Iran and Saudi Arabia Agree To Talk…With China’s Help

but by China. The details are still being worked out, but already the agreement is expected to have wide ranging consequences for the region and to elevate China's standing as a rival to the US in global affairs. Bloomberg corresponds Golnar Motavali, having this deal with Saudi Arabia is all about shoring up legitimacy overseas, and Sam Dagger it seems like there's a lot of goodwill here, but at the

same time, there are a lot of spoilers. Had been reporting on how the deal came together and what each side hopes to gain, and later in the show, Jonathan Fulton for China, it's definitely in their interest to have a more stable golf. They don't want to have to deal with a region that's constantly on the precipice of conflict. He's an authority on the region's relationship with China, and he explains what this agreement means for the shifting balance

of power between East and West. Goldner, how did this deal come together? Saudi and Iran had been talking for some time for about two years, basically since the Biden administration came in and we saw the end of the Trump era for now and the end of the maxim and pressure policy on Iran, and that dialogue had been broken by Iraq and had taken place in the form of talks on a security level and deputy ministerial level

in Baghdad. Now, those talks were frozen and halted around this time last year, and then what we saw last month on much a tenth as you said, was this kind of surprise entry of China into this dialogue between Saudi in Iran, this tentative effort between both countries to cool their relationship, to repair ties, to fix kind of what's been I think about ten years probably of real tension and animosity and quite at sometimes high octane hostility

between the two countries and the deal itself. If you look at the text, there's a lot in there about reviving the trade relationship between the two working on that, fixing that cooperating in the region. We know that Saudi Arabia, with a lot of countries in the Middle East, particularly in the Gulf Corporation Council and more broadly around the Arab world, are very concerned about Iran's footprint in the region,

it's influence in different countries in the Middle East. And we're going to be talking more about China's rule and what this means for the US and Israel in other countries a little bit later on. But sam I wanted to ask you, at the heart of this deal between the two nations, is this agreement to restore diplomatic relations, what does that actually look like. Saudi Arabia is majority

Sunni and Iran is ruled by the Shiah creed. It's majority Shia, and Saudi Arabia does have a Shia minority, and this is actually one of the many long running grievances between the two countries, which even go back to the foundation of the Islamic republican seventy nine. So Saudi Arabia has always accused Iran of staring trouble in the eastern province of Saudi Arabia, where the Shias mainly reside.

So Saudi Arabia had accused this cleric of ties to terrorism and then sentenced him to death, and this sparked protests in Iran. The Saudi embassy ablaze in Tehran. Iranians are furious after our leading Shia cleric was among forty seven men executed in Saudi Arabia on charges of plotting and carrying out terrorist attacks, and a mob attacked the Saudi embassy and this upset Saudi Arabia and its Gulf Arab allies, and that led to the rupture of the

diplomatic relationship. And they'll basically recallage of the ambassador and they're shutting down of the embassies. And obviously Iran reciprocated what you described. Happened in twenty sixteen at seven years ago, and the two countries remained isolated from each other until now. Goldnar. If we fast forward to today, can you explain why

Iran wanted to renew ties. From Iran's point of view, Iran domestically is facing a major crisis of legitimacy, and we've seen over the past couple of months it's on this diplomatic push, traveling hopping from country to country, really trying to shore up support with people that haven't shut

the door on Iran's face. Having this deal with Saudi Arabia is all about shoring up legitimacy overseas, shoring up political legitimacy as a regional power, because it's losing that at home, and that's very deeply tied to the economy right now for Iran. Iran's economy is in dire straits, and this is also all about defending the real the currency, which has hit successive lows against the dollar for the

past year. It's really a major crisis. So Iran can fight internal opposition using brutal force and executions to suppress protests, but it can't really do the same when it comes to a runaway economic crisis. What worries them more is economic turmoil and a type of economic collapse that they cannot control and that is completely out of their hands.

