Magazine Articles

October 30 2025

Rising Up To the Global Challenges, How IMF Is Coping and Needed Reform

BY DR SOHA MAAD

Introduction

A monetary fund is a financial institution that provides support to countries and regions to help stabilize their economies, especially during times of crisis. It typically offers short-term loans, policy advice, and technical assistance to address issues like currency instability, balance of payments deficits, or financial shocks. Examples of monetary funds are the International Monetary Fund (IMF) which is the most prominent global monetary fund, established in 1944 to promote international monetary cooperation and financial stability; The Arab Monetary Fund (AMF) which is a regional institution formed in 1976 to support Arab countries with monetary and financial stability. Some regions like Africa and Latin America are exploring establishing their own monetary funds to reduce reliance on global institutions.

Monetary funds are established to prevent or resolve financial crises, support currency stability and exchange rate systems, promote sustainable economic growth, and facilitate international trade and investment. In this article, we will focus on the International monetary fund, its establishment, its evolving role, the challenges it faces, its needed reform, and its wider impact and a SWOT (Strengths, Weaknesses. Opportunities, and Threats) analysis and comparison with world global organisations. The article concludes with a future outlook of the role of the IMF and a roadmap for Arab countries to establish an Arab pan international monetary fund.

IMF Foundation and Historical Evolution

The International Monetary Fund (IMF) was established in response to the global economic instability that followed the Great Depression and World War II. Its creation was part of a broader effort to build a new international financial order that would promote stability, cooperation, and growth.

Founded in 1944 at the Bretton Woods Conference, the IMF now has 190 member countries and serves as a central pillar of global economic cooperation.

The core functions of the IMF are:

Surveillance: Monitoring global and national economies to detect risks and offer advice.
Lending: Providing financial assistance to countries facing balance of payments crises
Capacity Development: Offering training and technical support to strengthen institutions.
Policy Dialogue: Facilitating cooperation on fiscal, monetary, and exchange rate policies.

The IMF mission is to foster international monetary cooperation, secure financial stability, facilitate trade, promote employment and sustainable growth, and reduce poverty worldwide.

The IMF is based on a Quota System. Each member contributes financial resources based on its economic size. This determines voting power and access to IMF funding. The IMF Special Drawing Rights (SDRs) constitute an international reserve asset created to supplement countries’ official reserves. IMF loans are often granted based on policy reform requirements to ensure repayment and economic stability.

The IMF helps countries in stabilizing their currencies, restoring investor confidence, navigating financial crises, and promoting sustainable growth. The IMF also plays a key role in coordinating global responses to challenges like pandemics, climate change, and debt distress.

The role of the International Monetary Fund (IMF) has undergone significant transformation since its foundation. The timeline of its historical evolution is as follows:

1944–1971: BRETTON WOODS ERA:

The IMF role was to maintain fixed exchange rates and support post-war reconstruction. The IMF acted as a guardian of the adjustable peg system, providing short-term loans to countries with balance of payments deficits.

1971–1980S: POST-BRETTON WOODS TRANSITION

The main challenge was the collapse of fixed exchange rate system. The IMF had a new focus on surveillance of floating exchange rates and macroeconomic stability. The IMF Began supporting developing countries facing oil shocks and inflation.

1990S: GLOBALIZATION AND CRISIS MANAGEMENT

The emerging role of the IMF was crisis manager during financial turmoil. The IMF Structural Adjustment Programs promoted liberalization, privatization, and fiscal discipline.

2000S: DEVELOPMENT AND DEBT RELIEF

The IMF role shifted toward Poverty Reduction. It introduced Poverty Reduction and Growth Facility (PRGF). The IMF also introduced Debt Relief Initiatives including Heavily Indebted Poor Countries (HIPC) and Multilateral Debt Relief Initiative (MDRI). 2010S–2020S: RESILIENCE AND SUSTAINABILITY

During the post-global financial crisis, the IMF Focused on systemic risk and financial sector stability.

The IMF COVID-19 Response involved emergency financing to over 90 countries. The IMF launched Resilience and Sustainability Trust (RST) and Food Shock Window (FSW).

TODAY’S ROLE

Today the IMF role involves global economic surveillance, crisis response and lending, technical assistance and capacity building, and climate and sustainability Integration

As such, the IMF has evolved from a post-war monetary stabilizer to a multifaceted institution addressing global economic, social, and environmental challenges.

IMF’s reserves and capital structure

Component	Approx. Value	Purpose
Quotas	SDR 660 billion	Core capital, voting power, access to funds
SDR Allocation	SDR 650 billion	Reserve asset for liquidity support
Precautionary Balances	Varies (multi-billion USD)	Operational resilience and risk management
NAB + Bilateral Borrowing	Over US$400 billion	Crisis response and lending expansion

Challenges Facing The Imf And Its Role At Global Level

The International Monetary Fund (IMF) plays a vital role in maintaining global financial stability, but it faces a complex array of challenges that test its relevance and effectiveness in today’s rapidly evolving world. Key challenges facing the IMF include:

Climate Change: The IMF must integrate climate risk into its surveillance and lending frameworks.
Unsustainable Sovereign Debt: Many low- and middle-income countries face rising debt burdens. The IMF struggles with timely and effective debt restructuring mechanisms.
Post-COVID Inequality: Uneven recovery has widened gaps between rich and poor nations. This threatens social cohesion and global stability.
Governance and Representation: Emerging economies and African nations demand a stronger voice. The IMF’s quota system and voting power remain skewed toward advanced economies.
Politicization and Leadership: Critics argue that IMF decisions are influenced by powerful member states. There is a need for more transparent and accountable leadership are growing.
Performance Evaluation: Difficulty in measuring the long-term impact of IMF programs. Some countries question the effectiveness of IMF interventions.

The IMF Rising to Global Challenges

The IMF has evolved significantly since its founding in 194. Originally focused on stabilizing exchange rates and supporting post-war economies, it now tackles a wide array of global issues:

Resilience and Sustainability Trust (RST): Designed to help vulnerable countries address climate change and pandemic preparedness.
Food Shock Window (FSW): A rapid-response tool to support nations facing food crises due to global shocks.
Expanded Lending Portfolio: Currently supporting 90 countries with over $112 billion in financing.

The IMF has shifted from its traditional role to a broader development financing institution, reflecting the changing nature of global economic vulnerabilities. It actively supports countries facing debt distress, climate disasters, and economic fragility especially in the Global South.

SWOT Analysis of the IMF’s Global Role

Strengths	Weaknesses
Global reach and legitimacy as a multilateral institution	Governance structure favors advanced economies (quota-based voting)
Ability to provide rapid financial assistance during crises	Conditionality of loans can lead to social and economic strain
Expertise in macroeconomic surveillance and policy advice	One-size-fits-all policy prescriptions may not suit diverse economies
Coordination with other global institutions (World Bank, UN, etc.)	Slow adaptation to emerging challenges like climate and digital finance
Opportunities	Threats
Expand role in climate resilience and sustainability financing	Rising skepticism and political resistance from borrowing countries
Innovate lending tools for fragile and low-income states	Geopolitical tensions may undermine multilateral cooperation
Strengthen support for inclusive growth and poverty reduction	Competition from alternative lenders (e.g., China’s Belt and Road, BRICS Bank)
Reform governance to reflect emerging economies’ growing influence	Loss of credibility if reforms are delayed or ineffective

This analysis highlights the IMF’s pivotal role in global economic stability while underscoring the urgent need for reform and innovation to maintain its relevance.

Comparative Overview of Global Financial Institutions

Comparison of the IMF with other major global financial institutions including the World Bank, World Trade Organization (WTO), and Bank for International Settlements (BIS)

Institution	Founded	Primary Role	Focus Area	Key Functions
IMF	1944	Promote global monetary cooperation and financial stability	Macroeconomic stability	– Surveillance of economies: Lending during crises Technical assistance
World Bank	1944	Reduce poverty and support development in low- and middle-income countries	Economic development	– Long-term development loans Infrastructure financing Policy advice
WTO	1995	Regulate and facilitate international trade	Trade liberalization	– Trade negotiations Dispute resolution Trade policy monitoring
BIS	1930	Serve as a bank for central banks and foster monetary and financial stability	Central banking and regulation	– Research and policy coordination Financial stability monitoring

Key Reforms Needed

The IMF is adapting, but reform is essential to ensure it remains fit for purpose in a world shaped by climate risk, geopolitical shifts, and economic inequality.

Key reforms needed include:

GOVERNANCE REFORM: The IMF Voting power is heavily skewed toward advanced economies. The needed reform involves a rebalance of quotas and voting shares to give emerging markets and low-income countries. This will make decision-making more democratic and representative of today’s global economy.
LENDING INSTRUMENTS: The IMF Quota-based access limits flexibility and fairness. The reform needed involves developing more responsive, needs-based lending tools that aren’t tied strictly to quotas. This will ensure timely support for countries facing climate shocks, pandemics, or debt distress.
DEBT SUSTAINABILITY AND RESTRUCTURING: The current IMF debt relief mechanisms are slow and fragmented. The needed reform involves forming a streamlined, transparent framework for sovereign debt restructuring, especially for low-income countries. This will prevent prolonged economic crises and promote recovery.
CLIMATE INTEGRATION: Climate risks are not fully embedded in IMF surveillance and lending. The needed reform involves making climate vulnerability a core part of IMF assessments and financing criteria. This will help countries build resilience and transition to green economies.
POLICY ADVICE AND CONDITIONALITY: One-size-fits-all policy prescriptions can harm social outcomes. The reform needed involves tailoring advice to local contexts and prioritize inclusive growth, social protection, and gender equity. This will support sustainable development, not just macroeconomic stability.
TRANSPARENCY AND ACCOUNTABILITY: The IMF faces a perceived lack of openness in decision-making and program evaluation. The reform needed involves improving public access to IMF data, decisions, and impact assessments. This will build trust and legitimacy among member countries and civil society.

Impact on Emerging and Arab Countries

The International Monetary Fund (IMF) has a wide-reaching impact across the global economy, with distinct effects in emerging markets and Arab countries.

The IMF acts as a financial first responder during global shocks like COVID-19 and food crises. It monitors global trends and offers policy advice to prevent instability. It provides technical assistance and training to strengthen institutions worldwide.

IMF benefits to emerging countries include:

Access to Emergency Financing: Helps stabilize currencies and restore investor confidence.
Support for Monetary Policy: Strengthens central banks and inflation-targeting frameworks.
Debt Restructuring Assistance: Plays a key role in managing sovereign debt crises.

However, the IMF faces major limitations including:

Social Costs of Reform: Structural adjustment programs can lead to job losses and reduced public services.
Capital Flow Volatility: IMF-backed reforms may expose economies to sudden capital flight.
Limited Customization: Policies may not fully reflect local economic realities.

In Arab countries, the IMF has provided critical aid to countries like Egypt, Tunisia, and Lebanon during fiscal crises. It provided policy reform guidance. The IMF Helped modernize tax systems, reduce subsidies, and improve transparency. The IMF contributed to macroeconomic stabilization in post-conflict and transition economies.

However, austerity measures have sparked protests in countries like Jordan and Tunisia. Some Arab nations remain heavily reliant on IMF support without achieving long-term sustainability. Moreover, Arab countries have limited influence in IMF governance structures.

IMF Future Outlook

The future role of the International Monetary Fund (IMF) is poised to evolve dramatically as global challenges intensify and the economic landscape shifts. A forward-looking view of how the IMF may transform to remain relevant and impactful include:

Acting as Climate Finance Leader: Climate change is now a macroeconomic risk. The future Role of the IMF may involve integrating climate vulnerability into country assessments, expand green financing tools, and support just transitions. This will help in scaling up the Resilience and Sustainability Trust (RST) to help countries adapt and decarbonize.
Promoting Inclusive Global Governance: Emerging and developing economies demand a stronger voice. The IMF should reform its quota and voting systems to reflect 21st-century economic realities. This will democratize decision-making and rebuild trust among underrepresented regions.
Enhancing Crisis Response in a Multipolar World: In light of geopolitical tensions and fragmented global cooperation, The IMF can act as a neutral, stabilizing force amid regional conflicts, trade wars, and financial contagion. The toolset may include flexible lending instruments, rapid-response facilities, and coordinated action with regional banks.
Supporting Digital Economy and AI Integration: Digital currencies, fintech, and AI are reshaping economies. The future role of the IMF may involve monitoring digital financial systems, advise on central bank digital currencies (CBDCs), and regulate cross-border tech-driven capital flows.
Leading Economic Resilience: Countries need more than loans and foresight. The IMF may provide predictive analytics, scenario planning, and policy innovation to help nations prepare for shocks before they hit.
Acting as Bridge Between Global Institutions: Complex problems require coordinated solutions. The IMF can serve as a hub linking the World Bank, WTO, UN, and regional development banks to align efforts on poverty, sustainability, and stability.

The IMF’s future will depend on its ability to adapt quickly to systemic risks, empower diverse voices, innovate boldly in lending and surveillance, and lead collaboratively in a fractured global order

The IMF is unlikely to be fully replaced, but it could be crowded out or sidelined in certain areas if it fails to adapt. China’s Belt and Road Initiative, BRICS Bank, and regional development banks offer financing with fewer conditions. Countries may prefer these options over IMF loans tied to austerity.

Institutions like the Green Climate Fund and World Bank are more specialized in climate-related financing. If the IMF doesn’t scale up its climate tools, it risks losing relevance in this space.

The IMF is still catching up on regulating digital currencies, fintech, and AI-driven economies.

Tech-savvy institutions or coalitions may take the lead in shaping digital financial governance.

If the IMF fails to reform its quota system and governance structure, emerging economies may push for parallel institutions that better reflect their interests.

Road Ahead For Arab Countries

Global finance does not need another IMF clone, it needs complementary institutions that fill gaps the IMF can’t or shouldn’t. Below are targeted, practical recommendations to design such institutions so they reinforce, not fragment, the system.

