The United Arab Emirates is rapidly expanding its economic footprint and soft power influence through an ambitious network of trade agreements and strategic partnerships spanning continents.
This move, aimed at reshaping global trade and diplomacy, has one major underlying objective: prioritising business. Experts told Arabian Business that at the core of this strategy are a series of Comprehensive Economic Partnership Agreements (CEPAs), which have positioned the UAE as a significant player in the evolving global order.
From Latin America to Africa and across Asia, the UAE appears to be establishing a network of commercial relationships that extend well beyond its traditional areas of influence.
This expansive vision reflects a nation determined to diversify its economy, secure its future in a post-oil world, and carve out a distinctive role as a global hub for trade and logistics. However, the UAE’s trade drive encompasses more than just economics; it represents a sophisticated exercise in projecting soft power. This strategy aims to bolster the emirate’s diplomatic influence and strategic autonomy in an increasingly multipolar world.
CEPA Strategy
CEPAs form the cornerstone of the UAE’s economic diplomacy. These comprehensive trade agreements go beyond traditional free trade deals, encompassing investment, services, and digital commerce.
Nicolas Michelon, CEO of Asia Intelligence Advisory and Editor of Asia Power Watch, contextualises the CEPA initiative within a broader geopolitical framework. “The UAE’s recent push to forge CEPAs with numerous new partners is part of a broader strategy to assert Smart Power, at the intersection of Hard Power — military and economic might — and Soft Power — encompassing culture, technology, and diplomacy,” he explained to Arabian Business.
This multifaceted approach has enabled the UAE to leverage its strengths across various domains, from its world-class logistics infrastructure to its burgeoning technology sector and early adoption of AI.
“In a context of significant geopolitical and geoeconomic reconfigurations, strategic realignments, and new economic and technological paradigms, it is crucial for a nation like the UAE to project Smart Power beyond the MENA region and beyond its traditional alliances, particularly with the US and Europe,” Michelon added.
The UAE has swiftly moved to implement this vision. Since signing its first bilateral CEPA with India in February 2022, the UAE has been proactive, concluding agreements with Israel, Indonesia, Turkey, Cambodia, and Georgia. Negotiations are ongoing with several other nations.
Navigating the US-China Divide
A primary driver of the UAE’s CEPA strategy is its aim to maintain strategic autonomy amid escalating tensions between the United States and China. The UAE is strategically positioning itself to maintain productive relationships with both global powers.
“Ensuring a balance between the US and China remains a priority without closing any doors,” Michelon clarified.
“The recent case of the AI investment fund G42 being required to divest from its investments in Chinese AI startups under pressure from Washington serves as a stark reminder that sitting on the fence may not always be sustainable.”
By maintaining ties with a diverse range of nations and diversifying its economic partnerships, the UAE has reduced its vulnerability to geopolitical pressures and preserved its strategic flexibility.
In this context, the CEPA strategy serves a dual purpose. “The CEPAs that the UAE is signing in Latin America and beyond represent a new geoeconomic strategy to maintain neutrality and non-alignment,” noted Abishur Prakash, Founder of The Geopolitical Business Inc.
Focus on Latin America and Africa
The UAE’s recent trade efforts have placed particular emphasis on regions historically underserved by Gulf investors: Latin America and Africa. This shift reflects both economic opportunity and strategic foresight.
According to Michelon, the focus on these regions is driven by factors such as the energy transition, decarbonisation efforts, and the UAE’s ambition to become a hub for disruptive innovation.
“To achieve this, access to critical raw materials that the UAE needs from third parties, many of which are found in Africa and Latin America, is crucial,” he explained.
The urgency of this effort is underscored by intensified regional competition.
“Neighbouring countries are pursuing similar strategies, intensifying competition for access to these resources. Saudi Arabia, Qatar, Turkey, and Iran are expanding their influence in the same geographies. The UAE cannot afford to lag behind in this race,” Michelon warned.
Recent trade missions highlight the UAE’s commitment to these regions. Dubai Chambers recently conducted a trade mission to Senegal, where the delegation engaged in over 150 bilateral business meetings to explore opportunities in agriculture, healthcare, energy, and technology.
On the sidelines of this mission, Mohammed Ali Rashed Lootah, President and CEO of Dubai Chambers, highlighted the growing economic ties between Dubai and Senegal, revealing that non-oil trade between the two reached $942 million in 2023, marking a 17.7 percent increase from the previous year.
Morocco as a Gateway
The subsequent stop of the trade mission in Morocco underscored the strategic importance of North Africa in the UAE’s economic strategy. Morocco, with its proximity to Europe and established trade links, serves as a key gateway for UAE businesses aiming to expand their reach.
