This, the 23rd edition of our StratEGIC Monthly, looks at some of the key issues defining the Euro-Gulf space in 2023 and focuses on some of the main political, economic and social issues that define their trajectory and underline the possible future of the global geopolitical balance.

January

• Abu Dhabi confirmed its support to Ukraine by dispatching household electricity generators and discussing the situation with Ukraine’s President Volodymyr Zelensky. The UAE’s proactivity confirms a trend that has been underway over the past years and likely to continue: Abu Dhabi is determined to develop global engagement and emerge as a pivotal node.
• Saudi Arabia’s Energy Minister, Abdulaziz bin Salman al Saud, announced plans to use domestically sourced uranium to strengthen its nuclear power industry. It is likely that there will be further steps taken by Saudi Arabia into the nuclear sphere if the international community does not take decisive action to reduce Iran’s nuclear ambitions.
• Aramco presented an initiative to encourage international companies to establish regional headquarters in Saudi Arabia.

February

• The First Interfaith Building in the Gulf was inaugurated in Abu Dhabi and is comprised of three cubic buildings and stands on Saadiyat Island, the cultural district of Abu Dhabi: a Jewish synagogue (the Moses Ben Maimon Synagogue), a Catholic church (His Holiness Francis Church) and an Islamic Mosque (the Imam Al-Tayeb Mosque) comprises this complex.
• Sultan Al Neyadi becomes the second Emirati and the fourth Arab to venture into space. The UAE’s strides in space, including being the first Arab nation to reach Mars and launch a Moon rover in 2021 and 2022 respectively, underscore its growing influence in global space initiatives. Saudi Arabia’s astronaut team that joined Al Neyadi, emphasises the Gulf Cooperation Council’s (GCC— Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE) interest in space exploration, marking a new chapter in the region’s quest for scientific advancement and international prominence.
• Saudi Arabia is making strides in its pursuit of nuclear power, marking a significant step with plans to build its inaugural nuclear power plant. Having long held an interest in nuclear energy, dating back to its investment in Pakistan’s nuclear programme in the 1970s, Riyadh now focuses on harnessing nuclear power for peaceful purposes. Recent developments, including a workshop held by the International Atomic Energy Agency (IAEA) and an energy cooperation memorandum signed with France, emphasises Saudi Arabia’s commitment to ensuring a safe, secure, and transparent implementation of its nuclear energy programme.
• The Italian Defence Minister, Guido Crosetto, officially visited the United Arab Emirates and engaged in high-level discussions with officials, notably meeting his counterpart, Mohammed bin Ahmed Al-Bowardi, to bolster bilateral ties, particularly in security, focusing on regional challenges. Addressing prior tensions stemming from Italy’s arms export suspension due to the Yemen conflict, Crosetto also strategised with Tareq Abdul Raheem Al-Hosani of the Tawazun Council to define long-term goals.

March

• Saudi Arabia took a significant step toward bolstering its ties with China by agreeing to join the Shanghai Cooperation Organisation (SCO) as a Dialogue Partner, potentially paving the way for full membership in the future. The SCO, led by China, encompasses eight Members and several Observer States, with Saudi Arabia, Egypt and Qatar now included as Dialogue Partners. China’s push for closer engagement with the Middle East, highlighted by President Xi’s mediation between Iran and Saudi Arabia, underscores Beijing’s increasing focus on the region. The $3.6 billion deal for Saudi Arabia to acquire a 10% stake in China’s Rongsheng Petrochemical further solidifies their economic partnership.
• After six years, Iran and Saudi Arabia have agreed to restore diplomatic ties in a deal facilitated by China following undisclosed discussions in Beijing. The joint statement emphasised respect for state sovereignty and non-interference in internal affairs.
• Italian Prime Minister Giorgia Meloni’s visit to the UAE marked Italy’s strategic move towards diversifying its energy sources. With a focus on bolstering energy cooperation, Meloni signed Declarations of Intent emphasising a strategic partnership and joint pursuit of UN environmental goals, aligning with the UAE’s hosting of the COP29 Climate Conference. Highlighting this shift, ENI and ADNOC inked an agreement on energy transition cooperation. This visit underlines Italy’s proactive foreign policy, evidenced by Meloni’s engagements across Algeria, Libya, Saudi Arabia, and Israel, aiming to forge new strategic and energy alliances.

