In today’s fragmented geopolitical environment, economic diplomacy has emerged asa key instrument for building resilient international partnerships. Nowhere is this more evident than in the evolving relationship between the European Union(EU) and the Gulf Cooperation Council (GCC). With formal Free Trade Agreement(FTA) negotiations stalled for years, the two regions are increasingly turning to sectoral strategies, targeted bilateral initiatives, and institutional innovation to deepen economic ties.
Economic Forums and Business Networks
One prominent example of pragmatic economic diplomacy is the France-GCC Economic Forum, which convenes public and private stakeholders to promote cooperation in energy, healthcare, and infrastructure. In 2023 alone, the Forum facilitated agreements worth over €1.2 billion in green energy projects and smart urban development.
Similarly, bilateral chambers of commerce are playing a growing role. The Romania–UAE Chamber of Commerce has helped initiate more than 40 joint ventures in sectors such as agritech, smart irrigation, and cybersecurity between 2020 and 2024. Romania’s agricultural exports to the UAE grew by 23% in 2023, driven by collaborative innovation in climate-resilient farming.
An outstanding case of institutional innovation is the Euro-GCC Economic Initiative. Launched in Bucharest in November 2024, it has quickly become a hub for strategic partnerships, facilitating public-private engagement between Europe and the GCC. The Initiative organizes annual business summits—including the upcoming 2nd Euro-GCC Business Summit in Malta—and offers membership packages that support SMEs and large corporations in forging trade and investment pathways. The platform has also launched an Innovation Hub, which connects European startups in AI, clean tech, and digital logistics with GCC innovation zones such as Hub71 in Abu Dhabi and KAUST in Saudi Arabia.
The UAE–EU CEPA: A Strategic Milestone
A breakthrough development came in April 2025 with the official launch of negotiations for a Comprehensive Economic Partnership Agreement (CEPA) between the UAE and the EU. This landmark initiative—backed by UAE President Sheikh Mohamed bin Zayed Al Nahyan and European Commission President Ursula von derLeyen—is designed not just as a trade deal, but as a blueprint for 21st-century economic integration.
The numbers are compelling. The EU’s GDP reached €17 trillion in 2023, accounting for 14% of global trade. The UAE’s non-oil trade with the EU exceeded US $67 billion in 2024, growing 3.6% year-over-year. The UAE now represents over 40% of GCC–EU trade volume, making it the Union’s primary Gulf partner.
The CEPA is expected to benefit over 50,000 UAE-based SMEs, streamline IP protection and digital trade protocols, and foster collaboration in strategic sectors such as hydrogen, fintech, and AI. It will also align with the EU’s €300 billion Global Gateway strategy, co-funding infrastructure corridors from Europe to South Asia and East Africa.
Sectoral Modularity and Strategic Asymmetry
While the CEPA framework is bilateral, its broader impact is regional. The UAE’s ability to negotiate independently of GCC collective processes has created asymmetry—but also a potential roadmap. Other Gulf countries may follow suit ifthe CEPA proves economically fruitful and politically viable.
Germany, for instance, has already initiated discussions with Saudi Arabia on deepening bilateral cooperation in advanced manufacturing and defense technology. In 2024, German exports to Saudi Arabia rose to €9.3 billion, a 6% increase driven by machinery and renewables.
Opportunities in High-Tech, Security and Defense Innovation
Innovation ecosystems between the EU and GCC are increasingly intertwined, particularly in high-tech and defense sectors. In 2024, Thales Group and Saudi Arabian Military Industries (SAMI) launched a joint venture to develop AI-based surveillance systems tailored for desert environments. Meanwhile, UAE’s EDGE Group signed a€700 million cooperation framework with Rheinmetall AG to co-develop unmanned aerial systems and cyberdefense platforms.
Saudi Arabia is rapidly expanding its defense R&D footprint, with the King Abdulaziz City for Science and Technology (KACST) leading collaborative programs with EU partners in autonomous systems and smart munitions. In 2023, KACST and France’s CNRS signed a cooperation agreement to explore AI applications in strategic industries.
European startups and SMEs, particularly those in AI, quantum computing, biotech, and cybersecurity, can benefit from GCC sovereign investment funds such as ADQ and PIF. Through co-innovation labs and dual-use tech incubators, the EU and GCC are jointly addressing threats from cyberattacks, critical infrastructure vulnerability, and emerging warfare domains.
The Euro-GCC Economic Initiative is also piloting a cross-regional Innovation Hub, connecting tech startups from Romania, Poland, Germany, Estonia with accelerators in Abu Dhabi and Riyadh. Initial projects include biotech,cybersecurity, dual use products.
Institutional Innovation as Soft Power
Beyond trade, institutional innovation underpins economic diplomacy. The EU-GCC Clean Energy Technology Network, funded by the EU since 2010, has hosted over 60 expert forums and training events in hydrogen, carbon capture, and energy efficiency. Its recent conference in Abu Dhabi drew more than 300 participants from both regions, signaling robust engagement.
Academic diplomacy is also accelerating. The Sorbonne Abu Dhabi has graduated more than 2,800 students since 2006. In Dubai, the University of Birmingham has established a full campus offering degrees in AI and sustainability. In Saudi Arabia, King Saud University and KAUST are expanding partnerships with European universities, including co-funded doctoral programs with German and Dutch research institutions. In 2024, Oxford University and the Mohamed bin Zayed University of Artificial Intelligence (MBZUAI) launched a joint research initiative on AI-assisted medical diagnostics.
The Erasmus+ program is also expanding its reach. Over 1,200 students and faculty from the GCC have participated in Erasmus+ exchanges since 2014. Horizon Europe, the EU’s flagship R&D funding program, is opening additional project calls to GCC institutions, with Saudi and UAE universities already participating in research on hydrogen and climate resilience.
Conclusion: A New Model of Engagement
EU–GCC relations are no longer constrained by stalled multilateral negotiations. Economic diplomacy, through modular, sector-led and innovation-driven channels, is charting a flexible and resilient path forward. As both regions navigate climate transitions, digitalization, and geopolitical uncertainty, institutional innovation will be key to converting shared interests into sustainable partnerships.
By focusing on practical mechanisms—like CEPA agreements, joint research platforms, co-financed infrastructure corridors, and tech-defense synergies—the EU and GCC can build an economic architecture that is fit for purpose in a multipolar, rapidly evolving global order.
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