The UAE and China: New ties and strategies

The former has strayed from the latter to pursue its interests, especially its fruitful cooperation with China. In the multisided Yemen conflict, Abu Dhabi has begun backing separatist movements in the hope of taking over ports that could prove crucial to the Belt and Road Initiative.

Launch of products from Chinese brand Xiaomi in Dubai, January 2016
Mutual trade between China and the United Arab Emirates is expected to rocket to $106 billion in 2022. © dpa
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In a nutshell

  • The UAE’s new ties with China led to a conflict of interests with longtime ally Saudi Arabia
  • Abu Dhabi will seek a friendly regime in southern Yemen to access locations with high economic potential
  • The UAE is unlikely to fully turn its back on Saudi Arabia, but its new allegiance to China could make the region more volatile

The United Arab Emirates will “become a shining pearl along the Belt and Road,” declared Chinese Foreign Minister Wang Yi on July 21, 2019, as a new blueprint for a comprehensive China-UAE strategic partnership was being drawn up. In 2013, when China launched the Belt and Road Initiative (BRI) – modeled on the ancient Silk Road – with an initial investment of $2 trillion, the UAE was chosen as a major partner because of its strategic location. For the small federation of seven emirates, it seemed a heaven-sent opportunity to develop its economy and assert its political influence in the region, perhaps even in the world. Nevertheless, the project is fraught with unexpected challenges.

The UAE is a staunch ally of Saudi Arabia. The two countries are united against the threat of Iran and party to the boycott of Qatar, and they are both fighting the Houthi rebellion in Yemen. However, Abu Dhabi is also actively pursuing its own economic and security interests, striving – much like Riyadh – to take control of ports along the international trade routes in the Arabian Peninsula, the Gulf of Aden and the southern part of the Red Sea, and especially in the Horn of Africa where a large part of world trade, including oil, transits. 

Abu Dhabi is seeking to further its interests and thwart efforts by Iran and its Houthi proxies, as well as Qatar and Turkey, to do exactly the same thing. The policy dovetails nicely with China’s ambitions to develop an extensive transport infrastructure network, giving Beijing an edge in commercializing its products in Africa, the Middle East and Europe. The UAE is positioned to take a significant role in the southern Red Sea leg of the project, facilitating the transit of goods not only to countries along the way, but also to Africa. However, conflicts of interests have led to tension with Saudi Arabia. 

About-face in Yemen

In early August 2019, separatist forces in southern Yemen, led by the Southern Transitional Council and supported by the UAE, launched an assault on Aden and troops loyal to Yemeni President Abd Rabbuh Mansur Hadi – ultimately taking the port. President Hadi, alongside whom the UAE had previously fought the Houthis, took refuge in Saudi Arabia. From there, he leads his army’s operations with the full support of the kingdom, which wants to return him to power.

The separatists declared that dozens of their militants had been killed by a missile fired by President Hadi’s supporters. Fighting expanded further and Saudi Arabia and the UAE found themselves briefly lending air support to opposing forces. Talks were held and the fighting stopped but Aden remained in the hands of separatists, who seek to restore the independent state of South Yemen as it existed until 1990. There is no solution in sight for this new development, which not only adds to the confusion of the Yemeni civil war, but also creates tensions between the two countries leading the coalition against Houthi rebels. 

The UAE wants a friendly regime in southern Yemen.

Abu Dhabi, meanwhile, has taken several surprising initiatives. Following attacks – allegedly committed by Iran – on tankers in the Strait of Hormuz in May and June of this year, the Emiratis held talks with Tehran on strengthening security in the Gulf and the two countries issued a joint communique. Yet Iran openly supports the Houthis while the UAE fights them; furthermore, Iran occupies three small Gulf islands claimed by the UAE and refuses to bring the matter to arbitration. 

In June 2019, Emirati troops started leaving Yemen. It is widely believed that Abu Dhabi is not happy with the Saudi position, and that it wants to come to an understanding with the Houthis and defuse tensions with Iran. It is now primarily focusing on its own economic interests to the exclusion of everything else. 

By siding with the separatists, the UAE is signaling its preference – if not for the partition of Yemen, then at least for a federal system that satisfies all factions. It wants a friendly regime in the south that will let it set up an economic and defensive presence in the ports. 

This aim has been driving UAE policy since it first landed its troops in Yemen in 2015 as part of the Saudi-led coalition against the Houthi rebellion. Emirati forces were stationed in the south and immediately began training and arming separatist militants. When the Saudi-led coalition imposed a blockade on Yemen, these forces took over the southern shore and set up outposts in the ports of Aden, Mocha and Mukalla. They intended to overtake the port of Hodeida as well but were unable to dislodge the Houthis. 

The Emirates sent troops to the strategically located island of Socotra in the Gulf of Aden, and to Perim Island in the Bab el-Mandeb Strait, where they attempted to establish outposts, drawing sharp protests from the official Yemeni government as well as from local inhabitants. Under heavy Saudi pressure, they had to withdraw the bulk of their troops, leaving only small contingents in place. In September, the governor of Socotra announced that such a contingent, with the help of several separatists, had broken into the island’s power plant and taken costly equipment – generators and transformers – probably with a view to set up another power plant. 

Network of ports

Taking over the ports of southern Yemen is only part of the Emirati plan. The UAE wants a presence in the main ports of the Horn of Africa, along the coast of Somalia and in the southern part of the Red Sea. The Dubai-based company DP World, one of the world’s largest port and sea-terminal operators, will be key in implementing this strategy.

