23/03/2023

Iran, Saudi Arabia and China: A Triangle of Détente

On March 10th, the Islamic Republic of Iran and the Kingdom of Saudi Arabia, which have been contenders for dominance in the Persian Gulf region, restored diplomatic relations after six years of tensions following their severed ties in 2016. In 2021, the parties initiated secret talks to resolve their differences over political, economic, and primarily religious issues, paving the way for further détente.

This can be viewed as a milestone marking the onset of a period of stability in a globally relevant geopolitically and geo-economic region. It is an initiative for peace and stability promoted by two religiously and politically contending sub-regional powers with considerable influence over other states in the region. It coincides with the mediation efforts by Middle Eastern states to negotiate the normalization of relations between Israel and Saudi Arabia.

Iran as the axis of Shi'ism and Saudi Arabia as the centre of Sunni Islam represent Islamic religious leadership. Both nations have proved to be politically pragmatic and tolerant in overcoming pre-existing barriers and mistrust in the highest religious and governmental spheres. While détente does not eliminate major differences in political conceptions, religious imaginaries, or regional roles, it does mitigate them by promoting better regional governance. From now on, it is hoped that the influence of Iran over the cadre of armed groups - Houthi rebels operating from Yemen, Hezbollah - that even attacked the Saudi Kingdom and the United Arab Emirates targeting oil infrastructures vital to their economies will lead to the cessation of their actions.

The successful resolution of the process underscores China's "mediating role", which can be attributed to several factors. Firstly, both countries share intense trade relations, particularly in the field of energy and oil. Since 2017, China has emerged as the world's largest oil importer, surpassing the United States; therefore, crude oil from the Middle East and Gulf economies is a crucial commodity that sustains its industries, production, and consumption. Saudi Arabia is the leading exporter of crude oil to China, while the United Arab Emirates ranks as the seventh largest exporter.

Secondly, it was the outcome of China's active public and non-public diplomatic efforts in the region since the middle of the last decade to provide adequate supplies of crude oil, take over areas of influence relinquished by the United States, and secure maritime supply routes through the Persian Gulf, the Strait of Hormuz and the Gulf of Aden. In this regard, Iran has officially joined the Chinese Silk Road Project (OBOR/BRI). China is Saudi Arabia's largest trading partner and Chinese investments are highly valued within the framework of the Kingdom's Vision 2030, which seeks to achieve development goals. The bilateral détente also strengthens expectations of closer ties with China on the part of the Gulf Cooperation Council (GCC) member states. Additionally, Saudi Arabia is attempting to revitalize the Saudi Silk Road project in the Jizan region to lure foreign investment.

On the Iranian side, talks with world powers to revive the 2015 nuclear deal are at a standstill and its relations with Western countries have become more strained. Meanwhile, Russia, Iran's main international ally, is engaged in the war with Ukraine, which gives China a greater role as a mediator, diplomatic partner, and strategic player in the Gulf region.

In concrete terms, the commitments made by the parties reaffirm their mutual respect for sovereignty, the principle of non-interference, and the reactivation of the security cooperation agreement signed in April 2001. In addition, they have agreed to collaborate in the fight against terrorism, drug trafficking and money laundering, and to resume the trade and technology agreement signed back in 1998.

The normalisation of relations between Tehran and Riyadh is expected to bring about greater regional stability and security and boost cooperation between the countries of the Persian Gulf and the Islamic world. As per official statements, both countries acknowledge their shared destiny and common denominators, which makes it necessary for them to cooperate to build a model of prosperity and stability for their respective peoples.

Sergio Cesarín is a professor at the MA in Economics and Business in Asia Pacific and India, a CONICET researcher and the Coordinator of the Centre for Asia-Pacific and India Studies (CEAPI) at UNTREF.