TOPIC : THE SAUDI-IRAN RAPPROCHEMENT AND IMPLICATIONS FOR INDIA

THE CONTEXT: In a major breakthrough, on 10 March 2023, Saudi Arabia and Iran signed an agreement to restore their diplomatic relationship, which was severed in 2016 after the Saudi Embassy in Tehran and Consulate in Mashhad were ransacked by protesters demonstrating against the Saudi execution of Shia cleric Nimr Al Nimr. The deal was brokered by China and has a huge significance within the Arab world as well as outside the region.

ABOUT THE DEAL

• The two countries affirmed respect for states’ sovereignty and emphasised adherence to the non-interference in the internal affairs.
• Saudi Arabia and Iran agreed that the Foreign Ministers of both the countries will make arrangements for the return of their ambassadors and discuss means of enhancing bilateral relations.
• Multilateral areas of cooperation: The two countries also agreed to implement the bilateral Security Cooperation Agreement signed in 2001 and the General Agreement for Cooperation in the Fields of Economy, Trade, Investment, Technology, Science, Culture, Sports, and Youth, signed in 1998.

WHY SAUDI ARABIA ACCEPTED THE DEAL?

• To achieve the long-term vision, long-term peace with Iran is necessary to achieve the targets they have put before themselves under Saudi Vision 2030.
• Help in rebuilding the economy: Protecting the critical infrastructure: Saudi Arabia hopes to protect borders and critical infrastructure from the Houthi attacks by signing an agreement with Iran to restore normalcy. It also gives Saudi Arabia a chance for a face-saving exit from an ‘un-winnable war’ in Yemen as well as relief from drone attacks on its oil installations and airports, as was the case in recent times.

WHY IRAN ACCEPTED THE DEAL?

• Economic isolation and domestic pressure: Iran is going through one of the toughest phases of economic isolation and domestic pressure. Tehran knows that getting a reprieve from Western sanctions is not a near-term possibility and at home, despite its crackdown, protests refuse to die down.
• Need for Chinese support: China’s economy is deteriorating and its currency, the rial, is struggling. Iran wanted Chinese investments and support for the rial. According to Iranian media reports, China allowed Tehran to withdraw parts of the $20 billion funds that were frozen with Chinese banks (after the U.S. sanctions).

SIGNIFICANCE OF THE REAPPROACHMENT

• Mutual distrust will decrease: Saudi Arabia and Iran have been at loggerheads over the latter’s suspected role in inciting protests in Bahrain during the Arab Spring, and support for the proxy groups in the region, fueling instability in the region. On the other hand, Iran perceived Saudi Arabia as a dominant opponent that has been a major factor in inviting external players into the region.
• Peace in Yemen: It offers hope for a peaceful resolution of the conflict in Yemen which had turned into a battlefield for a proxy war between Iran and Saudi Arabia. The agreement, if implemented fully, can substantially improve the situation in Yemen. The end of the Saudi military operation in Yemen and restraint on the part of the Houthis can significantly reduce armed violence in the country. It can also considerably improve the humanitarian situation and help the country rebuild its economy.

THE IMPLICATION IN REGIONAL POLITICS IN WEST ASIA

• US-Saudi Relationship: The Saudi–Iran agreement will have implications for US–Saudi relations. Although the US and Saudi Arabia are strategic partners and Saudi Arabia is an important regional ally of the US in West Asia, its normalising of relations with Iran at a time when Vienna nuclear talks remain inconclusive, points towards a tough road ahead for their bilateral relationship.
• China will emerge as a player in West Asia: China through mediation brought Saudi Arabia and Iran together successfully. By doing so, China intends to shape the international community’s perception about its image and role as a neutral and benevolent player in the turbulent Gulf region.
• Impact on Israel-Saudi Arabia relationship: The Abraham Accords are a series of joint normalization statements initially between Israel, the United Arab Emirates, and Bahrain. Israel wanted Saudi Arabia too to join the Abraham Accords. But the Saudi restoring ties with Iran has come as a severe jolt to the Israeli ambitions.
• Rapprochement of Israel and Arabs will take a jolt: With strengthening solidarity between the Arabs and Iran there will be suffering in ties between Israel and Arabs.
• Regional and Global trade: The peace deal also offers hope for a safe passage of trade by sea, both through the Bab-al-Mandab as well as the Persian Gulf, crucial not only for the region but global trade too. The 2019 Persian Gulf crisis had severely disrupted oil trade and had brought the region precariously close to a direct military conflict.

