The new Switzerland: diplomacy is key to UAE’s trade success

Emirates NBD

• UAE has kept up cordial relations with both East and West
• Decade of ‘deglobalisation’ forecast by Emirates NBD investment report
• Powers that ‘speak to both’ set to benefit, says bank’s Maurice Gravier

The UAE is “the new Switzerland” and poised to reap the benefits of its good relationships with both East and West, the investment boss of one of the Gulf’s leading banks has said.

Maurice Gravier, chief investment officer at Emirates NBD Group, said he believed the world needed neutral powers, “a place to speak between the blocs”.

He added: “For me, the UAE is the new Switzerland – there is no question. We see hedge funds coming to Dubai. That’s what happened in Switzerland as well.”

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Gravier was speaking at the launch of the bank’s Global Investment Outlook 2023, which is predicting that the next decade will be dominated by “deglobalisation”, decarbonisation and ageing demographics.

The UAE is set to be one of the “probable winners of the shrinking of globalisation,” he said.

“When we talk about the shrinking, it’s the fact that we see more and more trade restrictions, especially between the US bloc and China bloc.

“The China bloc of course includes Russia, and in the recent escalation we see between the US and China a lot about trade. The [US government’s] chip axe is really tough. It’s an economic war.”

Last October, the Biden administration blocked the export of semiconductor chips and chip technology to China, in a bid to slow Beijing’s AI and military advances.

Gravier said the new raft of global trade restrictions “affect everyone”, but the UAE was in a good position. He pointed to the trilateral initiative between India, the UAE and France, unveiled last week, as the latest evidence of the Emirates’ rise as a diplomatic and economic force.

“For emerging regions it’s more difficult,” he said. “You have to choose your allies and you cannot market everything to everyone. In the middle, you don’t have many countries that have good relations with both. And frankly, for the Gulf – and for the UAE in particular – it looks like a winning situation because [they] speak to everyone.”

This neutral status would help the country attract more foreign investment, according to Gravier.

Over the past few years, the UAE has become a magnet for overseas hedge funds seeking a low-cost, investor-friendly base away from Brexit, the Ukraine crisis and the impacts of the coronavirus pandemic.

The UAE ranked first in the Gulf for foreign direct investment inflows in 2021, although the amount the Emirates invested overseas overtook this figure during the same period.

Gravier, who worked in the Swiss financial services sector for eight years, pointed to the trilateral initiative’s focus on energy.

“We all know India is buying crude oil from Russia … because they didn’t put sanctions on Russia. If they refine it and then sell refined products to Europe they can because there’s no problem between Europe and India,” he said. 

“The fact that the UAE is in this triple alliance shows that it is a diplomatic superpower, which is quite new.”

A sanction on oil products is expected to be the West’s next measure against Russia, which has historically been a major exporter of petroleum products. India is a net importer of crude oil but a net exporter of refined products.

The bank’s report said the battle between national and global agendas was not new, but was escalating.

“Globalisation is not over, but in a volatile transition, until some form of equilibrium is found again,” it said. “In the meantime, countries wise enough to maintain harmonious relations with the major blocs should get outsized benefits.”

Gravier added: “The UAE is one of the very rare countries in this situation.”