Gulf Arab nations are moving swiftly to repair relations with Iran as Tehran and the United States negotiate a final peace agreement after their devastating war.
Rather than relying exclusively on a defense alliance with Washington, the oil-rich monarchies are now expanding their engagement with Iran.
Governments in the region are floating and discussing new ideas to promote reconciliation with Iran through regional security agreements, a non-aggression pact, trade and investments.
The change of heart marks a fundamental departure from decades of rivalry and in some cases outright enmity. Since Iran’s 1979 Islamic revolution, the Sunni-dominated Arab Gulf states viewed their neighbor’s Shia establishment as a destabilizing force that threatened their security by wooing their Shia minorities and supporting Islamist militant groups across the Middle East.
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While Gulf nations are rattled by Iran’s insistence on controlling shipping through the Strait of Hormuz, they are supplementing or even substituting military preparedness with diplomacy. Their financial clout bolsters their confidence that they can woo Iran into a new era of cooperation.
Individual Interests
Daniel Benaim, a Gulf expert at the Middle East Institute, a Washington think tank, says the United States’ failure to achieve its principal wartime objectives in Iran has prompted Gulf states to manage their own relations with Tehran.
“It has led to their disparate efforts to engage Iran,” he told MBN. “To carve out their own arrangements for security using diplomatic and financial tools where a larger U.S.-led strategy has not yet succeeded.”
Washington entered the conflict to overthrow Iran’s hardline Islamist regime, dismantle its nuclear and missile programs and end Tehran’s support for its mostly Shia militant proxies across the Middle East. The country’s supreme leader, Ayatollah Ali Khamenei, and several senior commanders were killed in the opening U.S. airstrikes on February 28. But the war ended 40 days later with a fragile ceasefire rather than a decisive victory.
While Iran is weakened by this war in many ways. Its sharp, coercive capabilities have shown themselves to be effective in causing pain.
Daniel Benaim, a Gulf expert at the Middle East Institute.
On June 17, Washington and Tehran signed a Memorandum of Understanding (MOU) to extend the ceasefire by 60 days as they negotiate a final settlement on the country’s nuclear program and other unresolved issues.
Since then, diplomatic activity has intensified across the Gulf. On June 30, Qatar began hosting another round of indirect negotiations between U.S. and Iranian officials after a weekend of tit-for-tat attacks. After Iran targeted commercial vessels in the Strait of Hormuz, the U.S. retaliated against military and missile sites along Iran’s southern coast on the Persian Gulf. Tehran in turn retaliated against sites in Bahrain and Kuwait.
The attacks underscored the vulnerability of the Gulf states. For weeks this spring, thousands of Iranian projectiles rained on Saudi Arabia, the United Arab Emirates, Bahrain, Kuwait, Qatar and Oman, all of which are members of the Gulf Cooperation Council (GCC), a security, economic and diplomatic bloc.
QatarEnergy’s liquefied natural gas (LNG) production facilities are located in Ras Laffan Industrial City. (file photo)
Iran said it was targeting U.S. military bases. Gulf governments, however, reported damage to their energy infrastructure, hotels, and airports, causing widespread disruptions. At least 28 people were killed, most of them expatriate workers, and hundreds more were injured. Tehran also closed the Strait of Hormuz, the world’s most important energy shipping waterway, choking the economies of a region highly dependent on exporting hydrocarbons.
“While Iran is weakened by this war in many ways,” Benaim said, “its sharp, coercive capabilities have shown themselves to be effective in causing pain.”
In a bid to reassure Gulf allies during a trip to the region last week, U.S. Secretary of State Marco Rubio said Washington was seeking lasting peace in the region “that in no way undermines our security, our prosperity, or the security or prosperity of our friends and allies.”
But Gulf governments remain concerned that Washington’s provisional agreement with Tehran did not address any of their core security concerns. “Lasting regional security requires a definitive end to missile and drone attacks, ceasing support for militias, and halting interference in the sovereignty of our states,” Bahraini Foreign Minister Abdullatif bin Rashid Al Zayani said.
Benaim, who previously oversaw U.S. relations with the region for the State Department, said Gulf leaders are watching closely whether the MOU ultimately leads to the reopening of the Strait of Hormuz. They are also keen to see whether the ultimate agreement grants Tehran major concessions on regulating navigation in the Gulf and maintaining its controversial nuclear program, while leaving its missile arsenal and regional proxy network untouched.
“They are united in the goal of making sure that Iran does not dominate the Gulf,” he said of the evolving approach shared by the Gulf Arabs. “But they are operating largely individually when it comes to strategy and tactics.”
The six Gulf nations have varying relationships with Iran. At one end of the spectrum is Oman, which is engaging in discussions with Tehran about coordinating navigation and maritime management in the Strait of Hormuz. Muscat has also served as an intermediary between Iran and Western governments. On the other end is Bahrain, whose Sunni rulers accuse Tehran of inciting unrest among the island nation’s majority Shia residents and attempting to overthrow the government. Iran has denied these allegations.
