The Wilsonian peace thesis grounded in Kantian ‘perpetual peace’ could not end wars and armed conflicts due to institutional and operational lacuna that the world leadership overlooked owing to divergent interests. Hence, the complexities of political economy in the aftermath of World War I widened political and policy differences among the transatlantic power hubs. The world, tragically, witnessed another world war that affected power relations globally as well as regionally.

The US emerged as a ‘new’ hegemon. It replaced the British not just geopolitically but also commercially. Even institutionally, the US initiated organisational processes amid the World War II that culminated in the formation of the Unites Nations and the proverbial Bretton Woods institutions, i.e. the World Bank and International Monetary Fund.

Within a few years post-WWII, the US and USSR, which cooperated in the said war, parted ways. They expanded their strategic influence in initially Europe and ultimately in other parts of the world, particularly Asia. Europe felt tremors of Cold War (simply put: no peace, no war) in terms of Berlin Blockade (1948-49), formation of NATO in 1949 and consequent arms race between the US and USSR.

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From China’s perspective, for trans-regional trade and economic cooperation, particularly with Iran, where the former committed US $400 billion in Iran in 2021, a conflict-free regional environment is but necessary. Being rational stakeholders, Saudi Arabia and its GCC partners would desire the same since China has also invested considerably in Saudi Arabia, UAE, Qatar and, importantly, Israel. Both Iran and Saudi Arabia export petroleum products to China.

For uninterrupted supply chains and domestic growth in these countries, regional peace is a must. The Kingdom supported its Gulf ally, the UAE, to establish diplomatic ties with Israel. It also opened its air for Israel flights recently. Being a rational actor, Israel needs more markets for economic reasons.

As far the US is concerned, it has already shifted its strategic interest to Southeast Asia. The Asia Reassurance Initiative Act of 2018 (ARIA) and related policy procurements are a case in point. Nonetheless, being a key regional player, the US would keep its tactical presence in the region through its military basses. A relatively non-violent Middle East is likely to serve the American interests as well. The latter can focus on, for example, South China Sea than consuming resources in the Middle East. To this end, the US supported dialogue between Iran and Saudi Arabia through Iraq and Jordon under the Biden Administration.

However, since there has been a change in the government in Iraq and the US is busy in the Russia-Ukraine war, China has got an opportunity to play a lead role in terms of encouraging and hosting in camera talks between Iran and Saudi Arabia in recent months. From a neo institutionalist perspective, it is in the mutual interest of the two countries to prefer peaceful co-existence by establishing regimes and institutions, such as the free trade agreements. Additionally, the Saudi-Iran detente offers economic incentives to not only China but also other regional countries, such as the UAE and Qatar.

As far as Pakistan is concerned, it may not be a direct beneficiary of this détente in the short run. Pakistan may feel some of the trickle down effects of the normalisation between Iran and Saudi Arabia, the two archrivals that have affected the social, economic and political fabric of the country not just during the Cold War but in the 21st century as well. From sectarianism to one-dimensional foreign policy, Pakistan remained a hostage of its lop-sided strategic calculus. Pakistan’s internal problems, especially economic vulnerability, have hugely impacted its foreign policy. Even after 76 years, Pakistan suffers from structural compulsions.

Theoretically, the Saudi-Iran detente offers a room to Pakistan to strengthen economic relations with Iran – say, by resuming work on Iran-Pakistan gas pipeline project. However, because the Saudi resentment has been subdued post-rapprochement, Pakistan will find it difficult to put it into practice, given its conventional reliance on the US-led world (economic) order. Will the US nod Pakistan to reap dividends of Saudi-Iran detente is yet to be seen. But China will encourage trans-regional trade and economic cooperation – a hallmark of the BRI.

Dr. Ejaz Hussain has a PhD in political science from Heidelberg University and a post-doc from UC-Berkeley. He is a DAAD, FDDI and Fulbright fellow and an associate professor.

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