In the midst of regional upheavals, the Gulf States affirm their influence and their bet on a vast economic transformation.
The six oil-rich monarchies of the Gulf are generally spared in the most violent conflicts in the Middle East. But Iran’s reprisal strike on an American military base in Qatar in June, woke up existential fears that the Polished Gulf citadels could not be trained in an open war: a scenario that has not been seen since the invasion of Kuwait of Saddam Hussein.
For the region’s business world, another concern is now a regular disruption of shipping and trade corridors. The countries of the Middle East were forced to close their airspace during the Israeli bombing of Iran and to face increasing pressure on sea roads, especially in the Red Sea, around the Suez Canal, and the Hormuz Strait, where 20% of the world’s oil flows flow daily.
However, despite these geopolitical opposite winds, the economies of the Gulf thrive. This year again, the Gulf Cooperation Council (GCC) should grow more quickly than the global average with a planned increase of 3.2% of GDP, according to the World Bank. Meanwhile, Saudi Arabia, the United Arab Emirates (Water), Qatar, Bahrain, Oman and Kuwait continue to pay billions of dollars in the diversification of their economies far from oil and gas.
Washington connection
The Gulf remains a heavy goods vehicle in global affairs, holding around a third of the world’s raw oil reserves and more than 3.8 billions of dollars in sovereign funds. While most of the savings are struggling with the uncertainty of world trade, CCG states have been largely spared by the shock waves of President Trump’s economic policies.
Earlier this year, the White House imposed a 10% tariff on CCG exports, a decision that can cause an increase in costs or disruptions of the supply chain in sectors such as aluminum and petrochemicals. But the CCG capitals have led a large part of their export orientation of Asia for a few years, and more importantly, oil and gas exports remain exempt from American prices.
“Behind the scenes, there is a lot of collaboration, many things that happen.”
Ron DanielCEO of liquidity
Trump can visit Riyadh, Doha and Abu Dhabi has marked an inflection point in this strategic relationship and the beginning of a new era of agreement. The United States has obtained at least $ 3.2 billions of investment for the next decade: $ 1.4 billion in Qatar, including a 96 billion Airways $ 96 billion order in Boeing; 1.2 billion of water dollars; and $ 600 billion in Saudi Arabia, including a defense pack of $ 142 billion.
International investors flock to the region. American companies like Amazon Web Services, Nvidia and Oracle have launched large -scale operations in technology and AI as well as wider projects supporting the economic transformation of the region.
“The energy transition continues to attract attention,” notes Abbas Husain, a global infrastructure and development manager of Development at Standard Charterd, “not only in renewable energies such as solar energy and also, but also in emerging technologies such as countries with green hydrogen and carbon capture. City solutions see substantial investments.
Expand the influence thanks to investments
These mega transactions and renewed relations in terms of leadership suggest that a US-CCC tandem will shape the future of the region, whether at home in the Gulf or in the region in the broad sense where the Gulf States exploit their ample financial means to extend their influence, often counterpoints from Iran.
Syria stands out in this regard. After 14 years of a devastating civil war, the decision in May of the United States and Europe to raise sanctions has paved the way for the gulf investment.
“The United States has given a green light for economic cooperation with the new Syrian government,” said Jihad Yazigi, founder of the Syria report, an information and online advice service focused on the Syrian economy. “The breaking of sanctions will not bring an influx of American capital – I do not think it was the objective – but that will allow the countries of the Gulf to intervene and really speak of reconstruction.”
In May, the port operator of water, DP World, signed a memorandum of understanding of $ 800 million with the new Syrian government to develop and exploit the approval port on the Mediterranean coast, a multiple facets project which includes industrial zones, logistics hubs and free trade zones. Other transactions should follow, in particular with Saudi Arabia and Qatar, which settled the debt of $ 15.5 million in Syria to the World Bank and paid most of the government’s wages.
In terms of the private sector, UCC Hold, based in Doha, is already carrying out an electricity project of $ 7 billion in Syria while the Qatari Food and Beverages Baladna has promised 250 million dollars for a new industrial project. A long-standing supporter of the Syrian uprising against the ousted dictator Bashar al-Assad, Qatar announced new investments in Damascus airport and explores opportunities in sectors, including the media, tourism, industry and logistics.
The pace of these investments will help determine the speed at which the Banking System of Syria can get back on their feet after being cut from international finances for more than a decade. In mid-June, the nation has been reconnected to the rapid financial messaging system for the first time since 2011. Currently, the only foreign banks operating in Syria are regional lenders of neighboring countries, including Lebanon, Jordan and Bahrain.
“For the banking sector, international banking or cross -border relations will first resume countries like Turkey, Lebanon, Jordan”, predicts Yazigi. “The United States will remain cautious.”
The CCG also extends its strategic economic imprint in Egypt. Last year, water mainly bombarded Cairo with a development package of $ 35 billion. Qatar and Saudi Arabia follow billions of investments covering energy, infrastructure, real estate, tourism and other pipeline sectors.
And the Gulf countries occupy the front of the stage in regional diplomacy, including negotiations on conflicts in Lebanon, Gaza, Iran – where Oman acted as a mediator – and Israel.
In 2020, the previous Trump administration negotiated agreements between Israel and water, Bahrain and Morocco. At the time, there was hope that Saudi Arabia would be the next major country to join the Abraham agreements. While the war in Gaza has suspended the standardization process, Gulf leaders continue to promote the vision of a pacified region where liberal trade and cross -border affairs transcend wars.
Since 2020, more than 600 Israeli companies have started working with water, including liquidity, a direct Fintech lender focused on AI that manages a portfolio of several billion dollars. His biggest office is now in Abu Dhabi and his second largest in Tel Aviv.
“We are in the region because we think it is the best place to bring talents and develop technology, and I do not see it changing,” explains Ron Daniel, CEO of liquidity. “Water is the case to use the appearance of this region.”
Although Israeli entities cannot officially trade with Saudi Arabia, the United Arab Emirates often acts as a bridge, re-exporting goods and services on the Gulf market and beyond. By 2040, Tel Aviv plans to increase the value of its exports through Dubai by $ 150 billion to $ 1 billion.
“Behind the scenes, there is a lot of collaboration, many things that happen,” explains Daniel. “It’s good for peace and the region, but on the table, he must wait for politics to allow it.”
Winds contrary deficit
While the GCC uses its lever effect to open the way to a new regional order, it also faces increasing challenges.
The block was better the global volatility than many neighbors, thanks to deep financial reserves and budget pads, but its dependence on oil remains vulnerability. A decrease of $ 10 in prices, for example, reduces the budget balance of Saudi Arabia by around 2.25% of GDP. The Kingdom has now been struggling with its largest budget deficit since 2021, and Goldman Sachs warned that it could double its budgetary difference of 2025.
To support their economic ambitions and continue to finance massive infrastructure projects, the Gulf countries turn to the international debt markets. In the second quarter only, Saudi Arabia raised $ 6 billion in sovereign bonds denominated in the United States and should issue more by the end of the year.
Although the CCG collective / GDP ratio remains relatively low at around 30% and is considered to be durable, borrowing on this scale is a new phenomenon for the region. Some observers predict that the increase in debt levels will become concern for foreign investors and the rise in questions on the viability of flagship projects such as the Neom, the futuristic city of Neom, Saudi Arabia, in the desert.