The heightened interest in cryptocurrencies across the Gulf is taking place alongside global efforts to both regulate digital assets and attract cryptocurrency firms.
In October, the United Arab Emirates will take the rotating chair of the Indian Ocean Rim Association for two years. This will be the first time for the UAE since its membership to the association in 1999 and only the second time for a Gulf Cooperation Council state to chair the regional organization; Oman was the first in 2001-02. This diplomatic event highlights a major development in Gulf foreign policies: the growing role the Gulf Arab countries play in the Indian Ocean region. By investing politically and economically in the small states of the Indian Ocean, both on its African and Asian shores, and by building closer ties to the two major powers in the region, India and China, at least three Gulf Arab states – Saudi Arabia, Qatar, and the United Arab Emirates – are positioning themselves as pivotal actors in the area. This development has direct implications for the United States: As the administration of President Donald J. Trump ranked the Indo-Pacific region its first regional priority in the 2017 National Security Strategy, understanding and factoring in the growing role of Gulf partners in the region is critical.
Gulf Influence on the Politics of Small States in the Western Indian Ocean
Over the last five years, Riyadh, Doha, and Abu Dhabi have been using all instruments of power – cultural, economic, diplomatic, military – to advance their agendas in the Indian Ocean. This is evidenced by the much-documented Gulf power plays in the Horn of Africa, where port contracts, military base agreements, and infrastructure investments have increasingly influenced the local political landscape.
This trend accelerated after 2015, when the war in Yemen, and the operational requirements for amphibious assault on the Yemeni coast from the Gulf of Aden, led Saudi Arabia and the UAE to deploy armed forces in African partner countries, such as Eritrea, Somalia, and Djibouti. This Gulf footprint can be a stabilizing factor: For example, Saudi Arabia and the UAE played an instrumental role in the facilitation of a peace deal between Eritrea and Ethiopia in July 2018. But it can also exacerbate local disputes: In Somalia, the dispute between Qatar and the UAE has had a direct effect on internal politics.
The Seychelles and the Maldives also illustrate how Gulf Arab countries increasingly coordinate business contracts and development aid with their strategies in the Indian Ocean. Combining economic investments in real estate as well as air and sea port infrastructure, Gulf Arab states have become critical supporters of the development of these small islands. It has a lucrative dimension – the Maldives and Seychelles are popular tourist destinations for Gulf citizens and their wealthy expatriate communities. But there is also a political dimension: Noticeably, contrary to Somalia, the Maldives was among the six countries that took part in the boycott of Qatar announced on June 5, 2017.
Alliances with Major Powers of the Indian Ocean
If the influence of Gulf Arab states in the small countries of the Indian Ocean has increased, the most consequential trend in their regional policies may be their parallel rapprochement with both China and India. Trade between China and the Gulf Arab states rose from $9.8 billion in 2000 to $175 billion in 2014. Moreover, if Gulf countries were barely visible from the initial plans of China’s Belt and Road Initiative, they are becoming pivotal partners, as evidenced by their high-level attendance in April of the Second Belt and Road Forum organized by the Chinese government in Beijing. Chinese companies have been investing or planning to invest in several key port facilities in the Arabian Peninsula. So far, China is focusing on Jazan in Saudi Arabia, Duqm in Oman, and Khalifa Port in Abu Dhabi. Meanwhile, in Qatar, China Harbour Engineering Company signed a memorandum of understanding in November 2018 to discuss joint investments aiming to modernize Hamad Port.
Adding to their strategic location, Gulf Arab states are among the few countries of the Indian Ocean able to provide capital to consolidate China’s infrastructure projects in the area. For instance, Saudi Arabia announced in September 2018 that it would be investing $10 billion into Pakistan’s deepwater port of Gwadar, which is a major recipient of Chinese funds for the China-Pakistan Economic Corridor. Saudi investments in Gwadar do not yet seem to be coordinated with the Chinese projects, but in coming years, they could herald future Chinese-Gulf initiatives in third-party countries.
