The United States relies on its economic strategy to further its geopolitical objectives in the Middle East and Asia
After receiving diminishing returns in recent years from using geopolitics as the fulcrum of its Middle East strategy, the United States now appears to be tapping geoeconomic synergies to advance its objectives in the Middle East and Asia. This was evident in U.S. National Security Advisor Jake Sullivan’s early May meetings with Saudi Crown Prince Mohammed bin Salman, Emirati National Security Advisor Tahnoun bin Zayed al-Nahyan, and Indian National Security Advisor Ajit Doval.
Sullivan’s trip was the most significant visit to the region by a U.S. official since President Joseph R. Biden Jr.’s regional tour in July 2022. Sullivan traveled to Jeddah amid an increasing pace of regional de-escalation efforts, including the China-brokered agreement between Saudi Arabia and Iran to reestablish diplomatic ties and Syria’s readmission to the Arab League. Moreover, United Arab Emirates-Iran, UAE-Turkey, and Saudi Arabia-Turkey ties have recently improved. At the core of these political recalibrations is the region’s growing focus on economic diplomacy after more than 10 years of Arab Spring-linked friction and instability.
The United States’ bid to change tack and implement a more creative regional strategy is also partly conditioned by a downturn in Saudi-U.S. relations and China’s increased regional influence. Washington seeks to expand the scope of the Abraham Accords between Arab states and Israel and the I2U2 partnership – comprising India, Israel, the UAE, and the United States – enabling Washington to both counter the perception that it is disengaging from the region and consolidate its relationships in the Middle East and Asia. Minilateral partnerships, like I2U2, also offer wider geoeconomic connections with critical partners.
The rationale for this strategy was articulated in Sullivan’s May 4 speech at the Washington Institute for Near East Policy on the eve of his Middle East visit. Sullivan said that the Biden administration’s “new framework for U.S. engagement in the Middle East is built on … partnerships, deterrence, diplomacy and de-escalation, integration, and values.” According to Sullivan, the key platform for this framework is I2U2, which aims to connect South Asia, the Middle East, and the United States through trade, technology, and diplomacy. “If you remember nothing else from my speech, remember I2U2, because you will be hearing more about it as we go forward,” Sullivan stressed. Such a strategy, according to Bilahari Kausikan of the Middle East Institute of the National University of Singapore, suggests that the United States, as an “offshore balancer is not in retreat but demands more of its allies, partners, and friends to maintain regional equilibrium.”
I2U2 and the Negev Forum – a framework aimed at expanding cooperation among Israel, Morocco, Bahrain, the UAE, the United States, and Egypt – are focused on nonpolitical, pressing regional issues, such as water and food security, space exploration, health care, climate change, and regional security. Sullivan’s meetings in Riyadh built on recent deals, such as the Comprehensive Economic Partnership Agreements that the UAE signed in 2022 with India and Israel, among others. The cooperative initiatives discussed in Riyadh included a major cross-regional railway infrastructure project connecting Gulf Arab and other Middle Eastern countries that could extend to India via regional shipping lanes. This concept, already discussed as part of I2U2, is particularly appealing to Israel. It remains unclear how much interest Riyadh showed in the rail deal and other cooperative ventures.
Divergent Interests, Collective Action
Each member of these new partnerships brings a unique perspective and, at times, diverging and even conflicting interests. However, their economic focus promotes a shared agenda, thus reducing discord.
For the United States, I2U2 is a mechanism to extend its infrastructure investment and food and energy security initiatives to Middle Eastern and South Asian partners, providing an alternative to Chinese projects, such as the Belt and Road Initiative. Washington sees this approach as an opportunity to encourage its regional partners to take a more active and independent role in shaping the region’s future, allowing the United States to reduce its own resource investment while maintaining its presence and influence.
For India and the UAE, I2U2 provides a platform to interact with senior officials in Washington and highlight the cross-regional reach of their diplomatic initiatives. While diverging approaches toward geostrategic and regional issues, particularly China’s rising power and global influence, remain a concern, Gulf Arab countries’ participation in U.S.-led initiatives reflects their new penchant for “multialignment” amid U.S.-China competition.
