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Iranian Foreign Minister Hossein Amir-Abdollahian, Saudi Arabia's Foreign Minister Prince Faisal bin Farhan Al Saud and Chinese Foreign Minister Qin Gang during their meeting in Beijing, China, April 6, 2023. Image Credit: REUTERS

TEHRAN: Iran’s resumption of diplomatic ties with long-time rival Saudi Arabia has raised the Islamic republic’s hopes for improved security, economic and trade cooperation with its neighbours and within the Gulf.

Riyadh and Tehran cut top-level engagement in 2016, but their foreign ministers on Thursday signed the Beijing Agreement in China’s capital, after senior security officials from both Gulf powers concluded its terms last month.

Longstanding regional dynamics now look set to be reshaped.

Defusing regional tensions

Promoting regional harmony is a declared objective of the China-brokered deal, which emphasised the importance of boosting bilateral cooperation to ensure “security, stability and prosperity in the region”, according to the joint statement released after the Beijing meeting.

Hopes have been raised for a negotiated resolution to Yemen’s long-running conflict, where Saudi Arabia has led a military coalition supporting the internationally recognised government since 2015 and Iran-backed Houthi militia control swathes of the country’s west.

The Yemen conflict has killed hundreds of thousands of people directly or indirectly, and left millions on the brink of famine, according to the United Nations which calls it the world’s worst humanitarian crisis.

Tehran and Riyadh know that “for seven years, this spirit of confrontation has caused irreparable losses to the Muslim world, to the region as well as to their two nations”, said Iranian analyst Heshmatollah Falahatpisheh, a former head of parliament’s national security committee.

More cooperation 

Resumed Iran-Saudi ties give Tehran hopes of closer relations with its Arab neighbours, two of which have normalised relations with Iran’s sworn enemy, Israel, in agreements known as the Abraham Accords.

For Iran, rapprochement with Saudi Arabia represents “the best bulwark” against the Abraham Accords concluded in 2020 between Israel and Arab countries including the UAE and Bahrain in the Gulf, according to Falahatpisheh.

“Detente with Saudi Arabia allows Iran to avoid the formation of a united regional front at a time of heightened tensions with the United States and Israel,” said Ali Vaez, from the Belgium-based war monitor International Crisis Group.

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Saudi Arabia's Foreign Minister Prince Faisal bin Farhan and Amir-Abdollahian during Thursday's talks in Beijing. Image Credit: Reuters

A thaw in relations could encompass Bahrain, which followed Saudi’s lead in cutting ties with Tehran in 2016 and also Egypt.

Iran has named an ambassador to the United Arab Emirates nearly eight years after his predecessor left.

“After some eight years, the foreign ministry has named Reza Ameri as the Islamic Republic of Iran’s new ambassador to the United Arab Emirates,” Iran’s official IRNA news agency reported late Tuesday.

The move comes after Iran welcomed an Emirati ambassador last September ending a six-year absence.

Iran’s Supreme Leader Ayatollah Ali Khamenei has also stated an intention to increase ties with Asia and further distance Tehran from Israel and the United States.

Boosting Iran’s economy

The deal could impact global energy markets as both countries are major oil and gas producers and where any disruption to production typically leads to price fluctuations.

“There are huge areas for cooperation in the oil, gas and petrochemical sectors between the two countries,” said Keyvan Kashefi, a board member of Iran’s Chamber of Commerce.

With the prospect of increased regional cooperation, Iran is hoping to better manage the economic troubles it has faced since biting US economic sanctions were reimposed in 2018, when then-president Donald Trump withdrew Washington from a landmark nuclear deal with Tehran.

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Saudi and Iran delegations during their talks. Image Credit: Reuters

“Developing economic and trade cooperation” with Saudi Arabia is one of Tehran’s objectives, Foreign Minister Hossein Amir-Abdollahian said after Thursday’s Beijing meeting.

