“We won’t wait for the battle to be in Saudi Arabia. Instead, we will work so that the battle for them is in Iran,” Saudi Arabia’s powerful Crown Prince Mohamed bin Salman declared a few years ago at the height of the tension between the two regional heavyweights.

Ruling out any rapprochement with arch-foe Iran, he framed the rivalry, which has played out via proxy forces in Iraq, Lebanon, Syria, and Yemen, in theological terms, warning that Tehran’s ultimate aim was to wrest control of Islam’s holiest site in Mecca.

But even the best-laid strategies tend to break down at politically critical moments. At some point, diplomacy can better represent national interests and prompt a thawing of strained relationships.

A detent in Iran-Saudi relations now seems to be coming, though the possibility of long-term reconciliation remains to be seen.

A surprise deal between Tehran and Riyadh to restore diplomatic ties is meant to put an end to the rift between the two nations that has deepened since Saudi Arabia broke off diplomatic ties with Iran in 2016.

The agreement, signed by Iranian and Saudi security chiefs at the weekend, came at the end of a week of previously undisclosed Chinese-brokered negotiations in Beijing between the two Middle Eastern rivals.    

Iran and Saudi Arabia, divided by regional disputes and the legacy of a geopolitical rivalry going back a century, have agreed to restore normal diplomatic relations and reopen their embassies within two months.

In a statement, the two countries said that they are committed to a meeting between the ministers of foreign affairs of both countries to implement the agreement, arrange for the return of their ambassadors, and discuss means of enhancing bilateral relations.

The deal has been hailed as a major diplomatic breakthrough. Some analysts opined that it will help settle several regional conflicts, end Yemen’s war and pave the way to make progress in the stalled US-Iran nuclear deal talks.

However, the Iranian-Saudi agreement, though lacking details, has also meant renewed scrutiny of the situation in the region, galvanising efforts to address deep structural problems in the Middle East’s geopolitical and security order.

This order, once dominated by the US and its allies, has been deteriorating since the US-led invasion of Iraq in 2003 while an alternative is still being born in a new multipolar world that is witnessing the eroding of US power and the rise of China and Russia.

Like other Middle Eastern powerhouses, Iran and Saudi Arabia are carefully watching this decline and are aiming to seek a leadership role in the regional order that is emerging from the post-Iraq invasion chaos that will better take into account their views and national interests.

From the ruins of the ongoing Ukraine war, the troubled waters of the Arabian Gulf, and the escalating US-China-Russia competition, and amid various smoldering regional hot spots, this new order is taking shape. Both Iran and Saudi Arabia with their conflicting objectives are trying to place themselves at its centre.

This neighbourhood competition, however, is being overshadowed by a larger rivalry between the major world powers as problems old and new collide and combine to challenge the US-led Middle Eastern order, with China as the main contender.

Both Iran and Saudi Arabia are seeking to build on the shift in the Middle East that has allowed China to rise as the greatest geopolitical challenger of the US and as a key strategic actor in the Gulf.

Prior to the diplomatic breakthrough, both countries showed signs of advancing their ties with China as the Middle East became more turbulent and their discord with the US widened.

Iran and China signed a 25-year cooperation agreement in March 2021 to strengthen their long-standing economic, political, and security ties. The accord was meant to bring Iran into China’s Belt and Road Initiative, a multi-trillion-dollar infrastructure scheme intended to stretch from East Asia to Europe.

The agreement also aimed to significantly expand military cooperation in a range of areas including exercises and the weapons industry and security, deepening China’s foothold in Iran and raising concerns about the US troops in the Gulf.

Saudi Arabia has also boosted its political, economic, and security ties with China. Since 2016, it has sealed dozens of deals with China worth billions of dollars and covering a range of sectors that include green energy, technology, cloud-based services, manufacturing, petrochemicals, pharmaceuticals and others.

More significantly, Saudi Arabia has stepped up its military cooperation with China, which has reportedly helped it in building an arsenal of Chinese-made long-range missiles.

Riyadh has also reportedly sought China’s help in the construction of nuclear plants, including a facility for extracting yellowcake from uranium ore, a considerable shift in Riyadh’s civilian nuclear programme.

