The UAE-Saudi Arabia Rivalry Becomes a Rift

Saudi Arabia and the United Arab Emirates often have seemed like two sides of the same coin, to western eyes at least: two powerful, oil-rich monarchies, both allies of the United States and avid consumers of American weapons, united in their determination to maintain regional security and stability on their terms and in cooperation with Washington. If there were differences in politics or outlook, they appeared cosmetic at best. The two countries were on the same side in Yemen since 2014, they opposed Iran and its nuclear deal with the West, and they united to isolate and blockade Qatar in 2017.

But behind the scenes, real and serious differences were taking shape. The two countries are now waging a quiet struggle to determine who will emerge as the Arabian Gulf’s—and maybe the Arab world’s—preeminent power, leveraging their economies and foreign policy to not only wield influence within the Gulf Cooperation Council (GCC) but to project it on the world stage. What once seemed like a conventional fraternal rivalry has, in the past few years, taken on the appearance of a rift.

Saudi Arabia and the United Arab Emirates, the two most populous countries and largest economies in the GCC, have always been natural rivals. Some of this rivalry has its origins in territorial disputes and dynastic politics that long predate the independence of the UAE in 1971. In recent years, however, stresses in the global oil market, a shifting geopolitical landscape, and differing conceptions of national missions have added to the tensions. An incipient rift between the two countries could have profound effects on the politics of the Gulf and on American security strategy in the region.

Economic Flashpoints: OPEC, Oil, and Diversification

The growing differences go back many years and are firmly rooted in economic competition. In a foretaste of things to come, Emirati objections in 2009 to locating the headquarters of a proposed GCC central bank in Riyadh helped kill plans for the bank itself. More recently, oil politics drove a wedge between the two countries. In July 2021, Saudi Arabia spearheaded a plan within OPEC+ to extend production cuts, which had been set to expire in April 2022, until the end of that year in order to compensate for the near-collapse of oil prices during the COVID crisis. The UAE objected, calling the proposal “unfair” because it would have required it to absorb a disproportionate production cut, a potential loss of income in the tens of billions of dollars. The immediate dispute was resolved later that month when the cartel agreed to raise the production limits of five of its members, including the UAE; but strains have lingered to the point that UAE sources had to deny reports in March that the country was considering leaving OPEC. All sides played down the disagreement, but it laid bare how the UAE, for one, chafed at the Saudi presumption of supremacy in OPEC+—and, by extension, other issues. The affair set the pattern for tensions yet to come between the two Gulf heavyweights, within OPEC and beyond.

The dispute over oil was only one aspect of a more complicated rivalry involving differing economic visions.

The dispute over oil was only one aspect of a more complicated rivalry involving differing economic visions that have forced Riyadh and Abu Dhabi into an intensifying competition as both strive to modernize and diversify their economies, often at each other’s expense. Under the leadership of Crown Prince Mohammed bin Salman Al Saud (often referred to as MBS), Riyadh “has set out to challenge the UAE as the leading business and transportation center of the Middle East,” according to Wilson Center scholar David Ottaway. He notes that MBS plans to spend $147 billion “to make Saudi Arabia the principal air and sea ‘logistics hub’ for the region,” rivaling the UAE as the Gulf’s major entrepot. As part of this scheme, the Saudi government in March announced the launch of a new airline, Riyadh Air, owned by the kingdom’s Public Investment Fund. With an initial purchase of 72 Boeing 787 Dreamliners, Riyadh Air is expected to compete directly with the UAE’s leading airlines, Emirates and Etihad Airways.

To encourage foreign investors to set up shop in Saudi Arabia, the kingdom is implementing policies that amount to another direct challenge to the UAE economy. Two years ago, during the dispute over oil production, Riyadh imposed new import restrictions to eliminate tariff-free market access for goods made in economic free zones, which are a backbone of the Emirati economy. In addition, the rules specifically included goods manufactured with Israeli input, a rebuke to growing UAE-Israel trade relations stemming from the 2020 Abraham Accords brokered by the Trump administration.

Saudi Arabia also decided to challenge the UAE as the preferred headquarters location for most foreign firms doing business in the Gulf. In 2021, the Saudi government began requiring foreign companies operating in the kingdom to establish a headquarters there by 2024, with a goal of getting some 480 companies to do so by 2030. While Saudi officials indicated that this is intended to ensure global firms are committed to the kingdom for the long-term, it is unlikely that Emirati officials see it that way, as Abu Dhabi and Dubai now play host to some 76 percent of the regional headquarters of major firms operating in the Gulf.

Some of these moves by the Saudis are a result of the kingdom’s rush to implement Vision 2030, a comprehensive development framework designed to diversify the Saudi economy and develop public services. It was inevitable that the plan would bring the kingdom into some degree of direct competition with the rest of the Gulf, and particularly the UAE, which jumped aboard the diversification train with its own long-range strategy years earlier. But that competition is now beginning to look a lot like a power struggle, with the Saudis attempting to reassert their regional dominance in a zero-sum game, the results of which will help determine who emerges as the preeminent power in the Gulf.

