KSA-UAE Tensions: Oil, Trade, TV
GCC Flag, Jazan (Saudi Arabia), 2019 [Author Photo]
Once again, Twitter and the occasional statement to international media has offered evidence of some below-the-surface tensions between Saudi Arabia and the United Arab Emirates, as documented on this site with respect to the conflict in Yemen back in 2019. Following up on those posts, I’ll put a bit of what I’m seeing here, but keep in mind that this post will be a work in progress as people reply on Twitter or elsewhere to tell me what I’m missing or getting massively wrong.
[If you like what you see, supporting the site certainly gives me an incentive to keep writing.]
Much like in 2019, the present sparring between the UAE and Saudi Arabia over oil prices and other topics might soon be buried again under an outward assertion of a united front, but it seems indicative of ongoing friction resulting from the following three sources (just based on chatting through with a few friends):
Saudi Arabia’s economic ambitions are most rapidly achieved by siphoning off business from the UAE, whether through strong-arm tactics or massive investments & economic incentives (hence efforts like February’s directive to international companies to reclocate their regional HQ to the Kingdom or risk losing out on government contracts) & UAE leadership resenting this
The UAE’s geopolitical ambitions are most rapidly achieved by presenting itself as a more nimble, more capable, more reliable and above all less embarassing security partner to the United States & other would-be allies than Saudi Arabia (hence steps like publicly announcing the UAE’s withdrawal from the Yemen War’s quagmire in the pages of the Washington Post) & Saudi leadership resenting this
[Update: I may be reading too much into this so focus more on #1 and #2] Divergent foreign-policy strategies of either diversifying economic and security ties away from the United States (such as with the UAE’s deployment of China’s COVID-19 vaccines and 5G technology) vs. Saudi Arabia’s occasional gestures in that direction but generally abiding by US requests/suggestions on major decisions (i.e. no Chinese COVID-19 vaccines or 5G technology in the Kingdom)
The past 2 posts on this blog on Saudi-UAE relations were more related to point 1; this post is more closely related to point 2. Hence:
The conflict between Saudi Arabia's imperative for economic transformation and the economies of the other Gulf states is going to be one of the fascinating stories of the next decade https://t.co/RAm1k7XIKb — Gregg Carlstrom (@glcarlstrom) July 5, 2021
There’s also the question of the GCC countries’ relationships with Israel. Any momentum towards normalization within Saudi Arabia seems to have stalled out with the change of administrations in the United States – nominally leaving Qatar and Saudi Arabia more closely aligned on the issue of recognition of Israel than the UAE and Saudi Arabia (more on this below).
[Update: Ryan Bohl wrote on this subject for the Newlines Institute.]
Of course, this is just a pithy over-simplification of a complicated relationship (me, not Gregg Carlstrom). It’s clear that Saudi-UAE relations have a long way to go before they’re anything like even the pre-2014 UAE/Qatar rivalry – but worth keeping in mind.
[Update: For more on intra-GCC dynamics after the rapprochement between Qatar and the Quartet, a number of scholars working in this area recently put out a volume of essays on the subject in Orient: The German Journal for Politics, Economics and Culture of the Middle East. Contact me if you have trouble accessing it.]
One of the clearest triggers for the latest round of tensions has been negotiations within OPEC+. I won’t pretend to fully understand how international oil production & energy cartel-ing works, so I would recommend seeing this coverage by Summer Said of the WSJ (along with colleagues Benoit Faucon & Stephen Kalin) for a more in-depth discussion of the present standoff.
[Update: Friends on Twitter also recommend writing (Arabic) by energy-market researcher Annas Hajji on background to the OPEC+ negotiations.]
Suffice to say that Saudi Arabia is seeking to negotiate a joint expansion in production, and while the UAE agrees in principle to higher levels of production, it wants a larger cut of that expanded production – probably not unrelated to massive investments by the Abu Dhabi National Oil Company (ADNOC) into expanding production by 2030.
[Update: For more on the UAE’s present oil policy, see this AGSIW paper by Ben Cahill.]
