Iran-Saudi Arabia: a move to bury the hatchet or friendship to spite Washington? Shereshevskiy's analysis

On March 10, Iran and Saudi Arabia decided to restore economic ties and reopen diplomatic missions. Tehran and Riyadh said they will reopen their embassies within two months and implement security and economic cooperation deals signed over 20 years ago. The noteworthy detail is that the agreement was brokered by China, indicating Beijing's growing influence in the Middle East.

The event came as a surprise to everyone, including Israelis, who are usually well-informed. The news came just as Israeli Prime Minister Benjamin Netanyahu was meeting with Italian Prime Minister Giorgia Meloni. Addressing the Italian businessmen before the agreement was published, Netanyahu said: "I think our opportunities will grow to unimaginable limits if we succeed in another goal that I am pursuing. One of my main goals is to achieve normalisation of relations with Saudi Arabia."

The point was that Saudi Arabia could join the Abrahamic agreements normalising relations between Israel and the Arab states. Following the remark, Netanyahu launched into speculation about the possibility of building a pipeline to Europe that would connect Saudi Arabia with the Israeli port of Haifa. The Israeli press noted that Netanyahu's upbeat tone before releasing information about the agreement between his archenemies, the Iranians and the Saudis, who are friendly to Israel, proves that he was not aware of what was happening.

Relations between Tehran and Riyadh were severed in 2016 after a series of high-profile incidents. Saudi Arabia is a predominantly Sunni country. However, about 10-15 per cent of its population is Shiite, residents of the poorest regions, which at the same time are home to huge oil fields; Saudi Shiites complain of political and economic discrimination. Iran is a Shiite theocracy, a mullah-ridden state led by Ayatollah Ali Khamenei, and the majority of Iran's population is Shiite (although some sociologists dispute this view). In 2016, Saudi authorities executed Saudi Shiite thought leader Sheikh Nimr al-Nimr, who had called for revolt against the kingdom's authorities and had publicly wished the entire Saudi dynasty dead. Although the Sheikh distanced himself from Iran, after his execution the IRI leaders decided to use the execution to their advantage; Iranian "protesters" attacked the Saudi embassy in Tehran. This led to a breakdown in relations between the countries. And now they have been restored.

Does what has happened to mean that a fundamental change in Saudi policy is taking place? That is an exaggeration. The fact is that Saudi Arabia, as well as a number of other Arab states in the Persian Gulf, especially the UAE, and Bahrain, are competing with Iran for influence in the Middle East. Saudi Arabia and the UAE have long supported opposition forces in Syria fighting against Iranian ally Bashar al-Assad. Saudi Arabia is competing with Iran in Iraq, where a pro-Iranian government is in power, while Riyadh is trying to engage with the local Sunni minority and with Muqtada Sadr's supporters in the Shiite camp. In Lebanon, the Iranians support the Shiite militia Hezbollah, which dominates the country's politics through its military might, while the Saudis support Christian and Sunni parties hostile to Hezbollah. In fact, Tehran has created an empire in the Middle East from the borders of Afghanistan to the Mediterranean Sea, with Iraq, Syria and Lebanon under its sway. This increase of Iranian military-political power alarms the Arabs. But the main area of rivalry is Yemen. There, Saudi and Emirati forces have been at war for years against the Houthi rebel movement affiliated with Iran, with the Houthis carrying out large-scale raids into Saudi territory and firing rockets and drones into Saudi and Emirati cities. Finally, the Iranians have repeatedly attacked tankers in the Persian Gulf, interfering with oil shipments and putting Arab trade at risk. In 2019, the Iranian military shot down the largest Saudi oil refinery with cruise missiles and drones. The story of Sheikh Nimr and his execution is only part of the puzzle.

All of this, taken together, has escalated the Iranian-Arab (Shiite-Sunni) conflict to the point where it has overshadowed the Arab-Israeli (Palestinian-Israeli) conflict. Previously, the Arabs of other countries supported the Arabs of Palestine in their demand to end the Israeli occupation and establish a separate Palestinian state. Therefore, most Arab states refused to deal with Israel. But the situation has now changed so much that the Emirates and their ally Bahrain have moved towards rapprochement with Israel by establishing diplomatic relations with it within the framework of the so-called Abrahamic agreements. The Saudis, though not part of the Abrahamic treaty, are moving closer and closer to Israel through joint economic projects; there is talk of possible military cooperation as well. So what has happened now?

The anti-Iranian coalition that is forming around Israel is not going anywhere. The regional tensions between the Gulf Arabs and Iran are enormous. Nevertheless, the Saudis have good reasons to re-establish relations with Iran.

First, in the Middle East, as elsewhere, countries hedge risks. Hedging is the opening of trades in one market to offset the impact of price risks of an equal but opposite position in another market. Today the term is often used in regard to political relations. The Saudis are not alone in doing so. Last September, the UAE, which also severed its relations with Iran in 2016, returned an ambassador to Tehran.

The main reason for this is the escalating conflict between Israel and the US on one side and Iran on the other, due to the breakdown of the nuclear deal. Iran is developing a nuclear programme and, according to experts, its breakthrough time for the development of nuclear components is only 12 days (it would then take 6 to 12 months to integrate a nuclear device with a missile system). The US and Israel have already said they will not allow this to happen. Israel is stepping up attacks against Iran and bombing its territory with drones. The US and Israel are conducting joint military exercises to practice attacks on Iran's nuclear programme.

Under these circumstances, Saudi Arabia, as well as the Emirates, do not want, as they say, to get caught in the crossfire. They are willing to cooperate with Israel and the US, but at the moment they would not want to be the last ones on whom Iran would retaliate. While they are allies of Washington and Tel Aviv, they at the same time do not want their territory to be hit again by Iran.

There is a second reason why the Saudis went to re-establish relations with Iran. The fact is that their relationship with the Biden administration has not worked out. The White House chief has been sharply critical of Saudi Crown Prince Mohammed Bin Salman, the de facto ruler of the kingdom. Biden holds the prince responsible for the murder of Washington Post columnist and publicist Jamal Khashoggi in 2018. Biden has also pressured the Saudis to increase oil production to bring down energy prices on world markets. At the same time, congressmen were discussing the possibility of freezing arms sales to the Saudis - we are talking about huge military contracts, possibly the biggest in the history of arms exports. All of this has triggered a backlash.

By cooperating with Iran and making deals with it through the mediation of the main US opponent, China, it is as if the Saudis are saying to Americans: "Dear friends, be very careful".

Saudi Arabia depends on US military protection - protection from Iran - as well as on US arms supplies. And, of course, it will not cut off cooperation with Israel, nor will the Emirates. Moreover, the Saudis intend to modernise their economy and need hundreds of billions of dollars in foreign investment and modern technology, all of which is unlikely to be possible without the cooperation of the Americans. The same motives apply to ties with Israel.

But the Saudi ruling circles have made it clear to the Americans that they are open to cooperation with their rivals, especially China, and should not be underestimated. Biden will probably have to damp his ardour the next time he wants to criticise the prince or demand something from him.