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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With Kuwaiti ruler Sheikh Sabah now approaching his 91st birthday, the region’s attention is turning to the topic of succession once again. The transition of power to Crown Prince Sheikh Nawaf seems relatively certain. However, the matter of who will become the next crown prince and potential long-term ruler of Kuwait remains an open question; uncertainty surrounding succession leaves Kuwait open to internal conflict over tradition and family lineage, and could cause significant changes in regional and global relations.
Gulf Monitor | Courtney Freer | Kuwait Succession
Steel manufacturers in the UAE have been faced with slowdowns in domestic demand in recent times, as real estate and infrastructure projects have tapered off. At the same time, protectionism has been choking overseas markets for these firms while domestic authorities have been reluctant to retaliate, leaving metals manufacturers on a very un-even playing field. While companies see a strategy of diversification and specialisation as one response, along with developing more vertically integrated international supply chains, the sector’s plight raises some important – and difficult – policy questions for market authorities and governments.
Gulf Monitor | Jonathan Gorvett | UAE Steel Industry
The GCC states are all seeking policy responses to the twin crises of a sharp drop in oil prices and devastating economic effects of the COVID-19 pandemic. With business activity coming to a halt and government revenues from oil exports taking a dive, what policy levers and mechanisms do states have to alleviate some of the economic fallout?
Gulf Monitor | Karen E. Young | Fiscal policy
Vision 2030 places great emphasis on the private sector as a major source of future employment for Saudi youth, yet empirical research highlights that a large percentage of young nationals still prefer public sector employment, especially “jobs for life,” over private sector work. In laying the groundwork for robust and sustainable growth in the future, the government faces a conundrum: how to wean young nationals away from seeking public sector employment while simultaneously increasing confidence and trust in private sector opportunities.
Gulf Monitor | Mark C.Thompson | Employment Saudi Arabia
While GCC states have responded aggressively to the spread of COVID-19, with travel bans, event cancellations and quarantines, concerns remain over regional exposure to major centres for the virus, such as Iran. Meanwhile, the economy of the region overall, which is highly dependent on oil, tourism and transport, will be badly hit across the board. Medical centre and equipment builders and suppliers, and the growing e-commerce sector, will likely benefit, however.
Gulf Monitor | Jonathan Gorvett | Coronavirus GCC
Faced with an ever-expanding education budget and disappointing results, the Saudi government continues to pursue education reform to better align workers’ skills with the needs of employers. Most new initiatives focus on giving universities the freedom – and students the incentive – to focus on subjects that serve Vision 2030 objectives, rather than seek to tackle the poor performance of primary and secondary education. The authorities face a range of challenges to reform at these levels, and some see private provision as the only way forward.
Gulf Monitor | Daniel Moshashai & Sara Bazoobandi | Saudi Arabia education
A recent swathe of new hotel openings in Dubai and Abu Dhabi has ramped up the pressure on owners and investors. The negative effects of oversupply are also being exacerbated by events abroad. These include the entry of Saudi Arabia into the regional tourism market and expected impact of the Wuhan coronavirus on global travel. The latter half of this year will likely see an uptick in arrivals when World Expo 2020 comes to Dubai. But over the longer term, enabling hotels to offer a variety of experiences – and the authorities’ scaling back of new hotel building permits – will likely be two keys to the hotel sector’s future success.
Gulf Monitor | Jonathan Gorvett | UAE hotels industry
Relations between the Gulf states and Israel are shaped by two opposing forces. One is encouraging deeper political and economic ties and cooperation on regional security matters; the other is working to prevent this from happening so that neither can realise their full potential. If the absence of a negotiated solution to the Israeli–Palestinian conflict and Palestinian self-determination is a major hindrance to closer relations, the perception of an existential threat from Iran is working in the other direction to bring them closer together.
Gulf Monitor | Yossi Mekelberg | Israel
The Emirati space programme will no doubt occupy global headlines later this year, when it launches its Mars probe, Hope. The initiative’s ultimate goal is not so much the exploration of the Red Planet as the development of a diversified, knowledge- and innovation-based economy back home on Earth. By developing its space sector, the UAE aims to leverage a recent convergence between greater demand for space-based technologies and a dramatic fall in the price – and size – of satellites. But the industry is not without its challenges.
Gulf Monitor | Jonathan Gorvett | UAE space industry
Rising electricity demand in the GCC and an over-reliance on hydrocarbons for power generation are encouraging Saudi Arabia and the UAE to progress with nuclear development programmes. But the prohibitive costs of nuclear, coupled with water security issues and regional instability, are likely to stall progress of nuclear programmes in both countries, and deter other countries in the region from adopting nuclear agendas over the coming years.
Gulf Monitor | Georgina Hayden| Nuclear power
Saudi Arabia has ambitious energy diversification targets, yet execution has been slow and the kingdom remains synonymous with petroleum. However, ACWA Power, a company backed by the public investment fund and Saudi investors, is helping Saudi become a leader in the renewable energy sector.
Gulf Monitor | Jessica Obeid | Renewable energy
GCC telcos have recently been racing to announce new firsts in 5G services, with Gulf authorities seeing this new technology as a key pillar in their diversification strategies. Yet, telcos here face the same challenges as elsewhere when it comes to 5G: initial rollout requires major investment at a time of falling voice use and cheap data, while the future rewards the technologies 5G could facilitate remain uncertain. Nonetheless, a combination of deep – largely state-owned – pockets and a willingness to bet on the future will likely keep the 5G race going, even if some of the smaller players may struggle to keep up.
Gulf Monitor | Jonathan Gorvett | Telecoms and 5G