We propose a strategic roadmap for Arab countries seeking to establish their own regional International Arab Monetary Fund to complement the role of the IMF. This could ultimately enhance financial sovereignty, resilience, and cooperation across the Arab world. Key steps along this strategic roadmap are:

Step 1. Defining the Arab International Monetary Vision

Regional resilience: Tailored support for Arab economies facing debt, inflation, or currency instability.
Policy autonomy: Reduce reliance on external institutions with rigid conditionality.
Shared priorities: Align financing with Arab development goals including youth employment, food security, energy transition, and post-conflict recovery.

Step 2. Defining the Arab International Monetary Mandate

Focus Areas: Macroeconomic stabilization, emergency lending, climate resilience, and digital finance.
Avoid duplication: Complement, not compete with the Arab Monetary Fund (AMF), IMF, and World Bank.
Include fragile states: Ensure access for conflict-affected countries like Yemen, Sudan, and Syria.

Step 3. Building a Strong Capital Base

Founding contributions: Tiered capital from Gulf Cooperation Council GCC, North African, and Levant countries.
Hybrid financing: Combine paid-in capital, guarantees, and callable funds.
Private sector role: Invite Arab sovereign wealth funds and banks to co-invest in resilience and infrastructure windows.

Step 3. Adopting Inclusive Governance

Quota formula: Blend GDP, population, vulnerability, and paid-in capital.
Rotating leadership: Ensure representation from all subregions including Maghreb, Mashreq, Gulf, and Horn of Africa.
Transparency: Publish board minutes, program evaluations, and country scorecards.

Step 4. Providing Flexible Lending Instruments

Emergency Stabilization Facility: Rapid disbursement for currency or fiscal crises.
Climate Resilience Window: Support adaptation, water security, and energy transition.
Digital Finance Facility: Help central banks regulate fintech, CBDCs, and cross-border payments.
Debt-for-reform swaps: Link concessional loans to measurable outcomes in education, health, and governance.

Step 5. Strengthening Surveillance and Technical Support

Arab Macroeconomic Dashboard: Real-time data on inflation, debt, reserves, and employment.
Policy labs: Regional hubs for fiscal reform, digital taxation, and green budgeting.
Capacity building: Train ministries and central banks in risk management, debt sustainability, and climate finance.

Step 6. Coordinating with Global Institutions

Joint country platforms: Align programs with IMF, World Bank, and Islamic Development Bank.
Crisis coordination: synchronized action during regional shocks.
Legal harmonization: Standardize debt clauses, banking regulations, and digital finance rules.

September 22 2025

Brics 2025 Expansion and Its Impact on Global Trade and Technology

BY DR SOHA MAAD

Brics 2025 at a Glance

The 2025 BRICS (Brazil, Russia, India, China, and South Africa) Summit in Rio de Janeiro marked a transformative moment for the bloc, showcasing its expanded membership and ambitious agenda for reshaping global governance. The addition of new members to BRICS in 2025 (Egypt, Ethiopia, Iran, United Arab Emirates (UAE), Saudi Arabia, and Indonesia) marks a strategic pivot toward a multipolar world order and amplifies the bloc’s voice as a champion of the Global South. This article highlights the wider and the long-term impact of BRICS expansion with particular focus on impact on trade, technology, energy, world balance of power, the dollar dominance, and the new emerging world geopolitics. The article concludes with a roadmap for Arab banks to navigate the risk and challenges of BRICS 2025 expansion and to leverage the opportunities.

Significance of The New Brics Members

Each new BRICS member brings unique strengths:

Indonesia: Southeast Asia’s largest economy and democracy and including Pacific trade routes.
Iran & Saudi Arabia: Major energy producers; their inclusion signals BRICS’ growing influence in the Middle East.
Egypt & Ethiopia: Key African players. Egypt bolster BRICS’ continental reach and development agenda.
UAE: Financial and tech hub. UAE adds innovation and investment clout.

BRICS has now a strategic impact. It represents 45% of the world’s population and 35% of global Gross Domestic Product (GDP). With Iran, Saudi Arabia, and UAE, BRICS controls a significant share of global oil and gas production. Its expansion counters Western, led institutions and offers alternatives to dollar, based systems. Its expansion also strengthens cooperation among developing nations on climate, health, and tech governance

New members support calls to reform the UN Security Council and World Trade Organization (WTO). BRICS expansion fuels efforts to settle trade in local currencies and reduce reliance on the United States (US) dollar. The bloc now reflects a broader spectrum of cultures, religions, and political systems, enhancing legitimacy.

Impact on Global Trade

The expansion of BRICS is already shaking up global trade dynamics. BRICS+ now accounts for nearly half the world’s population and around 40% of global GDP. Intra, BRICS trade has surged, with 40% of global goods trade now occurring among member states. New members like Saudi Arabia, Iran, and UAE bring energy dominance, while Indonesia and Egypt add manufacturing and logistics strength

BRICS is pushing to settle trade in local currencies, reducing reliance on the US dollar. China’s Cross, Border Interbank Payment System (CIPS) and Russia’s rubble, based trade are key tools in this shift. A BRICS currency is under discussion, which could further challenge dollar hegemony.

New Development Bank (NDB) is expanding its lending footprint, offering alternatives to Western institutions like the International Monetary Fund (IMF) and World Bank. This boosts trade by funding infrastructure, logistics, and digital connectivity across member states.

The United States (US), under President Trump, has threatened additional tariffs on BRICS nations, accusing them of “anti-American policies”. These tariffs could disrupt trade flows, especially for countries like South Africa and Nigeria, which rely heavily on exports to the US.

BRICS+ is building a parallel trade ecosystem, with new supply chains, payment systems, and trade agreements. This could fragment global trade but it empowers emerging economies to trade on more equitable terms.

As such, BRICS expansion is redrawing the map, not just of who trades with whom, but how trade is conducted.

Most Impacted Sectors

The BRICS+ expansion is reshaping global economic dynamics, and several sectors are impacted as follows:

Energy Sector

Oil & Gas: With Saudi Arabia, Iran, and UAE onboard, BRICS+ now controls over 40% of global crude oil production.
Natural Gas: The bloc produces 32% of global output, with potential to rise if Algeria joins.
Renewables: BRICS+ is projected to generate 80% of its power from renewables by 2050, surpassing the Group of seven G7’s capacity.
Critical Minerals: The bloc holds 75% of global manganese, 50% of graphite, and 28% of nickel, essential for batteries and clean tech.

Technology & Artificial intelligence (AI)

Digital Sovereignty: BRICS nations are building independent fibre-optic networks, satellite systems, and cloud infrastructure.
AI Collaboration: Joint working groups are developing facial recognition, cross-border data sharing, and AI governance frameworks.
Semiconductors & Quantum Computing: India, Russia, and China are investing in chip manufacturing and quantum encryption.

Agriculture & Food Security

Agri-Trade: BRICS+ accounts for 5% of global agricultural trade, with Brazil, Russia, and India leading in grains and livestock.
Food Reserves: Plans for a BRICS Grain Exchange and Food Security Reserve aim to stabilize prices and supply.
Innovation & Sustainability: Emphasis on digital agriculture, land restoration, and climate, resilient farming.

Infrastructure & Development Finance

New Development Bank (NDB): Expanded lending for transport, energy, and digital infrastructure, especially in Global South nations.
Agri, Infrastructure: Focus on storage, logistics, and irrigation to boost food production and trade.

Finance & Trade

De-dollarization: Push for local currency settlements and a potential BRICS currency to reduce reliance on the US dollar.
Digital Trade: Initiatives like digital certification and AI, powered customs systems aim to streamline cross-border commerce.

Brics 2025 Expansion Impact on Tech Industry

The BRICS+ expansion has a major impact on the technology (tech) industry, especially in areas where digital sovereignty, AI innovation, and infrastructure independence are top priorities.

China’s digital currency is influencing BRICS+ members to explore central bank digital currencies (CBDCs).

A decentralized system is being discussed to facilitate trade outside the SWIFT network.

BRICS is promoting shared development of AI tools and software to reduce reliance on proprietary Western tech.

Countries like Brazil and South Africa are nurturing tech start-ups in fintech, health tech, and agri-tech.

BRICS 2025 is making a strategic realignment of the digital world. BRICS+ is building a parallel tech ecosystem that could redefine who leads in innovation, security, and connectivity.

Impact of Brics 2025 on World Balance of Power

The BRICS bloc, now expanded to include Egypt, Ethiopia, Iran, Indonesia, and the UAE, has become a major force in global affairs. Its impact on the world balance of power in 2025 is both strategic and symbolic, signalling a shift away from Western dominance toward a more multipolar order.

BRICS nations are increasingly resisting US-led geopolitical and economic mandates, forming a defensive coalition that promotes sovereignty and non-intervention.

The bloc condemned US strikes on Iran, marking a rare moment of diplomatic unity and asserting its role as a voice for the Global South. With 10 full members and over 20 partner or aspiring countries, BRICS is becoming a magnet for nations seeking alternatives to Western alliances. BRICS is actively working to reduce reliance on the US dollar, with initiatives like BRICS Pay and increased gold reserves among member states. The bloc now accounts for over 35% of global GDP and controls significant shares of oil and rare earth markets. In response to BRICS’ growing influence, the US has imposed heavy tariffs, especially under President Trump, signalling economic pushback against the bloc’s ambitions.

Political systems range from democracies to autocracies, and economic disparities between members (e.g., China vs. Ethiopia) complicate consensus, building.

While China and Russia push for a stronger anti-Western stance, India and Brazil prefer a more balanced approach focused on economic cooperation.

BRICS advocates reform of global institutions like the United Nation (UN) and World Trade Organization (WTO), aiming to give developing nations more influence.

Through the New Development Bank and other tools, BRICS offers financing without Western, style conditionality.

In essence, BRICS 2025 reflects the aspirations of a diverse set of nations to redefine global governance, challenge entrenched power structures, and form a space for new voices in international decision-making.

Impact of Brics 2025 on US Dollar Dominance

The BRICS bloc’s push to challenge the US dollar’s supremacy has intensified in 2025, but the outcome is far from straightforward:

BRICS Pay & Alternative Systems: The bloc has launched initiatives like BRICS Pay and the BRICS Bridge to facilitate trade in local currencies and bypass SWIFT.
Gold, Backed Currency Proposal: A new BRICS currency backed by commodities like gold and oil is under discussion, aiming to offer stability beyond fiat systems.
Expansion Strategy: With new members like Egypt, Iran, and the UAE, BRICS now represents over 45% of the world’s population and a growing share of global GDP.
Structural Advantages of the Dollar: The US dollar still accounts for nearly half of global payments and remains the top reserve currency due to its liquidity, legal certainty, and institutional depth.

Countries like India are cautious, preferring interoperability over outright dollar replacement. Political and economic diversity within BRICS makes consensus difficult.

Despite announcements, actual trade volumes in BRICS currencies remain low. Businesses still favour the dollar for its stability and global acceptance.

Experts suggest we may be entering a cyclical dollar bear market, not a full collapse of dollar dominance. These cycles typically last 5 to 9 years and reflect broader geopolitical and economic shifts.

President Trump has threatened tariffs on BRICS, aligned nations, viewing their currency efforts as a strategic threat.

BRICS offers an alternative to Western, led institutions, attracting countries frustrated by dollar, driven debt and sanctions.

In short, BRICS is shaking the tree, but the dollar’s roots run deep. The real story may be less about dethroning the dollar and more about diversifying global finance.

New Emerging World Geopolitics Following Brics 2025

The expanded BRICS bloc in 2025 has become a powerful symbol of the shifting global order. Its rise is reshaping geopolitics in ways that challenge traditional Western dominance and empower the Global South.

BRICS is no longer just a counterweight to the G7, it is a platform for strategic multi-alignment. Countries are increasingly navigating between major powers rather than aligning with one bloc. With nearly half the world’s population and growing economic clout, BRICS is positioning itself as the voice of emerging economies, advocating for reforms in global governance.

The inclusion of Iran, Egypt, and the UAE gives BRICS a stronger foothold in Middle Eastern diplomacy, especially amid ongoing tensions in Gaza and Iran.

President Trump has threatened 100% tariffs on BRICS nations pursuing de-dollarization or alternative currencies, escalating trade friction.

Western institutions like the G20 and WTO face growing criticism from BRICS members, who argue for more inclusive and equitable decision-making.

With expanded funding and local currency lending, the NDB is becoming a viable alternative to the IMF and World Bank.

BRICS is increasingly involved in conflict mediation, such as the “Friends for Peace” initiative on Ukraine led by China and Brazil.

Nigeria’s new partner status and Ethiopia’s full membership signal BRICS’ deeper engagement with African geopolitics and resource diplomacy.

Indonesia’s entry and India’s upcoming chairmanship reflect a nuanced approach seeking influence without alienating Western allies.

In essence, BRICS 2025 is redefining the rules of global engagement. It is a forum where emerging powers negotiate their place in a world no longer dominated by a single narrative.

The Main Risks for Arab Banks

Arab banks stand at a strategic crossroads in the BRICS 2025 landscape, but with opportunity comes exposure.

Arab banks aligned with BRICS de-dollarization efforts may face sanctions or tariffs, especially under the Trump administration’s aggressive stance. Inclusion of Iran and Russia in BRICS heightens the risk of political backlash or reputational damage in Western markets.

Moving away from SWIFT and dollar, based systems could limit access to global liquidity and increase transaction costs. Adoption of BRICS Pay or other alternatives may lead to interoperability issues and technical vulnerabilities.

Balancing BRICS, aligned frameworks with Western compliance regimes (e.g., FATF, Basel III) may strain resources and increase audit risks.

Banks dealing with sanctioned BRICS members (e.g., Iran, Russia) risk secondary sanctions or loss of correspondent banking relationships.

