Is Donald Trump's Re-Election Bullish for the GCC Economies?

By the morning of November 6th, it became obvious that former President Donald Trump would return to the White House and serve a second term, after defeating the Democrat Party candidate Kamala Harris.

Much of the world was fixated on the American elections since they would decide many things. Russian and Ukrainian observers were keen on seeing who would win, discussing which prospective candidate would support their side or seek a ceasefire in the conflict. Chinese observers would hedge some Asia Pacific politics based on the winner, and so on. However, one such supranational entity in geopolitics should not be ignored, and that would be the Gulf Cooperation Council (GCC).

Photo credit above: Trump International Golf Club House, Dubai

Uploaded to iStock Anna Litvinova by Feb 2020 iStock photo ID: 1205587177

How would the GCC react to an America once again led by Donald Trump? And their mostly petrostate economies seeking UAE-style diversification into tourism, trade and services as well?

One thing to note about Donald Trump is the thing that's always been a constant in his character: Trump is first and foremost a pragmatic businessman. And businessmen, irrespective of rhetorical bombast, do deals. Which means that dealing with a Trump-led Administration, for the highly pragmatic Gulf Arabs, should be less of a headache, with less of the lecturing on human rights that the Democrats and permanent State Department often bring.

For example, regarding security ties–if the GCC holds its end of the bargain in regards to countering Iranian influence or anti-American elements, Donald Trump would, in return, give them the full support of the American Military Industrial Complex (MIC) and more guarantees of their security against Hezbollah-linked militias like the Houthis, Iran, or whatever threats may face the Kingdoms.

However, not everything may go according to expectations set during Trump's first term. While it was under Trump that normalization between the GCC and Israel began with the Abraham Accords, the Gaza war shattered any such hopes, and the Saudis to the surprise of many sought détente with Iran. It's noticeable, for example, that even as the Houthis have stepped up their Red Sea blockade in support of the Palestinian cause in Gaza, that the Iranian-backed Yemeni Shi'a coalition (after years of cross-border warfare) have recently left Saudi territory alone. In return, the Saudis have joined the Iranians in the BRICS multipolar alliance of countries de-dollarizing their trade, increasingly adopting Chinese yuan for oil sales, and conducting previously unthinkable military exercises at sea alongside their previous rivals from across the Gulf.

That said, without establishing a Palestinian state–which Israeli settlement expansion is deliberately blocking in the West Bank–it's unlikely the GCC would be interested in full normalization with Israel. And with a fragile ceasefire in place between Israel and Hezbollah in Lebanon, the incoming Trump team's goals remain subject to the regional dynamics of the Middle East.

Donald Trump also, to put it plainly, does not necessarily care about human rights and the internal affairs of other sovereign states, he infamously nicknamed the Egyptian President Abd el-Fattah Sisi as his “most favorite dictator”. Considering what you read about President Sisi and the Egyptian economy in the news, make of that as you wish.

Now, economically speaking, things are a bit more clear on that front than on matters of war and peace.

All Gulf financial markets have noted the victory of Real Estate Developer-in-Chief Donald Trump as a positive, with the indices closing on the same day the results were declared with gains. Gulf Arab investors and especially property developers are of the opinion that Donald Trump would be good for their economies.

We quote, "Analysts noted that these market moves align with investor expectations of a Trump Administration’s economic approach, prioritizing reduced regulatory pressures and trade policy changes," Mohamed Hashad, chief market strategist, at Noor Capital (from a Reuters article dated November 6th).

In addition to loving GCC golf and resort real estate, Donald Trump also loves oil, and OPEC (with the exception of Bolivarian socialist Venezuela) seems to love Donald Trump back. So the feeling is mutual, and with American shale production slackening, significant energy imports will be required for the U.S. to rebuild its decayed infrastructure. More fundamentally, confidence in the US dollar is bankrolled by the large oil reserves of Saudi Arabia which are still mostly sold in petrodollars. However, Trump may also just as likely push for expanded domestic drilling and low oil prices for OPEC, so we'll have to see how it goes after January 20th.

Trade will be certainly up–that is for sure, but that also depends on the dynamic situations, even if the geopolitical situation in the Middle East does not favor the U.S, GCC-USA trade will continue increasing as both sides are too invested in each other’s economies to easily pull back, especially in the energy, defense, and sovereign investment as well as private equity fields.

However, with regards to political changes, a U.S-Iranian conflict, possibly sparked by the collapse of the weak Lebanese-Israeli ceasefire and continued Houthi belligerence, would ensure oil market volatility. Thus, any prospective economic gains for GCC on Mr. Trumps victory in the American Elections could be rapidly undermined.

To sum up, the Saudis and Emiratis, Egypt's two closest and richest allies, most certainly are quite happy about the re-election of Trump. And economically speaking there can be gains in the real estate especially tourism and resorts sector, with longtime major Trump campaign donor Steve Wynn set to open the Middle East's first casino in the UAE. Qatar, however, would be in quite an issue if they're found to be an unreliable mediator in the future in the same way they were by hosting Hamas senior leaders. The Qataris thus would remain highly pragmatic, Kuwait and Bahrain would remain the same, and so would more historically neutral but still US-UK friendly Oman.

Overall, Saudi Arabia and the UAE stand to the biggest regional winners from a second Trump presidency–with robust demand from South Asian and African investors for golden visas by investment in the GCC countries for our industry. That is, if things go as expected.