In 2016, Abu Dhabi was granted a concession for the development and operation of the port of Berbera in Somaliland (a region which proclaimed its independence but did not receive international recognition) under a wide-ranging cooperation agreement. This allowed the UAE to establish a military base, build an airport for cargo freight, pave a major road to the port and construct other infrastructure, which is scheduled to be completed by the end of 2019. 

A similar deal was struck in 2017 for the port of Bosaso in Puntland, an autonomous region in northeast Somalia. Investments in these two locations are estimated at over $1 billion. Construction is being carried out by an Emirati company and the ports will be operated by DP World. The Somali government is seething because of the deals, which were made with rebel regions without its knowledge, let alone consent, and is weighing how best to react.

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Facts & Figures

Separatist outposts in southern Yemen

Separatist outposts in southern Yemen China UAE cooperation
Emirati-trained separatist forces were able to take over several ports in southern Yemen. © macpixxel for GIS

The UAE was also successful, with the help of Saudi Arabia, in establishing a significant presence in the Eritrean port of Assab, on the other side of the Bab el-Mandeb Strait. Intended as a logistics base for the fight against the Houthis, it was enlarged and expanded, and a military airport was added. It quickly became the main Emirati hub for dispatching planes and ships for bombing raids on the rebels. It was from there that ground troops assembled prior to moving to southern Yemen. Separatist militants were trained there as well. Judging by the size of infrastructure that was built, the UAE intends to remain in Assab for a long time. There it will have a strategic outpost on the Red Sea and operate a civilian port for the Belt and Road network.

Emirati policy has resulted in an impressive economic and security presence in the Horn of Africa and the Gulf of Aden. It has turned the UAE into a magnet for Chinese business. Beijing is investing enormous sums to implement the BRI and integrate ports along the way, building infrastructure to transport goods to large consumer centers. It could not ignore the role of the United Arab Emirates and DP World, and therefore acted swiftly to bring them on board. A fruitful cooperation followed. 

Chinese connection

In a matter of years, China has become the UAE’s second-largest trading partner after India, with exports to China, mainly oil, in excess of $60 billion in 2017. That number expected to reach $70 billion in 2020. Mutual trade is expected to top $106 billion in 2022 – an unbelievable achievement considering that the UAE is a small entity that only became independent from the United Kingdom in 1971. The country’s total population is 10 million; only 15 percent are citizens while the rest are foreign workers. The main export is still oil and its derivatives, but cars and high-tech items such as computers are also being manufactured.

Diplomatic relations with China were established in 1984 and have steadily developed. It was clear to both parties that cooperation would be mutually beneficial, based on the smaller country’s strategic position and its liberal policy on trade and foreign investment. Exchanges of high-ranking visits strengthened those ties. Chinese ruler Xi Jinping came to the UAE in 2018 and signed several deals. Abu Dhabi Crown Prince Mohammed bin Zayed made his fourth visit to China in July 2019, signing 16 new agreements in the fields of industry, infrastructure, industrial innovation, health, education, tourism and aviation. 

In a matter of years, China has become the UAE’s second-largest trading partner.

A crucial deal directly addresses the involvement of the UAE in the BRI. The two countries will invest $3.4 billion in the development of the Emirati port Jebel Ali to enable the transit of large quantities of Chinese products on their way to customers all over the world, making the port one of the main hubs in the Chinese project. 

China is also erecting one of the largest pavilions on the grounds of Expo Dubai 2020. Several Dubai companies and organizations have inked cooperation deals with Shanghai trade and investment firms for the BRI; there will be mutual visits to pinpoint more investment opportunities. There is also a vast economic zone being built around the grounds of Expo Dubai where there will be an industrial park, a business center and one of the largest airports in the world, expected to handle 160 million passengers a year and 12 million tons of freight. Roughly 5,000 Chinese companies already operate in the United Arab Emirates, in addition to trade agencies and no less than four banks. An estimated 200 000 Chinese citizens reside there.

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Scenarios

The UAE’s new geopolitical moves – supporting separatists in southern Yemen and taking over as many ports as possible in the region to integrate with the BRI network – can both be explained by this growing connection to China. Abu Dhabi has seized the historic opportunity offered to enhance its economic and political standing in a troubled region. It will not all be smooth sailing. The UAE is part of the Gulf Cooperation Council and, as such, has been closely cooperating with Saudi Arabia on regional security for years. Abu Dhabi Crown Prince Mohammed bin Zayed is a personal friend of Saudi Crown Prince Mohammed bin Salman. 

Through its involvement in Yemen on the side of the Houthis, Iran has managed to drive a wedge between the two allies. This is a major step in the war it is waging against Saudi Arabia, a strong Sunni state, keeper of the two holiest shrines of Islam, Mecca and Medina, and as such, a main stumbling block in Tehran’s attempts to establish a Shia crescent in the Middle East. 

Conversely, the Ayatollahs see a potential ally in the UAE. For decades, Dubai has been a transit hub for Iranian goods and money transfers. Because of the new American sanctions, most Iranian businesses have left, depriving the UAE of an important source of revenue. 

Future developments in the region will not be dictated by the small Emirati empire. It is unlikely to switch alliances at a time when Iran is making an all-out effort to topple the regimes in Saudi Arabia, Bahrain and Kuwait, using important Shia minorities living there. The UAE’s growing relations with China will also serve as a buffer.  

Nevertheless, the volatile situation in the region could impact global shipping, especially if the tug of war between Iran and the United States and its Gulf allies turns into a full-blown conflict despite U.S. President Donald Trump’s commitment to do his utmost to prevent it.

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