Saudi Arabia’s Finance Minister, Mohammed Al-Jadaan, has indicated that the Kingdom could soon start investing in Iran, following a breakthrough agreement to re-establish diplomatic relations between the two regional rivals.
Riyadh and Tehran agreed to resume diplomatic relations and reopen embassies in each other’s countries following China-led negotiations in Beijing on March 10. This development is a significant boost for Iran’s economy, which has been battered by years of economic mismanagement, government corruption, and Western sanctions.
Signals hope
Al-Jadaan’s statement raises hope that mutual pledges made in the diplomatic agreement will be adhered to, leading to cross-investments, normalization of relations, and enhanced regional peace and security. The two countries have agreed to revive cooperation accords in several fields, including trade, economy, sports, technology, science, culture, and youth.
However, some analysts and policymakers remain skeptical about whether the two Middle Eastern powers, which are ideologically at odds, will stick to their pledges. The suspicions and mistrust between them will not disappear overnight. Both countries have accused each other of destabilizing the region and regard each other as grave security threats. They have often been on opposite sides of regional conflicts in Yemen, Lebanon, and Syria.
The Saudi Arabia-Iran détente is significant not only for Iran but also for Saudi Arabia. Saudi Arabia is investing internationally and launching mega-projects as part of the kingdom’s Vision 2030 plan to diversify away from oil. Investment in Iran would enable the kingdom to gain access to new markets and benefit from Iran’s skilled workforce.
The re-establishment of diplomatic relations and the possibility of cross-investments between Iran and Saudi Arabia are positive developments for the region’s economic and geopolitical stability. However, it remains to be seen whether the two countries will genuinely stick to their pledges and overcome their ideological differences to achieve sustainable cooperation.
