About a year ago, on the first international visit of Donald Trump’s second term, he heaped praise on the authoritarian rulers of Qatar, UAE and Saudi Arabia, and above all their promises of trillions of dollars in gifts and investments.
Today, the carefully-crafted image of a stable region, rising on the global stage, is completely shattered by the war on Iran and its consequences. Its regimes and the geopolitical, and economic system they are based on are deeply shaken. One important expression of this is the deepening of tensions and conflict between Saudi Arabia and the United Arab Emirates, two dictatorships which are superficially on the “same side” of the war.
In reality, the Middle East has been far from a stable region in the 21st century, with Israel’s wars and occupations, the US-led war on Iraq, the “Arab spring” revolts of the 2010s and consistent mass movements against the Iranian dictatorship.
However, over the last decade the economic growth of the Gulf states, the 2015 agreement between the US and Iran restricting the latter’s uranium enrichment and easing sanctions, followed by the Abraham Accords, especially between Israel and the UAE, have been pointed towards by global politicians and establishment commentators as positive signs. In 2023, Iran and Saudi Arabia restored diplomatic relations in a deal brokered by China. A year later, Iran and the UAE both joined the ‘Brics’. Strong economic growth in the region has been partially based on a pivot to Asia, with China becoming by far the Gulf’s largest trading partner.
Economic Recession
Now, Trump and Netanyahu’s war and Iran’s retaliation have erased illusions about the “Gulf model” and global rise of the region, exposing the fragility of its economic and political model. Alongside its petrochemical industry, the UAE in particular has profiled itself as a global logistics hub, a financial centre and a rapidly growing AI powerhouse. Last year, tourism accounted for 12% of UAE’s GDP, with Dubai receiving as many visitors as Paris in 2025. Investments in sports have boomed throughout the region, including Qatar’s hosting of the FIFA World Cup in 2022. In recent years, Saudi Arabia has begun to more forcefully challenge the UAE in all these fields.
Now exports have collapsed, with a daily drop of 16 million barrels of oil passing through the Strait of Hormuz (only 7 million of which have been compensated for by a crucial Saudi pipeline to the Red Sea). More than 30,000 flights have been cancelled. “Daily losses in the Middle East region are at $600 million, with the UAE taking a big proportion of that hit,” CNBC quoted Nancy Gard McGehee, professor of hospitality and tourism, 22 April.
Oxford Economics predicts a recession in the six-country Gulf Cooperation Council (GCC), downgrading its January prediction of 4.6% growth to -0.2%. JP Morgan predicts -0.6% this year.
The impact of this has already been felt by the many migrant workers in the region who make up the majority of the working class, with job losses, unpaid wages and insecurity caused by Iranian drones and missiles. 260,000 workers have reportedly returned home to India from the region. Millions of relatives throughout South Asia and East Africa living on remittances from Gulf countries will receive less, if anything.
The sharp downturn has forced US Treasury Secretary Scott Bessent to announce financial support to the UAE and possibly others through a currency swap. This serves as a partial guarantee of the state’s financial system, similar to Trump’s 2025 bailout of his far-right friend Javier Milei in Argentina.
The UAE-Saudi Rift
The crisis caused by the war has sped up the conflict between the two authoritarian rulers, Saudi Arabia’s Crown Prince Mohammed bin Salman (MbS) and the UAE’s ‘President’ Mohamed bin Zayed (MbZ). Both their political systems are, like Qatar, built on dictatorial rule, a super rich small elite and foreign labour. Of the UAE’s 10.2 million inhabitants, 87% are foreigners, and only 1.3 million are national citizens. In Saudi Arabia, 41.6% are foreigners and in Qatar 87.9%. In total, the Gulf states have 35 million migrant workers, many from South Asia.
These three states are also among the leading global importers of arms. The only countries buying more arms than Saudi Arabia are Ukraine and India. As was predictable however, this arms race in no way prevented war and devastation.
MbS and MbZ have gone from partners to competitors in several real armed conflicts. In Yemen and Sudan, they give military support to different armed forces fighting each other. In Yemen, both are fighting the Iran sponsored Houthis. However, the UAE supports the Southern Transitional Council (STC) which fights for control of the southern part of the country, including important seaways and harbours, while the Saudi regime supports the “official” (Western-recognized) government. In January, the Saudi air force bombed STC forces. In the Sudan war, Saudi Arabia follows Egypt’s support for the official army, with the UAE supporting the Rapid Support Force and has close links to the Ethiopian regime which is in conflict with Egypt.
In the region, the Saudi regime has gradually competed with the UAE in attracting foreign capital. And the Saudi de facto leadership of Opec has placed restrictions on UAE oil quotas.
This led MbZ to decide that the UAE would leave Opec. The decision came suddenly in April. This gives the UAE the possibility for postwar production of 5 million barrels a day instead of the OPEC limit of 3.5 million. The UAE is at the same time planning to build new pipelines as alternatives to the Strait. Both of these steps mean greater independence from the Saudi Opec regime, but can also start an oil price war.
