Donald Trump & the GCC, What can we expect?
A look at what the Trump presidency could mean for the Gulf region
When Donald Trump enters the White House as President of the United States of America on 20 January, the world will be faced with an unknown quantity on a political level.
What is certain is the global concern born out of his aggressive, winning campaign that has been reflected in the stock markets fluctuation.
We look at what Donald Trump Presidency could mean for the Gulf states region
But with President Elect Trump’s victory in November’s presidential election, has posed many questions regarding his ability to establish popular command at home.
And to add to his mounting workload, the business magnate may have to work overtime to convince foreign governments not only of his credentials as a serious politician, but also his ability to work as a international partner.
This challenge is perhaps most keenly felt in the Gulf Cooperation Council (GCC) a region he antagonized in recent months with comments including his infamous proposal to put a ban on Muslims entering the US.
News agency Reuters highlighted the magnitude of this particular struggle when it wrote: “The future of the Middle East’s top foreign ally is, in the words of a Saudi prince, an anti-Muslim “disgrace”, openly disdainful of Arab security partnerships, who believes Saudi Arabia would cease to exist for long without the United States.”
Concerns were also voiced in other parts of the GCC, including the UAE where Dubai’s deputy chairman of police and general security Lieutenant General Dhahi Khalfan Tamim warned about the danger of a Trump win back in March, writing on Twitter about a potential “clash of civilisations” if the Republican candidate won. But now that the supposedly unthinkable has happened, major players in the region have made moves to start out on a path of cooperation and goodwill.
For their part, Gulf leaders sent their congratulations and good will to President -Elect Trump immediately after his victory.
The Vice President and Prime Minister of the UAE and Ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum took to Twitter to express his good wishes.
“We offer our congratulations and best wishes both to President Elect Donald Trump and to the American people,” he wrote.
“We look forward to share our message of hope, peace, tolerance and development for a better world.”
Saudi state news agency SPA reported that King Salman wished Trump success in “achieving security and stability in the Middle East and the wider world”, while Qatar’s Minister of Foreign Affairs, Mohammed bin Abdulrahman Al Thani, wrote on Twitter: “We congratulate @realDonaldTrump for being elected as 45th President of #USA. Look FW to strengthen #Qatar #US cooperation in all fields.”
Newspaper Kuwait Times reported that: “His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah sent a congratulatory cable yesterday to Trump on winning the US presidential elections. The Amir expressed hopes that Kuwait and the US will continue their strong historic relations, working together for a brighter future for the world.”
In Oman, His Majesty Sultan Qaboos Bin Said also sent a cable of congratulations to Trump, wishing him success in various areas including further growth in bilateral ties, as did Bahrain’s Crown Prince, Deputy Supreme Commander and First Deputy Prime Minister, His Royal Highness Prince Salman bin Hamad Al Khalifa.
Customary as they may be, these comments suggest a willingness to work with President Trump, and have been echoed by business leaders in the region.
Following a public spat with Trump on Twitter, Saudi business magnate Prince Alwaleed bin Talal — the prince who branded Trump a disgrace — wrote: “President elect @realDonaldTrump whatever the past differences, America has spoken, congratulations & best wishes for your presidency.”
In a TV interview he added “I have no problem with him right now, and I’m very happy to interact with him.”
Another 1-time Trump critic, Dubai’s Khalaf Al Habtoor, also offered positive comments to local media, saying that the GCC can work “very well” with Donald Trump as President, and that he must “re-establish the long relationship the GCC has with America”.
Less encouraging was the market reaction to the shock of Donald Trump’s win.
Stock markets in the Gulf fell sharply as the result of the election became clear, with Saudi Arabia’s index pulling back 2.7% in the 1st 10 mins of trade as more than 90% of traded shares declined.
Dubai’s market sunk 2.7%, with notable drops including Emaar Properties (losing 3.5%) and Dubai Investment (losing 3.9%), while Abu Dhabi’s index was down 1.7%. Aldar Properties was particularly hard hit, retreating 3.8%. Doha’s index went down 2.2%.
Investors seemed to fear economic and trade turmoil around the world with years of unpredictability on policy, all of which could have discourage the Fed from raising interest rates this week.
Crude Oil prices also fell after the results of the election, with Crude tumbling by 4% early on, leaving prices at 43, a near 2-month low before bouncing back shortly afterwards.
Gold however jumped by 70 to a high of 1,337 oz
Suffice to say there is more than an air of anxiety in the region following Donald Trump’s winning campaign, with predictions of difficulties ahead.
Speaking on the day of the result, Faisal Durrani, partner – head of research at Cluttons, said: “This morning’s shock result is already reverberating around the world and creating further anxiety in an already uncertain economic environment.
“While it’s still early days, immediate concerns are around the resilience of oil prices, which are sliding this morning along with a weaker dollar, suggesting we may need to buckle up.”
However, he added that the weaker dollar could benefit markets in the GCC, saying: “This may well strength the appeal of a regional investment, helping markets such as Dubai and more secondary locations like Doha, perhaps, benefit from any temporary recoiling in global property investment appetite.”
Quoted in The National, John Sfakianakis, director of economic research at the Gulf Research Centre in Riyadh highlighted a potential problem for Arab investors in the US, with billions of dollars of GCC investments at stake.
“Investors from the region won’t liquidate, as much will depend on actual policy change that goes beyond the mere rhetoric,” he said.
“Yet if the rhetoric becomes policy, then investors will have to look for safe havens and that will not be as easy as one thinks.”
On a social level, Samer Chehab, COO of comparison site compareit4me.com believes his presidency could put American expats in the region in a “tricky position”.
He said: “Trump came out with mad policy ideas in the run-up to the election, and if he enacts any of them as President, it could spell bad news for American expats in the Gulf.
“For example, Trump’s ideas of limiting Muslims’ access to the United States would be disastrous for US-Gulf relations. The Gulf countries could retaliate by making it more difficult for American citizens to travel in the region, or by placing credit restrictions on them.”
He added that if American business interests were threatened in the region, it could impact the tens of thousands of Americans employed by US companies in the Gulf.
“What happens to those jobs if the business relationships between the US and Gulf countries turn sour? It’s definitely worrying, so we’d advise American expats to put any big spending plans on hold until it’s clear that their ability to work in the Gulf is safe.”
There are also major concerns over Donald Trump’s environmental stance as well as his vow to rip up the international nuclear deal with Iran.
There could also be an impact on students from the Gulf, with many said to be reconsidering their options having initially planned to pursue higher education in the US, a trend largely driven by anxieties over Donald Trump’s rhetoric on Muslims and increasing reports of hate crimes in the country.
However seriously Trump applies his demagogic approach as candidate to his role as president – border wall, Obamacare, Iran nuclear deal, Muslim ban et al – there will be a number of issues concerning the GCC and Middle East that he will need to engage with sensitively.
America has its fingers in numerous Arab pies.
The coalition intervention in Yemen and the chaos of Iraq and Syria are two areas of foreign policy where the Trump Administration will be closely scrutinized.
And then there are trade relationships, cyber security, and numerous other issues to consider. All of which are Key US interests, which will demand that he works closely with regional allies.’
Like him or not like him, there is no escaping the reality that Donald Trump will be the President of the United States of America in the new year.
His rhetoric as the Republican candidate proved somewhat divisive at home and set alarm bells ringing abroad, and with his Inauguration imminent businesses and governments across the region have already had to adjust to this new political reality and its implications.
Whether or not Donald Trump will follow through with his election promises and threats, the world, including the GCC has braced itself as it waits to see what changes and challenges the new Presidency brings.
By Neil King
Paul Ebeling, Editor