On April 2, President Trump heralded a new era in United States trade policy when he announced massive “reciprocal” tariffs to almost all U.S. trade partners. These new tariffs are divided into two components: a baseline tariff of 10 percent on all U.S. imports and a reciprocal tariff on specific countries based—somewhat crudely—on their trade deficits with Washington. While that second set of tariffs is paused (with the notable exception of China) at the time of this writing, the countries originally subject to the highest reciprocal tariffs included China, Japan, India, South Korea, Taiwan, Vietnam and several European countries. In the Middle East, the highest tariffs fell on Syria, Iraq, Libya, Algeria, Tunisia and Jordan. According to President Trump, the tariffs are intended to reduce U.S. trade deficits and reshore American manufacturing jobs. 

A Muted Impact

The new 10 percent tariffs are likely to have a minor impact on the GCC states. Perhaps most importantly for the region, the Trump administration has exempted oil and gas exports to the United States from the tariff regime. This is significant, given that hydrocarbons form the largest GCC exports to the United States. In 2024, the share of GCC oil exports to the United States was about three percent of the region’s production and less than 10 percent of total U.S. oil imports. Though the GCC states are not likely to be significantly impacted by the new tariffs, they are not immune from the broad indirect impact of the disruption to global trade. As the situation currently stands, a potential trade war between the United States and China, combined with a general rise in protectionism are likely to fuel uncertainty, slow global economic growth, and exacerbate fears that inflation will once again worsen. If an economic slowdown occurs, demand for oil would decrease, and GCC states would feel the impact. 

Against this backdrop, Gulf countries must balance their economic interests with their desire to maintain stable relations with the United States. In the last two decades, the GCC states have made ambitious and serious efforts to reduce their dependence on oil revenues and diversify their economies, but they still have some way to go. Significantly lower oil prices would slash public funds available to advance economic-reform initiatives. In addition, a potential peace agreement between Russia and Ukraine would lead to lifting of sanctions on Russia’s oil and gas exports, further lowering the price of oil and decreasing GCC states’ revenues. Furthermore, direct negotiations between Washington and Tehran on the latter’s nuclear program might ease sanctions on Iran’s oil exports, potentially compounding the problem. Worse still, U.S. crude oil exports continue to grow, exceeding an annual average of 4.1 million barrels per day by the end of 2024—threatening to undercut regional production and drive prices lower.

In terms of monetary policy, the currencies of each GCC state except Kuwait are officially pegged to the U.S dollar—meaning that Gulf financial markets are particularly vulnerable to tighter monetary conditions, especially if the U.S. Federal Reserve keeps interest rates high to contain tariffs’ inflationary pressures. In the last few decades, the United States has faced a growing budgetary crisis, as a ballooning GDP to debt ratio and elevated deficits have cast doubt on its long-term economic stability and financial creditworthiness. Finally, digital currencies have made impressive advances in recent years, further weakening the  dollar’s dominance. As a major U.S. adversary, China has actively promoted its own digital Yuan as an alternative to the dollar, and some GCC states have even signed agreements to settle payments in digital RMB, a form of digital currency issued by China’s central bank .

A Trading Partner to All

For many years, the governments of the Gulf have been aware of the vulnerability of overreliance on the U.S.-centric international trade system, and have established strong trade ties with other partners around the world to diversify their financial and commercial partnerships. These ties are certain to help in mitigating potential losses in trade with the United States amid the Trump tariffs. And while Washington will likely remain the region’s closest security partner, Beijing enjoys several advantages when it comes to trade. For example, GCC states increasingly see China as a reliable partner and alternative to the United States. Furthermore, trade and investment with China come with no political conditions, unlike any deals made with Washington. 

Since the early 2000s, advancements in hydraulic fracturing, or fracking, have made the United States the world’s largest hydrocarbon producer. Meanwhile, the Chinese economy continues to grow, fueled largely by hydrocarbon imports from the Gulf region. Indeed, over the last two decades, Asia has consumed over 70 percent of total GCC oil and gas output. Even in an increasingly tumultuous international trade environment, Asian markets are projected to remain the main destination of GCC hydrocarbon exports in the future. There are synergies in the realm of clean energy, as well; as part of their national economic diversification strategies, the GCC states have undertaken several massive initiatives to increase their renewable energy potential. For its part, China has emerged as the world leader in solar and wind power. Exchanging goods and technical know-how with China has emerged as a clear priority for the GCC states as they navigate the transition toward a post-oil future.

The growing importance of trade relations between the GCC states and Asian powers like China have been institutionalized by several free trade agreements (FTAs). Multilateral negotiations with China started in 2024 and the two sides are in the process of ironing out the final details of a free trade agreement that includes the entire bloc of Gulf monarchies. In September 2023, the extension of the Joint Action Plan with Japan for 2024-2028 was ratified. A few months later, the GCC penned an FTA with South Korea. Negotiation with India is ongoing, and the two sides are expected to sign an FTA in the near future.

As another trade alternative to the United States, the European Union is the second largest trading partner to the GCC after China. Over the past four decades, the two blocs have signed several agreements to promote economic, trade and financial cooperation. These include the 1989 Cooperation Agreement, the Dialogue on Trade and Investment, launched in 2017, the 2018 EU-GCC Dialogue on Economic Diversification, and EU-GCC Strategic Partnership, which began in 2022. The EU-GCC partnership has been further consolidated by holding the first summit in Brussels in October 2024. Equally important, several GCC sovereign wealth funds have made substantial investments in Europe in technology, infrastructure, and strategic industries. These investments and the huge trade volumes have created a strong and healthy economic relationship between the two regions. 

GCC States Remain Well-Positioned

In addition to diversifying their trade relations, the GCC states have made significant progress in promoting socio-economic reform at home in crucial sectors such as education, gender equality and digitization, which will further tariff-proof their societies. Digital transformation is positively correlated to progress in broad economic development, and can help Gulf economies to weather tariffs; this is because tariffs generally apply to physical goods and services rather than digital ones. Furthermore, a recent study by the International Monetary Fund concludes that “the GCC’s young and tech-savvy population, along with its relatively advanced digital infrastructure positions it well to reap the economic benefits of further digitalization.” 

The direct impact of the new U.S. tariffs on the GCC economies is likely to be modest, but the disruption of the global trade system has already generated uncertainty and raised doubts about sustained global economic growth. GCC economies are well integrated in the global economy, so they must adapt to developments and navigate a radically redefined commercial environment. The bloc’s relations with the United States, China, Europe, and other global powers are more important now than perhaps ever—especially if the GCC states seek to drive the technological and socio-economic transformations required to seize the economy of the future.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

The Trump administration’s assertive approach to economic affairs has fundamentally shifted America’s geopolitical behavior, creating significant impacts worldwide—and particularly among the Gulf Cooperation Council (GCC) member states. These ambitious strategies could be genuinely advantageous, or they could destabilize the long-standing alliances and partnerships that have advanced U.S. interests in the Middle East.

The economic circumstances of post-World War II Britain provide insightful yet limited perspectives on the current U.S. economic scenario. After the war, Britain grappled with immense national debt amid a shifting geopolitical order—a scenario that rhymes with the United States’ current conundrum. However, the United States faces an unprecedented competitive dynamic; unlike London, which could rely on Washington’s support to combat an insular adversary in the Soviet Union, the United States must contend with a powerful, economically resilient rival that presents alternative avenues for economic partnership than those offered by Western powers.

China’s Belt and Road Initiative (BRI) offers attractive alternatives for Gulf nations, challenging traditional Western economic models. The GCC states, which have aligned closely with American interests for over 60 years, now face a more complex landscape. They must now balance their commitment to established partnerships against opportunities presented by China’s ambitious global economic agenda.

