Navigating Complex Interdependence: A Theoretical Assessment of Iran–Saudi Economic Diplomacy and Normalization

Abstract

In this article, the author examines the degree of validity of Complex Interdependence (CI) theory in the context of post-2023 normalization of the relations between the Islamic Republic of Iran and the Kingdom of Saudi Arabia by Robert Keohane and Joseph Nye. Building on the Structural Realist paradigm, which sees security in the Persian Gulf as a zero-sum game and military competition as the only means of resolving conflicts, this study investigates how Saudi Arabia's economic statecraft of Vision 2030 for modernization and Iran's economic statecraft through a desire to alleviate sanctions have altered bilateral relations leading to a more pragmatic de-escalation of tensions. The study systematically challenges the three operational assumptions of CI theory – multiple channels of interaction, the lack of an issue hierarchy and the diminishing importance of military force – and shows that economic diplomacy and institutional integration are in the process of significantly changing the statecraft of regional security. The paper ends with strategic policy options for institutionalizing bilateral risk-reduction mechanisms.