When Covid-19 started hitting in earnest during spring 2020, a major global concern was the potential disruption to food trade. GCC Economies in particular feared a re-run of the 2007/08 and 2010/11 food price spikes which had caused tremendous challenges on the world food markets and risky domestic social challenges in the Gulf. At that time, economies that had been historically able to rely on imports without much disruptions felt a crunch on the world markets through the physical scarcity of staple foods. One consequence of these food crises was the investment in overseas’ agricultural land (in particular in East Africa), which turned out to be too controversial and economically futile. Fortunately, and thanks to functioning global supply chains, the 2007/08 and 2010/11 scenarios were averted in the Covid-19 pandemic. In fact, global food trade has remained remarkably resilient so far.

Yet, the changing climate with more prolonged heat waves affecting the GCC and an environment which is unsuited to produce agricultural crops will only relegate the problem into the future with the exception of indoor farming, which although promising, is unlikely to address domestic needs. The GCC economies will continue to rely on high levels food imports to ensure food security. However, what is often missing is the careful assessment of supply chain sustainability in light of climate and environmental change.

Current trade patterns for key commodities

Unlike the relatively sudden onset of the Covid-19 pandemic, the slow-burn impact of climate change will allow more time for national economies to adapt and mitigate for the looming challenges. In the GCC context, this means a dual approach, leveraging technological innovation on one hand and securing resilient trade relations on the other. Sustainable seawater desalination being key to longterm water security, international partnerships in research and development are essential in addition to domestic initiatives. Food production can also theoretically benefit from less water intensive methods including hydroponics, although these are unlikely to scale sufficiently for growing domestic needs. Hence the bulk of governments’ efforts will be in establishing and reassessing trading relations, an activity which will form the cornerstone of their food security policy. In particular, this will require policymakers to model the long-term effects of climate change on crop yields in their food-supplier countries, and thus determine whether existing trade partnerships are addressing their needs.

At present, countries like Saudi Arabia and the UAE import their food requirements from various countries around the world. The figure below illustrates the trade picture in maize, wheat, meat and rice for the year 2018. Net-exporting countries such as the United States, Brazil, or India play an important role in both countries’ food security. The UAE displays a high dependency on the Russian Federation, its major provider of wheat. In Saudi Arabia, European countries such as France, Germany, Latvia and Lithuania are the key providers of wheat. Both KSA and the UAE are heavily dependent on specific countries for specific agricultural commodities. While this can seem expected upon a first view for instance in the case of rice, a deeper analysis of the top rice-exporting countries shows that while India does indeed lead with an export volume of 11.7 MMT (Million Metric Tons), Thailand is not far behind with 11.1 MMT of exports in 2018. As such, there appears to be an over-dependency on India, even if there may be fallback agreements with other countries.

Figure 1: KSA and UAE food import concentration for selected goods, based on price of goods traded. Source: Chatham House (Resource Trade 2018)

The picture is more worrying when climate risks are incorporated in food-exporting economies supplying the GCC. According to the latest Climate Risk Index, many of these economies are vulnerable to extreme weather events and their consequences. India, which supplies around three quarters of Saudi Arabia’s and the UAE’s rice imports was the fifth most
affected country globally by extreme events in 2018. The USA and to a lesser extent Argentina, key providers of Maize for the same countries, were also categorized as particularly vulnerable based on 2018 events. But beyond the extreme weather events, gradual temperature increase and water scarcity is likely to affect agricultural production in the key economies of India, Australia, Pakistan, France, Germany and even the United States. Water scarcity is now a fact in India’s leading export regions such as West Bengal, Uttar Pradesh and Punjab. Export controls would be the first measures to be applied if climate events limited production, hence India may not be a safe import option if the water and climate crisis further unfolds.

Figure 2: Climate risk ranking 2018. Countries with a lower score were at a higher risk of climate events. Source: Germanwatch.org

The Way Forward

GCC States need to do more than pool financial resources to adapt themselves to the future. What is more important is to understand and address the foreign policy dimension that particularly affects trade policies. In order to enhance the food resilience of GCC states, coordinated foreign policy efforts have to be made to address climate change in a way that serves their national and regional interests. This means the time is ripe to carefully assess future trading relations in light of climate and environmental change. For example, future trade with India may be reassessed on the basis of potential production shortages due to increasing water shortages in the North of India. Climate proofing of trade can be achieved through using state-of-the-art databases and models to understand where the GCC may have to diversify trading relations to avoid a climate crunch.

Shrinking natural resources such as food, water but also biodiversity will force GCC states to change not just their domestic but also foreign policies. While they have long been able to rely on safe food imports from other parts of the region, climate change will test the resilience of trade links. Covid-19 has provided a sudden experience of how global affairs can quickly change and what future challenges may be ahead of import-dependent countries. Covid-19 should serve as a wake-up call for GCC decision-makers to further invest in climate-proof trade policies and tools to understand climate risks that can lead to diversified supply chains to ensure undisrupted future food imports.

Perhaps one of the most ambitious development projects in recent history will be the roll-out of the 900bn US$ Belt and Road Initiative[i]. China’s goal to become the leading world power will not only increase China’s global role, it will also have decisive impacts for the Middle East as the region is an integral part of the Western axis of the BRI. This requires adapted security and foreign policies in the Middle East to utilize the opportunities from BRI but also to manage the risks of a world, which is further shifting towards the East in the coming years and decades. If the Middle East positions itself carefully, it can greatly benefit from this shifting world order. In order for this to happen, the Gulf Cooperation Countries (GCC) must understand their crucial role to steer the Middle East in this geopolitical transition.

