Saudi Arabia

Saudi Arabia is the Gulf’s Status Quo Power

Saudi Arabia has been an anchor of stability and growth in the Gulf and beyond. There are at least three reasons for this. First, as the largest economy in the Arab world, it acts as a major source of economic support for struggling Arab nations. Second, as the largest state in the Gulf region, it sets the agenda of the Gulf Cooperation Council (GCC). Finally, Saudi Arabia is also a leader in the global energy sector due to its exceptional ability to act as a swing producer and stabilise global energy prices. Consequently, Saudi Arabia is able to navigate complicated relationships with traditional powers such as the United States and Europe, as well as emerging powers such as China and Russia.

These unique traits have enabled Saudi Arabia to sail through difficult times in the region such as two wars in Iraq and the wave of international terrorism carried out by Al-Qaeda and the Islamic State in Iraq and Syria. The Kingdom has faced formidable challenges caused by the 2011 Arab uprisings in Tunisia and Egypt, which subsequently spread to Syria, Bahrain, Yemen and Libya. It has dealt successfully with some of these challenges, for instance by leading the GCC’s security operation against the unrest in Bahrain in 2011 and aiding Egypt’s political transition since 2013.

The Quagmire

The regional turmoil caused by the so-called ‘Arab Spring’ remains evident in the civil war in Syria, the factional strife in Libya and the economic meltdown in Lebanon. These states, however, are relatively distant from Saudi Arabia and, hence, their instability does not directly impinge upon Saudi security. The same holds true for the conflict between the Palestinian Territories and Israel. However, extremist groups like Hezbollah in Lebanon, Muslim Brotherhood in Egypt, and Hamas and Islamic Jihad in the Palestinian Territories do indirectly endanger the stability of the Kingdom and other GCC nations, especially when their impacts get closer to home.

As a sovereign nation, Saudi Arabia guards its national security, political stability and economic growth against any danger from within or outside the Arabian Gulf, especially across its immediate borders. The rift with Qatar, the political strife in Iraq and, above all, the war in Yemen are three instances where Saudi threat perceptions have been shaped by the same regional foe, namely Iran.

Iran is ideologically committed to the destruction of America, Israel and the established political order in the Arab world.


The clerical regime of Iran is ideologically committed to the destruction of America, Israel and the established political order in the Arab world. Since 1979, its clandestine arm, the Islamic Revolutionary Guard Corps (IRGC), has sponsored the assassination of dissidents and diplomats in foreign lands. Furthermore, it has provided financial and military support to extremist groups, which include the Houthis in Yemen and several militant outfits in Iraq and Syria, to destabilise the Arab world. The IRGC, and its elite Quds Force, is declared a terrorist organisation by the US.

Paradoxically, it is the United States’ consistently declining willingness to act as a protector of energy resources and trade routes in the Gulf that has spurred Iranian militarism, particularly since the 2011 Arab uprisings. The 2015 Iran nuclear deal, the Joint Comprehensive Plan of Action—which capped Iran’s nuclear enrichment activities in exchange for international sanctions relief—played a key role in worsening the security dilemma of Arab Gulf nations.

Critical Instances

The six-member GCC was created in 1981 in response to the security threat posed by Iran after the latter’s 1979 revolution. Under Saudi leadership, the GCC has been able to forge a sustainable framework for collective security and economic integration. Differences do arise occasionally, for instance, over deepening integration on the level of monetary, fiscal and even political union between Saudi Arabia, the UAE and Oman. These differences, however, are either resolved amicably, or the contested issue is simply postponed.

The serious rift that erupted in 2017 between Qatar on the one hand, and Saudi Arabia and its Gulf allies and Egypt on the other was an exception, as the issues in question were diplomatically resolvable. Saudi Arabia and Egypt were aggrieved by Qatar’s Al-Jazeera channels as a result of their broadcasting the destabilising activities of the Muslim Brotherhood. Additionally, Saudi Arabia and Qatar were also engaged in a border dispute. Of course, this major rift within the Gulf bloc served Iran’s expansionist ambitions. It also allowed the regionally assertive Turkish regime of President Recep Tayyip Erdogan to establish a military base in Qatar.

Qatar responded to the 2019 Iranian-sponsored drone and missile attack on key Saudi oil refineries in Abqaiq and Khurais by reaffirming the principle of GCC collective security.


Over time, however, the traditional norms of Gulf diplomacy were re-established. Qatar responded to the 2019 Iranian-sponsored drone and missile attack on key Saudi oil refineries in Abqaiq and Khurais by reaffirming the principle of GCC collective security. In return, Saudi Arabia extended an olive branch to the Qatari leadership. A reconciliation agreement was concluded during the GCC summit at Al-Ula, Saudi Arabia, in January 2021. In subsequent meetings, Saudi and Qatari leaders have amicably resolved issues of mutual concern. In 2022, Turkey and Saudi Arabia also reconciled by concluding significant deals on military and economic cooperation.

