Latin America and the Middle East Gulf: building a strategic alliance in a multipolar world
Argia Partners founders Manuel Balmaseda, Ángel Melguizo, and Víctor Muñoz are renowned economists and policy strategists. You are guiding governments and private sector leaders through the complex transition toward sustainable and technology-driven economies.
In this policy brief they explore the potential of an enhanced economic and financial relation Latin America- Middle East. Could you elaborate on why you believe these two regions specifically are best positioned to form such an alliance? Why this paper? Why now?
In economics we know integration and diversification pay off. In this research we wanted to bring attention to the unique window of opportunity that Latin America and the Middle East Gulf currently share. On one side, Latin America offers food, energy, and critical minerals essential for global stability and the green transition. On the other, Gulf countries bring capital, technology, and a bold vision for economic diversification.
For instance, Latin America's role as a global agricultural powerhouse directly supports the Gulf’s pressing food security needs, while Gulf countries robust financial resources, technological expertise, and infrastructure can enhance productivity and sustainability across Latin America. Our analysis in trade shows Brazil and Argentinean exports of food and animal products reaching nearly 8 billion USD, and imports of more than 1 billion UDC of fertilizers to
the region (mostly Saudi Arabia), essential for agricultural productivity. The symbiotic nature of this relationship underscores its importance and strategic value for both regions.
In a rapidly shifting geopolitical landscape both regions face the urgent challenge of redefining their global role. At this pivotal moment, they are seeking like-minded partners to help shape a more balanced, sustainable, and forward-looking global order. And we wanted to flag it and put solid numbers on trade and investment of it.
Your paper discusses the potential for Latin America and the Gulf to become a “third bloc” in the global order. What concrete steps do you think governments on both sides should prioritize in the next 2–3 years to move from opportunity to implementation?
To move from opportunity to implementation, governments on both sides should prioritize three concrete steps. First, they need to establish clear institutional frameworks, such as bilateral trade and investment agreements and regulatory harmonization, to facilitate secure and efficient flows of trade and capital. Costa Rica´s Comprehensive Economic Partnership Agreement with United Arab Emirates, with entered into force in April this year, is a practice to emulate.
Second, targeted investments in joint infrastructure projects—particularly logistics hubs, ports, and renewable energy facilities—will significantly enhance trade connectivity and operationalize cooperation in strategic sectors. Third, creating dedicated financing platforms supported by sovereign wealth funds and development banks will mobilize capital specifically toward joint projects in food security, sustainable energy, and digital technologies, translating shared goals into tangible outcomes and fostering deeper, long-term integration.
The involvement of Gulf sovereign wealth funds is highlighted as crucial for fostering cooperation. What specific strategies should Latin American countries adopt to better attract and effectively leverage these investments?
Indeed, Gulf sovereign wealth funds (and also pension funds and central banks) have accumulated astonishing savings: 2.4 trillion USD in the case of UAE, 1.9 trillion USD Saudi Arabia and nearly 600 billion USD Qatar. But before Latin America starts figuring out ´how to spend those funds´, let´s recall that these funds are, primarily, a core (if not the core) financial support for Gulf countries medium-term development strategies. Good news is that Saudi Vision 2030, Qatar Vision 2030 Emirati We are UAE 2031, and Kuwait Vision 2035 all include ambitious targets for their economies to reduce the dependence from fossil fuels and advance towards renewable energies, to diversify the economies incentivizing their digital industries, and to strengthen their international role. But Latin America does not rank high enough among the priorities yet.
Latin America should make the case to be a valuable partner in their global, digital and green agenda. And, given the synergies we described in traditional, geopolitical and innovative sectors, this can be done.
Considering the ambitions laid out in the report, what policy measures would you recommend to political leaders and international development organizations to effectively implement and sustain this strategic alliance over the next decade?