Dangling Financial Incentives
The evolving Gulf approach to Iran might signal a deeper regional shift from confrontation towards economic interdependence and cooperation.
The region well remembers the tanker wars of the 1980s, when Iran and Iraq attacked commercial shipping in the Gulf, and the 1991 Gulf War, when the Arab nations joined a U.S.-led military coalition to force Iraqi dictator Saddam Hussein out of Kuwait. Today’s Gulf monarchies are focused on implementing ambitious diversification plans to transform their hydrocarbon export-dependent economies into advanced financial, tech and transport hubs.
“Now it is more about each country’s own national interests and the pursuit of diversification and economic strategies,” said Elizabeth Dent, a senior fellow at the Washington Institute for Near East Policy think tank.
As some of the world’s wealthiest countries, the Gulf states are also exploring whether their financial resources can encourage Iran into stable and cooperative relations. In Qatar, U.S. and Iranian officials are likely to continue indirect talks over releasing at least $6 billion in Iranian assets held in Qatari escrow accounts. Doha has emerged as the main financial intermediary between the Tehran and Washington and will oversee the technical details of an agreement over disbursement of frozen Iranian funds.
The MOU also promises cash-strapped and sanctions-hit Tehran significant financial incentives by committing Washington and its regional partners to “develop a definitive, mutually agreed plan with at least $300 billion for the reconstruction and economic development of the Islamic Republic of Iran.”
It remains unclear whether the Gulf nations are willing to finance a large part of Iran’s post-war reconstruction; U.S. President Donald Trump has said no U.S. taxpayer money will be spent on that huge undertaking. In any case, regional powers have shifted their diplomatic efforts into high gear to explore whether economic incentives can reduce the risk of future conflict.
Grand Bargain
Saudi Arabia, the region’s largest country and key economic and military power, appears to be pursuing a grand bargain with Iran. A Saudi government source told MBN that Riyadh is considering holding a regional conference to foster reconciliation with Tehran. Such a conference would also aim to discourage Iran from imposing tolls in the Strait of Hormuz.
Vessels in the Strait of Hormuz, as observed from Musandam, Oman, on June 18.
In May, Riyadh reportedly discussed with its regional allies a non-aggression pact with Iran. Modeled on the 1970s Helsinki Process in Europe, it would seek to establish a regional framework for security and cooperation.
Salem Al Ketbi, a strategic expert in the UAE, sees Gulf governments keen on supplementing credible military deterrence with direct diplomatic engagement to manage the risks posed by Tehran’s aggressive posture. “The most realistic option is to combine legitimate deterrence and cautious diplomatic engagement,” he told MBN.
That approach is evident in the UAE, whose diplomatic engagement with Tehran is expanding. On July 1, direct flights between Dubai and Tehran resumed after months of suspension. Days earlier, the country’s Foreign Minister Sheik Abdullah bin Zayed told his Iranian counterpart Abbas Araqchi that “serious diplomacy and responsible dialogue remain the best means of addressing all regional and international crises.”
Dent, who oversaw the Arabian Peninsula in the office of the U.S. Defense Secretary, said the conflict has reinforced Gulf nations to diversify their foreign relations.
“I think they’re probably going to continue to pursue a little bit more of a diversified relationship board, rather than solely relying on the United States,” she told MBN.
[Gulf capitals] are now keen on opening that door back up to Iran. They want to integrate Iran into the region even further to ensure that they are not targets in the future if this continues to happen.
Elizabeth Dent, a senior fellow at the Washington Institute for Near East Policy.
Except for Bahrain, whose diplomatic relations with Tehran remain severed, Dent said Gulf capitals increasingly see value in repairing diplomatic ties with Iran while maintaining their long-standing security partnership with the U.S.
“They are now keen on opening that door back up to Iran,” she told MBN. “They want to integrate Iran into the region even further to ensure that they are not targets in the future if this continues to happen.”
But Tehran might not share the Gulf Arab’s optimism.
Farzan Sabet, an Iran expert at the Geneva Graduate Institute, says Tehran’s strong performance in the war and the favorable interim MOU has strengthened the leadership’s confidence and encouraged it to seek to reshape the region’s balance of power.
Iran’s emboldened and more risk-taking behavior leaves Gulf states vulnerable to further military coercion and financial extortion
Farzan Sabet, an Iran expert at the Geneva Graduate Institute.
“It’s unclear if Tehran is interested in a genuine reconciliation,” he told MBN. “And whether it can, in a potential future round of war with the U.S., resist the temptation to exploit the military vulnerability of Arab Gulf states.”
Sabet sees Tehran continuing to leverage the Strait of Hormuz against its adversaries despite the current diplomatic efforts.
“Iran’s emboldened and more risk-taking behavior leaves Gulf states vulnerable to further military coercion and financial extortion,” he said.
