BRICS Key to Arab Trade Diversification Strategy

 

In 2023, more countries such as the UAE and Iran joined the BRICS group.

BRICS Key to Arab Trade Diversification Strategy

By Syed Atique Hussain Naqvi, Toronto, Canada 

As global business and economic dynamics constantly evolve, countries are increasingly diversifying their trade relations to protect their interests. The Arab world is no exception.

Economic powerhouses like Saudi Arabia and the United Arab Emirates (UAE) have been expanding their strategic business partnerships with major economies such as China, Russia, and India, while maintaining strong ties with traditional partners like the European Union, the United States, and other nations in the Americas.

The leadership in these Arab nations envisions rapid economic growth over the next 10 to 20 years, which will require additional partners to drive foreign investment and trade. This forward-looking approach is evident in the UAE’s recent involvement with BRICS.

During a visit to Russia for the BRICS Summit in Kazan, UAE President Sheikh Mohamed bin Zayed Al Nahyan highlighted the growing trade between the UAE and Russia in his meeting with President Vladimir Putin. The UAE has already demonstrated its diplomatic capabilities by successfully mediating a prisoner exchange between Russia and Ukraine, further strengthening its global standing.

Upon Sheikh Mohamed's arrival in Moscow, President Putin proudly announced that trade between the UAE and Russia had tripled in the past three years, reaching $11.1 billion. In August 2023, the UAE officially joined BRICS, a move that reflects the country’s commitment to fostering dialogue among developing and emerging economies, while ensuring its long-term economic prosperity. UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan emphasized the importance of multilateralism in promoting global peace, security, and development.

While Saudi Arabia was invited to join BRICS, it has not officially done so. According to reports, Crown Prince Mohammed bin Salman will likely not attend the upcoming BRICS summit in Kazan, though Saudi Foreign Minister Faisal bin Farhan will represent the kingdom.

Some might interpret this absence as a lack of interest in strengthening ties with BRICS. However, this assumption seems off the mark, especially considering recent developments. Russian President Putin has acknowledged Saudi Arabia as a serious partner in potential peace talks between Russia and Ukraine. During a press conference, Putin expressed confidence in Saudi Arabia’s sincere efforts to promote peace and reiterated his close personal relationship with the Saudi leadership.

Trade between Russia and Saudi Arabia has also seen significant growth, particularly in agriculture, with Russian grain exports to Saudi Arabia reaching $1 billion annually. Overall, Saudi-Russian trade amounted to $3.34 billion in 2023, with key exports including aluminum, metals, grains, and oil products. Russian companies have expressed interest in expanding exports of grain, halal meat, and confectionery to Saudi Arabia.

BRICS, originally comprising Brazil, Russia, India, and China, has expanded to include South Africa, Egypt, Ethiopia, Iran, and the UAE, with Saudi Arabia potentially joining in the future.

China is currently Saudi Arabia’s largest trading partner, with bilateral trade surpassing $100 billion in 2023. The UAE-China trade relationship is similarly robust, reaching $95 billion in 2023 and nearly $50 billion in just the first half of 2024. Meanwhile, trade between India and the UAE has surged from $180 million annually in the 1970s to $83.65 billion in 2023-24. Saudi-India trade reached $43 billion in the same period.

Saudi Arabia's trade with Brazil totaled $8 billion in 2023, while the UAE-Brazil trade amounted to $4.4 billion. In comparison, UAE-US bilateral trade stood at $31.4 billion in 2023, with a significant surplus favoring the US. The US-Saudi trade volume for 2023 was $29.7 billion. Trade between Saudi Arabia and the UK in the 12 months ending Q1 2024 reached $23 billion, while UAE-UK trade stood at $33 billion.

A simple comparison shows that Saudi Arabia’s trade with two BRICS members, China and India, reached $143 billion in 2023, far surpassing its combined trade with the US and UK, which amounted to just $52.7 billion. Similarly, the UAE’s trade with China and India totaled $178.6 billion, compared to $56.5 billion with the US and UK.

This data highlights how, over the past decade, Arab economic powers like Saudi Arabia and the UAE have successfully diversified their foreign trade partnerships.

The ongoing conflict between Israel, Palestine, and Lebanon has resulted in thousands of casualties and widespread destruction, particularly in Gaza and Lebanon. Arab leaders have expressed frustration over the lack of Western influence in reining in Israeli Prime Minister Benjamin Netanyahu. Traditionally, one of the reasons for Arab countries' close ties with the United States was its ability to manage its ally, Israel. However, the past year has shown that, despite significant US aid, the Biden administration has little leverage over Netanyahu’s government.

In light of these changing realities, Arab countries’ trade diversification strategies reflect their pragmatic approach to the future. By engaging with BRICS, Arab leaders are ensuring that they remain adaptable in a rapidly shifting global landscape.