Businesses report blocked payments from Saudi Arabia to the UAE, raising fears of worsening ties
Saudi Arabia has reportedly delayed or blocked money transfers to accounts in the United Arab Emirates.
The reports have raised fears that a widening political rift between the Gulf neighbours is now hitting trade.
Several sources told the Financial Times 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.
One Western executive at a Dubai-based healthcare company told the FT that Saudi banks had blocked and returned several payments from a long-standing Saudi client since mid-May.
Saudi Arabia’s central bank denied imposing any “direct restrictions on specific countries” in comments to the FT.
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The dispute cuts into one of the Gulf’s most important commercial relationships.
Despite traditionally being seen as allies, the countries have a number of points of contention, including Israel, which is Abu Dhabi's closest ally in the region but remains unrecognised in Riyadh.
Saudi officials also object to the UAE's backing of separatist movements in Somalia and Yemen.
'Raising the stakes'
Saudi Arabia, with a GDP of about $1.2 trillion, and the UAE, with an economy worth about $550bn, are the Arab world’s two largest economies. Bilateral trade exceeds $20bn a year.
For years, companies have used Dubai as a base to serve the Saudi market. But Riyadh has increasingly pushed firms to move operations into the kingdom as it tries to keep more business, jobs and investment at home.
“There has always been economic competition between the two sides and this is not the first time that such measures have reportedly been deployed to raise the stakes, and the relationship survived previous bouts of tension in the late 2000s and in 2021 as well,” Kristian Coates Ulrichsen, a fellow for the Middle East at the Baker Institute, told Middle East Eye.
Tensions reached a crisis point after Riyadh accused Abu Dhabi of backing a secessionist Yemeni faction that launched an offensive against Saudi-aligned forces in December.
The UAE was forced to withdraw its military personnel from Yemen amid the tensions and after Saudi attacks on its Yemeni allies.
Saudi Arabia said the UAE, its main partner in the Saudi-led coalition that entered Yemen’s war in 2015 to fight the Houthis, had threatened its national security by supporting the offensive.
That war failed to defeat the Houthis and killed hundreds of thousands of Yemenis.
The row caused the worst rupture between the two Gulf states in decades and exposed older rivalries over trade, oil policy and regional influence.
The US and Israel’s war on Iran briefly pushed those divisions into the background, as Gulf states tried to show unity after Iran targeted the region in retaliation.
“It's likely that the tensions never really went away but the immediacy and urgency of the Iranian attacks on the Gulf meant that they faded into the background during the war,” said Ulrichsen.
Earlier this year, the UAE shocked its neighbours by announcing it would leave Opec, the oil group led in practice by Saudi Arabia.
Abu Dhabi said the decision reflected its “economic vision and evolving energy profile”, but the move was widely seen as a blow to Riyadh.
Saudi officials have previously insisted that political tensions with the UAE would not damage trade or economic ties.
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