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As Saudis and Emiratis are at each other’s throats, Israel could get hit by ricochets

As the Gulf competition spills into the open, Riyadh will likely seek to rein in Abu Dhabi’s ambitions by targeting its newest trading partner — Israel

Lazar Berman

 

 

To the surprise of many, Saudi Arabia seemed to target Israel last week when it specifically mentioned the Jewish state in its announcement about new tax break policies.

Last Monday, Riyadh amended its rules on imports from other Gulf Cooperation Council countries to exclude goods made in tariff-free zones or “using Israeli input” — containing a component made by Israel, or made by a company fully or partially owned by Israelis — from preferential tax breaks.

Rather than auguring renewed hostility toward Israel, the Saudi move is actually part of an escalating competition with the United Arab Emirates for the mantle of regional powerhouse.

While Israel is not directly involved in the rivalry, there are a number of potential ways it can still get dragged into the middle as the two countries vie for economic and political dominance over the Gulf region.

With Jerusalem and Abu Dhabi now allied openly, Israel is most likely to feel the shockwaves of the Gulf battle via its ties with the Emirates. The UAE sees its budding relationship with Israel as a potential driver of economic growth and expansion of political influence, while the Saudis now have an economic interest in either joining the party — which they have declined to do thus far and have shown little interest in lately — or playing spoiler.

“They’re trying to punish the Emiratis for the Abraham Accords,” explained Brandon Friedman, director of research at the Moshe Dayan Center at Tel Aviv University, “which gives the UAE a regional economic advantage, and also a political advantage.”

The unraveling

While the current dispute is mainly economic, it comes against the backdrop of years of rising tensions as the two states fell out of sync on diplomatic and security affairs.

It was not always this way. Over the past decade, the Saudis and Emiratis appeared to be in lockstep, coordinating on a number of major initiatives, countering populist Arab Spring-inspired movements, intervening militarily in Yemen, boycotting Qatar and introducing a sales tax across the Gulf Cooperation Council.

Egyptian President Abdel-Fattah el-Sissi, left, greets Saudi Crown Prince Mohammed bin Salman on his arrival to Cairo, Egypt, for a visit meant to deepen the alliance between two of the region’s powerhouses, on March 4, 2018. (Mohammed Samaha/MENA via AP)

The same period was also marked by a close friendship between the crown princes of the two countries. When Saudi King Salman appointed Mohammed bin Salman — popularly known as MBS — as defense minister at age 28 in 2015, and two years later as crown prince, Abu Dhabi’s older Crown Prince Mohammed bin Zayed, or MBZ, took him under his wing and served as something of a mentor.

But despite the outward appearances, there have long been stresses in the alliance, which in the past both sides labored to keep quiet. In recent months, those stresses have managed to crack the normally airtight veil of secrecy surrounding Gulf royals and decision makers.

“Something happened in the last 10-20 years that caused every country to dig in more in their own national goals, and to work together less,” said Moran Zaga, an expert on the Gulf region at Mitvim – The Israeli Institute for Regional Foreign Policies.

She noted that a regional shift away from overreliance on the US for military support had put a premium on countries being able to throw their weight around, which may have given the UAE the impetus to attempt to wriggle out from under the Saudi shadow.

“They don’t have the defense umbrella that they once had, and the desire of each one is to increase their relative value in the region,” Zaga said.

Egyptian men chant anti-Israeli slogans during a Muslim Brotherhood-staged anti-Israel rally in Cairo. (photo credit: Khalil Hamra/AP)

The resulting friction has not only affected the region’s economic relationships, but also their defense agendas, which do not always line up.

For the Saudis, the Iranians represent the main security threat, while the UAE sees the Muslim Brotherhood — and the Turkey-Qatar axis backing it — as its primary foe.

“You see this different emphasis,” said Friedman. “Whereas the Emiratis are very much concerned and cognizant of wherever the Muslim Brotherhood seems to be rearing its head in the region, the Saudis ––while certainly seeing the Brotherhood as a threat internally — externally I think have a less aggressive approach to the Brotherhood outside of Saudi borders.”

While the Saudis have worked closely with the US and Israel to counter Iran, the Emiratis maintain open diplomatic channels to Tehran and a healthy trade relationship from Dubai to the Islamic Republic.

