Mega Deals and Tension Management in GCC Region
In a significant shift, the pace of investments in Syria will play a crucial role in the recovery of its banking system, which has been cut off from international finance for over a decade. The country has recently decided to lift sanctions, paving the way for investment from the Gulf in its reconstruction.
The Gulf Cooperation Council (GCC) states, which hold one-third of the world's crude oil reserves and have over $3.8 trillion in sovereign wealth fund assets, are extending their strategic economic footprint in various regions. One such example is Egypt, where the UAE has provided a $35 billion development package, Qatar and Saudi Arabia have made substantial investments, and Gulf countries are taking a leading role in regional diplomacy.
The US has given a green light for economic cooperation with the new Syrian government, allowing Gulf countries to step in and discuss reconstruction. Qatar-based UCC Holding leads a $7 billion power project in Syria, and Qatari food and beverages firm Baladna has pledged $250 million for a new industrial project. Syrian's reconnection to the SWIFT financial messaging system in mid-June marks a significant step forward for the country's financial integration.
The Gulf states have largely been spared the shockwaves from President Trump's economic policies, with the GCC expected to grow faster than the global average with a projected 3.2% GDP increase this year. The US secured at least $3.2 trillion in investment pledges for the coming decade during Trump's visit to Riyadh, Doha, and Abu Dhabi.
Israel and the UAE have started collaborating in various sectors, including fintech. An Israeli company, Liquidity, is managing a multi-billion-dollar portfolio in Abu Dhabi. The UAE's aim to raise the value of its exports from $150 billion to $1 trillion by 2040 is being facilitated through its role as a gateway for Israeli entities to access the Gulf market and beyond.
However, the Gulf countries are not without their challenges. They face growing dependence on oil and rising debt levels due to international borrowing to fund infrastructure projects. For instance, Saudi Arabia may more than double its 2025 budget gap.
International investors, including US companies like Amazon Web Services, Nvidia, and Oracle, are flocking to the region for tech and AI projects and broader projects supporting the region's economic transformation. The UAE pledged $1.2 trillion during Trump's visit, while Saudi Arabia pledged $600 billion, including a $142 billion defense package.
The Abraham Accords, which normalised relations between Israel and certain Arab states, have also played a role in this economic integration. Since 2020, the countries involved in the Accords, including the UAE and Morocco, have moved closer to Israel within this framework, aiming for regional integration and peace between Israel and these Arab states.
The Gulf's strategic economic footprint is indeed expanding, with these nations playing a significant role in shaping the economic landscape of the Middle East and beyond.
