The Strategic Costs of Saudi-Emirati Competition

Saudi Arabia and the United Arab Emirates (UAE) have long navigated cycles of cooperation and competition in the Middle East, shaped by historical disagreements over regional initiatives and unresolved territorial disputes. At times, the two countries have coordinated closely, particularly in the 2010s, when they aligned their policies in Bahrain, Egypt, Syria and Yemen. They also adopted a similar approach toward Turkey and Iran. This cooperation, however, proved to be short-lived.

Diverging economic and strategic interests have pulled Riyadh and Abu Dhabi in different directions, especially in ongoing conflicts in Yemen, Sudan, the Horn of Africa, and to a lesser extent, Syria. Despite shared goals of regional stability, Saudi Arabia and the UAE often pursue opposing strategies, plunging the Gulf into an intense rivalry between the region’s two leading powers—one that is set to reshape the regional balance of power.

Economic Competition

With a GDP of approximately $1.3 trillion in 2025, Saudi Arabia is by far the largest economy in the Arab world, followed by the UAE at $569 billion. Both countries host major sovereign wealth funds, the Public Investment Fund (PIF) and Abu Dhabi Investment Authority (ADIA), which rank among the largest globally and hold significant international investments. Despite these similarities, there are several major differences.

Saudi Arabia holds the world’s second-largest proven oil reserves (267.2 billion barrels), while the UAE ranks sixth (113 billion barrels). This disparity has shaped the countries’ approaches to production and prices. Riyadh has always preferred stable and moderate levels to support long-term global demand, whereas the UAE has pushed for higher production to maximize revenue before global demand shifts to alternative energy sources such as renewables and nuclear power.

Beyond oil, the UAE has led in diversifying its economy, with Dubai establishing itself as a major regional and financial aviation hub. Emirates and Etihad Airways, along with Qatar Airways, consistently rank among the world’s top airlines. Further, the Barakah nuclear plant began commercial operation in April 2021, with all four units online by 2024, making the UAE the first—and so far only—Arab country with an operational nuclear power plant.

In recent years, Saudi Arabia has taken significant steps to reduce dependency on oil revenues, encourage tourism, develop its nascent private sector, and attract foreign direct investment. The kingdom plans to build several large nuclear plants and small modular reactors in partnership with the United States. Riyadh has also offered incentives for foreign companies to establish regional headquarters in the country, a move intended to challenge Dubai’s position as the region’s business hub. Furthermore, the kingdom is pursuing ambitious plans to update and modernize its aviation sector, including expanding Riyadh Air and launching FlyNas.

Both Saudi Arabia and the UAE have made significant investments to become regional data-center hubs. In 2019, the kingdom established the Saudi Data & A.I. Authority, and a year later, it issued a National Strategy for Data and AI. In May 2025, Humain was launched to advance the kingdom’s strategy. Similar steps have been taken by the UAE. In 2017, the country issued its National Strategy for Artificial Intelligence 2031, and in 2018, G42, an Emirati AI company with links to China, was founded. In 2020, the UAE opened the Mohamed bin Zayed University of Artificial Intelligence, the world’s first university entirely dedicated to the study and development of AI. According to the International Monetary Fund (IMF), these efforts have made both countries the most AI-ready nations in the Middle East.

Competing Regional Visions

This growing economic competition between Riyadh and Abu Dhabi has further fueled their strategic rivalry. For decades, the UAE has perceived political Islam as an existential threat, a perception that has shaped its regional—and increasingly international—posture. The Emiratis have been accused of supporting non-state actors in several conflicts in order to secure political leverage and access to economic resources. Recent developments in Yemen and the Horn of Africa underscore these accusations.

After the Houthis seized Yemen’s capital, Saudi Arabia and the UAE launched Operation Decisive Storm in 2015 to defeat the group and restore the ousted government. After four years of fighting, Abu Dhabi withdrew its troops from the front lines and expanded its support to the Southern Transitional Council (STC), which was established in 2017 and advocates for an independent state in southern Yemen. On the other hand, Saudi Arabia has continued to support the internationally recognized government led by the Presidential Leadership Council (PLC). Working with the United Nations and regional partners, the kingdom has been seeking a diplomatic settlement to the conflict. The STC’s capture of Mahra and Hadramawt in December 2025 was seen as a direct threat to Saudi national security and prompted Saudi-backed forces to regain control over the territories.

