Despite the clear opportunities presented by recent Iranian setbacks (including the disarray inflicted by Israel on Lebanon’s Hezbollah), Saudi Arabia also needs Iran’s compliance to achieve its goal of extricating itself from Yemen’s long-running civil war, according to a recent analysis and forecasts presented by the Economist Intelligence EIU’s Country Analysis service
EIU analysis forecasted that Saudi Arabia will seek to avoid undermining its recent detente with Iran in 2025-29, despite Iran’s current weakness, as it hopes to broker a lasting settlement with the Iranian-aligned Houthis to end the threat of renewed cross-border attacks, including on oil installations.
In late December the kingdom extended another US$500m of financial support to Yemen’s internationally recognized government, which it backs, indirectly aimed at preserving the tentative domestic calm that has followed a truce in 2022.
In doing so, the kingdom hopes to advance the resumption of talks with the rebels when Israel’s war in Gaza and Houthi attacks on shipping in the Red Sea end, expected in 2025.
EIU analysis added that the extension of financial assistance and investment in Yemen will continue to serve as the kingdom’s primary vehicle for leveraging soft power in Yemen, throughout the 2025-29 forecast period.
More broadly, Saudi Arabia will attempt to exploit recent setbacks to Iran’s regional interests while preserving bilateral rapprochement. This will be aimed at promoting the regional military de-escalation that is necessary to attract the foreign investment that it requires for its planned domestic economic transformation.