Gulf State – Horn of Africa Relations in Economic Perspective

Posted by Becca Parkinson - Tuesday, 1 Mar 2022

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In our edited collection The Gulf States and the Horn of Africa: Interests, Influences and Instability, Simon Mabon and I explore the contemporary dynamics within and between these two sub-regions. We raise questions concerning the foreign policy priorities of the Gulf states, the Horn states which fall under the greatest external influence, and the nature of the main bilateral relations, as well as significant shifts over time. Buzan’s regional security complex theory (RSCT) is drawn upon in light of a rapid increase in targeted and multifaceted economic engagement which is often found to be driven by heightened security, other geopolitical motives, long-term economic interests and humanitarianism. Growing ties are cited in the volume in the context of the war in Yemen, Saudi security on its western flank, push back against (violent) Islamism and those actors which support it, Saudi – Iranian rivalry, and the Qatar Crisis (2017-2021).

The port city of Suakin, close to Port Sudan, could become a major maritime hub under Turkish development plans, enhancing Turkey’s soft power further.

Brendon J. Cannon and Ash Rossiter sketch out international actor engagement in the Horn, and find that Turkish humanitarian concern in Somalia after the 2011-12 famine set in motion a deeper relationship, including the construction of hospitals, schools and roads. It has broadened out to include other soft power elements such as scholarships and training, as well as enhanced political dialogue which contributes to Turkey’s international reputation. Sudan and Ethiopia are also important markets for Turkey, as Umer Karim finds, with major investment across a number of industries from energy to infrastructure. President Erdoğan has vowed to enhance trade and investment relations with Sudan, promising bilateral trade of $10 billion over the coming years and ploughing in $300 million in direct investment during his visit in 2017. The port city of Suakin, close to Port Sudan, could become a major maritime hub under Turkish development plans, enhancing Turkey’s soft power further. Ethiopia, which was making initial gains in its industrialisation strategy, including leveraging its status as host of the African Union, as a symbol of freedom as an uncolonized country, and from rapid economic development, has made it an attractive proposition. However, growth of 10 percent in the decade to 2019 has since been undermined by the war in Tigray which is estimated to have cost the Ethiopian government $1 billion as of August 2021.

In my chapter on Saudi and Iranian competition, I note the $13 billion of Gulf state investments in the Horn between 2000 and 2017, mainly in Sudan and Ethiopia, and concerns about Iranian activities throughout the region. Iran continues to be hampered by a combination of limited religious affiliation, lack of united revolutionary zeal (as opposed to the immediate aftermath of decolonization), diminishing security connections and economic resources needed to secure a strong alliance(s). Eric Lob notes that this financial constraint didn’t always exist, and Iran’s Construction Jihad organization has been active in Sudan and in other African states. After an Islamist-backed coup in 1989, Iran – Sudanese relations were warm on the commercial and security fronts, but this only helped to re-enforce Sudan’s pariah status. 

Iran continues to be hampered by a combination of limited religious affiliation, lack of united revolutionary zeal (as opposed to the immediate aftermath of decolonization), diminishing security connections and economic resources needed to secure a strong alliance(s).

Sudan signalled to the kingdom for financial assistance from 2014 and was frustrated by a lack of GCC state lobbying taking place with the US and European partners on sanctions relief after the 2005 Comprehensive Peace Accord and the 2011 secession of South Sudan. Amid rising tensions in the Gulf, the Iranian attack on the Saudi embassy in Tehran in 2016 was the turning point for many states in their relations with Saudi Arabia, including Sudan. The crisis encouraged Khartoum to cut diplomatic relations with Iran and realign with the kingdom. $350 million was paid into Sudan’s central bank at the time, replicating a familiar pattern of Saudi riyal politik and UAE economic statecraft which has been a central feature of their foreign policy modus operandi, particularly evident in the wider region since the Arab uprisings. Further aid transfers, and a promise of greater efforts to secure sanctions relief for Sudan in 2016, were accompanied by Sudan’s commitment of 10,000 troops for the Yemen conflict, where the Iranian Revolutionary Guards Corps (IRGC) stands accused of supporting the Houthi insurgency. The Qatar crisis facilitated more concrete support from Doha in 2017 versus Saudi pledges for various agricultural projects and joint ventures, but with few being implemented. By 2018 UAE officials estimated they had pumped in $7 billion to support the Sudanese economy. Further Saudi and UAE pledges of support followed the coup in Sudan in 2019, although a $1 billion offer from Qatar turned down by the Sudanese government during the Qatar crisis. As Mohammed Sharfi attests, all GCC actors are needed to support diminishing financial resources, a fall in foreign direct investment and lower labor remittances.  

