For years they were the power duo in the Gulf region: the 35-year-old Saudi Crown Prince Mohammed bin Salman and his mentor, the 60-year-old heir to the throne of the United Arab Emirates (UAE), Mohammed bin Zayed. Both are opponents of Iran, both fear political Islam, both are allies of the USA. But now deep rifts are opening between the Saudi prince and his friend in the Gulf.
A few days ago, a dispute between the two countries prevented the Opec oil cartel from reaching an agreement with its partners to increase production. Although there are now indications of a compromise, the rivalry between Saudi Arabia and the Emirates will persist and create new fronts in the Middle East: In the search for a future beyond the oil age, both countries have become competitors.
Mohammed bin Salman, called MBS, and Mohammed bin Zayed – called MBZ – have jointly shaped important developments in the region in recent years. They broke off the dispute with the emirate of Qatar in 2017, and MBZ supported the Saudis’ war in Yemen. With the encouragement of then US President Donald Trump, they built an anti-Iranian front with Israel.
The tensions were plain to see
But now MBS and MBZ are becoming rivals. The Emirates withdrew from the Yemen war in 2019, leaving the Saudis with a conflict that cannot be won militarily. At the beginning of this year, Saudi Arabia pushed through a reconciliation of the Gulf states with Qatar, which the UAE only reluctantly joined. The Emirates agreed on a peace treaty with Israel, while the Saudi government, as the guardian of the holiest places in Islam, held back out of consideration for conservative forces in its own country.
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The tensions were clearly evident in Opec. As the leading power of the oil cartel, Saudi Arabia wanted to secure an agreement with partners such as Russia on the production volume in the “Opec Plus” group. In order to support oil prices amid the slump in demand during the corona pandemic, “Opec Plus” decided last year to reduce production by ten million barrels (159 liters) per day – that was around ten percent of global production. More oil is now flowing again: around six million barrels less per day are currently being produced than before the pandemic.
The Saudi plan envisaged increasing oil volumes by a further two million barrels per day from August until the end of the year and then holding this level until the end of 2022. But the UAE rejected the proposal and prevented an agreement. The Reuters news agency reported on Wednesday that there was a compromise, but the Emirates denied it.
New conditions for international companies
Even if there should be an agreement before August: The dispute is a sign of a deeper rift between MBS and MBZ. The young Saudi heir to the throne knows that his country has so far been poorly prepared for the post-oil era. He therefore wants to attract more high-tech companies, tourists and investors, but the UAE is way ahead of the Saudis: Investors will find very good business conditions in the glittering cities of Abu Dhabi and Dubai, and foreigners can lead a Western lifestyle that is Arabia is impossible.
MBS wants to catch up, even if it puts MBZ on the skin. At the beginning of the year, Riyadh announced that international companies should only be able to benefit from lucrative Saudi government contracts if they relocate their regional headquarters to Saudi Arabia: a clear declaration of war on the UAE. A few weeks ago, the Saudis changed their import regulations, making imports from UAE free zones more expensive. A new Saudi airline is set to compete with successful airlines like Emirates.
At the same time, MBS is trying to reduce bureaucratic and social regulations in order to attract investors. This includes the driver’s license for women and the opening of cinemas in the Islamic-conservative kingdom. On the World Bank’s Business Climate Index, Saudi Arabia improved from 92nd place in 2019 to 62nd place last year. The UAE are in eleventh place.
According to experts, the rivalry will intensify in the coming years. For the Saudi heir to the throne, success as a reformer is crucial, wrote Middle East expert Kristian Ulrichsen in an analysis for the US think tank GIF. On the emirate side, too, “economic nationalism” could continue to grow: that is the new reality in the Gulf.
