Dynamics of Competition and Collaboration:
Unveiling the Saudi Arabia-UAE Relationship
The Middle East region, characterized by its historical, cultural, and geopolitical significance, holds a central position in international relations. The intricate dynamics of this region have laid the foundation for in-depth interactions between nations, profoundly shaping their relationships. In this context, the relations between the United Arab Emirates (UAE) and Saudi Arabia stand out prominently as critical actors in the regional equation. As two prominent Gulf monarchies, the evolution of their relationship has been shaped by a complex interplay of historical, political, economic, and energy-related factors, eventually entering a phase of mutual competition over time. A retrospective analysis of the historical origins of the UAE and Saudi Arabia is essential to comprehend the dynamism of their relations. The UAE's declaration of independence in 1971 prompted a reevaluation of established positions among regional actors, marked by Saudi Arabia's non-recognition of the UAE's sovereignty and territorial claims. However, diplomatic efforts and the influence of international norms eventually paved the way for a cooperative framework between the two.
Recent years have witnessed a distinct intensification of the competitive atmosphere between the two countries, primarily driven by divergent economic and energy interests. The UAE and Saudi Arabia have both emphasized attracting foreign investments to foster economic development and sustainable growth. However, the pursuit of distinct investment strategies has introduced a realm of contention between them. Particularly pivotal are projects developed through collaborations with foreign companies, given their critical role in economic prosperity, consequently emerging as a platform where the interests of both countries converge and conflict. This competition is also evident in the energy sector. The determination of oil production quotas highlights the divergence in energy policies between the two countries. Notably, Saudi Arabia's proposal to decrease oil production quotas is motivated by the need to maintain its fiscal balance.
Conversely, the UAE has taken the lead in increasing its energy production, resulting in a conflictual dimension in the energy sector. This competition is reflective of regional concerns as well. Both countries, while supporting different sides in regional issues such as the Yemen crisis, strive to exert influence over the balance in Yemen. Simultaneously, escalating security risks in the Persian Gulf are viewed as a reflection of conflicting interests in the region by the two nations. Consequently, the competition between the UAE and Saudi Arabia is a product of multifaceted factors, including historical, economic, energy-related, and regional dimensions. This rivalry not only sheds light on the evolving background of the Middle East but also prompts a reevaluation of the roles of these two countries in the regional equation.
In this paper, we aim to dissect the evolving dynamics between the UAE and Saudi Arabia. Understanding the backdrop of their relationship is crucial to decipher the complexity of their interactions. By delving into the historical context and analyzing their distinct regional and international positions, economic impacts, and strategic objectives, we can unravel the multifaceted nature of their competition and collaboration. This paper sheds light on the intricacies of this rivalry, offering valuable perspectives on the fluid nature of Middle Eastern politics. By examining the history of their relations, focusing on economic and energy aspects, and illuminating their different regional stances, we intend to reveal the multi-dimensional structure of this competition.
II.The Strategic Significance of the Middle East's Geography
The strategic importance of the Middle East's geography has provided the foundation for the intricate dynamics that profoundly shape the interrelations among the states operating within the region. In this context, the bilateral relationship between the United Arab Emirates (UAE) and Saudi Arabia emerges as a salient feature among the pivotal actors in the regional calculus. The evolutionary trajectory of this association between the two Gulf monarchies has been delineated through the interplay of multifarious factors encompassing historical, political, economic, and energy dimensions, ultimately maturing into a phase characterized by pronounced mutual competition. An appraisal of the historical antecedents of both the UAE and Saudi Arabia becomes imperative in the comprehension of the underlying dynamics. The UAE's assertion of sovereignty in 1971 engendered a recalibration of the entrenched positions of regional players. Saudi Arabia's initial non-recognition of the UAE's statehood and territorial assertions posed initial impediments, yet these challenges were transcended over time through diplomatic parleys and the impact of international norms, culminating in the establishment of a harmonious modus vivendi.
Recent years have witnessed the crystallization of an intensified competitive milieu between the two entities, chiefly revolving around divergences in economic and energy interests. Both the UAE and Saudi Arabia place premium emphasis on attracting foreign investments to realize economic development and ensure sustainable growth. Nonetheless, it is in the realm of investment strategies that differences have emerged, leading to a terrain of contestation. Notably, the pivotal role of projects fashioned through collaboration with foreign corporations in buttressing economic prosperity has morphed into an arena where the two nations' interests intersect and occasionally diverge. Traces of this competition extend into the energy domain as well. The delineation of petroleum production quotas assumes significance as an area witnessing the departure of energy policies between the two entities. Notably, Saudi Arabia's proposition to curtail petroleum production quotas is animated by the imperatives of fiscal equilibrium.
Conversely, the UAE has charted a distinct course, foregrounding an expansionist energy production strategy, thereby affording the energy domain a concomitant stage for conflict. This competition is further discernible in the regional milieu. Both nations seek to influence the balance in regional matters such as the Yemen crisis by backing divergent parties. Additionally, the mounting security risks in the Persian Gulf are perceived as a manifestation of the conflicting interests borne by both entities in the realm of regional dynamics. Conclusively, the UAE's rivalry with Saudi Arabia is a manifestation of intricacies spanning historical, economic, energy, and regional dimensions. This rivalry is emerging as a pivotal determinant of the region's future, catalyzing a reevaluation of the roles both nations undertake in the regional equation.
