Unravelling the Gulf’s energy conundrum

Expo 2020 via Balkis Press/Abaca Press

The Gulf ended 2022 centre stage, thanks to what was arguably the greatest World Cup final ever played. As Lionel Messi lifted the trophy, Qatar was able to bask in the acclaim that its hosting received from many quarters – and, to some extent, brush aside a build-up dogged by questions about human rights.

But the World Cup was almost a distraction from all the other ways in which the region took a step up on the global stage – gaining wealth, political clout and credibility.

Some of that credibility came from the success of Expo 2020 Dubai. This giant undertaking snatched an improbable victory from the jaws of defeat at the hands of Covid.

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With more than 32,000 events and over 20 million visits, Expo was a showcase of what the UAE can deliver. It was safe, slick and fiscally responsible; but it was also open, progressive and cosmopolitan – all values that the UAE espouses and, in a Middle Eastern context, largely lives up to.

As is often the case, where the UAE leads, others in the region follow. Its atmosphere of relative tolerance is seeping beyond the Emirates’ borders into more conservative nations such as Bahrain and Saudi Arabia. The notion that openness is not only good for business, but also nothing to be afraid of, is proving infectious – for at least some of the region. 

As Iran faces global outrage for its treatment of women, and both male and female protesters, there is no mistaking which path looks clearer and more stable.

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Adjacent to this, the Abraham Accords may be offering only a glimpse of what a region with more dialogue and cooperation could look like, but in fields such as tech and defence there has been tangible progress in collaborative projects.

Likewise, direct flights between Tel Aviv and Doha during the World Cup – unthinkable not so long ago – offered a taste of what normalised relations might bring.

Any optimism that this might lead to a long-term open business environment with Israel must inevitably be tempered by politics, particularly with the return of Benjamin Netanyahu at the head of an uncompromising-looking right-wing coalition in the Knesset; the Palestinian question remains unanswered and passionately divisive.

However, there are clear successes from the accords and benefits that are hard to ignore. Their contribution to altering the conversation at least should not be dismissed.

In an increasingly unpredictable global environment, it is the war in Ukraine that has really supercharged the Middle East’s influence.

As the United States stepped back from the Gulf, this conflict was perhaps the first test of a ‘post-American’ world and countries such as the UAE, Saudi Arabia and Turkey have all played key diplomatic roles at important moments.

Even more significantly, the oil-producing states have seen their wealth skyrocket as Europe scrambled for alternatives to Russian supplies and global energy prices soared.

There is no serious suggestion that the Gulf states wanted to profit from the tragedy in Ukraine, but no disputing that they have. After the lean Covid years, 2022 was the complete opposite for oil.

What the overflowing coffers of the Gulf’s sovereign wealth funds present is at once an albatross, an irony and an enormous opportunity. Anyone who lives in the region cannot fail to notice the biggest threat to its future the moment they walk outside.

The glowering furnace that is the summer sun is a constant reminder that climate change is an existential issue for places such the UAE. Food and water security – and frankly the sheer discomfort of life – when the temperature is more than 50C – all underline the urgent need to diversify from fossil fuels.

It is not as though the Gulf countries do not know this and their investments in diversification attest to it; but Ukraine has provided a reminder of the world’s addiction to fossil fuels. No matter how much it might want to break away from supplying it, the irony for the Gulf is that it finds itself with more demand than ever.

When Cop28 comes to Expo City in Dubai this year, the UAE will know that its own people, as well as the rest of the world, will be looking to it for leadership in the fight against climate change. This is an opportunity in and of itself, but it is one that is underpinned by the region’s unique position to invest in solutions.

The UAE in particular has shown an extraordinary ability to come up with groundbreaking answers to climate-related problems.

With its wealth boosted by demand for hydrocarbons, it has never been in a better position to put its money where its mouth is and live up to its pledge to reach net zero emissions by 2050.

Eleni Giokos is a Dubai-based anchor and correspondent at CNN