To effectively implement and sustain this strategic alliance, Latin American countries should focus on the fundamentals: strengthening the rule of law, ensuring regulatory predictability, and improving the business climate. Prioritizing investment in human capital, particularly in technical and digital skills, is essential to match the needs of Gulf investors in sectors like
renewable energy, agrotech, and logistics. Clear and targeted investment incentives, along with productive development policies that foster innovation and competitiveness, can help channel capital toward strategic areas. International development organizations can support this by facilitating institutional capacity-building and blended finance mechanisms. Above all, enabling an active role for the private sector—as both a driver and partner in this alliance—will be key to
ensuring its long-term success.
You suggest that collaboration in digital technologies and innovation could significantly benefit both regions. What types of technology exchanges or joint initiatives would you see as most impactful and feasible in the short term?
Synergies between Latin America and Middle East are evident also in the most innovative sectors pushing the so-called green and digital transition.
Beyond the hype, we specifically foresee a convergence of the technology and energy agenda. New technologies, in particular AI, Internet of Things, data analytics and cloud computing are allowing technology to make cities and industries greener, favoring renewable energies – a key part in 2030s Gulf vision - thanks to advances in storage and predictability. These technologies are helping fight climate change impacts and preserve biodiversity. And AI is even making itself
greener, with lighter models, efficient cooling and computing, and even training in green datacenters.
Dubai World (DP World) has conducted 21 investment projects in the region worth more than 5.5 billion USD. Its largest investment was made in Brazil in 2023, for 2.4 billion USD in a renewable energy project, specifically green hydrogen production. There are also significant investments in the ICT and electronics sectors. Also, the Saudi investment group Abdul Latif Jameel announced greenfield investments reaching nearly 400 USD million in renewable energy
in Mexico and $200 million in Brazil.
Latin American richness in natural resources, favorable climate, and the vibrant digital ecosystem (skilled urban young population, start ups and universities) are solid foundations for developing that binomial. The region is, as CAF Development Bank put it at COP28 held in Dubai, a region of global solutions. And this holds true particularly with Guld countries.
In the context of the growing polarization between the U.S. and China, how can this Latin America–Gulf partnership avoids becoming entangled in great-power competition while still benefiting from global economic flows?
In line with Professor Quah’s vision of “third powers,” we believe the Latin America–Gulf alliance can thrive by being exemplary—focusing not on alignment with major power blocs, but on setting standards in sustainability, innovation, and inclusive growth. Rather than choosing sides, both regions can strengthen their global position through diversification of partners and deeper economic integration across sectors. This approach not only insulates them from external
shocks and geopolitical swings, but also reinforces their credibility as stable, forward-looking actors. The key to resilience lies in building pragmatic, value-driven cooperation that leverages their complementarities while staying open to global flows on their own terms. By the way, the same philosophy would apply to the relation of the region with Europe. EU- CELAC dialogues are quite promising, particularly now that the 2025 summit is confirmed and will be held in Santa Marta, Colombia in November. These strategies should consolidate and even advance global integration, at least among the coalition of the willing.
How do you see the role of Latin America regional financial organizations such as CAF Development Bank for Latin America and the Caribbean and the Inter-American Development Bank in this process?
They have been instrumental in the past, and they are indispensable in these turbulent times. Development banks DNA is to address market failures in the financial systema that private banks and markets cannot fill. In the Latin America-Middle East relation these market failures can stem from lack of mutual knowledge and trust, high risk and uncertain returns, cyclical financial stress, or even insufficient mobilized capital. CAF Development Bank, the IDB as well as the World Bank and other regional ones, in association with Gulf countries SWF would have the financial muscle, the granular knowledge –
a lot on the ground and the local level – and the political capital to fill those gaps and untap the potential. Again, good news is that the pending agenda can leverage on recent progresses such as CAF Development Bank agreements with Saudi Arabia Exim Bank, Abu Dhabi Fund for Development, and Kuwait Fund for Arab Economic Development, or, on a more global perspective the IDB agreement with the OPEC Fund.
So let´s move fast!