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Rare earth minerals, along with other metals, such as lithium, copper, cobalt, and nickel, are critical for the technologies driving the global transition to clean energy. They serve as core components in everything from electric vehicle batteries and wind turbines to advanced electronics and defense systems. As demand accelerates, securing reliable supply chains for critical minerals has become a top priority for countries worldwide.

In recent years, Gulf states have become increasingly focused on critical minerals as part of their economic diversification efforts, with Saudi Arabia and the United Arab Emirates playing leading roles. These states’ strategies, however, differ significantly: Saudi Arabia is building an integrated mining sector, while the UAE, Qatar, Oman, and Bahrain are adopting more selective investment approaches. These differences reflect each state’s distinct national priorities and capacities within the global critical mineral landscape.

Saudi Arabia’s Integrated Mining Sector

Mining is the “third pillar” of Saudi Arabia’s national economy under Vision 2030, playing a crucial role the kingdom’s efforts to diversify away from fossil fuels. With Saudi Arabia’s untapped mineral and mining resources valued at an estimated $2.5 trillion, the kingdom has the capacity to develop an integrated mining ecosystem by leveraging its vast domestic deposits while also using its substantial capital to expand investments in global supply chains. This ability to build a strong domestic mining base and pursue strategic opportunities abroad is what distinguishes Saudi Arabia from other Gulf states when it comes to critical minerals.

Domestically, Saudi Arabia has accelerated efforts in recent years to develop its mining sector through regulatory reforms, expanded geological surveying, and partnering with various global entities. In 2021, the kingdom passed the “Mining Investment Law” to make investment processes more efficient and investor friendly. In parallel, the Saudi Geological Survey, the country’s national geological authority, launched the “Regional Geological Survey Program” in late 2020, working with both local and foreign partners to map 230,000 square miles of the Arabian Shield to identify mineral resources and attract greater foreign participation.

These efforts have already produced tangible results. Saudi Arabia’s estimated mineral wealth rose from $1.3 trillion in 2016 to roughly $2.5 trillion in 2024, reflecting new discoveries and improved mapping techniques. Exploration activity has also expanded significantly, with investments in exploration growing from $28.4 million in 2019 to $140 million in 2024. Additionally, by 2025, foreign mining investors accounted for two thirds of the total license bidders in the country. The kingdom has further sought to capitalize on its domestic critical mineral potential through strategic partnerships with international entities, notably signing nine mineral deals, valued at $9.3 billion, in late 2024 with companies including India’s Vedanta Resources and China’s Zijin Mining Group, and, more recently, establishing a joint venture between Maaden and MP Materials to build a rare earth refinery in Saudi Arabia.

Through Manara Minerals, a joint venture between Maaden and the Public Investment Fund, Saudi Arabia has been acquiring stakes in major global mining entities. In 2023, Manara Minerals invested $2.6 billion to acquire a 10% stake in Brazil’s Vale Base Metals. In 2024, it expressed interest in investing at least $1 billion in Pakistan’s Reko Diq copper and gold project as well as up to $2 billion in First Quantum Minerals’ copper and nickel assets in Zambia, extending the kingdom’s reach across global critical mineral supply chains.

The UAE’s Global Reach

Unlike Saudi Arabia’s resource-rich landscape, the UAE has limited domestic critical mineral reserves. So, Abu Dhabi has centered its strategy on investing in critical mineral projects globally, notably in Africa. In 2023, the UAE, through International Resources Holding, invested $1.1 billion to acquire a 51% stake in Mopani Copper Mines in Zambia. Most recently, International Resources Holding acquired a 56% majority stake in Alphamin Resources for $366 million, giving it access to the Bisie tin complex in the Democratic Republic of Congo. Additionally, in 2024, International Resources Holding formed joint ventures for iron ore mining in Angola and announced that it was in advanced talks to potentially acquire mines in Burundi, Kenya, and Tanzania.

Beyond Africa, the UAE is expanding its global footprint through various large-scale partnerships, namely with the United States. In January, Abu Dhabi’s ADQ, with Orion Resource Partners, a U.S.-based global investment firm specializing in metals and materials, created a 50/50 joint venture based in Abu Dhabi with a $1.2 billion commitment to invest in mining companies in Africa, Asia, and Latin America. Additionally, in October, a broader fund, Orion Critical Mineral Consortium, was established by the U.S. International Development Finance Corporation, Orion Resource Partners, and ADQ with an initial funding commitment of $1.8 billion and a plan to expand to $5 billion. The consortium’s goal is to invest in existing or near-term producing assets, further underscoring the UAE’s emphasis on gaining strategic exposure to global critical mineral assets.

Qatar, Oman, and Bahrain

Qatar’s distinct critical mineral investment strategy is more conservative than that of the UAE. Through its sovereign wealth fund, the Qatar Investment Authority, Qatar’s approach is focused on gaining financial exposure by acquiring stakes in well-established critical mineral companies rather than investing directly in mines. In 2024, QIA invested $180 million in Dublin-based TechMet, and, more recently, it invested $500 million in Canada’s Ivanhoe Mines through a private placement. This targeted approach gives Qatar exposure to the critical mineral sector while avoiding the operational risks associated with running mining projects.

