UAE foreign policy: A focus on Asia

Shifting regional realities, an emphasis on pushing forward with developing the Emirati non‑oil economy and securing markets for its hydrocarbons exports, as well as the diminishing role of the UAE’s traditional main security guarantor, the US, are leading to a significant reshaping of the country’s foreign‑policy stance. 

There has been an especially firm push to strengthen existing diplomatic and commercial relations with major Asian markets, foremost India, and build new commercial relationships in that region. This has been bolstered by broader policy initiatives, including a marked liberalisation of foreign residency rights, liberalising foreign investment and accelerating free‑trade deals.

A comprehensive economic partnership agreement (CEPA) with India was negotiated and ratified within months and took effect in May 2022. It is helping to accelerate the trend in burgeoning bilateral trade and investment—bilateral trade increased from US$72.9bn in the April 2021‑March 2022 period to US$84.5bn in April 2022‑March 2023.

India is the UAE’s largest export market (the UAE is also India’s third‑largest export market, as well as an important source of investment and remittances) and second‑largest source of imports (after China). Indians are the dominant expatriate group in the UAE, representing more than 30% of the population (followed by Pakistani nationals) and have been among the keenest to take up opportunities for investment and work under the UAE’s more liberalized system.

Including India, Asian countries make up the top six export markets for the UAE. The pivot toward Asia as a source of new trade and investment opportunities was exemplified by the signing in mid‑2022 of a treaty of amity and co‑operation between the UAE and the ten‑nation Association of South‑East Asian Nations (comprising Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia). The UAE subsequently gained Sectoral Dialogue Partnership status with the bloc in June 2023, with which it aims to support trade and investment opportunities in the member states, as well as use the closer ties with these economies to enhance trade and investment relations with China.

What next?

The UAE leadership’s foreign policy and its efforts to forge robust economic and political ties with Asia is a pointer to how the country views power and influence evolving in the coming years. It also reflects a change of position in recent years that is accelerating in pace amid bifurcation and rising geopolitical tensions globally. President Sheikh Mohammed bin Zayed al‑Nahyan will see this as an opportunity to strengthen the UAE’s position globally and build a role as a neutral power broker, as well as enhancing its status in growing competition with Saudi Arabia.