China’s mediation of Iran-Saudi ties: Geopolitical Implications

On March 10, Iran and Saudi Arabia announced the restoration of diplomatic ties and the re-opening of their embassies within two months. The Joint trilateral statement reaffirmed “the respect for the sovereignty of states and non-interference in the internal affairs of states” and shared a desire “to resolve their disagreements through dialogue and diplomacy”¹. 

Saudi and Iran severed ties in January 2016 after protestors attacked the Saudi embassy in Tehran over the execution of Shiite cleric Nimr Baqir al-Nimr. This was the last straw in the relations between Saudi and Iran already drawn into a prolonged war in Yemen with Houthi rebels backed by Iran fighting the Saudi coalition in the region. Drone attacks by Houthis on Saudi vessels in 2019 have further deteriorated the ties between the countries. With Houthis adhering to the ceasefire mediated by the UN, in April 2023, the agreement with Saudi and Iran springs a new hope of a peaceful resolution of nine year long war.

Besides the war, the unilateral withdrawal of the US from the 5+1 JCPOA (Joint Comprehensive Plan of Action) nuclear agreement and the consequent economic sanctions have unsettled Iran. To reach a conciliation, Iran simultaneously initiated- Vienna talks to reach out to the US and dialogue with Saudi.

By 2021 the newly inaugurated Biden government stalled weapons sales to Riyadh and signalled strong disapproval of the Yemen war. Washington has refused calls with GCC countries regarding Iran’s studied missile development program and nuclear enrichment. With war draining the resources of both countries and Iran’s nuclear ambition looming over regional security, Saudi and Iran realised the need for a dialogue. The then Iraqi Prime Minister, a former intelligence chief Mustafa Al-Kadhimi who has good ties with leaders of Saudi and Iran hosted the intelligence officers of both countries in April 2021.

Since then, both countries held five rounds of talks in Iraq and Oman. But talks suffered a setback after Al-Kadhimi vacated the post due to the worsening of the domestic crisis in October 2022. New Iraqi Prime Minister Al-Sudani hoped to resume the talks on his first visit to Iran in December 2022. Meanwhile, the Vienna talks continued to drag on with no signs of any breakthrough. China, a party to the JCPOA also remained silent but continued to forge strong economic ties with Iran. China and Iran signed 25 years cooperation agreement in March 2021 and Beijing pledged to inject investments to the tune of $400 billion².

As the largest oil importer China has close energy cooperation with Iran and Saudi. Heralding a new era of China-Saudi Partnership, President Xi on his visit to Riyadh in December 2022 reached a major alignment with Riyadh on a host of issues including the Iran nuclear agreement and its threatening consequences on regional security. In a conference with the members of the Gulf Cooperation Council, Xi welcomed the proposal to hold a meeting with Iran to reduce tensions.

Post Riyadh Summit, Saudi summarily hinted at further dialogue with Iran. During Iranian President Ibrahim Raisi’s first state visit to Beijing in February, deputy foreign minister Ali Bagheri Kani demanded China expedite talks for an early return to JCPOA³ and expressed interest in a dialogue with Saudi on the restoration of ties.

Beijing hosted the negotiations between the NSAs of Saudi and Iran from March 6-10 leading to the announcement of the official re-establishment of diplomatic ties. The reimposition of punitive economic sanctions further widened rifts in US-Iran ties. Washington’s silence on Houthi drone attacks on Saudi vessels and Biden’s hardline stance during the campaign- “we were going to, in fact, make them pay the price, and make them, in fact, the pariah that they are”⁴ didn’t go down well with Riyadh despite his state visit to the Arab nation. This essentially foreclosed all chances of mediation between the Arab countries for the US.

China seized this opportunity with both hands. Effectively leveraging its economic heft mediated a détente that caused a global stir. China’s uncanny diplomatic prowess in sharp contrast to its Wolf-warrior diplomacy has stunned the world. Traditionally mediation has remained an exclusive domain of superpowers to showcase their global political heft.  Rightly so, Beijing’s triumph in Saudi-Iran mediation has certainly positioned it as a leading power.

But the real test of China’s diplomatic acumen is in the implementation of the deal within the next 60 days. Given the entrenched animosities, rampant egregious sectarianism, and history of violation of agreements, the chances of the deal proving to be a game changer for the region are rather slim.

China’s latest stint has definitely spurred an intense debate and this must be examined in the context of Beijing’s larger geopolitical aspirations. Having pulled up an ace, Chinese propaganda machinery will now gloat about America’s decline. On the contrary, though the US remains the most prominent power in the region, by shifting focus away from the Middle East steadily after the Iraq occupation, it has created a strategic vacuum.

