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The implications of the Iran-Saudi deal

Mar 17, 2023 | AIJAC staff

Image: Shutterstock
Image: Shutterstock

03/23 #03

Last weekend, Iran and Saudi Arabia signed an agreement to renew diplomatic ties. While the agreement was not a complete surprise, the venue was – they initialed it in Beijing under Chinese auspices. This Update looks at the terms and implications of the Teheran-Riyadh deal, not only in terms of the intense rivalry in the Middle East between the Iranian-led bloc and the Sunni states, but also in terms of increasing Chinese efforts to increase its political role in the region.

We lead with a solid general summary of the terms of the deal, and especially its implications in terms of China’s role, from Radio Free Europe. In addition to providing facts and background, the piece also includes analysis from US-based, Israeli and Chinese experts. Both the piece itself, and the experts quoted, note that the deal will not in itself end the bitter Teheran-Riyadh rivalry, and actually may lead to numerous additional challenges and tensions, not least in terms of bringing an end to the conflict in Yemen. For this good introduction to the deal and its implications, CLICK HERE.

Next up, Henry Rome and Grant Rumley of the Washington Institute for Near East Policy offer an analysis that pours cold water on the idea that the deal is either a major regional diplomatic breakthrough for China, or is likely to lead to a major shift in the Middle East regional order. They assess the risk of the deal coming off the rails as high – and suggest China is unlikely to be either willing or able to act as the deal’s guarantor. They also suggest that, even if the deal goes forward, the result could be increased, not decreased, regional tensions – especially if Iran views the deal as a reason to push ahead with its provocative nuclear strategy. For all the details of this essential analysis, CLICK HERE. More words of caution about the deal’s limitations and pitfalls come from Washington Institute head Robert Satloff, in an interview.

Finally, we offer an Israeli perspective on the deal from three top experts at Tel Aviv University Institute for National Security Studies, Sima Shine, Yoel Guzansky and Eldad Shavit. Like Rome and Rumley, they caution that the deal does not mean the rivalry between the Iranians and the Saudis is over, but they do express concern that the deal represents a blow to attempts to create a firm anti-Iranian camp in the region to counter Iran’s destabilising rogue behaviours. They also canvass how the deal affects Israeli hopes that an Israeli-Saudi normalisation agreement will soon be possible. For their detailed and knowledgeable arguments, CLICK HERE.

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China Eyes Larger Middle East Role After Sealing Iran-Saudi Deal

Radio Free Europe (RFE), 14 Mar 2023

A surprise deal brokered by China to reestablish diplomatic ties between Iran and Saudi Arabia has paved the way for Beijing to expand its influence in the Middle East and shore up its broader ambitions on the global stage.


China and Iran sign a 25-year friendship pact in 2021. The latest deal can be seen as part of a larger Chinese push into the Middle East region. (Image: President of the Islamic Republic of Iran)

Following the announcement of the March 10 agreement, which came after four days of previously unannounced talks in Beijing, the Wall Street Journal reported that Chinese leader Xi Jinping plans to continue to press ahead with his country’s regional leadership and host ahigh-level meeting of Gulf Arab leaders and Iranian officials in Beijing later this year.

The gathering has reportedly been in discussion since December, when Xi met with Arab leaders at a regional summit in Riyadh and proposed the idea.

The deal between Iran and Saudi Arabia highlights Beijing’s growing focus on the Middle East, where Xi’s long-term foreign policy goal of presenting Chinese leadership as an alternative to the United States is finding fertile ground amid waning American influence and China’s expanding economic and political ties with the region.

Wang Yi, China’s top diplomat, said that the success of the talks between Riyadh and Tehran — whose rivalry has long shaped politics and trade in the region — was attributed to Xi’s leadership and that it was ‘a victory for peace.’

‘China will continue to play a constructive role in handling hot-spot issues in the world and demonstrate its responsibility as a major nation,’ said Wang, who represented China in the talks. ‘The world is not just limited to the Ukraine issue.’

