A new analysis from the Peterson Institute for International Economics warns that Saudi Arabia, Qatar, and the United Arab Emirates face significant economic challenges due to the ongoing conflict between the U.S. and Iran. These Gulf countries, which previously committed nearly $4 trillion in investments to the U.S., are now grappling with increased defense spending, energy infrastructure costs, and trade disruptions stemming from the conflict. The International Monetary Fund has sharply reduced its growth forecasts for these nations; Qatar’s forecast was cut by 14.7 percentage points, while Saudi Arabia's and the UAE's were both revised down to just 1.7 percent. This fiscal pressure could lead Gulf states to prioritize domestic spending over their earlier investment commitments to the U.S., potentially straining relations with Washington.
Written by the local model on 2026-09-14,
using this article's own text rather than the other coverage of the
same event (that is the story summary below).
The ongoing conflict between the United States and Iran could make it harder for three Gulf countries — Saudi Arabia, Qatar and the United Arab Emirates — to deliver on nearly $4 trillion in economic commitments to the US announced under President Donald Trump’s “America First” agenda, according to a new analysis from the Peterson Institute for International Economics (PIIE).
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countries → make → Economics
The 15-page report released Monday says the Gulf states are facing growing economic pressure from the US and Israel’s war on Iran, including the need to spend more on defence, energy infrastructure and trade.
asserted
states → release → defence
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“The conflict has weakened their fiscal positions and economic prospects and may have lasting effects on their growth models.
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conflict → dismiss → models
It has also weakened their confidence in the US security umbrella in the Gulf,” the report said.
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report → weaken → Gulf
The war has hit the Gulf economies much harder than the global economy at large, according to the report.
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war → hit → report
The International Monetary Fund (IMF) cut its 2026 global growth forecast by 0.3 percentage points, but the reductions were much larger for the Gulf states.
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reductions → cut → states
The IMF cut Qatar’s growth forecast by 14.7 percentage points, to 8.6 percent.
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IMF → cut → percent
Saudi Arabia’s forecast was cut from 4.5 percent to 1.7 percent, while the UAE’s was reduced from 5.6 percent to 1.7 percent, as well.
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UAE → cut → percent
Gulf governments have enough financial assets and borrowing capacity to avoid an immediate funding crisis, according to the report, but PIIE said the economic pressure could lead the countries to prioritise spending at home over investments in the US.
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pressure → have → US
“Saudi Arabia had already begun rebalancing toward domestic investment before the war; the conflict appears to have reinforced that shift,” the report said.
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report → begin → shift
Saudi Arabia’s Public Investment Fund has reduced the share of its portfolio allocated to international investments by 10 percent over the last six years to 20 percent, down from 30 percent in 2020.
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Fund → reduce → 2020
The report also warns that delays in fulfilling the investment commitments could lead to additional pressure from the White House, which has previously used tariffs to push other countries to follow through on their commitments.
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which → warn → commitments
“The Trump administration has already shown limited patience with delays by other partners.
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administration → show → partners
In January 2026, Trump threatened to raise tariffs on South Korean goods, citing delays by the Korean legislature in enacting its US investment agreement,” the report said.
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report → threaten → agreement
“Continued frustration over Korea’s delayed implementation also appears linked to the recent US decision to scale back joint military exercises there,” the report continued.
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report → continue → exercises
That pressure has coincided with progress on US investment commitments from South Korea.
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pressure → coincide → Korea
The Wall Street Journal reported last week that the South Korean government is close to a potential energy investment deal worth more than $100bn that would help support the expansion of artificial intelligence infrastructure in the United States.
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that → report → States
Qatar, meanwhile, continues to pursue investments in the US energy sector.
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Qatar → continue → sector
QatarEnergy began producing liquefied natural gas (LNG) at a facility in Texas in March and began exports the following month.
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QatarEnergy → begin → exports
QatarEnergy’s ties with US energy companies could expand further.
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ties → expand → companies
It is negotiating with several US LNG producers on contracts through 2031 to help replace capacity lost after Iranian attacks damaged Qatar’s LNG facilities, according to the Reuters news agency.
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attacks → negotiate → agency
The PIIE report said the lack of clear definitions, timelines and ways to measure the investment commitments could make it difficult to determine whether the countries are actually following through.
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countries → say → commitments
The deals have also drawn scrutiny from lawmakers.
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deals → draw → lawmakers
“Political concerns in the United States present another obstacle.
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concerns → present → obstacle
Members of Congress have raised questions about the economic and national security effects of Gulf investments, governance, and possible conflicts of interest,” the report said.
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report → raise → interest
One example cited in the report is a $2bn investment in Binance by a UAE-backed investment firm.
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example → cite → firm
The deal used a stablecoin issued by World Liberty Financial, a cryptocurrency company linked to the Trump family.
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deal → use → family
Senators Elizabeth Warren of Massachusetts and Jeff Merkley of Oregon sought records about the transaction, citing concerns about the financial ties involved in June 2025.
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Warren → seek → June
By October 2025 Trump pardoned Binance founder Changpeng Zhao, who had pleaded guilty in 2023 to violating US anti-money-laundering laws.
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who → pardon → laws
Lawmakers have also raised concerns about Gulf sovereign wealth funds from Saudi Arabia, the UAE and Qatar being involved in financing major US corporate deals, across US media, including Paramount Skydance’s proposed acquisition of Warner Bros Discovery, the parent company of CNN.
“The question now is whether, and in what form, the three countries will implement their commitments,” the report said.
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report → raise → commitments
