{"id":513775,"date":"2026-03-04T13:20:08","date_gmt":"2026-03-04T13:20:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/513775\/"},"modified":"2026-03-04T13:20:08","modified_gmt":"2026-03-04T13:20:08","slug":"the-iran-wars-spread-to-dubai-saudi-arabia-and-qatar-is-jeopardizing-the-entire-global-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/513775\/","title":{"rendered":"The Iran War’s Spread to Dubai, Saudi Arabia, and Qatar Is Jeopardizing the Entire Global Economy"},"content":{"rendered":"

On Sunday, a fire broke out at a data center in Dubai belonging to Amazon Web Services. The facility was stuck by an object<\/a>, likely shrapnel from an Iranian drone intercepted by the United Arab Emirates\u2019 air defenses. The incident, which may mark the first time in history that a major company\u2019s cloud data center was damaged in a war, is emblematic of the unprecedented nature of the conflict now unfolding in the Middle East. Far from just another war in the Persian Gulf, this is the first conflict since the Second World War to directly impact cities and facilities that serve as hubs in the globalized economy.<\/p>\n

When U.S. and Israeli leaders launched military operations against Iran last week, they expected a forceful response. But Iran quickly moved beyond retaliation against U.S. and Israeli forces and opted to externalize the pain of the war by hitting civilian targets across all six of the Gulf Cooperation Council (GCC) states.<\/p>\n

On Sunday, a fire broke out at a data center in Dubai belonging to Amazon Web Services. The facility was stuck by an object<\/a>, likely shrapnel from an Iranian drone intercepted by the United Arab Emirates\u2019 air defenses. The incident, which may mark the first time in history that a major company\u2019s cloud data center was damaged in a war, is emblematic of the unprecedented nature of the conflict now unfolding in the Middle East. Far from just another war in the Persian Gulf, this is the first conflict since the Second World War to directly impact cities and facilities that serve as hubs in the globalized economy.<\/p>\n

When U.S. and Israeli leaders launched military operations against Iran last week, they expected a forceful response. But Iran quickly moved beyond retaliation against U.S. and Israeli forces and opted to externalize the pain of the war by hitting civilian targets across all six of the Gulf Cooperation Council (GCC) states.<\/p>\n

Over the past few days, Iranian drones and ballistic missiles have hit oil platforms, refineries, airports, seaports, hotels, and commercial vessels. In selecting these targets, Iran has made a bold gamble. It has used its asymmetric capabilities\u2014cheap drones and abundant ballistic missiles\u2014to attack the countries that had been the most effective boosters of diplomacy since U.S. President Donald Trump took office. Gulf leaders repeatedly tried to use their unique influence in the Oval Office to steer the United States away from a war of choice against Iran and toward a new nuclear deal.<\/p>\n

Gulf leaders have condemned Iran\u2019s attacks. Anwar Gargash, a key architect of UAE foreign policy, warned<\/a> that the targeting of Gulf states has confirmed \u201cthe narrative of those who see Iran as the primary source of danger in the region and its missile program as a constant driver of instability.\u201d He urged Iran to return to its \u201csenses\u201d before the region was thrust into a deeper crisis.<\/p>\n

Iran\u2019s attacks could push the Gulf states to enter the conflict, opening their airspace to U.S. forces and even joining operations against targets in Iran. For now, reports suggest that Gulf leaders, unable to tolerate the mounting economic disruptions, are pushing the Trump administration to pursue a cease-fire<\/a>.<\/p>\n

Over the past quarter century, the Gulf states have emerged as the economic powerhouses of the Middle East and significant players in the global economy<\/a>. They were able to do so in large part because of the stability and security promised by their rulers and underwritten by the United States, which maintains military bases in every Gulf state apart from Oman. But when the first Iranian drones penetrated Gulf air defenses, they shattered the facade of the region\u2019s security. The United States had instigated a war that undermined the security of all its partners in the region and remains seemingly unable to protect the Gulf states from the blowback.<\/p>\n

On Monday, Emirati President Mohammed bin Zayed Al Nahyan strolled through<\/a> Dubai Mall in an attempt to calm jittery residents and stranded tourists. He and his fellow Gulf leaders will need to do a lot more to reassure global companies and investors around the continued viability of the Gulf economic model.<\/p>\n

Images of gleaming skyscrapers in Dubai; Doha, Qatar; and Riyadh, Saudi Arabia have become familiar. But these are just the most visible examples of the economic development of the region. To understand the Gulf\u2019s importance in the global economy, one should trace the flows of commodities, goods, services, capital, and people. The impact of the war on these flows gives this conflict a truly global dimension.<\/p>\n

The most obvious impact is the interruption of energy and petrochemical exports<\/a>. The Russian war on Ukraine has given traders significant experience in pricing geopolitical risk, but a protracted war in the Persian Gulf will break all the relevant models. According to an analysis by data firm Kpler, around one-third<\/a> of the world\u2019s supply of crude oil, methanol, and fertilizer as well as around one-fifth<\/a> of the world\u2019s liquid natural gas (LNG) and natural gas derivatives such as butane and propane are exported through the Strait of Hormuz.<\/p>\n

The price shock associated with prolonged disruptions to these exports will be significant. For now, the increase in energy prices has been modest, likely reflecting that traders expect this to be a short war. Should prices remain elevated for a long time, it will be a boon to Russia<\/a>, which could also expect to take market share from Gulf suppliers in its key energy market, China.<\/p>\n

Most ships passing through the Strait of Hormuz are not oil tankers or LNG carriers, but container ships that connect the Gulf economies to global supply chains. When the United States invaded Iraq in 2003, the annual throughput at Dubai\u2019s Jebel Ali port was the equivalent of around 5 million<\/a> shipping containers. Since then, throughput has tripled, making Jebel Ali one of the 10 most active container ports in the world, boasting greater utilization than any single port in the United States or Europe, with connections to more than 150 ports worldwide.<\/p>\n

