The Saudi-Iranian Rapprochement: Implications

On March 10, Saudi Arabia and Iran announced that they had agreed to resume diplomatic relations and re-open embassies in each other's countries. The rapprochement between Saudi Arabia and Iran has profound implications for the Middle East, as the changed relationship between the two will impact many of the existing tensions and issues across the region. To understand these implications, Wikistrat held a webinar on the topic with Gulf expert Dr. Christopher M. Davidson.

Dr. Christopher M. Davidson is an Associate Research Fellow at the European Centre for International Affairs. His research interests are focused on the Middle East, particularly statecraft in the Gulf States. He has written extensively on the political economy and authority structures of the region, having authored seven books, including "Shadow Wars: The Secret Struggle for the Middle East."

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Full Transcription:

Anttoni [Wikistrat Staff]:

Thank you everyone for joining our webinar today. Today we will have a TED Talk-style presentation, followed by a Q&A session, so if you have any questions related to the topic, please write them in the chat, and we'll see if we can get them answered. The topic today is the implications of the Saudi-Iran rapprochement, and our speaker today is Dr. Christopher Davidson.

Dr. Davidson is an associate research fellow at the European Center for International Affairs. His research interests are focused on the Middle East, particularly statecraft in the Gulf states. He has written extensively on the political economy and authority structures of the region, and has authored several books, including, Shadow Wars: The Secret Struggle for the Middle East. Dr. Davidson, thank you very much for joining us at Wikistrat today, the stage is yours.

Dr. Christopher M. Davidson:

Thank you, Anttoni, for the kind introduction, and, of course, to Tali and everyone at Wikistrat for the invitation to speak on something so topical, of course, such an exciting and potentially very important development. It's not something, of course, that's come completely out of the blue. Some of the more freer regional media, for example, especially in Kuwait and Lebanon, have already been hinting at this Saudi-Iran deal for some weeks now.

Also, I remember, casting back a few years, back to 2017 when I was in the United States, I remember speaking to a colleague in the financial industry, and he said to me, "Christopher, it's like a Hollywood romance film. We all know the ending here. We know that Saudi Arabia and Iran are eventually going to see eye to eye and get together here in the region." Of course, what he got wrong was the timeline. He'd predicted within three to four years, he's a little bit out. And of course, he'd also got the interlocutor wrong. It wasn't Hollywood and the United States, it was actually the People's Republic of China.

So, turning to the current deal and agreement itself, then. We've had a number of reported factors, especially in international media. These, as far as I can see, are essentially statements that have been made by Saudi officials on the sidelines, and in that sense, that is the party line, as it were, coming out of Riyadh, Crown Prince Mohammed bin Salman, MbS, as he's known by his acronym, this is the message that the international audience is intended to hear.

First and foremost, that Saudi Arabia is attempting some kind of more serious diversification of its international security and diplomatic partnerships, not only by reaching some form of reconciliation with its long-term adversary, Iran, but also bringing China into this very important intermediary role. China, of course, being portrayed by the Saudi officials as something of an honest broker in the region, given that it has strong existing relationships with both Saudi Arabia and Iran, which is something that, of course, the United States and other Western powers cannot claim.

Of course, Saudi Arabia and China have a significant economic partnership, now dating back a few decades. China, a major energy customer for Saudi Arabia and the other Gulf states, as well as Iran. We've also seen, of course, some limited on/off Chinese-Saudi military procurements as well, including the ballistic missile program that's been heavily reported on over the past few months, where Chinese technology and know-how has essentially been brought to Saudi Arabia to kickstart their own missile program.

Other reported reasons we've had include Saudi Arabia's interest in applying pressure on the United States, essentially stating that it can potentially realign, in this case with China, as an alternative superpower, putting pressure on the United States to provide some concessions, especially with regard to loosening up some of its high-tech weapon sales to Saudi Arabia, and also providing greater blessing and technology transfers in the nuclear industry. Saudi Arabia, like the United Arab Emirates before it, pursuing its own civilian nuclear program. The UAE, several years ago, as many will recall, essentially played by the book; getting the United States and other world powers's approval for its own nuclear energy program, even though the final construction contract went to a South Korean consortium.