Saudi Arabia cut ties with Iran in 2016, and the diplomatic rapprochement comes as the countries have squared off against each other in regional proxy conflicts over the years. Analysts have cautioned that the China-brokered deal faces obstacles ahead and that it will take more than renewed diplomatic relations to mend ties. But the agreement also reflects growing pragmatism from each side with Tehran looking to salvage its tattered economy and Riyadh eager to calm tensions that have inflamed wars and fueled attacks on Saudi Arabia and its interests across the region.

‘Iran is deeply isolated, humiliated by months of protests, and heavily reliant on China strategically [and] economically. This deal lessens its isolation, gains legitimacy for the regime, and strengthens China’s regional influence at the expense of the [United States],’ Karim Sadjadpour, senior fellow at the Carnegie Endowment for International Peace, wrote on Twitter following the peace deal.

‘Given China’s enormous leverage over Iran and its interest in regional stability, Riyadh likely hopes this deal provides them a Chinese shield against Iranian aggression,’ he added.

Cautious Optimism

According to the Wall Street Journal report, the new deal provides two months for Iran and Saudi Arabia to agree on details before reopening their embassies. Once an agreement is reached on those specifics, the countries’ foreign ministers will then meet to finalize it and the purported Middle East summit in China will take place after that announcement.

‘The countries of the region share one fate,’ Saudi Foreign Minister Prince Faisal bin Farhan Al Saud, tweeted about the deal. ‘That makes it necessary for us to work together to build models for prosperity and stability.’

Iranian officials also welcomed the agreement, with Iranian Foreign Minister Hossein Amir-Abdollahian saying it was a sign that Tehran’s regional policy was ‘strongly moving in the right direction’ and that the country’s ‘diplomatic apparatus is actively behind the preparation of more regional steps.’

While many analysts believe that the deal and China’s role in it are being met with caution in Washington, U.S. National Security Council spokesman John Kirby said the United States supports ‘any effort to deescalate tensions’ and that ‘we think it’s in our own interests,’ noting that it could lead to an end of the civil war in Yemen, which has seen the country’s Iran-backed Huthi militants face off against a Saudi-led coalition in a conflict that has led to hundreds of thousands of people killed and created a dire humanitarian situation.

Tehran was motivated to strike a deal as a currency crisis grips Iran, compounding an already devastated economy from U.S. sanctions over its nuclear program and fallout from months-long public protests against the clerical regime’s rule.

Iranian officials are said to be hoping to extract economic benefits from Riyadh for their easing of tensions as well as from China, which maintains significant economic leverage over Tehran.

Iran’s semiofficial Mehr news agency reported that prior to the March 10 announcement, Beijing allowed Iran to access a portion of some $20 billion in Chinese banks that was frozen when the United States left a landmark nuclear deal and reimposed sanctions against Tehran in 2018.

China promised Iran in 2021 to invest a reported $400 billion in the country in exchange for oil and fuel supplies, though Western sanctions against Tehran have prevented Beijing from realizing the terms of the sprawling agreement.

Beijing also has deep economic links to Riyadh as China is Saudi Arabia’s largest trading partner and the kingdom is one of China’s largest oil suppliers.

Those economic ties have been the bedrock of China’s engagement in the Middle East, where Beijing receives more than 40 percent of its crude oil imports and has a growing interest in regional stability.

But the peace deal also reflects China’s shifting approach to the region, which is moving from being centered on trade and investment toward wading into the Middle East’s tense conflicts.

‘So far, China has been very cautious…focusing primarily on business without getting too involved militarily in the Middle East. But things could change,’ Zhou Bo, a former senior colonel in the People’s Liberation Army, said this month at an international affairs conference in Israel before the deal was announced.

Beijing’s Evolving Role


Chinese President Xi Jinping (right) shakes hands with Saudi Crown Prince  Mohammed bin Salman in 2016 in Hangzhou, China. China bills itself to regional states as a partner that promotes multilateralism and won’t criticise them over human rights issues (Image: Shutterstock, Salma Bashir Motiwala).

In addition to its economic ties, China’s growing influence in the Middle East has been its growing appeal as a partner that touts multilateralism and refrains from criticizing human rights records in the region.

Beijing has also capitalized on fallout from events that have hurt Washington’s standing in the region, such as its 2003 invasion of Iraq and wide-ranging war on terror, with China following a strategy to shun Western ideals and U.S. interests when engaging with the Middle East.

