Competition Over the Casks
The relationship between the United Arab Emirates (UAE) and Saudi Arabia, long-standing strategic partners, is experiencing a significant shift. Both nations are competing in various domains, yet they still rely on each other in many ways. This evolution, however, has been marked by cracks, most notably the ongoing oil spat that began in 2015.
The current oil spat is one of several manifestations of rising economic competition in the Gulf region. The UAE, perceiving itself as a regional power, has opposed the extension and expansion of a supply deal without first increasing its baseline production. This firm objection was a clear display of its power projection.
The public disagreement between the two Gulf states this week in the OPEC+ group has sent shockwaves through international markets. Key figures like Saudi Energy Minister Prince Abdulaziz bin Salman and Russia's Energy Minister Alexander Novak have expressed their commitment to maintaining oil market stability amid tensions, emphasizing cooperation and careful monitoring of supply and demand dynamics.
Meanwhile, advisors to the Saudi Royal Court, such as Turki Al Sheikh, have vented their reservations about the UAE on Twitter. Similarly, Dhahi Khalfan, a former official, has expressed unsparing views about the UAE on the same platform. These public airings of disagreements are a new normal in the Gulf, partly due to the Gulf rift (2017-2021).
The UAE's efforts to diversify its economy, including the relocation of regional company headquarters and modifications to import rules, are also contributing to the growing perception that the post-oil era is nearing. The awareness of changing dynamics in the Saudi-Emirati relationship has played a role in this week's public clash, but the relationship remains solid.
The resolution of the current oil spat will likely impact the two countries and influence the direction of the Middle East. The evolution of the Saudi-Emirati relationship will shape the contours of their acceptable levels of alignment and divergence moving forward. Three things to watch in this relationship are: the extent of UAE power projection without undermining Saudi Arabia's leadership, the level of coordination tolerated during economic competition, and how rapidly shifting domestic, regional, and global developments affect their threat perceptions and geopolitical standing.
Despite the current dispute, many believe that the benefits of the strategic partnership between the UAE and Saudi Arabia outweigh the costs. The Saudi-Emirati Coordination Council established in 2016 and the GCC have not been able to resolve the current dispute due to personalized state relations and lack of institutionalization in the Gulf. Nonetheless, the relationship is expected to survive this latest disagreement.
A more assertive Emirati voice is one of the clearest manifestations of the region undergoing major recalibration. As the Gulf states navigate this new landscape, it will be interesting to see how they balance their competitive ambitions with their shared interests and long-standing partnerships.
