Saudi Arabia and UAE on an economic collision course

The Saudis and Emiratis are pursuing diversification into an equivalent sectors: tourism, financial services, logistics, petrochemicals, technology. Since they both lack the talent pools required to serve these industries, they need to vie with one another for expatriate expertise also as investment.

Saudi Arabia and UAE on an economic collision course
Saudi Arabia and UAE on an economic collision course

For several years now, Saudi Arabia and therefore the United Arab Emirates are in lockstep on policy . The close friendship of their de facto rulers, Saudi prince Mohammed bin Salman and Abu Dhabi prince Mohammed bin Zayed, is that the Middle East’s most vital alliance. It allows them to strong-arm the Gulf Cooperation Council, to the disquiet of other members, and set the agenda for the broader Arab world.

Better referred to as MBS and MBZ, the 2 leaders share a fear of Iran and a loathing of Turkey and therefore the Muslim Brotherhood. Their countries have formed coalitions with other Arab states to fight a war in Yemen and impose an (only recently lifted) embargo on Qatar. Beyond the center East, they need collaborated to broker a peace deal between Ethiopia and Eritrea and pursue military and security alliances in Asia and Africa. they need even, once in a while , pledged economic partnership, reception and farther afield.

Although they're mostly united by their mutual interests, there's one shared goal that threatens to divide them. Both are keen to scale back their dependence on hydrocarbon exports by diversifying their economies  and this puts them on a collision course.

The Saudis and Emiratis are pursuing diversification into an equivalent sectors: tourism, financial services, logistics, petrochemicals, technology. Since they both lack the talent pools required to serve these industries, they need to vie with one another for expatriate expertise also as investment.

The contest is destined to grow fiercer because the Arab monarchies burn through the wealth accumulated from decades of oil and gas exports; the International fund reckons their collective chest are going to be empty by 2034. The pandemic’s impact on oil prices has also concentrated minds across the GCC on the urgency of diversification.

The UAE has first-mover advantage here: the most important emirates, Dubai and Abu Dhabi are attracting skilled white-collar workers for many years . The country has long been the well-liked regional hub for multinational companies. Only over the past few years has there been an intense competition for talent between Dubai and therefore the Saudis, with the latter offering a bigger market to offset the UAE’s more liberal lifestyle.

The UAE, meanwhile, will undoubtedly respond with counteroffers. it's giving expatriates a much bigger stake in its economy by amending laws to permit them full ownership of companies. Some categories of expats will soon have a path to citizenship, a move specifically designed to deepen its talent pool. More categories will likely be added to preserve the Emirati advantage.

The Emiratis also will calculate the network advantages of Dubai and Abu Dhabi , where the dimensions of the prevailing expat community — and therefore the critical mass of social and cultural services catering thereto — exerts a pull on foreigners looking to relocate to the region. It helps that the UAE features a well-established international image of being relatively liberal in practice, whereas Saudi Arabia has only recently begun to liberalize its laws.

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