III. Allies in the Regional and International Arena
In recent times, Saudi Arabia and the United Arab Emirates (UAE) have exhibited a proclivity to be acknowledged as allied stakeholders in the regional and global arenas. These two nations have displayed a proclivity for coordinated stances on sundry issues. They have notably presented a united front against the Iran nuclear agreement, imposed a blockade on Qatar in 2017, and resisted the proliferating reverberations of the post-Arab Spring landscape across the Middle East. Furthermore, they have conducted joint military operations against Houthi insurgents in Yemen. Nevertheless, current developments suggest a waning of this period of amicability. Media reports suggest that in December of the previous year, the Saudi Crown Prince dispatched a missive to the UAE, urging concerted efforts to arrest the decline of Saudi Arabia's standing in the Middle East and OPEC. This missive, accompanied by the implicit threat of intensified isolation, underscores the evolution of the Saudi-UAE relationship into a more complex phase following the joint blockade against Qatar. These developments merit contemplation within the framework of shifting regional dynamics and the evolving national interests of both nations. Moving forward, the contours of Saudi Arabia-UAE relations warrant meticulous scrutiny within the context of shifting power paradigms and global policy trajectories within the region.
IV. Contradictions between Saudi Arabia and the UAE Today
In contemporary times, the contradictions between Saudi Arabia and the UAE find focal point primarily within the economic sphere, attributable to differences in economic interests and energy policies. The absence of robust indigenous scientific and technological sectors in Arab countries underscores the significance of attracting foreign investments from more developed nations, which serves as a pivotal measure to redress this imbalance. Investments, in tandem, facilitate the inflow of novel technologies and the cultivation of domestic talent.
Foreign investments, notably, furnish a dual role in diminishing reliance on revenues from oil and gas. These investments, as a rule, are channeled towards the advanced economic sectors. In 2022, the UAE garnered $22.7 billion in investments, ascending to the forefront as the harbinger of foreign direct investment in the Arab world. However, in the preceding year, Saudi Arabia witnessed an almost commensurate influx of foreign investments. Propelled by the Vision 2030 program aimed at economic diversification, Saudi Arabia has embraced the pursuit of augmented foreign investments as a foremost priority. This ambitious scheme aspires to catapult annual foreign investment inflows to levels twentyfold greater by the year 2030, as articulated through the National Investment Strategy.
The pursuit of these objectives galvanizes Saudi Arabia's determined efforts. In 2020, the Ministry of Investment was established, and in 2017, a conference resembling "Davos in the Desert" was initiated to attract foreign investors to the kingdom's paramount projects. The establishment of the ministry with the aim of enhancing the investment environment culminated in the legal parity of foreign and domestic investors in 2022. Foreign investors were accorded the liberty to purchase, vend, or liquidate their enterprises. This represented an unprecedented shift, for hitherto, the assent of a local partner was imperative for such decisions. Furthermore, Saudi Arabia went a step further by establishing four special economic zones based on the Dubai model, thereby offering investors special tax conditions. Each zone serves distinct purposes: clean energy, logistics, digital economy, and cloud computing.
Given these rapid transformations, an increasing number of foreign enterprises appear to be considering entry into the Saudi market. This forms a sharp contrast in a domain where the UAE has already made significant inroads. Although the super gains of the 2000s may no longer be feasible in the UAE, many investors are deliberating that such triumphs can indeed be repeated in Saudi Arabia.
V.Concerns and Dynamics of the UAE
For some time now, leaders of the United Arab Emirates (UAE) have evinced a tendency to downplay Saudi Arabia's initiatives. Particularly noteworthy is the close relationship maintained between UAE President Mohammed bin Zayed and Saudi Crown Prince Mohammed bin Salman, marked by advisory consultations in foreign policy domains. However, recent trends indicate that the UAE has begun to perceive a sense of rivalry vis-à-vis Saudi Arabia. This sentiment is particularly discernible in light of Saudi Arabia's strategies geared toward collaborating with foreign corporations, posing a direct threat to the UAE's economic well-being. In response, Saudi Arabia has taken steps to curtail access to government contracts for foreign companies operating through regional centers on Saudi soil by 2024. This development reflects the emerging dimension of competition between the two countries.
To preempt capital outflows, the UAE established its own Ministry of Investment this year in July. Modelled on Saudi Arabia's approach, the ministry aims to coordinate all investment programs of the country. In addition, the UAE has implemented measures to enhance the quality of life for expatriates working in foreign firms. Last year, a new visa policy was introduced, simplifying the process of obtaining visas and the hiring of freelancers by companies. The UAE administration has not hesitated to challenge its Islamic identity, as evidenced by measures such as altering the weekend schedule from the traditional Friday-Saturday to Saturday-Sunday.
In tandem with economic factors, the discord over OPEC quotas between Saudi Arabia and the UAE holds significance. Starting from the autumn, Saudi Arabia proposed curbing petroleum production quotas to elevate prices. This imperative was deemed necessary to ensure fiscal equilibrium in Saudi Arabia. Conversely, the UAE is driven by ambitions to expand its energy production, consequently engendering a contestation within the energy sector. These competitions are also evident in the regional landscape. Both nations seek to exert influence over regional issues such as the Yemen crisis by supporting divergent factions. Moreover, the escalating security risks in the Persian Gulf are interpreted as a reflection of the conflicting interests stemming from both entities' roles within the regional dynamics. In conclusion, the UAE's rivalry with Saudi Arabia is a manifestation of intricacies spanning historical, economic, energy, and regional dimensions. This rivalry is emerging as a pivotal determinant of the region's future, catalyzing a reevaluation of the roles both nations undertake in the regional equation.