Economic Development Dialogue Restarts In Ras Al Khaimah

Dear friends,

I am pleased to see you in the wonderful city of Ras Al Khaimah, which hosts this year our Verona Eurasian Economic Forum that is gathering for the 17th time. The 2022 decision to make it a traveling event proved to be a success, as it allowed to bring the discussion right into the heart of Greater Eurasia, involving new countries and societies.

This year, the choice of venue for the Forum was made in favor of the United Arab Emirates, in favor of Ras Al Khaimah, one of the Emirates that make up this federation, unique in many aspects.

Despite its youth, the country, born in 1971, has firmly established itself on the international stage and continues to assert itself more and more. Despite its modest size and only 11 million population, however, it has become an important player not only regionally but also globally. It is one of the most influential countries in the Middle East, a crucial hub for air and sea transportation, strengthened by increasingly efficient infrastructure.

Its economic development strategy is proving to be very wise. The country is not limited to exports of hydrocarbons, but is diversifying literally before our very eyes, becoming a financial, transport, and tourist center, noticeably increasing green energy. As a result, the UAE’s GDP grew from €373 billion in 2019 to €456 billion in 2024, with a projected economic growth rate of 3.5% in 2024.

The UAE’s recent entry into BRICS has significantly increased its weight in the world, placing it within the framework of this organization, which has a significant role to play in international economic development. At the same time, the Federation maintains excellent relations, as they say in Italy, 360 degrees, with all the main actors of the world economy, without destroying bridges with anyone, on the contrary, trying to build new ones.

The Emirates is finalizing negotiations with the Eurasian Economic Union, which unites 5 post-Soviet countries (Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia), to expand trade and investment cooperation. UAE Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi recently discussed this with the Eurasian Economic Commission in Moscow.

A few weeks earlier, in October, the first summit between the European Union and the Cooperation Council for the Arab States of the Gulf (GCC), where the United Arab Emirates is a pillar, was held in Brussels. Discussions on trade, energy, climate change, and the conflicts in Gaza and Lebanon took place in the framework of the EU-GCC dialog on the Economic Diversification Project.

Relations with Italy are positive. In 2023, my country was the ninth trading partner of the United Arab Emirates with a trade volume of €8.8 billion, up 9.5% from the previous year. This positive trend has been confirmed in the current year as well. More than 600 Italian companies operate in the country, representing construction, the energy sector, consumer products, security/defense, banking/insurance, and aerospace industries.

According to SACE (Italian State Export Credit Agency), the United Arab Emirates is the only country in the region where Italian exports are expected to grow at double-digit rates in both 2024 (+16.1%) and 2025-26 (+12.5% on average). The United Arab Emirates’ efforts to diversify its economy and develop infrastructure are driving exports of investment assets (+16.1% and +13.7%, respectively): in particular, machinery and equipment manufacturing (+15.5% in 2024) and electrical equipment (+15.2% in 2024). It also shows the country’s commitment to energy transition, developing projects to reduce greenhouse gas emissions, and increase renewable energy generation in line with the goals of the National Climate Strategy. With its help, the country aims for a 31% reduction in greenhouse gas emissions by 2030 and become a net zero-emissions economy by 2050.

The positive outcome of the UAE’s foreign policy is a consequence of its strategic vision: Collaboration and co-existence in pursuit of stability and prosperity in the region and the world, and its mission: Promote the UAE through effective diplomacy to support security, stability, and development.

Dear friends,

The Verona Eurasian Economic Forum is dedicated primarily to the economy, to companies that need to understand current events, the changing political and geopolitical context, and navigate the jungle of dizzying changes.

Companies don’t like uncertainty; they prefer to operate in a clearly delineated, predictable, and reliable environment. The current context is far from this.

We find ourselves in a world that is mutating at an accelerated rate and is sailing into unfamiliar waters.

The recent US presidential election is a new factor that has been added to all others. The United States remains a force that to a great extent, like it or not, formulates the global agenda. Other players are largely working out their positions, taking into account not only their own interests (not everyone remembers how to do this), but also those of the USA.

