Gulf

1. Saudi backs Egypt turnaround
2. US Senate softens on Riyadh
3. Israel-UAE trade surprise
4. OPEC’s sunset?
5. Battle of the smelters

Pager bombings in Lebanon unleash — what else — the memes.

Welcome back to Semafor Gulf, where we aren’t allowed to expense our pager bills.

I’ve been living and reporting from Saudi Arabia, the UAE, and Qatar for almost 20 years, but their geography keeps shifting. When I started, editors in New York considered the Gulf and the Levant nearly identical, and some Gulf bureaus were often simply another base to cover conflicts, in Iraq, Israel-Palestine, and beyond.

But in fact, Rome and Dubai are equidistant from Gaza, something you feel particularly intensely in this dangerous week on the Lebanese border. One of the curious things of living and working here is how little people talk and think about the war in Gaza. It’s not ignored. Coverage is constant and deep on Arabic TV channels and in newspapers. People are donating to charities for Gaza, and Arabs are discussing the conflict at home. But it doesn’t seep through to business conversations and most social interactions.

The Gulf at least seems to have drifted further from the conflict than ever. The transformation, optimism, wealth, demographics, and challenges here have no immediate connection to the suffering in Gaza, Lebanon, or Syria, and there’s little legal space here for political expression.

And yet the Gulf powers remain central to the diplomatic story, and determinedly optimistic about their long-term economic ties to Israel. As Kelsey Warner reports below: Even in this brutal year, trade between Israel and the UAE ticked up.

We’ll be navigating this complex, shifting geography at Semafor Gulf, bringing you the key stories from local and regional media, along with our exclusive journalism from here and around the world, as it impacts the Gulf. We aim to inform — and occasionally — delight you.

As my editor Ben said on Monday, we approach this with humility. While my team and I have been at this for some decades, we are only as good as our sources. Email us here, send tips, and tell me when we’ve made mistakes. Thank you for joining us!

Saudi Arabia is betting big on Egypt

Saudi Arabia offered up a vote of confidence that Egypt’s economy has turned a corner. The PIF pledged to invest $5 billion in Egypt, indicating it believes Cairo is along the path to addressing currency risks and making itself more investible. No timeline or details were given about the deal, struck in a meeting between Saudi Crown Prince Mohammed bin Salman and Egypt’s prime minister.

As Semafor’s Sarah Dadouch notes, the deal also points to how the Gulf’s attitude is shifting away from plowing cash into flailing regional economies, and toward seeking returns on its investments: Saudi Arabia’s $5 billion deposit in Egypt’s central bank in 2022 may be the last of Riyadh’s handouts. In this way it is following in the footsteps of the UAE, whose own sovereign wealth fund ADQ in 2022 became the biggest shareholder in two of Egypt’s top three listed companies and in February of this year committed $35 billion for a prime stretch of beach on the Mediterranean.

US-Saudi defense pact has bipartisan support

The US-Saudi defense treaty that has eluded Joe Biden may be on the table for the next American president. Senators in both parties are open to a pact with Riyadh, they just don’t see it happening in the 11th hour of Biden’s presidency, Semafor’s Burgess Everett and Elana Schor reported, based on interviews with more than a half-dozen senators on the Foreign Relations Committee. 

Both sides of the aisle are eager to reassert their role in foreign policy after the Obama administration’s nuclear deal with Iran skirted the Senate’s treaty protocol, which ultimately allowed Donald Trump to rip it up. Nine years later, there is broad consensus that Riyadh, despite its human rights record, is a potential bulwark against Tehran.

Senators are demanding that any agreement be a treaty, requiring a two-thirds majority. That makes it harder for it to pass the chamber, but aligns with Saudi Arabia’s own position: Riyadh has made a defense pact a requirement for normalizing relations with Israel.

Abraham Accords’ quiet anniversary

The year-on-year increase in trade between Israel and the UAE in the first seven months of 2024. The surprising figure isn’t being celebrated, though, and neither was the fourth anniversary of the Abraham Accords, which has come and gone quietly this week. Normalization between Israel and the UAE is surviving: trade has lost momentum but is still rising even amid the war in Gaza, Semafor’s Kelsey Warner reported.

Overall trade remains miniscule given the sizes of the two countries’ economies, but the growth shows how business ties have been maintained. “The war makes private sector investments from the UAE into Israel more challenging, but the state was always the lead in the flows,” Karen Young, a senior research scholar at Columbia University’s Center on Global Energy Policy, said.

