The Gulf countries pivot: diversification, diplomacy and defense

By Olha Hembik | 2026-06-25

Saudi Arabia, the United Arab Emirates and Qatar are no longer using oil and gas revenue to just fill their coffers.

These financial infusions are now helping to boost their positions in the global arena, strengthening their status as middle powers.

The Gulf countries no longer want to play the role of dependent partners of the big players. Instead, they want to be independent centers of power. To achieve this, they are simultaneously developing their economies, engaging in active diplomacy and taking steps to shore up their security.

Saudi recalibration

After giving women more rights and embarking on a policy of openness to the world, Saudi Arabia is gradually shaping a new state.

The country is practicing strategic autonomy and is increasingly orienting itself toward global interests. These days, Saudi Arabia is continuing to implement its sweeping state-sponsored socioeconomic transition program known as Saudi Vision 2030.

The program was unveiled in 2016 at the initiative of Crown Prince Mohammed bin Salman.

For Saudi Arabia, this is a bold program of capitalist reforms that is meant to transform not only the country’s economy and society, but also its global position.

“Our nation holds strong investment capabilities, which we will harness to stimulate our economy and diversify our revenues,” Mohammed bin Salman said in a statement on the program’s website.

China is Saudi Arabia’s largest market for oil exports. China is also the most active foreign investor in Saudi Arabia, accounting for 58 percent of new business investment in 2023. The second-largest source of foreign investment is the United States. For Riyadh’s economic interests, strategic cooperation with Russia on oil extraction also remains important.

According to data from official Saudi sources, the growth in foreign investment in the fourth quarter of 2025 surged by 90 percent year over year, reaching 48.4 billion Saudi riyals ($12.9 billion).

Sectors such as tourism, renewable energy and technology have also opened up for foreign investors. Among the most significant projects, Oracle is investing $1.5 billion in the country’s cloud infrastructure, Amazon Web Services has a project that costs more than $5.3 billion, and Google is involved in building an artificial intelligence center that costs around $10 billion.

Lucid Motors is also playing an important role: the Saudi Public Investment Fund has poured billions of dollars into the company to develop domestic electric vehicle production.

Furthermore, Hyundai is building an automotive plant that costs over $500 million.

Experts say that in addition to its economy, Riyadh is actively diversifying its diplomatic relations. The kingdom is active in the Middle East and North Africa, wagering on partnerships with Global South countries. But it is also striving to maintain a balance in its relations with major powers such as the United States, China and Russia.

“I don’t view our relations with the United States and China as being mutually exclusive. I think they actually complement each other,” said Khalid Al-Falih, the Saudi minister of investment.

UAE and Qatar: focus on the East

The United Arab Emirates (UAE) is a smaller and more flexible neighbor of Saudi Arabia that is fighting for a competitive edge in the region.

In a series of regional conflicts, including in Sudan, Libya and Yemen, the two states have repeatedly found themselves on different sides of the divide. The UAE is Saudi Arabia’s chief rival for the status of the region’s main export and logistics center.

The competition between these countries is expected to heat up.

Among the countries of the Gulf Cooperation Council, which depend on oil, the UAE has achieved considerable success in diversifying its non-oil sectors of the economy. The country talks about creating a society that relies on talent, skills and new technologies.

The UAE’s growing economy spawned the Look East Policy, a strategy according to which the country gradually shifts its economic and foreign policy focus from the West to Asia.

It is selling energy to Asia and is attracting Asian capital, participating in Chinese infrastructure projects and expanding trade with India. Since withdrawing rom the oil cartel OPEC/OPEC+, Abu Dhabi has created its own sphere of influence in the Middle East and Africa.

The goal is to pivot from being a regional energy exporter to being an independent global player.

Qatar is another Gulf country where energy is also the basis of its diplomatic push. In recent years, Doha has participated in negotiations on Gaza, humanitarian agreements between Russia and Ukraine, and mediation in Africa, among other matters.

Qatar has complicated relations with its closest neighbors. The UAE and Saudi Arabia view Qatar’s activity as excessive interference and even a challenge.

Thanks to early investment in liquefied natural gas infrastructure and long-term contracts with key Asian and European partners, Qatar has not fallen prey to the same economic pressure as its neighbors and is pursuing its own regional policy.

Qatar’s abundant, cheap energy has enabled it to enter a sector that is changing global technologies and the economy. It is now trying to catch up to Saudi Arabia and the UAE in the artificial intelligence race in the Gulf.

The launch of the company Qai, which has received money from the country’s $526 billion sovereign fund and $20 billion from a joint venture with Brookfield, is the most ambitious step toward this goal.

Security as strategy

Security is the most important value for the economic stability, international influence and long-term development of the UAE, Qatar and Saudi Arabia.

With that in mind, Saudi Arabia has instituted the largest military expenditure: it spent between $70 billion and $80 billion on defense last year, among the highest military spending in the world.

Ukraine recently signed a drone deal with Saudi Arabia, Qatar and the UAE that covers the joint production of drones and the development of more effective anti-drone systems.

According to Vadym Triukhan, a Ukrainian expert and diplomat, throughout the full-scale war, Ukraine has gained unique experience in countering Iranian drones that is now attracting interest around the world.

“What was a matter of survival for Ukraine is gradually becoming a matter of national security for the Gulf countries. Along with drone interception technology, Kyiv can offer battle-tested air defense tactics and infrastructure defense methods,” Triukhan said.

The Gulf countries are also devoting particular attention to cybersecurity. For instance, Qatar is beefing up its defense capability using technological solutions as well as innovations in digital systems and AI, while the UAE is implementing its National Cybersecurity Strategy, which aims to strengthen the defense of critical infrastructure.

As part of this strategy, last year it opened a cybersecurity center of excellence with Google Cloud.