What the Saudi-Iran deal means for the Middle East

Brokered by China, the agreement between the two regional rivals reflects shifting economic—and ideological—alignments.

By I. Chotiner

Last week, Saudi Arabia and Iran announced that they would reestablish diplomatic relations after seven years of severed ties. The two nations pledged to reopen their embassies and also agreed to begin coöperating in areas such as security and trade. The rivalry between Saudi Arabia and Iran—which is often used as a symbol of the broader tensions between Sunni and Shiite Muslims—has been a key feature of politics and conflict in the Middle East. Both have been involved in proxy fights in Yemen, Lebanon, and elsewhere. (In Yemen, Saudi Arabia launched an intervention in the hope of restoring a government overthrown by Iranian allies; in Lebanon , the Saudi government forced the resignation of the Lebanese Prime Minister, in 2017, a move thought to be aimed at containing Hezbollah, an Iranian ally.) Almost as significant as the agreement itself is that it was brokered by China, which has sought to expand its influence in the region.

To discuss what this deal could mean, I spoke by phone with Gregory Gause, an expert on the Middle East and a professor of international affairs at Texas A&M University’s Bush School of Government and Public Service. During our conversation we talked about how Saudi Arabia’s leader, Mohammed bin Salman, may be rethinking his country’s foreign policy after a rocky few years with the West, whether conflict between Iran and Israel is on the horizon, and why the United States should be less paranoid about Chinese involvement in the Middle East.

Why did this deal happen now?

It’s a reflection of China’s increased importance in the Gulf and in the Middle East more generally. Iran is feeling somewhat isolated in the region, and I think it sees more pressure coming from the United States and Israel on the nuclear issue. I don’t think that that’s necessarily why Saudi Arabia was willing to agree to this now, but it could be why China stepped in—to try to prevent some escalation on the nuclear issue. But, even if the Saudi government is less apt to support an American-Israeli strike on Iran regarding the nuclear issue, that might not be enough to stop it.

What is in this for Saudi Arabia, then?

The country’s relationship with China. When I talk to Saudis, one of the things that they emphasize to me is, “Don’t make us choose between you and China. China buys more of our oil than any other country—we can’t get involved in the United States’ efforts to create an anti-China bloc. We want to work with you, but we can’t isolate China.” And so I think the importance of the relationship with China and the desire not to alienate China diplomatically probably had something to do with it. Of course, Saudi Arabia has been talking to Iran through Iraq and Oman for a year or more, so it’s not as if this comes completely out of the blue. The thing that comes completely out of the blue is China’s central role in the situation.

Recent reporting has indicated that Saudi Arabia wants the U.S. to help it build a civilian nuclear program, in exchange for normalizing relations with Israel. I imagine Israel will not be thrilled about this new deal with Iran, as the Israelis have been reaching out to other Sunni states for the ostensible purpose of containing Iran. Are these Saudi goals—to normalize relations with Iran and to normalize relations with Israel—in tension?

They are in tension, without a doubt, and I think that the extension, so to speak, of the Abraham Accords to Saudi Arabia was probably on the table in these talks. I assume that Iran sees that, if Saudi Arabia signed on to a deal with Israel, that would further deepen Iranian isolation in the region. So I think that these two things are in tension. But I don’t want to exaggerate what Saudi Arabia and Iran agreed to here. I don’t think that this ended any of the ongoing issues in the Saudi-Iranian relationship. To me, the real sign of Saudi-Iranian rapprochement would be a settlement of the Yemen issue, not reopening embassies in each other’s countries. Iran is the only outside power that really has any influence over the Houthi movement. This issue is really important to Saudi Arabia, and it’s looking for an exit ramp.

I don’t think that this ends the tensions between Saudi Arabia and Iran on Yemen, on Iraq, on Syria, on Lebanon, or on the nuclear issue. Those are still out there. This is a really interesting and different initiative from China in terms of its diplomatic involvement in the Gulf, but, if they could actually get some movement on the nuclear issue, then Nobel Prizes all around.

M.B.S. has essentially been in power in Saudi Arabia for the past several years, and we saw, at least initially, a very aggressive Saudi foreign policy, with him presiding over a catastrophic war in Yemen, and also aggressive action in Lebanon—In Qatar.

That’s right, the blockade of Qatar. So, are we seeing a change in Saudi foreign policy? You mentioned that they’ve been talking to Iran through Iraq for about a year, and that there’s some desire to try and end the conflict in Yemen. Again, I don’t want to understate what’s still going on there in terms of the humanitarian crisis, which Saudi Arabia is in large part responsible for. But I’m curious whether you think Saudi Arabia is trying to transition into a different stage.

