Category: Speaking of Diplomacy

Title: Diplomacy in the Gulf follows the money

Author: Karen Young
Date Published: January 14, 2021

Recent diplomatic moves among Gulf states closely align with efforts to attract new investment.


Recent diplomatic breakthroughs in the Gulf, specifically the normalization of ties with Israel and the lifting of the blockade of Qatar, have a common driver: the drying up of foreign direct investment across the region. The United Arab Emirates (UAE) and Bahrain normalized diplomatic relations with Israel as part of the Abraham Accords in September 2020, followed by Sudan and Morocco. Saudi Arabia orchestrated the easing of the long-standing rift with Qatar, along with Bahrain, the UAE and Egypt.

In the end, 2020 seems to have made a very powerful case for mending fences in the Gulf. Their revenue streams have been devastated by an oversupplied market, a global pandemic has stripped demand for oil, and there is a growing consensus that alternative energy is both a better investment and a political lightning rod. The only recourse is tighter fiscal policy, implementing new taxes and fees, borrowing, and attracting new investment. [Read more]