Today, everyone is floundering in assumptions, hypotheses, and expectations. Will the US policy change, and to what extent will this affect the course of events? At this point, we can only have general plan assumptions about the policy principles of the future US administration.

1. America doesn’t have to instigate wars; it may want to find diplomatic solutions to conflicts and not start new ones. Actually, in his first term, President-elect Trump has not started wars or armed conflicts, although he has not hesitated to use force in conflicts already underway. It seems that his businessman’s logic may prevail: war is a loss of resources, even if there is a part of society and business making money from it. I would quote here a Russian proverb: war to some is boon for others.
2. America will not develop multilateralism. By the logic of the “America First” slogan, the interests of one’s own country should dominate the interests of the rest of the world. But at the international level, bilateral relations and ties will be prioritized over geopolitical, economic, and trade alliances.
3. The line of behavior should be built around a Deal, that is, an agreement, similar to those accepted in the business world, all of which during negotiations can be accompanied by strong pressure, guile, threats, flattery.

This is just speculation, but it is yet to be seen what the actions of the new American administration will be.

Let us keep in mind that the activities of the world’s largest power do not take place in airless space. There are tens and hundreds of other players, each with their own interests, priorities, and opportunities. It is from the dialectical interaction of all these forces that a synthesis emerges, reflecting the events that today are more or less accurately described by the media and tomorrow will become history for study at school.

We have every reason to expect a minimization of multilateralism on the part of the USA. It’s true.

But it is no less true that the destruction of the unipolar system and the evolution toward multipolarity, with all the risks and unknowns that accompany it, is a process that is now in motion and unstoppable. This is an objective trend that can be slowed down, contained, but not reversed.

A prime example of this ongoing, eye-catching process is the rapid development of BRICS. Some tend to portray this organization as anti-Western, competing with structures patronized by the United States. But if it is an alternative, it is only in terms of its structure, its philosophy, its way of doing things. It is not based on an internal ironclad hierarchy, does not have a main or dominant participant, does not dictate to others what they should do and how they should do it. This organization develops a common platform for action in international geopolitics and sometimes ensures that compromises are reached, discussing in conditions of equality and parity the most sensitive events, even between competing countries, and not always sworn friends.

It produces results, not quickly, but the arrangements are mutually beneficial, and so they are assured a long life. As a recent example, I would cite the agreement reached on the eve of the BRICS summit in Kazan between India and China on patrolling in the conflict border zone that has poisoned their bilateral relations since 2020.

The lack of an internal hierarchy is seen by many critics as evidence of the BRICS’s weakness and inefficiency. But that is what gives it strength, making this model of international relations increasingly attractive. BRICS is not imposing a new system of international payments and finance, but is exploring additional systems that could be added to the existing ones. To this end, the BRICS’s New Development Bank was created and became a partner of the G20 at its Rio summit three weeks ago.

We have seen a rapid increase in the number of countries seeking to join BRICS. The urge is so strong that it is uncontrollable at this point. About forty countries have publicly expressed interest in joining BRICS, of which 23 have already submitted a formal application. For this reason, the BRICS Partner status was specially created and given to 13 countries of unequal size and weight: from small and poor Bolivia or Cuba to Turkey, a NATO country, or Belarus, an ally of the Russian Federation, to Indonesia, the fourth most populous country in the world, to the African giant Nigeria. Each of the countries, both within BRICS and eager to join, finds its own interest in it. Will this organization become a model for the international relations of the future, based on respect and harmony? It’s too early for a definite answer. But these are the long-term trends.

To take a shorter-term view of today’s environment, I would go back to the global implications of the recent US presidential election results.

One can get lost in speculation about the immediate future, even having an idea of the approach to various problems of the White House’s new occupant.

Much has been written about how Trump’s election has caused panic in some European capitals and in the EU. The reasons are many, including the president-elect’s desire to end the conflict in Ukraine. Will an anti-American front in Europe become possible?

