The Gulf’s Sino-European Balancing Act

Greg C Bruno

AFP photo: Fayez Nureldine

When the UAE’s minister of state for artificial intelligence, Omar bin Sultan Al Olama was asked in January about doing business with Huawei, the embattled Chinese tech giant, he was unequivocal: for his country, impartiality pays. “We are a very collaborative country,” he told the American news channel, CNBC. “We have worked with everyone from everywhere on Earth.” But six months later, it’s worth asking: does that policy need a reboot?

Al Olama’s response – delivered amid allegations that Huawei’s technology could be used for state-sponsored espionage – was not intended as a geopolitical litmus test, but it has become one. As economic tensions have risen between China and the United States, forcing allies in Europe to re-evaluate their own ties to China and Huawei, the neutrality long favored by states such as the UAE has become more complicated.

“We see the intersection of geopolitics and technology very clearly, and that has created certain dilemmas for countries like Turkey and those of the GCC,” said Mohammadbagher Forough, an expert on China at Leiden University in the Netherlands. Confronted with a geo-economic choice between East and West, a lot of Arab countries “are choosing China,” he told me.

Thirty years ago, the choice for Gulf states seemed obvious. In 1989, the European Economic Community – predecessor of the European Union – established ties with the Gulf Cooperation Council in an agreement billed as the foundation for “cooperation on all aspects relevant to bilateral relations.” For many in Europe, the goals were clear: to secure energy imports and increase access to Middle East markets. The GCC, meanwhile, viewed the deal as a tool to foster economic development and diversification, and to promote regional integration. Despite early progress, however, an EU-GCC free trade agreement has not materialized.

Reasons for the failure are varied. Within the GCC, internal disagreements on security and other issues have complicated the bloc’s negotiating position, while EU states have faced their own internal resistance. For instance, EU petroleum producers have lobbied hard to derail duty-free access for Gulf states’ hydrocarbons. More recently, the EU’s support for the Iran nuclear deal and the GCC’s response to the Arab uprisings have driven the two sides further apart.

But there is another factor that cannot be overlooked: the rise of China. In January 2016, Beijing released its so-called “Arab Policy Paper,” the first time China publicly committed to developing ties with the Arab world. And, unlike the disjointed EU, China is better positioned to deliver on its vision.

At the heart of the new Sino-GCC détente is China’s Belt and Road initiative, which seeks to draw on the Gulf’s strategic location to fuel a Chinese-centered global network of air, land and maritime trading routes. In the three years since China’s Arab policy paper was published, BRI-linked investments to the GCC have skyrocketed. According to Jonathan Fulton, a political science professor at Zayed University in Abu Dhabi and author of “China’s Relations with the Gulf Monarchies,” China’s Middle East policy a decade ago was “simple” and “shallow” whereas today it is characterized by “dense interdependence.”

Consider the numbers. In 2016, trade between the GCC and China hit $114 billion, up from $9.9 billion in 2000. While the EU remains the GCC’s largest trading partner, European exports to the GCC have been declining since 2015 while China’s have surged. Fulton notes that Sino-GCC trade could hit $350 billion by 2023. Beijing is also increasing military aid to the region. A recent report by the US Defense Intelligence Agency concluded that China is now a top arms supplier to the Middle East, pushing aside American and European arms manufacturers, which are bound by export controls.

For the EU, these trends mean one thing: Europe’s influence in the Middle East is waning. A 2016 assessment for members of the European Parliament warned that China’s economic clout “is likely to alter regional trade and investment patterns profoundly and to increase competition for the EU in high-end industries it has hitherto dominated.” If China and the GCC were to finalize a free-trade agreement, as some experts expect, “the EU’s prospects of promoting democracy, the rule of law, and human rights in the region” would be hurt, the report concluded.

To be sure, Europe is not abandoning its relationship with the GCC, or vice versa. In December last year, the EU unveiled plans to open a delegation in Kuwait. And earlier this year, the EU’s foreign policy chief, Federica Mogherini, pressed European member states to deepen their role in the Middle East. At an EU-Arab League ministerial meeting in Brussels in February, Mogherini called for a renewal of EU-Arab ties because, as she put it, “Europe needs cooperation with the Arab world and the Arab world needs cooperation with Europe.”

And yet, China’s regional forays have made that balance more precarious than ever. Politically, historically and even culturally, the GCC has more in common with China than with the West. For many experts, therefore, the economic realignment is a natural reordering.

But tipping too far toward China would be a mistake. For one thing, China’s economy is slowing and a recession cannot be ruled out; at least one analyst predicts a decline of annual GDP growth from about 7 percent today to two percent during the next decade. Should such a drop occur, it could devastate China’s trading partners. Viewed this way, hitching the cart exclusively to China looks unwise. It also makes decisions like the collective silence from the Organization of Islamic Cooperation on China’s mistreatment of Uighur Muslims in Xinjiang seem all the more short-sighted (and self-serving).

Perhaps the best approach, then, is the collaborative model advocated by Al Olama from the UAE: finding ways to work with everyone. While staying neutral and multipolar will not be easy in a world increasingly drawn to isolationism, the alternative would be far costlier.

Greg C. Bruno is the author of “Blessings from Beijing: Inside China’s Soft-Power War on Tibet.” As a journalist his work has appeared in The New York Times, Foreign Affairs, The Guardian and other international outlets. He was a term member of the Council on Foreign Relations in New York, and is a former opinion editor at The National in Abu Dhabi and Project Syndicate in Prague.