In Oman, mining has been designated a strategic sector under Oman Vision 2040. Oman’s investment strategy in critical minerals is grounded in domestic development but at a much smaller scale than Saudi Arabia’s, given its smaller resource base. The country advances its exploration and investment agenda through the Ministry of Energy and Minerals and state-backed Minerals Development Oman.

Oman’s ophiolite-rich mountains are believed to host a wide range of metals, including chromite, cobalt, copper, and nickel. The country was also the first in the Gulf to produce and export ferrochrome. In 2023, the Ministry of Energy and Minerals signed an agreement with United Kingdom-based Knights Bay to extract nickel, Oman’s first mining agreement with a foreign investor. In January, Minerals Development Oman exported copper concentrates from its Lasail mine for the first time and plans to start production at Al Baydha copper mine in the years ahead. More recently, the Ministry of Energy and Minerals signed three mining exploration agreements valued at $500 million and signed a memorandum of understanding with Turkey’s Ministry of Energy and Natural Resources to enhance cooperation on critical mineral exploration.

Bahrain has also been trying to enter the critical mineral space, despite its small size and limited resource base. In September, Bahrain became the first Middle Eastern country to sponsor a deep-sea mining permit after backing California-based Impossible Metals’ bid to explore part of the Pacific Ocean. Although Bahrain has not made any financial commitments, Impossible Metals CEO Oliver Gunasekara noted that Bahrain could potentially fund a refinery in the future. While Bahrain’s initiatives remain extremely limited compared to those of other Gulf states, recent moves suggest a desire not to be left behind in the global critical mineral race.

The Gulf states are increasingly active in critical minerals, hoping to capitalize on their resources and strategic investments to prepare for a post-hydrocarbon economy. However, their different approaches reflect each state’s distinct resource capacities, national priorities, and ambitions.

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Oman has moved rapidly to position itself as a regional and global hub for green hydrogen, driven by economic diversification and climate goals under Vision 2040. While strategic ambition and active international engagement underscore its potential role in the future of clean energy, the country must navigate technological, economic, and resource-related challenges to fully realize these objectives.

Oman’s hydrogen ambitions – targeting 1.5 million tons annually by 2030 with over $50 billion in committed projects – place it close to Saudi Arabia’s Neom, which aims for 600,000 tons annually powered by 4 gigawatts of renewables, and rival the United Arab Emirate’s low carbon hydrogen capacity exceeding 1.4 million tons per year. Qatar, meanwhile, emphasizes blue hydrogen linked to natural gas and carbon capture. Unlike many Gulf peers reliant on blue hydrogen pathways, Oman stands out as the region’s most fully renewable-powered hydrogen economy, integrating production clusters at Duqm to anchor domestic demand and exports. This combination of relative scale and green structural orientation could give Oman a unique competitive position in the Gulf hydrogen landscape.

The Global Hydrogen Context: Promise vs. Market Realities

Hydrogen is not new to industrial use. For decades, gray hydrogen, derived from natural gas, has been used in refining and fertilizer production. What is new is the shift to green hydrogen, produced through electrolysis using renewable-powered electricity, making it virtually carbon free. Advocates hail hydrogen as indispensable for decarbonizing steel, cement, aviation, chemicals, and long-haul shipping.

However, even as governments adopt ambitious hydrogen roadmaps, practical progress remains uneven. Hydrogen Central has reported on a wave of canceled or postponed projects across Europe, North America, and Australasia. High costs, uncertain demand, and technical barriers have forced companies including ArcelorMittal, Iberdrola, Shell, BP, and Equinor to scale down their ambitions, while U.S. and Australian developers – including Air Products and Fortescue – have also pulled back from largescale projects. The mismatch between green hydrogen’s potential and its economic viability remains stark. For example, Luxembourg-based ArcelorMittal has scrapped plans to transition two plants in Germany to hydrogen-based green steel production, citing prohibitive costs. Yet, in the Gulf, flagship ventures, such as Neom in Saudi Arabia, are proceeding, buoyed by state support and long-term strategic bets.

This global slowdown contextualizes Oman’s ambitions. Unlike advanced economies struggling to retrofit existing infrastructure, Oman can build an energy transition architecture from the ground up, harnessing its abundant renewable resources and unencumbered industrial space. Nevertheless, Oman’s plans face the same structural cost hurdles that have undermined projects elsewhere. Its distinct advantages – geography, renewables, political stability, and strategic partnerships – must therefore be weighed carefully against these constraints.

Oman’s Renewable Energy Expansion as a Foundation

Green hydrogen is only as clean as the electricity that produces it. Thus, Oman’s hydrogen strategy depends first and foremost on scaling renewable capacity, a project that has accelerated in recent years.