Shifts in global trade flows and currency preferences may impact asset valuations and portfolio stability. Arab banks may face limited access to Western capital markets and financial services if perceived as politically aligned with BRICS. Transitioning to new digital payment systems like BRICS Pay could expose banks to cyber threats and data breaches. Data governance across BRICS jurisdictions may conflict with Arab regulatory norms, causing legal uncertainty.

Arab banks must tread carefully, leveraging BRICS opportunities while safeguarding against systemic shocks. A dual, track strategy that balances innovation with risk mitigation will be key.

Roadmap for Arab Banks

With the expansion of BRICS to include Egypt, Saudi Arabia, and the UAE, Arab banks are uniquely positioned to capitalize on new financial, geopolitical, and technological opportunities, while also facing structural and regulatory challenges. A strategic roadmap for Arab Banks in the BRICS 2025 Era is needed to help them navigate the evolving landscape.

Our recommendations to Arab banks are:

Aligning institutional goals with BRICS priorities like de-dollarization, infrastructure financing, and South, South cooperation.

Fostering collaboration among Arab central banks to harmonize policies and present a unified voice within BRICS forums.

Investing in cross, border payment platforms that support non-dollar trade, such as BRICS Pay or blockchain, based alternatives.

Accelerating fintech adoption to compete with BRICS innovation hubs in AI, clean energy, and smart banking.

Leveraging sovereign funds to co-finance BRICS infrastructure projects and diversify investment portfolios.

Engaging with the New Development Bank (NDB). Arab banks should seek co-financing opportunities and technical partnerships with the NDB for sustainable development projects.

Participating actively in BRICS+ financial summits and working groups to shape policy and access capital.

Harmonizing Compliance Frameworks and aligning with BRICS banking standards while maintaining compatibility with global norms (e.g., Basel III).

Developing hedging strategies for currency volatility and geopolitical risks associated with BRICS realignment.

Strengthening digital defence and ensuring that data governance aligns with regional and BRICS regulations.

Offering tailored financial products for exporters/importers engaging with BRICS markets, including trade finance and Foreign Exchange (FX) solutions.

Developing programs to help small and medium enterprises tap into BRICS, linked supply chains and investment flows.

Position Sharia, compliant products as a bridge between BRICS financial systems and Arab market needs.

Developing internal expertise on BRICS economies, regulations, and financial instruments.

Partnering with BRICS institutions for executive education, internships, and joint research.

Arab banks are no longer just regional players. They are becoming architects of a new financial order. With bold vision and strategic execution, they can turn BRICS 2025 into a launchpad for global influence.

September 22 2025

EU Budget 2026 Swot Analysis and Wider Impact

BY DR SOHA MAAD

Introduction

The European Commission has proposed a 2026 EU budget of €193.26 billion, with an additional €105.32 billion expected to be disbursed under the NextGenerationEU recovery instrument. This budget aims to fund key European Union EU priorities such as climate action, digital transformation, and continued support for Ukraine. The draft budget includes policy highlights and strategic objectives, expenditure breakdowns across programs and institutions, revenue sources and financial forecasts, and performance statements for EU-funded programs. The Council of the European Union proposed €186.24 billion in commitments and €186.49 billion in payments This excludes special instruments outside the multiannual financial framework.

This article overviews the risks and opportunities of the EU 2026 budget followed by a SWOT (Strength, Weakness, Opportunity, Threat) Analysis. The wider impact of the EU 2026 budget is assessed and a future roadmap for Arab banks is depicted to navigate the challenges and opportunities of the EU 2026 budget.

Opportunities and Risks of EU 2026 Budget

The EU 2026 budget presents a dynamic mix of opportunities and risks, reflecting its ambition to tackle global volatility while advancing strategic priorities.

The EU 2026 budget offers various opportunities including:

Strategic Investment: Major funding for defence, digital transformation, and climate action positions the EU as a global leader in innovation and resilience.
Support for Ukraine: Continued aid strengthens geopolitical influence and fosters stability in Eastern Europe.
Green and Digital Transitions: Investments in clean energy, biodiversity, and digital infrastructure align with global sustainability goals.
Youth and Innovation: Funding for education, job creation, and startups boosts long-term competitiveness.
External Engagement: €15.5 billion allocated to neighbourhood and global partnerships enhances trade and diplomatic ties.

However, the EU 2026 budget entails various risks including:

Limited Flexibility: budgetary room for new initiatives is tight.
Debt Repayment Strain: Repaying NextGenerationEU borrowing could pressure future program funding.
Geopolitical Uncertainty: Conflicts, migration pressures, and climate disruptions may shift priorities or divert resources.
Implementation Challenges: Complex coordination across member states could slow fund absorption and reduce impact.
Economic Volatility: Inflation, interest rate shifts, and reduced international funding may affect execution and outcomes.

This budget is both a stabilizing force and a strategic lever.

Critique of EU 2026 Budget

The EU’s 2026 budget has drawn both praise and criticism, reflecting the complexity of balancing strategic ambitions with fiscal constraints.

Critics argue that the multiannual financial framework (MFF) restricts the EU’s ability to respond swiftly to emerging crises, such as geopolitical instability or climate shocks. Some Members of the European Parliament (MEPs) have raised concerns about the growing emphasis on defence and security, fearing it may come at the expense of cohesion, food security, and social programs. While designed to promote climate goals, CBAM could disproportionately impact developing economies, including Arab countries, by increasing export costs and straining trade relations.

The draft budget reflects input from multiple political groups, leading to competing priorities and a lack of clarity on long-term strategic direction. Minority MEPs have proposed amendments to rebalance spending and improve transparency.

The budget is undergoing trilogue negotiations between the European Commission, Parliament, and Council to reconcile differing views. Despite these critiques, the budget is still viewed as a vital tool for advancing EU competitiveness, sustainability, and strategic autonomy.

Swot Analysis of EU 2026 Budget

A SWOT analysis of the EU’s 2026 budget, summarizing its strengths, weaknesses, opportunities, and threats based on its strategic priorities, structure, and geopolitical context is as follows:

Impact on Global Financial Markets

The EU’s 2026 budget is poised to ripple across global financial markets in several key ways:

Market Confidence and Stability: The budget’s emphasis on security, defence, and Ukraine support signals geopolitical commitment, which may stabilize European equities and sovereign debt markets. Predictable funding flows and reinforced fiscal discipline could bolster investor confidence in EU bonds and the euro.
Green and Digital Investment Surge: Significant allocations to climate resilience and digital innovation may attract global capital into EU-based green tech and digital infrastructure firms. Environmental, Social, and Governance ESG-focused investors may increase exposure to EU markets due to alignment with sustainability goals.
Currency and Trade Dynamics: Increased spending on competitiveness and strategic autonomy could strengthen the euro, especially if paired with robust economic performance. The budget’s support for migration and border management may influence labour market dynamics and trade flows, particularly with neighbouring regions.
Spill-over Effects on Emerging Markets. EU funding for external engagement (€15.5 billion) may boost development and stability in partner countries, influencing regional markets and cross-border investments. Enhanced support for Ukraine and Middle East crisis response could affect commodity prices and risk premiums globally.
Bond Issuance and Liquidity: Continued use of NextGenerationEU instruments implies sustained EU bond issuance, impacting global fixed-income markets and benchmark rates.

Impact on Technology

The EU’s 2026 budget places a strong focus on technology and innovation, with funding channeled through several key programs and initiatives including:

Horizon Europe: Continues to be the EU’s flagship research and innovation program, supporting cutting-edge science, digital transformation, and green tech.
Digital Europe Programme: Invests in supercomputing, artificial intelligence, cybersecurity, and advanced digital skills.
European Institute of Innovation and Technology (EIT): Allocates funding to Knowledge and Innovation Communities (KICs) across sectors like ICT, climate, and manufacturing.
NextGenerationEU: Provides additional support for digital infrastructure and tech-driven recovery efforts.

The strategic priorities include:

Boosting Artificial Intelligence AI and quantum computing capabilities
Expanding 5G and future connectivity
Supporting startups and Small and Medium size enterprises SMEs in tech innovation
Enhancing cybersecurity resilience across member states.

Impact on Crypto

The EU 2026 budget is set to influence the crypto landscape in several nuanced ways, especially as Europe pivots toward regulating decentralized finance (DeFi) rather than expanding the Markets in Crypto-assets (MiCA) framework.

Regulatory Shift in DeFi: The EU is preparing to regulate DeFi protocols starting mid-2026, as MiCA (Markets in Crypto-Assets Regulation) leaves many decentralized platforms in legal limbo. This shift may bring clarity depending on how “decentralization” is defined, which remains unresolved.
Investor Protection and Compliance: MiCA’s final phase (effective since late 2024) focuses on stablecoin reserves, fraud prevention, and Know Your Customer (KYC) requirements, which could tighten compliance for centralized crypto platforms. Fully decentralized platforms may be exempt, but ambiguity persists around enforcement.
Budgetary Influence on Crypto Adoption: Funding for digital transformation and financial innovation may indirectly support blockchain infrastructure and fintech start-ups. However, no direct budget line is earmarked for crypto development, signalling a cautious stance.
Risks and Uncertainties: The absence of a MiCA II framework means no major overhaul is expected, but targeted legislative updates, especially around stablecoins and Anti–money laundering (AML) rules, are likely. New anti-money laundering provisions restricting anonymous crypto accounts are scheduled for 2027, which could reshape user behaviour and platform design.

The EU 2026 budget sets the stage for a more regulated and possibly fragmented crypto environment.

Impact on Strengthening EU Power

The EU’s 2026 budget is more than just a financial plan; it is a strategic instrument to expand the Union’s influence and autonomy across multiple domains. Increased funding for defence, cybersecurity, and critical infrastructure reduces reliance on external actors and enhances the EU’s ability to act independently in global affairs. By centralizing resources for climate action, migration, and support for Ukraine, the budget enables the EU to speak and act with a more cohesive voice. Instruments like the Carbon Border Adjustment Mechanism (CBAM) give the EU regulatory power over global trade, encouraging partners to align with EU climate standards. Massive investments in innovation, sustainability, and digital transformation position the EU as a global standard-setter in emerging technologies. With over €15 billion allocated to “Neighbourhood and the World,” the EU is deepening its role in regional stability, development, and diplomacy.

In essence, the 2026 budget is a blueprint for a more assertive, resilient, and globally influential EU.

Impact on Defence

The EU’s 2026 budget places strong emphasis on defence and security, reflecting growing geopolitical tensions and the need for strategic autonomy. European Parliament priorities include boosting EU defence and cybersecurity capabilities, investing in dual-use transport infrastructure, and enhancing crisis preparedness. The European Defence Fund and other instruments continue to receive support to foster joint procurement and innovation in defence technologies. Germany, as the EU’s largest economy, plans to spend $94.5 billion on defence in 2026, including $9.7 billion in military aid to Ukraine. France will increase its defence budget to €53.7 billion, with an additional €3.5 billion earmarked for strategic upgrades.

The EU’s 2026 budget is poised to significantly strengthen the bloc’s defence posture, reflecting heightened geopolitical tensions and a push for strategic autonomy. The European Parliament has prioritized funding for military defence, cybersecurity, and dual-use transport infrastructure to improve rapid deployment and resilience.

Continued, unconditional financial and logistical support for Ukraine remains a central pillar, reinforcing the EU’s commitment to regional stability. Funds are earmarked for bolstering crisis response mechanisms, including health and migration management, which intersect with defence readiness.

Member states are expected to channel increased national and EU-level funding into modernizing equipment, rebuilding stockpiles, and developing autonomous systems like drones and cyber tools.

Defence investments may stimulate industrial production, innovation, and job creation, especially in high-tech sectors tied to military applications. The budget supports reducing reliance on non-EU defence systems and enhancing the EU’s ability to act independently in global affairs. This budget marks a turning point in how the EU integrates defence into its broader economic and strategic planning.

Impact on EU Economy

The EU’s 2026 budget is expected to play a pivotal role in shaping the bloc’s economic trajectory, especially amid global volatility and strategic shifts. Key economic impacts include:

Resilience and Competitiveness: Investments in innovation, digital infrastructure, and industrial production aim to strengthen the EU’s economic backbone.
Support for Strategic Sectors: Funding for defence, cybersecurity, energy transition, and migration management will help safeguard long-term stability.
Recovery and Sustainability: The NextGenerationEU instrument adds over €105 billion to support recovery from past crises and accelerate green and digital transitions.
Jobs and Youth Opportunities: Programs targeting education, health, and cultural initiatives are designed to empower young people and close skill gaps.
Cohesion and Territorial Equity: Reprogramming of cohesion funds will address emerging priorities like affordable housing and water resilience, promoting balanced growth across regions.

Overall, the budget is seen as the EU’s largest investment tool to complement national efforts, reinforce strategic autonomy, and ensure economic stability in a rapidly changing world.

Impact on Arab Countries

The EU’s 2026 budget is expected to have indirect but significant effects on Arab countries, especially through trade, climate policy, and regional cooperation.

The Carbon Border Adjustment Mechanism (CBAM), part of the EU’s climate strategy, will require exporters to the EU to pay for carbon emissions embedded in goods like cement, steel, and fertilizers starting January 2026. Countries like Egypt, which exported €4.6 billion worth of CBAM-covered goods to the EU in 2022, could face substantial costs. Arab exporters may need to invest in greener production methods or negotiate for technical and financial assistance to remain competitive.

The budget allocates €15.5 billion under the “Neighbourhood and the World” heading, which includes funding for migration management, security partnerships, and economic development programs in neighbouring regions, including North Africa and the Middle East.

Arab countries may benefit from EU-funded initiatives aimed at stabilizing the region, but they will also need to adapt to new regulatory pressures. The EU’s push for green and digital transitions could open doors for collaboration in renewable energy, tech innovation, and infrastructure development.

Geopolitical Impact

The EU’s 2026 budget is strategically crafted to reinforce the bloc’s geopolitical influence amid rising global tensions and shifting alliances.