The Partnership Dilemma

Ballooning U.S. public debt, now nearing a daunting $36 trillion, combined with soaring annual interest payments surpassing $1.5 trillion, significantly influences domestic and international policy decisions. In response, the Trump administration has reduced U.S. government investments in key sectors such as scientific research, education, and international aid. These measures, which the administration claims will help slim the deficit and stabilize the nation’s economic foundations, nevertheless pose significant concerns for the future of the American economy. Critics argue that cutting investments in innovation and human capital development while leaving the primary drivers of U.S. spending untouched risks undermining the United States’ long-term global competitiveness and technological edge.

The significant scale of America’s global military commitments also often constrains its economic agility, limiting the financing available for investments in global infrastructure and economic initiatives that would rival those of China. Meanwhile, diplomatic tensions, evident in strained relations with key partners such as Canada and the European Union, have highlighted American vulnerabilities if Washington chooses to act alone. An economic powerhouse like China could potentially exploit these fractures, leveraging economic and geopolitical advantages to undermine traditional U.S. alliances.

By comparison, China’s relatively disciplined economic policies and less exorbitant military expenditures offer greater fiscal flexibility, enabling Beijing to launch strategic global investments in infrastructure and other projects. These moves resonate strongly in the Gulf region, where GCC states perceive China as both a complement and potential alternative to their long-standing economic and military partnerships with the United States.

However, China’s global economic strategy has also sparked concern in countries where it has invested. Several nations, notably Sri Lanka, Myanmar, and Pakistan, experienced political and economic instability following deep economic ties with China. Some states have even been forced to surrender the very projects China financed—including ports and other critical infrastructure—to Chinese companies. These cautionary tales of a Chinese “debt trap” have led Gulf policymakers to approach Chinese partnerships with measured vigilance, carefully balancing the allure of Asian investments against proven Western reliability.

The Ambitions and Risks of Economic Nationalism

Central to Trump’s “Make America Great Again” agenda is an adherence to aggressive economic nationalism and the widespread use of protectionist policies like tariffs to rejuvenate domestic industries and markets. This approach has notable risks, made evident since the administration slapped levies of at least 10 percent on every foreign trading partner on April 2. Heightened tariffs designed to shield American businesses could also escalate consumer prices, diminishing purchasing power in the process. These dynamics might stifle economic growth, worsening the risk of a recession in the world’s largest economy.

The administration’s substantial budget cuts to education and scientific research—critical drivers of the United States’ long-term economic competitiveness—may erode America’s innovation capabilities. The implications extend far beyond domestic borders, affecting international partnerships with Gulf countries that have begun investing in advanced technologies and innovation-driven projects under their national economic diversification regimes.

Of course, Trump’s economic policies represent a double-edged sword for Gulf countries. On the positive side, if Washington can improve its fiscal health, it could bolster international confidence in the U.S. economy, thereby enhancing the value and stability of the U.S. dollar. This stability would positively impact oil pricing and investment strategies for Gulf sovereign wealth funds.

Conversely, reduced American engagement in global affairs and international economic partnerships risks creating a strategic vacuum that China will almost certainly move to fill. If the GCC states move too close to China, however, they risk drawing the ire of the United States, which could lead to disastrous consequences for their national security interests. Gulf nations are thus compelled to adopt pragmatic strategies, increasingly relying on a balanced approach that aims to please both the United States and China. Leveraging American security assurances alongside deepening economic ties with China will allow the GCC countries greater flexibility, maximizing their strategic and economic autonomy.

Ultimately, the effectiveness of Trump’s attempts to balance the U.S. budget, combined with the United States’ ability to sustain its geopolitical dominance in the Middle East will significantly influence the Gulf’s future choices. In the coming years, the GCC states must carefully weigh their economic diversification objectives and maintain their strategic autonomy against the backdrop of intensifying U.S.-China competition.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Since President Donald Trump’s return to the White House, Saudi Arabia has emerged as the United States’ preferred mediator to end the war in Ukraine. On February 18th, a U.S. delegation led by Secretary of State Marco Rubio met a Russian delegation led by Foreign Minister Sergey Lavrov in Riyadh for talks. This historic meeting, which did not include Ukrainian officials, preceded Rubio’s March 11 talks with Andriy Yermak, the Head of the Office of the President of Ukraine, in Jeddah. Saudi Arabia is slated to host future negotiations between U.S., Ukrainian, and Russian officials as Washington presses for peace. 

While Saudi Arabia’s role as host for these talks has dominated the headlines, other GCC countries have also contributed to initiatives aimed at de-escalating the war. The UAE has secured several rounds of prisoner exchanges between Russian and Ukrainian forces, most recently in January 2025. Qatar has spearheaded efforts to repatriate Ukrainian children abducted by Russian forces, and Oman has facilitated lower-profile dialogue efforts between Iran and Ukraine, which seek to address tensions caused by Tehran’s export of armed drones to Russia. As Trump’s push to end the Ukraine war intensifies, these parallel initiatives further bolster the standing of GCC countries as helpful mediators. 

Saudi Arabia at the Center of Peace Talks

Although Saudi Arabia has mediated in conflicts, from the 1975-90 Lebanese Civil War to Sudan’s ongoing intra-military civil war, it initially assumed a lower profile than its GCC counterparts regarding the Ukraine war. From April to September 2022, Saudi Crown Prince Mohammed bin Salman (MBS) worked with Turkish President Recep Tayyip Erdogan and Russian oligarch Roman Abramovich to broker the release of ten foreign national prisoners of war (POWs) in Russian custody. In December 2022, Saudi Arabia coordinated with the UAE to win the release of U.S. WNBA basketball player Brittney Griner from Russian prison. Saudi Foreign Minister Faisal bin Farhan claimed that MBS personally intervened on Griner’s behalf, but U.S. officials have disputed the extent of his involvement. 

Saudi Arabia’s next foray into Ukraine War mediation was more polarizing. In August 2023, Ukrainian President Volodymyr Zelensky presented his ten-point plan for peace in Jeddah. Perhaps because the talks took place in a non-Western country and China was in attendance, Zelensky saw the forum as an opportunity to encourage solidarity with Ukraine among countries of the Global South. Russia’s exclusion from the negotiations and Ukraine’s insistence on a complete withdrawal of Russian forces from its territory hardened the Kremlin’s resistance to a diplomatic solution. 

In light of these controversies, Saudi Arabia lowered its profile as a conflict mediator in Ukraine. However, Trump’s return to power has changed the calculus for Saudi leaders. MBS clearly sees an opportunity to use crisis diplomacy to rid himself of the reputational stains that have lingered since the  grizzly 2018 assassination of Jamal Khashoggi by Saudi agents in Istanbul. By demonstrating his utility to President Trump and his foreign policy priorities, MBS hopes that Saudi Arabia can become a trusted interlocutor for the U.S. and ensconce its seat at the table in future negotiations over Iran’s nuclear program. In a sign of its newfound influence over the discussions, Saudi commentator Salman al-Ansari claimed that European diplomats are considering visiting Riyadh—not Washington—to register their disagreements with U.S. policy towards Ukraine. 

Riyadh’s emergence as a major diplomatic power player in the Ukraine war should not come as a surprise, as Saudi Arabia’s calculated, independent foreign policy has made it an amenable mediator for both Russia and Ukraine. After the 2023 U.S.-Ukraine talks in Jeddah, Putin reportedly consulted with Mohammed bin Salman on how to best resolve the conflict. Support for Saudi Arabia’s mediative role is widespread among Putin’s negotiating team. Russia Direct Investment Fund chief Kirill Dmitriev is one of Putin’s main interlocutors with Trump and is a long-standing supporter of cooperation with Saudi Arabia; In October 2019, Dmitriev became the second Russian national—after Putin himself—to receive the Order of King Abdulaziz.