Oman has committed to sourcing 30% of its electricity from renewables by 2030 and 60% by 2040. As of May, renewables comprised 11.5% of Oman’s energy mix. Large-scale solar plants have been pivotal, most recently the 500 megawatt Manah I solar facility, built by Shanghai Electric with France’s EDF and Korea Western Power, came online operating under a 20-year power purchase agreement with Nama Power. Other projects, such as Ibri 2, Dhofar 1, and upcoming Ibri 3 and Dhofar 2, are rapidly boosting capacity.

China has emerged as a central partner. LONGi Green Energy Technology Company has joined forces with Power Construction Corporation of China to providing high-efficiency solar modules for the North Oman Solar Project, powering production for Petroleum Development Oman, the country’s largest producer of oil and gas. JinkoSolar, a major Chinese rival to LONGi, has secured the contract to supply Oman’s first hydrogen-linked solar project, a 487.5 MW facility supporting green ammonia production.

Meanwhile, pioneering smaller-scale initiatives, such as Oman Data Park’s partnership with Solar Wadi to establish the country’s first green energy data center, showcase the capacity-building logic of leveraging renewables for both industry and services.

This ecosystem of renewable projects provides the physical basis for hydrogen electrolysis, without which Oman’s export ambitions would remain aspirational.

Oman’s Green Hydrogen Roadmap: Scaling Supply and Infrastructure

Oman has set a national target to produce 1 million tons of green hydrogen annually by 2030 and 8 million tons by 2050. Achieving such scale requires coordinated planning, institutional innovation, and foreign partnerships. In line with Sultan Haitham bin Tariq al-Said’s directive to fast-track hydrogen development, Oman established Hydrom, charged with overseeing concessions and coordinating upstream renewables with downstream hydrogen and ammonia projects. Hydrom’s portfolio now includes nine awarded projects in Al Wusta and Dhofar, together valued at more than $50 billion and designed to produce roughly 1.5 million tons of green hydrogen per year by 2030.

Oman is also prioritizing industrial clustering. Preliminary planning is underway for the development of a dedicated green hydrogen zone in the Duqm Special Economic Zone. Covering about 7 square miles, the zone aims to co-locate production plants, storage, export facilities, and service corridors, hosting downstream elements of at least five confirmed megaprojects. Duqm is emerging as a green industrial hub, with companies including France’s Engie and South Korea’s Posco contributing to the buildout.

Oman’s first green hydrogen and ammonia plant is already under construction, led by India’s ACME Group. Chinese partners, including Sungrow Hydrogen and Shuangliang Group, are supplying key electrolyzers and hydrogen production systems. Complementing these is an ambitious manufacturing partnership between Oman’s United Engineering Services and China’s Sungrow to build a local factory for electrolyzers and liquefaction systems.

These supply chain and infrastructure commitments address one of the major bottlenecks in global hydrogen rollouts, namely technology dependence. By localizing equipment production and inviting heavy industrial investors, Oman is seeking to move beyond pilot-scale hydrogen projects into creating genuine commercial anchors.

Industrial Anchors: Hydrogen and the Green Steel Value Chain

A key obstacle facing hydrogen economies worldwide is sustaining demand at scale. Oman’s ambition is not only to export hydrogen directly but to integrate it into industrial value chains that can anchor demand domestically while serving international markets.

One initiative is the Meranti Green Steel project, which aims to establish a 2.5 million ton per year green hot briquetted iron plant in Duqm. The project envisions an initial reliance on a gas and hydrogen mix before ramping up to mostly hydrogen by the end of the decade. The plant’s output is intended for Meranti’s green steel plants in Thailand and for European customers pursuing lower-carbon supply chains.

The importance for Oman lies both in demonstrating hydrogen’s role as a commercially viable fuel for heavy industry and in creating the conditions for Omani steel to be integrated into international markets undergoing a shift toward greener materials. Green hydrogen-enabled industries therefore serve as a bridge between Oman’s domestic energy infrastructure and global decarbonization markets, ensuring that these projects are not stranded assets but are aligned with long-term industrial and commercial demand.

Financing the Transition: Sovereign Investment and International Partnerships

Hydrogen megaprojects require unprecedented financing commitments. To support the country’s energy transition and emerging hydrogen sector, the $200 million Future Fund Oman was established as a joint initiative between the sovereign investment authority and Hong Kong’s Templewater. The fund is designed to catalyze investment in renewable energy, electrofuels, green data centers, and low-carbon mobility, strengthening both domestic capacity and Oman’s position in global low-carbon markets.

Beyond domestic capital, Oman actively seeks international partnerships. At the Oman-Korea Green Hydrogen Investment Forum in August, the Ministry of Energy invited Korean companies to join Omani projects, emphasizing shared ambition and Korean technological capacities. Japan, South Korea, China, and India – each possessing ambitious hydrogen import agendas – represent important target markets, while Oman also courts European partnerships. Its balanced diplomacy allows it to navigate great power rivalries, securing investment from China, India, Korea, and Europe simultaneously.

Strategic Geographies: Europe vs. Asia

Oman’s location on the Arabian Sea provides a strategic advantage for hydrogen exports, offering shorter transit times and potentially lower shipping costs to major Asian markets, including India, Japan, South Korea, and China. At the same time, Europe remains a politically and commercially significant target given the European Union’s increasing reliance on hydrogen for decarbonizing steel, chemicals, and heavy transportation.