So a lot of this not just outreach with Saldi, although it's a big part of it, but also an effort to build this relationship with Russia, really try to push China to engage more when it comes to trade and economic ties with Iran, going to countries like Armenia. This is all about Iran trying to save itself from an economic crisis and much more recently a major crisis of legitimacy domestically in same on the other side of the equation, way did Sarai Arabia want to renew ties

with Iran right now? The number one thing that Saudi Arabia, or to be more precise, Crown Prince Muhammad that the factor ruler cares about is securing his twenty thirty vision, this multi chillion dollar project to reinvent the kingdom's economy turn it into a major tourism and business hub, and he felt that one way to do it would be to make peace with Israel and have all these guarantees

from the United States. He wasn't able to get those guarantees from the US, so he felt the next best thing at the moment to tap down tensions, at least in the short term, would be to make a deal with Iran that would be guaranteed by the Chinese. I mean here his logic is China being the largest buyer of Iranian crude, they have more leverage over the Iranians to keep them in check. So really that's the logic.

And I would just add quickly that one person told me that the Crown Prince still has this quote unquote visceral hatred from Iran. So let's keep in mind that these two countries our trivals. Goldner Sam talked about Saudi's relationship with Israel. What does this agreement mean for the hostile relationship between Iran in Israel? Yeah, I think, as you mentioned, obviously, Iran and Israel have been enemies, to put it bluntly, for a very long time, since nineteen

seventy nine and the Islamic Revolution. From Iran's point of view, what this deal with Saudi Arabia does in terms of its relationship with Israel is it kind of puts a damper on Israel's recent effort to reach out to countries in the Persian Gulf. So we saw that with obviously the Abraham Accords with the UAE, which was a big deal in late twenty twenty. I'm grateful to Crown Prince Mohammad Benzaid of the United Arab Emirates and to you Foreign Minister Abdalah benzaid I, thank you both for your

wise leadership. If we're working with the United States and Israel to expand the circle of peace, that's of course Israel's Prime Minister net and Yahoo. Iran does not want to see a normalization of relations between Israel and a

country like the UAE. And I think what this deal does is that it kind of puts the breaks on any ideas that anyone may have the read may want to go down the same path quickly, Golmar if he remember, I mean when the deal was announced, right, a lot of Israeli officials came out and said this is a disaster, and they blamed the Prime Minister Benjamin Netanyahoo for really

being responsible for this quote unquote disaster. I mean it was people from the opposition and also even people within his own coalition that said, you know, you blew it. We could have had a deal with Saudi Arabia, but

look now they're going into the arms of Iran. No. I was just going to say, I think from the Saudi point of view, it makes a lot of sense from a security perspective, Goner, When you look ahead how significant is this arrangement now between Saudi and Iran when it comes to relationships in the region and the end. It's a very good question. On the one hand, I think this is a really big deal. This can be

hugely significant. Again from the point of view of a reporter who's been covering the domestic turmoil and the protests in Iran for the past six months, looking at it from that prism, it was a kind of real sort of stroke of intelligence by the Iranian security establishment to get this deal while it was facing this massive, massive, major domestic crisis. On the other hand, when it comes to economics and trade, there are huge question marks over

what Saudi can actually do. Iran is still under US sanctions, Saudi in the US are still allies, you know, and Saudi Arabia is going to be very restrict it in what it can do economically and trade wise with Iran with those sanctions, So that for me is a big question mark. And again the other big question mark is what is it going to do to Iron's footprint on the region in general? Is Iran going to scale back elsewhere in the region or not? Sam, do you think

both countries will follow through and this agreement. They've spoken on the phone twice, the foreign ministers, and they're supposed to meet soon to discuss implementation of this agreement. And Iranians have spoken about an invitation from the King of Saudi Arabia to the President Raisi to visit Saudi Arabia. So it seems like there's a lot of good will here, but at the same time, there are a lot of spoilers. These two countries are facing one another on many fronts.

