Business executives making 'contingency plans' for UAE-Saudi Arabia feud
Business executives are making contingency plans in case a growing feud between Saudi Arabia and the UAE escalates in the oil-rich Gulf region, amid signs that the two neighbours are embroiled in an economic war of attrition.
Bloomberg reported on Monday that some global investment banks are worried they will have to decide between Abu Dhabi and Riyadh.
Some businesses have begun making contingency plans for separate logistics. Others are reviewing contracts for clauses such as force majeure and examining local relationships that might cause the Gulf states to punish them, Bloomberg reported.
The UAE and Saudi Arabia are at loggerheads on several geopolitical hotspots, including Yemen, Sudan and Israel.
But they are also economic competitors. Saudi Arabia is trying to make its capital, Riyadh, the centre of regional business activity in direct competition with Dubai. The two neighbours have also clashed over energy, with the UAE massively boosting oil production since leaving the Saudi-led energy alliance Opec in May.
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Semafor reported last week that delays at the border crossing from the UAE into Saudi Arabia are lasting “several days”. The report said that delays have been worsening in recent months, with some truck drivers forced to sleep under their trailers for as long as a week while they wait for approval to cross.
The Financial Times also reported that payments from Saudi banks to UAE-based accounts belonging to companies and individuals in Dubai had been returned or held up since May, often without explanation.
Saudi Arabia, the UAE and Qatar have long been prized as cash cows for western businesses.
Bankers have gone to the Gulf seeking deals, investors have sought start-up money, and chip makers have pitched sales to states looking to develop their AI industries.
Western lawyers and consultants have for decades minted fortunes advising Gulf states, although in recent years, countries like Saudi Arabia have started to crack down on their spending with western advisors as they look to push their own population into the workforce and cut costs.
Still, Bloomberg reported that executives were taking no chances. One unnamed law firm was being more selective about the work it took on to avoid antagonising the UAE or Saudi Arabia.
Another unidentified international firm raising capital for an investment fund was told by its Saudi counterparts that it could invest only in entities focused on the kingdom and was required to avoid investing in funds active in the UAE.
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