On March 10, the world was surprised to hear that rivals Saudi Arabia and Iran had agreed to restore diplomatic ties after seven years of no relations marred by geopolitical competition in the region.

A statement, issued jointly by Saudi Arabia, Iran, and the mediator, China, announced that the states had reached an agreement which includes reopening their embassies and restoring diplomatic relations within two months.

The agreement, reached in Beijing over four days, also includes the activation of security and economic cooperation treaties signed between Iran and Saudi Arabia in 2001 and 1998, respectively. Moreover, emphasis is laid on respect for sovereignty and “non-interference in [states’] internal affairs”.

This move, if followed through, promises to potentially reshape the Middle East security and geopolitical landscape, challenging alliances and perceived animosities, both current and future. Israel is particularly affected, as it has marked Iran as its nemesis and helped make it a pariah in the region—what U.S. President Joe Biden promised to make Saudi Arabia, before visiting the Kingdom to get oil prices lowered.

Detente in the Middle East

This development is particularly significant given the fierce rivalry between Saudi Arabia and Iran, which has escalated into cold war-style proxy wars.

The Arab uprisings started with Tunisia in late 2010 and inflamed populations across the region, leading to revolution in some places and civil war in others. As such, arenas opened up for further and intensified geopolitical competition in the region.

The Middle East in the 2010s was marked by fault lines determined by competing ambitions for influence and ideological differences, as well as sectarian divides. Accordingly, there was a divide between Turkey and Qatar on the one hand, supporting the Islamist wave, and Saudi Arabia, the UAE, Bahrain, and Egypt (the Quartet) on the other, supporting traditional centers of power, such as the military. There was also a fault line between Saudi Arabia and Iran, and followed, to varying degrees, by the rest of the coalition. This can be partly seen as a Sunni-Shia divide in the wake of Iraq’s post-2003 collapse into sectarian violence, although framing it in exclusively those terms boxes in the larger geopolitical competition to a limiting view of sectarian struggle.

Yet, a general trend of reconciliation has begun in the past few years. The 2021 Al-Ula Declaration resolved the diplomatic crisis between the Quartet and Qatar. Moreover, a gradual detente has been taking place between Egypt and Turkey, as well as Turkey and the UAE and Saudi Arabia. This is in addition to the normalization of ties between the UAE, Bahrain, Sudan, and Morocco on one hand and Israel on the other. The Saudi-Iranian declaration can therefore be seen as part of a larger trend of cooling tensions in the region.

What this augers for the Middle East remains to be seen, but such a significant agreement would not have taken place if either party was not committed to “shaking up” the dynamics of regional relations, as AP described it. Especially considering that, over the past several years, the two countries have been involved in several regional conflicts by providing support to different sides, including in the political deadlock of Lebanon and in the civil wars of Syria and Yemen. Accordingly, it seems likely that this move will bring about a paradigm shift which Daniel Kurtzer, former U.S. ambassador to Egypt and Israel, described to the Cairo Review as “nothing short of a potential upheaval in the region”.

Kurtzer explained that Iran, pressured by sanctions, has found “a pathway to further normalization in the region”. Cinzia Bianco, a research fellow at the European Council on Foreign Relations, speaking to Al-Monitor, agrees that the reconciliation could lower tensions in the region, saying that the Saudis adopted this approach because Iran is in a “weakened position,” according to the news outlet.

Sanctions on Iran have certainly significantly hindered it economically, and mass discontent with the government and mandatory hijab laws have placed it in a precarious position internally. Therefore, it does make sense for Iran to seek any potential economic or political benefits through reconciliation. It remains to be seen, however, how this agreement would affect U.S. relations with both Saudi Arabia and Iran.

Superpower Competition in the Region

Among the shocks that came with the agreement between Saudi Arabia and Iran was the fact that it was brokered by China. With the United States historically taking the spot of main foreign influence in the Middle East, this development signals China’s increasing involvement in the region.

China has strong relations with both Iran and Saudi Arabia. AP reports that Saudi Arabia is China’s largest oil supplier, and Iran relies on China for 30 percent of its foreign trade. It is important to note that China has been slowly building ties within the Middle East for decades, mostly through economic agreements, presenting itself as an alternate partner to the United States. This development, while sudden, makes sense in a larger picture of increasing engagement in the region. The move signals increased political and diplomatic involvement, which challenges the traditional narrative of China being mainly an economic superpower. Kurtzer said that “China, previously content with resource extraction, pulled off a diplomatic coup”.

Going hand in hand with China’s increasing involvement is the perception that U.S. interests and engagement in the region are on the decline. However, Kurtzer argues that this perception “is wrong, as significant U.S. interests are at stake, and the United States is not disappearing.” Moreover, it seems that Washington is taking somewhat of a tougher stance vis-a-vis regional players (with the exception of Israel)—from former U.S. President Donald Trump’s policy of maximum pressure on Iran to the current administration’s failure to renegotiate the Joint Comprehensive Plan of Action (JCPOA). In addition, relations between the United States and Saudi Arabia have frayed in recent years, particularly since the murder of journalist Jamal Khashoggi in 2018—even the longstanding oil-for-security alliance is facing a tense period. Kurtzer explained that “the Saudis, a traditional U.S. ally and partner, have demonstrated a significant degree of distrust in the United States as a reliable guarantor of their security”. This may be considered as a challenge to the traditional landscape of superpower influence in the Middle East.

