Despite having many concerns and interests in common in the Persian Gulf region, Saudi Arabia and the United Arab Emirates (UAE) are moving faster now than ever in the path of rivalry and conflict.
For years, Saudi Arabia and the UAE have been allies in the Persian Gulf region. The two Arab states are both oil-rich, both allies of the United States, and interested in maintaining peace and security of the region to sell oil and accumulate wealth. Even on the political spectrum, the two countries have been like the two sides of one coin. They have been on the same side in waging a war in Yemen since 2014, they joined their economic forces back in 2017 to isolate and blockade Qatar for political purposes, and last but not least, they both opposed Iran and its nuclear deal with the West known as the Joint Comprehensive Plan of Action (JCPOA).
But things seem to have been moving in a different direction lately and the escalation of geopolitical competition between Saudi Arabia and the UAE is threatening the already chaotic and prone-to-conflict region like never before.
The rivalry between Riyadh and Abu Dhabi is not only intensifying, but it is also spreading so fast in different economic, political, and defense areas, with each country struggling to surpass the other and establish itself as prominent regional players. Saudi Arabia and the United Arab Emirates are the two most populous countries and largest economies in the GCC, and these features give them enough potential to compete.
Saudi Arabia is now in the process of establishing diplomatic relations with its long-standing adversary, Iran. Riyadh is also actively involved in presenting itself as a diplomatic mediator in the regional conflicts such as that in Lebanon, Syria, and Palestine. The Kingdom is also looking forward to establish ties with Israel and end the war in Yemen. All of these developments, if materialized, will give even more power and prestige to Saudi Arabia to finally make it the hegemonic state in the region, a fact that is the UAE’s worst nightmare.
Economy and politics, two main battlefields for Riyadh-Abu Dhabi cold war
In the realm of economy, Saudi Arabia has implemented a number of initiatives and ploys in recent years to pressure the UAE. Back in 2021, for example, and in one of its latest moves, the Kingdom announced that foreign companies operating in Saudi Arabia have to establish a headquarters there by 2024 and some 480 companies to do so by 2030. Although Riyadh explained that the move was intended only to ensure global firms are committed to the kingdom for the long-term, that is not how the UAE interpreted the announcement.
In other words, the UAE has every reason to worry about this Saudi decision simply because Abu Dhabi and Dubai now host some 76 percent of the regional headquarters of major firms operating in the Persian Gulf.
The same rivalry story goes on in the political domain., with the issue of relations with Israel being in the center of stage. Saudi Arabia and the UAE have been having different approaches to whether restore ties with Israel or not. Since the UAE decided to normalize ties with Israel under the Abraham Accords back in 2020, relations between Abu Dhabi and Tel Aviv have grown considerably, especially in the economic area.
Since then, the two have signed many bilateral trade deals that reached $2.5 billion in 2022 from a base of near zero before the accords were signed. Some 1,000 Israeli firms now operating in the UAE, and economic relations between the two are expected to grow even more in a not very remote future. Back in this April, the UAE signed a Comprehensive Economic Partnership Agreement with Israel, which was Israel’s first free trade agreement with an Arab state and is expected to nearly double the trade volume between the two.
This is for sure not good news for Saudi Arabia. That’s why in recent months, the Kingdome has shown unprecedented interest to normalize relations with Israel. Especially given the importance the Biden administration has placed on expanding peace between Israel and the Arab states, restoring ties with Israel can benefit Riyadh both economically and politically. However, whether this could ease tensions between Saudi Arabia and the UAE or worsen it, is a matter of time.