GCC food security calculations dominate in other cases, notably Saudi – Somali relations, where up to 40 percent of Somalia’s sheep and goats were allocated for sacrifice during the Hajj up to the interruption caused by Covid-19. How sustainable this trade will be in an increasingly arid region where millions face hunger in 2022 remains to be seen. Saudi – Ethiopian economic relations are channelled through personal business connections such as Mohammed al-Amoudi, a Saudi/Ethiopian billionaire, and his investment group Midroc Ethiopia. Saudi Arabia and the UAE worked in tandem on securing the Eritrea – Ethiopia peace deal in 2018, including the possible deposit of $1 billion into the Ethiopia central bank. Egypt will hope for similar political and economic leverage with regards to alleviating tensions with Ethiopia and Sudan over their respective positions on the hydroelectric Grand Ethiopian Renaissance Dam (GERD) project, especially since Ethiopia supplies 85 percent of the water that flows into the Nile.

Karen E. Young and Taimur Khan focus exclusively on the economic statecraft of the UAE, a so-called ‘small state’, and its operations in the Horn. They note that economic intervention and reach has been coupled with ideational and cultural factors, as well as aspirations to shape the regional order and other economic interests, specifically port access. They chart the rise of such actions as deriving from a windfall from high natural gas and oil revenues prior to the 2014 price drop and readjustment, as well as foreign policy learning experiences in theatres such as Libya, Egypt and Yemen. Yemen represented a pulse of UAE strategic expansion into Assab, Djibouti, Somalia and Socotra. Socotra in particular has become a prime example of the seamless intermingling between commercial and security considerations. Ethiopia and Eritrea provided the UAE with a foothold, as did Aden temporarily, for DP World. Having been forced out of Djibouti’s Doraleh Container Terminal by a presidential decree in 2018, David Styan writes extensively about how Djibouti’s inability to manage tensions with the UAE will continue to have repercussions for Dubai and the UAE’s economic engagement in Berbera port in neighboring Somaliland, and with the Federal Republic of Somalia.

The episode, including a possible corridor between Hargeisa (the Hargeisa government owns 30 percent of Berbera port) and Ethiopia (the Ethiopian governments owns a 19 percent stake, leaving DP World with 51 percent), draws attention to the numerous variables at play. These are found to arise from other port opportunities or forms of GCC state leverage, inadequate infrastructure in the Horn, complex business environments (e.g. patrimonial networks), changes in local Horn politics (e.g. shifts in autonomy due to new hydrocarbon discoveries) or indeed personal relations.

Kuwait, along with Saudi Arabia and the UAE, is often cited as a leading Arab donor, but is also exceptional due to the role played by the Kuwait National Assembly in economic policy.

Mara A. Leichtman’s chapter in contrast to the rest, focuses on Kuwait, another small GCC state, whose foreign relations in East Africa have been dominated by development assistance to Tanzania. She notes that Kuwait, along with Saudi Arabia and the UAE, is often cited as a leading Arab donor, but is also exceptional due to the role played by the Kuwait National Assembly in economic policy. She also comments about the leadership roles played by the late Emir Sabah al-Ahmed al-Sabah and the state writ large as leaders in the humanitarian domain. Kuwait, unlike Saudi Arabia and the UAE, has not opted for a more muscular foreign policy. But due to economic pressures associated with lower oil prices, Covid-19 and increasing competition, Kuwait may choose to act in unison with other regional and/or international partners in future. This trend may extend to other small states in the GCC seeking to economize and punch above their weight.     

In conclusion, Gulf state engagement has been facilitated by the complimentary nature of economic statecraft and what de Waal calls a ‘political marketplace’ that exists in the Horn of Africa due to a lack of political institutions, history of patriarchy, and merchant culture, which makes political bargaining and funds for provisional allegiance a common occurrence. The volume draws attention to the structural asymmetry between Africa and the Middle East as well as the opportunities that changes in the regional and international order have presented these states with in their quest to address domestic challenges and enhance their relative autonomy. It identifies a lack of regional and sub-regional integration, manpower issues, and threat perception regarding state and non-state actors as important drivers of some recent GCC state engagement in the Horn and beyond. Whilst there is evidence of inter-regionalism, there have also been spill over effects into other sub-regions as well, notably North Africa. For example, the UAE has been accused of underwriting the cost of Sudanese mercenaries operating in Libya. These features and their evolutions underscore the plethora of variables in the political economies of both sub-regions which continue to undermine full cooperation and collaboration.


A guest blog by Robert Mason.

The Gulf States and the Horn of Africa: Interest, influences and instability edited by Robert Mason and Simon Mabon, is available now.

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