Middle East
Gulf sovereign wealth funds maintain $25 billion investment pace despite regional conflict
Gulf sovereign wealth funds maintained their investment momentum during the first quarter, despite nearly a third of the period coinciding with active conflict in the region.
Data from the consultancy Global SWF, first reported by Semafor, indicates that the Saudi Public Investment Fund (PIF), Abu Dhabi-based Mubadala, and the Qatar Investment Authority (QIA) deployed a combined total of approximately $25 billion in new capital during the quarter. Absent the outbreak of hostilities, this trajectory suggested a record-breaking year for state-owned investors.
This resilience reflects the extraordinary scale of Gulf capital. The primary funds in Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) currently hold an aggregate value of $5 trillion, a figure projected to climb to approximately $18 trillion by 2050.
Diego López, founder and managing director of Global SWF, noted that a prolonged conflict would likely dampen the pace of overseas investment. Regarding future developments, he suggested that strategies implemented during the COVID-19 pandemic could serve as a roadmap.
López observed that certain entities, such as the Abu Dhabi Investment Authority (ADIA) and the Kuwait Investment Authority (KIA), could be utilized to bolster public budgets, potentially slowing allocations to private markets. Other funds may pivot to support conflict-affected sectors like aviation or provide financing for domestic defense enterprises, including EDGE in the UAE, SAMI and SAFE in Saudi Arabia, and Barzan in Qatar. Both strategies would reduce the capital available for international ventures while supporting domestic economic diversification plans.
The ultimate destination of Gulf capital remains a central question for government officials and investors meeting in Washington this week for the World Bank and IMF spring meetings. Beyond immediate energy supply concerns, the core issue is whether energy disruptions stemming from the conflict with Iran—which are already weighing on the global economy—will prompt a shift in sovereign fund priorities and how that would reverberate globally.
For now, operations continue “business as usual,” a stance reiterated by numerous Gulf officials and supported by Global SWF data. The long-term outlook depends on the resolution of the conflict. Should hostilities cease within months and trade flows normalize, Gulf states would likely see renewed budget surpluses, returning them to their perennial challenge: where to allocate the capital.
While it may be fashionable to suggest these funds might curtail investments to signal displeasure with the US—the nation that initiated the conflict—the reality is more pragmatic. Gulf investors are unlikely to divert tens of billions of dollars to non-US competitors of OpenAI or Anthropic for the simple reason that such alternatives do not exist. The depth of US public and private markets, combined with its technological lead and entrenched ties in defense, energy, and finance, makes a rapid strategic pivot improbable.
Although a general slowdown in capital flows would not be unexpected, some funds may accelerate deployment to acquire distressed assets. “We may see funds… acting opportunistically to identify attractively priced opportunities in specific geographies and segments,” López said, noting that the Saudi PIF followed this pattern during the pandemic. He added that Mubadala is also well-positioned to capitalize on market imbalances.
Unlike previous crises triggered by low oil prices or global credit crunches, the current shock involves a direct threat to the region. With Iran effectively closing the Strait of Hormuz, a significant portion of oil-derived wealth is effectively stranded. The World Bank forecasts that growth in the Gulf will slow to 1.3% this year, down from 4.4% in 2025, while regional officials estimate tourism losses could reach $32 billion. The economies of Kuwait and Qatar are expected to contract by more than 5%, according to the World Bank.
Despite these pressures, sovereign wealth deals continue to follow pre-war patterns. According to Global SWF, nearly 60% of Gulf overseas investment over the last five years has targeted financial services, infrastructure, and technology, with the US share of that total steadily increasing. Recent transactions involving OpenAI, Anthropic, Electronic Arts, and Paramount Global indicate that Gulf investors are not retreating from previous commitments.
Private equity deployment also remains active. Last month, entities linked to Abu Dhabi Crown Prince Sheikh Tahnoun bin Zayed Al Nahyan participated in a funding round for the $10 billion fitness wearable startup Whoop and agreed to acquire Oklahoma-based Traverse Midstream Partners for $2.25 billion. Additionally, last week, another Sheikh Tahnoun-led firm acquired a majority stake in a UK-based hospitality group—valued at over $1.3 billion—which includes The Ivy restaurant chain and the private members’ club Annabel’s.
