A new order is emerging in the Middle East. For decades, Iran wielded influence across the region by cultivating a network of proxies that created instability in several Arab countries, from Lebanon to Yemen. Today, however, Iran’s regional status is drastically diminished. In contrast, Saudi Arabia is establishing itself as the most influential power in the Arab world. With Donald Trump’s administration back in Washington, Saudi Arabia and the United States can strengthen their partnership to neutralize the threat of destabilization by Iran and alter the balance of regional power for a generation.
Rise and fall of Iran’s proxies
Since the birth of the Islamic Republic of Iran in 1979, Iran has pursued a strategy of expanding influence in the Middle East. It projected hard power not only through nuclear enrichment and ballistic missile programmes aimed at presenting Iran as a geostrategic heavyweight in the region, but also through a doctrine it called ‘forward defence’.
This is the concept the Tehran regime used to justify – both to its people and to the outside world – its support for a number of armed proxies and political allies in the Middle East. Iran claimed it needed to invest in these proxies so they formed protective layers around Iran itself, staving off threats from Iran’s foes, namely Israel and the US.
The horrific October 7 attack on Israel in 2023 by Hamas marked a turning point in Iran’s influence in the region. During the seven years running up to this attack, Iran had suffered setbacks due to the Trump administration’s policy of ‘maximum pressure’. Under this policy, the US withdrew from the nuclear deal Barack Obama had brokered with Iran, re-imposed sanctions and assassinated General Qassem Soleimani, head of Iran’s elite Quds Force who was responsible for the coordination and capacity building of Iran’s armed proxies.
Despite those pressures, Iran managed to continue its destabilizing activities. It was funding and training armed groups such as Hezbollah and Hamas and propping up the regime of Bashar al-Assad in Syria. Since 2015 it had stepped up capacity building for the Houthis in Yemen and by 2023 this relationship had grown closer. It also wielded considerable influence in Iraq through its support for the Popular Mobilization Forces (PMFs).
The death of Hezbollah leader Hassan Nasrallah in an Israeli air strike in September 2024 dealt a significant blow to Iran’s ‘axis of resistance’. Photo: Morteza Nikoubazl/NurPhoto via Getty Images.
The October 7 attack changed all this. The assault by Hamas was followed the next day by Hezbollah rocket attacks on Israel, and later the Houthis, while some PMF factions and Iran itself followed suit, all under the pretext of aiding Hamas. For more than a year, Israel found itself fending off attacks all linked to Iran. Israel’s reaction therefore could not be limited to weakening Hamas. Israel needed to change the bigger picture that had allowed Hamas and those other armed groups to form a concrete threat to Israeli security. Israel has now largely achieved this goal.
With Israel recognizing that its safety was dependent on containing Iran’s interventions across the Middle East, Washington under President Joe Biden stepped up its military support for Israel. Now, with Trump back in the White House, Israel can count on further support from Washington.
Unlike Biden, who was trying to get the US to rejoin the nuclear deal with Iran, Trump wants a new comprehensive deal that addresses Iran’s nuclear and ballistic missile programmes as well as its regional interventions. Unlike the Biden administration, which was populated by figures seeking engagement with Iran, the Trump administration is made up of Iran hawks intent on increasing the pressure on Tehran. And Trump himself will want to hold Iran accountable for an alleged plot to assassinate him while he was on the election campaign trail in 2024.
The current Trump administration is looking to intensify pressure on Iran but has not said it wants regime change there. The expectation is that US policy will seek containment of a significantly weakened government and the further undermining of Iran’s regional influence.
Shift towards Saudi interests
With US policy under successive administrations having failed to stop the spread of Iranian intervention in the Middle East, and with Saudi Arabia needing stability in its neighbourhood to pursue its ambitious Vision 2030 modernization strategy, Riyadh came to pragmatically pursue de-escalation with Tehran.
After years of a diplomatic tension between the two countries, in 2023 Saudi Arabia led efforts to restore bilateral relations with Iran, choosing China as the guarantor of a diplomatic deal between Riyadh and Tehran. The erosion of Iranian influence, however, allows Saudi Arabia to move beyond de-escalation and reclaim its role as leader of the Arab world.