There have been some changes. I I think M.B.S. came into power believing that Saudi Arabia was a superpower—that it could act like Russia, like China, like Iran. It could kill its dissidents abroad; it could use military force with impunity and success; it could throw its weight around. M.B.S.’s predecessors, his father’s generation, were very cautious. They knew the limits of Saudi power, and I’m not sure that he recognized those limits, but I think maybe he’s learning those limits now. And so we are seeing, I think, a more cautious Saudi foreign policy. But it’s also a Saudi foreign policy that is predicated on the idea that the Pax Americana is over and we’re in a more multipolar world. For Saudi self-interest, relations with China and relations with Russia are important, because there’s not an exclusive, single superpower to deal with anymore.

People in the United States don’t appreciate how important the September, 2019, attack on the Saudi oil facilities was for Saudi Arabia. This was the first time that Iran attacked Saudi territory, with implausible deniability. Did it come from the Houthis? Did it come from Iraq? That the United States really did nothing in response was shocking to the Saudis, and I think some of the outreach to Iran started at that point, as M.B.S. came to realize that he might not get backup from the United States for an aggressive policy toward Iran. [Houthi rebels claimed responsibility for the attacks, conducted by drones, on Saudi oil processing plants in Abqaiq and Khurais; the United States and its European allies have accused Iran of helping the rebels.]

Are there other reasons that Saudi Arabia might want to reach out to Russia and China? Perhaps because they have systems of government that someone like M.B.S. is more sympathetic toward? It’s not so fun to get criticized by the Biden Administration about Jamal Khashoggi, or about women’s-rights activists being thrown in jail, or whatever else. In short, is this outreach ideological as well as practical?

I discount that because the United States remains his main security interlocutor in terms of arms sales, in terms of military training, in terms of intelligence sharing, all of those things. And I don’t think that the outreach to China and Russia is something that dates from Biden or even late Obama. The deal with Russia was through opec+. That was an effort by Saudi Arabia to include Russia and some other non-opec members, but above all Russia, in efforts to sustain prices in the world oil market. This occurred first in the mid-twenty-tens when, around 2015, you had a collapse of oil prices, which collapsed again in 2020, with covid. Collaboration with Russia was seen by Saudi Arabia as essential for oil prices. Even with the war in Ukraine, the Saudi government has sustained the belief that it needs to have a relationship with Russia to do that.

Now, a lot of times Russia doesn’t coöperate, and Saudi Arabia opens the spigots and produces a lot of oil and drives the price down to show Russia that it has to coöperate. But the Saudi take on this is that they need Russia to manage the world oil market. That predates Trump, and it certainly predates Biden. The outreach to China goes as far back as King Abdullah’s reign, in the two-thousands: after he became King, one of his first foreign trips was to China. Outreach to China as the main growth market for Saudi-energy exports long predates the tensions of the late Obama years, the disappointment with Trump over the

attack in 2019, and then of course the frostiness with the Biden Administration.

What can you tell us about China and Iran’s relationship in the past decade?

I don’t want to say that Iran has an ideological affinity with China, but at least there is the idea that the United States is their enemy and they have to find alternative great powers for both strategic and economic reasons. I think that this is a real driver of Iran’s policy both toward China and toward Russia now. It’s partially economic, in that China’s a big customer for Iran, too. But I think that Iran has been somewhat disappointed that China doesn’t want to pick sides in the Middle East. Iran sells a lot of oil to China, but Saudi Arabia sells more, and so China has always looked at the Gulf region more like an economist would and less like a political scientist would. They want to be customers of everybody and they want a peaceful, nonviolent region where energy can flow from all the parties to them.

I think this might get us off this question, but let me throw it in: the immediate reaction in a lot of circles in the United States is that this is a defeat for the U.S. and a win for China—that what’s a win for them is a loss for us. I don’t know. I think, when it comes to the Persian Gulf region, American interests and Chinese interests are pretty similar. We both want energy to flow from that region, and a peaceful, stable region helps the energy markets.

And it’s not like the U.S. being the reigning power in the Middle East during the past decades has brought peace and harmony and good will all around.

That’s for sure.

To what degree have the protests inside Iran changed the strategic thinking about Iran and the region?

