Responsible Statecraft has published an article examining relations between the Gulf states and the United States following the war on Iran. What did the war expose? How might these relationships change? And what will they be built upon in the future?
At Davos in January, Canadian Prime Minister Mark Carney surprised his audience by openly calling on middle powers to work together and resist pressure from major powers.
His suggestion that these states should resist pressure from both China and the United States was unusually direct for a political speech. Nevertheless, it reflected a growing consensus that middle powers will become increasingly important as the world moves towards multipolarity, particularly if they can free themselves from the dominance of major powers.
For some of the world’s most prominent middle powers, however, the war on Iran exposed the limits of their ability to influence global affairs and the difficulties they face when confronting an uncompromising superpower.
Since February, the Gulf states, among the wealthiest and most influential middle powers in the world, have been forced to confront a difficult reality: all their money, diplomatic influence and political relationships were not enough to protect them from the chaos unleashed by the American-Israeli war on Iran.
Over the past decade, the Gulf states have sought to become increasingly autonomous middle powers with significant influence over global trade and investment, while remaining deeply embedded in the United States-led security system. This creates a fundamental dilemma. Their economic model depends on stability, while their security model depends on a superpower that is increasingly inclined towards escalation.
In the months and years ahead, these states will face difficult choices. Can they prevent the conflict from returning? To what extent can they hedge against the United States as an unpredictable actor, or against the emerging threat of repeated disruption to energy flows through the Strait of Hormuz? Or will they simply have to accept that their economies and societies remain hostage to the decisions of their superpower allies?
The Gulf’s Rise as a Global Middle-Power Bloc
For at least a decade, the Gulf states have worked to modernise both their global image and their economies. They sought to move beyond memories of the Arab Spring, when they were frequently portrayed as destabilising actors, and instead present themselves as open for business. More broadly, they wanted to escape the old stereotype of the Gulf as a backward refuge for oil-dependent rentier monarchies.
The United Arab Emirates has arguably been the most successful, reinventing itself over several decades as a global transit hub and financial centre. The most prominent transformation, however, has undoubtedly taken place in Saudi Arabia, where the young and ambitious Crown Prince has attempted to combine economic reform with sweeping social changes that have fundamentally transformed the fabric of Saudi society.
As with many oil-rich states pursuing reform, Saudi Arabia has achieved considerably greater success in the social sphere than in the economic one.
At the same time, global energy flows have undergone a major transformation. Gulf oil and gas exports are increasingly flowing towards Asia rather than the West.
In response, Gulf states have engaged in a delicate balancing act familiar to anyone who has studied previous periods of great-power competition. They have sought to maintain a balance between the United States, the region’s longstanding primary security provider, and China, which has become their most important economic partner.
The growing importance of Gulf states as financial centres and investment hubs, combined with their expanding role in international mediation, has further strengthened their position on the global stage.
Six months ago, the future of the Gulf states as major middle powers in the emerging international order appeared promising. Following the American-Israeli war on Iran, that future is now considerably less secure.
The Material, Economic and Reputational Costs of War
The consequences of the war can be seen across three areas: physical damage, economic losses and reputational harm.
Ironically, the physical damage was probably the least severe of the three. All Gulf states suffered some degree of material damage, although none experienced destruction on a massive scale and the severity varied considerably between countries.
The most significant infrastructure damage was undoubtedly the Iranian attack on Ras Laffan, Qatar’s principal gas processing and export facility. The site lost approximately 15 per cent of its production capacity and is not expected to be fully repaired for another three to five years.
Economically, all the region’s major energy exporters suffered revenue losses and were forced to suspend production, effectively halting the flow of oil and gas intended for export.
Losses in energy revenue were compounded by the closure of several regional transport hubs. More than 6,000 flights across the Middle East were cancelled during the opening days of the war, while estimates suggest that the affected countries lost as much as US$30 billion in tourism revenue.
The war also imposed significant macroeconomic costs across the region. In April, the International Monetary Fund lowered its economic growth forecasts for the entire region, including a projected 8.6 per cent contraction in Qatar’s real gross domestic product.
