Will the Israel & Iran Conflict Impact US - GCC Trade & Investment?

It is not the first time I have found myself contemplating the impact of Middle East strife on international business. I flew from Dubai to Salt Lake City in 1990 for a WordPerfect Global Distributor event, arriving on the day that Iraq invaded Kuwait and the Gulf War began. Middle East air travel was restricted immediately, and the event was canceled. Still, ironically, the UAE (me) and the Saudi distributors were already there, and I couldn't get a flight back. Since then, I have been witness to the war in Iraq, Afghanistan, and other aggressive regional military clashes and their impacts on business.

I am offering my opinion on the impact of the current Israel-Iran conflict, based on my over 30 years of experience living within the Middle East's geopolitical landscape, specifically from the perspectives of Saudi Arabia and the United Arab Emirates, and its impact on trade and investment.

The UAE and Saudi Arabia will most certainly project a 'business as usual' attitude as they have both invested heavily in diversifying their economies, which are heavily dependent on the comfort level of their international development partners. The UAE, in particular, has shifted its relationship with the US from a defense-driven cooperation of the past to an economic partnership, as evidenced by recent events, including President Trump's visit and the announcement of significant investments in sustainable energy and artificial intelligence. Saudi Arabia is making significant efforts to promote international tourism through investments in mega-projects, tourist attractions, sporting events, and business conferences. The UAE already holds its place on the global destination bucket list. Security and safety are king.

For the GCC countries, what is real is that should the US directly enter into the conflict, Iran pledged to retaliate against military installations in Saudi and UAE while targeting the oil supply infrastructure in both countries, which they have demonstrated their capability to do so in 2019 and 2022. Creating a military zone across the Strait of Hormuz impedes the international flow of oil and the global supply chain. When oil prices rise, the global economy stumbles.

Based on experience, Americans and American businesses tend to be easily spooked when anything like the current conflict occurs, especially the small to medium size companies. I am well aware that US media is alarmist based on the ‘sky is falling’ rhetoric my family shares while I’ve been living overseas. By contrast, the residents of UAE and Saudi Arabia take it in stride. A friend in UAE commented this morning, "It's normal." believing this too will blow over quickly.

Normal or not, brief or not, conflicts and the mere threat of conflicts like this fuel economic fluctuations that impact the markets. Increased economic volatility, compounded by US pre-existing tariff uncertainty, will require more than a pro-business attitude to reassure US businesses large and small. Or will the dollar value of recent Saudi and UAE commitments to the US overshadow the geopolitics, and will the wheels of new UAE and Saudi Arabia trade and investment continue to turn regardless? The ultimate question for both the US and its counterparts in UAE and Saudi may be, can they afford not to?

I think not.