Robert and Grace’s view
European countries were taken by surprise when the US and Israel attacked Iran. But this crisis may offer Europe a chance to address longer-term risks by helping shape the Gulf region’s future trajectory.
The challenges, to be sure, are immense. The war has provided an unwelcome reminder of how critical energy chokepoints can create economic vulnerabilities. Higher energy and transport costs as a result of the closure of the Strait of Hormuz are pushing up consumer prices, dealing a blow to disposable income and corporate profits. Even in the event of a return to prewar maritime traffic, Iran now views the strait as sovereign territory and as a primary source of strategic leverage.
Tehran also appears able to withstand pressure from a US naval blockade, while Iran-linked conflicts in Iraq, Lebanon, and Yemen continue to flare up, highlighting potential for spillovers for Europe.
Major European nations — including France, Germany, Italy, Spain, and the UK — have thus far rejected direct military participation in the Iran conflict, showing a willingness to chart a more independent foreign policy. But translating this into regional influence will require substantive engagement. Deeper trade, investment, and defense partnerships with the Arab Gulf are obvious starting points.
Some nascent initiatives, such as the India-Middle East-Europe Economic Corridor (or IMEC) and Iraq’s Development Road, already incorporate Europe as a destination. The emergence during the war of other new corridors provides additional proof of concept for Europe to invest in trade and export route diversification.
At the same time, foreign investment partnerships are going to be even more critical for the Gulf going forward. Savvy European governments and businesses should be able to find ways to support the domestic economic interests of Gulf countries, while also demonstrating the attractiveness of investment opportunities on their own continent.
And diversification of defense partnerships alongside the localization of the sector within the Gulf are important strategic and commercial priorities for regional governments. European defense companies can do more to support Gulf countries’ reassessment of their own capabilities. In May, the UAE said it would establish a defense-focused free zone to build an “advanced and sustainable national defense industrial base,” with the help of global defense companies. A similar focus on expanding the defense sector is expected in neighboring countries. Several Gulf Arab states have already turned to Kyiv for help, given its experience intercepting drones fired by Russia.
European actors seeking to deepen their regional engagement will no doubt encounter a continued strong US presence, especially in the investment and defense domains. However, the Iran conflict will open opportunities for Europe to advance its interests in ways that are beneficial for the region — if it is up to the challenge.
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