Fraying Saudi-UAE ties put US objectives at risk

By tradition, the communiqué at the end of every Gulf Cooperation Council summit meeting is a bromide about friendship among the member states — Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman and Bahrain. The joint declaration is usually long on promise but short on any real purpose beyond concealing discord.

Even by that low standard, the document released at the end of the latest gathering of Gulf leaders in Riyadh on Dec. 14 was the wispiest of fig leaves. The usual invocation of unity did little to hide the growing rivalry between the group's two most important members, Saudi Arabia and the UAE.

For me, the widening divergence of economic, security and foreign-policy interests between the kingdom and the confederation of emirates was one of the most important stories of 2021. How the contest plays out will have a large bearing not only on the affairs of the Arabian Peninsula but on the geopolitics of the wider Middle East. In particular, it poses a challenge for the U.S., which has long relied on the friendship between the two states as a bulwark against Iran.

Some of the differences between Saudi Arabia and the UAE stem from economic choices made by their leaders, others from contrasting security calculations and still others from ideological considerations. These haven't yet added up to open antagonism between them, certainly nothing in the nature of the naked hostility they jointly directed at Qatar during a three-year economic embargo that ended at the start of 2021.

The Saudi-Emirati rivalry is certain to sharpen, however. Eventually, the deepening tensions will put businesses and investors in the awkward position of having to choose between them for political rather than economic reasons.

The two countries, which share a 300-mile border, have a long history of amity. They drew exceptionally close to each other after the Arab Spring uprisings of 2011, when monarchs on both sides recognized the threat posed by popular pro-democracy movements.

The bonds deepened in the middle of the decade, with the emergence of Prince Mohammed bin Salman as the power behind the throne in Riyadh. MBS, as he is commonly known, developed a close friendship with his opposite number, Crown Prince Mohammed bin Zayed of Abu Dhabi, known as MBZ. The Emirati, arguably the Arab world's most influential leader, became a mentor to the young Saudi. By 2017, when MBS was formally named crown prince, their two countries were allies in a war in Yemen as well as the embargo of Qatar.

In both conflicts, it was widely assumed that the older man had guided the hand of his protégé. MBZ had persuaded MBS that their countries were imperiled by Doha's support for the Muslim Brotherhood, the Islamist movement that regards the Saudi and Emirati royal families as enemies. He had also brought the Saudi prince around to the view that Iran and its network of proxy militias, including the Houthis in Yemen, represented the greatest threat to them both.

Together, the Saudis and Emiratis lobbied the Trump administration to ratchet up its so-called "maximum pressure" campaign of economic sanctions against the regime in Tehran and welcomed the 2018 American withdrawal from the nuclear deal the Islamic Republic had struck with the world powers.

To a lesser degree, the two countries were wary of Turkey's growing influence in the Muslim world. When President Recep Tayyip Erdogan suggested MBS had been behind the assassination of the journalist Jamal Khashoggi in Istanbul, the UAE endorsed the Saudi explanation for the death.  

There were other signs of Emirati influence on the Saudi crown prince. MBS's ambitious plans for social reform, including some freedoms for women and curbs on religious authority, seemed designed to bring the conservative kingdom closer in its mores to the relatively liberal UAE. His "Vision 2030" project to wean the Saudi economy from its dependence on oil revenue was inspired at least in part by the UAE's successful diversification into areas like tourism and transportation logistics. 

But the two princes couldn't remain joined at the hip forever. By 2019, MBZ's security calculus was turning away from a confrontation with Tehran and its proxies. The UAE began to pull out of the war in Yemen, where the Iranian-backed Houthi rebels had proved impossible to defeat. The Saudis were unhappy to be left carrying the can, but MBS didn't publicly criticize his mentor.

The following year, when the UAE broke from the Arab boycott of Israel and signed the Abraham Accords, inspiring three other countries to follow suit, the Saudis made it clear they wouldn't be joining the pack. Then it was Riyadh's turn to withdraw from a common effort: Toward the end of 2020, MBS decided unilaterally to end the embargo of Qatar. The Emiratis grumbled, but went along.  

In 2021, it was the economic competition between them that took centerstage. MBZ accelerated the process of ending the UAE's geopolitical disputes — notably with Turkey and Syria — to focus on economic challenges at home. MBS, likewise, stepped up his quest to make Saudi Arabia the Arab Peninsula's leading destination for business and investment.

The two sides then broke long tradition by openly bickering over oil production quotas in July; the UAE demanded the right to sell more even as the Saudi-led OPEC+ cartel wanted to curb output. A compromise was eventually reached, but a miffed Riyadh banned flights to the UAE — the Covid pandemic was cited as the reason, but nobody was fooled.  

The Saudis ratcheted up the tension by challenging GCC's preferential tariff arrangements. Hardest hit were the companies operating in the UAE's free zones, which use their proximity to the much larger Saudi market to attract businesses. Riyadh was already pressuring foreign companies to move their regional headquarters to the kingdom, threatening to cut off state contracts for those that failed to relocate. The Saudis also approached thousands of companies around the world with tax breaks and other incentives to use their desert capital as a global business hub.

Acutely aware that its own market is much smaller, the UAE responded to the Saudi challenge by playing up its strengths, such as the relatively liberal lifestyle foreigners can enjoy in cosmopolitan cities like Dubai and Abu Dhabi. It introduced new visa rules to attract foreign talent. And for good measure, the UAE announced it would switch to a Monday-Friday work week to bring its economy in line with international norms.

The intensifying economic competition coincided with a diplomatic surge from both MBS and MBZ. Ahead of the GCC summit, the Saudi prince conducted a whirlwind tour of the member states; among other things, he was reportedly seeking a consensus on how to deal with Iran. Although they have held some backchannel talks with the Iranians, brokered by Iraq, the Saudis remain anxious that Tehran's accelerated uranium enrichment program is bringing it ever closer to nuclear weapons capability.

The Emiratis, meanwhile, are pursuing more open diplomacy with the Islamic Republic. MBZ sent his brother and national security adviser, Sheikh Tahnoon bin Zayed, to Tehran in early December. Iran's hardline President Ebrahim Raisi is expected to visit the UAE, possibly in early 2022. 

The Emiratis seem to have decided they can no longer depend on the U.S. for protection against Iran. Among other things, this calculation may have informed the UAE's recent decision to suspend talks with the Biden administration over the purchase of F-35 jets and other weaponry. And they aren't persuaded that their deepening friendship with Israel will make up for the loss of the American security umbrella. The Iranians will play on these anxieties to try to widen the gap between the UAE and its allies, both next door and further West.

The regime in Tehran will have been delighted to hear a top Emirati diplomat advocating against more economic sanctions even as the U.S. was warning of tighter restraints if the nuclear program isn't reversed. But the change in the UAE's tone won't have been welcome in Riyadh; Saudi cities and oil installations remain under constant threat of Iranian-made missiles fired from Houthi positions in Yemen. The latest round of talks between the world powers and Iran began on Monday, but aren't likely to roll back Tehran's nuclear program.

For the Biden administration, any deepening of divisions between the Arab Gulf allies potentially weakens American pressure on Iran, as well as presenting a diplomatic headache in and of itself. And it would bode ill for the next GCC summit, in Oman, next year.

Not that you would be able to tell from the communiqué, of course.

Bobby Ghosh is a Bloomberg Opinion columnist. He writes on foreign affairs, with a special focus on the Middle East and Africa.

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.