In the complex landscape of Middle Eastern geopolitics, the ongoing conflict involving Iran has the potential to reshape dynamics among Gulf states. This evolving situation suggests the possibility of fractures among these nations, with some potentially unwilling to align with traditional alliances, particularly in relation to the United States. A notable observation by Satyajit Das highlights that Israel has become a focal point of U.S. interests in the region, often overshadowing the significance of other nations. This raises questions about the feasibility of a resolution, especially concerning the strategic Strait of Hormuz, which remains tightly controlled by Iran despite U.S. objections.
One alternative path could see some Gulf states recognizing that their survival hinges on reconciling their differences with Iran, albeit reluctantly.
Richard Pape offers a complementary viewpoint, stating that the Gulf states are increasingly acting independently, leading to a fragmentation of their united front now that U.S. influence is waning.
By Satyajit Das, a former banker and author of numerous technical works on derivatives and several general titles: Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives (2006 and 2010), Extreme Money: The Masters of the Universe and the Cult of Risk (2011), and A Banquet of Consequence – Reloaded (2016 and 2021). His latest book is on ecotourism – Wild Quests: Journeys into Ecotourism and the Future for Animals (2024). This is an amended version of a piece first published in the New Indian Express print edition.
The conflict instigated by Israel and the U.S. against Iran is significantly altering the already volatile energy markets and the geopolitical landscape of the Persian Gulf. Various objectives are becoming apparent. Israel aims to destabilize Iran and its Arab neighbors, facilitating the annexation of Palestinian territories. The U.S. is expected to define its goals post-“victory,” echoing its controversial, post-World War II support for colonialism in Indochina.
The violent repercussions have led to the entrenchment of hardliners within Iran’s Revolutionary Guards, as many moderates have been killed in recent airstrikes. Their focus is on neutralizing threats to the Islamic Republic’s existence. To curtail the ongoing conflict, Iran demands the withdrawal of U.S. military presence, security guarantees from reliable powers, reparations, and new protocols governing the Straits of Hormuz, among other provisions, potentially including lifting sanctions and releasing frozen assets estimated between $100 billion and $120 billion.
Central to this situation are the Gulf Cooperation Council (GCC) States—Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, and Oman.
These primarily Sunni Muslim states find themselves entangled in a dilemma of their own creation. Despite claims of brotherhood, they have historically sought to weaken Iran’s influence in the region while relying on U.S. military protection. Their monarchies maintain strong economic ties with the U.S., investing significantly in Western assets through sovereign wealth funds, while their petrodollars support the U.S. dollar’s reserve status. Some members have even established formal relations with Israel under the Abraham Accords.
Since the outbreak of hostilities, Iran has launched well-planned attacks on GCC nations, aiming to dismantle these alliances. Strikes on U.S. bases have been part of its military strategy, even as governments deny any acknowledgment of foreign military presence within their borders. Concurrently, Iran’s targeting of GCC energy assets and attempts to restrict transit through the Straits of Hormuz pose significant threats to their economies, especially since many GCC states are already financially vulnerable.
The GCC now faces a difficult decision. They can choose to support the U.S. and Israel in a military response against Iran, with the potential of a new front opened by Israeli Prime Minister Netanyahu. This coalition could provide the U.S. with an opportunity to reduce direct involvement, transitioning to a model focused on supplying arms, akin to its Ukraine strategy. Recent arms sales worth $16.5 billion to Gulf states illustrate this trend.
Alternatively, the GCC could pursue a diplomatic approach, seeking neutrality with Iran, dismantling U.S. bases, agreeing to reparations, and collectively managing vital maritime shipping routes.
However, both options come with significant ramifications. Aligning with the U.S. and Israel could incite backlash from populations sympathetic to Iran and Palestine, jeopardizing the legitimacy of the existing monarchies. Conversely, reaching out to Iran could alienate their Western allies, who prioritize stable energy supplies.
Underlying resentments complicate this choice. Many in the region harbor frustrations over Western hypocrisy regarding Israel, and there are growing doubts about the reliability of U.S. security guarantees. Prominent Emirati businessman Khalaf al-Habtoor candidly questioned the legitimacy of the U.S. approach, expressing concerns about collateral damage and the potential consequences of forced involvement in conflicts.
Furthermore, the GCC faces internal divisions. Historical disputes over oil production levels exist between the UAE and Saudi Arabia, with the former advocating for maximum exports to fund a post-oil economy, while the latter seeks to maintain control over OPEC output agreements. The relationship between Saudi Arabia and Qatar remains fraught, having been marked by a blockade from 2017 to 2021 due to alleged support for extremist factions.
The forthcoming choices may have wider global implications, potentially exacerbating tensions. Aligning with the U.S. and Israel could lead to long-term instability. Russia views such a development as a further extension of Western influence, while China would be concerned about securing its energy resources and investments in infrastructure.
Conversely, a GCC partnership with Iran could grant control over vital shipping lanes and the ability to dictate pricing, an outcome that would alarm European and allied Asian nations. This scenario may compel these countries to consider joining coalitions aimed at safeguarding energy routes.
Israel perceives any Iran-GCC alliance as a distinct threat to its security. It heavily relies on Western support, and mounting resentment over perceived U.S. complicity in the conflict continues to grow. Former President Trump has already hinted at reducing U.S. engagement in the region, suggesting that the American presence is becoming more habitual than strategic.
As the situation stands, the conflict remains unresolved, with unpredictable consequences on the global stage. The potential impacts on fossil fuel availability and pricing, critical for the global economy, remain unclear. As Adolf Hitler once stated, “The beginning of every war is like opening a door into a dark room. One never knows what is hidden in the darkness.”
© Apr-26 Satyajit Das All Rights Reserved