The Kremlin also sees holding talks in Saudi Arabia as a triumph for its vision of a multipolar international order. Kirill Semenov, a prominent Moscow-based expert on Middle East affairs, highlighted to the author the symbolic significance of holding U.S.-Russia talks in “the heart of the Islamic world in Riyadh, not in Europe.” Semenov argued that “thanks to the Russian special military operation, the role of the leaders of the Global South has increased and they naturally recognize Russia’s contribution.”  

For its part, Ukraine sees Saudi Arabia as a valuable potential investor in its post-war reconstruction and is courting it as a partner with which it can develop an indigenous defence industry. Ukraine also wants to extend MBS’ diplomatic ambitions to the prisoner exchange and child repatriation spheres, which are particularly important for Kyiv. These plans were officially announced by the Ukrainian presidential administration after Zelensky’s trip to Riyadh last week. 

Parallel GCC Efforts

While the UAE has publicly endorsed Saudi Arabia’s arbitration efforts, it has also offered its mediation services to U.S. officials. The UAE has established its credibility as a diplomatic interlocutor through its efforts to broker prisoner exchanges between the warring parties. Since the start of Russia’s full-scale invasion of Ukraine, the UAE has brokered 11 separate prisoner exchanges and helped free a total of 2,583 POWs. The UAE has tried to tie these prisoner exchanges to other issues, such as the resumption of Russian ammonia exports (a key base chemical used for fertilizers), but has struggled to find success. Nonetheless, the UAE has continued to maintain close relations with the warring parties to advance its interests and bolster its diplomatic efficacy. 

During Zelensky’s February 2025 visit to Abu Dhabi, the UAE signed a Comprehensive Economic Partnership Agreement (CEPA) with Ukraine. The CEPA amounts to a UAE-Ukraine free trade pact and will also allow both countries to coordinate on facilitating Ukrainian grain exports to the Global South. The coincidental timing between this CEPA and the UAE’s double taxation agreement with Russia underscores the delicacy of Abu Dhabi’s balancing strategy.  

Since July 2023, Qatar’s diplomatic role has focused chiefly on the repatriation of Russian and Ukrainian children. These efforts have resulted in the return of 95 Ukrainian children and 15 Russian children to their families. Although Ukraine protests Russia’s depiction of this initiative as a “child exchange” and the number of children released is dwarfed by the 19,000 that Russia allegedly abducted from the territories it occupies in eastern Ukraine, Qatar’s mediation is the most durable framework to address this issue. 

Similar to the UAE, Qatar has tried to broaden its diplomatic efforts to issues beyond the repatriation of children. Before Ukraine’s surprise August 2024 incursion into Russia’s Kursk region, Qatar attempted to broker an energy facility ceasefire. While Russia denied the potential resumption of talks in October 2024, Yermak expressed an openness to Qatar hosting energy ceasefire negotiations days later. Qatar’s more limited initiatives could gain renewed momentum if Trump fails to convince Putin to adopt the U.S.-Ukraine thirty-day Jeddah ceasefire plan. 

Oman’s diplomatic role in the Ukraine War has been more peripheral and mirrors the dialogue facilitation efforts it advanced in other Middle East theatres, such as the March 2023 Saudi-Iran normalization agreement, discussions over the future of Yemen, and ongoing U.S.-Iran talks. In February 2023, Oman hosted negotiations between Iranian and Ukrainian officials. Ukraine, along with the United States, has accused Iran of arming Russia with armed drones, while Iran has dubiously insisted that its drone deliveries to Russia predated the war. Though these talks did not produce any diplomatic breakthroughs, Oman’s reputation for neutrality could allow it to play a role in the Ukraine war’s resolution. 

Saudi Arabia’s emergence as mediator-in-chief in the Ukraine War is a watershed moment for the GCC’s conflict arbitration ambitions. It complements successes in other theatres like Qatar’s brokering of talks between the Democratic Republic of the Congo and Rwanda, and the UAE’s dialogue facilitation between the U.S. and Iran. As protracted conflicts continue to destabilize the post-Soviet space, Middle East and Africa, GCC countries will have many opportunities to leverage their diplomatic experience and contribute to the de-escalation of hostilities. 

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

On April 2, U.S. President Donald Trump issued an executive order imposing a base tariff rate of 10 percent on imports from most countries worldwide, including Iran and Syria, which have been subject to U.S. sanctions for years. The tariffs apply to imported goods and services, but exclude oil and gas.

As the president detailed in the Rose Garden, the rate of tariffs varies significantly by country. While a 10 percent tariff has been imposed on all six Gulf Cooperation Council (GCC) countries, other regional states face much steeper rates: Iraqi exports to the United States will be charged a 39 percent tariff, Jordanian goods and services 20 percent, and those from Israel 17 percent.

Immediate Ramifications

The GCC countries are likely to suffer from the United States’ new trade barriers. In the long run, the systemic effect of higher trade barriers will adversely affect their economies. Indeed, tariffs and international counter-measures will likely reduce global demand for oil, result in high import costs, diminish trade of sensitive and advanced goods and technologies from the United States, and hurt the small and medium-sized enterprises (SMEs) that form the backbone of Gulf economies. In fact, the decline in the value of the member countries’ stock markets was the first reaction to the tariffs. Following Trump’s announcement, the Saudi Tadawul All-Share Index dropped by 0.61 percent, Abu Dhabi’s stock market fell by 2.86 percent, Dubai’s by 2.64 percent, Oman’s by 0.76 percent, and Bahrain’s by 0.5 percent.

Despite their potential impact, some regional media outlets have downplayed the significance of the tariffs. The website of The National, the state-run Emirati newspaper that aligns closely with the government’s views, has reported that the UAE’s leading exports to the United States are precious stones and jewelry, followed by aluminum. “Given the high-profit margins associated with precious stones and jewelry, and the UAE’s status as a low-cost producer of aluminum,” the outlet reported, “the impact on UAE businesses is expected to be minimal.”

Economic Vulnerabilities

The most important and perhaps longest-lasting impact of tariffs on the economies of the GCC will be depressed demand for oil and, as a result, oil prices. Though oil and gas imports are exempt from tariffs, rising trade barriers will likely lead to a decline in exports and heightened uncertainty in global production and consumption of goods. This chain reaction ultimately reduces global market demand for oil because fewer goods are being produced, transported, and purchased. Markets have reacted predictably; following the announcement of the tariffs, crude oil prices dropped by $10 per barrel.

The potential for a global trade war would almost certainly weaken global energy demand due to a recession in the largest oil-consuming countries, such as China, India, Japan, Brazil, and Canada. This presents an obvious problem for the GCC countries—most of which depend on energy exports to fund their budgets and diversification initiatives. Saudi Arabia, for instance, needs oil to be priced near $96 per barrel to balance its 2024 budget​, well above current prices of roughly $62 per barrel, and still significantly higher than the pre-tariff prices of roughly $70 per barrel. The IMF estimates the UAE’s break-even price at around $36 per barrel, but Emirati leaders will still be watching oil prices with trepidation. Any decline in global oil demand could create budget deficits, spark recessions, and even contribute to inflationary pressures across the GCC states.

Developments in the United States may also hold consequences for the GCC states. As a tax on imported goods, the cost of tariffs is typically passed to the consumer in the form of price hikes. As inflationary pressures grow, the U.S. Federal Reserve may keep lending rates high to mitigate inflation. Higher interest rates tend to strengthen currencies, but a stronger dollar will diminish the export competitiveness of the United States, because its goods will cost more in international markets. Because many Gulf countries—including Saudi Arabia, Qatar, Oman, and the UAE—peg their currencies to the dollar, rising inflation in the U.S. will directly impact the competitiveness of Gulf industry and manufacturing.

