Iran war puts 3 Gulf states under pressure, hits America’s agenda
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Washington: The prolonged confrontation between the United States and Iran is putting the Gulf states’ ambitious US investment commitments under mounting economic pressure, potentially complicating nearly $4 trillion in promised investments by Saudi Arabia, Qatar and the UAE under President Donald Trump’s “America First” agenda, according to a new study by the Peterson Institute for International Economics (PIIE).
The 15-page report said rising spending on defence, energy infrastructure and trade is intensifying financial pressures across the Gulf, with the conflict having a disproportionately severe impact on the region compared with the global economy.
The International Monetary Fund has cut its 2026 growth forecasts sharply for the three countries. Qatar’s projection was reduced from 14.7% to 8.6%, while Saudi Arabia’s fell from 4.5% to 1.7%. The UAE’s forecast was also slashed from 5.6% to 1.7%.
PIIE warned that mounting domestic demands could push Gulf governments to prioritise spending and investment at home over commitments in the US. Saudi Arabia had already begun shifting its focus towards domestic investment before the latest conflict, with the share of international investments in its Public Investment Fund falling from 30% in 2020 to 20% over six years.
Delays in fulfilling investment pledges could also invite pressure from the Trump administration, which has previously used tariffs to push countries into honouring economic commitments.
At the same time, some Gulf investments in the US are continuing. Qatar remains active in the American energy sector, with QatarEnergy beginning LNG production at a Texas plant in March and preparing to start exports the following month.
PIIE also warned that vague definitions, timelines and evaluation mechanisms for the investment pledges make it difficult to determine whether countries are actually fulfilling their commitments, while the agreements face scrutiny in the US Congress over economic, national security and governance concerns.