Source: Global Times
As long-term regional rivals, Saudi Arabia and Iran have shook hands and made peace under the mediation of China, and bilateral economic and trade exchanges are heating up. The website of the US "Foreign Affairs" magazine said on the 22nd that the rapid improvement of relations between Iran and Saudi Arabia will have a far-reaching impact on the region. One of the region's most important disputes could come to an end, and economic ties across the Gulf could be expanded. As relations with other neighboring countries accelerate to "turn war into peace", the world is exploring the possibility of "great reconciliation" in the Middle East and more business opportunities that may be bred in the future. Experts told the Global Times that Chinese companies are expected to usher in more opportunities in this region with their own advantages.
The regional economy has ushered in major benefits
After Saudi Arabia reached the "Beijing Agreement" with Iran, Saudi Finance Minister Jadan announced that Saudi Arabia will invest in Iran "soon". Iran's Minister of Economic Affairs and Finance Handuzi said Iran is ready to resume economic ties with all Arab countries in the Middle East. The Iranian Chamber of Commerce said that the Iranian private sector has launched plans to interact with the Saudi economy and will set up an "Iran-Saudi Chamber of Commerce" to send business delegations to exchange visits.
For a long time, the United States has promoted a regional security architecture led by defense relations in the region, trying to build a "Middle East NATO" to enhance deterrence against Iran. Reality shows that regional rivalries will only continue to exacerbate tensions and force Gulf Arab states such as Saudi Arabia to increase defense spending. Before the outbreak of the Russian-Ukrainian conflict, Saudi Arabia's military expenditure once ranked third in the world and topped the arms import ranking for a long time.
On the other side of the Persian Gulf, Iran also deeply feels the economic pressure brought about by the deterioration of the regional situation, and the US "maximum pressure" policy directly compresses Iran's foreign economic cooperation space. The "milestone" agreement between Saudi Arabia and Iran is expected to transition the main tone of the region to construction and development.
At the beginning of his presidency, Iranian President Raisi listed expanding economic cooperation with neighboring countries as one of the priorities of his economic development plan. According to the latest data, neighboring countries already account for 61% of Iran's non-oil trade, 57% of exports and 47% of imports. The Iranian State News Agency published an editorial saying that if the agreement between Iran and regional countries is successfully implemented, "neighboring countries first" will become an important way forward for Iran's economic development, and economic cooperation with neighboring countries will usher in a leap.
Wang Jin, associate professor of the Middle East Institute of Northwest University, told the Global Times on the 23rd that Saudi Arabia and Iran have similar economic visions, and both have the will to get rid of a single energy structure and strengthen and expand the economic pattern.
At present, Saudi Arabia is focusing on the implementation of Vision 2030, strengthening economic diversification and building Saudi Arabia into an international trade, tourism and investment center. Regional relations expert Ankari believes that whether Saudi Arabia can achieve its grand goals, maintain regional stability and ensure national security is the key, Iran has always hoped to use its geographical advantages and domestic production capacity to build itself into an international trade and transit transportation center connecting the Eurasian continent and radiating Africa. According to a report by the Russian satellite network on the 22nd, Iran's Minister of Economic Affairs and Finance Handuzi said that Iran hopes to complete the construction of the "International North-South Transport Corridor" before 2025 during the term of the current government. Analysts said that Saudi Arabia and other regional Arab countries are expected to join the construction of the economic project in the future.
Saudi Arabia had planned to build a GCC-Iran Free Trade Area before severing diplomatic relations with Iran, and analysts believe that the resumption of diplomatic relations between the two countries provides another opportunity for this idea. Syria, Iraq, Yemen, Lebanon and other countries on the frontlines of regional conflicts urgently need large amounts of infrastructure investment. In the future, new capacity will be added to the regional market.
The energy industry in the Middle East is expected to grow in concert
The relationship between the two most important energy countries in the Gulf region has improved, which is also profoundly affecting the international energy market. Qatar's Al Jazeera said on the 23rd that Saudi Arabia and Iran are members of the "Organization of the Petroleum Exporting Countries" (OPEC) and "Organization of the Petroleum Exporting Countries +" (OPEC +), according to 2022 data, Saudi Arabia's oil reserves exceed 260 billion barrels, ranking third in the world, and natural gas reserves are about 8 trillion cubic meters. With oil reserves of more than 200 billion barrels, Iran is the fourth largest oil reserve in the world, with natural gas reserves of about 34 trillion cubic meters. Previously, the two countries held their respective positions in the energy market. In recent years, the United States has imposed severe sanctions on Iranian oil and gas exports, and Gulf Arab countries are also cracking down on Iran's influence in OPEC and other organizations and international energy markets.