Regarding OPEC+ negotations, Saudi Oil Minister has been quite willing to go on-the-record with his annoyances with his Emirati counterparts…
It’s the whole group versus one country [the UAE], which is sad to me but this is the reality. Saudi Oil Minister Prince Abdulaziz bin Salman, Bloomberg, 7.4.2021
Saudi Oil Minister: I represent a country that aims at balance, that takes into account the interests of everyone as the head of OPEC+.. and there is a mechanism for grievances… and if there are countries that harbor reservations, why were they silent about it previously?
#وزير_الطاقة_السعودي: أنا أمثل دولة متوازنة تراعي مصالح الجميع كرئيسة لـ #أوبك_بلس.. وهناك آلية متبعة للتظلمات… وإذا كانت هناك تحفظات لأية دولة لماذا سُكت عنها سابقاً؟#الأسواق_العربية pic.twitter.com/wR1zSYwD8t — الأسواق العربية (@AlArabiya_Bn) July 4, 2021
Others followed up to cast doubt on the UAE’s position, such as Mohammed Al Bishi, of Bloomberg Media’s Arabic-language Asharq television outlet (a joint venture between Bloomberg and the Saudi Research and Media Group, described by the Guardian as “closely entwined with the political and PR aims of the Saudi state”).
The UAE’s request to raise its reference production rate is measured against its production in April 2021 [note: he later corrects to April 2020], which was for one month, amid exceptional circumstances affecting the market. This is actually surprising and illogical… it is even uncertain whether this production is actual production capacity, withdrawal from stocks, or both. If we take the April  measure as a reference , Saudi Arabia will benefit, but many other countries such as Russia, Iraq, Nigeria, Angola, Algeria and Oman will inevitably be harmed, which the Kingdom and Russia do not want…because the organization is based on taking care of everyone’s interests.
ولو أخذنا مقياس شهر إبريل 2021م كمقياس مرجعي فإن السعودية ستكون مستفيدة، ولكن دولاً أخرى كثيرة مثل روسيا والعراق ونيجيريا وأنغولا والجزائر وعمان حتما ستتضرر وهو ما لاتريده المملكة وروسيا.. لان المنظمة قائمة على رعاية مصالح الجميع. pic.twitter.com/5UNLCsGEDf — محمد البيشي (@albishi) July 5, 2021
The main narrative from Saudi officialdom as well as form nationalist influencers emphasized the Kingdom’s pursuit of collective, international interests.
The deep consideration and the responsibility exhibited by Saudi Arabia’s leadership in previous OPEC agreements was the factor that led to the stability of the energy market. We know that the pandemic has harmed the economies of countries, but looking at individual interests will lead to chaos and a deterioration in prices. No one has been affected more economically than the Kingdom, yet it is the one that is making the greatest sacrifices.
بعد النظر والمسؤولية التي تمتعت بها قيادة السعودية لاتفاقيات اوبك السابقة كانت العامل المؤدي لاستقرار سوق الطاقة. نعلم ان الجائحة اضرت باقتصادات دول ولكن النظر للمصالح الفردية سيؤدي للانفلات وتدهور الاسعار. لم يتضرر احد اقتصاديا اكثر من المملكة ومع ذلك هي التي تقدم اكبر التضحيات https://t.co/XRJVgjnImR — مشعل الخالدي (@meshaluk) July 4, 2021
“Cresstoff” – a pro-Saudi nationalist account that is periodically banned and reinstated on Twitter, or unknown provinence – likewise had this to say on the dispute (in other words – there is a meaningful dispute here with respect to oil prices, but it will not go beyond that):
The Saudi position and its economic and political sacrifices towards the 2020 oil crisis cannot be compromised – in the midst of the Corona crisis – Saudi Arabia stood alone in the face of the flood. And when the snow melted and the meadows cleared, it will not allow new developments to be dealt with in isolation from her sacrifices, whether from Russia and America in the past or from the Emirates now… The world suffers from the fog of the pandemic, and the oil markets, despite all the challenges, are still stable, thanks to God, and then thanks to the wise Saudi leadership of the global energy system. As for those who dance to the tune of disagreement, I say: Saudi Arabia and the Emirates in particular… …and the Gulf states in general, are a historical model of integration and competition, which should have a positive impact on the region. And when hostile decisions, statements, or tweets are issued from here and there, they will not, even in the most severe case, debart from the the dispute in question. Continue your delirium and chant your wishes. The region will not return to your schemes.
