Tom Howe sets out the key components of the recent agreement between Iran and Saudi Arabia and explores what it tells us about the region’s shifting geopolitics and how the UK is engaging with the Gulf.
The historically complicated Iran-Saudi Arabia relationship entered a nadir in 2016 after a group of Iranians attacked the Saudi embassy in Tehran following Riyadh’s execution of a Shia cleric, leading Saudi Arabia to break ties with Iran.
Relations worsened further following incidents such as the 2019 attack in which ostensibly Iranian drones temporarily knocked out around half of Saudi Arabia’s oil production.
Tehran has since sought to improve its regional relationships, re-establishing full diplomatic ties with Kuwait and the UAE in 2022. While on the Saudi side, there is recognition that resolving the conflict in Yemen requires engaging with the Iranians.
Building on public talks in Iraq and secretive meetings in Oman, the pair met in Beijing for talks in March 2023. The agreement they reached, which Beijing will oversee, should see the pair normalise their relations, including reopening their embassies, ending Saudi support for the lIran International Television – a satellite TV channel providing Persian language coverage often critical of the Iranian regime, and ending the Iranian arming of Houthi rebels in Yemen.
For Tehran, the deal should undermine the exiled opposition by ending Saudi support for Iran International Television and minimise the Gulf’s involvement in any Israeli military attacks against Iran.
For Riyadh, the deal is a hedge that reduces the risk of being caught up in any Iran-Israel conflict. It should also end Iranian support for the Houthis, creating a potential route to end Riyadh’s involvement in the Yemen conflict, which has increasingly spilt over the Saudi border and threatens Riyadh’s ambitions to attract foreign direct investment.
China’s involvement in the deal demonstrates how its economic clout translates into diplomatic influence in a region where it is increasingly the most important economic partner. While Beijing’s engagement follows three years of talks, their status as a trusted partner helped to get the deal over the line.
Without overstating Beijing’s influence, this agreement furthers its energy-security interests as the single largest importer of Middle Eastern hydrocarbons. If it’s successful, it should improve the security and stability in the Gulf, reducing the risk of disruption in the Strait of Hormuz, which accounts for around 30% of seaborn-traded crude oil.
The US’s relationship with Iran means it could not have played the same mediating role. Moreover, after Washington failed to retaliate for the 2019 attacks on Saudi oil facilities, Riyadh has viewed the US as an unreliable security partner.
Writing for RUSI, Barak Barfi suggests that the Saudi-Iran agreement isn’t as ground-breaking as suggested and will only improve relations between the historic rivals if there is more concrete reconciliation. Yet, perhaps more significant is the role played by Beijing, and it will be interesting to see how active it remains in the region.
The agreement points to the shifting balance in a region increasingly marked by multipolarity. On the back of the US’s shale gas revolution, Russia’s invasion of Ukraine, and growing US-China competition, regional powers like Saudi Arabia and the UAE are reaching for strategic ambiguity and hedging to balance their engagement with other powers.
As economic gravity shifts east, Gulf states – like the UAE, Qatar, and Saudi Arabia – are well placed to capitalise on the growth in Asian markets. However, European states are increasingly looking to the Middle East and North Africa (MENA) to diversify their energy imports and improve their energy security. According to RUSI’s Tobias Borck, Gulf countries are unlikely to meet all this demand.
Western actors remain the most important security partners for Gulf states, with significant basing of US forces alongside equipment and training from the UK and France. While China is increasingly influential, it will struggle to replace the West’s importance for the region’s security.
Despite a perception that the West has neglected the MENA, there has been growing engagement with the region. Recently, the UK held its first strategic dialogue with Qatar, met with Gulf Cooperation Council in Riyadh for the third round of talks for a free trade agreement, and in a speech in Bahrain in November, the Foreign Secretary emphasised the UK’s enduring commitment to the region’s security.
However, the Integrated Review Refresh (IRR) has limited references to the MENA, reflecting UK interests in a secure and stable region. The document identifies Iran as a serious threat to UK interests and is cognisant of the growing geopolitical competition in the region.
The IRR also emphasises the UK’s general ambition to work with middle powers, recognising that these powers will have their own worldview and that the UK should avoid creating zero-sum choices for those it can otherwise cooperate with.
While closer China-Iran relations will not be viewed positively, improved Saudi-Iran relations align with the UK’s desire for a more stable Gulf. There may be concerns about the wider region, as Riyadh has been seen as a reliable bulwark against Iranian influence. However, with the JCPOA (Joint Comprehensive Plan of Action, i.e., the Iran nuclear deal) effectively defunct and the Iranian nuclear programme continuing apace, improved Gulf-Iran relations may provide a route to address concerns.
Much of the UK’s engagement with the region will remain security focused. However, the end of Saudi involvement in Yemen may indirectly impact the UK-Saudi relationship, given the defence-industrial links. This aspect of the relationship has been widely criticised, with claims that the UK is complicit in the humanitarian crisis in Yemen.
There are opportunities to positively broaden relations with Gulf states, with the IRR noting the ambition to collaborate on renewable energy projects and carbon capture and storage.
Russia’s invasion of Ukraine demonstrates that energy partnerships are inherently political. The UK must approach the partnerships strategically, balancing its objectives with the interests of others through a comprehensive strategy. Yet It is unclear if this will happen.
While official statements and documents paint a measured – albeit limited – picture, resources will undoubtedly impact the UK’s engagement with the region.
The Iran-Saudi deal highlights a region in flux as both great and middle powers vie for influence. Recognising this, the UK needs to translate the pragmatic spirit of the IRR into an adequately defined strategic approach to the region.
By Tom Howe, researcher, UK in a Changing Europe.