Iranian President Masoud Pezeshkian’s apology to Gulf Arab neighbours for attacking their countries might be seen as a sign of easing tension there. But anticipation and anxiety still prevail all over the western flank of the Gulf. Pezeshkian promised “no more attacks against neighbouring countries unless they are the source of an attack against Iran.”
But not long after his statement, Dubai Airport was hit, which led to the national carrier Emirates partially cancelling flights it had resumed. Loud explosions were heard in the skies of the Qatari capital Doha and the Bahraini capital Manama while the Emirati military in the capital Abu Dhabi intercepted missiles and drones.
This ultimately demonstrates that President Trump’s claim that his attacks on Iran forced it to apologise to its neighbours and cease its strikes was false. The Gulf states are already realising that the “US is abandoning them to the eye of the storm,” as some Gulf pundits have described it, off-the-record.
Air defences in Gulf countries were capable of destroying almost all Iranian missiles and drones, but the few projectiles that were not safely intercepted caused damage that goes beyond causalities or destruction. It impacted the mantra of stability and economic prosperity. As the Financial Times put it in a lengthy story about UAE, the image of a secure country in the middle of troubled region has been negatively affected. “Historically, Dubai has benefited from regional instability and global crises; but this time the port city is at the centre of the storm,” the paper concluded.
The Financial Times story quoted officials and advisers saying that “many worry that, after the Gulf States have been dragged into a war they did not want, the US may fail to ‘finish the job’ or start negotiations with Iran that leave them exposed.” The war is already having serious consequences on energy, trade, tourism, property markets and other sectors of the Gulf economies. It is a blow to their efforts at diversification away from oil, pursued successfully by the UAE and now in action in Saudi Arabia.
Due to ships and tankers avoiding the Strait of Hormuz, even though it is not officially closed yet, Iraq and Kuwait have announced “force majeure” and started decreasing oil production. That means losing billions of dollars as exports stop flowing out of both countries. Though Saudi Arabia has an alternative in the East-West pipeline, enabling to export from a Red Sea port, it can only carry less than half of the standard Saudi production. UAE has access to an Oman pipeline from Fujairah, but its capacity is less than two million barrels per day.
Reports are surfacing that the Gulf countries are mulling over ways to cushion the economic impact of the war and Iran’s attacks on them. The Financial Times reported that Saudi Arabia, the UAE, and Kuwait might “review their overseas investments and future commitments as they consider options to ease the financial strain caused by the US-Israeli war against Iran.”
That could have an impact on any number of things from investment pledges to foreign states or companies, sports sponsorship, contracts with businesses and investors, or sales of holdings. The three Gulf countries, along with Qatar, promised hundreds of billions of investments in the US last year during Trump’s visit to the region. If these funds do not materialise, the American president will feel the heat, which might push him to end the war, as some Western commentators note.
Energy and money can be volatile in times of crisis. But the real damage was inflicted on the sensitive sector of tourism. As airspace over the Gulf closed and thousands of flights were cancelled, it was the UAE that suffered the most, particularly Dubai. As a major world travel hub and a global tourist destination, any stain on Dubai’s reputation as a secure place can be detrimental.
It appears that the Iranian military leaders intentionally placed the UAE at the receiving end of most of the missiles and drones they aimed at the Gulf. Visitors and residents who scrambled to leave the country talked to Western media about their plight. The American expats and tourists in particular were very critical of their government for not offering them any help. In fact, the Emirati authorities bore the brunt of accommodating them with no effort from the American authorities at all.
Spain, the UK, and other countries arranged repatriation flights for their nationals, most of whom had already travelled to Oman by land; they were flown home from there. The chaos was far worse than that of the 2020 pandemic, as at the time the entire world was in lockdown.
This time round the fear of war and airstrikes is isolated within the region. Affluent residents and business people who had favoured Dubai for its tax policies hired private jets in which to leave. Some wealthy Asians also started transferring their assets from there to Singapore or Hong Kong. That is a real blow to the efforts of Dubai to establish itself as a global financial hub welcoming capital, bankers and property investors from all over the world. The model is still being tested and, despite proving itself repeatedly, the present test seems a difficult one.
Even if the war stops tomorrow, real damage has already been inflicted on the Gulf. The Gulf countries only received lip service from the Americans whose priority is to protect Israel. In many circles, over-reliance on the US, which has been tested by Iranian strikes, is being reconsidered. Many in the Gulf were dismayed by Trump’s expression of “surprise” that Iran attacked them. Though nobody is talking about disengagement as such, the alliance with Washington is no longer the sole option and countries of the region might have to diversify allegiances to protect themselves.
* A version of this article appears in print in the 12 March, 2026 edition of Al-Ahram Weekly
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