The Divergences in the Gulf Have Their Own Dynamic
Amb Anil Trigunayat, Distinguished Fellow, VIF

West Asia has an unusual knack of keeping the watchers and analysts on feet most of the times. On the one hand ongoing conflicts and hotspots in Yemen, Libya, Syria and Iraq keep one frustrated. And on the other simmering cinders of the Arab Spring keep the Arab Street charged up from Algeria to Lebanon to Sudan let alone the harbingers of the movement in Tunis and Egypt. Another important dimension was the heft for external intervention by various emerging power centres like UAE and Qatar while Iran, Saudi Arabia, Turkey and Israel maintain their pugilistic punches both outside and in undermining one another for ensuring their own pie of the regional and geo-political influence. But intra-GCC divergences and disputes have acquired greater salience in recent past as they began to follow mutually exclusive policies. Qatar’s blockade by Saudi Arabia, UAE, Egypt and Bahrain, even though partially normalised after 4 years, is instructive. The mediatory role of small states like Qatar and Kuwait in regional and extra-regional matters has become more prominent. Of late alleged divergences between Saudi Arabia and UAE have become a cause of concern while efforts for rapprochement between Saudi Arabia and Iran on the one hand and Abraham Accords bringing the Jewish State closer to the Sunni Arab world have generated some hope for further normalisation.

UAE and Saudi Arabia have been part of a strategic bilateral alliance (2017) driving their initiatives often jointly in the region and beyond. The rich Gulf monarchies have emerged as major actors in the region as the erstwhile powerful countries like Egypt, Iraq and Syria and more importantly their autocratic rulers were consigned to history or an unenviable position. Riyadh and Abu Dhabi formed a Sunni Arab alliance which wanted to exorcise the Houthis insurrection but five years down the line they have realised the limitations of the unwinnable war. Abu Dhabi which had been backing and banking the Southern Transition Council at variance with its Saudi partner decided to withdraw its forces from the Yemen frontiers even if it is keen to develop the strategic Socotra port. Qatar had moved out much before as intra-regional rivalries and diplomatic spats grew. But UAE and Saudi Arabia, especially the two young leaders Sheikh Mohammed Zayed (MBZ) and Crown Prince Mohammed Bin Salman (MBS), continued to maintain their high level brotherly and strategic contacts and conferred frequently during the finalisation of Abraham Accords as former President Trump, and more specifically his son in law Jared Kushner, steered the whole process of normalisation with Israel. This also turned out to be their Administration’s major foreign policy achievement.

But with President Joe Biden things began to take a different turn. Soliciting the US affection is usually a global pastime. At least most nations prefer to have the hyper power on its right side. Biden’s major focus in the Middle East is to keep Iranian nuclear ambitions under check and reverse Trump’s rash decision to withdraw from the JCPOA (the Iran nuclear deal). Like in Obama’s tenure, Israel and Saudi Arabia, UAE and other Sunni powers have been opposed to the very idea. Netanyahu went a bit farther in his vitriolic, avowed opposition to the Iran nuclear deal unless it becomes JCPOA+ and even indulged in alleged clandestine attacks on Iranian nuclear facilities and scientists. But Iran deflected these provocations through a strategic patience and silence while indirectly maintaining pressure through its 3 H proxies i.e. Houthis, Hamas and Hezbollah etc. Biden and his professional foreign and security outfit maintained nonchalant equanimity towards Israel and Arab friends of Trump while entering Vienna Talks. It gave unmistakable signals to the friends of Trump while not undermining their importance in the foreign policy dynamic.

Both UAE and Saudi Arabia also bore the brunt of proximity to Trump while Netanyahu could still escape the brunt. Saudis faced pressure as US released documents pertaining to Khashoggi murder; Sale of F35s to UAE and some missiles to Riyadh were held back; Biden and King Salman and not the MBS became the equivalence; while the traditionally very first call by a US President to Israeli PM was on hold for over a month. But then 4th Gaza war happened, and US leadership was ploughed back into the region rather unwillingly. Meanwhile, witnessing a redirection of US attention towards Indo-Pacific both its rivals China and Russia have begun to deepen their regional outreach. Likewise, major countries in the region also are working out complementary and competitive equations with both Moscow and Beijing. Russia has been an important part of the OPEC+ and has a crucial role in the energy trajectory of oil production and pricing by the Group.

