Dr. Diana Galeeva‏‏


        
<p><strong>At a recent panel on strategic studies at Oxford, high-level representatives from Baltic states discussed the impact of the Ukraine war on their region. I had been sitting and thinking "What about the Middle East?" since my focus is on the GCC. How has the current geopolitical landscape shaped ties between Estonia and the GCC? I asked an Estonian envoy (whom I can’t identify by name due to the Chatham House Rule) how their government views strategic ties with the GCC, and what can be learned from these relations. However, the Estonian official’s response was limited. They told me only that Estonian relations with the Middle East were aligned with core EU strategic objectives and priorities. I have continued to be intrigued by the three Baltic small countries, which at least in size are similar to the smaller GCC countries, and by how the former have adopted "bandwagoning" strategies with the EU. Meanwhile, GCC countries maintain very close ties with Western states, although they have increasingly adopted more proactive nationalist policies, such as Saudi First or UAE First. Why are countries with otherwise similar capacities choosing such different paths, and how do these paths differ? What can we learn from these partnerships? What are the key objectives of each of these countries, and how might the Ukraine war shape the future of these relations?</strong></p>



<div style="height:18px" aria-hidden="true" class="wp-block-spacer"></div>



<p>Although diplomatic ties between the GCC and Baltics were established in the 1990s, they have not been effectively developed in all cases. For example, the UAE recognized Latvia as an independent state in 1991, and the two countries established diplomatic ties <a href="https://www.mofa.gov.ae/en/missions/riga/uae-relationships/bilateral-relationship">in 1995</a>. The UAE and Latvia have signed memoranda of understanding on mutual recognition of driving licenses (2017), agriculture (2017), economic collaboration (2016), air services (2015), and mechanisms for political <a href="https://www.mofa.gov.ae/en/missions/riga/uae-relationships/bilateral-relationship">discussion (2013</a>). As of 22 March 2014, Latvian citizens <a href="https://www.mofa.gov.ae/en/missions/riga/uae-relationships/bilateral-relationship">do not need a visa</a> to visit the UAE. By contrast, Lithuania and Qatar established diplomatic ties on 25 November 1992, but only held their first political meeting in Vilnius <a href="https://uk.mfa.lt/default/en/news/first-political-consultations-between-lithuania-and-qatar-take-place-in-vilnius">in 2019</a>. This bilateral economic relationship has expanded to include energy, agriculture, innovation, research, <a href="https://uk.mfa.lt/default/en/news/first-political-consultations-between-lithuania-and-qatar-take-place-in-vilnius">and education</a> sectors. Meanwhile, Lithuania and Oman established fairly normal diplomatic ties <a href="https://urm.lt/default/en/news/lithuanias-ambassador-presents-his-letters-of-credence-to-the-sultan-of-oman-">in 1992</a>, although the Lithuanian ambassador to the UK is accredited to Oman and resides in&nbsp; <a href="https://urm.lt/default/en/news/lithuanias-ambassador-presents-his-letters-of-credence-to-the-sultan-of-oman-">London</a>. On 22 September 2022, Lithuania and Oman celebrated the thirtieth anniversary of their diplomatic <a href="https://urm.lt/default/en/news/lithuanias-ambassador-presents-his-letters-of-credence-to-the-sultan-of-oman-">ties</a>. Other GCC countries established diplomatic relations with Baltic nations in the 2000s, including Saudi Arabia and Latvia, which signed an agreement in 2003 at the Permanent Mission of the Kingdom of Saudi Arabia to the UN in New York.</p>



<div style="height:18px" aria-hidden="true" class="wp-block-spacer"></div>



<p>Beyond these fairly recent connections, the Estonian official’s comments about their country’s pragmatic approach made clear that the EU and NATO remain the key priorities. Since 1993, a few years after the dissolution of the Soviet Union, significant strides were made in relations between the EU and Estonia, Latvia, and Lithuania. They signed a number of agreements to further political and economic ties and pursue EU integration, including agreements on trade and commercial and economic cooperation (1993), the free trade agreements (1995), and the <a href="https://www.elibrary.imf.org/display/book/9781557757388/ch07.xml">Europe agreements (1995</a>). This demonstrated Baltic determination to become more integrated with <a href="https://www.elibrary.imf.org/display/book/9781557757388/ch07.xml">the EU</a>, which could in turn reflect less of a focus on the Middle East.</p>