There are, however, some contradictions, I feel, with regards to the international reporting on the rapprochement, notably within Saudi Arabia, and it's fair to say, I think, within the United Arab Emirates and some of the other Gulf states. China is privately not seen by Gulf officials as a potential alternative to the United States, either as a long-term diplomatic interlocutor, or indeed, certainly, a security partner. The prevailing view, and I believe this is still the case, is that China is still fundamentally seen as a free rider on US maritime security. So not withstanding China's greater economic partnerships in the Gulf region, not withstanding China's greater need for energy imports from Saudi Arabia and other Gulf states, it still, ultimately, relies on US maritime security.

Also, the line that's been fed to the media regarding Saudi Arabia's keenness for further substantial US arms procurements seems at odds with another line that's coming out of Saudi Arabia at the moment as well, that Saudi Arabia is actually keen to cut back some of its spending on arms, and is keen to actually deescalate the arms race in the region. But there seems to be some contradiction there. In fact, a little further in the talk, I'll refer to Saudi Arabia's need for costly economic reforms that are at odds, very much, with continued extravagant military spending.

So, there are certainly some specific recent factors I feel we can point to, that certainly brought the two sides together, regardless of Chinese involvement. If we cast our minds back to September 2019, we had those Iran-linked airborne attacks, whether drones or missiles, on key Saudi oil infrastructure, specifically Saudi Aramco, the national oil company, having some of its plants attacked and quite severely damaged by these attacks.

We also, in January 2022, had the Houthis, therefore de facto Iran-linked, airborne attacks on UAE infrastructure, in particular in Abu Dhabi, where I believe even some of the attacks landed close to the international airport. Crucially, as far as Saudi Arabia and its ally, the United Arab Emirates, were concerned, neither of these Iran-linked attacks met with a strong, forceful US response, and in that sense, it worried them about the future strength of the US security guarantee.

On top of that, we had, during the Trump administration, back in June 2019, the accounts of the planned US air strikes on Iran being called off at the last minute by the White House. On top of that, we had the particular Saudi and UAE interpretation of the US's assassination of Iran's Qasem Soleimani in Iraq, which occurred in January '22, as not being a retaliation by the United States on behalf of its Gulf allies, but rather being a retaliation specifically in US interest, given that Iran had earlier attacked key US assets in and around Baghdad. So in that sense, this was not the US retaliating on behalf of Saudi Arabia or the United Arab Emirates, but quite narrowly retaliating to direct US interests in the region that had been attacked by Iran.

In parallel, the long-running conflict in Yemen not going Saudi Arabia and the UAE's way, the UAE having, of course, already effectively pulled out formally from the conflict, Saudi Arabia seeking to deescalate or disentangle themselves from that conflict. In Lebanon, again, seen as another proxy arena between Saudi and Iran, Lebanon not going in Saudi Arabia's or the Gulf states's direction either.

We also, with regard to specific recent factors, have to look at it from the perspective of what has been going on in Iran as well. Iran, certainly perceived as being in a weakened state, especially in the wake of the protests that began back in September 2022, and of course are still very much ongoing.

From Saudi Arabia's perspective, this presents, and has presented, an opportunity for geopolitical concessions. Iran, of course, having to focus inwardly, rather than on being able to back up and sustain proxy conflicts around the region, whether in Yemen, Lebanon, or elsewhere, East Africa.

Also, and I feel this is being, perhaps, less reported on in the international media, although there were a couple of pieces in Foreign Policy and Foreign Affairs a while back. Saudi Arabia itself fearing actual regime change in Iran if these protests do continue, and the situation gets out of hand.

That may sound counterintuitive, given that these are long-term adversaries, but Saudi Arabia has long feared collapse of the regime in the Islamic Republic of Iran. After all, the last time there was severe instability on the other side of the Gulf, back in 1979, this was followed by the Siege of Mecca in Saudi Arabia, and a wave of fundamentalist and extremist attacks across the region. If the Islamic Republic were to implode in Iran, Saudi Arabia doesn't know what is coming next, and as I'll turn to in a moment, Saudi Arabia needs great stability for the next few years, due to its very important economic reform programs.

