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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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
The government’s ambitious economic diversification timeline will likely be delayed by uncertainty over the successor to Sultan Qaboos bin Said Al Said and significant funding constraints. As part of Oman Vision 2040, the government is currently pushing strong growth in non-oil sectors, including natural gas production, chemicals, cement, metals and tourism.
Gulf Monitor | John Davies | Economic Diversification
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