Furthermore, a world trade system marked by growing tariffs will increase the cost of raw materials, disrupt supply chains, and generate market volatility. This dynamic can diminish the growth potential of SMEs, which contribute significantly to the Gulf region’s economic outlook. To give an idea of potential impact, the GCC hosts an estimated 675,000 formal SMEs. By mid-2022 alone, the number of SMEs in the UAE was 557,000. SMEs contribute as much as 63.5 percent to the non-oil GDP and provide one in four jobs across the region. The disruption caused by tariffs could reduce or halt hiring, change micro and macro investment patterns, and could trigger a wider recession throughout the Gulf.

Another potential impact relates to the redirection of Asian exports. Tariff increases will almost certainly lead to a surge in Asian exports being redirected to new markets within the GCC, which could crowd out local producers. For instance, Chinese steel exporters who typically ship to the United States will likely seek new markets to sell their product, potentially impacting global pricing dynamics. Producers based in the GCC will experience competitive pressure from this influx of exports, which could cause the Gulf states to implement protectionist policies of their own.

Not Powerless

Like the rest of the world, the GCC economies will be hurt by tariffs. However, these countries do possess leverage, and they can retaliate if they feel their economic future is at stake. As major energy producers and exporters, they could slash production to raise prices and enact a political cost on the U.S. president. Similarly, they could align more closely with the European Union, China, or other major trading powers to reduce their reliance on the United States.

With President Trump scheduled to visit Saudi Arabia, the UAE, and Qatar in May on his first foreign trip returning to office, there is a good chance that negotiators are working behind the scenes to blunt the damage caused by his tariffs. Given Riyadh and Abu Dhabi’s $600 billion and $1.4 trillion investment commitments in the United States, respectfully, and Qatar’s foreign policy and global energy market clout, the GCC’s three most powerful states will surely leverage their strengths in attempts to moderate the president’s protectionist urges.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Donald Trump’s return to the presidency could mark a major shift in U.S. foreign policy, particularly regarding the United States’ relations with Iraq. Since the 2003 invasion, Iraq has occupied a special place in U.S. foreign policy. Yet, Trump’s second term could see a radically different approach to Iraq than under previous presidents. For its part, Iraq’s leadership has adopted a cautious approach to Trump’s second administration, which will be shaped by Baghdad’s efforts to maintain a delicate balance between the U.S. and Iran—an increasingly difficult task as regional and global tensions evolve.

Of course, Trump’s second coming could reshape more than just Iraq-U.S. relations. The president will likely  impact key international issues like the war in Ukraine and Washington’s relations with NATO, the European Union, and Canada. Trump’s strong pro-Israel stance might also influence American regional foreign policy and shifting regional alignments. These international developments would undoubtedly affect Iraq, whose stability is deeply intertwined with the broader regional order. In a radically redefined Middle East, and with the right set of policies, Iraq could shift closer to the United States, marking a major development for the geopolitics of the region.

Threading the Needle
For over two decades, the Iraq-U.S. relationship has been shaped by Washington’s ubiquitous military presence in the country. However, this approach has not yielded the desired peace or stability in Iraq, which has faced persistent sectarian conflict, the rise of extremist groups, and political turmoil. The time has come for U.S.-Iraq relations to pivot away from military entanglement toward a more sustainable, co-equal, and cooperative framework. This will require both parties to refocus on fostering diplomatic ties, economic development, and institutional strengthening in Iraq, rather than relying on military power.

Iraq must also pursue domestic and foreign policies that maximize its independence and sovereignty. While the U.S. may retain a strategic interest in Iraq due to regional power dynamics, Iraq must take control of its own future. This means fostering internal reforms and working with international partners—especially the United States—in ways that promote Iraq’s long-term stability without leaving it vulnerable to external influence.

Expectedly, the Trump administration has redoubled Washington’s efforts to counter Iran across the Middle East. While Iraq’s relationship with its eastern neighbor has been a defining element of the former’s political landscape, Iran’s influence has declined significantly in the past half decade. Indeed, the 2019 Tishreen protests, which highlighted Iraqis’ growing frustration with Iran-backed political factions, exposed deep fractures within Iraq’s political elite. If Iraq’s leadership and the new American administration recognize this shift, it could open the door to a new chapter of cooperation that further diminishes Tehran’s influence in Iraqi affairs.

More recent regional events—such as the October 2023 Hamas attacks on Israel—have triggered a cascade of developments, including the intensification of conflicts involving Hezbollah and Israel, the collapse of the Syrian regime, and more intense U.S. military action against the Houthis in Yemen. These shifts signal that the zenith of Iranian power across the region may have passed. Iraq can seize this moment to distance itself from the Islamic Republic.

Of course, there are obvious dangers to hewing closer to the United States. The tensions that nearly boiled over into direct conflict between the U.S. and Iran during Trump’s first term—particularly after the killing of General Qasem Soleimani in 2019—left Iraq caught in the crossfire. A second Trump term, marked by perceptions of extreme vulnerability in Tehran, could resurrect those tensions, leading to further instability in Iraq if it becomes a battleground for competing U.S. and Iranian interests.

The reimposition of the United States’ “maximum pressure” strategy could also destabilize Iraq by triggering retaliatory actions from Iran-aligned militias. This would put Iraqi leaders in an extremely precarious position; Iraq would have to preserve its economic ties with the U.S. while navigating domestic political pressures and steering clear of the larger regional conflict. This balancing act could prove impossible.

Iraq’s dependency on Iranian energy imports further complicates its position. If Trump intensifies sanctions on Iran, which appears likely, Iraq’s economy could suffer without external support. If it wishes to pressure Iran without alienating Iraq, the United States would need to provide Iraq with alternative solutions to meet its energy needs. Indeed, Iraq’s domestic political scene itself is deeply influenced by the Coordination Framework, a coalition of Shia political parties and militias that maintains close ties with Tehran. The Coordination Framework has proven the main vector for Iranian influence in the country, and the bloc’s parties are among the United States’ most strident critics. Tensions briefly rose in the wake of Trump’s November 2024 electoral victory, with Iran-backed groups across the country preparing for possible confrontation with the new administration. Prime Minister Mohamed Shia’ Al-Sudani’s decision to congratulate Trump despite criticism from his own allies indicates the complex balancing act Iraq must perform to safeguard its interests.

A New Path: Fostering Economic Engagement and Strategic Partnerships

For the U.S., the current state of affairs offers an opportunity to reinforce its commitments to Iraq’s internal stability and independence from Iran. However, this course of action will require significant investments in the relationship. It will also require Washington to move beyond its reliance on military cooperation and expand economic and diplomatic ties to strengthen Iraq’s state institutions. Of course, there is still significant room for cooperation on security issues; Trump’s approach to the Iran nuclear deal may require Iraq to take steps to curb the influence of Iran-aligned militias, which would presumably involve greater U.S. support for Iraq’s armed forces.

The United States should encourage strategic investments in the Iraqi economy, assisting with energy, agriculture, and infrastructure development. These investments would help diversify Iraq’s economy, reduce its dependency on Iran, and build stronger ties between the two nations. By fostering economic partnerships, Washington can help Baghdad become more resilient to external pressures and more internally stable in the long run.