Divisions Over the War
The UAE has been hit by more Iranian missiles and drones than any other state. This led MbZ to argue for the Gulf states to respond militarily. “UAE President Mohamed bin Zayed held a series of calls with Gulf leaders, including Saudi Arabia’s Crown Prince Mohammed bin Salman, shortly after the US and Israel attacked Iran on 28 February. Crown Prince Mohammed bin Salman and other Gulf leaders rebuffed Mohamed bin Zayed’s request for a coordinated Gulf attack on Iran. The report underscores how the war on Iran has deepened tensions between Saudi Arabia and the UAE”, the Middle East Eye reported.
Despite there being no common military response, unacknowledged attacks on Iran from both Saudi Arabia and the UAE were later reported. They were, however, different in character, with UAE attacks sharper, focusing on energy facilities.
Saudi Arabia supported the US talks with Iran, while the UAE at the same time escalated its attacks and argued against any deal with Iran. Abu Dhabi has also doubled down on its links with Israel, “who sent an Iron Dome air defense system with troops to operate it early in the war with Iran”, Axios reported. The UAE also received a secret visit from Netanyahu. “Flight-tracking websites show military transports have shuttled between the Israeli air base of Nevatim and the UAE throughout the conflict”, the Wall Street Journal reported, concluding “The UAE has taken on a more disruptive role, embracing Israel’s military dominance and rethinking its role in traditional Arab-led institutions”.
Global Dependence
The war has not only shown the world economy’s dependence on oil from the Gulf. For a long period, the region has attracted a huge amount of global speculative capital. “Non-oil sectors contributed more than 70 percent of real GDP across the region in the first half of 2025. Saudi Arabia’s non-oil economy was projected to grow by five percent year on year in 2025, and the UAE attracted record levels of foreign direct investment in technology, logistics, and financial services” (The Middle East Council on Global Affairs).
This has all laid the ground for the sharp effects of the war. Asia is the worst hit, being the destination for 80% of the oil exports from the Gulf and 90% of LNG (liquified natural gas). Within Asia, “Japan, South Korea, and Taiwan face the sharpest and most direct exposure” (Gulf International Forum). Globally, the shortage of jet fuel is soon to have major impact,
The Wall Street Journal listed the global dependence on other major resources from the Gulf.
- 46% of urea, “the world’s most widely used nitrogen fertilizer”
- Close to half of global sulfur – its “lack of availability is forcing industrial slowdowns in hubs like Indonesia and the copper belt of Africa”.
- A third of global methanol, already creating a shortage of plastics.
- Petroleum coke, a by-product at refineries, used for batteries in EVs and more.
- Helium, aluminium, glycol and steel pellets.
Fight Against Imperialism and Capitalism
The development of the Gulf states is one of many symptoms of the parasitic capitalist system. A seemingly safe haven for a small luxurious elite, based on mostly super exploited migrant workers and the huge volume of speculative capital. Ruled by dictatorships, militarily linked to Washington, and mainly doing business with Beijing. Of course neither of the main imperialist powers care about the conditions of the people or the environment.
The regimes in the region fear their working masses, having seen the potential in the “Arab spring” as well as in Iran. The masses also completely oppose Netanyahu’s genocidal war on Gaza. These are the reasons Saudi Arabia’s MbS has cautioned against getting involved in the US-Israeli war. The UAE ruler, on the other hand, hopes that his links with the US and Israel can save him.
The war on Iran, as well as US imperialism’s aggression against Venezuela, Panama and Cuba, have also exposed Putin and Xi Jinping. They have been unable to meaningfully support their allied regimes, and also of course do not support any independent actions of workers and oppressed. Shared membership of the ‘Brics’ has not prevented Iran and the UAE from waging war against each other.
In general, the ruling classes prefer calm and stability. But the wars on Iran and Ukraine are signs of imperialist confrontation and aggression that are a key part of the 2020s. Any costs of war and confrontation will be laid on the masses.
The only way to escape wars and crises is through mass action of the working class and the oppressed, in the Middle East and globally. To the heroic willingness to struggle must be added democratic organisation and a revolutionary socialist program.
Trump’s War Is Shaking the World
In mid-May, the Strait of Hormuz remains closed, and Trump is oscillating between claims that a peace deal is imminent and threats to completely wipe out Iran.
Ever since the first month of the war, when it became clear that the regime in Iran had not fallen despite the destruction and massive bombing, Trump has sought an end to the conflict, whilst at the same time being determined to declare himself the victor. But it is clear that Iran controls Hormuz, something which is difficult for Trump to accept, and impossible for the Gulf states.
The war threatens the global economy, has shaken the US’s allies in the Gulf states and depleted a large part of the US’s arsenal. Public opinion in the US is overwhelmingly against the war.
Even if some form of agreement were to be reached, the global effects of the war are only just beginning. Prices are rising, and not just for fuel. Food production is under threat, particularly in poorer countries. Politicians worldwide are stepping up military rearmament even further.
There is an urgent need for a strong grassroots movement of workers and young people against war and militarism. This means fighting against all imperialism, whilst supporting the struggle against dictatorships in Iran and throughout the region.
