The Middle East is witnessing a bitter struggle between Saudi Arabia and Iran for regional hegemony. A series of events brought the bilateral relations to the lowest level.

       The crisis started with the execution of the Shiite Sheikh Nimr Al Nimr in Saudi Arabia, and protesters in Tehran stormed the Saudi Embassy. Riyadh broke immediately its diplomatic relations with Tehran. Despite existing differences the League of Arab States commonly supported Saudi Arabia and several Arab states broke their relations with Tehran as well.

       Changing international frame

       The nuclear agreement between Iran and the six major powers represents from Saudi perspective a direct threat to Riyadh’s regional influence. Iran is challenging Saudi Arabia in proxy wars in different areas of the Middle East. Since President Barack Obama was inaugurated as president on January 20, 2009, the Saudi-American alliance began to swing. The Saudi-American alliance, which lasted since the "Quincy Agreement" in 1945 during the famous meeting between former US President Franklin Roosevelt with Saudi Arabia's founder King Abdul Aziz bin Saud on board the USS "Quincy", is no longer in full function. The crisis broke out witrh the "Arab Spring" through the Syrian crisis and found its peak with the nuclear agreement with Iran.

       Over the full seven decades between 1945 and 2015 the Saudi-US alliance was based on a clear and transparent exchange: oil for security. The nuclear deal with Iran made Washington a mediator in the conflict between Saudi Arabia and Iran. Washington ceased to be absolute ally of Saudi Arabia in each regional battle.

       Iran still maintains its regional presence accumulated since the occupation of Iraq in 2003, and is ready to deal with the US in the region. Some American experts consider the importance of Iran's post-nuclear agreement higher than relations with Saudi Arabia, in terms to settle important regional problems. The international echoes of current Iran-Saudi Arabia escalation confirm these estimates, because the majority of the US media coverage was leaning to Iran, and not to Saudi Arabia.

       However, with Obama entering the "lame duck" period, hopes of Riyadh are connected with election of a Republican president next year, who could restore the Saudi-American alliance. Currently Riyadh is trying to win time and form new regional alliances in order to curb Iranian influence, and to prevent Tehran from reaping the benefits of the nuclear agreement on the regional level.

       Transformed Regional Context

       At the beginning of the year 2016 Saudi Arabia announced an "Islamist alliance against terrorism" which included Arab and Islamic countries from within and outside the region –with exception of Iran, Iraq and Syria. After Saudi Arabia cut its diplomatic relations with Iran, Sudan and Bahrain followed. The UAE reduced the level of its diplomatic representation with Iran, Kuwait summoned its ambassador in Tehran and Oman condemned the storming of the Saudi embassy in Tehran. Later on, the LAS showed a rare and clear solidarity with Saudi Arabia. The traditional counterweights in LAS like Egypt, Algeria, Syria and Iraq are busy with their internal issues. Arab Gulf states with their huge financial resources could pose more weight and power within the LAS.

       It will take some time observe major shifts in the regional balance of power. Saudi Arabia and the Arab countries are paying today the price of the occupation of Iraq in 2003, and its transformation from a barrier in front of Iran to a base of Iran’s influence in the Middle East. Saudi Arabia’s conditions are becoming more difficult; Riyadh has not been able to achieve a clear victory in Yemen after months of fierce battles. The decline in oil prices causes a budget deficit in Saudi Arabia, which is estimated of one hundred billion dollars for the current fiscal year. Therefore, Riyadh is forced to impose new taxes, shrinking the public spending. This means that the "social contract" between the ruling family and the Saudis (economic welfare in exchange for civil liberties and political rights) will be subjected to a severe test. Like Saudi Arabia, Iran relies on oil, and with return to the world oil market after lifting sanctions, revenues would be much less than the Iranian aspirations.

       Both parties - Iran and Saudi Arabia - will face soon severe internal tests: elections in Iran to the Parliament and “Experts Council”, which decides the identity of the leader, and the succession problem within the Saudi royal family by either crown prince Mohammad bin Nayef or the ambitious deputy prince Mohammad bin Salman, the King’s son. Logically, the regional escalation does not suit Iran now, since it would grow stronger with time by getting the sanctions lifted and gaining more international recognition. Perhaps for that reason Saudi Arabia prefers to escalate tension in relations with Iran.

       Saudi and Iranians are exchanged roles: a decade ago Iran under Ahmadinejad has chosen escalation in order to tilt the regional balances to its favor, and currently Saudi Arabia under Mohammed bin Salman chooses regional escalation to achieve the same goal.

       Consequences

       The struggle between Saudi Arabia and Iran would continue at least for the short term. That means that the proxy wars between two countries in Yemen, Iraq and Syria will continue as well. In Syria a political settlement of the conflict is especially difficult. Riyadh seems to push both Ankara and Cairo toward reconciliation in order to form a united regional front against Tehran. Let us wait and see.

       Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.