Iran and Saudi Arabia reap benefits of rapprochement, one year on

Analysts say reconciliation has enabled the two countries to focus on more pressing domestic agendas

Saudi Crown Prince Mohammed bin Salman and Iranian President Ebrahim Raisi at the Organisation of Islamic Co-operation summit in Riyadh in November 2023. Reuters

Iran and Saudi Arabia have benefitted from a year of resumed diplomatic ties that have allowed them to contain their security risks despite the dangerous regional fallout of Israel's war in Gaza, analysts say.

On March 10, 2023, following negotiations facilitated by China, the regional foes agreed to re-establish their embassies and exchange ambassadors, concluding a diplomatic standoff that lasted for seven years, triggered by attacks on Saudi diplomatic premises in Iran.

The landmark agreement raised expectations for enhanced stability in the Middle East and beyond.

Saudi Ambassador to Iran, Abdullah bin Saud Al Anzi, arrived in Tehran last September to start his new mission, before the Iranian Ambassador to Saudi Arabia, Alireza Enayati, submitted his credentials in Riyadh shortly after.

“An Iran-Saudi detente has proved useful to both parties,” Bader Alsaif, an assistant professor of history at Kuwait University, told The National.

It enabled “focus on more pressing domestic agendas, whether it is meeting the development needs of Vision 2030 for KSA or quelling unrest and internal strife in Iran”, he added.

The two regional heavyweights have often found themselves on opposing sides of conflicts, particularly in Yemen.

Their rapprochement sparked optimism for a ceasefire that could bring an end to a decade-long war that has devastated Yemen, where Saudi Arabia supports the government against the Houthi rebels, who are backed by Tehran.

Since the reconciliation, talks have progressed between the Saudis and Houthis, with the Yemeni rebels sending a delegation – a first since the war began – to Riyadh to discuss the possibility of a long-lasting ceasefire.

“There has been no breakthrough in Yemen yet in terms of an official deal with Ansar Allah (the Houthis) for instance, but there has not been a regression to past military escalation either,” said Dr Alsaif.

While efforts to end the conflict in Yemen have gained traction, yet since November, the Houthis have launched a series of attacks on international shipping in the Red Sea, part of what they claim to be a solidarity campaign with the Palestinians amid Israel's devastating war in the Gaza Strip.

Their attacks on shipping have prompted retaliatory US and UK strikes against the Iran-aligned group.

Analysts say the year-old Saudi-Iranian reconciliation has largely shielded Riyadh from the continuing regional unrest.

“Direct attacks on the Kingdom from Yemen or elsewhere in the region have certainly stopped suggesting that the Iran-Saudi detente has improved domestic security dynamics for the time being,” said Sanam Vakil, director of the Middle East and North Africa programme at the Chatham House think tank.

“The problem is that such aggression could always recommence, so the broader risk has not been removed but rather contained,” she emphasised.

Last December, sources close to the talks told The National that Yemen's warring parties were considering a preliminary ceasefire to allow peace negotiations and have largely agreed to a proposed road map. The sources insisted that the attacks in the Red Sea would not hinder the prospects of an agreement.

“It appears that the Houthis have deliberately avoided targeting GCC partners and their interests. This shows their pragmatism and hope that after the war comes to a close the Houthis hope to return to the status quo and the negotiating table with Saudi Arabia,” Ms Vakil added.

While containing security risks for Saudi Arabia, the rapprochement has also allowed Iran to secure diplomatic goals with the deal helping facilitate the return of Syrian President Bashar Al Assad, who is a close ally of Iran, to the Arab fold last May.

For Giorgio Cafiero, CEO and founder of the geopolitical risk consultancy based in Washington Gulf State Analytics, “there’s no doubt that the GCC states restoring diplomatic relations with Damascus has constituted a geopolitical gain for the Islamic Republic”.

At the same time, the restoration of diplomatic relations with Riyadh “has been a big boost to the [Iranian President Ebrahim] Raisi administration's Neighbours First foreign policy strategy,” added Mr Cafiero.

In November, a month into Israel’s war on Gaza, both Syrian President Al Assad and Iran’s President Ebrahim Raisi, attended an emergency Arab League summit in Riyadh during which they both advocated more “punitive” measures against Israel.

Beyond the political gains, the reconciliation between two of the region's major economies has also led to discussions about boosting trade ties.

Farzad Piltan, West Asia director at Iran's Trade Promotion Organization, said Tehran has been eying a target of $1 billion annual trade with Saudi Arabia, which he said could further expand to $2 billion with a focus on steel, saffron, carpets, cement and dried fruit.

“The pace has been noticeably slow yet steady. It takes time to rebuild trust and enable different channels of communication to understand one another's needs and calculi,” Mr Alsaif said.

“A key question is whether this detente will translate to better understanding and accommodation of one another down the line or it is a temporary break for both sides to pick up pace and focus on internal issues before tensions resurface once again: a question of tactical versus strategic shifts.”