KSA is The EU’s Economic Arena for the Ensuing 10 years

The European Union countries recognise the importance of strengthening economic ties with Middle Eastern and Gulf countries, especially after geopolitical shifts with financial, investment, and strategic implications. These nations can provide support and assistance for the economic demands and pressures faced by the European continent.

With its permanent economic presence in Europe and strategic positioning as a hub for regional and international projects, Saudi Arabia has become the most important Gulf and Middle Eastern country in the European Union for economic, investment, and trade officials. This is due to its ability to connect active economic markets in Africa, Asia, and Europe and its role in the European Union.

An Ideal Partner

According to its member states, the European Union acknowledges Saudi Arabia’s economic dominance and unlimited investment, which has led to its rise to regional leadership in the past decade. This dominance has attracted new trading partners like Turkey, Iran, the Emirates, and Qatar, despite rivals’ limited choices due to Saudi Arabia’s ambitions, maturity, and leadership.

Under the auspices of the Public Investment Fund, this is what changed the Saudi economy and its markets—moving them from local and regional economic leadership to an international and global one. As a result, the European economic poles were forced to acknowledge that the Kingdom is the best partner for their nations in terms of supply chain flow, energy stability, and investment sustainability.

The Kingdom’s trade volume with the European Union, the second-largest trading partner, reached over 13% in 2022 and less than 16% in 2023, with an annual trade volume of $80 billion, according to the Kingdom’s General Authority for Statistics. Moreover, European businesses aim to participate in Saudi Arabia’s diverse and expanding economic activities, mainly in the non-oil sector, in support of the Kingdom’s comprehensive economic partnership.

The initiative aims to diversify revenue streams and develop the Saudi economy, resulting in over 1,350 European businesses operating in Saudi Arabia. This has led to increased foreign direct investment, trade exchanges, and progress in commercial, investment, and economic infrastructure development, with a growth rate exceeding 25% in recent years.

In turn, the EU’s trade exchange between the two parties, including foreign direct investment, reached around 130 billion euros between 2021 and 2022, demonstrating its significant role in fostering economic and investment partnerships. This is in addition to the logistical services it offers to investment companies operating on its land.

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Adaptability and Neutrality

The Saudi government employs flexible financial and economic policies for foreign investments, avoiding conflicts with other parties. It maintains a neutral stance on political matters affecting national sovereignty in its financial and investment dealings with major nations and the G20, ensuring creative flexibility and mutual partnerships in strategic, economic, political, and other sectors.

The Saudi leadership’s unwillingness to engage in non-party affairs ensures positive relations with all parties and protects Saudi Arabia’s strategic interests by maintaining gains with regional and international allies, particularly European ones. The kingdom is cautious in addressing potential issues that could undermine its partnerships.

The Kingdom has denied rumours of selling its European bonds in 2024 and emphasised its economic and investment partnerships as a crucial pillar of global economic stability. Furthermore, it focuses on international contacts and removing politicisation that hinders its global financial and commercial incubators to enhance collaborations.

The Kingdom of Saudi Arabia and EU member states have mutual trust in commercial, investment, and financial contexts, ensuring an open and ready investment geography for growth and extension over the next ten years.

European stock markets are attracting Saudi investors due to their political stability and economic momentum from emerging markets. These factors are driving Saudi investments towards European markets, despite the growing growth in European investments in Saudi Arabia through diverse sectors and positive policies supporting incoming investment.

More specifically, European stock markets have implemented new policies to reduce risks and promote sustainable profit growth. These policies, coupled with balanced euro-dollar exchange rates, will strengthen the relationship between Saudi investments and European investment incubators. Over the next decade, Saudi/European and European/Saudi investment will experience significant growth in investments, exchanges, and economic partnerships.

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Features of Collaboration

European and Saudi markets are collaborating more due to the Kingdom’s economic and social liberalism, promoting investment and commercial dialogue. Saudi economic strategy aims to attract new investors by bridging the gap between local communities and investment patterns.

Remarkably, an Irish company has launched the first fund for European investors to trade and purchase Saudi government bonds through European stock exchanges. This enables consistent and rapid growth rates in Saudi fixed-income markets and makes it accessible to many European countries.

Saudi Arabia is partnering with European companies to boost green hydrogen production and export rates, with an agreement signed between two Saudi and German companies to export over 180 tonnes of green hydrogen and ammonia annually.

In February 2024, the Saudi Ministry of Environment, Water, and Agriculture signed a first-ever agreement to export agricultural products to the European market, particularly the Netherlands, in response to the agricultural sector’s growth, reaching self-sufficiency after producing over 10 million tonnes.

The General Authority for Foreign Trade in the Kingdom held a meeting with over fifty expert economists at the end of 2024. The meeting showcased the shared desire between the Kingdom and EU countries to expand trade exchange and financial and investment cooperation in the future. Primarily, this meeting introduced reform measures aimed at legislation, cooperation opportunities, customs dealings, trade and investment flow, and lifting trade barriers to foster a comprehensive, dynamic economic partnership.

The Kingdom and the European Union aim to establish an effective partnership that goes beyond traditional interests, including strategic, technical, and artistic collaborations, in line with Saudi ambitions for comprehensive reform priorities. Most Saudi bodies have participated in bilateral discussions to maximize Saudi interests in foreign trade.

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A Sensible Strategy

Upon deeper examination, it becomes evident that the Kingdom of Saudi Arabia and the European Union countries have a shared interest in forming an economic and trading alliance. This approach makes sense and governs the relationship between the two parties. The Kingdom views the economic relationship with the nations that make up this union as a viable avenue for economic growth and the promotion of resources, wealth, and important national sectors.

In addition to spanning over 26 nations and encompassing four million square kilometres—more than 42% of the whole European continent—this alliance forges extensive economic and investment ties. A single region has about 440 million people’s purchasing and consumption power.

When combined, these requirements create the perfect setting for the Saudi economy, which is looking for enthusiasm and financial, investment, and commercial impetus. Additionally, they serve as a source of civilisational, cultural, and legacy dissemination for the Saudi environment, which is experiencing urbanisation, development, and renewal.

The European Union considers the Kingdom of Saudi Arabia to be a source of financial, commercial, and investment influence that permeates the people of the European continent, along with being a significant energy supplier and a cornerstone of Gulf and Middle Eastern international relations.

In actuality, the demands of comprehensive Saudi reform necessitate accurate and expert plans for future modernisation plans, maximising benefits for all national and local sectors from EU collaboration. Current transformations are not sector-specific. However, Saudi ambitions aim to reform and develop all sectors under a modern perspective, allowing for thorough interaction with the diverse European model.

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