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The Politics of Trade and Investment in the New Gulf

Panel VIII-29, 2023 Annual Meeting

On Saturday, November 4 at 11:00 am

Panel Description
  • In recent years, GCC countries have become prominent in hosting high-level sports events. These events include but are not limited to motorsports such as Formula 1 Grand Prix and elite level tournaments in sports such as cricket, tennis, golf, and combat sports such as, Brazilian jiu-jitsu, Mixed martial arts (MMA), and boxing. Considered a sports mega event, the recent FIFA 2022 World Cup in Qatar was the largest sports event hosted in the region. This paper considers the political and economic aspects of GCC countries, with a specific focus on Qatar, increasingly hosting major sports events. Within the scholarly literature, growing attention has focused on hosting major sports events as a form of “soft power” or “sports diplomacy,” aimed at promoting a positive image of host countries internationally (Stanton, 2020; Abdi et al., 2019; Dubinsky, 2019; Murray, 2018; Trunkos & Heere, 2017). Long-term economic considerations such as sports tourism (Gratton, Shibli, & Coleman, 2007; Kurtzman & Zauhar, 2003) and infrastructure legacy (Preuss, 2018; Grix 2018; Baumann & Matheson, 2013) are also important for countries in the region that are trying to diversify their economies away from fossil fuels and comply with reducing greenhouse gas emissions as set out in the United Nations Framework Convention on Climate Change. This paper argues that a variety of political (e.g. soft power/sports diplomacy) and economic (e.g. sports tourism and economic diversification) factors influence the decisions to host (i.e. plan and implement) major sports events in the region. Using the 2022 FIFA World Cup in Qatar as a case study, this paper seeks to answer two main questions. First, what are the goals of Qatar in hosting major sports events such as the World Cup? Second, can tangible benefits in terms of tourism, trade, inward direct investment, and improved relations with other states be observed in practice as derived from hosting major sports events such as the World Cup, especially given the controversies surrounding the event? The paper utilizes a case study research design along with data collection methods of semi-structured interviews with key informants, and analysis of secondary and primary sources to answer the research questions. This research adds to a growing body of scholarly literature on GCC countries hosting major sports events in the region and sheds further light on the multifaceted political and economic factors influencing these processes and outcomes.
  • Chinese President Xi Jinping visited Riyadh in December 2022 to participate in a China-Arab States Summit, a China-Gulf Cooperation Council Summit, and a state visit to Saudi Arabia. The multifaceted, high-profile trip refocused global attention on Chinese interests in the broader Middle East. Xi wrote that the visit would “usher in a new era in China’s relations with the Arab world, with Arab states of the Gulf and with Saudi Arabia.” Indeed, the Saudi Arabian government appears increasingly eager to position the country as China’s preferred economic partner in the broader Middle East region. This paper addresses the following primary research question: What are the key dimensions of Chinese-Saudi economic relations, and how have the parameters of economic engagement changed over the decade between 2012-2022? This partnership possesses an established energy-based foundation, but trade and investment figures also reveal growing economic ties in the non-oil economy – albeit of an uneven nature. A clearer, up-to-date understanding of the economic partnership between China and Saudi Arabia will elucidate the secondary research question: What is the hierarchy of China’s economic partnerships in the Middle East? The paper argues that Saudi Arabia is poised to emerge as China’s primary economic partner in the Middle East, given the strong foundation of multifaceted economic ties and Saudi Arabia’s ambitious economic development plans. The international political economy focus of this work entails an approach that is inherently interdisciplinary, combining insights from economics and international relations. The paper draws heavily on quantitative sources – primarily trade- and investment-related data from economic platforms, international institutions, government agencies, and statistics centers. The author intends to utilize additional sources and findings from a related research initiative at their institute and a graduate-level seminar course that they teach on China-Middle East Relations. This paper adds a new scholarly dimension to two related fields: i) China-Middle East relations and ii) international political economy of Gulf Arab states. Future researchers can use this paper presentation and the associated publication to better understand Chinese-Saudi ties and the associated implications for the broader Middle East.
  • The global landscape of foreign aid flows has shifted from the dominance of G-7 donors to a mixed bag featuring new players, such as donors in the Gulf donors and the global South. The rich literature on the determinants of foreign aid, based mostly on cross-border flows originating in Western countries, finds that donors prioritize soft power, geostrategy, and humanitarian needs. However, far less is known about the motivations of Gulf donors. Does the selection of countries, sectors, and implementation mechanisms reflect their foreign policy priorities, international economic strategies, or values related to religious affinity? To answer this question, we combine data on foreign aid flows from Saudi Arabia and Kuwait with key recipient country indicators, including per capita income, government expenditures, foreign policy alignment with donors, religious affiliations of populations, and elites’ favorable of donors. We find that, unlike their Western counterparts, Gulf donors are 60 times more likely to fund Muslim-majority countries and 17 times more to fund countries where elites hold a favorable view toward them. Gulf donors are punching below their financial weight by not articulating their own values, not releasing any foreign aid strategies, and not having distinct delivery modalities or sectors with competitive advantages.
  • The members of the Gulf Cooperation Council play a key role in the intensifying competition between great powers, especially the United States and China. Their role in geopolitical conflicts, regional security, and the global energy market, as well as their economic and political outreach, make them key actors in maintaining the current global system or, from a Chinese perspective, in reshaping it. Nevertheless, the six states (especially the United Arab Emirates, Qatar, and Saudi Arabia) do not only try to capitalize on the growing competition between great powers, but (as the Qatargate scandal or their behaviour concerning the crisis in Ukraine shows) actively try to build influence in them to shape their foreign policy agenda, decision-making, and strategy. While the ways in which Gulf states attempt to influence stakeholders in Washington have been investigated deeply, scholars fail behind in understanding how they try to affect China’s decision-making processes. Although the different political culture in Beijing makes such an endeavour difficult, it would be crucial to understand how they try to build influence in China directly and indirectly. The paper aims to compare how the Gulf states build relations and influence in the United States and China and how they want to shape the great powers’ foreign policy. The main argument of the research is two-fold. First, instead of analysing Gulf states’ foreign policy in terms of alignment, hedging, or neutrality, they should be perceived as actors which are capable of capitalizing on the current developments taking place on both the global and domestic American and Chinese levels. Second, historically, the six monarchies learnt from building relations vis-á-vis Great Britain and the United States, and they will use this lesson when dealing with China and Chinese hegemony-building. The conceptual framework of the paper will be built on the literature on alignment, status-seeking, and virtual enlargement in the realm of small state studies (and the evolving research program concerning middlepowerhood). The methodology will follow a mixture of formal modelling (provided by the updated version of small state influence-building theories) and a comparative case study structure focusing on the Gulf states. The paper will be concluded with recommendations on how Western powers should re-evaluate their relations with the Gulf states, to limit their influence, and disincentivise them from participating in Chinese hegemony-building attempts.