Saudi Crown Prince Muhammad bin Salman welcomes Chinese leader Xi Jinping in Riyadh in December 2022.

‘[Beijing’s] real power is steadily catching up to the willpower to undercut U.S. hegemony,’ Tuvia Gering, a China expert at the Institute for National Security Studies, wrote in February for the Atlantic Council think tank.

The United States has long-standing ties with Riyadh and is its main security partner, though relations have been strained for many years and soured significantly after the gruesome 2018 killing of Washington Post journalist Jamal Khashoggi by Saudi agents, allegedly at the behest of Saudi Crown Prince Muhammad bin Salman.

While the new peace deal is an early diplomatic coup for China, analysts are also quick to caution about the difficulties ahead for Beijing in navigating one of the most volatile rivalries in the world, which is exacerbated by the Sunni-Shi’a schism.

Reopening embassies and renewing diplomatic relations as outlined in the deal are unlikely to forestall Iran and Saudi Arabia’s struggle for regional dominance.

The war in Yemen will be a critical test for the nascent rapprochement.

Saudi officials are reportedly seeking a way to end the conflict but hammering out a peace agreement will be an even larger task and could reinvigorate tensions between Tehran and Riyadh.

Others have noted that Iran’s Islamic Revolutionary Guards Corps — the hard-line faction that has made armed influence in the Middle East a key policy pillar — has yet to weigh in on the March 10 deal and that it won’t survive without some form of blessing from it.

‘It’s one thing for China to host the talks, but it is another for China to help implement the signed agreement on time,’ Fan Hongda, a professor at the Middle East Studies Institute of Shanghai International Studies University, wrote after the deal was announced. ‘What kind of guarantees will China provide if one of the parties does not respect the agreement?


What Beijing’s Iran-Saudi Deal Means—and What It Doesn’t

by Henry Rome, Grant Rumley

Washington Insitute for Near East Policy
Policy Watch
Mar 15, 2023

China brokered the agreement, but this does not signal a new Beijing-led order in the Middle East—in fact, it could make regional tensions worse.

 

Last week’s agreement to reestablish diplomatic relations between Tehran and Riyadh was no “peace deal,” but the rivals did decide to cool tensions and reopen embassies after a seven-year lapse. China’s role in facilitating the deal raised the most consternation in Washington, leading some to declare that “a new era of geopolitics” had begun and assert that the agreement topped “anything the U.S. has been able to achieve in the region since Biden came to office.”

Yet there are plenty of reasons to be skeptical about the notion that the deal signals a newfound Chinese diplomatic prowess or a shifting regional order. For one, Beijing has been wading into Middle East diplomacy for years—most recently via President Xi Jinping’s December trip to chair regional summits in Saudi Arabia—but with little to show for its efforts. (For a detailed look at China’s past diplomatic activities in the region, see the companion article “China’s Track Record on Middle East Diplomacy.”)

Further, it remains unclear how crucial Beijing was to the Iran-Saudi negotiations. The two parties had been conducting backchannel talks for years in the hopes of de-escalating tensions, with previous rounds sponsored by Iraq and Oman. Those talks were sidelined with the change in government in Iraq and the spread of protests in Iran last year.

Reports on the new agreement suggest that both sides were readily able to reach consensus on important issues, at least on paper. Riyadh apparently agreed to soften coverage on Iran International, the London-based media outlet funded by Saudis, which Tehran has depicted as the leading anti-regime instigator throughout the recent protest movement. In return, Iran reportedly agreed to encourage its Houthi allies in Yemen to maintain the current year-long truce. Since that war began in 2015, Saudi Arabia has spent millions of dollars defending its territory against Houthi missile and drone attacks, which have often targeted major civilian sites. In short, Riyadh and Tehran already had strong incentives to take at least a few initial diplomatic steps to bolster their internal stability, so forging this deal is hardly a masterstroke for Beijing.

Another open question is whether the deal will be implemented in full, and whether Beijing intends to hold each side accountable. According to the trilateral statement issued on March 10, Iran and Saudi Arabia agreed to “resume diplomatic relations” and reopen their embassies within two months. They also affirmed their “respect for the sovereignty of states and…non-interference in internal affairs,” as well as their intention to implement their 2001 security cooperation agreement and their 1998 deal covering economic, cultural, and scientific cooperation (the latter two agreements will be discussed more fully in a forthcoming companion article).

