Fiscal pressure from Iran War clouds Gulf States’ US spending plans
Gulf nations may prioritise domestic investments over US commitments amid economic pressures, says new report.
The ongoing conflict between the United States and Iran could make it harder for three Gulf countries — Saudi Arabia, Qatar and the United Arab Emirates — to deliver on nearly $4 trillion in economic commitments to the US announced under President Donald Trump’s “America First” agenda, according to a new analysis from the Peterson Institute for International Economics (PIIE).
The 15-page report released Monday says the Gulf states are facing growing economic pressure from the US and Israel’s war on Iran, including the need to spend more on defence, energy infrastructure and trade.
“The conflict has weakened their fiscal positions and economic prospects and may have lasting effects on their growth models. It has also weakened their confidence in the US security umbrella in the Gulf,” the report said.
“Continued frustration over Korea’s delayed implementation also appears linked to the recent US decision to scale back joint military exercises there,” the report continued.