The Riyadh conclave was also a step in renewed U.S. efforts to expand the Abraham Accords by facilitating the normalization of Israeli-Saudi relations. Following the meetings in Saudi Arabia, U.S. officials traveled to Israel to brief their Israeli counterparts on the talks, and Israeli Ministry of Foreign Affairs Director General Ronen Levy followed up with a visit to Washington for further talks. This form of regional engagement also allows Israel to manage tensions with the United States, the UAE, and Saudi Arabia in the wake of the formation of a right-wing coalition led by Prime Minister Benjamin Netanyahu.
For Israel and the United States, expanding the Abraham Accords, especially to include Saudi Arabia, remains a major goal despite Riyadh’s insistence on linking the normalization of relations to progress on the two-state solution. In Israel’s view, improved Saudi-Iranian relations and Syria’s readmission to the Arab League do not necessarily hurt its relations with the UAE and Saudi Arabia. Further, it is notable that despite the tensions stirred by the new Israeli government, Israeli-Saudi normalization is still on the table.
A potential explanation for this could again be the economic rationale. According to a recent Washington Institute poll, 38% of Saudis feel it “would be acceptable to have some business deals with Israeli companies” if they would “help” the Saudi economy. Similarly, in an endorsement of ongoing reconciliation efforts, 41% of Saudis thought “the agreement on a maritime boundary between Israel and Lebanon” would yield positive results for the region.
A New Regional Approach
These developments suggest that the United States is championing a new regional approach that aims to bring key players in the Middle East and Asia closer. While Beijing’s mediation efforts hogged the limelight, Washington was simultaneously involved in a similar diplomatic effort to help Japan and South Korea overcome their decadeslong differences. This is good for both Washington’s Indo-Pacific strategy and the Middle East’s quest for alternative diplomatic and security arrangements. While China remains a factor in the region, the United States is demonstrating to its regional partners that its pivot to Asia will not be at their expense.
A part of the United States’ push for an economic-centric approach to the region lies in China’s and other Asian countries’ thriving economic ties with the Gulf states. The Belt and Road Initiative, launched in 2013, has enhanced China’s growing Middle East engagement. Traditionally centered on trade and investment in the energy sector, Beijing has since expanded its economic activities to include infrastructure projects, tech-driven smart cities, innovation centers, and 5G mobile network projects. The November 2022 UAE-U.S. agreement to mobilize $100 billion in clean energy investments by 2035, for example, could be viewed as an effort to offset China’s deals in the renewable energy sector.
The U.S. focus on economic partnerships thus acknowledges China’s successful effort to combine diversified economic cooperation and political engagement to effectively advance its regional interests, as seen in President Xi Jinping’s impactful visit to Saudi Arabia in December 2022 and Beijing’s mediation of the Saudi-Iranian rapprochement. Beijing has also had initial success in expanding the use of its currency by Gulf Arab countries for select transactions, including energy purchases, and initiated a pilot program with Thailand, Hong Kong, and the UAE for mBridge, an international digital transaction platform that uses the yuan. Further, in a sign of growing diplomatic and security diversification in the region, Bahrain, Kuwait, and the UAE were granted dialogue partner status by the Shanghai Cooperation Organization in early May, joining existing dialogue partners Saudi Arabia and Qatar.
These China-friendly moves in the Middle East and Washington’s assessment that major countries “seek to evade the intensifying standoff between the United States, Russia, and China,” which was recently revealed in leaked U.S. intelligence documents, may be influencing these new policies. Biden suggested that U.S. relations with China are likely to begin to “thaw” and worked to build consensus on an approach to China with the United States’ allies at the G7 summit in late May. Ending a press conference at the summit on a relatively positive note, Biden said: “We’re not looking to decouple from China. We’re looking to de-risk and diversify our relationship with China.”
Though it is unclear when and where the next U.S.-China summit will take place, any summit is more likely to help than hurt ties between the two superpowers. Even just maintaining the status quo is not a bad option. The “de-risk without decoupling” approach – a deviation from the U.S. playbook – partly reflects European and Asian allies’ concerns about pushing Beijing too hard.
This nonconfrontational, “economics-first” approach fits well with the emerging “new Middle East,” an approach it may be beneficial for Secretary of State Antony Blinken to encourage when he visits Saudi Arabia in June.
