Businesses fear blowback from Saudi-UAE rift

Executives in the United Arab Emirates fear the country’s rift with Saudi Arabia could affect their operations after some businesses said they had requests for visas to the kingdom rejected in recent weeks.

Tensions between the two traditional allies burst into the open in December after Riyadh alleged that the UAE had supported a Yemeni separatist faction that had launched an offensive against Saudi-backed groups.

Since then, employees at banks, management consultancies, law firms and oil and gas services firms have all faced issues when applying for Saudi visas from the UAE, according to six people whose companies were directly affected. Saudi Arabia has also been making a broader push to encourage businesses to move operations and staff to the kingdom.

“Of course we are worried,” said one marine services executive, whose employees this month had visit visas rejected. “But the business community has been very good at finding workarounds.” 

The company resolved the issue by applying from branches in neighbouring Gulf states of Qatar and Bahrain. “Others are not so lucky,” they said.

Like others, he said they were given no reason for the rejections, adding that he hoped the issue would be temporary given the states’ deep economic ties. 

A Saudi official insisted that there had been “zero changes” to the visa process. The UAE did not respond to a request for comment. Executives in the UAE viewed conciliatory comments this week by Saudi foreign minister Prince Faisal bin Farhan as a sign that Riyadh was seeking to cool tensions. 

“The relationship with the UAE from our perspective is critically important,” Prince Farhan told reporters. “It is an important element of regional stability and therefore the kingdom is always keen on having a strong, positive relationship with the UAE.” 

One executive said the visa issue had begun to ease over the past week.

The crisis between the neighbours escalated after Riyadh, which maintained the Yemeni secessionist’s advance threatened the kingdom’s national security, bombed weaponry and vehicles that it said Abu Dhabi had sent to the faction.

The UAE then acceded to a request by the Saudi-backed Yemeni government that it withdraw its forces from the country. The two countries intervened in Yemen’s civil war in 2015 to fight Iranian-backed Houthi rebels but supported different factions that often competed with each other. 

The rift over Yemen and other regional issues triggered the biggest rupture in years between the Gulf’s powerhouses. Analysts do not expect it to escalate to the extent of the last Gulf crisis in 2017, when Saudi Arabia and the UAE led a regional embargo of Qatar over allegations that Doha supported Islamist groups.  

Saudi Arabia and the UAE have bilateral trade of more than $20bn, and many companies use Dubai as a hub to serve the kingdom, which has by far the Gulf’s largest population.

But the tensions have caused unease in the business community.  

One UAE-based banker said his institution was preparing for a roadshow in Saudi Arabia when one of the bank’s staff had a visa rejected. 

“It isn’t just us, other banks are facing the same problem,” the banker said.

To circumvent the problems, some companies are allowing executives to see clients by travelling on regular visit visas purchased on arrival at the airport, according to two consultants.  

Other businesses are concerned about the legality of letting employees work while on tourist visas, another person said, calling it “a Catch-22”.

Another executive said nationals from about half a dozen countries, including Jordan, Egypt, Pakistan and India, have for about a year struggled to obtain multiple-entry business visas for Saudi Arabia when applying from the UAE.

The kingdom does restrict visa applications for Muslims during the Hajj pilgrimage season to manage the number of visitors.

Some other nationalities started to face similar issues in October, they said. But in December and January — as tensions between Saudi Arabia and the UAE flared — the problem deepened, with the number of rejections soaring, the executive said. He added that the issue had started to ease. 

“I’m not sure it’s linked [to the tensions], it could be but there’s no evidence,” the executive said. “We believe that this is a way to push people to consider relocation.” 

Another regional manager said Saudi Arabia has recently upped long-standing efforts to persuade UAE-based companies with extensive operations in the kingdom to relocate staff to Riyadh. 

Since 2024, Saudi Arabia has required multinationals to establish their regional headquarters in Riyadh to secure government contracts. The move sparked disquiet among some global firms that had for decades used Dubai as their Gulf base. Many have restructured operations to comply with the diktat because of the scale of business in the kingdom.

While a war of words is still playing out, most businesses believe that any ripple effects on businesses will be shortlived given close trade ties between Saudi Arabia and the UAE. Saudis are also major investors in the UAE, especially in Dubai real estate. 

As the UAE pursues de-escalation, Emiratis with prominent social media accounts have been informally warned by government representatives to refrain from retaliating to growing Saudi online criticism.

“We were told to focus on all the good things that happen here and not get involved,” said one.

Data visualisation by Keith Fray