The futuristic building has received three Guinness world records for the largest interactive light floor, the longest interactive water feature and the largest interactive digital LED mirror screen.
Whether oil plants, millennia-old cultural sites or the masses of pilgrims in Mecca: Gigantic video installations with these motifs are intended to bring the kingdom closer to the onlookers.
With 13,000 square meters, the Saudi building at the world exhibition is the largest after the pavilion of the host, the United Arab Emirates (UAE), which was erected like a white falcon’s wing. The buildings are a symbol of the new rivalry in the Gulf.
For decades, Saudi Arabia, with its ultra-conservative royal family, was the sleepy great power. Rich because of the oil billions, powerful because of the largest military in the region and the Islamic holy places of Mecca and Medina, the largest economy in the Middle East dawned in the desert. What the rulers in Riyadh said applied to everyone.
But not only the oil price shock at the beginning of the corona crisis, which caused the tariffs for crude oil to slide into the red for the first time, became a wake-up call. Riyadh was surprised to find that the smaller neighboring states – above all the UAE and Qatar – have developed into independent and potent rivals with more sustainable and future-proof economies.
Saudi Arabia has lost its leadership role for the time being
With Emirates, Dubai has built the world’s largest long-haul airline. Qatar has become the largest exporter of liquefied natural gas (LNG) and has left the Saudi-led oil cartel Opec. With DP World, the UAE has a leading global port operator.
In addition, the Emirates are attracting so much international attention with the Expo2020 and Qatar with the soccer World Cup next year to make the small countries visible on the global map.
The Fifa World Cup and the Expo will take place in the Arab world for the first time. And they are fading the enormous reform efforts at the big neighbor. In recent years, the UAE has even succeeded in becoming “an important regional power” and “a small maritime region around the Gulf of Oman” and “no longer being a junior partner of Saudi Arabia”, says Guido Steinberg, Middle East expert of the Science and Politics Foundation.
This should now come to an end, according to the will of the powerful Saudi Crown Prince Mohammed bin Salman, who directs the empire for his 85-year-old and sick father, King Salman. His “Vision 2030” is intended to catapult Saudi Arabia into the post-oil era with investments in the three-digit billion range.
In addition, “the ambitious Crown Prince wants to step out of the shadow of the Emirates and replace the UAE as the most important economic center in the region,” says Sebastian Sons from the Center for Applied Research in Partnership with the Orient.
MbS, as the monarch’s son is only called, is about “establishing Saudi Arabia as the undisputed leading power in the Gulf region after the reputation of Riyadh has suffered in recent years”.
Saudi Arabia dealt its rivals the biggest blow with two measures: First, the Saudi investment minister Khalid al-Falih announced that companies that continue to receive orders from the Saudi state or from global corporations such as Saudi Aramco (oil and energy) and Sabic (petrochemicals) want to get, must have a regional company headquarters in the Kingdom from January 1, 2024. So far, the vast majority of companies operating in the Gulf have had this in Dubai.
“For many German medium-sized companies, creating a legal requirement for the participation in Saudi projects to have to relocate the head office to the country is a new hurdle that is difficult to overcome,” says Helene Rang. The executive board member of the Near and Middle East Association of German Business calls on Riyadh to “remove hurdles” and “liberal investment requirements”. With this, as well as with a liberal lifestyle, the UAE and Qatar would have attracted investors from all over the world.
Declaration of war on the Emirates
But the powerful kingdom is taking a different path: In July, a decree was passed that no more goods from free trade zones or products from companies with Israeli participation can be imported into Saudi Arabia duty-free.
Dubai in particular is famous for its free trade zones, where the majority of goods are manufactured. And the UAE recognized Israel at the insistence of former US President Donald Trump, Saudi Arabia has not yet done so.
The think tank Emirates Policy Center, based in Abu Dhabi, the capital of the UAE, describes the guidelines from Riyadh as “a threat to the economy of the UAE”. Oliver Oehms, head of the German-Emirati Chamber of Commerce and Industry in Dubai, puts it a little more cautiously: “Instead of the deeper economic integration we had hoped for within the framework of the Gulf Cooperation Council, we are currently seeing more of a stagnation, at best.”
The UAE are now trying to secure their economy and further attract foreign investment by means of “preferred partnerships” with selected countries. In addition, there are long-term visas for professionals and founders and, since May, the right to 100 percent ownership of companies by foreigners.
“The most innovative industrial ecosystem”
After all, in the 2020 corona year, foreign investments rose by 44 percent and the UAE rose five places to 30th worldwide in the UN’s Competitive Industrial Performance Index this year. In an international comparison, the UAE is now number 17 in per capita exports. This proves “the innovative industrial ecosystem”, says Sultan Al Jaber, Minister of Industry of the UAE.
After the gross domestic product fell by 7.7 percent in 2020, the International Monetary Fund expects economic growth of 3.1 percent this year. The rating agency S&P estimates that Saudi Arabia could gain an average of 2.4 percent each by 2024.
Above all, according to Sons, Riyadh wants to “attract existential direct investments from abroad and develop sectors such as logistics, entertainment and tourism into pillars of the Saudi economy. In doing so, he is fueling competition with the UAE, whose success is based on these very pillars. “
To this end, the Saudi state fund Public Investment Fund (PIF) is investing three-digit billion amounts. The most visible signs of the new rivalry in the Gulf, where Saudi Arabia wants to become the largest market for the entertainment industry by 2025, are the construction of the world’s tallest house in Jeddah, one kilometer from the 829 meters of the previous record holder “Burj Khalifa” in Dubai .
Added to this is the purchase of the British football club Newcastle United by the PIF after Qatar has secured Paris-Saint Germain and Abu Dhabi secured last year’s Champions League finalist, Manchester City.
And precisely at the airport in Dubai, home of the Emirates airline and the most used airport in the entire region, the Saudi Ministry of Tourism is currently doing massive advertising for trips to the kingdom.
For the UAE, meanwhile, the world exhibition Expo in Dubai is supposed to bring the necessary attention and, according to the trade association Icaew, it has “stimulated economic activity and laid the foundation for even more growth in the coming months”.
More: The Gulf States want to get out of the crisis quickly.