The shoots of stability: What the Saudi-Iran deal means for the Middle East and Europe

Saudi Arabia and Iran have agreed to begin the process of normalising their relations. Europeans should consider how to help entrench the stabilising gains of the agreement – even as they navigate difficulties with Iran

(230310) — BEIJING, March 10, 2023 (Xinhua) — Wang Yi, a member of the Political Bureau of the Communist Party of China (CPC) Central Committee and director of the Office of the Foreign Affairs Commission of the CPC Central Committee, presides over the closing meeting of the talks between a Saudi delegation and an Iranian delegation in Beijing, capital of China, March 10, 2023. (Xinhua/Luo Xiaoguang)
Wang Yi, a member of the Political Bureau of the Communist Party of China (CPC), presides over the closing meeting of the talks between a Saudi delegation and an Iranian delegation in Beijing
Image by picture alliance / Xinhua News Agency | Luo Xiaoguang

After three years of back-channel diplomacy, Saudi Arabia and Iran have formally agreed to work towards restoring diplomatic relations that were cut in 2016. Many Western officials and analysts were surprised by the announcement, and the fact that China pushed it across the line. Others in Europe and, especially, the United States have expressed outright alarm over both Beijing’s role and the danger that the Iranian government could use restored ties with Saudi Arabia to bypass intensifying Western pressure related to its nuclear program, its repressive crackdown on domestic protests, and its support for Russia in Ukraine.

But, although the deal faces significant challenges, it offers the prospect of much needed calm in the Middle East. This will first and foremost benefit the people of the region. It also brings advantages for Western countries and China, which – despite wider global competition – have a shared interest in ensuring the region’s stability. Europeans now need to consider how they can help entrench the stabilising gains of the agreement, even as they navigate ongoing difficulties with Iran.

What the deal means

For much of the past decade, the Middle East has suffered the destabilising consequences of the Saudi-Iranian rivalry – which played out to deadly effect in Yemen and Syria. Moreover, attacks against Emirati oil tankers and Saudi energy infrastructures in 2019 and 2020, allegedly conducted with Iranian backing, contributed to the deterioration of the world’s energy security and the safety of maritime routes crucial to global connectivity.

The deal suggests that the two sides have made some progress in addressing critical areas of dispute. Saudi Arabia has long preconditioned restored diplomatic relations on an Iranian commitment to de-escalatory steps in Yemen, including ending cross-border attacks into the kingdom. The restoration of ties could be a prelude to an announcement that the regional dimension of the Yemen conflict has ended, allowing Riyadh to formally withdraw.

But, given the deep distrust and geopolitical opposition between the two states, there is a long way to go from this agreement to meaningful stability in the Middle East. Saudi Arabia in particular likely views the deal more as a hedging bet to protect itself against Iranian attacks than as a true strategic realignment. Indeed, the initial renewal of dialogue between Riyadh and Tehran occurred in direct response to the United States’ unwillingness to retaliate against Iran for missile strikes into Saudi Arabia in 2019, when Saudi leaders concluded they could no longer rely on the US for security protection.

Iran has long hinted that it would target Gulf monarchies if Israel or the US attacked its nuclear facilities, which is becoming increasingly likely as nuclear negotiations falter. Saudi Arabia – like its neighbour the United Arab Emirates (UAE) – is using outreach to Tehran to avert this outcome. Riyadh has also been exploring enhanced ties with Israel in pursuit of a regional anti-Iran front. But, while Israel favours a confrontation stance, the UAE and now Saudi Arabia view engagement as a necessary element of a viable containment strategy. This reflects Saudi Arabia’s broader embrace of extreme hedging and strategic ambiguity as it navigates between Russia and Europe, China and the US, and Israel and Iran.

Iran’s leaders, for their part, have three main motivations for normalising relations. Firstly, Tehran wants Riyadh to withdraw its support for Iran’s exiled opposition. Iranian leaders have publicly accused Riyadh of fuelling recent protests in Iran, including through its support for opposition television channels widely viewed inside Iran. The regime likely hopes that the stipulation in the deal that the countries will not meddle in each other’s internal affairs will contribute to weakening this opposition.

