Tensions between the United States and China are expanding beyond the Asia-Pacific region. The Middle East and North Africa is likely to be one of many venues in what might be a new Cold War between Washington and Beijing. We can imagine how Washington and Beijing’s respective global outlooks and ability to project (soft and hard) power could affect their future relations with the MENA region. How MENA countries deal with each other, and the role they play in the emerging global energy and economy transitions, could influence how the two superpowers engage with the region in ways as interesting and important as what the superpowers are able to do themselves.
Three factors shaping the future
On the MENA side of the equation, two critical dimensions are likely to shape their role in the future US-China competition in the region.
(1) Intraregional politics: The first is how regional countries relate to each other: with functional and practical economic and political integration, or sustained dysfunction and instability. Prior to the current war in Gaza, there was a trend toward de-escalation, stabilization, and integration. Whenever that momentum might be regained, under the “functional and practical” route, we could imagine MENA nations looking in new ways at the lessons of pan-regional intergovernmental organizations. The region could explore policies and mechanisms that emulate the practical benefits afforded to member states of other regional blocs like the European Union and the Association of Southeast Asian Nations. Such ideas could first lower trade barriers, then foster closer economic and commercial ties across the region.
Similarly, the thinking behind the Helsinki Final Act of 1975 and the Organization for Cooperation and Security in Europe could influence MENA governments’ approach to their citizens’ human rights and each other’s domestic affairs.
The functional and practical path would represent a MENA equipped with deliberative, consultative decision-making processes to act with agency, putting its own interests before the dictates of the US-Chinese competition.
The alternative path is easy to define: MENA governments continue to support various armed groups in proxy wars, and use that environment to ignore human rights, enabling outside players to exploit that dysfunction.
(2) Levers of the future economy: The fossil fuel resources of Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (that energy-rich club might soon include Egypt and Israel) are likely to remain MENA’s main sources of leverage vis-à-vis Washington and Beijing — at least for the next couple of decades. Given the two superpowers’ desire to secure the region’s oil and gas for themselves and their allies (or deny them to adversaries), US and Chinese companies will remain powerhouses in regional markets.
But MENA is poised to influence the future global stage, and gain agency in the US-China competition over the region, by leveraging its energy and financial power in different ways in the future. As the world turns to renewable energy, the region’s petrostates are simultaneously ramping up economic diversification into tech sectors while also leveraging their wealth to finance climate-friendly energy projects and other green economy endeavors in their neighborhood and around the world. The new frontier for the region’s resource- and capital-rich countries will be fostering innovation and science/technology/ideas hubs for the post-carbon economy that humanity intends to build in the 21st century.
Beside eventually waning hydrocarbons and ascending green energy, new logistical/transportation/energy networks have proliferated in the region and are likely to further increase its geopolitical and commercial significance. Be it through long-established routes, such as the Suez Canal, or new and proposed ones, such as the Trans-Caspian International Transport Route, India-Middle East Corridor, and the Turkish-Iraqi-Emirati-Qatari Development Road, MENA is going to be sitting at the center of global trade networks. Many of the region’s seaports and airports will also play an expanded role in international affairs.
(3) An eagle and a dragon walk into a bazaar — Fit or floundering?: When Donald Trump became president in 2017, he opened to question the wisdom of international trade as a net positive while putting the US on a more confrontational path against China, globally, to include MENA. China, of course, had already started moving into MENA more forcefully in the late 2010s. Beijing’s successful mediation between Iran and Saudi Arabia to resume diplomatic relations in 2023 caught many by surprise but that was only the latest in a series of Chinese advances in the region.
At the same time, unrelated issues have increasingly complicated the ability of both countries to compete as they might prefer. Some analysts argued that the demographic bottlenecks and economic woes facing the People’s Republic would prevent it from competing with the United States and the West before a new Cold War could even begin. In the US case, its own economic issues, and increasingly polarized domestic politics and their ripple effects, are constraints.
Ironically, their respective struggles risk undermining what are perhaps among the strongest factors that could help in determining US and Chinese relations with the MENA region. For the United States, its cultural nodes, as well as its freedom and rule of law, likely appeal to the region’s restive youth but are showing strains. For China, its successful experience in rapid socioeconomic transformation in two generations without any noticeable changes to its political system may be its main selling point to at least some MENA governments, but that, too, is showing strains for Beijing.
An important new factor is how much MENA countries have shown their intention in the last few years to forge a path not beholden to either superpower — in part because they see Washington’s and Beijing’s foibles. There are many examples: Iran’s and Saudi Arabia’s decision, along with the United Arab Emirates, Egypt, and Ethiopia, to join the BRICS group of nations (Brazil, Russia, India, China, and South Africa) in August 2023 is only one of the most recent ones, raising eyebrows in the West. Many came to question whether BRICS and MENA were beginning to form an anti-Western bloc, despite denials of a turn away from the West.
What might the US-China competition in MENA look like in the future if the countries there take the more functional and practical path in intra-regional relations and lean into the green energy/economy transition, while the superpowers contend with internal challenges?
