Analysis: Iran-Saudi deal places China’s Middle East role in spotlight

Iran and Saudi Arabia are to re-establish diplomatic relations, following an agreement brokered by China, which has potential implications both for the US’ role in the Middle East and Israel’s hopes of fostering an alliance to challenge Tehran’s bid for regional dominance.

What happened

• The agreement between Iran and Saudi Arabia was announced in Beijing on Friday, and says embassies will be reopened within two months.
• In a joint statement, the three countries said the deal was part of a move by President Xi Jinping to secure “good neighbourly relations” between Iran and Saudi Arabia.
• Talks between the Saudis and Iran began in 2021 and have previously been hosted by Iraq and Oman.
• Riyadh severed relations with Iran in 2016 after its embassy came under assault from demonstrators protesting against the Saudis’ execution of the prominent Shiite critic Sheikh Nimr Baqr al-Nimr. Saudi Arabia has accused Iran of stoking discontent among its minority Shiite community.
• The Saudis and Iran have been heavily involved in the brutal war in Yemen with Tehran backing the Houthi rebels and Riyadh fighting a bloody battle on behalf of the western-backed government. In 2019, a series of drone attacks by the Houthis hit Saudi oil facilities, cutting its output by half. Tehran denied any involvement.
• While welcoming the agreement – both the Obama and Biden administrations have been keen to see lower tensions between Iran and Saudi Arabia – Washington also sounded a note of caution: “It really does remain to be seen whether the Iranians are going to honour their side,” John Kirby, a spokesman for the National Security Council, said. “This is not a regime that typically does honour its word.”
• Some analysts questioned the significance of the agreement. “The Iran/Saudi deal is a relatively narrow one, focusing on specific issues such as the reopening of embassies and the resumption of trade relations as well as security from attacks,” said Fatima Abo Alasrar of the Middle East Institute. “While these steps are essential for improving economic ties and reducing tensions between the two countries, they do not address the broader ideological and political differences that have driven their long-standing rivalry.”

A coup for Tehran …

Under pressure at home and abroad, Tehran leapt at the opportunity provided by China and the Saudis. “Facing a dead end in nuclear negotiations with the United States, and shunned by the European Union because of its arms exports to Russia … Iran has scored a major diplomatic victory,” Ali Alfoneh, a senior fellow at the Arab Gulf States Institute in Washington, suggested. Hussein Ibish, a fellow expert at the Arab Gulf States Institute, agreed that, for Iran, “it represents a successful effort of trying to push back against regional isolation without major changes to its policies, which adversaries like Saudi Arabia had previously been demanding”.

… and a gamble by Riyadh

Like the US and Israel, the Saudis are deeply disturbed by Iran’s burgeoning nuclear programme but they have also been concerned by a long-term decline in Washington’s influence and interest in the region and frosty relations with the Biden administration. “The Saudis are opportunistic at every turn: they are contending with rising tensions at home, waning influence in the Muslim world, and strained relations with the US. And so they are hedging,” argued Carmiel Arbit, a nonresident senior fellow, at the Atlantic Council.

China’s growing regional presence

Under Xi, China’s presence in the Middle East has been growing, although it has previously largely been confined to expanding the country’s economic power and reach. China is the largest importer of energy from the region.

• The Iranian president, Ebrahim Raisi, visited China last month, building on the 25-year “strategic cooperation pact” the two states signed in 2021. China’s purchase of Iranian oil has been key to keeping the country’s sanctions-hit economy afloat.
• At the same time, China has also been increasing its ties with the Saudis, who rolled out the red carpet when Xi visited in December.
• Commentators have noted that the Saudis appear to have delighted in snubbing their noses at Washington: “What is notable of course is the decision to hand the Chinese a huge public relations victory — a photo op that is intended to demonstrate China’s newfound stature in the region,” said Suzanne Maloney, vice president and director of foreign policy at the Brookings Institution think tank.
• Others have noted that while the US is likely to be “uneasy” about China’s role in the Iran-Saudi Arabia agreement, it does not cross any of Washington’s key redlines for its allies and partners in the region: greater signals intelligence and other data gathering capabilities, dual use facilities, and potential technology transfers.
• Nonetheless, while China has positioned itself – unlike the US – as a neutral arbiter in the region, that status may be hard to maintain. “As its interests in the region grow it may prove difficult to defend those interests while remaining neutral,” argued Karim Sadjadpour of the Carnegie Endowment.

America the indispensable

Despite China dipping its toes in the stormy seas of the region’s politics, the US remains indispensable for traditional allies such as Saudi Arabia. The US provides major defence supplies – including Patriot missile defence batteries – and its Central Command has thousands of troops stationed in the kingdom. Moreover, as the former US ambassador to Israel, Daniel Shapiro, noted the agreement hasn’t altered Tehran’s strategic goal of securing regional dominance. When Iran inevitably breaches the “terms and spirit” of the agreement, Shapiro argued, “it will be a potent reminder to Riyadh that Beijing, for all its economic and now diplomatic influence, is an unreliable partner to ensure the Kingdom’s security. Which, ironically, may reinforce Saudi Arabia’s dependence on its strained partnership with the United States”.

“A resounding failure”

In Israel, the agreement was greeted with dismay, bitter recriminations and questions about the country’s goal of forging closer ties with Saudi Arabia.

• Former prime minister Naftali Bennett accused Benjamin Netanyahu of a “resounding failure resulting from diplomatic negligence, general weakness and the internal struggle within Israel” and labelled the agreement a “grave and dangerous development for Israel and a significant diplomatic victory for Iran”.
• The US has been at the centre of behind-the-scenes talks between Israel and the Saudis and it was reported last week (see news story) that Riyadh is requesting security guarantees and help with its nuclear programme from Washington in return for normalising relations with the Jewish state.
• However, the deal with Iran appears to be part of a wider diplomatic push – which has included efforts to improve relations with Turkey and Qatar – which may not impact any potential agreement with Israel. “Both sides are still interested in exploring next steps regardless of whether the Saudis bury the hatchet with Tehran,” suggested Jonathan Schanzer, the vice president of research at the Foundation for Defence of Democracies.
• Saudi analyst Aziz Alghashian agreed: “Saudi Arabia has prioritised a rapprochement with Iran over an overt rapprochement with Israel [but] this doesn’t mean very quiet relations with Israel are going to cease… Now the relationship with Iran is a variable that is part of the calculation.”
• Others pointed to the fact that the United Arab Emirates – Israel’s closest Gulf partner – signed the Abraham Accords with Israel in 2020 but restored relations with Tehran last summer.