لا يمكن المساومة على الموقف السعودي وتضحياته الاقتصادية والسياسية تجاه أزمة النفط 2020 – في وسط أزمة كورونا – وقفت السعودية وحيدة في مواجهة الطوفان، وعندما ذاب الثلج وبان المرج؛ لن تسمح بالتعامل مع التطورات بمعزل عن تضحياتها، سواء من روسيا وأمريكا سابقًا أو من الإمارات حاليًا — ملفات كريستوف (@CressFiles) July 5, 2021
ودول الخليج عامة، نموذجًا تاريخيًا يحتذى به في التكامل والتنافس، ما من شأنه أن ينعكس إيجابًا على المنطقة. وعندما تصدر قرارات أو تصريحات أو تغريدات مناوئة من هنا وهناك، لن تخرج في أشد حالاتها عن إطار ملف الخلاف نفسه. استمروا في هذيانكم وترديد أمنياتكم. لن تعود المنطقة لتخبطاتكم — ملفات كريستوف (@CressFiles) July 5, 2021
In response, the Emirati oil ministry issued a press release outlining its negotiating stance, while oil minister Souhail al-Mazrouei spoke at length with CNN (rather than Bloomberg):
For us, it wasn’t a good deal [referring to OPEC+ production cuts which were based on a] level of production that goes back to 2018. We knew that the UAE position in that agreement was the worst in terms of comparing our current capacity with the level of production. But an agreement is an agreement… Now we think that linking the extension of the agreement for a reference that goes back to 2018, and for a period that starts from 2022, is just not realistic, because this is four years… That is totally unfair. UAE Minister of Energy and Infrastructure Suhail Al Mazrouei, CNBC, 7.4.2021
At least a few Emirati influencers have backed up this position on Twitter. Former Dubai chief of police Dhahi Khalfan, for example, weighed in with oblique commentary on Saudi-UAE relations in a number of tweets, as he often does on any number of hot-button issues. For example (though note that this is mixed in with commenting on improvements in Emirati public schools as well as taunting his online critics):
This age does not know friendship or brotherly relations… It is a time of material interests.
هذا زمن لا يعرف الصداقة او الأخوة…انه زمن المصالح المادية. — ضاحي خلفان تميم (@Dhahi_Khalfan) July 5, 2021
More to the point, Khalfan also posted in defense of the UAE’s OPEC+ negotiating stance citing perceived unfairness of allotted Emirati production relative to a “baseline” level under the agreement.
Someone sent me this on how the UAE was the most affected [by the OPEC+ cuts]… more than others… and when it demanded justice, it was said that it did not have a right to.
ارسل لي احدهم كيف ان الإمارات كانت الأكثر تضررا…من غيرها ..وحين مطالبتها بالعدالة قيل أن لاحق لها. pic.twitter.com/6uEcRHEAhE — ضاحي خلفان تميم (@Dhahi_Khalfan) July 5, 2021
Less direct was a somewhat cryptic poem posted to Twitter by MBS confidante and Saudi entertainment czar Turki Al Al-Sheikh, which… might be related:
My friend… by God, you are no longer my friend Time has changed you… and life’s circumstances And time… even if it takes you… it won’t take me And a good friend friend… doesn’t forgets… his friends (You know who I mean)
صاحبي … والله ماعادك صاحبي الزمن غيّرك … وظروف الحياه والزمن … وأن راح بك … ماراح بي والصديق الكفو … ماينسى … اصدقاه 🤷🏻♂️ تدل دربها🙃 — TURKI ALALSHIKH (@Turki_alalshikh) July 5, 2021
(Also more… shall we say Qatari-aligned accounts are somewhere between exasperation and schadenfreude).
