China’s Iran-Saudi deal is a wake-up call for India

Its economic engagement there has included its role as a major market for the region’s hydrocarbons, the use of the US dollar as the principal currency of international exchange, and its supply of investments and technologies. Its role as security guarantor has been equally crucial, even if its military interventions have often caused more damage to itself and the region.

It is this American centrality that Beijing is attempting to challenge, and while it is not going to be easy, China under President Xi Jinping is clearly not going to stop trying. This is evident from a series of recently released Chinese foreign policy documents on its global development and security initiatives.

The complex geopolitical reality of the West Asian region must also be taken into account when drawing conclusions about the importance of the Chinese role in the latest diplomatic breakthrough.

America’s chequered past in the region suggests it has not always been in control of the outcomes despite its overwhelming diplomatic, economic and military might. While Iran, Saudi Arabia and Israel have been the big local powers, with Egypt and Iraq also influential actors, smaller players like Qatar and the United Arab Emirates (UAE) have also grown in stature and influence over time.

The equations among these powers have changed often over the past decades. Today’s extreme hostility between Iran and Israel was preceded by a period of friendship between the Israelis and pre-revolutionary Iran, for example. With the US-sponsored Abraham Accords, several Arab countries now appear willing to sideline the Palestinian issue in favour of closer ties with Israel – acknowledging its military superiority and hoping perhaps to partake in its technological prowess. In Saudi Arabia, religion also seems to be taking a back seat to plain nationalism. 

It may appear as though Beijing has pulled a rabbit out of a hat with the Iran-Saudi deal but let us not forget that the two countries wanted the deal badly, and that there is really no clear roadmap laid out in the trilateral joint statement about what comes next.

The Saudis were careful not to talk about sovereignty in terms of territorial issues – Iran and Saudi Arabia do not have any territorial disputes but the UAE, a close ally of the Saudis, does have an ongoing maritime territorial dispute with the Iranians. But a joint Gulf Cooperation Council-China statement at the end of Xi’s visit to Riyadh in December 2022 did affirm the UAE’s territorial sovereignty over the disputed features. The same statement also had a call to “ensure the peaceful nature of the Iranian nuclear programme" and for Iran to cooperate with the International Atomic Energy Agency. As a result, there was a great deal of Iranian annoyance with the Chinese.

China may have decided it was more important to show its credentials to the Arabs – whom it wishes to wean away from the Americans – as it was confident of persuading the Iranians. The latter are in less of a position to bargain with the Chinese, given the only major power they have to fall back on is Russia, which is otherwise occupied. China is also Iran’s largest trading partner at a time when it is severely hobbled by Western economic sanctions.

Meanwhile, the Iran-Saudi rapprochement in general and their “affirmation of the respect for the sovereignty of states" in particular is sure to put Israel in a bit of a spot, geopolitically speaking. In December the Israeli defence minister had in a speech to graduating air force officers called on them to be ready to hit nuclear sites in Iran ‘in two or three years’ – essentially a declaration of a lack of consideration for Iranian sovereignty.

The Iran-Saudi agreement is no doubt also a response to the increasingly rightward turn in Israeli politics led by Prime Minister Benjamin Netanyahu, one that the US seems either unwilling or unable to moderate. It is worth noting that the US is also trying to mediate a peace deal between Saudi Arabia and Israel but that the Saudis are also troubled by the declining American attention to their interests.

Implications for India

For India, the deal itself is not a bad thing if it brings about greater regional stability, and might well open up other opportunities for engagement with the two West Asian states where India does not need to worry about offending either party. There could be some complications for India’s close ties with Israel, given that nation’s domestic politics and views on Iran but there’s no reason why New Delhi should not be able to balance ties like the UAE does and make the most of the I2U2 quadrilateral of the three countries and the US.

That said, the Iran-Saudi deal does shine an uncomfortable light on India’s lack of influence in the region. Given its proximity and cultural links, apart from economic and political ones, New Delhi should have had a role in bringing the two traditional foes together. Instead, China’s role in swinging the deal suggests its influence outstrips that of India’s by a distance. The fact that Indian Ministry of External Affairs waited several days for its regular media briefing to respond to the deal – with a colourless “India has always advocated dialogue and diplomacy as a way to resolve differences" – seems to suggest a degree of surprise and unease at the Chinese role. If India had to ignore the Chinese role altogether, it could very well have responded immediately, as the Americans did.

Meanwhile, there is the matter of whether the deal will stick – and, if it does, how important or immediate its effects will be. Major deals struck in the region have collapsed under the weight of contradictions or stakeholder capriciousness – think back to the 2015 Iranian nuclear deal, which was scuttled by the Donald Trump administration in 2018.

The Americans continue to have their suspicions about Iran’s sincerity. As for Syria, the Arabs and Iranians are converging on the belief that the Bashar al Assad regime needs to be engaged, while the primary concern for the Saudis will be ending the conflict on their borders with the Houthis in Yemen. How quickly the latter’s Iranian supporters nudge them towards compromising with the Saudis remains to be seen.

For now, though, the deal is a propaganda coup for China, a reminder to the Americans not to take its influence for granted, and hopefully also a reminder to India that it takes a great deal of work to convert historical ties and photo ops into actual influence on the ground.