By Hilal Khashan* – Geopolitical Futures
Their relationship was never as strong as it appeared
Relations between Saudi Arabia and the United Arab Emirates appear strong on the surface. Both countries worked closely to defeat the Arab uprisings and topple the Muslim Brotherhood-affiliated regime of Mohammed Morsi in Egypt. They joined forces in launching the war against Yemen’s Houthi rebels in 2015 and enforced an austere blockade of Qatar in 2017, which lasted three years. The two countries’ leaders often say that what brings them together exceeds what pulls them apart. In reality, however, their relationship is fraught with tension and distrust. An in-depth look at the history and objectives of both countries reveals that their differences are deep-seated and will not dissipate in the near future.
Fraught History
The relationship between Saudi Arabia and the UAE has actually been turbulent for decades. In the 19th century, fighting erupted between the expansionist Saudis and the Abu Dhabi-led Trucial Coast Sheikhdoms (the present-day UAE). In the mid-1950s, a dispute over the Buraimi Oasis broke out between the Saudis on one side and Abu Dhabi and Oman, both backed by the British, on the other, and the Saudis were driven out of the area. When the UAE was founded in 1971, Riyadh vetoed the inclusion of Bahrain and Qatar in the new state. Saudi troops occupied Abu Dhabi’s 25-mile (40-kilometer) Khor al Adaid inlet. Riyadh also prevented Qatar from constructing a causeway to connect it to the UAE in 1974, as it was determined to remain the sole hegemon on the Arabian Peninsula.
Saudi Arabia did not recognize the UAE until 1974, when King Faisal coerced the UAE’s first president, Sheik Zayed bin Sultan Al Nahyan, to sign the Treaty of Jeddah. But because it gave ownership over Khor al Adaid to the Saudis, the Emiratis did not ratify the treaty, and it has remained a source of tension between the two countries.
The Gulf Cooperation Council has also been an area of friction. Egypt’s signing of a peace treaty with Israel in 1978 and the inception in 1980 of the Iran-Iraq War convinced a hesitant UAE to agree to establish the GCC, under Saudi leadership, in 1981. Earlier this month, however, observers were stunned when the UAE refused to agree to Saudi Arabia’s oil production quotas at an OPEC+ meeting. The former demanded a more significant share of the output, while the latter, joined by Russia, insisted on maintaining production cuts until the end of 2022, rather than ending them in April 2022 as the UAE wanted.
The UAE undoubtedly needs to increase liquidity to attenuate the effects of the COVID-19 pandemic, including the drop in oil production and loss of revenue from tourism. It wouldn’t be surprising if the UAE followed Qatar’s lead and left the organization. Both these countries are aware that the end of the oil era is approaching and want to benefit as much as possible from their enormous reserves while they can.
The disagreement over production cuts earlier this month is only the tip of the iceberg. Unlike Saudi Arabia, which insists that October 2018 output should be the baseline for the 10 percent production cuts agreed to by OPEC members, the UAE demands that the baseline be moved to April 2021, when its production increased from 3.1 million barrels per day to 3.84 million barrels per day. The UAE argues that even at the higher baseline, at least one-third of its production capacity will remain idle, higher than any other OPEC+ producer.
However, the unspoken conflict between Abu Dhabi and Riyadh runs much deeper than production quotas and oil prices. In its bid to transform the Saudi economy by 2030, Saudi Arabia plans to replace Dubai as the business, transport and tourism hub of the Middle East. Privately, Abu Dhabi officials express resentment of Saudi attitudes toward the UAE. They also say that the two countries had agreed to simultaneously normalize relations with Israel, but Saudi King Salman refused to proceed with the deal, making the UAE look like the villain for abandoning the cause of Palestinian statehood.
Welcome Competition?
The decline of oil as an engine of economic development has swayed the Saudi royals to compete with the UAE in the business sectors that it spent half a century developing. Saudi Crown Prince Mohammed bin Salman is envious of Dubai’s spectacular success in these areas and expects his Neom project to overtake Dubai as the Middle East’s leading high-tech city. Saudi Arabia recently informed foreign companies wanting to participate in government projects that they must relocate their regional offices, currently located in Dubai, to the kingdom by 2024. A few days ago, Saudi Arabia amended its rules for imports from GCC countries, excluding goods produced in free zones from tax breaks, essentially targeting the UAE’s Jebel Ali, Dubai and Abu Dhabi duty-free areas.
The Saudi crown prince is launching a fierce economic confrontation with the UAE, opening the door for countermeasures by his nominal ally, the crown prince of Abu Dhabi. This month, Saudi Arabia announced plans to establish a new airline to compete with Emirates. It also recently said it would expand its shipping facilities to accommodate 40 million containers, close to Dubai Port’s 43.3 million container capacity. Saudi Arabia suspended travel to the UAE for Saudi citizens, ostensibly to protect them against COVID-19. But the decision appears to be part of a move to convince Saudis to vacation in the kingdom rather than Dubai.
Saudi Arabia has also taken steps to isolate the UAE from the GCC. After assuming power in January 2020, Oman’s Sultan Haitham bin Tariq Al Said traveled to Saudi Arabia this week on his first foreign visit. He agreed to increase bilateral economic cooperation and open a direct desert highway, bypassing UAE territory, to facilitate the flow of goods between the two countries. That his meetings took place in Neom city underscores Riyadh’s determination to distance itself from the UAE and its need to find an alternative route to the Strait of Hormuz, which Iran often threatens to close.
The Emiratis say they welcome the competition. While Saudi Arabia’s global ease of doing business ranking rose to 62nd from 92nd last year, it’s still far from the UAE’s ranking of 16th in the world. The Saudis are in a rush to become the region’s business hub but have failed to modernize their development administration and skills of local personnel, which lie at the center of Riyadh’s Vision 2030.
Riyadh’s aggressiveness will likely prompt Abu Dhabi to simplify its bureaucratic requirements to help it maintain an edge and to blunt any progress in Saudi development plans, which mirror those of the UAE. Dubai has a five-year plan to double the size of its tourism sector and hotel capacity and increase shipping and air traffic by 50 percent.
As for the GCC, its member states’ trust in each other is fading. While Saudi Arabia is opening to Qatar, Egypt and Oman, it’s skeptical about Abu Dhabi’s intentions, especially after it fostered excellent relations with Yemen’s secessionist Southern Transitional Council and withdrew its troops from Yemen in 2019. When Saudi Arabia took the lead in founding the GCC, it presented it as a vehicle for achieving collective security, promoting cultural enrichment and enhancing economic integration. But member states failed to build a joint military force, opting instead to recruit mercenaries and rely on the U.S. for military support. They also presented the GCC as an equivalent to the European Union, but its six members couldn’t agree on introducing a common currency. Tribal divisions prevented further economic integration, even though Saudi Arabia chose to stay out of the competition over the service sector between the UAE and Qatar until the decline of oil prices prompted it to compete rather than integrate.
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*Hilal Khashan is a Professor of political science at the American University of Beirut. He is a respected author and analyst of Middle Eastern affairs. He is the author of six books, including Hizbullah: A Mission to Nowhere. (Lanham, MD: Lexington Books, 2019.) He is currently writing a book titled Saudi Arabia: The Dilemma of Political Reform and the Illusion of Economic Development.