There are, it's fair to say, other long-term [inaudible] and structural issues, which have most certainly been bubbling under the service, and I think we can confidently point to having contributed to this recent and current rapprochement. As we talked about earlier, we've certainly had a growing sense of doubt in Saudi Arabia and some of the other Gulf states over the long-term future of its US security and diplomatic partnerships; crucially, under both Democrat or Republican administrations. If we think to the legacy of the Obama administration, for example, the stance on Saudi Arabia was seen as increasingly poor and ambivalent.

We had the infamous Obama Doctrine, as published in The Atlantic magazine back in 2016, where he quite clearly stated that he would no longer axiomatically support Saudi Arabia or the Gulf states in any greater conflict with Iran. Understandably, that was taken very seriously in the capitals of the Gulf states.

We then had earlier, of course, the US being party to the Joint Comprehensive Plan on Iran's nuclear program back in 2015. Then in 2016 and in July 2016, we had the declassification by Obama of the so-called 28 pages of the Joint Congressional Inquiry into the 9/11 attacks. Although Saudi Arabia officially supported and pressed for the declassification of those pages, it's now widely understood this was an effort to get ahead of the story, and that the pages themselves certainly have added an extra layer of evidence which appears to be supporting the long-running lawsuit being pressed by the families of the victims of the 9/11 attacks, with the path appearing more clearly than before to point to Saudi Arabia.

Connected to this, a few months later, we had in September 2016 the Justice Against Sponsors of Terrorism Act, which Saudi Arabia, of course, have lobbied furiously to prevent, essentially allowing US citizens or the relatives of US citizens to sue foreign states that could be tied to terrorist activities, with JASTA being more commonly referred to as the 9/11 bill.

We also have the legacy of the Trump administration. Wow. Although, ostensibly the Trump administration firmly supported Saudi Arabia, and in particular its Deputy Crown Prince and then Crown Prince MbS, and of course pulled the United States out of the Iran nuclear deal. On the other hand, there were many things that the Trump administration did and did not do that greatly concerned Saudi Arabia.

There was the lack of a US State Department designation of the Muslim Brotherhood as a terrorist organization, for example, despite the White House's promises and efforts. There was also what was seen as an insubstantial US support for the Saudi and UAE-led blockade on Qatar from 2017 to 2020. Despite the initial public statements of support on Twitter, I recall, by the US president, within a few months that same US president was trying to engineer Camp David reconciliation [inaudible] the different parties, hence Saudi and UAE's interests. But also, there was seen, despite presidential support and vetoes, there was seen as, overall, insubstantial US support for the Saudi-led efforts in Yemen.

Looking a little forward as well, Saudi Arabia and its allies in the Gulf remain very concerned about future Democrat or Republican administrations. We have, in the next few months, for example, the likelihood of a new White House direction on how to handle human rights issues in Saudi Arabia and how they are going to be fed into US policy on Saudi Arabia. There's also likely to be a report very soon, which uses case studies from Saudi Arabia, the United Arab Emirates, and Qatar to demonstrate how these ostensible US security partners have been illegally lobbying and seeking influence to shape Western democratic institutions.

With regards to a new president, potentially, in 2024, despite, one could say, a Saudi down payment through Live Gulf and various other soft power overtures to the Donald Trump, or potential Donald Trump future administration, there remains great caution over the direction such an administration might take, it's seen as extremely, extremely difficult to predict.

Also with regards to long-term factors and structural issues, I feel there's been too little in the international reporting on this rapprochement that's focused on Saudi Arabia's driving need to get these economic reforms done on schedule by 2030 as part of its overall master plan, Saudi Vision 2030, essentially to diversify the Saudi economy away from oil export revenues.

We know that Saudi Vision 2030, its components, many of them criss cross and overlap with each other, but some of the common threads include courting foreign direct investment, not just from the region but much further afield, and also boosting international tourism. The role of these giga projects, for example, many of them rely on FDI or on tourism. The Red Sea Project, for example. Kudai, the potential world's largest tourist resort as well. None of this can be possible in an unstable region. Imagine the impact on international tourist flows to a future Saudi Arabia if there were to be further Iran-linked drone or missile strikes on the capital city, or close to these resorts.