Saudi and Abu Dhabi could've solved their differences: 1. Bilaterally since they have a special relationship. 2. Within GCC, an organization they almost destroyed. 3. Within AL. 4. Within OAPEC, another useless obscure Arab org. Proof neither is qualified to lead the region. — Ibn Firnas (@Ben_Firnas) July 5, 2021
Meanwhile, from the Chair of the Dubai Chamber of Commerce:
You can see an attempt on social media by some to patch things up, but the tear has expanded beyond the patch!
الملاحظ في التواصل الاجتماعي محاولة البعض الترقيع لكن أتسع الخرق على الراقع — majid saif alghurair (@majidalghurair) July 6, 2021
On the subject of “patching things up,” Khalid al-Suliman has a column out on July 6th reminding readers that “friendships last but enmity does not”:
It is very important to be cautious in dealing with suspicious messages on social media, as fabricated news or opinions can ignite the fires of sedition. The creators of this content are mostly anonymous or fake their identities. It is wrong for some to contribute to the circulation or dissemination of these perspectives, unless based on official statements that are issued regarding foreign relations or policies towards regional and international issues. Plunging into negativity causes nothing but harm! K. AlSuliman, Okaz, 7.6.2021
And from the Emirati side:
Our disagreement with Saudi Arabia is that we love Saudi Arabia more than them. As for the Saudis, they love the Emirates more than us.
خلافنا مع السعودية هو اننا نحب السعودية اكثر منهم وخلاف السعوديين معنا انهم يحبون الامارات اكثر مننا . pic.twitter.com/THnmCV9dpR — حمد الحوسني | Hamad Alhosani (@Hahosani) July 5, 2021
Regional Integration or Competition
Another contributing factor over the weekend was a decision by Saudi authorities to restrict travel from a number of countries, including the UAE, officially over coronavirus concerns.
One of those who responded on the Emirati side (seemingly from Lebanon, based on his Tweet location) was Emirati political scientist Abdulkhaleq Abdulla. Abdulla is a boosterish voice regarding the UAE’s global presence who is also one of the few one-the-record, not-a-state-official sources for English-language media stories about Emirati geopolitics. (He has also been detained in the past by Emirati security, though this has not kept him from championing the detention of other academics in the UAE.)
In one tweet (since deleted) he initially complained about “some countries” banning entry from the UAE – almost certainly a reference to Saudi Arabia banning entry from the UAE and several other countries over coronavirus concerns.
He always tweets and deletes, people like him should be taken for what they say… [Quoted from Abdulla]: The UAE is the first [globally] in vaccinating against COVID, its precautionary procedures are the most specific, its numbers of those affects among the lowest globally, and its economy is among the fastest in the Gulf and the Arab world to recover. Why then do some countries place it on their “red list” to prevent travel? Is the problem with us or with them? And is this purely from health considerations or due to some other matter?
As the above screenshot suggests, Abdulla quickly deleted this tweet.
When the mind tells you to delete a tweet, there’s no harm in removing it. This is good and wise. [Quoted]: A previous tweet about a travel ban to the UAE was deleted because it might be misunderstood and be exploited by those who are always fishing for controversy.
عندما يدعوك العقل لمسح تغريدة فلا بأس من ازالتها. هذا هو عين الحكمة والصواب. https://t.co/908597mgu1 — Abdulkhaleq Abdulla (@Abdulkhaleq_UAE) July 4, 2021
Dhahi Khalfan also posted a chart on July 4 showing the UAE’s COVID-19 statistics relative to Saudi Arabia and Kuwait (which had not been hit by the travel ban), indicating a lower rate of individuals tresting positive in the UAE:
Corona in the Gulf… on Saturday
كورونا خليجيا…السبت pic.twitter.com/FBm67C8g2t — ضاحي خلفان تميم (@Dhahi_Khalfan) July 4, 2021
The “other matter” Abdulla was likely referring to, however, is ongoing Saudi efforts to develop the Kingdom’s economy in ways that could be seen as siphoning off business activity from the other GCC economies.
