meed-logo

line1 line2 line3
SIGN IN / REGISTER

Riyadh takes the diplomatic initiative

2 April 2025

 

Saudi Arabia has been at the centre of regional diplomatic activity through the early months of 2025, positioning itself as an intermediary in the Ukraine conflict and at the forefront of engagement with the new regime in Syria.

The role of regional mediator is one that has in recent years been more closely associated with Qatar – particularly in relation to the Gaza conflict – and, on occasion, Oman.

Riyadh’s decision to throw its weight behind diplomatic initiatives is part of what Abdulaziz Sager, chairman of the Saudi-based Gulf Research Centre, has described as a “bold multi-alignment strategy”, which seeks to balance Riyadh’s economic and security concerns and its regional leadership ambitions.

Multipronged initiatives

The kingdom has gained plaudits for its efforts to resolve the Ukraine war in particular. Following his talks with Crown Prince Mohammed Bin Salman (MBS) in Jeddah on 11 March, Ukraine’s President Volodymyr Zelenskyy said: “Saudi Arabia provides a crucial platform for diplomacy, and we appreciate this.”

Zelenskyy added that he had “a detailed discussion on the steps and conditions needed to end the war” with the crown prince.

The previous month, US secretary of state Marco Rubio had said Saudi Arabia had played an “indispensable role” in setting up bilateral negotiations between Moscow and Washington to discuss the conflict.

Russia’s President Vladamir Putin has also praised the Saudi leadership for providing a platform for high-level meetings with the US and “creating a very friendly atmosphere”.

Whether all this leads to a lasting peace deal for Ukraine remains to be seen, but Saudi Arabia’s attitude to conflict may be coloured somewhat by its own experiences over the past decade in Yemen.

It is now 10 years since it launched a bombing campaign against Yemen’s Houthi rebels in March 2015, and the war has not gone as Riyadh had hoped, with the Houthis proving far more resilient than anticipated.

Saudi Arabia’s southern border has at least been relatively quiet since a truce took hold in 2022, but a comprehensive peace deal has proved elusive.

Riyadh has also been re-engaging in the Levant this year, in light of the new regime in Damascus.

The new Syrian president Ahmed Al-Sharaa travelled to Riyadh in early February, on his first trip abroad since taking power. Saudi Foreign Minister Prince Faisal Bin Farhan had been in Damascus a week earlier.

There are some key issues at stake for Riyadh. The regime of President Bashar Al-Assad had overseen the industrial-scale production of the amphetamine-type stimulant Captagon, much of which was smuggled into Saudi Arabia and other Gulf states. Saudi efforts to disrupt the trade – both at its borders and via lobbying of the Syrian authorities – had failed to stem the flow of drugs.

In addition, Hasan Alhasan, senior fellow for Middle East Policy at the International Institute for Strategic Studies, has pointed out that between 500,000 and 2.5 million de facto Syrian refugees are thought to be living in Saudi Arabia – a fact that gives Riyadh a clear interest in Syria’s stability, particularly if it wants to encourage them to return home.

“Saudi Arabia views the fall of the Assad regime as an opportunity to reassert its influence in the Levant,” he asserted in a recent commentary.

The ousting of Assad in late 2024 and the recent Israeli campaign against Hezbollah has also changed the situation on the ground in Lebanon, encouraging Saudi Arabia to reconsider its approach there too.

MBS hosted Lebanon’s recently elected President Joseph Aoun on 3 March. Following their meeting, Saudi Arabia said it would look again at allowing Lebanese exports to Saudi Arabia and letting its own citizens travel to Lebanon.

Manoeuvring around Trump

The Saudi diplomatic push may also be motivated by a desire to ensure that relations with Washington remain on a positive footing in the wake of Donald Trump’s re-election as US president.

At first, it appeared that the bilateral relations would follow a similar pattern to Trump’s first term.

In January, MBS said in a phone call with Trump that Saudi Arabia was planning to invest some $600bn in the US over the coming four years, which the US president suggested should probably be increased to $1tn. This echoed the signing of $460bn-worth of defence deals when Trump made Saudi Arabia his first foreign trip as president in May 2017.

Riyadh appears to have conceded to Trump’s higher figure, with the US president saying in early March: “I said I'll go if you pay $1tn to American companies, meaning the purchase over a four-year period of $1tn, and they've agreed to do that. So, I'm going to be going there.”

However, other aspects of the bilateral relationship are more difficult and less predictable. Trump had been pushing Saudi Arabia to join Bahrain, the UAE and Morocco in normalising relations with Israel, but in light of the war in Gaza and Trump’s own plans for the ethnic cleansing of Palestinians from the strip, that looks like a stretch too far.

Trump will nevertheless have been pleased by the decision by Saudi Arabia and the other members of the Opec+ bloc in early March to unwind some of the production restrictions they had voluntarily agreed.

