A green Gulf

Ahmed Mostafa , Thursday 28 Oct 2021

Al-Ahram Weekly sums up the competition and strategic relations surrounding environmental measures in the Gulf.

A green Gulf
President and CEO of Saudi Aramco Amin Nasser (L) speaks, as chairman and CEO of Total Patrick Pouyanne listens, during a session of the Saudi Green Initiative forum, in Riyadh (photo :AFP)

Saudi Arabia hosted the Middle East Green Initiative (MGI) Summit on Monday. World leaders gathered in Riyadh to join in climate discussions ahead of the Conference of the Parties (COP26) that will take place next month in the UK. The MGI summit is an extension of the Saudi Green Initiative (SGI) that was launched by Crown Prince Mohamed bin Salman on 23 October.

In an auxiliary event, at the Youth Green Summit held on 24 October, the Saudi Energy Ministry announced that it is building an artificial intelligence (AI) team on a multi-billion budget. These announcements are in line with the main theme of sustainable development advocated by global economic and financial institutions, the Smart Green Economy trend everyone is following.

The Gulf countries have a double-edged goal: to diversify their economies away from heavy reliance on oil and gas while catching up with sustainable development.

SGI aims to double carbon emission reduction targets previously announced. The crown prince said the SGI initiative will involve investments of over 700 billion riyals (190 billion US dollars) in the time period between now 2030. He also vowed that Saudi Arabia will plant 450 million trees and rehabilitate huge swathes of land by 2030, reducing more than 270 million tonnes of carbon emissions a year and turning Riyadh into a more sustainable capital.

Together with the Crown Prince, Energy Minister Prince Abdulaziz bin Salman reiterated that reducing carbon emissions will run parallel to maintaining Saudi Arabia’s share of the global oil market. The energy minister said Saudi Arabia will tackle climate change, but also stressed the continued importance of hydrocarbons and said it will continue to ensure oil market stability.

In pledging to achieve a zero-carbon target by the date stated in SGI, Saudi Arabia joins the ranks of Russia and China on their stated net zero target date of 2060. The US and the EU have aimed for 2050. The UAE set its zero-carbon target to 2050.

That is not the only difference between the Emirati and Saudi economic paths. In fact, the UAE is far ahead of other Gulf countries in adopting a Smart Green economy. It started investing in renewable energy almost two decades ago when it launched its clean energy Masdar — an arm of the Abu Dhabi-based investment fund Mubadala. Now, Masdar has many solar and wind energy projects in many countries. The UAE was also a Gulf pioneer in adopting technology and its applications in government and economy.

Yet Saudi Arabia has an advantage even if it is starting its economic reform a little late. The Saudi economy is larger than other Gulf economies, which makes it more attractive to local and foreign investors.

Almost all Gulf countries are now undergoing a policy of diversification within their economies to steer them away from reliance on the revenue from hydrocarbon exports. In doing so, they are competing within significantly smaller sectors ranging from developing tourism to the re-export business.

Trade is a traditional activity of the region, but again there is limited scope for expanding its capacity. Dubai has developed a re-export hub in Jabel Ali that might be difficult to replicate. The UAE has also had a head start as it had already developed a strong tourism industry based on leisure that is now well-established. Meanwhile Saudi Arabia has “religious tourism”, with the Islamic holy sites located in Mecca and Medina. Millions of Muslims from all over the world visit the kingdom every year for Hajj and Umrah.

Since his ascent to power in Riyadh, the crown prince is pushing for change. Many old sites are being developed as archaeological attractions to draw in tourists, and society is being opened up with many traditional restrictions in entertainment and other sectors disregarded.

As one Dubai-based commentator put it, business competition is not affecting strategic relations between Gulf countries especially Saudi Arabia and UAE. “Take the analogy of the Anglo-Saxon special relationship. The USA and the UK might compete in business, but this is not jeopardising their strategic relations. Saudi-UAE relations are even stronger than those across the Atlantic,” he told Al-Ahram Weekly.

Officials in Riyadh and Abu Dhabi have played down all talk — common on social media and platforms linked to Muslim Brotherhood — of a possible rift between the two countries. The UAE was the first to welcome SGI this week. Actually, it opens up more opportunities to UAE involvement in green and smart projects in Saudi Arabia.

Even the decision by the crown prince that any multinational company not based in Saudi Arabia might not be awarded government contracts is not as harmful to the UAE economy as some claim. Shifting the regional headquarters of international companies from Dubai to Riyadh or Jeddah doesn’t actually mean that the UAE is losing out to Saudi Arabia. As one Emirati pundit put it, “We have always been creative, and are always happy to see our sister countries imitating us.” He referred to “the few who are making noise” about the impact of business competition by saying: “Ignore those who are angry about the close relationship between the leaders of the two countries.”

It is true that Gulf countries are accelerating their reform processes, and also competing in limited fields. But it is true as well that this competition might prove healthy for the whole region and has the potential to lead to more creativity. The bottom-line, as almost the whole Gulf would agree, is that economic competition is not jeopardising strategic relations between Gulf countries.

*A version of this article appears in print in the 28 October, 2021 edition of Al-Ahram Weekly

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