By Sam Dagher and Donato Paolo Mancini
Bloomberg News
Riyadh, Saui Arabia — With its replica arches and columns from ancient Persepolis, the new “Iranian Corner” at one of Riyadh’s most popular outdoor venues has been doing decent business selling carpets, saffron and other products.
Saudi Arabia’s capital might seem an unlikely place to showcase the Islamic Republic. The rivalry between the two powers has shaped the Middle East for decades. But ahead of Donald Trump’s return to the White House, the kingdom is urgently looking to strengthen ties with Tehran while it seeks to bolster relations with its traditional ally the U.S.
Crown Prince Mohammed bin Salman, the de facto Saudi ruler, made an offer of increased trade to Iranian officials in recent weeks in the hope of ratcheting down tension with the West and a reduction of support for proxy militias, according to people with knowledge of Riyadh’s moves. They asked not to be identified when discussing private matters.
That would build on a March 2023 rapprochement between the two countries brokered by China, which is pushing for them to forge closer ties and provide much-needed revenue to Tehran.
Trump’s victory, though, is testing the regional dynamic because of the prospect of a renewal of the Middle East policies introduced in his first term. Those may include his maximum pressure approach to Iran, which saw Washington walk away from a nuclear deal with Tehran and impose severe sanctions.
Saudi Arabia is still keen to capitalize on work that went into a defense and strategic agreement with the U.S. that was put on hold after the Oct. 7 attack by Iran-backed Hamas on Israel last year.
Prince Mohammed sent national security adviser Musaad Al-Aiban to Washington last month to revive the talks, according to three people with knowledge of the matter. Yet, time is tight. The aim was to secure commitments before President Joe Biden leaves office in January.
The Saudis see the dual-channel approach of closer ties with Washington and Tehran as vital geopolitically, though it could leave the kingdom in an awkward spot. Prince Mohammed’s top priority is his trillion-dollar plan to diversify the kingdom’s economy away from oil. The agenda, known as Vision 2030, relies on peace as well as foreign investment to help fund its ambitious mega-projects.
Speaking at the annual investment conference in Riyadh in late October, Saudi Foreign Minister Prince Faisal Bin Farhan said his primary mandate was to protect Vision 2030 and further its advancement.
It’s unclear what Prince Mohammed has offered the Iranians, but a person who worked on the 2023 detente between the two historic foes said trade could initially focus on products in the food and medical sectors that won’t breach European and U.S. sanctions against Tehran.
An accord could involve private Saudi companies, and transactions may take place through a third country like Iraq, the person said. Iran-Saudi trade is negligible at the moment, and Iranian officials have expressed a desire to take it to up to $1 billion a year.
Saudi Arabia made a similar approach last year in a bid to de-escalate regional tensions amid the ongoing war in Gaza, Bloomberg reported at the time. The fresh proposal would also be conditional on Iran holding back on support for its proxies in the region, such as Hezbollah in Lebanon.
Officials with the Saudi ministries of foreign affairs and trade didn’t respond to multiple requests for comment.
Before the crown prince’s move, Iranian officials had been unhappy that Saudi trade and investment pledges under what’s become known as the Beijing Agreement hadn’t materialized. China, which is the biggest buyer of oil from both countries, has been urging Riyadh and Tehran to buttress their rapprochement, said Dina Esfandiary, senior adviser for the Middle East and North Africa at the International Crisis Group.
“It’s a pretty simple, noncontroversial way for Riyadh to demonstrate its commitment to the new dialogue with Tehran,” she said.
A Saudi-Chinese-Iranian committee following up on the accord held its second meeting in Riyadh on Nov. 19, reaffirming commitment to it. In a statement, the parties touted the nearly 140,000 Iranian pilgrims that have visited the Islamic holy sites in Saudi Arabia this year as a sign of closer ties, along with things like the Iranian Corner in Riyadh.
On a political level, Prince Mohammed earlier this month accused Israel of carrying out “genocide” against Palestinians in Gaza and criticized it for attacking Iran during an exchange of direct missile fire in October.
He dispatched his army’s chief of staff to the Islamic Republic to meet his counterpart, while Saudi’s armed forces took part in a naval drill in the northern Indian Ocean alongside Iran, Russia, Oman and other countries.
That harsh rhetoric against Israel was mainly aimed at appeasing the kingdom’s own citizens and those in the wider Arab and Muslim worlds upset at the civilian death toll in Gaza.
The kingdom’s engagement with Tehran, meanwhile, is all about protecting itself and its economic transformation plan from any flare up between Israel, Iran and Trump’s U.S., said Hanin Ghaddar, a senior fellow at the Washington Institute for Near East Policy. “Saudi Arabia’s main concern is its internal security,” she said.
While Saudi Arabia is upset at the devastation wrought by Israel’s wars in Gaza and Lebanon, it’s not shedding a tear for the weakening of Hamas and Hezbollah, according to people familiar with the leadership’s thinking.
Both groups are designated as terrorist organizations by the US and European countries. Prince Mohammed continues to deeply mistrust Iran and that played into the decision to send Al-Aiban to Washington, the people said.
Al-Aiban, who sealed the 2023 deal with the Iranians in Beijing, was tasked with finding out whether any agreement could be signed before the end of Biden’s term, the people said. Among topics discussed were designating Saudi Arabia a major non-NATO ally.
The U.S.-Saudi Arabia deal being discussed before Oct. 7 centered on a binding defense treaty with Washington that included the prospect of a normalization of ties with Israel, with the stumbling block being that Riyadh would demand steps toward establishing a Palestinian state. The kingdom’s position has hardened on that since the start of the war in Gaza and subsequent devastation of the territory.
That could change if Israeli Prime Minister Benjamin Netanyahu — or any successor — alters his stance, something that looks unlikely despite the 60-day cease-fire agreed this week with Hezbollah. The Israeli parliament this year passed a resolution opposing Palestinian statehood.
“I would expect the pendulum to swing back in the other direction should Netanyahu end current conflicts in Gaza and Lebanon and take meaningful steps toward a Palestinian state,” said Firas Maksad, senior director for strategic outreach at the Middle East Institute in Washington.
One bright spot in the U.S. might be Prince Mohammed’s history with Trump and his son-in-law Jared Kushner before relations temporarily soured following the killing of newspaper columnist Jamal Khashoggi in the Saudi consulate in Istanbul in 2018. That might help him walk the line between the U.S. and Iran, and fulfill his foreign policy goals.
In the meantime, the crown prince is hedging his bets. Saudi Arabia has observer status at the the BRICS group of emerging market powers, of which Iran is now a full member.
“He is guided by a nationalist ‘Saudi first’ view of the world,” said Bernard Haykel, a professor of Near Eastern studies at Princeton.
Matthew Martin and Sylvia Westall contributed.
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