History has not been kind to the aspiring cultural and finance hubs of the Middle East over the past 50 years, from Beirut’s descent into civil war to Kuwait’s invasion by neighboring Iraq. Hence why Gulf economies such as Dubai and Abu Dhabi are determined to show they can overcome their biggest test yet, a US-Israeli war with Iran that’s killed thousands across the region, displaced many and massively disrupted oil supplies. The omens haven’t been great.
Officially, things are fine in the United Arab Emirates despite the missile strikes and economic worries. They’ll be even better if President Donald Trump is right about the US exiting the war within two to three weeks, and that leads to a broader cessation of the fighting and a reopening of the Strait of Hormuz, a crucial waterway for oil out of the Gulf.
From government pronouncements to social-media posts, the state position is that life goes on and the UAE will even benefit from coming through this period. “Our institutions are operating efficiently, our defense forces with professionalism, and our private sector with responsibility,” Dubai’s ruler, Mohammed bin Rashid al Maktoum, said at the weekend, adding that the emirates “will emerge strong...
Yet as the war has grinded into a fifth week, the positive narrative has been starting to look a little stretched. Efforts to curb bad news haven’t stopped occasional outbursts from people saying what they really think, from Emirati billionaire Khalaf Al Habtoor’s angry post (subsequently deleted) lambasting Trump to corporate bosses saying the region’s growth outlook is uncertain.
This isn’t existential yet for Dubai’s position as a business hub. Abu Dhabi’s oil riches have helped out its fellow emirate in the past. But the prospect of a longer war has been weighing on the Gulf economy, as has the fading likelihood of a substantially weakened Islamic Republic. Arab nations could lose between $120 billion and $194 billion from gross domestic product as a result of war disrup...
Before Trump’s latest comments on Tuesday about ending the war, Dubai’s stock market had fallen by more than 18% since just before the conflict started, with the listed real-estate sector down about 30%. Some hotels have cut prices heavily, according to their websites. Dubai Airport has reopened with limited capacity and airlines rerouting to Asia. Property developers have been allaying investor c...
For a global finance hub dubbed by some as the Switzerland of the Middle East, the economic scars could run deep. Talk of an exodus from Dubai and Abu Dhabi was always overdone — there are plenty of long-term expats living there who have no immediate alternatives and who are umbilically attached to a quality of life that includes zero income tax and great childcare. Many Emirates-based people woul...
Yet it’s becoming more common to hear from those who relocated to the region, or brought over relatives, saying something along the lines of: I didn’t sign up for this. A senior investment banker tells me that while there’s been a low take-up for relocations from the UAE, there are doubts about a return to the status quo ante — when a flood of arrivals had people talking of Dubai as an alternative...
The UAE has, of course, done an impressive job intercepting more than 2,000 missiles since the conflict began. And it has rebounded strongly from previous crises such as a real-estate bubble in 2008. It thrived during the pandemic.
But its exposed position on the geopolitical map is now evident. The Strait of Hormuz, the Gulf’s waterway into open ocean, is something countries and companies are trying to avoid. Dubai’s port of Jebel Ali, known as the “engine,” is much quieter than normal. The UAE does have an Hormuz-dodging route via Fujairah for oil exports but that’s still vulnerable to attacks.
Moreover, the country’s fortunes and future prospects depend on its non-oil economy — as does Saudi Arabia’s Vision 2030. And this is where international investors might look differently at the region’s vulnerability to Iran’s asymmetric warfare from now on. The Gulf has been betting on local commercial projects driven by artificial intelligence and data centers; a repricing of the risk of such ve...
This could be the moment when the UAE’s massive sovereign wealth funds — with international stakes in everything from soccer teams to hotels and tech companies — are tapped for local use. The UAE is so far standing by a $1.4 trillion pledge to invest in Trump’s America, though a prolonged conflict will doubtless require some reprioritization toward security at home.
One big US question is whether the Gulf states remain under its security umbrella. There’s increasing noise in the region about retaliating against Iran, with some voices in the UAE calling for a doubling down on the US partnership. At the same time, the Americans are proving to be a wayward ally.
Dubai’s supporters make the point that global capital has few other places to go, especially as London increases taxes and gets more squeamish about where the money comes from. The UAE-or-bust lobby is mistaken, however.
International capital could find a home in the old-world hubs of Geneva and Milan, even if Europe has its own wartime challenges. Hong Kong’s appeal is returning despite China’s national-security law. “People say that these places are boring, but boring is the new sexy,” one financier told Bloomberg News recently. In this new era of insecurity, it’s hard to disagree.
Source Name : Economic Times