The Saudi Arabia-UAE rift that froze OPEC is a sign of things to come


RIYADH, SAUDI ARABIA – JULY 19: (—-EDITORIAL USE ONLY â MANDATORY CREDIT – ” ROYAL COURT OF SAUDI ARABIA / HANDOUT” – NO MARKETING NO ADVERTISING CAMPAIGNS – DISTRIBUTED AS A SERVICE TO CLIENTS—-) Crown Prince of the United Arab Emirates (UAE) Mohammed bin Zayed Al Nahyan (L) meets with Crown Prince of Saudi Arabia Mohammed bin Salman (2nd L) within his visit in Riyadh, Saudi Arabia on July 19, 2021. (Photo by Royal Court of Saudi Arabia/Handout/Anadolu Agency via Getty Images)

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DUBAI, United Arab Emirates — The unexpected rift between Saudi Arabia and the United Arab Emirates within OPEC in early July came as a shock to many in the Gulf region and those watching from abroad. 

The dispute over oil production levels temporarily froze the group’s ability to lay out its plans for the markets, sending crude prices upward. But it wasn’t the first appearance of tension between the Arab neighbors and longtime close allies, and likely will not be the last, experts who’ve long been watching the region say. 

“What is happening here is these are the two biggest economies in the region, in the Arab world,” Abdulkhaleq Abdulla, a political science professor in the UAE, told CNBC. “And as Saudi Arabia wants to reform its economy, privatize, etc, there is bound to be competition between them.”

“Competition between the two biggest Arab economies is, I think, just starting,” Abdulla said. “And it is bound to intensify in the days to come.” 

Conflicting interests

Bahrain Foreign Minister Abdullatif bin Rashid Al Zayani, Israeli Prime Minister Benjamin Netanyahu, U.S. President Donald Trump and UAE Foreign Minister Abdullah bin Zayed Al Nahyan (L to R) attend a signing ceremony for the agreements on “normalization of relations” reached between Israel, the United Arab Emirates and Bahrain at the White House in Washington.

The White House | Shealah Craighead | Anadolu Agency | Getty Images

The UAE last year announced a normalization deal with Israel, becoming the first Gulf country to do so, while Saudi Arabia has so far publicly refused to do the same. Saudi Arabia meanwhile has been working on a tentative rapprochement with rival Sunni power Turkey, with which the UAE has significant tensions as Ankara supports an Islamist ideology that Emirati leaders see as a threat. 

And the two Gulf powers had some diverging interests in the war in Yemen, despite being on the same side, with the Saudis supporting an Islamist party distrusted by the UAE and Abu Dhabi supporting separatist tribes that did not align with Riyadh’s goals. The UAE drew down its military activity in Yemen in 2019, while Riyadh remains embroiled in the conflict.

“It has been a common assumption that the UAE and Saudi Arabia have effectively indistinguishable worldviews and interests — that the UAE is sort of an appendage or dependency of Saudi Arabia,” Hussein Ibish, a senior resident scholar at the Arab Gulf States Institute in Washington, wrote in a blog post in July. “That has never been the case.”

Economic consequences

So, where do things go from here?

An OPEC deal was reached in mid-July, and the Saudi and Emirati energy ministers praised each other and the work of the group of oil producers. Still, economic competition — at a time where returns for oil-producing nations are extremely volatile — isn’t set to go away anytime soon. 

“We’re coming out of this pandemic where every country in the world needs to figure out a way to economically recover,” Tobias Borck, a research fellow specializing in Gulf affairs at the Royal United Services Institute in London, told CNBC. “But for the Gulf monarchies, especially for Abu Dhabi and Saudi Arabia, that is compounded by the fact that they are also under pressure to figure out a way to transform their economies and get away from relying on oil.”

“In that environment, quite frankly, everyone is going to look after number one,” Borck continued. “And for all the genuine friendship and continued pragmatic alignment, when it comes to economic matters, at some point that friendship ends and it becomes about looking after yourself.” 

A ‘collision course’

For the Emirati professor Abdulla, “rivalry is too strong of a term” to describe what’s going on between the two countries.

“It could be a controlled, managed, friendly competition,” he told CNBC. “Or it could get out of hand, and we will see it intensify in the months and years to come. We are still in the first five minutes of the competition. We don’t know how it is going to evolve — and it might have some impact on the political issues that bind the two countries together, some political spillover.”

“There are clearly multiple areas where they are on a collision course in the economic sphere,” Borck said. “You’ve now sort of put your position out, and at the moment, those positions are on a collision course. Whether they’re going to remain so? We’ll see.”



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