The world this past week has been rather grim with ongoing violence across Israel and Palestine and a less than positive global economic forecast. Restrictions on free trade are surging and political tensions are worsening. But let’s start with some positives in the region.
With one eye on sustainability and one eye on energy security, KSA is set to move closer to its Vision 2030 climate goals. In partnership with French train firm Alstom, KSA is set to test its first hydrogen train. In an attempt to ensure sustainability in transportation, KSA’s Public Investment Fund has also launched a company to invest in EV manufacturing.
Across borders, it is partnering with Iraq, Kuwait, UAE, and Oman to facilitate the exchange and trade of electricity amongst the states. This could be particularly helpful for energy-poor Iraq, where outdated plants and grids are unable to meet surging summer-time demands.
A cross-border resource partnership is also developing between Qatar and France, where Qatar Energy and TotalEnergies have entered into a 27-year LNG supply partnership.
In the UAE, ADIA is likely to continue investing across North America, Europe, Asia, and much of the developing world despite any suggested global economic decline, focusing on opportunities in green energy.
KSA is also exerting influence beyond the region in China as ARAMCO acquires a 10% stake in Shandong Yulong Petrochemical. US-KSA security and diplomatic ties have reached an impasse against the backdrop of the Israel-Palestine conflict. Increased investment in China signals ongoing engagement between the two states and perhaps a signal to the US that economic partnerships based on Saudi national interest are business as usual.
This may be the ideal time for China to increase its ties with the Middle East where the US has traditionally played the role of peace broker. With IMEC at a potential stalemate, China’s upcoming Belt and Road Forum-with 140 countries in attendance- could be the forum that showcases what an alternative hegemon scenario looks like and how economic and diplomatic relations between states could shape up.
It is also a time of increased partnership between Taiwan and the EU where the former is planning semi-conductor-based investments in Germany and expecting to acquire the entire European market as its customer. The EU is actively de-risking from China. Amidst the recent roll-out of the Carbon Border Adjustment Mechanism, the US is also applying consistent pressure on the EU to introduce a tariff against steel and aluminium from emissions-intensive producers- such as China. Evidently, friend-shoring and China’s sidelining seem to be the norm. It is no wonder that China and Russia, both sidelined by the West, are drawn to each other. Putin’s current visit to China showcases their economic and diplomatic support for each other. Enhanced cooperation between the two at a time when the US appears to be on a complicated roadmap to Middle Eastern alliances could create a new sphere of influence.