Growing Middle East economic and investment cooperation caught between tailwinds and headwinds

March 2024 Al-Monitor Trend Report 

2,410 words

Turkey’s efforts to boost economic ties with former Gulf rivals have continued in 2024: on March 21, the Gulf Cooperation Council (GCC) and Turkey agreed to launch negotiations for a free trade agreement (FTA). If finalized, it could create one of the world’s largest free trade areas, with a total value of $2.4 trillion, Turkey’s trade minister wrote on X (formerly Twitter). That comes after Gulf governments pledged to invest billions into Turkey last year, delivering a big win for President Recep Tayyip Erdogan’s efforts to revive his country’s moribund economy. 

Similarly, Gulf wealth is throwing a major lifeline to another embattled economy: in February, Egypt signed a $35 billion deal with the UAE centered on developing a Mediterranean resort area. The mega investment delivered a major influx of much needed foreign currency, helping pave way for Cairo to secure an expanded $8 billion IMF loan deal. Within days, rumors began swirling that Saudi Arabia was looking to invest billions into an Egyptian Red Sea tourist destination.  

These moves indicate that there are still strong tailwinds behind ongoing economic integration and investment cooperation in the Middle East despite instability delivered by the Gaza war. Still, this comes alongside signs of how the conflict is also hurting collaboration. 

On March 13, Abu Dhabi's national oil company and BP suspended a $2 billion offer to buy a 50% stake in Israeli gas producer NewMed Energy due to regional uncertainty. A highly visible sign of growing Israel-UAE ties, the deal emerged as a byproduct of the Abraham Accords and hints at how the war could impact gas grid integration in the eastern Mediterranean. Other economic links boosted by normalization also appear to be fraying, with Morocco now turning to Turkey for weapons as the Gaza war strains defense deals with Israel.