Complex Made Simple

Saudi and UAE rivalry ongoing despite respite

Sharing borders and being part of the larger GCC block meant that Saudi and the UAE have always enjoyed strategic and friendly relations that often translated into close economic ties, until recently...

The two Gulf neighbors did manage to end an impasse over oil policy that roiled global energy markets Saudi has been pressuring international companies to put their Middle East hubs in the kingdom Saudi's Crown Prince has pushed an $800 billion strategy to double the size of Riyadh

Sharing borders and being part of the larger GCC block meant that Saudi and the UAE have always enjoyed strategic and friendly relations that often translated into close economic ties. And then, there are times when things go sideways. 

Late last July, trucks lined up for hours at the border between Saudi and the UAE as some international manufacturers found their goods impeded in what looked like a deepening economic rivalry between the two countries.

Saudi Arabia, the UAE’s fifth-largest trading partner, had imposed new rules excluding items made in free zones from preferential tariff arrangements meant to facilitate the free flow of goods within the six-member GCC.

The confusing measures affected bilateral trading relationships worth a total $15.26 billion last year. The new rules asked that products labeled ‘Made in UAE’ had to satisfy certain value-added requirements including having a workforce of 10%-25% citizens behind the company producing them to avoid fees, something particularly tough for any business in the UAE where 90% of the population are expatriates.

Finance Minister Mohammed Al-Jadaan said the Saudi trade rules, which were planned long before the latest dispute with the UAE over oil production, were aimed at supporting local manufacturing in the Gulf.

The two Gulf neighbors did manage to end an impasse over oil policy that roiled global energy markets, but not before bringing the issue of rivalry front and center, despite diplomatic posturing to the otherwise.

Saudi Arabia had, for example, raised pressure on international firms to shift their regional headquarters to its shores, in a direct challenge to Dubai.

Fighting for headquarters

Early this September, Saudi news channels started to transfer operations out of Dubai amid a push by Saudi to get multinational companies to relocate their headquarters to the kingdom.

Staff at Al Arabiya and Al Hadath were told of the plans to shift to Riyadh from Dubai, a move that will happen in stages.

The goal is to produce 12 hours of news programming from the Saudi capital by early January.  

Saudi has been pressuring international companies to put their Middle East hubs in the kingdom by the start of 2024 or risk losing out on business in the region’s largest economy. Dubai Media City has housed some of the region’s largest news companies for more than a decade.

Sam Barnett, chief executive officer at MBC Group, the largest broadcaster in the Middle East and North Africa, said the Saudi company’s plans to set up a new headquarters in Riyadh “are on track.” MBC plans to maintain a “strong regional presence,” he said.

Crown Prince Mohammed bin Salman has pushed an $800 billion strategy to double the size of the Saudi capital and turn it into a global hub, challenging Dubai’s status as the region’s premier business center.

Softening ties with Turkey

Saudi has been working on a tentative rapprochement with rival power Turkey, with which the UAE has significant tensions. But that has also changed for the UAE as if to say ‘We can do one better.’

Turkish President Recep Tayyip Erdoğan held a recent phone call with the UAE leader, Abu Dhabi Crown Prince Mohammed bin Zayed during which the two discussed relations between Turkey and the Gulf state.

The UAE’s state-run news agency said the leaders “reviewed the prospects of reinforcing the relations between the two nations in a way that serves their common interests and their two peoples.”

The two countries have seen their ties affected by regional tensions, including the conflict in Libya, where the UAE and Turkey have backed opposing sides in recent years.

Erdoğan has also noted, “I am also considering meeting with Sheikh Mohammed bin Zayed.”

In June, a report said that UAE seeks to restore ties with Turkey and other regional countries.