Following security talks in Beijing, Iran and Saudi Arabia have decided to re-established diplomatic relations and agreed to reopen their embassies in each other’s countries. Their agreement reactivates earlier commerce, economics, and investment agreements, as well as the 2001 security collaboration deal. It also confirmed the states’ sovereignty and pursuit of non-interference in each other’s domestic affairs.
The agreement is an important move toward promoting peace and stability in the region and beyond, with China favorably contributing to resolving complex regional issues. Pakistan will reckon with downstream implications due to its unique bilateral relations with Iran and Saudi Arabia, including easing tensions with its Eastern neighbor India.
China’s Big Power Play as Broker of Peace
China’s increased mediatory influence in the Middle East has strengthened its image as a peace broker in recent years. An important factor is the fact that China is perceived as a neutral party that does not align with any specific power bloc. This characteristic gives China a unique advantage over the U.S. and Europe in building reliable relationships, allowing interaction with all parties, and developing relationships based on mutual interests.
The current agreement between Iran and Saudi Arabia shows China’s ability to bring two avowed adversaries together and assist them in finding common ground. China’s growing trade and economic links, particularly with KSA and Iran, add to the former’s global weight and influence. China accounts for roughly 30 percent of Iran’s foreign trade and is the largest oil export market to Saudi Arabia, both facts which can be used to support regional stability.
Although the deal has been interpreted differently in the West, it has helped to alleviate some concerns that China’s involvement in the region is primarily motivated by economic interests and that it may be uninterested in resolving the fundamental political issues that underpin regional conflicts. There is also greater optimism for improved investments, infrastructure, and economic development in the region due to China’s Belt and Road Initiative (BRI). It is worth noting that the decision comes as President Xi Jinping begins his third term, showing a continuation of China’s foreign policy objectives based on the cooperation model.
The United States’ Traditional Role
The U.S. role in the region and any effort to help normalize Iran-Saudi relations may not have been possible due to its involvement in the Middle East. Given the absence of diplomatic relations between the US and Iran, as well as its alliance with Saudi Arabia, the U.S. would not have been seen as an honest broker in Saudi-Iran mediation.
Despite portraying itself as a stabilizing force in the Middle East, the U.S. position has been contentious for various reasons. Several Middle Eastern countries oppose U.S. security and military policies in the region. For example, the United States’ military actions in Iraq and Libya were seen as destabilizing factors that later contributed to the growth of extremist groups such as ISIS and Al-Qaeda. Furthermore, tensions existed between the United States, Saudi Arabia, and the UAE. The U.S.–Saudi partnership, traditionally based on the exchange of oil for military protection without meddling in Saudi royal affairs, suffered a significant setback in 2018 due to the murder of Saudi journalist Jamal Khashoggi and then-President Trump’s open criticism of the Kingdom.
The U.S. limited its support against the Arab coalition’s war in Yemen, causing a schism in its regional relations. Consequently, Saudi Arabia has turned to other countries, such as Russia and China, that are willing to invest in the country without imposing their values. The Saudi government has launched numerous initiatives under the Vision 2030 development plan to diversify its economy, reduce its dependence on oil, and transform the country’s strategic position into an asset, and consequently, decoupling from the US.
Implications on Pakistan
Stable relations and cooperation between Iran and Saudi Arabia benefit Pakistan’s efforts to promote regional integration and increase domestic economic development. As both countries attempt to resolve their differences through negotiation, improved regional peace and stability as a result of Saudi-Iran deal may increase Pakistan’s commercial and economic engagement potential with the Middle East and Central Asia.
Pakistan values its close ties with Iran and Saudi Arabia, the former being an important neighbor and the latter employing a significant number of Pakistanis and providing financial support in times of need. Pakistan can use this opportunity to seek crucial investments from both countries to ensure the CPEC’s success and the BRI, in which both countries are participants. Both Iran and Saudi Arabia have already shown interest in investing in Pakistan. Iran has vast reserves of untapped natural gas and energy resource that could help develop Pakistan’s gas and electricity transmission systems to overcome the burgeoning energy crisis. Similarly, it would benefit Pakistan to attract investments from Saudi Arabia to develop its oil and gas sector—particularly in exploration and production—which could help reduce the country’s reliance on imported oil.
Pakistan’s geography offers vast opportunities for regional connectivity, whose dividends will be collectively helpful for regional and extra-regional players. Moreover, this convergence will also assist in addressing complex geopolitical challenges to inter-regional connectivity and stability, such as Afghanistan. The overall regional security situation may improve because of an added inclination to resolve conflicts and lower regional tensions. This normalization would bring both parties to resolve issues through negotiations, which could help reduce sectarianism and extremist groups’ influence outside their border through proxies.
Normalization in Iran-Saudi diplomatic relations could help reduce regional tensions and create a more conducive environment for peace and stability. Iran and Saudi Arabia also enjoy cordial relations with Pakistan and India, and could use their influence to ease tensions between the two South Asian countries. With reduced regional tensions, Pakistan and India may be more willing to engage in dialogue and pursue diplomatic solutions to their longstanding disputes.
The agreement may also support multilateral forums such as the Shanghai Cooperation Organization (SCO), a forum for regional countries to discuss security and economic issues. Pakistan and India are members of the Shanghai Cooperation Organization (SCO), Iran recently joined, and Saudi Arabia has agreed to join as a dialogue partner. Increased collaboration between Iran and Saudi Arabia within the SCO could create an opportunity for Pakistan and India to engage in constructive dialogue. For instance, in a recent positive development, Pakistan’s foreign minister agreed to attend the May 2023 SCO foreign ministers meeting held in India.
It remains to be seen whether Iran and KSA will be able to resolve their bilateral issues before agreeing to play such a role and whether India and Pakistan will welcome their involvement. The possibility of new regional dynamics, on the other hand, needs to be regarded positively. With peace in the making between Pakistan’s two traditional friends, Islamabad could make domestic progress without walking the erstwhile tightrope of balancing its relations between both countries.
This article has been published in another form at https://southasianvoices.org/implications-of-the-iran-saudi-deal-for-pakistan/
Syed Ali Abbas
Syed Ali Abbas is a Research Associate Officer at the Center for International Strategic Studies (CISS), Islamabad.
