The comeback kingdom: What a resurgent Saudi Arabia means for Europe

European leaders have made significant efforts to strengthen their position in the Gulf since 2021. This has continued despite political challenges, including those linked to the alleged involvement of a Qatari official in the corruption of European parliamentarians. But, to make the most of these efforts, Europeans need to fully appreciate the geopolitical shifts that have occurred in the Gulf over the past few months. One of these is Saudi Arabia’s ‘comeback’ as a leader in the Middle East and North Africa region, as well as its turn away from the volatility of the 2015-2018 years. Europeans need to respond to Riyadh’s apparent intention to become the first port of call in the region for leaders who want to discuss geopolitics and geo-economics. The trip to Brussels of Saudi foreign minister, Prince Faisal bin Farhan, is an opportunity for European leaders to understand the scope for more active cooperation on regional projects.

For a decade, Saudi Arabia has actively and bitterly contested regional leadership with Turkey and Iran, as well as the much smaller Qatar and the United Arab Emirates (UAE). But Riyadh is now turning the tables in its favour. Turkey’s leadership is battling a domestic financial crisis and the impact of a devastating earthquake. It is also preparing for a heated general election later this year and continues to be geopolitically consumed by its hedging game on the war in Ukraine. Meanwhile, tensions between Turkey and Saudi Arabia have subsided. Iran’s leaders are focused on internal turmoil following months of protests: the prospect of restoring the nuclear deal is at an all-time low, and the regime lacks the financial resources to invest in its regional proxies. Finally, since the 2017-2021 Gulf crisis, Qatar has cut support for its Islamist partners and downsized its ambitions for leadership in the region. Its leaders would rather work as closely as possible with Saudi Arabia, which reciprocates the interest.

In fact, notwithstanding differences in geopolitical weight, the United Arab Emirates (UAE) is now the only actor in the region that has the strategic capability to compete with Saudi Arabia. It is perhaps for this reason that the longstanding relationship between the countries’ leaders, Saudi crown prince Mohammad bin Salman and Emirati president Mohammad bin Zayed, is experiencing some turbulence. It appears that the two leaders now engage only in minimal contact and coordination – which is a significant departure from the reality of the past few years. But these divergences need not turn into active tensions. Indeed, the ability to prevent differences with Abu Dhabi, Cairo, or any other capital in the region from spilling over into open hostility will likely be a factor in determining whether Saudi Arabia has the strategic maturity to lead.

In the meantime, Russia’s war in Ukraine has rekindled international interest in Saudi Arabia. The strategic value of the kingdom’s resources amid a global energy crisis means Riyadh can begin to turn the page on the reckless policies that started with the launch of the war in Yemen in 2015. It can also show that things have really changed since the brutal killing of Jamal Khashoggi in 2018 and demonstrate a new vision for the region based on diplomacy and economic statecraft. As part of this, Saudi Arabia is playing the multipolar game: refusing to align with the West on Russia, while hosting both US president Joe Biden and Chinese leader Xi Jinping in 2022. But chatter in Riyadh indicates that Saudi leaders are aiming for leadership in economics, energy, and investment too.

Saudi Arabia’s liberalisation has been accompanied by a significant increase in the repression of political and civil rights

The country’s 2016 strategy for economic growth beyond oil, Vision 2030, led to sweeping changes in Saudi society. The country has since become much more economically and socially liberal, now identifying as the economic hub of the Middle East and North Africa region. EU officials should acknowledge this role formally during the upcoming EU-Gulf Cooperation Council (GCC) Trade and Investment Dialogue and in their efforts to relaunch trade talks with the GCC. However, the liberalisation has been accompanied by a significant increase in the repression of political and civil rights. So, although it is very much in Europeans’ interest for Vision 2030 to succeed, they need to communicate clearly that repression will remain a political obstacle to their engagement. Beyond divergence in values, it creates an uneasiness around the rule of law that gnaws at the confidence of both locals and foreigners who wish to capitalise on the newly liberal surroundings. It will be crucial for Riyadh to nurture a more predictable environment to unlock opportunities for both trade and investments.

The Saudi Public Investment Fund’s decision in 2022 to establish six funds channelling $24 billion towards Egypt, Oman, Iraq, Jordan, Sudan and Bahrain is one of the clearest indications of Riyadh’s strategy to expand its soft power in these countries and beyond. Saudi leaders are bent on fighting corruption and getting a return on their investments, by tying money to IMF-sanctioned reforms. This means Saudi and European approaches to regional investments are now more aligned. That said, Europeans should remain vigilant on how far Riyadh will push its own narrow political self-interest as part of aid conditionalities. Where Riyadh feels that its agenda cannot prevail – such as in Lebanon and Syria – it is essentially refocusing on objectives such as the prevention of Captagon (a type of amphetamine) smuggling. Europeans have a common interest and relevant experience in tackling the trade in illegal drugs, which could be conducive to cooperation.

On energy, conversations in Riyadh suggest that Saudi leaders have every intention of continuing to coordinate the policies of hydrocarbons-producing countries in the Organization of the Petroleum Exporting Countries’ ‘OPEC+’ format. This format includes Russia and promotes policies to resist the phase-out of fossil fuels. But Saudi leaders are also keen to boost their green energy credentials through the Middle East Green Initiative. During his upcoming trip to Riyadh, the European Union’s Green Deal commissioner, Frans Timmermans, should challenge the kingdom’s leaders to move these plans on to the next stage, with the EU’s support. Timmermans should explore opportunities to work on concrete initiatives ahead of the UN Middle East and North Africa Climate Week meeting in Saudi Arabia later this year and December’s COP28 summit in the UAE.

The biggest threat to Saudi ambitions remains a potential escalation with Iran. Chatter in Riyadh indicates that Saudi leaders are dead set on a course of coercive diplomacy with Tehran: a dual strategy of containment through the maximum pressure of new sanctions and engagement through de-escalatory talks. Iran could respond to renewed maximum pressure with attacks similar to those of 2019. And it is not clear whether established means of back-channel communication between the two countries or Saudi Arabia’s newly boosted defence capabilities could fend these off. Nevertheless, Riyadh still sees reaching a comprehensive deal with Iran as its endgame. The containment and de-escalation approach represents a significant shift in the kingdom’s regional strategy, and is based on Saudi leaders’ belief that they can no longer count on the US to have their back. European leaders should continue engaging diplomatically to ensure pragmatism prevails over the temptation to engage in tit-for-tat escalation.  

Working with Saudi Arabia will continue to be difficult for Europeans. They should not shy away from engaging on divergences in human rights – including through the formal EU-Saudi human rights dialogue – in such a way that highlights how progress on this front is in Saudi Arabia’s interest. But European leaders also need to respond effectively to the kingdom’s burgeoning geopolitical and geo-economic leadership in the Gulf and the Middle East and North Africa. These regions remain fundamental to Europe’s pursuit of its economic, energy, and climate goals.