Overview
This month’s Israel-Hamas ceasefire has been met in the Arab Gulf, and elsewhere, with relief and cautious optimism. In a region that is increasingly something of a foreign policy juggling act for the US, the signing of the Gaza ceasefire (and the events that preceded it) will open up new opportunities for security cooperation, normalization, and collaboration on Gaza’s reconstruction. But it has also highlighted strategic misalignments between the US and its Gulf partners, Arab capitals and Israel, and within the Gulf Cooperation Council (GCC). With much at stake for the Gulf states’ ambitious economic transformation plans, and the US’ role in the region still in flux, the coming months will shape the region’s economic trajectory and role in the post-conflict order.
Gulf Perspectives on Gaza’s Ceasefire
Like much of the rest of the world, Gulf Arab capitals met the signing of the Israel-Hamas ceasefire earlier this month with happiness and relief. In addition to straining some states’ relations with Israel, the ongoing conflict—and Israel’s spillover clashes in Lebanon and 12-day war with Iran—threatened stability for the region as a whole. In recent years, the UAE and Saudi Arabia have adopted a foreign policy doctrine that embraces stability and reconciliation over more muscular power projection, stepping back from overt, large-scale interventions in Yemen, Sudan and elsewhere. The shift comes amid domestic efforts in every Gulf country to transform and revitalize their economies ahead of an expected eventual oil demand cliff. While the UAE—which has emerged in the last decade as a regional hub for tech, logistics and tourism—is leading the pack, every regional economy is in the process of an expensive, critical economic transformation. The task is perhaps the most high-stakes for Saudi Arabia, which by far has the largest overall and national population among the Gulf Arab states to eventually employ and support in the private sector. Thus, Gulf Arab leaders had been working behind the scenes since the earliest days of the war to call for a negotiated peace, and despite limited involvement in the eventual agreement, are strong proponents.
While there will be a role for Gulf states in postwar Gaza, the specifics—as with many elements of the 20-point peace plan—are not exactly clear. Big questions like the role of the Palestinian Authority, the makeup of the international policing force that will maintain order in the enclave, and the extent of Israeli military withdrawal will shape Gulf contributions and confidence in the ceasefire. Saudi Arabia, the UAE, Qatar and others are interested in Arab inclusion in President Trump’s “Board of Peace” and in Arab strategic leadership on rebuilding Gaza. Gulf capitals will likely be called on to contribute significantly to fund Gaza’s postwar reconstruction, which the World Bank estimated in February would cost over $50 billion. Saudi Arabia, however, has stated it will not release significant funds without the transfer of authority to the Palestinian Authority (which Israel strongly opposes) or another internationally legitimate body.
Intra-Middle Eastern spats have already shown themselves—the leaders of Saudi Arabia and the UAE were absent from a strategic meeting this week in Sharm el Sheikh, Egypt, with explanations ranging from not wanting to give Cairo too much credit in the peace process to rejecting the lack of mention of the two-state solution or a Palestinian state. Gulf disagreements over the trajectory of peace in Gaza are unlikely to be the spoiler for the peace process before Hamas, although a lack of Gulf commitment or confidence in the plan could hamper any reconstruction or new governance efforts.
Regional Security, Post-Doha Strike
Regional security in the Gulf has been in a state of flux for the past several decades. In the midst of a drawn-out transition away from the era of no-holds-barred US security guarantees, Gulf capitals have attempted to hedge by building relationships with China and Russia, increasingly considered normalization with Israel, and adjusted their foreign policy to prioritize stability (see, for example, Saudi Arabia seeking détente with Iran in 2023). The events of the last several months have shed new light on the region’s security arrangements with Washington and with Jerusalem.
The US, which has been working for decades to facilitate greater regional security collaboration, had been making strides in recent years. Perhaps incongruously given the Gulf’s escalating criticisms of Israel’s operations in Gaza (and elsewhere), US media reported late last week on leaked US documents that illustrated Gulf-Israeli military cooperation had actually increased, not decreased, during the course of the Gaza conflict. In meetings from 2022 to 2025, Israeli and Arab leaders met at locations including Al Udeid Airbase in Qatar (the US’ largest Middle East installation) to discuss the creation of a “Regional Security Construct,” to include Israel, Qatar, Bahrain, Egypt, Jordan, Saudi Arabia and the UAE (with Kuwait and Oman as “potential partners”).
