On March 10, 2023, Iran and Saudi Arabia announced an agreement in which they agreed to restore diplomatic relations after a long period of hostility between both states which continued to threaten the peace and stability in the Gulf and fuelled conflicts in the region. This breakthrough agreement was brokered by China after four days of undisclosed talks in Beijing among top security officials from the three countries. The deal outlined the two-month embassy reopening process in Riyadh and Tehran and discussions on a range of cooperation mechanisms between both states.
The agreement shows China’s efforts and willingness to mediate this major Middle Eastern rivalry in order to increase its investments and economic projects in the region.
Background of Saudi-Iran Relations
The agreement between Riyadh and Tehran is a significant diplomatic breakthrough between both states after years of animosity, support of proxies against each other, and espionage activities. Being rival major powers of the Middle East, both countries did not enjoy a history of good relations particularly due to sectarian differences and apparently the American interference in the region. This regional rivalry started with the efforts to dominate the region and in the 2011 Arab Spring, Saudi Arabia blamed Iran for inciting protests against the royal family in Bahrain while Tehran rejected such accusations. The Saudi policymakers supported the Syrian rebels against the Iran-backed Bashar al-Assad regime in 2011 and further supported the Yemeni government in the Civil War of 2015 against the Houthi Rebels which were backed by Iran. In the 2015 Mecca stampede, Iran accused Saudi Arabia of mismanaging the Hajj pilgrimage in which 400 Iranians died.
Saudi Arabia cut its diplomatic ties with Iran after the Saudi diplomatic missions were seized in Tehran and Mashhad in protest of the execution of Shiite opposition cleric Sheikh Nimr al-Nimr in 2016. In 2019, Riyadh blamed Iran for the missiles and drones attack on its oil facilities in Abqaiq–Khurais and tankers in the Gulf waters. Later, in March 2022, the Saudi Aramco oil depot in Jeddah was attacked by missiles launched by the Iran-supported Houthi territory in Yemen.
Tehran and Riyadh viewed each other as a security threat and the region witnessed various attacks on Saudi and Emirati vessels and energy infrastructure which was then blamed on Tehran by both the Saudi and its Western allies – however, Iran denied all such accusations. Iran also reciprocated by blaming Saudi Arabia for supporting Iranian opposition groups which are recognized as terrorist organizations by Tehran, this includes the Mujahedin-e Khalq, the ethnic Arab group Al-Ahvaziya and the infamous Baloch militant group Jaish al-Adl.
Historically, after the 1956 Suez Crisis, the United States (U.S.) maintained a significant presence in the Middle East and effectively replaced France and the United Kingdom (U.K.). Consequently, the majority of the conflict resolution work was done by the U.S. However, The New York Times writer Peter Baker argued that China side-lined the U.S. by brokering the deal between the arch-rivals. Such a deal shows a shift in the major power influence in the Middle East.
As the manifestation of the unintended consequences of great power politics, the sanctions imposed on Russia due to the Russia-Ukraine War led to global economic consequences and conceivably paved the way for deeper Sino-Arab cooperation. The Gulf states remained neutral in the Ukraine conflict and had a certain distaste for the sanctions imposed on Russia, particularly by the US. However, China used this opportunity to create economic and investment opportunities for the new Gulf wealth. Chinese top diplomat Wang Yi called the deal the “Victory for Peace” and that China will continue to play its constructive role in the region.
Factually arguing, China has deeper economic interests in the Middle East, perhaps more than Tehran, Riyadh, and even Washington. It is worth noting that Beijing continues to import Iranian oil despite the U.S. secondary sanctions and China has also allowed Iran access to its 20 billion USD which was frozen in the Chinese banks when the U.S. reimposed sanctions on Iran after leaving the landmark nuclear deal i.e., Joint Comprehensive Plan of Action (JCPOA). China is Saudi Arabia’s biggest trade partner having a bilateral trade of almost 90 billion USD and it accounts for 40 percent of Saudi crude oil exports.
China benefitted enormously from this deal as a conflict-prone Middle East is a threat to its economic investments, projects, and trade opportunities.
The deal also symbolizes an increased influence of China in the region side-lining the U.S. while giving China certain prestige and trust as a reliable power and mediator in the region.
Pakistan’s Foreign Minister Bilawal Bhutto Zardari warmly welcomed the normalization of diplomatic relations between the two countries and called it an important diplomatic breakthrough commending the role played by China’s visionary leadership. Historically, this role has been played by either Pakistan or Egypt.
For decades, Pakistan has been following the policy of balancing its relations with Riyadh and Tehran. First, being an important strategic ally, and second being an important neighbor. Thus, Pakistan was more vulnerable to the consequences of the Saudi-Iran rivalry. Pakistan has a military alliance with Saudi Arabia and is dependent on it when it comes to financial assistance. It is important to note that more than a million Pakistani diaspora lives and work in Saudi Arabia and is a vital source for remittances for Pakistan. Also, Pakistan has a 10-15 percent Shia population and borders with Iran. Consequently, Pakistan faced sectarian violence and attacks by militants based in Iran whenever the matter of Saudi-Iran rivalry intensified.
Reportedly, Riyadh’s politico-diplomatic pressure was behind Pakistan’s calculations of not completing the Iran-Pakistan gas pipeline and not expanding trade with Iran. Also, Pakistan’s external security had been under continuous external pressure to choose a side. The Saudi-Iran cooperation will help build stability in the Middle East and the Persian Gulf and will help Pakistan in considering new initiatives and projects in Iran. Such developments are a good omen for materializing the Iran-Pakistan gas pipeline; otherwise, Pakistan could be liable to pay 18 billion USD to its Iranian counterparts for not honoring the deal.
Future Prospects for Pakistan
Pakistan has been going through an economic crisis, and the political instability and recent floods have further aggravated the situation. In these conditions, Stability in the region will provide Pakistan with an opportunity to increase the cross-border trade with Tehran and to complete the pending projects of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline.
There is a possibility of Pakistan’s joint ventures with Tehran and Riyadh depending on the sustainability of the deal. Riyadh may also invest in Pakistan and Iran.
China being the mediator in the deal, and also a close friend of Pakistan with strong economic ties may also advocate Pakistan’s case in rich Gulf countries and drive their attention towards Pakistan’s financial woes. China can also invite Pakistan to become a part of future projects in the region.
The author is a Research Assistant at the Institute of Strategic Studies Islamabad (ISSI), Pakistan, and a student at the National Defence University, Islamabad, Pakistan. She can be reached at firstname.lastname@example.org.
Muhammad Ali Baig
The author is a Research Fellow at the Institute of Strategic Studies Islamabad (ISSI), Pakistan. He can be contacted at email@example.com and firstname.lastname@example.org ORCID: http://orcid.org/0000-0001-9818-2532.