The port is an engine of globalization, especially as represented by the expansion of Chinese exports. Today, Jebel Ali\u2019s free zone hosts more than 500 Chinese companies, a figure that has doubled<\/a> in the past five years. If an African manufacturer sources a piece of equipment from a Chinese supplier, chances are that it will be routed through Jebel Ali.<\/p>\n

Alongside global shipping, the Gulf states have also emerged as a hub for global aviation. The airports in the region, especially Dubai and Doha, are among the busiest and best-connected in the world. Two-thirds of the world\u2019s population lives within the radius of an eight-hour flight of these hubs<\/a>. Alongside the passenger traffic, the Gulf\u2019s airports are also vital connectors for airfreight, handling around 10 percent<\/a> of global volume.<\/p>\n

The increased flows of energy and goods passing through the Gulf economies required the development of the regions\u2019 service sector, which now includes a globally competitive and systemically important banking sector. Total commercial bank deposits in the GCC reached $2.3 trillion<\/a> last year, about the same level as total deposits in Italy<\/a>. But unlike Italy, a significant portion of these deposits are held by nonresidents. In Qatar, around one-fifth<\/a> of deposits belong to persons outside the country. In the UAE, that proportion is around one-tenth<\/a>.<\/p>\n

Dubai is also a center for nonbanking financial institutions and exchange houses that process remittances\u2014not only for expatriate workers in the Gulf but also for migrant workers making cross-border payments between countries in Africa and Asia. The city also handles 15 percent of the world\u2019s gold trade<\/a>. This makes Dubai systemically important for a range of underbanked economies in South Asia and Africa.<\/p>\n

The rise of sophisticated commercial banks in the GCC has also facilitated the flow of international capital through the region. While the region\u2019s capital markets remain small, cities such as Dubai, Abu Dhabi, and Doha play an outsized role as destinations for investment by high-net-worth individuals from key geographies, including the wider Middle East, Europe, Central Asia, and Africa.<\/p>\n

Nothing symbolizes this unique role more than the fact that even the U.S. president has direct interests in Dubai real estate. The Trump International Hotel and Tower, the first of a series of developments planned by the Trump Organization in the region, is under construction in Dubai.<\/p>\n

While seeking to attract foreign capital, the Gulf states have also advanced their geopolitical aims by leveraging outward direct investment. The region\u2019s seven main sovereign wealth funds<\/a> accounted for 43 percent<\/a> of all capital invested by state-owned investors globally in 2025, tallying $126 billion in total outflows. Among last year\u2019s deals was a major investment<\/a> by the Qatar Investment Authority into Jared Kushner\u2019s investment firm.<\/p>\n

The war jeopardizes all these flows. Production has been disrupted<\/a> at key energy facilities. Vessel traffic through the Strait of Hormuz was just one-fifth<\/a> of its normal levels on Sunday. More than 70 percent of all flights to the UAE, Qatar, and Bahrain remained canceled<\/a> as of Monday. Stock prices in Qatar and Saudi Arabia have slid<\/a>, while exchanges in the UAE and Kuwait suspended trading. The Dubai gold market is throttled<\/a>.<\/p>\n

Given the sporadic announcements of piecemeal measures, there is little sign that the Trump administration has a plan to manage the numerous shocks on the horizon, let alone a clear understanding of how those shocks will materialize should the war continue in the coming weeks<\/a>. U.S. Secretary of State Marco Rubio has briefed reporters<\/a> that the administration will take steps to \u201cmitigate against\u201d rising energy prices. He also insisted that the issue had been \u201canticipated.\u201d The Trump administration announced it will be offering political risk insurance<\/a> for \u201cshipping charterers, shipowners, and key maritime insurance providers\u201d \u00a0through International Development Finance Corporation. The last time the U.S. government mobilized insurance products to support shipping at a global scale was a program implemented by the War Shipping Administration during the Second World War.<\/p>\n

Reflecting on the rise of international trade and finance, former U.S. President Woodrow Wilson once stated<\/a> that the \u201ceffects of war can no longer be confined to the areas of battle\u201d and insisted that \u201cwhatever is done to disturb the whole world\u2019s life must first be tested in the court of the whole world\u2019s opinion before it is attempted.\u201d The markets and networks that underpinned globalization were developed in a postwar environment in which military conflict always took place far away from major hubs. U.S. wars in Korea, Vietnam, Iraq, and Afghanistan did not jeopardize the global economy.<\/p>\n

Today\u2019s U.S. policymakers seem to have forgotten Wilson\u2019s admonishment. When Trump embarked on this war, he exposed his Gulf partners to unprecedented attacks, and in turn, he disturbed the flows that are the lifeblood of the global economy.<\/p>\n","protected":false},"excerpt":{"rendered":"On Sunday, a fire broke out at a data center in Dubai belonging to Amazon Web Services. The…\n","protected":false},"author":2,"featured_media":513776,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,1376,548,46,9896,5897,203689,133789,17267,13341,16681,1601,15808,8767],"class_list":{"0":"post-513775","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-ca","10":"tag-canada","11":"tag-donald-trump","12":"tag-economics","13":"tag-economy","14":"tag-energy-policy","15":"tag-iran","16":"tag-iran-u-s","17":"tag-middle-east-and-north-africa","18":"tag-qatar","19":"tag-saudi-arabia","20":"tag-supply-chain","21":"tag-transportation","22":"tag-united-arab-emirates","23":"tag-war"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/513775","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=513775"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/513775\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/513776"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=513775"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=513775"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=513775"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}