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Gulf countries may have to review their foreign investments and future commitments due to pressure on their budgets as they consider options to ease the financial strain caused by the US-Israel war against Iran.
A Gulf official said it could have an impact on anything from investment pledges in foreign states or companies, sports sponsorships, contracts with businesses and investors or the sale of holdings.
The official said three of the four major Gulf economies – Saudi Arabia, the United Arab Emirates, Kuwait and Qatar – had jointly discussed their budgets and the pressure on their economies. But he refused to reveal the names of the states.
“Several Gulf countries have begun internal reviews to determine whether force majeure clauses in existing contracts can be invoked, while also reviewing current and future investment commitments to mitigate some of the anticipated economic strain from the ongoing war,” the official said. “Especially if the war and related spending continue at the same pace.”
He said the move was a precautionary measure given the “budget stress these countries are facing due to lower energy income, slowdown in production or ship inefficiencies, (and) increased defense spending, in addition to the tourism and aviation sectors”.
An adviser to a Gulf government said the possibility of investment reviews by wealthy states had drawn the White House’s attention. They manage some of the world’s largest and most active sovereign wealth funds, and Saudi Arabia, the United Arab Emirates and Qatar pledged to invest hundreds of billions of dollars in the US after President Donald Trump visited the region last year.
They are also big supporters of sporting events around the world and all are investing heavily domestically to develop their nations and diversify their economies.
Any move that affects investment in the US or other Western states could increase pressure on Trump to find a diplomatic strategy to end the war.
The oil-rich Gulf states have been dragged into the conflict that the US and Israel launched against Iran, with Tehran launching a brutal response against Washington’s regional allies. The war has slowed shipping traffic through the Strait of Hormuz – the vital waterway through which a fifth of the world’s oil and gas passes – with at least 10 tankers stuck in the gulf.
Qatar, the world’s second-largest liquefied natural gas producer, was forced to declare force majeure this week after suspending production following a drone attack on its main LNG plant. One of Saudi Arabia’s largest oil refineries has also been attacked.
Iran has also hit US bases and embassies in the region, as well as airports, hotels and residential buildings, severely disrupting air traffic and tourism.
The Gulf states had pressured Trump to halt the attacks and seek a diplomatic solution with Iran, but have since faced the brunt of the Islamic Republic’s retaliation.
Khalaf al-Habtoor, a prominent Emirati businessman, expressed the Gulf countries’ frustration about being dragged into a war started by the US and Israel in a social media post addressed to Trump.
“A simple question: Who gave you the right to drag our region into a war with #Iran? And on what basis did you take this dangerous decision?” He said on X. “Did you calculate the collateral damage before pulling the trigger?”
He said the Gulf states are expected to be major financiers of Trump’s Gaza reconstruction plan and supporters of his broader “peace board.”
Noting that the Arab Gulf countries “have contributed billions of dollars based on support for stability and development”, he added: “These countries have the right to ask today: Where has this money gone? Are we financing peace initiatives or financing a war that puts us in danger?”