Continued, unconditional financial and logistical aid to Ukraine signals the EU’s commitment to defending democratic values and deterring aggression in Eastern Europe. Increased funding for defence, cybersecurity, and dual-use infrastructure aims to reduce reliance on non-EU military systems and bolster the EU’s ability to act independently on the global stage. With over €5 billion allocated to migration and border control, the EU is reinforcing its external borders and addressing root causes of migration. The rollout of the Carbon Border Adjustment Mechanism (CBAM) in 2026 will reshape trade dynamics, especially with countries exporting carbon-intensive goods to the EU. This could pressure global partners to adopt greener practices, but may also strain relations with developing economies.

The budget earmarks significant funding for regional stability, including €1.6 billion for Palestine and continued support for Syrian refugees in Turkey. These moves reflect the EU’s intent to remain a stabilizing force in the Mediterranean and Middle East.

By investing heavily in sustainability and innovation, the EU positions itself as a model for climate action and tech governance, influencing global standards and partnerships.

This budget is a statement of intent on how the EU sees its role in a rapidly evolving world.

Impact on International Relations and Diplomacy

The EU 2026 budget is designed not just for internal resilience but also to shape the EU’s global role. Its diplomatic and geopolitical impact is already being felt across several dimensions:

Strengthening Global Partnerships with €15.5 billion allocated to “Neighbourhood and the World”, the EU is deepening ties with neighbouring regions, including Eastern Europe, the Mediterranean, and Africa. Continued support for Ukraine reinforces the EU’s commitment to democratic values and regional stability.
Strategic Autonomy and Security Diplomacy: Increased funding for security and defence bolsters the EU’s ability to act independently in global crises, reducing reliance on external powers. Investments in cyber security and dual-use infrastructure enhance the EU’s credibility as a strategic partner.
Migration and Border Management: Budget allocations for migration and humanitarian aid support diplomatic engagement with origin and transit countries, helping to manage flows and reduce tensions. Implementation of the Asylum and Migration Pact is expected to influence EU relations with North African and Middle Eastern nations.
Soft Power and Global Influence: Funding for education, health, and cultural programs promotes EU values abroad and strengthens its soft power footprint. Support for climate action and green transitions positions the EU as a global leader in sustainability diplomacy.
Risks to Diplomatic Cohesion: Budgetary constraints and debt repayment pressures may limit flexibility in responding to emerging global crises. Diverging member state priorities could complicate unified foreign policy execution.

This budget is a blueprint for how the EU intends to engage with the world.

Strategic Roadmap to Adapt To EU 2026 Budget

Adapting to the EU’s 2026 budget requires a forward-looking roadmap that aligns with its core priorities (resilience, sustainability, competitiveness, and strategic autonomy). A tailored strategy for businesses, governments, and institutions include:

Alignment with Strategic Priorities

Focus on defence, digital transformation, and climate action, which are central to the budget’s objectives.
Prioritize security and preparedness, especially in sectors vulnerable to geopolitical shifts.

Embracing Green and Digital Transitions

Invest in low-carbon technologies to meet CBAM requirements and avoid trade penalties.
Upgrade digital infrastructure using funds from Digital Europe and Horizon Europe.

Leveraging EU Funding Instruments

Apply for grants under NextGenerationEU, European Defence Fund, and Cohesion Policy
SMEs should explore innovation support through regional development funds.

Strengthening Regional Partnerships

Collaborate with EU institutions on migration, border management, and neighbourhood stability
Arab countries and neighbouring regions can benefit from the €15.5 billion allocated to external engagement.

Enhancing Financial and Regulatory Readiness

Align with EU ESG standards and prepare for digital euro integration.
Monitor regulatory changes, especially around carbon pricing, cybersecurity, and trade compliance.

This roadmap helps in positioning institutions to thrive in a reshaped European landscape and in building a sector-specific strategy or exploring funding opportunities.

September 22 2025

Arab Banks Awards & Commendations of Excellence 2025: Celebrating Leadership, Innovation, and Impact

A Tradition Reinforced in Beirut

On the evening of July 18, 2025, the city of Beirut—renowned for its resilience and cultural vitality—hosted the Arab Banks Awards & Commendations of Excellence 2025. Organized by the World Union of Arab Bankers (WUAB), this prestigious ceremony reaffirmed its standing as the foremost recognition platform for the Arab banking and financial sector. More than an annual celebration, the awards have become an enduring tradition, symbolizing excellence, innovation, and the collective ambition of Arab banks to achieve sustainable growth and global competitiveness.

An Evening with Visionaries and Leaders

Held at the legendary Intercontinental Phoenicia Hotel, the event brought together an extraordinary assembly of leaders: central bank governors, chairpersons, CEOs, senior executives, regulators, and representatives of international financial institutions. Beyond celebrating distinguished achievements, the ceremony provided a strategic forum for dialogue and collaboration—strengthening partnerships and shaping the future of Arab banking in a rapidly evolving global landscape.

Integrity in Selection: Recognizing True Excellence

A defining feature of the awards lies in their rigorous selection process. A specialized committee of economists, senior bankers, and the Union’s research department meticulously evaluated nominations, applying strict and transparent criteria. This ensures that each recognition represents genuine distinction—whether in leadership, innovation, sustainable practices, or strategic impact on the Arab and international financial arena.

Spotlight on Innovation and Sustainable Growth

The 2025 awards highlighted transformative initiatives across the sector, from digital banking advancements and financial inclusion strategies to sustainability-driven models and visionary leadership. Each award underscored the capacity of Arab banks to not only meet contemporary challenges but also to set new global benchmarks for creativity, resilience, and forward-looking strategy.

Inspiring Profiles of Leadership and Vision

The evening featured special segments dedicated to profiling award-winning leaders and institutions. These narratives, rich with resilience and ambition, offered inspiration to the wider banking community. They celebrated those who turned adversity into opportunity and reaffirmed the role of Arab banks as engines of innovation, stability, and progress for the region and beyond.

The World Union of Arab Bankers: A Unifying Force

Established in 2006 in Casablanca, the World Union of Arab Bankers has grown into a formidable force, unifying over 500 members from the Arab banking sector. This organization, through events like these awards, plays a pivotal role in promoting excellence, facilitating knowledge exchange, and shaping the future of banking in the Arab world.

The Banking Executive Magazine: A Decade of Illuminating Success

‘The Banking Executive’, as the English-language magazine emerging from the World Union of Arab banks, has been a beacon of insight and information. For over a decade, it has consistently highlighted the triumphs and advancements of the Arab banking sector, offering its readers a window into the dynamic world of Arab finance.

A Legacy and a Vision for the Future

The “Arab Banks Awards & Commendations of Excellence 2023” event is more than a ceremony; it is a reaffirmation of the Arab banking sector’s commitment to excellence, innovation, and leadership. As the event concludes, it leaves behind a legacy of inspiration and a vision for the future, motivating banking and financial professionals to continue pushing the boundaries of what is possible in the world of finance.

Dr. Joseph Torbey, Chairman, World Union of Arab Bankers (WUAB)

In his address, Dr. Joseph Torbey welcomed distinguished guests and reaffirmed Lebanon’s path toward recovery and renewal. He emphasized that with restored confidence and determination, Lebanon is embarking on a journey to rebuild the state, address economic and social challenges, and reassert its role within the Arab community. He extended sincere gratitude to the Arab delegations present, whose participation reflects the strength of solidarity across the region and the shared commitment to supporting the Arab banking sector.

Dr. Torbey underscored the symbolic value of the International Union of Arab Bankers’ annual celebration, dedicated to honoring leaders and institutions that have demonstrated resilience, excellence, and innovation in the face of regional and global challenges. He highlighted the role of these banks in preserving strength and stability, ensuring asset quality, and acting as pillars of support for Arab economies.

Reflecting on the future, he noted that despite the turbulent environment, the trajectory of progress and development remains unbroken. Success, he explained, is driven by individuals who excel in creativity, innovation, and leadership, contributing to the advancement of Arab banking practices. He reiterated the Union’s mission of developing advanced banking cadres and equipping professionals with the skills required to navigate an era of rapid change.

Turning to technology, Dr. Torbey spoke about the growing importance of artificial intelligence in banking operations and customer-facing applications, particularly in enhancing efficiency, competitiveness, and credit decision-making. Yet, he stressed that human intelligence remains indispensable, ensuring that technology serves humanity rather than replacing it. He described the human element—empathy, creativity, and judgment—as the true foundation of sustainable progress.

He concluded by celebrating the achievements of the honorees, recognizing them as pioneers in digital innovation, leadership, and institutional excellence. Dr. Torbey affirmed the Union’s pride in showcasing their contributions, through both the International Union of Arab Bankers and The Banking Executive magazine, as models of inspiration and catalysts for continued growth across the Arab banking sector.

Dr. Wissam Fattouh, Secretary General of the World Union of Arab Bankers (WUAB) and Union of Arab Banks (UAB)

In his address, Dr. Wissam Fattouh expressed deep appreciation to the distinguished assembly of leaders, diplomats, and banking professionals, underscoring the significance of their presence in Lebanon as a powerful signal of confidence in the country’s ability to reclaim its role as a center for Arab and international dialogue. He highlighted Beirut’s unique position as the capital of economic and financial encounters in the Arab world, renowned for its openness, hospitality, and tradition of bringing together decision-makers and experts from across the region.

Dr. Fattouh emphasized the symbolic importance of holding the International Union of Arab Bankers’ annual celebration in Beirut after years of absence caused by Lebanon’s successive crises. This decision, he noted, demonstrates faith in a new era for the country—one that restores its Arab and global presence, revives its economic potential, and reaffirms its place as a host for regional cooperation.

He further elaborated on the complementary roles of the International Union of Arab Bankers and the Union of Arab Banks, both of which serve as platforms to strengthen collaboration between financial institutions, enhance the visibility of the Arab banking identity, and work collectively toward common objectives. Within this framework, he underlined the critical importance of public–private partnerships as a strategic mechanism to close financing gaps in infrastructure and public services, describing this model as an essential pillar of sustainable growth.

Paying tribute to the leadership of Mr. Mohamed El-Etreby and Dr. Joseph Torbey, Dr. Fattouh recognized their ongoing efforts in building capacity, advancing skills, and fostering a culture of excellence among Arab bankers. He praised their initiatives to spotlight successful experiences and encourage healthy competition as a means of elevating the profession to global standards.

In a special acknowledgment, Dr. Fattouh celebrated the role of women in Arab banking by honoring Ms. Sheikha Al-Issa of Kuwait with the “Women’s Leadership in Arab Banking Associations” award, commending her exceptional achievements and her pioneering role in empowering women within the sector. He concluded by reaffirming the commitment of the unions to celebrate Arab bankers’ achievements, inspire innovation, and drive the sector toward greater advancement and success.

Press here to view photos of awards ceremony.

September 22 2025

Who’s Winning in AI—China or America?

If you’re looking for a clean scoreboard with a final whistle, this isn’t that kind of contest. “AI leadership” isn’t one race—it’s five or six overlapping ones: frontier models, compute and chips, capital formation, talent and research, intellectual property, and real-economy deployment. On some tracks the United States is clearly ahead; on others China is setting the pace. For executives and policymakers, the smarter question is: who is ahead at which game—and what does that mean for strategy in 2025?

1) Capital, Companies, and the Frontier

On the money and model frontier, the United States holds a commanding lead. According to Stanford’s 2025 AI Index, U.S. private AI investment reached $109.1 billion in 2024, almost 12× China’s $9.3 billion. That capital is underwriting an ecosystem of hyperscalers (Microsoft, Amazon, Google), chipmakers (NVIDIA, AMD), and frontier-model labs (OpenAI, Anthropic, Google DeepMind, Meta) that continue to set the technical pace.

Model output tracks the money. The same report notes that in 2024 U.S.-based institutions produced 40 notable AI models versus 15 for China—while also acknowledging that the performance gap is narrowing as Chinese teams climb rapidly on common benchmarks.

What it means: For frontier capability—multimodal models, agentic systems, and foundation-model platforms that others build atop—the U.S. remains the reference point. Access to American cloud scale and leading GPUs compounds this advantage.

2) Compute and Chips: Uneven Access, Shifting Rules

Compute is the oxygen of modern AI—and here policy shapes the market. U.S. export controls introduced in 2022–2023 and tightened in 2025 restrict China’s access to the highest-end AI accelerators and, more recently, place worldwide controls on the diffusion of the most advanced closed-weight AI models and their model weights.

The screws continue to turn. On September 2, 2025, the U.S. revoked fast-track export status for shipments of certain U.S.-origin tools to TSMC’s Nanjing fab, signaling less flexibility for advanced equipment flows into China even via non-Chinese companies.

What it means: U.S. firms enjoy more ready access to top-tier compute; Chinese labs and clouds can still scale—but often with domestic accelerators and more emphasis on efficiency. Constraints nudge Chinese players toward smaller, highly optimized models and application-first strategies.

3) Patents, Publications, and IP Gravity

On intellectual property, China leads by volume—dramatically so in generative AI. WIPO’s 2024 landscape report finds 38,000+ GenAI inventions from China between 2014–2023, about six times the U.S. count, with Chinese firms (Tencent, Ping An, Baidu, Alibaba, ByteDance) prominent among the top assignees.

Stanford’s 2025 AI Index similarly highlights China’s lead in AI publications and patents, even as the U.S. leads in notable model outputs.

What it means: IP quantity is not the same as platform dominance, but it signals deep industrial experimentation. Expect more Chinese ownership of methods and sector-specific innovations, even when the very top general-purpose models remain U.S.-centric.

4) Regulation and Governance: Different Operating Systems

The governance approaches diverge. In the United States, Executive Order 14110 (Oct. 30, 2023) directed agencies to set safety, reporting, and testing baselines for frontier developers, with NIST’s AI Risk Management Framework providing a voluntary, risk-based playbook businesses can adopt.

China’s Interim Measures for Generative AI (effective Aug. 2023) emphasize security reviews, content management, and provider accountability, shaping how GenAI services are launched and operated domestically.

