The Gulf region was always important to the world because of its rich reserves of oil and gas. First Britain and then the United States were the main players in the region in the past.
The Gulf states have close political, defense, and economic ties with the United States. Many of them also host the US military. But over the last decade, China —one of the world’s largest energy guzzlers— is stepping up its presence in the region. As the United States shifts focus to the Indo-Pacific in a bid to contain China’s aggressive moves in Asia, China is also taking a keen interest in engaging with members of the Gulf Cooperation Council (GCC).
As the US-China rivalry intensifies, the Gulf region could emerge as an important geo-strategic arena where the big two powers jostle for influence. With oil and gas playing an important part in world diplomacy, the GCC nations —Saudi Arabia, UAE, Kuwait, Bahrain and Qatar— assume added significance.
Two high-profile visits to the region in 2022 by US President Joe Biden in July and Chinese President Xi Jinping in December set the tone for the new rivalry in the region. Expectedly, China has denied any geopolitical motive for Xi’s visit, emphasizing instead on trade and economic cooperation.
These developments are taking place at a time when the sheikhdoms wish to emerge from the cocoon of gas and oil and diversify to other fields, like financial services, green energy, and the digital economy. They are now looking beyond energy and focusing on becoming an economic hub of the world.
The signs for the region aiming to become an economic hub are clear. The easing of restrictions by the UAE to allow unmarried foreigners to live with their partners without the seal of marriage is to open space for more people to invest and work in the country. Saudi Arabia under Crown Prince Mohammed bin Salman, or MBS as he is commonly known, has sent the moral police packing and opened the country to music, cinema, and entertainment. What is more, Cristiano Ronaldo, the Portuguese football legend, has signed up to play for a Saudi club. He is being allowed to live in the country with his family. Ronaldo is not legally married to his partner. The successful holding of the football World Cup is an example of Qatar trying to make its mark in the international stage.
Last year after Russia’s invasion of Ukraine, when the United States was hoping to rally the world against Vladimir Putin, West Asia remained aloof. As a close friend of Saudi Arabia, the United States was keen that Saudi Arabia use its influence on OPEC to ramp up oil production to reduce energy prices and inflationary pressures on the world economy. Russia and Saudi Arabia ensured that OPEC did not place more oil in the world market. All OPEC members that were approached refused to toe the line. The United States felt that high energy prices was benefitting Putin’s war in Ukraine. Saudi Arabia, however, made it clear that the OPEC+ decision was based entirely on economic consideration. The strain in ties that had started over the murder of Saudi dissident and journalist Jamaal Khashoggi has possibly also played into this. MBS is said to have ordered the savage murder. Joe Biden as presidential candidate vowed strong action against MBS and flagged human rights in Saudi Arabia. US statements following the NATO decision were sharply critical of OPEC, especially of Saudi Arabia.
In a fast-changing world buffeted by Russia’s war in Ukraine and the pulls and pressures of oil diplomacy, the Gulf powers led by Saudi Arabia are slowly but surely asserting themselves. While the region had always been open to the United States and its European allies, it has in recent times also played footsie with both Russia and China. Saudi Arabia as the foremost Sunni power in the region often sets the tone for the Gulf states to follow.
This is not to suggest that American influence among member states of the GCC is waning. Washington continues to be the security guarantor to Saudi Arabia and has close defense ties with many of the GCC members. The Gulf kingdoms and sheikhdoms are major buyers of American weapons. Though China is also trying to step up arms sale to the region, its supplies are miniscule compared to US sales. Figures show that despite Beijing’s efforts, America is way ahead. Between 2003 and 2021, Saudi Arabia purchased just $245 million worth of arms from China, compared to $17.85 billion spent by Riyadh to buy US arms during the same period.
The US Navy’s 5th Fleet is stationed in Bahrain with around 7,000 American troops based there. The Sheikh Isa Air Base in Bahrain also hosts American fighter jets, surveillance aircraft, and a special forces operation centre. Bahrain is considered by the US as a “major non-NATO military ally”. But gradually with the rise of China and that country’s aggressive moves in the India-Pacific, the United States had begun its pivot to Asia. The move occurred during the Barak Obama presidency, but since then as America perceived China more and more as a threat, the United States has shifted much of its energy and resources to the Asia Pacific.
China and Gulf Cooperation Council
China is one of the biggest buyers of oil from the Gulf countries. China and Qatar signed a $60 billion deal in last November to purchase liquefied petroleum. Last year, China bought 27 per cent of the oil exported by Saudi Arabia. It is also increasing its energy cooperation with the UAE and other sheikdoms in the region.
During Xi’s visit to Riyadh last month, the kingdom organized a meeting with the neighboring Gulf country rulers at the China-Arab States Summit and China Gulf Cooperation Council Summit, helping Xi to exchange views with rulers of the region. The China-Arab States Cooperation Forum first met in 2004 but this has gathered additional momentum with Xi’s visit.
China is keen to expand its footprints here not just as a buyer but as a stakeholder. Nearly 200 infrastructure and energy projects under the Belt and Road Initiative are in place. Xi visited Riyadh in 2016 and welcomed Crown Prince Mohammed bin Salman to Beijing in 2019 at a time when MBS was in the doghouse for the brutal murder of Khashoggi at the Saudi Consulate in Istanbul. The two countries had established a strategic partnership during Xi’s last visit to the kingdom.
During the latest visit, 34 bilateral agreements were signed between China and Saudi Arabia. Though oil and chemicals are at the core of economic ties, there is a conscious effort to expand beyond to green energy, information technology, cloud services, logistics, construction and housing as well as medical industries. The joint statement at the end of the visit emphasized the need for global market stability. The statement also said that “the two sides reaffirmed that they will continue to firmly support each other’s core interests”.
China hopes to sell more arms to the region in the coming years. Beijing recently announced the sale of unmanned aerial vehicles (UAV), costing roughly $4 billion to Saudi Arabia. But the more sophisticated security equipment like fighter jets and air-to-air missiles continue to be supplied by the United States.
As China hopes to overtake the United States by 2050, there will be shadow-boxing by the world’s number one and number two powers across continents. The United States is pushing back and remains far ahead of China as of now.