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Riyadh-Teheran: Foes No More?

March 18, 2023 | Expert Insights

The decision by Saudi Arabia and Iran to reinstate diplomatic relations after seven years of rivalry in West Asia is as surprising as Beijing acting as a broker of this peace agreement. Evidently, the development caught the U.S. by surprise, which has considered the Middle East its turf for decades. China hosted the final negotiations between Riyadh and Tehran in Wuxi City after mediating several rounds of talks in Iraq and Oman in 2021.

More importantly, it makes an emphatic statement on the emergence of Beijing as a principal global player, a role China has diligently worked towards for the past few decades. This is well aligned with Beijing's stated foreign policy goal of "quasi-mediation diplomacy" which seeks to promote China's broad diplomatic, commercial and political objectives through consolidating consensus.

The peace agreement involves reviving a security cooperation accord signed in 2001 as well as a 1998 pact dealing with the resumption of trade, investment, and technical, economic, cultural, and scientific ties between the two countries. Additionally, both Saudi Arabia and Iran have agreed to reopen embassies in each other’s countries within two months.

This arrangement has been welcomed by other West Asian countries, the UN and the bulk of the West. While not mentioning it openly, Washington may consider this move as a challenge to its historic domination as well as taking the shine off its much-touted Abraham Accord that saw UAE and Bahrain accepting Israel's sovereignty, with Saudi Arabia expected to follow suit.


The traditional Islamic sectarian rivalry between the Saudi kingdom, a Sunni state and Iran, a Shia country, has translated over the last few decades into a bitter struggle for regional hegemony. Both claim their position as the leaders of their respective sects and have bitterly fought each other through their proxies in Lebanon, Iraq, Syria and, most devastatingly, Yemen.

In January 2016, Saudi Arabia severed diplomatic ties with Iran after its embassy in Tehran was attacked. Since then, the relationship has steadily gone south, with the rivalry peaking in the senseless civil war in Yemen, where Iran-backed Houthi rebels have taught Saudi and UAE-backed Yemeni government a bitter lesson on a protracted battle of attrition. The culminating point, most embarrassingly for Iran, came in 2019 with Houthi drones devastating Saudi oil installations causing losses amounting to billions of dollars. Now Riyadh has been trying to find a way out of the Yemeni imbroglio without losing face or acceding space to Iran. The ongoing popular Hijab protests in Iran have been another friction point between the two rivals. Saudi Persian language media channels have been instigating the protestors since day one of the protests, invoking a “credible threat of attack” from Iran.

China's ability to bring these warring neighbours together and make them re-establish formal diplomatic relations is a credible achievement and hints at its balanced approach of cementing ties with "all players based on common interests" instead of focusing on geopolitical alignment groupings as is usually done by the U.S.



Regional peace is crucial for Saudi Arabia to realise its "Vision 2030", which aims to diversify the oil-dependent economy by attracting foreign investment and tourism, thereby transforming it into a global hub for business. This has led to Riyadh's concerted efforts to end long-standing regional conflicts/rivalries.

Brutal sanctions by the U.S. and internal tensions have made the current regime in Iran the weakest since the revolution. A need for finding regional allies and for the revival of the nuclear agreement and the linked Joint Comprehensive Plan of Action (JCPOA) has rendered Iran amenable to reconciliation with Saudi Arabia.

Iran and China have grown closer since the western sanctions throttled Iranian trade and commerce. A "prospective US$ 400 billion trade and military partnership" between China and Iran came to light in Jul 2020, which signposted a strategic geopolitical move which could have significant repercussions in the West and South Asian neighbourhood. The contours of the proposed deal continued to be the topic of debate until the New York Times obtained an 18-page 'draft copy'. According to the document, Iran and China were working on a Comprehensive Strategic Partnership of immense economic and military significance. Then China was struck by COVID 19, and nothing much was further heard of the deal.

Iran's acceptance of China as a credible mediator can be seen as a response to the latter allowing Iran, despite U.S. sanctions, to withdraw a portion of the $20 billion funds that were frozen with Chinese banks.

Evidently, the U.S. is losing ground to China in different corners of the globe, but it has only itself to blame as it pursues a "de-prioritisation policy," allowing the war in Ukraine to occupy centre stage in its diplomatic outreach. Also, as American dependence on Middle East oil reduces, the incentive to pursue its interests in the region slackens.

Taking advantage of USA's reduced enthusiasm in the region, China has signed multiple strategic cooperation pacts with both Saudi Arabia and Iran. China's domestic interests are also served by its desire to bring stability in West Asia since it sources more than 40 per cent of its energy from the Gulf, and tension between the two major oil producers potentially threatens its supplies.

This could be a sobering moment for India. Its principal adversary has positioned itself as a geopolitical player in the Gulf region, crucial for India's economic interests and energy security. This move could also diminish the significance of the I2U2 (Israel-India-UAE-US) or "quad of the middle-east" that the U.S. created as the post-Abrahamic Accord security arrangement in the region. India's strategic partner in the region, Israel, too, should be worried as its understanding of ‘enemy’s enemy is a friend’ may be shaken!


  • It is too early to make a definitive assessment of the success of the Chinese-sponsored reestablishment of diplomatic relations between the two arch-enemies. The enmity is too deeply seated, and a diplomatic deal can hardly change the underlying sectarian tension between Sunnis and the Shias. However, it is a good sign that at least diplomatic channels of communication between the two leading players in the Middle East have now been established.
  • This raises hope for the long-suffering citizens of Yemen, caught in the power rivalry between the two. If the Yemen war is peacefully terminated thanks to better relations between Riyadh and Tehran, it could augur well for other Shia-Sunni conflict points like Lebanon and Syria.
  • China has scored a diplomatic coup of a sort for which it deserves all the credit. In a geopolitical landscape where China is often seen as an ogre, ready to gobble up its weaker neighbours, this would do much to enhance its international standing.