What it means: U.S. policy increasingly targets frontier risk and model diffusion; Chinese policy centers content, safety, and control in consumer-facing services. Multinationals must localize both compliance and product behavior.

5) Deployment Playbooks: AGI versus “AI+”

There is also a philosophical split. U.S. players are still pushing hardest on the frontier/AGI vector, aiming for step-change capabilities that unlock new markets. China, constrained on chips yet rich in industrial scale, is pushing “AI+”—embedding practical AI in manufacturing, logistics, public services, healthcare triage, and finance. This pragmatic emphasis is backed by state initiatives and funding programs to accelerate sector adoption.

What it means: If AGI-style breakthroughs stall or take longer than expected, a deployment-first model can win near-term economic impact. If the frontier keeps leaping, platform economics favor the U.S. incumbents and partners.

6) National Capacity: Funds, Talent, and the Long Game

Both sides are investing for the long haul. The 2025 AI Index notes governments worldwide stepping up; among them, China launched a $47.5 billion semiconductor fund (Big Fund III), while the United States doubled the number of federal AI regulations issued in 2024, signaling governance maturation alongside industrial policy (and complementing CHIPS Act incentives for domestic capacity). St

On talent, flows still generally favor U.S. labs and companies, attracted by compensation, equity upside, and access to compute—self-reinforcing advantages that are hard to replicate quickly. China, meanwhile, is building capacity at scale in applied AI engineering and systems integration, benefitting from the world’s largest manufacturing base and vast data-rich platforms.

A Fair Scorecard for 2025

Frontier models & platforms: U.S. leads. Greater capital intensity, cloud scale, and access to top GPUs keep American firms ahead at the bleeding edge.

Compute access: U.S. leads, and policy keeps widening the gap at the very top end—though China is progressing with domestic accelerators and efficiency gains.

Patents & publications: China leads on volume, signaling broad experimentation and sector breadth, even as the very top general-purpose systems remain mostly U.S.-built.

Industrial deployment: Advantage China in “AI-at-scale” within domestic services and manufacturing; advantage U.S. in platform-style deployment via global SaaS and cloud ecosystems.

Governance capability: Different strengths. The U.S. is shaping global norms for frontier safety and model handling; China is calibrating fast implementation rules for consumer and enterprise use at home.

Net-net: In 2025, the United States is ahead in frontier AI, which sets standards and captures outsize value when breakthroughs land. China is ahead in breadth of applied adoption across key domestic sectors, and its IP engine is prolific. Neither position is static—and policy will continue to reshape the field.

How Leaders Should Respond (Practical Moves)

Pick the right race. If your advantage depends on frontier capability, align with U.S. clouds, model providers, and chip roadmaps; design for rapid model refresh and agentic workflows. If your advantage is in industrial deployment, study Chinese “AI+” patterns—lean models, edge inference, data-ops discipline—and adopt where it fits.
Plan for compute volatility. Export rules can reprice supply overnight. Build multi-path compute strategies (on-prem + multi-cloud + emerging domestic accelerators), and design models with parameter-efficiency and distillation in mind.
Localize governance. Operationalize NIST AI RMF for internal controls and procurement; in China, harden content, provenance, and security reviews to meet local service rules. Treat compliance as a product feature, not a paperwork burden. Own your problem spaces. China’s patent surge shows how quickly applied niches get captured. If you rely on proprietary workflows (e.g., underwriting, logistics, clinical pathways), convert know-how into defensible data and micro-models, not just generic LLM prompts.
Talent and partners. Whether your build center is Dubai, Riyadh, Singapore, or Frankfurt, align with ecosystems that give you access to models, data partnerships, and compliance support. In a fast-moving field, speed to safe deployment is the real moat.

Bottom line: Asking “who is winning?” only makes sense if you specify the race. Today, the U.S. is winning the frontier, and that matters enormously for platform economics and global standards. China is winning on breadth of applied use and IP volume, which matters for sustained diffusion across the real economy. For executives, the play is not to pick a flag—it’s to design an AI strategy that borrows strength from both models: frontier where it differentiates, “AI+” where it compounds.

September 3 2025

Trump’s Tariffs and India’s Economic Future

The announcement of new tariffs by United States President Donald Trump on a broad spectrum of Indian imports has generated considerable attention across global financial and economic circles. For India, a country that has long benefited from global integration, the move presents both immediate challenges and long-term questions about its strategic direction. Yet, the implications extend well beyond India. They also carry significant lessons for other emerging economies, including those in the Arab world, where policymakers and banking leaders are seeking to consolidate growth, strengthen resilience, and ensure sustainable integration into the global economy.

This article examines the potential impact of Trump’s tariffs on India, evaluates India’s available responses, and draws parallels and recommendations for Arab banks and financial institutions that must remain alert to the shifting landscape of global trade and investment.

A Sudden Turn in U.S.–India Economic Relations

The new tariffs are framed as a punitive measure for India’s purchase of Russian oil, but they also represent a broader shift in American trade policy. Washington has historically enjoyed strong and cooperative ties with New Delhi, especially under Prime Minister Narendra Modi, who has invested heavily in building closer relations with the United States. The abrupt reversal in tone, therefore, highlights the volatility that can accompany trade relations in today’s world.

For India, the short-term damage of these tariffs is undeniable. Exports worth approximately $65 billion annually are directly affected. Yet, in the context of India’s total merchandise exports of around $441 billion, the share of goods under tariff pressure accounts for less than 15 percent. This is not negligible, but it is far from catastrophic.

Why the Immediate Impact Is Manageable

Several factors help mitigate the near-term disruption. First, geography plays an important role. The United States, while India’s largest single trading partner, remains a distant market. High transportation costs have long compelled India to diversify its trade portfolio and reduce over-dependence on any single destination.

Second, international trade is dynamic. Trump’s global tariff strategy is not aimed exclusively at India; it is reshaping supply chains worldwide. As companies and exporters adjust, new market opportunities inevitably open. For Indian exporters, the shift will not be without cost, but it is also not without potential gain.

Third, India’s trade structure is more complex than merchandise alone. The country’s services exports, exceeding $380 billion annually, have become the true engine of its global economic rise. These include IT services, financial outsourcing, research and development, and other high-value sectors. Crucially, these exports are not subject to tariffs, allowing India to maintain strong momentum in areas that matter most to its long-term economic growth.

Services as the Cornerstone of Growth

India’s services sector has repeatedly proven its resilience and global competitiveness. From large-scale outsourcing contracts to high-level research and technology partnerships, services exports have delivered consistent value, even in times of global uncertainty. This has made India one of the most important players in the international services economy, a status unlikely to be challenged by tariffs aimed at goods.

Moreover, in a global environment characterized by growing policy unpredictability, multinational corporations are rethinking their dependence on the U.S. market. This reassessment opens the door for India, which is already making inroads into European and Asian OECD economies. Evidence suggests that Indian exporters of both goods and services have begun intensifying efforts to develop new partnerships in the European Union, Japan, and Australia.

The Strategic Question: India’s Place in the Global Economy

While the immediate economic costs of U.S. tariffs are important, the deeper issue lies in how they influence India’s long-term strategic orientation. Within India, two competing visions of the country’s role in the global economy have long existed.

The first vision is outward-looking. It emphasizes confidence, openness, and integration. It seeks growth through globalization, by leveraging Western technology, finance, and markets. India’s remarkable economic success between 1991 and 2011 was largely the product of this approach, which enabled the country to attract foreign investment, access advanced technologies, and integrate into global supply chains.

The second vision is more defensive. It portrays international engagement as a vulnerability and advocates for self-reliance, even to the point of economic isolation. This inward posture is shaped by historical skepticism toward the West and often prioritizes autonomy over efficiency or competitiveness.

Trump’s tariffs have provided fresh arguments to proponents of the inward-looking approach. The tariffs reinforce claims that the global trading system is unreliable, that reliance on Western markets creates risks, and that India’s interests are better served by insulating itself. Should this perspective gain momentum, the consequences for India could be significant: reduced growth, diminished regional influence, and a retreat from the global liberal economic order.

Signs of Continued Commitment to Openness

Fortunately, there is evidence that the more outward-looking vision still dominates. India’s recent free-trade agreement with the United Kingdom is a powerful example. The deal commits both sides to lowering protectionist barriers and reflects India’s willingness to deepen ties with OECD countries under frameworks of mutual interest.

Furthermore, ongoing negotiations with the European Union could produce a comprehensive trade agreement that anchors India more firmly in the global economy. Such agreements not only diversify India’s economic base but also send a strong signal of its commitment to international trade principles.

Lessons for Arab Economies

For Arab banking and financial leaders, India’s current experience offers a valuable case study. Arab economies, much like India, face questions about the balance between openness and self-reliance. The global system is undergoing stress from multiple directions—tariffs, sanctions, geopolitical rivalries, and supply chain disruptions. The choices made in this environment will shape long-term growth trajectories.

Several lessons stand out:

Diversification is essential – India’s ability to withstand the shock of U.S. tariffs is partly due to the broad diversification of its trade and services portfolio. For Arab economies, diversifying both export markets and export categories is crucial to resilience. This applies equally to hydrocarbons, manufacturing, and services.
Services are a growth engine – India’s rise as a services powerhouse shows the value of investing in sectors that are less vulnerable to tariff shocks. Arab countries, with their young populations and growing investment in technology and financial services, are well-positioned to expand in similar directions.
Global partnerships matter – India’s proactive pursuit of trade agreements with the UK and EU underscores the importance of strategic partnerships. For Arab economies, deeper trade and financial ties with Europe, Asia, and Africa can help reduce dependence on any single region.
Policy direction is critical – India’s internal debate between openness and protectionism mirrors similar debates in Arab countries. Choosing openness—albeit balanced with prudence—can enhance competitiveness and long-term growth prospects.

The Role of Arab Banks

Arab banks have a central role to play in reinforcing these lessons. Their financing decisions, international partnerships, and investment strategies can help their countries embrace openness while safeguarding resilience. This means:

Supporting cross-border trade finance that links Arab exporters with multiple markets.
Investing in digital banking, fintech, and services sectors that echo India’s experience in IT and outsourcing.
Encouraging governments to pursue comprehensive trade agreements that provide predictability and stability.
Financing infrastructure that facilitates integration into global supply chains, from ports to digital connectivity.

Arab banks must also prepare for volatility. Just as Indian exporters are adapting to shifts in trade flows, Arab financial institutions should anticipate similar disruptions and position themselves as facilitators of adjustment.

Opportunities for Strategic Recalibration

The broader message from India’s encounter with U.S. tariffs is that external shocks, while disruptive, also create opportunities. For India, the tariffs may accelerate its pivot toward Europe and Asia. For Arab economies, the lesson is that external pressure can be harnessed to strengthen partnerships, modernize financial systems, and expand economic reach.

As global trade flows evolve, both India and Arab countries stand to gain from greater interconnection. India’s success in services complements the Arab world’s growing focus on digital economies and financial innovation. Collaborative ventures between Arab banks and Indian institutions could open new pathways for shared growth, from joint fintech platforms to cross-border investment vehicles.

Recommendations for Arab Banking Leaders

Trump’s tariffs on India are more than a bilateral trade dispute. They represent a moment of strategic choice for one of the world’s largest emerging economies. Whether India turns inward or reaffirms its outward orientation will shape not only its own prosperity but also the balance of the global economy.

For Arab banking leaders, the key takeaways are clear:

Invest in diversification to reduce vulnerability to external shocks.
Prioritize growth in services and technology sectors that offer resilience.
Support governments in pursuing trade agreements that expand opportunity and anchor economies in predictable frameworks.

Build partnerships with India and other outward-looking economies to seize emerging opportunities.

By doing so, Arab banks and financial institutions can position themselves as drivers of sustainable growth, not only for their own economies but also for the broader region. The lesson from India is not one of retreat, but of strategic engagement—anchored in openness, resilience, and confidence in the opportunities of the global economy.

September 3 2025

Currency Dominance in the Digital Age: Integrity, Technology, and the Future of Money

For more than eight decades, the United States dollar has stood unrivaled as the backbone of the international financial system. Its supremacy has been underpinned by the United States’ economic scale, deep and liquid financial markets, credible institutions, and geopolitical influence. Yet equally important has been the power of network effects: the more the dollar was used in trade and finance, the more indispensable it became. Today, however, we are witnessing the emergence of a new dynamic—one that introduces a fresh layer to the global competition for monetary leadership.

As digital technologies increasingly provide the rails upon which money moves, the resilience and credibility of currency systems will depend not only on traditional macroeconomic fundamentals but also on the strength, integrity, and security of their technological foundations. This shift fundamentally alters the logic of monetary competition and carries profound implications for financial stability, economic sovereignty, and geopolitical order.

The Dollar’s Enduring Privilege

The dollar’s role as the world’s dominant reserve currency has granted the United States what economists have long described as an “exorbitant privilege.” Even during times of domestic or global economic stress, the U.S. has been able to borrow at relatively low interest rates, finance persistently large trade deficits, and issue debt securities that are universally regarded as safe. This trust has been anchored not only in the depth of American markets and the credibility of its central bank but also in the robustness of its legal frameworks and institutions.

Yet the privilege is not unconditional. It is built on trust—trust that the United States will continue to uphold the institutional and financial underpinnings that give its currency credibility. In the digital age, trust acquires new dimensions. It is no longer sufficient for a currency to be backed by economic might alone; the integrity of its technological infrastructure becomes equally decisive.

The New Variable: Data Integrity

The entry of digital technologies into the heart of global finance introduces a new variable into the hierarchy of currencies: data integrity. As stablecoins, tokenized assets, and central bank digital currencies (CBDCs) grow in use, the credibility of currency systems increasingly hinges on the ability of their underlying technologies to resist cyber threats, maintain data verifiability, and safeguard transaction records.

