Connect with us

Middle East

Gulf states signal investment review as Iran conflict strains budgets

Published

on

The economic fallout from the US-Israeli campaign against Iran is placing severe strain on the budgets of Gulf nations.

The region’s leading economies have initiated a review of their overseas investment commitments and contractual obligations to mitigate the escalating financial burden.

As stated to the Financial Times, a Gulf official indicated that the scope of this review is broad, encompassing everything from capital commitments to foreign states and corporations to sports sponsorships, service contracts, and asset divestitures.

The official noted that Saudi Arabia, the United Arab Emirates, Kuwait, and Qatar are collectively assessing the pressure on their national budgets and economies, though they declined to name specific participants in the talks.

“A number of Gulf nations have launched internal assessments to determine whether force majeure clauses can be invoked in existing contracts. Simultaneously, both current and future investment commitments are under review. The objective is to alleviate some of the economic pressures anticipated from the ongoing war,” the official said, adding that these measures will gain further significance if the war—and its associated expenditures—continues at the current intensity.

Energy revenues slump as defense spending surges

According to the official, these preemptive measures are a direct response to mounting budgetary strain.

Fiscal balances in the Gulf are being tested by a combination of declining energy revenues—driven by slowing production and logistical disruptions—as well as downturns in the tourism and aviation sectors, compounded by a sharp rise in defense spending.

A separate official, serving as an advisor to a Gulf government, indicated that the prospect of these wealthy nations reviewing their investments has drawn the attention of the White House.

Saudi Arabia, the United Arab Emirates, and Qatar manage among the largest and most active sovereign wealth funds globally. Following a visit to the region by US President Donald Trump last year, these nations had pledged hundreds of billions of dollars in investment into the US.

Gulf states are also major financiers of global sporting events. Domestically, these nations have been executing large-scale investments to diversify their economies and accelerate development.

Investment shifts may increase pressure on Washington

Moves that could impact investments in the US or other Western nations are viewed as a potential lever to increase pressure on President Trump to seek a diplomatic resolution to end the war.

The oil-rich Gulf nations are indirectly involved in the war initiated by the US and Israel against Iran. In response, the Tehran administration has struck back hard against Washington’s regional allies.

Following the outbreak of hostilities, maritime traffic through the Strait of Hormuz—the conduit for approximately 20% of global oil and natural gas shipments—has largely ceased. At least 10 oil tankers have been reported attacked in the Gulf.

Qatar, the world’s second-largest producer of liquefied natural gas (LNG), was forced to declare force majeure this week after suspending production following a drone strike on its primary LNG facility. One of Saudi Arabia’s largest oil refineries was also targeted.

Infrastructure and diplomatic sites struck in the Gulf

Iran has also targeted US military bases and embassies in the region, in addition to airports, hotels, and residential buildings, causing significant disruption to air traffic and tourism.

Before the war began, Gulf nations had urged the Trump administration to avoid striking Iran and to seek a diplomatic solution. However, these nations have borne the brunt of Iran’s retaliation.

Khalaf Al Habtoor, a prominent business leader in the United Arab Emirates, expressed the growing frustration in the region via social media in a direct address to President Trump:

“A direct question: Who gave you the authority to drag our region into a war with Iran? On what basis did you make this dangerous decision? Before pulling the trigger, did you calculate the consequences?”

Al Habtoor recalled that Gulf nations have been cited as primary financiers for President Trump’s plan for the reconstruction of Gaza and were expected to support broader initiatives dubbed the “Peace Committee.”

Noting that Gulf nations have contributed billions of dollars to support stability and development, Al Habtoor added, “Today, these nations have the right to ask: Where did this money go? Are we financing peace initiatives, or a war that puts us in danger?”

These developments may have significant consequences not only for the economy but also for the regional security architecture. Reports are mounting that the bond of trust between Washington and the Gulf states has been weakened by the war.

An analysis published in Foreign Policy suggests that Iran’s attacks could fundamentally fracture the security relationship between the US and the Gulf.

