Expo 2020 Dubai - will New Zealand's investment pay off?

Geoffrey Miller, International Analyst, Democracy Project

2021-10-01

MIDDLE EAST

GEOPOLITICS

This article can be republished under a Creative Commons CC BY-ND 4.0 license

Dubai Expo
International analyst Geoffrey Miller considers New Zealand’s participation in Expo 2020 Dubai and asks whether it can help to deepen the country’s ties with the Middle East

Expo 2020 is a chance to reconsider New Zealand’s relationship with the United Arab Emirates (UAE) and the Gulf.

The six-month mega-event on Dubai’s outskirts – the first world fair to be held in the Middle East or Africa – officially opens to visitors today, after being delayed for a year due to the pandemic.

It will remain open for 182 days, closing at the end of March 2022.

New Zealand has allocated a considerable $NZ61m for its participation in the event – centred on its purpose-built pavilion.

The structure draws heavily on Māori culture and carries the theme of kaitiakitanga, or ‘Care for People and Place’.

For context, New Zealand’s budget is about the same amount as France is spending – and not a world away from the outlays of the UK (around $NZ86m) and India (roughly $NZ100m).

There are high hopes that New Zealand can use the Expo opportunity to forge closer ties with the Gulf region, in the same way the Expo 2010 event in Shanghai helped to develop NZ’s links with China.

Clayton Kimpton, New Zealand’s Commissioner-General to Expo 2020, referenced the success of the Shanghai event in an interview with Abu Dhabi TV in August. He credited the Expo for helping to drive the “exponential growth” in New Zealand’s relationship with China since 2010.

Kimpton pointedly noted that New Zealand was negotiating a free trade agreement with the six-country Gulf Cooperation Council (GCC), of which the United Arab Emirates is a key member.

New Zealand sells around $NZ2b of exports to GCC countries each year – with close to half of this going to the UAE itself.

Collectively, the GCC is New Zealand’s seventh-biggest trading partner, and the UAE alone is the tenth-biggest.

The GCC is clearly already a lucrative market for New Zealand, but it holds even greater potential.

The hot, dry countries in the Gulf are ideal markets for New Zealand’s meat and dairy products. And some 40% of New Zealand’s meat exports are already certified as halal.

Increasing exports to the Middle East would also fit well with the trade diversification that Nanaia Mahuta called for earlier this year.

An in-principle free trade agreement was signed between New Zealand and the GCC in 2009 – but it remains unratified.

New Zealand’s last major foray into the Gulf was in 2015, when then Prime Minister John Key visited Kuwait, Saudi Arabia and the UAE.

It was followed by what became known as the “Saudi sheep deal”, under which New Zealand paid for a demonstration farm in Saudi Arabia to pacify objections to NZ’s ban on live sheep exports.

That arrangement turned into a debacle after hundreds of lambs died on the farm and questions were raised in New Zealand about the legality of the deal.

New Zealand’s big splash at Expo 2020 is a useful way to move on from the mistakes of the past.

But the impact of Covid-19 looms both over the event itself, and especially over New Zealand’s participation.

The UAE is now open to most visitors – subject to testing requirements – but original expectations that 25 million visitors would attend Expo 2020 are now highly unlikely to be met.

Instead, the slow rebound in international air travel means that local visitors from the UAE and the immediate Gulf region are likely to dominate – rather than transit passengers stopping over in Dubai on their way somewhere else.

From New Zealand’s perspective, the lower numbers might not actually be such a bad thing, if they result in visitors making more in-depth and repeat visits to the Expo – something which is being encouraged by organisers in the ticket pricing structure.

More problematic is the impact caused by New Zealand’s own travel restrictions – which effectively mean the country is off-limits to foreigners. Mandatory hotel isolation is required for all returning citizens and residents.

A briefing paper released by New Zealand’s Ministry of Foreign Affairs and Trade (MFAT) this week put a brave face on the situation, saying that it would “use this event to signal that although our borders are closed, New Zealand is open for business”.

But the restrictions will undoubtedly hamper New Zealand’s efforts.

Only around 400 managed isolation and quarantine (MIQ) hotel rooms have been allocated for New Zealanders travelling to Expo 2020 – including business people and cultural performers.

For a large-scale, six-month event, this is not a lot.

But the allocation has also been criticised as being too generous, given a general shortage of MIQ spaces for New Zealanders wanting to return home.

Sensitivities over international travel – given the MIQ situation – mean that it is also uncertain whether any New Zealand government ministers will travel to the event.

VIP delegations would normally be essential to boost New Zealand’s credibility and profile – John Key made a high-profile visit to Expo 2010 in Shanghai.

Trade minister Damien O’Connor this week left New Zealand to travel to Europe and the US – but his itinerary made no mention of any stopover in Dubai.

By contrast, India’s trade minister was to personally open the country’s pavilion on Thursday.

Coronavirus issues aside, New Zealand risks being left behind in trade with the Gulf – despite being an early mover in its original quest for a free trade deal with the GCC.

The UAE recently identified eight countries with which it intends to sign “comprehensive economic partnership agreements” – including Israel, South Korea and the United Kingdom.

New Zealand was not on the list.

For New Zealand, the UK – now eager to conclude trade deals following Brexit – is a particular new threat in the Gulf trade game.

The UK and the GCC announced earlier this year that they were pursuing “new opportunities to boost their trading relationship”.

And the UAE’s sovereign wealth fund, Mubadala, recently signed a separate £10b ($NZ19.5b) investment deal with the UK.

While tensions in the GCC have eased after a long-running dispute between Saudi Arabia and Qatar was resolved in January, the separate moves by the UAE with the UK underline how the intra-Gulf rivalry is set to continue.

Qatar will host its own global marquee event – the FIFA World Cup – next year.

For its part, Saudi Arabia is incentivising multinational companies to relocate from Dubai to its capital, Riyadh – and is trying to expand its influence more generally, as part of its ‘Vision 2030’ post-oil strategy.

New Zealand currently has embassies only in two of the six GCC countries – Saudi Arabia and the UAE.

An immediate next step could be to consider opening more diplomatic missions in at least some of the remaining four GCC countries – Bahrain, Kuwait, Oman and Qatar.

Of the four, Kuwait already has an embassy in Wellington – and reciprocation would surely be welcomed. Kuwait showed significant interest in the bilateral relationship at virtual ministerial consultations with MFAT earlier this year.

New Zealand’s prospects in its future relationship with the Gulf are bright.

But if they are to prosper even further, Expo 2020 Dubai needs to be just the start of deeper and more meaningful engagement.

Geoffrey Miller is the Democracy Project’s international analyst and writes on current New Zealand foreign policy and related geopolitical issues. He has lived in Germany and the Middle East and is a fluent speaker of German and Arabic.

This article can be republished under a Creative Commons CC BY-ND 4.0  license.'

Democracy Project

Membership

NZIIA membership is open to anyone interested in understanding the importance of global affairs to the political and economic well-being of New Zealand.