondly, a lot will also depend upon the success of the agreement to provide a protective shield to Saudi Arabia against the Houthi attacks. Thirdly, Iran would be concerned over the extent to which the agreement will help to ending its isolation, facilitating the Vienna nuclear talks and lifting the sanctions imposed on it. If key concerns of both the countries are not addressed after the agreement is implemented, there is a possibility that situation may go back to the square one.
The agreement is a positive move to break the impasse, but a lot depends upon maintaining the momentum that has been gained as a result of the talks. Further, the issues of discord between them are numerous and complex. Cooperation over non-controversial issues such as bilateral trade, investment, culture and so on is relatively easy to sustain but forging cooperation on security matters will take time and require more negotiations and trust between them.