Saudi and UAE Power Struggle Reshapes Gulf Alliance After 40 Years

The Gulf Cooperation Council was founded in 1981 by six monarchies, Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Bahrain, and Oman, bound together by a shared moment of vulnerability. The Iranian Revolution and the outbreak of the Iran-Iraq War had made collective security feel like the only rational choice. For decades, that logic held. Today, it is fracturing.

The transformation underway is not a collapse into open hostility. Saudi Arabia and the UAE remain deeply interconnected politically, economically, and strategically. What has changed is more subtle and more consequential: the two largest Gulf powers are pursuing increasingly autonomous national strategies, driven by matured ambitions, diversified priorities, and growing confidence in their ability to act independently. The shared external pressure that once bound them together has loosened. In its place has emerged what might be called competitive coordination, a system in which cooperation and rivalry coexist simultaneously.

This shift reflects a broader reality about how Gulf states now operate. For much of the past decade, Riyadh and Abu Dhabi appeared to move in near strategic harmony. They coordinated on regional security, confronted political Islamist movements, and sought to reshape the political order that followed the Arab Spring. Beneath that apparent alignment, however, important differences persisted. Saudi Arabia is a unitary monarchy governed from a single center, while the UAE is a federation of seven emirates whose individual rulers, particularly in Dubai and Abu Dhabi, retain significant autonomy over foreign and economic policy. These structural differences shaped distinct decision-making styles even during periods of close alignment.

One of the earliest and most long-standing disputes concerns maritime borders relating to the Treaty of Jeddah from 1974. In 2005, the UAE decreed Al-Yasat, a maritime territory sitting near both countries’ shores, as its own. Saudi Arabia responded with increased restrictions at land border crossings. The disagreement escalated in 2019 when the UAE expanded the borders of Al-Yasat, prompting Saudi Arabia to file a complaint with the United Nations. The situation remains unresolved, a reminder that even the most basic territorial questions between these two countries have never been fully settled.

Regional political divergences have accumulated over time. The UAE normalized relations with Israel in 2020, but Riyadh held back, calculating that its own normalization would carry a higher political cost given its custodianship of Islam’s holiest sites. When the Qatar blockade ended in 2021, Saudi Arabia moved toward reconciliation with Doha considerably faster and more warmly than the UAE, which retained deeper reservations about Qatar’s regional alignments. These were not yet signs of rivalry, but they indicated that Riyadh and Abu Dhabi were beginning to calibrate their regional choices according to increasingly distinct national logics.

Iran’s role in this dynamic has been pivotal, though not in a straightforward way. For decades, a shared perception of the Iranian threat was the principal glue holding Saudi-UAE coordination together. As Saudi Arabia recalibrated its approach toward Tehran, first through the 2023 China-brokered rapprochement and more recently through its proposed non-aggression framework, that shared external pressure loosened. The removal of one of the strongest incentives that had previously suppressed underlying differences created space for those differences to emerge more openly.

The economic drivers of competition run deep. Traditional security considerations have broadened to include economic diversification agendas, demographic pressures, technological ambitions, and post-oil transition concerns as drivers of policy. Large youth populations created an urgent need to generate jobs and revenue beyond oil and the public sector, making the attraction of foreign investment, tourism, and corporate headquarters a matter of strategic necessity rather than mere preference. Because the pool of available investment and corporate relocations is finite, diversification strategies that look similar on paper translate directly into competition for the same resources.

Saudi Arabia’s Vision 2030 is a geopolitical project designed to position the Kingdom as the indispensable political, economic, and diplomatic center of the Arab and Islamic worlds. This has meant an unprecedented wave of giga-projects, including NEOM, Qiddiya, Red Sea Global, and Diriyah, funded primarily through the Public Investment Fund, whose assets under management have grown to roughly 910 billion dollars. The PIF’s international portfolio, spanning stakes in global sports, entertainment, and technology companies, functions as much as a tool of geopolitical positioning as of financial return. Economic strife in 2026 has brought visible recalibration. NEOM in particular has undergone significant cost-cutting and project adjustments, suggesting that the financial limits of this model are becoming more apparent even as its geopolitical ambitions remain unchanged.

