The Sheikhs of the Global Majlis: The UAE and KSA's Growing Influence in Emerging Markets is Propelling their Position as Global Powerhouses
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The Sheikhs of the Global Majlis: The UAE and KSA’s Growing Influence in Emerging Markets is Propelling Their Position as Global Powerhouses
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By Naam Chakravorty, Gulf Lead at Botho, and Saniya Syeda, Senior Analyst at Botho
August 2, 2023
The United Arab Emirates (UAE) and Saudi Arabia (KSA) are currently at a geopolitical inflection point, both regionally and globally. Their growing prominence is enabled by recent events that have allowed them to leverage their strengths towards a position of influence. In terms of geopolitical shifts, both the UAE and KSA have been actively deepening their connections with countries in the Global South. They are extending an olive branch to old foes in the region, while simultaneously diversifying their economic and political ties beyond conventional allies. Both are also actively striving to position themselves as preferred trade and development partners for markets in the Middle East, Africa, and Asia. The transformative phase experienced by these two Gulf countries in recent years has established them as global heavyweights, rapidly reshaping global geopolitics through strategic alliances with emerging markets.
Consolidating Independent Political Heft in the Region
In the last three years, the two Gulf countries have adopted a pronounced approach to establishing distinct regional relationships, independent of the interests of their traditional allies.
The foremost instance of this came from the UAE’s bid to normalize its relationship with Israel in 2020—a move that sought to reimagine Middle Eastern geopolitical dynamics. Since then, KSA, too, has ushered in a series of foreign policy moves that seek to consolidate its power regionally. In 2021, the Ula Accord set the tone for KSA’s willingness to rekindle old ties for mutual benefit when it normalized its relations with Qatar after an almost five-year political stalemate.
Since then, KSA has thawed the ice with two more of its former adversaries in an unprecedented fashion. With the revival of diplomatic ties with Iran, KSA has not only signaled its willingness to neutralize tensions with a long-time foe in the interest of domestic stability and economic progression, but it has also established its independent foreign policy, distinct from that of a long-term ally, the United States.
This independence has been exemplified by both countries, as they recently brokered peace after a long-drawn war with Syrian President, Bashar al-Assad, much to the dismay of Washington DC. While the UAE has invited Assad to COP 28, KSA extended the Jeddah Declaration olive branch to Assad, welcoming him back to the Arab League after a decade. These moves indicate the larger progress the two Gulf states have made in consolidating their might in the Middle East to cater to their own domestic interests and propel their expanding influence amongst emerging markets.
Strengthening position in Emerging Markets through FDI
Moreover, in recent years, the UAE has taken a lead in implementing a number of investment-focused initiatives to boost its economic and trade ties with emerging markets. These include the $1 billion UAE-China Joint Investment Fund, the $50 million UAE-Caribbean Renewable Energy Fund, and the Abu Dhabi Investment Authority’s (ADIA) $1 billion investment in Indian companies, such as Kotak Mahindra and Lenskart. The UAE has also established free trade zones and special economic zones in key emerging markets, such as India, China, and Egypt, offering tax incentives and streamlined regulations to attract foreign investment.
Similarly, Saudi Arabia has been growing its influence in emerging markets by investing heavily in infrastructure and energy projects, both domestically and abroad. The kingdom's Vision 2030 comprises a number of initiatives to promote economic diversification and transform KSA into a global investment powerhouse.
In light of this, Saudi Arabia has also been pursuing strategic partnerships with emerging markets across its peninsula. For instance, it recently launched a $10 billion investment in South Africa's energy sector and a $500 million pledge to support Yemen's reconstruction efforts. Additionally, the kingdom has been increasing its investments exponentially in Asia, doubling its petrochemical investments in China and building an ‘investment bridge’ in India, all signaling its growing economic influence in emerging markets. These efforts, combined with key geopolitical trends globally, have all enabled the rise of Riyadh and Abu Dhabi as pivotal power players globally.
International tensions make way for new power players in Riyadh and Abu Dhabi
The Ukraine war has had a significant impact on the global political and economic order, and it will be a crucial factor in shaping the emerging geopolitical strategies of the GCC. Economically, Western sanctions have compelled countries like China and Russia to explore alternative avenues for conducting international trade, which has necessitated the development of new financial infrastructure. As a result, Middle Eastern financial centers like Abu Dhabi and Riyadh have gained prominence.
On the political front, we are witnessing an increase in strategic partnerships being forged by the two GCC countries. For instance, the UAE's pursuit of the I2U2 corridor and Saudi Arabia's decision to join the China-led Asian Security and Economic bloc, the Shanghai Cooperation Organization (SCO), along with its expressed interest in joining BRICS, clearly demonstrate the two countries' commitment to diversifying their global geopolitical ambitions. While the individual value of these blocs may be subject to debate, the significance of having the UAE and KSA as allies for prominent global actors, the USA and China respectively, is emphasized by these strategic alliances.
As the political tensions escalate among the USA, Russia, and China, the UAE and KSA will remain pivotal geopolitical partners in the Global South, solidifying their influence in the Middle East and expanding their reach into emerging markets in Asia and Africa. With their newfound adeptness in navigating global geopolitics and bolstering their positions in vital economic sectors like energy, KSA and the UAE are poised to become influential leaders in global affairs, earning them the title of the Sheikhs of the Global Majlis.
Naam Chakravorty is the Gulf Lead, and Saniya Syeda is a Sr Analyst at Botho Emerging Markets Group.