The recent steps towards a rapprochement between Saudi Arabia and Iran have been hailed as a positive development in the tumultuous politics of the Middle East. Restoring full diplomatic relations between the arch-rivals, in a deal brokered by China, could reduce regional tensions and assert China's growing influence in the Gulf.
For years, the two countries have been engaged in a bitter rivalry, with their proxy wars and regional power struggles adding to the region's instability. However, the newfound willingness of the two nations to engage with each other has raised hopes that a period of peace and stability may be on the horizon.
The reasons behind this sudden shift in attitude are complex. China has a significant economic interest in both Saudi Arabia and Iran, as they are key oil suppliers and trading partners.
However, China is also aware of the complex political and historical tensions between Riyadh and Tehran and recognizes that any resolution will require patience and careful diplomacy.
Ultimately, China's interest in the region is primarily economic, and it will likely continue to seek opportunities for trade and investment regardless of the outcome of Saudi-Iran relations.
Still, they can largely be attributed to a recognition on both sides that their mutual animosity has been detrimental to their own interests.
Saudi Arabia and Iran are the two largest oil producers in the Middle East, accounting for approximately 25% and 10% of the world's oil production, respectively, and any shift in their production levels can significantly impact global oil markets.
The recent steps towards a rapprochement between the two countries have already impacted oil prices, with prices falling in anticipation of increased oil production from the two countries.
However, it is still unclear how much of an impact this will have on world oil production in the long term. A reduction in tensions between Saudi Arabia and Iran could lead to increased oil production.
The ongoing conflict in Yemen, where Saudi Arabia and Iran have been supporting opposing sides, has proven to be a costly and draining affair with no clear end in sight. The conflict has resulted in an estimated 233,000 deaths since 2015.
Both countries have also been hit hard by the economic fallout of the Covid-19 pandemic, which has left them struggling to maintain their economies and social stability. In Saudi Arabia, the economy contracted by 4.1% in 2020, while Iran's economy shrank by 4.9%.
In this context, the recent talks between the two countries, facilitated by Iraq, have been seen as a positive development.
Iraqi Prime Minister Mustafa Al-Kadhimi, who facilitated the talks, said: “The Saudi-Iranian rapprochement is a new chapter in the region's history. It is a historic day for the region and the world.”
United Nations Secretary-General António Guterres, welcoming the talks said: “The talks between Iran and Saudi Arabia are a positive development, and we hope that they will reduce tensions and end the conflicts in the region.”
The talks have focused on a range of issues, including the conflict in Yemen, the situation in Syria, and broader regional security concerns. While it is still too early to say whether these talks will lead to lasting peace, the fact that they are taking place at all is a positive sign.
However, there are also reasons to be cautious about the future of the Middle East. Complex and interconnected problems, including sectarian tensions, economic inequality, and ongoing conflicts in Syria, Iraq, and other countries, still plague the region.
The longstanding rivalries between Saudi Arabia and Iran are deeply ingrained, and many in both countries remain deeply suspicious of the other side.
Moreover, regional dynamics are constantly shifting, with new players and alliances always emerging.
For example, the emergence of Turkey and Russia as major players in the region has added a new layer of complexity to the politics of the Middle East. In this context, it is difficult to predict with any certainty what the future holds.
The recent talks between Saudi Arabia and Iran are a positive development. They offer a glimmer of hope that the two countries may be able to put their differences aside and work together for the region's greater good.
However, many challenges and obstacles must be overcome if lasting peace and stability are to be achieved. The future of the Middle East remains uncertain, and it will require sustained effort and cooperation from all sides.
Crisis Group's Iran Project Director Ali Vaez said: “There is no doubt that the conflicts and rivalries between Saudi Arabia and Iran have been a major source of instability in the Middle East. If they can find a way to work together, it could have a transformative impact on the region.”