The differences between the two approaches became more marked and significant in 2019, said Joshua Krasna, Middle East scholar at the Moshe Dayan Center at Tel Aviv University.

That year saw a number of brazen attacks attributed to Iran and its regional allies.

The Emirati-flagged oil tanker A. Michel, May 13, 2019, one of four ships damaged in what Gulf officials called a ‘sabotage’ attack off the coast of the United Arab Emirates. (UAE National Media Council via AP)

In May 2019, three oil tankers and a fourth commercial ship were rocked by explosions off the UAE coast. In September, Saudi oil facilities were attacked by drones, temporarily cutting the kingdom’s oil production in half.

Despite its bellicose rhetoric, the Trump administration opted not to attack Iran militarily, forcing both sides to reconsider their security posture.

The UAE, a nation whose economy relies on shipping, realized that the US was not going to protect it as aggressively as it would have liked, and decided to take matters into its own hands by calming tensions with Tehran. Its official government statements after the tanker attacks avoided naming Iran as the perpetrator, its media was relatively muted about Iran’s role, and Emirati officials began engaging Tehran on maritime security.

Illustrative: US President Donald Trump, left, speaks with Saudi Arabia’s Crown Prince Mohammed bin Salman during family photo session at G-20 leaders summit in Osaka, Japan, June 28, 2019. (Kim Kyung-Hoon/Pool Photo via AP)

The Saudis were initially much more aggressive, reportedly preparing a military response against Iran.

In 2019, the alliance in Yemen fell apart as well. The UAE announced it would be withdrawing forces from the war zone, possibly taking their Saudi partners by surprise.

The move was precipitated by increasing international criticism of the Saudi-led coalition over the civilian death toll and humanitarian crisis in Yemen. There was also significant domestic criticism that influenced Abu Dhabi’s decision.

“You won’t see street demonstrations,” said Zaga. “It is expressed in other ways. In private conversations, in the Majlis, in newspaper articles, in posts by intellectuals who ask ‘Why are our soldiers being killed on foreign ground that isn’t our enemy, and who we haven’t declared war on?’”

People march with the flags of south Yemen, the United Arab Emirates (UAE), and Saudi Arabia, as portraits are raised of Saudi King Salman bin Abdulaziz (C-L), his son Crown Prince Mohammed bin Salman (C-R), UAE President Khalifa bin Zayed al-Nahyan (L), and his brother Abu Dhabi Crown Prince Mohammed bin Zayed al-Nahyan (R), during a demonstration titled the “million-man march of gratitude for Saudi Arabia and the UAE,” in the center of the second-largest city Aden on September 5, 2019. (Saleh Al-OBEIDI/AFP)

The Saudis, who share a border with Yemen, are much more invested in the conflict, and can’t pull out easily. Moreover, they see the Houthi rebels as an extension of their Iranian nemesis, and are more determined to see to their defeat.

The UAE is more invested in the Libyan civil war, as it is more directly tied to the rise of the Muslim Brotherhood. In Yemen, Abu Dhabi backs a separatist movement in southern Yemen, breaking with the Saudis, who back a Brotherhood-aligned government in Sanaa and have exempted Yemen’s Muslim Brotherhood affiliate Islah from its terrorist list.

In Libya, the Emiratis actively backed the Khalifa Haftar government against the UN-recognized Government of National Accord. The latter is firmly backed by Turkey and they fear it is ripe for domination by Islamists.

Fighters of a military battalion loyal to Libyan General Khalifa Hafta patrol the streets in the eastern city of Benghazi during a state of emergency to combat the coronavirus outbreak, on March 21, 2020. (Abdullah DOMA / AFP)

The UAE also appeared to be behind the 2017 GCC blockade on Qatar. The Saudis and Qataris moved quickly to repair ties after the January 2021 Al-Ula summit, hosted by Saudi Arabia, leading many to believe that it was largely a UAE-driven policy.

The Emiratis — not the Saudis —  have also sought observer status in the EastMed Gas Forum, meant to counter Turkish ambitions in the Mediterranean.

A zero-sum economic rivalry

The economic rivalry between the two erstwhile partners is escalating as well.

“Part of the reason that’s happening is that the Saudis have very publicly pushed back on the Emiratis’ larger regional profile economically and politically,” said Friedman.

