The Middle East is going through rapid changes. The process has been under way for some time but the emergence of new leadership has given it a new dimension. Many factors are contributing to this situation. These include politics, security, culture and foreign policy but economic interests dominate the rest.

It seems that the Middle Eastern countries, especially the Gulf Cooperation Council (GCC) members, are in a race to diversify their economies and minimise dependence on fossil fuels. Hence, every other country is coming up with its own development plans like Vision 2030 proposed by Saudi Arabia and Vision 2035 revealed by Kuwait. The ‘visions’ have been devised to reshape their economies and look for new avenues of economic significance.

This is not a choice; it is a compulsion for them. It is an open secret that climate change has affected the whole world and fossil fuels are the biggest reason for it.

The rage against climate change is compelling the oil-dependent countries to look for new avenues. The leadership of every country is facing pressure from their populations to move away from oil and look for cleaner sources of energy. Sustainable Development Goals and Paris Climate Change Agreement have further complicated the situation for the oil-dependent countries.

Covid-19 is another factor. It has shaken the economic landscape of the region and stressed the need to diversify. Major economies in the region have shrunk, Saudi Arabia by 4.1 percent, the UAE 5.9 percent and Qatar by 3.2 percent.

The race to diversify the economies has thus been further accelerated. In their efforts to diversify their economies, these countries are facing tough competition and challenges from one another. The competition is more visible among the GCC members as they have a high reliance on fossil fuel. They want to maximise their benefits before it is too late.

The competition has given rise to rivalries among these countries. The first instance of note in this regard is the relations between Saudi Arabia and Qatar. Relations between Saudi Arabia and the UAE are also strained, especially after the UAE made a unilateral announcement to enhance its oil production. Saudi Arabia strongly opposed the decision and has asked the UAE to reconsider it.

On the other hand, the recent efforts by Saudi Arabia to attain economic diversification have created distress in some Middle Eastern countries. First, Saudi Arabia has announced that it will become a connectivity hub over the coming years. Saudi Arabia has announced that it will be investing about $130 billion to restructure and expand the airports and related sectors. It also plans to launch a new airline. The initiative has a direct relevance for the UAE and Qatar, as both are major hubs of connectivity in the region.

Saudi Arabia is also trying to attract major companies to the Kingdom using both a carrot and a stick. On the one hand, the KSA is offering incentives for companies and private businesses. On the other hand, in early 2021, the KSA announced that it will sever its relationship with companies that do not establish their offices in the Kingdom. Many multinational companies serving the KSA are currently based in the UAE or Qatar and operate their business from there.

The KSA has also revised its policy of tariff concessions and movement of goods across the border. It has announced that goods containing Israeli inputs and those produced in free trade zones will not receive any concession or preference. This will directly hit the UAE.

The next competition will be in the field of renewable energy, climate-friendly industries, technologies and securing food. Oil-dependent countries are facing a dual challenge. They have to quit fossil fuel production and meet the energy demand of the country, simultaneously. Besides, they have to shift their industry to climate-friendly technologies for which they have no base.

Most of the regional countries are dependent on imported food. The KSA, for instance, imports more than 80 percent of its food. Kuwait imports 85 percent. Climate change which is impacting food production will further complicate the situation.

There are also many areas in geo-politics where these countries have conflicting views. The most prominent areas are Yemen, Syria conflict, Israel and the race for superiority.

Pakistan should focus on its economy and emerging opportunities in the region. It should work closely with all countries in the region and not with some at the expense of others.

Currently two of these countries offer significant opportunities for Pakistan. Saudi Arabia presents opportunities in infrastructure development, food and services.

Adaptation of modern technology, especially in information technology will create many opportunities, which Pakistan can exploit. Pakistan can also benefit from the emerging job market in the services sector. Saudi Arabia has decided to become a connectivity hub. This will create new job opportunities in large numbers. Pakistan can also benefit by venturing in the restaurants industry by tagging it with food and food commodities from Pakistan.

Kuwait too offers huge opportunities. It is keen to invest in Pakistan in oil, agriculture and in SEZs. Kuwait is also looking to import human resource from Pakistan. Cyber security can be another area of interest. Kuwait is also engaged in building huge infrastructure for connectivity, maritime trade and tourism. Kuwait has also initiated the process to build a new city. More importantly, Kuwait is not part of any regional conflict. Its neutrality makes it one of the most suitable countries for economic linkages.

To exploit the job market and investment potential, Pakistan will have to work in three areas. First, it will have to improve the investment climate. It will have to make it business-friendly. Second, Pakistan will have to impart skills, especially to the youth. For that purpose, it will have to run specialised programmes by keeping in mind the new job market of Kuwait and Saudi Arabia. We need to say goodbye to old strategies and practices. Third, Pakistan will have to work on communication and PR skills of the labour force. As most of the jobs will be in the field of public engagement sectors.

Pakistan must be conscious of the changing dynamics of the region, both in terms of economy and geo-politics. Pakistan should conduct a detailed analysis of these changing dynamics and politics in the region. It will help Pakistan devise a balanced and wise policy. Pakistan should try to avoid picking sides in the region.

Prime Minister Imran Khan’s declaration, “Pakistan is ready to work for peace and development but Pakistan will not pick sides in conflicts,” should be the guiding principle.

The writer is a political economist