April​

• Saudi Arabia and the UAE saw a significant surge in non-oil business activity, marking a crucial step in the Gulf Cooperation Council’s quest for economic diversification. Saudi Arabia’s PMI rose to 59.6, showcasing robust expansion in the non-oil private sector, driven by increased tourism, consumer spending, and infrastructure projects. This growth aligns with Vision 2030 and indicates a move away from oil dependence. Similarly, the UAE experienced a rise to 56.6 in their PMI, showing a strengthening non-oil economy attributed to surging new orders. Despite a slight softening in employment, both nations continue on a trajectory of job creation.
• In a significant step towards regional unity, Qatar and Bahrain formally restored full diplomatic ties, culminating in the resolution of a lingering dispute that arose amid the Al Ula agreement of 2021. Building on Bahrain’s foreign policy objectives to bolster regional security and foster collaborative opportunities among Gulf nations, the reconciliation, formalised at the GCC General Secretariat in Riyadh, signifies a pivotal moment in Gulf relations.
• The recent Saudi-Iran dialogue sparked optimism for regional stability in the Middle East, with initial successes evident in Syria’s Arab League reintegration and the release of hundreds of Houthi prisoners in Yemen. However, the impact on Lebanon’s complex political landscape seems limited, mainly serving to prevent further local escalations rather than fostering significant change. Resolving Lebanon’s internal disputes requires a robust domestic dialogue that currently appears elusive. While stakeholders express cautious optimism that the Saudi-Iranian accord could eventually aid in resolving Lebanon’s crisis, both sides acknowledge the deal’s limited immediate focus on Lebanon compared to other regional priorities like Yemen and Iraq.

May

• It is estimated that Iran could produce enough weapons-grade uranium (WGU) for a nuclear weapon within 12 days. This calculation is based on the quarterly inspection report from the International Atomic Energy Agency (IAEA). By utilising only three advanced-centrifuge cascades and a portion of their current stock of 60%-enriched uranium, Iran could acquire enough material for a nuclear weapon.
• The GCC sees a more restricted Russia as a valuable transactional partner and have become less interested in the Iran nuclear file compared to the US and Israel.
• Saudi Arabia and Canada agreed to restore diplomatic relations, bringing a close to a five-year spat that damaged political and trade relations.
• The League of Arab States (LAS) readmitted Syria after an 11-year absence. The decision was taken at an extraordinary, closed-door meeting, held in Cairo, where 13 out of 22-member state foreign ministers formalised relations to Damascus.

June

• The UAE recorded impressive economic growth over the past year, with its Gross Domestic Product (GDP) increasing by an incredible 7.9%. The substantial GDP growth also demonstrates the UAE’s ability to effectively capitalise on emerging opportunities. The UAE has consistently invested in infrastructure development, providing a strong platform for sustained economic expansion.
• China made history by completing its first-ever purchase of liquefied natural gas from the UAE using the yuan, on the Shanghai Petroleum and Natural Gas Exchange. This transaction sparked speculation that the hydrocarbon-exporting states of the Gulf Cooperation Council were moving towards de-dollarising oil and gas sales. Over the past 25 years, the dollar’s market share has decreased from more than 70% to less than 60%. In terms of global reserves, the share held in US dollars has declined from 73% 2001 to 58% at present.

July​

• July saw an unprecedented flurry of high-level Gulf leader visits to key EU member states, reflecting a concerted effort to forge strategic partnerships. Oman’s Sultan Haitham bin Tariq Al Said visited Germany, The UAE’s President Mohammed bin Zayed Al Nahyan travelled to France while Saudi Arabia’s Crown Prince Mohammed bin Salman Al Saud toured Greece and France. Against the backdrop of sanctions on Russia and the EU’s quest for alternative energy sources, energy cooperation emerged as a pivotal theme across these visits. These interactions aimed at fortifying European energy security, countering Russian and Chinese influence and catalysing European strategic realignment. Noteworthy achievements included agreements such as the Oman-Germany energy cooperation declaration, France-UAE Comprehensive Strategic Energy Partnership, and Saudi-Greek Strategic Partnership Council, emphasising the significance of these engagements.
• The UK released a statement linking a batch of Iranian weapons, seized earlier this year by a Royal Navy warship in international waters south of Iran, to attacks on Saudi Arabia and the UAE launched by Houthi rebels in Yemen (officially Ansar Allah). According to the UK, the weapons seized included surface-to-air-missiles and engines for land attack cruise missiles, in violation of UN Security Council resolution 2216 (2015).
• US President Joe Biden embarked on a high-stakes diplomatic tour across Israel, the West Bank and Saudi Arabia, aiming to address critical global concerns. Amidst an energy crisis, Biden sought to bolster US interests by rallying oil-producing nations to increase output. However, his objectives—ranging from fostering regional integration in Israel, forming an anti-Iran alliance, to countering China and Russia—encountered obstacles. Saudi Arabia and the UAE hesitated to boost oil production without OPEC+ consensus, underscored the complexity of addressing the energy dilemma.