It was these production cuts and their reversals, by the six decades old OPEC, that brought the deeper dissent between the two major producers-the Kingdom and the Emirates, in the public domain this time round. As the impact of pandemic and reducing oil revenues and demand started to take its toll- differences among major producers on continuing production cuts and their dissatisfaction with the OPEC regime and diktat became accentuated. The tensions between Riyadh and Abu Dhabi appear to have surfaced as the latter went on producing above its allocated or agreed quota inviting critical reproach from Riyadh. UAE is not happy with the unfair allocation or unfair production caps (2.59 mbpd as against its production capacity of 4mbpd). Saudi Arabia wants output raised in stages by a total of two million barrels per day (bpd) between August and December and wants to extend remaining OPEC+ cuts until the end of 2022, instead of letting them expire as planned in April but UAE wanted the discussion on extension of cuts to be deferred. As the OPEC wanted to be vigilant and elastic with recent market rallies, UAE Energy Minister Suhail Al-Mazrouei said everyone must first be convinced of the need to delay the production increase and should implement their unfinished supply cuts. Public spat between the two friends led to speculation of a rift.

Some reports even indicate that Abu Dhabi was possibly finding not much merit in continuing with the membership of the OPEC. It will be recalled that Qatar – not a major oil producer had left the group as it was not comfortable with the modus operandi of OPEC. But for it, Gas cartel is far more important. For the Saudis and Russians, the production cuts have been able to prop up the international markets and with enhanced revenues they could bridge their budget deficits. But a break in the consensus may have a negative impact on the efficient planning of the move. As such there has been a demand by consumer countries like India and China to create their own cartel to better negotiate the oil supply, pricing and demand through predictable methodologies and agreements. They are also keen to develop alternative energy sources like renewables and hydrogen based projects.

Recently, Saudi Arabia disallowed travellers and flights to and from UAE due to virus variant. On the other hand, as both are also competing for greater economic activity and investments certain rules have been framed by Riyadh which tend to inhibit UAE exports or via its ports to the Kingdom. A decree read that goods that contain a component made or produced in Israel or manufactured by companies owned fully or partially by Israeli investors or by companies listed in the Arab boycott agreement regarding Israel, will be disqualified. This may have an impact as UAE and Israel signed a tax treaty last May that will enable greater joint venture manufacturing and product development. Another provision states all goods made in free zones in the region will not be considered locally made. UAE model is essentially based on special economic zones. Moreover, reportedly Saudi Arabia will not permit goods made by companies with a workforce made up of less than 25% of local people and industrial products with less than 40% of added value after their transformation process from the GCC tariff agreement.

They have also differed on approaches to regional threats including on Syria, Yemen and Iran and of course Turkey and its political Islam. But Riyadh and Tehran have been working on certain modus vivendi and likely to exchange their ambassadors soon. Doha and Riyadh have developed much closer relations since the Al Ula Summit but despite Saudi initiative the problem between Qatar and UAE have not been fully resolved. Likewise, Turkey and Saudi Arabia are trying to bury the hatchet even if their Islamic leadership ambitions will continue to impinge on any move to deeper normalisation. UAE finds the Turks a major threat and a competition while they understand the importance of affordable relations with Tehran.

The spats and conflicts at the bilateral, regional, OPEC or OPEC+ are not new. These are often resolved over time or with the intervention of the top leaders. However, the strategic direction of the priorities both political and economic and ongoing churn into their visions of their own countries and the region tend to spiral over into other domains which might have their heightened difficulty levels. However, at the outset the perception in the public domain must be managed to avoid an irretrievable fall out since the regional dispute resolution mechanisms are simply incapable and ineffective. As the economic crunch and competition deepens the crevices are bound to emerge but the challenge is to keep them within an admissible threshold.

(The paper is the author’s individual scholastic articulation. The author certifies that the article/paper is original in content, unpublished and it has not been submitted for publication/web upload elsewhere, and that the facts and figures quoted are duly referenced, as needed, and are believed to be correct). (The paper does not necessarily represent the organisational stance... More >>

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Very perceptive and thought provoking article. West Asian and Gulf leadership should accord priorities towards stability and peace than individual interests.


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