<div style="height:18px" aria-hidden="true" class="wp-block-spacer"></div>



<p>However, it is precisely this focus on the EU and NATO—partly because of the Ukraine war— that has prompted Baltic states to look towards the GCC. While Sweden’s path to NATO membership has drawn international strategic attention to the Baltic Sea region, Sweden’s agenda also aligns with the Gulf’s approach. The defence contributions of NATO’s newly-integrated Baltic bloc, which includes the Nordic countries, the three Baltic countries, Germany, and Poland, will be crucial to the resilience <a href="https://foreignpolicy.com/2023/07/13/nato-baltic-russia-sweden-finland-critical-maritime-infrastructure-security-pipelines-nordstream-energy-sabotage-undersea-cables/">of the alliance</a>. For the GCC, this is less about strategic defence than energy security. The Baltic Sea and North Sea contain a dense web of critical infrastructure: terminals and ports, undersea pipelines, and electric and <a href="https://foreignpolicy.com/2023/07/13/nato-baltic-russia-sweden-finland-critical-maritime-infrastructure-security-pipelines-nordstream-energy-sabotage-undersea-cables/">telecommunication cables</a>. The importance of the Baltic region is expected to grow as international powers turn away from Russia. Baltic states are expected to expand their liquified natural gas (LNG) import infrastructure, build offshore wind farms, and invest in new undersea power cables. As countries move away from Russia, they will make vital investments in power connections <a href="https://foreignpolicy.com/2023/07/13/nato-baltic-russia-sweden-finland-critical-maritime-infrastructure-security-pipelines-nordstream-energy-sabotage-undersea-cables/">with European countries</a>.</p>



<div style="height:18px" aria-hidden="true" class="wp-block-spacer"></div>



<p>In light of the above, it is perhaps not a coincidence that Estonia—which does not own a single oil refinery—ramped up energy exports to Saudi Arabia in June 2022. During the first five months of 2022, Estonia imported around 8 million barrels of fuel oil <a href="https://www.bloomberg.com/news/articles/2022-06-16/estonia-suddenly-ramps-up-fuel-oil-supplies-to-saudi-arabia">from Russia</a>, and which it then reexported. According to Bloomberg, these "shipments are small in the context of the global oil market but underscore the close ties between <a href="https://www.bloomberg.com/news/articles/2022-06-16/estonia-suddenly-ramps-up-fuel-oil-supplies-to-saudi-arabia">Riyadh and Moscow</a>." This also demonstrates how the Ukraine war is shaping GCC relations with the Baltics, making the two regions important for each other’s new strategic landscapes.</p>



<div style="height:18px" aria-hidden="true" class="wp-block-spacer"></div>



<p>The Baltic countries fit neatly within Gulf economic diversification programs. For example, the Saudi investment minister signed deals on trade, technology, and entrepreneurship during a recent visit to Estonia <a href="https://www.arabnews.com/node/2326216/business-economy">in June 2023</a>. As part of economic diversification efforts, the Federation of Saudi Chambers of Commerce and Industry and the Estonian Chamber of Commerce and Industry created a joint <a href="https://www.arabnews.com/node/2326216/business-economy">business council</a>.&nbsp; This has resulted in memoranda of understanding between an Estonian deep-tech startup and the Saudi Shammal Commercial Investment Co. to create a joint venture and introduce muon <a href="https://www.arabnews.com/node/2326216/business-economy">flux technology</a> to Saudi Arabia. Saudi Arabia and Estonia <a href="http://www.tradearabia.com/news/IND_410749.html">signed</a> five further agreements, including between the Saudi Ministry of Investment and Estonian autonomous system developer Auve Tech, and between the capital management firm Rigel Capital and Estonian autonomous delivery <a href="https://www.arabnews.com/node/2326216/business-economy">innovator Clevon</a>. The Estonian-Saudi Investment Forum was also convened to "provide a platform for government officials and private sector leaders to explore funding opportunities in technology, startups, and the energy <a href="https://www.arabnews.com/node/2326216/business-economy">transition</a>."&nbsp;</p>



<div style="height:18px" aria-hidden="true" class="wp-block-spacer"></div>



<p>Latvia has similarly sought out opportunities to develop relations with Saudi Arabia. This will help the Saudis achieve their Vision 2030 project for social reform and <a href="https://www.arabnews.com/node/2323496/business-economy">economic diversification</a>. The Federation of Saudi Chambers signed an agreement with the Investment and Development Agency of Latvia (LIAA) to form a joint economic committee across the fields of investment, trade, transport, finance, tourism, food industry, logistics, and agriculture. This initiative is designed to boost collaboration between Latvian and <a href="https://www.arabnews.com/node/2323496/business-economy">Saudi companies</a>. In 2022, Latvian exports to Saudi Arabia reached $149.35 million—up from $1.41 million <a href="https://www.arabnews.com/node/2323496/business-economy">in 2021</a>—including pharmaceuticals ($1.2 million), electronic equipment ($2.8 million), oil and distillation products ($5.6 million), and cereals ($<a href="https://www.arabnews.com/node/2323496/business-economy">131.6 million</a>).</p>



<div style="height:18px" aria-hidden="true" class="wp-block-spacer"></div>



<p>In 2022, Latvia and the UAE signed a six-track economic collaboration program in the fields of trade and investment, transportation and logistics, investments and trade, advanced technology and innovation, food, agriculture<a href="https://www.wam.ae/en/details/1395303026254">, education, and science</a>. Dr. Thani bin Ahmed Al Zeyoudi, the UAE Minister of State for Foreign Trade, emphasized that this program would boost UAE-Latvia relations. He stated that "Latvia is a promising economic destination and an important trade partner for the UAE in the Baltic region" and that "over the past years, we have achieved high levels of economic cooperation." Partnerships are developing between Latvia and the UAE and Saudi Arabia, perhaps more quickly than with other GCC countries.</p>



