How Biden Can Rebuild U.S. Ties With the Gulf States

As tensions between the United States and the Gulf monarchies have been laid bare in recent weeks against the backdrop of Russia’s war in Ukraine, spiraling energy prices, and Houthi attacks on Saudi and Emirati territory, it’s clear that there will not be a return to the U.S.-Gulf partnership of the past—but there can be a new understanding between the two sides.

Washington can dial back the climate warrior talk and acknowledge Gulf Arab producer and OPEC+ member demands to be included in discussions about climate adaptation and to carve out a role for hydrocarbons. In return, the U.S. government will have to address Gulf Arab security concerns and offer more effective protection against attacks by Iran and its militant proxies in the region.

This low point in the relationship, arguably its nadir, did not occur overnight. Tensions have been building at least since the 2011 Arab uprisings, when Gulf Arab monarchs believed Washington was abandoning them and aligning with the Islamist forces that sought to unseat them. Four years later, this feeling of neglect was reinforced when the Obama administration signed a nuclear deal with Iran that, in their view, failed to consider their security interests.

No matter how hard U.S. officials try to dispel the notion that Washington is appeasing Iran, Gulf Arab suspicions of U.S. intentions remain high.

The Biden administration announced on Feb. 12, 2021, that it was reversing the designation of Yemen’s Houthis as a foreign terrorist organization, judging this was necessary to enable international humanitarian assistance in Yemen. The Gulf Arab countries, Saudi Arabia in particular, saw President Joe Biden’s decision as a signal he was ignoring Iran’s expansionist and military designs in Yemen.

Yet what seems to be the straw to have broken the camel’s back, at least for the Saudis and the Emiratis, is the U.S. response to recent Iranian and Houthi missile and drone attacks against civilian targets in Saudi Arabia and the United Arab Emirates. Both saw the U.S. response as slow and insufficient. Washington, however, thought it did more than enough lately by sending senior U.S. officials to the region to meet with Saudi and Emirati leaders, by activating U.S. missile defenses stationed in theater, and by deploying additional U.S. military equipment and supplying more interceptor missiles to the Saudis.

No matter how hard U.S. officials try to dispel the notion that Washington is appeasing Iran, Gulf Arab suspicions of U.S. intentions remain high, which is one reason why Saudi Arabia and the UAE have been hesitant to heed calls from the United States to increase global oil supply—a top item on the U.S. Middle East agenda to reduce fuel costs at home and put pressure on Russia, as high oil prices help insulate it from the impact of sanctions.

So far, Saudi Arabia and the UAE have not been interested in breaking the OPEC+ agreement of coordinated outputs through 2022. Oil production has become a sticking point, though neither the Americans nor the Gulf Arabs seem to want to define the relationship on energy or security alone. The grease to the wheels of collaborative energy and security policy is a shared belief in the value of an open global political economy, with a privileged role for the U.S. dollar.

If there are any early lessons learned for the relationship between the United States and the Gulf Cooperation Council in the Russian war against Ukraine, one is clearly the power of global financial isolation. Russia risks losing normal balance of payments operations as its reserves held abroad are blocked, its oil exports unwelcome or sanctioned, and its bank sector excluded from normal transactions. Moreover, thousands of international firms are exiting Russia, from the oil and gas sector to technology, consumer products, and professional services; they are unlikely to return quickly, even if the Russian invasion of Ukraine halts and sanctions are rolled back.

For the Gulf states, their phenomenal growth story of the last 20 years has been a product of a period of high oil prices between 2003 and 2014 (with a blip in the global financial crisis of 2008-2009) and then a period of fiscal reform and extraordinary issuance of sovereign debt between 2015 and 2022. The last 20 years are a story of the benefits of financial inclusion, access to capital markets, and the ability to project power abroad through assets—everything including real estate, technology, entertainment, and equities in the firms that make the global economy function.

The Gulf states and their sizable sovereign wealth funds have been active holders of American debt in U.S. treasuries, as well as investors in the kinds of industries they hope to grow at home. That investment in innovation, technology, and consumer brands has allowed the Gulf states to import human capital, to expand the quality of life of their citizens, and to make their cities hubs of global capitalism and connectivity. Because these states have currencies linked to the U.S. dollar and export products priced in dollars, any disruption to their access to markets would be catastrophic.

