The hyper-disruptive force of the Middle East and the growth of the Global South
In case you missed it, the G20 League of Nations met in New Delhi recently and there were several takeaways from the summit we should all keep at the forefront of our minds as a developing nation.
First, the 55-member African Union was formally made a permanent member of the G20, on par with the European Union, to make the grouping more representative. It is such a colossal move as, up until now, only South Africa was a member of the G20.
The entry of the African Union will also provides a more robust voice to the Global South within the G20, where it was always the G7 countries that have, for so long, leveraged their dominance. This move has come after the BRICs (Brazil, Russia, India, China, and South Africa), the League of Nations (dominated by China and Russia) expanded to include Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates — also a step in the right direction for developing nations with emerging economies.
Moreover, at the summit, nations agreed that sovereign states should not and cannot forcibly seize other territories. Host country India, in tandem with Brazil, Indonesia, and South Africa, played a crucial role in ensuring that the summit did not splinter around condemnations of Russia, which, to some analysts, is another clear demonstration of the growing power of the Global South to direct diplomacy and trade negotiations forward.
Noticeably missing from the summit was China’s Leader Xi Jinping. However, his absence never prevented unveiling some of the current dynamic geopolitical trade shifts. Indeed, it was a clear awakening to us that the West has decided to abide by the adage, “If you can’t beat them” join them.
Enter India, Saudi Arabia, and the United Arab Emirates (UAE): At the summit, US President Joe Biden, along with leaders Narendra Modi, Crown Prince Mohammed bin Salman, and Sheikh Mohamed bin Zayed, announced the launch of a new trade route connecting India to the Middle East and Europe through railways and ports in what seems an unmistakable response to China’s US$3-trillion Belt and Road Initiative for trade and commerce.
According to President Biden, the plan also includes the European Union, France, Italy, and Germany, and will comprise two separate routes — “an east corridor linking India to the Gulf Arab states and a northern corridor connecting the Gulf states to Europe”. Goods and services would transit through the UAE, Saudi Arabia, Jordan, Israel, and Europe. The route will also enable electricity, digital connectivity, and pipes for clean hydrogen export.
From all predictions, including those from the International Monetary Fund, India will grow by over 6 per cent in the next few years and is on track to be the world’s third-largest economy. So, the US partnership with India is not surprising. But this announcement is a departure from President Biden’s previous specific declarations on the Kingdom of Saudi Arabia (KSA), and our memory of his awkward fist bump with Saudi Arabia’s prime minister, Crown Prince Mohammed bin Salman, when he visited the Gulf.
Clearly something has changed, and the KSA and the UAE are now strategically seen as titanic economic and politically independent forces amid some of the world’s most powerful countries. They know you cannot disregard the Middle East any more. It would be best if you came to their table.
Furthermore, despite pressure to choose sides, Gulf states have insisted and maintained a balanced position involving political and economic cooperation across the board, which analysts say makes Gulf states strategically, diplomatically, and economically vital.
Their self-reliant foreign policy also upholds an unbroken friendship with China against others trying to create distance and tensions. As a result, “Gulf countries are using this multipolarity and this new world order to try to put themselves at the heart of global trade, trying to invest even more in connectivity and globalization.” (Cinzia Bianco, The European Council)
The Middle East’s stealthy strategy has definitely softened the United States’ influence in the eyes of the world, and President Biden accepted at the summit that: “The world stands at an inflection point in history,” as he graciously thanked the UAE leader for bringing them all to this point. The White House said the project would usher in a “new era of connectivity”.
However, these geopolitical agreements are no surprise to me, especially since I was not only following the economic pursuits of Dubai and the UAE, but I also went to the KSA last February after the royal family announced its bold Vision 2030 to use KSA’s strategic location as an integral driver of international trade through Africa, Asia, and Europe is on target.
The Saudi Government spent US$950 billion on mega projects; will complete its first phase of reconstruction — some 1700 acres of land — to boast a diverse selection of new leisure, entertainment, housing, education, and religious facilities with 38 unique hotels, 100 new restaurants (including Michelin Star restaurants), nine museums, over 100 retail shops, two grand mosques, two state-of-the-art universities, over 20,000 new residences, 14,000 underground parking spaces, and the rejuvenation of the landscape with 1 million plants, scrubs, and palm trees with tourism’s annual GDP contribution to the Saudi economy of US$30 billion in 2023, and tripling their tourism sector employment to 1.6 million jobs by 2030.
A critical component of this ambitious goal is the creation of 2,000 entertainment, cultural, and sporting events to attract millions of non-religious tourists annually, with the renewal of the birthplace of the Arabian peninsula — Diriyah and At’Taurif.
Already, Saudi Arabia has forcefully disrupted the global golf, soccer, and Formula One space, unnerving what used to be traditional notions of where these sports should take place. In June, the PGA tour agreed to merge with KSA’s LIV Golf, which reportedly committed over US$2 billion to grow the sport. In soccer, Saudi Arabia’s club Al Nassr signed a contract with Cristiano Ronaldo worth over US$220 million. Plus, they have already built their own Formula One track in Riyadh.
They also plan to transform their public investment fund — with assets that are expected to reach US$1.86 trillion by 2030 — into one of the largest sovereign wealth funds in the world and consolidate its position in shaping the global economy.
As the economic epicentre continues to shift away from the United States, Jamaica needs to plan for where global opportunities will be in the next five to 10 years. Since our leading foreign exchange earner is remittances, and we have extensive knowledge in tourism, perhaps we need to consider how we export labour to the Middle East in addition to the US and Canada.
The 78th UN General Assembly will occur in New York from September 18 to 26, 2023. I understand that our ministers of industry and commerce and foreign affairs and foreign trade will be in attendance. Let us hope they will use the opportunity to prioritise Jamaica for India, Brazil, the Middle East, and Nigeria.