Gulf economies are undeniably under strain, requiring government adjustments. Allocation decisions may take longer as defense, incentives, and reconstruction take priority. However, while the war may disrupt the pace of investment, the deal flow during the conflict suggests that the region’s wealth is now too deeply integrated into the world’s largest economies to be easily halted.
Middle East
US waives human rights terms on $320m military aid to Egypt
The US State Department stated that it has waived human rights conditions on more than $300 million in military aid to Egypt.
The statement emphasised that this decision was taken in consideration of Cairo’s “helpful role” since the outbreak of the war against Iran.
Egypt began receiving substantial support from the US after signing a peace treaty with Israel in 1979.
Since the late 1980s, the country has received approximately $1.3 billion annually in US military assistance.
A portion of this aid is subject to conditions related to human rights and democracy, which can be waived on national security grounds.
Withholding funds, including during the administration of former US President Joe Biden, has caused tension between Cairo and Washington in the past.
A letter dated 21 September and addressed to various congressional committees, obtained by Reuters, stated that Secretary of State Marco Rubio “decided to waive the certification requirement under the fiscal year 2025 Foreign Military Financing programme for Egypt of $320 million.”
This waiver was subsequently confirmed by the State Department.
An accompanying memorandum justifying the decision stated that this portion of military aid was “essential for counterterrorism, border security, or non-proliferation programmes, or otherwise important to the national security interests of the United States.”
The memorandum, dated 4 September and bearing Rubio’s signature, stated: “Exercising this waiver authority is critical to the US-Egypt relationship and to US national security priorities, particularly given the helpful role Egypt has played in the aftermath of Operation Epic Fury.”
“Operation Epic Fury” is the designation used by the US military for the campaign launched jointly with Israel against Iran in late February.
The State Department memorandum, whose authenticity was confirmed by two sources in Washington familiar with the letter, did not provide detailed information regarding what was termed Egypt’s “helpful role”.
The State Department’s annual decision on military aid to Egypt typically covers funds allocated for the preceding fiscal year, which ends on 30 September.
A State Department spokesperson stated that Rubio waived the certification in the interest of US national security and that the US continues to cooperate with the Egyptian government across a range of issues.
In an emailed statement, the spokesperson said: “This waiver recognizes the importance of maintaining security cooperation with Egypt at a time of significant security challenges in the region.”
The Egyptian Ministry of Foreign Affairs did not immediately comment on the matter.
The spillover effects of the Iran war have imposed a heavy toll on US security partners, including Egypt.
Owing to rising fuel prices and other disruptions, the Egyptian economy is passing through a difficult period.
Under the Biden administration, the US withheld portions of the annual military allocation on multiple occasions over Egypt’s human rights record.
In 2024, following the Hamas-led 7 October attack on Israel and the subsequent war in Gaza, the Biden administration set aside human rights conditions, disbursing the entire $1.3 billion allocation to Egypt for the first time in its tenure.
Human rights organisations have long accused Egypt, under the administration of President Abdel Fattah al-Sisi, of widespread human rights abuses, including torture and enforced disappearances.
This week, Egyptian police detained six journalists from a fact-checking and investigative media outlet, accusing them of spreading false information on behalf of the banned Muslim Brotherhood.
Egyptian authorities state that they have taken steps to address human rights issues. Sisi said stability is paramount and that the government supports human rights by working to provide for basic needs.
Middle East
Britain expands curbs on arms exports to Israel over Gaza risks
Britain has significantly broadened its military export restrictions targeting Israel, suspending or rejecting more than 80 licences for items the IDF could use in Gaza.
This figure is nearly triple the number affected when the policy was first introduced in September 2024.
United Kingdom Minister of State for the Middle East Stephen Doughty said that as part of what he described as a “tighter system” for assessing exports to Israel, more than 50 further export applications have been refused since approximately 30 licences were initially suspended.
Under the initial decision taken in September 2024, 30 of roughly 350 licences were suspended after the British government concluded there was a “clear risk” that certain military exports could be used to commit or facilitate serious violations of international humanitarian law in Gaza.
The affected equipment included components for military aircraft, drones, naval systems, and targeting gear.
