Frederick Kempe,

President and CEO of the Atlantic Council 

History teaches us that some events turn out to be inflection points, changing the trajectory of a country, a region, or even the world. The war in Iran has that potential. It could neutralize the Middle East’s greatest destabilizer over the past four decades, creating new openings for regional security and prosperity—or spark another period of violent instability. It could fundamentally weaken a country that has been at the heart of an axis of aggressors—China, Russia, North Korea, and Iran—or embolden a regime bent on exacting revenge up to and including through terrorist attacks.  

However this conflict ends, its impact will extend far beyond Iran’s borders. Arab Gulf states, which have suffered from Iranian attack in recent days, will have to reassess how to define and defend their vital interests. Their European partners, meanwhile, will continue to absorb the secondary consequences of this instability for their security and economies.  

In every crisis lies opportunity, however. The war underscores the need for European and Gulf countries to forge new and deeper forms of partnership—on geopolitical priorities, defense spending, commercial investments, and artificial intelligence, to name a few.  

In that spirit, we are proud to announce the launch of the Atlantic Council’s Europe-Gulf Alert. The weekly newsletter will track significant European and Gulf developments across the energy, technology, economic, diplomatic, and defense and security sectors.  

We are launching the newsletter as the Atlantic Council and its partner Antenna Group, led by Theodore Kyriakou, prepare to host the first Europe Gulf Forum this May in Greece, with a mission of bringing together political, policy, business, and investment leaders at the highest levels of government and the private sector. Europe-Gulf Alert will be there every step of the way, providing concise expert analysis and novel insights about the transformative changes shaping the futures of the two regions. 

Beyond concerns regarding Iran, the story of Europe-Gulf relations is one of almost unlimited potential and, thus far, insufficient ambition. The Gulf brings patient capital and strategic appetite; Europe brings technological prowess, research capacity, and advanced industrial ecosystems. Closer Europe-Gulf cooperation could help transform each region’s economy, at a moment when European economic growth is lagging and the Gulf Cooperation Council (GCC) is seeking economic diversification.  

There’s also opportunity presented by emerging technology. Gulf countries are rapidly advancing their innovation agendas; GCC adoption of use cases related to generative AI, for example, is expected to generate up to $35 billion—equivalent to as much as 2.8 percent of non-oil gross domestic product. At the same time, Europe is home to two of the world's top ten suppliers of semiconductor equipment by revenue, with Dutch-based ASML number one overall. One of the core structural challenges of Europe-Gulf trade is the limited diversification of GCC exports to Europe, with 75 percent of those exports still concentrated in hydrocarbons. But future commercial and investment ties will go far beyond fossil fuels. 

The bottom line: Europe and the Gulf each stand to benefit tremendously from seizing this historic moment, addressing its dangers even while embracing its opportunities.

THE LATEST

Diplomacy

The EU and GCC are coordinating their response to the Iran war in new ways 

On March 5, GCC and EU foreign ministers held their first-ever emergency meeting, condemning Iran’s attacks as “inexcusable” and reaffirming the GCC’s right to self-defense under Article 51 of the United Nations Charter. Four days later, a broader EU-convened summit brought together GCC leaders’ representatives alongside other regional leaders to mobilize against Iran’s targeting of civilian and oil infrastructure. GCC and UK foreign ministers met separately on March 15, welcoming UN Security Council Resolution 2817’s condemnation of Iran and pledging joint diplomatic efforts to prevent Tehran from acquiring nuclear weapons. 

Expert take

Jörn Fleck,

Senior director of the Atlantic Council’s Europe Center

“The current conflict and its ripple effects highlight the need for greater European cooperation and engagement with the Gulf states, as Europe’s interests are already affected by the conflict—not least in energy markets, crucial trade routes, and overall security.

But Europe also needs to take a hard look at what it can bring to the table as an actor if it wants to be seen as a real geopolitical player.”  

Energy

Geopolitical risk has gone from theoretical to real, which could spur supply diversification 

Iran’s effective closure of the Strait of Hormuz, where one-fifth of global oil flows, has sent benchmarks surging over 40 percent this month to their highest level since 2022. Crude output from the United Arab Emirates has fallen by more than half, with the Abu Dhabi National Oil Company suspending crude loading at Fujairah after a drone strike on the export terminal. US Treasury Secretary Scott Bessent told CNBC that Washington is allowing Iranian oil tankers through the strait to keep global markets supplied.  

Expert take

Landon Derentz,

Vice president for energy and infrastructure at the Atlantic Council and senior director of its Global Energy Center

"The disruption in the Strait of Hormuz is forcing energy markets to confront geopolitical risk that had long been treated as theoretical.

In response, governments and investors may accelerate efforts to diversify supply, redirecting capital toward lower-risk producers and energy systems less dependent on vulnerable chokepoints.”

Economy

The EU and Gulf are confronting economic shocks—but policymakers have agency in how this plays out

EU Economy Commissioner Valdis Dombrovskis has warned that a protracted conflict with Iran risks triggering a “substantial stagflationary shock” that recalls the 1973 oil crisis, while Eurogroup President Kyriakos Pierrakakis has stated that the economic damage will hinge on the conflict’s duration. As for the Gulf, Goldman Sachs estimates that Qatar and Kuwait could each experience a 14-percent decline in GDP this year if fighting continues through April. As of Monday, Dubai’s stock market had lost 20 percent of its value since February, entering bear-market territory and ranking as the worst-performing equity market globally this month.  

Expert take

Khalid Azim,

Director of the MENA Futures Lab at the Atlantic Council’s Rafik Hariri Center for the Middle East 

 "Policymakers can influence how markets price geopolitical risk [regarding the war in Iran]. First, they can reduce the duration of the disruption. Second, they can reduce uncertainty by articulating a clear strategic framework.  

Both mechanisms would serve to lower the effective price of what might be called a geopolitical put option on the global economy.” 

Defense and security

The war is coming to Europe, but how will Europe respond?

US President Donald Trump told the Financial Times that it would be “very bad for the future of NATO” if European allies refuse to help secure the Strait of Hormuz. According to EU foreign policy chief Kaja Kallas, Brussels is considering a range of responses including modifying the mandate of its naval missions in the region. Yet major European powers are resisting. German Defense Minister Boris Pistorius, for example, has rejected any military role. UK Prime Minister Keir Starmer has declined to pledge warships while stating that the United Kingdom is helping develop “a viable plan” to restore passage through the strait.  

Expert take

Dan Shapiro, 

Distinguished fellow with the Atlantic Council’s Scowcroft Middle East Security Initiative

“Iran, the weaker party in the conflict, has sought to balance the blows it has sustained by expanding the playing field and spreading the pain—to the Gulf, to energy markets, and even to Europe. 

The regime hopes to survive this conflict and establish deterrence against [the conflict’s] renewal. European willingness to impose costs on Iran—diplomatic, economic, and, if necessary, military—will be a critical component of any post-war strategy.” 

Highlights from the Atlantic Council

• The Gulf that emerges from the Iran war will be very different

• Why Gulf security is critical to global security
• Energy under attack: What the Gulf can learn from Ukraine and Iraq
• Watch: What role should Europe play in the Middle East?