New Zealand changes tack in the Gulf

A sign of things to come.

That might be the best way to interpret New Zealand trade minister Damien O’Connor’s recent foray into the Middle East.

O’Connor stopped off in Riyadh and Abu Dhabi on a brief, yet important trip that comes as New Zealand prepares for its October 14 election.

The biggest takeaway was that New Zealand would enter preliminary talks with the United Arab Emirates (UAE) on a new Comprehensive Economic Partnership Agreement (CEPA) – mirroring a new approach announced by Australia in 2022.

Wellington is also following in the footsteps of countries that have already signed similar deals with the UAE, including India, Indonesia, Israel and Turkey.

O’Connor’s trip to the Gulf last week piggybacked on a higher-profile mission to New Delhi. This leg of the trip dovetailed with a sizeable New Zealand business delegation that was organised independently and led by the India New Zealand Business Council (INZBC).

The INZBC’s chair, Michael Fox, heralded the delegation as a way to ‘reframe the bilateral relationship’.

An added benefit of New Zealand’s done-and-dusted free trade deals with the United Kingdom and European Union is renewed interest and capacity to focus on parts of the world that it had previously neglected.

At a political level, Wellington has certainly begun to take India more seriously this year, after being stung by criticism of what appeared to be an under-appreciation of the world’s new most populous nation.

Keen to display a long-term commitment, there is new-found eagerness from New Zealand to undertake bilateral visits, sign lower-level agreements and de-emphasise any expectations of quick wins on trade.

To this end, Nanaia Mahuta, the foreign minister, visited India for the first time in February – while her Prime Minister, Chris Hipkins, accepted an invitation to visit India from Narendra Modi at a later date. Hipkins was also responding to pressure from his main rival for Prime Minister – Christopher Luxon – who had promised to visit India during the first year of his term, if elected in October.

There are lessons from the India experience that can also be usefully applied to New Zealand’s relationship with the six wealthy Gulf states.

This is not just because both countries visited by O’Connor – Saudi Arabia and the UAE – are set to join the BRICS grouping as soon as 2024. India is itself a founding member of the BRICS, which also includes four other key influencers in the Global South – China, Brazil, Russia and South Africa.

Both Saudi Arabia and the UAE are important trading partners for New Zealand, both in their own right and as cornerstone members of the six-country Gulf Cooperation Council (GCC). Founded in 1981, the GCC’s customs union became fully operational in 2015. When taken as a whole, it is New Zealand’s eight-biggest export market.

New Zealand’s exports to the bloc are growing rapidly, a trend that should come as no surprise.

After all, Saudi Arabia – the biggest Gulf state by population, at around 36 million – is pursuing an ambitious ‘Vision 2030’ programme focusing on the country’s future beyond oil. The plan includes the building of a new city, Neom, on the Red Sea. Meanwhile, a new airline – Riyadh Air – aims to bring millions of new visitors to Saudi Arabia and become a massive new global hub for connecting traffic.

In the neighbouring UAE, a major current focus is on the hosting of this year’s COP28 climate change summit in Dubai. The meeting has faced criticism because its head, Sultan al Jaber, is also the chief executive of the UAE’s biggest oil company.

Not to be deterred, al Jaber has countered that oil and gas companies – as major greenhouse gas emitters – need to be seen as ‘part of the solution’ and invited to the negotiating table.

The UAE’s ambition for inclusiveness is also manifesting itself in other foreign policy areas. In just a few short years, the UAE has normalised or restored relations with previous regional rivals and foes such as Iran, Israel, Turkey and Qatar.

Moreover, Abu Dhabi is continuing to resist Western pressure to take sides in the war on Ukraine and is instead continuing to advocate for dialogue. To this end, the UAE’s president, Mohamed bin Zayed, visited Russia in June, with one of his key advisers arguing ‘this polarisation has to be broken’.

New Zealand has long-standing friendly ties with the UAE, but the relationship has warmed particularly over roughly the past decade. Wellington opened an embassy in Abu Dhabi in 2011, a move that was reciprocated by the UAE in 2015.

In trade terms, New Zealand sees the UAE as the ideal gateway to the Gulf – playing a similar role as Singapore does for New Zealand in Asia. The CEPA talks are a useful next step – and Wellington will probably only benefit from the UAE’s current drive for openness and engagement with a wide range of partners.

However, the signals from O’Connor’s first stop at the GCC secretariat in Riyadh were less encouraging.

Accounts of the meeting – whether from the GCC itself, Arabic-language media, or from O’Connor himself – were not particularly optimistic.

New Zealand is trying to restart efforts on a free trade deal with the GCC that was agreed to in principle in 2009, yet never signed.  Wellington wants to renegotiate the agreement to include labour rights and environmental provisions, while the GCC has reportedly countered by offering reduced market access for New Zealand’s exports.

None of the six GCC countries are democracies and there will always be some tensions over human rights issues. However, the GCC states are evolving and New Zealand also brings considerable experience from its relations with other countries – notably China – in navigating and addressing such differences.

More broadly, there may be a temptation on New Zealand’s part simply to put the wider GCC deal in the too-hard basket, given the potential of the useful and more straightforward arrangement with the UAE.

This would be a mistake.

But the truth is that New Zealand needs to start putting in the hard yards.

As with India, New Zealand’s best bet for the Gulf is probably to park its free trade ambitions and focus on building the relationship across a wide range of areas.

Superb preconditions for greater engagement already exist: New Zealand enjoys direct air links with two GCC countries – Qatar and the United Arab Emirates.

The immediate focus should go on developing a deeper understanding of the region. More could be made of people-to-people ties and academic and cultural exchanges, including Arabic language programmes.

While Arabic is taught by a number of Australian universities, it is not offered by any New Zealand institution – the only one of the six official UN languages left out.

At a government level, there probably need to be more ministerial visits with no expectations of immediate return.

The last visit to the Gulf by a New Zealand Prime Minister was made by John Key in 2015, when he visited Kuwait, Saudi Arabia and the UAE.

If there is to be an eventual deal, more ministerial visits will need to be made to all six GCC countries – including the bloc’s three other member states of Bahrain, Oman and Qatar.

With New Zealand’s election campaign now in full swing, Damien O’Connor’s trip to the Middle East could end up being something of a personal swansong.

But whatever the election outcome, one thing is clear.

The Gulf is not going away.

Geoffrey Miller is the Democracy Project’s geopolitical analyst and writes on current New Zealand foreign policy and related geopolitical issues. He has lived in Germany and the Middle East and is a learner of Arabic and Russian. He is currently working on a PhD on New Zealand’s relations with the Gulf states.