One estimate suggests that repairing Gulf energy facilities will cost approximately US$60 billion.
Governments are increasingly exploring ways to protect their economies from any future closure of the Strait of Hormuz, whether by constructing expensive alternative pipelines or investing in new port facilities.
Some of these costs may prove temporary. Flight numbers, for example, have already recovered, while many expatriate workers have returned to their jobs in Dubai and elsewhere after being evacuated during the early stages of the war.
However, it remains too early to determine the full reputational cost of the conflict. If Gulf states can no longer project an image of stability or provide a secure environment for international workers and investors, their economic model could be placed at risk.
The Contradiction at the Heart of Gulf Security Policy
These economic risks are closely connected to regional security.
The strategies pursued by regional states such as the United Arab Emirates and Saudi Arabia have long centred on strengthening security relations with the United States while simultaneously building deep economic ties with Beijing.
In Washington, some policymakers in the Biden administration viewed this as a strong reason to provide tangible security guarantees to Gulf states as part of broader competition with China.
President Donald Trump’s approach to the region relied heavily on the Abraham Accords, a major foreign policy initiative of his first administration. The agreements sought to stabilise the region, isolate Iran and counter Chinese influence by strengthening relations between Israel and the Gulf states.
The war with Iran, however, demonstrated how American security guarantees can become deeply complicated for these countries.
Every member of the Gulf Cooperation Council was attacked, including states that had attempted to prevent the conflict through mediation.
Qatar, Kuwait and the United Arab Emirates suffered damage to civilian infrastructure, not only attacks against American military bases located on their territory.
The war also demonstrated that, despite the Abraham Accords and years of claims to the contrary, Washington clearly places greater importance on some regional allies than others. During the conflict, the American military allocated significantly more resources to protecting Israel than to protecting the Gulf states.
This places the Gulf states in an almost impossible position.
If security guarantees from Washington carry risks comparable to their benefits, why continue pursuing them? Yet abandoning the United States as a security partner creates problems of equal significance. The current White House, in particular, is unlikely to readily accept the loss of access rights to some of its regional military bases.
China, meanwhile, may remain an indispensable economic partner, but it has shown no desire to assume America’s security role in the region.
The war on Iran may have exposed the shortcomings of the existing United States-led model, but no clear alternative currently exists.
A Greater Reliance on Regional Power
This reality points towards a greater need for Gulf states to rely on their own resources, whether through diplomatic settlement or confrontation.
In practice, the Gulf Cooperation Council states appear to be moving in different directions.
Saudi Arabia and Qatar are exploring the possibility of a regional agreement with Iran, an approach that could reduce the likelihood of renewed war, even if it carries broader geopolitical consequences.
Saudi Arabia is also deepening its existing relationships with Turkey and Pakistan, moving towards partnerships with regional middle powers that offer capabilities and relationships different from those available through the major powers.
The United Arab Emirates, by contrast, is drawing closer to Israel, betting that strength and force can provide a path out of the current dilemma.
All Gulf states are likely to allocate more funding to defence spending and purchase from a more diverse range of partners in the years ahead.
Washington’s Gulf Relationship Faces a Reassessment
For American policymakers, relations with the Gulf states will require reassessment after the war, and not only in relation to the terms of whatever peace agreement is eventually signed.
The Gulf states are unlikely to demand the withdrawal of American forces. However, they are equally unlikely to finance the reconstruction of American military bases or pay for concessions offered to Tehran.
With the financial pressures created by the war, Gulf investment in the American artificial intelligence boom is also likely to decline, alongside a noticeable reduction in unconditional funding for projects favoured by the White House.
The Trump administration may soon discover that Gulf leaders have little interest in becoming a source of financing for repairing damage they did not cause.
The most likely outcome is not a dramatic break with Washington, but a series of quiet and gradual adjustments.
Gulf states will purchase new technologies and additional weapons systems to protect their populations and critical infrastructure. They will attempt to influence the president’s policies while seeking a practical regional settlement capable of preventing further violence.
At the same time, Washington’s influence is likely to decline gradually. That may ultimately serve the interests of both sides.