There was the February announcement of international firms being forced to relocate regional HWs to the Kingdom if they wanted access to lucrative government contracts. Likewise, as Ahmed Al-Omran noted in his always-excellent Riyadh Bureau newsletter, the Saudi government has also announced plans to launch a second national Saudi airline, perhaps to rival Dubai as a logistics hub. And it has been over a year since Vivian Nereim wrote for Bloomberg (pre-pandemic) on how “Saudi Opens for Business to Rival Dubai as Regional Hub.”
Another step in this area underscores both regional economic competition and divisions over relations with Israel. Changes to regulations on imports from other GCC countries would eliminate preferential tarriffs (i.e. effectively raise tarriff barriers) on any goods from free zones (such as the many such zones in Dubai).
[Update: For more on the UAE’s free zones, see this AGSIW paper by Robert Mogielnicki.]
And regarding free zone negotiations:
The idea once was to create a GCC market, but now there’s the realisation that the priorities of Saudi Arabia and the UAE are very different. This regulation is putting flesh on the bone of these political divergences. Amir Khan, senior economist at Saudi National Bank, Reuters, 7.5.2021
In any case, Abdulkhaleq had refined his views on regional competition in time to speak with international media on Tuesday:
There is this creeping economic competition in the relationship between the two biggest Arab economies and the competition is bound to intensify. The UAE is speaking its mind … but the relationship is strong and the leadership know how to resolve issues. Abdulkhaleq Abdulla, Reuters, 7.6.2021
Khalid Meshaal on Al-Arabiya
In a third interesting development, Hamas leader Khaled Mishaal appeared on Saudi broadcaster Al Arabiya, openly declaring that his group was aligned with the Muslim Brotherhood (probably not music to the ears of Emirati leaders) – this despite the fact that even recent, more pro-Palestinian statements from Saudi media outlets continued to reserve substantial criticism for the group.
#خالد_مشعل في مقابلة خاصة مع #العربية : كنا ولا نزال ننتمي فكرياً إلى #الإخوان .. و #إيران تدعمنا بالسلاح https://t.co/s8jphHADuU #العربية — العربية (@AlArabiya) July 4, 2021
Prominent Saudi “patriotic Tweeters” were in turn quite ready to justify this programming decision:
I support hosting any person hostile to the Kingdom and the Arab axis in a dialogue on Saudi channels, provided that the interviewer is a real interviewer who interrogates the speaker and does not flatter them. It is important for Khaled Meshaal to appear on Al-Arabiya to renew (to those who have been deceived) that he stands with Iran against the Arab peoples, and his thanks to the Houthis for targeting Mecca with missiles.
مؤيد لاستضافة اي شخص معادي للمملكة والمحور العربي في حوار على القنوات السعودية شريطة ان يكون المحاور محاورًا حقيقيًا يمارس معه التحقيق والاستجواب ولا يجامله. مهم ظهور خالد مشعل على العربية ليجدد للمخدوعين وقوفه مع ايران ضد الشعوب العربية وشكره للحوثيين على استهداف مكة بالصواريخ. — مشعل الخالدي (@meshaluk) July 5, 2021
Furthermore, op-eds and tweets critical of normalization (and Israel more broadly) do seem to be a bit more common these days. As noted in passing in one op-ed on US policy in Al-Riyadh:
America realizes that supporting Israel, strengthening its military power, and imposing its supremacy, does nothing but lead to further Israeli isolation in the region. The Abrahams Accords and Israeli normalization with some countries in the region will not change the way in which the Arab world sees the Israeli presence… and the best example of this is the crisis of Bab al-Sheikh Jarrah neighborhood in Jerusalem. Ali bin Hamad Al-Khushiban, Al-Riyadh, 7.5.2020
[Will add more on this as I get time]