The Folly of Purchased Protection: Why the Gulf States’ US Security Bet is Failing
The US-Israeli war against Iran is entering a critical stage, which might lead to an unimaginable catastrophe. A logic of existential threat has consumed Iran, Israel, and the U.S., pushing them up the escalation ladder. This has terrifying implications for the Gulf States, which had calculated that investing in the U.S. security umbrella would protect them from external attacks.
If the Iranian regime survives, this will be the greatest defeat of the US in its post-World War Two history, signalling a definitive end of the US empire in the Middle East and likely hastening its demise in the world at large. It seems unlikely that the US will accept this outcome. Same for Israel, which has always regarded Iran as a mortal enemy—it may be unwilling to live with an Islamic Republic that in all probability will seek revenge for the damage it has suffered from American-Israeli bombardment. And Iran has made it clear that any pain it suffers will be proportionately distributed to other countries in the region.
The stakes are extremely high; indeed, they will remain so unless one party blinks and diplomacy replaces war in settling the dispute. The choices the Gulf States make will be crucial in determining their survival as functioning societies.
The Fairy-Tale Development Model of the Gulf States
The Gulf States often conjure images of stupendous wealth, luxurious lifestyles, and stability. They serve as a hub for global energy trade, finance, air travel, and real estate. They are places where the rich go to hide their wealth and seek extravagant entertainment, and the poor or not-so-rich from all corners of the world eke out a living and improve their lives.
Although oil was discovered in the Gulf in the 1930s, it was the Arab oil embargo of 1973, quadrupling the price of oil, that fuelled the great transformation. The six Gulf States—Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Bahrain, and Oman—rapidly transitioned from sparsely populated, poor desert states of tents, camel life and pearl diving into stupendously rich petrostates. With a combined GDP of approximately $2.3 trillion, these states—home to fewer than 30 million citizens—collectively rank as the world’s ninth-largest economy.
It’s not surprising that the Gulf States are often perceived as rentier states par excellence. Viewed as a bloc, oil and gas account for roughly 40% of their GDP, 75% of their export revenues, and 70% of their budget revenues. While dependence varies among the six states, with the UAE (particularly Dubai) and Bahrain having diversified significantly into sectors such as tourism, financial services, and manufacturing, these states remain rentier because their primary link to the global economy is still the extraction of a resource that is not significantly ‘produced’ through domestic labour but rather ‘rented’ out from the ground.
The labour market dynamics of these economies present a surreal or fairly-tale developmental landscape. Foreign residents, largely devoid of citizenship rights, account for the vast majority of the population in Qatar (90%), the UAE (88%), and Kuwait (70%). Even in Saudi Arabia and Oman, where indigenous populations remain the majority, foreign workers still comprise roughly 45% of the total population, performing the bulk of private-sector work. The absence of citizenship rights to foreign residents allows the tiny indigenous population to protect their ‘rent’ without sharing it.
What is more, the vast majority of the indigenous workforce is concentrated in the public sector—supported by inflated remuneration and benefits—leaving the private sector almost entirely to foreigners. Despite attempts to redress this imbalance, foreign labour still accounts for over 90% of the private-sector workforce in Qatar and the UAE, and between 75% and 80% in Kuwait, Bahrain, and Oman. Only Saudi Arabia’s aggressive ‘Saudisation’ policy has significantly made a difference; yet, even there, approximately 60% of the private-sector labour force remains foreign.
Amazingly, the Gulf States are the only countries in the world where the majority of their citizens work for the government—between 75% and 85% in Qatar and Kuwait; and 60% and 70% in Bahrain, the UAE, and Oman. Only in Saudi Arabia, with a much larger indigenous population, do less than 50% (about 45%) of the citizens work in the public sector. To underscore the surreal nature of the Gulf States’ labour markets, only about 5% and 5-10% of India’s and Africa’s labour forces respectively work in the public sector. Even in the European Union with huge welfare states, the number of workers employed in the public sector is only 16-17% of the labour force.
Ensnared in the US Financial and Security Complex
Awash with unearned wealth or resource rents, the Gulf States have, over the years, built a network of relationships that tether them firmly within the US’s financial and security architecture, effectively rendering them outposts of US power or vassal states in the Middle East. The building blocks were laid in the 1970s when the dollar holdings of the Gulf States rose exponentially, following the quadrupling of oil prices.
A deal was struck with the US to funnel the large amount of dollars held by these states back into US Treasury bonds. Led by Saudi Arabia, these states also agreed to conduct all oil transactions in US dollars, effectively forcing countries around the world to demand dollars. This petrodollar recycling system gave the US ‘exorbitant privilege’: it could print dollars to meet high foreign demand without the risk of domestic inflation, and it could rely on the Gulf States to buy US Treasury bonds—effectively financing America’s national debt and freeing it of the need to impose heavy taxation on its population.
The Gulf States have become major players in the US financial system. Through their massive sovereign wealth funds, they collectively own over USD 5 trillion in global assets, with a significant percentage—estimated in several trillions—invested in US Treasuries, listed equities, and private equity firms.