Duqm, in southeastern Oman, is positioned as the cornerstone of a dual-market export strategy. It anchors an envisioned Oman-Europe liquefied hydrogen corridor while serving as the operational hub for shipments to Asia. The site’s development has been accelerated by Chinese participation. Firms such as Sungrow Hydrogen and Shuangliang Hydrogen have supplied critical equipment and contributed to port infrastructure, industrial zones, and ancillary facilities that integrate renewable generation, electrolysis, and downstream logistics. These partnerships enhance the scalability and technological readiness of Duqm, aimed at transforming it into a comprehensive hydrogen hub rather than a simple export terminal.

Europe offers credibility and a politically backed market, but cost competitiveness remains a challenge; delivered liquefied hydrogen could exceed current European production costs. Asia, in contrast, provides both proximity and scale, with the combined demand of Japan, South Korea, China, and India forming a large and expanding market for green hydrogen and ammonia. By leveraging Duqm as the operational center for both corridors, Oman can validate its hydrogen production in the European market while capturing volume and diversification opportunities in Asia.

This dual-market approach also aligns with Oman’s broader diplomatic strategy of neutrality and multidirectional engagement, reducing dependency on a single region while maximizing strategic flexibility. By integrating domestic renewable energy assets with industrial-scale hydrogen production and export logistics at Duqm, Oman is creating a sustainable, commercially viable pathway for the country’s hydrogen ambitions. Chinese firms’ involvement has been pivotal in enabling this integrated model, providing technology, infrastructure, and expertise that strengthen Oman’s competitive position in both European and Asian hydrogen markets.

Structural Constraints: Technology, Water, and Economics

Oman’s hydrogen strategy is ambitious but faces critical headwinds. First is technology dependence. Oman does not yet manufacture electrolyzers at scale, relying heavily on Chinese partnerships. While joint ventures including United Energy Services-Sungrow aim to fill this gap, dependency raises strategic risks.

Second is water availability (and costs associated with it). Electrolyzers require vast volumes of water – fresh, seawater, or treated wastewater. In an arid country like Oman with scarce water resources, this creates potential trade-offs. Advanced seawater desalination and water recycling will be required, adding to expenses.

Third, and most fundamental, is price competitiveness. Omani planners aim for production at $2 per kilogram by 2030, yet current benchmarks suggest prices at nearly double that. Without international subsidies, regulatory frameworks, or carbon pricing mechanisms that privilege low-carbon fuels, Oman may struggle to sell hydrogen profitably in distant markets.

The Diplomatic and Industrial Dimension: Asia, China, and Balanced Geopolitics

China has emerged as a central player in Oman’s hydrogen sector. Chinese firms have won substantial contracts to supply hydrogen production equipment, especially for large green ammonia and hydrogen projects in Oman. China is embedding itself across Oman’s hydrogen value chain by supplying panels (JinkoSolar), electrolyzers (Sungrow, Shuangliang), and full hydrogen systems (Xinsichuang Hydrogen) and engaging in research and development partnerships, including collaboration on liquefaction technologies with Sultan Qaboos University. Joint interests extend to hydrogen fuel-cell trucking and supply chains.

This partnership is also geopolitical. As U.S.-China tensions constrict Beijing’s access to Western cleantech markets, the Middle East provides fertile terrain for Chinese industries, and Oman is a crucial partner.

Oman’s neutral diplomatic posture – cultivating ties with Europe, Asia, and competing Gulf neighbors – thus becomes an asset, insulating it from overreliance on one bloc. This balance is central to maintaining export flexibility and long-term sovereignty in a competitive global hydrogen market.

Challenges Ahead

Oman’s dual-market hydrogen strategy – anchored at the Duqm hub and supported by strategic partnerships, including major Chinese technology and infrastructure players – positions the country to meet both European and Asian demand while advancing domestic economic diversification.

Yet challenges remain. Cost competitiveness, water scarcity, and global market volatility require careful navigation. Looking ahead, initiatives like the 2025 Green Hydrogen Summit Oman – which will bring together over 3,000 participants to focus on regulatory, financing, and infrastructure priorities – demonstrate Oman’s active role in implementing its hydrogen strategy.

By linking domestic renewable energy capacity with industrial-scale production and export corridors, Oman is building a tangible, forward-looking framework to transform its hydrogen ambitions into a sustainable and globally relevant industry, reinforcing its Vision 2040 and net-zero objectives.