I mean Yemen being one, Syria is another place in Lebanon, Saudi Arabia backing certain groups and Iran backing other groups. In Iraq. Obviously, the Saudis have great interest in investing in Iraq and getting closer to Iraq, but Iran obviously wants Iraq to remain within its fear of influence or part of its orbit of influence. So you could see a number of places where things could go wrong, and Saudi Arabia and Iran could quickly blame one another, and

you could see this whole thing unravel. Sam Golnar, thanks for speaking with me today. Thank you, it's a pleasure. Thanks with when we come back. China's key role in bringing Saudi and Iran back together. Now, let's get a closer look at the other important player in this deal, China. Jonathan Fulton is a nonresident Senior Fellow for Atlantic Council's Middle East Programs, and he's a specialist in China Middle East affairs. Jonathan, one of the surprises of this agreement

was China's role in brokering it. Can you tell us how that came about and why it matters so much? How it came about is going to be a really interesting history at some point. Right now, everybody scrambling to, you know, pull all the threads together and try to figure out what the whole story is. Just a little bit of background. So Si Jumping went to read in December.

It was a very well covered event. While he was there, there was talk about, you know, China's five point plan for Middle East piece which was announced and I believe March twenty twenty one, I think that was probably the seats of it from the Saudis side. I think that the Saudi government was probably asking Chinese government to get

involved in this. I think that's the case because if you look at what happened during that same summit, China made a couple of statements about Gulf regional affairs that really didn't sit well with Tehran. One was about their take on how Iran's nuclear program was destables for the region. The other thing was voicing support for the UAE's position on this disputed islands that Iran has claimed since taking them in the day the UAE became an independent back

in seventy one. The fact that China made those two statements seemed to really anchor Tehran. They called in the Chinese ambassador and gave them addressing down and there's a lot of really strong statements. So I'm pretty certain that Iran wasn't involved at this point. This was something that just came up pretty recently. So what it looks like to me, and again we're still waiting to find out what the whole story is, but it seems like this

was a regional approach to a regional problem. And why it's interesting is because when they got basically to the point where it's time to dot the eyes and cross the t's, instead of bringing in the US, which the Saudis normally would have done, they said, let's go to Beijing and do this in China. Now, I believe the Saudis were keeping the Americans in the loop throughout the process. But it really does into signal, you know, not just to China but to the US that, look, the region

has a lot of moving parts. The US couldn't broker this deal because they don't have the relationship with Iran that you would need. And you know, the US State Department spokesperson has made this point, and every US official i think has made the point over and over again. Good on China for doing this. We certainly couldn't. But then you see, you know, the Saudi's have reached out

to Russia to help facilitate this rapprochement with Syria. So what you're seeing is a region where there's a lot of regional issues, which everybody's very well aware of, and typically the default has been to rely on extra regional powers, usually the US, to play a leading role. And now they're saying, look, we'll deal with this stuff on our own, but let's bring in these extra regional powers like Russia, like China to help facilitate it, so they've got some

skin in the game. And also just to show that, you know, the region is changing and it's not just a US Lake anymore. What does China get out of this? They've traditionally not involved themselves in this way, and now Ji Jinping seems to be doing it quite a bit. Yeah, he certainly does. He's making making things exciting for those of us who focus on Chinese foreign policy. What is trying to get out of a more stable golf is what I think most of us get out of it.

You know, China gets between forty and fifty percent of its crude oil imports from the Gulf that they just signed this twenty seven year deal with Qatar for a liquefied natural gas imports. Both of this is very important for China's economic growth, for its own energy security beyond the energy which is obvious, I think to most of us when we think about the Gulf, regional countries have been engaged in these economic diversification projects for quite a while.