Before taking these steps, however, American leaders must first realize that Iran’s influence in Iraq is confined to certain political factions and does not reflect the broader Iraqi political landscape. To build stronger and more lasting strategic relations, the United States should engage with diverse political voices within Iraq and support humanitarian, cultural, and civil-society-led initiatives that strengthen Iraq’s natural and human resources. These actions would help to reduce the influence of sectarianism and extremist groups and help create a more stable and unified Iraq.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

The rapidly shifting geopolitical landscape in the Middle East has recently been endangered by the United States-led airstrikes targeting Yemen’s Houthi rebels as a part of Trump’s administration’s broader pressure campaign against Iranian-backed proxy groups across the region. Indeed, Iran’s renewed efforts to boost its proxy network amid Israel’s war in Gaza caused a security vacuum, resulting in tectonic changes in the region. As such, deadly attacks against the Houthis in Yemen are a largely reciprocal move due to their frequent missile attacks on Israeli cities, civilian infrastructure, and on merchant ships in the Red Sea. 

Since President Donald Trump’s inauguration in January 2025, many have argued that the United States will take a tougher stance on Iran in an effort to contain Tehran’s regional influence, diminish its leverage over numerous proxy groups—particularly Hamas and Lebanon-based Hezbollah—and ink a new nuclear agreement. In this vein, Donald Trump’s letter addressed to Supreme Leader Ayatollah Ali Khamenei on March 12, 2025, which demanded that the two sides return to the negotiations table over the nuclear deal within two months, should come as little surprise. However, Ayatollah Khamenei refused to entertain negotiations with Washington, emphasizing Iran’s capability to retaliate against any threat—and signaling that the confrontation would reach its inflection point in the coming months. 

America Considers Bombing Iran—And Tehran Reacts

Khamenei’s seeming intransigence has stoked aggressive rhetoric in the United States and Israel. This, in combination with certain military moves—notably the deployment of large numbers of B-2 bombers to the U.S. military base in Diego Garcia, roughly 3,000 miles south of Iran—has prompted recent speculation of upcoming coordinated U.S.-Israel strikes on Iran as a part of efforts to diminish Tehran’s regional influence, as well as to end its longtime effort to acquire nuclear bombs. Although U.S. and Israeli authorities have not offered any comment regarding such plans toward Iran, the unusual frequency of Ayatollah Khamenei’s statements and public speeches, and open calls for Iranian MPs to “rethink the country’s nuclear and military doctrine,” hint that Tehran is nervously preparing for a major attack on its main military facilities, energy infrastructure, and likely its nuclear sites. In addition, Tehran recently urged its proxies in Iraq to move their headquarters, financial resources, and ammunition stockpiles in Karbala, Anbar, Baghdad, Salahaddin, and other provinces to different parts of the country—strictly during night hours to prevent them from any tracing. On the other hand, Yemen’s Houthis received orders from Tehran to renew missile attacks on Israeli cities and infrastructure.

As heated debates have raged in the West and Israel regarding the necessity of curbing Iranian influence, the Islamic Revolutionary Guard Corps (IRGC) has not been idle. On March 6, it showcased and tested new defensive and offensive weapons in large-scale military exercises, including secret underground naval bases along the southern coast—thus referring to the country’s preparedness for another tumultuous year amid threats. Despite the frequent demonstrations of new ballistic missiles, the inauguration of new military bases, and the Iranian authorities’ bellicose rhetoric, Tehran seems to appreciate the limitations of its influence and military capabilities in light of Israel’s extended military operations against its proxies in Gaza, southern Lebanon, and southern Syria. 

Iran’s fear partially stems from having no credible regional ally or partner to mediate between itself and the United States. Russia, Iran’s main foreign ally, is as distrusted by Washington as Tehran itself. On the flip side, its neighbor and fellow Shi’a Muslim country Azerbaijan maintains a long-term strategic partnership with Israel, particularly in the military/defense field, despite harsh criticism of Iran’s conservative political establishment. Amid the ongoing Gaza War, Azerbaijani President Ilham Aliyev’s aide Hikmat Hajiyev landed in Israel in December 2024 to meet Israeli officials—and again in February 2025 to meet Prime Minister Benjamin Netanyahu while Iran watched from the sidelines. Consequently, Iran’s deteriorating relations with Azerbaijan, Turkey, Iraq, Syria, and Pakistan risk igniting the regional security architecture—a predicament made even worse by the specter of significant U.S.-Israel airstrikes. 

Critically, Israel is likely not strong enough on its own to do lasting damage to Iran. Although it could delay Iran’s nuclear program through violence, it likely could not stop it altogether—unless it had assistance from Washington. Moreover, in the event of Israeli strikes against Iran, Tehran has promised regional retaliation, even if Israel strikes alone. In this case, deterrence of retaliation of this scale would require advance coordination with Washington, as in the case of Yemeni Houthis. This fact notwithstanding, Israel is simultaneously engaged in building more sophisticated partnerships through muted diplomacy in Iran’s close vicinity ahead of the potential operation against it, namely with Azerbaijan. Undoubtedly, Israel’s intensifying diplomatic traffic with Baku in the aftermath of the October 7 attacks boosted concerns in Tehran, even though Azerbaijani authorities have not taken any public action against it. 

A U.S.-Israel-Azerbaijan Alliance Would Be a Game Changer 

Azerbaijan’s importance as a key regional small power with its soft power tools, critical energy resources, a strong military, and a long border with Iran are key advantages that Israel has benefited from throughout the two countries’ partnership. In this crucial time full of uncertainty and dangerous regional dynamics, Semion Moshiashvili, a Knesset member from the Shas party, proposed the formation of a strategic alliance between the United States, Israel, and Azerbaijan—a step that was promptly endorsed by Orit Strock, Israel’s Minister of National Missions. 

Such an alliance would not be easy to make, given longtime political uncertainty between Washington and Baku. But its formation would allow Israel and the United States to create a security belt stretching from the Eastern Mediterranean to the Caspian Sea, making it easier to counter Iranian influence and Russian regional ambitions as a bonus. America’s interest in the prospective partnership format received an unexpected boost after Steve Witkoff, President Donald Trump’s special envoy to the Middle East, embarked on a short surprise trip to Baku on March 14 on his way back from Moscow. Although the Azerbaijani government would neither confirm nor deny Witkoff’s presence on its soil, it was more than a simple coincidence—hinting that Israel employed all diplomatic channels in Washington to organize Witkoff’s visit to Baku even for a few hours. 

Prime Minister Netanyahu is looking for a more profound partnership format that includes Azerbaijan and other potential partners, thus forging an alliance against Iran and simultaneously pressuring the Trump administration to take countermeasures. However, despite assurances from Washington, President Trump recently underlined that he would prefer to make a deal with Tehran, though he would not take military action off the table if such negotiations failed. It is no secret that the Netanyahu cabinet hopes such talks will fail—and it has worked hard to persuade the Trump administration to participate in joint strikes on Iran’s nuclear facilities while it is at its most vulnerable. 

In this regard, Azerbaijan’s borders with Iran, its access to the Caspian basin, its military-technical and intelligence capabilities, and its information channels have emboldened the United States and Israel to intensify backstage negotiations with Baku. Nevertheless, it is clear that Azerbaijan will not grant authorization to Israel or America to use its territories as a platform to attack Iranian targets. Although Azerbaijan’s distrust toward Iran skyrocketed dramatically in the aftermath of the 2020 diplomatic confrontation and the terror attack on Azerbaijani embassy in Tehran in 2023, the Aliyev administration appears unwilling to directly become involved in a war against its much larger southern neighbor. 

This reluctance notwithstanding, there is still a possibility that the United States, Israel, and Azerbaijan will be engaged in information exchange for some time amid the Gaza operation. Further high-level visits to and from all three nations are a virtual certainty. Azerbaijan is clearly in favor of an alliance with Israel, particularly in the security field, and such an alliance with the involvement of the United States could yield both military and political benefits for Baku. In its turn, the Trump administration will undoubtedly put its blessing on a deeper Azerbaijan-Israel partnership against the Iranian factor, as in the case of the recent purchase by Azerbaijani State Oil Company (SOCAR) of a 10% stake in Israel’s Tamar gas field near Haifa. 