FP: “The US could lose the Gulf”

In an analysis titled “The US Could Lose the Gulf,” authored by George Washington University professor Marc Lynch, it is argued that Iran’s attacks on Gulf nations could radically alter regional security dynamics.

According to the analysis, Iran’s targeting of the United Arab Emirates, Bahrain, and other Gulf states has effectively ended the diplomatic rapprochement between Saudi Arabia and Iran established in recent years.

The analysis states that Iran’s strategy is not limited to military retaliation; it is also designed to create regional and global economic pressure by exposing the vulnerability of Gulf states.

According to Lynch, Tehran aims to exhaust Gulf and US air defense systems with low-cost drones and missiles, while simultaneously seeking to create severe volatility in global energy markets by exerting pressure on the Strait of Hormuz.

Another point highlighted in the analysis is the erosion of Gulf confidence in the US. While the regional security architecture has long relied on security guarantees provided by Washington against Iran, the recent attacks have severely shaken this premise.

According to Lynch, Gulf administrations hold the view that the war initiated by the US and Israel against Iran was launched without adequate consultation, despite the fact that it directly impacts their national interests.

The failure of the US to provide effective protection against Iran’s attacks on oil facilities, ports, and energy infrastructure has deepened the loss of trust in the region. The analysis also draws attention to concerns that Gulf nations are rapidly depleting their stocks of interceptor missiles, with the US unable to replenish this capacity in the short term.

This situation has led to the US military presence—long viewed as a security guarantee—being regarded in some Gulf capitals as a source of potential risk rather than a security asset.

According to the analysis, Iran’s attacks have severely eroded the belief among Gulf states that Washington will protect them during regional crises.

Middle East

Iran resumes ballistic missile assembly using stockpiled parts

Published

on

Iran has resumed ballistic missile production in underground facilities, despite statements by Israeli and US authorities asserting that this capacity had been completely eliminated.

According to a report by The Wall Street Journal citing US and Middle Eastern officials, the Tehran administration is utilizing pre-stockpiled components in the manufacturing process.

Officials report that despite strikes on missile sites and industrial installations at the beginning of the war, Iran continues the assembly of both solid- and liquid-fuelled missiles.

Intelligence data indicates activity at numerous underground centres, including the Khojir complex in the southeast of the country, along with efforts to establish additional underground assembly points to protect against new air strikes.

Current assembly operations are being maintained at lower volumes compared with pre-war levels, as US and Israeli operations destroyed several facilities and a naval blockade has impeded the import of components and solid-fuel ingredients.

Assessing the process, Tal Inbar, a senior analyst at the US-based Missile Defense Advocacy Alliance, stressed that damaged infrastructure can be repaired during periods when facilities are not targeted, and parts procured from other countries can be stored there.

Inbar noted that it would be naive to believe Iran is not rebuilding its missile production capacity.

Arguing that the facilities were destroyed and Tehran has suffered severe losses, the official stated that Iran remains weaker than ever before, and US President Donald Trump will never permit the country to acquire nuclear weapons.

Pentagon spokesman Sean Parnell stated that the US has destroyed up to 90% of Iran’s drone, ballistic missile, and naval industrial infrastructure, severely degrading Tehran’s ability to launch missiles and unmanned aerial vehicles.

Another US government official pointed out that the Tehran administration may have revived production, albeit on a low scale, following preliminary talks conducted in mid-June with the Trump administration regarding the opening of the Strait of Hormuz and ending the war. The official noted that existing stockpiles are sufficient to assemble at least two hundred missiles.

A CNN report in late May indicated that the Tehran administration was attempting to reopen underground missile shelters, struck by the US and Israel with costly munitions, using bulldozers and dump trucks.

Excavation activities accelerated after the April ceasefire decision; out of 69 tunnel entrances struck across 18 distinct locations, 50 have been made accessible again.

Experts stressed that it is impossible to destroy missile power solely by bombing tunnel entrances, underlining the limitations of such bombardments.