August

• Saudi Arabia has rapidly ascended to a prominent global force, bolstering its international standing through strategic diplomatic endeavours. Riyadh’s initiatives, including prioritising Chinese language education for Saudi students and reducing Haj costs for Pakistanis, showcase a multifaceted approach aimed at future-proofing relationships with key players like China and Pakistan. By aligning itself with China’s Belt and Road Initiative and reinforcing ties with crucial partners, Saudi Arabia aims to solidify its position on the world stage.
• During this year’s Summit in Johannesburg (22-23 August 2023) Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, the United Arab Emirates (UAE) and Uruguay, were formally invited to join BRICS.
• At the 2023 G20 Summit in India, the unveiling of the India Middle East Europe Corridor (IMEC) marked a transformative shift in global connectivity. Anchored by a Memorandum of Understanding among India, the United States, Saudi Arabia, the UAE, and key EU states, this ambitious project aims to integrate Asia, the Arabian Gulf, and Europe through two main corridors, promising enhanced economic ties and infrastructure development. IMEC’s potential for fostering stability in the Middle East is significant, but challenges loom in terms of legal commitments, construction complexities, and securing financing amid global economic downturns and competition from Chinese investments. For India, IMEC represents a quest for alternative trade routes and a move away from reliance on China’s Belt and Road Initiative, while for Riyadh and Abu Dhabi, it signifies economic diversification and a step toward independent foreign policies beyond energy-focused roles.

September

• Qatar is reinforcing its position as a global leader in natural gas production with a major expansion project in the North Field—the world’s largest natural gas field. The expansion aims to increase Qatar’s annual liquid gas production capacity from 77 to 126 million tonnes, with the development of new wells, offshore facilities and advanced technologies. The project has the potential to stabilise the global energy market while supporting the transition to cleaner energy sources.
• Saudi Arabia’s economy is currently in the midst of a significant transformation, characterised by a series of reforms to reduce its reliance on hydrocarbons, expanding its revenue sources, and enhancing its overall competitiveness. The latest annual review of the country’s economy by the International Monetary Fund (IMF) reveals that Saudi Arabia stood as the fastest-growing G20 economy in 2022, achieving an impressive year-over-year growth rate of 8.7%. The diversification of the economy has been significantly driven by enhancements in the regulatory and business environment. A fresh set of laws designed to promote entrepreneurship, safeguard investors’ rights, and reduce the costs of doing business resulted in a 95% increase in new investment deals and a staggering 267% growth in licenses issued in 2022. Over the next three years, according to the global credit agency Moody’s, Saudi Arabia’s economy is projected to expand at an average rate of 3.2% annually. The non-hydrocarbon sector will have a substantial influence, contributing an annual average of 3.5%.
• The Dubai Shopping Festival (DSF) is an annual event that showcases Dubai as a global shopping haven, and in 2024, it will continue its tradition of providing unforgettable experiences. The DSF has expanded and diversified over the past years and truly stands alone in the sector. The DSF is an important date on the international tourism calendar. Indeed, Dubai’s infrastructure, with its world-class malls, hotels, and transportation, renders it an attractive destination and a key venue for international conventions. The DSF also afford Dubai the opportunity to showcase the UAE’s rich culture and heritage as visitors can explore traditional souks, art exhibitions and heritage events that provide insights into the UAE’s and the Gulf’s history.

