Rail development to grow across GCC, with Saudi Arabia & UAE leading the charge

To:

Al-Monitor Pro Members

From:

Afshin Molavi

Senior Fellow, Johns Hopkins School of Advanced International Studies

Date:

Nov. 14, 2022

Bottom Line:

The long-planned GCC rail network that aims to link Kuwait in the north to Oman in the south and traverse all six states has sprung to life again with the launch of the new GCC Railways Authority, substantial track-laying progress in the UAE, ambitious plans in Saudi Arabia and renewed focus among other states. The UAE and Saudi Arabia will likely advance further and faster than their peers by the end of this decade, and the dreams of the line connecting all states will be slowed by regional laggards. Still, the trajectory is clear: Absent a major exogenous shock, rail development will grow across the region, with some moving faster than others but all moving toward a similar destination.

Background Facts:
  • The idea of train travel from Kuwait in the north to Oman in the south with stops across all four other GCC states has been under discussion for more than two decades. It has been given fresh impetus by the establishment of the GCC Railways Authority at a Gulf Cooperation Council (GCC) Summit in December 2021 and pledges from all six governments to renew efforts toward greater rail connectivity. High oil and gas prices and the easing of tensions with Qatar have also added wind to the sails of the project.
  • The GCC rail network aims to link countries by train from Kuwait City to Muscat, hugging the eastern coast of Saudi Arabia and into the UAE, with links to Bahrain and Qatar as well — with the total track length exceeding 2,100 kilometers (1,300 miles) in a project estimated to cost some $200 billion. Hopes for this line to materialize by the end of the decade are too ambitious given slower developments in Kuwait and Bahrain.
  • Unlike in aviation and shipping, the GCC region lags behind major world economies in its access to rail networks. Meanwhile, the region has played catch-up with the high-speed train revolution sweeping parts of Asia and urban metro train growth worldwide. Notable successes include Dubai’s metro, the Doha Metro, a high-speed rail link between Makkah and Medina in Saudi Arabia, and the soon-to-be-opened Riyadh metro.
  • Given the importance of connectivity, logistics and tourism to the existing business models of key GCC states and the vision statements of others, inadequate rail networks act as a drag on potential growth. Rising train networks will ameliorate a GCC weakness: regional trade interconnectivity.
  • Further, increased rail will help GCC states meet their climate pledges as rail is “among the most energy-efficient modes of transport for freight and passengers,” according to the International Energy Agency.
  • In December 2021, GCC leaders pledged to expand their rail networks and launched the GCC Railways Authority to help execute these pledges. In the same month, the UAE announced a $13 billion railway program that would link all of its key cities.
  • While the Dubai Metro launched in 2009 has been the most high-profile and successful rail development in the UAE thus far, the country has made substantial progress in growing its conventional rail networks. In 2016, Etihad Rail — the federal body mandated with network development — successfully launched a freight rail line connecting gas fields in the south with the city of Ruwais.
  • Etihad Rail recently announced the completion of track-laying in Sharjah and Ras Al Khaimah as part of a rail line connecting Ghuweifat on the UAE border to the UAE’s northern coast. The next step would be to connect Fujairah on the Indian Ocean to this growing network. By 2030, Etihad Rail envisions a robust train network spanning some 1,200 kilometers, carrying millions of passengers across the country, and has pledged to spend $13 billion in development.
  • With the region’s most extensive existing network, Saudi Arabia plans to more than double the number of tracks connecting the country, pledging to add 8,000 kilometers to the already-existing more than 5,000 kilometers of track. Rail accounts for the largest portion of planned transport spending.
  • Two key developments have added momentum to Saudi Arabia’s rail developments: the addition of a fifth passenger stop near the Jordanian border, allowing for train travel from the north to Riyadh in 12 hours; and a 450-kilometer high-speed railway launched in 2018 that links the holy cities of Makkah and Medina with a stop at King Abdulaziz International Airport and King Abdullah Economic City in Jeddah.
  • The Saudi Landbridge Project, the kingdom’s most ambitious yet, aims to connect Jeddah on the Red Sea coast across the nation to the eastern province and the Persian Gulf sea lanes. Rail freight currently accounts for less than 5% of total freight within the kingdom. The landbridge will raise that significantly.
  • Increased rail connectivity will also boost Saudi Arabia’s ambitious tourism vision. As part of Vision 2030, the kingdom aims to attract 100 million visitors by the end of the decade, a five-fold increase from 2019. Amid easing tensions between Riyadh and Doha, Qatar also recently announced that construction and planning on its rail link to Saudi Arabia have advanced.
  • Oman received a boost in its rail efforts with a recently signed agreement between Oman Rail and Etihad Rail to establish a joint company that would operate a 300-kilometer network that links Sohar Port with the fast-growing UAE network. Plans are afoot for a starting capacity of 12,000 passengers per day as well as 250,000 containers.
  • Kuwait and Bahrain have moved slower than others in developing their rail networks, and Bahrain and Qatar remain at loggerheads diplomatically, complicating plans for a planned causeway that would have supported road and rail links.
Alternative Scenarios:

Scenario 1: Oil and gas prices collapse, pinching government budgets and delaying rail network plans.

This is less likely given the nature of energy dynamics today as Russian oil and gas exports will see long-term declines as European sanctions tighten, energy demand continues to ramp up worldwide, and limited investment in new production has tightened the supply outlook for the next decade. Even with lower oil and gas prices, the biggest spenders — the UAE, Saudi Arabia and Qatar — are well-positioned fiscally to continue budget outlays for a sector they have clearly defined as strategic.

Scenario 2: Individual laggards or lingering regional tensions hold up the project.

While individual states can slow the idea of a rail link connecting all six GCC states and the idea of train travel from Kuwait City to Muscat by the end of the decade, robust investment in Saudi Arabia and the UAE will dramatically grow rail networks, adding pressure on other states to play catch up or get left behind. Given the stated importance of rail in the vision plans of Saudi Arabia and the UAE and Qatar’s determination to keep up with those two states, it is likely Doha will seek to keep pace with Riyadh and Abu Dhabi. Further, Doha-Riyadh ties have healed rapidly, supporting future rail links.

Conclusion - Most Likely Scenario:

For a region with business models and future visions tied to regional and global connectivity, expanding rail networks makes eminent sense. A combination of new resolve, high energy prices, a favorable geopolitical environment, existing project success stories, and the establishment of regional and national institutions mandated to grow rail all leads to an inexorable conclusion: The GCC will be a major source of new rail developments over the next decade. Saudi Arabia and the UAE will lead the pack in spending and track-laying, with Qatar trailing close behind. All three will be expanding regional interconnectivity and putting pressure on others to keep up. While the dream of a GCC line that allows for easy travel from Kuwait City to Muscat may still be a distant prospect, train travel will become much more common for residents and visitors over the next decade, while freight rail will add to regional connectivity.

Contributor Background:

Afshin Molavi has nearly 25 years of experience covering the geo-economics of the Middle East and North Africa and broader emerging markets with postings in Riyadh, Jeddah, Dubai, Tehran and elsewhere. Currently a senior fellow at the Johns Hopkins School of Advanced International Studies in Washington, he has also held various research, reporting, analyst and leadership roles at Reuters, Oxford Analytica, the International Finance Corporation of the World Bank, emerge85 and the New America Foundation. His articles have also appeared in Bloomberg, the Financial Times, the Washington Post and the Journal of Commerce, and he is the founding editor of Emerging World, a Substack newsletter that explores the intersection of emerging markets, globalization and the key global trends shaping our future. 

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