Gulf Railway

Introduction

The Gulf Railway (a.k.a. the GCC Railway) is a planned 2,177 KM-long railway system to connect the six Gulf Cooperation Council (GCC) member states. The project aims to facilitate the free movement of goods and passengers within the Eastern Arabian region.

The proposed railway line will begin from Kuwait City and extend towards Dammam in Saudi Arabia, where it will bifurcate into three lines – one to Manama in Bahrain (through the proposed King Hamad Causeway), another to Doha in Qatar (via Salwa Port) and the third to Abu-Dhabi and Al-Ain in the UAE and Muscat in Oman (through Sohar).

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The estimated cost of the project is US$250 billion. All six GCC member states are responsible for developing the length of the rail network falling within its territory and bearing the proportionate project cost.

Diesel-powered locomotives have been proposed as the mode of transportation across the tracks. The speed of passenger trains is slated to be approximately 220 km per hour, while the speed of freight trains is slated to be restricted between 80 to 120 km per hour. The expected daily carrying capacity of the trains at the start of the line's operation is 12,000 passengers and 250,000 containers.

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A History of Roadblocks and S-train-ed Relationships

The GCC member states approved the project at the 30th GCC summit held in Kuwait City in December 2009. At that time, Saudi Arabia was the only GCC member country with a railway infrastructure. The original completion deadline of the project was set as 2018.

In mid-2015, Qatar floated tenders for its portion of the project but later put it on hold. In November 2015, Saudi Railways Organization informed that the line implementation had begun in Oman and UAE, and would begin in Saudi Arabia before the end of the year. In January 2016, Etihad Rail suspended the tender for the UAE’s portion, justifying its stance through an official statement that it was waiting for other GCC countries to begin construction. In March 2016, Qatar Rail reiterated the same sentiment.? In April 2016, a meeting of GCC transport ministers was held in Riyadh, where it was mutually decided to postpone the deadline from 2018 to 2021. In May 2016, Oman also followed suit with other GCC members by putting the project on hold and focusing on constructing its domestic rail network. Bahrain also joined the bandwagon and postponed the construction of its portion linking with Saudi Arabia until 2023, and linking with Kuwait thereafter.

The major challenges faced in the implementation of the project over the last 14 years have been summarized below:

1)???? Economic downturn emanating from low oil prices, COVID-19 pandemic, and rising debt of GCC governments: Since 2014, low crude prices and demand have destabilized Gulf economies, delayed investments, and cut capital expenditures in megaprojects. The economic crisis was further exacerbated by the COVID-19 pandemic, which disrupted the entire system including the supply chain. The average Brent oil price per barrel fell from $106 in January 2014 to a record low of $19 in April 2020. The combined effect was a regional GDP contraction of 4.8% in 2020. The sustained vicissitude raised the fiscal deficits and debt levels of GCC governments to unprecedented highs, reaching a peak of $42.1 billion in international debt in 2020, as per data from Capital Economics.

2)???? The blockade of Qatar: In June 2017, Saudi Arabia, UAE, Bahrain and Egypt imposed a blockade on Qatar, accusing it of trespassing, backing Islamist radicals and Iran, and promoting terrorism. All these countries severed diplomatic and economic ties with Qatar and enforced a slew of diplomatic actions like the closing of borders, restrictions of airspaces and ports, repatriation, restrictions on trade and food imports, media ban, etc.

3)???? Lack of trust and political cooperation: Since each member state is responsible for developing its section of the line, mutual trust and sharing of responsibilities are central themes to the project’s success. However, due to a history of political tensions and breach of trust among the nations, instead of doing their bit, the member states have waited for other members to complete their portions first, virtually bringing the entire network to an indefinite halt.

4)???? Nationalistic policies: The GCC is not economically integrated. More often than not, the states act independently and pursue their own policies, creating competing economic agendas. When it came to putting in mutual cooperation to ensure the holistic development of the entire GCC region, the member countries followed a “you before me” approach. However, when it came to building their domestic rail networks, the members indulged in a “me before you” policy in the interests of their respective nations, and preferred the development of local networks over GCC Rail.