October

• At the Gitex Global technology conference in Dubai, OpenAI announced a strategic alliance with Abu Dhabi’s G42, marking a pivotal moment for generative AI in the Middle East. This partnership signifies OpenAI’s expansion plans in the region, aiming to deploy innovative AI models across sectors such as finance, energy, healthcare, and public services. Led by influential figure Sheikh Tahnoon bin Zayed Al Nahyan, G42 joins forces with OpenAI to create customised solutions tailored to the region’s unique requirements. This collaboration, described as a convergence of values and vision by G42 CEO Peng Xiao, emphasises the transformative potential of AI, echoing sentiments shared by OpenAI’s CEO, Sam Altman. As the UAE and Saudi Arabia witness a surge in generative AI investments, with a projected economic growth of $23.5 billion by 2030 in the Gulf Cooperation Council countries, this partnership reflects a broader trend of technological advancement in the region.
• The inauguration of Oman’s national online forum, “Together We Progress,” stands as a pivotal milestone in bolstering communication channels between the government and its citizens. Positioned at the intersection of the Arab world, Iran, and the broader Indian Ocean region, Oman has historically emphasised a distinctive governance model centred on stability and social cohesion.
• NEOM, Saudi Arabia’s futuristic city has established a strategic London office, signalling a push to bolster ties with Europe. The office aims to fuel trade, investment, and tech collaboration, serving as a conduit to European markets. This move holds potential for fostering economic growth by enabling skill, capital, and innovation exchange. European companies could contribute to NEOM’s infrastructure and tech advancements, especially in areas like renewable energy, biotech, and AI. Moreover, this office acts as a gateway for European firms looking for new opportunities in Saudi Arabia.
• The International Conference on Women in Islam, hosted by the OIC in Jeddah, marked a pivotal moment in Saudi Arabia’s ongoing reforms, spotlighting strides toward gender equality. The event addressed critical facets, spanning legal reforms, women’s roles in diplomacy and business, and the imperative of education for empowerment. Discussions underscored the need to uphold equality while respecting cultural and religious values. Despite persisting challenges such as combating gender stereotypes and aligning local customs with Islamic principles, the conference demonstrated a resolute commitment to advancing gender equality in the Islamic world.

November

• ​Oman experienced a landmark influx of 3 million tourists in 2023, underlining a transformative shift for the country. This surge, while promising for economic diversification, poses challenges and opportunities beyond tourism. Positive tourist experiences could bolster Oman’s international image and diplomatic ties. However, managing cultural exchanges, infrastructural needs, security, and environmental impacts becomes pivotal. Balancing tourism while preserving Oman’s identity requires meticulous planning. Nevertheless, this surge elevates Oman’s global prominence, potentially attracting investments and strengthening its diplomatic presence.
• DEWA, post-COP28, shines as a beacon of sustainable progress, aligning fervently with global climate goals. Its commitment to carbon neutrality, renewable energy, and water conservation underscores Dubai’s dedication to environmental leadership. Initiatives like the Mohammed bin Rashid Al Maktoum Solar Park, DEWA epitomises the city’s shift toward a greener energy landscape.

December

• ​Saudi Arabia is poised to transform into a leading hub for electronic sports (E-sports) with a groundbreaking initiative centred around Quiddiya City, an expansive 500,000 square meter e-sports district near Riyadh. This ambitious project includes plans for 30 video game companies, 25 e-sports teams, and four cutting-edge e-sports arenas, one of which promises a fully immersive gaming experience. With the aim to attract 10 million annual visitors by 2030, the Saudi Arabia is set to invest approximately $40 billion, positioning itself within the $184 billion gaming market. This strategic move aligns with Saudi Arabia’s broader economic diversification goals, leveraging its sovereign wealth fund’s investments in major gaming entities. The establishment of the Saudi Electronic Games and Sports Authority, led by Crown Prince and Prime Minister Mohammed bin Salman, signifies the country’s dedication to oversee, regulate, and propel the sector’s growth globally.
• Trucknet Enterprise, an Israeli smart transportation firm, has forged groundbreaking agreements to establish an overland trade route circumventing Red Sea vulnerabilities. Trucknet aims to facilitate seamless movement of goods from Gulf ports to Israel’s Haifa Port, connecting importers with transport companies while reducing costs and optimising container occupancy. While the route’s immediate cost-effectiveness is debatable due to expenses like fuel, toll fees, and port charges, its competitive edge lies in expedited transit times of just four days from Dubai to Haifa, appealing particularly to shipments where timely delivery to the Mediterranean and Europe is paramount. Despite not initiating the Dubai-Israel land route, Trucknet’s innovative approach has sparked considerable attention, notably in the Arab world, given ongoing conflicts, positioning it as a key player in reshaping Middle Eastern trade dynamics.