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Some Washington pundits view the attack on Qatar as a minor dent in an otherwise sturdy defense platform: It has angered the Gulf states, but they will come around due to few, if any, alternatives. This is a flawed assessment. It downplays the uniqueness of the attack and the determination it will spark in reassessing options. The attack was executed by a U.S. ally in a residential area without warning and targeted a U.S.-endorsed mediation process with Hamas representatives. It is not even remotely similar to the 2010 targeted Israeli assassination of a Hamas operative in Dubai, a covert action that violated sovereignty but did not involve airstrikes in broad daylight resulting in local casualties. This botched Qatar operation has been accompanied by alarming rhetoric. Israeli Prime Minister Benjamin Netanyahu has shown no remorse, warning Qatar and others on U.S. Embassy grounds in Jerusalem and subsequently in the presence of Secretary of State Marco Rubio that similar such attacks could not be ruled out. The Gulf’s centrality in the Middle East and its significance to the United States warrants specific U.S. guarantees beyond President Donald J. Trump’s assurances of nonrepetition and dinner meetings.

Interdependent Paths?

The Gulf Arab states have been the Trump administration’s preferred regional partner as evidenced by his affinity for forceful leadership and first major trips abroad to the Gulf in both presidential terms. The two sides share a pragmatic approach and recognize the possibilities of Gulf capital and U.S. technologies, among other mutually attractive domains.

Gulf-U.S. relations are at the heart of Trump’s vision for the Middle East: a peaceful, prosperous region further integrated with Israel. Yet this vision will not materialize if Israel sustains its occupation and keeps getting a free pass, violently advancing its aims at the expense of U.S. partners and even U.S. interests at times. A second obstacle is the midlife crisis confronting the current U.S. security umbrella as the relationship based on “oil for security” needs to be redefined. Both sides have been overtly discussing, and occasionally working on, a holistic and multifaceted agreement. However, they have not yet been able to come to a conclusive understanding. Accompanying this is the recurring frustration among the Gulf states over the perceived U.S. unwillingness to defend them, while the United States remains frustrated with the complaints and the Gulf states’ inability to grasp its position. Gulf leaders are aware that the United States does not necessarily respond to one-off attacks unless they are part of a clear cycle or threat – though such attacks appear increasingly more common in the Gulf. But the current U.S. defense posture is not delivering for the Gulf. It is further complicated by a new challenge: how to deter attacks on the Gulf by a U.S. ally. This is on top of changes in the United States and the Gulf during the past decade. An emboldened Gulf and an internally fractured, preoccupied United States makes a clearly defined defense treaty more urgent, starting bilaterally and then extending collectively to the Gulf Cooperation Council membership. Saudi Arabia and the United States have been pursuing one, but it remains on hold. Further, the most recent defense relations update with Bahrain in 2023, the Comprehensive Security Integration and Prosperity Agreement, falls short of Gulf expectations as would the rumored U.S. “enhanced” defense agreement with Qatar after Israel’s attack.

Gulf security has long relied on foreign superpowers. The United States has been the Gulf states’ main security partner, characterized by military bases and weapons procurement as well as training and interoperability. The relationship has delivered in the past, but its utility is under question if turning the Gulf into a conflict zone goes unaddressed. These attacks were few – until now. The last bastion of stability in the Middle East, the Gulf cannot afford these incidents to be the new normal. The often-underreported Gulf-U.S. security success stories will eventually be dwarfed by unaddressed security threats.

If these two elements – Israel’s conduct in the region and U.S. defense parameters – remain open questions, it will risk the stability of the region, the transformations underway in the Gulf, and the trillions of dollars in committed investments in the United States. The Gulf states will have to prioritize their security. They will not have enough bandwidth or even the excitement to pursue the envisaged projects with the United States. The United States cannot refuse to acknowledge the red lines that Israel has crossed in the past two years. Nor should it stay idle when its interests and Gulf partners are under attack.

The Gulf: One or Many?

Feeding the conviction that this was another one-off attack that will not garner a serious U.S. reaction is the notion of Gulf unity. Several partners of Gulf states, including the United States, readily dismiss Gulf unity. They find it performative, comes in waves, and serves passing interests at best. There are elements of this, but holding it as a rigid descriptor of Gulf affairs misses historical trends and the ongoing reconciliation momentum on display since the 2021 Al-Ula Summit. It also misses fast changing dynamics underway that reinforce the efficacy of unity: a weakened Iran and an emboldened Israel. The Gulf Arab states have always come together when major crises befall them. The Iran-Iraq War, occupation of Kuwait, and invasion of Iraq are a few examples. A U.S. ally attacking a Gulf capital, regardless of the reason, qualifies as another strong unifier.

Converging Gulf views and actions have been on display in recent months too. Look no further than coordinated actions in postconflict spaces such as Lebanon and Syria and relations with Iran. Tactical differences may exist (Sudan and the degree of normalization with Israel for example), but there is a shared general direction especially when it comes to regime preservation and pan-Gulf security. The Gulf rift from 2017-21 was the exception, not the norm.

For example, a delegation from the United Arab Emirates, an Abraham Accords signatory, kicked off its Gulf tour to align Gulf views toward normalization with Israel before turning to the ramifications of the Qatar attack (the Emirati visit to Saudi Arabia was followed by Qatar, Bahrain, and Oman). Top Emirati officials have warned Israel against annexing occupied Palestinian lands, and Abu Dhabi summoned the deputy Israeli ambassador to protest the Qatar attack. The UAE is part of a gathering Gulf consensus against Israel.

