The Gulf countries are not only diversifying their economies within by looking beyond oil, but expanding their partnerships abroad too by their traditional markets in the West and Asia. In the process, they are also widening their diplomatic relations outside their traditional and comfort zones.
This was evident in two events that were hosted in the region during November – one, the fourth Summit of Arab-South American Countries in Riyadh; and two, the Africa Global Business Forum in Dubai.
Aimed at strengthening ties between the geographically distant but economically powerful regions, the Riyadh summit had a distinct political tone as well. It was attended by leaders from 22 Arab League members and 12 South American countries, including Venezuela, which is a member of the Organisation of Petroleum Exporting Countries, along with Saudi Arabia, the world’s biggest oil exporter.
Two Latin American countries – Argentina and Brazil – are members of the world’s largest economic club of G20, as is Saudi Arabia from the Gulf-Arab side.
Trade between the two regions has increased from $6 billion in 2005, when the first summit was held under the stewardship of president Luiz Inacio Lula da Silva in Brazil, to $30 billion in 2014. As part of the rotation policy, Qatar and Peru have hosted the summits in 2009 and 2012 respectively. Each of these gatherings has focused on developing trade, investment and transport links.
Saudi Arabia, the largest economy in the Arab world and the Gulf, highlighted the “convergence of positions” between countries of the two regions on many issues, including politics, which offer “pr-omising opportunities for collaboration.”
Unknown to much of the world is the “positive stance” taken by Latin American countries towards the issue of Palestinians. For example, Chile hosts about 3,50,000 Palestinian immigrants and their descendants, who moved and sett-led there during the course of a century.
More recently, more than 2,000 Syrian refugees fleeing the war have made Brazil their home since 2011. While Venezuela has said it would welcome up to 20,000 Syrians, the twist is that Venezuela’s President Nicolas Maduro is an ally of Syrian President Bashar Al Assad, who is facing rebel forces backed by Saudi Arabia and other Arab and Gulf countries.
Though Venezuela will host the next summit in 2018, this political difference was not reflected in the final communiqué. Instead, it emphasised the need to reach a peaceful solution to the Syrian crisis in accordance with the statements of the Geneva I and Vienna conferences.
The importance of finding a solution to the Yemeni crisis through the application of the relevant resolutions of the Security Council, particularly Resolution 2216, was also part of the communiqué. Supporting the ongoing political dialogue in Libya under the auspices of the United Nations was highlighted as well. In another sign of expansion of economic activity, the Africa Global Business For-um in Dubai saw the participation of over 40 African and Arab leaders, as well as leading figures from the economic world.
Excellent infrastructure facilities have helped Dubai serve as a hub for re-exports to Africa for long. But the global food price crisis in 2007-08 made the Gulf countries as a bloc eye Africa for investments linked to food security, which has expanded in other realms since then.
Dubai's trade with Africa, estimated at $35 billion annually, has expanded beyond the Arab countries in North Africa to include Uganda, Kenya and Ethiopia, and even oil producers in West Africa like Ghana, Nigeria and Angola.
Starting from dhow (traditional boat) trade with the ports of Zanzibar, Tanzania and Kenya, which were earlier dominated by Arab, Gujarati and other regional traders, Dubai has now become the logistics and procurement hub for both African companies and even many Asian trading companies operating in that continent. Dubai is also giving Ant-werp a run for its money as a global diamond trading hub for African miners.
The Dubai Chamber of Commerce and Industry claims it was among the first to recognise the economic potential of Africa by exploring the Common Market for Eastern and Southern Africa (COMESA) region. Following suit, many other UAE’s state-owned companies like Etisalat, Mubadala and the International Petroleum Investment Company, among others, have invested considerable capital in Africa.
Potential for growth
Though Africa accounts for 12 per cent of the global oil and gas production, it consumes only a quarter of it, which indicates the potential for growth. This is being tapped by many countries and regional blocs in the world, including the Gulf. Further, widely recognised as home to one of the world’s fastest growing populations and middle classes, Africa has attracted much attention of Gulf investors too.
According to a West Africa Economic and Monetary Union report in 2014, UAE businesses committed a total of $19 billion in funding for 17 infrastructure projects in West African countries. The public-private partnerships cover infrastructure, energy, food security and water projects. In other ventures, Qatar National Bank bought a 12.5 per cent stake in Togo’s Ecobank Transnational in September 2014. The bank has a presence in several other African countries too.
At a broader level, Gulf exports to Africa include oil and oil derivatives, cars, vehicles, plastic raw materials, and agricultural fertilisers, aluminium and communications equipment. Its import list from Africa includes gold, pearls, fruits and vegetables, nuts, livestock, copper, and coal.
As their strategic business interests in Africa grow, it is natural that the foreign policies of Gulf countries will become proactive in Africa. According to one expert, “Britain called its exit from the Gulf in the 1970s as an ‘East of Suez’ policy…the region’s next diplomatic and economic policy in Africa can be termed ‘South of Suez’!”
(The writer is a Dubai-based political analyst, author and Honorary Fellow of the University of Exeter, UK)