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The Iran-Saudi Agreement is Not a Game Changer

The China-brokered agreement restoring relations between Saudi Arabia and Iran, announced on March 10, is not a game-changer for the region or for U.S. influence in the Gulf. The agreement itself is susceptible to sudden deterioration or collapse, as has happened on several occasions in the past as a consequence of Saudi Arabia’s executions of high-profile Shia dissidents, disruptive demonstrations by Iranian pilgrims on the annual Hajj, or attacks on the Kingdom by the Iranian-backed Houthis.

The accord does not confer on China the mantle of Gulf security guarantor, but rather indicates that China wants its expanding role as a global power to include the Gulf. The United States still maintains more than 35,000 military personnel at various bases and facilities throughout the Gulf. China has no significant enduring military presence in the Gulf, although it reportedly sought to construct a base in the UAE and has been helping Saudi Arabia develop a capability to indigenously produce ballistic missiles. In the past, Beijing functioned only as a supplier of completed missiles to the Kingdom; its new role as a capacity builder has undoubtedly helped in gaining Riyadh’s trust as a partner and mediator.

Most importantly, it is China’s role as a major oil importer that provided Beijing with enough leverage over, and engagement with, Iran and Saudi Arabia to conclude the accord after two years of progress under Iraqi and Omani mediation. Recognizing that U.S. primacy in the Gulf is not imminently threatened by China, U.S. officials have expressed support for the accord, regarding it as a chance to lower tensions in the Gulf, facilitate a settlement of the long-running war in Yemen, and provide officials with an opportunity to focus on the more immediate crisis in Ukraine without risk of distraction by an emergency in the Gulf.

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Even if the agreement is implemented and endures, it will not interrupt broad and longstanding U.S.-Saudi security cooperation, including accelerating efforts to develop Integrated Air and Missile Defense. Nor will the accord derail any future U.S. arms sales to the Kingdom. U.S.-Saudi strategic relations have survived many challenges over the past eight decades—the most recent being the role of Crown Prince Mohammed bin Salman (MbS) in the murder of dissident journalist Jamal Kashoggi and the disastrous war in Yemen, as well as the lack of Saudi transparency with Biden administration officials regarding recent OPEC+ oil production decisions. However, the Saudi leader’s solicitation of China—one of the United States’ peer rivals—as the final broker of the rapprochement will further sour MbS’ relations with Washington, creating difficulties in any future attempt to rebuild his reputation within the Biden Administration or on Capitol Hill.

Although Iran signed onto the agreement at least in part to ease its global isolation, the accord does not change U.S. policy toward Iran in any significant way. The United States is not bound—either by the accord or by any separate informal discussions with Riyadh—to ease any of its comprehensive, multi-sectoral sanctions on Iran. Moreover, the broad array of U.S. secondary sanctions on Iran, effectively giving would-be Iranian partners a choice between siding with Tehran or Washington, is likely to act as a brake on Saudi investment in Iran that the two Gulf powers have discussed since their agreement was signed in Beijing. Several hundred Iranian entities are subject to sanction by the U.S. Treasury Department, and any significant Saudi business transactions with these sanctioned entities could subject the Saudi firms to U.S. sanctions.

It is also highly unlikely that Iran-Saudi reconciliation will lessen the chances of the U.S. Congress levying additional sanctions against Iran due to its supply of armed drones to Russia, its repression of protesters, and other perceived transgressions. The substantial support in the Congress for vocal and material U.S. backing for opponents of the Iranian regime will not be altered by the Iran-Saudi reconciliation, even though the United States has little ability to influence domestic political events inside Iran. Because no further U.S. concessions to Tehran are on offer, the agreement with Saudi Arabia is not likely to cause Iran to accept the proposals that are on the table to restore the 2015 multilateral nuclear agreement.

What Happens Next?

With diplomatic achievement comes obligation, and Kingdom officials, U.S. officials, and members of Congress will each expect China to contribute to Gulf stability by pressing Tehran to rein in its objectionable behavior. U.S. officials have assessed that the Iran-Saudi pact could, at the very least, lead to a settlement of the long-running war in Yemen. Those expectations might be met, as the various parties to that conflict have been seeking a solution for more than a year. An end to the Yemen war will necessitate the termination of Iranian-supplied missiles and drone technology to the Houthis, who have used the drones to great effect against targets in Saudi Arabia and the UAE. Yet even as Oman-mediated talks to resolve the Yemen war have advanced over the past several months, Iran has continued to try to supply the Houthis. U.S. and allied naval forces have blocked five major arms shipments from Iran to Yemen over the past ninety days, according to March 16 testimony by U.S .Central Command (CENTCOM) Commander Michael Kurilla. Saudi Arabia and its allies also expect Beijing to pressure Iran to freeze its nuclear program and to exercise restraint in arming and advising the other regional armed factions it supports, such as Hezbollah or its militias in Iraq. It is uncertain whether Beijing will convince Iran to pursue this course of action, however, as exerting regional influence and developing its technology base remain at the core of Iran’s national security strategy.

Though Iran-Saudi reconciliation may not transform the geopolitical landscape of the Gulf, the accord has upended the security calculations of Israel, a key U.S. partner. Tel Aviv had hoped that its quiet cooperation with Riyadh would continue to expand and institutionalize. The Kingdom’s reconciliation with Tehran—whose nuclear program Tel Aviv considers an “existential threat”—deals a serious blow to Israel’s aspirations for normalizing its relations with Saudi Arabia. Though the agreement will not halt the gradual expansion of cooperation between Israel and Saudi Arabia, the pact would certainly seem to signal that Saudi Arabia would not back Israeli military action against Iran’s nuclear program. The United States opposes Israeli military action against Iranian nuclear facilities as well, so Saudi Arabia’s repair of its relations with Iran does not meaningfully add to the constraints that are already being imposed on Israel by Washington. But Israel has shown willingness to disregard U.S. concerns in the past by acting decisively when it perceives its core interests are under threat, and the Iran-Saudi deal is highly unlikely to affect Israel’s perceptions of its core interests. Ultimately, while the Beijing-brokered deal promises to turn down the heat between the Gulf’s two major powers, tensions remain high throughout the region—and the agreement’s full implementation faces significant challenges.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Issue: Geopolitics, U.S. – Gulf Policy
Country: Iran, KSA

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Dr. Kenneth Katzman is a Senior Fellow at The Soufan Center, a Senior Non-Resident Fellow at Gulf International Forum, and Senior Research Adviser at Global Insights Group. His work focuses on geopolitical and regional dynamics in the Middle East—with a focus on Iran—as well as United States strategy. In late 2022, Dr. Katzman retired from his longtime position as a Senior Analyst with the Congressional Research Service (CRS), an arm of the U.S. Congress that provides analysis and advice to members of the U.S. Congress in their legislative and oversight responsibilities. In that post, Dr. Katzman served as a senior Middle East analyst, with special emphasis on Iran, Iran-backed groups operating in the Middle East and South Asia, the Persian Gulf states, Iraq, and Afghanistan. During his more than 30-year tenure at CRS, he provided reports and briefings to Members of Congress and their staffs on U.S. policy on these countries and issues, and provided analysis of related legislative proposals.


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