Geopolitical Fissures: Yemen and Israel Stand Out

On regional strategic and political issues where the countries once marched in lockstep, fissures have emerged as well. The most prominent example is Yemen, which continues to roil relations between Saudi Arabia and the UAE eight years after their armed forces intervened to restore the internationally recognized government of President Abdrabbuh Mansur Hadi and push back the Iran-supported Houthi rebels. The Emirates viewed its participation in the effort partly as a way to demonstrate support for Saudi Arabia, but also as a means of striking a blow against political Islam and, perhaps more important, protecting its own economic interests by securing vital maritime trade routes close to Yemen, including the Bab al-Mandab entrance to the southern Red Sea. In addition to shouldering much of the heavy fighting, the UAE trained some 90,000 troops in the South, and now maintains operational control over a number of armed groups. These forces have become the military backbone of the Southern Transitional Council (STC), a UAE-backed separatist movement through which it continues to exert influence. Much to the consternation of the Yemeni government and its Saudi backers, Abu Dhabi has gone on to build a military facility on Socotra, a Yemeni island that commands the entrance to the Gulf of Aden, and an airbase on Mayun, an islet situated in the middle of the Bab al-Mandab strait.

The UAE viewed its participation in the Yemen effort partly as a way to demonstrate support for Saudi Arabia.

Having achieved its aim of protecting its security interests and attaining a significant role in Yemen’s political future—and concerned that rising international criticism of the war and its humanitarian impact made its involvement increasingly untenable—the UAE withdrew most of its troops in the southern and western parts of the country in 2018, marking a significant shift in the dynamics of the conflict. Saudi Arabia and its erstwhile ally are now effectively on opposite sides of the war, a reality the kingdom acknowledged when the Saudi-backed Yemeni government recognized the STC in 2020, resulting in its inclusion in the government. This turn of events was a striking illustration, not only of the shifting situation in Yemen, but of the changing relations between the two Gulf powers. Not to be outdone, in June the Saudis convened a new political grouping, the Hadramawt National Council, to serve as counterweight to the STC.

The two nations’ differing approaches to Israel have also played into the growing rivalry. Since the UAE formalized ties with Israel under the Abraham Accords, relations between the two countries have grown by leaps and bounds. Economic cooperation has taken off, with bilateral trade reaching $2.5 billion in 2022 from a base of near zero before the accords were signed. Some 1,000 Israeli firms now operate in the UAE, and economic relations are expected to grow further with the signing in April of the UAE-Israel Comprehensive Economic Partnership Agreement, Israel’s first free trade agreement with an Arab state.

Saudi Arabia, meanwhile, has refused so far to normalize relations with Israel, despite US diplomatic efforts (although sub rosa security contacts continue). This situation has disadvantaged Riyadh politically and economically vis-a-vis Abu Dhabi, especially given the importance the Biden administration has placed on expanding the circle of peace between Israel and the Arab states, a strategy which has emerged as the cornerstone of Washington’s policy in the Middle East.

Differences on US Relations

Indeed, on this larger issue of relations with the United States, stark differences have emerged as well. Mohammed bin Salman’s relationship with President Biden remains poor, in spite of considerable high-level attention the United States has paid to the kingdom over the last year, and MBS has made clear he is trying to strike a more independent foreign policy course. The UAE, while it shares Saudi concerns about American staying power in the region and likewise has put some distance between itself and Washington, notably on Russia and China ties, nevertheless has emerged as ostensibly the more trusted ally of the two.

Military and economic ties with the United States remain strong (the UAE is a major consumer of American weapons and is also the top Middle East market for US exports). More important, the UAE (unlike Saudi Arabia) has participated in US-led military operations in Afghanistan, Kuwait, Iraq, and Serbia, in addition to the NATO mission led by the United States in Libya. As part of its extensive military cooperation with the United States worldwide, the UAE participates in a full slate of training and combat exercises with US and other forces, hosts some 5,000 American troops at the Al-Dhafra Air Base, and provides support services for the US Fifth Fleet at the port of Jebel Ali. For a period in the 2010s, the UAE enjoyed the reputation of “Little Sparta” in the US military because of its military prowess and enthusiastic support of US missions in the region and beyond.

US-UAE relations generally remain on strong footing and come without the mercurial policymaking that characterize the US-Saudi relationship under MBS.

