On November 3, Lebanese Prime Minister Saad Hariri landed in Riyadh. By the next day he would be on television reading from a transcript announcing his resignation as Prime Minister, pointing to Iranian regional meddling as the reason. That same night, Saudi Crown Prince Mohammad bin Salman (MBS) launched an “anti-corruption” purge, leading to the arrest of more than 200 elite Saudi officials and businessmen, including 11 royal princes.

New Cold War
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As the Saudi princes were being moved into house arrest at the Ritz-Carlton and a power vacuum was seeming to open in Lebanon, Yemeni rebels fired a missile towards Riyadh. Saudi Arabia immediately blamed Iran for the attack.

For the past two years Saudi Arabia has been embroiled in the Yemeni civil war between supporters of the government of President Abdrabbuh Mansour Hadi and the Houthi rebels. With the Saudis backing the pro-government coalition, and Tehran supporting the rebel forces, politicians and the international press have been quick to label the conflict as a “proxy war” between Iran and Saudi Arabia, perhaps overshadowing the massive humanitarian crisis that has been unfolding in Yemen.

Background

While tensions between Saudi Arabia and Iran have escalated over decades, their differences were perhaps cemented hundreds of years ago. Despite the nuanced nature of the relationship between the two nations, it is impossible to overlook their religious differences as a major source of conflict.

Although both countries are Islamic in law, character, and population Saudi Arabia is a Sunni nation, while Iran subscribes to the Shia branch of Islam. The differences between these two sects of Islam may seem insignificant to a casual bystander, but they emerged over a thousand years ago and have since become imbedded in each respective culture.

After the death of the Prophet Mohammad, his followers were unsure whom to follow. Some chose Abu Bakr, one of the Prophet’s fathers-in-law, while others selected Ali, Mohammad’s cousin, as their leader. The ensuing civil wars resulted in the death of Ali and his sons, whose martyrdoms are central to Shia Islam.

Perhaps the most salient demonstration of the religious differences between these two nations, at least on a geopolitical level, is the series of Middle Eastern conflicts that unfolded following the 1979 revolution in Iran, which saw Shia religious authorities replace the pro-Western Shah.

In the succeeding Middle Eastern conflicts, including the Iran-Iraq War and the 2003 U.S. invasion of Iraq, Sunni Saudi Arabia and Shia Iran found themselves squarely on opposite sides of each conflict, highlighting as well as reinforcing their differences.

The martyrdom narrative still manages to pack a strong rhetorical punch. The most recent breaking point in Saudi-Iranian relations came in 2016 with the execution of a prominent Shia cleric on terrorism charges in Saudi Arabia, which led to the dissolution of diplomatic relations between Iran and Saudi Arabia.

What’s happening in Yemen?

Understanding that the relationship between Iran and Saudi Arabia has evolved out of religious complexity and regional strife it is easy to see how the conflict in Yemen has devolved into a proxy war that some are labeling as the “New Cold War.” As one might imagine, this war is leading to a catastrophic humanitarian crisis.

The many airstrikes that have rocked Yemen have not only killed and wounded civilians, but also destroyed vital infrastructure like hospitals and sewage facilities, leading to the worst cholera outbreak the world has seen in the past 50 years.

Yemen’s economic instability, in part, led to the civil war. Now, after two years of fighting combined with the destruction of countless factories, the economy has collapsed. With millions of people displaced and out of work, starvation has seized the population, creating what is perhaps the worst food emergency in the world.

The constant fighting and air raids have destroyed key bridges and one of Yemen’s most important seaports, while a Saudi led naval embargo continues, making it nearly impossible for food or any international humanitarian relief to reach the population. According to the UN, 69% of Yemen’s population is in need of humanitarian aid.

Despite the Saudi-led coalition, the exiled government has been unable to reclaim power. In the midst of the chaos, Al-Qaeda is believed to be operating in some parts of Yemen, while ISIS has taken responsibility for attacks in the rebel controlled area of the country.

With no official diplomatic relations between the Iran and Saudi Arabia and little incentive to end the conflict, it becomes difficult to see how a resolution could be reached. Meanwhile, tensions escalate, airstrikes continue, and more than 14 million Yemeni people live without access to safe drinking water.

What’s next?

Although it remains unclear what the ultimate geopolitical outcome of the so called “New Cold War” are or what the shifting power dynamics in Riyadh and the region as a whole will bring, there have been some measurable financial ramifications of the rising tensions.

According to market research, the price of oil has risen in unison with the developing tensions in Riyadh, unsurprising considering Saudi Arabia is the world’s second largest producer of oil. In fact, the price of Brent Crude oil has increased by more than 40% since June. That being said, analysts believe that oil prices will decrease again by the end of the year, based on the assumption that Iran and Saudi Arabia will avoid direct hostility.

Given the November 4 missile attack, it seems unlikely that Saudi Arabia will be stepping away from the crisis in Yemen. Perhaps adding fuel to fire, the U.S. Air Force recently confirmed that the missile fired by the Houthi rebels, who were eager to take responsibility for the attack, was Iranian.

Analysts believe that Iran and Saudi Arabia will not directly engage in hostilities, however between the crisis in Yemen, the resignation of Hariri, and the recent so-called purge, MBS’s ultimate goals remain largely a mystery.

While leaders seem unmotivated to find a solution, the UN reported in October that it has failed to obtain funding for the humanitarian intervention that they had planned in Yemen.