If Gulf leaders want to be taken more seriously by the United States, concrete and coordinated actions are necessary. The Gulf needs to move beyond optics (condemnations and communiques) and the performative (visits and summits) to specific innovative, escalatory actions that influence outcomes and yield tangible results from its partners and adversaries.

What Can the Gulf Do?

Gulf leaders are realists. Their dependence on U.S. security cooperation is no secret. Setting aside the question of trusting the United States or not, they recognize that no powerful alternative exists in the interim. Meanwhile, Israel has succeeded in rapidly elevating itself as the most immediate challenge to Gulf security. Early versions of these risks were already hinted at in the GCC’s first vision for regional security, issued in 2024. The precedent of an Israeli attack and the threat of a repeat underscore the urgency of GCC states coming fully to grips with the vulnerabilities and threats that currently face them. That is why remaining idle with no impactful response to Israeli aggression is not an option for the Gulf. The Gulf states need to efficiently promote their views and devise a set of actions that shields them from future attacks.

Diversifying partners, localizing defense, and establishing an indigenous regional security architecture are the next best options to the current dependence on the United States. But these measures, even with the modest progress of previous efforts, will take a decade at least to bear fruit, if pursued wholeheartedly. The Gulf’s changing threat perception can generate outcomes that diverge from U.S. security imperatives. When a U.S. ally becomes the source of a major threat to the Gulf, it means more regional defense cooperation with parties the Gulf Arab states have traditionally viewed with suspicion, such as Turkey and possibly even Iran, or with trusted partners, such as Pakistan. These defense ties are less developed than with the United States, but what use is a military superpower if it does not provide basic security needs and thwart repeated attacks? Regarding evolving Gulf attitudes toward Iran, a lax U.S. response to the Israeli attack could ultimately push the Gulf Arab states closer to Iran, an astonishing potential turn of events and one that indicates how powerfully Israel’s reckless action has upended long settled strategic thinking in the Gulf. This can mean continued quiet communication and de-escalatory efforts with Iran, turning a blind eye to maximum pressure enforcement, and enabling Iranian regime survival to act in effect as a counterweight to Israel, avoiding the latter’s imposition of a regional order. Such a trend, which would represent strengthening current Gulf rapprochement dynamics with Iran, could push Abraham Accords signatories toward cooling relations with Israel, at best, and further systemize Gulf efforts toward actualizing a Palestinian state as a precursor to any further normalization.

Despite the challenges the Gulf states confront in addressing threats to their security, they have more immediate options to respond to Israel’s attack. If such a response is smartly planned and coordinated, the tools at their disposal can send a clear signal that the Gulf is to be reckoned with. Such action can also help fend off future attacks or at least raise the stakes for potential attackers.

Gulf sovereign wealth funds are the region’s most underutilized deterrent although marshaling this tool for deterrent effect will require acknowledging the independent calculation of national interests each state brings to the deliberations. If the many Gulf sovereign wealth funds were to consider a joint, specific divestment plan that starts with Israeli-affiliated entities, including specific triggers, it could have powerful effect. Similar action aimed at the U.S. entities at a later stage would also likely have a galvanizing effect. Any financial moves that could have an impact on U.S. interests should be gradual and well-communicated in advance to accentuate impact and minimize fallout, and they should be accompanied with specific asks that meet Gulf defense needs and regional interests, such as delivering a Palestinian state – a goal that the United States does not disagree with. Consideration should be given to making Gulf investments in the United States conditional on enabling local industrial and defense development to secure civilian nuclear programs and access to technology and materials, like the recent U.S. artificial intelligence and chip deals with the UAE and Saudi Arabia.

Diplomatic pressure and global coalition building like the Saudi-led “Global Alliance for the Implementation of the Two State Solution” is another model to follow. Despite their low risk tolerance and capability disparity with Israel, Gulf states need to underscore – and have their powerful friends underscore – the right of states under international law to defend themselves when attacked. The United Nations charter enshrines that right. Gulf countries could choose to exercise that right, as well, with a demonstrated, orchestrated defensive response.

Continued diversification and signing major defense deals with other countries should also be geared toward securing more U.S. concessions. This process is already underway. A joint, strategic approach is already one of the early responses to the Qatar attack, including the Saudi-Pakistani mutual defense pact that had been in the works but was notably signed eight days after the attack. Putting together an adaptive, integrated suite of options promises better returns than a wait-and-see attitude, a hesitant response, or exclusive recourse to a behind-the-scenes approach. Absent an assertive approach, the Gulf states would be inviting another attack. Other Gulf capitals could be next.

New Gulf-U.S. Understandings

This is a different attack. The United States should take note of the Gulf’s rapidly shifting calculus. The attack on Qatar will accelerate a process already underway – weaning off of dependence on the United States – and likely provide for a more unified response across the Gulf. But eliciting a firm U.S. response that addresses Gulf security concerns and admonishes Israel would reinvigorate the relationship and demonstrate the Gulf’s value to the United States. That could translate into a well-defined collective defense pact with the Gulf states.

