Economy, Geopolitics, Investment

Saudi Arabia Seeks Rapprochement with Iran

For Middle East watchers, the conflict between Saudi Arabia and Iran seems to manifest itself in nearly every area. From proxy wars and blockades, diplomatic rows and everything else in between, Saudi Arabia and Iran jostling for regional dominance is a familiar topic of conversation.

 

But Crown Prince Mohammed bin Salman struck a different tone in a recent interview with Saudi state television. MBS focused on diplomatic possibilities and stated, “we are working now with our partners in the region and the world to find solutions for these problems. At the end of the day, Iran is a neighbouring country. All what we ask for is to have a good and distinguished relationship with Iran.”

 

The news comes as American President Joe Biden is seeking to repair the multilateral nuclear deal with Iran, which his predecessor Donald Trump pulled out of. Analysts have regularly pointed to the election of Biden as a marked changed in American diplomatic relations with Saudi Arabia, which had enjoyed especially close ties with America under Trump.

 

In early April, it was revealed that Saudi Arabia and Iran held secret talks in Baghdad in an attempt to restore official diplomatic relations between the two countries after they were broken five years ago. The talks were not immediately confirmed by either state, but the MBS’s recent interview suggests the two nations may be seeking closer ties.

 

Saudi Arabia and Iran still have plenty to hash out, and the question remains as to how much American foreign policy has changed, but for now, it looks like both sides are at least interested in coming to the diplomatic table.

 

Recalibration

            Iran-Saudi relations have been strained, and they have culminated in various proxy conflicts and a Saudi-led blockade against Qatar, which the Saudi-led coalition argued was becoming too close to Iran.

 

The blockade against Qatar lasted three-and-a-half years, but the Saudi coalition did not get the outcome it was looking for. Qatar became closer with Saudi’s regional rivals Iran and Turkey, and the small country was able to withstand the crushing blockade.

 

Combine the failed Qatari blockade with brutal and seemingly never-ending proxy conflicts in Syria and Yemen, and Saudi Arabia and Iran may see their costly and destructive path as bad for business.

 

Attracting foreign investment to Saudi Arabia has proven difficult. The assassination of Jamal Khashoggi has loomed large in Western media, and the Kingdom is still struggling to recover from it on a diplomatic front.

 

Saudi Arabia’s much-publicized turn from oil-dependency to a more diversified economy relying on tourism and green technology necessitates better relations. Saudi Arabia is looking to become a regional economic hub but has thus far found it difficult to compete with other Gulf states.

 

A diplomatically keen Saudi Arabia is not a surprise considering their continued intervention in the region is racking up high costs while delivering more instability to the region. If a deal can be hashed out with Iran, Saudi Arabia might stand to gain immensely in the short term.

 

However, in Iran, the latest development around leaked tapes from Foreign Minister Javad Zarif has divided the political establishment. On the leaked audio tapes, Zarif complains that the Islamic Revolutionary Guard Corps has more power than him over military and diplomatic decisions.

 

Iranians are set to head to the polls for a presidential election in June, and the frank statements from Zarif have divided Iranian political parties on how the country should act in regards to the nuclear deal.

 

Vienna has been the host to renewed talks on the Iranian nuclear deal and if reincorporating the United States into the deal and lessening sanctions against Iran is possible. As Trump unilaterally pulled the United States out of the agreement, Zarif and President Hassan Rouhani have been pushed into a corner, especially after Zarif’s comments were leaked. Due to the upcoming elections, and the United States’s assassination of popular General Qasem Soleimani in early 2020, President Rouhani and Zarif may be compelled to resist a renewed deal with the Americans due to political concerns.

 

Saudi Arabia wants to see the nuclear deal strengthened and has expressed a desire to be consulted on the negotiations. With increasing pressure on Iran, it is difficult to imagine a strengthened deal that would also pull in other regional countries like Saudi Arabia.

 

If re-entering the deal may already be a step too far, then providing concessions to Saudi Arabia is unlikely to fly.

 

Relations with America

            When President Biden entered the Oval Office, many believed it would drastically change the country’s relations with Saudi Arabia and Iran. The US would no longer provide Trump’s blank chequebook to Saudi Arabia, and Biden was keen to re-enter the Iran deal thus lifting some sanctions against Iran.

 

While both countries have made adjustments to the new administration, it is unclear whether it will yield different results.

 

MBS has insisted that there only minor differences between Riyadh and Washington. Despite calls from members of his party, Biden has balked on taking action against the Crown Prince for his alleged involvement in the Khashoggi assassination.

 

And while the US House of Representatives voted to limit arms sales to Saudi Arabia, the Biden Administration approved a $23 billion weapons sale to the Kingdom. Biden is allowed to continue sales to Saudi Arabia if he certifies that the country is not involved in killing dissidents.

 

Biden’s half-baked stance on America’s involvement in supporting Saudi Arabia in Yemen, pulling offensive forces while keeping defensive missions in place, has been criticized as murky and continuing to aid Saudi Arabia with its offensive efforts.

 

And while there seems to be interest from the Biden Administration and Democrats for re-entering the Iran nuclear deal, it’s unclear whether that can be achieved under the same agreement. With the United States pulling out of the Iran deal and assassinating the most powerful general in Iran, the Iran nuclear deal was always going to be difficult.

 

Making it shakier are reports of US Coast Guard ships off the Iranian coast being ‘harassed’ by the Revolutionary Guard Corps. Iran undoubtedly views the United States as an aggressor, and if that does not change or political realities in Iran do not allow for improved relations, Biden may not see improved relations with Iran.

 

A slight recalibration may see a better relationship between Saudi Arabia and Iran, but if too many geopolitical factors do not change, it is equally likely that the bloody stand-off continues.