The possibility of a US-Israeli joint operation against Iran raises the specter of escalation and increased regional instability. Therefore, Israel and America’s efforts to shore up regional strength by courting Azerbaijan is an attempt to minimize the risks of a future conflict spiraling out of control. 

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

According to media reports, the Trump administration is thinking about physically intercepting and inspecting Iranian oil tankers on the high seas as part of a major escalation of Washington’s so-called “maximum pressure” campaign against the Islamic Republic. According to March 2025 reports, American authorities are considering using the Global War on Terror-era Proliferation Security Initiative (PSI) as a legal basis to board and inspect ships suspected of transporting Iranian petroleum.

Washington plans to use the world’s natural sea lane chokepoints to slash Iran’s oil exports and pressure Tehran into making major concessions over its nuclear program. Such efforts, however, run the danger of inciting a strong response from Iran and its trading partners, or disrupting global energy markets.

The Next Evolution of Maximum Pressure

During President Trump’s first term, the maximum pressure campaign sought to limit Iran‘s financial and commercial relationships with the world and pressure the regime to abandon its nuclear program. Though the plan is intuitive, it almost immediately ran into reality when Washington struggled to find quantifiable evidence of its success. Iran’s smuggling networks made around $53 billion in oil earnings for the regime in 2023, despite the fact that many of Trump’s restrictions on trade with the Islamic Republic remained in place. Moreover, President Trump never fully denied that maximum pressure hoped to depose the regime in Tehran, which only hardened Iran’s determination to undermine the policy.

Since taking office in January, the Trump Administration has already slapped two fresh rounds of sanctions on Iran. On February 6, the Treasury Department imposed restrictions on three crude oil ships and related companies that it accused of transporting Iranian crude to China. The second round, on February 24, greatly broadened the scope of the penalties to encompass more than 30 people and 13 vessels, including five Very Large Crude Carriers, or VLCCs. In the past, Iran’s “shadow fleet”—a network of antiquated tankers that operate outside of Western insurance and regulatory oversight—has enabled Iran to evade previous sanctions. Its recent moves suggest that the United States appears determined to crack down on Iran’s ability to circumvent sanctions. Indeed, the more aggressive enforcement activities being mulled by the White House are, at their core, an attempt to increase the effectiveness of the maximum pressure campaign, not a divergence from it. 

Seizing Control

The PSI, a 2003 agreement signed by more than 100 countries to stop the trafficking of weapons of mass destruction, would, in theTrump administration’s view, serve as the legal foundation for its expanded maritime interdiction policy. PSI grants member states the right to board merchant vessels if there is “reasonable suspicion” that they are “transporting prohibited weapons.” Enforcement efforts have focused on strategic chokepoints in international trade lanes, especially the Strait of Malacca in Southeast Asia. This narrow channel, which separates the Malay Peninsula from Sumatra, carries around 30 percent of the world’s crude oil. It has also emerged as the focal point for Iranian attempts to circumvent sanctions.

About 40 miles east of the Strait of Malacca, Iran has concentrated a significant number of “dark fleet” tankers. These are old ships that operate under flags of convenience without Western insurance, to obfuscate their ownership and activities. These vessels conduct covert ship-to-ship oil transfers, guaranteeing that billions of dollars’ worth of sanctioned oil reach Chinese purchasers each year, despite China’s public position that it will not acquire Iranian oil.

According to Bloomberg, operators have increased the number of these transfers since 2020, with more than a dozen ship meetings taking place per day. An estimated 350 million barrels of oil, worth more than $20 billion, were traded in this offshore network in early 2024, demonstrating Iran’s reliance on expensive, high-risk trades to get around sanctions. Tehran’s economic existence depends on these operations, while China gains from cheap oil and protects its large companies from American secondary sanctions.

By harnessing its large naval presence near the strait, the United States seeks to delay and disrupt Iranian shipping and cause intense financial uncertainty for Tehran. The goal, at least for now, is not to seize all Iranian oil shipments—a nearly impossible task. “You don’t have to sink ships or arrest people to have that chilling effect,” a source familiar with the administration’s plans told Reuters. 

The China Factor

It is no coincidence that the United States is considering clamping down on these illicit transfers amid renewed competition with China. In February, Republican senators alleged that China was providing Iran with chemicals for missile propellants. In a letter to Secretary of State Marco Rubio, they called on the government to “identify and sanction any entities involved in transferring missile propellants to Iran, including Chinese companies and ports facilitating Iranian shipments.” The senators also signed a statement that connected attempts to “impose costs on Communist China” by increasing pressure on Iran. This implies that maritime interdiction could form one aspect of a larger U.S. policy that targets Iran’s economic-military links with China, as well as Tehran’s nuclear aspirations.

Maritime trade flows could be significantly impacted by the strategy. Operations at Singapore Port, the biggest bunkering and transshipment facility in the world, could be disrupted by extensive interception efforts near the Strait of Malacca. Regional ports may also encounter inefficiencies and delays as ships attempt to avoid inspections or reroute entirely.

Strategic Challenges and Implications

Of course, there are practical and political obstacles to implementing a water-tight maritime interception policy. Implementing unilateral regulations on the high seas presents difficult international legal issues. The United States would need to coordinate with its regional allies and partners, especially from countries that control important maritime chokepoints—many of whom have no inherent interest in disrupting merchant shipping in their territorial waters.

Previous attempts by the United States to seize Iranian oil proceeds have led to retaliation. In early 2023, Iran allegedly arrested a number of foreign vessels in the Gulf after the United States confiscated approximately one million barrels of Iranian oil. The Pentagon responded by sending more troops to guard shipping routes. More intense interdiction efforts might lead to comparable or harsher retaliation, which would put international trade and the lives of merchant vessel crew members at risk.

History has also shown that Iran is adept at finding inventive ways to skirt international sanctions. It has consistently developed new strategies, including reflagging ships and using intricate webs of shell corporations, to conceal ownership and transactions. Time will tell whether the United States is capable of identifying and countering these increasingly sophisticated techniques.

Beyond its ability to cut Iran’s oil revenue, the success of the administration’s policies will ultimately depend on their wider geopolitical impact. Intensifying the maximum pressure campaign will undoubtedly affect regional stability, international energy markets, and Iran’s nuclear aspirations. The possibility for economic or military retaliation may cause international markets to become unstable. If prices at the pump begin to rise, Washington’s commitment to these measures may begin to wane.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

The Gulf region has become a pivotal arena in the global artificial intelligence (AI) race, with China and the United States vying for dominance over the direction of AI development in the Gulf. As one analyst observed, “Whoever [wins] the Gulf AI ecosystem is going to be in a very favorable position when it comes to the AI race globally.” Predictably, this competitive environment has fueled substantial investments from major tech players into the region.

The United Arab Emirates (UAE) has emerged as a global leader in technological innovation, particularly in the realm of AI. This strategic shift aligns with the nation’s ambition to lead AI research, development, and application. With significant investments, strategic policies, and visionary leadership, the UAE has solidified itself as a dominant force in global AI advancement. Central to this effort is Sheikh Tahnoon bin Zayed Al Nahyan, the UAE’s National Security Advisor and a key figure in the Emirati security establishment, who is responsible for driving investments in AI and advanced technologies.