Doughty said additional measures adopted this month established what he termed a “double safeguard” mechanism within the approvals process.
Export applications must now be assessed both against existing international humanitarian law criteria and in light of Britain’s position on the legality of Israel’s presence in the Palestinian territories.
“We have so far suspended or refused more than 80 licences,” Doughty said, adding that he had personally examined each licence.
Despite the wider restrictions, British-origin parts entering the international F-35 fighter jet supply chain continue to be largely exempt.
The UK government argues that preventing British-made components from entering the global F-35 pool could undermine the programme as a whole and have serious consequences for the security of the UK and its allies.
Direct exports of F-35 parts intended specifically for Israel remain suspended.
Doughty defended maintaining the supply of components via the international programme, arguing that halting it could have severe ramifications for the broader European and allied security architecture.
Foreign Affairs Committee Chair Emily Thornberry challenged this position, arguing that the issue was political rather than purely legal.
Thornberry suggested adopting an approach similar to the Dutch model, under which components entering the international supply chain could be flagged as “not intended for aircraft bound for Israel”.
The initial suspension was implemented in September 2024 by then Foreign Secretary David Lammy.
Lammy stressed at the time that the measure did not constitute an arms embargo and applied solely to items assessed as usable in military operations in Gaza.
Since then, the policy has been tightened further under Prime Minister Andy Burnham.
The expanded export restrictions follow the Burnham government’s adoption of a more confrontational policy toward the Israeli government.
Foreign Secretary Ed Miliband drew sustained applause at the Labour Party’s annual conference in Liverpool after delivering a sharp critique of the Netanyahu government’s policies and defending the decision to ban trade with Israeli settlements in the West Bank.
Accusing Israel of committing war crimes in Gaza, Miliband stated that the British government heard public outrage over the conflict, telling delegates: “We hear you. You were right.”
Middle East
Netanyahu holds secret UAE talks with Saudi Arabia and Arab officials
Israeli Prime Minister Benjamin Netanyahu met with representatives of Gulf and Arab nations that lack diplomatic ties with Israel, including Saudi Arabia, during his weekend visit to the United Arab Emirates.
Sources close to the gathering told the Israeli newspaper Yedioth Ahronoth on Monday that representatives from Morocco, Libya, Jordan, and Qatar also took part in the meeting.
Netanyahu made a unannounced visit to Abu Dhabi on Sunday, where he met with the country’s leader, Mohammed bin Zayed Al Nahyan.
According to Israeli media, this marked the first time the United Arab Emirates officially confirmed a visit by Netanyahu.
The meeting was arranged by Mossad Director Roman Goffman “at the request of Saudi Arabia, which asked for Israel’s assistance against Houthi attacks in the Red Sea region,” according to Yedioth Ahronoth.
The discussions addressed Iran and the Houthi militia. The newspaper added that the Arab states heard from Israel that “Israel is prepared to assist countries in the region with air defence systems, just as it aided the UAE during the conflict with Iran.”
Conflict in Yemen intensified in September when Ansarullah militiamen launched a rapid offensive that seized Yemen’s entire Red Sea coastline, including the vital maritime corridor of the Bab el-Mandeb Strait.
The Yemeni resistance also imposed a blockade on Saudi Arabia’s energy exports and staged multiple attacks against the kingdom.
Saudi Arabia reportedly sought military assistance from the US to counter Ansarullah.
Washington declined to attack the Houthis directly, but announced that it would provide intelligence and targeting support.
Reporting on the same visit, The Jerusalem Post said Netanyahu spent six hours in the UAE and that the principal subject of his discussions with MBZ was Iran.
Citing sources familiar with the matter, the newspaper added that the trip came “after Netanyahu exerted heavy pressure on the United Arab Emirates to arrange a meeting ahead of the Israeli elections on 27 October.”
Separately, the Associated Press, citing a person with direct knowledge of the meeting, reported that Netanyahu’s visit to the UAE was arranged in part to ask MBZ to deny reports that he had warned the Israeli prime minister of an impending Hamas threat prior to 7 October 2023.
According to Israeli media, Netanyahu’s office denied the AP report, issuing the following statement:
“Fake news. The visit focused solely on strengthening ties between the two countries and on regional issues.”
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