Yet the 2001 security cooperation agreement is vague—although it includes generic language encouraging information sharing and joint training to counter organized crime, terrorism, and drug trafficking, it does not provide a specific path toward initiating such cooperation. Moreover, the trilateral statement makes painstakingly clear that China’s role was “hosting and sponsoring talks,” and it may host another regional summit later this year. It has given no signal that it intends to be the agreement’s guarantor or keep it on track.

Indeed, the risks of derailment are high given the lack of trust between Riyadh and Tehran. Renewed protests in Iran could trigger another surge of regime anger toward Saudi Arabia, whether or not Riyadh and its allies are involved in fomenting the unrest. And although the Houthis are closely aligned with Tehran and depend on its weapons, cash, and training, they might still launch further strikes on Saudi Arabia for their own reasons, thereby threatening the fragile ceasefire. Similarly, Iran’s network of proxies in Iraq and Syria could decide to attack Saudi partners or the kingdom itself, undermining Riyadh’s internal support for compromise.


China is already the Middle East region’s dominant economic force through its energy purchases, and may now be seeking to expand its diplomatic role to match its economic footprint (Image: Shutterstock, rustamxakim). 

The deal may even exacerbate the broader geopolitical tensions that Beijing is likely aiming to calm. Most notably, Iran may perceive the agreement as a tacit endorsement of its current nuclear policy, which has matched diplomatic intransigence with unprecedented technical advances. If Tehran decides to double down on its nuclear strategy as a result, it will further alarm Western, Arab, and Israeli officials. In other words, while the deal might de-escalate tensions between Iran and Saudi Arabia, it could simultaneously exacerbate Tehran’s tensions with other actors, potentially raising the possibility of military escalation.

Washington should therefore be clear-eyed about what Beijing’s mediation means—and what it doesn’t. China’s investment in the Middle East will likely continue growing; after all, it is the region’s dominant economic force and has long sought to match its diplomatic standing with its sizable economic footprint. Until now, its diplomatic reputation in the region has not been challenged by realities on the ground. Getting Iran and Saudi Arabia to publicly agree on a de-escalation accord is a win to be sure. But actually holding them to the agreement over the long term is an entirely different challenge—one that will reveal a great deal about China’s true influence.

Henry Rome is a senior fellow at The Washington Institute. Grant Rumley is the Institute’s Goldberger Fellow and author of its 2022 study “China’s Security Presence in the Middle East: Redlines and Guidelines for the United States.”


Iran and Saudi Arabia Renew Relations

Sima Shine, Yoel Guzansky and Eldad Shavit

The announcement by Iran and Saudi Arabia on the renewal of diplomatic relations, after seven years of hostility and severed relations, came as a surprise to many elements, since the negotiations were conducted out of the public eye and mediated by a surprising third party – China. What are the implications of the rapprochement between Tehran and Riyadh for Israel and the region, and does this effectively block Saudi Arabia from joining the Abraham Accords in the future?

INSS Insight No. 1695, March 14, 2023


(Image: Shutterstock, Andy.LIU)

Abstract: In a surprising announcement, Iran and Saudi Arabia announced a resumption of relations (which were severed in 2016) and a return of ambassadors, which will take place in two months at the latest. The announcement was surprising both in its timing and in the identity of the mediator – China. The move reflects Beijing’s increased involvement in the Gulf and strengthens its position vis-à-vis the United States in the region. While the US administration welcomes the decline in tensions in the Gulf and seeks to continue efforts to restart negotiations on a return to the nuclear deal, it views China’s intervention as an unfavorable dynamic. The main test for Iran-Saudi relations will be the continuation of the truce in Yemen, yet the underlying hostility between the countries will not disappear. At the same time, this development can be seen as a blow to efforts to create an anti-Iran camp in the region. However, the renewal of relations itself is not an obstacle to future normalization between Saudi Arabia and Israel. Riyadh’s considerations on this matter are broad and touch on deep issues regarding relations with Washington, developments in the Palestinian arena, and Saudi Arabia’s status as a protector of holy sites for Islam.