The UAE’s Ambitious AI Strategy

The UAE’s comprehensive AI strategy, launched in 2017, aims to leverage artificial intelligence across multiple sectors to improve governance efficiency, enhance economic diversification, and position the UAE as a global leader in AI technology. The strategy encompasses sectors such as healthcare, transportation, education, food security, and governance. By integrating AI across these domains, the UAE seeks to improve public services, reduce costs, and attract international investments in AI-related industries.

The AI strategy is aligned with the ‘We the UAE 2031 Vision’ and the UAE Centennial 2071 vision—each part of Emirati leaders’ broader strategic vision of the UAE as a global economic powerhouse. By prioritizing AI development and adoption, the UAE is actively laying the groundwork for a knowledge-based economy, facilitating its transition away from an oil-based economy while driving growth through technological innovation.

The Gulf Region as an AI Battleground

The UAE has worked diligently to court major international tech firms, securing significant partnerships to advance its AI goals. For instance, Microsoft invested $1.5 billion in G42, an Emirati AI firm chaired by Sheikh Tahnoon bin Zayed. This strategic partnership reflects the UAE’s increasing role as a technological hub for the Middle East and beyond. Conversely, Emirates-based companies such as Dubai’s DAMAC and Abu Dhabi’s MGX have invested heavily in prominent American AI firms, including OpenAI, Anthropic, and Musk’s xAI.

These investments highlight the UAE’s strategic balancing act—simultaneously leveraging Western technology partnerships and maintaining economic ties with China in order to ensure continued growth in its AI ecosystem.

Navigating Geopolitical Complexities

The UAE’s deep involvement in the AI sector has placed it at the center of an intense global geopolitical competition. The U.S. Commerce Department’s “AI Diffusion Rule,” announced in early 2023, underscores this tension. The regulation classifies countries into three tiers for access to advanced U.S. semiconductor chips:

• Top Tier: Countries with near-unrestricted access, such as Canada, Germany, and Taiwan;
• Middle Tier: Nations outside of the United States’ traditional ally network, which can still purchase advanced chips but face stricter licensing requirements;
• Bottom Tier: Traditionally antagonistic countries with near-total export bans, such as China, Russia, North Korea, and Iran.

As a partner of the United States but not an “ally” in the traditional sense, the UAE falls into the second category, as do most other Arab nations.

Washington’s restrictions have drawn criticism from major U.S. tech companies, including Nvidia and Microsoft, two tech giants that enjoy a fairly long history of close relations with the UAE’s leadership. Both companies have argued that the UAE should be granted greater access to U.S. semiconductor technology. Microsoft, in particular, stressed that the UAE was an “American friend” that was being unfairly restricted under the AI diffusion policy.

Balancing Economic Partnerships with China

However, a change in U.S. policy with respect to semiconductor exports to the UAE is unlikely. While Abu Dhabi has maintained a strong partnership with the United States, it has raised concerns in Washington for its economic ties with Chinese technology firms. Indeed, the UAE’s exposure to Chinese tech has become a recurring point of tension in diplomatic discussions.

A notable example of U.S. discomfort with close China-UAE ties was the Microsoft-G42 deal, which required G42 to sever ties with Chinese tech firms as a condition for American investment. This agreement reflects the broader geopolitical rivalry between the United States and China, with the UAE being strategically positioned between the two superpowers.

In spite of these complexities, the UAE has mostly managed to balance its diplomatic ties effectively. By maintaining strategic investments from both Western and Chinese entities, the UAE has solidified its status as a bridge between the West and Asia. Indeed, by maintaining close ties with both sides, Abu Dhabi could be ideally positioned to play a mediatory role in the future, if any conflicts arise between the major AI players.

The Role of Sheikh Tahnoon in AI Advancement

Sheikh Tahnoon bin Zayed Al Nahyan has played a pivotal role in the UAE’s technological advancement, particularly in the field of AI. As the chairman of G42, Sheikh Tahnoon has overseen major investments and partnerships that have helped position the UAE as a global AI leader. Under his leadership, G42 has collaborated with international tech giants and played a central role in deploying AI solutions across key industries.

His strategic vision has enabled the UAE to secure investments from leading AI firms, foster innovation, and develop cutting-edge infrastructure to support the country’s technological growth. Sheikh Tahnoon’s leadership has been instrumental in aligning the UAE’s AI ambitions with its broader economic development goals.

In a move to deepen economic ties and reinforce its strategic partnership with the United States, the UAE recently announced plans to invest $1.4 trillion in the U.S. economy over the next decade. Crucially, the announcement followed a key meeting between the U.S. President Donald Trump and Sheikh Tahnoon. The investment underscores the UAE’s commitment to strengthening its comprehensive partnership with the United States while continuing to leverage Western technological expertise to drive innovation domestically.

Future Outlook for the UAE’s AI Strategy

The UAE’s commitment to AI innovation is expected to expand in the coming years. With ongoing investments in AI research centers, talent development and attraction programs, and partnerships with global tech leaders, the UAE is well-positioned to remain a dominant force in the AI landscape.

The government’s focus on digital transformation, combined with its strategic diplomatic efforts, will continue to attract international investors and tech innovators. By leveraging its financial strength, geopolitical position, and forward-looking leadership, the UAE is poised to shape the future of AI on a global scale.

Ultimately, the UAE’s AI strategy reflects a pragmatic blend of technological ambition, diplomatic foresight, and economic vision. Through strategic investments, international partnerships, and visionary leadership, the UAE has emerged as a formidable leader in AI.

As the race to develop artificial intelligence intensifies, the UAE’s capacity to manage geopolitical complexities while fostering technological innovation will solidify its influence on the global stage. With its future-oriented vision and commitment to transform its economy, the UAE is set to shape the future of AI and redefine technological leadership worldwide.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

On March 12, Iran, China, and Russia launched joint naval drills in the Gulf of Oman, marking their fifth joint exercises in the last few years. The recent war games came amid the ongoing border tensions in the Middle East—with direct clashes between the Israeli Defense Forces and Iranian proxy groups, including continuous attacks from the Yemen-based Houthi rebels in the Red Sea. According to the Russian media, the exercises involved warships and aviation focusing on the protection of “maritime economic activity.” 

Indeed, the Israel–Hamas war and clashes in Lebanon and Syria following the fall of the Assad regime led to the further militarization of the region. Moreover, the re-election of Donald Trump as the U.S. president led Tehran to seek deeper ties with China and Russia in nearly all fields, including strengthening navy capabilities to deter potential attacks—even as Trump’s most hawkish advisors are conspicuously absent from his administration this time, and those who remain have made statements welcoming a renewed nuclear deal. Nevertheless, Tehran seems cautious as it likely seeks to capitalize on the offer of a new nuclear deal amid the changing geopolitical landscape.

Iran’s Diplomatic Strategy

In the last ten years, Iran has been leaning on the diplomatic and economic support of Russia and China against the West, particularly in terms of national nuclear strategy. The partnership between Moscow and Tehran in particular has evolved significantly since the onset of the Russian invasion of Ukraine in February 2022. The large-scale war in Ukraine and the effect of Western sanctions on Russia and Iran have each served as a major impetus for the improvement of the bilateral relationship. As such, both sides cemented a bilateral partnership with a new wide-ranging treaty on January 17 in Moscow. A similar agreement was signed with China in 2021, confirming commitment to a bilateral strategic partnership.

However, after January 2025, the Trump administration announced a significant shift in America’s foreign policy discourse—such as putting pressure on Ukraine regarding the peace deal, increasing bellicose rhetoric against China, encouraging diplomatic rapprochement with Russia, and taking the Israeli side against the Iranian proxy network. Among all, Iran is indeed concerned about Moscow’s steadily changing narrative toward Washington amid its shrinking influence in the Middle East and mounting domestic tensions and instability. Notably, the most recent meeting between senior U.S. and Russian officials in Riyadh—in which the atmosphere was positive between the two sides and led to cordial statements—intensified concerns in Tehran. Although Russia and Iran have long been distrustful of each other, Moscow has remained Tehran’s main economic partner and supplier of some critically essential goods, including defense products. 