5)???? Financial, technical, and legal issues: The network development is uneven across the GCC. Not all states have a spare government budget to spend consistently on infrastructure. The capabilities of each GCC state to deliver its section also vary greatly, and some have poor records of delivery. In Bahrain, the long-proposed King Hamad Causeway is still in the feasibility stage since its ideation in 2014, and everything remains on hold. Kuwait has tried for more than a decade to procure a wide range of infrastructure projects under the PPP mode, but most have yet to materialize. The GCC Rail project itself has encountered issues in the acquisition of property and avoidance of conflict with oil facilities along the proposed route. The GCC railway also faces a spate of technical challenges due to the region's difficult terrain and weather conditions. Train wheels are susceptible to deterioration up to ten times, and all parts of the network are threatened by rapid erosion due to sandstorms.

6)???? Other concerns: Several miscellaneous problems have also impacted the project, like visa issues for non-GCC nationals, illegal migration, smuggling, etc.

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Potential Benefits

Despite the multiple challenges faced by the project since its ideation, the GCC member states have persevered with the project due to a plethora of perceived advantages it promises to bring in. The following is an illustrative list of the benefits envisaged from the project:

1)???? Strengthened regional connectivity and communication: The project will provide a significant impetus to regional connectivity and cooperation amongst the GCC states and enhance joint sustainability efforts.? ?

2)???? Savings in costs and time: The network will reduce the duration and related costs of travel and thus emerge as a cheaper alternative for the transportation of goods and people simultaneously. It will also help in ebbing the traffic on the road.

3)???? Positive environmental impact: According to an estimate by Etihad Rail, rail transportation cuts carbon dioxide emissions by 70 to 80% as compared to trucking. The project would thus also reduce the GCC’s carbon footprint.

4)???? Trade boom and economic harmonization: The line will ameliorate intra-GCC trade exchange and proffer further opportunities to attract foreign investment.

5)???? Economic diversification: Improved transport connectivity will also boost other sectors like tourism and entertainment in all the countries in the region and promote economic diversification, thereby leading to reduced dependency on oil.

6)???? Increased job opportunities: The Federation of the GCC Chambers of Commerce and Industry has estimated that the project is expected to create over 80,000 direct and indirect jobs in the GCC region.

7)???? Revitalization of delayed local railway plans: While Saudi Arabia, UAE and Qatar have developed other railway networks in isolation from the GCC Railway, other GCC member states like Oman and Kuwait have been facing several delays and suspensions in their respective local railway development projects. Development of the GCC Railway project can breathe a new lease of life into all such delayed local railway plans.

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Regained track-tion: All Aboard

At the 37th GCC summit held in Bahrain in December 2016, the GCC Supreme Council emphasized the need for the members to remain committed to the project, and decided to send the draft project to the Economic and Development Affairs Commission to ensure timely implementation.

In February 2017, the UAE's Federal Transport Authority stated that out of the total value of the proposed rail project of over $240 billion, projects worth $69 billion were already under construction. At the Middle East Rail 2017 conference held in Dubai in March 2017, Saudi Arabia's Public Transport Authority announced that the GCC had initiated a feasibility study to establish the GCC regional rail authority.

In April 2017, the Federation of GCC Chambers stated that Saudi Arabia, UAE, and Oman had made considerable progress, and Bahrain had appointed an international company to execute the project. However, the portion in Kuwait was delayed by infrastructural and technical issues, and would begin only in 2018 and be complete by 2020. Subsequently, Kuwait began construction of its portion connecting with the Saudi border in August 2018.

In November 2018, the UAE section of the project received a further boost when the Abu Dhabi Department of Finance and the UAE Ministry of Finance signed an agreement for funding Phase 2 of the country's rail network.

