Has The UAE-Saudi Honeymoon Phase Ended?

The majority of the literature has either underestimated or over-exaggerated the ongoing spat between the United Arab Emirates (UAE) and Saudi Arabia, failing to put things into context. Indeed, the economic spat over the oil-producing quotas is expected to have global ramifications on gas prices.

 In February of this year, Saudi Arabia announced that by 2024 its government would cease doing business with any international companies whose regional headquarters are not based within the kingdom. The decision was perceived as a direct call to companies, operating in the UAE, to pick up and relocate in Riyadh.

Dubai’s position as the region’s pre-eminent commercial hub is being challenged. (Source: Reuters)

“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.”

They have disagreements on political issues regarding the War in Yemen and the Qatari-rapprochement. The two Gulf countries, however, share common strategic and security interests, which could curb these tensions in the near future. Both regimes are wary of the rising influence of Iran and its proxies, in addition to the potential role of the Islamic movements in the Middle East and North Africa (MENA) Region.

“While economic issues could see further public disagreement, Riyadh and Abu Dhabi are expected to continue to deal more discreetly with political matters to preserve an image of unity,” British academic and Gulf expert Christopher Davidson said.

To put it in another way, they can’t afford “not to be friends” regardless of their conflicting economic goals. It’s quite normal for allies to be at loggerheads, but this doesn’t necessarily mean breaking  enduring ties. Frankly, the cost would be too high. It’s plausible to say that it’s not a full departure but rather a turn away from a period of  close relationship.

Now, the challenge for both parties is how to strike a balance between economic aspirations and regional goals. Failing to achieve such a balance is not a good option for both states; otherwise, they might lose a lot and they are aware of that.

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