From April onwards, the eight-strong group will start to bring 2.2 million barrels a day back onto the market over the course of 18 months. That fits in with Trump’s call in January, soon after taking office, for Riyadh and Opec to do more to help bring oil prices down.

However, that decision may also create fiscal challenges for the Saudi government, as any rise in production could be more than offset by lower prices.

Saudi Aramco has announced plans to trim its dividend payouts this year to $85.4bn – down from $124bn in 2024. These payments are a vital source of revenues both for the central government and for its Public Investment Fund (which holds a 16% stake in Aramco)

All that could force some public sector spending constraint in the kingdom, in a sign that balancing diplomacy and financial interests is not always straightforward.

MEED’s April 2025 report on Saudi Arabia includes:

> UPSTREAM: Saudi oil and gas spending to surpass 2024 level
> DOWNSTREAM: Aramco’s recalibrated chemical goals reflect realism
> POWER: Saudi power sector enters busiest year
> WATER: Saudi water contracts set another annual record
> CONSTRUCTION: Reprioritisation underpins Saudi construction
> TRANSPORT: Riyadh pushes ahead with infrastructure development
> BANKING: Saudi banks work to keep pace with credit expansion

https://image.digitalinsightresearch.in/uploads/NewsArticle/13483143/main.gif
Dominic Dudley

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Uncertainty increases for Shell’s $3.9bn gas project in Iraq

    11 June 2026

     

    Uncertainty is increasing for phase two of the Basra Gas Company (BGC) expansion project in Iraq amid fallout from the ongoing regional conflict that started when the US and Israel bombed Iran on 28 February.

    BGC is a joint venture of the Iraqi Ministry of Oil through its subsidiary South Gas Company (51%), London-headquartered Shell (44%) and Japan’s Mitsubishi Corporation (5%).

    In September last year, the World Bank’s International Finance Corporation (IFC) signed a $500m investment deal with BGC for the phase two project.

    The entire phase two project is estimated to be worth $3.9bn, according to the IFC, which says the money will be spent between 2025 and 2030.

    Of the $500m deal that was signed in September, $300m will be provided directly by the IFC, and this was approved by the IFC’s board on 14 January this year, less than two months before the US and Israel attacked Iran.

    The subsequent conflict and the disruption to shipping through the Strait of Hormuz have created major obstacles for the project, according to industry sources.

    One source said: “Many Western workers that were specialists in the oil and gas sector have now left the country due to security concerns.

    “On top of this, it was originally assumed that required equipment for the project could be brought in through the Strait of Hormuz and that operational cash flows could be relied upon to help fund the project.”

    Due to the major disruption to shipping crude exports through the Strait of Hormuz, Iraq has had to dramatically reduce oil production in the Basra region, and, as a result, associated gas production has declined as well.

    One source said: “Right now, the state-owned oil companies in Iraq are in the midst of a financial crisis and it is unlikely that they will be able to contribute to this project in the way that was originally envisioned.”

    The main focus of the BGC phase two expansion project is a new liquefied petroleum gas (LPG) refrigeration train to increase the overall capacity of the upstream facility, where LPG and condensate are obtained through processing of the associated natural gas.

    The scope of the project also includes the construction of a new 22-kilometre-long, 132kV overhead transmission line, which will help to meet the energy demand associated with the project.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17178691/main.png
    Wil Crisp
  • PIF to work with Egypt’s TMG on Saudi real estate schemes

    11 June 2026

    Saudi Arabia’s Public Investment Fund (PIF) and Egyptian real estate conglomerate Talaat Moustafa Group (TMG) have signed a memorandum of understanding (MoU) to explore collaboration on mixed-use real estate projects across PIF-owned developments in Saudi Arabia.

    The non-binding agreement covers potential cooperation across the residential, commercial, hospitality and retail sectors, as well as integrated urban environments. PIF said the partnership would accelerate project delivery and value creation across its portfolio.

    TMG, which has nearly 55 years of experience developing large-scale integrated cities, communities and hospitality projects across Egypt, brings technical and managerial capacity to the collaboration. The company previously signed an agreement with Saudi Arabia’s National Housing Company (NHC) in early 2024 to develop more than 27,000 residential units at the Banan City project in Riyadh’s Al-Fursan suburb.

    The MoU also establishes a framework to attract additional investors to future project phases and is intended to expand private sector participation as investors, partners and suppliers.

    PIF said the agreement forms part of its broader strategy to diversify Saudi Arabia’s economy and develop its urban development and livability ecosystem – one of six strategic ecosystems under its 2026-30 strategy. That ecosystem spans housing, retail, office and community spaces and essential services.