In lieu of its retrenchment from the region, the US-brokered normalization agreements or Abraham Accords ushered the Middle East into a new era of cooperation. While US maintains a huge military presence in the region, through the newly minted Quadrilateral arrangement, I2U2 (India Israel UAE US), the US has outsourced regional security to focus on other interests. These diplomatic initiatives have significantly strengthened regional cooperation.

Since the turn of the first decade of the 21^st century, China began to seek parity with the US and pushed for G2. Steadily shifting the course from a “peaceful rise”, China under Xi began to effectively compete with the US. China resents the US-led world order. Indeed, the trilateral agreement has consciously avoided negotiations in English. Speeches and documents are made in Mandarin, Farsi, and Arabic. Making no secret of its ambitions to reshape the world order, China is slowly infiltrating various multilateral institutions and propping up alternative multilateral forums and organisations.

Vowing to alter the global governance mechanisms, China has the establishment of AIIB (Asia Infrastructure and Investment Bank) and the New Development Bank and steadily expanding SCO, BRICS (process under consideration). For a while, China’s alternative global world order had many takers. Especially, the absence of political presuppositions or ideological strings-attached policies of Beijing found immense acceptance from authoritarian regimes which loathed the West’s ideological patronization. But the Covid pandemic exposed the weakness of China’s system. Further, China’s aggressive expansionism in the Indo-Pacific region and mercantilism alerted the countries of its unbridled superpower ambitions.

A backlash against China in terms of decoupling and building a rules-based international order picked up momentum leading to a spurt in interest-based coalitions. The West started applying the lessons learned from the Ukraine war on Taiwan. Additionally, China’s refusal to condemn Russia and its ‘no-limits friendship’ has further exacerbated the Sino-scepticism. To blunt this Western narrative, in February, China announced a 12-point Ukraine peace plan and expressed interest to seek a role in Ukraine settlement and talk to Ukraine President Zelensky for the first time since the start of the conflict.

Propping up economic heft and influence and putting its best foot forward, China has played the role of mediator in the Saudi-Iran talks. Irrespective of whether the deal has hit all the right notes, through its diplomatic maneuvering China has projected itself as an alternative to the West.

As opposed to the punitive sanctions of the West, pledging investments, China has adeptly pulled Iran into its orbit fashioning the emergence of the Iran-China-Russia group post-Ukraine. Saudi perhaps had hedged its bets on China in pursuit of ‘Vision 2030’ and diversification of the economy. Riyadh has kept the West in the loop and informed other powers- France and Russia ahead of the deal. On March 14, Saudi signed a landmark deal with Boeing for the purchase of 121 planes for its newly unveiled national carrier-Riyadh Air⁵. Formally announcing the deal, Saudi even sent feelers to the US seeking normalisation of ties with Israel in exchange for assurances on civil nuclear reactor⁶.

The geopolitics of the Middle East region is much more complex for any single power to dominate. But the timing of this brokered deal is a shot in the arm for China hankering for a major foreign policy achievement. The announcement of the Saudi-Iran deal culminated in the rubber stamp China parliament formally voting Xi as the President for the third five-year term. With this Xi might be more confrontational than ever toward the West given the window of opportunity for reunification is shrinking. Riding high on this diplomatic triumph, Xi has advanced his visit to Moscow. China announced participation in the Naval drill, “Security Bond-2023” exercises with Iran and Russia in Gulf of Oman⁶.

Clearly, China doesn’t have altruistic motivations or any long terms plans for the region other than advancing its self-interests. Having garnered the admiration of the countries for its diplomacy, China will now seal military, economic, trade, investment, defence deals and intensify arms, weapons sales and military exercises with countries in the Middle East. Make no mistake, the Saudi-Iran deal is more about posturing for Beijing and ostensibly showcasing its diplomatic abilities.

The steady reduction of oil dependence from the Middle East has shrunk Washington’s interest in the region. Swayed by an undertone of narratives, the US is undermining China’s diplomatic influence at its own peril. Ukraine crisis along with Western sanctions has crippled the pandemic-ridden developing economies. Food, fertiliser, and energy securities have intensified the pursuit of an alternative to dollar trade. The current diplomatic triumph can provide fresh impetus to China’s latent dedollarization and Renminbi trade transactions ambitions.

Dwindling demography has narrowed China’s strategic window of opportunity. Facing stagnating economic growth and repressed dissent, President Xi would up the game against the US. Syrian President Assad is in Moscow seeking to restore ties with Turkey and incidentally, Xi is traveling to Kremlin in the next couple of days⁸. In 2021 China extended a $2.3 billion loan to rescue Turkey's tottering economy. Will this be yet another occasion for China deploying its tremendous economic influence to pull off a diplomatic win?

 

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