Stablecoins in particular illustrate both the potential and the risks. These digital tokens, pegged to traditional currencies like the U.S. dollar, have quickly become integral to cross-border payments and a vital on- and off-ramp for speculative crypto investments. Yet they raise macroeconomic and systemic concerns. By diverting seigniorage away from governments and facilitating tax evasion, they could erode fiscal revenues. More troubling, if a stablecoin loses its peg because its liquidity buffers are inadequate, the loss of credibility could trigger widespread financial runs.

The consequences could extend far beyond the crypto ecosystem. U.S. dollar stablecoins, for example, are heavily backed by U.S. Treasury securities. A disorderly run on these assets would not only destabilize the stablecoin market but also disrupt U.S. government financing and global bond markets. Weak auditing, opaque disclosures, and inconsistent regulatory oversight compound the risks.

Beyond Traditional Credibility: The Prospect of “Cyber Runs”

While such vulnerabilities echo traditional financial risks, digital finance introduces a new, more complex dimension: the possibility of a “cyber run.” Unlike classical runs triggered by macroeconomic weakness or liquidity shortages, a cyber run could result from weaknesses in the technological infrastructure itself.

A system’s cryptographic backbone, once considered unassailable, may not remain secure in the future. The U.S. National Institute of Standards and Technology has warned that quantum computers, once commercially viable, could break many of the public-key cryptographic systems currently in use. Infrastructure that appears robust today may be rendered fragile tomorrow, with consequences not only for digital assets but also for the stability of the global financial order.

This possibility forces a rethinking of what gives a currency its strength. In a digital monetary world, the credibility of code, the resilience of cryptographic standards, and the system’s capacity to resist hacking are as critical as fiscal capacity or central bank independence.

Integrity Premiums in a Multipolar World

The trajectory ahead may lead toward a more multipolar monetary system, where no single currency enjoys absolute dominance. Instead, currencies and their digital ecosystems may command what can be called an “integrity premium”—a competitive edge derived from their technological robustness, cyber resilience, and capacity to guarantee data verifiability.

The most successful currencies of tomorrow will be those supported by comprehensive financial architectures. This includes rigorous validation of transactions, robust protection of user identities, safeguarding of transaction histories, and resilient frameworks that can withstand quantum-era threats.

By contrast, currencies linked to states with weak cyber defenses or opaque standards risk losing ground, regardless of the size of their economies. Conversely, technologically sophisticated jurisdictions with high levels of transparency and robust cybersecurity could exert influence disproportionate to their economic weight.

Geopolitical Stakes

The implications for geopolitics are profound. Just as naval supremacy in the past translated into commercial dominance, control over payments infrastructure may increasingly determine economic sovereignty in the digital era.

The strategic value of payments data extends far beyond monetary policy. It is central to surveillance, law enforcement, and the enforcement of sanctions. Digital currencies, therefore, cannot be seen as neutral instruments; they are contested arenas of geopolitical power.

For countries in the Arab world, where financial integration with global markets is both a necessity and a strategic objective, these dynamics are especially relevant. The resilience of regional currencies and the credibility of cross-border payments infrastructure will directly affect economic stability, trade competitiveness, and geopolitical positioning.

Lessons from History

History offers a cautionary parallel. In the 19th century, the proliferation of privately issued money led to financial instability, runs, and frequent collapses. The lack of a coordinated regulatory framework left economies vulnerable to manipulation and panic. Today, the unregulated spread of digital currencies could replicate these challenges on a global scale, with potentially greater consequences given the interconnectedness of modern finance.

The lesson is clear: without coordinated oversight and international standards, the risk of volatility, fragmentation, and systemic disruption will grow.

The Role of Standards and Coordination

Preserving international monetary stability in this emerging landscape requires more than technological innovation. It requires coordinated governance.

Global cooperation will be essential in developing standards for tokenization, cryptographic interoperability, data privacy, and post-quantum resilience. If currencies evolve in isolation—each with its own technological rules and regulatory frameworks—the result will be a patchwork of balkanized networks. Such fragmentation would increase exposure to systemic shocks, weaken trust, and undermine the predictability upon which international finance depends.

For Arab economies, which operate at the crossroads of global trade and finance, engaging in these international standard-setting processes is not optional. It is a strategic imperative. The integrity of global payment systems will determine the credibility of cross-border financial flows that are essential for investment, trade, and growth across the region.

Implications for Arab Banks and Policymakers

For banks and policymakers in the Arab world, the rise of digital monetary ecosystems presents both opportunities and challenges. On the one hand, digital currencies could enhance cross-border transactions, reduce costs, and expand access to global markets. On the other, the risks of cyber vulnerabilities, regulatory fragmentation, and technological obsolescence could expose financial institutions to instability.

The region has already demonstrated its ability to adopt digital innovations rapidly, from mobile banking platforms to fintech ecosystems. Yet the stakes are now higher. Cybersecurity, regulatory clarity, and technological investment must be treated not as auxiliary concerns but as pillars of financial strategy. Central banks in the region will need to strengthen their oversight frameworks, invest in cyber resilience, and collaborate more closely with international peers to align standards and practices.

Moreover, Arab financial institutions must prepare for a future in which trust is measured not only in balance sheets and sovereign ratings but also in code integrity and cryptographic strength. Investment in research, partnerships with global technology leaders, and active participation in international forums will be vital to securing the region’s monetary interests.

Recommendations for Arab Banking Leaders

The digital age of currency competition brings with it a new reality: the future of money will be determined as much by technological integrity as by macroeconomic fundamentals. For Arab banks and financial leaders, this evolution underscores three critical priorities:

Invest in Cyber Resilience – Banks must ensure that their systems are robust against cyber threats, including those that may emerge from advances in quantum computing. This requires continuous upgrading of cryptographic standards, penetration testing, and regional cooperation on cybersecurity defense.
Engage in International Standard-Setting – Arab central banks and policymakers should actively participate in shaping global standards on digital currencies, tokenization, and data privacy. Being at the table is essential for ensuring that the region’s interests are represented in the emerging global framework.
Build Trusted Digital Ecosystems – Beyond compliance, Arab banks should position themselves as leaders in building transparent, secure, and user-centric digital ecosystems. By prioritizing integrity, they can enhance their credibility and attract international partners and investors.

In a world where financial credibility increasingly rests on technological trust, the Arab banking sector has both a challenge and an opportunity. Those who anticipate this shift, invest in resilience, and commit to integrity will not only safeguard stability but also strengthen the region’s standing in the global financial system.

September 3 2025

66 Arab Banks Among the Top 1,000 World Banks

Introduction

The year 2024 was marked by persistent global challenges: geopolitical volatility, inflationary pressures, and uneven economic recovery across developed and emerging markets. Despite this turbulence, the Arab world once again demonstrated notable resilience. Driven by the Gulf Cooperation Council (GCC) economies, the region leveraged solid fiscal positions, diversified investment strategies, and robust banking systems to maintain growth momentum.

At the heart of this resilience lies the Arab banking sector. Banks across the region have sustained their strong capital bases, expanded asset portfolios, and embraced innovation in digital transformation and sustainable finance. These institutions continue to serve as a cornerstone of economic stability, not only safeguarding domestic economies from external shocks but also actively financing national development and diversification agendas. The 2025 rankings reaffirm the central role Arab banks play in supporting economic growth, modernizing financial markets, and contributing to global stability.

Observations

Concentration in the GCC: Saudi Arabia, the UAE, and Qatar collectively dominate the regional landscape, accounting for the bulk of Tier 1 capital and assets, underscoring their pivotal role in Arab banking.
Growth Leaders: Several institutions, notably Emirates NBD, Qatar National Bank, and Abu Dhabi Commercial Bank, continue to strengthen their capital and asset bases, reflecting steady growth trajectories.
Regional Diversity: While the GCC remains at the forefront, banks from Morocco, Jordan, Egypt, and Lebanon also feature in the global rankings, reflecting the geographical breadth of Arab banking strength.
Returns & Profitability: The sector demonstrates robust return ratios, with leading banks maintaining profitability even amidst a demanding global environment.
Sectoral Expansion: The upward trend in aggregate assets highlights the continued expansion of the Arab banking industry, both within the region and internationally.

Top 10 Banks by Tier 1 Capital (2025)

Rank	Bank	Country	Tier 1 Capital (USD m)
1	The Saudi National Bank (SNB)	Saudi Arabia	40,812
2	Al Rajhi Bank	Saudi Arabia	31,454
3	Emirates NBD	UAE	30,058
4	Qatar National Bank (QNB)	Qatar	28,832
5	First Abu Dhabi Bank (FAB)	UAE	26,757
6	Riyad Bank	Saudi Arabia	18,065
7	Abu Dhabi Commercial Bank (ADCB)	UAE	17,093
8	Saudi Awwal Bank (SAB)	Saudi Arabia	15,367
9	National Bank of Kuwait (NBK)	Kuwait	13,464
10	Banque Saudi Fransi	Saudi Arabia	12,591

Analysis:

The Saudi National Bank (SNB) retains its commanding lead, with Tier 1 capital exceeding $40.8 billion, underscoring its pivotal role in Saudi Arabia’s financial system and its capacity to support large-scale projects under Vision 2030. Al Rajhi Bank, with $31.5 billion, continues to leverage its strong retail base, while Emirates NBD’s climb to $30.1 billion highlights Dubai’s growing prominence as a global financial hub. Qatar National Bank and First Abu Dhabi Bank follow closely, both reflecting their ability to combine scale with regional influence.

The presence of Riyad Bank, ADCB, SAB, and Banque Saudi Fransi illustrates the deep bench of Saudi and Emirati banks shaping regional finance. Meanwhile, Kuwait remains represented at the top by NBK, with $13.5 billion in Tier 1 capital, reinforcing its historic role as a financial leader in the Gulf. Collectively, these top ten institutions represent a robust, well-capitalized ecosystem capable of supporting innovation, cross-border expansion, and resilience against global headwinds.

Top 10 Banks by Assets (2025)

Rank	Bank	Country	Assets (USD m)
1	Qatar National Bank (QNB)	Qatar	356,571
2	First Abu Dhabi Bank (FAB)	UAE	330,315
3	The Saudi National Bank (SNB)	Saudi Arabia	294,441
4	Emirates NBD	UAE	271,326
5	Al Rajhi Bank	Saudi Arabia	259,836
6	Abu Dhabi Commercial Bank (ADCB)	UAE	177,733
7	National Bank of Kuwait (NBK)	Kuwait	130,123
8	Riyad Bank	Saudi Arabia	120,101
9	Saudi Awwal Bank (SAB)	Saudi Arabia	106,518
10	Banque Saudi Fransi	Saudi Arabia	78,074

Analysis:

Qatar National Bank maintains its status as the region’s largest bank by assets, surpassing $356 billion, reflecting its regional dominance and international footprint. First Abu Dhabi Bank follows with $330 billion, cementing the UAE’s place as a critical financial hub. Saudi National Bank, Emirates NBD, and Al Rajhi Bank round out the top five, each boasting asset portfolios above $250 billion.

Notably, Abu Dhabi Commercial Bank’s assets reached $177.7 billion, reflecting strong corporate lending and infrastructure financing. The presence of NBK emphasizes Kuwait’s stable banking sector, while Riyad Bank, SAB, and Banque Saudi Fransi confirm Saudi Arabia’s deep financial base. This balance between scale and diversification underpins the sector’s ability to absorb shocks and sustain regional growth.

Country Representation of the Top Arab Banks (2025)

Country	Number of Banks	Total Tier 1 Capital (USD m)
Saudi Arabia	10	154,063
UAE	16	117,468
Qatar	8	61,383
Kuwait	8	38,983
Morocco	6	16,979
Oman	5	13,017
Bahrain	6	12,929
Jordan	4	10,771
Egypt	2	5,058
Lebanon	1	819

Analysis:

Saudi Arabia emerges as the clear leader in Tier 1 capital, with 10 banks amassing $154 billion, underlining their central role in financing Vision 2030 initiatives and regional mega-projects. The UAE, with 16 banks totaling $117.5 billion, highlights the country’s broad-based banking landscape and its strategy of global connectivity.

Qatar’s $61.4 billion capital base demonstrates the scale of its banks relative to the country’s size, particularly through QNB. Kuwait’s $39 billion Tier 1 total underscores its stable financial system, while Morocco, Oman, and Bahrain provide strong regional diversity. Jordan, Egypt, and Lebanon add further representation, ensuring that Arab banks are visible across North Africa and the Levant, not solely within the Gulf.

Conclusion

The 2025 rankings reaffirm the Arab banking sector’s role as a pillar of resilience and growth in an unsettled global economy. The region’s top banks continue to demonstrate strength in capital adequacy, asset growth, and profitability, enabling them to serve as engines of economic development while embracing innovation in digital banking and sustainable finance.

The concentration of financial power in Saudi Arabia, the UAE, and Qatar underscores the GCC’s global significance, yet the contributions from Kuwait, Morocco, Oman, Bahrain, Jordan, Egypt, and Lebanon enrich the sector’s diversity. Collectively, these 66 Arab banks highlight a story of strategic depth, financial soundness, and future readiness.

As the global economy faces continued uncertainty, Arab banks remain steadfast — not only as defenders of regional stability but also as active participants in shaping the evolving architecture of international finance.

