Saudi Foreign Minister Faisal bin Farhan’s tweet that countries in the region "share one fate, the same attributes" signaled a new era in Saudi foreign policy and the dynamics of the Middle East.

The main impetus behind the Iranian-Saudi rapprochement is to diversify their trade, foreign politics and energy relations. For example, Prince Faisal became the first Arab official to visit Ukraine since the war started, which went down well in Washington. Then he visited Russia.

In December 2022, Riyadh hosted the first-ever China-Gulf Cooperation Council meeting. In a similar vein, Iran, in addition to restoring diplomatic ties with Saudi Arabia, has agreed to curtail shipments of arms to the Houthis and provided Russia with new types of advanced long-range armed drones for use in its war on Ukraine. Despite this, Riyadh, unlike Tehran, did not cut its ties with the United States totally, the only factor having the gluing effect between Iran and Saudi Arabian rapprochement is their willingness to bring Washington to its knees as the U.S. under the Joe Biden administration followed harsh policies both toward Saudi Arabia and Iran.

For instance, Biden called Saudi Arabia's Crown Prince Mohammed bin Salman (MBS) a "pariah" after he held the prince responsible for the murder of journalist Jamal Khashoggi in 2018. As for Iran, although Biden sought to reverse ex-president Donald Trump’s decision to pull out of the Iran nuclear deal, he failed to revive the agreement and leaned into closer coordination between Israel, Saudi Arabia and the anti-Iran coalition in the region to deter an Iranian nuclear threat. However, with the Saudi-Iranian peace deal on March 10, the policy of Biden remained fruitless.

Will truce play into Russia’s hands?

Another factor that set alarm bells in Washington is that Iran and Saudi Arabia appeared to be prominent supporters of Russia. For example, Iran, as mentioned above, delivered at least 18 drones to Vladimir Putin’s navy after Russian officers and technicians visited Tehran. Riyadh refused to cut oil production and Washington perceived this as Saudi Arabia’s teaming up with Russia. Amid deep anger over this decision by Saudi-led OPEC+, U.S. officials declared that Biden would re-evaluate the entire relationship with Saudi Arabia. Put differently, this move of Riyadh was seen by Washington as "undercutting Biden’s efforts to isolate President Vladimir Putin’s Russia for his invasion of Ukraine, providing considerable relief for Moscow, which is dependent on oil exports."

Looking from a different angle, the thaw in relations does seem to have an economic logic on both sides. Saudi Arabia needs stability to attract investment and diversify the economy away from oil and petrochemicals. Iran’s economy, meanwhile, is on its last legs. In February, the Iranian rial reached a record low of approximately 580,000 against the dollar, marking a 55% decline compared to the previous year and a staggering 94% drop over the past decade. Moreover, the persistent weakness of the rial has contributed to inflation remaining at around 50% throughout 2022.

As Saudi Finance Minister Mohammed Al Jadaan stated, "Saudi investment in Iran is growing 'very quickly' if the agreement holds."

Motives behind reconciliation

Another motive behind the Saudis' willingness to start diplomatic relations with Iran is that the deal signed on March 10 after seven years of hostility would support its socioeconomic development plan, Vision 2030. As the Kingdom is investing billions of dollars in implementing the program, an escalation with Iran would threaten the project’s funding, deter much-needed foreign investment, and dash Saudi Arabia's dreams of becoming a regional and global hub. Thus, Riyadh became enthusiastic about mending its relations with Iran.

However, the big question is to what extent the deal to resume diplomatic ties and "Saudi first" diplomacy to regain regional and international influence will be a long-lasting policy. When given the fact that the U.S. is still influential in the defense of Saudi Arabia and Israel is much eager for normalization with Saudi Arabia, the questions such as "to what extent Riyadh will be a reliable regional partner or whether it poses a threat to Iran or not" will be on the agenda of Iran. Let’s put it this way: According to many American analysts, the deal is functional but not strategic as the U.S. is moving to reduce the gap in Saudi defense and Israel has become a de facto security partner within U.S. Central Command.

The crux of the matter is whether China’s mediation compensates for the lack of the U.S. as a global mediator in the region. China has some advantages in mediating, such as conveying high-level Iranian security officials and not just Iranian diplomats, whom Saudi Arabia perceives as less in control of Iran’s behavior in the region. This Chinese influence, especially with the Islamic Revolutionary Guard, compensates for Riyadh’s lack of coercive diplomatic tools and military deterrence over Iran.

Another motive of Beijing to be a mediator is that China presents itself as a reliable global actor in the region, keeping itself at an equal distance from Saudi Arabia and Iran. Second, China, playing the role of a mediator, has proved that it has a constructive role and this would enhance its economic stakes in the region as well as the security ones. Thirdly, China has found the opportunity to prove its soft power capacity and diplomatic skills by helping the two former adversaries mend bilateral relations. This also has shown how the U.S. strategy of sanctioning countries like Iran has backfired. Trump’s maximum pressure on Iran and his indifference to attacks on Saudi Aramco in 2019 and the human tragedy in Yemen led to the strengthening of the Chinese hand in the region.

China-U.S. struggle in Mideast

Normalizing relations between the regional actors and this landmark agreement can transform the region by aligning the two major actors and weaving the part into China’s global aspirations. Yet, as the patron of the established order in the area, the U.S. has remained reluctant and unable to mobilize its political and military forces to reassure its allies of the status quo.

On the contrary, Washington left its allies alone in the face of big catastrophes, such as drone attacks on Saudi Aramco sites in 2019. Trump’s immediate reaction to this attack was that he would not rush into a new conflict on behalf of Saudi Arabia. Accordingly, the House of Saud appears unsure of past and current U.S. administration’s commitment to security. They have, therefore, welcomed the Chinese initiative to mend the fences with Tehran. As for Tehran, the Iranian clerical establishment has felt the urgency for a rapprochement with Saudi Arabia, especially after the aggressive Israeli policy of penetrating the Gulf following the normalization process between Israel, the United Arab Emirates (UAE) and Bahrain.

Hence, Tehran aims to pursue closer relations not only with Saudi Arabia but also with the UAE and Bahrain at a time when it fears a military strike by the Israelis decimating Iranian nuclear infrastructure. A possible Israeli strike on Iranian nuclear sites and Israeli penetration into the Gulf, such as increasing Israeli influence on Sokotra island, threatens Riyadh on equal terms.

In a nutshell, the March 10 agreement has started a new era in the region on many levels of analysis; security, energy, diplomacy and systemic ones. This agreement has many repercussions on regional actors in the Middle East and global ones such as China and the U.S., which would herald the beginning of a future deep-rooted change in the dynamics of the international system.