India’s Commerce Minister, Piyush Goyal, declared his country’s intention to finalize a trade agreement with the UAE by early next year during his visit to Expo 2020 in October. The news came the same day that Reliance Industries, an Indian industrial conglomerate, disclosed plans for a new UAE trade hub, and the same week that the Abu Dhabi Investment Authority announced a $400 million contract with the Indonesian internet firm GoTo.
These achievements highlight a trend that has accelerated in recent years: the strengthening of economic ties between the Gulf and Asia.
In the decade leading up to the pandemic, trade between the GCC and rising Asian markets, including India and China, increased by 36%, while trade with advanced western economies, such as the US, UK, and EU, slowed.
By 2030, GCC trade with Asian emerging countries is predicted to be worth $480 billion, surpassing the region’s trade with advanced western nations for the first time.
In geopolitical circles, a new narrative is forming of a growing fight for influence in the Gulf between the East and the West, despite rising global tensions.
The scenario may create anxiety in some Western countries, but not necessarily. Instead, as the Gulf rises along with Asia’s tide, mutual possibilities will abound.
The investment and development opportunities that are emerging as the Middle East economies diversify and succeed in the face of expanding commerce with Asia are apparent examples. Rapid urbanization and infrastructure development are major themes in the region – the population of cities in the Middle East more than doubled between 1960 and 2015 – with Gulf countries laying out ideas for smart cities, such as Neom, that are centered on innovation and sustainability.
Given Britain’s special capabilities in frontier technologies such as AI, digital infrastructure, and renewable technology, these are perspectives worth sharing for economies like the UK. I’m sure the UK government is working hard to assist UK firms in engaging with these projects and seizing the opportunities they present.
The most significant benefit of improved Gulf-Asian ties, however, can be seen in the most important crisis facing us all today. As the United Nations Conference on Climate Change (COP26) draws to a close, world leaders recognize that the challenges of climate change can only be met by worldwide cooperation. And those problems are enormous, especially given the demand on rising nations to reconcile economic expansion with climate action. The fastest-growing electricity demand in the world is in Southeast Asia, although renewables only accounted for 15% of the region’s energy mix in 2019.
Closer relations between the Gulf and Asia are also beneficial in this regard. The Gulf region is leading the way in developing new solutions to meet global energy demand while also aiming to reduce carbon emissions, and Asian economies are proving to be valuable partners in this endeavor.
It’s also worth noting that it’s not one-way traffic. The expanding presence, quite literally, of Middle Eastern sovereign wealth funds in Asia has been one of the most eye-catching trends in recent years. In Asian centers like Singapore, Hong Kong, Shanghai, and Beijing, SWFs from all over the region have opened operations. The trading ports that once anchored the Silk Roads linking Eurasia’s peoples may be resurrecting.
Of sure, geography is crucial. The Middle East has traditionally served as a crossroads for trade between East and West, and in an age of supply chain disruptions and shipping delays, its position on global trade routes has never been more crucial. But, at a time when global tensions are high, the region has also served as a conduit for ideas and interaction.
Through energy innovation, a Gulf that is accessible to both East and West can help fuel global recovery and develop a cleaner economy. In the century ahead, the Middle East’s pivot to Asia might serve as a major connection for the world and a key engine of global growth.