The United States is facing a depleting reservoir of credibility in the Middle East. Consistency is key to addressing that depletion and so is treating the Gulf states as equal partners in a multifaceted relationship starting with security.

The Gulf states need to forcefully demonstrate their rejection of the evolving regional status quo. Turning a blind eye to Israel’s open season on the region is not an option; Gulf states need to take action and activate messaging that effectively quarantines this attack as a deeply mistaken one off and absolutely not the start of an alarming new trend.

The post What Can the Gulf Do After the Attack on Qatar? appeared first on AGSI.

With this step, the Omani government’s primary objective is not necessarily to pioneer new tax regimes. Nor is the planned personal income tax especially likely to spark major shifts in the country’s political economy. Oman’s personal income tax is better viewed as part of a multipronged policy to achieve incremental progress on fiscal consolidation and economic diversification efforts.

The latest tax development in Oman also fits the region’s broader trend: gradually increasing taxes. Yet other countries are not necessarily going to follow in Oman’s footsteps on a personal income tax. The process of increasing taxes has been slow and uneven – with varying tax types and rates across countries – alongside room to negotiate exemptions and other forms of preferential treatment, enabling the GCC region to remain a low-tax environment by global standards.

First Movers

Oman’s personal income tax rests within a broader, ongoing process of tax reform. A global minimum corporate income tax of 15% came into effect this year, though Oman has imposed some form of corporate income tax for decades. Omani authorities implemented an excise tax in 2019 and a value-added tax of 5% in April 2021, alongside various other municipal taxes and fees.

Optimizing the collection of existing taxes or raising rates are low-hanging fruit of tax reform. For example, Omani officials have room to improve their capabilities around VAT collection. Broadening existing tax bases and revising tax incentives are other measures for increasing non-oil revenue without introducing new taxes.

When new taxes enter the policy pipeline, Omani authorities have rolled out implementation carefully. A draft law of the personal income tax made its way through both houses of Oman’s Parliament in 2024. There is a roughly two and a half year phase-in period before the personal income tax’s implementation in January 2028. Companies have ample time to prepare for any impacted employees.

Government statements on the tax emphasized that it would not impact 99% of the population. According to the Oman News Agency, the objectives extend beyond pure budgetary support: “The tax aims to promote wealth redistribution among societal segments, enhancing social justice, while supporting the state budget and specifically financing part of the social protection system.” Such messaging suggests an attentiveness to concerns over wealth inequality and employment issues.

Omani citizens constitute approximately 57% of Oman’s population of about 5.5 million people. This is a significantly weightier demographic of citizens as a proportion of the total population than that of neighboring GCC states: Kuwait, the United Arab Emirates, and Qatar. Moreover, Oman’s gross domestic product per capita is on the lower end of the regional spectrum ($20,248 in Oman versus $49,378 in the UAE or $76,276 in Qatar), and Oman does not enjoy the same level of hydrocarbon resources found in most neighboring oil- and gas-producing states. Omani citizens have expressed economic grievances during protests in the past, though these are rare events for Oman and other GCC countries.

The fiscal stakes attached to the personal income tax are relatively low. Revenue estimates for the new tax stand at “less than 0.5% of GDP.” This will not make or break Oman’s economic diversification drive but will play a limited supporting role.

It helps that the Omani government has greatly improved the country’s economic fundamentals. Since assuming power in 2020, Sultan Haitham bin Tariq al-Said has navigated a challenging global and regional policy environment. His government has made steady progress at home through fiscal discipline, government debt reduction, and reforming state-owned entities. “Oman’s steadfast reform efforts are paying off,” according to the International Monetary Fund, and resulting in upgrades to sovereign credit ratings. Tax reform is just one element of a broader economic policy playbook.

Regional Spillover

The announcement and eventual introduction of a personal income tax in Oman will not necessarily pave the way for a similar tax in other Gulf countries. On economic policy generally and taxes specifically, GCC countries tend to move at their own pace and according to their individual interests.

For example, a unified GCC VAT agreement in 2016 did not lead to a unified introduction: The UAE and Saudi Arabia introduced a 5% VAT by the agreed-upon deadline, though Saudi authorities hiked the standard rate to 15% during the coronavirus pandemic; Bahrain and Oman implemented their VAT after the deadline; and Qatar and Kuwait have yet to introduce a VAT.

Other Gulf countries, particularly the UAE, may worry that a personal income tax could dent their global wealth hub status. High-net-worth individuals, investors, and entrepreneurs are important demographics in the UAE. Most would not welcome news of a personal income tax. Many highly skilled, well-paid professionals already grumble about Dubai and Abu Dhabi becoming increasingly expensive. In any case, the fiscal need for such a tax is simply not as great in the UAE. As for Saudi Arabia, the IMF proposed a “menu” of other tax measures to support fiscal adjustment, including introducing a property tax and amending existing taxes.

Some Gulf citizens seem open to the idea of a personal income tax, but often that openness is predicated upon the notion that foreign residents would foot the bill. Selectively taxing the personal income of foreigners would face less pushback from citizens but could complicate foreign investment and global talent attraction efforts.