The UAE has developed its own model of influence rooted in logistics, finance, global connectivity, technological modernization, and strategic agility. Abu Dhabi’s regional approach has often emphasized flexibility, commercial reach, and diversified international partnerships. DP World, the UAE’s multinational supply chain and logistics company, operates more than 80 port terminals across roughly 40 countries, positioning Dubai’s Jebel Ali and Abu Dhabi’s Khalifa Port as critical nodes in global shipping networks well beyond the Gulf. The Emirates and Etihad airlines have similarly built outsized long-haul transit hubs relative to the UAE’s population, while sovereign vehicles such as Mubadala and ADQ pursue technology investments, including in artificial intelligence, that have occasionally drawn scrutiny from Washington over their ties to Chinese technology partners.

The Red Sea is emerging as one of the principal arenas of future competition between the two countries. Ports, maritime corridors, logistics infrastructure, food security chains, and access to African markets are becoming central components of Gulf strategic thinking, particularly following concerns about the closure of the Strait of Hormuz. Saudi Arabia has invested heavily in Red Sea logistics infrastructure, most notably the new NEOM Port and an expanding Jeddah Islamic Port, to offer bypass routes around the Strait of Hormuz and as alternatives to the network of terminals DP World has built from Sokhna in Egypt to Berbera in Somaliland. Even where commercial interests still intersect, such as DP World’s stake in Jeddah’s southern container terminal, the broader trajectory is toward competing rather than shared infrastructure, with each country building out a Red Sea network designed to reduce its dependence on the other.

The Yemen conflict illustrates how competition extends into diplomatic and proxy spheres. For much of the past decade, Riyadh and Abu Dhabi have backed rival factions within the broader anti-Houthi camp. Saudi Arabia has supported the internationally recognized government, including its Islah-aligned components, a Sunni Islamist group advocating for a unified Yemeni state. The UAE has cultivated the Southern Transitional Council, a secularist group advocating for the secession of South Yemen, and affiliated militias as a more flexible vehicle for its own influence over Yemen’s southern coastline and islands. This rivalry became openly visible in December 2025, when STC forces seized territory in Hadramout and al-Mahra provinces near the Saudi border, prompting Riyadh to strike STC-linked positions and press for an Emirati military withdrawal. Abu Dhabi chose to accommodate rather than escalate.

A similar pattern has unfolded in Sudan, where Saudi Arabia and Egypt back the Sudanese Armed Forces under General Abdel Fattah al-Burhan as the country’s legitimate authority, while the UAE has provided support to the Rapid Support Forces. The UAE drew international scrutiny for the arrangement, including a case brought by Sudan against the UAE at the International Court of Justice, dismissed in May 2025 for lack of jurisdiction. For Riyadh, the underlying concern extends beyond Sudan itself: if externally backed paramilitaries can fracture one Arab state’s sovereignty and capture its resource economy, the precedent could spread along the wider Red Sea.

Despite these long-running disputes over proxies and territorial influence, Riyadh and Abu Dhabi have so far kept Yemen and Sudan contained as separate policy areas, restricting them from having significant impact on the two countries’ wider relationship. On the broader security questions that matter most to both capitals, the two countries remain substantially aligned. Both continue to value U.S. security guarantees in the Gulf, even as Saudi Arabia in particular has visibly moved to diversify its security arrangements. Both have sought to prevent any return of Muslim Brotherhood-aligned movements to positions of power in the region. Both share an interest in avoiding renewed open warfare with Iran, even if their tolerance for direct engagement with Tehran now differs sharply.

The aftermath of the Gaza war has opened the door for differences between the two countries to become more visible without signifying a complete breach in cooperation. Riyadh appears increasingly sensitive to the broader political and symbolic dimensions of regional legitimacy, particularly in light of Saudi Arabia’s wider Arab and Islamic positioning. A jump into normalization with Israel could threaten Riyadh’s standing among regional partners. Abu Dhabi has maintained a more continuity-based approach rooted in the strategic logic of the Abraham Accords and in its privileged network of technological, security, and economic relations with Israel.

Saudi officials, including Foreign Minister Prince Faisal bin Farhan, have repeatedly stated since October 2023 that normalization with Israel cannot proceed without a credible and irreversible pathway to Palestinian statehood. Emirati officials, by contrast, have generally treated the Abraham Accords and progress on Palestinian statehood as parallel rather than sequential tracks, arguing that disengaging from Israel would reduce Abu Dhabi’s ability to shape outcomes for Palestinians rather than advance them. These differing calculations reflect two partially distinct conceptions of regional influence: one centered on broad political legitimacy and strategic centrality, the other on flexible partnerships, economic integration, and networked geopolitical reach.