The Rising Gulf. The New Ambitions of the Gulf Monarchies

118 Pages·2015·1.25 MB·English

by  Toby Matthiesen

The Rising Gulf
The New Ambitions

of the Gulf Monarchies
Edited by Valeria Talbot
ISBN 978-88-98014-85-9 (pdf edition)

© 2015 Edizioni Epoké
First edition: 2015

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I edition.

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Contents
Introduction
Paolo Magri .................................................................................... 7
1. Conservative Monarchies in a Transforming Region
Toby Matthiesen ........................................................................... 13
2. The Gulf’s Proactivism in the MENA Region
Elena Maestri ............................................................................... 27
3. The Gulf Between East and West
Abdullah Baabood ........................................................................ 43
4. GCC Sovereign Wealth Funds: Aims and Motives
Sara Bazoobandi .......................................................................... 61
5. Saudi Oil Policy:
To Swing or Not To Swing...That’s the Problem
Naser al-Tamimi ........................................................................... 81
6. The Rising Gulf. What Implications for the EU?
Luigi Narbone, Valeria Talbot ................................................... 101
About the Authors ...................................................................... 113

Introduction
Over the last decade the Gulf monarchies emerged as increasingly
proactive players. The steady rise in hydrocarbon prices, up to
2014, has represented a significant source of wealth for these oil
and gas producers, enabling them to maintain sustained domestic
economic growth rates and high public expenditures, on the one
hand, and to invest heavily in key sectors both domestically and
abroad, on the other. Gulf Sovereign Wealth Funds (SWFs), which
amount to 40 per cent of the world’s total SWF assets, have been
diversifying and expanding investments into the Americas, Europe
and especially Asia. Futuristic cities such as Abu Dhabi, Dubai
and Doha have become the symbols of the Gulf’s growth driven
by oil wealth, which transformed these states into important finan-
cial hubs and international business centres.
The rise of the Gulf States has gone hand in hand with a dra-
matic change in the world system, where Asia has been emerging
as a new global economic centre and major energy consumer.
With their huge hydrocarbon reserves, these monarchies have be-
come crucial energy suppliers of the growing Asian markets as
well as key investors. In a global order ever more marked by new
regional powers, the Gulf monarchies took advantage of their as-
sets and strategic position to seize new opportunities and increase
their international leverage. This has resulted in a growing diversi-
fication of interests and international relations, which became
crystal clear in the Middle East and North Africa (MENA) region
after 2011. The Arab uprisings provided the Gulf monarchies with
the opportunity to deepen their political, cultural and economic in-
fluence in the area. Relying on their huge economic assets, they
succeeded in limiting instability within their borders while at the
8 The Rising Gulf

same time expanding their reach outward. For them the uprisings
had mainly economic roots. As a result, they used the financing
tool, both internally and externally, to support real economy and in-
come distribution with a view to reducing socio-economic discon-
tent in the Arab countries. The Gulf regimes intervened, directly or
indirectly, in all the major regional crises, from Libya to Syria and
Yemen. Despite the clear will to influence regional dynamics in or-
der to maintain – or in some cases to alter – the status quo, it is dif-
ficult to grasp the rationale behind the Gulf monarchies’ policies.
One should bear in mind that these monarchies are anything but a
monolith with a single strategy. Rather, they encompass a wide
range of interests and agendas. Indeed, in spite of common features,
they have adopted different positions and policies. The most strik-
ing example is given by the opposite approaches of Saudi Arabia
and Qatar towards the Muslim Brotherhood and the rise of political
Islam.
Gulf assertiveness comes at a time when the monarchies are
facing important challenges. At the internal level, economic diver-
sification is by far the main challenge. In spite of many attempts to
diversify their economies, these monarchies continue to be highly
dependent on hydrocarbons. The real question here relates to the
sustainability of the rentier state model and its ability to preserve
wealth along with social and political consensus in the long-run. A
further critical issue is the hand-over of political power to the next
generation of the ruling families. In addition, when it comes to the
regional context, the nuclear deal with Tehran and Iran’s growing
influence are perceived as foremost concerns for the Gulf’s securi-
ty, in spite of US reassurance to maintain, and reinforce, a partner-
ship based on sound geopolitical factors. Last but not least,
shifting dynamics in global energy markets, due to weaker de-
mand in many countries coupled with stronger US production,
may prove to have negative effects on these hydrocarbon produc-
ers, should oil prices remain low in the long-term.
In the complex Gulf puzzle, this report puts together the pieces
of the domestic dynamics with those of the external policies. The
aim is to assess to what extent the rising Gulf monarchies are able