When war comes to wealth: conflict in the Gulf

When war comes to wealth: conflict in the Gulf

Graham Jackson, Blogs Editor

Featured image credit: U.S. Navy/Wikipedia Commons (Public Domain)

At 1:15 AM EST on Saturday, February 28, United States Central Command (responsible for US forces in the Middle East), in coordination with Israeli forces, launched surprise airstrikes across Iran in an operation named “Epic Fury.” This unanticipated attack decapitated senior Iranian leadership, killed Supreme Leader Ayatollah Khamenei and struck key military installations around the country.

After the initial salvo of airstrikes from the US military and Israeli Defense Forces (IDF) on Saturday, Iran launched hundreds of ballistic missiles and thousands of drones toward US forces in the region, Israel, and the American-friendly Gulf states. A Royal Air Force base in Cyprus was also targeted by several drones and NATO had to shoot down a ballistic missile heading towards Turkey.

The justification for the strikes and ongoing operations in Iran has been somewhat ambiguous. Secretary of State Marco Rubio appeared to say the US was pressured to attack because Israel was already planning to do so, putting the US at the blunt end of an even larger counterattack than it is currently experiencing.

Following public outrage at the idea that the US was pushed into the war by Tel Aviv, Secretary Rubio walked back his statement the following day, and President Trump also rejected the logic saying that, according to The Guardian, “If anything, I might have forced Israel’s hand.” He failed to make it evident how he could have done so. Trump justified the strikes by claiming imminent threats from Iranian weapons programs.

A map of joint US and Israeli strikes on Iran and Iranian counterstrikes within the first 100 hours of Operation Epic Fury. Iran’s Supreme Leader was killed in the initial strikes in Tehran.
Image: Department of Defense (Public Domain)

Trump has not received Congressional approval for his military campaign (the legislative branch is the only part of the US government that can formally declare war). According to the War Powers Act, the President must begin to remove all mobilized troops 60 days after their initial deployment if Congress fails to approve the operation.

The lack of Congressional oversight during the current operation has angered many in the Senate and the House. As for the American public, approval for the war stands at only 44%, according to a recent NPR, PBS and Marist Poll survey.

Most recently, President Trump has said he is now attempting to seek an “Unconditional Surrender” from Tehran. Despite the confusion in Washington on the purpose of the war, its effects are painstakingly clear.

Perhaps one of the most striking examples of the war’s impact on everyday life is in the Gulf states targeted by Iran: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (there are no Gulf nations that haven’t been attacked during this conflict) have all faced numerous drone and missile strikes.

These strikes, to the surprise of many, were not only on US military bases hosted in the countries, but also on civilian and economic sites. These targets included diplomatic facilities; the Fairmont Hotel in Dubai, UAE; oil facilities in Saudi Arabia; and Amazon Web Services data centers in Bahrain and the UAE.

Paradise Meets Ballistics

The Gulf states have become famous in recent years for being glitzy havens of wealth and success. While building their initial fortunes in vast oil reserves, Gulf countries have managed to diversify and attract troves of Western expatriates looking for a place to live with year-round warm weather, gleaming skylines, handsome foreign investment opportunities and a perceived security from the turmoil of the outside world.

An image of the Dubai skyline. The Emirati city was hit by a massive Iranian counterattack consisting of drones and ballistic missiles.
Image: Wikipedia Commons (Public Domain)

The oasis turned out to be a mirage for many once the missiles and drones started to fly on February 28. While the civilian casualties are relatively low in the Gulf nations (partially due to their advanced air-defense systems from the US) the spectacle of smoke clouds towering over luxury high-rises has the potential to create a perception of chaos and danger that could ruin the Gulf’s reputation.

The profitable new industries (such as tourism and the tech sector), which make a sizable portion of the GDPs of these countries, are jeopardized by a potential loss in confidence of foreign firms. If international businesses decide that the Middle East is too risky of an environment to safely invest in, it could spell ruin for the region’s economies.

Iran’s attacks on oil, tourist hotspots, international airports and sites of foreign investments suggests that the rationale for Tehran is to inflict maximum pain on the most critical parts of Gulf economies to scare their governments from supporting the US and Israel’s efforts. However, the attacks might instead backfire with the possibility of Iran creating new enemies and worsening its already precarious position.

An F/A-18 Super Hornet taking off from the deck of the USS Abraham Lincoln during Operation Epic Fury.
Image: U.S. Navy/Wikipedia Commons (Public Domain)

According to the Wall Street Journal, Abu Dhabi has been considering freezing Iranian assets in the country as retaliation for the attacks. Tehran depends on the UAE for access to foreign currency which it badly needs due to heavy economic sanctions put in place by the West.

In an effort to quell concern over attacks in the Middle East, the UAE, for example, has also attempted to curb the posting of images of sites of Iranian attacks by warning its residents against it and reminded them that distributing a false video (several fake videos showing mass destruction in the UAE have proliferated online) was a criminal act.

As of late, Iranian President Pezeshkian gave an apology to the Gulf states for its attacks and claimed the Iranian military would halt all attacks on the Gulf unless a Gulf state attacked it. This commitment was apparently meaningless as other Iranian officials directly contradicted this statement and Iran fired drones and missiles at an airport in the UAE and oil facilities in Saudi Arabia.

While conflict still rages in the Middle East, with explosions permeating through the once tranquil Gulf enclaves, America’s shifting strategy makes it difficult to project the length of the war and how long the region will have to hold out. If regional governments manage to protect their global reputations there is a chance that the region will quickly bounce back to its prewar pace.

However, if the Iran crisis manages to permanently shift the perception of safety of the Gulf states then the formula that has driven the region’s outstanding growth and prosperity could easily falter.  With the war showing little signs of relenting, the outcome is far from clear.

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