The post-war political strife in neighbouring Iraq also threatens Saudi security. The Kingdom seeks reconciliation of its divergent political interests in Iraq. However, pro-Iranian militias and political factions have taken Iraqi politics hostage for the benefit of Iranian expansionism to the extent that a major sectarian faction led by Moqtada al-Sadr has made this issue a key plank of its political agenda. In 2021, Iraqi Prime Minister Mustafa Al-Kadhimi also survived an assassination attempt in a drone attack on his official residence in Baghdad, allegedly by an Iranian militant proxy.

Together with the spiritual leadership, the IRGC has prevented Iran’s successive reformist leaders from making necessary compromises over regional and global issues.


After almost two decades of violent instability, Iraq had a leader who sought political reconciliation at home and also sponsored five rounds of security talks between Saudi Arabia and Iran in Baghdad in 2022. These talks have failed to produce any tangible outcome, as the levers of power in Iran are controlled by its spiritual leader, Ayatollah Ali Khamenei, while the IRGC drives the extremist regional agenda of the clerical state. Together with the spiritual leadership, the IRGC has prevented Iran’s successive reformist leaders from making necessary compromises over regional and global issues. The return of hard-line figures to power in 2021 has added to Iranian intransigence in international diplomacy. The implications have been evident in the Vienna talks between Iran and the Permanent Five members of the United Nations Security Council plus Germany to revive the 2015 nuclear accord as well as in Iran’s aggressive approach to the conflict in Yemen.

In Yemen’s case, the Saudi-led coalition was forced to intervene in 2015 to protect a legitimate government from the onslaught of the Iran-backed Houthi militia. In subsequent years, this militia consistently attacked critical targets in Saudi Arabia and the UAE, with armed drones and missiles provided by Iran. However, in April 2022 the hostilities ended with the enforcement and subsequent extension of a ceasefire and the establishment of a Presidential Leadership Council. Saudi Arabia and the UAE have also extended financial support worth $3 billion to mitigate Yemen’s acute humanitarian crisis. In short, Yemen’s transition to peace would not have been possible without timely diplomacy by the two Gulf nations, in partnership with the UN and the US.

Constraining Factors

Iran’s ability to wage proxy wars in the Middle East is constrained by recent developments in Yemen and Iraq, and the reconciliatory moves by previously estranged nations. Qatar has restored its relations with both Saudi Arabia and Egypt. Turkey has reconciled with Saudi Arabia, the UAE, Egypt and even Israel. The leaders of the UAE and Syria have exchanged visits. Iran’s terrorist infrastructure in Syria and the Palestinian Territories has also come under severe Israeli attack more often than before. Moreover, the 2020 Abraham Accords—which led to Israel being diplomatically recognised by the UAE, Bahrain, Morocco and Sudan—have created a new regional security structure which reduces the scope of Iranian militarism in the Gulf.

President Joe Biden restored much-needed military shipments to Saudi Arabia and the UAE to defend against future drone and missile attacks by the Houthis or Iran.


During his visit to Israel and Saudi Arabia in July 2022, President Joe Biden also renewed US security commitments to the Middle East, by stating that the US “will not walk away and leave a vacuum to be filled by China, Russia, or Iran.”[i] He followed up on this pledge by restoring much-needed military shipments to Saudi Arabia and the UAE to defend against future drone and missile attacks by the Houthis or Iran. Saudi and US naval forces also subsequently held military exercises in the Red Sea. Notably, during Biden’s visit, the Kingdom agreed to open Saudi airspace for Israeli commercial flights and direct flights for Muslim pilgrims, while reciprocating the Israeli overture on the return of two Red Sea islands under its control.

This is only the first step in the normalisation process between Saudi Arabia and Israel. The Kingdom is the citadel of Islam, hosting the two holiest mosques. It also leads the Organisation of Islamic Cooperation, the largest representative body of the fifty-seven Muslim countries, which was founded in solidarity with the Palestinian Territories. Neither the UAE nor Bahrain have such religious and historical compulsions. That is why the Kingdom has made its recognition of the state of Israel conditional upon the settlement of the Palestinian issue in accordance with the Arab Peace Initiative, which was proposed by Saudi Arabia in 2002 and subsequently endorsed by the Arab League.

