The Middle East is entering a phase of recalibration. As Gulf powers prioritise stability and de-escalation, says Nadeem Ahmed Moonakal, they are also positioning themselves to play a leading role in global AI, which is likely to have a profound influence on the regional geopolitical landscape
Perhaps the most important feature of current changes in the Middle East is the growing significance of geoeconomics. Security remains the foremost consideration, and all regional reform programmes hinge on stability. Yet security is no longer the sole fulcrum driving regional powers' foreign policies. For decades, Gulf states' foreign policy was anchored in an oil-for-security arrangement, dependent on US military guarantees. Today, those states – Saudi Arabia and the UAE in particular – are repositioning themselves as nodes in global supply chains for AI, critical minerals, and clean energy.
For decades, Gulf states' foreign policy was anchored in an oil-for-security arrangement. Now they are repositioning themselves as nodes in global supply chains for AI, critical minerals, and clean energy
Iran is currently seeking a nuclear deal to ease its economic pressures. Iraq and Lebanon now face renewed balancing challenges. These states must carefully manage their ties with Iran and the Gulf states to maintain political stability and attract much-needed economic support. Syria, meanwhile, is entering a phase during which reconstruction is a priority, making Western assistance and Gulf investment indispensable. Across the region, economic considerations are reshaping regional alignments and compelling states to recalibrate their foreign policies.
In recent years, Gulf states have increasingly harnessed their substantial sovereign wealth funds to invest in and pivot toward technology. The region is also emerging as one of the world’s fastest-growing investors in AI, semiconductors, and digital transformation. Technology has replaced oil as the primary currency of geopolitical relevance.
This transition is also reorienting alliances and partnerships through technological interdependence. The nature and scale of Gulf investments indicate a growing preference for the US as these states' key technological partner. Of course, investments in data centres and AI collaboration advance the Gulf powers’ digital ambitions. But they also create long-term security linkages because the threat to its infrastructure would directly affect the US. This becomes more important as regional states seek durable guarantees amid shifting US policies from one administration to another, and particularly because security concerns have remained high since the Israeli attack on Qatar.
While they deepen ties with the US, Gulf states are also pursuing relationships on their own terms. They are broadening partnerships to enhance their strategic autonomy, engaging simultaneously with China, Russia, and Europe.
Saudi Crown Prince Mohammed bin Salman’s recent visit to Washington fits into a broader recalibration of US-Gulf relations. The relationship began with Trump’s earlier Gulf tour, which first elevated technology and investment-driven partnerships. The latest visit deepened this trajectory, advancing cooperation on AI, critical minerals, and civil nuclear technology while securing major Saudi investment commitments in American industries.
Washington has reinforced its regional role through upgraded defence arrangements, including offering non-NATO ally status and advanced weapons sales. Together, these developments point to a multidimensional US-Gulf partnership shaped by a growing recognition of mutual dependence. Washington needs the Gulf’s economic weight and regional leverage; Gulf states rely on US security guarantees and technological depth.
China’s expanding economic footprint in the Gulf has accelerated regional diversification away from exclusive reliance on the US in non-security realms
On the other hand, China’s expanding economic footprint in the Gulf through the Belt and Road Initiative, major infrastructure projects, 5G networks, and deepening energy cooperation has accelerated regional diversification away from exclusive reliance on the US in non-security realms. Beijing has become a crucial trade partner and the Gulf’s leading buyer of oil. It has also invested heavily in ports, logistics corridors, and digital infrastructure. Although China refrains from assuming security responsibilities, its increasing presence has reshaped Gulf strategic calculus and demonstrates the effects of the great-power competition in the Middle East.
Iran-Israel tensions, characterised by periodic escalations and indirect confrontations rather than full-scale conflict, are likely to remain the most consequential factor shaping regional security dynamics. Israel’s exploitation of the moment, violations of international law, and escalating attacks to expand buffer zones signal a continued aggressive defence strategy with pre-emptive operations in Lebanon, Syria, and beyond. Iran, meanwhile, leans on its network of proxies to sustain strategic depth and bargaining power.
While the US exerts its military power, Gulf states are increasingly seeking to stabilise the region, lower conflict risks, and prioritise economic and technological transformation
Gulf states are increasingly seeking to stabilise the region, lower conflict risks, and prioritise economic and technological transformation. The Saudi-Iran détente and the subsequent thaw in relations exemplify this trend. Washington, for its part, continues to act as the net security provider but is increasingly relying on Gulf states to manage regional tensions. This evolving relationship is less hierarchical and becoming more mutually negotiated; Gulf states intend to exercise greater diplomatic autonomy and influence, while the US exerts its military power, reflecting a new form of strategic interdependence.
The Middle East is becoming a more multipolar and strategically complex region, where economic and technological ambitions advance alongside persistent security risks. The region is making progress in development; underlying risks and structural challenges, however, continue to constrain its resilience.
The foreign policies of regional powers will increasingly be driven by pragmatism, even as they frame their actions in ways that resonate with their historical identities and domestic narratives. Regional powers are likely to seize every opportunity to reduce overreliance on extra-regional powers. The Middle East’s future will be defined by how regional countries navigate great power competition, assert autonomy, and turn global rivalries to their advantage.