Similarly, Riyadh has been suspicious of Abu Dhabi’s policy across the Red Sea. Since the fall of Sudan’s president Omar al-Bashir in 2019, the country has suffered from high levels of political instability and conflict. By 2023, fighting had intensified between the Sudanese Armed Forces (SAF), led by General Abdel Fattah al-Burhan, and the Rapid Support Forces (RSF), commanded by General Mohamed Hamdan Dagalo (Hemedti). Saudi Arabia and most regional powers have supported the SAF, while the UAE backs Hemedti,

In the Horn of Africa, the UAE has established an extensive economic and military presence in Somaliland, which declared independence from Somalia in 1991. Leveraging the territory’s strategic location near the Bab al-Mandab strait, Abu Dhabi has invested in Berbera, including a naval base, a deepwater port, and an airfield. While Somaliland remains unrecognized internationally, Israel recently extended recognition and established diplomatic relations in December 2025, a move condemned by the African Union, Saudi Arabia and many Muslim and Arab countries. The UAE has notably refrained from criticism.

Normalization with Israel further highlights the divergence between Riyadh and Abu Dhabi. When the UAE signed the Abraham Accords in early 2020, it hoped normalization would provide leverage both to prevent Israel from annexing the West Bank and to advance Palestinian-Israeli negotiations. Although official annexation has not occurred, Israeli settlements continue to expand, creating a de facto annexation, with no progress toward ending the conflict. Since the outbreak of the war in Gaza in October 2023, Abu Dhabi has condemned Israeli policy and provided substantial assistance to the Palestinians. Yet Israeli-Emirati relations have remained resilient, and the killing of tens of thousands of Palestinians has had little impact on the growing economic, technological, and security cooperation between the two nations. Abu Dhabi continues to view normalization as a strategic choice that aligns with its long-term national interests.

Saudi Arabia’s stance on normalization with Israel has evolved differently. In September 2023, Crown Prince Mohamed bin Salman stated that the kingdom was moving closer to normalization with Israel every day. A year later, the Crown Prince accused Israel of committing genocide. Senior Saudi officials have strongly requested specific and concrete steps to implement a two-state solution as a prerequisite for normalization, but Prime Minister Netanyahu and his cabinet have shown no willingness to meet these conditions. Expectations of Saudi Arabia joining the Abraham Accords have, for now, largely dissipated.

The Way Forward

The strategic landscape in the Middle East has shifted dramatically since October 2023. Before the war in Gaza, several regional players—including Iran, Turkey, Israel, Egypt and the Gulf Cooperation Council (GCC)—maintained a fragile balance of power. Over the past two years, Israel has made significant military gains but has failed to articulate a strategy to ensure peaceful coexistence with its neighbors. These neighbors now face two choices: work collectively to counter Israel’s growing dominance, or align individually with competing regional powers—deepening regional fragmentation in the process. Regional hedging is no longer an option.

While economic competition between Riyadh and Abu Dhabi serves the national interests of both countries, strategic rivalry fuels regional instability at a critical moment. The U.S.-Iran standoff may trigger a regional war, with substantial economic and strategic consequences for the wider Gulf.

Recent experiences underscore the costs of regional fragmentation. The 2017-2021 blockade imposed on Qatar was a clear failure, underscoring that the GCC is strongest when united. Regional powers such as Egypt, Turkey, and Oman, as well as global players including the United States, China, and Europe, do not view relations between Riyadh and Abu Dhabi as a zero-sum choice—they seek strong ties with both capitals.

For now, both Saudi Arabia and the UAE appear intent on containing their rivalry. This stance was highlighted last month when Saudi Foreign Minister Prince Faisal bin Farhan emphasized the importance of relations with Abu Dhabi for regional stability, signaling Riyadh’s desire to maintain a “strong and positive relationship.” Still, whether cooler heads prevail or a wider Gulf rift emerges, both countries have much to gain and much to lose from a conflict with each other. Only time will tell whether further escalation leads the region down a new, uncharted path.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.