Until 2023, Iran had prided itself on what it called the ‘axis of resistance’ – its network of proxies and allies in the Arab world. Today, that ‘axis’ is no more. Israel has defeated both Hamas and Hezbollah militarily. Most of Iraq’s PMFs have largely distanced themselves from the rest of Iran’s proxies’ war with Israel.
The regime of Bashar al-Assad in Syria has fallen. And the US has re-designated the Houthis as a terrorist organization, a designation originally made by Trump during his first term then lifted by Biden. The void left by Iran’s shrinking influence is being filled by actors more aligned with Saudi Arabia’s interests.
In the Palestinian context, although rifts between Hamas and the Palestinian Authority continue, political voices are calling for Palestinian political unity and the re-activation of the Arab Peace Initiative that Saudi Arabia first proposed in 2002. Saudi Arabia has made the revival of the peace process a pre-condition for normalized relations with Israel.
In Lebanon, the two-year political vacuum that had left it without a president due to obstructions by Hezbollah ended with the January 2025 presidential election during which the Saudi and US ambassadors served as observers. This was followed by a visit to Beirut by the Saudi foreign minister who announced his country’s support for Lebanon’s new leadership.
In Syria, the post-Assad administration’s first diplomatic visit abroad was to Saudi Arabia, reciprocated by a landmark visit by the Saudi foreign minister to Damascus, with both countries committing to support Syria’s transition. In Iraq, the issue of the PMFs’ status is highly sensitive, so Baghdad is calling for the merger of armed groups into state institutions while maintaining a strategy of balancing relations with Iran and the US. In November 2024, Iraq and Saudi Arabia signed a military cooperation agreement.
US–Saudi alignment
The US has an opportunity to capitalize on these geopolitical shifts by deepening its strategic partnership with Saudi Arabia. Stability in the region allows the US to focus resources on other priorities such as Asia and increases opportunities for economic cooperation with Gulf and other Arab countries. For Saudi Arabia, stability is necessary for the implementation of its socio-economic transformation programme. Normalization of relations between Israel and Saudi Arabia would bring both sides, as well as the US, diplomatic, financial and security benefits.
Saudi Arabia’s Crown Prince Mohammed bin Salman, pictured above in the White House with President Trump in 2018, has committed to invest at least $600 billion in the US over the next four years as part of a growing strategic partnership. Photo: Mandel Ngan/ AFP via Getty Images.
Containing Iran is essential to achieve stability. Saudi Arabia has already made a significant gesture in support of the Trump administration by committing to invest at least $600 billion in the US over the next four years. Washington in return has expressed its eagerness to advance shared interests with Saudi Arabia in Lebanon, Syria, Gaza and elsewhere, and emphasized the threat posed by Iran and its proxies.
The new administration’s redesignation of the Houthis as a terrorist group shows it is putting its words into action. This increases the chances of a Yemen peace deal in line with Saudi interests as the US is uniquely placed to use a carrot-and-stick approach in the Yemeni context. Washington has already announced further sanctions on Iran’s oil network.
But it must be careful not to repeat the Obama-era scenario of making a deal with Iran that ends up supporting Tehran’s regional influence. That would squander today’s historic opportunity to shift the balance of power in the region in a way favourable to the US and its Middle East partners. The US can further neutralize Hezbollah and other Iran-linked proxies by going after their financial networks.
Last October, the US Department of the Treasury issued an alert to financial institutions, which contains a list of red flags to help them detect and counter Hezbollah’s illicit activities. As those activities – from drug smuggling to money laundering to dealing in blood diamonds – are worldwide, the Trump administration can help allied countries to implement the Anti-Money Laundering and Countering the Financing of Terrorism protocol.
Beyond financial measures, the US can weaken Iran’s proxies by empowering Syrian, Lebanese and Iraqi state institutions. It can also push Israel towards a restart of the peace process, paving the way to widen the scope of the Abraham Accords to include Saudi Arabia.