China has set the seal on the Iran-Saudi Arabia deal

The April 6 meeting in Beijing of the Foreign Ministers of Iran and Saudi Arabia, has set the seal on the breakthrough brokered a month ago by China for the two giants of the Gulf region to restore diplomatic relations after seven years.

On March 10 when Wang Yi, the Director of the Foreign Affairs Commission of the Chinese Communist Party (CPC), announced that secret talks in Beijing between the national security advisers of Iran and Saudi Arabia resulted in their agreement to resume diplomatic ties and reopen embassies, it caused a sensation. Chinese media boasted that this demonstrated that the Gulf was no longer in the United States’ exclusive sphere of influence: the agreement needed “a global sponsor of China’s stature and credibility with various regional countries” to be reached.

The declared outcomes are important but not spectacular; essentially an agreement on reopening embassies by next month, and implementing old cooperation agreements from 1998 and 2001. These earlier agreements are short on specifics, and did little to mitigate the intense rivalry between the Shia and Sunni powerhouses, who both view the Gulf — and more broadly West Asia — as areas of their political and economic influence. Whether the present agreement delivers longer term results remains to be seen.

India’s reaction to the announcement was muted — merely saying it always advocated diplomacy and dialogue to resolve differences. However, as a near neighbour of the Gulf, India has reason to be concerned at the growing Chinese clout in this area. Though, lesser tension and conflict in this region — where about 7 million Indians live, which is our main supplier of oil, and a key market for our exports — is nett positive in the short term.

The US, the dominant power in the Gulf for the last five decades, initially reacted coolly saying that the outcome was a continuation of understandings reached earlier in Oman and Iraq sponsored talks. It also argued that if the deal ended the Yemen conflict “we would welcome that”. Nevertheless, reports have emerged that the CIA chief, William Burns, flew to Riyadh and complained about US being “blindsided” by the deal.

The agreement does represent a victory for Chinese diplomacy in an area from where it buys 45 percent of its oil imports worth over $120 billion, and where its exports and infrastructure/hi-tech investments are growing significantly. While China’s naval presence in the Arabian Sea has been mainly for anti-piracy patrols, the US believes the Gulf is a ‘focus area’ for Chinese military planners. In 2021, the US interceded with the United Arab Emirates to stop China’s work on an allegedly secret facility at Khalifa port where China has built container terminals.

The US will now not have much success in halting the burgeoning ties between China and Saudi Arabia. Under Crown Prince Mohammed bin Salman, Saudi Arabia is following a dynamic foreign policy, diversifying its options to protect its economic and security interests. It co-operates with Russia on keeping oil prices high, and with China which buys oil and engages in massive two-way energy/ infrastructure investments. It is ending hostility towards Syria, and wants to end its war on the Houthis in Yemen, which has only compounded its security problems. The Western drive to cut oil consumption, and US blunders in alienating the Saudi Arabian leadership gave China an opening which it grasped.

In December, China’s President Xi Jinping made a high-profile visit to Riyadh where he participated in three summits in three days: China-Saudi Arabia; China-GCC; and China-Arab states. These meetings ended with a plethora of agreements on further political and economic co-operation, clearly establishing China as a key partner. But the joint statements revealed that China was also taking the side of the Gulf countries in their differences with Iran, over: three Iran-controlled islands near the Hormuz Strait claimed by the UAE; Yemen, where China condemned terrorist attacks by Houthi militia on Saudi Arabia and the UAE; and, addressing ‘the Iran nuclear file and destabilizing regional activities’!

A stunned Iran called in the Chinese Ambassador and conveyed “strong dissatisfaction”. However, given its domestic turmoil, isolation from the West, threats from Israel, and hamstrung by economic sanctions, Iran had little room to manoeuvre away from the biggest customer for its ‘sanctioned’ oil. In February, Iran’s President Ebrahim Raisi paid a bilateral State visit to China, the first in over 20 years.

In Beijing, Iran agreed to implement a Roadmap for the 25-year Strategic Agreement signed in 2021(which envisages $400 billion of Chinese investments, of which only $185 million has materialised so far), and apparently set the stage for mediation with the Saudi Arabia.

Concrete results followed quickly, when the Saudi Arabia-owned Iran International news channel — whose broadcasts from London on anti-regime protests were troubling Tehran — said it was ‘relocating’. In March, Iran gave hints of ending arms supplies to the Houthis. The path towards the Foreign Ministers’ agreement, looked clear.

Iran, while on the diplomatic backfoot, is negotiating with traditional skill. It has taken initiatives such as the recent understanding with the IAEA on nuclear inspections to relieve Western pressure, and to reduce risk of confrontation with Israel. Going along with Chinese diplomatic leadership helps keep its options open with that country. In making a deal with Riyadh, Tehran may be playing for time before it reverts to a more traditional Iranian posture of claiming leadership of the region. Yet today, China’s success in mediating a deal between the two-biggest Gulf antagonists has echoed around the world — and reinforced its image as a global power.

Ranjan Mathai is former Foreign Secretary of India and High Commissioner to the United Kingdom.

Disclaimer: The views expressed above are the author’s own. They do not necessarily reflect the views of DH.