Houthi political leader, Mahdi al-Mashat, shakes hands with Saudi ambassador to Yemen, Mohammed Al-Jaber in Sanaa: Saudi Arabia and Iran's reconciliation represents a major geopolitical shift in the Middle East.

Saudi-Iran rapprochement
A revolutionary resolution for the Middle East?

Saudi Arabia and Iran's reconciliation serves the interests of both sides and represents a major geopolitical shift in the Middle East, writes Maha Yahya. Where all this will lead is still up for discussion, but for the first time in many years, something appears to be changing

Iran and Saudi Arabia have agreed to restore diplomatic relations after seven years of estrangement. Two surprise factors characterised the deal – China's role in facilitating it and the agreement's timing. This was the first time that Beijing has intervened so forcefully in Middle Eastern diplomacy, and it came at a moment when the United States was attempting to raise the pressure on Iran by brokering an opening of diplomatic ties between Saudi Arabia and Israel.

The Saudi-Iranian deal, which blindsided most governments, was in the making for two years at least and negotiations were initially mediated by Iraq's former prime minister Mustafa al-Kadhimi, with meetings also taking place in Oman. The two countries cut diplomatic relations in 2016 after protestors angry with the kingdom's execution of Saudi Shia cleric Nimr-al-Nimr burned the Saudi embassy in Tehran. Since then, the situation had deteriorated, with Iran suspected of being behind the drone attack against an Aramco oil facility in Abqaiq in September 2019.

According to the trilateral statement on the Saudi-Iranian deal, Saudi Arabia and Iran affirmed their "respect for the sovereignty of states and the non-interference in internal affairs of states". However, some have suggested there are hidden security clauses. These allegedly include an agreement by the two sides to advance the decisions reached over Yemen by the Saudis and Ansar Allah, otherwise known as the Houthis, in direct negotiations.

The Saudis also purportedly pledged not to fund media outlets seeking to destabilise Iran, and both sides agreed not to support activities subverting the other. The countries will re-open their diplomatic missions within two months, reviving both a security cooperation agreement and another agreement covering cooperation in a range of other fields.

Concrete gains for the Saudis

For Saudi Arabia, the gains from the deal are apparent. The restoration of diplomatic relations allows for negotiated settlements in places that are of vital national security importance for the kingdom, above all Yemen.

Saudi Crown Prince Mohammed bin Salman receives Xi Jinping, President of China, on 08.12.2022 in Riyadh, Saudi Arabia (image: Bandar Algaloud/Saudi Royal Court/REUTERS)
Win-win situation: business with China now surpasses the Gulf kingdom's combined trade with the United States and the European Union, thus cementing Chinese ties with the region as a whole. For the Saudis, the new deal opens the door to ongoing diversification of their security and economic partnerships. Regional de-escalation will also allow the kingdom to focus on domestic policies and implement its Vision 2030 programme, which seeks to turn Saudi Arabia into a regional and international financial, economic and tourism hub

By giving China a diplomatic win, Saudi Arabia also reinforced its relationship with Beijing, the kingdom's largest trading partner. In the past decade, Saudi Arabia's trade with China surpassed its combined trade with the United States and the European Union. This has helped improve China's ties with the region in general, especially after the successful visit of President Xi Jinping to the kingdom in December 2022.

The deal opens the door to the diversification of Saudi security and economic partnerships, especially as the world moves slowly to a post-hydrocarbons era. China is reportedly helping Saudi Arabia build a missile factory and expand its military capabilities. A de-escalation of tensions also allows the kingdom to focus on domestic policies and implement its Vision 2030 programme, which seeks to turn Saudi Arabia into a regional and international financial, economic and tourism hub, as well as other major internal socioeconomic transformations.

According to reports in the Wall Street Journal and the New York Times, the United States has recently been trying to facilitate an agreement between the Saudis and Israel to establish diplomatic relations. Among the Saudi conditions are U.S. security guarantees to the kingdom, Washington’s help with developing a Saudi civilian nuclear programme, and fewer restrictions on U.S. arms sales to Saudi Arabia.

At the recent Munich Security Conference, Saudi Foreign Minister Faysal bin Farhan linked the failure of the nuclear agreement with Iran to Saudi Arabia’s wish to build its own nuclear programme. Riyadh’s deal with Iran also protects the kingdom from the regional fallout of an Israeli attack against Iranian nuclear facilities.

Opportune distraction for protest-wracked Iran

The timing of the Saudi-Iranian deal could not have been more opportune for Iran either. Given the collapsing economic situation there and mounting international pressure, especially after the failure to revive the nuclear deal and Iranian progress in enriching uranium, Tehran must have welcomed the calming of tensions. This was all the more significant in that the country has been facing months of domestic protests.


Not surprisingly, Iran’s currency rebounded by around 21 percent after announcement of the deal. We are also nearing the period when the pilgrimage to Mecca will resume, with greater Iranian participation. The Iranians too were happy to give China a diplomatic win as part of their wider effort to reduce Washington's regional sway, while Beijing also helps Iran circumvent U.S. economic sanctions.

In the United States and Israel, the deal must have caused considerable consternation, despite Washington’s affirmations to the contrary. The role played by China was a slap in the face of the Biden administration, while for Israel it undermined the goal of creating a regional alliance against Iran. This is especially critical given the declared Israeli objective of signing a peace deal with the kingdom, despite clear statements by the Saudi foreign minister that this would not happen without a settlement in Palestine based on the 2002 Arab Peace Initiative. Israel had been coordinating closely with the United States over a potential response to a nuclear Iran, with both sides recently holding joint military exercises.

Slap in the face for USA and Israel

China pulled off a major diplomatic coup at a time when little seemed to be moving forward in the Middle East. In doing so, it asserted itself as a global player, indicated it would get involved politically when it had a strategic interest in doing so, and relieved some of the pressure on its ally Iran.

What is unclear is whether Beijing will offer any guarantees should either party violate the agreement’s terms, especially the clause in which Iran pledged to cease its interference in the internal affairs of Arab countries. With proxy forces in Iraq, Syria, Yemen, and Lebanon, Iranian involvement is a fact of life there. The only guarantee seems to be the unwillingness of either party to upset China at this critical juncture.

Another major question is whether this rapprochement will translate into other de-escalation deals in the region. While the Saudis are negotiating with the Houthis, will the deal lead to direct discussions between the kingdom and other pro-Iranian non-state actors, such Hezbollah in Lebanon, as some press reports have indicated?

What will the Saudi-Iranian deal mean for the nuclear negotiations? And what does it mean for Lebanon? Will the deal help facilitate the election of a president who is amenable to Iran, or will we see some compromise between the Saudis and Iranians? And what of Syria? Will it be invited to the upcoming Arab League meeting in Riyadh and will Faysal bin Farhan visit Damascus soon, effectively ending Syria’s regional isolation? If yes, then under what conditions?

The Saudi-Iranian deal is not just about waning U.S. influence in the Middle East, it’s about a fundamental shift in regional geopolitics. It also reflects widespread fatigue with conflict in the region and a desire by regional actors to take the lead in shaping the Middle East’s future. Where all this will lead is still up for discussion, but for the first time in many years, something appears to be changing.

Maha Yahya

© Malcolm H. Kerr Carnegie Middle East Center 2023

Maha Yahya is director of the Malcolm H. Kerr Carnegie Middle East Center, where her research focuses on citizenship, pluralism, and social justice in the aftermath of the Arab uprisings.

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