The UAE has launched a number of initiatives to lure investors in a bid to counter Saudi Arabia’s challenge.
Riyadh has recently undertaken a number of decisions to overtake its Gulf neighbor as the main economic hub, including amendments to trade rules which will require multinationals to relocate their main headquarters to the Saudi capital.
Easing residency rules to lure $150 billion worth of foreign investments is said to be one of the ideas within the reform package aimed at diversifying the country’s economy.
The hope is that this will make Abu Dhabi more competitive in a region overcrowded with oil-dependent economies facing similar challenges and targeting the same foreign investors.
Some of the reforms were unveiled by ministers yesterday to mark its Golden Jubilee. They include liberalizing residency rules to attract and retain skilled workers; new visa categories for freelancers and entrepreneurs; allocation funds to support Emirati projects and for the adoption of advanced technology within the industry, in a bid to raise productivity by 30 per cent.
The UAE will also target a ten per cent increase in exports to ten key markets, including China and the UK, as part of a 14 per cent growth in investment outflows by 2030.
Foreign investors will get a preview of the many opportunities Abu Dhabi will offer in a global summit next year. The aim is to draw $150 billion into domestic projects by 2030.
The repercussions of Abu Dhabi’s counter initiative, particularly its decision to push ahead with greater trade cooperation with China, remain unclear. The UAE has been caught in the crossfire of a regional power struggle between the US and China.
In June the administration of US President Joe Biden applied pressure on the UAE to remove China’s Huawei equipment from its networks within the next four years or risk termination if its deal with Washington to purchase F-35 jets and drones; a major reason for why the Gulf state normalized ties with Israel last year.
Saudi Arabia is also unlikely to take such a challenge laying down. In addition to measures introduced to lure foreign investment from Abu Dhabi, Riyadh has instructed news channels to transfer headquarters to Riyadh in what appears to be a further acceleration of its economic rivalry with its Gulf neighbor.
Cracks in relations between the Saudis and the Emirates started to appear in 2019 when the UAE withdrew most of its military forces from Yemen, leaving Saudi Arabia alone in its war against Iran-backed Houthis. The Emirates was also found to be backing a rival government in Yemen.
Other major sources of tension are said to be the speed of Saudi-led efforts to end the trade and travel embargo on Qatar, about which Abu Dhabi is not pleased, while Riyadh is equally frustrated over the pace of UAE normalization with Israel.