Author: Oliver B John, Astrolabe Global Strategy

In a move widely hailed in the Persian Gulf and cautiously welcomed by the United States Administration, senior Chinese, Iranian, and Saudi security officials agreed to re-establish diplomatic relations between Riyadh and Tehran.

Although Saudi Arabia and Iran have been quietly discussing ways to reduce tensions since at least 2021, China’s active role in brokering the agreement is particularly significant. This was likely the first time that China has leveraged its diplomatic ties to the region to resolve a major international political dispute. Given the ongoing geopolitical competition between Washington and Beijing, some observers ask whether China is positioning itself to replace the United States as the major external power in the region.

On 10 March 2023, Saudi Arabia and Iran concluded five days of discussions hosted by China, agreeing to restore diplomatic relations within two months. They also agreed to ground their relations on the principles of respecting sovereignty and non-interference in internal affairs. Delegates from the three countries ‘expressed their keenness to exert all efforts towards enhancing regional and international peace and security’.  The Saudi and Iranian foreign ministers met in Beijing on 6 April to follow-up on the discussions.

Although the agreement represents a potential reduction in tensions, it is vague on the concrete steps Riyadh and Tehran will take, leaving room for speculation. Reports suggested that Iran would curtail its support for Houthi attacks on Saudi territory, a key Saudi goal. A statement by Iran’s mission to the UN, that the agreement would ‘accelerate the ceasefire, help start a national dialogue, and form an inclusive national government in Yemen’ seems to confirm this view.

The Houthis quickly denied that the Iran–Saudi deal would affect their actions since they are not ‘subordinate’ to Iran. On 16 March 2023, the Iranian Foreign Ministry also denied that the agreement covers Yemen, leaving open the question as to what, if any, commitments the Iranians might have made.

China has a clear incentive to push for a diplomatic solution to these tensions. Roughly 50 per cent of its imported oilcomes from the Persian Gulf region — Saudi Arabia was its largest single supplier in 2021. It also imports around 7 per cent of its liquid natural gas from Qatar and recently signed a long-term supply contract. Stability in the region is crucial to China’s energy security, and reducing tensions between Iran and Saudi Arabia and helping them resume formal diplomatic ties could increase that stability.

China was well positioned to mediate the dispute, as it is the largest oil export market for both Saudi Arabia and Iran, and accounted for over a quarter of Saudi crude oil exports in 2021. Since the United States reimposed sanctions on Iran’s oil industry in 2018, the country’s exports have dropped sharply, but this supply likely now goes to China. China’s strong relationships with both sides gave it a diplomatic edge over the United States in brokering the deal.

Although the United States had been encouraging its Gulf partners and allies to reduce tensions since the Biden administration took office, the United States had no real prospect of orchestrating such a high-level meeting.

Amid ongoing US–China competition, many observers questioned whether China’s diplomatic success represented a further decline in US regional influence or a drift in US–Saudi relations. While Chinese officials denied they were trying to fill any regional vacuum, they were happy to let others draw this conclusion. They emphasised their ‘historic role’ in brokering the deal as a ‘reliable mediator’ and stressed the importance of using dialogue to settle regional disputes, in contrast with the United States’ opposition to the Iranian regime.

Riyadh also maintained that China was not seeking to replace the United States in the region and confirmed that they briefed Washington before the negotiations and announcing the agreement. Saudi officials stressed that they view both Washington and Beijing as important partners and that they hoped not to be put in the middle of any ‘conflict between the two powers’.

Although China is still not challenging the United States as the preeminent external security guarantor for the region, it appears to be expanding its regional diplomatic influence. By demonstrating the effectiveness of Chinese diplomacy, Beijing encourages Saudi Arabia and other US regional…

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