LONDON, March 13 (Reuters Breakingviews) - ‘The defense of Saudi Arabia is vital to the defense of the United States’. President Franklin Roosevelt’s 1943 assertion, opens new tab, which other Gulf states like Qatar and the United Arab Emirates came to see as equally relevant to them, now looks different given all three states have endured nearly two weeks ​of Iranian drone and missile attacks in retaliation for U.S. and Israeli strikes. Traditionally warm relations between Washington and Saudi Crown Prince Mohammed bin Salman, UAE President Sheikh Mohamed ‌bin Zayed Al Nahyan and Qatari Emir Sheikh Tamim bin Hamad al-Thani make it unlikely these Gulf leaders will publicly register any displeasure they might feel. But there are still various financial ways to send a message.

The Gulf disquiet is real. Dubai billionaire businessman Khalaf al-Habtoor questioned whether the costs of dragging the Gulf into the conflict were ignored. Sources close to Gulf Arab government circles told Reuters that many believe U.S. President Donald Trump brought the Gulf into a war shaped heavily ​by Israel, and agree the political and economic fallout for allies was not fully weighted.

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Such displeasure is unsurprising. Saudi, Qatar and the UAE have invested a lot – in hard cash – in ​public displays of support for Trump that have gone way beyond the norm. Ahead of the president’s visit to the region last May, Qatar gave Trump ⁠a luxury Boeing 747 airliner, while entities linked to a senior Abu Dhabi royal took a stake in World Liberty Financial, the Trump family’s stablecoin business. Meanwhile the three Gulf states collectively contributed $24 billion to the ultimately ​successful bid for Warner Bros Discovery (WBD.O), opens new tab by Paramount Skydance, backed by the Trump-aligned Ellison family.

As such, when some of the Gulf states counselled the U.S. president against striking Iran, they had grounds to at least ​hope he’d listen. Instead, they now have to contend with a war of uncertain duration, and a blocked Strait of Hormuz that means they can’t ship their main fossil fuel exports. They also, according to Adnan Mazarei, senior fellow at the Peterson International Institute for Economics, face rising defence bills, reconstruction costs and shrinking FDI inflows – all while the cost of borrowing climbs.

That’s probably why regional governments are examining their options. High-level representatives of three of the four biggest Gulf states ​are reviewing how they globally deploy trillions of dollars invested by their sovereign wealth funds, Reuters reported on Wednesday, citing a Gulf official. The main reason for the move is to offset any losses triggered ​by the war. But the rethink could also be used as a way to register irritation at Washington.

On the face of it, a high-profile way to do that would be to pull out of either the Paramount acquisition, or ‌even for ⁠Saudi’s PIF to reverse course on the $30 billion of equity it’s sinking into the $55 billion Electronic Arts buyout (EA.O), opens new tab. Neither promises a good return, and it would represent a pointed snub. Unfortunately, as Elon Musk found buying Twitter, it’s extremely difficult legally to wriggle out of a nearly done deal.

That still leaves scope for a major rethink on investment pledges made during Trump’s 2025 Gulf visit, which eventually led to Qatar pledging $1.2 trillion in the U.S., Saudi $1 trillion and the UAE $1.4 trillion. These are long-term commitments over a decade or so, and only a minority came with specific contracts at the time. Scope for a potential AI bubble to pop ​might suggest that Abu Dhabi’s MGX investment vehicle ​should dump its stakes in OpenAI and the ⁠Trump-endorsed Stargate venture to build out AI infrastructure. Yet with the emirate laser-focused on pushing its status as an AI hub – and still reliant on Nvidia chips – that might hurt the UAE more than the U.S.

There are other less high-profile ways to send a message to Washington, though. Among last May’s pledges, bets ​that look less strategically important include Saudi entity SURJ Sports Investment’s $4 bln U.S. tie-up, and backing for U.S. LNG. Saudi Arabia’s drive to localise ​50% of defence spending by 2030 ⁠is gathering pace, including through non-U.S. partnerships with Chinese, opens new tab and Turkish drone manufacturers. Riyadh could emphasise the point by doing more defence deals in Europe.

Gulf leaders may feel it’s better to avoid ditching even these commitments. But with Iranian regime change looking unlikely, they may find themselves locked into a riskier situation in which they can’t count on Washington. It would be odd if that didn’t come with financial as well as political consequences.

Context News

• Three Gulf ⁠states are reviewing ​how they deploy trillions of dollars invested by their sovereign wealth funds in anticipation of offsetting the losses triggered by the ​U.S.-Israeli war on Iran, a Gulf official told Reuters on March 11.
• These reviews include possible investment pledge reversals, divestments and a re-evaluation of global sponsorship deals as the oil-and-gas-rich states assess how to absorb the financial shock, said the official, who requested anonymity ​due to the sensitivity of the matter and without identifying which states.

For more insights like these, click here, opens new tab to try Breakingviews for free.

Editing by George Hay; Production by Shrabani Chakraborty

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Afiq Fitri Alias

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Afiq Fitri Alias is a data visualisation columnist at Reuters Breakingviews, based in London. He joined Reuters in 2023 and was previously a data journalist at the New Statesman Media Group where he covered UK politics, international affairs, and technology.

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