Understanding the Saudi-Iran Relations

Understanding the Saudi-Iran Relations


  • Saudi Arabia and Iran, two of West Asia’s major powers that have been at odds with each other for decades, agreed to restore diplomatic relations in March of this year in an agreement brokered by China.

Historical Background:

  • The rivalry between the two dates back to pre­revolution Iran when they competed with each other for regional dominance.
  • After the 1979 revolution brought down the Iranian monarchy and turned the country into a Shia theocratic republic, sectarian and ideological issues were added to the mix.
  • In recent times, it had turned into a cold war with both sides supporting their proxies across West Asia.
  • Now, under China’s mediation, they have agreed to start a new beginning.
  • If peace holds, it could have far­reaching implications for regional security, stability and geopolitics.

What are the terms of the agreement?

  • Finer details of the agreement are yet to be unveiled.
  • But officials on both sides say, according to reports, that Iran has agreed to prevent further attacks against Saudi Arabia, especially those from the Houthi controlled parts of Yemen (Iran backs Houthis, a Shia militia in Yemen while the Saudis back the government forces).

  • Saudi Arabia, on its part, agreed to rein in Iran International, a Farsi news channel that is critical of the Iranian regime (which the Iranian intelligence has termed a terrorist organisation).
  • The Foreign Ministers of both countries would meet soon to thrash out the terms of the reconciliation before reopening embassies in each other’s capitals in two months.
  • China is also planning to host a cross­Gulf conference of Iran and the six Gulf monarchies (Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait and Oman) this year to further strengthen peace in the region.

Why did Saudi Arabia reach out to Iran?

  • One of the key drivers of these realignments is the U.S.’s deprioritisation of West Asia.
  • The U.S., the traditional great power in the region, has bigger foreign policy challenges in its hand now such as the Russian war in Ukraine and China’s rise in the Indo­Pacific.
  • Additionally, relations between Saudi Arabia and the U.S. have been rocky in recent years.
  • The U.S. is now one of the top oil producers in the world and is not as dependent on the Gulf Arabs as it used to be during the Cold War.
  • This allowed American Presidents to expedite the U.S.’s deprioritisation of the region.
  • When Saudi oil facilities were attacked in 2019 (for which Iran was widely blamed), the U.S. looked away.
  • This seems to have prompted the Saudis to look for alternative solutions for the Iran problem.
  • The solution they came up with was to reach out to the Iranians.

What led Iran to accept the deal?

  • Iran is going through one of the toughest phases of economic isolation and domestic pressure.
  • Its economy is deteriorating and its currency, the rial, is struggling.
  • Iran wanted Chinese investments and support for the rial
  • According to Iranian media reports, China allowed Tehran to withdraw parts of the $20 billion funds that were frozen with Chinese banks (after the U.S. sanctions).
  • So, while struggling with isolation and sanctions, a deal with Saudi Arabia, under China’s mediation, could open economic lifelines for Iran.
  • And strategically, Iran knows that such a deal could complicate American effort to rally Arab countries and Israel against it.

Syllabus: Prelims + Mains; GS2 – International Relations