    The MoU is subject to the satisfaction of certain conditions precedent and receipt of all necessary regulatory and internal approvals.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17181887/main.png
    Colin Foreman
  • Egypt signs $420m Gabal El-Zeit wind agreements

    10 June 2026

    Egypt has signed agreements worth $420m for the investment, operation and power purchase of the 580MW Gabal El-Zeit wind power complex in the Red Sea region.

    Gabal El-Zeit 1 has a capacity of 240MW, while Gabal El-Zeit 2 and 3 have capacities of 220MW and 120MW, respectively.

    The agreements were signed between Egypt’s New and Renewable Energy Authority (NREA), the Egyptian Electricity Transmission Company (EETC) and Dubai-based Alcazar Energy.

    Under the agreements, Alcazar Energy will invest in, operate and manage the farms through a project company established under Egyptian law.

    The company will be responsible for technical operations, maintenance and efficiency upgrades while maintaining a minimum capacity of 580MW throughout the contract period.

    The Egyptian Electricity Transmission Company will purchase the electricity generated by the plant.

    The agreements follow earlier efforts to privatise the Gabal El-Zeit wind complex, involving a deal with UK-headquartered private equity firm Actis.

    According to the Egyptian government, the project supports the country’s state ownership policy and national energy strategy, which aim to increase the share of renewable energy in the electricity mix to 45%.

    The Gabal El-Zeit area on Egypt’s Red Sea coast is one of the country’s most established wind power development zones. The latest Gabal El-Zeit wind farm was completed in 2014, according to MEED Projects data. Germany’s Siemens Gamesa was the main contractor. 

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17170360/main.jpg
    Mark Dowdall
  • Majid Al-Futtaim awards $545m Ghaf Woods contract to ECC

    10 June 2026

    Majid Al-Futtaim Properties has appointed Engineering Contracting Company (ECC) as the main contractor for the Capria East, Capria West and Maravelle Residences developments at its Ghaf Woods community in Dubai, in a deal valued at AED2bn ($545m).

    The contract covers the construction of one-, two- and three-bedroom apartments and duplex residences across the two Capria clusters.

    The award adds to a series of major construction contracts Majid Al-Futtaim has issued across its Dubai communities in recent years.

    In May, local contractor Al-Sahel Contracting was awarded a AED700m contract for the Distrikt development, also at Ghaf Woods.

    In 2024, Majid Al-Futtaim awarded AED3bn in contracts for its Tilal Al-Ghaf community, appointing Innovo Build to build 94 waterfront villas at Elysian Mansions and United Engineering Construction (Unec) to deliver 130 villas at the Alaya development.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17170744/main.jpg
    Colin Foreman
  • Saudi Arabia and Turkiye sign railway agreements

    10 June 2026

    Register for MEED’s 14-day trial access 

    Saudi Arabia and Turkiye have signed two memorandums of understanding (MoUs) to strengthen bilateral cooperation in the railway and logistics sectors, advancing Riyadh’s ambitions to become a global logistics hub.

    Transport and Logistics Services Minister Saleh Al-Jasser and Turkish Transport and Infrastructure Minister Abdulkadir Uraloglu signed the agreements at the ministry’s headquarters in Riyadh on 9 June, following ministerial talks held with a high-level Turkish delegation. Transport General Authority president Fawaz Al-Sahli and officials from the kingdom’s transport and logistics sector were also present.

    Agreement scope

    The first MoU covers logistics services and operations, including the exchange of expertise, policies and regulations. The second focuses on railway technologies, signalling and communication systems, railway digitalisation, human capacity development, the localisation of the railway industry and measures to reduce the sector’s environmental impact.

    More broadly, the agreements cover cooperation on railway standards and related innovations, the exchange of expertise on the design, operation and maintenance of rail projects, and engineering, infrastructure and safety standards.

    The two sides will also cooperate on research and development, with provision for joint workforce training through specialist railway academies.

    Riyadh said the agreements will help support its National Strategy for Transport and Logistics Services and Saudi Vision 2030, which seeks to position the kingdom as a logistics bridge connecting three continents.

    Turkish projects

    Turkish contractors have already established themselves as key players in the region’s rail sector. In 2012, Yapi Merkezi secured a $2.1bn contract for work on the Haramain high-speed rail network in Saudi Arabia, while Turkish firms Mapa and Limak are leading the ongoing civil works on Dubai’s $5.5bn Metro Blue Line project as part of a China Railway Rolling Stock Corporation (CRRC) consortium. Turkish consultancy Proyapi Muhendislik ve Musavirlik Anonim Sirketi has also won design contracts for the 111km Kuwait National Rail Road project.

    The agreements signed by Saudi Arabia and Turkiye may also give momentum to longstanding discussions around a rail corridor linking the GCC with Turkiye. The route, which has been discussed for years, has gained renewed impetus in recent months as the effective closure of the Strait of Hormuz has pushed regional governments to accelerate the development of overland trade alternatives.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17169958/main.gif
    Colin Foreman