However, there is also a degree of hyperbole in the discourse. While this may be a watershed moment, both for the region and for China, it is also possible that it is a one-off event. Kurtzer believes that while China has some “diplomatic momentum”, it “remains a freeloader in terms of relying on the United States to ensure the security of energy exports from the Gulf” and that “it is highly unlikely that China will try to play a security role in the Gulf”.

These changes come in the backdrop of the Russian invasion of Ukraine, another event which had significant ripple effects on the region. The war has revealed several trends, including the decline of Russia as a superpower, the continued U.S. role as the political and diplomatic powerhouse, and the economic prowess of the West and its sanctions. However, it has also demonstrated the malcontent of Arab leaders with the United States, seen by their abstentions in the UN General Assembly before being pressured to condemn the war, as well some negative media coverage toward the U.S. role in the war. It is therefore not too surprising that such an agreement was brokered by China, especially when considering the nonexistent diplomatic relations between Iran and the United States, in addition to Iran’s support for Russia in the Ukraine War.

Israel, Normalization, and Placing Palestine Back in the Center

Another side which may have lost much through this rapprochement is Israel. Observers agree that Israel has taken a hit given its antagonization of Iran and hope for normalization with Saudi Arabia. Kurtzer said that the Israelis “probably believe that both of those goals have been impacted negatively by this development”. Mairav Zonszein, Senior Analyst on Israel-Palestine at the International Crisis Group, agrees, saying that the government sees it as “bad news for the country and regionally”. She explained that, as far as Israel is concerned, the agreement “weakens the anti-Iran axis and the Abraham Accords and emboldens Iran, instead of further isolating it”, adding that the Israeli strategy regarding Iran that “focuses solely on might has been ineffective” and has contributed to the current situation.

However, normalization between the Israelis and Saudis is not quite off the table just yet. The Times reports that Saudi Arabia is willing to normalize relations with Israel in exchange for “security guarantees from the United States, help with developing a civilian nuclear program, and fewer restrictions on U.S. arms sales”. The fact that the Saudis don’t view both developments—reconciliation with Iran and normalization with Israel—as mutually exclusive may signal support for the general trend of detente in the region; that is, toward healing past wounds.

Nevertheless, there is no doubt that normalization is now more complicated, to say the least. And that is a win for Palestine and the Palestinians, which is an aspect largely neglected by the analysis and media coverage of the Iran-Saudi deal.

Any normalization with Israel before a settlement is reached with the Palestinians undermines their cause, and since Saudi Arabia is seen as the guardian of the Arab Peace Initiative (API)—the official position of the Arab League and a reiteration of the land-for-peace formula—it would completely shatter what hope is left for a shadow of a fair settlement. Now, since normalization seems to be put on hold for the time being—the U.S. is unlikely to accept the aforementioned Saudi conditions—the API, largely considered defunct in the shadow of the Abraham Accords, may be finding its second wind.

Moreover, any cooling of regional tensions benefits the Palestinian cause as it shifts attention back to the harsh reality of life under occupation. Significantly reducing the antagonism and power struggle with Iran frees up much Arab energies that can be dedicated to other causes. This is particularly true in arenas where Iran and Saudi Arabia find themselves on opposing sides, such as in Yemen and Iraq.

Reaching a renegotiated JCPOA agreement would benefit the Palestinian cause and the region even more. Questions remain whether this agreement would aid or harm JCPOA 2.0 negotiations, or not have any effect at all. Enhancing regional cooperation and reducing tensions is certainly no cause for harm, although ‘sticking it’ to the United States through using China’s good offices, though understandable when taking into account Iran’s relations with the United States, may be irritating to U.S. officials. Though neither factor seems strong enough to strongly influence the course of negotiations, only time can tell. Kurtzer believes that “the effort to reach a new JCPOA has hit a brick wall, and the prospects of renewing the accord are extremely dim. There is a need for a ‘Plan B’ but none has yet appeared”.

The restoration of diplomatic ties between Saudi Arabia and Iran has the potential to significantly reshape the Middle East map, although not in the way former U.S. Secretary of State Condoleezza Rice would have liked. There is a great opportunity in this development to ease a multitude of situations and continue what appears to be a general trend of reconciliation in the Middle East. A further implication for this agreement is what it signifies for superpower competition in the region, showing China in a diplomatic rather than economic role in a major way for the first time, disrupting the traditional role of the United States, and furthering the narrative of U.S. disengagement. A deal between Saudi Arabia and Iran complicates Israel’s plans to normalize ties with Saudi Arabia and continue its strategy of isolating Iran, though Palestinians may be equally glad for the delay and for the attention their cause can now receive. While there is potential for major change in each of these arenas, it is currently unclear how far the impacts of this agreement will reach. Observers will be keen to see how this breach of the divide between Saudi Arabia and Iran will ripple across the region.