Some Gulf Arab states want a more formal U.S. security guarantee, akin to what the United States enjoys with NATO and other treaty allies. But a solely top-down approach to a more strategic U.S. defense arrangement with any Gulf Arab country is neither practically effective nor politically feasible. This depends not only on the U.S. Congress’s buy-in but also on a comprehensive architecture for security cooperation, neither of which is available.

Some Gulf Arab states want a more formal U.S. security guarantee, akin to what the United States enjoys with NATO and other treaty allies.

A more realistic but still worthy alternative is a new strategic defense framework with the Gulf Arab states, or at least those that are in favor of one—not a formal alliance but a credible mechanism to elevate the security partnership in ways that reaffirm key principles and set clear and achievable objectives for the bilateral or multilateral defense relationship.

Two immediate deliverables and two long-term objectives of this framework could include establishing a fusion cell based on the Houthi missile and unmanned aerial systems threat to provide Gulf Arab partners intelligence on activities that may be a precursor to future attacks along with a real-time warning of the launch of those attacks. Such resources could include two or three Predator drones and other assets that would provide persistent, high-quality intelligence and warning of planned or impending attacks on U.S. personnel and bases or on those of Saudi and Emirati partners.

The second deliverable is joint contingency planning with more willing and capable Gulf Arab partners on Iran. This didn’t happen in the past for legitimate reasons. First, the Gulf Arabs had little to contribute in terms of military capability. Second, the Gulf Arabs have always been divided on the issue of Iran, and in 2017-2021 the Saudis, the Emiratis, and the Bahrainis cut ties with Qatar in part because they accused it of cozying up to Tehran. But the feud has now subsided, and U.S. Central Command has an opportunity to involve Gulf Arab partners, along with Israel, in at least some of its strategic planning processes to incorporate and leverage their more powerful weapons.

The more long-term elements of such a U.S.-Gulf strategic defense framework are integrated air and missile defense—which is a collective responsibility in the region that first and foremost requires trust among Gulf Arab participants to create shared early warning systems—and a commitment by the United States to help its Gulf Arab partners pursue the necessary defense reforms to develop effective military capability. This means investing in institutional capacity building, as opposed to focusing on arms sales and tactical solutions to old and deep problems in the militaries of these partners.

When it comes to energy, Saudi Arabia and the UAE will be key to increasing oil production capacity to meet present and near-term demand. During the energy transition to decarbonize the world’s economies, there will still be a need for petrochemical products and for oil production. Governments can work together to make that production cleaner, more cost efficient, and more reliable. Technology cooperation in carbon capture and storage should be a key U.S. policy priority and incentive for engagement in the Gulf.

The United States has a core interest in stability in global trade routes, including those that surround the Arabian Peninsula, from the Suez Canal to Bab el-Mandeb throughout the Indian Ocean and Sea of Oman, up the Strait of Hormuz. Security cooperation and training, along with demining and patrolling, should combine with policy efforts to enforce environmental safety of international waters, including concerns for possible pollution from nuclear power plants and industrial waste.

There is an increasing global demand for climate finance, new green investments, and the creation of circular economies of scale. The Gulf and the wider Middle East will be hit hard by climate change. The Gulf states’ ability to lead solutions will enable their own survival and ability to thrive in the challenges ahead. U.S. policy coordination through blended finance of international financial institutions, U.S. government development finance arms, and Gulf state development funds might seek to provide financing for projects like renewable power plants, as well as adaptive infrastructure in transportation, including electric fleets and buses in public transportation, across the Middle East.

It is possible to envision improved ties between the United States and its Gulf Arab partners. But Washington will need to acknowledge the real security threats the Gulf faces from Iran and its proxies, and the Gulf Arab monarchies will need to continue to embrace the benefits and potential domestic political risks of an open global political economy. Only a more effective, transparent, and comprehensive dialogue, supported by leadership on both sides, can get this roughly eight-decade-long partnership on a new track.