The announcement of the restoration of diplomatic relations between Saudi Arabia and Iran, under Chinese mediation, has exposed the limits of the European Union’s influence in the Middle East.

While the EU was careful to avoid explicitly crediting China, which it has referred to as its “systemic rival,“ for the breakthrough, Brussels declared its readiness to build on it by engaging “with all actors in the Middle East in a gradual and inclusive approach, in full transparency.”

While such a statement suggests a pragmatic approach, it begs the question why it was China, an adversary, and not the EU, that facilitated the agreement between the two Persian Gulf rivals? Is dealing with the consequences of policies pursued by others the best the EU can do, particularly given the fact that United States, its main ally, was also excluded from a development that promises to reshape the geopolitical environment that the EU will have to navigate? What does it say about the EU’s proclaimed ambition to be a major geopolitical player?

Although the EU has its hands full with countering the Russian aggression in Ukraine, its waning influence in the Middle East preceded the war and is at least partly due to its own failure to deploy the leverage it once had in that region.

In the Middle East, China is now playing the role traditionally reserved for the Europeans: talk to all sides and back it up with economic muscle. Unlike the U.S., the EU had diplomatic relations with all the players in the region, including Iran. Following the 2015 nuclear deal known as the JCPOA, the EU and Iran agreed on an ambitious roadmap to develop bilateral relations. Even after former U.S. president Donald Trump unilaterally withdrew from the JCPOA in 2018, Iran maintained its compliance for more than a year in the apparently vain hope that Brussels would match its political statements with real financial commitments to keep the deal afloat.

The E3 (France, Germany, UK) created a special trade instrument — INSTEX — designed to facilitate legitimate trade with Iran. That initiative, however, soon hit a wall as European financial institutions were reluctant to engage in trade with Iran lest they fall afoul of  extraterritorial U.S. sanctions. In fact, a grand total of one operation was carried out via INSTEX which, just last month, dissolved. To add insult to injury, INSTEX’s European creators blamed Iran for its failure.

The E3/EU’s failure to fully comply with its part in protecting the JCPOA led whatever emerging leverage it had built with Tehran to collapse. Nor was the EU more successful in its desire to play a stabilizing role in the Persian Gulf. Following the assassination by the U.S. of Iranian Gen. Qassem Soleimani in January 2020, the EU committed to diplomatic initiatives to reduce tensions in the region, but it never followed up with a convincing strategy to achieve that goal.

Instead, the communication on the “EU strategic partnership with the Gulf,” unveiled in May 2022, envisaged many useful initiatives in the fields of green transition, digitalization, women empowerment, etc. However, it barely touched on the thorny issues of regional security. While it purported to encompass the “Gulf,” the document excluded Iran, Iraq, and Yemen, in effect equating the “Gulf” with the Gulf Cooperation Council (GCC). While that was a win for GCC lobbying efforts, it reduced the EU’s role to that of a technocratic manager of relations and then only with a limited group of countries — rather than a strategic player determined to help shape the region’s geopolitics.

The EU’s failure to protect the JCPOA and engage all the countries of the Persian Gulf in a truly balanced fashion contributed to the demise of Iranian moderates who staked a lot of their political capital on normalization of ties and increased trade with Europe. That failure helped hardline conservative factions consolidate their power and pivot to the “East” in their foreign policy. Subsequent supplies of Iranian drones to help Russia’s aggression in Ukraine, combined with the domestic crackdown on the protests that followed the killing by the “morality police” of the young woman Mahsa Amini, turned European public opinion decisively against the Islamic Republic. Add to that the numerous and outspoken voices of the Iranian diaspora that have transformed Iran into a domestic issue in some key European countries, and any new diplomatic initiatives with Tehran have become politically prohibitive for EU governments. 

While the EU has lost what little leverage it has ever had on Iran, its relationship with Saudi Arabia, in theory a key economic, diplomatic and security partner for the bloc, is not a much better. The kingdom ignored pleas from the West to increase its oil production in order to lower energy prices and politically damaging inflation in the U.S. and EU that were exacerbated by Russia’s war on Ukraine. While some argued that this was a result of the West distancing itself from a “key partner” by criticizing the ruinous Saudi war in Yemen, the gruesome murder of journalist Jamal Khashoggi, and the repression of women’s rights activists, the truth is that the EU, as a bloc, never imposed any sanctions on Riyadh for these transgressions. What little restrictions some individual states, to their credit, imposed on arms sales to the Saudi kingdom, were either reversed or offset by fellow Europeans filling the gap.

For Saudi Arabia, that would not change the fact that the kingdom sees itself as an ambitious sovereign power untethered to the West and eager to diversify its relationships. Normalizing relations with Iran is a perfect illustration. As significant as the deal itself is, the fact that the West’s nominal regional partner agreed to hand this diplomatic achievement to the West’s peer rival speaks volumes.

China’s bold move in brokering Saudi-Iranian normalization, which no doubt was aided by  regional players, notably Iraq and Oman, also illustrates the broader shifts towards greater multipolarity and intra-regional agency in the Middle East. China’s rise, however, was facilitated by the EU’s own declining ability to influence events in the region. The best the EU can do now is try to capitalize on any development leading to greater security and stability in the region.