On Friday, March 10, 2023, Iran and Saudi Arabia announced the resumption of relations and the return of ambassadors to Riyadh and Tehran, which will take place no later than two months from now. The announcement was unexpected regarding the timing and regarding the identity of the mediator: China. As part of the commitments they took upon themselves, Riyadh and Tehran agreed to honor previous agreements, avoid interference in each other’s internal affairs, and engage in extensive negotiations on all bilateral and regional issues, with an emphasis on security and stability in the region.

Relations between Saudi Arabia and Iran were severed in 2016 after the execution in Saudi Arabia of high-ranking Shia cleric Nimr al-Nimr, who was one of the Saudi royal family’s most vocal critics. This move led to a general attack by the Iranian public, some say under the auspices of the regime, against the Saudi missions and a rupture of relations. The conflict between them culminated in September 2019 in a major Iranian attack on Aramco facilities in Saudi Arabia using UAVs and cruise missiles. The attack, which temporarily shut down about half of Saudi Arabia’s oil production capacity, was a seminal milestone for Riyadh in terms of its awareness of vulnerability to Iran and especially given what Riyadh perceived as “neglect” by the Trump administration, which did not provide it with military assistance. All this has sharpened Saudi Arabia’s understanding of the need to diversify its support pillars at the global level and hedge risks at the regional level.

Over the past two years, Tehran and Riyadh have engaged in several rounds of talks, mediated by Iraq and Oman, in an attempt to restore diplomatic relations. Iran’s interest centered on the desire to implement the regime’s policy, announced by President Raisi, to improve and tighten relations with neighbors and, as part of a broader policy, to reduce US influence in the region and decrease Tehran’s isolation in the region. For its part, Saudi Arabia’s main interest was related both to the desire to end the war against the Iran-supported Houthis in Yemen, and to the direct strikes it has incurred, e.g., the attack on Aramco facilities.

Contacts between the countries have seen ups and downs, with a major crisis erupting in late 2022 amid social unrest in Iran and Tehran’s accusations against Saudi Arabia that its media outlets were inciting Iranian citizens. Senior Iranian officials, including the Minister of Intelligence, openly threatened Saudi Arabia, and based on explicit information about the possibility of damage to the kingdom’s territory, the United States moved its naval vessels closer and apparently sent warnings to Tehran. British authorities, amid multiple warnings of harm to journalists, were forced to admit they could not guarantee the safety of correspondents of the Riyadh-funded “Iran International,” and the channel was forced to relocate from London to the United States.

China was the unexpected element to bridge the gap between the two countries and brought the talks in Beijing with senior officials of both countries to an agreement and a joint statement. The development follows the important visit by PRC President Xi to Saudi Arabia and the summit he held with the heads of the GCC countries, as well as the visit of Iranian President Raisi to China; this was mainly intended to ensure there was no erosion of bilateral relations, after what was perceived in Tehran as statements contrary to the interests of Iran on the part of President Xi.

This is undoubtedly a significant diplomatic achievement for China, which seeks to strengthen its influence on both sides of the Gulf – in Iran and the Arab states of the area. This interest reflects China’s greater dependence on Iranian and Saudi oil and the need to improve relations between them as part of a broader strategy to maintain regional stability. China’s achievement in essence reflects its increased interest in the Gulf, especially vis-à-vis rapprochement between the hawkish countries in a region full of tension, and as such, also strengthen its position – or at least its image – in relation to the United States, which for many decades has been an unwavering ally of the Gulf countries.

Officially Washington welcomed the resumption of relations between Saudi Arabia and Iran, and the spokesman for the National Security Council even stated that Riyadh had informed the administration of the talks to renew relations. The very resumption of Tehran-Riyadh relations is in the interests of the US administration, which attaches great importance to reduced tensions in the Gulf and seeks to continue efforts to resume negotiations on a return to a nuclear agreement. US interests are certainly served if the agreement leads to the extension of the ceasefire in Yemen and possibly even broader agreements, as the Saudis expect – notwithstanding that China’s involvement and diplomatic achievements are not favorable to Washington, which monitors China’s actions that aim to drive a wedge and take advantage of existing disputes between Washington and Riyadh. These disputes continued following the disappointment with the lack of response after Iran’s attack on Aramco facilities and have continued since the Biden administration came to power, as well as since the US President’s visit to Riyadh.