Rampant inflation and record depreciation of Iran’s currency the rial against the dollar have blighted its economy.

Saudi Finance Minister Mohammad Al Jadaan last month flagged potential investment in Iran.

He said there were “a lot of opportunities” in Iran, and that he couldn’t see any reason to prevent investments taking place between the two states.

Religious ramifications

Resuming international flights should also increase religious exchanges between Iran and Saudi Arabia.

Another point of the agreement is the “resumption of Umrah” by Iranian pilgrims following Riyadh-imposed limitations for the past several years.

The Umrah is a pilgrimage to the holy city of Mecca in Saudi Arabia that can be taken at any time of the year, in contrast to the Hajj, which takes place on dates according to the Islamic lunar calendar.

Key moments in their relationship

April 1979: Iran revolution

When Iranian revolutionaries overthrow the US-backed shah in 1979 and form an Islamic republic, governments in the region accuse the fledgling state of seeking to “export” its revolution.

In 1980, Saddam Hussain’s secular regime in Iraq attacks neighbouring Iran, triggering an eight-year war in which Saudi Arabia, a key US ally, supports Baghdad.

July 1987: ties cut

In July 1987, Saudi security forces in Mecca - the holiest site in Islam - crack down on an anti-US protest by Iranian pilgrims. More than 400 people are killed, mostly Iranians.

Demonstrators ransack the Saudi embassy in Tehran and, in April 1988, Riyadh breaks off diplomatic relations for several years and Iranian pilgrims stay away from Saudi holy places until 1991.

2011-2014: opposing sides in Syria, Yemen

From 2011 on, Iran and Saudi Arabia back opposing sides in Syria’s civil war.

Tehran supports President Bashar Al Assad with military forces and funds whereas Riyadh backs rebels but also joins a US-led coalition to fight extremists from the Daesh group.

Amir-Abdollahian (left), Faisal bin Farhan and Chinese Foreign Minister Qin Gang (centre) during a meeting in Beijing. Image Credit: AFP

Saudi Arabia and Iran also take opposing sides in the Yemen conflict: Riyadh and Washington accuse Tehran of arming the Houthi militia, a charge it strongly denies.

A Saudi-led coalition launches a campaign of air strikes against the rebels in March 2015.

January 2016: ties cut again

In January 2016, Saudi Arabia executes prominent cleric Nimr Al Nimr, a driving force behind anti-government protests, on “terrorism” charges.

Protesters attack Saudi diplomatic missions in Iran, and Riyadh again severs ties.

March 2016: Hezbollah, Qatar

In November 2017, Saudi-backed Lebanese Prime Minister Sa’ad Hariri suddenly and mysteriously announces his resignation, citing Iran’s “grip” on his country through the militant group Hezbollah, in a statement issued from Riyadh.

Hariri recants his resignation after mediation by French President Emmanuel Macron.

In June 2017, Saudi Arabia and its allies sever ties with Qatar and impose a blockade on it, accusing Doha of backing extremism.

Saudi Arabia ends the embargo three years later.

Oct 2017: Iran nuclear accord

In October 2017, Saudi Arabia backs US President Donald Trump after he walks out on a 2015 deal with global powers aimed at limiting Tehran’s nuclear activities.

On March 15, 2018 Saudi Crown Prince Mohammad bin Salman warns that if Tehran gets a nuclear weapon, “we will follow suit as soon as possible”.

March 2023: restoring relations

On March 10, 2023, Tehran and Riyadh announce plans to resume ties as part of a deal brokered by China.

A year earlier, Yemen’s Saudi-led government and Iran-backed rebels had agreed a truce, signalling moves towards a detente.

On April 6, 2023, the Iranian and Saudi foreign ministers, Hossein Amir-Abdollahian and Prince Faisal bin Farhan, meet in Beijing for the first high-level talks between their countries in seven years.

They pledge to work together to bring “security and stability” to their region.