Bank	Country	Arab Ranking by Tier 1 Capital 2024	Tier 1 Capital 2024 (Million USD)	Assets 2024 (Million USD)	Profits 2024 (Million USD)	Return on Tier 1 Capital (%)	Return on Assets (%)
The Saudi National Bank (SNB)	Saudi Arabia	1	40,812	294,441	6,297	13.78	1.91
Al Rajhi Bank	Saudi Arabia	2	31,454	259,836	5,858	16.73	2.02
Emirates NBD	United Arab Emirates	3	30,058	271,326	7,389	20.84	2.31
Qatar National Bank (QNB)	Qatar	4	28,832	356,571	5,430	16.14	1.31
First Abu Dhabi Bank (FAB)	United Arab Emirates	5	26,757	330,315	5,422	17.40	1.41
Riyad Bank	Saudi Arabia	6	18,065	120,101	2,773	13.76	2.07
Abu Dhabi Commercial Bank (ADCB)	United Arab Emirates	7	17,093	177,733	2,882	15.00	1.44
Saudi Awwal Bank (SAB)	Saudi Arabia	8	15,367	106,518	2,498	14.00	2.02
National Bank of Kuwait (NBK)	Kuwait	9	13,464	130,123	2,245	15.30	1.58
Banque Saudi Fransi	Saudi Arabia	10	12,591	78,074	1,352	9.62	1.55
Sum of Top 10 Banks			234,493	2,125,038	42,146
Kuwait Finance House (KFH)	Kuwait	11	12,343	118,398	2,631	16.78	1.75
Dubai Islamic Bank (DIB)	United Arab Emirates	12	12,017	93,843	2,452	18.50	2.37
Alinma Bank	Saudi Arabia	13	11,057	73,821	1,734	14.06	2.11
Arab National Bank (ANB)	Saudi Arabia	14	10,165	66,215	1,534	13.03	2.00
Mashreq	United Arab Emirates	15	8,324	72,816	2,692	29.49	3.37
Qatar Islamic Bank (QIB)	Qatar	16	8,235	55,159	1,272	15.35	2.29
Arab Bank	Jordan	17	7,568	71,231	1,446	13.31	1.41
Abu Dhabi Islamic Bank (ADIB)	United Arab Emirates	18	6,578	61,506	1,870	25.25	2.70
Masraf Al Rayan	Qatar	19	6,280	47,004	429	6.68	0.89
Attijariwafa bank	Morocco	20	5,948	71,859	1,777	19.43	1.61
Sum of Top 20 Banks			323,008	2,856,890	59,983
Bank Muscat	Oman	21	5,753	36,182	702	10.20	1.62
The Commercial Bank (P.S.Q.C.)	Qatar	22	5,668	45,553	828	14.70	1.83
The Saudi Investment Bank (SAIB)	Saudi Arabia	23	5,523	41,778	605	9.45	1.25
Banque Centrale Populaire (BCP Group)	Morocco	24	5,185	53,638	781	9.48	0.92
Bank AlJazira	Saudi Arabia	25	4,577	39,708	375	7.17	0.83
Bank Albilad	Saudi Arabia	26	4,452	41,324	834	16.81	1.81
Bank ABC (Arab Banking Corporation)	Bahrain	27	4,421	46,265	423	7.94	0.76
Commercial Bank of Dubai (CBD)	United Arab Emirates	28	4,272	38,164	905	19.31	2.16
Doha Bank	Qatar	29	3,961	30,288	236	5.91	0.77
Dukhan Bank	Qatar	30	3,738	32,401	369	9.87	1.14
Sum of Top 30 Banks			370,558	3,262,191	66,041
Burgan Bank	Kuwait	31	3,376	26,318	221	4.84	0.62
Bank of Africa (BOA)	Morocco	32	3,293	41,867	690	14.95	1.18
Gulf International Bank (GIB)	Bahrain	33	3,177	42,892	211	5.67	0.42
RAKBANK (National Bank of Ras Al Khaimah)	United Arab Emirates	34	2,882	24,047	620	19.61	2.35
Gulf Bank	Kuwait	35	2,689	24,130	201	7.22	0.80
Commercial International Bank (CIB) Egypt	Egypt	36	2,648	23,922	1,519	41.08	4.55
Qatar International Islamic Bank (QIIB)	Qatar	37	2,522	16,478	346	13.73	2.10
Arab African International Bank (AAIB)	Egypt	38	2,410	18,151	442	12.48	1.66
Ahli United Bank – Kuwait (Islamic)	Kuwait	39	2,231	23,786	206	7.62	0.72
Commercial Bank of Kuwait (CBK)	Kuwait	40	2,163	15,051	531	23.45	3.37
Sum of Top 40 Banks			397,949	3,518,833	71,028
Sohar International	Oman	41	2,163	19,144	307	12.05	1.36
Ahli Bank Q.P.S.C.	Qatar	42	2,147	16,371	245	11.41	1.50
Sharjah Islamic Bank	United Arab Emirates	43	2,088	21,566	313	13.66	1.32
National Bank of Oman (NBO)	Oman	44	1,894	13,635	193	8.66	1.20
BankDhofar	Oman	45	1,819	13,225	131	6.23	0.86
National Bank of Fujairah (NBF)	United Arab Emirates	46	1,710	16,575	255	13.53	1.40
Bank of Bahrain and Kuwait (BBK)	Bahrain	47	1,634	11,151	193	11.83	1.73
The Housing Bank for Trade and Finance (HBTF)	Jordan	48	1,528	12,995	332	13.85	1.63
National Bank of Bahrain (NBB)	Bahrain	49	1,464	14,687	222	15.07	1.50
Kuwait International Bank (KIB)	Kuwait	50	1,394	12,655	79	5.40	0.59
Sum of Top 50 Banks			415,790	3,670,837	73,298
Oman Arab Bank	Oman	51	1,388	11,161	94	5.71	0.71
Warba Bank	Kuwait	52	1,323	17,077	75	5.48	0.42
National Bank of Umm Al Qaiwain (NBQ)	United Arab Emirates	53	1,311	4,868	150	10.51	2.83
Al Salam Bank	Bahrain	54	1,243	18,784	202	14.87	0.98
Arab Bank for Investment & Foreign Trade (Al Masraf)	United Arab Emirates	55	1,076	6,712	69	5.85	0.94
Crédit Agricole du Maroc	Morocco	56	1,059	15,620	24	2.27	0.15
Bank of Sharjah	United Arab Emirates	57	1,052	11,866	113	9.95	0.88
GFH Financial Group	Bahrain	58	990	11,031	129	12.99	1.17
Capital Bank of Jordan	Jordan	59	902	11,603	261	25.01	1.94
CIH Bank	Morocco	60	838	13,944	158	11.40	0.69
Sum of Top 60 Banks			426,972	3,793,503	74,573
Bank Audi	Lebanon	61	819	16,665	-14	0.00	0.00
Ajman Bank	United Arab Emirates	62	800	6,222	12	13.64	1.75
Bank al Etihad	Jordan	63	773	11,762	121	9.92	0.65
Commercial Bank International (CBI)	United Arab Emirates	64	762	5,689	13	7.21	0.97
United Arab Bank	United Arab Emirates	65	688	5,843	90	11.91	1.40
Crédit du Maroc	Morocco	66	656	7,325	128	11.18	1.00
Total (All 66 Banks)			431,470	3,847,009	74,923

September 3 2025

RED SEA GOVERNANCE

BY DR SOHA MAAD

Introduction

The governance of the Red Sea is multifaceted, involving both strategic and geopolitical dimensions. A Red Sea governance framework involves infrastructure and technology governance, financial and risk management, and regulation. The latter involves various strategies and policies for enhanced global trade and supply chain management.

This article highlights the importance of the Red Sea governance in light of the latest geopolitical development. The article overviews the Red Sea infrastructure and activity including the main facts and figures, the shipping routes passing through the Red Sea and the main goods and services traded through the Red Sea. The importance of the Red Sea in global trade is highlighted with a focus on the latest developments and the geopolitical risks and the impact of the Red Sea disruption on global trade. The article concludes by drawing the future of the Red Sea trade, technologies, and infrastructure towards greater governance and Arab banks contribution to Red Sea governance.

Red Sea Trade Infrastructure and Activity

The Red Sea is a vital artery for global trade. Recent developments have reshaped the Red Sea infrastructure and activity in dramatic ways.

Key Ports and Facilities of the red sea include:

• Port Sudan: Undergoing expansion and modernization, especially with Chinese investment via the Belt and Road Initiative (BRI).

• Berenice Naval Base (Egypt): Significantly expanded to support both military and commercial maritime operations.

• Djibouti Port: A major logistics hub, especially for East African trade and Chinese naval presence.

• Jeddah Islamic Port (Saudi Arabia): One of the busiest Red Sea ports, central to Saudi Vision 2030’s logistics ambitions involve developing new corridors:

• China’s Belt & Road Initiative (BRI): Infrastructure investments across Sudan, Egypt, and Djibouti and strengthening maritime logistics and port connectivity.

• India-Middle East-Europe Economic Corridor (IMEC): Proposed alternative to BRI.

Red Sea Geography and Physical Characteristics

• Location: Between Africa and the Arabian Peninsula.

• Length: ~2,250 km (1,400 miles)

• Width: Up to 355 km (221 miles)

• Surface Area: ~438,000 km²

• Average Depth: 490 meters (1,610 feet)

• Maximum Depth: 3,040 meters

• Salinity: ~40%, the highest in the world

Main Shipping Routes through the Red Sea

The Red Sea is a critical artery in global maritime trade, forming part of the shortest sea route between Asia and Europe. The main shipping routes that pass through this region:

Primary Red Sea Shipping Routes

• Asia–Europe Route: Starts in East Asia, enters the Indian Ocean, passes through the Bab el-Mandeb Strait, travels up the Red Sea, and exits via the Suez Canal into the Mediterranean. This is the most heavily trafficked route for container ships carrying manufactured goods, electronics, textiles, and raw materials between Asia and Europe. It accounts for nearly 30% of global container traffic.

• Asia–Middle East–Africa Route: Similar to the Asia–Europe route but diverts to ports in the Middle East and East Africa. It facilitates regional trade in oil, foodstuffs, and industrial goods.

• Europe–East Africa Route: Ships depart from European ports, enter the Mediterranean, pass through the Suez Canal, and head south through the Red Sea to East African ports. It supports trade in agricultural products, textiles, and humanitarian aid.

Strategic Chokepoints

• Bab el-Mandeb: Southern entrance of Red Sea. It connects Red Sea to Gulf of Aden & Indian Ocean

• Suez Canal: Northern exit of Red Sea Connects Red Sea to Mediterranean Sea

These chokepoints are vital for uninterrupted global trade. Red Sea routes drastically reduce shipping time compared to alternatives. Countries like Egypt, Saudi Arabia, and Djibouti rely heavily on port revenues and trade facilitation. These routes are essential for transporting energy, electronics, food, and consumer goods.

Main Goods and Services Traded Through the Red Sea

The Red Sea is a vital conduit for global trade, facilitating the movement of a wide range of goods and services between Europe, Asia, and Africa. Main commodities and services traded through this strategic waterway include:

Energy Products

• Crude Oil & Refined Petroleum: Transported from the Persian Gulf to Europe.

• Liquefied Natural Gas (LNG): Shipped from Gulf states to Asia and Europe.

Manufactured Goods

• Electronics: Smartphones, computers, and components from East Asia.

• Automobiles and Machinery: Exported from Europe and Asia to Africa and the Middle East.

• Textiles and Apparel: Especially from South Asia and China to European markets.

Agricultural Commodities

• Grains: Wheat and corn from Europe and the Black Sea region to Africa and the Middle East.

• Sugar, Coffee, and Tea: From East Africa and South Asia to global markets.

Raw Materials

• Metals and Minerals: Including copper, gold, and iron ore from Africa.

• Chemicals and Fertilizers: Used in agriculture and industry across the region.

Consumer Goods

Furniture, Toys, and Household Items: Shipped from Asia to Europe and Africa.

Services Facilitated by Red Sea Trade

• Shipping and Logistics: Container handling, refueling, and transshipment services at major ports like Jeddah, Djibouti, and Port Sudan.

• Maritime Insurance and Security: Especially critical due to piracy and geopolitical tensions.

• Port Services: Customs clearance, warehousing, and cargo inspection.

The Red Sea has long been a hub for trade in spices, incense, gold, and exotic goods, dating back to ancient Egyptian and Islamic Golden Age expeditions. Its strategic location has made it a focal point for cultural and economic exchange for millennia.

Red Sea Importance for Global Trade

The Red Sea is one of the most strategically vital waterways in the world, playing a central role in global trade and geopolitics. Over 10–12% of global trade passes through the Red Sea annually. The Red Sea forms a strategic trade route and is part of the shortest maritime route between Europe and Asia. It connects the Mediterranean, Indian Ocean, and Pacific trade networks. Its importance has grown with the rise of global supply chains, especially for energy and consumer goods.

Latest Trade Development in Red Sea

The latest trade developments in the Red Sea as of mid-2025, reflecting both strategic innovation and ongoing challenges are:

Neom Port Pilot

Saudi Arabia’s Port of NEOM completed a pilot program that cut Cairo – Iraq trade transit times by over 50%. A new intermodal corridor links Egypt’s Port of Safaga to NEOM via the Red Sea, then overland to Erbil, Iraq. This initiative supports Saudi Vision 2030 by positioning NEOM as a regional logistics hub and offering alternatives to traditional shipping routes.

Submarine Cable Disruption

Rising tensions and attacks in the Red Sea are threatening undersea cable systems critical to global internet connectivity. Telecom companies like Ooredoo and Zain are exploring terrestrial cable routes to bypass the Red Sea and avoid outages. India’s internet economy is particularly vulnerable, with increased insurance costs and repair delays for damaged cables.

Ships avoiding the Red Sea are rerouting around Africa’s Cape of Good Hope, increasing calls at African ports. Many African ports lack capacity to handle the surge, leading to congestion and delays.

Geopolitical Risk Surrounding Red Sea

The Red Sea has become a geopolitical hotspot in 2025, with escalating tensions and strategic rivalries reshaping the region. Attacks on the Red Sea have disrupted global trade, forced rerouting around Africa, and raised insurance premiums. The Bab el-Mandeb Strait and Suez Canal are becoming now high-risk zones. United States (U.S.), China, Iran, Saudi Arabia, United Arab Emirates (UAE), Turkey, Russia, and others have expanded military presence.