The two kingdoms find themselves competing economically as they pursue similar goals. They are both looking to move beyond their reliance on oil exports and rapidly diversify their economies.

The Saudis seem to see this situation as a zero-sum competition, passing laws aimed to cut into the UAE’s regional economic standing.

In February, Riyadh announced that by 2024, any multinational company that has not moved its regional headquarters to the kingdom would be barred from lucrative government contracts, a move clearly meant to erode Dubai’s position as the regional business hub.

Newly constructed towers in Riyadh, the Saudi Arabian capital and main financial hub, on December 16, 2020. (FAYEZ NURELDINE / AFP)

Other measures have included a Saudi flight ban to the UAE and attempts by the Saudi port management company Red Sea Gateway Terminal to challenge Dubai’s DP World. And on Monday, the Saudis announced that products with components made in Israel would not be eligible for import tax benefits.

The economic competition was on full display over the past two weeks as the two sides clashed openly at a crucial OPEC+ meeting. The talks between OPEC members and Russia centered around attempts to agree on increases in oil outputs as the world opens up again after the COVID-19 shutdown.

The Emiratis, who have invested heavily in their ability to produce oil in order to fund economic development, demanded that their output match their new capacity.  The Saudis disagreed, and talks fell apart without an agreement.

DP World’s chairman and CEO Sultan Ahmed bin Sulayem at a presentation in Dubai, United Arab Emirates, April 29, 2018. (AP Photo/Kamran Jebreili)

“The fact that it’s playing out publicly is the dimension here that’s most interesting,” said Friedman.

Israel in the middle

Saudi efforts to stymie the UAE’s economic program have pulled Israel — which signed the Abraham Accords with the UAE and Bahrain in September — into the fray.

US President Donald Trump, center, with, from left, Bahrain Foreign Minister Abdullatif al-Zayani, Prime Minister Benjamin Netanyahu, and United Arab Emirates Foreign Minister Abdullah bin Zayed al-Nahyan, during the Abraham Accords signing ceremony on the South Lawn of the White House, September 15, 2020, in Washington. (Alex Brandon/AP)

For the Saudis, curbing the UAE may mean quashing the areas where it’s making the biggest strides, including opening up to Israel.

“They might be unhappy with how quickly, how nicely, things are moving between us and the UAE,” Krasna posited.

Riyadh could move to challenge or slow important technological and business deals between Israel and the UAE if it seen as giving Abu Dhabi an undue advantage.

At the same time, if their economic or security needs overcome the domestic risk of normalization, the Saudis could begin bringing their ties to Israel out into the open.

However, they have to tread far more carefully than their neighbors.

There is vocal Salafi opposition to normalization, and the House of Saud is wary of endangering the longstanding set of understandings with the religious establishment that has provided the regime with stability and legitimacy.

They also find it difficult to gauge the sentiment of young Saudis, who have no memory of the major wars between Israel and Arab states, and make up two-thirds of the population.  “They have to manage that risk very carefully,” said Zaga.

It appears that the royal family is not united on how it should approach Israel.

In October, former ambassador to the US Bandar bin Sultan told Al Arabiya, “We are at a stage in which rather than being concerned with how to face the  Israeli challenges in order to serve the Palestinian cause, we have to pay attention to our national security and interests.”

Saudi Prince Bandar bin Sultan at his palace in Riyadh, Saudi Arabia, 2008 (photo credit: AP/Hassan Ammar)

Two months later, past intelligence chief Turki bin Faisal lambasted Israel at a conference in Bahrain.

The two leading Saudis are also split over normalization. While the young MBS met then-prime minister Benjamin Netanyahu in 2020 and appears open to outing Saudi cooperation with Israel, his 85-year-old father King Salman sees support for the Palestinian cause and the defense of Al Aqsa as an obligation of the Saudi royal family.

The change of government in Israel paradoxically makes it easier for the Saudis to normalize with Israel, while simultaneously making Riyadh pump the brakes. The regime feels it has more legitimacy to cooperate with leaders who did not lead the May military campaign against Hamas in Gaza.

On the other hand, its rulers must now familiarize themselves and assess a new slate of leaders and ministers in Israel, Zaga explained. In the meantime, the healthy rivalry with the UAE is expected to grow.

“There is competition,” Zaga said, “and it is causing both partners to look for ways to get stronger.”

 

Source: Times of Israel

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