Scenario 1: US strong, China as weaker outlier
The United States stabilized at home after the 2032 election. Through a mix of economic protectionism against adversaries, openness to commerce with allies, gains in labor rights and skills, and cooling off societal tensions, America had a resurgence reminiscent of the 1980s and 1990s at home and abroad.
Washington found smarter ways than “boots on the ground” in MENA. Successive US administrations mixed pressure and incentives to allies to help them resolve their long-standing disputes through confidence-building measures. An engaged Washington could support entities that encourage regional cooperation. With that support, many US-friendly MENA countries lowered their trade barriers and cooperated on conventional and renewable energy projects. That made the support increasingly a two-way street over time, as emerging MENA tech sector powers supplied an increasing share of the growing markets in the US for green economy products and projects.
China did not sit idly by though. It continued to invest in Iran as well as Gulf Arab nations for energy security while selling them weapons. Still, Beijing could not fulfill its purported potential as envisioned in the early 21st century. It increased its influence over Iran (and Syria and Iraq) by other means, and the Islamic Republic became a major geopolitical outpost for the People’s Republic. However, China’s attempts to benefit from remaining geopolitical and factional tensions in the region at US expense yielded limited results.
Part of the problem rested with Beijing’s limited capacity to respond to the region’s needs. Belt and Road Initiative (BRI) projects either proved unprofitable or unable to alleviate MENA countries’ infrastructure problems. Thus, leaders in MENA capitals paid more attention to their American and European options — and leveraged their own tech capabilities to build for themselves. China’s demographic and economic bottlenecks, along with geopolitical problems in its near abroad, further barred meaningful engagement with the MENA region.
Scenario 2: United States stagnant, China strong
Unlike the first scenario, America’s domestic scene never calms down, hampering its ability to project power as it once did. Washington’s woes — monetary and fiscal policies at the federal level (or lack thereof), inability to retrain its labor force, and contentious politics around wealth and income inequalities, identity, and “America First” — diminish US political influence and the preeminence of the dollar.
This relative US weakness and the lack of consistency in the policies of successive administrations make regional countries prefer to conduct business with Beijing. US allies such as Israel, Turkey, and Egypt remain tethered to the West politically and economically, though they, too, balance their relations between the West and the East.
A more functional MENA, with its intra-regional trade and its investment in exportable renewable energy and green industries accelerating, finds its engagement with China deepening as Beijing begins to shift to greening its economy. The region’s trade with Beijing and the wider Asia-Pacific region doubles from the 2010s to the 2030s and again by the late 2040s, and MENA countries vote along similar lines as China at the UN and the World Trade Organization. These positive dynamics outweighed any concerns that Beijing continues to ally with Iran.
Friendship with Beijing is paying off for the region’s political elites as well as its citizens, but on a much more co-equal footing than in past decades. One result is a bolstering of commerce within the region as well as with China and the rest of Asia. Some countries use Beijing-sponsored BRI initiatives to upgrade their physical infrastructure, while regional industrial powerhouses such as Turkey and Egypt and newly “green-industrialized” economies such as Jordan, Palestine, and Iraq are becoming more able to produce high-quality widgets that compete with Chinese goods.
Scenario 3: “Compeer-itition”
Here, both the United States and China have regained their “mojo” by the middle of the 21st century. And the MENA states, with better educated and trained populations, GDP growth, investment in the green economy, and influence over global trade, transportation, and logistics routes, stand collectively as a near-peer vis-à-vis the two superpowers.
This has had much to do with intra-regional changes. Functional integration helped unlock tens of billions of dollars in economic and commercial value. As industrialized countries lessened their dependence on oil and gas, the hydrocarbon-rich countries of the MENA region offered lucrative purchase and carry options for developing countries in Asia and Africa — and used the proceeds to invest in high-efficiency wind and solar energy technologies, green hydrogen, smart grids, and new-generation desalination plants, which it then offered to both industrialized and developing countries at competitive rates.
MENA’s relations with the US and China rest on a healthy mix of cooperation and competition. Coupling Gulf money with engineering giants from Asia, MENA, and North America helped to build resilient infrastructure in countries vulnerable to rising sea levels and other risks posed by climate change. At the same time, Abu Dhabi, Doha, Dubai, Istanbul, Riyadh, and Tel Aviv came to compete with China’s and America’s finance and tech hubs in the development of technologies that fight climate change. These dynamics effectively dampened any lingering US and Chinese interest in a Cold War with each other in MENA.
Epilogue: A new slant on the US and China in the Middle East
Today, as MENA’s headline-producing problems persevere and worsen, the United States and China are able to compete to influence regional governments according to their own priorities. If we — and more importantly, leaders in the region — take the time to imagine futures in which countries take on bold new forms of agency to reset intraregional political dynamics and to invest in the tech and green economies of the future, we can see the kinds of steps that could create those futures and temper Washington and Beijing’s competition in this part of the world.
Barın Kayaoğlu is the Dean of Students and Associate Professor of World History at the American University of Iraq, Sulaimani (AUIS) and a non-resident fellow with the Strategic Foresight Initiative at the Middle East Institute. The opinions expressed in his works are personal and not shared by AUIS or MEI.
