The United Arab Emirates’ twin hubs of Dubai and Abu Dhabi, as well as Qatar’s capital Doha, have transformed themselves into global financial centres built on a bedrock of safety, stability and proximity to deep pools of capital. Iran’s attacks on Saturday came as a jarring reminder of geography.
Hours after the US and Israel struck Iran, Tehran retaliated by targeting US military bases in the Persian Gulf. Projectiles were seen in the sky from Abu Dhabi’s financial center, while residents in neighboring Dubai reported hearing blasts over the course of the day.
Missiles were intercepted in Riyadh, Doha and Abu Dhabi, where at least one person died from falling debris. Dubai’s media office said the city is operating normally, though Emirates — the world’s largest international airline — temporarily suspended operations in a move that will likely have knock-on impacts for the travel industry.
The UAE issued a swift statement, saying its air defence systems dealt with the missiles, adding that the safety of citizens, residents and visitors is a top priority. The government said it won’t allow its airspace, territory, or waters to be used in any hostile military actions against Iran, and will not provide any logistical support.
Countries, including the US, quickly moved to issue warnings for citizens based in the Middle East, where expatriates make up a bulk of the population in countries like the UAE. “Due to reported missile attacks, British nationals in Bahrain, Kuwait, Qatar and United Arab Emirates should immediately shelter in place,” the UK said.
The events imperil both Dubai’s ascent as a hedge fund magnet and Abu Dhabi’s emergence as a sovereign wealth powerhouse, events that have rested on a carefully-cultivated image of insulation from regional turmoil. Like the UAE, Saudi Arabia and Qatar have also been drawing financial firms as they push to diversify away from oil.
Even as conflict flared last summer, financial professionals continued to pour in. At the time, concerns about potential spillover had intensified when Iran attacked a US base in Qatar. That strike was seen as being orchestrated and financial firms quickly moved on as there was little broader impact.
The stakes are higher this time.
It’s the first instance of the Islamic Republic launching attacks on so many of America’s sites in the region. In the past, it usually resorted to what it’s described as “limited” retaliatory strikes against the US during periods of heightened tensions.
The UAE is home to the Al Dhafra Air Base, while the US Air Force has a significant presence and assets at the Prince Sultan Airbase outside Riyadh. Qatar also has a large American base in the region, while Bahrain is home to the Navy’s Fifth Fleet.
The most recent flare-up will come as a challenge to the region’s efforts, particularly the UAE given its position as a haven in times of crisis. It drew capital during the Arab Spring, opened up quickly during the pandemic and attracted Russian money after Moscow’s invasion of Ukraine.
In recent years, the country has also lured international billionaires looking to safeguard their wealth, as well as Wall Street banks and hedge funds looking to expand. Abu Dhabi has been on a dealmaking spree with its nearly $2 trillion sovereign wealth, while property prices in Dubai have surged 70% over four years propelled by buyers from around the world.
Following the attacks, Abu Dhabi called for restraint and a return to diplomatic solutions and serious dialog. The events prompted a show of support from Saudi Arabia, whose Crown Prince Mohammed Bin Salman called UAE President Sheikh Mohamed bin Zayed on Saturday to express the kingdom’s readiness to provide all possible support.
That followed a period of escalating tensions between the two largest Gulf economies, which boiled over in December, when Saudi fighter jets struck a cargo of weapons being shipped to Yemen from the UAE.
Written by: Adveith Nair, Alex Dooler, and Dinesh Nair @Bloomberg
The post “Missiles Seen Over Abu Dhabi Financial Hub Dent Safe Haven Image” first appeared on Bloomberg