Saudi Arabia has stepped up efforts to outflank the United Arab Emirates and Qatar as the commercial, cultural and/or geostrategic hub in the Gulf. The Saudis recently expanded their challenge to the smaller Gulf states by seeking to position Saudi Arabia as the region鈥檚 foremost sports destination, once Qatar has had its moment in the sun with the 2022 FIFA World Cup. The kingdom seeks to secure a stake in the management of regional ports and terminals, which have so far been dominated by the UAE and, to a lesser extent, Qatar.
The kingdom kicked off its effort to cement its position as the Middle East鈥檚 behemoth earlier this year. In February, Saudi Arabia announced it would doing business by 2024 with international companies whose regional headquarters were not based in the country.
Arrest of Migrant Activist Puts Qatar in the Spotlight
The UAE 16th on the World Bank鈥檚 2020 Ease of Doing Business Index as opposed to Saudi Arabia at number 62. As a result, freewheeling Dubai has long been the preferred regional headquarters of international firms. The Saudi move 鈥渃learly targets the鈥� United Arab Emirates and 鈥渃hallenges the status of Dubai,鈥� said a UAE-based banker.
Saudi Arabia is a latecomer to the port control game, which is dominated by Dubai鈥檚 DP World. That company operates 82 marine and inland terminals in more than 40 countries, including Djibouti, Somaliland, Saudi Arabia, Egypt, Turkey and Cyprus. The kingdom鈥檚 expansion into port and terminal management appears to be less driven by geostrategic considerations. Instead, Saudi Arabia鈥檚 Red Sea Gateway Terminal (RSGT), backed by the Public Investment Fund (PIF), the Saudi sovereign wealth fund, said it was targeting ports that would service vital Saudi imports, such as those related to food security.
In January, PIF and China鈥檚 Cosco Shipping Ports bought a 20% stake in RSGT. The Chinese investment fits into Beijing鈥檚 larger Belt and Road Initiative (BRI), which involves the acquisition of stakes in ports and terminals in Saudi Arabia, Sudan, Oman and Djibouti, where China has a military base.
Jens Floe, the chief executive officer of RSGT, said the company planned to invest in at least three international ports in the next five years. He said each investment would be up to $500 million. 鈥淲e have a focus on ports in Sudan and Egypt. They weren鈥檛 picked for that reason, but they happen to be significant countries for Saudi Arabia鈥檚 food security strategy,鈥� Floe said.
Saudi Sports
Saudi Arabia鈥檚 increased focus on sports, including a possible bid to the 2030 World Cup, serves multiple goals. First, it offers Saudi youth, who account for more than half of the kingdom鈥檚 population, a leisure and entertainment opportunity. Second, it boosts Crown Prince Mohammed bin Salman鈥檚 burgeoning development of a leisure and entertainment industry. The Saudis believe this could allow the kingdom to polish its image tarnished by human rights abuse, including the killing of Saudi journalist Jamal Khashoggi in 2018, and challenge Qatar鈥檚 position as the face of Middle Eastern sports.
A recent by Grant Liberty, a London-based human rights group that focuses on Saudi Arabia and China, estimated that Riyadh has invested $1.5 billion in the hosting of multiple sporting events. These include the final games of Italy and Spain鈥檚 top football leagues, Formula 1 races, boxing, wrestling and snooker matches, and golf tournaments. So far, Qatar is the Middle East鈥檚 leader in the hosting of sporting events, followed by the UAE.
According to Grant Liberty, further bids for events worth $800 million have failed. This did not include an $600-million offer to replace Qatar鈥檚 beIN Sports as the Middle Eastern broadcaster of the UEFA Champions League. Saudi Arabia reportedly continues to ban beIN from airing in the kingdom, despite the lifting of the Saudi-Emirati-led diplomatic and economic of Qatar in January.
Oil Exports
Mohammed bin Salman鈥檚 plan to diversify and streamline the Saudi economy and ween it off dependency on oil exports 鈥渉as set the creation of professional sports and a sports industry as one of its goals,鈥� said , spokesperson for the Saudi Arabian Embassy in Washington. 鈥淭he kingdom is proud to host and support various athletic and sporting events which not only introduce Saudis to new sports and renowned international athletes but also showcase the kingdom鈥檚 landmarks and the welcoming nature of its people to the world.鈥�
The increased focus on sports comes as Saudi Arabia appears to be backing away from its intention to reduce the centrality of energy exports for its economy. Energy Minister Prince Abdulaziz bin Salman, the crown prince鈥檚 brother, recently an International Energy Agency (IEA) report, saying 鈥渢here is no need for investment in new fossil fuel supply鈥� as 鈥渢he sequel of the La La Land movie.鈥� He went on to ask, 鈥淲hy should I take [the report] seriously?鈥�
Putting its money where its mouth is, Saudi Arabia intends to increase its oil production capacity from 12 million to more than 13 million barrels a day. This is based on the assumption that global efforts to replace fossil fuel with cleaner energy sources will spark sharp reductions in American and Russian production. The Saudis believe that demand in Asia for fossil fuels will continue to rise even if it drops in the West. Other Gulf producers, including the UAE and Qatar, are following a similar strategy.
鈥淪audi Arabia is no longer an oil country, it鈥檚 an energy-producing country 鈥� a very competitive energy country. We are low cost in producing oil, low cost in producing gas, and low cost in producing renewables and will definitely be the least-cost producer of hydrogen,鈥� Prince Abdulaziz said. He appeared to be suggesting that the kingdom鈥檚 doubling down on oil was part of a strategy that aims to ensure that Saudi Arabia is a player in all conventional and non-conventional aspects of energy. By implication, he was saying that diversification was likely to broaden Saudi Arabia鈥檚 energy offering, rather than significantly reduce its dependence on energy exports.
鈥淪ports, entertainment, tourism and mining alongside other industries envisioned in Vision 2030 are valuable expansions of the Saudi economy that serve multiple economic and non-economic purposes,鈥� said a Saudi analyst. 鈥淚t鈥檚 becoming evident, however, that energy is likely to remain the real name of the game.鈥�
The views expressed in this article are the author鈥檚 own and do not necessarily reflect 51吃瓜鈥檚 editorial policy.
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