US Secretary of War Pete Hegseth claimed in April that they had effectively ended Iran’s missile programme. However, an NBC News report noted that Tehran utilized the ceasefire period to reconstitute its military strength.

Continue Reading

Middle East

Mohammed bin Salman urges Trump to strike Houthis after Mokha falls

Published

on

Saudi Crown Prince Mohammed bin Salman has requested that US President Donald Trump launch air strikes against the Houthis in Yemen.

According to two US officials who spoke to Axios, Trump rejected the request, and US officials emphasised that the administration has no plans for direct intervention against the Houthis for now.

Oil prices surged on Thursday after the resistance led by Houthi militias (Ansarallah) seized the strategic coastal city of Mokha in Yemen.

This development brought the Yemeni resistance one step closer to the Bab el-Mandeb Strait, which is vital for global trade and Saudi oil exports.

With Iran already disrupting traffic in the Strait of Hormuz, Houthi control over Bab el-Mandeb could provide Tehran with powerful new leverage over the US and its Gulf allies.

On Thursday, as Houthi forces advanced towards the coastal city of Mokha and Saudi-backed Yemeni forces retreated, bin Salman telephoned Trump to brief him on the deteriorating situation.

A few hours later, the prince called again to request that Trump carry out US air strikes against the Houthis.

Trump declined, but a US official stated that the administration would provide Saudi Arabia with intelligence and targeting data on the Houthis.

The official noted that approximately 200 US military personnel are currently stationed in Saudi Arabia, providing non-military support.

A senior Trump administration official indicated that Washington’s priority is keeping the Red Sea open, while leaving the broader fight to regional partners.

“We are in continuous dialogue with Saudi Arabia and the Government of the Republic of Yemen regarding regional stability,” the official said.

The official continued:

“The US remains focused on protecting our core national security interests, such as ensuring freedom of navigation in the Red Sea, while empowering our regional partners to take the lead in managing and resolving regional security challenges.”

The US is concerned by the rapidly escalating conflict in Yemen and is seeking to avoid direct military intervention while increasing its support for Saudi Arabia.

According to two sources familiar with the matter, Admiral Brad Cooper, Commander of US Central Command (CENTCOM), travelled to Saudi Arabia on Thursday for urgent coordination meetings.

The conflict between Saudi Arabia and Yemeni resistance forces reignited in July after Riyadh blocked an Iranian aircraft carrying senior Houthi officials from landing in Sanaa following their return from Ali Khamenei’s funeral.

Bin Salman requested Trump’s political support to strike Sanaa airport, but made clear that Saudi Arabia did not require US military assistance. Trump granted his support.

The Houthis subsequently retaliated by attacking Saudi tankers in the Red Sea. These strikes threatened a route crucial to the kingdom’s oil exports, and the group later expanded its attacks to Saudi energy facilities.

Saudi Arabia and its Yemeni allies responded with air strikes and ground operations against Houthi positions.

Saudi Arabia’s request for direct US military intervention marks a sharp reversal from July, when Riyadh informed Washington that it could manage the Houthis on its own.

As clashes intensified, the Saudis began seeking progressively greater support from the US.

Sources close to the discussions noted that in recent weeks, US military and civilian officials informed their Saudi counterparts that Trump’s directive is to keep American forces focused on Iran and the Strait of Hormuz, and to avoid opening a new front.

Continue Reading

Middle East

Netanyahu ignored MBZ warning on Hamas 7 October plan, report says

Published

on

Israeli Prime Minister Benjamin Netanyahu reportedly ignored a direct warning from UAE President Sheikh Mohamed bin Zayed Al Nahyan in the run-up to 7 October 2023, according to an investigation by the Israeli newspaper Haaretz.

The report states that the UAE leader, widely known as MBZ, was convinced in September 2023 that an explosion was imminent in the region, particularly given the escalating tensions in the West Bank.

