BANGKOK, Thailand -- More than 30 years after a Thai janitor stole a blue diamond from Saudi royals and the murder of four Saudi diplomats, Riyadh has agreed to stop punishing Bangkok with financial sanctions which cost billions of dollars in lost trade, tourism, and jobs.

Greed, sleaze, betrayal and bloodshed over the still-missing blue diamond and the four unsolved murder cases, resulted in Saudi Arabia's expulsion of more than 200,000 Thai workers, a ban on Saudi tourists traveling to Thailand, and a drop in imports and exports between the two countries.

Thai Prime Minister Prayuth Chan-ocha's surprisingly successful meeting with Saudi Crown Prince Mohammad bin Salman at Al Yamamah Palace in Riyadh on Jan. 25 suddenly changed all that.

Relations now "must be better than the last 32 years," Prime Minister Prayuth said.

"Both countries have agreed to fully restore diplomatic ties, including the appointment of ambassadors."

A joint Saudi-Thai statement said Mr. Prayuth "expressed his sincere regrets for the tragic cases that took place in Thailand between 1989-1990."

Thailand is committed "to providing appropriate security to members of the Royal Embassy of Saudi Arabia in Bangkok," the statement said.

"We will move on, and will not talk about the past any more," said Thai Foreign Minister Don Pramudwinai.

Saudi Arabia sanctioned Thailand over the murky cases which began in January 1989 with the killing of a Saudi diplomat in Bangkok, leaving Thai police unable to arrest the unidentified gunman.

Seven months later, Kriangkrai Techamong, a Thai janitor who worked inside one of Prince Faisal bin Fahd's palaces in Saudi Arabia, stole $20 million worth of jewelry and gems including a rare 50-carat blue diamond.

Mr. Kriangkrai smuggled the stolen items to Bangkok and was arrested in Thailand after selling most of the booty to Thai jeweler Santhi Sithanakan for low prices, not realizing their enormous value.

Mr. Kriangkrai served three years in prison and was released in 1994 after confessing his role in what Thai media dubbed The Blue Diamond Affair.

Police Lt.-Gen. Chalor Kerdthes flew to Saudi Arabia and returned some of the jewels, but Saudis insisted most of those were fake.

The prized blue diamond was never returned.

A "confidential" February 2010 cable from the U.S. Embassy in Bangkok titled, "The Curse of the Blue Diamond," and published by the anti-secrecy Wikileaks website, said:

"Soon after the incident, some wives of Thai elites, particularly police commissioners and generals, were photographed wearing jewelry strongly resembling the stolen Saudi jewels at various official or high-society events.

"The Blue Diamond itself had been spotted several times on the wife of a police general in the 1990s," the embassy said, but it later disappeared.

That cable was sent to the U.S. Central Intelligence Agency, the National Security Council, the U.S. Pacific Command, American embassies in China, Saudi Arabia, and elsewhere.

But no evidence emerged proving police received the jewels.

One year after the theft, three more Saudi embassy diplomats were assassinated in Bangkok, all on the same night in 1990 in separate attacks.

"The Thai media has persisted in mixing up the strands of the jewelry theft story with the separate story of the [four] Saudi diplomat murders, which almost certainly were part of a Saudi feud with Hezbollah," the U.S. cable said.

Also in 1990, Saudi businessman Mohamed al-Ruwaili, who had close links with the Saudi royal family, vanished in Bangkok while investigating the crimes. He is presumed dead.

Then the plot thickens.

In 1994, Police Lt.-Gen. Chalor, who arrested the Thai janitor and Mr. Santhi the jeweler, was himself arrested for allegedly kidnapping, torturing and killing Mr. Santhi's wife and teenage son.

His wife and son were found dead in their crashed Mercedes near Bangkok.

During a Criminal Court trial for those two deaths, four men reportedly confessed "the police allegedly kidnapped the family members in order to pressure Santhi to reveal information about what happened to the jewels," and pay a ransom for the return of his wife and son, the U.S. embassy cable said.

After he paid, the "police gang" killed his wife and child to conceal their kidnapping.

In 2001, "two judges, one from the Appeals Court and one from the Supreme Court, attempted to extort" hundreds of thousands of dollars from Lt.-Gen. Chalor, the cable said, apparently to declare him innocent.

But the Supreme Court upheld a death sentence in 2009 against Lt.-Gen. Chalor for masterminding the kidnapping and two murders.

Several years later he was freed.

Others in the gang were acquitted, but one officer reportedly died in prison awaiting trial.

In 2010, Thailand's Special Investigations Department indicted five other police officers accused of kidnapping and killing Saudi investigator Mr. al-Ruwaili. 

All five were later acquitted.

It is unclear why Saudi Arabia has now restored relations with Thailand despite the unsolved cases involving the four dead diplomats and the lost jewels.

The "historic talks between Thailand and Saudi Arabia didn't happen by chance, but they were the result of the Thai government's efforts over the past six years," government spokesman Thanakorn Wangboonkongchana said.

"The [Thai] prime minister stressed the need to begin supplying Saudi Arabia with Thai workers immediately, and that the cooperation should take shape in two months, to ensure Thai workers have access to job opportunities in Saudi Arabia," Mr. Thanakorn said.

Thais who might be hired include factory, construction and shipyard workers, electricians and machine operators, petroleum and natural gas technicians, hotel and health personnel, cooks, and housemaids.

Thailand expects a flow of Saudi tourists, cooperation on international security and terrorism, investments, and the purchase of Thai goods including chicken and beef slaughtered according to Islam's halal method.

Reflecting Thailand's official joy over Saudi Arabia's welcome, a Bangkok Post editorial cartoon portrayed the Thai prime minister and Saudi crown prince hugging while riding on a magic carpet resembling Thailand's red-white-and-blue national flag, on a heart-shaped flight path across the sky.

"Current Thai-Saudi ties would amount to Rip Van Winkle waking. After a long sleep, both countries will wake to find both regions drastically changed," said columnist Kavi Chongkittavorn.

"Thai-Saudi ties are pivotal for U.S. regional strategy in Southeast Asia, especially in relation to the Muslim and non-Muslim world.

"Saudi Arabia has been generous with its 'zakat' donations and other forms of financial assistance for Thai Muslims. Local religious schools have benefitted greatly from such contributions," Mr. Kavi wrote.

Thailand's U.S.-trained military expects the diplomatic thaw will enable the Islamic nation to help end Thailand's smoldering Muslim Malay-Thai insurgency.

More than 8,000 people on all sides have been killed in violence during the past 20 years in the Muslim-majority southernmost provinces of Pattani, Narathiwat, Yala, and parts of Songkhla.

The rebels are fighting for increased autonomy or independence against Thailand's Buddhist-majority government and military.

"Saudi Arabia could support the goal of conducting peace talks through the Organization of Islamic Cooperation," said Lt.-Gen. Somchai Virunhaphol, a former lecturer at Bangkok's elite Chulachomklao Royal Military Academy.

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Richard S. Ehrlich is a Bangkok-based American foreign correspondent reporting from Asia since 1978. Excerpts from his two new nonfiction books, "Rituals. Killers. Wars. & Sex. -- Tibet, India, Nepal, Laos, Vietnam, Afghanistan, Sri Lanka &