Beyond Geopolitics: Why There is an Economic Motive to the Changing Relations in the Middle-East

By Prof. Tridivesh Singh Maini

In recent weeks all eyes have been on US President Joe Biden’s Middle East Visit. A lot of the analysis has focused on how Biden’s trip is aimed at resetting ties with Saudi Arabia as well as brokering an agreement between Saudi Arabia and Israel.

Economic dimension of the churning in the Middle East 

The re-alignments taking place in the Middle East, such as the improvement of ties between Israel and United Arab Emirates, (both countries signed the Abraham accords in 2020 and normalized relations with active intervention from the US) and Saudi Arabia as well as the overtures by Turkey towards Gulf countries – especially Saudi Arabia and UAE — are driven by geopolitical factors. However there is a strong economic component which often tends to get relegated to the sidelines.

Israel’s normalization of ties with Arab countries

Post the Abraham accords which resulted in normalization of ties between Israel and UAE (later on Morocco and Bahrain also joined the accords) trade relations between both UAE and Israel have improved significantly. Trade in 2022 is likely to be to the tune of USD 2 billion, both countries having signed an FTA in May 2022. There has also been an increase in the number of Israeli tourists visiting the UAE.  While absolute normalization between Saudi Arabia and Israel is unlikely in the short run, Israeli investors are exploring investment opportunities in Saudi Arabia with a thrust on areas like technology and desert agriculture. A strong interest on both sides to strengthen economic links highlights the fact that Saudi Arabia is investing in venture funds headed by Donald Trump’s son in law Jared Kushner. Kushner was also the Trump administration’s envoy to the Middle East. Furthermore, in a symbolically important way, Biden is likely to fly directly from Saudi Arabia and Israel (the first direct flight from Israel landed in Saudi Arabia in 2021). It is likely that Israel and Saudi Arabia will announce more direct flights to give a fillip to the bilateral relationship.

Turkey’s ties with Saudi Arabia and UAE 

 Turkey and Saudi Arabia as well as UAE have had tensions. Turkey has sought to reduce tensions and strengthen economic linkages with both countries. Turkish President Recep Tayyip Erdogan needs to put his country’s economy back on track before the election next year and robust economic relations with Abu Dhabi and Riyadh can be important towards that end.

Turkey-Saudi relations 

The main bone of contention between Turkey and Saudi Arabia was the murder of Saudi Journalist Jamal Khashoggi in Istanbul, in 2018, as well as Turkey’s support for Qatar after other Arab countries had imposed a blockade on Qatar in 2017. Turkey’s calls for an international inquiry into the murder of Khashoggi resulted in the souring of ties, and Saudi Arabia imposed a boycott of Turkish goods. This had an adverse impact on the bilateral economic relationship. As a result, over the past two years, Turkey has been seen making overtures towards Saudi Arabia. The decision of the Istanbul Court in April 2022, to transfer the trial of 26 accused in the murder, in absentia, to Saudi Arabia, was looked at as an important concession to the Saudi government. This decision, which drew flak from numerous human rights activists, was followed by a visit by Erdogan to Saudi Arabia in April 2022 (the first after the murder of Jamal Khashoggi).

During Saudi Crown Prince Muhammad Bin Salman’s visit to Turkey, on June 22, 2022 both sides are supposed to have discussed the need to enhance trade and investment. A joint statement released after their meeting between Erdogan and MBS said that both leaders:

‘… discussed the possibilities of developing and diversifying mutual trade, facilitating the bilateral trade between the two countries and overcoming the difficulties, increasing the communication in the public and private sectors of the two countries in order to explore investment opportunities and transform them into concrete partnerships in various fields’

Turkey and UAE had tensions over a number of regional issues, but  have made concerted efforts to improve ties over the past year. During the visit of Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, to Turkey in November 2021, the UAE announced  a $10 billion fund for investments in Turkey. Turkey is the UAE’s 7th largest trading partner and non-oil trade was estimated at over 13 billion for 2021. In January 2022, Israel and UAE signed a trade swap estimated at USD 4.7 billion (the aim of this agreement was to enhance trade and investment relations). During the Turkish President’s visit to UAE, in February 2022, agreements were signed in a number of areas including trade, technology, agriculture.

Sheikh Abdullah bin Zayed, the UAE’s minister of foreign affairs and international cooperation pitched for stronger economic ties during his visit to Turkey in May 2022.  An improvement of ties between Turkey and UAE will also help Turkey in drawing more tourists from UAE, giving a boost to the economy.

In conclusion, the changing re-alignments in the Middle East have a strong economic prism. While for countries like Saudi Arabia, improvement of ties with Turkey and Israel will enable it to enhance diplomatic clout, for both Israel and Turkey there are strong economic incentives.

Tridivesh Singh Maini is Assistant Professor, Jindal School of International Affairs, OP Jindal Global University, Sonepat, Haryana.

Image credits – WEF

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