The Gulf States have invested heavily in the new US growth engine—data centres—with commitments estimated between USD 35 billion and USD 50 billion. Furthermore, they have significantly backed businesses associated with the Trump family. The UAE-based Aryam Investment 1 reportedly acquired a 49% equity stake in World Liberty Financial (WLF), the Trump family’s cryptocurrency venture. Additionally, MGX, another UAE-backed firm, reportedly used USD 2 billion worth of WLF’s USD1 stablecoin to invest in the crypto exchange Binance. This move effectively transformed the Trump-linked stablecoin into a major player in the global cryptocurrency market.
The deepening of economic ties with the US is underpinned by a raft of security arrangements that tether the Gulf States to the US global sphere of influence and security interests in the Middle East. These involve large-scale, expensive purchases of arms from the US, allowing Washington to use Gulf territories as military bases to deter Iran, other regional powers, and non-state actors. Furthermore, these arrangements encourage a lean towards the US policy of normalising relations with Israel.
Collectively, the Gulf States spend about USD 120 billion annually on their militaries. The US is the biggest beneficiary of this expenditure, reportedly receiving tens of billions of dollars annually as payment for defence equipment and services every year—a figure that rises sharply when major deals are signed. For instance, in 2025, the Trump administration announced a massive defence agreement with Saudi Arabia valued at USD 142 billion. These arms deals benefit major US contractors in the military-industrial complex, such as Lockheed Martin, Raytheon, and Boeing.
In addition to these deals, the US maintains a formidable footprint of 13 major bases across the Gulf, hosting between 40,000 and 50,000 troops—a figure that surged following the 2026 war with Iran. Qatar serves as the regional command centre at Al Udeid, while Kuwait acts as the primary logistics and airlift hub. Naval power is centred in Bahrain, home to the US Fifth Fleet, and supplemented by the UAE’s Al Dhafra Air Base and Jebel Ali Port, which host advanced strike groups and surveillance units. To counter regional threats, Saudi Arabia hosts critical Patriot and THAAD missile defence batteries, while Oman provides vital access to deep-water ports outside the partially closed Strait of Hormuz. In short, the Gulf States function as a vital base for forward operations to project American power and military dominance in the region. They are, thus, likely to become sitting ducks or hostages if the US security umbrella fails to protect them.
It’s important to address one other issue (rapprochement between Israel and the Gulf States) before discussing the serious miscalculations the Gulf States have made in entrusting their security to the hands of a superpower that is addicted to war and joined at the hip with a Middle Eastern power (Israel) that seeks unfettered hegemony in the region.
The US has gone to great lengths to encourage Arab countries, particularly the Gulf States, to normalise relations with Israel. The Abraham Accords of 2020–21, initiated by the first Trump administration, departed from the traditional framework that required the establishment of a Palestinian state as a prerequisite for normalisation. Alongside other Muslim-majority nations such as Morocco, Sudan, Somaliland, and Kazakhstan, the UAE and Bahrain signed the agreement in 2020. This shift was incentivised by the prospect of accessing advanced US weaponry, most notably the F-35 fighter jet.
Even though negotiations with Saudi Arabia stalled when war broke out between Israel and Hamas in 2023, the US has been able to woo Saudi Arabia and Qatar into a unified military command (CENTCOM) that allows Israeli and Arab military officers to discuss radar data and missile defence systems against Iranian drones and ballistic missiles. This effectively makes the Gulf States an integral part of the US-Israeli strategic alliance and military operations against Iran.
Hostages in the US Security Umbrella
The Gulf States may have reasoned that operating within the US security umbrella was a safe bet because of the US’s unrivalled global military power and the belief that such power would be used only defensively on matters that affect their interests. This reasoning is seriously flawed for three reasons.
First, even before the digitisation of asymmetric warfare—exemplified by the use of drones and pinpoint missiles—the US has historically struggled against weaker states and non-state actors. The wars in Vietnam and Afghanistan serve as prime examples of where overwhelming conventional might failed to translate into strategic victory. Today, digitised asymmetric warfare employed by a middle-tier power like Iran further exacerbates these challenges for the United States.
Second, as a global power, US interests are unlikely to be always aligned with those of the Gulf States. The US has a strong and disturbing record of initiating wars or military interventions in foreign countries even when it is unprovoked. Reports indicate that the U.S. conducted 251 military interventions around the world between 1991 and 2022.
Indeed, there is an obvious patron-client problem in US-Gulf relations. The Gulf States (the clients) want the US (the patron) to act as a shield, but the US often acts as a sword for its own independent objectives. Besides, as a global power, the US is prone to transactional diplomacy—it might sacrifice a Gulf interest to gain an advantage in a conflict with other global powers.