You hear about Saudi Vision twenty thirty year, New Kuwait twenty thirty five. All of these vision programs are about getting beyond a single resource economy. How do you give past this energy dependent economy and build something more long term, And that's required a lot of foreign direct investment. It's involved a lot of infrastructure construction. It's involved a lot of other countries companies coming in here and helping them

develop this stuff. And of course, if you look at China's Belton Road initiative, this stuff lines up very very neatly. There's a synergy between what China has been doing internationally what golf countries need. They also it's an important region in global Islam, of course, and China's got a very big Muslim population, so working closely with the country like Saudi can help them when they're dealing with certain domestic pressures with their Muslim populations. So the relations here are

pretty deep. So for China, it's definitely in their interest to have a more stable golf They don't want to have to deal with a region that's constantly on the precipice of conflict when somebody attacks out I Ramco. In September twenty nineteen, China ended up spending about ninety seven million dollars a day extra for the same amount of oil. That's around the time that the US was applying maximum pressure on Iran, putting deeper sanctions on Iran to change

its economic behavior. Also, America had pulled out of the nuclear deal with Iran. That was something that Beijing had been involved in the negotiations of to a degree that most folks don't really recognize, But they were applying a lot of their political leverage in Iran in the lead

up to that project or that deal. Rather, so, I think China looked at the region as quite important to them, and they looked at America's role as something that didn't necessarily serve Chinese interests in the way it typically had in the past, And I think there became this new logic of we have to play a bigger role in securing our interests in this region. We certainly can depend on the US, our chief competitor, especially at a time

when the trade war is in full force. In the relationship between China the US has just reached what at the time looked like it's lowest point. Certainly since then it's gotten lower. How much do you think that calculation from Beijing was Jijmping wanting to show that China is a viable alternative to the US, that the East is a viable alternative to the West when it comes to this sort of diplomacy. Absolutely, that's such an important point,

and it's something that we really have to understand. And I believe April of last year they announced the Global Security Initiative, and this is China saying, look, we have maybe not all the answers, but we have some answers to contribute to global security. That global is an important point. They're saying that the way that the West has handled global security initiatives has largely focused on the military or traditional security approach. China says that their approach is more

focused on development issues. They think they've got something to help the world with, especially the global South, especially countries in Africa and the Middle East that have been on the outside of a lot of the development that we've seen in over the past few decades. Given all of what you have just said, how does this complicate the situation in Israel, especially between Israel and the Palestinians very

much so. Now It was interesting to me, i live in Abildabby, watching how the region has been changing over the past month or so. Five days before this series of meetings between China, the Saudi's, and the Rhunians was announced, the Wall Street Journal broke a story that Saudi was willing to consider joining the Abraham Accords and here's the price tag. They wanted certain concessions, especially from the US, especially from Israel, if they're going to do this thing.

That was very, very difficult for them, And it was interesting to me because obviously, for Prime Minister not in Yahoo, this would have been a tremendous feather in his cap to have the biggest, most consequential Arab state that hadn't yet established diplomatic relations with Israel. To have the Saudis come in would have made this all worth while, and it would have been hard for Saudi Arabia to do.

I don't think it's done yet, but it's something that there's tremendous diplomatic pressure in a lot of countries in the region to not do this. And the Saudis have always said that support for Palestine is one of the key pillars of their regional policy. They don't want to undermine the Palestinians. So it looked like when the Saudis were saying we're warming up to this idea of establishing relations with Israel, that seemed to be something that would

have hardened the regional security atmosphere. This would have been creating an even stronger coalition of Arab countries working with Israel balancing against Iran. And while that would have probably given extra way to those countries, it also wouldn't have done anything to lower the temperatures in the region, because, if anything, it would have gotten even more hostile I think towards Iran, which would have forced Iran to behave aggressively.

In turn. It's interesting that, you know, five days later the saudiast did something completely different and said we're going to try to work with Iran. And why this could be caused for optimism in the region is when you look at a lot of the pressures in the Middle East, the warren Yemen. You know, like the Saudis have been wanting to solve this for a while. You can't solve it by just talking to the yem and he's you have to bring in Iran. A lot of the really

difficult issues that the Saudis were facing. Tehran offers a path to alleviating some of those pressures. So it seemed like a pretty smart move to me. And again, I don't think this means that the door to the Saudi

entering the abraham Ac court. I don't think that door is closed yet, but it certainly got a lot more complicated, and the fact that the Israeli domestic situation has gotten so complex in recent weeks, I think that makes it a lot harder for regional actors regional Arab countries to say, yeah, we're going to sign a deal with Israel right now, because I think they look at the situation in Israel and think it's not looking any better for the Palestinians right now, So why would we jump in at this

