Ayanangsha Maitra, COGGS
As the sand is shifting, the Global South nations need more sunlight to emerge from darkness. The South nations need both a hand as well as a compassionate during their transition towards prosperity. Despite the strong bonhomie that the Gulf Cooperation Council (GCC) shares with the countries in Africa, Latin America, and South Asia, the council’s overall influence and camaraderie within the Global South remain very limited. Established in 1981, the GCC, the hexad club, is a union of Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman.
Over the decades, Arab-African ties have scaled newer heights. Dubai is now the New York of Africa. On the flip side, the Gulf region too is finding Africa more interesting due to its minerals, resources, huge human habitat, hardworking skilled workforce, and emerging economies. The diversity of the continent is highly appealing. But as an organization, the Gulf Cooperation Council still lacks a sharp vision to strategically enhance its influence in the Global South.
GCC in Africa
Worried about the increasing influence of China and Russia in Africa, the US has begun urging the United Arab Emirates, Qatar, and Saudi Arabia to take on a larger role in Africa. Last year, GCC companies unveiled 73 Foreign Direct Investment (FDI) projects in Africa, totaling over $53 billion. Among the GCC nations, Kuwait has historically played a remarkable role in shaping Arab-African relations, being the first Arab country to host the Arab-African Summit in 2013. Agility, a Kuwait-based global logistics firm, is actively working to encourage foreign direct investment (FDI) and facilitate access for multinational companies to the African economies.
The UAE stands out as a significant player, currently the fourth-largest investor in Africa after the European Union, China, and the United States. In 2021 alone, the Abu Dhabi Fund for Development allocated approximately $16.6 billion to over 66 projects across 28 African countries. Additionally, Dubai Ports World has established itself as a leader in port expansion and maritime collaboration, managing operations in more than 10 African nations. DP World is pumping $80 million to develop a 300,000-square-meter logistics park in Sokhna, Egypt, in partnership with the Suez Canal Economic Zone, while also securing a 30-year contract to upgrade and manage sections of Tanzania’s Dar es Salaam port.
Over the past decade, GCC countries have made significant strides in their investments in the continent, collectively surpassing capital of $100 billion. The United Arab Emirates leads the charge with an impressive $59.4 billion invested across various sectors. Saudi Arabia follows with $25.6 billion, focusing on infrastructure, energy, and technology projects. The other GCC nation, Qatar, has contributed $7.2 billion, primarily targeting strategic investments in areas such as real estate as well as hospitality.
Africa’s social challenges remain a concern for Saudi Arabia too. Saudi Arabia is actively engaging African countries with proposals for debt reduction and conflict resolution.
During its G20 chairmanship in 2020, Saudi Arabia emphasized the need for suspending debt service obligations for African nations. Several GCC investments are often criticized for prioritizing short-term returns over sustainable development. To maximize its influence in Africa, the GCC must contemplate a more strategic approach.
GCC in Latin America
In the Latin American region, the Council’s footprint remains minimal despite significant opportunities. In the early 2000s, ties between the GCC and Latin America were revitalized as both regions committed to enhancing their relationship through political exchanges and bilateral initiatives. The inaugural Summit of South American-Arab Countries (ASPA), hosted by Brazilian President Luiz Inácio Lula da Silva in 2005, played an immense role in strengthening ties, leading to the signing of an Economic Cooperation Framework Agreement between the GCC and MERCOSUR. Despite geographical distance, formal exchanges between the GCC and Latin America saw a remarkable surge in trade during the 2010s. Gulf states significantly increased imports from Latin America, with Brazil, Mexico, Chile, and Argentina being key contributors. In recent years, Gulf countries have exported goods like fertilizers, plastic polymers, aluminum, ammonia, and oil to Latin America. Latin America has exported iron ore and manufactured aluminum to the Gulf on the other hand.
Brazil is the main trade partner for the GCC in Latin America, but a substantial trade deficit exists there. Uruguay and Panama enjoy a favorable trade balance with the GCC. Saudi Arabia has a keen interest in mining and minerals within Latin America. The Saudi Public Investment Fund (PIF) is planning to invest approximately $15 billion in Brazil, focusing on sectors such as green hydrogen, infrastructure, and renewable energy. Additionally, the UAE’s state-owned defense technology firm, EDGE Group, has acquired a 50% stake in the Brazilian high-tech weapons systems company SIATT.
What Can the GCC Do in the Global South?
It’s high time for the GCC to act in the Global South for mutual prosperity. The Global South represents large markets for the GCC, and the Council should seek to enhance its influence in these fast-emerging economies.
The behemoths and venture capitalists belonging to the GCC are expected to flex their muscle in the continent. Substantial economic investments can be a game changer, which in turn makes the ties between the Gulf and Africa stronger. As GCC countries are diversifying their investment portfolios and actively seeking opportunities in sectors such as infrastructure, technology, and renewable energy, the Global South would be a perfect destination for investment.
Areas of infrastructure projects, transportation, and telecommunications are highly lucrative. The UAE has invested in numerous projects across Africa to enhance connectivity as well as increase local economies. Qatar has completed projects aimed at improving water security in drought-stricken Global South nations. The GCC may identify new geographies in the Global South for capacity building and high-impact community infrastructure development. At times of crisis, the GCC nations have extended help to nations in Africa on humanitarian aid grounds. Similarly, the Council can consider empowering more local leaders and enhancing institutional capacity in the Global South. To uphold its position at the global level, the GCC should no longer be just a bloc of elite nations but should position itself at a higher stage for its contribution through impact as well as impression, leaving lasting works. The GCC is missing its clout in the Global South and the potential in those economies. Promotion of public-private partnerships (PPPs) in developing nations would widen the Council’s avenues for economic growth.
References:
- Africa and the Gulf states: A new economic partnership | World Economic Forum (weforum.org)
- DP World allocates $80mln to develop logistics area in Sokhna (zawya.com)
- South-South Solidarity and the Summit of South American-Arab Countries – MERIP
- Saudi Arabia’s PIF plans to invest $15 billion in Brazil, says Brazilian minister | Reuters