Also, there's a very important internal political angle to this as well. As the years have gone by since MbS has essentially ascended to becoming de facto ruler under his father, the king, and has seen off most rivals, his political legitimation, now I feel more clearly than ever, seems to rest on delivering these economic reforms in time, rather than any expansionist or hawkish foreign policies. And I think that's the situation we now see MbS and Saudi Arabia in.

The regime, the administration, however we want to refer to it, must deliver on these reforms, must deliver, maybe not all, but at least a substantial chunk of these giga projects and other mega projects tied to Vision 2030 to keep the population on board, to deliver the promises on employment, housing, FDI inflows, and to wean the population off oil finance subsidies.

In parallel to this drive for economic reform and stability, we've also, I feel, seen MbS and his inner circle in Saudi Arabia, they've already secured support from, arguably, the most powerful man in the region, MbZ, now the President of the United Arab Emirates, former Crown Prince of Abu Dhabi. They already secured his support between 2015 and 2017, and he was portrayed in the international media as MbS's mentor.

MbS's public statements, and there was many interviews he did with US magazines and in Silicon Valley, again and again almost used MbZ's language on the Brotherhood, on Iran, on Qatar, on Al Jazeera, almost word for word. And then it petered out, as Vision 2030 started to [inaudible]. As far as we can see, MbS has essentially dispensed with these outdated, hawkish foreign policy stances that the UAE was pursuing during that period. Some extent, the UAE seems to have dispensed with them too.

We've seen, of course, MbS be the leading force behind this reconciliation with Qatar, [inaudible] just a week before the Joe Biden administration came in in January 2021. Crucially, it's been Saudi Arabia, it's MbS, that's helped to get Egypt, that's helped to get Bahrain on the same page with Qatar. The UAE, it seems, will take a little longer, but that reconciliation is also happening too.

We can also say Saudi Arabia seeing an opportunity here with China as their interlocutor and their broker in this important regional agreement. There's Saudi Arabia trying to gain an edge in the Gulf-China relations. The UAE, seen within Saudi Arabia at the moment, as having gained an edge in Gulf-Russia relations, UAE president MbZ making his first non-regional presidential trip to Moscow. Dubai, as per international reporting, effectively serving as a de facto Russian sanctions-busting hub at the moment, and the UAE very having much the edge with Russia. Well, this is an opportunity, it would seem, for Saudi Arabia to double down on its Chinese relations.

Saudi Arabia, with regards to Israel as well, never fully on board with the UAE-led Abraham Accords back in 2020, which pulled Bahrain along with it, a recognition very clearly in Saudi Arabia, I feel, that most Israeli tourism, technology, and FDI that's bound to the Gulf is ultimately going to end up in the United Arab Emirates rather than Saudi Arabia.

A recognition and awareness, in Saudi Arabia, that they can never bring the bulk of their own population on board with normalizing Israeli relations in a way that the UAE has been able to do. Or at least, one could say, the UAE has been able to rely on a greater deal of political acquiescence amongst its national population than Saudi Arabia ever could do.

Also with regards to Iran and UAE competition with Saudi Arabia, the UAE has stolen the march on Saudi Arabia, with regards to normalizing relations with al-Assad in Damascus, and the UAE that's poised, it would seem, to be the major Gulf investor in Syria over the next few years, rather than Saudi Arabia. Thus, in many ways, this rapprochement, especially with some of the talk that there's going to be Saudi investment in Iran, would seem that Saudi Arabia has effectively circumvented the UAE's relations with Damascus by going for a, potentially, much greater prize.

And just a little word on the role of Iraq and Oman interlocutors in this deal as well, wasn't just China, it was regional states as well. Iraq, of course, has been playing a very careful game in recent months, in the past year and a half, especially. Oman too is now greatly respected by Saudi Arabia and the United Arab Emirates. Far gone are the days when Oman was seen as paying their interest by brokering the Iran nuclear agreement with the United States, and we saw the UAE repeatedly attempting to spy on Oman and spy on its [inaudible]. Now, we have MbZ in the UAE making his first regional presidential trip to Muscat. We see Saudi Arabia repeatedly making very strong overtures to Oman, as well.