This question may seem ridiculous, but in London, Paris, Brussels, they are thinking how to escalate the conflict through various actions, to force the new American administration to make decisions it would like to avoid. In particular, the European Commission is preparing to withdraw 392 billion euros from the Cohesion Fund, designed to overcome inequalities in the development of different zones of the Union, in order to spend them on the development of the European military industry and military aid to Ukraine.

Incidentally, one government coalition, in Germany, has already collapsed over a dispute over whether the country’s financial resources should go to the Ukrainian military or German retirees… But the militarization of the productive sector is a new trend that is beginning to take hold in the development of the economy.

There are fears that Trump will renew pressure on NATO allies to devote 3% of GDP to military spending, threatening to leave the alliance if US partners disobey. Some of the NATO countries are rushing to comply and loudly announce it.

However, it is unlikely that the USA will leave NATO. But what will the increase in military spending lead to? These funds will be used to buy more American weapons!

“It’s the economy, stupid!” In the current context, this particular famous phrase comes to mind, coined in 1992 by Jim Carville, Bill Clinton’s campaign strategist.

As for the region where we are today, the Middle East, it also faces the unknown. Will peace return there, albeit with clenched teeth? Is normalization, even partial, possible? Will the dialog continue between the region’s major players, who often dislike each other so much? In any case, it should be kept in mind that the UAE’s position is proving to be balanced and constructive.

Uncertainty also reigns over expectations for the global economy in the context of current and future developments across the oceans.

The new Trump administration is expected to raise duties and tariffs on imported goods, especially from China and Asia in general. The move is meant to strike a blow to the economies of China and other Asian countries and to promote the reindustrialization of the United States. There is talk of tariffs of 20% and even up to 60% for some Chinese goods. Will the countries concerned wait like lambs to be eaten by the gray wolf? What are they themselves preparing? What might be the consequences of such decisions on the part of the Americans?

These tariff methods are essentially comparable to sanctions, albeit under a different name. They are arbitrary and one-sided. Only sanctions imposed by the UN Security Council are legitimate and legally binding.

Speaking of which, I will say without going any further: all sanctions are dictated by economic and political considerations, the desire to weaken a competitor, not to get concessions from him.

The expected tariff barrier can be complemented by tax and financial measures to promote American industrial development. This trend began under the first Trump administration and was then continued by the Biden administration, which in effect pursued a kind of industrial Trumpism without Trump, but the second Trump administration may resume this course more intensely and radically.

Of course, one could say that the import tariffs were just a campaign argument to win the support of voters in the so-called Rust Belt, the former industrial heartland of the USA, and that it remains to be seen what decisions will be made in practice and on what scale.

Indian newspapers, for example, recognize that anticipated US tariff policies could hurt manufacturing in India and its exports to the United States. But at the same time, they are confident they can negotiate exceptions with the Americans, given the US political courtship of their country.

In any case, it is clear that such actions reflect a failure to confront competition by market methods, in fair competition. It’s not just about China.

And they will not necessarily bear fruit.

Take the story of the American steel giant US Steel. For years, it did not stand up to competition from manufacturers from other countries. It has not been helped by various US domestic market protection measures that have distorted competition but have not improved the competitiveness and efficiency of this steel national champion. Against such a backdrop, one such competitor, Japan’s Nippon Steel, decided to buy this US asset. But that December 2023 deal, worth $14.9 billion, was blocked by US authorities for political reasons. The case remains unresolved. It is unlikely that the future administration in Washington, DC will change its approach to this issue, a painful one for Tokyo.

Other attempts at reindustrialization at the expense of producers in other countries continue, but their success is very relative and not guaranteed.

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest semiconductor maker, has taken advantage of many US government incentives to move some production to US soil. It is understandable that the Americans would like to regain at least partial control over the production of these strategic items and get it off the island, which will sooner or later revert to rival China.

Let’s not forget: the Chinese think in terms of decades and centuries, not short election cycles like we in the West.