Steven Kenney is the director of MEI’s Strategic Foresight Initiative and the founder and principal of Foresight Vector LLC.
Photo by Wang Dongzhen/Xinhua via Getty Images
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CHICAGO – Recent discussions about the implications of artificial intelligence for employment have veered between the poles of apocalypse and utopia. Under the apocalyptic scenario, AI will displace a large share of all jobs, vastly exacerbating inequality as a small capital-owning class acquires productive surpluses previously shared with human laborers.
The utopian scenario, curiously, is the same, except that the very rich will be forced to share their winnings with everyone else through a universal basic income or similar transfer program. Everyone will enjoy plenty and freedom, finally achieving Marx’s vision of communism, where it is “possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman, or critic.”
The common assumption in both scenarios is that AI will vastly increase productivity, forcing even highly paid doctors, software programmers, and airline pilots to go on the dole alongside truck drivers and cashiers. AI will not only code better than an experienced programmer; it will also be better at performing any other tasks that that coder might be retrained to do. But if all this is true, then AI will generate unheard-of wealth that even the most extraordinary sybarite would have trouble exhausting.
The dystopic and utopian outcomes both reduce AI to a political problem: whether the left-behind (who will have the advantage of numbers) will be able to compel the AI tycoons to share their wealth. There is reason for optimism. First, the gains from AI under this scenario are so extravagant that the super-rich might not mind giving up a few marginal dollars, whether to appease their consciences or to buy social peace. Second, the growing mass of the left-behind will include highly educated, politically engaged people who will join the traditionally left-behind in agitating for redistribution.
But there is also a deeper question. How will people respond, psychologically and politically, to the realization that they can no longer contribute to society by engaging in paid work? Labor-force participation has already declined significantly since the 1940s for men, and though women entered the workforce in large numbers only in the 1970s and 1980s, their participation rate also has begun to decline. This may well reflect a trend of people at the bottom losing the capacity to convert their labor into compensable value as technology advances. AI could accelerate this trend, defenestrating people at the middle and top as well.
If the social surplus is shared widely, one might ask, “Who cares?” In the past, members of the upper class avoided taking jobs, and disdained those who did. They filled their time with hunting, literary pursuits, parties, political activities, hobbies, and so on – and they seem to have been rather pleased with their situation (at least if you ignore the bored gentry idling in summer dachas in Chekhov’s stories).
Modern economists tend to think of work in the same ways, as simply a cost (“c”) that must be offset by a higher wage (“w”) to induce people to work. Like Adam and Eve, they implicitly think of work as a pure bad. Social welfare is maximized through consumption, not through the acquisition of “good jobs.” If this is right, we can compensate people who lose their jobs simply by giving them money.
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Maybe human psychology is flexible enough that a world of plenty and little or no work could be regarded as a boon rather than an apocalypse. If aristocrats of the past, retirees of today, and children of all eras can fill their time with play, hobbies, and parties, perhaps the rest of us can, too.
But research indicates that the psychological harms of unemployment are significant. Even after controlling for income, unemployment is associated with depression, alcoholism, anxiety, social withdrawal, disruption of family relations, worse outcomes for children, and even early mortality. The recent literature on “deaths of despair” provides evidence that unemployment is associated with elevated suicide and overdose risk. The mass unemployment linked to the “China shock” in some regions of the United States was associated with elevated mental-health risks among those affected. Loss of self-esteem and a sense of meaning and usefulness is inevitable in a society that valorizes work and scorns the unemployed and unemployable.
As such, the long-term challenge posed by AI may be less about how to redistribute wealth, and more about how to preserve jobs in a world in which human labor is no longer valued. One proposal is to tax AI more relative to labor, whereas another – recently advanced by MIT economist David Autor – is to use government resources to shape the development of AI so that it complements rather than substitutes for human labor.
Neither idea is promising. If the most optimistic predictions about AI’s future productivity benefits are accurate, a tax would have to be tremendously high to have any impact. Moreover, AI applications are likely to be both complements and substitutes. After all, technological innovations generally enhance some workers’ productivity, while eliminating others’ tasks. If the government steps in to subsidize complementary AI – say, algorithms that improve writing or coding – it could just as easily end up displacing jobs as preserving them.
Even if taxes or subsidies can keep alive jobs that produce less value than AI substitutes, they will merely be putting off the day of reckoning. People who derive self-esteem from their jobs do so in part because they believe that society values their work. Once it becomes clear that their work can be done better and more cheaply by a machine, they will no longer be able to maintain the illusion that their work matters. If the US government had preserved the jobs of buggy-whip makers when automobiles displaced horse-drawn carriages, one doubts that those positions would still confer much self-esteem on anyone who took them today.
Even if humans are able to adjust to a life of leisure in the long term, the most optimistic projections of AI productivity portend massive short-run disruptions to labor markets, akin to the impact of the China shock. That means substantial – and for many people, permanent – unemployment. There is no social safety net generous enough to protect people from the mental-health effects, and society from the political turmoil, that would follow from such widespread disappointment and alienation.