As political tensions rise between Saudi Arabia and the United Arab Emirates, questions are emerging over whether their disputes could hit trade and economic cooperation—or whether economic interdependence will restrain further deterioration.
Relations between the two countries have recently been strained over Yemen, Sudan, and other issues.
Given their weight within the Gulf Cooperation Council (GCC)’s economic framework, a Bloomberg report on Jan. 27 noted that “the GCC economy is entering a period of testing, with potential repercussions that could affect one of the region’s most important paths of economic integration.” Companies in both countries are reviewing risk-management and business-continuity plans in case political disputes lead to regulations or trade restrictions.
The report highlighted operational concerns, including difficulties some Emirati companies face obtaining Saudi work visas for employees and moves by firms to explore alternative structures, such as opening offices inside Saudi Arabia. Bloomberg also recalled the 2017 Qatar blockade, which disrupted GCC supply chains and forced companies to revise risk-management strategies.
Some observers argue that economic interdependence could act as a brake on tensions, given the high financial cost such disputes would impose on both markets.
Mutual Investments
Economic, trade, and investment ties between the UAE and Saudi Arabia rank among the most advanced in the region. Emirati economist Hussein al-Qamzi, a former Dubai International Financial Centre board member, told Alhurra that “investments between the two countries are large and far-reaching,” noting that the UAE is the leading foreign investor in Saudi Arabia.
Al-Qamzi estimated Emirati investments in Saudi Arabia at $30–45 billion, likely higher when including sovereign wealth funds and semi-government entities. Saudi investments in the UAE range from $6–8 billion, making the Kingdom a significant investor in the Emirati market.
A Turning Point
The year 2021 marked a shift in economic relations. In February, Saudi Arabia required foreign companies to relocate regional headquarters to Riyadh by 2024 to continue government contracts. Riyadh said the measure applied only to government procurement, but its coverage of all agencies and funds gave it substantial weight, especially for major entities like Saudi Aramco and the Public Investment Fund.
This was widely seen as an effort to redirect multinational activity from Dubai to Saudi Arabia. In July 2021, the removal of preferential customs treatment for goods from free zones further affected the UAE’s re-export trade model. The move coincided with a rare OPEC dispute when Abu Dhabi sought to raise its oil production baseline.
Economic Resilience
Economist Jamal Bannoun said ties have reached a level “beyond traditional cooperation.” Non-oil trade exceeds $48 billion annually, making the UAE Saudi Arabia’s largest non-oil trading partner. “This volume supports supply chains and creates jobs,” he said. “Talk of a trade rupture is economically unrealistic.”
Saudi investments in the UAE focus on real estate, energy, logistics, retail, and financial services. Bannoun emphasized that these are long-term commitments reflecting enduring partnership rather than temporary flows.
Competition exists, he said, but within a healthy framework. “Relations are strong and interconnected, but require careful management to sustain cooperation and regulate competition to serve both sides’ interests.”
Al-Qamzi highlighted the functional complementarity of the two economies. “This integration is even more important amid rising global protectionism and restructuring of GCC supply chains,” he said. Managing economic competition and turning it into a stabilizing factor has become a strategic necessity.
The article is a translation of the original Arabic.
Alhurra
Sakina Abdallah
A Saudi writer, researcher, and TV presenter
