The Saudi-Iran deal — 10 things you need to know

10 March 2023
Saudi, China, and Iran representatives

Signatories to the Saudi-Iran deal (l-r) Musaad bin Mohammed Al-Aiban (Saudi Arabia), Wang Yi (China), Ali Shamkhani (Iran) / supplied

Yesterday, an overwhelming majority of Democrats and Republicans in the US House of Representatives joined forces to call for regime change in Iran.

Today, China, Saudi Arabia, and Iran issued a joint communique announcing normalising of diplomatic relations between the Saudis and the Iranians — 7 years after breaking off ties in the last year of the Obama presidency.

The significance of this cannot be underestimated. I'll break it down:

  1. The two territories have been at odds for centuries due to differences in religious beliefs which in turn informed the politics of the two nation states today. Saudi Arabia follows Sunni Islam while Iran follows Shia Islam. This conflict dates back to the death of the prophet of Islam in June 632. 
  2. The normalisation of ties will have a domino effect, leading to improved relations between other countries in the region that have been divided along sectarian lines.
  3. Saudi Arabia and Iran have been involved in proxy conflicts in various countries, including Yemen and SyriaThe normalisation of ties offers the first real chance for peace in Syria and Yemen.
  4. This move will probably trigger cooperation and collaboration in the Gulf Cooperation Council (GCC), This will have a stabilising effect on oil prices, as both countries are major oil producers, and any disruption in their production always has a significant impact on global markets.
  5. OPEC will be strengthened as both Saudi Arabia and Iran are members of the organization and have at times been at odds over production levels and pricing.This in turn benefits major oil producers Russia and Venezuela who, like Iran, are affected by US unilateral economic sanctions.
  6. The move will strengthen Iran's hand in the ongoing negotiations over Iran's nuclear program. Saudi Arabia has been a vocal opponent of the Iran nuclear deal and has expressed concern about Iran's nuclear ambitions.
  7. Saudi Arabia and Iran have both invested heavily in military capabilities in recent years effectively driving a regional arms race. A reduction in hostilities between the two will refocus that funding towards defensive weaponry. This is a setback for the US and the UK who are the largest and second largest exporters of arms to the Saudis respectively. Just last year, the US approved a massive sale of arms to the Saudis specifically to combat Iran.
  8. Both Saudi Arabia and Iran have been victims of attacks from hostile extremist groups in the region. Cooperation between the two will reduce such incidents.
  9. Iran has recently discovered what is believed to be the world's second largest reserves of lithium. This is a godsend to China which is the world's biggest refiner of lithium as well as the world's largest electrical vehicle market. Access to Iran's lithium will turbocharge the Saudi Green Initiative.
  10. Finally, the normalisation of ties has massive implications for the global balance of power, as this opens the door to both countries joining BRICS. This, in turn, will accelerate the trend towards de-dollarisation.

This is a monumental setback for the Biden administration by any measure. It seems that Barack Obama was prescient in his warning about Joe Biden years ago: “Don’t underestimate Joe’s ability to f*ck things up.”

It's also a diplomatic coup for Xi Jinping who, just hours prior to releasing the statement, was reelected president of China, unopposed, for an unprecedented third term.

The world changed today. Stay focused.

Full text of the trilateral statement

In response to the noble initiative of His Excellency President Xi Jinping, President of the People’s Republic of China, of China’s support for developing good neighbourly relations between the Kingdom of Saudi Arabia and the Islamic Republic of Iran;

And based on the agreement between His Excellency President Xi Jinping and the leaderships in the Kingdom of Saudi Arabia, and the Islamic Republic of Iran, whereby the People’s Republic of China would host and sponsor talks between the Kingdom of Saudi Arabia and the Islamic Republic of Iran;

Proceeding from their shared desire to resolve the disagreements between them through dialogue and diplomacy, and in light of their brotherly ties;

Adhering to the principles and objectives of Charters of the United Nations and the Organisation of Islamic Co-operation (OIC), and International conventions and norms;

The delegations from the two countries held talks during the period 6-10 March 2023 in Beijing — the delegation of the Kingdom of Saudi Arabia headed by His Excellency Dr Musaad bin Mohammed Al-Aiban, Minister of State, Member of the Council of Ministers, and National Security Adviser, and the delegation of the Islamic Republic of Iran headed by His Excellency Admiral Ali Shamkhani, Secretary of the Supreme National Security Council of the Islamic Republic of Iran.

The Saudi and Iranian sides expressed their appreciation and gratitude to the Republic of Iraq and the Sultanate of Oman for hosting rounds of dialogue that took place between both sides during the years 2021-2022. The two sides also expressed their appreciation and gratitude to the leadership and government of the People’s Republic of China for hosting and sponsoring the talks, and the efforts it placed towards its success.

The three countries announce that an agreement has been reached between the Kingdom of Saudi Arabia and the Islamic Republic of Iran, that includes an agreement to resume diplomatic relations between them and reopen their embassies and missions within a period not exceeding two months, and the agreement includes their affirmation of the respect for the sovereignty of states and the non-interference in internal affairs of states. They also agreed that the ministers of foreign affairs of both countries shall meet to implement this, arrange for the return of their ambassadors, and discuss means of enhancing bilateral relations.

They also agreed to implement the Security Co-operation Agreement between them, which was signed on 22/1/1422 (H), corresponding to 17/4/2001, and the General Agreement for Co-operation in the Fields of Economy, Trade, Investment, Technology, Science, Culture, Sports, and Youth, which was signed on 2/2/1419 (H), corresponding to 27/5/1998.

The three countries expressed their keenness to exert all efforts towards enhancing regional and international peace and security.

Issued in Beijing on 10 March, 2023.

For the Islamic Republic of Iran: Ali Shamkhani

For the Kingdom of Saudi Arabia: Musaad bin Mohammed Al-Aiban, Minister of State, Member of the Council of Ministers, and National Security Adviser

For the People’s Republic of China: Wang Yi, Member of the Political Bureau of the Communist Party of China (CPC) Central Committee and Director of the Foreign Affairs Commission of the CPC Central Committee.

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