Oman’s personal income tax is still years away, and neighboring Gulf countries do not seem to have similar plans on the short-term horizon. If regional policymakers give more serious consideration to a personal income tax, however, the topic might be less taboo, with Oman having already broken the ground.  

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In 2023, Russian and Omani officials exchanged several visits. In July, Russian Foreign Minister Sergei Lavrov made his first visit to Muscat since 2016. In September, a Russian delegation of law enforcement agency representatives, the Rosatom State Corporation, and the central bank visited Oman. Just three months later, the Omani minister of culture, sports, and youth, Crown Prince Sayyid Theyazin bin Haitham al-Said, traveled to Moscow and met with Russian President Vladimir Putin.

The two countries have since worked to strengthen economic ties. In 2023, Oman’s foreign minister said the country was working with Russia on reaching a mutual investment promotion agreement. Oman also participated as an honorary guest at the 2024 St. Petersburg International Economic Forum and at the 2024 international economic forum “Russia – Islamic World: KazanForum.” In October 2024, Muscat hosted the business mission “Made in Russia,” with 39 Russian companies from a range of sectors. Trade ties have grown drastically: In 2010 trade turnover between the countries was $12 million and exceeded $400 million by 2023. However, the trade balance has tilted in favor of Russia – in 2022, Russia exported $246.8 million in goods to Oman and imported only $4 million.

Bilateral relations reached a new level in April 2025 with a visit by Omani Sultan Haitham bin Tariq al-Said to Moscow, where he met Putin for the first time. During the visit, Oman and Russia signed an agreement to establish a visa-free regime and discussed wider energy, trade, infrastructure, and diplomatic ties. And in October 2024, Oman participated in trilateral naval exercises in the Indian Ocean with Russia and Iran.

The recent progress in strengthening relations has been especially noteworthy given the short history of diplomatic relations between the two countries. In the Cold War era, Oman was suspicious of the Soviet Union’s ambitions and exportation of communism. The countries only established diplomatic relations in September 1985, a rare exception from the Soviet Union’s otherwise sprawling diplomatic presence in the Middle East.

Oman: A Regional Gateway?

Moscow’s emphasis on closer ties with Oman is part of a reorientation toward the Middle East and Asia. It has come as Russia works to mitigate pressure from Western sanctions imposed following its 2022 invasion of Ukraine. It also represents an effort by Moscow to reposition itself in the Middle East amid a regional shift in the balance of power following the overthrow of the regime of Bashar al-Assad in Syria, the Gaza war, and the June conflict between Israel and Iran. Russia values Oman’s pivotal diplomatic outreach and the role it has played particularly as a host and facilitator between Iran and Western powers and other Gulf countries.

Russia’s engagement with Oman fits into Moscow’s outreach strategy in the Middle East, particularly with the Gulf Cooperation Council states. Russia announced that it would host a summit with the Arab League, including Oman, later in 2025. In April, Russia hosted Qatar’s emir, Tamim bin Hamad al-Thani, and the two countries pledged to dedicate $1.14 billion each in a joint investment fund. On August 7, the United Arab Emirates’ president visited Moscow to discuss bilateral trade and investments.

Russia sees Oman as an entry point for Russian products and businesses into the Gulf region. Oman is particularly attractive for Russian businesses because of its special economic and industrial zones, especially given a 2023 agreement on the elimination of double taxation between the two countries. Oman is also attractive with its opportunities for connectivity, particularly through its ports along the Omani Sea coast. The Sohar port is linked to India, China, Japan, South Korea, and the countries of the Red Sea region. Oman’s geographic location and historical cultural and economic ties with East Africa are also appealing to Russia. Oman has also considered joining the International North-South Transport Corridor, which runs from Russia’s Baltic and Caspian ports to Iran and further south to the Gulf and India. And Moscow and Muscat signed a memorandum of understanding on transit and transportation in April.

For Oman, the reorientation of Russia’s economy toward the Global South provides economic opportunities, as Muscat actively pushes to diversify economic relations as part of its Vision 2040 initiative. Oman wants to use Russian artificial intelligence technologies in its industry to accelerate economic growth. The Omani leadership has likewise mentioned cooperation in the energy sphere. Moreover, given that Russia is Oman’s main supplier of wheat, Muscat can look to Russia’s experience in agriculture as well as transportation.

Yet there are limits to Russian-Omani relations. Muscat aspires to maintain a neutral status globally and enjoys close ties with the United Kingdom and the United States. Oman’s Vision 2040 requires Western investment and knowledge for a successful economic transformation. This is a hurdle for Oman when contemplating closer alignment with Russia. There is also a geographic distance that hampers quick and effective linkage between Oman and Russia. Transit through Iran is not easy logistically nor does the present security situation in the Middle East allow for quick expansion of the International North-South Transport Corridor. Nonetheless, Oman will likely continue to build closer ties with Russia – as much as possible without harming Muscat’s firmer and more traditional ties with Western powers.

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