War and Peace

I have flown over Mecca a few times on the way to Jeddah and in particular, flights during the Hajj are memorable. Usually, the pilot played prayers on the intercom as the plane approached the holy site, and most of the passengers were taken up with prayer – in a way that perhaps only an Irish Catholic could appreciate. More impressively, sights of the enormous infrastructure that spans Jeddah airport to Mecca gives a sense of the hundreds of thousands of pilgrims that visit Mecca every year from across the Muslim world.

Notably, in a few months Iran’s Shia Muslims may be made welcome to Mecca following the agreement between Iran and Saudi Arabia to reestablish diplomatic relations, under the diplomatic stewardship of China. I am not sure that this event immediately heralds a geopolitical revolution in the Middle East but it is significant in many ways, and will at the margins reduce tension between the countries of the region (‘no problems with neighbours’), though may also provoke stress between the regions beyond the Middle East.

For Iran the deal brings several positives – even more trade with China, the mantle of a ‘responsible’ regional actor, the chance to consolidate its overwhelming influence over Iraq and Syria, a lesser commitment of resources to Yemen and less intense pressure on domestic Iranian politics from Saudi related media outlets (notably those in London). Also, the prospect of a visit by President Raisi to Saudi Arabia will add legitimacy to the Iranian government at a time when protests there have been widespread.

For Saudi Arabia there are also multiple benefits. Notably, a calming if not an end to the war in Yemen and by association, attacks into Saudi Arabia itself. Its oil infrastructure and access to drinkable water will be more secure now. Closer commercial ties with China will be welcomed at a point where the Kingdom’s currency has weakened and when inflation is high, and a corollary of this will be pressure on the US to ‘charm’ Riyadh.

Diplomatically, Saudi Arabia now has a dangerous hedge- it plans to join the SCO (Shanghai Cooperation Organization – about which we have written much in ‘The Levelling’) as a ‘observer’ member, which we might think of the SCO as a China led anti-NATO gang. The motivating force behind this deal is Saudi Arabia’s Crown Prince Mohammed Bin Salman (MBS). He is hugely ambitious for his country, and while young people in Saudi Arabia enjoy far, far less freedom than those in Iran, the relative change in their lives and expectations in recent years has been very significant.

Broadly for the region, the reestablishment of diplomatic ties should see a shift in emphasis from local geopolitical tension to economic growth. For China, it is a major win, notably in terms of trade – it accesses oil from both Iran and Saudi Arabia, will promote the use of its currency in the region (similarly a recent trade deal with Brazil will boost use of the yuan) and will invariably sell more Chinese goods into the region, not to mention access its real estate markets.

China will also host an Arab-Iran summit in Beijing later this year, a move that underlines the view EU President Ursula von den Leyen expressed last week in a keynote speech that ‘China’s clear goal is a systemic change of the international order with China at its centre’.

If China is a winner, then in this increasingly bifurcated world, the US must be the loser.

The announcement of the deal came at a time when Western banks were collapsing, and strikes and riots disrupting European capitals, so to an extent it has passed under the radar. It confirms my view of rapidly changing geopolitical tectonic plates, and China’s aim to realign the world along autocratic/East v democratic/West lines. The Chinese may well feel that twenty years on from the invasion of Iraq, the West’s grip on the Middle East has decisively loosened. They should also be careful not to think that meddling in the Middle East is a prerogative of great power status.

There are maybe three tests of this new alignment. One is very simply the extent to which the reopening of diplomatic ties produces any real ‘warmth’ between Iran and Saudi Arabia. The second is whether the coming global recession further weakens local currencies and specifically will lower the price of oil, and thus local economies.

The third test may come from Israel and focus on Iran’s quick march towards acquiring a near functioning nuclear weapons program. The war in Ukraine has seen Iran emerge as a sophisticated producer of military technology and granted that it is now producing a very high grade level (84%) of enriched uranium, Iran could be considered to be in the antechamber of nuclear powerdom. This may prove a threshold too far for Israel and many armchair wing commanders

In this respect, the protests that have dramatically gripped Israel in recent months in the light of the Netanyahu government’s attack on Israel’s institutions have thrown the country into disarray at a critical moment. This is nearly entirely Bibi’s doing, and it may just become his greatest mistake.

Have a great week ahead,

Mike

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