No Longer the Enemy of My Enemy?

Policymakers in Tehran fear that if Russia improves its relationship with the United States, it might consequently downgrade its strategic partnership with Iran—thus enabling the United States and Israel to ratchet up pressure on Tehran by conducting deadly operations against proxies in close vicinity. Undoubtedly, such a scenario will result in the disruption of Russian arms supply to Iran, which at this stage is vitally important for Iran and its proxies to deter Israel and its allies across the Middle East. Since 2019, Russia has become the sole exporter of arms to Iran, as the latter desperately sought Su-35 fighter aircraft and S-400 air defense missile systems to address the country’s dire need for significant air defense systems.

Israel’s accurate air strikes on Iranian military facilities in 2023 and 2024 underscored this need. The strikes—which were essentially uncontested—forced Iran to ramp up cooperation with Russia in this direction, resulting in Moscow’s dispatch of missile experts to Iran several times in 2024 and early 2025. In addition to military/defense partnership, Russia is a crucial country for Iran in terms of circumventing financial sanctions, namely by offering alternative payment systems outside SWIFT, from which both countries are cut off. Moreover, in an attempt to avoid international financial surveillance and banking restrictions, Russia and Iran explored cryptocurrency transactions that were later leveraged by the Iranian Islamic Revolutionary Guards Corps (IRGC).

Still, considering the negative impact of the war in Ukraine on Russian diplomacy, domestic stability, economy, and geopolitical influence, it is unlikely that Moscow will abandon its cordial relations with Iran and China for the short-term appreciation of the Trump administration. On the contrary, Russia is still in need of vocal support from Iran and China to amplify its narratives about the war in Ukraine.

But the most recent agreement between Ukraine and Russia—brokered by the United States—for a 30-day partial ceasefire agreement hinted that Moscow is enthusiastic about restoring diplomatic dialogue with Washington. Therefore, if Russia seeks more nuanced concessions from the Trump administration—such as abandoning arms shipments to Ukraine and the possibility of re-deploying Russian troops into Syria—the Kremlin may reward the Trump administration and Israel by pressuring Iran to sign a new nuclear deal and downgrading its comprehensive support to proxy groups in the Middle East. Indeed, such perspectives triggered debates within the Iranian media as to whether Russia would soon align with the United States against Iranian interests and curtail relations with it. In fact, it is likely that the same calculations are ongoing in Moscow—and that Kremlin policymakers would prefer to evaluate the situation and check the pulse of regional allies before making any moves with regard to Iran’s geopolitical and nuclear ambitions. 

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Relations between Kuwait and the United States have been marked by decades of cooperation rooted in common security objectives, economic interests, and geopolitical considerations. Since Operation Desert Storm in 1991, Kuwait has emerged as a vital regional partner to Washington, largely due to its strategic location, financial clout, and political stability. While this partnership has remained consistent, the arrival of the Trump administration introduced new diplomatic complexities that influenced U.S. relations with Kuwait and the broader Gulf region.

A Deep Partnership

Kuwait has held the designation of a Major non-NATO Ally since 2004, a status that emphasizes its significance in supporting the United States’ regional national security objectives. This special designation reflects Kuwait’s consistent cooperation in providing access to key military bases, facilitating training operations, and enabling smooth logistics for American forces stationed on Kuwaiti territory. Kuwait is home to one of the largest US military presences in the world, including U.S. Army Central, the Army branch of U.S. Central Command (CENTCOM).

Kuwait’s geographical position enhances its strategic value, providing an ideal environment for U.S. military training. Moreover, Kuwait accommodates the region’s largest U.S. air logistics hub at its international airport, enabling efficient troop and equipment movement throughout the Middle East.

Kuwait has also played an essential role in financially supporting U.S. military operations. Unlike other American partners, Kuwait does not require the United States to pay for land use and offers access to subsidized utilities such as electricity and water. Kuwait has provided an estimated $200 million annually to assist U.S. stabilization efforts in Iraq, as well.

Following the Gulf War, Kuwait contributed approximately $16 billion to cover U.S. war expenses, demonstrating its commitment to security cooperation. When Washington needed assistance during a crisis, Kuwait stepped up, providing free evacuation flights for numerous American citizens stranded in Afghanistan after the Taliban’s takeover in 2021. These flights, arranged aboard Kuwaiti-flagged Boeing 777 aircraft, reflect Kuwait’s proactive foreign policy, its dedication to humanitarian efforts, and its alignment with Washington’s broader regional objectives.

Tensions Rise

Despite this rich history of cooperation, disputes have begun to surface. Howard Lutnick, the U.S. Secretary of Commerce, claimed that the United States had not been adequately compensated for the $100 billion it spent liberating Kuwait. Lutnick also alleged that Kuwait had imposed very high tariffs on U.S. imports. These statements sparked controversy in Kuwait and are widely challenged by U.S. official records. According to a 1992 U.S. Government Accountability Office report, the Gulf War’s total cost was approximately $61.1 billion, with U.S. allies—including Kuwait—covering about $52 billion of the expenses. Kuwait, Saudi Arabia, and other Gulf states contributed an estimated $36 billion, while Japan and Germany added a combined $16 billion.

On the issue of tariffs, Kuwait’s trade policies align with the Gulf Cooperation Council’s (GCC) unified customs framework, which imposes a 5 percent tariff on most imported goods. This figure is significantly lower than the tariffs imposed by many other countries, and, more importantly, is common among the United States’ GCC partners. Since its liberation from Iraqi forces in 1991, Kuwait has directed substantial investments into the U.S. economy, with its financial contributions estimated to exceed two to three times the Gulf War’s cost. Today, U.S.-Kuwait trade relations remain robust, with total trade reaching approximately $5 billion.

In Kuwait, Lutnick’s controversial remarks were widely interpreted as politically motivated. The former CEO of Cantor Fitzgerald, Lutnick is a vocal supporter of former President Donald Trump. His strong ties to Trump, including his staunch support for using tariffs as a coercive tool. Lutnick may have also sought to pressure Kuwait to adopt a more flexible stance on normalizing relations with Israel. Despite Washington’s pressure, Kuwait has refused to engage in normalization talks with Tel Aviv, reaffirming its strong support for Palestinian statehood.

Securing Kuwait’s Future

Though many Kuwaitis chafed at Lutnick’s remarks, Kuwait faces mounting geopolitical pressures that may force it to accede to American demands.  The increasing assertiveness of global powers such as China and Russia, combined with renewed U.S. efforts to strengthen its Gulf partnerships, places Kuwait in a delicate position. To safeguard its sovereignty and strategic independence, Kuwait must focus on resolving domestic political disputes that undermine its ability to negotiate with partners and adversaries alike. Addressing these challenges will require Kuwait to adopt strategic reforms that promote economic resilience, political unity, and social cohesion.

Kuwait’s close strategic partnership with the United States remains a cornerstone of its foreign policy. To the benefit of both Washington and Kuwait, this relationship is nurtured by deep economic investments, security cooperation, and shared political interests. While recent controversies have tested this relationship, Kuwait’s long-standing contributions—both financial and political—underscore its steadfast commitment to regional stability and its partnership with Washington.

In the face of growing geopolitical tensions, Kuwait’s ability to navigate diplomatic challenges will hinge on its ability to strengthen its domestic foundations. By pursuing reforms that enhance economic resilience and political stability, Kuwait can safeguard its national interests while continuing to serve as a reliable U.S. partner in the Gulf.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.