As the overall diplomatic climate in the region eases as the reconciliation between Saudi Arabia and Iran eases, the Gulf region's capacity to secure energy production and supply will be enhanced. Wang Yongzhong, director of the International Commodity Research Office of the World Economic and Political Institute of the Chinese Academy of Social Sciences, said that the main income of countries in the Middle East comes from oil and gas exports, and the pursuit of higher oil prices is in line with relevant regional interests. If Iran and Saudi Arabia unite, OPEC will most likely not follow the U.S. strategy in terms of output policy.
Yokar, head of Iran's International Energy Research Institute, said that Iran and Saudi Arabia have broad prospects for cooperation in the energy field. Gulf Arab countries such as Saudi Arabia and the United Arab Emirates have huge natural gas needs, and Iran's export of natural gas to relevant countries can be a first step in energy cooperation with the region. After that, Iran can cooperate with regional countries to explore and develop oil and gas fields, and attract Arab countries to invest upstream and downstream in Iran's energy industry. Yokar believes that in the future, the two countries also hope to cooperate and jointly invest in power facilities and energy transportation pipelines in Pakistan, Iraq and other countries.
Although the door to energy industry cooperation has gradually opened, Qatar's Al Jazeera reported on the 22nd that Saudi Arabia and Iran, both energy powers, still have potential obstacles to cooperation, and the two countries are largely considered to be competitive economies, because exports are dependent on oil and its products, which may limit the return path of economic and trade relations between the two countries, in this case, joint investment is needed to launch value-added products that can be developed using new technologies for the two countries.
New opportunities for Chinese enterprises
The Middle East has been experiencing "warm winds" recently, and countries such as Syria, the United Arab Emirates, Egypt and Turkey have embraced peace with open arms. Behind the reconciliation between Saudi Arabia and Iran, China's positive role has received attention and affirmation from many parties. The website of the US "Foreign Affairs" magazine quoted Saudi officials on the 22nd as saying that the old model of the United States in exchange for "security" for low-priced oil is dead, and Tehran and Riyadh believe that they will benefit from China's efforts to restore regional relations.
According to Foreign Affairs magazine, Saudi Arabia's strategic autonomy vision shows that Riyadh wants to maintain close and independent relations with the United States, Russia and China, and Iran is also actively "looking east" in the economic sphere. Many parties are welcoming China's deepening role in the Gulf region, and with China's increasingly thriving economic interests in the region, Chinese companies may usher in more opportunities.
"China's 'Belt and Road' initiative and the economic vision of the Gulf Arab countries and Iran have strong complementarity," Wang Jin told the Global Times, adding that the economic influence of China and the United States on the region is changing, and the total amount of economic cooperation between China and related countries is increasing, and the type, depth and breadth of cooperation are becoming more and more comprehensive. In the future, the economic and trade ties between China and the Gulf Arab countries and Iran are expected to become closer and better.
Wu Bingbing, director of the Center for Middle East Studies at Peking University, told the Global Times that Chinese companies have their own advantages and characteristics for investment and cooperation in this region, such as infrastructure, new energy vehicles and digital economy. Chinese enterprises should give full play to their advantages, and at the same time, they must keenly grasp each other's national policies.
Iran's "Look East" strategic plan focuses on economic cooperation with non-Western countries such as China. The Iranian government's "Productivity Development" plan plans a large number of projects in the fields of energy, minerals, infrastructure construction, and industrial production.
In the field of automobile industry, the Iranian automobile market is in great demand, and manufacturing technology needs to be upgraded urgently. The Iranian government plans to continue to improve the level of cooperation between China and Iran in the automotive industry, attract Chinese investment, and expand the scale of joint production of automobiles. In the field of infrastructure construction, Iran plans to build 4 million residential units, Bahapur, head of the Tehran Construction Cooperation Federation, said that Chinese enterprises are at an advanced level in the field of construction and should cooperate with China to introduce advanced technology and experience. Iran has also planned a number of domestic and cross-border railways and highways, which are in dire need of foreign investment and technology. In the field of minerals, Iran has about 7% of the world's proven mineral reserves, rich in copper, iron, aluminum and other mineral resources. Recently, Iran discovered 8.5 million tons of lithium reserves in Hamedan province, which has become the focus of the new energy vehicle industry.