High Stakes

The prospects of Saudi-Israeli normalisation, the revival of the US’s security role in the Gulf, the realignment of Gulf security interests with Israel, and several regional reconciliation processes have contributed to the regional isolation of Iran. As of yet, however, there is no indication that Iran’s hard-line leadership is willing to compromise on its ideologically-driven agenda of subverting the Gulf nations’ quest for economic diversification and development.

Despite recent moves towards normalisation with Israel, none of the Gulf states, including Saudi Arabia, wish to entangle themselves in the crossfire between Iran and Israel.


Saudi Arabia has the greatest stake in this respect, as it is undergoing massive social and economic transformation under Crown Prince Mohammed bin Salman’s Vision 2030 plan. This strategic plan aims to wean the Saudi economy away from an overbearing dependence on oil. China, the Kingdom’s largest trading partner, is hugely invested in its key projects. The US has also joined in. Therefore, despite recent moves towards normalisation with Israel, none of the Gulf states, including Saudi Arabia, wish to entangle themselves in the crossfire between Iran and Israel, which is why the UAE and Kuwait recently restored diplomatic ties with Iran.

Saudi leaders, including the Crown Prince, have also extended a hand of friendship to their Iranian counterparts on a number of occasions. In return, they have received even greater Iranian militancy. Unlike other GCC members, the Kingdom has been the primary victim of Iranian-sponsored Houthi attacks. Therefore, it cannot afford to make peace with Iran unless the Iranian clerical establishment is prepared to abandon its destructive ambitions. Accordingly, the Saudi leadership is not opposed to the revival of the JCPOA, so long as it contains inbuilt provisions to prevent Iran’s malignant activities in the Gulf and beyond as well as limit its precision-guided ballistic missile program.

Nuclear Stalemate

The problem is that Iran is unwilling to compromise even on its nuclear program, let alone to address persisting Saudi security concerns. The Biden administration has also reneged on its earlier pledge to address these concerns in what it had previously termed as a “longer and stronger” nuclear deal with Iran.[ii] Meanwhile, Iran has continued to enrich uranium beyond the 3.67 per cent purity allowed under the defunct JCPOA, by using advanced IR-6 centrifuges. As recently as August 2022, the International Atomic Energy Agency reported that, for almost a year, Iran has been enriching uranium up to 60 per cent purity, close to weapons-grade.

For years, the nuclear watchdog has also been probing the origins of nuclear material found at three undeclared Iranian sites. This issue eventually became a stumbling block, stalling the talks to revive the JCPOA in September 2022. Until then, the Biden administration was willing to appease Iran to the extent of accepting its unrealistic demand that a future US administration would not renounce the nuclear deal. The Biden administration was even prepared to overlook the fact that Iran had started shipping its lethal drones to Russia for use in the Ukraine war.

The reason was political. The global energy crisis caused by Western sanctions on Russia in the wake of this war has triggered an inflationary spiral ahead of the US midterm elections. The only way the price of crude oil per barrel could be brought down to significantly below $100 dollars is by raising production. The Biden administration approached Saudi Arabia and the UAE for help. They obliged, by raising OPEC+’s oil output twice, once before and once after Biden’s visit to Saudi Arabia. This was a marginal increase, totalling 350,000 barrels per day, as the two Gulf nations had already reached their maximum production limits. In any case, their economies have just recovered from the devastating impact of the Covid-19 pandemic, hence the floor price of $100 dollars per barrel was in their interest. Sanctions-ridden Russia shares this interest.

Iran could produce over a million barrels per day of crude oil and ship it to international markets within months; it has millions of barrels of crude oil stored on ships ready to sail. Thus, hypothetically, in the eventuality of reviving the JCPOA, the Biden administration could have achieved its expedient goal of luring US voters in the midterm elections. In the process, however, whatever security guarantees it had offered to trusted US allies in the Gulf would have gone down the drain. The cost of rewarding Iran would have been grave, not just for the Arab nations, which have already suffered enough, but also for the victims of Russia’s war in Ukraine. Nevertheless, the Middle East is a complex region, where patterns of consistency and contradiction in policies of the great powers and regional states produce outcomes that often defy expectations.

[i] “Biden says U.S. ‘will not walk away’ from Middle East.” CBS News. 16 July 2022. https://www.cbsnews.com/news/biden-us-middle-east-will-not-walk-away/.
[ii] Erlanger, Steven, and David E. Sanger. “U.S. and Iran Want to Restore the Nuclear Deal. They Disagree Deeply on What That Means.” The New York Times. 9 May 2021. https://www.nytimes.com/2021/05/09/world/middleeast/biden-iran-nuclear.html.

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2 July 2022

“Economics and Rebuilding in the Middle East and North Africa” showcases articles about the various ways of conceiving the region’s economies as well as reconstruction.