China resets balance of power in Middle East with Saudi-Iran reconciliation

A tectonic shift occurred last week in the Gulf, taking the world by surprise. After years of severed diplomatic relations, Saudi Arabia and Iran – two regional arch-rivals – buried the hatchet in Beijing in a process mediated by China and agreed to restore diplomatic ties within two months and reduce smear campaigns against each other.

While secret talks and side-track discussions had been going on since April 2021, they did not bear fruit and remained outside public attention. Given the considerable impact of such a development, it is imperative to scrutinise this reconciliation brokered by China and analyse the potential winners, global implications, and impact on US hegemony in the region.

Who wins, who loses

The biggest winner to emerge from the Iran-Saudi reconciliation is China, stamping Beijing’s emergence as the new powerbroker in a changed global order. It also confirmed  China’s avowed commitment to global peace and stability.

This commitment was emphasised in Xi Jinping’s keynote speech at the GCC Summit in Riyadh in December 2022, which was initially unwelcome in Tehran. However, a recent meeting between Iran’s President Ebrahim Raisi and Jinping overcome any lingering resentment.

China’s role in brokering this rapprochement has allowed Beijing to deepen economic ties in the region while challenging the traditional American role as the primary mediator of negotiations worldwide.

Although the White House officially welcomed the appeasement between the two arch-rivals, it is reasonable to argue that China’s gain is Washington’s loss as the world shifts towards multipolarity and offers new opportunities for Beijing to display its soft power.

The restoration of diplomatic ties between Iran and Saudi Arabia is expected to bring positive geopolitical and economic outcomes for both countries.

While it may be challenging for Saudi Arabia to deepen economic cooperation with Iran due to concerns about potential backlash from Western nations, resolving the civil war in Yemen is Riyadh’s priority.

A peaceful solution to the Yemeni civil war would significantly alleviate Saudi Arabia’s security and economic concerns, heightened by the highly-publicised Houthi attacks on airports, oil storage facilities, and cities.

For Iran, the reconciliation would bring a different set of positive outcomes. The first benefit for Tehran is to emerge from the deep isolation caused by crippling Western sanctions. In an ideal scenario, de-escalation will create a win-win situation for Saudis and Iranians.

Meanwhile, Israel is not pleased with the current positive climate. The Saudi leadership had previously refrained from openly agreeing to the Abraham Accords brokered by Trump, which would have offered Tel Aviv more legitimacy. Secondly, Tel Aviv has long constructed Iran as the boogeyman to obtain deep concessions from the Gulf countries.

If this rapprochement continues, Israel’s objective of isolating Iran and playing Gulf heavyweights against each other will suffer a significant letdown. “The restoration of relations between the Saudis and Iran is a serious and dangerous development for Israel that represents an Iranian diplomatic victory. It represents a critical blow to efforts to build a regional coalition against Iran,” former Israeli PM Naftali Bennett has said.

Implication for international order

The Iran-Saudi reconciliation has implications for the global balance of power.

As Beijing extends its influence beyond the Asia-Pacific, the world’s largest oil importer flexes its soft power muscles, adopting a diplomatic approach that emphasises peace and stability while daring to meddle in Washington’s Gulf sphere of influence.

This endeavour signals a shift in China’s policy in the Middle East from mere rhetoric to tangible actions. China’s ability to bring both foes to the table exemplifies its newfound role in the multipolar world. This achievement marks a departure from China’s traditional detached approach to more engaged policies, reflecting its ability to deliver concrete results, as demonstrated by its involvement in the GCC Summit.

It is evident that Beijing has moved on from words to actions to illustrate to the international opinion that a multipolar world is becoming a reality, and its dynamics are increasingly palpable.

US’s cautious optimism

The Biden administration officially welcomed the Iran-Saudi deal as a sign of de-escalation in the region. However, some observers note that the US may be disappointed that China has taken the mediation role which Washington has long played.

Furthermore, there are concerns that the US overestimates its influence in the region, as recent signals from the Saudi Crown Prince suggest that Saudi Arabia may not unconditionally align with US interests, as evidenced by its close relations with Moscow.

As a result, US strategy-makers are now dealing with the implications of such a change on its strategic posture in the region.

Over time, Saudi Arabia, Iran, and China’s approaches will be refined. Even so, this event marks new daring and imaginative chessboard moves within the context of a multipolar system.