Callback Contact +1 514 288 1997
The Global Leader in
Residence and Citizenship by Investment

Middle East Countries Seek Untapped Potential, Greater Global Clout

Dr. Robert Mogielnicki

Dr. Robert Mogielnicki

Dr. Robert Mogielnicki is a Senior Resident Scholar at the Arab Gulf States Institute in Washington and an Adjunct Assistant Professor at Georgetown University. 

Middle Eastern governments are calculating that they can wield new economic and political clout through formal participation in BRICS while also maintaining traditional, established partnerships such as those with the USA and Europe. 

Expanding partnerships, markets, and commercial opportunities

The Middle Eastern countries of Egypt, Iran, and the United Arab Emirates (UAE) — as well as Ethiopia — joined BRICS at the outset of 2024, following invitations extended by the bloc in 2023. Saudi Arabia is reportedly considering its invitation to become a member, though eventual Saudi membership is anticipated. This expected expansion doubles the number of members in the multilateral grouping of countries, which, combined as a new BRICS group, account for a larger share of the global gross domestic product (GDP) than G7 countries when adjusting for purchasing power parity. In recent years, several Middle Eastern countries have forged deeper ties with other overlapping multilateral entities, such as the Shanghai Cooperation Organization.

Middle Eastern businessman in traditional outfit in front of a window typing on his cellphone

There are strong complementarities underpinning deepening ties between Middle Eastern states and BRICS. The energy domain is an obvious foundation for expanding partnerships. China serves as a key energy partner for oil- and gas-producing countries in the Middle East. Russia plays an influential role in the OPEC+ oil alliance — the charter of which Brazil intends to join in early 2024. In theory, a larger BRICS membership base should open new market entry and commercial opportunities for business actors in participating countries. Even without generating immediate economic gains, formal involvement in BRICS by Middle Eastern countries allows those governments to demonstrate progress on the diversification and strengthening of global partnerships.

The challenge of dollar alternatives in divergent economies

The new Middle Eastern member countries of BRICS, however, do not represent a homogenous group. These countries exhibit divergent economic conditions: Saudi Arabia and the UAE enjoy robust economies, while Egypt and Iran confront systematic economic challenges. There are also major differences in each country’s respective positions in the international order and how senior government actors therein pursue political and diplomatic interests on the world stage.

The bloc — largely led by China and Russia — has sought to establish an international financial system that is less dependent upon US dollars. The heterogeneity of both the founding BRICS members and the new Middle Eastern member states of BRICS will complicate collaboration on such initiatives. The outcomes from the 15th BRICS Summit that took place in Johannesburg, South Africa, during August 2023 suggest that dedollarization efforts will be a slow process. Indeed, Saudi Arabia and the UAE peg their currencies to the US dollar.

Broader economic and political influence

The USA and European countries, nevertheless, remain wary of Middle Eastern states’ deeper engagement with BRICS, especially given the prominent roles that China and Russia play in the bloc of countries. Yet, the primary motivation behind Middle East-focused engagement with BRICS is not to abandon longstanding American and European partnerships. Rather, Middle Eastern governments have made a strategic calculation that they can wield new economic and political clout through BRICS while maintaining their traditional, established partnerships. 

Part of this strategic calculation aims to support wealth migration, tourism attraction, and finance-related ambitions. Sustaining economic growth in the UAE, which aims to double its GDP to over USD 800 billion by 2030, and to a lesser but increasing degree in Saudi Arabia, depends heavily on attracting high-net-worth individuals. Many of the affluent individuals already in the UAE hail from China, India, and Russia. Meanwhile, the proliferation of exclusive, luxury-focused development initiatives under Saudi Arabia’s Vision 2030 indicates the expected significance of this demographic segment. The number of Chinese and Indian millionaires (USD 1 million+) alone stands at 862,400 in China and at 326,400 in India, according to New World Wealth, ensuring a deep and growing pool of wealth within BRICS.

Both established and nascent tourism hubs in the Middle East will seek to boost inflows of tourists from BRICS member countries. Egypt wants to attract 30 million tourists annually by 2028 — up from 11.7 million in 2022 — to support an industry that accounts for approximately 12% of GDP and millions of jobs. Russia and Ukraine serve as important sources of inbound tourists to Egypt, but the Egyptian government also views tourism flows from China as a major growth area. Saudi Arabia will eventually need to expand its tourism mix beyond the country’s solid base of religious and domestic tourism. The pace of tourism-related development initiatives in Saudi Arabia is staggering: the Neom project alone recently announced the new sub-developments of Epicon, Leyja, Siranna, and Utamo.

Potential political sway and favorable financing terms attract new BRICS members

Deeper finance-based forms of collaboration may also follow from the inclusion of new Middle Eastern members of BRICS. Saudi Arabia and the UAE are major sources of global investment finance, especially given large and active sovereign wealth funds, which strengthens the group’s financial and development credentials. In December 2023, Dubai’s ruler announced the establishment of a new sovereign wealth fund with assets under management ranging from USD 80–100 billion. Indeed, both the UAE and Egypt have been members of the BRICS New Development Bank since 2021. Egypt will likely leverage its formal member status in BRICS to secure favorable financing terms and attract greater levels of foreign direct investment.

Though harder to quantify, the prospect of political clout associated with BRICS membership is another primary dimension behind the strategic calculation of Middle Eastern countries to participate in the group. BRICS membership provides Iran, which confronts economic and diplomatic isolation from much of the global community, an avenue for greater international engagement. The Gulf countries of Saudi Arabia and the UAE, in particular, have sought to cultivate closer political and diplomatic ties across Africa, Asia, and Latin America. BRICS offers another institutional avenue for implementing such strategies of global engagement.

REQUEST A CALLBACK

We use cookies to give you the best possible experience. Click Accept all to proceed as specified, or click Allow selection to choose the types of cookies you will accept. For more information please visit our Cookies Policy.

Loading...