UAE investment in Morocco has been substantial, with Dubai firms investing $2.1 billion in the past decade alone, positioning the emirate as a leading source of foreign direct investment for Morocco.
“Morocco has always been viewed as a gateway to the African market and Southern Europe,” Lootah noted.
This investment push aligns with Morocco’s preparations to host major international sporting events, including the 2030 FIFA World Cup. Emirati companies are poised to play a crucial role in developing the necessary infrastructure and hospitality facilities for these global events.
“With regards to partnerships, especially concerning Morocco, the UAE stands out as the top contender,” commented Anas Guennoun, Vice President of CGEM and newly appointed head of the UAE-Morocco Business Council.
“We aim to double tourist numbers to 25-26 million by 2030…Dubai serves as a model and has emerged as a hub for startups, the digital economy, and the technology industry, and we would like to explore opportunities for building an IT ecosystem in Morocco,” he added.
Hassane Berkani, President of the Casablanca Chamber of Commerce, Industry, and Services, also highlighted the depth of UAE-Morocco relations. “This relationship, which dates back to the era of Sheikh Zayed and King Hassan II, has paved the way for extensive collaboration across various sectors.”
With the FIFA World Cup on the horizon, Berkani anticipates an increase in UAE business activities in Morocco over the coming years.
Soft Power Beyond Economics
In September 2017, the UAE launched its Soft Power Strategy to bolster its global reputation by showcasing its identity, heritage, and cultural contributions. The strategy focuses on four key objectives: establishing a unified direction across diverse sectors, promoting the UAE as a regional gateway, positioning it as a cultural and tourism hub, and highlighting its modern, tolerant character. Its six pillars encompass humanitarian, scientific, and economic diplomacy, among others, providing a framework for the UAE’s diplomatic efforts.
Recent data from Brand Finance’s Global Soft Power Index 2024 indicates that these efforts have yielded substantial results, with the UAE rising eight places to 10th globally since 2020, indicating significant improvements in influence, reputation, and international relations.
While the economic benefits of the UAE’s trade strategy are evident, its implications for soft power are equally profound. By positioning itself as a neutral, business-friendly hub in a region known for turbulence, the UAE is strengthening its diplomatic leverage and global stature.
“The UAE is positioning itself as a global trading hub at a time when the international trade system is undergoing politically driven fragmentation,” observed economist Omar Al Ubaydli, director at Bahrain-based think tank DERASAT.
“Its key advantage lies in maintaining positive relations with all major players and offering a combination of high-quality infrastructure and a business-friendly commercial environment.”
This approach is particularly appealing to nations in the Global South seeking to avoid entanglement in great power rivalries, noted Al Ubaydli.
“After centuries of colonialism and neo-colonialism, Latin American countries prefer to do business with countries that treat them as legitimate and equal partners who are not to be dictated to under any circumstances, and the UAE fits that favourable mould,” he explained.
The role of state-affiliated companies in projecting UAE soft power is crucial, Michelon noted. “These companies, along with AD Ports Group in integrated logistics, the Edge Group in defence, and Abu Dhabi’s Sovereign Wealth Funds, are leading the charge in projecting UAE’s Smart Power globally through substantial overseas investments and attracting investments into the country.”
Consequently, the UAE has emerged as the top destination for foreign investment in the Arab world, attracting over half of the region’s investment opportunities. The country garnered $30.7B in FDI inflows last year, marking a 34 percent increase according to a recent UN report on Trade and Development.
“The UAE is creating its own niche, drawing nations into an Emirati orbit,” noted Prakash, underscoring the country’s growing global influence.
According to Michelon, Dubai’s rise as a global hub for business and trade can be attributed to several strategic advantages. The city’s central location between Asia-Pacific and Europe, coupled with its proximity to critical shipping routes like the Arabian Gulf, Bab el-Mandeb Strait, and Suez Canal, offers unparalleled connectivity.
“The UAE’s recipe for success is not easily replicable,” Michelon observed, highlighting the country’s reputation for safety and stability as pivotal factors in its appeal to businesses and investors.
Abu Dhabi leads Numbeo’s 2024 Safety Index as the safest city globally, with Dubai following closely at fourth place. This reputation for security is bolstered further by the UAE’s significant climb in the Global Peace Index, rising 31 places to rank 53rd globally in 2024 – the most significant improvement in the region.
Dubai’s transparent business environment and robust rule of law further enhance its appeal as a prime destination for global investment.