<div style="height:18px" aria-hidden="true" class="wp-block-spacer"></div>



<p>Different dynamics are at play in the case of Lithuania, which has developed ties with Oman in particular. In 2022, Omani Foreign Minister Sayyid Badr Albusaidi and Lithuanian Foreign Minister Gabrielius Landsbergis met to discuss commerce, economics, <a href="https://fm.gov.om/omans-foreign-minister-holds-talks-with-lithuanian-counterpart/">culture, and investment</a>.&nbsp; In May 2023, Oman hosted a Lithuanian business mission at the Embassy of Lithuania to the United Kingdom, and which met with the Kaunas Chamber of Commerce, Industry and Crafts and <a href="https://urm.lt/default/en/news/lithuanias-ambassador-presents-his-letters-of-credence-to-the-sultan-of-oman-">Omani</a> partners. The mission sought to build knowledge of the Omani market and develop economic ties between Oman and Lithuania, expand export of services and goods, and explore new <a href="https://urm.lt/default/en/news/lithuanias-ambassador-presents-his-letters-of-credence-to-the-sultan-of-oman-">ideas</a>. Bilateral economic relations have included collaboration in the fields of ICT, financial technology, <a href="https://urm.lt/default/en/news/lithuanias-ambassador-presents-his-letters-of-credence-to-the-sultan-of-oman-">agriculture, and tourism</a>. This has extended to greater digitization of the public sector, boosting e-government at the national level, and developing cybersecurity and other capacities, including the <a href="https://urm.lt/default/en/news/lithuanias-ambassador-presents-his-letters-of-credence-to-the-sultan-of-oman-">Internet of Things</a>.</p>



<div style="height:18px" aria-hidden="true" class="wp-block-spacer"></div>



<p>Lithuania, like other Baltic countries, have sought to rapidly develop relations with the UAE in recent years. In May 2023, a memorandum of understanding establishing the Lithuanian-UAE Business Council was signed in Sharjah between the Association of Lithuanian Chambers of Commerce, Industry and Crafts (ALCCIC) and the UAE Federation of the Chambers of <a href="https://uae.mfa.lt/uae/en/">Commerce and Industry</a> (FCCI). The UAE and Lithuania discussed opportunities to expand investment in agritech and food production <a href="https://www.moec.gov.ae/en/-/uae-and-tanzania-discuss-strengthening-of-trade-investment-relations">technologies</a>. Furthermore, the two countries’ economic ministers and the Lithuanian minister of agriculture discussed the economic outcomes of the UAE’s National Food Security Strategy 2051, which was launched <a href="https://www.moec.gov.ae/en/-/uae-and-tanzania-discuss-strengthening-of-trade-investment-relations">in 2018</a>.&nbsp; Non-oil bilateral foreign trade reached $219 million in 2022, rising 51 percent from pre-pandemic levels. With regards to investment, Lithuanian foreign direct investment in the UAE totalled $9 million at the beginning of 2021, while the UAE’s investment in Lithuania amounted to about $<a href="https://www.moec.gov.ae/en/-/uae-and-tanzania-discuss-strengthening-of-trade-investment-relations">6 million in 2021</a>.&nbsp;</p>



<div style="height:18px" aria-hidden="true" class="wp-block-spacer"></div>



<p>Although relations between Lithuania, Saudi Arabia, and Kuwait are less developed, they are not insignificant. Lithuanian Ambassador Ramunas Davidonis’s <a href="https://uae.mfa.lt/uae/en/">June 2023</a> letter of credence to the Kuwaiti foreign minister gave quite limited details about potential diplomatic collaboration. In February 2023, the Lithuanian ministers of agriculture visited Riyadh with Davidonis to hold talks on boosting bilateral relations and trade and increasing innovative food products and processing technologies. The two countries also discussed export regulations for poultry, <a href="https://uae.mfa.lt/uae/en/news/minister-of-agriculture-of-lithuania-visits-saudi-arabia">beef, and eggs</a> as well as <a href="https://uae.mfa.lt/uae/en/news/minister-of-agriculture-of-lithuania-visits-saudi-arabia">investment and funding opportunities</a>. Bilateral trade between Saudi Arabia and Lithuania reached €124 million euros in 2022. This consisted primarily of agricultural and food exports, including €93 million in <a href="https://uae.mfa.lt/uae/en/news/minister-of-agriculture-of-lithuania-visits-saudi-arabia">wheat exports</a>.&nbsp;</p>



<div style="height:18px" aria-hidden="true" class="wp-block-spacer"></div>



<p><strong>In conclusion, relations between the Gulf and Baltic countries are mainly driven by economic collaboration, especially as it relates to GCC economic diversifications. At the same time, the clear strategic importance of the Baltic region has played a role in these ties, due to geopolitics and the Baltic countries’ close connections with NATO and EU. The Baltic states seem to offer an alternative route for re-exports of Russian energy to Gulf countries, which could become a more regular practice in the future. For these and other reasons, developments in Baltic-GCC ties remain an important dynamic in the current geopolitical context.</strong></p>

      

What Factors Drive the GCC-Baltic Relations?