1. The first-ever EU-Gulf Cooperation Council summit will be hosted under Hungary’s EU Council Presidency, marking a historic step in their relations.
The Hungarian Presidency aims to further deepen cooperation between the Gulf countries and the European Union. The relationship between the EU and the Gulf Cooperation Council (GCC) dates back to 1989. Although the relationship was temporarily affected by the pandemic and internal tensions within some GCC countries, it has regained momentum in recent years. In 2022, a joint declaration on strategic cooperation with the Gulf was adopted, with priorities including climate change, energy security, and the green transition. Former Italian Foreign Minister Luigi Di Maio was appointed as the first EU Special Representative for the Gulf in May 2023. However, no EU-GCC summit has taken place until now: the first will be held on 16 October, marking a significant milestone in the history of relations between these two regional organizations.
2. Energy remains the backbone of EU-Gulf trade, with energy security as a critical area of mutual cooperation.
Economic relations between the two regions are vital, with trade totaling €200 billion in 2022. On a country-by-country basis, Saudi Arabia, the United Arab Emirates, and Qatar account for the largest share of trade, representing roughly 80-90% of total trade among GCC members. Among EU countries, France, the Netherlands, Germany, and Belgium had the highest trade volumes. At a pan-European level, the Gulf countries ranked as the EU’s seventh most important trading partner.
Despite this high volume of trade, it reflects a rather homogeneous pattern: oil, oil derivatives, and gaseous hydrocarbons made up more than 80% of imports from Saudi Arabia and Qatar into the EU, and over 90% of imports from Kuwait. These same products also dominate trade with the other GCC countries, accounting for 40-60% of imports, and are the most significant category, except in Bahrain, where they are second only to aluminum-containing products.
3. The Gulf’s push for economic diversification and a green transition opens exciting new opportunities for Europe.
Five out of the six GCC countries have formal visions to diversify their economies, and the EU could become one of their most important partners in the future. This cooperation began in 2019 with the establishment of the Economic Diversification Dialogue project. Supporting the Gulf countries’ progress in this area could bring several benefits to the EU. For instance, future exchanges of knowledge on green energy technologies and the promotion of foreign direct investment (FDI) in both directions—especially in the energy sector—offer significant potential. The energy sector in the GCC, particularly in the Emirates, has already seen rising FDI, with the UAE ranking second in greenfield FDI in 2023, although coal, oil, and gas sectors still lead in capital inflows. In return, FDI from Gulf countries may also target the energy sector within the EU.
4. Green hydrogen is emerging as the energy of the future, and the Gulf countries are poised to become major players in this sector.
The GCC states continue to derive significant influence from their hydrocarbon wealth. One of the most striking recent examples is Qatar, which has played a key role in securing the EU’s energy supply following the Russia-Ukraine war by exporting liquefied natural gas (LNG). In 2023, the EU imported nearly 15.5 billion cubic meters of LNG from Qatar, making it the fourth-largest exporter of natural gas. When looking solely at LNG imports, the EU was already the second-largest importer, after the U.S. However, there are differing views on the future volume of Qatari gas exports to the EU, partly due to the EU’s climate goals and the contrasting approaches the two parties take in the gas market. Qatar prefers long-term contracts, whereas EU countries have tended to favor short-term agreements.
The future trade of another gaseous element—hydrogen—is even more controversial and highly anticipated. In 2022, the EU decided to rapidly reduce its reliance on Russian fossil fuels and accelerate the green transition in response to the Russia-Ukraine war. Hydrogen is expected to play a key role in this strategy, as it has the potential to replace both natural gas and oil. However, for this transition to be sustainable, the focus is on “green” hydrogen, which means the electricity used to produce it (by splitting water into oxygen and hydrogen) must come from renewable sources. By 2030, the EU aims to produce 10 million tonnes of renewable hydrogen domestically and import another 10 million tonnes. The Gulf countries could become key partners in achieving this target, as the UAE, Saudi Arabia, and Oman have ambitious plans and significant potential for green hydrogen production. Saudi Arabia and Oman, in particular, aim to produce up to 1 million tonnes by 2030, which could contribute significantly to the EU’s import goal. Cooperation in this sector is already a recurring theme in EU-GCC dialogue.
5. While Gulf states offer stability in a volatile region, Europe has a duty to assist in reducing broader geopolitical tensions.
While increased cooperation with the Gulf countries is a priority for the EU in many respects, it may be influenced by external actors and events beyond the control of the parties involved. One key area of concern is the rising tensions around the Red Sea, through which much of the region’s trade passes before crossing the Suez Canal. Both Israel and the ongoing conflict in Yemen threaten this vital trade route. Alternatives exist, such as rerouting ships around the Cape of Good Hope, but this would delay the arrival of goods in Europe by up to two weeks and incur additional costs. As outlined in the program of the Hungarian EU Presidency, EU efforts must be intensified to restore regional stability and secure supply chains in the Red Sea region.
The escalating conflict between Israel and Hamas presents additional dangers, particularly due to the differing policies of the Gulf states toward Iran, which could potentially create tensions among GCC members. An open conflict with Iran would further jeopardize energy security. While this is not an immediate threat, market prices already reflect the uncertainty surrounding this situation.
Moreover, the region is of significant interest to several major powers. China, for example, has overtaken the EU as the region’s largest trading partner, while Russia and India are also emerging as influential players. If these powers manage to strengthen their ties with the Gulf more effectively than the EU, this could pose a significant challenge to deepening EU-GCC relations in the future. Additionally, the EU’s political stance toward the region could itself lead to friction. While the EU has called for enhanced relations, the European Parliament has issued several critical resolutions on countries in the region, particularly regarding human rights issues, which could strain these relationships.
Written by Gábor Papp