The countries of the GCC – the Kingdom of Saudi Arabia, the UAE, Kuwait, Qatar, Oman, and Bahrain – continue to be reliant on natural resources as a primary source of fiscal revenue. Their citizen populations expect a range of social services and patronage from the state and its ruling families. Pressures of population growth and expectations of intergenerational equity have put economic policy at the centre of state capacity.
There is new momentum to resolve, or at least begin to shift public policy to address inefficiencies like subsidies, spur private sector and non-oil growth, and create alternate sources of government revenue. The momentum accelerated with a sharp decline in global oil prices in late 2014.
Castlereagh’s Gulf Monitor provides an insight into key developments in economic diversification, monetary and fiscal policy, social policy and foreign relations in line with the collective ambitions of GCC states to change their economies, yet preserve their systems of governance.
Also housed on this page is the Market Watch collection by Karen E. Young, who has followed and mapped closely the GCC states’ policy response since 2015. It is an authoritative guide to understanding policy formation, reaction and hydrocarbon reliance in the GCC in the last five years.
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Carbon capture utilisation and storage (CCUS), a technology which can stop up to 90% of harmful emissions produced by fossil fuels from entering the atmosphere, could be a boon for oil and gas-reliant GCC economies vulnerable to the impacts of climate change. Saudi Arabia, the UAE and Qatar have taken steps to research and deploy the technology on a limited basis, but large-scale adoption faces many challenges, including high capital costs, low technical readiness and underdeveloped regulatory frameworks.
Gulf Monitor | Aisha Al Sarihi | Carbon capture technology
The Silk City megaproject in Kuwait took a major step forward last May with the opening of a key transport link connecting its future site to the capital. Silk City is one of the largest and most ambitious developments in the region and has drawn interest from Chinese Belt and Road planners. However, it still faces major challenges including domestic political disputes and neighbourhood security turmoil – both of which underscore long-standing obstacles for the country when it comes to attracting local and international investors.
Gulf Monitor | Jonathan Gorvett | Infrastructure
Saudi Arabia’s plans to open up the country and its economy to global tourism are in full swing. In addition to an ambitious agenda of new infrastructure developments, the kingdom has loosened visa restrictions and launched a major international marketing campaign to attract overseas leisure visitors. However, substantial challenges in the short to medium term suggest that the targets for foreign visitors will not be met; a stronger focus on developing domestic tourism may yield greater success and create more viable business opportunities.
Gulf Monitor | Daniel Moshashai & Rachna Uppal | Tourism
The UAE’s complex relationship with Iran looks like it may be improving following bilateral moves to reduce tensions and calls to renew collaborations. But can these recent developments be equated with a wider thawing of relations in the region?
Gulf Monitor | Sanam Vakil | UAE foreign policy
With new shopping centres opening their doors and double-digit growth predicted in the medium term, the Gulf retail industry looks set for a boom. But the market may be struggling with oversupply and dwindling demand.
Gulf Monitor | Jonathan Gorvett | GCC Retail
President Donald Trump’s decision to withdraw troops from Syria signals the end of US support for the Saudi Arabia-UAE alliance which sought to counter Iran’s strategic advances in the Middle East. Their decades-long effort received a major boost in 2017, when Trump threw his support behind his two GCC partners, pulled the US out of the JCPOA and re-imposed oil sanctions on Iran. But a series of missteps by the Gulf states and Trump’s reluctance to commit US forces to backing up anti-Iran rhetoric have left their “counter revolutionary” strategy in disarray.
Gulf Monitor | Fareed Mohamedi | Security & foreign policy
The Fujairah port and free zone began to emerge more than a decade ago as a strategic location for storage and bunkering given its positioning outside the Strait of Hormuz in the Gulf of Oman. While the location is not immune to regional security risks – evidenced most recently by the tanker attacks off the Fujairah coast in May – it presents an attractive option for energy trade and bunkering outside the Hormuz chokepoint. In this context, the UAE has been working to build up the importance of the port and its oil facilities and bolster international prestige, but there is still work to be done.
Gulf Monitor | Emily Stromquist | Energy infrastructure
Investors hoping for a slice of the world’s biggest, and most profitable, corporation will have to wait a while longer after Saudi Aramco again decided to hold off plans to conduct an initial public offering (IPO) over an acceptable valuation. However, Aramco will eventually privatise a stake in the company to equity investors – a central component of its Vision 2030 economic diversification programme – potentially paving the way for further oil and gas IPOs from the region.
Gulf Monitor | Rachna Uppal | Aramco IPO
GCC countries are seeking outward-looking solutions to guarantee their food security. Supported by government initiatives, private agribusiness companies are buying land across the world to secure agricultural goods from cereals to meat, particularly in destinations closer to home in South Asia and East Africa. However, the new phase of investments is laden with risks that must be delimited through strong bilateral ties.
Gulf Monitor | Daniel Moshashai | Agriculture
Two years on from the outbreak of the Qatar crisis, the blockade has provided Doha with an opportunity to rebrand itself and focus on its development goals and diversification plans as written in its National Vision 2030. Drawing on off the record conversations in London and Doha in April 2019, this analysis offers a unique perspective on the government’s handling of the crisis, and on the sustainability and challenges of the roadmap and wider vision.
Gulf Monitor | Sanam Vakil | Qatar Vision 2030
The global pushback against single-use plastics could have implications for the future expansion of the polymer industry in GCC countries.
Saudi Arabia is seeing some positive news in the return on investment in its outwardly placed capital in new technology.