This China-Gulf rapprochement occurred at the same time as a Gulf-India rapprochement, showing the commitment of Gulf Arab states to diversifying their partnerships. Under Prime Minister Narendra Modi, India reactivated its long-dormant political engagement with Gulf Arab countries, in particular Saudi Arabia and the UAE. Modi’s personality is a major factor: During his February trip to India, Saudi Crown Prince Mohammed bin Salman went as far as to describe Modi as his “elder brother.” Similarly, Modi invited Abu Dhabi’s Crown Prince Mohammed bin Zayed al-Nahyan as the guest of honor to India’s Republic Day in 2017 – the last Arab leader to receive the invitation was the late King Abdullah bin Abdulaziz of Saudi Arabia in 2006. Since then, India and the UAE have signed numerous partnership agreements ranging from investments into Indian infrastructure to counterterrorism and maritime security cooperation. Meanwhile, in Oman, India is also investing in Duqm and the Indian navy has been granted access to Omani port facilities, notwithstanding the Chinese presence there. More broadly, this Omani strategy of opening its ports to all major stakeholders of the Indian Ocean – China, India, the United States, and the United Kingdom – reflects a broader Gulf approach to strategic balance in the region: avoiding competition among the great powers and, in this instance, positioning Oman as their natural hub.
The Logic of Gulf Strategies in the Indian Ocean
Analysts often look at China’s growing relations with the Gulf Arab states only through the prism of whether China is able and willing to replace the United States as the primary security guarantor of the Gulf states. But framing the contemporary development this way is missing the genuine impetus of Gulf Arab states for cultivating ties with China and India while increasing their footprint in the smaller states flanking the Indian Ocean.
Officials in Gulf Arab states do not talk of replacing the United States or Western partnerships, but they certainly aim to diversify their foreign policy and position themselves as pivotal actors in the Indian Ocean, an effective way to strengthen their strategic autonomy. Under these circumstances, it is natural that Gulf Arab states, with their long cultural and economic exchanges across the Indian Ocean, would now look to turn these gains into political capital.
This calculus behind Gulf forays into the Indian Ocean, either eastward or westward, goes against the prevailing view within the current U.S. administration that frames the strategic developments in the Indo-Pacific region as a zero-sum game between Washington and Beijing. But this binary logic ignores the ability of local states to define their foreign policies. Leaving aside the U.S.-China competition and focusing on potential areas of cooperation with local actors would prove more effective for regional governance efforts.
An increased role of Gulf Arab states in the Indian Ocean leads to two major unknowns: the ability to sustain their objectives and the impact of their regional policies. First, there is still a gap between the aspirations of Gulf Arab states to project influence across the Indian Ocean and their military means to support their goals. Maritime security cooperation, one of the primary challenges in the area, underlines these limitations, given the modest size of Gulf navies. Saudi Arabia and the UAE have been working to modernize their fleets, but with only modest power projection capabilities, they are a long way from being considered deep-water navies.
The second unknown relates to the effects of Gulf regional engagement. Because governance in the Indian Ocean remains limited, Gulf diplomacy could contribute to the stability of the region, but Gulf influence could also have a destabilizing effect. On the one hand, Saudi and Emirati roles in the peace deal between Ethiopia and Eritrea emphasize their stabilizing influence; on the other hand, tensions over Djibouti and Somalia reflect the risks of exporting the intra-Gulf dispute to other regions, especially in countries with fragile state institutions.
Eventually the role of Gulf Arab states in the Indian Ocean will depend on two factors: their ability to support their ambitions for strategic autonomy, including through military means, and their aptitude to act as genuine stakeholders in reinforcing good governance in the area. The coming Indian Ocean Rim Association chairmanship of the UAE could be a test to evaluate just how likely they are to succeed.
is an associate professor in strategic studies at the UAE National Defense College. The views expressed in this article do not reflect those of the UAE National Defense College, the Near East South Asia Center for Strategic Studies, nor any government.
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