Recent strains in the bilateral relationship notwithstanding, US-UAE relations generally remain on strong footing and, significantly, come without the mercurial policymaking and semi-disguised hostility that characterize the Saudi approach to the United States under MBS. The UAE’s enthusiastic embrace of the Abraham Accords and relations with Israel has opened up new opportunities for advancing US security policy in the region, in contrast to Saudi Arabia’s continued holdout. That the Emirates remain Washington’s preferred partner in the Gulf (something no American policymaker would openly admit) was signified by the Trump administration’s approval of the sale of up to 50 F-35 advanced fighter jets and 18 MQ-9 Reaper drones, both of which would be a first for any Arab state, even though negotiations over terms are still ongoing. During a meeting with UAE President Mohammed bin Zayed Al Nahyan (MBZ) in Jeddah in July 2022, President Biden had very warm words both for the Emirates and MBZ, whom he invited to visit Washington, a courtesy that, pointedly, has not been extended to MBS. Even in a time when performative independence from Washington is standard statecraft in the region, having close political-military ties with the United States remains a marker of power and influence.

Clashing Visions Drive Saudi-UAE Contest

Two competing visions of Gulf leadership have begun to clash more openly. The Saudi vision centers on the royal family’s belief in its rightful role as first among equals in the Gulf, based on history, population, and economic weight. Until fairly recently, the kingdom’s cultural and political outlook has also been intensely conservative, focused above all on regime preservation and on holding off social and political change in partnership with the country’s religious establishment, and on generally reacting to, rather than driving, events. While that has begun to change rapidly under MBS, the kingdom is still playing catch-up.

The Emirati worldview sees the country as more dynamic, forward-thinking, and socially and economically liberal, as reflected in its activist foreign policy of the last decade or so and its ready adoption of national strategies to build a more resilient, sustainable, and globally-integrated economy. The UAE’s own Vision 2030, for example, came out in 2008, a full eight years before Saudi Arabia’s. The UAE consistently ranks high on international indices of soft power and national development. This vision of the Emirates is immensely appealing, not only to its own citizens but to many others in the Arab region; the 2023 Arab Youth Survey, for example, revealed that, for the twelfth straight year, young citizens of the Arab region named the UAE as the country that they would most like to live in and that they would like their own country to resemble. Understandably, the UAE is bridling at the dominance of Saudi Arabia and has felt compelled to assert its own independent course in global affairs, not only as a matter of pride and right, but to safeguard its expanding economic and security interests.

It was inevitable that these very different national visions would clash as the Saudi and Emirati development strategies began to compete in the same sectors, and as the UAE’s rise challenged Saudi Arabia’s conception of its leadership role, not only in the Gulf but within OPEC and on the international stage. The rift has been denied by both countries, and the Saudis and Emiratis still share many objectives: confronting Iranian aggression, thwarting political Islamist movements at home and abroad, and supporting like-minded authoritarians who share their intense interest in preventing another Arab Spring. But the contest for influence and power is only likely to grow as the Saudis seek to reassert their leadership (some would say hegemonic) role in Gulf politics, while the UAE pursues independent objectives in line with its economic imperatives and global sense of mission.

The competition is likely to play out most noticeably in Yemen and in OPEC, and more broadly in the economic sphere, as both countries compete to attract foreign direct investment, trade, and tourism. Diplomatically, they will vie to assume the role of regional arbiter, as the UAE did in February by arranging a phone call to help mend the rift between Qatar and Bahrain, and as Saudi Arabia has been doing in Sudan, part of a larger Saudi diplomatic effort to make itself relevant on the world stage beyond its role in OPEC+.

Why It Matters to the United States

For the United States, the UAE’s withdrawal from the Combined Maritime Forces last May and its rivalry with Saudi Arabia could complicate efforts to build a stronger regional security structure to counter Iran, such as its hoped-for Middle East air defense alliance. And the sharp difference between the Saudis and the Emiratis on Israel ties will make more difficult US efforts to integrate Israel into the region, a major policy goal of the Biden administration. American policy faces an uphill climb due to the fact that both countries have an interest in demonstrating their independence from Washington and may increasingly compete to build stronger relations with China. On the other hand, both countries are likely to be pleased with the American military’s response to attempts by Iranian Navy vessels to seize oil tankers transiting the Gulf in a continuation of such behavior since 2019.

American policy faces an uphill climb due to the fact that both countries have an interest in demonstrating their independence from Washington.

Still, the United States could potentially exploit the quiet but important competition between the Saudis and the Emiratis to gain the benefits conferred by close political-military ties with Washington, as the Saudis seek security guarantees and nuclear cooperation as the price for engaging with Israel, and as the UAE tries to finalize the F-35 deal. Hints or demonstrations of preferential treatment in cherished arms or trade packages, for example, depending on who does more to accommodate US priorities, could help nudge some decisions in Washington’s direction. US foreign policy does not usually do subtlety very well, but it may be worth trying in a Gulf region that increasingly appears disenchanted with US leadership, and where a small but important opportunity has turned up.

The views expressed in this publication are the author’s own and do not necessarily reflect the position of Arab Center Washington DC, its staff, or its Board of Directors.

Featured image credit: Twitter/MbZ