particular moment? More with Jonathan Fulton after the break. Yet another relationship that this agreement seems to complicate is the very fraught relationship between the US and Saudi Arabia. Yeah, you know, we could just sit here and name all the countries for the rest of this episode because it complicates everything. But yeah, it certainly does with the US Saudi relationship. While President Biden was campaigning, he made it pretty clearer that he had some very strong thoughts about

the Saudi government. He said he would turn them into a pariah state, and I would make it very clear we were not going to in fact sell more weapons to them. We were going to in fact make them pay the price and make them, in fact the pariah that they are and also the US government under President Biden put a big focus on democracy promotion as part of their foreign policy. As somebody's watching from outside, I think that looked like, how do we consolidate a block

of countries that feel threatened by China? Western liberal democracies that were threatened by China. During the Trump administration, when the US wasn't acting as a leader in this front, you could see Australia, Canada, the UK, Europe all were quite fragmented in their approach to China at the time, and I thought that this democracy promotion was the way to say, look, we've got this something in common with

all these countries. Let's create a block of countries with similar concerns and we can create a united front against China. I don't think that recognized obviously the allies and partners the US has that aren't democratic, And in the Gulf in particular, that wasn't taken very lightly. There's always a concern in the Middle East that the US is leaving, so for the Saudis, where the central pillar of their foreign and security policy since the mid nineteen forties has

been cooperation with the US. And then to think, okay, the US is consistent in his foreign policy towards the region. From one administration to the next. It seems to see saw you get kind of a general bipartisan insensus that the Saudi government isn't much loved by the Democrats or the Republicans outside of the Trump family. I think the Saudi's probably looked at the US and thought, you know, hey, we've been an important partner to you for a long time.

Why would you forget all that over some political problems. Do you think that behind closed doors, the US does think that this is to their advantage. I think they probably do with the proviso that, no doubt, they're a little worried about what it means long term. I don't

think anybody's being disingenuous. So when they say that this is something that contributes to regional security, you can find any number of American leaders, presidents or senators or whatever saying over decades, we would like to see China playing a more robust role in regional issues or global issues. You know, China's certainly benefited from international order that's allowed

or facilitated rather their dramatic growth and transformation. It's time for you to start doing more to pay forward a bit. So I think the US government probably does see this as something an example of China contributing a public good that really only China could. But at the same time, I think everybody's a little leary about does China really believe that it has the answers to all these regional problems, because it's not something obviously one country can't do it.

America hasn't been able to do it despite all of the resources and talent and relationships they have, So as a relative newcomer, it would be very presumptuous to assume that China can step in and say, oh, yeah, we'll fix this. What are you looking for in the months and years ahead. So one of the things I'm watching, obviously is that within the region, China's presence has been growing, its interests have been growing. It's got a lot of assets, it's got a lot of expatriate citizens, it does a

lot of business. And the expectation has always been, given this depth of Chinese engagement in the region, is it going to step up its presence beyond the economic, beyond the political, and start contributing to regional security. That is complex because if China were to do this. You know, you see a lot of other countries that have interested in the Middle East, like the Europeans, the UK, India, Japan, Korea.

Those are all US allies or partners. When they contribute to regional security, they tend to do so in a manner that aligns with American interests. The fact that China is not a US ally or a partner, but its chief rival, means that if China were to come into the region and start contributing to regional security, it probably would do so in a way that wouldn't necessarily align with America's interests. But then, just looking back at an even bigger scale, a lot of countries across the end

of Pacific have deep interests here as well. Most of them work with America very closely on security issues, on political issues, and a lot of them have trouble with China, whether this is India or Japan or any number of countries, and a lot of them have deep interest here as well, in the Gulf or in the Middle East. Jonathan Fulton, thanks for talking with me today, Thanks for having me, Thanks for listening to us here at the Big Take.

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