Unpacking the Gulf’s Tough Diversification Choices

Economic diversification in the Gulf region was no easy task prior to the outbreak of the Iran war in February. Several months of conflict have added plenty of risk-related challenges while creating some new opportunities as well. Ziad Daoud, chief emerging markets economist for Bloomberg, argues that the Gulf now faces three diversification-related challenges: economic dependencies on hydrocarbons, security dependencies on the United States, and broader geographic dependencies on the Strait of Hormuz. 

These three interconnected domains will consume significant policy attention over the coming months and years. What are the new strategic considerations and priorities around economic diversification in Gulf capitals? Where does Washington feature among other established and new defense partnerships? How feasible are ambitious plans to build out economic infrastructure that bypasses the Strait of Hormuz and other efforts to enhance economic resilience? And what does this mean for the future of U.S.-Gulf relations and U.S. and global business interests?

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