Two weeks after the mid-March announcement of China’s diplomatic coup mediating the restoration of diplomatic relations between longtime rivals Saudi Arabia and Iran, a few realities are beginning to emerge out of the somewhat overheated initial assessments. First and most important, Saudi Arabia and Iran appear to be forging ahead on their own. A spokesperson for Iranian President Ebrahim Raisi indicated March 19 that he has received a written invitation from Saudi King Salman bin Abdulaziz to visit Riyadh. Also, Iranian Foreign Minister Hossein Amir-Abdollahian reported proposing three locations for a projected meeting at the foreign minister level. Amid these signs of progress, there are also Saudi and U.S. reports indicating that the original Chinese-mediated agreement included an Iranian commitment to stop arming the Houthi rebels in Yemen. In recent days, U.S. Secretary of State Antony Blinken welcomed the deal, saying anything that could reduce tensions and stop Iranian destabilizing activity is “a good thing,” and a White House spokesperson emphasized the positive impact the agreement could have on the conflict in Yemen.

The Historical Context

This is not the first time Saudi Arabia and Iran have moved to restore severed diplomatic ties since they first established relations in 1929. They restored diplomatic relations in 1946, after a break in 1944, and in 1991, after a rupture in 1987. The two states are now emerging out of another long rupture that occurred in the wake of the 2016 Saudi execution of Shia cleric Nimr al-Nimr and the subsequent storming of the Saudi Embassy in Tehran.

The current diplomatic opening, therefore, is a return to the status quo ante. It does not carry with it the scope of diplomatic breakthrough evident in the Abraham Accords between Arab states and Israel, for example, when states that had never had diplomatic relations established them. Saudi Arabia and Iran have had an often-difficult relationship but one marked, over the past 90 years, by long periods of established diplomatic relations. Those relations have never been particularly warm, given the decades of geostrategic competition between the two neighbors.

Fundamental Dynamics of Ongoing Rivalry

With Saudi Arabia increasingly determined to extricate itself from its military involvement in Yemen, and with Iran anxious to break out of the isolation caused by suffocating U.S. and international sanctions, it makes sense the two countries could see a way forward by reestablishing ties. There isn’t too much surprising or overly significant in such a development. However, the basic competitive rivalry – marked by periodic spikes in frictions, easings in tensions, and traded accusations of meddling – is likely to remain somewhere between a simmer and a low boil.

If Saudi Arabia’s involvement in Yemen soon comes to its denouement, the Saudi-Iranian agreement will be viewed as a prime agent of that development. But it is really a symptom of trends already underway rather than the precipitating cause of them. This agreement reestablishes the basic diplomatic floor in relations between the two countries. It remains to be seen whether it ushers in a new era defined by a Saudi withdrawal from Yemen. And even if Saudi Arabia withdraws from Yemen, the fundamental dynamics of rivalry in its relations with Iran – evident in disputes over Mecca, proxy battles in regional locales, maneuvering over regional security arrangements, and concerns over Iran’s nuclear program – are unlikely to change that much.

A Modest Achievement

The aspect of greater interest is China’s role in brokering this agreement and what it portends for the future. While China’s effort has been widely lauded for getting regional rivals to reestablish diplomatic ties, the scope of its achievement remains uncertain. China is poised to take significant credit if the agreement holds, but in the end, significant credit for a modest achievement – eminently feasible even without its involvement – remains pretty limited credit. The United Arab Emirates and Kuwait quietly restored diplomatic relations with Iran in August 2022, without any Chinese mediation. Iranian officials at the time pointed to positive developments in establishing relations with Saudi Arabia, with no mention of Chinese involvement. Media accounts since then have referenced extensive Omani and Iraqi mediation efforts that paved the way for the Chinese effort.

The Chinese calculation seems to be that the diplomatic stars are aligned, and the restoration of relations will happen without too much exertion on their part. Chinese diplomacy in the Gulf has been marked by tentativeness and caution; it is unlikely the Chinese would welcome having to apply significant leverage – or even be able to find the leverage needed – to corral the parties if either side did not follow through with its pledges.

Nonetheless, the consensus from analysts thus far is that Chinese involvement in this deal is significant – it signals rising Chinese influence in the Gulf and equally telegraphs a decline in U.S. influence. The first assessment is largely inarguable, but this reality has been a long time coming, and it remains mostly economic rather than of strategic significance. China has built robust economic relations with Gulf trading partners – reflective of the country’s voracious need for access to the region’s oil. In that same period, the United States has significantly weaned itself off of Gulf oil, as the development of its shale oil industry helped the United States become the world’s leading oil producer.

Saudi Arabia Plays the China Card  

The Chinese-brokered deal between Saudi Arabia and Iran is a prime example of Gulf strategic diversification and hedging. Gulf countries have moved away from a singular reliance on their relationship with the United States and forged strong relations with China, reminding the United States they have alternatives for partners, and, for example, leverage to compel more attractive U.S. concessions on access to technology and weapons. And the war in Ukraine has temporarily divided the world map again: China is firmly backing Russia, and Gulf states are trying to stay neutral and outside the grip of a U.S.-centric view of the conflict, which is accentuating some of the strategic hedging clear in the Gulf. Nonetheless, much of this Gulf relationship with China is economic in nature – China is the largest customer for the region’s oil. It’s a bit difficult to see, in a relatively modest diplomatic deal, the outlines of a China preeminent in the Gulf. For now, China’s relations with its Gulf partners remain too focused and overdeveloped in limited lines of activity, primarily economic ties and trade.

The United States – Still the Gulf’s Essential Strategic Partner

Many observers have suggested this diplomatic coup demonstrates a loss of U.S. influence. However, the United States was not positioned at all to broker a deal between Iran and Saudi Arabia. Washington’s relations with Tehran are too limited and hostile to permit such outreach. This is not a decline in or loss of U.S. influence. It is a deliberate forswearing of such influence, at the outset, a reflection of policy choices on Iran the United States has made.

Moreover, the United States remains, despite perhaps some slippage at the margins, the strategic partner of choice (and necessity) for all Gulf Arab states; the source, for example, of the most highly prized technology and investment; and the most sought-after location for higher education and professionalization. A developed architecture of U.S. military positions is spread across the Gulf, with robust forces, a sophisticated, dominant maritime presence, and pivotal train and equip programs.

China’s relations with the Gulf are important and growing. And China may be able to build on its diplomatic breakthrough with summit diplomacy and Gulf Cooperation Council outreach. But for now, its relatively slight diplomatic coup with Tehran and Riyadh is significant in a small-bore way. It’s business pretty much as usual, but with a flourish of Chinese diplomatic activity that may well look less significant as time goes on.