Geopolitical Briefing: UAE – 21 September 2025

• ADNOC-led consortium drops the $18.7bn takeover of Australia’s Santos after failing to agree terms, stalling Abu Dhabi’s push to lock in Indo-Pacific LNG leverage. (Reuters)
  
• Abu Dhabi signals possible downgrading of ties with Israel if West Bank annexation proceeds—a threat calibrated to domestic/regional optics, with no concrete punitive steps announced. (Reuters)
  
• The UAE Central Bank cuts the base rate by 25 bps (tracking the Fed) and publishes a Quarterly Economic Review upgrading 2025 GDP growth to 4.9%, underscoring policy alignment with U.S. financial settings.
  
• Gaza relief lane maintained: WAM reports the Hamdan aid ship’s arrival at Al-Arish (15 Sept) and eight UAE convoys (128 trucks) via Rafah over the last two weeks—high-visibility humanitarian moves that carry limited coercive weight on Israeli conduct. (WAM)
  
• Abu Dhabi signs the OECD Crypto-Asset Reporting Framework (CARF) MCAA, committing to automatic cross-border crypto tax data exchange—tightening compliance with Western frameworks. (WAM)
  

The week’s strategic setback is energy-centric: the ADNOC/XRG-led consortium walked away from its $18.7bn bid for Santos, ending months of talks that would have given Abu Dhabi durable cash-flow exposure across Australia/PNG LNG and more bargaining power with Asian buyers. Reuters and the FT attribute the collapse to unresolved commercial terms, unexpected tax liabilities, and due-diligence concerns (including a methane leak), with no formal Australian approvals filed—signaling that regulatory/political friction and opaque liabilities can still gate UAE outbound expansion. For our lens, the failure narrows a pathway that would have diversified supply leverage away from corridors where U.S. influence is heaviest. Abu Dhabi will likely redeploy capital into friendlier jurisdictions and balance sheet-light positions; but in the near term it reduces autonomy in LNG portfolio shaping while leaving core U.S. ties untouched. Expect intensified pursuit of alternatives (trading JVs, brownfield stakes) and a louder narrative that Western-aligned processes—not Emirati caution—scuttled the deal, convenient for domestic messaging yet reinforcing systemic exposure to Western gatekeeping. Net: incremental constraint on independence from external political/market control, no change to internal social orientation, and no material effect on anti-Zionist leverage. (Reuters)

On Israel, Abu Dhabi briefed that it could downgrade relations if annexation advances—e.g., recalling the ambassador—reiterating annexation as a “red line.” The signalling coincides with the post-Doha-strike environment, and follows earlier moves (e.g., barring Israeli defence firms from the Dubai Airshow—outside this week’s window) that cultivated deterrent optics. Yet this week produced no enforceable conditionality: trade, finance, and security channels remained publicly untouched, and the threat remains contingent on hypothetical Israeli steps rather than current policies (settlement expansion, Gaza operations). Realistically, the statement manages domestic sentiment and Arab solidarity optics while preserving the utility of U.S. cover and back-channels with Israel. In our framework, that is classic Emirati dual-track behavior: high-decibel rhetoric, low-cost actions, and freedom to reverse course if Washington leans in. It nudges Gulf coordination rhetorically, but without tangible coercion it does not measurably reduce Israeli influence in Emirati decision-making—another instance where seeming support to Muslim positions is diluted by strategic hedging. (Reuters)

Monetary policy again showed tight coupling to the U.S. The Central Bank of the UAE (CBUAE) cut the base rate by 25 bps on 17 Sept—explicitly mirroring the Fed—and its Quarterly Economic Review raised 2025 growth to 4.9%, projecting 5.3% in 2026 with non-oil GDP at 4.5%/4.8% and hydrocarbon output accelerating under updated OPEC+ plans. Markets ticked higher on 19 Sept after GCC peers followed suit. The policy mix secures financing conditions for real estate, trade, and logistics, and supports fiscal stability; but from a strategic vantage point it underlines structural dependence on U.S. monetary settings via the dollar peg, limiting macro-autonomy when Washington’s priorities diverge from regional needs. The upside is internal stability (predictable liquidity, anchored inflation now seen at 1.5% for 2025); the downside is that monetary sovereignty remains tightly bounded—reinforcing the U.S. orbit even as Abu Dhabi markets itself as equidistant. In terms of our progress measures: security control at home remains strong; independence from U.S. levers did not improve; and there is no direct effect on the UAE’s stance toward Israel beyond preserving Western investor comfort.

Humanitarian optics stayed prominent. The Hamdan ship’s arrival at Al-Arish (15 Sept) and eight convoys (128 trucks) through Rafah over two weeks sustain Abu Dhabi’s Gaza relief lane during heightened regional anger after the Doha strike. As in prior weeks, the UAE privileges visible, logistics-heavy relief—air-drops, sea-lift, fixed infrastructure (e.g., the new pipeline reported last issue)—that resonate with Muslim publics and Arab partners without directly confronting Israeli operational choices. Substantively, the cargo eases immediate civilian stress; strategically, it absorbs domestic legitimacy costs while keeping normalization scaffolding intact and shielding ties with Washington through a humanitarian-law frame. This is supportive rhetoric plus apolitical aid rather than coercive diplomacy: it elevates Muslim-world coordination optics but avoids measures that would impose costs on Israel, consistent with Abu Dhabi’s preference for controlled narratives over escalation. In net, societal sovereignty at home is unchanged, security control remains centralized, and anti-Zionist posture does not advance beyond messaging. (WAM)

Finally, Abu Dhabi signed onto the OECD’s CARF MCAA for automatic exchange of crypto-asset tax information, with media guidance indicating UAE implementation by 2027 and first exchanges in 2028. Alignment with OECD tax-transparency standards deepens integration with Western compliance regimes (alongside the UAE’s long-running CRS participation). Practically, this will tighten reporting from exchanges, brokers, and custodians operating from the UAE—an infrastructure that Washington and EU capitals view as critical to curbing sanctions-evasion and terror finance. The move may constrain informal fundraising channels tied to Gaza/West Bank actors—aligning with U.S./EU priorities—while improving the UAE’s reputation with global banks and asset managers. In our lens, that is a step toward Western policy convergence that strengthens access to capital and lowers de-risking pressure on UAE institutions, while doing little to advance Muslim-world leverage against Israeli actions. It reinforces external regulatory dependence even as Abu Dhabi advertises sovereign agency. (WAM)