Israel and the US’s war on Iran is having a huge economic cost for Gulf states who are said to be considering their overseas investments in US amid the turmoil.
Gulf states have been badly hit by a downturn in energy exports
Gulf states could be forced to rethink their overseas investment portfolios as they feel the pain from Israel and the US’s unprovoked war on Iran.
A source told The Financial Times that due to the war, three unnamed Gulf states are facing budget constraints after downturns in hydrocarbon, shipping, tourism, and aviation revenues, as well as a huge increase in defence spending.
Gulf states have been relying heavily on air defences to intercept Iranian missiles and drones, while attacks on energy infrastructure and shipping in the Strait of Hormuz and the Sea of Oman have hit oil and LNG exports and could prove costly.
Three of the Gulf’s biggest economies, which have not been named by The Financial Times, are now in talks about the huge economic impact the war is having on their finances, and could put foreign investments, sports sponsorships, and other areas of business under review.
”A number of Gulf countries have begun an internal review to determine whether force majeure clauses can be invoked in current contracts, while also reviewing current and future investment commitments in order to alleviate some of the anticipated economic strain from the current war,” an official told The Financial Times. “Especially if the war and related expenses continue at the same pace.”
Many Gulf states have huge overseas portfolios, with stakes in companies from tech giants to foreign water utilities, although it is not clear if or which investments could be affected.
There is said to be growing anger in the Gulf over the Israeli-US assault on Iran, which has seen cities such as Dubai and Manama come under heavy fire by Iran and energy infrastructure across the region targeted.
Qatar Energy declared force majeure earlier this week due to the massive disruptions in gas and oil exports, and Doha has warned of the huge costs the war will have on the global economies.
”Everybody that has not called for force majeure we expect will do so in the next few days that this continues. All exporters in the Gulf region will have to call force majeure,” Kaabi told the FT.
”If this war continues for a few weeks, GDP growth around the world will be impacted.”
Emirati tycoon Khalaf Al-Habtoor appeared to express frustrations among the country’s business community during a tweet on Thursday, a country that had established close ties with Israel but is now is bearing the brunt of its disastrous war on Iran.
”His Excellency President Donald Trump, A direct question:,Who gave you the authority to drag our region into a war with Iran? And on what basis did you make this dangerous decision? Did you calculate the collateral damage before pulling the trigger? And did you consider that the first to suffer from this escalation will be the countries of the region itself!” he asked.
”You have placed the countries of the Gulf Cooperation Council and the Arab countries at the heart of a danger they did not choose.
Thank God, we are strong and capable of defending ourselves, and we have armies and defenses that protect our homelands, but the question remains: Who gave you permission to turn our region into a battlefield?”
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