Riyadh Eyes Greater Influence, Trump Permitting

• Med this Week Middle East and North Africa

The MED This Week newsletter provides informed insights on the most significant developments in the MENA region, bringing together unique opinions and reliable foresight on future scenarios. Today, we shed light on Saudi Arabia's challenges for 2025.

The year 2025 has begun with significant challenges for Saudi Arabia. On the domestic front, as the Vision2030 deadline approaches, the Kingdom enters a critical phase of implementation. Riyadh now faces the reality of project delivery, which requires a reassessment of costs and timelines, while also working to attract foreign investors. However, the greatest source of uncertainty for the Saudi economy comes from the newly inaugurated Trump presidency. Saudi economic policy must remain flexible and adaptive to unexpected developments, particularly regarding oil production. Trump's recent call to lower oil prices could have significant repercussions for Saudi oil revenues, which remain a cornerstone of Vision 2030's funding. Yet, the impact of the 'Trump factor' extends far beyond domestic and economic affairs - it carries even greater weight for Saudi Arabia's foreign policy. Trump is increasing pressure on Saudi Arabia to normalise its relations with Israel, but since Riyadh's sine qua non - the creation of a Palestinian state - is making no progress, achieving this goal remains distant. Moreover, despite his tough stance, Trump has done little or nothing to bridge the gap, especially with his latest statement - calling for the expulsion of Palestinians from the Gaza Strip - which was firmly rejected by the Kingdom. While the Axis of Resistance appears to be weakening, concerns remain over Iran's future policies, prompting Saudi Arabia to maintain its dual approach of diplomatic rapprochement and strategic containment of the Islamic Republic. The situation in Syria has also necessitated a shift in Saudi policy. Riyadh is taking the lead in engaging with the new Syrian government, signalling a major shift in regional alliances. On Monday, 3 February 2025, Syria's Interim President Ahmed al-Sharaa concluded his first foreign trip with a visit to Riyadh, underscoring Saudi Arabia's growing role in shaping Syria's future. However, al-Sharaa was not the only leader to visit Saudi Arabia in early 2025. On 28 January, Turkish Foreign Minister Hakan Fidan met his Saudi counterpart in Riyadh to discuss pressing regional crises and to enhance Turkish-Saudi bilateral relations. Just a day earlier, on 27 January, Italian Prime Minister Giorgia Meloni met with Crown Prince Mohammed bin Salman, signing a $10 billion agreement. Despite the many challenges ahead, Saudi Arabia continues to assert itself a key player on the Middle Eastern chessboard, strategically positioning itself amid shifting regional and global dynamics.

Experts from the ISPI network discuss Saudi Arabia's foreign policy and economic challenges for 2025.

Reforms, oil, and foreign investments: Saudi Arabia's 2025 formula for its economic goals

"The main challenge for Saudi Arabia in 2025 is to push ahead with its ambitious domestic reforms while contending with the greater-than-usual policy uncertainty in the US that is likely under President Trump. To manage these uncertainties, Saudi economic policy will need to remain flexible and respond to unexpected developments as they materialise. The oil market remains critical to Saudi Arabia's ambitions. High oil revenues are needed to finance the Vision 2030 projects, but these high revenues may become increasingly difficult to sustain given President Trump's recent call for lower oil prices. A key need for the Saudi economy is to attract more foreign investment to help with the development of new sectors and industries which are critical for diversification and job creation."

Tim Callen, Visiting Scholar, Arab Gulf States Institute in Washington (AGSIW)

Allies at a crossroads: will Saudi Arabia be able to balance Trump?

"Currently, Saudi Arabia's main foreign policy challenges all depend on the new Trump presidency. In the Middle East, Riyadh is going to navigate through many obstacles amplified by the White House. The return to the American 'maximum pressure' policy against Iran is at odds with the de-escalation process the Saudi kingdom is cultivating with Tehran; the recent US decision to redesignate the Houthis as Foreign Terrorist Organization further hampers Saudi-backed diplomacy in Yemen; Trump's rush for extending the Abraham Accords clashes with the Saudi precondition of establishing a Palestinian state before recognising Israel. Regarding the international economy, US tariffs and economic polarisation are negative news for investments-driven Vision 2030, with Riyadh still focused on raising gradually the oil output, differently from the White House's desires. In a few words, MbS and Trump are tight allies and friends, but will Saudi Arabia succeed in striking a win-win balance with the US amid so many challenges?"