Riyadh’s interest in developing its ballistic missiles programme and its pushing forward to obtain nuclear weapons with the help of Beijing has been a further sign of the security dimension in Saudi-Chinese relations.

Iran’s and Saudi Arabia’s separate deals with Beijing, which should have warranted alarms in Riyadh and Tehran morphing into fears that could have pushed the arch-enemies in opposite directions, has in some surprising ways brought Saudi Arabia and Iran together with China.

Though it is still unclear how far the reconciliation between Saudi Arabia and Iran will actually go, the Iranian-Saudi deal remains a tricky test for regional heavyweights and world powers as it marks a fundamental shift in the increasingly competitive Middle Eastern landscape.

In the first hours after the announcement of the agreement, official responses in key Arab capitals were largely supportive of the reconciliation, but some reactions revealed that diverging preferences exist or could emerge, especially from countries which have faced Saudi pressure not to normalise their relations with Iran.

Striking a cautious note, Arab League Secretary-General Ahmed Abul-Gheit said that “the agreement is a step that could signal a new and positive stage in bilateral relationships.”

“It could be useful in achieving a certain degree of regional stability,” the head of the Cairo-based organisation tweeted.    

The deal contains an element sure to make Gulf countries such as the UAE and Bahrain, which have established diplomatic relations with Israel in what were called the “Abraham Accords,” deeply uneasy.

For Israel itself, which had hoped to see normalisation with Saudi Arabia, the move is a major blow to its efforts to bring the Kingdom to such an historic deal.

The shifting dynamics represented by the Chinese-brokered deal also pose a key challenge to the US, which under former president Donald Trump started reducing its military commitments in the Middle East.

Publicly, the Biden administration has tried to shun the deal as irrelevant, but privately White House officials have voiced concerns that the Iranian-Saudi normalisation is a message that its plans to contain the Islamic Republic are no longer feasible.

Yet, while the deal remains important in terms of regional and global geopolitical competition, it also raises serious questions about the judgement of Saudi Arabia’s leaders, particularly about whether it offers too much from Riyadh or a possible path to rein in Tehran’s increasing ambitions.

Shia Persian Iran and Sunni Arab Saudi Arabia share a long history of enmity dating back to the ancient schism in Islam. In modern times, hostility between the two countries separated by the Arabian Gulf have arisen from sectarian and geopolitical considerations.

Saudi Arabia maintained mixed, and sometimes warm, relations with the former Shah of Iran, but ties with Iran soured after the Iranian Revolution in 1979 that brought to power an Islamic regime bent on spreading Shia ideology in the Middle East.

There have been numerous attempts to improve the relationship between the two countries. In 1998, the Islamic Republic and Saudi Arabia signed an economic and investment agreement. Three years later, Riyadh and Tehran agreed to expand their security cooperation.

But Iranian-Saudi relations worsened after the US-led invasion of Iraq in 2003 when pro-Iran Shia groups emerged as Iraq’s new rulers. Relations also worsened over Iran’s nuclear programme and its rising influence in several Arab countries.

More recently their relations took a sharp dive after the execution of Sheikh Nimr Bakr Al-Nimr, an outspoken Saudi Shia cleric. Protesters angered by the execution attacked and burned the Saudi Embassy in Tehran prompting the kingdom to sever relations with Iran.

As a result, there is widespread scepticism about the agreement, particularly the Iranian leadership’s commitment to the terms of the deal. It has sparked fears that it was driven by the perilous logic of managing the Cold-War-style power rivalry between the two countries and not as part of a bid to calm regional tensions or to improve Iranian-Saudi relations.

While Saudi Foreign Minister Faisal bin Farhan has maintained that the agreement “does not mean that we have reached a resolution of all outstanding differences,” a top Saudi writer who is close to the royal family acknowledged that the international powers’ competition for influence in the Middle East had played a major part in reaching the deal.

“Why China? Two reasons. First, it is the only country that has leverage over both Saudi Arabia and Iran. Second, China has vested interests in ending the Saudi-Iranian conflict to protect its interests,” wrote Abdel-Rahman Al-Rashid in the Saudi-owned Asharq Al-Awsat newspaper on Sunday.

* A version of this article appears in print in the 16 March, 2023 edition of Al-Ahram Weekly