THE conflict in the Middle East has forced the Gulf monarchies to rethink their oil and trade routes, but rerouting them will be no simple task, experts say.<\/p>\n
Faced with the closure of the Strait of Hormuz, the only maritime entry point to the Persian Gulf, the region\u2019s Arab nations are looking for ways to bypass Teheran\u2019s stranglehold on their exports.<\/p>\n
Badr Jafar, the UAE\u2019s special envoy for business and philanthropy, wrote in the Financial Times in early April that the Gulf states would never \u201creturn to a posture of strategic dependence on a narrow strait controlled by an unpredictable neighbour\u201d.<\/p>\n
He insisted that new pipeline and port capacity would be built and \u201cthe power grids, water systems and trade corridors connecting the region\u2019s economies forma\u00adlised\u201d.<\/p>\n
Economics, politics and regional diplomatic rivalries are likely to get in the way, however, experts said.<\/p>\n
While Kuwait, Qatar and Bahrain have no coastline outside the Gulf and no alternative to the strait for seabound oil and gas, Saudi Arabia and the United Arab Emirates both have pipelines allowing them to ship at least some of their output from ports beyond Hormuz \u2013 and plan more.<\/p>\n
Nevertheless, these pipelines only cover a fraction of the two nations\u2019 pre-war exports and would need to be expanded if either country wants to completely end their reliance on the Strait of Hormuz.<\/p>\n
Robert Mogielnicki, of the Arab Gulf States Institute in Paris, said building new pipelines \u201cwill take time\u201d and such infrastructure would \u201cstill possess vulnerabi\u00adlities\u201d.<\/p>\n
\u201cDiversifying energy export supply routes is nevertheless going to be crucial in the years ahead,\u201d he added.<\/p>\n
For liquefied natural gas (LNG), of which Qatar is by far the dominant producer in the region, the dependency on Hormuz is even greater.<\/p>\n
Yet, as Frederic Schneider, a senior fellow at the Middle East Council on Global Affairs, explains, building alternative \u00adnatural gas infrastructure will likely prove economically unattractive.<\/p>\n
\u201cThe idea of a trans-Arabian gas pipeline has occasionally been floated but never progressed,\u201d he said.<\/p>\n
\u201cThe distances, political complexity and cost make it unattractive against LNG tankers in normal conditions, and normal conditions are what pipeline economics are built on.\u201d<\/p>\n
The Gulf\u2019s major container ports are mostly located on its southern shores, including Dubai\u2019s Jebel Ali, the region\u2019s main logistical hub.<\/p>\n
With the Strait of Hormuz off limits, ships have been diverted to Oman and Saudi Arabia\u2019s Red Sea coast with contai\u00adners then shipped onwards overland.<\/p>\n
But overland capacity is limited while costs are \u201csignificantly higher\u201d, said Schneider.<\/p>\n
One possibility for boosting land-based transport capacity would be the Gulf Cooperation Council\u2019s (GCC) planned rail network. Yet, the project, which is suppo\u00adsed to link all six member states by 2030, has been plagued by delays.<\/p>\n
Another possibility could be the India-Middle East-Europe Economic Corridor project, launched in 2023, which partially aims to bypass both the Strait of Hormuz and the Suez Canal, using rail links across the Middle East to connect European and Indian shipping routes.<\/p>\n
Yet, the idea remains \u201ctenuous, if not hypothetical\u201d, said Schneider, not least because the project would involve linking Saudi Arabia with Israel at a time when Riyadh has cooled on establishing diplomatic relations with Israel.<\/p>\n
While Gulf governments talk about \u00adintegration, analysts warn that their own self-interest may get in the way.<\/p>\n
\u201cTensions around the strait will gene\u00adrate some tailwinds supporting regional integration projects, but these will also have to contend with some serious economic headwinds and governments that will be super focused on their domestic fronts,\u201d said Mogielnicki.<\/p>\n
The budgetary pressures created by the conflict, which have not only halted oil and gas exports but also hit tourism, \u00adaluminium and fertiliser production, may also make coordination less likely.<\/p>\n
\u201cThis fiscal crisis only intensifies the intense, beggar-thy-neighbour, zero-sum economic rivalry that has marked GCC national economic policies for years,\u201d said Schneider.<\/p>\n
Previous conflicts in the Gulf, he pointed out, did not lead to more regional integration, even if there were bilateral deals, he said.<\/p>\n
While the shock of closing Hormuz is much greater, he said, \u201cI would be cautious about treating a geopolitical shock as a substitute for the political will and institutional capacity that have been missing so far\u201d. \u2014 AFP<\/p>\n","protected":false},"excerpt":{"rendered":"THE conflict in the Middle East has forced the Gulf monarchies to rethink their oil and trade routes,…\n","protected":false},"author":2,"featured_media":122218,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[26],"tags":[177,14073,41640,49,27872,39,11991,15769,41642,41639,101,41641],"class_list":["post-122217","post","type-post","status-publish","format-standard","has-post-thumbnail","category-persian-gulf","tag-conflict","tag-gulf-monarchies","tag-lng-dependency","tag-middle-east","tag-oil-routes","tag-persian-gulf","tag-pipelines","tag-regional-diplomacy","tag-regional-integration","tag-starextra","tag-strait-of-hormuz","tag-transport-capacity"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@iran\/116604182472362004","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/122217","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/comments?post=122217"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/122217\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media\/122218"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media?parent=122217"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/categories?post=122217"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/tags?post=122217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}