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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

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Dominic Dudley

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    Data from regional projects tracker MEED Projects shows that $737m-worth of construction and infrastructure contracts had been awarded in the kingdom by 29 October 2026. While this exceeds the $686m recorded across the whole of 2025, it confirms that the market remains in a prolonged downturn.

    Between 2016 and 2020, Bahrain recorded more than $2bn in annual awards, peaking at nearly $3.9bn in 2016 when major packages for the Bahrain International airport expansion were signed. Awards then fell to $912m in 2021 before rebounding to almost $2bn in 2022. The recovery was short-lived, with awards declining to $1.66bn in 2023, $1.57bn in 2024 and $686m in 2025.

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    Activity this year has been supported by several housing and transport packages.

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    The package includes a signature bridge connecting Muharraq with the North Manama Causeway and Bahrain Bay, as well as road works between junctions four and five.

    Residential projects provided further volume. Mohammed Abdulmohsin Al-Kharafi & Sons secured a $112.4m contract to build 512 social apartment units on Madinat Salman’s Island 12. Binaa Al-Bahrain also appointed Kooheji Contractors to build Bayview in Manama, a development comprising four residential buildings and 489 apartments.

    Early-stage commitments included a BD5m ($13.5m) consultancy contract awarded to US-based Populous for the planned Sports City at Sakhir. The scope covers the masterplan, internal infrastructure, phase 1A design and tender documents. Lebanon’s Dar Al-Handasah won a QR28m ($7.7m) contract to conduct feasibility studies for the proposed 40-kilometre Qatar-Bahrain Causeway, also known as the Friendship Bridge.

    Transport links

    Transport is the most promising near-term outlet for the market, with a pipeline valued at about $15bn, according to MEED Projects data.

    Cross-border rail has re-emerged as a strategic focus. Bahrain has introduced legislation to establish a framework for constructing, operating, maintaining and regulating railway networks, including licensing, safety, cross-border services, and passenger and freight tariffs.

    The move comes as Gulf states prepare to advance the GCC railway network, which is expected to begin operating by the end of 2030. Bahrain’s proposed rail link to Saudi Arabia is expected to run via the planned King Hamad Causeway, a second fixed connection between the two countries alongside the King Fahd Causeway.

    Road expansion is also progressing. In September, the Bahrain Tender Board received bids from Nass Contracting, Haji Hassan Group, Almoayyed Contracting Group, Mohammed Abdulmohsen Al-Kharafi & Sons, Eastern Asphalt & Concrete Production, Cebarco Bahrain and Kingdom Asphalt for the upgrade of two kilometres of the Sheikh Jaber Al-Ahmed Al-Sabah Highway. The works involve a four-lane dual carriageway with service roads.

    Industrial and maritime infrastructure is advancing, too. The Ministry of Works received five bids for engineering and quantity surveying services linked to reclamation works at Salman Industrial City and Bahrain Logistics Zone.

    Dar SSH International Engineering Consultants submitted the lowest offer at BD778,580 ($2.1m), followed by Aecom at $2.2m, Ansari Engineering Services at $2.3m, Millet Engineering Bureau at $2.4m and Ayesa at $2.8m. The project involves reclaiming about 1.13 million square metres of land using 9.67 million cubic metres of fill near Khalifa Bin Salman Port.

    The government is also preparing the Bahrain Northern Link Road as a public-private partnership. The 29.5km highway will connect the North Manama Causeway with Suhaila Island and the King Hamad Causeway, creating a parallel east-west route to Sheikh Isa Bin Salman Highway and improving links between Khalifa Bin Salman Port and Saudi Arabia.

    Building pipeline

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    The four-storey complex will be built on a reclaimed island and will include a main hall for joint sessions, separate debating chambers, administrative offices, an auditorium, library, museum, meeting rooms, public spaces, underground parking and supporting facilities.

    These projects provide a route out of Bahrain’s multi-year downturn. The market’s recovery, however, will depend on whether the government converts feasibility studies, advisory mandates and prequalification exercises into construction awards.

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    With a small economy and exports almost wholly reliant on passage through the Strait of Hormuz, Bahrain has been painfully exposed to the turmoil caused by the Iran war. The country’s social makeup – with a Shia majority ruled by a Sunni-dominated regime – is also showing signs of strain.

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