So, some of the likely implications as, I think, certainly the analytical commentariat, international commentariat has repeatedly pointed out. Agreements involving Gulf states often peter out, and very often, sadly, lead to little much more than the paper they're printed on. After all, Saudi Arabia and Iran have some form in this regard.

There was an earlier agreement, of course, back in 2001. In fact, looking through the latest agreement, portions of that have actually been reproduced. And that, of course, led to very little. Nonetheless, this current rapprochement involves China, which, as we've discussed, appears to be playing a much more powerful, honest broker role in the region, which seems to give it a much greater impetus and a greater chance of lasting.

Also, I think, there are some very realistic milestones in the deal, notably the commitment by both sides to reopen embassies within two months. So this is a tangible, deliverable target; will or will they not be open in two months? I think it's very likely they will be reopened in two months, and that will, I feel, maintain and sustain some of the momentum behind this rapprochement.

And ultimately, for the various short and long-term factors we've discussed, there does appear to be a much greater convergence of interests between Saudi Arabia and Iran, both on the foreign policy, economic, and domestic political fronts. A much greater convergence, it would seem, than we've seen at any time before. Thank you. I'm happy to take any questions.

Anttoni [Wikistrat Staff]:

Thank you, Dr. Davidson, for the very detailed presentation. We have a list of questions from our community, and many of these you talked about in your presentation, but... Okay, first one, does the rapprochement reinforce Saudi Arabia's quest for nuclear tech?

Dr. Christopher M. Davidson:

Yes, I think the rapprochement can only help Saudi Arabia in this regard, especially with regards to international approval and international technology transfer. One of the greatest liabilities, of course, is that this is a conflict-strewn region in the future. International partners and joint ventures are inevitably more problematic if they feel that a nuclear Saudi Arabia could potentially be caught up in a war with Saudi Arabia over the next few years.

This rapprochement, if it holds and if there's further momentum further down the line, would seem to enhance Saudi Arabia's prospect of developing an internationally approved high-tech nuclear industry, of the kind that the United Arab Emirates already has.

Anttoni [Wikistrat Staff]:

Okay, and given that Chinese intervention in Middle Eastern issues is not unprecedented, why is this time different?

Dr. Christopher M. Davidson:

I would say Chinese involvement in the broader Middle East is not unprecedented, but in the Gulf states this is their highest profile signature diplomatic achievement. Nothing that I can recall involving China comes close to this, China has tended to focus on energy contracts beneficial to China, of course. It's tended to focus on construction contracts, and a number of joint financial ventures as well. But this is their first serious, high-profile foray into high-level diplomatic engineering.

Anttoni [Wikistrat Staff]:

And where is the United States in this deal? Does it support or protect the Gulf against Iran, or what happens now? How will this affect the Iranian nuclear ambitions?

Dr. Christopher M. Davidson:

Yes, the mood in the United States seems to be very much a "wait and see" holding pattern as we discuss this agreement involving China. Has not come as a complete surprise, it's not come out of the blue, although I would say it's come a little bit sooner than, I think, many had anticipated. It's certainly prompting something of a recalculation in the United States, though those long-term factors remain. The United States has been pivoting away from Saudi Arabia and the Gulf states for many reasons for a good few years now. This is, ultimately, a region that is of less interest to them than before.

We could go back to the 2014 US shale oil revolution, and the US subsequently becoming a major oil producer again in its own right. Although the Ukraine crisis and the impact on global energy supplies has certainly thrust Saudi Arabia and the UAE and Qatar, to a great extent, back onto the world stage again, in long-term US interest, it is slowly starting to fade at the margins. The US also, my understanding, sees China through very much the same lens as Saudi and other Gulf officials.

Saudi Arabia is not yet poised anytime soon to be able to deliver and provide the same kind of security guarantees to Gulf states that the US can. So, to answer the question in an overall manner, I think we can see the fade to the margins of the Gulf states, as far as US policy is concerned, resume, slowly but surely. We can see the US security guarantee remaining, but becoming thinner and thinner as the years go on.

Anttoni [Wikistrat Staff]:

And more about China. Beijing has signed plenty of MOUs, and made dozens of promises, yet many proposed agreements have failed to come to fruition. What are the chances the rapprochement brokered by