By MALAK HARB Associated Press
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DUBAI, United Arab Emirates — Long-time Mideast rivals Iran and Saudi Arabia took another significant step toward reconciliation Thursday, formally restoring diplomatic ties after a seven-year rift, affirming the need for regional stability and agreeing to pursue economic cooperation.

The agreement was reached in Beijing during a meeting between the Iranian and Saudi foreign ministers, a month after China had brokered an initial reconciliation agreement between the two regional powerhouses.

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The latest understanding further lowers the chance of armed conflict between the rivals, both directly and in proxy conflicts around the region.

It could bolster efforts by diplomats to end a long war in Yemen, a conflict in which both Iran and Saudi Arabia are deeply entrenched.

Thursday’s announcement also represents another diplomatic victory for the Chinese as Gulf Arab states perceive the United States slowly withdrawing from the wider region.

But it remains to be seen how far the reconciliation efforts will progress.

The rivalry dates back to the 1979 revolution that toppled Iran’s Western-backed monarchy, and in recent years the two countries have backed rival armed groups and political factions across the region.

Iranian Foreign Minister Hossein Amirabdollahian laid out details of Thursday’s agreement in a tweet, after his talks with Saudi counterpart Prince Faisal bin Farhan Al Saud.

The minister wrote that Thursday marked the beginning of “official diplomatic relations … economic and commercial cooperation, the reopening of embassies and consulates general, and the emphasis on stability, stable security and development of the region.” Amirabdollahian said that the issues are “agreed upon and on the common agenda.”