The Chinese-sponsored move is the latest in a series of Saudi measures that began, in agreement with Russia and against the explicit request of President Biden, with oil production cuts. This joined Riyadh’s explicit demands, published recently in the Wall Street Journal, relating to security guarantees and advanced weapons (and it is not clear whether the administration is ready to advance these demands), and China’s major investment in the creation of a new city, Neom, promoted by Crown Prince bin Salman. The White House official’s reference that Washington continues to monitor China’s attempts to gain influence and power around the world while reacting to China-brokered rapprochement reflects the US perspective regarding what is perceived as China’s attempt to present itself as a peace-loving and peacekeeping power.

Saudi Arabia has followed in the footsteps of Kuwait and the United Arab Emirates, which returned their ambassadors to Tehran last year. However, Iran and Saudi Arabia lead opposing ideological camps and have been fighting each other directly and indirectly throughout the Middle East for years, seeking to shape the region in their own image and strengthen the camp under their own leadership – Sunna against Shia and Arab against Persian.

The announcement of the resumption of the relationship is an attempt to ease the tension and send the message of “business as usual,” but business is not “as usual.” Both will continue to see each other as a threat and will seek to strengthen their influence in various arenas. Iran will continue to view the close relations between Riyadh and Washington and the US military presence in the Gulf countries as a threat to its interests. Still, the resumption of relations will presumably help to reduce the level of tension and, perhaps, also prevent belligerent actions of one against the other. The main test is expected to be the war in Yemen, which in recent years has led to countless Houthi missile attacks on Saudi territory, leading to a ceasefire. The resumption of relations was welcomed by parties close to Iran in the region, led by Hezbollah leader Nasrallah, as well as by Iraq.


Saudi Arabia’s de facto ruler, Crown Prince Muhammad bin Salman (l) and Israeli PM Binyamin Netanyahu (r): Netanyahu has made establishing normal relations with Saudi Arabia a key goal but it is unclear how the new Riyadh-Teheran pact will affect these hopes (Image: Wikimedia commons)

As far as Israel is concerned, is the resumption of relations a strategic/intelligence surprise? In any case, the Saudi move, at least cognitively, hurts both the Prime Minister’s stated public efforts to achieve a formal normalization of relations with Riyadh and Israel’s efforts to establish an anti-Iran camp in the region. Saudi Arabia’s actions once again clarify its geostrategic interests, stemming from a clear balance of power in favor of Tehran.

While Saudi concerns about Iran will not abate even with the resumption of relations, and while interest in strong security relations with Washington remains, the recent move reflects the understanding/concern that the US commitment is not enough, that Iran is already a nuclear threshold state and perhaps on the path to a nuclear state, and Israel too does not provide a security umbrella in the face of the Iranian threat. Therefore, it must hedge risks and reduce the intensity of the confrontation with the main rival, and it is better to keep the enemy close. At the same time, the resumption of relations with Saudi Arabia, mediated by China, will strengthen Iran’s sense of confidence in its ability to cope with the tightening of sanctions, which Washington and Israel seek, given the alarming progress of the Iranian nuclear program.The move may also strengthen the Russia-China front, which is important for Iran.

Nonetheless, the resumption of relations between Saudi Arabia and Iran does not prevent future normalization of relations with Israel. Even the UAE’s announcement of the normalization of relations with Israel did not prevent the return of the ambassador to Tehran and tightened bilateral ties, including military ones. Riyadh’s considerations are broader and include the Palestinian arena, relations with the US, especially regarding arms sales and security guarantees, and Saudi Arabia’s special status as protector of Islam’s holy sites.

Sima Shine is currently the head of Iran program at the Institute for National Security Studies (INSS). Dr. Yoel Guzansky is a Senior Researcher at the Institute for National Security Studies (INSS) specializing in Gulf politics & security. Eldad Shavit joined INSS in early 2017 as a Senior Researcher following a long career in the IDF Intelligence Corps and the Prime Minister’s Office in Tel Aviv. 

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