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The Iran-Saudi Arabia agreement to restore diplomatic relations signals a major de-escalation between the two bitter rivals. However, the manner in which this deal came about raised more questions than the rapprochement itself. The agreement was brokered by China and signed in Beijing, thus signaling a significant shift in power alignments in the Middle East.

Historically, most of the accords in the Middle East have been either mediated or sponsored by the United States. Given the significant geostrategic and economic value of the region, these accords primarily between Israel and Arab states not only reflected the immense U.S.influence but also showcased Washingtons primacy in the region. Many have thus already described the recent development as a power shift, with China emerging as a significant player in the Middle East, replacing the U.S.

Though the resumption of diplomatic ties between the two Middle Eastern nations may not lead to a dramatic change in the regional security equation, the optics of Beijing playing an effective mediatory role between these long-time adversaries will surely raise Chinas status as a regional political player. In due course, other countries in the Gulf and beyond may begin seeing China as a more reliable mediator than Washington.

The ease with which China has filled the vacuum created by the United States falling political and economic engagement with the Middle East, some experts argue, would eventually catapult Beijing to global hegemony. However, global hegemony, as John Mearsheimer would argue, may prove to be an unattainable goal; more realistically, political influence over the Gulf may help China realize its regional ambitions. Regional hegemony would effectively enable China to neutralize its peer competitors in other regions too.

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But having China as a regional hegemon in Asia would not augur well for Indias geostrategic ambitions.

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The announcement of the rapprochement was significant on two other accounts. First, it timed to coincide with the beginning of Xi Jinpings unprecedented third term as the president of China, which reflected his complete grip on the party and thus laid to rest rumors about any simmering dissent. Second, it laid bare Chinas geopolitical ambitions of seeking political influence in the Middle East, something which Beijing always denied in the past. China has repeatedly declared that its interests in the Middle East are only economic. Some believe that it is only a matter of time before Beijing establishes a military presence in the region. This deal, therefore, comes with a huge red flag for India and raises important geopolitical and strategic questions for New Delhi.

Indias response to the recent Iran-Saudi Arabia rapprochement has so far been muted, and some experts have termed this silence disquieting. The question is, what should Indias official response be? No democracy can openly show hostility toward a peace initiative, even when brokered by an adversary. India has traditionally welcomed any reestablishment of diplomatic ties between these two nations. India also openly welcomed the agreementlast yearbetween the United Arab Emirates (UAE) and Iran to resume the exchange of ambassadors.

New Delhi, it seems, is patiently watching events unfold and has rightly not been hasty in dismissing the Chinese initiative. On the whole, Indian interests in the Gulf would plausibly be more secure if the two bitter rivals were actively working to de-escalate mutual tensions. India, among other countries, also gained from the2001 security agreement between Saudi Arabia and Iran, which prevented active conflict for 10 years despite deep mutual mistrust.

Iran was one of the primary oil suppliers to India, making up 11 percent of the total oil imports, up until 2019, when the Trump administration imposed sanctions on Iran after revoking the nuclear deal. India stopped its oil imports from Iran, and this significantly impacted Indias energy sufficiency, adding strain to the domestic economy.

At the same time, Indian and Chinese interests in the Gulf have the potential to be in conflict. Like India, China is a major importer of Saudi oil. Chinese oil imports from Iran are substantial, whereas Iran has traditionally been a major hydrocarbon supplier for India. A China-friendly Middle East would give Beijing leverage to manipulate Indias interests, besides greatly boosting Chinas Belt and Road investments and its African ambitions.

Moreover, in the realpolitik sense, increasing Chinese influence in the Middle East may indirectly help Pakistan, both economically and strategically. Given the close relationship between Islamabad and Beijing, China may advocate Pakistans case and influence rich Gulf countries to help ease Pakistans financial woes. In such a scenario, the Middle East under Chinas sphere of influence may fundamentally undermine Indias commercial and security interests.

Despite all this, the current developments may strangely create an opportunity for India to project itself as a more effective alternative to China. The hesitance of the United States to spend more political capital on mediating conflicts in the Middle East creates an opportunity for others to fill this space. Some would argue that China has already or is beginning to fill this vacuum. However, given Indias long-standing relationships with most of the Gulf states, it has a clear edge over China to become a more reliable partner and mediator. The large Indian diaspora in the Middle East is a formidable asset that provides India with a unique soft power advantage. This diaspora can act as a steadfast anchor in relations, irrespective of policy shifts and external shocks.

Moreover, given the potential tilt in the balance of power with the rise of China in the gulf region, the United States would inevitably put its weight behind any Indian effort as a future peacemaker in the Gulf.

Another added advantage for India is its growing cooperation with Israel. The I2U2 partnership between India, Israel, the UAE, and the U.S. has already put India on the regions alliance canvas. New Delhi has strong motivations to push I2U2 as it seeks to reframe its relationship with the Middle East and gain a bigger footprint in the region. New Delhi can leverage its de-hyphenated stance in the Middle East to act as a bridge between Arab states and the Jewish nation.

Indian and Chinese interests in the Gulf could become mutually exclusive if China restricts its ambition to the economic domain, something which China has publicly maintained. Indian interests will be compromised if China intends to use the Gulf region for its force projection. India needs to patiently assess if Chinas growing involvement in the Gulf is detrimental to its long-term security interests and the regional balance of power. At the same time, recent developments also provide a window of opportunity for India to embed itself as a significant player in the Middle East.

Excerpt from:
China's Role in the Iran-Saudi Deal May Not Be All That Bad for India - The Diplomat