On 16 October (2024), for the first time ever, a Summit was held with representatives of the Gulf Cooperation Council (GCC, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE) and European Union (EU) members, aimed at strengthening relations. Energy and geopolitical challenges in the Middle East have, traditionally, been the two main defining features of their relationship, and this remains the case today, underscored in the context of Israel’s “seven-front war.”
The Joint Statement following the Summit called for ‘an immediate and comprehensive ceasefire’ in Gaza and the release of all hostages held by Hamas, the exchange of Palestinian prisoners, as well as immediate and unimpeded access to ‘large-scale humanitarian aid throughout the Gaza Strip to all Palestinian civilians in need.’
Apart from energy and geopolitical challenges, other topics were also discussed. This is because things have changed, as the Gulf region is truly going through a transformation. Dubai, in the United Arab Emirates, has developed into a global hub for all kinds of service providers, looking for an attractive place to do business and live. In 2023, The Economist noted that
The UAE is prospering even as war rages in the Middle East and superpower rivalry unravels the world. The non-oil economy is growing at nearly 6% a year, a rate that India is enjoying but that the West—and these days even China—can only dream of. Talent and wealth are flocking to the country, as Chinese traders, Indian tycoons, Russian billionaires and Western bankers alike seek stability and success.
At the same time, the other GCC members are rapidly evolving. Saudi Arabia, for instance, is embarking on a modernisation project that clearly seems driven from below, as many of its citizens are well-travelled and internationally oriented and English proficiency is on the rise and they are helping to steer their country in a new direction. Again The Economist thinks that ‘it may become a serious rival’ to Dubai. But it is not a zero sum game. Other GCC partners, like Bahrain, have long been open to the world and are continuing to march to the future.
At the EU-GCC Summit, in the Joint Statement, the leaders affirmed their ‘joint commitment to a strategic trade and investment partnership,’ vowing to ‘take forward our discussions at regional level with a view to reach a regional GCC-EU Free Trade Agreement, including an investment chapter.’ In particular, they note that ‘we will explore cooperation opportunities in various fields, such as fintech, digital transformation and health by exploring joint research and development in major fields, including in the event of pandemics.’
From a historical perspective, it is very welcome to see that the region is not only associated with geopolitical turbulence, as important as this remains today, but also with the digital economy.
Meanwhile, the GCC and UK are also gearing up for a trade deal even if a wary Labour government is complicating matters. That is another reason why a deal with the EU is key for Europe. An EU-GCC deal could also further help EU member states with investments from Gulf sovereign wealth funds. It would furthermore benefit the EU in its competition with others, because so far, the GCC has signed relatively few trade deals; it finalised a deal with South Korea last year, 16 years after talks started. The EU is the second-largest trade partner for the GCC countries, generating €170 billion in trade in 2023, so there are massive opportunities here for both sides.
That said, the European Commission thinks bilateral deals with individual countries in the GCC are more feasible than a grand deal with the Gulf Cooperation Council—and it is focusing on this approach. It therefore now wants to aim first for a deal with the UAE and then engage with the rest. The UAE expects to conclude a free trade zone agreement with the Eurasian Economic Union, which includes Russia and Belarus but this is being tempered by the arrival of Donald Trump who is pressuring states to choose sides.
The EU member states are, however, concerned that negotiations for such bilateral trade deals risk alienating other GCC countries, in particular Saudi Arabia, which would prefer a region-to-region agreement. Then, if presented as a step-by-step approach, Saudi Arabia may perhaps embrace this strategy.
Moving closer to GCC priorities is a great confidence building measure including Saudi Arabia’s position on how to tackle the Houthi challenge. The EU could start by helping to reconcile GCC concerns and addressing the clear military challenge posed by the Houthis and underwritten by Iran. Since October 2023, the Suez Canal has remained largely closed for traffic, due to the Houthi attacks, something which is costing container transporters dearly and interrupting the supply lines and, ultimately, EU consumers. Despite this, EU countries appear unwilling or unable to do much about it. Hampering international trade in such an aggressive way should not be acceptable in any circumstance and shows that in the context of the EU-GCC relationship, trade and geopolitics are hard to separate. It is time to lean into that reality.