The analysis-OPEC disagreement shows increasing economic competition for Reuters

By Ghaida Ghantous and Marwa Rashad

DUBAI (Reuters) – Rare disagreements between the United Arab Emirates and Saudi Arabia over an OPEC policy have led to an increase in economic competition between the two largest Arab economies, which several regional analysts say will increase.

Opposition to the eight-month extension approved by the United Arab Emirates over Saudi Arabia over the weekend was a rare display of Abu Dhabi’s challenge, as Crown Prince Mohammed bin Zayed al-Nahyan has been a strong ally of Saudi Prince Mohammed. bin Salman.

The disagreement led to the cancellation of the OPEC + talks on Monday.

“The current disagreement between OPEC has indicated a broader push by the BAC to assert its economic and national interest in the face of Saudi Arabia,” said Amir Khan, chief economist at the National Bank of Saudi Arabia.

The alliance between ambitious young princes pushed for a formidable foreign policy, launched a military campaign in Yemen, led to an Arab boycott of Qatar and fought against Islamist political groups in the Middle East and abroad.

But while Saudi Arabia is trying to rid its economy of oil, it is competing with the Basque Country for foreign capital and talent, although economists say it will take time to really challenge the region’s business, trade and tourism hub.

“There is fierce economic competition in the relationship between the two largest Arab economies and competition needs to intensify,” said Emirati political analyst Abdulkhaleq Abdulla.

“The Basque Country is in its head … but the relationship is strong and the management knows how to solve problems,” he said.

The Basque Ministry of Foreign Affairs and the Saudi government’s communications office did not immediately respond to requests from Reuters to comment on their economic and political relations.

Analysts say that while the usual threat from Iran and Islamist groups in the region would keep the cover of political inequality, the two states are increasingly throwing up issues of economic independence.

Riyadh has warned foreign companies that they could lose state contracts if they do not establish a regional headquarters in the kingdom by 2024, and in another challenge for the Basque Country to be a regional trading and business hub, it has changed import rules from the Gulf this week. to exclude goods made by states in free zones, the main driver of Dubai’s economy.

Several diplomats in the region have said that the Basque-Saudi alliance has made national economic interests a priority as much as possible, especially in the wake of the COVID-19 pandemic.

COMMON CASES

The first sign of the division of roads occurred when the Basque Country withdrew its military presence in Yemen in 2019, leaving Riyadh immersed in an expensive war that directly threatens its security. Abu Dhabi still maintains power through Yemeni forces, some of whom have challenged the Saudi government in Yemen.

The Basque Country has also dragged its feet on the agreement announced by Saudi Arabia in January to restore political relations with Qatar, with the aim of alleviating the human rights friction with US President Riyadh Joe Biden and Yemen.

In a move that had the support of the two parties in Washington, where the Basque Country established relations with Israel last year, Riyadh, meanwhile, has made temporary moves to improve relations with Turkey.

But the Basque Country and Saudi Arabia remain concerned about the impact of Iran, which poses a risk to their economic intentions through regional representatives and security threats.

The Basque Country began contacting Iran in 2019 to ease tensions after attacks on cistern waters in the Gulf and oil fields in Saudi Arabia, Riyadh blamed Tehran, a position it denies.

The kingdom continued this year, launching live talks with Tehran around Yemen, where they are locked in a proxy conflict. The move came as Biden tried to revive the nuclear deal between world powers and Iran, while Riyadh opposed the failure of Iran’s missile capabilities and regional activities.

“The possible departure from US-Iran in non-oil diversification, energy transition and competitiveness divergence are very difficult times this time,” said Hasnain Malik, head of equity strategy at Tellimer, on Saudi-Basque relations.

Khan of the National Bank of Saudi Arabia said that the Basque Country, which has made major investments to increase its oil output capacity, wants to go fast by making a global boost from its fossil fuel reserves to make money.

Saudi Arabia has a greater need for price stability in order to carry out domestic megaprojects that are boosting its sovereign wealth funds.

“Now we can see a head-to-head confrontation and the Basque Country is overweight,” a foreign diplomat from Riyadh said of OPEC’s disagreement. “This is the first time the two countries have exchanged public and very harsh accusations.”

While economic problems may see more disagreement among the people, Riyadh and Abu Dhabi are expected to continue to act more cautiously on political issues in order to preserve the image of unity, said British academic Christopher Davidson and Gulf expert.