Israeli President Isaac Herzog, who maintains close ties with bin Zayed, recounted: “In the months leading up to the war, he spoke with me about this issue frequently. He consistently conveyed the message that the situation needed to be de-escalated. He even dispatched a special envoy to Israel who met with the prime minister. The emir appeared to sense that the region was on the verge of erupting.”

MBZ also engaged in direct discussions with Netanyahu. These exchanges followed a standard operational protocol: a representative from the United Arab Emirates embassy would arrive at the prime minister’s office equipped with a specialised, secure telephone device to ensure confidentiality.

However, according to the newspaper, the call initiated by bin Zayed on this occasion was extraordinary in nature.

A week and a half before 7 October 2023, the UAE ruler placed a call to Netanyahu from the Presidential Palace in Abu Dhabi, and the two leaders spoke for 45 minutes.

During this conversation, bin Zayed warned that Yahya Sinwar, the Hamas leader in Gaza, was planning a major operation against Israel.

Bin Zayed voiced deep concern that such an event would not only lead to significant bloodshed, but would also destabilise the entire region and undermine the Abraham Accords.

Haaretz reported that three senior foreign sources possess direct knowledge of the call’s contents, marking the first public disclosure of the conversation’s existence.

A close Palestinian adviser to bin Zayed, who had emigrated from Gaza to Abu Dhabi years earlier and maintained extensive connections across the Gaza Strip, was also present during the exchange.

According to the adviser, the UAE ruler stressed to Netanyahu that Israel needed to prepare for this specific threat.

The adviser stated:

“The emir explained that, according to his assessment, Sinwar was preparing for a major event. He told Netanyahu that Israel had to be prepared. At the same time, he proposed working towards an economic solution for the Gaza Strip to prevent escalation, alongside calming the situation in the West Bank.”

Bin Zayed urged Netanyahu to take the matter seriously. Yet, to the emir’s surprise, the prime minister reacted with relative calm.

Netanyahu told bin Zayed that, in his own assessment, Hamas was planning to operate in the West Bank area. Reassuring the Emirati leader, Netanyahu insisted that Israel was prepared for any scenario.

The UAE leader later recounted his conversation with Netanyahu and his subsequent warning to CIA Director William J. Burns.

Bin Zayed shared with Burns the intuitive alarm he had sought to convey to Netanyahu—that “something over there is about to blow”—and noted the Israeli prime minister’s conviction that the unstable theatre was in fact the West Bank.

“The emir hoped that, despite Netanyahu’s reserved reaction, he would take the message seriously and take action,” the adviser said.

However, neither anticipated that the prime minister would hear the warning without briefing the heads of his defence and security establishments: neither the director of the Shin Bet, nor the director of the Mossad, nor the chief of staff of the Israel Defence Forces was informed of MBZ’s warning.

Haaretz noted that Gaza-related negotiations between Israel and Hamas had been proceeding smoothly in early 2023, providing the context in which the Emirati ruler’s concerns emerged.

The report received swift corroboration from the Israeli political opposition. Former prime minister and leader of the B’Yachad party, Naftali Bennett, stated that he knew the warning issued by UAE leader Mohamed bin Zayed to Netanyahu concerning Hamas’s plans prior to 7 October was genuine.

Speaking to 103FM, Bennett said: “I am telling you: I know this to be true.”

Bennett continued:

“Mohamed bin Zayed of the UAE warned Netanyahu that Sinwar was planning an operation. The head of the Egyptian General Intelligence Directorate, Abbas Kamel, also notified Netanyahu a few days before the massacre that a major operation was being planned. I do not wish to discuss my sources with anyone. I am telling you: I know this fact to be true.”

Contending that Netanyahu had led Israel “blindly into this horrific disaster,” the opposition figure asserted: “He was so deeply captive to the conception that Hamas was an asset that, despite receiving explicit warnings, he did nothing.”

Bennett maintained that Netanyahu bears direct responsibility for 7 October, not merely by virtue of being prime minister, but because “he spent 15 years strengthening Hamas and doing nothing.”

Continue Reading

MOST READ

Turkey