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  • Andreas Krieg

The limits of the UAE’s neo-mercantilism

Since August, the United Arab Emirates (UAE) has been on a comprehensive regional tour that has involved Abu Dhabi reconciling with Qatar, strategically re-engaging Turkey, shaking hands with the Bashar Assad regime in Syria and officially reaching out to Iran. The diplomatic soft power stunts are underwritten by a neo-mercantilist grand strategy that has been the backbone of Emirati successes since before the eruption of Arab Spring protests in 2010-11.


Nearly a year after Gulf Cooperation Council (GCC) member states reconciled in Saudi Arabia’s Al Ula, leading to the lifting of the blockade on Qatar imposed by the ‘Arab Quartet’ (Bahrain, Egypt, Saudi Arabia and the UAEA) in 2017, the blockade’s masterminds in Abu Dhabi have turned their foreign and security policy around from zero-sum confrontation to pragmatic engagement. With Qatar emerging from the blockade crisis more resilient than before and extensive soft power ties in the United States and Europe, the UAE initially appeared isolated from what appeared to be a Saudi-led initiative to end the rift within the GCC.


The nature of Emirati neo-mercantilism

For almost a decade, the UAE has been engaged in a zero-sum game to roll back the revolutions stemming from Arab Spring-related protests, experimenting with direct and indirect military power. These adventures have left Abu Dhabi overstretched, damaged its international reputation, and antagonized not just regional players but also western partners. And when the Joe Biden administration entered the White House in January, it was unlikely that it would provide the UAE with as many blank cheques as its predecessor—increasing the pressure on Abu Dhabi to rebrand.


Meanwhile, Qatar—having learned its lessons from the Arab Spring, acting more consciously of its size—has since 2014 effectively disengaged from the post-Arab revolution arena, reverting to a policy of mediation and constructive multilateral engagement. Doha’s soft power coup in Afghanistan this summer reinforced the realization in Abu Dhabi that the power of networks often depends on generating win-win opportunities instead of rallying around artificially ripened bogeymen.


In particular, Emirati National Security Advisor Sheikh Tahnoon bin Zayed Al Nahyan (TbZ)—more of a pragmatist than his more ideological brother, Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan (MbZ)—has been promoting his core assets of statecraft: his globally-networked industrial complex. Having been at the forefront of the UAE’s neo-mercantilist grand strategy for years, MbZ’s ‘under-the-radar guy’ offers the means and ways to expand Emirati influence from the Gulf over North Africa and the Horn into the Mediterranean. At the heart of this neo-mercantilist grand strategy lies the notion that through becoming a key node in global supply chains and regional infrastructure projects on and offshore, the UAE can multiply its strategic reach and influence.


Emirati neo-mercantilism is not limited to its ‘straits diplomacy’ built around access and control of strategic waterways. It more comprehensively looks at commercially induced networks to create interdependency between allies, competitors and even opponents—with Abu Dhabi as the key node. As such, Emirati neo-mercantilism is built around opportunity rather than ideology or notions of friend and foe.


The limits of Emirati neo-mercantilism

In all its recent regional rapprochements, the UAE started the conversation with cooperation on investment projects—even in wealthy Qatar. And while it might be too early for bilateral discussions on investment between Doha and Abu Dhabi, Emirati delegations have recently inked a range of agreements on investment in Syria, Turkey and Iran. In Syria, an Emirati company signed a deal to build a solar power plant near Damascus, helping the regime to upgrade its energy grid. A similar deal was just announced in Iran to augment power capacity there. In Turkey, the UAE has promised to set up a 10B USD fund to strategically invest in port and logistical infrastructure, propping up the Turkish economy while potentially gaining access to a regional competitor’s critical infrastructure.


But in Syria and Iran, the UAE’s neo-mercantilist approach might already be running into obstacles. The existing sanctions regime imposed by the United States together with western partners on the Assad regime and the Islamic Republic make it very difficult to build meaningful commercial networks in both countries. While Abu Dhabi has a long history of pushing the boundaries of western sanctions on regional states to advance its own interests, its normalization with the Assad regime is notably taking place amid a firm commitment by Washington to uphold its sanctions on Syria. When it comes to Iran, the UAE has already long served as a key node in a complex regional network that facilitates Iranian oil exports in contravention with US sanctions.


Importantly, it appears as if the UAE’s neo-mercantilist networks are only used to foster de-escalation with competitors where levels of escalation have become too costly to sustain. When looking at Emirati operations below the threshold of war, from those of its armed surrogates in Libya or Yemen to military aid sent to Ethiopia, Abu Dhabi still relies on indirect hard power rather than the power of mercantile networks. As such, the cost of war by delegation can be kept fairly low and conflict sustained with plausible deniability, while the UAE shapes relations with key competitors through commercial interdependency.


This begs the question of how sustainable the UAE’s re-prioritization of neo-mercantilism really is. As it appears to be built around opportunity, Abu Dhabi retains a high degree of flexibility, which entails degrees of unpredictability. Moreover, as ideational fault lines between the UAE and its competitors remain widely unaddressed by these mercantilist engagements, the propensity for re-escalation is high. The latter is particularly the case when and if the regional context changes—for instance, as a result of a different US leadership in 2025. This may lead the UAE to seize new opportunities to retain its leverage and influence.


In a complex, multipolar region where reliable security frameworks are absent, the Emirati neo-mercantilist approach has important limitations. While it creates a foundation for regional ententes, more than opportunism is necessary for outreach efforts to become sustainable. Most of all, the regional networks that the UAE seeks to build will only lead to mutually beneficial win-win situations when they are truly non-hierarchical, with no single node dominating.


Bottom line:

  • Since August, the United Arab Emirates (UAE) has been on a comprehensive regional tour that has involved Abu Dhabi reconciling with Qatar, strategically re-engaging Turkey, shaking hands with the Bashar Assad regime in Syria and officially reaching out to Iran.

  • The Emirati outreach is underwritten by a neo-mercantilist grand strategy that has been the backbone of the UAE’s successes since before the eruption of Arab Spring protests in 2010-11.

  • With Qatar emerging from the blockade it faced more resilient than before and extensive soft power ties in the United States and Europe, the UAE initially appeared isolated from what appeared to be a Saudi-led initiative to end the rift within the Gulf Cooperation Council.

  • For almost a decade, the UAE has been engaged in a zero-sum game to roll back the Arab revolutions, experimenting with direct and indirect military power. These adventures have left Abu Dhabi overstretched, damaged its international reputation, and antagonized not just regional players but also western partners.

  • At the heart of the Emirati neo-mercantilist grand strategy lies the notion that through becoming a key node in global supply chains and regional infrastructure projects on and offshore, the UAE can multiply its strategic reach and influence.

  • In a complex, multipolar region where reliable security frameworks are absent, the Emirati neo-mercantilist approach has important limitations. While it creates a foundation for regional ententes, more than opportunism is necessary for outreach efforts to become sustainable.



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