Risks of Red Sea Disruption

Over 190 attacks since late 2023 have forced major carriers to reroute, adding 10–14 days to Asia–Europe shipping times. Even with diplomatic progress, the threat of asymmetric warfare and maritime attacks remain high. The Red Sea hosts critical subsea cables like Google’s Blue-Raman and Bharti Airtel’s Africa, vital for internet connectivity across Asia, Africa, and Europe. Cable cuts and anchor damage near Bab el-Mandeb have slowed data speeds and increased repair costs.

Companies are investing in terrestrial routes and hybrid networks like the India–Middle

Strategic competition among the U.S., China, Iran, and Gulf states is intensifying, with naval coalitions and base expansions in Djibouti, Sudan, and Somaliland.

Increased militarization raises the risk of miscalculation and conflict spillover. The Red Sea may remain a contested zone, with fragile ceasefires and proxy tensions shaping maritime security. Continued disruptions could further inflate freight costs, delay goods, and destabilize supply chains. Businesses may accelerate nearshoring, diversify routes, and invest in digital logistics to mitigate risk.

The Impact of Red Sea Disruption on Global Trade

Disruptions in the Red Sea have had major ripple effects on global trade, especially since late 2023, including:

Trade Route Disruption

Ship transits through the Suez Canal have dropped by up to 50% compared to previous years. Many shipping companies are rerouting vessels around Africa, adding 10–15 days to delivery times and increasing fuel and labor costs. Over 586 container vessels were rerouted in early 2024 alone.

Economic and Inflationary Effects

Container shipping prices more than doubled in 2024, peaking near record highs. A 10% rise in shipping costs can increase core inflation by 0.18 percentage points in G20 countries. Just-in-time industries (electronics, food, energy) are especially vulnerable to delays and cost spikes.

Insurance & Security Challenges

The Southern Red Sea and Gulf of Aden are now considered high-risk by insurers. Insurance costs have surged, with stricter security protocols and dynamic pricing.

Strategic and Geopolitical Consequences

Disruptions near the Strait of Hormuz and Red Sea raise concerns about oil supply and pricing. Governments and companies are investing in alternative routes, land bridges, air freight, and rail, to bypass maritime chokepoints. Persistent instability is reshaping global trade strategies and eroding confidence in maritime security.

The Red Sea disruption has hit several industries hard, especially those dependent on just-in-time delivery and global supply chains including:

• Automotive Industry: Major automakers like Volvo, Tesla, and Suzuki suspended production in Europe due to component shortages.

• Retail and Consumer Goods: Companies like Amazon, IKEA, Walmart, and Home Depot have faced delays in seasonal items, clothing, patio furniture, pool supplies. Longer lead times and higher shipping costs are affecting inventory planning and pricing.

• Construction and Manufacturing: Shortages in raw materials and equipment have slowed down projects and increased costs. Rerouted shipments and port congestion are causing delays in delivery of steel, machinery, and modular components.

• Energy Sector: Oil prices spiked by 4% after attacks and retaliatory strikes in early 2024.

• The Red Sea is a key route for Gulf oil exports. Disruptions raise fears of supply bottlenecks.

• Food and Agriculture: Perishable goods like fruits, vegetables, and seafood are at risk due to extended transit times.

• Logistics and Shipping: Container rates have quadrupled, and delivery times increased by up to 15 days.

• Insurance Industry: Marine war risk premiums have surged, and coverage models are being recalibrated. The Southern Red Sea and Gulf of Aden are now designated high-risk zones.

Future of Red Sea Trade Technologies and Infrastructure

The future of Red Sea trade is being shaped by a mix of geopolitical tensions, strategic innovation, and regional cooperation. Attacks have caused a dramatic drop in Red Sea shipping transit volume. Many shipping companies will continue rerouting via the Cape of Good Hope, adding 10–14 days to Asia–Europe transit times. Higher freight costs and insurance premiums will remain a challenge through 2025. Saudi Arabia’s NEOM is emerging as a logistics hub, offering faster intermodal routes to Iraq and the Levant.

Countries like Djibouti, Kenya, and Tanzania are investing in port infrastructure to absorb rerouted traffic. Projects like the Red Sea Development Company are integrating ESG (Environmental, Social, & Governance) standards into port and tourism infrastructure. UNCTAD is pushing for digital customs and logistics systems to reduce delays and improve resilience. The United States, United Kingdoms, and allies have formed maritime coalitions to protect shipping lanes, but tensions remain high. Expanding influence through port investments and military presence in Sudan and Djibouti. The Red Sea Council may evolve into a more active platform for conflict resolution and trade coordination. Longer delivery times and higher costs are feeding into global inflation, especially in Europe and Africa. Companies are investing in nearshoring and alternative transport modes to reduce dependency on Red Sea routes.

To enhance the future trade infrastructure and technologies of the Red Sea, we hereby propose a blend of strategic investment, innovation, and regional cooperation, including:

• Modernizing Port Infrastructure by expanding and rehabilitating key ports to handle larger container volumes and improve efficiency.

• Ports should adopt smart technologies (Artificial Intelligence AI and Internet of Things IoT Integration) for cargo tracking, predictive maintenance, and automated customs clearance.

• Secure digital ledgers and blockchain can be piloted to streamline documentation and reduce fraud in cross-border transactions.

• Embedding ESG standards into infrastructure planning. Solar and wind power can be used to reduce carbon footprints of port operations.

• Regional Collaboration and Security Coordination should be enhanced to secure Red Sea shipping lanes from piracy and militant attacks. A platform for Arab and African coastal states is needed to coordinate trade, security, and environmental governance.

Towards Better Governance of the Red Sea and Arab Banks Role

The Red Sea is not owned by any single country, it is a shared maritime space bordered by several nations, each with jurisdiction over their respective territorial waters and Exclusive Economic Zones (EEZs).

While no one “owns” the Red Sea, several powers exert influence:

• Saudi Arabia: Through the Red Sea Development Company and Vision 2030, it’s investing heavily in tourism and infrastructure along its western coast2.

• Egypt: Controls the northern gateway via the Suez Canal, a vital global trade artery.

• Djibouti: Hosts multiple foreign military bases (U.S., China, France, Japan), making it a strategic hub.

• UAE: Funds port developments in Berbera and Bosaso, embedding military infrastructure to secure energy routes3.

• China & U.S.: Compete for influence through naval presence and infrastructure investments.

Arab banks can play a transformative role in Red Sea governance, as the region grapples with geopolitical tensions, maritime insecurity, and economic instability:

Financing Regional Infrastructure and Connectivity

• Ports & Logistics: Banks can fund upgrades to Red Sea ports and intermodal transport systems, improving trade efficiency and resilience.

• Digital Infrastructure: Investment in fintech and digital banking across littoral states can enhance financial inclusion and cross-border commerce.

• Green Projects: Support for sustainable energy and climate-resilient infrastructure can align with global ESG goals.

Supporting Multilateral Institutions

• Arab banks can provide financial and technical support to the Council of Arab and African Coastal States of the Red Sea and Gulf of Aden, helping it evolve beyond a security-focused body into a multidimensional platform.

• Through development finance and economic diplomacy, banks can help reduce tensions by promoting shared prosperity.

Cross-Border Investment and Development

• SME Financing: Facilitating access to capital for small and medium enterprises in coastal states can stimulate local economies and reduce dependency on foreign aid.

• Public-Private Partnerships (PPPs): Banks can co-invest with governments in strategic sectors like tourism, fisheries, and renewable energy.

Enhancing Maritime Security through Economic Stability

• Arab banks can collaborate with insurers to develop tailored marine risk products for Red Sea shipping routes.

• Strengthening compliance and monitoring systems.

Data and Intelligence Sharing

• Banks can provide macroeconomic insights to help governments and regional bodies anticipate shocks and plan coordinated responses.

• Promoting financial transparency can help reduce corruption and improve governance across Red Sea states.

July 29 2025

Beyond the Numbers: Rethinking What Economic Success Truly Means

GDP growth hides rising inequality and risks
Wealth concentration weakens democratic institutions
True prosperity demands smarter, broader metrics

For over half a century, gross domestic product (GDP) has reigned supreme as the gold standard for measuring economic performance. From central banks to finance ministries, from IMF reports to national development plans, the GDP figure is often treated as a definitive metric of success. When a country records robust GDP growth, leaders celebrate; when the number falters, alarm bells ring. Yet, a deeper examination of this entrenched metric reveals that GDP, while useful, is increasingly inadequate—and, at times, harmful—as a singular measure of progress, especially in regions such as the Arab world where the socio-economic landscape is complex and evolving.

GDP: From Precision Tool to Political Crutch

The intellectual foundation of GDP lies in its simplicity. Designed by economist Simon Kuznets in the 1930s, GDP offers a concise numerical summary of a nation’s annual production—essentially the market value of all goods and services created within a year. It approximates income generation and economic scale, offering governments a standardized framework for comparison across borders and time.

As Diane Coyle outlines in her history of GDP, the metric’s introduction brought discipline to economic policymaking. It allowed countries to move beyond subjective indicators such as infrastructure projects or trade volume and adopt a clear, empirical baseline. In a globalized economy, this was no small feat.

But over the decades, GDP has evolved from an analytical tool into a political shield. Its authority often allows policymakers to deflect criticism about inequality, unemployment, or environmental degradation, citing growth statistics as evidence of national advancement. In practice, however, GDP growth can conceal as much as it reveals.

e Mirage of Shared Prosperity

GDP’s most troubling limitation is its indifference to distribution. A country can experience rising GDP per capita while the majority of its population faces declining living standards. This is not merely a theoretical concern. In many economies, particularly those heavily reliant on oil or elite-driven sectors, a surge in GDP might enrich a narrow segment of society while leaving structural inequalities untouched.

Nobel laureate Joseph Stiglitz addressed this fallacy in his 2010 book *Freefall*, arguing that “a larger pie does not mean everyone—or even most people—get a larger slice.” In the Arab world, this rings especially true. From North Africa to the Gulf, several countries have recorded strong GDP growth even as youth unemployment remains stubbornly high, labor force participation among women lags, and the wealth gap expands.

In 2008, the Commission on the Measurement of Economic Performance and Social Progress—led by Stiglitz, Amartya Sen, and Jean-Paul Fitoussi—called for an overhaul of how we measure national success. They urged governments to integrate data on inequality, poverty, and well-being into national accounts. Yet, despite widespread endorsement, GDP’s grip on public policy and investor perception remains unyielding.

When Wealth Speaks Louder Than Citizens

Beyond its blind spots on equity, GDP-centric thinking may inadvertently corrode democratic governance. As wealth becomes more concentrated, so too does influence. In the digital age, where visibility equates to power, those with capital can shape narratives, amplify ideologies, and steer public discourse. The analogy to feudal societies—where elites dominated not just economies but conversations—has found a modern parallel.

In today’s world, a handful of ultra-wealthy individuals and tech conglomerates wield disproportionate control over what billions see and hear. The risk is not simply inequality, but the marginalization of voices and perspectives that lack economic heft. When policymaking begins to reflect the priorities of the wealthy rather than the collective good, the democratic fabric frays.

This concern is hardly abstract. Across the Arab region, calls for transparency, accountability, and citizen engagement have grown louder, particularly among youth. Yet, in many cases, public policy continues to be shaped in boardrooms and ministerial halls where GDP figures dominate discussions, and societal well-being is relegated to footnotes.

Climate at the Margins of Metrics

Perhaps the most critical blind spot of GDP is its indifference to sustainability. Activities that deplete natural resources, pollute the air, or exacerbate climate change can all contribute positively to GDP in the short term. In effect, a nation can boost its GDP by cutting down forests, burning fossil fuels, or engaging in overfishing—practices that undermine long-term prosperity.

For oil-producing countries in the Arab world, this presents a conundrum. Hydrocarbon exports remain central to GDP calculations and fiscal revenues. Yet, the same activities contribute to climate vulnerabilities—desertification, water scarcity, and extreme weather—that threaten the region’s future.

The urgency of climate action has been widely acknowledged, including by Arab central banks and financial institutions now integrating ESG frameworks and green finance tools. However, until GDP is adjusted—or supplemented—to account for environmental depletion, progress will remain partial and performative. As UN Secretary-General António Guterres noted in his 2021 report *Our Common Agenda*, “What we measure shapes what we do.”

Why the Arab World Needs New Metrics

In light of these structural issues, the Arab region must revisit the foundations of how it defines economic success. Policymakers, economists, and banking leaders cannot afford to rely exclusively on GDP when charting national development or formulating fiscal strategies.

There is no shortage of alternatives. The United Nations Human Development Index (HDI), the World Bank’s Shared Prosperity Indicator, and the OECD’s Better Life Index offer multidimensional views of progress. These indices incorporate life expectancy, education, access to services, environmental quality, and income distribution.

Regional institutions can take the lead in adapting these frameworks to local realities. A tailored “Arab Prosperity Index,” for instance, could blend conventional economic indicators with metrics on social cohesion, climate resilience, digital inclusion, and governance quality. Such a tool would not only offer a more truthful account of regional progress but also help restore public trust in economic institutions.

Recommendations for Arab Banking and Policy Leadership

As stewards of the region’s financial architecture, Arab banks and central banks have both the capacity and the responsibility to champion more inclusive and forward-looking economic indicators. Here are three core recommendations:

Promote Holistic Reporting Standards: Encourage financial institutions to publish impact reports that go beyond profitability and incorporate social, environmental, and governance metrics. Linking lending decisions and risk assessments to broader societal outcomes can drive systemic change.
Support National Statistical Reforms: Partner with governments to expand the capacity of national statistics agencies, enabling the collection and analysis of multidimensional data—from income inequality to environmental degradation.
Champion Regional Benchmarking Tools: Collaborate with Arab League entities, sovereign wealth funds, and development banks to create region-specific progress indices that reflect the unique priorities and challenges of Arab societies.

Recalibrating our understanding of economic success is no longer a matter of academic preference. It is an imperative. The costs of our GDP obsession—social fragmentation, democratic erosion, and ecological damage—are already evident. The time has come to redefine prosperity on terms that reflect the full complexity of our societies and the future we wish to build.