Third, several realist scholars argue that US policy in the Middle East is heavily influenced by the domestic pro-Israel lobby. Unlike the primarily transactional and commercial nature of US-Gulf relations, US support for Israel is characterised by unparalleled institutional and military aid. Historically, the US has maintained this support even when Israeli actions conflict with broader US strategic goals. Because the Gulf States lack comparable influence within the US Congress and media—and because their interests often diverge from Israel’s on the Palestinian issue—the ‘security umbrella’ remains inherently biased and unreliable for Gulf partners. Furthermore, Trump doesn’t respect Arab leaders. He referred to the Saudi Crown Prince, Mohammed bin Salman, as “kissing his ass” now that he’s actually attacked Iran—something MBS doubted he’d ever do—a phrase he’s unlikely to use against Netanyahu.
Despite reports that the Gulf States warned the US against attacking Iran, it’s clear they lacked a definitive say in the ultimate decision to go to war. Following the failure of the US-Israeli decapitation strategy to achieve regime change, the Gulf States became the primary targets for Iran’s retaliatory asymmetric operations. Whenever the US and Israel strike Iranian military targets or civilian infrastructure, Iran promptly retaliates not only against Israel but also against US military bases and civilian infrastructure within the Gulf States.
The Al-Dhafra Air Base in the UAE, the Al-Udeid Air Base in Qatar, the logistical hubs in Kuwait, and the US Fifth Fleet headquarters in Bahrain have all come under fire. Iran has also targeted the Ras Tanura oil facilities in Saudi Arabia, the Dubai and Abu Dhabi airports, the Jebel Ali port, and a water desalination plant in Bahrain. Qatar, Kuwait, Bahrain, and Oman depend on desalination plants for 86-99% of their water, and Saudi Arabia for 70%.
In a single week in March 2026, the UAE alone detected over 800 drones and 180 missiles—an onslaught that the ‘US security umbrella’ has been unable to effectively prevent or fully mitigate.
In this era of low-cost drone and missile warfare, the Gulf States have become hostages in the US security umbrella. They absorb the punitive retaliation the US inflicts on Iran, yet the US proves unable to shield them from the blowback. ‘Purchased security’ has become not only worthless but a threat to the very existence of these states as functioning societies. Without a diplomatic settlement, their future remains utterly bleak.
Apocalytic Scenarios
The following scenarios signal a potential catastrophe and underscore the urgent need for the Gulf States to change course. While the Iranian government is clearly fighting an existential war, defeat is also a strategic nightmare for both Israel and the United States. Many geopolitical analysts contend that Israel seeks regional hegemony—a goal that necessitates the destabilisation and fragmentation of powerful Arab and Muslim states. Indeed, Netanyahu stated at the outset of the Iran war that he had been yearning for this campaign for 40 years.
Iran has demonstrated in this conflict that Israel remains highly vulnerable to retaliatory strikes. The much-vaunted Iron Dome and multi-layered defence systems have proved inadequate against relentless, large-scale drone and missile attacks. The Israeli regime may be calculating, therefore, that if the Iranian government survives this war, it will pose an even greater long-term threat as it seeks to avenge the casualties and infrastructure damage inflicted by Israel and the United States. Such an apocalyptic fear may drive it to commit mass atrocities as it has done in Gaza.
While the Iran war does not pose a physical existential threat to the U.S.—given Iran’s lack of ICBMs—a defeat would be more than just humiliating. It would signal a profound inability to project power in the Middle East, prompting allies to seek alternative security arrangements. While the U.S. has previously withdrawn from Vietnam, Iraq, and Afghanistan, walking away from this conflict could represent an existential collapse of its status as the world’s leading superpower. Given Trump’s impulsive character and inability to engage in serious reflection, the US may be tempted to commit war crimes by engaging in carpet bombing across Iran in a bid to force rapid capitulation.
The Gulf States are thus caught in a strategic bind. Despite the heavy infrastructure damage they have sustained over the last four weeks, they view a clear US-Israeli victory as the only opportunity to rebuild without the lingering threat of Iranian retaliation. Their massive sovereign wealth funds provide the means to rapidly restore these states as global hubs for finance and tourism. This economic necessity explains why Saudi Arabia and the UAE have reportedly become increasingly hawkish, privately urging the Trump administration to ‘finish the job’ rather than accept a premature ceasefire.
This war has shown, however, that even though the US is far superior to Iran in all dimensions of conventional warfare, Iran has an incredible ability to hit back at US, Israeli, and Gulf assets. Its mountainous geography, tunnel networks, and firm grip on the Strait of Hormuz --where 20% of the world’s oil, gas, and fertiliser passes--clearly give it the upper hand.
Two other scenarios—bombing Iran to the Stone Age, as Trump has threatened to do, and a long war of attrition—will be catastrophic for the Gulf States. Iran will drag the Gulf States back to the Stone Age with it if Trump acts on that plan. And even if the Gulf regimes survive, a protracted war will end their fairy-tale development model that has not only given them unrivalled wealth but also transformed their region into a hub for global air travel, finance, real estate investment, and tourism.
It is time for the Gulf States to move beyond the U.S. security umbrella, normalise ties with a more powerful Iran, which will always be their neighbour, and build broader security alliances. Providing bases to a global power whose interests often diverge from its hosts—and which frequently resorts to offensive force—is a strategic recipe for disaster.