IMPLICATION FOR INDIA

The West Asian region forms an important part of India’s extended neighbourhood, and is vital to India’s strategic outlook. India has vital stakes in the stability, security and economic well-being of the region.

Importance of the Region:

• Energy Security: The region supplies about 50 per cent of India’s crude oil requirements, over 70 per cent of natural gas requirements.
• Diaspora and Remittance: It hosts about 9 million Indians and accounts for 60 per cent of remittances received in India annually.
• Security: Security challenges in the region have a ripple effect into India, and therefore any instability in the region has a direct bearing on the safety and security of millions of Indians working there, our energy security and our steadily growing trade relations.

POSITIVE IMPLICATIONS

• Business Opportunities: Iran and Saudi Arabia form the major power block and any reconciliation between them opens further opportunities for India. India already has comprehensive trade and business relations with Saudi Arabia. With Iran, although it has been restrained in furthering its ties due to international sanctions on Iran because of its nuclear issues, but India and Iran have been attempting to revitalise their ties in recent times.
• End of the conflict in Yemen is important for India: Any potential conflict between the two main rivals anywhere in the West Asian region, puts to danger millions of Indians working in the region and is a logistic nightmare for the Indian government. For Example with ‘Operation Raahat’ in Yemen, India evacuated over 4,000 Indians and 1,950 foreign nationals from 48 countries in March 2015.
• Cost-effective Oil Imports: If crude oil from Iran comes back into play, it adds to the various options of cost effective and efficient imports by India. India has previously tried rupee trade arrangements with Iran and it is currently in talks with the UAE too. A peaceful region offers opportunities for India to collaborate better with major countries in the region to promote ‘non-dollar trade’, rupee trade etc. which are beneficial in the long run.

NEGATIVE IMPLICATIONS

• China as a major stakeholder in West Asia: China as a competing nation with india, will have the upper hand in the region which will be against the interest of India. Unlike the U.S., which has a history of military interventions in West Asia, China comes with a cleaner record. While the U.S.’s ties with Saudi Arabia faced headwinds in recent years and it has hostile ties with Iran, China has warm ties with both — it is a leading buyer of Saudi oil and the largest trading partner of Iran. This allowed China to use its economic leverage to bring the parties closer.
• Regionally, the agreement marks China’s arrival as a major power in West Asia. Though in earlier major deals like US was present like Camp David agreement (1978), Oslo Accords (1993), the Israel-Jordan Treaty (1994), Middle East Quartet (2002) or the Abraham Accords (2020) — but in this the U.S. was absent.
• China as leader of the Global South: While the U.S. is busy rallying the Western world to arm Ukraine to push back Russia and weaken Moscow through sanctions, China is quietly brokering peace in the Global South. With this deal, China is trying to send a clear message to countries in the Global South. Khalistan
• Hamper strategic autonomy: India will have difficulty to deal simultaneously Arab world and Israel as Israel has registered its opposition with the deal while india has welcomed the deal.
• Challenge the India as a net security provider: India now sees itself as a “net security provider” to the region. This reflects India’s aspirations to take a leading strategic role throughout the Indian Ocean and to expand its strategic reach even into the Pacific. Many countries see India in benign terms and welcome its rise as a regional security provider. There is a growing expectation that India will shoulder more of the responsibilities of providing the so-called “public goods” of security. However the prospect of India will diminish with the greater involvement of China in West Asia.
• Rejection of the US: The influence and commitment of US in the region have definitely reduced, given an absence of strategic vision in conflicts like Iraq, Syria, Yemen, etc. The last decade has shown many Middle Eastern countries losing faith in the U.S., and broadening their options to other players like Russia for energy matters, and China for economic and political matters. This will have indirectly impact the India as India and US is a strategic partner and have signed the logistic agreement.

THE WAY FORWARD

• India till now maintained strategic autonomy by maintaining good relations with all the countries in the region. Even after this deal, India needs to build good relations with the Arabs, Iran and Israel.
• Maintaining the status in the region as a net security provider.
• Leverage Iran and Saudi Arabia’s good relationship, which has provided greater business and trade opportunities.
• Chinese involvement in the region may create conflict thus India has to increase the Navy presence and capacity building in the region.
• There is need to strengthen the multipolar world order. India should reclaim its status as the leader of the global South.

THE CONCLUSION: The Iranian Ambassador to India echoed the sentiment, stating that the peace deal would be of benefit to India since it would help and intensify the stability and peace in the Persian Gulf region. It is now for India to seek the best opportunities from this deal, especially with regard to its revitalised engagement options with Iran.