Either way, TSMC is to build 3 manufacturing facilities in Arizona. As part of the Chips and Science Act of 2022 (it has become one of the elements of Trumpism without Trump!), the company is counting on $6.6 billion in US government guarantees and $5 billion in loans, plus more than 25% in tax credits. But there have been delays, labor conflicts, and other problems in the implementation of this project. Work is underway, but not at the expected pace.

In other words, money is not yet a guarantee of a specific result.

In any case, the new aggressive US tariff policy, if implemented, will certainly change markets in various parts of the world.

We can expect an intensification of what I already called the regionalization of globalization a few years ago.

This means that regional or megaregional markets will be formed, within which globalist economic liberalization will take place, but from the outside they will be protected by various tariff and political instruments.

It may seem strange, but it is Communist China that remains the biggest defender of classical liberal globalization, which involves the gradual opening of markets, the lowering of tariff barriers, and the unification of rules and conditions for business in the spirit of the World Trade Organization. The reason is obvious: the Chinese are proving to be economically successful under these conditions. Re-read President Xi Jinping’s speech at the 2017 World Economic Forum in Davos.

One would assume that the USA would want to close its market to some extent to Asian and Chinese products. Now they are also putting pressure on European partners to push them to close their market to Chinese goods as well, or limit trade with China.

We have already seen the first steps in this direction when the European Commission recently imposed tariffs (35.3%) on Chinese electric cars, which are unbeatable in terms of price/quality ratio in European markets. Beijing responded with additional tariffs (30.6%) on some products imported from the EU, although less important in volume and value: cognac and cheese.

Huge volumes of trade are at stake. Recall that the EU imported €514.4 billion from China in 2023 and exported €223.5 billion. In 2023, the USA imported $473.2 billion from China and exported $147.8 billion.

What configuration might the global market take if such expectations are implemented?

American and European markets will be partially closed to inexpensive Asian goods. What will be the implications for other markets, such as those in ASEAN? Some of China’s current market share in the West will shift to other Asian countries. Where will Chinese goods at a good price end up? In Asia, taking away some of the share of local producers. Europe, having closed itself off from Chinese goods, will become the main foreign market for a reindustrialized America, particularly by moving production there from the EU. But goods from the USA will be more expensive than goods from China. Will they be able to take the place of the Chinese in Europe? Why not?

The Americans have succeeded with Russian gas, although such efforts have not been successful for 50 years. It turned out to be sufficient to make, in the right context, a few political decisions, blow up Russian undersea gas pipelines to Europe (then everyone will say they are incompetent to investigate), and the deed is done. Europe barely imports any Russian natural gas anymore and buys instead more expensive American LNG, shutting the door on its efficient and competitive industrial model: it reduces consumption and demand for natural gas, followed by a gradual decline in prices, which reached cosmic heights in the first time after this reversal, and it passively watches its own deindustrialization and the transfer of its production to the USA, as well as to China.

Look at the German statistics: Germany is turning from the economic locomotive of Europe into the sick man of the European economy before our eyes. Ask what the German automakers think of this when Volkswagen plans to close 3 of its 10 plants in its home country… Ask those who work in the chemical, metallurgical, engineering, and other industries, too…

In a rapidly changing economic and political environment, against the backdrop of growing awareness in various areas of the world of the importance of sovereign decisions dictated by national interests, the United Arab Emirates finds itself at an international crossroads, acquiring a paramount role, along with other countries of increasing numbers.

The fact that the UAE is hosting the XVII Verona Eurasian Economic Forum is an eloquent confirmation, among others, of the validity of the UAE’s approach. From the outset, it has shared and developed, within its modest means, a strategy that the United Arab Emirates also adheres to: give priority to economic development and trade, conduct dialogue between entrepreneurs and societies of any country, even those belonging to different geopolitical and social blocs. This dialogue, in which all are listened to and respected, without discrimination, is the true guarantee of peace and well-being.

That’s why we are in Ras Al Khaimah today, in the Emirates. That’s why we are so welcomed here, and we feel at home. So, I’m sure we’ll do a great job.

Thank you for your attention, and I wish you two fruitful days.

Thank you!