A New Gulf Order: How the UAE is Overtaking Saudi Arabia in regional leadership

Saudi Arabia, however, has pursued a much more cautious, reactive and nationalistic approach, prioritizing its own industrial development, grand projects and business elites, often at the expense of its own progress. The reasons for this are varied. Despite recent reforms, Saudi Arabia is still constrained by domestic, religious and ideological currents that drive its younger, less-tested leadership to adopt an approach that plays to the core narratives of a more traditional and closed society. The extremism that inflicted Saudi Arabia for decades[v] is still very much an undercurrent of the country today, though often hidden behind the skyscrapers that increasingly dominate Riyadh’s fast-developing cityscape. Similarly, infighting within the Royal Family, succession battles, and disputes between traditional and new elites[vi] limit Crown Prince Mohammed bin Salman’s ability to fully embrace modernity, pluralism and tolerance. Notwithstanding the activities of the Public Investment Fund and LIV Golf, much of Saudi Arabia’s reform, like its mega public works project are, quite literally, gathering sand.[vii] These diverging paths will come to redefine the regional balance of power in the coming years, which is steadily tilting in favour of the UAE.

The UAE has smartly pursued the extension of the United States’ protective security umbrella via a cooperation-first approach in concert with such partners as Europe, India, Israel and Egypt. It has demonstrated itself to be committed to regional stability, coexistence and cooperation, hosting hundreds of multi-national conglomerates in a business environment characterized by regulatory certainty. And Dubai has become perhaps the most dynamic stop on every conference circuit, from food to technology to sustainability, emphasizing its centrality to global commerce.

Saudi Arabia has taken a different path, reflecting its more insular approach to politics and business. Over the past year, for example, the Kingdom has tightened its relationship with Pakistan, Sudan, Turkey, and Qatar, signalling to the West that, alongside its desire to maintain strong relationships with Washington, its foundations remain at a different point on the ideological spectrum. This approach is also reflected in its investment and development agenda, which is more focused on the development of Riyadh and other Saudi centres – less on becoming a regional hub for international trade, engagement and expatriate gathering, conferences and declarations, notwithstanding.

The results are reflected in each country’s economic figures, of which non-oil related GDP[viii] is a critical indicator. In the first quarter of 2025, the UAE’s non-oil economy accounted for more than 77% of the country’s real GDP, a remarkable shift for the oil-rich country. The UAE’s success is a function of having proven that its model is possible, beneficial and sustainable, attracting millions of investors, professionals and labourers from the West alongside low-income workers. While Saudi Arabia’s economic diversification efforts are also underway, their rate of growth has been comparatively slower. Non-oil sectors made up 56% of total GDP[ix] in the kingdom in 2025; however, the mega construction projects commissioned as part of Riyadh’s Vision 2030 plans – which constitute a notable portion of the diversified economy – are increasingly emblematic of ambition outpacing execution[x] and are encountering mounting bottlenecks. These state-driven megaprojects, such as what was once branded the “city of the future”, NEOM, are now more often than not criticised for their questionable commercial viability.[xi] And, judging by the small numbers of expats who have chosen to make Saudi Arabia a permanent home, entrepreneurs and investors from abroad still have substantial doubts.[xii]

Culturally, the makeup of the leadership has much to do with the differences between the Kingdom and the UAE. Despite sharing certain security and economic interests, the UAE and Saudi Arabia operate within vastly different opportunity structures. Demographically, Saudi Arabia’s population is predominantly indigenous[xiii], accounting for approximately 55.6% of residents. Although, to an extent, Crown Prince Mohammed bin Salman has sought to distance the kingdom from its Wahhabi heritage[xiv] – a strict and puritanical sect of Islam – these efforts have remained largely cosmetic, and much of the population, as well as the leadership, remains strongly conservative and closed to foreign engagement. Indeed, the core tenets of Wahhabi ideology remain intertwined with the country’s social and cultural fabric. This connection is rooted in history[xv], as the Royal House of Saud and the Wahhabi movement rose in parallel to found the kingdom, which retains its role as custodian of Islam’s holy sites and overseer of the Hajj for the Muslim world. The continued influence of the Wahhabi clerical establishment, which has sometimes embraced the aims of the Muslim Brotherhood and other extremist movements, significantly narrows Riyadh’s diplomatic manoeuvrability in the region.