Transformations: The Coming of Age of the Gulf
By Piercamillo Falasca & Daniela Palumbo
This, the 19th edition of our StratEGIC monthly, looks at some of the key issues defining the Euro-Gulf space in August 2023 and focuses on some of the main political, economic and social issues that define their trajectory and underline the possible future of the global geopolitical balance.
Step 1: Fostering Ties with China and Pakistan
By Daniela Palumbo
Saudi Arabia is rapidly emerging as a great international power. Following its diplomatic push to ensure regional stability, Riyadh has undertaken a number of strategic initiatives to bolster its international position. Some of these initiatives aim at specific goals such as the promotion of Chinese language learning for Saudi students to prepare young people for a future where China plays a more strategic regional and international role.(1) China’s Belt and Road Initiative (BRI), for instance, is raising the eyebrows of an entire generation of Gulf entrepreneurs and Saudi Arabia (among others) is setting the groundwork for a more comprehensive dynamic with Beijing.(2)
The same could be said of policies to attract more people to the country as part of its soft power strategy such as Riyadh’s decision to reduce haj costs for Pakistanis this past Spring (2023). This may produce important geopolitical implications because Pakistan is one of the most important strategic partners for Saudi Arabia on everything from nuclear deterrence to food production and labour.(3) By reducing costs for religious rites, Saudi Arabia underlines its keystone role as the Custodian of the Two Holy Mosques its commitment to serve Islam globally. Through such arm-length approaches (among many others), Saudi Arabia is strengthening its bilateral ties with some of the engines of the world economy—such as China. As such it is able to project itself more completely on the international environment.
Saudi Arabia is, of course, not alone in reaching out to China, Pakistan, India and others. All the GCC states do—to one level or another. But given the volume of its trade and the power it wields, it is the only GCC member to be able to produce a truly global impact from its strategies. This is pushing Riyadh to represent the bloc — on its own and with its GCC allies — in ways that were unimaginable a few years ago.
Enter BRIC-by-Brick Enlargement
By Daniela Palumbo
Keeping this in mind, the BRICS (Brazil, Russia, India, China and South Africa) has become ripe for expansion.(4) During this year’s Summit (Johannesburg, 22-23 August 2023) Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, the United Arab Emirates (UAE) and Uruguay, were formally invited to join the bloc.(5) Despite different levels of economic development — and indeed different national identities — BRICS emphasise the importance of cooperation among non-Western powers. Some of the key takeaways from the Summit included: a proposal for a common currency, climate action and developmental plans.
So two GCC members are set to join BRICS: Saudi Arabia and the UAE. This presents an interesting geopolitical dynamic since both are also central to US and European strategic postures. Unsurprisingly, the US looked on curiously as Saudi Arabia opened the door to BRICS. But for Gulf-watchers the surprise is tempered by the fact that trade relations between the GCC and most of the BRIC countries are already comprehensive and this only formalises those relations into a more manageable framework.
Not the Only Summit in Town
By Piercamillo Falasca
Importantly, BRICS are not the only new kids on the bloc. In a significant development that promises to reshape the global geopolitical and economic landscape, the India Middle East Europe Corridor (IMEC) was officially unveiled at the 2023 G20 Summit in India (09-10 September 2023). This visionary project, underpinned by a Memorandum of Understanding signed by India, the United States, Saudi Arabia, the UAE, the European Union and its major member states France, Germany, and Italy, represents a paradigm shift in connectivity. Its core objective is to foster economic integration among these three geographically distant but economically interdependent regions: Asia, the Arabian Gulf, and Europe. IMEC will consist of two pivots: the Eastern corridor, designed to connect India to the Arabian Gulf and the Northern corridor, which links the Arabian Gulf to Europe. The project entails shipping between India and Saudi Arabia, followed by a rail connection to the UAE, with potential extensions reaching as far as Jordan and Turkey. IMEC also includes essential infrastructure components, such as energy and digital connectivity cables, along with a pipeline for clean hydrogen exports. This initiative is a critical component of the broader Partnership for Global Infrastructure Investment (PGII), to support infrastructure projects in developing nations. PGII strategically positions itself as a counterbalance or an alternative to China’s Belt and Road Initiative (BRI).
IMEC has the potential to promote stability in the historically conflict-prone Middle East. It could even pave the way for diplomatic relations, and offers India an opportunity to establish enduring connectivity to the Arabian Peninsula, bolstering its regional role. IMEC also offers a reliable alternative to the congested Suez Canal and the increasingly militarised Red Sea, providing a more secure and efficient transportation route (according to some estimates, goods could reach Europe from Mumbai using the new route 40% faster than the Suez Canal and cut the cost by 30%). While IMEC is full of promise, it is not without challenges. First, the MoU signed for IMEC does not create legally binding obligations under international law. The implementation and construction of the corridor also poses significant challenges as the project requires substantial infrastructure development. Third, securing financing for the project is difficult, especially given the global economic recession and competition from China’s substantial investments.
For India, IMEC is about searching for alternative trade routes to the North-South Transport Corridor to Russia via Iran, and breaking out of ‘encirclement’ by China’s BRI. For those sitting in Riyadh or Abu Dhabi however, things look different. The corridor fits into a broader plan for economic diversification beyond their roles as energy producers. It is viewed neither as part of strategic competition with Iran or China, but as a diversification of partnerships and an effort to create a more independent foreign policy.