Israel’s September airstrike on Hamas negotiators in Doha, Qatar will certainly change this calculus. For Arab capitals, however, it may better illustrate the limits of America’s protection than the risks of partnership with Israel. For Arab Gulf partners that have also historically relied on the US security umbrella—but especially Qatar, designated as a major non-NATO ally and host of the most US troops in the region—the US’ unwillingness, or inability, to avert the Israeli strike was a shock. Such experiences are not exactly new: in 2019, the region was stunned when the US failed to respond militarily to Iran-backed attacks on oil sites in Abqaiq. The process repeated itself in 2022, when the US did not join in retaliation for a Houthi drone attack on Abu Dhabi that killed three.
Gulf capitals have struggled to turn disappointment in the US’ security guarantees into a decisive change in security policy. Although the GCC charter contains a commitment to mutual defense, regional security has long been dominated by a patchwork of bilateral agreements with the US, rather than an effort at regional collective security or greater military independence. Rather than prompting a long-discussed “Arab NATO,” the aftermath of the Doha strike is likely going the same way: in the days after, Qatar and the US signed a NATO-level mutual defense agreement, and a GCC meeting on the issue did not produce any concrete security deliverables. It was also reported just this week that Saudi Arabia is in talks for a similar US defense pact—a development that would be seen as a major coup in Riyadh and go a long way toward reassuring Saudi leaders of US commitments. Meanwhile, a GCC meeting on the issue did not produce any concrete security deliverables. The incident may accelerate Gulf hedging towards Russia and China, although the US’ sanctions against the former and escalating global competition with the latter make security-related cooperation difficult if not impossible.
Life (or Afterlife) for the Abraham Accords
The resumption and expansion of the Abraham Accords, the Trump-negotiated normalization between Israel and Bahrain and the UAE (and later Morocco and Sudan), has been a priority for President Trump since the first days of his second term. Observers largely saw the Abraham Accords as being on ice for the duration of the Israel-Hamas conflict, and some worried that the UAE and Bahrain, unable to weather the reputational risks amid the humanitarian crisis in Gaza, would exit the agreement (in September, the UAE warned the White House that Israeli annexation of the West Bank could unravel the Abraham Accords). While the UAE and Bahrain publicly criticized Israel during the conflict, trade relations have deepened, rising 11% in 2024 in the UAE. This has mostly been driven by public sector transactions, as private sector businessmen appear wary to engage with Israel.
Efforts to expand the Abraham Accords have, predictably, gone nowhere during the active conflict. While Saudi Arabia and other Gulf countries do not need to worry about being voted out of power by citizens dissatisfied with their Israel policy, they do need to worry about legitimacy and popularity in a broad sense from the public as well as their own extensive royal families. In Saudi Arabia, which is seen as the crown jewel of the Accords for the Trump administration, outside observers have long seen King Salman, of a generation with firsthand memories of earlier Israel-Palestinian clashes, as the primary obstacle to normalization. De facto ruler Crown Prince Mohammed bin Salman is viewed as more willing to pursue normalization in the name of expanding trade relationships and promoting regional stability.
Normalization with Riyadh seemed on the horizon in summer 2023, the final days of Biden’s presidency, as Washington and Riyadh discussed a comprehensive defense agreement, but quickly became impossible following the October 7 attacks and outbreak of broader violence. With the ceasefire, and promise of closer Gulf-Israeli cooperation on Palestinian reconstruction and policing, expansion of the Abraham Accords is once again seen as on the table. With slow-moving Kuwait and Oman apparently holding back on Israeli ties (the two countries have not participated in planning for the “Regional Security Construct” with Israel and the US) and Qatar decidedly off the table, efforts will be focused on Saudi Arabia (as well as non-Arab Muslim countries like Indonesia and Malaysia). Despite the removal of the most significant obstacle to normalization—active conflict—there remain significant gaps, such as Saudi objections to Israeli annexation of the West Bank and territories occupied by settlers, and Israeli pledges not to recognize a state of Palestine. With numerous question marks over the ceasefire’s implementation and next steps, there remain several stumbling blocks, or opportunities, for future normalization.
What’s Next for the Regional Economy
In Gulf capitals, the end of fighting in Gaza is seen as an unqualified economic boon. Paired with the significant degradation of Iran’s proxy forces over two years of escalated shadow wars with Israel, Arab leaders are hoping for extended regional stability in which to pursue economic aims. With the region once again fully open for business, there will be significant opportunities to engage with an infrastructure sector tasked with the rebuilding of Gaza—as well Syria and Lebanon—as well as capitalize on reinvigorated trade links between Israel and the UAE, Bahrain and other regional partners. On the other hand, the Gaza ceasefire is fragile, and the risk of disruption is relatively high—whether due to flare-ups of violence, Hamas’ intransigence, or political divisions within Israel’s government. Nonetheless, needs in Gaza and the reopening of trade links in the Arab Gulf pose significant opportunities for global partners.
