Tensions between Saudi Arabia and the United Arab Emirates (UAE) over Middle East hegemony are spilling into the economy. With transfers from Saudi accounts to UAE accounts repeatedly delayed recently, concerns are growing that Saudi Arabia is effectively blocking financial remittances to the UAE.
On the 7th (local time), the Financial Times (FT) in the United Kingdom reported, citing multiple sources, that "Saudi Arabia is blocking or delaying financial remittances sent from domestic banks to UAE accounts." Since May, funds that Saudi corporations transferred to the UAE accounts of companies or individuals in Dubai have been returned or delayed by the Central Bank of Saudi Arabia without further explanation, it said.
Bloomberg also reported the same day that "several people experienced money sent from Saudi Arabian accounts not arriving in UAE accounts, being returned to the sender, and electronic payments being blocked," adding, "Some corporations are routing transfers through other jurisdictions that appear unaffected to circumvent the issue."
An executive at a healthcare corporation headquartered in Dubai said, "Three payments sent by a Saudi client we have transacted with for years were blocked and returned by Saudi banks since mid-May," adding, "The funds were usually held for about a week and then returned to the sender or recipient without any inquiries."
Another Dubai-based corporation also told the FT, "Payments from Saudi corporations now take a very long time," adding, "We have customers waiting for goods, but payments are not being made. Many suppliers that ship to Saudi Arabia are in the UAE, so this kind of measure ends up shooting themselves in the foot."
Saudi Arabia and the UAE are the Arab world's largest economies, with annual bilateral trade exceeding $20 billion (about 30 trillion won). According to data compiled by Bloomberg, trade between the two Gulf states rose from $21.7 billion in 2024 to $25.7 billion last year, showing steady growth in trade volume. Many corporations are also using Dubai as a base to tap the Saudi market.
However, cracks in diplomatic ties have deepened since late last year. In December last year, Saudi Arabia accused the UAE of supporting separatist forces in Yemen, further heightening tensions. When separatist forces backed by the UAE attacked Yemeni government troops supported by Saudi Arabia at the time, Saudi Arabia even labeled the UAE as a "threat to national security."
Bloomberg assessed that the situation has escalated into the most serious rift among Gulf states in decades, further aggravating tensions that had accumulated over competition for economic leadership and differing views on Middle East conflicts.
On top of that, at the end of April, the UAE announced it would withdraw from the Organization of the Petroleum Exporting Countries (OPEC), which Saudi Arabia effectively leads, deepening the rift. Observers said this brought to the surface the conflict within OPEC between the UAE, which wants to increase production, and Saudi Arabia, which prefers cuts to defend oil prices.
For now, both governments are not officially acknowledging the delayed transfers between accounts. The Central Bank of Saudi Arabia said, "The institutional sector operates under a robust regulatory framework," adding, "There are no direct restrictions targeting specific countries, and banks apply the same risk-based due diligence measures to all transactions to protect the soundness of the financial system."
A UAE government official also told Bloomberg that it has not received complaints or reports from private corporations about difficulties or abnormal delays in bank transfers between the two countries, saying, "The UAE and Saudi Arabia maintain deep and longstanding economic and commercial ties built on substantial trade and investment flows."