The New Players

The New Players

Lapo Pistelli
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The peninsula now aiming at economic diversification is a natural platform for the transit of Asian goods to Europe. For China, India and Russia, positioning themselves in these economic and financial routes in the post-oil era has become a strategic factor

Since the fall of the Berlin Wall, and especially since the major agreements on the liberalization of world trade in the early 1990s, the Gulf has experienced three decades of extraordinary economic growth and continuous expansion of its geopolitical role.

A quick glance at the map is enough to understand how the Arabian Peninsula is now the natural platform interconnecting the routes from the new Asian giants to the European market and across the Horn of Africa.  One can easily see the strategic nature of the control and position of each of the countries bordering the two shipping routes there, the Straits of Hormuz and the Bab el-Mandeb.

The Gulf exports energy and organizes the logistics of Asian goods in transit to Europe through free-trade zones with major tax incentives. It has attracted investments, developed sophisticated financial services and exerts a growing fascination as a tourist destination with its iconic architecture and a dense calendar of sporting, musical and cultural events. The Dubai Expo in 2020 and the World Cup in Qatar in 2022 serve as proof of a long-desired centrality.

 

 

The three eras in the Gulf

The transformation of the region has been impressive. All the natural history museums in the Gulf States are now celebrating this transformation based on the long-term vision of their ruling families: from old black-and-white photos of traditional pearl fishers’ boats to the current oil wealth, in anticipation of the post-oil future of economic diversification, widespread technology, smart cities and smart education, all already under construction.

The Gulf in “pre-oil” times was a region of British protectorates, a low-cost investment in the most powerful families to maintain order and protect the trading foundations of the British Empire. Since World War II, after the historic meeting of Franklin Roosevelt and Abdulaziz Ibn Saud, the Gulf had chosen an American “oil for protection” arrangement, but the last twenty years have been marked by the entry into the region of new stakeholders who had previously been excluded.

 

Beijing, a long-term cooperative partner

The first silent protagonist is China, and a true protagonist it is. Beijing leads energy imports from and goods exports to the region. In 2016, China was also the leading investor with a volume of resources exceeding the joint volume of U.S. and European investments. President Xi Jinping received King Salman in Beijing in 2017 and signed agreements worth USD 65 billion and visited the United Arab Emirates the following year. The Chinese call our Middle East “Western Asia,” and consider the Gulf as the penultimate stage of the Belt and Road Initiative. 90 percent of Chinese goods are shipped by sea, making the Gulf Straits an essential hub. This economic strategy is underpinned by political doctrine and recently also by a discreet military presence. In 2016, China adopted a new “Arab Policy Paper,” and the next year its first military base in the region was established in Djibouti. In the Gulf, Beijing offers itself as a long-term cooperative partner without ideological constraints, as a loyal friend, impervious to change, as patient, with no intention of disturbing the 40,000 U.S. troops still positioned in land bases and on the two aircraft carriers stationed in the region.

 

Delhi’s Growth Corridor

With less strength and strategic continuity, India has recently become a stakeholder in the region. Delhi is attempting to counterbalance the spider’s web of the Chinese Belt and Road Initiative with their “Asia-Africa Growth Corridor,” in partnership with Japan. This Indian initiative identifies the Omani ports as the gateway to the region and the energy corridor between Duqm and the Iranian port of Chabahar as an alternative route to the two narrow overcrowded Straits.

 

The loyal collaboration of Moscow

Russia - with its huge tactical and strategic capacity and low profile in navigation - has finally thrown its hat into the region. Moscow does not have the same degree of financial resources as China and knows that its military presence would be well beyond Washington’s redlines. At the same time, the slow strategic U.S. withdrawal after so many costly interventions, and above all the loyal collaboration Moscow has recently offered OPEC to counter the U.S. “tight oil” challenge and to stabilize oil prices via agreed cuts in production, have given Russia the opportunity to overcome the invisible historico-political “border” at Damascus. This line has been crossed in the opposite direction by many of the Emirs when visiting President Putin for the first time.

 

This must be the place

The Gulf is thus the new “must-be place” of the globalized world. While Kingdoms, Sultanates and Emirates cooperate and compete among themselves in the new geopolitical infrastructure and ports, in cultural diplomacy, in the search for new technologies, in the religious soft power of their own Koranic schools and in the media of its satellite broadcasters, the new global players are seeking a prominent position there by investing economic and political resources. With oil coming to an end, preparations for the future are already being made at these latitudes.

 


Lapo Pistelli

He has been Eni’s Executive Vice President of International Affairs since April 14th, 2017. Between 1996 and 2015, he was a member of the Italian and European Parliaments. In Brussels, he dealt with Economic and Monetary Affairs and Foreign Affairs. He was also Deputy Minister for Foreign Affairs and International Cooperation. He has taught at the University of Florence, the Overseas Studies Program at Stanford University and other foreign universities.