I don’t think they’ve changed the way the nation’s neighbors in the region, such as Saudi Arabia and Israel, feel. If you saw Iran as a threat, you still see it as a threat. I don’t think that there’s anyone in the region who thought that these protests would bring down the regime, and so there wasn’t a sense of, Let’s pile on and see if we can get a regime change. That was a particular view of some in the United States, but I don’t think it’s been borne out.

The question then becomes about the Iranian regime’s perception of its own stability, its own position in the region, and its own position domestically. We know that there were splits in the Iranian élite—members of the élite criticized the sitting government for the ferocity with which it cracked down on the demonstrators and called for some relaxation of the social regulations on women. I could see how the regime might view some lessening of its regional isolation, or some normalization with Saudi Arabia, as a plus.

I also don’t want to exaggerate Iran’s isolation. In many ways, it’s doing very well in the region, but it’s doing very well largely with non-state actors or failed state actors, be them Houthis, the militias in Iraq, Bashar al-Assad—who’s winning that war, but is basically just one militia now in Syria—and, of course, Hezbollah. Although state-to-state relations aren’t great, it’s really good at dealing with non-state actors.

People in Israel and the United States who are supportive of, let’s say, an aggressive Israeli foreign policy, seem, at least initially, to be angry about this deal. The reason, of course, is that Israel’s No. 1 fear is Iran, and this will not contain Iran. But, in the long term, wouldn’t Israel want peace between Sunnis and Shias and broad harmony in the region?

One can understand the Israeli security concerns. The Iranian regime constantly promotes chants of “death to Israel” at regime-sponsored rallies and things like that. You can understand the worry that the Israelis would have as Iran approaches the possibility of being able to weaponize its nuclear program. That said, particularly for the current Israeli government, it’s also a way to deflect attention from the Palestinian issue, which is the gnawing issue in the Israeli body politic. How are you going to rule a population that doesn’t want to be ruled by you if you don’t want to negotiate some political separation with them?

In terms of Israeli foreign policy in the region, Saudi Arabia was the big prize. The Emirates, Sudan, Morocco—they’re fine. Egypt and Jordan, of course, already have peace treaties and embassies with Israel. Saudi Arabia is the last stable, big Arab state that has not made peace with Israel, if you will. The Israeli government would love to be able to sign Saudi Arabia. Partially, that signals long-term acceptance in the region from the Arab world. Partially, it’s an effort to put together an anti-Iranian coalition. And I want to emphasize that I’m not sure that this Chinese-mediated restoration of diplomatic relations between Iran and Saudi Arabia precludes the Saudi government coöperating with Israel against Iran. As I said, the nuclear issue is still out there, and Saudi Arabia worries about that, maybe not as much as Israel, but it does worry about that.

You mentioned earlier that you thought China’s main concern in the region was the continued, steady, and disruption-free flow of oil. Do you see them having interest beyond that in the region going forward?

I have to preface this by saying that I’m no student of Chinese foreign policy. But I always thought that, like I said, a lot depends on whether the Chinese think like economists or think like political scientists. If they think like economists, they’ll free-ride on whatever security the United States can provide, and they’re not going to pick sides. If they think like political scientists, then they’ve got to get a military presence and they’ve got to be able to protect their own sea lanes to get energy from the Gulf to China.

My guess is that the Chinese government hasn’t made that decision because it doesn’t have the capability to do the latter yet. This diplomatic foray is perfectly positioned to emphasize that China is not playing favorites, that it wants a stable region, and that it brings the diplomatic ability to talk to all of the parties in the Gulf, which is something that the United States can’t do.

How do you think the Biden Administration will view this news?

The State Department was very clear: it said that it’s happy with anything that deëscalates tensions in the region. The Administration’s line on this is going to be, We’re happy with anything that settles things down in the region. Then they’ll talk to Saudi Arabia and say, What exactly does this mean vis-à-vis Iran? And where do you stand as we approach a point where decisions have to be made about the Iranian nuclear program? Tell us where you are on that now, because, before, you were always encouraging us to take a tough line, and you were against us doing deals on nuclear issues with Iran.

Still, I think that there will be plenty of people in Congress—and this will be bipartisan—who will see this as a failure of American foreign policy because they’ve adopted a very zero-sum notion of our relations with China. It’s not a sophisticated way to understand how we’re going to have to deal with a great-power competitor who, unlike the Soviet Union, we have extensive economic relations with. That’s the uncharted territory we’re in. And so the Cold War template that I think a lot of people in Washington are starting to apply to relations with China is not the most productive way of thinking about this. If you can find areas where there are actually common interests, acknowledge them. And this might be one of them. 

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