By Antonio Graceffo
The Chinese Communist Party’s Middle East peace deal has implications for U.S. regional influence.
On March 10th, Saudi Arabia and Iran announced that they would resume diplomatic relations in a deal brokered by China. Relations between the two countries have been broken since 2016 over a dispute regarding Riyadh’s execution of a Shi’ite Muslim cleric. The final straw for their relationship was when the Saudi embassy in Tehran was stormed by protesters. Afterward, both countries recalled their diplomatic missions.
Tensions worsened when Saudi Arabia blamed Iran for a 2019 drone attack on its tankers in the Gulf. Saudi Arabia also accused Tehran of engaging in proxy warfare when Yemen’s Iran-aligned Houthi terrorists carried out cross-border missile and drone attacks in Saudi Arabia and the UAE, hitting Aramco facilities in Jeddah.
The CCP-brokered agreement is meant to reduce tensions and improve security in the Gulf region. However, before celebrating an end to hostilities, it is important to remember that the situation is complicated. One of the major players in the region is Israel, whose relationship with the United States, though strained, still defines much of the U.S. engagement with other Middle Eastern nations.
The Abraham Accords signed between Israel, the United Arab Emirates, and Bahrain, and witnessed by President Trump, went into effect on September 15, 2020. Last year, Israel signed a free-trade agreement with the UAE, the largest such agreement with an Arab nation. It had been hoped that Saudi Arabia would also join the Abraham Accords because this would have gone a long way toward ensuring peace in the Middle East.
Saudi Arabia and Iran have been at odds for decades. The Saudi-Iran power struggle left Saudi-allied countries dependent on U.S. military protection in exchange for remaining silent on the Palestinian issue. The deal brokered by China, assuming the peace holds, removes any real chance that Saudi Arabia would recognize Israel. It may even threaten the participation of the UAE in the Abraham Accords. If real peace is achieved where Houthis do not extend their attacks beyond the borders of Yemen, then this would undermine the need for U.S. military protection.
The Houthi, whose motto is “God is great, death to the US, death to Israel, curse the Jews, and victory for Islam,” are a rebel group fighting against the recognized government of Yemen’s President Abed Rabbo Mansour Hadi. The government side is being supported by a Saudi-led coalition, including troops from the UAE, which is backed by the United States. This peace agreement could convince Iran to pressure the Houthis into retiring from the fight. This could mean that the Houthis would have to accept Abed Rabbo Mansour Hadi’s government. Or, it could mean that the Saudi-led coalition would withdraw from Yemen and allow the opposition to take control. Until these questions are resolved, it is unknown whether this new agreement will bring peace.
From an American perspective, the agreement is troubling as it is the latest step in the CCP’s campaign to bring the Middle East into its political orbit. The wording of the joint trilateral statement by China, Saudi Arabia, and Iran sounds exactly like CCP rhetoric to have “respect for the sovereignty of states and the non-interference in internal affairs of states.”
This verbiage has repeatedly been used in official Chinese foreign policy statements to deflect challenges to the annexation of Taiwan, the repression of democracy and freedoms in Hong Kong, or condemnation of the repression and genocide against the Uyghurs in Xinjiang, as well as cultural genocide in Tibet and Inner Mongolia. The CCP’s stance is that these are internal affairs and that outsiders should not meddle.
The CCP includes similar language in many of their international agreements such as BRICS and the Belt and Road. In a recent declaration by the Shanghai Cooperation Organization (SCO), participating nations pledged “respect for other countries’ sovereignty and non-interference in their domestic affairs.” By co-opting a growing number of countries into signing documents forbidding intervention in another country’s sovereignty, the CCP is preventing these nations from voting against China in the UN Security Council or United Nations Commission on Human Rights.
Ever since the United States became largely oil-independent, China has displaced the United States as the world’s greatest importer of oil. This makes China a larger economic partner for many Middle Eastern countries and strengthens Beijing’s influence.
While the United States has less influence as a buyer, it still holds two advantages over China. The first is that oil is priced in U.S. dollars. Because all countries need oil, most countries hold the U.S. dollar as their reserve currency. For Saudi Arabia and other oil-producing nations, pricing and collecting oil sales in U.S. dollars eliminates currency exchange risk and prevents their central banks from having to go onto foreign currency markets to buy dollars. Many Middle Eastern countries including Jordan, Oman, Qatar, Saudi Arabia, and the United Arab Emirates also peg their currency to the dollar.
China has been trying for years to convince Saudi Arabia to settle at least some of their oil trade in yuan. After many years of discussions, however, Riyadh and Beijing have only agreed to possibly make a deal in the future. The truth is that Saudi Arabia has no use for yuan. The dollar will remain its reserve currency because most imported goods and raw materials must be paid for in dollars. The United States is also the primary weapons supplier for the Saudi military, and those weapons also have to be paid for in USD.
Being a weapons supplier is part of the United States’ second advantage over China—the military. The United States maintains bases in Saudi Arabia, UAE, Oman, Turkey, Syria, Lebanon, and Israel, which provide physical security to its regional partners. If the peace agreement holds, these countries may feel they no longer need U.S. protection, and may choose to be in Beijing’s orbit. But this remains to be seen and is part of a far-off and hypothetical future. Even then, there would still be the issue of dollar dominance, an issue the CCP is powerless to resolve.
This article originally appeared in The Epoch Times 3/20/2023Updated: 3/20/2023