It remains to be seen how far Iran can use Saudi Arabia in its effort to offset sanctions – given that Riyadh is still pushing Europe and the US to apply ever more pressure on Tehran

Secondly, Iran aims to thwart growing Western pressure by diversifying its options. Tehran has already established or restored ties with other Gulf monarchies; Saudi Arabia was the key remaining holdout. But it remains to be seen how far Iran can use Saudi Arabia in its effort to offset sanctions – given that Riyadh is still pushing Europe and the US to apply ever more pressure on Tehran to force concessions on regional issues and those related to weapons and nuclear enrichment. For Riyadh, this pressure remains an important part of its outreach, highlighting the tension underlying the agreement.

Finally, Tehran wants to neutralise possible Israeli cooperation with Arab states to launch military attacks on Iran. The Saudi-Iran deal comes against the backdrop of reports that the Netanyahu government plans to strike Iranian nuclear facilities. This would risk collapsing the dialogue process. Even with this new agreement Iran could retaliate by striking energy facilities and waterways linked to the Gulf monarchies. These regional dynamics are at the heart of this breakthrough. But the agreement has been overshadowed in some Western quarters by China’s role as its facilitator.

China’s role in the deal

The deal is indicative of China’s increased engagement with geopolitical challenges in the Middle East. Chinese leaders know (like their Western counterparts) that instability threatens important interests, notably in the energy sphere. Riyadh, in turn, sees Beijing as an increasingly credible partner in face of US disengagement, but also as the only actor with real leverage over Iran. It now expects China to be the guarantor of this deal – no longer just an economic free-rider.

China’s role in facilitating this agreement will sting in Washington. This was an intended outcome for Saudi leaders, who hope that the threat of growing Chinese influence will result in upgraded US security guarantees. More broadly, it points to the shifting landscape in the Middle East, which has been marked by increasing multipolarity for some time now.

But concern about China’s role is something of a red herring. Beijing will struggle just as much as the US and Europe to shape behaviour in the Middle East to its liking. The focus on China also neglects the fact that the deal comes after three years of back-channel talks facilitated by Iraq and Oman – but also France, given its role as co-convener of the Baghdad Conference for Cooperation and Partnership, which brought regional states, including both Saudi Arabia and Iran, into new dialogue. Moreover, the agreement could highlight Beijing’s willingness to play a more active role in trying to stabilise a key global theatre. This upholds the prospect of some international cooperation behind shared interests in face of a broader retreat into zero-sum global competition.

How Europeans can react

European leaders should emphatically support the prospect of stabilising the Middle East in line with core European interests.

The deal opens doors for Europe to enhance its own regional influence in support of this goal. Europeans will not be decisive players in shaping a political and security agenda in the Middle East, but they can re-energise ideas to entrench the deal’s gains and cement regional cooperation. They could, for example, revitalise their Gulf maritime security mission, “EMASoH”, conceived from the start as an inclusive mission involving all regional actors to de-conflict the maritime space.

Renewable energy and water scarcity are also promising platforms, given existing dialogue between regional actors on these issues and upcoming events such as COP28 in the UAE or the Middle East and North Africa Climate Week in Saudi Arabia. These issues reflect acute challenges facing states in the region and are areas where Europeans have a clear advantage compared with other external actors. The European Union could deploy instruments such as its Global Gateway initiative and the European Green Deal to enhance cooperation.

Importantly, this will require careful balancing between competing interests regarding Iran. The European desire to support a stabilisation process in the Middle East risks being undermined by, or undermining, its intention to extract concessions from Tehran on the nuclear track. Western actors will need to tread carefully, balancing coercive pressure such as ongoing sanctions with a willingness to provide regional states space to widen their regional engagement. Ultimately, this challenge underlines the imperative to chart a diplomatic rather than military course out of the nuclear crisis. Riyadh and Tehran are still committed to beefing up their respective deterrence capabilities. But they have chosen to respond to rising tensions – especially between Israel and Iran – by turning towards diplomacy. This is something that Europeans have long advocated and now need to support.

The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.


Director, Middle East and North Africa programme
Deputy Director, Middle East and North Africa programme
Senior Policy Fellow

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