China’s mega Belt and Road Initiative, once President Xi Jinping’s flagship project, does not lack leadership support. Yet, 11 years after its inception, the project has yet to take off as envisioned. Meanwhile, the global trade and investment strategy of the United Arab Emirates – a country of just 11 million people – is providing an alternative vision.
The brainchild of UAE Foreign Minister Abdullah bin Zayed al-Nahyan, the trade expansion project envisions the UAE as the center of the world’s largest trade and investment network. This network is what has differentiated it from Beijing’s project. The BRI was, at its core, a carrot for countries that cooperate with China – a play-to-get-paid strategy defined by Beijing’s single-party leadership.
Abu Dhabi does not see itself as the leader of global trade but rather a participant in myriad global partnerships. Its comparative advantage in logistics, cost of business, and geographic location anchors diverse global trade partnerships (including the BRI) to the UAE’s ports and board rooms. Abu Dhabi’s strategy is rooted in the region’s 5,000-year trade history, which the UAE has readopted as a defining element of its revised grand strategy.
China’s BRI is modeled on the Silk Road. It starts in China, is driven by China, and ends in China. It is a Chinese project that invites participation.
Alternatively, the UAE’s trade strategy is not a road; it is a web, and the country’s ports, airports, and free zones are at the center of that web. The foundations of the Emirati trade and investment network have been the flurry of free-trade agreements pursued by Abdullah bin Zayed. In 2022, the UAE signed Comprehensive Economic Partnership Agreements with India and Indonesia, giving the country access to the first and third most populous countries in Asia (China has been in negotiations with the Gulf Cooperation Council collectively on a free trade agreement since 2004 and has yet to finalize it). In 2023, the UAE signed a free trade agreement with Israel, which in turn has free trade agreements with the United States and European Union.
On September 17, the UAE and Australia reached a bilateral trade and investment deal. The UAE also has free trade agreements with countries in the Arab world and is working on several more, including one with Malaysia expected to be signed by the end of the year. Furthermore, the UAE has begun focusing diplomatic resources on South America and is strategizing how to link select economies like those of Argentina, Brazil, and Guyana with its expanding network.
Already, the UAE has a robust trade relationship with African states. The UAE is the fourth-largest source of foreign direct investment into the African continent, after China, the EU, and the United States. Additionally, Dubai has become a favored city for transcontinental sub-Saharan African business deals and meetings, competing with the Ivory Coast and South Africa to draw business leaders from the subcontinent.
The UAE model is a synergy of independent systems. On one side is Abu Dhabi, the capital and richest emirate. It attracts massive international investments, imports advanced industrial capabilities, and strategically pursues future technologies. Dubai is the global convener. It attracts talent, tourists, private sector businesses, and entertainment.
Ras Al Khaimah and Sharjah are the country’s manufacturing and industrial engines. Ajman and Umm al-Quwain are critical junctures in Emirati logistics networks and provide industrial and agricultural depth to the other emirates. Finally, Fujairah’s location outside the strait of Hormuz on the Sea of Oman is a strategic access point for cargo and energy. The heart of the UAE’s economic model is the friendly competition and economic integration among the seven emirates.
The UAE is a major force in logistics, with fleets of cargo ships and planes and a plethora of ports, serving as a well-managed vestibule for global trade. Emirati grand strategy aims to maintain and grow this role. Abu Dhabi’s leadership has facilitated this by divorcing politics from international relations – maintaining universal cordiality and compartmentalizing politics from trade and business.
This approach demonstrates how the UAE can expand trade links with Tehran within the confines of global sanctions and still protest the occupation of its islands. It is how trade, tourism, and business between the UAE and Israel continue to grow while Abu Dhabi condemns the humanitarian situation in Gaza and annexations in the West Bank. The UAE is keen to continue expanding its trade and friendship with India while it voices concern about the mounting abuse of Indian Muslims.
Abu Dhabi is not ignoring sensitive areas. Rather, it aims not to sacrifice shared prosperity for the sake of secondary geopolitical goals. Abu Dhabi has launched a strategy of pragmatic mercantilism. The ethos of this philosophy is rooted in Abu Dhabi’s institutionalization of economic liberalism, in that shared prosperity benefits all, and mutually beneficial relationships with time will organically resolve areas of geopolitical tension.
Nonetheless, to maintain momentum on this strategy Abu Dhabi needs to address some challenges. First, it needs to continue improving financial transparency. Abu Dhabi has already launched several policies to address this, which have led to the removal of the UAE from the gray list of the Financial Action Task Force, a global financial watchdog.
Second, it must continue improving its private sector’s economic complexity through horizontal and, especially, vertical economic development. There remain too few cases of private sector businesses growing more complex without government assistance or guidance – compounding the challenge of stubbornly low labor productivity.
Finally, it needs to ensure that it is isolated enough from fragile regional powers so that, if they collapse economically or politically, the damage to the UAE will be minimized. With a population of over 100 million, Egypt has already received tens of billions of dollars in direct aid, central bank deposits, and investments from the UAE.
These risks can be addressed by increasing cooperation and economic integration with complex, developed economies. The UAE’s strategy is evolving in real time. It is defined by malleability and sets the benchmark for how a middle power can sit at the table with great powers. Though the UAE’s gross domestic product tops out at around $500 billion, the country’s sovereign wealth funds are an extension of its national power, giving the UAE an economic potential of over $2 trillion dollars, which helps explain how it has managed to punch far above its middle power economic status.
In the wake of the September 23 Washington visit of UAE President Mohammed bin Zayed al-Nahyan, Washington has an opportunity to double down on this Emirati approach. The United States does not need to reinvent the wheel to address its global competitive challenges. Washington can support and advance U.S. and global prosperity within the established global order by supporting independent, strategic trade relationships that are currently only marginally linked, using preexisting, functioning systems in partners like the UAE to integrate global trade relationships in the emerging era of increased economic multipolarity.
The UAE is a federation of seven principalities in a difficult environmental and geopolitical location. It is a desert country with an indigenous population of fewer than 1.5 million. Still, it has deliberately designed and launched a strategy that has turned it into a major trade, logistics, and investment power. Abu Dhabi may be a tiny player globally compared with the United States. Still, it represents a successful model for strategically building interconnected trade and investment relationships that expand prosperity and enable stability.
