When Saudi Arabia and Iran buried the hatchet in Beijing last week, it was a game-changing moment both for a Middle East shaped by their decades-old rivalry, and for China’s growing influence in the oil-rich region.
The announcement was surprising yet expected. The two regional powerhouses have been in talks to re-establish diplomatic relations for nearly two years. At times, negotiators seemed to drag their feet, the deep distrust between the two countries appearing immovable.
Iran’s talks with Saudi Arabia were unfolding at the same time as negotiations between Iran and the United States to revive the 2016 nuclear deal were faltering. The outcomes of both sets of Iran talks seemed interlinked – Riyadh and Washington have long walked in lockstep on foreign policy.
But a shift in regional alliances is afoot. Saudi Arabia’s relationship with the US has become strained in recent years, while China’s standing has risen. Unlike Washington, Beijing has shown an ability to transcend the many rivalries that crisscross the Middle East. China has forged good diplomatic relations with countries across the region, driven by strengthening economic ties, without the Western lectures on human rights.
Meanwhile, President Xi Jinping has called for China to play a bigger role in managing global affairs after Beijing scored a diplomatic coup as the host of talks that produced an agreement by Saudi Arabia and Iran to reopen diplomatic relations.
Xi gave no details of the ruling Communist Party’s plans in a speech to China’s ceremonial legislature. But Beijing has been increasingly assertive since he took power in 2012 and called for changes in the International Monetary Fund and other entities it says fail to reflect the desires of developing countries.
China should “actively participate in the reform and construction of the global governance system” and promote “global security initiatives,” said Xi, the country’s most powerful leader in decades. That will add “positive energy to world peace and development,” Xi said.
Last week, Xi was named to another term in the ceremonial presidency after breaking with tradition in October and awarding himself a third-five year term as general secretary of the ruling party, putting himself on track to become leader for life.
The National People’s Congress on March 12th cemented Xi’s dominance by endorsing the appointment of his loyalists as premier and other government leaders in a once-a-decade change. Xi has sidelined potential rivals and loaded the top ranks of the ruling party with his supporters.
The new premier, Li Qiang, tried Monday to reassure entrepreneurs but gave no details of possible plans to improve conditions after Xi’s government spent the past decade building up state companies that control banking, energy, steel, telecoms and other industries.
Li’s comments echoed promises by other Chinese leaders over the past six months to support entrepreneurs who generate jobs and wealth. They have vowed to simplify regulations and taxes but have given no indication they plan to rein in state companies that entrepreneurs complain drain away their profits.
The ruling party will “treat enterprises of all types of ownership equally” and “support the development and growth of private enterprises,” Li said. “Our leading cadres at all levels must sincerely care about and serve private enterprises,” he said.
Chinese officials earlier indicated anti-monopoly and data security crackdowns that knocked tens of billions of dollars off the stock market value of e-commerce giant Alibaba Group and other tech companies were ending. But entrepreneurs were rattled anew in February when a star banker who played a leading role in tech deals disappeared. Bao Fan’s company said he was “cooperating in an investigation” but gave no details.
Li said Beijing will make a priority of job creation as it tries to revive economic growth that sank to 3% last year, the second-lowest level in decades. This year’s official growth target is “around 5%.”
The premier expressed confidence China can cope as its workforce shrinks. The number of potential workers age 15 to 59 has fallen by more than 5% from its 2011 peak, an unusually abrupt decline for a middle-income country.
Li said that while China is losing its “demographic dividend” of young workers, better education means it is gaining a “talent dividend.” He said some 15 million people still enter the workforce every year. “Abundant human resources is still China’s outstanding advantage,” he said.
Abroad, Beijing also has built on China’s growing heft as the second-largest economy to promote trade and construction initiatives that Washington, Tokyo, Moscow and New Delhi worry will expand its strategic influence at their expanse.
Those include the multibillion-dollar Belt and Road Initiative to construct ports, railways and other trade-related infrastructure across an arc of countries from the South Pacific through Asia to Africa and Europe. China also is promoting trade and security initiatives.
A “Global Security Initiative” issued in February said China is “ready to conduct bilateral and multilateral security cooperation with all countries.” It offered to help African countries resolve disputes and to set up a “new security framework in the Middle East.”
Also last month, Beijing called for a cease-fire in Russia’s war against Ukraine. Ukrainian President Volodymyr Zelenskyy welcomed Chinese involvement but said success would require action in addition to words. Beijing has refused to criticize President Vladimir Putin’s attack on Ukraine and has accused Western governments of provoking the invasion.
The agreement between Iran and Saudi Arabia could herald the end of a blood-drenched era in the Middle East. Riyadh and Tehran have been at ideological and military loggerheads since Iran’s Islamic Revolution installed an anti-Western, Shia theocracy in 1979.
Those tensions began to escalate into a region-wide proxy war after the 2003 US invasion of Iraq spiraled into civil conflict, with both Iran and Saudi Arabia vying for influence in the petrol-rich Arab country. Armed conflict that pitted Saudi-backed militants against Iran-backed armed groups washed over much of the region in the decade and a half that followed.
In Yemen, a Saudi-led coalition military campaign to quash Iranian-backed rebels triggered one of the world’s worst humanitarian crises. In Syria, Iran supported President Bashar al-Assad as he brutalized his own people, only to find his forces facing off with rebels backed by Saudi Arabia and other Gulf countries. In Lebanon too, Iran and Saudi Arabia have backed different factions, contributing to a two-decade-long political crisis that has exacted a huge economic and security toll on the tiny eastern Mediterranean country.
Diplomatic relations were officially severed in 2016 when Saudi Arabia executed prominent Shia Saudi cleric Nimr al-Nimr, leading rioters in Tehran to torch the Saudi embassy.
But a slew of economic problems triggered by the pandemic and costly wars may have eroded the appetite for conflict, and Saudi and Iranian officials say they are eager to turn the page on that dark chapter.
The détente appears to go far beyond the resumption of diplomatic relations. Saudi and Iranian officials say they will also work to reimplement a decades-old security cooperation pact and revive an even older agreement on technology, and trade.
It’s a rare piece of good news for a region still reeling from their rivalry. How that plays out – and whether it can undo the havoc wreaked by the rivalry – remains to be seen.
But analysts say that China’s growing leverage in the region helped hedge both countries’ bets, changing a now-outdated political calculus that once made Western capitals the most likely venue for watershed regional accords.
“China is now the godfather of this agreement and given China’s strategic importance to Iran, that holds tremendous weight,” said Ali Shihabi, a Saudi analyst familiar with the Saudi leadership’s thinking.