Saudi-Iranian Normalization: Changes in Regional Dynamics

Policy Briefs Program

March 14, 2023

On Friday, March 10, Saudi Arabia and Iran agreed to restore diplomatic relations after months of talks mediated by China. Many states have praised this re-engagement and its potential impact on regional conflicts, such as the Yemeni Civil war; others, including Israel, are apprehensive as to how this deal will impact the Iranian threat and nuclear program. As experts analyze the geopolitical effects of this development, one trend persists: China’s economic and diplomatic role in the Middle East is growing. 

Relations between the two countries were severed in 2016 after Saudi Arabia executed a prominent Shiite cleric. The two parties have operated as regional rivals, oftentimes in support of opposing movements. Al-Monitor described the impact of this normalization: “the detente between Saudi Arabia, the world’s biggest oil exporter, and Iran, a pariah for Western governments over its nuclear activities, has the potential to reshape relations across a region characterised by turbulence for decades. Iran and Saudi Arabia support rival sides in several conflict zones including Yemen, where the Huthi rebels are backed by Tehran and Riyadh leads a military coalition supporting the government. The two sides also vie for influence in Syria, Lebanon and Iraq.”

The normalization was well-received by many regional states, including as the UAE, Oman, Qatar, Iraq, Egypt, Bahrain, and Turkey. Hezbollah, the Houthis, and the Palestinian Authority similarly expressed optimism towards the agreement. Profiled in Al Jazeera, “the chief negotiator for Yemen’s Iran-aligned Houthi movement said diplomatic ties between countries in the Middle East are needed. ‘The region needs the resumption of normal ties between its countries for the Islamic nation to reclaim its lost security as a result of foreign interference,’ Mohammed Abdulsalam said….Hassan Nasrallah, the head of Lebanon’s powerful armed group Hezbollah, said the resumption of ties between its backer Iran and longtime rival Saudi Arabia was a ‘good development.’”

Iran is looking to expand its diplomatic efforts with other Middle Eastern countries as well, in particular Bahrain, Egypt, and Jordan. Featured in Al-Arabiya, Iranian foreign ministry spokesman Nasser Kanaani said resuming diplomatic relations with Saudi Arabia will have a ‘positive effect’ on Iran’s ties with other Arab countries: “Fortunately, with the positive atmosphere that we are witnessing in the region, this positive development can happen in connection with other regional countries as well, including Bahrain. We should further trust the path of diplomacy and take steps in this direction…Egypt is an important country, and the two countries value each other’s importance in the region. The region needs the positive capacities of both Tehran and Cairo.”

Iranian-Saudi normalization, however, is not conducive to Israel’s ambition of deterring Iran’s leadership and power within the region. Highlighted in Israel National News, Former Israeli Prime Minister Naftali Bennett stated that “this is a terrible blow to the effort to build a regional coalition against Iran. It is a total defeat for the Netanyahu government, caused by a combination of political neglect and economic weakness and internal struggles inside Israel. The nations of the world and the region see Israel as divided, with a government that is not functioning and is focused on systematic self-destruction. And these same countries are choosing a side.”

Saudi Arabia acknowledged that while this agreement was promising, not all of the differences between the two countries would be immediately resolved. Cited in the Saudi Gazette, the Kingdom’s Foreign Minister Prince Faisal bin Farhan stated: “Saudi Arabia’s agreement with Iran to restore diplomatic ties does not mean that both countries have reached a solution to all disputes between them. He emphasized that the Saudi-Iranian agreement to restore diplomatic relations underscores the joint desire by both sides to ‘resolve disputes through communication and dialogue’…Prince Faisal reaffirmed that Saudi Arabia is forging ahead in the path of de-escalation it has chosen because of its sense of responsibility in bolstering regional and international security and stability.”

Experts are optimistic that an active Iranian-Saudi diplomatic relationship will enhance progress in resolving the Yemeni civil war. Written in Tehran Times, Iran’s permanent representative to the UN believes that “the agreement between Iran and Saudi Arabia will help bring about a truce in Yemen…‘Resuming political ties between Iran and Saudi Arabia appears to speed up the realization of a ceasefire in Yemen, the beginning of popular dialogue there, and creation of an inclusive national government in the war-devastated country.’”

While the deal looks promising, there exists uncertainty regarding each country’s underlying objectives amid this normalization. There is also concern on the agreements’ ability to be upheld. Expressed in Haaretz, “The Saudis may hope that their turn to China gives them leverage in demanding more weapons, security guarantees, and civil nuclear technology from the United States—perhaps packaged as compensation for a normalization deal with Israel…Washington and Jerusalem both need to view the Iranian-Saudi announcement not as crisis, but as a reinforcement of the common approach they must pursue: Deterring Iran from crossing further thresholds on the path to a nuclear weapon…and working to expand Israel’s normalized relations with additional Arab states, including Saudi Arabia.”

Regardless, this development underscored China’s increasing role as a power player in the region, both in economic and diplomatic capacities. Stated in Bahrain News, “China is Saudi Arabia’s largest trading partner and the kingdom is one of China’s largest oil suppliers… 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… 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.”