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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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    That focus points to where McGrail expects the next few years of growth to come from. Rail sits at the centre of the UAE story, alongside road upgrades and other major developments in Abu Dhabi. In Dubai, the clearest signal of intent is the expansion of Al-Maktoum International airport.

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    Saudi reset

    In Saudi Arabia, the recalibration story predates the conflict, and McGrail says the change should be read as a strength rather than a retreat.

    “I am positive,” he says. “When the reprioritisation started at the beginning of 2025, having lived through the global financial crisis here, I saw the decision to stop, re-evaluate and reprioritise expenditure as a positive. When Vision 2030 was set, Saudi Arabia had not won Expo or the World Cup, so the reprioritisation was the right thing to do. Saudi Arabia will come out of it stronger. Short-term pain, long-term gain.”

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    > COMMENT: Saudi projects hold steady
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    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
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    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
    > DATABANK: Saudi data indicates project spending shift

    To see previous issues of MEED Business Review, please click here
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    MEED’s October 2026 report on Saudi Arabia includes:

    > COMMENT: Saudi projects hold steady
    > GOVERNMENT: Riyadh looks to reset its regional defence outlook
    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
    > UPSTREAM: Aramco upstream spending gathers pace
    > DOWNSTREAM: Sabic steps up Saudi petchems investment
    > POWER: Saudi Arabia’s power award activity slows
    > WATER: Saudi water sector hits sharp slowdown
    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
    > DATABANK: Saudi data indicates project spending shift

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20580855/main.jpeg
    Yasir Iqbal