Keys to the Gulf's new prominence: Opportunities and ties with Spain

In an international scenario marked by geopolitical tensions, energy transition and the fragmentation of power blocs, the Gulf countries have gone from simply being oil exporters to becoming strategic players with a global vision. Today the Gulf Cooperation Council (GCC), formed by Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain, promotes investments, leads international mediation processes and weaves alliances with a long-term vision, emerging as an economic, diplomatic and financial actor with global projection. 

This new prominence is of interest to countries such as Spain, which have the opportunity to revitalize their bilateral relations and forge new economic ties. The growing economic diversification of the Gulf countries and the increase in demand for consumer goods, as well as the dynamism of their foreign investments led by sovereign wealth funds, contribute to this. 

So summarizes Javier Solana in the preface to the report Economic-business relations between Spain and the Gulf Cooperation Council (GCC). Situation and opportunities, prepared by EsadeGeo and researchers Tomás Guerrero and Adrián Blanco. A report that analyzes in depth the factors of the growing influence of the region and the possibilities it offers to the rest of the world. 

Spain is no stranger to this movement. Bilateral relations have intensified in recent years, although there is still great potential to be tapped. How can Spain take advantage of this strategic opportunity?  

The silent transformation: high incomes, open economies and a new horizon 2030 

With a combined GDP in excess of US$2.18 trillion and a per capita income that has doubled in recent decades, the GCC has established itself as one of the most dynamic regions on the planet. 

Although hydrocarbons remain the main economic driver, current growth is driven by ambitious national diversification strategies such as Saudi's Arabia Vision 2030 or We the EUA 2031, among others. These plans are trying to direct investments towards high value-added sectors: industry 4.0, artificial intelligence, financial services, renewable energies, logistics and tourism.  

The commitment to diversification is supported by policies of openness to foreign investment, favorable tax regimes, regulatory flexibility and growing international competitiveness. The United Arab Emirates, for example, is already one of the most attractive global destinations for greenfield investment, and the region is competing to position itself as a hub for innovation and technological capital.  

The country has also strengthened its position in geopolitically important sectors such as disruptive technologies or key infrastructures such as ports, as well as the control of critical minerals-rare earths, superconductors or precious metals.  

At the same time, the regional integration process-which is moving towards a customs union and a common market-as well as trade agreements with powers such as the US, Singapore and EFTA, and negotiations with the EU, China, India and MERCOSUR, strengthen its trade policies. All this is backed by a solid and sophisticated financial system that has turned the Gulf into a haven for international capital in times of uncertainty.  

The GCC economies not only seek growth, but also want to transform the productive matrix of their economies and reduce vulnerability to a drop in demand for fossil fuels.  

From conflict mediators to global promoters

The transformation of the region is not only economic. In recent years, the GCC countries have strengthened their political role through pragmatic and multilateral diplomacy. Saudi Arabia and the Emirates have joined the BRICS, demonstrating their ability to relate equally with opposing political blocs and facilitate dialogue between them. At the same time, the region hosts high-level forums and summits and its mediating role in conflicts such as Ukraine, Gaza or Afghanistan reflect its growing weight and influence on the international chessboard.  

In parallel, they have also made soft power a central instrument of their foreign strategy: massive investments in sports, media, universities and major international events such as the Dubai Expo or COP28, consolidate their image as global promoters.  

The role of sovereign wealth funds

One of the Gulf's most powerful instruments is its sovereign wealth funds financed with oil surpluses. Today they account for nearly 40% of the total assets under management of these vehicles worldwide. They seek to drive decarbonization, position themselves in sectors such as technology and boost local industry. They are key drivers of the economic transformation agenda in their respective countries and have the financial capacity to mobilize resources for long-term projects.  

In recent years, these funds have invested more than 17 billion euros in Spanish companies: from Iberdrola to Glovo, Telefónica to Enagás. In addition, initiatives such as the joint Spanish-Omani fund SOPEF show the potential of these alliances to facilitate co-investments with a long-term strategic vision.  

Spain: exporting more and investing less

Economic and business relations between Spain and the GCC economies are going through a good period. Spanish exports to the region are growing at an annual rate of 7.7%-reaching €95,182M according to the report-led by products such as semi-manufactures, food and beverages, among others. At the same time, investments from Gulf countries in Spain have soared in sectors such as energy, infrastructure and technology.  

However, although the trade balance has begun to even out, Spanish investment in the region is still small: it represents barely 0.13% of Spain's total investment in the world. According to the EsadeGeo report, geographical distance, the size of the market and the lack of links partly explain this situation.  

Even so, opportunities exist, especially in sectors where Spanish companies have competitive advantages and GCC countries are looking for partners: clean energy, tourism, education, health and infrastructure.  

Strengthening the ties: a shared roadmap

The EsadeGeo report identifies clear lines of action to intensify this relationship. At the institutional level, Spain could lead EU negotiations for a free trade agreement with the GCC economies. It could also strengthen the cultural and educational presence in the region through the new headquarters of the Cervantes Institute or the creation of an international channel in Arabic of RTVE (in the style of the BBC, France24 or DW).  

At the economic level, the report suggests expanding co-investment mechanisms with sovereign wealth funds, organizing more sectoral road shows (trade missions) and promoting Halal tourism with adapted certifications and visas, among other recommendations. For their part, Spanish companies can gain competitiveness in the region if they develop specific value propositions with local partners, positioning themselves as strategic allies.