What is the Belt and Road Initiative

During official state visits to Kazakhstan and Indonesia, China’s President Xi Jinping announced the Belt and Road Initiative in the autumn of 2013. With its objectives ‘to construct a unified large market and make full use of both international and domestic markets, through cultural exchange and integration, to enhance mutual understanding and trust of member nations, ending up in an innovative pattern with capital inflows, talent pool and technology database‘, the BRI is one of the largest infrastructure projects in history covering two thirds of the world’s population across 68 countries[ii]

It is divided in a main axis with two wings, one in the West and the other one in the East. While the main axis integrates much of Central Asia, the Indian sub-continent, the ASEAN countries and Oceania, the Eastern wing is largely confined to Latin and Central America. The by far most ambitious part of the BRI will be the Western wing as it seeks to integrate three highly diverse world regions in terms of economic prosperity, political systems, culture and population growth: Africa, Europe and the Middle East.

China seeks to connect the countries along the Western axis mainly through infrastructure developments such as new roads, maritime infrastructure and railways. This is intended to reduce export and import time for countries trading with China. In particular, the Western axis is based on railway and road networks from China to Western Europe and through maritime routes to Africa. A key element within the maritime strategy is to build ports such as in Gwadar (Pakistan) and Lamu (Kenya) to establish faster trade between the two world regions[iii]. In the Arab world, Egypt is considered as the key beneficiary of the maritime part of the BRI as the Suez Canal will once again see an increase of shipping movements. Another country to benefit will be Iran as a corridor for railways. It already enjoys close political relationships with Beijing[iv]. However, this also means that the BRI will have profound geopolitical implications for the MENA region.

Geopolitical impacts on the Middle East

MENA will be the de-facto energy hub for the Western axis if not for the entire BRI. GCC States will once again be able to bring their hydrocarbon assets to the table to energize the initiative. At the same time, ports in the GCC are expected to benefit from increased shipments of oil and gas to the East and Africa. This provides the region with both opportunities but also more challenges. The geostrategic bottleneck of the Strait of Hormuz will yet again increase. Maritime security will not only remain a key challenge there but also in the Arab Sea and the Red Sea as vessels will have to be protected from pirates. The lack of maritime institutions in the Indian Ocean region will further add to the challenges of governments in the MENA region as countries have no political mechanism to avoid competition. Hence, GCC governments will further have to invest in their military to procure the necessary infrastructure to protect their sea routes.

Risks and Opportunities of the BRI for MENA

This may further increase existing tensions between the GCC and Iran as both actors in the region may have opposing interests. In an increasingly armed region, such diverging interests increase the risk of sustained conflict, either directly or through proxies. Moreover, terrorist activity could severely impact successful trade in the other bottleneck: the Suez Canal[v]. There will therefore be no alternative for the GCC economies to provide further strategic aid to Egypt to maintain stability in the Arab Republic. Moreover, America’s future role in the MENA region will add to the complexities: with sustained low oil prices, America’s ambition for energy independence may be in jeopardy, requiring it to maintain a military presence in the Gulf, while China may decide to send further troops to the MENA region to protect its interests. This may have a potential for political competition with Washington. Last but not least, Russia’s increasing presence in the Levant and Turkey’s geopolitical interests will add to the political tinder box. This will all have to be carefully managed through political institutions across countries in the region.

However, there are of course other, currently untapped opportunities resulting from the BRI. China may or may not decide to increase its military presence in the region. If it doesn’t, as the stakes could be too high to confront the United States, the GCC in particular will have a window of opportunity to establish themselves as a political actor within the Western axis of the BRI. This means nothing less but a new geopolitical role for the MENA region. It can choose to use its intermediary geographical location and position as the key energy provider to China but also Africa to set itself up as a global player akin to Europe or North America.

Conclusions

The BRI will define the coming years and decades in many countries of the world. The MENA region is affected in a number of ways. The GCC are likely to remain a key energy provider in such a new world order, yet it will have to address potential conflict areas such as intraregional rivalries, maritime security and terrorism. The region will have to manage the risks but also the opportunities such as becoming a vital political actor within the Western axis of the BRI. Such shifts will not be easy to navigate but they present the region with an opportunity to transform itself to a global player that can grow as part of the BRI.

[i]  Deloitte, 2018. Embracing the BRI Ecosystem in 2018. Online: https://www2.deloitte.com/insights/us/en/economy/asia-pacific/china-belt-and-road-initiative.html

[ii] Tsang Group, 2019. What is One Belt One Road Initiatve. Online: https://tsangsgroup.co/areas-of-expertise/what-is-one-belt-one-road-initiative/

[iii] Deloitte, 2018. Embracing the BRI Ecosystem in 2018. Online: https://www2.deloitte.com/insights/us/en/economy/asia-pacific/china-belt-and-road-initiative.html

[iv] Maha S. Kamel (2018) China’s Belt and Road Initiative: Implications for the Middle East, Cambridge Review of International Affairs, 31:1, 76-95, DOI: 10.1080/09557571.2018.1480592

[v] Ibid