Eleonora Ardemagni, Senior Associate Research Fellow, ISPI

2025 will be a year full of challenges for Riyadh's foreign policy

"In 2025, Saudi Arabia faces a multifaceted array of foreign policy challenges in the Middle East. The relationship with Iran remains fraught with historical and current tensions, necessitating careful diplomatic manoeuvring. The conflict in Yemen continues to be a significant concern, with Saudi Arabia seeking a stable and secure resolution while engaging in peace talks. Efforts towards normalisation with Israel are complicated by the unresolved Palestinian issue, requiring a nuanced approach to maintain regional stability and domestic support. Under Vision 2030, Saudi Arabia is actively diversifying its economy, which involves forging new international partnerships beyond traditional allies like the United States, including with China, to bolster economic growth. The Kingdom also aspires to play a pivotal role in regional mediation, aiming to resolve conflicts from Sudan to potential roles in broader international issues. Lastly, ensuring the safety of maritime routes in the Red Sea is vital, given the strategic importance of these waters for global trade"

Hesham Alghannam, Nonresident Scholar, Malcolm H. Kerr Carnegie Middle East Center

Containing while engaging: Saudi strategy with Iran

"Shifting Middle East dynamics indicate a decline in Iran's regional influence, as its allies recalibrate their strategies. Iran's ability to project power through the Axis of Resistance has weakened, though concerns about its future policies persist. For Saudi Arabia, managing ties with Iran requires both diplomatic engagement and strategic containment of Tehran's regional interventions. These dual objectives - rapprochement and containment - are pursued as complementary efforts. Saudi policy remains vigilant yet adaptive, recognising Iran's constraints and the emerging opportunities for stability. This decline reflects less a shift in Tehran's policies and more a strategic shift by other powers favouring confrontation over appeasement. Strategically, the focus remains on countering Iran's influence at the regional level. This includes supporting efforts to curtail its military and ideological reach in countries where it has entrenched itself, such as Syria, Iraq, Lebanon, and Yemen. By prioritising these containment measures, Gulf Cooperation Council (GCC) states can work towards eliminating Iran's illegitimate presence in the region while continuing to engage diplomatically on matters of mutual concern."

Layla Ali, Researcher, Gulf Research Center

Saudi Arabia wants the "New Syria" on its side

"Within the GCC, Saudi Arabia is taking the lead in engaging post-Assad Syria. The Kingdom seeks an influential role in Syria's future, and al-Sharaa's government wants Saudi Arabia to be deeply involved in the war-torn country's redevelopment. Riyadh eyes opportunities across many domains in Syria (energy, health, technology, education, etc.), but recognises the extent to which Western sanctions stand in the way. Politically, the Kingdom wants the 'New Syria' to align with Riyadh, not Iran and Hezbollah, on regional issues. Saudi Arabia sees its influence over Syria's post-Assad government as a valuable opportunity to minimise any potential for the Hay'at Tahrir al-Sham leadership in Damascus to ever challenge other Arab governments with threats of exporting revolutionary Islamist ideology throughout the region."

Giorgio Cafiero, CEO and Founder, Gulf State Analytics

Amid international challenges, Riyadh and Ankara seek a closer partnership

"Türkiye's Foreign Minister Hakan Fidan's visit to Saudi Arabia and his meeting with his Saudi counterpart, Prince Faisal bin Farhan, take place against the backdrop of strengthening ties on bilateral issues and regional matters of mutual interest. This is particularly significant in light of Trump's return to the White House and the rising challenges posed by Israel in both the Syrian and Palestinian contexts. Given the 'Trump factor' and Israel's tendency to escalate tensions in the region, the visit underscores the need to accelerate and enhance the Turkish-Saudi Coordination Council as a vital mechanism for deepening collaboration in the political, economic, and defence sectors. It also emphasises the importance of collective regional efforts to stabilise the situation and advance credible, sustainable solutions in Syria and Palestine. Key discussions included the necessity of lifting sanctions on the New Syria, urging Israel to achieve lasting peace in the region, and reinforcing the importance of implementing the vision of a two-state solution regarding the Palestinian issue. These issues are expected to be communicated to partners of both countries in the region and beyond."

Ali Bakir, Assistant Professor, Qatar University, Senior Non-Resident Fellow, Atlantic Council's "Scowcroft Middle East Security Initiative" and Middle East Programs

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