New Zealand prime ministers frequently change planes in Dubai en route to destinations elsewhere. But Christopher Luxon’s visit to the United Arab Emirates (UAE) this week will be the first time since 2015 that a New Zealand prime minister has embarked on a visit to the Middle East itself.
Much has changed in the region since John Key, also from Luxon’s center-right National Party, visited the Gulf in April 2015. This includes some of the personalities. In the UAE, Sheikh Mohamed bin Zayed Al Nahyan (also known as MBZ), became president in 2022 after the death of his brother, Sheikh Khalifa. In Saudi Arabia, Mohammed bin Salman (or MBS) was promoted to the key role of Crown Prince in 2017, before also becoming prime minister in 2022.
Moreover, the six Gulf Cooperation Council (GCC) countries, including the UAE, have rolled out ambitious programs of economic transformation to prepare for a post-oil future. These include the UAE’s “We are the UAE 2031” plan – which seeks to double the country’s GDP by 2031 – and Saudi Arabia’s “Vision 2030” blueprint with its various megaprojects.
But while prosperity in the Gulf has continued, conflict and general turmoil has unfolded in many areas elsewhere in the wider Middle East region. These range from the battle against Islamic State in Iraq and Syria that dominated the mid-2010s, to the more recent catastrophic war in Gaza and its offshoots that have collectively claimed some 50,000 lives.
In a press release announcing the trip, Luxon cited a shared “desire to de-escalate conflict in the Middle East” as one of the common goals that unite New Zealand and the UAE. Indeed, as small states, both countries are well-placed to pursue peacemaking strategies built on dialogue, diplomacy, and de-escalation.
The UAE – which established diplomatic relations with Israel in 2020 under the Abraham Accords – has been among the countries continuing to work toward a ceasefire in Gaza. As part of this effort, Sheikh Abdullah bin Zayed Al Nahyan, the foreign minister, invited his Israeli counterpart Gideon Saar to Abu Dhabi for talks last week.
New Zealand has less recent direct experience with peacemaking efforts. But Luxon could always make a 2025 New Year’s resolution to do more. The government’s consistent calls for an end to the fighting in Gaza – including by Foreign Minister Winston Peters at the United Nations and in Luxon’s own joint statements with Australia and Canada – certainly provide room for Wellington to make a greater diplomatic contribution. One option for doing so could be to work more closely with small state partners in the region such as the UAE and Qatar.
Still, the main purpose of this week’s mission to the UAE by Luxon is to oversee the signing of a bilateral Comprehensive Economic Partnership Agreement (CEPA). Negotiations for the CEPA concluded in September last year, when UAE minister of state for foreign trade, Dr. Thani bin Ahmed Al Zeyoudi, visited Wellington.
New Zealand has much to be grateful for when it comes to the bilateral deal. The CEPA helped to break a logjam for a wider free trade agreement (FTA) with the six-country Gulf Cooperation Council (GCC), which was agreed upon just a month later.
Since then, New Zealand’s overall economic fortunes have only darkened, while ties with the Gulf have burned more brightly than ever. Gloomy figures released in December showed New Zealand entered a recession in the third quarter of 2024, with a 1.0 percent fall in gross domestic product (GDP) vastly exceeding forecasts.
Conversely, new annual statistics to the end of September 2024 show that exports to the Gulf are flourishing. The GCC grouping – made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE – now collectively ranks as New Zealand’s sixth-biggest export market, a further improvement on what was already a significant seventh position.
New Zealand sold NZ$2.74 billion worth of goods and services to the Gulf over the year. Of this total, by far the lion’s share was purchased by Saudi Arabia (NZ$1.14 billion) and the UAE (NZ$1.15 billion). New Zealand’s exports to both countries have seen a notable boost since the COVID-19 pandemic, with both Saudi Arabia and the UAE passing the symbolic NZ$1 billion mark as their appetite for New Zealand’s high-quality food products has only grown. Dairy, meat, and other agricultural goods have been particular winners from the boom; the UAE is now New Zealand’s fourth-biggest market for milk powder exports.
The success of the Gulf trade story is even more significant when considering that the total population of the six countries is only around 58 million people – smaller than the number of people who live in France.
With a desert climate serving as a natural barrier to agriculture, the GCC countries are particularly willing buyers of New Zealand’s food exports. In exchange, New Zealand continues to purchase mainly oil-based products from the Gulf. Competitive trade tensions are negligible.
Indeed, on paper, barriers to the Gulf are already low – most New Zealand exports attract a tariff of only 5 percent. However, arguably the real value of the CEPA and the wider GCC FTA is the signal the agreements send, particularly on the Gulf side: New Zealand will now be seen as a favored country with which to do business.
While New Zealand can look forward to increasing its lucrative exports to the Gulf, the GCC states will be more interested in investment opportunities. Despite being home to three of the world’s biggest sovereign wealth funds – Mubadala, the Emirates Investment Authority (EIA), and the Abu Dhabi Investment Authority (ADIA) – foreign investment in New Zealand from the UAE remains at remarkably low levels.
A companion investment agreement is to be signed alongside the CEPA and may help to make New Zealand more attractive for UAE investors, particularly when it comes to major infrastructure projects that the prime minister is keen on.
Overall, Christopher Luxon will be eager to sell an economic success story during his quick trip to the UAE, in a bid to turn the page on the dire economic news that struck New Zealand just prior to the Christmas holidays.
New Zealand is dipping its toes back into the Middle East. The signing of the CEPA will be a major boost to bilateral trade and investment with the UAE. It could also be the beginning of something more. This is the starting gun, not the finish line.
This article was originally published by the Democracy Project, which aims to enhance New Zealand’s democracy and public life by promoting critical thinking, analysis, debate, and engagement in politics and society.