Houthis sign an oil exploration deal with a Chinese company; tacit Saudi-Iranian approval expected
More deals between China and other Arab countries are expected with the tacit approval of Saudi and Iran
Houthis government and a representative of the Chinese government, as well as Anton Oil Services, signed on 20 May 2023 a MoU in Sanaa to invest in oil exploration in Yemen. According to the Houthis’ Minister of Oil and Minerals, Ahmed Daris, the MoU came after many negotiations and coordination with several foreign companies. The minister welcomed investments in Yemeni oil, stressing the Houthi government’s keenness to provide incentives for foreign companies. He added that there are many ongoing negotiations with other international companies to invest in oil exploration in Yemen and soon more MoUs will be signed in that regard. He warned foreign companies against dealing or concluding any contracts with the coalition-backed government in Adan.
For over a year, Houthis have exercised tight control on Yemeni energy exports by targeting foreign ships loading Yemeni oil in coordination with Adan-based government. Several drone attacks were conducted by Houthis against foreign ships that attempted to load energy from Yemeni ports. By signing this deal, the Houthis are reaping the economic benefits of their recent reconciliation with Saudi Arabia. The deal opens the gate for further Chinese investments in the country which will help it in development and growth.
The deal is effectively the first fruit of the Saudi-Iranian rapprochement. Both countries are interested in stabilising Yemen as a gate to expanding their mutual cooperation and ensuring the security of oil flows from the gulf. China is broadening the scope of Pax Sinica and using its economic might to broker peace and stability in the Gulf region where it imports lots of its energy. With the involvement in Yemen, China is expected to also contribute to easing regional tensions in Jordan, Iraq, Lebanon, and Syria. Already last year, Syria joined the Belt and Road Initiative. Lebanon and Iraq are already talking with the Chinese about increasing investments and joining the BRI. The next economic peace agreement China can pursue is in these countries with Saudi and Iran’s blessing.
Globally, after signing strategic investment agreements with Iran and Saudi, China is continuing to pursue undermining the US influence in the region. China’s economic charm offensive will require a response from the US, but it will be challenging for the US to change course on its anti-Iran policy, narrowing the pool of potential responses. Recently, the US invited Iraq to the Summit for Democracy 2023 which discussed expanding economic ties with like-minded democracies. The US can use this platform to build stronger alliances with Iraq and the region.
In the coming months, more deals between China and other Arab countries are expected with the tacit approval of Saudi and Iran who are set to reap the largest benefits from Pax Sinica. The US response to China remains to be seen but will be a significant factor in China’s success chances.