Economically, the GCC region has witnessed a significant improvement since 2021 as a result of rising oil prices and a positive global economic outlook. The average Brent oil price per barrel recovered to $123 in June 2022 before tumbling down to $83 in December 2022. The current prices are still more than 300% up from the excruciating lows of 2020. As per the estimate by the Economic Intelligence Unit, the average Brent oil price per barrel is expected to average around $80 until 2025.

At the 41st GCC summit held in Al-Ula, Saudi Arabia in January 2021, the leaders of the GCC signed the Al-Ula declaration, a “solidarity and stability” agreement toward ending the diplomatic rift and restoring ties with Qatar.

At the 42nd GCC summit held in Riyadh in December 2021, the rapprochement between Qatar and formerly boycotting states was further consolidated. Moreover, the leaders of the six states approved the creation of the GCC Railways Authority to oversee and manage the implementation of the region’s railway network.

At the Middle East Rail 2022 exhibition and conference held in Abu Dhabi in May 2022, Etihad Rail announced that it had completed 75% of the second phase of the national rail network.

In July 2022, Systra was selected to conduct a feasibility study on the proposed 550 km high-speed rail line between Riyadh and Doha.

In September 2022, Oman and UAE signed an agreement for cooperation between Oman Railways and Etihad Rail to establish a joint company (Oman and Etihad Rail Company) to construct and operate a 303km railway network linking Sohar Port in Oman with the UAE national railway network.

In October 2022, the General Secretariat of the GCC stated that Saudi Arabia had completed nearly 200 kilometers of its segment, the UAE had completed the implementation of its fragment up to borders with Saudi Arabia, and other members were completing their requirements to implement the project.

At the 43rd GCC summit held in Riyadh in December 2022, the Supreme Council reviewed the developments of the joint GCC action and directed to complete the requirements of the railway project per the previous Council resolutions.

In January 2023, Kuwait tendered a consultancy contract for study, detailed design and preparation of documents for the first phase of the Kuwait National Rail Road project, including the Gulf track.

In February 2023, the Prime Minister of the UAE announced the completion of the 1,200 km-long UAE National Railway Network. The Oman and Etihad Rail Company, also inked a strategic agreement with Mubadala Investment Company, a sovereign investor in Abu Dhabi, to support its development of the railway network between Oman and the UAE.

In March 2023, the Oman Ministry of Transport, Communications and Information Technology (MTCIT) confirmed that Oman and Saudi Arabia were studying prospects for the construction of a railway line to link Duqm to Riyad through the border crossing in Ibri.

During the Middle East Rail Conference held in Abu Dhabi in May 2023, the GCC Secretary-General reaffirmed that the six GCC member states were going ahead with efforts to complete the project.

In May 2023, Saudi Arabia discussed a draft agreement with Kuwait and appointed France’s Systra to complete the feasibility study regarding a high-speed rail link connecting the two countries.

In July 2023, Bahrain's Ministry of Transportation and Telecommunications and GCC Rail Authority discussed the railway connecting Saudi Arabia and Bahrain across the proposed King Hamad Causeway.

In September 2023, during the 2023 G20 New Delhi summit, the governments of India, UAE, Saudi Arabia, USA, France, Germany, Italy, and the European Union signed an MoU to develop the India-Middle East-Europe Economic Corridor (IMEC). The corridor is expected to further integrate rail links between the UAE and Saudi Arabia.

In November 2023, the 25th meeting of the Committee of GCC Ministers of Transport and Communications held in Oman established December 2030 as the target operational launch date for the ambitious project. The Committee also ratified the 2024 budget and approved three bylaws for the GCC Railway Authority.

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The Way Ahead

As things have started to get back on track after a start-stop journey, the world will wait with bated breath and hope that the megaproject will finally be able to see the light at the end of the tunnel. In the distant future, there are even more ambitious plans to expand the project beyond the GCC region and make it a hub to link East and West.