Iran-Saudi Arabia thaw might favour regional integration
By Silvia Boltuc
Managing director of SpecialEurasia
In March 2023, China aided Iran and Saudi Arabia in re-establishing diplomatic relations and embassies. Although Riyadh and Tehran have a long way to go, the rapprochement was a major turning point for the region. With this agreement, Saudi Arabia is aiming for stability and security to achieve its Saudi Vision 2030 projects, while Iran is seeking economic recovery and regional integration.
Tehran has been awaiting decades to be able to trade with the West. Because of the impossibility of lifting sanctions, Iran has pushed regionalism, aiming to be a logistics and energy hub and build relationships with Eurasian countries. Tehran’s government has focused on new port infrastructures, the establishment of Free Economic Zones and including Iran within the main regional multimodal corridors, as well as increasing cooperation with Eurasian organisations such as the SCO, the EAEU and the BRICS. Page 2
Currently, the easing of tensions between Iran and Saudi Arabia marks the beginning of a new season of relations with several Persian Gulf countries. This will impact external players’ interests, including China, Russia, the US, Lebanon, and Syria.
The Ukrainian crisis changed the global energy market. Russian oil, previously sold to the West, is now directed east. It has also revealed differences in interest between some OPEC+ actors, especially Saudi Arabia, and the US. If, on the one hand, the Chinese mediation in the Iranian-Saudi reconciliation is not a success for Washington, on the other hand, the easing of tensions between Riyadh and Tehran could favour negotiations between Iran and the United States and lead to a temporary agreement between the two actors.
While competing interests in Syria and Lebanon and the normalisation of relations between Riyadh and Tel Aviv remain complicated dossiers, this historic rapprochement may help improve the maritime security in the Persian Gulf, where Iran has a predominant position, and stabilising Yemen. The recent oil cooperation between the Kingdom and Iran announced by Mohsen Khojastehmehr, the CEO of the National Iranian Oil Company (NIOC), not only marks a departure from past Saudi allegations of attacks on its oil infrastructure by Iran but will also contribute to the common interest of securing the Persian Gulf waters through which passes a consistent part of international oil exports.
Moreover, Iran entering the Eurasian markets, particularly the Central Asian one, could be aided by better relations with Persian Gulf monarchies. The recent Kazan Forum showed the importance of the Islamic world in Moscow’s strategy against sanctions, and Russia and some Arab states are key investors in Central Asia. The third fundamental player in the area is China, who has negotiated the agreement between Saudi Arabia and Iran, it is one of Riyadh’s main oil buyers and has signed an agreement worth billion with Tehran. While Tehran, Moscow and Beijing already cooperate in several fields, stabilising the Persian Gulf might increase Central Asian republics’ interests in Iran and its connection infrastructures. Indeed, at the recent Astana International Forum, the Kazakh minister of economy highlighted the importance of Iran for regional and international connectivity due to its strategic geographic position. An increase in Persian Gulf integration might support corridors and supply chains running from Russia and China, through Central Asia and Iran till India and contrast the Turkish role as a regional transit hub.
Divergent religious goals and views in terms of external interferences in the Persian Gulf region might represent a challenge in Iran-Saudi Arabia relations. In this regard, Iran’s Leader Ayatollah Seyyed Ali Khamenei, in a message to Iranian pilgrims on their way to Mecca, stressed that Muslims should be united in fighting the plots designed by the enemy which set Islamic denominations, nations, races, languages, and the diverse cultures of the Islamic world against each other, remarking Iranian stances towards Western involvement in the region, while since the early ‘30 Saudi Arabia has opened to the US presence in the area. Finally, the normalisation of relations between Riyadh and Tel Aviv could represent a further breaking point in the future. Nevertheless, diplomatic rapprochement has been helpful so far and is motivated by economic imperatives for both countries.