The deeper question haunting OPEC

Slack demand in China and stock buildups elsewhere are captivating global markets after OPEC delayed output hikes until December. But these are fleeting issues, Wael Mahdi, a long-time former OPEC correspondent, writes in his first Semafor column.

The core question now is whether OPEC can maintain unity. Members are boosting capacity even as the group limits supply. Tens of billions of dollars in investments sit idle. Renewable energy is gaining market share.

“There are five major challenges that will determine whether OPEC is relevant for decades to come,” Mahdi wrote. “These challenges aren’t insurmountable, but the odds are stacked against OPEC.”

Saudi assembles aluminum giant

Saudi Arabia is consolidating its aluminum stakes, creeping up global ranks to become a top-five producer. On Sunday, state-owned mining company Ma’aden agreed to buy Alcoa’s 25.1% stake in their joint venture. Then it proposed to spin off its aluminum and bauxite units and merge them with Bahrain’s biggest industrial company, Alba, picking up Aramco’s stake in the firm along the way. Ma’aden said it was considering listing the unit on Saudi Arabia’s stock exchange, which would fulfill Alba’s previous ambition to get on the Tadawul.

Riyadh has increasingly prioritized its mining sector as part of efforts to diversify its economy and capitalize on the energy transition: It cited mining as a “pillar” of its industrial foundation — alongside oil, gas, and petrochemicals — in its Vision 2030 outlook.

Tech

• Abu Dhabi-owned tech fund MGX is aligning with two of the biggest hitters in AI — Nvidia and Microsoft — to back a $30 billion BlackRock data center investment vehicle. The deal comes on the heels of Microsoft announcing plans this week to build two responsible AI centers in the UAE as it looks to tap emerging markets with G42. — FT, Bloomberg
• Doha-based fintech TESS Payments has raised an undisclosed sum from Fingular, a global financial services group based in Singapore as it builds one of Qatar’s first online-only banks. The new partners are aiming to issue over $600 million in loans to Qatari residents within three years.

Wealth

• The money managers flocking to the Gulf have given rise to pricey private schools, particularly in the UAE, where public education is not easily available to expats. This has helped Sunny Varkey, one of Dubai’s most successful Indian expats, maintain billionaire status as his GEMS Education network absorbs rising demand. — Bloomberg

• Another UAE NRI, MA Yussuf Ali, will add to his billions when UAE grocery giant LuLu Group opens its IPO in October or November. LuLu plans a dual listing in Abu Dhabi and Riyadh and wants to raise between $1.5 billion and $1.85 billion. — Zawya
• Hong Kong is on a “charm offensive” with wealthy Gulf families, positioning itself as a gateway to China as it looks to revive its reputation as an attractive investment destination. — Bloomberg

Diplomacy

• Australia and the UAE announced a trade pact to boost shipments of agricultural products and resources. Australian exports could rise by $458 million a year, and provide the UAE with better access to critical minerals and green energy investment.
• Saudi Arabia has finally acquiesced to IAEA requests to rescind light-touch oversight protocol of its nuclear facilities and switch to regular safeguards by the end of the year.

Deals

• PIF-backed SURJ Sports Investment is bidding for a minority stake in EuroLeague, Europe’s top basketball league. — FT
• Saudi Arabia granted two firms approval for the country’s first ETFs tracking Hong Kong shares, expected to raise a combined nearly $1 billion.

It sometimes feels as though there are two constants in our region: war and macabre humor. For Arabs of a certain generation, Hezbollah’s exploding pagers conjured up memories of one of the weirdest songs of the 1990s. Saleh Khairy’s Tibajerni, an Arabized version of ‘page me,’ wasn’t one of the Saudi singer’s biggest hits, and the chorus — ‘page me and enter your secret code, the pager is making me reel’ — is utterly incomprehensible to today’s youth, as the Saudi media company Thmanyah pointed out on X. (The year of that tweet, 2022, shows the tune, and its bizarre video, lives rent-free in many of our heads).

The song’s full version is going viral, and one mashup features an explicit graphic depicting Hezbollah’s leader exploding as a beeper goes off. Sectarian slurs add an extra layer of darkness to the online jabs, making even noncombatant observers cringe. Essentially, social media is a cesspool, no matter where you are.

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