In the face of shifting alliances and uncertainties in the global economy, late efforts between Latin American countries (LAC) and the Gulf Cooperation Council (GCC) look like an isolated attempt to deepen investment, trade, cultural, and diplomatic cooperation ahead of key international summits.
The role of LAC in securing the GCC’s food-security goal comes hand-in-hand with the Arab Gulf’s expanding foreign policy. Bilateral trade figures show an increase of 90% from 2006 to 2015. Nevertheless, several opportunities remain untapped or partly tapped greater investment flows in sustainable energy, tourism, oil, and gas, in addition to $2.04 trillion of potential trade complementarity in goods and services. Although current GCC-LAC trade flows amount to $16.3 billion, there is substantial room for growth.
Historical and diplomatic precedents like OPEC (Oil and Petroleum Exporting Countries) and the ASPA summits (South American-Arab Countries) have created strong foundations that merit greater analysis to bridge the current gaps between the GCC and LAC in anticipation of a surge of future opportunities such as Expo Dubai 2020 and the World Cup Qatar 2022.
The creation of OPEC was a pivotal event in the relationship between the two regions that rocked the oil markets in 1960. The five founding members: Iraq, Saudi Arabia, Kuwait, Iran, and Venezuela —under the leadership of energy ministers Abdullah Tariki of Saudi Arabia and Juan Pablo Perez Alfonzo of Venezuela — joined forces in Baghdad and were able to change the dynamics of the global economy. Despite OPEC’s diminishing role through the years, the precedent set by the organization and the history of their diplomatic relations create a robust foundation for even stronger partnerships between the two regions.
Furthermore, the ASPA summits, a set of high-level meetings between 22 members of the Arab League and 12 from LAC aimed at increasing cooperation and political coordination, sparked several initiatives of trans-regional collaboration.
“We have so much in common that the long distances between our countries are not an obstacle,” King Salman of Saudi Arabia stated during Riyadh’s 2015 ASPA summit. “We are connected by the great legacy of rich values and customs shared between Arab and South American civilizations.”
“Both regions are keen to explore deeper relationships to diversify their trade and investment partners and hedge risks amid global economic uncertainties.”
Recent economic cooperation agreements and political gestures between the GCC and LAC demonstrate that the Arab Gulf States occupy an important role in Latin America’s international relations. “Both regions are keen to explore deeper relationships to diversify their trade and investment partners and hedge risks amid global economic uncertainties,” according to The Economist. However, more needs to be done “to boost awareness and information about the potential benefits of deeper links between the GCC and Latin America, particularly beyond Brazil and Argentina, this region undoubtedly offers a great diversity of food sources and opportunities for investments across sectors.”
A more recent effort to bridge both regions is the Dubai Chamber of Commerce’s Latin America Global Business Forum. The multifaceted event held in Panama City in 2019 along with the Inter-American Development Bank (IDB), aimed at identifying opportunities to further cooperation between businesses in the Arabian Gulf and Latin America.
Trade and Partnerships
In trade, the potentials for growth are complementary; as the products that one region imports, the other region exports. According to the IDB, “Complementarity thus signals potential for trade, and, in this case, shows that actual trade levels are well below the trade potential,” an asset of growing importance in the upgrade of relations between the UAE and Brazil, and in the signing of Memorandums of Understanding (MOU) in October 2019.
Thus, the latest Arab Gulf tour by Brazil’s President Bolsonaro to Saudi Arabia, the Emirates, and Qatar pursued an increase in mutual trade and investment, and a clear strategy on friendship, social-cultural cooperation, and sports partnerships. Such high-level visits and the signing of additional MOUs and bilateral trade agreements indicate a growing effort to enhance the transatlantic partnership, and of using Brazil as the main door to the region.
The Arab Gulf’s development agendas for economic transformation and diversification (which aim at modernizing and diversifying the countries’ economic and productive system) create the opportune momentum to integrate newer partnerships with LAC. Thus far, the GCC’s action plan for pursuing greater economic and political influence across the region, which has attracted the most interest from Gulf investors, is expanding across LAC’s ports and logistics sector. The UAE’s DP World (specialized in port terminal operations and global supply chain) became a full logistics operator in Peru in October 2019, merging with existing major stakes in Chile, Argentina, Dominican Republic, and Brazil as a logistics operator.
On a larger scale, Brazil is currently the world’s largest exporter of Halal meat, which along with Brazilian OneFoods (based in the UAE), take-up a market share of 45% in chicken products in KSA, UAE, Kuwait, Qatar, and Oman. Additionally, Cinépolis, a Latin American company, and the world’s fourth-largest company in the movie theater industry is opening its first “megaplex” in the UAE. Cinépolis also received a license in 2019 to build six cinemas in KSA’s growing theater industry, illustrating a prospective role that LAC investors can play in the Arab Gulf. These and several other examples of economic partnerships are only in addition to the multimillion-dollar “complementarity” in bilateral trade.
Expo 2020 and World Cup 2022
Expo 2020 Dubai will present LAC with the opportunity to forge strong partnership with the GCC in food and agriculture cooperation, culture, sports, sustainable energy, and tourism. Colombia is already set to stage “the most ambitious international promotion initiative ever at Expo 2020.”
The World Cup especially will be an enormous asset for the promotion of economic ties and regional conditions as ideal places of investment and trade cooperation.
The potentials to boost GCC-LAC awareness and information will deepen with the coverage of Spanish-speaking media in the U.S. and Latin America on the Arab Gulf during Expo 2020 Dubai and especially during Qatar World Cup 2022. The World Cup especially will be an enormous asset for the promotion of economic ties and regional conditions as ideal places of investment and trade cooperation.
Despite the tens of thousands of kilometers separating both regions, recent developments show a determined effort to further collaboration and partnerships. However, challenges remain, and according to the IDB and the Dubai Chamber of Commerce, “there is much to do from the policy arena at a low fiscal cost …[and] the analysis suggests that substantial progress can be made in the short and medium run.” Existing and emerging linkages demonstrate a clear rationale that a sound foundation exists for growth and to further advocate in favor of bridging the current gaps between both regions.
As things stand, the strategies are more of an isolated approach, with the UAE, Saudi Arabia, and Qatar as the leading countries seeking cooperation with Latin America.
As things stand, the strategies are more of an isolated approach, with the UAE, Saudi Arabia, and Qatar as the leading countries seeking cooperation with Latin America. Rather than being a region-to-region story, Brazil, Argentina, and Mexico (with 76% of the total trade between both regions) are the LAC members leading these country-to-country linkages.
Ultimately, to transcend rapid political changes in LAC, regional stakeholders should place a minor focus on the ideological positioning of governments. Instead, the emphasis should be on the positioning and strategizing of economic inclusion from non-state actors—especially pragmatic private-sector visionaries—to inspire a more inclusive, secure, and integrated future for all the people of both regions.
