ASSESSMENTS

Gulf Arab States Brace for a New Normal of U.S.-Iran Confrontation

Jan 16, 2020 | 10:00 GMT

A map of the Persian Gulf region.

Should hostile U.S.-Iran relations keep the prospect of a regional war alive, Arab states along the Persian Gulf will be among the first to suffer the economic consequences, as well as potential physical attacks.

(Shutterstock)

Highlights

  • The states of the Gulf Cooperation Council (GCC) are vulnerable to economic collateral damage in the event of further escalation between the United States and Iran, which is driving their own efforts to de-escalate across the Persian Gulf.
  • The perception of brewing regional conflict risks deterring foreign investment, tourism and expatriate labor that GCC states need to diversify their oil-based economies.
  • The risk of direct physical attacks, however, will be tempered by Iran's desire to also strengthen ties with nearby Gulf states as part of its greater push to distance the region from the United States.

As the U.S.-Iran confrontation heats up, Iran's regional neighbors are assessing where they stand in the event of a serious escalation. Washington and Tehran have stepped back from the brink of war following the U.S. assassination of senior military figure Qassem Soleimani. But should such a tit-for-tat escalation occur again, spiral further or last longer, the Persian Gulf risks being increasingly perceived as a dicey business environment, which could have lasting economic repercussions for the members of the Gulf Cooperation Council (GCC). In defusing this threat, however, these GCC countries have little control over Washington's regional strategy -- even when it puts their physical security in harm's way, as evidenced by the Iranian strike on Saudi oil facilities in September. Thus fears of another U.S.-Iran confrontation and the economic blowback will push them to consider their own de-escalation efforts across the Persian Gulf....

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